Connor Tomkies: Aftermath of an Exit: Healing, Reflecting, and Progressing Forward

0:00I was a little worried about how I would respond to wealth. Connor Tomkies. He spent eight years growing and selling Support Ninja, his global talent acquisition firm. Now he focuses on buying great businesses to scale them for exit. This episode delves into Connor's exit experience, why he prefers to buy a significant portion of business over angel investing, and how helping out his extended family members turned out to be the most rewarding use of his exit wealth. The best companies have multiple offers to buy them, like the best companies have options. So then the question is, how are you providing value to those entrepreneurs?

0:37I look for companies that already have a fully built leadership team and have already found product market fit, and I'm just helping them scale faster. I think the best things that we've done with money have been helping family members, but it's also like something that you hear a lot of like caution about, feeling embarrassed about your past self, but also feeling like you're an imposter. Like all these things are probably signs of growth. If I was to lived a good life and I don't have many regrets at the moment. So I'm pretty happy with that.

1:12Hi, Connor. Hi, Anastasia. Nice to meet you. Nice to meet you too. Very good to have you on my podcast. Thank you for joining. I'm excited to be here at the Exit Paradox. Let's jump into it. Fantastic. So you sold your company, Support Ninja, two years ago. Can I take you back to that moment when you made the decision and I want to hear why you decided to sell. Yeah. So for everyone, I think the reason's slightly different. For us, we were hitting a point where we were hitting a lot of ceilings as far as like our growth and the operations were getting so much bigger and Support Ninja was doubling in size every year.

1:51And so it was a different company every year and I had to be a different CEO every year. So that was a part of it is that we needed a partner to help us scale to that next stage. And then another piece of it is there was three partners and one of the partners wasn't involved in the business day to day. And so going through that exit process was a way for us to also have that partner find his exit and give him an option. And that's something that's always really challenging is that the partners that you have going into it might not be the next set of partners that might help you get to the next stage.

2:24No, absolutely. So now looking back to that business that you sold, do you ever regret starting it in the first place? I don't think I do. Even the companies that didn't have the exit, I hoped that they would have. It's hard to say that you regret it if you like where you are currently, right? And so for me, it's like, even if you don't have that desired outcome financially you still learn so much going along that journey and you still met so many different people that help you get to where you are that it's hard to say that you regret that right and so um would i have done things the same way probably not but i'm hired to say that i regret it what would you do differently this time so i kind of have to separate it out into two different parts right so the first part is like what would i do differently if I was to sell a company in the position that I am in now, which is a little bit different because once you have that financial security and you've gone through that exit process the first time, you're able to have more flexibility.

3:27You're able to time your exit better. You're able to plan better. And so that's completely different. And that's why I encourage people to go through that process once because then you're a different entrepreneur after that first time. But if I was to go back and do it before, I think it's important for partners to kind of sit down and talk about what that entrepreneurship prenup looks like if you were to split up as partners or what happens if someone finds something more interesting and they want to do something else. I think having that conversation is very important and I do that with all my partners I work with now.

4:01Would you agree that building a business is a traumatic experience for a founder? Yeah, it can be traumatic. I think all of us have some scar tissue. Yeah, for sure. I think it's hard because there's so much energy and so much of yourself that you put into that business. And so if that business goes through something, then you're so tied to it that you, in a way, also go through it. And so it's also hard to have that much responsibility or be that responsible for so many people. And if your company gets to a size where you don't know everyone by name, there's also that that kind of like um you're responsible for people that you can't directly um take care of and that's that's kind of stressful in a way uh so i think a lot of the trauma is either tied to like uh uh not being able to be the person i want to be for everyone inside the organization if that makes sense um but i also i'm not sure if it's fair to call it trauma i think it's just more like some scar tissue you know like take us some hits and then you keep on moving.

5:06I guess that's where scars normally come from, from some form of damage, right? The reason I was curious about it is because I wonder if you then went through any kind of healing process after you sold and if you felt the need to do that. So whenever I talked to other post-exit founders, a lot of them took some time off in between their companies to take time to reflect and I've heard different amounts of time kind of tossed out there like a couple months two years um I didn't take that time to like reflect um too much I think I was kind of dealing with my uh stuff and my transition while moving and I think that's how I I tried to feel better is almost immediately I started building landing pages and working with potential partners.

