When It’s Over

I’m a fan of trusting your gut. It has served me well over the years. I sometimes have a tendency to overthink things, and the way I overcome decision paralysis is by following my instincts. One of the most challenging times I've done this has been when deciding to sell GroupMe and Fundera.

Selling a company is an incredibly emotional process. The thing you’ve spent years dedicating your life to is going to end up in someone else's hands, and the team you’ve grown to love and build things with has an impending timeline to disband. It's hard for things to feel perfectly right.

With GroupMe, the decision to sell was a relatively easy and organic one. Steve and I never had a successful exit under our belt. The NYC tech ecosystem was just beginning to emerge and $50-100m acquisitions were far and few between and a Big Deal. We were also hemorrhaging money as we covered the cost of every text message sent (not all messaging was done in app) and our growth was bankrupting us. We were also young, the price was life changing, and we knew we had enough energy to build more companies. Skype made a compelling offer and we jumped on it.

People ask me all the time if I regret selling. GroupMe is exponentially more valuable today than it was when we sold. It’s arguably Microsoft’s most compelling mobile asset. But when we were acquired we had something like 1m total users (we had been around for roughly one year) and we weren’t growing as fast as we wanted. I don’t regret it. Of course it would have been nice to have sold for more money, but it was the right thing for all of our constituents: investors, the team, and us individually as founders.

Fundera was a more complex story. We built the business to a profitable $30m annual revenue company with decent ebitda margins while growing 75% a year (and ultimately grew to over $100m in annual revenue with excellent ebitda margins post-acquisition). There were many times when I was absolutely certain that if we kept plugging away we would have built many hundreds of millions of dollars of enterprise value strictly based on the fundamentals of the business. Maybe even a unicorn one day. But we got absolutely wrecked by Covid (all small businesses and smb lending temporarily shut down). We managed to survive and come out the other side in a strong position, but it was a taxing and exhausting experience for the team (as it was for many companies whose businesses were adversely impacted by the pandemic).

Our team was facing what was effectively a total reset, both in market conditions for our industry and our own collective energy as leaders. Did we have it in us to buckle down again for another 5+ years and commit to seeing the business through to its potential? In my gut, I knew my answer was No. I simply didn't want to. It was time to close a chapter and move onto my next adventure, and after a grueling year I no longer has the same fire and passion within. I had a series of hard and honest conversations with the leadership team and it became clear that we were all on the same page. It was time to find a new home.

In some ways I felt like a coward - it is a founder's job to inspire people and see things through. Was this abandoning ship and a dereliction of duty? We always read and are told that whenever we take money from investors we are signing up for what is a decade-plus long commitment. That it’s a roller coaster and it’s on us to have the grit to ride it to the very end, wherever and whenever that may be. After selling groupme I once had a VC tell me he didn’t know if I had the courage to build a great company since we sold so quickly. These stories and interactions compound and create an illusion of the characteristics we are supposed to have and the iconic people we are supposed to emulate.

But fuck that. My take is so long as you always value and treat your team, investors and customers well, you’re okay. And if you can make everyone money along the way all the better. When you know you know. And sometimes it’s just over and you're ready to move on and that’s perfectly okay. No excuses necessary. So when I hear founders say they are ready to sell their company or move on as CEO, there’s no judgment, only support, so long as they’re doing it the right way. No shame in building something while being honest with yourself. Only pride.

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