The Wise Exit

Cashing Out Podcast | Episode 5 | Shane Bliemaster | Selling Without A Banker

Todd: Welcome to the Cashing Out podcast where our fellow founders share real stories and offer honest advice around selling their companies to some of the top acquirers in the world. My name is Todd Sullivan, CEO of Exitwise, where we help business owners create the exits they deserve today. I have a special guest in good friend, Shane Bliemaster. Shane has the interesting perspective of working for three companies that were acquired, the last of which was his own.

He went through his first M&A transaction as an employee of Peanut Labs, which was acquired by e-Rewards in 2010. Then he was part of the founding team of MoviePass, which was acquired in 2017. And finally, his last exit was as the founder of Marketing Supply Company, which he sold the Phenomenon in 2021.

Now because of Shane's previous experience with M&A, he decided to sell this last business without hiring an investment banker in today's conversation, we'll explore how he made that decision, any advice he has [00:01:00] for our fellow founders that might be in a similar position. And in hindsight, did he make the right call? I hope you enjoy my conversation with Shane Bliemaster.

So Shane, thank you for doing this. You have had an amazing run as a marketing and growth entrepreneur. Being part of three exits over your career so far, you're way younger than I am. So I'm pretty jealous. I know your insights, your advice. It's gonna be like gold for our founders.
So I'm really pumped. You're doing this so much so that as soon as you took this time slot, I had no problem bumping Mark Cuban from this one. So thank you.

Shane: What an intro. Yes. Thanks, Todd. I appreciate that. Thank you.

Todd: I think it's always fun. Just to talk first about how we got to know each other, how we first met, and I know you and I talked about what that actually was, so why don't I hear your version?

Shane: Sure. So how we ended up meeting was, uh, I was about three years into MSC and, uh, Marketing Supply Company, which was my marketing agency that I started in Detroit and it was back and, and I still do this quite a bit, but it was back when I really was trying to hustle to grow the business.
Yeah. And you know, this was obviously pre COVID. I think this was probably about six years ago, five, six years ago. And. I was just trying to connect with everyone that I could in the Detroit market. I had lived outta state for a long time. And when I first started the company, I was able to leverage my connections in San Francisco and New York to grow the business.

And that was when, you know, when I reached out, we, majority of our clients were actually on the coast. In San Francisco and New York because of my time spent there. Um, and I, I really wanted to connect with more local entrepreneurs, people doing interesting things. Your name popped up a few times. [00:03:00] I saw, I think I saw you on LinkedIn at one point.

Um, so I just cold outreached on LinkedIn and, uh, you and I connected and you've always been so awesome to me. And as soon as I reached out, I think within an hour or two later, you immediately responded and you were like, yeah, man, let's meet up. Let's talk. Let's I want to hear about your background. I wanna tell you about some stuff I'm working on. And then I think we just had a meeting for the next week. I drove up to Birmingham, you and I sat down at a coffee shop and, uh, and we had a great conversation. I, I still remember that day perfectly. It was, it was a refreshing conversation to meet another entrepreneur locally who was kind of doing some of the same things that I was.

Todd: That’s great. I love hearing that because there's so much noise on LinkedIn. Right. But I'm sure when I saw that, I know that I went and looked at your background and saw all of these things that just spoke to me as very successful [00:04:00] entrepreneur must be doing something interesting. And then one of my investors from a previous company, I think you had worked with him or at least provided services.

So I reached out to him and he spoke so highly of your capability. I'm like, all right, I gotta meet this guy. And so from there, I was doing some consulting with a client who desperately needed any kind of growth revenue, anything, get it off the ground and convinced you to like, Hey, come and try to help us.
Right. Yeah. And so that was, well, that was like the first time we really kind of got to work together. Then I find out you got the hat on, right. That you were also a hockey player. Yeah. And then I remember, all right, I gotta get this guy out on the ice. And so I bring it to this. I convince you to do a 7:00 AM skate.
In my, in my old man's league. And you're like, I, I don't know. You probably looked at my background. I'm like, okay, this is gonna be fun. And then you kind of skate circles around everyone. I think you did you just switch to like, go from righty to [00:05:00] lefty. I mean, it was still obvious that you didn't belong on the ice with us, but I appreciated you being there.

But then I was like, Shane, you gotta come back. And you're like, well, 7:00 AM on Saturday morning. I don't know if I can really do that. But what I wanna say now is you just had a baby. So first congratulations. I tend to think you should say congratulations kind of after the first year, when you've been through that battle.

