What we found out:

• Define your mission statement early.

• Negotiate terms based on your values, not just price.

• Stay true to your vision and keep innovating.

• Recalls should be handled quickly and to your customers’ benefit.

• Raise capital when it supports growth, not exploration.

• Allocate capital for your next venture carefully; don’t blow it all.

01: an insurance salesman and a $5,000 loan

Tom Chappell was born in 1943 and grew up in Pittsfield, Massachusetts. He studied English at Trinity College in Hartford, Connecticut, and at 22 he married Kate Cheney, an artist whose family had founded Cheney Brothers, at its peak the largest silk mill in the country.

His first job out of school was selling insurance for Aetna in Philadelphia, and he was successful. He ranked first out of 65 salespeople and got a $600 raise, while the lowest performer got a $300 raise. Tom was competitive, so a system that gave only slightly higher rewards to high achievers didn’t sit right with him:

I was not made for that kind of a culture.

— Tom Chappell

Most of the write-ups I read about Tom’s of Maine start with a loan made in 1970. His time selling insurance is usually left out, but it explains a lot of what was to come. Apart from two years working for his father’s business, Tom spent the rest of his career owning his own businesses. Even when he finally sold at 62, he negotiated to stay in charge.

the family business

In 1968, Tom and Kate moved to Maine to raise their children in the countryside. Tom went to work with his father, whose textile mill business had failed. His father had started a new business focused on pollution abatement for the textile industry, developing cleaning products without harmful nitrates and phosphates.

For me, it was about combining business and the environment. In the mid-’60s, you didn’t work for a business and be concerned about the environment. It was either-or.

— Tom Chappell

Laundry detergent seemed like an odd first product for a company later known for toothpaste. It made more sense once I learned about his father’s business; Tom spent two years there learning how to clean textiles without phosphates, compounds that help detergents clean but were causing algal blooms in lakes and rivers.

the loan

Tom had no money to start a business. A friend in Kennebunk who worked in alternative education offered to loan him $5,000 by posting his IBM stock as collateral at the bank. The same friend later contributed another $2,500. Further funds came from a second mortgage on the Chappell home and, later on, loans from the Small Business Administration (SBA).

The first product was developed in 1970 and called Clearlake, which the company calls the first non-phosphate cleaner on the market. It came in a container with a prepaid return label so customers could mail it back for refills, and Kate drew the product label by hand. The manufacturing equipment was secondhand stainless steel from local dairy farms, which Tom bought about a hundred dollars at a time. In 1972, the company added soaps made with vegetable glycerin, and later shampoo, conditioner and lotion.

Kate raised three kids while doing the design work and was the voice of the customer, helping guide Tom’s decisions on product design and packaging.

the toothpaste

In 1975, Tom and a chemist friend made a toothpaste without saccharin or artificial additives. It was flavored with herbs and spices and used calcium carbonate, a natural mineral, to clean the teeth. The company stated that it was the first natural toothpaste sold in the United States. Tom had a hunch it would work: nobody else was making one.

We knew very well that we were serving a consumer that was discerning about what they would put in their bodies.

— Tom Chappell

Tom’s toothpaste quickly became the company’s biggest revenue driver and a staple in health food stores.

02: the growth-innovation tradeoff

The first test of the company’s values was fluoride. It was controversial in the natural foods world but was also what the American Dental Association (ADA) recommended to prevent cavities. Tom decided the company should offer both. Within two years the fluoride version was outselling the original version and total toothpaste sales had doubled. The company explained the decision: it is important to serve all of a customer’s health needs, and to give them the choice.

In 1981, the company changed its name to Tom’s of Maine. By 1983, annual sales were approaching $2 million, and further growth needed outlets beyond health food stores. That year, CVS became the first drugstore chain to stock Tom’s products, and the company started to position its toothpaste as a proper alternative to Crest and Colgate.

the consultants

To make that leap, Tom brought in professional managers. John Rockwell, a consultant from Booz Allen Hamilton in New York, joined as a director. Rockwell summarized the change in one sentence Tom recalled decades later:

We’ve got to help transition this company from serving the health committed to expanding it to the people that are health concerned.

— John Rockwell, as recalled by Tom Chappell

From 1981 to 1986 the company followed a strategic plan: changing the marketing and brand message so it appealed to mainstream shoppers, hiring the right people, raising prices and producing the product more efficiently. In short, it worked. The business was growing by about 25% per year in the early 1980s.

Tom later said the company had become “overcome with the numbers,” so I expected the consultants to be the villains of the story. Instead, he calls Rockwell a great mentor, and in the interview he never says the growth plan was wrong. The plan did what it was meant to do and the company grew. The tradeoff was innovation: no new products were introduced for four years, and new products were the reason the company existed in the first place.

the empty years

By 1986, Tom’s of Maine had hit its strategic targets and Tom was miserable:

The company had started because Tom and Kate wanted products that didn’t exist. Now, in Tom’s words it was led by “the MBAs.” He said he could not find meaning in a business with the sole purpose of becoming bigger and more profitable.

03: a divinity degree and a failed deodorant

Tom’s answer to the disconnect was an unusual one: he enrolled part-time at Harvard Divinity School, 90 miles from Kennebunk, and commuted there twice per week while continuing to run the company. He got up at 4:30 a.m. to study and later called it an extremely difficult education. He read philosophers like Martin Buber, whose book ‘I and Thou’ is about how people relate to one another, and started to apply the lessons to the business. He finished with a master’s degree in theology in 1991.

On paper, a founder enrolling in divinity school looks like he is walking away from the business. The way I read it, it was the opposite: he kept running the company while gaining perspective through his studies. Some of the biggest changes made to the business came from that time: a revised mission statement, a giving program and paid volunteer time for employees.

the mission

In June 1989, while he was still studying, Tom started a year-long process to work out what the company stood for, asking employees to play an active role. The resulting mission statement declared that the company would make a profit and work toward the common good at the same time. Three main changes shifted the axis on which the company was built:

• 5% of profits were donated to environmental, arts and community causes. That later increased to 7% and then 10%.

• 5% of employees’ paid time could be spent volunteering in the community.

• New benefits for employees, including profit sharing, child-care support and paid parental leave. Factory workers also rotated stations every hour to avoid fatigue.

The advertising budget was increased to $1.3 million in 1989, and the first national campaign went live in 1990: a radio spot with the voices of Tom and his mom, Virginia. Around the same time, new manufacturing equipment increased toothpaste output from 50 tubes per minute to 90.

the recall

The new set of values was put to the test almost immediately. Tom’s deodorant was a popular choice. In 1992 the recipe was changed to remove petroleum-based ingredients, replacing them with glycerin made from coconut, and lichen. The new version simply didn’t work for about half of the customers it served.

We hadn’t really thought this through carefully enough. It wasn’t an effective deodorant.

— Tom Chappell

In October 1992, Tom recalled the product at an estimated cost of $450,000. Oof. The solution included bringing back the old formula and sending every customer who complained a replacement product and a coupon for their money back with their next purchase. The recalled deodorants were donated to homeless shelters, in true Chappell fashion. Tom has said that the recall created an overall loss for the business that year, but that it recovered the following year and no employee was let go:

I think I took the hit for that.

— Tom Chappell

the ADA seal

The company’s values also meant that the biggest wins took a long time to materialize. Tom’s wanted the ADA’s seal of approval for its toothpaste line; the seal communicates that a product has been tested and approved by the dentists’ association. To most, an ADA seal seems trivial. For Tom’s it was a requirement that took seven years to obtain. The timeline seemed unusually long, so I dug a bit deeper. Turns out the ADA had no standard for natural products, and Tom’s would not allow animal testing. The Food and Drug Administration (FDA) required fluoride toothpaste to be registered through trials on rats. Tom refused and pushed for human trials instead. After meetings in Washington, the FDA agreed. It may have taken a while, but they never gave in.

In 1995, Tom’s of Maine became the first natural toothpaste to carry the ADA seal, for its spearmint, cinnamon and fennel flavors. That same year, sales reached a record high of $20 million. Tom wrote about the company in two books, one released in 1993 and the other in 1999.

04: the investors and the sale

going herbal

Tom’s of Maine made the biggest bet in its history in 1999: a line of herbal cough, cold and wellness remedies and liquid herbal extracts that effectively doubled its product offering. The products were developed with researchers at the University of Illinois at Chicago and the company acquired Green Mountain Herbs of Vermont to make the extracts. Approximately $4 million was set aside for marketing, the largest marketing budget in the company’s history.

At this point in time, much bigger companies, including Warner-Lambert and tea giant Celestial Seasonings, had already tried their hand at herbal remedies with little success. Tom’s rebuttal was that the business had often succeeded when others were doubtful.

The capital outlay was substantial. So much so that in 2000, the Chappells sold 12% of the company to 15 outside investors for $6 million. One of them was John Whitehead, the former co-chairman of Goldman Sachs.

At first, the expansion provided false hope. Sales grew by 19% to $33.5 million in fiscal year 2000. The next year, growth slowed to just 7%, to $36 million, short of Tom’s $40 million target, and the company ended the year with a $1.5 million loss. It was only the second year in 25 that the company lost money. Tom’s explanation to Forbes says it all:

We tried to do too much.

— Tom Chappell

the recovery

The record between 2001 and 2006 is light because Tom’s of Maine was a private company. Most of the write-ups I read end around 2000, when the herbal products were introduced, so I assumed the Chappells sold because the business was struggling. Then I found the coverage of the sale in 2006, which said the opposite.

By the time of the sale, the company was generating about $50 million in revenue and growing 15% to 20% per year in its existing stores. Tom’s was responsible for 60% of natural toothpaste sales in health and specialty stores, with nearly 200 employees and a lineup of about 90 products. Colgate said at the time that Tom’s gross margins were ten percentage points higher than its own.

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why sell?

Tom was 62 at the time of the sale and had been running the company for more than 35 years. His three reasons for selling are well documented:

• The business lacked the distribution and research and development it needed to keep growing.

• He was concerned that competitors would be bought by bigger companies and take market share away.

• Kate had gone back to her art.

He summed it up simply:

We had run out of energy.

— Tom Chappell

The Chappells looked at going public and decided against it, because money alone would not get the products into more stores. So they decided to sell instead. Colgate topped their list of possible buyers because, according to Nutraceuticals World, it had treated Tom’s of Maine with trust and respect.

Funny enough, 2006 was a year of big moves in the industry. On March 17, 2006, L’Oréal agreed to buy The Body Shop, the other famous values-led personal care brand at the time. Tom’s of Maine announced its sale just four days later.

the deal

The deal was announced on March 21, 2006, and closed on May 1. The terms were as follows:

• $100 million in cash for 84% of the company. Colgate described the price as approximate and never published an exact figure.

• Tom and Kate were to keep the other 16%.

• Tom was to stay on as CEO and Kate as vice president.

• The company stayed headquartered in Kennebunk, Maine.

• Tom said the product formulas, jobs and programs, including the giving program and paid volunteer time, would not change.

Tom and Kate’s joint statement explained the choice:

We chose Colgate as our partner because they have the global expertise to help take Tom’s of Maine to the next level.

— Tom and Kate Chappell

Colgate’s price valued the business at $119.0 million, approximately 2.4x annual sales.

The more interesting value is the one implied six years earlier. When 15 investors bought 12% of the company in 2000, they valued the business at just $50 million. Effectively, the value of their stake grew about 2.4x in six years, despite a losing year along the way.

Not every customer was happy about the sale. A customer in Portland told reporters her first thought was that Tom’s was “consorting with the devil.” The marketer Seth Godin titled his blog post on the deal “Tom Chappell sells out,” though he opened it by congratulating him.

05: after the sale

two weeks of retirement

Tom kept running Tom’s of Maine under Colgate for about two years. Once he retired, it didn’t last long. Kate put it best in a 2011 interview:

I think he stayed retired for two weeks.

— Kate Chappell

A lot of thought went into what came next. A mentor had told Tom that he was too young to retire and he agreed:

I didn’t feel like retiring. I felt I had a lot of energy.

— Tom Chappell

The two quotes about energy stood out to me because they sound like they contradict one another. The difference was who said it. “We had run out of energy” was about Tom and Kate together, after running a business for more than 35 years, with Kate ready to return to her art. “I felt I had a lot of energy” was Tom on his own, thinking about his next move.

The idea for his next company came on a hiking trip in Wales with his son Matt. Walking for up to eight hours each day, Tom struggled to find a layer that kept him warm and dry even after testing several different materials.

When he told Kate about his plan, she recalled thinking, “My goodness, all over again?” Inc. reported that Tom committed nearly $5 million to the idea within weeks of the sale, while he was still running Tom’s. The company, called Ramblers Way, was founded in 2009, when Tom decided to take it seriously.

ramblers way

Ramblers Way made clothing from American-grown wool that was sewn in the United States (and partly in Kennebunk, Maine). Pay started at $14 per hour plus benefits in 2016. Tom picked apparel because he thought the industry needed to change, calling it the second largest polluter on earth. He told the Portland Press Herald in 2017 that he expected Ramblers Way to be much bigger than Tom’s of Maine.

It didn’t exactly work out how he hoped. The company was launched exclusively online, had a “miserable” first four months, and then started selling through brick-and-mortar retailers. By 2011, it was in 115 stores and had 22 employees, two of whom were Tom’s kids. By 2015, Tom had personally ponied up $14.5 million to build the business, and by the end of that year the company was close to going out of business:

We didn’t have a winning proposition.

— Tom Chappell

It was Kate, along with their daughter, who pushed for the next move: opening their own stores. The first store opened in Kennebunk in November 2015, with plans for more in Portland and New Hampshire. His daughter Eliza handled the design work, his son Chris managed the e-commerce side, and his son-in-law managed supply chain. As of 2025, the company’s website states the brand is run by a new husband-and-wife team, David and Stacey Weinstein.

The comparison is stark. Tom’s of Maine took 13 years to get close to $2 million in sales, funded by a loan from a friend, a second mortgage and SBA loans. By 2017, bringing Ramblers Way to market had cost about $18 million, and it was close to failing six years after it was founded.

06: the tools

the product

Tom’s sold only natural household and personal care products for health-conscious customers. Laundry detergent was the first, then soap, shampoo, lotion and eventually the star of the show, toothpaste. Deodorant, mouthwash, floss and shaving cream were introduced in later years. By 2006 the company offered about 90 products across health food stores, co-ops and mass-market chains such as CVS.

founder skillsets

Tom is a salesman by trade. He is competitive by nature and was top of his sales team at Aetna early in his career. He later said that the reason Tom’s of Maine succeeded was the market share it took from Colgate, Procter & Gamble and Unilever. Read: he beat the competition at their own game.

He learned how to make cleaning products without phosphates while working in his father’s business, and knew when to bring in outside managers. What he learned in the 1980s was that hiring did not mean handing over direction of the company.

Kate brought design and a customer’s perspective. She drew the first label, worked on packaging and advertising, and kept her own career as an artist along the way.

monetization

Tom’s made money by selling products on store shelves. It started in health food stores and co-ops, and moved into mass-market chains, starting with CVS in 1983. In the 1980s it raised prices as part of the move to the mass market, and by 2001 Forbes noted that a tube of Tom’s toothpaste cost 30% more than Colgate’s in some stores. Despite the long runway from idea to exit, Tom’s was the definition of “if it ain’t broke, don’t fix it.” Selling through retailers worked for a long time, and the company never moved away from it.

unique branding

The brand was the founders. The company took Tom’s name in 1981, Kate designed the packaging, and the first national ads used the voices of Tom and his mother. The giving program and volunteer time are at the core of the business and carried the legacy on after the company was sold.

The refusal to test on animals was another testament to the brand the Chappells had built, even when it cost the company years with the FDA and ADA.

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07: lessons to apply today

01: the mission statement

Tom’s of Maine didn’t start with a mission statement; in the early days it was run on a philosophy. When Tom was at school, he started writing one. It took a full year and the input of every employee but it went on to guide later decisions including the sale. It also shaped how much the company gave away, how people were treated and, years later, what kind of buyer it would accept.

In reality, you don’t need a full year. Set aside a quiet afternoon and write down what your business does for its customers and the community beyond making money. Put extra thought into the things your business will NOT do. Share it with anyone who works with you and use it to guide decisions, big or small. Review it once a year. A clear mission statement is the core pillar of your business.

02: stay true to your vision

The consultants that Tom hired in the early 1980s did exactly what they had to in order to grow the business. What got missed was innovation, something Tom had never delegated before. Four years passed without a new product. When hiring outside expertise, make sure there is a clear line for what they are improving and what stays with you. Innovation and vision should remain in your hands as the founder. Nobody can do it like you.

03: recall the right way

Product recalls happen all the time. What surprised me was how gracefully Tom’s handled the failed deodorant formula. Not only did it donate the batch to homeless shelters (in line with the mission statement), it brought the old formula back and sent every customer who complained a replacement and a coupon for their money back on their next purchase. Even though the company finished the year at a loss, it showed customers what the brand valued. Tom’s wanted to get the product right. If you’re faced with a recall for a physical product, go above and beyond to make sure customers are satisfied and not thinking of leaving. The respect you earn will be worth more than the money you lose.

04: raise capital sparingly

Raising money is easier to justify in situations where the capital would support further growth and expansion of the business. For Tom’s, it was to explore a new branch of the business where there was no expertise and competitors had already failed. The result was a $1.5 million loss for the year. Before making the decision to take on outside capital, ask if you’re paying to grow what you already know works or if you’re exploring. You’re better off testing small scale, perhaps even pre-selling to gauge demand and price elasticity before committing.

05: values or price?

There is no record of an auction or a competing offer. Nutraceuticals World reported that some analysts thought another buyer could have paid more, and the numbers suggest why: Colgate’s price valued the business at about 2.4 times revenue while it was growing 15% to 20% a year, with gross margins higher than Colgate’s own. Price was clearly not the Chappells’ main motive; the terms of the deal mattered more.

The announcement confirmed the things they cared about most: a 16% residual stake, Tom running the company and the headquarters in Kennebunk. Tom also said the giving programs would continue. If you’re selling your business and want a set of values to survive the sale, make a list of your non-negotiables before the first conversation. Conditions can lower the price a buyer is willing to pay, so decide which terms you can live without and what your price floor is.

06: preservation of capital

Tom’s of Maine was built on borrowed money and was forced to grow slowly; perhaps one of the reasons it succeeded as a brand. When he founded Ramblers Way in 2009 with money from the sale, he spent heavily from the start and came close to losing the company. When you sell your business, decide in advance how much of the proceeds you are willing to put into your next venture and decide on growth targets required before more capital is allocated.

08: what still isn’t clear from the research

• How much of the sale proceeds the Chappells kept after paying out the 15 outside investors, and whether any employees owned shares.

• Whether Colgate ever bought the Chappells’ remaining 16% stake.

• Tom’s of Maine’s profit figure at the time of the sale.

• The exact date Tom stepped down as CEO of Tom’s of Maine; the Portland Press Herald says he ran the company for about two years after the sale.

• Annual revenue between 1983 and 1995, and between 2001 and the sale.

• If there were any other interested buyers.

09: the brand today

Twenty years after the sale, Tom’s of Maine is still a Colgate-Palmolive brand headquartered in Kennebunk. The range now includes toothpaste, deodorant, mouthwash, body wash, bar soap, floss and toothbrushes. The company says it still gives away 10% of its profits and has maintained the B Corporation certification it first earned in March 2019, with a score of 86.5 in the 2024 assessment. The last two years have been harder. In November 2024, the FDA issued a warning letter after an inspection found bacteria in the water used to make toothpaste and clean equipment, and a black mold-like substance, at Tom’s plant in Sanford, Maine. The company said it tests finished products before they leave its control and that the water system was being upgraded. In 2026, Colgate agreed to pay $2.9 million to settle a class action over the contamination and its “natural” marketing, without admitting wrongdoing. Colgate does not report Tom’s sales separately, so whether the brand continued to grow post-sale cannot be confirmed. The details that mattered to the Chappells can: the brand kept its name, hometown headquarters and giving program, although Tom has since stepped down as CEO.

FOUNDED FACT

At the age of 10, Tom Chappell was the model for Norman Rockwell’s painting Choirboy, which was on the cover of The Saturday Evening Post on April 17, 1954. Decades later, the owners offered to sell it to him for $750,000. Kate said they would’ve had to give it to a museum, so he passed.

LEARN MORE

How I Built This with Guy Raz — Tom’s of Maine: Tom Chappell, NPR, December 2017. Tom on Aetna, his father’s business, the loan, the consultants, divinity school, the recall and Ramblers Way, in his own words.

Inc. — Andy Isaacson, “Why the Tom’s of Maine Founder Thinks He Can Create the Next Patagonia,” April 2017. Why he sold, and the near failure of Ramblers Way.

Tom Chappell — The Soul of a Business: Managing for Profit and the Common Good, Bantam, 1993. His own account of the 1980s and the mission statement.

SOURCES

Colgate-Palmolive Company — press release, March 21, 2006. The purchase of 84% for about $100 million in cash, the 16% retained by the Chappells, Kennebunk, Tom continuing to lead the company, the $3 billion natural care market growing 15% a year, the 60% share in the health and specialty channel, and Ian Cook on gross margins ten points above Colgate’s.

Colgate-Palmolive Company — press release, May 1, 2006. Completion of the purchase.

How I Built This with Guy Raz — Tom’s of Maine: Tom Chappell, NPR, December 2017. His father’s textile business in Massachusetts, the Aetna raises, his father’s pollution abatement business, the IBM stock and the $5,000 loan, the dairy equipment, Kate’s role, the toothpaste, John Rockwell and the consultants, Guy Raz on 25% growth, the 1986 crisis, divinity school, volunteer time, the deodorant recall, its $450,000 cost and the loss, animal testing and the FDA, the mentor after the sale and the Rockwell painting.

Encyclopedia.com and FundingUniverse — Tom’s of Maine, Inc. company history, compiled from contemporary press. Aetna, the move to Maine, Clearlake, fluoride in 1978, sales near $2 million in 1983 and CVS, the consultants, Harvard Divinity School from 1986 to 1991, the mission statement, the $1.3 million ad budget and the 1990 campaign, the recall and the replacements and coupons, the ADA seal and $20 million in 1995, the tithe, the 1999 herbal line and the 2000 investors.

Forbes — Ian Zack, “Out of the Tube,” November 26, 2001. The 30% premium on a tube of toothpaste in some stores, $6 million for 12%, John Whitehead, $33.5 million in fiscal 2000, 7% growth to $36 million in fiscal 2001, the $40 million target and the $1.5 million loss.

Inc. — Andy Isaacson, April 2017. The reasons for selling, “We had run out of energy,” the Wales trek, the nearly $5 million within weeks, the $14.5 million and the $18 million, and Kate and the retail stores.

New Hope Network — “Colgate to retain Tom’s values in acquisition,” March 2006. The $50 million in sales, nearly 200 employees, about 90 products, Tom on keeping the programs, including paid parental leave, and Tom and Kate’s roles.

