On Entrepreneurship and Growth - How Ben Fitter-Harding sold his business, Cardboard Fish

Show Notes

In this conversation, Ben Fitter-Harding shares his entrepreneurial journey, detailing the inception and growth of his first business, Cardboard Fish, a communications technology company. He discusses the challenges and successes of navigating the acquisition process, the emotional impact of selling a business, and the transition to his new venture, Dodgems and Floss, a creative agency. Ben reflects on the lessons learned throughout his journey and the importance of foresight in business planning.   takeaways

• Ben started Cardboard Fish out of curiosity and experimentation.
• The rise of mobile technology significantly impacted their business model.
• Acquisition was a natural progression for the business as it matured.
• The M&A process was organized and facilitated by a specialist.
• Post-acquisition, the team experienced both growth and challenges.
• Ben transitioned to consulting after the sale, allowing for flexibility.
• The new venture, Dodgson and Floss, focuses on bespoke branding and design.
• Ben values the work-life balance more in his current role.
• He emphasizes the importance of understanding the exit process early.
• The journey has been fulfilling, with opportunities for personal growth.

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Creators & Guests

Host

Barnaby Cook

What is The Exit Plan: Mergers and Acquisitions for Creative Entrepreneurs?

The Exit Plan is for business owners that are interested in learning more about how to sell their business. Each episode Barnaby Cook interviews someone who has bought or sold a business - either a creative agency, or a production company. The conversation gets under the skin of why they wanted to sell, or were looking to acquire, how the deal was structured, how they agreed upon a valuation and what lessons they learnt along the way.

So I will, let's go.

So welcome.

Can you just start by telling me a little bit about who you are, please?

Brilliant.

Yeah.

Thank you, Barnaby.

I'm Ben Fitter-Harding.

So I'm the creative director at Creative Agency, Dodgson and Floss.

That's what I do now, but I was able to start that business off the back of another
business sale.

So I used to run communications technology company, Cardboard Fish, which we sold to the
market leader in the States in 2014.

Okay, so how did you get into that?

Carbohydrate was one of those businesses that came through curiosity really and
experimentation and text messaging was a very new technology at the time.

We were a text messaging specializing business.

That was our strength.

And we were building things that had text messaging as part of that offering to start
with.

imagine back in the year 2000, when you had kind of your Hotmail account, we had an email
service that we built.

and we built in text message alerts of new emails.

So for the first time you'd get a text message when you received an email, which these
days would probably be horrendous.

But back then, when you used to get maybe two, exactly when you used to get two or three
emails a day, it wasn't quite so, so horrific.

And it was actually very useful because back then you didn't really have emails on your
phone in any kind of widespread way.

So knowing that you had a reason to grab a computer or a laptop and log in and check your
emails was, yeah.

kind of a bit of a game changer.

It was a different time.

remember sort of going to an internet cafe, know, check my emails and then you'd sit there
for an hour sort of responding to people and then that would be it.

Yeah.

So when did you found Cardboard Fish then?

So back in 2000.

2000 and then, it was 14 years from, okay.

of course the business changed massively in that time into what it became.

So talk me through that a bit.

Did you set it up on your own?

Did you have a business partner?

And talk me through the growth.

Myself and my business partner put it together.

He was very, very good at the technology side and incredibly talented on making these
things happen.

I was far more on the branding, the web, the kind of experience side.

And yeah, together we built our first couple of platforms, which were the email based one,
but also just a free text messaging service, which became very, very popular.

And actually the email service we phased out pretty quickly because

It was incredibly expensive to operate an email service that was growing very quickly.

There wasn't the money in it.

Advertisers didn't particularly want to advertise within something where they couldn't
control the content.

So getting decent revenue streams was a challenge.

However, the free text messaging service was far more popular and because we controlled
the content on the pages, advertisers were prepared to pay.

And so the initial kind of rise of the business was very much funded through the early
advertising boom in the early 2000s, which

worked very, very well for us and allowed us to really get a foothold in what was
initially a consumer market.

But very quickly, the volumes of text messages that we were sending allowed us to branch
into the B2B market, which is ultimately where we ended up.

And we always dabbled with consumer products for years after that, but it was always a B2B
offering that was the core of the business.

So it was a web page that you could log on to and send free text messages.

And this is back in the day where you had to pay for text messages, right?

