What SaaS Founders Get Wrong About Growth and Funding - A Candid Conversation With Greg Head of Practical Founders

Unknown: M Today I'm joined by Greg Head, the founder of Practical Founders. We will explore the DNA of a practical founder, the growth metrics that actually matter, and how to navigate the high stakes decisions leading up to an exit. Welcome to Bootstrapped the Lighter side, the podcast for B2B startup founders wanting to achieve success without giving up ownership or control. This podcast is brought to you by Lighter Capital, the leader in founder friendly financing for B2B SaaS companies. Learn more at AH lighter capital.com Greg welcome to the podcast.

Greg Head: It's great to be here.

Unknown: Melissa, you have a great background. Why don't you tell us a little bit about your background and then tell us about practical Founders.

Greg Head: Well, I've been a long time software founder, played a long time over 30 years in the growth game. So I'm an older guy that helps serious founders now build valuable companies but without VC funding. I was part of leading tech companies in the 90s, the 2000s and the SAS era. Two companies to 100 million and my passion is helping serious founders these days. So I've talked to thousands of founders in the last 10 years, but I work with about 45 bootstrap lightly funded founders all over the world B2B SaaS founders and that should conclude some AI spin. These days SaaS with AI in my practical founders CEO peer groups, we meet monthly, work on the biggest questions of the business. It's like having a peer advisory board of people who get you so you don't have to listen to the simple bumper sticker advice that comes out of the media or shows up on YouTube. All the hard questions that founders go through is they build their companies from 1 to 5 or to 10 and even past 20 million in ARR.

Unknown: What does that look like to be part of the Practical Founders group? What does that entail for the 45 CEOs?

Greg Head: Yeah, it's a CEO peer group and it's a bit like EO Vistage and YPO, but just for deep B2B SaaS, uh focused. It's a uh, monthly Zoom call, a three hour call structured that I moderate. So I curate the peer groups. So there's eight to 10 founders in each group and you're generally matched with founders in your same growth range, like from 1 to 3 or 4 million and 4 to 10 to 12 million and 10 to 20 plus million. So they want to be around other founders like themselves. It's lonely to be a founder and they got big issues they can't talk about with anybody else and they go to local CEO peer Groups which are great, but you say CAC to ltv, you lost them. Right. So it's.

Unknown: Yeah.

Greg Head: And the fun is deep down in there they don't really want to be around VC funded founders. So they stick, you know, they don't really jump into the ecosystem and the world is changing literally by the month with AI and what's happening in M M&A and SaaS pricing and everything. So they want to go through that with others. And it's a, uh, it's like having an advisory board. You're bringing your, your strategic issues, your big decisions. What should I do about this VP of sales? Should I get non dilutive capital? Right. How should I think about that? And other founders who have done it, not done it, you know, get to hear their specific challenge and give context sensitive feedback and perspective. And here's what I did and all that. It's very useful to get through the biggest questions that founders face every single month that the end of the year you need to look back and say I made more, better decisions about my bigger questions and issues than uh, than I used to. And we made more progress in my business because of that.

Unknown: Yeah. I am a founder myself and I found that I learned more from my peers than any place else. And that was where I, you know, the most valuable use of my time was spent with others who've, who were doing or had done the same thing. So I think that's great. You often distinguish practical founders from venture backed blitz scaling founders. And what are the defining characteristics of a practical founder?

