Selling my company was a milestone that many entrepreneurs dream of. It all started with a chip on my shoulder, arrogance that I knew better than everyone else, and a laptop, eventually growing into a successful company. In a previous article, I shared a bit about the process of selling my company. But today, I get to look back on all of that nearly two years later with the benefit of hindsight. 

Most problems in my life come from mis-set expectations. This is also the case here. Those not caused by mis-set expectations come from my own laziness and shortsightedness. I now look back on selling the company as the most expensive lesson I have ever taught myself.

I am writing this post for current founders who are considering selling their company to encourage you to dig a bit deeper. I am not saying do or don’t sell, I am encouraging you to really think through what you’re doing and why you’re doing it.

Background

My company was a bootstrap success story. From its inception as me consulting, to growing the team, to building multiple successful software products, our growth was a testament to hard work and determination. I wasn’t smarter, or better connected, or better financed, or with a better pedigree than my competitors.  We never took outside funding, which meant every decision, every risk, and every triumph was solely on me and my wallet. Years of this pressure eventually led me to wanting to get away from it all. For some this would be called burnout, but for me it was a personal incompatibility with parts of the business I don’t want to delve into in this post. 

Selling

When I finally signed the deal to sell, it felt like I was not only getting a financial outcome, but I was also getting freedom from parts of the business I didn’t want to be around anymore. Financially, the sale put me in a comfortable position, though far from the lavish retirement many imagine. 

I got lucky and sold my company to people who have treated me, my company, my customers, and my employees well. This isn't the story of a big bad acquirer who did something wrong. 

When I sold, I didn't have any earn out or retention clause. I expected to leave and work on a specific startup idea. I built the MVP in my spare time and had amazing traction within 6 months, until the market tanked in fall of 2022. Then all my initial customers got laid off or projects terminated.

Since then, I haven't had any ideas that have grabbed me and felt super powerful. Without this I feel like I have been wandering aimlessly looking for that powerful idea.

And as the dust settled, I realized that this had not been just a financial transaction – it was a pivotal life event that profoundly impacted my sense of self and purpose.

Post founder life

Selling has destroyed the identity I had built of who I was as "CEO and Founder". I hadn't gone to therapy prior to selling the company. Part of my problem with selling comes from the fact I had not identified my values (https://www.therapistaid.com/therapy-worksheet/values-clarification) in advance. Once I knew them, it was obvious that 4 out of my top 10 would be negatively impacted by selling the company if I didn't start another one afterwards:

• Family
• Love
• Friends
• Fun
• Recognition ⬅️
• Wealth ⬅️
• Power ⬅️
• Respect ⬅️
• Honesty
• Humor

I know that these values can be fulfilled through other ways, but for me, the agency and autonomy of being the founder also matched my personality and financial goals well. It’s hard to know this about yourself if you don’t pause the everyday cycle of building and growing to learn more about yourself. Now whenever I talk to founders I almost always push them towards getting into therapy not to fix any problem, but as a way to force a regular process of reflection and self understanding.

Another interesting learning was that I care a lot more about cash flows than wealth. What you don't know is that when you have a pile of money, you turn into a dragon. The goal becomes to sit on the pile of money and make sure it doesn't get smaller, and ideally grows on its own. This is surprisingly hard, and amongst other wealthy people and former founders I now know, this is one of the most frequent preoccupations. In fact, one of the categories people are interested in are cash flowing software businesses just like the one I had sold.

The best way to think about this is with a trite sports analogy of playing on offense vs defense. When I was the founder of a company I was always on offense working to grow and expand and find new success. Now I am working to defend what I have earned, while struggling with my inability to start something new.

While I was lucky with an acquirer who didn’t do any of the bad stuff you often read about, I also saw many mistakes I had made in the process of selling the company.

• Not getting a mentor / coach to help me understand how to be a better CEO.
• Not talking through motivations with a therapist and seeing if my goals could be better met with other approaches. 
• Not thinking about selling part of the company that I was unhappy with.
• Not thinking about promoting someone else to be a leader and stepping away myself.
• Not running as aggressive of a sales process as I should have and focusing only on a few ideal acquirers. This likely turned out better for everyone other than me, but I still think about it at times. 
• Not hiring the right team to support me in the sale process. Seriously if you’re going to sell, make sure you have a team that is vouched for by at least 2 founders that have sold. I did a terrible job of hiring people to represent me and this hurt me significantly from a financial, tax, and legal perspective.
• Maybe all of these could have been avoided if I had a co-founder to help me in the first place.

I want to circle back to what I wrote in the beginning. The point here isn’t that selling a company is a bad idea and that you shouldn’t do it. The point is that it’s important for you to take the time to understand why you’re doing what you’re doing, how it will impact your life, and make an informed decision.

What’s next for me

I continue to work on new ideas, and even the process of ideation itself. I build random projects like the har-cleaner library / Securely to feel like I am moving the ball forward. After all, action creates momentum.I angel invest and consult with current and aspiring founders. Often talking about topics exactly like the ones above (feel free to reach out if that’s you).

Mostly I continue to look for new ideas and co-founders to build with. If you're in NYC and interested in working with me feel free to reach out via https://twitter.com/BorisBerenberg or https://www.linkedin.com/in/borisberenberg/

In 2016 I built MoodApp, a mood tracker designed to solve my own misery. I became convinced that my job was horrible, and that I was miserable because of that job. Maybe all I needed to be happy was to find a new job?  But what if I was wrong? Spoiler, I was wrong. What if there was an alternative cause, and data collection and analysis could show me where the actual problem lay?

To this day I believe the buttons on the side of the Pebble Smartwatch combined with the ability to have a persistently foregrounded app provided me with the user experience (UX) platform to build the best mood tracker I ever used.

Why Mood tracking matters

Before we get into UX and buttons, it is important to understand why mood tracking matters, and how that will influence an optimal mood tracker design.

There are specialized use cases such as tracking mood during clinical trials out there. However, most individuals I spoke to only cared about mood tracking if they had an acute problem they wanted to fix. I could relate to those people because in building MoodApp, I was trying to solve my own misery.

The holy grail of mood tracking would be a system which automatically detected and logged emotions to be analyzed at a later date. Considering that we can't even do this in a lab setting, let's keep it in mind as an ideal, but focus on reality. By 2015, there were plenty of mood trackers that existed on the market. Everything from apps on a smartphone, to websites, to ye olde pen and paper. The problem with all of them (and the still unsolved problem today) is how do you get yourself or a user to submit data into the system. The term medical adherence describes the challenge here.

The TL;DR is that people don't do what is in their best interest. They don't take pills their doctor tells them to take, they don't floss when the dentist tells them to do this, and they definitely don't take out a pen and paper in the midst of a heated conversation with their manager to log their feelings.

