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Kevin McArdle bought my SaaS. For millions. And now, I get to talk to him about all things acquisition. In our chat, we discuss the importance of annual exit planning for startup founders, we explore the mindset and framework necessary for building a successful and sellable business, as well as the benefits of stepping outside of your normal workplace to think strategically. With practical advice and personal anecdotes, this conversation is a must-watch for any entrepreneur looking to achieve long-term success — and a big life-changing check at the end.
Kevin on Twitter: https://twitter.com/Kevin_McArdle
The blog post: https://thebootstrappedfounder.com/kevin-mcardle-the-man-who-changed-my-life-and-could-change-yours/
Kevin on Twitter: https://twitter.com/Kevin_McArdle
The blog post: https://thebootstrappedfounder.com/kevin-mcardle-the-man-who-changed-my-life-and-could-change-yours/
The podcast episode: https://share.transistor.fm/s/d938c4ce
You'll find my weekly article on my blog: https://thebootstrappedfounder.com
Newsletter: https://thebootstrappedfounder.com/newsletter
My book Zero to Sold: https://zerotosold.com/
My book The Embedded Entrepreneur: https://embeddedentrepreneur.com/
My course Find Your Following: https://findyourfollowing.com
Creators & Guests
Host
What is The Bootstrapped Founder?
Arvid Kahl talks about starting and bootstrapping businesses, how to build an audience, and how to build in public.
Arvid Kahl: Welcome to The
Bootstrapped Founder. Today, I'm
talking to Kevin McArdle. Now,
he was very instrumental in my
founder life. He acquired my
SaaS business. So we're going to
have a conversation about
acquisitions, preparing for your
exit, building a bootstrap
business that other people
actually wanna buy and how to
get to that point, how to go
through the process and what to
think about during building your
business, not just when it's
time to sell but long before
that. Here's my conversation
with Kevin.
Thanks so much for being on the
show today. I have one thing to
say to you: you changed my life.
I just wanted to tell you.
Kevin McArdle: That is the
nicest thing that anybody said
to me in a very long time.
Arvid Kahl: It really is, like,
we built Feedback Panda, the
SaaS business that we sold to
the company you worked at and
the company you led and the
company that acquired us. And it
was the most life changing thing
that ever happened to me. I
think after meeting Danielle, my
co founder
Kevin McArdle: Yeah
Arvid Kahl: You know, the person
that I spend my life with,
Kevin McArdle: Good to clarify
that
Arvid Kahl: If there was another
person that had a massive impact
on the trajectory of my life,
let's just say that, it would be
you. So a big thank you from me
for this. And it's really nice
that you found the time to talk
to me today. You have a lot to
share about private equity and
acquiring businesses, building
and operating SaaS businesses.
And I'm excited to hear what
you're currently working on and
what the future has in store. So
thanks for being on the show.
And it's really nice to talk to
you again.
Kevin McArdle: Oh, it's always a
pleasure to talk to you, Arvid
and pleasure to be on the
podcast and talking publicly, I
think for the maybe for the
first time. And it's very nice
of you to say that. But you
know, I played a role in the
success that you and Danielle
had, but I was lucky to be the
one to acquire Feedback Panda.
And if it wasn't me, it would
have been somebody else that,
you know, gave you the exit that
you were looking for. But I'm
just so excited for you and
Danielle and all the success
you've had.
Arvid Kahl: Oh, thanks so much.
Well, you wrote the nicest email
and we had the most wonderful
conversations with you. So it
was really easy to pick you,
let's just say that. Like you
had such a nice friendly and
uncomplicated way of interacting
with us that made all of this,
it made it very easy to trust
you and the team. I think that's
one of the things that you did
so well in this whole you know
pre due diligence but already
kind of due diligence phase,
right? When you're selling a
business and you're acquiring a
business, both parties kind of
poke at each other to see if
it's legit because there are a
lot of people who are not legit
in the field, unfortunately. So
you allowing us into you know,
the business and all the people
that work for you and having
chats with them. That's why I'm
with Tyler. Tyler Tringas, whom
I have another podcast with,
right? He was the first person
Kevin McArdle: Of, course. Arvid
and Tyler Catch Up. I'm a fan,
you know that.
Arvid Kahl: Thank you so much.
Oh, great as fan. I'm super
happy. But first of all, thanks
for listening to that show.
Because that's good to know that
anybody's listening. But really
like Tyler was the first person
we called in our kind of seller
side due diligence that we did
with you, right? Because we
needed to make sure all the
people that sold, were they okay
or you know, like that they run
into any issues? And we had such
a cool chat with him. And he was
so energetic. And so he talks so
kindly about the business and
particularly about you that it
came very easy to chat with you
and then go through the process
of getting acquired. So that was
really cool.
Kevin McArdle: I have a huge
smile on my face as viewers can
see because it just brings back
such great memories of I
remember specifically sending
that email to Danielle. And I've
told this story publicly because
it makes me smile. And her
response was just a very kind
and polite, "No, thank you, not
interested." I was like alright,
well that's fine. I have a new
friend on the internet. And
that's a good thing for the day.
And then in the background, I
find out later she told me
called Tyler, I think spoke to
another person who had sold us a
business and then she came back
like emailed back I think a
couple of weeks later. It was
like, actually, Kevin, we're
considering it. Let's have a
chat. And so yeah, that whole
process, it was easy on our side
too. Because you know you two
built such a great business.
You're such a great team. You
had your, you know, things in
order and you know, we're ready
to sell and had done the right
things to prepare. And so yeah,
it was win-win all the way
around.
Arvid Kahl: The whole process
was fun for me like everything
in between, like even me
recording this eight hour video
for the software engineer that
was supposed to take over my
work just going through the
codebase. Like no sane person
does this. But in that moment,
it felt like just a joyful
activity knowing how well it
would be received, right? Like
the whole process was just kind
of a give and take obviously
because we needed to spend a lot
of energy both on running the
business and on preparing
everything for the acquisition,
but it never felt forced. It
never felt like the pressure,
that was never on. And I think
that is one of the things that I
admire the most about you in
this process, how you were
guiding it without like pushing
it. That was such a sensitive
way of dealing with people who
are already like I was mid
burnout at that point, right? I
was super stressed. And people
don't want to lose their baby.
They want to lose the business
and all that. So you handled
that with such care. You know,
I'm a fan, but I just want to do
it publicly just admit, I'm a
big Kevin McArdle fan.
