Selling companies for millions — Jesse Stein's playbook for fast scale and clean exit

I asked him for his university, and I said, "Do not sand off the truth and put varnish on it." Like, what do you think? He goes, "I absolutely love it." I said, "Well, great. So what do you recommend I do to avoid the kind of typical hurdles, rocks in the road, snags, and potholes that SaaS companies have experienced?" And he goes, "First off, don't target SaaS." He says, "Yeah, oh, we couldn't agree with that more, dude."

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Welcome back to another episode of the Revenue Reimagine Podcast. We have with us today Jesse Stein, who has founded, operated, and sold multiple technology ventures. He's currently the founder and CEO of Hermetic AI. And before that, started SportsMemorabllia.com—my kid would love that, by the way—growing it from a mere domain into the world's largest autograph store and a top 500 internet retailer that was sold to a small little company you might have heard of called Fanatics. And before that, he started and ran a D-to-C consumer, or D-to-C consumer that made sense, Adam, online skincare brand generating a mere $48 million in revenue in two years. Prior to that, Jesse worked and lived in Tokyo for six years. Definitely want to dig into that for a little bit. But Jesse, thanks for joining us, man. Glad to have you here.

My pleasure, guys. Thanks for having me.

So I'm going to take it in a bit of a different direction. We originally talked about what brought you from Sports Memorabilia and skincare into the SaaS space. Like, why did you come into the SaaS space?

It was less about the fact that SaaS is fashionable, and more that I saw an opportunity and thought that the best and highest way to explore that opportunity was through a subscription business that people call SaaS now.

Super interesting. And so to get it back on topic on what we're going to talk about, which is digital marketing hacks and that kind of stuff, tell us a little bit about what you've learned in the Sports Memorabilia world that now you're bringing into this SaaS world, because there's probably a lot of parallels as you're trying to build this new motion.

Yeah, probably the biggest couple of big learnings there. First off, cultivate your potential acquirers years in advance. And so Michael Ruben, who ended up acquiring us with Fanatics, we had cultivated that relationship directly and indirectly for like three years. And I acquired the domain name SportsMemorabllia.com in 2006.

Yeah, way back. I was going to say that had to be way early because you're not getting that domain.

There's been more than a few domains you've bought and sold. We'll talk about that later too.

Yeah, yeah. It was not a raw—it was not—you were early on that game.

I was early in the game. But I mean, all the domains pretty much got snatched up in the late 80s and early 90s, so these domains were aftermarket. I ended up spending about a million dollars on domain names in '06 and '07. This is like hobbies.com, boating.com, yachting.com. I was obsessed with kind of like the landholders of the internet. I was obsessed with these kind of category-defining one and two-word domains that have no synonym. And so it's kind of like beachfront real estate. And then the idea is to develop out that real estate. But nothing worked out. I mean, biking.com, boating.com, yachting.com. Those I mean, I learned some valuable lessons, which is like focus. Like, it's really—I found myself opening up a biking store because we found out that in order to get the various suppliers of bike derailers and frames and so forth, you had to have a physical store. So when you zoom into each of these categories, you realize how complicated it is.

So one big lesson from Sportsman, which was the original question, is focus. And you guys are really smart. I'm certainly less smart, but smart people tend to be curious. And what I've noticed is curious people tend to lurch toward the shiny and the new, and that is dangerous. It's extremely distracting. And I've noticed it is inversely correlated, at least in my experience and the experience of the people who I consider very successful over time as entrepreneurs, to lurch toward the shiny and the new and to constantly reach down and pick up.

Yeah, exactly. I talk all the time. I'm trying to be better, but I definitely am one who suffered from shiny object syndrome 100%.

Or what I call bigger, better deal.

Oh no, Zachary with his shoes. Yeah, that's a whole thing.

So yeah, that resonates a lot, totally, totally. And it's fun because it's new, but it's extremely distracting. And what I've noticed is like you'll start off on the yellow brick road on your way to Oz, and then it's very easy to get distracted by, you know, the tin man and the lion and the scarecrow and the monkeys and the trees. And then you end up in Munchkinland instead of Oz.

And so with Sports Memorabilia and these other domains, for example, boating.com ended up opening up a branch in Norfolk, Virginia, which is where our biggest competitor was. And we scaled that, and I was just all things to all people and nothing to nobody. And so the moment we focused on Sports Memorabilia, and I had these two incredible co-founders, Mike and Stefan, and it's always—it sounds really cheesy, but it's always a team—so what we learned is just the power of focus. And the moment we focused, it was pretty unstoppable.