What we have today

The world has wildly changed since 2015, except not in the realm of mood tracking. There have been a couple new entrants to the space in the form of apps that run on smart watches (but are functionality identical to smartphone apps), some dedicated devices of questionable accuracy, value, and with varying privacy implications (Halo was shut down), or hybrid approaches like fitbit's Stress feature. Apple's upcoming iOS 17 update will allow users to "log their daily moods and momentary emotions; see what might be contributing to their state of mind" but we have yet to see how that is implemented. Ultimately, none of them try and solve the adherence issues and fail to move the needle for capturing a meaningful amount of data to help a user effect change in their lives.

The tracker I use today for ongoing mood monitoring is how we feel. The main improvement between theirs and most others is that they have something akin to an emotion wheel as their primary design element:

This UX is important in helping users learn the vocabulary to better identify their emotions and thereby empowering them to deal with those emotions. However, the main functionality to improve adherence is a simple scheduled reminder, which  if you pay attention can be configured with some degree of variability (though for some reason this isn't the default). This was something other apps, and even MoodApp had in 2016.

The thing that how we feel offers that MoodApp never did is the ability to tag what you're doing, and who you're with. It also integrates with Apple Health (fitness and sleep) and the weather to see if there are any correlations there.

Unfortunately, without adherence, there is little data to analyze:

Things haven't gotten better, not because of laziness, stupidity, or malice of those working on the problem. It is because input methods to support adherence haven't changed.

Why buttons + foreground apps

In the ideal of mood tracking mentioned above, the word automatically does a lot of the heavy lifting. What it is really saying is that we want to understand what you feel, when do you feel it, where you are when you feel it, and any additional metadata we can get related to the emotion.

We can't record everything, but physical buttons and a foregrounded mood tracker go a long way to solving the problem because they make it easy to log your feelings anywhere, anytime, no matter what is happening. This is because tactile buttons on the side of a smartwatch can be operated by the user in nearly any setting without looking at the screen.

By using the up button to signify a single unit of positive emotion, and the down button to signify a single unit of negative emotion, the user is empowered to log emotions effortlessly, without making others aware that they are doing this.

For example, in a meeting you can press the buttons under a desk even in the middle of a high stress situation. Or, at an opera where you're absolutely loving the performance you can press a button without lighting up a screen and disrupting others.

Without buttons that work without you looking at them, this kind of input is simply not possible. For example, the Digital Crown on an Apple Watch could in theory be a great input. However, it can't be bound to a random app that is always open, and it's hard to know how far you have rotated it without looking for some kind of visual feedback from the watch.

This didn't fit elsewhere, but a random note I wanted to include was that a nice unintended consequence of allowing a user to log emotions whenever they wanted was that it empowered them to ask themselves how they were feeling more often. Awareness of your current emotional state is an important component in emotional regulation and behavior modification.

What I learnt about my mood

Since MoodApp generated significantly more data points per day (I could easily log more than 10 times a day) we could apply standard data analysis methods to it.

I found that there were a couple main analysis approaches that helped me understand my own issues. The first was understanding if there was a correlation between mood and location. This was easily identified using a heat map of my emotion logs.

Looking at this map, it was trivial for me to understand that the workplace was not the cause of my negative feelings. In fact, the location with the small amount of red on the map near where it says South of Market was my workplace and was the only place where I regularly felt positive emotions. The blue dots which signify negative emotions are by Union Square and by DNA Lounge may be easy to recognize for SF locals, but if not, these are the locations of nightclubs.

Another way to analyze this data is by looking at it in relation to time. I broke it down like so:

Apologies for the inconsistent colors here. In the first graph, blue is negative emotion and red is positive. In the second graph it is reversed. Anyways, this helped me to understand that most of the negative feelings I had came at 10pm or later. This was correlated to the days of the weeks I was going clubbing. Not that surprising that I found out that alcohol actually made me less happy, not more.

Conclusion

I am in a much better place in my life today, and how we feel meets my needs. But if I were dealing with an acute mood issue and needed a tracking tool which supported a high degree of data logging, I don't know of any options on the market.

To this day, I am not aware of any major platform (smart watch / wrist band / ring / etc) that supports similar enough UX to build a new version of MoodApp. There are some indie platforms out there like Paul Smith's Open Smartwatch, or the mutantW_V1 which I think can be used for this use case, but are not at a point of developer experience where they are a viable developer platform for distributing a mood tracking application. If you know of a good platform I have overlooked, please let me know. If someone at Apple, Whoop, Fitbit, or similar is reading and wants to know more, please give me a ping and I will be happy to share more info with you.

Credits:

Images were provided under Creative Commons by Pebble Technology.

B2B SaaS SLAs aren't lies, but they are carefully worded legal statements intended to mislead a buyer. This isn't to say that buyers are being cheated, in fact, buyers often want to be misled. Nonetheless, I think we can do better.

A business buying software isn't just looking for someone to solve their pain point. They're looking for a relationship, trust, reliability, risk management, and compliance. The buyer may be required by law, or their own customers to meet various standards of managing risk.

This is one of the reasons why we end up with Dilbert like experiences at large enterprises. A Kafkaesque labyrinth of legal, security, risk, and other teams who must sign off on anything that is done.

SLAs are an important feature analyzed by SaaS buyers. The buyers want to know that this important business system is reliable, and that they can trust it, and that there is a punishment for the vendor failing.

However, sellers intentionally undermine them, and the weaknesses are ignored by the buyers who desperately need a tool they can shove through their own complex process. As a result, SLAs operate mostly as a form of checkbox compliance rather than an enforcement of service quality.

This is due to three key points.

1. The vendor defines what constitutes an outage (SLIs) in a restrictive manner such that failures that a reasonable user would call an outage are not considered an outage.
2. The vendor defines the duration or calculation of any given outage, which means they can sweep an outage under the rug entirely or reduce the duration of one. Amazon's AWS is frequently shown to do this in posts like this https://ably.com/blog/honest-status-reporting-aws-service
3. When an outage does happen, the punishment the vendor faces has no punitive component in it.

Let's look at a few SLA policy docs to see what they say.

Slack

You can find Slack's SLA document here: https://slack.com/terms/service-level-agreement.

The important parts to note are:

Downtime excludes the following:‌‌‌‌Slowness or other performance issues with individual features (link expansions, search, file uploads, etc.)

To review current and historical Uptime, visit Slack Status.

If we fall short of our Uptime commitment, we’ll apply a credit to each affected account equal to 10 times the amount that the workspace (or, as applicable, org) paid during the period Slack was down (we call these Service Credits).

