Latest / Unstuck Pod / Business Owners Don't Know Their Value (Dylan Gans and Jamie Schneiderman)
Transcript
- Jamie: Hey everyone, welcome back to the Unstuck Pod. I'm here today with Dylan Ganz. Dylan from Baton. Great have you here. Thanks for coming. Dylan Gans: Thanks for being a great host, Jamie. I really appreciate it. I'm excited. I'm excited to get into it. Jamie: ⁓ Awesome. So let's do this. To start off with, why don't you let everyone know you, what doing, the ton. start there then we'll get into it. Dylan Gans: Totally. Yeah. So I grew up in Hoboken, New Jersey, which is a really cool place. It's diverse culturally and economically. And I was always around entrepreneurs. So my grandpa owned a medical practice. My dad had a construction company. So it was just something that I kind of assumed I think throughout my life that I was going to do starting and building companies. I wrote a business plan for a barber salon when I was like 14 years old. was like a weird thing for a 14 year old to be doing. and I started a construction company in high school after Hurricane Sandy. I started a clothing company, which was really fun and taught me a lot. And I got a lot of people involved in that business. and you know, then I went to college, was a finance major thought that maybe I'll go work at a bank or work on wall street. I had an internship at bank of New York when I was 18 years old. I think I was the youngest intern there. And I learned a ton and there were some amazing people there, but I hated it. And I had juxtaposed that experience with experience visiting a bunch of different startups in New York City. And I was like, this is so cool that all of these people are super passionate. And we went from big companies like LinkedIn that still felt like a startup, right? They had Nerf guns in the office and it seems like a really cool environment to go into people's apartments to just say, you know, what does it look like to go from, from zero to one? And was really fortunate kind of when I went back to school, was, I I was 19 at this point, sophomore year. I was like, I'm going to go work at a startup. Um, and I think one of my superpowers has always been reaching out to people and, and, being shameless. And I had a couple of different opportunities, um, but ended up, uh, joining the founding team of a company called good uncle. We were a food production company, a ghost kitchen in 2016 before ghost kitchens were a cool thing. And I was like, I really want to work at this, this place. the founders had sold their last company for a 100 million dollars. They hadn't launched yet. I was ended up being the first marketing and sales hire and the seventh hire overall. and that was an internship that just never ended. I, worked there all through college. I was abroad in Hong Kong and I was up at like 2 AM on calls with the team there. Cause that was, you know, working hours over there. it was just super into that experience. did everything that I possibly could for that business from running go to market, doing brand, doing marketing, to running data analytics. And then we sold that business to Airmark in 2019. Airmark's Fortune 500 food service company, which was amazing. I was 24, 25 at the time, and I got to be a VP at a public company, which was a cool experience. Stayed there for two years, built the business a ton. was managing a team of about 30 there. And, and ultimately knew that I wanted to go back early stage and was experimenting with some different ideas, talking to a lot of people. And what I got really excited about was I had a friend who was doing tech sales. Maybe you're the traditional tech sales background. And he bought a commercial cleaning company. He was living in New York at the time and bought a company in Nashville. I was like, that's a really weird. career path, right? Tech sales to owning a commercial cleaning company. So I started asking him lot of questions. And what I found was one, buying and owning a small business is an amazing economic opportunity, right? These things sell for two to three times cashflow, which is a better return than anything else you'll get on the market, right? You're getting like a 50 % return on the money that you put in. And, you know, in real estate, which maybe you think some of the markets are similar, they're buying small businesses and buying real estate. you're lucky if you get like a 10 to 10 X on the cash, right, which would be like a 10 cap. So I got really excited, really interested on that angle. Then I started seeing how these deals got put together. And you can use an SBA seven a loan government backed loan, seller financing. And you can buy these businesses for like 5 % down. So he had bought this business to kick off $200,000 in cash flow for half a million dollars. And then I started seeing how did you kind of find this business? And I found that the ways that people were going through the process were just totally archaic. Biz by Sal is kind of the biggest competitor and it looks like Craigslist and this was like five years ago. So just got, got excited about, can we build something better? Jamie: I mean, sounds awesome. So first of all, I love the journey. This is great. And you know, you've been there. So you've been on the other side of like, the startup, the business, like running it, you've seen it. So let's talk, I want to talk about baton and I want to talk about so you see this opportunity, you we can do this better. So ⁓ let's about what is better look like, like, so what are you doing? How is it better and different than what's out there? You know, let's go. Dylan Gans: Totally. Yeah. And I mean, it's interesting because I think like a lot of entrepreneurs, you're just