So focus, and then cultivating acquirers, potential acquirers, potential partners, investors way in advance so they have the most important thing of all, which is trust and comfort. And so like the year I acquired Sports Memorabilia, I actually went up to Steiner Sports and met with Brandon Steiner. That was like the first meeting I took. I took meetings with all the big people in the space who'd been entrenched and way better funded. All my businesses except for one had been self-funded, for better or worse. And so I met these people, started doing business with them, became Steiner's biggest supplier actually, and then Mounted Memories, and then these people ended up in Michael Ruben's ecosystem over time. And it was kind of like all roads led to us. And they had great things to say about us. And so it really greased the skids. And by the time I met with Michael Ruben, he was like, "This is a great idea. Let's do this. Everyone loves it." So that was another lesson for sure—to build trust way in advance. It's like definitely a digging your well before you're thirsty type of activity. But doing that in advance, I cannot tell you the benefits.

And then the third one was like, find an acquisition channel where you experience unusually low CAC for an extended period of time. You know, it's like a diabolical acquisition shortcut, except if sustainable. And so in that case, it was SEO. And then I developed a number—we collectively developed a number of hacks for media buying as well. And then the use of CRO, or conversion rate optimization, cannot tell you how that is by far the lowest cost, easiest way to drive incremental visitors, conversions, cash flow. And that, by the way, very few of your competitors will ever do. Like, everyone talks about Optimizely and Visual Website Optimizer and these other conversion rate optimization tools. Very few people use them consistently and aggressively. So like, those are I don't know, four or five things that we learned from Sports Memorabilia.

So I find—you said a couple things that I find fascinating. As much as I'd love to dive into domains and that game, you said that it's a team effort and you talked about founders. And I know when we're talking to founders of SaaS companies, and even just ourselves, to be honest, I believe that co-founder or co-founders is absolutely critical. I struggled with the idea of going out on my own. I struggled with the idea of then doing it with anyone. But Dale convinced me like the power of two or three is more.

But co-founder is like a marriage, right? It's not as simple as, "Hey, we have an argument. I'm going to go take my toys, my customers, and go cry in my sandbox and screw you." Like, you've got to figure it out. And that's hard. And you have to be able to have difficult conversations, but you also have to have people that you deeply trust that deeply add value to the product or service or company that you're trying to build. And I believe that is a different skill set than you, in a lot of areas.

But for the founders listening who either are founders right now, either technical or sales, and don't have the other founder, or for folks listening who want to become founders, how do you find that great co-founder? What do you look for? How do you know, "Hey, this is the person I want to get married to?"

Wow, yeah. That's a great—and we can have a discussion together about this. So I've been working with co-founders for 25 years as a tech entrepreneur with different co-founders, and I definitely believe that, like, I agree with you, having people to work alongside just adds rocket fuel to the business plan but is also more fun. More fun, especially certainly complimentary skills obviously, like, is super important. But then, like, for me, at least, just because you're going to spend so much time with the person, to really enjoy their company and then sense of humor together is critical.

I'm not a big fan of people who are, especially if you're going to spend hours a day with people who are very literal-minded or just can't take a joke or can't laugh at themselves or can't poke fun. You guys joked before this podcast about, you know, making fun of each other, good-natured zingers and so forth. I think that's all super, super important.

I think, for example, I've two co-founders with my current venture—Brandon and then Bensa. Bensa is in Hungary and he's our technical co-founder. They're just a joy to work with. There's stuff that they do that I can't possibly do, and hopefully vice versa. We really enjoy working with one another.

Then I guess the other thing is just to be quick to forgive and apologize. You know, if I'm having an off day or I'm irritable, that one's hard for me. That one Dale will tell you—that one's hard for me.

Yeah, yeah. I think we all have off days, and I think the challenge becomes how do you not take some things personal? How do you not take things and I think it's even harder now because we have this insatiable need to be connected at all times. It could be a Slack message, could be a text message, and we don't get on the phone and really contextually ground the conversation in what we need to accomplish. I think a lot of times that leads into other pieces, and then we get busy and you have clients and all sorts of other things.

I'm curious, Jesse—how? Why did you pick what you picked to build? For your platform, it's starting to be a super crowded space.

Yeah, so all the stuff that I've been lucky to do pretty much comes from a frustration that I had in my career, in my life, where I saw that there was just an opportunity. Then many of them are harebrained schemes and never actually work out in the real world. But then from time to time I get lucky.

This one was—so we developed an AI called Mia. Mia—it's a little nod to Miami, which is where I am. I love it.

What I noticed is that it's really hard to engage with leads that come in through your website. When someone submits a web form on your site, it's really hard 24/7 to get there first before competitors and engage in a personalized fashion. Then to follow that lead through the buyer journey, and then to stay in touch with the lead when it disappears into thin air.

