Thriving With or Without Funding (Acquire.com)

Andrew: People, I, idolized and admired and now they're, you know, supporters of my company. So it was, it was very humbling to have them want to invest

Jason: This is Funded, a show where founders who raised millions in venture capital share the gritty side of what it actually took to get that money in the back. I'm Jason. Not too long ago, I was trying to get my ideas funded. And back in the day, I was a VC listening to founders pitch me for money.

If you only know me as the host of a podcast called Funded, you might think I believe raising venture capital is the only true successful path forward. But that's just not the case. There are numerous paths to success that don't involve outside capital. And I'm a huge fan of all of them.

For those of you who do decide to raise, make sure you check your intentions. Is it because it feels like the right thing to do for your business? Or is it because you associate success with being venture backed? This isn't an ivory tower criticism. I point this out because I know firsthand how easy it can be to associate being bigger with being better. To chase the path that feeds your ego and not your soul.

Jason: Andrew Gazdecki, founder of Acquire.com, knows a lot about only raising from VCs when it's the right move for the business. He bootstrapped his previous company to a significant exit. Acquire.com is a marketplace to help entrepreneurs sell their small businesses, most of which have not taken a dime of outside funding. In fact, a lot of Andrew's marketing dissuades entrepreneurs from raising money. Rather than viewing VC dollars as a shortcut to success, he emphasizes the significance of creating a business of value first. Andrew believes that by focusing on the foundation of delivering value to customers, entrepreneurs can set themselves up for long-term success with or without venture dollars. As the saying goes, you can't build a skyscraper on a shaky foundation.

Andrew: I was always kind of hustling, I guess you could say. I did all the typical cliché stuff when I was younger, like working at an eBay store when I was 13. You gotta be 18 to actually be on eBay, so I was bending the rules. I had a number of different ways to make money. I grew up in San Clemente, a beautiful area, but I didn't have much. I'd go over to my friend's house and see huge mansions by the beach. Amazing place to grow up. But what instilled entrepreneurship in me was necessity.

You know, entrepreneurship now is super trendy. Everyone wants to be an entrepreneur, start a company, and I think that's awesome. But for me, it was just out of necessity. I needed to make money to buy stuff, like a new skateboard or whatever. Thinking back, I was kind of a troublemaker, not with the law or anything, but always had some sort of idea or something.

Jason: Were you shy growing up?

Andrew: I wasn't the most outgoing. I'm half introvert, half extrovert. I think I've always been that way. But I wasn't afraid to ask questions. I'd talk to my friend's parents, asking them how they became successful. I was always curious. I still am today. I love learning. I found my passion early in life, which was business. The rush when something works or you sell something on eBay, especially when I was a teenager. Everything just progressed from there. I've always been naturally good at sales, maybe that helped. I don't know.

Jason: Yeah, no, I think the background that you have is different, some from some of the other people I've talked to who have come from technology and software and building things that require a lot of time and effort in the beginning before they can even start selling. But your background is with eBay. You know, you started an eBay store. And so the moment you start an eBay business, you're selling and you're generating revenue. And so when you say you found your passion, it sounds like you found this passion for business, probably this idea of like solving a problem and getting, extracting value out of that. And so your path into business maybe didn't lend itself to thinking about raising outside capital right away. Can you tell me a little bit about your first experiences with business and whether or not this idea of like bringing on capital even hit your brain or when that became a concept to you?

Andrew: I mean, I was a teenager. I didn't even know what raising capital was. So, for my first business, uh, it was a company called Bizness Apps, like my first real business with employees and stuff like that. We only raised a hundred thousand dollars, and even that felt like an enormous amount of money. I was 21 at the time.

Jason: Wow.

Andrew: Did you raise that from?

Andrew: Uh, two individuals, Robert Strazzarino and another individual named Christian Friedland.

Jason: Got it.

Andrew: They were basically just two entrepreneurs in my college town. I went to CSU Chico state, um, and they were great mentors. And I learned probably everything I know about business from them. They were super hands-on. They didn't make a lot of angel investments. And so that allowed them to spend a lot of time really helping me shape the business. At one point, we were doing daily updates, and then because the business began growing so fast, like every day was kind of different. And then we moved to like weekly, monthly, and then quarterly, so, yeah. And then just long story short on that business, ran it for about eight years and then, um, it was acquired when I was 29. After that, I started a crypto company for some reason. I literally started building the company while my first business was in due diligence and then jumped right in. For anyone listening, and if you sell a biz, yeah. I don't recommend that because you don't get to celebrate the win or anything like that. I literally went from one challenging problem company team to manage to another more complex, challenging problem team to manage. But that's what I enjoy. I mean, I just love building businesses and...

Jason: So, Business Apps. I mean, you did raise a hundred thousand dollars, but that was like two different angels. I wouldn't call that raising massive capital. So for all intents and purposes, that was a bootstrap business. And you ran it for, I guess, eight years before selling it. And this next business, obviously, you kind of monkey-barred from one to the next. You didn't wait for outside capital but started building it.

