Navigating Investor Relationships and Business Pivots with Sahil Patel

In this episode of the DealQuest Podcast, I'm thrilled to welcome Sahil Patel, CEO of Spiralize, a leading company specializing in predictive CRO and data-driven landing page optimization. Prior to Spiralize, Sahil was the CEO and founder of ER Express, a successful SaaS company which he led for 11 years before its sale in 2021.

Throughout his career, Sahil has worked with renowned organizations such as Netflix, Podium, NBA, Lowe's, Harvard University, and Gusto. He specializes in landing page conversion optimization, running over 130,000 A-B tests for clients, and offering unique insights into best practices for effective A-B testing. Whether you're navigating complex investor relationships, considering strategic pivots during challenging times, or building systems that can scale through uncertainty, this conversation provides practical frameworks for making deals that create lasting value.

The Entrepreneurial Mindset Starts Early

Sahil's first taste of deal-making came through baseball card trading at age 13. "We'd have a booth, we'd have our own cards, and that was deal, man. You trade your cards," he shares. What struck him most was watching the successful traders who "didn't start with, hey, I've got this Mickey Mantle rookie card I'm looking to sell. They would talk about just baseball."

This early experience taught him that relationship-building precedes transactions. The best deals happen when you understand what the other party values beyond the immediate exchange. This principle would prove crucial throughout his entrepreneurial journey.

The Power of Corporate Training for Future Entrepreneurs

After graduating from Emory in 2000, Sahil joined Booz Allen, where he learned a valuable lesson about leveraging big company experience. "Big companies, you get lots of training, you meet mentors, you get to see what good looks like," he explains. The structured environment provided him with "a ton of repetitions" in building models, writing presentations, and conducting analysis.

What made this experience particularly valuable was how consulting firms actively prepare employees for their next steps. "They're very good at kind of getting you trained up, and then kind of getting you, you know, they very, kind of, in a nice way, push you out the door." This systematic approach to development gave him confidence to pursue business school and eventually entrepreneurship.

The Critical Difference Between Service and SaaS Economics

When Sahil launched ER Express with family office investment, he quickly discovered a fundamental disconnect in how different investor types evaluate businesses. His investors had extensive experience in service businesses but struggled with SaaS unit economics. "To them, the way you look at a SaaS business, you really have to look at two things. You look at the gross margin... you want to be getting that 70% to 80% gross margin. And you have unit economics."

The challenge was that service business investors naturally focus on total costs rather than marginal contribution. "In a SaaS business, you have tremendous fixed costs up front while you build your software. But the cost to deliver the product is mainly zeros and ones." Understanding these different frameworks is crucial for entrepreneurs seeking investment from investors outside their sector.

When Investor Misalignment Creates Dangerous Signals

After reaching $1 million in annual recurring revenue, Sahil wanted to invest in sales and marketing to accelerate growth. However, his family office investors, comfortable with their initial investment, weren't ready to co-invest in the next round. This created what Sahil calls "a huge signaling problem when you try to do that. Go to the market and say, we want a raise, but our existing investor's not re-upping."

The market interpreted this as a red flag about either the business or management team. "Because it's almost always a sign that there's a problem with the business, or the management team, or both." This experience taught him that investor alignment isn't just about money – it's about shared vision for growth stages and timing.

The Entrepreneur's Greatest Enemy Is Time

Looking back on his journey, Sahil identifies the most crucial insight he'd share with his younger self: "Whatever you think is your enemy, it's time. All the other things, all the other mistakes that you can make, you can recoup. You can even recoup money. But you can't recoup time."

This realization hit him during the most stressful period of his business, when he was experiencing physical symptoms from the pressure. The combination of a failing funding round, slowing growth, and personal stress created a perfect storm. "Time is your biggest enemy," he emphasizes, because every day that passes without progress makes the business mathematically less attractive to potential acquirers or investors.

The Stress of Entrepreneurial Uncertainty

During the lowest point of his journey, Sahil experienced the physical toll of entrepreneurial stress. "I had TMJ from clenching my mouth at night. So I constantly had headaches. Like, if you think about, like, having a hangover, that was just how I went through the day." This culminated in a moment where he was "dry heaving on these railroad tracks" while trying to have lunch with his pregnant wife.

