Podcast appearances and mentions of David Newell

In these messages, Pastor's Zach David, David Newell, and Trenton Cruse take a look at the Garden of Gethsemane, the illegal trial, and the crucifixion of Jesus.

It's almost as much of a Christmas tradition as mummering or Figgy Duff - The Ennis Sisters are touring the province with a collection of seasonal tunes and recitations. Newfoundland Morning's David Newell spoke to Teresa Ennis before their Grand Falls-Windsor shows earlier this week.

In this message, Pastor David Newell discusses the prophetic word given by Pastor Aaron Michael during Cross Connection 2024.

In this episode, you will explore the first step in moving your organization toward being a generous community partner.Our special "neighbor" in this episode is David Newell best known for his beloved role as Mr. McFeely on Mister Rogers' Neighborhood. With a career spanning over three decades on the show, Mr. Newell became an enduring symbol of kindness and community for generations of viewers. Beyond his on-screen role, he dedicated his career to Family Communications, Inc. (now Fred Rogers Productions), where he served as Director of Public Relations, working tirelessly to extend Fred Rogers' message of compassion, learning, and neighborliness.Generosity At Work is produced by Jackson Healthcare's LoveLifts community impact platform. It is free resource for business leaders and organizations seeking to be a force for good in the world. Learn more about Jackson Healthcare. 

Pastors Bret Hileman, David Newell, and Trenton Cruse all gave words at Good Friday 2024. This is a compilation of those words, including a word given by Pastor Trenton Cruse on July 3.

Join DJ Bob this week for a conversation with David Newell! David is best known for his portrayal of Mr. McFeely on Mister Rogers' Neighborhood. He and Bob talk about diversity in children's programming, disability inclusion, Fred Rogers' inspirations for the show, and so much more!

This week, Shayne  and David Newell share the story of their 25th anniversary vow renewal ceremony at Sea Breeze Point, with a reception at Rue de Paris and portrait sessions inside Magic Kingdom and EPCOT! You'll hear how they picked a different date for the event and why they chose to hire their own day-of coordinator even for such a small gathering. Plus they share what it was like to have Disney Uninvited Guests in lieu of traditional entertainment, and how food items like donuts flambée and Disney's cake ball machine served as entertainment too! Click here to see ALL the photos!

The big move out of Corner Brook's "old" Western Memorial Regional Hospital continues this week. For many patients and staff, it is likely a welcome change to get into a brand-new building. But, for some long-term care patients and their families, it's a major cause for concern. Eddie Joyce is the Independent member of the House of Assembly for Humber - Bay of Islands, and he spoke with the CBC's David Newell.

A Newfoundland woman is not pleased with the lack of accommodations available for her pet rescue dog on a Marine Atlantic ferry in late March. Danielle Irvine of St. John's set out to drive to Montreal, and she took her mild-mannered, seventy-five-pound husky/retriever mix, Whylie Coyote, in the car. The dog had experienced a lot of trauma before Irvine adopted him. He is still overly anxious and needs medication to calm him on long drives. Their trip to the mainland hit a roadblock once they finally left Port Aux Basques on the ferry. Irvine spoke with CBC producer David Newell. We also spoke with Marine Atlantic spokesperson Darrell Mercer.

A new episode from a popular online docu-series called "Canadiana" focuses on the strange, true story of -- get this -- a WHALE heist that happened back in the 1500s, around Red Bay, Labrador. Ashley Brook is a producer with Canadiana, and she spoke with Newfoundland Morning's David Newell.

There were a lot of smiling faces and some sad goodbyes in Gander on Saturday, as the 2024 Newfoundland and Labrador Winter Games came to a close. About 12-hundred athletes, coaches and officials took part in the week-long event. CBC's David Newell brought us some of the voices and sounds from the show.

Last week was an exciting one for young athletes across the province, as Gander hosted the Newfoundland and Labrador Winter Games. Not only was it the first Winter Games since the pandemic, it was only the second one ever for Team Indigenous. Port au Port's Candice Simon was the manager with the Team Indigenous female hockey team. Keira Evans-Rice of Makkovik and Lacie Bennett of St. George's played on the team. The CBC's David Newell spoke with them before they hit the ice Friday afternoon.

It was a homeowner's worst fear realized on Saturday in Conche when a woman ran out to do an errand and returned to her home, and her possessions burned to the ground. Glenn Symmonds is the Chief of the Conche Volunteer Fire Department. He spoke to Morning Show producer David Newell.

If you ask your children about school, they might tell you it stinks. They don't mean it literally, of course, but Hope MacDonald's children mean it. MacDonald has two children attending E.A. Butler All Grade School at McKay's, in Bay St. George South. She says sewer backups and the odours that come with them are a major concern. MacDonald spoke last week with CBC producer David Newell.

In this message, Pastor David Newell talks about how we can expect push back as we move into 2024 and beyond.

In this message, Pastor David Newell discusses the Great Commission, and its importance.

In this message, our newly ordained Congregational Care Pastor, David Newell, talks about Matthew 16, when Jesus asked his disciples the question, "Who do you say that I am?".

In today's episode of Jake's Happy Nostalgia Show, we're very honored to be joined by the one and only, David Newell! David is best known for portraying the beloved "speedy delivery" man Mr. McFeely in the long-running PBS series Mister Rogers' Neighborhood. Join us as we hear stories about Fred Rogers himself, how the series dealt with serious topics, various appearances David's done as Mr. McFeely and tons more! Speedy delivery!

For anyone who lives in Gander, it's not unusual to see people in uniform. Dozens of members of the Canadian Armed Forces live and work in town. This summer, the base at Nine Wing Gander got a new commanding officer. CBC producer David Newell met Lt. Col. Rhea MacLean last week.

David Newell is an American actor and public relations specialist for children's television. He is best known for his portrayal of delivery man Mr. McFeely on the beloved children's TV show Mr. Rogers' Neighborhood. However, there is much more to this enigmatic man than that. This is what you need to know about him. Podcast Notes: https://ancestralfindings.com/david-newell-mister-rogers-neighbor  

This is one of the best times of the year for hunters in this province, as moose hunters are hoping for a successful season in the woods, Many have already been out a couple of times in pursuit of a trophy animal. But for one man visiting from Ontario, his hunting trip was over almost as soon as it began. Art Jameson spoke to the CBC's David Newell.

In this message, David Newell discusses how Next Level Freedom Church is like a Daniel Church; and just what he means by that.

In this message, David Newell discusses his life verse; 2 Chronicles 7:14.

In our climactic ending, the film crew grapples with their final assignment involving a double-decker bus in the heart of a bustling public square. Confronted with the critical choice between subverting their plan for the greater good or playing into the Minister's hand, which path will they choose? Come navigate the intrigue, fear, and deception of our last act. (Part 3 of 3)**Add our Patreon Feed to your Podcast App**https://open.acast.com/public/patreon/fanSubscribe/3607115This series is not suitable for listeners under the age of 18 and may contain material some people find disturbing.CONTENT WARNINGS:Auto Accidents, Body Horror, Gaslighting Mass Killing, Politics, Profanity, ViolencePlayer CharactersScott Dorward as Keeper of Arcane LoreRoss Bryant as AdrianNic Rosenberg as RizGraham Walmsley as Bencuppycup as KirbyProduction and CreativeGame Rules and Setting: Call of Cthulhu 7e by Chaosium, Inc.Edited by Scott Dorward and cuppycupTranscriptions: Sabrina Haenze and Sonix.aiPatreon Ideas we used in the story: "Falling from a power pole into a shark tank and then the power pole falls into the shark tank so you get bitten by a shark and then electrocuted to death." by Ethan J, "fell off a roof, on to a make shift seesaw, only to be killed by the concrete to launched in the air." by Drew M, "Trying to achieve immortality (perhaps with a pencil)" by Caolán, "Dehydration from drinking too much tea" by David Newell, "Forgetting to breathe" by Alex, "Using someone's fabric scissors and them finding out about it (iykyk)" by mmm0rphine, A "classic: piano falls on you but that doesn't kill you, you step aside and skip in a banana peel and break your neck on the stairs." by TanyaLashea, "Get stuck on an inversion table." by Grondel, "Making the safe word “wolf” and only pronouncing woof" and "Red telephone box" by Steven Horne, " Riz Gukgak from fantasy high because he's nifty and cute" by Max D, "Kirby, eat cake by day kill god by night" by Tomboi LaCroix, "Loki goddess of mischief" by Drew M and Coffey, "Tea as a cure for everything" and other team themed suggestions by Deanna B, Firecop890, and Coffey.Patreon ShoutoutAlthalos, Anthony D., Caolán M., Drew M., E.M.F.D., Heather P., India thank you terror, Kevin M., Killius Manjaro, Lancey Pants, Matthew C., Mikah S., Steven H., Tomboi LaCroix, ai.mmm0rphine, Call Me Dirt, Dan F., firecop890, Jeff F., Jessen, Mario S., Michael H., Nathanael C., Not That NicNew PatronsMeredith M., Nathan F, Oystein of the North, 0xbcd, James B., Merrick Hosted on Acast. See acast.com/privacy for more information.

Our next story memorializes a man many of you may have come across. Peter Pickersgill's political cartoons and illustrations appeared in countless newspapers, including the Toronto Star, The Ottawa Citizen, Le Devoir and community papers across this province. Pickersgill was also a commentator on CBC's The Sunday Edition and Fisheries Broadcast...and he had a special dedication to outport Newfoundland - especially his beloved Salvage. Peter Pickersgill passed away earlier this week. Jeff Mierins was a good friend and associate of Peter's, and h spoke with Newfoundland Morning's David Newell.

Shanawdithit, the last-known of the Indigenous Beothuk people from Newfoundland, was only about 28 years old when she died in St. John's in 1829. Now, students at the College of the North Atlantic's Digital Filmmaking program in Stephenville are getting ready to tell her tragic story...and they want actors to help them do it. The film is called "The Last Beothuk." Auditions will begin soon, and filming will start in late May. Peter Buckle is an instructor with the program, and the CBC's David Newell reached him in Stephenville.

