Startup Acquisition Stories Podcast w/ Andrew Amann, CEO at 923 Venture Studio

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Transcription –

Andrew Gazdecki:
All right. I am here with Andrew Amann, recently got Acquired and I’m super excited for this one because his name is also Andrew. Andrew, how you doing today?

Andrew Amann:
I’m doing great. Good to see you again, Andrew.

Andrew Gazdecki:
So for those of us that don’t know you or the studio that you own, do you want to give just a brief introduction of yourself?

Andrew Amann:
Sure. So my name is Andrew Amann. I’m the CEO of 923 Venture Studio. We build mobile apps for entrepreneurs and tech brands and we’ve been doing it for 11 years now. And we build both in the startup space, we have 14 startups ourselves, but we also build for clients like an agency would build mobile and web app.

Andrew Gazdecki:
These are native applications, correct? iPhone, Android?

Andrew Amann:
We have doven into the hybrid world and we’ll never go back. We only release native Android and iPhone and then web apps as well. We do a lot of CRMs and web applications.

Andrew Gazdecki:
Nice. We were talking before this and you know I was deep in mobile apps. We would only do native, we got stuck in native because we started with iPhone apps and then we had to go over to Android. So we had two separate teams, an iPhone app and an Android team. Don’t recommend it. Do not do it.

Andrew Amann:
Oh, we love it. So we love the two divisions because when the iPhone updates and their libraries change, it’s much easier to adapt to the libraries. The hybrid apps we have tried to build have never gone well on either the updates, the library has always changed, or it actually costs more in the long run to build the hybrid app. So we highly recommend doing native Android, native iPhone, and we do have two teams like that.

Andrew Gazdecki:
Oh, I thought… I misheard you. I thought you said you do hybrid. We never… Yeah, we always did native. Just, the quality is better but there is just that extra… It’d be nice to just make a feature once and then have it on both platforms. But anyway, let’s get to the good stuff. So white label of Ven app was recently Acquired. What did it do? What problem was it solving? Tell me about that a little bit.

Andrew Amann:
Yeah, so we are a Venture Studio so we build our own startups and at the time we were building for ourselves and one of the ideas that we had was trying to solve going to festivals. At the time, it was 2019 when we started building this product and the festival application space was very sparse. The applications that existed really didn’t have the ability to go offline. And if you’ve been to a festival before, one of the hardest things is there’s 20,000, 30,000, sometimes 90,000 people in one location and the internet just does not work, so all of these websites and simple applications that marketing teams are putting out did not have the capability of offline downloads without trying to download the website yourself.
So we had the idea of trying to build an app that was dedicated to be offline first. And then secondly, location services still work after you’ve downloaded the contact, you don’t need the internet, you can just use the GPS radio in your phone, and so you could still locate the bathroom, locate the stages, find out who’s playing. Because all the data was offline, you could press a button and be located of where you are and where you want to get to. So those are the two main features that we were trying to sell. We built it in 2019. We hired a CEO in early 2020. We were set to release at the beginning of 2020. We released on March 1st, 2020. And we had a few customers lined up and we immediately pressed return and returned all their money, so it did not work because of the situation we released it.

Andrew Gazdecki:
It’s so crazy just how timing can play out with startups, but it sounds like something good came out of it. At least you were able to find a buyer for that. But man, that timing. I feel for you. We-

Andrew Amann:
I do [inaudible 00:03:51]-

Andrew Gazdecki:
I remember there was-

Andrew Amann:
Yeah, go ahead. Sorry.

Andrew Gazdecki:
No you go. Sorry.

Andrew Amann:
I was just about to say, as soon as it happened, we didn’t even talk to our customers. We just pressed return and said, “I’m sorry.” Because you felt so bad for these guys that had planned for a festival for six months a year and they had set up like us with the app, they had planned all the events and they just were heartbroken because there was no way people were attending in March of 2020.

