E81: AcquHire & Growth Via Acquisition w/Steffen Schebesta - CEO North America Sendinblue -How2Exit

Ronald Skelton  0:06  
Hello and welcome to the How to Exit podcast, where we introduce you to a world of small to medium business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors, and other influencers with the sole intent to share with you what it looks like to buy or sell a business. Let's get rolling.

And now a moment for our sponsors. I want to highly recommend you get Acquisition Aficionado magazine. Every month, Acquisition Aficionado magazine brings you tactics for business buying and selling you won't find anywhere else. Learn firsthand from industry leaders who share their success stories, featuring in depth interviews and stories from leading figures in the business acquisition industry. This multiplatform mobile magazine speaks to acquisition entrepreneurs wherever they are in the journey. And I want you to visit acquisitionaficionado.com today. Hello, and welcome to the How to Exit podcast today. I'm here with Steffen Schebesta, say your name for me, man. I want to make sure we get this right. I know.  

Steffen Schebesta  1:14  
Right? I know. It's difficult. It's

Steffen Schebesta

Ronald Skelton  1:17  
Okay. All right. He's the CEO of North America SendinBlue and VP of Corporate Development. And I want appreciate, I want to let you know, I really appreciate having you on the show for the day. And I just I, I can't believe I stumbled your day. It's like this. I say, I'm not going to say that I did. We'll go with that. Thank you for being here today. And let's just start off with your origin. Man. How did you get started and kind of you have a very interesting story that I think people are gonna love to hear. Let's kind of jump into kind of how did you get started, as an entrepreneur? And then, and then how did you start it in the acquiring businesses and being acquired,

Steffen Schebesta  1:48  
 sure, yeah.

Thanks for having me. Great to be here. So originally, I'm from Germany. So I was born and raised in Berlin, that capital of Germany, and that's where I grew up, went to high school. And during high school, my high school years, I started programming a bit. And from there, during university, together with a, with an old school friend. We started like a web agency, I would say we're building some websites and just financing our studies that way. And then,  like,  one year in university, I had a class called entrepreneurship. And we had to write a business plan. And we had just finished a project. For one of our customers, we built a little program, like, you had to install desktop software, to send out emails like a newsletter software, basically. And that brought us to the idea to write a business plan on an email marketing service. And we did that, and then was really well received, we actually participated in a competition. Over 300 business plans were submitted, we finished in seventh place, we, we thought amazing. Of course, we never expected to finish that high. The first six, were awarded with money. And we'd like to first of all, once we heard that you were really disappointed before we were really happy. So anyways, we started working on that. And then,  from that web agency, we kind of transitioned into programming the software for small and medium businesses, for them to do all kinds of email marketing, stuff like marketing, automation, sending eblast transactional emails, and so on. And we started that in, in 2011, had one angel investor who invested like 50,000 euros back in the day. We didn't know what we were doing. To be honest, we were pretty young, I was studying at the time, but still in your city. But somehow we got a little bit of traction, were able to make it grow over the years. And eventually, in 2018, we had reached a company size of about, like 70, 80 employees. And we're one of the top three players in the German market when it comes to software as a service for email marketing, and kind of hit some limits in terms of growth, like international growth, especially, we looked around for possible partners, and people reached out to us other companies and asked if we're open to an acquisition. So in the end, we actually weren't completely like 100%, acquired by our French competitor called SendinBlue. And that's a company I now work for, which is funny, because now after, after the acquisition, early 2019, my position obviously changed from being the CEO in Germany, I moved to Canada opened our go to market office in, in North America. So I live in Toronto now. And I also became the VP corporate development just because I was like naturally interested in that. And we also became more active on that field. As an acquirer, we've actually acquired a couple of companies over the last 12 months, five to be specific. So we're pretty active. And I'm like in this unique position where I feel like I understand the founders pretty well because I've been in their position. And on the other hand, now I'm of course trying to, to see it from the other side from the buyer side. So that's pretty much my backstory. And yeah, I work a lot on the m&a, on the m&a side. And it's pretty fun.

Ronald Skelton  5:09  
It's interesting, I have a background in email. I'm gonna date myself here prior to 2008. So I don't know when you started newsletters ago was a, was a name of it 

Steffen Schebesta  5:18  
Yeah exactly

Ronald Skelton  5:19  
Yeah right,  I don't know when you started that. But prior to 2008, I actually ran some of the largest email systems on the planet. Outsource email systems, I actually participated in some of the startups that started at the anti spam, like how to control spam in the space. Like I've flown to, to Seattle, Washington, and MIT and Julian hates house, who used to own and run SpamCop, and helped bring some equipment to him to help handle a denial of service attack he had, I helped I was at a bright male that was an anti spam solution that was bought by Symantec. And then I worked at a couple companies you'd never know of, but they ran email for like Netscape and some other companies that, that outsource some of their email stuff to it. So I understand the complexity of that, right?

Steffen Schebesta  6:01  
yeah

Ronald Skelton  6:01  
You're having to go through, like,  manage all these white labels and leaks, all the different stuff it takes to get email delivered, I don't want to undermine the feat of what it took to create what you created. Because there's something to that right. To build a company that can deliver marketing material through email, had some technical roadblocks, you guys were able to get through now. You're in Canada now. and you were with SendinBlue. You guys have acquired five companies in less than was it 12 months now.

Steffen Schebesta  6:01  
Yeah 12 months.

