Startup Acquisition Stories w/ Sukh Sidhu – Founder and CEO of Stridist

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Transcription-

Andrew Gazdecki:
All right, I’m here with Sukh, who recently Acquired a startup on Acquire, and with that being said, Sukh, how you doing?

Sukh Sidhu:
I’m good, Andrew. Thank you for having me. It’s a pleasure to be here.

Andrew Gazdecki:
Yeah, likewise. So for those who aren’t familiar with you, your background, do you want to just give a quick intro of yourself? And I want to hear the Dubai part too.

Sukh Sidhu:
Yeah, sure. So I’ve spent most of my career in the fitness industry. A couple of years prior, just out of college, I actually spent some time selling women’s shoes online, which was interesting. So I briefed in an ecomm before ecomm was a big deal, probably should’ve stuck with it. And then into the fitness industry, I love fitness, love training myself. And a very typical path into the industry was, “Oh, I like training. Maybe I should become a personal trainer.”

Andrew Gazdecki:
How much can you bench press?

Sukh Sidhu:
Nowadays? I don’t even know.

Andrew Gazdecki:
I’m just kidding, man. Sorry, go on.

Sukh Sidhu:
Very little. So I became a personal trainer, went really well because I’ve enjoyed the business side of it, whereas most personal trainers like the exercise side, I enjoyed the business and the marketing. So I did well as a personal trainer. I ended up opening a couple of gyms in the UK, and then very early, around 2013, I started working with clients online again before it was really a thing. And it’s still very early as well.

Sukh Sidhu:
So I started working with clients online around 2013. That really took off. I had clients all over the world, sold my gyms in 2016 for next to nothing, more so just to get rid and so I could go all in online. And then around the same time as that, I started selling online courses, business programs, doing some mentoring, basically teaching all the trainers and coaches, nutrition professionals how to move online, which is the big shift we’re seeing in the fitness industry.

Sukh Sidhu:
So obviously when I came across Stridist on Acquire, which is a platform for the same audience, it was a no-brainer. And that’s how we ended up here today. The move to Dubai was around two years ago from the UK, so yeah, that’s where we’re at.

Andrew Gazdecki:
That is awesome. I love that story of how you Acquired something that is so in your zone of competence and zone of geniuses as well, I assume, because I assume you enjoy fitness and helping people in terms of getting in shape. So that’s awesome. But before I start diving into questions on that acquisition, before we started recording, I wanted to know, are there really abandoned Ferraris in Dubai, from people who just are so rich they can’t get them out, so they just leave them?

Sukh Sidhu:
No. So that’s not what happened, but it did used to be a thing. So it was more so around the crash in ’08. So over here, there’s no fail safe. The government aren’t going to bail individuals out, bail businesses out, and back then as well, it was basically illegal to miss payments. So what happened was there was loads of expats, loads of guys from the US, the UK, all around the world who had these Ferraris on finance. The crash happened, the bottom fell out, they couldn’t afford repayment. So they just drive them into the desert, get on a plane, and leave basically. So that’s how that started happening, but-

Andrew Gazdecki:
Ah.

Sukh Sidhu:
… they could probably fill a desert again at the minute because the cars out here, as I was saying before we went live, it’s obscene. I did a video for one of my friends this morning because I do my work in a golf club. I work out at the golf club, have a coffee in the morning and I walked outside and there was a Lamborghini Urus, a Rolls Royce Wraith, the Rolls Royce Cullinan, a Mercedes G-Wagon, and there were only about eight cars in the car. And that was four or five of them, so.

Andrew Gazdecki:
Lamborghini Urus, if I could get one SUV, it’d be that one. A little out my price range, though. I’ve just seen the picture of all the Ferraris, and I was like, “Whoa.” So thanks for clarifying that. All right, let’s get back to the good stuff.

Andrew Gazdecki:
So you go onto Acquire, you come across this company that seems like a great fit. How did you initially reach out to the buyer and what was that experience like going through the acquisition process?

