Worlds Apart: Interview with Hunter Jensen

Elizabeth Shea chats with Hunter Jensen, founder and CEO of Barefoot Labs and author of The Killer Use Case. Hunter shares his journey from becoming a self-taught programmer to bootstrapping Barefoot Labs over two decades, funding early growth with little more than determination and a handful of zero-interest credit cards before building a thriving company. When growth plateaued, a chance introduction led to a strategic acquisition that allowed him to diversify his personal risk while remaining actively involved in the business. Hunter offers anecdotes about navigating an international transaction, the importance of having trusted advisors by your side, and the challenges that emerged after the deal closed as two organizations with different cultures learned how to work together. He also reflects on why maintaining equity proved valuable and how strategic buyers can exponentially accelerate growth. If you’re a founder considering a strategic partnership, partial exit, or international transaction, this episode is for you.

Transcript

SPEAKER_01 0:00

Hello and welcome to Branching Out, a Tree Fork Strategies podcast. I'm Elizabeth Shea, the founder and CEO, and I created this show to help business owners navigate the ins and outs of an exit event. So each episode, I sit down with seasoned founders and CEOs who have successfully sold their companies through a strategic or a financial transaction. Together we discuss what went into their decision to sell, what worked, what they would do differently, and the valuable lessons that they would like to pass along to founders with a sale on the horizon. Our goal is simple to provide a playbook that you can use as you approach your own sale with confidence and clarity, knowing that you're not alone in the process. This is Branching Out. Thank you for joining me. Hello, everybody, and welcome to Branching Out. I am very excited to have in the studio today Hunter Jensen, who is a relatively recent acquaintance from just a few months ago, right, Hunter? Yeah, that sounds right. We're excited to have you on. So Hunter comes to us as the founder and CEO of Barefoot Labs. Um he had a recent acquisition. If you'll share a story with us about that, he's also an author of a book that recently came out called The Killer Use Case. So there's probably some interesting anecdotes you can talk about with that book. But welcome to the program, Hunter.

SPEAKER_00 1:14

Uh, thanks so much, Elizabeth.

SPEAKER_01 1:16

Okay, so let's let's just start with the basics. Let's start at the beginning. Tell me how you got your start creating Barefoot Labs and what actually you did to help build that business up.

SPEAKER_00 1:25

Yeah, so I'd say it started in fourth grade when my dad brought home an IBM 386 computer, and I learned Q Basic programming.

SPEAKER_01 1:39

Wow.

SPEAKER_00 1:40

That age. So so I've been programming since then. But where it really started was actually in college. So I went to the University of Virginia, and my plan was to join the computer science department and learn that. And I got there and I did a semester and I looked at the curriculum and I learned that they weren't teaching any of the new stuff yet. Like they weren't teaching web development because it was brand new. But that's all I really wanted to do. So I dropped out of the computer science department. I ended up with a double major in philosophy and economics of all things. And I taught myself web development by checking books out of the library. And I paid my tuition by picking up gigs on Craigslist, just writing code, building websites. My first kind of professional gig was for a lingerie's website. It was called Forever Hers.

SPEAKER_01 2:35

Oh, that's great.

SPEAKER_00 2:37

And so I graduated, I came out to California and I started doing that full-time. I was just like a full-time freelance developer. And there was a moment where I realized, well, okay, there's a real ceiling on this. Like I only have so many hours a day that I can bill. I should start hiring people and build a real business. So that's really when I got serious. I made my first hire. I started hiring subcontractors to do the things I didn't like or that I wasn't good at. And very organically built this business over the course of more than 20 years. But that's the uh that's the origin story is uh lingerie website on Craigslist.

SPEAKER_01 3:21

Wow. So so you didn't set out to start a business. It sort of happened organically. But that take you take a lot of risk in doing that and building a company that way. Like, did you ever feel like you were taking risks?

SPEAKER_00 3:33

Well, I was young and and dumb, and I certainly took risks, but I didn't have all that much to lose. Like, worst case scenario, what am I? I'm gonna sleep on my brother's couch for a month or two, go get a real job and and you know, get back on my feet. And the way that I did it was actually kind of funny. I just got these credit cards with 0% interest rates on them for like the first nine, 12 months or whatever, you know, like an introductory period with no interest rates. And then I would just transfer them to the new one to pay for like the building of this business. So effectively I took out like a 0% interest loan by just hopping credit cards for the first nine months. But I was able to become profitable very, very quickly because it was just super lean and it was just it's just me or just me and one person. And so, yeah, I took risks by basically bootstrapping the company, but that had its benefits too, which meant for a very long time I was 100% owner. And that became a very helpful fact when you fast forward to the transaction, right? And I'm glad that I did because it made it for a much more meaningful uh transaction than it would have been otherwise if I took a bunch of capital up front.