It was like 10 p.m.

message.

Yeah.

Yeah, 10, 20p up to 50p on pay as you go.

So it was very popular with younger people.

It was a blue and orange website burned into the retinas of many people kind of of a
similar age to me.

Amazing.

how did the advent of the iPhone and I guess the BlackBerry a bit before that, how did
that kind of change things?

So for us, it was clear that other businesses that were operating in our space, especially
the biggest ones, the market leaders were converging communications and also offering a

full communications platform.

So whether it was email, voice, SMS, WhatsApp, you know, all the different platforms, all
the OTAs that were emerging, it was becoming a much bigger game than the one that we were

playing.

But we were very, very good at the bit that we did.

as often happens with a specialist, you we've found our niche and we kind of stuck to it.

And, and for text messaging that worked really well.

I mean, in the early days we got approached by number 10 and the cabinet office for their
campaigns, Tony Blair's election campaign.

later on in one of his general elections was, was using the platform.

and from there, businesses across the world started to leverage the fact that we were very
good at connecting into mobile operators and doing it at a very low cost to them.

so.

While the rise of email and mobile email and even NMS, which started to emerge and of
course WhatsApp was starting to arrive around this time, SMS remained an incredibly strong

platform for businesses that just needed to reach a consumer and not have to worry about
what they were using, what the device was, what OTA they were using.

They just had a mobile number and that was all they needed and that would connect them.

Yeah, it's amazing.

in terms of where were you based and sort of an employee growth and like how did that sort
of pan out?

So we managed to stay reasonably small.

think there were 18 of us when the business partner and I exited the business.

And the growth was kind of slow and steady from about 2006, 2008, to when we eventually
left in 2014.

We were always based down in Canterbury, near Whitstable.

We had a small office there and it allowed us to stay quite focused.

And I think that worked well for us.

I think what became clear as we did start to get bigger was that my business partner and I
were fresh out of college.

We had no business experience whatsoever.

We learned as we went along.

But if we were going to compete in the new kind of global communications space that had
become this massive market, then something was going to have to change because we didn't

really have the skills to compete at that level ourselves.

We had our bit and we could have probably kept going for many years, but what the business
became by being acquired by the market leader

was far more exciting and it's still going strong to this day.

Okay, so how did that come about then?

How did you get approached or did you kind of go out looking for a buyer?

So we went out looking, we worked with a boutique &A specialist.

We spoke to some of the big ones as well, but we'd reached a point where we knew that it
was time to combine with somebody else.

And it was time to step away really and do something different.

I'd very much grown up with the business.

It was time to kind of let go.

It felt like a very natural point for that to happen.

It was never a plan.

We never had a plan from the start.

to exit but in those later years it became a plan to then get the business ready for an
exit so that we could cleanly step away.

And were you and your business partner kind of aligned on that?

you both?

Yeah.

Yeah, which makes it a lot easier.

Once we'd reached that point where we were kind of ready, then it was a relatively simple
process.

It was stressful and it was a bit of a roller coaster.

But it certainly wasn't as daunting as I thought it might be.

And if you work with a specialist, then it does make it all a lot more organized and they
take control of a lot of the process for you.

So who did you appoint and how did that process go?

I'm not sure if they're still around.

They might be.

was an &A boutique called Livingstone.

We also spoke to BDO and some of the bigger players.

They all had their different pitches and they all wanted to put together a glossy magazine
of what the business was, which was a very weird experience.

It's like, is your life.

It's like being handed this book and saying, is what you've been doing for the last 14
years.

It was very weird, but also quite humbling.

was a

a really interesting process.

I think what we both realized was that when the business was really skyrocketing, which is
probably a couple of years before we sold it, that would have been a much better time to

have been going onto the market because the trajectory just looks different.

Whereas as soon as you start to see that the market is maturing, then that makes life a
little bit more complicated.

We were very lucky though in that our core technology was really strong.

So we were very much going to be acquired much more for our technology than for our
customer base, if that makes sense.

Who were the customer base?

Did you have a few big advertisers that used you a lot or was it quite dispersed?

We did have a few larger clients who would typically be other aggregators who are
aggregating from lots of small businesses.

And so their volumes were very large, but they were quite anonymous in terms of consumer
recognition.

But there was a very, very long tail of clients.