This podcast is made possible by our beloved MaxFun Members and is part of the annual #MaxFunDrive! To find out how you can contribute to the show and earn great gifts for as little as $5 a month go to Maximumfun.org/join. Plus, listen to find out how YOU could be a guest on Go Fact Yourself!And… Join Helen & J. Keith on Twitter for an “Ask Us Anything” on Wednesday, March 29 at 1pm PT (4pm ET). @gofactyourpod It's a beautiful day in the #MaxFunDrive – The latest edition of Go Fact Yourself!Get ready for the conclusion of our first-ever Listener Tournament, welcoming our two finalists to this special episode of the podcast.Lyn Fortman learned a lot about herself during the pandemic. After a great deal of introspection, she discovered more about her gender identity, that she's happy to share in the hopes that it helps others along their journey. Lyn will tell us about her career as a corporate recruiter and why she's proud to advocate for colon cancer screenings.Patrick Parker considers himself an all-purpose blerd (a portmanteau of “Black nerd”). If there's something to be nerdy about– from comics, to RPGs, to pro-wrestling and more, chances are that he's at least dabbled. Patrick will explain his goal to achieve his masters in social work, and why he so enjoys being a stay-at-home dad.Our guests will answer trivia questions about funny families and notable neighbors.Areas of ExpertiseLyn: The Crossfit Games, the comic strip For Better or For Worse, and Jimmy Pardo's Never Not Funny podcast (seasons 14 to current).Patrick: The movie A Christmas Story, Black superheroes from Marvel Comics, and the TV show “Mister Rogers' Neighborhood.”What's the Difference: Minute MaidWhat's the difference between being the adjectives “minute” and “miniature”?What's the difference between a housekeeper and a cleaning person?Appearing in this episode:J. Keith van StraatenHelen HongLyn FortmanPatrick ParkerWith Guest ExpertsLynn Johnston: creator of the comic For Better or For Worse.David Newell: actor best known for his role as Mr. McFeely on “Mister Rogers' Neighborhood.”Theme Song by Jonathan Green.Live show engineer is Dave McKeever.Maximum Fun's Senior Producer is Laura Swisher.Associate Producer and Editor is Julian Burrell.Seeing our upcoming live shows in LA by YOU!

My guest is best known for playing Mr. McFeely the delivery man on television's classic “Mr. Rogers' Neighborhood.” We discuss his career, his experiences on the show, the value of this type of programming, and much more.

Judge David Newell from the Texas Court of Criminal Appeals joins hosts Garrett Farrel and Emma Catlett to discuss his time on the Court. Judge Newell discusses his time as an appellate prosecutor, his journey to the court, and much more. Judge Newell also discusses the Oral Arguments that will be held at Baylor Law School on Thursday March 23. For more information about the cases that will be argued at Baylor Law, please click on the link: https://www.txcourts.gov/media/1455887/3-23-23.pdf

The frequent closure of the emergency room in Bonavista has caused many people in need of urgent care to travel to Clarenville for treatment. Town officials and concerned citizens have been lobbying for a solution to the closures - and now there is some encouraging news about that facility. John Norman is the mayor of Bonavista, and he spoke with CBC producer David Newell.

Judge David Newell is currently serving his second elected term on the Texas Court of Criminal Appeals. He was born in Bethesda, Maryland and studied to be a writer, earning a degree in English with Honors from the University of Houston. After a friend was attacked, he began volunteering at the Houston Area Women's Center, which led to his decision to pivot careers and go to law school. He served with the Fort Bend and Harris County District Attorney's Offices before running to be a judge on the Court of Criminal Appeals. David and his wife live in Houston, Texas with their two sons.

This podcast will wake up some TV memories. If you grew up in the 60s and 70s you'll remember the famous catchphrase “speedy delivery.” It was used by the postman on “Mister Rogers' Neighborhood.” David Newell played the part of Mr. McFeely. He was originally in the public relations department for the program and was then cast as Mr. McFeely. The name was Fred Rogers' middle name, taken from his mother's maiden name. David and Fred became lifelong friends. Newell toured the country promoting “Mister Rogers' Neighborhood” until he retired in 2015. In this podcast David talks about a Mr. Rogers' Christmas program that caused some controversy.

Students in the theatre program at Grenfell Campus, Memorial University, are performing Henrik Ibsen's "Hedda Gabler" this week. CBC's David Newell spoke to the show's director, Grenfell associate professor Michael Waller, about the production.

CBC's David Newell gets an update about Pride celebrations this week in Gander, with two excited but weary organizers.

In September of 1943, Gander air base was home to a squadron of B-24 Liberator bombers. The planes were meant to defend the east coast of Canada from U-Boats and other wartime threats. On a routine test flight on September 4, 1943, Wing Commander J.M. Young lost control of the bomber and plunged directly into Gander Lake, where the plane has rested ever since. This year, ocean hydrographer Kirk Regular of the Marine Institute was working on the lake when he decided to look for the B-24. He spoke with CBC's David Newell.

On this episode of Buddycast, our good buddy David Newell aka Mr. McFeely returns to Buddycast to discuss 1-4-3 Day. Hear all about Mr. McFeely's wisdom right here on Buddycast! #gobesomeonesbuddy --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app Support this podcast: https://anchor.fm/nick-sorensen/support

Mister Rogers, Now More Than Ever with guest Dennis Scott   Amazon Associate Link Ask anyone and they'll tell you, “We need Mister Rogers more than ever.” This audio collection features interviews with fans, friends, and colleagues whose lives were changed by the simple wisdom and kindness of Fred Rogers. For the first time you'll hear both celebrities and everyday people tell their stories of how Mister Rogers affected them and, in some cases, even saved their lives. As incredible as it may sound, Fred Rogers personally answered every letter he received. Hearing his words read aloud and the heartfelt gratitude from people who experienced his kindness firsthand make this a one-of-a-kind audio presentation. Hosted by beloved TV personality Tom Bergeron, it will touch you and help you believe, as Fred Rogers did, that all of us are special. This spoken word collection includes special appearances by Kellie Pickler, The Cowsills, Lee Greenwood, Jim Brickman and Marilyn McCoo and Billy Davis, Jr. It's seventy-two minutes of fun and memories. It also includes a rare interview with David Newell, the "Speedy Delivery" Man from Mister Rogers' Neighborhood Produced by our guest on this special episode, two time Grammy and Emmy winner, Dennis Scott     Young Dennis Scott at the Concord   Thank You Mister Rogers Web Site https://thankyoumisterrogers.com/   Thank you for joining us here this week in the neighborhood. Music featured on podcast was Stay by Rick Lee James Special Thanks to my guest Dennis Scott and The @MisterRogersSay Community on Twitter. Our Substack page is https://rickleejames.substack.com/s/welcome-to-the-neighborhood-a-mister. Our Instagram page is https://www.instagram.com/misterrogerssay/ I'm your host Rick Lee James. My Twitter account is @RickLeeJames, my web site is RickLeeJames.com, My other Podcast is Voices In My Head (The Rick Lee James Podcast), and I look forward being with you again next time. Until Then: You make each day a special day. You know how, by just your being you. There's only one person in this whole world like you. And people can like you exactly as you are.

Mister Rogers, Now More Than Ever with guest Dennis ScottAsk anyone and they'll tell you, “We need Mister Rogers more than ever.” This audio collection features interviews with fans, friends, and colleagues whose lives were changed by the simple wisdom and kindness of Fred Rogers. For the first time you'll hear both celebrities and everyday people tell their stories of how Mister Rogers affected them and, in some cases, even saved their lives.As incredible as it may sound, Fred Rogers personally answered every letter he received. Hearing his words read aloud and the heartfelt gratitude from people who experienced his kindness firsthand make this a one-of-a-kind audio presentation. Hosted by beloved TV personality Tom Bergeron, it will touch you and help you believe, as Fred Rogers did, that all of us are special.This spoken word collection includes special appearances by Kellie Pickler, The Cowsills, Lee Greenwood, Jim Brickman and Marilyn McCoo and Billy Davis, Jr. It's seventy-two minutes of fun and memories. It also includes a rare interview with David Newell, the "Speedy Delivery" Man from Mister Rogers' NeighborhoodProduced by our guest on this special episode, two time Grammy and Emmy winner, Dennis ScottThank You Mister Rogers Web Sitehttps://thankyoumisterrogers.com/Thank you for joining us here this week in the neighborhood.Music featured on podcast was Stay by Rick Lee James Special Thanks to my guest Dennis Scott and The @MisterRogersSay Community on Twitter.Our Substack page is https://rickleejames.substack.com/s/welcome-to-the-neighborhood-a-mister.Our Instagram page is https://www.instagram.com/misterrogerssay/I'm your host Rick Lee James. My Twitter account is @RickLeeJames, my web site is RickLeeJames.com, My other Podcast is Voices In My Head (The Rick Lee James Podcast), and I look forward being with you again next time.Until Then: You make each day a special day. You know how, by just your being you. There's only one person in this whole world like you. And people can like you exactly as you are. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit rickleejames.substack.com/subscribe

Gav was at HTC to speak to the caretaker manager and 4 of the players on Wednesday.  These are available on YouTube in video form.  Enjoy the final tomorrow however you're watching it GGTTH

Welcome To The Neighborhood: A Mister Rogers Tribute Podcast   (Special Guest David Newell - Mr. McFeely) This week in the neighborhood, our special guest is Mister Roger's Neighborhood's Very Own Mr. McFeely, David Newell. Serving Mister Rogers Neighborhood since 1967, David Newell played Mr. McFeely, the Neighborhood's cheerful “Speedy Delivery” man. He was Mister Rogers' most frequent visitor. When there was a knock at the door, there was a good chance it was Mr. McFeely in his mustache, cap and vintage blue uniform, bringing a package, a film, or a visitor. Links For David: Speedy Delivery DVD: https://www.speedydeliverymovie.com/ David Newell on Twitter: https://twitter.com/mrmcfeely143 Thank you for joining us here this week in the neighborhood. Music featured on podcast was Stay by Rick Lee James Special Thanks to my guest David Newell And The @MisterRogersSay Community on Twitter I'm your host Rick Lee James. My personal Twitter account is @RickLeeJames, my web site is RickLeeJames.com, My other Podcast is Voices In My Head (The Rick Lee James Podcast), and I look forward being with you again next time. Until Then: You make each day a special day. You know how, by just your being you. There's only one person in this whole world like you. And people can like you exactly as you are.    