Andrew: Well, for the crypto business, we ended up raising 700K for that. So, just a small jump up, but I put a good amount of money into that business before raising capital. I've done that with all of my businesses. I typically put in at least enough to get product-market fit. For example, at Business Apps, we were generating, I believe, I don't know, let's call it a hundred K a year, something like that. And that was self-funded through a different business, which was a mini-job that I had created that gave me some unique insights. There was a job board that connected mobile developers with businesses, and I kept seeing the same job posted over and over and over again. So I just saw an opportunity to make a template and sell it. I sold that job board and used that as initial seed funding.

Jason: Right. I think that's actually a good part of the conversation to get to because you started MicroAcquire, and I've been a follower of yours for a while now and have watched MicroAcquire kind of come out of the ground, running with a really, really strong voice around what it means to serve businesses and what you need to start a business and what you don't need to start a business. So when you started MicroAcquire, did you think it was going to be a large venture-backed business, or were you able to see the sort of initial strands of a profitable or self-sustaining business from the get-go? Like, how did you think about MicroAcquire as you were starting it?

Andrew: Yeah, good question. So the answer to that would be, no, I actually started it as a side project. I kind of just looked at the market and saw zero innovation in terms of acquisitions. My two previous businesses, finding a buyer was the hardest thing in the world. And so I thought there had to be a better way, something specific to startups, something specific to SaaS. And I just couldn't find anything in the current solutions and optionality for smaller businesses, let's call it like $10 million or less revenue. You'd have to pay like a business broker 15%, which is like a small seed round. So I looked at that and I'm like, okay, it really felt like a Wealthfront, you know, financial advisors situation where, a lot of the parts of an acquisition, you know, they're very complex, but it's all manual.

A lot of it happens offline. And so I thought, you know, what if we made a marketplace where we remove the middleman and have buyers and sellers connect directly? So I kind of just thought to myself, you know, as I was selling Bizness Apps, you know, if I just wanted to sell the business and find buyers immediately, like what would it take for me to list a business on a marketplace? And, uh, yeah, so I was just scratching my own itch and then it just took off, but by no means did I start thinking like, I'm gonna change the landscape of M&A.

Um, you know, I was just dabbling at first. And then as it started picking up, I really saw just how, you know, when you put something out into the world and then a lot of people are like, oh my gosh, like. Thank you for building this. Like, I can't believe it doesn't exist yet. You start to get this real feedback from a large amount of people and it's very consistent. And I think that's a good way to, you know, kind of not push all your chips in all at once. You know, I built it myself, generated, I think we got to let's go. 600,000 annual recurring revenue before taking any outside capital.

Jason: Wow.

Andrew: So there was,

Jason: So this was still a side project. You said you had your scratching this itch, you knew it was a challenge because you know, you sold a company before and you felt that disconnect between buyers and sellers. But talk me through a little bit about that. The momentum as it was building, like throughout probably just a landing page or something that represented this idea, um, how did you go from that to 600 K with zero money? Right.

Andrew: No, actually. So I did the opposite of what I would recommend. I overbuilt the marketplace because my thought was, if I was going to really, you know, if a startup was really going to list on a marketplace, I kind of needed to out-startup them if that is like a term where, you know, it looks beautiful, the user experience instills trust.

Jason: Uh, you wanted them to feel safe.

Andrew: Yeah. So I really invested a lot in, you know, the initial prototype or the initial MVP, if you will. And, uh, had no business model at all, everything was completely free. You could sign up. He started talking with sellers immediately. We did that for about a year. So basically all customer support all listings vetted by me, every single newsletter written by me. Uh, what else? Product, man. Everything was run by me for, yeah, about a year and a half, but it wasn't like work. I mean, I just enjoyed it so much. I'd wake up from like four to, like I'd work till like midnight, every single night. And then I'd wake up super excited too, because I wake up and then I'd see these really, really interesting companies looking to sell and most of them are bootstrapped, you know, they were self-funded and...

Jason: Just want to pause and say, say like, you're about to talk about these entrepreneurs and their excitement, but as I asked you about it, and as you were talking about waking up early, like just that smile, that creeps on your face and sort of a light in your eye that it's a really special thing to see and to hear, right. You didn't need capital. You weren't making money necessarily, but you saw the problem that you were solving and it feels like it's something that really lights a fire. And I think that's kind of what drives a lot of great entrepreneurs. Do you feel like you're always chasing that or is that just something that is kind of natural to you?

Andrew: I'd say, you know, well, before I started MicroAcquire, I kind of use this like a framework and it started with the customer. So I'm a big advocate of, you know, you have to love the customer that you're serving and you have to love the problem that you're trying to solve. Otherwise, it's just gonna feel like work, and then you're going to be competing against someone that it doesn't feel like work and they're going to work twice as hard, twice as fast, and maybe with a little more love, you know, like they really, really want this problem solved. And that's just basically built like my video game or like, yeah, I want to go play.

Jason: That's a great quote.

Andrew: And it was just such a cool business because I got to look at startups all the time and I'm kind of like, I always joke where I say, you know, some people like to play tennis or, you know, whatever on the weekend I like to play startup. I like looking at different startups. I like to read different business books. I, you know, that's what I am wired to do, I guess in a weird way. But, but...

Jason: So what I was going to say is, as you were launching MicroAcquire, I can't even remember why I came across you on Twitter. But I started following you on Twitter and seeing the content you were putting out and having been a venture capitalist, myself, and a venture-backed founder who then transitioned over to, after my last company exited, knowing that I didn't want to raise money for my next company. I had seen all sides of this conversation around what types of startups, venture capital and their venture capital bootstrapping, and you came out loud and proud about what it means to start a company and what you do need and what you don't need to start a company. And very specifically talking about how venture capital wasn't the answer. It's not always the answer.

