What founders need to know about acquisitions: Shopify VP's lessons from selling 3 startups 

You don't actually sell your company to another company. There is no such thing as a company. It's an imaginary legal construct. There are people who work together as a group. This might sound like semantics, but it's not. Because once you understand that, it's like, okay, I have to actually convince some people that they want to buy my company, it becomes more of a tractable problem. Or like, I have to sell my company to Twilio. Well, no, no, actually, you have to get Jeff Lawson to see that this thing is a solution to a problem that they have. And that's very different.

Welcome to in depth, a show that surfaces tactical advice founders and startup leaders need to grow their teams, companies and themselves. I'm Brett Burson, a partner at first round, and we're a venture capital firm that helps startups like notion Roblox, Uber and square tackle company building first. On the in depth podcast, we share weekly conversations with startup leaders that skip the talking points and go deeper into not just what to do, but how to do it. Learn more and subscribe today at first grande.com. For today's episode of in depth, I am thrilled to be joined by Daniel debo, a VP of product for demand at Shopify. Daniel is a repeat founder, his most recent startup helpful was acquired by Shopify in 2019. Before that, he co founded ripple, which was acquired by Salesforce in 2011. His first startup work brain was acquired by Infor in 2007. Given Daniel's gone through this process of starting a company and choosing to sell it to an at scale business multiple times over his career. I'm excited to share his advice on how founders should approach the m&a process today. I think navigating acquisitions is one of the more underexplored topics in company building. And it's especially relevant right now. Given that more founders may be considering the acquisition route these days. In our conversation, we go over everything a founder needs to know about the m&a process from top to bottom. We start by diving into what established companies can do to create an environment that attracts founders, as well as what conditions founders should look for. In a potential acquirer. We also explore the concrete steps founders can take to build meaningful relationships with executives of all types, not just the corp dev team. Daniel shares tons of useful tactics from How to Spot clear buying signals from potential acquirers to the numbers all founders should lead with during initial conversations. He also shares his do not do list for first time founders going through this process. We also get into the techniques he used to involve investors in the m&a process, and how to communicate about a potential sale to the broader team. We end on his advice for succeeding inside a larger company post acquisition and making the transition from founder to employee. This episode is a great listen if you're a first time founder exploring m&a, or a recently acquired employee that's now operating inside a larger org. But I think there are tons of great negotiating and sales tactics that anyone can draw from his experiences. And now my conversation with Daniel. Well, thank you so much for joining us excited for the conversation.

Absolutely. Really glad to be here. Thanks for having me.

Maybe one place to sort of start is given you been on the entrepreneurial and founding journey a number of times, you've also sort of operated as an executive at scale. What do you think is great about being an employee? And how would you compare and contrast what's great about being a founder,

like most things in life, they both have pros and cons. And look, I think probably a few things. One is you have the scale and scope of a business so that when you launch products, or you want to update them or grow them, there's this natural distribution channel that you don't have to fight against when you're starting your startup. Second, there are people around you to help you and support you that does not exist inside of a startup. Third, when you call people pick up the phone, I'm calling from XYZ is different than I'm calling from, like google.com, or wherever it is never heard of them. I'm not answering your call. So I think those are some of the real benefits that you have inside of a large org. There's a lot of very smart people who are there. And I think the last one, there is an existential terror that faces you almost every day as a startup founder, right? It is a level of stress that is really hard for people to appreciate. It's not that I don't have a stressful job today or that people who are execs in big tech companies don't have stress on their heads. They do. I just found that personally it is a very different level of intensity. And so it's a little bit more sustainable in terms of lifestyle. And then what's great about being a founder well I'm sure the people listening to this have some understanding but it Is the blade palette it is the freedom it is other than your board or your investors, which is a real thing, not having a boss, it is the ability to go make massive change it is the people that you work with, you get to create the team, the culture, the opportunity, and then also speed like you can go really, really fast. So there's great things about being in both places. So

in the context of an at scale business that's either acquiring companies and talent or has decided they want more founder oriented entrepreneurial talent inside of the company. What do you need to do? What are the conditions you need to create to allow that to happen if you're operating in that scale business,

