this is the story that we shall call: "How We Accidentally Created A "$100,000 Mini-SPAC".
First a little background... what the hell is a SPAC?
SPAC stands for Special Purpose Acquisition Company. Also known as a "Blank Check" company.
Basically - it's when a legit person (like Chamath, or Bill Ackman) goes to the stock market and says: "Give me money, and I'll use that money to buy a great company".
- 2017 - Chamath launched a SPAC called "IPO A"
- It raised $700M from investors, to go find a company to buy
- 2 years later, IPO A bought a 49% stake in Virgin Galactic, and the stock ticker changed from IPO A --> SPCE
- Investors who gave Chamath the "$700M blank check" have since tripled their money in the 3 years as the stock went from $10 to $30
He's done ~4 more SPACs in 2020, and has registered every letter in the alphabet (IPO A, IPO B, IPO C etc..). I'm pretty sure he's making ~$100M a pop on these (the rich get richer!)
I might do a deep dive about SPACs in a future email, but for now just know - it's a blank check given to someone to go buy a company.
This is the story of how we accidentally created a micro SPAC...(a $100,000 blank check company)
It all started with a Twitter DM from a guy named Andrew Gazdecki.
Andrew owns MicroAcquire, a website where you can go and buy small SaaS businesses.
Basically, instead of starting a business from scratch - you can buy a business that's kinda-sorta-working and make it better.
So anyways - Andrew says hey I got an idea. What if we just gifted one of these businesses to someone from your community.
Me: what do you mean gifted. Like, give away a business? Oprah style?
Him: yeah exactly. We have some micro companies for sale for like $5k, let's give one away.
Me: *wheels turning*
I agreed on the spot. It's a genius marketing move for him. I have a big community of entreprneurs. He wants to get the word out about his marketplace.
This is way more buzzworthy than just running an ad about his site. Giving away a business!
This is where things got interesting..
I tweeted it out:
*note the off the cuff tone, as if this was my unplanned idea when in reality we had already arranged it before hand. I learned a thing or two watching wrestling (back in the Stone Cold Steve Austin days).
Immediately the tweet took off. 2 unexpected things happened:
#1 - A bunch of people tweeted that they would chip in $5k too, just for the fun of the experiment.
Within a day, we hit $100k. I never expected this. There was no promise of equity. This is just a wild experiment (aka kicks & giggles)
#2 - And MicroAcquire got a huge surge of traffic.
call me shaan kardashian baby
Alright baby - now we had a $100k bankroll, and some pretty impressive operators that we could give the business to.
Speaking of bankroll...this newsletter is brought to you by Mercury - modern banking built for e-commerce companies. They aren't just a sponsor, they are the bank I actually use for business.
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Just think about it - most banks sponsor old white guy golf tournaments. Mercury sponsors entrepreneurs like me so I can take time to tell these stories. As a founder, who would you rather roll with?
Check out Mercury here. It's one of the startups I wish I had invested in early on.
Anyways - back to our story.
Over the weekend, I went through about 100 businesses on MicroAcquire.
Now tbh - a lot of them are junk. Small side projects someone built, with no clear path to growing into something meaningful.
But there were a handful of contenders.
I liked 2 categories in particular:
a) Shopify Apps - shopify is growing like crazy, and these tend to be sticky once someone installs it in their store.
For example, This shopify app ($24k annual recurring revenue) that lets you schedule daily deals for your store.
b) Virtual Assistants - there were a couple companies that were offering virtual assistants to companies that can't afford Executive Assistants, but still want help dealing with a bunch of admin work.
This company had ~$114k ARR and ~$25k profit last year and seemed like it could grow.
I'm intentionally not telling you about the companies we liked (so you don't go bid against us), but will reveal that once a deal closes.
Last step - who do we give the business to?
Andrew went through hundreds of applications, and he short listed some contenders. We had the contenders do a little test ("how would you grow this business?")
and then we picked a winner. Here's his original application: https://www.notion.so/Dan-s-Plan-for-SaaS-Success-cd8b51c557774206a104954e7a1fd8ee
You should look at this ^. It's better than 99.9% of job applications.
- I liked his video message, it was personal, and short.
- He built a landscaping company in high school (employing 12 of his school friends). I like people who have built "sweaty" blue collar companies early in life. Shows hustle.
- He's an engineer, has worked at Tesla, Rivian, etc.. Technical chops are an asset.
- He put his favorite frameworks at the top, which means he knows I have a framework fetish (did his homework)
- He found the sweet spot of "excited" without being "desperate"
1) From a random tweet, we raised a $100k Blank Check company to help a random hustler buy a business.
2) We found Dan, the person we want to give the business to.
He'll learn more from 1 year of buying/growing this business than he could ever learn in business school.
3) Dan will spend the next 60 days digging through MicroAcquire to find the right company to acquire.
I'll have Dan write some guest-updates about the journey on this newsletter in the coming months.