Nutraceuticals World — “Word from Wall Street: The Colgate, Tom’s of Maine Deal,” 2006. The 15% to 20% growth, the decision not to go public, why Colgate topped the list, and the view that another buyer might have paid more.

The Motley Fool — “Tom’s Deal With the Devil,” March 22, 2006. About $50 million in sales, and Colgate’s margin comparison repeated as profit margins.

Deseret News (Associated Press) — March 22, 2006. Customer reactions and Tom on formulas, operations and jobs staying the same.

Seth Godin — “Tom Chappell sells out,” Seth’s Blog, March 2006.

Moodie Davitt Report — March 17, 2006. L’Oréal’s agreement to buy The Body Shop.

Tom’s of Maine — “Backstory” and “Who We Are,” company websites. Kate’s hand-drawn label, soaps in 1972, the toothpaste in 1975, fluoride in 1981, the ADA seal, and the giving and volunteer programs today.

Wikipedia — Tom Chappell, Kate Chappell and Tom’s of Maine. Birth years, schools, the Cheney family, the 1991 degree and the 2019 B Corporation certification.

Entrepreneur — “Toothpaste Magnate Finds an Eco-Friendly Encore,” March 2011. Kate on two weeks of retirement, the first four months of Ramblers Way, 115 stores and 22 employees.

Portland Press Herald — June 6, 2016, and February 19, 2017. Ramblers Way’s stores, wages and prices, 2009 as the year Tom got serious, his two years running Tom’s under Colgate, Chris Chappell as e-commerce director, and his expectation that it would be bigger than Tom’s of Maine.

Ramblers Way — “Our Company,” ramblersway.com, September 2026. The current owners.

Portland Press Herald — November 20, 2024, and CNN, November 19, 2024. The FDA warning letter, the Sanford inspection, the complaints and the company’s response.

Antiques and the Arts Weekly — December 2005. Tom Chappell as the model for Choirboy and the April 17, 1954 cover date.

B Lab — Tom’s of Maine company profile, bcorporation.net, read October 2026. Certified since March 2019, the 86.5 score on the 2024 assessment and the current product range.

Inc. — July 7, 2026, and Top Class Actions, 2026. The $2.9 million settlement in the Eastern District of New York, covering purchases from November 21, 2020 to March 6, 2026, and Colgate’s denial of wrongdoing.

Every figure in this issue is drawn from public statements, interviews and press coverage, and each one is listed with its source above. No interview was conducted with the founders. Tom’s of Maine was a private company and published no financial statements, so revenue and profit figures are as the founders, the buyer or the press stated them and have not been independently audited. The purchase price and stake are taken from Colgate-Palmolive’s own announcements. Amounts are US dollars.

Biggest lessons:

• Cash is the only security. Movado paid $100 million cash for MVMT and promised up to $100 million structured through an earnout if the brand hit certain growth targets over the four years that followed. On the day the deal closed, the earnout was already valued at just $16.5 million. In the end, no earnout was ever paid and the cash component was the only money received.

• Learn from previous failures. Jake’s first company, a light-up T-shirt business, sold product through a physical store that ultimately lost to competitors who sold online. With MVMT he learned from that mistake. There were no physical stores, every sale went through the MVMT website, and customers were acquired through social media.

01: humble beginnings

At the age of 12, Jake was selling promotional lollipops and made his first few hundred dollars. By the age of 17 (2008) he started a business that sold interactive glow-in-the-dark T-shirts, which at its peak was generating $10,000 of revenue per week. The strategy worked for a while (having a physical storefront), however, when competitors offered similar products online, the business suffered and Jake was forced to shut it down.

Most of the public write-ups I’ve read about MVMT start with the inaugural Indiegogo campaign. The T-shirt business is often skipped but was foundational for the development and success of MVMT.

I had other businesses that had failed and I blamed myself. I wasn’t going to let that happen.

— Jake Kassan

Jake met Kramer in Santa Barbara. Kramer was studying at UC Santa Barbara and had experience with Kickstarter through a campaign he ran for a wallet business that ultimately raised more than $100,000 from around 3,000 backers. Jake was studying at Santa Barbara City College at the time, and after a year, he dropped out:

I just didn’t know why I was doing it. I was doing the routine, going in circles.

— Jake Kassan

Kramer left school soon after with just one semester left for his degree.

the watch niche

Neither of the founders was particularly knowledgeable when it came to watchmaking. The problem they faced was a simple one: the watches they liked cost between $500 and $1,000, too expensive for college-aged kids. On the other end of the spectrum, the cheaper ones were not particularly nice or interesting to wear. Kramer described the gap to Forbes:

It’s not that millennials don’t like watches. It’s that what was available was overpriced, marked up, and the brands weren’t things that we really felt we wanted to get behind.

— Kramer LaPlante

The plan was to create a minimalist watch that looked expensive but priced between $95 and $160. After vetting 20 to 30 manufacturers on Alibaba, they found one they liked. The process happened over email and Skype; they watched for red flags in how each manufacturer communicated, looked for a decent production history and asked for photos and samples before deciding. Three months later, the founders had six samples they had designed themselves and had photographed them with a camera from Costco, all with less than $5,000 invested. At this point, Jake was also $20,000 in debt and working as a valet.

02: 200 emails and the first $1 million

The first person who wanted to buy a watch was a neighbor. Jake and Kramer showed him a prototype and he asked to buy it on the spot. The first real proof of concept.

The obvious place to start was Kickstarter, where Kramer had success before. Their campaign was turned down twice so they moved to Indiegogo instead in June 2013, with a goal of $15,000. All of this without a single product shipped. The pitch was a concept alongside a promise:

We have a business, we don’t have product ... Give us six months, we’ll ship you these watches, and this is the concept.

— Jake Kassan

the campaign backers

There was no marketing budget, so Jake was forced to do it himself. His advice on crowdfunding includes starting with family and friends and setting a goal small enough to hit quickly so the campaign is ‘successful’ by platform standards. The internet glosses over the manual work that went into the success of the campaign launch. Jake describes the level of commitment he had:

I’d go and scrape 200 emails from different press people. I’d go on Reddit, and I’d post different stuff, and then I’d use VPNs to upvote my own Reddit posts to get higher ranking.

— Jake Kassan

Most of the emails went unanswered, but he felt he had to send them. Jake also believed that Indiegogo campaigns take most of their money at the end, so they extended the deadline for a total of 50 days. When it closed in August of 2013, 2,887 people had backed MVMT for a grand total of $219,898, almost fifteen times their initial goal. Forbes later reported that at the time it was the second most-funded fashion campaign in Indiegogo’s history. A second campaign ran from August 7 to 27, and the two together raised $291,307 from almost 3,900 people.

The original campaign page: https://www.indiegogo.com/projects/mvmt-watches-affordable-stylish-high-quality-watches-59

the first year

Then came the hard part: making the watches and shipping them to those who had already paid. The business was run from their Santa Barbara apartment for the first two years. Jake built a basic website during the campaign so that sales momentum could continue after it ended. It was a success; four orders were placed through the site the day after the campaign closed.

The rest of 2013 was spent working with the press. By 2016 MVMT had been featured in Complex, GQ, Hypebeast and many blogs. On Instagram, customers were prompted to post photos wearing the product with the hashtag #jointheMVMT. The best ones were reposted with credit to the photographer. It gave the business a steady supply of product photography that was essentially free.

People felt cool wearing our watches and they told their friends about it, and it all just snowballed from there.

— Kramer LaPlante

By the end of 2013, less than six months after the Indiegogo campaign had ended, MVMT had generated more than $1 million in sales.

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03: $20 to sell a $100 watch

In the second year of business, growth and customer acquisition became the primary focus. Jake taught himself Facebook advertising:

Year two was when I taught myself through podcasts and YouTube videos how to run Meta ads, and that’s just when it all took off.

— Jake Kassan

Every MVMT sale went through their website which allowed for the measurement of ad spend, customer acquisition costs and how much product had been sold. Unfortunately, MVMT never published these figures publicly. The only hint came from the founder himself.

Once I learned I can go and spend 20 bucks and sell a $100 watch, I’ll do that all day.

— Jake Kassan

When Facebook became a proven channel for customer acquisition, the same approach was taken to podcasts, Google ads and YouTube. Jake later called Facebook and Instagram “the secret formula for scaling the brand online.” By the end of 2014, sales climbed from $1 million the year prior to $7 million. By 2017, the number had increased tenfold to $71 million.

Alongside advertisements, MVMT also leveraged influencer marketing on Instagram back when it was rare. From smaller travel creators to A-list celebrities such as Kylie Jenner, MVMT paid to have them wear the product and show it off to their respective audiences. Not every post was worth the investment. One of Kylie Jenner’s posts, for example, went up during an Instagram outage.

We made our money back, I think, but it should’ve done much better.

— Jake Kassan

The range ultimately grew from just watches to sunglasses, a women’s collection, blue-light glasses and then jewelry. By 2017, MVMT moved into department stores, including Nordstrom and Bloomingdale’s, though it remained a small part of overall revenue.

no investors

More than 20 venture capital firms wanted in, and one by one the founders turned them down. When money was short, they borrowed small amounts from friends or the bank but no share of the business was ever given up.

the margin

Profit figures weren’t made public by MVMT, but I was very curious and eventually stumbled upon a transcript of an earnings call two weeks after the deal was announced. This came directly from Movado’s CEO, Efraim Grinberg:

Since its founding, MVMT has been profitable on an operating basis every year. Last year, MVMT generated EBITDA of 7.4% of sales.

— Efraim Grinberg, chief executive, Movado Group

Based on the revenue figure of $71 million, that equates to approximately $5.3 million, a thin margin for a product with a significant markup. Movado’s CFO was able to provide some additional context on that same call stating that MVMT’s biggest operating cost was customer acquisition and marketing. MVMT also made most of its profit around the holidays after running at or slightly below breakeven in the first half of the year.

the warning

In January 2018, seven months before the deal was announced, Jake noticed a changing landscape for social media advertising:

[Using Facebook and Instagram ads now is] much more difficult without a doubt. It’s still possible, but it would be very difficult to scale as fast as we did. We used channels that just aren’t as efficient or easy to use anymore.

— Jake Kassan

In the same interview, he stressed that brands not investing in other acquisition channels “are going to hit a ceiling.” That year, for the first time, he and Kramer started looking to raise money.

04: $100 million up front, and a $100 million promise

Soon after the search started, the founders started conversations with Movado Group. Movado is the public company behind Movado, Concord and Ebel, producing watches for brands such as Coach, Tommy Hilfiger and Hugo Boss. Its offerings missed a key segment of the market at the time: young people who shopped primarily online. What started as an effort to raise capital quickly turned into a conversation around a potential sale of the business. The two sides moved quickly to an exclusivity agreement:

I think it was a 75-day exclusivity where we shared information, we talked to them, we met with them, they met with our team.

— Jake Kassan

Over the next 75 days, the founders could not entertain other offers or speak to other buyers. This gave Movado time to go through the business with a fine-tooth comb and left the founders without a backup. This was almost the opposite of the Pura Vida case study from last week where seven formal offers were registered through an auction process.

Jake says that Movado “wanted to know a lot about [the] business, if not everything,” and his finance and marketing staff spent a significant chunk of their time producing reports, a large ask on top of regular workloads. Bankers managed the process and lawyers handled the negotiation. All in, it took six months to get from the first fundraising conversations to a signed deal.

The founders were in agreement on the reason to sell:

We wanted the financial freedom to figure out what we wanted to do next.

— Jake Kassan

the terms

The deal was announced on August 15, 2018, and closed on October 1. It was structured with three primary components:

• $100 million cash at closing, adjusted for cash, debt and working capital.

• Up to $100 million more across two additional payments, tied to future performance. The catch? There was “no minimum required future payment”.

• Jake was to stay on as CEO of MVMT and Kramer as COO.

The cash component valued MVMT at 1.4x 2017 revenue and 19x EBITDA. If the $100 million earnout had been paid in full, the resulting value of $200 million would have been 2.8x revenue and 38x EBITDA.

Movado’s CEO made a public statement after the announcement of the deal speaking to the gap it filled in the existing customer base at Movado:

While others believe that young consumers will not be interested in the watch category, Jake and Kramer proved them wrong.

— Efraim Grinberg, chief executive, Movado Group

The filings show how Movado logged the purchase. It valued MVMT’s inventory at $14.6 million. Most of the remainder was entered as goodwill, the MVMT name and its customer relationships, essentially how accounting shows the acquisition of a brand and its customer base (in this case, largely built on social media followers).

the second $100 million

The second $100 million was structured as an earnout. It was expected to be paid in two parts: the first was to be based on MVMT’s average performance over the first two years after the sale, and the second on performance over the two years after that. Both parts depended on MVMT hitting revenue and EBITDA targets that were never shared publicly.

Accounting rules require a buyer to estimate the expected payout of an earnout component on the day a deal closes. That estimate is then updated every quarter afterward. Movado built its estimate from a simulation of MVMT’s possible sales and profit over the next four years and arrived at an expected value of $16.5 million at closing.

$100 million is what Movado would have paid if MVMT grew fast enough to hit every growth target but when the probability of actually hitting those targets was simulated, the estimate came in less than one sixth of the maximum.

I assumed the further decline in the expected payout was because of the COVID pandemic strictly based on the timing of it all. Upon closer investigation, however, it became clear that in July 2019, 10 months after closing and six months before the pandemic started, Movado cut its estimate down to just $1.9 million. On the earnings call the reasoning was questioned, to which Movado’s CEO responded that MVMT was growing but just not fast enough.

This is a transaction that was staged over [a] three to four-year period of time in terms of an earn-out, and it will not achieve that level of growth.

— Efraim Grinberg, chief executive, Movado Group

By January 31, 2020, Movado valued the earnout at $0 on lagging performance. Jake stayed on as CEO for about two years after the acquisition, and the founders ended up earning nothing after the initial cash payment at closing. In a 2025 interview, Jake said that he was happy to stay on as a courtesy to Movado since they essentially changed the trajectory of his life by acquiring the brand.

That is why the price of this deal is quoted four different ways:

The $300 million figure appears to trace back to a 2018 Forbes writeup: “an initial $100 million payment, and two additional payments of $100 million in total.” This is incorrect but has since spread from one blog to another. Setting the record straight here! Funny enough, even one of the podcasts I listened to listed the sale price at $300 million, from which Jake made $100 million. The filings clearly state that Movado paid $100 million cash and no further payments were ever made.

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05: after the sale

the brick and mortar bust

Movado’s plan was to bring the MVMT brand into brick-and-mortar stores. In March of 2019, Movado’s CEO explained to shareholders that the business had been built as a digital brand and needed access to physical stores to reach the next level of growth. In May he said that Movado would launch MVMT in stores in the second half of the year alongside a bigger TV budget. By that fall, MVMT had its first national campaign.

Then COVID came along and stores closed six months later. In April 2020, Movado cut the book value for MVMT’s name and its customer relationships by $22.2 million. A write-down like this means the buyer no longer expects those assets to perform as expected at acquisition. Movado’s reasoning was twofold: universal store closures and the decline in Movado’s own market value.

leaving MVMT

Jake stayed on for two years, and the money was part of the reason why.

I stayed on for two years total, and I think it was partially because of the money.

— Jake Kassan

In 2020, he decided he “wasn’t adding a ton of value” and stepped down. Movado appointed a CEO in March 2022 to run MVMT’s day-to-day operations. The brand still exists to this day and is listed among Movado’s own brands in its most recent annual report. Kramer has since co-founded HygieneLab, a men’s personal-care brand.

now i’m lost

Jake has been unusually open about his experience after the life-changing payout at the age of 27. Growing up, he had one goal.

The North Star when I was younger was always financial freedom. So my purpose, I always felt, was: I wanted to make money.

— Jake Kassan

Then you sell [your company] and then ... for the first time in years, I don’t want to talk about MVMT anymore, but I also didn’t know what to talk about.

— Jake Kassan

The first few years were good but then every day started to feel the same, “like Groundhog Day.” In a CNBC interview, he discusses turning 30, going through a breakup, and struggling to find anyone who understood how lonely he felt. He speaks openly about depression and has mentioned a panic attack that happened in Australia in 2024 that came “completely out of left field.”

How do you empathize with someone who is rich and depressed?

— Jake Kassan

After the panic attack, he decided to start working again but to worry less about the outcome. He chose filmmaking, something he had always loved, and began posting his films on YouTube. One of his best-performing videos, “At 30, I Sold My Company for $100 Million, Now I’m Lost,” is about his struggle with depression and a real take on the life of a founder post-exit.

The next mountain I want to climb was trying to tell meaningful stories through YouTube.

— Jake Kassan

He also started investing in startups, including the soda company Olipop and the sauce brand Truff. He says the money has stopped making a difference in how he feels:

I can’t buy more peace of mind. That’s my relationship with money. I’m grateful for it. I appreciate it. I’d rather have it than not have it ... but there’s nothing that it can do that is going to make me a happier person.

— Jake Kassan

06: the tools

the product

For the first several years, the primary product offering was a line of minimalist watches designed by the founders and manufactured in Asia. They were sold exclusively online and cost between $95 and $160. Several years later, sunglasses, blue-light glasses and jewelry were added to the product line and sold to the same consumer.

founder skillsets

The two founders had different skillsets but were both business-minded from an early age. Kramer brought crowdfunding experience and went on to run the operations side of the business. He has said they were “the first ones to go to market totally online” in the watch business. Jake learned from several failed businesses as a teenager and taught himself advertising that ultimately scaled the brand. He has been open about his shortcomings, admitting he was “probably just a little below average” at school but “very good at being hyper focused.” Jake was also forced to be a master delegator in later years. By 2018, the business had a CMO and CFO who took over roles he had carried years earlier.

If you don’t hand off responsibility and hire people to have ownership of things, then you will always be limited.

— Jake Kassan

monetization

Monetization for a brand of its size had relatively few channels. The business was originally funded from preorders and then moved to direct-to-consumer (DTC) sales through the brand website and social media, ultimately moving to department stores once the brand had grown sufficiently. The crowdfunding rounds paid for the first production run and selling DTC preserved a markup that would otherwise be paid to a retailer. MVMT was strategic with reinvestment into the business; most of the markup from DTC sales went back into advertising and the production of the next batch of product.

unique branding

MVMT is pronounced ‘movement’. The founders were the same age as the people they were selling to: people in school or just graduating who didn’t have an arm and a leg to donate for a nice watch. They aimed to start a MVMT for affordable and stylish timepieces that everyone could enjoy.

07: what went wrong

01: one channel

Similar to the Pura Vida case study from last week, MVMT relied heavily on Facebook and Instagram ads. By 2018 those channels had become harder and less efficient, a significant headwind for a business whose biggest cost was marketing. Even at the peak of social media advertising and efficiency, the CAC meant that although the product markup was good, the company’s EBITDA margin was under 10%. In April 2021, two and a half years after the sale, Apple released iOS 14.5, which let iPhone users stop apps from tracking them across other apps and websites. That made ads on Facebook and Instagram harder to target and measure, and Meta told investors the change would cost about $10 billion in 2022.

02: one buyer

MVMT went into exclusive talks with Movado, the only buyer recorded, while the founders were still deciding whether to sell or raise money. It is unclear whether competing offers through an auction mechanism (like for Pura Vida) would have changed the terms they would be willing to accept or if the final price would have been higher.

03: the promised earnout

Although Jake has openly stated he was happy to stay on after the sale to thank Movado for changing his life, the promise of the $100 million earnout component was also a factor. He stayed on expecting a payout that was later reduced to $0.

08: lessons to apply today

01: treat the earnout as a bonus

Cash is the only thing that has certainty in an acquisition. As they say, “cash is king”. An earnout should be seen as a performance bonus that is by no means guaranteed. Even better? Go into a deal assuming there won’t be an earnout because then everything that is paid after the cash component is in your favor. Even at closing, Movado’s estimate for MVMT’s earnout was about 1/6 of the maximum. If you need more certainty, negotiate for more cash up front or take an all-cash deal and walk away. If you choose to stay on, make sure the reason is greater than just the money.

02: business failures

Jake’s T-shirt business was his real-life MBA. He lost to competitors that sold online so he started a brand that sold exclusively through a website. Most founders treat a failed business as something to put behind them. Instead, use it as a growth opportunity. The failure might not have been huge, but something didn’t work. Write down what actually caused the failure, being as specific as you can, and then start the next business doing exactly the opposite. If you felt no creative control, make sure you build with creativity as a core pillar. If you underpriced and had no margin, aim for an upscale or luxury product.

03: pre-sell the first orders

MVMT’s first production run was paid for by almost 3,900 backers before a single watch was made. Crowdfunding is the most obvious version of presales, but the principle works anywhere: take deposits, create a waitlist structured with a deposit for the product and sell the first batch before you manufacture. It’s also a great strategy for understanding demand. If nobody is interested, you didn’t waste time or money building up an inventory just to scrap it. I think it’s an underutilized market research tool that more founders should be using.

04: be a master of many skills

Early on, Jake understood that every aspect of the business was up to him and Kramer. After making the decision to sell exclusively online, he forced himself to learn social media ads and stuck with them until he understood what differentiated a good ad from a bad one, eventually allowing just $20 of ads to sell a $100 watch. The efficiency that was reached meant that there could be a big budget allocated to advertising spend until the efficiency of the method changed somewhere around 2018. The key here is to understand the deepest parts of the business yourself before delegating. Understand who your client is, what they care about, how advertising and marketing work and be able to explain the whole process end-to-end to somebody who doesn’t know what you offer. Pre-revenue and early on, you can’t just hire someone. It has to be in your hands so you might as well start learning early!

05: prepare for the unexpected

Movado spent the majority of the exclusivity period combing through MVMT’s business documents which required a lot of manpower and involved producing reports in order to satisfy due diligence requirements. The main value was in the brand and its social media following, not the inventory. Anticipate what a buyer may want to know ahead of time and prepare some reports that can easily verify customers, acquisition channels, and inventory levels if applicable to your business. The more organized you are, the easier the process becomes.

06: the trough after the peak

Jake’s ultimate goal growing up was to make enough money to have financial freedom, which he had checked off by 27. He eventually realized it wasn’t enough. The few years after he left MVMT, he said on a podcast, were when he enjoyed life, traveled and embraced having no responsibilities. Then it haunted him. He lost a sense of purpose. Struggling with depression and a loss of meaning, he also found it difficult to relate to anyone else given his unique situation. If you are planning an exit that has the potential to change your financial situation permanently, make sure you have something to fall back on that can keep you from losing your sense of purpose.

A great example of this is Maxx Chewning from Founded’s second case study on Sour Strips. He made videos for YouTube years before an exit and continued doing so afterward. He now makes videos about exciting projects he’s working on, designing a house, and funny skits. The perfect post-exit strategy.

09: what still isn’t clear from the research

• How the sale proceeds were split between Jake and Kramer.

• The earnout targets and whether they were met. Movado explained why it cut its estimate but never published the numbers.

• If there were any other potential buyers considered.

• The true annual spend on advertising and the raw CAC.

• MVMT’s revenue after the sale (since it isn’t broken out from Movado’s portfolio).

