While Jake Brodsky recently shared his perspective of selling Paradigm to Francisco Partners, today we’re sharing the perspective from some of Paradigm’s founders.
We had a chance to sit down with Sarah Schaaf (who you’ve met!) co-founder and CEO of Headnote, and David Bitton, co-founder of PracticePanther to take a behind-the-scenes look of starting and growing their companies, trusting its potential with ASG and overseeing its exit to Francisco Partners.
For background, David Bitton and Ori Tamuz sold PracticePanther to ASG in 2018 (which later merged with Bill4Time, MerusCase and Headnote to become Paradigm). Since then, David and Ori have founded a new company called DoorLoop. Sarah and Thornton Schaaf sold Headnote later in 2020 to Paradigm, where Sarah is now an integral part of Paradigm as its General Manager, Payments Division.
Let’s start with an obvious one – ASG recently sold Paradigm – how are you feeling?
David: I’m humbled by how large the company has become and truly grateful for leaving the company in such capable hands with the entire team at ASG. I never would have thought in my wildest dreams how big the company would be. It’s been beautiful watching the positive impact it’s had on people’s livelihoods and careers from both our customers and team members that have grown personally, professionally and financially.
Sarah: I’m incredibly proud of the entire Paradigm team. So many people spend their entire careers without getting to experience the type of growth we’ve seen at Paradigm over the last 18 months. I’m also especially proud to be part of the founding team that built Headnote along with my co-founders, Matt Crampton and Thornton Schaaf. As an entrepreneur, you dream about building something that will be used by so many people, and working with an amazing team to grow and scale your vision. It’s been incredibly exciting and serves as a real validation of all the hard work and collaboration that so many people contributed.
What was the motivation behind starting your business?
David: We simply wanted to make a better and easier software for our wives that used outdated programs and couldn’t find anything good to run their own law firms. When we saw the market size, market need and current competition, we knew we could do it better and capture market share.
Sarah: I spent my entire life working in and around the legal industry and wanted to create something that would change the way the industry operated by starting with one of the most important things a law firm needs to operate as a healthy business – getting paid easily and efficiently. Headnote was created based on problems and challenges I experienced as an attorney, and a desire to bring upleveled technology and user experience to law firms of all sizes.
When did you decide it was the right time to sell your business to ASG?
David: We weren’t looking to sell our company at that time as we still had more to grow. ASG was one of the few companies that was willing to work creatively with us and find a solution that would benefit all parties. When we saw how much they cared about us and our team and wanted to invest in our people and growth, we knew we found the right partner.
Sarah: I’m an entrepreneur at heart and Headnote was a venture-backed business from its early days. I was on a path to continue to grow Headnote as a more traditional Silicon Valley-based company until we started talking to ASG. It became clear right away that we would be able to fulfill our mission of changing the way law firms get paid remarkably faster by partnering with ASG. After meeting with ASG and the Paradigm leadership, we aligned on a shared vision and mission and never looked back.
What were your main considerations when evaluating different buyers? What made you decide to go with ASG?
David: On one hand, all founders look for the most money they can get. On the other hand, they also want a smooth and professional transaction with as few surprises as possible. We also wanted to see the company left in capable hands with an easy transition. ASG checked off all our boxes and more, so they made the decision easy for us.
Sarah: It was important to us to partner with a leadership team that was truly accomplished, had been operators, truly understood what it was like to be a founder and share our vision. ASG had a great reputation in the legal technology industry and had tens of thousands of law firm customers between the three existing Paradigm Legal Practice Management businesses (LPM’s). Because of that we knew we could greatly accelerate our growth and mission by partnering with ASG.
What was the first year like post acquisition to ASG? What surprised you?
David: It’s definitely a surreal experience not being the captain running your own ship anymore. What surprised us was the talent ASG brought to our team and how much they actually stood behind their “PeopleFirst” motto. All companies in any industry can benefit from the massive amounts of shared learning from ASG’s portfolio companies. All the CEO’s and Executives in Residence lean on ASG’s vast network of members to help guide them in their journey. When everyone works together and cares about your business, it’s a win-win for all.
