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Podcast Transcript 032:: Scaling Success: Acquiring and Engineering Growth in Micro SaaS with Kjael Skaalerud

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POD032 - Kjael Skaalerud - Scaling Success: Acquiring and Engineering Growth in Micro SaaS with Kjael Skaalerud

[00:00:00] Kjael: Where do I see opportunity? And, try to be a contrarian and I know that sounds a little bit cliche, but, uh, these really small and I think conventional definition of a safe business is usually a function of size.

[00:00:12] So. Put simply a 10 million ARR businesses is safer or more enduring or more stable than a 1 million business. And I just disagreed with that because and I guess marketplaces like acquire. com and others, there was this whole universe of these small software companies now that you had a lot of visibility into and they were operating for two, three, four, five years and were profitable pretty much out of the gate.

[00:00:33] I was like, okay. business that has generated a 50 percent profit margin for two or three years feels as safe to me as a business generating 10 million with no EBITDA, no net income, and is actually losing money. So it's like, okay, hypothetically, private equity isn't as active in this micro SaaS category.

[00:00:50] So it's not quite as competitive with these institutional players. These businesses are safe. They command lower valuations. I'm going to go try to do this.

[00:00:57] Michel: Hi everyone and welcome to Growth Leap. I'm your host, Michel Gagnon. We talked to pretty awesome business builders who are designing disruptive and meaningful companies.

[00:01:11] Hello, everyone. Today. I got the pleasure of talking to Kjael Skaalerud, the president of a Skaling Ventures, a firm focused on acquiring and operating micro SaaS companies. He led his first acquisition in the spring of 2023, a business management SaaS for creative, small and medium sized businesses. And he has not looked back since. Before buying micro SaaS, Kjael worked in the private equity world and focused on building robust sales teams and helped companies transition from founder led sales to a more professional organization. I know, unfortunately we won't have enough time to cover everything I'd like to cover.

[00:01:46] but, it'll sure be an insightful conversation full of concrete examples and practical tips. So enjoy. ​

[00:01:57] Hi Kjael thanks for joining us, to get started. Can you give us a quick rundown of who you are and what is Skaling Ventures for people who do not know you?

[00:02:07] Kjael: You got it. And thank you for having me, Michel. This is a pleasure. Of course. I appreciate it. yeah. So, my name is Kjael. I'm the president, which I'm not crazy about that title, but I'm the president of scaling ventures. And as you very eloquently put it, we acquire and operate micro SaaS firms. And for, , The typical, I guess, listener, what does micro SaaS mean?

[00:02:27] I'll try to avoid as much private equity, SaaS world buzz speak as I can, but traditional private equity, there's what's called the lower middle market, which usually starts at about 3 million dollars in annual recurring revenue. So firms that are generating 3 million to 10, that's kind of conventional lower middle market.

[00:02:42] So we play below that, which is called micro SaaS. So think, uh, and our specialty is vertical business to business software that mostly serves small and midsize businesses. and those firms are generating, you know, between one and three million in recurring revenue. And in terms of my background again, I think you probably said it better than I can, but, my career has always been in sales and go to market.

[00:03:02] And I guess what's probably interesting or what I think kind of cultivated in my vantage point is I've worked at every stage firm. so I started my career in a big corporate environment, ADP, which was known as kind of an elite global sales organization, uh, ended up running the New York office. And then from there, I spun out, I was in business school.

[00:03:19] So I started my own consulting firm. Where I was working with a lot of Series A firms and working closely with the venture community. And it was kind of like a, Hey, we just made a series a investment in X, Y, Z. They don't have a VP of sales. It's all founder led sales growth. Can you come in as kind of like an interim or a bridge VP of sales to help establish some infrastructure, help us get more clear on our ideal customer profiles on acquisition channels, and then ideally recruit your replacement.

[00:03:44] So that, that was, Interesting because it was just a ton of reps. So I ended up working with, you know, call it 20 to 30 organizations over a three year time period. So, a lot of that was transitioning from founder led sales, transitioning into enterprise sales, stuff like that. After that, I got back into operating for venture backed firms and I was a VP of sales.

[00:04:02] For a few tours and that was, you know, I guess more conventional venture, right? Like we are trying to hit really ambitious growth targets. We, it's a huge market that we're trying to tackle. We've got pretty good conviction around product market fit, help us go prove the market and help us do that in the most repeatable, predictable manner possible.

[00:04:19] And, I kind of determined that venture wasn't really for me. It's kind of a power law mechanism at the end of the day. So you know that there are 10 companies in the portfolio. Two are going to really outperform and eight aren't. And that's great when you're one of the two, but when you're one of the eight, you're kind of the walking dead and you slowly just get suffocated over time.

[00:04:35] And it's like, all right, I'm not sure I like the risk profile of this. I do to my core believe in systems and kind of framework oriented methods where you can predictably generate healthy and enduring growth. And that's when I started to make my way over to private equity as an operating partner, where a fund would buy a firm and they would install me as the CRO and then we would build a sales organization.

[00:04:56] We'd go to market and we try to 2X the business in three years. So I did a few tours of that and then I kind of picked my head up and it was like, all right, Where do I see opportunity? And, try to be a contrarian and I know that sounds a little bit cliche, but, uh, these really small and I think conventional definition of a safe business is usually a function of size.

[00:05:15] So. Put simply a 10 million ARR businesses is safer or more enduring or more stable than a 1 million business. And I just disagreed with that because and I guess marketplaces like acquire. com and others, there was this whole universe of these small software companies now that you had a lot of visibility into and they were operating for two, three, four, five years and were profitable pretty much out of the gate.

[00:05:35] I was like, okay. business that has generated a 50 percent profit margin for two or three years feels as safe to me as a business generating 10 million with no EBITDA, no net income, and is actually losing money. So it's like, okay, hypothetically, private equity isn't as active in this micro SaaS category.

[00:05:52] So it's not quite as competitive with these institutional players. These businesses are safe. They command lower valuations. I'm going to go try to do this. It was a good, the biggest option was that I could do deals, right? That I could be a kind of a deal person and structured deals and finance acquisitions and do stuff like that.

[00:06:09] And so far so good, but that's I guess my career arc and what got me to this point.

[00:06:14] Why You Should Prioritize Systems Over Goals

[00:06:14] Michel: I really like what you said about the risk profile or associating risk profile, to, the actual level of revenues. I think Jason Fried from 37 signals has, talked a lot about, the beauty of staying small.

[00:06:28] I'd like to start with your scaling ventures principles, which is something I found, that you've, defined and shared publicly on, on your website. I found them super interesting and I'd like to talk about some of them. So for audience, you can find them on a Skaling Ventures' website, and there's a couple I'd like to touch on, but first, you seem to be a fan of, James Clear's Atomic Habits. if not, well, you should read the book. He talks about, you don't rise to the level of your goals. You fall to the level of your system. So your first principle is systems over goals. What does that mean for you? And, how do you apply this to a SaaS business?