And I don't necessarily, I definitely don't think these are mutually exclusive thoughts having that thought and then also raising venture capital. But I wonder if you could talk a little bit about this progression of building something that you love, just because you wanted to scratch your own itch and then finding out there is revenue to be made and then getting to a point where, you know, you're building this great bootstrap business and you realized, huh? Maybe I should raise money or huh, maybe I need to raise money. Can you talk about that transition a little bit?

Andrew: Yeah. So we've done three financings. Do you wanna hear the story of the first one?

Jason: Yeah, definitely.

Andrew: So I have a template that I've sent more than a hundred times to different investors, like, "Hey, please follow up in like four to six weeks. I'm super busy, but I really appreciate the support." I'm sure if someone did the same, this email has maybe gone through that, but, um, I had zero intentions of raising any capital. I didn't, you know, it just hadn't, it really wasn't my plan. But, uh, I met with my first investor, Jeremy Devine, who I had known for about seven years. We met during an introduction from my first angel investor, Christian Friedland. We went to In-N-Out and got burgers, and I randomly asked him about some of his favorite investments. He's a very humble, smart guy, and I can't say enough good things about him. The story goes, we were circling around a small seed round, and then I was like, "Ah, I don't want to do this. It's not enough capital to really build what I wanted. I realized to really build out the product vision, it's going to be capital intensive.

Otherwise, it's just going to be a deal flow platform." But we wanted to innovate on things like legal document creation. We wanted to make due diligence easier so you can assess the health of the business more easily, look at revenue, expenses, and stitch together P&L. We wanted to make transferring assets easier. All of these could be different companies. The products are so complex. Financing, escrow, really rethinking how acquisitions in the lower end of the market are done. So I kept pushing, and again, it's just me. Literally, it's just me, and I had one person to help with customer support, but I just kept going. We were going to close a small seed round, a $200,000 investment, and I just said, "Nah, I'll just fund it myself." So I wired $200,000 from my personal bank account.

There's a funny tweet on the MicroAcquire Twitter account. I wrote, "We just closed our seed round from Andrew Gazdecki," and it was $200,000 from my own account to continue funding the business. So I invested quite a bit of my own money just to really build out, find product-market fit, and continue to grow both sides of the market, supply and demand, and really just feel out how big of an opportunity this was. And as every month went by, it became more and more obvious that this could be something that could help millions of entrepreneurs across the world.

Jason: When we come back, Andrew tells us the story behind his first round of funding that wasn't from his own piggy bank and how it came into play. If you're a startup trying to sell into enterprises, I'm sure you've been dreading getting some sort of certification like SOC 2 or HIPAA. I know I did when I was running my last company, and it cost us some important deals. If that's you, you're in luck because not only is there an awesome solution called Vanta that makes the process dead simple, but also funded listeners get $1,000 off the service by going to vanta.com/funded. That's v a n t a.com/funded. Check it out. Andrew's focus was always the business. He never really spent a lot of energy on fundraising. If anything, he avoided investors and ran the opposite of a process. Whatever he was doing, it was working.

Andrew: So, after turning down Jeremy the first time, he just said, "Hey, let's catch up in like two weeks." And I, I've also never made a pitch deck. So we just get on a call and I just walk them through my thoughts on the business and where I think it could go. And I'm thinking about, you know, kind of like, we want to build like the Zillow of M&A, if that's an analogy and, on the spot, he just was like, "This, and we'd love to work with you. Can we invest 2 million at XYZ evaluation," which was, we negotiated 2.2 million for 10%, and that was it. And I was like, "Okay." And then we put that money into digital engineering resources to continue building out the marketplace and the product.

Jason: Yeah, but before we continue, because you ended up building much more and attracting more capital, I think the easy thing for an outsider to hear is like, "Oh God, this guy just didn't even build a deck, didn't do anything, and was able to raise money without even trying. Maybe I can do that." And so like, it's really easy to say it happened really quickly, but you're about to say, I want to get your reaction to that. What do you think about that?

Andrew: Yeah, so here's what I would say. If you want to raise capital, ask for advice, and if you want... I'm saying the phrase wrong...

Jason: Sometimes, when you ask for advice, you get capital, and most times when you ask for capital, you get advice.

Andrew: Yeah, so my focus was so much on building the business and not on fundraising. It was almost zero on fundraising. I was focused entirely on moving the business forward. So I'd create what I'd call momentum decks or traction decks where, you know, user counts, but I wasn't outlining the problem or anything like that. If it wasn't obvious to you, then, you know, okay, I'm not going to explain. I'm not going to sell you on this. Like, this is basically how fast we're growing. These are the numbers that I'm seeing. So I would say, you know, the best way to raise capital is... Building in public really helps a lot too because that's another way of introducing your company to someone for the first time. But I was showing revenue numbers, like from 200K I still do, just to inspire other entrepreneurs and show them like, you know, "Hey, you can build something out of nothing too."

