- Deal volume and the creation of the FBA Broker
- Changes in the industry (who is winning in the industry)
- Buying into entrepreneurship
- Adding an asset
- The Exit: Should you sell?
- After the Exit
- What motivates us as entrepreneurs
Mentioned in this episode:
- Dan Andrews
- Before the Exit
- Keith Cunningham
- Jay Abraham
- Warren Buffet (quote)
My name is Coran Woodmass host of Truth About Exits and my good buddy Dan Andrews has agreed to join the podcast today but he's flipped the tables and has started interviewing me instead of me interviewing him.
What's the concept behind Truth about Exits?
Thanks for asking Dan. I found that I've been dealmaking for a few years and I'm talking to investors and professional buyers, corporate development guys that are doing this for a profession. What I've realized is doing one exit can be a good or a bad experience. Oftentimes people that have an exit instantly become, “Hey”, I can help you sell your business or prepare for sale or think about selling, which is actually one of the reasons I wanted to talk to you. But what I've seen is that oftentimes a deal that closes only is more of a timing thing. It's what I call almost lightning in a bottle. We've seen some deals that 100% would not have happened at any other moment in time. The deal structure was such that it was a really great deal for the seller or the client. Other times we've had different deals that matched a lot of those same criteria and just the result was very different. That's a long way of saying the, the Truth About Exits is all about every side of the deal.
Sellers we're interviewing people, clients of ours that have successfully sold and other clients such as our mutual friend who I interviewed yesterday that went through the sale process and decided not to sell. That was interesting. I'm also wanting to talk to the buy side. One of my colleagues has 20 years of corporate development or investment banking experience. He's been on both sides of the transaction and he's done about 2.8 billion in deals. We have a dedicated show once a week on this podcast to talk about his experience of doing things like roll ups and deal structures and what it looks like from the buy side and the sell side alongside capital raising. All of that will be super interesting. Then talking to people like yourself that have had an exit, had some time to really think about it and in your case even write a book about it. Which I thought was amazing called “Before The Exit.”
The title the Truth About Exits implies that there's something that's not well-known in the business/sale world like you're going to reveal something so what’s surprised you? Like in your journey, what have you discovered that isn't typically talked about?
Oh man, so much. Some of the things that surprised me is how people talk about when I say people, business owners, how groups of business owners talk about exits, talk about buyer types. Partially because of nondisclosure agreements, you never really get to the heart of what the deal structure was or what it took to get to that level. It's like revenue in business, everyone knows that revenue and talks revenue, right? No one talks about net profit or how much their business is sucking all the cash out of their life. It's the same thing with an exit. You maybe have a public list price and people see that your business was for sale at whatever multiple of whatever list price and then if it sells the average person will assume that you've got all of that cash at close. There was no other drama around the deal. Buyers were lined up wanting your asset because it was the perfect business that they had ever seen before. That's just not the case. Most times people are selling for a reason. Most times it's out of fear. I'd love to get your perspective on that too but that's what I was saying. That's the most interesting thing, right? Is the how but the how is never the same. There's no two deals that are ever the same. Even if you're dealing with the same buyer, for instance they'll see something completely different that you don't see or they're at a different moment in time actually getting an exit. There's a lot of timing that goes into selling the business, which is why we focus on building as big a buyer pool as possible to give people as many options as possible and deal making.
I say one is none. If you have one buyer that's interested, oftentimes that means nothing. You need multiple people interested.
Do you know your deal volumes such like you're sort of total deal volume that you've done so far? Yes.
Can you say it? No.
Why not? And what are the reasons for that?
There's a few things that go into that and I'm focused on where we're going, not where we've been. So my goal for this year is to close 20 million and transactions next year is 100 million in transactions. I can tell you combined in the fee is since we started we haven't hit 20 million yet but I can see where this business is going and more importantly, where our buyers are. We just ticked over a billion dollars in registered buyer pool, which is nuts. And a lot of those guys want the large deals I was in. I was messaging you about being in New York recently and that alone is a $10 million deal. There's the volume out there. You are going to New York to work on a closing a $10 million deal. That's part of what you're in charge of basically or that you're hoping to close, correct. Yeah, absolutely.