Kevin McArdle: Likewise, this is
just, you know, Arvid Kevin fan
club meeting
Arvid Kahl: I guess. Let's just
compliment each other for
another hour. Why not?
Kevin McArdle: Yeah, Arvid we're
already losing listeners. So why
not just continue. But, you
know, it's funny, like some of
the things you said, like, you
know, because selling a business
is a stressful process. I've
been on the other side of that
and the fact that you said it
was fun. And I'm sure there was
some stress in the background
too. But like that, you know,
the compliment you paid me
earlier, it's sort of funny and
funny or weird to me in a way is
like, it's just kind of how I
act and who I am because, you
know, I'm a human being. And I
know, you know, we just do
business with other human
beings. And I don't like dealing
with a-hole. So why, but like,
it's shocking how much people
say the way I do things is
different. And the experience is
different. And you know, it just
blows my mind that other people
don't have the same approach of
just being a human being. Don't
think that you're smarter than
everybody else in the world. And
don't be a jerk, don't put
pressure on people because
people don't mostly don't
respond better in pressure
situations. They usually perform
best when they're comfortable
and happy. And, you know, I like
how you phrase it with like,
guiding without pushing, I think
is what you said, but I may
steal that.
Arvid Kahl: Please do. Feel free
to steal whatever you like, you
gave me so much already. I'm
gonna keep doing this. This
reminds me of something, reminds
me of, I think like Paul Graham
wrote this book, like Hackers &
Painters. And in that, he has an
essay on how schools, the system
that we are kind of socialized
in really pretty much reflect
prisons in terms of the
dynamics, the social dynamics
that happen within them. And I'm
getting somewhere with this,
right? The idea is that you are
put into this kind of confined
system that you're not allowed
to leave, which is like the
premises of the school. You have
these weird internal social
dynamics, you have like the
nerds and the jocks. And you
have like gangs in prisons, that
kind of are equivalents of bad
like you're part of one of those
groups, but not both. And the
people that are there the
biggest stars in prison, like
the strongest and most violent,
like most fear inducing people
turn out once they're released,
to have no standing in society
whatsoever. And it's pretty
similar in schools too, right?
Where the bullies then don't
find jobs because they're way
too aggressive. And they don't
value actual human
relationships. And that reminds
me of many people who have been
conditioned in a system like
this, that you have to kind of
elbow your way through society
and then they end up at a spot.
I think the Peter Principle
applies here where people get
kind of promoted to the point
where they just at the limit of
their capacity, right? And I
think Peter Principle says
something else about it. I'm
just trying to keep it friendly
and loose here. But the idea is
that people who have this kind
of behavior, they get to a
certain point, but not further.
Kevin McArdle: Yeah, they hit
the ceiling.
Arvid Kahl: They hit the ceiling
because people at some point,
they don't take it anymore. Like
either they are also pretty
aggressive, which you know, kind
of creates more conflict or they
are at the point where they are
enlightened enough to understand
that you get way further with
kindness and with being
passionate about something and
opening up to people than
closing off and trying to grab,
grab, grab and this is mine,
mine, mine and you better stay
down, right? That kind of
behavior just doesn't fly in
most groups of people
particularly not, I guess, the
founder community where people
really need each other because
it's such a strong community.
Kevin McArdle: That's
interesting. People really need
each other. And at the same
time, people have independence.
Arvid Kahl: Yes
Kevin McArdle: Do you know what
I mean? I think people need each
other by choice versus like a
corporate environment where you
have to sort of play the games
to advance in your career. If
you're the controller of your
own destiny, you're a founder.
You don't need to build
community with other people in
your situation. It's beneficial
to do so. Yeah, I haven't read
that essay. I'll maybe go back
and look at it. But I think and
I hope society's evolving a
little bit because I see and
it's you know, as we're
recording, it's the time of the
year where kids are graduating
and moving from you know, I've
got a couple of moving from one
school to the next and I see the
way kids interact with each
other today and it's sort really
not perfect. But I think it's
less clicky than when perhaps we
were in school and Paul Graham,
you know, it's an interesting
comparison schools to prisons
because like, you just can't
leave. And there's a person in
charge of making sure you do
what you're supposed to do. But
I think the educational system
is certainly still has its
flaws, but I think it's evolving
in a lot of good ways in terms
of like, more belonging, you
know, kids treating each other
as like, we're all one big group
versus I'm a jock. And I can
only be defined by that, but
it's so situational, right? Like
and the Peter Principle, you
know, there's one human being
that I can remember who is the
epitome of the Peter Principle
just being promoted past his
competence level. And I always
picture that person when I hear
the Peter Principle. And there's
also people we know that like,
just bullied people through
their whole lives and are
incredibly you know like
successful by what you know,
like a business or economic way
by doing that. And
unfortunately, people look at
them and say, well, that's the
way that you succeed in
business. So
Arvid Kahl: That's the thing
like the media attention on
those people either attention
that they created for themselves
because they are sociopathic
enough to allow for this, right?
They don't hold back or because
they stand out so much. And use
agencies or you know, the tech
crunches of the world, they take
a look at them. And they just
think it's so clickbait
generating, I will have a
headline that works. That is
really unfortunate. I'm glad
that you say this about the
evolution of the educational
system. And I have this feeling
that I guess the digital
transparency, the fact that we
are interconnected and
everything that happens happens
everywhere immediately, right?
When you hear something happen
or something happens, you hear
about it within 30 seconds if
it's important. That didn't used
to be the case in the 60's, 70's
and 80s, where you would have
the full day before the kids
could report back to the parents
and if at all, right? You would
have a delay in stuff. And that
changes the immediacy of how
behavior is rewarded or punished
in these situations. So I guess
that helps. And by shining a
light just on the system and
make it fairer, make it more
equitable and that stuff. And I
have a feeling that's it's
almost the same in the
entrepreneurial community and
particularly with people sharing
their stories like building in
public or just being more
approachable and being more
allowing more insight into their
businesses, that creates more
equitable, more fair and more
accessible businesses in the
space that I'm in. And let's
just call it the indie hackers
SaaS founder community, as
specific as it gets. When I see
people build in public and I'm
just realizing this now. So
you're part of the thought
emergence here.
