Ep. #793 - What Happens After Acquisition
In this episode of Startup Hustle, join Matt and Matt for Part 51 of “How to Start a Tech Company” to hear about what happens after an acquisition takes place.
Covered In This Episode
What should you expect after a company acquisition? The Matts will provide answers based on their own experiences.
It’s quite the journey – negotiating a successful exit. But the learning continues after the contracts get signed. Listen to Matt and Matt discuss what to look out for after receiving the big check. They also share advice on how you should behave as an entrepreneur and a leader while navigating an acquisition.
Tune in to their fun conversation about what happens after acquisition in this Startup Hustle episode.
Don’t miss any of the episodes. Click here to listen to the entire series.
- A short recap of the previous episode in this series (0:57)
- What is acquisition (3:51)
- The glitz, glamour, and hustle of having your startup acquired (6:19)
- The effects of being acquired (VinSolutions) (10:22)
- The reality of merging companies (13:32)
- Acquisition and its impact from the owner to the employees (15:57)
- Dealing with attention and perception (19:22)
- Expecting and dealing with culture clashes (26:37)
- Keeping people focused after acquisition (31:51)
- The role of the founder after the acquisition (33:21)
- What founders should remember (34:33)
- Wrapping up (36:28)
Well, and that is a hard part, you get a lot of people that will hit you up for an investment. And honestly, as we all know, like 80 to 90% of startups fail. So the best thing you can do is say no to most of them unless it’s something that I always say. And this is for me, like I don’t usually invest in things unless it’s something I’m really passionate about or really understand or really care about.Matt Watson
Now, at the same time, I’ve seen people definitely stick through adversity in other places, and accept lower pay to stay in cultures that they like. So I think, really, the culture is the big thing.Matt DeCoursey
The big key here is you’ve got to have a real heightened sense of just keeping the team together for that, especially that first probably three to six months. But really putting a big focus on keeping people happy and keeping people on board. Try not to disrupt them, you know, as much as possible at the very beginning.Matt Watson
Uncertainty is something that should be approached with empathy and understanding. You gotta like remember that what is exciting for you as the founder might not be exciting for the 199 people that work there. So be humble. You don’t want to see a video of you walking down the hallway with the big check.Matt DeCoursey
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Following is an auto-generated text transcript of this episode. Apologies for any errors!
Matt DeCoursey 0:01
And we’re back for another episode of Startup Hustle, Matt DeCoursey here with Matt Watson. Hi, Matt.
Matt Watson 0:06
Hey, how’s it going, man?
Matt DeCoursey 0:08
51 Dude, we’re almost there. The Final Countdown I wish I had a button that I could play the final.
Matt Watson 0:14
Matt DeCoursey 0:17
That’s exactly what it sounds like. So I don’t need the button. So thank you. But yeah, here we’re back, dude. Episodes 51 and 52 of our How to Start a tech series, or how to start a tech company? And how to realistically understand how tech companies work as we are admittedly going to be exactly two weeks late delivering this or two months late. Now we have so many. Well, I know. But we’ve talked to so many people along the way that your expectation should be that things take twice as long and cost two to three times as much. Being the eternal optimist that I am that I actually believe we are ten months ahead of schedule and way under budget, which has led to this series being acquired, and we’re going to talk about what happens after an acquisition today. Now I know you know so much about this, I’m going to let you rest your mind and your voice for just a moment. We remind everybody that today’s episode of Startup Hustle is brought to you by Gusto. Gusto has modern solutions for modern HR problems, whether it’s talent management, payroll, or onboarding tools. Gusto HR platform has it all for you. Be smarter than your competitors and try a free three months subscription. You just go to gusto.com forward slash Startup Hustle. Once again, gusto.com forward slash Startup Hustle. I’ll see you Matt. You know, it’s even easier than typing all that stuff in. Just get it on the show notes and click the link. Click it’ll take you right there. So you know that we here in our approach pattern to this we’ve recently talked about preparing for an exit. Well, what is an acquisition, preparing for an exit reasons acquisitions fall apart, negotiating a second successful exit? And then you have the good old what happens after now? Oh, Matt, and no less than 10 episodes in the history of what is, by the way, Episode 800. Is March 7. I can’t believe I know. I was telling. I was talking to Sandy Kemper recently, and I was reminded he was like, what shows what’s going on inside? Well, you were on episode number 100, where we were super pumped to have gotten to 100 episodes and to have you as our guests. You were like our big golden prize? Do you remember that? We were like, yes. The perfect gas. Yeah. Now he’s been on three times. And he’s like, Oh, my so one of your most popular episodes. I don’t know, a lot of love the episodes with Sandy, which by the way, you talk about acquisitions, and raising capital, you know, up to 400, and well over 400 million, but our episode is titled 400 million in capital and what we did with it, so
Matt Watson 3:03
Yeah, interesting. C2FO is definitely one of the unicorns of Kansas City. So I mean, they’ve got to be a smaller company. And they’re just aghast at our guest.