SPEAKER_01 4:45

Yeah, no, I think that you know the bootstrapping is certainly the way to go, but it is it is risky and it does take a certain entrepreneurial spirit, I believe, to make that happen. So um you grew for how many years? 20-some years?

SPEAKER_00 4:58

Uh yeah, we were officially founded in 2005. So that puts us at year 21 right now.

SPEAKER_01 5:04

Okay. Wow. Congratulations. So you you built up the company. How big did you get? How many people did you have?

SPEAKER_00 5:10

I think when we were acquired, we were at like 14 people, I want to say, something like that. But something to keep in mind is that's not necessarily a great gauge because when we had that many people, we probably had another 30 or 40 subcontractors that were working full-time on our project. So we were a bit bigger than our head count in terms of the amount of work output that we were putting through. And we had, you know, an onshore-offshore model where we had folks in the States and then had folks doing a lot of the heavy lifting in in Eastern Europe where we could get uh better rates.

SPEAKER_01 5:44

Yeah, no, uh, that's that's amazing. So tell us about um when you first started thinking about looking at a strategic acquisition or being acquired by a strategic uh entity. Or did you even think about it? Did it just happen? Just tell us about that story. Yeah, well as you roll your eyes, so no.

SPEAKER_00 6:01

Yeah, well, no, yeah, I mean, uh every business owner thinks about it. Um, but often it feels like some far-off dream. And one of the things that looking back, maybe I would have done differently is at the time, I didn't really understand that I was building a services company. And I didn't really understand what that meant for multiples.

unknown 6:27

Right.

SPEAKER_00 6:27

I was looking at software like SaaS startups getting their five to 10x multiples, thinking, oh, cool, that probably is for me too. And when I really got into it and started looking at it, I came to understand that no, not even close, not even in that ballpark is what a services company gets. But so, you know, it was the kind of thing that was always on my mind. It was also a time where I felt like we had plateaued. We had maybe two or three years where the revenue was like about the same. And it was kind of like a lifestyle business to a certain extent, right? Like it, I was making good money. Um, but we weren't growing anymore. And the reason we weren't growing was that the amount of capital that it required to grow past that inflection point was more than I was personally willing to risk. Because at that point, my bank account and the business bank account were basically the same thing. That's how much money I had, is what was in the business bank account, right? And I could no longer stomach the risk, you know, and I also got married around this time and all the rest of it. And so I had a little bit more on the line. And I I just I couldn't risk all of that personal capital. And so if we wanted to grow, we needed some outside investment. That was that was kind of the conclusion. And I started to gear up for, okay, what does this look like? Do I need an investment banker? Do I need a consultant? Et cetera, et cetera. And then at that time, a friend of mine uh who lived in Belarus and I worked with very closely for many years, I mentioned that I was thinking about this. And he said, you know what? I actually have somebody for you. They're actively looking for a software development shop in the States, like right now. And I said, Whoa, great. Yeah, tee it up. And the rest was history. I mean, they ended up being the buyers, and they're now my parent company, and the head of that organization is is on my board of directors. So, so I was thinking about it and I was starting to maybe get the gears going. And then out of nowhere, just out of left field, came this deal, and it was a good one. And, you know, I went with it and uh haven't looked back.

SPEAKER_01 8:49

Oh, that's a great story. I mean, some people on our show have that situation happen where they're like it just comes out of nowhere, and other people go through a process. So, did you take the time to educate yourself on any of the components of like the fact that multiples are different for a software company or for a development company, a services company than a software company? What did what did you do to go to get ready to go through that process? Did you hire any advisors in the end?

SPEAKER_00 9:15

Yes, I did. I would say any business owner, you'd be crazy not to bring in a professional for a transaction like this. Um, there was so much I didn't know. And so I really leaned on three different professionals, which I would say were an MA consultant, my my attorney, and my CPA. Uh, that was my squad. That was my MA squad at the time. And, you know, we had some real challenges because this was the first time that my parent company had bought a company in the States. And their attorneys and my attorneys were not speaking the same language, both literally and metaphorically. Um, and there was like this massive disconnect. And it took the professionals on my side to educate the other side of the table in a way that I didn't, I never would have had the authority to do, right? They would have said, no, son, that's incorrect. This is how we do things. But when I had those professionals at my back, they had authority and they were, they were listened to and it created a more collaborative deal environment. Um, as well as they were just protecting me from making bad choices.

