To read a transcript of this episode, click here.
In 2012, Gabriela Isturiz co-founded Bellefield Systems, a company offering a timekeeping application for lawyers. Over the next seven years, Bellefield grew to 45 employees when Isturiz decided to hire an advisor to find a strategic investor. Given Bellefield’s growth and success, Isturiz was hoping the process would garner a valuation of 5-7 times Bellefield’s Annual Recurring Revenue (ARR).
Along with investment proposals, Isturiz also received several acquisition offers, which she deftly played off each other. Ultimately Isturiz managed to increase the bidding price from a shortlist of acquirers by as much as 40% before she consummated a transaction with Aderant, a division of Roper Technologies.
As you strategize how to emerge from this pandemic, it’s worth considering a few of the pillars that made Isturiz’s company so valuable.
Financials: Bellefield enjoyed an EBITDA margin north of 25% — almost unheard of for a fast-growth Software-as-a-Service (SaaS) company.
Growth Rate: Acquirers care about the future, which is why your growth rate plays a significant role in how they will value your company. Bellefield was growing 50% year over year, which is one reason they garnered more than a dozen acquisition/investment offers.
Recurring Revenue: The most significant reason Bellefield grew so quickly was that they were able to retain 98% of their income from one year to the next and 95% of their logos.
Monopoly Control: Instead of offering a generic timekeeping software, Bellefield focused on timekeeping for lawyers. Niching down to one segment allowed Bellefield to build a platform that integrated with 32 of the most significant practice management platforms lawyers use, which made it challenging to compete against Bellefield.
There are lots of other surprising insights in this interview, including:
As Isturiz evaluated more than a dozen acquisition and investment offers, she hired a coach to help her think through what she wanted. If you would like a second opinion on your strategy to emerge from this crisis, consider requesting a call with a Certified Value Builder™. Our team of professionals can help you see how your business would be viewed by an acquirer and give you some critical things to consider as you start to re-build.
Gaby Isturiz is a serial entrepreneur, experienced CEO and founder of two successful SaaS (Software-as-a-Service) technology companies in the legal and professional services vertical. In 2012 Gaby founded Bellefield Systems, the global leader in time tracking and compliance technology for lawyers, and under her leadership, the company experienced over 900% growth in just 6 years. In December 2019 Bellefield was acquired by Roper Technologies (Aderant division) a constituent of the S&P 500 ®.
Gaby was named winner of the EY Entrepreneur of the Year, Business Women First award, a recognition given by the Pittsburgh Business Times, CEO of the Year Finalist and twice Smart 50 Honoree.
John Warrillow
Don’t you love it when the good guys and gals win? My next guest is a great example of that. Her name is Gaby Isturiz, and she started a company, very simple business, timekeeping for lawyers. Simple for me to say. But let’s let Gaby disabuse me of that fact. But in this episode, Gaby talks about the growth of her business, the key performance metrics that she looked at, that made her business so successful. She ultimately viewed it to be worth between five and seven times top line revenue. She got 12 acquisition offers.
John Warrillow
What I loved about this interview was how she deftly played one acquisition offer off the next. She ultimately had 12 offers. She brought it down to a list of four, and got one acquisition offer up by 40% as she’ll describe in this episode. Lots of really interesting tid bits for you as an aspiring value builder. Listen for the importance of the niche that she focused on and how she got a defendable market position, how important growth in her financials were in her acquisition. And just recurring revenue is such an important, secret sauce to the entire evaluation algorithm. It was a pleasure to talk to Gaby.
John Warrillow
Here to tell her story is Gaby Isturiz.
John Warrillow
Gaby Isturiz, welcome to Built To Sell Radio.
Gaby Isturiz
Thank you so much for having me.
John Warrillow
Tell me about this company iTimekeep. What did you guys do?
Gaby Isturiz
Yeah. Actually the company name was Bellefield and-
John Warrillow
Okay. The product name was iTimekeep.
Gaby Isturiz
iTimekeep, right. Right.
John Warrillow
Yeah, okay.
Gaby Isturiz
So, Bellefield is/was a legal technology company, which was solely focused on helping lawyers to capture more time, yes.
John Warrillow
Mm-hmm (affirmative)
Gaby Isturiz
And also, we made sure that the time that they captured was in compliance with what the clients wanted and also what the clients were willing to pay.
John Warrillow
Right. So this was an application. If I had an iPhone or an Android device, I could track my time I was working for a client on my device, and it would somehow get pushed up to the cloud?
Gaby Isturiz
Exactly, exactly.
John Warrillow
Got it.
Gaby Isturiz
Everywhere. Pretty much.
