Inside Uptime’s 7-Figure Acquisition of JurisPage

Transcript

Disclaimer: Transcripts may contain a few typos. With most episodes lasting 60+ minutes, it can be difficult to catch some minor errors.

John Warrillow:

So when’s the last time you read a book on selling your company? My guess is you’ve never read a book on selling your company. Why bother when the only books out there read like text books, filled with acronyms and terms you’ve never heard of written by people who make it their job to make themselves look and sound smarter than you? Why bother? Well, The Art of Selling Your Business tries to do exactly the opposite. It features the stories of the founders I’ve listened to for the podcast. I’ve taken their best practices, their secret hacks, and bundled them into a storytelling format so that you can take away the key lessons, the action plan, the field guide without sifting through the boring textbook, that is most books on the topic of selling your company. You can get it at BuiltToSell.com/Selling.

People always say curiosity is the entrepreneur’s killer app. It’s the ingredient that you need to be a successful business owner. While I agree curiosity is important, I actually think there’s another personality trait that could be even more important, and that’s discipline. As you grow your business, there are going to be so many temptations along the way that I believe that it is the entrepreneur who can remain disciplined to the original idea, the original value proposition, the person they want to serve and the product they want to offer.

If you are able to stay disciplined, I think you will find that serves you well. It served my next guest, Andy Cabasso, quite well. Andy built a company called JurisPage, sold it to another Inc. 5000 business, Uptime Legal, in a seven-figure exit. I want you to listen for how tempting it was for Andy to do two things, one, take non-recurring clients, and two, take clients that fell outside of his niche, and just listen to the discipline he had in saying no to both of those opportunities. Here to tell you the entire story is Andy Cabasso.

Andy Cabasso, welcome to Built to Sell Radio.

Andy Cabasso:

Thanks, John. Happy to be here.

John Warrillow:

JurisPage sounds very formal. Tell me about this company. What did you guys do?

Andy Cabasso:

We did marketing, web design, SEO, paid search for law firms specifically.

John Warrillow:

Such a cool niche, because lawyers are great at their shtick, whether they’re defense attorneys or commercial real estate lawyers, but are generally terrible marketers, right?

Andy Cabasso:

Well, I got into it because I was in law school, and I was applying to work at some different law firms, and all of the websites of the firms that I was applying to were very bad. So I figured, “I could do something about this,” and I connected with my co-founder who was actually a former roommate of mine in college, and we started working together. He brought the web design experience. I brought the ability to speak to lawyers and market to lawyers, and it took off from there.

John Warrillow:

Did you actually get a law degree or did you leave early?

Andy Cabasso:

I am a licensed lawyer. I’m not disbarred or anything like that, but I practiced very briefly for a short time while JurisPage was growing. Then I realized, “Okay, this is a growing business. I’m going to make a decision here, because I couldn’t focus on both,” and so I spent my time on JurisPage. Got it.

John Warrillow:

So web design, SEO, pay-per-click for lawyers.

Andy Cabasso:

That’s right.

John Warrillow:

Did you host their websites or just build them?

Andy Cabasso:

Yep. Everything. One thing that was key for us, and this came from my co-founder’s experience, was he was freelancing for several years prior to us working together, going from project to project, doing some web design work. I guess a few things that he had found frustrating were one was the lack of recurring revenue, where he’d be going from project to project. And once he’d stop working on a project, it’s like feast or famine. You have to hunt and keep looking for new project work. Otherwise, you’re not getting paid, not bringing in any money, and so taking a vacation could be difficult.

We made sure that from the beginning with working for different clients at JurisPage that every client would have some ongoing service being provided to them. Whether at the very least, it was hosting and providing support for their websites, or doing ongoing marketing services like paid search or SEO and content marketing and things like that. Of course, over the years, plenty of people reached out to us who said, “Hey, can you just design my website, give it to me, and then let me take it and go elsewhere?”

We just said, “I recommend… There are plenty of places that could do that for you, but that’s not our model. I’m happy to give a recommendation.” But for the most part, we found that people were pretty receptive to it because people are busy. A lot of… Especially lawyers in smaller firms that we were targeting, no one wants to be tinkering on with their own website. When their billable hour is $300 plus an hour, they don’t need to be making tweaks to their site. They could just call us up, and we can help them out.

John Warrillow:

Andy, I think a lot of people listening to this are saying, “I get it. I know I should focus on recurring revenue, but I’m not sure if I have the courage to say no to a customer who wants to pay on a one-off basis.”

Andy Cabasso:

Mentally, it’s tough, right, when you see someone who’s in front of you saying, “I have a check. I want to give you money. Take my money.” It was also the case, similarly, that we had some clients that wanted our services who were not in the legal space, who were in a different market and wanted us to design a site for them. We turned them away too, because that wasn’t the market that we were going after. In our best case scenario, we would have a law firm client. We’d be doing their website and doing their ongoing marketing, but for a simple one-off project, there’s no opportunity for expansion revenue there.

We could start simply building and hosting a law firm’s website. And then over time, as they’re looking to get into marketing, upsell them on a marketing service, and bring more recurring revenue from them. But for someone in a different space, we couldn’t have… There would be no opportunity for us. And for a one-off project, it just wasn’t worth the time investment for the one-off there.

