How to Handle an Acquisition Offer from a Customer

October 30, 2020 |  

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About this episode

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In 2015, Nathan Hirsch and his partner started FreeUp.com, an online marketplace of virtual assistants. Four years later, Hirsch and his partner were billing more than $12 million when they received an acquisition offer from a customer they couldn’t refuse.

There are some transferable lessons in this episode, including:

Create a Positive Cash Flow Cycle: Hirsch billed clients upfront and paid his freelancers days later, so the faster they grew, the more cash they accumulated, which enabled them to avoid raising outside capital.

Diversify Your Customer Base: FreeUp’s largest customer amounted to less than 5% of their revenue, meaning they were never beholden to a single customer. It almost meant that even though their acquirer was a customer, they didn’t have excessive leverage over Hirsch.

Answer Questions With Questions: Diligence is an exhausting series of inquiries, but Hirsch managed to slow the flow by following each item with one of his own, meaning the more the acquirer asked, the more they had to answer, perhaps blunting their inclination to keep asking questions.

This episode includes several other nuggets, including:

  • Hirsch’s favorite question to ask freelancers in an interview.
  • What Hirsch believes every entrepreneur should do after they sell.
  • How to calculate your number.
  • The difference between re-occurring revenue and recurring revenue.

Hirsch’s positive cash flow model meant they could scale from zero to $12 million in billing in four years without raising outside capital. Discover your positive cash flow model using The Cash Flow Finder tool in Module 10 of The Value Builder System™ — complete module 1 for free by completing your Value Builder questionnaire.

Our guest

Nathan Hirsch is a 31-year-old entrepreneur that's been scaling businesses since 2009. Nathan's first business, Portlight, sold over $30 million in sales through Amazon. Nathan then co-founded FreeeUp.com with an initial $5,000 investment in 2015, scaled it to $12M per year in revenue, and it was acquired in 2019. Today, Nathan is a co-founder of Outsource School, a company working to educate entrepreneurs on how to effectively hire and scale with virtual assistants through systems and software. With all of his businesses, Nathan has hired and scaled with hundreds of virtual assistants and freelancers from all over the world. He shares his roadmap for scaling businesses with virtual assistants through Outsource School. Nathan has built himself into a social media personality online, he has appeared on over 300+ podcasts, and has spoken to thousands about remote hiring at industry events.

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Transcript

John Warrillow:

So once a year you go to the doctor. They take your blood pressure. Maybe they prick your finger and they take a little blood and they give you a sense of your cholesterol level. Maybe if you go to one of those fancy healthcare facilities, they get you to run on a treadmill for a while, see how your heart’s doing. You get a checkup.

John Warrillow:

The same thing should be true of your business. When we look at your business through the Value Builder’s Score, we’re going to look at it through eight key drivers that acquirers care about. Whether you want to sell your business immediately or in 10, 20 years from now, these are the eight factors that business buyers care about. Knowing them now will help you maximize the value of your business going forward. Just go to valuebuilder.com and take the questionnaire.

John Warrillow:

Okay. So who’s most likely to buy your company? Could be a financial buyer like a private equity group. Maybe it’s a strategic buyer. You probably heard of partners becoming acquirers. What about customers? My next guest was acquired by one of his customers, and here to tell you the entire story is Nathan Hirsch.

John Warrillow:

Nathan Hirsch, welcome to Built To Sell Radio.

Nathan Hirsch:

Yeah. Thanks for having me. Excited to be here.

John Warrillow:

Awesome. So tell me about FreeeUp. What do you guys do?

Nathan Hirsch:

So FreeUp is my last company. So kind of to give a little bit of a background, I was an Amazon seller. I started an Amazon business in college, and I had hired VAs and freelancers to help me grow my Amazon business.

John Warrillow:

VAs being virtual assistants, for folks who don’t know.

Nathan Hirsch:

Yeah. Virtual assistants, and I really did that out of necessity. I mean, I tried hiring college kids. They were super unreliable. I tried hiring US employees, and no one took me seriously as a 20 year old entrepreneur. So I needed help for my business. A buddy of mine told me about virtual assistants, and I found myself using the Upworks and the Fiverrs of the world and figuring out a good hiring process. But it just took too long to post a job, get 50 applicants, interview them one-by-one, and talking to other Amazon sellers, they had that same issue.

Nathan Hirsch:

So I came up with the idea of what if I offered my Rolodex of VAs, my Rolodex of freelancers to other Amazon sellers. And they would say, “Hey, I need a graphic designer. I need a PPC person, a customer service rep.” And I would introduce them quickly. I would take a percentage of everything that that VA made. I’d protect the client if anything went wrong, and that was the beginning of FreeUp. We created a competitor to Upwork and Fiverr, a marketplace that pre-vetted VAs and freelancers, matched them up quickly, had great customer support, had no turnover protection. And eventually ran out of VAs and freelancers, had to start recruiting and marketing on that side. Got a developer involved, built this minimum viable product of a software, and we really hit the ground running.

Nathan Hirsch:

We started off going after Amazon sellers. We eventually went after marketing agencies where we scaled this business from a $5000 investment to doing a million to $5 million to $9 million to $12 million in year four before being acquired actually by one of our customers, TheHoth, who’s actually located about an hour and a half from me, at the end of last year, November of 2019. So that’s kind of the short version. But FreeUp came about based on my own hiring needs, and then eventually became this marketplace that ended up being a lot bigger than I thought it would.

John Warrillow:

Yeah. For sure. I’m familiar with Upwork. A little bit with Fiverr. The kind of marketplace of freelancers I guess is the way I think of it, and for those maybe who haven’t used either of those two services, they could visualize it that way. So what made you guys unique from say Upwork? What was the point of differentiation?

Nathan Hirsch:

Yeah. So there’s a lot of different freelance marketplaces out there. But they’re very similar. You go on there, you post a job, anyone can apply. You then go through the applicants, you hire someone. You do the billing through the platform, and if someone quits on you, you kind of start that process all over again. And turnover kills businesses. The waste of time that you spent interviewing all these applicants, a lot of entrepreneurs don’t want to do it. And there’s really no great customer service that we saw on these different platforms. So we really focused on four things.

Nathan Hirsch:

One, the pre-vetting. We got thousands of applicants every week to just try to offer services on the platform. We would vet them and only let the top 1% on the platform.

Nathan Hirsch:

From there, we’d match people up quickly. So people can go to FreeeUp. They can still go to FreeUp and say, “Hey, I need a graphic designer.” And within a business day, you’re going to be matched with one to three graphic designers. You’re not going to have to go through 50 people. They’re already being vetted. They’re already going to be a good fit for your job posting. You can do what I like to call fast hiring where you can do quick interviews and get rolling.

Nathan Hirsch:

From there, you have customer service where anything goes wrong, if people miss due dates, if people aren’t communicating, you’re not just there waiting and waiting for your freelancer to respond. You can reach out to the marketplace and they’ll help.