I think there's a bunch of different components of that. Certainly, you have to have a really effective profounder m&a function. That means people who are seen as helpful people who are seen as honest, straightforward, you have to have a process that is founder friendly, right? I think you have to have executives, who are friendly to founders, and it doesn't have to be other founders themselves. But people in the company who are there to sponsor support, guide, mentor, and teach people when they come in, not all founders know everything. And certainly the transition from being a founder to being an effective executive can be challenging for people. And so you have to have people who are willing to mentor and support and see value in what founders can provide, and also maybe forgive their trespasses a bit, because sometimes they are a bit spicy. In my experience, it's totally crucial to have a CEO who appreciates and values founders. And I've been lucky in both instances where I ended up to join companies, having co founders who deeply respected the mindset of a founder talked about it openly, and made space in their time, whether it was like lunches, or offsides, or whatever to like, create a community of those founder type folks around it. I think the last thing and something that Shopify, where I am right now is just like openly say that you want people who have that entrepreneurial experience when you're hiring. So founders don't have to come necessarily through acquisition, people who've tried things started, companies demonstrated type of grit and Ownership mindset, that is a really good indicator often of success. And so actively making it part of your recruiting criteria isn't really helpful.

You mentioned this kind of a little bit. But what about org design or specific rituals inside of a company, that positions founders coming in to have a big impact? And hopefully retaining the company?

Yeah, that perennial question around the org design, which is like, Hey, do we take this team? And we own them? And we let them kind of keep running on their own? Or do we assimilate them like the Borg very quickly, as fast as possible? I think the answer to that is somewhat case specific. Depends on the scale of the businesses be acquired. I mean, is it an operating business? Or is it really a founder early on that product market fit or just getting scale? And so you'd have to calibrate what's appropriate. But I think the key thing is understanding one size does not fit all. And it is very, very easy for a large organization to completely crush a small organization by just making a few of the wrong choices. I think related to that isn't just the org structure is who are the sponsoring executives, because I think those can make a really big difference of the energy and positivity that comes when an acquisition happens, or lack thereof. I also think actually, a really important component is that the m&a team that does these things sort of takes ownership and sponsorship of the success of founders as they move through the organization. So it's not like, hey, we bought you and we're on to the next one, but we actually care about you. And they check in, they make sure those folks are doing well they talk with the execs around them, I kind of act as an extra layer to really support the founder and the team around them so that they're successful. And I think it's a really smart thing for that to happen, especially when you're acquiring primarily talent, right?

How does some of the ideas that you shared maybe express itself in your last journey, when you were building ripple for a number of years, and then got acquired by Salesforce and then spent almost four years building at Salesforce?

Yeah, I was acquired by Salesforce at a time when Marc Benioff was very much like I want founders, I saw a few practices that were really positive. I mean, one I alluded to, which is Mark made time for founders, he would have quarterly lunches, everybody was different, I guess, but I knew that I was always able to find time with him. Second, he would kind of bring founders into conversations where they weren't supposed to be by normal corporate ladder structure. So that occasionally happened where we you know, you get a note from Mark saying, Hey, can you get on the plane and come to this meeting with come have dinner come see what we're doing here. Third was related to that if there were like, top executive offsites top 100 would get that call get the opportunity to be there, get a chance to network with other peer executives and kind of be into the loop of things. And then you know, something that I actually will take a little credit for at Salesforce was I remember saying like, Hey, can we just get everyone together? Because a bunch of the founders we would see each other at these like regular events, but we never like had a thing for us. So we did do that he's Mark was like Send him a note. He said, Yeah, sure organize it. So I did. And then I think continued on. And I think it's been a great tradition. And we definitely do something similar here at Shopify, we're founders get together once a year. And then it is really both fun, but also productive thing for retaining founders.