John Warrillow:

What was the closest you came to falling off the wagon?

Andy Cabasso:

In terms of… In what?

John Warrillow:

Either taking non-lawyer clients or taking one-off clients who would not give you a recurring tale. Either, it seem like those are two fundamental legs of your strategy, and I think they give you monopoly control, and they’re hugely differentiating and build the value of your company, and really hard to stick to. Because you get, as you say, people flashing checks in front of you saying, “I’m not a lawyer, but I’m a real estate agent.” Well, you do great work for lawyers, so come help me with my real estate, whatever.

How close did you come to falling off the wagon?

Andy Cabasso:

Not that close. If anything, maybe earlier on before we had built up a solid book of business and had a solid amount of leads coming in every month, where we may be on the fence and a little bit more open to just getting a project of a client that wasn’t legal related, but the thing that we recognized was we had built this domain expertise in law firm. We could easily and quickly build up a law firm site from scratch a lot faster than we could build a site for a real estate agent who would have more complex requirements.

Actually, part of what was important to this was we weren’t just building recurring revenue, but we were also building a productized service. It wasn’t like we’d go from one project that would want like, “I want all of these WordPress plugins, or I want all of these unique features specifically for us that really wasn’t something that we had done before.” We had a very specific scope. We had packages that clients could choose from. And for us, it was important because this made it more repeatable, so we could more easily take on new projects, have our assembly line process for it that was repeatable, that could help us over time as we took on more and more clients.

Add more team members, plug them into the process, and be able to serve more clients easily, but taking on one client that can’t work within that mold, that has unique needs, throws a wrench into all of it. So we had to step back and realize, “This client was going to be more time intensive, that it was going to require things that we maybe weren’t set up for already.” Would it even be worth our time investment, where the end-product that they would get, that would be great?

But there are no real lessons that we could learn from that for future clients of ours, because none of the assets that we’re creating, none of the project work that we’re doing would be reusable potentially for any future projects.

John Warrillow:

Got it. That makes a ton of sense. A lot of people listening to this will be saying, “Okay, I get, I think, productized services,” but maybe they’re still selling their time, or they’re selling their project-based work, and they are about to create a productized service. For folks, if you don’t know what a productized service is, effectively, it’s where you package up a service. You make it tangible, make it real, make it repeatable as you say, Andy.

I’d be curious to know, what mistakes did you make in your first productized services? When you first scoped out your packages, what was the biggest mistake you made in scoping them out?

Andy Cabasso:

I like this question. This is something that we quickly learned over time, we needed to hone in on, but specifically defining the limits of the scope. One good example was redesign rounds. So basically, our process was we designed the webs. You give us some ideas. We have a initial conversation and consultation. You give us the assets we need. We design the site, then you review it, make some tweaks, and then we make those changes, and launch the site. Well, before we added more strict language into our agreements, we might have some clients who would go back and forth with us for months.

Another thing would be the way that we do pricing. The earliest iteration, we did pricing at milestones based on a deposit, based on when we started, and then another payment based on when we provide the first iteration, and then another milestone payment at launch. One problem that we encountered for, honestly, as long as I was there was that some clients would sign up. We’d get going, and then they would disappear, and then we’d be trying and play phone tag for months, and sending lots of emails to get them to respond to our inquiries, to get us the assets we needed like their bio pages, their headshots.

So many times, I would hear, “Oh, I’m working on my bio content. Give me a few weeks because I got other pressing stuff to do, or I’m getting my headshot taken next month. We’re hiring a photographer. Give me some time,” or just completely disappearing. So then we had to adapt and be like, “Our payment terms would be something like a deposit on sign-up, and then another milestone payment either on launch or in three months, whichever comes first.”

John Warrillow:

Nice.

Andy Cabasso:

A lot of web designers can probably empathize. We had some clients who were three years out-

John Warrillow:

Sure.

Andy Cabasso:

… where they signed up and just disappeared.

John Warrillow:

Did you ever run into… I mean, lawyers are lawyers. They’re into contracts and the details. Did you ever run into lawyers who were picking over the legal contract, and pushing back on some of the terms?

Andy Cabasso:

Yes. That happened. I can think about two or three times that that happened. It was never like… Maybe once ever was it a deal breaker. Honestly, for me, it was a red flag that they were… Our contract was good. It was fair. It was reasonable, and it was the same contract that we used for hundreds of clients. But when a client would come in and say, “I want these changes and amendments to the agreement,” like, “I want the governing law of the contract to not be in New York, where you’re based, but California where I’m based or wherever.”

My response was, “I’m sorry, we can’t tailor this specific contract just to you. That is not sustainable for us to keep up for everyone. You can either take it or leave it.” That was important for us. It was important to have pushback where we needed to have pushback. And if there were ever maybe an occasion where someone would bring something up, where we’d like, “Oh, that’s an interesting point,” well, moving forward, maybe we’ll amend the agreement, but that really did… I think that maybe happened once where someone pointed out like, “Hey, do you have any…”

I saw the contract, and you’re missing this one thing. I’m like, “Oh, that’s probably a good thing to have.” But for the most part, we were very straightforward in our contract, in our terms. We weren’t hiding anything. There wasn’t anything that was weird or off. I know the web design space and a lot of some other companies, I’ll say, had more unfair terms. I know a lot of lawyers in particular had been burned before. Things like…

As an example, there were some marketing agencies, especially the larger ones where they would say, “You sign up with us. You’re paying a marketing fee per month, and we’ll do the website for you, and we’ll do the marketing for you, but you don’t really own your website. You don’t get an… If you cancel your service, you don’t get an export of the website, and you can’t move it somewhere else.”