[00:07:06] Kjael: Yeah, my goodness. And a huge fan of James Clear. I think I've probably, when Atomic Habits came out, I probably gave away, I was just went on Amazon and ordered 20 copies and just gave away to every person I like, read this immediately. you know, and it's interesting, In our context and for the founders that are listening, like usually business performance is a function of your own performance.

[00:07:27] So if you're able to grow the business in new and meaningful ways, you kind of have to grow your competence. You have to grow your aptitude. You have to constantly level up. So it's an, and kind of this is the way for the folks that listen to the, or watch Mandalorian. That's another one that I subscribe to where it's like, this is the way.

[00:07:41] And I've always found that just a commitment to constant improvement or just iterative improvement is the way to go. And I guess a common fallacy, or I mean, we know in society, right? Like the failure rate for new year's resolutions is like 98 percent or it's something like, you know, 50 percent fail in one week and 98 percent fail in the first month.

[00:08:00]  There's kind of two sides to a goal, right? You have kind of what you're trying to do and then you have what you're willing to give up to achieve that goal. And so a lot of times when we think about goal setting and as a practice, right? Just documenting your goals and writing it down makes them infinitely more likely to happen, but we kind of failed to establish a game plan to get to those goals.

[00:08:17] And another fallacy is. And I usually use fitness and nutrition as a metaphor because, you know, just about everybody can relate, but it's like, common error that we see with the revenue goals, for instance, is, you know, we want to double revenue in two years. It's like, okay, what's underpinning that goal?

[00:08:33] Like, what's the most growth you've generated period? They're like, Oh, you know, 10 percent it's like, okay, well, maybe we just shoot for an incremental improvement on that 10 percent and let's see what we can get to. Like, let's assume we can get 10 percent month over month or 10 percent better month over month.

[00:08:49] Where does that land us in two years, right? Like maybe it's going to hit the target. Maybe it won't, but at least we're kind of working from base rates and we're establishing goals relative to either our performance, right? Where we can say, Hey, the most I've added to my bench press. Is 10 pounds in a month.

[00:09:06] Okay, cool. Why don't we start to try and add 12 pounds to a per month, right? So you kind of think about your base rates and kind of relative context, but also against your peer group. Where it's like, okay, we want a 2X the business in two years. It's like, okay, how many businesses have ever done that?

[00:09:22] Right. Or for a business that looks and feels as close to you as humanly possible, what's the best growth they've been able to generate. so I guess that's just kind of one example of like being systems oriented is, almost always like as a starting point is to kind of just reverse engineer the goal.

[00:09:35] So it's like, here's our goal. What do we have to do in kind of incremental steps to achieve that goal? And does that pass like the reasonable test? so I think with that, and I think systems thinking is another book that's absolutely outstanding. And so if you think about the world in terms of inputs and outputs, um, like another common example is.

[00:09:53] Especially in kind of niche vertical software where, you know, it's like, Oh, we want to 5X the business in five years. Okay, how many users do you have today? And they're like, Oh, we have 2000 users. Okay. Do you think that there are 10, 000 users in the market period?

[00:10:08] Because that's what it's required to five X the business. Like, have you done kind of that brass tacks reality check?

[00:10:13] Systems are everything. And I think that's a good way to vet just about anything as well. like when you're thinking about your growth motion for the folks, I imagine where it's hyper relevant, where it's like, what are the inputs that we're using to generate the desired outputs. And then that can start to help you think about funnels where it's like, Hey, we want to generate, you know, simply we want to add this many users. It's like, okay, cool. How many trial signups do you need? Or you don't even know, don't know what your conversion from trial to paying user is.

[00:10:39] Let's start there. Let's establish base rates so that we can set reasonable goals. And then we can kind of engineer our way towards success.

[00:10:45] Michel: I think, you see this a lot in startups today where you, you know, some teams spend a lot of time defining OKRs, which is, you know, it's a great system. I like that, but not putting as much or more effort into defining how you're going to get there, uh, or defining, you know, the system that is required to actually achieve your objectives and key results.

[00:11:06] So I, I totally agree.

[00:11:08] The Right Approach to Testing Acquisition Channels

[00:11:08] Michel: Another interesting principle. that you have is simplicity equals mastery. And, uh, I mean, we live in a very complex world, with a lot of technology and add ons what does that mean for you in a business and how'd you apply that?

[00:11:27] Kjael: Totally. Oh my goodness. Bruce Lee is one of my favorite philosophers.

[00:11:32] Michel: Oh,

[00:11:32] great.

[00:11:32] Kjael: thinks, and he thinks in one of his lines is uh, I fear not the man who has practiced 10, 000 kicks once. But the man who has practiced one kick 10, 000 times and there's another one that focus creates the space for performance, which a dear friend kind of, exposed me to once upon a time and it made a huge lasting impression on me.

[00:11:50] And I guess to put this in the context of go to market and growth, the tendency is to try everything all at once to everybody under the sun. And that's a really good recipe for terrible performance. so There's kind of that piece where, you know, and a lot of times it's like almost all priorities are correct.

[00:12:09] It's just the sequencing that's wrong. So another mistake is, you know, Hey, we want to start to get targeted acquisition going. We're going to buy some ads and we're going to send some emails and we're going to pay some influencers and we're going to sponsor some conferences. And it's like, okay, let's pull that back.

[00:12:24] Like we want to kind of have our scientists hat on all the time. Yeah. And let's adhere to the scientific method. And it's like, well, why don't we just create an experiment that allows us to test these different channels or these distribution outlets, so to speak. And then we can compare them on a relative basis, and then we can double down.

[00:12:40] And that way you don't end up with a, a year where you spent your entire budget and you haven't really proven one kind of acquisition channel.

[00:12:47] Another thing that's interesting, and again, just kind of back to kind of principles is, power law is so pervasive in our world. So. Peter Thiel has some good stuff where usually like if you can establish one productive channel distribution or acquisition channel, that's usually going to generate 80 percent of your results.

[00:13:02] So for founders that are trying to get go to market going, your job is to find that one channel. Your job isn't to try everything under the sun. Your job is to find one channel where it's like, Whoa, the results here are way better than the others. Let's keep going until we start to get diminishing returns.

[00:13:15] So there's that component where it's like simplicity equals mastery in the sense that like, If you're able to allocate all of your attention to a single thing, the likelihood that you unlock your optimal performance is way higher than if you're spread across a bunch of stuff. on the other vein, Uh, like my favorite thing ever is I guess the grandma test or the eighth grade test.

[00:13:35] If you can't explain this to an eighth grader, you don't understand it. so I think that's a good proxy for our own knowledge. Or Roberge, as we were talking about, you know, kind of stepping into this and, uh, this sales acceleration formula, which, was, you know, kind of the gospel for folks like me for many years, they, they used to define intelligence as the ability to comprehend complex topics and articulate them simply.