Are there things that you learn specifically from interacting with Benioff that you've taken with you as you continue to build companies and products,

I learned a lot from him, both by watching and being around the organization. I think the number one thing was, he is a visionary in terms of talking about where things are gonna go. And being able to articulate that I think I learned a lot about storytelling and marketing from him. I learned a lot about mass media and understanding, centering. Often startups and marketing people are very focused, or like startup CEOs, or founders are like, this is my one chance to tell my story. And one thing I definitely learned from Mark, we were launching a product and it went, well, a lot of press coverage. In maybe two months later, he's like, great, we're gonna launch this again. And I was like, Mark, we already launched it. And then he's like, Daniel, do you think anybody really remembered or noticed, like, there were 1000 new stories that day. If we do this, again, with a slightly different variation, very few people are gonna notice that I'm paraphrasing. So Mark, don't get back to but it was like, we're gonna launch it and the launch of the game and then launch the game. And I was like, wow, that's kind of great, because she was aware of how the rest of the world saw in rather than the way that we often see it, which is like, everybody's paying attention to me. And his point was like, no, no one paying attention at all, you have to really repeat yourself and be out there a lot to get attention, especially today.

So wanted to sort of take a left turn and talk a little bit about actually running an m&a process. As a startup. I think that this is an area that's just like highly under discussed, I think it's one of the few areas in company building, that still like a black box. And given that you've done it multiple times over your career where you started a business and chose to sell it to an at scale business. I thought we kind of explore that area, and maybe hear some of your ideas around. How should a founder think about it, and execute on it. Let's say it's a founder that's reaching out to you for advice. And they're like, Hey, I'm deciding whether I want to sell the business and how to go about it. I'm sure you get those calls all the time. What if I listened to like five of them? What are the commonalities in terms of perspectives or ideas you tend to share with those founders?

Yeah, that I do. I've been lucky. I've invested in a lot of great companies and a lot of great founders. And they do get those calls. The first question I asked, and by the way, it's the same question I asked when they're like, How much money should I raise? What should I do? When should I do it is always to ask, What do you want from this journey that you're on? And it sounds a bit philosophical, but it's really important. I mean, one of the beauties of being a founder is you have autonomy, generally, and self actualization, and you're on this journey to do it. That's probably why a lot of people want to do it. So the question is, are you trying to maximize the amount of money that comes like you're trying to stop the pain that you've been going through? Because this has been so hard? Are you trying to move into a different risk return profile? What is it that you personally want? What would make you happy? And I often think that is a really important place to start. Because, frankly, that's not often asked of the founder, there's so many other people who have a lot of interests going, but I think that's a pretty important question. The second thing is to don't believe your own bullshit, and have a really accurate assessment of where the company really is. And what are your go forward prospects like what has to happen for you to grow into the valuation you just accepted? Or for the next round? What do you really think is happening with your pipeline. And this is hard for a lot of founders, because you have to live in this like dual state of like, everything's awesome, and everybody's excited. And then like, inside, you're like, oh, it's all horrible. But that's hard. And that's found your life all the time. But you have to kind of be pretty honest with yourself about where this is. Because you do have responsibility more than your own needs. For self actualization, you have a team, you have investors, and I've always viewed that as pretty important investors, you have like a sacred trust to these people they trust, you should try and do the best you can for them, especially employees as well, these are people who believed in you. So that's probably where it started is like, what is it you want? And where are you realistically as you start to go down the path of like, should you sell? Or how do you go about that sales process.

And so we can come up with some hypothetical scenarios, let's say that you've been building for a while the company is kind of working, but it's not on fire, it's most likely going to be hard to raise more capital. And you know, you've only raised five or 10 million. So you're in a position where you could find a landing for the business, for example. And let's say they want to balance both getting the right price, but they also don't want to be an indentured servant forever at a heinous company that they're going to hate waking up every day. And so they're looking for some pragmatic outcome. What should they actually do? Like, I'm excited to chat about this with you because I actually don't know that most founders in that position, even know where to begin. Now, as they think about exiting the business.