But I'll say congratulations now. How does 7:00 AM on a Saturday morning sound now, given that you're probably changing diapers at 5:00 AM. right. You're up already here.
Shane: Yeah, yeah. Yeah. It sounds great. And the hardest part about that is I live in Detroit, right? Not only was it 7:00 AM.

It was a 45 minute drive to get up there. But I will say I had a fantastic time. Great guys, everyone was, you know, really gracious and like awesome out there. All right. There's nothing better than playing pick up with a bunch of guys you don't know and getting to know some people.

Todd: I can tell you just walking into that rink, it's like, people will say the, the smell, like why would [00:06:00] the smell yeah.

But it's just, it brings you back. It's amazing. And the relationships in the locker room, it's just, it's fantastic. Yep. All right. So what I really want to talk about is the decision that you made on the last exit to go and sell that business yourself. But maybe let's talk a little bit about kind of your experience leading up to that because you're in pretty rare air to be able to be part of multiple kind.
M&A events, right. Being able to see it participate even just, you know, be a fly on the wall. So maybe can you kind of quickly take me through beginning to end of your career.
Shane: So I went to college at San Francisco State from Michigan. Originally moved out to the west coast, went to San Francisco State. Right after college I took a job at a company called LoopNet, which is a commercial real estate website. And I was actually doing sales. So at that point, I didn't realize I kind of had a thing for marketing. Uh, I did [00:07:00] that for about a year and a half, which was incredible experience. I mean, I would highly recommend.

Coming out of college who doesn't know where they want to go with their career. Go take a software or a SaaS sales job. You're gonna learn about SaaS. You're gonna learn about sales. You're gonna learn how to talk to people on the phone. You're gonna learn how leaders in your organization grow departments and grow businesses.

It's fast paced. It's awesome. So did that for about a year and a half. Didn't really like it. Sales wasn't for me. So what ended up, what I ended up doing is through about a year and a half doing that, I just decided that I was gonna leave. And I took an unpaid intership. This is back when unpaid internships were, were very common and they still can't believe it was a thing, but took a unpaid internship at a company called Peanut Labs.

This was in San Francisco. So I started at this company. I had no idea what they did when I joined. I just wanted an unpaid internship at a tech startup. Right.

Todd: You should come work here. We have a few of those. [00:08:00]

Shane: I just wanted whatever I could get. So I took this unpaid internship.
This is also when the economy wasn't great. Right? So a lot of people weren't paying that much and decided to, to do that. I was bartending on the weekends trying to make ends meet in San Francisco and when I got to this company, I kind of had this epiphany, which was, I can make money kind of playing around on the internet.

Learning how to use the internet. And in my entire childhood, I had an uncle who always made sure I had the best computer I had. I was the first person in my high school to have a CD burner. I was, you know, like I always, I, and I always had a knack for the internet and that's what I tell my employees.
Now, when I hire them, is, are you good on the internet? And that's a serious question, right? Like, are you good? Are you good with your computer? And do you know how to use the internet. Well, if you know how to do that, then most likely if you understand the internet, you can be a good marketer. So when I got to this, when I got to [00:09:00] this company, I was given these assignments that were like, okay, go figure this out from a marketing perspective.

So I would go, I would, you know, do a bunch of research, figure things out, figure out how to do affiliate marketing, figure out how to do, you know, all these, all these little things for this company, Peanut Labs, what they did was they Mo. Social games like Zenga and all those Facebook games back in the day, Peanut Labs was an offerpal competitor.

What we did is we offered market research surveys in exchange for virtual currency on those social games. So it was Peanut Labs who helped Zenga actually go public. By helping them monetize their game through offers and, and market research surveys. Then they would turn around and sell that data to Nielsen and, and all those market research companies.

So I got along very well with the CEO and COO, they decided to put me in charge of the, kind of like part of like the labs part of the business. Yeah. Which was we're gonna launch these little side businesses and we can see if we let's see if we can get them to stick. Awesome. Awesome. Yeah. So this is when Groupon was, this was in, I think, ‘09 when Groupon.[00:10:00]

The fastest growing company in the history of the world, right? Yeah. I mean that, it was when they, they were just a rocket ship and they were the tech darling back in the day. Right. Yeah. And it, and it was, they were also in Chicago, which was a little bit rare. Right. Um, at the time to have a company it's, usually they were usually still coming outta San Francisco.

So, what we did was instead of it, we offered a third, we put together a third offering as a way to monetize, which was the local deal in your area. To purchase to get the virtual currency for the game you were playing. So you could buy like, you know, $10 for $20 at a restaurant, you would get that coupon.

