Northstar, Virat Electric Company, Ryan discussed on The Tech Blog Writer Podcast - Inspired Tech Startup Stories


Read a was also think this, incredibly important to build relationships with potential buys, but making those relationships building those relationships very early on in the process. So can you tell me more about why so important an also what any good or bad examples, you could maybe share that would highlight that you all? All bad. I think, you know, with regards to the relationship, you know, one of the things outside of the actual numbers, you know, so you have growth, March retention and the assumed attachment rate, as, as value drivers for Virat electric company in value, the acquisition of your company, but the other thing is the culture fit Ryan. So this is in unsaid, but very, very real thing. So if you look at a lot of companies, where the company will out in by another company, or even looking at buying another company, there is a certain amount of time, where the two companies are trying to figure out whether or not they can work together. You know there's a culture there, the city haven't been company that's very corporate. And you have a startup as you know, a star up, you know, where people are a little more wild than, you know, the big company, people are a little more laxed, you know there under the umbrella, the big corporations startup. People are hustlers started. People get frustrated with the big company started people leave. Investment goes down the toilet. So and so forth. Right. Or the startup gets acquired and they lose their hunger. Because now they're you know, everybody fat happy and you know, they're, they're not as motivated to, to Bill, the new company. So, you know, this is these these situations are very common. And so, and it's an unsaid thing. So if you drop out and acquisition for a long time. So what I suggest that people say, look, if you want size, specialize in selling companies in twenty four to thirty six months. Right. That's my that's my game plan. So I pick up a company at a point where I think, I can make that happen, so usually usually when they have what I call marketing by validation, and that's dated by somebody buying their product. And then right at that point immediately at that point, I start figuring out the buyer profiles are and then you have your entrepreneur go out and and start building relationship through partnership. Hey, I'm so, and so you make the introduction. And you you're warming up to them. They're warming up to you. You're starting to work together and you show that, that you companies can work together for a period of twelve months or so. So you know the thing I tell on for north my glow. Let's say you work on your company for five years may not divide. Your you go. Okay. I'm ready to sell my company. So first of all, how do you know you're ready second of all what, what tells you, you're right, just because you decide you ready, like if you have no metrics and no buyer, you don't know how close you are to that, right? Second of all, that means that you're starting the process, right? That, right. Semi you're, you're starting to have that phone call with them. You starting to develop this relationship, and that works has to be done and that could take a year or more. Right. So you have to really you have to really start that it's, it's a big. It's a big relationship thing, even outside of the dry, even if the dryers lineup they still can set back and go, yes, not good fit. We just don't think it's good that, you know. So it's really really important. Unfunny. Entrepreneurs listening. How can I say to pivot focus to long-term exit planning, is any tips around that economic I do in Boston business operating support system book that I'm writing called meet the boss this what I call it I called the northstar. And so that was a shameless plug, by the way, sorry about that. You have a the northstar in I call it the north star because you can always see the northstar when people get lost, they have the north star, and I tell people if you are ready. Fire aim perces, ready, aim fire. I tell him if you're trying to cross the ocean. And you're one degree off on your company's. You're going to land on a different continent. So you have to know where you're going to constantly align yourself to that north star and you can change your north star, but you need to start with something. So I tell people the first you have to have is the what, so what is your business, and what is your product, and they need to be separate? So that's just description feature and benefit. And then you haven't why why should somebody by your company in? Why should somebody buy your product and that's problem solution an impact, and then you have the who and that's the ideal buyer profile, and the ideal customer profile, and then you have the win? Mrs also very important. You know, boss uses eight from x to y date. Algorithm. And a lot of a lot of the boss methodology. And that's because if you don't have date, it's like running a marathon without a finish line. Right. You lose the interest of your people. They know they're in a start up. You know, just your keep people, who's interested, you know, people stop running when there's no finish line. So you have to have that win now that win can change. But you need to say I'm going to accomplish this by this date. And then now after you have a win. You have to establish the how much and people always go crazy on this one. Right. The investors, and I don't know how much as much as I can get all the sort of thing, and I say to them, I say, listen, if you don't know how much then you don't know how much money you should take on. You don't know how close you are. And