Nathan Hirsch:

And then lastly, no turnover protection because if you spend a month training a customer service rep in the Philippines and they quit on you, FreeUp will cover the first month of a new person. So you never have to pay that onboarding cost more than once. So those four things are really what helped us stand out.

John Warrillow:

Got it. And what kind of margins did you guys make on the freelancer’s time? I can’t remember what Upwork is, but I think it’s a pretty… Is it 10 or 15 points of margin or something like that?

Nathan Hirsch:

They raise their fees. So they end up being like 20% plus because it’s 20% plus they have these different processing fees and all that. FreeeUp was 15% with a $2 minimum per hour, and that $2 minimum is important because if you have someone for $5 an hour, you’re getting $2 out of that $5, which is a lot higher than that 15%.

John Warrillow:

Okay. So if I’m understanding, if I hire a freelancer on FreeeUp and I pay them $1000, you guys are getting $150, right? Am I getting that right?

Nathan Hirsch:

Correct. But if you hire someone for $5 an hour, FreeUp would get $2 every hour that VA works.

John Warrillow:

Okay. That’s helpful for sure. So one of the obvious questions is with any marketplace kind of business where you have to have both of the happy freelancers wanting to post their availability and obviously the people wanting freelancers. So you need kind of both sides. One of the cruxes is the chicken or egg problem. How did you guys solve that, getting enough traffic to both sides to support the marketplace?

Nathan Hirsch:

Right. You got the client side and the freelancer side. So we had a little bit of a headstart on the freelancer side because I mentioned I was an Amazon seller. I had this Rolodex of Amazon freelancers, and we really tapped into that network early because what we did on both sides is we created a referral program where anyone that you recommend, you made money on every hour that they build forever. So we had freelancers right away saying, “Hey, this platform’s awesome because they brought me a good client,” and telling all their freelance friends, and then vice versa on the client side.

Nathan Hirsch:

So we used that affiliate program and that referral program to really get it off the ground, and we went above and beyond to make sure every single person knew about it. Not only was it on the website but on every single phone call, we had every single conversation we would end it, we would train our people to end it saying, “Hey. By the way, we have this great referral program.” So right off the ground, we had the freelancers. We went out and found the clients, and then we used the affiliate program to keep it balanced until we were able to invest other marketing resources into the business.

John Warrillow:

Got it. Okay. That’s helpful for sure. And so you mentioned the kind of growth of this, and there’s a we involved. Tell me about the team. Who is the we?

Nathan Hirsch:

Yeah. So it was me, my business partner Conner. He’s much more the backend, the technical side where I end up being a little bit more of the face and the sales side. We have a developer who we’ve known since our Amazon business named Russell who built all of our software. He built our new software simply SOP as well. And then all virtual assistants. We had no office, no US employees. Me, my business partners, and 35 remote virtual assistants in the Philippines. And we didn’t have an office in the Philippines. We’ve only been to the Philippines once, and that was for a vacation. It wasn’t really work related. And we didn’t just wake up one day and hire 35 people. We started off with one VA, increased their hours, hired a second one, but by the time we sold it, the team was about 35 people.

John Warrillow:

Got it. And all remote VAs other than you, Conner, and Ryan.

Nathan Hirsch:

Yeah. Me, Russell, Conner.

John Warrillow:

Sorry, Russell.

Nathan Hirsch:

Yup.

John Warrillow:

Got it. That’s helpful. So I’m curious about these virtual assistants because I’ve had I think it’s fair to say a mixed results using virtual assistants from different parts of the world. What’s the secret to hiring these people? What can you tell me? Give me some advice.

Nathan Hirsch:

Yeah. I mean, when we started hiring VAs, we had no idea what we were doing. We hired a really great one to start. We got lucky. Her name was Chicianne. She’s still with FreeUp. She worked with us for eight years, but we made a lot of bad hires as well. And we really spent years trying to figure out that secret formula. What interview questions do we ask? How do we set expectations and onboard them? How do we train them very efficiently and create standard operating procedures? How do we manage them and keep them motivated so they don’t just fall off a cliff later. So we spent years doing trial and error. And when we finally figured it out, the code of virtual assistants, that’s when we were able to sell over $25 million on Amazon. We were able to hit the ground running with FreeUp and hire rockstars from our internal team. The same people we hired in month one were with FreeUp in year four when we sold it. Even now with Outsource School, we teach other people how to do that. And our internal team is awesome as well.

Nathan Hirsch:

So it comes down to interviewing and focusing on not just experience but attitude and communication as well. Onboarding, setting expectations, making sure everything is black and white so there’s no gray area or issues that pop up down the line. Having great operating procedures that allow you to save time on training so you’re not just doing one-on-one training with every single person and hoping that it works out. And finally, getting people to buy into the company, and management’s a large thing I could talk about for an hour. But our biggest thing is our VAs care. They loved FreeUp. They continue to love FreeUp. They love Outsource School. They want to be a part of it. They’re not just over there doing tasks, handing in a task and getting another task. They feel like they’re building the business with us, and that’s really the key.

John Warrillow:

Got it. What’s your favorite interview question for a VA?

Nathan Hirsch:

So we like to ask them if they consider themselves a builder, and if they consider themselves entrepreneurial because those are the kind of people we want to hire. We don’t want to just hire robots who will do what we say and just say, “Yes, Nathan. I’ll do it.” We want people who are always thinking, “How can I make the system better? How can I own this system? How can I take it to the next level? What outside experience can I bring in there?” Those are the kind of people that we like to surround ourselves with.

John Warrillow:

Got it. So it’s you and your partner. You’ve got these 35 VAs. You’re billing you said 12 million or 10 or 12 million of revenue on the top line, is that right?

Nathan Hirsch:

Yeah, last year was 12 million.

John Warrillow:

Got it. And again, you’re sort of taking a percentage of that off the top. What triggered you to want to sell? How did that all kind of come about?

Nathan Hirsch:

So logically we know there’s only so many ways you run a business. You either run it forever or you run into the ground. You get funding, venture capital, which we’re personally not interested in. We don’t want to feel like we’re working or reporting to someone else. Or you sell it. So we tried to build FreeUp and all our businesses to be sellable. But what ended up happening was one of our clients, TheHoth, reached out to us, and they said, “Hey, we love FreeUp. We’ve been using FreeUp. We want to get into the VA, freelancer space. We bought a bunch of other similar companies.” They own an SEO agency. They own a writing agency. But they want to break into the space, and they didn’t want to build it from scratch. So would we be interested in being acquired?

Nathan Hirsch:

And from there, they ended up asking us questions, making us an offer that we felt like was more than fair, if not aggressive. And then the due diligence began, and they had a lot of questions on us, and they wanted to know who does what when in every situation and all of our numbers, all of our books, and that kind of stuff. But we also did due diligence on them. We wanted to make sure that we weren’t selling it to someone who was going to drive it into the ground or hurt our team or hurt our partnerships. We went through that. They checked the boxes. We got to visit their office, an hour and a half for me, and meet their team. And we were really impressed with them just as entrepreneurs and as people.

