January 23, 2023

Lessons From Buying & Building 50+ Software Startups with ASG CEO Steve Reardon

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Our CEO Steve Reardon is a former startup founder who started his career at ASG leading one of our legal tech companies, and later taking on a group CEO role in our marketing tech vertical. In 2020 he became ASG’s CEO and today he oversees the buying and building of our entire community of companies. As we celebrate the milestone of 50 acquisitions, we sat down with Steve to reflect on his own journey from founder to operator to ASG CEO and what’s next for ASG. 

An interview with Steve Reardon, ASG’s CEO

Tell us about yourself — what was the personal journey that led you to ASG?

I grew up in Durban, a city on the east coast of South Africa, the furthest landmass from Silicon Valley. I studied finance and accounting and went into the retail business after college as a financial manager for a clothing company in Cape Town. 

I quickly moved from finance management into brand management, and I loved being an operator. I think there’s no better way to learn a business than interacting physically, one-on-one, with a customer who’s trying to buy a product that you made.

Around that time I started dreaming of starting my own company. I was passionate about photography, and photo printing was a growing industry, so I started Peldon Technologies to supply photo printers and all-in-one kiosks to pharmacies and retailers. I started with $1,000 in savings and went door-to-door selling my printers across Cape Town, Johannesburg, and Durban. 

Four years later, I had built a team of seven and had business across the three cities. I gained a real appreciation for being a founder; I handled every aspect of a small startup, from dragging my machine around to doing demos, running payroll, doing my own books, and hiring and training people. One of my learnings early on was that the founder experience is less about glory and more about lying awake at night worrying about making payroll. We ultimately sold to one of our competitors and had a pretty good outcome.

After I sold the printer business, I pursued a role at a business centered on another passion: golf. The Pro Shop Group was a big box golf retailer in South Africa that ran these large-scale golf retail businesses. They also had a business called PlayMoreGolf that aggregated unused tee times across hundreds of golf courses in South Africa and sold them to members. I was a member at the time and really loved the service. Unlike the traditional model of joining a golf club, you could join PlayMoreGolf and play a hundred different courses at off-peak times. They were looking for a general manager, so I applied and joined soon after.

That GM role was my first taste of managing a recurring revenue business. We looked at cost to acquire customers, monthly recurring revenue, revenue retention, churn, ACV per customer upgrades, downgrades, and everything else. I wouldn’t join Alpine and ASG for eight more years, but those early lessons set me up for my role today. 

Pretty soon, we looked for a focus area outside of golf. I was part of the team that looked at cycling as the next expansion. We led the acquisition of Cycle Lab Group, South Africa’s largest retail chain of cycling stores. Over time, we opened big box bike stores, including the largest cycling store in the Southern Hemisphere. We also added other elements like a cycling club and partnerships with bike parks. We aimed to create the three legs of the stool: retail, membership, and facilities, just like we had for golf.

Cycle Lab Group, (MoreCycle) was my first large CEO gig; we had a team of over 150 people and I loved it. 

You went from operator role to founding your own business and then back. How do you blend an owner and operator mindset? What do you like about running companies vs. being a founder?

My hot take is that they are not as different as people think. I hear some founders say, “I could never have a boss. I don’t like working for other people.”  At the end of the day, your stakeholders are the people that you work for. When you're a founder, your stakeholders are your customers and they have a direct impact on you, often even a direct line to you.

If you’re lucky and your business grows past the early stages, you will probably have investors and you might have a board. The thing that matters at that business stage isn’t whether you started the business or you’re running it — it’s that your incentives are all well aligned and you actually like those people, because whether you’re a founder or an operator not having those things be true will make your life very difficult.

When I was a founder I definitely ended up working for my customers. I could be playing golf on a Saturday and if a customer’s machine went down, they were phoning me. For me, the founder lifestyle was actually way more stressful and difficult than having a slightly larger, more ‘traditional’ job running a scaled company.

How did you wind up at ASG, and what roles have you held here?

