At TechExit.io, Jeremy Shaki explains what it was like to watch his 12-year project “fall apart.”
Lighthouse Labs co-founder and CEO Jeremy Shakey says he's “still absorbing” some of the lessons learned from his experience starting, leading and abandoning his company.
In a frank conversation by the fireplace TechExit.io This week, Shaky sat down with Garibaldi Capital Advisors founder and CEO Brent Holliday to talk about Lighthouse Labs' winding 12-year journey from idea to bankruptcy—and what he learned along the way.
“I don't know how to write a lesson for this because I'm not there yet.”
Speaking on stage at the MaRS Discovery District in Toronto on October 21, Shaki told attendees about the early days of the Canadian coding school, the challenges and growth it faced amid the pandemic tech boom, and the “writing on the wall” it saw for its business during the recession and the emergence of artificial intelligence (AI).
Shaky also spoke candidly about how Lighthouse Labs' two failed attempts to sell its business forced him to design his future business. acquisition workforce training platform Uvaro earlier this year and was thinking about bankruptcy filing just a few months later, and the impact both made.
“I wasn’t just selling shares,” Shakey said. “I sold friendships, I sold relationships, I sold a lot of my heritage and I sold what really mattered to me.”
Lighthouse Labs is a Toronto-based technology education company that claims to have trained more than 40,000 students through in-person and online programs that teach skills in areas such as cybersecurity, data science, data analytics and web development since its inception in 2013.
By late 2019 and early 2020, Lighthouse Labs had approximately C$10 million in revenue and $1.5 million in earnings before income, taxes, depreciation and amortization (EBITDA), with 70 employees and a physical presence in six cities across Canada, Shaka said. At the time, the company trained 1,200 people annually in technical skills, he said.
COVID-19 brought new problemswhich forced the company to lay off staff and move training courses online. With those changes, Shaka said, Lighthouse Labs experienced rapid growth during the pandemic-driven tech boom, with revenue rising to $30 million with $4 million in EBITDA in 2023.
But by early 2024, Shaka said, Lighthouse Labs will see its business prospects worsen. With rising layoffs in tech, a much tighter entry-level job market and the advent of artificial intelligence, Shaka said the company's leadership realized “all the odds are stacked against us.”
This forced them to consider what the outcome would look like if they shut down the business immediately, and whether they were willing to develop new programs and products to remain competitive.
“The questions that really came up were where [tech] will there be jobs in the next five years?” – said Shaky. “And no matter who I talked to… no one felt confident.”
With this in mind, Lighthouse Labs ultimately decided to explore the possibility of a sale, and Shakey contacted a list of 75 potential buyers that the company had accumulated from previous acquisition negotiations. Before landing on Uvaro, he received 14 expressions of interest and four letters of intent.
Shaki said he believes he has a good relationship with Uvaro and an understanding of why the two businesses could work well together.
Headquartered in Kitchener-Waterloo, Uvaro provides skills development and career development services. At the time of the acquisition, Uvaro stated that it believed Lighthouse Labs' hands-on training for mid-level professionals complemented its existing workforce development programs.
“I watched for six months a man who ran [the company] with really good intentions, strong vision, strong abilities, making mistakes that I had no control over.”
Jeremy Shaki
Lighthouse Laboratories
Shaky received 90 percent of the (undisclosed) sale price up front because “cash is what's real,” a move that proved prophetic considering how things ultimately turned out.
“My exit story is an average exit story,” Shaki said. “It didn't generate the maximum amount of money we could get. It didn't falter or fail – I found a way out of it.”
But Shaki said it also caused the business he had built over more than a decade to “fall apart” when Uvaro and Lighthouse Labs went out of business two months ago and filed for bankruptcy. Shaky is still picking up the pieces.
uvaro And Lighthouse Laboratorieswebsites are now redirected to the proxy page, and an FAQ document posted there for lenders and stakeholders indicates that Uvaro raised capital to finance the purchase of Lighthouse Labs and then began burning through cash when its projected sales pipeline and government contracts did not materialize within the projected time frame.
CONNECTED: Bankruptcy documents claim sales failures sank Uvaro and Lighthouse Labs after acquisition
“For six months, I watched someone run this with really good intentions, a strong vision, strong abilities, and make mistakes that I had no control over,” Shakey said. He noted that the “aggressive” change in market conditions following the acquisition also played a role in the downfall of Uvaro and Lighthouse Labs.
According to Shaka, the hardest part for him came when Uvaro suddenly went bankrupt and fired the Lighthouse Labs team. When that happened, he said, all of Lighthouse Labs' former employees, partners and suppliers called him because “I was still that guy.” Even though they understood that Shaky was no longer in charge, that didn't make the moment any less difficult.
“Nobody called me an asshole, but [I] felt like this because [I] left with the exit and [I] gave the parts to somebody, and now they did something with them, and, nefariously or negligently, or not their fault at all, but just to do with the market – one way or another – it ended up being the exact opposite of what I tried to build for 12 years, and it ruined the next six months for a lot of people because of the way it ended,” Shaki said. “That's an issue that I'm still going through and struggling with… I don't know. how to write a tutorial for this because I'm not there yet.”
BetaKit reached out to Uvaro co-founder and CEO Joseph Fung for comment on Shaka's assessment of what led to the bankruptcy of Uvaro and Lighthouse Labs.
Shakey admitted that managing Lighthouse Labs' demise had “taken a toll on him” and advised other entrepreneurs interested in selling their businesses to make sure they understand how much control they do or don't have over the future development of their company after the acquisition.
“It meant a lot to me, and losing it still hurts,” Shaki said.
Image courtesy of Cube Business Media, producer of TechExit.io.