John Warrillow:

Wow.

Andy Cabasso:

“You don’t own even the content of it.”

John Warrillow:

So you weren’t doing that. You had a bunch of thinner agreement.

Andy Cabasso:

No.

John Warrillow:

Got it.

Andy Cabasso:

But I understood. So being mindful of that, I was making sure that we wrote a very fair contract. I understood when clients would come in potentially being skeptical. If they told us, “Oh, I was previously with this other agency,” that would be a good flag for me because I would know, “All right, so they’ve gone from this agency. They’ve been burned before. Now, I know how to couch our conversation, and tailor it best so that they’ll… They’re not going to be trusting now of anyone, so…”

John Warrillow:

How did that… When you’ve got… When the lawyer can’t export their own data, it obviously keeps them sticky, because it creates a built-in churn friction, if you will. How did allowing owners or lawyers to walk away with their data impact your churn rates?

Andy Cabasso:

It didn’t… It wasn’t really a big problem for us, but-

John Warrillow:

[inaudible 00:18:27]. It wasn’t a big problem.

Andy Cabasso:

No. I mean, I guess a fear that one might have especially early on would be like, “All right, well, if we let people export,” then they can take it with like, “Stay with us for a month, and then move to their own service and platform.” But that didn’t end up being what we were running into. If we were delivering for them on keeping their website up, handling all of their support inquiries, managing the site for them, they were seeing the value that they were getting from it.

If they signed… There were plenty of clients where they’d sign up. We deal with it, and we never heard from them. Others where we’d hear from them several times a month with, “Here are new team members. Please add them to the site,” and we’d take care of that. Others where we were doing the ongoing marketing for, and so if we were delivering them the results, there’s no reason that they’re going to want to change services.

John Warrillow:

Got it, got it. When it came to productizing your service, part of that is the repeatable nature of what it is you offer. How did you get employees to follow your processes?

Andy Cabasso:

We built SOPs, so standard operating procedure documentation. We basically built docs that outlined every step of the process, the project management software that we were using. I think the earliest software we were using for project management was Trello. We had had a long doc that was basically a lot of walkthroughs and checklists. Here are the things that the site needs at this stage, in this stage, in this stage.

Once a client signs on, we send them this and this and this, and request all of this stuff from them. We send them this link to this portal, and then we don’t move them to the next stage until we get these assets that we need from them. If it’s been five days or whatever, and we have not heard from them or not gotten the assets and not left this stage, now, we need to ping them again, and-

John Warrillow:

Got it. What did you learn about standard operating procedures and making them work inside your company? Because a lot of people create them, and then they become shelfware or Dropbox ware, never to be seen again. What did you learn about making these things sticky, actually work?

Andy Cabasso:

Well, to make them sticky with the team members was management, like me or my partner, reviewing the projects and the statuses on a weekly basis, so looking at what my team members have produced, looking at where everything is in the stage, and we’d have for each client the checklist of where they’re at and what’s going on with them along with all notes. So we could, in a few seconds, look at a given client, see where they are, see what status they’re in, see the checklist of what we have and what we’re waiting on.

So with the checklist in particular being necessary for us to move to another stage, they had to be used. Without that, with just saying, “Here’s our SOPs. Follow it,” you’re then ripe for them not getting followed.

John Warrillow:

It’s important to have checklists along the way. I’d love to know what triggered you to want to sell this business. So as you’re growing it, you and Sam, how big did you get it before you started to think about selling? In terms of… I don’t know if you share revenue or a number of employees or some proxy for size, so people get a sense of-

Andy Cabasso:

Sure. Well, so we had a… I want to say, but it was about maybe 200 clients that we were working with by the time that we sold. I’d say that at the time that we sold, we weren’t actively looking to sell. We’d been approached by a few different people about selling around the same time, which is fortuitous, but we weren’t actively looking to sell when the opportunity came around.

John Warrillow:

200 clients, what would that equate to in terms of number of full-time employees or equivalent like FTE headcount?

Andy Cabasso:

When we sold, there were four of us who were full-time plus some additional contractors that we were working with.

John Warrillow:

Got it. That’s helpful for sure. You’re getting a couple of inbound inquiries from folks. What did you do with those?

Andy Cabasso:

I took skeptical phone calls. I’m like, “All right, am I being catfish? Is this a scamming attempt? What-

John Warrillow:

What does catfish means? I’ve never heard that before.

Andy Cabasso:

You’ve never heard catfishing before?

John Warrillow:

Is this supposed be a New York thing? I’ve never heard catfish.

Andy Cabasso:

No. No.

John Warrillow:

No.

Andy Cabasso:

It’s like a catfish. The term catfish basically means presenting a fake profile online to deceive someone else. Typically, it’s in a romantic context.

John Warrillow:

I see. I don’t do enough online dating. This is the problem between me and you, Andy. You’re spending a lot of time online dating. I don’t.

Andy Cabasso:

I’ve been married for a long time. I am not online dating.

