From Startup to RBC Acquisition

Mike Pinkus: Over the last 10 years at ConnectCPA, we've had the privilege of witnessing the incredible journeys of over a thousand businesses. We've been there for the thrilling highs and daunting lows of entrepreneurship. We've celebrated wild successes and monumental exits, and we've also stood by businesses as they've navigated the stormy seas, facing roadblocks and challenges that every entrepreneur encounters in their day-to-day grind. Join us as we dive deep into the stories of these resilient individuals who dared to dream, who persevered, and who were a testament to the power of entrepreneurship. This is their journey, their lessons, and their triumphs. Welcome to GrowthTales. I'm your host, Mike Pinkus, co-founder of ConnectCPA.

Mike Pinkus: Today we have an incredible guest in Shane Murphy. Shane and his co-founders, Derek and Travis, built Founded Technologies, which is a platform that allows businesses to easily incorporate and handle a number of other legal functions in a self-serve model. Shane and one of his co-founders, Derek, are lawyers themselves, which allows them to see the pain points of incorporation and the setup experience for business owners. The model they created allows for greater speed, lower cost, and an overall great experience to the business owner. Shane and his co-founders scaled Founded Technologies from 2015 up to 2020, where they were acquired by RBC and rolled into Ownr, where now Shane acts as their current CEO. Shane, thank you so much for joining me.

Shane Murphy: Hey, Mike, it's always good to chat with you. Thanks for having me here.

Mike Pinkus: So, Shane, we go way back. I remember we went for, I think we went for lunch at, like, York University,

Shane Murphy: Or was it

Mike Pinkus: The law school?

Shane Murphy: The, well, it's the old LA Good Hall, which is right downtown Toronto. Apparently, it's the oldest building in Toronto. But yeah, it's like a cafeteria from the 1840s or something like that. And I remember it well, and I'm glad we've always stayed in touch.

Mike Pinkus: And it is funny, the backgrounds where two people in professional services—obviously us in accounting and you and Derek at the time in law. And so interesting that you guys went down a path of getting into technology, similar to us, but you guys went full board into technology. And I wanted to start the conversation off, Shane, by asking, how did you, Derek, and Travis come up with the idea for Founded? And maybe you can give a bit of a—rather than me explain what Founded was as a business or is as a business, it's probably better coming from you. So maybe we start off with that and then we can jump into the origin story.

Shane Murphy: That sounds good. I'll start with the overview of where we are today. So, as you said, I'm the CEO of Ownr, and prior to joining Ownr, I was the co-founder of a startup called Founded Technologies. But what both Founded did and what Ownr does today is really centered on the process of starting a small business. That's where we found product-market fit—helping entrepreneurs and really early-stage businesses get incorporated and get everything structured properly, legally, from the start. So their share issuances, any board resolutions, the kind of stuff that a lawyer would typically do for an early-stage company, we have done that as an entirely self-service online platform. So allowing entrepreneurs to get themselves incorporated with a little bit more confidence at the start is where we've really found our fit.

Shane Murphy: And right now, to date, Ownr has incorporated or registered over 135,000 Canadian businesses. We've done a lot of volume of businesses, which is great. I think we are becoming known as the one-stop shop for entrepreneurs to get off the ground, which is something we're really proud of, and we'll talk about that. But getting back to your question about how did it all start—well, this is where ConnectCPA and my founding team, we were kind of kindred spirits early on. I was a practicing lawyer, and although I enjoyed the practice of law, I did feel that this industry, the legal industry, was going to change and evolve over time. I didn't know exactly how it was going to change, but I felt like clients were more and more looking for technology-driven solutions.

Shane Murphy: They were looking for predictability in billing and fees. So I wanted to be on the side that was pushing that change forward rather than staying in my career and letting change happen to me or around me. I wanted to drive it forward. So it's not like there was a brilliant light bulb moment where it was like, we should get in on incorporating businesses. But we spent a lot of time talking to early-stage entrepreneurs and trying to really understand that market and what options they had. Obviously, they could go to a lawyer and get this done, but the reality was many were doing things themselves, doing it poorly, trying to figure out how to file forms with the government and what internal record-keeping they would need. So, really, through a few pivots and turns along the road, we came down to the conclusion that the small business market was very comfortable doing this sort of work online.

