Start. Scale. Exit. Repeat. vs. Start. Scale. Keep. with Colin C. Campbell

0:02John Lee Dumas:Who's ready to rock today, Fire Nation? JLD here, and welcome to Entrepreneurs on Fire, brought to you by High Level, the all-in-one sales and marketing platform. Today, we'll be breaking down start, scale, exit, repeat versus start, scale, keep. To drop these value bombs, I brought to Colin C. Campbell and the EO Fire Studios. Colin is a serial entrepreneur and number one best-selling author in 15 categories and 13 awards on Amazon of start, scale, exit, repeat. Colin started, scaled, and exited over a dozen companies worth only. almost a billion dollars, including Two Cows, Hostopia, Dot Club Domains, Geeks4Less, and Paw.com.

0:36John Lee Dumas:Colin also runs Startup Club with 1 million members. And today we talk about start, scale, exit, the start phase, the shift to scale, maximizing the exit, keep versus exit, and oh, so much more. And a big thank you for sponsoring today's episode goes to Colin and our sponsors. NetSuite Next is the next huge leap in how business gets done with AI built into everything you do. And for the first time ever, you can try NetSuite Next for free. If your revenues are at least in the seven figures, go to netsuite.ai slash fire. Built for every industry, ready for every boardroom. If you are building a real business, you need real infrastructure.

1:15John Lee Dumas:High Level gives you website hosting, funnels, email marketing, automation, calendar booking, payments, and course hosting all on one platform, plus award-winning 24-7 support. Get a 30-day free trial and my full bonus stack that includes a 15-minute private call with me and much more at highlevelfire.com, highlevelfire.com. Colin, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. You know, I'm going to lead with this topic today that you can start a business, scale it, exit, and you don't have to keep it. There's a lot based on that.

1:52And I've gone through 30 years of starting businesses. I'd done over a dozen multi-million dollar companies and many of them I've sold eventually failed or went out of business because they simply the technology shifted or something changed. And that's the key in launching businesses. You're an entrepreneur and you do it not because you're just trying to launch one particular business, you're building wealth for yourself and for your family and for others. And sometimes you need to take the chips off the table. So I'm a big believer in start, scale, exit, take some money off the table and then repeat.

2:39John Lee Dumas:Yeah. Well, let's double down on that because I do want to talk about starting scaling and exiting because you're a big advocate for doing those things and exiting while things are going well, like you just mentioned. And that goes against a lot of what entrepreneurs believe. They're like, oh, let's make hay while the sun is shining, like we're crushing it. We're only going to the next level, the next level. Like they just think it's going to get better and better and better. So why does your approach make sense? Well, let me start. I always like to tell stories, you know how I am. Right. So let's start by me taking you back to the nineties.

3:08Uh, I learned this lesson in a very hard way, John, uh, in my career, we built a company, uh, my brother and I in the nineties called internet direct became one of the fastest growing companies in Canada. And we were riding a massive wave called something called the internet. And it felt like it was going to keep going up. But then the dot com crash happened. You know, the Nasdaq went from like 5000 to it was like 1150 or something like that. I mean, could you imagine the Nasdaq doing that now dropping 80 % now because of a boom like AI or something like that? I'm just saying like it was just radical.

3:43Like you wouldn't, you would never experience those times unless you were through it. And we were through it. And And unfortunately, the company that I had that went to over a billion dollar market cap, and I own 13 % of it, that company ended up filing for bankruptcy protection. And I ended up selling my shares, which traded at once at$19 a share. I traded at six cents a share. Look, what I learned is that bad things do happen. But here's the cool thing about that whole event. And I'm going to say something positive about it, right? Was that it actually was the basis for my book, Start, Scale, Legs, and Repeat.

4:15I don't think the book would have occurred if I didn't have that experience in my 20s, losing$100 million. And remember in 2021, you remember 2021, we had the GameStop stock. Oh, yeah, that was crazy. Half million dollar cartoon apes. And we had SPAC craziness over a thousand public listings. Do you remember that?

4:36John Lee Dumas:I actually owned one of those apes when it was worth half a million dollars. Seriously? Yeah. You were right there. I was there. Well, hopefully you got in a little early, but they're not worth half a million dollars today, are they? Not even a fraction. Correct, right? So fast forward one year later after 2021 and the market crashed, we saw e-commerce companies just collapse in value and tech companies and the crypto crashed and everything. So I have a phrase that I use in the book. I say, exit quietly stage left, right? Let's let other people make some money here and take your business to the next level, all right?

