Episode 104

Building Your Business to Sell it & Navigating an Acquisition with a Large Company

Mike Ugino - SellBrite
January 24, 2020

Mike Ugino is the CMO and co-founder of Sellbrite a SaaS platform for marketplace sellers.  Sellbrite was recently acquired by GoDaddy.  In this episode we breakdown how Mike and his business partner Brian approached building the company with selling it in mind.  We also talk about what the acquisition process was like including saying no to GoDaddy initially.  In this episode we uncover some golden ideas for scaling and exiting your business including:

See Transcript Below...

Connect with Guest:
Via LinkedIn
Via Facebook
Via Twitter
Via YouTube

Sellbrite - #1 Multi-Channel Selling Software for eBay, Amazon, and More
Via LinkedIn
Via Facebook
Via Twitter
Via Instagram
Via YouTube

GoDaddy - Domain Names, Websites, Hosting, and Online Marketing Tools
Via LinkedIn
Via Facebook
Via Twitter
Via Instagram
Via YouTube

Mentioned in this episode:
The Llama Commerce Show - Demystifying eCommerce Into Actionable, Digestible Bites
The GoDaddy Blog - Online Marketing, Web Design, and Small Business
Influencer Marketing - The $68M Secret You Don’t Know - William Harris - The GoDaddy Blog
Brian Nolan - Co-Founder and CEO of Sellbrite (acquired by GoDaddy)
Idealab
The Carolina Bagel Company and Deli - New Bern, NC

Episode Transcript

Brett:

Well hello and welcome to another edition of the eCommerce Evolution podcast. I'm your host Brett Curry, CEO of OMG Commerce and today this is sort of like a throwback episode, but also with all kinds of stuff that's brand new and exciting and so this is a repeat guest and not only a repeat guest, but this guy was a guest on the very first podcast I did. Shout out to the Llama Commerce show. It's a whole 'nother story in and of itself. I had to go check that... Google that if you want some last and some good information too.

Brett:

This episode of the eCommerce Evolution podcast is brought to you by OMG Commerce and we're thrilled to underwrite this program and bring some amazing guests to you. I have a question for you. How is your YouTube gain? Are you using YouTube to help scale your e-commerce business? Hopefully you're using YouTube both as a remarketing vehicle and also for top of funnel growth. However, if you're like most e-commerce companies, then you're probably not fully leveraging YouTube. I have two free resources for you. The first is a two minute crash course on YouTube ads. I recorded this with the famous Ezra Firestone. You can check that out by looking at the links in the show notes to this show. You can also Google smart marketer and two minute crash course and you'll find the resource there.

Brett:

Also, we recorded a 90 minute webinar outlining exactly how we scale with YouTube. We talk about keys to a great YouTube ad. We talk about audience targeting, we talk about bidding, optimization and much, much more so I highly, highly recommend you check it out. You can also find that linked here in the show notes. It's also at the bottom of the two minute crash course page, so check them out and start scaling with YouTube and now back to the show.

Brett:

My guest is Mike Ugino. He's the co-founder and CMO of Sellbrite. I'll explain what Sellbrite is in a minute, but Sellbrite was just acquired in April. The deal was inked April of this year, bought up by GoDaddy. Now Sellbrite is a GoDaddy company. We're going to talk about what that process was like because I know a lot of our clients, a lot of people listen to this podcast. You're looking for an exit event, so I want to pick Mike's brain and hear a little bit of that story. We're also going to talk marketplaces because that's what Sellbrite does is helps e-commerce companies sell more, sell better on marketplaces. We're going to dive into that as well and have some fun along the way so Mike Ugino, what's up man? Thanks for coming on the show.

Mike:

Hey, hey, thanks for having me back again and then again.

Brett:

Yeah.

Mike:

It's nice to be on with you.

Brett:

Exactly. It's always fun. We were just reminiscing I think in that very first episode. This was pre eCommerce Evolution so this goes back to the Llama Commerce days. You were in your incubator, right? Sellbrite started in an incubator, which is a great story and we were using Google Hangouts at the time and you ended up writing backwards on a dry

erase marker board that was behind you I think, so they would show properly in the pictures, is that right?

Mike:

That's right. If you see behind me now, I have what in real life is properly written and it now looks reversed. At least I'm saying that, let's hope it actually plays out that way when we publish.

Brett:

It actually... Zoom fixes it so it looks correct.

Mike:

Oh well, okay. Well I thought that Google Hangouts did not fix it and it turns out that they did and my backwards writing was indeed backwards.

Brett:

Making people work hard on that but-

Mike:

Unfortunately we edited it out. Me trying to explain that so I looked less stupid than I already did.

Brett:

It's a good time man but yeah. Let's first explain what Sellbrite is and does and just a brief background and then let's get into this amazing growth and we're going to talk about the acquisition story with GoDaddy, because I know there's a lot of people out there listening that would love to be acquired by a company, the size and scope of GoDaddy. What is Sellbrite and what do you guys do?

Mike:

Sure. Sellbrite is a simple software tool and we describe it as the easiest way to sell everywhere that matters, so to list and sell your products on the world's largest marketplaces as well as your e-commerce store. Sellbrite helps brands and retailers to take the products that they sell, make them available for sale wherever they want to sell, manage all their product inventory, manage all their product content, fulfill any orders and do it all in a simple easy to use affordable tool.

Brett:

Yeah, and at first I think it was first introduced to you guys by my buddy William Harris. I think that's maybe how we made the first-

Mike:

Yeah, that's right.

Brett:

...connection and there are other tools that do similar things to what you guys do, but some of them are like crazy, crazy, crazy expensive. You guys are affordable. The tool works fantastically well. Connects inventory, creates this one unified view so you can kind of see everything and yeah, it's a great tool so just check it out for sure.

