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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!
MELISSA KWAN - Episode 46 of the Cashing Out M&A Podcast (brought to you by Exitwise)
00:00:00:14 - 00:00:14:08
Melissa Kwan
You can't think about it this way, right? Because you can't build a company to sell. You have to think about building a company to generate enough value for your customers, your customers, or buy the product. If enough customers buy your product, then somebody will want to buy it.
00:00:15:02 - 00:01:08:17
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 Melissa Kwan, who is currently the co-founder and CEO of eWebinar, a top automated webinar platform. Prior to eWebinar, Melissa spent 13 years building three successful companies without venture capital backing. Her last company, Spacio, became the real estate industry's number one open house sign-in solution, helping agents automate lead capture and follow up. Melissa sold Spacio in 2019 to a strategic buyer. After years of struggling to build her company with virtually no resources, our fellow founders will easily relate to Melissa's story, especially those who have not had the benefit of venture capital funding.
00:01:09:06 - 00:01:28:13
Todd Sullivan
From eating one meal a day to reduce our personal burn to growing Spacio to over 100,000 users and selling for mid-seven figures. Melissa Kwan gives our listeners a good look into the expectations versus reality of building and exiting a successful SaaS business. I hope you enjoyed my conversation with Melissa Kwan.
00:01:34:16 - 00:02:01:17
Todd Sullivan
Melissa, thank you so much for being here. I was really excited to have you on because, you know, I've listened to you on other podcasts, I've listened to your podcasts, I've read a lot of stuff about you. And one of the things I really love is I hear like, true fellow founder coming out of you, all of the kind of trials and tribulations and sacrifices that you made building these companies over the last, what, 13 years?
00:02:02:02 - 00:02:21:18
Todd Sullivan
It was really inspirational. So having you on to tell your story of building companies, but also selling to a strategic, a strategic where you developed this relationship while you were building your company, I think is something that we can all learn from. And just so you know, Mark Cuban had this time slot, but when you agreed, I immediately bumped him.
00:02:21:18 - 00:02:23:00
Todd Sullivan
So thank you for being here.
00:02:23:23 - 00:02:26:13
Melissa Kwan
Thanks so much for having me. And bumping Mark Cuban.
00:02:26:18 - 00:02:48:15
Todd Sullivan
Yes. So, again, like you have an amazing startup story. And I think if you could go back from the beginning and start with the companies and how you built them, I think people are going to really get a sense of who you are and how you decided to build companies against maybe conventional wisdom based on where you were living at the time.
00:02:48:15 - 00:02:49:01
Todd Sullivan
Frankly.
00:02:49:17 - 00:03:12:08
Melissa Kwan
Yeah, So that's a big, big question. I've been in startups for 13 years working on my third right now, eWebinar, all three of them are bootstrapped. My first ten years, I built two companies, both in real estate technology. So real estate technology is a pretty small industry, even though it sounds big like there's there's a finite amount of companies that are in that space.
00:03:12:23 - 00:03:41:04
Melissa Kwan
My first company was more of like an agency where we built products for realty developers and that kind of like became the second company. So even though it was like two separate enterprises, it felt like one company ten years. My second company was an enterprise SaaS company, my first product company, but it was still like sales led. And you know, I was living in Vancouver in my first startup, I moved to New York to build my second startup just to be closer to the industry.
00:03:41:18 - 00:03:58:09
Melissa Kwan
You know, New York is one of the few cities in the world where you could really call it a real estate city. Like, literally everybody cares about real estate. Yeah, like my roommate, my first roommate in New York had an obsession about floor plans, and he's a banker. So he would actually go look at floorplans on, like, his free time.
00:03:58:12 - 00:04:16:02
Melissa Kwan
So now just gives you an idea of, like, what New Yorkers are like. And my second company was the one that was acquired called Spacio. It was a real estate check, an app that we sold to brokerages and franchises. And, you know, like I said, that company we built for, you know, five years and sold in in like year four and a half.
00:04:16:10 - 00:04:22:22
Melissa Kwan
But it really felt like a ten year journey. And then I started E webinar two months after that company was was acquired.
00:04:23:07 - 00:04:43:16
Todd Sullivan
You know, so I love to hear the journey with space Spacio, right. So you answered the question of why move Vancouver to New York and not kind of like straight down the coast to San Francisco, right into kind of startup Mecca because it's you're doing a real estate play and you say the industry is small. We see a lot of different companies here that are looking to sell.
00:04:43:16 - 00:05:01:06
Todd Sullivan
And we actually have a real estate technology company and process right now. Just awesome. And it's really fun to learn about that industry. So you move to New York to start this, but I would love you to kind of give the color of the sacrifices that you're making in order, you know, to to build this company.
00:05:02:22 - 00:05:20:00
Melissa Kwan
So first of all, I didn't move to New York to start it. I started it already. But I couldn't be close enough to my customers. A lot of these people were in New York, and anyone who's lived in New York knows that people don't work with companies that are not in New York, at least to start. If you don't have an office, if you don't see people for happy hour, you're not relevant.
