162: Walker Deibel — Buying a Company and Then Building It

Are you thinking about how to grow your business with near and offshore staffing? But you're also wanting to make sure that it's reliable, cost effective, and really well done? I think docsa talent is the way to go. Here's why. They don't just fill your jobs. They bring integrity, top talent, and a people first approach that's hard to find. I've known the people at Doxa talent for over 20 years now and I say that you can count on them. I have. Talk to Docs of Talent and you won't be disappointed. Go to docsatant.com Bill G Again, that's doxataalent.com Bill G One more time. Doxatalent.com Bill G Check it out. Today the typical question is buy or build? And that's the one that we hear most often in the world of entrepreneurship and scaleups. Today's show is really all about what if you could buy and then build? And what's that all about? There's a book. It's a great topic. I really loved recording this show. I think you'll get a lot out of it. How do we use buying and then improving as a growth strategy? Acquisition growth or even starting with something that's already built and then building on top of it? What are the lessons learned? How do you go about that? That's what today's show is all about, with a really great, engaging guest. Listen in. If you've been listening to our podcast or you've read the book Scaling up, you might be interested in our workshop on the Scaling Up Growth framework for your own business. We have a workshop coming soon to San Francisco and we have a few hundred dollars discounts for our loyal podcast listeners while supplies last. Just go to scalingcoach.com workshops and then enter the code sup that's S U p for Scaling up podcast when you register. We'll see you there. Hello and welcome again to the Scaling Up Business Podcast. I'm your host and scaling coach Bill Gallagher. On the show with me today is Walker Deibel. So Walker's co founded three startups, he's acquired seven others and he's exited two of them. He's got an MBA from the Olin School of Business Management at Washington University in St. Louis and he's the author of a book, Buy then Build. So we're talking about acquisition today and acquisition versus building everything yourself. The value of that. You're in St. Louis today with your.

Family that's right here in St. Louis. Bill, thanks for having me.

How Old are your kids? What's the family like?

They're 8, 6, and 4. Three girls.

Wow. 8, 6, 8, 6 and 4. Yeah. Mine are 22 and going on 20.

You get me started talking about kids. I mean, this is going to be a whole different hour than what I planned.

Buy, then build. You got to build in the kid department. Well, I suppose you could go on the acquisition. Right. You could adopt. That's the equivalent. So talk to us about, give us a little bit of your background for our listeners about your entrepreneurial journey. Did it start as a kid? Did you start buying businesses on the. On the playground? Wow.

Wow. Yeah, you know, I'm not. I'm not that. That kid that had, you know, the newspaper route or anything like that. There. There was a very short stint where my dad had actually bought a automatic knife sharpener, and I made some flyers and put them in the mailboxes and tried to get some business sharpening knives. But I got one customer and there was no repeat business. So it never really took off. It wasn't until much later when I became a professional that I sort of realized. I determined pretty quickly that if I was going to be putting my own labor into working hard and building something, that I really wanted to make sure I could do it for myself or at least, you know, be in a small group of people that were making decisions for the business. Yeah.

So take us through the whole arc. Like, how did it develop? Where did you take some of your business mistakes? And I know we talked about it beforehand and I know about the grad school, but I think our listeners would love to hear about that.

Sure, sure. So, you know, the concept behind Buy Then Build is really what I call acquisition entrepreneurship. In other words, you know, I believe that, you know, entrepreneurship is a bit more of a condition and that there's multiple ways to do it. Right. Well, it's more a condition than say, a job or a role. Right.

Like psoriasis.

Yeah, exactly.

Gout.

So. So I think most of us would agree with that. I mean, you know, you go to an EO meeting or anything like this, and everyone's like, oh, I'm. I'm an entrepreneur because I can't. I can't keep a job or whatever. You know, we're in one regard, we're the rebels. In the other, we're the officers. You know, which one is right. So, you know, let's see. I think that probably a good place to start would be that while I was at Wash U getting an mba, me and a few of My friends started a company and we had licensed the rights to this technology for point of purchase advertising. Okay. And we were getting big in streams with a major national retailer. We were the finalists in the business plan competition. We had momentum, we were pitching for funds and, you know, it basically all fell apart, you know, the month that I graduated. And that's fine, you know, I mean, that's almost why you do it in grad school, right? Because it's like, hey, I'm protected, I'm a student, you know, or whatever.

You're supposed to launch the idea, drop out of school and the company's supposed to succeed. That's right. Get your degree and the company fails.

That's right.

Not reading the right book.

That's exactly right. However, we all know that as entrepreneurs, you know, startups fail. We all know that. In fact, Bill, we know from Scaling up that, you know, Verne's book that only 4% of companies in the United States ever exceed a million in revenue. Right?