John Warrillow:

I’m asking for a friend.

Andy Cabasso:

Oh God. There is a movie called Catfish. I think it’s on Netflix.

John Warrillow:

I’m totally [inaudible 00:24:34] stuff.

Andy Cabasso:

Anyway. I-

John Warrillow:

I get catfish. All right, so now, I have a pretty good sense of catfish.

Andy Cabasso:

All right. The fear is like, “Who’s this random person reaching out to us? Is it a competitor doing competitive intelligence? Is it real bonafide opportunity?” Because over the years, out of the various business ventures that I’ve had, I feel like a few times a year, someone reaches out about either acquiring or investing whatever I’m working on. There are some serious people, some not so serious people. When you first take that call, you might be a little bit on your guard like wanting to know, “Well, what is it that the other side is looking for? What’s the ideal opportunity that they’re looking for, and could it even be a good fit?”

For example, I’ve taken… Let’s say I took a call with someone who is looking to expand into a market, and they’re interested in my company. Usually, one of the first questions I ask is like, “Well, what are the criteria that you’re looking for?” And they’ll say like, “All right, well, we’re looking for companies with five to 10 million ARR.” Then I’m like, “Okay. Well, we don’t fit that criteria. Now is not a good time. Follow up in six months, and let’s see where we’re at then,” or something like that. But-

John Warrillow:

So you’ll basically quiz them about their investment criteria to see if there’s a fit.

Andy Cabasso:

A lot of investors and acquirers are strategic and have certain ranges that they’re looking for, and I don’t want to waste your time of going through an NDA and due diligence process only to find out you’re like, “All right, this company is way too small. Any multiple that we’re going to offer, it’s not going to be high, and it’s not going to be what you’re looking for. It’s not necessarily a strategic acquisition, so what are we even doing here right now? Let’s wait until we’re in the right criteria ranges.”

John Warrillow:

You mentioned multiple. Before we get into the actual sale, this is when you’re still growing the company. You’re getting these inbound inquiries. What did you and Sam think the company might be worth on a multiple of either EBITDA or multiple of revenue? Had you guys had some conversations to say-

Andy Cabasso:

Not at all.

John Warrillow:

Interesting.

Andy Cabasso:

This was not even on our radar at the time. Some companies had pitched us about just soft inquiries about acquiring, and we hadn’t really taken them too seriously. We had some dialogue, but not a lot, and so we hadn’t… In the back of our minds, in running the day-to-day business. We’re not looking at our balance sheets, the income statements, and being like, “Okay, we are now worth this or now worth this.” That just seemed to me like a very vanity sort of thing and wasn’t helpful for running our day to day.

John Warrillow:

But you must have had some sense of what it might be worth.

Andy Cabasso:

I guess big picture, I’m like, “This is worth a lot more. This is growing, and so I see the trajectory of it. It’s probably worth…” If you were paying for the asset of where it is today, that’s nothing that I’m particularly interested in, because I still thought we were pretty early stage. But if you are interested in acquiring it for the long-term value that you see out of it and there’s potentially a strategic play, then it will be worth more.

John Warrillow:

Interesting. Interesting.

Andy Cabasso:

I think a lot… Our company was only… When we sold, we were three years old, a relatively young company, but I’m sure if your company that you’re looking to get acquired is more mature, at a later stage, you’re probably going to be thinking about specific multiples and thinking about, “All right, so this is the range that we’d be interested in.”

John Warrillow:

When you’re having these conversations with these shots over the bow inbound inquiries, are they throwing at any numbers with you on the phone? Are they giving you multiples, or are they throwing you any kind of bait so to speak?

Andy Cabasso:

Some of them were, but we were just like… It wasn’t anything exciting to us, and so we said, “Maybe it’s not a good time now. Maybe we should…” It was just the default, which is, “Let’s follow up in six months, and see where we’re at.” Because at that valuation, that’s not particularly interesting to us.

John Warrillow:

Usually for small businesses, you hear numbers like two to three times SDE, which is a pretty common multiple SDE being seller discretionary earnings, which is your profit and anything you take out of the company, so to speak. Were those the kind of multiples they were throwing out broadly speaking?

Andy Cabasso:

Well, so they were… I guess, some early people that we spoke to were looking at multiples on revenue, which was more interesting, but still not all that interesting to us. We were a lean bootstrap business. If it was earnings based, we would not at all be interested because we were… Like I said, being bootstrap, we weren’t drawing crazy salaries for ourselves. We were reinvesting everything into the business to help it grow more.

John Warrillow:

Got it. Got it. Got it. What changed? At some point, conversation changed because you did get a conversation started with Uptime Legal, which is Inc. 5000 fastest growing company. How did that start? What was the-

Andy Cabasso:

Sure. I mean, this is probably a good, broader tip for any business owner looking to get acquired is make friends and build your business’ network. We had known Uptime for a few years. We had some mutual clients. Uptime, the company that acquired us, provides managed services for IT for specifically the law firm niche, and so we were in the same market. Some of our clients had crossover, so they’d hire us for their web design. They’d hire Uptime for managing their servers and their practice management software and virtual machines for remote logging into their stuff and that kind of thing.

