This is my fourth interview with Patrick Coddou, the founder of Supply.co, which sells razors and shaving accessories. The first, in August 2020, is related to the rise of the DTC model. Second, in February 2021, decided to make a friendly bet whether his company or mine will get more sales in 2020.
Our third interview took place in October 2021. The impact of iOS 14.5 has reduced the profits of many e-commerce brands, including Coddou’s. We discussed his plans for rebuilding the business.
The plan worked. Supply.co followed suit with gains. Coddou sold his business. This is the subject of this interview.
Eric Bandholz: What’s new?
Patrick Coddou: I recently sold Supply, my company. There have been many sales and divisions of the e-commerce model since the release of iOS 14.5 in May 2021. Many cannot make money or sell their products for coins. So I’m thankful that’s not the case for us. We started the process of selling the business in March 2021. Many people looked at our contract. So we’ve been in the market with technology for a while.
Long story short, I’ve been talking to an investment manager for a year now. Finally, he told me to think about my marketing. It was late 2020. Things were going well at that time. We have a Covid problem. We have cleared the Shark Tank of our financial statements for the past 12 months.
One of the things I learned about Shark Tank is that you can’t sell right away because of the size of the business. Buyers want to make sure it’s not a one-time thing. You must remove the success of Shark Tank from your financial history. So we did it and decided to make money or sell.
We are at the limit of three options. On the one hand, we can continue to grow, primed. Second, we can get money and goals for the stars. Or, third, we take money off the table and sell it.
By then the business had exceeded all my expectations. I always have big dreams and big visions, but I invented this thing in my office as an aeronautical engineer and I never thought it would become a multi-million dollar business. I know it is precious. It would be nice to sell and put my family in a better financial position.
When you look at the EBITDA numbers – earnings before interest, taxes, depreciation and amortization – there is a big chance at the end of 2020, at least in theory. We went to market in March 2021.
Anyone familiar with e-commerce knows what happened next, which is iOS 14.5. We went from a profitable and growing business to an unprofitable one overnight. June and July 2021 are the first unprofitable months in company history. No one can buy what they like.
Bandholz: How do buyers know you’re in the red?
Coddou: When you are in the market, interested buyers are looking for new numbers. I told them the truth and explained to them what was happening in the business. We are still trying to sell the business until the end of 2021.
But when you’re selling a business, you almost always use the last 12 months’ EBITDA. This is what every buyer looks for. You cook if you have two or three months that are not good during this time. We are still trying to sell and at the same time work to save the company. I rebuilt our sales team from scratch, fired the entire company, hired a green team and trained them. Slowly but surely, the business gained. It didn’t happen overnight, but we started to see some positive trends.
It was one of the worst years of my life, career wise. I was stressed and anxious about the business, but I doubled down. But at the same time, I have high hopes of being able to convince potential buyers. But honestly, I should stop trying to get it and come back in a year.
Bandholz: How old was your company at the time?
Coddou: We started in 2015, about six years. Throughout 2021, I was still trying to sell the business, but rebuilding the business was not necessary. Fall 2021 looks good. Q4 is better, Q1 2022 is good, and Q2 is terrible. Then things started to get better. Fast forward to April this year when we are about to wash away those bad months. It’s time to get back to business.
But the landscape has changed. There is no fundraising this year. Still, there is interest.
However, in April, the offers were even better. We discussed the team and signed the letter of intent. When you sell a business, you sign a letter of intent, two or three pages of what we think the business is worth, and terms and conditions. It’s not binding, but it does guarantee that you won’t sell your product anywhere else for the next 60 days. This gives you and the buyer a chance to do your research. We closed in August this year.
Bandholz: You still work there.
Codou: Yes. I’m still in Supply. My work is the same. My team stays with me and almost nothing has changed in the company. I still believe in business and the best days are yet to come.
There are many personal and emotional decisions that go into marketing. But the biggest feeling in my heart right now is gratitude. I never thought we would get this result and I am relieved. For the past 12-18 months I have been stressed and exhausted.
I have not enjoyed working for many years. It reminds me of the early days without the burden of everything else, answering questions and bringing out the light. The bigger the company, the bigger the fire and the more they end up on my desk. Now that the lights go to the other tables, I can do whatever I want. Sometimes it is difficult for me to organize training staff and provide wisdom that will help them.
I realized that I am a good founder. For a mark under $10 million, that’s good. I am a beginner, not an artist. Maybe that’s why I’ve had a little bit of stress and a little bit of fun in the last two years as I’ve transitioned from being a founder to a team-building CEO. When I’m excited about something, it’s always about new ideas, new products and new business – ideas just keep coming.
Bandholz: What’s next?
Coddou: Marketing requires a lot of thinking. One of them was thinking about the people who helped me along the way. I owe my success in my journey to many people. I ask myself now: “Who am I?” One of my passions is mentoring and coaching – helping others develop and grow.