Kevin McArdle: Yeah
Arvid Kahl: The fact that they
have feedback cycles with the
whole community, often surfaces,
accessibility issues was so much
earlier than when the founder
would have thought of them,
right? So yeah, I've had that
with my own content, like people
told me your blog is great. But
I have dyslexia, I can't read
this, like, what do I do? So I
had the option of either
starting a podcast, which I
ended up doing or having at
least a little snippet of a
WordPress plugin that
automatically generates like an
audio version of the article
that I would write and that
happened like three or four blog
posts into my actual blog
existing because people like
myself from the beginning, I was
already sharing everything I
did. So they quickly could give
me the feedback on, this is not
accessible. This is kind of
excluding people who have this
issue.
Kevin McArdle: I understand you
may not have come to that
conclusion not as quickly or
ever, right? Yeah
Arvid Kahl: I would have had
more readers like that's the
thing that default is people can
read and write and hear and see,
right? That's kind of the
societal default. But obviously,
not everybody is included in
this group. But the group is big
enough to kind of allow for
these people to fall off the
site and still turn it into
something big, right? Which is
why accessibility is so
important.
Kevin McArdle: Yeah, that story,
like I can read, I can see, I
read very slowly. So I'm more of
a podcast fan, but like, just
knowing that you had that
feedback took the step to say,
well, let me try to make this
more accessible for other people
draws the "normal groups" of
society to you more because
like, well, at least Arvid gives
a shit about like somebody who
has trouble reading. I don't
look so it's interesting that
we're talking about this and
it's no surprise because like, I
love how your content is like
founded in or like grounded,
maybe it's a better term in just
kindness. You know, I like you
talk about building an audience
onTwitter and like conventional
wisdom is like, hot takes that
are extreme is what gets you
clicks and follows and
engagement and like, that's kind
of true. And I think that's part
of what is like, makes normal
media and social media hard to
consume a lot of times because
everybody feels like they have
to be polarizing. And then you
step into the world and you're
like, well, what if I'm just a
nice person and if I like, give
people compliments and I just
try not to be a jerk all the
time. And I think part of what
we get along is like, that's my
attitude too like, but it's not
from I don't know how to say
this. It's not from like a
business strategy perspective.
It's not like, oh, well, I think
more founders will be attracted
to me if I act like a human
being and don't have the sharp
elbows. It's just like, I don't
have the time or patience to
live any other way. Like, this
is just kind of who I am. And so
long ago, I figured out like,
just be who I am. And the right
people will hopefully be
attracted to that. And almost
more importantly, the wrong
people will be repelled by that.
Arvid Kahl: That's right!
Kevin McArdle: And there are
several examples of where I can
think of somebody either not
wanting to work with me or for
me or choosing to sell to
somebody else. And you know, on
and on down the list or like
choosing not to invest in my
company. And there's like, good,
well, okay, check, process is
working because we had somebody
self select out of my orbit, so
I'm going to keep doing what I'm
doing.
Arvid Kahl: That's so great.
That is one of the things that I
love about having like a public
persona. You allow people to
self select out. And it is not
conventional wisdom to get rid
of people from your potential
audience, right? Because
everybody wants numbers,
numbers, numbers, bigger,
bigger, bigger, but having the
wrong people in your audience is
gonna cause more damage than
them actually self selecting out
of it. And that is true for
anybody, right? Audiences,
customers, partners,
collaborators, all of this, like
if you have a group of the right
people, no matter how small it
is, your impact is gonna outsize
the impact you have with a mixed
bag of everybody who may or may
not be vibing with you. Let's
talk about that business. Let's
talk about what you're currently
building because I was just
going to throw in another
compliment. Like, the reason
that I can be this on Twitter
that I can just be kind and
friendly and empowering and
motivating is because I've
worked with and found people in
the higher echelons of the
entrepreneurial world, like
yourself who are like this. Like
I've seen in you and the people
that you work with and the
people that I got to meet
through you, that it's possible
to do this at a super high level
and be effective and successful
and friendly and kind and all
these things at the same time.
So it is like motivation by
example, that allows me to do
this and now be this for other
people myself.
Kevin McArdle: Yeah, that's a
cool thing is like you, I think
you are now voted, you know, not
to, I mean, I know how big your
audience is, Arvid because I'm
not the type of person who
clicks a profile, how many
followers do you have? So it's
like, I don't know how many
followers most people have. I'm
sure your audience is gigantic.
And that's exciting to think
about you being that example to
other people because there are
still so few example then like
my platform of choice is
Twitter. There's still so few
examples of just like kindness
and positivity on that platform.
And you know and people seeing
all the success you've had in
building an audience and
building a huge podcast
following and all that. But the
other kind of, sort of, like I
was saying, like, you would suck
at it if you tried to do it the
other way, you know, because
you're just not that person,
right? If you were trying to
like, you know, troll people and
you know, insult people all the
time, like, it would be
inauthentic. You wouldn't be
good at it because that's just
not who you are.
Arvid Kahl: It would be so
weird. It would be hard. I
honestly
Kevin McArdle: I dare you to do
that for a day and do it like
next April 1st
Arvid Kahl: That would be fun.
Kevin McArdle: People would pick
it out right away. But like just
to spend the day just being a
jerk online and see what
happens.
Arvid Kahl: See, the thing is
with anything online, like
there's barely any context,
right? Twitter doesn't have
context because it's text
exclusively. It's just the line
of text. It doesn't have your
smile, doesn't have like the
subtle kind of tone of your
voice when you like just insult
somebody, but there's a smile
under it, right? It doesn't come
through if you just say "fuck
you, everybody" on Twitter,
like, it would be funny, but you
know, like somebody would
probably and that's the thing.
That's why my thinking is in
those moments, somebody probably
just had a really shitty
experience an hour ago. And now
they're on Twitter scrolling
through and trying to find
something positive. They see me
telling them to fuck off. They
don't want to be that, right?
Arvid Kahl: You never know where
somebody else is. And that is
Kevin McArdle: Their bad
experience
for good or for bad, right? You
never know like how high they're
flying or how low they're
currently crouched on the floor,
just like rolled up in the
bundle because they're going
through something. So the
default for me is trying to
shift it towards the positive
but it would be very interesting
to just be like evil Arvid like
Star Trek style just grow like a
goatee like Spock and just you
know be like from the evil
universe for a day or two. Man,
you're right. I think there are
too few people. Let me just make
the world's best segue at this
point. It kinda sounds like it's
just like a little group of
maybe chamber musicians like two
or three. But wouldn't life be
better if they were in a much
bigger band? What are you
currently working on?