Mike:

And William by the way... William and I just published our first piece of content on GoDaddy's blog just to... because you brought William up.

Brett:

Nice. I think I may have seen that on Instagram or something.

Mike:

Okay. Good. Yeah, it's a fantastic post on influencer marketing.

Brett:

The influencer marketing.

Mike:

...to some of your listeners that run their own brands and a little bit, but it's an awesome resource that has tons of expert content that hopefully they can get value out of.

Brett:

Sweet so GoDaddy. I'm sure you just Google GoDaddy blog influencer marketing William Harris, Mike Ugino something like that. Also linked to in the show notes somebody would check it out there but yeah.

Mike:

Awesome.

Brett:

I'm eager to read that. That's fantastic. I remember when I first met you and Brian Nolan, who's the other co-founder, awesome guy. Met you guys, I think it's... well first time we met in person and he was at a Magento show or something like that but I know the plan from early on was to be acquired, right? Let's talk about this... I don't know if that was the plan in the very, very beginning, but it seems like it's been a while you've been thinking about it. Did that shape your thinking from the very beginning or was it not until you got into the business a little while before you decided, hey, we could potentially sell this one day?

Mike:

Yeah, I think there was always the thought early on that this business would be attractive to potentially a larger strategic acquirer. I don't think we had misgivings that we were going to build a Facebook level business because it's pretty niche. We target e-commerce businesses of which there are many and we knew we could build a wonderful business, but there was always another thought that there could be value there with the right partner but then also that we felt we could build a very large business and continue to run it on our own.

Mike:

I think we went into it thinking, let's consider both paths and it'll sort of work itself out as long as we focus on building a valuable company and then once we raised money focused on creating value for our shareholders.

Brett:

I think that's key. Build a valuable company first is what we're offering and what we're doing. Does it matter? Do people love our product? Are they passionate about our product? Are we making a difference? And then that's going to create options, right? It's always good to be in a position where you don't have to sell, where you could just keep tracking along and make great money because that usually leads to a better deal in the end for you.

Brett:

Let's talk about this process a little bit. What do you think you guys did right in the formative years as you were kind of building the company and then as you were getting closer to sell, things that you're looking back, you're like, hey, that was a pretty good... pretty decision. I'm glad we did those things or some of the-

Mike:

Sure.

Brett:

Some of your good decisions.

Mike:

That's a great question. From the very beginning, I think we were forced to be scrappy and frugal. We never had a whole lot. When we started the company we scraped together what little we had, actually pretty much cashed out my IRA to build our first product, which I don't recommend doing..

Brett:

Very risky.

Mike:

I apologize for little bit of background noise.

Brett:

No problem.

Mike:

We started with a little. We built a very small prototype and we operated it for a year trying to grow that tool and use it to prove that there's more that e-commerce businesses need. We immediately got feedback when we launched this product that it's great, but what if it could do this as well? And while we had ideas to build similar small products, quickly it became realization that ultimately this is a piece of what could be a bigger tool and that ultimately became Sellbrite.

Brett:

I love that and one thing I'll kind of add to that because I think this is really important. A lot of times as entrepreneurs we have the false notion that if we just had a ton more cash, that everything would get easier and there is some truth to that but I believe some constraints lead to creativity. Constraints can lead to making really good decisions and doing things that lead to future success. Big fan of Google and Google talks about some of the early leaders like Eric Schmidt for CEO and stuff that having constraints leads to creativity. When you feel like you've got all the money in the world, unlimited resources, a lot of times you don't come up with as good of a product. Like we as humans need those constraints a little bit so don't be afraid of that. Don't back away from that. Constraints can be your friend. I think.

Mike:

I totally agree. I think when your back's up against the wall, if you can thrive in that environment, you're going to do incredible things. I've always been someone who does the best work under pressure. I don't know why. I think maybe it's that if I have too much time I'll iterate and iterate and iterate myself to death..

Mike:

..as a perfectionist but I totally agree and it also forces you to be cautious. Sorry, funny side story on why.

Brett:

That sounds like growth. That sounds like they're expanding or building or something.

Mike:

Yeah, we're growing, yeah... rapidly growing right before my eyes. We are an Internet company and like most Internet companies have pretty terrible Internet in our office building.

Brett:

Prerequisite. If you're an online startup you have to deal with bad WiFi.

Mike:

Yeah, exactly. The whole WiFi drops a lot. Fortunately we've been able to withstand the calls so far, but finally after a few years and thanks to GoDaddy, we're upgrading our Internet infrastructure a little bit. Hopefully no more issues.

Brett:

Yep. Yep. I got us off on a... we went a little bit deeper-

Mike:

That's all right.

Brett:

...so you guys are scrappy in the beginning.

Mike:

Yeah, yeah, yeah, early on so we... It's interesting. We were fortunate to find Ideal app which is an incubator here in Pasadena testing in California where my partner and I met working for another online retailer. We were able to find them and they invested in the company early on and by early, I mean about a year... little over a year after we had launched that first product so it took a while. They have a lot of e-commerce experience, so they understood what we were trying to do even though I think at the time we were a little early in our market and a lot of the investors in LA didn't really understand the value or what it could become but what they asked us to do was kind of prove that there was staying power and that this could be a business.

Mike:

We launched a kind of like a dummy website of the full Sellbrite product and everything it could do with pricing plans and drove traffic to it to test out, could we acquire traffic profitably and could we prove a willingness to pay based on plans selected and then when they wanted to start a trial, we very kindly told them that unfortunately the product wasn't ready, but we'll let them know as soon as it is. That was a really cool exercise because it was very lean startup method and it forced us to start thinking like everything we do, we need to really test and they basically gave us a little bit of money to run that test and then invested more once we proved that.

