Fourteen Things That Will Keep Me from Buying Your App

Real talk about your SaaS business from a common-sense business owner who buys and operates a large portfolio of SaaS businesses

Original illustrations by Travis Knight from Simple Focus.

I’ve bought and operate a lot of SaaS businesses, and I run two agencies as well. Over the years, I’ve looked at a lot of companies, especially SaaS.

Along the way, I’ve learned a thing or two: most importantly, I know what is a fit for me and what is not. I have a few questions I ask in the beginning, and the answers to these questions either pique my interest or make it easy to respond with, “Sorry, this isn’t a fit for me right now.”

People always ask me for what I look for when I buy an app. But that’s about fit, and fit is for me. Instead of sharing what is a fit for me, or what I look for, I think it’s more helpful if I list the things that scare me off:

1. You’re a jackleg.
   I only want to buy apps from smart, capable people with integrity and a good reputation among their peers. I will do my homework and ask around about you. Take the time to get to know people in our industry, blog, share and speak. Your reputation is the first and most important hurdle for me.
2. Your app is ugly.
   I won’t be caught dead buying an ugly app. And even though Simple Focus would do a killer job redesigning your ugly app, that takes a lot of work and isn’t cheap. And if you don’t know it’s ugly, well, that’s a conversation for another day.
3. Your SaaS metrics aren’t easy to get to.
   This is your first financial hurdle. I love being able to look at historical metrics to get a quick glance of the product’s performance. These services are a simple and quick way to get a sense of how your subscription business performs. Check out HookFeed, Chart Mogul, FirstOfficer and Baremetrics, but any of them will do. If you aren’t keeping up with these metrics, that’s a sign of your sophistication as a SaaS operator, which tells me all I need to know about what the rest of your business will look like.
4. Your books are a mess.
   This is your second financial hurdle. I can’t state enough how important it is to understand the financials of your business clearly. If you run multiple apps, you need to keep them all separate from one another. Tangled books mean you don’t really know how your business performs, I don’t want to be the person who has to untangle your businesses for you to find out. You may have made a great product, but I’ll walk away from tangled books 99% of the time.
5. You’ve got crazy high churn.
   Sometimes, buying an app with high churn is a good investment because I can reduce churn pretty easily, but knowing that your app can hold a low churn rate means your customers see enough value in the product to keep paying for it month in and month out. I’d rather buy something I know the customers love than risk buying something that can’t keep customers around.
6. Your code base isn’t documented.
   This means two things to me: first, it means you haven’t committed to taking deliberate care of your product; second, it means my developers won’t be able to spin up as fast when they take over, which costs me time and money when we get to work on updating and maintaining the product.
7. Customer on-boarding is on your to-do list.
   Customer support time is increased when it’s harder for new customers to get started. But more importantly, it means many customers who are kicking the tires on your product won’t end up sticking around because the product isn’t guiding them to the product’s value.
8. Your customer support isn’t in one place.
   When I take over an app, I want a single source to go to for historical customer support that’s not in your head. This will help my team take over and keep the customer experience seamless. My team won’t be as good or quick at customer support without a repository of past conversations to reference.
9. You log feature requests…in your head.
   Please keep a list of feature requests in one place, a simple text file is fine, but a bug and issue tracker like Sifter is an even better way to track bugs and feature requests. I freaking love Sifter.
10. Your customer help docs aren’t helpful.
    Deep customer help documentation is critical for helping customers find the answers they need. It reduces customer support time, but it also increases retention. It also take a long time to write, and I don’t want to have to do that, because that’s expensive. It also helps me and my team learn about the product.
11. You buy all of your customers.
    For many reasons, I prefer zero customer acquisition costs. But knowing that you have a good mix of paid and organic traffic tells me a lot. I much prefer a business with strong organic search results.
12. Your operating costs are nuts.
    Some businesses cost more to run, I get that. But I prefer to buy apps that have optimized their operating expenses. While I’m able to come in and save on operating costs because of my existing team and infrastructure, if you already have it under control, this is a sign of a mature business and a founder who has taken care of things.
13. You don’t care what happens to your app after you sell it.
    I buy apps for a fair price from people who want to ensure their product and customers are taken care of. Often, this means I’m not going to be the highest bidder (but not the lowest either). If you want top dollar for your app, it’s likely to go to someone who’s less concerned with taking care of your customers and more concerned with the bottom line. I’m concerned with both, so my offer price will reflect that.
14. You want a complicated contract.
    Your attorney and my attorney will both tell us it’s not about whether there’s “trust,” but about covering all the edge cases. I only buy from someone who wants a simple deal that doesn’t slow things down, since I try to do deals in about a month. So the contract template I worked up with my attorneys is the best of both worlds: it’s simple, covers both parties appropriately with only the necessary legalese, and facilitates a quick transaction where trust is present.

I put this list together in the hopes that it’ll help folks see what a real acquisition looks like through the eyes of a common-sense business owner who buys businesses occasionally.

But beyond preparing to sell your business, you should just be doing these things. It’s much more practical to run a sustainable business than to hope you’re going to get rich one day because something magically finds traction and builds value outside of cashflow. Focus on making a good product and taking care of the basics in business.

If you want to be successful running a SaaS business (or selling it to me), that’s my best advice. There’s not a lot new or advanced, the basics truly do make the biggest difference.

And yeah, I’m in the market.

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