Plus you would get the virtual currency you wanted for the game. So I was still not getting paid very much, but I, I, you know, flew around from New York, San, uh, I was in San Francisco. I was, I went to New York. I went to Houston, uh, and I went to LA and I walked around from restaurant to restaurant closing businesses to join this program.

And I was [00:11:00] basically selling on pieces of paper, getting these people on board. We signed, I think 120 businesses in a month and a half. And then we launched this product into the market and it failed spectacularly. So where, we made the mistake was we thought that. People who want the virtual currency want other things.

But what we found is that, like, they didn't want to go to a restaurant. All they wanted to do was get the virtual currency for their game. So we made the classic mistake of like building this entire thing, going out and closing a hundred, you know, a hundred local businesses and then launching and it totally fell flat.

So, um, yeah, so it was pretty. My first, like real failure, I got to see firsthand, like mistakes being made. Yeah. Um, and then we were, uh, we, we needed to kind of like pivot and change the business into something. And then what we did was we, uh, we pivoted kind of last minute and we thought that [00:12:00] people maybe wanted movie tickets in exchange for virtual currency.
Todd: So this was still Peanut Labs at the time. This was Peanut Labs. Got it. Got it.
Shane: So we launched this thing over the weekend, which is four movie tickets for $20. I did a quick search on Go Daddy at the time found the domain weekly cinema bought weekly cinema.com had my friend, my roommate actually create a logo for us.

And that weekend we launched this thing called weekly cinema, which was four movie tickets for $20. Plus you get your virtual currency and then we, and then we were off and running. Then we, it worked extremely well. We, we sold a ton of movie tickets that weekend. Then we, we got into a partnership with movie tickets.com.

Uh, and then we scaled that business, we were doing, and then we created partnerships with Groupon and living social. We ended up selling, I think 1.5 million movie tickets within eight months through that platform. That's [00:13:00] amazing. Um, so it's called weekly cinema, but then all the while Peanut Labs was in the process of being acquired by a company, uh, called research now or e-Rewards.
So once e-Rewards bought that business, bought Peanut Labs this play thing that we were doing on the side, which was the movie theater subscription service. They're like, no, no, no, no, too. A little bit too risky for us. We're gonna go ahead and shut that down. So, um, so I got a little, a lot of really good experience there because I got to see one, I got to build two new businesses from scratch launch 'em in the market.

See if they stick one stuck did really well. And at the same time, I got to see the business Peanut Labs, the business go through the process of an acquisition and what that looks like and how they treated their employees during an acquisition and how they led us through an acquisition and how their, how their communication skills.

And it's the, the guys that, uh, ran Peanut Labs were super interesting. There were two brothers from Pakistan and they were like 24 years old. And [00:14:00] I, and I was like 26 and I was the old, I was the old guy in

Todd: the group, the old unpaid intern at the beginning. That's crazy. That's crazy. That's crazy. Yeah. I mean, I would argue also you learned during that failure of like, not to make this big assumption of what your customers want and go figure out what they want first.

Right. So probably looking at the data, you're able to see, oh, maybe movie tickets, maybe there's a heartbeat here. Right? And then you go out, you test it. Oh, it looks good. We'll build it out. I think when I talk to a lot of founders, it's, you know, whatever your idea is, if you call that a, you wanna fail at A, B, C, D, and maybe F is going to work, but you gotta like go through the battle to figure out what's actually gonna stick and not make those assumptions.

Right. Do real customer discovery.

I was like 26 years old having these conversations, getting, not getting paid [00:18:00] very much money to talk to these huge guys in Chicago at the time, you know, it was, it was always interesting to be in that room and be able to like, try to keep up going, you know, punch for punch with these guys. When I had really no idea what I was doing. And I think that was hugely beneficial in my career and the way that the guys at Peanut Labs let me.

Be in that room and let me speak and share my opinion and share my strategy is how I try to manage people to this day, because it was such a huge impact, uh, on, on my life.
Todd: But then you had this experience on the movie side, the movie subscription business, right. So transaction happens then what?

Shane: Yeah, so what happened was, uh, we were, so we were acquired by rewards and, uh, and then that side of the business shut down and I was kind of working on the Peanut Lab side of the business again, but it, but it really wasn't for me.

And. um, I had been, uh, I had a couple guys reach out to me through LinkedIn, [00:19:00] um, one guy from true ventures. Um, he was a VP at true ventures at the time, reach out to me. He had heard that I was running a large portion of weekly cinema, uh, and he said, Hey, we're going to be launching a movie theater product. We've been watching you guys.