Sukh Sidhu:
Yeah, honestly not to blow smoke up you know what, Acquire just makes it so easy. So the plan for me last year, just to roll back a little bit, was to start acquiring small companies. So I actually Acquired another company on Acquire just before Stridist, just a small acquisition. And the plan was I was going to do a few and then I came across Stridist, light bulb moment, huge domain expertise for me, area of expertise.

Sukh Sidhu:
So I reached out to Mike, the guy who was selling it and he was basically a client of a coach who used a different platform. And in the fitness industry, there’s lots of competition for what we’re building, but they’ve been around for 10, 20 years and none of them are liked. They’re all just tolerated. So that’s what he discovered as a client. We spoke to Mike back and forth, and we used your documents, your templates.

Sukh Sidhu:
The first offer we actually put in I think offended him slightly, and maybe I was a bit naive and I didn’t purposely lowball it, but I was probably too logical in my approach to valuing it based on his MRR, and the fact that it wasn’t growing.

Andrew Gazdecki:
Where was the monthly recurring revenue when you first got it?

Sukh Sidhu:
I think when we first found it on Acquire, it was around just over $1,000 MRR, and just flat line, no marketing, no presence online. And I think maybe we offered 2.5 to 3X ARR. In fact, it was probably quite a good offer initially.

Andrew Gazdecki:
Yeah, yeah, no, not bad.

Sukh Sidhu:
Yeah, but the reality is because I knew I could at least have a successful launch that would pay back a reasonable amount, I probably would’ve been willing to pay quite a lot more. So anyway, we increased the offer. There was quite a bit of back and forth just through diligence as there often is, but I think from getting that second offer right to close was probably two and a half months max, two months. Yeah, so not too long. I think probably quite standard. I know people nowadays are getting them done a lot quicker. I think I listened to your podcast with Joe Spicer, is it? Who moves quick, so not that quick. But yeah, it didn’t feel too long to us.

Andrew Gazdecki:
Yeah, we see acquisitions close. Sometimes it can take a year. We’ve seen some big deals, they’ll just stay on Acquire usually with a higher price. And then eventually, they just wait for a strategic buyer, where they have maybe an audience where basically the business is worth more to the buyer than the seller. So they’re willing to pay above typical market valuations that you see, which I find fascinating. And then we see 30 days and 90 days, and then people like Joe, a week.

Sukh Sidhu:
Yeah, 48 hours.

Andrew Gazdecki:
But what was the first company you Acquire’d? I wasn’t aware. I thought it was just this one.

Sukh Sidhu:
So it was a company called Sunrise KPI, and like I said, small acquisition. I think it was like 10 grand US. It was actually a great opportunity, but I barely touched it because I think it was two weeks later I found Stridist, very shortly after. And it was very apparent that Stridist, I wanted to give all my attention. But yeah, Sunrise KPI, it was like a metrics dashboard for solopreneurs. So for example, you could measure your social media growth, your email list growth, amount of leads, conversions, new clients, revenue growth, all in one aesthetic dashboard.

Andrew Gazdecki:
I remember, I’ve seen that. I remember when that one came in. I liked it.

Sukh Sidhu:
Yeah, it’s cool, and what we did is we started work on it, rebranded it, pretty much ready to relaunch and then I found Stridist, and honestly, I haven’t touched it since.

Andrew Gazdecki:
Well, you can always put it back on Acquire.

Sukh Sidhu:
Yeah, I might do that.

Andrew Gazdecki:
Yeah. So tell me about Stridist. If you don’t mind disclosing, where’s monthly recurring revenue now?

Sukh Sidhu:
It’s about 36K MRR.

Andrew Gazdecki:
What the?

Sukh Sidhu:
Yeah, so-

Andrew Gazdecki:
So that’s 3,600% growth? Am I getting that right?

Sukh Sidhu:
I have no idea. I have no idea.

Andrew Gazdecki:
Yeah, no, that’s-

Sukh Sidhu:
That isn’t my strong suit.

