Manuel Frigerio: Every company that I launch has the seed of my next company.
I think the reason why this happens is that, ultimately, being an entrepreneur is about fixing problems, right? And so when you have customers telling you about their problems every day, all day long, then you eventually start seeing patterns. That’s what, to me, entrepreneurship is all about.
Manuel Frigerio would never have built the referral marketing software ReferralHero, had it not been for the previous startup he built. One that ultimately failed. Despite the money he raised, and all the reasons it should’ve been a huge success. But as you’re about to hear, sometimes it takes building one business, to figure out what to build next.
I’m Lexi Grant and you’re listening to They Got Acquired. A show about life-changing business acquisitions, and founders, who don’t follow the Silicon Valley narrative.
Today, you’ll hear from Manuel Frigerio, a serial entrepreneur and developer who built ReferralHero, a marketing tool that helps businesses generate leads. You’ll learn how Manuel used a customer-first approach to build it—and how selling for six figures allowed him to move on to his next company. You’ll also hear a message about the M&A firm that supported him through the sale; that’s our sponsor for this episode, FE International.
Lexi Grant: When you sold ReferralHero it was bringing in mid-six figures in ARR (or annual recurring revenue) and you sold for six figures.
M: Yes, that’s right.
L: There was a quote that I thought was really interesting that you wrote “While I didn’t sell ReferralHero for a life-changing amount of money. It’s still enough not to have to worry about money for a long time. And, for someone like me, who doesn’t come from a rich family, it’s basically the same.” Can you say a little more about that?
M: Well, I didn’t grow up poor. I always had food on the table, but money was always a concern. Especially since my mom was a single mom raising two boys. She had a normal job and my father wasn’t the best when it came to contributing.
So, money was always a concern in my family. When I sold the business and I saw my money in my bank account, that was for the first time I felt sort of financially secure in a way that I’ve never felt before. Especially in a moment where I just had a baby and my wife, was going on maternity leave for at least a year.
Even though it wasn’t a life-changing amount of money—what is a life-changing amount of money? It is an amount of money that doesn’t make you worried about money. Right? That’s exactly what is selling the business. That money, for me, was enough money that I didn’t feel like worrying about money—not for forever, but probably for a long time.
M: I mean, I don’t really have a motivational quote. [laughs]
L: No, no, that’s good. Your story is motivational. You don’t need a quote.
As you can tell, Manuel’s a humble guy. He’s quick to lay out all the mistakes he made while building ReferralHero, but just as fast to appreciate the silver linings to all the twists and turns. For starters, he didn’t set out to be a developer or an entrepreneur.
When Manuel graduated from University in Milan with a business degree, he had his sights set on corporate business. So it seemed like a dream scenario when he got his first job at a large corporation. But for Manuel, it was a bit of a letdown.
M: It was just not at all what I wanted to do.
And his next job at a bank? Not so great either.
M: The job was actually awful. [laughs]
In 2012, after his job became victim to the financial crisis, Manuel fell back on his hobby of coding — something he’d done for fun since he was a teenager.
L: I’m wondering when you got interested in web development.
M: That’s actually a funny story. In my high school, we had one week a year where we could do whatever we wanted. And I wanted to join this gaming group, specifically. But, that day, something went wrong with the service. Someone said we can’t play this game—and we can’t play any game—so who wants to learn HTML?
Everyone was like: What is HTML anchoring myself? He started showing what that was. For some reason, that feeling of being able type something in a notepad that would appear on the screen was exhilarating. It felt like I was creating my own game, in a way.
That day, I remember I went back home and actually went to my local library and got a book on HTML. My mom wasn’t very keen on the idea. At the time, I didn’t even have the internet at home. I was homeless; I didn’t have the internet. I remember I copied and pasted the examples from the book by hand, character-by-character, and tried to reverse-engineer how they worked, and that’s how I got started.
One thing led to another and that’s how I really learned HTML, CSS, and JavaScript.
After my two big jobs after university [sort of] failed, I started considering coding as maybe something that I could do full-time and as a sort of life path. It was a good six or seven years between when I first started coding and when that became my life path.
So Manuel started freelancing, doing some WordPress work here and there. He still wasn’t sure what he wanted to do long-term, but he used his freelancing gigs to travel all over Europe, eventually landing in London because he wanted to improve his English.
Once there, he plugged into the startup community at Google Campus. That’s where he met a developer, named Anthony Francis.
