Inside Shutterstock’s $65 Million Acquisition of FlashStock

February 21, 2020 |  

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Grant Munro started FlashStock in 2013 to help big companies produce content (photos, videos) for advertising campaigns. In 2015, Instagram exploded, and online marketers became desperate for more content, which helped fuel Munro’s business from a handful of employees in 2014 to more than 100 in 2017. That’s about when Munro agreed to sell FlashStock to Shutterstock for $65 million. 

To read a transcript of this episode, click here.

Grant Munro started FlashStock in 2013 to help big companies produce content (photos, videos) for advertising campaigns. In 2015, Instagram exploded, and online marketers became desperate for more content, which helped fuel Munro’s business from a handful of employees in 2014 to more than 100 in 2017. That’s about when Munro agreed to sell FlashStock to Shutterstock for $65 million. 

The FlashStock story provides some key takeaways for any founder keen to build value:

  1. Protect your equity: FlashStock scoped their client’s needs for the year and got them to pay for a year’s worth of content upfront. This positive cash flow cycle allowed Munro to avoid raising institutional money and keep most of his equity. Munro also cautions owners to consider the team you want to build in the future and make sure you reserve enough equity for what your company will look like in the future, not just what you need now. He also advises owners to consider clauses to claw back shares of employees who leave to ensure the rewards go to the workers who stick it out to (and past) an exit. 
  2. Create a traffic jam of offers: When Shutterstock made their initial offer, Munro’s first instinct was to start negotiating. Still, his advisor counselled him to buy time to try and accelerate the education process of other would-be acquirers so that FlashStock could get all interested buyers to the table at the same time.
  3. Managing investors with competing interests: Munro was juggling a group of investors who had bet on FlashStock early in its tenure. Some investors wanted Munro to sell, and others wanted him to keep growing. Munro sat down with one sage advisor who asked Munro a simple question: “Is this going to be a life-changing event for you?” The advisor went on to point out that for most of the investors, the money would be good but not life-changing, yet for Munro, who owned the lion’s share of the equity, it would change his life forever. The advisor’s message was clear: all of the stakeholders come at the decision to sell from a different perspective, and none had as much to gain (or lose) than Munro. That clarity gave Munro the confidence to take the deal. 

There’s a ton more in the interview, including:

  • The surprising downside of sudden wealth
  • How to deal with the loss associated with selling your company
  • The secret to getting your customers to pay upfront
  • How to know when to sell
  • How to structure employee stock agreements

There’s much, much more in the interview.

Munro’s one big regret in selling FlashStock was not considering the emotional impact of selling a business he had worked so hard to create. If you want to get psychologically prepared to leave your company, there are four big questions you need to answer, and we’ve created a handy questionnaire to help. It’s called PREScore™.

Our guest

Grant is the Co-Founder and SVP of Shutterstock Custom, a leading provider of on-demand visual content for the world’s leading brands. He has helped more than 250 enterprise marketing teams, including AB InBev, L'Oréal, Nestlé, and McDonald's amongst many others, change the way they think, develop, and source creative content at scale. Prior to starting Shutterstock Custom, Grant was the SVP Product at a leading social media management company and a product manager at Nokia. He has worked with a number of brands in a senior capacity including Coca-Cola, JP Morgan Chase, and Amway.

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Transcript

John Warrillow:

I think you’re going to like this next interview with Grant Munro, who sold his company FlashStock to Shutterstock for a cool $65 million, just five years after starting the company. Not a bad little return. There are a few things here to listen for. I want you to listen to the way Grant talks about protecting his equity. He’ll give you some tips and tricks around dealing with employees and your cap table and how to manage through when employees leave your company, making sure you claw back some of that equity. He has some really interesting negotiation tips that he learned from his advisor, one of which was to really time or try to time acquisition offers so that they sort of create a bit of a traffic jam and you can create some competitive tension, so listen for the way he did that.

John Warrillow:

As well, a really sage advisor of his asked him a very simple question, is this going to be a life changing event for you, Grant? And the answer was yes, which for a lot of his other investors, it was not going to be a life changing event. That it just gave Grant clarity about accepting the offer that was in front of him. So listen to the way he thought through that. There’s a ton more in the interview. Enjoy this wide ranging conversation with Grant Munro.

John Warrillow:

Grant Munro, welcome to Built To Sell Radio.

Grant Munro:

Thanks. Thanks for having me.

John Warrillow:

Tell me where you are right now. We were talking offline but tell folks where you physically are in the world.

Grant Munro:

I am in this little beautiful pocket called Sutton, Quebec. It’s about an hour and a half from Montreal, five or six hours from Toronto and it’s one of the few places that you can ski in East Coast that offers everything from glades to French fries and gravy on it.

John Warrillow:

Awesome. Awesome. Well, one of the benefits of selling your company, a little bit more freedom, flexibility. Love it. Tell me about FlashStock, what is this company? What did you guys do? What was the essence of the business?

Grant Munro:

Yeah, so FlashStock customer was a big brand, a big company that’s trying to market their products and services to mostly consumers and they’ve got something unique, their product and they’re using all the channels that are out there, prints, digital, TV and more increasingly social media. So when you’re doing that, you’ve got two parts of what you do. There’s the money that you spend on advertising and then there’s the money that you spend to create the content.

Grant Munro:

So having worked a bunch of time in that industry, and seeing how these big companies were creating content, it just didn’t seem to be very efficient, didn’t seem to be done very well. Historically, they were looking to big traditional creative agencies who were charging huge amount of money to create sort of pixel perfect assets for TV, and then repurposing those for digital so it’s very slow and very expensive. On the flip side, you’ve got stock photography, or stock video, which is all pre-shot, pretty generic.

Grant Munro:

So there was nothing really servicing digital companies or companies that have a strong digital and social media presence. So I started a company called FlashStock to solve that and basically, we were a software platform where our customers who, again, were the big marketers could connect to a global network of creators all around the world, and have content created for them that’s custom to their specific need.

Grant Munro:

So if you’ve got a product or service that you want to tell that story about, our network was able to do that and because we were a marketplace and benefited from a lot of network dynamics, scale was a big part of that. So we could do it for a lower cost and much faster timeframe. So for someone who had to create a lot of content, who’s a consumer brand, it was just a great alternative to what existed today, or what exists today.

John Warrillow:

So let me make sure I’ve got it. So if I’m Ford, and I want a digital image of a beautiful country road for an online ad I’m running, I could go to a big, like photo, what are they called? They’re like, stock photography shop and buy an image, right?

Grant Munro:

Yeah, you could do that but then you would have to post produce, like photoshop your car in the image.

John Warrillow:

Right. Oh, I see. So they would actually include the visual of the car along with this beautiful country road, and you’d have some custom do that.

Grant Munro:

Yeah, so we worked with quite a few auto clients and the story would be, we want to tell the story how this particular vehicle enhances someone’s life by allowing them to get to a mountain that they wouldn’t previously get to. So we want to tell the story of that person who meets our customer demographic, loading the car up with skis, getting in the car, talking to their friends, looking at a map, driving to the mountain, skiing the hill. So they want to tell that story and they can’t do it with stock photography, because it doesn’t exist. So they have to do more of a full production model.

