How MightySignal Sold for $4.5M to AirNow After Running $1M ARR with Zero Team (Interview with CEO Ryan Buckley)

Introduction: Ryan Buckley and MightySignal

Nathan Latka

00:00Hey, guys. My guest today is Ryan Buckley. He's the CEO of MightySignal, which he sold to AirNow in 2021. Before that, he was the co founder and CEO of Scripted, a marketplace for content marketers. He's also author of the Parallel Entrepreneur and an associate professor at Diablo Valley College where he teaches business and marketing. Ryan, you ready to take us to the top?

Ryan Buckley

00:16>> Absolutely.

Nathan Latka

00:17Alright. I remember those scripted days, man. Marketplaces are tough. Yeah.

Ryan Buckley

00:22>> Kind of a brutal business. Content marketing seems to be like a race to the bottom now, and it's a tough market to be in, but we we gave it our best.

Nathan Latka

00:30Now you sold this to Xenon run by Jonathan Siegel, a very famous guy sort of doing micro private equity like deals. Yep. And then I just saw him running ads like crazy on this thing. I assume it grew, but were you still running it at that point?

Ryan Buckley

00:42>> No. No. After I sold it, I actually took some time off. That's when I wrote the book, and I was working on Toofr, more fat into find emails, track job changes, some of these other micro SaaS products. And then Jonathan hired me back to run MightySignal, which he had just acquired in late twenty eighteen. And I ran that for almost three years before selling it to AirNow.

Nathan Latka

01:05Ryan, how does that work? How does a private equity firm incentivize a a creator like you who do anything he wants, build anything from scratch, and keep a 100% yourself. How does someone like Siegel convince you to come run MightySignal?

Why Ryan Joined Xenon and MightySignal

Ryan Buckley

01:16>> Yeah. You know, I just kinda thought of it like going back to school. I respected Jonathan, during the scripted acquisition process, was just really impressed by what what he built and the companies that he was able to acquire. I know you've had a lot a lot of those guys that have come through the Xenon program on the podcast.

01:38>> And I just thought I had a lot to learn from this guy. And I was kind of feeling like some of my muscles, some of my entrepreneurial muscles were atrophying, and this was gonna be a way for me to to get a kick in the pants, just learn from some of the best, get challenged. And so, yeah, I just decided to take the plunge. I also MightySignal is a big mobile data company. We we process data

02:04>> off of off of phones, break apart apps, look at what software's installed. I knew nothing about mobile data. I knew nothing about SDKs. Frankly, I really knew nothing about private equity other than I kinda liked what it sounded like these guys did. So when when he offered me that job, you know, I was kinda flattered. That was part of it. And and, yeah, I just decided, you know, here's an adventure. I'll just I'll just kinda go

02:27>> for it.

Nathan Latka

02:28Now Jonathan acquired MightySignal around about January 2019. You joined it. I believe there's only three or four folks on the staff at that point. Right?

Ryan Buckley

02:36>> No. There are actually none.

Nathan Latka

02:37So Oh, none.

Ryan Buckley

02:37>> Okay.

Inheriting a $1M ARR Business with Zero Team

Ryan Buckley

02:38>> Bought the he bought the business. The whole team was acqui-hired by Instacart. And so he handed me a business that was doing a million ARR with no team. And the first thing I had to do, of course, was hire an engineer. This is a highly, highly technical product. Tons of resources in AWS, like, beyond my ability to comprehend what the heck was going on with with all the software and all the databases. So I I

03:02>> had to find someone, hired that guy, hired a sales guy, slowly built out a team, and started to grow it.

Hiring the First Engineer via Upwork

Nathan Latka

03:09Interesting. Okay. How did you find that developer? Was it, like, a freelancing site or a Toptal or a friend or what?

Ryan Buckley

03:13>> You know, it was it was an Upwork. Have had amazing luck with Upwork, and, you know, I'm I'm I have friends with those founders.