So, let's apply our 3 checks above:

1. Outages would require all of Slack to down, and core functionality like Search being broken would not trigger the invocation of the SLA.
2. Outages are defined based on the status page that Slack operates and are of questionable veracity.
3. Unlike others I have reviewed, Slack has done a good job and offers a meaningful punitive penalty to themselves.

Atlassian

You can find the Atlassian SLA document at: https://www.atlassian.com/legal/sla with a couple important linked-to pages at https://www.atlassian.com/legal/sla/service-credits and https://www.atlassian.com/legal/sla/covered-experiences

The important parts to note are:

If we confirm there is a failure to meet the Service Level Commitment in a particular calendar month and you make a request for service credit within fifteen (15) days after the end of such calendar month,

Less than 95.0% Monthly Uptime Percentage - 50% Service Credit (% of monthly fees for affected Cloud Product)

Covered Experiences‌‌Jira Cloud Premium or Enterprise‌‌‌‌View Issue‌‌Create Issue‌‌Edit Issue‌‌View Board‌‌...‌‌Covered Experiences include browser-based experiences only (not, e.g., integrations, API calls or mobile versions).

Again, let's look at how this applies in practice:

1. Outages would require a failure of only the most basic of Jira features (same thing applies to other Atlassian products but I didn't want the quoted portion to be huge). In theory, authentication being down wouldn't be included in the SLA calculation.
2. Outages are defined by Atlassian's status page which customers are expected to take at its word. On top of that, you must manually contact them within 15 days to claim the outage.
3. Assuming you're down for an entire month, Atlassian has limited its liability to 50% of what you have paid. I think in catastrophic cases, Atlassian would go above its own SLA policy like they did in the incident last year. But if this is what you're going to do, why not put it in the SLA in the first place.

Snowflake

You can find Snowflake's SLA document at https://www.snowflake.com/legal/support-policy-and-service-level-agreement/

The important parts to note are:

“Unavailable” is defined as an Error Rate greater than the relevant Error Rate Threshold over a one-minute interval calculated across all Accounts within each applicable Cloud Provider Region

“Error Rate” is defined as the number of Failed Operations, divided by the total number of Valid Operations. Repeated identical Failed Operations do not count towards the Error Rate

“Failed Operations” is defined as Valid Operations where the Service returns an internal error to Customer, subject to Section III (SLA Exclusions) below.

‌                                                                       Upload

The Service Level Credit table Snowflake offers to customers

• ‌

1. Failures only count if they're a backend error and exclude basic things like authentication.
2. Successful operations increase the denominator, but repeated failures don't increase the numerator.
3. Assuming a customer is at 99.0% availability, that means they have had 7h 14m 41s of downtime. So, the punishment to Snowflake is roughly 3x what the customer suffers, not terrible, but also not great.

Why does this happen?

My guess is that this is some corollary to Goodhart’s Law

Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.‌‌‌‌or more commonly reworded as‌‌‌‌When a measure becomes a target, it ceases to be a good measure.

Teams are expected to provide a high level of service to customers. They are asked to measure that, and quickly realize it's really hard both to measure and to meet those exceptions, so instead they define metrics that look good on the surface, but are at best misaligned in terms of customer value.

Snowflake explicitly says on their blog:

These industry-standard SLA thresholds are not particularly good measures of user experience.  The underlying service-level indicators (SLIs) focus on query execution, which misses many critical components of the actual user workflow, from client library behaviors to the correct results being served. They also are implicitly dependent upon the user being able to reach and authenticate to Snowflake.

They go on to talk about how other things are being done to focus on UX, but if that's the case, then why is this what their SLA measures?

Can the situation be improved?

I would love to see someone create a tool which automates SLA monitoring and claims against vendors in bulk. Something akin to what StatusGator is trying to do at: https://statusgator.com/blog/sla-monitor/  and Downhound is doing at https://www.downhound.com/about (no affiliation to either them). If you can detect that a given product is down from the customer perspective (I call this antagonistic monitoring), then demonstrate that the SLA definition is too narrow, and that the SLA metrics are dishonest, then it places the buyer in a powerful position during renewal conversations. My hope is that enough companies getting hammered enough on bad SLA performance by buyers can be a bar raiser for the whole industry.

If this were to exist, I also imagine you could have an honest public status page (I own honeststatuspage.com so if someone is building this let me know). This would be an adversarial tactic of shaming vendors into improving product quality and could again be used to feed into a procurement process.

Take a moment to follow me at https://twitter.com/NothingEasySite and https://twitter.com/borisberenberg and subscribe below ⬇️

Networking events in NYC and the conversations haven't really given me what I was looking for. In the spirit of doing, I decided to try and create a new event which would be a better fit for what I want to attend.

The idea in my mind was something along the lines of:

In person Product Hunt or Show HN without a focus on impressing VCs

The rules were simple

• We curate 5 companies who will demo their products for 5 minutes each
• Presenters should focus on demoing with a focus on getting new users or enticing people to join a company based on the product itself
• Attendees are required to provide feedback to those doing the demos. Don't provide feedback? You don't get invited back

Thanks for all the help

Before diving in further, I want to call out the people who helped make this a reality. My co-host James Steinberg, Morgan Barrett for showing the value of a well organized breakfast meetup, the VCs and founders at PitchAndRun including Kevin Weatherman and John Gannon who helped me find presenters, Geri Kirilova for also helping me find presenters, Mark Birch for literally writing the book on how to organize events like these, and my partner for putting up with my nonsense as I dove headfirst into organizing my first event.

Building the event stack

The cool kids in NYC use Lu.ma for organizing events so we used that. Lu.ma, and most everything else we used was free or near there.

We put up the event page and started iterating. This all kicked off around the same time as generative AI entered the twittersphere. I wanted to try and create imagery for the event and was able to come up with the current header quickly using Playground.AI by feeding it different prompts and screenshots of Apple keynotes. You can see that process in the header image of this post (starts bottom right, and ends top left).

To promote the event, we reached out to our personal networks, shared the event in the Saturday app, via relevant event newsletters and listing websites here in NYC, and on social media. It was very amateurish, but it worked and we ended up with more than 160RSVPs before we closed sign ups entirely.

We wanted to make signing up for the event easy so we only asked for a few fields of information, but this made it hard to curate the attendees. To solve this, we used Phantombuster to enrich their submissions with their LinkedIn profile information. We could then prioritize attendees based on how we thought we could create the highest amount of community benefit.

The downside of all of these tools if they don't tie together well. There was lots of manual copy pasting and gluing stuff together in spreadsheets. Hopefully as the community grows and we get some budget, we can get better tools that make all of this a bit easier.