John Warrillow
Got it.
Gaby Isturiz
So, it didn’t matter where they were in the world, right? With any device, any computer, they were able to capture their time and make sure that, that time was the time that was going to be paid by the client.
John Warrillow
I know there’s a lot of timekeeping apps out there. How was yours different or tailored for lawyers?
Gaby Isturiz
Yeah. There are a number of them. I think what set us apart was our business model and value proposition. And we were the first SaaS timekeeping and compliance platform in the legal industry.
John Warrillow
So, okay. But I think there are lots of other timekeeping apps out there. What I’m hearing you say is the compliance piece was important. Is that right?
Gaby Isturiz
Yeah. In legal, most of the law firms, they already using some sort of billing system, timekeeping system. What set us apart, it’s this was the layer that will sit on top of their practice management system or call it ERP that will integrate with any system that the law firm had. So we integrated with 32 legal ERPs. So the convenience for the law firm was basically the ability to enter time from a mobile device anywhere they were in real time connected with their ERP system.
John Warrillow
I see. Because a lot of their work is done when they’re in the car, or the coffee shop, on the elevator. They want to capture that time. It’s not always sitting at their desk where they have access to their ERP system.
Gaby Isturiz
Correct. Think a little bit of…. like Concur, right? So you will use Concur for expenses. Right?
John Warrillow
I don’t know Concur. What is that Concur?
Gaby Isturiz
Oh, Concur is one of the largest expense tracking systems.
John Warrillow
Okay.
Gaby Isturiz
And kind of like a similar… Our goal was to become the Concur of time, right? But it’s very specialized. So we added engagement, we added gamification, a lot of metrics and KPI to not only helping them to capture more time, but also help them to capture more time through better behavior.
John Warrillow
Got it. Yeah, because anyone who bills by the hour, the bane of that manager existing is getting people to fill out their time sheets. It’s always an issue.
Gaby Isturiz
And it’s painful, right?
John Warrillow
Yeah.
Gaby Isturiz
And there is a lot of revenue to be leaked.
John Warrillow
Lost?
Gaby Isturiz
Mm-hmm (affirmative)
John Warrillow
Yeah.
Gaby Isturiz
Yeah.
John Warrillow
How important was… and let me ask you a different question. You had this idea of becoming the Concur of the timekeeping space, is that right?
Gaby Isturiz
Exactly. Mm-hmm (affirmative)
John Warrillow
Why did you come up with that analogy and how did you use an analogy to communicate your vision in your company?
Gaby Isturiz
That analogy help us really well. And we use Concur because pretty much anybody, professional services, even investors that cater to the professional services industry and technology, they’re pretty familiar with Concur. So, it was the perfect analogy because a professional services… professional, they track time, right? And they track expenses. So, there was no in the market for legal something as simple and sleek as Concur for entering time. And again, we became the leader in timekeeping for legal.
John Warrillow
Got it. And so, how did you finance the business? What was your journey?
Gaby Isturiz
Yes, that’s a very good question. We had started out in 2012 and we bootstrapped the company. We didn’t have any outside investment. And we were lucky enough to have another liquidity event years prior, from our first company, which was also in legal. It was eBillingHub and we sold that company to Thomson Reuters. So, we were pretty lucky to have some ability to fund the new venture. But we bootstrapped. We started out with three and in 2012 and in 2019 we were over 45 people.
John Warrillow
Wow.
Gaby Isturiz
Year. One year later, we were already profitable. And we were growing 40-50% year over year.
John Warrillow
Wow. Fantastic. Who’s the we, the three of you? Were you all co-founders together or who funded the first [crosstalk 00:09:21]
Gaby Isturiz
Yes. We had started out two of co-founders, myself and my… Daniel Garcia, my other business partner. And then, we had a third business partner to join us. So, a little bit like a few months later. But yeah. We just started out, the three co-founders. My expertise was a little bit more in running and building companies, operation, finance. One of my co-founders, Daniel Garcia, his expertise was buildings SaaS platforms, which we already did successfully in the eBillingHub. And then, we had another partner John Kuntz that started doing the sales and the business development.
Gaby Isturiz
So, we had a pretty good set of skills together. So, that’s why we didn’t have to go and raise money.
John Warrillow
Got it. And how did you make money? What was the commercial relationship you had with customers? Did you charge them on a SaaS monthly basis, annual? How did you charge?
Gaby Isturiz
Year, our revenue model was a subscription model. It was a yearly subscription by which the law firm… And we also had accounting firms. Not that many, but we had one the largest accounting firms in the world as a client. But will pay a subscription fee per user, per year.