Shane Murphy: And the needs we were trying to solve for them were pretty uniform. There's not a whole lot of difference between incorporating a small coffee shop or incorporating a roofing business. The full gamut of small business we could serve pretty well, and they were comfortable doing it through technology. So those sorts of insights came to us, and then it was like, well, let's build an online incorporation solution, add on some things on top of that to make the product sticky, and I'll talk a little bit more about the details. But it was really that. It started with Derek, who you mentioned, who was also a lawyer, and me. And we had one co-founder, Travis, who himself was an entrepreneur and had started businesses. He was a software engineer and developer, and he could build these solutions and build teams to build tech too. So we had the right team. I can't say we had the right idea at the very start, but through a bit of playing around in the market and speaking to people, we found a solution that seemed to work. And that was the impetus that kind of set us on the road to get us to where we are today.

Mike Pinkus: And Shane, why did you start with incorporations? I know that that's one area which seems brilliant, and looking back on it, it's such a brilliant thing because I used to incorporate, used to get companies incorporated prior to Founded, where you'd question—not that you'd question the fees of your lawyer. You're dealing with a professional, and coming from professional services myself, you have a lot of mutual respect for other professionals helping you out. But why did you see an opportunity to start with incorporations in building a tech product around that?

Shane Murphy: I think there's two sides to it. One is understanding the customer, and the other is understanding the business model and building the business. In terms of our customers, I mentioned this earlier—that I think the incorporation solution, what that looks like for a broad range of companies, is pretty similar. So we knew we could build something that wouldn't need to be radically revised depending on industry or the ambition of the company itself. So incorporation fit with our user base.

But from a business model—and I'm not going to say this entirely worked out the way we thought it would—but the hypothesis was that in building a business, we would target companies at the earliest possible stage that we could acquire them. So incorporation seemed like a great time to bring them onto Founded or bring them onto Ownr and then nurture them over time by offering them more advanced types of services through technology.

Shane Murphy: Right. So day one would be incorporation. Maybe month three would be an employment agreement or a contractor agreement, NDA, and then year one, year two, going down the road might be equity issues—so issuing shares or transferring shares—all the way up to building an employee stock option plan, which would be year four or five down the road. So it was looking at the long-term trajectory of these businesses and trying to think what could we offer them at each stage. Incorporation checked out as the acquisition point, but we always had this ambition to offer more services. But we needed to find the companies who needed those advanced services too.

Mike Pinkus: Yeah, it's amazing. And as you looked at bringing on customers and getting product-market fit, what would you say were some of the biggest challenges in getting that? Because I think a lot of companies, it's a default that they want to speak to a person—to their lawyer. There's a trust element, there's a prestige that's surrounded around being a lawyer and working with that trusted advisor. How difficult was it to get product-market fit now that you were introducing technology and removing some of that human capital?

Shane Murphy: I think it's become easier over time, but when we go back right to the start, it was definitely a challenge. When you're a totally unknown brand, you have to establish trust very quickly because incorporation might be simple from a legal perspective and everything, but it's still very important. Like when I talk about 130,000 businesses we've interacted with, each one of them, to me, is the story of someone taking a big risk in their life. You know, these are people who are often starting something new. So you've got a responsibility to these people, and you can understand why they might have a big concern or might question your legitimacy as a startup.

So early on, we had to, for lack of a better word, kind of play the lawyer card. We had to be very clear and transparent: we are not your lawyers when you use this technology. We have designed it, however, and we are lawyers, and we've given this our review from a professional perspective. We think what you're getting through our technology is just as good as what you would get from a lawyer, but it's not individualized, tailored advice. So there's that very important caveat—for regulatory reasons and otherwise—that we had to be very, very clear that we're not a law firm, but we're designed by lawyers. So the technology is embedded with legal knowledge and expertise.

Shane Murphy: Finding a really catchy, punchy way to explain that to people in the typical attention span of five seconds as they're going through websites—it wasn't easy. So huge credit to good product people, good marketing people we've worked with over the years to refine that. But I think, yeah, building trust and embedding professional knowledge into tech products has been a real key to establishing credibility.

Mike Pinkus: Yeah, and that's amazing. And it's something that I think solved a major pain point in the market, which was people spending a lot of money on something that could be spun out pretty quickly and questioning fees. But Shane, you brought up a hundred thousand—was it over a hundred thousand incorporations?