Coran, you've done a lot of different types of businesses. Why does the world need another business broker? We're like, why would you think that that's a good option to go do that?
I feel like as a traditional entrepreneur, as a lifetime entrepreneur, you get an itch when something's wrong and you see an opportunity. You see a problem or a gap in the market and you just have to fill it. In the beginning I really resisted doing this as I was very happy as you know, we've been to multiple countries all around the world and I love that. I love the freedom to just go in and move. This business is a big deal and hence gets the more professional buyers. The more we actually need to be in locations to get deals closed and that limits the amount of travel. As you know I couldn't make it to DCBKK last year and hang out with you guys in Chiang Mai but that's a choice, right? It's the reason I'm doing this. I find that and you've talked about this before is the average business broker doesn't really have the seller's best interest at heart. I don't believe. There's a gap between a business broker and someone like an investment banker or M&A advisor. Our approach is we look at the person behind the deal and the business and we say well what would it take to get the absolute best outcome for this business? And oftentimes when I first talked to people it's not to sell right now. That's not the right option. That's not the best option to get them the outcome they want due to a multitude of factors. I like to think of it when I talk to someone the first time I need them to think about what will convince themselves to sell as opposed to not sell. Because we always start from a default position of not selling. The real concept behind that is to get the absolute best outcome for each client. Not have hundreds of listings. That's just not my model. I've been on both sides of transactions and I want to help each client get the best outcome for them.
When you're like flying to New York and there's these big buyers there and they're excited about your inventory of potential opportunities, like how do you disclose to them that like, “Hey, I'm trying to maximize how much this sells for”?
That's pretty standard in the industry actually for you know, investment bankers and the M&A guys that's what they do. They take a deal to market and they try and maximize value by finding the right buyer fit or the right buyer pool. It was just following a different model I guess. But you know, it's interesting because we put out so much data and we've been watching this market for so long. Often times the buyers are asking me about or our team about value, deal structure, transfer process, those types of things that came to know what it actually takes to get these deals done. These guys in New York, the traditional more traditional M&A guys, they've done a lot of deals in different verticals but a brand that sells mostly via Amazon is different to them and they want to know how they should view that deal. That's what we can add value.
A few years ago you were talking on the podcast about the trends in the industry and I think you did a really good job of making it easy to understand like what's going on in the Amazon space. How would you describe the last couple of years in terms of people building businesses on Amazon and what's happening there?
Oh, man. A lot's changed in the in the beginning that I literally had buyers that would buy anything that sells on Amazon and now it's definitely not the case. There's just more sophistication because there's more inventory on the market and there's more deals that aren't selling through. You know not everyone sees this but because we're so focused on this space and we're watching the whole market. We can see the overall macro trends, if you will in the marketplace. We don't get visibility on every deal of course, there's a lot of, there's no public registry or public repository of information on private business sales. As I mentioned before NDA’s come into play and a lot of people don't want to share information which is fine.
I'd be open to it but you need everyone to be on the same page. The biggest trends we've seen is an abundance of deals on the market. There's a lot of listings. A lot of people have heard other people sell and they're like, Yup, I'll go out and sell my business too. That's just not the case. Right. It's the overall sell through rate last year confirmed sales, it was about 20% of the market sold through and that's everywhere. We find anything that's publicly available, whether it's someone trying to sell the business themselves through a broker, through a marketplace, through a traditional business broker. But we've got about 60 or 70 different brokers or marketplaces that we're tracking. There's a lot of listings on the market is about 230 deals live right now available at all different price points. But that's the biggest takeaway because there is so much inventory on the market even a novice investor at the six figure range can easily see 50, 60 deals and figure out what's a good good business and what's not. That's the biggest change we've seen for sure.
Who are the people, cause you get to see like the inside baseball of many of these deals, who are the people that you sort of squint your eyes a little bit and smirk and say, wow, those people got this thing figured out. Like who's winning right now? How are people winning on either side?
