Building five new products after a $3.5M exit

Spencer Patterson bootstrapped a SaaS product to $140K MRR and 6M daily users in four years. He then exited for $3.5M and now he's in the process of teaming up on five new SaaS projects.

Let's take a peek at his finances. 👇

Money buys happiness

💰 "From a young age, I saw that money does, in fact, buy happiness. No, money itself doesn't, but the things it can afford you certainly do: The best health care for you and your family, living in a safe neighborhood, being in the best schools, driving a safer car, eating cleaner/healthier food, reclaiming more of your time, etc." —Spencer

He admits that this doesn't apply on a "spiritual level", but says it's definitely true on a "creature-comfort level".

These views stem from where he grew up. He says he hated NYC and dreamed of getting out. He saw living there as a constant struggle of trying to do better and he just wanted to be able to afford a quiet home somewhere else, so he focused all his energy on making money.

💰 "I tried a lot of silly businesses growing up and it took a while for me to figure out that the internet is where the money's at if you don't have any." —Spencer

Now, he can afford that house, and then some.

Exiting is not all gumdrops and rainbows

After bootstrapping his SaaS to $140k MRR, he sold it for $3.5M on Flippa. He says it felt great to make that kind of money. It was surreal.

💰 "The biggest excitement was thinking about all the things I could say “no” to. I mean, I could do that before, but now I could really live life on my own terms." —Spencer

It wasn't all gumdrops and rainbows, though.

💰 "Then I also got a flash of, 'Oh man, what do I want to work on now?' That’s when the stress set in. I am not the type to sit still. I need outlets for my creative juices. Which is why I am now an exit/growth advisor to founders." —Spencer

As for what he did with the money, he says it might be disappointing to some. He didn't go on a spending spree. He simply put most of it aside for taxes.

💰 "When the IRS comes knocking you want to make sure they are paid up." —Spencer

Other than that, he set up his “warchest”, which he plans to use on his next projects. He has anywhere from $10k-$50k set aside for each of the five projects he's starting.

Keeping busy after the acquisition

Spencer's currently working on a few SaaS products with founders that he met on X and Linkedin. They're building the products while he's building the businesses.

💰 "I feel that having a business + tech co-founder team is the best way to go for bootstrapped ventures." —Spencer

He's also actively meeting with founders on Flippa and Acquired to purchase products in the low six figures. That way, he can jump right into scaling a business right away.

And he's been networking with other founders who have had successful exits and are keen to invest in new projects.

Hard numbers

While he does all this, Spencer is living off of the interest payments from his savings and investments. He says his expenses are low enough that this covers everything he needs personally, plus the investments he makes into his businesses.

That's a lot of interest, and it's all thanks to what he made from the acquisition, plus what he managed to save at his previous job.

Let's take a look at what he's bringing in:

• Acquisition: $3.5M
• Current MRRs: $0
• Founder pay: $0
• Personal account: Undisclosed
• Business account: Just enough to cover business investments

He isn't paying himself anything because the products haven't launched yet. Even if they had, though, this is how he likes to do it. On his previous product, he didn't pay himself a dime until revenue was more than he felt was needed for expansion. And even after that, he only paid himself the amount he'd made at his previous job.

He doesn't really have any business expenses right now, but here are his personal expenses:

• Total: ~$3,950/mo
• Mortgage: $1100/mo
• Insurance: $250/mo
• Taxes: $125/mo
• Electric: $200/mo
• Water: $50/mo
• Internet: $80/mo
• Garbage: $25/mo
• Food: $600/mo
• Gas: $100/mo
• Lawn: $90/mo
• Cat: $50/mo
• HOA: $75/mo
• Restaurants: $300/mo
• Entertainment: $200/mo
• Merchandise: $500/mo
• Travel: $2500/yr

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Investing vs staying liquid

Right now, Spencer needs to be liquid, as he plans to invest his money into new projects. He also likes having cash on hand for other reasons.

💰 "Cash is king right now. There is a lot of volatility in the world and in every market. Until I can see a clear direction on where things are going, I'll stay liquid. It's always good to have money saved up for the right investments." —Spencer

But his cash isn't just sitting around. He has it in high-yield savings accounts and CD ladders. For both of these, he aims for 5%+ interest.

He does have some investments, though. He says money should be treated as a tool, and it should be used to make other "tools".

💰 "Make your money work for itself. The less you trade time for money, and the sooner you put your money to work, the more it will come to you without effort." —Spencer

So he has invested in everything from precious metals to foreign currencies to international bonds to CDs, and on and on. He's a firm believer in diversification.