Kevin McArdle: I see what you
did there. Well done. I didn't
know where you're going with
that. But yeah, so I think
you're asking about the new
company. Yeah, Big Band Software
is the new project. We just
launched in March of 2023. Well,
the company was founded December
1st of 22, but launched early
23. And yeah, the vision is to
build a holding company of great
software businesses. So we're
buying software companies, 1 to
10 million in revenue with no
obligation to ever sell them,
which is strange in our world.
Usually transactions, you know,
weirdly, the bigger the
transaction, sometimes the
shorter the cycle because
investors want to put money into
a business, grow it and then get
that money out as quickly as
possible. We just have a
different approach. And partly
because we've got like minded. I
have two partners in this
business, Chris Reedy and Jason
Heath, both of whom I've known
for five plus years. Chris, I've
worked with before. And we had a
similar vision. We've got some
great investors who have given
us the luxury of lots of capital
to go spend over the next few
years and they've got the same
vision likes, let's build a
holding company. If we own great
software businesses, why would
we want to sell those? You know,
let it compound over years and
dare I say decades. And so yeah,
on the surface, we are buying
smallish software companies. But
beyond that, we're trying to do
things quite differently than
almost anybody that's out there.
Arvid Kahl: So that's what's
novel to me, like the difference
between, like private equity as
I know it and holding company.
Can you kind of tell me what
exactly you think is different
Kevin McArdle: Yeah, so a
typical private equity firm or
between them?
fund would raise a bunch of
money, tell investors, okay,
we're going to buy some stuff,
we're going to try to grow it,
and then we're going to sell
everything in order to give you
all of your money back. And that
timeline would typically be
somewhere between 7 and 10
years. So Arvid, please give me
your money. And in 7 to 10
years, I'm gonna give you all of
your money back, hopefully times
three. And that's the model. So
that means let's say, it's a 10
year fund, which would be sort
of at the long end of the range.
But that, so I'm being generous.
So now I've kind of got, you
know, three or four years to
spend all of the money that I've
raised. And then I've got two or
three years to try to grow those
companies. And then I've got
three or four years at the end
to sell all of those companies.
And to me, you know, there's a
couple of challenges that I've
always seen with that. And the
first is like, if you've got a
great asset and it's growing,
why would you sell it? Like,
that's the dream for everybody.
And I'll come back to, there are
a lot of reasons I love to say,
there are 100 reasons why people
sell a business and only one of
them is money, right? So you've
talked publicly about how you
and Danielle, the business was
great, but it was putting
pressure on your marriage
because all of the stress of the
business. And that's a great
reason to sell a business that
has nothing to do with money,
like almost nothing to do with
money, right? So I want to be
clear, like there's no problem
with selling a great business.
But being forced to sell that
great business just because of
the timing of your fund, I
always had a problem with
because what if you raise the
fund, let's say 10 years ago and
you're now obligated to sell all
of those businesses during
today's economy? You know, would
you choose to sell that business
now? Or are you doing so just
because you told your investors
you were going to give their
money back? So I don't like the
idea of being forced to
celebrate assets if it's not the
right time. And I don't like the
idea of this like short term
thinking, you know, I mentioned
like, we want this thing to
compound over decades plural. If
you buy a business and you have
two or three years to run it and
then you have to start thinking
about selling, the tendency is
to make very short term
decisions. So are we going to
invest in research and
development or do we hire
another three salespeople? Well
that trade off and this sort of
a silly simple example but like,
if I'm going to sell this
business in three years, well,
the default we will go higher to
salespeople. Who cares about
working down technical debt or
you know, adding some feature
what you're improving a customer
experience? So, you know, like
just growth at all costs, trim
expenses. These are the knocks
against private equity is that
it's short term thinking. It's
very transactional for founders,
which is a huge part of your
audience, I know. You know, a
lot of times your company gets
absorbed by a bigger version of
whatever you're doing and the
brand disappears and your team
might get fired and your
customers may or may not have a
great experience. That's another
reason why I never really liked
the typical private equity
model. And so, you know, mid
last year, I literally took out
a blank sheet of paper and just
started scribbling like, okay,
if I want to, if I have the
opportunity to build my dream
company, what would it look
like? Who would be involved?
What would our strategy be? You
know, what are the beginning,
middle, end points? What is my
job look and feel like? Who do I
get to work with and talk to on
a day to day basis? And I mean,
like, knock on wood, it came
together in many of the ways
that I sort of dreamed about
back when I was scribbling on
that page. And that's what Big
Band Software is now today.
Arvid Kahl: That's awesome. I
like, the image of a big band,
like the idea of a group of
people each playing their own
instrument, virtuously, right?
But in harmony with each other.
And just making fun music, like
big band music, like I come from
Dresden in Germany, that's my
birth town. That's where I'm
from. And we have a Dixieland
festival there. Out of all
places, in Germany, there's a
yearly Dixieland Festival and I
grew up going to this as a kid.
Like, we would be there and
there would be these wagons full
of bands, big bands too like,
sometimes 20 people, just, you
know, with trumpets and
trombones and all that kind of
stuff. So I have a very vivid,
like, visual representation of
just how enjoyable the ensemble
of a big band can be. So seeing
you picking that name and idea
for something that I also see as
something very joyful, something
very positive, a business that
doesn't just take, grow, and
then throw away businesses but
actually embraces them. You
should have called this like,
it's kind of embracing, it's not
a holding company. You don't
hold them, you embrace them.
It's an embracing.
Kevin McArdle: Yeah
Arvid Kahl: That's how it feels
to me.
Kevin McArdle: Let me go
trademark embracing. No, that's
cool because part of in yield,
like naming a business sort of
evolves, right? And both of my
partners are musicians. And we
had lots of sort of, we kept
circling around musical names,
but I love Big Band for all the
reasons. And our tagline on the
website is business in harmony.
And for a lot of the reasons you
said like individuals who are
excellent at what they do, but
coming together to create
something that's bigger than any
one of them could do. And the
other thing that I love is like
when like, just about everybody
loves music, right? And it
doesn't matter what kind or
type. Almost everybody loves, I
have never met a person who
doesn't like music.
