DeepSummary
In this podcast episode, Ben Gilbert and David Rosenthal interview Patrick Campbell, the founder and CEO of ProfitWell, a SaaS company that was recently acquired by Paddle for over $200 million. Patrick shares the backstory of ProfitWell, how it evolved from a bootstrapped consulting business to a successful software company without any outside investment.
Patrick discusses the details of the acquisition process, including the initial conversations with Paddle's CEO Christian, the negotiations, the due diligence process involving numerous lawyers, and the challenges of integrating the two companies' cultures and operations after the deal was finalized. He also touches on the decision-making process behind the acquisition price and the importance of having a good support system of founders who have gone through similar experiences.
Throughout the episode, Patrick offers insights into building a SaaS company, raising venture capital, pricing strategies, and the trade-offs between going public or being acquired by a strategic buyer. He emphasizes the value of focusing on the long-term vision and not getting caught up in the smaller details during the acquisition process.
Key Episodes Takeaways
- Building a successful SaaS company often requires a long-term vision and the willingness to make sacrifices in the early stages.
- Achieving product-market fit before raising venture capital can be an ideal approach, as it provides more leverage in negotiations and avoids potential cash flow constraints.
- During economic downturns, prioritizing customer retention and providing more value through free offerings or community building can help companies emerge stronger.
- The acquisition process involves extensive due diligence, negotiations, and cultural integration challenges that require open communication and a shared vision between the parties involved.
- Pricing strategies and segmentation should be reevaluated during economic shifts to identify opportunities for growth and better serve customers' evolving needs.
- Having a support system of experienced founders and seeking advice can be invaluable when navigating major events like an acquisition or raising capital.
- Building a company as a strategic acquisition target requires careful consideration of the potential buyers' motivations and the long-term value proposition of the combined entity.
- Transparency and direct communication between the CEOs can help overcome challenges and streamline the acquisition process, even when involving numerous legal teams.
Top Episodes Quotes
- “Whoever holds on to the most customers at the end of this wins. And what that means is not only retention, so making sure you have cancellation flows. For those people who are trying the bottom 20% trying to leave, let's pause them. Let's do this. Let's do all other stuff, right?“ by Patrick Campbell
- “I think if you can get to product market fit then it or see it in the, like, horizon without raising money, I think that's ideal. And then as soon as you have that, go for it.“ by Patrick Campbell
- “I won't say the name because it might actually violate an NDA, but there was a giant company, honestly, my favorite public company ever. I can't say what it is, but, like, they're not in the subscription space at all, right? So the only way this works, it was like the quickest two phone calls, because the only way this works is if they're bored.“ by Patrick Campbell
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Episode Information
ACQ2 by Acquired
Ben Gilbert and David Rosenthal
7/27/22
What does a $200 million+ acquisition look like up close? How much time, focus, and communication happens between the first conversation and closing the deal? And when do the CEOs of each company just need to use the "red phone" and have a direct conversation without the 86(!) lawyers in the room?
We sit down with ProfitWell founder and CEO Patrick Campbell to answer it all, centering on ProfitWell's recent acquisition by Paddle. And incredibly, Patrick built and scaled the SaaS company without taking a single dollar of investment! If you're running a company that may one day need to navigate an acquisition (or just curious), tune in!
Links:
- Our Previous Episode with Patrick, a Masterclass on Pricing - The Documentary: "We Sign Tomorrow?"
Sponsors:
Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.