Yeah.

And when you couple that with, you know, with the fact that, you know, we all know the axiom that, you know, nine out of 10 startups kind of fail. So that one that makes it, you know, there's a very small chance that it's going to succeed from there. So you're right, we're all supposed to drop out of school and have the, have the business launch. But more common than not, that's not actually what happens. And I was a victim of that same exact statistic. Perhaps it's punishment for not understanding statistics. So the startup fails. Right. And this is sort of when I come to this conclusion that entrepreneurship is a bit more of a condition. In other words, I didn't have some kind of big idea. I just made the rounds for 18 months raising capital around this other idea. And you know, everyone was sort of had sort of heard my pitch and so I knew that there was a way to find a business to buy, or rather to buy a business. And so I started down that path. And what, I was probably the only MBA grad that didn't have a job secure because we had so much momentum. Right. So I started on a path and I'm sort of met with this really opaque, fragmented industry where the, you know, the M and A advisors or brokers or intermediaries or investment bankers, I mean, what did all of that mean? And like, why were they different? They were all sort of peddling the same goods. And it was one of these where the businesses that were, that I could find for sale, you know, the Deal flow was absolutely horrible. And what I was looking for at that time was what, what, you know, that was 2004. You know, Biden build was released in what, 2018, the end of 2018. So it took me that long to sort of, you know, kind of figure it out on my own and that it's really the resource that I needed when I was getting started.

So what was the first business you bought?

The first business I ended up buying was. So I failed in that whole endeavor, right? Like, literally, someone tried to sell me a pet cemetery. And as someone who was into startups and understood adolescent markets and had an MBA, I was not looking to make 20 bucks a month from former pet owners while I cut the grass or something like that. I was looking for something that I could build and accelerate to new heights. I ended up kind of failing in that first journey looking for that acquisition. And I went corporate. And what ended up happening was I, about a year later, kind of started my search again and ended up buying a book printing company. Okay. Now, it was a very, very weird decision externally.

Okay?

And here's why, Bill. If you. I bought the company in 2008, and if you remember what was going on at that time, like the iPad was coming out, Kindle was making headlines, ebooks were thriving. Right. Bookstores were just starting to get. So newspaper were just starting to get soft. We had no idea what was really about to happen with the, you know, the real estate crash and, you know, all the rest of it. Bookstores were going out of business. Newspapers were, you know, trying to. It was horrible.

It was already threatened by the Internet. Like, at that point, I was reading the news on my laptop in bed, and I was a couple years into leaving the paper out in the driveway. It would only be like Sunday mornings that I would go get the thick, you know.

That's right, that's right, that's right. So the thing was that it was perceived as not a mature industry, but actually declining one. So it wasn't only people, you know, in my age group that weren't going into that industry, but also, you know, the. For lack of a better description, the gray hairs weren't exactly, you know, wanting to get involved in that industry either. Everyone was running from the printing industry. Here's what I saw. Here's what I saw. I looked at the underlying trends of what was happening. And at that time, what I saw was Amazon was actually pushing the volume of new titles. It went from. I'm a little rusty on the numbers, but you're talking like 3,000 new ISBNs a year to over 300,000. Self publishing was exploding and something else happened as well. What happened was digital book printing became good enough and this had never really happened before in the industry. And so what Amazon was pushing was people were buying books online, which was driving innovation in digital printing. And so these long tail kind of books that were out of print because there was no demand all of a sudden could be serviced. So publishing companies were just now starting to turn over to just in time, inventory. So there was opportunity there. Right. So I bought a company that had about 125, 150 publishers as their customers. Okay. I made a small down payment, took a huge loan and then I used the cash flow from the business to, I knocked down some walls. I put in a digital book printing facility, started selling that product to existing customers of the company and you know, within 18 months it was about 20, 25% of the business. And we were using that product as our, you know, the tip of the spear in discussions with, with new customers and expanding the company.

Interesting. Yeah. So you, you picked a trend, you bought into an existing business, you leverage that into making it a different business.

That's right. That's right. And if you're familiar with that's, I don't know if you want to go this direction, but if you're familiar with real estate investing, buying a company is very, very similar where, you know, it's basically a leverageable asset where in comparison to a startup it's kind of like, you know, equity infusion on future earnings as opposed to proven historical track record.

Right. So better to buy into a business that's on, in an industry that's on decline into a business that, where there's a motivated seller than something that looks clearly like it's a winner in terms of value.

Yeah, so, so I mean my, in my opinion, I mean you just said better to buy a declining business and change it. In my opinion, there's four different opportunity profiles and I think that that's definitely one of them. That's definitely, that's one of them.