FOUNDED FACT

MVMT’s first Indiegogo campaign was titled “Affordable, Stylish, High Quality Watches – $59.” As of this writing, MVMT men’s watches cost between $148 and $498. The brand that launched as the cheap option has now clearly moved to premium pricing.

LEARN MORE

CNBC Make It — Jake Kassan, January 2025. The most complete account of what happened after the sale, in his own words.

The 505 Podcast — episode 147, February 19, 2025. Jake on the campaign, learning ads, the Movado exclusivity and why he left.

Movado Group — Form 8-K of August 15, 2018, the quarterly reports for fiscal 2019 through fiscal 2021, and the second quarter fiscal 2020 earnings call. The terms, the earnout valuation quarter by quarter and why it was cut, and the 2020 write-down.

SOURCES

Movado Group, Inc. — Form 8-K exhibit 99.1, August 15, 2018. The initial payment of about $100 million, about $85 million net of tax benefits, up to $100 million more in two contingent payments with no minimum, and 2017 revenue of about $71 million.

Movado Group, Inc. — Form 8-K, August 15, 2018, merger agreement summary. The sellers: MVMT Watches Inc., Atomic NewCo Inc., and the revocable and 2017 annuity trusts of Jacob Kassan and Kramer LaPlante.

Movado Group, Inc. — Forms 10-Q for the quarters ended April 30, 2019, July 31, 2019, October 31, 2019 and April 30, 2020. The October 1, 2018 closing, the purchase price allocation, the earnout valued at $16.5 million at acquisition by Monte Carlo simulation and $1.9 million at July 31, 2019, revenue and EBITDA targets through 2023, the portion booked as deferred compensation, the liability at zero by January 31, 2020, and the $22.2 million impairment.

Movado Group — second quarter fiscal 2019 earnings call, August 30, 2018 (Motley Fool transcript). Efraim Grinberg on MVMT being profitable every year, its 7.4% EBITDA margin, the 4.5 million social followers, and young consumers.

Movado Group — first quarter fiscal 2020 earnings call, May 30, 2019 (Nasdaq transcript). Seasonality and the US wholesale launch.

Movado Group — second quarter fiscal 2020 earnings call, August 2019 (Seeking Alpha transcript). Grinberg and Sallie DeMarsilis on why the earnout was revalued and how its two payments were measured.

CNBC Make It — Jake Kassan, January 2025 (syndicated by NBC). The T-shirt company, dropping out, the sale at 27, life after the sale, and the quotes on purpose, loneliness, depression and money.

CNBC — December 1, 2016. The lollipops, the T-shirt company’s $10,000 weeks, Kramer’s Kickstarter wallets and his last semester, sunglasses in 2016, and the $95 to $160 price range.

The 505 Podcast — episode 147, February 19, 2025, and its episode description. The neighbor, the pitch, the 200 press emails and Reddit, the first year, learning ads in year two, $20 to sell a $100 watch, Kylie Jenner, never raising outside money, the 75-day exclusivity and diligence, why they sold, staying two years, and leaving.

Cool Hunting — interview with Jake Kassan, March 19, 2019. The 200 emails, and the line on businesses that failed.

Forbes — Peter Lane Taylor, February 16, 2017. Santa Barbara, the six sample watches, the Costco camera, less than $5,000 invested, the second most-funded fashion campaign on Indiegogo, Kramer on word of mouth, and more than 20 venture capital approaches.

Forbes — Amy Feldman, January 8, 2018. $1 million in the first year and $7 million in the second, #jointheMVMT, paid influencers, and Jake on Facebook and Instagram getting harder.

Yotpo — September 5, 2018. Kickstarter’s two rejections, how the manufacturer was vetted, crowdfunding advice, the extended deadline, the first website orders, and Jake’s $20,000 of debt and valet job.

eCommerce Influence podcast — interview with Jake Kassan, May 2018. The apartment years, #jointheMVMT, and handing off responsibility.

Dropbox — customer story, January 17, 2019. Jake on being broke and unable to afford the watches they liked.

Entrepreneur — March 9, 2016. Press coverage in Complex, GQ and Hypebeast.

JCK — August 2018. Kramer LaPlante on millennials and watches, and the founders’ roles after the sale.

BackerKit — archived records of MVMT’s 2013 Indiegogo campaigns: goals, totals, backers and dates, and the first campaign’s title.

LA Business Journal — August 2018. Nordstrom and Bloomingdale’s.

Business Wire — March 23, 2022. Movado’s appointment of a chief executive for MVMT.

Daily Dot — January 2025. The date of Jake’s YouTube video.

HygieneLab — Thistle & Oak brand profile, Fearrington Village, August 18, 2026, and Kramer LaPlante’s LinkedIn profile. Kramer’s company since MVMT.

Movado Group, Inc. — Form 10-K for fiscal 2026. MVMT among the owned brands, and manufacturing by independent contractors in Asia.

MVMT — men’s watches, mvmt.com, September 2026. Current list prices.

Every figure in this issue is drawn from public filings, interviews and press coverage, and each one is listed with its source above. No interview was conducted with the founders. Figures are as the founders, the buyer or the press stated them and have not been independently audited, with the exception of the purchase price, the earnout valuations and the write-down, which are taken from the buyer’s filings with the Securities and Exchange Commission. All currency figures are US dollars.

Biggest lessons:

• The structure is more important than the payout. Griffin Thall and Paul Goodman received seven offers to sell in 2019. Six of them left more of the money tied to future performance. In the end, they took the offer with 75% of the amount paid up front. This saved them because future performance was not guaranteed.

• Don’t build on rented land. Almost everything Pura Vida sold was through Instagram and Facebook with reach that could not be recreated outside of those platforms. Apple changed the rules in 2021 causing revenue to halve over three years.

01: two artisans, a trash bag, and a boutique in Malibu

Griffin Thall and Paul Goodman met at San Diego State University. In 2010, with their degrees finished and no jobs lined up, they took a five-week surf trip to Costa Rica. On a beach on the Pacific coast, they met two local men, Joaquin and Jorge, who were making and selling woven bracelets.

The boys certainly didn’t plan on buying 300 bracelets but the situation called for it:

We met two artisans on the beach who were hand-making super colorful bracelets. They were homeless at the time and we decided we wanted to help them.

— Paul Goodman

They bought the entire stock to help them out. The crazy part was that it was the only investment they would ever make in the business and there would be no investors.

I went looking for this detail because the story is always told as two boys with some genius idea. Griffin’s own words show how little planning went into the business initially:

We just came home with a bag of bracelets in a trash bag.

— Griffin Thall

the first customer

The two recent graduates had no retail experience and no good way to market or distribute the bracelets. Griffin’s mother was a buyer at Planet Blue, a boutique in Malibu who agreed to carry them. All 300 sold in a week.

This was when Griffin and Paul knew they were onto something big. It was also the moment Griffin and Paul were faced with the problem of getting more supply.

ten days of silence

An email was sent to Joaquin and Jorge to ask for more, followed by 10 nail-biting days of radio silence. There was no plan B. Either they got a response or that would be the end.

On the eleventh day, they got an email back and the second legitimate order was placed, turning an ordinary souvenir into a supply chain.

I would say probably one of the best parts of our story is the luck of us finding each other.

— Griffin Thall

What followed was the boring middle. Griffin and Paul introduced the product to surf stores, yoga studios, nail and hair salons, boutiques, or any other store they thought fit the brand. They established their digital presence using a website around the same time, taught themselves web design and product photography from YouTube.

02: the machine

From 2010 to 2015 Pura Vida saw rapid growth primarily stemming from wholesale and online sales through their website. By 2014, the company was generating approximately $9 million in annual revenue, with 80 Costa Ricans working full-time and more than two million bracelets sold. In 2014 alone, $300,000 was donated to 166 charities, the same kindness on which the foundation of the business was built.

What made the company remarkable were three key developments that emerged between 2015 and 2019.

the ambassadors

Pura Vida recruited more than 150,000 registered brand ambassadors, about 50,000 of which were active at any one time. They were not celebrities by any stretch, Griffin and Paul took another route: People with small followings who were sent product for free, given a referral code, and were paid an affiliate commission for each sale they made.

The terms of the program weren’t easy to find but some digging revealed the company’s own ambassador pages and recruiting materials used to recruit university students. The commission on all sales through each person’s unique link was 10%, paid through PayPal, while the code also gave those who used it a 20% discount code, which could be given to friends but could not be mass-posted. For high performers, there was a reward ladder with levels called Sand, Surf, Sea and Star. The rewards were paid in bracelets, charms, t-shirts and silver cuffs as referral sales climbed. There was no penalty if an ambassador made no sales.

That structure is why the program scaled so quickly. At 10% of the bracelet sale, monetary benefits were limited so for most ambassadors the social acclaim of climbing the ladder and free gifts is what they stayed for. This cost Pura Vida next to nothing and was essentially all profit. Griffin’s reasoning for recruiting small accounts speaks to the marketing knowledge he had developed:

Customers know that businesses working with influencers having 50,000 followers are sponsored [posts] and might not be as authentic.

— Griffin Thall

One influencer with a million followers involved negotiation and headaches they didn’t want. Fifty thousand people with 1,000 followers became a system that produced a continuous stream of organic content showing off the product in real photos and locations. The focus was on creating very high-resolution content and then repurposing it across the company’s other marketing channels.

the club

The second big mover for the business was a monthly subscription that sent exclusively designed bracelets to customers each month. In 2018, this channel alone was responsible for 22% of total revenue.

The key with adding a subscription service was recurring revenue. Not only does it raise the lifetime value of a customer it also allowed for a higher budget for customer acquisition while actively smoothing out seasonality in a gift category. On the supply side, it also created stable revenue and predictability for the Costa Ricans that made the bracelets. Ultimately, this added revenue source allowed the company to grow even quicker since a large part of subscription revenue was reinvested.

the wave ring

The third mover was a product decision. After five years of selling only bracelets, Pura Vida had moved laterally into jewelry. One product in particular did the heavy lifting – rings. At one point, rings were flying off the shelf at a rate of 3,000-4,000 per day for two years straight. The real driver of revenue was the fact that there was essentially no cost to acquire customers since the audience had already been built.

the numbers

Between 2016 and 2018, revenue blew a hole in any projections. From $15 million in 2016 to $30 million in 2017 and finally to $68.3 million in 2018 from which the business made $3.8 million in net income and $13.7 million in adjusted EBITDA, at an operating margin of around 20%.

Those are not rookie numbers, especially for a two-owner company without investors or outside capital.

One thing I couldn’t quite straighten out is the sales channels. The buyer’s investor presentation has 2018 figures broken out as 52% e-commerce, 25% wholesale and 22% subscription. A trade publication reporting from that same year reported 65%, 20% and 14%, respectively. I have used the buyer’s version here but either way the breakdown is roughly the same: just over half of revenue came from e-commerce, and the rest was split almost evenly between wholesale and the subscription club.

The lion’s share being e-commerce was not a mistake. At the time of the sale Pura Vida had 1.6 million Instagram followers, more than 3 million people across all social platforms and one million email addresses. Griffin has shared that more than 800 artisans were making bracelets in Costa Rica and El Salvador at that time.

the Costa Rica problem

In August of 2017 a former director of supplies for Pura Vida, Shannon Eagle, sued the company. Among the allegations was that the bracelets were not made in Costa Rica at all and that this had been the case since 2015. In December 2017 a customer filed a class action over the same issue, stating the packaging and marketing said the bracelets were made in Costa Rica by the people who shared in the profits.

On April 26, 2018, an email was sent to all customers. The products, it said, may not have been hand-made by local artisans in Costa Rica, and the bracelets were made, assembled and distributed in several countries including Costa Rica, El Salvador and India.

The outcomes of either case were not part of the public record. The supply-side problem was clear: when millions of bracelets were being sold each year, Costa Rican artisans working from a cart on a beach can’t keep up. Production had to move elsewhere, at least in part. The issue was that the marketing materials were never changed to reflect this.

03: cash up front

In 2019 Griffin and Paul ran an auction to sell the business. Twenty-five parties looked into the company: 22 private equity firms and three strategic buyers that would own and operate it. Seven made formal offers.

We weren’t really looking to sell quite honestly, we were looking for the best partner that could help take Pura Vida to the next level.

— Griffin Thall

The strategic buyer that best suited the interests of the founders was Vera Bradley, a quilted-cotton bag and luggage brand out of Roanoke, Indiana that was listed on the Nasdaq and at that time generated about $416 million in annual revenue. On paper it was an odd pairing: a department store brand acquiring a bracelet business selling to teens on social media was a unique one.

the sale

The seven offers were not competing on price. It was the guarantee that made Vera Bradley’s deal enticing. A private equity buyer will typically pay part of the price at closing and leave the rest tied to future performance, which keeps founders working for the remaining funds. Vera Bradley was willing to pay 75% in cash on the day of closing.

The terms were agreed on June 19, 2019 and closing was less than a month later on July 16. Here’s the juicy part you’ve been waiting for:

• $75 million paid cash for 75% of the company on the day of closing, funded from cash and investments.

• Up to $22.5 million structured as an earn-out against performance targets for 2019.

• An option (not required) for Vera Bradley to buy the remaining 25% five years after closing.

• Griffin and Paul staying on to run the business as co-presidents, from their homes in La Jolla.

At closing, the whole company was valued at $100 million, which was 1.5x 2018 revenue and 7.3x adjusted EBITDA. With the maximum earn-out included, the total value was $130 million, which was 1.9x revenue and 9.5x EBITDA. Griffin has publicly stated that the sale was roughly 9x EBITDA, meaning he assumed the full earnout in his quoted figures.

the real price nobody calculated

Digging through articles and press releases revealing the sale, I noticed that three different prices were circulated and none of them are what the founders were actually paid. Using the official filings, however, I was able to make sense of it. Most news coverage quoted a price of $75 million, which was only the first cash payment. One trade outlet quoted $85 million, which is the $75 million plus the later purchase of the last 25% of the business, and leaves the earnout outside the equation. Two business publications quoted $130 million which was not a payment at all: it was the highest-possible valuation the deal would have implied if the earn-out had paid in full and Vera Bradley purchased the remaining 25% at the original $100 million valuation.

The earn-out was ultimately found on the balance sheet for $20.1 million on the day the deal closed, which is what Vera Bradley expected to pay. What was actually paid by Vera Bradley turned up in the cash flow statement for the year to January 2021: $18.7 million, which was about $3.8 million short of the expected cap. Whether performance targets were missed or further negotiation happened is unclear. The final 25% was ultimately not paid with the same valuation from 2019, either. Here is the full and accurate breakdown:

From $100 each to splitting over $100 million is quite the return for nine years of work.

04: after the sale

Vera Bradley reported Pura Vida as its own business segment, meaning that operating figures were reported separately every quarter for six years after the sale. This works out because it means I had a proper revenue stream to follow after the sale.

The first two years were record years and the investment was a good one for Vera Bradley; Pura Vida’s sales rose more than 50% in the first year after acquisition, surpassing $100 million. In the year to January 2021, revenue was $112.5 million with $8 million of operating income, and in the year to January 2022 it was $119.6 million and $9.5 million, respectively. Two and a half years after the sale the business was still growing and run by its founders.

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the start of the end

Apple released iOS 14.5 in April of 2021, which added a system prompt that asked iPhone users whether an app was allowed to track across other apps and websites. Most users opted out.

Facebook and Instagram had been built on app tracking. It was how they knew which advertisement led to a purchase, a big driver in deciding who to show advertisements to and which ones to use. Without it, both customer targeting and measurement was unreliable, leaving advertisers scrambling to acquire customers. As was to be expected, the cost of customer acquisition skyrocketed.

For most companies that meant a bad quarter or two. For Pura Vida, it was the basis of the whole business with about three quarters of revenue coming from customers acquired through social media. In other words, it was the start of the end. Vera Bradley’s chief executive, Jackie Ardrey, commented on the change shortly afterward:

Overall challenges continued to persist in our social and digital media effectiveness coupled with rising digital media costs.

— Jackie Ardrey, chief executive, Vera Bradley

The quarter ending October 2022 is where it becomes notable. Pura Vida generated $21.7 million in revenue over those three months, down 20.3% year-over-year with an operating loss of $1.4 million compared to a $1.8 million operating profit a year earlier. The revenue chart above shows the whole story.

the founders leave

Vera Bradley bought the remaining 25% of the business for $10 million in 2023, three and a half years after the deal closed. Griffin and Paul left the company on January 28, 2023, thirteen years after the inaugural trip to Costa Rica. They gave up their roles, sold their last shares and disembarked from Pura Vida. Griffin was to stay on as a marketing and branding consultant.

The real mystery that I’d like to uncover is why the remaining 25% was sold for $10 million instead of the $25 million based on the valuation when the deal closed in 2019. I suspect it had something to do with the declines in performance already being felt by Vera Bradley and the founders wanting out.

the write-down

Vera Bradley had $44.3 million of goodwill and $61.7 million of other intangible assets on its balance sheet when it bought Pura Vida. For those unfamiliar, goodwill and intangibles are what a buyer records when it pays more for an acquisition than just the hard asset value, which have to be written off when the value of the company no longer supports the line items. Over the three years that followed, it was written down: $22.4 million after tax in the year to January 2023, $5.4 million the next year and $6.2 million the year after that.

By March of 2025, Vera Bradley had signed an agreement to sell Pura Vida which closed later that month for a staggering $1 million. I triple-checked this one because a business that had cost Vera Bradley nine figures to acquire and was then sold for just 1% of that value six years later is an anomaly. The filings show a bit more detail: A cash consideration of $0.9 million, with a total of $3.5 million including $2.5 million of contingency and a net loss on disposal of $15.2 million.

The revenue numbers speak volumes in explaining the final sale price. In Vera Bradley’s last year of ownership, the business ran an operating loss of $15.1 million on $53.2 million of revenue. A buyer willing to take that on must be compensated for the heavy losses they will also assume. The reason the brand sold for any kind of value at all was Pura Vida’s 2.1 million Instagram followers at the time.

The buyer was a special purpose vehicle called Project Aster Acquisition, LLC. On June 24, 2025 the beneficial owner, CriticalPoint was named, a private capital firm in El Segundo, California that buys non-core businesses from larger companies. It appointed Ryan Heuser, who co-founded and ran Paul Frank Industries, as chief executive, with a plan to cut the existing lineup of products, move to cut-to-order production and revamp the website.

05: the tools

the product

For the better part of a decade, Pura Vida specialized in a single product: handmade woven string bracelets from Costa Rica. The price at which the bracelets were sold was especially important because it meant scalability and a vast TAM. Later on, the line extended to rings, necklaces and anklets. The founders valued donating to charities, and often; the company supported more than 300 non-profits with more than $2 million raised.

founder skillsets

Neither founder was an artisan, jeweler or marketer. Listening to podcasts and reading about the founders, it became clear what their true skillset was: The ability to hold a vision and stick to it. The idea to produce organic content was far-fetched but ultimately was possible through the ambassador program which produced a continuous supply of authentic-looking photographs of the bracelets. This meant that growth and attention were a compounding resource that was almost free. The subscription, the wholesale expansion and the move into jewelry were downstream effects of this ability to scale at low cost. Ultimately, however, this is also what caused the collapse of the revenue model when Apple changed its rules.

monetization

The strategy for monetization grew as the company did. From direct to consumer through one merchant to start, the brand then grew social media accounts and its ambassador program. From there, sales grew quickly making for better economics to support a subscription service and expand into wholesale. The entire premise of the business (and why no cash investment was needed) was the reinvestment. Every bracelet sold would then fund the next one. The combination of scaling and reinvestment is what led to a nine-figure exit just nine years after the trip to Costa Rica.

unique branding

Pura Vida is a Costa Rican expression meaning ‘the good life’. The bracelets came with a story of hope and support for those two men on the beach that was passed down to ambassadors. This human element meant the sourcing correction email sent in 2018 was especially damaging to trust and brand image.

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06: what went wrong

01: the origin story

Moving production from Costa Rica was a reasonable business decision for a company growing at the speed that Pura Vida did. It was the failure to communicate the change with customers that ultimately cost the trust of many customers. The two lawsuits and the apology sent out by the founders solidify the damage that was done.

02: rented land

About three quarters of the business depended on Meta’s decisions. Progress was made to produce real assets outside of the social media side (one million email addresses, over 150,000 ambassadors, wholesale growth and a subscription base) but acquisition was never taken off those platforms. The expensive part of the business was platform risk and is a lesson to anyone relying heavily on rented land.

03: the last 25%

In January 2023, when the option to purchase the remaining 25% of Pura Vida still had eighteen months remaining, revenue was declining at a rate of 20% per year and the bottom line was losing money. The purchase of the last quarter of the business, although still lucrative, was less than half of the value implied with the initial sale in 2019.

07: lessons to apply today

01: negotiate for certainty

Six of the seven offers would have left more money in the business, contingent on future growth, which turned out to be dismal. The decision to choose a lower total value and receive 75% upfront is likely something the founders are still happy with to this day. If you are ever handed competing offers to purchase your business, price them two ways before deciding: at the implied valuation and on the assumption that revenue falls by 50%. The offer that realizes the highest price and makes the process easier is always the best option.

02: plant the flag pole

Pura Vida’s product, customers, brand or team didn’t change between 2022 and 2025. It was ultimately the risk that the customer acquisition strategy would be affected by a change outside of the control of the business that caused damage. Do this today: Get out a blank document and list where your last 100 customers came from. Was it from a distribution channel you own or from a channel that can disappear or become more expensive overnight? If the cost to acquire a new customer doubles or triples, what does that do to your bottom line? If the business does not survive on paper, it’s time to eliminate the point of failure. The second and third acquisition channels are only cheap to build while the first one still works.

03: auction for buyers

Even if you’re not looking to sell, you might be interested in what kind of offers you might get if you get a bidding war going. Running an auction for a sale of your business can not only serve as price discovery, it can help drive up the final multiple if you do decide to sell. For Pura Vida, it led to 25 interested parties and seven formal offers. This allowed the founders to take their time, weigh their options and pick the offer that best suited their requirements. Go in with a strong description of the business, a list of 10 buyers you would happily sell to, and a price floor. One offer gives you no leverage.

04: recurring revenue FTW

A woven bracelet was historically seen as a one-time purchase. A monthly subscription turned it into 20% of overall revenue that was reliable. The increase in lifetime customer value allowed for a higher cost to acquire customers up front. It also flattened the seasonality for a product that was often gifted. The subscription model also created less inefficiency on the supply side since it was easier to predict. The question isn’t whether customers will subscribe, it’s seeing what they already subscribe to and making a purchase easier by removing the decision element. Lower friction for the customer means more revenue for the business.

05: minority stakes

Keeping a stake in the business might feel like keeping upside potential, but in reality it’s putting your cards in the hands of a buyer that has full control over the remaining piece. Vera Bradley had a five-year purchase option that was exercised 18 months early when the business started to decline for less than half of the implied value at acquisition. If you sell a majority stake and keep a small amount of equity, keep these questions top of mind: Who can trigger the sale of the remaining equity? When can it be triggered and how is that piece valued? If at all possible, advocate for a price floor or the right to force the sale yourself.

