Built To Sell Radio Episode # 281
Andrew Gazdecki was born in Detroit and lost his father as a young boy. He and his Mom grew up using food stamps. In College, Gazdecki created an online marketplace for freelancers (think a tiny version of Upwork). He sold his online marketplace for $50,000 and said it “felt like a trillion dollars” at the time.
Before handing over his marketplace, Gazdecki noticed something interesting in his search logs. There were a lot of businesses searching for developers who could build a mobile app. It was 2010. Every company wanted to have a mobile application. Few could afford the five-figure investment for a custom app from a development shop, so business owners were trying to hire freelance mobile developers at a torrid pace.
Gazdecki decided to take the $50,000 he had made in the sale of his first business and invest it to create a simple template any business could use to create a mobile app. He named the company Bizness Apps. His timing was perfect. The world was moving from desktop applications to mobile apps, and Gazdecki was the beneficiary. Bizness Apps grew to more than $7 million in revenue in just four years, which is about when he was offered $15 million for 70% of the company. Gazdecki was torn. Fifteen million dollars was life-changing money, yet Gazdecki had the sense he might be able to get more.
Gazdecki turned down the offer and continued to build Bizness Apps. Soon after turning down his first acquisition offer for Bizness Apps, Apple made an announcement that would jeopardize Gazdecki’s entire business. Apple banned template-based mobile applications from their AppStore. The move triggered a five-month firestorm for Gazdecki, which only ended when he decided to cold email Apple's CEO Tim Cook.
It was a Hail Mary, and it worked. Thanks to Cook, Gazdecki got his client’s Apps back in the App Store, but he was spooked by how quickly he could lose everything. Gazdecki decided to sell and promptly received an offer from the Austin-based private equity group, Think3. Think3 agreed to buy 100% of Bizness Apps in an all-cash sale that was well north of $20 million.
It was a fairy tale ending to a fantastic run, and in this episode, you’ll learn:
The change Bizness Apps made to its distribution model that created explosive growth
The downside of showing up on the Inc. 500 list of America’s fastest-growing companies
How to ensure you don’t get held ransom by your employees with more technical knowledge than you
The email address Gazdecki used to reach Apple’s CEO, Tim Cook
Why “platform risk” can undermine the value of your business
How to perform reference checks on an acquirer
How to dramatically cut your tax bill when selling
What to tell your employees during diligence when an acquirer starts asking nosey questions
How to say to your employees you’re selling your company
Why Gazdecki ended up in a puddle of tears hours after receiving the wire transfer that would change his life forever
Is Your Business Overly Reliant On A Single Supplier?
Gazdecki’s most crucial supplier was Apple, so when they changed their criteria for apps that could be uploaded to their AppStore, it almost put Gazdecki out of business. Supplier risk is one of the three legs of The Switzerland Structure, a key driver of your company’s value. See how you’re performing on The Switzerland Structure by getting your Value Builder Score.