Matt DeCoursey 3:11
That is amazing with the info, the expertise. And honestly, I look at and I think I’m like, wow, I’ve got so much room to grow. To learn still. So now, I don’t know if acquisitions in their future. But you’ve had a couple, Matt. So you know, when it comes to acquisitions, I mean, in general acquisition describes a primarily amicable transaction depends who you ask, where both firms cooperate, also depends on who you ask. Friendly acquisitions occur when the target firm agrees to be acquired, its board of directors, or whomever approves the acquisition, and friendly acquisitions often worked towards the mutual benefit of acquiring and, you know, target companies now, you know, there, we’ve talked about a lot of the other stuff, mainly that you know, for individual managers, employees that, you know, acquisition can be personally disrupted, maybe even feel traumatic, as if the baby has been ripped out of your arms are a whole lot of stuff. But, you know, really, in the end, like, for this episode, we’re moving past all that stuff. And, you know, the real question is, is what happens afterward? Now, now, you’ve talked about this in the past and kind of described, well, you know, what, let’s just go firsthand now, after the VinSolutions acquisition, which was in the 150 million ballpark in 2011. Like, I mean, what happened after that?
Matt Watson 4:42
Well, with any acquisition, right, it’s going to impact multiple different things and people, right, so it’s me personally, it’s the other shareholders, it’s our employees. It’s our executives. It’s our product. It’s our customers, like everybody gets affected in some different way. Right and depending on the type of acquisition, it’s good or bad, or, or no change for all these different things, you know, the number one thing I can think of was a bunch of consultants crawling up my ass. That was the first thing I can think, you know? Well, you sell it, you sell a company. And the next thing you know, like, the mothership wants to come crawl up your ass about all sorts of shit. You know, like, the consultants come in and want to make sure security is good. And this is good, and that is good. And you’re like,
Matt DeCoursey 5:32
Oh, should they have done that before?
Matt Watson 5:35
Well, they do. But it just gets worse afterward, you know?
Matt DeCoursey 5:39
So well, Matt, you described this to me in the past, and maybe even when we were discussing, you know, the, when you were in million dollar bedroom. I mean, you described the feeling as being really anti-climatic like, all of the all have the glitz, glamour, hustle stress, everything happened before and then one, then you wake up, and there’s a bunch of money in your bank account. And you’re kind of like,
Matt Watson 6:03
I would say, you know, if you think about the roller coaster ride, probably the climax is when you get the offer, and you get the letter of intent. That is probably actually the biggest highlight of all of it. Because then you’ve got to grind for like three to six months, that is pure hell of getting the deal done. The due diligence, all the meetings, all the bullshit, you got to do it exhausting. I mean, now, if you’re just a shareholder that didn’t have to do any of the work, then okay, sure, then you’re just super excited when you get the money later. But if you’re but if you’re an executive, or the founder, that is going through all the bullshit to get the deal done. Once you get the money, it’s just like a huge sigh of relief. You’re just like, you’re just off the roller coaster. At that point. You’re like, Oh, my God, the last three months, six months had been exhausting. I just want to go like sit on an island somewhere and do nothing now. Like, it’s just exhausting. And you just kind of get off the roller coaster. And really the most exciting part of it. It was back when you got the offer. I would say that.