Arvid Kahl: Yeah
Kevin McArdle: And you jumping
to the Dixieland festival in
Dresden reminds me of like,
right after we launched somebody
else that I don't know well but
we're sort of mutual followers
on Twitter. He's like, I love
it. It reminds me of the second
row. And I knew what he was
talking about. He grew up in New
Orleans and no, not the second
row, the second line and it's
like in New Orleans, there's
always like, you know, marching
bands, not in the traditional,
like school band sense. But
like, New Orleans is full of
music. I don't know how to
explain this to people,
hopefully, they know. But like,
parties, there's always a band
marching through the street. And
it's sort of organized, sort of
group and then the second line
is just anybody who else is in
the crowd has an instrument or
an umbrella. They just want to
dance like and so the name Big
Band just made him think of that
thing, which you could tell was
a joyful thing for him just like
the Dixie festival is a joyful
thing for you. And also, just
like, you know, another mutual
friend, I was just emailing with
Murich Dowsinger with you know,
when we were talking about this,
he's just like, it feels human.
Like, thank you. And like, of
course, why do most people not
name businesses and things that
like? They're all just
collections of humans with a
common vision and mission but
like, we come up with these
names that like are like feel
more like robots than humans. So
I'm glad it clicks with you and
it seems to click with a lot of
people and at the end of the
day, it's just a name and we
gotta go, you know, do good
things, but
Arvid Kahl: That's right. Yeah,
you have to kind of the name is
goal, right? You want to
accomplish this and it's gonna
be an interesting goal to
accomplish. I want to ask you
more from the perspective of a
software business owner now
because it's kind of you're
building this company that is
willing to acquire businesses,
while then what do businesses
need to look like to become part
of a big band? It's kind of what
I want to know because many
people, you know, they are
trying to build a software
business to, obviously, turn it
into a lifestyle, you know, have
revenue come in and live your
life under your own control,
without any external forces
shifting around. But like we
said, for many reasons, they
might want to sell at some
point. So what makes the
business interesting for you in
this context of the big band?
Kevin McArdle: Yeah, I love that
question. Like simple things to
point out, we're looking for
businesses that are 1 to 10
million in revenue, profitable
and growing. They don't have to
be growing at 200% a year. They
don't have to be hugely
profitable. But that's sort of
the niche that we're looking
for. That said, you know, there
are a lot of different ways to
create a wonderful business and
it is a lot dependent on the
founder and what their vision
is. And so, you know, like, if
selling to Big Band is an
endpoint for somebody awesome,
like, let's chat. But I don't
think people should build their
business to somebody else's
specifications. Does that make
sense?
Kevin McArdle: So I think we're
doing things differently than a
Arvid Kahl: Oh, absolutely.
lot of people. But if you build
a great business, loosely
defined, right? Like, there's a
lot of different ways to define
a great business. And as a
founder, you should be building,
I believe you should be building
the greatness that is in your
head. Like whatever the people
listening to this, however, they
define great, go build that and
somebody will want to buy it,
whether it's big band or
somebody else. And so, you know,
we look at a lot of things that
many people do, like, you know,
in a SaaS world, low churn is
hugely important. And you don't
want a lot of customer
concentration and these sorts of
things. But it's also like, it's
also the same advice of like, if
you're building a great
business, what does a great
business look and feel like? So
let's go aspire for that. And
sort of like the sale takes care
of itself is one way to look at
it. And I sort of annoy myself
because I'll make two sides of
the same argument immediately
and contradict myself.
Arvid Kahl: Sure
Kevin McArdle: So the one side
of the argument is build a great
business and things will take
care of itself. If you have a
great business, loosely defined,
however you define it
personally. Someone will want to
buy it when you are ready to
sell it. The second side of the
argument, I've started telling
people for a long time, I've
said it's never too early to
start thinking about an exit.
I'm now like evolved that. I
think exit planning should be an
annual exercise, just like
strategic planning. And I'm
going to publish something about
this. It's sort of like half
written. So I'll make sure you
see it early. And I can put it
in the show notes, whether it
comes out before or after the
podcast. But just like we do
like annual planning or
strategic planning once a year,
not we like not everybody does
this. But that's sort of
conventional wisdom that one
should do that. I believe one
should do exit planning once a
year as well, even if you don't
think you're going to be selling
for another 5 years or even 10
years because the exercise of
exit planning makes you think
about things that you don't
think about, you know, the other
51 weeks of the year. And so I
think it's a very healthy
exercise for founders to think
about that like, okay, at some
point when I'm ready to sell,
what are people like Kevin and
others like him interested in?
What do they care about? Am I
checking off those things? And
it's not about Kevin. If I check
off those things that will make
my business healthier, it will
make it better and easier for me
to run. A great business to sell
is also a great business to own.
We know this. And so I'm going
to, you know, continue to
encourage people to make this an
annual exercise. Because the
other part is like, you might go
into this annual exit planning
exercise thinking, well, I don't
want to sell for five years but
I'm gonna do this planning
because Kevin told me I should
and, you know, I'm gonna just
follow his advice. 12 months
from now, you might be in a
different position or 6 months
from now you might be in a
different position. And if you
haven't thought about selling,
if you haven't thought about
these things of like, what's
important and how do I get ready
to sell my business, you're not
ready to sell your business. And
so that's again, one of the
reasons why I believe there's
should be an annual exercise for
founders because you don't
always get to choose when the
right time to sell is and that
could be a very positive thing.
Somebody approaches you and
says, I want to buy your
business and you need to react
to respond. Or it could be a
negative thing. And
unfortunately, I've had several
situations where founder gets
sick, founder's spouse gets
sick, co founder gets sick. You
know, child, God forbid, gets
sick. And like, all of a sudden
focus needs to be on those
things versus the business. And
just being ready and having at
least thought about the process
and what to do, I think is super
helpful and healthy.
Arvid Kahl: What would somebody
ask themselves, like, during
such an exit planning session?
What would be the like, the most
important things that you would
do every single year? And maybe
track them over time, obviously,
because they change. But you
know, I may be getting ahead of
you here. But what will be the
Kevin McArdle: So at the top of
the list is if you have a co
most important stuff?
founder, are we on the same
page, right? So like, and the
Arvid Kahl: Drama
same page might be, I just
talked to a couple of guys, they
happen to be guys that have been
best friends. And then they
start a business and the
business is going well. And it's
one of those like dream
scenarios, right? Where you get
Kevin McArdle: And then problem
turns into conflict and drama.
to be in business with your best
friend. And it's, you know, good
things happen. But one of them
is like, well, I might want to
do this for another two years.