[00:13:57] So I think simply put, if you can't explain something to a kid, you don't understand it. And if that's the case, then , you have work to do to, to, I guess, get to that level of understanding where you can articulate it no matter the context or the other one is, pitch me this software in 30 minutes.

[00:14:12] Most people can do that. Okay. Pitch me this software in 10 minutes. Gets a little tougher pitch this to me in one single sentence, right? So you just try to remove the noise and get to the real kind of split the atom, so to speak, and get to the root of what it is. And if you can't, and then that, that makes you a way more useful salesperson to write where you're like, okay, you step into a room.

[00:14:29] What's my context. I've got 30 minutes. This is a non technical audience and you can kind of cater your narrative accordingly, but you have to own the root of whatever that narrative is to articulate it like that.

[00:14:38] Kjael's Strategy to Find Your Best Acquisition Channels

[00:14:38] Michel: You said, well, maybe we have our priorities straight, but the sequence is not right. So to come back to this. So if you're, let's say a SaaS, founder what you would suggest is to say, instead of trying, you know, four different initiatives at the same time, pick one. do it for a certain period of time, make sure that your experiment is, you know, your hypothesis is clear and well documented and then, once you've tried to iterate, you can move to the next one. Is that what you're saying?

[00:15:07] Kjael: Yeah, absolutely. And I think too. I guess what we see very commonly is that you kind of inherit the tactics of the time. So for so long it was like, Oh, you want to grow cool. Let's hire some account executives. Let's hire some SDRs. Let's make cold calls. Let's send emails and let's see what's going on.

[00:15:25] And it's like, well, basically you just picked one hallway to run down when there are like 10 hallways available to you and you don't know which hallway is going to get you to the door you want to go through faster. So you kind of can pause and, you know, a problem well defined is half solved. And there's other things where, you know, you, and this is a kind of a Bezos ism, but you want to kind of map the landscape of what's available to you.

[00:15:48] So that's always my first thing is like, what are all the tactics under the sun? So remove as many unknown unknowns as you possibly can, and then use that as a starting point. And the other is, like study your own client base. You don't need to be that clever. It's like, Hey, who are the, like the five users that are the best fit for our product?

[00:16:07] How did they find us? What did their buying journey look like? Let's talk to them. Let's kind of understand what, you know, kind of that system looked like for them. And then let's reverse engineer it and try to replicate that system and repeat it as many times as possible. That's probably the best starting point and don't worry about tactics or channels or paid ads or cold email.

[00:16:24] It's like, Hey, user, You found us, you signed up, you use our product every day. you bought our most lucrative pricing plan, whatever. Can you walk me through how you found us? He's like, well, I did a Google search and I read some of your blog posts. The one blog that you guys did that was a recap on the webinar was the most useful.

[00:16:40] And then I started following your user and your user was mentioning how you help them all the time. Uh, and then I went to your website and I signed up, right? And it's like, okay, cool. So what we need to keep doing is webinars. And influencer, no emails, no paid ads. And everybody would be like, Oh, but those are the things you do.

[00:16:53] And I think that's also a thing where it's like, anytime you get advice that it's like, Oh, this is what you do. Be a little cautionary because context is King, right? So you want to kind of think, well, that might be what everybody else does. That probably means that that, that that's a noisy way to go.

[00:17:07] Cause everybody's following conventional wisdom and it doesn't take into account our business and our ideal customer profiles or any of that stuff.

[00:17:14] Build a Culture of Honesty and Transparency to Move Way Faster

[00:17:14] Michel: Maybe one, last principle that I, I saw because I, was not sure if I understand fully. So I, I'd like you to explain it a little bit, is care and respect equals honest equals, fast. what, what what does that mean?

[00:17:28] Kjael: oh man. So there's so much about this. you know, so humans we're cooperative animals. So I'm going to get a little bit like, homo sapien on you. But you know, if you look back at like our primal wiring, the folks that got on with the broader community had a better chance of survival. And the challenge is that that's really at odds with truth seeking.

[00:17:50] Right. Because if you tell somebody the truth, the truth can be shocking. The truth can hurt. and that would make them less likely to cooperate with you. And so I guess it's very unnatural to be a truth seeker. And if you look at some of the best business leaders of all time, they would attribute most of their success to creating a truth seeking culture.

[00:18:06] Like if you look at the Dalios, the Bezos, you know, et cetera, et cetera. And that's very hard to do. Let's say we debrief on this podcast. How was it Kjael? Oh yeah, it was great.

[00:18:15] Yeah. You know, it was fine. Like just sugarcoating it. That means no effort. I'm afraid to tell you the truth. And if we continue to operate that way, your, your podcast isn't going to get any better. I'm not going to become a better guest. So we kind of allow this sugarcoating to hold back. The truth. and so to get to this truth seeking environment, you have to kind of reframe things where it's like, if you actually care.

[00:18:37] Like if you care about the quality of this podcast, then you will give me real feedback. And if I care about the quality of this feedback, I need to have thick skin to the extent where I interpret your feedback as constructive. And I understand that you're that a, you care enough to tell me, uh, and B it's because you're interested.

[00:18:53] We're interested in the same things, which is improvement over time. And then what ends up happening is that if you create that culture of honesty and transparency, you move way faster. One thing that I used to kind of exclaim when I would step in to run a team is if you're confused today and you raise your hand, I will never tell you you're dumb.

[00:19:13] I will never be upset that you asked a question that I thought was stupid. If I find out in two weeks that you've been confused this entire time, I'm going to be furious. So that I think is a good example that kind of cuts to the root. And then on the other side, too, if you ask for feedback, Then you are not allowed to handle that feedback in an emotional sensitive manner.

[00:19:35] You have to understand that the intent is, is productive. The intent is constructive and that people are expending way more effort to be honest with you than to just be like, Oh yeah, you know, you did a good job.

[00:19:45] Michel: It's funny because yesterday I was in a retrospective meeting where it started a bit like you said, where there was a breakdown in communication that led to that issue and I raised my hand quite quickly and said, well, That's not actionable like this. There's nothing, useful that's going to come out of that.

[00:20:06] Instead let's, go to the root cause. Let's try to be specific. And, when we started doing that, I mean, it's like, who did what? Right. And then as you said, like some people started saying, well, uh, I don't want to finger point anything. I was like, well, we're not, it's not a trial here. We're trying to figure out what happened and to get better, as you said, you need to be specific.

[00:20:27] So I love that. I was, um, I had, I really had no clue what that principle, meant. So I, I'm, speaks to me.

[00:20:35] Kjael: lot of context for our organizations too, for that one. I think another really important point too, is. When you're giving or like there has to be a clear, kind of distinction between subjective and objective feedback. So one is like, Hey, here's what I think. Here's what I feel. Here's a gut intuition and that's useful feedback, right?