On this episode of Buddycast, it's a beautiful day in the neighborhood as we talk with our new buddy David Newell also known as Mr. McFeely from Mister Rogers Neighborhood! Hear all of his stories and experiences right here on Buddycast! #gobesomeonesbuddy #speedydelivery --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app Support this podcast: https://anchor.fm/nick-sorensen/support

Welcome To The Neighborhood: A Mister Rogers Tribute Podcast (Special Guest David Newell - Mr. McFeely)This week in the neighborhood, our special guest is Mister Roger's Neighborhood's Very Own Mr. McFeely, David Newell.Serving Mister Rogers Neighborhood since 1967, David Newell played Mr. McFeely, the Neighborhood's cheerful “Speedy Delivery” man. He was Mister Rogers' most frequent visitor. When there was a knock at the door, there was a good chance it was Mr. McFeely in his mustache, cap and vintage blue uniform, bringing a package, a film, or a visitor.Links For David:Speedy Delivery DVD: https://www.speedydeliverymovie.com/David Newell on Twitter: https://twitter.com/mrmcfeely143Thank you for joining us here this week in the neighborhood.Music featured on podcast was Stay by Rick Lee JamesSpecial Thanks to my guest David NewellAnd The @MisterRogersSay Community on TwitterI'm your host Rick Lee James. My personal Twitter account is @RickLeeJames, my web site is RickLeeJames.com, My other Podcast is Voices In My Head (The Rick Lee James Podcast), and I look forward being with you again next time.Until Then: You make each day a special day. You know how, by just your being you. There's only one person in this whole world like you. And people can like you exactly as you are. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit rickleejames.substack.com/subscribe

Welcome To The Neighborhood: A Mister Rogers Tribute Podcast (Special Guest David Newell - Mr. McFeely)This week in the neighborhood, our special guest is Mister Roger’s Neighborhood’s Very Own Mr. McFeely, David Newell.Serving Mister Rogers Neighborhood since 1967, David Newell played Mr. McFeely, the Neighborhood’s cheerful “Speedy Delivery” man. He was Mister Rogers’ most frequent visitor. When there was a knock at the door, there was a good chance it was Mr. McFeely in his mustache, cap and vintage blue uniform, bringing a package, a film, or a visitor.Links For David:Speedy Delivery DVD: https://www.speedydeliverymovie.com/David Newell on Twitter: https://twitter.com/mrmcfeely143Thank you for joining us here this week in the neighborhood.Music featured on podcast was Stay by Rick Lee JamesSpecial Thanks to my guest David NewellAnd The @MisterRogersSay Community on TwitterI’m your host Rick Lee James. My personal Twitter account is @RickLeeJames, my web site is RickLeeJames.com, My other Podcast is Voices In My Head (The Rick Lee James Podcast), and I look forward being with you again next time.Until Then: You make each day a special day. You know how, by just your being you. There's only one person in this whole world like you. And people can like you exactly as you are. This is a public episode. Get access to private episodes at rickleejames.substack.com/subscribe

Dear Friends, A short podcast from me this week to let you know about exciting future developments with Inner Truth as well as my top 5 books of the year so far. Links for the books mentioned: Bringers of the Dawn: Teachings from the Pleiadians by Barbara Marciniak The Seven Gates: Seven Steps Beyond Self-Awareness by Dr. Frances Yahia The Kybalion by Three Initiates The Archer by Paulo Coehlo Labours of Hercules: An Astrological Interpretation by Alice Bailey Much love, David

Its always a beautiful day when our dear friend Mr McFeely (aka David Newell) stops by to chat! Listen to this interview and get to know the man behind the one of the most iconic characters in television history! Be sure to also check out what new programs are coming from Fred Rogers Productions!

For many people in Newfoundland and Labrador who make homemade bread, the leftover dough provides as much of a treat as the loaves. Steve Bishop makes toutons at his bakery in Gander, and that's where CBC's David Newell met up with him.

Judge David Newell gives brings the right mix of humor and insight to his work on the Texas Court of Criminal Appeals!

We had the best conversation with a true television icon, and it was beyond our expectations! David Newell has spent the majority of his adult life as TV's fastest delivery man, Mr McFeely on one of the most classic programs of all time, "Mr. Roger's Neighborhood." This is not a watered down, 5 minute, sound bite interview! This is an engaging and retrospective conversation with the man behind the character, although the lines do blur at times. You will soon understand why Fred Rogers, himself, selected such a wonderful person to play everyone's favorite delivery man. Speedy Delivery to you!