Brett:

Nice.

Mike:

That was a great start. Ultimately I think what's made us successful is that we've been very focused on trying to build a great product and that's a very challenging thing to do in our particular industry because a multichannel tool means a lot of different things for pretty much everybody. I always cite a story of me growing up. My first job was in my uncle's bakery and my uncle moved from New York to South Carolina, rural South Carolina to open-

Brett:

Whoa, culture shock.

Mike:

Culture shock indeed, but to-

Brett:

To open what?

Mike:

Open a bagel shop in South Carolina, was kind of like a-

Brett:

In rural South Carolina, okay.

Mike:

A really kind of moment and to take it a step further, he decided to name it Carolina bagel, which is that... could be controversial. Pretty much the first bagel shop in the area, in the whole outskirts of Columbia, South Carolina but he made a fantastic product. Fantastic product, and people loved it and it caught on quickly and he was successful and then open a few more bakeries and I think early on that kind of always sank in like if we build a great product, everything else will work itself out. We've focused a lot on building an easy to use tool and making sure that we listen to customers, that we're monitoring to see what they're doing and where they're getting stuck and that we're constantly improving and we have iterated our product over and over and over again and done that at the expense of building more features.

Mike:

Sellbrite is less feature diverse than some of the other tools out there, but it's more consistent and effective at what we've kind of chosen to focus on as a result.

Brett:

Very, very good at what you do and it's simple. It's effective. It just works. Starting with that minimum viable product in the beginning, iterating, getting feedback, testing, improving, all of those things. That's awesome. I love that. Those are some of the things you did while you were scrappy, you tested, constantly improving, focusing on a good product and I think that applies everywhere. That applies to us as an agency. You as a SaaS business, e-commerce companies, if you can obsess about the product, good things are going to happen, right? If you continue to make it better and that happens at the expense of other things, right? Even you had said that like, well, you could build out all these other features or we could just focus on getting better and better and better at these core things.

Mike:

It's also key to know that you are not... in some cases this isn't true, but we were not the primary users of our own product. While we did create the product, because we felt that pain point as retailers ourselves, going forward it was no longer our full day. We didn't use Sellbrite professionally. Where I'm going with that is that you really need to listen to your users and you need to get their feedback and ask them what they want, what they need and sometimes that it all is reading between the lines a little bit because your customers are always going to ask for more than you really can deliver or more than you think is within your wheelhouse but making sure that you don't feel like the product needs to be performing for you I think is key and in particular for direct to consumer brand owners.

Mike:

We're SaaS, we're a software tool and it's a little bit different than if you make a physical product where you really need to have that feedback and you really need to constantly be soliciting the opinions of others because other people are going to also be using your product day in and day out and it's not a... it's much of a relationship thing as with SaaS, like software can stop working maybe for a couple of minutes at a time and then start working again and it's almost... kind of goes with the territory because there's a lot to it. Whereas if you build a physical product and it breaks once, you're going to lose that trust. You know what I mean?

Brett:

Yeah, absolutely and I think it's a really interesting point. I think this... well, let's talk about the agency world and the SaaS world first, because that's where you and I both live. We often start the company, I know this was the case with you guys. You built the

software to help with the need you had, so to help you guys manage better on marketplaces, right? But quickly as you evolve and grow, now you're building this company and it's growing and it's exploding and all these things you're no longer the primary customer. Right? It's easy and for me, when I was building the agency, I was very connected to all our clients. Now I'm still connected to some, it's pretty easy for you to kind of grow to a point where like, okay, I'm not necessarily either the prime customer or super connected to my customer naturally, so we need to have those feedback loops, right? We need to have those feedback loops from customers or else we're going to quickly become irrelevant and I think it is important.

Brett:

It is a little more binary I guess for physical products, right? Where it's either good or bad and you don't get a lot of whole lot of chances whereas with an agency or SaaS you maybe get a little bit of grace and there's some bumps along the road and you fix them and whatnot.

Mike:

Yeah, and there are things you can do to force yourself to be more aligned with your customers or your users. For example, early on, and I attribute a lot of our early success to this. We started a program, we just called it the Sellbrite store program where we actually purchased inventory from some of our customers, promised not to be price competitive with them and used our software to list products for sale and to operate a store and we rotated throughout the company. Everybody managed the store for a week, including all of our engineers, including everybody within the organization and you got unique insights from each.

Brett:

That's amazing.

Mike:

...team member that the team that they're part of, they would see different things and then have an idea on how to improve. It's the old drink your own champagne axiom.

Mike:

I recently heard drink your own champagne and I've upped to that one.

Brett:

Maybe a little more fun, a little more enjoyable.

Mike:

Yeah, we say eat your own dog food as well. It is important to certainly be using your products, but know that you're not the only user and not everybody sees things the way that you see them. Like you need that all feedback from customers who have other things going on in their life.

Brett:

And obsess over the customer, be willing to be wrong when something you think is important, you find out it's not important. Just obsessed over the customer, that's what you got to do. Okay. Next question. What are some things that either you wish you had done differently because they were either mistakes or just waste of time or something or some things that you thought would be important that were not important? Anything that would kind of fall in that list of, we either didn't do great here or we focused on this thing thinking it would be important once an acquisition came along, it wasn't important?

Mike:

It's a great question. I'm going to go more towards the things that I wished we had done earlier. Number one would have been try to fully instrument all of the analytics that you want to see as early on as you can, and I think this is one of those things that no matter how much you try to focus on an early, never gets quite the priority that it deserves but it's incredibly difficult to make strategic decisions in a business about what product to invest in, what feature to add next, which... in our case, which sales channel we want to prioritize or invest more in iterating upon and improving without truly understanding your customer base, how they're consuming your product, everything that goes with that and if yours make a handful of physical products, that'll be a little bit easier.

