Exclusive: MicroAquire CEO Andrew Gazdecki talks about how he helps bootstrapped founders get their dueView transcript
Andrew Gazdecki became a CEO straight out of college, spending years as a serial entrepreneur before selling his first two startups. Now, he helps entrepreneurs find buyers for their own startups through his latest venture, MicroAcquire.
Founded in January 2020, MicroAcquire is a marketplace connecting VCs with bootstrapped startups, primarily in SaaS. To date, there have been over 300 acquisitions on the site, several of which have broken the $1 million mark. Most startups listed on the platform are small in scale — to be eligible, companies should make no more than $500,000 in annual recurring revenue.
Long before becoming CEO of MicroAcquire, Gazdecki founded app building platform Bizness Apps from his dorm room at CSU Chico State. He sold the company after heading it for eight years. His next startup was Altcoin, a blockchain trading company that was also acquired.
Through his experiences, Gazdecki noticed that middlemen were pocketing a good portion of each startup sale, leading him to come up with the idea for MicroAcquire. The platform doesn’t charge any fees for startups and takes no part in the sale itself. Revenue comes from buyers who pay a premium membership to see listings. The company currently has $6.5 million in funding after a $3.5 million round in July, with capital from investors like Anthony Pompliano and Sam Parr.
Gazdecki spoke about the lessons he learned from previous startups he founded and sold, the differences between serial entrepreneurs and lifelong CEOs, and why MicroAcquire is designed to help as many entrepreneurs as possible.
The journey to MicroAcquire00:00:00
The Business of Business: I'd love to hear a bit about yourself and why you got into entrepreneurship in the first place. How did you get the idea for MicroAcquire?
Andrew Gazdecki: Yeah, I'll start with the first question. So I've kind of been an entrepreneur my whole life, I was that kid that I had an eBay store when I was 17. I had just a bunch of failed small hustles, I guess you could say. I went to CSU Chico State, I knew I wanted to be an entrepreneur early on. So I went into college, knowing I wanted to start a business.
So what really kind of got me into entrepreneurship, though, and I've been talking about this more frequently, I grew up pretty poor. I was born in Detroit, which — I'm glad I grew up there. I’m born in Detroit, and I moved to a town called San Clemente, which is a beautiful beach town. And I was just surrounded by a lot of rich families, like think of Housewives of Orange County, that's like, kind of segueing and great upbringing, but, you know, I didn't have a lot of means. And so for me, entrepreneurship was kind of a way out in terms of being able to provide a better life for my family, for myself. So candidly, you'll hear a lot of entrepreneurs say, like, “I wanted to change the world” and stuff like that. And I think that's awesome. But for me, I was very financially motivated.
So, for me, I just wanted to be financially secure, I wanted to provide a life for my family that I didn't have growing up. And so I saw entrepreneurship as a pathway to do that. I truly believe that the only way to really build wealth today is sometimes to start a business. So that's why I focused on doing that as my hobby. I was a kid, just like, how do I hustle? How do I make money? How do I make businesses work? I started so many different businesses. Again, everything from my eBay store to World of Warcraft, an affiliate website, which is embarrassing to talk about, to a number of other businesses in college. So each of those were kind of like a learning lesson, so to speak, like a stepping stone.
And then your second question, what got me into MicroAcquire: There's really two significant businesses I started in college. One was called Phone Freelancer. It was a job board that connected mobile developers with businesses. And this is when the iPhone just came out. And everyone was like, how do you make a mobile app, and I spent an entire winter break commenting. This was when commenting was a thing. This isn't a decade ago, on everything related to iPhone apps, and it started getting some traction. And I saw people posting jobs.
“There's a lot of middlemen taking a large portion of the sale. I thought it'd be really interesting to have a market where there are no middlemen, and entrepreneurs could speak directly with buyers. That was the idea behind MicroAcquire.”
