My Journey of Getting Writee Acquired: An Entrepreneur's Perspective - Part 1

My co-founder (Sk Shahnawaz) and I realised the power of Generative AI very early on (think early January 2022) and our goal was to make this revolutionary technology available to everyone in a package that was easy to understand and use. With this thought in mind, Writee AI was founded in February 2022 to eliminate the tedious parts of writing so that small business owners, freelancers and marketers could focus purely on the creative aspects of the process. My journey of starting up - the how's, why's and what's of the process are documented in my blogs which can be found here. This is Part 1 of a 2 Part series.

Background

ChatGPT, from OpenAI, launched in December 2022 and it took the world by storm. It in a matter of days became the fastest growing consumer app in history. ChatGPT made AI accessible to the masses and as luck had it, the world caught on to the impact that an AI can create in the workforce. AI as a field has always seen tremendous research interests but not as much commercial interest. Before December 2022, there were just a handful of pure AI companies, most companies either used AI to optimise their internal functions or had AI in some part of their product implementation. Artificial Intelligence as a service (or core offering) was relatively much rarer. After the announcement of ChatGPT, a gold rush began. Given how powerful the technology was, people thought that just about anyone could make a fortune with the power of AI. The gold rush brought in hundreds of investors and entrepreneurs, eager to make a quick buck off the new technology. While this crowded the market and made it almost impossible for users to separate the wheat from the chaff.

Gold rushes rarely lead to lasting wealth. I won't deny that there are a handful of people who created fortunes by conning investors & users in a short period, but those are a rarity. What builds lasting enterprises is the ability to wither storms or come out of them stronger (in the words of Taleb are either resilient or anti-fragile). I was certain that due to Writee's frugal approach and laser-eyed focus towards organic growth, we would stand out in the long run.

This stage is where I learnt a major life lesson. Just because I can survive something doesn't mean I should. Writee, in early 2022, was an innovative product that solved a very specific and pertinent problem. Writee, in mid-2023, had, in the eyes of AI-hyped users, become yet another AI tool that could do magic. Artificial Intelligence is the future of our world. It will make drastically change the way we live our lives, but the point of any technological advancement is to solve a specific problem. Using AI, for the sake of using it, can lead to added complexity which was what most AI platforms had started doing.

With this ever-growing trend in the industry, I had 3 options in-front of myself:

• Wait it out - Hypes die down within 8-12 months. Everyone who joined the space in search of gold is always left disappointed, while serious products that solve a specific problem survive. But the 8-12 months of complete insanity is very difficult to navigate through.
• Jump into the frenzy - It wouldn't have been ridiculously difficult for us to give into the hype and choose to raise enormous amounts of capital to lose it all. But, we could not knowingly choose to go a route where our likelihood of success was so low, no matter how attractive the short-term upside appeared.
• Exit - We firmly believe that Writee is an incredible product which solves a real problem. Why not hand the product over to someone else to take it on, and make all of our efforts worthwhile?

As it is obvious from the title of this article, we chose to exit. I was 19 when I started Writee. I had no idea what to do, but I was determined to make it work and learn along the way and I did. But, at a certain point, the value you get in return from the work you put in is not worth it. At the age of 20, I do not need to fight against the biggest companies in the world for a small space in the market. I can potentially achieve the same or higher market shares in industries that are significantly less competitive.

With all of this in mind, around the end of April 2023, we decided that it was now time for us to EXIT.

Pre-acquisition Planning

The first step in the acquisition process is to set-up expectations for yourself. We were incredibly off-mark with the expectations we set for ourselves. It wasn’t that we were naive, our expectations stemmed from thorough user research and an in-depth understanding of the technological landscape of the day. What we didn’t take into account was the host of “AI-powered” products that had cannibalised the market.

Through the 2 months in which Writee was in the market for acquisition, our expectations went up and down more times than we can count. It is important to set ourselves up mentally to be resilient to the emotional rollercoaster.

Coming back to the days before we listed Writee, we decided to choose the asset sale route instead of the company sale one. The basic difference between the two is that in an asset sale - I am selling the product, it’s code base and it’s IP to the buyer (these are my assets). In a company sale - I am basically selling the shares of my company to a buyer and transferring ownership. There were 2 reasons for this:

1. We were looking at a potential acquisition from a US-based entity. Doing share sale with an international is a major compliance hassle which we wanted to avoid.
2. The benefits of a company sale, in my limited experience, comes from a potential merger between companies or even as a subsidiary of a larger company. We had decided against this. While we aren’t opposed to the idea of a larger corporation buying us out, it required a very different skill set and a larger team (including legal) to be able to pull that off. Given our expectations from the sale amount, we believed that an up and coming entrepreneur taking our product and making it their own would be a better path for us to take.

With these in mind, we started looking for platforms and places to get Writee acquired. There is an undisputed leader in this space: acquire.com, it makes it incredibly easy for you to list your product and talk to potential buyers. I spent a couple of hours working on my listing and had it online within one day.

I waited with bated breath for 4 days to get a miraculous offer but as it turns out, things take time. To get Writee out there to more people I listed Writee on flippa.com too, which is another great place to get your tech business acquired.

Through weeks of research on these acquisition platforms, one thing was very clear - your innovation is worthless here. What matters the most in this space is the number of active paying customers or your revenue. This made complete sense too. People on these platforms are either looking for new start-up ideas or are looking for a stable new revenue stream. They are in most cases not looking to build the next unicorn. This is not true in a very specific use case and if you fall in that category, you almost certainly know what drives the boat for you, but for almost everybody else - FOCUS ON REVENUE if you are hoping to get acquired through these platforms.

There are more nuances and details to this, but I’ll take them up in a separate article discussing Acquisitions for small and medium sized startups as whole.

In the next part, I'll go into stories from journey negotiating with multiple different people, some fun, some not so much. Stay tuned for real life stories from the trenches!