So we had a referral relationship that was pretty open where we’d send clients their way. They’d send clients our way, and we built these kinds of relationships with a few different companies, because it helped us generate more business for ourselves. For a small company, we were decently known in the space maybe more than-

John Warrillow:

Interesting. The referral relationship, they send you a client. You pay them a spiff. Equally, they send you a client. You pay them a spiff.

Andy Cabasso:

Exactly.

John Warrillow:

Got it.

Andy Cabasso:

We had relationships like that with a variety of companies and-

John Warrillow:

When did it go from referral to something more serious?

Andy Cabasso:

I think we’d met up at a few conferences in the past, and we were talking about meeting up at a conference, and they threw out of left field like, “Hey, do you have any interest in being acquired?” I said, “Probably not.”

John Warrillow:

Who’s this? The CEO said that?

Andy Cabasso:

Yeah, the CEO. I was like, “We’ve been in this company three years. We’ve been growing it. I like the trajectory that we’re on. I probably am not interested in selling unless you have some compelling offer.” Conversation from there went like we talked about, well, what they were looking for. The thing is they were… We’re both very entrenched in the legal industry. They were looking to expand their product offerings, wanting to add a web design component and digital marketing component to offer to their existing clients as well as another revenue stream.

The ability to cross sell to their clients was particularly valuable, but they also had some institutional knowledge related to the law firm industry space that they thought they could take, and apply to us to help us better grow. They saw an opportunity in our much smaller business to help us grow faster. Basically, they saw value in that.

John Warrillow:

Let me understand that. The strategic value for them was they could sell JurisPage services, your web design and SEO services, to their existing clients who were using them for other things. That was kind of-

Andy Cabasso:

That was-

John Warrillow:

Like [crosstalk 00:34:21].

Andy Cabasso:

That was an aspect of it, for sure. That was…

John Warrillow:

That’s an obvious one, but the other one is less clear to me. They had some IP that they felt like they could inject into JurisPage. Maybe help me understand it.

Andy Cabasso:

Well, more… My company was a bit scrappier, like I said, four full-time people in addition to contractors and stuff like that. They’re a larger company with systems. I’m, to this day, very impressed with how well they run their organization, how methodical they are about their growth, their numbers, their KPIs and things like that. They thought they could apply the growth principles that they applied to their business to ours.

Before we even spoke with them, business operating system was nothing at all on my radar.Things like EOS traction, Rockefeller habits, that was nothing in my wheelhouse, but stuff that they were very plugged into.

John Warrillow:

Got it. Got it. So they thought that they could bring some of their business, rigor and acumen to your platform, and help you grow, and equally, they could probably grow by cross-selling your service. It had a two-pronged value proposition. Your response is, “Look, if you’ve got something compelling for me, let me know, but we’re not really for sale.” Where does it go from there?

Andy Cabasso:

From there, a bunch of high-level conversations like, “Why they were interested in acquiring us.” And then from there, we were like, “All right, I see why you’re interested in this. Well, then give us an idea, a number of NDAs, due diligence, all this stuff.” We put together a pitch deck with highlights and stuff like that, shared some documents, and then they came up with evaluation based on that. Then they make an offer. We go back and forth, and then-

John Warrillow:

What was your reaction to their offer?

Andy Cabasso:

I mean, the initial offer, I was like, “No, thanks.” I don’t know. First piece of advice, probably no matter what the first offer is, say no, right? Counter offer and come back, but-

John Warrillow:

But I’d be curious to know how you did that. Your reaction was like, “No, thank you.” Did-

Andy Cabasso:

Well-

John Warrillow:

I mean, a lot of times, when people get that first offer, it’s like, “I can’t believe how low this is. I’ve just spent all this time screwing around with this company, wasting my time, and this is the offer they come up with?” Did you feel a sense of like, “What a waste of freaking time?”

Andy Cabasso:

No. I mean, maybe I’ve been so jaded by the many conversations I’ve had in the past that I wasn’t that I’ll expect… My response was, “I understand why you would want us for the best price that you could get, but full disclosure that that’s not in the realm of what we’re looking for. And if that’s the range that you’re looking at, we’re happy to… Here are some alternatives. Instead of you acquiring us, maybe we can have just brainstorming here some other partnership arrangements, referral arrangements and stuff like that.” Then we went from there.

John Warrillow:

Are you and Sam aligned at this point? What was Sam’s reaction to their first offer?

Andy Cabasso:

Same thing. We didn’t… We were pretty aligned on the first like, “No, not interested.” If I…

John Warrillow:

So what was their next step? You’re like, “If this is it, no, thank you.” Did they say, “Well, what number did you have in mind?”

Andy Cabasso:

I’m trying to remember back to that. I’m sure that they were probably like, “All right, well, give us something that’s more what you’re looking for, and I’m sure what we gave was exorbitantly high.”

John Warrillow:

Did you counter though? Did you put a number on the table and say like, “This?”

Andy Cabasso:

I’m sure we did. It was probably… I remember generally the process being a bit back and forth.

John Warrillow:

Do you… Again, I know we spoke offline about the fact that you can’t really share.

Andy Cabasso:

Unfortunately, number wise, there’s not a lot that I can speak to. I guess what I can speak to is that end result. The sell price was seven figures.

John Warrillow:

Awesome. It would be helpful to know, I think, for folks following along… Again, if you can share this, great. If you can’t, totally understand.

