Software Social

Michele chats with Adam Pallozzi about the highs and lows of selling a business during the pandemic.

Show Notes

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Creators & Guests

Michele Hansen
Co-Founder of Geocodio & Author of Deploy Empathy

What is Software Social?

Two indie SaaS founders—one just getting off the ground, and one with an established profitable business—invite you to join their weekly chats.

Michele: Hey, everyone.

Welcome back to Software Social.

I am so excited to have my
friend, Adam Palozzi, here today.

It's actually Adam's first ever podcast
interview, which I was really shocked

when I just learned that because
Adam is an exited founder of piece of

software that he built over 10 years
learn to code throughout the process.

And it's just an awesome guy.

So welcome to Software Social Adam.

Adam: Thanks so much.

Thank you for the intro.

I appreciate it.

Michele: So let's start
out in the beginning.

Let's wind the clock back to 10
years ago, and you were a guitar

teacher for children, that's right.

Adam: Yeah, that was, that
was my introduction to it.

Well, that was my first business
that I was that always a guitar

teacher, and I got fully booked as
a guitar teacher, very early on.

It took me a couple of years.

I started teaching sort of straight
out of high school in schools.

And within a couple of years I was
fully booked and I just sort of

had this realization of this is
this, is it like now that I've,

I'm fully booked with my teaching?

Like there's not really any further
that I can go with this thing apart

from trying to start a business,
or I always knew that I wanted to do

something more than that, and I just
didn't know quite what, what it was.

Um, so yeah, it started from that me
just wanting to build something more

than just being a guitar teacher.

And so once I got fully booked, I started
hiring some other guitar teachers to take

up some of the waiting lists that I had.

And, um, then it just sort of grew
out from there over about 10 years.

It took a long time, but it, yeah,
it sort of grew fairly organically,

but through the process, as we were
building the business, I was looking

for software to, to run the business
on and it just sort of evolved into me

becoming the person who wrote all that.

I think I was always interested in it.

So yeah, it felt like a fairly
natural path as much as it might

seem a bit strange to go from guitar
teacher to software developer.

Michele: So you started out as a
guitar teacher and throughout the

process of that realized you could use
some software to, to run it better.

I'm curious, so you started the
business, the guitar instruction

business, 10 years ago.

At what point did the software come alive?

Like what do you start playing around
with trying to build something.

Adam: Uh, it started fairly early on.

So as soon as I started hiring other
teachers, it just got messy really

quickly, like music teaching is, it's
just a very labor intensive business.

So we had lots of people going in
different directions, and there's

just a lot of communication that are
happening today who taught what student

was the student absent and trying to
keep track of all of these lessons

that were happening by different
people in different locations.

Got really like at the start, we
were just literally emailing Excel

spreadsheets around between each other.

And it doesn't take many teachers
before that just becomes unworkable.

So pretty soon I was kind
of looking for things to do.

And I started going down the path
of like automations and stuff and

there wasn't really, there was not
none of the really no code tools

that exist now were around back then.

It was just, it was a
really different place.

And a lot of the really great
SaaS products that are out

there, I probably could have
leveraged didn't exist yet either.

So they're kind of just, uh, either that,
or I just couldn't find it, you know, it

was, it was hard to find the right sort
of software to run that business on.

And it's, it's also, it's a very niche
business, you know, because we had, so

we ran music lessons in primary schools.

So we had lots of teachers going
to different locations and the

teachers had different skills.

If you are a guitar teacher, but we had
a drum student at that school, then we

couldn't pay you off with that lesson,
it wasn't like a hairdresser where you

could have any hairdresser take any
clients, you know, I guess, depending

on uh, regular clients and things like
that, but it feels like a lot of other

businesses, there's a bit more flexibility
with with what we were doing, it was

it's so niche that no one had really
gone out and solve that problem yet.

And so I spoke to a software development
company about it and sort of pitched

them this idea and said, I think this
is what I need to run my business.

I outlined everything.

I gave them the full,
the whole box and dice.

And I went away and I came back
with a proposal and they said,

yep, we've done the numbers.

We think it'll be about $300,000
to build that piece of software.

And I, I was 24 running these tiny
little music school at the time and

just sort of went okay, well that's
well, and truly above my budget,

like that's not even in the ballpark
of something that I could consider.

So I think what I'm going to do, I'm going
to try and the first little version of

this, because I've been playing around
with fall FileMaker and a few other

little sort of low code sort of tools.

And so I knew I could sort of cobble
something together, so I'm going to

put together the first version of this.

That'll get us through a couple of years,
and then the business is going to grow.

We're going to be able to
afford that $300,000 bill.

I'm going to bring these people on
and we're going to build this amazing,

amazing piece of software eventually.

Over the next few years, I just sort of
got further and further down that rabbit

hole of writing the software, and the
software that we ended up building for

the business just sort of got more and
more complex over time to the point where

by the time I sold the business, we're
running everything through this thing.

So it started as a ball maker, um,
product, but then you can run like PHP.

There's a PHP IPI that you can use to,
uh, run off a form, like a database.

So we had a whole PHP front end for and
stuff that we probably be able built out.

And it turned into this giant thing
that, I mean, it probably, yeah,

if I added up the number of hours
I spent on it, it probably did end

up costing that $300,000 on ball.

It's just that I wasn't actually paying
that money cause I was doing it myself.

