From Rock Bottom to a $500M Exit—A Business Story Like No Other with Rich Galgano

0:01Light that spark fire nation JLD here and welcome to entrepreneurs on fire the only daily show interviewing the world's top entrepreneurs seven days a week. And today we'll be breaking down, going from rock bottom to a$500 million exit, a business story like no other. To drop these value bombs, I brought Rich Galganow into EO Fire Studios. Rich is an entrepreneur, author, and speaker specializing in sales leadership and strategic decision-making. He's the founder of Windy City Wire and author of Down to the Wire. In today's information, we'll talk about risks when it comes to entrepreneurs, the biggest mistake entrepreneurs make or trying to grow their business.

0:38Code yellow and oh so much more. And a big thank you for sponsoring today's episode goes to Rich and our sponsors. Take control of your data and keep your private life private by signing up for Delete Me. Now at a special discount for our listeners. Today, get 20 % off your Delete Me plan when you go to joindeleteme.com slash EOfire and use promo code EOFire at checkout. Do you have the right mentor in your life right now? For the first time in seven years, I'm opening up a few mentorship slots for individuals who know they need the guidance and accountability to take their business and life to the next level.

1:17Email me at john at EOFire.com with a subject line mentor, and we'll schedule a 15-minute chat to go over the program and see if it's the right fit for you. Rich, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. Hello, Fire Nation. I would say becoming successful is not gambling. You're not taking a gamble on yourself. You are taking a calculated risk, and that is a big, big difference. See, when you gamble, you're putting chips on the table without knowing the odds. You don't know the players, the outcome. A lot of it's based on hope, emotion, and adrenaline.

2:07And I know that because I lived that life, but I also built a business, and that is a calculated risk based on a belief in what I can accomplish in the market that I am going into. Fire Nation, we're talking about going from rock bottom to a$500 million exit. This is a story like no other. And Rich, I want to hear that origin story. Take us through it. I started gambling early in my life. Obviously as a teenager, playing poker with my friends, escalated in college, get a job, lose my fiance at the time, my grandmother dies, fill the void.

2:53Compulsive gambling is a progressive disease. And it just became more and more progressive. And over a period of three years, I utterly destroyed myself to the point where I got sick and tired of being sick and tired. When you gamble compulsively, when you're wired that way. You only ask God for a touchdown, a turnover, a card, a win, get even. That is your relationship with God because in essence, you are your own God. And that day that I surrendered, I dropped to my knees and I prayed to God for peace, for hope, for mercy. And I got, it was September 1993, walked into a Gambler's Anonymous meeting room.

3:45And a little over 13 months later, I am starting a business that I would, like you say, later monetize for almost a half a billion dollars. And what was that business? What was the problem you were solving? When I graduated college, I got a job in selling wire and cable. And that company ended up going through Chapter 11, which you learn. You work for a business that goes into Chapter 11. You learn so much about business, about operating on a cash basis, turning your inventory, selling high-quality customers. And I learned that. And you can say I had less than a stellar relationship with the management, the ownership and management of that organization, especially after I got clean from gambling and was able to see things with more clarity.

4:35So I basically wanted to create the wire and cable business that could be not the one that existed. And it was a dinosaur, archaic industry, no change, no thinking outside the box, just selling an undifferentiated product in an undifferentiated market. it. So I set out to take what is impossible to do, which is to take a commodity, plastic insulated copper, and turn it into something that the industry had never seen. And I did that by asking questions, by working with the electricians that use the wire, by using critical thinking, and thinking outside the box. And that's what I did. Now, listen, risks, they're part of the game for entrepreneurs.

5:21I mean, that's just the nature of the game that we signed up for. But how can we decide when a risk is worth taking in business or when it's just better to play it safe? Unlike gambling, business risk should never be based on excitement or wanting action. See, taking a business risk, also known as making a decision that materially impacts your business or your life, that requires strategic thought. You need to know what is my upside? What is the downside? Am I willing to accept that downside? Okay, how much time am I going to give this process to play out? What is my off-ramp? How do I exit cleanly without disrupting other parts of my business?

6:08That is how you decide whether to risk the capital and the time required to implement your decision. What does playing it safe even mean, John? To me, it means you just reached the point of complacency. See, what I've learned in my 35 years of business, in my 30 plus years as being an entrepreneur, you really only have two choices. You either build a lifestyle business, pays for the kids' college, nice cars, vacations, beautiful home, or you do what I did, which is build a life-changing business. To do that, you had to learn about resilience. Tell us about that. resilience is not some dramatic rise from the ashes.

