Jason Kirby: Hey everyone, welcome back to Fundraising Demystified. I'm your host, Jason Kirby, and today our guest is Rob Hunter, a partner at Speaker Ventures, but also an Exited founder. Welcome to the show, Rob.

Rob Hunter: Hey, thanks, Jason. Excited to be here.

Jason Kirby: I'm excited to have you and I think this is going to be a really interesting conversation for our founders that you can learn a lot from not just your background as a founder that's, you know, came from Y Combinator, raised venture capital more than once, but also kind of what that journey looks like at the end of a company's life and what their options might be when it comes to, you know, selling the company or exiting the company. But before I jump ahead, Rob, let's hear a little bit about you. What's your background and what have you built in your career?

Rob Hunter: Yeah, so kind of a serial entrepreneur from childhood. I grew up in a very small town, but always had this entrepreneurial itch. Kind of random, but I sold bootlegged Japanese pro wrestling and mixed martial arts DVDs and VHS tapes on the internet in the late 90s and early 2000s. I was like 12, 13, 14 years old, hacked together a basic website, but was making like 30, $40,000 a year kind of part time. And that's... Inflation has helped grow those numbers over time, right? But it was enough to dabble a little bit. Went to business school for an undergrad, watched as all of my friends got into investment banking, consulting, sort of these high status, well-paying jobs. I instead was looking for a business to buy or to start. Hadn't really found a great startup idea.

So instead I ended up buying a franchise. I became the first franchisee, one of the first franchisees of Marble Slab Ice Cream in Ontario, Canada where I grew up. Marble Slab has about 200, 300 locations in the US. It's been around since the 80s, but they were just sort of getting into Canada when I was graduating. Opened up one store when I was 22. It did quite well. And so I opened up another one a year later. I said, wow, how do I scale this? How do I keep going? Didn't.

Explicitly raise money for it, but borrowed a lot, did some creative financing. And I opened up five more stores in the next 18 months. And it turns out that was a very bad idea. The first two very much were false positives. The revenue was great from launch and then sort of started to trickle down a little bit. A lot of people tried the product and weren't necessarily in a position to be coming back on a regular basis. The chain itself struggled — about half of the stores that ever opened ended up shutting down, including five of my seven. And so it was lots of highs and lots of lows. I ended up closing a bunch down, moving back home with mom and dad in my mid-20s. I had to do the Canadian equivalent of like a bankruptcy to clear up all the bank debt that I'd borrowed and was kind of like having a rough go in life for the good chunk of my 20s. But thankfully, I was able to get a really fresh start, got into an MBA program in Boston.

Rob Hunter: Did Babson College there, which is sort of a top entrepreneurial school, and very much fell into wanting to pursue a sort of either, the thought initially was go get a nice safe job. And a nice safe job to me meant, well, let's go work for a seed stage or, you know, series A tech company. I interned at one over the summer of the two years of the MBA. It was in restaurant tech, so kind of sort of adjacent to my experience, and learned a lot there. They had just raised kind of a post seed round of a few million and lots of good learnings, lots of challenges, lots of sort of how do we actually make money? Like how do we actually generate revenue for this thing and not just impress investors? But out of that experience was sort of the germination of the idea for Hire Me.

And I'm sure we'll get into that, but that was sort of what led me into tech was an entrepreneurial bent from the time I was a kid.

Jason Kirby: So this is a fun, fun story. And I appreciate your candor in terms of talking about kind of the ups and downs of your twenties. You had two successful stores and then you kind of went and scaled too quickly, which is a common thing that happens at brick and mortar. You having to go back to your parents, like, like, what was that experience like to kind of ramp up, have success, that taste of success quickly, and then kind of having that immediate kind of kick to the stomach, you know, kind of like, what was that experience like? And what are some of the key lessons you learned from that?

Rob Hunter: You know, it was very humbling. I can remember the summer of the first store opening. This is six months in, I've sort of got things to where they need to be. I did a Contiki tour, it's like this youth travel thing. And I remember being on a cruise ship as part of this vacation I took. Sitting next to what I now assume is like a billionaire Greek — very, very wealthy man, right? We're playing blackjack, right? We're talking, what do you do? What do you do?

And I'm, I own this ice cream store and I'm having all this success and like chip pat on my shoulder. Look at me, look at me. And he sort of very, very tactfully just said, be humble, right? Have some humility, right? In terms of where you end up in your career. And I don't know, I'm reminded of that conversation now 15 years later. Cause I think I needed a bit of that. I very much had this, I don't know, hero's journey narrative in my head of, well, look at me. I'm the first on my father's side of the family to go to university.

My mom was a teacher and look at all this insane success I'm having at such a young age. I'm the golden boy. Everything I touch turns to gold and I can't lose, right? That very much got confirmed as not correct with this experience. I can remember though, and you can just barely see the outline on the wall. I can remember April 9th, 2011 was sort of right in the heart of when all this was going down.

And I would get in the habit of just going to the library and sort of trying to study for the GMAT and read and sort of remove myself from the chaos of the stores. And I stumbled on a book that was just all about like failure and reinventing yourself and sort of assert, it's called Ping, A Search for a New Pond — frog parable book, kind of weird, but anyway, there was a passage in there that basically said like, you know, I'm going to succeed. I will not fail. And the mentor says, well, actually, you are gonna fail and it's gonna suck and it's gonna be awful. But if you didn't fail, well then you didn't try. And failure in fact is one of life's great teachings and you need to go through it to actually become what you want to become and turn into who you want to be. And honestly, Jason, that passage moved me so much. First of all, I broke down in tears reading it. Second of all, I got out two pieces of eight and a half by 11 and a black magic marker and I transcribed the half a page or so of that.