Jason: And I think what's really important is that you met Jeremy, you said seven years before he invested. Right. And he's been watching you build businesses and sell businesses. And so what you said is exactly right. It's like a lot of founders, when they need to raise money, have to build a really great deck because they are rushing into the game and need the money. They're about to go out of business or whatever, and they need to be able to onboard an investor to understand what they're building and who they are and convince them as quickly as possible to raise money. Whereas you were focused on the business. You happened to meet investors along your journey. And when it came time, this investor is seeing an opportunity. There's nothing that excites an investor more than hearing about progress. So the first time Jeremy tried to invest and you were like, "You know what, I'm just going to fund it myself." And then he hears more progress and more progress. Those are the deals that investors will fight to get into. So yes, maybe it sounded like it happened quickly, but it's a lot of work and a lot of company and relationship building that went into that.

Andrew: Yeah, no, I completely agree. I think I oversimplified it, but yeah, I think it just rings true in terms of, you know, and I think even after you raise funding, your focus should be... I hate the term. The number one thing a CEO should be doing is always be fundraising. You should really be always trying to improve your business, like build a great team, have an awesome culture, make sure everyone is aligned in what you're doing, being a good leader, growing the business, creating happy customers. When you focus on those things, everything just kind of takes care of itself. But, you know, I talk about this a lot, openly, but I feel, you know, when all you read about is big fundraising headlines and like, you know, XYZ company raised 50 million, then a day later they raised like a hundred million.

It skews entrepreneurs to think that, you know, to be successful, you have to raise a bunch of capital and that's really what valuation and all these vanity metrics that really do not matter. You know, it creates an environment where people are more focused on fundraising than actually building a business of value. And so I think just having the focus and even like, now. I'm still completely working just as hard, just as much, because I still love what I'm doing, more than ever, but yeah, but now I get to play with a bunch of friends. You know, we've obviously expanded, but I think that's one thing that has... And that's why I've been so outspoken about my thoughts on not raising venture capital. Like I do not. I think 99% of entrepreneurs should avoid venture capital at all costs. And I'll give you two reasons why. Number one, it just depends on your goals. Like, I truly believe a lot of entrepreneurs just want to make, you know, they want to be financially secure.

The best way to do that is to bootstrap a business because I think the stat is like 98% of acquisitions are under $80 million. So just do the math on that. And then, out of the companies that do raise capital, only 1% become a unicorn. And actually, I think that's just to a unicorn, but unicorn like acquisition or IPO, I don't know the stats, but let's just assume that. 10% of that 1%. So you have a 10th of 1% chance to get to a liquidity event if you raise capital. So statistically, if you raise capital, your chances of making any money at all, go down dramatically, especially if you raise a bunch of capital, the more capital you raise. Your buyer pool goes down because there's only so many companies that can acquire a company for billions of dollars.

Andrew: And then, you have to get lucky along the way, like you have to have flawless execution. But if you just, for example, I'll use MicroAcquire as an example. You know, if I had just bootstrapped it and just kept it as a simple, less advanced deal flow platform, I'm still adding a lot of value for a lot of people. And I'll be in a lot of entrepreneurs. I could sell it whenever I want. But I wanted to really build out something that I think would change acquisitions for entrepreneurs all across the globe. And, um, that was really kind of the mindset shift of, you know, Hey, this, if I really assembled a team to invest in all of these different products, I think we could build something really special that can impact a lot of people.

Jason: Yeah. So, so actually that shift in mindset, this is something to dig into because the first raise you talked about was. You know, you wanted to build more, but like you're having fun. And so you'll just fund it yourself, and some people want to invest, but you don't need their money. You'll just fund it yourself. And then you end up taking venture capital, which does change the game. Right? So now you are on the treadmill, and you know that you need to get to this next proof point. Can you tell us a little bit about when you went out to raise the next time? Was it any different, how did that set of occur and what was going through your mind then?

Andrew: Yeah. Good question. So. We originally thought we could build out our entire product roadmap with the capital that I had on hand. Um, and so the original capital raise was, um, like two and a half million, which is a lot of money. But to really be the products we're building, you know, we needed separate teams for each. And so the second capital raise, we went. It was really just other investors that were users of MicroAcquire. They had asked to invest, and so, um, the second fundraise, I think it was about over a year ago. I just reached back out and said, Hey, we're looking to raise a little bit. Like, I think we started with an idea to raise another 2 million, and there was so much interest that we went to, I think it was five, and they were all MicroAcquire users. So I got kind of lucky.

There were, you know, my customers were angel investors and venture capitalists and successful startup founders. So that made raising capital very, very easy because they had used the product and then also their investors themselves. So that, period that happened from initially, you know, reaching out to say the first investor, I can't remember who the first one was, but, um, it took about a week to fully, um, fill the round if you will. And again, it was because I think people really wanted this to exist. They were all startup founders. That second round, I focused the majority on, you know, entrepreneurs, for strategic purposes. One for, you know, access to additional shown deal flow. And then to just, you know, you're building a company, you know, I'd love to learn from you. And I get a ton of really great advice from my investors, which has been amazing. People I look up to, you know, people I, you know, idolized and admired, and like now they're supporters of my company. So it was, it was very humbling to have them want to invest and, um, use that capital to, again, expand engineering and operations.

Jason: Is this when you were able to bring on, um, some of the A-Lister angels that I see in your cap table, like Naval, Sahil, Ryan Hoover?

