From Developer to Solo Entrepreneur to $5M+ Revenue: Sporcle Founder and CTO Matt Ramme (Part 6)

Sramana Mitra: What is the financial engineering of an acquisition like this? You have not raised any money for this company, right?

Matt Ramme: Correct.

Sramana Mitra: Private companies acquiring private companies is very complicated to pull off. Talk a little bit about that.

Matt Ramme: We’ve had some other smaller acquisitions as well. We just use debt. Nothing has been super huge in terms of the numbers. We could use a little cash but we just got debt. At our size, we’re not big enough from a revenue standpoint to get great debt.

Sramana Mitra: When you say debt, you take the debt on your balance sheet and then you acquire the other company for cash?

Matt Ramme: Yes. We use the operations of the new company to pay off the loan.

Sramana Mitra: What scale are you at right now revenue-wise?

Matt Ramme: We took a hit in the pandemic because we had about 800 shows a week. That went to zero. That was a difficult time for us.

Sramana Mitra: That pubs were paying you a fee to do those shows, right?

Matt Ramme: Right. That went to zero. We’re doing somewhere between $5 million and $10 million.

Sramana Mitra: I think I understand what you’ve done. As I mentioned to you earlier, there are always developers looking to start companies and become entrepreneurs. Your journey has a couple of paths of making that transition. One is, the five of you left and started doing contract software services. Then you were trying to do bootstrapping using services.

You had this biology software that you were tinkering with, but it didn’t go anywhere. But it is one of the ways that developers become entrepreneurs – starting to do contract work and building a product on the side. For someone trying to go down that path today, I would say you need to be a lot more diligent. There is a lot more learning that you can do today to figure out how to do that positioning. You have to be a lot more deliberate.

If you want to do bootstrapping using services, then get services projects in the area where you want to build a product and try to leverage that experience. That works better in B2B software than B2C. In your case, you used whatever service worked. That is a slightly different trajectory.

For those developers who are making the assumption that you’re going to get ad revenues, one of the lessons that you articulated is that it takes a while to get to substantial ad revenue. You’d need to create a runway to get to that ad revenue. You can do it with services projects, but you do need a runway to get to a point where you have enough traffic and monetization to sustain yourselves. I just wanted to call those nuggets out.

Matt Ramme: Right. Even if you then have that traffic, you’re not instantly going to get the monetization right away. They do better the longer you exist. You have to establish yourself. You need to hold on. At the same time, if you can build a product that people like and want to keep using, you got a shot.

Sramana Mitra: Thank you for your time.

This segment is part 6 in the series : From Developer to Solo Entrepreneur to $5M+ Revenue: Sporcle Founder and CTO Matt Ramme
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