John Warrillow
And did they pay for the upfront?
Gaby Isturiz
Yes. Yeah. And we had some that they will pay quarterly. But for everybody it was a yearly subscription.
John Warrillow
What did it cost to subscribe? What was the cost per user?
Gaby Isturiz
To get started it was $40 per month, per timekeeper. So, about $440 a year.
John Warrillow
And was your strategy to go for the very large law firms or midsize? Who did you target within the legal space?
Gaby Isturiz
That’s a great question, because in legal and even in professional services, the market is pretty well divided in large, medium and small. So, our strategy was, we want to democratize timekeeping for everybody. So, we decided that we really do not care about the size of the organization and we catered to a small firms from five lawyers, all the way to accounting firms with 5,000 timekeepers, or law firms with 10,000 timekeepers.
Gaby Isturiz
So, the value proposition was such that no matter what you’re using, our client is actually the lawyer and the simplicity for them. So, that strategy was a complicated one, because that the way large segment buys, it’s slightly different from the small segment. And the way that you market to the big segment, it’s different.
Gaby Isturiz
So… but yeah. We started out actually with a mid market. Why? Because the sale cycles were faster. You have quicker access to the decision makers, and that allows to build a very robust customer base. And then we started getting into the very larger space, which is the space where everybody wants. And for the smaller, it was a little bit more self served. We did a lot of email marketing, content marketing, so they could find us through SEO and those type of things.
John Warrillow
Got it. So, if I’m just Joe, working at my home, I would buy it online through your online channel? Is that correct or would I talk to your sales person?
Gaby Isturiz
You need to buy through a sales person. A big portion of our distribution channel, it was through direct sales. So yeah, we had some partners here and there, but the big bulk… the bulk of ours sales was through direct sales. So, had sales people that only sold to the large law or to the large market. And we had sales reps or account executives, however you want to call it that only sold to the small market.
John Warrillow
How did you herd cats at law firms? So, my experience selling to lawyers, which is somewhat limited, I will admit. But I did it very early in my career and I found it really challenging, because you have these big egos, all of whom think they know better, all of whom have a hack or a way around, and getting really big ego people to all agree to something is impossible with my experience. So, what was your secret?
Gaby Isturiz
John, you’re absolutely right. You’re absolutely right. I think the secret… the secret was, we had something that lawyers wanted. And if they wanted it, they were going to do whatever they needed to do. Talk to the CFO, talk to the CIO, to make it happen. But part of this as well, it was pretty innovative. Right? When we started out in 2012, the iPad just came out, right? Still the iPhone was kind of new, BlackBerry was kind of in transition. So, there were already used to having BlackBerries. They saw the benefit. But I think the secret sauce, it was a very simple value proposition. Right? Grab your phone, put your time in, you don’t need any training, and it works. So, yeah.
John Warrillow
Got it. Okay, that’s helpful. And at the same time, it has me think, how did you defend your territory? Because any three guys in a basement could come up with an app. They do it now in these hackathons. In a weekend, you could come up with an app. How did you defend against people, given the simplicity of what you created, how did you protect it?
Gaby Isturiz
Yeah. We had some patent pendings in terms of the indemnification. But we built up a SaaS timing compliance platform that, it was hard to replicate, because it connected with pretty much 40 ERPs in professional services. Right? And it was extremely simple. It would take us about an hour to deploy the solution. So, in the surface, right, it was very simple to use. But I think the architecture was pretty unique and John, I’m all for… I’m not afraid of competition. Right? If you can build this, make it faster, cheaper and better, right, and you can make the sales that we’re making, right, you deserve it all.
Gaby Isturiz
So, there was… But even today, there is no one competitor that has a SaaS solution like the one we built. Even John, in our prior life with eBillingHub, we created arguably the first SaaS solution, back in 2003 when it wasn’t even called SaaS. It was called Application Service Provider. Right? Back in the day, right? And so, we had a track record of building innovative platform, so when we sold eBillingHub, still there was not a competitor. So, we knew the market well, right? We knew the players and we knew what it will take to really compete one-on-one with us.
John Warrillow
That’s helpful. What was the trigger… You take me up to 2018, 2019, you had 45 employees growing obviously very quickly from 2012 to 2019. What made you want to sell? I understand you weren’t actually intending to sell in the beginning.
Gaby Isturiz
Yeah. And I think, John, you can relate to that. As entrepreneur, it’s part of the plan to have a successful liquidity event. That’s the point, right? And actually, one of the things that we kept in mind… Early on, it’s how we build a company that we can sell for the number that we want. Right? So, we knew that, that was happening. So, we were growing very rapidly. So, we wanted to partner with a financial investor or raise some capital to really take the company to the next level, right? Increase the growth from 50 to 75%, because the market was prime at that point.