So it got there in the end, but that was.

It sort of just turned into my mild
little school of, you know, to learn

how to code and to do it in a real
production environment, because there

were actual music teachers in schools
where if the software went down for a

day, no one knew who they were teaching.

So like it had real world repercussions.

So it was kind of, it was a
pretty good trial by fire.

But I look back at like the stuff that
I was doing and shake my head, I mean,

I think anyone who's gone through
that process of learning to code will

tell you that have that experience
of looking back at something that I

wrote years ago and just going, wow.

I really had no idea back then.

Did I?

But I think I really had no idea.

Like I didn't really have any
friends who wrote code either.

And, and I didn't have any exposure to
like the online communities and stuff

that I, now, I didn't even know that
they existed because I was coming from

this musician guitar teacher world.

So everyone that I knew was a musician.

And I don't know, like there wasn't
as much access to that sort of stuff,

10 plus years ago when I was first
getting into it, or I was just naive

and didn't even kind of know to go
looking for it because I was coming from

such a different place, but I figured
out how to do kind of everything from

scratch black, you know, writing my own
authentication and stuff, which, you

know, you look at it now and you just
go, why, why would you ever do that?

And to run it in production like
that, like, you know, ah, gee,

it probably wasn't the best idea.

It worked and it got the job done.

And I learnt so much from it.

You know, I think that was the really
big takeaway for me was just like,

literally googling how do you make a
website with a login and starting from

that, and then, and it was just this
cobbled together, PHP mess of, you know,

bits and pieces that I'd figured out
over years and years as I was adding.

So yeah, when people tell stories about
like looking back and checking their head

at previous code that they've written,
I feel like I go, yeah, you should see

some of the code that I, that I pushed
out when I was first getting started.

And yeah, it's probably embarrassing.

Michele: I think that's a
really relatable experience.

So there's, there's so much in there.

Um, two things I want to, I want
to start with the first one is you

mentioned that you had this idea to
build something after you were going

through this experience of sending
spreadsheets back and forth and know,

Patrick McKenzie has said that if you
can find an industry or business activity

where people are emailing spreadsheets
back and forth to one another.

That is a really good
opportunity for software.

Adam: I love that.

That's a great description for it,
cause I mean that's, and that was

especially 10 odd years, that's how
everyone in the industry was doing it.

That was the only way, because they're
just, like I said, it's pretty niche,

and there just wasn't anything that was
going to do what we needed it to do.

So, yeah.

that was kind of the genesis of that
idea, it was just driven by self need,

you know, I needed it to be able to
run my business more efficiently.

Michele: Yeah.

And then in turn that, that made
your businesses itself you know,

run better, but also, you know,
more attractive to someone.

So the other thing, I heard in there
was that this theme, this broader theme

that's going on of software, enabling
non-technical physical businesses, which

is a, you know, you may have heard that
as you know, software is eating the world.

But this is something that I know like
Tyler Tringas of calm company fund for

example, is really bullish on lately is
people with this subject matter expertise

in, specific non technical field, and then
building software for that, like when that

comes to mind, it was like software for
snowplowing businesses, very, very niche.

And as you see, and you said it was kind
of niche as a sort of a sheepish way,

but that's actually being recognized
as, are really valuable opportunity,

because as you said, there wasn't
any software out there for running

a music school business, and, you
know, who's attending the classes.

What lessons are they getting?

You know, a drum teacher
is not interchangeable with

a clarinet player, right.

You know, so like how do you make
this, you know, massive sort of many

to many problem work It's a really
real interesting opportunities there

now that that people are seeing.

Adam: It is for sure.

And I think the thing that has probably
changed for me a little bit over the

years, like since then, so like you
said before, like I've since sold that

business, I sold the music school and
the software all was a package together.

Um, the thing that's changed for me
since then is just maybe looking a

little more carefully at the industry
before I jump into something like that,

like a 10 year project on something.

Because it was great, but the number
of music schools out there who are at

the size where they need the software
that I was writing and profitable enough

that I can afford to pay a reasonable
subscription license to, to have access

to that software is not that big.

There's just, you know,

Michele: Um,

Adam: Music schools is one niche
that I was sort of targeting, but

then my business was even more niche
than that because we were actually

running in the schools and that
just, the extra layer of complexity,

there was the fact that everyone
was in different physical locations.

And so you couldn't necessarily
get from one school to another, you

know, in a given period of time.

And so it was more analogist with a
music school that has six different

campuses around the place versus everyone
running out of a single building, which

is more often how music schools run.

And one of the mistakes that I definitely
made with the software, not so much with

the business, but with the software,
was that it was so heavily customized

to that business that it didn't really
other music schools and less that

were running with like the exact same
business model as what we were doing.

And so I think that was one of the really
big takeaways for me was like, okay,

writing great software and building
a good business around that is great.

But unless you think you can
actually expand that customer base

out to the point that you know, to,
to proper scale, then you might.

You might be sort of
chasing a bit of a dead end.

And I think that was, that was sort
of the point that I got to with the

software specifically for that one,
like the musical itself was, it was

a great little business, but that,
software, you know, when I sold it,

I was initially thinking I was going
to rewrite it from the ground up as a

separate software package that was going
to be more generalized for music schools.

Um, And then I've since gone
in different directions and

done other stuff since then.

