Startup Acquisition Stories w/ Andrew Dumont – CEO of Stamped

This is a mini-series within SaaS Acquisitions Stories where we profile the top Acquire Private Equity firms and firms acquiring online businesses at scale. Andrew was formerly CEO in Residence at Tiny Capital and now CEO of Stamped (a Tiny Capital portfolio company).

Watch the interview

Learn more about Andrew –

Transcription –

Andrew Gazdecki:
All right. With me today, I have Andrew Dumont, an operating partner at Tiny Capital and currently CEO at Stamped and former CMO at Bitly. Andrew, fantastic name. Thanks so much for joining me on this podcast.

Andrew Dumont:
You as well, man. Yeah, you bet. Thanks for having me.

Andrew Gazdecki:
So let’s get the important stuff out of the way first. Is a hot dog a sandwich?

Andrew Dumont:
Man, I’ve been thinking a lot about this one. I’d say no, I’d say no. What about you?

Andrew Gazdecki:
Surprising fact, Webster dictionary actually classifies it as a sandwich.

Andrew Dumont:
Really?

Andrew Gazdecki:
Yeah.

Andrew Dumont:
Okay.

Andrew Gazdecki:
Yeah. I learned that-

Andrew Dumont:
Here we go.

Andrew Gazdecki:
I learned that this week.

Andrew Dumont:
The hard-hitting stuff. Yeah, yeah.

Andrew Gazdecki:
Yeah. That’s the hardest question I’ll have for you.

Andrew Dumont:
Okay.

Andrew Gazdecki:
But for those listening, do you want to just give… I gave kind of a brief background on yourself. Is there anything you wanted to add to that?

Andrew Dumont:
Yeah. I mean, startups have kind of been what I’ve devoted my whole career to. Started when I was about 18 with a startup that we started, have since jumped from a number of companies, San Francisco area, New York, back in Seattle now, have done quite a bit of angel investing as well, invested in about 20 companies there. So yeah, my whole career really has just been kind of all around startups, venture funded, Acquired startups, bootstrap startups. I’ve kind of have been a part of it all. So I have a super dynamic set of experiences here from the operating side and investor side now as well. So yeah, it’s pretty good summary there.

Andrew Gazdecki:
Nice, starting early, 18, sheesh.

Andrew Dumont:
Yeah. Yeah.

Andrew Gazdecki:
So how did you get involved in operating an Acquired business?

Andrew Dumont:
Yeah, well, in New York City, I was at Betaworks, which is kind of a startup studio model, one of the first companies that have kind of done that, build and scale within the company type model. So I was at Betaworks for a number of years, and one of the companies that they started was a company called Bitly, which I’m sure most people are familiar with. And Bitly was interesting because it was a venture funded company that kind of blew through a lot of the venture capital needed to become a sustainable, scalable business. And I hopped over from Betaworks to Bitly and I saw a lot of that, not necessarily post-acquisition, but that transition from venture scale to sustainable profitable business. And I really love that process of taking it from where it was that was not sustainable to sustainable.

Andrew Dumont:
Some people kind of see that more boring than the rocket ship venture stuff, but I really loved it and I love that operator’s mentality within that. So that’s kind of what got my mind on this direction. And then once I was done at Bitly, a buddy of mine, Andrew Wilkinson from Tiny, kind of had been acquiring businesses for quite a while and he had two companies that he needed an operator to come in and jump in on. And I started taking on those two businesses and have ran a few businesses for Tiny now, and I just loved it. I loved the reps. I loved the experience there. They’re similar, but they’re so different as well in terms of the levers that you pull as an operator. So yeah, that’s what kind of got me shifted to this side and I really enjoyed it.

Andrew Gazdecki:
Nice. And so you’re currently CEO of Stamped.

Andrew Dumont:
Yeah.

Andrew Gazdecki:
What does Stamped do?

Andrew Dumont:
Yeah, so Stamped does reviews and loyalty for e-commerce brands, mainly on the Shopify ecosystem, but supports a lot of different e-commerce platforms outside of that. So yeah, one of the more broadly used reviews platforms for eCommerce sites recently introduced loyalty, starting to kind of build a suite of products for e-commerce merchants that are building on Shopify and beyond that.

Andrew Gazdecki:
Nice. So a lot of people are acquiring businesses today, as you know, including Tiny Capital and another-

Andrew Dumont:
Yeah.

