RemoveBounce is an email list cleaning service that was sold on Flippa just before Christmas in 2019 for $35,000 to a team of tech-savvy entrepreneurs with a strong background in software development who were looking to expand their portfolio of online businesses in the email technology niche.
At the time of the sale, RemoveBounce was 2 years old, providing a profit of $1,732/month with traffic coming primarily through direct sources.
Since the acquisition, the email list verification platform has been through some radical transformations and the owners learned several valuable lessons.
We spent some time speaking with the new owners and sat down for Q&A session six months after their acquisition to find out a bit more about how the business is going, what got them excited about the business in the first place, and how it is helping them take control of their financial future.
Q: How did you find out about the listing of RemoveBounce on Flippa?
A: We spent several months analyzing the listings on Flippa before we came across RemoveBounce. Being tech savvy entrepreneurs who already had several businesses under our operations, we had a pretty specific idea in mind for what we were looking for and didn’t want to make a hasty purchase. We took our time and waited for the right opportunity to pounce on.
Q: Why did you pick RemoveBounce at that particular time?
A: We were looking for a business that touched on a few factors. It had to be a software as a service (SaaS) that had been on the market for a few years and it had to show consistent monthly profit. We also wanted a business that we could add value to with our own skills and experience. When we discovered RemoveBounce, we were able to instantly visualize how we could develop it in the future. Also, it was really important to have some investment and return ratios well in our targets. A good investment always starts at the right price.
We appreciated how much the previous owner worked to grow this business from zero, but we also recognized the potential of growth, dependent on more specialist knowledge in subjects such as front-end, back-end, SEO, process analysis and automation, and this was exactly where we could add value.
Q: How did the acquisition on Flippa go?
A: We went through a smooth acquisition, thanks to the processes that Flippa has in place. After contacting the seller, we agreed on a due-diligence call and fact-checked every statement about the business with provable facts. While this might be boring at times and such sessions can be quite lengthy, it is a “must” for any potential buyer. We cannot express enough how important a thorough due-diligence process is.
Afterwards, we sat on the information for a few days, reflecting upon it and deciding if it was the right opportunity for us. We also mapped out a potential improvement plan for the business. Once we decided that we wanted to submit an offer for the business, we sent the seller a letter of intent outlining our requests, expectations, and price.
Once the letter of intent was accepted, we contracted a legal team to prepare a sale agreement and continued the process.
After signing the contract, we deposited the money in Flippa’s escrow account and we proceeded to transfer across the assets from the owner. We would have been using an escrow service anyway, but having one already in the platform made the whole process a lot smoother.
Q: What happened after you sent the money to escrow?
A: As outlined in the sale agreement and discussed beforehand, we selected a date for the asset transfer.
We had a complete list of all the accounts and assets we needed access to and simply went one by one, transferring one account after another. Examples of accounts included in this process were hosting provider(s), cloud services, third-party services, social media, etc.
The process for each individual account was mainly:
- Seller has access
- Seller provides access to the buyer
- Buyer enables 2FA
- Buyer removes seller access
Then simply repeat.
We started a classic screen share / video call and went one by one and moved over each account.
😂 Fun fact: no matter how much one can plan, mistakes happen. So, we got locked out of our cloud hosting provider account. The seller had enabled 2FA access on two devices: one that was not used in some 200 days, and one that was active. When he removed the 2FA access, he removed the active one first. Then, we got locked out.
I would be lying if I said I was not nervous during that incident, but we clearly realized it was just a mistake that could happen to anyone.
This was solved by working with the cloud provider to verify our identity.
Good thing our money was in escrow! It saved us from a mini-heart attack. Whew!
A few days later, when we finished the transfer and were confident we had everything we needed to ensure business continuity, we instructed Flippa to release the money to the previous owner of the business. So far, so good.
Q: What was the next step for the newly acquired startup?
A: We did a thorough analysis and decided to fully revamp the platform, from front-end to the back-end, and add a few additional features for our clients. In the first three months, the platform benefited from a facelift, as you can see in the image below.
We also split the user-facing part of the platform into the landing website and the dashboard.
The reason for doing this was that they serve different purposes.
On the one hand, we optimized the landing page to be blazing fast. As we are technologists, we could take advantage of our skillset and really push it to the limit in terms of speed. There are few websites on the internet as fast as our landing page 👀. People access our homepage from all corners of the world, from different devices and variable internet connections. We wanted it to load in 1-2 seconds on any device out there, in any part of the world. The website must load instantly to keep potential customers engaged. As the sole purpose of this landing page is to clearly outline our services and convert, we needed it to first load before we convert.
For any tech enthusiasts out there, we are using Preactjs as a framework for this.
