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The Surprising Story Behind PetSmart’s Acquisition of AllPaws

April 1, 2021 |  

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Back in 2013, on the heels of building a successful online dating application, Darrell Lerner decided to apply his experience in the dating industry to pet adoption. He built a website and mobile app called AllPaws which allows users to find a pet based on a variety of criteria important to people considering adopting an animal.

In just over 2 years, AllPaws accumulated more than 1.5 million registered users and was receiving nearly 1 million visits per month while ranking in the top 100 of all lifestyle apps on Apple’s App Store.

Despite AllPaws’ success with consumers, it wasn’t translating into the next unicorn business. Lerner had chosen advertising as a way to monetize his traffic and was hovering at around $1 million in annual revenue. Lerner decided his business was worth more in the hands of a larger organization that could better leverage the vast amounts of pet and owner data he was collecting. Lerner decided he would sell AllPaws if he could get at least $3 million for his company. That’s when PetSmart turned around and offered him a whole lot more.

In this episode, you’ll discover:

  • How Lerner quickly solved the “chicken or egg” problem of anyone building a two-sided market.
  • An innovative way to align your M&A advisor with your goals.
  • A sneaky (yet brilliant) way Lerner created competitive tension for his company by drawing Petco into his negotiations with PetSmart.
  • How to know when you’ve pushed an acquirer as far as they’ll go on price.
  • The biggest challenges for an entrepreneur as an employee/contractor after you sell.

To quickly build his supply of pets that needed to be adopted, Lerner partnered with RescueGroups.org giving him instant access to more than 100,000 pets that needed a new home. Have you considered your best options for the fastest growth with the lowest risk? If you need some ideas, we’ll complete The Growth Quad in module four of The Value Builder System™. Get started for free by completing your Value Builder Score questionnaire.

Our guest

Combining his love for pets with his prior experience as co-founder of a popular online dating application, Darrell Lerner launched AllPaws in 2013 to offer a better way for people to find their next pet. The online dating style pet adoption platform quickly grew to millions of users and was ultimately acquired by pet industry leader PetSmart in 2016.

Darrell Lerner is a serial entrepreneur and business operator with deep experience starting and growing consumer-digital businesses. As a product-driven founder who developed his entrepreneurial spirit at an early age, he has worked on several multi-million user products and achieved successful exits while overseeing multiple C-Level roles. In his free time, Darrell enjoys watching basketball, baseball, and horse racing, listening to the band Rush, and playing with his rescue dog Kona (perhaps the biggest AllPaws success story of all).

Twitter: https://twitter.com/DarrellLerner LinkedIn: https://www.linkedin.com/in/darrelllerner/ Facebook: https://www.facebook.com/DarrellLerner

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Transcript

John Warrillow:

Hey, guys. It’s John Warrillow. So, after five years of hosting Built to Sell Radio, I’ve distilled the secrets from the most successful founders into the ultimate field guide, The Art of Selling Your Business: Winning Strategies & Secret Hacks for Exiting on Top is now available. The Art of Selling Your Business is a playbook for punching above your weight in a negotiation to sell your company. Now, you may still be years away from selling, but there are actions you can take now that will make your business irresistible to an acquirer in the future.

John Warrillow:

In this book, you’ll get answers to your most vexing questions like when’s the right time to sell? How should I value my business? What are the biggest mistakes owners make when they sell? How do I get multiple offers? How do I attract an offer from an acquirer without looking like I’m desperate to sell? How many companies should I approach? How do I separate real acquirers from tire kickers? When in the process do I reveal my numbers? When and how do I tell my employees? How do I avoid re-trading when the buyer drops their price during diligence? And the age-old how do I avoid an earn-out?

John Warrillow:

Along with actionable answers to the questions, you’ll also get a playbook for defending yourself against the dirty tricks used by the most unscrupulous acquirers including how to defend yourself against re-trading, acquirers who intentionally set unattainable earnout goals, financing an acquirers business, becoming a prop deal, strategic pacing, competitors posing as acquirers, accepting illiquid or overvalued shares for your business in lieu of cash, and giving away your retained earnings as part of your deal. You’ll also get easy to understand definitions of some of the most bewildering terms acquirers use in negotiating to buy your business. Stuff like tipping basket, covenant, downstroke, escrow, indemnification, earnout, [inaudible 00:02:43], reps and warranties, churn. I’m just about to throw up just using all this industry lingo, but you’ll get a definition for each of them in an easy-to-understand package. If you order the art of selling your business today, you’ll receive a collection of thank you gifts to enjoy alongside the book. Just go to builttosell.com/selling.

John Warrillow:

So cool little story for you today. The best way I can kinda describe it to you is imagine the world of online dating, right? You’ve got two people trying to find each other, certain level criteria that each has things that are important to them, etc. My next guest Darrell Lerner took what he learned building an online dating app and brought it to the world of pet adoption. Imagine yourself you’re looking to get a new pet and you think you’re going to adopt one, but you probably have some criteria. Maybe you need it to be hypoallergenic or there’s a certain energy level that you want for your dog. Well, that’s what Darrell Lerner built in this app called AllPaws.

John Warrillow:

He was able to in a deaf mood bring more than 100,000 listings almost overnight to his app solving the chicken or egg problem. He’ll describe how he did that. He also talks about what it was like to negotiate the sale of his company to a giant. He sold his business to PetSmart. How he brought Petco, PetSmart’s biggest rival into the negotiation, and what it felt like for him as an entrepreneur to be managed by his acquirer. Here to tell you the entire story is Darrell Lerner.

John Warrillow:

Darrell Lerner, welcome to Built To Sell Radio.

Darrell Lerner:

Thanks so much, John. It’s great to be here. Thanks for having me.

John Warrillow:

So, AllPaws, I must confess I’ve never actually used the app. I’ve adopted a dog though. I went to the Humane Society in Toronto and years ago, my wife and I just got married we thought, “Well, we’ll get training wheels. Instead of having kids we’ll get a dog.” And we went to the Humane Society. So, I guess I did it in a very old school kind of way. Tell me about AllPaws.

Darrell Lerner:

So, on AllPaws is what happens when an online dating founder decides to tackle the pet industry. In my prior life, I was in the online dating industry. I had a very popular Facebook app for a while. Grew the company significantly, and I was ready for something new. I missed the early stage feel, and sat in an office. I had raised some friends and family money. Sat in an office, I had somebody with me and literally started writing ideas on a piece of paper of what to do, and about 10 ideas. Were sitting there for a couple of months, and the girl who came to work with me was like, “Yeah, we got to do something.” And I was like, “We keep talking about how fun it would be to do something with pets. I’m like, “Let’s just take the knowledge that we have from years of building a dating site, and build a much better way for people to find their next pet.”

