Episode Summary
In the second part of their conversation, Steve and Ben talk about what it was like for Verblio to acquire the AI-driven video platform Automagical. They cover the M&A process, the unexpected challenges, and how the move led Verblio to double down on its role as a written-content-first platform.
(And don’t miss the first half of their conversation, on leveraging freelancers to ride the content creation wave.)
???? Get smart: “An M&A strategy to me is very similar to starting a new product in your company.”
Podcast-at-a-Glance
???? Podcast: MarTech Podcast
????️ Host: Ben Shapiro
???? In his own words: “The MarTech Podcast tells the stories of world-class marketers who use technology to generate growth and achieve business and career success.”
???? Two of our favorite episodes: “Artificial Intelligence for Growth Companies” with Morphio CEO Eric Vardon, and “Guide to Hiring Contractors to Solve Discrete Marketing Problems” with MeasureMatch CEO James Sandoval
Top Tip from This Episode
Know who you are—and who you are not ????
“The M&A process caused quite the existential moment at our company where we had to figure out how we wanted to define ourselves internally,” Steve says. As a content creation company that focused on written content, how did video fit into Verblio’s offerings? “Are we saying video should be your only content? Video should be paired with your existing written content? Or should it be a standalone where we create cost-effective video marketing?”
Video was—and continues to be—exploding in popularity. For Verblio, though, the decision was made that writing will continue to be our core offering. “We are going to be a written content company first,” Steve says. “The video is to enhance that written content and also to help promote it. …Once we came to that point, understanding the rest of the message was a lot easier to get out.”
Episode Highlights
Why Automagical was the ideal choice
“They basically came to us and said that we’re the company that they wanted to sell to. We’ve been talking to them for a few years about partnering with them, testing with them, and there was a clear strategic fit.
…It was the right size company for a bootstrapped company that’s in the $6 million, 10 million annual revenue range to acquire. Without VC funding, we needed to go with somebody who was at that pre-revenue stage or very early revenue stage… We also needed someone who didn’t have investors that we had to pay off.”
M&A strategies: size versus speed
“First of all, you have to decide if you’re going to go for the big approach—the M&A attorneys, the lawyers get involved, you’re really wrestling it down—or are you trying to do a reasonably sized deal that gets done quickly, where you might be up or down 10% on all of it but it gets done faster, and you’re not giving it all to professional services who support the M&A business, which is the route we went.”
Sometimes the tech is the easy part
“It’s interesting because actually the technology handover was much easier than the marketing and revenue facing piece of it—how do we go to market, start offering this as a different value proposition and selling it into our client base, which actually turned out to be a much bigger lift on our side than the actual integration.”
Integration takes a ton of time
“It’s like moving into somebody else’s house, right? They’ve been living there since the 1940s, they’ve put up gold-mustard drapes, they have pink everything, sconces everywhere, and there’s carpet in the bathroom. And basically you just know that your M&A process is going to uncover 20% of all of the challenges and problems that you have out there. And so you have to be pretty deeply committed to the fact that this is such a good strategic play for you, that you’re going to stick with it for long enough.”
Top quotes
????️ Steve:
[6:12] “We use technology in order to lower the cost of creating content, but we believe that humans are critical to creating great content of every level—and we thought that video should follow the same way.”
[9:31] “Part of our valuation was, these guys are so damn smart. We have utter faith in their technology.”
[10:26] “You describe marketing as a blend of art and science—I think acquisition is maybe even more art and science than most marketing that I’ve done.”
[13:59] “An M&A strategy to me is very similar to starting a new product in your company.”
[16:23] “Our value proposition is that our technology and the SaaS platform that Verblio created is to lower the cost and increase the efficiency and effectiveness of written content creation. And the video platform that we just bought does the exact same thing in that humans write the story, using that technology to lower cost and improve it.”
????️ Ben:
[15:13] “As a marketer, I advise people that are starting to think about marketing that you need to have patience. Cultivating great marketing takes time.”
[16:59] “One of the first things that I do with any of my clients is sit down and talk to them about what their company is, who they are. And then we try to find the overlap between not only who the company is, but who their customers are. And that’s really how I define someone’s brand.”
Learn More
Check out our announcement post on acquiring Automagical and what the tech is all about.