I think you have to get rid of this mindset of like, am I going to sell the company? The answer is you We will sell the company, everybody sells a company. Let's be clear, when you sell shares in your company to a venture firm, you have sold part of the company, the question you're really asking is, do I sell all the company now or just part of the company, because if you're gonna go raise money, you're still selling part of the company, you go public, you're selling the company, right? You're gonna have to do it. And so you can do that in different flavors, but the 01 Like, I'll never sell, it's never gonna happen. I think that can be destructive. And so there's probably a more realistic assessment that you're in somewhat of that middle ground. Okay. But to go back to your immediate question, I think the first thing I think about, of selling the businesses, and you're right, I've been part of a few of them and definitely helped a bunch of investors go through the process is, okay, thing one is, you don't actually sell your company to another company, there is no such thing as a company. It's an imaginary legal construct. There are people who work together as a group. And that means that you're going to have to sell your company to a group of people who happen to work together in a company. This might sound like semantics, but it's not. Because once you understand that, it's like, okay, I have to actually convince some people that they want to buy my company, it becomes more of a tractable problem, or like, I have to sell my company to Twilio, I have to sell them to Twilio? Well, no, no, actually, you have to get Jeff Lawson to see that this thing is a solution to a problem that they have. And that's very different. So when I think about the steps that one has to go through, first of all, I actually think if you can, you should not start this process, when you're at the moment that you're at, which is like, wow, it's grinding, I might be able to raise money, not like, you should always be thinking about building relationships with executives, at large companies. Maybe this is contrary to what others would say. But these are business develop relationship, partnership relationships, and yes, maybe they are acquisition relationships, you don't have to be as explicit. But I can tell you, it's sure as hell explicit when you call up and you're like, hey, we're running a process you want to buy us? Well, that's actually not a great spot. But it's a great spot. If you're like, have met an executive who runs a business unit that is complimentary or competitive, or whatever it is. And you're like, have met them five or six times and industry events are you gone in for conversation, and you maybe have a mentor relationship? And you're like, Hey, I'm really thinking about what the next steps are. And I know you have this issue or this problem, and I was wondering whether we could talk about whether I can help you solve that problem. That's a different conversation. And I think that it is something that we did definitely at ripple definitely had helpful was we maintain relationships like this all the way through the journey. It's not like we were in a sales process. It's not like we were trying to sell the business all the way through. But we kept them sort of in the air and real. And we're like actively using it as a way to figure out what was going on in the market. But then when the time came in this thing, kind of coalesces. It was very natural and normal to call up five or six people and say like, Hey, should we have this conversation? And they trust you, by the way? Because you're not giving some bogus? Oh, yeah, you know, eight other companies really interested when you're like, No, really, there's like, there's a couple other people, I'm probably going to axe it, you want to talk about that. If that's the conversation, you're way better spot to begin with. But that, to me is one of the most important things to understand is you sell it to a person, an executive, who has a problem. And usually you as the CEO, we're going to go work for that executive or the solution, you're going to take your IP and your company and your team, but also yourself. And so you really want to build that relationship of trust, well, in advance of trying to start a process. So that's

a good framing, and a great place to jump off from any thoughts on how to go about building those relationships. And maybe what to do in those conversations. That's not just a bunch of random catch ups, because I assume one of the important things is as you're interfacing and starting to build these long term relationships that might provide value to you in all sorts of different ways. Like you need the person to think you're awesome, and smart and good. And so I'm curious if you have thoughts on what you should actually be doing in those meetings, or how to structure it. So it's not just a bunch of random catch ups?

