Insider Access: Privy's biggest learnings from their acquisition by Attentive
Insider Access: Privy's biggest learnings from their acquisition by Attentive
Privy was down to $1,000 after a failed acquisition prior to Attentive acquiring them last week. More money, more DTC rollups. And SoftBank picks a few more (future) winners.
“Insider Access” is where I talk with founders and CEOs, as they share with us what actually happened and the why behind the most pivotal moments in their company’s history.
Last week, we had Adii Pienaar, who shared his stories behind the “accidental” founding of WooCommerce and his most recent company Cogsy. The week prior, we had Alek Koenig, the first-time founder of Settle, who raised two rounds in less than six months from multiple top tier VCs.
This week, we have a fan favorite CEO in the ecommerce world: Ben Jabbawy.
As the CEO and founder of Privy in 2014, Ben faced a failed acquisition that left his company with $1,000 in the bank. Fast-forward to last week, he led Privy to a successful acquisition by Attentive.
Continue below to read how this acquisition came to fruition and what Ben did differently this time around…
Casey Armstrong: First off, huge congrats! You founded Privy over ten years ago and just announced your successful acquisition by Attentive. Your reputation in the space was showcased as my Twitter and LinkedIn feeds seemed dedicated to you for a few days. I’ve never seen it like that. What is one soft skill or trait as a CEO and leader in the ecommerce space that you over index on and why?
Ben Jabbawy: Trust. If I could boil ten years down to the most important ingredient, it would be trust.
Customers need to trust you and your brand. The way I seeded that early was by going above and beyond when I was doing customer support, even for free users. The team we have today has taken that to a whole other level. It’s insane. One of the things I’m most proud of from the Privy brand.
Investors, they need to trust you. Only a handful of Privy’s investors were institutions. The rest were individual angels, family, and friends. They trusted me with their money. I spent years building, and dreamt about the moment I got to call them about a huge return.
Casey's note: Ben got to see his dream become a reality!
That dream motivated me through some horrible downs in the business, well before the Privy everyone here knows and loves.
Team. When an employee joins a startup, they are trusting the company, the founders. I took that seriously. They spent months or years of their careers, here, working on our shared mission. That’s a hell of a responsibility for you as a founder. Just like for my investors, I dreamt about the moment we got to notify the team that all their blood sweat and tears was being recognize.
CA: What is the craziest or most ridiculous situation that you found yourself in with Privy that you can now look back on and laugh?
BJ: In 2014, we were in a really tough spot: money running out and had 2 acquisition offers on the table. Made the decision to choose one of the deals, run through the process, and then I got a call that the deal had “lost executive sponsorship.” I got that call the day we were supposed to close saying the deal was off.
We had $1,000 left in the bank. I remember that day vividly. I couldn’t sleep for weeks, couldn’t eat.
I remember every phone call I made that day, to my brother, to my wife, to my advisor, and then I had to muster up the energy to walk into the office and tell the 10 Privy employees that all the jobs we thought we had lined up just got pulled.
Excruciating doesn’t even cut it.
But I also look at that day as one of the most important days of my career, and for Privy. That was the event that forced me to dig deep, with my back against a wall, and rebuild from scratch.
And that’s what we did. From 2015 to 2021, we just saw insane year over year growth, and the deal with Attentive, well, was for just a little bit more.
CA: With the acquisition, what was the most difficult part of it and what went most smoothly?
BJ: I can only speak from experience. We were fortunate enough to have a few offers in front of us. But the relationship and synergies with Attentive were just so much more exciting.
And every step of the way, as I met more and more from the Attentive team, I was just blown away at how great everyone was, and the strength of that company. It’s insane. Unlike anything I’ve ever seen before.
And I was actually enjoying spending time with everyone there. Even the tough negotiation conversations around deal points were a blast and we found ourselves laughing throughout.
I’m very thankful for all that.
Honestly, the most tense points of the deal were deciding between the offers, working with the Privy board of directors to evaluate each, and making sure that each stakeholder was getting what they wanted in a potential deal.
Then the diligence and getting to know each other phase was amazing. So fun to help get another company up to speed on the guts of our business. It was a great exercise.
And the final moments were intense, not because of the deal or Attentive, just trying to help employees and smaller investors understand what was happening, and get them comfortable signing legal documents they know nothing about. Again, another major lesson on how important trust becomes in deals like this.
CA: As you shared, you’ve gone through the acquisition process before and it didn’t end well. Going through it this time, what did you look for early on to put yourself and your company in a favorable position?