Andrew Gazdecki:
Yeah, I remember at that time we had a lot of travel, hotel, basically anything related to events revenue was literally… It wasn’t a slow decline, it was just a drop. A lot pulled through. We ended up usually not listing some of them because we were just saying, “Just hang in there, it’ll get better.” For a lot it did and then for some they found a soft landing like it sounds like you did, and I’d love to get into that. So I think the app’s great. It makes a ton of sense. I’ve been to festivals myself and I always download the app and stuff like that so clear need there. So you list on Acquire, tell me about how that experience went, how many buyers reached out, maybe we can start there and then dive into some of the other details.

Andrew Amann:
Yeah. And if I remember correctly, I think the number of buyers was about 20 that had reached out and shown interest and, in the end, there was probably three serious buyers that not only wanted to use the application, but wanted to build it into something larger that they were trying to be a part of. Whether it was a festival app for a gaming company or different event spaces, they were trying to determine how to utilize the services of organizing and setting up location based objects and then setting a schedule to those location based objects like a festival would. But you could also imagine a conference could use it, if you’re doing a football game or a large gathering of people where you’re trying to organize people at a specific time with different things happening within an area. Even like a wedding, you can utilize these types of services.
So a lot of the buyers had bigger visions for it. We had proposed it like we had released in March of 2020, we were building it, we’re a startup. We had our opportunities to use our developers and continue to use the developers through all the bugs. So it was like a buy as is and it was a startup. It had the resources, it had the assets that was able to be purchased and we were still trying to figure it out ourselves like, what is the marketing play? What is the sales play? And what are the main features we’re going to have to build? So on Acquire, when we decided to list it there, the buyers, they had the ideas of like, “All right, if this is the base bone or the backbone of my main goal, we can utilize these services.” There was one of the three serious buyers that wanted to use it in isolation and I quickly was like, “It’s not going to work for you. You really need to have a team behind this. You need to market it and you actually need to build for future.” And so that’s where, when the final buyer came in, he knew he had a bigger vision for it than just the app as it is today, or as it was in 2020.

Andrew Gazdecki:
Nice. Is your team still maintaining technical upgrades and stuff on the application?

Andrew Amann:
So we helped him through the first release of the festival that he… The person that had purchased from us in 2020 still ran a festival in 2022. We supported that festival, we helped get that set up. We also helped them release it to the app store, both the Android and iPhone. So we assisted the buyer in getting that to over the goal line basically, even after the purchase, just to make sure it went smoothly because we had promised that service.

Andrew Gazdecki:
That’s awesome. Have you ever thought about, this is kind of a left field question, but just building applications and then selling them based on… Because I could see a do-it-yourself event builder app company be made out of this application by the sounds of it. Have you ever thought about that? Just given maybe you create a few apps and they’re doing well but you find someone with bigger ambitions. Because you could sell it and then you could be the agency that supports it too, have you ever thought about that?

Andrew Amann:
Yeah, so we have 14 startups that we’ve built over the course of our lifetime and we have three different cohorts that we’ve gone through. At first, where the festival app came from was our first cohort where we were trying to do exactly like you said, build an application that we could operate as an agency and find enough people to use the application to monetize a future return.
The challenge with that is the funnel, we’re bootstrapped agency, so the funnel, we’re not funded by anything besides our clients. And the money that was coming in needed to be supported by the team to fund the startup itself. And if you had Venture backing, you could do that more often. But I really think the challenge is finding enough marketing and sales resources from your client profits to push that marketing forward. And as you know with any startup, that’s 90% of where the money goes, that’s 90% of where the focus is, is getting over that hurdle of product adoption and product market fit. And so that first cohort really didn’t do well in the sense that we just didn’t have enough resources from a bootstrap company to support the sales and marketing of really selling that idea, even though we also believed that that was a good path forward.

Andrew Gazdecki:
Nice. Yeah, 14 startups is a lot, so especially for a bootstrap agency. So excuse me, Ventures. That’s pretty impressive.

Andrew Amann:
Thank you.

Andrew Gazdecki:
So I guess moving back to the sales, so you decide on, you meet a buyer, three of them, they seem but all qualified. What made you sell to this particular buyer? Is there anything that they did that stood out? Did they offer favorable terms? Did you guys just mesh right? What made you say, “Hey, this is the correct buyer for this application?”