Planning meta game

A lot of the choices made in planning the first event were actually based on us wanting to make sure we could have a successful second event.

This includes:

• Hiring a videographer and video editor out of pocket to help create content which we can use to get presenters, sponsors, and venue hosts in the future.
• Getting a venue sponsor whose brand brought legitimacy to the event to help build trust with attendees.
• Ensuring we were the best possible guests of our venue in terms of planning, coordination, and general preparedness.
• Encouraging presenters and attendees to continue signing up even when we knew they may not be a fit yet, or we may not have enough room for them in this event. We didn't trick people, we were up front about constraints, but encouraged them to sign up anyways. This allows us to have a larger communication base for the next event making things a little bit easier on us as organizers.

The event

Our first event went surprisingly well. We had more than 50% of approved RSVPs show up which was in line with our expectations and capacity.  Presenters did an excellent job and multiple attendees came up to me after the fact asking where we had managed to find such great presenters. Two Sigma Ventures (our event sponsor) did an amazing job of setting up the space and provided delicious food and drinks.

Here's our quick recap video:

Our 5 presenters were:

1. Dorothee Grant from Kaveat
2. Ben Colman from Reality Defender
3. Tomer Molovinsky from Per Diem
4. Samir Housri from Mednet
5. Diana Hsieh from Correlated

We had a number of small issues, but everything was manageable. I will share a few so if you plan to organize an event, you can feel better when you find your own stumbling blocks:

• We set up a bunch of tech to record presenters and their demos, but forgot to enable audio recording
• We sent out duplicate event feedback requests after the fact

Post event

We collected 145 pieces of feedback shared with our presenters, of which 68 had attendees agreeing to share their emails with the presenter for hiring purposes.

We're operationalizing everything we did into a handbook and processes to help ensure that future events run even better.

Want to be involved in a future event?

• Apply to sponsor the venue at https://tally.so/r/mJ1vPX
• Apply to sponsor us with money at https://tally.so/r/nGeAMe

Sponsoring with money will help us buy software to make the organization work less manual, and maybe some equipment for stuff like video and audio recording.

• Apply to present at https://tally.so/r/wM1zvX
• Apply to volunteer at https://tally.so/r/m6DElN

If you're looking to attend a future event sign up with your email at  https://lu.ma/borisberenberg

60 hours a week for ~6 years without vacations allowed me to build and eventually sell my company. This was not a great use of my time. I could have had the same outcome with much better work life balance.

The rest of this post will talk about how I learned to better manage my time. Lots of this will make you say duh. However, it's important to realize that most things of value in life are perceived as duh. They're obviously the right thing to do and at the same time it's hard to do a lot of it.

I am not writing this because I expect this to blow your mind. I am writing this to remind you, that yes applying extra effort to implement this has positive outcomes. And that yes, compounding small improvements add up.

It took me ~15,600 hours to internalize this. I am a slow learner. Maybe you can do it a bit faster.

Self-control is finite

Just like physical muscles, the mental muscle of self-control can become fatigued through exertion, making it more difficult to exert self-control later. This is known as ego depletion.

Research has shown that self-control can be improved through a variety of techniques, such as mindfulness practices or goal setting. Mindfulness practices, such as meditation, can help you become more aware of your thoughts and emotions, which can make it easier to regulate them. Setting specific and challenging but achievable goals can also help to focus your self-control efforts. However, to do all of this, you need to expend self-control.

I had to understand that recurring situations in my life where I must expend self-control or to make choices on things I don’t care about, drained my ability to do well in areas I did care about.

The trope that always gets brought up here is Mark Zuckerberg and his shirts. While I haven’t gone to this extreme, I buy shirts so that I can pick any of them and be happy with whatever I have picked without thinking, and I apply this reasoning throughout my life.

Self-control is unreliable

On top of being finite, self-control can also be unreliable because it can be influenced by a person's environment and circumstances. For example, an individual may be able to exert self-control in a calm and controlled environment but may struggle to do so in a high-stress or chaotic environment. Additionally, your self-control can be influenced by your emotions, and you may be less able to exert self-control when you are feeling stressed, anxious, or depressed.

A system of behavior that can be very effective in self-control is habit formation. Habits are automatic behaviors that are triggered by specific cues in the environment. By identifying the cues that trigger unwanted behaviors, and then replacing them with new cues that trigger wanted behaviors, individuals can make it easier to exert self-control.

For example, I check Slack too often and let it interrupt focused work. The solution I found was to use an app called Quitter which closes Slack (and Messages, Whatsapp, and a few others) within 10 minutes of me not actively using them. This helped me break a negative habit of checking Slack and helped establish a habit of trusting notifications to be more relevant to the task I am doing.

Tools outperform people

By keeping track of how you spend your time, you can identify where they are spending too much time on distractions or unimportant tasks and adjust your behavior accordingly.

Tools helped me improve my self-control by providing cues and reminders to engage in desired behaviors, and by making it more difficult to engage in undesired behaviors.

One example of a tool that can act as a guardrail for self-control is a time-tracking app. I use a combination of the native Screen Time functionality and a third party time tracking tool called Timingapp. Screen Time is helpful for everything on the go, and then Tmingapp tracks everything on my laptop. Just having Timingapp installed has changed my behavior because I don't want to be disappointed when I look at the report at the end of the day.

Timelines and iterations

Someone may say to you "why don't you just spend more time outside of work". The word just does a lot of the heavy lifting there. The reality is that self-improvement is an ongoing effort. It will likely never be done. And progress will come in fits and spurts with you spinning your wheels. It's ok, that’s how it is for everyone who focuses on improvement and not performative change for social media.

Iteration is an extremely important part of self-improvement. This means that you must take consistent action, be mindful of your progress, and tinker with your strategies and routines until you achieve the results you want.

When you combine the reality of timelines and iteration you end up looking at something like James Clears 1% blogpost. The important takeaway for you shouldn't be that 1% better every day is your goal. The important takeaway is that 1% better is an impossibly high rate of improvement for most people.

You have failed, now what

You've put in the work. It's been years. You have decided that you want to give up. Work and life are not balanced. They won't be any time in the future.

So what? Is this worse than the person who overoptimizes for a hobby? Or for an addiction? Or anything else?

At some point you must understand who you are and accept that beyond a point you aren't going to change. I consider writing this post to be a form of work. I probably shouldn't be spending my time doing this right now. And yet here I am, 15.6k hours later. Maybe I will go play some Gran Turismo after this.

