
I bought HitTail (a SaaS app) in 2011, grew it, and sold it last week - rwalling
http://blog.hittail.com/2015/12/meet-the-new-hittail-team.html
======
c0achmcguirk
It's been great listening to Rob's story about HitTail on the Startups for the
Rest of Us podcast [1]. I highly recommend this podcast for the
coder/entrepreneurs out there. It will motivate you and keep you focused on
starting small and growing from there.

[1] -
[http://www.startupsfortherestofus.com/](http://www.startupsfortherestofus.com/)

~~~
ThomPete
Agree one of the best pod casts out there.

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rwalling
Here's the original story of the purchase and revamp:
[http://www.softwarebyrob.com/2012/01/25/the-inside-story-
of-...](http://www.softwarebyrob.com/2012/01/25/the-inside-story-of-a-small-
startup-acquisition-part-1/)

~~~
boyter
Also a podcast interview covering more details about it (many technical)
[http://techzinglive.com/page/921/165-tz-interview-rob-
wallin...](http://techzinglive.com/page/921/165-tz-interview-rob-walling-
hittal)

------
quickpost
Congrats Rob! Enjoyed following his various posts and presentations about
HitTail.

I suspect this is the listing for the sale on FE International:

[http://feinternational.com/buy-a-website/5262-saas-
keyword-t...](http://feinternational.com/buy-a-website/5262-saas-keyword-
tool-9-years-old-73k-net-mo)

I'd also be curious if Google's recent updates ("not provided" keywords in
analytics, etc.) have impacted the ability to make this an effective product
in the long run.

~~~
dangrossman
No doubt the long-term outlook of this product has changed dramatically since
its initial conception and the 2011 acquisition. It's an analysis and
recommendation engine built on search data for each site. That data used to be
directly available to and collected by HitTail, since search terms were in the
referring URLs of every visit to the site coming from a search engine.

Now that Google virtually never includes search terms in referring URLs, the
only way HitTail can get the data it needs is via Google's APIs. Google can
change the API, remove the API, or change the terms of use, and HitTail's SOL.
Already they only have access to a subset of search data the API makes
available, rather than _all_ long-tail keywords, which they had a few years
ago.

Will Google remain friendly to tools like this in the future? Who knows.
That's a risk the new owner hopefully evaluated before taking it on.

~~~
j45
I believe HitTail has it's own history of terms it's collected over the years
before google took it off the table

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rfrey
Congratulations, Rob, it's nice to see counter-examples to the "it's all
chance" worldview.

I looked at the FE International listings, and I have to ask of those who know
about these things: What would lead somebody to sell a going-concern business
for 2x earnings? There were several examples. I don't want to go straight to
"scam!" but that seems too good to be true.

~~~
patio11
There's a range of answers to this question, but the simplest answer to "Why
take N years of earnings today and give up the business?" is "Because then I
get N years of earnings today _and can spend my next N calendar years doing
something else_."

The exact setting for N comes down to a variety of factors, market conditions,
and a negotiation between a particular buyer and a particular seller. As
someone who happens to be long SaaS companies at the moment I would prefer
N=50 but I know SaaS owners whose lives would be improved by a sale at 2. (As
mentioned in sibling comments, market right now is 3ish.)

~~~
jacquesm
I was more than happy to score a 20 and I would have settled for 10... but
don't tell the buyers.

~~~
dennisgorelik
Do you mean your buyers paid 20x your business' yearly profits?

Why?

~~~
jacquesm
Excellent question! But I don't have the answer for you.

~~~
dennisgorelik
But did you actually sell at 20x yearly profits?

~~~
jacquesm
No, I sold at 20x _turnover_.

~~~
dennisgorelik
20x gross revenue?

Wow!

What was the name of that business and what year was that?

~~~
jacquesm
None of your business :)

But it's very well possible to make deals like these, it just matters that the
buyer has a different idea of the value of the business for them than you do.
Which answers your earlier question in a way, but the 'why' is actually
probably a lot more complicated than that and I can't really speak for the
buyers, the only thing I know for sure is that they had a totally different
idea of where they were taking this than I did. They probably thought it was
cheap.

