Start. Scale. Exit. Take Some Money Off the Table. Repeat. with Colin C. Campbell

0:28Who's ready to rock today, Fire Nation? speaker and founder of Startup Club, helping entrepreneurs globally through his book, Start, Scale, Exit, Repeat. We'll talk about getting timing right, the concept around laddering up wealth, and oh, so much more. And a big thank you for sponsoring today's episode goes to Colin and our sponsors. The Next Wave, your chief AI officer, hosted by Matt Wolfe and Nathan Lands, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. AI technology is transforming the way we do business. and the media landscape is fragmented, The Next Wave strives to be the leading podcast on AI technology and how you can apply to growing your business.

1:07Listen to The Next Wave wherever you get your podcasts. Is this your year to grow a successful business? Attend the world's highest rated business growth workshop taught personally by Clay Clark and now featuring Rich Dad Poor Dad author Robert Kiyosaki and Eric Trump at thrivetimeshow.com slash EOfire. Again, request life-changing tickets today at thrivetimeshow.com slash EO Fire. Colin, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. You know, what's interesting because we live in a unicorn nation and if it's not a venture backed startup, it's just not worth the time.

1:53And that really is not true. The fact is that 75 % of venture-backed companies fail, believe it or not, they fail, and over 90 % of companies on the Inc. 5000 fastest growing list don't even have venture-backed funding. There's a lot of opportunity to build a small business, grow it, and then sell that business, and then do that over and over again. Fire Nation, that's why we're talking today about starting, scaling, exiting, taking some money off the table, which is where a lot of people struggle, and then repeating with Colin Campbell in the house right now, rock and rolling. And years ago, Colin, we're talking years ago now, you failed to exit your business the right way.

2:36This was a huge learning lesson for yourself. Tell us more. Do we really have to go there? We have to. You know, going back to the early nineties, when I first started out, we did a software rental business, lasted 14 months because it got outlawed in January 1st, 1994. But then we did something called a BBS, a bulletin board service, and we launched that. But a few years later, two years later, there's this thing called the Information Superhighway. And we had to shut that company down to make room for phone lines for the Internet Access Service, which it was a company called Internet Direct at a candidate.

3:15It became the largest ISP in Canada, went public, was actually one of the fastest growing companies in Canada as well. and that was that was interesting because it was such a phenomenal ride so much demand and uh we decided to sell the company to a private company a cable company and we did stock for stock swap at the time it was 180 million dollar value and then within a few months we won a license and this company that i own 13 of a jld at the age of 29 years old was worth over a billion dollars. What? Billion dollars. Now, as part of this deal, what I agreed to do was an 18 month lockup. And something happened in March of 2000.

4:01That's when a judge announced the breakup of Microsoft and the Nasdaq fell from 5 ,000 to 4 ,000. And the people who controlled the company at the time, I was no longer in control. Those people decided to pull the offering. And they said well we'll come back into the market when the market improves well if you know anything about that time the market went to 1200 the nasdaq it was the dot-com crash there was not enough chairs to go around when the music stopped and that those shares that traded at 19 a share i ended up selling for six cents a share brutal and yeah i learned two things one is liquidity of your control.

4:43So when we do an exit, we've got to be very careful how we do that exit. We spent 10 years building that company and 10 weeks screwing it up. And then the second thing is bad things really do happen. Fire Nation, bad things really do happen. And that dot-com bust was pretty crazy. I mean, you learned a lot. I mean, specifically on timing, of course. I mean, timing, timing, timing. How important has timing been on the sale of your other companies? Well, in some ways, it's like a PTSD, I think. I don't know. Like I get so paranoid when things are going so well. You know, think about a couple of years ago, you had GameStop at$2 and it went to$470.

5:23You had a thousand SPACs hit the market. You had board apes that were selling for cartoon photos or images were selling for almost a half million dollars. And, you know, that was the time when I started thinking, okay, this is, this is a time to exit a company. And we actually did exit a company. We exited dot club literally months before the 2022 tech wreck that did occur and really brought down a lot of the valuations of a lot of these companies. We did the same, you know, after we, you know, in 2000, when the company that I had said I sold for six cents a share, my brother and I, we started in another company.

5:59And six years later, it became the number one fastest growing company in Canada. We took it public. And two years later, we sold it for cash, this time all cash. but interestingly we closed that deal a month before the Lehman crisis right so and if any if you know back going back into 2008 or you go back into 2022 I mean if you hadn't done your transactions if you hadn't made your sale then you've missed the window and now now I've taken it into a science we actually have a something called the time to sell index on startup club which we use IPO data to track whether it's a buyer's market or seller's market.