Matt DeCoursey 7:09
Yeah, totally. I mean, I think that’s why it’s like the glitz, the glamour, like I mean, we kind of get to the point where the money is about to be transferred. And you know, I mean, it’s kind of you the writing’s on the wall at that point. Now, you know, we’re speaking that not speaking from the founder, owner or investor, like the shareholder perspective, but after an acquisition, the reality is a lot different for the people that work in the company. Now, in many cases, and we’ve talked about this, and this was the case for you both with VinSolutions and Natrium. Most of the time leaders or CEOs, CTOs. You know, a lot of times are involved in what is known as an urn out, or they are around for an indefinite amount of time. Now, another, you know, so as we were talking about the past episode 150, we had Neil Sharma on who is the founder and CEO of D G, which was another 100 and $50 million acquisition for a company here in Kansas City. So that was ironically on episode 150. But I was talking to you guys about that. Now, Neil, actually, years later, has now stepped away from D EEG. So in some cases, like Neil’s like, he stayed a long time, you know, I mean, that was years. I mean, it’s two and a half years, basically. And, you know, if I read his article about that, I mean, I think a lot of that had to do with the fact that I think Neil’s a great leader, and maybe just bailing in the middle of a pandemic wasn’t what wasn’t the right thing to do. But, you know, as far as leadership goes, That’s variable. Now, for employees, this is a lot different. And I shared some of my experience. My greatest experience of a post acquisition world working for a company was not a company that I owned, it was when a private equity firm, purchased six different musical instrument chains. And this is in my late 20s. And they mushed them all into one now that created chaos man, and there was a lot of people were walking around on eggshells, there was a lot of people just literally had already packed up their ship because they knew they weren’t going to not end up with the job, because a lot of these acquisitions and mergers occur because it’s cheaper to mush three things together. And because you only need one of this, not three. And so these things, this redundancy, and you know, you’re trying to you know, you’re born, you’re running the bar, it’s like, an office space when the consultants come by, I mean, there’s a lot of people so exactly what do you do here, Matt? You know, it says, maybe interviewing for your own job again?
Matt Watson 9:42
Well, for sure. There’s depending on the type of acquisition and the size of the companies and all that stuff, right? There’s definitely massive cultural changes that happen and how it impacts the day-to-day job of different employees right at the VinSolutions side, when we were acquired, I would say it didn’t really impact the day-to-day of the employees, we kind of ran as an independent business unit and just kept doing what we were doing. They honestly never really integrated the company’s very well together. Really what they did, I would say almost two years later is to shut down certain product lines actually, like this whole, whole, like team, they just shut down because they move the customers to a different business units product like and so that that happened over a much longer period of time. And then, you know, you gave the example of, of the music instrument store music instrument stuff. And then, you know, from the metro side, when Metro acquired SEC fi, they pretty much immediately merged a lot of the teams together. So it was like an instant, kind of like, Hey, you do, you’re an account manager, but now you’re an account manager for both products. So now, you know, you got to learn both products, you got to understand both customer bases, you got to understand all sorts of new shit, congratulations, you have like two jobs. Now it’s that one. Right like, and then you also just get into the just giant culture shock, right? Around how companies do business. Where it’s like, you know, most startups are young, they’re agile, they’re more nimble, they make quick decisions, right? And the entrepreneurs and the leaders are usually much quicker to make decisions, right? Like, almost to their own fault. They run around with a shotgun, and they just make decisions all day. And sometimes there’s collateral damage, where all of a sudden, you got acquired. And now if you got acquired by a much bigger company, things may move dramatically slower, right, where it’s like, feels like nothing ever gets accomplished. And that is a giant culture change, that some of us simply cannot survive in some employees struggle with that.
Matt DeCoursey 11:48
I’d struggle with that. And I think the I don’t think that’s your favorite scenario. No, because, because like you look at our perspective, I mean, I’m used to owning or being one of the owners of the company, which means I don’t have to go through nine levels of approval.
Matt Watson 12:03
And you’re used to running around with a shotgun.
Matt DeCoursey 12:06
Yeah, or shoot, somebody takes your shot shooting, you’re shooting myself in the foot with it on Sunday I take responsibility for but I might have to actually get permission at the new company to shoot myself in the foot.