Ronald Skelton  6:01  
And you've got one by the time this show airs, you'll probably be on your sixth one, is what it sounds like. You've got one your work. (inaudible)

Steffen Schebesta  6:28  
Yeah, exactly.

Ronald Skelton  6:36  
That is almost unheard of. Right? That's acquiring finding deals and acquiring them as one thing. Bringing them in integrating them have them, having the culture fit everything is another. How are you guys working with the integration? How you guys, we're gonna dive back into how you find so many deals that actually pulled the trigger on but the thing that intrigues me the most now is what is integration look like? And it sounds like a lot of these companies are all over the world, right?

Steffen Schebesta  7:01  
Yeah, yeah. pretty much all over the world. It was like focused on Europe, but we also acquired one company in India. So yeah, pretty pretty spread out. One company was completely remote. Another company, the founder was in New York, the rest of the team was mostly in Austria. yeah. So nowadays, that's a new setup. Everybody works remotely or hybrid.

Ronald Skelton  7:22  
And so the culture though you have sendinblues culture, you have newsletters, that goes culture, because you had to integrate that. So technically sendinblue. Now, they required you, acquired you, what, two years ago?

Sound like

Steffen Schebesta  7:33  
the beginning of 2019.

Ronald Skelton  7:35  
 Almost 3 now

Now, in less than three years they've acquired going on seven, is that correct? or is there other ones?

Steffen Schebesta  7:41  
Actually, there's another one, which is a French company called (inaudible) Clark that we acquired in between. So

Ronald Skelton  7:46  
They're very skilled in this right, you guys are up and running, things are working. Talk about the process of the onboarding. And, you know, what does it look like once you're at once you've pulled the trigger, you own the brand, you have the technology? What is it that happens after that to, to help them continue to be successful and not lose the key employees? I mean, the biggest thing that happens when most acquisitions occur is people scatter like roaches when the lights come on, right? They freak out, don't know that their future is uncertain. And they leave.

Steffen Schebesta  8:16  
 Yeah,

And that exactly I've gone through this whole process myself. And that was the first acquisition, the first time I sold a company. And the first time SendinBlue acquired a company, you can imagine it goes pretty chaotic, that was not that much of like strategy behind and how we put things in place. We just figure it out over time. And of course, we have a lot of learnings. And with young companies, it's normal, you got to stay agile, and things change and you have to adapt. So we figured out, but of course, it was not, not ideal. So over, over the years, I think what we've done really well is to really understand what our sweet spot is, and acquiring a company like newsletter to go back and 2019 were like 70, 80 employees and SendinBlue was about 150 employees. That was almost like a merger, right? It's not that big of a difference. So that was pretty tough. To be honest. The companies that we acquire now over the last 12 months, they're much smaller in comparison. Now we have about 650 employees worldwide. And the companies that we acquired were between five and 25, 30 employees over the last 12 months. So it's a completely different game. But it makes things much easier. But the one thing like in terms of integration, and of course having a smaller team. For the buyer on the buyer side makes it easier because we know exactly where to put these people. We integrate them in our structure on the salary side. And from the founders perspective, we still have to be careful that we can still provide these founders perspective where they have impact on the group and where they don't feel like they're lost all of a sudden In a huge company, right. And that, that's super important, how we integrated companies and how we make sure that a company is a good fit for us. I would say a lot of it is pre acquisition already, in terms of like vetting. And it's like, I compare it to like a hiring process on steroids, basically. So we make sure we interview everybody, every single person from the company that we acquire, I think one important, one important topic as well is to, to work with a team to a certain extent before the acquisition. So usually, the whole process takes between three and six months, like, we're pretty fast. But like you, it's almost impossible to do it under three months, including due diligence and drafting off the SBA, and so on. So we have a bit of time together, where we work together, we have meetings together, we can build trust, and we also see how the founders perform over time. And that's a very, very interesting process, I think, we've had cases where we stopped the process in during the three or six months, because we didn't feel like we were aligned with the founders anymore, are with the team that we are acquiring. And for us, the way we acquire the product and the team are the most important assets of the company. We're always acquiring companies, or lately, especially where we think they can provide value to the Centrum Lu form that we currently don't have. So mostly on the product side, maybe access to, to markets or, or industries that we don't have, it's mostly about product extension. And having that in mind, it's it's key that these employees and the team stay motivated, provide value. And typically, what's really interesting for these founders that we acquire, is that they get access to about three, 400,000 active customers on the center of the platform right away. And if you have a company, in that range that I mentioned, like five to 30 employees, you're, you've shown first product market fit and you have first traction, but you haven't really scaled the business to a big degree, and you don't have typically you don't have like 100,000s of customers, right. So that's usually an interesting perspective for the founders. And a good motivation where they can have impact is to get access to three, 4000 users. So they roll out their, their feature that they build over years. And they're, they're experts. And, for example, we acquired a company called Meet Fox, it's like a meeting and scheduling tool. And they had a couple of 1000 customers on their users on their platform. And all of a sudden, they get x 2,3,400000. It's a big leap kind of you you're kind of jumping, jumping ahead and your company stage. So that's really motivating when it comes to founders. And I think that's something that can keep them incentivized and motivated over a long time. But of course, there's also other mechanisms, mechanisms that we use in the background to keep team members engaged in the team.

Ronald Skelton  13:11  
Now, when you acquire these companies, are they keeping? Are their websites their brand, their software, staying in existence under their own stuff? And or are you bringing them in integrating the features and stuff and redirecting domains, the SendinBlue? What happens to their product?