Andrew: Uh, so Naval came in the first financing was with, uh, Jeremy Levine, Naval, and Andres Klinger. And then the second financing was like the big group findings.

Jason: Got it. Got it. And is that people finding out about your company via Twitter and wanting to, you know, sort of reaching out and wanting to invest? Or did you go after them?

Andrew: A mixture of both. Word gets out quickly, but I did reach out to a list of people that I admired and I thought could add a lot of value to MicroAcquire. So I just reached out and said, "Hey, I'm Andrew. I noticed you use MicroAcquire. We're looking to raise additional capital. I'd love to have you on board." And it kind of just had a snowball effect from there.

Jason: And I saw something. One thing I'll point out is, you got really lucky. You're in one of two categories. So you're in this category of businesses that venture capitalists know very well. It's a category where there are multiple unicorns, multi-billion dollar companies - note-taking apps. There's a glut of multi-billion dollar note-taking apps. The joke is that venture capitalists, when they see someone pitch a note-taking app, they understand it. They think, "Oh, this is a problem that I have that I want to fund." It turns out there's another category, which is buying and selling companies. There's this funny joke about venture capitalists, and it's reflected in the number of billion-dollar note-taking apps. There are. If a venture capitalist truly understands the problem, they want to invest in that company. It turns out one of the only categories that venture capitalists really understand is note-taking apps. That's why Notion and Evernote and Roam and all these companies raised hundreds of millions of dollars. But you landed in a second category, which is near and dear to a venture capitalist's heart, which is seeing companies get acquired. So you just landed in this great place where VCs use your product on the side, see companies they know using it on the side, and really want to invest. It's really cool that you've been building this product. Did you raise one more round of capital, is that right?

Andrew: Yeah, so that one. But to your point too, there was... I mean, if I'm just thinking through the reasons to invest in MicroAcquire, let's say you're an angel investor or a VC fund. I've helped some of my investors' portfolio companies sell on MicroAcquire. So they almost get the return back from selling companies on MicroAcquire. And then I've had some of my investors buy multiple companies on MicroAcquire, so I definitely did get lucky there. Maybe next time I'll build a new note-taking app into the end of MicroAcquire and just go crazy. The second fundraising was prompted by Shrug Capital. We had a call, one of my favorite firms that had been Moshi, and they just offered, they wanted to put in a, what they call just a core check. And I said, sure. And then I went to Jeremy, got his thoughts and said, "What's your thoughts on maybe raising another round of capital, so we can really hit the gas?"

Because I identified a few areas where we could really expand, you know, our... cause we have four ways that we make money at MicroAcquire, and I really wanted to hit the gas on two. So they prompted the raise and then all the other investors in that round were existing investors from the previous round. So I believe only one new investor came into the third financing. Yeah, one new investor and then the rest were just insiders doubling down on their existing investment into MicroAcquire. So, and I think that happened because, number one, they saw the progress I was making, and I always try to do my best to give really detailed monthly updates with how everything is going, how many acquisitions, the volume of acquisitions, how many users are signing up, how is revenue doing? And so I think that happened over Thanksgiving week, and I believe only 10 or 12 investors were involved in that. So again, I just reached out to existing investors saying, "Hey, we're going to raise a little bit more money, to invest here, here, and here."

Jason: Yeah.

Andrew: They were all interested in it, it went pretty smoothly, so I've been pretty lucky in terms of, you know, I guess venture capital found me, rather than the other way around.

Jason: Yeah. I think again, what might be easy for someone to do is just kind of be annoyed at hearing this story because of how easy it was for you, quote unquote, easy, but easy is not the right word to use. You did all the right things.

Andrew: Yeah, but I would say the amount of work I put into building the business... if someone made that comment, like, "Hey, this kid just, you know, it's so easy for him," but it's so hard for me. I was working like an unhealthy amount just to make it. I truly, truly believe this business needed to exist for entrepreneurs. And so I was willing to work literally every waking hour to make it work. Sometimes it's what you need to do. You need to build the business into existence. And that's where I go back to, like, you don't really need financing. Venture capital is really just a tool that accelerates things that you want to do within your business.

By no means do you need venture capital. So if you're spending all your time pitching investors, hearing no, you should probably just spend that time focusing on your business, talking to your customers. I used to sit on live chat, even on the weekends. I learned so much from customers, like previous acquisitions, writing down different problems or ways to solve things. Just having that focus on the business makes fundraising easy. So you're putting the hard work where it should be, which is on putting value in your business and creating value for your customers. Instead of trying to impress whatever VC with your pitch, your story, and your super pretty deck or whatever. From my vantage point, most investors... it's important, but I think what's more important is, you know, are you capable of building a big business, and is this a big opportunity in terms of market size? Is this something that is in line with your personal ambition? I think that came across with a lot of investors, and it made the decision easy. I can only speculate.

Jason: I think there's a lot to say on that topic. I usually love asking founders, you know, what's a piece of advice they'd give to an early version of themselves or another founder that's going out there. And you already gave one, which I think is amazing. You know, focus on the business, really focus on building a great business, and funding will come. Can you think of a second one? Any other specific thing you'd like to share?

