From Y Combinator Founder to Cash Flowing Empire

Hey, Justin here, and welcome to Just Go Grind, a newsletter sharing the lessons, tactics, and stories of world-class founders! Premium subscribers get full access to this newsletter, exclusive events, event discounts, and more.

Shawn Sheikh’s always known he wanted to own something.

At first, it was a t-shirt company in high school. Today, it’s a company with over $300MM in portfolio value.

Along with Fred Chiang, Shawn founded Adly, a private equity firm that focuses on acquiring and growing small and medium sized internet businesses.

But even before Adly, Shawn had already founded and sold Solve, PivotCMO and Dus.

In this episode of the Just Go Grind Podcast he shares about Adly’s early days and present, and his experience in company growth and acquisition.

Listen to Shawn’s interview on Spotify, YouTube or Apple Podcasts.

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Let’s dive in.

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• “You don’t have to be right, you just have to try things and move on really really fast.” To Shawn, that’s the way to make progress. The more you try new and different things, the quicker you’ll get to one that actually works.

• Email outreach is everything. Shawn jokes about how “they sent a lot of spam” in the PivotCMO days, but the truth is both he and co-founder Fred Chiang are aggressive when it comes to signing clients.

• Start small. That’s how they did it at Adly. Shawn’s advice is to spend little in the beginning, learn from the experience, earn some money and then spend a little more than before. Slowly but surely. You’ll thank yourself later.

• Since Adly doesn’t have investors, valuations are not as crucial in the process of acquisition. They prefer to make things profitable and keep them forever instead of buying, growing and flipping companies.

• Brokers have been and continue to be pivotal for Adly’s deal flow. Shawn says that 60 to 70% of their deals have come from brokers. Now, where to find them? Well, the answer is much simpler than you’d think. Googling. Knocking on doors. Asking for recommendations. Once you’ve reached them, half of the work is done.

• Shawn’s advice is to be skeptical while negotiating. Why would someone want to sell their company? Is it because it’s inherently dying? Is it because the market’s changed? Are there new and better competitors? Look out for these red flags.

• To Shawn, reliability is key. Having a clean portfolio, a good relationship with brokers and being fast and decisive to close deals—these are all signs of a trustworthy equity firm.

• Fred and Shawn decided against buying only from the most profitable industries. Might be tempting at first glance, but in reality you’re much more vulnerable in the case of a downmarket. Also, it’s much more fun to try new things.

• Shawn explains that ‘reinventing the wheel’ is a weakness of his. At Adly they take a different approach. “What exists that we can do slightly better?” Whether it’s an innovative and modern sector, or a simpler and more classic product, you can find a good deal anywhere.

Listen to Shawn’s interview on Spotify, YouTube or Apple Podcasts.

00:00 What’s coming in the episode…

01:14 Introduction

02:55 Shawn Sheikh’s background

04:45 Starting Solve

09:15 Starting PivotCMO

11:29 Meeting Adly’s co-founder, Fred Chiang

13:38 Selling PivotCMO

17:14 Moving on to company investment and acquisition

22:04 Raising capital

25:10 Shawn’s goals and motivations

27:26 Adly’s deal flow

29:30 What to look for in a deal

31:46 Red flags in a deal

34:21 Why is Adly winning the deals?

36:32 Next steps after the deal

38:45 Building Adly’s team

40:06 Shawn’s day to day at Adly

42:33 Adly’s portfolio companies

44:17 Adly’s purchase of Smodin AI

48:57 Shawn’s approach to starting something new

50:50 What’s next?

52:26 How to reach out to Shawn

• Adly

• Solve (acquired by Blacklane)

• Pivot CMO (acquired by Conspiracy Theory and Unfold)

• DoubleList 

• Smodin

• Guthy Renker

Best,
Justin

Founder of Just Go Grind

P.S. Hiring? Check out the team at Athyna