6:37And I can tell you right now, I can tell you right now, we are in a strong buyer's market. It's not a good time to sell your company. It's a good time to buy companies, or it's a good time to build your company. Fire Nation, build or buy right now. And let's assume, Colin, that we get the timing right, and we figured it out and it's ready to go, who are the best types of companies to sell to? Yeah, I mean, I think timing is 50 % of your value. And in some cases, you know, we look at the e-commerce index in 2021 versus 2022, it had dropped by over 50%. So it's clearly, but in some industries, it's even more.

7:17So timing is critical. But what's also critical is finding the right buyer. And there are really three types of buyers. There's cashflow buyers, you know, I think like private equity, you have competitors and you have strategic buyers. And where I've done very well is selling my businesses to strategic buyers. Now, there is a formula where they look at your customer base or your technology and they say, I can leverage that with my customer base and gain a lot more profits and sales than if this company were to stand alone on its own. and I got the chance to work for that Fortune 500 company that bought us in 2008 for three years and I was in charge of acquisitions.

7:58So I understand exactly their mentality and they're not gonna give you a full value of the arbitrage, but what they will do is give you somewhere in between the cashflow value and the value of the arbitrage. Now, if you can't find a strategic buyer, then I really encourage you to think about a competitor because a competitor can reduce expenses and gain economies of scale. And again, they will give you some form of premium over what a cashflow buyer would give. But if you only have that option available, sell to a private equity or a cashflow buyer, that is something that may be the right thing to do if it's the right time in the marketplace.

8:40But I do highly encourage you to sell your business to a strategic buyer. When we sold Dot Club to GoDaddy Registry, just think about that. We had sold like a million domain names on our own, you know, going out there, flying to 50 countries, staff like five people, you know, doing the best we could. But they've got a lot more distribution than we have. So they're able to take our domain extension dot club, international alternative dot com, and they're able to take that and sell it to a lot more customers than we could ever. And they'll give us the benefit of that. I will also add that there are some tax benefits.

9:15when we sold Hostopia, it was a 15 % capital gains tax. And we were paying, it was a corporation, we're paying 46 % tax on income. And we sold it, it was publicly traded. We sold it for 17 times EBITDA. And if you think about how long it would have taken based on the earnings per share and the tax rate, it would have taken us almost 30 years just to obtain the value that we got at the time of sale because capital gains is typically taxed in most countries at a much lower rate than income. Or Puerto Rico at 0%. Yeah, but we all don't have the opportunity to live in Puerto Rico. I sort of wish we did, but no, some of us have to suffer up here in the United States.

10:01Well, listen, Fire Nation, I hope a couple of light bulbs went off while Colin was talking because, man, that competitor one really did light it up for me because I'm like, that makes so much sense because they're buying market share. They're able to grow so much faster. They will pay a premium for that. I mean, there's a lot of cool things to think about around these topics. We're going to be talking about laddering up wealth. We're going to be talking about preparing for an exit and so much more when we get back from thinking our sponsors. Ever feel like your job description just keeps getting bigger?

10:33But we all know there's only 24 hours in a day causing marketers everywhere to feel spread thin between creating content, launching campaigns, generating leads, and more. you barely have a moment to take a breath, let alone do your best marketing. What if there was a better, easier way? That's where HubSpot and Breeze, HubSpot's new built-in AI come in. When you combine the power of Marketing Hub and Content Hub, you can have your best quarter every quarter. It's really quite simple. HubSpot and Breeze are all about making your life easier, getting your results faster, and better connecting you to all your data all in one place.

11:08stop spreading yourself thin and start making major moves with HubSpot. It's not what a customer see big results in just 12 months, like collecting 110 % more leads, 31 % more deals created, 46 % more deals closed, and 192 % more web traffic. Visit hubspot.com slash marketers to learn more. Is this your year to grow a successful business? Are you looking to learn the proven processes and success systems that have been used to create thousands of millionaire success stories? See thousands of success stories and testimonials from real people just like you, who Clay Clark has mentored and coached into prosperity at thrivetimeshow.com slash EOfire.

11:50Clay's proven business coaching program is month to month, and it costs less than hiring a minimum wage employee. Yes, it's month to month, and it costs less money than hiring a minimum wage employee. Schedule your free 13-point assessment with Clay Clark himself today at thrivetimeshow.com slash eofire. Because Clay only takes on 160 clients and only allows 300 attendees to each business conference, you will interact with Clay directly, see thousands of real success stories, and learn about attending the Thrive Time Show two-day in-person workshop featuring the legendary Robert Kiyosaki and Eric Trump today at thrivetimeshow.com slash eofire.