you don't know what can I dilution, you can take on and more than anything? You don't have alignment from the board. A lot of times I'll get deals that are cleanups. Right. So there's a misalignment with the board the company's off. They've been draining money, the investors, retire putting money in, and they'll send it over to me to work on. Right. And so when I work on this deal with I'll do is, I'll sit down and I'll have a conversation with the board or the management team. I and I'll say listen management team. What is your strategy, which is all those things, right? What why when how much and then all lying those things, so you go into the board meeting, and I had one of these other day during the year. Like look the fact of the matter is that in order for this company to exit in the next twelve to thirty six months, you're looking at fifteen million dollar exit. And, you know, the board comes on the go, what I thought this was going to be fifty million dollar exit. And I'm like, where did you get that from mega? Oh, we just thought we thought that and I was like, well, then you have misalignment right because they've been giving out money looking at the. Outside and they'd been looking at it incorrectly. So a lot of times valuations, you high because of that, and they can't take on money without doing down round or a lot of times. They're trying to build this company out, and there's just false expectations. And so this time cost of money is off. So they're like, yeah, I can't wait five years for this exodus. It's going to be fifty million. I thought it was going to be fifty million, so you know there's a lot of lineman there, and how close are you to that exit? Will you have to have a trending wine yet? Say well growth margin retention and attachment, my top, and bottom line revenue need to be at a certain place for us to be ready for next. Well, if you don't have those numbers, you don't know where you are in that marathon. What, what are you on? Right. You're are you halfway? I don't know. Are you on the sprint should you start running so companies by companies? If you look at it like a bell curve company in all companies have belco, right? They reach appeal. Peak, and then they dropped down the other side and companies wanna buy companies as low on the left of the curve as possible. But when it's really safe because they're looking for that upside tick. And that's where you get through value from a synergy, the, the attachment rate in that outside take that they're going to get over time. Gets you a higher multiple, which is bore basically looking forward in the future. So they're gonna pay you ten times revenue. That's ten times ten years of your Ramya looking forward. They need to validate purchases be valuable. Right. And they do that two ways. They do that by looking at the future of the company and how well it's going to do and those valid driver's growth margin retention. So that would be the advice out, give to an entrepreneurs zinc of that stuff ahead of time and really factor that in make sure you keep its like GPS. Right. I told you I'm like, if you're gonna go from your friend's house to somebody else's house, and you don't know where that other location is you don't have GPS you don't know where you are. You don't know where. To make a turn. You don't know how long it's been taking together you need to have a GPS from the point where you are to the point where you're accidents, tastic advice, not you did mention you've got a book coming outlet. So we've got to explore. So what can we expect from your book, and when he's actually GIO the book comes out the first quarter next year? It's called meet the boss. And so what I did is I spent the last twenty five years, you studying, and, and I think of it as an open source platform, I spent the last twenty five years studying all of the different process architectures out there, so six sigma, lean forty axe, OGSM, okay. Ours. You know lean agile Kanban everything that's out there. Right. And I've spent twenty five years, and I didn't just study them. I actually use them at companies in different stages, and in different functional areas and basically, I put different. Aspects of them all together to create sort of this unified program, which takes advantage of these different pieces, along the half along the journey of a business from the point that it's his exits idealization all the way out to the company has liquidity event. And so the book sort of outlines those steps, and it has stories I've done hundreds of interviews with investors on for Noor's angel incubated groups might reveal sees on yours at succeeded. Entrepreneurs that failed meaning there's a ton of data around this, and the, it's not just me. Right. I mean, I think of myself as somebody who has collected the data led the project. But the input is from a lot of, you know, subject matter experts in different focuses addressing this problem because you have a ninety percent failure rate from Toronto Newroz. Well, that's just unaccepta-. Rable. I mean, I've seen really good deals lose and really bad heels win. And it has to do with their ability to execute in most entrepreneurs don't have the experience, so you have to give them a framework. It's like bowling with guard rails, you know, and it's like you know, making sure that you're staying in the ropes all the time and you're, you're not coming off the rails, you know, with your business, and you're moving forward over time in boss was built for that my passion actually for that came from growing up without any money and looking at the economy's today and seeing this massive consolidation of wealth. And what I what I wanna do..

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