One of the misconceptions people often have about Quiet Light Brokerage is that most of our transactions are e-commerce based. In reality, we have got quite a sizeable number of SaaS deals in our portfolio as well. Today, the Saas CFO Blog founder Ben Murray is here talking about his career, the blog, and his passion for sharing the metrics founders need for better planning and forecasting. Through his blog, Ben shares his passion for organizing the numbers, implementing SaaS metrics, and forecasting. Ben's advice is all about getting the lumps out of the profit and loss. Anyone looking to learn more about the topic both from the acquisition and the ownership side, this is the guy to know and this is the episode to listen to. Episode Highlights: The value in forecasting. Why do it in the first place. Things that proper forecasting might protect your business from. Software recommendations for businesses looking to get started with inputting the financial data. Types of metrics that are important for the owner and potential buyer to dial in on. The Rose Metric. Numbers a potential buyer should be looking for in a healthy acquisition prospect. How deep should the buyer look into the metrics? Warning signs to look for in a business evaluation. The why behind the data. Healthy levels of sustainability in the balance between recurring revenue and sales/marketing expenses. How Ben became so interested in the SaaS arena and why he feels compelled to share his knowledge with his readers. The cash runway forecast model. How to get started in forecasting. Transcription: Joe: Mark one of the misconceptions about Quiet Light Brokerage is that some people think we do; the vast majority of our transactions are e-commerce related when in fact we've got quite a sizeable SaaS component as well. And I understand you had Ben Murray from SaaS CFO on the podcast recently. Mark: Yeah I just recently became familiar with Ben. I was going out and taking a look at some of the people that are writing in this space and just kind of doing some research trying to expand our network in this area and I happened upon Ben's blog and I was absolutely blown away. So Ben is a CFO obviously and specializes in the SaaS arena and talks a lot about the metrics that we want to be able to track in the SaaS world for better forecasting and better planning on the part of SaaS founders. So naturally, I thought I had to have this guy on the podcast. We also sponsored a little ad in his newsletter as well to promote David's webinar. David Newell for those of you that don't know recently did a webinar on how to solve a SaaS business for 6, 7, or 8 figures. We're going to include those in the show notes we'll also make sure that we advertise that in our weekly newsletter if you don't get that; a really, really well received. We've had hundreds of people attend and have had great response from that webinar. We partnered with Ben to help promote that webinar as well. And as I told you Joe just before this call he knows more about SaaS than you and I will ever really know because he lives and breathes this on a day in day out basis. And so we talked a lot about some of the metrics to look at, how to think about some of the metrics, how to calculate some of the metrics in a way that makes sense because we know that we're supposed to be tracking some things like lifetime value, churn, and everything else but how do you actually construct these calculations in a way that makes sense for your business and then forecasting as well. So the topic; I'll be honest, I got a little wide-ranging with my questions because I wanted to ask him every question at once. And it was difficult to stay focused because I wanted to ask every question at once but there's just some really cool nuggets in this podcast including one that you and I talk about all the time and that's cash versus accrual accounting. Joe: Yeah, most people think about it only in terms of e-commerce but SaaS and content they've got to do it as well just to get the lumps out of the P&L. Mark: Yeah I mean look it just comes down to this basic concept accounting; double-entry accounting system has been around for a long time and it's been around for a long time because it works. And so we should be making sure that we're actually paying attention to our books in the proper way and understanding what sort of insights we can pull out of this. Ben talks a lot about the need for forecasting which is something that I'm increasingly growing aware of as being an important tool for business owners. And we talked a little bit about how to do that in the SaaS world in this podcast as well so it's super interesting. And I think for anyone that's interested in SaaS both from an acquisition or an ownership standpoint, Ben is a guy to know, this is a podcast definitely to listen to. Joe: I'm looking forward to listening to it myself. Let's get to it. Mark: All right I have Ben Murray from the SaaSCFO.com, Ben thank you so much for taking the time for a conversation here on SaaS businesses, CFO and everything metric heavy. I'm really excited for this conversation. Ben: Thanks Mark, it's great to be here. Mark: So let's start out pretty simple and give just a quick background on yourself; what you do, and also a little bit about the blog. I found you through your blog the SaaSCFO.com but a little background on yourself so that our listeners know who I'm speaking with. Ben: Sure yeah. My name is Ben Murray and I've been in finance and accounting for the past 20 plus years and my background has been airlines and software specifically SaaS. And so I've been a SaaS CFO for about the last 8 plus years or so. And about 3½ years ago I started blogging at the SaaSCFO.com where I just wanted to share my metrics, models, templates that I've been using and creating over the years and hoping that others will have; they could use those and implement the models and metrics in their businesses right away. Mark: Yeah and look there's a lot of people that write on this material, right? I've come across a lot of different blogs that kind of become this intersection of marketing and metrics and company structure and everything else. Yours is really focused on metrics and metrics from a kind of financial outlook perspective and probably a deeper dive than I found in most other places. So I can definitely really, really appreciate what you're doing here on the blog and some of the information that you share. I want to start off with just kind of a big question, your website title is Ben's post on SaaS metrics and forecast; pretty simple. I want to talk about that second half there and the forecasting side of it. I know a lot of business owners and even buyers who are looking at acquiring a business look at forecasts with a bit of a skeptical eye and wonder well what's the real value on them? Now I think people that are growing businesses at a higher level tend to see the forecasts and see the value in them. But I'd love to pick your brain a little bit about the value in forecasting and creating a good forecasting model and maybe what the foundations are for that. So why don't we start with that first question as why forecast in the first place? I mean isn't it really more wishful thinking or is there a real science behind this. Ben: Yeah there's definitely a science behind it because it really leverages your operational understanding of your business and I really feel you can't forecast until you know where you've been. So really understanding your historical financials, all the metrics around that, and then once you have that then you can put a very good forecast together. But if you don't understand your current financial state it's going to be really hard to create a forecast and obviously, the number one thing is cash, right? Cash is king. So if cash is tight or you think it might be tight you definitely need that forecast to balance resource requests versus cash balances. So that's number one. After that say if you have decent margins then again it's really understanding where your revenue is trending; your margins are trending. And as you scale so you don't get in trouble down the road; if you hire too fast, invest too fast. So forecasts it's definitely I'd say part of science part of intuition but it's really critical I think in any business as you scale and of course just understanding your cash and then the metrics that are coming out of your forecast. Mark: Yeah, what are some common areas that you see people running into with a lack of forecasting; just kind of sticking their finger up in the air and feeling where the wind blowing today as they're growing maybe a rapidly growing business. You already mentioned one, hiring too fast and bringing on too much support staff maybe anticipating more growth in the future. What are some other things that proper forecasting might be able to protect you from? Ben: I think when you create that first financial forecast and you have been forecasting it really exposes areas in your business that are kind of weak data-wise. The number one thing is like booking; tracking your monthly bookings whether that's MRR or ARR basis you need to know when new lows are coming in or new customers are coming in any expansion business churn downgrades. So that sometimes exposes that tracking. You're going to be kind of revenue forecast together. It all starts with your booking patterns. So that's one thing. And then it's just basic stuff. What's your current MRR? What are your current customer accounts? How many paying customers do you have so you can put again that revenue forecast together and then it's just understanding where you spend. You know one big thing that I see with SaaS firms is that they're coding all their expenses to one big bucket. And I think once you reach say a million or two ARR you really have to have more sophistication in your financial forecast than you're coding expenses to buy an apartment because without that you really can't create any SAAS metrics from that. So you really need clarity around your expenses as well to see that quite a bit. Mark: Yeah and so much of this when I give presentations at a conference and I get to the part where I'm talking about keeping good clean accurate verifiable books I get the sense sometimes that it gets glossed over. And I talked to a lot of entrepreneurs who say yeah I know my books are important but then when you find out are they actually managing them well we found out that they aren't and because it becomes sort of an afterthought to it. But what you said there at the end I think is so clear. Once you start having good numbers brought in to the business and you're starting to analyze these numbers it brings clarity to the business as well and being able to identify maybe the risks that are actually present in your company that you aren't seeing because you're not looking at the data. A lot of what you're saying here about forecasting, of course, requires keeping track of the numbers in the right way and you need to start somewhere. For somebody that's maybe at the smaller end of the spectrum in a SaaS operation, say sub one million dollars in revenue what sort of recommendations do you have to make sure that the data that they're getting is A. getting input correctly and categorized correctly and B. do you have any recommended software any recommended systems that you would start out with? Ben: Yeah I wrote a post because that was a question I was getting a lot on what SaaS accounting software can you recommend. And of course, when I speak with founders 9 out of 10 times their financials are in QuickBooks . So that's kind of a ubiquitous accounting system out there. And I've seen all sorts P&Ls but really it's good organization to your expense categories. Not having too many. Sometimes you see a QuickBooks P&L and it's 50 expense categories and you've got $5 posted in February and 10 the next month; just too much detail on that where a SaaS company is really 70 to 80% employee wages, benefits, taxes, etcetera. So that's the big thing is getting to know your wages classify them correctly; encoded by department. Then it comes down to travel, rent, commissions, so they're big expense categories that are common within SaaS, advertising, that you want to see those coded and classified correctly and kept track of each month so you're not getting behind and have very lumpy financials. So that would be the big thing is just to clearly categorize P&L by expense category and then obviously the other one is just not applying proper reverec which you can't blame SaaS founders that saved some 1 million but they're not playing proper reverec to their revenue. But eventually, you will need that in order to calculate again good metrics, good gross margin and so forth. Mark: Can you explain that last part a little bit more? Ben: Yeah, about the reverec? Mark: Yes. Ben: So often rates with an MRR business it's not as pronounced where you invoice monthly and recognize monthly but with annual contracts say quarterly, semiannual, annual, multi-year contracts you see a lot of SaaS companies posting that revenue right to their P&L. So, for example, a $12,000 annual contract that should be advertised and recognized over twelve months. They're posting twelve thousand in just one month. You'll see very lumpy revenue that it could be 50 or 100,000 in one month and it's $1,000 a month the next month and I've even seen negative in some months. And with that, you really cannot manage your SaaS business without a proper reverec and that could be finding a SaaS accounter bookkeeper who is familiar with the SaaS business model. But without that, you don't know your gross margins at all. You really don't know what's going on with your business kind of on a good steady run-rate basis. So again under a million, I get it. A million and two and scaling you definitely have to get to that point. Mark: Yeah. And so in our world again we've talked about this a lot on this podcast and pretty much every chance I get. And it's that simple difference between accrual and cash basis counting, right? Instead of saying oh I just got $12,000 in on an annual contract saying well I have an annual contract which means I need to service this client for the full 12 months and that equates out to $1,000 a month which I'm earning as I go along with this contract. It's kind of a foreign concept to a lot of people. But again the importance here is not treating the P&L like a statement of cash flows only and treat it again as a profit and loss statement. I would imagine Ben, this is something I didn't see on your site but I'm sure you've covered because your site is extremely comprehensive, it would make sense at that point to look at your financial statements and understand the balance sheet is going to be important in here as well. What role do you see and let me see if I can back up; I'm kind of all over the place right now but I'll ask this in a very basic way. I know a lot of people are kind of scared or mystified by the balance sheet. How much emphasis do you think people should put on actually getting familiar with the statement like that or do you think it's more important to look at some of the other metrics instead and focus on those? Ben: Yeah I think say as a founder-owner you do need to understand the balance sheet to some extent because the SaaS balance sheet is a little different than others. One obviously is deferred revenue, so in the example, we talked about when you invoice that 12k it's actually posted at the balance sheet as deferred revenue; as a liability, because you have an obligation now to say perform or to service that customer. The second thing with the new reverec standards you now have to capitalize the contract costs that arise when signing contracts with customers, for example, enabling commissions now that becomes an asset on your balance sheet. So that's the second area that's different with SaaS and that's actually new and then, of course, capitalizing software development. You can also capitalize software development once it reaches technological feasibility. And again that's another asset on your balance sheet. Other than that SaaS balance sheets are pretty straightforward but if you're applying the proper accounting you probably will see; you definitely should see deferred revenue and probably capitalized commissions. Mark: Yeah I can kind of hear the collective groan from people listening thinking well I thought we're going to be talking about SaaS metrics here and here we are back in the old accounting stuff but this stuff plays together, right? I mean when we go into some of the other more advanced metrics that you're talking about it depends on having those books done correctly so that you can pull out the right metrics and the right ratios that you're looking for. But let's get into some of those other metrics and just kind of a very basic question here, what do you consider especially forward for companies that 1 million maybe 5 million 10 million and then above as we kind of work up the strata here, what sort of metrics would you generally say are really important for an owner or potentially an acquirer to really dial in on a SaaS business? Ben: Yeah I think once you're past that early stage where you really have to manage your cash flow I mean it's going to be your go-to-market, sales, and marketing efficiency metrics and that's something I'm constantly looking at. So it's really all; it becomes a lot about the go-to-market efficiency. One are your inbound or outbound sales engine and marketing engines and then one metric that's a favorite of mine is cost of ARR, cost of MRR where you're looking at your ARR and MRR bookings and comparing that against your sales and marketing expense to see how much it costs you to acquire one that new dollar or ARR or MRR; that's a big one. And there's a great survey out there, a SaaS survey put out by KeyBank each year that provides those private company metrics so you can compare how you're doing against other SaaS companies who put data into that survey. So it's a great benchmarking tool. But again there are a lot of sales and marketing efficiency metrics that yeah as you're scaling, how efficient are you, how much cash is going to be required to hit your booking plan, and then really just that balance; it comes down to that balance between bookings and sales marketing. Mark: Yeah that's great. Let's talk employees it seems to be one of the costs that seems to kind of spiral out of control with SaaS companies on occasion right? The cost of supporting the clients can be higher and higher. You have something on the blog which I'd just kind of chanced upon which you came up with called the Rose Metric. Can you explain that a little bit? Ben: Yes sure. Again it kind of gets back to the concept that really a SaaS company or any software company is all about the staff; the employees because that's the major expense or as I call merits that investment in the business around your staff. And you see that revenue graph that you metric out there is kind of a general gauge around efficiency which I think is just too high level; too generic. So I want to look at really it's so important that your investing employees, that employees are happy because they are creating that software company; they're creating the product. And really comparing how efficient are we in headcount wages versus the bookings coming in. So it gets you