Andrew Gazdecki:
Okay, let me process that. God damn. Well first, congrats.

Sukh Sidhu:
Thank you.

Andrew Gazdecki:
Second, now I’m just wondering, what did you do? What were some of the unlocks, the levers that you pulled?

Sukh Sidhu:
So-

Andrew Gazdecki:
And you don’t have to give away your secret sauce or anything like that. Just a high level is completely fine.

Sukh Sidhu:
Yeah, I mean there is none. Bearing in mind, I had the audience, so I spent a couple of months just rebuilding and adding features that I knew I would have to have in order to launch to an audience who were already mature and have seen the competitors.

Andrew Gazdecki:
So you-

Sukh Sidhu:
So I spent a month… Sorry.

Andrew Gazdecki:
So you had an audience in place already?

Sukh Sidhu:
Yeah. So-

Andrew Gazdecki:
I love that strategy, where you have people willing to buy as soon as you Acquire the company. That’s all. I’m sorry, continue.

Sukh Sidhu:
Yeah, that’s why it was a no-brainer from a purchase perspective. So we spent probably too long in development before I relaunched it to my own audience. But then in April by this point, MRR had gone down to $700 I think. So then in April, we relaunched I think somewhere between the first 15 to 20K MRR came in the first eight weeks, six to eight weeks, and that’s probably credited to my existing audience.

Sukh Sidhu:
And then since then, it’s largely been word of mouth content really on social. But yeah, the bulk of that MRR was from just building up anticipation, FOMO, urgency, all that classic copywriting and marketing principles, building up a wait list. And then on the day we launched, funny story, not funny at the time, but shit actually hit the fan. We found out after launch the database wasn’t big enough. We crashed for about 12 hours until we figured out that was the issue.

Sukh Sidhu:
So on launch day, we actually got 350, 400 trial users and then we were offline for about 12 hours, which killed the momentum a little bit. But yeah, that initial launch set the tone for the last couple of months.

Andrew Gazdecki:
I love that. I love when servers crash, because you can view it in one of two ways. I mean, would you like your server to always be up because no one’s using it, or crash because people are obviously really interested in the product? So I put it in first world problem bucket, like, “Oh, you have too many users, that’s so awful.” And then obviously, there’s a clear fix, server downtime and stuff like that. So that’s incredible.

Andrew Gazdecki:
So man, you took this thing, so you Acquired it at 1,000 monthly recurring revenue. So it’s around 12,000 annual recurring revenue, and now it’s at 36… I can’t do the math on that, but-

Sukh Sidhu:
I think it’s 430, something like that.

Andrew Gazdecki:
430,000 annual recurring revenue? Damn.

Sukh Sidhu:
Somewhere. Yeah.

Andrew Gazdecki:
Are you doing any paid marketing or anything like that?

Sukh Sidhu:
Not yet. So, more fun. About two weeks ago, we decided we’d ran out of steam, pushing it to my audience and me pushing it and word of mouth. So the plan was all right, let’s start running paid, cold outreach, stuff like that. And then we crashed again.

Andrew Gazdecki:
Very nice.

Sukh Sidhu:
So we crashed again, and just put off direct response to our marketings. But as of yesterday, we turned paid on, cold email, and also just me having conversations and hustling a little bit because we take card details at free trial. So it’s almost worth my time when I have an hour to jump in Instagram DMs and speak to people. So a bit of everything.

Andrew Gazdecki:
Nice. Are you working on Stridist full time now?

Sukh Sidhu:
Yeah, pretty much. I still have a handful of higher paid mentoring clients, because I haven’t taken any money from Stridist, and that pays my bills and ensures that I’m not dipping into savings. But I’d say I still spend over 40, 50 hours a week on Stridist and then probably 10 hours a week on consulting/mentoring.