And we're gonna launch a movie theater subscription service. That's very similar out of New York. And I want you to, I want you to talk to this guy named Stacy, and Stacy's gonna be the CEO and I'm gonna be a co-founder and we're gonna start, we're gonna start this business. Would you be interested? And I was like, yeah, I mean, I had fun.

I had fun doing the movie thing, right? Yeah. It was a ton of fun. I was big events at, um, at movie theaters in San Francisco. It was super exciting for me. It was, it was really cool to be in the, kind of like in the movie industry, but as a tech guy. Yeah. Um, So what happened was hum, his name's hame, wat hame flew up from LA.

He and I met in a hotel lobby. He, he kind of pitched me on the idea. He's like, this is what we're gonna [00:20:00] be doing. We're gonna be building this thing called, uh we're. We're thinking of either calling it movie one or movie pass. And, um, would you be interested in maybe moving to New York to help? and I was like, I don't know.

I love San Francisco. I don't know if I want to go anywhere, but this sounds super interesting. Yeah. So then I got on the phone with Stacy Spikes. Yeah. Uh, who is, uh, he's an amazing guy. sThese guys were also super influential in, in my career. They both, uh, you know, basically said like, look, we want you to be our number one, come to come move to New York.

Be in the room with Stacy, I'm gonna stay in LA, but be in the room with Stacy when he builds this thing, he could really use your help. So I, two weeks later I was packing my bags, moving to New York to start what became movie pass in a small little, probably 100 square foot office in Manhattan with Stacy.
And we built, uh, what eventually became movie pass from scratch. Uh, we had nothing [00:21:00] and unbelievable. Um, yeah, it was a, it was a, it was quite the experience.
and I was, I was super lucky to be able to be guided by Stacy, who [00:23:00] is the most tenacious entrepreneur I've ever met in my life.

We would get shut down. Stacy would have a new idea, the following week on how to get around it. We, we, at one point. uh, we partnered with a company called Hollywood movie money. So at first we had a, a partnership with movie tickets.com and then we had a partnership. Uh, we got shut down because movie tickets.com just cut us off one day after our big launch in San Francisco.
And then we partnered with Hollywood movie money, which are the, the movie tickets in serial boxes. So that's how we got around it the second time. Uh, we actually used that same platform to print movie tickets, and then you had to actually print them out.

The way we like really got through is we built a debit card that could be loaded on demand. And this was Stacy's idea and it was absolutely brilliant, uh, that could be loaded on demand with a smartphone, an individual smartphone. It was actually loading dollar amounts onto the debit card from the, a [00:24:00] confirmation of ticket purchase on the app, which was the way we got into theaters because the only way we could be shut down is if they shut down MasterCard and they're not gonna, they weren't gonna shut down MasterCard. So that was the way we got through. So we were shut down. We were shut down a bunch. And then, um, I ended up leaving after about two and a half years just because I didn't, I wanted to go some different directions and, and it was kind of like my time there was, was a little bit.

Um, so I decided to leave and start doing some consulting work. Um, it was fun like doing, you know, traveling around New York on my bike, like going from meeting to meeting and doing growth consulting with startups, made a ton of really good connections there. Uh, and then about a year after I left. Um, maybe about a year and a half Stacy called me up.

Who's still a very good friend of mine. Um, and, uh, actually he's relaunching movie pass, I think next week, um, called me up and said, Hey, we're, um, we're [00:25:00] going to, we need digital marketing. We need growth. Will you help us? So then Stacy hired my agency MSC at the time to, uh, take over all they're digital.

Um, yeah, so that's kind of like how I ended up back working with them again. So I guess long story short, the acquisition happened when we were doing the, uh, the paid ads work for them. So we, we started working with them again. They were acquired, uh, I think about two months after we started working with them.

So I got to go through that process of the acquisition again, very tight with Stacy. So he was, you know, he kind of filled me in, as things went along, um, And then, uh, yeah, so that's how that whole story kind of played.

Todd: I mean, that's very relevant because you got to see what the CEO goes through through this real M&A process.

Yeah. And then, yeah, that I just read, he bought it out bankruptcy right now. He's gonna launch it again. That's great. That'll be fun to watch.

Shane: I think he bought it for like $13,000, all the assets. Wow. Pull it out of BK, [00:26:00] bought it out of bankruptcy and he's relaunching it. He's he'll figure it out at some point.
He's like I said, he's tenacious. He'll keep going and going and he will figure it out. He's awesome.