Grant Munro:

So if you went with a traditional agency that would do that for a TV commercial, it’s hundreds and hundreds and hundreds of thousands of dollars and if you want to do that for an Instagram post, it’s not worth it. The unit economics just don’t make sense. So you need something that gets you the same outcome, but is at a much lower cost.

John Warrillow:

How did this network of freelancers do it for less is because there’s a reason a big TV ad would cost a couple of hundred grands because you got to hire all these people.

Grant Munro:

They don’t have the overhead that a traditional agency. So because we were tech enabled, we could find the models, we could find the photographers, we could find the post production and not be encumbered by physical office space and employment contracts and union agreements. So we offer much more flexibility and freedom and the content was geared towards more of a social media digital use. So it doesn’t need to be pixel precise. There’s a bunch of trade offs with that, but it fills the need and basically fills that content bucket.

John Warrillow:

Got it, got it. I’m familiar with a site called Upwork and Fiverr. Would these be similar but obviously you had a very unique niche but similar in business model?

Grant Munro:

Yeah, similar in the sense that, I need a service, go out and get that service and make it as simple and seamless as possible is very, very much so in the content space. There’s a lot of nuance and content because there’s the visual identity, the look and feel that we have to suss out, but it’s generally the same premise.

John Warrillow:

How did you make money?

Grant Munro:

So we would charge our clients for the content, the end product, and then we would pay the freelancers and then we’d take a margin from that.

John Warrillow:

How did you guys come up with what to charge? Like in our Ford example, like auto car example. I want an image of a beautiful ski hill and I want to roof rack and the skis is all jazz. How did you figure out what to charge something like that?

Grant Munro:

Well, it was interesting, because so my background is in product and part of product is trying to understand that there’s a real urgent need, and then building a solution around that need. So because it’s not like these companies were not doing this before. They were doing it and they were spending money in it and they were trying to make it better. We basically had an anchor in terms of what the current spend was, and so we could work backwards from there to try to determine how much saving is required for this to become a really tangible solution for them.

Grant Munro:

So we found our sweet spot through a bit of test and learn and then you have to balance that with paying the creative people as equitably as possible. I think creative is an underappreciated space. So we wanted to make sure that we were compensating them favorably. So we were really playing against those two dynamics but the key for us and the key for any pricing discussion was really trying to understand what your customer’s currently doing and how much time or money they’re investing to do it currently, why they’re dissatisfied and translating down into a pricing structure that makes sense for them.

John Warrillow:

How did you get them to reveal that to you? Because that would be in some cases held close to the vest and not wanting to share.

Grant Munro:

Yeah, the agency world is a small world so you can understand the rate cards and it seems like there’s a generally a lot of dissatisfaction with agencies and so you get these little anecdotes and you put them together and you can quickly on the back of the napkin get a range in terms of what they spend. Yeah.

John Warrillow:

The big conundrum for anyone creating kind of a marketplace is like, and particularly a two sided marketplace is, how do you get both sides to play? Because the creative people need to have clients in order to really kind of care. Clients need to know there’s enough creative people. So how did you guys solve that problem?

Grant Munro:

Yeah, we were unique. So we were unique in the sense that we were servicing, so we weren’t consumer, we were B2B. So we were a B2B marketplace. So the trick for us was figuring out, who had the power in that relationship. So again, we’re dealing with freelance photographers, videographers, animators and enterprise clients. If you’re a freelancer who sells a creative service like photography, you probably have an abundance of time unless you’re fully booked and you would gladly take work.

Grant Munro:

So if we’re able to provide you with guaranteed work relative to your skill, the hypothesis was we have no problem filling that. So basically, if we could get the job, the hard part was getting the client. Once we get the client we can get the network. So we very much started customer acquisition first. So let us fill the demand side and then once we’ve got the demand backfill this plot.

John Warrillow:

Got it. Got it. That’s helpful. How did you finance a business? Sounds expensive. Don’t know why. Because it’s all technology in the platform.

Grant Munro:

So we were a technology startup. So there were some upfront costs. So I raised some angel funds from some friends and family, small amounts just to get the product off the ground, but then didn’t raise any institutional money. So basically, whenever we sold we, we were trying to sell annual agreements. So we would say to a client, hey, you’re going to do this many campaigns this year, you’re going to need this much content. We’ll put a package for you that’s going to cover 12 months and it’ll cost you this much and if you are you pay us upfront, and then we’ll use that money to make sure that you get the content over that agreement period.

Grant Munro:

So we were able to do that and that allowed us to basically take that upfront booking and collect it within 60 days and then put that capital towards growing the business. So we were able to get that sort of flywheel going where we have a great sales month, we use those proceeds to hire and fund the business and then continue to sell. Which is a really interesting good context of this show in particular, is not going out and raising a bunch of money and getting that valuation at a certain size prematurely, is really important not to do that and because we raised very little money and self funded and bootstrap the rest, we had so many options, because we were always in the black from that perspective.

John Warrillow:

That’s amazing. That’s amazing. I’d be curious to know how you got in particular, there are some brands are notorious for stringing out suppliers in the advertising space. I’m aware of all the beer and liquor companies for example, are renowned, infamous, for stringing out their suppliers 90 to 120 days. How did you get brands to get you to pay up front? What was the secret?

Grant Munro:

Well, okay, it’s interesting. There’s two parts to that. There’s, can you get these brands to sign a contract for a large dollar amount on their standardized payment terms with an unknown startup is like that’s problem number one is getting them over that hump. Here if the problem is urgent enough, and your solution is compelling enough, you should be able to do that. It’s interesting, there’s a lot of thought leadership on startups should give their product away for free and that’s the best way to get your foot in the door.

Grant Munro:

In reality, it’s not because if your startup isn’t solving a problem that a customer’s willing to pay for, you’re going to find that out pretty soon, so it’s better to find that out sooner rather than later. The trick is on the collection side, and you say 90 to 120 days, those were great terms. A lot of these big CPGs that are now private equity run, 260 days payable terms, but that’s after you’ve been set up as a vendor, and after you followed up.

Grant Munro:

So if it is 30 days, it’s actually 60 days because of all that other stuff that comes into play. As a start up, you can always play the empathy card, and say, you got to help me here. I’d say 90% of the clients we work with were supportive from that perspective but working capital and managing that and making sure that you’re following up and collecting your receivables is super important. Super, super important. I think that’s something that’s overlooked.

John Warrillow:

I guess in your case, it helped not to have a direct competitor that they could point to and say, these guys are willing to do it for 120 days.

Grant Munro:

We sort of had to pick our customer segments with that in mind as well. For example, if you think of the agency, agencies wouldn’t pay us until they got paid. So if their client is a big CPG, that’s private equity backed with 260 day payment terms, they’re not going to pay us. Their agency will have their own payment terms on top of that. So we’ll wait, take 260 days, then 90, it gets a little ridiculous.

Grant Munro:

But I would say, because we hadn’t raised capital, and we needed that money to grow and pay people salaries, it forced you to be very diligent about that stuff, which benefits you down the road. Whereas I think if you’re a little lackadaisical about it, it’ll hit you later on, but we were forced to solve it and forced to be very regimented around it, which benefited us through the acquisition as well.

John Warrillow:

To be clear, are your customers the agencies of these brands or are you going direct to the brands themselves?

Grant Munro:

No. We go directly to the brands themselves.

John Warrillow:

Got it. Got it.