Gaby Isturiz
So, we knew that we needed to add more in sales, marketing. I didn’t even have a CFO. We needed to be [inaudible 00:19:25] the executive team. So, initially we intended to be an exercise more for growth investment, but we knew that… growing with a prior equity, we were going to sell probably the majority of the company with the possibility to attract some potential and strategic investors, strategic buyers. At that point they buy pretty much 100% of the company.
Gaby Isturiz
So, we started out a process, John. We just started, we hired an investment banker. So, the process, it was pretty intense. And we got some LOI from both-
John Warrillow
Letters of Intent. Yep.
Gaby Isturiz
Letters of Intent from both, strategic buyers and from financial buyers.
John Warrillow
So many questions to begin with here. Okay, so you get these Letters of Intent. What would you… First of all, before we get into those, what did you think about… How did you think about valuation before you even saw the Letters of Intent and you and your partners were thinking about raising some money? Did you have a sense of what a company like yours was worth in terms of a multiple of… I’m assuming it would be a multiple of revenue you’d be thinking about?
Gaby Isturiz
Yeah, that’s an excellent question. And that’s a little bit of what I… The comment that I made. From the early on, we wanted to build a company that we could sell for the highest multiple. So, we really worked toward some KPIs. The first one was growth. So, we knew if we really focus on achieving these KPIs, we were going to get the multiple that we wanted. Right? So, the first one was growth. Keeping steady growth to be able to show investor or buyers. The second KPI was retention. Retention was extremely important to us and we achieved about 98% revenue retention and we were 95% logo retention, meaning that the accounts that we were losing, they were smaller. Right? In the scheme of things. And then, of course, gross margin-
John Warrillow
Did you clear, Gaby-
Gaby Isturiz
Mm-hmm (affirmative)
John Warrillow
Gaby, just to be clear, when you talked about 95% logo retention and 98% revenue retention, would that be on an annual basis or a monthly basis?
Gaby Isturiz
That was in the annual basis. Mm-hmm (affirmative) Yes.
John Warrillow
Fantastic. Good for you.
Gaby Isturiz
Yes. And of course, we started looking at gross profit margins, right, which is something very important. And EBITDA. So, we were lucky enough right, to have an EBITDA over 25%. So, with those elements, probably you are familiar in SaaS, with the rule of 40. Right? And the rule of 40-
John Warrillow
Describe the rule of 40. I forgot the rule of 40. Remind me what the rule of 40 is. It’s a combination of growth and EBITDA, isn’t it?
Gaby Isturiz
Exactly, exactly. It’s your year over year growth, plus your EBITDA should be something greater than 40.
John Warrillow
Yeah.
Gaby Isturiz
So, that puts you in a category where basically you can have a higher multiple. And not only that, John, but back in towards the end of 2019, the market was very poorly as well. Right? Prior to equity they have very healthy balance sheets. Right? So, we were pretty well positioned to have a great multiple, but in addition to that, the market was primed to pay for that as well.
John Warrillow
Mm-hmm (affirmative) mm-hmm (affirmative) Got it. And so, you guys had the rule of 40. Right? You had EBITDA margins 25 plus and your growth rate was [crosstalk 00:23:57]
Gaby Isturiz
Right.
John Warrillow
Yeah.
Gaby Isturiz
Right, right. And John, we also measure something that I learned. We didn’t have a CFO. So, a lot of these we learned as we go. Right? And we also learned about the magic number. In SaaS the magic number is pretty much the relationship between how much you are spending in marketing and sales, relative to the new recurring revenue that you generate. Right? So, in our SaaS business, your valuation, it’s based on annual recurring revenue, ARR, or the new term is CARR, right, which is contracted annual recovering revenue. Right? So, meaning that anything that is not recurring, right, like implementations, consulting and all that, right, that’s not something that you’re getting credit for. You know what I mean?
John Warrillow
Mm-hmm (affirmative)
Gaby Isturiz
So, we were very, very focusing 99% of our revenue, it was recurring.
John Warrillow
Got it, fantastic. And so, given that 99% if your revenue was recurring and you’ve reached the rule of 40, did you have a sense what range of top line revenue you thought was a reasonable valuation? Again, this is before you evaluated the Letters of Intent.
Gaby Isturiz
Yeah. So, we wanted to be between, anywhere between five and seven. Right?
John Warrillow
Got it.
