The Bootstrapped Founder

Arvid Kahl: Welcome to The
Bootstrapped Founder. Today, I'm

talking to Kevin McArdle. Now,
he was very instrumental in my

founder life. He acquired my
SaaS business. So we're going to

have a conversation about
acquisitions, preparing for your

exit, building a bootstrap
business that other people

actually wanna buy and how to
get to that point, how to go

through the process and what to
think about during building your

business, not just when it's
time to sell but long before

that. Here's my conversation
with Kevin.

Thanks so much for being on the
show today. I have one thing to

say to you: you changed my life.
I just wanted to tell you.

Kevin McArdle: That is the
nicest thing that anybody said

to me in a very long time.

Arvid Kahl: It really is, like,
we built Feedback Panda, the

SaaS business that we sold to
the company you worked at and

the company you led and the
company that acquired us. And it

was the most life changing thing
that ever happened to me. I

think after meeting Danielle, my
co founder

Kevin McArdle: Yeah

Arvid Kahl: You know, the person
that I spend my life with,

Kevin McArdle: Good to clarify
that

Arvid Kahl: If there was another
person that had a massive impact

on the trajectory of my life,
let's just say that, it would be

you. So a big thank you from me
for this. And it's really nice

that you found the time to talk
to me today. You have a lot to

share about private equity and
acquiring businesses, building

and operating SaaS businesses.
And I'm excited to hear what

you're currently working on and
what the future has in store. So

thanks for being on the show.
And it's really nice to talk to

you again.

Kevin McArdle: Oh, it's always a
pleasure to talk to you, Arvid

and pleasure to be on the
podcast and talking publicly, I

think for the maybe for the
first time. And it's very nice

of you to say that. But you
know, I played a role in the

success that you and Danielle
had, but I was lucky to be the

one to acquire Feedback Panda.
And if it wasn't me, it would

have been somebody else that,
you know, gave you the exit that

you were looking for. But I'm
just so excited for you and

Danielle and all the success
you've had.

Arvid Kahl: Oh, thanks so much.
Well, you wrote the nicest email

and we had the most wonderful
conversations with you. So it

was really easy to pick you,
let's just say that. Like you

had such a nice friendly and
uncomplicated way of interacting

with us that made all of this,
it made it very easy to trust

you and the team. I think that's
one of the things that you did

so well in this whole you know
pre due diligence but already

kind of due diligence phase,
right? When you're selling a

business and you're acquiring a
business, both parties kind of

poke at each other to see if
it's legit because there are a

lot of people who are not legit
in the field, unfortunately. So

you allowing us into you know,
the business and all the people

that work for you and having
chats with them. That's why I'm

with Tyler. Tyler Tringas, whom
I have another podcast with,

right? He was the first person

Kevin McArdle: Of, course. Arvid
and Tyler Catch Up. I'm a fan,

you know that.

Arvid Kahl: Thank you so much.
Oh, great as fan. I'm super

happy. But first of all, thanks
for listening to that show.

Because that's good to know that
anybody's listening. But really

like Tyler was the first person
we called in our kind of seller

side due diligence that we did
with you, right? Because we

needed to make sure all the
people that sold, were they okay

or you know, like that they run
into any issues? And we had such

a cool chat with him. And he was
so energetic. And so he talks so

kindly about the business and
particularly about you that it

came very easy to chat with you
and then go through the process

of getting acquired. So that was
really cool.

Kevin McArdle: I have a huge
smile on my face as viewers can

see because it just brings back
such great memories of I

remember specifically sending
that email to Danielle. And I've

told this story publicly because
it makes me smile. And her

response was just a very kind
and polite, "No, thank you, not

interested." I was like alright,
well that's fine. I have a new

friend on the internet. And
that's a good thing for the day.

And then in the background, I
find out later she told me

called Tyler, I think spoke to
another person who had sold us a

business and then she came back
like emailed back I think a

couple of weeks later. It was
like, actually, Kevin, we're

considering it. Let's have a
chat. And so yeah, that whole

process, it was easy on our side
too. Because you know you two

built such a great business.
You're such a great team. You

had your, you know, things in
order and you know, we're ready

to sell and had done the right
things to prepare. And so yeah,

it was win-win all the way
around.

Arvid Kahl: The whole process
was fun for me like everything

in between, like even me
recording this eight hour video

for the software engineer that
was supposed to take over my

work just going through the
codebase. Like no sane person

does this. But in that moment,
it felt like just a joyful

activity knowing how well it
would be received, right? Like

the whole process was just kind
of a give and take obviously

because we needed to spend a lot
of energy both on running the

business and on preparing
everything for the acquisition,

but it never felt forced. It
never felt like the pressure,

that was never on. And I think
that is one of the things that I

admire the most about you in
this process, how you were

guiding it without like pushing
it. That was such a sensitive

way of dealing with people who
are already like I was mid

burnout at that point, right? I
was super stressed. And people

don't want to lose their baby.
They want to lose the business

and all that. So you handled
that with such care. You know,

I'm a fan, but I just want to do
it publicly just admit, I'm a

big Kevin McArdle fan.

Kevin McArdle: Likewise, this is
just, you know, Arvid Kevin fan

club meeting

Arvid Kahl: I guess. Let's just
compliment each other for

another hour. Why not?

Kevin McArdle: Yeah, Arvid we're
already losing listeners. So why

not just continue. But, you
know, it's funny, like some of

the things you said, like, you
know, because selling a business

is a stressful process. I've
been on the other side of that

and the fact that you said it
was fun. And I'm sure there was

some stress in the background
too. But like that, you know,

the compliment you paid me
earlier, it's sort of funny and

funny or weird to me in a way is
like, it's just kind of how I

act and who I am because, you
know, I'm a human being. And I

know, you know, we just do
business with other human

beings. And I don't like dealing
with a-hole. So why, but like,

it's shocking how much people
say the way I do things is

different. And the experience is
different. And you know, it just

blows my mind that other people
don't have the same approach of

just being a human being. Don't
think that you're smarter than

everybody else in the world. And
don't be a jerk, don't put

pressure on people because
people don't mostly don't

respond better in pressure
situations. They usually perform

best when they're comfortable
and happy. And, you know, I like

how you phrase it with like,
guiding without pushing, I think

is what you said, but I may
steal that.

