I Bought a Startup For almost $1M but it didn't go as planned. Two...
John Rush@johnrush
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Jan 16, 2024
~7 min read
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1
I Bought a Startup For almost $1M
but it didn't go as planned.
Two years ago I bought a product from another bootstrapped indie maker.
I had two options
1) build it from scratch
2) buy it and continue building the existing product
I was about to start building my own but stumbled upon a product that had really good feedback on Twitter. I'd often see people mentioning it.
I've tried it and love it too.
[Acquisition]
So I reached out to the founder, it turned out he was actually planning to sell it right at this moment too, so we made a deal really quick for $800k (5x ARR). It was right at the top of the valuation hype.
[Reality]
I was coming from a VC-backed startup world where you've got a team, one person per position, or even a few.
I never really met yet anyone who built stuff in solo.
So I didn't know what to expect.
The seller was pretty honest about everything, but I am an optimistic person, so I wished for the best.
However, things didn't go as planned.
[Downtime]
Either I was an unlucky buyer or it was just the nature of software to break when it gets to the new owner (remember what happens when you buy a used car? It breaks right away).
The platform was going down way too often. The churn started to grow into 2-digit numbers.
The upside of building solo is that you're fast, but the downside is that you take shortcuts.
The platform used the stack I wasn't familiar with. So it basically took me and my devops guy almost a year to figure it all out at finally fix the downtime issues.
But we lost lots of users until that.
I'm a really scrappy person.
Maybe if I hired an expensive DevOps guru, he'd fix it all in a day. But I tend to dig deep into every problem and fix it internally, so that at the end of it, we know how to fix such things next time, for the next projects.
[Churn]
The overall trajectory of the growth before the acquisition was positive, going up, but 2 months after I bought it, the numbers started going down.
The key reason was that the products built by solo founders are very tightly connected to their persona. So many users are loyal to the persona, not the product.
The other reason was that the original founder was grinding every day promoting the product everywhere, but when I bought it, I didn't do that. I did pretty much nothing and hoped for organic growth. Yes, I was naive. The growth slowed down. It was still happening organically, but it was slowing down every month. Until we did something new.
[SEO]
I heard SEO terms a lot in my life. But I had no idea what is it and how to do it.
My intuition said: it's what you need for growth.
We went for agencies and even got a quote for Neil Patel, but after all, I didn't wanna just buy the black box. I wanted to learn and master SEO so that I can use this skill in my next projects.
It was April, and we started learning SEO and experimenting. At first, it felt like an ocean, but in 2 weeks of playing around, we got some little results.
After 2 more weeks in May, we had even more.
Here I realized that this may be huge, and I need to build an engine that does this for me. That's where I came up with another idea: build my own SEO tool.
[SEO magic]
We started doing lots of AI-generated articles and used lots of different tools, raw chatgpt, own AI playground.
Eventually, in June we started one of the biggest projects of my life: a tool for SEO automation. The goal was to build a 100% autonomous agent that does SEO on autopilot. We knew the world would be soon filled up with AI SEO generators, so our goal was to make the one that makes human-level content that's actually valuable to the reader.
[Growth]
Finally, we started growing again. Or at least we stopped going negative.
Since Aprile, we have grown MoM every single month until this day and I'm pretty sure there won't be ever a month with negative growth for us again.
SEO was bringing more and more traffic, so the growth was accelerating.
[Social Media]
In April I had 72 followers here on X.
I searched X for my product term and saw almost no recent mentions. I remember how many mentions I saw a year ago, and now there were very few.
To be honest I felt pretty sad for a while. It's the same as when your kid brings home F-grade from school. You have this chest pain. So I had the same. I felt like people don't talk about it, so they don't love it anymore.
My goal was to bring it back to the track. So that people talk about it, recommend it, and share their love for it.
In a few months, after I engaged with people around my product topics, provided value and we did lots of improvements to the product, people started mentioning it again.