Andy Cabasso:

Sure.

John Warrillow:

Are you able to give folks a sense? Because here’s the thing, when you get… I’ll call it a lowball offer. I’m not sure if that… That’s not your words. Those are mine, but if you get an offer that’s below where you want it to be, two ways, you can play that, right? One, you could say thanks and plow on. Thanks but no thanks, and plow on, or another way, you could say, “Thanks but no thanks, but here is an offer that would work for us,” and so you can counter.

Andy Cabasso:

I guess, let’s talk strategy, right?

John Warrillow:

Yeah. A lot of people are wondering about that second option is what to do around valuation. Because on one hand, you could throw it a reasonable number, and keep the conversation going, but you may put a ceiling onto which you’ll ever sell your company for. Equally, you could throw out some outlandish number that is completely crazy, but could be so crazy that the acquirer will be like, “Okay, I don’t want to be insulted either,” and walk. How did you think through that?

Andy Cabasso:

Well, at the end of the day, we weren’t looking to be acquired, and so our backs weren’t against the wall. It’s easy for us to walk away, which is also a powerful position to be in is if you can walk away, then you have nothing to lose. But the other side really wants the assets that you have, then hopefully they’ll try to keep you at the table. Our counter was, “That’s just not in the range that we’re looking for. Here are some alternative arrangements that might be a good fit for us.”

That was just because we were like, “All right, well, if that’s the range that you’re at, I don’t think that’s going to work,” but they’re-

John Warrillow:

So let me be clear, your counter was not, “You want X. We want 3X.” It was, “That’s not going to work, but what about if we deepen our referral partnership, we could do some other things.” You didn’t counter with another number.

Andy Cabasso:

Yeah, and that was coming from our position of like, “All right. I think we’re way off. So if it’s not going to work, then here are some other things that we could do to work together, because we would like to work with you.” And just because of the positioning of both of us, they were still very interested in acquiring us. They were like, “All right, hold on. Hold on. Hold on. Let’s see what we can do.” I think that was what it was. I think then we got another counteroffer.

John Warrillow:

As a second offer.

Andy Cabasso:

Yeah. As negotiation experts will say, never negotiate against yourself. If someone says no to you, don’t reply back with, “All right, well, if that doesn’t work for you, then how about this?” It was like, “But we didn’t want to…” Honestly, we were coming from the perspective of, “If we’re not in the same range, then let’s just not waste our time, because I don’t want to come back to you, and give you a counteroffer that is way out of line with what you’re looking for, so let’s walk away, and let’s move on and not spend more time on this.”

But-

John Warrillow:

But they did come back.

Andy Cabasso:

They did. They were interested in this, and so they [inaudible 00:43:28].

John Warrillow:

Are you able to share… Again, as long as we don’t talk about numbers or multiples, are you able to share their second offer? Was it substantially more like 2X more than the first or 3X more than the first or a little bit better than the first? Are you able to share a little bit of color to give people a sense of…

Andy Cabasso:

I actually don’t remem… I mean, it was definitely more. It got us closer into the realm. I remember it being like, “All right, this is closer,” and now we’re at a point where like, “If you are coming back to us, you clearly are very interested in this. Let’s talk now and try and find a number that would work for all of us.”

John Warrillow:

Got it. At that point, did you throw out a number after the second offer?

Andy Cabasso:

Probably, yeah.

John Warrillow:

A lot of times, acquirers, when they can’t somehow get to an agreement, they’ll use an earn-out as a way to bridge the gap between what they want to buy your business for and what you want to sell it for. I noticed, I think, in your LinkedIn page, it said you spent some time with JurisPage or at Uptime Legal. So I assume there was an earn-out or some contract. Are you able to share what that was like? Was that a big part of the deal?

Andy Cabasso:

Well, so part of the deal was that I stayed on for a few years. I assumed the role… One thing that I guess made it more valuable and worth it to them was now, I was stepping into a role where I was not only running the division and showing them how it worked. I was also providing my marketing expertise to help the organization as a whole, and so I was able to deliver more value there as well.

John Warrillow:

Got it. How did you structure that? Did you have certain targets you had to meet as a division of time, or what was the trigger that caused your second payment?

Andy Cabasso:

I cannot share that unfortunately.

John Warrillow:

No problem. But there was some target of some sort that… It’s interesting because sometimes, one of the most challenging things about an earn-out is that the things that you are incentivized to do run counter to what the acquirer wants, right? The classic would be that they say, “Okay, we want you to hit a certain profitability threshold as a division of our company.” Yet, out of the other side of their mouth, they’re saying, “We want integrate you into our business.”

A lot of times, what happens is the entrepreneur is just like, “For me to hit my earn-out, I can’t spend all my time focused on integrating our business into your business. If you want to integrate, don’t make me sign up for an earn-out,” and so they’re [crosstalk 00:46:31].

Andy Cabasso:

Sure, or being focused on revenue versus profitability like-

John Warrillow:

Right.

Andy Cabasso:

If you give me all the budget in the world, I can skyrocket our revenue by spending a ton on ads, and acquiring new customers, but it’s not going to be profitable for you, right?

John Warrillow:

Did you negotiate a budget in your agreement that you were allowed to spend to grow JurisPage?