6:00And I spun up like a venture studio and people reached out to me to invest or buy their business. And so it was just more like I was excited about what the next idea was and I was excited to keep on moving. But probably for six or eight months, it's been like transition where I'm like, have good days and then bad days. Or I wake up in the middle of the night being like, oh, I should have done this or I should have handled this relationship differently. So I think I'm still dealing with it, but I'm probably like also unfrozen and I'm concealing not feeling. So if you look back at these two years, what would you do differently if you had to go through them again?

6:39I probably would have taken a little bit more time. I think that probably would have been best. We went on a trip to Italy and we were able to relax there And then we came back and my wife kind of, I was playing Zelda on the couch behind me. And she's like, is that what you're going to be doing? And I'm like, oh, yeah, well, I guess not. I should get to work. So I wish I'd probably take a little bit more time. You didn't like the idea of you being on the couch? No, not at all. No. And I kind of respond well to that. I kind of respond well to people like teasing me or kind of pushing me to do something a little bit differently.

7:16Um, and so I wish I probably took a little bit more time than that though. And, um, I think this is hard. Um, but whenever you're transitioning away from the business, like the thing that you carry away with from that experience most is the relationships that you have inside that business. And I wish that, um, I did this to an extent and I wish I did this even more as I wish I connected more with people and spent more time with them and was able to like, it's not, it's never too late. Right. But it's, I wish I was, it's important to be a very intentional friend and peer and colleague to the people if you're leaving a business because you might work with them again, or you might, those relationships are very important, you know?

8:06So you regret you didn't take more time between businesses because you could have spent that time developing those relationships. Yes, I think that's exactly it. How much time do you think you should have taken? I think for me, probably a couple months would have been good. And that's on the lower end of the spectrum, I think. I think we have like a knee-jerk reaction of like, we have to move or we have to be building something. Or if you're not moving, you're standing still. And sometimes it's good to strategically hold still. It's good to strategically stop and take a moment or else he might jump into the wrong thing and he might be in that wrong thing for the next three to eight years, you know?

8:48So it's good to take that pause. Do you feel now you're in the wrong thing? I think I was relatively lucky in that I have a lot of partners that I really respect and enjoy working with. And I actually enjoyed what I'm doing now more than I was like two years ago. and so I really enjoy that piece. I really enjoy working in multiple businesses. I really enjoy seeing them grow and develop and expanding on different ideas relatively quickly and it's harder if you're working inside a bigger company and Support Ninja had thousands of employees. It's really hard to move quickly and also you feel guilty working on new ideas because you feel like you should be working on, you need to be working on that company 100 % like they you owe them that much right as the ceo of that company and so um i do enjoy the freedom of where i'm at now um i don't have a lot of regrets i i think that uh there were a couple things where like things didn't work out right away or you try to do like a um you're looking at a distressed business and you're trying to figure out how do you pivot it and um luckily enough we made some mistakes but we were able to move on relatively quickly so that's a win So what is it you're doing now?

10:10So I started a venture studio called Operator Equity, which the idea is almost like an anti-private equity firm where it's entrepreneurs are essentially the LPs in the business. There's not a horizon as to when you have to sell. And I focus mostly on fixing cap table issues. So like what I was talking about before, helping partners try to figure out what is the right next steps for them. And then operator equity is in a position to help those companies kind of like fix that, that cap table or, or, uh, figure out what the right steps are to move forward. Um, and so I did that. I became an EOS implementer.

10:49Um, if you know the entrepreneur operating system, um, so that way, whenever I buy a business, I can help, uh, implement a operating system inside that business and help them grow their, their sales and their operations, uh, departments. and right now Operator Equity has six logos underneath the umbrella. So it's been growing pretty rapidly. We just announced that we bought a business today, which is exciting. We set out to make essentially like a deal box talking about like what are the type of companies that we're interested in buying? What are the characteristics of them? And so as far as valuation, we're looking at between 5 to 20 million.

11:27we find this kind of like the in-between of like small to medium um size enterprises like where they're just kind of hitting their their growth stage uh 25 margin agency sas technology services businesses mostly we're looking for a motivated founding team um probably a two to six times on ebitda and preferably an eos operating system behind the scenes so like investing in other companies that also run on this uh this operating system makes it easier to speak the same language and to incorporate them into the fold so essentially eos stands for the entrepreneur operating system it's based off this book by gino wickman called traction and it breaks down the business into six key components there's like a people component a data component process vision, traction, and it breaks down like here's the different stages of development in these six different areas and here's how you can implement them in a very clear and concise way.