Yeah. Well, I did the same years ago when I was in the radio business. We, I, I wasn't the CEO, but I was an officer in the company and, and we were buying up failing radio stations and then flipping them to new markets. Tell me, will you expand on that story? Some of that story is not ready for.

Well, let me ask you this. Were you growing through acquisition or were you sort of buying?

So, no, we would buy an underperforming radio station. Right. In a major market, usually major markets, Right. We'd go into Houston and we'd buy a station that had a lot of gospel on it. This is a winning example of them. And. And we'd look and we'd say, wow, there's a substantial. So this is failing as a gospel station. And. But there's a substantial population here of Vietnamese, and we should make a Vietnamese station in this town. So we would then turn that secondary signal that wasn't so hot wasn't really winning into all Vietnamese.

I love this example because here's. Here's what happened. Here's what happened. When people start a business from scratch, what they're trying to do is essentially build an infrastructure. Right. What you were buying wasn't necessarily the gospel station at all. You were buying the infrastructure. You knew, everyone knew that, you know, whatever 101.5 was a station. People knew, you know, people. You know, there was probably offices or recording studios. There was people there doing it. You were just sort of changing a little piece of the offering that had a drastic impact on, you know, what happened there locally. That's great example. Great example.

Yeah. You know, I just spent the last couple days coaching in a prison. Coaching and mentoring, you know, serious maximum security prisoners on entrepreneurship and job skills. It was a deeply moving experience. We have a show coming up on that soon that will post with Cat Hoak. But what was cool about that is many of them came in there like, okay, I want. I have this vision for a barber shop, or I have a vision for a food truck, or I have a vision for a car wash. Or they had these different ideas, and at first they were like, we're going to build this. We're going to do that. I'm like, why don't you just buy a failed food truck and then convert it and put a cool design on the thing and make it your menu instead of trying to do everything from scratch. And people love that idea. Somebody was like, I want to do a barbershop combined with a car wash. And he had this whole vision for how it's a family weekend thing to make families better. I'm like, that's awesome. Go pursue your vision, but don't try to do both of them. Just get the little storefront or the corner of the car wash that's not doing well and open the barbershop part of it.

So, Bill, here's what I would say. You're hitting on something that's really awesome. However, again, I talk with a lot of family offices and private equity and even acquisition entrepreneurs that want to do exactly what you say, they'll say, oh, I'm looking for the same deal. Everyone else is, you know, a million in ebitda, totally run down, tired, not doing well, and I can get in and fix it right now. If you actually look at. But the thing is, is that you equally that those same prison mates, if that's the right term, could actually look into car wash. That's doing fantastic. Why don't you buy that one? You don't have to do anything. Right. So the point is, is they got the location right, you know, they've got the branding right. I mean, maybe it needs a new coat of paint. But the thing is, is that when you look at the historical earnings, yes, you might be paying a little bit more because it's not exhausted, but it might turn out to be a better investment for someone who maybe isn't as savvy at like the turnaround, you know, kind of, kind of skill set. And so that, that's another one of the four.

Well, in their case, right, and this is maybe relevant for all of us. In their case, they had a hard thing like all of their pitches were they wanted to figure out how to create something for $5,000 startup costs. Right. So what can they do for five grand out of pocket and be cash positive in six months?

Well, that's a different, that's a different question. That's a different show.

But it's a different show. Right, but here's the thing I think that's interesting about it is that we all have certain constraints and pressures around, like paying our rent and like. So talk to us about, back to your story about the exit of Corlee and then what was the next business?

