How Capacity CEO David Karandish grew to $50M revenue with a 151 person team in 2025.

folks I am grinning big today because we have a real treat over the next 25 minutes you're going to learn the story of that grind that 12year bootstrap hustle from 0 to 5 million bucks of Revenue competitive space from Bridget Harris who cut her teeth in politics before launching you can book me about 12 years ago they're they're about to make an announcement which I'm not going to steal the Thunder from they'll do it in a second but she has now teamed up with David at capacity who's a seasoned entrepreneur cut his own teeth teeth starting in 2011 at answers.com one of the um we'll call it one of the fallouts of the 1999 Heyday but went public went through a pipe went through a take private went through a majority went through a secondary ended up selling that business for about 800 900 million bucks before launching capacity which is now focused on helping entrepreneurs enable and get their support done quickly providing great customer support all leaning in to this AI Revolution we're living in on that note David Bridget are you ready to take us to the top let's do it let's do it all right well David first off what's the announcement what happened recently I am really excited to announce that capacity has acquired you can book me uh this brings world class online booking into our collection of AI powered uh uh platform pieces and so one of the biggest use cases we've had for capacity is when folks want to automate their booking process and now uh we're able to do that on the tune of a million bookings a month that's incredible now Bridget I thought it would never happen I'm going there's no way it's just this is never going to happen she's got profit sharing plans set up you know she's in full control she's doing this with family members this is great help us understand sort of um what what right before you guys signed the m&a deal and it closed um what did you grow Revenue to and what ultimately made capacity the right fit for you can book me um so we had we' got you canb me running at a really nice $5 million a year um profitable as you know well you know I've spoken a lot about creating uh profit which you need to do if you're bootstrapped over long term you need to start making money um uh to make it worthwhile frankly so we've got to that stage and um really at the end of the day I'm looking for how do I get you can put me to the next level how do I get this you know this um business that we have built which has has got to a point which is really exciting really something that you know means something for our team our company but also our customers how do we get it to the next level and actually it there's a combination of reasons why and and um I should say at this stage you know we didn't go through a process we weren't for sale we didn't put up some big estate sign you know up in our in our lot um capacity approached as and um we like we really liked the offer we liked we like the fact that they're in customer support and AI for customer support it's a huge problem that needs to be solved um we know it we feel it inside you can book me so I knew that you know what they um are doing what they're what they're building for their own customers is a really strong product offer that we know our customers could really benefit from there's a huge amount of synergy as David was saying that um all of those guys need scheduling and um we need you know we we need to find a vehicle to scale and grow what we do so there was a lot of synergy there and I think also that the team itself and the way approached us it was really respectful of us being a bootstrap company of us having our own you know our own engine that we grow through product L growth and self- serve and there was something very kind of obvious about the deal I mean as one of those things where as we got closer to the deal the day before we signed and everything else it got easier and it got more exciting to look forward to the day that we were closing as opposed to harder so I suppose you know when you're selling away your life you might at the point of about to sign sit there and go am I doing the right thing you know is this a disaster and actually genuinely and there's a story to tell you about it Nathan but genuinely the night that we signed it we were so happy that we just got to the point where we we know that this is the right thing to do for us and what night was that you were at a Paul McCartney concert that that we we told the lawyers on the day it was it was just before Christmas we told them on the day we have to close um today because we're going to see Paul McCartney tonight and no matter how important um you know the capacity team are and you can me team and all the lawyers and how expensive it all is Paul Paul McCartney uh is more important and so we went off to see Paul McCartney in the O2 it was obviously an amazing gig and we were on a train on the way back from London to Bedford where I am now um and the whole thing happened over a call um you know on our train back full of drunk people coming back from London but it was so it was a fantastic night for both re December what December 22nd 23rd something like that 18th 18th December 18th and then we've been in we've been in hibernation Nathan since then we've been sort of from the shop yeah no it's great now before I jump more into the story the backstory the negotiations you know things to look out for both on on both sides the acquirer and the one the group being acquired Bridget is this are we pretty much on the spot here in terms of Revenue growth or any corrections you want to stick in here uh yeah no no we hit 1 million sort of much more in the 2016 2017 Mark so it's a bit it's a bit more sort of it's less of a hockey sticker more of a of a of a nice a nice Hill but about but about five million at Exit yeah yeah yeah so David let me pivot over to you in capacity because you told me in our preall you have a thesis you built a list of 