Take a moment to follow me at https://twitter.com/NothingEasySite and https://twitter.com/borisberenberg and subscribe below ⬇️

Google is a great search engine, but there is growing user frustration. Why? Because if something makes money, Google wants to make sure you click on an ad to get to it, and if it doesn't make money, Google wants you to see the answer immedietly on Google and not go elsewhere. I don't believe this serves the interests of the users long term, and is an opportunity to create an alternative search engine to Google.

My proposal is to build a distributed search index on top of which both large scale and niche search engines can run. Distributed search engines are not a new idea, but I believe my approach in terms of how you bring it to market will help solve the chicken and egg problem of getting enough usage for it to work.

What does it take to build a new search engine? I would argue the 4 main components are:

• Crawling the internet to get the data you want to search
• Indexing the data you have crawled
• Searching and Ranking across the index
• User adoption of the new search engine

Crawling

One of the largest challenges in building an effective search engine is to have a sufficiently large, and up to date index of everything on the web, so let's start there. Crawling and indexing the web is hard. 15% of Google searches have never been searched before. The important takeaway for me here isn't that people are asking new questions, it's that new things are happening and this makes up a significant portion of peoples interests. This means you need a dataset that is rapidly updating. There is a great core dataset you can get from Common Crawl, but it's updated monthly so results based on only this would be stale, and Common Crawl is limited in scope. From there you can layer on your own data, but due to the high percentage of automated traffic many websites will request you don't scrape via their robots.txt or outright block you via a firewall if you're not one of the major search engines. This gives large search engines a huge advantage since their large crawl dataset is the core on which the rest is built. Without a good dataset, you can't have a good search engine. Who can crawl every single website in the world, especially as the newest ones are being published or updated? The users visting these webpages. What if every single browser in the world retained a locally cached copy of the latest version of every website they visited? I built a proof of concept of this using a Chrome extensions + Mozilla's Readability to strip text from a given webpage, and then I do some basic full text search on the captured data. It works like expected and get's us to a good starting point. The Better History Chrome extension is a more mature implementation of this. This doesn't have to be done exclusively by end users, but if they are the primary crawlers in your day one architecture, I believe this search engine will have a significant competitive advantage.  Additionally, we can get the majority of the value that a website offers it's users by extracting only the visible text at the time a user departs a given site. Yes this can be improved with on device ML to clasify pictures, and possibly smarter handling of common objects like tables of information, but I don't think it's necessary at the get go.

Index

Ok so we have a single machine, with the dataset of websites the user has visited, and some full text search capability on it, how does that help us actually create a global searchable index? I would propose using Gnutella or a similar protocol. There are performance implications related to routing which are  addressed further in this post.

Search and Rank

Once we have a global index, we need to be able to search it. I don't have a solution here. Searching per node, and then aggregating the results across nodes seems to be a solved problem by the large search engines, but I am not an expert on this problem. I expect that the network latency introduced by the nodes distribution on a public internet will also be an important issue to overcome. However, I have four core ideas which I believe are important to both search performance and quality:

• More recent versions of a result are more valuable. If user A has a copy of my site from a week ago, and user B has a copy of my site from an hour ago. The search results from user B have more value than user A. When a distributed search receives multiple conflicting results, the most recent one should be prioritized.
• Social graph proximity is a good proxy for relevancy, and authority. If a result comes from a friend, it's much less likely to be spam, or irrelevant than if I get it from someone 1 Kevin Bacon away from me.
• Central servers can collect information uploaded by individuals, and then act as a proxy on their behalf thereby reducing network distance and number of hops in the search graph.
• Nodes can cache data as it is recursed through them. This reduces the network distance between the node asking the question and the one answering it. However, this poses a numbr of challenges around expanded security risk, data storage needs, data transfer volume, and questions about how this should impact network distance as it impacts result quality as mentioned above.

Go to Market

Let's assume you can get this working as a fully funcitonal tech demo. Your ability to search a given index vs Google will be slower and less accurate, but you're still in a functional place. So how do you actually get this working as a business?

Enterprise Search

Start by not competing with public search. Start by offering this as an enterprise search offering. If a company uses Coveo or one of the other competitors, they're going to have challenges like the enterprise search provider not having connectors for X and Y tools they use. Especially internal one. Since your search product is based on web caching, this isn't a concern. You support every single web based tool on day 1. Important caveat here is that you will have to build out support for a few non-web based connectors for tools like Slack, MS Team, and Git providers, but that's the cost of doing business. At the end of the day, you still have fewer connectors to maintain, and that's a significant advantage. The other added benefit of starting by making this a B2B tool is that companies have a very accessible social graph which can be seen via their  LDAP/AD/whatever other tool they use.

But there is a trade off, your index doesn't take into account permissions. For example, a user can search repeatedly with various string combinations to enumerate the contents of the cache, and thereby figure out private data that only HR should be seeing.

This will be addressed using two sets of include and exclude lists of URI regexes. The first set will manage what is and is not cached on a given node. The second set will be a map of URI regexes and either groups or individual users who should always or never be able to access these results and will act as a search filter as each node processes search results it is returning.

Additionally, I believe that organizations will want to have certain common URL paths that they always include and exclude in the index prior to searching ever happening. For example, we never want anything at https://facebook.com/* to be indexed. These types of lists should be community contributed similar to how uBlock Origin or Spamhouse operates where organizations can subscribe to various lists to help enforce the behavior of their network.  This isn't bulletproof, but you'll get 80% of the way, and it will improve over time.

Consumer Search Platform

Ok so let's assume this all works for companies, what does any of this have to do with creating an alternative to Google? Take all of those tools you have given enterprises to lock down what their users can do, and turn it into a platform provider. Instead of an org pushing policies down on users, you allow communities to build their own include and exclude list based search engines which users can subscribe to. Since it costs you near $0 to host these lists, you can give it to users as cheap as free and still make money overall.

For example:

• Paid access revenue split – A group of dentists could set up their own dentist focused filtered search and charge $10 a month for access, and you would take 10% fees from that.
• Ad platform – One of the Kardashian's could set up a search engine that only returns Kardashian approved merch and run ads on it to support the thing. You would provide the advertising platform and you take 30% of the revenue and the Kardashians get their 70%.
• Free – A group of kids want to set up a Minecraft specific search engine to exclude all the SEO spam and surface actually interesting resources across the web. They do it, they don't earn anything, you don't charge anything.

Weak points

I am under no illusion that this is a perfect idea. If you want to build this, there are a couple critical issues you need to be considering from day one.

The ability for more niche search engines means that you will inevitable end up with partisan filtered search engines which will exacerbate echo chambers. This isn't about one side or the other, it's an inevitable outcome. The question is how will you deal with these from a policy and governance perspective.

