Why I didn’t sell Finsweet for $1.24 million
After four years of countless websites, I was offered $1,240,000 for a full acquisition of Finsweet. The company that wanted to buy us is amazing. I have a deep respect for their company, mission, and success. I was ready and motivated to sell before they told me the offer price. The offer price came in right where I expected it. Preliminary papers were signed, congratulations were given, but I turned it down… and it felt damn good.
So - why the hell did I turn down so much money? 4 years of business, 2 years of monetary success, 0 investors, 0 liabilities, 100% ownership. I live in Mexico where that amount of money goes very far. May seem like a no-brainer. I turned it down because of money. The buying company is like every company should be - concerned about profits. What is on the profit and loss sheet is how success is defined. The profitability of the company is what makes it strong. Of course this is how a business should think. This has been the thought process since forever and it works. I’m not saying this is wrong for traditional business or any business with significant overhead. You don’t make money, you aren’t careful with your spending, you go out of business.
Crazy shit Finsweet does and wants to keep doing
Finsweet doesn’t think like this. We are far from a traditional business. I always positioned Finsweet as ‘different’ from any other company - even before I knew what that meant for us. Different how? Different in design work? Different in client relationships? After this almost-sale, I have a better understanding of how our unique thinking is a key mindset that differentiates us from most companies in our industry. Check out these bizarre non-businessy things we do. Any accountant, lawyer, or seasoned business professional would tell you that we’re F’in crazy… Well, we are… and damn proud of it.
- We have no idea how much revenue and expenses are incurred throughout the year until we do the numbers for taxes. No idea at all. Don’t really care. We specifically haven’t hired a bookkeeper or accountant so I don’t have to hear about that shit. That’s not us.
- Our employees aren’t on contracts or agreements. Nothing. There is no formal invoicing. Pre-pay an employee for a project that hasn’t started yet? Sure, why not. Anyone on our team can shoot me a Slack message and say the amount they want to be paid for past, current, or future work. Within 24 hours, I send them a wire and tell them to keep track of it. Yes, our employees are in charge of keeping track of how much they’re paid.
- Most people on the Finsweet team are paid based on how happy our client is with their work. They’re given a range for how much they can earn based on happiness. Happy client = all the money. The full pay for a 100% happy client can be close to 2x the pay for an unhappy client.
- We don’t require new clients to send payment before we start working on their project. We’ll work for weeks before we receive the initial payment that should have been paid before we started. Heck, we’ve almost finished projects before we were paid the first invoice.
What’s the upside to this madness? Client happiness, trust, and speed. Not focusing on the numbers, the ‘rules’, or any of this normal business stuff is what lets Finsweet grow faster and faster every year. Employees feel empowered and flexible in their relationship with Finsweet. They choose what they want to work on and when they work on it. Vacations and days off are unlimited and don't have to be announced as long as they don’t cause a missed deadline. Everything in business happens quicker when people are happy. Work is delivered at a higher quality when people are happy. We create a sense of trust internally in our team and that trust waterfalls to our clients. Everyone is damn well happy.
With all of these irregular processes, we’ve never had a problem once. Never a problem with cash flow, never a problem with employees taking more than agreed upon, never a client who doesn’t pay the bill. 4 years, not once. When you create a real environment of trust, it works. When I’m selling clients and leads, they can feel my passion and trust for their project, not for the end paycheck. This lack of focus on money is engraved in the Finsweet culture and it’s what helps us grow and make more money long term. Once you introduce money-based milestones, that culture starts to disappear.
Yes, I believe that focusing less on money has the opportunity to make you more money. Our industry as a whole is much too creative and flexible to be focused on such structured practices. Focus on making everyone happy and the money comes naturally. We get more leads and clients saying ‘yes’ - We get more employees saying ‘yes’ - We have quality employees who are ready to be dedicated team players even though we've never met face-to-face. You can’t pay for that.
Check out this flow:
If an employee is paid based on client happiness wouldn’t it be in the employee's best interest to provide additional, out of scope, features and functionalities to the client’s new website? Yep. And it happens every project. The client is happy because we put in a thousand dollars+ of add-ons at no additional cost. Client scope creep? No problem. Our employees don't complain about tasks out of scope because it's going to create tension in the project. The employee's higher end range of pay for a happy client has scope overage built into it. The client is surely impressed that we haven't told them to pay us more money. They're also impressed that we started working asap so we could hit their deadline, regardless of their incredibly slow accounting department that took weeks to pay the first invoice. They think, “what a great company this is.” They’re ready to continue working with us post-launch and refer us new business. The Finsweet employee is getting their full above market-average pay because the client is thrilled. Everyone is happy. Everybody wins. It repeats project after project. What a F’in sweet cycle that is.
We’re able to do all of these irregular practices without worries because Finsweet is lean as hell. We need a ridiculously low amount of money in the bank to operate, most of our employees are project-based which limits overhead, and we’re a full remote team which almost removes overhead completely. Even if one of these practices crashed and burned, Finsweet would be equally as healthy. I can’t imagine Finsweet ever going out of business because of money. It seems impossible based on how the company is setup. So why would we care so much about money?
With any buying company knocking on our virtual door, would we be able to keep these practices that make Finsweet ‘Finsweet’? I doubt it.
What’s next for Finsweet?
Following the decline of the sale, Finsweet is even more motivated and driven for growth. The sale offer pushed me to think about everything we do on a much deeper level. In 2020, we’re going to put an extra touch of careless money spending into our business. Smart, but careless. We’re going to continue creating useful tools and resources for the Webflow community without any intention of monetary return. We’re going to continue doing ridiculous things to impress leads. We’re going to continue spending money without a cap to excite people… and we’re going to do all of this at 2x our original plan. All of this wouldn’t be possible if Finsweet was acquired. Some of it would be possible, but not all of it.
We’re going to use different measures for success. The profit and loss will not define if Finsweet is successful or not. It hasn’t for 4 years and it won’t for the next 4 years. We have a very high quality team that does insanely good work. The money will come. We’re going to focus on people-based measures. Measures that most companies do care about, but don’t use as their primary drivers for the definition of success.
- How many people and families are we feeding?
- How much more satisfied and motivated are our employees month after month?
- How many happy clients feel empowered from the website we just built them?
- How many referrals did we get from happy clients?
- How many new clients did we get because we spent an illogical amount of money on ‘Fun Project Z’?
- How many ridiculous projects did we release?
- How many dedicated fans of the Finsweet brand do we have?
We have a lot to do this year. Expect several valuable projects, tools, and resources coming to the Webflow community in 2020. Current employees will get more responsibilities if they want - and they can get paid more if they want. We hope to add new employees to the team as more projects come our way.
Thanks buying company - we’re thankful for the opportunity and the knowledge we got from this process. If I wasn’t so F'in crazy, I would have sold.