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The Wise Exit is an open dialogue with fellow founders and former business owners sharing real stories and offering honest advice around selling their companies to some of the top acquirers in the world.
Beyond the entertaining and educational exit stories, host and M&A Advisor, Todd Sullivan is here to help demystify the Mergers & Acquisitions (M&A) process. For example:
- How much is my business worth?
- What is Net Working Capital?
- When should I get a Quality of Earnings analysis
- Should I hire an Investment Banker, M&A Advisor, or Business Broker?
- When do I talk to my Key Employees about a possible transaction?
We hope you enjoy... and learn a few things along the way!
Austin Ogilvie - Episode 55 | CASHING OUT M&A PODCAST
00:00:00:04 - 00:00:20:02
Austin Ogilvie
M&A conversations can be a bit of a vision quest. It can be a total waste of time if you allow it to be. Startups are not get rich quick schemes as much as some people think they might look like that. And if you are chasing every shiny penny in every M&A conversation, it can be a total drag.
00:00:20:04 - 00:00:50:15
Todd Sullivan
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, my guest is Austin Ogilvie, a former machine learning product manager who decided to leave his day job to co-found and eventually sell y hat a data science and decision management platform to Alteryx, a public company competing in the same space.
00:00:50:17 - 00:01:20:16
Todd Sullivan
In our discussion, Austin emphasizes the value of seeking guidance from seasoned CEOs and professionals who have gone through the M&A process in order to structure the right agreements when it came time to sell his business. Austin is a firm believer that whether you're raising money or selling your business from the first introduction to the investor until the moment the wires hit the bank, fundraising and M&A are journeys requiring bi directional courtship, storytelling, sales and detail old organization.
00:01:20:18 - 00:01:47:17
Todd Sullivan
I hope you enjoy my conversation with Austin Ogilvie. Austin, thank you so much for being here. I've been excited for our conversation. You know, a fellow founder, a guy that has started a business, sold a business, saw problems that he and his clients were facing. The old one started the next one, you know, going after that problem. I found it amazing and really interesting how your M&A transaction happened.
00:01:47:17 - 00:01:57:19
Todd Sullivan
I know we're going to get into that, but I just want to let you know that Mark Cuban had this spot today. And when you were available, I immediately bumped him. So thank you for being here.
00:01:57:21 - 00:02:08:06
Austin Ogilvie
Now, I hope you're saying not tongue in cheek, but thank you. Thank you for reaching out. Super excited to get to know you and big fan of the pod, man. So great to be here.
00:02:08:08 - 00:02:29:20
Todd Sullivan
Thanks. Austin. So I guess what I really like is you you've gone on this entrepreneurial journey. You had your transaction. Now you're giving back to a lot of founders with and of startup advice. And for us, we're doing it similarly in really at the exit, right? We found that as our the biggest black box in our entrepreneurial journeys and you're trying to give back.
00:02:29:22 - 00:02:42:23
Todd Sullivan
So I love to hear really the beginnings, like how you started your company and then what led to this kind of M&A transaction you think you can take us back to really when you started the first company?
00:02:43:01 - 00:03:12:07
Austin Ogilvie
Yeah, sure. So the quick version is I began my career in an alternative lending company, venture backed company in New York called On Debt Capital. And we were building a number of different data driven sort of underwriting routines that were leveraging what was then very cutting edge machine learning techniques. Decisions abound in in lending like risk scores and pricing algorithms and all the rest.
00:03:12:07 - 00:03:40:10
Austin Ogilvie
So there's a lot of ML that we were taking into iPhone apps and the web app, etc., and we were inspired by a lot of the problems that we had to overcome to productize those machine learning routines. Me and another product manager at On Deck and we left in 2013 to build a data science company that was going to provide contemporary data scientists using open source tools in particular which are in Python.
00:03:40:10 - 00:04:06:19
Austin Ogilvie
We're having a sort of rejuvenation moment. Dramatic popularization in the academy led to lots of quantitative research being done in those languages and replacing SAS and MATLAB. These like very expensive commercial quant tools from sort of yesteryear. So we built this data science company for, you know, depending on when you push the start button, approximately four and a half years, we raise some VC money.