That's a great question. I've never been asked that before. Right now I strongly believe it's the buy side that's winning. Another trend we're seeing under a million dollar list prices, the multiples are dropping and they're very soft partially because of the inventory, partially because there's no one helping people see what's a good deal or helping them necessarily understand how to make that deal better or maybe they just don't care. They just want out. Right. The multiples are softer there. I think the buy side in that range the zero to a million you need to see a lot of deals to get a good deal for you.
I was talking to a lady last night at this conference and she runs a traditional manufacturing business and she has retailers sell her product on Amazon for instance. We're talking to her about take back control of her own product and her own brand. She didn't quite realize you could do that. But then she was also saying that she acquired a small in the economic downturn of 2008/09. She went bought another brand and because of her distribution she could blow this brand up. When talking to her about picking up, Amazon based brands and then putting them into her distribution channels and she could get an easy win, maybe she could double or triple the business in a year or two, right? Because of her existing infrastructure and relationships. I feel like anyone that comes into this space on the buy side with unfair advantage whether it's distribution that's more capital, a better understanding of marketing outside of Amazon. We're at a conference right now we were talking about this yesterday actually is a lot of people have and when I say people, a lot of business owners that sell brands, product brands by Amazon because it's relatively easy to get into that ecosystem and you can basically grow a business really fast without traditional marketing and sales skills.
Anyone that has traditional digital marketing, offline marketing, direct response kind of marketing chops can come in and take something that's working that customers love and then build it outside of Amazon and then not come in with the fear of mindset. Because a lot of times the only reason clients are thinking about selling their businesses is fear, that's the main motivator is what if this all goes away? Right? You talk about this too. I love hearing you talk about your story.
Who's winning them a sell side right now?
There's a few. I think there's definitely a subset of fortunately that are seriously just pumping and dumping at different levels. So you'll see this a lot at the lower levels of enterprise value. So under 100,000 to 500,000 as those brands that have just been pumped up in a short period of time and the seller themselves don't know if the business will continue. If they got a cashout at two to three times earnings, that's a win for them. What they don't know is whether that will continue, whether it will grow they just want out and that's one way to do it. I would say that's probably a win for them. The ones that I'm really seeing that a winning are brands and businesses that have built such momentum behind that business that it's legit getting uncomfortable. That brand is growing so fast that they need to put in more capital. But to do that the lines of credit personally guaranteed more of their net worth is built up in this business and it's getting uncomfortable. Maybe they're the sole sole owner of that business and it's becoming uncomfortable. That's the perfect time to, not the perfect time. But that's one way to win is you've built a monster and you can exit, pass it on to someone instead of restraining growth. That's another way to win. Also there's a lot of buyers that are interested in keeping those founders on and providing growth capital. That's another win you don't actually have to, if you're on a monster and you’re just needing help with the financing side. There's buyers that are actually interested in that. The whole Private Equity space was really was built around these type of deal structures to keep the founders in, have them take some chips off the table and give them growth capital access to more distribution to grow the business.
They may be looking to do add on acquisitions to that brand, that business to make it stronger and then sell it in a few years' time. If you retain, say 20% of the deal you'll get, they call it the second bite of the apple in the Private Equity world isn't that the whole pitch, right? Hang on to 20% and we'll sell this in five years guaranteed for 10 times more. Sometimes it works and sometimes it doesn't. It depends on the deal structure. Sometimes they'll be really sharp. I mean this is all they do. They're professional deal makers. Which is another reason why I started this show to really highlight what that is and what the real motivations are. As cool as that sounds but holding back 20% getting another exit. I guarantee you the main reason that offers on the table is to reduce the risk of the buy side, not improve your chances in the future as the seller. If you understand the motivations on both sides that's where the real power is to understand why an offer is like it is.
One of the things that interests me just in life in general. I'm just going to say this out loud is like important things that no one is writing about are producing content on. I think like Google has subconsciously persuaded us that like everything important in life has like written about and it's just not. And so here's an example of something I'm seeing that I just haven't heard a lot about, which is over the last five years, there's been a big trend of people in the middle of their lives who have money buying themselves into entrepreneurship and they're doing it through Internet businesses. I'm wondering, do you have any insight into how these people are faring generally speaking?
