[00:00:00] Tim Schumacher: It was scratching our own itch. I was still in university, we're building websites for companies and that was like in the eight nineties early, two thousand and we always ran into that problem like customer wanted the main and wasn't there. And at the same time was the main were just lying around and we said, hey, let's make buying a domain name as easy as this registering one today and that was the idea for Sedo.com.

[00:00:00] Andrew Michael: This is Churn.fm, the podcast for subscription economy pros. Each week we hear how the world's fastest growing companies are tackling churn and using retention to fuel their growth.

[00:00:46] VO: How do you build a habit-forming product? We crossed over that magic threshold to negative churn. You need to invest in customer success. It always comes down to retention and engagement. Completely bootstrap, profitable and growing.

[00:00:59] Andrew Michael: Strategies, tactics and ideas brought together to help your business thrive in the subscription economy. I'm your host, Andrew Michael, and here's today's episode.

[00:01:09] Andrew Michael: Hey, Tim, welcome to the show.

[00:01:11] Tim Schumacher: Hey, Andrew.

[00:01:13] Andrew Michael: It's great to have you. For the listeners, Tim is the co-founder of SaaS.Group that acquires SaaS companies with a bootstrapper mindset. Tim is also an investor and advisor to many companies and partners. Prior to SaaS.Group, Tim was the CEO and co-founder of Sedo.com. So my first question for you, Tim, is what was the most interesting domain that was sold through Sedo during your time there?

[00:01:36] Tim Schumacher: The most interesting domain was sex.com. And I think it sold for, was it 15 million or something?

[00:01:42] Andrew Michael: Oh, wow. It's crazy. Like obviously, Sedo.com, I've known it for many, many years. Myself always like whenever you go to search for a domain and there's something you think, oh, I have this great name. And then you go and it's like, oh, somebody owns it. And then you go and look, where did they own it? And it's normally living on Sedo.com. So it's become almost like a recognized brand in its own rights as the backbone of like domain after GoDaddy, I'd say. Where did the inspiration come from to build that company? Like...

[00:02:08] Tim Schumacher: I was still in university. We were building websites for companies and that was like in the late 90s, early 2000. And we always ran into that problem. Like a customer wanted the domain and it wasn't there. And at the same time, all those domains were just lying around and we said, hey, let's make buying a domain name as easy as registering one today. And that was the idea for Sedo.com.

[00:02:28] Andrew Michael: Yeah. No, very nice. I think I've even actually made a purchase though. Sedo.com for a prior domain and then I again sold it afterwards. But yeah, the experience definitely streamlined and made things a lot easier as well. Like if they're not using something like Sedo.com, it's normally quite a hassle as well to try and source and find the details and eventually get down to it.  

[00:02:49] Andrew Michael: So you're the co-founder of SaaS.Group. You're acquiring SaaS companies. You went from selling domains to acquiring SaaS companies, like help me connect the dots. Why, why did you choose to go down this path?

[00:03:01] Tim Schumacher: Yeah, there were actually a couple of years in between. So I exited Sedo, we sold to United Internet and then I dabbled around with angel investments.  I've done angel investments. I still do angel investments on the side. At some point I got really frustrated. You know, you get those pitch deck. There's nothing, there's maybe just an idea and yeah, 10 million valuation. At the same time, there's great SaaS companies out there, founders who are really good in getting the SaaS company from zero to one.

[00:03:30] Tim Schumacher: And then they kind of struggle very often. They're like, okay, how do I get it from one to 10? You have to manage a team. They get burned out. They're really more builders, MVP builders than their people like to run a company. And so I was like, hey, why don't I do this? I've done that before. And I started buying one after the other and kind of one thing led to the next one. And we figured that actually this is something I enjoy doing, taking a company which is there and then improving on it.

[00:03:56] Andrew Michael: Very nice. How's it going today? Like how many acquisitions have you made? What does the group look like?

[00:04:02] Tim Schumacher: It's going well. We've made 20 acquisitions. We always buy 100%. Sometimes there's an earn-out or there are certain components, but we want to keep things super simple. The group is about 350 people, employees, so the majority of them working in the brands, but then we also have quite strong central teams that can help brands with competences they might not have. So those are things like HR, finance but also like specialty marketing functions DI, AI, because a lot of those brands are small like the smallest brand is like one guy who runs it. The biggest brand is about 25 people and everything in between. And of course at that size you can't afford everything and so we have this approach is like run your brand like a startup at the same time you've got some best in class people who can help you from the side whenever you need them

[00:04:49] Andrew Michael: Interesting. So it's almost like some version of a PE phone, but on a much, much smaller scale and on the opposite end.