kind of a balance of as we scale what resources do we need to support our bookings plan or rounding plan and just see how efficient we are in acquiring new MRR or ARR against our kind of employee headcount or employee wages. Mark: Yeah it's an interesting piece and again I'd recommend people take a look at the blog and kind of dig into some of these employee metrics. It's one that we don't see as much in our world and I think it's an interesting one to take a look at. From a merger and acquisition standpoint if you're a buyer coming into a business and trying to evaluate it where are you going to begin looking at a company's books? What sort of numbers are you going to be looking at in trying to calculate within that first day as you're trying to see is this a good opportunity and a healthy company? Ben: Yeah obviously the first thing you're going to look at is just are they good books are you inaudible[00:19:12.5] accounting so they're good financial statements. And then after that, it's really understanding the health of the recurring revenue because a lot of valuations are based on almost full of ARR or MRR and then also EBIDTA. So really when I look at it you know it's really looking into that recurring revenue; so the bookings data, what's your gross dollar retention, net revenue retention, how many logos are you losing per month, how many dollars are you losing per month, and churn and dock rates. And then of course if you've got multiple products it's understanding all of those metrics by the product lines. Because that's what you're really buying is the recurring revenue stream and of course any profitability or lack of profitability that goes along with that recurring revenue stream in the form of EBIDTA. So those are the same first things that I dive into is really understanding the revenue streams and then really the business model; what does it take to support that recurring revenue stream? Do you have tech support? Do you have CSMs? What's needed support that revenue? And then, of course, another big thing is to go to market engine; understanding sales and marketing, how they're acquiring customers, how efficient they are, and then of course looking into GNA, RND, the product roadmap etcetera. Mark: Sure absolutely. As far as dealing with a company with weak books like of we're evaluating a company that maybe has this lumpy revenue because they're recording everything on a cash basis. Are there ways that you can suggest that would not involve a whole deconstruction of books but maybe to be able to evaluate a business that has weaker books or weaker data tracking practices? Ben: Yeah if you really can rely on the financials for the revenue stream then you have to really build a backup through their bookings data or their invoicing data. So getting say a couple years of invoicing history of their subscriptions; so dollar amounts, start and end dates, it helps if you knew is this a new logo expansion etcetera so that you can reconstruct what the revenue stream should look like and then get back into you know what kind of expansion are you seeing, churn are they seeing so you can build out that revenue stream if it's not; if they're not [inaudible 00:21:30.3] to the financial statements. Mark: Sure. What would be some warning signs that you would look for an acquisition? Obviously, you said you would really look at the health of the recurring revenue. How trustworthy is it? Also the go-to-market cost as well. What are some things that would be just kind of a deal-breaker for you if you were evaluating a business? Ben: I mean a couple of things would be looking at again I think it's going to be around churn and payback periods. So payback periods are extremely important. So how fast are you paying back those upfront customer acquisition costs. So one looking at their cash balance, of course, are they trying to [inaudible 00:22:10.5] fund working capital through lines of credit or debt that their business model isn't quite working for some reason or the payback period is too long or they have just too much cash tied up in check. And then, of course, new logo acquisition, do they have the go-to-market model proofed out or product-market fit and then again just is churn under control, can they acquire customers but then can they retain them over time. So again those are some of the things that if you see warning flags; you might see some warning flags there that the metrics just as a whole don't add up together. Mark: Right. You mentioned payback periods. This is something that I've ran into a number of times where I see somebody pretty plainly put out there hey my LTV is this my CSC is this so look I'm going to acquire the customer for 80 bucks the lifetime value is $400 and you're going to make a great return on your investment on that. But when you dig into it a little bit deeper you find out that if you take like an 80% cohort, if you're taking a look at the majority of customers the lifetime value is much lower. There are a couple of unicorns in there that are pulling in this really high value. What are some ways that you can recommend dissecting this when you get this kind of flat up numbers of my lifetime value is X and my cost of acquisition is Y so, therefore, you're going to make that killing on this business. How can you sort of dissect that and actually get some better insights there? Ben: Yeah especially with LTV because that can be so sensitive to the denominator or what churn number you're using as the dominator. So you really have to understand what inputs they're putting themselves because that lifetime value can be all over the place. So again you mentioned cohort analysis, are they taking the cohorts, are they using aggregate churn or are you looking at really with check and payback periods you should be looking at it's really a point in time like the cohort analysis that what's the most recent cohorts coming in and the paybacks on those and also lifetime churn from the cohorts say from the past 12 months. So you really have to I think look at the details on the numbers that are building up into those formulas to really prove out what they're saying that they can really claim great numbers. Mark: Yeah, it's one of the reasons that LTV to me I'm not a big fan of that metric on its own I mean it's interesting but I think it's just kind of a live number way. It doesn't color a whole lot when you're looking at it by itself, right? It can really take you to a lot of different factors. Ben: Yeah and I definitely calculate LTV it's interesting because I think SaaS metrics in isolation don't mean much. You kind of have to look at the big picture obviously it's LTV to check but also looking at cost of ARR payback periods. So maybe it's one data point but it's not telling the whole story. So I do look at LTV but again I think say cost of ARR or the payback on that is a much easier way to understand. And LTV I still think is kind of a ballpark because it's always changing and it's such a sensitive calculation that it's not the number to just look at alone. Mark: Yeah. A question I get all the time from people and it's really basic in your world so I apologize for even asking this but people ask me all the time well how am I supposed to calculate my lifetime value, how am I supposed to calculate my churn when I have people that are still; that have been with me from day one? And these numbers sometimes can be difficult to calculate because of that or even people that are dropping off but then coming back on and then dropping off again and then coming back on. Ben: Yeah. I hear that a lot too. Yeah especially if you're a couple of years in you really don't know your lifetime value yet. Again it's just a formula; it's a calculation so it's a ballpark but you don't really know true LTV yet if you've just been around a couple of months or a couple of years. And then the whole dropping off dropping on back on that's where it just becomes almost company-specific that you really just have to define internally what does a new customer mean, when does it really mean that they churn so that everyone within the company understands that. And if you're in any sort of M&A then that's clearly; that you're transparent with how you're actually tracking those stats. Mark: Yeah. And I think that part right there that point is probably the key that I think is so important especially from an acquisition standpoint. If you're looking to acquire a SaaS company and you're just looking at the metrics on the surface how does that seller define those metrics within their own company and why did they set up those rules because with multi churn you can look at that in a number of different ways. You can calculate that number using different approaches the same way with LTV numbers you can use different approaches and get different results. So why did you choose a certain method; why did you choose a certain approach to this? And that's the color I think from an acquisition standpoint that starts to get really important when you're looking at any of these metrics is understanding the why behind what data is being presented and then the rules and applying a sanity test to it. Are these people just giving numbers because that's what they're supposed to pick or are they actually looking at these and using these metrics within their company, yeah just a really good point on your side as far as understanding the metrics and where they're coming from? Moving beyond that cost of acquisition, moving beyond the lifetime value numbers and you've mentioned a few times the going to market costs as well, what are some health levels for the sustainability of ARR or MRR on a SaaS business. Ben: You mean as kind of as far as the balance between recurring revenue and sales marketing expense? Mark: Yes. Ben: Yeah, so healthy levels, the things that I look at and this is probably more mid-market enterprise but usually if you can acquire bookings for $1 of a new ARR for a dollar of sales market expense that's pretty good. So again there are some surveys out there that kind of give you some benchmarks and that's kind of you can say in whole new logo and expansions of course expansion in ourselves should be a lot cheaper than acquisition, maybe that's 30 to 50 cents of sales and marketing expense acquire one net new dollar of ARR. So certainly it's just that you look in and if it's higher you just need to understand from that business why it's taking longer and what's the story behind go to market. Is that a longer sales cycle that's impacting the [inaudible 00:28:48.6] so just different things to really understand their business model. Mark: That's great. I'm going to just take a quick break from some of that heavy metric discussion here because we're throwing around a lot of acronyms right now. How did you get your start in this rollout? You said that you had experience in the airplane industry and then also in the software industry. How did you get to be so passionate about this and kind of digging in as deep as you do? Ben: Yeah well I guess one that you really loved forecasting and financial forecasting though in Excel models and you kind of build-up that tool kit over time and just really enjoy it really understanding the economics of businesses and especially software is so interesting and yeah I did start in the airlines which is also kind of metric intensive and very financially disciplined and I kind of applied that to the SaaS areas. So I just noticed out there a lot of resources on SaaS but it didn't quite I felt go far enough or really just give you the whole story and the template that they were using it kind explained it but then you might have to go do an hour or two of work to recreate what that person did. And so I said; I thought you could be a little different by just providing the exact models, the templates that I'm using and hopefully the bits and pieces of those would be applicable to some people in SaaS that they could incorporate into their business and I received great feedback from readers, subscribers downloading templates that it's helped them out a lot, founders that are trying to do their first forecast. So I just wanted that kind of transparent value exchange out there and it's just really from my kind of on the job experience as a SaaS CFO and just things I encounter every day that are pain points for me that could be pain points for others and just help them out with maybe something with a template that I've used to solve some of those problems. Mark: Yeah you have all these comments on the site from people who have written into about the resources and I love the one here that says great resources that save a lot of time and brain damage to replicate. It's very true. Again there's a really good stuff on here. You brought up forecasting again so I'm going to start to bring this full circle here back to forecasting because we talked about that and it's a topic that I'm personally very interested in as well right now. You have a whole page here on the cash runway model. Can you explain that at a high level and maybe we can get into it a little bit? Ben: Yeah definitely because I have my financial plan out there that I live in Excel every day that I kind of take it for granted that other people can also open up Excel or just dive right in and for a lot of people it's still a little too advanced so with kind of that you could say advanced side of financial planning model. So I tried to create something very basic and it is really inspired by a founder I talked to who said that he got some funding just with a super basic cash forecast. So I thought well how could I take that and just make it super simple say for founders and non-excel people to just start inputting even it really gets to their cash invoicing. So they really could forecast their cash balance and how long that balance is going to last. If they funded it and then they're looking for investments that they could say hey here's my cash invoicing coming up, here's my headcount, here are some other metrics; that major expenses and then just forecast their cash balance in one tab. So that was the genesis of it just trying to really boil down to really something basic that founders and again non-excel people could hopefully use right away. Mark: Yeah. And you have this template available on the site. And you didn't actually answer it's kind of the question I was going to lead into and that is how does somebody get started with forecasting if they don't have the resources for a CFO like yourself what are some basic models that they can put together to start forecasting their cash flow? Ben: Yeah, definitely. I think really it's understanding their invoicing patterns; so what is your cash coming in whether that's funding or just the invoices you're sending out to your customers or their credit card payments they're making online line through your site. So that's really the first step. It's just that cash in. And then it's going to be headcount. Again headcounts the majority of expense for SaaS company so really and I'm quite informal as to how do we easily calculate and forecast that expense. So whether you've got one person 850 cut that into model, forecast that expense out. So the second thing again is headcount. And then any other major expenses, maybe it's rent, maybe it's tradeshow, advertisements, so it's kind of that 80-20 rule start with those big expenses; start with the big invoices as a place to start to put together kind of a basic forecast. Mark: Right then as with all things you can refine that as you go along and improve it and make it more accurate and you can look back to see how accurate was our forecasting and get the insights that you need from there and be able to really plan out what's going on or if you're looking for funding obviously very useful for that as well. This has been really interesting and maybe a little bit of a scattered conversation because I want to talk about everything at once. That's my downfall. I've never really claimed to be the greatest podcast host in the world but there is just so much here to be able to discuss. We are up against the clock at this point though and so I want to give you the chance to kind of round it out and with what you do you obviously have a passion for a lot of this in you being able to help out a lot of people. What are some of the common problems or common questions that you get at the blog and what would you say to SaaS founders currently operating a business right now or those that might be looking to get into this through acquisition? Ben: Yeah I mean the kind of questions or problems that I see really one is just how do you calculate this stuff, how do you calculate these metrics, what are the inputs? And that really comes back to just a nice clean P&L that you take the time; make that investment through your bookkeeper or accountant to really set up a well-organized P&L because that's where all the metrics emanate from. And if you don't have that it's going to be really hard to calculate the metrics and really have that financial transparency to manage your business. So really again it starts with what's your SaaS P&L and I try post on there on my site kind of walking through from bookings down to income; what the major components of the SaaS P&L are and again it's getting good organization and good fundamentals there and then you can build upon it then you can start forecasting then you can calculate metrics. So again it starts with I think a nicely organized SaaS P&L. Mark: You know I had Babak Azad who was with Beach Body; he grew that company into a billion-dollar company and he was talking a lot about the metrics that they use there and I asked him a similar question about how do you get started; how can you start tracking this and his response was just what yours is and that is just start; you just have to start with it right. And your advice to start with a P&L and having that set up correctly. It's what we've been preaching here at Quiet Light Brokerage for a very, very long time. Get those books in order. You want to have those books in order. It doesn't matter if you want to sell or not. As a business owner having good financial records it's irreplaceable. Once you get it you will be so happy that you've had it. But it starts with how you're inputting it. I've run into bookkeepers; maybe you have as well but I run into bookkeepers especially when somebody hires them remotely who kind of don't want to do an accrual basis books because they consider it to be more difficult but it's the proper way to do it and as you said all the metrics derive from there. Alright, one last time Ben where can people find you? What's the best way to contact you? Ben: Sure you can contact me through my site. It's the SaaSCFO.com and then actually later this month I'm launching the SaaS Academy.com. It's an online digital course for SaaS metrics and more so that's coming out soon as well. But definitely my blog you can contact me through to the site. Mark: That's fantastic. Thanks so much for coming on. I hope to have you on in the future. In the future, I'll choose one topic and I'll stick on that for the entire topic but thank you so much for this really good overview episode. I really appreciate it. Ben: Alright thanks, Mark. Thanks for having me. Links and Resources: Ben's Blog The SaaS CFO Ben's Blog post: The ROSE Metric Ben's Software Recommendations David Newell SaaS Webinar