And the other one is like, I
could do this forever. And
they're in their 30s. So it's
not huge conflict. But they're
not quite on the same page. So
let's talk about that, right?
And another same page issue is,
you know, somebody, you know, if
you've got two co founders and
one says, man, if I could sell
this business and my share is
And unfortunately, co founder
drama kills a lot of companies.
$10 million, that would be
amazing, life changing amount of
money. I'd be totally happy with
that. And the other co founder
might say, I'm not selling
unless I take home $50 million.
Well, that's a problem. And if
you're doing this on an annual
basis and you do it early, it's
a discussion. If you wait five
years and don't uncover it or
you don't address it, it becomes
a problem.
And so that's one of the things
just like a check in and it
doesn't have to be only once a
year, but making sure if there's
co founders or other owner,
meaningful owners of a business.
So like, if you have an angel
investor who owns 1% of your
business, you are not obligated
to have this conversation with
that person. But just
understanding like, are we on
the same page with timeline
economic output? Life, like
commitment to this? Like, are we
working 100 hours a week, every
week until we die? Or do we want
to have, you know, a more
easygoing, like, healthy,
sustainable lifestyle? And, you
know, those are the co founder
dynamics is at the top of the
list. Now, if you're solo
founder, obviously, that's less
important. However, might be
good to have that conversation
with a partner or a spouse if
you have one. Because they are
certainly a stakeholder in you
and your commitment to the
business. The other things that
are important in like an annual
exit planning exercise that may
not be addressed in like a
strategic planning exercise is,
you know, how much am I involved
in the business as a founder?
And early stage, you're involved
in everything. You do
everything. As your business
grows and you start thinking
about exiting, you want to be
doing less than less. And I
think that's one of the things
that you and Danielle did very
well is sort of identify how do
we delegate these things to
team? How do I document what I'm
doing so that somebody else can
pick it up and do it? So those
sorts of things are part of a
annual exit planning exercise.
And I love how you jumped to
like tracking it over time. I
was just talking to a woman who,
we were having these
discussions. Off the record, I
won't share who. But you know,
she's of the mindset where she's
like, I could do this forever.
I'm like, awesome. Do it
forever, if you're happy. And if
you start tracking this, like
today, your answer is I want to
do this forever. And next year
at this time, your answer might
be do it forever. And then two
years, three years time do it.
But then your four if you say,
you know, maybe I can see the
end of the runway and I should
start thinking about this and
then your five it's like, I'm
getting a little tired. If you
do this just one point in time
and let's say it's year four and
the answer of your annual exit
planning exercise is I can kind
of see the end of the runway and
I want to start thinking about
this. You don't have that. It's
not a trend. It's just a this is
how I feel right now. And so
that's a you're a smart guy and
you jumped right on. I think
having the you can go back and
like trend over time. How am I
feeling about this and that's
doesn't mean, if your trend
starts to dip towards or go up
towards, like, maybe it's time
to think about selling that
doesn't obligate you to think
about selling seriously. But
it's a good data point and a
good exercise to have with
oneself or with one's you know,
co founders to, you know. It's
really important to set aside
the time to have that thought
and discussion separate from
like, annual planning.
Arvid Kahl: I love this. And you
know, what I love most about
this is that almost every single
point you just mentioned in your
business exit planning strategy
has almost nothing to do with
the technical parts of the
business, like the operational
part of the business at all.
Kevin McArdle: No
Arvid Kahl: It's all persons,
all human
Kevin McArdle: Which is why it's
different. And the other point
I'm making and like, annual
planning people, you know, if
you're super on the ball, you
might be doing it in October,
November in preparation for the
next year. If you're less on the
ball and you might be doing in
January, February or like what
do we hope happens this year,
even though we're a little bit
into it, obviously, depends on
seasonality and cyclicality of
your business. It could be
nothing but turning the page of
a calendar is typically when
people think about strategic
planning for the business. I
believe exit planning should be
opposite. I'm going to recommend
to people like late spring,
summer, like most business
cycles tend to slow down a
little bit in the summertime.
And because it's a very
different conversation with
oneself or with one's co
founder, it should not be the
same week of the year. Don't do
your business planning or exit
planning. Because, yeah, you're
right. It's all about sort of
like how are you feeling up
here. And in here, your head and
your heart to say like, do I
still want to do this? You know
and like being honest with
yourself? Do I still want to do
this is different than how do I
grow the business? And how's the
tech stack doing? Where's the
product roadmap? And how are my
customers doing? I'm telling
people set that all aside, this
is a selfish, how do I feel? How
do I feel with my co founder?
How's my spouse feeling about
this business and is now the
time to start thinking more
seriously about selling?
Arvid Kahl: Yeah, that's really
cool. I really appreciate that.
I think I've written about this
a couple years ago. It was a
consequence of me, like dealing
with the sale itself and the
process of building the
business. I also had or
redeveloped. Danielle and I
developed this kind of check in
with each other every couple of
months. And I think we call this
the founder business fit. Like
if the founder is still good for
the business because the
business can operate if you
build it in a sellable way. And
that's what you just said a good
business is a sellable business.
A sellable business is a good
business, right? So if you can
remove yourself from that
business, that itself could be
run by somebody else. And that
doesn't have to be you, right?
It could be run by somebody and
it is not kind of bound to the
founder and checking in with
yourself for this founder
business fit. You're right. The
honesty part is probably the
hardest in there like, among all
the different things you can
talk about, right? You can talk
about like your vision and how
much you would like a certain
thing. But we all have these
narratives in our mind about how
life should be, right? Where we
are supposed to end up because
our parents told us that that is
the dream that we are supposed
to live or we ourselves have
found that in our communities
and now we want to live somebody
else's dream. So being honest
enough to say, well, I need less
than this or I need more than
this to feel secure. That's the
hardest part. And I think for
that, I love that you make this
about the time of year too. I
just had a thought because like
when you do these sessions, when
you do these kind of I don't
know if it's called the summit
or something but you take
yourself away. You have your
little conversation. You lock
yourself in the room with
somebody or just by yourself for
a day or two and you just talk
about this one specific topic,
time of year and location, how
much do you think that actually
impacts what comes out of these
conversations? Comparing like
being at the beach having that
conversation versus like being
somewhere in the mountains in
the winter in a little cozy
little board cabin? You think
that actually impacts what comes
out of these things? I'm
curious, what do you think?