HubSpot and other CRMs are woefully ill-equipped to do this. The best they can do is trigger a sequence or workflow of four non-personalized emails. I know that AI tools are coming on board, but it's going to take some time. There's nothing out there.

This thing that we're doing now came entirely because in my last venture, we spent about $2 million on Meta ads and we drove 27,000 book-a-demo leads through our web form. I noticed that even if we got there an hour late, or a couple hours late, competitors could already be engaged in the process. Seventy-five percent of the business goes to the vendor that responds first, even if they have an inferior product offering.

Then even worse, speed to lead. No lead left behind is the bottom line. Once the lead gets to be months old and you know, if they didn't—if they're closed-won or closed-lost—to keep in touch with that lead in a personalized fashion is really, really difficult.

So that's where that came from. Then I had this amazing conversation with Godard—actually a couple conversations with Godard Aiello, who's the founder and CEO of G2. I showed him this a couple weeks ago. I showed him Mia and what we got, and I asked him for his advice. He's built—I think they're up to $113 million in ARR, right? A small little amount of money, right? Godard's awesome. He's got a great personality. He's a very kind person.

I asked him for his unvarnished advice. I said, "Do not sand off the truth and put varnish on it. What do you think?" He goes, "I absolutely love it." I said, "Well, great. So what do you recommend I do to avoid the typical hurdles, rocks in the road, snags, and potholes that SaaS companies have experienced?"

He goes, "First off, don't target SaaS. People buy from people. That's why companies who invest in meaningful connections win."

We couldn't agree with that more, dude. You know, I don't know if you guys know who Andy Paul is.

Yeah, yeah. So I had a few Zooms with him and his son Alec, who's awesome. Andy's wonderful. His first experience share was: do not target SaaS. He's recounting how he was at some of the first SaaS events and so forth, and he just noticed how incestuous it was—they were just all selling to each other. He goes, "The market's completely overrun."

So Godard's advice—he said, "Pick a very, very specific ICP, use that as a beachhead, and then expand out from there." But kind of like further to our initial conversation with Dale and Adam about shiny pennies and focus, he just said, "Focus in and eat, sleep, and breathe a very hyper-specific ICP."

So we made about 8,000 calls to home services people through SDR testing that ICP. We did some stuff in—I see off your left shoulder, Adam—The Gap Selling book, yeah. So Keenan—I had a dinner with Keenan, couple great conversations with Ken. He's a great guy. He became a strategic adviser and we were going to do a bunch of stuff together. Then I actually just wrote him this morning and let him know, "You know what, we're not moving into SaaS. It's so overrun and it's packed."

So I ended up talking to a number of restaurant chain owners—owners of a space that's near and dear to my heart. Oh beautiful, okay. I led sales for Toast for three years in the Southeast. Restaurant owners—great space, underrated, awesome.

I'm in this organization called YPO, and so I started reaching out to fellow YPOs who are owners of polished-casual and above restaurants—polished-casual to fine dining, multi-unit, multi-multi-unit folks—and asking the same question. So we've zeroed in on private events.

What we noticed is that speed to lead and no lead left behind, and private events for restaurants that have event venues for private dining—huge opportunity and very neglected. So the last 90 days, we're just completely about eating, sleeping, breathing private events leads for restaurants and hotels and unique venues.

So I have a meeting coming up with the CEO of the LA Rams and Golden State Warriors and these guys, because that's a huge part of the business—private events.

Yep, 100%. This is in Adam's wheelhouse. You're speaking my language so much. I don't think Dale's seen me get this smiley on the show, man. I'd love to chat offline about it.

100%. This is my world—not just because I lived in it from a sales perspective, but I am such a—like, we travel and eat and do events like that is what we do for fun, like life-wise. Awesome. So I love it.

But not to spend time there—oftentimes when you're building, scaling, growing a company, there's a lot of folks out there who want to give you a ton of advice: "Do this, Jesse. You can't do that. You got to focus on this."

Talk to us about where you bucked the trend. What's some of the common advice that you've just ignored that has actually turned out to help you be really successful multiple times over, which you don't see a whole lot?

Yeah, so I mean, what's really important to note, and I always let people know right away: I do not have the lightest touch by any stretch, and I don't get wiser with age, apparently. So I've just been at it a while. I got fortunate right out of—well, I went to Wharton. I did my MBA at Wharton. This is when the dinosaurs walked the earth. I started my MBA in 1996, and entrepreneurs—that was a dirty word at Wharton. It was all about training people to go into finance, go work at some big Fortune 100 finance company, right?