Yeah, that's a great question. Well, first of all, it's not the end of the world to have a random catch up. But I agree, you can do a lot better than that. So the first point is like map out who in the industry, who are the organizations that you think could be likely partners requires, right, and partners is a real thing, like definitely can be in their ecosystem, you could do an equity investment. It's a continuum of that conversation, our conversation with Salesforce when we were acquired was about them investing in us. And then as the journey unfolded, the m&a team and Mark just decided, like, we're gonna buy this company. So it doesn't have to always be as explicit. So what is it that you want to have as a useful conversation? Well, where are the interests aligned? Where's something that you as a startup have that would help this big company sell more, sell faster, sell in a different way sell to different market? How would it make their product better? It's on you as the startup to kind of paint that picture. One thing that just blows me away, and it is something I've done before, I mean, in fact, I remember meeting with Mark and what I did is I spent time with one of my designers and I said like here's the Salesforce you UX, let's design what it would look like for ripple to exist inside of that UX. So when we went there, and we were talking about partnering, you know, it wasn't just imaginary, like here, we've thought it through this is what it looked like, let me take you through the steps of how this will be used, what we the use cases, that is value added. And that is helpful, right? Like that is like, okay, I can see you're painting a picture a storytelling about how these two teams can work together. I think that is pretty helpful. So how do you find these people, I think that's part of the magic of being a networker, as a CEO, you're gonna call your VCs, you're gonna go to industry events, you're gonna go and network your way to get those important connections and invitations. I think another tactic that is useful is just sharing information. You don't even have to have a meeting all the time is like, Hey, I read this article, I thought, this is interesting. What do you think about this, I found this thing happening, we've seen it. I get those emails from founders all the time, I'm actually quite appreciative often when they're sort of trying to connect with me and tell me what's going on. I think, actually, it's probably worth also saying is, there's an important moment when you have to tip from like, Hey, I'm just building relationship with his partnership, it could be this to like just being direct. Because I think there is a real frustration on the opposite side, when a founder is being too smart to cute. And you're like, it's clear, you're running a process, it's clear, you're trying to sell your company, but you just simply won't say that, that is not helpful, like just say, and they're gonna know and they're gonna be able to run through it. Often the company can move quicker if you're explicit about what's going on.

You talked a little bit about this. But are the ideal people just senior GME product lead type people that operate in complementary spaces? Because I think to your point, a lot of founders who haven't sold businesses think that everything's about the m&a team or corp dev team. And in some cases, that's the case. But in most cases, I think you did a great job of articulating, it's about finding a business leader who has a specific problem that your team or your product solves for them. And so just anything else on who the best types of people the appropriate seniority to senior to Junior, anything to keep in mind there.

Yeah. So first of all, I don't like the rules of thumb, like never talk to the corporate m&a people, they're terrible. That is a very bad piece of advice. In my mind. Sometimes they're really good. Like I remember, for us at Salesforce, it was Vilchez, who's now a partner at two sigma, a great VC. But he was running in May, he called me on the phone cold and said, hey, you know, we've we've seen your stuff, do you want to talk, and we just became friendly, like, we talked for a while, and he then opened up a lot of doors to introduce us to people. Inside the org, we didn't really know that many people and helped us to map out but it was a patient process where we're like, we would build relationships, and he helped guide us. So I don't know if it's this is a universal truth that you should not work with or trust those folks. But I do think if you're picking up from me that like it is far more important, inside of a company to understand that like, very rarely does m&a have the ability to just buy a company. I think Shopify has one of the most advanced and interesting approaches the people who run our m&a team, and we don't even call m&a called product acceleration. And the people who run it are like very senior product leaders. So the person who used to run our platform business, the person who used to run our talent acquisition, the person who used to run our marketplace business. So yeah, I think there's no, you shouldn't be scared of the those people in the right way. Having said that, it is almost impossible for a corp dev team to acquire a company without some sponsorship from a senior executive inside of it. In fact, it isn't possible, someone has to put their hand up and say like, I own this thing. And also remember, often most companies like hey, you are running this business, you have 300 heads allocated to grow for next year, you have 3000 people who work for you, whatever it is, well, if they buy your 50 person company that's 50 heads out of that 300. It's usually like this is a cost I'm gonna incur. And I'm just making a business decision to acquire this company to accelerate where I need to get to. So it is vital that you build relationships. But to your question about does it have to be the GM though? No, it doesn't have to be. I think it's a great idea to build relationships of high technical connection, where like technical people inside of a larger org really trust and respect the technical people in your organization. If you're a technical founder, building that relationship with engineering leaders matters. But in all cases, the commonality is, as you pointed out, you are solving a problem, a business problem for a business leader or technical leader at the acquirer.

