Big News! Why I Skipped the Exit and Went All In: The Full Scale Story
Why I went all in on Full Scale instead of taking the exit
The goal of most startup founders is to get an exit. They want that big payday in the end. I have done that twice and understand why it is highly motivating for startup founders. My first startup, VinSolutions, ended in a 9-figure exit and changed my life.
However, selling your company isn't the only choice, and for one of my companies, Full Scale, I had no interest in selling it. However, my co-founder was interested in exiting.
Today, I want to share why I went all in on Full Scale instead of taking the exit.
How it All Started
About 5 years ago, I was running a different company I founded called Stackify. I needed to hire 10 software developers, and as a practical founder, there was no way I could afford to do that in the USA. My friend Matt DeCoursey had his own company, Gigabook, and he had a few employees in the Philippines.
DeCoursey convinced me that the Philippines was an excellent place to hire software developers. I had never worked with someone from the Philippines and was initially skeptical.
All I knew was that the local Filipinos I knew in Kansas City were some of the nicest people I had ever met. After hiring the first couple of people, I quickly realized they were not only the nicest but also very talented software engineers!
The Philippines ended up being one of the hidden gems of where to hire software developers. Nobody realizes that the Philippines is one of the largest English-speaking countries in the world. Two times more people speak English in the Philippines than in Australia!
English fluency and communication skills are priority #1 and #2 regarding software development. The Philippines was terrific for that! I also found that the talent level was extremely high. We hired great senior developers who previously worked at Accenture, Lexmark, Kyocera, NCR, and many other companies. A well-trained talent pool already existed to recruit from.
I credit building the team there with being a big part of Stackify's success and our eventual exit in 2021.
An Accidental Business Was Born
When I first started hiring those developers in early 2018, I aimed to help my startup. I had no intention of creating a professional services company or dev agency. After I saw its potential, I told a few friends about it, and they were instantly interested in the idea. If it worked for me, they trusted that it would work for them.
We had an "ah ha" moment and decided this could be its own business. I worked with Matt DeCoursey to make it a partnership, and we opened up to service other companies.
Over the next 12 months, we hired over 100 people!
An accidental business was born! Entrepreneurs are all about solving problems, especially when it’s their own! I never thought I would create an offshore development agency, but we did. Matt DeCoursey ran the business's day-to-day, and I continued to focus on Stackify and, most recently, At Capacity.
I never thought this collaboration would grow into what could be the most important company I ever started.
Getting That First Exit
Most startup journeys are a grind, and it wears people out. I made $120k a year as the CTO in 2011 at my first company. On paper, I was worth millions. However, I had employees making 3x-5x as much as I did. (Salespeople are expensive!) My entire net worth was tied up in my company, and I had no access to it.
When we sold VinSolutions, I was ready to take the money and run. It is so much money at some point that it is hard to turn down. I was also 29 years old then.
I sold Stackify because I was ready to do something different, and the business was challenging. Competing with heavily capitalized New Relic, Datadog, and others was brutal.
Some people love startups but don’t like bigger companies. I see this a lot when talking to Startup Hustle guests. A small startup is a roller coaster of excitement. Eventually, the companies get big, and it feels more like a corporate job and more like a daily grind. They would rather innovate new ideas than scale companies.
Whatever the reasons people want to exit, I can understand and relate to all of them after doing this for 20 years. You want to diversify, change your lifestyle, help family, take some time off, retire, do something else, or whatever it is you want to do!
Take the Exit or Keep Going?
After 5 years, Full Scale has grown to 300+ employees and 8 figures of revenue, and it has even made the Inc. 5000 twice as one of the fastest-growing companies in the USA.
After selling two other companies, I always advise other entrepreneurs that if you sell your company, what do you do with the money?
Where could I invest my money to produce higher annual returns if I sell?
Especially one that I have some control of!
Definitely not the stock market. It's likely not private equity. Maybe Bitcoin or Tesla if you have a time machine.
I didn't want to sell. I want to own the company for the long run. However, I also understand those who want to get the exit and diversify or go do something else.
While I wasn't interested in selling, my business partner was interested in getting his first exit.
After 5 years on the sideline, I was also anxious to take the lead at the company and get us to the next level. I had my own vision for where I wanted to take the business.
I have 20+ years of experience leading software engineering teams. Running Full Scale is a dream business for me.
So, what do you do when you have two business partners with different goals?
Enter The Partner Buyout
I had never acquired a business before. I had been on the selling side twice and understood the process. I assumed I could find potential investors or banks to help facilitate the transaction.
I called a local friend who specialized in debt financing and helped me once before. After one quick conversation, he told me the SBA had an excellent program for partner buyouts. He gave me the confidence I needed to know I could figure out a way.
I decided to make my business partner an offer, and about a week later, we had a signed LOI in place for a deal structure that worked for both of us! Let’s go!
It ended up taking 94 days from the first offer to close.
I honestly have to say that it was a relatively painless process. A lot of hurry up and wait. A lot of digging up diligence docs. But overall, it was a smooth process. It is much easier to buy 50% of a company you are already familiar with!
He took the exit. I went all in.
After starting 4 companies, I also appreciate how hard it is to start a new company. Growing an existing business is way easier. I’d rather grow an existing profitable business!
Acquire or Start a Business?
Going from $0 to $1M in annual revenues is tough. Something like 90% of companies never make it.
Another great option is acquiring an existing business that you can just grow. Lately, there are even sites like Acquire.com selling pre-revenue companies up to companies doing millions in revenue. No matter your budget, there are options. Is it still a high risk? Of course!
If you want to be an entrepreneur and don't want the pain of starting something from scratch, I highly recommend using the SBA programs and considering acquiring a small business!
What's Next for Full Scale?
Now, the real work begins. I have always been involved in the company from the outside. I have also always been a customer. I understand how the business works, but I don't know everything.
Like any new manager, I have to get fully up to speed about every aspect of the company. I will undoubtedly have my own ideas and changes I want to make.
I will bring a startup and entrepreneurial mindset to a company that is 300+ strong. I will make mistakes. I will make some small bets that will be failures. We will also figure out how to get better at everything we do.
What's Next for Me?
I started my career as a software developer. I have been a CTO for basically 20 years. However, I have also been a CEO of tech companies for over 10 years. That still sounds totally weird to say.
I have the unique experience of going from software developer to CTO and CEO. Being CEO of a company with 300+ employees is a new chapter for me.
There is a special podcast episode that discusses the transaction you can listen to.
Congrats to Everyone
I want to finish by saying thank you to my business partner, Matt DeCoursey. Thank you for building a fantastic business over the last five years. We randomly met via a startup Facebook group. You never know where you might meet a new business partner, find a new customer, or develop a new business idea.
You have to always be looking for opportunities.
Full Scale started as a friendship and turned into an accidental business. It became a big exit for a friend and a new chapter for me.
I also want to take a minute to thank our team. Without them, none of this could have ever happened. We are in the people business, and we are nothing without them. They do all the real work in this company.
Thank you also to our 50+ customers for whom our teams work for every day. It also makes me proud to know that several of our customers over the last 5 years had their own exits that we were pivotal in!
Last but not least, thanks to my wife, Mea Watson, who I met in the Philippines as part of this journey!
If your company needs help growing your development team, my team at Full Scale would love to help!
Thanks, everyone! On to the next chapter! 🚀