#239: Grasshopper Founder Shares Metrics and Strategies that Earned a $170 Million Sale to Citrix
On today’s show, we have David Hauser, former founder of Grasshopper — a virtual telephone service — which sold for $165 million in cash and $8M in stock to Citrix. David is a metric master and shares with us some of the marketing and operational strategies that enabled them to grow from zero to $30 million in 12 years. He breaks down how to leverage key metrics like client acquisition costs (CAC) and the lifetime value of a customer (LTV) to exponentially scale a business. We talk about goals, failures and opportunities met along the way as David became a serial entrepreneur and how his ability to keep his learning high and wide-lens helped him stay strong in new markets as an angel investor.
What You Will Learn In Today's Podcast Interview
- Why David says running a good business is the most valuable — and value-building — thing you can do
- The missing piece of advice when it’s time to sell your business
- How to attract business just by acting with integrity and following through on what you say you’ll do
- The value of doing each job yourself before you hire for the role
- Why Grasshopper used paid marketing, how much they put into doing it and how they evaluated the outcome
- The power of routine
- How David achieved 30% of his business from referrals
- The way David funded Grasshopper’s growth, the company he took from zero to 30 million, and sold after 12 years
- Why you should see business profits as growth capital rather than income
- What blended client acquisition costs (or CAC) are and how to evaluate their efficiency
- The difference between marginal and total CPA
- How much can (and should) you spend to catch up on churn
- Our success metrics and how they fail us while still being what we have to strive for, plus what you can do about that
Are You Growing The Value of Your Business
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- Are your company's current initiatives intentionally designed to increase the value of the business?
- Do you know what you want from your business long term and why?
- Do you know what your company is worth?
- Do you know the differences between Management, Family Transitions, PE Firms, ESOPs and Strategic Buyers?
- Does the business have a written strategic plan on how to achieve the desired normalized EBITDA and valuation?
About the Guest:
David Hauser is an American entrepreneur, speaker and angel investor. He is best known for co-founding the Grasshopper Group, a virtual telephone service acquired by Citrix Systems for $170 million in 2015. Hauser is a founding member of National Entrepreneurs' Day and has co-founded a number of tech companies, including Grasshopper, Chargify, Spreadable PopSurvey, Deck Foundry and others.
05:05 - “The reason it worked is we were solving our own problem.” – David Hauser
05:33 - “Before we hired anyone for anything, one or both of us did that job.” – David Hauser
08:10 - “The most value in selling a business just comes from operating a good business.” – David Hauser
09:50 - “How do I strip out the income I have to have to live and think about the rest as growth capital.” – David Hauser
11:10 - “I didn’t want to make money on salary. I wanted long-term growth.” – David Hauser
11:55 - “There’s no additional happiness in that delta.” – David Hauser
18:28 - “The emotional shift from wealth generation to wealth preservation is very hard.” – David Hauser
24:00 -“Recurring, repeatable revenue is a game-changer.” – David Hauser
38:00 - “No matter what’s on paper, we’ll always try to do what’s right.” – David Hauser
39:05 - “I think there’s a false narrative around this ‘it needs to be competitive’ kind of thing.” – David Hauser
Links and Resources:
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Brought to you by Ryan Tansom of Intentional Growth