like, there seems there's an opportunity here. But the reality is like five years ago, we didn't really know what this was going to look like. And we were like, I think small business owners deserve better. think more buyers should be in the market. We can make this easier. think there are lot of different ways to think about how we do that. But it just started with a lot of conversations. I was like, I'm going to go talk to every small business owner that I can find anybody who's bought a small business before and just learn about their experience. And the first thing that, that we keyed in on was that small business owners have no clue of what their business is worth, which is crazy. It's their most valuable asset that, know, they're tracking their home on Zillow. They're tracking their stocks in their Charles Schwab account, but they don't know how much they're, again, most valuable asset is worth. So we, thought to ourselves, Could we be like the Zillow for small businesses and can we start with valuations as a wedge? So we went in, we raised 2.7 million in pre-seed funding off of a deck. And at this point, like 20, it was like 25, 26 when started the company. It was crazy. I was like, I can't believe that people are giving me money to go pursue this idea. It was insane. And we had, I had amazing partners, amazing co-founders. Jamie: What's wrong with these people? Why are they giving me money? ⁓ Dylan Gans: But it was, was a pretty crazy experience and, and, and, you know, challenging to raise money, especially at that stage. but we got it done and we out and we just talked to a lot of small business owners and started giving free valuations away. and we figured we were like, we want to be in the transaction at some point. We don't know how that looks exactly. Let's start with this, this first thing and we'll talk to business owners and we'll see what opportunities unfold from that. And pretty quickly we'd be going through these super custom valuation reports. And these businesses would say, Hey, you just explained more about my business to me in the last 20 minutes than anyone has in last 20 years. We wanted evaluation because we want to sell. Can you just sell our business for us? you're probably getting this from, from me and it's philosophy that we have at the company. If the customers are asking for something, ⁓ might be something there. Right. and we figured it would be a good learning opportunity. ⁓ so we went ⁓ and talked to a hundred business brokers. brought in. three business brokers Baton. I was managing them as contractors, learned a ton from their process. were kind of like the typical business brokers and built conviction pretty quickly that we should be doing this in-house. ⁓ think that's, ⁓ around this time we had raised ⁓ another 2.8 million in seed financing based off the idea that small business owners want evaluations and there's a lot of money to be made from this. And started signing these sale agreements in droves and we're going, growing pretty quickly. And yeah, so I was like, I think we could do this ourselves. We had unlocked some good growth channels. And I was like, I'm going to be the first full-time Baton business broker. I sold 14 businesses in nine months. Most business brokers, by the way, manage five to 10 deals a year. But we just had better systems. We have better technology. We were running a modern process. And that was that. And then after I felt like we had a good motion there, The question was, hey, can I hire a team that can do this as well as I've been doing it? So we brought on like two people that are two years into investment banking, maybe two years into private equity, and they're watching their MDs do deals and they're like, I could do this. We're like, okay, come do it. Let's go. The the top M &A advisors are making like $50,000 plus their 2425 years old making $50,000 plus in just bonuses and commissions every quarter now. they're doing really, really well. And their base salary is pretty, pretty compelling as well. Yeah, so that's, mean, I think what makes us different now is we're the best place to buy and sell a small business and we get really in the weeds to support business owners and business buyers as they go through the process. ⁓ Yeah, go ahead. ⁓ Jamie: Okay. So no, no, no, no. So, okay. So you say that like, I hear two different pieces for me, which are, which sounds like awesome for the business owner. How, okay. I do want to go through some of the challenges of getting to where you've gotten to, cause it all sounds like it's all gone peachy and great and perfect. And I, I'm sure a lot of it has, I also want to talk a little bit about how do you take what feels like good process, processes, modern processes, as you said, but a high value, high touch and scale. So I want to understand both of those things. Dylan Gans: Totally. Yeah. I mean, from the beginning, we, we bet on the marketplace model, which I think is actually really important to this. So while we have advisors kind of bringing everyone through the process of selling, we have a beautiful modern marketplace. ⁓ and we did a lot of kind of like against, the industry norm things to build and scale that marketplace and ⁓ buyers access data really easily. so those things helped us scale. But it's interesting because when started doing this, was like, you know, it's the adage, Paul Graham says, do things that don't scale, which I've been thinking about a lot lately, even as we're entering kind of this next phase of our ⁓ growth. I didn't know. I mean, the reality is like, I didn't know exactly how it was going to scale. I just just figured we could. What's been amazing us ⁓ is the AI And I think once we saw that there were all these things, like