And I brought it with me to Boston. I brought it with me to San Francisco, to Toronto, all over. And it is now framed and hanging on the wall 13 years later. So very hard as you're going through it. You know, you're worried you've disappointed everybody, most of all yourself. But I think an important, an important part of the journey for sure.

Jason Kirby: Yeah, I would say doing it in your twenties is a much less costlier experience than say doing your 20s. And I had a similar experience with kind of my first tech startup. You know, I had small businesses that were successful, but I wanted to kind of go bigger in scale as well and got in the tech startup world and you know, just could not be — one could not raise money because it wasn't a fundable idea. It wasn't a venture backable idea, which I didn't know by the time.

But when we finally kind of like crash and burn and gave up and shut down the company, it was a very humbling experience. Everything prior was successful. Everything I did was successful except, you know, that moment. And there was just like a couple of sequential events of failure. And I was like, just like, it just takes the, takes the breath out of you, takes your motivation out of you. And it's just about how do you get back up and go do the next thing, which for me, the next thing was — I think it was a guy that sold the Walmart. So ended up, you know, just got to stay in there and have, I think having those failures kind of help shape a founder to what they can ultimately achieve later on in life. But, but I digress. Let's keep going here. So, you had that experience, you're humbled in your twenties, you know, but then you go on and you’re going to go through the experience of being in a seed stage startup. What happened thereafter? And tell me about kind of the company you took to YC.

Rob Hunter: Yeah, so I graduated in May of ’14. Babson was very good about pitch competitions. Also on the wall is the $20,000 check we got for one of those things. And it's like, I think we ended up with $30,000 in winnings. And it's like, when you get that much, you're like, shit, I actually got to do this, right? I can't just cash the check and go get a job. People are actually expecting me to go and do this. We sort of flailed in the wind for a few months, but were ultimately able to recruit the co‑founder of the company that I had been interning at. And so Jeff has remained a very close friend, you know, in the intervening 10 plus years. We were actually just in Vegas for his bachelor party last week. So it's been good to really have that relationship grow out of the internship experience. But we got Jeff involved. Jeff was actually able to build product for us, which is kind of important as a tech company. But Jeff's involvement very much, I think, was the catalyst for us being able to get into YC.

We had applied. I remember hearing Sam Altman speak — Sam was running YC at the time — at Harvard a few weeks prior to our interview. And it was to the MBA tech conference. And Sam kind of like shit on MBAs a little bit, like basically said... and for good reason, I think actually. A lot of MBAs are like, we should go do this and go get a technical co‑founder and give them 5%. And it's all about the idea, right? Well, I was a little... because we had just finished this MBA program. But long story short, I think YC accepted us because I had owned seven ice cream stores for like seven years, right? I had been in that business. And so I think I had a lot of insights into what problems we were facing as an operator. And specifically for me, the business was very much tied to initially the sort of optimization of who you're hiring. In my pitches, I always told the story of Kendra.

Kendra was one of my first employees. She showed up with a paper copy of her resume, which is what everybody did back in the day, right? You'd have like dozens, hundreds of resumes showing up at the store. And Kendra was 15. She had babysitting and soccer as her primary experiences. I think she might've spelled babysitting wrong, but she lived around the corner from the store. She had great availability and just the most bright and cheerful and like amazing person you could see.

And I saw it because I was physically at the location when she had dropped the resume off. And so without that, I would have totally lost it. Her resume would have hit a pile and not ever been seen. So that was sort of the inspiration for the company was like, how do we go find more Kendras? We went through a lot of iterations over the years, eventually sourcing the Kendras and not just sort of like optimizing the screening and selection of them, was a big part of it. But that was very much the inspiration. So we applied to YC. We flew out. We did one interview in the morning. And we were one of the rare batches that said, got the call, you guys got to come back for another interview. So we're running around San Francisco, pulling our hair out for like six hours during the day. And then we get called back in and it's Sam, it's Jessica Livingston. Like we had the sort of A+ team on the second interview, but we were able to get in.

And it was, again, sort of like, I'm a crier, Jason. I got tears of joy when we got into this, because it was just a year or two after the bankruptcy. So it's like highs and highs and lows and lows. I think we very much though assumed that we get into YC and it's this automatic button that gets you $3 million in funding. Arguably, it's maybe become more of that now, but at least back in the day, we did YC, we had an amazing experience. I don't mean to suggest we didn't — most important professional step in my life. But we were early and we were in a space that was not necessarily all that sexy. And so we ultimately were only able to raise a few hundred thousand dollars immediately after demo day. And so we had been very much prepared. We were gonna have our wives move out. We were gonna live in San Francisco. We were gonna be all in on Bay Area experience. But, you know, with $175,200 in the bank, it just wasn't enough to make it a prudent financial decision, right? I had gotten married on the way. We actually got married in Las Vegas on the drive out to YC. I'm Canadian, so my student visa was running out. But anyway, we did YC, we did Demo Day, great pitch. And then another sort of down a little bit of like, we don't have millions of dollars to deploy here.