That's a great question. That is whole MBA programs on this too. I think it's Harvard have a course called entrepreneurship through acquisition. I read a book by these guys. I can't remember the professor's name. We actually speak to a lot of these people. This is one of the Truths about Exits and I'd love to dig into this in the future. So I'll give you a preview here. On the sell side, in business groups like the DC for instance, some of them will mention Private Equity Groups and people, the average business owner thinks that's one thing but there are many different versions of a Private Equity group. There's a group that actually has raised the funds, which is not the person you'll be talking to most of the time. Most of the funds that I'm talking to have raised funds have anywhere from $100 million to 100 billion with a b dollars.
They're not typically looking at a seven or eight figure or six figure e-commerce business for instance, of the people that you'd be talking to at that range on the buy side that say they're a Private Equity group and typically independent sponsors or fundless sponsors is the better term. What they actually do is they have some chops in either have an M&A, maybe they've done a program, like I just mentioned, maybe they have some industry experience. They go out and find deals. They tie up the deal and then they go back to their investors that they've already talked to about that concept and they're investor say we'll back you. They're rich by the way.
I often joke about this is golf buddies, right? That's what this is. And we're talking about passing the hat at the golf club, it's another way to do it. Okay. That's just to decode the professionalism here a little bit. But what are these small Private Equity groups have to do with these independent buyers?
I've actually come across some people that are both, so they're in the middle of their career. There is two guys I'm thinking of right now that we've been through a couple of deals we haven't closed yet, haven't come to terms but these guys are perfect examples. They worked for massive consulting firms. They've done worked on billion dollar brands. They have chops in the space because they were executives. They owned good incomes and they have a good network but they also have the golf buddies, right. And their golf buddies talking to them like you've got all this experience, we'll back you right if you if you go find this type of deal and that they're on the flip side, they've come up with a thesis. They've banded together two guys that have similar experience and say well let's go acquire these brands.
They have a game plan. But even these guys have background. They understand in this case, cause we deal mostly with Amazon based brands. They understand the Amazon ecosystem but they still need to go pass the hat right when they’ve got to do the deal. So they've given themselves a two year window. I've talked to them a lot about what they're doing as I'm very fascinated by it as well. But they haven't actually closed the transaction yet. And I'm not sure if that's 100% because they've not found the right opportunity. Maybe they haven't come to terms like we didn't on the deal. We were working on the value of actually putting a couple offers now on different deals. I haven't seen anyone yet that's actually closed on that as I've seen a lot of people thinking about that as a concept. Actually, sorry I have. I've seen one guy that had somewhat of a crossover between entrepreneurial and professional type career. I believe he was a minority owner in a business that sold and then moved into being an independent sponsor and has now closed a number of deals. So put together the right team. I don't think there's an easy answer because I haven't seen too many on the other side.
Well, let me give you an example here's like a person that I'm dreaming of and I've seen a few cases but not many. This person is let's say 45, 50 years old is a civil engineer is really interested in the entrepreneurial lifestyle has like x amount of money saved up for retirement and wants to chop off 200 or a hundred grand of it to go out and buy an Amazon business. That's the buyer profile I'm talking about. How are those people fairing or do you see a lot of that? Essentially like the career person who's using their retirement savings to buy into entrepreneurship.
We haven't closed a lot of deals with these with that type of archetype. The reason for that is most of those guys using or wanting to use SBA back debt and we've only had a handful of deals, a one deal actually and some we are prepping. Now one deal that was actually fit that criteria because a lot of our deal flow is outside of the US so it's outside of the mould. That need to actually put in a couple of million themselves and that's in cash or they can't really come up with that at close. Part of it is the deal size we're doing as thinking back a few years ago when we was still doing six, we started off just doing six figures plus deals and now we do seven and eight figure plus deals.
That's our wheelhouse we have closed deals at that range with similar type experience but all of them were actually business people. We had offers from professionals. I think that's a long way of saying as a concept I agree It's interesting. If you want my opinion on how I look at it, if I was a professional coming into acquisitions, happy to talk about that. But unfortunately I don't have any point of reference to say, well this guy did this and it's going great and this guy tanked and lost everything.
What advice would you give to a person in that situation?