Grant Munro:

In some ways we were competitive to the agency.

John Warrillow:

I would think so.

Grant Munro:

Yeah, but not not not all the time.

John Warrillow:

Who’s the we? Who owned the company?

Grant Munro:

So I founded it and I had another co founder that departed a few months in and then I was always under the belief that, sharing the ownership across the early team was super important. So the we was really that founding team and the early employees that helped guide us.

John Warrillow:

How did you reconcile when early employees left for example, your co-founder? How did you deal with, they’d helped to create some value, but they were leaving and that they would serve to participate in the business going forward. Did you buy back their shares, or how did you kind of stick out that?

Grant Munro:

Yeah, I think if you were doing it again, you want to set up terms where people are being rewarded for their effort, but if they do leave, they’re not taking a disproportionate amount of money and I think even at the founder level, sort of doing it again, you want to set up a scenario where if someone leaves within four years, they’re losing a percentage of what they’ve got. So basically setting up that waterfall investing for all different share classes, I think is super important.

Grant Munro:

So that’s pretty standard in the industry where you get an allotment of equity and then that vest over a 1, 2, 3, 4, 5 year period and there’s new opportunities. That works as an incentive for both the employee but also kicks back some of the shares for people who have left back to the company. So that’s actually an interesting, it always confused me when investors or potential acquirers would ask to see the cap table.

Grant Munro:

I always thought it was a peculiar question because it seemed like what does that have to do with anything, but it sort of shows where the ownership sets, where the alignment is, and making sure everyone’s is centered appropriately, and it’s something that you have to be really thoughtful in managing is your cap table and how you think about just giving people allocations of shares and what your future team will look like, what your key hires will be and what the market rate is for that. It’s definitely something that was a big learning curve for me.

John Warrillow:

What advice would you give to a new founder, who is going through this for the first time, let’s say he or she owns 100% of the company, and they’re thinking, okay, I really want to grow this. I know I’m going to have to give up a little bit of equity along the way. It sounds like one piece of advice is to make sure you have some sort of clawback clause that if and when they leave, you’re getting those shares back, or at least a portion of them. What other advice would you give, kind of really tactical stuff?

Grant Munro:

Yeah, I think thinking about what your management team looks like today, reconcile that against the type of company you want to be in the future, be it sort of 2, 3, 5 years, and then what that management team will look like then or need to look like then and what are some of the key hires that you’re going to make and understand what the expectations of those key hires would be at that level and joining a company of that size, just to give you a framework of what your cap table really need to look like.

Grant Munro:

So for example, if you want and your friends started a company that made it to a millionaire [crosstalk 00:16:14] yeah ,and he’s the only technology person and you know that you’re going to want to hire a more traditional CTO, and that CTO is joining an early stage company, and you want them to be a certain level of experience, you know that you’re going to have to give that person 3 to 5% of the company for them to take that risk.

Grant Munro:

If you’re not thinking about that, when you’re making your decisions about allocations, it’s going to bite you. It’s not an unsolvable problem, but it’s a lot of work if you haven’t been thoughtful about it. So that’s advice number one is, make sure you’re thinking more of a longer term and what that team looks like and what the allocations will need to be. Then second is just protecting yourself and the company in terms of how you pay for that and making sure that, if the person leaves and doesn’t meet the requirements, that they’re not taking all those shares with them and setting up the appropriate waterfalls and vesting schedules that are equitable on both sides of the table is also super important.

Grant Munro:

The only thing I’d add to that is setting expectations up right from the beginning. Like don’t pull people along with a promise of shares and promise of equity. It’s really easy to do that and it’s a really slippery slope to go down. If you say to someone, hey, join my company and you will get shares at some point in the future. You have to give that to them right away and make it clear exactly what they’re going to get. Because if there’s any gray, it causes a huge headache down the road.

John Warrillow:

Got it. Got it. Okay, that’s super helpful. So let’s move ahead now to the actual acquisition by Shutterstock. Well, first of all, I mean, the growth was just stunning, right? We’re talking about the early days and getting it off the ground. When did you start the business?

Grant Munro:

So I started the business officially in back half of 2013 and signed our first client, early 2014. End of the year 2014 about five people, including myself, continued to grow. Ended the year 2015 with about 15 people. Then in 2016, we grew to 80. Then at the time of acquisition, we around 110. So we did experience massive growth in and around the back half of 15 and 2016.

John Warrillow:

What fueled all that growth?

Grant Munro:

I love to say it was my strategic ability, but it wasn’t. It was this little thing called Instagram came online and similar to Facebook, it had a massive presence before brands could actually really spend any money on there. So we had this beautiful scenario where at the back half of 2015, every brand wanted to be on Instagram, but they couldn’t buy ads, there was no way to monetize it. So the content that they could put out there was all stuff that was re-used, it had to be as low cost as possible because it wasn’t being promoted and you never really knew who was going to see it.

Grant Munro:

So because we were positioning ourselves as a lower cost provider, it just created a huge amount of demand for us. Then when Instagram finally turned on monetization, which is as a brand I can buy advertising and target it to an audience on this platform, it upped the game in terms of the quality of the content, which really continued to fuel our business. So that trajectory was driven a lot by that.

John Warrillow:

Wow. Amazing. You were there to capture that and capitalize on it. At what point did you realize that maybe the time was right to sell. Was there a trigger that…

Grant Munro:

So it was interesting. So as I mentioned, took very little early capital from an angel network, so didn’t have a lot of funds to play with and there were some real advantages to that but there was also some disadvantages. As I mentioned, we were funding the business basically using the bookings, the cash receipts from the previous quarter to pay for the business for the future quarter. It’s perfect when it works but when it doesn’t work and you get a little slippery, and because we were a sales driven organization in the sense that this wasn’t all inbound, and we were just closing deals on the phone, we have to actively go seek clients and explain our value proposition.

Grant Munro:

There was some ups and downs and we had to think about the balance sheet where when you’ve got 100 people on staff, and you’ve got that payroll coming out, if you have a bad month, a bad quarter on the sales side, even if it’s just short term, it could create some real problems and added a tremendous amount of risk. So at the end of ’16, we have been growing like crazy, the bank was filling up with cash. We didn’t really know what to do with it but it still wasn’t enough to give us six months, nine months of really comfortable runway and thought it would be prudent to go out and look for other forms of financing.

Grant Munro:

Be it bank loans be a line of credit against our accounts receivable and of course, being in the technology space, angel investing. So it was really a function of, hey, we got to do something here. Let’s go out and get a lay of the land that really started to get the wheels turning in terms of what to do next.

John Warrillow:

What was that like for you personally as the primary shareholder, owner, founder CEO, fill in the blank, to be carrying the weight of that burden?

Grant Munro:

Yeah, it was tremendously stressful and the way, we have structured the company is wanted to grow. So growth was important for everyone that was in the company. So we were constantly pushing the sales organization to sell more sell faster, bigger deals, shorter sales cycles. We started to basically live on this month to month cadence where we would set pretty aggressive sales targets and achieve them or not achieve them. So the pressure that would build up throughout the organization, including me, and the people that were running those functions was really, really high.