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And McKenzie, you know, or BCG. So it was finance and consulting. And so first month at Wharton in 1996, when I declared tech entrepreneurship as a major, the academic adviser looked at me and said, "You should have gone to Stanford or Caltech." And I was like, "Great, awesome."

By the way, I had a great experience at Wharton, even though I struggled academically and they didn't have a whole lot of classes for me, but it was still a great experience. And it turns out people, as a result, think I'm much smarter than I actually am because I went there. But one thing I learned from there—you kind of asked about advice that people or institutions in this case had given me that I've ignored to my benefit—Wharton was all about perfectionism because they were training people to go to Goldman, investment banks, McKinsey. Think about it. It's all about dotting every i and crossing every t. And entrepreneurs who do that and are perfectionists get their asses handed to them, right?

I mean, it's all about 80/20. You don't do everything perfectly. Obviously, there are some things that you want to make sure you do extremely well. But the vast majority—you guys know—you have to 80/20 that. That equals speed, right? So I think I was fortunate in that way. I would have—I've always iterated, I guess, pretty quickly.

And so when I graduated and then it was right place, right time. Late '90s, graduated, and that was the beginning of the commercial internet. So I think I got my reps in early.

And then I love it. I love it. I'm very fortunate. And there have been a number of—oh, and I cut things off pretty early in general, although we've had some pretty interesting misadventures. And I've—that's key though, right? A lot of people don't do that. They think, "I've invested dollars or x amount of time, so I got to keep going." And I know there's a term for it and it's slipping my mind right now, but being able to say, "Hey, this didn't work. Cut it. Cut our losses. Whatever we spent, it's a cost of loss and move on to something that's going to work." Because all we're going to do is keep dumping a ton of money and time into something that is never going to work.

Yeah. We talk often about iterating rapidly, tripling down on what works, and abandoning really quick what doesn't. That is awesome advice that you guys give. Like, if your listeners would just pay attention to that, you know, that's it. That's the game, you know?

I think it's tricky because I think there's a lot of bad advice out there as well. And some of it is probably just old school go-to-market. Go-to-market is changing so quickly. Every three months, you have new tech coming out. You have new ways of getting ahold of people. You have Google shutting off, you know, putting spam filters on everything. And so now you can't do the outbound that you used to be able to do. So there's a lot of tricky parts.

And so I think, depending on where you are, you get into an investor world where they're like, "Oh, you have to have these many calls and these many emails and this much stuff to convert down the funnel," and that's just not the way go-to-market works anymore. There are different ways to do it. And kind of like—I forget about the SaaS space for a second—but speed of the lead has always been a thing. There are fundamentals that are always a thing. But it's like, how do you execute on those fundamentals? And the things that are working, you do more of. And the things that you test and taste—test and taste—and then the things that don't taste very well, you don't keep them in the stack.

But I think the other thing, one of the things I learned early on when I went to go get my MBA—when you have your MBA, yeah, once in a while. Once in a while, unbelievable. But one of the things that we learned early was, once you fail at something, now you just have something else that you don't have to go about. You just put that in the loss column and you move on. You have to be okay with failing. And if you don't fail often, you're not going far enough. You're not testing the limits far enough. And if you don't try to put yourself out of business every day, someone else is going to put you out of business.

That's a great insight. Yeah, you have to have a tolerance for risk. Just picking up on what you're saying, you definitely have to have a stomach for risk and not take the failures personally.

And then be—yeah—be pretty—I try to be pretty self-aware. I've got multiple sources. Like, you can't see yourself swing. So you have to, I think, on a regular basis consult with people who've been there, done that, who aren't yes people, and then will tell you the truth. They tell you honest, transparent, goddamn truth. Because a lot of people just want to hear what's happening, like, "Yes, you're right. Yes, the product—" we just got off a customer advisory board. We just got off a call before this. And the CEO of the company was like, "I want to know the real reason why the product sucks or it doesn't work. I don't want to hear all the good stuff about the product."

Makes sense, makes sense.

Yeah. And I see that. And I'm definitely a work in progress. So I'm not saying I've achieved any endpoint. But definitely something that's been valuable to me is consistently consulting people who've done it. Goddard was a great example. Got on with him twice. He's been very generous with his time. And then a guy who really has a lot of battle scars over ten years building G2 and has done phenomenal with it. But really helping me there. And then also just like work that, you know, I do certain meditations—let's just say—for fifteen years now that have been extremely helpful in terms of calling me on my own BS. And because, you know, ego—as you guys know—ego and pride and shadow and all that stuff.

No, not at all.