[00:20:54] I think, you know, our feelers are much more evolved than our thinkers, so to speak, but at the same time, you always be prepared to substantiate feedback with data. Because that's the, that's as close as we can get to the truth. That's as close to the reality as we possibly can. So that's another thing where it's like, if you give feedback and it's critical, but in a constructive manner, be ready to substantiate your point of view where it's like, Hey, you know, I don't like that last email campaign seemed off base.

[00:21:18] Why? Because our conversion rates were much lower than our other campaign. You know, that's a, I guess, very terrible example, but you get the point.

[00:21:26] Kjael's First Micro SaaS Acquisition

[00:21:26] Michel: Let's switch gear a little bit. I want to talk about your acquisition, which, dates back a couple of months. can you tell us a bit about, you know, company acquired? I believe you've, um, found that company and acquired. com. We had Andrew on, on our podcast a couple of months ago. So just tell us about, how it happened and a bit more about the company itself.

[00:21:47] Kjael: Yeah yeah, totally. So it was actually, March of last year so we've been at it for three quaters Uh, owning the business and this is our first rep. So, you know, a lot of this is kind of a proof of concept that the micro SaaS asset class itself is interesting, because on a pure volume basis and I guess conventional wisdom is do the biggest deals you can.

[00:22:06] Because there's kind of everything is work. So you can expect kind of the same baseline level of work. You might as well try to get as much, put simply, if you're going to try to fly to the moon, you might as well try to fly to Mars because they're both really hard and Mars is a lot cooler.

[00:22:19] so micro SaaS kind of, this is kind of an experiment in it onto itself. And we're treating this first rep as a way to really refine our playbooks and our systems and also kind of take. and anti kind of conventional approach, where a lot of times you talk to a private equity fund and you ask about their playbooks and they don't really exist.

[00:22:34] Right. They're kind of general thought processes. There between, you know, people's ears that are not documented, they're not systematized. They're not technology driven. There's no automation, there's no leverage of data, et cetera. so anyway, I digress a little bit, This first deal, I guess, to put a point on it, it was kind of like, let's go prove this and let's go do it.

[00:22:53] And let's apply what's been very successful in a more typical private equity setting and see what we can do here. Um, and a huge catalyst for that is the emergence of these marketplaces. Um, so I have a eternally grateful to Andrew, because again, there are no investment bankers. Right. And so a lot of the time it was like the Craigslist equivalent where it's like, Hey, this is a software business that's for sale.

[00:23:14] And you're like reading like the classifieds of a newspaper. And it was like, Oh, that's hard to establish a real ecosystem around that.

[00:23:20] How SaaS Startup Marketplaces Accelerated the Process of Acquiring a Business

[00:23:20] Kjael: So when acquired. com and other marketplaces had come up, all of a sudden you have visibility into these businesses that are very interesting. And, I guess the OG way of private equity too, is there's like a data room.

[00:23:30] Which has these static Excel sheets that are exports of financials, and maybe there's a screenshot of a pipeline from Salesforce. Now you just pipe into these systems of record. So you want to know what a business's revenue is. Here's an API into their stripe dashboard. You want to know what their traffic looks like.

[00:23:46] Here's Google Analytics. So Conviction around the data sources to understand how these companies were performing was way more authoritative. And there were much more sophisticated marketplaces where all of a sudden it's like, Whoa, there is a universe, an ecosystem of businesses that are here, that are interesting, that are for sale.

[00:24:04] We can really quickly move through diligence. And much of it is that like we can just move faster, right? We have small teams that punch way above their weight class. We, we. Strap, you know, I, I joke, like we put iron man suits on them so that they punch, like, you know, employees that you know, five employees, one employee can do, So anyway, so we came across this firm and I keep our portfolio anonymous.

[00:24:23] So again, trying to kind of flip convention on its head. So typically, fund is like, here's the company we just acquired, but then they don't talk about how they make it more valuable. They don't disclose their transformation plan. They don't disclose anything. So we keep our portfolio anonymous, you know, ninjas move in silence, so to speak, and then, uh, we're super public about everything that we do, where we struggle, the hurdles we run into, et cetera.

[00:24:43] So I came across and in my world, I've been. Obviously I've lived and existed in CRMs my entire life. And we like RevOps was this role that emerged and we were doing what was now defined as RevOps for years where it was like, okay, we're only as efficient as our tech stack, right? And what's the data we use and how do we leverage, you know, activity from the market?

[00:25:05] Kjael's Rationale for Focusing on Vertical Niche SaaS

[00:25:05] Kjael: How do we get smarter? What are the feedback loops in our system, et cetera. Uh, so I know CRMs very well. And if you think about like the three kind of pillars of business software, it's, you got to manage your customers. CRM, you got to manage your books, which is like an accounting or an invoicing or something like that.

[00:25:19] And you got to manage your employees, which is like an HR tech. So those are the three kind of pillars. And that's where you get the sayings where, you know, all SaaS tastes like chicken because it's like usually derivatives of that. And so where we get excited is you have these big horizontal players that are like, we want to be the CRM for every business under the sun.

[00:25:35] And that's a huge market that they're almost always venture capital backed where you can start to carve off and compete for market share are like these very small niches where it's like, okay, you know, Salesforce is great for the most average business under the sun. But what about for hair salons?

[00:25:50] What about for dog walkers? What about for the most obscure niche you can possibly imagine? So we like. pure play traditional kind of base case technology infrastructure that's catered very neatly to a specific segment a. k. a. vertical niche SaaSs. so that, that's kind of been our macro sweet spot, if you will.

[00:26:10] Analyzing 500 Deals and Why You Need to Be Carefull with LOIs

[00:26:10] Kjael: And so I stepped in the marketplace. I was at it for about a quarter and I probably looked at, you know, between 200 and 500 deals, and then they move into LOI. again, I probably won't try to go too hard down the deal jargon, but that's basically like, Hey, this is what I'm prepared to pay you. This is how I'm going to pay you.

[00:26:26] And then it's, it's kind of contingent on a diligence period, which is defined, you know, 30 to

[00:26:31] Michel: How many, sorry, how many LOIs

[00:26:34] Kjael: probably, nine LOIs and I don't like, I'm not really, I'm pretty intentional with LOIs. Like if I ship an LOI, we're going to move really swiftly through diligence. We already have the capital organized and we're going to move.

[00:26:46] there are a lot of people that just rip LOIs because I think the worst thing you want to do is like retrade, which is like, Hey, I'll pay you a million dollars for this podcast. And then you get to the end and you've just spent 30 to 60 days letting me look at the business. And it's like, actually, you know, how's 600 K?

[00:27:02] We looked at some stuff and this stuff and it's like, ah, like, that's just kind of a bad practice. And that can give you a bad reputation with founders. And so we, when I send an LOI, we have all the intent in the world to get the deal done and at that valuation. so did about, probably 10 to 15. I've got good metrics on that, obviously.

