Start. Scale. Exit. Repeat. with Colin Campbell

0:02Who's ready to rock today, Fire Nation? JLD here and welcome to Entrepreneurs on Fire, brought to you by the HubSpot podcast network, the audio destination for business professionals with great shows like inclusion and marketing. Today, we'll be breaking down Start, Scale, Exit, Repeat. To drop these value bombs, I brought Colin Campbell into EO Fire Studios. Colin is a serial entrepreneur having exited companies today worth over$1 billion, and he's the author of Start, Scale, Exit, Repeat. He is the founder of Startup Club on Clubhouse with nearly 1 million members. And today, we'll talk about what makes a startup successful.

0:39We'll also talk about the next great opportunities. We'll also talk about learning from other people's mistakes. We'll talk about Colin's failures and so much more. And a big thank you for sponsoring today's episode goes to Colin and our sponsors. Business Made Simple, hosted by Donald Miller, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Business Made Simple takes the mystery out of growing your business. Join my friend, Donna Miller, each week as he shares value bombs on topics like the secret to making better marketing decisions. Listen to Business Made Simple wherever you get your podcasts.

1:16Ever thought of giving a TEDx talk? It's one of the most powerful ways to share your message with the world. And four-time TEDx speaker Taylor Conroy from Thought Leader can help you get there. Visit thought-leader.com to join Taylor's free training where he teaches you how to land a TEDx talk and spread your message to millions. Colin, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. Ideas are worthless. Now let me explain that. It's not ideas that are worth anything. It's acting on those ideas that are worth a lot. Let me tell you a story.

1:59My colleagues and I in 2006 would travel around the globe selling our software platform. We'd often come out of the meeting and we would try to get a taxi, but we just could not get a taxi to come to our location. So we were sitting in a dasha, which is like a cabin in Ukraine, and we were brainstorming back and forth and we came up with this idea called my yellow button you press this yellow button and you can see the car coming towards you or the taxi coming towards you that would pick you up now we went back after that weekend to the office we told our our team there and the fact is it just never made the priority list well you know the companies uber and lyft who launched a couple years later.

2:53You can have the best idea in the world, but don't be one of those entrepreneurs who look back and say, oh, I had that idea and they did it. You have to take action. Start, scale, exit, repeat. That is our theme today, Fire Nation. We're going to continue to inspire you throughout with some great content along these lines. And there are a lot of things, Colin, that make a startup unsuccessful. But we want to know what makes a startup successful. Break that down for us. Is it dumb luck? Is it hard work? Or actually, is there something formulaic? I've spent 30 years, John, as a serial entrepreneur, 10 years, 10 years researching and writing this book.

3:38Over the last two years with a staff of six interviewing over 200 people, of which the top 50 interviews made the book. And I'm telling you right now, there is a formula for success. Now, here are a few things to think about to make your idea successful. First, it has to solve a problem. And we've heard that all of the time. You have to have a purpose. And a purpose isn't getting rich. A purpose is something that you believe in. It's something you can love because Because I'll tell you this, startups are a roller coaster. And we go up and we go down. And to get through those tough points, you're going to want to love that idea.

4:18I also discovered in my research that ideas that can scale are just as easy as running ideas that can't scale. In fact, my wife and I own a Montessori school. And we actually got to the point where we hit maximum capacity at 110. So we're thinking, hey, could we expand this? and we started doing some research. To get one more student, we had to go through a lot of regulation, millions of dollars of infrastructure. So in the end, my wife said, no, let's just keep it the way it is. We don't want to expand. So we want to try to pick ideas that can scale it. And I'm here to tell you, my wife, who runs a small business of 16 teachers, it's a lot more stressful and complex and hard to run a small business than it is a large business.

5:02The next thing that we found was that you need to be able to build a moat around your business. You need to be able to file those trademarks, the patents, develop an idea that can be defensible because when you start to scale, you're going to get attention. At paw.com, we trademark and patent a number of innovations so that others can't take them from us. And there's many, many techniques to build a moat. I am going through this really, really quickly. The book touches upon it a lot more. The next chapter in the book is an idea that catches a wave. Go back to the 90s. You're too young for this to remember this.