00:04:06:19 - 00:04:29:20
Austin Ogilvie
We did Y Combinator and we were probably a million and a half or so in revenue. And we were out for our series A, we had secured a series A term sheet and got approached by another player in the same space. There were probably about a half dozen data science companies founded between 2012 and 2014 that you could call direct head to head competitors.
00:04:29:20 - 00:04:48:00
Austin Ogilvie
And we all knew each other. You know, we're all at the same events. We're all obsessed with the same technologies. So while we’re bitter rivals on the front lines, at the same time, we sort of all are kind of friends with one another. And the CEO of one of these competitors approached us. I think he had gotten wind of the fact that we were out in the market.
00:04:48:00 - 00:05:05:21
Austin Ogilvie
You know, the rumor mill on Sandhill Road and beyond is is a real thing. And he was interested in our technology. And so he sent us a term sheet. I'm happy to answer whatever questions you might have, but that's sort of the lead up anyway as to how it got done.
00:05:05:23 - 00:05:30:12
Todd Sullivan
Yeah. Thank you for taking me back. I guess I understood about half of what you said. You're clearly the smarter one on this call. It feels like everything we're hearing about machine learning these days. You were at least a decade ahead. And probably why there were only a few competitors. I think it makes a lot of sense to know your competitors right in in the space and have potentially open dialog.
00:05:30:15 - 00:05:43:08
Todd Sullivan
Like you said, you're on the battlefield, right? So you're not going to share everything. But it sounds like in the middle of raising capital, you at least had enough of a relationship that you were open to these types of conversations.
00:05:43:10 - 00:06:10:02
Austin Ogilvie
Yeah, I mean, like on that point, I'll just say I'm not one to ever knock the competition. And especially at the early stage, like obviously we need to fight and destroy if we can. On the other hand, if you think about it, you're competitors. They represent your customers, too, right? And if you presumably you love your customers, you've got your career quit your job to go work on problems that serve your customers well.
00:06:10:04 - 00:06:43:19
Austin Ogilvie
You know, be kind and compassionate to the others in the space that are doing the same. That's one point. Second point is, it is very unlikely that you're the only smart and creative team on planet Earth that's worrying about a particular problem. If it's any good and there will be others, and especially when you're helping contribute towards a new category definition, which at the time in the data science world shows that we were, and certainly now with my current company, I feel as though we are, you know, there are others that are pushing the industry forward and helping shape it.
00:06:43:19 - 00:06:50:07
Austin Ogilvie
So I mean, definitely fight and win. But yeah, I think it's very wise to not be weird to your competitors.
00:06:50:09 - 00:06:57:13
Todd Sullivan
Yeah. So you're out raising capital because you're what you do in about a million and a half in revenue at this point, is that correct?
00:06:57:15 - 00:06:58:06
Austin Ogilvie
Yep.
00:06:58:08 - 00:07:08:06
Todd Sullivan
And so you've sent out, you know, investor decks, You're having conversations with the likely suspects. Were any of these you're the same seed investors that you had initially?
00:07:08:08 - 00:07:28:05
Austin Ogilvie
Yeah. So all of our seed investors were interested to take, you know, their pro-rata or more. But as is very common, the VCs love to have another come in and price it. They also, you know, new money, new blood that can take the company to the next step so that we were out there mainly talking to new investors.
00:07:28:06 - 00:07:52:04
Todd Sullivan
Yeah. And it seems to me like I've read a lot of your blog posts around this idea of like good VC behavior. It seems to me that this is kind of uncanny timing to be in the middle of fundraising and have a competitor who likely all investors that are investing your space know the competitive set, right? They know who's who and to get outreach for a bid to buy the business.
00:07:52:06 - 00:08:14:06
Todd Sullivan
Well, however that happened. Right. I think it's remarkable, but also remarkable to be open to that conversation. Right. Because we get a mindset of like capital raising to grow and merging with a competitor is also it's a similar mindset in that you're probably saying, hey, one plus one equals three. Here we have a similar mission and we want to grow together.
00:08:14:11 - 00:08:20:11
Todd Sullivan
Is that how you how you really thought about it? Because it's a shift, right, from raising capital to selling a business.