Sure, yeah, let's talk about that. So kind of in the same lines, what we're thinking, what I realized was even though we had had this great early success in terms of building out the digital book printing facility, what happened was we really hit a glass ceiling. I needed an infrastructure that we didn't have. And what that infrastructure was was simply the ability to CliffsNotes version. I wanted people to be able to get quotes online, send their files online, have them automatically ripped, put on two different presses, color in black and white, automatic barcodes, married bound out. Right. It sounds simple today because it's something that we're familiar with. But back then that wasn't something that was off the shelf. I mean, this was a full custom built thing. And when I talked to dev teams, it was coming with A seven figure sort of investment. Number one, I didn't have the money. I had maybe five grand. I didn't have the money. But also, just building out that additional infrastructure didn't necessarily guarantee more customers, which of course is the goal. What I knew was that the success that we had, it sort of made us. This sounds more impressive than it is, but we had succeeded in becoming one of the largest 2% of printing companies in the US and Canada. Okay. And there's, you know, probably because everyone else was sort of having a hard time. But the thing was, was that I knew that there were smaller digital book printing startups that had sort of, you know, been, been out there. And they were basically using this digital ordering infrastructure to service those customers. And I knew that I could actually acquire an existing business, get the customers, because it was this. I would be a strategic buyer in this sense. I'd be able to increase the net profits of the company because I already had the overhead. Okay. And so I was looking for that very specific infrastructure that would help us break through that glass ceiling and get to the next level. I spent two and a half years looking at 27 different acquisition targets and not all of them were for sale, right? I mean, well, I mean, I looked at hundreds, but you know, I mean, real conversations with everything from, you know, really high tech, like straight out of the startup accelerator, to even, you know, really mature printing companies that had done something similar to what we had done, you know, like in terms of, you know, trying to make a go at the digital side. And this ultimately led to, number one, a huge learning curve. Right. But second, the second it led to finding the absolute perfect fit. All right. I mean, you know, I was in St. Louis. This other company was based in Chicago, had, they had another facility down south. They were a hundred percent, you know, digital book printing. You know, we were, you know, call it 75% offset book printing. So this, you know, had a geographic expansion. They had the most robust online ordering system in any true B2B printing format, and they weren't for sale. I spoke with them. Well, you know, I don't know, let's get through the election. You know, a few months went by and you know, I'm sort of painting this, this vision in this picture. And the guy came back and said, okay, listen, I love your vision. We absolutely have to do it. And I'm like, great, that's great. And he said, but I just want to change one little thing. I want to buy you instead. And so, you know, where I'm going With this is that, you know, acquisition entrepreneurship is not necessarily just the best way to start. It's also. We can talk about growing through acquisition, but it's the most effective and fastest way to grow, and it's the best for most people. And by doing these activities that are leading to the outcomes that you want, it might ultimately be the best way to exit your company as well.

You know, we've done this quite a few times with our. And sometimes successfully, sometimes not successful. I'd love to hear your thoughts on it. But. Or with more success and more difficult success in some other cases. I think most of them are pretty successful in the end. But we start with a company, we bring in scaling up. They start to do stuff. We create the bhag and the purpose and the values. We work on the culture, we implement good execution habits, we tighten up the business model. Then we start acquisition. We start pulling companies into that thing and. And. And then some growth. Yeah.

Point of order is. Is growing through acquisition part of sort of the scaling up? You know, is that in your toolbox? Is that something that's scaling up?

Many of our folks have done it. Once they get the core thing in the core company. Right. The core operating system in there, and we're starting to build and we've got a leadership team that's got at least some key people, then we start to acquire companies often. And there are a lot of different ways of the financing and that in there. It's not implied or required, but it's really common. Some of the things, though, that I notice are, one, if we're doing the scaling up framework first and then we start to acquire, it's a lot easier. One company that we did scaling up with the. We had already done nine acquisitions. Then they're like, okay, we've got some leadership alignment issues and some cultural issues. Let's bring in scaling up. But by then it was a lot harder and that company was successfully sold. But. But they probably would have liked to have run it up a little bit more first. And. And they probably would. It probably would have been a lot easier had we done not, you know.

Absolutely, absolutely. So. So I was a producer on a film called Print the Legend, which, if you ask me, it's one of the best films ever made on entrepreneurship. But the scene in the movie where they sort of bring in adult supervision and she says, you know, I think to the camera, like, I'm here to essentially put a spine in a jellyfish. You know, I'm putting a backbone in a jellyfish. If you grow through acquisition before you're ready for it. It's going to create chaos. Right? So what you're doing is setting the foundation right and then using acquisitions as an accelerator for growth instead of, you know, having to sort of go in and, you know, put a backbone in a jellyfish or pull a bunch of pieces together.

Well, that culture is really critical, right? You got to align the culture of everything. And so who's getting acquired has got to get absorbed into all of the culture and then all the operating practices and the larger vision and strategy of the acquiring company. But that who's going to acquire who is often a. A subject of some conversation.

You know, I mean, you know, in grad school I heard that it's something like it's over 50% of acquisitions don't actually extract the value that they expected that they would in an acquisition. And it has to do ultimately with culture. Right. I mean, we all, you know, all the analysts sit in the back room, they run the numbers. Everything logically makes sense. And then once you get in there, it's, you know, and the thing is, is that I think it was, maybe it was Bill Gates. I mean, somebody, somebody of note, some iconoclastic entrepreneurs said, you know, what, you know, whatever you're accelerating, you know, is basically what you're. What you're growing. So in other words, if you don't have that foundation tight and right and ready to go, and instead you're inefficient when you start, when you start scaling it up, and maybe it was burnt harnish. When you start scaling it up, all you're, all you're growing is your inefficiencies. So, you know, tying your shoelaces at the start line is really important.