Andy Cabasso:

We definitely… I remember discussing budgets and stuff like that. That was probably part of it. I can’t remember specifically if there was a term for that, but we were mostly on the same page in terms of how we saw and what we saw as the levers to growth there.

John Warrillow:

Because in your case, I mean, clearly, you’ve got a tremendous amount of SEO experience in legal. You could have injected all of your time in building Uptime Legal to be the number one rank in a bunch of natural search listings, or grow JurisPage, and so there’s that natural tension. So obviously, those are things you guys work through to try to… How would you carry… I know you can’t speak specifically about your earn-out, but if you talk more generally…

Some people refer to their earn-out as a prison sentence. Others are more favorable. What words would you use to describe what it felt like to be in earn-out?

Andy Cabasso:

Let’s see. No, I guess… I don’t think anything about working with Uptime was a prison sentence certainly. We, to this day, have a good working relationship. Since they’ve acquired us, they’ve acquired other marketing companies as well, and they have… They’re a very smart company. In terms of, I guess, talking about structures of deals and things like that, you’re talking about like, “All right, so different packages that you could accept, different options,” and so some things to think about of like, “Well, what could be on the table for us?”

I know some people when they want to sell, you’re like, “All right, I want to… Just give me a stack of cash, and let me walk away.” Others are like, “Well…” Acquiring companies are like, “Well, I want you to stay on for six months or a year transition. Help us integrate, and then you can go away.” Some are like, “Well, we want some performance guarantee that this all doesn’t come crashing down the second you leave.”

John Warrillow:

How long was your earn-out?

Andy Cabasso:

Cannot speak to that.

John Warrillow:

Okay.

Andy Cabasso:

But I guess one thing that might be an option in terms of negotiating like, if you are negotiating something like an earn-out, you might have your projections. They might have their projections. One thing that could make things a better deal for you is have some minimum guarantee that, “Here are the marks that we want to hit. At which point, different bonuses or things like that trigger. But at the very least, we’re going to have a minimum threshold so that if we, let’s say, close your company tomorrow, and send you packing that you would still get the minimum required under the agreement.”

John Warrillow:

Got it. Got it. Having some floor to any earn-out piece.

Andy Cabasso:

Yeah. I mean, you can get creative with these things if you want to.

John Warrillow:

You’re a lawyer, so who better to get creative than [inaudible 00:50:33]?

Andy Cabasso:

Another thing is don’t be your own lawyer if you’re selling your own company. I hired a lawyer. I hired a lawyer who does M&A work, because I’m not an M&A lawyer. Sure, I could read a contract. I’m like, “All right, this looks like a contract,” but I don’t know necessarily if there are provisions that are important, things that I’m missing-

John Warrillow:

So even you hired a lawyer, a corporate lawyer. That’s great. That’s amazing.

Andy Cabasso:

Even me. I’m not an M&A lawyer. I would absolutely recommend that anyone… Even if you’re an M&A lawyer, you’re going to be… Let’s see. If you’re an M&A lawyer, you might even want an M&A lawyer yourself just because you’re going to be too close to this and emotionally involved, and you’re going to want someone who is more objective to be able to be in your ear, and give you feedback and advice. Don’t be your own lawyer. If you’ve…

A lot of small businesses, if you’ve seen enough contracts and things like that, you’ve probably drafted your own contracts. I’ve drafted plenty of contracts over the years, even though I don’t have necessarily all the formal experience in the world at drafting contracts and agreements. But even so, when you’re dealing with a buyout, you really want to make sure you get it right and you get everything that you’ve agreed to at least in substance, and so you don’t want to skimp on that.

John Warrillow:

Great point. I have a different question that’s goes back to the entire journey. I realize it was a three-year journey before Uptime. You and I spoke offline, and I looked at your LinkedIn profile, and you went to Northeastern, which is… I think U.S. News and World Report ranks them, was one of the top 10 entrepreneurship programs in the United States, undergrad. Babson’s always number one, and Indiana. There’s a few, but Northeastern’s up there as one of the top entrepreneurship programs in the United States.

What do you wish you had learned about entrepreneurship through college that you came to learn through actually running a company?

Andy Cabasso:

Oh gosh, maybe it’s not even so much like business course knowledge. A very large amount of what I’ve learned in terms of being a business owner was stuff I learned on the job. I wouldn’t say that any of the course materials I had related to marketing, learning the four Ps of marketing or anything like that, were particularly helpful as opposed to just getting into content marketing, SEO, myself, reading everything I could, and learning how to implement all of that in terms of operations and building a productized business we learned kind of doing.

John Warrillow:

You’re not making a good plug for Northeastern here.

Andy Cabasso:

No, it’s like… Maybe it’s not a plug for college necessarily. I mean, I think colleges teaching regarding entrepreneurship, I think, has been evolving, especially with Northeastern as an example. Since I left Northeastern, they developed an incubator for startups. I had been involved in the startup incubator, and I’ve seen what they… Their incubator is very good, and that extracurricular outside of coursework stuff has been, I think, much more impactful.

I remember in courses, we have courses where the deliverable at the end of the year was a business plan or a marketing plan. That’s all good until you need to execute on these things, and you’re not going to necessarily be referring to a business plan or a marketing plan every day. I mean, maybe I would in hindsight… I don’t even know. I think probably a more valuable thing that isn’t really… I don’t know that it’s taught is on the mental aspect of running your own business, the resilience that you need.