Andrew Gazdecki:
Nice. This is incredible, man. Congrats! So you’re already at let’s call it half a million in your recurring revenue. That’s phenomenal growth. I love these stories because there’s builders, where people are really good at building projects but they can’t take it farther, and a lot of the times, they don’t want to. They want to go and build. So you Acquired something and it sounds like you’re more of a scaler, where you’re able to grow the company a bit further than the original owner. So it’s win-win.

Sukh Sidhu:
Yeah, I mean-

Andrew Gazdecki:
Yeah, go ahead.

Sukh Sidhu:
So Mike, who we Acquired it from was very much that, he built the product and then realized, “I can’t market,” and that was it. So he got an effective outcome, and then for me, I’m non-technical. The thought of building this from scratch and trying to figure out developers from scratch and what technology from scratch is just probably a non-starter, to be honest. I know you’re non-technical, having listened to some of your stuff before, but I’m probably another level of non-technical.

Sukh Sidhu:
My iPhone is a struggle sometimes. So the thought of trying to develop something from scratch is probably a non-starter. So it’s a win for me as well and I know I can market to this audience, and can help them as well and know what they need. So yeah, it was definitely a win for us.

Andrew Gazdecki:
You saved a ton of time too, because you’re buying product market fit, where there’s even just that 1,000 in monthly recurring revenue or 12,000 if you look at it annually, that’s some good traction where there’s a lot to work with in terms of talking to customers for feedback, seeing what’s working, what’s not working. And just getting to that point alone can take a year. So you skipped over that, that year where you’re just eating glass, begging customers to just look at the product, so that’s awesome.

Andrew Gazdecki:
So now I’m just wondering, how far do you plan to take this? If you just had to say two years from now, where would you love Stridist to be?

Sukh Sidhu:
I see two options for our future. So I’m super confident in us getting to a few million revenue a year. Super confident. I don’t think it’ll be easy. I think there’ll be periods of just stuck. But I think we can do that. I think that’s an outcome we can get to in the next couple of years, two, three years. From there, I’ll have a decision to make because I can see us getting to 5,000, 10,000 users. Beyond that, I think it’s a world of pain in the industry that we’re in.

Sukh Sidhu:
It’s so fragmented, and just a very difficult industry in general to scale in and bring together. So in a couple of years, a few million revenue, and then it’s our decision to maybe sell, or take that swing for the fences maybe with the same company.

Andrew Gazdecki:
Yeah. You maybe bolt on some other fitness related products or maybe even a community on there as well. So other tidbits. I guess I’d love to know, a lot of people that listen to this podcast are both buyers and sellers. So you’ve Acquired two companies on Acquire, so I assume you’ve talked to a lot of different founders looking to sell their businesses. What are some things that founders can really do to make you comfortable making an offer and moving forward with an acquisition?

Sukh Sidhu:
So something that sellers can do?

Andrew Gazdecki:
Yeah, sellers. So I’m a startup founder looking to sell my business. What three tips would you give me in order to increase my chances of you being comfortable acquiring my company?

Sukh Sidhu:
Yeah, so the first thing is a call, and just having a conversation with the founder is great. And some founders are understandably standoffish. I’m sure sometimes they feel like someone may be wasting their time. But just having a conversation, being able to have a conversation with a founder is just a massive help. And having that early, if they’re willing to do that. Often, I will ask what are the challenges and what are the problems?

Sukh Sidhu:
And you can tell straight away if somebody’s just sugarcoating the true challenges that the business may face or the software may face. So when we had a conversation with Mike, he had a developer on the call and you know what some developers are like, it just comes out and they have no filter, and he was just incredibly honest with what he changed, how he’d improved the platform. And that really put our mind at ease, because he was giving us the roadmap to make sure this thing worked and could scale.

Sukh Sidhu:
So that really helped us. And then I suppose just being super responsive once we get to the point of due diligence, quick responses, quick questions, quick answers, it’s just all incredibly helpful for a buyer.