Greg Head: Yeah, practical founders is my determination. I played the bootstrap game and the VC funded game for 30 plus years. So I understand all of that. But we have the religion of VC funding. You can't raise enough money, go for it and bet your company. Go big or die. And then there's a religion of bootstrap. Oh, you never raise any outside funding and do it yourself and so forth. So that's not very useful either. But there's a huge distinction between the modern venture funded software company founder institutional capital. When you raise 10 or 20 or more million dollars, it's really go big or die. There's a place for that. But most founders don't play that. And it's not just bootstrapping. There's all kinds of practical funding, angel funding, Don, dilutive funding, some institutional capital, those small seed funds that write you a million or 2 million and don't really care about getting you on series. ABC funding, drugs, it's just a different sport. Uh, the VC funded game these days. And by the way, it's really painful in that sport these days. If you were a SaaS founder who raised in 20, 21 or 2 when everything was hot, you're mostly screwed. If you didn't sell your company now and didn't move on to AI, VCs have moved on, so forth. So there's all kinds of ways to build valuable software companies. Practical founders are in control of their speed, their culture, their decision making. When I sell, should we pivot? This way they don't have a serious partner on their board who says, no, we agreed you're going to go as fast as possible, we're going to shoot you. That's kind of the modern deal. So, uh, there's all kinds of ways to do it. Literally, there's more variety when you don't raise VC funding. If you're selling something valuable and spending less than you making revenues, there's all kinds of ways to do it. You could bootstrap forever like Jason Fried, or grow fast and sell it to private equity or raise VC funding later. You know, that used to be a thing. There's all kinds of ways to do it.

Unknown: Yeah, I mean, at lighter capital we've been going for 15 years, but about 25% of the companies that we have funded either had VC or went, um, on to take VC, but 75% didn't. And there's a lot of great stories and a lot of great exits. As you know, I was a venture capitalist for the better part of two decades and I've seen a lot more good exits for founders in bootstrap companies than I did in venture backed companies and venture backed companies. You're playing a high risk game. So I love to hear from you because I've thought about this myself and I don't have, uh, an easy answer for it. But have you seen common personality traits among founders who build profitable, sustainable SaaS companies? And what I mean specifically is, could you look at a person? Because oftentimes people have a choice. Do they want to go down this VC path where you're chasing the next round, or the bootstrap path? Is there a personality trait that distinguishes those that choose one path from the other?

Greg Head: I would say collectively, yes. There are different approaches. And by the way, it's just a different approach. It's not like, it's kind of like, do you like international soccer or do you like NFL football? Like, okay, you could choose one or the other. But in the crowd of practical founders, yes, there is a difference. The VC funded crowd Moved to Silicon Valley, start up in the incubators, go to Stanford. All that is they want to do big things and they kind of look around and say this is what you do. And they get ready to play the VC game and they literally can't conceive of, how about you just grind it out for a few years and get revenue going and so forth. That's just not cool. Right. And bootstrappers have always been looked at as very uncool to the VC funded crowd. And then there's the more practical crowd that says, I would never conceive of betting my company like that. I'm not that cool. I'm not trying to build such a big company that it's VC scale. But they're. I call it practical. Practical founders means reasonably crazy. It's still crazy to start a software company with or without funding and imagine you're going to grow it and change your industry and sell it and be worth 10, 20, 50, $100 million in the top 0.1% of wealth holders in the United States. Like that's still crazy. It's totally possible. And the odds are better. They're compounders, they're grinders. They're serious about their customers. They want to do it in their own way. They place a high premium on their independence and control, which means their cultures are different, their business models adapt. Uh, a lot of it is the speed. I don't have to do this in five minutes for a vc. I can do it over five years. And vertical founders like you can't move. Vertical software industry is very fast, right? Usually. So they place a high premium on their independence, which means they're kind of serious people, they're kind of frugal investors. They're frugal pitch pennies, but they invest it, right? And they're playing a different sport, which actually for founders has much better odds. The odds in the VC world we all know, and it's getting worse. 75% of VC funded founders walk away with zero. VCs will say this.

Unknown: I would say a lot more than that.

Greg Head: Uh, yeah, okay, so I was being conservative. I've been nice. Right. And I invest in companies and I invest in VC funds. It's, it's not always bad.

Unknown: Yeah, yeah, it's, it's a hit driven business.

Greg Head: Yeah. Right, yeah. Well, VCs know this, but founders don't. Right. They're taking the funding drugs and they're not, not really sure that it's a grow fast or die kind of thing. So there's Better odds of some VCs like Rory or Disco say there's better odds of being, being, uh, $10 billion revenue software company with VC funding. But there's better odds for the founder of getting to a 10, 20, 50, $150 million exit. 95% of software exits are still under a hundred million dollars. The odds are way better. If you can get it to a million, you can get it to 5 million. If you can get it to 5 million, you can get it to 10. Like there's a certain pretty good odds. And once you get it to 5 or 10, even in this AI shift, even with the re rating evaluations and so forth, that's still life changing wealth, regardless of what happens in the next few years.

