Launched 5mo ago. Our biggest competitor just reached out to buy us
Got an email 2 weeks ago from the CEO of the company I compete with most directly.
Assumed it was a fishing expedition but I took the call anyway.
They wanted to acquire us, and after speaking for a bit they offered $400K. Not retire tomorrow money but enough to take seriously.
I passed. But going through the process of actually considering it was one of the most clarifying things I've done as a founder.
They asked questions I'd never sat down and answered honestly.
What percentage of your users actually use the core feature? Where is your real moat? How dependent is this business on you personally? What breaks if you disappear tomorrow? What transfers in an acquisition versus what's just locked in your head?
I had to go find the answers and it was pretty damn uncomfortable.
The moat I thought we had basically didn't exist. A funded competitor could rebuild the core product in a few weeks with AI coding tools. What I thought was defensible was really just good distribution and systems.
I was also more central to the business than I'd admitted to myself. Key customer relationships, product knowledge, reputation in the space. Strip me out and the valuation drops significantly.
But I found some things I'd been underselling too.
Retention was stronger than I realized. A customer segment I'd written off as small was actually our fastest growing. Word of mouth in a specific niche was outperforming everything we were doing intentionally.
I also was able to hear about some of their numbers and while I thought their churn was probably a lot better than ours, turns out it was almost the same and they're 10x the size of us!
The deal didn't close. But the clarity was worth more than the number they put on the table.
Seriously consider doing this exercise even if no one comes knocking. Pretend someone wants to buy you and answer the hard questions honestly.
You'll find out where you're weaker than you think and stronger than you've given yourself credit for.