Grant Munro:

So that absolutely had a burden and that was part of it is if we get additional capital, can we take a breath and can we get somebody additional support that we need in terms of tooling, support resources, the things that you would skimp on when you’ve only got $1 but things cost two. For example, we didn’t really have a finance organization, we didn’t really have human resources, the facilities were below par, to say the least and it’s like, all this stuff takes its toll. So, yeah.

John Warrillow:

What was the worst case scenario in your mind at the time?

Grant Munro:

During that growth phase, or during-

John Warrillow:

Yeah, when you were kind of putting the pressure on the sales guys, we got to deliver, we got to deliver, we need the cash from the sales to pay our payroll, in fact. If that didn’t happen, what would have happened? What was the worst case scenario in your mind?

Grant Munro:

So the FlashStock story is a really positive story because we basically went in one direction and then it ended, the biggest fear for me was having to lay people off and having to tell a story that wasn’t a great story. Winning becomes very addictive, and each month achieving target and telling people you achieve target, the more you do that, the harder it is to think about and rationalize downturns. Because we were so dependent on marketing and marketing spend, and emerging platforms like these things are very dynamic.

Grant Munro:

So that was a real reality. There was number one is, you know, will the market winds change at some points in these are the things that we’re so dependent on that we don’t really have any control, to operationally are we being as effective as possible as a sales organization in terms of capturing those opportunities? Three, are we supporting our staff and team, putting so much pressure on them, are we giving them the support resources and tooling and all the infrastructure that they need to be most successful?

Grant Munro:

Sort of all of these things just add to a tremendous amount of stress and pressure that you know, at the time, you wouldn’t wish on anyone, but then when you step out of it after the business, you kind of miss it.

John Warrillow:

The adrenaline rush of it all. I’m curious, I want to dig a little bit here because I think there are a lot of owners listening to this, who share that sense of burden, of hitting their number. I’m trying to get at, everyone kind of wins and loses. You got a bit of a chalkboard. What was it about losing, having to lay people off having to kind of go in front of the company and say, we didn’t do it, guys [inaudible 00:25:00] what was it about that that scared you so much?

Grant Munro:

So it’s interesting. I wasn’t a born entrepreneur, I started FlashStock, I had been working as a professional for 10 years and it’s interesting. When you start your own company, you are responsible for your outcome, nobody else is responsible for your outcome and that sounds really obvious. The difference between doing that saying, I’m going to start a company, I’m going to get people to give me money so that I could start this idea and then I’m going to hire people against my idea. That concept is very different than I’m going to go work for company x.

Grant Munro:

So when things go badly at company x, people have a tendency to look for another job, blame their manager, blame the company, blame the culture, do all that stuff, but it’s never your fault. When it’s your company, and you’re doing it all, I personally took failure much more personally and much more severely than I would in any other scenario. Know where the failures became my failures. If the culture is struggling, it’s because of me and I’m not doing my job as effectively and the fear became very motivating but it became very personal to me to make sure that I am actually doing my best.

Grant Munro:

That’s one of the best things about being an entrepreneur. It’s a true test of your ability. I remember when I was in university, I took computer science and math is a big part of that. It was the first time in my life like I hit my intelligence threshold. I took this theoretical math 300 course, no matter how hard I studied, I’m like, I could not do well in this course. It was like-

John Warrillow:

I’m tapping out. That’s it. I got nothing.

Grant Munro:

You hit your ceiling and you realize it and it’s a big eye opener. Startups are very similar, where you’re trying to do the best you can and the outcome is really dependent on all of these things that you do and all of these activities you put in motion, and if you could be better, the company could be better and it’s such a, you’re so in the moment, and you’re so alive, and it’s so dependent on your day to day decisions, and how you interact with the team.

Grant Munro:

It becomes very intense just from that perspective. Then the other pieces, depending on how you structure the organization, you don’t tend to hear a lot of good news, you start to hear more and more bad news. It’s all complaints, it’s complaints from all different functions, all the things that are going wrong, all the reasons why things aren’t going to work and you start absorbing that and over time, it can take a real physical toll, especially if you don’t have an outlet to sort of de-stress and get perspective and give yourself a little break from that.

John Warrillow:

What impact did it have on you physically?

Grant Munro:

Yeah, a lot. I remember during the time of sale, so when we started to talk about acquisition through the due diligence process, I physically lost 15 pounds. I wasn’t sleeping, huge amounts of stress, there was friction in my household, I basically disconnected from my social network because I was so focused on the deal. Thinking about mental health and it’s definitely a huge part of it is the endurance and the ability to endure a tremendous amount of stress through an extended period of time, can take a really, really sharp turn pretty quickly.

Grant Munro:

I’ve always been big into fitness. So my outlet was exercise and when I would get really stressed, I would go and exercise. I’d come out of that feeling much better. There were, I remember days, and I put my gym in my garage in Toronto in the winter, which is really, really cold. There were days where you just sit there in the freezing cold and just sort of stare at the floor and think to yourself, how did I put myself in this situation?

Grant Munro:

How do I get out of it in this desperate, the monkey mind and the chatter that is created as a result of all these activities. If you can’t get a hold of it can be pretty overwhelming.

John Warrillow:

What would trigger the monkey mind? What sorts of things was it? Was it the sales sort of deal you were on?

Grant Munro:

Yeah, it could be anything. It could be someone on a team complaining about another team member and you start to kind of catastrophize from there. It could be over reading a market signal about something changing, a new competitor, a new competitor raising money, like it kind of hits you from all these different angles. If you internalize that, and you can sort of take it home and you have no release, it really does build up and you have to be quite aware of it and cognizant of it. They say founders and entrepreneurs are a little crazy and you kind of have to be, because it’s not normal to be under that much pressure. If you’re not ready for it, it’s going to surprise you, that’s for sure.

John Warrillow:

Would you do it again?

Grant Munro:

I would do it again. It’s funny actually. I have this very strong memory during the due diligence period of the purchase, sitting there in that garage, feeling so depleted and saying like, I’m never going to do this again, ever. I’m never going to do this again. Then a month after the deal closed, I want to do it again.

John Warrillow:

Dude, you’re an addict.

Grant Munro:

Yeah. Absolutely. Absolutely. There’s an absolute addictive quality. It’s the best thing in the world and it’s the hardest thing, but usually the hardest things are the best thing.

John Warrillow:

Well said. Let’s get into the deal. So, you realize, look, we got to raise some money, give us a bit of a cushion. What was next? Did you hire some help? Did you go take it to market yourself?

Grant Munro:

Yeah. So a couple of things are happening. So we talked to a bunch of banks, we talked to a lot of other non dilutive funding sources and realized that none of those made sense for the type of business we were. So for example, bank loans in Canada for a growth startup that isn’t EBITDA positive, not going to happen. So venture was really the only anything and-

John Warrillow:

You guys make any money at this point?

Grant Munro:

We were cashflow positive.

John Warrillow:

Because of the model but EBITDA was-

Grant Munro:

No, because we were constantly hiring. So just not attractive from your typical financial institution. So venture was probably our best path and because we had only raised from individual angels, I thought having an institutionalized board and professional board members would be a real benefit. So I was really interested in that. Our company was growing very quickly and the one thing I noticed is, venture capital firms or private equity firms, they have basically a sales development function of a group of people that go out and try to identify companies that are growing that they can talk to, because for them having access to the right deal is make or break.