Andrew Amann:
Yeah, and when you have three, you’re kind of best of the [inaudible 00:09:50], you try to pick the best of the three. So you want to work with all three obviously to make sure you’re finding someone that has the capital and has the vision for it. But this specific buyer ideally would’ve been a perfect fit even if I had 20 interested parties.
And the reason was he knew that this app had the bare bones to grow to something larger. They were also more familiar with the web3 space, the crypto space. He wanted to add some wallet capabilities to it so it would be more security on it. And also some of the events that they had envisioned were in conference buildings that had multiple floors. And so when they provided, maybe it was a crypto conference or anything like that, you could really see this app fitting in to the way he wanted to utilize event services. And so I think that tipped the scale in us to say, “Look, we also can build with you, we can build products, we can develop resource, we can be the feature set of building.” I’m sorry, “We can be the development team to build additional features.” And I think that marriage of need for product and us having the resources of continuing to build what was necessary allowed us to be just continuing the conversation until the acquisition went through.

Andrew Gazdecki:
That’s awesome. I love how you were able to sell the app and then still be available to, again, maintain the app, make improvements, fix plugs, upload it to the app store. That’s a huge just advantage compared to a lot of other sellers because as a buyer you don’t want to buy an application and then the source code is messy, then you have to go find another engineer. So just having someone available for any fixes and upgrades, so that’s awesome that you were able to do that. In terms of due diligence, how did that go? It’s a mobile application, I imagine it was maybe a code review and then you transferred the app into maybe a new developer account or he or she registered a developer account. Can you walk me through that a little bit?

Andrew Amann:
Sure. So whenever you transfer, we had… I guess the way to explain it is most mobile apps have a backend that needs to be supported typically on the web and then you have the servers and the infrastructure behind that. But this application specifically had a web application which we called the admin portal that allowed you to set up an event, where both mobile apps for that event was tied to that specific instance of the admin portal. So the idea was each event or each festival that you operated would have its own app and it would be named that festival’s name. And then in the admin portal itself, you would specify which admin, what the event name was and you would set it up on the admin portal. So the due diligence was creating an event, having him log in and create his own event, move the stage around, move the bathroom rooms around. One of the cool features was taking a map and drawing an illustration on top of the map of exactly hand drawn. If you’ve gone to a festival, somebody hand draws the bathroom and then a few trees.
So he was able to test all of that through the admin portal. And then, if it was me when we were testing for our events, I would actually run out to the actual festival, call my developer and be like, “I’m running 10 feet, I’ve run 30 feet this way,” and see if it would follow me on the map. I’m not sure if he specifically did that location testing, but because you have this live app that was supposed to work for festivals in 2020, he had the capability of logging into the admin portal, downloading the app and seeing the interactions between the app and the festival. From a code standpoint, we had told him we were going to get it to production. And so for that first festival that happened in… It happened this year in 2022, we supported that all the way through. So there wasn’t any code review necessarily, but for the most part he was able to test and review and see the application in action from his computer before purchasing.

Andrew Gazdecki:
That’s awesome. Yeah, that’s pretty typical with pretty much all the buyers I talk to in terms of obviously technical due diligence is extremely important, but also just testing, just do a demo of application sign up, could be a SaaS app or e-commerce to order the product, SaaS application, go through the user flow, see all the email drip, just so you can get an understanding of how built out this product is. So that’s exactly what I would’ve done so that’s awesome. I like that drawing feature idea too. That’s like… So moving over to… Yeah, go ahead.

Andrew Amann:
I was just going to say, that drawing feature could be a product on its own. The way that it worked is we would hire an illustrator and we had an illustrator on our team that would draw the festival map. And if you’ve ever read Paper Towns, it’s a book about how subway drawers can’t… Like you can’t have turns in subways, you have to have 90 degree turns. And so when you see the subway of New York City, it’s easy because it’s a grid. But in Boston it’s like a 90 degree turn first. It’s not actually like that, it weaves and turns. So a festival does the same thing and everything’s not to proportion, but you could stretch and skew it onto a map and you would find a river and you’d trace along the river and the illustration would drop over the map and then when you downloaded the map on the phone, as soon as you got to where the festival location is, the actual Google Maps on your phone would convert to this illustrated image that you’re walking inside of.