Today the newest member of the Quiet Light team, David Newell, joins us to discuss the four pillars for buyers and sellers, particularly when they apply to SaaS businesses. David knows SaaS super well and covers all the metrics that buyers and sellers need to pay attention to on both sides of the acquisition process. We discuss everything he looks for when listing a SaaS business, the challenges in measuring some of those metrics, and some common SaaS buyer pitfalls. David started his career in investment banking and worked in that environment for four years. Looking for a taste of life on the outside, he started brokering online, eventually working his way through the ropes to a head broker role. David is now a successful entrepreneur in his own right, with a brand in self-discovery and personal development which has grown from a podcast to a full online brand. Inner Truth offers a wealth of courses, community, and content for anyone embarking on a journey of self-truth. We're very pleased to welcome David to the Quiet Light team. Episode Highlights: David takes us through his background and the SaaS business floodgate that opened for him as he learned about this niche and began brokering SaaS deals. The top three things David feels are important to hone in on to add value to a business. What churn is, how it's calculated, and why it's a cornerstone to a SaaS business. The difference between MRR and ARR and how each can affect the revenue profile of your business. David's software recommendations for measuring the metrics he looks at in a SaaS business. We get into what micro SaaS is and how it differs from the traditional SaaS model. Potential pitfalls of owning a SaaS business and the challenges to consider when getting into the SaaS acquisition arena. Tips and advice for folks preparing to sell their SaaS business. Compelling acquisition tips on how to do the good work before getting ready to sell. Transcription Mark: Joe we are quickly being outnumbered here at Quiet Light Brokerage. We just hired on somebody else who hails from the UK. Joe: Yes; David Newall, a fantastic guy, and another Brit. I guess Brian's not a Brit he's a— Mark: What is he? Joe: He's Estonian, that's what he is. Mark: Yeah but he's kind of an international mutt when we would think about it. He's Estonian but he lives in the UK sometimes but now he's looking at living who knows where. Joe: Well, he's a true entrepreneur. He's been living all over the world with his wife for the last 12 months. And we just got together at the Prosper Show last week with both David and Brian and Brian's wife; a first time we've met a Quiet Light spouse right? First time you've met … you've owned this company for almost 11 years and you've never met a spouse until last week. Mark: Over 12 years. I mean talk about the age of the modern company right? We are a distributed company. Everybody lives in different states and when we see each other it's at conferences. So it's pretty rare for me … very rare being that this is the first time ever that I met a Quiet Light spouse. And I think the only reason that I did is because Brian and his wife don't actually have a home that they go to. Joe: That's right. Mark: I mean obviously they have places where they live but they're constantly on the move which is fun but I'd like to meet more of the spouses. Joe: I'm with you. Yeah, they were in Vegas and then they were heading down to … I think it was Panama for two months and eventually they're going to make their way back to the UK and settle down I believe but we'll see. Time will tell. But yes we have a new member of the Quiet Light Brokerage team. His name is David Newall; a former investment banker, a former head of brokerage services for a competing firm, a fantastic guy. I gotten to him a lot on the podcast but even more last week and I knew we were going to hit it off well when I started calling him Harry Styles because of his British accent and his affinity towards Taylor Swift. Everybody call him Harry if you want and I think he called me grandpa at one point. So I think we're going to get along well. Mark: Didn't sort of from Australia though, is he? I mean— Joe: Not at all, that's what I kept saying just to bust his chops a little bit. Mark: Well, let's get to the meat of it though because David really knows SaaS super well. The guy is a genius when it comes to SaaS businesses and you guys talked about some of the metrics that both buyers and sellers need to pay attention to in a SaaS acquisition. Joe: Yeah, we did. We went through everything that he looks for when he's listing a SaaS business for sale and he's done dozens and dozens of them personally. So all of the different metrics and what some of the challenges are in measuring those metrics from a selling standpoint and then we focused and flipped it over to what buyers should look for and what some of the pitfalls are. Very, very knowledgeable; a very smart guy and it's going to be a great podcast for those SaaS business owners out there. Mark: Well, I love having these British guys on staff because they make us sound so much more intelligent. Joe: He does. Come on now there's nothing like a good southern drawl though. I don't have it but there's plenty of folks that have. Mark: Well, it helps that David is actually a really really smart guy so it's not just the way he says words, it's what he's saying. He's always extremely insightful. And he puts things in a very simple way as well that makes it pretty easy to understand and adjust. Joe: Yeah so let's get to the accent. Let's focus on SaaS and what David has done in his history and how he's going to help the Quiet Light team build a much, much bigger brand and a great, great addition to the team for all the buyers and sellers out there as well. Joe: Hey folks it's Joe Valley with Quiet Light Brokerage and today I've got one of our newest brokers with us. He has a ton of experience. It's David Newall. David welcome to the team and Quiet Light's podcast. David: Thank you, Joe, it's a pleasure to be here. Joe: That's a funny accent. Is that Australian? David: It's British and I saw you write it as Australian in an email the other day. I was absolutely savaged by that. I was going to reprimand you. Joe: I was only kidding. I was on the phone with Ben. We won't say his last name but he's like yeah tell him he's a great guy but I really don't like that Australian accent. He was kidding at the same time as well. Anyway, I'm going to kick this off just the way we do with every guest David and that is can you give us some background on yourself? Tell us about who you are, where you've been, that kind of stuff. David: Yeah well, I started life out in in investment banking actually. I've been a business degree undergraduate and then I launched myself into the windy world of investment banking. And I worked in merger and acquisitions for Citi Group in London for four years which as you can imagine is a very intense environment but also an incredible learning environment. And there I got to work on some of the biggest tech media and telecoms, M&A, Capital Races, for the first four years of my life. And you learn a lot, you earn a lot, you don't sleep very much and so at a certain level you start to think I wonder what life looks like on the outside of this office. And so I left that and took some time to travel and then shortly thereafter I decided it would be really good to get involved in something smaller where I could have more a managerial position and bring a lot of the experience that we had into a more exciting and a hotter area. And so that's when my online business brokerage life actually began. And I started life out at one of your competitors. Joe: Our competitors; you're on the team now. David: And yeah so I started like everyone does with this so that's the bottom realm with always the view to building up and becoming the [inaudible 00:07:48.7] which is just the head of brokerage and operations there. And so with the three attendant that I have, we obviously expanded very well out of London and moved overseas to Boston. Built a team up and so in that time yeah I must have done about 75 deals and sort of oversaw the rest of the team doing about 200. So a lot of deals across a lot of business models and a lot of niches. And yeah it was a very exciting endeavor. Joe: You know I was out for a walk this morning and yes folks I'm in North Carolina and it's sunny here and I was thinking about having this conversation with you this morning and the fact that you mentioned the last time we chatted that you've done 75 deals. And I'm thinking wow David might have more experience than I do. And I'm adding mine often. I think I've done more but I'm doing it longer, that's the key. David: Yeah for sure. Joe: But you have me by doing a larger deal than I've done as well which is it's great to have that experience that you bring to the team just because that's everybody here at Quiet Light, a very successful entrepreneur business person and a great deal of skill and talent in the internet space as well. You are also an entrepreneur as well can you touch on that just for a moment? David: Yeah, that's right I mean I think one of the things that was just becoming kind of a burning seed for me in 2016 which is the year that I sort of decided to leave was to strike out and become sort of my master and flex my entrepreneurial feathers a little bit. And so I spend the best part of sort of nine months, ten months as really resting and thinking in to what I wanted to get involved in. And my personal interest is massively in self-discovery and personal development. So I got really deep into yoga and meditation and shamanism and breathe work and all of these wonderful tributaries that are now becoming really big parts actually of modern culture. And so around this time last year, I actually launched my own online brand of self-discovery called Inner Truth and it started as a podcast and then we since added on audio courses with various famous speakers from around the world. And yeah the podcast is growing exponentially now and I'd had some really amazing people and I've got to interview some of my favorite authors, singers, writers, speakers, yeah it's mostly really famous people so it's kind of an interesting life now hopping on the podcast every week we have a celebrity and— Joe: It's pretty neat. David: Yeah yeah [inaudible 00:10:18.8] Joe: Yeah, it's … Mark and I did a podcast on the benefit of podcasting for your business and for us at Quiet Light it's just opened up doors to very successful authors, professors at Harvard, whatever it might be and then there are these celebrities inside the world we live in which is e-commerce and SaaS and so on and so forth. But it really is a great tool for anybody that's running their own business. Start with a podcast, it doesn't cost that much. You can always edit out stuff that you're not good. I think actually when we did that podcast I must have stuttered and stumbled in the first three minutes and we decided not to edit any of it because we said look if we can do it anybody can. David: Yeah, 100%. I mean on the first episode I recorded it was an hour long and I spent four hours editing it. Joe: Yeah. David: Well, I've got the last move and now and there's a lot less going on. You sort of have to force necessity when you're doing some of the bigger guns now. Joe: You certainly do. Speaking of big guns let's talk about some of your experience in the e-commerce brokering world or internet business brokering world. A lot of folks think that Quiet Light is really specialized in physical products or e-commerce as they label that whereas the largest deal I've ever done was a content business. The next largest after that was a SaaS business. Sure I do lots of Shopify stores with an Amazon component or more these days an Amazon business with a Shopify component but you have a tremendous amount of experience in the SaaS base right? David: Yeah exactly I think you know around 2014, 2015 we really started to spot this emerging trend of micro SaaS businesses coming up and sort of not really being thought about perhaps and valued in a very sophisticated way given the strength of these businesses, the IP mode that they've got and the recurring revenue. And so we really started to pour a lot of attention into what makes SaaS special. And yeah we're very happy to start working with some great names like Patrick McKenzie and Rob Walling and as they bought their businesses to us and we did successful exits for them; the floodgates opened really. And so for me yeah I think … you know I sold several dozen SaaS businesses over my time and culminating over course the successful sale of Rob's business direct in Leadpages in 2016 which was an incredible transaction an awful massively personally gratifying because Rob is such a good friend and great to get a life changing exit for him but also to sell into a company as big as that with Claire as a CEO; a super dynamic deal environment and yeah definitely a lot of learning. Joe: Yeah, Mark had Rob on the podcast talking about his story of building Drip and exiting from it and it was a great, great podcast. If anybody hasn't listened to that please do. But it's kind of funny I remember when you were doing that deal and we were