Unknown: Yeah, absolutely. And we've seen that over and over again in Lighter Capital's portfolio companies. These stories don't make the news, but the founders sold the company for tens of millions, sometimes over 100 million, and they owned all of it. Maybe they gave a little bit away to an angel investor or some employees, but that just isn't an interesting story. A more interesting story is, uh, a founder raised $100 million on a billion dollar valuation. You know, but oftentimes the founders end up with nothing in that case, because now they've got lots of liquidation preferences they have to clear in an exit before they see anything.

Greg Head: That's why I have the Practical Founders podcast, which people listen to and I, I uh, interview founders, many of whom use lighter capital, few, uh, coming through the next this season, Lighter founders who have all done it in different ways in different industries and different ages and different regions and all of that. And the stories are really interesting. But that $100 million funding story is easy. It's clickbait, it's very easy, but it's almost meaningless. This is the hidden majority of software founders in the world. Like 150 founders I've interviewed in the last three years, their net founder equity value, which is realized or unrealized, they may or may not have sold all or part of it or none of it. And the average founder equity value of those 150 founders is $11 billion, 75 million each on average. And this is just scratching the surface of the tip of the ice. So if this is 1% of all these Practical founders out there who've built something and, or have sold it, it's like a trillion dollars in equity value going to founders. That isn't talked about at all.

Unknown: Absolutely. And I think that one thing that's not talked about a lot is how difficult it is to make money in venture capital. I don't just mean for the founder, but for the venture capitalists themselves. I run across a wealthy venture capitalist more often than not. They made their money and then became a venture capitalist. There are very few as a percentage of VCs who made their money in ventured. Uh, it's a tough asset class to make money. And so not only is it very few founders in a VC's portfolio that have positive outcomes, but it's very few VC portfolios that have positive outcomes. But a few do so well that they bring up the average for the whole industry.

Greg Head: That's right. I literally had this conversation with a lighter founder this morning who's going to be on the podcast. If you sell your business for $30 million, which is just scratching the surface of building a valuable company, um, you know, practical software company, you're worth more than 98% of all VCs without having raised VC funding. Like, isn't that ironic? And that's. So there's a place for VC to build these LLMs and to build the rock. It's rocket fuel for rockets. So if you don't have a rocket and you're not trying to be $100 million in three years, which is the new standard is of an AI company, you should stay off the. It's very powerful, scary drugs and, um, not so useful.

Unknown: Yeah, I remember I was talking to a VC not that long ago about a portfolio company that we share and they were saying, yeah, they're great. They're the chuggers. I'm thinking the Chuggers because they grow sort of 70 to 80% every year, year on year.

Greg Head: I mean, to me, sorry to hear that's only 70.

Unknown: That's a fantastic company. And he was saying fantastic company. Then he went on to tell me about a company that went from, you know, 0 to 10 million in a matter of months. So that's. That's what's interesting to be Cs.

Greg Head: Well, I think both are correct that there's 70%. Rule of 70 companies, rule of 40 companies, rule of 20 companies, these rocket rides and everything. But when we hear SAS is dead and it's just a chugger and that it's just a lifestyle business and they just want to get it to 20 million, all that stuff.

Unknown: I don't know anyone that has a lifestyle running a, running a software company, but right with them. Tell introduce me.