Sarah: Post-acquisition, I joined the Paradigm leadership team and we found ourselves living through a global pandemic with many shared challenges to solve quickly. Nothing about that time was “normal” for anyone, so we tried to stay nimble and do everything we could to support our team and their families. It was a difficult time for so many people, and I was incredibly humbled by how everyone pulled together and made the Headnote team feel like part of the Paradigm family even though we couldn’t meet in person. Even today there are people on the Headnote and Paradigm teams that I collaborate with on a daily basis and have only ever met virtually! That was certainly surprising. I continue to be impressed at the resilience and agility of the entire team, and how we’ve evolved together to become even more productive under such strange circumstances.
Your business has gone through a few life cycles with ASG – from joining ASG LegalTech to introducing the Paradigm brand, to now transitioning ownership again. What has it been like to watch your company live through each of these moments?
David: It’s like watching your child grow up in the real world. When we first sold PracticePanther, it was like our baby graduated from High School and was going off to College. When they acquired more companies and rebranded as ASG LegalTech, it was like our child graduated from College and was getting their Master’s degree. And when they rebranded as Paradigm and were acquired again by Francisco Partners, it’s like they’ve completed their PhD and are now conquering the world, ready to handle any challenge that comes their way.
Sarah: Exciting and certainly never boring! It’s been so incredibly exciting to watch what we built at Headnote scale into Paradigm Payments. We joined ASG LegalTech essentially in a virtual world and watched our team integrate with the larger organization. I’m still amazed at how much we accomplished virtually in those early days including multiple product integrations between teams that had never met or worked together prior. Working with the leadership and marketing teams to rebrand ASG LegalTech to Paradigm was exciting and extremely creative. Being a part of the transition from ASG to Francisco Partners has been truly energizing and validating. Throughout all of these periods, the Headnote team has stayed connected and maintained their own identity while seamlessly blending our culture with Paradigm’s to create one unified team and vision. It’s been an extremely satisfying experience through and through.
We understand handing the reins of your business is challenging, what advice would you offer SaaS founders during the M&A process?
David: Do your best to make the transition as easy as possible for the incoming team and CEO in residence. The more you help them, the more the company will succeed. The sooner you let go and give up control, the better it will do. Put as much documentation together on all the processes, procedures and knowledge in your head to make it easy for them to run your ship (I’ve found that video tutorials are even better!).
Sarah: It can be really challenging to imagine “handing the reins” to your company over to someone else, but I think that’s the wrong way to think about it. To me, it’s more a matter of successfully handing off the baton to the next team member in the relay. Every company has different stages and an eventual evolution. If you’re ready to hang off the baton and bring in some other value-add team members to help carry your vision forward, make sure you find people to partner with that are smart, but more importantly, are good humans. Any round of funding, transaction, acquisition or large scale partnership is like a marriage or long-term relationship in many ways. Make sure you choose someone that you’d want to be in a foxhole with when things inevitably get tough.
Anything you’d like to share with other founders?
David: ASG is the real deal. They will take good care of you and your people. You will feel like you’re part of their family forever and they will also take good care of your business and legacy. If we had to do it all over again, we wouldn’t have changed a single thing.
Sarah: I continue to believe the most important characteristic you can have as an entrepreneur is perseverance which also often shows up as resilience. Whatever you call it, keep going but follow the data. Don’t be afraid to pivot if it helps you keep moving in the right direction. Most founders I know are smart and hardworking, but the ones that end up succeeding are the ones that figure out how to keep going despite being knocked down.
Anything you’d like to share with customers?
David: Thank you for continuing to take this journey with us and standing by us from day one when we were just the little guys. I know you’re going to continue being in great hands with people that truly care about your growth and success, and will continue building great products to help you succeed.
Sarah: Founding Headnote and watching it become a trusted part of so many law firms daily operations has been an incredible honor. Thank you to all of our customers for your unwavering support and confidence in the Headnote team and technology.