[00:27:16] and then we came across a business that was, very enduringly profitable. Um, it had been around for 10 years. it was, it's profitable all of those years. there was a little bit of tech debt. The product was encumbered and it basically pulled together the Holy Trinity, which is CRM accounting, and HR tech and a team management into a single umbrella.

[00:27:35] Why Retention Is the Number One Thing in SaaS

[00:27:35] Kjael: There was a lot of workflow automation and it was catered towards photographers, mainly commercial photographers, and then our other event based creatives. And retention was extraordinary. And I know that, uh, we might touch on retention a little bit more, but retention basically proves that the product is useful.

[00:27:50] Um, and that's the number one thing in SaaS because it's a function of recurring revenues. So if users come in, it doesn't do the trick. They churn, you don't have recurring revenues. You can't command interesting multiples. And then why are you in SaaS at all? So retention is the number one thing.

[00:28:04] Skaling Ventures' 50 Dimension Deal Scorecard

[00:28:04] Kjael: And so it was very jazzed about the business, move pretty swiftly, through it. And we have a very structured, again, kind of objective scorecard where it's like, you know, we look at 50 dimensions of any deal and those dimensions get more detailed as you get further into the process. So we have stuff that's like public information from a listing.

[00:28:22] Cool. We've signed some kind of NDA. Now we have private information. Now here's the stuff we want to look at. Cool. We've signed an LOI. Now we're in diligence. Now we have basically full access to everything. Here's the stuff that we want to look at. And that scorecard allows us to compare deals on a very objective basis where you can start very simply.

[00:28:36] And it's like, what was the aggregate score of this deal? Versus that one. Okay. Where did it outperform? Where did it underperform? And then you can start to figure out where you want to take risk. you can start to map a transformation plan, et cetera.

[00:28:47] The Importance of Founder-Product Fit

[00:28:47] Kjael: So we acquired the business. and I think one piece too, that's very interesting is we talk about founder product fit, or I guess some folks are starting to talk a lot more about founder product fit and what we don't have in most cases is like, Hey, if we want to build like an outbound email tool, I'm a subject expert if we want to go build SaaS for photographers.

[00:29:06] I'm not a subject expert. Like I don't understand the personas. I don't understand the jobs to be done, the pain points. So when you can look at a business that was a founder who occupies that space and was solving their own problems, then you know that there's kind of that founder product fit, so to speak.

[00:29:22] And they bring a ton of tribal knowledge to the equation, which then translates into a product that's useful, which then translates into retention. So that story was there. And then the other piece too, and at the end of the day, again, this is very trite, but it's all about the people, right? So you start to really appreciate the founder because their DNA is what's going to permeate into the rest of the organization, into the user base, et cetera.

[00:29:43] And so the other thing that we look for. In terms of a selling reason is founder burnout where it's like, I built this thing, I'd started moonlighting it and then it took off, you know, has a life of its own. And then I was living off the income from the business and I've been at it for eight or nine years or or five or three, and I'm ready to move on.

[00:30:01] Because the thing that you have to hedge for is, I guess, adverse selection, right? put simply anybody, people are selling businesses for a reason. Nobody sells a business that's absolutely ripping. So if something's on acquire. com immediately, it's like, Oh, like what's wrong with this business?

[00:30:17] Why are they trying to sell it? And so when the founder is like, you know, I just, I want to mix it up or, you know, a little bit of liquidity here. I'm going to take a year off. I just had a kid and I'm going to spend time with my family, et cetera. So all those things kind of culminated. And obviously we've learned a shit load, since then.

[00:30:31] but the things just stood out and it was like, I trust the founder. The user base is healthy and they are using the product every day. And I know that we can grow it because that was not the founder skillset. They were technical, they're engineers, they're product centric. And that's the other thing too.

[00:30:46] You ask him, you know, how have you grown it? You're like, well, people come to our website and buy it. And it's like, how do they find you? It's like, okay, we, there's some stuff we can do here. so anyway, I'll leave it at that long winded answer, but hopefully that touched on what you're hoping to hear.

[00:31:00] Kjael's 90-day Plan After Acquiring a Micro SaaS

[00:31:00] Michel: super interesting and insightful. I want to touch on your sales experience. How did you get started. What was your, your approach? We've talked about sequence. This is something I believe in a lot. And I keep repeating to our team, day in, day out. It's like the sequence of, what we do is sometimes as a, if not more important than what we're prioritizing. So, you know, when you, you got the deal signed, what was your first few steps and what were you interested in?

[00:31:30] Kjael: So I think our playbook generally breaks into like four chapters. Our first 90 days encapsulates a lot. but that's kind of how we think about it. And we work in six week sprints. So at that point, it's very much kind of capabilities building and establishing infrastructure, et cetera, and kind of priming the engine for growth. And the other big question mark is the seller transition.

[00:31:52] So sellers, are they going to stay on for like a 30 day transition period? Are they willing to stay on for a quarter? Are they going to stay on for, 5 percent stake in the business and be a board member and contribute 10 hours a month for the first year? all of that is there. But no matter what , the first kind of chapter is visibility and documentation.

[00:32:11] The Four Chapters in Kjael's Playbook to Drive the Business

[00:32:11] Kjael: And I'll elaborate on each of these chapters, but the first is visibility and documentation and then transition and stability and then learning and diligence validation. And then we move into identifying the number one growth constraint or the number one kind of, an experiment to get that first acquisition channel going.

[00:32:26] So under visibility and documentation, like in here come all the quotables, but like you can only improve what you measure. So the first thing is like, what are the customer touch points? What have funnels and conversions look like? What does product usage look like? What do brass tacks metrics around MRR, et cetera, look like, how well documented is the product is the code base.

[00:32:47] How well documented is the support components. So it's basically just I want to see everything. It via like slack alerts. Like I want one dashboard that shows me everything. I want to be instantly in the know on how this business is operating. And I want to make sure that everything is documented because in essence, you're trying to understand the business you're trying to ramp basically.

[00:33:05] So it's almost like an onboarding exercise. So you're like, I want to understand the mechanics of the business as soon as humanly possible, and I want to round out any tribal knowledge in legit documentation. So that's kind of the first chapter. And then, you act on that as quickly as you possibly can.

[00:33:20] And then as you come out of that, you kind of have a V1 scorecard or you can, where it's like, okay, these are our base rates right back to the whole thing around systems and coals. Like we're going to 5X the business. It's like, all right, well, how much has it grown now? You know, so you kind of establish that baseline visibility and then just make sure that you have everything documented because the assumptions that the seller is going to leave eventually.

[00:33:39] so once that's in place, then you move on to transition stability. So a lot of this is like key employees. what are the risks in the business? And we need to solve for that. So in almost every case, the CEO is leaving. So what was the CEO? Oh, he was the lead engineer. Okay, shit. We probably need to bring in some engineering talent, or, you know, how are we going to orient the other engineers around kind of the knowledge gaps as it relates to the product, et cetera.