12:28And I think for a lot of entrepreneurs we just start solving problems and we don't necessarily know what that next stage of development looks like. And so I like the EOS model just because you can hand someone a book, you can hand a manager a book or an entrepreneur a book, and you can know that you're beginning to speak the same language essentially yeah it it's like uh the lean startup book was used for a while in a similar manner i think that might have been one of the first books i read on entrepreneurship back in the day is that eric reese that did that book yeah i think so it's been a while yeah eric reese why did you choose eos as kind of the structure for your system yeah so i self-implemented EOS at, um, embark, which is a dog genetics company before support ninja.

13:18And, um, it, uh, it went all right. And then as support ninja, we needed a little bit more help because we had so many people. So we had three EOS implementers, um, some even in different countries. And, um, we implemented it because we had so many managers, so many different levels because we had so many people. And it was that point of being able to hand them that two-page business plan, you know, and have everyone aligned in core values and everyone understand what our one, three, and 10-year plan would be and what our go-to-market strategy is. Just being able to hand them that plan in like a clear and concise way and have them run their meetings the same way really created a really cool ecosystem where everyone inside the company could see what was happening on a leadership team level and a director and a VP level, it's really kind of cool.

14:11Like if you look at 150 different teams with team managers all doing meetings the same way and speaking the same language and understanding where the company's goals are, that's a pretty powerful alignment thing. So basically you tried it yourself. You saw it work in two companies, not even one of different sizes. And now you're delivering a system because you've tried it and And you think this is sort of the value you can bring into those companies that you're buying to help them 10x or whatever your expectation is from them by the time you, I assume, exit them at some point. Yeah, I think that's a big part of it is whenever people are, the best companies have multiple offers to buy them.

14:55Like the best companies have options. So then the question is, how are you providing value to those entrepreneurs? And that was something I was struggling with. And that's what I liked about EOS. But then the other side of it is that I think CEOs and entrepreneurs are also looking for what their growth plan is as an individual, as a person. And what's cool about operator equity is that once we invest in a business and they have an event, they have a lot of cash that they didn't normally have access to, they then get to act as an LP in the next deal. So then if they find something that's interesting to them, then they can co-invest and do the next one.

15:36And so in a way, they're growing as an entrepreneur and they're getting more exposure into different industries. And I think that's pretty important to me is that they're bringing in that skill set into that ecosystem and they're helping engage with other founders that are going through similar things. It creates a really cool dynamic. So what's your ambition with Operator Equity? Where do you want it to go? I think for me, I like the idea of entrepreneurs helping entrepreneurs and the idea of not having a shorter term investment horizon. I like the idea of kind of seeing what nature the company takes on its own, right?

16:15Like what's the best thing for that company and for that entity? Is it scaling for five years and then selling or is it scaling for 20 years? Is it doing an ESOP? Is it doing a public offering? Is it, uh, um, I enjoy seeing that, that kind of piece, you know, and there's not like a hard requirement as far as like, we have to hit, uh, these milestones or we have to acquire these companies within this timeframe. Um, so I really enjoy that. There's a little bit more flexibility kind of baked into a model where with traditional financing options and raising money from LPs, they need to set an expectation as to when that exit's going to occur.

16:55And usually it's within that three to five year window. And that might not necessarily be the right thing for the company. So from my end, I'm looking forward to seeing how these companies flourish organically. So on a personal level, how did you come up with this idea as opposed to building another company, just one company, or doing something else entirely? I think there's a difference in mindset between being a director and an executive and being an executive and a founder. And then logically the next step is being a founder versus an investor. And so for me, I was like, what is the type of investment I could be the most excited about?