SPEAKER_01 10:28

Right, right. Most people don't go through this but once in their life, you know? And so that's an interesting perspective that is from a different country, too, to have a buyer that is that is buying it and probably, yeah, literally different languages, and then terms are probably also seen to be very different.

SPEAKER_00 10:44

Yeah, the deal structure, all of it. Uh my attorneys, we had to actually bring in another attorney that had more experience in in doing deals in Eastern Europe to like even explain what some of the sections of the purchase agreement were. Like, why is this even here? My attorney was like, I've never seen anything like this before. And I said, I think it's an Eastern Europe thing. Like, can we can you look in your firm and see if there's anybody else that has like experience working with these countries? And and sure enough, sure enough, it was. And it was a requirement for them. It was not something that we could take out. They needed it. We just had to learn that. And so I would say that one that like one of the more unusual bits of the deal was having to deal with people that felt worlds apart geographically and culturally.

unknown 11:32

Yeah.

SPEAKER_01 11:33

So how long did the process take from the time that you first sat down to have a conversation till because I think a lot of people don't anticipate how long it can actually take.

SPEAKER_00 11:41

This one actually I would say probably went faster than average in that I wasn't soliciting a bunch of different deals and trying to negotiate people against each other, which is often a part of this process. And it was strategic, not PE. So there was not the level of diligence that like you might go through if you're being inquired by a private equity company that has very dialed processes for all of these things. But that being said, I think it probably still took nine months from initial conversation to wire transfer, you know, land. Right. Probably probably six to nine months, I want to say. It was a little while ago, so I'm not quite remembering, but it takes a while. It takes a while.

SPEAKER_01 12:29

It does, it does.

SPEAKER_00 12:30

I had to um this is a good story. This is a good story. Uh so the uh the closing of the deal. Okay, we're super close. And I say, look, I'm gonna fly out to Minsk, where they were based, and let's close and and let's close this deal in person. Okay. Minsk is very far away, by the way. So I I get on a plane, LAX, uh, and then lands in Warsaw, quick little puddle jumper over to Minsk, and I've got the negotiation of my life happening first thing in the in the morning, and I'm standing at the turnstile waiting for my bags, which never come. Because they were still in Warsaw, they didn't make it onto the puddle jumper. So I've got I've got the biggest negotiation of my life, and sweatpants and sneakers and a hoodie.

SPEAKER_01 13:27

Oh my gosh. Wow. So what'd you do?

SPEAKER_00 13:32

Oh man. So I managed to find a store that was open, bought some pants that were way too long, and a shirt whose sleeves were way too long. I'm not a tall guy, so I normally have to have to like tailor my stuff. And I didn't buy the shoes because they were like $400. And I was like, I'm not buying $400 shoes for this. So I wore sneakers to this negotiation with my like clothes that just didn't fit at all. Did you tell them? They knew. So, okay, so the the people at the table, I had the opportunity to explain to them why I looked like a fool. The problem was all the other people that saw me, all the other people walking down the hallway are like, that's the guy that we're like talking about buying this company from. And I wonder if there are still people at the organization that are like, why was he dressed like that that day?

SPEAKER_01 14:26

That was okay. So lesson learned.

SPEAKER_00 14:32

Yeah, well, just give yourself a buffer, like a travel buffer for something to go wrong before the meeting of your recorder.

SPEAKER_01 14:39

Oh my gosh, that's a great story. So the transaction happened, it went through that morning. And so you, you know, pop champagne, whatever you do, and then you move on. Now they didn't acquire the entire company, correct?

SPEAKER_00 14:52

Acquired they were acquired a majority, but they acquired a majority stake, but intentionally left me a lot of my minority stake. And the reason for them and for me was that one, for them, they were to a certain extent paying for my blonde hair and my blue eyes and my American accent. And and without me, it would have been a struggle to keep the business alive after the acquisition. And that was that was clear from the beginning of the conversation. Like I was part of the deal, right? And that's typical, right? You get you have your earnouts, and we had an earnout. Um, and ours was two years. Like, but then also for me, I didn't want to leave. I actually love my job. I love what I do. I love it today. I loved it then. I wanted to keep doing it. I just wanted to see the company keep growing, and I wanted to take some of my own chips off the table, right?

SPEAKER_01 15:46

Right, right.

SPEAKER_00 15:47

Everything in my name in that business. Everything.

SPEAKER_01 15:51

Yes.