[00:34:01] So you solve for that. And then you, you establish, communication beats with the users. So that's another thing. That sets up very hostile where it's like, Oh God, some private equity person. Worst case is like some corporate private equity person just bought this software. I've been using, I love it because I know the founder.

[00:34:19] It's very human. It's very personal. They're going to gut this thing. It's going to be terrible. So we are big advocates of staying human and building in public. And so it's like, Hey, here's who we are. Here's what we're here to do. Here's our plan. Do you have any feedback? We'd love to talk to you. We'd like to understand what you do, where the gaps are.

[00:34:36] so you get those beats going as soon as humanly possible. And then so once that kind of baseline is established, then you move into like, actually learning. from, your assumptions from diligence. So, I mean, after 30 days of just studying the shit out of a business, you come out of it with some thought process around, here is the ICP, here are the core customer segments. This is what the onboarding motion looks like. This is how pricing and monetization looks. this is what we've seen as kind of gaps in the road map. So you just validate that and it's like, all right. Let's now that we're in the business, we have way better visibility.

[00:35:05] We've rounded out kind of our blind spots and they're all documented. Let's validate the assumptions that we came into the business with. Once that's done, then you move and we call all of those things like eating your vegetables. So it's like you got to get in and eat your vegetables and eat them as fast as humanly possible.

[00:35:21] And then you get on the fun stuff, which is growth. And then it's usually just about experiments. So it's like, cool, let's put our lab coats on and let's start executing growth experiments and let's figure out how we're going to, how we're going to grow this thing.

[00:35:32] Michel: I want to know what it looks like. Because I, used to work in, uh, management consulting with PwC, if I've had to work, also with McKinsey back in the days when I was in the aerospace business,

[00:35:43] I've seen like huge decks and then I own private equity when you have, investment memos or, you know, whatever documents, things can be thick and, quite thorough.

[00:35:53] Kjael: Hmm.

[00:35:54] Understanding Kjael Operating System and Tech Stack

[00:35:54] Michel: You're targeting micro SaaS companies. And I was looking at your ICP in a way, or your, your ideal target. And sometimes you, I think if I read correctly or remember correctly, we're talking about seven employees or so. Right.

[00:36:08] So, I'm kind of interested in understanding how does that look like?

[00:36:13] You know, your, that work, right? Because you, just like you said earlier, You are acquiring a business whose processes sometimes are in, that guy in the corner his heads. I always say there's a fine line between bureaucracy and structure or, you know, effectiveness. So I don't know if you can give me a, uh, know, some ideas, you know, you've talked about a scorecard at the end you were saying, okay, what are the, key channels, that kind of stuff.

[00:36:38] How does that look like when you look at this, do you have a one pager?

[00:36:41] Kjael: Yeah. So a great question. And I, I, I'm still kind of moved by the comment around, you know, the thin line between bureaucracy and structure. that's profound. yeah. So I can tell you, I mean, we

[00:36:50] Michel: You can't, you can quote me on this.

[00:36:52] Kjael: yeah, perfect.

[00:36:53] Yeah. That might throw that on our principles. um,

[00:36:56] yeah. I mean, I can literally pull it up. Everything lives in notion for us.

[00:37:00] And again, we're trying to make things as repeatable as humanly possible.

[00:37:03] So when you step into a portfolio company homepage and we have the same for Skaling Ventures, you have a general section, a leadership section and operation section, sales and marketing, customer success and product and engineering. So those are the things we outline and then it back to power law. So it's like, all right, we have operating procedures that we document.

[00:37:21] We only need to document the 20 percent operating or procedures that get used the most. So that's how we think about kind of that balancing act between bureaucracy and structure, but we want to avoid redundancy. So it's like if you ever find yourself doing something more than once systematize it or document it and delegate it and kind of move up towards more impactful work.

[00:37:38] so for us and like articulating it, it's like, and we never want to be doing work and are redundant work and work should continue to should build momentum over time. Right? So when we're going through the diligence process, our scorecard should translate very neatly into a transformation plan, which should translate very neatly into an investment memo.

[00:38:00] So that work just cultivates and becomes increasingly simple over time. And it's like, if you had to write back to simplicity is mastery. If it's a 200 page deck on why you're going to buy the business, you probably don't know why you're going to buy the business. If it's, you know, 30 pages on how you're going to grow the business, you probably don't know how you're going to grow the business.

[00:38:18] so those are back to things where. And it's like, this is not college, right? this isn't like a 10, 000 word requirement on essays. This is a like convey this information as fast as humanly possible because that's what's actually rewarded in a business context. So, you know, our stack is, is mostly based on notion.

[00:38:34] For like our knowledge hub, all alerts run through slack. So, you know, if a user signs up, I see in slack. If a user churns, I see it. If we have a customer support ticket, I see it. So we kind of create this natural exposure, which via osmosis, you will orient yourself to the business over time. Right. It's just, you just kind of brainwash yourself with what's going on, but it's all centralized in one place.

[00:38:54] Right. So I'm not bound like, Oh God, to hear my emails. Okay. I'm going to go into the CRM and all right. And then I got this other dashboard it's like, this is consolidated into a single place as kind of the tip of the spear. And if you want to go deeper, you can go into those systems of record to really start to understand stuff.

[00:39:07] there's that. And I mean, I guess it's a function of, you know, Repeatability and systems and processes in notion. And then it's a function.

[00:39:15] How to Translate Vision Into OKRs and Daily Work

[00:39:15] Kjael: We use the entrepreneur operating system EOS, or it's a derivative of it called traction, which I'm sure everyone's pretty familiar with. So it's like, you know, we have a three year plan.

[00:39:25] We have a two year plan. We have a one year plan, and then we have a kind of a mission statement and core values and points of differentiation. But we use, it's called a vision traction organizer, VTO. That's like our most important artifact to orient the entire business. So you have your three and for us, we assume a three year or so holding period.

[00:39:40] So that's kind of the end game for us. So you have year three, year two, year one, and that dovetails into quarterly OKRs and then, We, everybody works in notion. So, Hey, this is the objective. Here are the key results. Those key results fit into a workboard and I can see the work that you're doing associated with each of those key results.

[00:39:56] So I can give you constructive feedback. It's documented. It's there, right? Like we're looking at it together. And then ideally that makes it infinitely more repeatable where it's like, Hey, how did we grow that last, that one thing we did with cold at what was that? It's like, it's right here. And what were the results?

[00:40:09] They're right here. Right? So you get to this place where it's not a hundred humans that are kind of working in like this abstract manner toward goals that they don't really understand. It's like, here's where we're trying to go. This is how this connects to that. These are the tactics that generated this result.

[00:40:24] And there it is for you. And then I guess we round that out with frameworks. So it's like, you're a function of the systems and how you document stuff and how you think through setting goals and getting to those goals. And then you're of a function of the frameworks that you use to inform your thinking.

