Strategies for Sustainable Growth

For entrepreneurs embarking on the journey to transform a promising startup into a thriving, scalable enterprise, the path is often fraught with challenges. A recent discussion on Startup Club shed light on the experiences and lessons learned from scaling business ventures. This exchange of wisdom underscores not just the hurdles encountered but also the strategic maneuvers that paved the way for sustainable growth. The conversation revealed that the essence of scaling a business transcends mere expansion; it involves a deep understanding of market dynamics, a keen eye for timing, and an unwavering commitment to adaptability and innovation.

An objective assessment of the company’s strengths, weaknesses, and potential for growth is paramount, ensuring that decisions are not only well-informed but also in harmony with the long-term objectives of the enterprise. This strategic approach to scaling ensures that growth efforts are both deliberate and aligned with broader market trends.

One of the key takeaways from the discussion is the critical importance of strategically timing growth initiatives. As markets evolve and new opportunities present themselves, pinpointing the optimal moments for expansion can dramatically influence a business’s success and longevity. Leaders must be vigilant, recognizing signs of market saturation, intensifying competition, or shifts in consumer behavior as cues for necessary pivots or diversification in offerings. An objective assessment of the company’s strengths, weaknesses, and potential for growth is paramount, ensuring that decisions are not only well-informed but also in harmony with the long-term objectives of the enterprise. This strategic approach to scaling ensures that growth efforts are both deliberate and aligned with broader market trends.

Furthermore, the significance of building a strong, capable team to support sustainable growth was a central theme of the discussion. The consensus among leaders is clear: scaling a business is an endeavor that extends beyond the founder’s initial vision. It requires the collective effort and dedication of a team that is not just skilled but also deeply invested in the company’s mission. By fostering a culture that values innovation, open communication, and continuous learning, entrepreneurs can create a resilient and agile organization. This kind of environment empowers team members to take ownership of their roles, contribute their unique expertise, and drive operational efficiencies. As a result, the business becomes better equipped to navigate the complexities of scaling, ensuring that growth initiatives are both effective and sustainable.

The journey of scaling a startup into a flourishing enterprise is complex and multifaceted. The insights shared by experienced business leaders highlight the importance of strategic planning, market awareness, and a strong organizational culture. By embracing these principles, entrepreneurs can navigate the challenges of growth with confidence, paving the way for a successful and scalable business.

  • Read the Transcript

    Start, Scale, exit, repeats. This is a show that we do every Friday at 2 o’clock Eastern. If you’re listening to it in replay, you might not know, but it is a live show. We have a live audience, uh, interaction. We really enjoy it when you come. To the show and come on stage and interact. We talk a lot about different topics and different issues and today we’re talking about selling your business and if you’ve ever sold a business before or have thought about selling your startup.

    This is the show to listen to because you’re going to get some very interesting advice. Hello, Mimi. How are you doing? We’re pretty excited about today’s show. Yes, me too. I’m good. How are you? Oh, very good. And uh, You might not know this also, but Mimi is the one who runs the website startup. club And on that website There are a lot of articles that have come out.

    A lot of podcasts. Um, we have an AI called Startup Club AI, where you can go there and ask it a question. We’ve hired two individuals, uh, who are studying AI. One of them is actually my daughter and another individual who is studying AI. Analytics and we’re creating an AI engine where you’ll be able to ask startup club a question about your startup, and it’s going to come back with relevant answers, relevant answers from the book, start, scale, exit, repeat, and also relevant answers from the videos that we’ve done and all of the all the shows and podcasts and from all the people who have given us advice on particular topics, you’ll be able to tap into that.

    Without actually having to go through the process of reading the book, although I have to say woke up this morning, checked it out on Amazon. We were number 1 in America for entrepreneurship management on Amazon. That was very cool. We’ve been number 1 now. Several times since the launch of the book on October 3rd, and we’re just really excited about that because, you know, you put a lot of work into something and you don’t often see the results.

    And today’s topic is all about selling your business and having successful exits. You can put 10 years in your life and screw it up on the exit. Trust me. I’ve been there, done that myself. Michele, what do you think about today’s topic? Uh, all about the sale. Selling your company. I mean, I love this, right?

    It takes so long and we’re literally working so hard to get to that point. But gosh, when it happens and things are going right and you find the right partners. There’s nothing like it Colin. And it really, you know, for those that have read the book, Start, Scale, Exit, Repeat, it is absolutely critical to master the skill and do the whole setup in the planning.

    Cause that’s what helps us grow wealth. You know, we’re not necessarily trying to build a unicorn, which, you know, if you read the first chapter, you’ll see what I’m talking about, but it’s the way of how we scale up our wealth. By, you know, continuing to start scale, exit, repeat, and it is, and you’ve been recently involved in an exit, uh, working in the working.