Nathan Hirsch:

And then it became how do we make this a win for everyone? And they were nice enough to agree to this, but we took $500,000 from the sale and gave it to our internal team in the Philippines to make sure they were taken care of. We made sure their jobs were secure, their bonus and raise programs were in place, and once we kind of sat down and we were like, “Hey, we’re going to sell our baby, this thing we’ve spent four years building.” But we looked at it as a win for them, a win for us, a win for the internal team, a win across the board, and it was tough for us to turn something down that we felt like was a win for everyone and still feel like.

John Warrillow:

Got it. So tell me about TheHoth. I’ve never heard of them. So describe them for folks who may not know that company.

Nathan Hirsch:

So Mark Hargrove and David Martin who are great entrepreneurs. They own a bunch of different businesses. They bought TheHoth for $100,000 about, I don’t even know, five to 10 years ago. And it’s now doing over $25 million a year. They built it up. They have an office in Tampa, Florida. I don’t think they’re going in offices now.

John Warrillow:

What do they do, Nathan? What do they do?

Nathan Hirsch:

SEO services. So they sell SEO packages.

John Warrillow:

Got it. So if I want my website to rank in a Google search above my competitors, I might hire them to improve my ranking.

Nathan Hirsch:

Right. Exactly.

John Warrillow:

Got it. Got it. And so why did they want to hire or buy a freelance marketplace? That seems like a weird… What was the strategic rationale for that?

Nathan Hirsch:

Yeah. And I’m not sure I can speak too much for them, but TheHoth is their biggest company. But they also own about 10 to 15 other companies. They own iWriter, which is a company where you can get freelance writers, and it’s a little bit more structured as an agency, more than FreeUp. They own different marketing agencies and all these different things. So they did dabble a little bit in the VA, freelancer space. So I think it was strategic there that not only are they requiring a marketplace that can sell VA services, but now they have all these VAs and freelancers at their disposal, which they can use on their other businesses and bring it all together.

John Warrillow:

Got it. So they’re seeing that they could touch a few of their other businesses as well as the SEO one. And these VAs are obviously very important to, whether it’s writing or SEO services. They’re relying a lot on talent from around the world.

Nathan Hirsch:

I mean, they’ve updated us on stuff, which they don’t really have to do, but they’ve taken some people and moved to their other companies with the virtual assistants permission. So just kind of using FreeUp as a centerpiece to get all this talent that they can then figure out how to use that talent across their different businesses.

John Warrillow:

Got it. Okay. So they came to you. They were a customer. Describe that conversation or how did they reach to you to enter into this conversation about acquisition? Was it over email or LinkedIn or was it a phone call? How did that happen?

Nathan Hirsch:

So FreeUp operated a lot of its business via Skype. So I actually talked to Mark on Skype, chatted about it. Then we set up a phone call and brought my business partner in. So we had talked via the phone maybe a few times before that. But his initial outreach was via Skype.

John Warrillow:

Was on Skype. How did he know how to reach you on Skype?

Nathan Hirsch:

I made myself very available on Skype. In our intro emails, it was like, “Hey, add our CO, add our owner, founder,” and I actually had a team of VAs that monitored my Skype 24/7. So I wasn’t just on there. But they always knew when to escalate stuff to me, and when Mark reached out, I obviously didn’t want my team to see it. So we quickly moved it over to phone call.

John Warrillow:

Yeah. Got it. And how did he approach you? What did he say? What was his opening line?

Nathan Hirsch:

Man, good question. I’m trying to remember. Something along the lines of, “Hey, we’ve really enjoyed FreeUp. We really like it. We’ve acquired different businesses. We’d love to have a conversation with you and your partner if you’re open to it.” Something like that.

John Warrillow:

Got it. And what was your reaction to that message?

Nathan Hirsch:

So we’ve had different people, even going back to the Amazon business, reach out. I mean, anytime someone’s like, “Hey, I want to invest. I want to buy your business,” we’ll hear them out. We’re always open to a conversation. So at that time, was I like, “This is the guy. He’s buying FreeUp.” Definitely not. But whenever someone wants to do that, we’re always open to listening to it. From there, he brought his business partner in. We could tell that they were serious. They had thought about it. That if they weren’t going to buy FreeUp, they were going to buy some other VA, freelance marketplace. They were very determined to do that.

John Warrillow:

Got it. And were there other… I mean, again, I know Fiverr and Upwork. Were there other sort of small to midsize VA services out there, virtual VA services out there that they could’ve acquired?

Nathan Hirsch:

Yeah. I mean, there’s no shortage. So when we started FreeUp, there wasn’t too many VA marketplaces. There was Upwork, Fiverr, and there’s a bunch of others, but there wasn’t as many as there are now. Now they’re popping up all the time. There’s a marketing one that I can’t remember. There’s Outsourcely, which is a popular one. Onlinejobs.ph was there before us. So it is a place that’s gaining steam as the economy and now everyone’s working remote. Jungle Market is another one that popped up after us. They target Amazon sellers. They kind of followed in our footsteps. So no shortage of marketplaces.

John Warrillow:

And was that a veiled threat on Mark’s behalf to say, “Hey, Nathan. Cool if you don’t want to chat with me, but we’re going to buy a VA service.” In retrospect, do you think he used that line as a way to get your attention?

Nathan Hirsch:

Maybe. I mean, Mark and David are smart businessmen. They couldn’t have been better to us through the process. They couldn’t be better after the process. They’ve been updating us on decisions and changes, and there’s nothing in our agreement that says they even have to do that or get our take on that. At the same time, they’re smart businessmen. I’m sure they did from their side what they felt like would get them the best deal and get what they wanted done, just like Conner and I did on our side. But I don’t think there were any threatening or anything along those lines.

John Warrillow:

Yeah. Yeah. So I’m breaking down the math here. So we’re 12 million in billings. So call it a 1.6 in revenue or gross revenue or whatever we want, gross profit maybe if we think of it that way. You got to pay the 30 VAs. It’s you and Conner. So there’s some profit leftover. What’s the value of the company? What are you thinking it might be worth? Before even Mark throws a number out, if you got a sense it’s probably worth a multiple of revenue or multiple of EBITDA, how are you thinking about valuation?

Nathan Hirsch:

Yeah. Yeah.good question. And I’ll try to answer it without getting into too much of what I can answer. I mean, we use our accountant who we’ve worked with for years to kind of let us know what he thought in terms of a valuation. You’re somewhere in the right ballpark for profit. There’s also other factors as well. I mean, we had no debt. The business was incredibly cashflow positive. We charged the clients before we paid the freelancers. So we always had a lot more cash than we did, plus there was no outstanding debts or anything like that. There was no accounts payable. Everything was either paid or a little bit of late payments for account receivable.