5:47But we started an ISP in Canada in the 90s, and it took off. In the 2000s, we launched a cloud computing company. It took off. In the 2010s, we launched e-commerce companies, including companies like Paw.com, and they took off. In 2020, I am telling you, this is a historic moment in time. It's never been a better time in history to launch a business. And I'm telling you, that wave is AI. It is unbelievable. And I'm not talking about just launching an AI company. Every startup needs to figure out how they can use AI to accelerate their growth. Now, how do you capitalize on a tech wave like AI? Let's get some specifics.

6:35Fortunately, in this book, we had the opportunity to interview Jeffrey Moore, who wrote the book Crossing the Chasm and Inside the Tornado. And again, there's a lot of techniques you could use here. Going back again in time, I'm going to go back to when CompuServe was competing with AOL in the 90s. And you probably don't remember this again, but we would get these diskettes or these CDs everywhere in every magazine. It was so much out there that we ended up using them as coasters in our office. They were just absolutely everywhere. Well, we all know the story that AOL destroyed CompuServe, even though CompuServe was there first.

7:18What did they do? They delivered the fastest. When you're in a tornado, you need to be able to deliver your technology the fastest. The second thing is make it easy. Believe it or not, technology is actually really complex for a lot of individuals. We need to make technology easy. And lastly, try to dominate a niche like a laser beam. Don't try to take on the elephants. Be the best in the world at one small niche, and that's how you can get there. At paw.com, we went out into the white space. That's what Joe Foster, who founded Reebok, calls it. Going into the white space. Places where no one goes.

8:01We did memory foam dog bed rugs, and we killed the category. We did waterproof blankets, and we killed the category. We did memory foam car seats, we killed the category. But guess what? When we tried to copy, like for instance, we said, oh, we have a million customers, so why can't we just get 1 % of those customers to sign up to a subscription for vitamins for our dogs? We launched the product and we only got 37. And by the way, I was one of the people who actually signed up for that service. Fire Nation, lots of great content here. And again, this is an individual who went and interviewed so many individuals who are so great at what they do And this is the content he's bringing back to your ears right now.

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10:33Go to hellofresh.com slash 50EOF and use code 50EOF for 50 % off plus free shipping. That's 50 % off plus free shipping when you visit hellofresh.com slash 50EOF and use code 50EOF. Do you have a message inside that you know is meant to be shared with the world? Giving a TEDx talk is one of the most powerful ways to share your message with the world, and Thought Leader can help you get there. Thought Leader is a speaker coaching company that has helped over 550 and counting coaches, speakers, entrepreneurs, authors, and experts land TEDx talks. Thought Leader is not affiliated with TED or TEDx, but they're able to get these results because their founder, Taylor Conroy, is a four-time TEDx speaker himself and past EO Fire guest.

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12:00Start, scale, exit. Take some money off the table, repeat. Tell us more. Okay, that is essentially the thesis of this book. The genesis behind this, by the way, comes from a lot of pain that I experienced in the late 90s. We had merged our company. It was a publicly traded company. We merged it, won the license for fixed internet in Canada. And then something happened in March of 2000. I don't know if you remember this one, but it was the dot-com crash. Bad things do happen. Secondly, in that particular scenario, we had actually locked our stock up for 18 months. So this company that went to over a billion dollars in market cap, and I was 29, I don't know about 13 % of it, Went to over a billion dollars in market cap, traded at$19 a share.

12:55I ended up selling for$0.06 a share. You know, that's the lesson I learned there was liquidity or control, and bad things do happen. Look at the tech wreck from last year in 2022. Look at the crypto crash. I mean, my gosh. So the idea in the book is how do we maximize value on exit and should we exit? Well, I'm telling you, when the market is frothy and there are signs, okay, go back to 2021, NFTs,$500 ,000, eight pitchers. You saw absolute insanity with people buying the GameStop stock. So you begin to see these signs of froth in the market. And that's when I say exit stage left. The other thing I'll tell you, too, is that it is tax efficient.

13:47Now, please get tax advice. Whenever I tell people this, I always say get the advice. But when we sold Hostopia, it was a publicly traded company. We sold it for 17 times EBITDA to a Fortune 500 company. When we sold that company, we paid a 15 % tax rate on the capital gains. our tax rate at the time was 40 % corporate and 15 % dividend. It would have taken us 25 years to make our money back on that. And then finally, we also talk about sell to a strategic buyer and avoid the cash flow buyers, especially in today's environment with very high interest rates. Fire Nation, you're just getting value bomb after value bomb here.