    Oh, we lost her there. I don’t know what happened there. She joined as a listener. Let’s get her back in the audience. Did somebody drop her to the audience? Was that you? Um, not me It was not you. Uh, you know what we still we’re still living with the bugs. We’re still living with the bugs It’s great to have uh samir jump on stage and we’re gonna invite you on stage to talk about your exit and to talk about You know the did it go well or did it sort of fall apart?

    Um recently Michele and I ran a company. She was president. I was the owner and there she is. She’s back Uh, and we sold it to go daddy registry after nine years. It was dot club and alternative. com. net. org Michele let’s can you sort of like talk a little bit about that exit the process? Why you think we did so well on?

    On the sale of that company. Yeah. I mean, it’s really interesting. Um, you know, it ended up being our best partner, which was GoDaddy. So. You know, for me, it really reiterates the importance of the partners and the relationships that you build, like we knew all along, it was a very strategic relationship and much to the dismay and whatnot, of many people, naysayers of, you know, even board members, I’m going to say that investors, we spent a lot of time nurturing that relationship because we did see the potential there.

    We did see the synergies. So for me, what I really, you know, learned it’s, it’s so important, you know, when you’re doing business with any partner, you just don’t know what will happen. It’s just like treat every one of them seriously and really think about what the implications are. They were a strategic partner.

    Okay. And we spent a lot of time. You know, visiting and going to conferences, that counting team would go bananas and call and can tell you this, Oh my God, why are you spending so much money? But we saw that we had the vision and we knew how strategic they were. And to that means we were very candid with them throughout the process and before the process.

    That we thought that they were the perfect partner and that we could eventually do a strategic alliance. So like, don’t shy away from these things is what I, I think, Colin, like a lot of people go at these kinds of negotiations. We were doing marketing programs, by the way, with them and placement, et cetera.

    They were a number one distribution partner, but, um, you know. A lot of people go at those types of negotiations where there’s, you know, I’m winning and you’re losing or vice versa, but really, you know, not to be cliche, but it is a win win. There’s nothing like a great partnership to really like move the dial forward, even if it’s not them acquiring you, but to make the business grow.

    Yeah, that’s what today’s show is about. Um. It’s all about how do we do the exit? How do we make it right? Um, what’s special about today’s episode is that we’re also using this episode as the basis for an article that’s coming out on Forbes. So Mimi, if you’re able to put up the most recent article.

    Yeah, we’re clubhouse clubhouse and clubhouse we. We sometimes have these little anomalies like phone calls that come in and hit our phone. But, uh, Mimi, if you’re able to post the last article that we recently did on Forbes, it was really, really interesting. It was based on last week’s episode, which you can catch in podcasts.

    Search your favorite podcast network. Start, scale, exit, repeat. Serial entrepreneur secrets revealed. And we were interviewed by pi. ai. And she did an interesting job. I would say she did a phenomenal job, but also there were a lot of questions she asked as a moderator that we would not have expected, and you’ll find that was quite entertaining, and it became the topic of a, an article for Forbes that we published last week.

    So today we’re going to publish the, um, we’re going to work on this topic of, of, of exit. You know. I spent 10 years writing this book, Start, Scale, Exit, Repeat, and really the genesis of this book came to me based on my career in the 20s. I had started a business with my brother called Internet Direct, and it became the fastest growing company in Canada, the number one fastest growing company in Canada.

    In fact, they had us on the front page of magazines, sort of like Inc. Magazine, it was called Profit Magazine. If you have any Canadian listeners up there. And, uh, we took the company public and in 1999 we decided to sell the company to a cable company. Called look communications, but we agreed to an 18 month lockup.

    See thanks for going like crazy in 1999 Nothing could go wrong But come march of of 2020 they decide to break microsoft up and the nasdaq falls a thousand points We pull a 50 million dollar offering the company at the time And I understand at this point i’d given up ceo ship or I was not running the company My brother was not running the company and we were actually um I was still the vice president of the internet division and buying a lot of companies at the time, but we were not in control of the company, yet we had signed up to an 18 month lockup.

    We had agreed that we wouldn’t sell our shares 18 months after the merger of our two companies. And, uh, and again, things were very, very frothy in 1999. In any case, fast forward a little bit here, the Nasdaq falls from 5, we pull our 50 million offering. Fast forward 18 months later, the company files for bankruptcy protection, and the stock, which by the way, traded over a billion dollars, a billion two, billion three, and I own 13 percent of that at 28 years old, uh, that stock, uh, I traded it at 19 came down and I sold it for six cents a share.

    See, I had started, scaled, And exited the wrong way. Uh, we were number one fastest growing company and then we became the last place finishers It was a disaster and that has always affected me. It’s always made me think about cycles To think two lessons from that one Liquidity or control and that’s in the book if i’m gonna sell my business It’s i’m gonna either gonna have liquidity which means cash Or I’m going to control the company.