M: He posted a job advert saying I’m looking for a co-founder for this “thing.” I was very new to the London startup scene and I wanted to meet people, so I said “Sure. Why not? It can be me.” And that’s how we became business partners.
The thing that Anthony wanted a co-founder for? It was a website called Campus Board, where people could post events, jobs, and requests for the startup community.
M: In no time, literally less than a month, everyone in that building was signed up to the platform.
Then, slowly but steadily, it expanded to the rest of the London startup community. Because, again, at the time, London startups were relatively small. There was probably an event a day—maybe even two—but there was no central place to find these things. And we basically built it up.
Campus Board was a hit. Manuel and Anthony had created something people really wanted. But there was one, not-so-minor problem: they hadn’t thought through how to monetize the website.
M: We made the classic mistake of first-time founders, which was that we had no idea how to monetize it.
We added some sort of sponsored pins because each ad was a pin and you could pay to be at the top. But that, of course, wasn’t a sustainable business; definitely not sustainable to pay for two people working full-time.
So, nine months into the project, the pair decided to pivot. Clearly, there was a huge opportunity in the event organizer market. They just had to figure out what, exactly, that opportunity was.
M: We realized talking to event organizers that the real struggle for them was to gather analytics—like engagement data about their attendees.
They had no idea how many people were returning attendees, how much money they’d made off of each attendee, or how much money they had made in total. And we thought: “Well, that’s, that’s interesting. No one is fixing this, so why don’t we do it?”
They landed on an app concept called Event Ninja and raised around $20,000 to create the prototype. The idea was to aggregate customer data from event ticketing platforms like Eventbrite. Event organizers would then be able to use this data to make strategic marketing decisions.
L: I read that Eventbrite actually reached out to you even before you built the prototype and then they featured Event Ninja on their homepage in the marketplace. So I’m curious what that was like.
M: Before we built a prototype, we wanted to be sure that we could actually build that product. So, we looked into Eventbrite and their APIs, and, at the time, they didn’t have a specific API endpoint that was crucial for this product to work.
We emailed Eventbrite saying, “Do you have any idea if you’re going to add this endpoint? Are you going to do anything about this or not?”
I got a reply from Partnerships at EventBrite.com and this person said, “We want to add this endpoint, but it’s quite a powerful one. We are revamping our entire API and we also want to add a marketplace. Why do you need it? What do you want to do?”
So, we got on a call with them. I explained exactly what we wanted to do, and they were super excited and gave us access to that endpoint before everyone else.
They were extremely supportive. They helped us with promotion. We were a guest post on their blog. They put us as a featured app in their marketplace.
But, unfortunately, that wasn’t enough.
[sad music]
Even though event organizers had said they WANTED a tool like this, and they had the support of Eventbrite, Manuel and Anthony just weren’t getting the kind of revenue they’d hoped for.
M: The vast majority of event organizers didn’t really care about this data. The number one priority was to grow—to sell more tickets. Even though they said they wanted data, in reality, this was probably priority number three or four. This was the first problem.
The second problem was that, even for those who generally wanted the data and knew how to use it, they weren’t willing to pay for it. This is actually something that happens often with analytic stalls.
People want to be able to go to a dashboard and find how much money they’ve made last month, but they’re not really willing to pay for that information. They think that it’s easy: there’s just a number on a screen. People don’t understand that, in order to calculate that number, there’s like a lot of work in the backend that the user doesn’t see.
The only types of event organizers that hypothetically WOULD be willing to pay for an analytics tool like Event Ninja were the larger and higher-end ones. But that market didn’t typically use Eventbrite as their ticketing platform.
Plus, Manuel couldn’t help but wonder… were they trying to solve the wrong problem?
M: One of the event organizers that we were helping with a vending job was a friend in London. One day, he asked, “Have you thought about creating some tools to help event organizers sell more tickets? Because that’s really what they want.”
There was one particular tool that Manuel’s event organizer friends wished they had access to, to sell more tickets: they wanted a way to create viral waiting lists. They had seen a new, mobile-only UK bank called Monzo use this strategy to generate thousands of new leads that were all referral-based.
M: They had this very interesting waiting list system where the more people you invited, the further ahead in the queue you would get. Every week, they would let in the top one thousand people. So, people had a big incentive to refer their friends, and a lot of event organizers wanted to use the same mechanism to sell more tickets.
But a tool like this didn’t exist yet for the event market. So even while Manuel worked on Event Ninja, he kept turning over this opportunity in the back of his mind. Until one day, he got an idea that he just couldn’t shake.