Matt Watson 12:18
So Matt, your new job is to now make PowerPoint presentations about what your team is going to do. And we’re going to have meetings and discuss those. And we’re going to need to see all sorts of spreadsheets and numbers and goals and forecasts. And if you could get all that done by Friday, that would be great.
Matt DeCoursey 12:38
While I’m busy working on new cover pages for TPS reports. So I’m not going to be able to do that. And I’m also got my fourth meeting about whether we should be using Microsoft Teams or slack.
Matt Watson 12:52
Oh, my God, yes. And I mean, this is a reality that happens when any kind of company is merged, right? You’ve got oh, we have different tools. And we have these. We have these management meetings. This is how we do things. You know, we have quarterly meetings, we have monthly meetings, you know, we have it’s like today like you, you might be in charge of whatever product or engineering, right? And then all of a sudden emerge like oh, now the VP of product is going to take that over. And this is how they do things. Everything has to go through review committee. And we now have to worry more about security and sock compliance and all this shit. And you’re like, Fuck, I just want to get this little change done in the software. And now they’re like, No, that has to go through a committee and we have talked to customers and get their opinions first. And they go, Oh my God, you just wanna jump off a bridge.
Matt DeCoursey 13:38
So if the acquisitions are big enough, I may request specific time throughout the day to stop and take breaks to shop for private islands.
Matt Watson 13:49
Yes, that’s important too.
Matt DeCoursey 13:50
Is that is that frowned upon? Or do you just get a you get someone to do that for you and just bring you the results? I feel like, Well, part of the fun is actually shopping for the island and really like but maybe not.
Matt Watson 14:02
Well, you’ll be in so many meetings all day. It’s pretty easy to just do that during the meeting.
Matt DeCoursey 14:09
Yes, yeah. It’s really starting to come together. Yeah.
Matt Watson 14:13
While you’re ignoring it, you can fight with your, you know, wife or spouse or whatever about the paint that she wants to do and the giant remodel and, you know, all the things you know, yeah.
Matt DeCoursey 14:24
Totally, totally. Or, you know, all that and, and shopping for overpriced JPEGs I mean, NF T. Yes. Because, yeah, you’re gonna have to have a board ape. I mean, and some other things.
Matt Watson 14:39
Yeah, you should definitely invest all of your money in JPEGs. Yes. I can’t wait to start.
Matt DeCoursey 14:47
We’re gonna be doing a series on that. And trust me, that will not be the last time that Matt and Matt are I sound a little surprised that we goes the wrong career who would have known 10 years ago, all we needed to be doing is buying and selling JPEGs.
Matt Watson 15:04
You know, they used to say, they used to call them starving artists, I don’t know, if they’re starving anymore.
Matt DeCoursey 15:10
They will be once the world once reality sets in, and 98% of those things turn back into a JPEG.
Matt Watson 15:17
So going, going back to, you know, the acquisition and how it impacts everybody, you know, for a lot of employees, it absolutely creates a lot of uncertainty right there, you know, our executive assistant, you know, immediately is like, I just don’t know, like, they already had executive assistants. Now there’s two of them, and I just don’t really feel like there’s enough work for both of us or whatever. And so she quits, right, like, you end up, you end up with a lot of people that jump off the ship, because they’re just not sure about what the post-acquisition world looks like, or they don’t like their new manager, or maybe they were happy working with you before. But maybe they weren’t, like, extremely happy. But now all of a sudden, they’re like, I got a new boss, new company, you know, maybe I should look around, maybe I should think about, you know, what other options are out there. And my friend, Joe keeps trying to recruit me to come work with him. So, you know, maybe I should actually think about it, you know, and next thing, you know, you got a floodgate of people leaving, like, it’s just part of the deal.