    And then secondly, bad things do happen. Think of 2022, anybody here in the audience? Remember 2022, we had the tech wreck, the crypto crash. We had, um, the hurricane, we had the war in Ukraine. We had it all and we got hit pretty hard. This company, I’ll tell you, this company got hit pretty hard by, I put 20 companies in my incubator and we were hit with every single one of those.

    We were hit with the, um. With the, uh, the inflation, our paw. com, uh, which brings in a hundred containers a year. The container cost went from 2, 400 to 24, 000. Brick container burned about 2 million in profits. Just that one year alone. We got hit with high interest costs are We have a loan. Let’s get an sba loan and it went from it’s a three million dollar loan on paw.

    com And it went from three percent three and a quarter to over nine percent Interest rate we have 800 employees in ukraine at a different company called geeks for less and the russians made it Three miles from our border and to top it all off we have A number of homes in one of our real estate businesses called escape club There are luxury real estate rentals and they’re located in north captiva and we were hit with an almost cat 5 storm So wow, we were really hit that year, but the thankfully We had enough resources and we’ve taken enough money off the table.

    We’ve laddered up well, so we can handle these shocks. Uh, they weren’t easy. I had a 5 million loan with a bank. And once the Ukraine war broke out, they backed out of the loan. And it was, you know, it was definitely a very frustrating, very frustrating times. Go back to 2000. Fast forward six years later, we took another company public.

    My brother and I love technology. We love to build companies. Uh, we took it public and two years after that we sold it to a Fortune 500 company for 17 times EBITDA. Uh, and this time it was all cash. So, that is why I was asked to speak at MIT. In 2012 because not only that company, but we did a number of other companies We sold dozens of companies and been very successful.

    We’ve done it. We sold hostopia that publicly traded company I just mentioned we sold that one a month before the lehman crisis. We sold Uh two cows a um, you might remember that one a few of the audience might remember that one We sold that one in 98 99 uh right before the dot com crash we sold the Um, dot club before the tech wreck of 2022 and, uh, we continue to exit stage left when things are frothy when you begin to see the signs that things are frothy.

    That’s when we exit stage left. All right. We have, um, Renee on on the stage and really enjoy having you on Renee. Uh, we’d love to hear from you. Your exit story. And if you’re in the audience and you want to come on stage and share your exit story, that’s what we’re talking about today. We’re talking about the exit.

    This is a syndicated podcast, and this is also the topic of a, um, an article that we’re writing. So if you do come on stage, um, we ask that you give us permission to print anything that’s publicly available. All right, Rene, what are your thoughts on exit? I went through the same experience as you did, where I got, I got totally creamed in 1989 when my company.

    My company went public, 22 million in sales, 1982, um, 83. And then I hired the wrong CEO, who destroyed the company. We wrote off 10 million of inventory within 24 months because of him. And then, um, ATI was going to take over my public company. I was going to get 10 percent of ATI, my shareholders another 5%.

    And I raised 23 million of the 25 needed for the reverse takeover. And the Royal Bank called the loan, because Cooper’s Library wanted to make a million and a half in the receivership. And so they wouldn’t give me two more weeks for the next two million to come in. So they killed what I’d built over 17 years.

    And so I totally understand the pain, the lessons learned that you described, the difficulty of starting, scaling, and exiting. So I totally relate to everything you’ve said, 100%. So it sounds like you spent like 17 years building this company, and then it just all fell apart in like, what, 17 weeks or 17 days?

    Like, isn’t it amazing? Yeah, yeah. The bank would not give me two more weeks to close on one, ATI taking over my public company. And he, and he, KY, my friend, ended up selling for 6 billion to AMD. So that would have been a hell of a win for our shareholders, but the bank wouldn’t allow it. So I’m totally against bank debt, as you can imagine.

    I totally don’t like certain professional managers because they have their self interest at stake instead of the shareholders. And it’s really a difficult journey to build companies. Yeah, so going back to that billion dollar collapse, you sound Canadian as well. RBC was our investment banker. Toronto, yeah, I’m from Toronto as well.

    You probably, you might even remember Two Cows, Internet Direct, those ones. Yeah, so, what a fucking disaster. I mean, a billion dollar company. I’m driving through frickin McDonald’s and the girl says, I saw you on the news last night. Yeah. Yeah, just get me the coffee, right? Um, no, it was horrible. And I felt guilty about it.

    I felt horrible about it. Uh, I had lost 95, 98 percent of my wealth, um, at that particular, um, collapse. And, um, I’m curious, like, from your perspective, you must have lost a lot as well, and how did you bounce back? Like, what did you, how did you get through the mental challenges of that? It’s called nightmares and suicidal.

    So, 1989, the company goes down, and, and the company, and there’s 800, 000 owed. To creditors of a public company. And my dad says, you’re going to pay it back. I said, oh? He says, yes, it may not be personal debt, but those people bet on you, they invested on you, you personally are going to pay it back. I spent 10 years paying back 800, 000 of funds that I could have, perhaps, it could be argued I did not owe.