[00:40:40] So an example for us, Michel, should you, you want to grow, the growth lead podcast? Should you buy ads or should you actually, maybe let's change tooling. Let's switch to a platform that's going to allow the video quality to be much better. Everything costs time period. So time is the most finite resource and time is often associated with money.

[00:40:58] So those things are there and you have two opportunities that you have to decide on relative to each other. So a lot of times there is no thought process. There is no framework. So we use RICE for that, which is, or product investments, I guess, is more, you know, guys common in our context where it's like, all right, what's the reach of this thing?

[00:41:13] What's the impact? What's our confidence in the reach and the impact and then what's the effort that's associated. So it ends up being kind of a tipping scale where reach and impact and confidence are on this side and efforts on that side. It's like, well, it turns out if we buy ads, we can grow the podcast and then we can afford whatever kind of video production stuff we want.

[00:41:29] Right. And the rice score was four times higher than the other thing. And it's like, okay, let's allocate our time and capital that way and go. so I think, we're all a function of our systems and our systems are informed with frameworks.

[00:41:40] Michel: I really believe in systems just because I'm not naturally organized. I don't know if you are naturally, uh, very structured and organized, but the way you speak conveys that at least, but for me, like the system was really a way to help me, uh, with my, more negative sides or, bad qualities, let's say.

[00:41:57] So it's really helpful. And I, I agree with you. It, provides transparency also in accountability for, for the rest of the team.

[00:42:05] I don't want to take too much of your time, but there's kind of two things I'd like to talk about. The first one is really sales.

[00:42:10] And, I kind of want to dig a bit deeper on that, but, and the last one is a bit more philosophical, because I like that. so let's start with the sales, question.

[00:42:20] So basically you're acquiring, SaaS companies. This is your experience. And, I'm interested in, knowing what's your approach like to grow sales in a SaaS business And how do you structure the team? What are the first steps? And I'm interested in seeing this from, let's say, let's think the, the company's just acquired, right?

[00:42:39] So let's say you're, I'm the tech founder of a SaaS, Micro SaaS business. I don't necessarily know where to go next. Or I know, how to grow my sales organization or my revenues overall. Based on your experience, what's your approach and what are the key things that, our audience could use to, to reach their goals.

[00:42:58] Kjael: Yeah. Yeah. there's a Dalio

[00:43:01] Michel: a big question.

[00:43:02] Kjael: Yeah, yeah, yeah. But I mean, I think I can definitely contribute some ways to think about it. so I think the first order of business is to like understand the reality in which you exist. Understand the constraints So if, and a very simple example is how much is your, like unit economics is a good way to kind of think about it where it's like, okay, how much does your product cost?

[00:43:22] And we'll just keep this very basic. It costs 100. It's like, okay, you can acquire a customer for 99 and you'll make a dollar. But now we understand some constraints that we can work within. So it's like, okay, then it becomes, How do we spend as little to acquire that hundred dollar customer as we humanly can so that we're creating profit?

[00:43:40] Cause that's the, that's what all businesses are intended to do, right? Is create some kind of profit margin such that costs don't equal profits and then you're making no money. So there's kind of some brass tacks where it's like, are we, how much is our product? Okay. What kind of resources does that give us to actually grow the business?

[00:43:55] Okay. And then that's kind of a good point of departure. Unit economics is very useful for that. And in SaaS, you start to think about lifetime value, but that's very tricky to measure at an early stage business. Cause it's like, we have five paying customers and they've been with us for a year. We don't know how long they're going to be with us.

[00:44:09] So you need to don't use LTV as like a, this is defined. It's more like, Hey, we just think that it's kind of around here. So we're going to try to spend no more than a third of that to acquire our customers. and you want to think about a payback period too. So it's like we're only, you know, a customer is a hundred bucks.

[00:44:23] We want to make that money or it costs us a hundred dollars. We want to make that money back in two or three months and then it's just profit margin. So those are some other ways to kind of think about it. typically. It's a function of segment as well. So as you move into more enterprise software where the contract values are higher, now you can afford a sales team.

[00:44:39] Now you can afford solutions consultants. Now you can afford implementation people. If you're down in the small business category and your product is, 30 dollars a month, you can't afford sales teams.

[00:44:49] Well, I guess there's kind of this distinction at the most macro level between product led growth and sales led growth, product led growth. The holy grail is like the product helps sell itself, right? Which is like DocuSign. Hey, Michel, I just sent you a contract and you're like, Whoa, this was easy. This was great.

[00:45:04] I'm going to use it. Happy days, right? The product just grows and grows and grows and grows. There's no sales people. There's no anything. The next one is like, can your users onboard themselves? So is it kind of user led onboarding, which is kind of a derivative of product led growth? but at least you don't need to consult someone around.

[00:45:19] Hey, here's your, like a CR, like you're selling salesforce. it's, there's so much consultative sales that has to happen to get them to a place where they can actually believe, or you might need to implement, you know, a proof of concept and actually show them the outcomes that you're doing. So another question is like, can our users perceive the product value on their own?

[00:45:37] Okay. So now this unlocks some product led growth stuff where it's like, we just need to get them to our website and get them involved in a trial. And then it's just about kind of prompts within that user experience to get them to convert to paying users. So the first thing is mind your context.

[00:45:51] Are we selling? And a simple way to think about that is are we selling to small midsize businesses? Are we selling to mid market companies? Are we selling to large enterprises? Who's generally involved in those buying decisions? Okay, it's a small business. It's one person. Okay. It's a enterprise. There's a decision making committee of 20 people.

[00:46:07] Okay. And so it's just thinking, what is our buyer's journey? Who's involved in that buyer journey? What are the kind of typical, I guess, steps that they take? How thoughtful is this? And then you can start to back into a sales process, or some kind of like an experiment on, on what you want to test to get there.

[00:46:24] But usually it's like, what's a thesis on our unit economics? What's the context of our category? Which segment are we selling into who are profiles in terms of like how the decisions are made at these organizations. Okay. From that, you've got enough shit on your whiteboard to start to be like, all right, let's hire one sales person, you know, and you can start to think about how you want to do it.

[00:46:42] But, um, those are, I guess I would say kind of good starting points.

[00:46:46] Typical Mistakes SaaS Founders Make

[00:46:46] Michel: And do you see a typical mistakes that SaaS founders are making on that front specifically?

[00:46:52] Kjael: Totally and this One has been around for a while, so I wouldn't really suggest it's novel, but like the most conventional one is quota equals bookings. So it's like, Hey, we need to grow revenue. 2 million. Cool. We need to hire four people. Account executives that carry a 500 K quota because they're just going to magically produce whatever their quota is.

[00:47:10] And that's how we'll get to our goal. So you just throw bodies at the problem. And then the other one is you scale too quickly. And Roberge has some good stuff on this too, where it's the feel like you would think that a Series A business, there's way more unknowns, there's way less validation has a way higher failure rate than a Series B business.

