When we acquired the Cross Sell Shopify app, the product hit all of our typical buying criteria. It’s a well-built SaaS product that customers love with a history of growth and more potential.
Our acquisition story for Cross Sell, however, was a bit different than our usual “founded by bootstrapper, bought by SureSwift.” While Cross Sell was initially founded by a bootstrapper, the product had already been through an acquisition back in 2017.
Over 3 years, its second owners Deven Soni and Ryan Kulp rebuilt and redesigned the app from the ground up, took it to its next growth level, and then decided the time was right for them to sell last year.
I’m thrilled that SureSwift was the “win-win” choice when they reached that decision, and I’m very excited to bring you all this interview with Deven and Ryan, who are both seasoned acquirers, investors, and operators in the SaaS space.
An interview with Deven Soni and Ryan Kulp
Tell us a bit about yourselves — what’s your background, how did you wind up owning Cross Sell?
Ryan: So, I moved to New York City after school in 2013, worked for a Techstars company, and over the next few years, I got more and more connected and involved in tech startups, from freelance marketing to product development.
In 2015/2016, I was working at a venture fund in San Francisco. That’s when I got involved with buying and growing companies of my own. And the following year, I met Deven through a business partner, Justin Mares. And that’s when we bought Cross Sell together.
Deven: On my end, I had a pretty traditional finance background early on. I worked in tech M&A in San Francisco, and eventually joined a venture-funded startup. I sort of married those two worlds together and became a Private Equity and Venture Capital Investor at Goldman Sachs for about two years.
After that, I moved to a fund called Highland Capital Partners in Silicon Valley. Then I realized that this whole time that I was kind of a value investor trapped in a technology investor’s body.
And that’s the reason I started a venture/private equity fund called Wired Investors back in 2014, and we bought about 18 digital businesses over the next 3-4 years. About half of those were SaaS, and the other half were media-based. And that’s where I met Ryan and Justin as well.
I know what we liked about Cross Sell, but what stood out to each of you when you bought it?
Ryan: My business partner Justin and I started looking at the Shopify app store in 2016, and we just started creating our own metrics to watch — like the ratio of installs to reviews, and recency and frequency of reviews, and we started plugging them into this spreadsheet model.
Cross Sell hit all the green lights in terms of those metrics as kind of a remarkable product, without even knowing what it was. It was just like, this app has something going on that other apps don’t. And so we kicked the deal over to Deven and said, “this is the one.”
Deven: Yeah, we were talking about Shopify, then like three days later we started looking at Cross Sell.
Ryan: That’s right. We were very careful about not wanting to waste you or your partners’ time, so before we went in on this Cross Sell deal, it had to be the one. So we moved pretty quickly.
But what stood out to me when I found it was the reviews, of course. Then looking at the product, the design wasn’t great. So maybe to one person, they’d say, “I gotta run away because it looks bad to me.” We had a design competency, so I just saw that as a huge opportunity.
Like, you know, the HGTV shows where they see old carpet, and they say, “Oh, we can rip it up and put in hardwood floors.” That was our same approach, how we found the product and why we were able to move so quickly.
I love that home remodeling reference. Did you both already have the idea of a joint venture in mind? Or was it more we’d like to work together and if the right deal comes along, we’ll figure out the structure and how it works?
Deven: It was more the latter. We had a pretty active pool of investors, and Ryan and Justin had a ton of competency in the Shopify ecosystem. We thought that was an area we wanted to dip our toes into more and learn about, so we kind of just started talking.
And from there it was just literally if we find a good deal to work on together that’s big enough to do some cool stuff with, let’s take a look at it together. And that’s what happened with Cross Sell. It ended up being probably four or five weeks from conversation to close.
And what about your goals while you owned it? Every owner approaches things a little differently than the original founder. Give us a snapshot of what it looked like when you bought it, and what your focus was on.
Ryan: For me, as the operator, I needed it to not be the same type of project as Fomo (another Shopify app I was operating), and other projects where I was doing 2 am tickets, fixing bugs, and things like that.
So from day one, I think before we even closed, I created a Trello board “master plan” for the next two years to do everything from rebuild the app from scratch and redesign it, to doubling or tripling the pricing depending on the legacy user.
And we did get through virtually all of that before we transitioned to you guys. That was a plus, for me. And I think also a plus for the product and the customers because when you’re just starting out going from zero to something, you kind of can’t have a plan because the plan is like, don’t die and do what customers tell you to do.
But I think Cross Sell at that time already had 1600+ customers. I didn’t think it needed this shotgun approach of “let’s just do whatever feels good each month.” I thought it needed more long-term planning.
The previous owners, in my opinion, had optimized for minimizing day-to-day work, which is fine for a side project but doesn’t work as well when you’re trying to grow.
So we focused on improving support, because as the product grows, that need grows, and it makes sense to have a Help Center and things like that.
And then on the product side, we wanted to improve it so dramatically that we would begin to stand out from the crowd of these other competitors in the marketplace.
So we kind of inverted some of the day-to-day strategy and operations from the original founder.