Andrew Gazdecki:
Oh, dang.

Andrew Amann:
So you bump into the stage. It was so cool. It’s like a product in itself and it’s one of the coolest features we had on it.

Andrew Gazdecki:
That’s awesome. Dang. Yeah, I didn’t even know you could build that with iOS but, like I told you, I haven’t built a mobile app in a long time but that’s… Moving over towards transition, it sounds like that was pretty easy too. Just basically moved over the code base, took it to production. How did that process go?

Andrew Amann:
Yeah, with Google and Android he would have to sign up for an account, I’m sorry, with Google and iPhone, he would sign up for a Google Play Store and an iTunes App Store account and the apps were transferred into those accounts that he owns. And so from there on out he owns the code base, he owns the app that’s built inside of it, then we would transfer the repository of the admin portal to one of his servers and give him the keys to the credit card and he would then own the AWS that supported the infrastructure of the admin portal and at that point he can own and operate the entire application.

Andrew Gazdecki:
That’s so smart. So did you have this application hosted in a different AWS environment?

Andrew Amann:
Maybe not at the time, but by the time the purchase was complete, yes.

Andrew Gazdecki:
Nice. Yeah, I hear from time to time some people will have a bunch of different applications in one AWS instance and they got to pull it out, put it into something new, but just having it in just a singular AWS account with nothing else in it, you can just drop the username and password and make it easier for everybody. I guess my next question would just be, in terms… So you went through due diligence transfer and then you’re pretty much done with everything, but how’s the relationship with the buyer at this point? Are you pretty much continuing to build events for this buyer or has this person taken over the app and you’re on to new things?

Andrew Amann:
Yeah, we built the first… We helped him release that first one. It was a festival out in Seattle and we haven’t heard back of how it went yet, but the relationship, it’s seemingly good. We haven’t heard anything negative. It’s one of those things that I think we made the transaction, we made the transition, and now he’s off to either growing that business. I’ve been trying to follow along to see if they’re making anything public and I haven’t seen anything specifically, but I do know that they’re in the event space, they’re selling all the time to events and maybe this is part of their package, maybe it’s an internal thing that he’s now figured out how to redeploy over and over again and I just haven’t been privy enough to understand exactly where this product is going in the future. But I do know it was capable of running that first event.

Andrew Gazdecki:
This sounds so smooth. I’m struggling to think of more questions because most of the businesses that we sell are SaaS companies, e-commerce companies, there’s a lot of moving pieces. But with mobile apps it just sounds like upload into the other developer account, the backend services are transferred over. So it sounds like everything went smooth end to end, is that correct to say?

Andrew Amann:
Yeah, and it went very smooth and I think Acquire made it super easy because you matched us, right? The service matched us, and then from there he had more of the knowledge of how to purchase products so he had the paperwork, he had the due diligence stuff, he had all the term sheets all ready to go. Whereas on our side, we’ve only sold two apps out of our 14 and the first one was an [inaudible 00:18:33]. It was new to us of how to approach selling an asset like this.
And it was a very simple piece of paper where I think it was four or five pages too. We had simplified it immensely by the time we got to the term sheet, but I think from our standpoint we were less attached to it because there was… We didn’t have customers, and for us to grow that product, we needed to hire sales and marketing. For him, he saw it as, “I have the sales and marketing and I need the product.” And so it’s almost like an easy transfer because it’s not about the price and it’s not about, hey, this is such a large acquisition that we need to figure out 30% of this or 10% of this and if this doesn’t work we’re going to knock this price down a little bit. It wasn’t that high of a price that allowed us to get into those argument.
I think we positioned it as a way that, look, we were about to release this in 2020. We were really excited, we had these festivals lined up, they were excited about it, and COVID happened, and so we haven’t touched it and now people are contacting us again. We have the number one spot for white label festival app on Google and we’ve maintained that, it’s just nobody’s been searching white label festival apps since 2020. And so now in 2022 the lead started picking up and I’m like, “I don’t have time to build this, but who does?” And he did. And I think that’s why it was such an easy transition because we were willing to give up a resource that had potential and he was willing to accept a resource and put the work in to give it that potential. So that’s why I think it was more of a match of here’s… It’s almost like a car. I love the car, I know that it drives great, I just need someone to love it and care for it.