00:08:20:13 - 00:08:42:10
Austin Ogilvie
Yeah. So totally. So the first term sheet that we had was a very straightforward series, a term sheet. And when we got approached by the competitor, that's precisely how we viewed it. We basically said like, All right, how much dilution are we going to take if we take the series A path and how much capital does it give us? What is the sort of R&D that we could tackle with that amount of cash?
00:08:42:10 - 00:09:02:12
Austin Ogilvie
And what is the go to market sort of objective or milestone that we think we could really hit? And we played the same game. Looking over here at the M&A term sheet, we were at the end of the day contemplating trading risky. We had stock for risky competitor stock and you know, they were very much interested in our technology.
00:09:02:13 - 00:09:24:22
Austin Ogilvie
They had some big monster enterprise contracts that, you know, a CEO of this company had far more experience than we did at the time with getting in with bigger companies and taking our products, which were considerably further along than the other company. The buyer into the hands of a very talented sales team was an interesting idea, but neither was going to provide liquidity.
00:09:25:02 - 00:09:47:10
Austin Ogilvie
We both were considered sort of how much do we think Path A or B will allow us to win the category and advance the sort of dream and obviously that was incorporated many conversations with we didn't have a board at the time was just me and my co-founder, but we had major stakeholders that we leaned on and had lots of conversations with.
00:09:47:10 - 00:10:08:14
Austin Ogilvie
Then we met the board of the other company and, you know, got into it with them at the end. We liked to join forces, you know, there's a half dozen of these companies like, Let's team up. Felt like the right move at the time. Now, of course, we haven't even gotten to the punch line here, which is we signed that M&A term sheet, but we didn't actually close it.
00:10:08:16 - 00:10:48:00
Austin Ogilvie
There was sort of a wild card, which I can throw in. The company that we actually sold to was we had had months earlier before we went out for our A, we'd had a couple of conversations with another far bigger company. At the time we met them, they were still private. They had kind of gone ghost a little bit and they had debuted their IPO around the same time that we went out for our series A, They came back to the table with another term sheet 43 days into a 45 day closing period with the competitor that we had, you know, signed on for.
00:10:48:02 - 00:11:07:18
Austin Ogilvie
And so we had obviously this new term sheet we disclosed it was a whole thing. You know, we had already negotiated a merger agreement. We'd already done all of the post term sheet diligence with the other buyer. And the deal that we actually closed was the second company, which is called Alteryx. It's a publicly traded company in the data science space.
00:11:07:18 - 00:11:09:22
Austin Ogilvie
And I'm happy to tell you about that. Yeah.
00:11:09:23 - 00:11:32:05
Todd Sullivan
I mean, okay, so really interesting because is it Alteryx? Is that which is so Alteryx being a public company at the time, I could kind of understand how there was an interest before they went public. Then there's this period of time where they go silent, right? They've got to focus on going public and now they're coming back and saying, Hey, there's a company out there that could be really valuable to us.
00:11:32:07 - 00:11:51:05
Todd Sullivan
And spinning up that conversation must have been pretty interesting because I'm guessing that the terms would be very different. Did you get cash out of that deal as opposed to just kind of sharing in, I don't know, equally risky stock like you were with the competitor? How were the structures different there?
00:11:51:07 - 00:12:21:04
Austin Ogilvie
Considerably different structure. It was one third cash, two thirds stock deal. Obviously, like there was major interest from our stakeholders in liquidity. It was commercially quite a good deal for us and we really liked the idea at first. We got us excited about going down the let's merge with the competitor path had a lot to do with seeing, being able to imagine without squinting too hard our products in the hands of talented sellers.
00:12:21:05 - 00:12:49:23
Austin Ogilvie
Well, Alteryx, one of the best enterprise sales teams in the market right now, they're just an unbelievably good sales team and you know, they have I don't know how much, you know, Alteryx, but they're sort of they have a lot of products, but their flagship is a desktop app, sort of drag and drop machine learning and data cleansing kind of tools like Imagine Excel on Steroids or like Python simplified a little bit in a visual way.