The platform that we built was very good at supporting a lot of customers.

So we had customers that might only be sending kind of a hundred messages a day, but they
were aggregated into this platform where that was manageable for us with a relatively

small team.

So the numbers of clients and the breadth of the world that they covered was staggering.

I mean, we used to have to keep a really close eye on the countries that we weren't
allowed to trade with because customers would onboard themselves.

So it was always a bit of a almost paying catch up to try and monitor what was coming in
because the platform was that autonomous.

Right, who are we not allowed to trade with?

North Korea.

there are there are there is a list of countries that are kind of banned.

from signing up and most times, the credit card processes won't accept their payments
anyway.

But of course, I would imagine if you're in those regimes, you get good at using kind of
partial services and cards and yeah, need to do what you need to do.

Yeah, yeah.

Okay.

So, so yeah, so then, so the &A people you work with, so they did put together this glossy
prospectus and then and then then where does it go from there?

I've still got that somewhere.

need to dig that out.

It's truly, yes, physical brochures.

They were big as well.

was a big magazine.

That's just weird.

But nice to have.

then from there, they did a market analysis of businesses that might be interested.

And that included everybody from the same kind of business as us, which is ultimately what

what happened with us.

I was looking back, that was quite obvious because of our technology platform.

We were likely to be acquired by somebody who was in the same space and wanted the
technology.

But there were all kinds of other businesses like some agencies get acquired, don't they,
groups who don't have a designer or marketing agency, and they add that to part of their

portfolio.

So we looked at other companies like that who had a portfolio and might be interested in
adding a communications element to that.

And

We did have a few buyers that were interested after that process had taken place and they
were approached by the &A specialist.

And various valuations were kind of floated around and they saw kind of those top level
figures that had all been cleaned out of all of the stuff that you put through a business

when you're kind of an owner manager that makes it look not quite as rosy as it is.

That all gets changed and very beautiful graphs get produced.

Yeah.

And yeah, we had two kind of serious discussions and then one of them became the ultimate
acquirer.

And what kind of, what were the valuations like in 2014 for technology businesses?

we were, if I remember correctly, we were working off a 10 times multiple of our net
profit and we were reasonably profitable back then.

So it was a, was a, it was a target and was ultimately pretty much what we got from the
business that acquired us.

but it, as with anything that the value is really subjective and based on the value that
the

potential acquirer places on you.

So they all, you know, look at their product portfolio and look at where you slot in and
what revenue you bring and what profit you bring and put a figure on it.

So as much as I'm really pleased that we did actually find a partner that worked for us,
there was a potential there that we could have sold for a lot less to a business that

didn't value our technology assets as much as our eventual partner did.

Okay and what and do you put that down to the the &A advisory that you used and the advice
that you got that you were able to to read that out?

yes.

I mean, in large part, there were also kind of side discussions as always, because it was
the market leader and they were in the same space as we already had a relationship with

them.

So once they were aware of what was happening with us, we were able to have all kinds of
discussions.

So the &A was definitely the catalyst, the specialist was definitely the catalyst for
that.

But ultimately, it did allow kind of other discussions to take place.

I think in hindsight, because

because our technology was so strong, working perhaps with more of a technology specialist
in &A might have yielded more potential acquirers for us.

Their approach was more general across the market, including people who didn't work with
technology or communications at all at the moment.

Yeah.

And what was the makeup of team of the sort of 18, roughly people that you had?

Was it all developers?

So it was probably about a quarter development, quarter sales, and then you had kind of
marketing and leadership and a couple of tech support.

So yeah, there definitely wasn't a huge customer service component, but because of the way
the business operated and in B2B, it is bit different.

You can manage a lot of interaction yourselves.

And lot of the relationships were held with the founders, which was just helpful.

But then with the salespeople as well.

again, that probably would have limited our growth long term.

But in the space that we were at and with the volume of customers that we had, it worked
really well.

It kept us very lean and very nimble.

So, and after the acquisition, in terms of sort of your team members, they sort of, did
they make cuts or how did that integration piece go?

It's so hard, isn't it?

Especially when a business like ours was very much, it was very personal to us.

We knew everyone really well.

They were the people that we'd grown up with.

That was really difficult.

It did feel a bit like a betrayal.

It did really feel like, you know, we're leaving and you're all staying.