Todd: So then, you know, you got marque clients at that point, have you named it marketing supply company? The, your agency at that point?

I was, you know, I was, uh, I was 31. I'd never started my own business. I'd only do it done kind of like side consulting work. And I kind of said to myself, well, if you know, if I'm gonna do this, now's the time I'm gonna do it. So let's just go and do it. Don't have a family. Um, I, you know, I just moved back home a year prior, so, and I always wanted to build something in Detroit.

I always wanted to like, to actually start a business in Detroit and I saw a major opportunity for it because no one did. Growth marketing in this [00:28:00] market, or there weren't any like real growth agencies. It would, there were always these like outdated McCann in common, you know, like all these like outdated old auto agency advertising agencies who are going to go away very soon because they're so outdated.

So the idea was let's, you know, I'll start this business and I can work with a lot of the startups here. A lot of the fun companies that are up and coming, I can work with a lot of companies on the coast. Uh, and how I found the name of Marketing Supply Company is I was just, it just hit me one day. I was like, well, dot, you know, obviously dot coms are hard to come by.

I thought about.co. And then I was like, well, you know, I'm in Detroit. Um, it's very industrial. What can I do with that? So I, I thought marketing supply I'm then I, and then I thought I tried .com and I was like, well, actually.co would be better. Marketing supply company. Yeah. So I, I, I searched.co. It was available.

I bought it, had a logo made, found someone on, [00:29:00] uh, on Upwork. Yeah. Had a logo created and put up a, a landing page and then got some business cards and it was marketing supply company. And that was it.

Todd: That's awesome. I want to give a, a little shout out to Joe Malco, because you said he was very influential.

I mean, I've heard that numerous times, like there are a few guys that you come across, right. That have really have intent on having positive impact on other people in the world that we live in. Right. This entrepreneurial tech world. And Joe's certainly one of 'em in the story that I heard from Joe was that yeah, you were working there.

You were a superstar there and you needed to go do what you were doing and help a lot more people than just one company. So I felt like, at least from that story, there was a ton of support for you to go start this thing, which is great. Right. You were obviously meant to do it. So then yeah, a couple years go by, we ran into each other.

I bring your company in, you know, on assignment went and we become friends. Then, you know, I get a call from you that it's like, Hey, [00:30:00] there's some, a company that's interested. They're kind of a partner. We know them. That's interested in buying me. I've been thinking about this. Um, you know, what do you think?

Right. So I think we sat down at your office and we had, you know, a conversation. You know, that was when I was really getting the idea that the best outcomes are really created by specialist, investment bankers. So a banker that only specializes in one particular industry, and I didn't really have somebody that was really dedicated to what you do.

And you had, you know, somebody that was really knocking on the door. And I think that we get this question all the time and I would've asked it 10 years ago. I would've asked it of. Hey, why can't I just sell my business myself and we have our reasons, right? Why we think that we will help founders and protect them and, you know, create structures that are really beneficial.

And it's not just about getting top dollar, but we believe that's certainly part of it. [00:31:00] You ended up making the decision. I'm gonna do this on my own. Now, most of the founders that we talk to have never seen. An M&A transaction. Right. And yet you've seen, how do you grow from zero to something really impressive and have exits.

So you made this decision. Can you talk me through what made you decide first to sell your business? And then second to do it basically on your own? As far as I know.

So Joe introduced me to a friend of his who was looking to acquire a startup, uh, kind of like a growth agency. Um, and, uh, he introduced me to, to the guy and, uh, they had just purchased another company in Los Angeles the year before called phenomenon, which is a, uh, an ad agency.
So they had just purchased phenomenon a year prior and they wanted to add more, uh, data driven, growth marketing capabilities to what phenomenon could offer, because what was happening is [00:33:00] they were doing all the brand. And they were doing some of the strategy work, but it ended there and they weren't able to kind of continue ons with the actually taking that work and take, actually pushing it into the market.

And, and getting it to work for the client. So it was, uh, it was the thought that we would be able to jump in, pick it up from there, take that work into market, make it successful. And then it, it, it creates longevity in the relationship rather than kind of like just the brand stuff. It, and then it flows into the work that we do.

And obviously it, it it's more profitable that way. That was kind of the theory.
Todd: And as I remember, was it there, there on the west coast, you're here in the Midwest and maybe there was, yeah, you can deliver your services on the west coast and you have got clients here that maybe they can leverage as well.

And you're obviously providing this reoccurring revenue, right. Just keeping that relationship going. That's. So Joe makes the intro, you feel like the fit is there now, right? You guys are complimentary to each other. [00:34:00] So this is some confidence that this could actually make sense. Right. So where do you go from there?