14:33I mean, these are some great pieces of advice from somebody who's experienced it personally, and then again, talk to other people who have experienced it personally as well. And Colin, we're seeing these serial entrepreneurs, these people that we look up to and admire. I mean, they are starting, they are scaling, they are exiting, they're repeating. What are they doing right that we can model? Yeah. And see, that is the basis of this book. I was asked to speak in 2012 at MIT to a group of entrepreneurs. And they said, Colin, you've been so successful at all these starting and exiting all these companies.

15:07What is the secret formula? And I really looked back and I realized that it's all about the story, having a great story, great people, great systems, and raising enough money for your startup. And this changes from start to scale to exit. And even in repeat, there's a different formula. And we need to understand that. I will throw one thing out about people is that most businesses in this country fail to scale. And the number one reason is the entrepreneur themselves are the ones in the way. It's their ego. When you're in scale mode, you have to check your ego at the door, become a coach, and hire great leaders.

15:59Again, we cover this in detail. And there's one other thing that I think is really, really cool. If you're listeners, if you're starting a business, if you can figure out your X factor, this is critical. Think Domino's Pizza, 30 minutes are free. Think National Car Rental, just show up and go straight to the car. No lineup. Think Warby Parker, how they changed the equation on glasses and dominated the space. Whenever you can find something, when you go into the white space, you do something original like Paw.com did, you can dominate that space. That's it. It's very, very basic, but it's sometimes complicated to figure out.

16:43Actually, at Hostopia, it took us seven years to figure out our BHAG. which was become the best in the world at migrating websites and email. And we created a nearly unbearable brand promise of 100 % migration guarantee. Wow. And I'll tell you this, we were told a day before we were going to lose the Earthlink contract, and this was for 80 ,000 websites and a million email addresses. We flew down. We went to the office, my CTO and I. We talked to the mid-level executive who's worried about his job. That's all he's worried about, migrations and losing his jobs because that's where things go bad when you do a migration in these big companies.

17:27And he said, let's go to lunch. And he has a two-seat Wego. It's an electric car. This is 2006. So my CTO gets in the front. I climb in the back of the trunk, and we go to lunch. And we sat with him, and we told him our nearly unbearable promise, which is a 100 % migration guarantee. Now, the day before, we were told we were going to lose this contract. We won that contract and all the dominoes fell. We won AT &T. We won Photophone. We won British Telecom. We won Bell Canada. We won all the telecoms in South America. We wiped out our competitors. That's it. When you can find that X factor, it can make a huge difference in your business.

18:03Fire Nation, what's your X factor? If you don't have a quick answer to that, find it fast. Colin, start scale, exit, repeat. Tell Fire Nation what they need to know about this book. Why should they read it? And where do they go to pick up a copy? I'll tell you this. This is a book like you've never seen before. It's published by Forbes. We wrote it for the ADHD entrepreneur. 58 chapters, dozens of illustrations, 200 callouts, all color-coded with start, scale, exit, repeat, all color-coded. and you've got the Audible or audiobooks that you can use or the ebook. It's on Amazon, Barnes & Noble, any bookstore out there.

18:47Fire Nation, you're the average of the five people you spend the most time with and you've been hanging out with CC and JLD today. So keep up that heat. And for links to everything we talked about, visit eofire.com. Type Colin, C-O-L-I-N, in the search bar and the show notes page will pop right up. And Colin, thank you for sharing your truth, your knowledge, your value with Fire Nation. And for that, we salute your brother and we'll catch you on the flip side. Absolutely. Hey, Fire Nation, a huge thank you to our sponsors and Colin for sponsoring today's episode. And Fire Nation, what can 4 ,000 of the world's most successful entrepreneurs teach you?

19:25How 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 UncommonSuccessBook.com. I'll catch you there or on the flip side. Business Made Simple, hosted by Donald Miller, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Business Made Simple takes the mystery out of growing your business.

20:00Join my friend Donna Miller each week as he shares value bombs on topics like the secret to making better marketing decisions. Listen to Business Made Simple wherever you get your podcasts. Ever thought of giving a TEDx talk? It's one of the most powerful ways to share your message with the world. And four-time TEDx speaker Taylor Conroy from Thought Leader can help you get there. Visit thought-leader.com to join Taylor's free training where he teaches you how to land a TEDx talk and spread your message to millions.