How I went from growing startups to buying them

The SaaS world is divided into two camps: funded SaaS companies and bootstrapped SaaS companies. My company Decalab is an attempt to find a third way.

Last year, we acquired a business that had previously raised $10mm in venture capital and was currently at $500K in annual recurring revenue.

And now, over the next the few posts, I'm going to openly share our attempts to buy company #2.

Before I get into why we are building a "SaaS Factory," a little about me.

My first startup

I started my first business when I was 19 as a student at Babson College. The business was simple — a website that delivered food from restaurants that did not deliver to our suburban campus.

We needed some late-night variety! Fellow students had no options after 8pm outside of ordering Dominos or Chinese. So I partnered up with a couple restaurants, and for every sale generated to their stores, we kept 30% of the invoice. Instead of delivering each order one by one, I got them all done in one run at 10:30pm. Even with a limited model, the demand was high! Unfortunately, it never became DoorDash. (This was 2002.)

After running it for a year and a half, I sold it to a fellow student before graduating. But by then, I had already fallen in love with the internet.

After college, I had my first and last job at EMC Corp, where I worked as a financial analyst for three years. It was great exposure to the workings of a public company, but I lasted there because I was in a rotation program and had three roles for three years. However, I realized that if I didn't leave and start my own company, I was never going to do it. The only way to learn — was by doing.

Learning by doing

Over the next five years, I started two B2C companies in India. A classifieds portal and a direct to consumer jewelry brand. They both failed.

I was excited by the internet, but knew little about building teams, products or business models. My biggest challenge was to build a balanced co-founding team who could bring a product to market — the perfect mix of both engineering and growth talent.

They were also the most painful five years of my life — but the experience was priceless. Things were always tight money wise, so I did some brick and mortar stuff intermittently to pay the bills. Imported truck tires from China and also sold Indian furniture to the middle east. I know I needed a better plan.

Towards late 2010, I visited Bangalore a couple times. On the second trip, I met my future co-founders for my first foray into SaaS: Recruiterbox. We really got along amazingly well and there was instant comfort from Day 1. They were engineers (backend and frontend — balanced team) and I was the growth guy.

Over nearly seven years, we bootstrapped the company to 3,000 customers, a team of 55 (across Bangalore and the US) and were acquired by a PE Fund in San Francisco, which is where I was based for half of those years.

I learned a lot about SaaS and myself during these years. While I was hungry for success, I cared even more about building a product that wasn't just valuable — but heplful. It wasn't about getting funding just for the sake of funding. The money was investement in our company's mission, just as much as our software.

The big idea: Decalab

Without VC funding, the alternative was to repeat the scenic route: creating efficient, profitable and slow-growth SaaS products. However, even if everything went my way — I realized that this journey takes most bootstrapped founders 3.5-4 years just to break the first $1mm in revenue.

As an experiment, I started looking on Crunchbase at all of the healthy Seed and Series A rounds, which never raised a round again and also had a team size of 25 or less in places like San Francisco. There were tons!

It seemed to me that a company commits to doing the $100mm ARR sprint in 7 odd years by taking capital north of $10mm. Fair enough, many bets are worth it. But most of the companies were ones where that equation breaks (statistically speaking). So they raise $10mm, but after 4 years of that round — they are at $2mm in ARR.

This is where the idea for Decalab originated. I knew a lot of these products would make great $10-$25mm ARR businesses in due time with only the revenue invested back into the businesses (especially with a global remote/India team). So why not create a SaaS factory that is focused on cracking the 1-10, and offers founders liquid exits if they no longer wanted to continue their project or were betting on a different product?

We could short-circuit product-market fit, sometimes even the growth flywheel (with evidence from past experiments) and try to solve the local maximas (fancy word for bottlenecks). We could do 5-10 companies that totalled $100mm in ARR, all from revenue spend. The only starting capital we need was enough to acquire the companies themselves. After that, they had to be self-sufficient.

Remember that Crunchbase filter? I wrote to 119 founders, a friendly founder-to-founder note, asking them if they were considering an exit. Within two days, I had 22 calls scheduled.

Our first acquisition

Through that effort, I found FlyData.com, our first acquisition. It was doing $500K ARR, raised nearly $10mm, and had bet on a few different products. Now 6 years later, they had their one core product with a loyal customer base and very low churn! The low churn is what attracted me to it given my Recruiterbox experience of biting churn on the little guys.

Yet FlyData was neither a $100K ACV (avg contract value) sold through enterprise sales, nor a $100 per month high churn business. It was right in the middle — avg revenue per customer $10-$15K per year and completely self-serve product!

Luckily, the founder in San Francisco was looking to move on. As far as employees, there were only two support engineers on the team in Japan and Philippines. I made it very simple for him and closed the whole deal within 30 days.

I derived the valuation based on these 6 factors:

  1. Revenue growth rate

  2. Churn

  3. EBITDA (profit)

  4. Annual vs monthly plan mix

  5. Team that will be left behind

  6. Space (Competitive? Commoditized? Declining?)

If you're considering an exit, don't shy away from writing to me and let's brainstorm the best path. Most of the time, if we don't see Decalab adding value to the future of the business, I am pointing people to better options than me.