Steffen Schebesta  13:27  
It depends. It depends on the companies,  like if we have smaller companies, sometimes it's even more like an Acqui hire. If it's bigger, the brands exist, they continue to, they continue to grow. And typically, companies our sweet spot that the companies that we acquire, like I said, they have to have like first product market fit and have to have a good traction, typically growing faster than SendinBlue. And we're already rolling relatively fast for our company size. We don't want to cannibalize our own business. And we want to keep that traction going. The startups that we acquire have said difficult path in a way because, on one hand, we want to bring that value want to integrate that product into SendinBlue as soon as possible. But on the other hand, we also want to keep the revenue that the company already generates, and we want to keep it growing. And a lot of times they have I mean, they've done something well, and they have their customers that are happy and, and 1000s of customers and in many cases, and they have built a network and their community. So we want to make sure this is like part of the assets that they bring to sendinblue, we want to make sure that they keep them and we can continue using them and building on them.

Ronald Skelton  14:41  
So that's interesting. I mean, Google is the same thing. and they'll acquire a company. They'll keep running it as is, and then eventually, over time, a lot of the features and functions move into like Google Maps was pretty much built off of other companies they bought. I think Google even owns Waze now, but a lot of the Waze features were like As a Copperhead are starting to show up on your Google routes, and they integrated the technology and features in, but you can still go two Waze if you want to. I liked the strategy, I was just curious on how you guys approached that. And then you have two different separate some people just want, like I use Calendly. Now, but some people just want the meat, I just want something to manage my calendar, I don't need all the other stuff. I already have something for that.

Steffen Schebesta  14:41  
yeah

Ronald Skelton  14:42  
So if you did a full integration, you would like say they had 1000 users, you might lose as many as 30, 40 50% of them because they just they already have a CRM, they already have these other tools. And they weren't wanting to move everything. They just needed that one thing. I was curious on like that, that integration as far as integrating the technologies, does the technology stack matter? Like when you're looking for acquiring is like the fact that writing their code in C or writing their code and whatever the Ruby on Rails? I'm dating myself here, because that's stuff I knew when I was doing PHP. I don't even know what the current one is that horrible

Steffen Schebesta  15:53  
I can tell it's been a while for you. The Oh, yeah. I guess in the more modern water sex? No, but for us, to be honest, it doesn't matter that much. I guess it depends on the structure of your tech. And our tech is more around like microservices. So like, every service can be written in another language as well without being too technical. Hopefully, for the audience. Yeah,  So it's pretty much as long as they, they have their tech under control, and it's scalable to a certain degree than that it's definitely fine.

Ronald Skelton  16:28  
Me not knowing the current technology stack is bad considering when I was your age, I was working for Lockheed Martin hacking into firewalls for three, three littered agents. I have a tech background, I worked for Lockheed Martin, we designed firewall systems for US agencies that don't exist or don't want to be don't want you to know what type of firewall they're building. I even helped redesign the mission planning system for the U two Spy flying, the picture that takes pictures, and I'm dating myself here because that's an old, that's an old platform. But we moved it off of vac systems and onto something new, understand technology that is, so I'm just not current on i because I haven't done it in like 15 years now. The technology stack doesn't matter, the team and the product and the product market fit the fact that they're growing matters more than what code they're writing it in. That's interesting, because as if I was looking for something like, kind of distancing myself from tack from tech, I think a lot of the acquisition entrepreneurs do they buy something, they want the next acquisition to have the same, the same coding language or whatever, so that the programmers can jump from one project to the another. And 

Steffen Schebesta  17:27  
yeah

It doesn't have to be the same language. But it should be the same, like mindset, I would say, and like a modern, modern approach to technology. But that's usually the case, we acquire companies that have been on the market for a couple of years, under 10 years. They're typically product led growth companies that are pretty, pretty strong on the tech side. I don't do the tech, due diligence, even though I also used to program a bit when I was younger,

Ronald Skelton  17:58  
yeah

Steffen Schebesta  17:58  
and I developed the first version of our software (inaudible). It's been a long time. You have the PHP back in the day. But

Ronald Skelton  18:07  
Even when I used to write code, I used to joke around. and somebody said, you write code, I was like, Yeah, I'm a functional programmer, and nothing can see in functions, let me No, no, I write it into a function to do what I want it to do. And then I give it to somebody else, because I was never a good programmer. Even though I've written some code and took the classes in college and stuff, I was just never into it enough to be proficient and great at it. Let's jump back into the mergers and acquisition side of things. I'm curious. There's a curiosity question that's in the back of my head. SendinBlue. Is it VC backed? Or is it private equity?

Steffen Schebesta  18:36  
Both.

Ronald Skelton  18:38  
There's too, like the VC world is like startup unicorn hunting pitcher, I get it. I've been in that space. I've worked for those companies, where private equity is all about growth through acquisition and fast scaling. And so that's seen traits from both of it and what we've been discussing. So I was curious. So they've got backing from both sides of it. So they've got the bones of the MVC back then being able to grow fast and have money to develop things out. But you got your team, you've got your taste of acquisition through the PE world, right?