But what was sort of a disappointment ended up being, I think, a bit of a feature. The constraint that came from only having a small amount of capital to play with was we had to figure out, like, how do we actually get revenue from this thing? And we built and we sold and we built and we sold. And honestly, we did what I would recommend no founder do, but it worked for us — we'd take 25 grand here, 50 grand here, 100 grand here, right? A lot of sort of small checks every couple of months as we'd engage with investors. This was back in the day, by the way, and it's so funny for me now. You go to demo day and companies are raising at 15 million, 20 million cap for basically the traction we had at the time. And I can remember in our day, people on the East Coast anyway thought we were like crazy expensive at a 6 million pre.

And it's like crazy how stuff has just shot up over time. It is interesting just to get in the weeds a little bit — back in the day YC almost exclusively did pre‑money SAFEs. And so there was a little bit of flexibility baked in to say, okay, well, you know, if you end up raising two, three million on a six million pre‑money SAFE, like you haven't completely sold the farm. Whereas, I don't know, if you were raising post‑money two, three million, six, you've basically given up half the company. So I kept building, kept selling, kept building, kept selling. Along the way in 2016 — so this is about a year and a half after we had done YC — then we did get some, a little bit more serious money in. We had a pretty big AngelList syndicate do about a half a million. Another couple of larger checks came in and we did this program 43North. We ended up taking a million dollars from them in exchange for moving to Buffalo, New York for a year. Lots of positives and negatives with that program over the years, but that was ultimately, I would say, what turned us into more of a remote company because we had folks in Boston, we had folks in Buffalo. Buffalo ultimately did not work out, and so I went to Toronto, and so we were kind of all over the place by then, but kind of kept growing at that 40%+ growth rate year after year after year. And by 2018, we were a million plus in revenue, had built out the product, kind of strayed away from the sourcing piece. At one point we had thought about, hey, we're gonna be like LinkedIn for blue collar recruitment, right? Manufacturing, healthcare, retail, et cetera. But we kept finding success building, hiring SaaS tools for the restaurant industry. And that's very much where we sort of doubled down on to be successful.

We were able to sign White Castle — was a big deal for us early on in those days, you know, six‑figure deal — and very much kind of figured out this bottoms‑up sales motion of, you know, if we can go sell the Dunkin’ Donuts guy that's got five locations, it makes it a lot easier to then go sell the bigger Dunkin’ Donuts guy that's got 50, 100, etc. So maybe I'll take a beat, but that's sort of the couple of years post YC.

Jason Kirby: So you share what I've recognized as a more common experience for a lot of founders in terms of this kind of like, all right, we checked the box. In this case, you got into YC. Now don't we get X? Isn't just a bunch of money or interest supposed to come my way? What was it like seeing your peers in YC that maybe had a different experience that kind of like took off? And kind of how were you feeling when you know, you were seeing that happen while you guys were scraping to kind of get checks at the door? What did you kind of see from your counterparts in YC and kind of what was that experience like?

Rob Hunter: Yeah, you know, it's interesting. There were obvious clear winners that you can't feel even a tinge of jealousy or whatever for just because they're good guys and gals and their companies are doing amazing, right? So we were in a batch with GitLab, which obviously has done quite well since the YC days. I remember EquipmentShare did very well coming out of Demo Day and it's still done quite well. Those guys are great.

It's funny though, the one, and maybe this sort of reveals personal bias quite a bit. You know, there's the odd company where I never got to meet the founders. We were the first batch of a hundred plus companies. And then you hear their funding announcement, like, really? Like that got funded and we can't get like a million. So I think it was more very, very small, like twinge of jealousy on kind of the other second, third quartile companies, right? It's sort of like, hooray and a lot of enthusiasm for the sort of top quartile. It's empathy for the bottom quartile. I would argue we were probably like third quartile in terms of fundraising post YC. And it's sort of like, there were a few that were like, I'm surprised that that would get funding. I do feel like, and frankly, I still feel like this. A lot of Silicon Valley VCs like have not worked minimum wage jobs before, right?

And we were playing in a world that just was not super knowledgeable about it. And I think, I don't know, we kept kind of getting bucketed into — people would make comparisons to like formal HR technology for white collar workers. It's like, this is just a totally different ball game. We're actually more of like restaurant operations software than we are pure HR in my opinion, because it's just such an ingrained part of hiring in restaurants. You are constantly hiring. It's not an HR department often that's doing it. It's the store manager, the restaurant manager that's responsible. So yeah, a little bit of frustration, but at the end of the day, like, I don't know, the ice cream experience really taught me and sort of moderated the highs are not so high, the lows are not so low, right? When you've gotten sued by multiple, you know, billion‑dollar, multi‑hundred‑billion‑dollar banks, in your 20s, it's not quite so terrifying to have a VC not get and like what you're doing. And so it was, I would say, back to the failure stuff, a lot easier to deal with the ups and downs of entrepreneurial life, having gone through it.

Jason Kirby: You know, I'm glad you share that. And, and, you know, as you come out of YC and you kind of bring in these small checks to kind of like keep, keep grinding — you know, don't give up — keep compelling investors to get you the checks to keep on going and having other bad at things. Obviously valuation is very different than they are now, but, you know, I'm starting to see them come down, but nothing to what we've seen before. And then, you know, you go out and you want to raise a Series A for Hire Me and, you know, it wasn't successful to what you were hoping for. You'll kind of walk us through that experience. And there's another story that I want you to kind of bring in and tie into that in terms of the other company that you, you followed on with after the fact and raise money, you know, practically overnight. So I kind of want to, you know, share those two stories and kind of juxtapose positions of how those two worked out.

