Why Jack Ellis acquired Fathom Analytics from his co-founder

Speaker A: We always knew that Paul was going to be done at a, ah, certain point. And so he sort of was sat back like what is there to do? And then we just had a conversation about what an exit might look like if he was truly done work. And we came up with an agreement in the space of 24 hours.

Speaker B: Hello and welcome back to Indie Bites, the podcast robbing you stories of fellow indie hackers in 15 minutes or less. Today I'm joined by Jack Ellis who's the co founder of Fathom Analytics, a simple privacy focused analytics launched in 2019. I last spoke to Jack on the podcast in 2021 where he talked about the inception and growth of Fathom taking on a massive incumbent and why Jack loves working with a co founder. But in December 2024 Jack actually acquired his co founder share in the business, making him the sole owner. And in this episode we're going to talk about why he made this unique move and um, what's next for Fathom. But before we get into this episode, I'd like to thank my sponsor, Email Octopus. They are an email platform focused on affordability with a very generous free plan and ease of use without some of those bloated features that the other email have so you can focus on shipping and growing your audience which you'll know is really essential for growth in the early days. So to get started with an email platform that gets out of your way, you can contact up to 2,500 people for free. Head to email octopus.com or hit the link in the show notes. Let's get into the episode. Jack, welcome back to Indie Bytes. How are you doing my friend?

Speaker A: I am good. Who runs Email Octopus?

Speaker B: I've heard of that, uh, Tom Evans and Jonathan Bull.

Speaker A: That's a British company.

Speaker B: They're British chaps. I said a couple of years ago that I wanted to take on a long term sponsor. I had a few people reach and they agreed to do a year, uh, long contract and now they just do a role and sponsor for me. And they're an unbelievable product. They're an unbelievable team. They're just so supportive and nice and that's the kind of company I want to work with.

Speaker A: It's good value for money as well.

Speaker B: It's great value for money. And when people want to set up email. I think every business needs email product like email. Octopus is perfect for you because it is simple.

Speaker A: Linkin park are using them you see on their website. Linkin Park. Yeah. Okay, interesting. So this isn't a, uh, this is an established company.

Speaker B: Okay. Oh, they're very established.

Speaker A: Okay.

Speaker B: But what I love about it is they're bootstrapped and nice. They can do things like supporting small indie creators because they had a help of the indie community when they first started. So they're very much giving back where they can in the community.

Speaker A: Link and park. Like, that's awesome. And I extended your sponsor, but that is cool. 93,000 companies using. That's insane. All right, cool. That's good to know. I didn't, I didn't know much about this company. I've heard the name before, probably from you actually.

Speaker B: So, Jack, it's been four years since we lasted our episode of Indie Bites, two years since we last spoke, and you recently announced some bloody massive news. And I'll leave a link to your article and um, podcast explaining in detail why you did this. But talk me through acquiring half of the business from your co founder to become the sole founder of Fathom.

Speaker A: Yeah, so we always knew that pool was going to be done at, ah, a certain point. And it was this ongoing, like, moving point as to kind of done in a few years. Done in a few years because, you know, Paul was ready to do some other things, focus on some stuff in life right away from just business and grinding and Paul isn't a marketer. A lot of people think that Paul's a marketer. Paul isn't a marketer. Paul is a like brand builder, designer, copywriter. He'd just done a whole new redesign, a huge redesign of Fathom. We're still shipping parts of it. He basically, from the ground up, built a CSS framework because he enjoys doing that, did all of this stuff. And then the bottleneck was then development and so he sort of was sat back like, what is there to do? And also what do I want to work on? And then I was aware of this and it was just in the back of my head. And then we just had a conversation about what an exit might look like if he was truly done work, you know, and we somehow just came up with this idea of what if I bought him out. Over time he stepped back completely. I continued getting a salary because I'm working in the business. And then Paul is there, you know, ad hoc freelance for maybe a couple hours a week for design work when he has the time to do it. And we came up with an agreement in the space of 24 hours, the agreement was completely done. And then we spent three months talking with lawyers.

Speaker B: So it was always sort of on the horizon. The Paul was going to exit the business. How Often did you talk about this being the way you were going to do it versus having an external party come in and buy the company fully?