[00:47:29] And that's not the case. Series A and Series B businesses have about the same failure rate. And I guess some theories on that is because they're like, Oh my God, we hit this thing. Cool. Let's hire 10 salespeople. And it's like, well, actually hire one. And prove that you can repeat this at a unit level and then hire another one.

[00:47:46] And now maybe start to hire in cohorts and try to do two at a time. Okay. Now you can bring in a whole class of salespeople and that allows you to kind of group and truncate onboarding activities where you should pick up efficiency and performance gains and a de risk the entire process. So it's always like, Test, validate, double down, test, validate, double down.

[00:48:03] Don't just slam the pedal to the metal and never take conventional wisdom at face value where it's like, Oh, you want to grow people? You need to hire one AE. And for every AE, you need two SDRs. They need to make a hundred phone calls a day, or you need to spend two grand a month on paid ads. It's like, well, I mean, maybe, you know, like we need to find that out.

[00:48:21] Like we can't just assume that that's the case and allocate very finite resources when there's high stakes, especially now. Where cost of capital is going up, like this growth at all costs sentiment is like, it doesn't work anymore. Right. Interest rates have changed. Valuations have come down and it's like, we need to see you hire a salesperson and make that salesperson profitable period.

[00:48:42] Did they generate more revenue than it costs to employ them? Just start there and then kind of iterate your way to the truth. So I think it all comes down and it's just like beast, take your time. It's better to be late than to be early and run into traffic and get hit by a car. It's like take your time make sure you know when the cars are coming and you know There isn't this kind of crazy clock pounding behind you Be smart and kind of let the results and let the reality around you validate your tactics and determine how you go from there

[00:49:11] Michel: Love it also one of the typical mistakes is, hiring, especially micro SaaS. , if you have a very small company, you hire big guns, you hire an ex Google or an ex, McKinsey, And these people have this massive infrastructure and resources supporting them to actually get the job done.

[00:49:29] Not all of them can transition to that, you know, small companies where, as you said, maybe things are not documented or, they don't necessarily have all the sales enablement they'd like to get.

[00:49:39] Kjael's Definition of Success vs. the One He Inherited from Society

[00:49:39] Michel: Maybe my last question is, as I promised more philosophical, talking about success and happiness.

[00:49:45] You said in a previous interview, I didn't come up with a calculus for happiness that was my own. I inherited society's definition of success. And you, you were talking about, growth at all costs about finding new paths in investment and business. Do you have a new definition of success?

[00:50:03] And if yes, how is that influencing your approach to buying and scaling businesses?

[00:50:08] Kjael: Yeah God it's funny how this all comes full circle, right? You know, it's interesting. Like you'll see, Hey, what are your goals? And people, and I guess we're just talking about material things. it's like, well, I want a private jet and I, or I guess let's just start from the top.

[00:50:22] Like if we, we live as an American, I live in a highly capitalist economy. As a function of that, consumption is the name of the game. People need to consume, people need more, they need kind of endless appetites to perpetuate this capitalist system. So, if you inherit society's definition of success, it is a private plane, it's multiple houses, it is a chauffeur, it is dining out, wearing all this nice stuff, an expensive watch.

[00:50:47] And so, especially when I was in Manhattan for 10 years, and so you never stop to think where it's like, On a relative basis, does an afternoon with your son make you happier than a watch? Yeah? Okay, then strike the watch off your list. Who cares about the watch, man? Like, it doesn't matter. So I think the first and most important thing is, like you can engineer a lifestyle as a function of what it costs and then how you can create those kind of resources to provide for that lifestyle.

[00:51:14] So very, you know, in our goals for my family, it's, we really enjoy travel. We really enjoy international exposure. we enjoy time in nature, time in the mountains. So simply put, it's like we want a home in the mountains. We want to take two or three epic trips per year. Okay. Well, what's a home in the mountains cost?

[00:51:30] Well, it's 30 percent down on a million dollars and then it's expert, you know, monthly mortgage. Cool. What is our average spend for a trip? That's kind of an epic worldly trip. That's what it looks like. Great. To sustain that lifestyle, you need this level of capital to get it going and then you need this level of kind of consistent income on an annual basis.

[00:51:47] Great. Now let's work our way toward there. There's a good story. And it's I'll try to get through it very quickly, but there's a gen, I haven't told him a long time, so I might miss on some of the details, but there's a gentleman on the beach who's fishing and he's just pulling fish out of the water, pulling fish out of the water and a tourist walks up and he's like, Oh my gosh, you're, they're really biting today.

[00:52:06] He's like, yeah. He's like, wow, if you keep catching fish like this, you know, you can get some boats and some nets. And then if you keep being successful, you can get, hire more people and do more stuff. And then, you know, you can retire and you can do what you want and sit on the beach and fish with your son.

[00:52:23] And he looks at the guy and he says, that's what I'm doing right now.

[00:52:29] Michel: Yeah,

[00:52:29] Kjael: So I think there's a lot to be learned where determine what success means to you and then reverse engineer your way via systems on how you get there.

[00:52:37] Michel: I love that. Thank you so much Kjael, for all your insights. Before I let you go, any parting words for audience or final?

[00:52:47] Kjael: Yeah, well, I mean, I'm here to be helpful. Uh, you know, honestly, and uh, I think another part of my definition of success is given back and I think it's weird to be in a place where I've accumulated some knowledge and some experience. And so I'm eager to give back. So if you're a founder and you're struggling, I'd love to talk shop.

[00:53:03] I mean, for the love of the game is kind of our adage, but this doesn't really feel like work to us. This is fun. It's a game that we're all playing. So if you're trying to grow and you're struggling, If you're a little bit burnt out and you want to explore change, listening to another opportunity, you want it.

[00:53:13] You're not sure how valuations work. You're not sure what metrics matter. I am around my email is KJ AEL at skaling ventures with a K. If you're an investor and you're trying to figure out interesting kind of ways to diversify and finding new asset classes that create interesting returns, microsats is super interesting.

[00:53:29] And I'm happy to talk about that and why I've kind of committed this chapter of my career to it. And, uh, if you want to follow along, like if this has been useful, Where, you know, again, I'm building in public to ideally convince a bunch of people that are like, this startup stuff is terrible. I'm eating peanut butter and it's awful and I can't do it.

[00:53:45] And this corporate thing is killing my soul and I get no joy from my life. It turns out like there's this acquire and operate path. That's kind of the best of all worlds and it's very fulfilling and it's interesting and you get to work on fun stuff and push the envelope and the category, et cetera.

[00:54:02] So anyway, that's what we're out here doing. And I'm around.

[00:54:05] Michel: Perfect. I'll make sure we have all the links to your podcast website, et cetera. So thank you so much. Good luck with the next acquisitions and , all the best.

[00:54:14] Kjael: Right on. Thank you so much. This was honestly a pleasure. Thank you.

[00:54:17] Simon: Thanks again for listening, I hope you enjoyed the show. Make sure you subscribe to the podcast. And as usual you can find the show notes at stunandawecom.

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