A good example would be, you know, I'm a luxury restaurant, I want a mobile app that has a loyalty program, push notifications, allows me to just connect to my customers on their phones. They're paying like $40,000 to $50,000 for these mobile apps. And I just thought hey, there's these do-it-yourself website builders. And they have a similar business model. What if I just did this for mobile apps. And so that was really the idea behind Bizness Apps. And I sold that job board. I sold it for like a trillion dollars because I was in college. That was the most meaningful sale of my life. It wasn't very much, like a couple tens of thousands of dollars, but it felt like a trillion dollars in college when everyone's broke and stuff like that. I used that to start Bizness Apps. I was CEO of Bizness Apps for about eight years. And that was acquired by a private equity firm about three years ago, made more mobile apps than any other company in the world, which is kind of crazy to say, I think I can't prove it, but Apple releases, like how many apps were submitted. And we would compare how many resubmitted and so we get to around like 5% of all the apps submitted to the iTunes App Store, and also the Google Play Store.
And then after that, I started a blockchain trading company, which was acquired by a strategic buyer, so I just went through the acquisition process twice as an entrepreneur. I had previously hired an investment bank to help me with the sale of Bizness Apps and ended up turning down offers received with the investment bank. Investment banks have this thing called a tail. So basically any introduction they make over a period of usually one to two years, mine was two years, waiting for the tail to end and then went out to market and sold the business. The investment bank’s fee was $800,000. And like 6%. And I remember telling them, I said, you guys have the coolest job, I do all this work, and I come in, and then you get this nice cut at the end.
So I just thought I'd always be interested in providing a new, innovative way for entrepreneurs to sell their businesses without some of the headaches that you typically see in the market, like, who is the best investment bank to work with? Or who were the best buyers to work with? Or how can I take my company to market without paying $150,000 upfront or working with a business broker and paying 15%? So I just saw, there's just a lot of middlemen taking a large portion of the sale. And I thought, you know, it'd be really interesting to have a market where there are no middlemen, and entrepreneurs could speak directly with buyers. And so that was the idea behind MicroAcquire.
Trends in startup acquisition: SaaS, ecommerce, and more00:06:35
Are there other startups like MicroAcquire, where founders can be connected with potential buyers? Or if there are, what makes MicroAcquire different?
Yeah, so the first thing that makes us different is we don't charge any commissions, there's no fees. So if you're looking to sell your business MicroAcquire’s 100% free, which is kind of crazy. And I didn't think it was gonna work, because that's not a good business model, free. But what we do now is we charge buyers access to deals. So for example, you can look at startup listings, but all the listings are private, you don't know who the owner is, you don't know exactly what the business is. And to request that information, you just have to subscribe to a MicroAcquire premium account.
And in terms of competition, there's a few other marketplaces out there. But I would say what differentiates us is we're specifically focused on scalable tech businesses. So SaaS, ecommerce, we've started to move into things like mobile apps and crypto companies just by — they come to us, and we vet those businesses, so about 5% of businesses that submit to MicroAcquire we actually put on the marketplace. And I would say the biggest difference is the quality of buyers. There's a lot of strategic buyers, which means public companies, CEOs have well-funded startups. So a lot of acqui-hiring a lot of strategic acquisitions, and then a lot of financial buyers as well from large institutional private equity firms, to people that are starting, maybe micro firms, where they're looking for companies below $1 million in revenue. So I would say that's the biggest difference. It's almost like in between a broker and one of the larger marketplaces, the best examples, right? Flippa. But on Flippa, you can sell like anything, domains, websites with no revenue. There's no curation on that. And so we are very picky about the businesses we post and just try to basically be the best platform for startups to sell their business.
What trends do you notice within these companies? What are some of the more interesting companies you're seeing that seem to have something in common?
I mean, I see a lot. So when I wake up in the morning, I go through the submissions every day, I'm seeing agencies, I'm seeing SaaS companies, ecommerce. So I see a lot of different types of businesses, which is really cool. I love startups. I love startups as it is, I don't know, it's my hobby. So just going through like, oh, this is interesting.