Mike:

Your instrumentation will be around, go to market strategy and much more kind of marketing focus and cost and fulfillment focused but from a SaaS perspective, understanding how your product is consumed by different types of users is incredibly important and it has taken us a lot of time and we've spent a lot of time that we didn't need to spend over the years just trying to mine insights out of data that's not very easily accessible. That would be one thing for sure.

Brett:

Getting your data clean, accessible in a dashboard type thing as early as possible.

Mike:

As early as possible.

Brett:

It helps you make better decisions anyways. Like even if you're not going to sell for a long, long time, it helps you make better decisions in the moment as well.

Mike:

Absolutely. Understanding who your customers are by vertical, the things that they're selling. You would think that a company like ours should be able to know that pretty quickly but it's actually, if you haven't planned for that and create a kind of a taxonomy for understanding the types of products or categories that your sellers sell within, it's very difficult. All the sales channels have different category structures. You can't just kind of do a quick query by keywords. It's a challenge and then not knowing that you don't necessarily know which verticals are hottest without more anecdotal type as evidence. Similar, and that's just understanding who your customer is and then there's how they use your product, making sure that all the key features and flows in your product are very well instrumented and that you're monitoring where those friction points are. It was later in our lifetime as a company where we really understood how performant our key features were, and so that's certainly something I would recommend to any software entrepreneurs out there is to make sure that you're thinking about that stuff as early on as possible.

Brett:

Yeah. Anything else they're getting... I love that. Getting the data as clean as possible and for an e-commerce store that's partially easy, right? You've got Shopify, you've got Google Analytics, but I think thinking about it at a deeper level, right? Understanding who our customer is, building segments, seeing how people behave and respond and just getting very, very clear with the data and do that as soon as possible. I love that advice. Anything else you wish you would've done sooner?

Mike:

We've always been somewhat restrained from a cash perspective, but I wish we would have hired the folks that are on our leadership team now. I wish we could have hired them earlier, because hiring great people that can execute a strategy and can help manage a growing team is invaluable. We're fortunate to have Angela and Keith on our team, who Angela runs our customer success team and Keith runs engineering who are terrific and I wish we had made the decision to prioritize those positions sooner.

Brett:

I would totally agree with that by the way. Like, there's some key hires we've made first which will be our COO, Sarah who really helped take away a lot of the management of our team away from me so that I can focus more on strategic growth and things. Several years ago was huge and then as we started implementing directors of departments, like our Google ads Director, Greg Maycock. Amazon Director, Chris Tyler, like that helped us grow tremendously and I don't know if we could have done it a whole lot sooner, but I would agree with you like that often will feel like an uncomfortable expense. Hey, I'm stretching a little bit to hire this person or to fill this position, but if you get... one, get the right person, which isn't always easy, but get the right person and two then have that job spelled out properly or give them the freedom to create and really make the job valuable, man, as soon as you can do that. Do that. Absolutely.

Mike:

Yeah, totally. We have changed our target customer as the company has gone on and we'll get into this a little bit as talking and talking about the GoDaddy story but I wouldn't say that we would have necessarily should've done that sooner. It was kind of more of reading the tea leaves and seeing what opportunities exist in the market and how we can truly widen the moat that we have with our product but I do think that the analytics has been something that could have served us so much better earlier on in our career with Sellbrite and then, yeah, like you said, having the right people to help you build an organization is absolutely critical.

Brett:

Any kind of a... similar question, any advice you wish you had gotten sooner? And maybe this is related to those two things, so if it is we can just skip it. No problem but any advice you wish you had gotten sooner or advice you would give to somebody who's looking to sell in the next year to five years?

Mike:

Looking to sell a company?

Brett:

Yeah.

Mike:

Yes. Let's talk a little bit about the story of kind of how we got to this point.

Brett:

Awesome. Will love that.

Mike:

I think that'll open up lots of lessons that I learned and little nuggets of wisdom. Let's see, the year was 2017 and we were approached by GoDaddy to partner with them and build marketplaces... basically an extension to the marketplaces for GoDaddy's online store product and it was super exciting. Ironically, at the time there were a couple of companies that were interested in that type of functionality and so we were having these discussions but we really liked the folks at GoDaddy and their product had a lot of

characteristics that we kind of identified with. It was simple, easy to use. There were clearly a lot of things about it that were well thought out and we decided to enter into a partnership to build them a white labeled version of our product, which we'd never done before.

Mike:

That was in the fall, I believe 2017, and then by the end of the year, right before we kicked off the official partnership, they reached back out with their corp dev team and offered and invited us to join the GoDaddy organization, which was awesome.

Brett:

Which means they wanted to buy you at that time.

Mike:

Right. They wanted to... made us an offer to acquire the company. We were on the verge at the time. We had just kicked off some smaller partnerships with other integration partners and we were really on an exciting trajectory and felt that it wasn't the right time for us to join forces with GoDaddy.

Brett:

Was that really tough to come in and say thanks guys-

Mike:

Sure. Absolutely.

Brett:

Did you feel like you might not ever get that deal again? I mean there's at least something in the back of your head saying if you say no now done, door's closed to GoDaddy forever.

Mike:

Absolutely. It is very hard to say no to something like that and trust that you can continue to pull off what has already been a statistical anomaly. I mean the fact of the matter is we raised very little money, so we're a largely bootstrapped and grew by... through our-

Brett:

Which is pretty rare for SaaS. I mean SaaS usually has to have some kind of-

Mike:

Totally. Very much so.

