Jan 12, 2024 — 2 min read
2023 was a tough year for us. A pure grind.
What worked:
- The business model
- Our Team
- Raising $ + deploying it
What didn't work:
- Growth was tough
- We got bit by platform risk
- Too many small portfolio companies is death by a thousand cuts
We have two relatively passive companies. Well 3 but "company" is a bit grandiose. They're really just products.
Sheet.best, screenshotapi.net, colddm.me are all relatively passive. They have some growth / stable revenue. They only require a few support tickets on any given week. On any given month we're doing maybe a day or two at most of engineering work now (after a full rewrite in one case, and basically open heart surgery in another). These have been great to own but we also have a few others on our plate now. One with investors (journey) and a big one (growthbar). Growing 1 company is hard. Growing like 6 in parallel with a shoestring budget is not only hard, it sucks, and is maybe a stupid idea.
In 2024 we're trying to deploy around $1.5-$2M. That's about 1.5-2x all the cash we've ever deployed. We're not going to be able to do it $100k at a time. That just doesn't make sense.
So in preparation, we're offloading most of our assets other than Journey to rebuild xo as more of a holding company with slightly larger businesses. That means buying businesses big enough to pay people reasonable wages to do work. In some cases that is engineering, and in some cases that is growth. Those are really the only two jobs (since support, book keeping, etc is centralized).
Back in the archives I'm sure you'll pass by me saying that I think there's a huge opportunity in the micro saas space. I think I'm right, but not at the super micro level the way we're doing it. Perhaps is XO was a 1 man shop that might work, but only up to a point. I'd still just be buying a job. Companies that makes less than ~$20k MRR are just not cashflow-ey enough to pay for a developer and a growth person full time. That's the new minimum for any acquisition ... can we hire 1 FT engineer and 1 FT growth person.
MRR is also a misleading term. If stripe says you have $20k MRR, that's not necessarily what you will be paid that month unless everyone is monthly. If there are any annual subs, your revenue is lumpy on any given month. That also makes operations a little harder because you have to manage the cashflow.
2020 - i have an idea!
2021 - will this work?
2022 - ok cool i think this works, let's double down
2023 - oh damn. We used to have some serious macro tailwinds. Growth is hard, we're spread thin and haven't bought enough revenue to hire help
2024 - ok cool, we were just buying things that were too small. Growth is still hard but we can hire people to help with the work. Maybe focusing on sales led growth is a strength. Getting a metric ton of $10 a mo customers also sucks.
So in short, 2023 really sucked. I'm not saying 2024 will be easier, but it should suck less.