SaaS Interviews with CEOs, Startups, Founders
Flip Your SaaS Playbook: PE firm Acquires $1m ARR MightlySignal for .5-1.5x, Sold 24 months later for $4.5m.
14 Jul 2022
Chapter 1: What is the background of Ryan Buckley and Mighty Signal?
I don't know if this is a term that they made up, but, but you know, if and when liquidity happens, that's what happens.
Yeah. You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey guys, my guest today is Ryan Buckley.
He's the CEO of Mighty Signal, which he sold to AirNow in 2021. Before that, he was the co-founder and CEO of Scripted, a marketplace for content marketers. He's also author of The Parallel Entrepreneur and an associate professor at Diablo Valley College, where he teaches business and marketing. Ryan, you ready to take us to the top? Absolutely. All right. I remember those Scripted days, man.
Marketplaces are tough, huh?
Yeah. Kind of a brutal business. Content marketing seems to be like a race to the bottom now. And so tough market to be in, but we gave it our best.
Now you sold this to Xenon run by Jonathan Siegel, a very famous guy sort of doing micro private equity like deals. And then I just saw him running ads like crazy on this thing. I assume it grew, but were you still running it at that point?
No, no. After I sold it, I actually took some time off. That's when I wrote the book and I was working on twofer, morphed that into find emails, track job changes, some of these other micro SaaS products. And then Jonathan hired me back to run Mighty Signal, which he had just acquired in late 2018. And I ran that for almost three years before selling it to AirNow.
Wait, Ryan, how does that work? How does a private equity firm incentivize a creator like you who could do anything he wants, build anything from scratch and keep 100% for yourself? How does someone like Siegel convince you to come run Mighty Signals?
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Chapter 2: How did Ryan transition from Scripted to Mighty Signal?
So when he offered me that job, I was kind of flattered. That was part of it. And yeah, I just decided, you know, here's an adventure. I'll just kind of go for it.
Now, Jonathan acquired Mighty Signal around about January of 2019. You joined it. I believe there's only three or four folks on the staff at that point, right?
No, they're actually none. So he bought the business. The whole team was acquihired by Instacart. And so he handed me a business that was doing a million ARR with no team. And the first thing I had to do, of course, was hire an engineer. This is a highly, highly technical product.
Tons of resources in AWS, like far beyond my ability to comprehend what the heck was going on with all the software and all the databases. So I had to find someone, hired that guy, hired a sales guy, slowly built out a team and started to grow it.
Interesting. Okay. How did you find that developer? Was it like a freelancing site or a top towel or a friend or what?
No, it was, it was an Upwork. I had amazing luck with Upwork and I'm friends with those founders.
What's the job description when you post it on Upwork? What do you say? Hiring a lead technical engineer and you give it to 10 people and then you hire the best one?
Basically, yeah. I mean, with this one, it wasn't a hard sell because we were kind of a sexy startup, Silicon Valley startup, owned by private equity, profitable. I threw all these keywords in there. And then I said, I'm willing to pay top dollar.
Wait, no, no. What were some of the other keywords? Profitable, what else?
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Chapter 3: What challenges did Ryan face after acquiring Mighty Signal?
Do you care about the structure, by the way, of that multiple? So what if it's a three or four X multiple, like the deal prices, but it's all stock in the new company?
Yeah. So there are ways to ensure liquidity. And that's, of course, that is a really important term at a much lower scale. Like I got bit by that bug as we just talked about. It is certainly a concern with selling to businesses with more zeros. So, yes, you want, of course, as much cash up front if there is stock and it's a private business.
You want to essentially have warrants that would force the buying entity to essentially cash out your stock in a certain amount of time if they don't go public or something like that.
Oh, I see. So that's how you guarantee liquidity. You do that via warrant. So if anyone listening right now is selling your company and let's say it's a $5 million acquisition offer, 2.5 as stock, you don't want to just say, fine, 2.5 stock. You want to say, okay, I'll get 2.5 stock, but you need to attach warrants to that. And those warrants, like you're forced there.
Explain to me how that would work. They're forced to buy the warrant of what?
Yeah, exactly. Let's just say you say, okay, within 18 months, this stock needs to be liquid. Either you IPO, you provide some secondary capital that's going to come in and buy our stock away from us, or you're forced to buy it yourself. Smart. Yeah, because Xenon's...
their PE shop, their cashflow business, essentially, they don't want to hold some, basically cash, acquisition opportunity tied up in some private stock in a company they never really intended to own because they're not in the business of holding stock in mobile data companies.
Yeah. The deal price was public. You put out $4.5 million. Aeronauts only raised $400K. They've got a team of 50 people based in London. Where do they get $4.5 million to do a deal like this?
Yeah, they've raised a lot more than 400K. So I think that Crunchbase data is probably off and overseas investments, some private deals don't all get cataloged in Crunchbase, but they have a whole network of European investors.
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Chapter 4: How did Ryan find and hire the right talent for Mighty Signal?
It's fun to work for a larger business with more resources. I wanted to see MightySignal through to its kind of logical context. conclusion, see if we can start going head to head with some of the bigger players. Air now has that complimentary data that mighty signal is lacking. So kind of, uh, it addresses the, uh, the whole thesis of why mighty signal couldn't, um, exist on its own.
Like couldn't really grow on it.
Was it basically flat? I mean, you bought it at a million.
Yeah. We couldn't, we had a really hard time growing it.
Yeah. Well, I mean, this is just the genius of Jonathan, right? Which is he buys it two years, three years ago for whatever he bought it for one X, one and a half X, sells it for three or four X. I mean, that's just pure negotiation leverage and will.
Yep. Yep. Yep. Yeah. Yeah. And then he finds good people to run these businesses and they have a playbook.
Yeah. You, you, exactly. Very cool story here. Ryan, remind everyone of the title of your book so people can learn more about how you do. Yeah.
Oh yeah. So the parallel entrepreneur, um, Kindle unlimited, it's on Amazon, hardback, people back. And yeah, it's just kind of the story about how to run businesses using your day job to essentially finance your entrepreneurial dreams. Uh, you can do both. And, um, it's kind of a playbook for how to go about doing that.
Guys, on that note, Ryan, let's wrap up here with the famous five. Number one, name your other favorite business book besides your own.
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