Grant Munro:

So because of our growth, and because we worked with the freelance network, our LinkedIn profile look like we had a huge employee growth relative to our crunch base stats on how much money we raised and it was really, really attractive being in Canada. So we got tons of inbound interest from tier one venture firms growth equity, for all across the board that were interested in talking to us and interested in investing in FlashStock.

Grant Munro:

So we kind of had, it was very early conversation, but we kind of had to pick, we had to pick. We weren’t actively seeking, I had a pretty generic investor deck and just given our numbers and our growth and our market, it became very, very appealing in parallel to that. So I was never actively looking to sell as a sort of caveat and there’s some interesting learnings there for sure. I knew that because I hadn’t worked heavily in the creative space, I wanted to know the ecosystem as best as possible.

Grant Munro:

So when we first launched, I reached out to different agencies, different stock photo companies, different content management systems, just so I could try to understand the ecosystem in the landscape. Inevitably, you’ll get in touch with the corporate development team and 95% of those conversations don’t go anywhere. I do remember getting in touch with the corporate development person from Shutterstock in 2014.

Grant Munro:

We got along really well. He’s a great guy. We’re still friends now. He said to me, right off the bat, it’s like, “Hey, I think what you’re doing is interesting, but we would never acquire you because your model is just so different than our model.” I’m like, okay, makes sense but I’d love to stay in touch because we’re in the same industry, we’re serving the same client, so it’s good to know each other. They’re based in New York, Shutterstock’s based in New York.

Grant Munro:

So then basically, every quarter, two quarters, I would be in New York for sales or customer meetings and I’d grab a coffee with this guy, and I’d explain our progress and I’d say, last time you talked to us, we were five people and with an idea. Now we’re 10 people with twice as many customers. Now we’re 30 people, and it became this almost natural diligence for them because I’d give them updates on a regular cadence and they’d track our business and see our business and the proof is in the pudding in terms of your progress.

Grant Munro:

You could tell he was getting more and more excited but I never assumed that they would be an acquirer of us and I wasn’t actively looking for acquisition. We had a few other qualified inbound offered, not offers but interest to have an acquisition conversation, but never really felt that the company was in a position to do that, because we were just growing so quickly and so focused on growth. We actually didn’t need the capital at all at that time.

Grant Munro:

So then I remember it was the end of 2016 and we had just closed off our year in the sense that we hit our milestones, we hit our metrics, and we were having a big Christmas party and a big celebration. I had a conversation with that same individual that I’ve been talking to for about two, three years. I basically told him how we finish the year and I could sense the tone of the conversation change. He said, “We got to get you in here and meet the leadership team of Shutterstock.” I was like, “Yeah, anytime. Let me know I’d be happy to meet the team,” sort of put the phone down and never really thought of it.

Grant Munro:

So this was December of 2016. Then in February as we’re now ramping up the roadshow for fundraising, and for us again, it was relatively easy because a lot of it was inbound. So we were just scheduling in person meetings for February March. As I was ramping up for that getting the sales deck and the financials together, Shutterstock reached out again and said, hey, we’d love for you to come in and present. Present to the company and present FlashStock and what you’re doing and to be honest, we are thinking about either a partnership or an acquisition.

Grant Munro:

Because of our growth, I was so excited about the growth and potentially raising a big venture check that I was like, okay, that’s interesting, it’d be good experience but it’s nothing more than that. So there wasn’t a lot of internal pressure for me or no real desire. So I went to New York and their office, Shutterstock’s office is in the Empire State Building, beautiful office. A very startup field, it felt really nice.

Grant Munro:

I presented to their management team, which was a pretty big team, in a pretty big boardroom and I’d been giving the same presentation for three weeks. So I knew it like the back of my hand, and there was no mystery. I noticed that the team wasn’t overly engaged and when you give big presentations, you can usually tell by body language, if the team is really, really into it and it just didn’t feel that way, like people were typing on their computer. And I wasn’t getting a lot of really deep questions.

Grant Munro:

So in the back of my mind, I just said, well, this is kind of a waste of time. I think the only question I got was, you’re a Canadian company, you sell to US customers. How do you feel about currency, exchange rates? I was like, I don’t think about that at all. That’s so far from my mind. I remember leaving that meeting and chatting with the corp dev guy and saying, “Yeah, wow, that was a waste of time.”

Grant Munro:

He’s like, “No, no, no, it wasn’t. That’s just how the team works.” So I didn’t think anything of it. So I finished my other meetings in New York and I remember I got back to Toronto, and he had emailed me and said, “Hey, everyone loved your presentation,” which I was surprised about. “So we would love to come in and meet your team and do a deep dive on all things FlashStock.” I was really hesitant to do that because we were a relatively small company.

Grant Munro:

Having this big player coming in and snooping around, people are going to get massively distracted and because we were in the process of potentially raising money, continuing our momentum was very, very important. So I said, “You can come here, but you can only spend time with me. I don’t want to distract the team,” and they understood that and so a team of two or three, this was early February, flew in to Toronto, we went out for dinner, and then spent the day, one day going through everything.

Grant Munro:

Going through the product, the financials, the future opportunity, the staffing, the union economic, everything and it was all relatively high level. I didn’t think that much of it. It was basically the same stuff that I would show an investor that was starting to get a bit serious. It was a good conversation. So that was on a Tuesday or Wednesday in February and then they went home. On Friday at like 5:30, so I hadn’t heard anything. I received an email from a senior person at Shutterstock, with basically like a term sheet, with a pretty wide range, but a range that was similar to the ranges that we’ve been chatting with our investors in terms of where they would ballpark our valuation.

Grant Munro:

So I was like, oh, very surprising but definitely not insulting. Could be interesting and serendipitously, I had been talking to an investment banker, who I got along with really well, who was Canadian, who I was probing them to see how they could help, if they could with a big financial raise from venture firm, and they weren’t interested but someone was-

John Warrillow:

They were not interested?

Grant Munro:

No, they were more M&A, larger deal M&A, not really helping with the fundraising. So when this deal came in, sort of pinged them and said, “Hey, random, but I just got this inbound term sheet. It’s interesting. Should we chat? We chatted and he fully agrees that this was a qualified opportunity that should be worth pursuing. Then we engaged their services and they helped us through that process.

John Warrillow:

So you had on that term sheet, it was an offer range as opposed to an actual number.

Grant Munro:

Yeah, yeah.

John Warrillow:

You think it’s between x and y.

Grant Munro:

We think it’s between x and y. We think it’s cash in stock, but we don’t really know yet because we haven’t done any diligence. The thing that the buyer is trying to secure at that point is exclusivity on a deal. So as part of that, there’s an exclusivity period of 45, 90 days where you can’t do anything else other than talk to this company. If another acquirer comes along, you’re contractually not obliged to have that conversation. So there’s a vested interest from them and there’s a vested interest for you. This is where the investment back strategy became really, really interesting is how to play this and how to how this all plays out.

John Warrillow:

Yeah, and what did they suggest and what did they do? What strategies did they take?

Grant Munro:

Yeah, so at the time, we had two other suitors that were interested sort of kicking the tires, but not really serious.

John Warrillow:

The other suitors were looking at making an investment or a full on acquisition?

