The Best Deal We Never Made
Just seven months after our initial launch, we received an offer to buy TaxJar.
It’s safe to say we were flattered. We’re always flattered anytime another company sees so much value in TaxJar that they offer us money to take controlling interest. But this offer was different from any other that I, or anyone else on our experienced team, had ever seen before. And that difference is what made it easy to say no, while at the same time gave us purpose.
By way of background, we’d talked to the company several times before receiving their offer. In those conversations, they’d asked us what it would take for us to agree to a deal, and we gave them terms, including an amount that we needed. We made it clear that our ‘number’ had a lot to do with taking care of our investors (as opposed to just the team). Not because our investors were breathing down our necks putting pressure on us. They’d taken a chance on us and we wanted to reward them for it.
When I received the offer, I did what any founder would do. I scanned it feverishly looking for the amount. It was half of what we asked for. I then went through the offer more carefully. The first paragraph sounded about right. They’re excited to make us an offer about the potential to combine forces, yada yada.
The second paragraph was what really caught my attention. It was basically a threat. And not a thinly veiled one either. We were being told that if we don’t accept the offer, the acquirer will launch a competitive product that will be priced more cheaply than ours (we were already the most affordable by a long shot), thus taking us out since they are a proven company with hundreds of employees.
That can’t be right. The acquirer is supposed to sell us on the vision of conquering the world together, right? Together we’ll be the most indestructible business the world has ever seen. Or something like that. I had to go read it again just to make sure my sleep-deprived brain didn’t imagine the threat….nope, it was still there.
I shared the offer with the team (there were just a few of us at that point). No one said anything remotely in the ballpark about taking the offer. Their reactions were all the same. Did they just threaten the company they aim to buy?
The Takeaway: Be Careful Not to Give Someone Purpose
Three really important things happened as a result of that offer that have shaped who we are as a company today.
1. We acquired a chip on our shoulders
We’d basically been told we had one chance to avoid being crushed by a company that said they knew how to do what we’re doing better than us.
Think about what it’s like to be told you’re not good enough. As founders we’ve all been there. You can either go hide or you can get angry.
None of our early employees were the type to go hide. (For the record, no one on team TaxJar would ever choose that option). We were pissed. We took the threat personally. It was fascinating to watch a team that hadn’t worked together for very long move from potentially splitting cash and stock into we’ll-show-them mode in just a matter of minutes.
The deal was dead. We now had someone we wanted to beat.
Every company that wants to be great needs motivation over and above KPIs and goals. Ours was delivered to us on a plate. We now had the equivalent of bulletin board material that we could rally around. Years later, we’re still using it every day.
2. We were onto something
For an established company to make an offer like that, we realized we had to be doing something right (because it bothered them enough to try to take us out early). It was clear that we needed to continue to do what got us to that point — put out customers above everything else and stay focused on execution. That’s it. Everything else would be a distraction.
Related, we realized that we weren’t thinking big enough. It wasn’t about building a nice lifestyle business anymore. We could build a massive business, employee dozens of people on a distributed team, and have thousands of customers and millions in revenue.
3. Treat everyone with respect
I remember thinking shortly after this happened that I hoped no one would ever have an interaction with TaxJar that left them feeling like our team did after that “offer.” It wouldn’t matter if we’re talking to customers, partners, or competitors — we were going to treat them like they should be treated — like people.
As it turns out, just treating people the right way has become a major differentiator for us. Customers bring it up all the time. They appreciate not being taken for granted.
A byproduct of this philosophy is it spills into everything you do as a company. As a result, great companies want to work with you. The best talent applies to be part of the team.
Thanks in large part to that offer, we’ve grown more than 30x. We’ve thrived on being the underdog, stayed focused, and I’d like to think we’ve treated people the right way.
By the way, the person who made the offer is no longer employed by that company.
