Sean Frank is the Founder and Managing Partner of Cloud Equity Group, a Wall Street-based asset management firm. He started his career as an entrepreneur and businessman at 12, building what became a web-hosting company. Over the past two decades, he has acquired significant expertise in all aspects of private equity investing, leading to the founding of Cloud Equity Group in 2013. Sean is also a keynote speaker and mentor to young entrepreneurs.
In this episode of the Smart Business Revolution Podcast, John Corcoran is joined by Sean Frank, the Founder and Managing Partner of Cloud Equity Group, to talk about building a tech-enabled service provider. They also discuss the evolution of Sean’s business, how to overcome age bias in the private equity space, and tips for thriving in a highly competitive industry.
Here’s a Glimpse of What You’ll Hear:
- [01:35] How a 12-year-old Sean Frank started a web-hosting business
- [06:50] Strategies for building a recurring revenue business model
- [09:35] How to thrive in a highly competitive industry
- [11:16] Sean’s experience hiring his first employees and building a legitimate business in middle school
- [15:24] The value of starting a business at an early age
- [17:52] Sean’s early business acquisitions and his entry into private equity
- [29:03] The challenges young entrepreneurs face in getting capital
- [31:11] Why Sean acquires digital ventures — and his tips for managing sellers’ emotions during M&A transactions
- [39:28] The people who have influenced Sean’s career significantly
Resources Mentioned In This Episode
Sponsor: Rise25
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Episode Transcript
John Corcoran 0:00
Okay, today we’re talking about how to build and grow a tech-enabled service provider. So if you have an IT services business, you have a managed service company, or if you have a digital agency and you want to grow it, that’s what we’re gonna be talking about here today. My guest today is Sean Frank. He is the CEO of Cloud Equity Group. And I’ll tell you more about him in a second. So stay tuned.
Intro 0:21
Welcome to the Smart Business Revolution Podcast, where we feature top entrepreneurs, business leaders, and thought leaders and ask them how they built key relationships to get where they are today. Now, let’s get started with the show.
John Corcoran 0:38
All right, welcome, everyone. John Corcoran here; I’m the host of this show. And you know, each week, I get to talk to smart CEOs, founders, and entrepreneurs of all kinds of companies. We’ve had Kinkos, Netflix, YPO, EO, Activision Blizzard, LendingTree, OpenTable, GrubHub, and all kinds of episodes; check out the archives if you want to learn more about them. Of course, this episode is brought to you by our company, Rise25, where we help B2B businesses get clients, referrals, and strategic partnerships with done-for-you podcasts and content marketing. You can learn all about it at Rise25.com or email us at [email protected].
My guest here today is Sean Frank, such an interesting story. He started what became a web hosting company at the ripe old age of 12 years old, and then got into the acquisition game and started acquiring other companies. And that evolved and became Cloud Equity Group, which is a Wall Street-based asset management firm. And we’re talking about what they do now with M&A, M&A, and acquiring companies in a moment, but Sean, excited to have you here today. And I want to hear how this came about. I mean, when I’m 12 years old, I’m like playing video games and soccer and stuff like that. And here, you’re launching a web hosting business. So, you know, I always ask people at the beginning of these episodes about any entrepreneurial side hustles. And usually, it’s small. It’s like, oh, yeah, at one time, I did a lemonade stand. You know, I did a little bit of a newspaper route. But you were legit, at 12 years old, a web hosting business. How did you get into that?
Sean Frank 2:07
Yeah, thanks for having me, John. Yeah, certainly a very non-traditional path. And, you know, the industry that I’m in now, you know, back when I was 12, we’re talking, you know, the early 2000s, it’s tail end of the.com, boom. And it’s a time period where the internet is new to most end users, right? Most people don’t have a computer in their home yet. If they do have a computer, there may be on DSL, which is like a dial-up internet. Probably a lot of people don’t even remember that. And so it’s very much in its infancy. And with that, there was tremendous demand, and people wanting to create an online presence for the first time. It was often kind of pointless websites, maybe was a blog or host pictures, they would post, you know, anime characters, it was just, you know, a novelty, it was a very new thing, and everyone was very interested in it. And I became most interested in the coding aspect of it and how to actually compile the website and put the images there, and actually make it publicly accessible. And so, you know, I didn’t wake up one day and be like, Hey, I’m going to start a company, certainly not at 12 years old. Still, it was more so like, hey, I’m interested in learning the coding, this is interesting to me, and how can I, you know, code these websites and put them online, and that was really kind of the starting point for, you know, what will eventually be my, you know, entire career to date. And so I started doing these websites, and, you know, became known as the kid that could, you know, produce the websites. And, you know, it started off with, you know, friends or friends of friends that just wanted to, you know, put up pointless websites. But from there, I started to get, you know, businesses to reach out to me, usually ones that, you know, came from some kind of referral from a friend or something and said, hey, you know, we want to put our doctor’s office online, and we want to have a website that just advertises about our doctor’s office and so you know, I started getting these businesses to reach out to me as well,
John Corcoran 3:46
And call you’re using back then are you using,
Sean Frank 3:49
it’s all HTML. It was even the own. There was nothing, nothing back then it was free code, you know, eventually, these programs came out, you know, like Dreamweaver, and forget, there was another one that kind of made it easier to use HTML, but back then, I mean, there was no WordPress, there was no you know, Squarespace there’s no you know, any of this stuff that was, you know, quite literally needed code, you know, started as HTML, and then eventually got into PHP and you know, kind of as these other programming languages became more prevalent, and widely used, you know, kind of learned those, but, I mean, this is back at a time where you couldn’t make a website yourself, if you wanted to have a web presence, you either need to learn coding, or you needed to hire a company, that or person that could do it for you.