Darrell Lerner:

We got to work on what turned out to be AllPaws. We spent quite a bit of time validating the concept. From the dating industry, I knew that first there had to be a critical mass of pets in order for the experience valuable. Because just like in dating, if you do a search and once you add your search filters if there’s four search results, it’s a useless experience. You’re never coming back to that product. So, I investigated, can we get 100,000 pets right off the bat? And it turns out there were some third-party services, APIs that had pet listings. So I’m like, “Okay, check, we can get launched with 100,000 pets.” That’s enough that people will get interesting search results.

John Warrillow:

We should define API, Darrell.

Darrell Lerner:

Sorry.

John Warrillow:

No, no a connection for your device to another database, essentially, that allows that database to be served up in your app?

Darrell Lerner:

Yeah. So, there was a group called, a site called RescueGroups.org that basically served as I’ll call it inventory management for pet rescues and shelters. And one of the services they provided was the ability to upload their pets or the shelter pets onto other websites. So, we were able to tap into that to get this critical mass of listings right off the bat.

John Warrillow:

Got it, but I guess at the same time how did you reflect on the loss of control of how those listings would be displayed? Because you didn’t necessarily control that anymore at that point?

Darrell Lerner:

Great question. So first of all, after years with the prior company of working on top of the Facebook platform, I had a lot of experience of not being in direct control of your data and stuff like that. So, that wasn’t a shock. But one of the interesting things was, I spoke to the guy who ran it. I’m like, “Look, I have this vision. I want to take everything from the dating world.” And right now, if you try to search for pet online there might be free, there might be location, whatever. I’m like, “I want to add like 30 search filters. I want to add temperament, allergies, all these different things. And is there a way to do that with your database?” And he started laughing, he goes, “We have all that.” He said, “Nobody has ever asked for that before.”

John Warrillow:

So, wait, the RescueGroups.org had all that stuff on allergies and temperament?

Darrell Lerner:

They had like 30 different search filters. Some organizations didn’t necessarily upload all of it. But a lot of them did, and he’s like it’s all just sitting, and no one’s asked for it. And he really worked hand in hand with me in customizing the product to get it to where I wanted it to be. So what we really built was a dating site, it was just pets instead of people. So, then to further build-

John Warrillow:

So, let me see if I got it straight. So RescueGroups.org offers up their database to this API. So when somebody goes on the app, they can query it. Your big idea was like, let’s get a breadth of filtering criteria here. So people can really choose what they’re looking for in a dog or pet. And you launch with this great wealth of sort of the two-sided market. You’ve got one side of the market kind of nailed.

Darrell Lerner:

Correct. So that side of the market I was like, “Check, we’re going to get enough pets, at least from the start. And then we’ll offer the ability for organizations to upload their own.” But I’m like, “I got to see if people want this.” And so, I spent a few hundred dollars. I put up a coming soon page with an email capture. I said, “Hey, AllPaws is going to be launching soon. Add your email address to learn more.” And ran a few hundred dollars worth of Google ads. Adopt your next pet, 100,000 pets available for adoption, to see what kind of… First of all, what kind of click rates, then more importantly what percent of people give us their email address? I come from the testing and optimization background as a product person. So after having some fun optimizing that page and headlines and button copy, etc. We were getting 30, 35, 37% of people giving us their email address, which is just absurd. It’s a really high number. I’m like, “Okay, there’s clearly demand for this.”

John Warrillow:

So, let me get that straight. So, if you had 100 people land on that landing page 35 of them were giving you their email address?

Darrell Lerner:

Exactly. Exactly, right.

John Warrillow:

Wow.

Darrell Lerner:

Once we had optimized it, and that was after quite a bit of optimization. But it was kind of just me having a little fun, but at the same time it was validating that this is going to… There’s going to be in need. This is going to be interesting. And from my background in the startup world I’m like, “I think we can build a much better product, a product that’s 10 times better than anything on the market.”

John Warrillow:

So, where does it go from there? So you validated it. Did you launch with Google AdWords as your channel?

Darrell Lerner:

So, I hired a programmer developer who had worked with us at the previous company. A guy I knew real well, super talented. He built a product in let me say about four months. So, this is we ended up launching about, I want to say November 2013. I ended up… I decided… I can usually figure almost anything out, but I think one important skill for entrepreneurs is figure out what they’re good at, figure out where it makes sense for them to put their focus and where to delegate.

John Warrillow:

Sure.

Darrell Lerner:

I didn’t have a lot of experience with ad buying. I was doing my own tests, and I just knew that it was going to be a really long haul for me to figure this out and optimize this. Started asking around, got referred to a really, really talented ad buyer. One of the good things about pet adoption industry is there’s not a lot of competition for keywords because you don’t have big money behind it. And we really refined our marketing funnel. By the time we were done, we were paying five, six cents a click for a new user and under a dollar for a registered user. And that allowed us to really scale quickly especially once we added in some viral mechanics. We were getting traffic from social, really focused on emails.

John Warrillow:

So, you’re investing in paid search to drive the consumer side of the two sided market?

Darrell Lerner:

Correct.

John Warrillow:

Where did you get the money to invest in paid search? Did you raise a round of investment or how did that work?

Darrell Lerner:

Yeah, so I was kind of at the unusual situation because the previous company, which was called Snap Interactive had done very well. I was able to raise some friends and family money for my next venture, even pre-concept. So I found myself in this weird situation. I’m like, “I have an office, I have an employee, I have cash in the bank, but I have no idea what to do with.” Kind of the opposite of every other entrepreneur. But that allowed us to fund the early stages of growth, and build out the product.

John Warrillow:

How much did you raise friends and family, and what portion of the company did you have to give up for that?

Darrell Lerner:

Probably at the end of the day about a million dollars. I want to say probably for about a quarter-ish of the company.

John Warrillow:

Got it. Okay. So, that’s a pretty high valuation for an idea or even pre-idea.

Darrell Lerner:

Yeah.

John Warrillow:

Got it. Okay. So you get into it. The business is… What’s the business model? What was the vision for making money?

Darrell Lerner:

Yeah, so good question. My philosophy and especially coming from a dating site that we grew to 100 million users almost entirely virally. A little bit of kind of irrational exuberance. I’m like, “I don’t need to worry about that. I’ll figure it out when the time comes. I’m just going to focus on getting a lot of users and the rest will take care of itself just like it did before.” And started getting a lot of users, and started throwing up some Google ads, making a few hundred dollars a day and like, “This really isn’t going to do the trick.” I’m like, “I got to figure something better out.” We met a company along the way called Pet360. They owned a bunch of properties in the industry. And I just reached out…

John Warrillow:

You mean website properties or?

Darrell Lerner:

Yes. They owned PetMD, pet360.com, petfooddirect.com, the whole variety of pet sites and apps. And I just reached out to them to get better advertising, and almost immediately got an email from their head of business development, subsequently led to a meeting with their CEO. We decided they wanted to collaborate with us on a joint platform, a white label version of Pet360 using the AllPaws backend. We were going to have sponsorships and all that. So they put me in touch with their media division, their ad sales team. Things got derailed a little bit with the platform because it turns out they were in negotiation with PetSmart, and they were subsequently sold to PetSmart for $160 million.