Yeah. Dale's like, "Adam, you're one of the biggest egos in the room." I was thinking I'm going to change that sign behind you to something else when I see you next week.

I don't think the house—I don't think it's ego. I think my Achilles heel is I take things personally. And talk about "forgive and assume positive intent." And like a message will come across, and I will immediately—it happened this morning—I immediately am like, and I don't say it, but Dale knows me well enough now. Like, people genuinely can't believe it's only been eighteen months, and he's like, "You're taking this as me attacking you, and I'm not. I'm just asking a damn question." And I'm like, "Dude, like, what do you want me to do differently? I did what I could. This isn't my fault. Leave me alone." And it is partly ego, right? Because it's like I'm trying to do the best I can, and I'm doing this. That's hard for people. So I think that's really good advice—you have to put that aside. You have to be willing to admit that you're wrong, and you have to be willing to let others challenge you. Especially a co-founder, right? Like, the reason you pick a co-founder is to challenge you, to think differently, to look at things differently, and to, for lack of a better term, check yourself. Which is probably the wrong verbiage to use, but it's important.

Best idea wins. And I love being wrong. It's great. I love it when it happens all the time. You know, when one of my co-founders or someone else I'm working with just has a better idea, that's great.

Jesse, where does the humbleness come from? Because I look at your bio and I look at everything you've accomplished. I look—you know—starting at Wharton and the businesses you've sold and the revenue you've brought in. Like, in full transparency, most of the founders that I've spoken with and worked with—and Dale, you could probably agree with me—like, they don't have a level of humbleness, right? They don't want to be wrong. They don't say other people could do it better. It's the me, me, me, me, me show. Is that something that started in childhood? Is that something that was learned? Have you always been this way?

Oh, thanks. Well, I've just been humbled over a long period of time. I mean, a lot of failures, right? A lot of failures.

Yeah, well, yeah, not just—I mean, I'm just a normal dude. And really, right place, right time. I've worked very hard over time, but I also had people that really believed in me early on. You know, my father was great, but he lived very far from me—a thousand miles from my mom and me. And I grew up in Santa Fe, New Mexico, and my father was in California. He was a great, great person—very loving and kind person—but he had a lot of personal problems. And so I was very independent from a very young age. And my mom was my hero, you know, raising me.

As a single working mom, my grandparents who lived in New York really believed in me. They believed in two things: Judaism and their grandkids. And they supported my education all the way from private education, kindergarten through Wharton. And I did another Master's at Penn. And like, I was very fortunate to have that help.

I've also seen, you know, I have a great family as well—you know, a wife and kids. And although Adam, you are making us married guys look bad with that photo behind you. I mean, that's just borderline shameless. But I love it. But it's tough for the rest of us.

There's a whole story there. We were going to do a big wedding in Chicago where my wife is from, and we actually fell in love in Big Sur, California. So rather than doing a big wedding in Chicago, we flew out her family and ten of my closest friends, paid for everything. It was still cheaper than what a wedding would have cost. And we had a small intimate ceremony literally on the cliffs. It's beautiful. It was a cool experience.

And the last thing I would say—first of all, I feel so humbled and lucky to have incredible healthy children and a wife. And I've seen health issues, for example. And I know that's just luck. And I really don't take a minute of it for granted.

But also this work—I would encourage, or I'm not here to give advice because I have no advice to give, but experience shares. The last fifteen years, since I was forty, I've been working in these meditations. Let's just say these are very deep types of meditations that I think are very humbling, honestly, and can show you who you really are in a way that I think talk therapy is great, but talk therapy by comparison is a slow boat. So that's been a great tool.

And just to map it onto the entrepreneurial journey, it's really helped me. I think it just removes a lot of self-sabotage that entrepreneurs live with, and they often can't get out of their own way. This sort of work, whatever that modality would be for your listeners or you, I think is really important to do. Imposter syndrome is real.

Let's do some rapid fire. What is your favorite guilty pleasure snack?

Jolly Ranchers.

Which one?

The green one. The apple one.

What's the first app you check when you wake up in the morning?

LinkedIn.

Where do you start first—marketing or sales?

Marketing.

What's your go-to productivity hack?

Keyboard shortcuts on the iPhone. By far.

Early bird or night owl?

Early bird.

Last one as we wrap this up: dream vacation destination?

Safari in Southeastern Africa.

You and me both, my friend. You and me both.

Jesse, thank you so much for joining and for sharing all of that great information. Where can people connect with you and where could people learn more about Hermetic?

On LinkedIn. Just go to my—imagine that, yeah, imagine that. We will drop that in the show notes. Thank you so much for joining. We appreciate it, man.

Thank you both. Thank you.