    But my dad was brought up as a gentleman. Uh, his, his word was stronger than his handshake, stronger than a written contract. And that was the world of the 60s and 70s, for me, how I grew up. And so I lost 10 years of my life. I was suicidal, 1992. I had this huge thing hanging over my head for those 10 years of paying back 800, 000 that I was not legally obligated to do.

    So it was pure hell.

    Yeah, I mean, it’s you’re touching a nerve right now. I’ll be quite frank, because about 10 days ago, a friend of mine, after 19 years, he was in the business of, um, buying and selling houses, but the market had freezed and he had about a hundred employees and he had to shut his company down in the following Tuesday.

    He committed suicide. Um, yeah, look, I mean, this is, this is the thing. And you know, one of the things he said the day before he died was that. His identity, he’d lost his identity and I appreciate the fact that you did bring that up like mental health challenges are a very big thing when it comes to entrepreneurship.

    We do talk about that in book in the book. We don’t spend a lot on that. We spend mostly in the book start, scale, exit, repeat. We talk mostly about the code to make money and to succeed. But I do devote the second last chapter to this topic, and there really is a lot of challenges. You do go through a rollercoaster when you start and launch a company, and an exit can sometimes be, um, devastating, even if you sell for money.

    I remember, Michele, when we solely signed the contract, and I don’t know if you’ve ever been in a high school play. But you worked so hard on it for like six months, and then you do the final show, the curtains close, and literally everybody starts crying. It’s, it’s very sad. So at Dot Club, a very successful sale, all the employees made, um, made great money on the sale.

    But still, we started to tear up when we signed that final contract. Do you remember that moment, Michele? Absolutely. I was very upset about it for a very long time. So, yeah. It was hard, very hard, you know, you’re working so closely together and you’re just building and having a lot of fun doing it. And then all of a sudden it’s over.

    Yeah, it’s hard. Yeah, I think that what we did, my brother and I in the 2000s was really focused on what we love the most. And, um, startup failures are the scars of our past that guide us through new ventures. And that’s what we got to remember. It’s, you know, whether your exits successful or not successful, we learn from our prior companies.

    Actually, we have a stat in the book that serial entrepreneurs are, um, um, twice as likely to succeed because they’ve had those scars. They’ve had those experiences. Brené, keep your story going. I want to hear what happens after How did you move, again, how did you move forward, what happened, you had to pay 800, 000 off, what happened next?

    Well, 1989 my father said, I’d rather invest in you now than before because you failed, to your point that you just made. Then when I had a friend who failed a few years ago, so to speak, the company was stolen from him, and he was totally, totally down. I explained to him, you can rebuild. 50 times, 100 times faster after you failed because anything you build, you’ve got so many lessons, you know, so many answers, you know, you know, so many things to do.

    Sorry. And so, so the rebuilding process is so accelerated. Um, you’ve learned so much. So you know who to go to, you know, you can recognize red flags, you know how to solve problems. So the rebuilding process, people don’t realize. One, if you have failed. You can rebuild so much better and so much faster. So all I did was build companies.

    And that’s what I still do. I work 17 hours a day, 7 days a week. I don’t get paid. My exit is whether I succeed or fail. And um, I just, it keeps you young to build technology companies. Because you have to keep learning about all new technologies. So I live to stay young and to build companies and new fields.

    Latest one, cybersecurity, but my point being by going into fields, you know, nothing about you. Um, you’ve got such a history that helps and you’re forced to learn and stay young.

    Yeah, I like that. That’s interesting. And I find it fascinating. I, I, I sense that you and I have had very similar paths. Um, I don’t take salaries either in any of my companies, which is interesting. That’s something that once you get to a certain point of, um, success, you begin to think, ah, forget the salary.

    Even Elon Musk didn’t take a salary at Tesla, but was supposed to walk away at 56 billion on his pay package. Uh, but in any case, that’s one of the strategies to attract other people’s money, but also. Why pay the government taxes until your company is profitable? That’s been one of my sayings. So we have a section in the book called Exit.

    Now the book, Start, Scale, Exit, Repeat, is broken into a blue section for start, a red section for scale, an orange section for exit, and repeat is a light blue section. And even if you like, you know, you’re beyond the startup phase, although I honestly, I really believe you could read this book back to back and get a lot of benefits from it, Uh, even if you’ve even if you’ve already started your company, but I wanted to talk to you a little bit about the exit section of the book.

    Okay, it begins with a story and the story, uh, every time I tell the story 2 years later, somebody will come back to me and say, I remember when you told me this story. And by the way, the book has that it’s all about stories, stories about my own stories, but it’s also stories of 200 people that we interviewed for the book.

    So, uh, it’s about 50 of those actual interviews made the book and it’s really, really interesting to hear all of the stories. Uh, so we had sold our first company. I was 28 years old just before. We sold the other company for stock stock for stock swap, but we won’t go into that one. We sold a company called 2 cows and, um.