Darrell Lerner:

But, so I got pretty friendly with their two head media guys, ad sales guys. And I remember saying like, “All right. Well, while we’re waiting for this joint platform, can we run some ads on AllPaws?” And they’re like, “Yeah, I think we can get you some sponsorships. We could probably get you about $25,000 a quarter.” I looked, and I said, “Okay, let’s add a zero to that,” and they laughed. I’m like, “I’m serious.” I’m like, “I want to do 250,000 a quarter.”

John Warrillow:

You lost me a little bit. So when you say, “To run some ads on AllPaws, you’re referring to brands like Purina and other family dog related products.

Darrell Lerner:

Exactly. They did media sales. They had relationships with all these pet brands.

John Warrillow:

Got it.

Darrell Lerner:

And they would get deeper partnerships and sponsorships beyond just traditional Google AdSense or something like that.

John Warrillow:

So, the business model that you landed on was ad supported, effectively. You were going to run ads on AllPaws.

Darrell Lerner:

Yes.

John Warrillow:

Got it.

Darrell Lerner:

After also trying a whole bunch of other things in between, but yes.

John Warrillow:

And so, were you successful in getting some advertising going?

Darrell Lerner:

Yeah. So, that was a great conversation. I still remember the look on their face when I’m like, “Add a zero to that number.” And they’re like, “You can’t,” and I’m like, “Why not?” They’re like, they started explaining impressions and you just don’t have the traffic. I’m like, “Okay, what would I need to do to achieve my goal?” And they’re like, “Well, you’d need a lot more impressions, and you’d need stuff that was performing at a much higher rate that added a lot more value.” I’m like, “Okay, let me get back to you.” I came back to them with a plan. A whole bunch of just really creative ad placements.

Darrell Lerner:

I mean, I’ll get a good example. One of our big partners, our biggest partner became Royal Canin, the pet food brand. They specialize in breed specific pet nutrition. So one of the things we did for them is their biggest 13 breeds or something, anytime someone searched, let’s say, for a German Shepherd, a breed modal would pop up with some info or fun facts on a German Shepherd along with a coupon-

John Warrillow:

That’s so smart.

Darrell Lerner:

… for their German Shepherd food. We started on the post signup page. There was a welcome. Oh, by the way now that you’re interested adopting a pet, are you interested in learning more about veterinarians in your area, trainers in your area, pet food, supplements, all these different things, started creating opt-in leads. So I came back to them with this whole plan, and they’re like, “Okay, this works.” And they got us… It wasn’t quite the 250 a quarter level. But we got two initial buys from Royal Canin and BRAVECTO which is a flea and tick manufacturer. And the Royal Canin partnership really stuck, and it did get to the levels that I’ve wanted. One of the really-

John Warrillow:

Before you go, I just need to understand what was so important to you about the $250,000 a quarter? What did that mean to you?

Darrell Lerner:

Absolutely nothing. It was just a 10X of the number they gave me. I like to think big. I literally just said, “Okay, you said 25,000 a quarter, add a zero to it.” I was just like, “Okay, 25,000, a quarter is not going to support this business. I got to figure out how to make this a seven figure revenue business and quickly. So, tell me what I need to do. I’ll come back to you. I’ll do it.”

John Warrillow:

Got it.

Darrell Lerner:

One of the really cool things we did with Royal Canin, we put in this process to confirm adoption so that we could find out when someone actually successfully adopted a pet from the site. And we came up with this new pet parent welcome package that Royal Canin would send out. And this is all, we’re all doing it by hand. They would literally mail the packages, but we were testing it. We would send them a list of here’s the people who have adopted a pet this month. Here’s the pet they adopted and they would say, “Congrats on adopting Kona. Here’s here’s a welcome kit from your friends at Royal Canin.” And stuff like that, we really emphasized this whole capturing the new pet parent at the point of market entry. It’s the one time in your adoption journey where you haven’t already formed purchasing habits. And now more and more, we focused on that in our pitches.

Darrell Lerner:

One of the really fun things that we did worked both for the media deals, and then subsequently when we went to sell the company is we would do mocks these kinds of things in advance. We would mock up potential placements. And these are all these different creative things. For PetSmart, for example, we created a post signup page. We presented them with a post signup page that said, “Welcome to AllPaws. We’re so excited that you’re going to adopt a pet. Once you do PetSmart wants to present you with $400 off, a $400 new pet parent welcome package. And by the way here are the six pet smart locations closest to your home which we got from your IP address.”

John Warrillow:

I love that.

Darrell Lerner:

Actually, putting that in front of these brands they loved. They loved seeing that. It wasn’t just we could theoretically do this and that, and seeing it mocked up on the site capture their-

John Warrillow:

It takes the conversation up a new level from the kind of cost per 1,000 advertising.

Darrell Lerner:

Exactly.

John Warrillow:

And you make such a wonderful point around reaching the dog parent at that first stage.

Darrell Lerner:

[inaudible 00:20:42] it was so drilled into me, new pet parents, reach them at the point of market entry.

John Warrillow:

Point of market entry, love it. I’m reminded of all the brands that try to flog their products on new moms. When they’ve got their little baby and Pampers is hawking stuff and Huggies, all the rest of it.

Darrell Lerner:

That’s exactly it. That’s your chance to get people when they haven’t formed purchasing habits.

John Warrillow:

Yeah, yeah. Love it. So, how big did you get this company before you decided that it was time to sell?

Darrell Lerner:

So, we had gotten to about a million and a half registered users. Registering meaning they created an account on the site. You didn’t have to create an account, but then we captured much more information. We were doing probably about over a million visits a month. We had subsequently launched an iPhone app. It was kind of like a Tinder for finding pets to adopt, and that one was doing great. We were getting 500 to 1000 new downloads a day. We never spent a penny on marketing on that, and it was top 100 in the lifestyle category of the app store. And so, we were rocking and rolling and these were pretty big numbers and they were growing month after month, quarter after quarter, and a couple of things happened.

Darrell Lerner:

One, we reached a point where these ad deals, we became a slave to servicing them. It was great. We were doing a million dollars a year on ad deals. We got to services a big one from Royal Canin they kept renewing, PetSmart same thing. But I felt like the business had become pitching these ad deals, these, sponsorships, and then putting in all the placements, and then doing the reporting. And we had gotten away from really focusing on growth and iterating and optimizing, all that kind of stuff. That wasn’t super fun for me.

John Warrillow:

I just want to go back to something you said earlier because I just want to make sure I have it in my mind. The original AllPaws I’ll call it app was it a web-based app that I would access through a web browser on a computer, and it was only subsequent to that you built the iPhone app?