[00:04:56] Tim Schumacher: It has some elements of a micro PE. Absolutely. Maybe with the one difference that we're really operators, like we're all software developers, software people who like operating us. We're not like pure finance people. We don't live in slide decks. We live like in the product. And I think that's probably the main difference in terms of culture. And we don't sell the companies. That's the other difference. We're a buy and hold company, we were not opposed to selling if someone comes, a strategic comes and would offer a crazy price, or if something makes more sense to combine it with another company. Sometimes it makes sense for everyone involved. But our default mode is just operate the companies forever.

[00:05:34] Andrew Michael: Nice. And do you have any sort of thesis? Obviously, like B2B SaaS is quite broad even in its own rights. Is there any sort of specific vertical or type of apps or that you're interested in or do you keep it quite broad?

[00:05:46] Tim Schumacher: We keep it pretty broad, but we have three main verticals. One is developer software. So DevTools. Then we have a big chunk of marketing tools, SEO tools, social media, online marketing tools, and then productivity, which is a broad range, but anything kind of to run a modern company or modern vertical. And it is broad, but also it works because the business model is still surprisingly similar.

[00:06:10] Tim Schumacher: Things like churn, for example, they are the same for every company. So when we do certain things to improve churn or other things, we can propagate across all the companies. And it doesn't matter if you sell an online marketing software, a deployment tool or a software for photographers to make their life easier. And all of those are real examples from our product. A lot of those things are surprisingly similar once you start working on that.

[00:06:33] Andrew Michael: Yeah, interesting. Let's dive into that a little bit in terms of like, how you go about then evaluating these companies. And we talked a little bit before the show, keen to hear as well, like how much of an input do you view channel retention as, but let's save that for the first, like the end part. Maybe first of all, is like, what does the process look like when companies come to you and say, hey, I'm interested to sell, or are you going out and reaching out to companies as a first point? Like what does the normal process look like?

[00:07:02] Tim Schumacher: So it's both. We have a big database of great SaaS companies. We reach out to people. We do social media. Dirk Salmer, for example, one of my colleagues, he's really big and also publishing a lot about SaaS metrics and we go to events, those sorts of things. But then also people come to us, brokers come to us, founders, of course. And then, yeah, we have a first look. Is it the size we're looking for? We're generally looking for one to 10 companies between one and 10 million in revenue subscription based.

[00:07:29] Tim Schumacher: Ideally, PLG motion, but we have some which are a bit more on the enterprise side and generally selling into the US and Western Europe as markets. It doesn't matter where they are. We're a remote-first company, so the companies we acquire can be anywhere. And then we would dig deeper. We would look into all the different factors that make a fast company great or not so great. And that at the end determines valuation, but in the beginning, it's really kind of a quick check. Does it fit what we do?

[00:07:57] Andrew Michael: How it works. Yeah, nice. And then a couple of follow up questions to what we discussed previously is that once you make these acquisitions, then you mentioned that sort of the brands operate independently, but they have the central functions where they can lean into on HR and so forth. Like from a company perspective and a structure, how do you operate and how much do the teams actually then end up working with each other?

[00:08:18] Andrew Michael: Because the 350 people that you mentioned, does that include all the people from the individual brands themselves plus the office? And do you treat yourselves then as one big company and having these individual brands within, or is it like a series of small companies and you just have this parent's umbrella that operates and manages the portfolio?

[00:08:37] Tim Schumacher: Yeah, that's a great question. And it's, it's quite a balance. So we treat it as one company. Like everybody's, employed with SaaS Group, for example, HR is run centrally because most people don't want to manage also the hassle of employing people remotely in a legally proper fashion. That's actually pretty daunting task and we've got a great HR team that does that and also does a lot of things when it comes to recruiting for example but also employee recognition, performance reviews, development which you cannot do as a small company.

[00:09:10] Tim Schumacher: So the culture is partially, centrally at the same time when we acquire companies. Some companies have a strong internal culture. They have their own rates and things they do and their own culture and we actually let them preserve it to a certain extent. One thing is when you acquire a company, you should always make sure that it fits generally. We wouldn't acquire a company where we think, okay, the founders are jerks. And likewise, we wouldn't advise any company to sell to us if they think we're jerks.