In terms of trends, I think, the most eye opening part about MicroAcquire for me, it's just probably the long tail of SaaS. And what I mean by that is when you think of a startup, you think of their venture funding and press magazines or high flying, but there are thousands of small tech companies being created by two founders, they grow the company to a couple million in revenue. They have no investors. In just the amount of startups, it's really hard to quantify that market, because most of the market data today around startups usually comes from when they get funded or when they have some sort of news to share with the press. So there's just so many niche businesses.
One company that comes to top of mine now is pretty active on MicroAcquire, [which] was just a simple invoicing system direct towards medical practitioners. And there's just basically lots of niche software, I would say it’s very interesting. And to me that just says there's so much opportunity in SaaS today that you don't necessarily need to build a $10 million, $20 million company and build a company with $2 million and have a pretty life changing exit.
What about companies that might not be doing so well? Or might even be — maybe not fraudulent, but maybe not totally watertight? Have any deals fallen flat? And if so, what role does MicroAcquire play there?
Yeah, good question. So the only role that MicroAcquire plays is we connect buyers with sellers. So we don't do anything that a typical business broker would do. We don't get involved in negotiations, we don't get involved in valuations, we don't get involved in really any part of the business transaction, we just connect the buyer and the seller, there hasn't been any issues in terms of someone, we've seen some listings that look like this isn't adding up, and we won't list it. So we do our best to curate.
But we make it pretty clear to buyers that it's irresponsible to do — you're responsible for due diligence, and we have a list of professionals, they get hired for due diligence if they need help. The number one thing I would say that's maybe a problem for some companies on MicroAcquire, is they're just not sellable, which is usually a hard pill to swallow. And there can be a number of reasons, it can be a company that's unprofitable. It can be a company that has raised $4 million, but it's really only worth like, $5 million when the founders sell it, they're essentially walking away with nothing from liquidation preferences. That's always sad to see. But that's just the reality of startups. And sometimes an outcome like that can be better than just shutting down a business or just running it for 20 years because you get a salary.
“Some people will say, no, I built a great business. But no Bizness Apps for me was just pure luck.”
I would say the biggest downside of MicroAcquire, given how many businesses we list, would be the ones that we just can't find a buyer for. And I don't think anyone would be interested. And there's just so many reasons for that. They price it too high. Everything's kind of a mess. Or, like, they haven't maintained the code for years, stuff like that. And we usually don't list those businesses. But there are a few that have been on there for months. I'm not sure if you're going to sell.
When — and when not — to sell a startup00:13:34
You've sold a number of startups that you founded. When is the right time to sell for a founder? What advice would you give to founders that might want to do an exit and do it right?
I tell founders all the time to keep going, it's really good business. And they're growing. I mean, if anything, I say, hey, just throw it up there and start building those relationships now and say, this is your price. But when you go to market, you're going to be valued on current execution, on future execution. So that's where you see an angel investor or venture capitalists investing in the startup, doing like $1 million in revenue, and they get a $50 million valuation. Because they're investing in the future potential of that business. But when you go to market to sell your business, you're typically valued on multiple that revenue now, so that million dollars would be depending on how profitable the business is. And just there's a number of different qualities like churn, growth rate, what market is it in? How strong is the brand? How happy are the customers, how clean is a code base? All those combined. You can probably expect if you have $1 million revenue, two to five times that, really depends.
So that's a personal question. I always ask founders what are they looking to do next? What does an ideal outcome look like? The common one, I mean, my personal response to that is when you're tired. I sold Bizness Apps when I was tired. I also sold Altcoin when I was tired, I'd only ran that business for about a year. But I launched it in like 2017, and the crypto markets crashed. We just knew we weren't going to be able to raise another round of funding. So we knew we had to tuck it into another company.
Do you wish that you had held onto that with the recent boom of Bitcoin?