Arvid Kahl: Please do. Feel free
to steal whatever you like, you

gave me so much already. I'm
gonna keep doing this. This

reminds me of something, reminds
me of, I think like Paul Graham

wrote this book, like Hackers &
Painters. And in that, he has an

essay on how schools, the system
that we are kind of socialized

in really pretty much reflect
prisons in terms of the

dynamics, the social dynamics
that happen within them. And I'm

getting somewhere with this,
right? The idea is that you are

put into this kind of confined
system that you're not allowed

to leave, which is like the
premises of the school. You have

these weird internal social
dynamics, you have like the

nerds and the jocks. And you
have like gangs in prisons, that

kind of are equivalents of bad
like you're part of one of those

groups, but not both. And the
people that are there the

biggest stars in prison, like
the strongest and most violent,

like most fear inducing people
turn out once they're released,

to have no standing in society
whatsoever. And it's pretty

similar in schools too, right?
Where the bullies then don't

find jobs because they're way
too aggressive. And they don't

value actual human
relationships. And that reminds

me of many people who have been
conditioned in a system like

this, that you have to kind of
elbow your way through society

and then they end up at a spot.
I think the Peter Principle

applies here where people get
kind of promoted to the point

where they just at the limit of
their capacity, right? And I

think Peter Principle says
something else about it. I'm

just trying to keep it friendly
and loose here. But the idea is

that people who have this kind
of behavior, they get to a

certain point, but not further.

Kevin McArdle: Yeah, they hit
the ceiling.

Arvid Kahl: They hit the ceiling
because people at some point,

they don't take it anymore. Like
either they are also pretty

aggressive, which you know, kind
of creates more conflict or they

are at the point where they are
enlightened enough to understand

that you get way further with
kindness and with being

passionate about something and
opening up to people than

closing off and trying to grab,
grab, grab and this is mine,

mine, mine and you better stay
down, right? That kind of

behavior just doesn't fly in
most groups of people

particularly not, I guess, the
founder community where people

really need each other because
it's such a strong community.

Kevin McArdle: That's
interesting. People really need

each other. And at the same
time, people have independence.

Arvid Kahl: Yes

Kevin McArdle: Do you know what
I mean? I think people need each

other by choice versus like a
corporate environment where you

have to sort of play the games
to advance in your career. If

you're the controller of your
own destiny, you're a founder.

You don't need to build
community with other people in

your situation. It's beneficial
to do so. Yeah, I haven't read

that essay. I'll maybe go back
and look at it. But I think and

I hope society's evolving a
little bit because I see and

it's you know, as we're
recording, it's the time of the

year where kids are graduating
and moving from you know, I've

got a couple of moving from one
school to the next and I see the

way kids interact with each
other today and it's sort really

not perfect. But I think it's
less clicky than when perhaps we

were in school and Paul Graham,
you know, it's an interesting

comparison schools to prisons
because like, you just can't

leave. And there's a person in
charge of making sure you do

what you're supposed to do. But
I think the educational system

is certainly still has its
flaws, but I think it's evolving

in a lot of good ways in terms
of like, more belonging, you

know, kids treating each other
as like, we're all one big group

versus I'm a jock. And I can
only be defined by that, but

it's so situational, right? Like
and the Peter Principle, you

know, there's one human being
that I can remember who is the

epitome of the Peter Principle
just being promoted past his

competence level. And I always
picture that person when I hear

the Peter Principle. And there's
also people we know that like,

just bullied people through
their whole lives and are

incredibly you know like
successful by what you know,

like a business or economic way
by doing that. And

unfortunately, people look at
them and say, well, that's the

way that you succeed in
business. So

Arvid Kahl: That's the thing
like the media attention on

those people either attention
that they created for themselves

because they are sociopathic
enough to allow for this, right?

They don't hold back or because
they stand out so much. And use

agencies or you know, the tech
crunches of the world, they take

a look at them. And they just
think it's so clickbait

generating, I will have a
headline that works. That is

really unfortunate. I'm glad
that you say this about the

evolution of the educational
system. And I have this feeling

that I guess the digital
transparency, the fact that we

are interconnected and
everything that happens happens

everywhere immediately, right?
When you hear something happen

or something happens, you hear
about it within 30 seconds if

it's important. That didn't used
to be the case in the 60's, 70's

and 80s, where you would have
the full day before the kids

could report back to the parents
and if at all, right? You would

have a delay in stuff. And that
changes the immediacy of how

behavior is rewarded or punished
in these situations. So I guess

that helps. And by shining a
light just on the system and

make it fairer, make it more
equitable and that stuff. And I

have a feeling that's it's
almost the same in the

entrepreneurial community and
particularly with people sharing

their stories like building in
public or just being more

approachable and being more
allowing more insight into their

businesses, that creates more
equitable, more fair and more

accessible businesses in the
space that I'm in. And let's

just call it the indie hackers
SaaS founder community, as

specific as it gets. When I see
people build in public and I'm

just realizing this now. So
you're part of the thought

emergence here.

Kevin McArdle: Yeah

Arvid Kahl: The fact that they
have feedback cycles with the

whole community, often surfaces,
accessibility issues was so much

earlier than when the founder
would have thought of them,

right? So yeah, I've had that
with my own content, like people

told me your blog is great. But
I have dyslexia, I can't read

this, like, what do I do? So I
had the option of either

starting a podcast, which I
ended up doing or having at

least a little snippet of a
WordPress plugin that

automatically generates like an
audio version of the article

that I would write and that
happened like three or four blog

posts into my actual blog
existing because people like

myself from the beginning, I was
already sharing everything I

did. So they quickly could give
me the feedback on, this is not

accessible. This is kind of
excluding people who have this

issue.

Kevin McArdle: I understand you
may not have come to that

conclusion not as quickly or
ever, right? Yeah

Arvid Kahl: I would have had
more readers like that's the

thing that default is people can
read and write and hear and see,

right? That's kind of the
societal default. But obviously,

not everybody is included in
this group. But the group is big

enough to kind of allow for
these people to fall off the

site and still turn it into
something big, right? Which is

why accessibility is so
important.