Rob Hunter: Absolutely, yeah. So 2018 was a pretty pivotal year. We had just finished up in Buffalo, we're in Toronto, and all over from remote hires. And we had hit a million in ARR, which in my mind was like the key to unlocking that next round. We wanted to go out and raise five, six, seven million and had this big pitch of, well, we figured out the software side, now it's time to go figure out the LinkedIn side and we're going to go and do all of this. And did the road show, I was away for like two weeks from my one‑year‑old, which I remember being, you know, not awesome. Doing in‑person in SF, in New York, in Chicago, Boston, all over, right? And the interest like bluntly just wasn't there, right? We were growing 40, 50% a year. And that just was not a sufficient growth rate for a Series A.

There's not really a lot more to tell than that. We probably pitched 40, 50 firms and a lot of like tire kicking. There were a few that said, well, I'll put in, you know, 500K a million once you find your lead. And we just never found the lead. So it turned into like, what do we do next company‑wise? And what does Rob do next personally as well? And I remember being on a — after the fundraise was not successful — we did a little trip to Switzerland randomly. And I remember like running around the streets of Lucerne with this aha moment, and they always come on travel, by the way. Travel is I think quite important when you're in this life. But I kind of realized like, you know what? I am not the guy to run a 40% a year growth business. There's a lot of sort of optimization, there's a lot of tactics, there's a lot of like honestly, people management, a lot of sort of operational stuff in the weeds that just was not my bag.

I like the big, the vision, the storytelling, the strategy, the move fast, try to break things, right? I was very fortunate though that I had a guy to run the company for me. So Derek had been our COO, he had been with us for a couple of years and eventually we promoted Derek to CEO in June of 2019. But here's a real funny story. Derek and I used to own an ice cream store together.

And Derek and I sold that ice cream store and could not agree on what to do with the paltry amount of money from it. So Derek and I sued each other and we were in litigation for a couple of years, 2011–2013 or so, and very much were able to repair our relationship. Five years later, came on board as CEO, is now a partner with me at Speaker Ventures. So a good story in terms of, you know, you never — bridges — burn bridges can always be rebuilt, I suppose is the learning from that. But I digress. I had decided, hey, I do want to go do something else with my time. And the idea of student loan debt in America was just always kind of fascinating to me as a Canadian. There is 10× more student loan debt per capita in the US than in Canada. In Canada, it's six, $7,000 tuition for our top schools, clearly much, much more than that in the States. And so this idea of being 40, 50 years old and owing $300,000+ in student loan debt was like — broke my brain a little bit. It's like, well, why don't they just declare bankruptcy, right? Why don't they just, just like I did, right? I was able to get a fresh start. I've got this multimillion‑dollar SaaS business now because I was able to eliminate debt in bankruptcy. Well, then you go down the rabbit hole of, okay, if you Google the answer to that question, it's like student loan debt cannot be included in bankruptcy, which for all intents and purposes is true.

But it turns out there's a loophole where essentially if you can prove in court, if you can litigate against either the federal government or your private lender, that this debt is causing undue hardship — basically that it mathematically will never be paid off. If you're 50 years old and you make $40,000 a year, odds are you are never gonna have enough money to pay off your $300,000 student loan. I found some literature to that effect, connected with the author of the literature who was actually looking at these cases and finding that the rare times they were filed, they were successful, and was able to recruit Jason, actually, as a co‑founder for the venture. And so we called it Reset Button. We got the URL, which was great, and found a technical co‑founder, Max — was great as well. And basically, in a span of about three weeks from like first email to like wire, we raised just under $2 million. Craft Ventures, Slow Ventures were great partners in that business.

And it's just really to me highlights — like I was on the road for months with a million‑dollar ARR business a year prior and couldn’t get a term sheet, couldn't get any interest — a year later with a PowerPoint deck and a big idea and pretty awesome team we were able to get millions of dollars in the door basically by snapping our fingers. So it is pretty crazy, the venture world that's out there.

Jason Kirby: Yeah. And it's something I wanted to bring up specifically for a lot of founders because, you know, your Hire Me past life versus your Reset Button life — you know, it was just, you know, as you just kind of said, like you have, here's a business that makes money. Why doesn't anyone want to put money into it? And here's an idea. It's strictly on a PowerPoint deck.

And from what I find and what I have to constantly remind founders of is, you know, there's certain criteria you have to meet as a founder and as a business to attract venture capital. And practical is not one of those criteria. It's, you know, like, you know, what momentum do you have? What industry are you going into? Do you have a shiny object, you know, that can be flashed around amongst VCs to show? They'd rather have no data and take a shot in the dark for a hundred‑X potential or straight zero. They're not excited about an established business growing 40% a year. You're going to have to look more for private equity or strategic capital or grow revenue to fund those types of businesses just because you've proven yourself you're not a rocket ship. That basically deters almost all venture capital money from participating in that type of company, which is unfortunate because these are great companies and they could benefit from some injection of capital.

But as we've kind of seen and as I see often, it's reshaping how that founder thinks about their business and what type of capital they really need to achieve what it is they want to do. And you're smart. You realized that that business needed someone different and it wasn't you. And you stepped down from that. And I think that's such an incredible realization that so many founders really can't do that. They — it's like, it's my baby. I have to stay with it. Even though if it makes me miserable, I was like, no, you can divorce your company. It's okay.