    We, you know, we closed it took about 6 hours to sign the closing documents. We finish about 1 am at the law office, downtown Toronto. I received a check for 22M dollars and this was I was holding the money for 3 of us. So it’s don’t. It carried away here. Uh, and at that time for a day, we had to pay 37 percent tax on capital gains.

    So, you know, in any case, got this check driving home. We almost get in a car accident. We were like, laughing our faces off saying, well, I kind of suck. You know, you finally make it. And, um, and you get killed. But anyway, we managed to get home. I lived in Oakville and outside of Toronto. Renee knows where that is.

    It was a tiny home. I mean, it was a tiny, tiny home. Uh, climbed a 3rd. It was very skinny and tall climbed to the 3rd floor. It’s around 2 o’clock in the morning, walked over to the beds and woke my wife up. And handed her a check for the 22 million check. And, and she, she wakes up and she looks at it and she goes, I don’t understand.

    She could not comprehend the zeros that were on the check. It was very, very funny. She looked at it because she knew I was working on stuff. She, I told her I’m working on selling the company. She never understood. She never believed, you know, you go from this. Point in life where you’ve got nothing and all of a sudden, you know, you’ve got, you know, a lot of wealth and it was just a life changing moments.

    It was a funny moment in history and these moments can happen. They can come and they will come if you focus on the basics on starting scaling exiting repeating today. We’re going to talk about exit and in the book we talk about types of buyers. This is important concepts. So earlier we mentioned that go daddy registry had bought.

    Uh dot club dot club is an alternative to dot com dot net dot org. By the way hostopia was bought by deluxe communications Fortune 500 company to do all the checks in the United States and that company, um, had millions of small businesses and they used our technology to sell to those millions of small businesses.

    So they, they looked at the way that they could leverage the company. To get us get to another to get their revenue, their earnings up based on our customer based on their customer base in our technology. And that’s what we call a strategic buyer. In the book, we talk about three types of buyers. You have cash flow, which typically is private equity and private equity will come from a place normally where they want to leverage.

    The company so a 70 leverages come come down The banks have been a little bit more conservative maybe even 60 right now on the leverage side But they’re going to want to borrow money and the company’s going to need to pay interest payments So they’re really looking for an earnings multiple, you know that can range anywhere from an e commerce company right now at about four times four times earnings to a A tech company which i’ve done a few deals recently Uh, at about 7 times revenue, we tend especially a creative revenue, a creative monthly or creative annual models.

    They tend to do much better. And, um, like I said, it was 17 times, even a dot club. It was even far higher than that. We’re not allowed to disclose the numbers, but. Um, but you could actually obtain a pretty significant multiple with, um, certain types of companies. But again, that’s with strategic buyers, cash flow buyers looking at.

    Okay, what’s the cash flow? How much can I borrow against that? What can I get? So you’re typically looking at a pretty low multiple. Then you’ve got a competitor buyout. A competitor buyout is going to come in and eliminate costs and they’re going to give you somewhere between where they’re at, where your company’s actually worth of the street versus the value of merging the two companies together.

    And then you’ve got the um, strategic buyer and that buyer is looking at leveraging from their existing Customer base. Rene, it sounds like you’ve had a lot of experience selling companies. I’m going to get a, you know, you’re, you’re my, you’re my guest today. And I really wanted to hear more from you as well.

    What are some of your tips to sell successfully? If you’re able to answer that. I think you said it yourself. Um, I’m still struggling the topic of selling, meaning I’m not money oriented. Now I am in the cybersecurity company. I’m always technology and R& D oriented after innovations that have impact on as many people as possible.

    I’m after solving the toughest problems in the world from an R& D point of view. So I’m not your normal business person in any way. But I’m having to be that for the cybersecurity company. Because at this stage I do have to do both. Um, not just be obsessed with development, first in the world, R& D, and tech.

    And so right now, I am focused on both. So I’ll tell you in 2 years from now,

    exactly. And by the way, I’m involved in a, in a cybersecurity company, too. I think that, um, I don’t know what you do with your cybersecurity company, but. We do, um, DNS, uh, domain name security and we’re the first company in the world to do, um, uh, to have the technology that goes in and analyzes everyone’s domain names and looks for security flaws.

    Um, but we’ve been partnering with cyber security companies, so I don’t know if there’s anything there, but, um, you know, we’d love to talk. Yeah, I’ll email you. Yeah, yeah, absolutely. And I’ll, I’ll, I’ll connect you to the president. And, um, yeah, look, I mean, There is a lot of things to think about when you do sell your company, and one of the chapters I have in the book is called timing is half the value, and I think you sort of got a sense of that.

    If you’re here earlier when I talked about, um, the sales in the 90s and the 2000s and 2020s, uh, and whatnot of the company, some of the companies I was involved with selling before the Lehman crisis and whatnot. But we want to look for signs of froth in the marketplace. And what do I mean by froth? Think about 2021.