Brett:

...backing. They're expensive to start and operate in the beginning.

Mike:

We never had a large marketing budget, so we were not driving a lot of growth through rapid escalation about expend. A lot of it was organic. A lot of it was doing things but looking back I would say it was the right way. We were really focused on customer experience, driving great reviews, getting ourselves positioned with partners and app stores that we knew would provide a good return and that it would be fair with us and growing the business that way and so we decided to pass on the offer and instead pursue the partnership. Then in 2018 we started-

Brett:

Did that ruffle any feathers or was everybody kind of cool with that?

Mike:

I think it might have. I think whenever a corp dev team doesn't get a deal that they want it's obviously they were... that's what they wanted. Right? And so that's their job and so there was a little bit of not hostility, but... I think that's just kind of how that...

Brett:

That's the way it works. I mean, there's going to be some bruised egos. Some people are going to be disappointed like, hey, this was my goal, was to get this deal done. You're saying, no, now I look bad potentially, things like that.

Mike:

Yeah and that's okay because ultimately there was nothing that was in bad faith. I mean we had no ill will against GoDaddy. We were very excited about working together and what made it so hard is that we had not really officially been working in a development capacity with them yet, but we saw the opportunity, we felt like culturally we already fit well. It did made sense but it just wasn't the right time. In the next year we started building this integration and it was a monster of an integration to build. I mean we had never white labeled our software before and we were now having to rethink how it operates as an extension of another platform. Our product operates as its own source of truth and our customers use it and then connect to all their sales channels.

Mike:

In this world, we're building a solution that kind of fit on top of GoDaddy's online store and use that as its source of truth. It was a complex problem to solve but a cool problem and one that we really enjoyed working with them on but over the course of that year, the rest of the business suffered as we took our eye off of it and were focused so much on..

Brett:

It makes sense like what you focus on grows. What you don't focus on doesn't.

Mike:

Absolutely. That year, 2018 was a chaotic year for us and a scary year because we got to a point where we had hit... in SaaS we call it a growth plateau. A SaaS plateau where our new business coming in is kind of being evened out with our churn and so we needed to figure out how to continue to grow and reduce churn and we, in addition to building this white labeling solution for GoDaddy, invested a lot of our time and engineering resources into iterating on our core product features and flows, making the product a lot better, completely changing our business model. We changed our pricing plans and introduced a whole new like way that we bill. Previously it was based on things like your channel count and your skew count and now it was based on orders and for the most part we package our plans very differently and basically re-engineered the company from top to bottom.

Mike:

We also had to lay some people off, which was the hardest thing that I had ever done but our team was resilient and rallied around us. Fortunately because our team is so amazing after that and that was Q2 of 2018. Now we were about four or five months after having declined this offer thinking, oh crap like this never happened and we have an obligation to build this functionality and it could be that now the deal or it's not as attractive if we are kind of forced to sell the business but fortunately again, we made all of these changes and things started to pick up again and we were able to rapidly accelerate our lead growth. We were able to increase our conversion rates, we were able to reduce churn.

Brett:

Can you talk a little bit about that? Like what did you do to rapidly increase lead flow in any... I know that could be probably a podcast all by itself but any quick wins there you talked about.

Mike:

Sure. Well, I mean we invest a little bit more in marketing, but what we did was in conjunction with spending a little bit more in direct response, we implemented some better qualification tools to make sure that the right types of merchants were coming in to the platform so that our team that helps onboard and train and retain and support our customers was efficient with the time that they were spending and we were focused on good customers that were going to be a part of... that we could really help.

Brett:

Yeah. Part of fixing churn is just attracting more of the right people.

Mike:

Right, and also filtering out some of the wrong people and there are a whole variety of reasons why any commerce brand wouldn't be right for Sellbrite and Sellbrite wouldn't be right for them and that's totally okay and a lot of times they... fast forward a year and we're a better fit or they've outgrown the need for a solution like Sellbrite and it's just like kind of timing and a lot of times it is just their focus is on something that's a little bit outside of our focus but those things change as well. Making sure that we're as efficient as possible with the customers that we were working with and that wasn't a really a big part of it. Also like I said, we really improved our core product flows, so increased or decreased the time to value for using Sellbrite, made onboarding a lot easier.

Mike:

We invested a lot in content around training, how to use the solution and in conjunction with what was really a shift down market so the new pricing plans that we introduced were actually cheaper plans. We also built for what a future looks like at scale under that model by leveraging more one to many tools, more webinars, more kind of group training sessions, more content specifically devoted to your first few days with the solution and those things were hugely impactful because it allowed us to bring more customers in the door and onboarded on the platform. So-

Brett:

As you start growing against the vintage, did you guys initiate the conversations again with GoDaddy or did they approach you again or how did that all transpire?

Mike:

We kind of felt all along that there was a chance that things could come back around and we wanted to obviously make sure that we were continuing to deliver on our promise as a partner, but that the business was going in the right direction. Those couple of months leading up to having to lay folks off and in a couple of months thereafter, we had already started all of these improvements in advance of the layoffs because we knew that things needed to... we needed to make changes, but it took us a good six months for things to really take root and then come towards the end of the year and we were contacted again by GoDaddy. We may actually have reached out to them and said, "Hey, let's have a conversation." And we started up the talks again.