Andrew Gazdecki:
I like that. Yeah, I mean, that’s the classical term of time kills deals. I recently saw a deal on Acquire, a founder got a really fantastic offer a little bit below their asking price and they went back to all the other buyers saying, “Hey, if you could beat this,” and then he waited I believe two weeks to respond to the offer from this other buyer. The other buyer had moved on. So as a seller, I think it’s really important to understand that buyers are looking at multiple different companies in a lot of cases and scenarios.

Andrew Gazdecki:
So the faster you’re able to respond, the higher chances you have of actually closing a deal. So I really like that. What are maybe some red flags, reversing the question, I’m sure the answers will be similar, but what are some big just do not do this if you’re looking to sell your company?

Sukh Sidhu:
So I got in a couple of situations on Acquire and I think one off, where I didn’t end up buying, and this is again pre-Stridist, where I submitted a letter of intent, we moved into due diligence and the seller just was still really unwilling to share much at all. And I understand kind of the protectiveness still, but there comes a point where you’re going to have to share code or at least some code or least some insights to the platform. And on both of those occasions, it was a case of they wouldn’t really show much of the code.

Sukh Sidhu:
It was like, “Here’s a snippet of the code,” or “Here’s a quick screen share live on a call, but you can’t record it.” So I think at a point, a seller eventually has to give you the keys to have a look around and either trust the process or just ensure the contracts are airtight or whatever else in order, but it has to be a level of trust there as well.

Andrew Gazdecki:
And due diligence is one of those things you get into where even both the buyer and the seller are uncomfortable. Obviously, I had to share sensitive things about my business, but it’s required because without that information you don’t really know what you’re buying. So shameless plug, if you’re a seller and you’re in these situations, reach out to Support at Acquire and we’d be happy to help or assist. Because sometimes, some due diligence questions can be tricky. Like, “Hey, send me your entire customer list.”

Andrew Gazdecki:
The answer to that is, “No, scrub it, send anonymized data,” stuff like that, our team is happy to help with if you feel that you’re not sure how to handle a certain situation. But that is great advice and it’s true. If you’re not forthcoming, and again, that goes back to I think what we were talking about earlier, where time kills deals.

Andrew Gazdecki:
If you’re difficult to work with, there’s going to be a transition period as well. You may need this person three months down the line. To me, those are all little yellow flags where I start to think, “Okay, so we’re at step one and we’re already having issues, and then step two, I’m just asking regular due diligence questions, I’m not getting them.” Now I start thinking, “Okay, how’s closing going to be? How’s the actual transfer going to be? How much can I rely on you?” That relationship and the trust in the relationship and your ability to properly communicate I think is just so crucial to getting a deal done.

Sukh Sidhu:
Yeah, and like you said, alluded to that, it’s a yellow flag that this is going to be hard at every stage. Because we didn’t ask anything of Brian from Sunrise KPI or Mike from Stridist, other than we may ask questions for the first 30 days. And then we’ve asked questions after that, and they’ve been fine, they’ve been easy to deal with. They jumped on calls during those first days if we needed to.

Sukh Sidhu:
And you could tell that was always going to be the case because it was like that during due diligence. Whereas if it’s the opposite and due diligence is a nightmare, you just know after the close, it’s going to be a nightmare to get them on calls, get help, get answers to questions. So yeah, it’s two deals that we walked away from because of that.

Andrew Gazdecki:
And I don’t blame you either too, just because again, you get a feeling of how close are they holding their cards, in terms of obviously, there’s a proper way of delivering this information and a way of finding a middle ground. But again, if it’s just like, “Hey, I’m not willing to share this or this or this,” it’s just so hard to get over the finish line, especially if they’re just regular due diligence questions to go through. And again, shameless Acquire plug, but we have resources on Acquire in terms of what to expect during due diligence.

Andrew Gazdecki:
So if anyone listening doesn’t know what due diligence is, it’s basically being audited by the IRS, but times 100, depending on the size of your company. And there’s standard questions and we definitely have resources. I can help with that if anyone’s just wondering, “What is due diligence?” Because a lot of founders just don’t know. Almost every founder, every acquisition is their first acquisition.