Andrew Gazdecki:
Number of other firms and a big part of that is you Acquire the business and there’s a post-transition period. This is a broad question, but how do you successfully transition and operate a company after you Acquire it? How do you think through that?

Andrew Dumont:
Yeah, well, actually a lot of it tends to happen on the pre-acquisition side or at least kind of avoiding some of the pitfalls there. When it comes to the business that you buy, I think a lot of people just kind of rush through to get the deal done. Tiny does a really good job of being very deliberate with the stuff that they buy and doing a lot of work on the front end. So when it comes to pre-acquisition, I think about things like proper technical audit, being super deliberate with whether the team needs to carry on with the company or not. And if they’re not coming with the product that you’re acquiring, what sort of access do you have? The thing that’s been broadly true is that there’s always stuff that you find out after the fact with an acquisition.

Andrew Dumont:
And if you don’t have access to that team or kind of the institutional knowledge for that product, it can become really difficult to find a solution there. So that’s a big thing. I think about the kind of diversity and sustainability of the growth that product has, what are the customer acquisition channels? Where are they coming from? How sustainable are they? Are they relying heavily on paid? Are they relying heavily on organic? Things like that. Of the pre-acquisition stage, you can kind of figure a lot of stuff out. Once you get the product in your possession and you kind of have to start thinking about operating it going forward, I think of a few questions and it all comes down to focus. I try to find like, what is on fire?

Andrew Dumont:
Like what needs to be fixed right now? What can wait, but is a kind of high priority? Where’s the opportunity for growth in kind of the next stage of the business? And then what people, process are missing and how can I use kind of the existing folks within the business, if they did come along with it, to kind of take it forward? So there’s a lot there, it’s a super broad question obviously, but yeah, it definitely rhymes a lot from these acquisitions and what it looks like post-acquisition, but I think you can get ahead of a lot of it on the pre-acquisition work.

Andrew Gazdecki:
Nice. So you kind of took away my second question, but let’s dive into that a little bit more. What are some common mistakes you think entrepreneurs make after they Acquire a company and they’re thinking about post-transition with the company? You mentioned that best practice is obviously to do that up front before you Acquired the company.

Andrew Dumont:
Yeah.

Andrew Gazdecki:
Is there anything, in addition you’d add to that you’ve seen as mistakes or maybe mistakes that you’ve made in the past or things that could easily be avoided before you Acquire the company?

Andrew Dumont:
Well, the technical audit’s a big piece. I find that generally folks kind of rush through the product that they’re acquiring and not fully understanding the technical debt that exists within the business, if there is any, and in most cases with software, there typically is. So that’s a big thing. You know what, Stamped was a good example. Stamped had a ton of momentum behind it, had some challenging sort of infrastructure issues. But the big thing when I took over that business was continuation, right? Like leaning into the momentum that the business already had. So I think the biggest mistake is people take over a business and they feel like they have to scrap everything, just rebuild everything. And in some cases that’s not needed. You need to continue the momentum that exists and start building the missing pieces that existed in the business.

Andrew Dumont:
Within Stamped specifically, it had this great organic side of the business, but it was missing a proper sales org, success org, partnerships org, all these kind of new opportunities. So it was continue with what worked so well and kind of lean into that, but start introducing these new items that would kind of take it to the next stage, next level.

Andrew Gazdecki:
I like that. So you double down on what’s working, but then you also identify additional new opportunity levers to pull to kind of continue growth of the company.

Andrew Dumont:
Yeah.

Andrew Gazdecki:
Is that right?

Andrew Dumont:
Yeah. And they almost all have additional growth levers that you can pull, some more obvious than others. But typically when somebody is selling a business, it is not fully optimized. So I think the thing that has been obvious from each one of these companies is there is always opportunity because either that founder doesn’t have that experience. Like I see a lot of the stuff on Acquire. The people selling it in their notes, they kind of say, “I don’t have a marketing background. I don’t have a customer acquisition background,” but they built this great product that functions really well, solves the problem, has a bit of product-market fit. And then it’s just figuring out, what are the opportunities, what are the most efficient opportunities? What are the most scalable opportunities that exist? And there are always some.

Andrew Gazdecki:
I love that. And I think that’s one of my favorite things about Acquire. There’s builders and there’s scalers like yourself where some people are really good at that zero to one phase, just getting the business off the ground, then there’s awesome people named Andrew, like you-

Andrew Dumont:
And you. And you. Yeah.