08: what still isn’t clear from the research

• How the total was divided between Griffin and Paul, and whether either removed equity before the sale.

• Why the earnout was $18.7 million rather than the full $22.5 million.

• How the two 2017 lawsuits were resolved. Were they settled, dismissed or tried.

• Revenue figures between 2010 and 2013.

• Whether Joaquin and Jorge were still supplying the company at the sale, what the relationship looked like after the company grew, and their current quality of life after serving Pura Vida for years.

FOUNDED FACT

Vera Bradley paid $103.7 million all cash for Pura Vida between 2019 and 2023. At the end of 2025, the stock market valued Vera Bradley at about $64 million. The buyer had paid more for Pura Vida than the buyer was worth less than two years after the final piece of the business was acquired.

LEARN MORE

Built to Sell Radio — “Pura Vida’s $75 Million Acquisition by Vera Bradley”, episode 217. The only detailed account of the sale process from Griffin Thall: the 25 parties, the seven offers, and why the cash up front decided it.

Ranch & Coast Magazine — the profile that carries the trash bag, Planet Blue and the ten days of waiting for Joaquin and Jorge to reply.

Vera Bradley — the acquisition announcement of June 20, 2019 and the annual reports for fiscal 2020 through fiscal 2026. Six years of segment revenue, the earn-out payment and the disposal.

SOURCES

Vera Bradley, Inc. — Form 8-K exhibit 99.1, June 20, 2019. The $75 million cash consideration for 75%, the $22.5 million earn-out against 2019 targets, the right to buy the remaining 25% five years after closing, and 2018 revenue of $68.3 million with $3.8 million of net income and $13.7 million of adjusted EBITDA.

Vera Bradley, Inc. — Pura Vida acquisition investor presentation, June 2019. The channel mix of 52% e-commerce, 25% wholesale and 22% monthly club, the 96% bracelets and jewelry product mix, 1.6 million Instagram followers, more than 3 million social followers, a million email subscribers, the Net Promoter Score of 80, and $416 million of Vera Bradley sales.

Vera Bradley, Inc. — Form 10-K for fiscal 2020. The July 16, 2019 acquisition date and the allocation of $44.3 million to goodwill and $61.7 million to other intangible assets. The fiscal 2021 quarterly report carries the earn-out at $20.1 million at acquisition.

Vera Bradley, Inc. — fourth quarter and full year results, fiscal 2020 through fiscal 2025. The segment revenue series, the operating results, the write-downs, the “sales up more than 50%” line, the $18.7 million of contingent consideration paid in the year to January 2021, the quarter ended October 29, 2022, and Jackie Ardrey’s comments.

Vera Bradley, Inc. — Form 8-K, March 11, 2025, and Form 10-K for fiscal 2026. The sale of Creative Genius, Inc. to Project Aster Acquisition, LLC, the $1 million of cash consideration stated in the 8-K, and the 10-K figures of $0.9 million of cash consideration, $3.5 million of total consideration, $2.5 million of estimated contingent consideration and a $15.2 million net loss on disposal.

Built to Sell Radio — episode 217, Griffin Thall. The 25 interested parties, 22 private equity firms and three strategic buyers, seven formal offers, roughly nine times adjusted EBITDA, the 75% paid up front and 100% founder ownership.

Ranch & Coast Magazine — Griffin Thall and Paul Goodman. “We just came home with a bag of bracelets in a trash bag”, Griffin’s mother as a buyer at Planet Blue, 400 bracelets sold in a week, the ten-day wait for Joaquin and Jorge, and the luck quote.

GoDaddy — Q&A with Griffin Thall and Paul Goodman. “They were homeless at the time and we decided we wanted to help them”, and the wholesale push into surf stores, yoga studios and salons.

ABC7 Los Angeles — profile of the founders. “We invested $100 each”, about $9 million of revenue in 2014, $300,000 given to 166 charities that year, 80 Costa Ricans in full-time work and more than two million bracelets sold.

Pura Vida Bracelets — brand ambassador materials, and the program write-up for college students dated May 24, 2019. The 10% commission paid through PayPal, the 20% referral code and its restrictions, and the Sand, Surf, Sea and Star reward tiers.

CO— by the US Chamber of Commerce, May 2022. The ambassador program at more than 150,000 registered and about 50,000 active, the quote on 50,000-follower influencers, 2.1 million Instagram followers, and stores moving from 10% to 30% of the business.

San Diego Reader, January 5, 2018, and ABC10 News San Diego, April 26, 2018. The August 2017 suit by Shannon Eagle, the December 2017 class action, and the company’s email to customers.

Shop Eat Surf Outdoor — the 2019 sale, the founders’ exit on January 28, 2023 and the $10 million purchase of the remaining 25%, and the 2025 disposal. Also the alternative channel mix of 65%, 20% and 14%, and the roughly 20% operating margin.

PostPilot podcast and griffinthall.com — “We started with a hundred dollars each, never took on funding, doubled on every order”, three to four thousand rings a day, more than 800 artisans, and the “$130 million investment” figure in Griffin’s own biography.

CriticalPoint — announcement of June 24, 2025, and Shop Eat Surf Outdoor, August 12, 2025. The acquisition by CriticalPoint affiliates and Ryan Heuser’s appointment and plan.

companiesmarketcap.com — Vera Bradley’s stock market value at the end of 2025, used in the Founded Fact. Market value is not the same measure as a purchase price, and the comparison is offered as an oddity rather than as a valuation.

Every figure in this issue is drawn from public filings, interviews and press coverage, and each one is listed with its source above. No interview was conducted with the founders. Figures are as the founders, the buyer or the press stated them and have not been independently audited, with the exception of the purchase price, the segment revenue, the write-downs and the disposal, which are taken from the buyer’s filings with the Securities and Exchange Commission. Amounts are US dollars.

Biggest lessons:

• A business with one owner and no investors can essentially operate however the owner wants. Markus Frind ran Plenty of Fish the way he wanted for five years which included no sign-up fees, limited working hours and no employees in early years. Funny enough, these unique characteristics are what allowed the numbers to work.

• Saying no is leverage for a growing business. It is a death sentence if growth has stalled or has started to decline. Markus turned down buyers for years because the business paid him more each year through organic growth. The offer that finally registered was when a market shift was already in the works.

01: the farm, the fallback, and a two-week website

Markus Frind was born in Germany into a family of farmers that moved to Hudson’s Hope, British Columbia (an 18-hour drive from Vancouver), when he was five years old. The family lived on a 1,200-acre farm in a mobile home with no electricity or running water which provided the ideal conditions to play a lot of chess with his father. Nightly games led to clear sequenced thinking and allowed Markus to develop the ability to think five, six, or even ten moves ahead. This later translated to business foresight.

At first, I assumed the chess games were one of those things that gets attached to a founder after the fact to make the story interesting. That wasn’t the case here. He has told the story the same way for years in writing and on podcasts. In all of my research, it was the clearest explanation for his decisions; he never rushed anything and was patient in waiting for the dice to roll a six.

After high school, Markus spent two years at the British Columbia Institute of Technology (BCIT), graduating in 1999 with a diploma in computer systems technology, straight into the back half of the dot-com boom. What followed was the inception of several internet marketing companies that kept failing one after the other.

the waiting game

In 2001, out of boredom, Markus was browsing existing dating sites at the time and noticed what would become the premise of the entire business: they charged people to sign up without a clear reason. Paying to send a message seemed unnecessary to him because the sites were not necessarily trying to cover any costs. He figured that this was costing them customers.

He registered a domain and then did nothing for two years.

This is where the record surprised me. The story usually gets told as someone who spotted a gap in the market and pounced on it. In reality, though, he noticed the problem in 2001 and did not take action until 2003. What finally forced him to act was the need for a job since he had become unemployed. His resume needed an update.

Microsoft had released a new tool called ASP.NET. The fastest way to learn it, he figured, was to build something real using the technology. He already had the domain so he was off to the races. His approach was to just try things instead of learning from books:

I never learn things reading books. I learn by actually doing it.

— Markus Frind

Plenty of Fish went live in February 2003. It was built on the computer in Markus’ apartment. The first iteration had basic pages with no design and was promoted by posting in dating forums. The entire premise was to get some attention and build his portfolio as a developer. The plan was to get a job.

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the summer that changed everything

By March 2003, Plenty of Fish had 40 users. By the end of that year it had roughly 10,000. The reason it could not be a full-time job for Markus, however, was based on the entire premise the site was built on: not charging for sign-ups. There was no cashflow.

What changed the game was something not even he expected: Google launched AdSense in the summer of 2003, four months after the site went live. For the first time ever, a person with traffic and no sales team could introduce advertisements on any page and get paid automatically.

The first month grossed around $1,000. By October 2003 it was $4,000, enough to stop looking for work. By January 2004, $10,000 per month and in January 2005 revenue had inflated to almost $200,000 per month.

Those four figures were hard to find, sourced from a podcast conducted in 2022, seven years after the sale. They are his recollection rather than an actual record. The one check available is the Globe which quoted late 2003 revenue between $3,000 and $5,000 per month which matches Markus’ recollection.

Was it luck? Partly. The timing certainly was. Having a site with real traffic and almost no costs the day it launched was not. He had spent the previous nine months building the kind of website that cost nothing and had infinite upside.

02: five years as a solo builder

From 2003 to 2008, Plenty of Fish was run by a solo founder. He was the programmer, the moderator, the support desk and the CEO, running the whole site from a laptop in his Vancouver apartment.

The numbers make the story quite remarkable. By 2008, the site had about 15 million users and was generating roughly $10 million per year in revenue. One person and almost no overhead meant revenue was almost entirely profit for the business.

the famous payout

Nobody believed the numbers. A free dating site run by one guy making that kind of money read as obvious nonsense. Markus was often called a liar, so, in 2006, he took a photo of a Google advertising cheque totalling more than $900,000, and posted them online.

Not only did this shock the public and settle the debate, it also told every competitor in the category exactly how much money was up for grabs. He decided the attention was worth more than keeping the revenue stream quiet, and he was partly right: the copycats who turned up still lacked the traffic that Plenty of Fish had.

Nothing had changed from day one. Markus chose the free marketing channel over one that was paid.

work-life balance

The detail that made him stand out from other founders was that he claimed to work one hour per day. In later years when he had staff, he often arrived at the office at 11 a.m., sometimes noon, walked around to see what people were doing, and then went back home to play video games.

I thought about this a lot longer than I probably should have. Is that enough time to run a company with eight-figure annual revenue? The important detail here is easily missed. It’s not about the raw hours worked, which would suggest that Markus was lazy and lacked ambition. What it really reveals is an obsession with removing unnecessary tasks. There are, in Markus’ words, only ever four or five things per year that make any difference while running a business. For a business with no investors, no board meetings, no fundraising or sales calls, there simply isn’t enough work to fill the week. What was left to do did not take very long. Instead of creating random jobs to do, he simply moved on to do something else.

Over time, the needs of the business grew and were somewhat neglected by this same mindset, more on that later.

the first offer

Somewhere in the one-hour-a-day years, Noel Biderman from Avid Life Media (the company behind Ashley Madison) was interested in buying Plenty of Fish. Markus floated a price of $100 million and the conversation ended there.

At that time, the number was not defensible at roughly ten times annual revenue for a business run on advertising, one employee and with no contracts in place. Markus didn’t care that the buyer backed down; he was making enough and was not interested in selling.

hiring

In 2008, Markus finally started hiring, and Plenty of Fish became a normal company with offices. Two floors of Vancouver’s Harbour Centre housed the company’s headquarters while the staff grew into the double digits. The unique qualities of founders come out when hiring begins. In Markus’ case, he deliberately blurred the roles of each employee: programmers did some marketing and customer service representatives worked on product (they were, in his mind, closest to customer complaints to quickly fix an issue or feature).

What he screened for was narrower than a skillset. His interview questions were odd on purpose. One was simply: what is your spirit animal? Another asked the candidate to name three people they had worked with — one who liked them, one who did not, and one who was indifferent, and to say how each would describe them in a single adjective. Neither question has a right answer or can be rehearsed, which was the whole point.

By this point the company was garnering immense traction. Measured in page views, comScore stated 2.8 billion per month against Match.com’s 723 million. Markus’ public position on his competitors was that he left them in the dust long ago.

03: a decade of saying no

The thing that changed my understanding of the business and its founder was from an interview one month after the sale was finalized: Match Group had actually been trying to buy Plenty of Fish for about ten years prior to acquisition. It wasn’t one interaction that yielded the sale; it was years of Markus denying offers like a negotiation taking place in slow motion.

The question haunting me was: what the hell changed?

saying no was just easier

It was easy to keep denying offers primarily because every dollar of revenue was essentially profit in the beginning. That and the fact that Markus was the sole decision maker and stakeholder.

That put him in a rare position for an acquisition. When Match Group reached out, the only person he had to confer with was himself. The business was easy to run and paid him well for years without a hiccup. So why after all those years of saying no did Markus sell?

He told the BBC in earlier years that he had no other plans and that doing anything else would be like watching grass grow.

the things that changed

Three things changed between 2008 and 2015.

The first was the platform. Plenty of Fish was built as a website when that was the only option. An app version for Apple and Android launched in 2010. By 2012, Tinder had revolutionized the space again with a simple swipe gesture instead of the message-only design that Plenty of Fish was based on.

The second was revenue channels. The move from a website to a mobile app limited the ability to include advertising as standard. The industry was moving towards in-app purchases and subscription models, a shift Plenty of Fish made gradually between 2012 and 2015 rather than in one launch. The move doubled revenue from 2012 to 2015 because even a lower conversion to a subscription increased revenue more than advertisements ever could for the same number of eyeballs.

The third change was a chain of things going sideways. We’ll cover those in a little bit.

I went looking for some drama here and there isn’t anything meaningful to speak of. No other buyers to speak of and no public mentions.

the sale

On July 14, 2015, Match Group announced the acquisition of Plenty of Fish Media for $575 million USD, all cash. The announcement contained a generic line from Markus stating that his team had grown the company into one of the leaders in the category and that he was confident Match would accelerate it.

What he told a reporter the next day was better: It was “really surreal” and he was “still processing it all”. He was 36 at the time. The company had roughly 75 employees and a downtown Vancouver office that had grown the brand to have more than 100 million registered users.

The deal needed clearance from Canada’s Minister of Industry under the Investment Canada Act, a review that a foreign buyer goes through for a Canadian company of any size. The deal closed in the fourth quarter of 2015.

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04: the tools

the product

A free dating website with no sign-up fee, the key differentiator from competitors. The website allowed users to create a profile, search for people, message them, and in later versions, fill out a matching questionnaire. The design was famously plain. At face value this reads as a lack of care and investment into how the site looked. As a technology systems expert, Markus knew that simple meant fast which mattered more to him than design.

founder skillsets

Markus is trained in technology systems and programming, which buckets him as a technical founder. Through the five-year stint as sole operator, he learned many business skills. He built the product, but more importantly he made the decisions for what moved the needle for the product. The primary skill was not writing code. That part took two weeks. The real skill was ignoring what didn’t matter and simplifying what did.

monetization

Advertising was the revenue engine for years, through Google AdSense, driven by the volume of traffic to the website each month. Margins were strong and high traffic volume meant heaps of monthly revenue for several years. Subscriptions and paid features came later, once mobile phones enticed customers to pay for the upgrade.

unique branding

The name “Plenty of Fish” tells a lonely person that the problem isn’t them, it’s the supply. There’s plenty of people to choose from, you just have to start looking. Not only did this rank well on Google SEO, it also carried well through word of mouth.

05: by the numbers

Revenue was never audited or filed, so the whole public record is either directly from Markus or from the press. The figures include the $10 million of annual revenue in 2008 and the $100 million revenue figure reported in March 2015, which was described as having roughly doubled since 2012. The other figures are from early stages between 2003 and 2005, provided directly from Markus in a podcast. The years between 2008 and 2015 are still a mystery.

06: the sale process

The mechanics of the deal are simple in a way that is notable because almost no exit of this size is. There was one buyer, one recipient of a cash-only payment. And that was it. There was also no stock or earnout component so there were no strings attached. The slowest part of the sale was the Canadian regulatory review which is usually the fastest part of the sale process.

In Issue 4, which featured Baremetrics, the founder Josh Pigford had to get a signoff from two investors that agreed to lose every dollar they invested to facilitate the sale. The difference is not in the negotiation but in the choice to raise capital and sell a stake of the business. The sale was smooth because a cap table was never required.

07: what went wrong

01: the security mishap

In January 2011 Plenty of Fish was hacked and close to 30 million user accounts were exposed because passwords were stored in a form that was not protected. For a business whose product is privately sent messages, it posed a significant concern. The mishap was caused by years of running lean infrastructure that nobody other than the founder could see or fix.

02: bad marketing

Some of the marketing back in the early days included paid placements in music videos from 2010 that were not disclosed as advertising. In March 2015, months before the sale, the company was fined $48,000 under Canada’s anti-spam legislation. Neither of these was monumental in hindering the success of the business but turn up during the due diligence process.

03: the second product

Even with millions of registered users, Plenty of Fish remained one website for 12 years. Match Group, on the other hand, owned dozens of dating brands and could move a user from one to another as their circumstances changed. Markus could have done the same thing but was limited given the ‘four-to-five-things-per-year’ rule. Two or three dating brands under the Plenty of Fish umbrella could have competed well with Match Group.

08: lessons to apply today

01: know the value of future growth

Markus had the ability to turn down buyers many times because he was paid well and saw a clear growth trajectory for the business. If growth has stalled in your business or you foresee issues in the market, it may be time to position yourself for this shift before considering a sale. Although waiting years and saying no to buyers might sound like a good idea, there is also a risk that markets change so that there is less interest in buying your business.

02: sole ownership

One hundred percent owned by Markus Frind. From coding the website to the nine-figure wire transfer. Enough said.

Keep it as simple as possible for as long as possible. Borrow from a friend if you need to. Raising capital or diluting your ownership should be a last resort. Not only does it affect your decision-making ability, it lengthens the sale process and runs the risk of other shareholders not wanting to sell at the same time as you.

03: prioritize the true drivers

The one-hour-a-day story is unhelpful as an aspiration and useful as a filter. His actual claim is that only a handful of decisions in a year change anything, which implies the discipline is not working less but choosing earlier. Try it literally: at the start of a quarter, name the small number of changes that could plausibly move revenue or users, and put everything else on a written list titled “not this year”. That list matters as much as the choices do, because it is what stops the same rejected idea coming back every six weeks dressed up as a new one.

04: the free product model

Not only was the removal of a sign-up fee a key market differentiator, it was a distribution strategy. Free sign-up attracted the single men and women who were sick of paying for online dating. That same volume produced page views, and page views were sold to advertisers. Competitors left out a significant chunk of the market by ignoring price sensitivity. Plenty of Fish leaned into it and ended up winning.

For your business, if there is a way to widen the funnel at the top by offering a part or all of your service for free this can be a great customer acquisition strategy. Once users have discovered the value you offer, you can monetize through any channel and see increased conversion.

05: infrastructure. don’t ignore it.

Plenty of Fish’s password leak in 2011 and compliance fine in 2015 are both examples of what happens when a business runs on autopilot for too long with an underinvestment in infrastructure. Not only will flaws in the systems you run be found during a due diligence audit by a buyer, it will cause catastrophe down the line if not taken seriously. You should prioritize testing and upgrading security on the two or three most important systems you rely on most for your business.

06: measure the non-monetary driver metrics

Markus has said the thing that mattered in the early years was watching the data rather than the reports, and that for Plenty of Fish the business could be reduced to three metrics: how many people visited, how many sent a message, and how many received one. A site with visitors who never message one another is just a directory.

Find the smallest measurable metrics not tied directly to the money that can tell you if the business is thriving or starving. Measure them continuously and test them proactively rather than just reading a report of what’s already happened. The unglamorous truth is that you need to keep costs low for long enough so you can be patient and build the business on top of a working set of fundamentals.

07: action beats learning

What allowed Markus to build the business in the first place was a bias toward action. He always favored just trying something and learning from it than reading books and never applying the knowledge.

09: what still isn’t clear from the research

• Audited revenue for the year of the sale. The only figure in public is a reported annual run rate, and nothing breaks it out.

• Who initiated the sale in 2015. Did Match make a materially better offer than in previous years, or was Markus ready to sell?

• Whether there was another buyer.

• What the actual take-home amount Markus received after taxes and whether he decided to stay on after the acquisition.

• The split between advertising and subscription revenue at the time of the sale.

FOUNDED FACT

Around 2007, with the site earning about $10 million a year, Markus pitched a sale price that represented roughly 10x annual revenue. Eight years later, with 10x the revenue from 2007, he accepted an offer that was about 6x annual revenue. What changed was not the price he was willing to accept, but the outlook on the market and a realistic view of what the company was worth after learning from many previous offers.

LEARN MORE

The Globe and Mail — “The Vancouverite behind Plenty of Fish”. The best account of the solo years, the farm, and the $900,000 cheque.

The Globe and Mail — “Plenty of Fish founder Markus Frind on love, steel mills and selling out”. The long profile written after the sale, and his own account of how he decides what to work on.

Match Group — the acquisition announcement, July 14, 2015, and IAC’s annual report for that year, which is where the price is confirmed.

A New Wave of Entrepreneurship — “Markus Frind: Continual Improvement”, July 2022. The podcast the monthly revenue figures, the hiring approach and the three-counts idea come from.

SOURCES

IAC/InterActiveCorp — Form 10-K for the year ended December 31, 2015. The purchase price, the cash consideration and the year of completion. The only audited statement of the price.

Match Group — acquisition announcement, July 14, 2015. The announcement date, the $575 million figure, the quotes from Markus Frind and Sam Yagan, and the Investment Canada Act review.

The Globe and Mail — “The Vancouverite behind Plenty of Fish”, ROB Magazine. The farm and the move to Hudson’s Hope, the chess games, BCIT, the failed marketing companies, the domain registered in 2001, 40 users in March 2003 and 10,000 by December, the $900,000 in cheques published in 2006, $10 million of revenue by 2008, the one-hour day, the blurred roles, Harbour Centre, the comScore page views, and Noel Biderman’s approach.

The Globe and Mail — “Plenty of Fish founder Markus Frind on love, steel mills and selling out”, ROB Magazine. February 2003 as the launch month, “I never learn things reading books”, late-2003 revenue of $4,000 to $5,000 a month, and the four or five things a year that make any difference. Its headline puts the sale at $800 million where the filing says $575 million; this issue uses the filing.

Global News — “Meet the Vancouver man getting $575M cash for PlentyofFish sale”, July 15, 2015. About 75 employees, 100 million registered users in March 2015, his age at the sale, “really surreal” and “still processing it all”, and the earlier BBC line about watching grass grow.

Global Dating Insights — “Plenty of Fish Hit 100m Users, On Course For $100m Revenue”, March 17, 2015. The annual run rate of about $100 million, revenue roughly doubled since 2012, and the shift from advertising to paid membership.