Nathan Latka

03:21What's the job description? When you post it on Upwork, what do you say? Hiring a lead technical engineer, and you give it to 10 people, and then you hire the best one?

Ryan Buckley

03:28>> Basically, yeah. You you I mean, with this one, it wasn't it wasn't a hard sell because we were, you know, kind of a sexy start up, Silicon Valley start up, owned by private equity, profitable. You know? I threw all these keywords in there. And then I said, you know, I'm willing to Wait.

Nathan Latka

03:45Wait. No. No. What were

Ryan Buckley

03:46>> some of other keywords? Profitable. What else? Yeah. Profitable, San Francisco, probably also Silicon Valley, mobile data, SaaS enterprise. And and then I pitched myself a little bit. And and then Xenon, like, you know, this is, like, hot private equity group come in as, like, the lead engineer, first engineer, hopefully lead to something full time. And I think for a lot of the really good talent on Upwork, that's very, very attractive. And and then when I posted

04:21>> that job, you know, I said I picked the highest paid. I I like, the expert category, whatever, like, the most expensive category. Because I really wanted someone great.

Nathan Latka

04:30Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect

04:54your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna

05:18get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity And red is if you sold the whole thing outright. Now what's cool about this is this is

05:40not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're

06:06going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right, we're gonna go back to the YouTube video here in a second. But

06:28if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link, this link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into

06:54the interview. By the way, Ryan, like, I try and tell people to do this all the time. That is a mistake most people make is they give the project out and they go and try and find someone in the middle or the bottom price point just higher the most expensive, but it's still way cheaper than a $300,000 San Francisco engineer.

The Lead Engineer in Colombia and Xenon's Offer

Ryan Buckley

07:08>> 100%. 100%. And I found this killer guy, awesome guy, still with the business, lived in Colombia, and, you know, paid paid him well. He's still with the company. I'm not gonna, like, say what his salary is, but I think well for Colombia, but below San Francisco prices. And we've been we've been ratcheting him up, but just a a plus a plus engineer. Like, we're lucky to to have him. I really feel lucky that that he's still

07:35>> on the team. So

Nathan Latka

07:37Now now did did Jonathan approach you before he bought MightySignal? In other words, did he find the CEO before the acquisition, or did he come find you after?

Ryan Buckley

07:45>> No. He did. He found me before. Actually, they were in in the process of closing. And I think in his mind, because this was a bit of a fire sale, they were about to shut it down, and the board had already approved it. The assumption was they were gonna let it go. Investors were gonna take a loss. And Jonathan was like, okay. I'll start looking at this. If I can find a GM, then we'll do the

08:09>> deal. So, know, he's a persuasive guy. It's Jonathan Siegel. And we we met in San Francisco over two two meetings. And, yeah, and then I was like, alright. Let's

Nathan Latka

08:23Well, so how does he incent you? Does he say here's a 100 k salary and 30% of the business? Or, I mean, you don't have to tell me exactly, but generally

Ryan Buckley

08:29>> No. I could I can give you roughly. Low double digits, kind of shadow equity, and it was higher than a 100 k.

Nathan Latka

08:39Okay. Like So you're making a good base. For a startup founder, you're making a good base right out the gate, lower risk.

Ryan Buckley

08:44>> Yeah. Yeah. Yeah. I mean, he knew what my opportunity cost was. The other thing was I had to sell my side business. He knew about he knew about Toofr, the the the finding emails app, and that it had this this other things going on. It's like, don't want you distracted. I interviewed him for the parallel entrepreneur, so he knew that I was I was paralleling at the time. And he's like, you're not gonna parallel with

09:06>> MightySignal.

Nathan Latka

09:07So What'd you sell to for? Who bought it?

Selling Toofr and the Payment Plan That Went South

Ryan Buckley

09:10>> I I sold it to a another private equity firm in Texas. That relationship kinda went south, and they've been a bit litigious. So I won't say Ah, okay. Exactly who they are, but just the very high level thing that that kind of went went south was they were on sort of a payment plan that they stopped. They decided they weren't gonna do the payments anymore. So I ended up getting about half of what the the terms

09:44>> were on that one, and that was kind of like, you know, shame on me for just not getting all the money upfront.