He suggests reading Rich Dad Poor Dad when you're getting started and says that, while it's a bit outdated, the core principles apply:

💰 "Own things that cashflow and use that cashflow to purchase more things that cashflow. That could mean stocks that appreciate with dividends, royalties on assets, interest payments, rent payments from real estate, etc." —Spencer

Spencer also plans to look into multi-family real estate once the housing market corrects. He says prices are hyper-inflated right now.

When he eventually does that, he'll take on as much debt as possible on those properties. It's the only debt he's willing to take on, other than his current mortgage.

International vs domestic money

For money that he keeps in the US, Spencer has one rule.

💰 "The primary rule I follow is ensuring all funds held within the U.S. are in institutions with FDIC insurance. This is a critical step for safeguarding assets, providing a layer of security against the loss of deposit funds." —Spencer

And for international finances, he utilizes services like Wise to diversify his currency holdings, the goal being to minimize currency risk and maximize returns from currency fluctuations.

💰 "If you have ample diversification, you can insulate yourself from currency fluctuations and even potentially profit, should your home currency devalue." —Spencer

Minimalism and splurging on friends

Spencer sees himself as a minimalist. He doesn't spend much on himself, but he does like to splurge on his friends. If he goes to dinner or events with people, he always pays, no matter who he's with.

💰 "I don’t usually splurge on myself because I actually feel better surprising people I care about with things. I know it sounds cliché, but it’s true. " —Spencer

He did recently get a new truck, though, and he's excited about that.

💰 "I consider myself a minimalist. I don’t like clutter or having a lot of possessions so I don’t really buy much other than consumables or things that will save me time or effort." —Spencer

Despite being a minimalist, he's not a budgeter. He doesn't limit his spending. He just knows what things should cost and if an expense seems high in a given month, he does a review to understand what's going on.

Business structures impact taxes

Taxes are a moving target for Spencer. Like many of us, he has to predict his yearly income and pay taxes quarterly. And this can lead to overpaying, which ties up cash that could be invested elsewhere, or underpaying which leads to penalties and a lump sum payment at tax time.

💰 "I make the suggested quarterly payment based on the previous year’s returns, and not a penny more. The goal is to hold as much of my money as I can because overpaying leads to the government holding it interest-free with zero benefit to me." —Spencer

As you might imagine, the taxes on his $3.5M acquisition were substantial — close to 40%. But that's partly due to his company structure.

He says that operating as an LLC instead of an INC meant that he wasn't eligible for QSBS (Qualified Small Business Stock) benefits, which offer notable tax advantages.

💰 "If you are planning on selling instead of holding on to your company for years, I think it's best to use a corporation style that allows for QSBS. QSBS can be a significant planning tool for the right company, such as a tech startup." —Spencer

Bootstrapped funding

Spencer has never taken VC funding, but he has a lot of thoughts on the matter. He thinks it creates a ruthless and cutthroat environment where you can be ousted from your own project if you don't meet certain KPIs.

However, the bootstrapping community, he says, is about building each other up. He resonates with that. And it's better for the business too.

💰 "Bootstrappers are using their hard-earned money to build a project that they are truly passionate about. I feel like you work much harder and with a greater sense of purpose when your own money is on the line." —Spencer

And he says VC money is drying up anyway thanks to the high-interest-rate environment.

That's why he's all about "bootstrapped funding" these days.

💰 "Bootstrapped funding means taking your own money from your savings account and using it to fund your own project, and projects that you believe in." —Spencer

Do your homework

Let's wrap up with two pieces of advice.

First, do your homework.

💰 "People who want decent finances actually need to take an interest in it and do research on it. Look into how to save on taxes, look up qualified small business expenses, research investments and savings plans, find questions to ask your accountant, and so on. Do as much research as you possibly can before you invest anything." —Spencer

And second... do your homework.

💰 "If you are going to go all in on investing your time AND money into a project that you plan on starting, make sure you spend a bit of money to pre-test. Measure product stickiness. Use ads to test product market fit. Spend some money at the beginning to make sure you don’t fall into a sunk-cost fallacy." —Spencer

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Bootstrapped founders looking to exit but needing a little help in the process can find Spencer on X.

Please note that the above are opinions. This is meant for informational purposes only. It is not intended to be financial advice.

And if you'd like to be featured as a guest in a future interview for this series, let me know in the comments!