BJ:
I’ve had 3 term sheets pulled... good times.
Each helped me understand what a good deal felt like. True strategic alignment and incremental synergies. Making sure their board was bought in ahead of the deal and that Brian Long (Attentive’s CEO) and I were doing the deal together.
Every minute of this deal felt different than all the others I had explored in the past.
CA: With the acquisition market heating up in the ecommerce space, what’s your #1 piece of advice for founders who are being courted by another company?
BJ: Always be open to conversations. You never know where they will lead. Each of the offers we got came from companies and CEOs who I had a history with. Two of the three were integrated partners.
Even if you don’t think you want to sell, constantly be building these relationships over the years.
And put yourself out there. Don’t assume people know whats happening at your company. Share updates on customer counts, revenue growth, traction, in public.
Over the years I’ve shared more than I’ve held back.
Never once has that hurt me. You realize there are a lot of people watching, even if they don’t hit “like”.
CA: To close this out, I have to thank you again for taking the time to share your story and advice. You mentioned that you’ll stay on as CEO of Privy and that it’ll operate independently. What can you do now that you couldn’t have done before by joining forces with Attentive?
BJ: Attentive believes in Privy’s small business focus. Our support model. That was huge for me. On top of that, Brian is the best fundraiser I have ever seen. With Privy becoming a standalone division for Attentive, that means I get to put every ounce of energy into what I love, helping customers and building product. I don’t need to worry about where the money comes from, I can focus on building and hitting big goals. This is huge. And it means we’re going to be hiring a ton of new roles focused within Privy.
I’m pinching myself. You don’t find deals like this often.
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Fun fact: I first Ben over lunch a couple days before Shopify Unite. That was in June 2019.
I look forward to seeing him and many more of you in person this year.
The State of Ecommerce
What’s happening in the ecosystem? Who’s up? Who’s down? Who’s building the future?
Netflix and shop: Checkmate on linear commerce.
(Hat tip to BVA on the build.)Shopify invests in Stripe a day before taking Shop Pay beyond Shopify: That was fast. Just a day after it was announced that Shopify was one of a few select investors that contributed to Stripe’s latest $1B raise, they shared that Shop Pay is the first product to extend beyond Shopify merchants.
Gopuff zags, while others zig: As every tech company wants to be a bank, Gopuff launches their ads business, emulating others like Amazon, Walmart, and Instacart.
The (lack of) supply chain: Dog food, coffee, cars, sunflower oil. Elevated out-of-stock issues are affecting all types of businesses around the world. Most Tweet threads should not be unraveled, but this is a must read from Digitally Native.
Employment hits lowest numbers since the pandemic: States are starting to announce an early end to extra federal benefits, so keep an eye on the labor markets as carriers and logistics companies, along with Amazon, Walmart, and Target, look to fill many open roles.
Boxes, trucks, and bikes: What if instead of looking at the product category and the buying journey of ecommerce to measure penetration, we looked at the logistics model?
Stripe, Shopify, and ShipBob invest heavily in carbon removal: As ShipBob makes their global fulfillment network carbon-neutral, others help lead the green movement.
I guess I was quoted in the WSJ: Ecommerce continues to surge around the world. Thanks for the mention, Jen.
Acquisitions & IPOs
Liquidity events fuel the market, drive new innovation, and create new founders with deep experience and even deeper pockets. Who’s getting acquired? And who’s going public?
Tone: Following their acquisition of Privy, Attentive swooped in for the SMS sales engine based in Boston.
Should we see if Tivan will join us for Insider Access next week?Modalyst: After acquiring Rise.ai and Zeekit over the last few weeks, Wix acquired Modalyst, a US-based dropshipping platform for an undisclosed amount. They were also a portfolio company of Wix Capital.
Paula’s Choice: One of the early innovators in science-backed products and the direct-to-consumer movement, Unilever acquired Paula’s Choice. The amount was not disclosed by Unilever, but rumors place the acquisition at $2B for a 6.5x exit.
Thrasio: After raising close to $2B in the extremely hot ecommerce rollup space, Thrasio is in talks to IPO via one of Michael Klein’s SPACs.
Flink: Just six months after launching and raising $240M in funding, the Berlin-based delivery startup is being courted by Amazon and Gopuff.
Dingdong: The Chinese grocery delivery company has filed for an IPO and is targeting a valuation of at least $6B on $1.7B in revenue with $485M net losses in 2020. They have raised over $1B from SoftBank and others.