getting wind of it and it's funny we just thought oh yeah no we don't want to do 10 million dollar deals or whatever the number was. You have to fly all over the country, you got to put a tie on then you … and I don't think you probably did any of that. And now we're doing deals that are that size and a little bit bigger so we all grow up in this business and have to evolve so to speak. So let's talk specifically about SaaS David. For the audience that's out there, if they're running a SaaS business, if you're working with them through Quiet Light, you get a referral and boom you've got a SaaS business that you're going to value what are the top three or four things that you're going to sort of hone in on that is going to bring more value? Maybe even speak to the buyers here what should they be looking at and what would you look at as the seller's broker? David: Well, I think that one of the most important probably least looked at and least understood metrics of any SaaS business is churn. Churn really is the cornerstone of successful SaaS business because it is completely cancerous to revenue growth if you don't get that right. Joe: Can you define that for folks that are just beginning to look at SaaS; what churn rate is and maybe how it's calculated? David: Yeah, churn rate I mean you can look at it from a revenue perspective or you can look at it from a customer account perspective. Revenue is probably more helpful and that's simply telling you how much revenue, how many customers you're losing per month through cancellations, expiries or sort of billings that aren't going through. Joe: That's measured against total revenue and what's a good churn rate in the SaaS world? David: Well, that's a great and a pretty seminal question that comes up a lot when you're evaluating SaaS businesses that specifically are targeting different end users. So if you're thinking like the B2B space the monthly customer churn rate actually varies quite a lot depending on which business segment you're looking at. So if you have a SaaS business facing an enterprise segment it's going to have a materially different monthly customer churn rate than one interacting or facing against an SMB segment because those end customers have different purchasing behaviors. So in enterprise, for example, you know very, very, very low monthly churns expected and we're talking like 1.5 to 1% a month which annualized is 6 to 10%. When you're looking at SMB something doing 3 to 7% is— Joe: What does SMB stand for David? David: Small to medium sized businesses. Joe: Thank you. David: And so annualize that's more like 30 to 60%. And so now you can start to see that the difference between a 6% percent monthly churn rate and a 4% monthly churn rate is going to have a mega, mega, mega difference to the revenue profile of the business 12 months out from now. Joe: Yeah, let's just … I want to talk about the other two aspects in terms of things that you look at in terms of the metrics but the churn rate measured against the revenue; obviously, the revenue has to continue to climb and new customers need to come in at a higher phase than the churn rate in order for the business to be growing. Or even actually just staying steady right? They can be losing 5% a month and be gaining 5% a month in revenue just that. And the beautiful thing that buyers love about this is that … or SaaS business is that it's the recurring revenue. And they generally trade at a higher multiple. If you've got a straight up e-commerce business selling physical products with its own brand even with a patent I think that a SaaS business that's growing and has lots of growth opportunities and a reasonable low churn and workload is going to trade at a higher multiple. Is that your experience as well? David: Yeah well, I think that the recurring revenue piece is one explanatory factor for that premium in multiples. I think the other is simply the moat that exists around the average SaaS business; having that intellectual property. We work in a space where if you can find product market fit for a very quick rate with an Amazon business and very quickly start to scale it but with the SaaS business you might have to pile in anywhere between 10,000 and 100,000 into development and may not even make a penny. And so one of the things that actually make these micro SaaS businesses very valuable when they come to market is that actually, they've simply found product market fit after having put down a lot of Cap Ex. And so it's interesting that that's actually a large amount of the value proposition for people that are looking to acquire these and scale them because that in itself is finding a diamond in the rough. Joe: Right, so that risk is one of the four pillars for those that listen often. It's one of the four pillars and it's the lower the risk as David's talking about the defensibility of the business, that moat around it, it lowers the risk so therefore the value of the business goes up. All right throw in another couple of metrics that you generally look at and it's important for buyers to think about as well when they're looking at SaaS businesses. David: Yeah well, I think acquisition channel for the customers is really important and I think the really premium SaaS business at the higher end of the multiple range are just like every other type of business managing to acquire customers across a multitude of channels so the concentration risk is low. And that within those channels the competition is relatively low. You can look at say a SaaS business in the project management space which is absolutely saturated with VC vat competitors and that's a pretty frightening spot to be in. You'd much prefer to be somewhere in a quieter segment just like we'd look at in e-commerce. The same rules apply. I think it's quite nuanced in SaaS though because you have put down a lot of Cap Ex upfront to develop product and so you have to be pretty savvy when it comes to acquiring customers at a reasonable rate. Joe: Okay. So we've got the cost to acquire a new customer, the channel that you're getting them from, the churn rate, anything else that really jumps out that you're looking at? David: Yeah, I think the profile in terms of the revenue of the business is really important. So obviously we've been talking about MRR but there's ARR as well right? Joe: So that's Monthly Recurring Revenue and Annual Recurring Revenue. David: Yeah, exactly and it's very tempting when you're a business owner and this is kind of an important thing that I think a lot of business owners can trip up on to want to sell lifetime and annual plans at a gracefully discounted rate in order to book that revenue. But when it comes to sell it presents a pretty lumpy revenue profile at a major risk for the acquirer. And so actually the multiple that can be applied to MRR should be higher than ARR because it's more predictable. And this is, even more, the case when you know you're using debt financing to buy a business. And so something that I would always do when I'm evaluating a SaaS business is actually use something of a blended multiple where I value MRR higher than ARR. Joe: Right so to further detail that and explain a little bit that annual recurring revenue if you have one or two months a year where let's say the subscriptions are opened up and there's a flood of customers with a special promotion and a steeply discounted price for an annual subscription but you're selling the business a few years later and you are nine months away from or actually just say two months after that annual subscription, the person that's buying the business they're going to go 10 months without having that big bump in revenue. They're not doing any daily or weekly or monthly work for that revenue. It's going to occur so there's no discount necessarily but it can become a challenge like you say when they're getting debt financing. They've got a monthly payment to make every single month and if that big bump is not going to come for 10 months it can be a bit of a challenge. That's great. David: Yeah, and it's not entirely guaranteed that those annual subscribers will renew a great wish that came in there and I think people expect a certain level of annual around Black Friday but if the business is struggling to show MRR growth in off months then that's a bit of a red flag potential. Joe: Right, so from the buyer standpoint you think really the focusing on the monthly recurring revenue … you got to look at the annual recurring revenue but the more attractive business would be one that's got more monthly recurring revenue because it's spinning out that risk a little bit more. David: 100%. Joe: 100%. Okay, software that's out there to help SaaS owners measure these metrics. It's a challenge like I've looked at trying to calculate at lifetime value. It's very, very difficult. Everybody does it a different way. Is there a particular software that you've seen more SaaS owners use than not? David: Yeah I mean I really like the Profitwell analysis actually. I think whatever you use standardize. I think it's not helpful to swap between Chartmogul, Baremetrics, Profitwell, and just keep skipping around because then you're looking at very inconsistent numbers and methodology as in if trying to evaluate a number of SaaS business that's just not an additional complexity that you want to commit into your analysis. So I think stick with one and the one … the dashboard I've seen as the friendliest and the most well explained and the easiest to use is Profitwell. And in particular, looking at their cohort analysis the churn is this incredible way of seeing whether the business underlying is improving or getting worst as new customers are coming on board. Joe: Okay, Profitwell or wells? David: Well. Joe: Well, Profitwell. Yeah, I've seen Baremetrics used quite a bit on the SaaS businesses that I've sold. It's a great tool for buyers and sellers just to go look at it and study what these metrics are that people are analyzing these businesses on. David: Yeah, 100% and there's a bunch of open source businesses upon the Baremetrics platform where you can just go and look right now. I mean you can look at Baremetrics and their own metrics I believe on their own platform and I [inaudible 00:23:14.4] I think convert kit was on there for a while. They may still be. So it's fascinating to have a poke around and once you've looked at a handful of SaaS deals you can really start to get a feel for what makes sense for and what doesn't around from all of these metrics. Joe: I got you. David, you've mentioned the term micro SaaS more than once can you define that for us? Is there a certain size? Is that what you're referring to? David: Yeah I mean I think of micro SaaS as sub a million dollars in value but really when I think about it more deeply it's characterizing the business that has not gone down the sort of venture capital deep investment. You know fast growth, pushing for a revenue multiple exits and instead gone for the bootstrapped— Joe: I got you. David: Slower grave way of doing it. And that is absolutely not to say that you can't take a micro SaaS and push it into that revenue growth multiple VC back territory. It's just that I think a lot of the businesses that we look at in our world tend to fall into the micro SaaS class version. Joe: Yeah, I sold one last year that literally was started by someone that had a problem and he solved it himself. It was sort of a self-calendar tool and he had it for 14 years but he was an engineer by trade and you could tell by the interview that I did with him that he was not comfortable selling or talking; very, very much an engineer. The person that bought it very much the opposite of that and is already talking to private equity folks to invest or get it to a certain point and take it beyond this sort of micro SaaS market that you're talking about. David: Yeah this is a really important point actually that I want to extend because what I've observed in my experience is that a lot of the businesses that come off exit were designed by the engineer, by developer types that find a problem that solved that and pushed it out to friends and family and other developers, acquire a customer base. It starts to grow organically but they simply either don't have the appetite, the interest, or the skill set to market it. Nor do they want to. And so these businesses become right for marketers to take them over and actually work on building them out from a marketing standpoint because a lot of them are in very good shape on a technical side. They just need more sales effort poured into them. Joe: Yeah, the one I sold it was doing … I forgot exactly, let's call it a quarter million dollars in discretionary earnings. His advertising budget on a monthly basis was $325. David: Yeah. Joe: Yeah, I get emails every week now from them. I'm on their list; the guy that bought it and they're doing a much more aggressive email campaign, retention campaign, and adding new tools and features for the existing customers. Let's talk about the pitfalls of owning a SaaS business for those that are potentially buying one for instance. What do you see as major pitfalls and I had a gentleman named Ezra Firestone, you probably know Ezra. David: Yeah. Joe: I had Ezra on the podcast and we talked about