Kevin McArdle: Yeah, that story,
like I can read, I can see, I

read very slowly. So I'm more of
a podcast fan, but like, just

knowing that you had that
feedback took the step to say,

well, let me try to make this
more accessible for other people

draws the "normal groups" of
society to you more because

like, well, at least Arvid gives
a shit about like somebody who

has trouble reading. I don't
look so it's interesting that

we're talking about this and
it's no surprise because like, I

love how your content is like
founded in or like grounded,

maybe it's a better term in just
kindness. You know, I like you

talk about building an audience
onTwitter and like conventional

wisdom is like, hot takes that
are extreme is what gets you

clicks and follows and
engagement and like, that's kind

of true. And I think that's part
of what is like, makes normal

media and social media hard to
consume a lot of times because

everybody feels like they have
to be polarizing. And then you

step into the world and you're
like, well, what if I'm just a

nice person and if I like, give
people compliments and I just

try not to be a jerk all the
time. And I think part of what

we get along is like, that's my
attitude too like, but it's not

from I don't know how to say
this. It's not from like a

business strategy perspective.
It's not like, oh, well, I think

more founders will be attracted
to me if I act like a human

being and don't have the sharp
elbows. It's just like, I don't

have the time or patience to
live any other way. Like, this

is just kind of who I am. And so
long ago, I figured out like,

just be who I am. And the right
people will hopefully be

attracted to that. And almost
more importantly, the wrong

people will be repelled by that.

Arvid Kahl: That's right!

Kevin McArdle: And there are
several examples of where I can

think of somebody either not
wanting to work with me or for

me or choosing to sell to
somebody else. And you know, on

and on down the list or like
choosing not to invest in my

company. And there's like, good,
well, okay, check, process is

working because we had somebody
self select out of my orbit, so

I'm going to keep doing what I'm
doing.

Arvid Kahl: That's so great.
That is one of the things that I

love about having like a public
persona. You allow people to

self select out. And it is not
conventional wisdom to get rid

of people from your potential
audience, right? Because

everybody wants numbers,
numbers, numbers, bigger,

bigger, bigger, but having the
wrong people in your audience is

gonna cause more damage than
them actually self selecting out

of it. And that is true for
anybody, right? Audiences,

customers, partners,
collaborators, all of this, like

if you have a group of the right
people, no matter how small it

is, your impact is gonna outsize
the impact you have with a mixed

bag of everybody who may or may
not be vibing with you. Let's

talk about that business. Let's
talk about what you're currently

building because I was just
going to throw in another

compliment. Like, the reason
that I can be this on Twitter

that I can just be kind and
friendly and empowering and

motivating is because I've
worked with and found people in

the higher echelons of the
entrepreneurial world, like

yourself who are like this. Like
I've seen in you and the people

that you work with and the
people that I got to meet

through you, that it's possible
to do this at a super high level

and be effective and successful
and friendly and kind and all

these things at the same time.
So it is like motivation by

example, that allows me to do
this and now be this for other

people myself.

Kevin McArdle: Yeah, that's a
cool thing is like you, I think

you are now voted, you know, not
to, I mean, I know how big your

audience is, Arvid because I'm
not the type of person who

clicks a profile, how many
followers do you have? So it's

like, I don't know how many
followers most people have. I'm

sure your audience is gigantic.
And that's exciting to think

about you being that example to
other people because there are

still so few example then like
my platform of choice is

Twitter. There's still so few
examples of just like kindness

and positivity on that platform.
And you know and people seeing

all the success you've had in
building an audience and

building a huge podcast
following and all that. But the

other kind of, sort of, like I
was saying, like, you would suck

at it if you tried to do it the
other way, you know, because

you're just not that person,
right? If you were trying to

like, you know, troll people and
you know, insult people all the

time, like, it would be
inauthentic. You wouldn't be

good at it because that's just
not who you are.

Arvid Kahl: It would be so
weird. It would be hard. I

honestly

Kevin McArdle: I dare you to do
that for a day and do it like

next April 1st

Arvid Kahl: That would be fun.

Kevin McArdle: People would pick
it out right away. But like just

to spend the day just being a
jerk online and see what

happens.

Arvid Kahl: See, the thing is
with anything online, like

there's barely any context,
right? Twitter doesn't have

context because it's text
exclusively. It's just the line

of text. It doesn't have your
smile, doesn't have like the

subtle kind of tone of your
voice when you like just insult

somebody, but there's a smile
under it, right? It doesn't come

through if you just say "fuck
you, everybody" on Twitter,

like, it would be funny, but you
know, like somebody would

probably and that's the thing.
That's why my thinking is in

those moments, somebody probably
just had a really shitty

experience an hour ago. And now
they're on Twitter scrolling

through and trying to find
something positive. They see me

telling them to fuck off. They
don't want to be that, right?

Arvid Kahl: You never know where
somebody else is. And that is

Kevin McArdle: Their bad
experience

for good or for bad, right? You
never know like how high they're

flying or how low they're
currently crouched on the floor,

just like rolled up in the
bundle because they're going

through something. So the
default for me is trying to

shift it towards the positive
but it would be very interesting

to just be like evil Arvid like
Star Trek style just grow like a

goatee like Spock and just you
know be like from the evil

universe for a day or two. Man,
you're right. I think there are

too few people. Let me just make
the world's best segue at this

point. It kinda sounds like it's
just like a little group of

maybe chamber musicians like two
or three. But wouldn't life be

better if they were in a much
bigger band? What are you

currently working on?

Kevin McArdle: I see what you
did there. Well done. I didn't

know where you're going with
that. But yeah, so I think

you're asking about the new
company. Yeah, Big Band Software

is the new project. We just
launched in March of 2023. Well,

the company was founded December
1st of 22, but launched early

23. And yeah, the vision is to
build a holding company of great

software businesses. So we're
buying software companies, 1 to

10 million in revenue with no
obligation to ever sell them,

which is strange in our world.
Usually transactions, you know,

weirdly, the bigger the
transaction, sometimes the

shorter the cycle because
investors want to put money into

a business, grow it and then get
that money out as quickly as

possible. We just have a
different approach. And partly

because we've got like minded. I
have two partners in this

business, Chris Reedy and Jason
Heath, both of whom I've known

for five plus years. Chris, I've
worked with before. And we had a

similar vision. We've got some
great investors who have given

us the luxury of lots of capital
to go spend over the next few

years and they've got the same
vision likes, let's build a

holding company. If we own great
software businesses, why would

we want to sell those? You know,
let it compound over years and

dare I say decades. And so yeah,
on the surface, we are buying

smallish software companies. But
beyond that, we're trying to do

things quite differently than
almost anybody that's out there.