Rob Hunter: And I think often it can go poorly, right? Like often it cannot work out, but I think we had everything in play that it did. I will say I did stay quite involved on the finances, right? So I was still in the bank account, usually once a week, would still help with the preparation of the statements and sort of the budgeting. And so I kind of shifted into fractional quarter CFO almost in that role. And that ended up being a very, very good decision.

We had kept Hire Me very much — I fell in love. This was right around the time Paul Graham did the “default alive” essay and this concept of, okay, I'm burning $30,000 a month and I've got $300,000 in the bank, but I was burning 35 last month and I was burning 40 the previous month. And so if the trend line continues, then I'm okay. And if we sign a big customer next month and burn drops to 20, well then maybe I can make that sales hire and ramp it back up to 26 or 27. And so constant, constant calibration of budgeting and finances was like an important — very overnight became very important. When I hear founders pitching me on like, here's my five‑year model at the pre‑seed stage and here's like cell 76 of, you know, my four years tab D, right — it gets really stupid at that stage.

But then kind of overnight, when you're managing for cash flow and managing for never being able to raise again, some of those MBA, you know, Excel type exercises become very important for us. They became super important because we were and are a restaurant hiring company. And little did Derek know in June of 2019, when he took over as CEO, that COVID was right around the corner. And so COVID had some major implications for both companies.

For Hire Me — and remember this is a SaaS business, right? We're growing, you know, 2, 3, 4, 5% a month, in perpetuity. I think we had one month where there was a drop in the company's history. And then April 2020 comes — 25% drop, right? Restaurants are not hiring when every restaurant in the country is closed down. And so it was kind of a constant — I sort of jumped back in almost full time there to say, okay, like what are we going to do? Right? Like, how are we going to get through this? And the proudest moment of my professional career — and it's really more Derek, honestly, that did it — but we were able to get through COVID without any layoffs. We had, I think, 15, 16 people at that point in time, and we hadn't raised venture in two years. We had no prospect of raising venture, you know, anytime soon, but very, very, very careful, disciplined budgeting, literally like day‑to‑day cash flow statements helped us get through that.

And thankfully it didn't hit us quite as hard as we had modeled. We had modeled for 50%, right? We figured everybody would go away, but turns out Domino's Pizza really benefited from COVID and really needed to hire a shitload of drivers. And so we were able to, you know, duck and weave a little bit there and come back quite strong. And we ended 2020 actually up 40% year over year from a year prior, even with the big drop from COVID.

Reset Button though had more challenges where all these intricate legal arguments we were making were not possible because of student loan payments getting paused for three years. And on top of that, I will say it just feels like the consumer was kind of distracted and had Paycheck Protection money and had the stimulus money and wasn't as worried about their debt anymore. And so those two things, coupled with just the complexity of legal tech to begin with, sort of forced that company into a pivot. And we basically just iterated to legal intake software, client intake software for bankruptcy attorneys. And so a really interesting, very interesting year for both companies. But as 2020 was sort of nearing an end, 2021 was coming around, we were sort of heading both companies towards an acquisition. With Hire Me though, and that's kind of the main part of the story,

We had been having some strategic talks throughout 2020 with a company we had partnered with. They were maybe interested in building out or acquiring what we did — the hiring side. And we just couldn't quite get there on terms. We got there more or less on high‑level price, but the fine print was not maybe something we could agree on. And then out of the blue, we saw a post on the Y Combinator forum from another founder who had basically raised a search fund behind her. And I've been passingly familiar with search funds from my MBA days, but essentially they are, for those listeners that don't know, a vehicle that was originally primarily intended for recent MBA grads to go out and acquire a company. Technically private equity money that would back these often young entrepreneurs in going out and acquiring a company. Historically, they've been really heavy in manufacturing, construction — sort of these old‑school businesses, often with a retiring founder that started them and has been at it for 20 or 30 years. So we were a bit of a weird search deal. We were tech, we had no EBITDA, right? Like we were building specifically to break even and grow as fast as possible, but with break‑even cash flow. I was obviously not a retiring baby boomer entrepreneur, but it kind of sort of all made sense for all involved.

And so it's funny after months of back and forth with the strategic, our buyer on the search‑fund side — we got to an LOI in like 72 hours. Met on Friday, LOI signed on Monday. And little did I know like the diligence actually is quite heavy after that. And so it was a good five, six months of diligence before we were actually able to execute the deal. That involved actually driving Derek and myself and our buyer, and we met in — just based on where everybody lives — it made sense to meet in upstate New York. So we met at this empty Syracuse, New York hotel in the heart of the second wave of COVID. We were the only ones there, but we felt it was important to meet in person and sort of develop a relationship there. And so months of diligence, lots of very, very heavy, heavy lifting there, but we were able to pull off the transaction in June of 2021. And it was life‑changing. It really was. It was low 8‑figures.

Certainly not even a triple or a home run — arguably not even maybe a double for our investors — but it was life‑changing money for me. It was life‑changing money for Derek and the rest of the team. And in hindsight, I'm sure we'll get into this in more detail, but revenue kept growing, right? Like they were able to get up to six, seven million in ARR after we were able to exit. And you sort of second‑guess yourself, like, did I get out — like, was that the right decision to sell?

But I think for me, I went bankrupt 10 years prior. And at the time of the sale, my son was just turning one, my daughter was just turning four. And it was kind of like, this is enough money that I don't really ever need to worry too much anymore. And yeah, maybe there's a 90% chance, 80% chance I could get twice as much in two or three years. But that didn't compute for me. Subjectively, the 100% chance at half of that had more value to me than perhaps the true objective value of where things were headed. So it was the right call. It was the right call in hindsight.