00:12:50:00 - 00:13:28:12
Austin Ogilvie
It's a very unique product. There isn't many or aren't many quite like it, but all tricks. Part of the reason they were going public was they saw the opportunity to expand and serve data professionals, not just the many tens or hundreds of thousands that they already had been serving in the sort of business analyst kind of arena. But this new emerging class of data professionals working with programing languages, namely, again, Python and R, and that was a huge opportunity, obviously, it was the one that we saw in 2013 when we first got started, and it was one that they were very interested in investing in.
00:13:28:12 - 00:13:54:00
Austin Ogilvie
And so they're also very, very committed to hackathon culture and that's actually how we met them before we were out for our A, a bunch of their product people and engineers had asked us for access to our software that they could use for free in a hackathon and that we spent a lot of time on it. We just thought, This is it, this is great funds to help these cool engineers build something for a hackathon.
00:13:54:02 - 00:14:16:07
Austin Ogilvie
And you know, one meeting, it just so happened that the chief scientist and the chief strategy officer were on the call, which, you know, you don't have to be a rocket scientist to understand, you know, a hackathon conversation just became another kind of conversation when the C-suite joins the call. All right. That's how the conversation started. And then they went ghost, then they debuted their IPO.
00:14:16:09 - 00:14:30:00
Austin Ogilvie
Now we're holding these two term sheets, one for the series A one for a merger with a competitor. And then they sent over there. You know, it just landed in my inbox one day from the CEO of Alteryx term sheet.
00:14:30:02 - 00:14:47:20
Todd Sullivan
So I mean, I have so many questions. This is a great story. Did you have anyone aside from investors, right, the safe holders, helping you evaluate this or even taking you to negotiate with the potential buyers acquirers?
00:14:47:22 - 00:15:15:03
Austin Ogilvie
So one of the strongest recommendations I can give any founder is go get angel investors, CEOs and CTOs who have solved problems that you are very likely to solve or encounter. You know, they built a company that serves your same customer profile. They ran a similar go to market motion that you anticipate you're going to run. They've sold technical problems that you've need to deal with.
00:15:15:09 - 00:15:36:11
Austin Ogilvie
They've hired teams that you need to hire, all of that stuff. Is it the pattern recognition is massively valuable. And certainly among our angel investors, there were a handful that had gone through different types of managers, both, you know, stock for stock as well as a bigger company buying them out and PE roll ups and all kinds of stuff now.
00:15:36:11 - 00:15:57:09
Austin Ogilvie
Sure. But it's it's no different than any of the other reasons to take great angel investors investment in the beginning. Like you just haven't seen every movie in the world. And if you surround yourself with people who really like movies and have seen a lot, it turns out that it's quite useful. And this is just one of many those patterns.
00:15:57:11 - 00:16:17:10
Todd Sullivan
Yeah, that's a great answer. I actually have read quite a bit about your network and how you promote this idea of building CEO networks so you can really rely on each other. I know even as an investor, both you and I will look at investing in groups that might be able to leverage each other, and that's been an interesting journey for me.
00:16:17:12 - 00:16:39:16
Todd Sullivan
Okay. So so maybe let's jump into the bi-directional due diligence that you have talked about, right? So on that first potential joining of and a competitor, you are doing the exact due diligence that they are doing on you. But then when you go to sell to a public company, you're going to want to do something similar, right?
00:16:39:16 - 00:17:01:20
Todd Sullivan
It's probably not as in-depth. A lot of their information is public, but you are rolling or investing two thirds of this, you know, term sheet of this outcome back into that public company for public stock. Right. So maybe can you talk to me about that reverse due diligence process and maybe what you learned or things that you wish you had done differently?
00:17:01:22 - 00:17:29:00
Austin Ogilvie
Yeah, sure. So before we we leave the advisor who is advisor. Sure. Sure. Question behind. I also great counsel. I'm a huge proponent of the art of thrift in startups. Like not blowing your budget on stupid things is a great idea, but you should go get the best attorney every time. They are tremendous value and you know, paying those fancy, tall building attorney fees is no fun when you're small.