Greg Head: But it's really just that perspective that it's the VC who kind of owns a lot of the media here, podcast and otherwise, saying it's just not investable for me. Right. Nobody's saying what should the founders do? What are the best odds for you? What is the best return on the next 10 years of your life for founders? And that is almost always, maybe in some rare cases, if you've got a rocket, you get rocket VC funding, rocket fuel. Almost always it's go build something. Uh, especially with AI now go build something, prove it. Get some revenue from customers, lean in harder, get more customer revenue, get a little debt when you, you know, practical non dilutive funding when you need it, get a little angel funding if you need it. But you know, I talked to somebody this week who quit his job three months ago, got a new job and in his spare time, seven hours a week, built an entire landscaping business, ERP payments, managing schedules, texting, everybody, getting the specific items of what was there to put on the invoice, what was done, which was confusing before, in his spare time. And he's not a coder and he's got 10 customers already. Okay, so should I get funding? No. And I mean if we're talking non AI rockets, VCs have left the building. So don't even really try to raise funding. If you're a 50% grower, they really don't want that anymore.

Unknown: Right. There's something else that I'd love to get your opinion on that I think isn't discussed enough. And that's optionality that you take away when you go down the VC path. One of our portfolio companies told a great story where he was trying to raise. They've gotten to 2 million in revenue. We're growing quite quickly, thought okay, what do you do? You go raise. VC was talking to a VC and the VC said to him, you know, I can see you're on a path to 10 million. Um, and then I can see XYZ, one of their partners will acquire you for 50 million and that would probably be a good outcome for you. Right? And the founder's going, that would be incredible. This founding guy in his 20s. But what the VC said was, and, and if you took my money, I wouldn't let you do that. I wouldn't let you take that $50 million exit because they couldn't. If a VC was coming in at that point time for a 10 or 15 million dollar valuation, you know, they're not in it, in it for a 50 million dollar exit.

Greg Head: Unless things go on, 3x is not a win. It's like they'd rather shoot it than not, uh, yeah, so yeah, that's typical. There's a simple math to that that says I want to get to 10 million and sell it for 50. And VC say that's not our business, thank you very much. And nobody's explaining that. Get it to 10 and sell for 50, which is a great outcome for founders, is not at all for VCs. And you know, so there's a lot of confusion that's still out there, but nobody's really explaining that. When you raise $5 million, $10 million, you sell 20% of your company. So you think you still have control, but no, you've agreed and you have a lot of legal structure around. We're going to go as fast as possible and grow this as big as possible and sell it for as much as possible. Or where you're going to get cut off. Right. And optionality for a founder. Okay, AI's coming. Covid happened. You get an offer for somebody when you have a reasonably profitable, sustainable business, 1, 10, 5, 20 million ARR. And you don't have to sell it, then you're not going to get screwed by people who are trying to buy it and you get to change your mind. This is a discussion, it's a strategic question that comes up in our practical founders peer groups every month. Should I sell? Should I go? Should I be more profitable and run it for more profit? Should I go faster and run it for an exit? And you get to change your mind depending on what's happening. Uh, one of the problems with VC funding is at 2 million, you kind of start to know what you think you want out of this and what the market will bear and how fast you can go. You kind of start to know. But you have to declare the end game. Go big or die. If you raise VC funding, if you don't, you could grow it big. You could sell it early, you sell it later. You know, there's all kinds of ways that's the superpower of founders, uh, practical founders is their ability to say no and just do it their way because they can.

Unknown: Well, you had talked about the rule of 40 before, but what are. And there's been a lot of discussion if that even should be is if that's overused. But what are the three metrics that you think practical founders should obsess over?