[00:09:38] Tim Schumacher: So we try to do it in a way that there's a common ground already when we acquire it. And then some companies, they preserve their own team spirit. They do their own things, but they also affiliate with a greater swarm. And it's a delicate balance. It's something we're constantly reevaluating, but it works so far.

[00:09:56] Andrew Michael: Interesting. Yeah, because actually there's been quite a lot of value as well, then having shared knowledge as well between the individual brands and the go-to markets and the strategy as well as a whole. But yeah, logistically as well, it's quite an interesting challenge then to figure out like how do you maximize value without creating friction as well. Very cool.

[00:10:14] Andrew Michael: So, evaluation process, then people reaching out to you or you have this database, they come to you, they typically between 1 to 10 billion in revenue. I'm assuming mostly like bootstrapped in as well for it to make sense as well for an exit. What is your process then look like? What are you asking for in terms of metrics? What are the first questions you're asking these companies?

[00:10:35] Tim Schumacher: Yeah. So, I mean, the first questions we'd be asking would be on the revenue side, kind of what is the revenue? What is growth? What is churn? How is it distributed between the different packages? So enterprise versus smaller SME customers. So on the revenue side, but then also on the people side, like how many people are there? What's the distribution of the team? What do people do? Where do they live? What are they like? Because obviously people is the greatest resource of every SaaS company, also the biggest cost. Diving into that is quite important. And then last but not least, some other auxiliary things like, hosting stuff, tech stuff, but that usually comes a little later.

[00:11:12] Andrew Michael: And specifically then on metrics, like maybe let's double click into that. And like, what are some of the metrics that you really care about and looking at you, obviously the revenue being one, growth rate being another, but maybe like break it down for us in a little bit more detail and if we had to be a little analytical, so somebody thinking about potentially selling a SaaS business, like what are some of the metrics they should be having readily available to present or to show or talk about?

[00:11:37] Tim Schumacher: In the beginning, a process of selling a company is like you start on a very superficial level, does it fit? And then you dig deeper and deeper and deeper. And the first is really, is okay, is it even fitting? Then we would also be discussing, is the price range even fitting? Or are they even willing to do a transaction? And the next step would be then signing a letter of intent, which is a non-binding, but still kind of for us, it's a handshake agreement. That's the price at which we would want to transact.

[00:12:02] Tim Schumacher: And that's when the actual kind of really digging into the numbers really starts. And at that stage, we would be really looking at the raw data. So we would be looking at not just kind of the data on top because we've been seeing things like where people are like, oh, I have a net dollar retention, gross dollar retention, of course, being two super important metrics. They segmented out in a certain way and be like, okay, my net dollar redemption is 120. And then we're digging in and is like, well, it's actually much lower. And then, oh, okay, well, we define customers in a way that it's only people, I don't know, who were signing up at least once a month or something.

[00:12:36] Tim Schumacher: But that's then a subset of your actual customers, it shows something about kind of the value you're not delivering to the other customers. And so there are very different ways on how to look at metrics. And so for us, at this stage, it's actually also quite important to be able to analyze the raw data. But other than that, I would say that we look at the same metrics everybody looks at. Churn, NDR, gross DR growth. Where does the growth come from segmented by user basis? Have price increases been done or not? Because there's a big difference whether you grow your revenue through price increases or you grow it organically because you're delivering more and more value to the customer. One example where really there's often a deviation between how founders look at it and how an outsider would evaluate it.

[00:13:17] Andrew Michael: Yeah. Let's go back then into the evaluation because you said sort of the process is really like showing some high-level metrics and then you come to a point where like you've got an evaluation in mind and a price point that you want to make the purchase at. What's going into that initial one then if it's not like going into these details around like how they're dissecting and breaking up their net revenue retention or what are like the four or five whatever metrics that you would be able to then give you the formula to calculate the price that you're willing to pay for these companies.

[00:13:45] Tim Schumacher: Yeah. So it starts with really revenue and profitability of like one year. So trailing 12 months, for example, assuming it's a somewhat stable company, it's not like either crazily going through the roof in a good way of dying. But most companies we look at, they have some sort of growth, but it's not venture scale. Not like what you see in some of the AI services, but it's also not, it’s a good service, not declining. So maybe 10, 20% growth.