TechCrunch — “Match Group Buys PlentyOfFish For $575M To Bag More Singles”, July 14, 2015. The bootstrapped, sole-ownership framing and Match’s stated rationale.

Dating Sites Reviews — interview with Markus Frind, August 9, 2015. Match having tried to buy the company for about ten years.

A New Wave of Entrepreneurship — “Markus Frind: Continual Improvement”, Venture For Canada, July 27, 2022. The monthly revenue figures for 2003 to 2005, what he screened for when hiring, the two interview questions, and the three metrics he watched. These are his own recollection, given on audio seven years after the sale, and no other source carries them.

Wikipedia — “Plenty of Fish”. The 1999 BCIT diploma, the 2010 apps, the January 2011 breach, the undisclosed music-video placements, and the $48,000 anti-spam fine.

Every figure in this issue is drawn from public interviews, press coverage and SEC filings, and each one is listed with its source above. No interview was conducted with the founder. Figures are as the founder, the buyer or the press stated them and have not been independently audited, with the exception of the purchase price, which is taken from the buyer’s annual report. Amounts are US dollars unless stated otherwise.

Biggest lessons:

• Pick your buyer before you build the business. Brian built the site to be sold to the New York Times, and spent a year publishing alongside them before an offer was made.

• Quality beats quantity every time. Towards the latter half of Brian’s time at the Wirecutter, articles were revised more often than new ones were written showing the deep commitment to providing the most relevant recommendations.

01: the real sale price

On the morning of October 24, 2016, Recode reported that The New York Times was buying two websites: The Wirecutter and The Sweethome (the two sites Brian had spent the five prior years building). The price was quoted as “more than $30 million”. Within hours, the vague number was everywhere from news outlets to competitor blogs.

In late February 2017, about four months after the sale the Times filed its annual report that read: “In October 2016, we acquired product review and recommendation websites The Wirecutter and The Sweethome for $25.0 million.” Funny enough, I actually found the number still misquoted on Brian’s Wikipedia page:

Nobody (including Brian) has seemingly cared enough to go back and update the record.

Here’s the full story of how a man running one of the biggest blogs on the internet went on to build a product review site that used all of the opposite rules the industry swore by.

02: how it started

Brian Lam was born in New York City in May 1977. His mother grew up in Queens while his father immigrated to the United States from Hong Kong and worked as a computer engineer at Hewlett Packard. The family moved to suburban New Jersey while Brian was young. He recalls hating it there:

“I think it was like subtly racist in a way that it just is… New Jersey was just kind of very racist, very classist. It was just like not where I belonged.”

— Brian Lam

Brian had a peculiar upbringing with parents that had zero expectations for their children. He described it as very frustrating at the time but became useful later in life.

“My dad had a really overbearing dad and overbearing older brother, so he never wanted to tell us what to do, as a matter of principle. My mom was just really into being a free spirit.”

— Brian Lam

He built his first remote-controlled car at the age of seven. By the time he was 11 or 12 he spent summers in Hong Kong, where gadgets were “a lot smaller, cheaper, and better” than anything in America.

He attended Boston University and managed to switch majors six times: philosophy, English, journalism, photojournalism, computer science, and business, taking summer school every year and graduating with about 150 credits. The final degree of choice? Business. During his time at school, a journalist from the Boston Globe had come to speak to his class explaining that 80% of students wouldn’t get a job after graduation. Those that would were threatened with 80-hour work weeks for a measly $20,000 a year.

In 2000, he moved to San Francisco for a web development job and was laid off within two months when the dot-com bubble burst. His next job was rather unique, settling for a job at a kickboxing gym owned by professional fighter Alex Gong answering phones, cleaning, and helping out with customer service. After three or four years, he started giving lessons.

One day while working, a driver backed into Alex’s Jeep, parked on the street outside the gym. In a desperate attempt to catch the madman, Alex chased him down the street in nothing but boxing shorts. He caught up to the driver when he was stopped at the next set of lights:

“The light turns green, and I hear, ‘Pop,’ and I see Alex fall down. Alex was shot in the chest by this totally yuppie looking guy.”

— Brian Lam

A witness told the San Francisco Chronicle that Alex put his arm out to stop the driver, that the driver pushed him back, and that he then shot him point blank. Brian, an instructor at the gym, was quoted in the paper the next day: “the guy popped him. He definitely waited for the light to turn green.” He gave Alex CPR on the pavement using his own t-shirt and could not save him. The biggest lesson he learned from the whole ordeal was to always avoid conflict in life. It took him eight years to fully internalize what that meant for him.

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the call

Eventually, all roads led back to writing. Internships at Maximum PC and Wired turned into a contributor slot and then an assistant editor job at Wired, where he lasted a couple of years and got nowhere: “it was like me and sixteen senior editors who never really listened to me.”

In July 2006 he left the magazine for a blog, which was not something many people did back then, called Gizmodo which he ran from his San Francisco apartment. He worked long hours, day and night, ultimately growing monthly page views from 11 million to 42 million in his first year. He was promoted to editorial director less than two years in. By the time he left the company in 2011, the site had more than 220 million page views a month.

“At Gawker, I was thirty-five pounds heavier than I am now, because I was so unhealthy, and so unhappy, and so stressed all the time.”

— Brian Lam

“For five years it was not that different from boxing; being punched in the face every day was actually easier than working at Gawker. It was like so combative internally, so combative externally.”

— Brian Lam

In April 2010 Gizmodo put out the biggest article of Brian’s career. An Apple engineer had left an iPhone 4 prototype in a bar in Redwood City. It ended up being sold to Gizmodo, for which it was taken apart, photographed and published. Steve Jobs called soon after, asking for the phone back. With a bold tone, he told Steve that he would return it if he confirmed it was Apple’s phone.

Police raided the home of Jason Chen, the editor who had written the article, and seized his laptop and gear. Prosecutors spent 18 months on the case and charged no journalist. In October 2011 the two men who had found the phone and sold it to Gizmodo pleaded no contest and were each given a year’s probation, 40 hours of community service and $250 to repay Apple for the prototype.

Read the original Gizmodo article here: https://gizmodo.com/this-is-apples-next-iphone-5520164

After leaving Gizmodo that same year, Brian wrote a piece titled “Steve Jobs Was a Kind Man: My Regrets About Burning Him”.

03: lowering the (quantity) bar

The idea for what came next didn’t come from research. It was the accumulation, over several years, of people asking for advice on what tech to buy.

The entire industry was obsessed with what was new and hot. There was no market to write about what was good. Just like that, he had found one of the most underrated niches in the industry at that time.

The Wirecutter went live in October 2011, announced in a short post on The Awl. The post described the purpose of the website: to give advice for the best product in a given category at all times. It was a constraint rather than a promise, which didn’t sit well with investors at the time.

“My pitch was we are going to ignore a lot of noise and only be updated 10 times a month at most.”

— Brian Lam

Because of the hard sell, Brian didn’t raise any money at all. In fact, he asked for a simple sponsorship from Intel for the launch and covered the rest himself by renting out his house on Airbnb, selling his car and replacing it with a cheaper model. It took him two whole years to pay himself more than just enough to survive but he certainly learned how to live on a tight budget.

how it made money

The only revenue the website generated came from affiliate links. An article would recommend a product, the link to buy it redirected to a retailer (primarily Amazon) and the retailer paid Wirecutter a fraction of each sale, typically between 4% and 8% at this point. Fortune tried to estimate Wirecutter’s revenue in 2016 assuming 6%, which put revenue at roughly $10 million a year.

Two major differentiating factors made Wirecutter scalable and sellable:

1. There were no advertisers, so there was no reason to chase traffic. The edge came from genuine care put into recommending products rather than maximizing page views.

2. Neither the writers nor editors knew which products yielded the highest affiliate commissions. It was intentionally kept under wraps to keep incentives aligned with customers (recommending the best products).

Most copycat sites failed because they did not enforce the latter.

the work

Matthew Haughey, founder of MetaFilter, was asked to write for Wirecutter and turned it down: a single article took dozens to hundreds of hours of research, far more than he had expected. By the time the company was sold, there were roughly 1,000 active pages. Most of the backend work was not putting out new articles, it was keeping the ones they had updated and relevant. An analysis by Ahrefs in 2022 found that for every new article, five were updated.

For a website funded by advertisements, the incentive is to keep publishing something new. When funded by affiliate links like Wirecutter was, what pays is having a meaningful recommendation that holds its weight, especially over time. Keeping old articles updated was worth more than publishing new ones, especially once most of the major tech category recommendations had been written.

A downstream effect of this was years later:

“After people trust our work, they only read the first like 30 seconds, and then they stop, and they buy what we recommend.”

— Brian Lam

The trust had been built, one loyal customer at a time.

In 2013, Brian launched The Sweethome, a sister site for household goods. In December that year Brian hired Jacqui Cheng, previously an editor at Ars Technica. There were fewer than 10 people at the company at the time but by 2016 there were about 60, not counting freelancers. Matt Haughey, who had turned the work down, later described the writers as well paid and under no pressure to publish often.

Handing the editing job over to others was not one of Brian’s strengths. He had run Gizmodo from his own apartment and made most of the calls himself. At Wirecutter he hired Jacqui and then stayed out of her way. This progression meant that by the time of the sale, the company did not need Brian running the day to day.

04: the Times

In 2015 the Times and Wirecutter agreed to publish together. One of the collaborations, a guide to wireless routers, became the most-shared story on the Times site the day it ran. The Times’ version carried no affiliate links; Wirecutter’s did.

“I built The Wirecutter to be sold to the Times, basically. It’s the one thing they weren’t good at that I was good at… we just made a point of doing work good enough that it was the best that ever existed.”

— Brian Lam, 2025

The potential buyer of any business runs through the same set of questions. One of them is whether the internal team could build the same product or service in house for the same money. If they are able to, which they usually are, they cut the bid price or cancel the deal altogether. What keeps a number strong is unique positioning or a competitive advantage the company can’t quite replicate on their own.

The interesting part about Wirecutter was that the Times had asked its employees to do just that and they had responded with a resounding ‘no’. They could never accurately and efficiently replicate what Brian had done.

It wasn’t just the gruelling amount of time spent writing and re-writing the 1,000 articles, it was the customer trust and conversion through affiliate links that would have been almost impossible to do properly, especially a company as large as the Times.

The sale was ultimately announced in October 2016. Brian moved into an advisory role. Jacqui stayed on as editor-in-chief. In January 2017, the Times named David Perpich to run the business, and the two sites merged into one under the Wirecutter name later that year.

Brian was 39 when Wirecutter sold. He has described himself as semi-retired ever since.

05: the tools

the product

The product was simple: one webpage per category. Each individual page featured a dedicated winner in that category, a cheaper pick and a runner-up. There weren’t any scoring metrics, no endless options to choose from and no news or advertisement noise. When the winner was no longer relevant or a newer and better version came out, the page updated. The Sweethome had the same format but for mattresses, mops and kitchen knives, showcasing a horizontal market move that cost next to nothing.

founder skillsets

At this point you’re probably thinking that Brian was a talented writer, or marketer or just a generally savvy businessman in being able to scale Wirecutter to an eight-figure exit. Although he did have many talents, the real gold mine was knowing the industry inside and out. From the experience Brian had in the blog and magazine space, he understood what the big boys were after (attention) and what he could do to bridge the gap (build trust). The corporations were after speed, volume and covering everything that was new. Brian removed all three and focused on quality and answers. Exactly, as it turns out, what customers wanted.

The second skill Brian learned throughout his time at Wirecutter was restraint. Between hiring an editor, limiting publishing volume, and turning down advertising money, it quickly became clear that it didn’t come naturally to him. Part of what made it work was physically distancing himself from the industry by moving to Hawaii.

monetization

Affiliate commissions were, until the day of sale, the only monetization channel for Wirecutter. In 2015 the site drove $150 million of e-commerce sales, and the commission on that is what the company lived on. No annual revenue figure has ever been published, so what that commission actually came to is not known.

The best part? No funding rounds, no subscriptions, no advertisers to chase down and nobody to answer to.

unique branding

The brand was a promise that built trust over time. No BS. Only what customers really wanted from a product recommendation site. Wirecutter managed to do what others grimaced at: removing everything until the only thing left was what truly mattered for driving growth.

06: by the numbers

The only frustrating part of the story is the lack of publicly available revenue information. Brian was always very private around money. He even declined to give revenue figures to Digiday in 2014. To make matters worse, the Times has also never published revenue figures, either. Dead end. So apart from the $150 million e-commerce sales number from 2015, the incorrectly reported sale price of ‘more than $30 million’ and the actual reported sale price, there isn’t really much to work with.

07: the sale process

The thing I find interesting here is the difference in the attitude towards selling a business. In previous issues, we looked at founders that were dumbfounded when a buyer approached them. They would, in a hurry, hire lawyers and bankers and attempt to gain some leverage by collecting offers from several buyers.

This could not have been further from Brian’s intentions. He had planned for a sale from day one. There was never another buyer; it was always the Times. He knew it from the start of the journey. Working together was strategic to showcase what he had built, do some due diligence work for him, and strengthen relationships with those that would help facilitate the eventual sale. He never even so much as thought about another buyer, meaning he saw it coming all along.

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08: what went wrong

01: no outside funding

This went wrong from Brian’s perspective in early years. It took two years before he could pay himself more than poverty wages. Although this was a tough time in the journey, some entrepreneurs yearn for this kind of grind. One where there is nothing to lose and everything to gain.

02: the revenue nobody published

Brian’s refusal to publish figures was deliberate and defensible for most of the company’s life. The discrepancies arrived when the sale price was misreported. It also doesn’t allow us to paint a detailed picture of how revenue growth looked throughout the journey.

03: two brands doing one job

The Wirecutter and The Sweethome were separate sites for years. The Times merged them within a year of acquisition which is probably what should have happened a long time ago.

09: what went right

01: the asset nobody could rebuild

It was the sheer dedication to giving the right recommendation every time that earned trust. People came back and bought the recommended products. Over time, customers didn’t even read the articles anymore and skipped right to the affiliate links. They trusted Wirecutter with their buying needs at a deeper level. It was something not even the New York Times could replicate in the end.

02: money left on the table

It takes a lot to leave money on the table in any given situation. But leaving subscription and advertisement revenue AND getting no outside investment because of it required Brian’s vision for Wirecutter to be strong.

03: one buyer

Brian built Wirecutter to be sold to the Times, meaning he had structurally positioned the business to be enticing to executives. The unique positioning, strong trust that he built over years and dedication to quality articles spoke to all he had learned and hoped to sell to his target buyer one day.

10: take it with you

01: pick your buyer early

Knowing who you want to sell to can give you an edge. Like creating a customer avatar, it allows you to create the business for the buyer rather than seeking one after it’s already built. It will also increase the perceived value of what you’re selling. What kind of buyer would rather buy what you’re building than build it themselves? Keep a short list and revisit it often.

02: sell what takes years

The Times could have hired 60 writers and replicated the Wirecutter website. It could not, however, create five years of trust readers had for the recommendations. If you work out which part of your business can’t easily be copied within six months, you have determined your unique advantage that puts you in a good place to sell.

03: fix before you add

Wirecutter revised far more than it published because a useful and accurate recommendation kept earning more while new ones did not. A reminder that your five best-selling products or pages are probably worth more attention than the one you haven’t shipped yet.

04: the double-blind

Wirecutter’s reviewers were not told which of the links paid the most, which meant there was no conflict of interest. The recommendations were truthful and not skewed based on revenue figures. What are you selling because it gives you more cashflow? Is it the highest value item you could be selling if money wasn’t in the picture?

05: go public

Get ahead of the press. Let the public know before any news outlet of the details when you sell your business. A correct but uncomfortable message from you is worth way more than a misconstrued estimate from an illegitimate source.

11: what still isn’t clear from the research

• Why the reported and filed prices disagree. Was it retention pay for staff, an earnout, some liability, or just a wrong figure that stuck?

• The Wirecutter’s annual revenue figures.

• The site’s exact traffic in any year before the sale.

• What Brian personally earned from the sale. Was there anyone else in the picture?

• How the $25 million sale price was split between both Wirecutter and The Sweethome.

• Whether any other buyer ever approached Brian or made an offer.

FOUNDED FACT

Gawker Media, the company that owned Gizmodo, did not last as long as Wirecutter did. Gawker Media was sued by Hulk Hogan, lost, and filed for bankruptcy; in August 2016 a court approved a sale to Univision for $135 million. That was two months before the Times announced it was buying Wirecutter.

LEARN MORE

How I Built This with Guy Raz — “Wirecutter: Brian Lam”, 2022. Brian’s own long-form account of the whole arc. https://wondery.com/shows/how-i-built-this/episode/10386-wirecutter-brian-lam/

Techies Project — Brian Lam, 2016. The longest first-person interview about his upbringing, the gym, Gawker and the launch. https://techiesproject.com/brian-lam/

The Awl — “Please Welcome The Wirecutter”, October 3, 2011. The launch announcement. https://www.theawl.com/2011/10/please-welcome-the-wirecutter/

SOURCES

^{1. The New York Times Company — Form 10-K for fiscal 2016, filed February 22, 2017, SEC EDGAR accession 0000071691-17-000003 (the $25.0 million purchase price, the October 2016 acquisition date, and the description of affiliate referral revenue)}

^{2. Recode — Peter Kafka, “The New York Times is buying The Wirecutter for more than $30 million”, October 24, 2016 (the reported price, attributed to unnamed sources)}

^{3. Nieman Journalism Lab, CNN Money, Poynter and Fortune — acquisition coverage, October 24, 2016 (the ~60 staff, the $150 million of e-commerce sales in 2015, the 4–8% range of affiliate referral fees, and Fortune’s 6% assumption and its resulting ~$10 million revenue estimate)}

^{4. Techies Project — interview with Brian Lam, 2016 (the upbringing, New Jersey, Boston University, the dot-com layoff, Alex Gong and the CPR, Wired, the Gawker years, the 10-updates-a-month pitch, Intel, the Airbnb and the car, the two years below poverty pay, roughly 60 staff, and the 30-seconds reading behaviour)}

^{5. Hawaii Bulletin — interview with Brian Lam, November 16, 2025 (“I built The Wirecutter to be sold to the Times, basically”, the build-or-buy exchange, the Steve Jobs call and the jail line, and semi-retirement)}

^{6. The Awl — “Please Welcome The Wirecutter”, October 3, 2011, and Laughing Squid’s write-up the same day (the launch date and the one-sentence description of the site)}

^{7. A Whole Lotta Nothing — Matt Haughey, “The NYT buying Wirecutter and Sweethome is so much more amazing than you think”, October 24, 2016 (roughly 1,000 pages, dozens-to-hundreds of hours per guide, the pay and volume policy, and his own decision to turn down the work)}

^{8. Digiday — “These publishers blend e-commerce with content — and make it work”, August 2014 (Brian declining to say what affiliate links earned)}

^{9. Ahrefs — Wirecutter SEO case study, 2022 (the roughly 5:1 ratio of updated to newly published reviews)}

^{10. AppleInsider, October 12, 2011, and TechCrunch, October 11, 2011 (the San Mateo County outcome, the no-contest pleas, the probation, community service and $250 restitution, and District Attorney Steve Wagstaffe’s remark)}

^{11. Wikipedia — Brian Lam and Wirecutter (website) (the Gizmodo pageview figures, the title of the Steve Jobs essay, the December 2013 hire of Jacqui Cheng, the 2013 launch of The Sweethome, and the 2017 merger of the two sites)}

^{12. The Business of Content — Simon Owens, “Inside The New York Times’s post-acquisition strategy for Wirecutter”, March 2018 (the 2015 editorial partnership, and post-acquisition growth)}

^{13. Bloomberg Law and Fortune — Gawker Media’s $135 million sale to Univision, court-approved August 2016 (the FOUNDED FACT)}

^{14. San Francisco Chronicle — “Fender-bender hit-run turns fatal in S.F.”, August 2003 (the parked Jeep, the chase down Fifth Street, the witness account of the shooting, and Brian Lam quoted as an instructor at the gym)}

^{15. The Atlantic — Brian Lam, “Steve Jobs Was a Kind Man: My Regrets About Burning Him”, October 6, 2011 (the essay, published the day after Jobs died)}

^{Built entirely from public interviews, podcasts, press coverage and SEC filings. No interview was conducted with the founder. All figures are as the founder, the buyer or the press stated them and have not been independently audited, with the exception of the purchase price, which is taken from the buyer’s own annual report. Amounts are US dollars.}

Biggest lessons:

• Outside capital changes a business and how it operates. Baremetrics was profitable until the day Josh raised capital.

• The price of a product is an important decision. Nobody changed prices for eight years. The revenue plateau that followed was ultimately the reason the company sold for 2.65× revenue multiple rather than five.

01: the write-off

In the weeks before Baremetrics was sold in November 2020, Josh had to make two phone calls that most founders never have to make.

He had an offer on the table — $4 million, all cash, from a buyer he had known for fifteen years. The offer was good for a company of its size, and after a failed sale the prior year, he was not about to let another one go. There was, however, a small problem.

In 2014 and 2015, Josh had raised $800,000 from two investors: General Catalyst and Bessemer Venture Partners. In order to sell the business, both had to agree to never see their investment again.

To Josh’s surprise, both said yes. General Catalyst’s reply was something that a founder never hears.

“We recognize the work that’s gone into the past 7 years and it sounds like this is a great landing spot for the team.”

— General Catalyst, to Josh Pigford

It does stir up confusion. Why would an investor be so calm about losing 100% of an investment? What happened over those seven years? Why was the business unprofitable as soon as outside investment was arranged? The answer is in the detailed story, so let’s dive in.

02: how it started

Josh Pigford grew up in Alabama and was the kid on the block always trying to sell the neighbors something. From homemade birthday cakes to lawn mowing services, he would make a poster, staple it to a stick and plant it in the front yard.

He studied design in college and turned it into freelance web work, which became a consulting company called Automatik Studios. Between 2003 and 2013 he shipped more than forty projects: link directories that he sold later for a profit, a package-tracking tool for online stores that he sold, bought back and eventually shut down, music blogs, tutorials, and a long list of experiments that never earned a dime (his extensive list of projects, past and present, can be found here: https://joshpigford.com/projects).

Most of them failed for the same reason:

“I thought it was a good idea but it was a solution looking for a problem.”

— Josh Pigford

By 2013, two ideas were finally working. PopSurvey and Temper were survey and feedback tools built to work with Stripe were generating roughly $5,000 MRR combined. Not life-changing money, but proof that a decade of shipping had taught him something. Every skill Baremetrics would eventually need — the speed, the design eye, the confidence to charge on day one — had been paid for by products almost nobody used.

What looks like an overnight success was a decade of practice paying off.

Josh was a young entrepreneur, running two small software products businesses in 2013 — a survey tool and a feedback tool — and found himself exporting Stripe data to an Excel sheet once a month to collect data. The issue he consistently ran into was the lack of useful metrics captured. Stripe told you when money had been sent and who sent it. It didn’t, however, tell you pertinent metrics to grow a business: customer churn, revenue per customer, or month over month growth.