00:05:20:13 - 00:05:42:22
Melissa Kwan
So I just went from going there every six weeks to just eventually being there. Most of my time. And, you know, luckily home like Vancouver at that point was was fairly close. So it was easy for me to do. But I don't think the sacrifices are unique to that company specifically. I think when you start a company, you're sacrificing so many things.
00:05:43:12 - 00:06:05:22
Melissa Kwan
I mean, there's just so many, but just a few of them that kind of come to mind is like I moved to New York when I was 32 and, you know, I was at the beginning of building that company. When you're 32, ten years out of university, a lot of your friends are fairly successful, right? Like, they're you know, they're done with their residency programs and now they're a surgeon, right?
00:06:06:00 - 00:06:16:22
Melissa Kwan
They're done with, you know, whatever program their law firm. And now they're a lawyer and, you know, they're meeting their partners, getting married, having kids and buying the first apartment and you're not doing any of those things.
00:06:17:00 - 00:06:17:10
Todd Sullivan
Yeah.
00:06:17:18 - 00:06:48:11
Melissa Kwan
And it's not that you're like, oh, I'm not going to do any of those things. So I'm building my startup. It's because you don't have any money, you don't have any income. So I was I think the toughest thing is watching your peers move on with their life and the life you're supposed to have, right? Because all your life, society and your parents tell you this is the path you're going to go on, but you're not doing any of those things because you cannot you can't hold a relationship because you don't have any money to do any of those things.
00:06:48:11 - 00:06:58:00
Melissa Kwan
The travel to go out right. I would meet my friends after dinner, make up an excuse that, you know, I couldn't show up for dinner just so I can meet them afterwards so I didn't have to pay for dinner and drinks.
00:06:58:07 - 00:06:58:12
Todd Sullivan
Yeah.
00:06:58:18 - 00:07:17:14
Melissa Kwan
And these are just some of those lifestyle sacrifices, right? Like, I moved to New York and started a co-living space and lived with four other people in my early thirties, or, you know, even invited thirties. Nobody did that, right? People, like, no longer have roommates. But I think, you know, those are kind of the lifestyle sacrifices that jump out.
00:07:18:06 - 00:07:42:03
Melissa Kwan
But I also had a lot of fun. It's because I took a different path that I got to have all these experiences of living in a Co-Living house, being in New York, right? Even though I didn't have any money and being exposed to really creative people and creative cultures. And because I was in New York, I met my life partner and then we left New York to travel for three years full time just to experience the world.
00:07:42:03 - 00:08:03:02
Melissa Kwan
And eventually we found a home in Amsterdam. So also understanding that I would not have all these new experiences if I did walk that traditional path. So I'm very grateful for having those experiences and having those pains. But at the time it felt so much more unbearable. Right. I think hindsight 20/20, like of course your life is your life.
00:08:03:02 - 00:08:19:18
Melissa Kwan
But that was really hard. And then, of course, like, you know, in the beginning, not being able to get customers and, you know, for two years I had less than a hundred bucks in my account. I would only siphon money into my account after everybody else was paid and then pay myself just enough to make rent and just basic expenses.
00:08:20:03 - 00:08:46:22
Melissa Kwan
And then every time I ran out of money, I would pay myself a little bit and then take side projects to make payroll and then also pay for my own rent. So I did that for probably seven out of the ten years that I was in my first few startups. So I don't think these are unique sacrifices. I do think that it's probably unique to your first one or two startups where you're not getting a lot of traction and you don't have disposable income.
00:08:47:11 - 00:09:09:02
Todd Sullivan
Oh, thank you for sharing that. It just brings back all the memories of building my first company with my brother, living in the closet of an attic of a fraternity house where we weren't allowed to live, having to jump over a fence to get in and over a fence to get out and be, like hiding just because you didn't have any money, you know, for rent.
00:09:09:09 - 00:09:29:05
Todd Sullivan
And I remember, you know, your friends are, like you said, they're advancing in their careers and you get invited to trips and you make excuses of, you know, why you can't go. And I just I remember a Vegas trip where I did show up, but I ordered, like the child, P.B. and J for a meal because I said I wasn't hungry.
00:09:29:05 - 00:09:46:09
Todd Sullivan
Right. So I get all of that at one funny story where I was working in in New York, and a friend of mine said, Oh, yeah, I'm going to be in New York. He's like, You know, I'm going to be staying at the W, Where are you staying? And I'm like, Well, I'm also staying at a place that begins with one letter.
00:09:46:10 - 00:10:15:04
Todd Sullivan
It's called “The Y”, So I'm living in a co-space, whatever you call it, Right. Share up one bathroom on a hallway in midtown at the Vanderbilt YMCA and living there for essentially seven months to try to get a start that's in New York to work. So you're right, This is not unique to all of us. But when I heard, you know, your stories, I just thought it was so authentic, that willingness to keep battling until you made it really work.