A large % of global web traffic happens on mobile. This trend is accelerating. Mobile devices are not suited to act as cache or relay nodes in a network like this. This will particularly impact poorer devloping nations where mobile devices are the primary method of digital interaction. If you look at the history of P2P tech in these locations, it has inevitably failed and fallen back to a centralized model. I expect the same thing will happen here when it comes to storing the data, indexing it, and executing search queries. However, the mobile devices can still act as crawlers.

There are many security, privacy, and other related topics which are not covered at all here. I highly recommend reading the research done by the Tribler team.

Related work

Brave Search is actually similar to this idea via the WDP see the "Is the Web Discovery Project a crawler?" section.

Aquila Network and Sonar are also working on something similar

Spyglass and BrowserParrot seem to be trying to tackle this problem at the individual level

There are number of personal archiving tools such as Monolith, SingleFile, Diskernet (fka 22120), Memex, and I am sure many others some of which you can find at https://github.com/iipc/awesome-web-archiving

There are historical distributed search engines like YaCy and meta search engines like Searx

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I don't remember exactly when it started, but I am sure the impetus was a period of unhappiness with my job. This turned into an annual tradition of me trying to sell the company I had built as a birthday present to myself. This year, I sold it.

Like running the company, selling the company has been an amazing learning opportunity. I am writing this post to share what you should be thinking about should you try and sell your company.

A few caveats here:

• My company was 100% bootstrapped, and I was the 100% owner
• My company was profitable
• My company was an LLC, as such I did not qualify for a QSBS credit
• Both the seller and purchaser are USA headquartered organizations
• The acquiring company was PE backed
• This isn't an exhaustive list, this is purely based on my one experience selling a company

Prep work

The better of an understanding you have of your own business, the smoother the whole process will go. It's not enough to know the business, you need supporting evidence, and that evidence should be well organized. Doing so will save you time and money in the process. I would recommend that you start working on this at least 3-6 months before you plan to sell the company.

Financial

Financial docs will be pretty easy assuming you have been doing everything legit up till now. It may be worthwhile to run a formal audit on last year's finances to ensure everything is up to spec. Additionally, there are a few core concepts you should internalize early on. Understanding these concepts will help you decide whether now is the right time to sell your business.

Valuation

You need to understand how buyers value your company. In our case, the company valuation was set using EBITDA. This is one item you want to understand at least one year in advance. From there, you can start to change how you operate and influence the valuation. The buyer is not dumb, if they see you gaming this, they may skip the deal. What you're doing is professionalizing your organization towards a specific metric. This isn't about you making more money on selling the company. This is about the organization operating in a way that aligns with the goals of the buyer.

There is a concept of a 409A valuation which others have told me is valuable to understand. I didn't use one so I have no real input to offer here.

This number is negotiable.

Working Capital

I read a number explanations of working capital. I am sure they make sense to those with an accounting or finance background, but I had a hard time internalizing the idea.

The way I understood working capital is to think of it as the financial ball and chain of why you don't shut down the business and walk away with your cash balance + accounts receivable. It is the part of cashflows where you have money people owe you, and money already paid out, and there is that middle amount that you can never pull out of the business? That's your working capital.

When you get acquired, the acquiring company will likely keep it. Working capital is measured on a monthly basis. If you start preparing long enough in advance, you should be working to reduce working capital going into the sale. Keep in mind that the method of calculating working capital is not fixed. If you're growing, the calculation may be your last month multiplied by some expected growth percentage. While if you're stagnant, it may be a multi month lookback.  This is something you should understand and prepared to negotiate. This negotiation happened post letter of intent (LOI) for me, but you may want to do it beforehand depending on how much money is on the table.

This number is negotiable.

Cash free, debt free

This means that the company acquiring you wants to zero out the debts and cash in the company as part of the transaction. Sounds great right? Cash Balance + AR - AP + Acquisition price and you're home free! But no, you actually need to subtract out that working capital mentioned above. And depending on how your business operates, this can be a significant chunk. Make sure you understand your working capital numbers.

Holdback period + amount

As part of the transaction you will set a working capital target. The buyer will track to see how the company does against it for the following 90 days. Should you exceed the working capital target, the buyer doesn't want to add more money to fund the company. To offset this risk, the buyer hold some amount of the seller's money during that 90 day period to act as a buffer. This is the holdback amount and period. If working capital is less than the target, you get the holdback amount plus the amount under the working capital.

F Reorg

If you're going to be getting equity in the buyer, you may need to do an F reorg to reduce your up front tax burden. This is a simple process that your CPA can assist with. We had to do it last minute which was painful, so plan ahead. Your tax professional can tell you about the impact on your taxes.

Purchase Amount Breakdown

Make sure you understand what and how you're being paid, over what period of time, and with what gotchas.

For me, the amount was a mix of cash and equity. For exampe, check if the equity has a vesting period that requires you to stick around, or other provisions that can impact your final compensation. This is something that you should negotiate and analyze with the advice of both your lawyer, financial, and tax advisors.

Legal

This part of the process will be death by a million papercuts. You need to prepare yourself for this. My process was less painful because the buyer I picked was super flexible and so were their lawyers. Even with that, it still sucked. It could have sucked much less if someone had provided me with the following advice.

Organization

All work will happen via email. Microsoft Word documents and PDFs will be added to a "data room" which is a fancy way of saying Dropbox or one of their competitors. This means that if your data is organized in alignment with this expected method of communication, your life will be much easier. What does this mean in practice? Organize everything in an obvious folder hierarchy. My recommended one is as follows:

• Type of Document - Example: Customer Contract
  • Year - Example: 2022
    • Entity - Example: ACME Corp
      • Number. Document - Example "1. ACME CORP MSA.pdf"

I would recommend taking the time to rename files to be super consistent and obvious in naming. When lawyers are asking you questions, you don't want to be trying to find whatever document you need at 2AM on a Sunday. One other tip here is that you will find that documents are missing. Let's say you forgot to sign an NDA with ACME Corp. Create a text document named "ACME Corp NDA - Not Found.txt" and put it in the place where you would otherwise have it. The numbered documents will also make it easier to reference in other places which you will need to do.

Which documents do you care about

All of them. It's unfortunate but it really is all documents. This is part of why I said you want to start doing this 3 to 6 months in advance. This timeline lets you get copies of documents that may be in counterparty hands, or that need to be mailed to you by a slow government agency. To help you, here is a non-exhaustive list of documents you will be asked to provide as part of due diligence and warranties and representations:

Representation

You may want to sell the company yourself, or you may want to go through a broker. A broker will handle a lot more of the work for you. They will bring experience and provide an accounting and legal team to support you through the process. Based on my limited experience in this area, this will cost you ~15% of the gross deal price.

