Published on Huddle Today Mar 30, 2016
It’s a dream for many entrepreneurs – launch a company, build it and then sell it for a handsome profit. But what happens when that dream comes true? Is there life after acquisition?
There is if you’re Dan Martell.
He’s the Energizer bunny of New Brunswick’s startup scene – he just keeps going. In fact, the Moncton-based entrepreneur has seen three of his companies acquired.
His first company, Spheric Technologies, was acquired in 2008 by a U.S. company called Function One. He followed that up with Flowton, a San Francisco-based social marketing product that was acquired by Demandforce in 2011. Then he founded Clarity, which connects users by telephone with expert mentors who provide business advice. That was acquired by Fundable in February 2015.
It’s quite a track record.
Martell traces his success to his focus on building businesses that solve problems. Big companies want to acquire results, not just hype.
“The first thing is you’ve got to build a business,” Martell says. “People talk about building a company to flip it or sell it, it’s just ridiculous.”
Martell’s approach is to build the company because you truly believe in it. When you start getting momentum, the right people will start paying attention. These people either want your technology, your customer base or your expertise.
“If you’re out there being successful, you’re going to get inbound requests from big companies. There’s a certain size for a big company where they can’t innovate anymore… and they’re ok with buying companies to fill that gap in their product roadmap,” Martell says.
“What you need to do strategically is when you get one inbound request, put them on pause a little bit and you parlay that into conversations with three or four other companies and create a competitive advantage.”
Typically when a company is acquired, there’s an “earn out” period where you work at the company for two or three years, integrate it and make sure the transition works out. Or what some Silicon Valley wags call “vesting in peace.”
While many choose to live comfortably on their earnings and never work again, that’s not Martell’s style. He now has a new business that teaches technology entrepreneurs how to start, scale and sell their businesses, and it’s run through his personal website.
“Kind of taking the expertise that I have and I’ve created a few programs around that,” Martell says. “I put it together in a training program. That’s what I’m doing. It’s essentially my sixth business but it’s just DanMartell.com.”
Martell has also been an angel investor for the past 10 years, investing in 34 companies since the age of 26, picking winners like Udemy, Intercom and Unbounce.
He has three rules when it comes to investing his money in a business. One, the company needs to solve a problem he’s personally had. Second, he needs to feel he can be helpful to the company. Finally, he needs to be able to learn from the company as well.
“I don’t invest in entrepreneurs who need my money. I invest in people who are going to be successful and I convince them to take my money,” Martell says.
“Usually within a 20-minute conversation it’s either a yes or a no to even move on to the next step.”
So after living in San Francisco for almost five years, why come back to New Brunswick?
“I said you know what? The reason I worked my butt off my whole life is so I can live wherever I want and do whatever I want,” he said. “So why wouldn’t I want to be close to my family?”
He always wanted to come back home.
“When I moved from New Brunswick, it wasn’t to become a U.S. citizen, it was actually to go there and learn and bring it back to New Brunswick,” he says. “That was always the plan, I just didn’t think it would happen that fast.”
Martell says the startup scene in New Brunswick “keeps getting better” and has improved greatly over the years, especially compared to when he first started.
“When I started off, I didn’t know any other entrepreneurs. Zero. None.” he says. “I remember I cold emailed Frank McKenna and I said ‘Frank, I have a dozen employees, I do all my business in the U.S., is there anybody like me in this province?’”
“Today with all the different accelerator programs and organizations, it’s so great.”
When it comes to growing New Brunswick’s entrepreneurial community, Martell believes it’s not something that can be created, but recruited.
“I don’t think you create entrepreneurs,” he says. “I think you inspire them, you create a home for them, but they exist.”
Instead, you need to create an environment where entrepreneurs will see opportunities for growth.
“What I think we need to do is increase the percent of entrepreneurs who are growth-minded at that level in this region. I don’t think they come from this region. I think the only way to do it… you’ve got to convince them from other places to move here,” Martell says.
“[If we don’t] focus on figuring out how we convince other entrepreneurs to move here, it will never grow. Boulder, San Francisco, New York, all major hotbeds, people came from other parts of the world and went there.”
“That’s just the way it works.”