For more behind-the-scenes details about the SaaS companies we're running, drop your email below.

Follow along for acquisition #2!

Moving forward, across the next few posts, I am going to share in real-time everything that we are attempting — both to buy company #2, and product + growth stuff being executed on FlyData.


  1. How is our team organized? Who is on our team?

  2. What's the specific bet we are making with FlyData (half-baked today, but some exciting efforts). We'll open source this discussion and get feedback :)

  3. What I've learned from the first acquisition and how I'm applying this to buy company #2.

  4. Exactly how we're funding the three acquisitions we wish to do in this "first cycle"?

Please contact me if you are looking to join us in leading these companies on the engineering or growth side, or if you are looking to sell your company.

There are funded companies and bootstrapped companies, and our third way is to build the Decalab SaaS factory.

Follow along the journey with me and learn at my expense.

From the factory floor,

  1. 4

    Hey Raj, thanks for sharing. Any chance you'd be able to disclose how much you acquired FlyData for?

    1. 2

      A little more than 1x of revenue. Typical valuations for sub $1mm revenue can be from 1-3x of revenue depending on the 6 factors in the article above. This was a specific case where we needed to rewrite the product to add more integrations and growth was flat lining. Thanks!

  2. 2

    Awesome Raj!
    Did you spend 6 years working on flydata to made it profitable? I mean you need make almost the same you have had invested.

    1. 2

      Did you mean spend 6 years making Recruiterbox profitable? FlyData we just acquired 6 months ago. I will try to provide some context on how we look at return:

      If you look at my response to muon above, you already know I paid little over $500K to buy FlyData. Now we are buckling down over the next 3-5 years to get this to $5mm in annual revenue. If we keep seeing a respectable, even modest, growth rate then we will not sell or "flip" the business. We will keep growing it. And have the profits from that business fund more acquisitions. Our return barometer will be very different than a PE fund that needs to show an annual IRR on the money they have taken.

      Let me know if I answered your question :) Happy to go deeper.

  3. 2

    Bit of a side question but how did you facilitate the payments to the fast food joints back in 2002 (pre-stripe)?

    1. 2

      Collected all cash and settled with the restaurant every Friday. Old School :)

  4. 2

    Great stuff. I'm particularly interested in how you are funding the acquisitions.

    1. 1

      My own capital and capital from two more founders. No institutions. Thanks!

  5. 1

    Hey Raj! Love your story and what you're doing.
    Where do you search for your acquisition targets?

  6. 1

    I enjoyed reading this Raj and wish to build something like this from India🇮🇳.

    Would you be the one managing the all future products (like Sujan Patel way) or hiring CEO's for each products (like Tiny Capital way) or other ways around.

    Is the company #2 in same industry or a different industry altogether?

    Would love to know your thought process and thinking framework.

    Look forward to the future articles mate:)

    1. 1

      Right now the plan is to do it the "Sujan Patel" way. I am a big fan of his too :) We plan on being a lean core team and will be doing a lot of the work ourselves to get each co to at least $5mm ARR. Post that, we might have to be open to CEOs for each company. But we will learn as we go. Till $5mm, its all us.

  7. 1

    Just curious which was the better business? Importing truck tires from China or selling Indian furniture to the middle east? :)

    Thanks for sharing your journey and looking forward to more of these stories.

    1. 2

      Haha! Both were terrible, or rather I was terrible at them. However, the import of tires was exponentially better since I did not have fixed costs. In the furniture gig, I made the mistake of having a retail operation might meant a lease and inventory as well. Tires was a cleaner operation and faster moving product.

  8. 1

    Hi Raj, really liking both your SaaS factory business and the fact that you’re going to be building it in public. I’m looking forward to reading about your journey.

    I see you’re looking for growth experts. I’m a freelance web developer with experience in startups and building SaaS products. More info about me and my portfolio. Contact me anytime if you think there might be a good fit with your projects.

    1. 1

      Checking it out now!

  9. 1

    Super cool @whoisraj, I wonder how do you approach valuation when you bought the first company? I look forward to following your process :)

    1. 1

      Ah I just saw your answer to Moun above. That's really interesting, what made you think that with the right people it could go to 5MM in 3-5 years?

      1. 1

        I don't know that it will go to $5mm in that time period :) But it is our goal. The way we are spinning up our demand gen and outbound sales + content, we are hoping to start seeing signs this year and then tweak based on our lessons. Constant tweaking = that's what the next two years will look like.

        Valuation - see the 6 points towards the end of the blog as well. Thanks!

  10. 1

    Hey Raj, saying hi because I also graduated from Babson College. Love to connect!

    And curious about more of your model for sure.

  11. 1

    Interesting stuff. Are you based in Canada?
    I like your apperance on Latka Youtube channel. Best of luck getting good deals!

    1. 2

      Haha, thanks. Not in Canada but would love to visit. Usually based in Austin (moved from SF to Austin a couple years ago). And also spend part of the year in India.

  12. 1

    Congrats on your first acquisition, Raj :) Are you going to build the Decalab publicly?

    1. 1

      Yup :) that's the idea. Thank you!

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