Post Reboot

A couple of things did not happen since our last update, which led to an important decision for Sidenote.

First, we didn’t acquire another business. From the start, our stated goal was to buy ca. $150k worth of ARR to cover our operating costs and small (but reasonable) salaries for both of us. However, we couldn’t source enough deals that fit our investment criteria and ultimately close them. We got very near to it a couple of times but those opportunities fell through, for different reasons.

Second, portfolio growth is currently flat. The main reason for that is the kinds of products we acquired—tiny, in competitive niches, stable revenue, and without much work on them prior to the acquisition—require a lot of work to drive growth; we started by adding basic feature parity with competitors and optimizing some steps in the funnel but what they really need is more distribution channels. There are only so many hours in the day, and I prioritized the deal search and evaluation process (a nearly full-time responsibility) over growth work.

These 2 facts meant that our underlying thesis was invalidated (at least partially). Our acquisition criteria was conservative (preferring boring-and-cheaper-but-flat over growing-but-expensive-or-too-recent). This led to realizing that:

1. The market wasn’t as liquid as we thought it would be;
2. Getting these businesses on a growth trajectory would take much longer than we anticipated.

Unnecessarily burning capital while we solved these issues was not an option. So, it was decision time, and this is where we landed:

• new acquisitions are paused indefinitely;
• product = marketing, with development entirely focused on growth—i.e., all new features will be to support new acquisition channels (integrations and/or functionality so we can list these products on multiple marketplaces);
• cut costs by removing one of our salaries.

Considering the first two points, we concluded that Alfredo was the essential one. He’ll remain as sole operator and I will move to a passive role from now on.

Where do we go from here? #

We believe that making the product strategy entirely focused on distribution is the right call for both our products right now. They’re the kind of “barnacles on a whale” SaaS tools that build on top other platforms, and we see multiple ways to expand their feature-set in this direction. From experience, we know that traffic coming from platform marketplaces is high-intent, even when it’s not high-volume, so our expectation is that this will drive qualified top of funnel growth and have a material impact on revenue. We’ll try this on a single product first, and take it from there. If this doesn’t work, we’ll see.

Personally, though I would’ve loved to continue as an active part of Sidenote (that was the plan), I don’t see this outcome as something bad. I learned a ton from this experiment, and I’m excited to bring this background to a full-time product position I’ll be taking on soon.

That’s it for now. Next time, you’ll be hearing from Alfredo.