If you don't go with a broker, you will need to put the team together yourself. At the very least, this means one lawyer, and one CPA. Don't try and do the process with less than this. Not all lawyers are equal. If your buddy is a criminal defense attorney or a real estate lawyer, they're not the right person for the job. Find someone with M&A experience. Get specific information on how many transactions they have done in the last year, what the per transaction gross sale amount was, and what category of business was the company being sold in. If a lawyer knows medical M&A and you're a software startup, this won't be a good fit. I found that legal representation will cost in the ballpark of $10k-$100k depending on what they offer. It will also depend on how much prep work you're willing to do up front.

I would also recommend you get a therapist to talk to throughout this process. The best thing to find is other founders who have sold a company at roughly the same size and price. Their experience, emotional support, and references to representatives is very valuable.

Shopping Around

If you have a broker, they will handle this part for you. You need to figure out who is going to buy your company. This is standard sales. You can reach out to others, or others can reach out to you. The more they are reaching out to you, the more your company will be worth. If you're large enough, you can get investment bankers involved. Get at least 3 potential buyers interested if you want to feel like you're getting a fair price.

Make a deck

Did you do the prep work I mentioned above? Great. Now you have an understanding of what your company looks like from a financial and legal perspective. Take that and create a pitch deck for selling the company. You may also want to make a more in depth prospectus.

Providing data

Get an NDA and provide the appropriate data to the potential buyers. What is appropriate data? That's tough to answer and you will get differing opinions. You'll have to tell the buyer everything during due diligence, so don't cover anything up. My personal preference is to be open, and that seemed to buy me trust and good will from our buyers.

Selling

Letter of Intent

You're going to collect letters of intent (LOI) from your potential buyers. Once you accept one, you have to stop talking to everyone else until you either succeed in selling the company, or the no-shop period expires. You should aim to get them at the same time. It's like selling a house, buyers don't want you to hold an offer while you shop around. When I mentioned the three buyers earlier, that's the minimum, in practice you want more to ensure you can get many well timed offers.
Once you get an LOI, make sure it covers the following points:

• price: the amount and the structure (cash vs stock; merger or asset purchase)
• executive compensation post acquisition: especially equity revesting
• net-working capital: is the sale price cash-free/debt-free?
• no-shop period: once you accept the LOI, how long does the buyer have to complete due diligence and buy the company before you can go back on the market

Hell (Due Diligence + Representations and Warranties)

This could also be an easy process. It will depend on how much prep work you have done, how much you're paying others to do this work for you, and how strict or flexible your buyers want to be. I had done a poor job on prep work, and was doing most of the  work myself. My process could have been much worse had our buyers not been gracious and understanding of my inexperience and the mistakes that came along. This is one of those moments in the process when I got additional confidence that I had picked the right buyer.

Non Compete

The buyer will ask you to sign a non-compete as part of the transaction. The main thing I want to call out here is that this non-compete will exist outside of an employment contract. This is an important distinction. Moving to a state like California which doesn't honor non-competes in employment contracts won't save you. Have a clear understanding of the duration of the non-compete, and exactly what activities it does and does not cover. I negotiated improved language in mine which allowed me to operate in a similar area of business that isn't directly competitive. I will most likely never need this, but it means my back isn't against the wall anymore if something were to go wrong.

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Watching Formula 1 has been a great mix of entertainment and education. The interactions between the parties, the constraints involved, and the relentless pressure has helped me to learn to be a better leader.

Know who you're racing

Formula 1 as a league is a platform on which racing teams operate. The rules are public and well understood. Much like an app store, or a social media platform, everyone is broadley playing the same game, but at the same time, not really.

While all of the teams participate in one race, for the last few seasons, there have actually been three or more races happening in parallel. The first race is between Mercedes, Redbull, and depending on the year, Ferrari. Next up, you have the commonly dubbed "best of the rest", where the best a team is counting on is 4th place with McLaren, Aston Martin, Alpine, and Alpha Tauri fighting for championship points. At the back, Williams, Alfa Romeo, and Haas are mostly fighting to not lose more so than to win.

Going back to the app store analogy, even within a given category, there is clear stratification of outcomes. For example, here are the estimated downloads of popular social media apps on iOS for October 2021 from Statista:

When I work to put together our strategy it's important to keep in mind who I am racing. If I want us to compete with our largest competitor, and we're number 5, we need to know that this isn't a well set goal.

Yes, it's possible to do it as Esteban Ocon and Daniel Ricciardo showed last year, but in both cases, it happened because the leaders had shot themselves in the foot.

Platforms aren't fair, and they never will be

The 2021 season was particularly tension filled. Especially, with the championship being decided in the second to last lap by a contreversial policy decision. Fans, drivers, and teams have been vocal about the inconsistency of the application of the rules throught the season.

The main takeaway here was that even at the pinnacle of motorsport, with decisions being made by experienced stewards (referees), they're still constantly screwing up. This means that when I get hit over the head by a ridiculous interpretation of the rules in my life, it's to be expected, and in practice, something to plan and hedge for. Another nugget in the same vein is that while in the moment you're aware of how you're being screwed, at other times you benefit from others being screwed over. It's not a one way street, and if you aren't seeing your advantages, that doesn't mean they aren't there.

Focus on your strengths, even the best have weaknesses

While the main action is on the track, I have found watching the team principles (CEO of the team), and other senior members to be a very interesting portion of the show. In recent seasons, fans have gotten short interviews with team principles in the middle of practice, qualifying, and races. We have also gotten to hear some of the conversations between a team's sporting director, and race control.

These interviews and conversations have a lot of small wisdoms in them, but a key takeaway I see is that even at the pinacle of motor racing, the leaders have moments of weakness. Toto Wolff famously hits his table in frustration leading to jokes like this:

Watching highly successful people have these moments of weakness and still be successful gives me hope that for all my faults, if I push my strengths there is still a decent chance of success.

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Heroku pioneered the one click deploy button:

Let's go a step further, let me click a button, and deploy everything I need for a startup.

An entrepreneur can use many tools to replace large portions of non-differentiating activities. Here are a few categories and examples of companies in each area.

Each of the above categories has many other options, and there are other categories that I have not listed here.

As we build each of these business areas out, we are not subject matter experts in any of them.

With the push for DevSecOps and Shift Left, I would like to see someone build a one click deployment of everything I need from day one. Google, Microsoft, or AWS with a partner like Vendr / Rackspace are best positioned to deploy this.