Andrew Gazdecki:
And you have 14 other cars too, so getting one I think was really helpful. I guess, final question would be, based on just your experience selling this application, for those listening if you had to give just any advice when maybe they’re thinking about selling a mobile application specifically or interacting with buyers, what’s maybe the top three tips you would give other founders on how to position themselves to get Acquired?

Andrew Amann:
Yeah, I think the first one would be, we are a development agency so it’s different for us in a sense that we have the resources at our disposal to assist the customer or the buyer when needed. But I would say the first tip would be the sale is not the end and you need to promise that the app is supposed to do specific things, but you also, it’s an as is app, right?
Any purchase I imagine on Acquire at a certain point becomes as is. We can only support what currently is there today. So prior to the sale, the first tip is basically make sure the app is in a position that can be transferred, put it in its own AWS account as we talked about, make sure Apple and Google can be transferred very easily, and make sure you have those developer resources ready to go while this acquisition is happening because they’re going to be needing to do a few things. I mean, I think we spent almost a hundred hours of our own time just getting the application ready for the transfer and that is something that maybe you’re not prepared for or you’re not ready for and maybe you’re not funding for. If you’re a SaaS company and you have to keep on your contractors or your development team a little longer, really expect to keep them on through the acquisition and not cut them before thinking everything’s going to go smoothly. I think that’s an important tip to understand.

Andrew Gazdecki:
Nice. I love that. Yeah, just again, going back to how important the transfer is in terms of just knowing that if something breaks or if you want to add an additional feature, just having the previous owner available is massive, even if it’s just for a short period of time, even if it’s just to get it active to the point where you got it to, to the first festival. That’s huge, so well done and congrats.

Andrew Amann:
Thank you. No, thank you for providing the service that you do. I’ve been following you for a long time and I think this is what’s needed from entrepreneurship because we didn’t have to get a broker, we didn’t have to pay 15% of the sale price. We really utilized your services I think exactly as they’re supposed to be, to match buyers and sellers, and it was a perfect candidate. We were a perfect candidate for that.

Andrew Gazdecki:
Right on. Well, I wish I could take more credit. But I mean, you found the buyer and you did all the work, so congrats to you. I just have two more just quick random questions I always just like to throw in here. What’s a favorite book or podcast you’d recommend entrepreneurs?

Andrew Amann:
Sure. So right now I’m reading Mastery and usually I don’t recommend a book that I’m currently reading because I haven’t fully finished it yet, but Mastery by Robert Greene, I’m halfway through. It is exactly what I try to preach when I teach mentors or younger kids that are going into entrepreneurship about being an apprentice first and putting your time in day after day after day until you can master something and then become a teacher. But that book is really well written and Robert Greene is a good author to get a series of books from. He’s wrote 21 Laws of Power… What is it? 49 Laws of Power, something like that. But that’s a good book. Podcasts-

Andrew Gazdecki:
Kind of make you evil. Sorry, I was just saying, I’ll definitely check out Mastery because I’ve read the 49 Ways of Power or something and I was just saying that book can kind of make you evil if you take it too seriously.

Andrew Amann:
Yeah, and it’s odd. As you get to the end of that too, the last seven or eight, you feel guilty that that’s how people gain power and you’re like, “I know the trick.” And once you know the tricks then you see it in real life and yeah, I completely…

Andrew Gazdecki:
All right. What about podcasts?

Andrew Amann:
The Knowledge Project is my go-to. I will sit down with a notebook and listen to The Knowledge Project. It is a great way to see an author or read about an author, look them up on Knowledge Project and get a shortcut. It’s like a CliffsNote of how somebody thinks about a book that they wrote. And so each episode is really well done, really in depth, and Shane does a really good job listening to their previous stories and really harnessing out actionable items that entrepreneurs can take. So The Knowledge Project is my go-to.