Greg Head: Just on rule of 40, I think rule of 40 and rule of 60 or whatever. Your rule of is a reasonable thing still because growth is important and profit M or break even or investment or whatever that is that you choose to do is, is important. And a rule of something business above 40. I mean there's a lot of great businesses that are totally bootstrapped at a rule of 70. Their market's taking off their product is incredible, they're very efficient, you know, all this kind of thing. So you can pick your own rule. So it's still valid out there. It's very different than the VC funded rockets these days. There's no rule of anything other than you better grow 5 to 10x a year or we don't, you know, we can't bet on you. But the biggest metrics for founders these days, let's see, there's a lot of things you could measure, but it's quite simple. These are laws of nature. It's around your cac, your LTV and probably your nrr. So CAC is customer acquisition cost. Can I efficiently acquire good customers? Not just any customers. Can I efficiently acquire good customers? Can I do it at a million, at 5 million, at uh, 10 million? The game changes, the world changes. If it's very expensive to acquire customers, you better have a very expensive product and they better stay a long time. So if it's expensive to acquire them and you charge a lot and they stay forever, okay, that's good. So the relationship between your customer acquisition cost and your lifetime value of a customer, which includes their price, the churn, how long they stay, what you can upsell them and all of this, this is uh, fundamentally what private equity is looking at first. And they literally start with the back end, your churn rate, your upsell rate and so forth. And then they imagine being more efficient in going to market. So if you have an efficient CAC and a solid ltv, could be a small business software for low numbers or an enterprise software for high numbers. Those are real fundamentals there. The third one is the net revenue retention, which means for customers that stay, can you do they use more, can you sell them more? Do you do more payments? Can you upsell them? Do you have all in one solutions, additions? Can they pay you more every year? Not just in price increases, are you increasing value enough going up market and so forth. So those are fundamentals that can't be defied, that you know, if you get those right, you can do it in a lot of different ways and you'll have a successful company regardless of what happens in the world.

Unknown: How are practical founders responding differently if at all to AI than hype driven startups or VC backed startups?

Greg Head: Well, not all VC backed are hype driven. I uh, would say they're just taking a different kind of bet on it. And you could say VCs are more hype driven. Right? They're only betting on the hyper growers and so forth. But all the practical founders in our groups are doing cool things with AI. There's nobody not doing anything. There's nobody saying I don't believe it, it's not helpful, it's not great in my business it'll never work for our customers. Okay, there's all kinds, there's a range there. And the founders in my groups, every month we're talking about this. What are we doing in our business to make it more efficient? Practical founders in my groups are saying I'm going to grow faster next year. We're going to have 60% growth and I might add 20% more people because our product's getting better with AI, we can charge more, we're adding more products, we're doing more marketing, we're doing more of this, we're getting more efficient in our business. So affecting the value that they're delivering in the product, making their business more efficient. AI is very practical by the way, for bootstrapped and lightly funded software companies. You don't need to raise VC funding to get all this massive benefit. Yeah, it's really exciting. So some are very forward thinking about it, innovating for their industry, staying up, not late night every night, figuring this stuff out. It's changing by the week. Others are moving slowly, they're in regulated industries. But about 25% of the founders in our my groups are. The velocity of their product roadmap is moving up.

Unknown: Right?

Greg Head: They're total customer acquisition cost is coming down because of AI. That took a lot of work to get working for them.

Unknown: Let's spend a little bit of time on that topic. So as you've seen in the news, we have the SaaS apocalypse. SaaS companies valuations were hammered, although they come back a bit. Is AI going to kill SaaS?

Greg Head: Well, you know, it depends. By the way, there's no question there's going to be some AI first company that does amazing things, grows really fast and disrupts a uh, sleepy old public software company or a private equity based software company. There's, we're going to see a little of that. Is that all that's going to happen? No, I think SaaS is evolving. So if you have a modern SaaS system of record or some other kind of software, you're using AI to run your business, but you're AI enabling your business and it's not Quite clear that all These quote legacy SaaS can't just tack on AI. Right. There's all kinds of value there. Uh, it's not quite clear that that's totally invalid. They have data, they have workflows, they have customers, they have reputations in their industries. But I think what's clear is private equity who has bought most of the software companies in the last five years, public stock markets and the rest for these big monstrous, you know, slow moving, high priced, expensive. They had an estimation of these weren't keep growing forever at the same rates and eventually get profitable. And now they're re rating them, they're imagining either a lower growth rate or maybe disruption. So does that really affect the 1 to 10 million founders? Well it does. Downstream there's a re rating. So private equity, who buys companies to tack into bigger companies to sell them to public markets and everything that kind of cascades down. So I'm not here to say that 5x is the new 10x. Right. But people in the money game right now are saying there's a uh, little different perspective. Literally more painful for VC funded founders than practical founders who could just keep growing anyway and wait for things to return or evolve their business. But I think AI is a uh, ah, secret to grow faster and turn your rule of 40 company into a rule of 80 company.