Nathan Hirsch:

It was also lean. There’s no employees. There’s no benefits. There’s no US office. There’s no overhead whatsoever. And every single team can be scaled up or down. If we wanted to automate customer service more and reduce cost and focus on that and someone could probably do it better than us, there’s a lot of opportunity there. And our software, well we got it to a good point. A lot of opportunity there. We also did it very organically. There’s a huge market for ads. Someone who can master that. It’s a very difficult business to run ads to because it’s free to sign up. There’s no monthly fee. There’s no commitment. People can start and stop. So it’s a little tough to measure ROI but not impossible. Someone with more business experience than us can take it.

Nathan Hirsch:

So we kind of looked at it as, “Hey, this business is cashflow positive. It’s a cash cow. It’s lean. There’s no debt. There’s very little risk, and there’s a lot of opportunity there.” And that’s kind of how we looked at it.

John Warrillow:

So did you have some sort of multiple in mind? Again, most people think about it in the context of, “Oh, my business is going to be worth a multiple of profit or a multiple of revenue.” Did you have any sense of what you thought it was worth as a multiple of EBITDA for example or revenue?

Nathan Hirsch:

Yeah. And I don’t want to get into the numbers too much, but we definitely did have ballparks just from what our accountants told us. We also reached out to some other entrepreneurs we knew that had sold businesses, and they kind of told us. It’s weird because agencies, from what I’ve learned, don’t have very high EBITDAs depending on how good or how lean the agency is. But we weren’t an agency. We’re a marketplace, and how many marketplaces get sold or freelance marketplaces sold? So we felt we were kind of in the in between there, but because we weren’t an agency, we feel like that really helped us.

John Warrillow:

Yeah. And that’s why I’m asking you the question I’d love to get a sense because it’s really tough to know because would they think of you as… I mean, did you have recurring revenue? Was there a subscription fee that clients paid on a recurring basis whether they used the VA services or not?

Nathan Hirsch:

No. The whole platform we built, it was a software that billed clients that had the affiliate program. All that was custom built, and they were getting that. But yeah, people could sign up and have a free account. There was no monthly fee. At the same time, a lot of clients used us and billed every single month. We had clients in here before that had been billing every single week, every single month for the past four years. And that’s something they went through in due diligence, and there was a lot of recurring revenue even though it wasn’t built into the business model.

John Warrillow:

Got it. Yeah. What we call re-occurring revenue as opposed to recurring revenue. Meaning like re occurring, meaning it comes back. Customers keep purchasing every month, which is the beauty of a model like that.

John Warrillow:

But again, back to the number. Again, I know we can’t talk about the numbers that Roth paid. I get that totally… TheHoth paid, excuse me. But I would be curious to know if you and Conner talked about a number. Did you guys have a number in mind that you felt like, “You know what, this is kind of the number.”

Nathan Hirsch:

Yeah. I mean, we had lots of conversations about that, and we did come to certain numbers. And we told Mark and David that at some point, and yeah. I mean, all that came into the discussion. I mean, there were other factors as well. I mean, we mentioned other marketplaces were coming up. We also knew that if we wanted to get the business to the next level, that there were going to have to drastic operation changes, which we’ve never scaled a business to $25 million. So are we the right people to do it? Maybe, maybe not. We didn’t know a pandemic was coming, but we also knew that the economy was at a high point. And at some point, might be coming down. So that came into play at some point. And there were a lot of different factors along those lines.

John Warrillow:

Got it. So you and Conner have this number in your head. You kind of gone back and forth. What’s the methodology you are using to come up with that number in your own head? I’ve seen everything under the sun, but I’d be curious to know how did you guys come to the number? Again, we don’t need to know the number. But I would like to know how you guys arrived at it. Do you know what I mean?

Nathan Hirsch:

Yeah. No, I do. I mean, it’s a combination of how does that set me up for the future. I don’t want to sell the company and then have to get a job in the future. That shouldn’t happen. But also how much are we making right now because we mentioned the business had no debt. We pretty much took out all the money that’s going into the company. So that’s going to stop. But then we’re getting an upfront payment. So that was a factor as well. How many years of not working is worth giving up a potential revenue stream, but also, does that let us live comfortably going forward?

John Warrillow:

How many years is the right number? If you had an entrepreneur who was sort of saying, “I’m going to have to give up my income here. I’ve been making…” Let’s just make up a number. “This business has been paying me $100,000 a year for a long, long, long, long time. And I’m going to get a big check, but I’m going to lose that income stream.” How many years do you think is a reasonable trade off to get that upfront? Is it three years, five years? What do you think is a reasonable duration?

Nathan Hirsch:

Yeah. It’s a good question. I mean, you’re probably in that three to eight years but there’s other factors too. Like money now is worth more than money in the future because if I get a chunk of money upfront, I can invest that. I can buy real estate. I can do other things with it and make money on that money. So it’s not always just a straight line of, “Hey, I’m going to get four years of pay,” or five years of pay or 10 years of pay or whatever it is. You’re getting X amount of percentage of that upfront that you can then use to make more money. So lots of different factors there.

John Warrillow:

Got it. So Mark reaches out over Skype. He says, “Hey, let’s chat.” You guys meet. What was that first meeting like?

Nathan Hirsch:

So he introduced himself. Mark Hargrove, David Martin, they told us about their background, their businesses, why we were even having the conversation, why they wanted to get into the VA, freelancer space. They told us about their experience with FreeUp so far. They told us they were interested, and they told us that they had questions for us. Because even though they had used FreeUp, they didn’t really understand everything about it. They didn’t understand, did we have US freelancers as well because they had just used non-US VAs. They wanted to understand referral program that we talked about, why we did it, whether we felt like it was sustainable. They wanted to know what we were doing for marketing, whether we owned the software that they were using to get their freelancers. So they didn’t have really due diligence type questions, but they had more overall how does the business actually work to get a feel for type questions.

John Warrillow:

And how big a customer were they of FreeUp at the time of the acquisition? How much of your billings were they responsible for?

Nathan Hirsch:

Good question. So one of the cool things that I think helped us was no client was more than 5% or 4.5% of our total billings. So very diversified. If we lost a big client, obviously it hurts, but it’s not the end of the world. I mean, they weren’t up there with the biggest clients. They were somewhere middle client. They would bill a few hundred, a few thousand every week, every few weeks, whatever it was.

John Warrillow:

Got it. So they’re not like 80% of your revenue or something like that. Obviously that would change the dynamic of the negotiation. They were a relatively small proportion of your overall billings. That’s helpful, for sure.

John Warrillow:

So they’re asking you some fairly pointed questions. What was your reaction to sharing some of that more intimate details of what’s underneath the sheets?

Nathan Hirsch:

So people that follow me on social media know I’m pretty open. There’s very few things outside of if I sign a confidentiality that I can’t share, very few things that I won’t share. So a lot of the stuff I had mentioned on podcasts. I told other people. Very much common knowledge. If you spend hours and hours doing research, I’ve probably said it somewhere. I mean, we told them as much as we possibly could. We were an open book. I mean, at the time, we weren’t 100% sure what was going to happen with that information, but we didn’t think it was information that could come back and hurt us in any way.