something as simple as writing a description for a business, which has to be really thoughtful, right? Like you were putting out a flyer on all of this person's life's work. And how can we do that? How can I, you know, have someone and at the beginning, we actually had a copywriter that was reviewing all the materials, listening to the videos, and then they would send the advisor who was me at this time, a blurb. And then I would go in and I would edit the blurb. And then the AI moment happened. We started doing that with AI and the business owners were like, this is one of the most awful things I've ever read about my company. And, and it was a lot of these little innovations. And that was, so we raised our series a at the end of 2024 announced in January, 2025, which was $10 million. And, and the bet there was that we can build an agentic marketplace. And what does that start to look like? Jamie: Okay. Dylan Gans: ⁓ so I mean, the real answer is like, didn't know how that could scale, but now, now we're able to scale it with AI and finding great people and having people in the process at the right time. Jamie: No, no. so, you when you start to talk about building a marketplace, for buying and selling businesses, are there specific kinds of businesses that you want, don't want? Is it all businesses? Like, how do you look at that? How do you think about that? Dylan Gans: Totally. Yeah, we're industry agnostic. We're location agnostic. We found the process is generally the same and that there's always a hard side of a marketplace, right? For Baton, the hard side is the sellers. And it's fairly easy to find buyers for great business. So we have a really wide open buy box. Now our minimum adjusted cash flow is $100,000. I've done deals from, you know, $5 million, now $25 million deals that are under contract. to $50,000 deals. So we're a little bit up market, ⁓ not much. So, you know, it's just profitable companies. Jamie: No, no, no, I, I, okay. No, I got it. ⁓ got it. I understand it. ⁓ so, so let me, let, let me take a step back. I want to talk about, you you sort of worked your way through this. ⁓ You, saw the potential, you were smart to go and learn and listen and talk to a lot of folks who were out there, see the opportunities, which is great. And then leverage the technology that's out there. Let's talk about some of the challenging parts about getting here. because you make it seem for everybody who's listening, watching like, yeah, okay, well, we did this and we did this and it came together. I imagine it wasn't always that easy. I'm sure there are a lot of things that have gone wrong, continue to go wrong, right? So I understand a little bit more about some of the challenges ⁓ the past and maybe some of the things that are challenging right now as you go forward. Dylan Gans: Totally. mean, I think dots connect backwards, right? Which I think is a Steve Jobs quote and that there's this pretty story when you look backwards, but it's it's been excruciatingly painful to go through the process of building a company. Honestly, I don't know. Like has has broken at certain times. ⁓ It's crazy, and it's things that you wouldn't expect to break. Jamie: Yeah, yeah. Dylan Gans: And so a system that you created and you feel really proud of and you're like, this is, there'll never be a problem with, ⁓ businesses going to market. For example, this is just a, instance, we were signing all these companies ⁓ the series. They were like, we are going to grow. We're going to pour fuel on the fire. We have a lot of different lead channels and we're just going to grow. and we signed a bunch of new deals. looked like great businesses were really excited and A lot of these sellers just didn't have high intent to sell and ended up not going live. So our numbers looked way better, but we had this issue that they weren't actually converting to listings. we make moat, you know, we charge a small monthly fee. call it a paper cut fee, to be on the platform as a seller so that you're serious. and then, and then, but we make most of our money from actually selling the business. So we had these low intent customers, which is the problem that I never thought we would face. It didn't even make sense to me. ⁓ Jamie: ⁓ no. Dylan Gans: And you know, we dug out of that, but it's like everything in your funnel is going to break, especially as you scale. Just recently, we do a lot of cold outbound and the entire all year last year we were doing cold outbound cold emails. And I was asked, I would ask my head of growth every, every week. was like, how are more people not doing this? And my learning there is anytime you ask that question, you're not going to have that advantage for the long. You're not going to be the smartest person in the room, maybe for the next week, but not for, not for long. Jamie: Yeah. Yeah. Yeah. Dylan Gans: ⁓ so we've had to completely change how we think about, finding new customers. mean, it's, ⁓ seriously, Jamie, everything has broken at some point. ⁓ and it's, it's so, and when I was at good uncle and those founders were amazing, Matt and Wiley were incredible. I learned so much from them. they've helped me a ton in this journey and there were things and I was like, it's going to be, and I saw them working really hard. I was like, Jamie: Yeah. Dylan Gans: It's going to be so easy for me. I know exactly how to handle all these situations. It's going to be great. And it's, it's just way harder than I thought it would be. Um, that being said, one of the amazing things about being an entrepreneur is you get to be yourself every single day, which can be true at a great company, but it's still a little bit different because ultimately you're fitting into somebody