Jason Kirby: That's the thing is like, you know from the buyer's perspective like this is what makes a deal get done is — sure, there's a limit, you know, especially from someone on the outside on the sidelines saying why'd you leave money on the table? It's like you weren't in my shoes. You didn't know that I have two kids and I've been grinding for years, had a bankruptcy — all these different things about your life that shape it to where saying yes to a deal now is exponentially more valuable than the unknown deal value down the road that could be better or could not be better. And I'm glad you kind of share that personal perspective and journey of what led you to that decision and saying yes to the deal. And now that you have gone through that process, you have created this exit opportunity. You've also had the other company Reset which you rebranded and repurposed.

Walk us through how you structured that deal. Cause that one's a little bit different.

Rob Hunter: Yeah, so with Reset Button rebranded to Lexrea, we had this beautiful product, right? And the value prop basically is all these attorneys — everything is so manual when you take in a client. And so you're having to go in and like fax pay stubs back and forth and like get their tax returns. It's like all this very manual effort to gather the documentation needed to actually like declare bankruptcy. And so we were able to automate that. We had a bunch of hooks and APIs that would pull pay stubs automatically, that would pull tax returns, would sort of get all the documents automatically, which improves conversion rate and sort of makes it easier to onboard, saves the attorneys a ton of time. So problem was we were basically running out of money by the time we figured that out. And yes, it was 2021 and things were frothy and we probably could have pulled off like a 2.0 fundraise just on that as an idea. But I gotta be honest, our hearts weren't in it.

We had set out to change the world and solve student debt. And the idea of SaaS for lawyers — it wasn't really getting us out of bed anymore. Now, we had gotten to something like $50,000 in revenue or something, fairly small, but basically said, okay, if we were to sell this, I don't know, best‑case scenario, we might've gotten a few hundred thousand for it. The VCs involved would've taken 10 cents, 15 cents on the dollar, we would've gotten nothing. It just — it didn't strike me as the right move, given that the business actually has some long‑term potential if someone's prepared to grind it out. And so we were able to find another group of YC founders that actually were excited about the product and had been dabbling in a few different ideas, were wanting to do something. But the idea of basically kind of skipping the zero‑to‑one phase was very compelling to them because we had a product and we had revenue for the product and we had a buyer for that product. And like there was something here that just needed to be properly exploited and again, like, grind it out for a few years. And so we basically cut a deal with those guys where they took over the business and we hold equity in whatever they're ultimately able to do with it. And I think that's just a better outcome for us, a better outcome for our investors and a really, really good sort of asset for them to take over without needing to come up with any cash, right? And so that was just a very clean, easy way to give a soft landing to this product that has a great deal of potential. And they've done great with it since. So excited to see where it ultimately goes, but it was very much the inspiration along with the Hire Me sale for what we're up to now.

Jason Kirby: So now that we've kind of gone through your personal experience of doing these types of deals as the founder, let's talk a little bit about what you're doing at Speaker Ventures. And I would like to kind of spend the rest of the conversation kind of demystifying what these acquisitions look like from a founder perspective, especially a first‑time founder that's never sold a company. Like what does it actually look like for them to go through a deal like this in terms of, you know, lawyers and transactions and setting up a deal and timelines and all that kind of stuff.

Rob Hunter: Absolutely, and I will say we really try and aim to be — and I know everybody says this in every context — but we try to be as founder friendly on the buy side as we possibly can be. But I do think one element that might surprise folks is unless this is some crazy, insanely hot space and you've got Zuckerberg saying we need to get Instagram tomorrow — unless it's truly like a unicorn outcome in terms of — not in terms of dollars, but in terms of like one‑in‑a‑million buy‑side strategic needs this asset yesterday — if it's not that, the amount of diligence and the amount of data that needs to get shared is significantly, significantly 10×, 100× more than what's involved in a fundraise. And so I think when companies like this get acquired, VCs when they invest are all about upside maximization. Downside protection is not quite as critical, right? And so you can get to a point where you're excited about where this could go without a lot of data. But when we're acquiring a company and when private equity is coming in, when most companies are getting acquired, part of the calculus is like, how can this go wrong? What could make this not work? And let's uncover every stone, let's dig every needle out of every haystack to figure out like what could make this go wrong. And so there's just a ton of data that needs to be shared. The other piece too is that our financials — I had been doing everything myself, right? And I got an MBA, yay for me, right? But the complexity of cash versus accrual, of net churn versus gross churn versus retention versus — like there were so many metrics that in hindsight we probably could have built a little bit sturdier. We could have built the house with bricks rather than with sticks, I suppose, or whatever the third pig used — stone — in terms of just data structure and sort of level of detail in both pure financial but also just business data.

So a lot of that is needed. The other thing I'll say that has been a little amusing for me as I deal with founders is like all the FOMO shit that works with VCs, like just unfortunately doesn't really work here. You know, we've had people say like, I can sell like if you can wire the money in 30 days. It's like, it just doesn't work like that on the M&A side.

Jason Kirby: Thank you.