00:10:15:17 - 00:10:34:17
Todd Sullivan
So Spacio turns a corner for you, right? What? It was like 100,000 customers you ended up having and, you know, no small feat. And then you're you're able to sell the business. Can you tell me a little bit about, you know, when you knew that business was working and at what point you decided it's probably time to think about selling?
00:10:35:13 - 00:11:07:06
Melissa Kwan
Yeah. So we had a hundred or a little bit over 100 companies when we sold that over, I think it was like over 120,000 users within those companies because it was enterprise SaaS. And so it probably took us like two and a half years to find our first paying customer. And because my first company was an agency, I didn't have like it was in the space, it was in a real estate space, but I didn't have a concept of how hard it would be to build a product, like an actual product that would, you know, that someone would take all their credit card for.
00:11:07:19 - 00:11:28:03
Melissa Kwan
And, you know, because previously an agency is when you don't, you, you sell a deal, they pay you, you deliver. And I thought coming into this one that you know I kind of knew what I was doing. But you know, of course, I think every entrepreneur needs to be like, overly optimistic to, like, do anything else. Like if somebody was like, Oh, yeah, this is really hard, I would have second guessed it.
00:11:28:17 - 00:11:56:06
Melissa Kwan
But what ended up happening and the reason why I was in such a dark place was because I took out all the revenue for my first company, took a loan against that with a bank of almost an equal amount. That's how I got the capital to start the second company and not have to take major projects. Because if you take projects, you're developers and you are trying to sell more projects and so you can't actually build a product.
00:11:56:06 - 00:12:13:17
Melissa Kwan
So I knew I had to take at least a one year break to get our developer to build a product. What I underestimated was how long it took to build the product that somebody would pay for. We knew that it would be an open house product, but exactly what is the feature set that people are going to actually pay you for?
00:12:13:23 - 00:12:44:10
Melissa Kwan
That is the hardest part, right? So yeah, it took us two and a half years before the first person paid us $10 and the way we got that first person was I was so desperate that I told myself within a 90 day period that I would do anything like literally leave no stone unturned. And part of that was to talk to anybody who might give me money to stretch my 90 day runway.
00:12:45:10 - 00:13:03:10
Melissa Kwan
And I was in a co-working space and there was a VC based out of that co-working space, and I was just pitching this VC like having no idea how to pitch a VC. And he was like, You know, I think there's something here. I just think there's too many moving parts. Maybe you should strip away 90% of your product.
00:13:03:19 - 00:13:22:21
Melissa Kwan
Just sell this one sliver, like everybody goes into an open house and they sign and take away everything except for the sign in sheet and just, you know, just get your ten customers. Don't worry about 100 customers. Don't worry about a thousand. Use a feature like build on a feature that everybody uses and focus on ten customers.
00:13:23:06 - 00:13:38:01
Melissa Kwan
And I walked out of that thinking he does not know what he's talking about. This is going to be way too simple. No one's going to pay for a sign in sheet but didn't have any other tricks. So I walked out of there, called my co-founder and said, This is the feedback that I got. What do you think?
00:13:38:15 - 00:13:59:20
Melissa Kwan
Should we try it? And that's when we say, Yeah, okay, well, what do we have to lose at this point? So we stripped away 90% of features that we had. We made it only an iPad sign in sheet that wasn't even an app. It was just like browser optimized. And then I went on Craigslist and I just went to open houses that were happening that weekend, and I got them to try this product for free.
00:14:00:06 - 00:14:05:22
Melissa Kwan
And then I would secret shop those open houses to see how people would ask me to sign in and if they would actually use it.
00:14:06:05 - 00:14:06:12
Todd Sullivan
Sure.
00:14:07:01 - 00:14:16:21
Melissa Kwan
So that was how we got the first person to pay us ten bucks on Stripe. And I thought like I was sitting in a meeting at that time and I thought that was my co-founder testing Stripe.
00:14:17:03 - 00:14:17:13
Todd Sullivan
Sure.
00:14:17:13 - 00:14:40:05
Melissa Kwan
And he was like, No, that was someone actually paying us. And then within, because I come from an enterprise sales world, within the next 90 days, we turned it into an enterprise product because people like Brokerages just started asking us if we had an enterprise version of it because real estate agents were using it and then telling their managers and then they wanted to offer it for the rest of us, you know, for the rest of their agents.
00:14:40:11 - 00:15:03:03
Melissa Kwan
So while it took two and a half years to find the first $10, it took an extra one year for us to hit profitability and then an extra year for us to get acquired. So but I did get into a lot of debt because I had used up all that money and used the money that I took out a loan from under my own name.
00:15:03:10 - 00:15:10:00
Melissa Kwan
And I was not making money over those over those two and a half years. So that was kind of the story.