Matt DeCoursey 16:22
Yeah, and I think that’s expected. So, you know, a couple other things that, you know, from a more mechanical standpoint, you after a after a merger occurs, or an acquisition occurs, I mean, there is an actual, like, you know, shares, like, there’s some, there’s legal stuff that occurs, like, if you own if you own companies and share a and somehow those, those could turn into now, new shares and company B, meaning like, you know, it’s your first thing is no longer a thing, and it’s now something else. You know, another thing too, is in a lot of startups, and this has been, you know, part of what, you know, as tech, really, you know, rose and devout and valuations went through the roof. I mean, there was a ton of people in San Francisco that, you know, it found themselves young and rich. And, and, you know, here’s the thing is, you I mean, you could, in some, in many cases have a bunch of newly semi-wealthy people around and well, everyone handles that differently. Let me just put it that way.
Matt Watson 17:27
I mean, they handle it way better than the people who won the lottery. That might have been like, really, really dumb, that just got handed a bunch of money. I mean, usually it’s smart money, right? You got people that were entrepreneurs that ran a business or whatever, they’re usually more educated, smart, or whatever. And so yeah, if they get handed a few million dollars, they’re going to be much better than the lottery winners are probably, because here’s some crazy stories about the lottery winners, most of them all end up broke later. But, you know, even entrepreneurs, they, they, in some sense, when you have a big win, it makes you feel invincible, too. And they feel like everything they’re going to they’re going to touch later turns to gold, and they can repeat the success and all that which is absolutely not true. Some people get lucky and they have multiple, multiple wins. You know, you got something like Elon Musk that maybe everything he touches turns to gold. Or maybe you could say the same thing about somebody like Donald Trump, or you get some people that are just big personalities like somebody like Trump. I don’t know if he’s successful because he’s Trump-like maybe he’s not successful at all but the people just like him because he is who he is. They like to treat them however they treat him right. But for the average Joe, like the rest of us, like we’re successful ones does not necessarily mean we’re going to be successful again.
Matt DeCoursey 18:42
Well, I agree on the high-level examples. Now one thing that I would Rabat with is I do think that once you’ve seen what winning looks like it makes it easier to win Sure. And one thing I do know for a fact is once you have one your street cred has gone up a lot so it is like you use like the Trump example and I don’t even like talking about Trump because not I mean honestly I don’t like talking about politics but regardless, you there are people names brands and street cred and we’ve talked about this even up to fundraising like having the right advisors and people and stuff around you. Like you have brand value like do we have you and I have that like realistically we do and you know now what’s that worth? Is it Trumper or whatever maybe not but are definitely not Elon Musk, but on the micro like smaller scales. It does definitely matter. You know, another thing too is the moment that oh man, the moment that I mean, even regardless of what it is even us being on Okay, so when I was on the Forbes next 1000 last year, I got all kinds of weird shit coming my way after that, mainly nothing that I wanted to even pay attention too, but it definitely draws people out of the woodwork. I still get weekly calls, emails or inquiries from people that found Full Scale on the list of Kansas City’s fastest-growing companies. And that becomes tough to manage. Now speaking of management, managing your team can be as easy as 123 with Gusto, no more late nights for processing payroll, or dealing with business tax filings, no more painful spreadsheets for attendance tracking, say hello to your new smart HR platform, you go to gusto.com forward slash Startup Hustle, you get a three month free subscription. Now it’s gusto.com Ford slash Startup Hustle. Now, I don’t know if Gusto handles business tax filings for post-acquisition, mega checks. But yeah, I mean, like what I was saying, right before that, is there you do your life does change the perception that people have? And you and I have talked about that a little bit. I mean, I think people probably treated you a little differently afterward.
Matt Watson 21:04
Yeah, I mean, it’s, it’s interesting how people treat you Yes. And, and there’s a lot of pros and cons with it. Right? I mean, you know, it’s, it just, it really changes your life in a lot of ways forever. And even with your family, it creates all sorts of weird problems with your family as well. It definitely changes a lot of things. And it’s hard to even explain, you know, but it the easiest example is like, Hey, your best friend that you might would go have dinner with his version of of dinner might be meeting at Taco Bell, right, where your version of dinner now might be very, very different. And you wouldn’t be caught dead at Taco Bell, right? Because you’re like, I have money and are going to Taco Bell. But to them, I’d still got to talk about I like Taco Bell, I would go to Taco Bueno, but not Taco Bell.
Matt DeCoursey 21:57
But I’d go there to maybe both, maybe I go to both and then decide which one I wanted to eat. And that would be my version of fans.