5:13John Lee Dumas:I love that. and Fire Nation. I've interviewed 5 ,489 individuals as of today with Colin here. And there's been thousands, and I mean thousands, who have said the words, something along the lines of, man, if I had only sold at the peak, or if I had only gotten out earlier, or if I had only, you know, got acquired or sold when, you know, my business was at its peak, like we all just have this tendency to hang on because we're just so optimistic that everything's always going up into the right when times are good. And then of course, when times are bad, we're convinced things are only going down into the right.

5:51John Lee Dumas:But listen, let's talk about the start phase because back at the beginning, what is every, what is one thing that every founder has to get right in that phase, Colin, that start phase? First of all, say that there's a hundred things you have to get right. OK, but if we're going to focus on one, the one I like to focus on the book is the idea. OK, and I don't I don't know how many times I see graduates from college launching T-shirt companies. I don't understand this. You know, it's like how many T-shirt companies can we have in this world? And that's not a formula for success. The key when you look at your idea is, does it solve a real problem?

6:36Can it scale? And can I build a moat around it? Okay, now the moat is critical here because if you start winning, people are going to copy you. Competitors always do. We had someone copy us at paw.com and they went into Costco, but we had a patent on the design and we had them removed from Costco. We've removed dozens of competitors on Amazon because we have the trademarks for our own brands. So building a moat around your brand is really important. Now, Paw.com, the domain name itself, is actually a pretty cool moat. It really does provide something that you can't get from other people. And it gives you a lot of credibility as well.

7:17We do still sell on Amazon, but most of our sales do come from Paw.com. So the other piece is that you need to be able to scale this, like a school, a restaurant, a retail store, those kind of things. They're very hard to scale. And when you come up with your idea, you want to think about that idea that can scale very, very well. Let me give you a very clear example of this, a personal example, a personal story. JLD, if you remember, we used to own the domain extension.club,.com,.net,.org, and we owned.club. So we acquired the rights to.club, and we grew it to over 1 million names before selling to GoDaddy.

7:57What a great moat, right? By the way, Google and Amazon actually owned team and group,.team and.group at the time. But they did not own.club. So if you wanted a.club, you had to go through us. We're the only company in the world that could give you a.club. and here's the other part about scalability. So that's a moat. And then the other part about scalability, we virtually had unlimited inventory, which made it scalable. You know, in our book, we actually have a rating system for scalability and defensibility. So, I mean, that's the key. When you first come up with an idea, you'd be surprised at how many people come up with ideas that are successful, but they're not scalable or they're not defensible.

8:39My wife launched a school here in Fort Lauderdale and it's defensible, very, very defensible. You know, it's a bit of a, like, almost like a license, but you can't scale it. We got to 110 students. We went and looked at, can we raise, can we add an extra floor? Can we add an extra building? Millions and millions of dollars to expand it. You could never expand it. So when you pick your idea in the first place, pick one that is scalable, can build a moat and solves a problem.

9:04John Lee Dumas:Fire Nation, wise words from somebody who's been there, done that. I always love that Doc Club story too. I mean, man, so good. Let's talk about shift to scale. I mean, as you move into scale, what's the most important shift a founder needs to make to grow successfully? So this one actually is internal. This is internal within the entrepreneur. They must get out of the way. Their personality, which succeeded at start, in start mode, doesn't necessarily help them succeed at scale mode, okay? Because in start mode, what we're doing is we're delegating tasks. We're controlling everything. We're making everything work the way we want it to work.

9:49In scale mode, we're delegating responsibilities, not tasks. So we need to hire great leaders and delegate those responsibilities. And that is a mind shift change. That's not easy for most entrepreneurs. Most entrepreneurs, they say, this is what has worked all along. This is going to keep working. No, it's not. Hey, trust me on this one. I went through this. Okay. I went through this at a company called Hostopia. You know, you know, you heard about my dot-com crash and losing a hundred million when I'm 29 years old or whatever. But fast forward seven years later, we took another company public and sold to a fortune 500 company.

10:28And in that particular company, we went up to 600 employees and I had six or seven executives. And I became very good at one thing, hiring great leaders and learning how to delegate responsibilities, not tasks. So it's a shift. It's a mind shift. Not everybody can make it. But if you acknowledge that it's there, that we need to make that change, then you can evolve with the company. If you can't make that change, you got to step aside and let somebody else scale your company.

10:58John Lee Dumas:Fire Nation, Colin's a wealth of information. He drops value bombs left or right. And we're talking maximizing the exit keep versus exit and more when we get back from thanking our sponsors building a great website often means choosing between speed and quality unless you choose to build with framer with a visual design canvas responsive layouts and integrated cms and built-in hosting framer gives businesses everything they need to launch professional websites quickly and efficiently whether you're a creator a startup or an established company framer helps teams move faster without sacrificing quality its new ai powered agents which were just released as part of the major updates, help streamline the work while humans provide the creativity, judgment, and attention to detail that make a website feel polished and inviting.