As a family, we made the decision to move to the U.S., and in 2016 my wife, two girls, and I put our stuff in six duffel bags, got on a plane, and moved to California so that I could attend Stanford’s GSB. Stanford taught me a lot, but most importantly, it taught me about introspection, growth mindset, and knowing yourself. I can confidently say that the graduate program changed my life. And it’s also where I met Alpine Partner Matt Moore and the Alpine team.

I remember meeting Alpine Partners Mark Strauch and Will Adams during the interview process. We were talking about industries and I told my story about following my passions through the photo, golf, and cycling businesses before deciding I had a deep passion for developing people. I told them how I loved working with teams and growing businesses, and that I didn’t really care what industry I worked in as long as I was working with the right people. Will looked at me and said, “That’s exactly how we think about the world.” And I knew I’d found the right place.

In my early months at ASG, I led the third company we’d acquired, Bill4Time, which was based in Seattle. During my tenure, we completed several add-ons and Soumya Nettimi stepped in to run the business. Then I shifted focus to Traject, a marketing technology business, where we completed eight fantastic add-ons during my time. 

In 2020, I left Traject in Alice Song’s very capable hands and moved to the ASG level. Today I’m CEO of ASG, and actually Alice has also moved over to ASG as well and is leading our M&A team and Christina Martinez is running Traject. That’s one of the things I love most about ASG — there’s this incredible pipeline of talent, so when you’re ready to move into something new there’s always someone amazing to step into your shoes. 

Is there a moment that stands out from your time as CEO of Traject?

The most crazy and interesting time at Traject was the end of 2018; we completed six add-ons in 45 days. I had recruited a bunch of folks for upcoming M&A activity, but nothing had hit. Then in November and December, everything happened at once. I learned to lean on our team to step up and contribute. 

We developed a culture of real resilience and comfort with change because change was happening every day. In most businesses, that number of moving pieces would have put stress on the business, but we managed to turn the chaos into a positive. The team got excited about the rapid pace of change, and we recruited more team members who would thrive in a complex, evolving environment. As a result, we won lots of opportunities.

That pace of change meant we didn’t have a chance to second-guess whether we were doing the right thing or whether we should be moving slower. We would tell employees things like, “Katelyn, you’re now the head of Sales and Marketing for all of these businesses, and you have to figure it out.” There wasn’t a lot of time to think about whether we were making the right decisions; we always backed our strongest, most talented leaders and that always ended up being the right call.

What was it like to be a leader within the ASG community? What did you take away from that experience that you want to share with our community of leaders?

Being the CEO of an ASG company was amazing. Alpine Partner Mark Strauch has been my champion from the beginning. He’s a mentor and a coach who has helped shepherd me through my ASG career and he’s played a huge part in my success and growth as a leader. He’s always been able to put me in touch with folks who can help me along the way. Matt Moore has also believed in me from the beginning, he met a sarcastic South African in a Stanford library and somehow believed I could become a software CEO.

My experience leading Bill4Time and Traject instilled a belief in me that talent is the majority of the game. If you can field the best players, you’re going to win the game 99 times out of 100. When Soumya Nettimi took over as CEO of our legal tech vertical, she proved that a high quality, people-first leader could run a large software business despite being relatively new to executive management. 

She was a perfect example of why we believe attributes are greater than experience. She was so talented that she achieved incredible outcomes in a short period of time—better outcomes than any experienced operator might have achieved. Talent is such a systematic advantage — it’s structurally reformed the way I think about the world.

What do you love about running SaaS businesses?

I love the idea that you can manage a recurring revenue SaaS business in a very hands-on way through data and metrics. I’ve often thought if you give me four or five data points about a recurring revenue business, I can tell you immediately whether it’s working or struggling. And I’ve always been fascinated with the idea of using data to make minor tweaks or adjustments that can have huge ripple effects across the business. 

There’s a direct feedback loop, and they’re highly capital efficient, profitable, and can be real engines of growth. For example, if I increase the top of the funnel by X and keep the conversion rate the same, it will yield a new monthly recurring revenue (MRR) to this level. I love that these businesses are predictable and resilient; we saw that proven during the pandemic.

Tell me more about that — what was it like leading ASG through the pandemic and the landscape of the last couple years?