00:17:29:06 - 00:17:57:21
Austin Ogilvie
Well, at the end it really, really is consequential. And they helped a lot in this. Right. We are contemplating a series A term sheet, contemplating an M&A with the competitor term sheet, understanding, you know, how to evaluate those from like post closing kind of capitalization perspective as it is quite complicated. We have to understand what both companies look like, both before and then the pro forma after and understand like what is the actual deal commercially?
00:17:57:23 - 00:18:18:11
Austin Ogilvie
And then they were the ones to find like, okay, we're going to negotiate really hard for everything that they're going to ask of you. And the moment you sign there is a 45 day closing period in which there's no shop, so we can't talk to any other suitors. And during that time the lawyers go to work drafting and then negotiating the full merger agreement.
00:18:18:13 - 00:18:41:15
Austin Ogilvie
And during that time, definitely in every M&A context, the buyer is going to be looking carefully at the target. Well, in in the case of two startups, you know, it really is a merger. Technically on paper, one does buy the other, but really it's a merger in the truest sense of the word. It's important for both companies to due diligence one another.
00:18:41:21 - 00:19:01:15
Austin Ogilvie
You know how much cash is left in the bank. This is a conversation. I have it verbally with the CEO. You know, we do have a lot of debt. What is your revenue? Who are your customers? How long are the contracts? Like? All of those questions matter to us, the target, you know, as much as those questions matter to them, the buyer.
00:19:01:17 - 00:19:18:20
Austin Ogilvie
And it's just a little bit of a different situation when you know, it's Alteryx publicly traded. You know, you can look at stuff online and the types of risks are way more similar for both participants in the merger context than it is in the latter.
00:19:18:22 - 00:19:49:20
Todd Sullivan
You know, let me go back because you gave great advice on the attorney. You know, with us, we're dealing with M&A attorneys. Those are very specific skill set. And we're always telling people, do not use your family attorney for an M&A transaction. But I think with in your situation going out to other CEOs who have raised capital, finding the right attorney that really understands that landscape probably has a pretty good understanding of what M&A possibilities look like and can help you through that.
00:19:49:20 - 00:20:13:04
Todd Sullivan
Due diligence can help you structure, you know, those term sheets and eventual purchase agreements or merger agreements. So, yeah, I echo exactly what you said, that having the right counsel, it can really make an enormous difference. And sometimes, yes, the bills are enormous. But, you know, ask your fellow founders who they've used in the past and who they like and who's, you know, delivered Great, great.
00:20:13:04 - 00:20:13:13
Todd Sullivan
I mean, they.
00:20:13:13 - 00:20:38:01
Austin Ogilvie
All said all those guys and gals, they sit across from one another every day. And if you show up with a great Main Street lawyer, you will have your lunch eaten 100%. They'll just negotiate circles around random things like I had never even heard of net operating loss that added like a million bucks to the purchase price, like it's nobody's ever known this, right?
00:20:38:06 - 00:20:40:07
Austin Ogilvie
And there's a million examples like this.
00:20:40:09 - 00:21:06:11
Todd Sullivan
Now for our audience. NOLs are net operating losses and sellers can include them in M&A transactions and negotiate real consideration for them. But the IRS limits how acquirers can carry these forward many circumstances. This is to reduce taxable income, but a lot of it gets written down. So we're not tax professionals here, but we certainly work with net operating losses and and can get real value for them.
00:21:06:16 - 00:21:27:20
Todd Sullivan
But it's definitely something they should talk to your tax attorney or accountant about. Okay. So you're doing this kind of bi directional due diligence. You're with the public company, it's a little bit easier. You're getting a third of the cash. Two thirds is in this equity and you're using an attorney to get this deal done, at least to negotiate the purchase.
00:21:27:22 - 00:21:51:22
Austin Ogilvie
This same legal it's crazy, the same legal team. We work with the same partner now at my current company, although he left Cooley and now is as he's a Goodwin but back then the Cooley team had literally just done a full soup to nuts series A pre-term sheet term sheet red line followed by a term sheet from the competitor and the entire merger agreement.
00:21:52:00 - 00:22:02:03
Austin Ogilvie
And then here we bring them a new term sheet, followed by a 30 day closing process where they have to do it all again is I didn't sleep a lot for a while.