[00:14:12] Tim Schumacher: And then we would look at revenue and profitability. And profitability, of course, it's important to also look at what is the true profitability of the business because we see some businesses, for example, there's, the owners pay themselves a very generous salary, which is fair. If you're a bootstrap company, that's what you do. But of course, that's not a reflection of the true profitability.

[00:14:30] Tim Schumacher: In other cases, the opposite is they are like so tight on everything that there is no way to take out any costs and it's really, it's like, okay, barely breakeven, but there's no way to ever get this company profitable. So the actual profitability might not be reflective of the true profitability.

[00:14:47] Tim Schumacher: At the end, most founders look at the revenue and there's a wide range of multiples of course to the revenue, but we see in a small SaaS segment, so 1 to 10 million is small cap SaaS. We've bought anything from 0.5 times revenue all the way up to 10, with the majority of being usually between 2 and 4, I would say, 2 and 4X, the annual revenue.

[00:15:10] Tim Schumacher: That's where the majority of the transactions happen. Like the 0.5, those are special situations. The 10 was a company which was growing crazily, so like venture scale, and was still early. But usually 2 to 4 is where transactions. Of course, that's sometimes also a surprise to many SaaS owners because they look at public multiples and they're like, oh, this company transaction is publicly valued at 20 or 30 or something.

[00:15:35] Tim Schumacher: But those are absolute outliers. That's not reflective of the small cap market. That's literally also what every broker and every stats provider will tell you. But that's sometimes a tricky discussion, of course.

[00:15:49] Andrew Michael: Yeah, no, for sure. I think it's sort of a line act, typically like when I'm here and speaking to people, it's between like the five to 10% range at the lower end. And maybe they're a little bit larger companies as well, exceeding like the one to 10 million. So that track is definitely not the 20 to 30 you're seeing in the public spaces when people are selling their companies at the early stages. But it's generally more attractive, I would say, like, than traditional business sales where your acquisitions are aligning more with what you'd sell a traditional non-software business for.

[00:16:20] Tim Schumacher: Absolutely. Yeah. Non-software businesses often go for somewhere I would say between four to six profit multiples. And also there again, you know, you look at public comps, they're often higher, but they've reached a certain scale, certain instability, certain track record, which you don't have in small cap, which is why, yeah, if you transact, I don't know, an e-commerce business, it'd probably be a four or something, or brick and mortar business, four times profits, which of course is a huge difference. So yes, software tends to be a bit more attractive. Yeah, because often to 2x revenues can mean 10x, 15x profits, especially if it's not optimized for profit.

[00:17:03] Andrew Michael: Now going into these deals, like founders coming to and they're sharing a P&L with you, is that what you're looking at then if you're not going into the metrics specifically to get to that valuation? Because again, I'm just trying to understand the process. If today I decide I want to sell my source business, I come to Tim and say, Tim, like, how much are you going to give me for this? What do I need to have ready to show you so that you can then come to that point?

[00:17:25] Tim Schumacher: You should have revenue, profitability, growth rates over the last 12 to 24 months ready, ideally on a monthly or quarterly basis, and ideally segmented by the different types of costs. So people hosting rent, whatever, and on the revenue side segmented into the different packages and a few revenue metrics. That's enough for kind of a ballpark valuation where like, okay, this could be more like a two or this could be a four.

[00:17:58] Andrew Michael: You see a lot of different companies and I assume as well, and you evaluate quite a few, like what is your rate of acquisition yourself? So like from number of deal flow that you get to how many end up actually acquiring, what does that look like?

[00:18:11] Tim Schumacher: That's almost like in venture. Like we look at hundreds of companies every year and we try to acquire about 8 to 10 every year. We're a little slower this year, but that's our aspiration. And so, of course, the ratio is small, but a lot of deals, you know, we find out in the first two emails that it's not a fit. It's like, for example, heavy enterprise, a geography we don't do, it's too small, too big, those sorts of things. And number dwindles down really quickly.

[00:18:39] Tim Schumacher: I mean, we seriously look at, I don't know, probably 100 or 150, 200 companies, as I would say we look at seriously every year, have kind of more engaged conversations and out of those, yeah, it's a smaller percentage, but it's also, I would say if a founder wants to transact, it's not work which is lost because like you get all your information ready. And even if we would say we don't buy it.

[00:19:05] Tim Schumacher: For every type of business, we could tell you 10 people who would buy that particular business. So for example, if it's heavy vertical enterprise software, then yeah, we would, we’d be like, okay, those are people who buy, like, heavy enterprise software in specific verticals. We don't do this. We buy more generalist PLG software. We also understand, wouldn't buy something in a, in an industry we really don't get.