Did you leave on the day you sold it or how long after?

I did, yes.

I was very careful to write myself out in the purchase and sale agreement.

Anyone working during an acquisition, would advise to get very involved with that document
and make sure that you're not simply tied into some kind of an earn out that you actually

don't really believe in or don't want to do because I can say with my hand on my heart the
day that I went back in after the sale.

It was horrible.

It was lovely being there with everyone, but also it was horrible because it wasn't my
business anymore and it didn't feel like my business anymore and I couldn't make decisions

anymore.

You know, that power had been taken away from me.

And whilst everyone was very interested in what I had to say, it's very much, thanks,
we'll think about that.

It's, and that is, that's a very difficult place to be.

So if, you know, if you think that might be you at all, definitely make sure that you get
the kind of exit that you want.

I ended up working there for about a year afterwards as a consultant, which was much
better for me because I could pick and choose when I was in.

The money was fantastic.

I would recommend going down that route if you can.

I know that a lot of acquirers will want their core kind of leadership and founders to
stay with the business for as long as possible, of course.

But if you can reassure them that that's not necessary to this bigger extent, then it
gives you a lot more flexibility post-sale.

And was that the same for your, what was the division of roles between you and your
business partner?

And was it the same for him?

So because he was far more technical, he basically worked with the business to transition
some of the technology over the coming year or two.

So his setup was a little bit different.

He still has as much control, I think, as was possible.

there were additional incentives for him completing those milestones, but it didn't
detract from the initial purchase price, the initial transaction, which again, by getting

very involved with the sale purchase agreement,

you can ensure that that kind of thing happens.

Of course, the acquirer is going to go in very, very hard on the wanting to control
everything and keep you with the business as long as possible.

So it's really important that you really challenge those bits, I would say.

Those and the warranties, you often get a lot of warranties and they can be really
arduous.

Maybe 10, 15 years after exit, you can still be liable for certain technologies and
certain things that have been acquired.

you can get those right down, you just have to have the confidence to push for that and to
justify why you shouldn't be on the hook for something that someone has essentially bought

from you and will develop themselves for years.

It's kind of their obligation to make sure that they know what they're buying, not yours.

Yeah.

Yeah.

So back to the team, you've described the difficulty that you had after the day you'd sold
it.

But yeah, what was the effect on the wider team?

As much as I think it was a shock initially, I know it was a shock initially, they were
now within a much larger organization which continues to grow and do very, well to this

day.

And so it has given them all opportunities that they wouldn't have had if it had just been
us.

We might not have been able to hold onto them for that much longer.

As much as we were a great team, at some point they would have wanted to go off, more
money, do more exciting things, grow in their own roles.

and they did and many of them stayed with the business for years and have done really,
really well.

I'm really fortunate in that a number of them since then have actually come and worked
with us at the studio.

So at Dodgers & Bloss I've got I think three of my kind of core team from back then now
work with me here, which is really lovely coming to like going full circle.

Yeah, very nice.

So what has the business become over the last 10 years since you sold it?

So now it is that converged communications player.

So they are now doing fantastically well in voice messaging, including RCS and OTAs like
WhatsApp, email.

They've acquired many, many other companies to put that portfolio together.

And yeah, it's lovely to see that a little part of my business is still there in that
massive enterprise that now exists.

Okay.

And what so then what did you do after you after you left?

What what you consulted for a year and then and then what then what happened?

I thought I would want to go and sit on a beach somewhere, but that didn't happen.

think within a few weeks of leaving, even while I was still consulting, I was already
looking at commercial property, looking at residential property for a portfolio, but then

also starting the agency.

And I was very lucky that I had good friends that were already in the creative space.

It's actually what I trained in.

It's what I went to university to study.

And so having now the opportunity and the cushion to be able to go and create a creative
agency was a real kind of gift, I guess.

And now I get to really love doing what I'm doing now.

Again, not thinking about an exit, but just trying to create a really great business.

So what is dodgems and flosks?

What do you guys do?

So as a creative agency, do mostly branding, design and web work for mostly corporates,
but also some smaller businesses and SMEs, highly bespoke really.

So again, we've kind of specialised in our niche.

We're not niche in terms of industry, but we're niche in terms of very bespoke level of
work that we do.

What would you say are the sort of differences that you've observed between the business
that you're running now and and Carpool Fish?