Andrew Gazdecki:
Yeah, that. You can come in and take the business a little farther. And then, even though the founders sold the business, they get to see it reach new heights, which is always awesome to see.

Andrew Dumont:
Just on that real quick, Andrew, I think it’s important for people that want to buy companies and startups to define what type of person that you are. When I was at Betaworks, which is all from zero to one, like building a product from zero, trying to get product-market fit. I’ve been through that cycle a bunch and I didn’t love it as much as taking something that had product-market fit and scaling it. So I think it’s important for people that… Thanks to Acquire, it’s more accessible to go buy companies now. But I think it’s important for you as a person that could be acquiring another company that could be acquiring these businesses, do you want to operate these businesses? Is that what you’re really good at? Is that what you enjoy doing? Or do you enjoy the zero to one of starting an app or starting a company? And if that’s not you, either don’t buy them or go find people like me or other folks that can take these and scale them and love doing that work because it’s different kind of work.

Andrew Gazdecki:
Yeah. I couldn’t agree more. So you’ve been through a few times, is there any stories that kind of stick out to you in terms of like a successful post-acquisition strategy that you wrote out? I know you touched on one, but-

Andrew Dumont:
Yeah.

Andrew Gazdecki:
Is there maybe a story or another company that comes to mind of a successful post-acquisition transition?

Andrew Dumont:
Yeah. I mean, I think Stamped has been super successful, but I’ll kind of skip that one because I covered a bit of it there. I took over a company called Meteor.com, which Tiny Acquired, which was an open source product, JavaScript framework. And that was an interesting one because I don’t have that background, but it speaks to just kind of the consistency and the type of opportunities that you see after you Acquire a business. With that one specifically, a team did not come with that product. So it was just the company. It had an open source component. So when I thought about that, I thought, “Well, I don’t have a technical desire to go and build this framework and work on the open source side.” So the first hire that I made was a dev evangelist who came in and filled that strategic need for the business.

Andrew Dumont:
There was a ton of opportunity in pre-committing on AWS and kind of reducing hosting expenses, which was one of the primary OPEX components of that business, ton of opportunity on introducing different pricing model for the software business on Meteor cloud, and then introduce new kind of marketing channels, which were non-existent for a developer framework. So you can kind of see, it’s just like step by step. You kind of break down, how does this become stable? How do you get the right people on board? And then you start going through opportunities, both on the expense side and on the growth side. And it’s just kind of piece by piece there.

Andrew Gazdecki:
I really love the comment you made there just about… Especially just like your ability to recognize what you don’t know.

Andrew Dumont:
Yeah.

Andrew Gazdecki:
It takes a team to win. So you hire people that are more versed in maybe an area that… And I think that’s one of the most important thing for an entrepreneur’s understanding what you’re good at and what you’re not good at. And then being able to recruit people to kind of help with areas that maybe you don’t have expertise in.

Andrew Dumont:
Yeah. So that’s all.

Andrew Dumont:
I think it’s interesting or it’s important to note as well, like what you’re trying to optimize for when you Acquire a business? Are you optimizing for earnings or are you optimizing for growth of the business? Ideally the answer would be both, but there’s a bit of a trade off there. So I think something that Tiny does that’s really smart is they Acquire companies that are already profitable, are growing consistently, not exponentially, but they have a good growth rate and that’s always the balance as an operator, is how much do I want to invest in the business versus taking earnings out of the business? And it’s important to note what stage the business is in terms of earnings versus growth and what you’re trying to lean into. That’s kind the tug and pull always with operating. That is not necessarily the case with venture funded startups. You’re not making that decision as actively when you’re operating.

Andrew Gazdecki:
Yeah. I like how there’s more optionality in terms of when you… Because the company you’re referencing, wasn’t that a company that was a carve out from a venture from [inaudible 00:15:39] company?

Andrew Dumont:
Yeah. It was. Apollo. Yeah.

Andrew Gazdecki:
Yeah. So they probably would’ve just shut that company down and you pulled it out and then pulled the team together and it sounds like it’s doing awesome. I love that.

Andrew Dumont:
Yeah. Yeah. Yeah. And you know, to your point, it didn’t match the model of that venture funded business, but I’m still a great business. And to your point, I don’t know what they would’ve done with Meteor, but yeah, it was like one of those things where do we shut this down or do we hand it off to somebody who can take it and continue it forward? So yeah, there’s a lot of opportunity like that.