    Just go back. It wasn’t that far ago when you could buy a bored ape, a cartoon picture digitally for a half million dollars. We saw a stock called GameStop rise to astronomical levels. Um, we saw something called SPAC special purpose acquisition companies. I personally love them because I thought this is a way for entrepreneurs to get to the market and get liquidity.

    Um, but you know what? We saw them take off and there were dozens of them or hundreds of them launching and, um, they were all, you know, also successful. So when we begin to see times of fraud, that’s when I say exit stage left. And. When you do that, you’d be surprised the valuation of e commerce companies.

    We were looking at that because we have a number of e commerce companies in our incubator here. One of them being paw. com, PAW. com. Another Meowingtons that Michele owns, uh, which is a cat company, cats and dogs running around the office here. And, uh, with those companies, we saw valuations collapse about 95%.

    Look at. 3. 6 billion to 148 million. Look at, um, Allbirds, the way it collapsed and Casper and some of these other e commerce brands. Don’t get me wrong, I actually think they’re good businesses in a lot of ways, but we saw the valuations absolutely get decimated. When I say timing is 50 percent of the value in the case of e commerce companies, it was probably more like More along the lines of 80 to 90 percent of the value.

    Uh, what’s interesting about this podcast, our very first show, and this is show number 144, I believe. I might be one off. Sorry, Mimi. Uh, but I believe we’re 144. And if you go back to the very first episode, we interviewed Yosef Martin. Yosef Martin started a company called BoxyCharm. And he sold it for a half billion dollars.

    And this was only what, two years ago, a little over two years ago, when the market was that frothy. So timing is half the value on exit. Michele, any thoughts about timing or exits that you might want to add to this conversation? Yeah, I mean, timing’s absolutely critical. You know, look, the e commerce market pretty much is, you know, went down the tubes after, um, COVID and we’re seeing that results of that, like you said, so now a lot of e commerce, um, shops that thought they were going to sell for a lot of money are kind of having to wait it out and, you know, relook at their strategy and get competitive again.

    Um, for us at club, actually, I think we were pretty fortunate because the company was doing extremely well. Progressively without a dip, quite honestly, and did even better during COVID. Um, Obviously we don’t own it now, but, um, we actually sold, we believe at the right time, you know, there’s a, a lot of pressure right now on the market with interest rates high and all the other dynamics that are happening.

    I think that’s part of what Collins, uh, whole. Philosophy is around start, scale, exit, repeat is, you know, if you just keep pushing and pushing, thinking you’re going to make more or more or sell for more and more, that’s not always the case because these things happen, wars happen, interest rates happen and you don’t get to choose.

    So I, I think part of the, you know, lesson here is, you know, there’s a time and a place to take money off the table. And don’t be afraid or think, Oh my gosh, I could have made much more because quite oftentimes that’s not how it goes. Can I, can I add to that, Michele? 1983, a year before that, I raised two and a half million, um, on private placement, five pension funds.

    1983, I was going to go public, I went public in March. There were 19 companies lined up after me. And I was arrogant enough to think in March that, gee, the brokers won’t change the price of the stock from 9 to 7 that they promised me. I’m 13 million on a 30 million valuation and I arrogantly hesitated.

    My dad says to the brokers, eight brokers, let me talk to my son. I’m 35 years old. He says, you’re going to accept their deal. I’ve never told you what to do in your life, but you’re going to accept it. We have 6 million in debt. This will give us 7 million in cash. I went in, accepted the deal, said, thank you.

    Two weeks later, the market crashed. 19 companies lined up after me. None could go public for the next two years. Half them, 80 percent died. So, to, to what you’re saying is you never know what can happen. If you’re arrogant like I was, I was really stupid in my arrogance. You don’t have the experience to know how to say thank you to capital.

    Um, you think you’re a big shot, you think you can, you know, you’re going to succeed and nothing’s going to stop you. Life happens, and um, everything you said is so accurate. Thanks.

    Isn’t it so? You know, I mean, we always look back. Okay, let me go. Let me talk about pop for a second. That’s P. A. W. dot com. And we did 39 million dollars in sales during the pandemic in that year, but 3. 5 million in profit. We were 3 years in a row. That’s just growing company on. The, uh, Inc. 5000, one of the fastest growing companies, and we had multiple buyers lined up to buy us, but we said, Oh, wait a minute.

    If we did 39 million this year, we’re going to do 50, 60 million next year. Why would we sell today? Well, you know what? The pandemic ended. There was a little bit of a pandemic hangover. The revenue pulled back a bit, uh, and, um, the valuations, the valuations that we were talking about, and you see them publicly.

    Traded multiples, you know, they, they absolutely collapsed. And so, you know, here, here was a guy who’s been writing this book for 10 years, who didn’t take his own advice and sort of like. Guys, we need to sell and we need to do it this year. No matter what, you know, it’s okay to take some money off the table.