Rob Hunter: Even the lawyer piece is gonna be heavy there. And that's the other piece of this too, like for better or for worse is attorneys — you can run up a bill very, very, very heavily and very quickly that by the way typically has to be paid like even if the company doesn't sell. And so be mindful of that, right? It is a little bit of a dance of like how much to lean into this and how much not to. The best way to go into it as a founder though, and I think we very much had this with Hire Me, like leverage is the name of the game. If you're growing fast enough that life is fine if this deal doesn't happen, it's okay. And if your lawyers can't agree on something, then okay, like we'll just not sell, right? You sort of hold the cards in that situation. We were fortunate, we dealt with a firm in Buffalo, New York that we just really trusted. And Buffalo, as you can imagine, has cheaper lawyers than Boston or San Francisco. And so like we ended up not too bad, you know, coming out of that. The other thing to...

Jason Kirby: Well, my number one advice to founders when it comes to managing your lawyer is never let your lawyer talk to their lawyer. That I think is one of the most costly things, especially because in some deals, they make the, you know, like the buyer will make the seller pay both legal fees — you know, they call it the transaction — out of the proceeds. And you don't want two lawyers talking to each other, justifying why they need to talk to each other to rack up that hourly bill. So always build a relationship with the buyer and hash out the actual business terms with the buyer, the person leading the deal, and then tell your lawyers what to do. And so many people get caught up and like, let the lawyers figure it out. And they're like, yeah, 100K later. It's a pretty costly mistake.

Rob Hunter: Yeah.

Jason Kirby: So something that I'm not sure if that happened to you, but that's always something that I always advise founders to pay attention to, especially in early days when your deals are small, you know, seven, eight figures.

Rob Hunter: Build that relationship with the other party as best you can to hash this stuff out. And then the other thing I'd say is just have realistic expectations. I can remember we were talking with an AI tangential company, and I think founders hear — like I get a 10×, 20×, 30× multiple when I fundraise, and so therefore I should expect that when I sell. And it's like, well, no, guys — if the reason a VC is paying 20× on the valuation is because they also have the downside protection. In other words, if you're raising $5 million and your company is only worth $5 million, there's not as much risk. And obviously, if you're able to keep growing 100%, then maybe you grow into it one day. But a SaaS business growing 30, 40, 50% a year to a financial buyer is worth — there's a lot of things that go into this — but two, three, four, five, six × revenue tops, right? Any more than that is just not — like the math on earning a return from it just doesn't really compute. Granted, everything's possible with strategic, right? And you get some crazy stuff going on here and there. And I imagine AI will accelerate some of that. But I do think having some realistic expectations is important. And the other one that goes along with that — and it actually ties to the legal piece a little bit — is probably you're not gonna see every dollar of cash upfront. And if you are, you might not be optimizing for how much you could get out of the deal. So like with the Hire Me transaction, with some of the deals we do, there is this component of like a seller note where, you know, 10, 15, 20, maybe 30% of the transaction isn't paid in cash upfront. Perhaps it's an earn‑out, perhaps it's just a formal note. From our side, one of the reasons we do seller notes, frankly, is to mitigate the legal side.

We could have the lawyers talk and we could have the lawyers go deep on every number and every piece of data that's ever existed. And we could drop $500,000 on legal. But it doesn't make sense to drop $500,000 on legal on a $5 million or $10 million deal. And so if the buyer owes the seller $500,000 or a million, and — God forbid — there be some fraudulent landmine that was not uncovered, the seller note sort of allows for that leverage and allows for us to not have to spend that money on legal on the buy side. So don't go in expecting pure cash for all of it. Deals get done because of creativity. And there are a lot of different ways to structure the transaction.

Jason Kirby: Yeah. And I think that's something to kind of really expose founders to — just come in with an open mind, come in with really what's your North Star of the transaction. Like what is it that's ultimately most important to you as a founder when considering an exit? What are your obligations to your investors and shareholders and your team? And working with the buyer — again, building a relationship and making sure that you can create a win‑win situation for all parties involved, knowing that...

Yeah, getting 100% cash upfront is very rare unless you're high growth. There's always some kind of escrow or some kind of holdback for some reason, shape or form to protect the buyer in some capacity. So coming in with that expectation is I think crucial for a successful negotiation. Cause yeah, you hit it all too on the valuation aspect. So many founders like, well, VC paid, you know, $30 million valuation. That's what we should sell for. And I'm like, no — you're not worth that much now to buy. That's for sure.

Rob Hunter: Well, and I think we want to move founders away from this idea of like zero‑sum game purely on price being the only lever, right? Build that relationship with your buyer, have conversations about what you actually want and what you actually value. And there are so many different levers you can plug and pull and tweak and shove to come up with something that actually finds value and finds alignment on: well, okay, I think this is actually gonna go really well. And so if it does, then maybe an earn‑out is a component of it. Or I have some concerns about the viability of this specific — I don't know — channel partner. And so we can tie a portion of the compensation of the deal to the further existence of that channel partner. I want to still hold equity. Okay, well, that's possible. You want it to be preferred equity where the principal is guaranteed? You want it to be common equity where the upside is perhaps [higher]? Like there are literally an infinite number of different things you can negotiate aside from just the sticker price of the deal. And the other thing to mention — and this is kind of back to basics a little bit — but if you can believe it, Jason, I have the odd founder where they've raised, you know, $2 million on a $12 million cap SAFE and they think, well, if I sell for $5 million, then my investors get 16 and 2/3 percent of the $5 million.

It's like, no, guys — your investors have liquidation preferences and they get their money back first before you get anything. And maybe in the frothy 2021 days, you could say, well, guys, do you mind taking a haircut on this so I can get some? Like, that's a lot less possible now when things are so tight and sort of every dollar of capital deployed matters in terms of the return these guys make. Be mindful of that. Be mindful of that when you raise.