Arvid Kahl: So that's what's
novel to me, like the difference

between, like private equity as
I know it and holding company.

Can you kind of tell me what
exactly you think is different

Kevin McArdle: Yeah, so a
typical private equity firm or

between them?

fund would raise a bunch of
money, tell investors, okay,

we're going to buy some stuff,
we're going to try to grow it,

and then we're going to sell
everything in order to give you

all of your money back. And that
timeline would typically be

somewhere between 7 and 10
years. So Arvid, please give me

your money. And in 7 to 10
years, I'm gonna give you all of

your money back, hopefully times
three. And that's the model. So

that means let's say, it's a 10
year fund, which would be sort

of at the long end of the range.
But that, so I'm being generous.

So now I've kind of got, you
know, three or four years to

spend all of the money that I've
raised. And then I've got two or

three years to try to grow those
companies. And then I've got

three or four years at the end
to sell all of those companies.

And to me, you know, there's a
couple of challenges that I've

always seen with that. And the
first is like, if you've got a

great asset and it's growing,
why would you sell it? Like,

that's the dream for everybody.
And I'll come back to, there are

a lot of reasons I love to say,
there are 100 reasons why people

sell a business and only one of
them is money, right? So you've

talked publicly about how you
and Danielle, the business was

great, but it was putting
pressure on your marriage

because all of the stress of the
business. And that's a great

reason to sell a business that
has nothing to do with money,

like almost nothing to do with
money, right? So I want to be

clear, like there's no problem
with selling a great business.

But being forced to sell that
great business just because of

the timing of your fund, I
always had a problem with

because what if you raise the
fund, let's say 10 years ago and

you're now obligated to sell all
of those businesses during

today's economy? You know, would
you choose to sell that business

now? Or are you doing so just
because you told your investors

you were going to give their
money back? So I don't like the

idea of being forced to
celebrate assets if it's not the

right time. And I don't like the
idea of this like short term

thinking, you know, I mentioned
like, we want this thing to

compound over decades plural. If
you buy a business and you have

two or three years to run it and
then you have to start thinking

about selling, the tendency is
to make very short term

decisions. So are we going to
invest in research and

development or do we hire
another three salespeople? Well

that trade off and this sort of
a silly simple example but like,

if I'm going to sell this
business in three years, well,

the default we will go higher to
salespeople. Who cares about

working down technical debt or
you know, adding some feature

what you're improving a customer
experience? So, you know, like

just growth at all costs, trim
expenses. These are the knocks

against private equity is that
it's short term thinking. It's

very transactional for founders,
which is a huge part of your

audience, I know. You know, a
lot of times your company gets

absorbed by a bigger version of
whatever you're doing and the

brand disappears and your team
might get fired and your

customers may or may not have a
great experience. That's another

reason why I never really liked
the typical private equity

model. And so, you know, mid
last year, I literally took out

a blank sheet of paper and just
started scribbling like, okay,

if I want to, if I have the
opportunity to build my dream

company, what would it look
like? Who would be involved?

What would our strategy be? You
know, what are the beginning,

middle, end points? What is my
job look and feel like? Who do I

get to work with and talk to on
a day to day basis? And I mean,

like, knock on wood, it came
together in many of the ways

that I sort of dreamed about
back when I was scribbling on

that page. And that's what Big
Band Software is now today.

Arvid Kahl: That's awesome. I
like, the image of a big band,

like the idea of a group of
people each playing their own

instrument, virtuously, right?
But in harmony with each other.

And just making fun music, like
big band music, like I come from

Dresden in Germany, that's my
birth town. That's where I'm

from. And we have a Dixieland
festival there. Out of all

places, in Germany, there's a
yearly Dixieland Festival and I

grew up going to this as a kid.
Like, we would be there and

there would be these wagons full
of bands, big bands too like,

sometimes 20 people, just, you
know, with trumpets and

trombones and all that kind of
stuff. So I have a very vivid,

like, visual representation of
just how enjoyable the ensemble

of a big band can be. So seeing
you picking that name and idea

for something that I also see as
something very joyful, something

very positive, a business that
doesn't just take, grow, and

then throw away businesses but
actually embraces them. You

should have called this like,
it's kind of embracing, it's not

a holding company. You don't
hold them, you embrace them.

It's an embracing.

Kevin McArdle: Yeah

Arvid Kahl: That's how it feels
to me.

Kevin McArdle: Let me go
trademark embracing. No, that's

cool because part of in yield,
like naming a business sort of

evolves, right? And both of my
partners are musicians. And we

had lots of sort of, we kept
circling around musical names,

but I love Big Band for all the
reasons. And our tagline on the

website is business in harmony.
And for a lot of the reasons you

said like individuals who are
excellent at what they do, but

coming together to create
something that's bigger than any

one of them could do. And the
other thing that I love is like

when like, just about everybody
loves music, right? And it

doesn't matter what kind or
type. Almost everybody loves, I

have never met a person who
doesn't like music.

Arvid Kahl: Yeah

Kevin McArdle: And you jumping
to the Dixieland festival in

Dresden reminds me of like,
right after we launched somebody

else that I don't know well but
we're sort of mutual followers

on Twitter. He's like, I love
it. It reminds me of the second

row. And I knew what he was
talking about. He grew up in New

Orleans and no, not the second
row, the second line and it's

like in New Orleans, there's
always like, you know, marching

bands, not in the traditional,
like school band sense. But

like, New Orleans is full of
music. I don't know how to

explain this to people,
hopefully, they know. But like,

parties, there's always a band
marching through the street. And

it's sort of organized, sort of
group and then the second line

is just anybody who else is in
the crowd has an instrument or

an umbrella. They just want to
dance like and so the name Big

Band just made him think of that
thing, which you could tell was

a joyful thing for him just like
the Dixie festival is a joyful

thing for you. And also, just
like, you know, another mutual

friend, I was just emailing with
Murich Dowsinger with you know,

when we were talking about this,
he's just like, it feels human.