SPEAKER_00 15:52

And that just became too risky for me as I'm getting married and thinking about a family and stuff. I just couldn't do it anymore. And so this allowed me to take my chips off the table, diversify, put them in places where you know they could grow, but also keep my skin in the game, such that if this business keeps growing, which it has, then I'm gonna see another reward at the, you know, at the end of this tunnel, right? And so for those reasons, like a majority acquisition where I still kept a nice chunk of equity made a lot of sense on both sides. So this wasn't like a a point of contention. This was actually something where we really came together and was like, I was like, wow, that works great for me. And they were like, well, this is works perfectly for us. Like, great, what's the next deal point? But I still consider it like an exit of sorts, right? Where I act in on my equity, right? And it's just that like now I have a new arrangement at the company. I still have plenty of equity. I'm still the founder CEO. I still have full operational control. Basically, what's different is I have a board of directors and they can fire me if they want, right? And so that's new. I didn't previously wasn't able to be fired. Now I can be fired, but we're many years in this partnership. It's been extremely fruitful on both sides. I look forward to more, you know, many more years uh with them as partners because they're that I have a wonderful board of directors. The leadership there is fantastic and forward-thinking. They let me take risks. They've seen me spectacularly fail and still support me. A lot of people can't say that about their board, but I'm I'm proud to be able to say that about ours.

SPEAKER_01 17:30

Okay. So when you look at the fact that you're still part of the company, which is very rare and you're going to continue to grow, I mean, what do you see in the future? What does that mean for the equity that you still have?

SPEAKER_00 17:42

Yeah, you know, it's actually pretty interesting. The equity that I still have today is actually worth more than the 100% of equity that I had prior to the deal. So we were able to grow the company to such an extent that I have more value in my equity now than I than I did then when I owned the whole thing.

SPEAKER_01 18:04

Well, you are definitely on the fortunate side of the of the equation. There are some people that just maybe don't even know their leadership team that much or aren't able to really see eye to eye on how the company needs to grow. So it's very fortunate. You know, there used to be a lot of strategic acquirers out there, and there are just less of them now. And that strategic acquirer is typically the way that a business owner would like to go. But they want to have a pursue an opportunity to really shape what their career looks like moving forward. My company, we sold to a strategic acquirer, and that was the right decision at the time, you know, because we got to basically grow the business and for the same reasons that that you had. And so I think the the big thing we like to talk about on this show is that there are different options. You don't have to just sell to PE. You don't just have to sell to a strategic and giveaway the entire company. There are options and there are ways to take some chips off the table. So bravo. You think you did a think you did a really nice job on that one.

SPEAKER_00 18:57

Yeah, thank you. Thank you. I mean, you I have told the story, right? Like it happened pretty organically. There's no way I would have known that this was what I wanted it to look like until I saw it. Do you know what I mean? I didn't go into being like, I want to maintain a large minority stake, and I want X, Y, and Z. I want a strategic. It's more in retrospect that I'm like, yeah, this actually like this pencils. You know, the fact that I'm still here and I'm still happy means that yeah, this was a this was a good structure based on what I need and what they needed. And and the benefit of a strategic is they understand your business deeply. They're in the same, they're in the same business. And in fact, they grew their business to be much bigger than your business. So they very well might be better at this business than you are as the smaller owner, right? And so if you embrace that and you let them in, they actually can be very, very helpful. It's like tell me how you grew your company to be that big and help me build this one to be that big, right?

SPEAKER_01 20:07

Right, right. And then one plus one can be three.

SPEAKER_00 20:10

Yeah, yeah. One plus one is three there. Like that's a that's a beautiful synergy that like creates a lot of value.

SPEAKER_01 20:16

So what um what didn't go well? What might have been something that you would have done differently? Was there anything?

SPEAKER_00 20:23

There was. There was. And it it almost I almost like put me into full panic. And I would have done one thing differently. So the thing I would have done differently is I would have done okay, so part of the deal, without getting into too many details, is that this means that all of the development work that I had been subcontracting to various teams in Eastern Europe is all now gonna go through my parent company, right? That was a deal term, and that made a lot of sense for us strategically, but we didn't actually work with them at all before the deal was done. We didn't do any projects with them. And the first project we did, which was a big one for us at the time, was a bit of a disaster. And we just had different processes, different communication styles, different expectations about work and you know, all of it. And I thought, oh no, if this is what it's gonna be like, I don't see how I don't see a future for us. And I'm locked in now. And so I was really scared at the time that I had just made a horrible mistake and that we weren't gonna be able to find a way to work together. So if I had to do it all over again, I would have tested those waters more, more thoroughly and said, Hey, can I just hire you as a contractor to do a project with us so we can see what that feels like? Because that was kind of a big leap. Now we fixed it. And they were great. And they said, We see why there are problems. Let's come together and find. Solutions and the second project was better, and the third one was even better. And everyone gets a little bit better, right? We have continuous improvement, and now we are just smooth on our project. Like they are just a thing of beauty.

