Entrepreneurial success stories often begin with significant challenges, and John Rush's story is no different. When John purchased the no-code website builder Unicorn Platform for $800,000 in June 2022, he faced immediate drawbacks. The monthly recurring revenue (MRR) dropped by 12%, churn rates increased, and technical issues plagued the platform. Yet, John’s perseverance and strategic thinking paid off, transforming the business and boosting MRR by 44% to $23,000 within two years. This article explores John’s journey, shedding light on the strategies he used to overcome these challenges and achieve success.
John’s background in startups
Before acquiring Unicorn Platform, John Rush had a wealth of experience in the startup world. He had been a founder, co-founder, CTO, or CEO of 30 startups, navigating some of the world’s top accelerators and securing funding. However, his experience with acquisitions was limited to a small transaction involving an icon directory ten years prior.
In early 2022, John was contemplating starting a business focused on no-code website building when he discovered Unicorn Platform. He liked the tool and even used it himself. After learning that the founder was interested in selling, John made an offer of $800 000, which was about five times the trailing twelve months’ revenue.
Immediate setbacks after acquisition
The excitement of acquiring Unicorn Platform quickly turned to concern. Shortly after the acquisition, the MRR fell from $16 000 to $14 000, and churn rates spiked. Users were frustrated with technical issues and frequent downtime, leading to a wave of cancellations.
The codebase, developed by the previous owner, proved challenging to maintain. The founder, who continued to work for John post-acquisition, and his team lacked the expertise to fix the problems. John had to bring in his own developers to stabilize the platform and address these issues.
Moreover, the departure of the original founder, whose personal brand was closely tied to the business, caused further customer cancellations. John’s initial hands-off approach, hoping for organic growth, only exacerbated the situation.
Gathering user feedback
Realizing that changes were necessary, John decided to gather feedback from users. Using Crisp for support, he sent automated emails to both canceled and active users, gathering insights from over 200 responses. The feedback revealed that users were frustrated with the slow pace of development, believing that no new features had been added in over a year.
With this valuable information, John and his developer embarked on a two-week "hackathon" to improve the platform and accelerate feature development. They also focused on better communication with users about these updates, which helped rebuild trust and engagement.
Boosting SEO and social media presence
John understood the importance of promotion and decided to invest in SEO and social media efforts. In April 2023, he began adding SEO-focused content to the site, which quickly boosted traffic. At the time of the acquisition, Unicorn Platform had significant social media mentions from happy users. However, by April 2023, these mentions had dwindled, prompting John to take a more active role in social media marketing.
Starting with just 72 followers on his personal Twitter/X profile, John shared stories and insights about his journey, promoting his brand alongside Unicorn Platform. By the end of 2023, his efforts paid off, and he amassed over 17 000 followers, significantly enhancing the platform's online presence.
Achieving remarkable growth
By the end of 2023, Unicorn Platform's MRR had grown to $18 000 per month, surpassing the acquisition's MRR by $2 000 and recovering from its post-acquisition low. In March 2024, less than two years after the acquisition, MRR reached $23 000, marking a 44% increase since John took over.
Today, John manages Unicorn Platform with a lean team comprising one developer and one support agent. He works on the business part-time, balancing it with several other projects.
Lessons learned
John Rush's journey offers several valuable lessons for those looking to buy and grow online businesses:
- Understand the owner's influence: John's experience underscored the importance of the original owner's role in the business. Many customers were more connected to the founder than to the brand itself. Future buyers should consider how the departure of a well-liked owner might impact customer retention.
- Active promotion: One of John's initial mistakes was assuming the business would grow organically without active promotion. His proactive approach to SEO and social media significantly boosted growth and engagement. Aspiring entrepreneurs should not underestimate the importance of continuous promotion and user engagement.
- Due diligence and risk management: John learned the hard way about the importance of thorough due diligence. Significant issues with the codebase and the platform's stability were not apparent during the acquisition. Prospective buyers must conduct meticulous due diligence and be prepared for potential challenges.
- Swift transition to your own team: John's experience highlighted the need for a swift transition to a new team post-acquisition. He advised against keeping the former founder involved for an extended period, recommending a complete handover within 30 days to ensure smoother operations and avoid dependency on the previous owner.
- Leverage user feedback: Gathering and acting on user feedback was a turning point for John. Understanding customer needs and addressing their concerns can lead to improved satisfaction and retention. Entrepreneurs should prioritize open communication with users to foster trust and loyalty.
Conclusion
John Rush's journey is more than just a business turnaround story. It's a reminder that in business, initial setbacks don't have to be the end.
From a scary 12% drop in MRR to an impressive 44% growth in less than two years, John's experience shows what's possible with the right mindset, strategies, and a lot of hard work.
So the next time you face a business challenge, remember this story. Because sometimes, the biggest successes come from the most unlikely beginnings. The only question is - are you ready to roll up your sleeves and make it happen?