Like, thank you. And like, of
course, why do most people not

name businesses and things that
like? They're all just

collections of humans with a
common vision and mission but

like, we come up with these
names that like are like feel

more like robots than humans. So
I'm glad it clicks with you and

it seems to click with a lot of
people and at the end of the

day, it's just a name and we
gotta go, you know, do good

things, but

Arvid Kahl: That's right. Yeah,
you have to kind of the name is

goal, right? You want to
accomplish this and it's gonna

be an interesting goal to
accomplish. I want to ask you

more from the perspective of a
software business owner now

because it's kind of you're
building this company that is

willing to acquire businesses,
while then what do businesses

need to look like to become part
of a big band? It's kind of what

I want to know because many
people, you know, they are

trying to build a software
business to, obviously, turn it

into a lifestyle, you know, have
revenue come in and live your

life under your own control,
without any external forces

shifting around. But like we
said, for many reasons, they

might want to sell at some
point. So what makes the

business interesting for you in
this context of the big band?

Kevin McArdle: Yeah, I love that
question. Like simple things to

point out, we're looking for
businesses that are 1 to 10

million in revenue, profitable
and growing. They don't have to

be growing at 200% a year. They
don't have to be hugely

profitable. But that's sort of
the niche that we're looking

for. That said, you know, there
are a lot of different ways to

create a wonderful business and
it is a lot dependent on the

founder and what their vision
is. And so, you know, like, if

selling to Big Band is an
endpoint for somebody awesome,

like, let's chat. But I don't
think people should build their

business to somebody else's
specifications. Does that make

sense?

Kevin McArdle: So I think we're
doing things differently than a

Arvid Kahl: Oh, absolutely.

lot of people. But if you build
a great business, loosely

defined, right? Like, there's a
lot of different ways to define

a great business. And as a
founder, you should be building,

I believe you should be building
the greatness that is in your

head. Like whatever the people
listening to this, however, they

define great, go build that and
somebody will want to buy it,

whether it's big band or
somebody else. And so, you know,

we look at a lot of things that
many people do, like, you know,

in a SaaS world, low churn is
hugely important. And you don't

want a lot of customer
concentration and these sorts of

things. But it's also like, it's
also the same advice of like, if

you're building a great
business, what does a great

business look and feel like? So
let's go aspire for that. And

sort of like the sale takes care
of itself is one way to look at

it. And I sort of annoy myself
because I'll make two sides of

the same argument immediately
and contradict myself.

Arvid Kahl: Sure

Kevin McArdle: So the one side
of the argument is build a great

business and things will take
care of itself. If you have a

great business, loosely defined,
however you define it

personally. Someone will want to
buy it when you are ready to

sell it. The second side of the
argument, I've started telling

people for a long time, I've
said it's never too early to

start thinking about an exit.
I'm now like evolved that. I

think exit planning should be an
annual exercise, just like

strategic planning. And I'm
going to publish something about

this. It's sort of like half
written. So I'll make sure you

see it early. And I can put it
in the show notes, whether it

comes out before or after the
podcast. But just like we do

like annual planning or
strategic planning once a year,

not we like not everybody does
this. But that's sort of

conventional wisdom that one
should do that. I believe one

should do exit planning once a
year as well, even if you don't

think you're going to be selling
for another 5 years or even 10

years because the exercise of
exit planning makes you think

about things that you don't
think about, you know, the other

51 weeks of the year. And so I
think it's a very healthy

exercise for founders to think
about that like, okay, at some

point when I'm ready to sell,
what are people like Kevin and

others like him interested in?
What do they care about? Am I

checking off those things? And
it's not about Kevin. If I check

off those things that will make
my business healthier, it will

make it better and easier for me
to run. A great business to sell

is also a great business to own.
We know this. And so I'm going

to, you know, continue to
encourage people to make this an

annual exercise. Because the
other part is like, you might go

into this annual exit planning
exercise thinking, well, I don't

want to sell for five years but
I'm gonna do this planning

because Kevin told me I should
and, you know, I'm gonna just

follow his advice. 12 months
from now, you might be in a

different position or 6 months
from now you might be in a

different position. And if you
haven't thought about selling,

if you haven't thought about
these things of like, what's

important and how do I get ready
to sell my business, you're not

ready to sell your business. And
so that's again, one of the

reasons why I believe there's
should be an annual exercise for

founders because you don't
always get to choose when the

right time to sell is and that
could be a very positive thing.

Somebody approaches you and
says, I want to buy your

business and you need to react
to respond. Or it could be a

negative thing. And
unfortunately, I've had several

situations where founder gets
sick, founder's spouse gets

sick, co founder gets sick. You
know, child, God forbid, gets

sick. And like, all of a sudden
focus needs to be on those

things versus the business. And
just being ready and having at

least thought about the process
and what to do, I think is super

helpful and healthy.

Arvid Kahl: What would somebody
ask themselves, like, during

such an exit planning session?
What would be the like, the most

important things that you would
do every single year? And maybe

track them over time, obviously,
because they change. But you

know, I may be getting ahead of
you here. But what will be the

Kevin McArdle: So at the top of
the list is if you have a co

most important stuff?

founder, are we on the same
page, right? So like, and the

Arvid Kahl: Drama

same page might be, I just
talked to a couple of guys, they

happen to be guys that have been
best friends. And then they

start a business and the
business is going well. And it's

one of those like dream
scenarios, right? Where you get

Kevin McArdle: And then problem
turns into conflict and drama.

to be in business with your best
friend. And it's, you know, good

things happen. But one of them
is like, well, I might want to

do this for another two years.
And the other one is like, I

could do this forever. And
they're in their 30s. So it's

not huge conflict. But they're
not quite on the same page. So

let's talk about that, right?
And another same page issue is,

you know, somebody, you know, if
you've got two co founders and

one says, man, if I could sell
this business and my share is

And unfortunately, co founder
drama kills a lot of companies.

$10 million, that would be
amazing, life changing amount of

money. I'd be totally happy with
that. And the other co founder

might say, I'm not selling
unless I take home $50 million.