Gaby Isturiz
X recurring revenue. So, minimum will be a five, right? And with the possibility to get seven, if not eight.
John Warrillow
And did you tell your M&A banker, your advisor, those numbers? Did you share the five to seven number with them?
Gaby Isturiz
Yeah, we did. And of course their positioning is we’re going to do everything to really… to maximize this multiple. Right? And that’s their job. Right? And some times, right, they do have private equity and our… a strategic buyer, they do have their own formulas in math, right, which across the other are pretty consistent. But also what drove a higher multiple for us was that our banker really set up a… kind of like a bidding war, which is something that we didn’t put in the numbers. Right? So, we were able to get that just because we have offers and they were competing for their business, which was very flattering for us.
John Warrillow
That’s fantastic. There’s a school of thought… When you sell a home for example, you never want to tell your real estate agent what your bottom line is, because they’re going to use that against you. They’re going to whisper in the ear of the other side that, “Hey, he’ll probably accept whatever.” How do you mitigate against that with a mergers and acquisitions professional? Once you throw out your bottom line being five, how do you ensure that, that doesn’t become the maximum you’re going to get because the M&A banker talked to the other M&A banker and says, “We can get this deal done if you come up to five.” Do you know what I’m asking?
Gaby Isturiz
Yes, absolutely. But I think the investment bankers are motivated, because they get a cut of the purchasing price, right? So, they’re motivated and there are some milestones, right? There are some accelerators that if they hit, they get more. So, when we negotiated the agreement with our banker, we made sure that we put accelerators, so they were motivated to hit that numbers. And they did.
John Warrillow
Got it, got it. Excellent. So, the accelerator… So, there’s a flat… a success fee that they get, but if they reach a certain threshold, a certain valuation, they get a higher percentage. So-
Gaby Isturiz
Exactly, exactly. And it was-
John Warrillow
And is that higher… Go ahead.
Gaby Isturiz
And it was like a stagger, right? From here, here, you get this. Right? But if you go beyond this, you’re going to get a lot more.
John Warrillow
And is the accelerator percentage on just the incremental amount that they get or on the entire amount? Do you know what I’m asking?
Gaby Isturiz
No, it was just on the incremental that they will get.
John Warrillow
Got it.
Gaby Isturiz
Yes.
John Warrillow
So, for the second X tranche, you get a Y-
Gaby Isturiz
Exactly, exactly, exactly.
John Warrillow
Commission. So, take me back to the Letters of Intent. So, you get Letters of Intent, both from financial buyers, private equity groups, and as well as strategic buyers. What was your reaction to those?
Gaby Isturiz
It was incredibly flattering, John. We had less than a dozen of Letters of Intent. To be completely honest, in our wildest dreams, we knew that we had a good company. We knew that we did a lot of things right. Right? Not because we knew it, because I made all the mistakes already. Right? And it was an extremely flattering event that you can have so many heavy hitters bidding for your business. But it was extremely difficult the process to go from the initial offers to narrow it down to a few.
John Warrillow
Why was that so difficult?
Gaby Isturiz
Pretty much there were… Out of the dozen, right, there were some that they were not competitive anymore. Right? So, those were easy to be eliminated. But at the end, there was a handful. Right? About four of them, which was a mixture of a strategic and financial buyers. And each of those, there had an amazing value proposition. They had amazing teams and it was hard, because you don’t know what you don’t know. Right? So, you don’t know how they might… people, was going to take the transition. Right? And how they’re really going to behave after they acquire the business. But we were very lucky. So, the few that we had at the very end, extremely professional, very genuinely interested in the business and I knew them. And through the process, you get to know them really personal. Right? So, you talk to these people pretty much every day. Right? They know more of my daily life than my husband. Right?
Gaby Isturiz
And yeah, it was really hard to choose one, telling the other ones, no. And we got, like I said, a little bit of a bidding war after that. But it was extremely humbling even for us.
John Warrillow
Good for you. Now, with the bidding war, you had multiple bidders at the table. So, did you say to all four of the short-list, “You’ve got to increase your bid or you’re not going to get it”? Did you actually that “we’ve chosen company A” and company B improved their offer again? How was the mechanics of that work?
Gaby Isturiz
Yeah. Actually, that part of the negotiation was handled by the head of our investment bank. Right? But yeah, so they will say, “We have a…” He couldn’t name any names. Right? And even today, right, that’s confidential. But they will say, “There are other bidders that are a lot higher.” Right? “Can you improve your offer?” And it was so interesting, because some immediately improved it. Right? There were some others that said, “No, I’m not going to play the game.” Right? “And I want to talk to the founder.” Right? “I want to talk to Gaby.” Right.