And on the pricing front, a lot of times a founder doesn’t know how great something is that they’ve made because they’re humble. We knew we needed to raise prices, and we knew we needed to bolt on some things to future-proof the product.
I think what we tried to do during our stewardship of the product was try to deliver on the vision that was already there, but that the original founder didn’t want to do or didn’t have the time to do since it was a side project for him and he had several other apps he was working on at the same time.
I’m curious when you bought the original code base, did you just buy the Cross Sell code base? Or did you get a bunch of ‘also ran’ apps that weren’t your top priority and you shut them down?
Ryan: I think we got one or two additional free apps or one that was making like $100 a month or something.
The same thing happened when we bought Fomo (it was called Notify when we bought it). We got an app that made $700 a month and had 800 users and it did scheduled Instagram posts, and of course, later, the Instagram API stopped allowing that.
But in both cases, we didn’t bother dealing with the other app, we just shut it down. Because even if we didn’t know exactly what our goals and tactics would be for the app, we knew we needed to do something different than what the previous person was doing, or the app would have taken off for them already. So if the previous person was managing all these little things, then it’s pretty easy to say, “let’s just not do that.” And then figure out how else we can fill our time, focused on a single product.
I think that’s going to be super interesting to both founders and folks who are doing what you’re doing. That’s a really hard call to make. But sometimes when founders take that sort of studio approach, they don’t realize that maybe they should be letting more go and going all-in on one thing sooner.
Ryan: For sure. That’s hard for a founder to do, especially somebody who wrote all the code and had the idea and thinks of it as something super special. It’s easier to do that coming in from the outside.
So you worked through your master plan — how did you decide it was time to sell vs. mapping out the next two to three years?
Deven: With every business, your growth and revenue charts are not always ‘up and to the right.’ It’s more these step functions, right? You tread along until something comes out — like a strong feature, or maybe the market changes in some way, and you get an uptick. And then you kind of tread water again.
That’s not to say that we were treading water, but I think we did a ton of work under the hood to make the product much stronger. And the overall SaaS market was changing. There are more buyers and sellers out there right now.
So, we thought, we have two decisions in front of us. We can go on for the long haul, which wouldn’t have been a bad decision, but things like expanding to a new channel, like BigCommerce or something, felt a lot like starting from scratch. Our other option was to let someone else carry the torch.
And at the time for us that second option just made sense, but I really deferred to Ryan on whether or not it made sense for him and the product. For us, we were broadly exiting our digital portfolio and thinking more about brick-and-mortar, and Ryan was open to selling at that point as well, so I just kind of ran with it and tried to find a win-win relationship.
Ryan: Yeah, that’s right. I think I would summarize it as steam, you know, you have some limited amount of steam. And every project has a different amount of steam. With Fomo, I ran out of steam three months ago — I’m no longer the CEO there. That was a four-and-a-half-year project for me. Our Micro Acquisitions course, I ran out of steam like nine months ago. So someone else is running that now.
Everything has a different kind of half-life. And what if you push through after you’ve run out of steam?
I think in this world, where the reason we have these businesses is to grow them and create jobs, and whatever else, that pushing through after you’ve run out of steam is masochistic. It’s not actually helping anybody. It’s definitely not helping shareholders and partners. And so I think it was the best thing to do for our partners, and for me personally, and I’m really glad it found a new home.
Ryan, you mentioned Fomo, can you give us a quick update on what’s going on there? I think that’s another interesting trend we’re seeing is that people — whether they’re founders who have multiple projects going, or they’re investors/buyers who have a portfolio — are trying to decide how and when to exit one component.
Ryan: Sure. With Fomo, I was working really hard. Basically, that was my full-time thing. And, you know, I got too connected to the growth. I had a good mood if we had an up month and I had a bad mood if we had a down month and I would watch This Is Us for 12 hours. It just got to be a weird relationship with the numbers. And I never thought it would be like that, so I kind of needed to just not do it.
But in terms of more logical reasons, I think there are a few ways to exit a company, right? There’s go public, or sell. There’s shut it down. And then there’s replace yourself.
And I think they could be done in that order, or the opposite order. So many people have tried to go directly to the biggest and the most obvious type of exit, but you kind of need to replace yourself before a good exit can happen, especially for the new owners.
You know, the new owners want to know that the business doesn’t require Ryan Kulp, and Ryan Kulp’s “brand,” and Ryan Kulp’s personal blog newsletter to push things forward.
So for me exiting Fomo a few months ago was a good test of my entrepreneurial chops. Did I create enough systems, enough documentation internally and externally, and enough checks and balances? So far, it’s going well, and they’re still growing. And that’s been a lot more fulfilling to see those monthly stakeholder newsletters where it’s still growing and things are happening when I’m not running it.
It really kind of came down to ego. And I think a lot of founders — maybe bootstrapped founders especially — have more ego because they kind of deserve it. If you started something and made it happen without investors, you sort of feel like, “I’m a Spartan.” And if you raise money with investors, even if you’re really smart, you feel like well, I owe a lot of people my success.
And so I think a lot of bootstrapped founders keep pushing through after their time is up because they have that kind of confidence of being a successful bootstrapper. And that’s great. But being self-aware is even greater.