24 key items you think every company needs when they think about inbound and customer support and you said quote we're going to go build or Buy in all these spaces which of those 24 items LED you to searching for booking tools and then ultimately LED you to email Bridget yes so when we think about the 24 steps of the customer experience Journey we can kind of divide them into three buckets you've got self-service so that's where a consumer can get help from an AI agent without having to talk with a person without having to fill out a contact us form without having to place a call to a human that's where we started that was kind of capacity bread and butter it's where we have uh a lot of uh product entry points in that part what we realized as we got into it though and that was kind of the original thesis of capacity when we launched back in uh early 2017 big thing though that we realized is that no matter how good your AI system is you have to be able to handle questions the AI doesn't know how to answer so the second big pillar that we focus on is this whole agent assist concept how do we help support teams do their best work when something does need to escalate up to a person as we got into it we started working with a lot of these support teams particularly marketing and sales support teams they're like David our biggest workflow is being able to get leads into our business being able to book appointments being able to bring people in and so our third bucket are those kind of campaigns and workflows we have other types of campaigns we do uh SMS campaigns Voice Dialer campaigns we have multiple types of workflows we support but scheduling is one of the biggest ones uh that we've been handling for years starting internally and then going externally and so we looked at this and said wow if we could find a company that's doing this well at scale I think there's a great opportunity to combine our self-service Ai and our agent assist tools together Bridget I'm going to keep asking David questions while I'm doing that though can you open up your email inbox and search his email and and go when you find it read to me the subject line of the first email he sent you okay nobody's asked me that Nathan you ask me so many unexpected questions David you know this like right I mean someone like Bridget is busy right so like you're sending out these emails to potential people to acquire and you got to get the response you've got to say in a curious way that gets her to say okay I'm interested when she's like been all against sort of exiting right all against the VC world and just wants to bootstrap what what that's true well no I well I was going to say the first time they contacted me I said no so there you go em subject line was but David find out okay David do you have a process did you only reach out to Bridget or did you reach out to you know 15 companies in the scheduling space yeah so the first thing we do is we use competitive research tools uh I know a great one that has a lot of great stats around SAS companies uh that you might be familiar with uh so we use tools like get lotka to go look at who oh nice Gotta Give the plug right no I appreciate that thank you to go look and see where where people are at and uh you know what every data point isn't always 100% accurate but it's directionally correct and enough for us to know are we going to talk with someone who's at uh 50k of AR someone who's at 50 million of ARR probably outside the range in either side of what we can go to uh then we make our list and then I I will go through and look at each individual website to see if there's anything a miss and uh just just to make sure it looks like there's a heartbeat and a pulse there then we have a process where we send out uh a bunch of different types of reach outs some by LinkedIn some by email uh occasionally we'll also do some calls and the idea is it's like hey here's what we're doing uh founder Le company sold my last company for north of 900 million uh we're in this AI uh empow AI powered support automation space would love to talk and see if there's any ways we can work together and sometimes it might come out of that and it's like eh not a good fit or sometimes it come out I would love to acquire them price isn't right sometimes we come out of a conversation it's like there could be a partnership there and then every once in a while we come out of a conversation like that like let's go turn over the next cards doesn't mean that we're the right fit for them or their right fit for us but there's a their there worth at least exploring and having that conversation and and you've just to give you some credit while Bridget continues digging through her her I'm sure very busy Gmail inbo or inbo email inbox uh I want to make sure we get your story sort of plotted accurately as well so based off our research capacity has acquired I feel like six companies to including the the Lumen box in in 2016 is that right I think the total number is up to I think eight or nine at this point eight or nine now okay and do we we generally have your Revenue profile accurate you broke the 5 million Mark in 2019 and now we're at about 40 45 million 50 million uh we're right at about 43 million to end end last year correct okay for okay great great and did I get the five million right in 2019 or is that too early uh I have to go back and look at it but that sounds directionally correct somewhere okay and where did you you know there's a lot of people listening right now that potentially want to sell to a group like capacity or want to bootstrap like Bridget there's also folks that want to go start their own version of capacity maybe like with a search fund where did you get the initial Capital to get going on this um you you weren't the original founder at answers. so I don't know how much you actually made when the company did the you know the secondary sale for 900 million bucks but where did you get the original capital yeah so uh I was the original founder of a company called