SaaS Interviews with CEOs, Startups, Founders
Capacity Acquires $5m ARR Bootstrapped YouCanBookMe To Build AI Support Mega Platform
04 Feb 2025
Chapter 1: What is the main topic discussed in this episode?
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They're about to make an announcement, which I'm not going to steal the thunder from. They'll do it in a second. But she has now teamed up with David at Capacity, who's a seasoned entrepreneur, cut his own teeth starting in 2011 at Answers.com.
One of the, we'll call it one of the fallouts of the 1999 heyday, but went public, went through a pipe, went through a take private, went through a majority, went through a secondary, ended up selling that business for about 800, 900 million bucks before launching Capacity, which is now focused on helping entrepreneurs
enable and get their support done quickly, providing great customer support, all leaning in to this AI revolution we're living in.
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Chapter 2: What announcement does Capacity make regarding You Can Book Me?
On that note, David, Bridget, are you ready to take us to the top? Let's do it. All right. Well, David, first off, what's the announcement? What happened recently?
I am really excited to announce that Capacity has acquired You Can Book Me. This brings world-class online booking into our collection of AI-powered platform pieces. And so one of the biggest use cases we've had for Capacity is when folks want to automate their booking process. And now we're able to do that on the tune of a million bookings a month.
That's incredible. Now, Bridget, I thought it would never happen. I'm going there's no way it's just this is never going to happen. She's got profit sharing plans set up. You know, she's in full control. She's doing this with family members. This is great. Help us understand sort of what what right before you guys signed the M&A deal and it closed.
What did you grow revenue to and what ultimately made capacity the right fit for You Can Book Me?
So we've got You Can Book Me running at a really nice $5 million a year, profitable, as you know well. I've spoken a lot about creating profit, which you need to do if you're bootstrapped over long term. You need to start making money to make it worthwhile, frankly. So we've got to that stage. And really, at the end of the day, I'm looking for... How do I get You Can Book Me to the next level?
How do I get this business that we have built, which has got to a point which is really exciting, really something that means something for our team, our company, but also our customers? How do we get it to the next level? And actually, there's a combination of reasons why. And I should say at this stage, we didn't go through a process. We weren't for sale.
We didn't put up some big estate sign up in our lot. Capacity approached us. And we really liked the offer. We liked the fact that they're in customer support and AI for customer support. It's a huge problem that needs to be solved. We know it. We feel it inside You Can Book Me. So I knew that
What they are doing, what they're building for their own customers is a really strong product offer that we know our customers could really benefit from. There's a huge amount of synergy, as David was saying, that all of those guys need scheduling and we need to find a vehicle to scale and grow what we do. So there was a lot of synergy there.
And I think also that the team itself and the way they approached us it was really respectful of us being a bootstrap company, of us having our own engine that we grow through product-led growth and self-serve. And there was something very kind of obvious about the deal. I mean, as one of those things, whereas we got closer to the deal the day before we signed and everything else,
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Chapter 3: How did You Can Book Me achieve $5 million in annual revenue?
So I suppose, you know, when you're selling away your life, you might at the point of about to sign, sit there and go, am I doing the right thing? You know, is this a disaster? And actually, genuinely, and there's a story to tell you about it, Nathan, but genuinely, the night that we signed it, we were so happy that we just got to the point where we know that this is the right thing to do for us.
And what night was that?
You were at a Paul McCartney concert.
We we told the lawyers on the day it was it was just before Christmas. We told them on the day we have to close today because we're going to see Paul McCartney tonight. And no matter how important, you know, the capacity team are and you can put my team and all the lawyers and how expensive it all is. Paul McCartney. is more important. And so we went off to see Paul McCartney in the O2.
It was obviously an amazing gig. And we were on a train on the way back from London to Bedford, where I am now. And the whole thing happened over a call, you know, on our train back full of drunk people coming back from London. But it was so it was a fantastic night.
So December, what, December 22nd, 23rd, something like that? 18th. December 18th.
And then we've been in hibernation, Nathan, since then. We've been sort of reeling from the shock.
Yeah, no, it's great. Now, before I jump more into the story, the backstory, the negotiations, you know, things to look out for both on both sides, the acquirer and the one, the group being acquired. Bridget, is this, are we pretty much on the spot here in terms of revenue growth or any corrections you want to stick in here?
Yeah, no, no. We hit 1 million sort of much more in the 2016, 2017 mark. So it's a bit, it's a bit more sort of, it's less of a hockey stick and more of a nice hill.
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Chapter 4: What factors led to the acquisition of You Can Book Me by Capacity?
We're in this AI-powered support automation space. Would love to talk and see if there's any ways we can work together. And sometimes it might come out of that and it's like, eh, not a good fit. Or sometimes it comes out, I would love to acquire them.
price isn't right sometimes we come out of a conversation it's like there could be a partnership there and then every once in a while we come out of a conversation like that like let's go turn over the next cards doesn't mean that we're the right fit for them or they're right fit for us but there's a they're there worth at least exploring and having that conversation
And just to give you some credit, while Bridget continues digging through her, I'm sure, very busy Gmail inbox or email inbox, I want to make sure we get your story sort of plotted accurately as well. So based off our research, Capacity has acquired, I feel like, six companies, including the Lumenbox in 2016. Is that right?