Darrell Lerner:

Exactly. Yeah, we launched the website in November 2013. We launched the iPhone app I want to say fall of 2014. And then this is getting through about 2015 totally purely coincidentally I had purchased and read Built To Sell around the same time.

John Warrillow:

Boy, that’s awesome.

Darrell Lerner:

I guess in my head I was starting to think about, okay, right now this business is really driven by whatever ideas I have and I felt like I was kind of holding it together. How do I reposition this? I really started to focus on the offering to brands, and the data we were capturing from pet owners. Again, even with this advertising, with the mocks, like hey we have our user acquisition optimized. We have this funnel, it’s churning. If there was a brand that could get behind it you just keep turning the crank and it’ll work really well.

Darrell Lerner:

And then the other thing that happened June of 2015 my dad passed away unexpectedly. We were super, super close and he was involved in the business with me. Not in a day-to-day role, but he had helped me raise some of the capital and in an advisory role. That was obviously one of those life events, and at a time when I wanted to be focused on grieving and everything like that I’m like, “Okay, I have a business that had gotten to the point where we’re actually running profitably, but we weren’t growing, and we were kind of stagnating.” Yeah, we’re still growing a little bit but not in the sense of the, from the startup world this isn’t going to be a billion-dollar company. This isn’t going to be a unicorn.

Darrell Lerner:

So, I was kind of focused on three parallel tracks at that point. One, was testing some features that were getting away from adoption, that were more social, but there might be a much larger opportunity there. And I was very quietly testing a bunch of things. On the backend for the user it was an activity feed or create a profile of your existing pets, but I was really gathering data to see how the users would interact with those features. And if there was potential to build something much bigger, much more social.

John Warrillow:

Like a Facebook for dog parents? That kind of thing.

Darrell Lerner:

I joke that Instagram for pets.

John Warrillow:

Instagram for pets, okay, cool.

Darrell Lerner:

And it’s funny, I remember saying it to me, during the whole second half of 2015 like, “The only time you would smile when talking about the business was in talking about this Instagram for pets idea.” Then I just focus a little bit on raising capital, which was tough. I mean, we got insane press. We were getting coverage. Good Morning America, Mashable. I mean, every good housekeeping, every major name. And there was never any inbound interest, which is really strange, because [crosstalk 00:26:19]-

John Warrillow:

Inbound interest from acquirers or investors you mean?

Darrell Lerner:

From investors. Because I know in the past anytime we would get a TechCrunch article we would have 10 phone calls or emails. I think people thought we were a not-for-profit in pet adoption, and I’m just like, “Okay, this is going to be a slog to raise capital.” And as your audience knows, raising capital is a long, arduous process. And I just didn’t know that my head was in it at that point after losing my dad and everything. Then the third was a sale. I started… What I really asked myself, I’m like, “Do I feel like I’m at the beginning of this journey or the end of this journey?” Taking together with the previous experience with Snap that was a 10-year process I was tired. The girl who was working with me was relocating, she was getting married. It kind of felt like this might be the end of the process. I didn’t know if I had another several years of real passion in it.

Darrell Lerner:

So, I asked around for some recommendations for some bankers focused on M&A. But I distinctly remember, I had a conversation. Ironically, it was with the guy who was the CEO of Pet360, a gum named Brock. I remember laying out my options for him. I like to get advice from other people. Ultimately, I’m going to do what I think is best. But it helps to talk to people who have been down that road and gather all their feedback.

John Warrillow:

What a blessing.

Darrell Lerner:

I remember him saying to me, and he’s like, “You got to pick a path.” He’s like, “You’ll execute successfully in whichever one you do, but you can’t do all three, you got to pick one.” I almost at that point, I hadn’t given myself permission to be okay with pursuing a sale. Because in a way it meant, all right, this isn’t going to be a billion-dollar business. I didn’t build a unicorn, but like, “You know what…” Go ahead.

John Warrillow:

Keep going.

Darrell Lerner:

I’m like, “You know what, if I can get some money out of this, investors get their money,” and at this point we had two and a half employees. It wasn’t like I had a whole team that was dependent upon me. And I can then take some time off. I’m like, “That’s an okay outcome.” I convinced myself that I’m okay with that. I’m at peace with that outcome.

John Warrillow:

Let me ask you a question because I find it interesting because on one hand the numbers you throw out are to me, to my eyes are just stunning. I’m looking at 1,000,005 registered users. 500 downloads a day of your app. I mean, these are just astonishing numbers. And then when we talk about the size of the company you have two and a half employees, a million or so in revenue. It’s like, what was that like to have this on in eCommerce terms, in technology terms those numbers are world class, massive, but on the size of the company. It must have felt weird. Did that feel conflicted [crosstalk 00:29:37]?

Darrell Lerner:

It’s a great question. It felt exhausting and lonely. But it’s interesting because my previous company we had done real well. We’re 20 million in revenue annually. We had 100 million users. This was almost like if you put an entrepreneur in a laboratory and said, “Okay, here’s a million dollars. We’re going to lock you in for two years. Come out of it with a business that’s worth more than that.” That was kind of what it felt like. I would just sit at my desk by myself every day and go, “Okay, what are we going to do next? What are we going to do next? How do I make it bigger? How do I meet people?” I mean, I knew nobody in the pet industry when I went in.

Darrell Lerner:

One of the things I was most proud of is by the time we were done I got to know CEOs of a lot of prominent companies in the industry. So, yeah, it was kind of weird. There weren’t… It wasn’t a big office with ping pong tables like we had the last time. It was almost… I felt like I was like in a little laboratory every day just churning out this product into achieving an ultimate goal of building a successful business.

John Warrillow:

Awesome. Okay, so let’s get into it. So, you talked to Brock, he’s like, “Pick a lane, buddy. You can’t be half pregnant here [crosstalk 00:30:49]-

Darrell Lerner:

Exactly.

John Warrillow:

… do something. What next? You hired an M&A person?

Darrell Lerner:

Yeah, so I tapped to my network. I asked for a few referrals for bankers. A couple said, “I don’t think this is going to be saleable.” I mean, obviously the best time to sell a business is when you’re not trying. It’s a lot harder when you’re trying. So I didn’t know what to expect. One of the bankers I spoke to said, “This isn’t for me, but I have someone who it might be for.” And he referred me to a boutique investment bank in New York called Triangle Capital.

John Warrillow:

Triangle Capital, okay.

Darrell Lerner:

Triangle Capital, middle market firm. I had a call with them. They weren’t sure. And he’s like, “I don’t know. He’s like the lead guy, a guy named Richard Kestenbaum, a great guy. He’s like, “I want to meet you in person. I want to talk to you.” And then we talked about the business for an hour. He’s like, “You come across very genuine, very enthusiastic, very passionate about this business, and what you built.” He said, “We weren’t going to take the assignment.” He said, “I think we can sell this business.” He said, “It’s going to sell for seven figures. The question is, is it a low seven-figure number or a high seven-figure number? That really depends on you, and it depends on how many horses we can get into the race.”