[00:19:27] Andrew Michael: Interesting. And then… so obviously these 150 to 200 teams that you see and you evaluate quite seriously. What are some of the things that the best teams do that end up getting acquired that, like, stand out to you during this process? And on the flip side then is like, what are some of, like the red flags that get raised during this process that you'd advised like founders avoid when trying to go forward with selling their business?

[00:19:51] Tim Schumacher: Yeah, great question. So if I think about the best run businesses, they were usually very efficient, very lean, small teams with highly competent people, very often technical founders who also were really good at streamlining everything and also had a good understanding of business things, but they weren't hung up about them, but they were really kind of super pragmatic about all those things, had automated a lot.

[00:20:20] Tim Schumacher: Very often they tend to neglect marketing so that's something where we can actually provide value that we’ve taken a few businesses which have been technologically very strong and made it prettier starting with website UX, a way to sign up but then also added sales and marketing. They don't really have everything in order and they want something else than what is there and there of course a lot of red flags in that process also how people treat employees, how if there's a lot of churn, if there is churn both for actually customers, but also for employees, would be red flags.

[00:20:54] Tim Schumacher: Yeah, lots of things you discover in the process where people kind of, have been taking shortcuts building a company, which might backfire. But also, we acknowledge that no company is perfect. I think it's… one thing to realize is that everything can be improved. It's just important to be upfront with it, to be like, okay, this is why we didn't do it. This is maybe that person which we could bring in to improve that and then we can actually take a lot of companies and significantly improve them.

[00:21:20] Tim Schumacher: That's also the value we bring. But for that, it's important to really have an, like a really honest discussion with a founder to really see eye to eye and really also develop a strategy together on where do we want to take the company in the next few years, because that's the only way how–

[00:21:34] Andrew Michael: Makes sense.

[00:21:34] Tim Schumacher: How everyone's happy.

[00:21:35] Andrew Michael: Yeah. So it sounds like then there's obviously like a few different metrics we've discussed as well that are key, but one of the ones you mentioned now, I would assume then would be something like revenue per employee. Just looking at like, creating these efficient companies, small teams that are doing big things like, do you have any sort of benchmarks on gross margin revenue per employee? Maybe also looking at, like the LTV to CAC ratio. Are there any specific, like things you say? Okay. Like if they fit in these buckets, this is the sweet spot for us.

[00:22:06] Tim Schumacher: LTV to CAC should be ideally, considerably above four, I would say. That's the idea world. But we also sometimes see that it's lower, but there's a lot of savings potential. So for example, our marketing team, we did an acquisition last year, big marketing spend, and our pay per click experts came in, slash the budget in half, and still double the revenue of this case of pay-per-click advertising. And that's just because we've got super smart people there.

[00:22:35] Tim Schumacher: And so sometimes it's actually okay that the CAC is pretty bad because we can do something about that. We actually like that better than if we look at this and it's perfectly optimized and we're like, okay, the CAC is already optimized. If we increase spending, which that’s not… market just isn't bigger. That actually would be more difficult for us because then there's really nothing we can do.

[00:22:58] Tim Schumacher: In regards to the revenue per employee, that's interestingly a wide, wide range. It's a crazy wide range. So we have businesses and we have even acquired businesses that are more like only a hundred, maybe $150,000 per employee. We have other businesses which we've acquired, which are 2 million per employee. So that's the range. It's like–

[00:23:21] Andrew Michael: Very big.

[00:23:22] Tim Schumacher: Trust me, a lot of benchmark. It’s like, really hard to benchmark this because there’s a lot of… I mean, every business could be different, but it’s, most importantly I think it’s the way how the founders have optimized the business. Like in the example of the 100, 150. There is, that’s been the DNA of the company to do everything with people. And there’s of course a lot of savings potentially if you optimize, automate things, but it’s hard. On the other side, the company with 2 million, that’s usually then that one developer who is like this crazy 10x developer, everything automated, but that also doesn't scale.

[00:23:54] Tim Schumacher: That only scales to a certain extent. You can't do marketing, can't do sales on that. So that means we actually naturally will bring that down, but we will grow the overall business. And we've done that a few times. And so I would say there's somewhere of a healthy middle, but it's really hard to take a benchmark, be like, oh, I'm striving for this because you hear this number. That's why I wouldn't say, hey, benchmark is 400,000 because it's like, even in our own brands, it's like, it's so much broader and then people get hung up about this one benchmark, but it's multifaceted.