No, I mean, cryptocurrencies have a really, really tough market. And really the biggest barrier that we had with Altcoin wasn't really go to market. It wasn't technology, it was really regulatory. So this was when like, is Ethereum a security or utility token? So we were in this legal gray area, and sec was involved. And we kind of took a step back, we said, do we really want to, like take this to market with this gray area. And then what happened was, we were building a solution on the Ethereum blockchain to speed up transaction times using a framework called plasma, which is side chain super tech. Boy, I won't bore you with that. But the first application we were going to use that for was a cryptocurrency exchange, similar to Coinbase, but decentralized, so there's no single point of failure.
But to take that to market, there's a saying that I've heard from other people in terms of regulatory compliance when you're handling money and securities it’s basically like $2 million to $3 million in 18 months, because you need a money transmitter license, you need the approval of the SEC. And so we looked at that. And we were like, we're tech entrepreneurs. We're not regulatory compliance entrepreneurs. So that was a business that we had a great time running.
“A problem I see a lot of founders doing is they create a life they don't want to be in.”
Some businesses are, the timing is too early. And that was probably the case with that business, maybe today would have been more successful as the SEC has put out more clear guidelines on what it would take to launch a business like that, but we were early. And the tech and the frameworks and the theoretical development that we were doing was also new. So that's another thing that I always look forward to in starting new companies. Is the timing right? And to bring MicroAcquire in the mix of this, and Bizness Apps, perfect timing, literally that is just sheer luck. Some people will say, no, I built a great business. But no Bizness Apps for me was just pure luck. The iPhone had just came out, every business was scrambling to figure out how to build mobile apps for their customers. And we just had an obvious solution to an obvious problem and big market.
Altcoin was a little early. Over the past few years, we've seen a lot of advancements in blockchain technology. So it would have been way easier. I've looked at some of the tools that have been created now. And I'm like, I wish we had that. Because we were thinking about maybe an ecommerce store, like the year 2000, you have no Stripe, no Shopify. So sometimes like that timing. And then another comment I'll make on that is, as it gets easier, you get more competition. So it's pros and cons. But with MicroAcquire, really, there's just been a huge influx in the buyer pool of SaaS companies specifically. So that used to be — think of acquisitions five years ago, and you think of like, Google buying, I don't know, YouTube, or something like that. And now it's the former VP of sales at a tech company, and they have really strong go to market experience. They find a great product that has happy paying customers, and they're suddenly buying a job where they want to buy this business, and use their experience to bring in some new energy and then a go to market strategy. So that's new. That was completely unexpected to me when I launched MicroAcquire.
It's interesting to hear the differences. But you were talking about feeling kind of tired and that being the right time to sell. You thought about selling Bizness Apps when Apple started changing up the App Store and you almost had to get rid of all these apps you created. They didn't allow apps that ran on a template. And you had to fight for that.
Yeah. So that was rough. So the short story there is — so it wasn't detrimental to the business or anything like that, because they weren't retroactively taking apps down. But we would have pivoted and created a more custom solution, but it would have slowed us down. And I was eight years into the business. So it's kind of like a gunshot to the foot. Like, this is not what I want happening right now. But we worked through it. And we started working on other mobile solutions, like progressive web apps, which are basically like mobile websites that perform like a native mobile app. That's where I think the future mobile is going for what it's worth. Because no one wants to download apps anymore. And so we were really, we saw that as a future.
But yeah, I mean, I was eight years into the business. Apple came in and gave me a nice — think of it like you're in the ring boxing, because startups are so draining mentally. And physically, we're in the last round, and Apple comes in with a knockout punch. I was so exhausted. And so after that was resolved, and business was back to normal things were looking up again, team morale was back in place, that's when we took the business to market just because I always say one year in a startup is like seven years, kind of like, dog years or cat years. And I was just tired. I was 29 when we sold the business, I was ready to move on to something new. There's all I knew, I worked at Sears. And I worked at Baskin Robbins, and then I was CEO of Bizness Apps. So I wanted to put my hand in a new business. So I was ready to sell.
