Q&A with both buyer and seller of a 6 figure web app. Ask us anything

Hi HN!

kareemm and derrickreimer here.

I (Kareem) was part of a partnership that bought Codetree in June from Derrick for six figures. Codetree is a project management tool for GitHub issues.

We haven't seen anybody fully open up the kimono around an acquisition like this before, so we're going to try something we've never seen: we're both happy to answer any questions you have to demystify the process around buying a business like this.

Here are some things you might want to ask about:

- specific numbers

- the mechanics of buying a business

- our psychology during the negotiation

- why we chose this business

- how we found it

- deal terms

- the risks of buying a business

- etc

Some more context

Here are some things we (the buyers) have done before buying Codetree:

- We've built products at places like ESPN, Microsoft (via acquisition), and MySpace (back when it was bigger than Facebook!)

- We've led product and dev to help Chimp.net grow from an inkling in the founder's eye to more than $150M in donations to charity.

- We've bootstrapped four successful SaaS businesses, sold one of them, and folded two others

- We've started one venture-funded company, an online marketplace that was sold in 2010

- We've run product and dev teams at two venture-funded companies

- Combined, the three of us have been writing software professionally for 45 years

After a year of figuring out what the next business was that we wanted to start and/or run, we ended up buying Codetree.

Derrick has also been pretty busy: just after selling Codetree to us, he sold Drip - an email marketing company he co-founded - to LeadPages. Two acquisitions inside of a month!

It's 10a PT and we'll be around for an hour or so.

Ask away!

EDIT 1110a: Wrapping up. Not a ton of questions but thanks for the ones you fired over, HN!

Good q, thanks!

> There are a ton of project management tools out there, why buy Codetree? Was there something specific about the business that stood out to you?

We believe that in big markets like project management there's lots of room for many successful companies (depending on your definition of success). We know and like the issue tracking space since my partners and I have been devs for 15y each.

But why Codetree? Because it was available, is a good product, and was the right price :) It's hard to find the intersection of those things and we looked at different businesses for about a year.

> I imagine when you buy a business you believe there are things you can do that will increase the value of the business. What are the top things you think you'll be able to do that were not already being done?

Ultimately the goal is to help software teams make and ship better software. Right now the things we're focusing on are:

1. Talk to customers and improve the product. A good product matters, especially with developer tools.

2. Build out new marketing channels. Without new signups, it doesn't matter how good our product is :)

Good question! I felt really good about the prospect of selling to Kareem and the partners after our initial conversation. It seemed like a really good fit. Probably the point of highest doubt for me was after receiving the first offer. I was able to stay pretty logical about things, but I was definitely concerned we would not be able to bridge the initial gap. Having David from FE International as an advisor was key to keeping me level-headed. After we agreed on a price, I was pretty confident we would close.

In this type of transaction both parties end up achieving their goal going into things. The seller wants to sell, and the buyer wants to buy. Both parties likely disagree with the potential of the product.

With that in mind, a question for the buyer - What do you understand about the business that the seller doesn't that makes this seem worth while? And for the seller - What aspect of the business makes it a target for sale rather than growth?

The bottom line for me was time and focus. If I had more hours in the day, I would have kept Codetree and grown it. My other business Drip was experiencing crazy growth and Codetree had always been a side business, taking the back seat to the needs of Drip. At the time of sale, I had at least 50 different feature ideas/growth opportunities written down but very little time to implement them. Rather than watch the product slowly fade away, the next best outcome for me was to see someone else realize that potential.