Shane: Yeah, so I've alluded to this a couple times, but haven't, haven't directly addressed it. I I've been super, super lucky and, and I think any entrepreneur, uh, Is is only as good as the people they they're able to surround themselves with. Right. Um, meaning I I've had a, a ton of help throughout my entire career.

And I've had people be very, very generous in their time and their relationships in sharing, uh, sharing contacts with me, uh, and guiding me and coaching me. And that that's so important for any entrepreneur, and I ended up getting, uh, so I, I started working with an accountant who, uh, who was also kind of like a, he was, he's almost like a, an accountant slash business advisor, uh, financial business advisor, uh, when I first started the [00:35:00] company and I actually met him at pony ride, uh, when, which was our first office that we were working out of, it was just, it was just me and one other guy.

Um, and. His name's Matt and Matt had throughout the, the, the course of my, you know, running or building marketing supply company. Matt had always been there helping me with my taxes and my books and just giving me financial advice. And how does, you know, like how did tax law and helping me with all the things that, that as an entrepreneur.

Don't have the time to think about a lot and you need a really good financial person to, to, to set you down, to set you and your business down the right path, which is gonna save you thousands and thousands of dollars. I remember one of the first things that Matt did for me when I first started working for him, is he, uh, he turned my business into an S Corp from an LLC, so I didn't have, so I wasn't hit with the, the huge self-employment [00:36:00] tax.

Um, and, and that was that it saved me tens of thousands of dollars. Uh, my second year in business. And, and he did those things for me throughout our, the lifetime of my business to help me grow. And I learned things from him all along the way. Um, which again is so important. Like when you work with people like that, you consume their knowledge and then you can pick their brain and ask them questions.

And he was just an awesome, awesome resource for me. So what happened was when, uh, when I started to, to have conversations. Uh, with these guys, Matt was super excited and Matt had gone through before he started his own kind of startup, uh, finance company. Uh, Matt, uh, had worked in corporate M&A, and he, I, I, you know, I, I came to him one day.

I'm like, Hey, here's, here's the deal. And he knew that I was thinking about maybe selling at some point. And I was like, Hey, here's the deal. I think these guys are serious about buying my business. Do you want to come along for the ride and like, help me do this. [00:37:00] and he was like, of course, man, like I would love to have one of these under my belt.

I would love, you know, I'd love the connections that I would get out of it. I would love to help you out. We became, you know, we were really good friends at that point. So from that point forward, Matt was a, a huge champion of mine. He helped me gave me the best advice. I, you know, I, he gave me excellent financial advice.

He gave me pricing advice. He gave me negotiating advice and he was just someone that I could lean. Throughout the process to help me guide to help me guide me through it. So I think the reason I, I ended up like selling the company by myself. It wasn't actually by myself, it was with Matt and he, without Matt, I would've had to.

Go hire a, an outside company and, and it would've been the right move for me to do that hands down. I wouldn't have been able to do

Todd: it on my own. This is great to hear because the accounting function, when you're selling your business, it's so important. The second that [00:38:00] you share information, financial information about your business, and it ends up being wrong, you might as well like shoot that.
Whatever you thought you had is gone that's right. Right. So you having someone in your corner, even before you're thinking about selling the business to make you really understand. What your business is financially like real financial statements that puts you light years ahead already. So I can see if you have somebody in your corner that can manage that side of the kind of data sharing and know that it's right.
And that you're leaning on that to drive valuation in any negotiation that you have, particularly a guy that has M&A experience. I mean, that's a find. So now to me, like the light bulb is like, ah, that's how this guy pulled off such an amazing outcome. Yeah, right. But not, not that you wouldn't do it yourself, but there's so many other things, right.

You had to run a business at the same time as doing this. Right. Can you talk maybe a little bit about how time consuming it was and how did you manage to keep the business growing while you [00:39:00] were doing.

Shane: Yeah. So back to what you said, and, and then I'll address that. Matt is my hero. Yeah. Uh, like, you know what I mean?

I, for the rest of my life, um, I, I will have, uh, I'll have nothing but gratitude for him because he he's, he was, he was so amazing through the process. And every time I see him, like, I, I mean, I give him the biggest hug and like, he's just, he's just an awesome guy and it's always so good to have people like that in your corner.

And like I said before, you can't do. That without people who, uh, who have your back and, and guide you and you have to trust people to guide you and you have to listen to people and you don't know everything, you have to ask questions and, and, and learn. Um, but you have to have experts who, who can help guide you through that process.