Anything else on the idea of understanding the psychology of the buyer that a founder might not know or is useful to keep in mind as they're navigating something like an m&a transaction?

There's a few things but one thing that's really important to understand is that executives in big companies who are tech executives are not VCs. And what do I mean by that? I mean that like if you're experienced in raising money or going through a transaction, which is a transaction is trying to create a frenzy of of To VCs who are bidding against you, you know VCs want to win the business, they want to win the deal. And frankly, they'll put up with a bunch of founder bullshit. And not always like they're not, you know, VCs, a walkway and say, This person is not acting with an integrity or they're being flaky. And I don't want to do business, but their level is higher, because they don't have to deal with you day to day, they just need the results. And you're part of a portfolio of bet they're taking. And so the dynamic and the forgiveness of quirky behavior, or arrogance, or excess commercial behavior is much higher in like, every VC knows, you're just pushing for the highest valuation, you're doing this stuff. And okay. When you're dealing with corporate executives, they don't want to have wildcards that they're dealing with. And if you act like someone who will not be a team player, when you show up, if you act entitled if you're arrogant, if you're not a listener to the person when you're having a conversation, if you act as if, oh, yeah, of course, you have to bite me because you guys are idiots, you don't know anything? Well, it's just human nature, they don't necessarily have to pull the trigger, they might be like, I don't want to work with this person. And I think that's actually a really important point, like, no matter how much you get paid, you're still going to work there for a while it is very rare for an acquisition to happen with founder doesn't have to sign up for a period of time, 18 months, two years, three years. And so what that means is like you're sitting across the table from this executive, you have to make them want to like you, because they're gonna have to work with you for three years. And it's job injury. Like it's just that simple. And so if you act like a flake, or jerk, or arrogant in the way that maybe you thought you could have gotten away with when you were raising funds, that is not going to play well. And so I would definitely suggest that is not an attitude that will go over really well through that m&a process. How do your ideas

map to the person that reaches out on the m&a team and is interested in talking to you a year into the company? Given what you've said, is it when people inbound you your strategy is to take a first meeting and nurture that is kind of the default? Or how do you think about it?

No, I mean, look, there's nothing wrong to say like, Hey, I'm super focused on building the business right now, we're no interested in selling the company, what I would really love is to do a call with you in a month or so. And if you could bring an executive who would be relevant to us about how we could partner with you, that would be a really great conversation that you could have. That's totally respectful, totally reasonable for you to do. And, you know, I think it's fair and incumbent upon the m&a team to do that. Often, the m&a teams will be tasked with like, go talk to 40 companies in the space or 20 companies gather up a data set so that you know, an executive can then evaluate who are the ones they want to talk to, I think it's okay for you to push back. The other thing you can do is you get that call, you're like oh XYZ company, we're who do we know there? Who's the Exec? Where's this coming from? If you don't feel you want to go direct to the corp dev route, and just kind of give all the data? When I say build relationships, I'm not saying get on the phone and say, here's all the stats user arr. Here's how much we're growing. Thank you very much. I wouldn't recommend that. I don't think that's good.