Serial entrepreneurship vs. long-term leadership00:22:06
There must be a lot of founders who just wait too long to sell. And even if they are tired, maybe they're getting to the point where the business is floundering and they're trying to keep it going. What advice would you have for them?
Yeah, I mean, there's, there's something called local maximums. When you first launch a business, usually within the first year or two, you'll have a few acquisition offers kind of poking out the door, usually from strategics. This depends, this is not always the case. But with MicroAcquire, I've already turned down several acquisition offers where people are really saying, hey, this could be a good token for our business. That's a good time to sell the business. And then you know, maybe two, three, four years down the line, when you kind of have a little bit more trajectory on your revenue model. And the business seems more stable than no one to your launch. That's another good time.
But really, there's no perfect time. If you get a good offer, take it, it just depends on your personal goals. I know people that want to run their companies indefinitely. I know people that are building companies with the specific intent to have them acquired someday. I think it's just important to be really clear on what your goals are. I think a problem I see a lot of founders doing is they create a life they don't want to be in, in a sense. And an example of that would be, let's say with MicroAcquire, I'm like, we're gonna build a billion dollar business. So I raise all this money. And next thing I know, we raise $100 million, and like that, I need to sell that business for a multiple of $100 million. So, now I just took the bar and just raised it up to here and 90% of the time, you don't reach that bar. And so you're stuck in the business and you've really limited your optionality in terms of exits.
So my advice is, just be really clear on what you want to achieve, do you want to run this business for the long term? Do you not know, if you don't know, don't make any decisions that aren't reversible. I wish I had some good advice on that. But yeah, it just depends on the founder. My best advice I guess would be just writing down what you want to do. Do you want to sell? Are you okay with a $10 million exit, which is amazing, but will change your life?
That's another thing I'll probably call out as some people think you need to sell a business for like $100 million or a billion dollars. You'll never be able to spend that money in your lifetime. Like this. This is a startup shirt. I bought this hat at some basketball game, you get to a certain point where the only thing money really does is you'll have a fuller house, if that's your thing, a faster car, but it won't make you happier, it won't make you more fulfilled, you'll probably sell your business and then start another one. I think goals like that are great, but understanding what your goal is, do you want to sell for $10 million or $20 million? Some people need the private jet. So they want to sell for $100 million. But just understanding what you're trying to achieve, really align your strategies. You're not just like five years in, you're like, well, this didn't work out as I planned.
Where do you feel that you fall on that spectrum of the Bezoses and Zuckerbergs of the world that aren't going anywhere? And the serial entrepreneur?
That's a great question. And I think about it a lot. My honest answer is, I don't know. My answer today is, I just want to help as many entrepreneurs as possible. I know that sounds cheesy, but you know, I've had an acquisition, I've been super fortunate in my career, I am at a point where I just want to do what I love, which is working with entrepreneurs and startups. And when a startup gets acquired a micro part, like some of you have paid off student loans, or someone who's telling you they paid off a portion of debt on their mother's house, it's pretty cool to think, if I'm successful, MicroAcquire, we're gonna be paying for a lot of weddings and down payments on houses and stuff like that, that's so I want more people to have similar outcomes that I was fortunate enough to have a Bizness Apps. That could change, like you could change in terms of, let's go big now, all these different services.
So I don't have a definite answer on that. But right now, I'm just having a ton of fun. And just, it's super rewarding. And my goal with MicroAcquire, I always joke about this, but I want to help make 1,000 millionaires by having them exit through MicroAcquire.
How many have you had so far?
So we've had over 300 acquisitions, not all of them are over $1 million dollars, in terms of over seven figures. Maybe like 55, if I had to guess, again, just because we just connect the buyer and seller, I don't actually see when a deal closes. That's something that we're going to be fixing where we can get visibility and allow people to transact on a platform where right now I wake up to an email and some person’s like, “I sold my company,” and I look it up, and it's a multi-million dollar business. So it could be more, could be less.