Andrew Gazdecki:
So there is some reasoning that I understand behind being really sensitive and maybe withholding information for whatever reason and maybe, but it’s just part of how you get your company Acquired. So I guess my last questions would be, how did you get into this in terms of acquisitions? So you had gyms before, what made you decide that entrepreneurship through acquisitions was a pathway for you and how’d you learn what you know today?

Sukh Sidhu:
Honestly, I think it was just probably reading bits on maybe Twitter, Andrew Wilkinson, I think it is. And a few other guys who I don’t want to call them P companies, but they’re almost holding companies of numerous small or large SaaS. And I remember just reading about Constellation and other companies like that and thinking, “That’d be pretty cool to just own…”

Sukh Sidhu:
So my strength is marketing and sales. So Acquire came along, that’s probably when it started. When you started coming along with Acquire, the opportunity to maybe Acquire some technology companies, or not necessarily technology, could be agencies that were struggling to get clients but had everything in place. I just thought I could come in. I got team members who worked with me in my course business who could come in, we could market it, install operators pretty easily. I’ve installed managers before, and then step back. And it felt like where I was heading at the time, before obviously I came across Stridist.

Andrew Gazdecki:
Right on. All right, final questions. These ones are going to be random. I always just do fun questions at the end. If you could travel to any place in the world right now, where would it be?

Sukh Sidhu:
Rome. Probably my favorite place in the world.

Andrew Gazdecki:
Rome? I’ve been to Rome.

Sukh Sidhu:
It’s amazing.

Andrew Gazdecki:
Good pick. Gladiator’s my favorite movie, so when we go through there, the-

Sukh Sidhu:
I just love that you can walk around a corner and see something that’s 1,000 years old, and then walk around the corner and see another thing that’s 1,000 years old. It blows my mind.

Andrew Gazdecki:
It blew my mind when I was there. Did you go to the fountain? Big fountain?

Sukh Sidhu:
Trevi Fountain, yeah, yeah.

Andrew Gazdecki:
The most beautiful thing I’ve ever seen in my life. We went to the Vatican but we couldn’t get in because we were wearing tank tops. Me and my wife, you have to be clothed up or something like that.

Sukh Sidhu:
Yeah, yeah.

Andrew Gazdecki:
So they were like, “No, you’re not allowed,” so.

Sukh Sidhu:
You’ll have to go back.

Andrew Gazdecki:
Yeah. If you had to recommend, let’s say you’re stuck on an island and you could only bring two things and a book, what would they be? We’re going really random. Sorry, I’m in that mood today.

Sukh Sidhu:
Do you want me to name the book?

Andrew Gazdecki:
One book and then two items to help you survive. And you can’t bring Wilson the ball from the movie.

Sukh Sidhu:
So the book, I’m going to be really boring. I’m trying to think, but all my books are very tactical business books and I don’t think that’s going to be helpful on a desert island. But I’ll just name a good book I’ve read reasonably recently, Built to Sell, which I just really liked by John Warrillow, and it’s a story as well. So maybe that’ll help me pass the time. Two things, I feel like I need something to make food, so I’m going to say a barbecue and a radio. Can I have a radio?

Andrew Gazdecki:
You can have whatever you want. Yep.

Sukh Sidhu:
I’ll take a radio.

Andrew Gazdecki:
You get a full sound system out of that. And then final question, just if people want to get a hold of you and learn more about your story in Stridist, where should they go?

Sukh Sidhu:
Twitter’s is probably the best place, I’m inconsistently build in public, so @SukhSidhuUK on Twitter is probably the best place to inconsistently follow along.

Andrew Gazdecki:
All right, thanks so much for joining this podcast, man. I’m rooting for you. It’s incredible just to see the growth that you’ve achieved in such a short period of time. So keep up the inconsistent build in public because it’s obviously working.

Sukh Sidhu:
I appreciate it. Thanks for having me.

Andrew Gazdecki:
All right, man. Cheers.