Andrew Gazdecki:
Nice. I’ve never heard of that podcast so I will check that one out too. So this next question I’ve never asked anyone, but given you’re in mobile development, what’s your favorite mobile app that you’ve ever seen developed? What do you think is they nailed the user experience or it’s your personal favorite? What’s an app that you just look at and say, “They just nailed every point of this?”

Andrew Amann:
Yeah, I’ll give you a few. The team at Spotify, I follow them specifically. The features that they put out are revolutionary and they end up being industry leaders in a lot of areas and it’s very minor things. They were the first ones to put the bottom bar on iOS and everybody followed suit and this was like 2016, 2017. But the way that they organize massive amounts of data and the time they put into each feature on Spotify, it’s really interesting to follow.
Even they have these scanning tools, they have these little audio listening tools, music lyrics that are abnormal compared to app development, but very natural for your thumb swiping. So Spotify’s team design wise is one of the best. The other one that I always kind of get addicted to is Mile IQ and it’s an independent app, it tracks your expenses of how much you drive automatically with GPS, but they have this really clever card system and it’s… Zero does it too a little bit, but not as good because Zero’s app is absolutely horrible. But Mile IQ is this peaceful organization of tasks, which is in this case is business driving versus personal driving, and their UI is really well done. So those are the two that just came to mind quickly. I’m a huge Google fan, so Material 3 and the new Android and the new Android 13. They’ve done a really great job with the settings and the menu options with the big buttons, so I would say that.
And then I guess the last thing I’ll say is if you look at the mobile app landscape in the last six or seven years, we’re all starting to copy Windows’ operating system, their phone and the way they organize the Horizontal Scrolls. So a lot of things that they introduced to the app world, because they came from scratch in 2013, 2014. A lot of the menu options are actually being copied from that, especially iOS, so it’s fun to see that coming back as well. And iOS music is a perfect candidate that looks exactly like the Windows phone music did a few.

Andrew Gazdecki:
Interesting. I didn’t know that. I totally agree on Spotify’s app now that you mentioned it. We used to always study the Starbucks app. I don’t know why, just for good and bad. Their ordering experience is really good, but it also feels like every department in that company just shoved what they wanted in the app. But anyways, really appreciate you joining the podcast and just sharing this story. This has been awesome, Andrew. If people want to get ahold of you and learn more about your Venture Studio, maybe have a [inaudible 00:27:25] app created by your team, how could they get ahold of you?

Andrew Amann:
Sure. So I’m very active on Twitter. Andrew Amann, A-M-A-N-N. So it’s adding and yeah, is it still called Twitter nowadays? I don’t know if we’re changing the name of that too, so hopefully.

Andrew Gazdecki:
By the time it comes out it might be something else.

Andrew Amann:
Yeah, for people listening, we’re two days into Elon purchasing Twitter so all these changes are coming. So if it’s still the same blue bird, then that’s what you can find my username and I don’t have a blue check mark yet, but maybe I’ll buy one by that time.

Andrew Gazdecki:
Yeah, I’ll put that in show notes.

Andrew Amann:
Yeah, thank you. And then LinkedIn, same thing, just Andrew Amann. And our company is 923 Venture Studio. We either do it with the numbers 923 or spell it out nine two. So that’s where you can find me and I appreciate everyone listening to this and thank you Andrew for having me on it. It’s total pleasure to see you grow and succeed in this space. And I like what you’re doing at bootstrapper.com too, it’s a very humbling and honest way that I think we’re all following you is trying to figure out also how to be bootstrappers and having a place that we can call home is great. So I appreciate you setting both Acquire up and that website.

Andrew Gazdecki:
Thanks Andrew, I appreciate that. Well, we’ll end on that note and I’m rooting for you man, so-

Andrew Amann:
Thanks.

Andrew Gazdecki:
Best of luck and I’m sure I’ll be chatting with you again soon.

Andrew Amann:
Sounds great. Have a great afternoon.

Andrew Gazdecki:
You too. Cheers.