It was incredibly difficult and stressful is the blunt answer. I had worked through and run businesses during the financial crisis. But in previous recessions and downturns, there was something of a playbook for what it was going to look like. And in this instance, there was nothing like that. 

When you talk about leading through uncertainty, the pandemic was it. It worked out and we came out pretty unscathed — having those strong leaders who were incredibly good at running a business and managing a team was a huge part of that. But it was like nothing I'd ever experienced and certainly one of the most difficult leadership challenges I’ve faced in my career.

Something that went well for us and helped was that we ratcheted up communication. At one point we were getting daily updates on what all of our leaders were seeing in their businesses. I was up to date, our stakeholders were up to date, and our leaders were up to date — and while things were really uncertain, no one was alone. 

How has that shaped how you lead today and how you talk to our CEOs about running a business?

One of the things I've been thinking a lot about with our leaders is just always being ready for things to potentially get weird and hard in the business. I’ve been pushing them to have contingency plans that can answer: what happens if your growth slows 10%? What about 20%? How about 30% or even 50%? What would you do? How would you conserve cash? How much cash would you need? 

The pandemic taught us that we hadn’t given enough thought to planning for massive business interruptions. To get better at long-term contingency planning, you need to live in that mindset. You want to make the plan, put it on a shelf, remake the plan, put it on a shelf. We’re getting better at that now. 

What’s your day-to-day like as the CEO of a community of software companies?

My primary role is recruitment, retention and development of high-quality talent. I want to make sure that we support our leaders both professionally and personally. Folks are trying to build their careers, run bigger businesses and win. 

My job is to get out of their way and try to be a lightweight shepherd of their careers. I think of myself as a sounding board for decisions that have long-term consequences, or sometimes just another person to help think through a sticky strategic problem. 

I’m now also a custodian and allocator of capital. I spend my time thinking about the three phases of our companies: buying, building, and selling. Depending on which stage we’re in, I spend time differently. 

In the companies where we’re in early innings, we’re very focused on buy and build. 

In companies we’ve owned for a long time, we’re getting closer to the building and selling phase, and since I’ve been in this role we’ve sold Paradigm — the legal tech vertical I started in — and ImageQuix, our photo tech vertical. With those later-stage companies, I spend time thinking through how deals might be constructed and put together in a software vertical, and then I consider who might be the best fit to lead those verticals.

How do you know it’s time for ASG to sell a business? 

The primary rubric I think about is: would another owner be a better owner for the business in the current phase it's in? There can be a lot of reasons for that answer to be yes. A business can reach a scale where it needs tons of capital for the next stage of growth, it's ready to IPO in a few years, or maybe it really belongs with a bigger strategic player in the industry. 

Ultimately, it’s about what’s best for our people — including the team and our customers — and the legacy of our founders. 

What are the similarities or differences to a founder thinking about the same decision? 

I think it’s exactly the same rubric. Founders sell a business because they are generally not the best owner for it in its current phase. But the reasons why that might be true are typically different in a founder-led business.  

You typically see single-owner or co-founded businesses that don’t have access to institutional capital. They could go out and raise, but bringing on investors would mean they’d dilute their own equity while still having a lot of their personal financial risk tied up in the business on top of having a new set of stakeholders. So, it can be a lot more advantageous for bootstrapped founders to sell at the stage where the business needs a capital infusion to grow to the next stage.

Lifestyle can also be a factor. Being a founder is incredibly stressful and difficult. When you work on a business for 15 years it puts stress on you. If you have a spouse or a partner and kids, it can also put stress on your relationship and your family.

I think for a lot of founders — particularly of the types of businesses we are buying at ASG — what they love and what they’re great at is taking things from zero to one. When I reflect on my own experience as a founder, I’m actually better at the one to 10 or 10 to 100 stage. I’m just not a ‘zero to one’ guy. There are some rare people who are good all the way through from zero to 100, but they are a vanishingly small minority.

Hear Steve talk more about his background and how he looks at the differences between building a business from the 0 to 1 stage vs. the 1 to 10 or 10 to 100 stage on Built to Sell Radio.

Tell us more about when you went through a sale as a founder. What were your personal factors for selling?

With the photo business I was in a market where there were basically two companies supplying the same products. Because of the competitive dynamics that were happening in that place at that time, I felt like it would be better for someone to be the single supplier.