Mike:

By that point the business was stronger. We were more positioned to be a successful integration with GoDaddy's products because we were now more positioned on the long tail of e-commerce market. Very few providers of tools like Sellbrite even dare to

try, let alone want to try going downmarket to support smaller merchants but we knew that we had the easiest to use product and we knew that it's the fastest growing part of the market and it made a lot of sense for us to really focus there. It was a big risk for us but it was a calculated one. Really one that we felt like we could really pull off and it also aligned us very well with what GoDaddy was trying to do. On top of that, we were by that point also chatting with other potential acquirers and... that's a really important piece-

Brett:

Did you approach these other buyers? Did you work with a broker? How did these other potential suitors know that you were potentially for sale?

Mike:

Yeah. We did not work with a broker. We considered it but nobody really knows our business like we do and I don't think that there would have been any added value for us in hiring a broker. If you're doing absolutely huge deals, I can see it being more relevant, private equity type stuff but for us we really knew who the most logical potential acquirers would be and who would be interested and while there are always interested parties that are outside of your strategic world, rarely does that I think work as well in the long run post acquisition and team transition and things like that.

Brett:

You want to sell to a strategic partner, right? Because there's usually upside on the backend for you. Usually you're given, hey, stick around or if we hit these performance targets over the next couple of years, your earn-out is greater. Right? So it's thinking about the longterm success, always like good for your customers but better for you in the long run too.

Mike:

That's a big part of it, but also to the right strategic knows the value of what you do and what your team brings to the table. A value buyer or private equity is going to want to strip the company down to its parts and then sell them off or get rid of the ones that he doesn't want.

Brett:

Sure.

Mike:

They're not going to be as optimistic or as forward thinking in terms of what the future market could look like if you're a software integrated with their go to market operation and what we really focused on in talking with GoDaddy was that post-close, is where we really develop value together and what Sellbrite could do in the hands of GoDaddy's team and marketing organization and customer base, like what it could look like and those are really exciting conversations to have, and also there are a lot of skills and skillsets that I think we can bring to the organization that have... there's opportunity there to kind of supplement what already exists and GoDaddy's a fantastic organization. A very interesting and I think a lot of times misunderstood organization that's doing some super cool things and I'll talk about that... I want to talk about that in a minute because I think-

Brett:

Yeah, absolutely.

Mike:

...there's some valuable stuff there. Going back to being in this process, we had some partners that had interest for a while and that we'd always talked about joining forces who we're kind of saying, hey just to let what things are kind of heating up and then some others that reached out to us and some others that we reached out to because at that point now we had developed a white labeled capability to add our products functionality onto the stack of another large shopping cart or another large organization and enable their customers to seamlessly leverage the marketplaces and so we were excited about that and we developed a go to market rhythm around discussing that and talking with potential partners, so that then led to conversations. By the time we got back into this conversation with GoDaddy, there were some other interested suitors and I think that really changes the dynamic a little bit.

Brett:

It has to, right. I mean, if a potential suitor is bidding only against themselves, they're not very motivated to give you a great deal, right so-

Mike:

Yeah, I mean that-

Brett:

Sorry. Did you approach these other potential buyers or did they approach you?

Mike:

A combination.

Brett:

Great.

Mike:

Some had approached us and others we had reached out to, not specifically to talk about being acquired but to talk about partnering.

Brett:

Great.

Mike:

Yeah.

Brett:

Pretty cool. Kind of a-

Mike:

And I do recommend that. I do recommend if you're in this stage, think about what value you would bring to another organization. What is the draw and the what can you do post acquisition together and then think about how you could turn that value into something that helps your business even if you weren't acquired by that company. If there's a partnership that you can do where you can add value to them, but that would allow you to continue to operate independently, that's fantastic. Especially if that's your goal. If you want to remain independent, that's totally okay but those conversations have a way of then turning into corp dev, M&A type conversations.

Brett:

Very cool. Any lessons or takeaways from the negotiations themselves? I'm sure there's a lot you can't talk about, which is totally cool, but any lessons or takeaways, any advice you would give to someone during that negotiation stage? And then also would love to know why you ultimately chose GoDaddy versus some of the other potential buyers.

Mike:

Sure. Let's see. What can I say and what can't I say? It was a very above board process. It is a very emotional process.

Brett:

I think it's gotta go back to and sorry to interrupt you. Part of it probably goes back to, hey, we found some potential partners who were great, like the culture lined up. We could add value to them. There's already some experience there, so like once you do that then probably the negotiations are relatively smooth, right?

Mike:

Yeah. Well we had established great working chemistry together and so while you had these corp devs conversations going on on one hand you can kind of back channel if you will or talk with your sponsors and supporters within the organization about how things are going and it is a very emotional process when you are considering selling your company and then you're tasked with putting a value on the company or rather the value has been told to you and you either agree with it or disagree with it. It's an emotional process to wrestle with that. The second time around we came into it with more of a stronger position and we were able to use that to our advantage but I think no matter who you are and who you're selling to even if it is the perfect acquirer, there will be points where you ask yourself, why am I doing this, this is terrible, or how dare they say this to me or, like you feel dejected or like you're not very valuable or just a whole host of emotions.

Brett:

Sure.

Mike:

It is important to remember that... Oh actually, let me take that step further. It's easy to think that somebody is trying to play a game with you or that they're out to get you, right. Like, you potentially have everything that you've worked hard to build in then you feel like it might be robbed from you. Right. I think that's incredibly normal.

Brett:

Sometimes we don't realize how much emotion we have wrapped up into our company and I think that comes to light and I've actually heard about another entrepreneur friend of mine whose deal went south and I think a lot of this came into play. Like there was emotion and how dare you, and this is my baby. Not that you would say that necessarily, but yeah, I think sometimes we don't realize the emotion we have wrapped up in our business.