He did what a logical entrepreneur would do and built the dashboard for himself first. So, in less than a month, he built it — eight days of actual work, spread out because he kept the other two products going at the same time — and launched it on Twitter where he had less than 1,000 followers.

Launch day brought five or six paying customers. One of them was a complete stranger who signed up on the most expensive plan at $250 per month — a tier Josh had put on the pricing page without expecting anybody to pay for it.

His distribution was terrible, but that didn’t matter. He knew something others didn’t that was rooted in a problem he had already encountered himself. If he had this frustration, he knew that others did too. It’s how he validated an idea within one week that would have taken another entrepreneur an entire year while testing.

The first year was a founder’s wet dream. Month two was the $1,000 monthly recurring revenue (MRR) milestone. This became $1,650 in month three. Then $3,200 and $5,300. By month six he was at $8,300, beating every estimate and goal he had.

Two catalysts brought the business to the next level. In April 2014, Buffer — then the most conspicuously transparent startup on the internet — made their Baremetrics dashboard public. Users that were curious about Buffer’s revenue landed on a live page that featured Baremetrics’ name. Josh later described it as the single biggest consistent source of referral traffic the company ever had, stating it permanently changed the shape of the growth curve. Visitors who saw the dashboard working in real time converted at 5.5 times the rate of an ordinary buyer.

The second was strategic writing, though not the kind most companies think of when hearing ‘content marketing’.

“Just generic content marketing is not the stuff that worked well for us. What did work well was when I laid out very specific things I did and gave tips.”

— Josh Pigford

The posts that worked were the ones with numbers in the titles: “How Hacker News generated $1,500 in monthly revenue”, “idea to $5,000 a month in five months”, “how we got our first hundred customers”. The triangulation of the idea was a thing of beauty. He wrote the articles for his customers, using his own company as a case study to drive leads, and then sold the product that was producing all of the numbers he wrote about.

By September 2014, Baremetrics was generating $20,000 MRR, with 250 paying customers by October and five employees.

It was also the month Josh decided to raise money.

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03: the $500,000 investment

General Catalyst had just launched a $10 million fund specifically for companies built on or for Stripe, and Baremetrics fit the bill. The final number was a $500,000 investment on a Simple Agreement for Future Equity (SAFE) at a $10 million valuation. The stated plan was to make three strategic hires: an engineer, a data scientist, and support staff.

Over $250,000 was depleted by month four. In that time, the team had expanded from two full-time employees to six and the company had stopped growing; a side effect of the key marketer (Josh) spending his time getting funding and making hiring decisions.

In December 2015, the decision was made to raise another $300,000 to hire two additional staff. Total headcount was now at eight, while the company had not been profitable since there were only two full-time employees.

By June of 2016, Josh came to the realization that the business was burning cash at a rate of $40,000 per month and there was about eight weeks of runway left.

“We’re running out of money and I need all of you to take a pay cut.”

— Josh Pigford, to the team

The team took the news rather well. They agreed to take a 15% pay cut. Josh took a 30% cut. One employee even volunteered to take a 50% hit to their salary for several months to get the business to profitability sooner. It had worked quite quickly; expenses came down by $20,000 in the first month and by almost $30,000 the month after. By December 2016, Baremetrics was profitable again, allowing employees to receive their full paychecks two months later.

This marked the end of a 27-month no-profit spell, which Josh bluntly blames on his vision and optimism:

“I was playing ‘visionary’ and just assuming things would work out because…of course they would!”

— Josh Pigford

“Eternal optimism is a tough beast to overcome.”

— Josh Pigford

There is a skill in that meeting that rarely gets credited. Josh had to walk into a room full of people he had personally put at risk and ask them to accept less money because of decisions he made. He said it plainly and honestly, stated he took the biggest cut of all, and nobody left.

Hiring had felt like progress at the time. What was not considered was that once hired, he was responsible for their livelihood. He couldn’t just let them go.

04: the tools

the product

The software was simple but impactful. It was, at its core, a dashboard connected to the payment processor Stripe. The dashboard showed the number of active subscriptions, MRR, churn, revenue per customer, lifetime value, and growth rates among other key metrics.

There was no spreadsheet, analyst, or setup which made adoption quick and meaningful for small businesses.

Two additional features were eventually rolled out: Recover, which chased customers who had declined transactions due to a failed card payment, and Cancellation Insights that aimed to collect information from customers that were cancelling their service and provided insights as to the most common reasons. Users were more likely to stay once these features were introduced, primarily because it increased retention and saved more money than it cost to subscribe.

founder skillsets

Josh is a designer by trade, but the difference is that he actually shipped his ideas. Baremetrics existed one month after the idea surfaced; his speed is what allowed him to beat competition to an underserved market. He has noted that he was not a particularly good manager for either the business or his employees and is what ultimately caused the blip in profitability.

The skill he leaned on hardest, though, was not design. It was listening. For years, Josh got on the phone with every single customer, and kept doing it long after most founders would have handed the job to somebody else. He booked follow-up calls at three, six, twelve and eighteen months, not to sell anything, but to understand how each business actually ran. He also refused to automate cancellations, routing them through a live chat instead so that a leaving customer had to tell an actual person.

“I hopped on the phone with every customer, every one of them, and regularly.”

— Josh Pigford

It is the same instinct that produced Cancellation Insights. If a customer was considering walking away, the most valuable thing left to do was find out why.

The failed deal and the anxiety around cutting everyone’s payroll left Josh thinking. And writing. Publicly:

“Seriously, almost nothing is actually a big deal, but man do we founders love to make things a big deal.”

— Josh Pigford, March 2018

monetization

The monetization of Baremetrics was simple: The product was sold as a recurring monthly subscription, priced to the amount of revenue a customer was tracking. This was genius, because it allowed the bill to grow as the customer’s business did, aligning incentives.

“A $9/mo customer is an entirely different customer than a $99/mo customer.”

— Josh Pigford

unique branding

Baremetrics sold transparency by practicing it. The company published its own revenue on a live dashboard, and then built Open Startups so other companies could publish theirs. This started as a marketing gimmick that turned into public validation. Other companies could not easily copy the idea without it looking like a knockoff. It gave the appearance of a much larger and more established company rather than one run by two employees at that time.

05: the revenue story

Almost no small software company leaves behind a public record of revenue figures. Baremetrics was unique in that sense – the numbers tell quite a story.

rapid growth

The fastest growth of the business happened when there was no money, no marketing budget, no staff, and most importantly, no pressure. Leverage and a lack of competition in the space allowed for quick scaling without much effort. Even on the marketing front, the large public dashboard of one of his customers did a lot of the advertising along with his strategically written articles.

Growth also came from larger companies. Revenue per customer grew by almost 70% in the first year with the average MRR growing from $55 to $93. This signaled two potential catalysts: either larger businesses were subscribing, or the ones already subscribed were growing and paying more each month.

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outside capital

The interesting metric to observe over the next few years wasn’t necessarily revenue, it was the change in revenue. The one person responsible for generating leads spent his time hiring and raising capital. It highlights the key person risk Josh made clear in that the success of the business ultimately came down to his ability to steer it. The risk wasn’t dilution; it was the lack of attention.

What makes this stretch remarkable is that there is no gap in the revenue numbers at all. In April 2016, two months before he worked out how little runway was left, Josh published a post that put Baremetrics at roughly $50,000 MRR — the highest it had ever been — and admitted in the same sentence that the company still was not profitable.

“Yes, Baremetrics is ‘only’ making ~$50k MRR and no we aren’t profitable yet.”

— Josh Pigford, April 2016

Revenue never stopped climbing. It went from $25,000 MRR at the end of 2014, to roughly $32,000 by mid-2015, to $50,000 by the spring of 2016, all while the company quietly headed toward insolvency. That was the entire lesson of outside funding in one line: the business was growing the whole time it was dying. Nothing was wrong with the product, the market, or demand. The money was simply going out faster than it was coming in.

profitability returns

Profitability returned through subtraction, not growth: pay cuts, cancelled tools, cost cutting at its finest. By March 2017, Baremetrics was producing roughly $70,000 MRR with no burn rate. Three years and four months in, the company was finally the profitable business it had been in month one. The lesson took time and $800,000 but it is one Josh will never forget.

the plateau

Then came the dry spell. For 16 months, the company sat at a plateau of $90,000-$100,000 MRR while working hard to acquire new customers.

Attempts to increase revenue included:

• A rebuild of infrastructure so that dashboard numbers updated in real time instead of once per day.

• The launch of the Recover and Cancellation Insights add-on.

• The launch of an entirely new product, Intros, to match startups with investors.

The latter venture lasted just three months before being shut down, and was eventually sold for $100,000.

What they didn’t do was change the price. With approximately 1,000 active customers, even a small monthly price increase could have meaningfully increased revenue.

The real culprit for the growth slowdown was the founder’s written marketing. After hiring several employees and managing existing clients, Josh struggled to write the articles that once pulled in hundreds of new leads. He didn’t have the time and nobody was able to meaningfully recreate it.

the growth returns

In January 2020 Josh hired a content specialist. Two months later, the pandemic hit. Revenue fell significantly for a few months. By the latter half of 2020, however, the company experienced growth that had not been witnessed before. The market for subscription software was expanding quickly; having a tool that monitored subscription revenue was in high demand.

The full-year 2020 revenue figure of $1.5 million came as a welcomed surprise. The company now looked lean with ten employees and just about 1,000 active subscriptions.

06: the phantom sale

In early 2019, Josh was dealing with family problems that were consuming a lot of his time and was not in a good place mentally. When there was interest to acquire the business in April 2019, he took it seriously.

By mid-May, he had four letters of intent to buy ranging from $3 million to $5 million. He signed an enticing offer at $4.95 million with a closing date in August of that year.

The trouble started when the buyer missed deadlines. There was no lawyer to contact and days before closing there was no response at all to Josh’s messages. After it all fell apart, Josh learned that the buyer had misrepresented themselves and did not have the cash to commit. Their play was to have outside investors sign off on the deal and have them fund it instead.

The painful process cost Josh almost $20,000 in legal fees and lost attention. The deal was also structured as an asset sale, meaning that if the deal had gone through it would have been taxed as ordinary income (and he would keep roughly half of the proceeds).

The part worth paying attention to is what he did next. Most founders describe a collapsed sale years afterward when they’ve had a chance to reset. Josh wrote the whole thing up on the company blog while it was still raw, including the state he had been in when he agreed to it.

“Depressed, anxious and the most stressed I’ve ever been.”

— Josh Pigford, on 2019

That is a difficult thing for any founder to publish. It also cost him nothing. The transparency that sold the software worked just as well when the news was bad. The other habit that year developed was speed: once he knew the answer, he stopped deliberating.

07: the (actual) sale

Jonathan Siegel ran the private equity firm Xenon Partners and had worked with Josh on some design work early in his career. Josh had known Jonathan for almost 15 years by the time he reached out in April 2020. It was the second time the two discussed a possible sale of the business; this time, the numbers made sense.

The structure was the unique part of the sale: $4 million, paid all cash in three instalments: at closing, 12 months after close, and 18 months after close. The important piece for Josh: No earnout. Xenon guaranteed $3.7 million for Josh regardless of what the due diligence process turned up. To Josh’s surprise, the sale was fast with just six short weeks from offer to close. Jonathan had structured the deal as a stock sale instead of an asset sale. The difference saved Josh hundreds of thousands of dollars in taxes. The sale ultimately qualified for a small business tax exemption, meaning Josh paid just 5% in state taxes. Score!

“Most acquisitions require the founder to stay on board for 2-4 years for an ‘earnout’…The prospect of sticking around for years to actually get the payout was soul-crushing.”

— Josh Pigford

The refusal of an earnout ultimately cost him. A founder willing to stay and help transition the business would be worth more in the end. To Josh, however, this was the best-case scenario. He had no intention of sticking around and received a handsome payout as a result.

Everyone on the team was kept on payroll and nobody was required to stay. People with options had them paid out in full; people without them got bonuses. The team was paid around $300,000 as a result.

Why a growing, seven-year-old company was for sale at all had nothing to do with the economics and everything to do with fulfillment.

“The majority of my time working on Baremetrics has been spent as a ‘manager’ and not a ‘maker’…I’m at my most fulfilled when I’m creating and am generally indifferent on growing or scaling things.”

— Josh Pigford

The pandemic made everything clearer for Josh. Managing 10 staff members, 1,000 customers and acquiring new ones wasn’t exactly what he had envisioned as an entrepreneur. Not only was it draining and time-consuming, he missed the ability to build.

It took him seven years to come to the conclusion that he was a starter: a person who is enormously content and useful in the first eighteen months but gets progressively less so as time goes on. Although it came later in the journey, Josh’s realization was the single most valuable piece of information he had telling him to sell.

“The same people who are good at starting companies aren’t always the same people who are good at growing or managing them.”

— Josh Pigford

“I’ve thought about Baremetrics literally every single day for seven years. That’s over 2,500 days thinking about this thing…”

— Josh Pigford

08: what went wrong

01: The price never changed

Prices never changed over the entire eight-year life of the business. The new owners increased prices in early 2022 that led to an immediate spike in revenue, followed by some churn given that prices had never changed before. Over time, revenue wasn’t just eaten by higher overhead, it was eaten by inflation and the ability to charge more but never trying to.

02: The investment that almost led to collapse

The $800,000 investment funded an increase in headcount, a fixed cost that did not fare well when revenue became stagnant. It took more than two years to recoup lost revenue, even with employees voluntarily taking pay cuts.

03: The one-man marketing team

The business was built on the founder’s transparency and niche online writing — two things that suffered when his time was spent managing. The revenue plateau started almost exactly when his marketing efforts were superseded with management duties.

09: what went right

01: He charged from the start

No free tier, no waitlist, no beta. The first customer paid $250 per month before the product was completed, which not only validated the idea but provided meaningful inputs on how to improve the overall experience.

02: The numbers that advertised

Publishing revenue was an entire distribution channel. Every company that publicly revealed revenue numbers was using what was essentially a Baremetrics billboard. As it turned out, the people looking at these dashboards were also those who wanted one for themselves.

03: Structure mattered more than the amount

The $4.95 million deal in 2019 fell through partly because half of the proceeds would have been paid in taxes. The 5% tax rate paid on the $4 million sale price, along with the lack of an earnout was worth much more than a higher offer ever could be for Josh.

10: the takeaways

01: Charge before it is ready

Josh put a $250 tier on the pricing page assuming nobody would take it, and a stranger subscribed to it on launch day. If there is something half-built sitting on your computer, who’s to say someone wouldn’t pay for it?

02: Niche writing works

Generic content marketing did nothing for Baremetrics. The posts with the number in the title built the company. Publish the version you are slightly nervous to share.

03: The cost of hiring

The $800,000 went entirely to staff and almost caused the company to go under. Before your next hire, work out what happens to the business if revenue stays flat for eighteen months.

04: Change prices. Often.

Baremetrics never increased prices. It wasn’t until the business was under new ownership in 2022 that a price hike was implemented and revenue spiked the same month. A price left unchanged is a silent decision to lose respect and value each year. It’s time to increase your prices.

05: Structure > number

$4 million as a stock sale with no earnout was worth more to Josh than $4.95 million as an asset sale. If selling is anywhere on your horizon, knowing the difference could save you.

11: what still isn’t clear from the research

• The terms of the second $300,000 investment and why it was raised.

• Who the buyer was when the 2019 sale failed. The ones that walked away days before closing.

• Whether the three instalments were ultimately paid in full to bring Josh to the $4 million total.

• Whether either of the investors could have blocked the sale to get their money and whether either of them received anything at all.

• What the reasons were behind the investors not clawing back their money at the time of sale.

FOUNDED FACT

A competitor sold for 50x.

ProfitWell’s product did roughly the same that Baremetrics’ did — subscription and revenue metrics for software companies — with one key difference: ProfitWell offered it for free. Although the dashboard was free and led to many more customers, the recovered failed payments add-on, among others, was a paid feature. Customers would use the dashboard for free and subscribe to add-ons either to support the founders or to get more from the dashboard. The same add-on Baremetrics also charged for.

On May 25, 2022, about eighteen months after Josh sold Baremetrics, Paddle acquired ProfitWell for more than $200 million. Was it company structure or customer acquisition? This might just be a thread for a future issue of founded.

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LEARN MORE

Baremetrics — “Selling a $4M SaaS: Inside the Baremetrics Acquisition”, Josh’s own account of the deal.https://baremetrics.com/blog/i-sold-baremetrics

Baremetrics — “I almost sold Baremetrics for $5m”, the deal that collapsed.https://baremetrics.com/blog/i-almost-sold-baremetrics-for-5m

Startups for the Rest of Us, Episode 534 — “A $4M Exit with Josh Pigford of Baremetrics”.https://www.startupsfortherestofus.com/episodes/episode-534-a-4m-exit-with-josh-pigford-of-baremetrics

SOURCES

1. Baremetrics — “Selling a $4M SaaS: Inside the Baremetrics Acquisition”, November 2020 (the $4M price, the 2.65× multiple, the three instalments, the absence of an earnout, the $3.7M guarantee, the $300,000 to the team, and the investor write-off including the General Catalyst quote)

2. Baremetrics — “I almost sold Baremetrics for $5m” (the four LOIs, the $4.95M signed at ~3.75× revenue, the buyer’s disappearance, the ~$20,000 in legal fees)

3. Baremetrics / Medium — “How we went from weeks of cash left in the bank to profitable in 8 months” (the $500,000 SAFE, $250,000 in 120 days, the $300,000 second round, the $40,000 monthly burn, eight weeks of runway, the pay cuts, December 2016)

4. Baremetrics — “Stripe Fund Invests $500,000 in Baremetrics”, September 2014 (the $10M cap, the SAFE, $20,000 MRR and profitable at the time, the hiring plan)

5. Baremetrics — “One Year Later: $20k/mo, 250 customers, 5 people and a $500k investment”, and “How we grew from $0 to $25,000/month in 12 months” (the first-year curve, Buffer, the 5.5× conversion figure, ARPU $55 to $93, the content that worked)

6. Baremetrics — “Idea to $5,000/mo in Recurring Revenue in 5 Months” (the month-by-month figures and the pricing philosophy)

7. Indie Hackers podcast #6 — Josh Pigford (the $250 first customer, the Twitter launch, ~$70,000/mo in March 2017, and “probably my hundredth thing to build”)

8. Startups for the Rest of Us, Episode 534, November 2020 (the $90,000–$100,000 plateau across sixteen to seventeen months, the 15% and 30% pay cuts, the asset-sale tax problem in 2019, the QSBS treatment and Alabama state tax, the content hire in January 2020)

9. Baremetrics — “How We Sold a Failed SaaS Product for $100,000”, January 2020 (Intros, its three-month life, and the sale to Tiny)

10. They Got Acquired — “SaaS analytics startup Baremetrics sells to private equity firm Xenon Partners” (team of ten, ~1,000 customers, the misrepresented funding on the failed deal)

11. Indie Hackers — Luke Marshall of Xenon Partners on running Baremetrics after the acquisition (the eight years of unchanged pricing, the 2022 repricing, the churn work)

12. General Catalyst / Stripe Platform Fund coverage, September 30, 2014, and Paddle — “Paddle acquires ProfitWell”, May 25, 2022 (the FOUNDED FACT)

13. Baremetrics Founder Chats — Josh Pigford (the childhood ventures, Automatik Studios and Sabotage Media, the forty-plus projects between 2003 and 2013, and “a solution looking for a problem”)

14. Intercom — “How Baremetrics went from $0 to $14,000 per month”, June 3, 2014 (the eight-day build spread across a month)

15. Startups for the Rest of Us, Episode 244, July 7, 2015 (~$32,000–$33,000 MRR in July 2015, the regret over the valuation cap, and the growth stall inside 60 days of the raise)

16. Baremetrics — “Is your company really only doing $45,000 per month?”, April 28, 2016 (~$50,000 MRR and not yet profitable, two months before the runway calculation)

17. Indie Hackers — “Growing a Revenue Analytics Platform to $83,000/mo”, June 5, 2017 (the June 2017 figure and the account of the near-death year)

18. Baremetrics — “Stop Stressing: Most Startup Decisions Aren’t Big Deals”, March 14, 2018 (the decision-making passage)

19. Starting & Sustaining — interview with Josh Pigford (calling every customer, the three, six, twelve and eighteen-month calls, the chat-based cancellation, and “payroll is a water hose that you can’t just turn off”)

Built entirely from public posts, podcasts and interviews, most of them written by the founder himself. No interview was conducted for this issue. All figures are as the founder, the buyer or the acquirer stated them and have not been independently audited. Amounts are US dollars.

Biggest lessons:

• The product did not change; the packaging did. Sales went from $2 million to roughly $120 million in the two years after they put the simple ingredient list on the front of the package.

• Sell where nobody else is. The protein bar section at the grocery store was cutthroat. The CrossFit gym down the road had no competition whatsoever.

01: the ugly baby

In August 2015, a small protein bar company in Chicago announced a complete packaging makeover.

The old wrapper had everything traditional protein bars had: a large logo, a catchy tagline that read “As Prescribed By Nature”, a picture of fruit and nuts, a colored band to suggest different flavors, and a list of bad ingredients the bar did not contain.

The redesign scrapped all of it. The wrapper became a flavor-specific colored backdrop, plain white text, and the recipe: 3 egg whites, 6 almonds, 4 cashews, 2 dates. Underneath it, two words. No B.S. The RXBAR logo was made smaller and moved to the top. The thing that customers cared about, the ingredients, was made crystal clear at first glance.

Nothing about the recipe changed. Same founders. Same strategy. The new packaging did some heavy legwork; the year before the redesign, the company did $2 million in sales. Two years after the redesign, that figure had jumped 60x to $120 million.

Peter Rahal, who had designed the original packaging himself, later described it in his own words: “Our baby’s ugly.”

02: how it started

Peter Rahal grew up in Glen Ellyn, a suburb west of Chicago, in a family that had been in the food business for two generations — his father on the ingredient supply side, and his mother specializing in juice. Peter was diagnosed with dyslexia in middle school, after years of being placed in special education classes and of teachers claiming he didn’t put in enough effort.

“I think some of my contrarian nature is rooted in that I just question and am skeptical of things. That was the way to protect myself.”

— Peter Rahal

He studied Political Science at Wittenberg University in Ohio, graduated in 2008, and went to work in marketing for a food business in Belgium. He ultimately came home to work in the family business.

Peter also ate a lot of protein bars, and thought almost all of them were bad. Not the taste, the contents. The front of the wrappers sold a healthy snack while the back revealed an ingredient list as long as his forearm, most of them harmful chemicals.

On a mission to create something healthy and delicious, Peter started making his own bars in his parents’ kitchen with Jared Smith, a childhood friend. Egg whites were used for protein, dates held them together, and nuts added texture. No added sugar, dairy, soy, or anything that required an explanation.