announc media when we acquired answers.com we did a international take private lever transaction for that we had some private Equity sponsors to help us there uh so I did well in the answers.com exit uh didn't make as much money as the private Equity guys did but I I I did well enough that uh I could use some of those proceeds toward future endeavors and so we started capacity we our first seed round was basically just insiders my business partner and I and then team members early on who wanted to invest and David did you sell like most people in the seat round I mean you're selling 15 to 20% of the business were you in that same range yeah somewhere in that somewhere in that range okay and how was that the 1.6 round in 27 million in 2017 uh that's correct yes okay and then the idea was that we didn't want to go take outside money until we had uh Revenue customers and proven that we should exist and then when we did that we were able to have a much more sizable valuation in that next round and uh I wasn't pitching people an idea I was pitching people at business and so one thing your listeners who are super on the early stage uh of their Journey might consider is whatever you can do to raise as least money as possible in order to get to that first dollar of Revenue I I highly recommend that because you can keep more control you can keep more uh ownership and you don't have to give up the farm when you're still in the idea face what did you pay though for Lumin box I mean that was that a company you launched from scratch or you purchased and if you purchased it what was the total cash you had to pay to get that business under your belt yeah we we don't disclose the uh acquisition prices for deals partly because we've got a combination of cash Equity seller notes earn outs that we do um so we don't ever disclose what we pay for these things um but a really high level you can think of it as up through right around the pandemic time we were a single channel webon uh customer support and employee support platform so if you wanted to go automate support for team members or customers we could help you with that uh when our biggest Market at that time was in the mortgage space and if you remember mortgage was white hot interest rates were free uh and then pretty soon after pal hit the breaks on uh on the whole economy and then we were L on calls with clients that were getting fired in the middle of our calls so we went from being 75% uh mortgage Tech at that time to saying okay we're going to need to diversify the categories we're in we need to go after uh because it wasn't our fault I mortgage was is a cyclical Market uh second thing though is we need to we need to be able to go after the highest value um highest value types of activities as possible which means we either need to get uh into a more expensive support which led us into voice or we need to get tied back to revenue which is why uh plugging into bookings and and scheduling makes makes a ton of sense so we went from single channel uh web only largely concentrated in one industry to saying we're going to go and be Diversified across Industries Diversified AC Ross channels and that means we're going to need to support SMS and voice and social uh and anywhere where you might get an email or a ticket or call I want to go back to Bridget because I'm sure she's found the original conversations before we do that though David just to sum up so we talked about revenue and the number of Acquisitions at capacity you've raised What's the total you raised to date for capacity just under 100 million okay and the last run was I believe in October for 26 million a series d uh yes you hesitated Ed that a little bit because we had uh some we raed a little bit more on top of that but yes okay and and most people you know once you get past series B series C you can get down to the point where you can negotiate especially with your background and answers and you're only selling you know call it maybe four five six 7% of the business were you sort of in that range for the series D so the way that we think about it is we we look at we looked at doing our Capital raise in a totally different way than most other companies do so most companies uh you start out maybe you have a seed round then you go off and you go bring on a VC then you're maybe trading one VC early stage VC for a late stage VC uh sometimes you're going into a third a third VC at that at that point and then you end up with this scenario where the founder is diluted the founder doesn't have board control and then when they want to sell or buy or raise Capital they get squeezed I've seen this story it's like it's like one of those uh well David this is why asking I can just cut to the real question which is how much Equity of capacity do you still own I own uh just under third okay and you still have board control I own a third of the of the equity and I have uh my business partner I have complete board control okay that's awesome great okay Bridget subject line what was it just on that last point though Nathan I mean and this is kind of counterintuitive to every single corporate lawyer doing D and the fact that David and Chris have complete control of capacity was a plus point for me and Keith uh not a negative because for us we feel like we're we're you know handing over a Founder Le company to a Founder Le company which is really this why I pushed on this because I'm going has David actually gone through a series D and still kept more than like 10 I mean most series D Founders I interview they have like 5% of the company left 10% of the company left so it's great that David and crew have done that and obviously Vis gives you it's way more aligned with how you think about business building too yeah that's it I mean the lawyer said are you sure they have complete control it's like well we have complete control so you know as long as you're comfortable with that do you want me to share my screen because I found it it was unink yes as long as David and you