Speaker A: It's a good question. So we had a few different ideas. You know, one idea was that Paul would remain on the board and even in the future when I'm, you know, old and gray, that I'm on the board and then we run it that way. So we're on the board of the company, we have a CEO in place or something like that. That was discussed. We all, I think we've discussed before just generally being able to work it out. I mean, him being able to work it out. But we never went into detail like the specifics and the specific, you know, maneuvers that can be done under the tax act and various things that could make it work. And so we never got into detail with that kind of stuff. But then we really got into detail once we had the idea.

Speaker B: So Fathom itself is like a healthy business. We can assume it is going to be very expensive to buy someone out that has a 50% share. Jack, how the heck can you afford that? And you say it's done over time. Have you just been like stockpiling cash that you could give Paul a, uh, bunch of money?

Speaker A: Ultimately it's structured. I have to pay him over time for buy his shares out over time effectively.

Speaker B: And so, uh, usually when a founder buyout happens, someone else comes in. Do you know of anyone else that has done it this way where the other co founder who that hasn't had a previous exit or a stockpile of cash?

Speaker A: I've never heard of an acquisition being done this way. But I also think, you know, pool is very value driven. I think you have to factor in what he's like. And I'm pretty much like a, I learned a lot from him. So like I'm similar in thinking. So if there's a way that can be, it can be done and it's kept independent. And granted there's some risk taken on by both of us, but it's still, it keeps the company independent and it's just kept clean. Whereas if we'd have brought in outside capital, it would have been, oh, uh, geez, I mean that would not have worked.

Speaker B: Why would that not have worked for you?

Speaker A: So now you've got a 50 stakeholder whose only contribution is money. I, I mean, I'm going to the, you know, worst case scenario, if someone comes in and they actually truly have skin in the game beyond money, that'd be a different story. But just like Money, like I put a lot of value on sweat equity and um, people that can actually move the business forward. I mean like, yeah, if the right person came in and was, okay, I'll take over pool shares and I'm happy to be a, uh, co founder with you. Different story. But companies where their whole objective is to get these big exits, you know, they buy the, they invest and they want to get an X times return on their investment. Just not interested.

Speaker B: And will Paul retain any equity at the end or is it clean cut? He's gone clink up. Huge respect to it. I do recommend people going and listen to that episode because it is really fascinating. Paul's mindset has been fascinating all throughout his career. As you follow him, it's contrary from reading Company of One, deleting his Twitter, uh, to now retiring young. When we spoke on the previous episode, Jack, we spoke about you being a solo founder in some of your previous projects and how incredible it's been you having a co founder, uh, how you bounce ideas off each other, complementary skill sets. So who's filling this pool sized hole that has now left the business? You're back to being a solo founder.

Speaker A: Uh, so we have, we have Ash on customer support, who's now head of customer success. His role is going to expand over time as he gets more involved in operations. We know the direction that Fathom has to go in. Yeah, sure, we had the back and forth on some things to iron them out. We always had a shared understanding of where Fathom needs to go, especially when you talk to your customers and do surveys and everything else. So no, it wasn't. I mean, obviously I miss them. I still talk to Paul every day though. So it's not like, yeah, okay. And that's the tricky thing, right? So like these conversations where we have to shape where the business is going, it's not like we're having those all the time. We occasionally will flesh things out. But I'm still talking to Paul, so it's not like I've lost a friend, you know.

Speaker B: So let's talk more about the analytics industry, can we call it? Because when you first started, you came in, you started battering down at Google Analytics and saying, if you want the simple, privacy focused alternative, Fathom is the one for you. But you're seeing competitors come up all around you. Is there still this demand for people not using Google Analytics? How are you dealing with all the competitors that might have feature parity with you now?

Speaker A: Yeah, I mean, the same way that we started off, we're continuing Doing is innovation. It's very easy for. I mean one of my friends literally predicted this would happen with more competitors entering it. VC backed. Who? One competitor made me laugh. In their thing, yes, it's free, but the data, we are going to use the data anonymously to, you know, for in insights. I said to one of my friends who was trialing this competitor, I'm not going to name them because I can't be asked, but I said to them, don't use them because they'll be using that data to give market trends to competitors. And like this isn't free. Careful when it says free. And it's a VC company. I know you can do freemium and I know it can work, but when I'm looking at a VC backed company who are offering free, I'm getting a bit, I'm getting nervous. So no, I mean we're ultimately we're targeting companies that don't want to use that kind of stuff who don't want to use a company that's going to boom and bust and everything. Like I think the focus on competition is wrong. I think that the focus should be on the customers, making them have a good time. How are we failing customers in whatever way, what can we be doing that's better for them? When you focus on the customers, you can have 100 competitors as long as you actually ensure that they succeed.