Grant Munro:

An acquisition, but very, very early, like hey, let’s have coffee with the CEO, hey, you’re interesting. If you ever want to buy you should sell, you should reach out to us. So a big learning for me. So my instinct when I got that letter was to respond and say, hey, thanks, but we also have other competitors at table, up your offer, and the banker said “No, that’s the worst thing you can do. Because if you play the competitive card too early, it could scare them away and think it’s going to drive yield price up. You’ve got a banker, you’re going to run a process and they’re basically going to get squeezed out, so they’ll just disengage.” So the play was basically sort of slow down Shutterstock and try to speed up the other companies. Try to get to a place where you’re getting three term sheets all at the same time.

John Warrillow:

Simultaneously.

Grant Munro:

Simultaneously, which is really hard thing to do because, getting big companies to move fast on anything is hard. Getting companies that want to move fast, getting them to slowdown is also hard. So it became this game of, trying to speed people up and try to slow people down but the process was simply telling the potential buyers, hey, if there’s an opportunity to sell. If you want to sell you have to do a bit more diligence to get to a fair valuation. Once you’ve done that, you can give us an educated offer and then we’ll in a better position to negotiate.

Grant Munro:

So that was the first learning is how and when to use competitive pressure to move a deal around. So we tried to do that and in reality, we weren’t able to get the term sheet for those other prospective buyers and that was a good learning for me is, like anything in life, it’s kind of a low probability event, because there’s so many things have to line up for a company to be acquired, especially at that size. So it has to be a strategic priority of that company. There has to be enough people there to manage a process because it is quite time consuming.

Grant Munro:

You as a company have to have the right profile and the right market, the market dynamics have to be a certain way. So to get all that stuff to line up and have three qualified offers at the same time, it’s like such a low probability event. Because we weren’t doing a fire sale, putting ourselves off to auction, you couldn’t really force it. People either wanted to be in that market or they didn’t and that was just a reality.

Grant Munro:

So we sort of had that messaging back Shutterstock say, hey, thanks but no thanks, super excited by this prospect, but go away and do some work. We’ll tell you whatever you want to know, go and do some real diligence and come back with a more qualified offer.

John Warrillow:

What was your justification because the offer they provided was too big a range you wanted a lockdown number or how did you-

Grant Munro:

The justification was you hadn’t done any actual homework yet.

John Warrillow:

Right. You guys all came to the meeting and you were typing on your laptops.

Grant Munro:

You haven’t done any diligence, you haven’t even seen our financials. You don’t understand our customer list. You don’t know anything. So what are you basing this on?

John Warrillow:

What was the risk in that in the sense that by revealing that information, weren’t you potentially risking creating a competitor in Shutterstock or sharing some information that they could use against you?

Grant Munro:

Not really. The thing that we always had is we were growing very, very quickly. So if things ever got contentious, we’d just say, hey, we don’t need to do this. Talk to us in six months, and our valuation will be way higher. So we never had that pressure whereas they, I can’t speak for them, but my impression of them was, pay, this thing’s growing like a weed, there’ll be a lot of people looking to acquire them, let’s lock this up as quickly as possible. I didn’t see any downside in terms of giving them a bit more information and slowing them down because we did have these other potential qualified offers. The reality is a term sheet isn’t binding anyway. So even if you signed it, they could go through all your stuff and walk away anyway. So there is no binding piece there.

John Warrillow:

Okay, so what was next?

Grant Munro:

So we couldn’t get the other companies to do a term sheet at the timeframe. So again, exclusivity was a big part of that. So you wanted to make sure that you’re adhering to the exclusivity period because it does lock you up. So we got to the point where the Shutterstock team, great team, strong vision, aligned with our vision, the offer was fair on both sides of the table. We thought it would be given how much we’d raised and the trajectory of the business and we hadn’t taken a lot of money that it was just a good decision.

Grant Munro:

So we had to rally the jets and make sure that everyone was on the same page in terms of should we do this deal or not. The answer was, yes and then that kicked off a 45 day diligence period, which was extremely challenging, mentally- and resource-wise to get to a definitive agreement to ultimately get to a signed purchase agreement.

John Warrillow:

Fantastic. Tell me what was going on with your investors during this time because you had a few friends and family, a couple of angels. What’s the kind of conversation with them like at this time?

Grant Munro:

Yeah, it was really interesting because people had different perspectives. So, for them, if you’re a serious investor, be it angel or institution, you’re looking for a disproportionate return on your winners, like having a three to five x return, because you have so many losses in a diversified portfolio isn’t really going to do it for you. So a good chunk of the investors were just happy to get money back in reality. I’ve been-

John Warrillow:

You’re actually going to pay me back?

Grant Munro:

Yeah, it’s funny. There’s a lot of, especially in the angel side, there’s a lot of people that make really bad investments. It’s really hard, don’t get me wrong, but returning any money is fantastic. Because a lot of them do it for other reasons than just financial, they just want to be connected to the ecosystem and learn. So there was a group that was like, this is awesome, do it. Congratulations. Then there was another group that said, we think this could be bigger, we think you should keep going. We think that this should be 100 x not a 10 x.

Grant Munro:

So for them, it was really around helping them understand what I saw as the opportunity, why I wanted to do it, what were the risks of going out raising a big amount from an institution and then trying to push the goalpost down even further. So it was an interesting conversation, but in reality for me, I had a really good conversation with an amazing angel investor. His name’s Chris Burggraeve. He was the ex global CMO of Anheuser Busch and I said, “Chris, I’m hearing conflicting information from investors. Half of them want this and half of them doubt. What do you think?”

Grant Munro:

He summed it up nicely. He said, he’s like, “Grant, will this transaction be life changing for you?” I said, “Yeah,” and he’s like, “Do it. Don’t feel bad, do it. Get it done.” He said, “For me, this won’t be. It’s nice to get money back. Don’t get me wrong, but this isn’t going to change anything for me. So I would rather you go for the grand slam home run than sell now, but I appreciate that this will be life changing for you and you don’t pass opportunities by, you just don’t.” So for me that meant a lot and was a big catalyst to the decision to do it.

John Warrillow:

I imagine, great advice. What the economics on the deal? I understand Shutterstock made it public. They’re a big public company, $65 million total price tag. Did they release what your revenue was at the time? I’d be curious to know what multi revenue, do you do talk about that at all?

Grant Munro:

No, they don’t release any information like that in any business unit. So now we were a business unit of theirs.

John Warrillow:

I see.

Grant Munro:

They don’t report at the business unit level.

John Warrillow:

Got it. Got it. Got it. Why was diligence so hard? Could you-

Grant Munro:

Yeah, I never really appreciated what it would entail, because we weren’t, I didn’t think we were a big company. So I was like, we only have so much stuff to go through and people kept telling me, get ready for this and it was really overwhelming and things that you don’t consider, tax was a big thing. All the different laws and Canada versus the US. So a couple of examples there. We had a few contractors in the US that we were hiring and there was a risk that the IRS in the US would view them as they should be full time employees, and as a result you’re exposed. So that’s one example.

Grant Munro:

Another example is if a foreign entity is buying a Canadian company, and that company is deemed as a cultural business, then it has to be approved by an MP in Ottawa. So the next question is, what’s a cultural business? Canada deems a cultural business that’s any business that’s creating original content in Canada. So they’ve actually blocked major trends. There was, I think it was a big hardware store that had an internal flyer that was part of Canadian culture, so they blocked an acquisition because of it.