are both comfortable of course this is awesome right this is this is it this is what I got in LinkedIn this was in March this was March 2024 I sold my last company for 960 million Nathan do you have to put that into your book and started a new one capacity to help automate support we have around 2,000 clients across the globe given the overlap with what you're doing I love to sync up re partnership or m&a opportunity up for a quick call David and then um this is the best example an advert for my tool I just sent him my Schuler get him addicted plus one user did he convert to a paid account uh I think I think Marcus capacity people move over to paid accounts pretty quick yeah yeah Marcus upgraded um okay so the next the next call I had them with them was was a bit of a support call because you know Marcus had upgraded he wanted to ask a few questions so yeah I mean that was that was it and that was in March so there was there was some way to go and again I wanted to emphasize for your audience that you know we weren't running a big process we weren't sort of trying to kind of uh get out at any cost we we we sold because it was the right thing to because that approach uh it didn't we didn't sell in March but it it started a relationship and a conversation that then led to another couple conversations of September October that led to you know Paul McCartney Paul McCartney day yes you you you Tech I went back and looked through our text Bridget and this is why I love doing what I'm doing at founder path right we're helping Founders keep as they grow and hopefully make them when they exit we did not have the privilege of backing Bridget and you can book me with debt cuz she just didn't need it and they were very happy and it is what that is but you did text me October 7th you said quote I have an acquisition offer I'd love to chat with you through to get your advice if you're in London we could do face to face um and so David she was very good about holding back all the names and the details but I do remember Bridget we had a really good brainstorm and you were asking really good questions I could tell you were seriously considering it because of the quality of questions you were asking when did though push come to sh right when did the now David to your point there's the total deal price and then there's the structure and these are very different right the total deal price could be 60 I'm making this up 50 million bucks but the structure could be 10 million cash 10 million stock 10 million earnout sellers notes Etc when did the total just deal price not the flavor of the deal but the deal price when did that really come out yeah I think the first thing that we did was just focus on is this the right fit and I I don't I don't want to like jump past that because uh I'm a like both at individual level and at the company level like I've worked with brilliant like just quick story worked with a brilliant uh uh brilliant product person at one point and he came from a larger organization and was a Awesome Fit for a large organization but couldn't multitask at a small Scrappy startup so it wasn't he was a bad person or I was a bad boss it just wasn't the right fit and so when we when we try to look at which companies we can go partner with like we need the people and so part of it is like we got to find people where where there's a good Mutual fit and if if the company we're trying to acquire doesn't view us as being the right fit there's no way it's culturally going to work and Bri how many people are you full-time uh we're about 22 people full-time and we have we actually have an overall head count of around 35 people if you include all of our contractors and things okay so David back to the people side yeah after you've determined hey I think there's a good cultural fit here I think we can work together then it's like okay well what are the what are the hot button items we have some companies we've acquired where they had existing debt we had to go take on wait let's we have a real example here let's try to use real I mean what Bridget what were the hot button items in this deal um so for us the it was actually so if you'd asked me a couple of years ago Nathan if you and I had been talking about about as being acquired I would have told you 100% that I would have wanted to sell and walk away I would have wanted 100% Cash on clothes and I'm I'm you know I'm riding off into the sunset because I believe that that that that was the only way that made sense for us to I'm either running my company or I'm not but I'm not going to go in for some sort of hybrid deal now as we got to know David's offer and the you know he's obviously got a team as well that was working with us um and it it did evolve we did go back and forth there were certain things about you know exactly you know how much Equity how much cash all the rest of it uh but at the end of the day what I actually felt quite comfortable was was the fact that we're not riding off into the sunset we're becoming investors in capacity so it was really important to us that we like the team that we like the founder that we like you know as I said I'm in I'm in favor of founder-led companies I'm in favor of Founders having 100% control and for me the hot button topic was I didn't want to feel like we were selling you can book me and we were I don't know that we were slinking away like actually this idea they're like H I don't I don't want to do that anymore more I'm off I actually wanted I started to strongly feel that we needed continuity I needed the story of youbook me in the company and the product and everything we've worked towards there needed to be some continuity there that I could be a part of that I liked so essentially it was almost like and we did feel a little bit like this on the day that the day after close all of us have felt like we've applied for a job to work for capacity you know we're all we we've all started to work for capacity now and that needed to be as good and as important for me and Kei