00:15:10:06 - 00:15:27:05
Todd Sullivan
That's a real, real struggle, but a such a great feeling, right? When you see the first customer pay and you immediately want to call that person and say, why? Why did you pay what was what was so compelling and tell me. So yeah, what a great feeling. Can you tell me about you got inbound interest for this business, right?
00:15:27:10 - 00:15:44:11
Todd Sullivan
But that wasn't as if this person was just calling out of the blue. You created a relationship. And I think, you know, a lot of founders ask us, you know, how can I think about starting to seed the market to see if there's interest out there? Can you talk to me a little bit about the relationship you created to eventually drive that interest?
00:15:45:02 - 00:16:00:14
Melissa Kwan
Remember, I forgot to ask your previous question of like, how did I know I wanted to sell? I think a lot of people, so I want to address that one first. I think a lot of people think, Oh, my startup is in a certain revenue or certain growth rate and I'm going to sell. I'm running out of money, so I'm going to sell.
00:16:01:07 - 00:16:29:06
Melissa Kwan
For me, it was super simple. I had been in the same industry for almost a decade. I truthfully hated being in that industry. I did not want to be there. I woke up every single day and I pretended to be someone else, to not let my co-founder know, to not let my team know. And I hated what I was doing and I could not feel the successes that I was getting because I hated supporting my product.
00:16:29:18 - 00:16:51:12
Melissa Kwan
And that's not a great place to be for a founder. It's a very lonely place because you cannot tell your co-founder. And you know, I had a peer group and like I do now of, you know, founders in my industry or in my space that, you know, every few months we we would connect and kind of riff about certain things and Aaron, who was a CEO of HomeSpotter at the time, was in that peer group.
00:16:52:05 - 00:17:15:14
Melissa Kwan
And I'd already known him through like conferences and things like that. So as I mentioned in the beginning, it's a very, very small industry. So there's a small group of founders where we just kind of connect like on WhatsApp or on text or whatnot. So that was kind of what I knew. Like I was just not having fun and I really saw the opportunity costs because so many cool things were happening at that time that I was not a part of.
00:17:16:05 - 00:17:36:19
Melissa Kwan
And I saw that if I had a SaaS company in real estate, my multiple was X, But if I spent my energy in an open industry, my multiple could be 2 to 3 times of of real estate and I would be able to spend much less energy and effort because people outside of real estate are more prone to buying technology.
00:17:37:02 - 00:18:02:02
Melissa Kwan
And I would be able to go into many more industries and many more different languages and geographies. So I saw the opportunity cost of what I could not do because this is where I was, you know, and that's kind of what I knew I needed it. But the relationship that I had with that acquirer was really just an industry friend that I would frankly complain to and just riff to on a regular basis.
00:18:02:11 - 00:18:21:18
Melissa Kwan
And I remember the one call I was I was just like, Aaron, I'm so tired of this. I wonder if my co-founder would let me sell my share while I go and do something else. Do you think that's possible? And he was like, Oh, you know, if you're serious about this, we are looking to make our first acquisition.
00:18:21:22 - 00:18:28:03
Melissa Kwan
If you're really serious, then we should have a conversation. But you're going to have to stay with us for, you know, 2 to 3 years.
00:18:28:06 - 00:18:49:01
Todd Sullivan
Yeah, that's great. I mean, you've touched on a lot of things. I think founders that go into these businesses, if they're just purely looking at how do I create, you know, an economic win and are not truly passionate about the industry, it gets to be really a slog, right? Because you're going to be in it longer than you think and you're going to get less out of it financially than than you think, at least for the majority of people.
00:18:49:14 - 00:19:06:17
Todd Sullivan
And so, you know, we feel really fortunate of what we get to do today is helping founders. And, you know, we frankly, I think we’d do this for free. We enjoy it so much. But I remember going back, I'm like, oh, do I really want to sell another t shirt? Do I want really want to go to another trade show with the same people in the same industry?
00:19:06:17 - 00:19:26:00
Todd Sullivan
Right. It just becomes work, work, work. So thank you for sharing that, because that can drive the exit for a lot of people. I think, you know, when you touched on when people get to a certain revenue level, is that the trigger? We find that the most successful exits are really with entrepreneurs that are really passionate about their industry.
00:19:26:00 - 00:19:48:01
Todd Sullivan
They have a lot of gas left in the tank and they're really playing in that fourth inning of a nine inning game because what they're really selling when they go to market is the future cash flows of the business. And when a business can see somebody like you super passionate about their industry and going to take them to the promised land, then you create outsized outcomes, particularly with strategics.
00:19:48:07 - 00:20:05:08
Todd Sullivan
So I'm not surprised that, you know, when you create a relationship in your industry and you got somebody to vent to, they get to really know you, they get to understand your product. And it was probably pretty easy for that person to say, Yeah, you know what, there's a real fit here, but I'm not doing this without Melissa, right?