Yeah, Well, I was founder and CEO of a couple tech businesses before, and then. And then a senior person, another one, and, and somebody asked me at one of these startup pitch conference things. You know, I already was down the road a little bit on it, and they said, well, if you'd not had 500,000 when you started, right, which is about what we had put into the whole first year of the business from outside, inside. But what if you'd had 5 million? And I said, oh, I know exactly what I would have done. I would have made the same mistakes in a much grander scale and with better chairs.

I think that's exactly right. And better office furniture, you know what, Just to pull it back also in a. Buy them build. The thing is, a lot of entrepreneurs believe that the best way that we have to start a business is through venture capital. And what we've learned from research at Harvard is that 75% of VC backed startups actually end up going to zero. That is a lot better than say, the 10% that succeed without venture capital. But you're talking about like, on average it's like $46 million put into each one of these things and there's still a 75% failure rate. So from my experience, I completely agree with that as well. I would definitely have a nicer chair as we ride down into flames.

Right, well, you learn things about it and hopefully you apply them to the next one. I was at brunch actually yesterday with a guy who was like, he's like, I had a whole string of failures. And he's like, well, maybe they weren't all total failures, but they like far didn't exceed. What's that word? The Vass had already missed expectations by a profound amount. And even if they broke even and many were ultimately dissolved, I said, well, for how long? What was this losing streak? And he said, I was about 20 years.

Was he a startup guy? Was he doing startups?

He was doing largely startups. Yeah.

Right.

I'll keep it that. That's a show for another day.

Well, because let's talk about that, because what I found is that there was a whole chapter in the book that I ultimately eliminated and it was all about entre metrics is what I called it. Right. And the concept is this. You know, we're taught as entrepreneurs that, you know, fail fast, fail often, take a lot of at bats. Right? I mean, that's what these sort of like magazine cover entrepreneurs say, right? Like, oh, I did all this 100 times and whatever, and sometimes it works. But you know, the truth is, is that, you know that movie Moneyball, right, where where, you know, the Boston Red Sox basically focused on changing the metrics so that they could afford it, and they focused on get on base, let's get on base. This is the only way we can beat these home companies. Entremetrics is the same exact thing because buying an existing company builds in three things. One, an investment with an ROI as opposed to a speculative. Let's build this number. Two, it builds in a margin of safety for the entrepreneur and for the investor. And three, it's got major upside potential, just like any startup does.

Yeah, I love that aspect. And I think we see a lot of folks, if you have a good exit and then you get out there and you try to do the next one and it bombs and you're like, oh, my God, what happened? There went all my money. Because you think you're genius at business. You're like, I'm brilliant. I've got the magic touch. I build a great team. But your second time attempting to build a team fails miserably. And you get into a business you don't really understand.

And, like, a little bit of hubris comes with entrepreneurship, I think.

Let's talk about the EDC business and that move into a different.