Unknown: Yeah. In fact I just reposted an article from Nvidia CEO yesterday on AI is not killing SaaS companies. AI is helping SaaS companies and while I wouldn't predict what's going to happen in the long run, I can tell you among lighters, hundreds plus portfolio companies, AI has been helping them and they're not so far because as you said they're just growing more efficiently. They're cutting out costs, you're growing without adding costs. But so far we haven't seen their customers churning to go to AI Native Solutions.

Greg Head: I'm m not seeing that either in 50.

Unknown: Our companies are small and nimble. Yeah, they can become AI Native Solutions and they already understand the business problem better than a new entrant. And we're certainly not seeing our customers customers saying we're just going to build this ourselves. So we're not seeing what all the hype is about on the ground yet. So we talked about this a little bit. But what are you seeing among your 45 SaaS companies that you work with?

Greg Head: Um, I'm seeing AI is very helpful to founders and AI is different this year than it was last year. Even early in the year it's very helpful to practical founders, there's a lot of understandable. You know, everybody's going through their AI epiphany. I don't know if this is really going to happen. I don't know if the hype is worth, you know, is AI hype is worth it. And then they spend a weekend with Lovable or Replit or something like that, and rebuild 80% of the front end of their own app themselves without a development team. And then they either get excited about how fast we can move or the new thing we could do that we could never do before, or they get a little paranoid about, uh, what's my moat? So it is changing and it is evolving fast. I like ChatGPT. You know, they're getting 20 bucks a month plus other kinds of transactional things. And that's a SaaS company. Okay? It's an AI.

Unknown: Exactly.

Greg Head: Fundamental model. SAS is more about the business model and so forth. So I think it'll be a long time before we get rid of the beauty of recurring revenue.

Unknown: Right.

Greg Head: And all the SaaS metrics there and usage fees.

Unknown: That's SaaS as well. I mean, whether it's, you know, it's just another way to bill for. For recurring. It's another. It's another form of recurring revenue.

Greg Head: I do see here's a, you know, a minority are saying, well, we use SaaS in the business. Our coders are moving faster, our marketers are moving faster, our leaders, uh, are moving faster. We're delivering more. And now we had AI some things in the product. The first chat experiment, the chat support, the, you know, some kind of things. We're actually kind of leaping forward from generative AI chat interfaces, English language interfaces, to your data and your reports or something like that, to the agentic world. Okay, you bought our product and now you could run these agents that do the thing that people used to do on our product or some of the things. And that is a whole new thing. They're charging 10 times more. So this is where the rockets are coming from. Any VC who says, we just raised a $5 billion fund and it's not going to be about job loss, is lying. They're betting, um, we're going after people's jobs, where that's where the next big pot of money is. And practical founders can go there, too. You could have agents that get a lot of stuff done that used to have to hire 10 people to do before founders lead this. They get the epiphany, oh, shit, I could be a better founder. We could be a better Product. We got to compete.

Unknown: Yeah.

Greg Head: Then, you know, they often have to bring their dev team and the frontline people and so forth into it. Not everybody has moved into the agentic world. This is. We're still kind of early in that phase. That's some of the epiphanies of that everybody's seeing in early 2026. But some are doing agents to do this, and they're connecting the dotted lines, meaning we're going to grow faster with fewer people. Because I see how this can go. So I know there's a lot of people that know they're headed that direction doing those bumpy first moves to see how this works. We all watch Jason Lemkin of Saster to go through this, and it didn't work well. And then they had to do a lot of work on the agents, and now, you know, most of his team is agents. Agents is labor.

Unknown: Yeah. Jason has a great podcast with Lenny on that topic.

Greg Head: Yes. Yeah. So that's happening. It's not everything. Yeah. Most coders who are further along in their AI understanding and experience will say, uh, okay, this takes a lot of work, and it's not a simple chat prompt and all that, but I can see where 80% of our code's going to be created and maintained by AI. And big companies say this anthropic says 80% of anthropics, you know, Claude, is built by AI, and 20% is all the people helping to manage the, you know, the agents that built that. So that's where this is heading, which is why we heard in the report, uh, this, uh, this last week, the Doomsday Report, what if AI works so well and then people are out of jobs and then they can't spend money? So, you know, that's an interesting one.