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13:29John Lee Dumas:Everything you need to succeed, all under one roof. No duct tape, no juggling five platforms, just one clean system for your business. And their award-winning 24-7 support has your back when you need it most. When you sign up at highlevelfire.com, you also get my exclusive bonus stack, a 30-day free trial, a private 15-minute call with me, JLD, access to my weekly live office hours, a digital copy of my book, The Common Path to Uncommon Success, my 50 days to something execution roadmap, and more. Visit highlevelfire.com and start building your something today. Colin, we're back, and I want to talk about just that, what I teased before the break, which is maximizing the exit, which is the dream of every entrepreneur that wants to exit.

14:15John Lee Dumas:They want to maximize the exit. So when it comes to exit, what's the one key move founders should focus on to maximize that potentially once-in-a-lifetime opportunity? Timing is 50 % of the value on exit. All right. Timing is 50 % of the value on exit. And by the way, maybe even more. I will put that out there. Right. You can have the same company, the same revenue, the same team, the same product and get a totally different valuation depending on when you sell. Okay. Let me take you to paw.com and this e-commerce world. Okay. Back in 2021, we talked about those board apes and how crazy things were.

14:51publicly traded companies like Allbirds and Spark. They're trading at billions of dollars market cap. Today, they're trading sub 100 million. We had sold our e-commerce company back in 2021. We didn't, by the way. I should have written the book and read the book before 2021, but it came out later. Okay, so, but the fact of the matter is we didn't and the valuations have collapsed. I even did some studies on this and we now come out with what's called a startup startup time to sell index. If you want, you can just search that on Google startup time to sell index. We, we report a new, um, uh, reading every single month.

15:31It's based on empirical data from 25 years of liquidity in the markets and we track it. And what we do is we've come up with a metric and that metric tells you, okay, there's no bias in this. Okay. You can just look at the metric and say, okay, that's what it is. Now, it's not necessarily a real estate metric. It's more designed for companies that get funded through PE or venture capital. But the whole ecosystem, the money system is based on IPO flows. And today we're currently at about 27 % out of 100. So 50 % is pretty much a seller's market. We're still in a buyer's market. It's still a very challenging market.

16:14But what's interesting, in the last month or two, we've actually seen a surge because of these new IPOs coming out from all the big tech, yeah, all the big AI companies. And now we're seeing some ancillary IPOs coming out. All that liquidity is going to lead into more money into the ecosystem, which will drive up prices. So we have this empirical metric. You can also go to startup.club, sign up to our email list. We publish it once a month. We publish this metric once a month. And again, it's a third party data metric. That's it. You know, you have to take it for what it is. Of course, if you're an AI company, you're hot in the right time or you're in another industry that's hot, there's things that vary.

16:58But the reality is the sentiment in the market right now is still pretty weak. And so this is a time to build, buy, but not sell. I think we're getting closer to crossing over to the seller's market, but we're not quite there yet.

17:12John Lee Dumas:I think you were about to tell a story about paw.com in 2021. Oh, sorry. Yeah, I get distracted. I'm just, we do the side hawk. But in 2021, like we had a, I was sitting down with a buyer. We're talking, you know, one times revenue. Okay. Then we hit 40 million in revenue. And I'm like, oh, this is like, but everybody's like, next year we can we can make so much more money if we just hold on for one year and again i wasn't running the company i was the main investor i'm the largest shareholder of the company and um with the whole team everybody said let's just hold let's just wait till we get to 60 million 80 million and we'll sell for 80 million dollars and then the uh you know and then the um the market just crashed um we had the post-pandemic hangover and now we're probably looking at a quarter of that value?

18:02A quarter of that value. Although I have to say, I shouldn't be so negative. And this is a live company right now. And the CEO, Michelle Van Tilburg, is phenomenal. She is, by the way, in reboot mode. We did cleanup mode and reboot mode, the new CEO, and she is killing it. And the company's expanding and it's profitable. And we're looking, just looking at very different metrics. So back then we were looking at revenue as part of the valuation. like percentage of revenue or one times revenue. Now we're looking at earnings multiples. So six times EBITDA. Okay. So it's a very different world, but had we sold back then when the market was hot, we would have obviously got a much higher valuation.

18:44John Lee Dumas:By the way, I live in Puerto Rico. So I'm looking at your dog cooling beds and blankets. My dog, he needs that. I mean, it's, it's so hot down here. Um, love all of this stuff. And let's talk about keep versus exits because a lot of entrepreneurs, they just default to build it and keep it. That's like the default. So what are the real advantages of start, scale, exit, repeat versus just holding on for dear life? Hoddle. I'm going to give four big advantages really quickly. Okay. I know this is negative, but it's true. Markets crash, competitors show up, technology changes. Even look at the SaaS companies today, how their valuations have fallen.