Almost. Case in point. Okay, let me tell the story, if you don't mind. Basically, after. After I sold the printing company, I kind of, to your point, went right back into a tech startup. And, you know, let me explain this bill. We had. We had a mobile software for the enterprise. Okay? We are. Our equity raise was oversubscribed. We had recruited an executive from Microsoft to be our CEO. We had a proven dev team with the CTO from another. Another major Fortune 500 firm working with us. You know, we had. We had beta programs running at over a dozen major companies. You would know them. And I mean, you know, we went through one of the top 10 accelerator programs in the world. And yet 14 months later, 14 months later, we were completely out of cash. You know, no paying customers, all the rest of it. Okay? And on paper, it's. It looked great in terms of what we had. Now you could say, hey, you know, they didn't have enough time to pivot or they didn't have enough product, they didn't have product market fit, or, you know, at the end of the day, it's all about, are you generating enough revenue to cover the expense of your infrastructure? Okay. And gross margin, we couldn't get there in time. All right? And what happened was the broker that I ended up working with on the buy side at the printing company ended up calling me and saying, hey, Walker, how's that startup going? I was like, gary, it's a little rocky right now. I'm leading a reorgang. There's three people in the organization. And he said, good, there's this business down here. You gotta come take a look at it. It's a perfect fit for you. And I was like, well, I mean, okay. So, you know, I jumped in the car and I drove about three and a half hours and I met the sellers. And I mean, just kind of right away, I had this overwhelming feeling that this was just not going to work. You know, the building was fine, but kind of in a remote area of this somewhat rural area of Missouri. It just seemed like, again, Kind of a tired, rundown industry or whatever. And the thing was that when I got there and I sort of had that hot take, like this wasn't going to work. It was a three and a half hour drive. So everyone knew that I didn't accidentally have somewhere else to be. Like, I was there. Okay. I'm there for 90 minutes at least, right? Yeah. I mean, you know, so I sit down and I have this meeting and all of a sudden a lot of things just kind of shake out of this meeting. Okay. Number one, I found out that the company had. I don't want to use, I don't want to sort of echo the sort of tough times that we were talking about earlier. But they had a major person in the organization that had left about six months ago and they just weren't quite back to normal. They were a little soft in their operations, which was an opportunity to increase profitability. But what they really had that was really special to me was they had this really kind of antiquated dos like ordering system, okay, where that this guy had the vision to put in, but it was just ugly. And so it was one of these, where they had. They had about 70 different customer locations logging into this thing and placing orders for product. And when I looked at it, it was like, wait a minute. And there was one person at the place at a customer location that could order because it required training. It was awkward, it was hard. There was no way that I was going to be able to talk to a new customer and get them to do this. It was just like the company had been around for 45 years and this was there. So it was that infrastructure that was so sticky that I was like, oh my gosh. So I acquired EDC with again, a small down payment and kind of a Small Business Administration loan, SBA loan, and have done that about six years ago and basically again, used the cash flow of the business to build out a proprietary E commerce storefront for companies with multiple locations. And you know, we've increased our skill set, our operations, our profitability, and now we source, manage inventory and distribute. And we really kind of created this like private Amazon Amazon experience for these companies, right? And it's, it's, you know, now when we go to sell the product to someone else, they immediately get it. It's like, oh my gosh, you know, you're basically increasing my, my efficiencies and my entire supply chain and, you know, I mean, we can leverage your overhead for the warehouse, et cetera, so on and so forth. So he was so close. So close and so far. Right. So, you know, yes. I'm. I'm still president of the edc, and it's a lot of fun, great company. So let me pull this around. Let me pull this around. Say one more thing. I got to pull those stories around. Sorry, Stop. Just short. Stop. Just short. Which was. We accomplished everything at EDC that we were trying to accomplish at Viewpoint simply by buying an existing business and turning it into the business that we wanted. And within 18 months, we had, I think it was, almost 10,000 users of our SaaS product. So, I mean, everything that was happening there was what we were trying to build. It was the infrastructure we were trying to build. You know, exiting is basically everything that I try to do is in this acquisition, entrepreneurship model. Okay. And so it's always going to be that growth through acquisition that ultimately leads to the exit. And so I think the most glamorous story was actually the one I already shared with Corlee and actually trying to grow through acquisition to that degree. In terms of acquisitions, I've actually been through many, but the large majority of them are actually with a whole different. If we go there, we're going to take this conversation totally different way. Ultimately, I've had probably 14 different exits. Lots of stories there, but yeah.

Yeah. So I imagine some good, some not good. I'm guessing from the way you said that there are some that you just like, okay, let's get out of this thing. And then others, it's like, this is the time to get out, like, in a positive way.

It's true. I've had both. It's true, I've had both. But, you know, most of my exits have actually come in my. In my film career. So I'm a film producer, and what we do is we, you know, develop and finance the creation of films, and then we sell them to distributors. So, you know, I've had films at south by Sundance, Toronto. We've won awards at all of these places, and we've sold for a distributorship. And so ultimately, today, I also work as an M and A advisor and help entrepreneurs exit their companies. And what I've learned is, is that it's extremely. It's a direct parallel to everything that I've already done in film production.

In your film work, are you funding. Are you buying and selling a film that's already been made, or are you funding the making of a film?

We're making the film. We're making the film. So as a member of the production team, we're. We're we're putting in funding, we're raising funding, we play a part in the creation process. And ultimate know we're. We're trying to make something that is sellable and then exit the whole product to a distributor.

And is this not an example of build, then sell? Or is it a. Or is there.

I actually think it's, I actually think it's buy, then build. And there's a couple of reasons why. Okay, like number one, so take print the legend, okay? It actually was the second ever Netflix original ever. And it was the same week as the first ever. Okay. So we're talking about, you know, the thing that started the streamers, you know, doing original original content, okay. And they, they really are growing through acquisition by buying content from guys like us. Ultimately, you know, I mean, in film and in, and in acquisition entrepreneurship, you will look at hundreds of projects or companies before you find the one that you're ready to move on. And what I look for is, okay, is what's the team in place? What do we know about, you know, the script or the footage that's been shot or whatever. And ultimately the cash and the financing in a project is usually the thing that takes it from something sort of being shopped around Hollywood to actually being a finished film and sold. And so what I do is I look at what's the sellability of this project before we even start, because I know that we've got to at minimum break even. And we've got to go into this knowing that we're going to make some money for the investors if I'm going to take it around and try to raise capital for that project.