I think the total number is up to, I think, eight or nine at this point.
Eight or nine now. Okay. And do we generally have your revenue profile accurate? You broke the 5 million mark in 2019 and now we're at about 40, 45 million, 50 million?
We're right at about 43 million to end last year. Correct.
Okay. Great. Great. And did I get the 5 million right in 2019 or is that too early?
I have to go back and look at it. It sounds directionally correct.
Okay. And where did you, you know, there's a lot of people listening right now that potentially want to sell to a group like Capacity or want to bootstrap like Bridget. There's also folks that want to go start their own version of Capacity, maybe like with a search fund. Where did you get the initial capital to get going on this? You weren't the original founder at Answers.com.
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Chapter 5: What is the significance of AI in Capacity's customer support strategy?
So if you wanted to go automate support for team members or customers, we could help you with that. Our biggest market at that time was in the mortgage space. And if you remember, mortgage was white hot, interest rates were free. And then pretty soon after Powell hit the brakes on the whole economy, And then we were on calls with clients that were getting fired in the middle of our calls.
So we went from being 75% mortgage tech at that time to saying, okay, we're going to need to diversify the categories we're in. We need to go after ā because it wasn't our fault. Mortgage is a cyclical market. The second thing, though, is we need to be able to go after the highest value types of activities as possible, which means we either need to get ā
into a more expensive support, which led us into voice, or we need to get tied back to revenue, which is why plugging in with bookings and scheduling makes a ton of sense.
So we went from single-channel, web-only, largely concentrated in one industry to saying we're going to go and be diversified across industries, diversified across channels, and that means we're going to need to support SMS and voice and social channels. and anywhere where you might get an email or a ticket or call.
I want to go back to Bridget because I'm sure she's found the original conversations. Before I do that, though, David, just to sum up. So we talked about revenue and the number of acquisitions, that capacity you've raised. What's the total you raised to date for capacity?
Just under 100 million.
Okay. And the last run was, I believe, in October for 26 million, a Series D?
Yes.
You hesitated there.
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Chapter 6: How does Capacity plan to integrate You Can Book Me's services?
When did though push come to shove, right? When did the, now David, to your point, there's the total deal price and then there's the structure and these are very different, right? The total deal price could be 60, I'm making this up, 50 million bucks, but the structure could be $10 million cash, $10 million stock, $10 million earn out, seller's notes, etc.
When did the total just deal price, not the flavor of the deal, but the deal price, when did that really come out?
Yeah, I think the first thing that we did was just focus on, is this the right fit? And I don't want to jump past that because I'm both at the individual level and at the company level. I've worked with brilliant... Just a quick story.
Yeah.
I worked with a brilliant product person at one point. And he came from a larger organization and was an awesome fit for a large organization, but couldn't multitask at a small, scrappy startup. So it wasn't he was a bad person or I was a bad boss. It just wasn't the right fit. And so when we tried to look at which companies we can go partner with, We need the people.
And so part of it is like we got to find people where there's a good mutual fit. And if the company we're trying to acquire doesn't view us as being the right fit, there's no way it's culturally going to work.
And how many people are you full time?
We're about 22 people full time. And we actually have an overall headcount of around 35 people, if you include all of our contractors and things.
OK, so, David, back to the people side. Yeah.
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Chapter 7: What are the challenges faced during the acquisition process?
And I think it's an emotional feeling. And when was that trip? That was in, when was that, David? That was in October, end of October? It was Halloween. Halloween.
It was Halloween.
It was Halloween. It was Keith's birthday, yeah.
They're off our UK friends with Halloween.
That's right. David dressed up as a sheriff on the day. But it was Halloween. And so that was what really clicked, that emotional feeling of like, yeah, we can do this. This feels safe to do this. We like these people. We like this team. We like the joint plan. We like the vision. And what I've said to the team, it's like we're the space shuttle docking on the International Space Station.
You know, the mission stays the same. We're still doing the same stuff, but we're basically joining a much larger, bigger operation so we can keep going with it.
Now, put a cherry on top of this cake here. Share what you're comfortable sharing. My audience obviously loves numbers. Maybe I won't push you on a cash number, but David, can you at least maybe share a revenue multiple you guys ended up trading at and getting the deal done at?
I would say we got to a number that was... Great for Bridget. Great for us. We both feel good about it in both ways. Because you got to remember, it was a mix of cash and equity.
But anytime we... If you're not going to give me the top line multiple, because my audience will kill me if I don't get something from you, can you at least show the percentages of how it was split? So for example, 10% cash, 30% equity, whatever, whatever. And then they can't do the math because we don't know what the total multiple is anyway. Right.
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