[00:24:25] Andrew Michael: Yeah, I fully agree. That's like, Tim, we never talk about benchmarks that much on the show, almost never. And for this reason is because like they're very, so drastically when it comes to churn and retention and I see like the same, that's how it can vary. So drastically within the company. And you may look at something at the surface level and say, oh, that doesn't look attractive. But then really when you get into the details, there's a huge opportunity for optimizations or improvements.

[00:24:46] Andrew Michael: So it sounds like you don't buy into this idea then that the first $1 billion solo founder company is going to be built in. If you're reaching to like, do you see this as a future or not? Obviously Open AI and others are saying like this moment is coming where we will see these companies. From your experience now with all these companies that you're building, do you see that as a possibility where a solo founder can build a billion dollar company?

[00:25:10] Tim Schumacher: Could be. I mean, with AI, it certainly could be possible. I mean, people probably wouldn't have believed 10 years ago that you can build a two, $3 million company with one person. Super, super smart developer. I could see that, but it's always going to be the outlier. Also for us, it's the outlier. We've bought two companies of that profile, one developer, over 2 million revenue, but those are absolute outliers. It's one in a thousand, I would say. And the same probably applies here.

[00:25:37] Andrew Michael: Interesting. Nice. All right. And is there any sort of like, advice you would give to founders when it comes to actually like, speaking about the product? Because obviously you hear this quite a lot is that you don't sell companies, companies are bought. And obviously in this case, people are selling their companies to, in a lot of places. So how should founders think about like positioning their company when it's up for sale or coming to somebody like you, which obviously maybe you don't want to share this information because it's not in your best interest, but how could they be getting the most out of the interactions that they have with you to increase their chances of acquisition and the valuation that you're giving them?

[00:26:14] Tim Schumacher: Yeah, no, I'm happy to share that because it's also easier for us. I mean, first is, I think, really, get information ready in a way, have proper KPIs, have proper metrics in a properly organized spreadsheet or tool that you can share, that you're willing to share. Also, the best founders, they're not stingy about confidentiality. The way sure you know, you don't get to give away your trade trade secrets and your little tricks and something in the beginning, but a P&L, for example, is really not that much information already.

[00:26:46] Tim Schumacher: Just as a potential buyer, it gives you a very generic information on how the business is doing. There's not like, oh, I see this P&L. It's like, oh, I'm going to copy this business right away. Because that's hard. It's… actually it’s hard to get there. So sharing ideas and sharing high level information is, or hiding that is less important than most founders think. First advice would really be get information ready, compile them in a way that people can actually digest them, explain the initial business and what you do, ideally also in some written form.

[00:27:15] Tim Schumacher: So you can just send this information over and you don't have to repeat things over and over again. On that question is, companies get bought, they're not sold. I think that applies to strategic more than anything else. If you're a strategic, you have this fit with this one particular company, you want to buy them because they have this type of technology you really need. That happens and those are the things that make the headlines.

[00:27:37] Tim Schumacher: Adobe and Figma, for example, is, I'm getting, they really wanted to kind of kill Figma or own this market completely. So that was like a perfect fit. But in our case, with 10s of 1000s of SaaS companies and also 10s, dozens of buyers, the likes of SaaS Group or similar businesses, actually business to get sold. If you want to sell a company, you either get a broker or you even just approach a few people who you like, like you follow them. Cause SaaS Group, for example, we also have a podcast and we have some information and many of the serial acquirers, they put out some information.

[00:28:15] Tim Schumacher: You can check with whom you resonate. And then you just contact them. You email them and say, Hey, I'm thinking about selling my company and here's some high level metrics. Is this for you? Just like you would contact a potential buyer of your software. It's not that much different. And yeah, that's in the end how it often works.

[00:28:32] Andrew Michael: Yeah, that's cool. So if anyone's listening, thinking about selling their business and they like the vibe of Tim, you know how now to reach out to him and let him know that you're selling your business. So I see we're almost running up on time then. I want to make sure I ask a couple of questions. First one is, what's one thing that you know today about churn and retention that you wish you knew when you got started with your career?