It was very exciting running a business that sold a digital product that you could stack
and buy, sell and cheap or price accordingly.

When you're selling only your time, it's a very different challenge.

And I've enjoyed that challenge, but it leaves me constantly yearning to find those
valuable digital assets and commodities that can be sold again.

And we create software in-house, we create a lot of software in-house.

and I hope that one day we will find something that has a wider value than just our time
but until then we enjoy we enjoy being available for hire if that makes sense.

Yeah, that's interesting because I guess, I mean, I think so many people who who work in
creative agencies haven't had that kind of digital product experience and I can sort of,

yeah, see how that's quite appealing.

Yes, very different space to be in now compared to having that transactional, the messages
are going through, every one of them is earning some money.

And that kind of happens autonomously even when you're asleep, whereas now the branding
doesn't get done during our sleep.

Unfortunately, we have to be very much awake for it.

Yeah.

But what I mean, how do you like for you?

How is it?

Do you kind of prefer what you're doing now?

like what would

It is a very different pace.

It's certainly, I think what I'm doing now is much more conducive to having a good family
life, having relationships, being able to travel.

I wouldn't say that the business that I was running before was particularly conducive to
that as many kind of tech startups aren't.

They do tend to take over your entire life.

That said, I'm still answering emails at

ridiculous times of day and night as many of us are when we own and manage our own
businesses.

So there are some similarities for sure, but also the differences are that I do have a
better quality of life.

And is that something you kind of specifically chose because you had sold a business and
you had some sort of financial security and then you were able to kind of design what you

wanted to do a bit more?

That's a good question.

No, I probably didn't give it that much thought, to be honest.

I was itching to do something.

And like all good businesses, it started very organically from conversations with friends.

And so it just felt right.

And I've just been able to control, I guess, the level of time and energy that goes into
it from me.

Whereas I

didn't feel like I had that level of control before it was kind of all consuming.

Yeah, yeah.

So sort of looking back on that process that you went through and, you know, building that
business and selling it, is there anything that you would have done differently?

I definitely would.

I definitely would have looked to start the, started the &A process sooner.

I think if we'd been talking to a specialist sooner, even if we didn't want to sell yet, I
think if we just started talking to somebody sooner, then that would have given us quite a

big advantage when it came to actually selling.

And that we didn't do that.

Definitely set us back a bit.

But at the end of the day, we managed to create a great

a great business and a great, acquirable business in the end, with a little bit of help
from some professionals to make sure the structure and everything was something that would

survive us stepping away.

But yeah, a little bit more foresight into that exit and what the exit was going to look
like probably would have helped us a lot.

But it's so difficult because you're in a business and you don't want to think about
walking away from it because you're living to create the best business that you can

possibly make.

Yeah, yeah.

How long did it take from the point where you sort of engaged your &A advisors to selling?

What was the timeline?

so it took us, I think about 18 months.

I'm just going to spin you around quickly.

Cause I just noticed that my battery is getting really low.

So I'm just going to spin around over here.

yeah.

so really it probably would have been, yeah, 18 months to two years, I think in total,
just a lot of that was, was preparation though.

A lot of that was putting together all the financials.

It was putting together that big glossy document.

We had to create a data room, which was a virtual space that was secure where we had to
put all kinds of confidential information about the products, the trademarks, the IP,

everything kind of had to go into this space.

So a lot of the way into it is a lot of admin.

And again, without a specialist working with us, I think that would have been daunting.

say the least.

There is a cost of course to working with a specialist and it wasn't small.

In the total scale of the value of the transaction it was very affordable but I couldn't
have done it without them if that makes sense.

I couldn't have done it without that professional support.

And what, with your business partner, where, what have they gone on to do?

So they've stayed very much in a kind of similar technology space, doing very different
things now to the kind of continual grind of what we were doing.

So again, just having that ability to travel, that ability to look at other ventures and
do different things.

And I think you need that after you've gone into something straight from education,
because you do need to have some kind of a life as well and explore the world a little

bit.

Yeah.

Great.

Okay.

I think that seems like a good place to wrap things up.

So thanks very much for sharing your story.

Thank you Barnaby, it was a pleasure.

yeah, really fun actually to talk about the process after a few years with a bit more
perspective.

Yeah, cool.