John Warrillow:

What was your reaction to that pitch from him?

Darrell Lerner:

I was happy to hear that he thought he could sell it. It wasn’t my first rodeo. So, I cautiously optimistic. The idea of a low seven figure number didn’t excite me. But I figured, okay, let’s see where this goes.

John Warrillow:

What did you think it could be worth? If low seven figures wasn’t exciting, did you have any sense of what would have been exciting?

Darrell Lerner:

Certainly, a mid to high seven-figure number was a lot more interesting. To make sure investors made something and make sure I came out of it with something. But we didn’t have a lot of cash left at that point. I mean, we weren’t losing money, but if any of these ad deals disappeared that would have been it. So, I figured, I’m like, “All right, I’m going to go down this path. I have to be all in on it.” I was hoping he was right. And he said to me, he’s like, “Give me a number that you will… I need to know you’re serious, that you will absolutely sell this business for.” And I started thinking, I said, “It’s got to be like $3 million.” I said, “If you could get me a deal for three million-plus I’ll take it. All other things being equal, and nothing black.” I said, “Honestly, anything less than that I’m not going to do an acqui-hire, and if someone wants to pay a million dollars to this I’d rather even though I don’t want to do it, I’d rather bet on myself, and I’ll build it back up.” But we went through the process.

John Warrillow:

And what was Richards reaction to the three million number?

Darrell Lerner:

He thought it was very doable. It’s funny in preparation for this interview I re-read Built To Sell last night. And it was so funny. I mean, your description of the process with the bankers was dead on. Every aspect from them saying, “Well, we don’t have a lot of cash, I can’t afford a retainer.” To them saying, “We got to have something to show that you’re serious.” And me saying, “I don’t want to work for an acquirer after that.” And them saying, “You can’t tell them that.” We rehearsed what your line is going to be. It’s important for you, for the business to end up in good hands. You’ll gladly participate in the transition. You have to be… You’re open-minded, but you’re also an entrepreneur. So, you’ll see how it goes kind of thing.

John Warrillow:

How did Richard… That’s great to hear. How did Richard coach you on answering the question? Will you stick around and help us? Work in the company for a while.

Darrell Lerner:

Yeah. So he said, he’s like, “Look, you’re going to have to commit to being a part of a transition.” I told him, I’m like, “I’m not going to relocate.” And he said, “That’s fair. So tell them you won’t relocate, but you will absolutely commit to a transition, making sure that business ends up in good hands, comes to a soft landing.” He said, “Tell them that you’ve just gone through a major life event. You’re open minded, you really don’t have a lot of thoughts beyond that. You’re happy to see what unfolds.” In my mind I knew there’s no way I’m staying anywhere for an extended period of time. But he said, “You can’t say that.”

John Warrillow:

How not to answer the question. Got it. Okay. So, you guys go back and forth. Were you at all concerned giving Richard your bottom line? And sometimes there’s a theory in real estate where you never give your bottom line to your real estate agent because you think, “Oh, may be they’re going to whisper that to the other side, and magically the offer you get is exactly your bottom line. Were you worried at all about sharing that level of detail with Richard?

Darrell Lerner:

So, great point. The way I addressed it, I structured an unconventional deal with them where their take, their commission on the sale went up as the price went up. So, I wanted them totally motivated to get a much higher price rather than like you’re saying, “Okay, we easily got a $3 million deal.” So, the more we solve for, the more they made at an increasing rate, and it definitely served, I think, to keep them highly motivated.

John Warrillow:

And that is unusual. For folks who are listening, oftentimes, the commission goes down for each extra million you get so an advisor might make X percent on the first million and then X minus 20% on the second million, and down.

Darrell Lerner:

Exactly.

John Warrillow:

And you went the opposite way.

Darrell Lerner:

I remember having a discussion with my brother, Cliff, who I was partners with in the previous company, and he’s an accomplished entrepreneur in his own right. And we were having that exact discussion. He’s like, “Look, you got to make sure your interests are aligned, and let’s structure something where the more the sale is the more they make, and we came up with this structure.” I think it served us very well.

John Warrillow:

Fantastic. So, who does Richard shop it to? How big is the short list or the long list?

Darrell Lerner:

I should also add there’s two other people at Triangle who I worked closely with, Errol Glasser and Kim Karmitz, all were great. We came up with a list of about… I should say, they came up with a list of about, I want to say 50 companies. As is normal in the process, the list cast a pretty wide net and included some companies that maybe have pet content, but weren’t pet companies. But we had a pretty good feel, and certainly I did right off the bat who the four or five that would be especially interested would be.

John Warrillow:

Who did you think the four or five were and why did you think they were strategic?

Darrell Lerner:

I thought, I’ll name a couple. I thought PetSmart for sure because PetSmart by buying Pet360 already participated in our business, and had our media revenue or percentage of our media revenue. I also did something that I have to pat myself on the back for. It was pretty strategic. So, I had befriended a reporter, a writer. And she’s like, “I’ll do a story on you for Forbes, but I got to have a good business aim.” And for like a year I kept pitching her all these stories about our growth and raising money and blah, blah, blah, blah. And she’s like, “These aren’t interesting.”

Darrell Lerner:

Finally, I came to her and I’m like, “All right, I have something different. Let’s talk about the performance of our ad placements and our sponsorships. How we’re allowing brands to connect with new pet parents at the point of market entry,” that whole pitch. She’s like, “That’s really interesting.” I said, “All I ask, and you can write anything you want just give me a two or three line quote that I can write myself,” and she agreed. In the quote, I talked about how we are getting deal after deal and renewals from partners like Royal Canin and PetSmart because of the high performance of their placements, and how this is such a great opportunity for other large retailers and brands.

Darrell Lerner:

And sure enough, it worked like clockwork. Within a week, I had a phone call from Petco, and Petco and PetSmart are very competitive. And we were working on a pretty sizable sponsorship or ad deal with Petco. PetSmart exercised their right of first refusal to take the Petco deal. And that basically they knew I was also starting to look into selling the company. That jump-started their participation in the process because they knew that Petco was interested in us at some level.

John Warrillow:

Love it. I love the Forbes angle. It’s brilliant. What was the right of first refusal? So, with PetSmart, they had the ability to accept any advertising package that you were offering somebody else, is that right?

Darrell Lerner:

Yeah. I don’t remember the specifics, but I think when we did our ad deal with them it gave them the right to write a first refusal. I want to say for any other, an ad deal with any other pet retailer. It might have even specifically said Petco because they were super competitive with each other.

John Warrillow:

Got it.

