A lot of people who start podcasts aren’t quite sure what the goal is: sponsorship dollars? Fame? Corporate brand-burnishing?
For Patrick Campbell, founder of the Boston startup ProfitWell, the return on his podcast became clear last month: $200 million.
That’s the price that one of his prior podcast guests, Christian Owens of the London-based payments company Paddle, paid to acquire ProfitWell. The deal officially closed in April and was announced in late May. ProfitWell, founded a decade ago, had never raised any outside funding. Despite that, the startup surpassed $10 million in annual revenue in 2019, according to Campbell.
Campbell, a former employee of Google and an e-commerce startup, Gemvara, founded the company in 2012 to provide customers with advice on how to optimally price products; its original name was Price Intelligently. “Pricing is at the intersection of important and uncomfortable,” Campbell says. “You get the smartest people in the room, but people seize up and get hesitant.”
Jeanne Hopkins, an early ProfitWell customer, says that the typical software-as-a-service company — one that sells subscriptions on a monthly or annual basis — “spends less than six hours total thinking about the pricing of their product offerings.” While working at Somerville-based SmartBear Software, Hopkins says, she relied on ProfitWell to assess and ultimately raise by 23 percent the price of a key product that had carried the same price for seven years, despite added functionality. Other early customers included Lyft, Reebok, and Autodesk, which sells software used to design buildings.
ProfitWell began life by selling, effectively, Campbell’s advice and analysis related to pricing questions. “Initially, it was just me in a room, 18 hours a day,” Campbell says. He’d cashed in his 401(k) account to provide him with $10,000 to cover his living expenses. His thinking: “If I can’t make it work with $10,000, then I’ll go back to work somewhere.” He was 24 years old at the time.
In some early conversations with venture capitalists, he learned that they were mostly averse to investing in companies that simply sold people’s time and brainpower — professional services companies.
Over several years, Campbell and his cofounders, Peter Zotto and Facundo Chamut, began building their own software tools, including one that helps retain customers and another that makes revenue accounting simpler and more automated. They created a free tool that serves as a dashboard for software companies’ key business indicators. That one, ProfitWell Metrics, not only built awareness but also had the dual purpose of helping ProfitWell gather lots of data about how businesses worked and how they were doing. Today, about 30,000 companies use the free dashboard.
Campbell also created an audio and video podcast called Protect the Hustle, which focused on how software-as-a-services companies grow. It has featured guests from Netflix, HubSpot, and Vimeo, among other companies. “We took a very media-like approach to our content,” he says. “We made a lot of videos, a lot of educational content, trying to be the most helpful brand out there. Even if people weren’t customers, we felt that it would help us a lot in terms of word-of-mouth.” (Coming soon: an online documentary about how ProfitWell’s acquisition by Paddle played out, entitled “We Sign Tomorrow.”)
Campbell says that by 2021, the company had decided to explore raising its first round of outside investment. “We started having a lot of $10,000 arguments, where you have like five initiatives that all need money, and they’re all worth doing,” Campbell says. “We were arguing over a $10,000 decision, well beyond the size where we should’ve been having those arguments.”
In seeking advice about raising money, he reached out to Owens, who had previously raised $93 million with Paddle. “He suggested maybe we join forces instead,” Campbell says. In May, Paddle raised an additional $200 million and used some of that funding to acquire ProfitWell for $200 million. The deal was a mix of cash and stock in Paddle; Campbell says he doesn’t want to be specific about how much of each was involved.
Bob Almond, a Boston entrepreneur, has been an informal adviser to ProfitWell for several years. “If they execute well,” he says, the stock component of the deal “could be worth five to 10 times as much as was announced.” As Apple begins to allow other companies to handle payments for mobile apps it distributes through its app store, Almond predicts that will drive serious growth for payment services companies like Paddle. “Paddle and ProfitWell are really well-positioned,” he says.
Campbell had moved to Salt Lake City in early 2020 to set up a west coast office for ProfitWell; his two cofounders remained in Boston. At the time of the acquisition, he says, ProfitWell had about 80 employees. He says they and about another 20 former employees will all “receive something from the deal. Even though we were bootstrapped, it was very important to me and my partners that everyone participates in the upside.”
Campbell headed to London in April to announce the deal and participate in a company-wide summit with his new coworkers at Paddle. He says that while other buyers might have allowed him to “just sell the thing and leave, that didn’t satisfy any of us. We wanted to keep going.”
So he will now serve as chief strategy officer at Paddle, reporting to one of his former podcast guests.