Bootstrapping to Exit, Then Raise Money and Exit Again: Wendy CEO Lance Neuhauser (Part 3)

Sramana Mitra: The track that we have is bootstrapping using services, which your story also speaks to. Services companies bring in revenues very early and that helps a lot. So bootstrapping using services to exit is a wonderful track actually.

Lance Newhauser: It worked excellently for us. I’ll say it took us some time before we made those technology investments. And that’s exactly what they were—technology investments. To your point, we had service margins to work with, but we had to carefully consider where the money would come from if we wanted to invest back into future growth. It took incredible discipline to define exactly what we wanted to build based on a clear, predicted return on investment.

At one point, we asked ourselves: Are we going to shift more toward a technology-driven approach, like Performics did with DoubleClick, which eventually brought them significant value through acquisition by Google? Or are we going to stay primarily in the service lane? We felt it would be challenging to excel at both.

We felt we had to pick one or the other in order to remain excellent for our clients. Ultimately, we chose services with technological support. We didn’t sell technology etc.

Sramana Mitra: Hence the acquisition by Omnicom.

Lance Newhauser: Correct.

Sramana Mitra: Great. Are you at liberty to give us numbers?

Lance Newhauser: It’s been a long time. I don’t remember some of the numbers, but when we sold to Omnicom, we only had a few million in revenue in the single digits of millions of dollars.

Sramana Mitra: In two years if you have single digit millions in revenues, that’s excellent.

Lance Newhauser: Again, I could say we were genius. We just happened to step right into that.

Sramana Mitra: You had the right timing. Timing is key in business. You’ve to hit a new technology at the absolute right time, and you hit the nail on the head and you had service market fit.

Lance Newhauser: Yes, we’d service market fit, and we were willing to move aggressively and capitalize it once we found it.

Then, there was the earnout. Keep in mind, Omnicom were wonderful serial buyers. We were first time sellers, so they got a heck of a deal, but it worked out well for everybody involved. Three years later, when the acquisition was over, we were doing well into the tens of millions of dollars of revenue. I don’t know if we crossed into a hundred million yet, but Resolution Media went on to do significantly more than that in revenue.

Sramana Mitra: When you finished the earnout, how much did you and the other founders make off this deal?

Lance Newhauser: Not as much as one might think. I made enough money to get the taste of what success is like and enough money to invest in myself when the time was right to create the next company.

Omnicom didn’t let me go right away. After the earnout was over, they put me into a large role inside PHD, one of their major brand agencies. I was running digital there. It’s a great turnaround story where I walked into a situation where there was 40 people doing about $100 million in billings. By the time I left 18 months later, we were over a 100 people doing over a billion dollars in billings.

Some of that success was due to the way we worked, and some of it was simply about being in the right place at the right time. Around 2008-2010, companies started understanding how to leverage digital marketing at scale. And there I was, overseeing the digital practice for one of Omnicom’s largest media agencies, which proved to be a valuable experience.

This segment is part 3 in the series : Bootstrapping to Exit, Then Raise Money and Exit Again: Wendy CEO Lance Neuhauser
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