Nathan Latka

09:49Yep. But That's always tell people when you're doing m and a stuff. I don't care if the deal price is a 100,000,000. If only a dollar is paid cash upfront, that's the deal price. It's a dollar.

Ryan Buckley

09:57>> Yeah. Yeah. Yeah. Yeah. I wish I'd wish I'd known that.

Nathan Latka

10:00Yeah. Yeah. But but but Okay. But MightySignal's, you're you're

Ryan Buckley

10:03>> you're now in figures.

Nathan Latka

10:05Neighborhood six figures. Yeah. Low now when you say low double digit shadow equity, shadow means less than 50%, I imagine. Right?

Ryan Buckley

10:12>> Well yeah. Yeah. And shadow equity also means that they so, you know, Xenon doesn't want to write GMs into the cap table. It's just it's just overhead, just kind of hassle. So it's essentially, it's a side letter that says, if and when there's a there's a liquidity event, you get x percent. So that does Oh, this

Nathan Latka

10:33is like a thing. Like, if I Google shadow equity templates on Google, I should find agreements for these, like, side letter templates.

Ryan Buckley

10:39>> Yeah. And I I don't know if this is a term that they made up.

10:44>> But

Nathan Latka

10:45but, you know, Jonathan Basically, it's been when liquidity happens. That's what happens.

Ryan Buckley

10:48>> Yeah. Yeah. Yeah. Yeah. And I think each GM just kinda negotiates that Okay. On on their own. Yeah. And when

Nathan Latka

10:54you say low double digit so, I mean, can we say between, like, ten and thirty percent? Is that a fair range?

Ryan Buckley

10:57>> Yeah. Okay. Fair range. Okay.

Why MightySignal Was Sold: Feature vs Platform

Nathan Latka

10:58So then why sell MightySignal recently? Why not keep building it?

Ryan Buckley

11:02>> Yeah. The the the thesis that was there when the founder sold was still there when I sold. And and that thesis is that, specifically, SDK intelligence is a a niche market that's worth a lot. It's very valuable to a handful of people in the mobile data industry. And, basically, we just kinda cycle through all of the customers. There there's a handful of players in this business, but, I mean, I think more to the point, and this

11:32>> is something that you brought up in your podcast in the past, you've had conversations like this. It's essentially a feature versus a platform. Mhmm. And MightySignal, much, like, really good at the single feature about what it does, breaking apart apps, looking for SDKs, tracking it in the database. It's not really a a full blown company. It's it's it's it's just there's just not enough meat on that bone.

Nathan Latka

11:59Yep. And

Ryan Buckley

12:00>> it would have taken a tremendous amount of investment for us to compete against the likes of App Annie. They're kind of the the elephants in the room. Apptopia is another big one, really nice company, great product, but they have all of these other datasets in addition to SDK intelligence. So that was that was basically why they sold. We kind of figured we'd we'd maybe hit saturation on a pure SDK Intel market, But but, you know, Jonathan

12:28>> wanted to see, like, hey. If we market the hell out of this, can we squeeze a bit more, and can we you know, he he bought it at a very attractive multiple. I don't think that's public, so he just probably wouldn't want me disclose. But

Nathan Latka

12:40Siegel usually buys things for multiples between point five x and one x or, like, one and a half x. Rarely will you see them buy something for more than two x. So people can make their own judgments.

Ryan Buckley

12:48>> Make their own judgments there. Yeah. And and so, know, you you run you run the Xenon playbook. You try to try to do north of of 0.5 to 1.5 when you flip it. So Wait. I don't see all that.

Xenon's Buy and Flip Playbook

Nathan Latka

13:01North of what?

Ryan Buckley

13:03>> So, you know, you bought between point five and one point five sales.