On the other hand, we had other needs in our dashboard. Here, other considerations take precedence over just speed, such as security and the ability to provide users with the best features. As this means complex code, authentication, state management, API calls, etc., we needed something robust as the foundation for this dashboard.
Again, a hot tip for any tech enthusiasts out there: we went with Angular.io here, as we could leverage most of it’s already available functionality to build a robust and secure platform quickly. On top of Angular, we have used NGRX for state management. This combo allowed us to build a truly reactive dashboard that keeps our users engaged, it’s fast, and it’s a long term solution that we are extremely happy with!
Q: How did you decide what you were going to focus on initially?
A: During our due diligence, we discovered that some of the customer contact messages had been stored anonymously, and many of them consisted of suggestions about features the users want, improvements and, or course, some complaints as well.
This was GOLD for us. After mapping each message to a category and then simply counting the number of requests per category, we were able to extract an actionable roadmap.
So, this took most of the “guessing” out of the question and we were really happy to start providing value to our existing user base.
Q: Apart from technical changes of the platform, are you doing anything else to take the business to the next level?
A: Processes, processes, processes. We are learning from the needs of the business and implementing processes for most of the activities that need to be done. Writing code, or making changes? We’ve got a process. Marketing activities such as link building? Writing articles? Social media strategy? We’ve got processes. Customer service? We’ve got a process for that too. As soon as new needs appear, we try to create a process on how to best deal with that case and scale-up. This helps us to prepare for the next requirements from clients, employees and business challenges.
Q: So, what’s next?
A: There are so many plans that we are working on at the moment for RemoveBounce! We are currently scaling up from an infrastructure perspective as we are close to reaching the limits of the current infrastructure for email verification. We were taken by surprise by the demand over the past two months and we are responding to this challenge at the moment.
We are blessed to have clients that constantly provide us with feedback about features that we introduce and features that we should introduce. According to their feedback, we analyze and add features from our backlog. We’re working full steam ahead, and still have a backlog packed for at least 6 months from now.
Q: What about the clients? Did they feel the change in ownership?
A: We tried to make the transition as smooth as possible, but the management styles are quite different, so we believe they felt a change in ownership.
What we learned is that as much as we’re willing to work hard and care for our clients by improving aspects of our services, we will still lose some clients in the process, sometimes due to factors outside of our control. On the brighter side, we did acquire a larger number of clients than we lost, so we are net positive.
In future acquisitions, we will certainly consider the numbers with caution and assume a small percentage of clients are likely to leave as soon as something changes.
Q: Would you buy again from Flippa?
A: Definitely. We are quite active in the Flippa community and we are trying to identify our next gems. We are subscribed to Flippa’s newsletters and we review the new opportunities daily.
Q: What lessons have you learned?
A: Oh, where do I start? For us this has been the first of many acquisitions to come on Flippa. So keeping this in mind, we learned incredibly valuable lessons about asking the right questions before our next acquisitions.
We learned that while we can manage anything in terms of technical challenges, we have a lot more to learn from the sellers from a business perspective.
For example, what are the personas of the clients? Is the seller able to provide a clear, detailed picture of his users’ personas or are they rather vague? More often than not, the sellers only have a vague idea about who their clients are, so it’s extremely important to figure this out from the beginning, as it can save the buyer from potential pain. The clients can be entrepreneurs that are friends of the owner and are likely to dissipate after the ownership has changed. Or the majority of the revenue can come from a concentrated number of clients (2-5) and this can also present risks once the ownership is changed. Fraudulent or fake clients can also be an issue, so learning in-depth about the clients is one of the lessons we learned.
We have also learned a lot more about SEO and tools we can use to check the websites before we acquire them. For those that are not familiarized with the importance of SEO – it can really make or break an online business.
For example, a low domain authority can be the result of poor SEO practices, such as buying backlinks. This can lead to penalties from Google, which can make it more difficult for that particular website to grow in rankings and be listed on the first page.
From this perspective, we would like to congratulate Flippa on the new partnership with SEMrush as this tool is one of the most complex and complete out there to verify all sorts of details, from domain authority, traffic analysis, organic search analysis, backlink audit and so on.
We could go on and on about the lessons that we learned, but another one that we would like to pick for this topic is goals prioritization. Yes, we know. Everyone keeps talking about prioritization and SMART goals, but they do actually work. Considering our technical background, we always want to add unlimited features just because we think “they’re nice to have”. But the real question is, are all those features actually needed? Has anyone requested them or what value do they actually bring us?
That’s why we learned that it is always good to start with identifying the functionalities that are required by our clients and that are strategic assets for the business instead of building what we, as software developers, find exciting to build.