I envision it working a little bit like so (example uses Google service names, but you can swap out the same thing with Microsoft, or AWS + third party tools):

1. I sign up with Google Apps for my new company
2. As part of onboarding they buy the domain for me
3. Google Analytics, Google Search Console, Google Tag Manager accounts are set up for the domain
4. DNS records for previous services are auto populated, MX, DMARC, DKIM, SPF, etc are all set up
5. A GCP Project is auto-generated based on one of many common long term supportable templates. The goal here isn’t to push companies into maximizing spend on GCP like some best practice Cloud Formation Templates will do. The goal is to show people how to do the right thing and in a compliant manner from day one. Google can try and push their specific products like Cloud SQL for PostgreSQL instead of a bare compute node running PostgreSQL, but should avoid pushing for specific lock in tooling like BigQuery. The idea here is to be a comfortable springboard, not a trap that users don’t want to step into. It would be easy to make a reputation management mistake here.
6. IAM is auto generated and tied back to Google Apps Groups so that I can manage everything from one place.
7. Deploy Zero-trust architecture as the baseline.
8. Provision tooling for automated secrets management tooling and pre-integrated with Google Apps. This includes a Google specific tool kind of like what Cloudflare Access does to get rid of SSH keys
9. A “VPN” application is available from within Google Apps for any employee to download, auth, and inherit the config from the previous steps. Think of something like Tailscale. Why do you need this is you're doing zero trust? You will drift away from zero trust to meet business goals and this deployment needs to accept those realities.
10. Some kind of bundled and managed password manager. I guess for Google this would be the one built into Chrome, but it needs to be better at auto generating passwords per site.
11. A code repo is set up on some service that Google partners with since they killed off Google Code.
12. CI/CD is set up within the previous GCP project template, again based on best practices. This isn’t perfect, but it helps to start things off on the right foot. They could even bundle as many of the items from the Open Source Security Score Card to be out of the box for projects.
13. Automated monitoring and alerting is set up for the templated project. This doesn’t solve the challenge of monitoring and alerting. It provides a set of baseline metrics that developers can use to understand how to configure things.
14. This is all hooked up to automatically create new environments on PR for automated and manual QA.
15. I can opt-in to auto-deploying a set of open source tools that will provide core services. The catalog consists of only projects which Google can automatically keep updated for me. When it makes sense, analytics are auto configured so when you deploy Ghost, Google Analytics comes pre-set up. Think of this like a more curated Bitnami with ongoing maintenance. Another alternative here may be to partner with a company like GitLab to offer a bunch of items pre-set up and integrated. A few examples of tools like this would be:
16. Ghost for a website/blog
17. SonarQube for code analysis
18. GitBook for docs
19. Cachet as a status page (in another region, and integrated into core monitoring)
20. Google core services and the open source tools are all auto configured to use Google for SAML sso and 2FA is always enabled.
21. Google Authenticator has some kind of sync functionality built into it like Authy.
22. Google partners with a company like Vendr. Companies on this plan can say: "I want to add SaaS tools like Quickbooks and Gusto to this. Please get me the best price you can on them. Then have them auto deployed with SSO and user delegation from the main Google Apps account."

As a founder, when I look at the list above, the first thing I think is:

“I appreciate the help. But it sounds like you spun up $1,000+ in monthly burn rate for stuff that doesn’t move the needle for me today. It helps me in the future, IF I succeed in getting there.”

This is where there needs to be a business decision from Google / Microsoft to become a platform for startups. Rather than using VC programs as the sole proxy for companies worthy of investment,  allow customers who opt into this to claim the same startup credits which empowers startups to build “right” from day one.

Companies like Atlassian are trying to solve this to some degree with their Open DevOps initiative. But in practice, this is more of a co-marketing activity between large vendors.

There is a real opportunity here for one of the big players to make DevSecOps best practices an easy opt-in for SaaS founders. Fingers crossed, one of them sees the value in it, and I don’t have to do this by hand in the future.

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I run a company that has been growing over 50% year over year for the last five years, while staying profitable the entire time. As I write this in the second half of 2021, there is an unprecedented level of capital looking for an investment. And yet, I can't find a way to fund an acquisition.

Access to capital is important for all firms, but it's particularly vital for startups and young firms, which often lack a sufficient stream of earnings to increase employment and internally finance capital spending.
- Janet Yelle, United States Secretary of the Treasury

Background

We're considering acquiring a product from another company, not the entire company. It's a profitable software product with an existing customer base that would distract the current owners from their main product offering. This acquisition would:

• Increase our gross revenues by 20%
• Gross profits by over 50%
• Net profits by approximately 80%

The growth numbers are also there to back it up, so it feels like a no-brainer.

We have self funded many similar acquisitions in the past and have a solid understanding of how to make acquisitions successful.

There are four types of capital currently available to me:

• Term loans
• Lines of credit
• Revenue based financing
• Sale of equity

While none have worked out for us, I know there is a market opportunity for a different kind of lender.

If you know a different model / have a suggestion, give me a shout on Twitter  @NothingEasySite

We don't fit their models

Term Loans

Because we want to buy a product, not a company, it's hard for term loan providers to analyze what we're buying. The difficulty in that analysis results in no interest from most parties. Banks have much more relaxed policies if the buyer earns >40M in annual revenue. Unfortunately, we're not there yet.

Lines of Credit

Our current business is a mix of resale of software made by others, sale of software made ourselves, and services that we provide in this ecosystem. The product were buying is software.  As a result, we don’t have assets that a bank or some other party can use as collateral.

Revenue Based Financing

Revenue based financing companies underwrite based on our current revenue. Lighter Capital and Pipe offered us about 50% of our ARR for the loan size.

This is problematic because some of our business lines earn non-recurring revenue. Defining what type of revenue is or is not recurring has been challenging. The recurring part is only 50% of our software sales revenues. The outcome? A capital shortfall. The lending process doesn't value the built-in ARR of the target asset.

Sale of Equity

Equity is a complicated topic because there are so many variables.

Due to how small our free cash flow is, private equity investors are not interested. And since we're not going to grow into a billion dollar company, we're not appealing to the VC crowd either.

The Only Options

In the end, all conversations I have had in this area were with what I would call lenders of last resort. They all wanted a 20%+ APR on the loan, plus 10%+ of the company itself. Ultimately, no one in this area was someone who I would want as a fellow shareholder.

Ideal Future

I would like to see a funding entity that addresses the following market:

• Between one to 20 million in gross revenues
• High rate of growth >30% YoY for 3+ years
• Existing revenues are a mix of services and software sales

And can offer terms along the lines of:

• Usage of funds should impact loan size and term
• Can underwrite from a finance rather than an accounting perspective
• Can value IP and treat it in the scope of assets of the borrower and their intended acquisition target
• Offer an APR somewhere between a traditional bank loan and a credit card

My hope is someone can tell me (@NothingEasySite) I am fool and have overlooked some option designed exactly for this.

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