It felt clear to me that either I needed to buy that other business, or it needed to buy mine. The other founder was an older operator than me and he had a larger company with other business lines and was better capitalized. I was a little tired and I wanted a new chapter and to jump to a slightly larger scale. 

How have all of your experiences of selling a business — whether that personal sale or the exits you’ve overseen at ASG — influenced your thinking as a buyer of businesses?

When we go through the sales process, there is great information on why some people buy the business and others pass on it. For us as business builders and business buyers that has made me become more cognizant of the things that can maximize or reduce value. 

We've now tried to incorporate some of those findings into how we think about running, growing, and buying businesses. So we are asking questions like,  how durable is this growth rate going to be — not just for us, but for the next buyer as well? How wide is the M&A market, not just for us, but for the next acquirer? How large is TAM going to be? What are the industry tailwinds and headwinds that both us and the future acquirer are going to see? 

The exits we’ve had have allowed us to have real interaction with the markets to turn some of the theoretical underwriting we had historically into real practical firsthand experience of underwriting when we sell businesses. 

And our exits have also helped us prove our theory on talent. We seek to hire diverse, high-potential leaders. We know they’re the best in the business, and it’s been really gratifying to see the market catching up with that. Our management teams are a huge part of our value on exit and very desirable to new owners. 

ASG runs companies across more than 10 verticals right now, and that number will keep expanding. How do you approach being a leader of leaders in that many industries? 

We’ve been building more scale at our board level, which helps with that. My personal approach is that I like going into the businesses early when we buy, especially in a new vertical. When we place a new leader in a new vertical, they are going to go through rapid career development and personal development in the first three years, and that’s where I can offer high-leverage support for them and I think of myself as a sort of incubator board member in that phase. 

Then as those businesses and leaders become more established, I can take a step back. Having that early depth means that even as I step back, I can have some breadth of depth across all of our verticals further down the line.

When you’re involved with this many businesses, you need to be really good at deciding where to spend your time. What are some skills you’ve learned in this role you wish you had known when you were a founder (or an operator) of a single business?

There are two parts to that — one is time management, and the other is cognitive load. The second part of that is the hardest for me. I am time constrained, but I also know there are only so many parallel things you can be good at and know deeply. I think about that a lot. The more cognitive load you have, the more stress, and it's harder to find headspace to think. 

It's a constant challenge and I am always tinkering with it and adapting. You can’t run on autopilot — it doesn’t work and you wind up overburdened and being a bad partner to the people you work with. So it’s really an active, daily exercise that I’m thinking about where I don’t need to be, whether that’s in specific meetings or on boards of our companies. 

The other piece is that I have to be careful with how deep I go in these organizations. There are times in a meeting where one of our CEO could be diving really deep into a business update or something on the go to market side, and I will actually call time out and ask them to bring the conversation back to a higher altitude. 

You have to be disciplined with your time and your headspace. And I’d say that advice is really relevant for founders. You need to know what’s happening in a ton of areas in a business, but at a certain stage you need to be sure you’re flying at the right level and using your time and headspace where it has the highest impact.

The other big learning I’ve had is getting better at giving other people the spotlight and the mic and taking more of a backseat. I’ve always been relatively good at delegating, but I used to think of it as sort of a lazy practice and I wasn’t always as good at recognizing people as part of it. When you pair delegating with recognition and intentionally developing your people the goal and rewards for doing that become very clear and being disciplined there just keeps paying off — for you, for your team and for the business.

What’s next for ASG? What are you excited about?

We just passed 50 acquisitions, and that’s a great milestone. I think what we have been great at that’s gotten us there is the professionalization of our companies, particularly through M&A growth and talent development. That’s a huge part of our success in growing a single acquisition into a market leader across a whole vertical like we did with Paradigm and are doing with Radicle Health, Actabl, and Traject

For the future, my focus is on getting bigger and we’ll do that by scaling the things we’re great at and getting even better at the things we’re good at. I have a huge focus on organic growth right now. I don’t just want to be ‘good’ at it — I want us to be the experts. And I think we're going to do that because we're focused on it.


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