So we're going to come back to the actual transaction process. But something we haven't talked about. How do you think about involving and talking to investors about this in maybe just at the very beginning, there's often trepidation. There's a lot of implicit or explicit pressure that a founder feels to never quote, give up, and just build this thing forever. What about having those conversations with your investors,

I just have found that the best relationships are one that are fried, located upon honest and mutual understanding of interests, and being honest about and look, hey, let's be honest, a, me and Mr. Investor, we are very closely aligned, but not entirely aligned, primarily because this is my entire bed, and you have multiple bets to make. But we're pretty aligned. And we both want to do the best we can and race and dwell on this investment. Right? And I think if you can have conversations like that, you're better off than being squirrely in information controlling. I'm not saying you have to tell everybody who's in your deal. But it's much better to have one or two investors, you build a custom thing of trust about? And you're like, Hey, I'm exploring this, what do you think? And they might say, well, that's a bad idea right now. That's okay, that's good. Get some feedback, get some advice on how to do it. But like, you know, investors are not happy when you're like, everything's amazing. We're gonna go crush it, and then you show up, you're like, I've got this m&a deal, I want to sell the company. They're like, what what happens? You have to get them to where you need them to be about why it is the right decision. And that takes time. It takes honesty. These are your partners in the business, they have invested money, they're real human beings that have put time and energy into you, you probably should have a conversation. And I don't think that being realistic and pragmatic, is a bad thing. Like, I don't know who told every young founder out there that like, you have to say I'm building the next Tesla. If I die before getting there. That's the only two outcomes I get to like zero or trillion. Most VCs are pretty sophisticated. They understand that there's a range of outcomes between SpaceX or Tesla, and a hole in the ground, there's lots of happy outcomes actually in the middle. And sometimes I think they're like pragmatically happy. If you're like, Okay, this isn't working as well as we want, or like this exit is probably not going to be 6 billion, but we could do 50 million today, everybody gets their money back, or maybe makes a little bit and move on. That's better, I don't think you'll lose face with a sophisticated investor, by being honest, and pragmatic. I think what's worse is you show up and you're like, I'm running out of money, it's either we have to sell for this and we're dead. Like, actually, it's better to be like, I think we might not make it, we should do this thoughtfully, we have time to figure out how to do this. I think every VC I know would much prefer that. Just an honest conversation, than being so full of bravado. And by the way, this actually just go to another point. Which is, I think, founders, by being exclusively focused on getting the highest valuation for their companies, they kill optionality for what they're trying to do. And when I say, highest valuation, in a funding round, I'm not talking about the exit price. But you can price yourself out of a really happy outcome for everybody. Because the price that you really insisted on was so high that the press stack is so big, that nobody's gonna make money other than the people on the press stack. And therefore you have no options. You want to maintain a range of possibilities all the way through the journey, as best you can. And part of that is like, what is the valuation you're raising, to get to the next level, so that if you do get to a place where like, Yeah, we actually would want to exit. Instead of having like, there's only two people in the world who could pay this much to get everybody money back, there's actually 25 companies that could acquire you, and everybody would be happy, that's a better place to be in my mind,

I think it's oftentimes more so amount of dollars raised than it is specific valuation, but those two things often go hand in hand. And you oftentimes remove the potential for a win win sort of dynamic, when you start to raise very, very large amounts of capital, particularly before something's really working. I think that's probably under appreciate. I also think to your point about working with relatively sophisticated investors, I think, particularly when you've raised call it 510 15 million, the business model of a venture investor is that you have a very small number. Most of the time, less than 5% of the investments that you make that are power line drive the whole business. And I often have found that founders, overthink about their investors and try to cater to them around the m&a process, particularly if it's a good outcome, but not an amazing outcome. And they end up sort of putting themselves in a terrible position to get their investor another three cents on the dollar. It's a big part of the way that we think about the world. I think, good investors, I think there are bad investors that would be happy to get another two cents on the dollar, even if it meant you were at some horrible company you had to deal with. But I think in general, if you have sophisticated good investors, you should actually be optimizing, not on the margin for another two cents. But like, to your point, what is the best next chapter for you in the business over the next 235 years?

