This is my fourth interview with Patrick Coddou, co-founder of Supply.co, a direct-to-consumer razor and shaving supplies retailer. The first was in August 2020, in response to the rise of the DTC brand. The second time, in February 2021, he settled a friendly bet that his company or mine would make the most sales in his 2020.
A third interview took place in October 2021. The impact of iOS 14.5 has significantly reduced profits for many e-commerce brands, including Coddou. We talked about his strategy for turning the company around.
The strategy worked. Supply.co rebounded, and earnings followed suit. Coddou sold the company. That is the theme of this interview.
Audio of the entire conversation is embedded below. Transcripts have been edited for clarity and length.
Eric Bandholz: What’s New?
Patrick Codu: I recently sold my business, Supply. Since the release of iOS 14.5 in May 2021, there have been many e-commerce brand sales and dissolutions. Many couldn’t get the funding or had to sell their companies for parts. So we appreciate that it doesn’t apply to us. In March 2021, we began the process of selling the business. Many people saw our transaction. So we’ve been on the market technically for quite some time.
Simply put, I’ve been talking to investment bankers for at least a year. Eventually he convinced me to consider selling my business. That was in late 2020. Things were going well at the time. I had a Covid bump. Shark Tank has been washed out of his most recent 12 months of financial data.
One of the things I learned from joining Shark Tank was that due to the influx of business, you can’t sell quickly. The buyer wants to make sure it’s not a one-time thing he does. Shark Tank’s success must be washed out of the financial statements. So we decided to do it and raise money or sell.
We were at an inflection point of three options. For one, it was able to continue to grow on its own. Second, I was able to raise some money and aim for the stars. Or, thirdly, take some money off the table and sell it.
At that point, business far exceeded my expectations. I always had big dreams and visions, but as an aeronautical engineer I built this out of my cubicle, I never thought it would become a multi-million dollar company. I know it’s worth it. It would be worth selling and putting my family in excellent financial position.
Looking at EBITDA multiples — earnings before interest, taxes, depreciation and amortization — there was a meaningful opportunity in the second half of 2020, at least in theory. It will hit the market in March 2021.
Anyone familiar with ecommerce knows what happened next. It was iOS 14.5. We went from a profitable and growing company to an unprofitable company overnight. June and July of 2021 were the first unprofitable months in the history of business. Potential buyers weren’t interested.
Bandholz: How did the buyer know you were in the red?
Kodu: Interested buyers demand the latest numbers when you are in the market. I was honest with them and explained what was going on in the business. We have attempted to sell the company through the remainder of 2021.
But when you sell a business, it’s almost always valued at multiples of the last 12 months EBITDA. That’s what all buyers see. If you see a couple of months of poor performance during that period, cheers. We still tried to sell, but at the same time we worked to save the business. Slowly but surely, business turned around. It didn’t happen overnight, but we’re starting to see positive trends.
Career-wise, it was one of the worst years of my life. I used to be stressed and anxious about my business, but it doubled. At the same time, I hoped that I would be able to persuade prospective buyers. But really, we should have paused our acquisition efforts and returned a year later.
Bandholz: How old was your business at the time?
Kodu: We started in 2015 so we are about 6 years old. Throughout 2021, I was still trying to sell my business, but rebuilding the company was not a priority. Fall 2021 looked okay. Q4 was even better, Q1 2022 was good, Q2 was great. So things started to get a lot better. This year he fast forwarded to April and those bad months were about to wash away. It’s time to go back to the market.
But the landscape had changed. We didn’t have that much acquisition money this year. I was still interested.
Still, by April the offer was getting better. We negotiated one and finally signed an agreement. When we sell our business, we sign an LOI. Pages 2-3 describe the company’s values and general terms. A non-binding promise to not sell your business elsewhere for the next 60 days. This gives you and the buyer an opportunity to do due diligence. It closed in August of this year.
Bandholz: you are still working there
Kodu: yes. I’m still in surprise. It’s the same with my job. My team is with me and little has changed about the business. I still believe in the company and believe that the best days await.
Selling a business involves many personal decisions and emotions. But my biggest emotion right now is gratitude. I didn’t expect it to turn out like this, so I’m relieved. Over the past 12-18 months I have been stressed and burned out.
It’s been years since I’ve enjoyed my job so much. It reminds me of the early days without all the other weights like accounting and firefighting. The bigger the company, the bigger the fire and it set my desk on fire. Now those fires go to other people’s desks and I can do what I love. can be difficult.
I found myself to be a great founder. For brands under $10 million, that’s fine. I’m a starter not a scaler. Maybe that’s why the past two years have been a little more stressful and a little less fun as I’ve moved from the role of founder to CEO building a team. When I get excited about things, it’s always about new ideas, products, and businesses, and the ideas never stop.
Bandholz: what’s next?
Kodu: Selling a business prompts a lot of reflection. One of them was thinking of the people who helped me along the way. I owe my success to many people along my journey. I am now asking myself, “Who am I?” One of my focus is consulting and coaching. It means helping others expand and grow.
Bandholz: Where can people contact you?
Kodu: You can visit Supply.co. My new site is SoundsLikeCanoe.com. I also do Twitter, @soundslikecanoe.
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