Steffen Schebesta  19:07  
Yeah,

exactly. So initially, VC backed Partek of the biggest and most successful French VCs. And then in 2020, yeah, October 2020. We raised a series B. And the lead was Bridgepoint, which is British PE. But Partek also invested again, and then a French public fund called Bpifrance. It's really an interesting mix. It's backing us. And yeah, you can definitely see that in the strategy for us as well. What I like about Bridgepoint is even though they RP, we still have a lot of flexibility around our strategy, and they kind of behave like a VC in many cases as well. And yeah, we can, we can be pretty aggressive when it comes to acquisitions as well, and pretty wide range of opportunities there.

Ronald Skelton  19:56  
So let's circle back around. I told you I was gonna go back to this in a minute. To in order for you to acquire five going on six and for SendinBlue to even if you back it up to three or four years and to do have seven or eight acquisitions, there's got to be a source, right? There's a team or a group of people out there looking for acquisition targets. So how do you guys do deal sourcing what is the process you go through to identify, evaluate, and no, that is worth even looking at and doing a, doing meetings with,

Steffen Schebesta  20:25  
It's honestly a mix of opportunistic inbound and strategic outreach. On the strategic side, we, we talk together, and like in the sea level, I talked to the founder and global CEO of the company. And we have certain hypothesis like last year, were a lot around e commerce obviously, like then this year, there was a bit of a downturn. This year, we're really focused on CRM. So we last year, we acquired two companies in the e-commerce space. One was an E commerce analytics called Metropolo. Another one called chatra, which was like an AI-enabled chatbot. And the third one was called Push Out, which is a push notification company for Shopify. And then this year, we focused more on the CRM side. So it was Meet Fox, the scheduling meeting software, and then, very recently, company called Yodel in the voice over IP, cloud telephony space. And this will these two will be additions to our sales serum. So like, these are the hypothesis behind it. And we know some weaknesses in our system that we want to fix. And what we've seen in the past, if you bring in founders that are very motivated and bring that knowledge, like that subject matter expertise, that's an additional benefit for the whole group that is very hard to, to build inside the company, you always have the question around, buy or build, right? And sometimes you would say, Okay, you acquired a company, you pay X amount, or X million, for this company. And now you add this one feature, or multiple features around maybe meeting and scheduling, why didn't you just build that in house? Right? And the answer is, first of all, there's a solution out there that has proven that it works, and has product market fit. But more importantly, there's a team around that really understands that market. And that's very difficult to have that in house and build that muscle in house. And I think that's really the biggest, the biggest benefit of acquiring a company in that field. Okay, but back to your question, how do we source deals? Yeah, out of these deals, a lot of them are inbound, I get about two to three decks per week. And I look at all these deals, and I discussed them with our CPO with our CEO, or other stakeholder holders in the company, if I think they're interesting, Sometimes there's obviously a mismatch, and then they're out immediately. But a lot of deals make it to at least that discussion stage. And then I scheduled next calls and meet the founders and so on. If I think it's interesting, we get a bit more information, mostly about like unit economics, growth rates, and so on, to see if it kind of falls into that sweet spot that we have identified. And then we continue talks. On the strategic side, from just discussions we have like, strategic discussions with the C level and the executive team, I reached typically, like, it's currently it's me, and I have some help, of course, from the legal team from, the finance team, our chief of staff who recently joined who used to work for Partek, or VC investor, so that we are working together on these topics. And I also get some help from the product team. Like sometimes I do some research, like, basically come up with a long list, half a product manager, testing out these products and telling me if they think it would be a good match for us. So that's one way as well. And funny enough, one acquisition, the latest one, yodel, that was a referral. So meat Fox, the founders of meat, Fox, New York, and basically introduced us. So that wasn't, that was an interesting case as well. So really mix of different sources, I think in the future will be more strategic, but there are good, a lot of good opportunities out there and we're willing to take that chance. And I know a lot of companies maybe don't have the resources or aren't willing to do that. But for in our case, especially nowadays with valuations of tech companies dropping and startups running out of money and maybe struggling or having, having to sift or pivot. There's quite a lot of interesting opportunities out there that we're looking at.

I can see the referral side, actually. As you get more and more of these, I guess the the referral side kick it up a little bit to think about it. Like each CEO you're bringing in and you just simply ask Who have you integrated with and who's buying your product and they're buying something else and they've asked you to integrate with them so you guys worked hand in hand already with and that now you got a new Aqua addition target because you already know, Company X has 2000 users got product market fit. And they, they spent time money and energy integrating with company why? because all their users are asking them to. And that company has a few 1000 users and it makes it fits in your space, I can see more referrals to I wasn't shocked to hear that. Now the inbound,

Maybe, maybe to add to that as well. Like now, we're after so many acquisitions. And that being shared across the company, as well introduce our employees sometimes reach out to me like, Hey, I'm using this tool, or this could be a good idea for an acquisition. So actually, it's a whole mindset and the whole company, I feel like sometimes I get an email from a sales manager, I just use this sales tool. And I think it would be so cool to have that on top of our sales CRM. Why don't you take a look at this? I'm like, yeah, actually, that might make sense.

Ronald Skelton  25:54  
You train 600 deal scouts.

Steffen Schebesta  25:56  
Yeah, exactly. 

Ronald Skelton  25:57  
(inaudible) And the word gets out, right? If you're on shows like this, talking about it, and you're in, in other media sources, talking about the six acquisitions that a year eight and three years, people, people in your space know that you acquire companies like them? And that might be part of your inbound source, right?

Steffen Schebesta  26:12  
yeah

Ronald Skelton  26:13  
Are they coming from CEOs just reaching out to you, hey, I would consider selling I'd love to be part of your team. Are you interested in talking to us? Are they coming from VCs as Okay, we're done funding this. Would you like it?