Yeah, absolutely. I would study my ass off. If you want to go into Amazon, I'd learn everything there is to know about Amazon and see if it's something, if it's a business model, you'd actually a business type you actually want to run number one. Next I'd read everything by Keith Cunningham and really dig, dig deep into his thoughts. He's very anti online business. He likes to buy car washes and another like service type businesses, right? He loves that. I think he has a plumbing business that kicks off like 3 million in cash flow a year or something. It's ridiculous. But he's a serial business acquirer and business owner as opposed to a business operator. He's the guy who taught Robert Kiyosaki basically how he thinks about it. I'd go deep go deep into that and get a handle on it because I think from the outside you can look and see these returns and see the net margins and they look really great. But if you're not coming into this space with an unfair advantage. I call unfair advantage capital experience, distribution channels, partners it's high risk. It's not bitcoin high risk but it's high risk.
Let me give you an observation. You tell me whether I'm bullshitting. I think that people who buy businesses with view on like, what they're lacking and what they're like expertise as an operator will bring to the table are generally not nearly as successful as people who just bring assets to the table specifically. Like distribution is a big one. For example and I'm maybe drawing a gray line here or a thin line here between operational expertise and like the asset of a distribution channel. For example let's say you know that if you buy a company like it's SEO rank will go from like 10 to one or whatever. And its category like that's more of an asset to me than the kind of mindset where it's like, we'll all run this business better essentially. Maybe my just initial distinction isn't right but the idea is like when I see people buy businesses because they think they'd be good at running them and fixing them it doesn't seem like those people are having nearly as much success as the people who are bringing like a concrete asset to that business when they buy it?
Absolutely. I couldn't agree more. One parallel for this is back when I was consulting. I read a lot of Jay Abraham stuff and he's someone to definitely research and the marketing side of the world. But one thing he said and a few other consulting type gurus say this is when you're consulting the thing that no one really gets until they get it is that the client you work with, the ideal client is someone that's already successful. It's already on a growth trajectory. You can give them a little bit of advice and that will mean a massive result to them. You don't want to start with someone that's starting from zero. It's the same with a business. It's attractive because you're not starting from zero with the business. But oftentimes people don't think about the operational chops that it takes to actually run the thing, let alone grow it.
If you're coming in completely blind to a space that's a losing proposition, that's gambling. If you're coming in, like you said with some assets and real assets behind you whether it's distribution it's supply side supply side is huge. If you can take margin and improve the margin, you're making more money straight out of the gate. Maybe you've got supply side knowledge and you're just wanting to plug into another sales channel. As I mentioned before the manufacturer we're talking to, she has extreme domain experience and unfair advantage distribution channels in that market. For her buying a brand that's just an Amazon is a no brainer. That doesn't matter that she's not an Amazon expert. I would definitely look for the most leverage possible. I love the quote from Warren Buffet which everyone talks about, but I'll explain how I see this quote so everyone knows that Warren Buffet says the first rule of investing is never lose money. The second rule is see rule number one and what I think is missed here and maybe you, you get out of maybe a lot of the audience does and it just took me a while to to see this is you definitely make money going in but what you're investing in needs to have some value already beyond what what you're seeing on the balance sheet or the P and. L. So like you were saying, if you're bringing assets to the table, you can increase the value of the business revenue of the business immediately. I was going to say a rule of thumb that to me is a correlate to Warren Buffet's quote. Don't invest or buy a business that isn't immediately worth more because you did so.
If your on the buy side you can create whatever deal structure you want. Actually that manufacturer, she's super sharp, she didn't have the cash for the deal. She actually got a deal. She was able to get this deal because unfortunately the the sell side had some, some health issues, right? So there's a health problem there and not quite death, which is the days death, divorce or institution. I'm not sure what the other one is. Yeah, there you go. Destitution. I love it. So she got a deal where she was actually paying out paying essentially an earn out structure where she paid less than the business was making already to pay the seller out, which is unheard of. Right? So it has those deal structures that are an absolute winner. So that was a percentage of the actual earnings of the business, less than it was earning, which is a perfect deal.
You took some notes on Before The Exit the book. If we were to do a second edition and give you a chapter, what are some things that you would add to it or change some things around so that buyers and sellers are so that sellers would be better informed?