M: I spent Christmas with some friends and then the next morning, completely hungover, I woke up and had a “Eureka!” moment. I said, “I know how to do it. I know what a tool to help event organizers sell more tickets looks like.”
So, I built a prototype in four days—from the 26th until the 30th of December—and I gave it to a couple of friends who were event organizers. After a week or two, they said, “How much money do you want?”
It doesn’t matter how much you say I’m going to pay for it because the results were amazing. It literally didn’t matter how much I asked for it… they would always say, “Yes!”
I started with $29 and $49 and $99 and $199. I stopped at $199, but I could have probably gone higher.
Two months later, Manuel met a marketer named Kieran Goodacre. He was new to the startup scene and eager to help Manuel with this waiting list tool. Together, they launched on Product Hunt what would eventually become ReferralHero.
M: It was an immediate success. It ended up being the product of the day with more than 2,000 upvotes, which, even to this day, would be remarkable. I think, to this day, it is still one of the upvoted products of all time.
I was thinking, “What am I doing? I’ve got this side project that clearly resonates with people and is clearly profitable. Then, on the other hand, Event Ninja is really, really struggling. I don’t see the light at the end of the tunnel. So, what are we going to do? That was a real struggle for four months because I didn’t want to give up the idea of having Event Ninja. I thought it was a really good idea and we just needed to try harder and harder.
Don’t just brute force our way to success. Eventually, reality caught up with us and that was not going to happen.
In the spring of 2016, thirteen months after they’d launched, Manuel and Anthony decided to shut down Event Ninja. Even though it wasn’t the outcome they’d wanted, Manuel was able to look on the bright side: his next startup was already doing really well.
After the break, you’ll hear about the challenges that Manuel and his new co-founder faced as ReferralHero took off, how Manuel used a broker to sell the company, and the gap in the market that led to a brand-new startup — with yet another co-founder.
M: I laughed because a friend of mine calls me “The Player of the Start-Up World,” because I always have a different co-founder.
Stay with us.
AD BREAK
Are you planning to sell your business?
Consider reaching out to today’s sponsor, FE International, an M&A advisor that helps founders like you exit their businesses.
In fact, they’re the firm that today’s guest, Manuel, used to sell his business.
When is it worth partnering with an M&A advisor like FE International? When you need help finding the right buyers for your business, when you want to solicit more offers, or if you simply value having someone knowledgeable throughout the process who can do all the heavy lifting.
FE International focuses on SaaS, e-commerce and content businesses. To request a free valuation of YOUR online business, visit FEInternational.com, and say you heard about them on They Got Acquired. That’s FEInternational.com.
–
Hey, I’m Bobby Burch. I’m a reporter with They Got Acquired, and I’ve been covering startups and entrepreneurship for the last decade.
Did you know we offer so much more than this podcast?
On our website, you’ll see lots of stories explaining how founders built and sold their companies plus resources that will help you figure out how to go about selling your business. And soon we’ll be releasing insights from our database, tracking hundreds of deals under $50 million.
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END AD BREAK
L: How did you deal with fast growth?
M: The growth actually caught me by surprise in the beginning, especially from a technical point of view. The amount of data that I, all of a sudden, had to manage was. A couple of orders of magnitude more than I ever had to deal with before. Because of the way ReferralHero worked, I had to store the email addresses of people.
Because a campaign could go viral, even someone starting with just 10,000 email addresses could end up after a couple of weeks with 500,000. Handling that level of traffic and storing that data was a real pain.
I remember the dashboard was sometimes unusable for four days, because it was just down. You couldn’t access it. It was just too much data. I eventually hired a much better developer than myself to fix these things once and for all. But I remember it was a real pain for the first four to six months.
After these initial hectic months, Maneul decided to expand ReferralHero’s capabilities beyond waiting lists, so it could be used for all kinds of referral marketing.
But first, they had to make a pretty big change.
L: You originally called the tool something else though. Right? Then you rebranded it to ReferralHero.
M: Yeah. It was initially called maître which is this word—and no one can pronounce it, including myself because I don’t really speak French—I can’t remember for the life of me, why I chose to call it maître.
So “maître” is a French word for master. Like “maître d’” without the “D.” I must’ve said it somewhere, liked it, and chose it. I honestly don’t remember.
L: How did you then make the transition to “ReferralHero”?
M: That’s actually a painful story. Most people, including myself, didn’t know how to pronounce it. People would call it all sorts of different things. They would call it a matte, Madre, matrix. That didn’t bother me too much, initially. Then, after a couple of years, it was a bit of a running joke.