00:20:05:08 - 00:20:26:11
Todd Sullivan
Your key to it for at least a little while. One of the topics I think comes up a lot for us is co-founders, right? Do they both have to make the exact same decision when they go to sell a company? Can one stay six months, one stay, two years? Right. We try to tell people we want to know exactly what you each individually want and we try to create that situation.
00:20:26:16 - 00:20:29:23
Todd Sullivan
How is it for you? Because you you had a co-founder at Spacio, right?
00:20:31:02 - 00:20:42:12
Melissa Kwan
Yeah. I mean, I think he was equally exhausted, but in a different way. Right, Because he wasn't customer facing. But don't forget, like we had so many years of not being successful.
00:20:42:20 - 00:20:43:03
Todd Sullivan
Yeah.
00:20:43:06 - 00:20:59:14
Melissa Kwan
And I'm not an engineer. I can only imagine from what I see, that engineers are like artists, right? You build something, nobody uses it. It's a bit defeating, you know, like you have to keep pivoting and keep trying new things and nobody uses it. Nobody's saying, Hey, this is a really great thing and and I'm getting a lot of value out of it.
00:20:59:14 - 00:21:10:06
Melissa Kwan
Like, it's not fun. So we had our last few years was fairly successful. But the first, you know, six, six, seven years was just a massive slog.
00:21:10:11 - 00:21:10:22
Todd Sullivan
Yeah.
00:21:11:04 - 00:21:32:18
Melissa Kwan
And so there was a lot of exhaustion just mentally from that. And even though he always got paid, like he was always paid like under market. So, you know, he had the same issues as me with, you know, watching your peers do well and you're not and and feeling like you're not, you know, you're not succeeding. And it is going to be a light at the end of the tunnel.
00:21:32:18 - 00:21:53:01
Melissa Kwan
So we never openly spoke about it because I think deep inside we wanted to cheer each other on and we were just like too deep into it at that point. But we had such an understanding also that like I was the business leader of this enterprise. So it wasn't like we had a discussion like, Hey, should we sell or not?
00:21:53:01 - 00:22:17:13
Melissa Kwan
Because we didn't shop the company, right? And the reason why we didn't shop the company was because I was at a point in my life that I didn't want to be more exhausted than where I was. I didn't want to have even less fun. I think when people think about selling their company, they don't think about the extra 2 to 3 years that you have to work for someone else, right?
00:22:17:19 - 00:22:47:01
Melissa Kwan
There was such a small group of people that could afford us that I would actually work for, but I don't want to shop the company. What mattered to me at the time was not getting the highest outcome, The biggest price point. The biggest driver for me was I could keep my lifestyle, which is a fully remote team and my team was mostly in Vancouver at the time and I was nomading, like for three years.
00:22:47:01 - 00:23:04:03
Melissa Kwan
I know about it. I left New York to Nomad and I cannot have a CEO that would have made me give that up. Sure, I was not going to disrupt my lifestyle and you'd be surprised at how many CEOs would not want you to do that. Right? Like, you have to be in the office, You have to do certain things.
00:23:04:03 - 00:23:24:11
Melissa Kwan
Right. And so because I knew Aaron, my acquirer so well, and he knew all the trials and tribulations because I was complaining to him for the past year. So I knew that if I sold this company to him, not only is he a good guy, he knew that I wasn't putting on a dog and pony show to sell this company, whereas with everybody else I would have to.
00:23:24:18 - 00:23:40:22
Melissa Kwan
Absolutely right. He knew all the challenges I was having internally and the challenges I was having with my cofounder, you know, and he was still going to embrace that. And he knew how important my lifestyle was and he was going to embrace that. And he was one of the very few people. So that's why I didn't shop the company.
00:23:41:03 - 00:24:02:09
Melissa Kwan
And I guess with my co-founder dynamic, like I think there was enough trust that if I said, Hey, we're selling the company and this is the offer, we're entertaining. And I believe because I know this person so well, that the offer he's going to give us is fair, but I'm not going to go and shop It. Yeah, he was kind of like that was there was just an understanding.
00:24:03:10 - 00:24:22:06
Todd Sullivan
Thanks, Michelle. Yeah. If you have a sense that that it's that it's fair and you're getting the fit component right to live the life that you want to continue to live, there's just so much value in that. And the co-founder, it sounds like he really trusted you that this is this is the right place to be. You know, I think that it makes a lot of sense.
00:24:22:06 - 00:24:38:18
Todd Sullivan
It makes a lot of sense. Even if you had an investment banker who said, hey, Melissa, we're going to, you know, shop, you know, to 100 different buyers, you wouldn't be content. And as long as the offer was fair and you trusted the person, you could even structure a deal where there is some earnout component, right, which most deals are going to have.