6:56To me, resilience is just refusing to go backwards. One day at a time, one decision at a time. And when you stack enough of those in a row, the next thing you know, you are on to building something solid. So Rich, I want to talk about a specific moment when that resilience was challenged. Because, you know, we all go through personal struggles and obstacles, both business and personal-wise. I mean, it's just going to happen because we're still living life as we're building our business. Give us a real world example of a time that you went through that either personal or business struggle and had to be resilient to get through it.

7:39We have to go back to 1994, 1995. Those were the early days. That's when we started the business, right? There was no choice. I had no choice. One, I had to stay clean from gambling. And the other thing I had to do was build a business. But then John, throwing a monkey wrench in the form of a lawsuit that would turn into a TRO. What's a TRO? A temporary restraining order. So the company that I worked for sued me within four days of me leaving and starting my business. They went to a judge, got a TRO. Now, all of a sudden, we're handcuffed. How are we supposed to make a living? If we can't sell customers, what are we supposed to do?

8:27Now, we have to go out and find attorneys, lawyers. You know, you get paraded in front of a judge who's not favorable to you. And I'm 25, 26 at the time. I don't know how the legal system works. Lo and behold, we hire the wrong attorney. We're getting crushed in court. But I'm going through the judge's order because I have to eat. And last I checked, I told myself, this is the United States of America. No one can stop me from doing business. So in the TRO, the judge said, we are not to solicit business from known customers of the old company. Well, says I'm not to solicit them. Well, what if they solicit me?

9:19So we reached out to all of them and says, we got this TRO. And believe me, the customers were pissed. guys doesn't say anything about you soliciting us. So that was the loophole. So I thought, well, John, lo and behold, we rack up$500 ,000 of business. In other words, $500 ,000 of violation over a few months. Now this lawsuit's getting, it's getting out of hand. My lawyer is horrible. We called him the nutty professor. The judge, every ruling is going against us. So this is how the court system used to work. We were in a certain county and we hired, the company I worked for, used to work for, hired a law firm that was strong in that county with political connections.

10:09We hired some doofus in another county. We didn't know any better. Next thing I know, we're in bad. We're in bad shape. And I'm in a gamblers and honest meeting the Friday before MLK day. And there happened to be a compulsive gambler in there who also was an attorney. And I just happened to show him all the court rulings, court orders. He says, Rich, you're in big trouble. You are in big, big trouble. You need to get a new lawyer. I said, well, can you represent me? He's like, I cannot represent you. Can't. He goes, but there's someone in our firm who can. Now this is 1994. Actually, now we're in 1995.

10:50There is no Google. You don't go to a computer and say, hey, find me the best defense attorney in DuPage County. Right. Doesn't work that way. So by the grace of God, there was no court on Monday morning because it was Martin Luther King Day. And this attorney happened to be in the office. His name was Dan Purdom. Turns out he's a former United States prosecuting attorney, prosecuted the largest health care fraud case in the United States. And he was best friends with the judge. we hire him we walk into court the next day john and this this firm the other the other side they're drooling with blood they know i'm dead they know they got five hundred thousand dollars of value of violations they found in discovery they're ready to shut my business down and the judge says wait rich we're gonna leave people hanging until we get back from thinking our sponsors.

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12:16Take control of your data and keep your private life private by signing up for Delete Me. Now, at a special discount for our listeners, today, get 20 % off your Delete Me plan when you go to joindeleteme.com slash EOfire and use promo code EOfire at checkout. The only way to get 20 % off is to go to joindeliteme.com slash EOFire and enter code EOFire at checkout. That's joindeliteme.com slash EOFire, code EOFire. Question for you, Fire Nation. Do you have the right mentor in your life right now? For me, mentorship was everything. From when I was just getting started in podcasting, webinars, course creation, book writing, you name it, I hired a mentor to guide me every step of the way.

13:02For the first time in seven years, I'm opening up a few mentorship slots for individuals who know they need the guidance and accountability to take their business and life to the next level. It's a three-month program, and together we will achieve massive results. If you're interested in learning more, email me at john at eofire.com with the subject line mentor, and we'll schedule a 15-minute chat to go over the program to see if it's the right fit for you. That's john, J-O-H-N, at eofire.com, but only if you're prepared to ignite. All right, Rich, we're back. I just want to thank you for maybe giving the biggest cliffhanger I've ever been able to have on the show.

13:43And the judge says, There is somebody substantial in the courtroom, meaning our new attorney. And from that moment, the judge flipped. The case went our way. The facts never changed. Nothing changed other than the fact that we got a brand new attorney. And you talk about resilience. That, to me, is just the resiliency of finding a loophole, generating those revenues to pay for our legal bills, keep our business going, buy inventory. That story's in the book. That entire lawsuit takes four or five or six chapters up. When you read those in the book, you are there. You're in the courtroom with me.