Steffen Schebesta  26:23  
Or depends on the company size. I've had founders reach out on LinkedIn just on, on by email, asking me if we're interested in like, these are sometimes very small companies, typically, typical scenarios, they go through some kind of m&a advisor banker that contact me and then I get like a first deck confidential deck. And then we go to information memorandum and then sign an NDA and get more information all the

time.

Ronald Skelton  26:51  
Are you on the market right now? Is there anything you're hunting for? If I found a company that matched X,Y and Z, I'd be interested in talking to him.

Steffen Schebesta  26:57  
We're always looking for companies that can complement our product offering. Like I said, this year it was a lot about sales CRM, I don't think we're done there yet. Other channels could continue to make, to make sense for us. We started with email marketing, maybe to give a bit of context, who started with email marketing automation, added SMS marketing after. And nowadays, we have a lot of other channels, we have our sales CRM, we have an email inbox, which is almost like Zendesk, we have Instagram, Facebook and Whatsapp messengers. We have web push with acquisition of push our last year, we have a landing page builder. So it's really an all in one solution, not only for online marketing, like that's where we started it. But now we have also sales and even customer service that can use our platform. And that's the overarching idea is to build this all in one software for small and medium businesses that they can use to grow their business. So anything that fits into that narrative is quite interesting. Definitely take a look.

Ronald Skelton  27:59  
Is your Sendinblue game plan? Like what's your long term game plan? Is that public? Is that something you can share? What's the end goal here? What are you guys, what are you driving towards?

Steffen Schebesta  28:07  
The end goal is really to give small and medium businesses, especially during the pandemic, so many businesses went bankrupt and went out of business. And it's so hard for them to compete with the Amazons and Walmarts of the world, right. So our, you know, our mission is to put small medium, or very small businesses and small medium businesses on equal footing with the big players. And that's what we're building, we're building a solution that is easy to use that's affordable, accessible for these businesses, and can maybe it won't do like 100% of a Salesforce or Adobe Marketing Cloud or whatever. But it will do like 95%. And that's much more than they currently have access to, at a price point that is actually doable for them. And with an ease of use where they don't need to pay for an account manager or they don't have to go through three months of training. Right. That's basically why SendinBlue exists.

Ronald Skelton  29:06  
And the business name that comes to my mind a lot is like I, I that might be not an acquisition target of you, but maybe an acquisition target for you. Meeting that. I think you guys are building something that companies like HubSpot would be after later on. I've seen their like you acquire a lot of stuff. They've inquired a lot of new big newsletters, one of my favorite newsletters they acquired in the last couple of years. So they're in this space in

Steffen Schebesta  29:30  
(inaudible) their work as well.

Ronald Skelton  29:32  
Yeah. You guys have any tools? like I'm a podcaster? You can hear on my show, right? Is there any tools? You guys have a run geared around the podcast world?

Steffen Schebesta  29:40  
No, not yet. Maybe something to look into?

Ronald Skelton  29:44  
Yeah.

Steffen Schebesta  29:45  
One topic that is quite interesting. It's all around like content creation, like ours, the rise of Canva kind of right. And it's interesting how things like that happen or figma as well, right? It's all about content creation, and it's relatively difficult for small and medium businesses to create compelling content, and our, our customers, typically, they don't have the resources, they don't have a designer that they can ask to spend eight hours on a flyer or an ad or whatever. So it has to be really easy and has to be quick and still has to look good, right. And that's the same mindset again. So common creation is definitely on our radar, too. We have some tools around that. Like I said, we have landing page builder, and we have like an image editing tool. But definitely, there's always room to improve, right? That's an interesting one around like social media management, we integrate with Facebook Messenger, Instagram, Messenger, and WhatsApp. But maybe there's something coming around that right social media advertising is an interesting one that could be combined with the rest of the software as well. 

Ronald Skelton  30:48  
It's interesting,

Thinking about like the like, there was no really good tool out there for kind of a CRM to manage a podcast production, right. I know somebody's trying to build one right now. I've been chatting with him on Zoom calls. But I ended up building my own little scrum board type where they call them I forgot what it's actually called. But it's a just a drag and drop process, like a production line. I built inside of Asana, because that's one of the tools I knew. So it's pretty good automates the workflow. So on my podcast, I pretty much get on here record you and I soon as I complete my checklist of stuff. So I'm supposed to do for the recording, I drag it into the next thing, it assigns it to somebody on my team, and they take it from there, and I don't touch it again. Your CRM tool I was looking at it, it looks like it has that same layout. If you didn't, how configurable is I use things like Calendly, which you already have a solution, for I use Asana, which your CRM. What I'm using for your CRM can probably take over task management and my production line. So your CRM could probably take over. The things I'm missing is I don't have a valid newsletter right now. And I use pod pages. My podcast website is hosted on pod pages, which is kind of like a blog. And it ties in with the RSS feeds from all the tools so that knows when it automatically updates my page whenever I release something on the podcast channel, right? So it just, it looks at my YouTube channel and those, so I don't have to go to it. Every time I do a release, we just post the content where it goes, and it picks it up and updates my page, it would be really simple, I think, for you guys to take over the elements of pod pages and build something equivalent. And then take a look at something like the production. So I was just curious, in this space, we're kinda a little off topic. So let's circle back around. You guys are growing very aggressively and talking to you. I think you mentioned earlier SendinBlue had like 100 employees when they acquired you. You got 600 Now, so you said 600? Plus, 

Steffen Schebesta  32:37  
yeah. 650.