00:22:02:03 - 00:22:31:01
Todd Sullivan
Yeah it is it's a really difficult, time consuming and stressful process. We've put together a timeline of what it takes to get an M&A transaction done. All the different processes, but we also attach the amount of time that it takes. It's not that it's difficult, but every little step takes an inordinate amount of time and then on top of that, we've tried to map the stress level on you as as the founder running this process.
00:22:31:01 - 00:22:46:15
Todd Sullivan
And it's just remarkable what it takes to get through an M&A transaction. And that's why we're such proponents of building great M&A teams that will take a lot of that load off of you. But no matter who you have on the team, it's a it's a stressful process for sure.
00:22:46:17 - 00:23:11:01
Austin Ogilvie
Yeah. One thing that you can do and you should be doing either way and a great legal team will help you do this is keep like a solid company binder with all of the key stuff. Like every employee should be signing whatever the employment agreement is, all the material contracts, both the ones that you have your customers sign and the ones that you sign for, vendors that you use, like all of that stuff.
00:23:11:03 - 00:23:44:13
Austin Ogilvie
Be really, really disciplined and like almost pedantic with your like level of organization because that will dramatically expedite not everything in the M&A process, but like quite a lot of it is just sanity checking, everything that sort of matters from a contracts perspective. Like, you know, that both sides in the case of the competitor deal, like we were reviewing everything that they had signed and we didn't do that for all tricks.
00:23:44:15 - 00:23:53:17
Austin Ogilvie
It was unnecessary. But certainly having your ducks in a row is going to be very helpful in any exit. It's worth doing.
00:23:53:18 - 00:24:15:03
Todd Sullivan
All right. So one, I think it's amazing that you were open to an M&A conversation multiple, right. While you're raising money you're obviously the company is growing and you really believe in the future, but you've decided you sold all tricks and now you're on the other side, right? You're working for them, you have a job, you are an employee.
00:24:15:05 - 00:24:18:17
Todd Sullivan
And I think you spent at least a year there. Is that correct?
00:24:18:19 - 00:24:29:05
Austin Ogilvie
Yeah, I've stayed a year. And my co-founder, Greg, stayed for a couple of years. A lot of the team stayed for quite a while afterwards, so kind of all over the place.
00:24:29:07 - 00:24:44:06
Todd Sullivan
And when you invested two thirds of the compensation back into the company, how was that turned out? Was it an earnout or did they have to hit certain metrics or your product sell in a certain way? How did that work?
00:24:44:06 - 00:25:12:22
Austin Ogilvie
So the when I say one third cash to third stock, that's the purchase price, the merger, the total consideration there was retention on top of that for certain employees. But no, the deal either you'd have to ask lawyers or tax people. But if you do it as a reverse double triangle merger, I think it's called there's some tax free sort of write offs that the buyer can do if it's no more than one third cash.
00:25:13:00 - 00:25:33:02
Austin Ogilvie
And obviously, like we all wanted the stock. I mean, we wanted the cash in part because, you know, startups don't pay very well and that was nice. But we quite liked the Alteryx upside, right? And certainly that did really well after the fact, too. So that was nice.
00:25:33:04 - 00:25:42:18
Todd Sullivan
That's awesome. All right. So you spend a year and but you're off to starting another company. What was the impetus to to making the jump to starting your next thing?
00:25:42:20 - 00:26:17:14
Austin Ogilvie
Yeah I mean so the you're at Alteryx was was awesome. I mean we the first six months was integrating the product putting the team and technology into the fight we had built and rebuilt our core flagship product and like at least three or four times while we were, you know, before the M&A. So we because we had to build it wrong the first time and for several times each time, you sort of learn how to do it better and Alteryx had a totally different set of programing languages and tools like the fastest way to integrate it was like, let's just do a full rewrite.
00:26:17:16 - 00:26:46:06
Austin Ogilvie
And so that was, you know, whatever number of months, right? When we sort of got there. And then the next six months was training all the sellers all over their five, 600 sellers all over worldwide. And that was a thrill, you know, seeing my product go into million dollar contracts like that, we couldn't have bribed our way into some of these sales opportunities with all of the VC money before and like that was amazing and learned quite a lot.