00:24:38:18 - 00:25:02:03
Todd Sullivan
And if you don't know the buyer well, you never know what's really their intention behind setting up those structures because they're not going to be really set up in your favor unless you have a great investment banker and a great M&A attorney on your side fighting for you. In your deal, did you have enough trust to leave some of the compensation to kind of later down the road while your companies performed?
00:25:03:08 - 00:25:24:17
Melissa Kwan
I mean, I think every deal I know of has internal component. Otherwise, how is the founder going to be there? Right. Even even if there is like a six months earnout, it's still an earnout. The most important thing to the acquirer is that your business is not disrupted. Right. What they're buying is, is your success and the revenue they're buying your customers and your customers trust you, especially for a small company like us.
00:25:25:01 - 00:25:49:20
Melissa Kwan
So it wasn't like we have to tie you to this. It's more we need you to be here to make sure that your customers know that they're going to be taken care of. And I knew that as well. And it turns out that I ended up negotiating. I had a two year earnout, but I ended up negotiating like, oh, you know, a six month early exit and then stayed on as kind of a half time consultant if anything needed.
00:25:49:20 - 00:26:15:14
Melissa Kwan
My intervention. But the other company that bought me was, you know, had had a much more structured sales process and they already had because I was in charge of sales and BD and we had a lot of share customers already at that point that it was very clear probably in the first year that I didn't really need to be there, that it was more important for my technical co-founder to be there to transfer his knowledge to a new team.
00:26:16:01 - 00:26:40:03
Melissa Kwan
So there was actually challenges in finding a place for me that we never fully figured out. And I don't think that's, you know, unique to us. But also I started in eWebinar two months after that company was sold because I just needed a new challenge and my CEO had to sign off on that. So, you know, a year and a half into selling that company eWebinar was just about to go to market.
00:26:40:04 - 00:26:56:16
Melissa Kwan
So it just the timing kind of kind of matched where there wasn't really anything else for me to to pass on and do and it was time for me to work on something else. Yeah. So that was kind of the like our story. And then my co-founder stayed on for a little bit longer than, than two years.
00:26:57:01 - 00:27:22:17
Todd Sullivan
You know, what's also interesting was, is that you were able to make this decision really with just you and your co-founder. You didn't have venture capital firms, you didn't have external investors that were potentially going to push you to to go to market. Right. And try to maximize the dollar every last dollar. I think you built this company very consciously, going to New York in an environment where it was all VC and incubator and that was the thing to do.
00:27:23:01 - 00:27:30:18
Todd Sullivan
Can you talk a little bit about that decision and how it really paid off, giving you flexibility and frankly, you know, a better financial outcome?
00:27:31:09 - 00:27:59:14
Melissa Kwan
Yeah, I don't know if it was better or not better, right, Because I don't have a different scenario. I can say that I didn't move to New York to be closer to startups. Like I didn't know that that environment existed. I didn't have a concept of what New York was going to be. I wanted to move to New York for two reasons one, to be closer to my customers, but second, to be close to people around my life stage because I was in Vancouver where it felt like a much smaller town.
00:28:00:06 - 00:28:18:14
Melissa Kwan
You know, people chose very different paths. Like a lot of people weren't in start ups, so I couldn't really connect with friends that I even grew up with. And even though I knew them for longer, I felt more and more disconnected with them because they didn't have an idea of what I was doing. And then they were, you know, getting married, buying their first home, going into a different path.
00:28:19:09 - 00:28:38:13
Melissa Kwan
And even though I had no friends in New York, I felt more connected to the people that were doing things I was doing or somewhere younger, somewhere older. So I felt more at home with where I was at. But as soon as I went to New York and getting more connected with a startup community, I was introduced to the idea that when you have a startup, you raise money.
00:28:39:02 - 00:28:57:18
Melissa Kwan
That's just what you do. I didn't realize I could raise money because I had taken out that loan. I had taken out all the revenue and that's how I was going to build the business. And, you know, I didn't realize that you could use other people's money. And that kind of sounded like, you know, a utopian way of building your company at that time because I was so strapped.
00:28:58:17 - 00:29:21:16
Melissa Kwan
But I started trying to raise money because I was so desperate and because nobody would give me money. And I was still building my business at the time. And as I was trying to raise money, we became profitable and then I ended up calling my own shots. So then I kind of saw the two different, I guess, perspectives of building a business.
00:29:22:05 - 00:29:50:19
Melissa Kwan
And then I learn that you can actually build a business without raising capital. And then I saw all my friends that had raised capital and what a different path they were on. All they cared about was raising more money, getting more intros to other VCs, raising the new round and keeping up their growth numbers. Where I was at that point, leaving New York to nomad for three years because I could, and working as much or as little as I wanted to, having a super small team not worrying about h.r.