Well, that's a problem. And if
you're doing this on an annual

basis and you do it early, it's
a discussion. If you wait five

years and don't uncover it or
you don't address it, it becomes

a problem.

And so that's one of the things
just like a check in and it

doesn't have to be only once a
year, but making sure if there's

co founders or other owner,
meaningful owners of a business.

So like, if you have an angel
investor who owns 1% of your

business, you are not obligated
to have this conversation with

that person. But just
understanding like, are we on

the same page with timeline
economic output? Life, like

commitment to this? Like, are we
working 100 hours a week, every

week until we die? Or do we want
to have, you know, a more

easygoing, like, healthy,
sustainable lifestyle? And, you

know, those are the co founder
dynamics is at the top of the

list. Now, if you're solo
founder, obviously, that's less

important. However, might be
good to have that conversation

with a partner or a spouse if
you have one. Because they are

certainly a stakeholder in you
and your commitment to the

business. The other things that
are important in like an annual

exit planning exercise that may
not be addressed in like a

strategic planning exercise is,
you know, how much am I involved

in the business as a founder?
And early stage, you're involved

in everything. You do
everything. As your business

grows and you start thinking
about exiting, you want to be

doing less than less. And I
think that's one of the things

that you and Danielle did very
well is sort of identify how do

we delegate these things to
team? How do I document what I'm

doing so that somebody else can
pick it up and do it? So those

sorts of things are part of a
annual exit planning exercise.

And I love how you jumped to
like tracking it over time. I

was just talking to a woman who,
we were having these

discussions. Off the record, I
won't share who. But you know,

she's of the mindset where she's
like, I could do this forever.

I'm like, awesome. Do it
forever, if you're happy. And if

you start tracking this, like
today, your answer is I want to

do this forever. And next year
at this time, your answer might

be do it forever. And then two
years, three years time do it.

But then your four if you say,
you know, maybe I can see the

end of the runway and I should
start thinking about this and

then your five it's like, I'm
getting a little tired. If you

do this just one point in time
and let's say it's year four and

the answer of your annual exit
planning exercise is I can kind

of see the end of the runway and
I want to start thinking about

this. You don't have that. It's
not a trend. It's just a this is

how I feel right now. And so
that's a you're a smart guy and

you jumped right on. I think
having the you can go back and

like trend over time. How am I
feeling about this and that's

doesn't mean, if your trend
starts to dip towards or go up

towards, like, maybe it's time
to think about selling that

doesn't obligate you to think
about selling seriously. But

it's a good data point and a
good exercise to have with

oneself or with one's you know,
co founders to, you know. It's

really important to set aside
the time to have that thought

and discussion separate from
like, annual planning.

Arvid Kahl: I love this. And you
know, what I love most about

this is that almost every single
point you just mentioned in your

business exit planning strategy
has almost nothing to do with

the technical parts of the
business, like the operational

part of the business at all.

Kevin McArdle: No

Arvid Kahl: It's all persons,
all human

Kevin McArdle: Which is why it's
different. And the other point

I'm making and like, annual
planning people, you know, if

you're super on the ball, you
might be doing it in October,

November in preparation for the
next year. If you're less on the

ball and you might be doing in
January, February or like what

do we hope happens this year,
even though we're a little bit

into it, obviously, depends on
seasonality and cyclicality of

your business. It could be
nothing but turning the page of

a calendar is typically when
people think about strategic

planning for the business. I
believe exit planning should be

opposite. I'm going to recommend
to people like late spring,

summer, like most business
cycles tend to slow down a

little bit in the summertime.
And because it's a very

different conversation with
oneself or with one's co

founder, it should not be the
same week of the year. Don't do

your business planning or exit
planning. Because, yeah, you're

right. It's all about sort of
like how are you feeling up

here. And in here, your head and
your heart to say like, do I

still want to do this? You know
and like being honest with

yourself? Do I still want to do
this is different than how do I

grow the business? And how's the
tech stack doing? Where's the

product roadmap? And how are my
customers doing? I'm telling

people set that all aside, this
is a selfish, how do I feel? How

do I feel with my co founder?
How's my spouse feeling about

this business and is now the
time to start thinking more

seriously about selling?

Arvid Kahl: Yeah, that's really
cool. I really appreciate that.

I think I've written about this
a couple years ago. It was a

consequence of me, like dealing
with the sale itself and the

process of building the
business. I also had or

redeveloped. Danielle and I
developed this kind of check in

with each other every couple of
months. And I think we call this

the founder business fit. Like
if the founder is still good for

the business because the
business can operate if you

build it in a sellable way. And
that's what you just said a good

business is a sellable business.
A sellable business is a good

business, right? So if you can
remove yourself from that

business, that itself could be
run by somebody else. And that

doesn't have to be you, right?
It could be run by somebody and

it is not kind of bound to the
founder and checking in with

yourself for this founder
business fit. You're right. The

honesty part is probably the
hardest in there like, among all

the different things you can
talk about, right? You can talk

about like your vision and how
much you would like a certain

thing. But we all have these
narratives in our mind about how

life should be, right? Where we
are supposed to end up because

our parents told us that that is
the dream that we are supposed

to live or we ourselves have
found that in our communities

and now we want to live somebody
else's dream. So being honest

enough to say, well, I need less
than this or I need more than

this to feel secure. That's the
hardest part. And I think for

that, I love that you make this
about the time of year too. I

just had a thought because like
when you do these sessions, when

you do these kind of I don't
know if it's called the summit

or something but you take
yourself away. You have your

little conversation. You lock
yourself in the room with

somebody or just by yourself for
a day or two and you just talk

about this one specific topic,
time of year and location, how

much do you think that actually
impacts what comes out of these

conversations? Comparing like
being at the beach having that

conversation versus like being
somewhere in the mountains in

the winter in a little cozy
little board cabin? You think

that actually impacts what comes
out of these things? I'm

curious, what do you think?