The two had many conversations about funding and toyed with the idea of raising money. Peter’s father told them to try to sell first. Both Peter and Jared contributed $5,000 to kickstart the business which would carry them from idea to exit.

“You need to shut up and sell a thousand bars.”

— Peter Rahal’s father, on raising capital

Production soon moved from the kitchen to the basement, where the first bars were made. Labels were designed in PowerPoint and applied to packaging by their mothers, who offered to lend a hand.

Peter wasn’t happy with the quality of work and was soon faced with having to fire his own mother.

“My mom just kept putting the front panel on the back panel, and vice versa… she wasn’t getting paid so it doesn’t really matter, but she actually was fired.”

— Peter Rahal

Peter tells the story as a lesson about quality standards rather than to berate his own mother. A crooked label could ruin the product simply because the label was the first and only part of the product the customer saw before trying it.

03: the gym phase

The obvious place to sell a protein bar in 2013 was a health food store, which is exactly why they didn’t try it first. The protein bar aisle at a traditional grocery chain was already full of brands with endless capital paying for shelf space; a two-man company with $10,000 was not going to win that fight.

CrossFit gyms, on the other hand, were the perfect place to find the exact buyer for the bars. Members were often on strict diets and picky about ingredients; not much was sold over gym counters other than T-shirts and hats. A clean slate. The shelf space was theirs if they could sell it. Members would often come for a late workout and be looking for a high-protein snack that wasn’t full of crap.

There were no departments to get past and no shelf space to pay for. There was just the owner, who usually ran the place from behind a counter. If the owner tried the bar and liked it, they bought a case. The process was manual, but it did give immediate feedback.

Peter and Jared spent the next few months driving around Chicago selling to gyms one at a time.

“We started in Chicago and just dropped by the gym, door to door essentially, calling, emailing, just like traditional sales.”

— Peter Rahal

For the first two years, Peter’s cell number was printed on the wrapper. If customers called, they reached a founder directly for support.

The other sales channel was online. RXBAR was offered on Amazon and sold direct from its own site. Both online options offered a subscription for the bars, a detail that made the company work financially: the customer paid first, and the bars were made to order.

By the end of 2014, less than two years after the first bars were made in Peter’s basement, RXBAR was pulling in $2 million per year in revenue.

04: removing the branding

The problem with the wrapper was not that it was ugly, although it was, even by protein bar standards. The bottleneck was hiding the details that made the product different from other bars — the ingredients.

The redesign went through five rounds. The final version made no promises whatsoever — no “natural”, no “clean”, no photography, no claims about what chemicals the bar avoided. Just a simple but clear list of ingredients, and “No B.S.” underneath.

“We’re not like everybody else. We don’t have secrets… it’s time we started saying that out loud.”

— Jared Smith

The finalized design rolled out in September 2015 and the business changed shape almost immediately. Wegmans took it first, then Whole Foods, then Trader Joe’s, which was the first time the bar went national. Sales went from $2 million in 2014 to $6.5 million in 2015, $36 million in 2016, and approximately $120 million in 2017.

This was a staggering lesson in branding — a 60x increase in revenue in three years and all that changed was the packaging.

By the summer of 2017, Nielsen had listed RXBAR as the fastest-growing bar in the country by dollar growth, in both the natural and the conventional aisles. The company had 85 employees at this time.

As it turns out, a grocery aisle full of brands making claims is the ideal place to be the brand making none.

05: the tools

the product

RXBAR is one bar, varying slightly through a selection of eleven different flavors by the time of the sale, alongside a smaller RXBAR Kids line launched in 2017. The premise has always been simple: six or fewer ingredients, 12 grams of protein, 200 to 220 calories, no gluten, dairy, soy or added sugar. The formula was mastered early on in the company’s life and it was kept that way. No new products, only new versions of the same one.

founder skillsets

Peter was in charge of product, marketing, branding, and sales and was the public face of the company. Jared worked on the operational side. Both founders have explained that the differences between them were an asset since neither of them had built a consumer brand before. A competitive advantage Peter did have was a childhood immersed in the food industry. He likely understood recipes, margins, and ingredients much better than the average person.

Founded fact: The family manufacturing business, Rahal Foods, helped to source ingredients in bulk at good prices for early RXBAR production.

monetization

RXBAR monetized through three main channels; later, this became just the latter two:

1. Direct sales to gyms and coffee shops. Low volume, high effort. CrossFit gyms were the niche they first tackled, which became a sales and marketing channel all in one.

2. E-commerce, which included Amazon and a subscription for the bars on their own website. This channel brought in a significant chunk of revenue right up until the sale of the company.

3. Wholesale grocery, from 2015 onwards. Lower margin per bar traded for vastly more volume. This is what took the business from seven figures to nine, and it is what made it valuable enough to sell.

unique branding

Every big protein bar brand on the shelf was selling an outcome. RXBAR sold transparency. Health-conscious consumers no longer had to read the back label and put it back down when it was too unhealthy — they saw the tiny ingredient list on the front with nothing to hide, making the purchase easy. This caught attention and became the best marketing strategy the team could have hoped for.

The idea and packaging were unique enough so that any copycats would be noticed immediately. The vastly different packaging from competitors is what set the brand apart.

06: by the numbers

07: the decision to sell

Neither founder went looking for a buyer. In January 2017, they started receiving calls, primarily because of the immense growth in a category that was running dry.

By March, the team had hired a banker to find out what the company might be worth and took their first meeting with Kellogg the same month. Ten companies expressed interest in buying the company; the team met with four.

The buyers were interested because sales across the category were down. Kellogg specifically noted a drop in cereal sales, a flat snacks business, and was in the process of cutting costs rather than inventing new products. RXBAR was the golden egg, providing a fast-growing vessel with no debt, good margins and health food credentials.

Absent a sale, the founders would be faced with a decade or more of working to get into every American grocery chain, something Kellogg already had access to.

One buyer they refused to sell to, however, was a private equity firm.

“We have an allergic reaction to private equity: They’re not operators.”

— Peter Rahal

They also refused to sell a portion of the business. A partial sale meant going through the whole process again in a few years. They wanted to focus on growth. One sale transaction meant they could get the deal done and then get back to work. At the time of the sale, Peter was 31 and had no intention to stop working. The consensus was therefore to go with a company with a track record for keeping founders as operators even after the business was sold. That company was Kellogg.

“We didn’t want to exit. I don’t want to not work… how Kellogg approaches acquiring companies, they don’t want to fire the founders.”

— Peter Rahal

08: the sale process

Kellogg announced the acquisition on the morning of October 6, 2017, and the deal closed on October 27, funded from Kellogg’s short-term borrowings. The sale price of $600 million was described to Kellogg’s own investors as 12 to 14 times RXBAR’s projected 2018 earnings, although it was approximately five times 2017 total sales.

Because the buyer was a public company, the sale price and details went out in a press release for all investors.

“The RXBAR team has built an incredible business with impressive growth and profitability.”

— Paul Norman, President of Kellogg North America

It took a total of seven months from first meeting to closing the deal, the result of a company not encumbered by debt or a complicated cap table.

09: what went wrong

01: The ingredient list

The ingredient list was the entire brand, and for the first two years it was out of sight. Even with this hiccup, RXBAR was a huge success in a very short timeframe.

02: They sold all of it, even future growth

This is always the risk of selling, although it is doubtful either founder regrets it. Selling 100% of the business meant there was some risk that the company would keep expanding rapidly, potentially into the billions of dollars. The founders took money off the table and created generational wealth. Could it have been more? Yes. Are they sleeping better now? Probably.

03: The reorganization

RXBAR was bought to be run as a standalone business, and for a while it was. Fourteen months after the deal closed, however, RXBAR had a headcount of 200. Forty of them were let go in a reorganization. The following March, the brand was moved under a new holding company called Insurgent Brands. The job of CEO went to the finance director, and Peter was moved into a vision and strategy position. Wanting to call the shots and operate the brand, Peter left soon afterwards.

10: what went right

01: They sold where nobody was selling

Every competitor was fighting for shelf space at grocery stores. RXBAR was sold in gyms, which had no competition or shelf space to purchase. By the time the brand reached grocery stores, recurring customers were asking for the bars by name.

02: The wrapper was the marketing

There was never a meaningful advertising spend before the acquisition. The package did the work: it explained the product, made the claim, and separated the brand from the competition. Peter learned of all customer issues early on by having his cell phone number printed on the wrapper.

03: Know what you want

Of the ten interested buyers, four meetings were set up with clear terms: no private equity and no partial sale. Not only did this expedite the closing of the deal, it also made negotiation that much easier.

11: founded lessons

In their words:

“Make sure you’re solving the right problem that exists or frustration that exists, and define it well, and spend a lot of time doing it.”

— Peter Rahal

“Our customers don’t want to buy a product with a label that’s not centered.”

— Peter Rahal

“You don’t sell your company and have less work.”

— Peter Rahal

“When things are going well, I get paranoid, you know. Celebrating doesn’t do anything to move you forward.”

— Peter Rahal

12: what still isn’t clear from the research

• How the $600 million was split between the founders.

• What, if anything, the 85 employees received.

• What the other three buyers offered, and whether any of them offered more than Kellogg or different structures.

• Where and how the bars were made once the hand-mixing wasn’t economically feasible.

• Whether the company was founded in 2012 or 2013. Peter has used both, and the difference comes down to when the kitchen experiments turned into a business.

FOUNDED FACT

The brand has been sold twice.

On October 2, 2023, the Kellogg Company split in two: the North American cereal business became WK Kellogg Co, and everything else — Pringles, Cheez-It, Pop-Tarts and RXBAR — became Kellanova. Ten months later, Mars agreed to buy Kellanova in a $35.9 billion sale that closed on December 11, 2025.

The business built by two friends in a basement in Chicago is now owned by a family-owned candy company, you know, the ones notorious for the long, chemically heavy ingredient lists. Peter’s non-compete stretched five years from the sale of RXBAR to Kellogg and expired in October 2022.

In September 2024, Peter co-founded a competing protein bar called David Protein. The first year of sales brought in a whopping $100 million in revenue. A $75 million series A funding round valued the company at $725 million. Is Peter Rahal the protein bar king?

LEARN MORE

Inc. — “He Started His Company for $10,000. He Sold It for $600 Million Five Years Later”, the exit interview, April 2018. https://www.inc.com/magazine/201804/danielle-sacks/rxbar-peter-rahal-exit-interview.html

How I Built This with Guy Raz — “Live Episode! RXBAR: Peter Rahal”, NPR, August 2018, recorded in Chicago. https://www.npr.org/2018/08/10/637619434/live-episode-rxbar-peter-rahal

Forbes — “This Protein Bar Cofounder Sold His Company For $600 Million. Now He Wants Another Bite Of The Market.”, December 6, 2024. https://www.forbes.com/sites/simonemelvin/2024/12/06/peter-rahal-david-protein-bar-interview-rxbar-600-million/

SOURCES

1. Kellogg Company — “Kellogg adds RXBAR, fastest growing U.S. nutrition bar brand, to wholesome snacks portfolio”, press release, October 6, 2017 (source of the $600 million price, the ~$120 million 2017 net sales figure and the 12–14× EBITDA multiple)

2. Kellogg Company — Form 10-Q note on acquisitions, filed November 2017, SEC EDGAR (source of the October 27, 2017 closing date and the short-term borrowings)

3. Inc. — Danielle Sacks, “He Started His Company for $10,000. He Sold It for $600 Million Five Years Later”, April 2018 (the sale process, ten interested parties, four meetings, the private equity quote)

4. Entrepreneur — “The Founders of RXBar… Built the Company by ‘Having a Bias Toward Action’” (door-to-door gym sales, the phone number on the wrapper, the redesign brief)

5. Packaging World — “‘No-B.S.’ approach to protein bar extends to packaging”, 2015 (the old and new wrapper described in detail, the Jared Smith quote, the September 2015 rollout)

6. CNBC — “RXBar CEO Peter Rahal: Focus on detail is crucial to success”, March 12, 2018 (firing his mother)

7. Crain’s Chicago Business — Peter Rahal, 40 Under 40 profile (85 employees, the $130 million 2017 run rate, “our baby’s ugly”)

8. Forbes — Alejandro Cremades interview, March 26, 2019, and Megan Bruneau, May 22, 2025 (the $5,000 each, the 2014 and 2015 revenue figures, dyslexia, the quotes in section 11)

9. Food Dive — “Despite its popularity, Kellogg’s RXBAR sheds 40 employees”, December 2018, and “RXBAR’s prescription for the future”, 2019 (the reorganisation, Insurgent Brands, the leadership change and the doubling of retail sales)

10. NOSH — “Sale of RXBAR Highlights What Investors Are Missing”, October 2017 (that the company raised no outside money, and why the large food companies were buying)

11. NPR / How I Built This with Guy Raz — “Live Episode! RXBAR: Peter Rahal”, August 2018 (the Cuisinart, and the $36 million 2016 sales figure)

12. Kellanova — separation completion release, October 2, 2023, and “Mars to Acquire Kellanova”, August 14, 2024; Mars — “Mars Completes Acquisition of Kellanova”, December 11, 2025

Built entirely from public interviews, press releases and SEC filings. No interview was conducted with the founders. All figures are as the founders or the acquirer stated them and have not been independently audited. Amounts are US dollars.

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Biggest lessons:

• Build the audience before you build the business. Not only is it the most organic form of marketing, it’s trust.

• A clean cap table sells quickly — no investors, no debt, and no contracts to unwind took this deal from a conversation to a bank balance in just two months.

01: the $75.5 million guessing game

On November 8, 2024, The Hershey Company announced the acquisition of Sour Strips. The press release was very formal: a few hundred words about expanding its candy portfolio and a quote from an executive. It mentioned everything, except the acquisition price.

Maxx had amassed a YouTube following of several hundred thousand by 2024, and, as you might imagine, the guessing began. People from all corners of the internet cast their vote, pegging the Sour Strips acquisition price anywhere from $75 million to half a billion, which is reasonable for knowing next to nothing about the buyer or the situation. The actual number arrived in a June 2025 podcast episode, broadcast by Maxx himself.

$75.5 million.

It went to sole owner Maxx Chewning who had started the company five years earlier with just $50,000 of his own money – an impressive feat for a physical product business by any stretch. He never raised capital, didn’t take on any debt, and never sold as much as a fraction of a percent to anyone.

“So the company got sold for $75.5 million. And that was a number that… was right in line of what I expected the company to honestly get sold for.”

— Maxx Chewning

Here is how a man whose first warehouse was a ten-by-ten foot office got to an exit of that scale.

02: how it started

Maxx Chewning grew up in Virginia and started posting fitness videos on YouTube in 2013 — workouts, food challenges, and, eventually, the business ventures themselves. When he first started, he was working an IT job. He was ultimately fired for doing YouTube on company time.

Like many fitness YouTubers in the early 2010s, Maxx started a clothing brand to sell to his dedicated audience, primarily gym goers. This brand was Ever Forward Apparel, named after his father, who died of ALS years earlier; the phrase “Ever Forward” had been his. Maxx learned business skills that would later jumpstart his success at Sour Strips — textiles, manufacturing, import processes and the ‘in the weeds’ mentality that included packing orders every night and dropping them off at the post office the following morning.

He later moved to Houston, Texas, mostly because that was where several close friends including Christian Guzman (also a fitness YouTuber who started the clothing brand Alphalete) lived at the time. He made the trip down there so often, he figured why not just move there instead.

By that time, Ever Forward had peaked at $1.6 million in annual revenue. By creator merch standards, it was a sizeable business. It was also, according to Maxx, a business that existed because of him rather than beyond him. Legacy was important to him.

The idea that would outlast him had been sitting in his videos for years.

Original fans knew that Maxx was a sour candy fiend. He would buy it at gas stations and convenience stores and then publicly complain about how it wasn’t sour enough. It was a running joke that the big candy companies should hire him to approve new products before they shipped them.

The joke was also a spark, with a full market analysis conducted over the span of two decades trying ‘sour’ candy.

In 2017, Christian Guzman launched an energy drink brand called 3D Energy. The shift from apparel to consumables inspired Maxx, knowing it could be done as a fitness YouTuber. The journey officially began in 2018.

“I never overanalyzed the market. It wasn’t a big master plan. As a candy fanatic, I was always analyzing what’s available in stores, and I was not as impressed as I felt like I could be.”

— Maxx Chewning

It took approximately eighteen months mostly because of several roadblocks - Manufacturers wanted order minimums he didn’t want to commit to while the samples he received were not sour enough to put his name behind the product. The project kept being put aside, but something kept pulling him back.

Investors were interested early on. The idea was to bring someone onboard who had industry experience, and to let Maxx be the face of the brand as a public creator. With the dragging timeline for actually getting started, they eventually lost interest.

Maxx was ultimately left with one option: Fund the $50,000 to get the thing off the ground himself.

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03: the twenty-thousand-unit hour

Sour Strips launched online on September 9, 2019, with the tagline “sour candy that doesn’t suck.” It sold more than 20,000 units in the first hour, the very real benefit of an engaged and dedicated audience he had spent years building.

People who followed his business ventures onscreen had two reasons to buy: the first was that they genuinely wanted to support Maxx; the second was those loyal fans who watched him complain about sour candy for years, eager to find out if he had finally cracked the sour-candy code. Whatever the reason, it worked.

“I’d built a social media audience for seven years. When I launched it, they not only wanted to support me, but also trusted that, hey, if I’m really into candy, I probably know what a good product is.”

— Maxx Chewning

The first warehouse was a ten-by-ten-foot office space. In December 2019 he added Tropical Mango, the first new flavor, because of a nudge received by members of his audience. By the brand’s first birthday in September 2020, it had sold more than one million bags or roughly $3 million in revenue.

The perfect positioning and the timing of it all became much clearer in hindsight. Six months after the brand launched, the world had its first COVID-19 shutdown. People were forced to stay home, were bored, and watched YouTube. The other thing they did was scroll and shop online. A YouTuber with a candy brand that fulfilled online orders was near perfect positioning for the brand to slingshot to the big leagues.

04: navigating margins

Before launch, Maxx called a friend who had built several large drinks brands. He was told what an optimal distributor margin, cost per unit, and sale price were. His cost was much higher than the friend suggested; by all measures, the business wasn’t operating efficiently and his costs were too high.

The tradeoff was the final price at which he sold to consumers. He rationalized that he would pay an extra dollar if the candy was actually sour and tasted good. It was either that or selling cheap candy that meant no team, no retail opportunities, and in the end, no brand. The choice to sell at a higher price point than direct competitors signaled to buyers that it wasn’t a competitor at all. He had created a premium category in one that wasn’t supposed to be premium at all. The decision paid off and ended up funding his team, providing retail opportunities and built the Sour Strips brand.

The second unique component of Sour Strips was the option to forego a sales team entirely. This came down, once again, to positioning.

When brick-and-mortar stores reopened post-pandemic, they needed every reason to get customers back into their stores. A candy brand that had a cult online following filled the gap perfectly. Many retail buyers had also seen the brand grow online over the last two years and were ready to make an offer.

In January 2023 Sour Strips went nationwide — all fifty states in more than 16,000 stores — which was the moment it stopped being an online brand. Over the five-year timeline, revenue skyrocketed from $3 million in year one, to $8.5 million, $16.5 million, $25 million, and then over $30 million in the final year before it was sold.

The rapid growth pattern emerged in every new retail venture: Sour Strips got into five H-E-B stores in the first week with the chain. Managers at other H-E-B stores saw the sales data and five to fifteen store requests started flooding in each day.

05: the tools

the product

The Sour Strips product consists of flat belt-like candy strips covered by a tooth-enamel-destroying layer of sour. They are sold in a resealable bag with a clear frontside so buyers can see the strips in all of their glory — a detail Maxx adopted from the candy he liked as a kid. By the time of the sale there were thirteen flavors in addition to bite-sized and party-size strips. There were also plenty of collaborations with other candy brands and even one with his friend’s energy drink.

founder skillsets

Maxx had developed a rather diverse skillset from building Ever Forward, and continued to build on them while Sour Strips grew. His skills as a YouTuber also helped with marketing, brand, and distribution. Of particular interest was the obsession to curate the brand, product SKUs, packaging and flavor of each new addition to the lineup himself rather than outsourcing it. His taste needed to be the final signoff – something Maxx understood well having built a personal brand on social media.

The operational side was mostly handled by a long-term friend and employee who handled vendor interactions, photoshoot setups, insurance, and documentation for distribution. Near the end of Maxx’s run at Sour Strips, the team had grown to around 20.

the warehouses

The ten-by-ten office space did not last long. The first real move was to a 1,000 square feet backroom inside of Christian Guzman’s Alphalete headquarters, a space Maxx renovated himself. It could hold 250,000 bags when full, which sounded like plenty until Sour Strips outgrew it in under a year.

Christian was the one who pushed him to make the big jump to 13,000 square feet, which seemed way too big at the time. Sour Strips outgrew it in under two years. The next step was a split 58,000 square foot warehouse of which Sour Strips occupied approximately half. Even those 28,000 square feet were reaching capacity before the sale went through. In a June 2026 YouTube video, Maxx explains how the lease was up and the brand was moving to a bigger space still.

monetization

Sour Strips was monetized through three primary channels, in chronological order of when they were first established:

1. Direct-to-consumer. The channel that first launched the brand and, for the first few years, was the whole business. The benefits included keeping the entire margin to reinvest in the business and a list of customers that followed and respected the founder. The limitation was volume.

2. Wholesale retail. This channel lowered the margin per bag but significantly increased volume. This is what took annual revenue from low seven figures to over $30 million, and it is what built the brand into something worth selling.

3. New products. Smaller sized bites, party packs and collaborations were sold within the already existing network of customers, ensuring repeat business.

unique branding

The primary aim of most candy brands is to attract children. Soft, swirly text, primary colors and cartoons invite children to try them, and is perhaps also why most candy isn’t sour enough. This is where Sour Strips created a category of its own. Maxx was thirty when he launched Sour Strips, so he created it for candy fiends like himself. Packaging strategically had angry fruit characters, was mostly black and white and had a tagline that would not pass other candy brand’s legal review.

The part of the business that was hard to replicate wasn’t the candy or even the packaging, it was the founder’s love for candy, a loyal audience that had seen him try thousands of brands, and the fact that he was still personally making the videos and branding even after the company was worth eight figures.

“Our core value is to be a cool brand, and that’s not hard if you don’t overanalyze it.”

— Maxx Chewning

06: by the numbers

Years run from the September 9 launch anniversary. The four later figures are as Maxx has publicly stated; the first-year figure is from a 2023 profile of the business. Year five is plotted at $30M against a stated “over $30 million”.

The business took a grand total of five years and two months from public launch to the announcement of the sale.

07: the decision to sell

Hershey had been calling for years. Not to negotiate, but just to check in. Roughly once a year somebody would call Maxx, say they liked what he was doing, ask whether he needed anything, and hang up. Maxx was intrigued by the interruption, but never thought much of it.

Private equity firms emailed regularly as well. He ignored them, both because he didn’t feel the need for outside capital, and because if he ever did sell, he wanted it to be to a candy company.