00:29:50:19 - 00:30:25:04
Melissa Kwan
And people leaving and all those things because we had such a small team that it felt like family. And, you know, at that point, i was already working like maybe four days a week like i do now, you know, and, you know, being not hugely profitable but not, you know, not unprofitable. So I kind of saw both sides and realize that you can build a company bootstrapping and maybe not necessarily having a better financial outcome, like I don't know what that is, but I do know that when we sold our company, you know, at the mid seven figures, my co-founder and I owned 95% of the company.
00:30:25:04 - 00:31:01:06
Melissa Kwan
We had some family and friends investment and there was no way if we took venture capital that they would have accepted that price, right? We would have had a board, at least one person that had to sign off. And I can't tell you how disheartening it would have been if I wanted to sell so badly because I wasn't having fun and I was seeing the opportunity cost and someone who gave me money, who wasn't even an operator, my business stopped the sale, you know, and maybe I would have had to keep going or shut down the company, or maybe they would have hired someone else as a CEO, and maybe I would have had to
00:31:01:06 - 00:31:23:13
Melissa Kwan
give up a chunk of my equity. But the outcome would not have had been the same for us. Sure. So that's how I see the difference is a lot of people think bootstrapping is a financial choice. But for me and I think a lot of other sort of founders, it's actually a lifestyle choice and that's why I made that lifestyle choice this time around as well.
00:31:23:20 - 00:31:44:10
Todd Sullivan
Yeah, I mean that leads really nicely into it. That was great, right? I think you distilled the really well having the single experience that you've had, but now, you know, you've clearly learned and you're making the decision to do it again with eWebinar. Can you tell us what you're doing today and how the last exit and the way you built that company is really impacting how you're growing this one?
00:31:45:18 - 00:32:12:10
Melissa Kwan
Yeah. So eWebinar helps automate webinars, so we turn any video into an interactive webinar that you can put on a recurring schedule. So imagine like your sales demos, training, webinars, onboarding webinars that you're doing over and over again, or you wish you could be doing. We help companies do hundreds of those every single month without being in front of a camera to do it live, without losing that personal touch that your customers care so much about.
00:32:12:17 - 00:32:16:17
Melissa Kwan
Because we deliver such a beautiful experience with an asynchronous chat system as well.
00:32:16:17 - 00:32:45:05
Todd Sullivan
I really I really love the product. And when you start with the premise that is a live webinar really better than a pre recorded webinar, like when you share like in every instance, the pre recorded one is better and this ability to create, you know, trust with your audience and really engage them when they want to be engaged, how they want to be engaged and create that kind of ongoing kind of feel like a live experience.
00:32:45:13 - 00:33:05:18
Todd Sullivan
I thought it was a great product, right? And I've just use it that kind of one time, as you know. I guess what the question really is, you made the decision to go in and bootstrap this business again, right? Knowing how hard it was the first time. But with the understanding that you had flexibility at the goal line to make your decisions when it was time to get out.
00:33:06:06 - 00:33:12:14
Todd Sullivan
I don't want to put the words in your mouth, but how are you thinking about this one differently given the experiences that you've had?
00:33:13:21 - 00:33:43:09
Melissa Kwan
Yeah, so I want to address that. It was so much harder the first time or first couple of times because I didn't have any money and I didn't have a concept of what it took to build a revenue generating product that is no longer the case because I had an exit. I have money and I have I didn't sell it for like retirement level money, which is why I had to start eWebinar two months after because I don't want to be working, you know, for the next ten years.
00:33:43:09 - 00:34:04:17
Melissa Kwan
I thought there was some urgency there, but I had enough money to float myself and invest in the business and I had the expertise to, you know, raise a family and friends capital to get it started. But mainly like I don't have to work for the next few years. And that's the reality, right? And a lot of people are like, Oh, you can bootstrap this one because you you sold the last one.
00:34:04:17 - 00:34:26:12
Melissa Kwan
Well, that wasn't always the case, right? You earn your way there. And because I have a concept of what it takes to build a product and that's the problem that we're solving at eWebinar is a problem that I personally experienced for five years in my last startup. I was the person doing all the live demos, right? The live training, the live onboarding.
00:34:26:12 - 00:34:49:17
Melissa Kwan
As I was traveling around the world, like I remember one day I did eight of the same back to back onboarding for different companies and I was like, This cannot be my life. I cannot earn this freedom. And then have my freedom restricted by my customers demo schedules. So why can't be there be a product that does exactly what I do but a better job because more people can attend, right?
00:34:49:21 - 00:35:06:18
Melissa Kwan
It could be a better experience because there won't be like, you know, I won't be exhaustive, there won't be blunders and won't be connection issues. So I really thought about this product for five years and then decided this was a problem that I was going to solve. So I had money to invest in a team. I had money to float myself.
00:35:07:04 - 00:35:28:10
Melissa Kwan
I had a concept of exactly what I was going to build to generate revenue from day one, and that was a very different experience from my previous one. So the other thing that I was thinking about coming into this one was not how do I build a company to sell, right? I think you can't think about this way, right?