Ronald Skelton  32:39  
So that's a 6x growth. And for three and a half, four years. Am I right?

Steffen Schebesta  32:43  
Yeah. So assembly was early 2019, around like 150. And then together with a new start to go the company, my old company were about like 220, 230. So from there, to 650 in 2022. (inaudible)

Ronald Skelton  33:00  
Yeah, so 4x, 4x a number of employees. And then I assume that revenues somewhere in there. i There's a rule of thumb in the brick and mortar companies that we look at, if before the owner tells us if they're if a company, most industries anyway, it's a company, before they even tell us how much they're making, we can almost account for about 100, $120,000 worth of revenue per employee on a lot of companies and some industries are totally different than that. But usually, if somebody says, I got 15 employees like okay, we're probably doing 1.5 mil, and then usually, more often than not, that's pretty close. So I'm assuming that you've kept the profitability up through that, or are you guys profitable at this point? I guess is the question I'm looking for. Is that okay to share?

Steffen Schebesta  33:42  
Yeah, I don't think I can disclose that.

Ronald Skelton  33:44  
okay

Steffen Schebesta  33:44  
But we're in terms of cash burn, I don't think we're as aggressive as maybe our US counterparts like maybe or or Active Campaign. And we didn't have to let anybody go either. Currently, it's a lot of layoffs in the tech world, but for us, it's going well.

Ronald Skelton  34:02  
Okay. And then are these sort of your you got VC backing and private equity backing? Are the show the structure of the deals? Is it stock and cash? Or can you tell me a little bit about the structure of the deals that the companies you're acquiring or

Steffen Schebesta  34:15  
the company that we acquire? Yep. Yeah, typically, since the founder team is very important to us. We always have some kind of stock based compensation as part of that deal and another part in cash. There's no one structure that fits like every deal. But it's typically like between 30 and 70% of stock versus versus cash. That's somewhere around there. So both we want to make sure the founders keep being incentivized and have the motivation to push the company forward with us. And there's typically like an earn out structure in place as well to reach certain targets and basically around integration or reaching specific as user or revenue numbers.

Ronald Skelton  35:01  
ask this question of a lot of my guests. What's one thing you know, now you wish should have known on day one? Like, what's something you've learned recently like, man, that would have been helpful if I had known that before we did our first acquisition or whatever? Is there any valuable lessons you can share with the listeners?

Steffen Schebesta  35:16  
Yeah, I think the one metric that I always look at and I find more and more incredible in, especially in the software as a service space is just the net retention rate. If I had to evaluate a company only by one metric, then I would probably take that, because it says so much about product market fit about growth and the future, and sustainability of the business model. And that it's I wish I had known that earlier, even when I had my own company, too. We looked at that metric bit, but not really in depth. Analyzing that understanding, it can help make a business very predictable, and makes it much more valuable. Like if you look at public companies, and their net retention rates, the craziest example I can think of it's Snowflake, and their net retention rate is somewhere around like 170%, which is unheard of. It's crazy. So basically, if they don't win any new customers, the whole year, they would still grow 70%. That's, it's incredible right.

Ronald Skelton  35:16  
that's insane. Right? If your net, so that means that every customer like seven out of 10 customers are referring new customers, right? If you look at the simplistic that simplistically, if they've got 170%

Steffen Schebesta  36:33  
(inaudible)

Ronald Skelton  36:34  
 retention rate,

Steffen Schebesta  36:36  
they spend more money on a cohort, let's say a cohort of all customers in January 2022, they spend, let's say, $10,000, they would spend $17,000, next January, 

Ronald Skelton  36:51  
okay,

Steffen Schebesta  36:52  
Right, it's the same cohort, and that ignores all the customers that churn in the, in the meantime, and that, like typically, it's some customers journey. Let's say there's 100 customers in January 2022. And they spend $10,000. After a year, we probably only have maybe 70, customers left, but they spent 170,000. So the expansion rate is even bigger, which is crazy. And that cohort like grows from 10,000 to 17,000, and then to almost 300,000, the next year. It's incredible. It's like a snowball.

Ronald Skelton  37:27  
And I can see why that's so important to what you do, because you're doing marketing automation, and tools that help businesses grow? right. And your pricing model has to do with how you make more money if they grow and they're successful. So if they're not growing, they're stagnant. And they're just basically doing what they've always done. And not only does that indicate your tools not working the way it probably was designed to work, but it also indicates that you're they're going to drop off, right, they can't afford to continue handling inflation, everything else, any space in the marketing space, I can see where that's a critical key metric thing to look at. Right? because you're in the business of helping them grow. Everything you have on your platform is designed around taking a company and helping them become a bigger company, take the company helping them retain customers, gain new customers, communicate with customers keep customers satisfied. And if that customer isn't spending more money with you that next year, then, simplistically, they probably didn't grow much, right? Remember too many businesses like that, like I know a bunch of their little different things. But I want a pest control company. And if my customer spends more money next quarter or the following quarter, than they did this quarter, I've done something wrong because I didn't kill their pets. Right? It's one of the things I am one in Oklahoma, I'm placing relatives with it. But if we get repeat business because we have

Steffen Schebesta  38:47  
yeah

Ronald Skelton  38:47  
Guys own Airbnb, is we got guys, commercial buildings that you just treat on a regular basis to prevent things, restaurants and stuff. We need to treat the outside and keep things from coming in. Anything that's attracted to bugs that are going to keep coming in. On the general basis. If we looked at my score on that, it probably be low, I get my customers back. But like every spring, when the ants come crawling out of the ground, New Hive, your new nest events come in. So I do get a calls back from Hey, you kill the ants last year, they're back. And I think that those ants aren't back, those are new ants because we killed the last ones. Right? That said, but not all industries are like that, where, you know, you get to grow because you're successfully doing what you promised you were gonna do.