Andrew: Yeah. I would say when you build a startup, it could be whatever you want. There's this thing where, and this happens to a lot of people that raise capital, like you mentioned the treadmill, like where you feel like you always have to be making these short-term decisions to impress the next set of investors because that's what your investors want you to do, raise more capital. But your investors make no money when you raise additional capital. So I guess I would say continue that focus on customers and really building a business of value and not just trying to build, you know, a fundable thing that just keeps raising money, money, and money until you're at a point where, you know, you're either going to be acquired for a lot of money or maybe it's just value. Add a lot of money. You've got to grow into that investment.

I mean, raising money is kind of if you raise money before you're ready, it's like putting rocket fuel in a rocket. And if you put that rocket fuel and you're not ready for it, like your business is going to explode. So I'd say just stay focused on customers. But going back to a different point, you know, focus on something that you do for free. Like I ran MicroAcquire for free for over a year because I truly enjoyed it. And I think when you can find a business that you would actually do that for, and, you know, I'm fortunate that I was able to do that and not have a salary and draw revenue from the business. I mean, I think those are the founders that go the farthest because you don't really care about, you're not thinking about money. You're thinking about the impact that you can make and the value you can deliver. Like the funny part about MicroAcquire, you know, I've accepted, we could fail, you know, every startup can fail. You know, that's just how startups work. But even if MicroAcquire does fail, we've made, you know, a ton of entrepreneurs millionaires, you know, and I think that's a win in itself. So, you know, if you want to create your video game.

Jason: Yeah, create your video game.

Andrew: And then the second part of that would be, you know, write down what you want out of a startup. Like if it's just a few million dollars or, which is a lot of money and you just want to be financially secure, avoid venture capital at all costs because you can get there a lot faster and really with a lot fewer headaches. 'Cause you know, I view MicroAcquire as a business I want to run for the next decade. But if you're just looking to become financially secure, there's not a lot of data on this, but I truly believe your stats are your chances are just so much higher and I see it every single day at MicroAcquire. So just find something that you would do for free and then focus on just creating as much business value and not impressing investors. And the rest just kind of takes care of itself. I love that. Before our interview, I was so excited to pick Andrew's brain and hear about the craziest businesses he's seen on acquire.com.

Andrew: This story I like to tell the most about just the most. And this is like how much opportunity there is with software today. So there's this business that was so simple. It would basically, like, if I took a screenshot of your face, it would just remove the background. So you'd have like a PNG with a transparent background. And it was making, let's call it 500K to a million in profit. That's all it did. And the whole strategy was like search engine optimization. So if you type in "background remover for image" or something like that, and it's sold for like 3 million bucks. And it was run by one guy. Everything was automated. It was just like an internet vending machine, just printing money. It was, I've seen several businesses like that, but people might kind of be like, oh, well, why would you build that and not a big thing? And you know, that guy or the person who sold it walked away.

Jason: That's probably super happy.

Andrew: Uh, yeah, I would hope so. Yeah. So we get to see a lot of fun businesses, and then also very niche too, like a CRM for a dentist is one I've actually seen. I didn't know dentists needed a CRM. Uh, you know, just really niche software and it just kind of opens your eyes to this different world of like, again, you don't need to build a billion-dollar business to be successful as an entrepreneur. And that's really our goal with MicroAcquire, whereas we want to help support those businesses and just show the world like, hey, there's this path that you read about all the time, but there's also this other path that a lot of other people should check out because it might be a little bit more practical and realistic.

Jason: Alright. Awesome. Well, Andrew, thanks so much for the time. It was a really fun conversation. I'm a big fan. It sounds like you're still having fun.

Andrew: Yeah, man. I mean, I do. I get to talk to cool people like you all day. I meet cool starters all day. Appreciate you having me on.

Jason: That was my conversation with Andrew Gaz, the founder of acquire.com, the best online marketplace to buy and sell startups. When we come back, we'll see how my producer, Paige, is doing. I have a feeling she's getting the hang of some of the VC lingo. Some people might be surprised to hear that I've struggled with focus my entire life despite getting good grades, attending good schools, and landing good jobs. But all that was in spite of being a crazy procrastinator. I tried a bunch of things like productivity apps and planning rituals, but nothing really stuck. When I heard people talk about Magic Mind, this super productivity drink, I was really skeptical.

But a friend convinced me to try it, and it totally changed my mind. When you drink Magic Mind, you just have this focus kind of wash over you. Like those distractions that normally make you do the things you don't want to do, those are gone. And it's been kind of amazing for me. I'm a fan of Magic Mind, and they've been awesome enough to give a crazy discount to my listeners. My discount code "funded" will get you 20% off your purchase. But if you go to the site magicmind.co/funded within 10 days of this episode airing, your total discount will be 50% off. Check it out, it's awesome. Hey, Paige.

Paige: Hi Jason.

Jason: So, what did you think about the interview with Andrew GSI? Actually, before that, uh, had you ever heard of Andrew GSI before?

Paige: No, I had not. But I am very, like I said, I'm still assimilating into this world of people building companies. But...

Jason: Yeah, and I'm so glad because there are so many characters online to follow, and Andrew is one of them. Uh, before we even did the interview, I knew of him and I was following him, and, uh, he did this great thing where he—do you know what Cameo is? It's like you can hire celebrities to do random videos. He got the actor that played Russ Hannaman on Silicon Valley to do this over-the-top selfie video promoting acquire.com and Andrew GSI. Uh, and that was great. He's a great follower. You should follow him.