Kevin McArdle: I do think
there's something to time and

place and space and it's all
individual, right? Like so like

on the beach, I would say don't
do it during your family

vacation that is not like this
is a business meeting or

conversation even if you're
meeting with yourself and so

don't take family vacation time
to do this because I don't think

that's the right frame of mind
to do it. And like for me, a

small cabin in northern
Minnesota where I live in the

Twin Cities but going a little
bit away into the wilderness

would be a great setting for
this. Other people it might have

to be on a beach. Other people
it might be like in a cozy cabin

with snow outside like it's all
individual but I do think

there's something to not being
in your normal workplace. It

just lets sort of like your
normal workplace, there's always

like distractions and things
that you think you should be

doing. But I think there's a
reason that people do like and

it's sort of gotten a little
cheesy, but they like offsites

is sort of like, oh, we're gonna
leave the office and we're gonna

go somewhere else and think
about different things. It can

be a little bit contrived. But I
do think there is something like

getting out of your normal
setting to help you think a

little bit differently than your
day to day. And then beyond

that, it's all personal. Like, I
jump to spring and summer

because I'm a sort of anal
annual planning happens in

November so that January one, we
know the plan and we're

executing the plan. And to me, I
want it as far removed from that

as possible. But you know, other
people might have different

ideas. And I don't really care
if you know, it won't hurt me or

bother me at all if nobody ever
does this. But if somebody wants

to do it, I would just encourage
like it, make it an annual

exercise, make it different than
your typical business day.

Arvid Kahl: That's a great idea.
Yeah. And it will be unique to

every, like every person really
like when their best time is to

have this conversation. It's
just an interesting idea to

think, like if there are times
or places that would like

inhibit a good conversation or
amplify it, right? The outcomes

of it, that would be kind of
cool. Thanks for sharing this,

like I love the way that this is
a thing, right? Like the exit

planning strategy session,
whatever you call it, that is a

thing that can be well defined.

Kevin McArdle: Yeah, and that's
why I'm trying to define the

thing and one of my friends and
investors is Dan Martell and he

always will, like come up with a
bumper sticker phrase and then

add TM to the end. So I'm
trademarking annual exit

planning, owned by Kevin McArdle
because people ask me all the

time, like, how should people
think about like, going about a

sale? And like, what is the
right time and like, you know, I

may even, you know, inspired by
you, like, create a course about

this. Not about like, making
money or like gating the

specifics, but just create some
structure and help people think

because, you know, like you and
Danielle, I've been fortunate to

buy businesses from 45 people
over a period of time, actually

closer to 50 if I think back
further in my career. My

partners have, you know, between
all of us, we've probably

acquired 60 businesses. We've
also sold businesses and so

like, we have a little bit of
expertise in this. And so I want

people to be successful,
especially bootstrapped

entrepreneurs who have, you
know, fought their way to create

a great business. And so making
it like you said, a thing and

not just, you know, read a blog
or listen to a podcast and like

that's going to be what I go try
to do. I think if it can be a

structured thing that becomes
like strategic planning. If you

want to go find a strategic
planning template, they're easy

to find. Annual exit planning is
not as easy to find, yet, but it

will, you know, I think making
it a thing can be helpful to

people. And so that's why I'm
putting the time in to sort of

think and write and, you know,
eventually will publish and

maybe even turn it into a course
or workshop type of thing.

Arvid Kahl: It's really about
the coining the term, right? And

that makes it more accessible
because people refer to it and

they know what it is. And I
think that's what Dan is great

at. And that is what you could
definitely use.

Kevin McArdle: Dan is great
about, yeah, like coined the

term, create a framework, give
people something that they can

just pull off the shelf and, you
know, take action. And the other

thing and then we can move on
from this point. But making it

an annual exercise means that
it's something that you should

just be doing anyway because I
think there's especially this is

one of those weird nuances of
like bootstrap indie hacker

community. There's sort of this,
I think, unfair expectation that

like people will and this may
have come out of like, there are

some very famous bootstrapped,
you know, indie people based in

Chicago who have said publicly,
we will never sell a business. I

think you know who I'm talking
about, which is just unhealthy

to use the word never or always
in most cases. But you know,

they were the leaders of this
community for a long time and

still people look up to them.
And so there's unfair

expectation, like you're going
to do this forever, which that's

not how business works. Like
every business transacts. It

could be when somebody dies, but
eventually businesses transact,

you know and in the software
world that we live in, people

don't hand businesses down to
their children like

manufacturing plants or you
know, some of these older, you

know, like a farm. Like that's
not how our business works. And

so it is normal and healthy to
think about the exit. And

because of this weird dynamic
that's in the, you know,

bootstrap indie thing, like, a
lot of times people come up to

me in real life if I see them at
a conference. And they'll open a

conversation with, you know,
Kevin, I don't want to sell my

business right now. But how
would it work? Or what is it

happens to my team? What happens
to customers? What would I do?

How would it be involved? Like?
So they have these questions,

which are normal, healthy
questions, but they feel like

they have to preface it with I
don't want to sell my business.

And I don't know if that's just
like, don't get too excited,

Kevin. We're just having a
conversation or but do you see,

do you know what I mean? Am I
making this up? Like, there's

this expectation of we're going
to do this forever. That's not

normal. Like, we don't have to
think like that.

Arvid Kahl: You're not only not
making this up. Like a couple of

weeks ago at the point of when
this is actually being

published, I will have released
an article that is titled, like,

short live businesses versus
forever businesses because it's

exactly this topic. Like people
think that what they need to

build immediately when they
start building a business is

their forever business. And it's
a bizarre idea because if you

look at home ownership, right?
People have a starter home and

then they have slightly bigger
home and then they move into

forever home. But forever home
is never the starter home,

right?

Kevin McArdle: It's not actually
a forever home, rarely forever

home is a forever home.

Arvid Kahl: Exactly! Forever
homes don't even work.. Exactly!

Kevin McArdle: Yeah

Arvid Kahl: If homes are
something that even if it's many

years or decades, it's still
temporary. Why do we not

consider businesses to have the
same lifespan, particularly in a

digital internet enabled society
where a long living product is

like five years maybe, right?
It's bizarre. I looked at and

researching that article, I
looked into the world's oldest

company. And apparently that's a
Japanese construction business

that has been around since like
570 AD, like they've been around

for 1500 years and they still
construct buildings today as

they were doing it back then.
You can do this in the

construction industry. But you
cannot do this in the SaaS

entrepreneurship industry, like
even next week is probably going

to be a different technology du
jour that you have to use to,

you know, build the coolest and
latest in tech. So we have much

different timeframes now that
also should impact how we think

about businesses, right? And my
whole thought in this was, well,

why don't we actually consider
our businesses to be something

temporary as well, at least when
we start out, right? And that's

the whole Rob Walling stair
stepping approach too like, you

built some things here, you see
how they work if they were cool.