Mike:

Yeah. It's very hard to feel... or very easy to feel like things that are going to be taken from you or somebody is out to get you and to let emotions get the better of you but at the end of the day, I think most and I'm specifically going to talk about corp dev because that's who you engage with the most in an M&A process. That's generally the department within an organization that's liaising with you. Most corp dev folks are good people that have a lot of things going on, a lot of other deals that they're working on and aren't trying to be sinister. Right? You just have to take every conversation as a list of facts or expressions and then you reply to them and it's just kind of a slow, very slow dance and kind of negotiating and then you get through it. And fortunately, I mean my partner, Brian and I, we've gotten each other to talk things out.

Brett:

Helps. Yeah.

Mike:

Huge advantage. We also have a board. Some idea lab folks were on our board as well as some other advisors that have been through this and that's a huge advantage when you have somebody that you can talk to, and if anybody's going through this, I'm also happy to talk with anybody directly or personally-

Brett:

That's awesome, appreciate that.

Mike:

I think reaching out to someone that has some experience with this helps navigate some of those emotional minefields because it can be a very traumatic process letting go of something or feeling like you're going to let go of something and miss a fine print or something of that nature, but most of the time these things happen in good faith, especially when it's a strategic acquisition. It's a value buyer, private equity, you kind of know going in like, this is your only real option and that's what they do.

Brett:

Yeah. Really good insights. Really good insights. What about things you've learned from GoDaddy since the acquisition? Because I think, and I don't know how relevant this is, but it seems like people maybe when they think GoDaddy, they just think old Superbowl ads or something like that, maybe that's a little bit older, but like that's the perception, but GoDaddy's doing some amazing things and we're just talking about their offices in Carlsbad, California. They're two minute walk from the beach and employees go surf in the morning or lunch or whatever and they're doing a lot of really cool things. We'd love for you to talk about that, but what have you learned from GoDaddy and the people can apply to their own businesses?

Mike:

Yeah, well there's a lot that I've learned both just in terms of how big organizations work as well as really cool things that can add value no matter who you are or at what stage you're at. It's certainly been a bit of a transition for us going from a team of 20 to a team of 9,000 but GoDaddy for an organization that large operates surprisingly nimbly and operates very much in kind of like a startup like manner.

Brett:

Love it.

Mike:

They're also incredibly employee and team focused. A lot of people don't know this, but GoDaddy was just ranked in the top 50 by USA Today of companies for benefits and workplace satisfaction and they came in number 11 above Apple, above LinkedIn, above Comcast, like some big companies and it's not a surprise, it's a fantastic company to work for. They're very focused on training and in terms of just education and educational opportunities, they're focused on giving back. I'm actually wearing a GoDaddy for Good T-shirt, which is one of the charitable organizations within GoDaddy where we do more kind of traditional charity and volunteering work.

Mike:

I also was fortunate to participate in a program called Empowered by GoDaddy where GoDaddy has local market partners that serve... like underserved areas and basically recruit entrepreneurs or people looking to start businesses or around businesses seeking help and offers the whole breadth of GoDaddy's product. Whether that's domains, hosting, e-commerce solutions, marketing solutions for very little. In most cases they're free, as well as educational content, training. I participated in an hour long

training with several dozen entrepreneurs just talking about e-commerce and it was awesome because you get questions from the most basic of like, why should I start an e-commerce? Or why should I pursue e-commerce as part of this business to very granular strategies, so you have this whole range of folks that are just trying to figure things out and GoDaddy is so entrepreneur friendly. They encourage all their employees to have side hustles. They make all the tools available.

Brett:

Which is really smart because I think it makes for better employees, right? You have a side hustle. I know Shopify is on the same thing where hey, support people, we want you to own a Shopify store. You play around with this, have your own sandbox. Make this work. If you do that, you're going to be a much better employee and much better at support and things like that.

Mike:

Totally. They're incredibly customer focused. So GoDaddy's support is pretty famous. Nearly 7,000 of the people within the organization are part of the care organization and that models a lot of what we do, which is really focused on providing fantastic support and being there when our customers need us, but underneath it all, it's like you said it's... most people think of GoDaddy and they kind of hearken back to those old Superbowl commercials and it being a little bit kind of chauvinistic in its branding not necessarily as a reflection of the company's values as they are. A lot of those ads are 10 plus years old.

Brett:

Yeah.

Mike:

They spend a lot of effort to focus on changing the culture of the organization and the way that it goes to market for years now, but what a lot of people don't know is that in addition to being a highly charitable entrepreneur and kind of giving back focused company, it's also a very compelling tech company story. GoDaddy's not traditionally known as a tech company, but there's fantastic talent. They're developing really awesome software solutions. We're very fortunate to be now a part of that and I'm very bullish on the future of GoDaddy. I think that you're going to see them really not start knocking off some of their competitors and become more known as a forward thinking tech company over the course of the next several years, but-

Brett:

And I think it's hard to overstate, if you can create this environment where you're one of the best places to work, right? Where people want to work for you, they're passionate about working for you. A quick plug to OMG Commerce, we did make the 2019 best workplaces for Inc. magazine, which we're super-thrilled about.

Mike:

Awesome. So awesome.

Brett:

I think the most excited about, any award or accolade or anything and then we've kind... that's been my favorite, but if you can do that, if you can attract and keep good talent. We just talked about how important the right hires are, but a lot of that means you've got to build a company where people want to be there. If you could do that and then also obsess over customers, you're going to do well. You're going to figure things out. You're going to be able to make a go of it. So, yeah, really good. Other lessons, other the

takeaways from GoDaddy or the things you've observed that you've been impressed with?

Mike:

I have definitely observed a focus on continuing to improve coordination amongst teams. GoDaddy happens to be a company that is very inquisitive, so they bring in a lot of companies like Sellbrite.

Brett:

It can be tough to get this separate culture to get them acclimated and integrated with other teams. That's tough.