else's vision. And, that's a really incredible feeling and something that I maybe didn't expect. Um, Jamie: You Dylan Gans: to feel as much because I had such a great experience at the last company. Jamie: No, think that's amazing. I love that point that you're making around getting be yourself and getting to be like it feels natural. ⁓ I to tell you just the funny thing is I used to say everything that can go wrong did go wrong for me too. And a whole bunch of things that I never thought could go wrong went wrong. You basically said the exact same thing. I'm like, well, I actually am hearing that from you. like, I get it. I know it. It's like all those challenges. Okay. So, so let's talk about, the next phase like. what are big things you're trying to crack? Where do you see yourself over the next couple of years? The company like ⁓ where are where are we headed next? Dylan Gans: Yeah, we're on a mission to make this the the next best asset class for everyone. Right, Which means that everyone can have access to the asset class that is small business ownership. And we get excited about empowering a diverse group of entrepreneurs. We we don't want to live in a world where all these businesses shut down. So there are 6 million small businesses that are owned by baby boomers today that are going to need change hands next 10 years. Right? 92 % of them don't have a transition plan. It's crazy. I have no idea how they're going to sell their business. So we're there every, every day fighting against that 92 % number. And our biggest competitor, we always say this isn't a another marketplace or another broker. It's the small business owner that doesn't think they can sell their business. So over the next you know, years, two years, we are on a mission to make sure everybody knows that this is an opportunity and a possibility. first and foremost. The other piece is ⁓ I think with, with AI, know, we talked about the hard part of the hard side of the marketplace, right? And, and when there's a hard part of the marketplace, you end up dedicating all of your time to making sure that hard part has a good experience so that you can access some network effects and you can go acquire those folks. But what that looks like is the other side of the marketplace might get treated like a second-class citizen. So generally, Jamie, what's happened in the business market for buying and selling companies is that buyers get treated. like a dime a dozen, like a commodity. And that's not fair. And what that looks like, and the staff for this is that 98 % of people who say they want to buy a small business never actually do. Right? So we have this like really crazy mismatch. have 30,000 buyers on Baton. You have apparently 3 million monthly unique views on BizBiz sell use. All these people, but they're just not able to get to that next step. And we think that AI is the technology that breaks down this barrier. So now as a buyer, I can give you through an AI agent, a first class experience where we're walking you through each step of the process, following up learning about, okay, you weren't interested in this business, but what about this one? And I really think you should take a double double click here, because we have all of this information about the company. And that becomes ⁓ a really big advantage, but two will start to shift how the works. Jamie: Hmm. Yeah, no, I think it's anyway, I think this is it sounds really great. It sounds very like very much needed. I've sold businesses before and I can see how it's nice to know that there are places to go ⁓ with business. ⁓ Dylan Gans: What was that like when you sold your business? Pick the hardest one, tell the hardest story. Jamie: pain. ⁓ see. you know, good about your business, what's great. And then, ⁓ you know, ⁓ have other telling you to know you got to package it this way. No, you got to frame it this way. No, you got to do this. No, you got to do this. And I'm like, okay, this is becoming a full time job instead of someone saying I'm coming and taking what's there. I found it frustrating at every part. You you said to me, what's most interesting is you said to me, you get to, when you run your own company, it's your own thing. You get to be you. And then all of a sudden you're running, you're selling a business and then you're trying to justify all the pieces that are there and everything that's going on and people are poking holes and they're trying. So, so I found it to be, I found it hard to find the right buyers. I thought a lot of tire kickers, I found it hard to for people to see the value and what was there at times, it worked out, but it just, it longer and way more painful and way more involved than I thought it was going to be when I got into the process. I don't know, months or six months of like, this is what I'm doing. And I'm like, I'm trying to run a company. how do you do both at the same time? Must be for a guy that's even in a smaller place. So we had. 35 people at the time, 40 people at the time. So like, it was different. Now, like if you're smaller than that, like, you know, you're anyway, it was not a fun. I try it's funny because you're asking me the question, like, how was it? Tell me about it. And like, I try to I think I tried to get it out of my head. Like we got there and hated it at the time. It was ⁓ lot of this stuff. You've it right. Like the challenges of growing a business are hard. The challenges of going next. Dylan Gans: A dramatic experience. Jamie: hard, how do you scale? I always say to people go slow to go fast, right? So that you got to go slow to go fast. Sometimes it's like slow down, figure it out. It's a lot easier to go fast. Everybody wants to like they're in everyone's in a