It's kind of hilarious to talk about this because like, I'm from. I was born in west la, right? And so I grew up around a lot of this kind of stuff, although I don't really have any background. But my nephew now is shooting the second season of Netflix series that's been, you know, he's a lead in a Netflix series. It's the Umbrella Academy, people know. And Aiden Gallagher's the, is the young, the young old kid. And so I like. But a guy from St. Louis who's like bringing some entrepreneurship to film and entertainment is, is almost amusing right from that point.

It's one of these where, you know, we made. I made a film in college. This was a start from scratch story. And we ended up selling it. It took about four years, right? And we ended up selling it to Lionsgate and that was a big success. We sold it for a fraction of the cost of the budget, which was a huge win in the film industry. And so early on I was like, the economics here aren't good, are they? My college roommate ended up working on the Paramount lot immediately after school. And so I spent a lot of time on the Paramount lot and just kind of understood, got to learn the sort of dynamic of, you know, how the film industry works. And I just sort of realized like I'm, you know, Hollywood is interesting because it's one of these where someone gets lucky. Like there's just this like external luck, right, that like is, you know, everyone's out there. You've got to like work for a decade, 15 years. But if you are really good, really dedicated, you know, the chances of you making it are just like a startup, not that great. They're just not that great. And so I was like, I don't like the economics. I'm going to go get an mba, right? And I was really close to going that direction. And then ultimately sort of 2.0 opportunity came around. And it's very parallel to the buy then build because you're ultimately buying intellectual property. You're investing in intellectual property that's already been pulled together as opposed to a starting from scratch project. And I've tried films from scratch and again it's just like my entrepreneurial journey. Like, you know, they get a lot of momentum and then they kind of fall apart.

Well, they're all industries that have changed too. Like, so I was involved in music for a while and music has changed dramatically. It used to be you get a record deal and then that you. There were record sales and then there were CD sales. But then along came something called Napster and things changed pretty significantly. And now people make money on the touring and on the merch and on the licensing and things like that. And the broadcast industry has changed really dramatically. First with cable and now with streaming things. And it's just changing so fast. And yet there is still a way for people to make money. But a lot of people end up as dog food, right?

It's true, it's true. The odds are against you.

So segue into a story that I didn't hear, but I had a note from our producer. The two women standing in the business. What was that all about?

Oh sure. Okay, I've got this idea where one of the concepts in the book is that when people go out and try to buy a company, they end up doing it completely the wrong way. Okay. Start looking at the wrong things. The brokers by and large aren't even necessarily any better. They're asking the wrong questions because they're ultimately trying to what's the fastest way that I can process what this guy is going to look for for. Right, but the thing is, is that they're not incentivized to sit around and train first time buyers and hold their hand and get them comfortable. They're just like, what can I put in front of this person that will, you know, sell something that, you know, I've got my pipeline or what do I have on my menu kind of thing. The thing is, is that, you know, a lot of times people go in and they're like, I don't know what I'm looking for. I just want to kind of don't do it like that. They go in, they don't have a sense of urgency. You know, they just want to kind. They feel like the seller is trying to sell them something. That's not how this goes. People need to figure out their attitude, aptitude and action, ultimately figuring out are they the right person for this kind of job, what is it that they're good at? What are their strengths and weaknesses and what do they want their everyday activities to look like? And sort of by spending the time to do the pre work up front and defining what it is that you're good at is going to help you in the long run. Here's why. When you buy a company, a lot of people will look at the company and say, okay, here's the company I'm thinking about buying. It's a car wash, it's an underperforming car wash, or it's a great car wash, to use your example. The thing is that if it's underperforming or it's great, I've got to know what I bring to the table. This business after I buy it is not this business anymore. It's this business plus me. Okay? And there are four opportunity profiles. You need to understand what your skill set, which opportunity profile is the best way for you as an entrepreneur to drive value. And then you need to use that growth opportunity to identify the business that it is that you want to buy. All right? That's sort of the theory. Okay. Now I was working with these two potential buyers and they were looking and looking and like a lot of searchers weren't having a lot of luck, right? And it basically took that same kind of what I call prep funnel. Okay? I took them through it and we got to the end and I said, so basically you're looking for a business that Needs, you know, whatever it was, you know, basically like international supply chain management with online marketing. That's the opportunity you're looking for. I mean, you know, long story, but that was where we got to. And they looked at each other and kind of sat back, you know, dramatic pause. And the one said, the other, we should have bought that wine shop. And the other one said, I know. As soon as he started talking, I knew it. And they were standing in this business, and they didn't have that realization, what can I bring to this business? What is the strength that I bring to change what's going to happen? And so they're standing in the company. It had international suppliers everywhere. Okay. It was a small retail shop, but the opportunity was online for them. And so this is what they knew, and they missed that opportunity because it ended up selling to somebody else.