So that, that idea didn't really end up
working out the way that I thought it was

going to because I think it was probably
not the right industry for that thing.

Michele: Yeah, that, I mean,
that, that note on industry

is really important, right?

There's a famous quote that, you know,
you can take an amazing team plus a bad,

or, you know, perhaps you could say, you
know, a low volume or low ability to pay

or limited, a bad market, market wins.

You take an average team in
a good market, market wins.

Um, I want to say that's Charlie
Monger, but I'm not quite sure.

But you know, more in our world,
Justin Jackson talks about this

in terms of riding the wave.


And you could be, a really good
surfer, but if there's only a

very small wave, that wave is
not going to take you very far.

Adam: Yeah, that's exactly it.

I love that analogy.

And I think that was one of the deciding
things for me in realizing that I needed

to sell the business and move on was
because I was spending so much time

writing software for this one little music
school that I was like, what am I doing?

Like the, one of the great advantages
of software is the leverage that

you get, that you can write at once
and sell it over and over again.

And I'm literally spending hundreds
and hundreds of hours writing this

incredibly complex, that one little
music school is only ever going to use.

And I think that there's more than
that, that I could be doing with this.

So, yeah, that was, that was kind of part
of the reason for me in deciding that

okay, it's time to, you know, I think,
done what I needed to with that business.

And it's probably time for me to
start looking for someone else

who can take it to the next.

Michele: Yeah, so into that selling
the business, both, so both the

music school and the software.

So what, what I find amazing about this
is that this is an in-person business,

and you sold it after COVID happened.

But in the thick of the chaos of the
early days of it, take us back there

and talk about how, you know, how, um,
how you went from this realization that

maybe you wanted to do more to like, so
you had that thought that you wanted to

sell it and you want to do something else.

What did you do?

Adam: So I I'd sort of had that
idea in the back of my head for a

while that it was always, probably
get where I was ready to move on.

And it was the end of the school year
is Christmas time for us, so we want

to have Christmas family holiday.

I was talking to my wife and I
said, I think I'm ready to go.

I think it's, you know, I think I'm
done with junior rockers and she said,

okay, well, what are you going to do?

And I said, I think I want to do
this software thing full-time.

I'm not exactly sure how it's
going to play out, but you know, I

think that's the direction I want
to go, we got back from the holiday.

And I, um, my car was in being serviced,
I remember I was in the back of an Uber

going to a business broker to go and talk
to them about selling junior rockers.

And I decided it was finally
an 10 years and I was going

to put business on the market.

I was sitting in the back of it.

Playing on my phone and just scrolling
through Twitter or something.

And I remember hearing this news
article on the radio, come on,

like on ABC radio about this new
virus and somewhere in China and

something weird, sort of going on.

And it sort of, you know, when something
just catches your attention and you

sort of go, huh, that was a bit weird.

And got the business broker's office
had this meeting talk about putting

the business up for sale and stuff.

Got home.


That night at dinner was talking to
my wife about it and said, had this

funny experience sitting in an Uber,
going to the, business broker's

office and heard this news article.

And you know, what it felt like, it
felt like the start of every like

global pandemic contagion movie where
someone's in a bar and there'll be a

TV screen up in the, in the background.

And there'll be this like random
news article about a weird virus

somewhere, that's just coming up.

I was like, it felt like that.

And then we, you know, we
both just forgot about it.

And then lo and behold,
yeah, we were in the movie.

I mean, no one knew what was,
what was coming at that point.

So I literally was listing it listing
my music school business that was

running lessons in primary schools as
COVID was just sort of taking hold.

And so within six or eight weeks, you
know, everything was going pretty crazy.

And the schools here in Melbourne
were starting to shut down.

And so, I mean, once that happened, you
know, we managed to switch some lessons

to online, but essentially the business
came to a grinding halt and very quickly.

And as that was happening we had
an interested buyer came along and

started a conversation and it was one
of those times where he could have

come in and go and Hey, I can really
take advantage of the situation here.

I know you're in trouble.

Like it's, you know, it's pretty fun
to see, um, you know, to his credit, he

was very kind of honorable about the way
that he went about the whole process.

And it was so such early days that no
one really knew what was going to happen

with COVID and with the schools shutting.

I mean, when the first time the school
shut here in Melbourne, it was just before

the end of the term one school holidays.

And the school was shut two weeks
early and everyone went okay.

Instead of school holidays being
two weeks, we're going to make it.

Surely that's long enough, like
four weeks of no schools like that,

that's a long time for schools to
be shut who could possibly imagine

it being any longer than that.

So we're going to come back at the start
of term, so and everything would just

go back to normal, you know, that's,
I'm sure that's, what's going to happen.

And so when we signed the sale contract,
we put a couple of clauses in there

that basically said, okay, there's going
to be a 12 month period where both the

buyer and myself, we're going to take
some of the risk here because no one

really knows what's going to happen
with schools and COVID and things.

So, we're going to put some fallbacks
in the price and things like that, so

that if things do go really badly, the
buyer will get some back, but there's

also a reasonable floor in there so that
I've got some comfort to know that I'm

going to be walking away from this 10
year project with at least something

that I can be happy with and look.

I think the sign that the deal
was well struck was that at the

end of the 12 months, we probably
both felt a bit ripped off.

But also pretty happy that
we, you know, we probably just

got away with it, you know?

