I believe we can bring a LOT more value to the world by building GREAT companies (for life) vs. being an investor or entrepreneur who aims to flip.
In the past couple months I’ve participated in three intensive, mind-blowing workshops/gatherings. All three helped me grow and expand my view of what’s possible in my businesses and personal life.
I’ve had a couple experiences as a consumer this summer that have made me want to scream. Things go wrong all the time. Thats ok. It’s when an organization doesn’t own it and communicate quickly about it that erodes trust and desire to do business with them.
This year’s trip to Omaha to listen to Warren Buffett & Charlie Munger answer questions for five hours was the same as previous years… a great cleaning of my investing windshield, an epiphany (or two), and a good time connecting with my 77 year-old father (and brother-in-law and nephew this time too).
I read this AMAZING business book a couple months back by a great New York restauranteur, Setting the Table by Danny Meyers. He had the courage to be revealing about the in’s and outs of his very successful restaurants. I loved a couple of his themes that apply to most businesses (not just restaurants):
1. Start by bringing unique value to the community/customer base – he only opens restaurants that can bring something new and exciting to the NYC restaurant scene (no me-too’s)
I’ve had a half-dozen of conversations in the past couple weeks with entrepreneurs who are considering selling their companies… $4 million, $15 million, $20 million, $40 million, $70 million… all at crazy multiples.
My questions go as follows:
Do you NOT enjoy your business?
Do you have partnership issues?
Do you think your core model is flawed and not sustainable?
Is your growth done?
Are you lacking in money to sustain your lifestyle?
In most of the conversations, the answer to ALL of these questions has been NO. The reason for thinking about selling has been solely about MONEY. More of it. More of it in a way that they can feel more secure about their future.
Little thought is given to how they would invest it and usually after talking it through more there’s a realization that they won’t be able to beat the return they are getting from keeping their company. But diversification makes sense.
Little thought is given to what they would do after they sold. Just the thought of hitting a nice beach, buying some cool stuff, and then coasting right into their next “midas-touched” venture (rarely happens twice). Or be more purposeful in helping others through sitting on nonprofit and for-profit boards and helping others. But they’ll figure it out in between margaritas.
Little thought is given to what will really happen with their great cultures and family of great employees. But the acquirers are good people who promise and insist on not changing the magic formula or the great cultures… yah right.
Then I remind them what it took to build the amazing platform they have now. And how they are the masters of their domains. The kings of their happy kingdoms. The painters of their beautifully growing canvases. But all the annoying stuff will be gone. I saw a great quote recently, “Big offers are a good thing, but personal sovereignty matters a whole lot more over the long run”
Having gone through all of the similar thinking, I shared with them that the reality was different for me and many others I know who have “cashed out”. The reality is the money means little in the end in comparison to having a great platform/canvas to continue growing and creating great things with.
In most cases, NO ONE is advising them NOT to sell. It seems to be part of the American dream, the ultimate accomplishment, and the biggest ego stroke for an entrepreneur to “cash out”. What if we changed that dream to having pride in building great companies that our great grandchildren can be proud of?
Three of the six entrepreneurs I spoke with decided NOT to sell. Not because the money wasn’t enough (it was). But because they were excited about continuing to create and grow on THEIR hard-earned platforms.