March 2008 Presentations

Entrepreneur Spotlight: Brian Beeler, TechnologyGuide.com
“How I Grew an Idea Into a Multi-Million Dollar Exit”

March 18, 2008

Cincinnati native Brian Beeler always wanted to be an entrepreneur. He got his wish - earlier than he ever expected - with TechnologyGuide.com, an online media company focused on emerging mobile technology. And after starting the company in 2001, he and his partner sold for multi-millions in 2007, leaving Brian with the opportunity to invest in other emerging entrepreneurs as well as look for his next “big idea.”

“It started out as fun,” Brian describes. “I was working as a software developer and I wanted something for myself.” He and a long-time friend partnered to provide a combination of original content, product reviews and active communities for notebooks, PCs, handheld devices, and other products. “We would get products and write reviews. We’d then build out the community behind it to get support - it gives consumers much more power to have a group behind them.”

Their new company pioneered the idea of niche content sites with a price comparison option, “similar to Shopzilla, which wasn’t there yet in 2001,” he explains. “Our early days were extremely labor intensive. We relied on ‘creative programming,’ where we’d go to retail sites, scrape their price and do fun things with it.”

The partners broke even in Month 1: “We made $357.57 in July, 2001 - and we counted every penny! Now we’ve rounded up to the nearest dollar,” he laughs. But from the break-even point, they quickly grew to revenues in the low seven figures by 2007.

How did they get there? Amazingly, they did it with no outside capital and working with just the two of them for a couple years. Brian says, “We cut our teeth in the PDA space, an emerging market at the time. Our first site was bargainpda.com.”

They spent two years perfecting the model, “honing in on it to make sure it worked the way we wanted,” before they expanded into other areas. “We launched some ideas that turned out to be stupid, but being small, we were able to do that,” he says. “But, we continued to focus on what worked and repeat it, and we ended up with many sites that were great.” They also made sure to stay small and nimble, however, so they could do what they wanted, when they wanted. At the time of acquisition, they had five full-time employees.

However, Brian believes the real key to their success is that they “got lucky.” He feels many businesses underestimate the role of “luck”: “We had the network, the history, and so on, but luck was still a big part of it,” he feels. “We could have done a lot of things differently - for instance, looking back on it, I see that we could have leveraged capital to grow much faster, but we chose to be flexible to do other things.”

One example of their luck was when they purchased a domain name for $500 that was worth $100-150,000! Compare this to a site that was asking $100,000: “We offered half of that, and they said no,” Brian remembers. “Then, a year later, we got a call - the owners wanted to retire and decided $50,000 was a good deal. That turned out to be a good site, but not as good as the one we got for $500.”

Luck wasn’t all that was needed, however, and Brian and his partner faced many challenges. When they started out, they spent inumerable hours on the business. He says, “My partner and I were both working day jobs, killing ourselves. We’d work 40-plus hours during the day, and 40-plus hours at night. It was good money, but it sure strained the family life.” Since Brian had just had a son, it was extremely tough on him and his wife.

They also had to learn as they went, since they lacked strong advisors and experience from people who had been there before. “My partner was the tech guy, I was business and marketing ... we were in the Wild West, doing our own thing. We didn't have advisors to say we could invest our time and money better by doing these things - it was trial by fire.”

They made it through, however, and had developed a nice business they were comfortable with. “We had no intention of selling the company,” Brian says. “We were content to keep doing this forever.” However, by mid-2006, they were receiving unsolicited offers and calls from VCs wanting to give the company money. “I kept saying ‘no;’ then the third time, I said, ‘maybe.’ It was tough, because we had a strong emotional tie that was hard to break.”

They finally made the decision to sell at the end of 2006, and starting working with New York City’s Jordan Edmiston, a boutique M&A firm that specializes in media deals, in early 2007. While making the decision, they had to bet against the future. “We asked them if they thought we could get $10-12 million for the company, and they said yes. Then we questioned, because we felt that multiples in the future would be huge. Our contact said, ‘I don’t know about the future, I can’t guarantee if it will go as well.’ We bet on him, and in hindsight he was right, because debt financing is not the same now as even a year ago.”