17:34And how can I amplify myself similar to how I amplify myself as a CEO or as a founder, you hire people in a kind of like a family office venture studio model, you are amplifying yourself but on another level you're amplifying yourself on a organizational level and you're working with multiple organizations at the same time and i think that's pretty powerful so when you worked on your own companies that you founded or co-founded what it is that you love doing what kind of activity you love doing most so have you heard that zero to one peter thiel kind of book where it's talking about the the joy of that initial creation element yeah um so if there's zero to one and then let's say one to two is like the mid stage right and then uh let's say two to three is like scale i i tend to enjoy zero to one which is like the inception of the idea the creation of the initial team and then the launch and then uh one to two i don't enjoy so much that's like the small to medium uh size enterprises where like uh you're you're scaling but you don't have all the team and all the resources in place and i'm like yeah that's not that's not great and then i really enjoy the the two to three so you have like a built-out leadership team so there's a little bit of a gap in the middle that i don't particularly enjoy um and so um i really enjoy in the like uh startup ideation and and launch um that creation of something.

19:11And then I enjoy seeing that thing hit the growth stage or hit that scaling element, which is more sales and marketing oriented. So sales and marketing is what would be interesting for you in that two to three stage? Yeah, for sure. So when you buy companies, do you buy them when they're already in that third stage? Exactly. Yeah. So I look for... Welcome to a more interesting one as soon as possible. Yeah, it's been interesting. So some of the companies that I'm actually working on companies inside this family office, inside this venture studio that are accepted and launched inside the ecosystem.

19:50But the companies that I'm acquiring right now have gone through that scaling challenge and has found that product market fit and are in that quote unquote two to three. they're in that growth stage. I look for companies that already have a fully built leadership team and have already found product market fit. And I'm just helping them scale faster. So do you feel you may be missing that creative channel that your business was for you probably at the very early stage if you only focus for the foreseeable future on companies that are more mature. Yes and no. I think that, so for example, I'm launching a podcast and that's one of the things that we were talking about, right?

20:41And so that idea of like, how do you, what's the premise behind it? And how are you providing value to the listener? And what's going to be the name of the podcast? And so I get to exercise creativity in that way. And I'm learning so much because I'm immersing myself in these different companies. and we're also launching additional services and products, I don't feel like I'm limited on the creativity side. I feel like I'm actually able to be more creative, if that makes sense, and solve more problems that are more varied. Fantastic. So for how long you've been doing it now, your operator equity business?

21:18So I sold Support Ninja two years ago. I stepped down as CEO of Support Ninja in July to join the board. and then I've been working on this for less than a year. So it's been a relatively tight timeframe and a lot happening pretty quickly. I'd love to talk to you in five years or six years to see how this idea develops. But it sounds like, you know, it ticks all the boxes for what you think you want to do in this. Let's check in in five years. I might be like, Anastasia, I don't know what I was doing. I am losing my mind. I don't know what meeting I'm entering into. Fine, right? I'm sure you can.

21:56Yeah, it's fine. Or maybe you'll be very grateful that you started it. So I would be continuing on sort of your personal journey. How you dealt with the loss of identity after you sold Support Ninja? I think it's a little hard whenever you look at... There's a little bit of an ego and it's not always healthy. where it's like with Support Ninja, there's thousands of people involved, and they all help make that company, right? And everyone has their fingerprint on it. And it's hard to sometimes look at things that might have your fingerprint on it and see it go in a different direction. And that's a little hard to see, right?

22:49Either you are growing a certain way, and then you're no longer growing a certain way, or see things being done differently. And that's a little challenging. The hard part, though, is that nothing really lasts and that it's almost like you're building a sandcastle, but everyone knows that your sandcastle is going to be washed away whenever the tide comes. So if nothing lasts and it's like the only thing that you have is that time that you had with that company. And I think that we made something pretty cool and we made a good environment for the employees and we did a lot of good for the community.

23:23And it's really cool to see something that, on the flip side, it's really cool to see something that you helped make and see it flourish and see it do something that you never thought it could. So to answer your question, I'm still navigating it.

23:42I guess what I was trying to understand is how much that search for and you and clearly identity was important in your decision about what you were doing next. So, for example, for me, when I sold my company, I was like, oh, my God, I need to have some kind of, you know, name or title or identity attached to me. And the first one I found was angel investor. And I went ahead and invested in a bunch of companies just to understand years later that it was coming from a completely wrong place, that I didn't do my work properly. And I just wanted to be someone in the ecosystem because I felt I was suddenly kind of kicked out of it.