SPEAKER_01 22:14

Well, that's great. I mean, but that it's a hard lesson because if you don't have that chance to test it out ahead of time, you can be surprised. And you are not alone. There are many people that have been on this show that have talked about the fact that the cultures didn't align and the processes weren't there in terms of managing things. Not the one was right or wrong, just different. And that's hard to get over. Yeah.

SPEAKER_00 22:36

It it is. And and with the added challenge that my parent company was a hundred X my size. Right? We're fast and nimble and we take risks and can move quickly. Um, but they're a big aircraft carrier, slow-turning kind of organization. Right. So it was like, yeah, we could change our process, but that has to go through nine approvals and then we do the review and then we do a test project. And it was like, oh, okay, okay, we'll we'll change ours. Because I just all I have to do is say that we're doing it differently, and that means we're doing it differently. And so, you know, that makes it challenging. I think the like if you want to abstract the lesson there, it's like don't be so distracted by the deal that you're not thinking about what work looks like after the deal. After. You you need to that needs to be part of how you're thinking.

SPEAKER_01 23:27

Absolutely.

SPEAKER_00 23:27

Yeah.

SPEAKER_01 23:28

Yeah, absolutely. That's that's a big lesson that you don't always think about because you are very focused on the deal and the transaction. Okay, so you just wrote a book called The Killer Use Cases. Tell me about that. What inspired you to write a book and in your spare time, it sounds like? Yeah, right. What's it about?

SPEAKER_00 23:46

Yeah. So it's called The Killer Use Case, a framework for AI adoption at mid-market companies. And so I've spent the last year or two, you know, writing and speaking about AI. It's pretty much all anybody wants to talk about these days. But, you know, I got started in probably 2023, 2024, like really getting deep in the space. And seeing the kind of the same problems over and over again. You know, the big companies have figured AI out to a certain extent. Like they've successfully deployed it at their organizations and they're seeing value being driven and an ROI. Um, but the mid-market companies are a mess. They're an absolute mess. They don't have the engineering talent, they don't have the strategic, technical people that they need, and they're just like evaluating vendors as if like the AI strategy at your company is just picking one of the pieces of software. And they have misconceptions about how it works. Anyway, I'm having these conversations over and over and over again and seeing the same pattern and built kind of a consulting practice around like how to actually get ROI from AI adoption at these companies. And it became such a kind of refined framework that I thought made sense to put it in a book. So I set out and it took a while. Uh, it takes a lot of time to write a book. It's not even that long of a book, but it still takes quite a while to take to write it. Um, but it was such a great experience. Something I'd kind of have been on my bucket list since I was young. I kind of always knew I'd write a book at some point. And I'll probably I'll probably write another one. Um, I mean, we'll see how this one goes, but I've got more ideas as well. Uh so check us out on Amazon, the killer use case. Please, five-star reviews. We need them.

SPEAKER_01 25:48

Oh, I love it. Hunter Jensen.

unknown 25:50

Okay.

SPEAKER_01 25:52

Oh, well, thank you so much for your participation in this program. Is there is there any last thoughts you want to leave our audience with as they look to pursue their own journey for an exit eventually?

SPEAKER_00 26:02

It's probably the most important thing you're gonna do professionally in your entire career. Uh treat it that way. That would be that would be my my parting uh my parting.

SPEAKER_01 26:14

That is a beautiful phrase. And I think it's very telling, very suitable. That's awesome. Excellent. Okay, so how can people get a hold of you, Hunter? You on LinkedIn, your company name?

SPEAKER_00 26:24

I'm on LinkedIn. Uh you can get us at barefootlabs.ai. And Elizabeth, as a as a thank you for having me on the show to all of your listeners, I encourage you to reach out, uh, hunter at barefootlabs.ai. In the subject line, please say, I heard you on Elizabeth's podcast. Because otherwise I won't respond. But if you do that, I promise that you'll get a personal, thoughtful response from me and we can chat about whatever it is you'd like to chat about. I don't, you don't need to be a potential customer. That's just as a thank you for having me on the show.

SPEAKER_01 27:00

I appreciate that. All right. We'll check out your book. All right. Thank you so much, Hunter.

SPEAKER_00 27:05

All right, thanks.

SPEAKER_01 27:06

Have a good day.