Nathan Latka

13:09And,

Ryan Buckley

13:10>> you know, their thesis is to get at least three to four x out. So we wanna then sell for for a multiple of three to four revenue or at least acquisition costs, like, what what they bought it for. So I was able to find a, a business in AirNow who was willing

Structuring Liquidity Protections with Warrants

Nathan Latka

13:27Do you care about the structure, by the way, of that multiple? So what if it's a three or four x multiple, like the deal prices, but it's all stock in the new company?

Ryan Buckley

13:34>> Yeah. So there are ways to ensure liquidity.

13:44>> And, you know, that's of course, that is a really important term at a much lower scale. Like, I got bit by that bug as as we just talked about. It is certainly a concern with in in selling to businesses that had a much you know, with with more zeros.

14:04>> So, yes, you want, of course, as much cash up front. If there is stock and it's a private business, you want to essentially have warrants that would would force the the buying entity to essentially cash out your stock in a certain amount of time if they don't go public or something like that.

Nathan Latka

14:23Oh, I see. So that's how you guarantee liquidity. You do that via warrant. So if there's so if anyone listening right now is selling your company and let's say it's a $5,000,000 acquisition offer, two point five as stock, you don't wanna just say, fine. Two point five stock. You wanna say, okay. I'll get two point five stock, but you need to touch warrants to that and those warrant like, you're forced there explain to me how that

14:40would work. They're forced to buy the warrant of what?

Ryan Buckley

14:42>> Yeah. Yeah. Exactly. Let's just say you say, okay. Within eighteen months, like, this stock needs to be liquid. Either you you IPO, like, you you provide some secondary capital that's gonna come in and and buy our stock away from us, or you're forced to buy it yourself. Smart. Yeah. Because, you know, and and and Xenon's their PE shop, you know, their cash flow business, they don't they don't wanna hold some like, basically, cash, you know, acquisition

15:12>> opportunity tied up in in some private stock in a company they never really intended to own because Yep. Yeah. Like, they're they're they're not in the business of holding stock in, like, mobile data companies.

The AirNow Deal: $4.5M Exit

Nathan Latka

15:24Yeah. Where did AirNow get the deal price was public. You put out $4,500,000. AirNow has only raised 400 k. They've got a team of 50 people based in London. I mean, where do they get $4,500,000 to do a deal like this?

Ryan Buckley

15:35>> Yeah. They've raised a lot more than 400 k.

Nathan Latka

15:37Ah, okay.

Ryan Buckley

15:38>> So I think that Crunchbase data is probably off and, you know, overseas investments, some private deals, and all the catalogs in Crunchbase, but they have a whole network of European investors.

Nathan Latka

15:49Okay. That makes a lot of sense. Now are you gonna stick with or are going back to Xenon, you like the private equity life?

Life at AirNow Post-Acquisition

Ryan Buckley

15:55>> No. That's that's that's certainly the plan. I've been enjoying my time with with AirNow. It's it's fun to work for a larger business with more resources. I wanted to see MightySignal through to its kind of logical conclusion, see if we can start going head to head with some of the bigger players. AirNow has that complementary data that MightySignal is lacking. So kind of it it addresses the the whole thesis of why MightySignal couldn't exist

16:24>> on its own, like, couldn't really grow on its own.

Nathan Latka

16:26Basically flat? I mean, you bought it at a million ARR and basically, was flat.

Ryan Buckley

16:29>> Yeah. We couldn't. We had a really hard time growing it.

Nathan Latka

16:32Yep. Well, I mean, this is just the genius of Jonathan, right, which is easy. He buys it two years, three years ago for whatever he bought it for, one x, one and a half x, sells it for three or four x. I mean, that's just pure negotiation, leverage, and will.

The Parallel Entrepreneur Book

Ryan Buckley

16:46>> Yep. Yep. Yep. Yeah. You know, and then finds finds good people to run these businesses and Oh, yeah. I knew. Have a playbook.

Nathan Latka

16:54Yeah. You. You. Exactly. Yeah. Very cool story here. Ryan, remind everyone of the title of your book so people can learn more about how you do how you do business.