Gaby Isturiz
And it was interesting as a part of the negotiation, because one of the potential acquirers, it’s, “Hey Gaby, if we are the vendor of choice…” Right, kind of like what you do in sales, right? “Then, I’m going to get you to the number that you want.” Right? “But I’m not going to play this game.” But interesting enough, right, everybody ended up playing the game, right? Increasing their bids and… But they were very consistent. It’s like these people talked to each other, John. Because I don’t know how they did it, right, that when they resubmitted an updated offer, they were pretty similar. So, it was even harder to choose.
John Warrillow
Do you think that the M&A professional representing you was… It sounds like they were feeding information to the people saying, “You’re going to have to increase this. You have to decrease that. You’re going to have to change this.”
Gaby Isturiz
Yeah, he will give them some cues, right. Say, so the minimum just to play, you need to be at least in here. Right? And even we had some that said, “You know what? At that point, I cannot… I’m not going to go. So, I’m out.” Right? So, we had one that was out, out of the four. So, we got it down to three. But yeah. So he will help them to better their offers.
John Warrillow
What was that call like you had with one of the acquirers that wanted to talk to Gaby? What was it like to go through that experience?
Gaby Isturiz
It was terrifying, terrifying. Because I called my banker. Right? And he gives me some talking points. Right? But it was terrifying, because I really love that potential acquirer. Right? Their value proposition, investments that they had made. Right? And you get to play a little bit of… a stone face. Right? You cannot give too much, because otherwise I could’ve ruined the negotiation for the banker. Right? So, it’s a little bit of this and a very hard decision. This is the harder decision that I ever made. We are evaluating our options. We’re lucky enough to have other options that, fortunately for us are higher than yours. Right? So, it will be great if you can do anything better. Right? So, yeah. It was hard. Yeah, it was hard.
John Warrillow
And to be clear, that acquirer did increase their offer even though they said they weren’t going to play.
Gaby Isturiz
Exactly, exactly.
John Warrillow
Got it.
Gaby Isturiz
Exactly.
John Warrillow
So, we’ll take the, I’m not going to play that game comment with a grain of salt.
Gaby Isturiz
Yes, yes.
John Warrillow
Got it. So, this is helpful. So, in terms of the coaching, what coaching did your M&A professional give you in order to have that call with that potential acquirer? Did he or she say, “Answer this question this way. Don’t answer this question no matter what.” What coaching did you get?
Gaby Isturiz
Yeah, that’s a very good point, because his main thing was, “You got to be yourself.” Right? “I cannot tell you what to do.” Right? “You are the CEO. You are the founder.” Right? “But if you start negotiating yourself, you are hindering our chances to get a better deal.” Right? “So, let me, if you want…” Right? “Let me negotiate this.” Right. “And be very grateful.” Right? But he never said, “Hey, you got to do this.” Right? It’s, “Be you.” Right? “But stay away from… getting yourself into a rabbit hole.” Right. And he said, “You know exactly when you are going into that.” Right? “Make sure you avoid it.” So, it was pretty neat. And-
John Warrillow
Got it. You had these four offers and they’re starting to come up in unison if you will. What was the improvement from the original offers that you received based on the cat and mouse game? On a percentage basis, how much did you get them up over that negotiation period?
Gaby Isturiz
It was funny, because one was almost 40% and the other ones that they were more level, it was 25% from where they were. So-
John Warrillow
From the original.
Gaby Isturiz
It was substantial. It was substantial.
John Warrillow
Yeah, yeah. For sure. And what other factors-
Gaby Isturiz
Now John, we knew. Right? One of the bidders, right, we knew… right? That they threw a very low ball. Right? And we knew that they were not serious about it. Right? So, we knew that with this one, right, they pretty much… They have what it took to double their offer. Right? So, they were pretty wealthy so to speak. Right?
John Warrillow
Mm-hmm (affirmative) mm-hmm (affirmative) And so, you kept them in from the long list of a dozen, down to four. You kept them in, because you knew they had more to give.
Gaby Isturiz
Exactly, exactly. Exactly. And that’s exactly how it happened. They had a lot more to give.
John Warrillow
Yeah. A lot more love to give.
Gaby Isturiz
Absolutely. Right? And they got it. Right? So-
John Warrillow
That’s great.
Gaby Isturiz
Yeah.
John Warrillow
I love it. I love it. So, what other factors did you look at as you evaluated these offers? Clearly price was one. What were the other things that made an offer either more attractive to you or less attractive?