And for me with Fomo, having that awareness meant knowing I needed to step away. And yeah, it’s been good so far.
Deven, you’re also someone who’s shaken things up throughout your career to find your own version of product/founder fit. Tell me more about moving from the investment side of things to acquisitions?
Deven: I think the reason for the transition was working in finance, you get to meet a lot of companies, and you can see a lot of business models, but it’s transient in nature. You get excited about something, and then you say goodbye and meet the next one.
And even if you’re an investor, that’s the same in some ways — you get the quarterly check-in, and that’s the relationship you have with that business.
I think for me there are many benefits to being an owner of companies, and I think part of that is being able to set more strategic direction, and thinking about capital allocation more precisely.
So those were the main reasons I made the switch. But, you know, in hindsight I wish I had done it earlier. It’s one of those things where I did the day job for probably three or four years longer than I would have if I’d known what the other side looked like.
You made another jump recently — from buying software to buying physical businesses under the Kingmakers name. You provide the systems, but an owner buys in. Is that right? Why the move from digital to physical?
Deven: Yeah, around 2018 or so, we just realized that the process we were using to find digital businesses wasn’t working as well, or the businesses were more expensive. So we decided to try the same kind of strategy of small-cap buyouts with brick-and-mortar businesses under the Kingmakers brand. We bought our first brick-and-mortar business in early 2019, and since then have bought or invested in several more.
We’re focusing on plumbing, roofing, and landscaping — really kind of “boring” businesses that we think have a lot of the same characteristics of digital businesses. So that includes things like low multiples, and you know, not a very liquid market. But they’re also easier to finance, and they’re cheaper. So that’s what we’re doing now.
How is running those businesses the same as running SaaS and software companies and how is it different? Anything universal you’ve noticed?
Deven: I think what’s universal is you’re still gonna get punched in the face a lot, right? Nothing’s easy. It’s just someone else punching you, whether it’s a faceless organization or a human that doesn’t show up to work. I would probably say that on the brick-and-mortar side, it’s more people drama. Someone doesn’t show up for work, or someone shows up to work high, and you have to deal with that. It’s a lot of these personal, visceral kind of human things. And solving for that kind of stuff is tricky, and building a culture in these businesses is just different.
But the nice part about it, the other different thing is every single human on Earth kind of wants what you’re selling, so it’s almost like selling a commodity in a way. It’s not like, you have to try really hard to differentiate your product. It’s more like if you show up, you do a good job, you clean up after yourself, and say “thank you,” you’ve got more business than you can handle, which is a rarity.
So you know, I think the similarity is that there are going to be problems in any business. The difference is the types of problems.
That’s so true — you have to be willing to get your hands dirty running any type of business. Speaking of those common business problems, growth and marketing come up a lot for bootstrappers, so Ryan, I’m curious what are some of the first things you look at there?
Ryan: I think one thing bootstrappers often leave on the table is extracting the amount of value that they’re providing in terms of pricing. You know, I just had lunch with my tutor in Korea yesterday. He was nervous about raising his prices for his online students. And I asked him, “Why? What is the new pricing?” Are you afraid too many people are going to cancel and you haven’t modeled out how many people you can afford to lose?”
He said, “No, no, I’m just nervous about who will be angry. If people cancel, I’m okay with that. I want more time for other projects.”
It turned out he’d raised prices before and when I asked him what happened, he said “Nothing, nobody complained.”
I think this is someone who has kind of the same mindset as the SaaS bootstrapper. He has a good product — it’s kind of premium tutoring, and he charges a lot more than most tutors here in Korea because his English is at such a high level. And he’s raised prices before successfully. But it doesn’t matter. He still has this fear of raising prices, and the emotional backlash that might happen.
So extrapolate that to SaaS founders with hundreds or thousands of customers, they tend to see the value of the product as whatever their first price was. And on the one hand, I mentioned earlier, I think bootstrappers have some ego. But on the other hand, they have blind spots, too.
So they have some ego, that they’re badass, but they have some blind spots that their product is worth it. Because frankly, a lot of bootstrappers start these little niche tool products to compete with someone that they think is too expensive. So what do they do? Their first step is to make their product cheaper than that competitor.
So as a marketer, one thing I look for is whether a product is worth a lot more than they think it is. And it’s not really about my opinion. It’s about their customers, of course. But if I think the answer is yes, then that’s immediately an opportunity to make something bigger without writing a single line of code.
Deven: That’s almost the number one playbook in our businesses, too — we look for plumbers and HVAC technicians that are underpriced because it’s just really easy to change.
So you’ve both moved out of SaaS for right now. Deven, you’ve gone on to a different business segment, and Ryan, you’ve moved to Seoul and you say you’re retired from SaaS. How are those K-pop aspirations going? And are you definitely retired or just taking a break for now?
Ryan: I’d like to think I’m retired from SaaS, not from working. I’m still very interested in acquisition, and entrepreneurship through acquisition — I think there are unlimited benefits there. Right now I’m looking into acquiring two cafes in Korea. But if I do buy a cafe and totally fail at it, I might have a reality check that I should go back where I belong, and then I’ll probably see you guys on another call soon.