Ryan Buckley

17:01>> Yeah. Yeah. So the parallel entrepreneur, Kindle Unlimited. It's on Amazon, hardback, paperback. And, yeah, it's just kind of a story about how to run businesses using your day job to essentially finance your entrepreneurial dreams. You can do both, and it's kind of a playbook for how to go about doing that.

Famous Five: Books, CEOs, Tools and Life Advice

Nathan Latka

17:20Guys, on that note, Ryan, let's wrap up here with the famous five. Number one Got name name your other favorite business book besides your own.

Ryan Buckley

17:27>> Yeah. I just read Tools for Titans, and now I I bought, like, 20 books as a result of reading that one.

Nathan Latka

17:35You put so many resources and backlinks in that thing. Just Oh my god. Pull.

Ryan Buckley

17:39>> It's insane. Yeah. But I'll be busy for a year.

Nathan Latka

17:42Number two, is there a CEO you're following or studying?

Ryan Buckley

17:45>> Yeah. You know, I know people have said this guy on on your podcast before, but, you know, Josh Pigford, it's just so fun to watch this guy work. Sold Baremetrics to Xenon. Was very public about what he loved and didn't love about it. Now he's back at it with Maybe Finance. Just a really genuine, vulnerable, open guy.

Nathan Latka

18:03Yeah. Does does does Siegel gonna sell Baremetrics soon, or he's gonna hold on to it a while?

Ryan Buckley

18:08>> I think that one's a cash cow. They're gonna hold on to it for a while.

Nathan Latka

18:10Yeah. Well, I saw he jacked up the price, like, seriously a couple months ago, and I'm wondering, okay. It increases revenue, but is churn gonna now go through the roof?

Ryan Buckley

18:18>> Yeah. No. I think there that's that's the playbook, man. It's working so far.

Nathan Latka

18:22Yeah. We'll we'll see. Number three, what's your favorite online tool for building the business?

Ryan Buckley

18:27>> Yeah. I've I've been running my life on Notion and and all of my various projects. So helpful to stay organized.

Nathan Latka

18:34Number four, how many hours of sleep do you get every night?

Ryan Buckley

18:37>> Seven.

Nathan Latka

18:38And situation, married, single, kids?

Ryan Buckley

18:40>> Yeah. Married, single, two kids, about to turn 40.

Nathan Latka

18:44And Wait. Married or single?

Ryan Buckley

18:46>> Married with two kids.

Nathan Latka

18:48Okay. Married. Yeah.

Ryan Buckley

18:49>> Yeah. Turning turning 40 real soon and just very, very happy going really good.

Nathan Latka

18:54That's exciting, man. Last question. Something you wish knew when you were 20.

Ryan Buckley

19:00>> Yeah. I guess because it's top of mind right now. You know? At 20, I thought 40 was, like, freaking old, so old. And, you know, now I realize, like, for me, I feel like in a lot of ways, it's just beginning. I'm just really excited about what's next.

Nathan Latka

19:15Guys, there you have it. A guy that launched in a marketplace and scripted, sold it, built his own side project Toofr grew to some revenue, sold it again, then got involved with MightySignal after private equity firm bought it. Was doing a million dollars in revenue with no team when he came in as CEO. He was incentivized with over a $100,000 base salary and 10 to 30% equity there, or should they call it shadow equity. Ended up trying

19:33to grow that business for two or three years, said, you know what? It's not gonna work, but got a great exit. $4,500,000 acquired by AirNow. Ryan is now building the tool internally at AirNow, trying to take it to some of the Apptopias, AppAnnies of the world. We'll see if he can make a little dent in the ecosystem here. Ryan, thanks for taking us to the top.

Ryan Buckley

19:48>> Always good, Nathan.

Nathan Latka

19:50One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it. And the buyers try and make a deal live. It is fun to watch every Thursday 1PM

20:15Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big

20:38fundraise, a big sale, a big profitability statement or else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign up

20:59for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We

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