John Warrillow:

Okay. So you’re fairly transparent, and in what way did that impact your negotiation? That transparency, that willingness to sort of share, did that have an impact at all downstream as you guys got into the negotiation?

Nathan Hirsch:

I think we established from day one with them. We’re like, “Hey, we’re going to be an open book. We’re going to tell you everything. If we tell you something, you don’t want to buy the business, we’d rather that happen then spend the next few years fighting in court over something.” We want them to be transparent, upfront. If they have certain plans, we want them to share them with us and vice versa. And I think that open and honest communication probably helped the negotiations. And like I said, even now they’re obviously going to make changes when you buy a business, and we agree with most of their changes. There’s obviously going to be stuff that we don’t agree with, and they also had a lot more success than we had. So there’s that kind of factor as well.

Nathan Hirsch:

So from whenever I talked to them, I always just try to give them open, honest thoughts, give them facts, give them information, whatever it is. And then it’s up to them to either ask followup questions or do what they can with that information.

John Warrillow:

It sounds like to some extent, I mean, you shared that they had more success. Did you see them almost like mentor figures or older, more successful, more experienced? Was it that sort of almost mentor/mentee relationship? Help me get underneath the sense that they were more successful than you. You sound like a pretty successful guy, so I’m surprised that you feel that way.

Nathan Hirsch:

Yeah. So I don’t want to say they’re my mentors because that’s not true, although we learned a lot just by going through the process, by talking with them, just by seeing the changes they’ve made to FreeUp. Getting from zero to one million, you learn a lot. My first time doing it, I’m sure your first time doing it, there were a lot of things you want to do differently. And the second time you do it, you do it a lot faster. You learn from those. And same thing going from one million to 10 million, and even more so getting from 10 to 50 million. So part of us figuring out the buyer is we weren’t just going to sell it to someone who offered us a lot of money. We wanted to sell it to someone who yes made a good offer, but also could continue to grow FreeUp and have the experience necessary to grow FreeUp.

Nathan Hirsch:

I mentioned that they took TheHoth from $100,000 to $25 million. Well, if they’re going to have success with FreeUp, they have to take FreeUp from $10 million to $25 million. And that’s not something that Conner and I had ever done before. Could we do it? Maybe. Is there risk that we’d make bad decisions along the way and it impact different people? Of course. Was that the main reason why we sold it? No. But was it one of many factors? I mentioned the economy. I mentioned structural changes. I mentioned finding the right people that we enjoyed working with that were going to take really good care of our relationship, and the offer as well, all of those were factors that we wanted to keep in mind. I think once we met with them and learned about them, and we sat down and we said, “Okay. If we’re going to sell FreeUp, these are the people that we’re going to want to sell FreeUp to.”

John Warrillow:

Got it. Okay. Let’s get into that a little bit more because these transparent conversations, the sharing back and forth, at some point, it got a little bit more formal. And did they ask you, “Okay, guys. What do you want for this thing?” Did they ask you for a number? If so, what did you say?

Nathan Hirsch:

Yeah. I mean, they asked us for a number. We had already talked about it. We told them a ballpark. They came back with a number inside that ballpark, and we kind of hit the ground running from there.

John Warrillow:

Okay. And the ballpark that you gave them was sort of a range or…

Nathan Hirsch:

It was a small range.

John Warrillow:

Okay. And how did you come up with that range? Again, we talked about this earlier, you guys talked about the fact you were getting rid of a bunch of cashflow, and you needed to sort of be paid for that. There’s lots of factors that went into that. I guess a purist might say, “Well, man, how do you know you didn’t leave money on the table because you kind of threw the number out to begin with?” Did you guys fear that sort of sense of, “Well, maybe we should let them go first.” Do you know what I’m asking?

Nathan Hirsch:

No, I do. I mean, there’s different negotiating tactics on both end. I mean, we had talked to an accountant. We had talked to a few people different people. Everybody came back in that same ballpark. From the conversations that we had had with Mark and David, we kind of knew what the top tier of their budget was, and we also kept in mind that they hadn’t even seen the financials yet. So did we leave money on the table? Maybe. I personally don’t think that we did. I mean, Mark and David are pretty smart business guys, and we got a number that we felt like was good for us and a good range of what our accountant was saying. Again, it’s also just a very weird business model to go through.

Nathan Hirsch:

Timings also a factor of it. And not that FreeUp isn’t doing well during a pandemic. It is. The freelance marketplace out of all businesses can do pretty well. But selling businesses during a pandemic, if we had tried to sell it in March, April, May when everything was going through craziness, probably wouldn’t have even gotten close to what we got now. Now things can change pretty quickly. But again, lots of factors.

John Warrillow:

You mentioned that you thought the offer was at the top tier of their budget. How did you know what their budget was?

Nathan Hirsch:

We had talked to them before about what they were thinking, what they bought businesses before. We asked them how they evaluate companies, and they explained to us what they did with EBITDA. So we had a decent educated guess of what they were going to come in with, and we were somewhat close.

John Warrillow:

So they had sort of said, “Look, guys, we buy businesses for X to Y multiple of EBITDA.”

Nathan Hirsch:

Right. These are the things we look for. These are the boxes we checked, which we felt like we checked all the boxes. They kind of gave us a range. Like, “Hey, X, Y, Z. This is out of the range.” Blah, blah, blah.

John Warrillow:

Yeah, yeah. But you sort of knew going in even before they presented you with an offer and even before you’d shared that, that there was this kind of range of EBITDA multiples that they were willing to pay or they were used to paying so to speak.

Nathan Hirsch:

We felt like we had a very good idea just by talking to them, talking to our accountant, talking to a few other entrepreneurs that we respected, that we were all in that same ballpark.

John Warrillow:

So the accountants using a multiple of EBITDA as well it sounds like. That was their sort of…

Nathan Hirsch:

Pretty standard way to evaluate a business.

John Warrillow:

Yeah. Yeah. For sure. For sure. And so Mark hears your number and says, “Okay. Think we can kind of get something done.” What was the next step? Did they present you with some sort of letter of intent, or was it their next move after that?

Nathan Hirsch:

Yeah, letter of intent, and then the due diligence questions. But yeah.

John Warrillow:

Got it. Okay. So what was your reaction to the LOI? Having had this sort of verbal conversation, what was your reaction when you saw it on paper?

Nathan Hirsch:

I think at that point we had understood that they were more serious than maybe we thought they were. And again, we had been reached out to from different people for that business but also the Amazon business. We never really got to the LOI part. I mean, we could tell from conversations with them that these weren’t people that just popped out of nowhere with a loan from the bank. These were people that had bought businesses, that had have a lot of success, and we were kind of expecting it at that point. And from there, we had a tough decision to make of whether we wanted to enter into it.

