Last week, his company found its first acquisition in marketing automation startup Drip, headquartered in Fresno, California. A year in the making — this relationship began with a single cold email from Collins to Drip Founder Rob Walling, as seen above. Here’s how and why it came to fruition:
In January, you recruited James Haughawout and talked about your acquisition intentions publicly. Sounds like you were the one who found Drip well before that, can you talk about how that discovery happened?
Yes, it was the middle of last year and in the back of my mind, I knew that an acquisition was really becoming possible for us. So I at least had the ability to entertain it for the first time. I remember going to Drip’s homepage and exploring the integration side of things. I read some great reviews of the product and poked around a bit.
I then realized that Nate Grahek at StickyAlbums and Chad Halvorson with When I Work — and other entrepreneurs I really respect — had been using Drip with very positive things to say about it. As I looked more into Drip, I was blown away by the product; here we have a fantastic solution built by engineers that’s on par, arguably better, than Hubspot and Marketo. They had not taken any outside investment, and the founder had built a name for himself through blogging, podcasting, and conferencing.
So I did the best thing I could think of and reach out to them directly.
No formal introduction, no real forethought, no…
No triangulation games, none of that bs, I just simply emailed and asked: do you want to sell?
And what did he say to that?
He thanked me for the kind words and the offer. He said it would be hard to part with things, but that there could be a scenario that he would entertain.
Interesting…what happened next?
A few months went by actually, we kinda lost touch, surely my bad. I have ADD and plus my wife was pregnant with twins during this time so it was a challenge for me to keep up. Then, they ended up launching a campaingn builder that reminded me to followup, so I was eventually able to connect Rob with James.
What was that inititial call like?
The first call was actually just between James and Rob. The reason why is because I wanted to take my emotion out of it so having Rob there for me was helpful. And I wanted them to know that I was serious so Rob was able to kinda get down to the business right away and make a conditional offer early on based on valuation expectations. We mulled it around a bit internally, I did more research and spoke with the board about it for the first time.
What was that offer that you started with?
It was lower than the number we ended up paying I can tell you that much, a respectable offer that we were prepared to pay at the time.
Why did the actual price end up higher?
Our initial offer was legitimate and fair, but the reason it went up is because their revenue was growing significantly over the period of time that we began talking. It almost doubled.
Taking a step back. As a founder & CEO, how did you strategically approach the acquisition process?
There really wasn’t a structure to it…I just went to where my synergies naturally took me. I think that the founder has the best vantage point to source deals because they come with deep knowledge of the industry and their own stuff. For us, at least, it was like that because we truly understand the market and the customers problems.
Did you retain outside counsel or how did you handle the process internally?
Did you look at other companies during that time and come close to buying prior to Drip?
Yes we did look…but we didn’t fall in love with the products. I can say that I am head over heels in love with Drip and glad we held out for them.
How many customers did they have when you closed?
About 1,500 that had turned them into a healthy seven figure business — enough to prove that they were on to something great. As a perspective, we have over 40,000 customers.
What will their product look like going forward?
Before the deal, we already integrated with Drip. We will continue to enthusiastically integrate with Drip competitors and Drip will enthusiastically continue to integrate with Leadpages competitors. We’ll streamline that process a bit, but will remain true to our belief that unbundling is the way forward, not the other way around. A la carte services that work together as a cohesive unit is what’s right for the customers, there will be no changes made in that sense. We will certainly expand their distribution potential.
Are they going to keep the Fresno office or what’s the plan in terms of people going forward?
They were a team of around nine including a few contractors. The two founders and two employees are moving to Minnesota and yes, we will keep an office out west.
What did you learn throughout the process?
I was out in San Francisco after we had been talking for a bit. In the middle of this event, John Tedesco strongly encouraged me to go meet them in person. I drove four hours each way to meet Rob in a coffee shop, and I’m glad that I did that because I don’t think the deal would have happened if I didn’t show up in person at that time. During negotiations there are often difficult conversations that are at least a little easier having met before in person. So I’m glad that John encouraged me to do that and I took his advice.
Do you anticipate more acquisitions?
Yes we do. There are some other companies I like, but not all love ends up in marriage. The stars totally aligned here in so many ways, it could be a while before that happens again.
Are companies reaching out to you in the same way you reached out to Drip?
Yes there’s been a little bit of that…but we’re getting to the point where our valuation is high enough that we’re priced out a lot of situations. And I’m absolutely not interested in going the private equity route because I’m attached to us being as independent as possible for as long as possible.
What do you see happening with Leadpages between now and the end of year?
We have another product coming out soon…talk of a rebrand…we’re moving really fast and I’m dead set on building a billion dollar plus marketing technology company here in Minnesota.
At what point did you determine that was your vision and billion dollars in what sense?
It’s the trajectory we’re on. Money is a good measure of value delivered to the market and I want to achieve that. And a billion dollar valuation for our shareholders is what I mean.
Is there anything else you would like to add?
I think that this is a win for the Minnesota tech scene. Between Leadpages and Drip I believe we’ve got a nice marketing technology community building here, and I’m excited to see what develops. Our two-day single track curated conference — Converted 2016 — is coming up on its second year and will sell out at 1,000 people as we continue to lead the charge here.