Kevin McArdle: I do think
there's something to time and
place and space and it's all
individual, right? Like so like
on the beach, I would say don't
do it during your family
vacation that is not like this
is a business meeting or
conversation even if you're
meeting with yourself and so
don't take family vacation time
to do this because I don't think
that's the right frame of mind
to do it. And like for me, a
small cabin in northern
Minnesota where I live in the
Twin Cities but going a little
bit away into the wilderness
would be a great setting for
this. Other people it might have
to be on a beach. Other people
it might be like in a cozy cabin
with snow outside like it's all
individual but I do think
there's something to not being
in your normal workplace. It
just lets sort of like your
normal workplace, there's always
like distractions and things
that you think you should be
doing. But I think there's a
reason that people do like and
it's sort of gotten a little
cheesy, but they like offsites
is sort of like, oh, we're gonna
leave the office and we're gonna
go somewhere else and think
about different things. It can
be a little bit contrived. But I
do think there is something like
getting out of your normal
setting to help you think a
little bit differently than your
day to day. And then beyond
that, it's all personal. Like, I
jump to spring and summer
because I'm a sort of anal
annual planning happens in
November so that January one, we
know the plan and we're
executing the plan. And to me, I
want it as far removed from that
as possible. But you know, other
people might have different
ideas. And I don't really care
if you know, it won't hurt me or
bother me at all if nobody ever
does this. But if somebody wants
to do it, I would just encourage
like it, make it an annual
exercise, make it different than
your typical business day.
Arvid Kahl: That's a great idea.
Yeah. And it will be unique to
every, like every person really
like when their best time is to
have this conversation. It's
just an interesting idea to
think, like if there are times
or places that would like
inhibit a good conversation or
amplify it, right? The outcomes
of it, that would be kind of
cool. Thanks for sharing this,
like I love the way that this is
a thing, right? Like the exit
planning strategy session,
whatever you call it, that is a
thing that can be well defined.
Kevin McArdle: Yeah, and that's
why I'm trying to define the
thing and one of my friends and
investors is Dan Martell and he
always will, like come up with a
bumper sticker phrase and then
add TM to the end. So I'm
trademarking annual exit
planning, owned by Kevin McArdle
because people ask me all the
time, like, how should people
think about like, going about a
sale? And like, what is the
right time and like, you know, I
may even, you know, inspired by
you, like, create a course about
this. Not about like, making
money or like gating the
specifics, but just create some
structure and help people think
because, you know, like you and
Danielle, I've been fortunate to
buy businesses from 45 people
over a period of time, actually
closer to 50 if I think back
further in my career. My
partners have, you know, between
all of us, we've probably
acquired 60 businesses. We've
also sold businesses and so
like, we have a little bit of
expertise in this. And so I want
people to be successful,
especially bootstrapped
entrepreneurs who have, you
know, fought their way to create
a great business. And so making
it like you said, a thing and
not just, you know, read a blog
or listen to a podcast and like
that's going to be what I go try
to do. I think if it can be a
structured thing that becomes
like strategic planning. If you
want to go find a strategic
planning template, they're easy
to find. Annual exit planning is
not as easy to find, yet, but it
will, you know, I think making
it a thing can be helpful to
people. And so that's why I'm
putting the time in to sort of
think and write and, you know,
eventually will publish and
maybe even turn it into a course
or workshop type of thing.
Arvid Kahl: It's really about
the coining the term, right? And
that makes it more accessible
because people refer to it and
they know what it is. And I
think that's what Dan is great
at. And that is what you could
definitely use.
Kevin McArdle: Dan is great
about, yeah, like coined the
term, create a framework, give
people something that they can
just pull off the shelf and, you
know, take action. And the other
thing and then we can move on
from this point. But making it
an annual exercise means that
it's something that you should
just be doing anyway because I
think there's especially this is
one of those weird nuances of
like bootstrap indie hacker
community. There's sort of this,
I think, unfair expectation that
like people will and this may
have come out of like, there are
some very famous bootstrapped,
you know, indie people based in
Chicago who have said publicly,
we will never sell a business. I
think you know who I'm talking
about, which is just unhealthy
to use the word never or always
in most cases. But you know,
they were the leaders of this
community for a long time and
still people look up to them.
And so there's unfair
expectation, like you're going
to do this forever, which that's
not how business works. Like
every business transacts. It
could be when somebody dies, but
eventually businesses transact,
you know and in the software
world that we live in, people
don't hand businesses down to
their children like
manufacturing plants or you
know, some of these older, you
know, like a farm. Like that's
not how our business works. And
so it is normal and healthy to
think about the exit. And
because of this weird dynamic
that's in the, you know,
bootstrap indie thing, like, a
lot of times people come up to
me in real life if I see them at
a conference. And they'll open a
conversation with, you know,
Kevin, I don't want to sell my
business right now. But how
would it work? Or what is it
happens to my team? What happens
to customers? What would I do?
How would it be involved? Like?
So they have these questions,
which are normal, healthy
questions, but they feel like
they have to preface it with I
don't want to sell my business.
And I don't know if that's just
like, don't get too excited,
Kevin. We're just having a
conversation or but do you see,
do you know what I mean? Am I
making this up? Like, there's
this expectation of we're going
to do this forever. That's not
normal. Like, we don't have to
think like that.
Arvid Kahl: You're not only not
making this up. Like a couple of
weeks ago at the point of when
this is actually being
published, I will have released
an article that is titled, like,
short live businesses versus
forever businesses because it's
exactly this topic. Like people
think that what they need to
build immediately when they
start building a business is
their forever business. And it's
a bizarre idea because if you
look at home ownership, right?
People have a starter home and
then they have slightly bigger
home and then they move into
forever home. But forever home
is never the starter home,
right?
Kevin McArdle: It's not actually
a forever home, rarely forever
home is a forever home.
Arvid Kahl: Exactly! Forever
homes don't even work.. Exactly!
Kevin McArdle: Yeah
Arvid Kahl: If homes are
something that even if it's many
years or decades, it's still
temporary. Why do we not
consider businesses to have the
same lifespan, particularly in a
digital internet enabled society
where a long living product is
like five years maybe, right?
It's bizarre. I looked at and
researching that article, I
looked into the world's oldest
company. And apparently that's a
Japanese construction business
that has been around since like
570 AD, like they've been around
for 1500 years and they still
construct buildings today as
they were doing it back then.