Grant Munro:

So because we were creating content it became potential, but we didn’t know any of this. The Shutterstock team had hired an external legal counsel who was looking at all of this and when you’re under diligence, all you do is receive request after request after request after request for information. Because it’s so time bounded, you have to provide all of this and we were under resourced, and it just felt like this, every time you thought you were finished, you’d say, oh, yeah, we just have a few more questions.

Grant Munro:

You’d get this 80 point spreadsheet where they were asking for all of these other things. It never stopped, for 45 days every day. It’s constantly poking holes in your business. So if you think about it, when you get that term sheet and the initial commercial contracts, that’s the maximum value that they will pay, and diligence is all about bringing that value down and looking for all of the holes in your business to basically negotiate that down and down and down and down.

Grant Munro:

So it became a very challenging thing, because not only we were dealing with that, we wanted to keep the business running. We wanted to make sure that it was executing, and people were focused. So we didn’t tell, there were only two or three people in the company that knew this was going on. Our head of finance, our COO, no one else knew. So we were almost living these separate lives, sort of sneaking into boardrooms, and having these conversations with the fear of distracting.

Grant Munro:

Because as you’re going through the process, the buyer is looking at your results. So if your results don’t meet what you had forecasted, it raises questions. It’s like, why didn’t you hit your sales forecast? What happened? It just adds, that’s the number one deal killer and all of these scenarios is you don’t hit your numbers through the process, and they get scared and they back away. So you’re constantly juggling these two things at the same time and it’s really challenging to context switch.

Grant Munro:

For example, there’ll be a performance issue with an individual employee and you’re thinking about closing this huge deal. Then you have to go to another meeting about this tiny little, what seems like a really small thing and it’s really hard to sort of jump back and forth.

John Warrillow:

I should imagine. How did you handle their attempts at retrading, the negotiating lower price as a result of things they found in diligence?

Grant Munro:

So we used an investment banker, and because I’d never gone through that, and investment bankers aren’t inexpensive. They were very, very helpful in that process in terms of giving background, explaining the pros and cons of negotiation tactics and basically instructing what we should do and how we should handle it. I found it extremely valuable resource. There were instances in the negotiation where, because of a missed forecast, trying to bring the overall value down, and then sort of push that value into future years into more of internet scenario.

Grant Munro:

So it’s like, hey, you’re short on your forecast by 10 percent, we want to bring the deal size down 10% but if you hit your number for the year, we’ll pay you out as part of the earn out. Logically, that makes a ton of sense but then an investment banker would say, that’s a terrible deal. Because as soon as you sign that paper, it’s their company, and you don’t know what they’re going to do with it. They could reorg and then you have no chance of hitting your number then and so why would you be accountable for that?

Grant Munro:

So it’s stuff like that, that becomes really empowering from a negotiation perspective. If you’ve never gone through it, and you’ve never thought about it, and you’ve never seen what happens post acquisition, you just don’t even think about it. It’s an unknown known. So when they bring that to light and act as the bad cop in the negotiation, it’s extremely valuable. So we got more than our money’s worth for what we paid with this investment.

John Warrillow:

How did you handle the earn out piece? Oftentimes these deals, they want to put it all in the future all upfront.

Grant Munro:

Yeah, they were actually really good about it. They recognized our growth, they recognized that they wanted to incentivize the employees and the shareholders to get the deal done. So they created a really seller friendly agreement that was heavily incented on the performance side. So they handled it well. I think of all the horror stories that you hear out there, we weren’t one of them. Maybe the execution is always something that’s up for debate but I think in terms of dynamics and structures that they did it quite favorably.

Grant Munro:

I think where it gets messy is you have employees, and you have shareholders and shareholders are not employees. If the earn out becomes part of future value, that’s really dependent on the employees, it can become quite messy because the shareholders are sort of waiting for this payment that they have no control over. It’s always cleaner to have those negotiations as two separate things and say, let’s talk about what we’re going to pay the shareholders and then be done with it.

Grant Munro:

Then let’s talk about a structure that makes sense for the employees who are staying on and sort of break those two things up, as opposed to negotiating them all together. So that was also good learning in terms of how the deal went through is like, let’s talk about this and then let’s talk about that. Let’s not talk about these things together.

John Warrillow:

Right. So you separated out and we’ve got shareholders that need to be paid for what’s been created and we’ve got employees that need to be incentivized for staying and future. Got it. Got it. What was life like after the sale?

Grant Munro:

Yeah. So immediately after the deal, because they were a public company, it had to be disclosed through the SEC, had to get permission and then a press release had to happen. So you immediately got this wave of congratulations, which was amazing. The day was exciting, day one was exciting. You felt amazing. The team was super excited, especially the team because we had been so scrappy, and we didn’t have a lot of resources. It felt like we’re finally going to get the support that we need it.

Grant Munro:

Customers were excited because they knew we had the backing of a tier one legitimate company and then yeah emotionally for me as the founder, it was something that you’ve been building up in your head for decades and then to have it actualize and be like, wow, this is changing my life was hugely emotional, hugely exciting, great for the family, great for the network, and one of those moments that you’ll never forget and you’ll look back on favorably for sure.

John Warrillow:

Where were you when the definitive share purchase agreement was actually physically signed?

Grant Munro:

So it was really interesting. Because we were growing really quickly, we wanted to shorten the exclusivity periods as short as possible. I think an average is about 90 days. Ours was about 45 days. So it’s a ton of work to do in 45 days. So there was a ton of pressure on both sides. So through that whole time, we were kind of working against this end goal of getting everything done, all the diligence done by a certain date. So within the last 48, 24 hours, it became clear on both sides that yeah, this deal is going to get done, we haven’t seen anything that isn’t going to allow us to get this deal done.

Grant Munro:

So we basically had written down a day of when this would all happen and worked backwards in terms of what needs to be done. So what needs to be done is someone has to send the appropriate forms of SEC, a press release has to be written and sent out. The employees need to be told, all this stuff has to happen. So you kind of create this project management schedule. When you’re doing the SEC stuff, they close the office at 4 PM. So it all has to be submitted by 3:30 or something.

Grant Munro:

So the day before it was supposed to close, we were talking to the Shutterstock team, and they agree that they were going to fly in that day and wait in a coffee shop, this is in Toronto, wait in a coffee shop around the corner until everything is signed, and then we will have a company update meeting and tell everyone as the press release is going out in the background that this is happening, then the Shutterstock team is going to walk in and say, congratulations.

Grant Munro:

It was all very orchestrated. However, there was a lot of work that needed to get done in that last 24 hours. So one of the things is, there’s the paperwork and the red lining, of course takes forever, but you’re doing that ahead of time assuming that nothing will go wrong. So that work is generally done ahead of time, and then you’ve signed everything, and they get uploaded into an escrow.

Grant Munro:

It’s not officially signed until all signatures are released through this escrow. So everything’s been signed, there just has to be an agreement on both sides to release the signatures. Before everything needs to be released, everyone has to agree on everything and one of the things that you have to agree on is this disclosure schedule, which basically lists everything in your company.

Grant Munro:

Every employee, every customer, every contract all the accounts everything, and it’s this huge file that takes a month to create and if anything changes, like you sign a new client, it has to be updated. Because if that has to represent the immediate time of signature, or it’s no longer valid, and if you knowingly exclude something, it’s negligence.