Matt Watson 22:03
But what makes it even worse is you also know that even if you go meet your friends at Taco Bell, you’re buying, there is no way they’re even going to pay for Taco Bell, right? And it just creates weird problems and relationships. That just happened that happened because of that, right? And you almost in a lot of ways have to find a new circle of friends that you have more in common with that you can do different things with and it just makes
Matt DeCoursey 22:28
you said that, to me was one of the very one of the very first things, so for those of you listening, Matt and I first got we had maybe only met one time before I asked to have a conversation with him to put in million dollar bedroom. And we realized we had some commonalities. After that we have kids that are the same age, we live really close to each other. We didn’t really know each other. But we hung out a couple of times after that you actually made a comment to me, you said, Man, I liked the fact that you don’t want anything from me. Just meaning like that’s the tiresome part like I mean, I run into doubt a lot to just people wanting, I don’t know, they want money from you. Basically, they want you to invest, validate, advise, directs, I don’t know just that it goes on. And the thing is, is I like doing a lot of that stuff. The problem is, is 90% of the people aren’t really coming proper with that letter. It’s like, I’d love to buy you a cup of coffee. So I can pick your brain about starting the dot com. And they’re emailing you from their Yahoo email, do not email me about your tech company from your Yahoo email. Seriously, don’t just don’t well, and that’s the hardest. Don’t email anybody about your tech company from Yahoo.
Matt Watson 23:36
Well, and that is a hard part, you get a lot of people that will hit you up for an investment. And honestly, as we all know, like 80 to 90% of startups fail. So the best thing you can do is say no to most of them, unless it’s something that I always say. And this is for me, like I don’t usually invest in things unless it’s something I’m really passionate about or really understand or really care about.
Matt DeCoursey 24:00
Then in that boat a lot too. I’ve actually been in the room or you or I have said that like, Hey, this is a cool idea. I’m sure it’d be successful, but I don’t know anything about this. So it’s hard for me to want to write a check. It’s hard for me to give you advice and that kind of makes me dumb money and I don’t like being dumb at all. Okay, so one of the things that occurs after an acquisition is there’s usually some level or form or person or group or someone that’s an integration leader. And you know, this is someone that’s designed this is a change agents, this is all the you know, so change management. So you look at our company Full Scale, we’ve got work coming up on our 200 and 50th. Employee will be there in about a month and a half, and that’s crazy. You know, you look at I know it is but you look at change and change is a big thing. And you know, and as I eluded on the very first page of my book balanced me, I literally say change is difficult and most people are bad at it and If you and and we get in our own ways, and a lot of this, but change in general, is huge. It’s hugely stressful for a lot of people. So a lot of times someone is assigned a team or something that is literally there to help answer questions, help lead the charge help combine cultures, you have things like new business processes that need to be evaluated. And also kind of dealing with cultural clashes, which we’ve talked about, you know, like, imagine, imagine if you take 100 people, and then you put them in a room with another 100 people, and then what I mean, it’s really naive to just people generally don’t like other people, that’s just kind of life. And now they have to work together and agree on stuff, which and then you have employee uncertainty. And as we’ve mentioned, attrition, I mean, these are all things that, you know, these are all the subcategories and departments of change management. So
Matt Watson 25:57
nobody likes change. And most people just want to do their damn job and go home at the end of the day. And the last thing they want is just more chaos, more change, more problems, more drama, whatever, they just want to do their job and go home. That’s it
Matt DeCoursey 26:11
True. True. So I mean, what out of those things like, you know, you have a culture clash, you have business processes, uncertainty and attrition. Like to me, I think the most pronounced thing is the attrition, because, you know, like, everyone notices when John is not on the team anymore.
Matt Watson 26:31
Yeah. And it’s, it’s also the bigger you get that also, nobody notices that John has gone because he works in some other department that I don’t know anything about. And I have no idea, right? It’s like, Oh, I saw in the back of the newsletter that John left, that’s like all you know, right. But when you’re really small, you know, everybody, like 20 people, 30 people, 50 people, whatever. But you do get to a point where it’s like, you don’t, you don’t know anymore. But what you do know, is the overall sentiment of like, hey, we’ve noticed that we’ve had a lot of people who left for whatever reason, but we’re not hiring anybody. Right. And that’s what really becomes the problem. It’s everybody eventually gets that sentiment of like, well, a lot of people are leaving, but we’re not hiring anybody. And that doesn’t feel good.