Paige: I will definitely be doing that after this. One of the things I actually noticed while listening to this episode is he just, he doesn't even mean to, it seems like, but he has such a good sense of humor, without even realizing it. Um, and the way he expresses himself with this calm confidence, he doesn't even realize that he is doing it. And it was really, um, I enjoyed listening to him.

Jason: You can tell that he's having fun. You know, you can tell that he really enjoys what he's doing. Even the interview was part of his company, and he loves doing it. Um, you know, that's just the thing that gets you amped to talk to certain founders, for sure.

Paige: Yeah. And that's why I enjoyed hearing about his background, and honestly, kind of where I had my first open-ended question, I guess I would say. Uh, because you were asking about his childhood, you know, how he grew up. And something that I noticed is that he said being an entrepreneur was out of necessity. And I guess I have like a counterclaim to that because, you know, we all come from different backgrounds, and he was mentioning he grew up in a very nice area, and he didn't grow up with as many things as the people surrounding him. So back to my point is he said that it was out of necessity that he became an entrepreneur, but what I've noticed is, some kids who grow up with similar backgrounds to him, that honestly makes them feel like even more, they can't become an entrepreneur because they feel like they don't have the resources, they don't have the network. So I guess my first question for you would be, do you think that certain people are almost just born to be founders and have that mindset? Because not everyone in his situation grew up viewing the world in the way that he did.

Jason: Yeah, what a funny question. Um, funny because I was chatting about this with my entrepreneur friend at dinner about like, are the things that go into a founder that is successful and a founder that is a venture-backed founder that's successful. And I think there are probably a few characteristics that help someone get down a certain path or be someone that's predisposed to enjoying what entrepreneurship represents. But I don't think it's, you know, I don't think it's one profile and only this one profile that ends up becoming an entrepreneur or ends up being a successful entrepreneur. I've seen people from very different backgrounds, people with a chip on their shoulder that needed to prove something, someone that grew up feeling like everything they wanted was always out of reach and they wanted to get to it really quickly. And the only way to short circuit that was by building their own business. And then sometimes people that grow up with great means, who got everything because they don't have any risk of I don't need to make money. It allows them to leverage their own intelligence, their existing network, and just go for broke and go really big, because they can, right? Like if they fail, they have something to fall back on. And I've seen all those profiles work out. So yeah. I'm not surprised that you're like, huh, I've seen different profiles. It's definitely possible.

Paige: I guess the reason I was just so intrigued is because when he was speaking about it, he was like, it was out of necessity. And I think regardless of the background that you come from, I guess not with every single founder, but with a lot of successful founders, they have this necessity to solve a problem and to create something, and I just really wanted to point that out because he said it with such confidence that he just knew that that's what he had to do.

Jason: I think it's a good call out. I mean, it's your own personal framing of that necessity. Right. But you're right. Like every founder that we talk to that is successful and has gotten to the next stage and beyond, they have their own framing of why this is like a burning necessity for them. Some people, it's like Andrew felt like he needed to get these things that were out of reach. Other people want to prove something. Other people just like want to scratch an itch or like have to solve a problem. But yeah, if you don't have that burning feeling like what I'm doing right now, like I have to be doing this, it's gonna be a hard road, so,

Paige: And I think that's something that investors can recognize as well. I think maybe that's one of the things that attracted so many investors in the end, along with many other factors. There's another question I wanted to ask you about, which is when he finished working on his first business, I can't remember the name right now. And as soon as, I think, during while it was getting acquired, he started working on his next business. And I feel like this is semi-common within founders who want to create multiple businesses, before they even finish the one, before they're already thinking about it. And he mentions how he recommends maybe you take a little bit of a break.

Jason: And he's like, but I didn't do that.

Paige: Yeah, right, right. Exactly. I just wanted you to talk about, you know, some of the benefits that might come from, you know, staying on that motivation acceleration train of trying to build something else and, you know, maybe point out possibly some of the downsides, 'cause I think you've experienced something similar as well. Correct.

Jason: Yeah, that's right. I mean, I think it's very common for entrepreneurs to want to continue being entrepreneurs. There are good drivers for that, and there are definitely negative drivers for that. I think the good one is that at some point, people just get addicted to the pure enjoyment in problem-solving, the constant challenge of building a business. When you think about what you want to do, it's not because you need to make money anymore or because of a potential outcome. You're doing it because, if given a choice to do five different things, you would still choose to work on this next business. It's not, you know, Andrew talks about this, he's having fun. We talk about this. He's having fun, and it's like, what's the next hobby he would work on? Well, it would be another business. I think the dark side of that is that, and this is my disclaimer for other people, because I've felt this too, which is, this feeling like you have to, or this feeling like if you don't continue being an entrepreneur or building businesses, no one will respect you. If it's all externally motivated. So, I do think people should hear the same advice that Andrew gave, which is like, take time off, develop a diversity of experiences and hobbies, try.

Paige: Yeah, see where that intention is coming from. See where that intention's coming from, and if it is internal and you genuinely just feel that necessity to solve another problem, hell yeah.

Jason: But find some time with your friends and family and have some other experiences as well. I think that's probably something that Andrew would recommend as well.