John Warrillow:

Yeah. And did you consider maybe shopping it to other folks? Was that part of your consideration or did you not want to do that for some reason? What was your thinking there?

Nathan Hirsch:

Yeah. So two reasons that we didn’t want to shop it around. One, we really felt like Mark and David were our ideal person to sell it to, which is something that we cared about. I mean, you have to remember we had our 35 person internal team, but we also had thousands of freelancers on the platform, thousands of clients, thousands of influencers that had promoted us and partners and entrepreneurs that I know and respect. So who we sold it to was important. So there’s some other details there that I’ll kind of skip over, but I guess the other side of it is just going out on the market and just saying, “Hey, this business is for sale. Make us an offer.” That didn’t really appeal to us. We had spent a lot of time building our reputation, building our brand. We have thousands of people who are using FreeUp, interacting with FreeUp, knowing me. That was coming back to our team at some point. So if we’re going to sell it, we were trying to keep it on the secrecy side. This seemed like the best way to do it.

John Warrillow:

Yeah. I heard one entrepreneur whose name is escaping me at this moment. I feel embarrassed not to be able to place his name, but he described it as landing the plane. Finding a home for the business that was going to be nestled into a perfect landing strip. I thought that was a great analogy for what you’re describing, which is wanting to find a home for your business, that it would thrive after your time.

John Warrillow:

So in the letter of intent, again, I appreciate the fact that we can’t talk about the number. But I would be curious to know sort of what it covered. So there was obviously an offer. Was that a multiple of EBITDA or was it actual a dollar figure?

Nathan Hirsch:

Good question. I believe it was a dollar figure in the letter of intent, from the best of my memory.

John Warrillow:

Got it. And one of the other questions that comes to mind is how you guys dealt with working capital. Because as you described, you had this beautiful business model where you charge customers upfront, and then paid the freelancers after that. So you had positive cashflow model. But that means you’ve got a lot of capital, working capital in the business presumably. How did they propose to deal with working capital?

Nathan Hirsch:

Yeah. Really everything we did, we just made as fair as possible. Any cash before the sale went to us. They paid us afterwards, once they paid off the freelancers and looked for any bad debt or anything like that, and anything from the day after was theirs. So everything was really down to the second of when something happened and kept accordingly. Even stuff like, and this seems stupid. It’s not really a big part. It wouldn’t have affected things here or there, but technically, this laptop was property of FreeUp. They were like, “Hey, keep your laptop. Keep your other stuff.” Everything was very civil. Everything was very fair kind of across the board, and whenever something came up and popped up, we talked it out, figured out a fair resolution and added to the agreement.

John Warrillow:

Got it. And did they give you a diligence checklist or a, “Here are the things that we’re going to have to check out,” as part of that letter of intent?

Nathan Hirsch:

It was more like endless emails of questions, but it was on both sides. Every time they would send us over 20 questions, we would send them over 20 questions. Again, we had some good phone calls with them. They seemed like good entrepreneurs, but again, we wanted to learn more. We wanted to know their good purchases, their bad purchases, what they were trying to do with FreeUp, what they were planning on doing with the internal team. Who’s going to be running the operations of it? Different stuff like that. So we were sending due diligence questions back and forth from both sides for a few weeks in there.

John Warrillow:

This is after the letter of intent was signed.

Nathan Hirsch:

After. And I think a good thing about… So they told us that we were the fastest people to get back to them in terms of due diligence, but it was more about our organization side. If they were like, “Hey, can you give us a breakdown of US versus non-US people on the platform,” well, we have that right here. Click this button, add it to diligence. So all of our books were meticulous. All of our team organization charts, everything they asked for were a click away. So it didn’t really take us that long to actually respond to those. At the same time, there were just a lot of questions.

John Warrillow:

I guess a lot of people maybe saying, “Wow. I’m surprised that a company was willing to buy another business that didn’t have any full time employees.” All of your employees were contractors, if I understand correctly. No one full time in the US, other than you and Conner, if that’s-

Nathan Hirsch:

Yeah. I mean, there were full time non-US essentially.

John Warrillow:

Okay.

Nathan Hirsch:

I think if it’s not common now, it’s going to become common soon. I mean, there’s so much that you can do with virtual assistants, hiring from the Philippines. I was just talking to someone who was actually a client of FreeUp, and he was asking about my experience. And he was worried that the buyer wouldn’t buy once he realized that there was no US employees, and I have no idea if his buyer will or won’t do that. But I kind of told them my experience off of it and how it didn’t really effect the sale. I mean, we were transparent about it. They knew what they were getting into, and if you want to add another crazy factor is we didn’t let them meet the team before they bought FreeUp. That was a big thing that we weren’t budging on. We showed them meetings. We showed them back stuff on each person. We explained every single person, their role, their rate, all of that. And they really trusted us that we were giving them A players, and they’ve been super happy with the people since.

John Warrillow:

Why were you so sensitive not to share the employees names and contact information?

Nathan Hirsch:

So they got the names, but they weren’t going to reach out to them. But we didn’t like introduce them or anything like that. Very similar to the same reason we didn’t want to just go out in the market and say, “Hey, our business is for sale.” The second it gets back to the internal team, it’s very tough to backtrack on that. We know deals can fall through. I mean, we were planning for the deal to fall through the entire five to six months, up until the day we signed it.

Nathan Hirsch:

Two factors. One, keeping our team motivated, and we knew that any distractions wouldn’t motivate them. But also, making sure that if they did back out, that we still had an operating business. That we were still hitting our goals. We were still finishing projects, and that was tough to do. I mean, Conner and I, we kind of kept each other accountable. There were good days where we were highly motivated, bad days where we’re like, “Okay. This lawyer thing is dragging out too much. Can we just finish this?” But the last month that we sold FreeUp ended up being the best month that we had had in the four years that we ran FreeUp. So by keeping our team focused, by keeping Conner and I accountable and focused, we’re able to not run into a situation where as this dragged on, who knows. You have two bad months in a row, maybe that spooks the buyer. Anything can happen at that point.

John Warrillow:

Mm-hmm (affirmative). Yeah. Yeah. Were you also worried that if you made introductions, that they could steal some of those employees and basically just take your employees as opposed to buying the business?

Nathan Hirsch:

I almost never worry about people stealing our employees. I mean, we’re all about virtual assistants and getting them to buy in and treating them well and having good culture and creating raise and programs that they’re happy with. Even with Outsource School, I mean, people that join Outsource School, they get an onboarding call with my VA Grace. Every single person can go to Grace and say, “Hey. You work for Nate? He’s good at vetting people. Come work for my company.” But Grace doesn’t want to go anywhere because she loves Outsource School, and she wants to be a part of what we built. So that’s never been something I’ve been concerned about.

John Warrillow:

Got it. Did your agreements with your virtual assistants, these 30 full time virtual, not full time employees in the US or whatever. Did those agreements have what lawyers usually call, I think they call it survivability clause or assignability clause meaning you could assign the commitments they make to you to the buyer effectively? Did they have that clause in them?

