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How to sell your software startup for 7 figures in 366 days 
I've had a number of people ask me about this experience so here it goes.
[Thread]
1/23
From the time that I went full time to the day we were acquired and cash was wired into our bank account was 366 days.
Feb 1, 2016 - Feb 2, 2017
That top tweet is a headline grabber though as the groundwork to make this possible was done the year prior.
Feb 1, 2016 - Feb 2, 2017
That top tweet is a headline grabber though as the groundwork to make this possible was done the year prior.
A little background.
I'm a technical cofounder, but have a business/finance background and I don't think we would have been as successful if that wasn't the case as business strategy came into play early.
I'm a technical cofounder, but have a business/finance background and I don't think we would have been as successful if that wasn't the case as business strategy came into play early.
I met my cofounder through a "Cofounder Dating" website called Cofounder's Lab.
As an engineer you are constantly pitched terrible ideas and no one wants to pay you for your work.
The common pitch is "I'll give you 2% equity to do the work".
https://cofounderslab.com/
As an engineer you are constantly pitched terrible ideas and no one wants to pay you for your work.
The common pitch is "I'll give you 2% equity to do the work".
https://cofounderslab.com/
My cofounder was awesome from the start.
Fair, realistic, and ambitious.
He'd run marketing tests on a number of products and we reviewed them over a couple months.
i.e. Demand was established well-before building the product.
Fair, realistic, and ambitious.
He'd run marketing tests on a number of products and we reviewed them over a couple months.
i.e. Demand was established well-before building the product.
On top of being awesome as a person he is the best product guy I've ever met.
We had full-fledged designs in hand before moving forward with development.
Seeing the whole picture ahead, i.e. systems thinking, is imperative unless you want to rebuild in a few months.
We had full-fledged designs in hand before moving forward with development.
Seeing the whole picture ahead, i.e. systems thinking, is imperative unless you want to rebuild in a few months.
We negotiated a split of cash/equity that vested over X period.
I'd been burned in the past by the lure of full sweat equity.
Work began in earnest in August 2015 as a side gig where I committed 20 hours per week.
I'd been burned in the past by the lure of full sweat equity.
Work began in earnest in August 2015 as a side gig where I committed 20 hours per week.
The biggest risk in the project was using a prerelease version of ActionCable in Ruby on Rails and making sure everything worked well with mobile clients.
So that was the first thing we attacked and proved out.
We didn't dally with easy stuff.
Work on the hard stuff first.
So that was the first thing we attacked and proved out.
We didn't dally with easy stuff.
Work on the hard stuff first.
In the meantime my cofounder was getting beta clients and raising money.
They both go hand in hand.
Raising money is hard without clients.
Clients don't want to work with you unless you have runway.
So we kept plugging away at making a demoable product.
They both go hand in hand.
Raising money is hard without clients.
Clients don't want to work with you unless you have runway.
So we kept plugging away at making a demoable product.
Fast forward to January 2016.
We had raised $35k on a note.
The note allowed us to continually raise while operating vs a priced equity round.
I was fed up with my job so decided to take the plunge with my wife's blessing.
February 1, 2016 would be my full-time start date.
We had raised $35k on a note.
The note allowed us to continually raise while operating vs a priced equity round.
I was fed up with my job so decided to take the plunge with my wife's blessing.
February 1, 2016 would be my full-time start date.
Pretty quickly into demoing for customers we found that we needed a significant change to support "organizations".
This touched most aspects of the code and in hindsight I should have expected this.
It was a significant refactor that took a month, but was necessary.
This touched most aspects of the code and in hindsight I should have expected this.
It was a significant refactor that took a month, but was necessary.
After getting through this we hired another developer full time.
He is the fastest engineer I've ever worked with.
Without him we would've been dead.
I was always trying to stay ahead of him with work.
He is the fastest engineer I've ever worked with.
Without him we would've been dead.
I was always trying to stay ahead of him with work.
We also were producing marketing videos every month as new features rolled out.
We'd send these to potential customers and investors.
These videos told stories about problems and solutions rather than explaining features.
Always demo with realistic data.
We'd send these to potential customers and investors.
These videos told stories about problems and solutions rather than explaining features.
Always demo with realistic data.
Midway through 2016 we had identified and reached CEOs of potential partners.
Cold email works.
Don't be afraid to send cold emails to these people.
It's a numbers game.
They MUST respond to at least a few to keep their M&A and partnership pipeline full.
Cold email works.
Don't be afraid to send cold emails to these people.
It's a numbers game.
They MUST respond to at least a few to keep their M&A and partnership pipeline full.
Towards the end of 2016 we had a couple hundred people on the platform and had raised about $200k.
The cold email had gone from interesting partnership opportunity to dead and back to potential acquisition.
This led to us flying out to the potential acquirer for a proposal.
The cold email had gone from interesting partnership opportunity to dead and back to potential acquisition.
This led to us flying out to the potential acquirer for a proposal.
Anxiety.
We didn't know what to expect exactly.
We ran through various scenarios and planned things out.
But getting an offer on the table is way different than how you planned.
We didn't know what to expect exactly.
We ran through various scenarios and planned things out.
But getting an offer on the table is way different than how you planned.
The offer was solid, but maybe lower than what we expected.
However, it had a lot of upside and was eventually a very smart move for the company and us as we ended up repaying that offer many times over.
However, it had a lot of upside and was eventually a very smart move for the company and us as we ended up repaying that offer many times over.
Due Diligence
After receiving a verbal offer we went into overdrive on preparing for the barrage of questions that come from due diligence.
From an engineering perspective the biggest selling point was our documented API.
A VP/CTO seeing that makes the model comprehendible.
After receiving a verbal offer we went into overdrive on preparing for the barrage of questions that come from due diligence.
From an engineering perspective the biggest selling point was our documented API.
A VP/CTO seeing that makes the model comprehendible.
This moved to onsite due diligence with the CEO, VP Eng, and VP Product flying to our tiny office.
We had technical due diligence reviews with the CTO, VP Eng, Dir Eng, and a mobile engineer online.
Key here is to know your strengths, weaknesses and limitations.
Don't Lie!
We had technical due diligence reviews with the CTO, VP Eng, Dir Eng, and a mobile engineer online.
Key here is to know your strengths, weaknesses and limitations.
Don't Lie!
After this we had a formal written offer and a month of legal proceedings.
This was purgatory and similar to "senioritis".
The threat of the deal being pulled is real, but you can see the finish line.
Our lawyers dealt with most of this and mostly gave us tasks to check off.
This was purgatory and similar to "senioritis".
The threat of the deal being pulled is real, but you can see the finish line.
Our lawyers dealt with most of this and mostly gave us tasks to check off.
Fast forward a month to acquisition day.
I bought some MacAllan scotch early in the morning.
About mid-day we got the call from our lawyers that the deal had been finalized.
So we gathered around our conference table and madly refreshed our bank account screen.
I bought some MacAllan scotch early in the morning.
About mid-day we got the call from our lawyers that the deal had been finalized.
So we gathered around our conference table and madly refreshed our bank account screen.
It only had $12 left because we'd been drawing the money down and stopped raising capital to prevent dilution.
Seeing a large sum of money wired into your bank account is a surreal feeling.
It was awesome, but still only a small part of the journey.
Seeing a large sum of money wired into your bank account is a surreal feeling.
It was awesome, but still only a small part of the journey.
At some point I'll write something about what happened afterwards.
Overall a great experience and it only whet the appetite for more.
Overall a great experience and it only whet the appetite for more.
