More than eight years ago, before Sandhills Development was a real company, I built a small membership plugin called Restrict Content Pro. It was really built for my own use but in such a way that it could be packaged up as a product and made available for anyone to use. It turned out to be a pretty good choice because it was ultimately the product that led me to begin building the next series of products that today make up most of the Sandhills Development portfolio.
If I had not built Restrict Content Pro in 2012, it’s very likely that we would not be here today. We would not be a team of 26 people, we would not have built our other products and we would not have gone on to grow Restrict Content Pro into a $500,000+ per year product with thousands of customers, a strong profit margin, and a dedicated team behind it.
I’d like to share some of the backstory for how this acquisition happened and some of the exercises we’ve gone through over the past year. This isn’t the first time we have gone through a product acquisition, but this is the most significant one we’ve completed, in financial terms and importance to us as a company. Restrict Content Pro has been a major foundation for us for more than eight years and going through the mental process of deciding whether to let it go was a huge roller coaster of up and down emotions for me and the whole team involved.
Why sell Restrict Content Pro?
A year ago we had no intention of selling Restrict Content Pro. In fact the thought had barely crossed our minds. We were in the middle of major development work on the product and we had been making tremendous progress on all fronts of it. Our revenue had grown, our customers were happier than ever, and the product was the most stable and feature rich it had ever been.
So why sell it?
Years ago I made a decision to always build our products and company with the anticipation that they may one day be sold. I did this not because I wanted to sell off our products, but because I knew all products and companies will ultimately always meet one of three fates: they will slowly fade away and die; they will be discontinued; or they will be sold or transferred to someone else to carry forward. There are no other possibilities. One of those three things will always happen, so building to sell was a strategic choice to ensure everything was already lined up if the opportunity arose, and if the opportunity never came about, we have ensured that we have an efficient and well organized system, which is hardly a negative from any perspective.
Operating under this strategy has had two major results for us:
- We have intentionally kept each of our products separated from each other. They each have their own payment accounts, code repositories, websites, and more. This allows for a product to be “packaged up” neatly and transferred to a new owner without much hassle or disruption.
- We were prepared for a conversation anytime a prospective buyer came knocking. While we were not seeking out buyers for any of our major products, we were always ready to have a discussion if the time was right.
For Restrict Content Pro, the discussion about selling it began in October, 2019, when I received a very short, straight forward email that asked:
I’m wondering if you’d be open to talking about selling RCP to Liquid Web.
That was it, and because of our mentality of always building with an anticipation that products may one day be sold, I agreed to a high level discussion to see if there was any point in engaging a more in depth conversation. This short-and-sweet message worked because it came from someone I’ve known for many years and already knew it was a serious inquiry.
Our conversation continued off and on for a few months but the potential of actually making a deal was still a far off possibility. In February, 2020, however, I was in Oklahoma City and iThemes’ General Manager, Matt Danner, asked to meet for breakfast. That meeting, though short, was when it became apparent that we might come to an acquisition agreement. From my past experiences with Matt and the rest of the iThemes team, I already had complete confidence in their ability to care for the product and our customers, so our conversations mainly focused on the deal specifics. There were, however, two major sticking points for us:
- The price had to be right. RCP had grown significantly in the past two years and was continuing to grow, so we had no incentive to sell unless the price made it worthwhile.
- We really did not want to lose any of our team members in an acquisition. As long as the team stayed with us, or they wanted to move over, we were open to a possible acquisition.
If we could come to an agreement that allowed for RCP as just the product to be transferred to iThemes / Liquid Web, we were open to it. We were, however, continually bothered by one detail: why? Restrict Content Pro was earning a strong profit, was very stable, and our team loved working on it. Why should we sell it, even if the price is right? It was already making a good profit every month, so strictly speaking, money wasn’t a problem nor a major motivating factor.
Restrict Content Pro was also the first of our major products, so deciding to let it go was very emotionally challenging.
This is a good example of when going for a long drive or walk to have an opportunity to just think without the distractions of a screen can be incredibly helpful. It occurred to me that selling Restrict Content Pro could allow us to narrow our focus, increase our development, support, and marketing resources on our other products, and to significantly insulate our team from downturns by putting more cash in the bank. Protecting against a downturn, which we had already put a large focus on, only became more important as we watched COVID-19 ravage the globe and so much was uncertain.
Our teams have been spread thin for a long time and this was an opportunity to reduce the amount of work each of them was responsible for, and to narrow our focuses, improving our ability to deliver excellence to our customers. It was almost like hiring 2-3 more people but without any of the hassles or challenges that come with hiring.
Recognizing the benefits of narrowing our focus gave us our “why”, and we already knew that the potential buyer was going to be a good shepherd, so after that it was just a matter of coming to an agreement on the deal terms. It took several weeks to come to a full agreement but in April we signed a Letter of Intent with a binding contract signed later in May after a thorough review and audit by the iThemes / Liquid Web teams.
iThemes has been a leader in WordPress for more than a decade and has an exceptional record of quality products, tremendous customer service, and a strong history of integrity. I have watched and known iThemes for many years and have always been impressed and awed by the quality of work they produce and their leadership.
Anytime a product or service changes hands there are concerns about how well the new owner will care for customers, existing and future. With iThemes, those concerns were non-existent.
iThemes has our full confidence and there’s no doubt they will carry Restrict Content Pro forward in amazing ways. We are truly excited to watch them push the product to new heights and do so much more with it.
Interview with Matt and Brian Krogsgard of Post Status
Last week, Matt Danner and I sat down (virtually) with Brian Krogsgard of Post Status to have a conversation about this acquisition.
Over the hour+ conversation, we dove into the how and why of this process and shared many of our opinions and experiences. The full interview can be watched / listened to here.
What happens next for Restrict Content Pro customers?
There will be several changes right away that customers should be aware of.
Starting today, all new purchases of Restrict Content Pro will go through the checkout system on iThemes.com. We have worked directly with the iThemes team to migrate all purchase and license records to their system. In the next week or so there will be some new faces showing up in the development and support teams as we continue to assist the iThemes team in learning the ins-and-outs of Restrict Content Pro.
Later in the year it is likely for there to be some minor design changes in the Restrict Content Pro admin to bring it inline with the other iThemes products, and there will be some adjustments to include Restrict Content Pro in the various bundles iThemes offers, making it more affordable than ever before.
Building Restrict Content Pro into the best membership plugin available has been one of our proudest achievements and we will miss working on it, but we are so excited about its long, bright future. iThemes is a fantastic team to carry on what we started and there is no doubt in our minds that they will deliver excellence.
What is next for Sandhills Development?
This was a product acquisition only, meaning nothing else with Sandhills Development has changed hands or ownership. We are still the same team working actively on all of our other products. The difference, however, is that now we have more resources on our other products and our teams are not stretched as thin. We have improved our ability to focus.
We are still a 100% independently owned and operated company and we are building for and focusing on the long term.