Um, and then as far as like running, as far as running the company goes while it was happening, it was pretty interesting, right? Because I try to take what I think is somewhat of a different approach to it. Um, I had just hired. Uh, uh, Mike Carol, who, uh, [00:40:00] who became our head of growth at that time. And Mike also came from nutshell.

So Mike joined, um, before the AC, uh, about eight months before the acquisition, Mike joined MSC as our head of growth. And, um, Mike was at nutshell, uh, had the same role at nutshell, that I did Mike and I worked together because nutshell hired MSC after I left nutshell. So I worked directly with. Again, someone that like, I couldn't do it without Mike, you know, it it's, it that's, that's kind of like the, I think the, the, the real story of all this is like, you've gotta find people to lean on.
So as I'm going through this process, um, Mike had such great experience that it allowed me to focus, uh, kind of have a dual focus. Yeah. Mike was helping run the business. And then I was, you know, spending half my time in the acquisi. and the unique approach I took to it is I actually pulled in [00:41:00] my, so I pulled Mike in yeah.

To the acquisition. And I pulled my, uh, one of my directors in marina who I know. Wanted experience in acquisitions and, and she wanted to learn how to build and sell a company. It was something she had always talked about. So what I did was I actually pulled them into a lot of the conversations I had them help me create the, the, the, our, our kind of like pitch deck on what we do when we pitch to the entire phenomenon team.

They were on those calls. Marina was 27 years old at the. It was one of those things where, like I thought about when I was 27 years old at Peanut Labs and the experience that I had, and, and I wanted to, to kind of pay it forward to, to marina and give her that experience of, uh, an acquisition she actually left and just was part of another acquisition, which was super cool.
So, um, so anyway, uh, We, so I pulled them into the conversations. Uh, we, [00:42:00] they, they were on all the calls. Um, and yeah, it was, it was difficult to do both, but it took, um, I think it took about eight months for the deal to close. Yeah. So we, I think we both slow plated a little bit and it was, it was a long, the negotiations took quite a.

Todd: Couple things that jump out at me is that a lot of times founders have to decide who did they bring the process that works at their company? You know, which employees certainly like if you have a CFO, that's gonna be a very important role, but you clearly had some people that you could really lean on that could operate the business when you needed them to and could be integral.
In the M&A process and that they were gonna get something out of it. And I think I need to think more even about that when I'm coaching our founders, when they're trying to make the decision, who do I bring, you know, behind the curtain that we are selling this business and who do we keep it private?
So those are really tough decisions. And I think you have a relatively small business, but you [00:43:00] really understand and, and know these people well. So you made the right call of who to bring in, and then now eight months, right? That's on the longer side. Each side might be slow. Rolling it. And what we find is really in order to keep a tight timeline or really accelerate a process, you have to drive competition.

Was there any other potential buyers that you would bring to the table or that you would suggest, Hey, phenomenon, right? If we're gonna do something, we should do it because you know, these guys are knocking on our door too. Was there any of that? There
Shane: was, yeah. And I got randomly introduced to someone.
Who local. Yeah. Um, who said, I wanna buy your business. I heard someone else's interested in buying your business, but I wanna buy it. Yeah. Are, are you interested in, in talking? And I was, of course. Right. So, um, but the, the, the interesting thing too about my business is when, and the acquisition is, it was peak-COVID.

So the, the market was [00:44:00] so unpredictable. Yeah. At that point, and, but because we were digital, we were growing month over month and we were a rocket ship. Yeah. Um, so the longer the negotiations dragged on the more revenue we made and the more revenue you make, right. The more your business is worth. Yeah. So the longer the deal dragged.

The higher the acquisition became. Right. And, and it was, it was just part of it. It was so the deal needed to close on their side, but also we are still negotiating, right?

Todd: Yeah. I mean, I'm typically telling, uh, founders that, Hey, the worst thing you can do is let your business slip while you are. Selling the business.

And you've just shown that, Hey, if you can accelerate growth, it's your negotiation, right? This is a chip on your side that you can play to not only get a deal close that you want, but increase, purchase price. So that's great. You brought in [00:45:00] competition. Yeah. I mean, you're doing all the right things. I think that that's what I was excited for.

This conversation. Is that, I didn't know how you pulled this off. Right? And now we're getting a little bit of insight into it. So I hope people can take from this, that you were able to drive competition. You had somebody near your corner that had real financial chops in an M&A experience. You had a team that was willing to back you up and carry the ball.