So I think if it hadn't been six months
later, I just couldn't sell the business,

like if it was stopped by that point.


I think I got very lucky that
I got to meet that buyer when

I did and sell a business.

And it all went down very, you
know, considering everything, I feel

very lucky about it all, so yeah.

Um, certainly, certainly an interesting
experience going through it and pretty

tough, stressful 12 months while I
was trying to kind of transition the

business across to this new person who
was going to be taking it up, taking

over the stewardship of this business
and trying to grow it and take it to

the next phase, whilst we were shut.

Like I couldn't like, you know,
when you're doing a business

handover, you're supposed to be like
teaching the new owner all about

how your systems and processes run.

And I mean, I could tell him about
them, but I couldn't show him because

we couldn't actually do anything, it
was just a crazy kind of experience.

Michele: That sounds like a, yeah, a
really, really weird experience, so to

have of selling the business and yeah,
they're supposed to be this period when,

when you're transitioning, but you, you
kind of just show them sort of what it,

what it looks like without anything there.

You mentioned that you ended that
12 month period feeling kind of

ripped off and like, I'm curious if
you were to sell a business again.

Is there anything, that you would do
differently, or that you would make

sure to do in the process of selling.

Adam: Don't sell a service business
in the middle of a global pandemic.

I would highly recommend that.

Look, I think the
handover was far too long.

I mean, it sort of had to be because,
because we were, we had these

clauses in the contract around the
risk because we just didn't know.

So that was, that was a part of
the way that we structured the deal

effectively with what we're going to
give ourselves a favorite of runway

here, because there's a chance of
things do pick up for six or eight

weeks, which then, you know, potentially
gives me a really great earner.

And then the business falls into heap and
the buyer gets left with, sort of thing.

So the thinking there was that high,
12 months is probably long enough

that we both have a reasonable chance
to kind of make a good go of this in

whichever way things are going to go.

And then the average is we'll work
out over that 12 month period.

And we'll, you know, we'll end up with
a fair kind of price at the end of it.

The reality though, was that
doing a business hand over

for 12 months, like when you.

I dunno, I guess it's different
for everyone, but for me, after

10 years of building and running
this business, like it was my baby.

I put so much into this thing and
then realizing that I was done.

Like I'll was ready to walk away.

That was the point in my life where I
was like, okay, I'm moving on emotionally

from that business now, but now I'm still
tied to it for another 12 months trying

to kind of make it continue to run and
grow and, and set it up well for the

buyer, because I don't want to, I don't
want to hand over a shell, but at the same

time, I've also got to have one eye on,
well, what am I going to do in 12 months?

I kind of, you know, this is all
I've ever done is running this

business and I want to have this
big career change and be moving into

full-time doing software development.

So if I'm not significantly concentrating
on that, then I'm gonna put myself really

behind the eight ball when that is up.

So and so, that was really tough.

It was too long.

If it hadn't been three months,
I could have said to myself,

you know, it's 12 weeks.

You just need to concentrate on doing
the handover, giving the business,

everything you can for that one last push.

And then you can go and do your own thing
after that, 12 months was just such a

long time that by the end of it, I was
so kind of emotional divorced from the

business that I was having a really hard
time actually giving it what it needed.

So, I think that's, you know, that
was one of the big takeaways for me,

it was just too long that handover.

Michele: Yeah, I think, I mean, that
makes sense that it was really hard for

you to slog through it for that long.

And, you know, you mentioned
the business was, was your baby.

And when I've talked to other founders
about this, uh, you know, conversation

we had with Danielle Simpson of Feedback
Panda, arvid Kahls, wife and co-founder,

you know, she, she mentioned how there
was like this grieving process that needed

to happen when you sell the business.

And, you know, for a long time you
were, you know, you were for 10

years, you were Adam of junior rockers
and then you sell the business.

And then it's like, okay, not only is
there all of this work to do to sell the

business, but there's this internal, uh,
handover that goes to, so to speak for,

from okay, well, who am I now, especially
for, for us founders who tie up so much of

our energy and identity, you know, often
to an unhealthy extent, myself included,

um, in our businesses and then to, be
going through that grieving, that loss

of an identity at the same time, that
you're also still attached to it as well.

It's really difficult.

Adam: Yeah.

And, and then even to, I think
for me, I got to the end of that

grieving process and it was kind
of like, okay, I've done that.

I've grieved and now I'm over it.

And I'm ready to move forward with my.

But hang on.

I've still got six months, nine months
to go of having to actually be hands-on

involved in what's happening here.

So that was tough because I think,
you know, I felt like I wasn't able

to do everything I could have for the
other people in that business, you

know, because then that was a part
of the reason for wanting to sell it.

So because people, you know, there were
other employees in that business who I

felt like deserved to have a boss who was
really invested in what was happening with

the businesses they were all working on.

You know, by the end that, that wasn't me.

I had one eye on the future to the other
things that I was going to be doing.

And so it was like, Hey, you guys deserve
better than this, you know, let's go

and find someone who can be that person.

So yeah, that's, you know,
it was a tough situation.

And having COVID piled up on top of
that as well, just made a tougher so.

So, you know, it is what it is.

I still feel lucky that
I got the result I did.

Um, it was, Yeah.

it was just a tough, tough time.

Michele: Yeah.