Shane Murphy: 135,000 businesses registered. So that would include incorporations and, you know, sole proprietorship registrations in addition.

Mike Pinkus: Wow. 135,000 and growing every month by a few thousand too. So that's the latest as we sit here in December of 2023.

Mike Pinkus: So you have my head spinning a bit about—how did you deal with customer support? You and Derek are lawyers, but that doesn't mean that your team was just staffed with lawyers in order to deal with, let's say, someone runs into questions when trying to do it themselves while using the technology online. It's an amazing cost savings and efficiency, and it solves a major problem. But now what happens when questions arise? And I'd just love to hear how you guys dealt with that.

Shane Murphy: Yeah, early on it was one of the huge challenges we faced. We had smaller volumes early on, but you know, like any startup story will be, you have to really nurture your early-stage customers. The customers have to love you early on. So that’s it. It was about going above and beyond for everyone who came through our virtual door at the earliest stages. And then over time, you just develop a bit more of a streamlined process for it.

It was very much just ad hoc when we were getting this off the ground, but now we've got a full customer success team, and they don't have an easy job because they are always dealing with issues that can get a little bit tricky and complicated for people—people who haven't dealt with this before. So the customer success team really has to both know what they can advise on.

Shane Murphy: This goes back to the regulatory issues—this customer success team is not a team of lawyers. They're experts in our technology. So they're there to help bridge the gap a little bit in knowledge. But what we can do is provide a huge array of helpful resources—blog articles, eBooks, videos. You know, videos, which you yourself have been part of in our video series too. So it's all about what kind of knowledge can we pass on.

I can be in all the videos I want explaining legal concepts—it helps. For things like tax and accounting, you yourself have helped out with that. So it's about creating a whole library of resources embedded within the product. And that then turns around to just the spirit of it. It's a self-serve experience, and people get a lot of value from it. But they understand the trade-off of using technology and not just walking into a lawyer’s office—you'll have to invest a little bit of time in understanding what your needs are and what potential solutions are out there.

Mike Pinkus: And you mentioned the videos, and I guess the videos serve as, again, a self-serve model to be able to solve your own problems. But now you—I’m interested—you now work with a multi-billion dollar company, and now you have way more resources at your disposal than you probably have ever had historically. I want to talk a little bit about the exit.

When you built this company, did you, Derek, and Travis have the intention of building to sell? Or was it supposed to be lifestyle? Or did you not really even think about any of the above? You just wanted to start a company in legal tech. What was your mindset at the early stages, and did it evolve over time?

Shane Murphy: I think at the early stages, we weren't super naive. We knew it would be a journey to figuring out where we were going with this and what the plan was. So I won’t say we didn’t think about acquisition at the start. I think everyone does—as one potential outcome of starting a business is to sell the business. But we weren’t overly preoccupied with that. And I think that was probably a good thing because, frankly, when we started the business, we would have had no idea that RBC would be a potential acquirer.

It would have made zero sense to be, in the first two or three years, thinking about why a bank would see value. I would have listed other legal tech companies that might have been interested in us, because I really viewed us in this box of legal technology—things for doing legal stuff, legal tasks.

Shane Murphy: But it took a long time to understand that what we were really doing wasn’t confined to legal. It was confined to a broader spectrum of small business services and services to help entrepreneurs. And when you put it in that broader world, then the opportunities became a lot more interesting, and we started to understand the full scope of the value we were offering too.

Obviously, there’s value in charging people and making a profit on incorporation, but acquiring that user and having the trusted brand was far more valuable. So when you have the user—and a lot of companies are targeting small businesses—we had them. And then it was the question: well, what more could we offer them?

And yes, of course, there’s a self-serve component where we can get more value off each one. But I do legitimately turn it the other way around and try to think the way an entrepreneur thinks when they start a business.

Shane Murphy: So, what are the questions they’ll be asking themselves? They ask themselves: Where do I incorporate? One of the next questions they would be asking: Where should I bank now that I have a corporation? I need a bank account. So all of a sudden, it’s like, well, there’s clearly bank value here. If we can drive them in a single experience to incorporate and open a bank account, well, all we need is a banking partner, and this is all the more valuable of a business on both sides. Makes sense.