I'd love it to be a continuation of what happened next because I think everyone likes a story, right? And your story is super interesting and your perspective is super interesting. It was a moment in time and then you've had time to reflect on it. You do love philosophy. That's why I love having conversations with you because you always see something from a different angle or you bring a different perspective. But I'd like to see you talking to people that have done the opposite instead of selling, what did they do instead of selling? And you know I've managed to meet some people and you've mentioned this as well that have built real wealth by holding businesses and buying more businesses, becoming the business owner instead of the operator and taking fear off the table and just growing either via acquisitions to add ons for that business or buying other business models and talking to them about that path and seeing how that differs from having an exit and then doing something else.
That would be cool because that's the biggest thing. I think that's one of the bigger questions that I received after the book. Specifically, how do you own your business essentially? Yes. Which is kind of a crazy thing. I think it's funny when people like sum up for me it was like writing this book was, you know, it's like close to 40,000 words and it's all this time and this story and stuff but it's funny like what people take away from it. Like the other day Taylor Pearson did a book review of it and he said too long didn't read. He'd put Tldr, he said selling your businesses is overrated. Like that's the takeaway. And it's like yeah you don't need to read 35,000 words. It's just selling your business. We're reading and it on the entrepreneurial side, the biggest feedback I got was like, how do I run? How do I not sell this thing? Basically? Like how do I maintain control of a business without having to run the damn thing every day? It's an enormous I mean the reason I didn't include that because it's like, well, your guess is as good as mine because that's challenging. You know, I don't know how to do it. That's why I sold.
That's the thought experiment angle. Right. I've had clients recently that literally read your book and know you personally. I've had many conversations. Even have a golf with you still decided to go sell. It's interesting to me because sometimes selling can be the it feels like it's the golden bullet. It's like, Hey, I've built this thing to a point, I dunno what to do next, let's sell it. Sometimes that is the best option. Seriously, that could be a great option. It could be life changing money, it could be generational wealth. If you're unlocking that kind of cash, then yes. If you want to right but think about what you're going to do next and think about alternatives and at least like you said in the book and I've heard you speak on this topic a number of times we've talked about it is what are your other options?
What else could you invest in? Like the tax alone you are mentioning, that you guys were paying on that that transaction is you could have really run some experiments and tried it. What in a CEO given it a go and see what happens as an alternative before going to sell. And that may take a little bit longer and not give you that instant payout. But there's always a reason that someone wants to go sell that business. I think often times we're not really true to ourselves, you know? Who was it that spoke at DCBKK a few years back and they quote, I'll think of his name in a sec. I can see his face. I can't think of his name is my favourite quote from him from his talk was he said lie to everyone else just don't lie to yourself. It made me literally sit back in my seat and go, wow. The truth power in that statement if you really let it sink in, is how often we actually lie to ourselves.
How do you see people doing this in the selling process?
A lot of people won't admit that they’re scared and a lot of people won't admit that it’s really a badge of honor to talk about with their mates that they really want to sell for. I had a seven figure exit. That's kind of a cool thing to say. I built this business from nothing and someone paid me millions of dollars for it. It's a badge of honor. Hey, look how great I am. The crazy thing is on the other side of that is as you've talked about a lot and it's in the your book because now that didn't make you happy. That's not money changing life.
You can only mention it a couple times to your buddies too or else, you know what I mean? Like do the guy who continues to remind people. So it's not as clutch as you might imagine as a resume and it's living in the past. So the crazy thing is entrepreneurs are always moving forward. There's momentum forward. So it's cool for a minute.
But then what, what are you doing now dude? Like that's great, awesome. High Five. What the fuck are you doing next? Because without the momentum's as there's no tension of growing and momentum that actually makes things, makes life interesting. It's why we get up in the morning if everything was easy street and everything was easy all the time there's no pleasure without pain, right? Because you need that pressure, especially as an entrepreneur, you need that tension that it can't be a clear win. You have to know that there's a chance of failure to even go and do it. I'm talking a little bit pessimistically about selling it. I am a broker that's my business. I sell businesses but it's interesting too to talk about.