I mean, and, and you're in Australia,
which has, you know, had some of the

longest lockdowns in the world and to be
going through that grieving and transition

alone, basically, you know, even if you're
talking to your employees on zoom or

whatnot, like I imagine it was probably a
bit of a relief when those 12 months now.

Adam: It was, it was a big real life.

Um, and yeah, that's one of my
regrets, was it like I had to

tell my main managers that I
was leaving, that I was leaving.

You know like it was
just the timing of it.

Some he had to lock downs in
Melbourne, there was no way to catch

up and talk to people face to face.

And, you know, especially for like my,
my main manager who was affected, who had

basically been running the business for
me for a few years at that point and all

were really close and, you know, I still
consider him a good friend and, um, it

was really, really disappointing to have,
to not be able to, go and catch up with

him and say, Hey man, we need to talk.

He's like, hey, let's, let's jump
on a zoom call and, you know,

pretend like we were strangers.

I dunno.

It's um, yeah, weird,
uh, weird experience.

Michele: Yeah, not getting that kind of
closure that you might get from being

able to see someone in person then, you
know, hug it out or, or, uh, however

Adam: did eventually.

So after the 12 months was up, he
and I went out and we finally got

to actually sit down at a pub and
have a beer and a meal together.

And it was really.

Um, no, it was really funny,
our, our relationship changed a

lot over that 12 months period.

I think one of the, one of my other really
big learnings from selling the business

and having that really long, that long
handover period, like I think if there

was going to be a positive out of that,
the one thing that I did get from it was,

I was more myself with my employees in
that 12 months, and I had been in the

whole 10 years leading up to it, I've
always had this thing of I'm the boss.

Like I need to be, I need
to take myself seriously.

I, you know, not, not like, I think
I've always had this attitude of like,

If I'm going to be the boss, then
someone needs to be, you know, thinking

seriously about what's happening here.

And, you know, being very
considered in what they're doing.

And always, always having a bit of
professional distance between me and

everyone else in the business, because
it just seemed like that was like

the boss thing to do that you should.

I don't, I don't know.

I'm not, I'm sort of struggling to
find the right words to describe

the feeling of needing to kind of be
disassociated a little bit from them.

Can I try this whole thing again?

I, I feel like it's coming
across really badly.

Michele: So it's really good actually.

I think you're hitting on something
that is hard to express, which is like

this feeling of responsibility, right?

Like you, you're the one
responsible for their income.

You're the one responsible for
making sure they have a place

to work six months from now.

You're responsible for making sure
all these kids learn how to play

flute and cello and everything else.


There's so much responsibility that
you carry as a founder, as you know, to

your employees and to your customers.

And that is a heavy burden to carry.

And I think, you know, people in, in
general, you know, beyond, you know,

the sort of indie world talk about
founder loneliness, That is a really

big burden to carry, and I can see why
you would feel like you needed to keep

that distance between you and your
employees, because, you know, maybe you

felt like you had to, you had to project
stability and confidence and, you know,

and it's, I think it's really only being
recognized in the past couple of years,

how helpful vulnerability is for leading
a business, you know, Brene Brown's work.

But that feels very, very new.

And definitely the longstanding tradition
of business owners is that you have

to project this, yeah, I guess it's
cause this calmness or that, or this

confidence, and it's not authentic
for, I would say probably the vast

majority of people to be somewhat,
you know, stoic and just carrying

all the weight of that themselves.


And so it sounds like even though
the, your big moment of liberation was

when the business was finally sold.

Your earnout was finally done.

Like you were done done, but like once
the paperwork was signed and it was

no longer your responsibility, really,
like you almost kind of became an

employee for 12 months, or you had a
very bizarre sort of employment contract

that nobody else had that, how the
had, you know, these conditions in it.


But like, you could just enjoy
the, the business you had built and

the, and the people you built it
with in a way that you'd like you

couldn't really, before you build.

Adam: Thank you for putting into words the
thing that I just couldn't quite get out,

but that's, exactly what it was like.


And, it was, you really
hit the nail on the head.

Like it was once the paperwork was signed,
and I told everyone that I was leaving,

it was like this veil sort sorta came
down and it was like, okay, I don't

have to pretend to be the boss anymore.

I can actually, talk to these people
and, and it changed over the 12 months.

And I think, that was the one positive
that came out of a being such a long time.

Was it, it actually gave me time
to realize that this transition was

happening with my relationship, with
the other people in the business and

to, to actually enjoy it and to start to
go with it a bit and go, I I'm allowed.

You know, be completely honest
with them about the fact that

this is really hard at the moment.

Like COVID is making it really,
really difficult to run this business.

And I can sound emotional.

Like there were, yeah, there were
times like, you know, you spent 10

years building a business and then you
watch it all just crumble overnight.

And it's really emotional.

You know, there were times when I'd be
like in tears, on the phone to these

people kind of going, I actually don't
know what we're going to do here.

Like where, you know, We are all managed
to kind of find a way to come together

and make it work and, and get through,
get through that 12 month period.

Um, and, and beyond for everyone else,
just obviously not for me in terms of

the hands-on involvement, but it was
really refreshing and really nice.

And, I said it to Dan one day towards the
end of the 12 months, how I felt like our

relationship had really changed and how
much I was really enjoying, actually just

feeling like I could be myself with him.

And it was really funny because he
actually said the same thing back.

He said, you know what?