Darrell Lerner:

So they immediately jumped on that, and that drew them into the process. And to go back to your question another one I thought would have been interested was Royal Canin because they were our biggest partner. And that really opened my eyes to how so much of an M&A process comes down to timing and circumstance. They never really got in the game. Their home base is in Europe, and their CEO was traveling or something to that effect with the managing director. And they were late into the game. They couldn’t get up to speed in time. And as this process went through you have to set deadlines when indications of interest are due, when bids are due. And they were just trailing and never really got into it.

John Warrillow:

It’s so funny because as entrepreneurs our company is so important to us. It’s like we think about it all day and night, and we think about all the strategic reasons why a company A would want to buy us blah, blah, blah. And then you’re like, “Yeah, well, the CEO’s just traveling this week, or they had a retreat, and somebody broke their leg.” And so, they’re all focused on… The craziest things happen, but it’s why we need a relatively big list of potential acquirers to go to.

Darrell Lerner:

It’s true. I mean, when we narrowed it down to let’s say, the six or so who wanted the bigger book meaning the whole merger package. Several of them were obvious to me, several of them were complete surprises. Companies we’d never spoken to or dealt with.

John Warrillow:

And those were companies that Triangle put on the list?

Darrell Lerner:

Yes.

John Warrillow:

Yeah. Were they private equity groups, or what were…

Darrell Lerner:

There were a couple of private equity groups in there that never went too far with it. Of the final group that was interested, I don’t think I can give names. So, it came down to two who ended up making bids. One was PetSmart. One was a company we had never dealt with that essentially it was a holding company for a bunch of different brands in the pet industry. One other that got pretty far down the line was a pet food manufacturer, natural pet foods. I had no relationship with them at all. I had never even thought about them, but they got pretty far with us.

Darrell Lerner:

Another large pet food brand also somewhat far. I was actually surprised they didn’t bid. I had made a trip to meet them in person. They ended up not bidding. But ultimately, Triangle put out a deadline for indications of interest. And it was sitting there going, “Okay, I’m preparing to be stood up and get nothing.” I remember Kim over there emailed me. She’s like, “Well, we have a bid.” And she told me who it was from, and I was like, “Really?” That was the holding company I mentioned. I said, “I wasn’t expecting that.” She’s like, “And it’s above your number.” I’m like, “Wow.” And then PetSmart came in with a bid that was also above my number. I was like, “Great, we got two bids both already above my number.” I’m like, ” whatever you do, don’t blow this deal. I’ll take either one of them, sell.”

John Warrillow:

I love it. What was Triangle’s response to don’t blow it, I’ll take either one. What did they say?

Darrell Lerner:

They said, “We know what we’re doing. It’ll all work out.” They just prepared me for the process to come.

John Warrillow:

How much of a difference between the two? I know we can’t talk exactly-

Darrell Lerner:

Sure.

John Warrillow:

… what the number was, but on a percentage basis, how much of a difference would there have been between the two offers?

Darrell Lerner:

They were both ranges. I would say a range of a couple million dollars. So probably a 30, 40% difference.

John Warrillow:

Okay.

Darrell Lerner:

So, it was clear that one of them which turned out to be PetSmart was the leader. Triangle talked with… We were pretty sure we can get them both come up. We think the other one will come up quite a bit. But PetSmart was the leader.

John Warrillow:

Got it.

Darrell Lerner:

And so at that point we had a lot of discussions around which one is going to make sense? What’s involved with me? What the process was like? The diligence which I’m a very organized detail-oriented person. It astounded me the level of due diligence performed during this process.

John Warrillow:

Yeah. I can only imagine. When you go back if we go back to the two offers again. You mentioned they were a range. Did you mean that on the letter of intent instead of providing a specific number they provided you a range or did you mean that there was a range between the two offers?

Darrell Lerner:

No, they both provided range, a range of let’s say roughly a million dollars. They said subject to further due diligence blah, blah, blah.

John Warrillow:

Wow, okay.

Darrell Lerner:

These represented, these were nonbinding indications of interest.

John Warrillow:

Okay.

Darrell Lerner:

So, I think we went… With the first group a bunch of them flew out to meet me. That’s another thing about the process actually that I found quite interesting. I had maybe four in-person meetings during all of this. I had more meetings… It was harder getting ad deals than it was doing the M&A deal. I remember saying to the bankers I’m like, Aren’t they going to… Aren’t we going to have 10 hour sessions?” They’re like, “No, these companies that have made acquisitions they have their process. You give them all their materials. They’ll want to meet you, certainly, but it was surprising how few phone calls and meetings there were.

John Warrillow:

That’s really funny and how clinical [inaudible 00:46:34]. So, these are indications of interest. That’s an important distinction as opposed to a letter of intent they were an IoI. Did you take both of the IoIs through to the next stage or did you commit to one?

Darrell Lerner:

So, I think if memory serves we shared more material with them over a couple of weeks, had a meeting. PetSmart knew us pretty well already from our pre-existing relationship.

John Warrillow:

Sure.

Darrell Lerner:

Kind of got them to the point of like all right what’s your real number here? And ultimately the PetSmart number ended up being a fair bit higher. Not a ton, but enough to make a difference.

John Warrillow:

It was higher than the original range they gave you?

Darrell Lerner:

It was at the top end of their range, and it was higher than the other offer which ended up going above their range as well, but they wouldn’t go to where PetSmart.

John Warrillow:

Got it.

Darrell Lerner:

And it’s kind of in the negotiations I remember the banker saying to me they’re like, “You know when push and when not to push. These are each of their limits. Can we say let’s add 500,000 because…” I feel like these are their numbers, it’s time.

John Warrillow:

What did they share with you about the body language, the tenor of the conversations, what’s in the agreement that would lead them to believe that they had pushed them as far as they could?

Darrell Lerner:

I think it just came from their experience. They seemed pretty confident. They’ve been doing this a long time. I just remember Richard saying to me, he’s like, “It’s time. These are their numbers.” He goes, “If you start squeezing them anymore you’re going to run the risk of losing the deal,” and yeah I trusted him.

John Warrillow:

And so, let’s just be clear because this is an important nuance. So, the IoIs, the indication of interest were ranges. You went through another level of diligence or meetings with both parties and then had them firm those offers up into a letter of intent or an LoI I’m assuming.

Darrell Lerner:

I remember correctly, we put a deadline right after July 4th, this is 2016 of all right, we need your bottom line number. And at that point we spent about a day going back and forth with each of them, and then I went into the Triangle office, and we looked at the offers. They’re like, “All right, it’s time to pick one, and move to a letter of intent.” And we picked the PetSmart offer and drew up a letter of intent pretty quickly, and moved into the really serious due diligence phase moving toward a closing date.