It was hard for me to do any sort of audio marketing—like podcasts—because I always had to spell the website letter-by-letter. Whereas, “ReferralHero” is two English words, so I didn’t have to spell.
L: Yeah. I think a lot of entrepreneurs, though, can relate to making this kind of mistake. I’ve done this too where I’ve named something—picked a company name that I didn’t love just to get it going and then had to change it later. It obviously didn’t hurt the growth of the product. Right?
M: It’s hard to tell. I think that it didn’t in the beginning. But, over time, as the market got more and more saturated, I think it did.
Apart from the confusing name and painstaking rebrand, figuring out how to meet the fluctuating demand for ReferralHero was also difficult. Three support roles cycled in and out over five years. And when Manuel’s co-founder Kieran decided to exit, Manuel ended up working on ReferralHero mainly on his own.
L: I think a lot of people would come up against a situation where someone they’ve worked with on a project ends up getting another opportunity, so they have to leave. Can you talk at all about how you navigated that and how you negotiated him leaving the country?
M: Sure. What was good about it is that, by then, I’d actually automated the majority of the processes. So, in a way, I actually didn’t need a full-time person doing marketing—not that he was working full-time, anyway. He was working part-time, but I was able to automate away the remaining 50%.
There wasn’t much of a “negotiation” in that I couldn’t buy him out. It just didn’t make any sense. So, I said to him, “I’m not going to pay you because you’re not working. But when I sell the company—because the plan was always to sell the company—you will keep every penny of your shares.”
And that’s exactly what happened. The conversation was a bit hard, but we’re two mature individuals and he totally understood where I was coming from. I understood his position, too. We parted ways in France, but we’re still friends and still call and talk to each other.
With much of ReferralHero automated, Manuel took advantage of the freedom and flexibility that his business offered. By this time, he’d met and married his wife. And together, they traveled as digital nomads all over the world. Manuel had time to follow through on another business idea, one he’d stumbled onto while working with ReferralHero customers. It was a tool for newsletter creators that he called Spark Loop.
M: I realized that a lot of people were using ReferralHero to run referral programs for their newsletters; they were trying to emulate The Morning Brew or The Hustle. But the tool was not really designed for that, despite the fact that it was a very manual process and they had to input their subscribers from one platform to the other.
They still wanted to do it. I was still willing to go through the pain and when I realized that, I thought, “Every time I see something like this, it’s an opportunity. When you see people, we need to go through the pain to get the result. That’s always a business opportunity.”
I talked to some of them and it was clear that what they wanted was a plug-and-play solution that just worked. They didn’t want to deal with the tech. They just wanted something to work, but none of the referral platforms were really designed for that.
That’s when Spark Loop was born.
Manuel co-founded Spark Loop with Louis Nichols, a growth marketer who believed in the product. Together, they convinced a number of prominent newsletter writers and brands to use Spark Loop — people and companies like James Clear, The Flipside, and Punchbowl News. That uptake continued to fuel the company’s growth.
By 2019, Manuel was in an enviable position that felt *familiar*: his side project, Spark Loop, had become MORE successful than his primary company, ReferralHero.
M: My wife and I found out that she was pregnant and, at the same time, my new business Spark Loop, was transitioning from being a cute side project to an actual business. I had to make a choice.
On the one hand, I could have kept “ReferralHero” and worked like 80 hours a week to run both businesses plus the baby. On the other hand, I could let it go and have more time to focus on Spark Loop and the baby. That was actually an easy decision because I felt like after five years my time with ReferralHero was over.
L: So you decided to use a broker. Can you talk about why you chose that route and what it was like?
Sure. The reason why I chose a broker was primarily time. The main pitch that the broker gives you is “Come with us! We’ll save you time. We know what we’re doing, so we’re not going to mess up. We’re going to do all the legal documents, et cetera.”
I was not worried about the legal aspect, but the time thing was actually a pretty big deal because, by the time I decided to actually move ahead with the sale, my baby was born. And, the first three months are absolutely brutal. I was so sleep-deprived that even the thought of finding buyers was too much. At that point, I was happy to pay a fee for someone to take that off my plate.
Years ago, Manuel had attended a startup conference where he met the founder of FE International. He was the first and only person that Manuel reached out to for help selling his company.
M: The way it works is that they first take a look at your business. You give them access to your Stripe and Google Analytics accounts and biometrics, and based on these metrics, they give you a ballpark figure for how much you can sell it for.
