How I bought a business for $0

Hi—Dan here. We're continuing Justin Mares's column on side businesses today! You can read previous editions here.

Before starting Kettle & Fire, I had a previous life in the SaaS world. I ran growth for a team (Exceptional Cloud Services)  that bought small SaaS apps and grew them. We later sold the bundle of businesses to Rackspace for 8 figures, in early 2013. 

When I left Rackspace after the acquisition and went out on my own, I wanted to replicate the model we’d seen so much success with at Exceptional. I wanted to buy and grow my own SaaS business. 

My partner Ryan and I were on the lookout for a business that fulfilled one of the side hustle criteria I’ve written about before. A strong potential acquisition had to:

• Solve a problem someone is already aware of,
• In a niche where customers are already paying,
• Where the product does not require a lot of maintenance or hand-holding,
• And is profitable or has a no-brainer path to profitability

In early 2016, we stumbled across Notify: a simple Shopify plugin that would pop up at the bottom of a website, displaying a purchase another customer had recently made.

Once I saw it in action, I immediately installed it on Kettle & Fire and saw a 40% lift in conversion… and $1,400 in extra sales (this was 2016… K&F was a lot smaller then 🙃).

Woah. 

If it helped my site this much, how many others see a similar sales lift? We had a strong hunch that we could buy Notify, add a few features, put some marketing behind it and grow it quite a bit. 

On February 1, we fired off this email:

Buying an app, no matter how small, is a lot of work. I’d tried to purchase other software businesses in the past and understood how hard it was to come to an agreement. The process involves a good bit of legal spend and can fall apart at the drop of a hat: lessons learned after spending $10k on legal for a failed acquisition 12 months prior 🤦.