I actually felt like I've been
able to be more myself with you as

well, because I've always tried to
be like, no, no, you're the boss.

And I should try and, you know,
be very responsible around Adam.

It was kind of like, he felt the
same thing from the other side of it.

And we both, our working relationship
got so much better when we just

dropped the act and started
being ourselves with each other.

It was, it was kind of really great
and kinda really sad that we'd spent

so many years not doing that because
we were both putting on this act that

we thought we had to for each other.

And it wasn't until the end that we kind
of realized you don't have to do that.

You're actually allowed to just
be yourself and be vulnerable.

And no one's going to hold it against you.

If you're the boss and you say, I
don't know what to do today, guys

like help me out, you know, which,
which I did and they did help me out.

And it was.

Michele: That's amazing.

Like, I mean, it sounds like you, you
came so far with this team and as people

and, you know, I wonder, so, you know,
now, you know, you are uh, a consultant.

And I wonder if you know, you start
another software business at some

point, do you think you would be more
vulnerable w with them from the beginning,

like that last year of junior rockers.

Adam: That's definitely my goal.

And I'm trying to be like that
with consulting clients too.

It's funny because it's a different
relationship with consulting clients.

So I think, I think you probably do
have to maintain a certain element of,

you know, no, I do know what I'm doing
and I'm in control and things are good,

but I've also just been trying to do.

Honest about, you know, things in my
life and what's going on and try and

just open up a bit more about who I am
and, and not just be a robot who writes

code, you know, and I think that that has
been really, really nice that the people

I've been able to work with just as a
pure consulting agreement type thing,

I've actually gotten to know a lot of.

Because of that, because I've been
consciously trying to break down

that wall as much as possible, as
much as I think you can look there's,

there's definitely still that sense
with the consulting that it needs

to have, you know, something to it.

Michele: Yeah.

I mean, I guess, you know, I
used to work at an agency that

was my first job out of college.

And there, there's definitely this,
you know, this air of professionalism

and like, yes, I can actually do the
thing that you have paid me to do that

I told you in the proposal I could do.


But then, you know, also being
able to be a bit more real

with people can be liberating.

And, and perhaps, you know,
that's more possible when, uh, w

w when you're running a company.

Um, so I don't, I don't
want to pressure you.

I'm sure you get this all the time,
but I'm curious, like, have you

thought about what your, your next
business might be, or are you.

You know, are, are, are you kind of still
taking some time to sort of just enjoy the

consulting and, and enjoy that lack of,
uh, for better way of putting it sort of,

the burden of, you know, running a larger.

Adam: No, I have.

And I've actually started working with
a really good mate of mine on a new

business that we're putting together
at the moment where sort of, we're just

getting ready to sort of start putting
out um, some of the material for it.

So this is one of my best mates
in the world is a sleep scientist.

And he came to me a while ago
with a proposal for a product

that he wanted to build together.

And essentially it's a, platform for
people with sleep apnea to manage

their treatment and you know, get
better outcomes from their therapy.

And so he pitched me on this idea
and we sort of start talking about

it and throwing some ideas around.

Yeah, so when, when the consulting
work, uh, when I was trying to balance

out the consulting work and decide,
well, how much of that do I want to do?

And how much do I want to be putting
into exploring other ideas and things?

I made the decision that, yeah, I want
to get back to running my own business

that I love the consulting and it's
great, but it's after having run your

own business for such a long period
of time, it's, you know, consulting is

effectively working for someone else.

You're writing code that someone else
is going to use to run their business.

And, and that's great.

I just, you know, for me, I
feel like I'm ready to get back

to doing my own thing again.

And this seemed like a really
interesting opportunity.

So we've been working on it for about six
months now and likely with what sort of

thing to the end of a beta testing phase.

And we're just about to start kind of a
biggest scale launch of this new product.

But that's been a really fun experience.

It's been completely different because
like I said, this is with, you know,

one of my best mates in the whole
world and getting to do something

like this with such a good friend
has been and amazing life hack.

Because I don't know about you, but I,
like, I find as I'm getting older and

everyone's got kids and your life gets in
the way, like it gets harder and harder

to chat with your friends, like, you know,
like you and Colleen during the podcast,

like it's such a good excuse to just catch
up with a friend and hang out with them

and run it, starting a business with a
friend is a great excuse to catch up with

them because we chat almost every day now.

And it's been amazing because
you know, this is someone who I

enjoy spending time with anyway,
and now we just get to do more.

I think you know, I felt like I
always got warned growing up about

not starting business with friends,
because what if it goes bad and you

lose a friend over or something.

And this is certainly someone who
I really wouldn't want to lose this

friendship over any amount of money,
you, someone who I really value.

But I think we're both in a
position where we're, we're

kind of ready to do it together.

And it's actually a second attempt.

We tried one other time to
start a business together.

And the business went really well, but
I had to bow out because I just felt

like I wasn't pulling my weight enough.

I we was still had full heads down
in junior rockers at that point.

And again, we had this idea for
a business that we could start

together and we started doing it and
it was going really, really well.

And I would say that he was just doing the
bulk of the work and I was still really

busy trying to deal with junior rockers.

And I just said to him, one day I was
like, look, man, I think I need to bow

out of this one because I can see it's
going to take off and you're going to end

up resenting me because I'm going to just
end up riding on your coattails here.

And he still runs that business today.

