Two Sides of the Acquisition Story: LogoChef and 99designs Weigh In

For some entrepreneurs, things go according to plan. Such is the case of Dan Strougo. His startup, LogoChef, was acquired by 99designs in August.

When an entrepreneur sets out on the startup path, they generally do so with two main end-game scenarios in mind: becoming a big success, or getting an exit. Entrepreneurial dreams, it turns out, are often far from the reality – but it is the success stories in the mix that get founders out of bed every day. Because, sometimes, things go according to plan.

Such is the case of Dan Strougo. His startup, LogoChef, was acquired by global online design platform 99designs in August.

“It’s really nice to see that it actually happened,” Strougo remarked in a phone interview with PulsoSocial. We were able to see the full start-up cycle from the start, from getting some traction to getting the attention of 99designs. I always admired their work and followed them closely, not only their new releases but also the executives themselves. I’m a designer, and I’m totally in love with and passionate about this promise of connecting small businesses with great designers. To be part of the player that’s doing the most honest and beautiful work is truly an honor and a privilege.”

But let’s back up a bit. How did 99designs even arrive at Brazil? According to company CEO Patrick Llewellyn, the startup began planning to enter the market at the start of the year, commencing the typical recruiting process and meeting local players. In fact, it was Strougo who reached out to them. Llewellyn explained:

As we got to know him, we really felt like he would be the perfect person to lead our operations there. It was really an acquisition about the people, what Dan represents to us. He’s a graphic designer by training, so he’s got a really strong empathy with the design community, and he’s also been working with small businesses for some time. He’s built his own business in our space, so he’s passionate about design, crowdsourcing design, and connecting designers with opportunities. When we realized that we could make a deal happen that aligned our interests and gave us a passionate first person and passionate first leader in this market, it ultimately made a lot of sense.

In other words, Strougo’s work in and commitment to the niche has been invaluable.

Beyond Strougo’s case as a strong local leader, why else make the decision to go to Brazil? 99designs, as it turns out, has always had a big draw in Brazil, even on its English site. Thus, combining its user base with that of LogoChef means it can hit the ground running.

That doesn’t mean no leg work has been required. 99designs, which has a presence in over 150 countries around the globe, is well aware of what truly localizing its product entails.

“The first thing we do is translate the site using professional translators. Then what we do is to have the country manager go through the translation, check it and make sure that it’s tonally correct, that it corresponds with the tone that we maintain in English,” Llewellyn  outlined. Once language is taken care of, other issues are addressed, like establishing a local phone number, enabling transactions in local currencies, and supporting country managers in spreading the word:

Really, the country manager’s job when we start in a new location is to make sure that the startup community in that region is aware of what 99designs is. Our first customers when we started, back in 2008, where the tech early adopters, mostly in Silicon Valley.

“This community is great, one, because they’re early adopters, and they’re prepared to try something new. But two, when they have a great experience, they love to share and communicate with their friends about it,” he added. In new markets, such as Brazil, early adopters are an essential piece of the puzzle.

99designsAs the opportunity grows, designers become increasingly aware of the possibilities – especially considering the platform is paying out US$2 million to designers each month. “If you’re looking for a way to design and make money online, then 99designs represents a terrific opportunity for a designer wherever they’re based in the world,” Llewellyn said.

With 99designs behind him, Strougo is now facing an entirely new challenge in expanding the platform in Brazil, essentially starting from scratch. “We’re starting a new cycle,” he remarked. I feel not like an employee of 99designs but like the founder of 99designs Brazil.” Of course, he’ll be backed by 99designs’ technical team and experts, allowing him to put 100% of his focus on spreading the word.  

Making the shift from LogoChef to 99designs is no easy task, especially considering that some of LogoChef’s activity is still underway. As the platform hosts contests for designers, each competition must be completed before the transition is complete. And after that, the startups run the risk that users won’t make the shift from one platform to the other. Strougo commented:

You can’t force users to come across to our platform, but we’re telling them about the opportunity offered by 99designs.

Dan Strougo and Patrick Llewellyn.
Dan Strougo and Patrick Llewellyn.

The global nature of the 99designs community will be one of its main assets in Brazil, likely inspiring more than a few designers to come on board. Moreover, by offering the platform in Portuguese, a new pool of designers will be attracted, not only in Brazil but in Portuguese-speaking markets in Africa and Europe. “This will provide local businesses here in Brazil with a more worldly view of their businesses, and that adds a lot to your project when you have foreign perspectives from designers from all over the world on your project,” he sustained. For designers, the opportunity to tap into international contests is significant as well.

99designs currently boasts around 2,000 designers in Brazil, and LogoChef 2,500. By the end of the year, they hope to combine to reach 10,000 users, clients and designers on the platform.

As to whether the rest of Latin America is on the menu for 99designs, both Llewellyn and Strougo agreed that yes, it’s on the horizon, though neither was completely clear as to the road map.

Strougo said that, once things are in order in Brazil, markets like Argentina, Chile and Colombia may be on the agenda. “We want to really step into one country at a time, look into it, at the culture, and adapt to it as much as we can as a global platform. I’m also very keen to expanding to other Portuguese-speaking countries in Africa that already buy from LogoChef, like Angola and Mozambique,” he elaborated.

For Llewellyn, Mexico is the top regional locale to keep an eye on. “It’s the largest of the Spanish-speaking Latin markets. Its close proximity to the U.S. and cultural ties to the U.S. make it a market that’s reasonably accessible to us,” he explained. “We’ve got a great community of designers in Mexico. There’s a very strong design community there. So that’s the one in the Spanish-speaking market that we see a lot of potential in.” He added that 99designs would like to be bigger in Chile, a smaller market, and that the platform is already providing local support and currency in Chile, Colombia, Argentina and Mexico out of its U.S. office.