Eventually, we had more mentions than ever before by the end of the year.
[Product]
When I bought the product, I thought we could keep it as it was for a long while, it's good, no need to make serious changes, just fix the bugs.
But I was very wrong.
The world is changing. The tech that's not changing is falling behind. People wanted new features, but we were very slow to deliver them.
[AI Hype]
In the middle of the crisis, we were sure that AI would solve it all. That we can just add AI to our product and the world is gonna go crazy about it.
So we did, and it took us 6 months.
But the results weren't what we expected.
I asked users, and I just sent them an email asking: what's the problem?
Many said: you have the wrong focus. We don't care as much about AI as you think...
Something clicked in my brain here. I realized that we were wrong all these months.
[Hackaton]
Three months after our AI fiasco, I asked the developer to travel to my home and we spent 2 weeks in a hackathon. We work every day, sleep, eat and work again.
The goal was to figure out what users want (I asked churned users and existing users, and had at least 200 chats). So it was clear to me what people wanted.
To key problem we had was our slow innovation speed. We were basically moving too slowly, so most users said they didn't even realize we shipped anything over the last 12 months.
So the key task for the hackathon was to figure out a solution to this problem: How Can We Start Moving 10x Faster?
We ended up solving this problem and turning our sale into a Ferrari by the end of the hackathon. We didn't add more resources, we just did certain tech tricks, which changed everything and we could start adding new features way faster than before.
[Now]
From April last year to today, we went from 14k MRR to 18k.
We grew every single month for the last 9 months.
[Future]
Our growth is accelerating, and I expect to at least double our ARR by the end of 2024.
The product is loved by the users, both on social media and when I talk to users. It warms my heart and wakes me up every morning.
Nothing is stopping us from turning it into the best product in the world. We're one step closer to it every day. Or even every hour.
[Conslusion]
It was a very successful acquisition after all.
I'm very happy I've done it.
I wish I didn't waste the first 12 months after acquisition just expecting it to grow by itself.
On my next acquisition, I know exactly what to do.
[The End.]
but it didn't go as planned.
Two years ago I bought a product from another bootstrapped indie maker.
I had two options
1) build it from scratch
2) buy it and continue building the existing product
I was about to start building my own but stumbled upon a product that had really good feedback on Twitter. I'd often see people mentioning it.
I've tried it and love it too.
[Acquisition]
So I reached out to the founder, it turned out he was actually planning to sell it right at this moment too, so we made a deal really quick for $800k (5x ARR). It was right at the top of the valuation hype.
[Reality]
I was coming from a VC-backed startup world where you've got a team, one person per position, or even a few.
I never really met yet anyone who built stuff in solo.
So I didn't know what to expect.
The seller was pretty honest about everything, but I am an optimistic person, so I wished for the best.
However, things didn't go as planned.
[Downtime]
Either I was an unlucky buyer or it was just the nature of software to break when it gets to the new owner (remember what happens when you buy a used car? It breaks right away).
The platform was going down way too often. The churn started to grow into 2-digit numbers.
The upside of building solo is that you're fast, but the downside is that you take shortcuts.
The platform used the stack I wasn't familiar with. So it basically took me and my devops guy almost a year to figure it all out at finally fix the downtime issues.
But we lost lots of users until that.
I'm a really scrappy person.
Maybe if I hired an expensive DevOps guru, he'd fix it all in a day. But I tend to dig deep into every problem and fix it internally, so that at the end of it, we know how to fix such things next time, for the next projects.
[Churn]
The overall trajectory of the growth before the acquisition was positive, going up, but 2 months after I bought it, the numbers started going down.
The key reason was that the products built by solo founders are very tightly connected to their persona. So many users are loyal to the persona, not the product.
The other reason was that the original founder was grinding every day promoting the product everywhere, but when I bought it, I didn't do that. I did pretty much nothing and hoped for organic growth. Yes, I was naive. The growth slowed down. It was still happening organically, but it was slowing down every month. Until we did something new.