a number of things. He's very much into yoga and meditation too by the way but we talked and he's got e-commerce businesses and he got SaaS businesses and he talked about the differences and what he likes about each and what he prefers. But I'd love to hear you talk about pitfalls and I'll tell you Ezra's feel. David: Yeah, I think that the IP roadmap for any SaaS business is always something that you have to be very clear on. I think you can easily fall into a trap where you start the design … excessively design the product either on specific customers and then it becomes this very odd sort of pool of mud. They like to use that phrase in SaaS world where you're designing around specific customers or you're just adding features to it that perhaps aren't really needed. And actually, I think a lot of SaaS business actually benefit more from dialoguing with customers about how to use their products more effectively. Because oftentimes they're only using about 20 to 30% of the functionality and then often churning away because they're not aware of the other 70% than just by adding feature sets for the point. And of course, this really does stack up because as you add more features that's going to add more complexity. You create more of a UX headache for your customer base. You create more of an operating manual to train your sales team with and everything starts to become … to slip out of control of. And I think that having a very clear crystal clear vision about the road map is actually like something that yeah probably keeps a number of SaaS owners up at night contemplating that. I think churn is a real challenge for micro SaaS businesses specifically because a lot of the time there ain't SNBs so they're naturally facing against a client base that's got higher churn. And the best way really to reduce churn is to really improve your onboarding experience and your customer success. And something we're all absolutely crushed during one of the best in class onboarding processes I've ever seen but it is expensive to do that unless you go down a very intelligent sort of IT lead onboarding route. And that's a challenge that I think a number of business owners struggle with because once you get up into massive scale on your VC back so you can have a whole sales team that come on and really help train every single house member when you're in this micro space you don't have the capital to do that. So you got to think very creatively about really educating customers, really onboarding them very well so that you can solve the churn issue and scale the business well. And the churn is also important because it really starts to impact your ability to run paid for example [inaudible 00:29:03.4] acquire customers that way and so there's a lot … you have to be just very, very thoughtful such I'd say churn is quite a headache as a SaaS business owner. Joe: Yeah, it sounds like any business with customers. Take care of the customers first. Make sure they're using the tools to the greatest extent possible and that will reduce the churn. Which will, in turn, give you more money to do paid advertising than more than $325 a month. Yeah, I was going to go to the same place not that there's a right business or a wrong business to buy, they're just physical products businesses are just different than content versus affiliate versus a SaaS business. So anyway I was talking with Ezra about it. He owns both. He owns Zipify and he owns BOOM by Cindy Joseph or a portion of that one. In the physical products world, you create an ad and it hits and you scale. You spend more money on the ad. With a SaaS business it may be the same but then you've also got more support, more customer onboarding, and focusing on that churn rate and the metrics and you've got the cost of those developers which are also a lot more expensive than the cost of really good customer service people or graphic designers in the physical products world. A big, big difference though and again it all balances out. With the physical products business you have to have working capital for inventory. Your business is growing like crazy … sometimes I've sold businesses that have been 24 or 36 months old and had in-depth conversations with the owners of those businesses David. They bootstrapped it. They don't ever take any money out of the business. It's just growing and all they do is take every ounce of profit just trying to keep up with the inventory demand; that working capital demand. And sometimes they still run out of inventory. So there are two different ways to look at it; two different worlds. Those people that exit on the e-commerce world they don't take a whole lot out the first couple of years if they hung on that accelerated growth always slows down a little bit and they can then start taking salary and pull some more money out of the business. But you don't have that physical product or working capital requirements inventory in SaaS but you've got more expensive staff and developers that gosh if you've got a key developer and they go away it's a key employee and you've got to replace them. It can be very challenging and very expensive. So I'm not sure which is right. I always … I think people that are new in the in the internet space that are coming from the corporate world and want to live … work at home and see their family more and travel less and I've talked to a lot of people like that they say what … where should I go? What space should I look at? And I kind of think that they understand more easily physical products and can easily say I sell a widget versus I sell software to that people subscribe to to help them manage their calendar better. It's very different; very challenging I think. What are your thoughts on that? David: Yeah, I agree entirely. I think there's a lot of things to think about with SaaS. It comes down to … as in life right? You always have to choose what problems you want to solve for and some people like solving for very intellectual problems. It's very interesting looking at the buyer base for SaaS companies that often people that enjoy the intellectual challenge of having a lot of the moving parts to think about. And there are people that enjoy the challenge of just scaling e-commerce. So it's … yeah, a totally personal preference. I don't think that one is better than the other. I think it's entirely a form or like disposition of character. Joe: Yeah. Well, listen, David, we've had you on talking about SaaS. You had more than SaaS experience right? You sold lots of content, lots of physical product sites in the past as well. David: Yeah, more than I can remember. I mean when I really started my brokerage career I spent almost exclusively doing content sites so we have all of the … it comes in affiliate stuff, Ad Sense sites and I love them because again you know we talk about these beautiful nuances between different business models. For me, it was just so interesting looking up the SBA strategies of these businesses, looking at the approaches that these owners are taking to rank specific pages. And I got super into ad optimization group and it just fascinates me with this psychology of ad revenues and clicks and so forth. So yeah I actually have a lot of reference for Ad Sense likes and I think I often look at them from my own personal acquisition perspective because I just love the pessimity of those business models. Joe: Yeah, yes, absolutely for those that don't understand it's good quality content developed over time that's driving organic traffic and you're getting paid for clicks either through Ad Sense or a lot of folks doing affiliate stuff as well when they're doing product reviews and things of that nature. But that was the larger one that I sold last year which is under 9 million and it was a content site; just crazy, crazy growth. A great story too and we've had Ramon on the podcast. And this goes to the relationships with the people that we work with. The first one that we sold for Ramon a few years ago, let's call it five years ago it was maybe $125,000 business and a few years later he comes back as a client again. He says okay I've got another one like this out. It's 425,000. And then he comes back in December of I guess it was '17 and you know he's got one where we think it's valued around 5 and then we get it under a Letter of Intent and it's just exploding growth. And so he says Joe I just don't think I can do this. It was a hard, hard call for him to make on a Saturday afternoon in April of 2018. And he had to walk away from a 5 million dollar deal because revenue was growing at 300% every month which really just drove the multiple down and the total value up. We pulled the listing and the same person it was under LOI for 5 million, he didn't go away. He wanted to stick in and he knew that the value was there so he bid it up and two others bid it up and it sold for just under 9 million; a great story for that guy. David: The high quality strategic exit there to come back at that level. Joe: It was a risky move to walk away from 5 million but it worked out for sure. And the buyer was fantastic too. You've got to have a good buyer and good seller on both sides of the table. Structurally business on the side I know but it was a combination of private equity money, a little bit of SBA money, some family fund money came into it, and then the owners… the buyer's personal money as well and as strange as it is that particular by David also bought the largest SaaS business that I ever sold. So relationships with buyers are critical as you know. Any quick tips or advice for people that are thinking about selling their SaaS business, what should they do? Should they just focus in on churn or maybe have a conversation with you with an eye to exit even in 12 to 24 months, what are your thoughts there? David: Yeah well, I think definitely I'd advice there as based on how far you are out. If you're quite far out I do think it's worth split testing price increases. Over the years we've seen a surprising number of wins from people making micro price improvements. I'm obviously not grandfathering existing customers by trying that out. I think if you are closer into the potential exit talking six months like the really important stuff is actually things that seem to become incredibly easy to miss. But I've seen over the years things like just securing IP properly and then that's much more than just getting trademarks sorted out. But actually, if you've had a lot of third party developers working on the code getting proper IP assignments. Because the number of transactions I've been involved where they've got to be done retroactively is a little bit uncomfortable. I think another piece is around security. Again if you're not patching passworkds properly or if you're storing credit card data or any of this kind of things, like if there's any aspect at leaking they really need to be on top of that. I think absolutely avoid any kind of large discounting, annual plan discounting. Don't sell any life time plan type things. I mean that attempt to sort of artificially increase revenue earnings three to six months out is really, really, really visible unless of course, it's around something obvious like Black Friday. And I think that don't be too heavy with sort of trying to cost cut because again that's really obvious when you come into a sale that if in the last six months you suddenly just gone extreme and leave in order to get an attempt at inflated SKU it becomes very obvious to any experienced buyer. Joe: Yeah very obvious. David: I think one of the things that really does have a pretty big impact in terms of leveraging the multiple up is as much as possible obviously document source code and annotate that well. But as you can try and bring in … if you're the owner/operator and you've done a lot of the IP yourself and built a codebase really start to consider six months out bringing on a developer in time to hand that off. Because if you can show you by the time you come to exit that the third party developer has been in the business for six months, understands the codebase intimately, and has made … pushed out various updates; that is going to be a very compelling acquisition proposition for a buyer versus … you know that all of the knowledge is inside the owner's head and then we've got to do like fulfill the email gates at transition and our third party developer is part of this. So do that work before and you will get paid multiples upwards on the backend. Joe: David, unknowingly you've talked about the four pillars; the risk, the transferability, the growth, and the documentation. It's not just financial documentation but it's SOP's and all the other stuff as well. All of the things that you're speaking to sellers about buyers can focus in on the same thing when they're analyzing a purchase of the SaaS business. Everybody, David is reachable david@quietlightbrokerage.com. Reach out to him there. He's up on the website now. A phone number extension is there as well. We'll put it on the show notes too. David welcome to the team. I'm thrilled that you're a member of the Quiet Light team now. Thank you for being here. David: Thank you, Joe catch you. Joe: Alright, talk to you soon. Links and Resources: David's Quiet Light Profile David's LinkedIn David's Podcast