Say it will probably be between X and Y. If you’re happy with that, then you sign a document, a contract with them where they’re going to go and find buyers. They have a big database of investors and buyers, and they email these people once or twice a month. Plus they have a website and do events. They do the marketing for you, essentially. Then they will get people interested and vet each potential buyer to make sure that they’re not wasting your time or their time.
For example, they will require proof of funding; any potential buyer has to prove that they have enough money for the sale, for buying the business. That was super helpful because, in the end, I only had to talk to three or four interested buyers. That, of course, saved me a lot of time.
L: What percentage did they take and was it worth it?
M: They take 15% and, even now, when I say it out loud, it still feels like a lot. But, I think for the amount of work they do, it is probably worth it; especially if it’s your first time. It depends on your circumstances, right? If I didn’t have a baby, I would probably try and sell it myself. But if you don’t have time, and if it’s your first time, then it’s probably worth paying someone to professionally do it. Also, because they take a percentage of the final sale, they are actually incentivized to find the best possible deal. And I saw that when I talked to a couple of interested buyers, they were basically negotiating on my behalf.
FE International found a buyer who gave Manuel a six-figure offer. The deal was 85% cash up front and 15% paid over 12 monthly installments, plus a few weeks of support that were capped at seven hours a week.
L: I’m curious, what was important to you about those terms? Like what were you looking for?
M: For SaaS, it is really rare that someone pays you 100% upfront. The important thing for me was that it was upfront. The reason why the upfront was important was to reduce risk; because, let’s say the 50% was to be paid over two years—if they go out of business after one year, I don’t see that money. So, the more upfront, the better. At least for me, to reduce risk, but also because I wanted to get this money to reinvest in other things.
In the end, there were two strong offers. One was actually more money overall, but it was a longer payout period and less upfront. So I chose the more upfront, shorter payout period one.
L: Cool. You can’t say who the buyer was, but I’m curious because I always think it’s interesting when a buyer doesn’t want to be revealed. Like I had that experience myself. Can you speak at all to what might motivate that?
M: I don’t know. This wasn’t a PE firm or an investing finder, but the company was an individual. I guess in a way it is the same reason why most people don’t talk about their net worth. Culturally, you don’t do it because it might make you a target. I guess some people feel by telling the world that you bought a business for this amount, you’re basically telling them your network in a way.
L: That makes sense. Financial privacy.
M: Yeah.
With his new company, Spark Loop, gaining steam, Manuel’s happy to have ReferralHero off his plate. And after going through the acquisition process, he has some advice for other entrepreneurs who hope to sell one day.
M: If you want to sell your business, you’re not selling a business, you’re selling a machine. So you should automate as much as possible. You should either have a person in place or a process in place.
The tactics of growing and selling that machine are important. But you know what’s even more vital? Persistence. Which is easy to see in hindsight, but extremely difficult in the moment.
M: It always looked like a linear story from the outside, but it’s never like that. It’s never linear. There are ups throughout downs, sometimes the lows are really low and the highs are really high.
Looking back, I probably rationalize a lot of things that happened. But there were many dark moments. Especially when you know your business is not growing and you don’t really know what you’re going to do. I bet there are many people in this situation.
When I moved to London, I had enough money to physically survive for four or five weeks. Towards the end, like after four or five weeks, I remember I woke up in the middle of the night and I had just five pounds left in my wallet. If that gig doesn’t come through tomorrow, I have to go home and flash forward only a few years: I sell my business for, for me, a life-changing amount of money. That’s the thing I’m most proud of.
What stuck with me after interviewing Manuel was how he used each of his businesses as a springboard to the next opportunity. He leveled up with each passing business, integrating what he learned, stacking those blocks of experience and knowledge on top of one another. And he stayed OPEN to possibilities.
This is how you inch your way toward an exit, even when you’re not sure what’s around the corner. Even when you only have, five pounds left in your wallet.
Thanks for listening to They Got Acquired. I’m Lexi Grant, and if you want to learn about more business acquisitions like Manuel’s, go to TheyGotAcquired.com and sign up for our email newsletter. We share lots of resources for founders, professionals in the M&A space, and anyone who wants to sell an online business.
If you’d like to learn more about Manuel, look to the show notes for all the ways you can connect. And for more information on our sponsor, FE International, visit FEInternational.com.
This episode was produced, written and sound designed by Laura Boach. If you liked this story, please share it with a friend, and leave us a review on Spotify or Apple podcasts. We have more amazing episodes coming your way — and every single share and review helps us get the word out. Thanks again, and we’ll see you next time.