I remember in undergrad, we had one speaker who was a CEO of a small business. He was wicked tired. He was just so beat and really dealing with some burnout. I’m like, “Oh, wow.” He’s trying to answer questions, but he’s also really tired. It’s clearly like being at the helm of this, there are other questions that we need to ask that we’re not even thinking about, because we’re not at this stage yet, but maybe it would… In moving forward, it would probably be good if there were some aspects of addressing mental health and wellbeing as a founder and running a business, because it’s tough out there.

It’s an emotional roller coaster. You’re going to have highs and lows, and being able to tackle all of that [crosstalk 00:56:08].

John Warrillow:

What was your lowest point in JurisPage, your emotional nadir as it were?

Andy Cabasso:

I mean, lowest point, probably relatively early on, we were burning money, spending on different marketing initiatives, and things weren’t moving. It wasn’t paying for itself as quickly as we would have wanted it to, and we’re faced with the prospect like, “Oh, are we going to have to shut this down and get real jobs?” That’s tough. When my co-founder and I are burning through our savings, and we have rent to pay, there were definitely a few times through the course where we’re like, “Okay, we don’t know if this is going to go anywhere. We haven’t proven that this is going to work.”

It’s funny, in hindsight, really, we were just a few… From me being at that point, we were a few months away from things really popping off and us hitting the stride, but it was definitely a lot of work, and there were definitely highs and lows. Whenever-

John Warrillow:

At that time, it felt like you’re never…

Andy Cabasso:

Yeah, especially if early stages, when you lose one big client or you lose a bunch of potential sales deals, that has a much bigger impact on you, and you’re like, “Okay, I don’t know if we’re building the right thing that people want. I don’t know what we’re doing wrong, because it doesn’t seem like it’s hitting. Should we continue doing this? Are we being stubborn by keeping doing this?” You-

John Warrillow:

Because there’s that entrepreneurial folklore where you stick to it forever, and there’s a always that question that comes to mind. Is grit the most important thing that determines success or [crosstalk 00:58:17]?

Andy Cabasso:

It’s tough because you see successful businesses, and it’s like, “All right, well, we just hustled and kept hustling,” but that’s survivorship bias. It’s like you hear celebrity actors who are like, “Well, I just hit the grind for years and years, and then eventually, I got the career defining role, and that was great.” But there are so many more failed actors, right? There are statistics about failed businesses and-

John Warrillow:

Sure there are.

Andy Cabasso:

… but you’re typically only hearing from the ones that made it work, and so it is tough. Where am I going with this?

John Warrillow:

I’d love to know where you’re going next, because you’ve sold JurisPage. You’ve done your earn-out at Uptime. You’re into something new. It’s called Postaga. Tell me about that.

Andy Cabasso:

Sure. One thing from our experiences and in doing digital marketing is that there are many different variables that go into Google’s search engine algorithm to determine what shows up first and highest in the rankings. But one thing that we know pretty soundly is that there is a very high correlation with the quality and quantity of links from other sites to your website affecting your ranking in search. If you get… If you have other high-quality, authoritative websites linking to your website, your website is going to rank better in search.

The challenge is getting other websites to link to yours doesn’t necessarily happen automatically. A lot of it has involved typically manual outreach efforts, like reaching out to different domains, being like, “Hey, I saw that you wrote this really great blog post. Would you be able to include a link to this post that I have? That’s very relevant and on topic and provides a great resource for your audience as well.” A lot of the process that we saw was very manual and time and labor intensive, and just, for an agency, wasn’t scalable and deliverable for our clients or for ourselves.

So basically, we built Postaga as a platform that helps automate and streamline outreach, cold outreach for link building, for digital PR and also for sales. Basically, if you want your content to rank better in search, you need other blogs to link to it, so we find our tool has a pretty powerful AI. We can analyze your content, give you recommendations of what other types of sites would be interested in your content, pitch them with a very personalized, tailored pitch to get them to link to you, and earn links that way.

John Warrillow:

That’s really cool. It’s called Postaga. What’s the URL?

Andy Cabasso:

P-O-S-T-A-G-A.com.

John Warrillow:

Awesome. We’ll put that in the show notes at BuiltToSell.com. Andy, thank you for doing this.

Andy Cabasso:

Thanks, John. This has been fun.

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 strategies of 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 ordered the book. Just go to BuiltToSell.com/Selling. Built to Sell Radio is produced by Haley Parkhill. Our audio and video engineer is Denis Labattaglia. If you like what you’ve just heard, subscribe to get a new episode delivered to your inbox each week. Just go to BuiltToSell.com.

Outro:

Thanks for listening to Built to Sell Radio with John Warrillow. For complete show notes with links to additional resources, visit BuiltToSell.com/Blog. John is the founder of The Value Builder System™. To find out how to improve the value of your business by 71%, visit ValueBuilderSystem.com. John is also the author of Built to Sell: Creating A Business that Can Thrive Without You and The Automatic Customer: Creating a Subscription Business in Any Industry. Connect with John at Facebook.com/BuiltToSell or on Twitter @JohnWarrillow, W-A-R-R-I-L-L-O-W. Thanks for listening.