Unknown: So the Citrini Report.

Greg Head: Yes, the Citrine Report. And by the way, they're shorting all the companies they, you know, talk down. Right.

Unknown: Yeah. Yeah. It's a business model.

Greg Head: Full disclosure. Yeah. Yeah. So that's. What if it works? Well, I'm actually kind of in that camp. I can see this working. Well, I can see not, um, the biggest companies in the world, the founders I work with, making amazing progress, and they're saying things like, we can build products that help our customers not to spend on people, and we're going to grow bigger with fewer people. So that equation is happening. It's a far cry from the COVID You just can't have enough people, you know, kind of.

Unknown: Right.

Greg Head: Spend enough money, you can't raise enough Money hubris. That was there as well.

Unknown: Yeah, absolutely. I'm sure in your CEO groups, exits are a common topic. How do you advise founders to think about the right time? There's a couple topics I'd like to dig into. One, are companies bought or sold? And to our uh, company, is it. Do you just stop when the founder runs out of energy? Is that the right time?

Greg Head: Well, the first thing here about exits is it depends. So it depends on the founder and when. Okay, let's just talk about the founder. Sometimes people say, as people do, I'm a 0 to 10 million founder. Right? I'm uh, this founder. Most founders don't want to grow their company as CEO to 100 million, bootstrapped or not. Like most founders who get started don't want to go that high. So there's kind of a time in there where they say, this is fun now. It was fun, it's less fun. Or something happens in their life or they've been grinding for 10 years and they're tired and they haven't paid themselves and ah, it's time to get paid. And there's all kinds of things. Things happens in markets Covid caused a lot of people were thinking about to exit to not exit and those that weren't thinking about it to, you know, to exit during the high premium. I don't take equity in the founders. I'm not investing in them. I help argue both sides and they can hear from the peer group, you should keep going longer. Here's a way to do that. Here's how to get over the burnout. Here's how to get a little funding to ease the pain a little bit or grow faster. Here's what it's like to grow a company for 20 years that's really profitable and take millions out every year in, um, distributed profits. Here's how to sell it. Here's how to go through the M and A advisor game and sell a company. Here's how to sell it to growth equity. So there's all kinds of ways to do it. Founders get to change their minds. But generally speaking, most founders have a number in their mind and a multiple on top of that number. I'm going to get it to this and sell it for X, which is a reasonable estimation, you know, reasonable thing if you're a rule of 40, 50, 60, 70 company. Two months ago every growth equity investor was saying those are still worth 10x maybe this month. I talked to a few and there may be hedging on that. Right. But you know, like a Smaller grower, that's break even at 30% growth.

Unknown: Okay.

Greg Head: That's worth less of a multiple and so forth. So people have a number in mind. They have situation in their head. They can read the tea leaves about AI coming to their space or changes in their market. So founders get to do it when it's right for them for all those reasons, and that's okay, you know, and they get to stay. By the way, this is another one. I thought I'd be tired. I'm not tired. I thought I would hate having 100 employees. I love having 100 employees. I think that's another thing as well. A lot of bootstrappers have this I don't want to have a lot of employees kind of thing, and I'm just a starter. But there's a lot of great CEOs who learn. You, uh, know, I ran $50 million businesses with 250 employees, and it's pretty heavy. But, you know, gosh, it was really fun. It's amazing. We can make big change in the world.

Unknown: So, yeah, I think it's not often attributed to this, but I think a lot of times, sometimes founders don't have a choice. They have to sell because they just can't keep going. But when there is a choice, I think often the choice to sell is made based on the energy level of the founder. When I say the energy level, or just the continued passion for that business versus what else they could be doing, it's not necessarily financially driven. You know, everybody tries to say, well, I've got the number I needed, and that's why. But, you know, really, is it, you know, Bill Gates didn't have the number he needed when it was in the billions, when he had, you know.