John Warrillow:

And so, a lot of water is under the bridge. Since then a lot of time has passed. Have you ever personally reflected on whether Richard was right that pushing them further would have made one of them walk or… Again, I’ll just speak from my own experience. Whenever I’ve sold a home oftentimes I hate to equate selling a business to selling a home, but oftentimes I’ll get some subtle pressure from my agent who says, “Hey, this is their offer. This is the best we can do.” And I’ve thought about it after. I was thinking, “Maybe I should have gone back one more time, one more turn.” Have you thought five years on now since the deal was there more money? Could I have pushed further? Was Richard just trying to get a deal done versus really being genuine?

Darrell Lerner:

No question. He was not just trying to get a deal done. I got to know the deal guy over PetSmart pretty well. Look, if I had said the number is $100,000 higher or nothing. Would they have done it? Maybe. But it was pretty clear to me. I subsequently saw their business case and their internal documents. This was their number. I don’t know if they would have walked over a demand for a little more. But clearly, the risk to reward didn’t justify making the demand based on the banker’s evaluation as well as my own evaluation. I was very happy with that number. It was a lot more than my original number. So, I didn’t want to do anything to risk the deal. I was like, “I spent the next three months just closing my eyes. Like, just don’t fall apart, don’t fall apart.” It becomes virtually impossible to run your business as normal while a deal like this is about to happen.

John Warrillow:

Yeah, I think people would be… I mean, people have heard about due diligence as being this very difficult period where the attention to detail, and all these things are incredibly important. But I think it would be interesting for folks to hear what was the most peculiar, surprising thing that you’re asked for in the diligence period that you’re like, “You want to see what?”

Darrell Lerner:

I think the most surprising thing was just truly the level. I mean, the volume of requests. I’m like, “Look, we’re a two and a half person company. There’s at this point 100 grand in the bank. There’s not a lot to do.” They had Simpson and Thatcher’s IP attorney quizzing me on stuff. I remember in one case, in particular, there was we had hired an outside developer to work on one feature. Over a couple of weeks, he’d worked with our developer on it. It was a common application feature, and they didn’t love the language in the freelance agreement we had signed with him. They’re like we want him to go to… We want to add a new agreement or something like that. I’m just like, “Guys, this is someone I haven’t spoken to him in three years. I dealt with for a minute and a half. He doesn’t know I exist.” I’m like, “I’m telling you if we go to him it’s going to do more harm than good. His role is something… It’s a feature that’s not even on the product.”

Darrell Lerner:

We spent a considerable amount of time on this. I’m like, “Look, I’ll rep whatever you need me to rep to.” Ultimately, part of the deal structure was there was a million-dollar hold back against any future claims. I’m like, “I’m fine with that. There’s not going to be any claims.” There was, I mean, initial resolutions from the formation of the business they didn’t love. We had to redo a resolution basically affirming all the prior resolutions.

John Warrillow:

Crazy stuff.

Darrell Lerner:

I mean, every piece of paper in my office ended up in their hands by the time we were done.

John Warrillow:

How did you guys stick handle? Because you and Richard had had this long conversation about your role and how not to answer the question. So how did they structure your role post-sale?

Darrell Lerner:

Yeah. So, it turned out to be really interesting and somewhat surprising. I remember the offer that we did not take the language was that I would agree to be an employee for one year, anything further by mutual agreement, and I did not have to relocate. So I’m like, “Okay, I’m fine with that.” And PetSmart’s offer, which ended up turning out to cause some friction was that I was a consultant for up to one year. I could be terminated at any time. I didn’t have to work full-time, and I didn’t have to relocate.

Darrell Lerner:

One interesting thing was it’s funny when you’re negotiating these terms you’re so focused on the big picture, but I remember adding in that no travel. Travel was not required because they were based in Phoenix and I’m in New York. And about a week after the deal was done I get an email from one of the high-ups there. All right, everyone on the AllPaws deal team please be in Phoenix on Monday. And I’m like, “Yeah, this is why I put in the no travel thing.” I remember talking to a couple of my contacts over there. And they’re like, “Look, I know that you like to please and want to do the right thing, and you still care and all that, but I’m telling you this is going to set the tone for next year. You have to say no.” And I felt really badly doing it, but I said, “I’m sorry, my agreement is no travel, that doesn’t work for me.”

Darrell Lerner:

Our main contact over there who I had a really good relationship with, the guy who did the deal. He called me, he’s like, “Look, they really want the deal team there. Is there any shot sometime in the next few weeks you can come out for a day?” I said, “Of course.” I said, “Why couldn’t they have asked like that?” That is perfectly reasonable. Of course, I will be there. That’s very different from be here next Monday. But yeah, it was funny, because I was like, “I’m glad that I got that clause in the deal.”

John Warrillow:

It’s so interesting because as entrepreneurs nobody tells us what to do. You’re like, “Be here next Monday. What are you kidding me? Like, no.” But when it’s couched as this will be a favor. It’s totally different reaction.

Darrell Lerner:

Absolutely.

John Warrillow:

But he’s working for some giant company. He’s like, “When I say jump you say how high? If I want your-

Darrell Lerner:

That’s exactly what my contacts there said to me. They’re like, “That’s what he’s used to.” He used that exact terminology. If he says jump, they say how high? And I am not used to that. I’ve worked for myself my entire life. So, that was eye-opening.

John Warrillow:

Yeah, that’s for sure. Did you have any sort of earnout that you had to achieve or was it simply a consulting contract on demand you were available, etc?

Darrell Lerner:

It was exactly as you’ve described. It’s consulting on demand. The only thing was, as I said, there was a million-dollar hold back, which I took on the entirety of personally rather than having any investors subject to that.

John Warrillow:

That was generous of you.

Darrell Lerner:

Yeah, I wanted them to do as well as possible. So, that was on me. But other than that, yeah, they kept me the full year. And I used to joke to people. They would ask, “How’s it going?” I’m like, “Well, I work from home. I work part-time. I’ve already gotten my money. That said, this has been one of the most stressful years of my life.”

John Warrillow:

Really.

Darrell Lerner:

It was just… I’m used to… It was hard to teach myself that I didn’t have to care as much. That it wasn’t my product, it wasn’t my decision anymore. They paid me for it, and their goals were very different than my goals. And when things were broken, where I was used to having a panic attack, it didn’t have the same importance to them. It was hard to separate myself and my baby. I actually did a lot of reading looking for advice on how to handle working with an acquirer post-transaction. And finally, I read one piece I think on Quora, and it really hit home. It’s basically be Zen. Just best efforts, be Zen about everything. Aim to please, but understand it’s not yours.

John Warrillow:

But again, what a difference for most entrepreneurs who take ownership, who are action-oriented, who are like, they live and die the result. And it’s like flip a switch like that.

Darrell Lerner:

It was so hard. The flipping of the switch for me really took place over the entirety that year. It took a long time for me to be like, “All right. Emails aren’t going out this morning.” Okay. I’ll let them know.

John Warrillow:

Zen.