12:26Become the next success story. Schedule a free consultation and request tickets to join Eric Trump and Robert Kiyosaki at Clay Clark's next business conference today at thrivetimeshow.com slash EO fire. Colin, we're back and you have a concept around laddering up wealth. Tell us more. That's interesting. I was at dinner with a gentleman you've interviewed, Joe Foster from Reebok, who founded Reebok. And we had this conversation about, do you start scale keep or do you start scale exit, take some money off the table, repeat? And so there are different perspectives on this. But the fact of the matter is, you know, I can't, you know, again, I can't go back, keep emphasizing this bad things can happen.

13:09And if we begin to reframe the way we think of ourselves, that we're not just CEO of this one company, but are but we are an entrepreneur and entrepreneurship is a trade like any other trade. and we need to learn how to master that trade, then we'll be confident that when we do sell this company, we can launch the next one and the one after that and the one after that. It's interesting to see with all the companies I've dealt with and all the entrepreneurs, how many one hit wonders there have been out there. You know, a lot of times entrepreneurs, they sell their business, they lose their identity.

13:45They stop seeing the opportunities that they have because they're no longer in the middle of it. And they just don't want to take the risk. Maybe they just don't want to go back to the way it was, the stress of running a startup. But I will say that if you can learn that trade and understand it, then you can begin to think about yourself as someone who actually builds and sells companies versus somebody who just builds and keeps and collects dividends or income from that company. Let me give you an example. when I was 16 years old, there was a gentleman in our town who started a fish and chip shop.

14:25He did absolutely amazing fish and chips and his shop was just busy. And then my brother and I got to know him and he started opening up a second and a third and a fourth and then selling those fish and chip shops off. See, he wasn't in the business of fish and chips. He was in the business of building a fish and chip store and selling that off and making a lot more money at a much faster rate. So Fire Nation, the concept around laddering up wealth, I mean, that's something that again, a lot of people haven't thought about, but it can be key when you're looking to go forward in that direction, because these are entrepreneurs on fire, Colin.

15:01I mean, these are entrepreneurs who are listening, small business owners. What do they need to do, our listeners, to prepare for an exit? You know, I think the first thing that I recommend anybody do is try to understand the KPIs or metrics in the industry. You know, for instance, we run an e-commerce company here called paw.com. Three years ago, honestly, it was all about revenue and growth. Today, it's all about earnings, a multiple of earnings. So we want to, the year before, two years before we sell the company, we want to try to optimize the company for the metrics that are in the industry.

15:38So if we decide to sell paw.com right now, it's all about boosting those earnings, building up the earnings, building up the earnings and getting a multiple of earnings. So I think that's the first thing. Another thing I think that's important is for you to check your ego at the door. Now, I know this is not, this may be counterintuitive for a lot of you and a lot of your listeners, JLD, but most entrepreneurs have a pretty big ego. And what we need to do is, because what we need to do is we need to check your ego at the door and basically fire yourself and elevate your team. When I was at that Fortune 500 company, I was in charge of the acquisitions.

16:15I mentioned that earlier. We bought about, I don't know, 15 companies or something like that. And let me tell you, not one company in all that time did the founder stick with the company more than a year. I was an anomaly. I stuck with the company for three years after I got bought. And it was painful, by the way. I admit it. I admit working for corporate America was one of the hardest three years of my life. I hated it. Why'd you stick around for three years? I made a commitment. I made a commitment that when I sold the company to the CEO there, that I would do that. And I did that. I stuck out my three years.

16:47I did my time. And I'm not going to sell myself. I put in my time. It sounds like you were in Fulsome's jail. You know, I'll give you an example, though. In Dot Club, I appointed a president of Dot Club and stepped back because a lot of these companies, when they see a well-oiled machine, a Swiss clock, they like those companies. They can get into them and they can understand how the transition is going to work and whether it's going to have a longevity. The reality is most sophisticated buyers know that the entrepreneurs, for the most part, are kooky and just don't are not good cultural fits within their corporation.

17:23So they tend to leave. I mean, this is not something that is new. Most buyers know that. So the more you elevate yourself and you beat your own chest, say, I did this, I did that, the less the value you're going to get for your company. You really want to do elevate your people. And if you can, don't take a salary, especially if it's an earnings multiple and literally do step out of the company and let somebody else run the company. Let me tell you another thing that I think is important too. When you do get down to the deal, you know, you're in the heat of that deal. I can't tell you how many times brokers and lawyers sometimes can get in the way and mess things up, but how many times I actually connected with the decision maker on the other side.