So that’s where the story of RBC starts—they were very interested in offering banking services to early-stage entrepreneurs, and we were the funnel that would drive them in. But the story really just kind of keeps going with us finding other pillars of value that we can continue on that journey.

Shane Murphy: So in 2023, we’ve launched Ownr Insurance, which is the next step of this journey. You know, as I was talking about the questions: Where do I incorporate? Where do I open a bank account? Where do I get insurance? Well, it’s just one more step now on Ownr. So it’s always just like—we can go in both directions, earlier or later—but following that train of thought of an entrepreneur requires us to really know our users.

But the addition of insurance, I think, is just one example of how we’re always going to be tacking things on. And we’ve come a long way from just thinking about this as a legal platform. It’s more interesting, and I’m more excited about it than ever because we can go in all kinds of different directions, so long as we’re unlocking value for entrepreneurs.

Mike Pinkus: And being with RBC, Shane, I think provides that power to be able to hopefully move relatively quickly on those different extensions of the core product. I’m wondering, did they approach you? How did you guys get connected in the first place? Like you said, you didn’t, in those early days, have the intention of just going and selling. Did RBC Ventures or—like, I know there’s a lot of brand names, and you could probably clarify that for everyone—of who ended up acquiring Founded and converting it to Ownr.

Yeah, how did that all come about, like the actual first interaction?

Shane Murphy: It’s a funny story because we were, as I said, operating as Founded. We were finally seeing a little bit of traction out there in the market. And then RBC had made a big fanfare about this new branch of the bank they were opening called RBC Ventures, which would be driving innovative solutions and technology in a new way. And the first venture to be created by RBC Ventures was something they called Ownr.

And Ownr was a very, very simple—just like a front-end website—fill in the blanks about your business, and they’re going to go file the paperwork and incorporate you. So they were a competitor at the time they launched. But what they were lacking was all that automation technology that we had built. We had a fairly deep tech stack, and it had been tested to scale.

So they looked at us and said, “Well, we like what you’re doing. We like it so much we basically are doing the same thing.” But their advantage was they had an unlimited number of people they could throw at the problem. We had very few people and needed automation technology.

Shane Murphy: So the first thing—to make this long story short—was we had a commercial agreement with RBC, where every time someone incorporated through Ownr, it would be run through Founded technology, and we would take a licensing fee off that.

So, effectively, we were competing but also working with them. A bit of a strange way to operate in the market as an ambitious startup, but we adapted to the circumstances, and it wasn’t a bad outcome.

But if we jump ahead then to about early 2020—this partnership had worked fairly well. The pandemic hits, and the demand for online services of all kinds just skyrockets. First, we thought we were dead—that’s a whole other story. We had about a week where it was like, “This is the end of the world.” Then the next week, everyone’s sitting at home, incorporating businesses like never before.

Shane Murphy: So, great thing for our business and a lot of volume through Ownr too. So we just had to have a heart-to-heart moment at some point and say: to really get the most impact out of this, we should join forces. And RBC made the offer to acquire.

We closed the deal in late August, early September 2020, and three years later, I’m still here. I took over the CEO role just about seven months ago now. I joined as Chief Operating Officer following the acquisition, and now I’m running Ownr as CEO.

Mike Pinkus: That’s an incredible story. I did not know—this is the first time—I did not know that you were behind the scenes helping on the backend of the Ownr incorporation. So that’s how the relationship started.

Shane Murphy: That’s it, yeah. It really was down to necessity in some ways. If you can’t beat them, join them and make it work for you somehow. It was a tricky thing to negotiate, but in the long run, you can see as the business has continued to grow, I think it just makes sense that we operate this together.

Mike Pinkus: And Shane, you obviously have a lot of entrepreneurial spirit. I mean, from law school onwards, you’ve been down this path of entrepreneurship. You sold in 2020, we’re now entering 2024. It sounds like you still have things you want to achieve with Ownr, with the product—now acting as CEO.

How are things different now, being with a larger company—having more resources, being with a multi-billion dollar bank—and not in startup land with more limited resources? How have things changed, and what plans do you have currently?