Gaby Isturiz
Oh, my goodness. That’s the hardest question. So, because every of the offers, they had so much positive. Right? But again, right, there was a big difference going a strategic or going with a financial, a private equity.
John Warrillow
Why? What was the difference between them?
Gaby Isturiz
Well because with the strategic, I knew that my involvement was going to be limited after the purchase. Right? So, basically we had agreed preliminary that my role was going to be more as a strategic consultant. Right? Meaning that I was not going to be running the company and making the decisions. Right? Whereas with the other offers, on the financial buyers, they were going to purchase a portion, a majority of the business, but still I will retain a percentage. And the idea was I wasn’t going to continue to run the company. One, I will continue to run on [inaudible 00:40:51]. The other one, they were going to put a new CEO or something like that, which was fine. Right? So, anything that will take…
Gaby Isturiz
So, they were very different. Right? And the difficulty came doing a soul search of what I wanted to do with my life. Right? Did I wanted to take all the chips on the table and cash out or was my heart… building the business, growing the business. So, with the financial buyer, so it could be sold to a strategic later on. Right? And I didn’t know, John, to be honest. Right? Am I ready to cash out? Right? And on the other hand, do I really want to keep the pressure going? Right? And not only that, increasing?
Gaby Isturiz
So, I had an executive coach. He really helped me a lot. Right? And the decision was really based on facts. Right? And numbers. I worked really hard to put the passion away. And we decided to go with a strategic buyer, so we sold 100% of the company.
John Warrillow
What questions did your executive coach ask you in order to help you determine whether you wanted to cash out or not?
Gaby Isturiz
Yeah. I remember he saying, “Gaby, do you understand that if you go with a financial buyer, you’re not in majority anymore?” Right? “You are not going to be the majority.” Right? “You can be the CEO, but you have a Board to report right now. Do you understand that?” Right? And because we didn’t have any investors before, right, I never had a Board? Right? Yeah, we had an Advisory Board. Right? But pretty much I will call all the shots. Right?
Gaby Isturiz
So, for me, it’s… can I thrive in that environment? And the second part was yes, I am tired. Right? I’ve been doing this for 20 years. Right? Just keep running. Right? To continue growing, 50-75%. Right? So, I don’t know. I doubted myself and should I take a break? And that was how he coached me to make… to really get to the bottom of my soul, right, to make a decision. But again, even though when I made the decision, I was pretty torn apart.
John Warrillow
Did you think about what you would do after… You’re obviously a young person, clearly not ready to retire. I hope you’re not ready to retire. Did you think about what you wanted to do after?
Gaby Isturiz
I did, I did. But I couldn’t find an answer, John. I couldn’t. I couldn’t. One of the things that I have realized, it’s that, that was my identity. That’s what I thought who I was. Right? I was a CEO, and entrepreneur. Right? And that’s what people knew me for. Right? So, that was so into my identity and that for me going this way, I was going to lose my identity. Because John, I couldn’t see beyond, right, the sale basically, especially with a strategic buyer. Right? But I knew, right, that I was giving options to myself. Right? So, a little bit of… I don’t know what is that thing after the sale, but what I know, it’s now I can slow down a little bit and take the time to really figure out what is the next thing that I wanted to do. I’m still in that search. Right? I’m getting closer.
Gaby Isturiz
But yeah, it’s a lot of understanding and who you are. Right? Giving up some of your identity. Right? But yeah, we were fortunate enough, John, that if want, we don’t have to do this again. Right? And you’re very fortunate to have options that you never imagine before, because you’re so busy, right, making the number. Right? Making the quarter, right, that you don’t know anything else basically.
John Warrillow
What are some of the… We’re recording this in April 2020 where we’re all stuck in our homes in COVID land. What is on the horizon for you? As you think about the possibilities now with the economic success that you’ve enjoyed, what are some of the… Like the old games shows where you had door number one, door number two, door number three. What are the three doors that you’re thinking about?
Gaby Isturiz
Yeah. I want to give back. Obviously I didn’t get here by myself. Right? There was a myriad of coaches. Right? And incredible people that feel and helped me to succeed. And one of the things that I want to and that I have started, it’s working with companies. Right? Or working with the startups that are minority owned. Right? As a female entrepreneur, in technology, it was really hard, John. So, if there is any way, right? And not only that I’m a female in tech, I’m a minority. Right? I’m from South America, Latino. Whatever. Right?
Gaby Isturiz
So, part of my heart, it’s… I got a lot from the system, the people. So, I’m figuring out some ways how to structure some organization that can help me pass these lesson. Right? And learn from them and hopefully help them to succeed as well.