I have seen so many founders that went through YC with us build great businesses that probably could have been sold for five or $10 million, but they raised five or $10 million and spent five or $10 million to do it and are now in a position where their equity is basically like a mortgage underwater. It was my ice cream stores all over again. So being really mindful. One thing we did that was helpful, just to back it up a little bit, was — I called it Outcomes. It was my Excel sheet.

And literally every couple of months, I would say, okay, revenue multiple — here's what happens if we sell for 5 million, 10 million, 15, 20, 25, 30 — and here's debt and here's equity and here's investors and here's who converts and here's who doesn't. And it was this rather detailed waterfall‑like statement knowing that — and it honestly like, I think was a bit of a motivator for us of like breaking down this big goal. Like, we want to get acquired for eight figures. Okay, well, how do we get acquired for eight figures? We get to revenue of three, four million, okay? And then the multiple is this, right? Like that was a very helpful exercise because it's very daunting to say, well, how do I go get acquired for eight figures? It's a lot more digestible to say, okay, if I add $5,000 of MRR — like I have for the last six months — if I keep doing that for three years, then eventually we get to a level where this multiple is sort of more inevitable, right? And so that can be distracting, right? You can be sort of like thinking too small, if you are venture backed, if that's where you go. But I don't know. Personally, I found that stuff pretty valuable.

Jason Kirby: Yeah, I would agree. And as we come to a close here on the episode, what would be some of the parting advice — you've already touched on a lot of tips — what would be some of the parting advice for a founder that is sitting at that point, maybe where you were at, at Hire Me, where you're growing, you're just not growing fast enough to attract what you know as far as capital options and venture. What should they consider? How should they start evaluating and reflecting on their situation?

Rob Hunter: Yeah, I mean, so a few things. Number one, I'd love it if they gave us a call, right? If they ultimately decide, you know, that they want to get off the train. We acquire and operate what we call VC detox companies. So if you've raised venture but aren't necessarily feeling like you're up for the next three, four or five years of the journey, we'd love to have a chat. But I think the subtext of that though is determine what you want out of your entrepreneurial journey. And you get to define what success looks like.

I would imagine like a lot of — frankly, our investors from Hire Me probably like — I mean, it was not a failure, but it was, you know, 1×, 1.5×, 2× for some of them. You as the entrepreneur though get to figure out like, is a few million dollars in the bank — like is that success? I mean, I think for a lot of people it actually is. So being aware of like, there are other options than shutdown, there are other options than acquihire, there are other options than IPO, right?

And just because everybody drinks the Kool‑Aid of like raise, raise, raise — acquire, acquire, acquire — IPO, IPO, IPO — there are so many other great transactions that can happen that don't get the headlines and don't get the press. And so we don't hear about them, we don't talk about them, but in fact are actually much more common. So figure out what you want. I would imagine too — just to be kind of blunt about it — like your age plays a bit of a factor. I don't know if I could do the Hire Me journey again with young kids and with a sort of higher standard of living that contributes to burn, right? Like I think you need to ask yourself the hard questions of like, what do I want to be doing with my time? And what is the opportunity cost of sticking around, right? I'll be honest, Reset Button did not work out, but I would be sitting here, had I not done that, thinking, man, like, what if somebody ever did this, right? Like what would happen? So,

I think a lot of it is just looking at your situation, figuring out what other irons you could throw in the fire. And then honestly, some good self‑reflection of like, am I the best person to be doing the next phase of this company's life? We see a lot of founders that are brilliant technical people, brilliant sort of product folks. And that can be a really effective way to launch and a really effective way to get your product out there. But if you're not like building a sales machine, that's often what is needed, like 80, 90% of the time. Most products cannot scale to millions of dollars in revenue purely on product‑led growth. You need to like actually build up a sales engine underneath this. And maybe that right operator, that right CEO is not you. And maybe there is always a world where you can go and find somebody that can do that. And by the way, maybe there's a world — like sort of there was for me with Derek coming on board — where getting the right person in place actually can contribute to better economics for you. So maybe there's some cash now, some more upside later. There's a lot of different — there's a lot more paths open, I think, than folks realize.

Jason Kirby: Well, I think that's amazing parting advice for our audience today. And for those of you that might be in that situation or maybe want to talk to Rob about your situation, by all means reach out to him. We'll put his contact information and where to find him on LinkedIn. And actually where can people find you, Rob? What would be the best way for people to reach out?

Rob Hunter: Yeah, LinkedIn's probably best. I'm just rob at speakerventures.com. I will point out, Jason, we're not like — there's no reason to be pushy — we're not pushy at all. I just love these conversations. I do some teaching here and there. And so I kind of count this as part of my teaching at the schools. And so all this to say, if you're in this position and you think you probably don't want to sell, reach out anyway. Love to have a conversation on like, what are your financing options? I can talk about venture debt, which was another thing we tapped into. Love to just jam on what your options are. And if we're not one of them, that's totally cool. Still love to chat and talk about where things can go.

Jason Kirby: Perfect. Very well said. Appreciate you sharing that with everyone. We'll be sure to include the contact information in the description below. And Rob, this was an amazing conversation. I hope founders have taken a lot from it and hopefully you'll get some people reaching out once this goes live.

Rob Hunter: Awesome, thanks Jason. Appreciate the time and it was fun to share the story.

Jason Kirby: I appreciate it. Thank you. All right.