When you had to focus on M&A, and the fact that you were growing your business means you could help dictate terms. I think like these are all. Awesome things to hear. So I don't wanna short change any of that, but I think I've learned a ton. Is there anything else that you would give to your fellow founder, like advice because, you know, we all build businesses cuz we're really excited to build them.
And maybe we're thinking about in the back of our head that we might sell it someday and very few people get that opportunity. Anything surprise you or any words of wisdom that you can kind of leave us
Shane: [00:46:00] with? Yeah, I would say the, the, what I loved about the, the, the guys and we, we were acquired by private equity, um, who, who owns also owns phenomenon.
We ended up changing her name, the phenomenon. Uh, I really liked the guys that were running the deal because they were tech startup guys. Okay. And they were in San Francisco. They, I think they like. Me and my business, because I had that startup experience, that San Francisco experience, I think it was a good fit for them.

It was a good fit for me. I think that's really important to want to, uh, and I have a good relationship with them still to want to be acquired by the guys that are acquiring your, but sorry, by the people that are acquiring you. Right. It's, that's super, super important, uh, to don't think about just the.
Because you're gonna regret it. You're if you're, especially if you're gonna have an earn out, you want, you're basically working for these people now. So you wanna make sure that they're people [00:47:00] that you wanna work with, people that you admire and people that you wanna continue to grow your career with.

There'll be other opportunities along all the way with them as well, especially private equity. Right. So, um, so that was, uh, that's something that's really important. I think that's a great point. I've been through, you know, that personally where I wish I knew who I was. I, I was selling my business to, before I did that.

I know in one case, if we had just known that the company that was acquiring us was. Planning on turning around and selling the company and that they had been running a process themselves and they needed us to make that next transaction happen. I mean, imagine the leverage we would've had and really like an, an M&A team knows that they know all the buyers, they know the mission, they know what the vision is over the next, you know, 18 months, three years.

And. And so you would hope that those expert teams are finding that fit for you and understanding kind of the inner workings of who you're selling to. I know you're talking about personalities too, and I've certainly, you know, had my experiences there where you wish you had done more research. That's just a great point.[00:50:00]

Shane: Yeah. When you're running your own business, especially if you're a sole founder, you're making all the decisions, right? Yes. And, uh, and then when you get acquired, There are a lot of other egos in addition to your own that you, you have to, that you have to deal with. Yeah. And, um, when you're used to making all of this, the decisions all the time, uh, and then you have to, uh, work with others, it, it can be difficult because, uh, you know, you've, you're, you're just used to making all the decisions you're used to kind of paving your own.

So that's something that also that you have to really think about is, again, are these, you know, like, am I going to be able to work with these people long term? Um, if, if yes, if they share the same mindset, Same values. All that stuff is very, very important. Then you, you know, you're gonna have a pretty good time, but if not, then you're gonna have a hard time.

And there are a lot of, and I'm sure you you've talked to many entrepreneurs. There are a lot of horror stories where, um, you know, I feel pretty [00:51:00] lucky, uh, what what's happened to us, but there are a lot of horror stories where, um, companies get acquired and they just can't get along. Yep. Um, It's it's important to make sure that they're the right people for you.

Todd: Yeah, I think that's a great final point. Look, Shane, thank you for doing this. This is just awesome. Yeah. I think in a really short period of time, right? You just amass so many experiences that are gonna be valuable for a lot of people. So I appreciate you sharing them. You know, I gotta say you don't look as tired as I think you should with a new son.

Congratulations on that. Right. That is such a unbelievable experience. And I hope mom is doing well. She must be doing the bulk of the work cuz you look too good to be of Jess had a, a newborn

Shane: um, you know, I'm, I'm, I'm in and out, I'm in and out of it and we've had some late nights, but she's, she's been doing great.

She's awesome. She's been. She's she's helped, you know, she's been doing, she has been doing a bulk of the work and, and she's, she's doing well. Baby's doing well, man. I'm, that's great. So excited. I've got, I [00:52:00] got a little hockey player that's starting to grow, so I, yeah, I just can't wait. I've been, I've already been Googling like how early can I start my child on ice skates? Yeah. And, uh, it's gonna be as soon as.

Todd: All right, man well, thank you.

Shane: Thank you, Todd. Thanks for having me.

Todd: Thanks again for listening to the cashing out podcast. For more founder, exit stories, please subscribe to the cashing out podcast on apple iTunes, Spotify, or wherever you listen to your favorite podcasts.

And please remember exit wise.com and the cashing out podcast are for entertainment purposes. Only. This should not be relied upon as the basis for investment decisions.