24:25So I was just curious if you can relate to that or you didn't have as much ego as I did at the time. No, I think I have it bad. I think that it's kind of like that dinner party question when people ask you, what do you do? Right. Which is inevitably like the first or second question. And for almost everyone is it's like your work. Right. It's your title or your the company that you made. And then after an exit, you're like, well, what's that answer for me? It's not as clear cut. It's not as clean. and in some ways I think that is the wrong question to begin with right because like that's a same thing is like people are trying to figure out how you fit into their world and you want to understand how you fit in their world right and um so yeah I definitely struggled with that and there's this uh there's this guy that was interviewing people during like Woodstock and he was asking a guy like, so what do you do?

25:31He's like, I'm just living man. And I'm like, Oh, I can relate to that. I'm like, I'm spending time with family and with friends. And like my title isn't all that I, I am. But on the other hand, I, I was very quick to be like, I'm going to be launching these different things. And I, I'm going to be running these different companies. And I still don't know what I say whenever I'm at dinner parties is, do I talk about one of the companies that I'm working on or do I talk about the podcast I'm launching or do I talk about this community that I'm trying to build for entrepreneurs like it's it's very different and I don't know what the right answer is so maybe I should just pick a different answer every time I guess you'll you'll come up with some formula over time so how yeah how your your thoughts about money and wealth changed from before you exited your business to now I was a little worried about how I would respond to wealth.

26:27And so I took some chips off the table. I took some cash out of the company when it probably would have been better to keep it all in, right? Because it's growing fast, partially so I could learn about money. So I definitely kind of view it a little bit more as like an educational process. And I'm definitely learning like what things I enjoy and which things I don't. I think it's definitely helpful to work with other people that have sold their business that are navigating the same thing. So that way you guys can share some lessons learned. That's definitely been helpful for me. As far as money is concerned, I think I have a bias towards things I can control versus things I cannot control.

27:13So I would much rather have like a company where I own a meaningful stake in versus a angel investment where I don't have as much of a clear image. What was that answer for you? It took me years to understand what wealth actually meant for me. There was a lot of confusion. I made lots of mistakes. And I think it wasn't until I got some clarity about my purpose when I realized that I want to think about my wealth as leverage for my purpose. In addition to creating enough stability in my life so I can actually be free to do what I want to do, which is also related to my purpose. But that was a long journey.

28:03At first, there was a lot of shock. There was a lot of fear as well because I didn't come from much money. And when I did get the money, I suddenly developed very quickly this anxiety about my incompetence. And when I started angel investing, that didn't help because I ended up losing quite a lot of money. Didn't do very well there. and I didn't enjoy dealing with all sorts of advisors and private bankers either. So it was quite bumpy for me. It was also very sudden. I didn't have any money, then I had too much to be able to manage. So it was a bit painful. Hence my question. I'm very curious about how other people go through this.

28:50so um the night of um the first exit my um my wife and i were about to go to bed and my wife like in the span of like 10 minutes figured out how to spend all the money that we had made she's like we're sending this much to family members we're doing this much to here and i was like it It took like eight or ten years and in ten minutes it was all figured out. Exactly. And yeah, I think it's funny because it is, everyone has an interesting relationship with money and understanding how to, going from like an abundance mindset versus a scarcity mindset and like an offensive kind of like, I say offensive as unlike you're looking at how do you generate wealth versus defensive where you're looking at how do you generate wealth versus defensive.

29:44you protect very different kind of mindsets. And... You're talking about abundance mindset. I found that it was much easier for me to have it when I didn't have money. It was much harder when I did. It should be the other way around. But it's very easy to accept it when it's just theoretical and you have nothing to defend. Oh, for sure. A hundred percent. And I think the best things that we've done with money have been helping family members, if that makes sense. But it's also like something that you hear a lot of like caution about, which is, um, kind of interesting in that like you can hear about like money, messing up, uh, families and relationships and trusts and that have gone wrong.

30:32But on the other hand, if you're able to like help, uh, your grandparents or your parents with like health issues or, or help family members move in with other family members or help with a down payment on like a house, like those things have a pretty big, like lasting impact on your lifestyle and your family and, and like helping kind of set the course. So I think that's something that like, we're happy that we've, uh, done with the financial security is be able to extend that financial security safety net to more people. Um, which is, is helpful. But on the other hand, And you also hear like a lot of stories of caution about that that I haven't yet experienced.