Matt DeCoursey 27:18
Yeah. And that’s, well, that’s sometimes you mentioned that situation where someone’s like, well, do I have two jobs? Now? I think one of the things when you when you look at employee attrition, as well, so the number one recruiter at Full Scale is our own employees. Yep. And, and a lot of times they are on the way in from another company. And then I noticed that we see an influx of applicants from that same company. Now there’s been in in one case, and I won’t mention the company, and this was very early on our timeline. Do you remember when I hired two people? And then the other 18 people at the company applauded? Yeah. Yeah. And you know, they have like a terrible culture. So the other, the new folks came over and they started, they’re like, Hey, this is pretty cool. These folks are alright. And next thing I know, I let it was a 20 person company, and literally had 100% of the employees apply. And we literally had to have a talk. We’re like,
Matt Watson 28:17
huh, yeah, it seems like there was some at some point, something like this happen. And you had to make the decision. You’re like, you know, we just can’t hire anybody else from there for a while. Like,
Matt DeCoursey 28:26
no, it wasn’t that well. I did hire I hired quite a few people from there. Because honestly, if you’re going to treat your employees like shit, I don’t have a lot of I don’t, I don’t, you’re not a mercy. That’s like, I don’t have a lot. I don’t feel like I need to have mercy on your business. But at the same time, like I wasn’t trying to just like shut down. Yeah, I could have, honestly I, you know, but I, we did end up hiring eight out of 20 people. And it was funny, because it was a US company that had an office over there. And as people started leaving that that person, the person that runs that place, there was honestly known as an at being an asshole tried to rape rate, rattle, some sabers, and like basically had sent over some messages. This is somebody who this guy could have contacted me and he didn’t, but he, he kind of sent the message over, like, we’re gonna sue you or do something like that. And by the way, I don’t respond to that very well. And I and I did actually send someone back over and to with the message, you’re lucky I left anyone if you’re going to be an asshole like that, but it made sense. Like, you know, and by the way, all those people still work for us.
Matt Watson 29:39
Well, what this really goes to show though, where this really connects is when your competitors know that you’ve been through an acquisition, all the recruiters in the world wake up to this, they’re like, oh, so and so acquired, so and so. Let’s go recruit those people. We know that there’s a chance they may want to Even now because of whatever is going on, right?
Matt DeCoursey 30:04
Because it’s just the same things that go with mass layoffs and departmental shutdowns, like, we went through that because it sends shockwaves. And people get skittish, and you know, like you said, most people want to just show up to work, go to nine to five, make a good living, go home and do other stuff. So the feeling of uncertainty or change or like, and then another thing, too, is like there’s self preservation. So I think that’s the big driver. I think if you put people in a situation where they can’t, they feel like they’re walking on eggshells every day, it’s not a good feeling. So why not go. So that’s the thing at Full Scale, like, we’ve clearly, you know, in the film in the Philippines, which is where our employees are, I mean, we got big in a hurry. I mean, we’re one of the top three employers of developers in the second biggest city in the Philippines. Now, now, that said, word gets out pretty quick. And also good culture word gets, like meaning like, Hey, this is a good place to work. So I mean, really, in the end, that’s what it comes down to. Now, at the same time, I’ve seen people definitely stick through adversity in other places, and accept lower pay to stay in cultures that they like. So I think, really, the culture is the big thing.
Matt Watson 31:11
And tying this back to our episode today about what happens after an acquisition. The big key here is you’ve got to have a real heightened sense of just keeping the team together for that, especially that first probably three to six months. But really putting a big focus on keeping people happy keeping people on board. Try not to disrupt them, you know, as much as possible at the very beginning. And honestly, when nitro acquired stack fire, I wish we could go back and do it differently of like, hey, they acquired us, but just leave us alone for a while, not like immediately try and smash the two companies together. I just don’t think that that works really great. The more you can kind of let things kind of slowly assimilate together, probably the better. But you really just got to stay focused on trying to keep your key employees around, keep everybody happy and expect some turnover, it’s gonna happen.
