#108: He Grew His Vertical SaaS Business for 5 Years and Sold It for a Big Prize – Mike Kovarik

Aug 30 2024 • 1 hr 8 mins

Mike Kovarik is the founder and former CEO of Attribytes, a software company he started, grew, and successfully sold in just over five years. Mike was a data analytics leader at large food distributors, where he discovered a chronic challenge with low-quality product data in their massive e-commerce systems. He quit his job, built a product with a friend, and his former employer became his first customer.

Attribytes grew steadily in the next few years, serving food distributors and retailers in the US, with Mike making the first sales and slowly adding new employees. He invested his savings in the company and raised just over $2 million from a strategic and several angel investors in Phoenix, Arizona. They grew to nearly $5 million in ARR in 2019 with just over 20 employees.

In 2020, Mike sold the company to Syndigo, a larger data management provider that served the same industry. He joined Syndigo for over a year to lead the acquisition of other data management companies to expand their product offerings. When their acquisition strategy changed in 2022, Mike left to take a break and then acquire and retool another vertical software company called ShopControlller.

Quote from Mike Kovarik, founder of Attribytes

"I built a little spreadsheet and I put in what our revenue was, what our current valuation was, and then what that exit would look like after taxes for me, just to see what that dollar amount was. We were at almost $5M ARR, and we were getting interest from acquirers, so it was already interesting.

"I created another spreadsheet to show what would happen if we raised big VC funding and invested that lover for 5-10 years to grow. What rate of return would I get? How would we be diluted? What annual recurring revenue would we need to get to, and what valuation would that be? What would my dollar amount be?

"The reality is that the amount for me would be pretty close to the same if we sold now or raised a big VC round. And I'm not trying to risk everything to potentially buy a plane. I could have a big exit now and have a lake house and a place in Flagstaff, and my kids' kids will be good. What else do I need?"

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