18:02When we're doing our IPO, for instance, RBC was our banker, and we tried to go out in the IPO, and we were struggling to get the first institutional investor. And finally, I said, can I just call him directly? And I said, we don't recommend that. We don't recommend that. but I did that because we had a pretty good rapport when I'd done the presentation with them and I called him up and I said like what's the issue here is look you're too expensive you're coming out too expensive I said okay at what price if we come out at what price what would work this is six dollars I said done we agreed on that he was our lead investor we closed six other institutions and was way over subscribed on this IPO did the same thing with the CEO of deluxe.

18:44I really built a connection with that person. You know, just because you have a broker. And I think that there are times when brokers add a lot of value and lawyers too, but don't underestimate the importance of building a rapport and a trust with the decision maker on the other side. The last thing I'll say about this, and by the way, there's a lot more in the book, start, scale, exit, repeat. But the last thing I'll say right now is there are no such things as evenings or weekends. When you're in deal mode, you're in game mode. And the tighter you make that deal, the more likelihood it's going to occur.

19:16If it gets stretched out and stretched out, just like it did when we were doing the offering in 2000, we were trying to raise that$50 million. It just, we sat and it was a big company mentality. We sat in hotel boardrooms for months doing projections, this, that, and the other. And then the dot-com crash happened and the whole thing fell apart. So bad things can happen. So when you're in a deal mode, it's go mode. That's it. And everybody on your team, We got to get this ball across the line. Deal mode is go mode. I love that phrase. And Colin, as you mentioned, you are the number one bestselling award winning author.

19:52You're a speaker. You're a founder of Startup Club and you are helping entrepreneurs globally with your book, Start, Scale, Exit, Repeat. So give us one key takeaway from that book that we can really utilize and tell us how we can acquire, get our hands on that copy. And then we'll say goodbye. The one thing that most startup books don't talk about, and we do, by the way, we talk a lot about the formula of success and what it takes to start scale, exit, repeat, but we don't talk about the mental challenges and the stresses and how it impacts you personally and your family and those around you.

20:28So we do, we do have a chapter at the back of the book dedicated to that. Yeah. JLD, this book was a 10 year project. We had six full-time staff, 200 people interviewed. we've won 24 global awards in 2024. Oh, that's an interesting, 24 global awards in 2024. We've been number one in 15 spots on Amazon. And it's just, it continues to surprise me how much this book has resonated with startups and with those who want to scale their business or those who want to exit their business. It's been a true pleasure to write this book and put this out. And we'll do what we can to keep helping people out. And we do a newsletter on Startup Club.

21:10Every month you can get access to that newsletter. And we have very, very interesting things in it, like the time to sell index. And we go really in depth on different tools you can use, different growth hacks, different minor majors to scale your business. Fire Nation, you're the average. Of the five people you spend the most time with, you've been hanging out with CC and JLD today, so keep up that heat. For links to everything we talked about, visit eofire.com. Type Colin, that's C-O-L-I-N, in the search bar, in the show on this page will pop right up. Start, scale, exit, repeat. It's a classic Fire Nation.

21:43I've got it sitting right on my bookshelf. It's a very worthy read for all the reasons that Colin shared and more. So Colin, thank you for sharing your truth, your knowledge, your value with Fire Nation. For that, we salute you, brother, and we'll catch you on the flip side. Yeah, thank you. Hey, Fire Nation, a huge thank you to our sponsors and Colin for sponsoring today's episode and Fire Nation. Successful entrepreneurs accomplish big goals. That's why I created the Freedom Journal to guide you in accomplishing your number one goal in 100 days. And we're talking step by step. Visit thefreedomjournal.com and I'll catch you there or on the flip side.

22:19The Next Wave, your chief AI officer hosted by Matt Wolf and Nathan Lance is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. AI technology is transforming the way we do business and the media landscape is fragmented. The Next Wave strives to be the leading podcast on AI technology and how you can apply it to growing your business. Listen to The Next Wave wherever you get your podcasts. Is this your year to grow a successful business? Attend the world's highest rated business growth workshop taught personally by Clay Clark and now featuring Rich Dad Poor Dad author Robert Kiyosaki and Eric Trump at thrivetimeshow.com slash EOfire.

22:59Again, request life-changing tickets today at thrivetimeshow.com slash EO fire.