    It’s okay to let other people make money. By the way, two cows, one of our first companies went to over a half billion dollars of valuation and we sold it for far less than that. Um, so it really, it really is okay. I’d like to also on exit, um, talk about the, the, the things that you need to think about as an entrepreneur.

    So, Often a lot of entrepreneurs try to sell their company and they positioned themselves as the hero and I’m going to make the case right now that that’s a mistake. That’s a huge mistake. See, I had bought. After I had sold, um, in 1999 to Internet Direct and in 2006 to Deluxe, uh, I was in charge of the acquisitions for those companies, so we were buying our competitors up in both scenarios, and I bought about 25 companies, and I will say this, that 99%, maybe 100%, because I can’t even think of the 1%, of the entrepreneurs did not stay with the company more than 24 months later.

    So I had actually agreed to stay with the company for three years after I sold to deluxe and I followed through that commitment of the day that it, that commitment came up. I didn’t care how much I was making. I had to get the hell out of there working for corporate America. I really hated it. You know, most entrepreneurs do that, do hate it as well.

    And so this is something to consider. They’re not stupid. The buyers are not stupid. They know that they need this company to run post you. And so the more you can play yourself down, the more you can check your ego at the door, the more you can elevate your, uh, the people around you, the better the valuation.

    So that’s something to consider as well. It’s really positioning yourself, getting it ready for that sale. And the other thing to get it ready for sale is to think about, okay, in 12 months from now, or 24 from months from now, I’m going to need to, uh, figure out, um, I’m going to need to maximize the value on exit.

    And so what I want to do 12 to 24 months before that. It’s figure out what are the KPIs? What are the metrics in the industry that they’re watching back in 2022 for e commerce companies, believe it or not really 2021, they were looking at the, um, the revenue, it was a company called MBMT sold for one times revenue, about a hundred million dollars.

    So watch company. So revenue mattered. Growth mattered. Come 2023, uh, nobody gave a damn about growth anymore. All they cared about was earnings. Earnings matter. So that was the key metric. So sometimes these metrics can change in your industry, but you want to think about what is that metric and how do we maximize that?

    That metric in the short term in order to boost our valuation on sale. It was a funny story going back to dot club Michele about clubhouse and dot club. So when clubhouse first launched a lot of, uh, for whatever reason, a lot of club owners, a lot of, uh, clubhouse influencers, whatever you want to call them, uh, they started buying up dot club domains and it turned into a frenzy.

    It was somewhat almost like the board eight frenzy. It was a bit crazy. Like one day we come to the office, we get a phone call. Hey, do you hear about all these people buying dot club names? And we’re looking at the numbers and I said, Holy shit, they’re exploding. Uh, I mean, it’s one day, I think we sold 350 premium names and premium names were names that were sold for like a thousand dollars each or something crazy.

    It was just absolutely insane. The number of, uh, domain names that we were selling at a premium level. People were buying their sink, their first name dot clubs, whatever, dot club. It was, it was really, really crazy. And it really, it was really interesting. So sometimes these, these positive events can happen that can give you, um, the momentum had at that point, Michele, we say, you know what, why don’t we see how this plays out?

    See, we had actually received an offer from go daddy and had accepted the offer. Now I’m not allowed to talk too much about it, but, but. But the fact is we had a material upside event, which is very rare. It’s usually a material downside event. You ever sold your company, they’re always looking to knock your price down.

    We had a material upside event. And, uh, because of that, we had to have a reevaluation in the mid process. And, um, and they agreed to it, but we could have also sat back and said, look, you know what? Things are going good. We’re doing so well It’s going to keep going but we knew things were good It went to profit and we were able to sell and we’re able to exit.

    So in any case, uh When you’re selling your company, you’re going to want to think about How you sell your company and who you sell it to we talked about the different types of buyers Sometimes you’ll have a company that you know, it’s just not doing that Well, but instead of walking away, I would highly encourage you To find a way to monetize on exit.

    So we had a company up in Canada, um, still own a portion of that company. Um, but it was a outdoor media company. We did all the taxi tops in the Toronto market. Another Toronto story, Renee. Too many Toronto stories. You should pick up the book. There’s a lot of, a lot of Canadian stories in there. So we actually, uh, owned all the, we still own all the taxi tops in Toronto, and, um, uh, but we’d run this, we’d run this company, we got a monopoly, which was really cool because it took us years to fight for that.

    But then something called Uber came out and started whacking the business. We were getting killed. And then the, you know, the pandemic pretty much put it onto the ground. I mean, it pretty much was done, but, uh, but we were able to say, okay, we don’t want to keep running this anymore. We want to walk away from it.

    Why don’t we sell this to our competitor? And we sold it to him for zero dollars We said we want you to take the company here It is and we got to know him over a couple years and this is instead of walking away I’m talking about when things are down You don’t want to go like you you don’t want to just walk away from that money Okay, we put 1.

