#227: Zero to Sold in 24 Months: How to Start, Run & Sell a Bootstrapped Business

On today’s show, I have the co-founder of FeedbackPanda and author of Zero to Sold: How to Run, Start, and Sell a Bootstrapped Business, Arvid Kahl. Arvid and I talk about how he was able to build FeedbackPanda from scratch to $55,000 MRR with only two employees, all within 24 months. We dive into what it means to manage versus own your business, which leads us to something that was discussed in the last episode with my partner Pat Hobby: Annual income versus long term value creation. My favorite moment was Arvid's answer to the question: Why did you decide to sell?

The most important takeaway from this episode is to know the difference between your management role versus your ownership and to know the value of your business. If you want to dive into the concept of long term value creation, it all starts with understanding business valuations so you can create more value in the direction that you want. You can learn more about that in our digital course.

What You Will Learn In Today's Podcast Interview

How Arvid spotted a problem in the market and why he built software to solve it
How FeedbackPanda was able to grow to $55,000 in MRR with only two people.
What B2BC (Business to Business Customer Sales or Prosumers) is and why it’s a great market to sell to.
The best way to build a business that is marketed by word-of-mouth within your client’s communities.
The best ways to replace yourself in your company to resolve burnout and keep your options open.
How to get your company noticed by potential investors and strategic buyers.
How Arvid and Danielle structured the sale of their company after educating themselves about the particulars so their main mission would continue with the next owner.
The importance of doing both sides of due diligence—while you’re going through your own skeletons, you should be looking for your buyer’s.
How goals impact your drive and ability to be receptive to new opportunities for growth.
What founder bias is, why we’re prone to it and how it plays a role in how you choose to manage your business.
The consequences of not fully understanding the differences between annual income and long-term value creation and what Arvid would do now if he could go back.

Are You Growing The Value of Your Business

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Are your company's current initiatives intentionally designed to increase the value of the business?
Do you know what you want from your business long term and why?
Do you know what your company is worth?
Do you know the differences between Management, Family Transitions, PE Firms, ESOPs and Strategic Buyers?
Does the business have a written strategic plan on how to achieve the desired normalized EBITDA and valuation?

About the Guest:

Arvid is a German writer and entrepreneur set on using his documentation software engineering skills to help business owners automate processes where possible to free up valuable time. Inspired by a work problem his wife, Danielle Simpson, was having, Arvid created a software program that addressed the specific issue she was facing in her online teaching role. Realizing this solution would be useful to more people in Danielle’s field, they bootstrapped FeedbackPanda (an EdTech software-as-a-service company) to improve the work experience for virtual teachers. Ten years later, they successfully sold to a private equity firm that would follow the mission established in the beginning: To genuinely help as many people as possible.

To that end, Arvid has written a book called Zero to Sold—How to Start, Run, and Sell a Bootstrapped Business about building said company and all that he and his wife learned along the way. He’s also editor-in-chief for The Bootstrapped Founder website where he writes about bootstrapping, startups, engineering, and mental health. He’s also working on a second book called Audience First publicly. You can contribute to it and his outline is online to review.

Quotes:

04:45 - “It’s incredible how dedicated teachers are. That’s one of the things we figured out from the beginning when were were figuring out who we wanted to serve. We later built FeedbackPanda to serve online English teachers. How much dedication they have for their craft, right? They love teaching.” - Arvid Kahl

18:46 - “Most of these little niche businesses that actually have successes at being, they don’t have money to waste. We [trained?] with, like, a hundred euros. Honestly, at that point, that was probably about ten percent of our monthly recurring revenue. That was a big expense. For others it wasn’t a big cost. For us, it was a big experiment” - Arvid Kahl

24:26 - “This is important to understand. Like, this is a step among many but it is a step that few people reach because the systems that are in place are so heavily disincentivizing from taking this path.” - Arvid Kahl

58:44 - “The moment we sold, I knew, ‘Okay, I need to do something… soon. So let’s figure out a couple of ideas.’” - Arvid Kahl

69:47 - “It means saying no, I think. That’s something that I’ve learned the hard way because I’m a people pleaser, I guess that’s what you’d call it. But saying no is fine too and it’ll lead to more success than saying yes and, kind of, half-a**ing it.’” - Arvid Kahl