Greg Head: Yes. Yeah. Isn't that interesting? Right? So I see that all the time we have these discussions as practical founders. We honor the founder in control. You created this thing. You bought your independence, you maintained your optionality. You did all the hard, compounding, grinding things to do great things for your customers and your employees and build a business model that's efficient enough. First of all, if you want a prize from it, you deserve a prize. Sometimes that's exiting a little bit every year in distributed profits. Sometimes that's selling, uh, all or some of your company. And what's the best way to do that? Timing has a lot to do with this. Not just on the founder side, on the market side. Right. It was a great time to sell a company in 21 and 22, when the markets were hot and everybody couldn't you know, valuations and multiples and everything was amazing and less so there. It's still a very active market for practical software companies that are less than 20 million in revenues or less than 100 million in uh, revenues. It's a lot going on there. I've had plenty of people on the podcast who were very successful selling their companies with M and A advisors and having a shop, uh, the company process. But I think that takes a combination of things. It takes a reasonable business, a rule of x, you know, 50 business or something like that that is growing and all that. And it also takes a founder that says, I'm not trying to super ultra mega, maximize the multiple here. I'll uh, give a fair multiple for fair, you know, acquisition process and acquisition price is only one of the terms in there. You don't want to stay very long or all that other stuff that comes in it structure, stuff like that. So if you have that I need to sell this for 20 times revenue perception, then yes, companies get bought like it's hard to run a process and get 20x in today's market, so forth. So strategics, which have faded generally from the acquisition game, big public companies, big software companies, bigger companies in your industry, private equity backed strategics who will overpay for your tool. You know, you sell software for dentists and you have 500 customers and that big strategic has 50,000 dentist customers. Right. They can sell a lot more of your software than you can, so it's hard to push them to buy your product. So maybe with strategics it's more about being bought than selling to them. You have to play their game.

Unknown: Greg, it's always so good to talk to you. I want to wrap this up with a couple things, a couple quick questions, but what is one habit that every practical founder should adopt tomorrow or today?

Greg Head: I would say play with AI every day. I'm old enough to remember the PC revolution, the Internet revolution, the SaaS revolution, the mobile revolution. Those are all very slow moving and were kind of, let's say incremental. They were big and over years they got really big. But you could kind of see your way through them and it wasn't right now you should be founders should be doing this, using it in their lives, seeing what competitors are doing, seeing what's happening this week, this today. You should be checking those things out, playing with these software products. Founders especially at this stage, right? They're really important to say, oh my gosh, I see it, we're going to go there and you guys are going to do this and they could move fast. So founders should be playing with this and getting to their AI epiphanies and progressing in their AI understanding and maturity.

Unknown: Any books or, uh, podcast recommendations?

Greg Head: Oh, I'll say the Practical Founders Podcast if you want to hear about other founders who've done it and all of that. I, uh, you know, I don't know that there's. Books are interesting these days because things are moving so fast that books are out of date, you know, a little bit here, but there's a lot of classic books in software. You can get the gist of them, um, and even apply the context of your business to a classic SaaS. Uh, books crossing the chasm, zero to one, whatever. Using chat GPT. Right. So all the frameworks, positioning and everything else.

Unknown: Books anymore? Yeah.

Greg Head: Right. I'm not sure. You know, and I done the Silicon Valley thing where we're all making it up on the front line and a book was about three. What we did three years ago. Right. So it's.

Unknown: Exactly.

Greg Head: So. Yeah, yeah. The answers kind of are in the LLMs and the chat. You know, it's consuming all of this and we can learn fast from that to our context.

Unknown: Okay, well, thank you, Greg. Lighter Capital is so aligned with how you see the world and how you work with founders. So it's just such a great pleasure to have you on the podcast today.

Greg Head: Thanks, Melissa. It was great to be with you and, uh, so many of your founders at the Leider Summit last fall here in Park City. And, uh, yeah, made a lot of friends there and some of those folks have been on my podcast already.

Unknown: All right, wonderful. Thanks again to Greg for joining our podcast today. And to learn more about Practical Founders, visit Practical Foundation. And to learn more about Lighter Capital, you can go to lighter capital.com and learn how to grow your company with non dilutive funding.