Missfresh: Another Chinese grocery delivery company has filed for an IPO on $915M in revenue with $251M net losses in 2020. They operate 631 “distributed mini-warehouses” in 16 cities. They have raised ~$2B from Goldman Sachs, Tencent, Tiger Global, and others.
Boxed: The New York-based bulk buying site for groceries, household products, and health supplies is going buying via Seven Oaks Acquisition’s SPAC. Starting in 2013 from a two-car garage in New Jersey, Boxed has raised $243M from GGV Capital, Greycroft, and others.
Full Truck Alliance: The Chinese platform that connects shippers and truckers has filed for an IPO that is targeting a valuation over $20B. In 2020, they reported $25M in profit on $396M in revenue. They have raised $3.6B from SoftBank, Sequoia Capital China, Tencent, GGV Capital, and others.
Following the Money
Who are VCs betting on to lead the future of ecommerce?
Klarna: As mentioned last week, the Swedish-based payments platform raised $639M in funding at a $45B valuation led by SoftBank. Live in 20 markets with 90M global active users, Klarna is seeing over 2M transactions per day and saw $6.9B in purchases made through their platform this March.
Oda: The Norway-based online grocery startup raised $271M at a $1.2B valuation led by SoftBank.
Faire: The online wholesale marketplace founded in 2017 raised $260M at a $7B valuation led by Sequoia Capital with participation from Lightspeed, Founders Fund, Khosla, and Forerunner Ventures.
Moonshot: The ecommerce rollup company raised $160M from Y Combinator, Liquid 2 Capital, Garage Capital, N49P, and Victory Park Capital.
Stackline: The Seattle-based ecommerce data company raised $130M Series B led by TA Associates. They help more than 2,000 brands including Sony, Levi’s, and Starbucks with ecommerce market data, advertising automation, and operations management tools.
Pattern: Pivoting to buying brands, the ex-Gin Lane founders who now run Pattern have raised $60M in equity and debt from Victory Park Capital, Kleiner Perkins, and others. They have currently incubated Open Spaces and Equal Parts.
Hungryroot: The New York-based grocery delivery company raised $40M led by L Catterton pushing their valuation to $750M.
Grabango: The checkout-free technology company raised a $39M Series B led by Commerce Ventures with participation from Founders Fund and Unilever Ventures.
Nate: The New York-based shopping app raised a $38M Series A led by Renegade Partners with participation from Forerunner Ventures and Coatue.
Kafene: The Buy Now Pay Later startup that focuses on the subprime consumer raised $14M led by Global Founders Capital and Third Prime Ventures.
Circulor: The London-based CO2, supply chain tracing company raised a $14M Series A led by the Westly Group.
Loupe: The live ecommerce streaming platform for sports card collectors raised a $12M Series A led by Forerunner Ventures. I may or may not have purchased a couple old basketball card boxes on eBay with a friend. We’re opening them up tonight. Here’s to unboxing a mint MJ or Harold Miner rookie card (IYKYK).
Trucks VC: A fund that focuses on early-stage transportation startups raised $52M for two funds.
The Chernin Group: A VC firm that focuses on consumer brands in media and tech (“linear commerce”) raised $1B, while adding three new partners: Maureen Sullivan, Luke Beatty, and Jarrod Dicker.
Eight Sleep: The sleep fitness company raised money from everybody “cool” on Twitter.
Companies to Watch
Each week, I’ll highlight a couple companies in the ecommerce technology and brand space that stand out to me. If you have suggestions, please reply to my email or DM me.
Ecommerce Technology
One of my favorite technologies that I started using over decade ago is Zapier. They allowed non-technical operators like me connect disparate technologies in minutes and automate tasks to reduce hiring needs. I still use them heavily today. But there has been a gap connecting the nuances of ecommerce and that’s where Alloy fits. In less than a year, they are becoming a cornerstone for all ecommerce tech roadmaps. Check out their recipes to make your life even easier. It’s tough to find a company building faster.
Ecommerce Brands
If you’ve ever watched our Operators Series, you’ve likely seen me eating during the call and 99% of the time it’s a Verb energy bar. My favorites are the coconut chai and vanilla latte. Not sleeping enough, kids, and eating between video calls makes them a staple.
In Closing
At the beginning on the year, I gave my 2021 forecasts to CommerceStacks. Before July, I’ll grade myself 6 months into the year. If you had any forecasts for the year or want to troll me on mine, please reply.
Best,