as anybody El else so I didn't so the alternatives for us would have been private Equity you know all of these huge vehicles that come along and try to scoop up loads of suas companies at about our kind of level um and we all know their names you know they're absolutely massive um and for me I think I'd always have felt like even if they'd given me double if even if I'd got double double the amount I'd all I would always have felt like I was walking away from something that I helped create that I think I'm very proud of um this way and so I I never did it we got offers in fact we got offers over the last couple of years we've had quite a few offers but I never wanted to do it because I didn't want that feeling and I think that the the point that I realize we could sell was actually was when we went to St Louis in Missouri where capacity's based me and Keith flew out so to try to reduce the amount of time for DD we did a face to face which I'd never done before but I 100% recommend it so me and Keith went to St Louis and on the first day we were there obviously everybody's a little bit trepidacious I do my presentation with we meet David we meet the team they do their presentations and everybody was so enthusiastic and there was so much energy and we just wanted to crack on with scheduling and customers and support and what we're doing me and Keith went back to the hotel that night and we stared at each other we're like we just basically said this is on this is on you know they they want to sell to us they want to buy to they want to buy us and we want to sell to them and I think there is it's an em that was in when was that David that was in um October end of October Halloween Halloween it was Halloween costumes the next day it was Halloween it was Keith's birthday our UK friends with uh with that's they were dressed up as a sheriff on the day but it was Halloween and and so that was what really clicked that emotional feeling of like yeah we can do this this feels safe to do this we like these people we like this team we like what we like the joint plan we like the vision and what I've said to the team it's like as we're the space shuttle docking on the International Space Station you know the mission stays the same we're still doing the same stuff but we're basically joining a a a much larger bigger operation so we can keep going with it now put a put a cherry St on top of this cake here share what you're comfortable sharing my audience obviously loves numbers maybe I won't push you on a cash number but David can you at least maybe share a revenue multiple you guys ended up trading at and getting the deal done at I would say we got to a number that was uh great for Bridget great for us we both feel good about it in both ways cuz you got to remember anytime we it was a mix of cash and Equity but anytime we well if you're not going to give me the top line like multiple because my AUD my audience will kill me if I don't get something from you can I you at least show the percentages of how it was split so for example 10% cash 30% Equity you know whatever whatever that and then they can't do the math because we don't know if the total multiple is anyway yeah I mean it's was it like a third are you comfortabley I don't mind the but these are David's numbers if I know the number David if you want me to I the split so was 50/50 50 cash 50 equity and that's what we were happy with we were happy did you start there was that the initial offer or did did you have to work to get to that we we negotiated there was quite a few different terms that we negotiated but I want to say this is really important is that we were able to take a really generous amount of equity that we're really super happy with a because it feels like we're we're fully invested in the success of you can book me inside capacity but also because we're bootstrapped so for me and Keith as Founders we could take a um a hybrid offer much more easily than so many people who as David says take on far too much complicated cap table nonsense at the very beginning and I highly recommend it because as Founders as bootstrap Founders we were able to do a deal that exactly when we got our number Nath and we got exactly what we wanted we're really happy um but at the same time we've actually now got this new relationship with capacity and David which makes it even better than what we were doing before yeah the last thing I just kind of leave us with because I know we're hitting time is na from our persp perspective whenever we work with a company like you can book me what if the company isn't convinced that capaity Equity is going to be worth X Plus y in the future then we're probably not at the right fit we want everybody incentivized to be able to say hey look we want to build something together and that means yeah you should get compensated for what you built and have a good outcome but uh we really like aligning the incentives where we're building something together and the the combination of these companies is much bigger and brighter uh than either one of them Standalone yep well guys I want to be respectful of everybody's time for the sake of my audience just to run down the story we don't know what the total sort of Top Line multiple was but let's say it was something very conservative like 2x on 5 million that would be a 10 million deal price and if it was 50% cash that's 5 million cash to a bootstrapper right a bootstrapper team and Bridget right and then 50% Equity they can go for the ride after that that's really what you want to build right look how happy she is has full control she had no board she had to convince it was her and Keith and Halloween costumes presenting in St Louis Missouri to get the deal done before or after a Paul McCartney concert David Bridget thank you so much for the details thanks for taking us to the top and congratulations thank thanks very much Nathan thank you all right boom we will cut guys what do you think yeah great is good you are good so tell us what you so so...