April 2022

Andrew Pierno

May 6, 2022 — 3 min read

Some days you wake up and nothing material happens. Other days you wake up and Andrew Gazdecki from Micro Acquire puts you on a billboard on a boat in Miami. Life is so rich.

XO Total MRR: $19,739

This month, the focus was mostly on raising capital. We went out to market and got enough of a pulse to rethink our strategy. Raising dilutive equity to fund acquisitions is just not the right way to go about it. We didn't like some of the valuation terms, but most importantly, what we're doing just doesn't fit well into the VC model. Or rather I should say this deal is a little weird for VC. There are also debt funds, PE funds, private capital funds, angels, HNE, family offices, etc. I learned today theres such a thing as debt placement companies. Lots of options! But the crown prince is the SBA.

The goal is now to go find a deal the SBA will finance. Something around $1M (purchase price) would be a great spot. Ideally it's a self-service SaaS we can plug in to our shared services model. Software is weird though. If you were buying a laundromat, you'd LOVE to see 10 years of operating history with some kind of growth. The SBA would love that, so would your accountant, and maybe you would love that too. But with software ... the idea of buying a piece of software that's 10 years old makes me want to jump off a balcony (just like a 2 story one). 10 years in software is like dog years in other businesses. 10 year old code is OLD. So, we need to find something that has not only been well maintained, but seriously overhauled, or just old enough to make the SBA happy. 2-3 years is the minimum. 2-3 year old code is totally fine (maybe). But 10 year old code? No thanks.

We should be able to buy roughly $250k in revenue for $1M. That's roughly $20k MRR + the $20k MRR we already have. In total we'd be at $40k MRR. Add in a little time and we'll be at $50k MRR in no time. The goal is to boot strap our way via debt to $83k MRR. That's $1M a year business. If we can post decent growth at that size then I think we'll start having very different funding conversations than I've had the past few weeks. Patience!

There are loads of quagmires on Twitter pontificating delusions about the SBA. Well, the good news is that yours truly is going to go through this (alleged) hellhole of a process and document the whole thing. There will, of course, be a Twitter thread or two 🕺.

I am super grateful for those of you who backed us immediately when we went out. I think there will be some opportunity to invest in the future. We may come full circle and try to fund one-off deals again with a slightly different pitch. Or we might just end up being a fund. Hard to say for now, but I do know that the longer we keep going, and continue executing, the better our chances of survival will be. Everyone likes to talk about growth, but there's also a lot to be said for not killing a company (which is hard). XO is bootstrapped. It's a little fragile still. My first order of business is figuring out this model while not killing XO.

Here are the numbers:

Sheet Best

Sheet.best was flat this month. Unusual for this product. Worth digging into what's going on and what we can do differently.

MRR - $3,404
Growth - 1%
Subscribers - 146 (+4%)
Growth Since Purchase - 4.25X

Screenshot API

Got a few annual subs that punched MRR up this month, I expect growth next month to be lower.

MRR - $2576
Growth - 17%
Subscribers - 97
Growth Since Purchase - 5.15X

Inlytics

New kid on the block. Growing like a champ. People hate on 10% MoM growth, but those people are wrong. Would I like more? Sure, but a consistent 10% MoM growth is also just so damn nice.

MRR - $8056
Growth - 10.25%
Subscribers - 558
Growth Since Purchase - 1.33X

Work Clout

This is the only non self-service product we have. This thing has a decently long sales cycle. Danny has been crushing it though and we have some awesome stuff in the works, just going to take a bit more time. Wouldn't be surprised if this is 3x bigger by the end of the year.

MRR - $5,703.32
Growth - 0%

Sentiment Investor

Not sure I ever wrote much about this (other than complaining about the process), but we bought this after the founders had paused all subscriptions (i.e. $0 MRR). We got it for very cheap, but just have not had the time to rebuild this from scratch. Lessons learned: stick to the playbook, buy cashflow, and don't buy something you have to rebuild from scratch.