Yeah, and sometimes it's also there's a misalignment like you said, right for your pest control, kind of like you said, you repeat business means that well, unless it's a company or another property, but it could also

right

Steffen Schebesta  39:42  
Mean something went wrong. Or if you go to see a doctor, like you don't want repeat business with a doctor and always have to come back to the doctor, right? or, I don't know, there's some business models, or if you have a bridal shop right, it's unlikely that you will have repeat business, but there's in, in, in inherent to certain business models where you have repeat business, and it aligns with a customer's intentions, and others where it doesn't. And then software as a service space. Luckily, a lot of times, if you have repeat business, it means you made the customer more successful. And then it's a win-win for both the provider and the customer.

Ronald Skelton  40:22  
So what's next? I mean, what do you how you guys are going to continue acquiring companies? Or what's next in the we're like, we already kind of know you got one more acquisition coming up. What is 2023? Plan?

Steffen Schebesta  40:34  
Yeah, so like I said, we're in the middle of due diligence right now. So at the time, this will be broadcast. Hopefully, we'll have closed. And then yeah, 2023, I think we might slow down a bit on, on the m&a side, just to also evaluate, just doing that like for the group just to try and understand really the impact that these acquisitions had. And to make sure that we really choose the right companies and go through a very conscious effort as well, Like I said, I think we're going to move more into the strategic direction. And we probably be a bit more selective, we might go a bit bigger over time as well. Some strategic ideas around maybe the US market as well. And maybe a bigger companies in that space. But yeah nothing sets stone we'll see. And the beauty of working in, like fast growing scale up is that things can change from one day to another and has changed a lot over the last years as well. I don't know, maybe we'll, we'll keep being very active and make people receive incredible opportunities that we can say no to. But overall, yeah, I think that's going to be more strategic and maybe a little slower in 2023.

Ronald Skelton  41:51  
Who would you consider being somebody that you're about your size, meaning I'm not talking like HubSpot or something crazy big and been around for years and years and years. But So who would you consider like, around the same customer base? Like who's your leading competitor? Every business kind of has their arch nemesis? Or is your like, one day we're gonna we're gonna beat these guys. Who is that for, you guys?

Steffen Schebesta  42:14  
I used to be MailChimp when we were heavier when we had a heavier focus on just email marketing. And then MailChimp was surprisingly acquired, but into it for

Ronald Skelton  42:25  
something

crazy. 800 million. What was the number on that was insane.

Steffen Schebesta  42:28  
They're off to a billion somewhere.

Ronald Skelton  42:33  
(inaudible)

Steffen Schebesta  42:34  
But I mean, Melton is much bigger company, their revenue is somewhere around, I think their revenue is around like 800 million.

(inaudible)

Somewhere about that. Now, things are changing a bit around MailChimp, their founder resigned basically, they're integrated into the Intuit suite, and there they increase their pricing and their free offer was, was decrease as well. So there's a lot of things happening. Looks like they're trying to milk the cash cow.

Ronald Skelton  43:06  
right

Steffen Schebesta  43:07  
So

Ronald Skelton  43:08  
we're gonna get there 12 billion Maximo.

Steffen Schebesta  43:10  
Yeah, exactly. So I don't know if we would consider them our biggest competitor. Now, we have a couple of newer competitors that are also growing fast and the e-commerce space. It's Klaviyo. We have Active Campaign, which more from the sales CRM, but they also now also have a pretty nice solution. On the marketing side now, HubSpot is typically more upmarket, much more expensive than us. So it's not a direct competitor and more CRM focused in us

Ronald Skelton  43:40  
Any UFC type top call outs, I'm coming for, you know, I didn't figure I get what he didn't respond from that. But I had to try, like, Alright, HubSpot, we're gonna eat your lunch, and then one day, we're going to require you none of that, no UFC.

Steffen Schebesta  43:55  
stretch goal why not

Ronald Skelton  43:58  
I had to ask, we, we've covered a lot of different topics and stuff. What have we missed, man? Like, what's important for somebody out there in your space? not even just competing with you, but they're in the software as a service. They're building companies are looking at growing through acquisition, what's important for them to know?

Steffen Schebesta  44:14  
Yeah, I think our biggest learning was really to find our sweet spot in our acquisition strategy. I'm a big believer in acquiring a company for the team and the product. And just making sure that the team is right and fits in the company to make sure that the founder is playing an important role and can create impact in the group after, I think that's the most my most important learning so over these acquisitions in the past,

Ronald Skelton  44:42  
Well, one of my favorite things to ask is, What can myself or the audience do for you? Right? Is there a way we can participate in what you're doing and help you find businesses? I mean, what is there that we can do that would help you and your role as SendinBlue and to help it grow?

Steffen Schebesta  44:57  
Yeah, for sure. I think part of Why I loved this side of my job, the VP Corp def is that I get to talk to a lot of founders in that space. And what I mean, you interview people, we're living in a way, 

Ronald Skelton  45:14  
In a way I love it. 