By April, 2007 they’d closed the sale with Tech Target, who was going public at the time. “They were our first presentation, and we liked them from the start,” Brian says. “In our first presentation, I got two slides in and abandoned the rest. We just had a conversation and came out of it thinking, ‘Wow, they really got it!’ Turns out that wasn’t entirely true, but we continued the discussions and it worked out.” The deal was all cash, which turned out great for the partners: “Everyone wants to be the next Google, but we were happy with our deal. The stock started at $13 but it’s $11 or $12 now.”

Brian feels working with a professional M&A firm made all the difference in their outcome: “We talked to the Washington Post, Scripps, United Business Media in the UK, and others ... Jordan Edmiston had sold to all these buys previously. We ended up with four offers, which I don’t believe we would have gotten on our own.”

How does Brian feel post-sale? Last year, he experienced the “Summer of Sorrow,” as he dealt with the emotions of selling his baby and spent months educating a new company about operations. “I had to adjust to public company life where everything was about the money,” he says. There were expectedly a lot of clashes, but Tech Target had spent a lot of money and Brian was committed to helping them get their feet on the ground. “They had to learn to do things differently, like selling ads,” he describes. “They thought they could use their current people but it just didn’t work because the buyers are different. Six months later, they had an entirely new crew to sell for these sites.”

Looking back, what does Brian see as the key learnings from his business, to “avoid the deadpool?” First, he says, be sure to build a network, “which is different from networking. There are a lot of events out there, and you see some of the same people at all of them. But do you have 10, 15, 20 people you know and can trust, who you can call when you need something done? Having a network is not ‘knowing a guy who knows a guy,’ and it’s not just socializing. It’s making sure you have key people to help you along the way.”

Some of these key people should be a good attorney, accountant and banker: “They can help facilitate the ebbs and flows,” Brian says. A formal advisory board is another key that provides a “soundingboard for new ideas, driving business, staying focused. I see this benefitting young companies all the time.”

Something Brian didn’t do but recommends is leveraging capital when it makes sense - as well as the knowledge/network that comes with it. “Money is half the battle - access to a network the other half,” he believes. “You can use money to grow more quickly, but taking money is one thing - getting the advice and knowledge is even more valuable.”

Finally, Brian echoes what most great entrepreneurs recognize. “You must know when you can’t do it all and then hire great people - and take care of them like family. But don’t hire family or friends if they’re not right for the job. You have to get people to fit the roles you need. We overpaid and gave excessive benefits, but we never lost a person. They were happy to be with us, they came in on weekends, at night. It’s the little things as well, like providing a refrigerator full of pop and snacks, to make the working environment better.”

In the meantime, what is Brian planning? In December, he put in his resignation and helped Tech Target create a succession plan. Now he’s seeking new ways to invest his time - and money. “I really missed the excitement surrounding starting a new company. I saw a gap in young people with success selling a company, especially in the online world, reaching out to new entrepreneurs.” Because of this, he joined Queen City Angels and is helping coach over a dozen companies on technology, online strategy, business plans, and more. “I’ve also invested in six companies with several more investments pending - we’ll see how those go,” he laughs.

He’s also started a company called Flying Pig Ventures. One of their first efforts is BreakTheVault.com, a contest site he purchased from someone who had shown decent traction but who lacked a plan and ran out of energy. “It sounds interesting but it’s not necessarily viable - we’ll see what happens,” he says. “There was a low cost of ownerhsip and it’s largely a marketing play, an opportunity to go viral.” Brian expects to give it through 2007 to see if it’s a real idea of if it will enter “the chasm of bad ideas.”

Contact:
Brian M. Beeler
bbeeler@flyingpigventures.com
513-602-3767

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