And if not, well you try
something else and then you step

into well, now I have some kind
of time freedom. I can now spend

more energy on maybe solving
bigger problems and then you

exit that and then you get to
your SaaS and you run this for

however long you want, forever,
whatever that means. I mean, the

whole topic of like lifetime
deals and stuff, I don't even

want to touch that, right?
Lifetime of what? But if your

business has a lifetime of like
five years, that is still a

successful business,
particularly if you get to sell

it to somebody who turns it into
something else or winds it down,

but transfers customers over to
an equally interesting business.

There are many ways. And it's
kind of like the cycle of energy

in nature. Like we have fungi
for a reason, right? Like

they're not just delicious when
you cook them. They empower a

whole system of cycling through
material and I feel businesses

should be considered something
similar. Which means together to

an end in this monologue of many
things, that it is perfectly

fine not to have to build a
forever business. But to

actually build a temporary
business that you want to get

from A to B through, that's the
idea. And for me, Feedback Panda

was kind of that, right? Now I
get to do this.

Kevin McArdle: Well, even if you
were building, like the Japanese

construction company, I'm
interested to read your blog and

learn more about that. But like,
even if the business continues

on, you may not be running it
and operating it certainly even

if it's the same family that
Japanese company has changed

hands hundreds of times at this
point. And so why wouldn't we

assume that whatever we are
building as business owners, of

course it's going to change
hands, right? Whether it's you

know, like the timing that I
think right now today or you

know, the timing that might
change. Here's another like

thing that I'm going to release
a secret into the wild. It's

okay to change your mind on what
you think is going to happen,

right? Like we might start and
have a successful company that

you say to yourself, I want to
do this for the next 20 years.

And in 12 months, your mind
might change like we've already

talked about. And so just
understanding that businesses

change hands and that's
certainly an important point in

that business and in one's life,
right? Because if there's a

monetary reward for that, like,
why wouldn't you be thinking

about that annually? You don't
want to think about it every day

or every week and obsess over it
because then it becomes a

distraction. But that's why I
want to make it a thing. This is

we annual Exit Planning is a
thing that smart business owners

do. And there's a structure and
a framework and Kevin will

publish his thoughts on what it
should look like or could look

like and other people smarter
than me, will say, cool idea,

I'm gonna make it better. And
hopefully, it becomes a thing,

just like, strategic planning is
a thing.

Arvid Kahl: I am very much
looking forward to you

publishing this for you to
change the world of

entrepreneurship. But honestly,
I think, honestly, that is a

change. You're not disrupting
it. But I think and that's great

because it doesn't need more
disruption. But you're giving it

the tool, we're giving people
the tools that they need to do

something that they already want
to do in a better way. So I

think I love the idea that
you're turning this into a very,

you should write about this
maybe more extensively. Like, as

I'm writing my third book, why I
want to do the same thing but

with building in public. Like I
want to put this out there as a

concept, as a framework, not
just for for indie founders, but

for anybody who wants to go from
A to B, right? You can always

kind of empower your community
to help you and help them in the

same way. So why not turn this
phrase into something that

people can actually use? And as
I'm doing this, got a suggestion

to you. Do more writing, I think
the world needs these thoughts

as a book.

Kevin McArdle: Well, I think, I
need to do more writing. I've

seen how successful you have
been with it. I think you're

also I don't consider myself a
great writer. But I also know

like, when I write something
down, it helps me to think about

it more clearly. So I have some
clarity about this concept

because I've been writing about
it and haven't published but

yeah, as soon as we're done
recording, I will go tweet:

annual exit planning is now a
thing.

Arvid Kahl: Yes

Kevin McArdle: And then go
around it from there.

Arvid Kahl: I love that. Well,
since you're already mentioned

that, like where do people go to
find out where are you sharing

this kind of information? Where
do you want people to find and

follow you?

Kevin McArdle: Yeah, two great
places, if you go to

bigbandsoftware.com, we have a
newsletter that I'm really proud

of that we share our ideas. We
also share links to, you know,

smart people that we know in the
world and what they're

publishing, talk about our team,
talk about like hiring needs,

those sorts of things. So yeah,
just bigbandsoftware.com and

you'll get a pop up for the
newsletter. And me on Twitter is

the best way to find me
Kevin_McArdle and McArdle has

one. Sorry, one C, people always
get that confused. And there's

more than one Kevin McArdle on
Twitter, unfortunately. But

yeah, I'm easy to find. And I
love engaging with people on

that platform as long as
they're, you know, kind and good

spirited like you. So yeah and I
love helping entrepreneurs. So

whether somebody might someday
sell to big band or not is

immaterial. I just know that
entrepreneurship can be very

hard and it can be very lonely.
And if I can make it even, you

know, 1% easier or less lonely
for somebody who's out there

working hard, then I'm happy to
do that.

Arvid Kahl: You've certainly
helped me and I know many people

who you have helped in the past.
And I know you are going to help

hundreds, if not 1000s or
millions of people, depending on

how well your writing gets
received by the community.

Kevin McArdle: Oh, that's nice!

Arvid Kahl: But honestly, I'm
super happy that you also just

appeared on my show here today
and shared what you're doing,

how you're doing it and the kind
way in which you're doing it. So

hey, man, thanks so much for
being on. That was an awesome

conversation. I'm so glad.

Kevin McArdle: It has truly been
my pleasure, Arvid. I'm so

grateful that you had me on.
It's so fun to talk to you as

usual.

Arvid Kahl: Thanks so much. Have
a good one.

Kevin McArdle: You too.

Arvid Kahl: And that's it for
today. Thank you for listening

to The Bootstrapped Founder. You
can find me on Twitter

@arvidkahl. You'll find my books
and my Twitter course as well.

If you want to support me and
the show, please subscribe to my

YouTube channel, get the podcast
in your podcast player of choice

and leave a rating and a review
by going to

(http://ratethispodcast.com/founder).
Any of this, will truly help the

show. Thank you so much for
listening and have a wonderful

day. Bye bye.