19:24Pandemics happen, the world changes. So that's number one. Okay. And if you got everything tied up in one company, that's dangerous for your wealth. Okay. Second, taxes. We sold Hostopia. It was a publicly traded company. I can give you the numbers here. We sold for 17.7 times EBITDA. Okay. To a Fortune 500 company. This was seven years after the pandemic. Okay. Sorry, after the dot-com crash. Mixing up my crises here. But seven years after, we sold this company for 17.7 times EBITDA, and we were paying currently a 42 % tax rate on income tax, okay? At the time, it was a 15 % capital gains rate.

20:09In the U.S. right now, it's about 20 % for LLCs, 23.8 if you have a C-Corp, whatever. Won't get into the details there. But my point is that when you, for whatever reason, countries all over the world charge a lot less on capital gains versus on income because it's a risk thing. You know, if you put your money up, you gamble it, they're going to charge you less taxes if you actually make money. The third advantage is that you might be great at start and you might be great at scale, but the reality is there's a strategic buyer out there who's going to pay you more. Because that's just like, think about GoDaddy and how they bought DotClub.

20:54Or the other company that I sold back in the 2000s. But GoDaddy came in and they bought DotClub. Yeah, we had a great company. Yeah, we got to a million domain names. Yeah, blah, blah, blah, blah, blah. But they got a global distribution channel. They got a lot more customers than we have, right? So they were able to take our domain extension and get a lot more from it. Because of that, you're now getting a big uplift in the valuation on sale. And the fourth advantage, and this is really personal, it's taking money off the table while you're young enough to enjoy it. a lot of entrepreneurs, a lot of my friends, they've been running their companies their whole life.

21:32They've been living on pretty much nothing, right? But they've got these massive valuations of their company. And you know what? I'm happy that I was able to sell my companies early on, fund my kids' education fund, buy one home, two home, maybe three homes, four, whatever. But I really did enjoy the fact that I was able to enjoy my life at a younger age. and maybe I would have made a lot more money had I held on and kept all my companies and made as much money as I can. But you know, the reality is we have one life to live. So let's just live it.

22:05John Lee Dumas:Let's just go live on a boat and cruise around the world. Oh, you heard about that too. So I did buy a cruise condo as well. Yeah, I did buy a cruise condo on Evora, Evora Illumina. It's like, you know, because life is short, right? It really is short. And we have this opportunity to not only go out there and make money, but also change the world. And I believe a lot of my companies, Startup.club, and we don't make a lot of money on those kind of companies, but that doesn't matter. What we're doing is what you're doing here is changing the world. You're changing entrepreneurs. You're helping entrepreneurs become more successful.

22:44John Lee Dumas:Well, I lived on a boat for 27 days. I took a Viking river cruise from Bucharest, Romania to Amsterdam. And it was such an epic experience. I know I could do it. I could live on a boat. I could be happy. Life is good. And Colin, take us home. What do you want Fire Nation to walk away from this conversation with? And how can they connect with you, consume your content? Fire Nation, the mindset shift in my life right now, and what I've lived by, and what's in the book, start scale, exit repeat, is live in the future. Okay, now obviously we can't literally live in the future, but we can surround ourselves with technologies that are going to shape the future before everyone else catches up.

23:29Okay, when I was six years old, JLD, six years old, my dad bought a 4K Sinclair computer in 1976. Think about that. And I was surrounded by that and all the new computers that came after that. When I was in Canada, I had the first one of the first HD TVs in Fort Lauderdale. The first the very first Model X delivered in Fort Lauderdale, by the way, number 984.

23:57John Lee Dumas:So it's under a thousand. And I've always had the fastest internet available. And when I was using everyone else is using dial up, I'm using broadband. And I believe that when we do this, When we live in the future, we understand the behaviors and how it affects us and how it changes things. So here's my value bomb. Okay, here it is. Okay. Don't just read about AI. Don't just talk about AI. Surround yourself with AI. Okay? And by the way, surround your people with AI. Oh, my gosh. Use ChatGPT. Use Claude. Use Copilot. Use Grok. Create an AI mindset. Listen, this morning I was up at 7 a.m. I'm so, maybe I'm crazy.

24:45I don't know. I was up at 7 a.m. creating an AI agent. And within two hours, I have almost automated all the accounting. We're using an AI agent for my real estate company. This is incredible. And I'm like, and so I was at lunch today, maybe going too far here, and I was talking to my bookkeeper. I took, we took her to lunch and I'm like, accountant, bookkeeper. And I was like, you know, this is what we're doing. And we're going to, I'm sure we can't, we can't do that. We can't do that. No, this is what we're going to do. Look, we need to all surround ourselves. If you're an accountant, if you're a lawyer, I don't care who you are.