Mike:

Totally. We were fortunate to have a fantastic woman by the name of Judy who led basically our whole integration work stream that covered then every single part of the business and making sure that we were able to liaise with the right people within GoDaddy, worked through kind of a first 90 days checklist and made sure that our team felt welcomed. We had a party with them. The day that we announced the deal on April 10th we had everything ready to go from an HR perspective on day one so that there were no questions. Like it was just a fantastically organized rollout and integration and I can't imagine it going better, but when you bring in companies like that, it can create a lot of miscommunication or uncertainty and how the organization is structured and it's a very fluid, I think most big companies... you're like the reorg concept happening a lot, but GoDaddy seems a little bit more fluid to where the reorganizations kind of makes sense and there are like small iterations and improvements on things as we go along and so that's really impressive to see.

Mike:

Senior leadership is very hands on with their teams and their team's teams, which is fantastic. We've gotten to know really everybody within the organization, which has been awesome for a company that size already and we're six months in, but I think the continued focus on workplace satisfaction and career development is absolutely refreshing and so one of the reasons that we were so excited to join GoDaddy is that we knew our team, we're going to have opportunities. Our whole team followed us along, which is amazing, which is rare.

Brett:

Awesome.

Mike:

...and we're working with them to figure out what... not that they can't continue to do what they do, but like if there's anything else that they're looking to learn about, like there are paths. I'm discovering those and it's a pretty exciting conversation to have.

Brett:

I love it. Is there anything you're doing, and suddenly this is kind of happening naturally and this is maybe the way GoDaddy operates but start as a team of 20... not start as a team of 20 but you were a team of 20 right. How are you keeping the Sellbrite culture, the energy, the vibe you guys had now that you're part of a team of 9,000? Any insights there?

Mike:

Yeah, I mean it certainly is a challenge but a very welcome one. GoDaddy has been very good about wanting us to stay as a team and we were still in our office, we're incorporating more GoDaddy branding but we want that. We want our team to feel like

they're part of the organization and vice versa but at the same time we still operate our own product or standalone product. We are going to likely make that a GoDaddy branded product, but we're not forced to do it immediately and GoDaddy realizes the value in not rushing that out so we're able to still kind of maintain our brand presence and identity with the team, at least internally and then externally with customers for a period of time to make sure that it's a smooth transition and everybody is ready for it, and that includes all of our partners and anybody who depends on Sellbrite kind of being what it says it's going to be and not changing into something else. That's been huge.

Brett:

Yeah, love it.

Mike:

I think we still do the things that we do on our own. We still celebrate milestones. We have been fortunate to ... we can send folks to other offices to meet people if they want, which is a great way to kind of integrate them and get familiarity with your organization and then on the reciprocating end we have a lot of folks that come visit us, so we're able to kind of show off the culture and the team that we built that GoDaddy wanted. It's been a very good kind of two way process to bring us onboard but to ensure that the team feels like they're still... they're not losing anything.

Brett:

Very cool. Well, it's been fun for me and I've been watching very much from afar but, hearken back to our early conversations and to see the way you guys have grown and then I know the acquisition has been really ideal and really smooth. I'm sure there's always... as with anything there's price and bumps along the way, but very smooth and probably couldn't have gone any better, which is awesome and so I think hopefully this will give some encouragement to people that are looking to, either they're building their e-commerce brand or a software company building for that exit. Do it the right way.

Brett:

I love the advice of doing the negotiation... like just try to be objective. Know the emotions are going to creep in there, but try to be objective. Really good stuff, Mike. I think we've actually got a lot of time. I was going to talk marketplaces with you, but we're right up against about an hour so plenty to-

Mike:

That's all right.

Brett:

...but it's been super, super good. I love that offer. Like people can hit you up on social media, if they have questions or something.

Mike:

You're going to think all sorts of wild things that you might want to do or how could they, or, I can't ask for this or concerns that you may have or things that you haven't thought of that might get worked into a deal that you need to be looking out for. Having good advisors, having great attorneys that have been through this before..

Brett:

Absolutely.

Mike:

...had great attorneys. Don't be frugal about that. We had attorneys, they were expensive, but looking back on it now, I've never once thought about it as, wow, that was expensive. It's totally worth it.

Brett:

It's totally necessary. You're going to get... something's going to go bad if you don't have a good attorney. No doubt that. Awesome Mike. Much appreciated. We'll link to your LinkedIn profile in the show notes. We would check you out there, but it's Mike Ugino, U-G-I-N-O, so check him out on LinkedIn with that, buddy. Thank you so much. Excited to see what you and GoDaddy cook up here in the coming months and years is going to be fun.

Mike:

You're the man.

Brett:

All right.

Mike:

Looking forward to next time.

Brett:

Yeah, absolutely. Thanks Mike, and as always, we appreciate you as well tuning in. We'd love to hear feedback. What are some burning topics? Some questions you have in the world of e-commerce or online marketing that you'd like answered? We would like to know, we would like to address those right here on the show, and so with that, until next time, thank you for listening.

 More Episodes

February 19, 2020
Anmol Oberoi - Emitrr

Voice Commerce - What’s New, What’s Next and How to Get Ready

In this episode I interview Anmol Oberoi the Founder and CEO of Emitrr - a voice-first SaaS Platform.

February 5, 2020
Chase Clymer - Honest eCommerce

Navigating the Shopify App Ecosystem in 2020

In this episode we dive into a smarter approach to apps that can help any Shopify store owner.

January 29, 2020
Russ Henneberry

Rethinking SEO and Content Marketing for 2020

It’s safe to say that your SEO approach is likely outdated. Obsessing over ranking and traditional keywords? You may be off-target.