00:26:46:08 - 00:27:02:04
Austin Ogilvie
But at the end of the day, I was really itching to get back to something early stage. And, you know, I also I was tired. I took some time off. I took like six months to travel, just sort of decompress and then, yeah, got going on a new or a new company.
00:27:02:06 - 00:27:10:20
Todd Sullivan
So I usually ask people when you had that transaction, right, as soon as it was finished, was there somebody that you called or celebrated with?
00:27:10:22 - 00:27:34:06
Austin Ogilvie
Yeah. Oh gosh, I'm glad you asked. This was hilarious. So Greg, my co-founder and my co-founder and I, we had just been through all of these several deals in a row, basically, and we're getting to the end. And we got an email from the lawyers said, Can I have permission to release your signature? Something like this? And I got a I got a text from Greg.
00:27:34:07 - 00:27:53:07
Austin Ogilvie
We weren't sitting next to each other. I think I forget where he was, but he texted me. Lawyers just asked if they can release my sig. Does that mean it's over? And I wrote back, I don't know. I think it's over, but I'm not sure. And then he wrote, Do me a favor. Don't call me at least for three days. Buy a flight to Nashville.
00:27:53:07 - 00:28:15:09
Austin Ogilvie
Meet me there on Wednesday. And I wrote back. Question mark, no response. So I was like, He wants some space and he wants me to go to Nashville. Okay, So I buy a ticket. No idea why I'm going to Nashville. I texted him, you know, here's my flight info. I'll be there tomorrow or whenever the day before the flight and I land and he's waiting.
00:28:15:11 - 00:28:39:01
Austin Ogilvie
He's waiting for me at the airport and he's like, get in, get in the car. I'm like, What am I doing in Nashville? Why are we here? He's like, Just get in the car. Like, okay, we're driving largely in silence listening to country music. And he drives us into downtown Nashville, and we are like parked right in front of Lou Casey, which is a cowboy boots company.
00:28:39:03 - 00:28:55:01
Austin Ogilvie
We walk right inside and he's like, We're buying some cowboy boots today and really nice ones. And the guy is like, okay, he's like, You want whiskey? Or Greg's like, I'll have a Budweiser. And we do some nice cowboy boots.
00:28:55:03 - 00:29:14:10
Todd Sullivan
That is awesome because the next question isn't who you call, but like, how did you celebrate? And for you to jump on a flight, right, and just trust, right? That's the trust you have to have with your co-founders, Right? That is such a great story. Austin, thanks for sharing that. All right. So you've got the itch. You're going to go start the next company.
00:29:14:10 - 00:29:20:19
Todd Sullivan
I know you had first name, now it's Thoropass. Can you tell us a little bit about the business you're running today?
00:29:20:21 - 00:29:49:12
Austin Ogilvie
Yeah. So the company is called Thoropass. You can check us out Thoropass. We are an I.T. audit and digital compliance platform, so essentially we help predominantly software companies meet the ever growing list of security and privacy standards and get audited under them. So for instance, if you're familiar with Sock to this is a family of audit reports that has become overwhelmingly popular in the United States.
00:29:49:14 - 00:30:18:11
Austin Ogilvie
Enterprises that do business with software companies usually insist on software companies undergoing a software audit every year, if not more. And there's many you know, ISO 27,000 Star is another sort of family of audits that's probably the most popular internationally. Hi Trust is very popular and relied upon if you're holding, you know, health data, a lot of the big pharma companies and hospitals, etc. will all insist that vendors undergo all kinds of different audits like this.
00:30:18:11 - 00:30:36:18
Austin Ogilvie
And we are a one stop shop for you to come and manage your day to day digital compliance. And then when the time comes to get audited, which again is routine, cyclical, every year sort of thing, we provide that turnkey on the platform. So if you need help with compliance or need some of these audits, give me a shout.
00:30:36:20 - 00:30:59:04
Todd Sullivan
Check out Thoropass. You know, again. Right. You're saying things that are like a decade ahead. You probably have a handful of competitors, but you're in a space where this is like a must have. It isn't like a luxury, right, for your clients. So amazing. Amazing. Your next company, I guess. I think this one is likely to be even bigger than the last.