Grant Munro:

So we’re trying to run the course of business and deals are being closed and the signature is forgotten and so everyone’s scrambling to get the sheet. Because as I mentioned, the plan was it would be centered around 3:30. The press release would happen at 4, I would have a company up all hands at four o’clock, the Shutterstock team would walk in from this coffee shop at 4 PM. So it was all orchestrated, but it never played out that way because it was taking so long to update all of these disclosure sheets.

Grant Munro:

So it was around to sort of set the stage big open office space, myself and our VP finance were sitting in this little office room, meeting room with no windows and a conference call. That was we had the other legal team and the escrow on the line. Everyone’s frantically trying to get these disclosures in order and it’s sort of 3:50, 3:55. I can hear the company getting together for the all hands, like putting the chairs together, you hear the background noise, and that’s literally happening outside of the door and everything’s done.

Grant Munro:

We’re sort of waiting for their approval. It’s 3:50, it’s 3:55. It’s 4:05. So we’re now past the deadline. You don’t hear anything and then all of a sudden the escrow agent sort of patches on and says, “Okay, signatures have been uploaded, deal’s done.” So I stand up and give my VP, finance who’ve been working tirelessly for a month a huge hug, and we walk out and announced the deal to everyone, the company cheers and then the Shutterstock team comes in and this is all within 30 minutes. Then because it’s a press release, my phone’s blowing up and yeah, it was an amazing day. Amazing afternoon for sure.

John Warrillow:

Wow. Did you do anything to mark it? Did you buy yourself a trophy? Was there some sort of physical memento that you indulged in?

Grant Munro:

There wasn’t actually. I kind of went the other way. I started to recoil all the luxurious commercial stuff, and I don’t know why I still can’t explain it but I didn’t do that. Maybe I will at some point in the future. Everyone asks me that, but I didn’t go off and spend a bunch of money on something frivolous. So I came back to work the next day and continued to do what I wanted to do.

John Warrillow:

How did your emotional state sort of continuing as time passed?

Grant Munro:

So it was really odd. Obviously the buzz of the deal and congratulations continued for another month or so and a couple of interesting things happened. First, for about six to 12 months, and this is going to sound kind of horrible, but it changed my perspective on what any individual can accomplish themselves. So for me to have this idea of starting a company, sell it and make life-changing money and impact and there’s nothing special about me.

Grant Munro:

I felt lucky that I had this realization that you can literally do anything you want and I felt a little bit of sadness to people who didn’t like their jobs, and realized that they could actually do whatever they want. They just haven’t seen the light like I’ve seen it and it almost, I created this weird mental separation for me and what felt like a lot of other people and it wasn’t I was better or worse. I just felt different. That’s gone away now, completely but that last lasted for like six to 12 months where I just had this clarity on, you can literally do anything you want, you just have to go out and do it and figure it out.

Grant Munro:

If you’re not doing that, there’s something wrong. So that was a little unsettling for a while and then the other thing was the finances, and this everyone saying congratulate, it didn’t make me happy. It didn’t make me happy at all and in fact, the realization that it didn’t make me happy actually had a worse effect, realizing that I’ve been striving for this goal for my whole life, achieving it, and not getting the happiness that I thought that it would give me was a real sort of kick in the stomach.

Grant Munro:

It’s taken me a year year and a half to recover from that. And I don’t even know if I’m fully recovered from it. Now, the problems of working hard and paying the mortgage and saving your RSPs have been replaced with what am I doing with my life? What’s the meaning of my life, all these existential questions that I never had before her now propping up.

Grant Munro:

It’s very surprising and it’s difficult. It’s different than the other problems that I’ve had but it’s something I didn’t consider and it’s something I implore anyone that’s selling their business is to really think about why they started the business in the first place and realize that once you’ve sold it, that’s gone and it’s no longer yours. You can either start another company, which is really, really hard and low probability event, or you can do something else, but recognize that you’re no longer going to be the person that created this company and is running this company.

Grant Munro:

You’re going to be someone who’s off to the side and thinking, is that really what you want and thinking about that beforehand. Putting the money aside is something that I wish I had thought about more than I did.

John Warrillow:

As you think about it now, what have you found to be helpful to manage through those periods of sense of loss or are there things you do, practices you have that get you through those periods?

Grant Munro:

Yeah. So the things that I found really interesting for me is mindfulness. So my family moved here from Scotland. So it’s so foreign to them but meditating and thinking about all the things that you never thought about is super important stuff. So for me a couple of things were it kind of forces you to think about what your purpose in life is, for me was and what legacy that you want to leave.

Grant Munro:

So I was in a scenario where I started a business, I had a huge amount of success, a lot of that was driven by external forces that had nothing to do with me and is this what you want to be known for the rest of your life and is this it? You don’t need money, you don’t need to work, what are you going to do? What is your purpose and spending time meditating on that, thinking about it and thinking about in the context of your life and your family and coming to a conclusion is something that’s been really helpful.

Grant Munro:

So for me, what I’ve landed on is having the ability to start a business and control your own destiny and create value is one of the most amazing things that you can do in the world. Not having to be dependent on someone else for your income and your livelihood is hugely empowering and I have two beautiful young girls and I want to pass that gift on to them. I want them to understand that they can do that and I want to give them some tools around how they do that.

Grant Munro:

So my purpose has shifted towards that and now anything I think about doing in the future is if it helps me become a better entrepreneur, become a better business leader, and allows me to codify that and systematized that in a way that I can pass that on to my kids, super empowering. Anything else that has nothing to do with that, I don’t want any time. I don’t want to touch it. I don’t want to waste any time thinking about it. I want to focus purely on that.

Grant Munro:

It’s a working backwards. From there, it’s either getting involved in another business at a different stage or starting it again and being really thoughtful about how to do it and thinking about it and reflecting on it and capturing those thoughts and bringing my girls and family into that and making sure that they’re learning from that. It’s forced me to have that level of discourse with them. Also, that level of internal thought on myself, which I never ever had before. For me, it was always about getting the next big raise, getting the next big title, starting a company, signing the next big customer, getting an exit, like it was never really that existential.

John Warrillow:

I think your daughters have a lot of fortune to have such a great old man.

Grant Munro:

Well, we’ll see. They’re too young for me to do much damage at this point.

John Warrillow:

I wouldn’t mind seeing where they’re going to be in 30 years. Let me know where I can invest. Grant this has been just hugely valuable. I am really grateful for, both some of the tactical stuff you shared, which is really valuable, but also just some of the emotional side, which is hard to talk about, but I think you did a beautiful job of just describing with great clarity. So I appreciate you. I think you’ve done a huge service to a lot of people today.

Grant Munro:

Awesome. Thank you, appreciate it.

John Warrillow:

Is there any, you’re going to have 1000 people reaching out over whatever social media platform. Do you accept LinkedIn connections or is there a place where people can reach out and say hi?

Grant Munro:

Absolutely. Hit me up on LinkedIn. Just search Grant Munro and find my profile and yeah, anyone out there that needs help, happy. I have time now. So, please reach out and I’ll do my best to give you some value hopefully.

John Warrillow:

Grant, thank you for doing this.

Grant Munro:

Okay. Thank you.

John Warrillow:

All right. Take care.

Grant Munro:

Cheers.

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