hurry. And until they've experienced like you said, these are the things that go wrong. Very hard to see. Very hard to know everything that's going to go wrong until you see it. And then you go, this is way harder than you than you thought. ⁓ Dylan Gans: Well, I mean, there's there's so many great threads to pull on there. I think there is an interesting thing a founder and I think an investor to especially a venture investor. You can't really think too much about your losses. So you're like, tell me about the challenges. I'm like, all I know is this is really hard, but you really can't dwell on these things too much because it is just really hard. Jensen Wang said it himself. He was like, if I knew how hard this was going to be, I don't think I would have done it. which is crazy because he's made so much money. He's had so much success. He's so incredible, but it's just, it's just really challenging. so I think blocking out the, ⁓ traumatic experience and, know, I put it in quotes, there's ⁓ course deeper trauma than selling a business, although it is, it is really serious. but I think a sign of a great entrepreneur is like, you have a short memory and you're like, ⁓ yeah, it was bad, I think, but here I am and I'm having a ton of fun still. Jamie: be a goldfish, right? It's like, I forgot, I forgot next, next. Well, know, you you said early on in this conversation, you're talking about the all the things that went wrong. It's like, okay, well, if you dwell on them, that's not helpful, because there's the next thing that's about to go wrong, or is going wrong, and that you're dealing with just deal with the next thing and deal with the next thing and deal with the next. So ⁓ it's always ⁓ a challenge enough. ⁓ Okay, so Okay, want to, ⁓ do want just, you know, If you could wave your wand and talk about like, we're gonna be here 12 months from now 24 months from now, what does that look like in your Dylan Gans: Selling more businesses. know, I think the biggest opportunity for me is ⁓ become cemented in the brand of small business owners brains is this is the best place to sell your business. We also want to be the best place to track your valuation. I there's a lot of tools that we can give business owners kind of on their journey to sell because if you want to sell, you should be thinking about it. you know, I'd love to say think about it three years in advance ⁓ and start for it and And we just want to be a part of that conversation. We want to start building relationships with people. I think most small business owners don't know about us. Actually, I know that to be true. I want more brand awareness. We're doing some really exciting things on the product side. I've been spending a lot of my time over there. We just brought on a new incredible head of engineering. And we're rebuilding out the engineering team to be super AI native, which is all really exciting. ⁓ I think ⁓ going to see some just this week, ⁓ internally launched AI chat on listings. So now as a buyer, I can have an AI conversation with all the information that's on listing, which is going to let buyers go way faster and ask ⁓ more pointed and build better relationships with sellers as they go through the journey. So there's a lot of product stuff, but. I just want to more businesses. want to help with the transition. I want to empower new entrepreneurs. And the more the more we can do that, and the better job we can do, the better. Jamie: That's awesome. I love it. So, okay. So for people who are following listening, people are looking to sell their business or buy a business. can they find you? So ⁓ all put links in the description after, but go ahead. Dylan Gans: We're baton.com, which we just got. We negotiated it. We've been negotiating for a long time and it was not cheap. But this is part of what we're saying. We want to be the place to buy and sell, the best place to buy and sell a small business. So baton.com. It's really easy. Everything for an owner getting a free valuation is free. Buying or signing up as a buyer is free, remains free. We plan for it always to be free. ⁓ we want to be, again, just, just, we're here to help transactions happen. So we think an open marketplace is the best way to do that. you'd find me on, on Twitter, LinkedIn, I'm at Dylan Gans, LinkedIn, Dylan Gans. I'm posting there more. I'm also on Instagram. I think I'm on Tik TOK, but the teams, the team's supporting with that. but yeah, and I'm, I'm always happy to chat. small business owners, business buyers. have a lot of conversations. every single, every single week, kind about this. I think one, one thing that I want to put out to folks is the world's changing a lot. There's this massive trend, right? I said, said it before there are 6 million small businesses that need to change hands. And I also think with all of the AI things going around, work is going to look a lot different. I bet that a lot of white collar jobs get eliminated. We're seeing it up a ton. There are the roles that we were hiring for that we stopped hiring for because AI was able to do it. And I think there is an amazing opportunity to take your severance from your big tech company and use it to go buy a small business. So I want to, I want to put that on people's radar. And I think without that, Jamie, the world's going to look a lot different. America is going to look a lot different. And I think we're going to lose some of the things that make this such a great place to be. Jamie: think this is fantastic. That was awesome. Dylan, thank you so much. That was great. Really enjoyed it. So thank you for the time. ⁓ Everybody else, ⁓ the next episode, for listening, and we'll see you soon. Dylan Gans: Thanks so much, Jamie. Appreciate it.