00:30:59:06 - 00:31:17:01
Todd Sullivan
Austin, Is there anything else? Just because we focus so much on M&A and you had a really, I think, unique experience. And I would say we have clients where private equity firms are trying to merge two competitors, right? They've go out and buy one and now we're going to go out by competitors and they and they merge them together.
00:31:17:03 - 00:31:38:04
Todd Sullivan
So that part's not unique. But to be in the middle of a fundraise and then have a merger opportunity and then an acquisition opportunity and just be open to all of these possibilities I think is remarkable. Is there any advice that you would like to leave us with or leave our fellow founders with having to do with that M&A process?
00:31:38:06 - 00:31:58:00
Austin Ogilvie
Yeah, I mean, I'm torn because a lot of the advice that I've been given and that I agree with, I think it's good advice is like it M&A conversations can be a bit of a vision quest. It can be a total waste of time if you allow it to be. Startups are not get rich quick schemes as much as, you know, some people think they might look like that.
00:31:58:02 - 00:32:25:15
Austin Ogilvie
And if you are chasing every shiny penny in every M&A conversation, it can be a total drag. On the other hand, there is such a thing as picking your head up to understand the options. Like options are good. I don't care if you don't like a particular option. Having it is better than not having it. And so, you know, having a few conversations here and there, at least being thoughtful once in a while, you know, I don't know what the cadence every quarter may be.
00:32:25:17 - 00:32:50:17
Austin Ogilvie
Make a list of plausible companies that could be interesting targets. If you're getting big enough to buy plausible buyers, that would be interesting complements or that you would complement them. You know, if you have close partnerships and you're doing co-selling wrapper products that dovetail nicely with your own, like, yeah, it is a good idea to be a little bit out there and be okay.
00:32:50:19 - 00:33:08:01
Austin Ogilvie
And one way to do that with truly big companies, the ones that have corp dev teams get them in as investors. I mean this is not how it happened with us and Alteryx, but it easily could have had we been smart enough and aware enough, we could have been more deliberate to a certain extent. We got a little lucky.
00:33:08:07 - 00:33:28:04
Austin Ogilvie
It just fell into place by accident and it could have totally never happened. But you can make a list of companies that have corp dev teams and when you're out there raising, don't have them lead it. They're usually very slow and they don't write big enough checks. There's all kinds of hairs in the deal, but they do invest even the publicly traded ones.
00:33:28:07 - 00:33:50:20
Austin Ogilvie
And you know, it is we could go far deeper down this rabbit hole. There's a lot to say here, but yeah, it's a great way it's good advice from up on M&A offer is by just asking them to participate in a VC round and like worst case, they pass a best case they buy you and medium case, you have a great additional investor on the table as part of the round.
00:33:50:22 - 00:34:11:03
Todd Sullivan
Even the ones that pass right now, you're on the radar. And I think that that's an important first step to having those future M&A conversations. So yeah, I think that's great advice. Let me ask you, after having this exit, the first one, did it make it any easier for you to raise capital or just kind of general awareness?
00:34:11:05 - 00:34:16:04
Todd Sullivan
What advantages do you think you have now as an entrepreneur, having had an exit under your belt?
00:34:16:06 - 00:34:41:06
Austin Ogilvie
I mean, considerable doors definitely open. It was easier to fund raise 100%. Yeah, I'm extremely grateful for having had the exit, you know, obviously like the financials, but far more than that, just the whole thing. It was enlightening and humbling. And, you know, I got to meet a lot of people who have been tremendously helpful along the way, and that's great.
00:34:41:07 - 00:34:50:10
Todd Sullivan
Awesome. Really, I want to be respectful of your time. Thank you so much for for spending this hour with us. I learned a ton. Thank you so much. I really appreciate it.
00:34:50:12 - 00:34:53:13
Austin Ogilvie
Yeah, great talking. Thanks again.
00:34:53:15 - 00:35:15:18
Todd Sullivan
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 exercise dot com and the Cashing Out podcast are for entertainment purposes only. This should not be relied upon as the basis for investment decisions.