    5 million dollars into this company. All right, so we decided to um To talk to our competitor and we said, let’s do a deal. You’re going to pay us a royalty on every sign for the next six years and we did the deal. We’ve captured back about 70 percent of our initial. Capital back on it. Ironically, the business is actually turned up recently because we now have digital signs in Toronto and we get we get a high revenue stream from the digital signs.

    We get a percentage of that in our royalty. And then we also got 15 percent of the combined company as well. So even though we were down on this company. In the end, we may still Mike. We still might make a decent profits. I think we’ve only had about 70, maybe 80 percent of our money paid back on the initial investment, but we’re heading down the right path.

    It’s better to monetize on exit the versus just walk away from that exit. All right, we have a few minutes left here. If you’re in the audience, feel free to raise your hand and come and share with us your thoughts. We’d Your exit story, what is it that you did when you exited your company? Was it successful?

    Was it a failure? How did it turn out? We want to hear from you. We love the stories like Renee shared with us and we really appreciate that. I should also mention this is also the, uh, a podcast which we syndicate called Start Scale Exit Repeat. Serial entrepreneur secrets revealed happens to be the same name as the book, which, by the way, Michele, this morning I woke up.

    I checked the Amazon and we were number one for entrepreneurship management this morning on that book. So we’re very excited about that. We’ve been we launched in October 3rd after 10 years of writing. Two years with six full time staff members interviewing 200 people of which 50 made the book. So if you’re in the audience and you want to jump on stage, please raise your hand.

    We have a few minutes left before we jump over to entree today. We’re doing a master class, which is slightly different topic than the one we’re talking about now. I charge, um, uh, 20, 000, uh, when I travel to do speeches. And, uh, this is the speech that I deliver, and it’s been considered the highest rated speech that I’ve ever done on any of the places I’ve gone.

    And it’s called Start, Scale, Exit, Take Some Money Off The Table, Repeat. And we have a PowerPoint presentation. It is an absolutely free masterclass, which we will, um, be doing live at 3 o’clock on Entree. Mimi, if you could post that. Link for entree. That would be great as well. I’m keeping Mimi busy here, but, uh, but no, but it’s actually, it’s a, it’s a, it’s a really interesting take on, uh, and Michele started touched upon this concept of laddering up your wealth, this idea that, you know, that you need to find a way to, um, and Renee, it seems like you’ve done this, but.

    Entrepreneurship is a trade and we need to learn how to master that trade. It’s a trade like any other trade And and that’s what we’re going to be talking about today on entree Start scale exit take some money off the table repeat The only way to access this content post the three o’clock the live session today Will be to see it, uh on the learning section of entree, which is a pro Membership.

    I think it’s about 300 a year, um, to be able to access it and get access to that content. So if you’re interested in really getting deep into lathering up your wealth, then that would be a session to attend. And if you’re listening to some podcasts, you can go to Entrez, sign up to the Pro Membership and, uh, listen to.

    That was master classes. We did. We’ve done four already, and we’re gonna add one per month on the entree platform. Okay. Are we good? Michele Renee? Any other? I think we sort of covered. Well, yeah, let’s right. I think so. But maybe, you know, just for people here in the audience, like the entree, you’re gonna do like a full on presentation and go more in depth.

    Right? Tell me a little more. Oh, yeah, for the presentation, um, it’s a PowerPoint presentation, or not the PowerPoints with lots of words on the screen is really basically images, which talk about the concept of of exit and also repeat. And that your identity is not based on just, uh, your one company and who you are in that industry that you are a trades person that your skill is entrepreneurship and we again we need to learn how to master that trade and it is a trade and then you can learn it and you can learn how to repeat it.

    And there’s some pretty neat techniques we talk about in repeat. Um, you know, it’s really interesting that, uh, Rene had some similar thoughts around here. He doesn’t take a salary. He just takes the capital gains. You know, it’s. You know, it’s it’s those kind of, uh, tricks and tips that we give on repeat, and we’ll get into it in a lot more detail.

    Well, you’ve been listening to Start, Scale, Exit, Repeat, Serial Entrepreneur Secrets Revealed, and this is a syndicated podcast. We’re going to jump over in a few minutes. Is there any, if there are any more questions, any more thoughts on the panel here? Otherwise, we’ll close the room. But, uh, really enjoyed the session, and really, Renee, really, again, really appreciate you coming on stage.

    I mean Especially sharing those challenges from the the 80s in the 1984 and you know, really it sounded like you you uh, He’s done it all I think he has And I remember your stories from before as well renee So thank you for you know, I think we all just need to help each other in the end And that’s renee parto r e n e P.

    A. R. D. O. if we quote you in the article, right? So

    I can see that from the club. All right. Well, I think we should head on over to entree E. N. T. R. E. set up the computer. I’ll set it up now and we’ll be talking about it. All right. Everyone looking forward to seeing you. Okay. Bye. Bye.

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