You can do this in the
construction industry. But you
cannot do this in the SaaS
entrepreneurship industry, like
even next week is probably going
to be a different technology du
jour that you have to use to,
you know, build the coolest and
latest in tech. So we have much
different timeframes now that
also should impact how we think
about businesses, right? And my
whole thought in this was, well,
why don't we actually consider
our businesses to be something
temporary as well, at least when
we start out, right? And that's
the whole Rob Walling stair
stepping approach too like, you
built some things here, you see
how they work if they were cool.
And if not, well you try
something else and then you step
into well, now I have some kind
of time freedom. I can now spend
more energy on maybe solving
bigger problems and then you
exit that and then you get to
your SaaS and you run this for
however long you want, forever,
whatever that means. I mean, the
whole topic of like lifetime
deals and stuff, I don't even
want to touch that, right?
Lifetime of what? But if your
business has a lifetime of like
five years, that is still a
successful business,
particularly if you get to sell
it to somebody who turns it into
something else or winds it down,
but transfers customers over to
an equally interesting business.
There are many ways. And it's
kind of like the cycle of energy
in nature. Like we have fungi
for a reason, right? Like
they're not just delicious when
you cook them. They empower a
whole system of cycling through
material and I feel businesses
should be considered something
similar. Which means together to
an end in this monologue of many
things, that it is perfectly
fine not to have to build a
forever business. But to
actually build a temporary
business that you want to get
from A to B through, that's the
idea. And for me, Feedback Panda
was kind of that, right? Now I
get to do this.
Kevin McArdle: Well, even if you
were building, like the Japanese
construction company, I'm
interested to read your blog and
learn more about that. But like,
even if the business continues
on, you may not be running it
and operating it certainly even
if it's the same family that
Japanese company has changed
hands hundreds of times at this
point. And so why wouldn't we
assume that whatever we are
building as business owners, of
course it's going to change
hands, right? Whether it's you
know, like the timing that I
think right now today or you
know, the timing that might
change. Here's another like
thing that I'm going to release
a secret into the wild. It's
okay to change your mind on what
you think is going to happen,
right? Like we might start and
have a successful company that
you say to yourself, I want to
do this for the next 20 years.
And in 12 months, your mind
might change like we've already
talked about. And so just
understanding that businesses
change hands and that's
certainly an important point in
that business and in one's life,
right? Because if there's a
monetary reward for that, like,
why wouldn't you be thinking
about that annually? You don't
want to think about it every day
or every week and obsess over it
because then it becomes a
distraction. But that's why I
want to make it a thing. This is
we annual Exit Planning is a
thing that smart business owners
do. And there's a structure and
a framework and Kevin will
publish his thoughts on what it
should look like or could look
like and other people smarter
than me, will say, cool idea,
I'm gonna make it better. And
hopefully, it becomes a thing,
just like, strategic planning is
a thing.
Arvid Kahl: I am very much
looking forward to you
publishing this for you to
change the world of
entrepreneurship. But honestly,
I think, honestly, that is a
change. You're not disrupting
it. But I think and that's great
because it doesn't need more
disruption. But you're giving it
the tool, we're giving people
the tools that they need to do
something that they already want
to do in a better way. So I
think I love the idea that
you're turning this into a very,
you should write about this
maybe more extensively. Like, as
I'm writing my third book, why I
want to do the same thing but
with building in public. Like I
want to put this out there as a
concept, as a framework, not
just for for indie founders, but
for anybody who wants to go from
A to B, right? You can always
kind of empower your community
to help you and help them in the
same way. So why not turn this
phrase into something that
people can actually use? And as
I'm doing this, got a suggestion
to you. Do more writing, I think
the world needs these thoughts
as a book.
Kevin McArdle: Well, I think, I
need to do more writing. I've
seen how successful you have
been with it. I think you're
also I don't consider myself a
great writer. But I also know
like, when I write something
down, it helps me to think about
it more clearly. So I have some
clarity about this concept
because I've been writing about
it and haven't published but
yeah, as soon as we're done
recording, I will go tweet:
annual exit planning is now a
thing.
Arvid Kahl: Yes
Kevin McArdle: And then go
around it from there.
Arvid Kahl: I love that. Well,
since you're already mentioned
that, like where do people go to
find out where are you sharing
this kind of information? Where
do you want people to find and
follow you?
Kevin McArdle: Yeah, two great
places, if you go to
bigbandsoftware.com, we have a
newsletter that I'm really proud
of that we share our ideas. We
also share links to, you know,
smart people that we know in the
world and what they're
publishing, talk about our team,
talk about like hiring needs,
those sorts of things. So yeah,
just bigbandsoftware.com and
you'll get a pop up for the
newsletter. And me on Twitter is
the best way to find me
Kevin_McArdle and McArdle has
one. Sorry, one C, people always
get that confused. And there's
more than one Kevin McArdle on
Twitter, unfortunately. But
yeah, I'm easy to find. And I
love engaging with people on
that platform as long as
they're, you know, kind and good
spirited like you. So yeah and I
love helping entrepreneurs. So
whether somebody might someday
sell to big band or not is
immaterial. I just know that
entrepreneurship can be very
hard and it can be very lonely.
And if I can make it even, you
know, 1% easier or less lonely
for somebody who's out there
working hard, then I'm happy to
do that.
Arvid Kahl: You've certainly
helped me and I know many people
who you have helped in the past.
And I know you are going to help
hundreds, if not 1000s or
millions of people, depending on
how well your writing gets
received by the community.
Kevin McArdle: Oh, that's nice!
Arvid Kahl: But honestly, I'm
super happy that you also just
appeared on my show here today
and shared what you're doing,
how you're doing it and the kind
way in which you're doing it. So
hey, man, thanks so much for
being on. That was an awesome
conversation. I'm so glad.
Kevin McArdle: It has truly been
my pleasure, Arvid. I'm so
grateful that you had me on.
It's so fun to talk to you as
usual.
Arvid Kahl: Thanks so much. Have
a good one.
Kevin McArdle: You too.
Arvid Kahl: And that's it for
today. Thank you for listening
to The Bootstrapped Founder. You
can find me on Twitter
@arvidkahl. You'll find my books
and my Twitter course as well.
If you want to support me and
the show, please subscribe to my
YouTube channel, get the podcast
in your podcast player of choice
and leave a rating and a review
by going to
(http://ratethispodcast.com/founder).
Any of this, will truly help the
show. Thank you so much for
listening and have a wonderful
day. Bye bye.