Nathan Hirsch:

No. So my overall opinion, and not to give legal advice, is hiring people from the Philippines and making them sign a legal document, what are you going to do with that legal document if they break it? Are you going to chase them across the Philippines and hunt them down? Probably not. So we had terms of service in our marketplace. We had expectations and stuff that we agreed on, but getting into that nitty gritty like that, it’s just very unenforceable.

John Warrillow:

Got it. Got it. Okay.

Nathan Hirsch:

But that’s just my own personal opinion.

John Warrillow:

Yeah, neither of us are lawyers, so we’ll save that for the $800 an hour guys. How long did it take from signing the letter of intent to the check clears your bank account and the definitive share purchase agreement is signed?

Nathan Hirsch:

They wired it while we were there.

John Warrillow:

No, no. I mean, how long did that take from signing the letter of intent to the actual share purchase agreement.

Nathan Hirsch:

Five to six months.

John Warrillow:

And did the letter of intent stimulate a length of time for diligence? Usually it’s 60 days. Do you recall if it had 60 days?

Nathan Hirsch:

Yeah, so there was a time for diligence, which we went through, and then the lawyers got involved for a closing date. And the lawyers, it wasn’t their fault. It wasn’t our fault. It was just kind of two lawyers doing their thing, going over every fine detail, and every day the lawyer would come to us with a different thing. We’d hope on the phone. We talked it out. They were reasonable. We were reasonable. We’d figure it out. We’d tell the lawyers what we wanted, and then another thing would pop up. Lawyers also aren’t just working instantly on you. They have other clients too. So maybe for a week they couldn’t get to it or whatever it was. So the lawyer part was not fun. It was stressful. It dragged out, but I love our lawyer. They like their lawyer. They’re just doing their job trying to protect their clients.

John Warrillow:

Yeah. Yeah. Yeah. So you sort of said it was going to be two months. It ended up being closer to six. So it was definitely lengthened. A lot of people having never gone through diligence now are wondering, “What on earth could make it so difficult? Or what should I prepare in advance so it doesn’t go so long and become so protracted?” What are some of the things that surprised you that came up during diligence?

Nathan Hirsch:

Yeah. Good question. And this is something I think we’ve learned from them is just being very on top of your data. So they wanted lots of data points that we had just never collected, we had never looked at. Even like breakdowns between billing of different countries, following clients over time and how often they come back versus percentages. We had some of it. Maybe a very basic version of it, but they took it to new levels. So I think they kept asking for these different reports, different ratios, different percentages that we had. We had all the numbers. We were organized, but we had to kind of put it together. But then they also wanted explanations on why we did stuff.

Nathan Hirsch:

So they joined our newsletters. They got a newsletter with a promotion. They wanted to know why we ran that promotion, what the thought was behind it, why we were offering discounts, how the promotion went. So there was a lot of stuff that as we were going along, they were following us and asking questions about the decisions we were making. We weren’t making any different decisions than we would be making if we had not been selling the business, but they just wanted to understand what exactly was going on.

John Warrillow:

And what was behind your choice to send them almost an equal number of questions back? For every five questions they asked you, you asked five in return. What was your thinking there?

Nathan Hirsch:

Yeah. I forget who told us to do that. We got some advice to do that, and we probably would’ve done it anyway. I mean, we care a lot about culture. We care a lot about people. We care a lot about relationships, and we want to work with people who want the same thing as we can. We want to create win-wins for everyone. We want them to buy FreeUp and grow it and make a lot of money on it. We want us to get a good deal. We want our team to be taken care of, and we also only want to work with people that can talk stuff out. If we have a dispute, I don’t want to get a lawsuit letter in the mail. I want to hop on the phone and figure it out like civilized adults. And so we wanted to make sure that they would answer our questions, that we knew what was going on, and really preventing any red flags. It’s almost no different than hiring virtual assistants. When I hire VAs, we set the expectations. We lay it out there. We make sure we have all the information up front so there’s no surprises down the line, and we kind of treated this in the same way.

John Warrillow:

Yeah. It’s interesting, and also I think really strategic because the more they have to ask, the more they want diligence to come to an end too. Because man, if we send these six questions, Nathan’s just going to ask us 10 more. So I don’t want to keep answering all these questions. So it’s an interesting strategy.

John Warrillow:

What was the structure of the deal? So a lot of these businesses are bought and sold usually on some sort of earn-out or what’s called a vendor take back where you loan a little bit of money to the buyer so that you get paid over time. How did you guys structure some of that stuff?

Nathan Hirsch:

Honestly, not sure if I’m allowed to discuss it. But it was a combination of mostly cash up front with some element of earn-out.

John Warrillow:

Got it. Okay. That’s helpful for sure. And so you’re also doing diligence because you want to know is this earn-out going to be real?

Nathan Hirsch:

Right. Exactly. There’s a certain element of afterwards, and we also don’t want people on our team to get screwed over in any way. They could hire people. They could buy FreeUp, fire everyone, replace them with their own team. Even if Conner and I had a bunch of money in our bank account, we wouldn’t be feeling too good about ourselves. We’re not going to be celebrating that. So we want to know that we’re selling this to good people who are going to treat people well, and that’s across the board, not just the team but the freelancers, the clients, and all of that. And obviously they’re not going to be us. They’re going to do things their own way and be differently, but we want to sell it. We want to really in general, whether it’s my business partner, whether it’s a client, whether it’s a freelancer, we only want to work with good people who honor their word, who have the same values and beliefs that we do.

John Warrillow:

Got it. How did you tell the team once the deal had-

Nathan Hirsch:

It’s tough. I mean, once we sold it, we hopped on a Zoom call, and we told them. And there was emotions. There was crying. They were very appreciative of the money we set aside for them, and I think even more so with the pandemic. But they were emotional. They were sad. We were sad too. I mean, I’m the godfather of Chicianne’s kid. We had been working together for eight years. That’s tough. Now we still stay in touch with them. We chat with them. We’re connected on social media. We want to make sure they’re doing well. They’re all doing great.

Nathan Hirsch:

But yeah, I mean, it was definitely a tough conversation. At the same time, I think they understood why we made the decision, and I think that was important to us.

John Warrillow:

Got it. So you mentioned that you put aside I think you said $500,000 for the team. Very generous. How did that come about?

Nathan Hirsch:

That was something my business partner, Conner and I talked about. I mean, that wasn’t something we necessarily planned years in advance. I mean, we said, “Hey, if we’re going to sell this thing, we couldn’t do it without our team.” They were billing us 2000 hours a week. We couldn’t work 2000 hours a week if we wanted to. Their ideas, their feedback, their hard work was a big part of growing FreeUp, and we felt like they deserved to be rewarded.