John Corcoran 4:27
Do you remember, like any, like, you know, big wins, like big paychecks like, that were, you know, kind of made you realize, wow, I can really make some good money here.
Sean Frank 4:37
Yeah, it’s funny. I mean, it’s all relative, you know, so I’m not gonna say the amounts of the paychecks. But
John Corcoran 4:42
yeah, what’s funny is some of you hear people say, like, yeah, I sold my first website for $500. It took me 17 hours to build and, you know, I totally regretted it, you know, that’s kind of thing here. I mean,
Sean Frank 4:51
my story would be very much like that. I mean, I don’t remember the exact amount but I mean, I don’t even think was $1,000 But I mean, as getting back to to the doctor’s office, and then there is a pediatric office, so a children’s doctor’s office home practice, you know, that wanted me to make a website for them. And this was my first I guess, big client is a 12 years old call it like $1,000, or whatever it was, which is a lot of money to someone that you know, doesn’t have any money and doesn’t have expenses is my first kind of real big win, you know, and they wanted me to go in and take pictures of their office and you know, put together a website that kind of shows the office and hours and all this. So that was, from what I can remember, I think that was my first kind of big client in the hosting business. And, you know, I don’t even know that I had a hosting business back, then I might have still just been doing kind of ad hoc design. But it was definitely right around there. But I said, Hey, you know, I can, you know, be making money from this, you know, so it started as just charging for the actual web development, which is, you know, typically like a one-time fee, or, you know, maybe like, a two-time fee, but you know, it’s the actual building of the website. And then after it’s built, there’s nothing after that. But once I started doing enough of these, I said, Hey, you know, is there a way that I can convert this to recurring revenue. And so that’s when I started studying hosting. And, you know, obviously, I was familiar with hosting, because I had to host the websites. And somehow I became friends with, you know, my hosting provider, which is a small company, I think, was also run by younger people and kind of learned about the business through them. And they said, hey, you know, I can be making these websites, but then I can charge a monthly fee and continue to host him. And that’s really what started my first kind of real business, it was the hosting side of things, it’s a better business, because it’s recurring revenue. And once you get a client, you know, you typically keep them for a long period of time. And so that kind of changes the mindset instead of, you know, having to sell projects continuously. And it’s, you know, it’s a one time project, and then you probably don’t hear from them again. Now, it’s about just kind of closing these clients, and I can watch month over month is kind of my recurring revenue and my recurring revenue, you know, income increases, and it was very interesting.
John Corcoran 6:50
Now, one of the challenges with that, because I know some people that have started, you know, have gone down that same path with having a web development or web building company. But then what, you know, seeing the recurring revenue of the web hosting and wanting to just do the web hosting, but one of the challenges is that, how do you get the web hosting clients, when you’re not building the website? You know, a lot of times, that’s when people come to you, because they want a website built, and then they take the hosting with it. Whereas like marketing as a service, or as a company, just the hosting service can be challenging. So how did you make that transition, as you really made this realization over to a business that was focused more on web hosting and non web building? Yeah, it’s
Sean Frank 7:33
very tough, I’ll say today, it’s significantly more tough than it was back then, you know, back end, kind of.com, boom, until in the.com, boom, there weren’t as many hosting providers. And so it was much easier to create a niche, or some kind of a target market. And then you were known within that, and you’d get a lot of, you know, kind of organic growth that way, whether it be from word of mouth, or you know, kind of targeted advertising or, you know, something along those lines. I started, obviously, my first clients came from web development, and they’re the ones that I did projects for, and then you know, had them on the hosting side. But then I really focused a lot on Bootstrap efforts. And so I’d get involved in kind of online forums, whether it be hosting related or web development related or coding related or whatever. And I would just be a very helpful resource there. But within my signature on the form, so at the bottom of any posts that I did, it would have a link to my hosting company. And I really built my company that way, and just being a resource and word of mouth and just kind of, you know, being community involvement, I think is a good way to put
John Corcoran 8:32
it bit early on SEO to thrown in there. Yeah,
Sean Frank 8:35
yeah, definitely. Early SEO. I mean, it had a blog back then it was focused on there wasn’t really social media back then. But sort of the limited, like the Yelp and whatever else, the Yahoo, I think, had some kind of social
John Corcoran 8:45
media platform. So posting on these boards and chat boards and things like that. Yeah.
Sean Frank 8:49
So a lot of bootstrap efforts like that. grassroots efforts, but, you know, it grew over time. And, you know, there’s definitely a period of time where I started investing in advertising and marketing. And again, I think it was a lot easier back then. Because there was, you know, much more limited competition. Today, it’s it’s significantly more difficult for hosting. Yeah, I mean, I think the keyword hosting is like $150 A click on Google, it’s tremendously competitive. And back then, you know, an average just normal retail and user hosting package, you know, might be like, $15 a month, $20 a month for a simple website. Today, you can get that for like $2 a month. So not only has the cost of advertising gone up significantly, because of the competition, the price that you get for the hosting has gone down significantly. So not not really good relationship