Shane Murphy: Yeah, I’m pretty open with the fact that being a part of this massive organization comes with, you know, pros and cons. It’s not entirely as easy as it should be. We have resources, and the bank is deeply committed to Ownr and deeply supportive of us. But also, the reality is banks don’t move like startups. And we have to—

Mike Pinkus: Yeah, keep—

Shane Murphy: Our autonomy and our startup spirit intact to move the way we want to move and react to the market the way a startup would. So we definitely have a positive relationship, but we try to keep in our own world a little bit within RBC so we’re not totally absorbed by the mothership in that way. We have our own brand and kind of our own ethos about what we want to accomplish, as much as possible trying to just hammer home to our whole team that we’re still in the early stages.

By my definition, we’ve come a long way, we’ve learned a lot, but there’s a lot more that we can do with this business. So that’s really what keeps me motivated and keeps me in touch with the team in that we have a super ambitious, bright team that wants to do more with this too.

Shane Murphy: So in terms of our plans, I’m not going to jump the gun and make product announcements here, but it really goes back to what I was saying earlier about listening to our users and following that path of an entrepreneur and providing value across that whole journey.

So with insurance, we’ve gone a little bit farther down the line from incorporation—financial services. To give a bit of a preview, maybe I’ll say we’re also looking in the other direction.

What are the questions people are asking themselves before they incorporate, before they kind of make the business official? They don’t know necessarily how to get the confidence to start their business. So trying to attack that in some ways—saying, how can we make entrepreneurship more accessible and make more people feel comfortable taking the plunge into starting a business? That’s something we’re working on right now and asking ourselves those questions.

Mike Pinkus: And those are great questions to ask. And my final question for you, Shane, is—and I ask this to most of the people that we’re bringing onto the podcast—it took five years to go from startup origination to exit, and I’m sure you went through a lot of ups and downs over those five years.

If you could take away one or two lessons that you’d give to someone else starting a business right now, what would those lessons be that you take away? And you can take a second to think about it. I don’t mean to put you on the spot.

Shane Murphy: No. For me, I think it’s really obvious from my story when I look back—that I started a business with people I really enjoyed spending time with and people I trusted. And when you’re starting a business, you know you’re going to be spending an incredible amount of time with your co-founders or coworkers. So that’s probably the first thing for me: to know this is going to be a long road ahead of you and make sure you’ve got the right team as part of this journey with you.

And that probably even speaks, in a way, about solopreneurs and businesses of one. You’re never going to be doing a business in entire isolation. There’s always going to be people you’re going to need for support and to bounce ideas around. So make sure you have the right community around you if you don’t necessarily have co-founders.

For me, that really made all the difference. And even to this day, we are so picky and precise in our hiring process, largely because we know that the core of this came out of a friendship, and it still has to have the sense of a team that’s got each other’s back and is willing to work together. We’ve been successful with that, even with the transition to the bank. So good people is probably, as far as words of wisdom go, the best I’ve got for you for long-term success.

Mike Pinkus: Well, I appreciate that, and I don’t want to hold you any longer, Shane. So I want to thank you for joining me. And your story, by the way, is—huge admiration for what you’ve done. You disrupted the legal industry. Being a lawyer and coming out of law school and working—you took a non-traditional path instead of staying in a law firm over the long run. You spotted an area of the market and really disrupted things. Over a hundred thousand incorporations is no small feat—meaning you put your stamp on the world for sure. Most people don’t get to that level in a business. So kudos to you on doing so.

Closing Thoughts

Shane Murphy: Appreciate that, Mike. It’s really kind of you, and I feel like, again, the work you’ve done in accounting innovation and bringing a tech-enabled experience to small business owners—we’ve always kind of been following the same path. So it’s great to see the success you’ve had too with ConnectCPA.

Mike Pinkus: I really appreciate that. Really appreciate that, Shane. And thanks so much.

Mike Pinkus: That was Shane Murphy, CEO of Ownr. There were two key lessons that I observed through my interview with Shane.

Number one: pick the right team. Whatever problem you are trying to solve will take a long time. Big businesses that achieve big results—whether that be large profits or an eventual exit—take lots of time and lots of hard work. When things get tough, you want to ensure you have the right people by your side. This starts with your co-founders but extends to every team member you have join your company.

Number two: focus on customers, not outcomes. The relationship with RBC was formulated well before they decided to make a bid to acquire Founded. Shane and his team just wanted to help solve problems. You never know when a new relationship, customer, or partner could ultimately lead to an exit. So be helpful, and the rest will fall into place.

That’s it for today. As always, keep scaling up and breaking barriers.