This honest account illustrates the reality that entrepreneurs often face but rarely discuss publicly. The uncertainty of not knowing if you're at the bottom or if things will get worse creates enormous psychological pressure. "You're in the valley, you just don't know... you never know when you're in the valley. Are you at the low point?"

How Creative Deal Structures Can Save Businesses

When traditional funding options disappeared, Sahil's family office investors proposed an innovative solution: a management buyout with seller financing. "We're gonna sell you the business as an MBO. And we're gonna loan you the money. We'll do seller financing." Crucially, they structured it as a non-recourse loan, meaning Sahil didn't have to put personal assets at risk.

This arrangement allowed the management team to execute their growth strategy without the constraints of misaligned investors. "We executed the growth strategy that we always wanted to do all along, because fundamentally, the business had good unit economics." The result was eight consecutive quarters of growth, proving that sometimes the structure of ownership matters more than the amount of capital.

Finding Opportunity in Crisis Through Strategic Pivots

When COVID hit in March 2020, ER Express lost eight quarters of growth overnight as hospitals focused spending on ventilators and masks. However, this crisis forced strategic thinking about where opportunity might exist. "We thought, okay, what are some bets we can make where there's data to show maybe they'll pay off."

The team identified patient registration as increasingly critical since "people have to stay in the parking lot and register. You couldn't literally walk into the waiting room and hand someone your driver's license." What had been a convenience feature became fundamental infrastructure. This shift in market needs created the foundation for eventual acquisition by Constellation Software.

The Veterinary Market Opportunity Discovery

The breakthrough came from an unexpected source: a call from a veterinary hospital. "Imagine your experience with shingles, but with a dog in the car with you. How do you explain to the dog COVID can't go in?" This conversation revealed that veterinary hospitals faced the same challenges as human healthcare but "10x" worse.

Sahil's response demonstrates entrepreneurial pragmatism: "I said, yeah, but you tell them we're not a vet... we know anything about the veterinary. He says, yeah, they are desperate. And I said, that's my kind of customer." By being transparent about limitations while solving urgent problems, they doubled their total addressable market and created the growth story that attracted their eventual acquirer.

Current Business Model: Performance-Based A-B Testing

At Spiralize, Sahil has created a unique value proposition in the conversion optimization space. "The way we do it is by crawling the internet and find everyone else's A-B tests. And our customers get to run the best ones." The secret sauce is their prediction engine that determines "which tests to run and where to run them."

The confidence in their system allows them to offer performance-based pricing: "Our customers pay us based on the conversion lift." This model aligns incentives perfectly and demonstrates the power of data-driven approaches to business development. It also shows how lessons from previous ventures can inform new business models.

Building Business Value Through Bootstrapped Growth

Unlike his first venture, Spiralize is entirely bootstrapped, giving the team complete control over their destiny. "It's a nice place to be," Sahil notes. The company serves B2B SaaS companies in the mid-market, typically between $50 million and $1 billion in revenue, helping them increase inbound leads through optimized conversion.

This positioning reflects lessons learned about market fit and business model alignment. By focusing on high-value software companies with long consideration cycles, they can demonstrate meaningful impact even with modest conversion improvements. "You get just a few more of those a month, very valuable.

Listen to the full episode of DealQuest Podcast Episode 358 with Sahil Patel: Available on all major podcast platforms

FOR MORE ON SAHIL PATEL
LinkedIn: https://www.linkedin.com/in/sahilanamipatel/
Company: Spiralize.com

FOR MORE ON COREY KUPFER
https://www.linkedin.com/in/coreykupfer/
https://www.coreykupfer.com/

Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

Get deal-ready with the DealQuest Podcast with Corey Kupfer, where like-minded entrepreneurs and business leaders converge, share insights and challenges, and success stories. Equip yourself with the tools, resources, and support necessary to navigate the complex yet rewarding world of dealmaking. Dive into the world of deal-driven growth today!