Steffen Schebesta  45:14  
And it's very interesting because you got to talk to innovative people who have some kind of different mindset and are creating something that they believe will change the world. It's very interesting. So that's always great. I'm always happy to be introduced to founders, ideally, to companies where it is in that sweet spot like a company between 50 and 30 employees has first product market fit, might be a good addition to the SendinBlue platform. Now, like, I'm very happy if, if somebody reaches out to me, and I'm happy to hop on a call to, to meet these people.

Ronald Skelton  45:55  
I think your tool I was looking at your tool earlier, and I was telling you before the show that I started looking into it. I was like, you could replace four or five things I'm doing, not only in the podcast side but potentially on my acquisition and merger side, which I've currently be using the same type of technology stack where I've used Asana and all these other tools. Somebody wanted to, you've got free plans, and you've got paid plans to give us the high level. So anybody that doesn't know and hasn't went to the website already, what's the high level features of SendinBlue? And I think you have a special offer for our listeners?

Steffen Schebesta  46:22  
Sure. Yeah. I mean, we have a free plan, you can send a lot of emails on that free plan, I think 300 per day. So it's quite a lot of emails. And there are some restrictions around volume and seats and so on. But we also have paid plans that are pretty competitively priced as well. And yeah, as a as an offer today, I have a discount code for our audience. It's for a premium plan, which offers a lot of different features, a lot of landing page, builders, CRM, and so on that you can use with that it's 50% off for the first three months. And the voucher code is how to exit with a to number two. To help you exit, I guess you can put that in the shownotes as well. And you get 50% off for three months.

Ronald Skelton  47:10  
Awesome. We'll do that. We'll put that in the show notes. And if somebody walked away the, the final question, first of all, how do people reach out to you ? Like, what's your favorite way for people to let you know they're they exist and share something with you, or show you a deal they might meet with you to take a look at so how do people reach you?

Steffen Schebesta  47:26  
Yeah, I think the easiest way is just to add me on LinkedIn, LinkedIn, LinkedIn account slash Schebesta. I think just my last name should work. And

Ronald Skelton  47:35  
Will put that in the show notes too. 

Steffen Schebesta  47:36  
Yeah, exactly. Perfect. Yeah, just reach out there and just drop me a line. Add me if you'd like. That's the easiest way to reach me.

Ronald Skelton  47:43  
Okay. And then I think I want to just thank you for being on the show. I'm trying to think if I missed anything here, I always like to end the show on a good note. So reach out to you, if they've got deals, check out the software Man, I was taking a look at different tools, your name popped up as funny as your name SendinBlue came up popped up, as I was researching different tools out there for the b2b space for what I want to create around this and some other media assets I want to purchase. And then your PR team reached out and said, Hey, we'd like to put him on the show. And I was like, Absolutely, I want to talk to this guy. So that was kind of wheeled into existence by accident, I think. But I do appreciate having you here today. This has been exciting. I love getting companies that are actually doing it. We get a lot of advisors and mentors and teachers and financial analysts and stuff on the show. But to get people on here that are living at you, you, you guys are eating deals, it's 6 in a year that means every every other month you're closing something that's almost insane, right? There's not too many guys out there doing that big or small that it takes the same amount of work to do the due diligence, close integrate a small five clarbeston company that does 100 person company, like there's more financial risk on the other one, but the work still there. So I don't want to underestimate or under a lot of level of work, you guys pulled off in a short period of time. So I'm impressed. And I'd like to, I'd like to circle back around with you in about a year and look at like, how it's working and what worked, what didn't lessons learn from these acquisitions. And once you've made after that, thank you for being on the show today. And look forward to seeing what the future holds for you, guy.

Steffen Schebesta  49:12  
Yeah, thanks, fun, fun being on the show. Thanks

Ronald Skelton  49:15  
Awesome. Hanging out for a second after the show. And that's the show, guys. Hey, it's your host, Ronald Skelton. I want to thank you personally for watching the show today and invite you to call our new hotline 918-641-4150 That's 918-641-4150 Call us and tell us about our show, ask questions, suggested guests or even tell me about a business you have for sale and we'll reach back out to you. Again that number is 918-641-4150 call our hotline leave us some information. Thank you. I don't want to announce our new channel partners the ITX marketplace since 1998 ITX has created 5 billion in value by selling more than 220 Define it businesses in 20 countries. IDX works exclusively with it enabled businesses generating between 5 million and 30 million who are ready to be sold in m&a to decision makers who are ready to buy. for over 25 years ITX has developed industry knowledge that helps determine whether a seller is a good fit for their buyers before making the match ITX mergers and acquisition marketplace we have partnered with has a proprietary database of 50,000 plus global buyers seeking it service firms managed service providers, Microsoft service providers software as a service platforms and channel partners with Microsoft Oracle ServiceNow itself in the Salesforce space. If you have an IT enabled business you're ready to sell. I want you to visit the I T exchange net.com/marketplace How to exit that link will be in the show notes visit them now. The investors and entrepreneurs professional mastermind. The investors and entrepreneurs professional mastermind combines that our traditional peer to peer mastermind introduced first in Napoleon Hill's famous book Thinking grow rich with accountability partnering, where your peers help you ensure that you set goals take actions and get results. If you want to scale blow past roadblocks and achieve success faster than you might think it's possible I suggest you take a visit over to tiepm.com That's T i e. P m.com. And check out the investors and entrepreneurs professional mastermind