Paige: Yeah, definitely. There's something else I think I wanted to touch on, which is all of his investors for his second raise were actually users of Acquire. And I just wanted to know your thoughts on that. I know that Acquire is within the VC world and people use it all the time, but he was seriously being chased by investors. And I want just your thoughts on why you think that was.

Jason: Yeah, I mean, I think when you can do a few things all at once is one, like start building real traction and momentum in a business while also keeping the investor community aware of what you're doing. And then finally giving investors a bit of the cold shoulder, a bit of the, "Oh, I'm not gonna raise from you. I'm just gonna do it myself because it's such a great business. And then I'm not gonna raise from formal venture capitalists. I'm gonna let my customers invest first." So VCs, you can't even get in there now. I always tell people the most powerful words that a VC can hear is no. Turning them away just makes them think, "Oh my God, they don't need my money." That makes them want to give them money more. So, I'm sure some of this was very calculated, and parts of this are just like running a good business. I'm running a good business that doesn't need outside capital, and I don't want to waste time fundraising. So, I'm just gonna keep running my business, and if VCs want to hear about me, they can. So, by the time that he went to go do his first raise from outside investors, there was already so much heat around him and awareness of his deal and excitement to do that, that once he kicked off whatever process he ran, there was already this pressure and scarcity around how much people wanted to do the deal. That's why it became so smooth.

Paige: And he touched on this in the middle of the episode talking about how, you know, all these founders focus on the raise. And he was like, you should be focusing on the culture, on the environment, on the team, on how can you literally perfect your process so much within your company that it's honestly just the natural next step to get some capital to accelerate the growth of your company. Yeah, step one of running a great fundraise is running a great business. And I think maybe not most, but a lot of first-time founders skip that step. They just think they need to raise. Because Andrew had been through the game a couple of times, he knew he just wanted to build a great business.

Jason: And if there was a point in time where outside investor capital was the thing that he needed to accelerate the business, then he would do that and not the other way around.

Paige: I think the media also has associated raising a lot of money with a successful business, whereas it's supposed to be a successful business raising a lot of money. That's the more natural way to look at it. And I think it leads, you know, sometimes founders to feel trapped, feeling like they have to raise because that's what gets the media's attention. But from Andrew's perspective, which he touched on numerous times, it was about building the best possible business and then, if people want to help him accelerate that, then it's gonna happen because they're gonna recognize the success that's already there. So yeah, I just appreciate his mindset.

Jason: Yeah. The ultimate irony of having Andrew Gasek from acquire.com unfunded is that Andrew's big thing both for his company and his own personal belief is that you shouldn't raise venture capital. Like 99% of entrepreneurs should not raise venture capital. They should run their own business. They should be playing for a small exit, and he wants to give the best platform and experience to make that process as painless as possible. And you know, as ironic as that is, it's almost not ironic because I believe it too.

Paige: Yeah.

Jason: I love the work of trying to help founders who are dedicated to building a venture-backed business, and helping them understand how to raise capital the most effective way. But I find that 90% of my work is convincing a lot of people that they shouldn't be raising venture capital. Certainly, Andrew doesn't think this, but my message is definitely not this either. My message of "you shouldn't raise venture capital" isn't "you're running a bad business." It's that it's just not the right fit for you. You can run an amazing business with huge financial outcomes without raising venture capital and it's a great message to put out there to make sure that people are going down the path that's right for them.

Paige: Yeah. Wow. It's been cool to learn a lot about the fundraising process through you and a bunch of different VCs and founders because I think that a lot of founders don't learn about the fundraising process until they're in it and they're raising. And I think it's cool that we're creating an opportunity for founders to learn about it beforehand. So they can really decide, you know, is this good for the business? Is this just something external that I think I need? And they can make a more proper decision around what's the best for them. I think that's a really cool way to almost wrap this up. And I just wanted to mention something that he said that I loved, which was, find something that you would do for free and just keep creating value. Maybe you can add your own thoughts on that. But I just loved that so much and I just wanted to share it again for people to hear.

Jason: I think it's spot on, a hundred percent. And I'll flip it around to you. To end this, what is that thing that you would do for free that you might sell on acquire.com in a few years? What do you think that could be?

Paige: Oh my gosh, you're talking to me. I thought you were talking to the listeners for a second. Something that I would be interested in is I've thought a lot about creating something where I actually go into other businesses and help create stronger communities and connections within them, you know, whatever business that might be. It could be any type of business because I just like to get involved with groups of people and foster a better environment. I'm not sure if I could sell that on acquired.com or if I even want it to get acquired because I want to be there. But yeah, that's the one thing that's been toying around in my mind lately.

Jason: Well, you'd be awesome at that, and I'm sure Andrew would help you sell that on acquire.com if you decided to.

Paige: Yeah, I might have to reach out to him.

Jason: If you're looking for more insights, strategies, and support around the process of fundraising, subscribe to our weekly newsletter at fundedpod.com/newsletter. You can also find me on social media; I'm at J a Y Y E H on almost every platform. I respond to newsletter replies and direct messages, so feel free to reach out. This episode was produced by Paige Randall.

Paige: Hey guys.

Jason: Thanks also to Jon Lee from Adamant and thanks to Andrew Gazdecki for creating a place for entrepreneurs and founders all over the world to control and sell their businesses the way they want to. As always, one last thanks to our fantastic sponsor, Vanta, the leading automated security and compliance platform.