Andrew Gazdecki:
Nice. I love that. So you’ve given a lot of great advice, but if you had to give just one piece of advice for entrepreneurs looking to Acquire companies and potentially operate them, because a lot of the companies that are being Acquired today, which really wasn’t happening too much, I’d say a couple years ago, or maybe it was and I’m getting this wrong, but you’re essentially buying a job. Let’s say you’re buying like-

Andrew Dumont:
Yeah.

Andrew Gazdecki:
A million dollar business and enough profit to essentially just replace your salary or whatever it may be. What’s like one piece of advice you’d give to entrepreneurs like that? Because some could maybe jump in heads first without too much of a plan. Maybe I’m giving away your answer already but if you had to just give one or two pieces of advice for an entrepreneur kind of looking at businesses in that realm where they’re going to be stepping in as operator, what would that be?

Andrew Dumont:
Yeah. Well, I think it goes back to what you’re saying and kind of what I alluded to before, which is like is that the job that you want? To your point, like an entrepreneur, they just kind of see this opportunity and they jump in and they buy themselves a job which maybe is not the job that they’re very good at or they enjoy doing. So I think it’s important to note it’s different than starting a business. It feels different than starting a business. So do you want to be in kind of the, what I call like the tweaking phase, where you’re just kind of taking something that has product-market fit and you’re trying to scale it? You’re trying to tweak it and get it to the place where it’s growing in a great business and a long term business.

Andrew Dumont:
A lot of people don’t love that work. So I think the first question is, do you want to do that work? The second question is probably, if not, should I still go buy this business? And if the answer is yes, then maybe I could look at an operator, hiring somebody to come in and take that job for me, somebody that likes doing that work and is well suited to do it. So I think one of the things Tiny does really, really well, and this is a whole nother discussion on how do you compensate correctly for operators, aligning interests for people that come in and take a business and operate them as a CEO with you as the owner. So, yeah, it’s just making that decision, doing that reflection on whether it’s something you want to do.

Andrew Gazdecki:
Yeah. I love that. And I’m always a big proponent of if you’re working on something and every day, it’s just like a struggle and it’s just like a headache, you probably bought the wrong business.

Andrew Dumont:
Probably brought the wrong thing, yeah.

Andrew Gazdecki:
Yeah. You want to find something that aligns with not just your skill sets, but also something that you’re excited about. So I really like that. So kind of wrapping up this podcast here, any books or like podcasts that you recommend to other entrepreneurs? Maybe ones that have really influenced you or just classics that you recommend every entrepreneur should read or listen to.

Andrew Dumont:
Yeah. I mean, I shouldn’t be saying this on a podcast, but I’m not a huge podcast listener, to be honest.

Andrew Gazdecki:
I’m not either, dude. I’m not.

Andrew Dumont:
Okay, good.

Andrew Gazdecki:
And here I am with the podcast, the irony.

Andrew Dumont:
Yeah. I mean, I’ve kind of devoted my entire life and career to this stuff. So I think about this all the time. So a lot of the stuff I read is like non-business books. I read a ton, just not the typical business book stuff. I don’t listen to a ton of podcasts. So I don’t know that I’ll have a great recommendation there. A lot of the reading that I’ve done in this category is on how to become a great CEO. The Outsiders is a great book, kind of on that and the different paths there. That’s by Thorndike. So there’s good stuff out there, but I think it’s important not to be fully consumed by this and introduce things that are not just business books and business podcasts all the time, because it gets a little echo chamber-y if you do that.

Andrew Gazdecki:
Yeah. I would agree with that. Well, Andrew, this has been a lot of fun, man. If people want to just reach out, learn more about Stamped or yourself or Tiny Capital, where should they go?

Andrew Dumont:
Yeah. Stamped is stamped.io, Tiny is tiny.com, on Twitter, at AndrewDumont, LinkedIn the same, Facebook the same. So yeah, I’m out there

Andrew Gazdecki:
Right on. Well, Andrew-

Andrew Dumont:
Cool.

Andrew Gazdecki:
Always a pleasure doing a podcast with another Andrew. So definitely-

Andrew Dumont:
Likewise.

Andrew Gazdecki:
Appreciate the time.

Andrew Dumont:
Likewise. Thanks for the time, man. I appreciate it.

Andrew Gazdecki:
All right. Cheers, man.