Beauty is in the eye of the beholder...

~~~
dennisgorelik
Actually, I just compared your deal with Twitter:

12 months revenue ending 2013-12-31: $664.89M

Twitter IPO Valuation: $24 Billion (Nov. 07, 2013)

Price/Gross revenue ratio = $24B / $664.89M ~= 43x

That makes your 20x sale look like an underperformer.

~~~
jacquesm
Yes, there are many other deals that are better. You forgot to ask the key
question though :) But I'll let it rest, none of this is for public
consumption and I shouldn't have written the first comment.

~~~
dennisgorelik
What is "the key question"?

~~~
kirubakaran
Purchase price, most likely.

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rubyrescue
We just bought a SAAS business via FE International last month
([http://talentdesk.com](http://talentdesk.com)). Process was incredibly
smooth. I'm happy to answer questions privately if anyone has any on what it's
like on the buyer side.

~~~
ThomasSmale
Congratulations on the acquisition! Great to hear you found our process
smooth, too.

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tyho
FYI, uBlock blocks your site.

~~~
tomphoolery
here's why:

"It will give you a script which you need to add in the head part of your blog
and it will start tracking all Keywords which drive traffic to your
Blog/Website"

[http://www.shoutmeloud.com/hittail-review-related-keyword-
su...](http://www.shoutmeloud.com/hittail-review-related-keyword-suggestion-
tool.html)

Whenever I see uBlock flagging something, I always make sure to double-check
as to what it actually is. In this case, it doesn't seem like HitTail is
_that_ malicious.

~~~
bpicolo
uBlock has had some pretty stupid political blocks, e.g. sourceforge globally

~~~
forgotmypassw
You never know which installers will get hijacked so as a precaution it's a
good idea to block SF globally.

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IanDrake
Hey Rob -

Financially speaking (and knowing what you know now) would you do it again?
Will you be going through the trash to find your next treasure?

Congrats!

~~~
rwalling
>>Financially speaking (and knowing what you know now) would you do it again?

Absolutely, no questions asked. Several reasons:

1\. Acquiring an app with product/market fit puts you ~18 months ahead of
starting from scratch. Like most founders, I'm not a very patient person. I'm
now working on GetDrip.com, and it took us a long time to hit p/m fit. The
slog to get there is the worst part of launching a product, IMO.

2\. Financially, this was a game changer for me. During the course of my
tenure with HitTail, revenue + the sale prices funded multiple angel
investments, the budget for building and launching Drip, and many other things
I would not have been able to afford previously.

3\. The acquisition and revamp were also game changing for me in terms of what
I was able to learn, the content I was able to produce from it (multiple
MicroConf talks). Both are important to me.

Even without the sale, the learnings and financial rewards were still a major
success for me.

>>Will you be going through the trash to find your next treasure?

I've already started my next one, GetDrip.com. I built it from scratch with a
co-founder, and I can't count the times I've said "I'm never going to build
from scratch again!"

I try not to say "never," but if I could choose build or buy I would buy.
Every. Single. Time.

~~~
dennisgorelik
How do you know that the business you are buying already has product/market
fit?

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davidw
I've always enjoyed Rob's take on things. The things he's worked on seem like
"a good goal" rather than something completely unobtainable, like most SV
style startups seem to those of us who are not there and don't want to kill
ourselves working on one. I highly recommend his book even though it's a bit
long in the tooth at this point:

[http://amzn.to/1OuZPHs](http://amzn.to/1OuZPHs)

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ArcticCelt
As a listener of both Techzing and Startups for the Rest of Us, it's fun to
have followed almost the whole story since it's beginning :)

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malux85
Congrats Rob!

Are you looking for your next adventure? I have spent 9 months building a
startup, at large scale (60 servers, 4 million data points a minute) My email
is in my profile, I would love to chat and get your thoughts and advice :)

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right2be
Excellent! I am sure HitTail is in great hands with Stas behind the cockpit.
Looking forward to seeing what comes and excellent job by FEI.

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joelrunyon
Is there a writeup for the story of this sale?

~~~
rwalling
I'm working on something.

~~~
boyter
Perhaps you could discuss it with the techzing guys again? It would be nice to
get into the details.

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kumarski
Brilliant "Discount for Bloggers" strategy = loads of positive reviews.

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Keats
Congrats! I enjoy your podcast very much

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brandnewlow
Congrats, Rob!

