Why buying a boring SaaS might be better than building one with Matthew Tse @ImprovMX

saas.unbound is a podcast for and about founders who are working on scaling inspiring products that people love, brought to you by https://saas.group/, a serial acquirer of B2B SaaS companies.

In episode #23 of season 5 of the saas.unbound podcast, Anna Nadeina talks with Matthew Tse, CEO of ImprovMX, an acclaimed email forwarding SaaS. Matthew shares his unique experience transitioning from a seasoned engineer to a SaaS owner through acquisition and sheds light on the lessons learned along the way.

From Software Engineer to SaaS Owner: Matthew’s Entrepreneurial Journey

Matthew’s background is rooted deeply in technology and engineering. Having worked as a Site Reliability Engineer (SRE) at Google, a self-driving car startup, and later at a quant fund in New York City, he cultivated an extensive technical skill set. Yet, despite a successful career, Matthew found himself craving entrepreneurial freedom.

“I just got tired of working for people… I really wanted to wake up to my own schedule, eat what I hunt, rather than just doing a thing that someone else told me to do.”

Initially, Matthew pursued the indie hacking route, creating micro apps and bootstrapping projects without external funding. However, he struggled to generate revenue, even failing to make a single dollar from some of his ideas, including a tax estimation app designed to help individuals avoid penalties in the complex US tax system.

This experience led him to consider acquisition as a viable path to entrepreneurship. Inspired by podcasts like My First Million, where entrepreneurs shared stories of acquiring and scaling existing businesses, Matthew began exploring the acquisition market for SaaS companies.

Why Buy a Boring SaaS Like ImprovMX?

Matthew’s acquisition philosophy centers on owning a “boring,” stable SaaS business that aligns with a lifestyle approach rather than chasing hypergrowth at any cost.

• Lifestyle Business:** He wanted a company that allowed him to work hard but maintain personal balance without the stress of an 80-hour workweek.
• Technical Complexity as a Strength:** ImprovMX’s email forwarding infrastructure is based on 1990s internet protocols, which many shy away from. For Matthew, this technical challenge was a perfect fit.Sticky Customer Base and Strong Reputation:** The company’s organic growth and loyal users offered a solid foundation for iterative improvements.

Matthew describes this synergy as a perfect match between his strengths and the company’s needs:

“The weakness of the business—its technical complexity—was my strength. And the strength of the business—its reputation and organic growth—was my weakness.”

Finding and Acquiring ImprovMX: A Strategic Approach

Matthew spent six months scouring marketplaces like Flippa, Acquire.com, and Quiet Light, reviewing over a thousand listings. Most companies didn’t meet his criteria—they were either too small, too recent, or had questionable metrics. ImprovMX appeared on Quiet Light and immediately caught his attention.

To secure the deal, Matthew offered a compelling package:

• All-cash payment
• Quick closing timeline (around 30 days)
• Minimal or no earnout conditions

This approach demonstrated seriousness and trustworthiness to the founders, Antoine and Surreal, who were praised for their integrity throughout the process.

Due Diligence and Unexpected Challenges

Matthew conducted thorough due diligence, including financial verification through Centoa, which confirmed the numbers aligned with Stripe revenue and tax returns. However, he found the legal negotiations over the Asset Purchase Agreement (APA) unexpectedly challenging, describing it as a “second tough negotiation” after agreeing on general terms.

Despite these hurdles, the acquisition process was smooth, and Matthew never experienced the common pre-closing doubts that many buyers face.

Transition and Customer Reactions Post-Acquisition

One common concern during acquisitions is customer churn due to uncertainty or dissatisfaction. Matthew carefully crafted communications to announce the acquisition, fearing mass departures. However, the reality was quite different:

• Most customers, paying or free, were indifferent to the ownership change.
• Only a handful of free-plan users expressed concerns or chose to leave.
• Paying customers appreciated the potential for a better product backed by a successful owner.

Matthew maintains a direct line with Surreal for technical questions but emphasizes his goal of full independence, only reaching out for complex infrastructure insights out of genuine curiosity.

Growing ImprovMX: Building a Team and Improving the Product

Since acquisition, Matthew has focused on transforming the technical support team to enable collaborative development. He:

• Upgraded a technical support member to junior developer
• Hired an additional junior developer
• Is actively seeking a senior developer to accelerate feature development and offload operational tasks

Alongside team growth, he is making continuous improvements to the infrastructure, front end, back end, and overall reliability. Marketing efforts include refining the landing page, better customer targeting, and experimenting with paid advertising.

Interestingly, Matthew is cautious about founder branding at this stage, preferring to focus on the company’s growth rather than personal visibility, which he believes could complicate future sales or transitions.

Understanding SaaS Multiples and Market Trends

Matthew shares valuable insights into SaaS valuation multiples based on his market research:

• Commodity SaaS: Typically sell for 2x to 3x revenue multiples due to high competition and volatility.
• Niche SaaS: Command 3.5x to 4x multiples because of more elastic market power.
• High-Quality, Established SaaS: Can fetch 5x or higher thanks to brand reputation, longevity, and customer stickiness.

He notes that extremely high multiples (8x to 10x) usually involve strategic acquisitions rather than typical market transactions.

Key Lessons and Entrepreneurial Advice

Reflecting on his journey, Matthew emphasizes the importance of self-awareness for entrepreneurs:

“You should spend a lot of time to really do an internal search of who you are as an entrepreneur… figuring out what you are actually good at and what you are trash at.”

His failed ventures taught him he struggles with starting sales from scratch but excels at iterative improvements on existing products. This realization guided him toward acquiring a business that matches his strengths.

He also recommends founders consider having advisors or brokers during acquisitions for peace of mind, even if they don’t cover every aspect of the process.

A Simple Hack to Keep Entrepreneurial Spirits High

To keep morale light and motivation high, Matthew implemented a fun Slack notification featuring a “money vomiting” emoji every time a new subscriber joined. This small gesture brought daily smiles and reminded him to enjoy the journey.