And it does really, really well.

And I do sort of look at it every now
and again, go probably should have,

probably should have stuck around.

But it feels like we're both
in a different place now.

And you know, we're, both kind
of got the time and the energy

to do this thing together.

And also the, you know, maybe that
little bit of experience to know that,

Hey, if it was heading down that path,
as much as I'm really excited for

this new product that we're going to
do, I'd back out if I thought it was

going to jeopardize the friendship.

Michele: Yeah, I think that that's
something I've seen um, is that

when, you know, people are not.

At the same level of commitment to
something it can, it can really, um,

challenge even the strongest friendship.

You know, I mean, I've seen so
many people, you know, warn people

about running a business with
their spouse and that's what I do.

And I think it's amazing.


And, you know, I guess.

Well, I was Colleen and I forget that,
I guess this podcast is kind of a

business, but really it's just an excuse
for us to talk to each other every

week and make sure that it's like an
appointment so that we don't blow it off.

Right, which has been so good.

Um, the business side of
it is more questionable.

Like whether we want that or how
good of a business it is, but like,

that's really the point of it.

And, and, and like, it sounds like you
learned a lot from that early experience

and you also had that insight into your
own priorities and that honesty with

yourself to say, you know what, like, I
love running this business with him, but

like I'm 25% and he's a hundred percent.

And the most important thing
here is the friendship.

And to continue, that would
jeopardize the friendship.

But now it's interesting that he's still
running that business, but now you're

starting a new business together and it
sounds like your, I guess you're, you're

still also dipping your toes in this one.

Cause you still got a little bit of
consulting going on, but I'm curious

if that experience like informed
how you set up the new business, the

software for sleep apnea patients.

And like, whether you spelled out in, you
know, some, something in your operating

agreement, or like, whether this was
a conversation you had, when you said.


Are we really gonna do this?

Like, you know, did you have
the sort of like come to Jesus?

Are we, are we both the same level of
intensity and, and passion and time on.

Adam: Yeah.

That's I mean, that's exactly
the conversation that we had.

So initially, he pitched me the idea.

I said, all right, let me, just have a
little bit of a play around, see if I can

knock out something, some sort of like
a little MVP that we can just play with.

Like, it was more proof of concept than
an MVP, I guess, just to see if, if it's

technically feasible to do the things that
we want to kind of set out to do here.

And so I did that and I was just
sort of doing it on the side.

I just working nights and weekends and
the bulk of my day was just consulting.

And we did that and we, we looked
at it and we played with it and

we went, this is really cool.

I think this is something, but also
through doing that proof of concept.

It made me realize just how much work
was involved in what we were, what

we're actually setting out to do.

It's like, you know, when you look
at a software project first up and

you go, oh, that looks pretty easy.

And then you get into the details.


Oh, okay.

There's a whole bunch of rabbit holes.

I didn't even see before
I started this thing.

And it kind of, it was really great
because it just showed me where a lot

of those rabbit holes were and they
were more than we realized, but it at

least gave us that real realization
that, okay, this is going to be hard.

And that's okay.

He's not a software developer.

He's he's asleep scientist.

And so at least initially it's
all, it's going to be almost

a hundred percent my effort.

It's going to be important feedback from
him, but then I'm going to need to spend

the bulk of the hours on doing this.

So what we ended up deciding
was that I would bill him where

we're 50, 50 partners in this.

But I'm going to actually bill him for
my hours at a reduced rate that sort

of allows for me owning equity in the
business as part of that, plus effectively

me paying part of my own hourly, rate.

And then him paying the other part.

And so I, I literally sent him an invoice
along with my other consulting clients

at the end of each month for the hours
that I've been doing on this thing.

Because we're in this space where
it's like, Hey, it's right now, it's

pretty much all software development.

As things change in the business
grows you're hopefully we get to the

point where it's profitable and we
can kind of rework the agreement,

but I wouldn't be surprised.

Going forward, it stays kind of
develop a heavy and his involvement

is more in the promotion and marketing
and he doesn't need to put in the

same number of hours that I do.

And so we've had that conversation that
we would probably continue with a similar

sort of agreement where we both get paid
per hour for the hours that we work in.

But we're also a 50 50 owners and we
split the profits at the end of the year

on whatever is left over after paying for
the hours that have each worked in it.

So at the moment, that's the plan and it's
been working really well up to this point.

I mean, we're, like I said,
we're only really just about

to get to the launch phase.

So, you know, we're not, it's
certainly not profitable at this point.

So who knows going forward, but
at the moment we have a good

plan and it's working so far.

Michele: That's a really
interesting model.

And I'm struck by how it seems
like you came up with something

that works for you, right?

Like you didn't take, a template of
something or, you know, like going

back to what you said about junior
rockers, where, you know, you felt like

you had to act a certain way because
this is how a business owner acts.


And then, so you adopted that role
and it sounds like you have in a very

different context, but have applied
that, you know, well, instead of doing

what I think I'm supposed to do, right.

Which in this case might
be taking equity instead.

It's like, what do I need out of it?

What do I want out of this understanding
what the other person wants out of it.

And then creating something new out
of it, uh, creating a new arrangement

that that really fits what you need
and what you want and is not just

something that is sort of off the shelf
like that, that strikes me as one of

the big perspective changes of having
run that business is that you're like

you're giving yourself permission to
make the new business work for you.