14:37You're in the depositions with me. You're in the settlement agreement. It's like a Perry Mason novel to some extent. It really is. That was powerful. Thank you for sharing that. And of course, Fire Nation, if you want more details on all of this, you can check out Rich's book, Down to the Wire. Now, what's the biggest mistake that entrepreneurs make when they're trying to grow their business? You asking me this question today is unbelievable. It's not lack of knowledge. it's ignoring your lack of knowledge that's the self-inflicted wound that kills growth but not only kills growth can be detrimental to other aspects of your business so let me be blunt if someone dismisses or minimizes advice from someone like me okay someone who's built a business from nothing, scaled it, monetized it multiple times, sold it for damn near half a billion, manufactured and distributed across multiple locations, navigated private equity, investment bankers, complex recaps, and stacked 31 consecutive years of EBITDA growth.

15:54I'll say that again, 31 consecutive years of EBITDA growth. Then who can you take advice from? And I see this all the time. And I'm going to give you a perfect example of this. Just a few weeks ago, six, seven weeks ago, I'm at an event. I meet an entrepreneur. He just signed an LOI to sell this company. I tell him, hey, I've been through the process. And by the way, he knew I went through this process before. I said, I'm happy to sit down with you and share my experience, walk you through the process, and I'll give you some insights as to how this is probably going to play out. He dismisses me out of hand.

16:29He starts telling me about this deal, brags about his attorney fees. He starts yapping. And then he tells me how much he's spending on lawyers. And I about spit out my drink. Could not believe what he told me. Look, we did a half a billion dollar deal. It was a extremely complex. The structure we did was complex. We're dealing with a publicly traded company in UK. We're dealing with unwinding blocker corps, multiple corporations within a corporation. And this guy's deal, it's a fraction of the size. It's a simple stock purchase agreement. Okay. I didn't want to insult him, but I just wanted to subtly nudge him and say, dude, these legal expenses, they might be a little excessive.

17:18And we start talking some more. And then he mentions the private equity group that's going to be investing in his business. Well, God, I know these guys. I know exactly how this process is going to be for him just based on my knowledge of the industry. So we talked some more. I said, look, this is where your SBA is going to get held up. This is what's going to happen on the working capital peg. And by the way, working capital, I said, that's where deals go to die. I said, you know, are you prepared with your rep and warranty insurance, which was something he had no clue about. I said, you do know they're going to trade down in value during the diligence process.

17:54and this guy had no representation on an investment banking side, only from his attorneys. And I'm like, dude, I'm not sure that's such a good deal. So again, he just dismissed everything I said out of hand, said he has it under control and his lawyers are all on top of it. Lo and behold, I've run into him Saturday night and he says to me, I wish I would have took you up on your offer. Everything you said has happened. We're forwards behind on the deal. My legal bills are out of control. The diligence has been a disaster. I have no idea where this deal stands and we are nowhere near completion on the stock purchase agreement.

18:42So how does an entrepreneur or avoid this, one, check your ego. If you can't stand the idea that somebody else might know a little bit more than you or have more experience in something, you're just, you're doing it at your own detriment. Eliminate the fear. See, change means admitting that maybe what you've built or what you know isn't enough. Get out of your comfort zone. You know, I think people just are fearful of doing something new or something that they're unfamiliar with. And I think pride is the biggest problem of all. They'd rather protect their image than maybe take advice from other people.

19:35And the excuses, I hear the excuses. I have investments in nine other businesses.

19:43And here's what I hear. My business is different. I can't market like that. My team won't go for it. No, I can't count my salespeople that way. It's amazing the excuses I see. And I always, I call excuses, they plateau into mediocrity. That's my take on the biggest business mistake I see entrepreneurs make. Rich, you've just dropped so many value bombs. I think that Fire Nation is just like, how can I learn more? How can I connect with this individual? And you have this book, Down to the Wire. So tell us more about this book, where Fire Nation can pick up a copy, and then we'll say goodbye. The book is a labor of love.

20:28In 2019, there's a spiral notebook on my desk, and I like to doodle. So I'm doodling, but then all of a sudden, I just write down the words, Down to the Wire. And at that point, I didn't know I was going to write a book. But then I knew, well, if I ever write a book, that's the title. So when I did start writing, I wrote a story about a kid who becomes a salesman, who then becomes a degenerate compulsive gambler, who then becomes an entrepreneur, who built something incredible and lasting, most importantly, lasting. And along the way, I lived through some outlandish, unbelievable moments most people will never get to experience.