Matt DeCoursey 32:04
Once again, today’s episode of Startup Hustle was brought to us and you by Gusto. If you’re looking for an all-in-one HR platform, it’s time to check out Gusto. You have everything you need, and just a few clicks of a button, you can get three free months when you go to gusto.com forward slash Startup Hustle. Once again, gusto.com forward slash Startup Hustle, there’s a link in the show notes. So now, I mean, as we as we come to an end here, what are some of your key points? I mean, I mean, I think we, we’ve had a lot of this stuff. I mean, what really stands out? Or what’s the key message? When you think about what happens after an acquisition?
Matt Watson 32:41
You know, as the founder, I think the hardest part is trying to figure out what is your position afterwards. Right? Am I going to stay with the company am I not going to stay with the company? More often than not, I would think that founders usually don’t stay. I mean, maybe if it’s a private equity deal, or a, you know, a strategic acquisition, where they, they want to leave the business alone, and they want you to run it and you have a lot of autonomy, then it might, you might be okay. But when you’re getting acquired, and you’re getting smashed together in some bigger corporation, as an entrepreneur who’s used to making a lot of decisions, and you know, having a lot of power, and all that kind of stuff to be brought into the corporate world can then can a lot of times just be the most stark difference in reality, and just does not work very well, does not work very well. For me, it’s very, very frustrating world for me. And you just have to figure out and you know, what, we’re How are you going to live in this new world? Or if you’re not, and if it’s not going to work for you, you just got to tell them. And be honest, be honest with them. A lot of times, they don’t expect that it’s going to work, right? They know this, it’s not a mystery to them, especially if they’ve done acquisitions before.
Matt DeCoursey 33:53
So yeah, and with that, I think it’s important to make decisions. Don’t be emotional. You know, like, I mean, it’s going to be an emotional thing. I mean, either your, your dreams are coming true. And you’re like, your life changed. And there’s, you’re like, wow, so we really could get either I really could get 30 million bucks out of this or whatever. But, you know, with that, you know, regardless, you know, making decisions based on emotion is tough. So, like, give it some time. I think go and Matt, I think you have I think one of the key points that I heard with this was that you know, looking back and you’re like I wish we would you should have gone into this a little slower, not like yeah, here’s day one now Bobo boom, go go go go go cuz, you know, there’s a lot. That’s the thing that’s very interesting is I think a lot of times as business people, or analysts or anyone we look at X’s and O’s on paper, and that is not people that is X’s and O’s on paper. These are columns and rows and you know, Once you kind of get higher up the funnel, you get human emotion and data, and there’s a lot to be said with that. And I think that the uncertainty is something I think that approach things with empathy and understanding and you know, you gotta like remember that like, what is exciting for you as the founder might not be exciting for the 199 people that work there so like, and another thing too is like be humble you know, you don’t want to see a video of any you walking down the hallway with the big check. Remember the big check, the one that’s like six feet wide. That is not how you should get your acquisition check. Get a nice quiet wire into your account. Don’t walk around with the big check. Just be happy you got the big check. So but no, but with that, like, I said is what is your celebration might be someone else’s uncertainty. So I think absolutely the humble, empathetic nature and you know, whether you’re an employee or an entrepreneur, or whomever like also know that, I don’t know, you’re just redefining things, but I think that these should be happy things and sell it with a positive future. And you know, like, and that’s the way to do it. Well, now I’m ready to end this episode, because I want to record number 52. Where I’ve got a big check, like just a big check. It’s congratulations, Matt. You’ve won a big check that says $10,000 on it.
Matt Watson 36:28
You can get those on Amazon, by the way.
Matt DeCoursey 36:31
Why? No, I didn’t say it was worth $10,000. Anyway, man, I’m gonna catch up with you on the flip side for number 52. We’re gonna round this thing out, man.
Matt Watson 36:41
All right, let’s do it.
Matt DeCoursey 36:42
Matt Watson 36:43