Why did you like embrace the book and the be wary of selling message so openly? Why like be so enthusiastic, why enthusiastically embrace this book and hand it to your customers? It’s like me, like if there was like some book about the value of working in a corporate job and living in the same city for your whole life. I don't like handed out every person that listens to my podcasts. Like that's the equivalent of what you're doing. Like this book basically says like, don't fucking list your business with Coran. That's the point of the book. Why, why are you embracing it?
I think you miss the story of your own book my friend. I definitely get the reason you wrote it. The reason I like to tell people about it, like you said share it with people and I love the messages because selling isn't the best option every time. If someone actually goes through the thought process they may try some of these experiments. They might actually build a bigger business, a more sustainable business, a business that runs without them. And guess what happens then? Right. The business is worth more. So when they do come to sell, we'll have a bigger, better more sustainable business to go to market with and no one loses in that scenario. It makes sense.
It is funny. Ian mentioned it when we were selling our business and I've heard it like a broken record is like if you decide you're going to sell all of a sudden you become this superhero entrepreneur. You figure out all your numbers, like you didn't know your numbers for a decade and now all of a sudden you've got these detailed private profit and loss. You get this like organizational chart. Everybody's got clear cause you've got to share this shit and by the time you're selling and it's like damn this thing is a sweet like this is really running well.
That's business. It's so great. Absolutely. It's just because you've been in it so long and so long could be four years, it could be seven years, it could be 20 years, 30 years. You know you're in the details and you really, it's not until you start seeing what you've created from the other side, which is really hard to do it unless you have to go through the process because no one wants to dig into the numbers. It's again lying to self, head in the sand stuff. Well we've got more cash at the end of the year, we're fine. Right? And revenue's growing. That's what we need to know. If you're really honest with yourself, honest about where your business is that not take it personally. If you can do that, then that's the same perspective you'll get when you go through the sale process and you'll be forced to do that. More importantly, which is really uncomfortable. You know, you don't want someone saying, well what you've built is shit and why did you do that? And that's ridiculous. Well you won't really get that sort of stuff that they'll be a lot of questions about line items and costs and expenses and why haven't you grown this bigger? That can be hard. Those can be hard questions to be honest, because you're on a call with someone or you're meeting with them, you need to answer with something.
You bounced around like your career to me is typical of a lot of people's, like if I'm just like thinking broadly about like the history of knowing you, it was sort of like, you know, it's sort of like you've been on a runway and like you were on the runway for a long time, like from thing to thing and like paying the bills, kind of moving along the runway and then all of a sudden you took off. Was there something that you weren't honest with yourself about? Is that part of why you were able to take off or was it simply a matter or was it something else?
100%. Yes, of course I was lying to myself. I'll give you the how that happens. I was sitting in a cubicle, back in Australia and I was listening to this little podcast called the Lifestyle Business Podcast. And I heard these guys talk about entrepreneurship and coconuts sitting on the beach building a business. And I was like I want to fucking do that. I went out there and I started trying it out and because I guess you're the sum of the five people you hang out with, right? The people you hang out with really matter. And what I noticed was being in a more lifestyle focused entrepreneur group, the you kind of default into what other people are thinking is cool and what other people are praising others for. Oh wow, you have this type of business model. So that's really cool. You don't have to get on calls with people. Others might be a different way of gaming the system then it's short term. But as of this Friday night, I'm King of the world and I think I just needed to go through some of those different models and get access to it for myself. And it's funny, I don't know if we've actually talked about this but a few years ago were in Berlin where doing the four hour work week lifestyle, we bought affiliate sites who are building out our e-commerce business. On paper well making money but internally I was bordering on depression and that's super weird to say because I had everything I thought I wanted. I got there and I thought it sucked. When I realized I did deep dives and kind of figured out why that was, it was because as a person I need to be talking to other people.