And what's important to you
and what works in your world.

Adam: Yeah, totally.

I think that's, one of the advantages in
being a little bit naive with this stuff,

because you don't necessarily realize
how things are supposed to be done.

So you just go and figure out what kind
of makes sense for you and your situation.

And, yeah, that's exactly like you
said like, that's a sort of unusual

situation, but it works for us because
of where we're both at, in life.

And it's given me the flexibility to
kind of juggle it with, well, I've been

able to start kind of scaling up my
work on, this new business and scale

down the consulting work a little bit
because I am making some money out of

it, even though it's at a reduced rate.

Um, so it's awesome that we've
been able to push the product

faster than we were expecting to.

So, you know, it's, been a really
great arrangement and I sort of,

I feel like it just makes sense.

You know, if someone's going to
be spending way more hours in the

business, like I think going forward,
if the business is profitable, then

we would do exactly the same model.

Except that instead of me sending
him an invoice, I would draw down

out of the business each month.

And then at the end of each year or
whatever the reporting period is, we

just do the same thing where we split
whatever's left between, you know, between

us as 50, 50 founders of the business.

So yeah, it's, a weird one.

I think it just, when we were talking
about it, it's like we got to the

end of that proof of concept thing.

And it was like, okay, this
is going to take some serious

development hours to make this work.

I can't just not work for the
next three months and do this.

So, you know, what can we do?

Let's talk about it.

And yeah, so it's fun.

You know, he's someone who, because
we've both always run our own business,

and I don't know a ton of people who
are running their own businesses.

And so he's someone who we
could always just catch up.

He would talk to me about what was
going on his businesses and we'd kind of

brainstorm things and I'll do the same
thing with him, with my businesses.

And now we get to do it together.

We get to like have those
brainstorming sessions.

And then at the end of
it, we're like, great.

Well, like it's mainly
doing this together.

It's not me taking that idea
and going off and doing it in my

own little corner in my world.

And so getting to do that with a friend
has just been so much fun saying yet,

Michele: So you said
it's in beta right now.

I'm curious, like, is there a website
people can go to, to check it out.

Adam: There is.

Yeah there is.

A, so we're calling it sleep HQ.

So sleep is the website.

So yeah, right now we're, basically
doing a slow release of accounts.

So we're, uh, we're only releasing a
limited number of accounts in every

24 hour period, just so that we
don't kind of, you know, overwhelm

servers and crash things just to make
everything a little easier for us.

One of the advantages that we thought
we had in doing this is that my mate

has a very big social media presence.

He's built a big YouTube audience over
a lot of years doing sleep science

and sleep apnea related videos.

Well, we were almost sort of cautious of,
Hey, if we do go and just drop a YouTube

video about this new product that we're
launching, we may have tens of thousands

of people going, you know, hit our
website and it's just going to crush it.

So that's why we've sort of been
doing this slow release thing for

the last three or four weeks now.

And we've just been kind of building
confidence in the number of users we can

sign up per day and per week to the point
where, we're now pretty much ready to stop

actually marketing this thing properly.

So, uh, yes.

Sleep is the website.

So people go there, they, depending on
how many accounts we've released in the

day, they may be accounts available.

It's a definitely a, a niche
product going for C-PAP users.

But there's a lot of them out there and,
you know, Nick, my mate has just so much

experience and such an audience in there.

To be honest.

It kind of felt like when he pitched
me the idea, like looking at guys like

Justin Jackson and transistor and stuff,
where you see these combinations of

someone who's really great at marketing
and someone who's really good at products

coming together and it just works.

And it kind of felt like that way.

He, he already had this big
audience that he's built in a,

very niche industry and I've got
the skills to build a product out.


I absolutely have that problem
there just about every software

development has with want to build
the thing, but you don't really want

to market it and sell the thing.

Like I've built a number of products
over the years where I've done the

work and got them out and then I sort
of market it and then I get bored or

I go on and do something different.

And I, you know, doing something
like this where you can, I can just

go heads down on the code and then I
can go, Hey, it's your responsibility

to make sure people know about it.

You go and make them sign up.

It just feels like this
perfect combination.

So it felt like a lot of things
coming together at the right

time for the two of us together.

So, um, yeah, we'll see.

But early signs being very promising, so
yeah, pretty, pretty excited about it.

Michele: Well, that's
really exciting stuff.

And you know, I, I love that, you know,
he already had this audience and you're

building something for that audience.


You know, it's what we were talking
about about the, the surfing analogy

talking about Justin again you know, yes,
it's a niche audience, but yes, niche

audiences ins is, are a good thing, like,
because it's very engaged and I mean,

if you can't sleep, like that's a very
serious problem that, you know, people

experience on a daily basis and they
might be willing to pay to be able to,

they are willing to pay to sleep better.


I say this as someone who was
currently very jet lagged from

visiting Colleen recently in
California, like sleep is important.

So, um, So yeah, I mean,
there's so many lessons in that.

I am, I'm so excited to see
where sleep HQ takes you.

And it has been, an absolute
delight talking to you.

I feel like we could talk all day.

So perhaps I should just say thank you,
Adam Palozzi, the exited founder of

junior rockers, self-taught developer,
current consultant and co-founder

of sleep HQ, Adam, thank you so
much for coming on software social.

Adam: Thanks so much for having me.

That was really fun.