In September 2024, the annual call from Hershey came with a request to meet in person in New York. Maxx was heading to New York anyways — his wife was attending fashion week, there was a Sour Strips event, and it was his birthday. The lunch took place on Wednesday, September 11. He recounts coming back to the hotel and telling his wife he had no idea what had just happened.

Two days later, a file with several hundred questions about the business landed in Maxx’s inbox. This was their due diligence.

Sour Strips had just turned five years old earlier that week.

“It wasn’t this desire. It wasn’t like I need to sell because of cash flow or I need to sell because I’m hating doing this. It was like I’m in, I’m doing candy, man. This is my dream.”

— Maxx Chewning

The initial push to sell to Hershey was the unlock for the next level of growth: Hershey had the access and network to get Sour Strips into more than 300,000 retail locations rather than the current 30,000 in a matter of months rather than the years it would have taken Maxx. It was also an easy way to avoid dealing with the staffing nightmare of a fast-growing candy company, and, of course, the copycats stealing Sour Strips’ spotlight.

08: the sale process

“It felt like I was back in school almost, because they give you this Excel spreadsheet with hundreds of questions that you should know the answer to, but I’m kind of doing them out of order. I’m like, no, don’t know that one. Skip that one.”

— Maxx Chewning, on due diligence

09: what went wrong

01: Eighteen months of stalling before launch

The delay in launching Sour Strips was doubt. Maxx knew what his vision was for a candy brand, but was unsure he could make a candy that was good enough to market to hundreds of thousands of subscribers. That’s why he kept putting the project aside and picking it up again. In the end, the timing worked out and positioned the brand to scale quickly, so the delay was actually a benefit in hindsight.

02: Profitable and nearly out of cash

Without outside investment, Sour Strips needed to be profitable from day one. For the first three years, all profits went right back into inventory. There were times the accounts ran dangerously low, and the difference between profitability and liquidity became inherently clear to Maxx. Although these lessons were primarily learned from Ever Forward, the scale and growth rate required significant levels of inventory, something not even Maxx was fully prepared for.

03: Running two companies at once

Up until Sour Strips was pulling in $20 million per year in revenue, Maxx was also running Ever Forward. It took until late 2023 to officially shutter the doors on the clothing brand. It took five years of brute force for Ever Forward to reach $1.6 million in annual revenue, but just one year of being in the candy business produced more than $25 million. The writing was on the wall; it was a hard decision for Maxx, particularly because the brand was tied to his father’s legacy.

04: One person wearing fifty hats

Maxx has stated publicly that Sour Strips was never built to be traded hands. He would rather give a task his all in the 30 minutes to an hour it took him to do it than hire for a new position. Although this kept the business lean with more profit to reinvest, it also created key person risk.

05: The team found out at the end

The only employee that knew of the deal was the long-standing friend he employed. He needed her for producing the correct documents during the due diligence process. The other employees found out once the deal had closed. It was clear that if talk of the sale leaked, it could put pressure on the deal. The real reaction came when the sale was announced: not excitement but worry about job security.

10: what went right

01: The audience came before the product

Seven years of videos meant launch day did not require a marketing budget. 20,000 units in the first hour was not because the candy was spectacular. It was the belief that Maxx had created something worth buying. Every creator-led brand stands by this significant advantage when launching a new product.

02: He kept every penny

Founders are traditionally told that outside money is how you scale a physical product; Sour Strips scaled to $30 million on reinvested profits. The wonderful benefit of this was that the $75.5 million was not divided up, it belonged solely to Maxx. It also notably sped up the sale process since the only permission needed was his own.

03: He ignored pricing advice

One of the best decisions Maxx made was to ignore pricing advice from peers. By charging a higher price and imagining it as a premium product, it became exactly that. Without this thinking, there would have been little profit margin and stifled growth as a result.

04: He let retail come to him

This was a unique advantage as a creator. Maxx leveraged his audience to generate awareness for the product until retailers came knocking instead of the other way around. He waited for the big brands like Walmart, Target, and H-E-B to come to him. Once other retailers saw the sales figures, they came quickly. It was a domino-effect.

05: He chose the buyer before there was an offer

Maxx always wanted to sell to a candy brand. More specifically, he wanted one that didn’t have a prominent line of sour candy so that the buyer would have to make it succeed. In other words, he wanted the legacy of Sour Strips to live on beyond his control. The relationship with Hershey that was built up over the years was more subconscious than it was deliberate, something Maxx only realized when he had an offer in-hand.

So far, the bet on the brand has paid off. At the time of the sale, Sour Strips was shipping about one million bags per month. By June 2026, that number had passed two million per month in over 70,000 retail locations. In recent months, they had a record week: 600,000 bags through retail checkouts in a single week.

Just a few years prior, a retailer had asked for 600,000 bags over three months that stretched the small team to their limits. A testament to the immense growth of the business in a short timeframe.

11: founded lessons

In his words:

“You should take advice from a lot of places, maybe from a lot of people who know the space… but you shouldn’t take every piece of advice as: this is concrete and what you have to do.”

— Maxx Chewning

“It’s a good thing, if you’re ever looking for an acquisition, that your team is really small and you don’t have any debt… in my case, owned 100%, no debt, profitable company, super small team.”

— Maxx Chewning

“I built a candy brand for candy lovers, but it was built by a candy lover. And I think that’s this cheat code that a lot of people don’t have.”

— Maxx Chewning

“I know that we are at the extreme of pushing the team, but this retailer wants 600,000 bags in three months. It was never ‘I don’t know if I can do this.’ It was always, ‘Say yes and figure out how you get there.’”

— Maxx Chewning

12: what still isn’t clear from the research

• The size and terms of the performance incentives alongside the $75.5 million, and how much of the total amount Maxx has actually received.

• What the employees received as a payout. He has confirmed publicly that he paid staff well from the proceeds.

• Tax treatment on the final payout.

• Whether competition for an offer would have raised the sale price. He never spoke to another buyer, so there is no way to know what Mars, Mondelez or Ferrero would have paid for Sour Strips.

• Exact revenue by calendar year. The figures are as Maxx stated them, in company years, in a podcast.

FOUNDED FACT

Hershey sold his first successful company too.

Milton Hershey’s first candy business failed. So did his second. The one that finally worked was his third venture, the Lancaster Caramel Company, founded in 1886. The company performed well enough that the American Caramel Company agreed a price of $1 million in the spring of 1900 and completed the purchase on August 10, 1900, paying cash for the factory, machinery, recipes and the “Crystal A” trademark.

He sold because he was under the impression that caramel was a fad. He kept one thing out of the deal — a small chocolate subsidiary and its equipment — and bet the million dollars on it. In 1909 he and his wife founded a school for orphaned boys, and in 1918 he signed nearly his entire fortune over to it. The trust that runs that school still controls roughly 80% of the voting shares of The Hershey Company today. This means the $75.5 million paid to Maxx was signed off, ultimately, by a boarding school in Pennsylvania.

LEARN MORE

Chew on This — Chewning on the two-month acquisition, the due diligence and telling the team.

I Sold Sour Strips to Hershey’s (let me explain) — his own explanation, on his own channel.

SOURCES

1. The Hershey Company — “Hershey Expands Sweets Portfolio with Acquisition of Sour Strips”, press release, November 8, 2024

2. The Hershey Company — Form 10-K for fiscal 2024, filed February 18, 2025 (confirms the November 8, 2024 completion date and the sale of the brand by Actual Candy, LLC; no purchase price is disclosed)

3. Chew on This podcast — “How Maxx Chewning Sold Sour Strips to Hershey’s for $75.5M”, June 2025 (source of the $75.5 million figure)

4. The Hershey Company — “How Sour Strips Went from Startup to Standout: A Q&A with Maxx Chewning”, May 26, 2026

5. Sour Strips official brand timeline, hersheyland.com

6. Shelf Life Story — “Maxx Chewning’s Multi-Million Dollar Candy Brand: Sour Strips”, December 6, 2023

7. Tubefilter — “Maxx Chewning has a smart strategy for his creator product”, November 12, 2024

8. Hershey Community Archives and LancasterHistory — Lancaster Caramel Company and Milton S. Hershey

9. Maxx Chewning, YouTube — “Saying goodbye to Sour Strips…”, June 2026

Built entirely from public interviews, podcasts, press releases and SEC filings. No interview was conducted with the founder. All figures are as the founder or the acquirer stated them and have not been independently audited. Amounts are US dollars unless noted.

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Biggest lessons:

• It’s not about the sale price; it’s about the structure of the deal.

• Know your audience – where you market your business should be where your target demographic spends their time.

01: the $20 million no

Competitors had circled for years without any success, which did not go unnoticed. The first real conversation started in March 2020, with Rave Mobile Safety — a direct competitor backed by the growth investment firm TCV. Rave noted that AppArmor had repeatedly beaten them in the RFP process.

By that point the brothers were exhausted, having tackled almost a decade of building and growth by themselves. Under these circumstances, it’s easy to accept whatever offer is presented. The brothers, however, weren’t so easy to break. Rave offered $20 million Canadian to acquire 100% of AppArmor, which was rejected.

It wasn’t the sale price that annoyed them. It was the structure of the deal. The offer had an earnout component, meaning the brothers would have to keep working (possibly even harder than before) to hit sales targets. This didn’t interest them.

Twenty months later, the same buyer came back with $40 million, all cash, no strings. Here’s how they got there.

02: how it started

Chris Sinkinson grew up in Kingston, Ontario, a small city about halfway between Toronto and Montreal. He was the oldest of three boys; his brother David, 10 years younger than Chris, eventually helped build the business.

Chris studied computer science at Queen’s University in Kingston. In the late 1990s, IBM came to campus to recruit students with a crazy offer: if students accepted a job offer, they would cover the cost to move to the big city (Toronto), pay for living expenses with no expectations of completing a degree. Chris was intrigued but decided against it in favor of finishing his degree to secure a higher salary.

Little did he know this was at the peak of the dot-com bubble.

He graduated in 2002, almost two years after the crash — Nortel, then one of Canada’s biggest tech employers, laid off thousands of workers. As a new graduate, he was suddenly competing with workers who had 10+ years of experience for jobs in his field. Forced by the hand of fate, Chris wandered into the world of entrepreneurship instead.

What seemed fun at first got hard very quickly. A document management system, e-commerce tools: Chris wrote a lot of code and made very little money. The conclusion was that he was good at coding but not good at marketing his ideas to others.

In 2010, he went back to school for an MBA at his alma mater, Queen’s University, to learn more about the subject.

The timing of Chris’ MBA meant he was on campus at the same time as his brother, David, who was finishing his undergraduate degree. Their lunches together consisted of Chris regurgitating lessons he had learned in class, while David, who now ran the school newspaper, put those ideas into action (or publication, more accurately).

Their first project together was a mobile app for newspapers.

Chris later reflected on this first real business idea: “It wasn’t a great market. It was definitely one of those markets that was headed in the wrong direction.”

In other words, it flopped.

the campus security audit

Around the same time, David was part of a campus safety committee that was in the process of auditing the blue-light emergency phones scattered around campus — the ones with a button that calls campus police. Two things stood out to David: first, roughly 30% of the phones were broken and second, they only helped if you stayed put until campus police arrived.

David’s idea was an almost perfect illustration of opportunity meeting luck. Not only were smartphones now becoming widely adopted (David sat on the campus safety committee just three years after the first iPhone was released), he also saw the smartphone as a way to have a safety device moving with students at all times.

Chris built it. The first version did exactly one thing: press a button in the app, and your phone’s location was sent to the campus security office, showing real-time location on a map.

After completing his undergrad, David, like Chris, also pursued an MBA and landed a job at a Canadian telecom company. He lasted eight months before deciding to join Chris.

Shortly after, the brothers packed their belongings and moved to Toronto, renting desks at a small incubator while building several small businesses. After a few weeks it became clear that one business (that would later become AppArmor) showed the most promise. The decision was made to sell the other small business ideas and go full steam ahead.

the capital

No seed round, no Series A or B. No funding was ever raised for AppArmor, and there were no investors, just the 50/50 equity split between David and Chris. Other small software projects on the side paid the bills and provided enough funds to launch AppArmor.

03: the $80/month customer

It took David and Chris three years to build a sufficient revenue stream to dive in full time. Shortly before doing so, the brothers locked down an important first client: their alma mater, Queen’s University. The project that was dreamed up on its campus was also the first paying customer.

Queen’s branded the app Sequre — Q for Queen’s, of course — and offered it to students for free. The brothers charged $1,000 CAD up front and a recurring subscription-based charge of $80 CAD per month.

Once the brothers understood how much they had underpriced it, they asked Queen’s to keep the number private. They agreed, considering they had just scored a sweet deal.

As a way to show appreciation, Queen’s entered a national award for campus safety and won. Although the award was presented to Queen’s, the ceremony was attended by university representatives from every corner of Canada. As part of the ceremony, a video demonstration of the app was shown, leaving attendees curious as to who built it. This might have been the best marketing the brothers could ever have asked for.

The second advantage of working with Queen’s was access. Not only was the university campus close by, but the Queen’s faculty was delighted by the brothers and allowed them to sit in the security office to monitor how the software was being used on a regular basis.

Many higher education institutions quickly adopted it after the initial success at Queen’s.

04: navigating modern marketing

For the first few years the brothers marketed the way they assumed a modern software company was supposed to: blog posts and social media. It provided no traction, and it took them an embarrassingly long time to work out why.

The simple explanation was that buyers were campus emergency managers. These are not people who spend their afternoons reading startup blogs or scrolling Twitter for good memes. They attend conferences, check their Outlook, and they publish RFPs.

Upon learning this, they switched their strategy. Instead of posting on social media, they sent old-school emails. Instead of blog posts, they attended trade shows and purchased a booth. They also submitted formal bids for RFPs, the document a school or government body publishes when it wants to buy something and invites suppliers to bid. Although the techniques were old school, time and persistence proved valid.

Four years after the initial launch at Queen’s in 2011, their strategy was starting to pay off. By the end of 2015, the business crossed $1 million CAD ARR, which roughly doubled every two years until the company was sold in 2022.

The second big leap forward was in January 2019. The brothers got an answer on an RFP for the Colorado Community College System and had scored not just one school but thirteen in one deal. This milestone also marked the first cross-border deal and opened the floodgates for other American universities.

05: the tools

the product

The primary product was the mobile safety app sold B2B. A user could press a button, and a live location appears on a map for campus security. Later versions further added mass text-message alerts, anonymous tip reporting, offline emergency plans, and eventually COVID-19 vaccine verification.

founder skillsets

David headed sales and marketing, something Chris had difficulty with, while Chris controlled the technical side of the business: software and product design, app development, and deployment for Queen’s and eventually every university thereafter.

monetization

Monetization was achieved through three primary channels and remained relatively unchanged since first launching at Queen’s. Eventually, just two channels were responsible for cashflow.

1. Recurring subscriptions. This is arguably the best cashflow decision the brothers made. Institutions paid a monthly or annual fee based on their size. The average revenue stream was approximately $15,000 CAD per year.

2. The original monetization model included a one-time setup fee, which was later dropped. Several deals stalled because the universities could not fit the hefty fee into their annual budgets. The brothers decided to up the subscription pricing and remove the setup fee.

3. The third and newest monetization framework was add-ons. As features were built out and the capabilities of the app increased, extras could be tagged onto the basic subscription service if chosen. Just a few of these add-ons brought the annual subscription amount closer to $50,000 CAD per year.

unique branding

As the app’s popularity allowed migration to the United States, the app was rebranded for each school. NYU students downloaded “Safe NYU”. Florida students downloaded “GatorSafe”. Any competent developer could build one campus safety app; almost nobody wanted to operate several hundred app store listings, each with its own institution, review cycle and configuration. This unique ‘rebranding’ strategy for every institution wasn’t just thinking of the customer, it was creating barriers. The operational hassle meant that AppArmor was less likely to have successful competitors.

06: the timeline

The business took 11 years from its inception to final sale to Rave Mobile Safety.

07: the decision to sell

So back to work they went for another twenty months. Revenue kept climbing, especially with a new add-on that provided a vaccine verification system at the height of the COVID-19 pandemic as students returned to campus. That stretch produced the best quarter in the company’s history: approximately $1.5 million Canadian of new recurring revenue.

On November 18, 2021, Rave came back with a second offer: $40 million Canadian, all cash, no conditions. This was an offer the brothers couldn’t pass on.

Because the brothers were sole owners with no equity distribution to investors, the $40 million payout was structured with ‘phantom equity’, so key employees received cash payouts based on the $40 million valuation.

08: the sale process

09: what went wrong

01: They marketed where they were comfortable, not where buyers were

Years of blog posts and social media aimed at an audience that was never going to purchase a subscription.

02: Underpricing their first customer

$80 CAD per month ($960 CAD per year) for software that eventually fetched upwards of $50,000 CAD per year per school. Although revenue-wise this wasn’t ideal, it’s the decision that ultimately bootstrapped the business.

03: They copied another company’s culture and lost both employees

Early on, the business attempted to adopt Netflix’s culture, because it had good reviews and other startups were piling on. It alienated their employees, which at the time stood at a grand total of two. Both left shortly afterward. In 2015, five core principles were established that became a core of the business: deliver quickly, deliver quality, thrive on freedom, leave your ego at the door, act in our best interest.

04: Nothing prepared them for due diligence

Eleven years of running the company, and the buyer’s inspection was the most involved part of it. Both describe it as the worst part of selling, and neither one saw it coming.

05: The team found out at the very end

A necessary consequence of the confidentiality agreement. Although employees found out on the day of the sale, they received salary increases, bonuses, and eventually, some even received RSUs when Rave was sold.

10: what went right

01: They rejected the structure, not the number

The single most valuable decision. Turning down $20 million because of how it was paid, rather than how much it was, is what produced $40 million with no strings twenty months later.

02: A thriving business

Saying no to the first offer was acceptable because the business was growing, profitable at a 60% margin, and under no pressure. Do not assume that passing on a lucrative exit and expecting a larger offer to come is reasonable. The reason it worked for AppArmor was because of brute market share, lack of competition, and strong growth in ARR.

03: They kept building during the gap year

The months between offers were not spent waiting for the phone to ring. They shipped a new product timed to campuses reopening and posted their best quarter ever. The second offer was a response to a demonstrably better company.

04: Leveraging future plans

Knowing Rave intended to sell shortly after their exit, the brothers negotiated a slice of that future sale before signing. Ten months later it paid out in spades.

05: Ignoring the noise

For a decade, Chris and David faced scrutiny and doubt from people claiming it was not a real business. This noise was shattered when the cash from the sale hit their bank accounts in early 2022.

11: founded lessons

In their words:

“Don’t pursue validation from your peers. Instead, pursue validation in the market. A couple of years into the business, that realization was a big change that helped me stay on track.”

— David Sinkinson

“If you’re running a profitable, systematized, and growing business, buyers will come to you. You don’t need to shop your company.”

— Chris Sinkinson

“We learned that you need to have face time with clients. It helps legitimize your product. Going to conferences and trade shows are a must.”

— David Sinkinson

“Bigger markets are harder to penetrate if you are a small business with low credibility.”

— David Sinkinson

“Always remember, your culture is a fundamental strategic advantage in the marketplace because it is difficult for rivals to replicate.”

— Chris Sinkinson

12: found(ed) out

Co-founder David Sinkinson was kind enough to answer a few questions for Founded.

• How the $40 million was divided between the two brothers → A 50/50 split ($20 million CAD each).

• The size of the phantom equity slice in Rave, and what Rave’s own sale actually paid them → It was small, less than a few hundred thousand each (less than 1% of the sale price). We locked in the win!

• Tax treatment on the payouts → primarily capital gains, we won taxpayer of the year that year.

• Whether any other buyer was ever interested in purchasing AppArmor, or if Rave was the sole bidder → names remain undisclosed but several were in the running, finally narrowing down to just two.

• Exact customer numbers between 2012 and 2022 → between 350-400 close to the sale date, with millions of users all security notification systems and apps.

• What do interviewers and other write-ups usually get wrong about you or the journey? “They tend to understate the revenue of the side hustles we had going at the beginning. Chris was a serial entrepreneur for years, so he had a few businesses doing a total of about 200K in revenue. This was hugely important - I had some kind of base salary at the start which allowed me to leave Bell and to get things off of the ground.”

• What did the day-to-day actually look like in the months before selling became your new reality? “It was challenging because we had to hide everything from the staff. So it was a lot of trying to move the business forward (in the business) and working on the sale simultaneously. This involved a ton of data pulling, scrubbing, etc. We didn’t have AI - we did it ourselves (and with professional support from counsel or accountants).”

• On Queen’s as your first client — was it a long process that had you feeling nervous? I can imagine landing that size of a first client is a big deal. “You know, I didn’t really think the safety app product was going to go anywhere! Can you imagine that?! So when we landed Queen’s, I thought it was a fun little thing to help people and a bit of pizza money. It also took them forever to launch, but after we did I started to realize “hey, maybe this could actually work” - particularly after it won the award.”

FOUNDED FACT

There were already two AppArmors.

When the brothers named the company in 2011, a well-known piece of software called AppArmor had been shipping inside the Linux operating system for about a year. It is a security tool that restricts what individual programs on a computer are allowed to do. It started in 1998 under the name Subdomain, was bought by Novell in May 2005 and renamed AppArmor and then scooped up by Canonical (the company behind Ubuntu) in 2009 and was accepted into the core Linux kernel in 2010 — one year before a campus safety company in Kingston, Ontario started using the same name.

For eleven years, a search for “AppArmor” returned both a piece of Linux security infrastructure used on servers worldwide and a campus security app for university students. Chris, a computer science graduate, would almost certainly have known. Neither party appears to have ever minded, and the name never came up as an issue in the sale.

Additional note from David: “They sent us a nasty letter one time. We reached a mutual coexistence agreement where we put a note on our site telling folks about the other AppArmor. We had the Canadian trademark, they had the US one, so I think we called it even.”

LEARN MORE

Built to Sell Radio, Episode 448 — David on the negotiating mistake that nearly cost them $20 million.

Practical Founders, Episode 107 — Both brothers on bootstrapping to $40 million with no investors.https://www.youtube.com/@PracticalFounders

SOURCES

1. Sramana Mitra — “Canadian Brothers Bootstrapping to $40M Exit”, Parts 1–7, July–August 2024

2. They Got Acquired — “These brothers turned down a $20 million offer…”, March 17, 2025

3. CO— by U.S. Chamber of Commerce — “How 2 Brothers Debunked Startup Myths”, November 21, 2024

4. Practical Founders Podcast #107, August 23, 2024

5. Built to Sell Radio, Episode 448

6. Rave Mobile Safety acquisition press release, February 8, 2022

7. Motorola Solutions acquisition of Rave Mobile Safety, December 2022

8. Startup Different — the founders’ book and podcast

9. AppArmor (Linux security module) project history.

Built entirely from public interviews, podcasts and press releases. All figures are as the founders or acquirers stated them and have not been independently audited. Amounts are Canadian dollars unless noted.

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