Now I realize I need to be doing deals, I need moment I need to have interactions with people that have the skill sets, a lot of money, like these types of people. I can't get enough of talking to. I talked to investors with hundreds of millions of dollars to deploy and I just want to talk to them all day about what they're doing, how they're doing it, why they're doing it. That's fascinating to me. And if I can eventually close a deal with someone like that in, whether it takes a year, 10 years, 20 years. I'll still do what I'm doing and I'd do it for free. Then on the sell side because I've been on both sides of the transaction. I want to help clients get the best deal. That actually gives me more energy. When I'm on calls even if it's late at night or early mornings or I've got to fly to go do a deal. I might be tired when I get up. I might be tired after a long flight but when I'm in that room and after I go through the deal beaming, absolutely beaming it lights me up. That's not the same for everyone. Back in the day if I had of said this isn't a slide on Chiang Mai love Chiang Mai, but let's say I was at Small House. Small house is a little pub in Chiang Mai. I love the small houses.
Why do you love it?
It's just, it's like a lounge room with all your mates but it's a pub although there's a few mosquitoes so you don't necessarily want that and your lounge room. But no, it's cool. It's just a cool little dive bar.
If you were there and what would you be saying?
If I could rewind to those early days and I know a lot of these guys that are in different spots now, but even if I was talking and this is a better example if I was talking to myself four years ago and saying, Hey Coran, I just flew out to New York and I was talking to these guys about this deal and we're working on and we've got all this diligence work to go through it, we're on more calls and there's tension and we don't know if we're going to get the deal done.
That would have been in my head what I thought I wanted back then. I would have said, why are you doing that? Just, just relax. Have another beer. Go do something else. Why are you putting yourself through this nightmare. In actual fact, I wasn't necessarily lying to myself. I just didn't know that was the thing. It's the gift and the curse of it was I needed to see that four hour work week lifestyle go to a bunch of countries to realize that that's not really me. And that's weird too to realize, right? Yeah.
What's your thing interestests you and keeps you motivated?
I'm tinkering with ideas. I love connecting concepts and figuring out how they can be useful. I love like an idea that can be used like a shovel. You know like now that we've got this we can go use it. That really excites me. That's even like the way I write blog posts and podcasts is the same way. I write emails to the team. It's like I've figured out like the pattern, give it a name, figured out the concept and then make a rule, you know, like, here's our rule based on like how are we going to do events going forward. Those sorts of principles rules. Structures, systems, like figuring out what they are. That's what excites me.
Wow. I really surprised I've known you awhile I wouldn't have called you a rule guy, what does the rule mean to you?
Maybe the rule isn't the right word but like the book is a good example of like there was this mishmosh of feeling and outcome, which is like our business sale and the book ended up being a distillation of concepts that could be used like tools for other people in that situation. That's why the whole book is a series of thought experiments. Like these are actual real experiments. Maybe that was trying to get at this idea of a principal or an experiment or an idea. There ideas that I don't know where they all came from. Some of them I just found laying around and some of them I just thought I did a hypothetical, like what would I wish I would've thought, you know? That's ideally like people would read the book and say this is a tool.
Those things exist in our businesses as well. When a customer says how should we behave? And so like you write that rule and then you announce it to the company and that's how you build a company, I think, how you build a culture. And that's the part of running a business that really excites me. For example, as like a really simple example recently someone asked us to sponsor our conference and podcast that I didn't necessarily feel comfortable with. I didn't exactly know why nobody really knew why. The question was like well should we take their money because they're offering us money and feel like vaguely uncomfortable about it or should we say no and then continue to feel vaguely uncomfortable about it. The third route is to say, well, why do we feel uncomfortable about this? Like, what's the principle here? What's the idea? And you sit and you think about it and you hammer and you walk around and you talk to people and you debate it. Hopefully sometime within the next fiscal quarter you can actually write the damn thing down and create a company policy. That's always been the part of companies that excites me. It's the closest thing you can have to running a little country, basically you get to write the constitution every day, you get to write the rules, you get to write the laws. The treaties and for me I guess like publicly people would know me as someone who talks a lot or writes a lot but that's always been how I grew companies too. That's where that all came from say setting the structure so you get to be the rule maker and that's what makes it interesting.
I love being challenged on ideas you were always a great verbal sparring partner like that. I love, it's always more fun to ask than to answer. I'll tell you that much. Thank you. I'll get you next time. All right, buddy. Talk soon.