John Warrillow:

But how did you sort of reward them along the way? I mean, you weren’t paying them below market rates, or perhaps you were. Why did you feel a sense of… I’m curious because you were hiring people in a developing country that may not have had jobs otherwise I’m assuming. Why did you feel the sense of indebtedness? Do you know what I mean?

Nathan Hirsch:

Yeah. I mean, in my opinion, if you sell a company, your employees, your freelancers, whatever, your virtual assistants should get a piece of it. What piece they get is totally subjective, and I’m sure there’s a lot of factors there. But we felt like Conner and I were very well off going forward. We’re very fortunate. We’re fortunate we grew up in the US with opportunities that they probably didn’t have, and we felt like this was an opportunity for them and some reward for a lot of hard work. We felt like it was the right thing to do, and yeah, I’m not sure it was much more than that.

John Warrillow:

Did TheHoth require you to have some sort of retention plan or bonus plan in place to transfer those employees over?

Nathan Hirsch:

No. In fact, they were very just skeptical at first just because I guess they never heard of it. They couldn’t believe why we were doing it, and we explained it to them. This was 100% from our side, not really on their side. They were down with it once we explained it to them and told them why. I think it kind of reassured them that they were getting A players because again, remember they never even met the team. But this came up later in the negotiation after everything was kind of set about.

John Warrillow:

First of all, how did you divvy up the money across the 30 employees?

Nathan Hirsch:

We spent a few hours going through people and dividing it out. I’m not sure there’s a perfect science for it. We tried to factor in a combination of how long they’d been with us with what their role is, are they a team leader, are they not a team leader with their overall performance. And we tried to get it as right as we possibly could.

John Warrillow:

Okay. Got it. So there’s a bunch of factors that went in and some subjectivity, some objectivity, but a bunch of things and you arrived at a number. But I’m assuming that for some of them this was life changing money.

Nathan Hirsch:

Yeah. They’ve been showing us their houses and renovations and stuff they’ve been able to do. Again, we didn’t know a pandemic was coming, but if you think the life is crazy in the US with the pandemic, imagine what it’s like in the Philippines. So I think having that sense of security there. I’d be the same way. If someone bought my company, the first thing I’m going to be thinking is, “Am I going to be losing my job? How long until I lose my job?” And all of that. So I think the money helped ease that while we also continued to reassure them that they weren’t going to lose their job and all of that.

John Warrillow:

Yeah. Makes sense. Was there any hesitation? I’ve heard of some acquirers saying, “Oh, no, no. Don’t pay them a bunch of money because then they’re going to leave because they’re going to feel like, ‘Man, I got all this money.'” I’m just doing the math, it’s around on average $10- or $15,000 per person, which may not sound like life changing money to you or someone listening to this. But again, to someone in a developing country, that could be a huge amount of money. It could be a year’s worth of money in some cases. Was there any sort of hesitation on behalf of the buyer saying, “Hey, man. Don’t give them that much money because I want to keep them.” Did you hear that at all or any sort of hesitance?

Nathan Hirsch:

Yeah. That was kind of their initial reservation. And if I was in their shoes, that would be my first reaction too. But we hopped on the phone with them. I mean, we explained to them that yeah, these people are going to get money, but they also love FreeUp. They’re dedicated to FreeUp. They want to be a part of FreeUp. They also have big families. They need to continue earning a living. This isn’t retirement money. They want to be a part of it. I mean, I think they kind of took our work on that. Although we had been open and honest with every other thing that we had done, so they had no reason to kind of doubt us there. I mean, rightfully so. It’s been almost a year since then, and no one’s just grabbed that money and run.

John Warrillow:

Describe for me where you were when the wire came in to confirm that the transaction had been consummated.

Nathan Hirsch:

Yeah. I mean, we were in their office in Hoth headquarters in St. Pete, Tampa, and yeah. We signed the document, and immediately they sent us the money.

John Warrillow:

Are you checking your iPhone? Do you have your banking app on your phone, and you’re like refreshing, refreshing, refreshing?

Nathan Hirsch:

Yeah. I mean, essentially. I mean, again, at that point, we’re trusting them. It doesn’t really make much sense for them to sign this agreement and then not send us the money at that point. So we weren’t necessarily scared it wasn’t going to happen. But it was definitely like, “Hey, this is real.”

John Warrillow:

I would actually genuinely be curious to know. So you’re in their offices. They’ve got home field advantage so to speak. They say, “Okay. It’s done. Wire’s sent.” Are you calling your bank to confirm it’s there, or…

Nathan Hirsch:

Oh yeah. I checked it. I have a banking app on my phone.

John Warrillow:

Okay. So you refreshed. You’re like, “Yup, okay. Good. We’re good.”

Nathan Hirsch:

Pretty much, yeah.

John Warrillow:

Got it. What’d you do next?

Nathan Hirsch:

So the next few days weren’t really celebrating. We told the team, and we got to remember we got 35 people that all work different time zones. So we had multiple meetings where we informed everyone. There was a lot of crying, a lot of emotion, a lot of explaining, a lot of repeating ourselves. So it wasn’t until a few days later that we actually got to enjoy it and celebrate.

John Warrillow:

What’d you do?

Nathan Hirsch:

Conner was here. So Conner lives in Denver. He came to Orlando. We went to TheHoth headquarters. We told the team while we were in TheHoth headquarters, and we came back to my place. We really just celebrated here. I think we went out, we got some beers, we kind of reminisced over the past four years, and talked a little bit about the future. Although nothing too crazy, just more longterm, big picture ideas. And yeah, just kind of enjoyed the moment.

John Warrillow:

Good for you. Did you buy yourself a trophy or any sort of reward to make the occasion?

Nathan Hirsch:

No. I’m a pretty frugal guy. I shouldn’t even say that because I just bought a second house in Colorado. But I was kind of planning on doing that anyway. But yeah, I mean, to me this is hopefully the beginning. I’m 31. I sold the business. I had some success on Amazon, although I never sold it. Hopefully Outsource School has some success. I mean, I want to continue to be in the entrepreneurial world. If you can tell by the way I’m dressed, I’m a shorts and T-shirts kind of guy. I’m never going to be one to just drop a lot of money on just stuff. Usually for me it’s about travel, and I had lots of travel lined up this year that all kind of got wiped out the window.

John Warrillow:

Yeah, yeah, yeah. It’s tough timing. There are worse problems I guess to have. But I’m happy for you, and I hope it works out for the travel at some point down the road when the world starts opening up again. Where can people find you, Nathan, if they want to reach out? Is LinkedIn the best, or do you want to point them somewhere? What’s the best way to reach out?

Nathan Hirsch:

Yeah. Nathan Hirsch on Facebook, on LinkedIn, on Instagram, or go to outsourceschool.com. You can check what I’m up to now. We’re teaching people. We’re giving people all of our systems, all of our processes so that you can scale businesses with virtual assistants.

John Warrillow:

Awesome, Nathan. Thanks for doing this.

Nathan Hirsch:

Thanks for having me.

 

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