[00:28:52] Tim Schumacher: Mainly the importance of it. In the beginning and with Sedo, we also had actually a big business, a big subscription business, the domain parking business, so you could park your domain and you could make money of it and it was advertising finance, but it had exactly those elements of churn as well. And I think we were very obsessed in getting new clients, but I think I wasn't always focused enough on reducing churn.

[00:29:14] Andrew Michael: Yeah. I think that trend is changing quite a bit and more and more like SaaS business, are realizing the importance of it over the last like five to 10 years. I can definitely see, I've mentioned this a few times to different people, but there's different inflection points on the show as well. When COVID came around, everybody started caring about churn again, because it started happening exponentially. So then there's spikes in downloads and similarly as well, like in the downturn again, everybody switched then to focus now again on churn and retention because it was going to be easier to retain than to acquire a new one.

[00:29:42] Andrew Michael: So yeah. I think that importance and like understanding is shifted though in the market as a whole, because in the beginning it was all just acquisition at all costs and grow, grow, grow. Nice, Tim, you obviously then as well, like the last question is you obviously speak to a lot of founders and they come to you like selling their businesses and so forth. What is one question that you wish more founders would ask you when it comes to selling their business, but they don't?

[00:30:07] Tim Schumacher: And it can be one of the first questions, one of the first calls is, assume, you know, a few months down the road, we're going to sign the final purchase contract. What's your feeling at the moment? What will you do with the company in the next five to 10 years? Where are you going to take it? What do you keep? What do you ditch? And what do you improve on or build new? And where will this company be in five to 10 years?

[00:30:31] Tim Schumacher: Really just on a super high level strategic outpost. And I think that's what you want to know as a founder. And at least that's what I care about is interesting. You know, you asked me about Sedo in the beginning and I think that's symptomatic in a way that, if it was my first company I founded, I ran that for 10 years, I'm still very, very proud that that's my company. I cycle by their office almost every day, see the office signs and everything. People still use it. The brand is still going super strong.

[00:30:58] Tim Schumacher: And to me, that's equally important than the money I got for the exit, because some other acquirer, they might have just killed the brand, integrated into something and nobody would even know what Sedo was. And that's what we're trying with, SaaS Group, to also keep the legacy. And so whether this is important for you as a founder or not, I think generally you want to know what happens with the people, with the customers, with the brand, with everything, and you should ask that question.

[00:31:23] Andrew Michael: Very interesting, yeah. That's a good one. Well, Tim, it's been an absolute pleasure chatting to you today then. Thanks so much for joining. Is there any sort of final thought you want to leave the listeners with or any ways they should be keeping up to speed with your work?

[00:31:36] Tim Schumacher: Pleasure onto my side. Thank you for having me. Yeah, if, you know, let's keep in touch with the listeners as well. I'm mostly on LinkedIn these days. Just connect with me there, follow me, Tim Schumacher. And there maybe as a closing word, the other topic I really deeply care about is climate action. So I publish a lot of things there also at the intersection of climate and what software companies can do, how you can use software to improve CO2 emissions and those sorts of things.

[00:32:05] Tim Schumacher: And that's besides kind of, making money and reducing churn, of course. I would say that's something my call to action, maybe every SaaS founder should also think about. How do you procure electricity? How do you design efficient systems? There's a lot of things. And how do you actually use software to make the world better? And with that. Yeah.

[00:32:24] Andrew Michael: Very cool.

[00:32:25] Tim Schumacher: Very much looking forward to people also caring about this topic.

[00:32:28] Andrew Michael: Nice. Yeah. So we'll make sure to leave everything we discussed today in the show notes. If anyone wants to check that out and anything else we discussed, please do, there. But thanks again for joining, Tim, and I wish you the best of luck going forward.

[00:32:39] Tim Schumacher: Thank you.

[00:32:40] Andrew Michael: Cheers.

[00:32:48] Andrew Michael: And that's a wrap for the show today with me, Andrew Michael. I really hope you enjoyed it and you were able to pull out something valuable for your business. To keep up to date with Churn.FM and be notified about new episodes, blog posts and more, subscribe to our mailing list by visiting Churn.FM. Also don't forget to subscribe to our show on iTunes, Google Play or wherever you listen to your podcasts.

[00:33:14] Andrew Michael: If you have any feedback, good or bad, I would love to hear from you. And you can provide your blunt, direct feedback by sending it to Andrew@Churn.FM. Lastly, but most importantly, if you enjoyed this episode, please share it and leave a review as it really helps get the word out and grow the community. Thanks again for listening. See you again next week.

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