[SEO]
I heard SEO terms a lot in my life. But I had no idea what is it and how to do it.
My intuition said: it's what you need for growth.
We went for agencies and even got a quote for Neil Patel, but after all, I didn't wanna just buy the black box. I wanted to learn and master SEO so that I can use this skill in my next projects.
It was April, and we started learning SEO and experimenting. At first, it felt like an ocean, but in 2 weeks of playing around, we got some little results.
After 2 more weeks in May, we had even more.
Here I realized that this may be huge, and I need to build an engine that does this for me. That's where I came up with another idea: build my own SEO tool.
[SEO magic]
We started doing lots of AI-generated articles and used lots of different tools, raw chatgpt, own AI playground.
Eventually, in June we started one of the biggest projects of my life: a tool for SEO automation. The goal was to build a 100% autonomous agent that does SEO on autopilot. We knew the world would be soon filled up with AI SEO generators, so our goal was to make the one that makes human-level content that's actually valuable to the reader.
[Growth]
Finally, we started growing again. Or at least we stopped going negative.
Since Aprile, we have grown MoM every single month until this day and I'm pretty sure there won't be ever a month with negative growth for us again.
SEO was bringing more and more traffic, so the growth was accelerating.
[Social Media]
In April I had 72 followers here on X.
I searched X for my product term and saw almost no recent mentions. I remember how many mentions I saw a year ago, and now there were very few.
To be honest I felt pretty sad for a while. It's the same as when your kid brings home F-grade from school. You have this chest pain. So I had the same. I felt like people don't talk about it, so they don't love it anymore.
My goal was to bring it back to the track. So that people talk about it, recommend it, and share their love for it.
In a few months, after I engaged with people around my product topics, provided value and we did lots of improvements to the product, people started mentioning it again.
Eventually, we had more mentions than ever before by the end of the year.
[Product]
When I bought the product, I thought we could keep it as it was for a long while, it's good, no need to make serious changes, just fix the bugs.
But I was very wrong.
The world is changing. The tech that's not changing is falling behind. People wanted new features, but we were very slow to deliver them.
[AI Hype]
In the middle of the crisis, we were sure that AI would solve it all. That we can just add AI to our product and the world is gonna go crazy about it.
So we did, and it took us 6 months.
But the results weren't what we expected.
I asked users, and I just sent them an email asking: what's the problem?
Many said: you have the wrong focus. We don't care as much about AI as you think...
Something clicked in my brain here. I realized that we were wrong all these months.
[Hackaton]
Three months after our AI fiasco, I asked the developer to travel to my home and we spent 2 weeks in a hackathon. We work every day, sleep, eat and work again.
The goal was to figure out what users want (I asked churned users and existing users, and had at least 200 chats). So it was clear to me what people wanted.
To key problem we had was our slow innovation speed. We were basically moving too slowly, so most users said they didn't even realize we shipped anything over the last 12 months.
So the key task for the hackathon was to figure out a solution to this problem: How Can We Start Moving 10x Faster?
We ended up solving this problem and turning our sale into a Ferrari by the end of the hackathon. We didn't add more resources, we just did certain tech tricks, which changed everything and we could start adding new features way faster than before.
[Now]
From April last year to today, we went from 14k MRR to 18k.
We grew every single month for the last 9 months.
[Future]
Our growth is accelerating, and I expect to at least double our ARR by the end of 2024.
The product is loved by the users, both on social media and when I talk to users. It warms my heart and wakes me up every morning.
Nothing is stopping us from turning it into the best product in the world. We're one step closer to it every day. Or even every hour.
[Conslusion]
It was a very successful acquisition after all.
I'm very happy I've done it.
I wish I didn't waste the first 12 months after acquisition just expecting it to grow by itself.
On my next acquisition, I know exactly what to do.
[The End.]