John Warrillow
Makes sense, makes sense. Did you buy yourself a trophy? Tell me you bought yourself something. You must’ve done something to celebrate this amazing win.
Gaby Isturiz
My goodness. John, our trophy was going away and travel for several month. Right?
John Warrillow
Fantastic. Were you able to do that before COVID?
Gaby Isturiz
No, no.
John Warrillow
Oh, no. That’s terrible.
Gaby Isturiz
No. And then… So, we were going away the same week when all this thing started. Yes, so I’m still waiting for that moment. Right?
John Warrillow
A raincheck. Yeah, you must take a raincheck.
Gaby Isturiz
Yes. So-
John Warrillow
Where are you going to go? What’s on your list of-
Gaby Isturiz
So… Well the first thing, right, we were going to go to Asia, Thailand, Cambodia and all that. Right?
John Warrillow
Sure.
Gaby Isturiz
But everything started around China, so we didn’t. And then, we were… We have a lot of family in Spain. So, we were going to go to Spain and travel around Europe, and our plan is to live… I have two teenage boys. So, it’s live some part here, some part in Spain basically.
Gaby Isturiz
So, the trophy’s… is should we buy something in Spain. Right?
John Warrillow
Fantastic.
Gaby Isturiz
But all of that is on hold up until… whenever. So…
John Warrillow
How is your emotional state been… You sold in, I think November 2019, was it?
Gaby Isturiz
We sold in December.
John Warrillow
December 2019.
Gaby Isturiz
John Warrillow
Okay. And we’re recording this in April 2020. So, it’s been about four months.
Gaby Isturiz
Mm-hmm (affirmative)
John Warrillow
How would you describe the emotions that you’ve gone through over that four months?
Gaby Isturiz
The thing it’s… The Corona virus have change a lot. We didn’t plan for this. Right? So, even the emotions have been shaped to adapt to this new reality. Right? So… But right after the transaction, I was still pretty active in the transition. Right? So, it didn’t hit home as hard. Right? And right when I was ready to start separating a little bit more of the business and start doing some things that were more enjoyable, right, that the Corona virus hit.
Gaby Isturiz
So yeah, I think on the emotional side, there has been a lot of unplanned events, right, that we needed to readjust basically.
John Warrillow
It’s got to feel weird to… You work your whole life to get to have this incredible success. You enjoy this amazing liquidity event and you have all this money and nowhere to spend it. There’s only-
Gaby Isturiz
Exactly.
John Warrillow
So many boxes you can have from Amazon shipped to your house.
Gaby Isturiz
Right. And you’re trying to be responsible. Right?
John Warrillow
There’s only so much to buy for your house.
John Warrillow
Right. You try… Right. You don’t want to have… Yeah, definitely. Yeah, well you don’t have to have all these. So, you’re like, “I got all this time, all this… and not that… I can’t spend it. I can’t go here.”
Gaby Isturiz
Right.
John Warrillow
That’s got to feel weird.
Gaby Isturiz
Yes. But one of the things that… I wanted to be very conscious about this… This shouldn’t change much who we are. Right? What it changed that now, we have a lot of options. Right? And we can do things in our terms and in our time. But even, John, I have one 18 year old and I have a 16. Of course, they know the transaction, but they don’t know details. Right? And yeah, they can probably do some math or whatever. Right? But we try to make sure that, that doesn’t change much who we are. Right? And that they still they need to work hard for themself.
John Warrillow
Good for you. Good for you. Well it’s been a… just a tremendous pleasure for me to hear your story. And I wish you all the best. I hope the travel restrictions get released and you can go travel the world as you deserve.
John Warrillow
Gaby, what’s the best way if people want to… And I don’t know if you accept LinkedIn connections for example, or if it’s social media account you want to point to, or a website. Where can people reach out to you if they wanted to say hi?
Gaby Isturiz
I think LinkedIn is the best.
John Warrillow
Okay.
Gaby Isturiz
I have an open profile. And I’d love to get new connections, learn from people. Yes.
John Warrillow
And you’re Gaby Isturiz on… It’s Gaby or not Gabriel?
Gaby Isturiz
No, it’s Gabriela.
John Warrillow
Gabriela. Okay.
Gaby Isturiz
It’s Gabriela Isturiz. But there are not many of that. Right? So-
John Warrillow
You’re not too hard to track down on social media.
Gaby Isturiz
No.
John Warrillow
All right. Well, we’ll put that in the show notes as well. This was a tremendous pleasure for me. Thank you for doing it.
Gaby Isturiz
Thank you. Thank you for having me. I appreciate it. Thank you, John. Take care. Bye.