21:20And when I wrote the book or the manuscript, whatever you want to call it, I wrote it for my grandchildren that are not born yet because I didn't want them to know just about my success. I wanted them to know about their grandpa, orts and all about my demons. But I also wanted to know that there's redemption in life and forgiveness in life, and you can turn things around. When I handed what I had written to some very close confidence, they were blown away. And they said, you cannot keep this just for your family. Rich, people need to read this story. And that's when I sort of knew that I was no longer writing a diary.

22:05I was going to have to finish this manuscript and write a book. And this book is for so many different people. 100%. This is a book for an entrepreneur. This is a case study in entrepreneurism 101. Okay. It's for marketing and sales professionals. If you've got a kid studying business in college, get him or her this book. And again, you talk about a case study. There's no book like this. And then if you are in the private equity realm, if you are an investment banker, the insights I provide into the mind of somebody like me is simply unreal. And then if you're thinking about starting a business, you own a business, you are thinking about monetizing a business.

22:52Again, this book has got everything and it's hilarious on top of being a great business lesson. Hilarious. And there are cameos from some very famous people who would later become very good friends of mine. Paul Stanley, lead singer from Kiss. Doc McGee, manager of Bon Jovi, Motley Crue and Kiss. Toby Keith, the late, great Toby Keith. Dan Hampton of the Chicago Bears, NFL Super Bowl champion, NFL Hall of Famer. And then just the stories, the run-ins, my gambling stories, my stories of recovery. It's... The people that have read the book have just been absolutely blown away. I'm grateful to be able to share my story with the world.

23:39Now, is this going to be available in the Audible version as well? There will be an Audible book. We are not going to release the Audible book, I believe, until at least a month after the release of the book. The book has already pre-sold, I believe, over 6 ,000 copies, which is doing very well. And we want the hardcover to get out there. We don't want to, I think, diminish any of the book sales with the Audible version. But the Audible version, I'll be recording that in the coming days. So yes, it will be Audible. And that's it, John. Well, this book sounds fascinating. And I can tell you that I really feel like more people need to write a memoir of sorts, even if they haven't had the kind of crazy, incredible life that Rich has had.

24:26because man, like I look at my grandfather and he led a pretty like standard life, like nothing crazy. He just did his thing. But I really don't know much about his life. I mean, he died well before I was born. But man, to have been able to pick up a book and to read about his life, I would have loved that. I mean, I'm his namesake. His name is John Louis Dumas and I'm John Lee Dumas. I don't know anything about this guy. Like I know the very basics. So I just want to challenge people to maybe think about creating something like that, a memoir, a legacy. And Rich, you want to say something? Yeah, it's so ironic you said that.

25:02My father passed in 2018, died of colon cancer. And there is no history of his father, no history of his mother. We don't know much about them. Don't even know much about my mother's grandfather. And when my dad was dying, we knew he was dying. I asked him if he wanted to record his life story to share. And it was just something he didn't not want to do. And I guess to each his own. And I think probably deep down, I was, I, I wanted to leave for my grandkids. what my father didn't leave for his, I think is really at the end of the day, why I wrote this. Fire Nation, you're the average of the five people you spend the most time with.

25:54You've been hanging out with RG and JLD today. So keep up the heat. And for links to everything that we talked about, visit eofire.com and just type rich in the search bar and the show notes page will pop right up. And again, check out the book, Down to the Wire. It sounds fascinating. I'm going to be reading this because man, I just, the story that you're portraying, Rich, it's a great one. And I want to say thank you for sharing your truth, your knowledge, your value with Fire Nation. For that, we salute your brother and we'll catch you on the flip side. Peace out, everyone. Thanks for your support.

26:29Hey, Fire Nation, a huge thank you to our sponsors and Rich for sponsoring today's episode and Fire Nation. What can 4 ,000 of the world's most successful entrepreneurs teach you? how about how to achieve financial freedom and fulfillment. My first traditionally published book, The Common Path to Uncommon Success is a revolutionary 17 step roadmap that will lead you to the lifestyle you've been dreaming about. This book took me 10 years of accumulating the genius of the world's top entrepreneurs. And you can get it all in one place when you visit uncommon success book.com. I'll catch you there or on the flip side.

27:03Take control of your data and keep your private life private by signing up for Delete Me. Now at a special discount for our listeners. Today, get 20 % off your Delete Me plan when you go to joindeleteme.com slash EOfire and use promo code EOfire at checkout. Do you have the right mentor in your life right now? For the first time in seven years, I'm opening up a few mentorship slots for individuals who know they need the guidance and accountability to take their business and life to the next level. Email me at john at eofire.com with the subject line mentor and we'll schedule a 15-minute chat to go over the program and see if it's the right fit for you.