I completely agree with you with one caveat. So no question sophisticated investors know, it's a long term game, they know that they want the founder, and also, frankly, all the future founders who often come out of an acquisition because they saw it, and they learned in there, like, I'm gonna go do my thing. They want them to land in the right place with the right opportunity, and everybody does well, and they're willing to trade off a little bit of, as you said, weights on the dollar, generally, with the caveat that you treat them with respect all the way through, if it becomes just about money, you're the enemy I'm gonna max out, then they're not going to have as much patience and time for like, well, what's the right outcome for this founder, if you, if you as a founder, treat your investors as partners and treat them with respect and transparency all the way through the journey, and they know that you are trying your best to either get them the money back or get some amount of pennies on the dollar. I think they have a lot more patience for like, okay, let's find the right place for you. And let's get the right deal. So that you're not miserable for the next two or three years. Yeah, totally

looping back to the process. So let's say that a founder has taken your advice. And over the last couple of years, they started to develop a handful of somewhat substantial relationships at five companies that may be a fit to acquire their business. What should they do now?

I think the sort of high level is you want to start with your most likely and most close and feel them out, have a conversation, as I alluded to earlier, try and be relatively upfront. And you want to try and get your somewhat solid opportunity. Or maybe it's like a, this is a bit of a game theory, but you got to try to like pick the one that you think is going to be most likely to be like, yeah, we're really interested. Because one thing I've learned is it's way better to not bluff. It's way better to just tell the truth meaning, you call up the other day, like, hey, there is a very serious company very seriously interested in buying. As I know, we've talked four times over the past three years and I know we have to talk about how we can help you with this thing. If you really think that's a thing that could happen now would be the time to have that conversation. Do you think that you could move the organization, do you think you're in a place where you could do that, to be part of us coming to join you and me coming to work with you? I think that's the conversation, you have to have any kind of run that cycle and you find out, okay, who's actually in this game. And that could take a few weeks, month. And then once you have a few of them, you try to line up that process, you want to discover buy, this is just like enterprise selling.

Yeah, that's what I was going to ask you about. I think a lot of people that don't do sales regularly don't understand how much of it is an act of discovery. And I was curious, maybe how those ideas translates to this early part of the m&a process?

Yes, yes. I was about to say like, you talk to your champion, hopefully the person you've built trust with an executive and you say, look, I want to learn about what happens next. And you just ask, who has to make this decision? Like? Does it have to go to the CEO? Does it have to go to the board? What is the m&a team's role? Who else do you think would be a key stakeholder to be part of this? How long does it take? What kind of diligence do you think you'd want to know? So that's first part, second part is like a sales process that you were selling, like, if you do enterprise selling, you've got to have all your ducks in your demos, and you've sort of done it before, you don't want to be making up the night before. I think on the side of the founder, you want to have a small team internally, like two or three people, Max generally, because you don't want to distract everybody else from like, Oh, my God, we're doing the sales process, that is not a good thing, you do not want to be in that. So you get that small team together, and you gather all the materials, and you prepare, you have everything so that if they say, Okay, we got your meeting, come in and give you a demo, open up your data room. Like I think there's a lot of work you can do to demonstrate the professionalism and the reality of your process versus it'll take us a month to get the data room together. And then we'll give it to you like nothing says, this is a real thing than having a data room, establish the share the link and team can start doing their evaluations all the way through it. So I think once you've had that conversation, you've done the discovery, have yourself ready, be effective at communicating it. And it's okay to sort of like nudge towards a deadline, my goal is trying to have this done by x. That's what we're trying to aim for. And you should tell people that because then people get motivated around if you don't put a deadline. Remember, there's lots of other people who are trying to sell their companies to the same place, the cork dev team is busy, they're probably doing another big transaction. And so you want to make it easy for them to do this. You don't want to make it difficult by having everything ready. And by having a timeline being upfront, I think that's a really effective way to kind of move things along.

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Daniel Debow (VP of Product for Demand at Shopify and a three-time founder) shares his playbook for how to navigate an acquisition.