Speaker B: How you providing the best experience for customers? Is it serving them to find out what they want the product? Is it just great customer support?

Speaker A: Yeah. So a bunch of things, making sure we're actually helping them achieve what they want to do, working out what the missing gaps are and what we need to provide to give them certain insights. We're always listening, we've got feedback everywhere. And then yeah, full time customer support that isn't shared with free users is a big one. So you talk about competitors. Name a competitor that has the same support as we do. There isn't one because you've got, if they go budget, they've got a ton of influx indie customers, but then they've got more people to support on cheap plans. What do people on cheap plans typically do with support? Abuse support. So we intentionally filter the amount of people coming through on support to offer the best support. Literally. In the analytics industry, I think a

Speaker B: lot of indie should focus on their customer. We talk about growth so much, but not making your current customers so happy and churn is a big problem with a lot of indie products and also where it's becoming easier and easier to build tools. Right. Now, it can be also easy to build, build, build, and not take care of your customers. So contrary to that, making sure the product is best for the customers, how are you getting new customers? How are you growing? Do you have a marketer on the team?

Speaker A: Honestly, a lot of it's word of mouth. Like, my blog posts obviously do help, but we're not doing enough marketing. I spoke to one of my friends, very successful entrepreneur, Poly, and he was showing me what they do for marketing, and he showed me the spreadsheet and I'm like, holy shit. Uh, it made me feel like we were doing nothing. You talk about marketing, growth has been good and word of mouth works and brand reputation, all of these things are fantastic. Uh, but marketing is being stepped up for 2025.

Speaker B: So what things are you thinking of doing?

Speaker A: You want me to share all of the stuff I'm doing?

Speaker B: I'm interested to know.

Speaker A: I mean, so, I mean, a few things that everyone does, right? Conference sponsorships, adverts in various areas. You know what? No, I'm not going to share this, dude. No, we're going to do a bunch of stuff, is what I'll say. Typical stuff. And we're going to be experimenting. So I don't. I guess I can't lay out a plan. It wouldn't be helpful for anyone anyway. But I guess I would say we're going to be experimenting with all of the available channels that make sense and testing them. That's the plan, basically. And you can be like, oh, there's YouTube ads. That's. Yeah, sure. Like, we're going to test everything. That's your answer.

Speaker B: How much money are you paying into it?

Speaker A: 60 million.

Speaker B: What did I expect? What did I expect? So how about you personally, how are you making sure you're having fun?

Speaker A: I have most fun when my brain is being stimulated, you know, away from the typical stuff that I always say, like family time and everything. But I. For me to feel fulfilled and happy, my brain has to be stimulated. I have to be learning stuff. I found chess is a good one to get my brain going. Reading is a big one. Exercising, eating. Well, when the health is good, everything's good. You know, health is the foundation of everything. When I'm eating as I should be, everything feels good.

Speaker B: Yeah. Well, Jack, thanks for sharing this. Finally, what revenue is Fathom app at? Uh, the moment?

Speaker A: Uh, 600 million. ARR.

Speaker B: Wow. That's what I thought. That's what I thought, Jack. I endeavor every episode on three recommendations a bit. You've been reading a podcast. You've been listening to and an entrepreneur you're inspired by or want to share. That's a good follow.

Speaker A: I'm reading Dopamine Nation. I'm reading Light Medicine of the Future podcast. I don't, I don't really listen to many podcasts. I guess Huberman Lab, uh, is what I listen to. Entrepreneur, I think always I lean towards people like Rob Walling, Jason Cohen, Ruben Gomez, the genius. Those kind of guys. To be honest with you, I don't really care for the big crazy names. I care for uh, the people that are smaller and really doing cool stuff.

Speaker B: Well, Jack, you've been a great guest. Appreciate you coming back on and sharing some of the updates of Fathom.

Speaker A: Thank you, sir.

Speaker B: Thank you very much for listening to this episode of Indie Bytes. As always, thank you to my sponsor, email Octopus and I will see you in the next episode.