Darrell Lerner:

That was actually… I mean, I literally said, “Okay, just be zen about it. Let them know.” And I remember Brock giving me advice telling me anytime you respond just make sure that you keep saying, “Any way I can help I’m happy to. I’m available to help, whatever you need just everything on paper, always make clear that you’re trying to help them, you’re available. Don’t say anything that could ever be used against you.

John Warrillow:

Sure. In writing for sure, yeah.

Darrell Lerner:

That was really the approach I finally got around to.

John Warrillow:

When you sold how much of your listings, how many of your listings, I guess, I mean, what proportion of your listings were from the original RescueGroups.org organization? Was it still the vast majority?

Darrell Lerner:

No, it’s a good question. So, at the time, we sold we probably had in the neighborhood of 250 to 300,000 pets at the time. I would say about 100 were the original Rescue Groups pets. 100 were, I actually had a joke, a frenemies relationship with a competitor called Adopt a Pet, which is the second-largest site in the industry. And we had about 100,000 listings from them as well through a strange partnership. The guy who runs it was a great guy. And then we got about another 50 to 100,000 through direct listings, shoppers signing up on their own.

John Warrillow:

And did those relationships with the RescueGroup.org and Adopt a Pet, were they scrutinized as part of PetSmart’s diligence. Was that something they wanted to dig into further?

Darrell Lerner:

Not as much as you would have thought. I know we sent a bunch of stuff to their technology folks. They weren’t focused on that very much. Yeah, again, I mean, I don’t know if that I have a specific example. But the things that I would have focused on more… They were really focused on legal. There was a lot of scrutiny. We had a really small line of credit.

Darrell Lerner:

We had a $50,000 credit line. That was something… If we ask for something peculiar they spent a ton of time on, that had at the close prior to the deal closing in order… So for it not to break a covenant for one of their larger credit facilities. That was a major, major focus. Like, you have to prove this as closed. Trying to figure out exactly how much cash was going to be in the bank at the time of the sale so that the sale could be adjusted by that cash. Literally, we’re talking $16,000, but it was scrutinized. No, they didn’t focus a lot on running the product. And in fact for most of my year there, I continued to run it almost business as usual.

John Warrillow:

Yeah, it makes sense. Can you please take us inside, take me inside the conversation that you had with one of those original investors? I’d love to know how you handled the conversation, what their reaction was, where it happened. Can you paint the picture for me?

Darrell Lerner:

Yeah, so the reactions buried. I told a bunch of people what I was thinking, and I laid out, I’m like, “Look, we’re in an unusual scenario. Most startups, 90 plus percent of them fail. Most of them are either an out or a home run.” I said, “We’re in a weird position where we’re going to hit a double or a triple.” And it’s going to be strange because you’re basically going to get your money back, if I’m able to execute a sale. And some of them, I mean, some were people I was close to, and they’re like, “Look, whatever you do, great.” Others I had no relationship with, or no close relationship with, they didn’t really care.

Darrell Lerner:

A couple of people were just thrilled to get a check. They’re like, “We considered this found money. We wrote it off when we made the investment.” A couple others had no reaction. It kind of ran the gamut. But they all knew, or at least most of them knew about my dad and everything. They understood the situation. And I made clear like, “Look, we’ve built a great business, but there’s not a lot of cash in the bank. And if we continue forward, there’s a risk of getting nothing, and I think that this is the right move for everybody.”

John Warrillow:

Yeah. Did you buy yourself any sort of trophy or reward for selling?

Darrell Lerner:

I bought my wife a treadmill. That was her big request. Well, actually, the house that you’re looking at is probably the big trophy.

John Warrillow:

Good for you. Well, listen, there are a lot of memories. I’m sure that’ll be great.

Darrell Lerner:

On the smaller side, I think there were a couple of things that I remember in particular. One was that trip out to Phoenix that I mentioned right after the deal closed, and I ultimately did go there. The meeting was on a Monday, and I said to my wife who’s a teacher, “Let’s make a little trip out of it.” And so we booked Friday, Saturday, Sunday at the Four Seasons in Scottsdale, and I’m like lets get a suite.

John Warrillow:

Hopefully, you charged PetSmart for that.

Darrell Lerner:

No, they paid-

John Warrillow:

Come on, man.

Darrell Lerner:

They paid for Sunday and Monday at the Westin.

John Warrillow:

Okay.

Darrell Lerner:

I paid Friday, Saturday at the Four Seasons, and I’m like, “Oh, we can book a suite. Oh, yeah.” Not that I hadn’t [inaudible 01:04:01] before this, but it’s an extra 500 a night. Yeah, great. Let’s do it. Let’s have some fun.

John Warrillow:

Good for you. I love hearing your story of how you spent the money, which is great. Listen, I really appreciate you sharing your story with such candor. How can people… If people want to reach, I know you’ve got a couple projects, nothing major that you want to disclose or reveal? Maybe you do? Tell me what’s going on?

Darrell Lerner:

Well, I’m still in stealth mode. But after three years of decompressing, taking some time, turning down some job offers and trying to figure out what the hell it is I’m wanting to do.

John Warrillow:

Dude, you are totally unemployable by the way. I’m just going to tell you that right out the gate.

Darrell Lerner:

This is what I do. So, and I came to that realization. So, last spring, around the beginning of the pandemic my brother and I started talking and we came up with a shared vision around better connecting with your friends and network. And he and I are partnering again, and it’s still in stealth mode, but we’re well into development on a project in the social messenger space that we’re super excited about.

John Warrillow:

That’s awesome. Well, you’ve let that little dangle there. That’ll make me curious for a few months for sure.

Darrell Lerner:

Stay tuned.

John Warrillow:

Yeah, stay tuned on that. Are you a LinkedIn guy? Are you cool if people want to reach out to you on LinkedIn?

Darrell Lerner:

Sure, sure. I’m on LinkedIn.

John Warrillow:

Or any other social channels that you use?

Darrell Lerner:

Twitter, Twitter and LinkedIn, both are under my name, Darrell Lerner, D-A-R-R-E-L-L L-E-R-N-E-R. You can just spell it, you’ll probably find it anyway it’s not hard.

John Warrillow:

Yeah, we’ll put that stuff in the show notes at builttosell.com. So, Twitter and LinkedIn. Darrell, it was a pleasure. Thank you.

Darrell Lerner:

This is fun reliving the story, and I hope I was able to share some valuable insights for your audience.

John Warrillow:

Hey, if you like today’s episode, you’re going to love my new book, The Art of Selling Your Business. The book was inspired by the cohort of my guests over the years who have been able to negotiate an exit far better than the benchmark in their industry. Sometimes two or three times more than I would have expected. I was curious to understand the tactics and strategy to these entrepreneurs, and what they do differently from average performers. The result is a playbook for punching above your weight when it comes to selling your business. To learn more, go to builttosell.com/selling, where we put together a collection of gifts for listeners who order the book. Just go to builttosell.com/selling.

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