00:35:28:10 - 00:35:46:05
Melissa Kwan
Because you can't build a company to sell. You have to think about building a company to generate enough value for your customers. Your customers will buy the product if enough customers buy your product, then somebody will want to buy it. Right? When you build a company to sell, how are you going to guess what the acquirer is going to actually want?
00:35:46:20 - 00:36:08:04
Melissa Kwan
Right? So when I think about this company, it's not to sell. It's how can I build the company that gives me the lifestyle that I want, right? How do I build a company that pays me and everybody involved a good salary? Yeah. So even if I don't sell it, it's just going to be a cash machine. And that's how I think about this business today.
00:36:09:00 - 00:36:32:16
Todd Sullivan
That's great. And I love frankly, your product works across industries, right? You talked about real estate tech being relatively small, so you're your total addressable market, although it seems like it'd be really, really big. Maybe with this product, it doesn't really have industry borders, right? We can use in M&A, it can be technology to agriculture, right? Lots of different companies will be able to use this.
00:36:32:16 - 00:36:51:23
Todd Sullivan
So yeah, this seems like a fantastic offering and something that is really is needed. You know, I really appreciate I want to be respectful of your time. I think, you know, I've learned a ton and just feel like a kinship to you having gone through some of these very, very similar things to build our businesses. And, you know, I think you said it really well.
00:36:51:23 - 00:37:12:23
Todd Sullivan
We really enjoyed it along the way, even though maybe we're behind our peers in the way that we kind of measure success in our culture. But boy, what a journey when you're able to find the level of success that that you have and then be so, you know, excited to do it again and come out with with something that I know the world is really going to love.
00:37:13:10 - 00:37:23:12
Todd Sullivan
Do you have any kind of last words of wisdom for founders that may find themselves in your shoes, considering to sell the business at some point? When you think about M&A specifically?
00:37:24:09 - 00:37:54:20
Melissa Kwan
Yeah, I mean, I think and I touched on this earlier, it's like I don't think a lot of founders think about their life after selling. And that is the number one question, right? Like, I think the number two question is how much do I want to sell it for? And of course that's important. But like I think this is important even with like picking the career that you want, picking the product that you want, thinking about selling your company is what is the life that you want to lead because it's going to be the next two years or three years.
00:37:54:20 - 00:38:06:10
Melissa Kwan
Who do you want to work for? Who don't you want to work for? Right. If someone is going to disrupt your lifestyle, how much more do they need to pay you for? You to compensate?
00:38:06:18 - 00:38:07:03
Todd Sullivan
Yeah.
00:38:07:19 - 00:38:22:12
Melissa Kwan
Right. And at that point in my life, in the past, there is no amount of money that you could pay me, at least for what my company was generating, because there was there was a fixed multiple. Right. It's like in real estate, it's like if you're not doing well, it's one to three. If you are doing pretty well, it's 3 to 5 is you're exceptional.
00:38:22:22 - 00:38:43:13
Melissa Kwan
It's five and above, right? So if somebody is going to pay me the average multiple, then okay, I'm not willing to give up my lifestyle. But if somebody wants to pay me two times the average multiple, okay, maybe it's a different you know, maybe it's a different conversation. But the number one thing is like, what are you willing to live with and what can't you live without?
00:38:43:18 - 00:39:08:10
Melissa Kwan
And for me, I didn't want to give up my lifestyle of traveling. I wanted someone that to protect my team, to give them market salaries after all these years and to keep them where they are. You know, and this was the person, you know, that was going to do it. So I think think about like, who will you not work for if you were to have a boss again after not having a boss for so many years, what is he or she going to look like?
00:39:08:18 - 00:39:19:09
Melissa Kwan
And that, I think is is my biggest advice is like, think about that first. And then as the offers start to come in, then you can figure out like, okay, what is what is the best offer that I'm going to take?
00:39:20:03 - 00:39:42:00
Todd Sullivan
Melissa That is perfect advice. And I would tell you that if you're going to go into an M&A transaction describing that in brutal honesty to your representatives, your investment bankers to carve out that path for you and just eliminate anyone who is interested in your business, but not interested in supporting how you want your life to be for those two or three years.
00:39:42:08 - 00:40:00:14
Todd Sullivan
Yeah, that's the way you create that. The right situation. You were able to do it on your own, so congratulations on that. But yeah, you should never go into these transactions. Just say I'll take anything that comes my way. You really want to plan that out? So listen, thank you for being here. I've learned a ton. I think our listeners have definitely learned something.
00:40:00:14 - 00:40:04:07
Todd Sullivan
Please let me know how I ever return the favor. But thank you for being here.
00:40:04:22 - 00:40:05:21
Melissa Kwan
Thanks so much for having me.
00:40:06:21 - 00:40:29:00
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 ex. It was dot com and the Cashing out podcast are for entertainment purposes only. This should not be relied upon as the basis for investment decisions.