Yeah, yeah, yeah. That online piece of it.

So ultimately, you need to understand what it is you bring to the table and define your search around the opportunity that's going to match your skill set.

So even if you're not going to work in the business, you're going to be contributing something to it. Some expertise, some ability, some skill set, some resource, some connection.

Okay, so you're talking about absentee ownership. Okay, so I own a business that I'm absentee.

Well, I'm assuming I'm not gonna. If I'm buying a business, I'm not gonna do a whole lot in it that I'm buying it.

Wrong assumption. I think that's the wrong assumption. I think that it depends. It's one way or the other. Right? It's either active investing. It's like, I'm gonna work for myself and I'm gonna grow this company, or to your point, I'm gonna be absentee. And so I'm either looking for something that has management in place, or I know the manager. I prefer this route. I know the manager. I know that level five leader that has that experience that's going to be able to come in and take something to the next level. And if I will not be an absentee owner, if I don't have the manager before I find the company that I turn it around, private equity will do the opposite. They'll go out and buy companies and then, like, you know, pull from their bench and recruit for management because they've got all this capital that they, like, need to deploy. I'm the opposite. I want to know who's the leader. Then let's go find the business that fits that person. Those are the only Instances where I will be an absentee owner, but not.

A business that already has a leader in place.

So, I mean, if you're looking at acquisitions. So I live okay in this. I live in the space that's sort of like 500,000 to 2 million in discretionary earnings. Call it adjusted EBITDA, if that makes you more comfortable. They're slightly different, but I like to play under private equity. The reason for that is really twofold. One, I pay lower multiples because two, there's not a bunch of buyer competition flooding in saying, like, oh, I don't have to compete with other people. I'll sit there and hang out and talk with the owner who wants to leave. And I'm trying to figure out what are they taking with them. I think also paying those lower multiples adds to that kind of margin of safety with the business model.

So I'm thinking not about the ownership or executive strategic leadership. I'm thinking about the operational side. And I'm probably mostly now thinking from my own head versus our clients and people, necessarily our listeners. I'm like, oh, I'm really great at helping them the strategy and setting some direction and helping build the team, but I should never be involved in the operation.

Yes, I understand. I understand. Well, there's also like the E Myth, right? Like, there's that. That person that builds the pie shop because they're great at making pies and they turn out, I'm not good at making pies at all. And they need that business person. And so a lot of times you get the craftsman that is actually the entrepreneur in these smaller businesses. And that to me is a big transferability issue. And how do I pull that around? What are we talking about?

Well, we're talking about what, what it is you're buying, what kind of leadership. We're talking more about the. The people side of what should be in or not be in the thing. And I think what I'm hearing anyway is that you want to think about what role you're going to play, how hands on, what, what.

Yeah, And I do want you to work in business, but I want you to focus on the growth opportunity. So in other words, let's say you're really good at B2B sales. The company you're looking for shouldn't have a B2B sales component to it, or it should not be performing well, or that's what you bring to the table. Whereas you need to find a business where you're not working in the business in that way, because what you need to be doing is focusing on the growth.

Yeah, right, right. Yeah. I heard of a friend of a friend who was also a coach, and then they started franchising other things and they just were the coach for all the companies that they were buying into and franchise.

Perfect example. Perfect example.

That was like their, their role was.

I mean, ultimately, ultimately, it's, you know, what's your highest and best use? Right. And I mean, it could be, it could be running operations. It could, you know, I, I often think that there's. There's really only two kinds of people. There's, you know, revenue generators and profit maximizers. So you're doing marketing and sales and strategy, or you're doing, you know, operations and accounting and strategy. You know what I mean? It's, it's those few extremes. Yes. There's, you know, other components to it. But where do you live and then find a business that has the other piece already kind of moving because that's ultimately what you get to buy.

Yeah.

And then.

Well, I, I'm also reminded one of my favorite entrepreneurs out there for so many reasons is Richard Branson. And, and what I noticed that's great about so many of Richard's businesses compared to some of the things that I've done and some of the things that our clients have done is that they. He just goes into an industry that already exists and he makes it cooler.

He makes it better.

Right. Look, he didn't invent the airplane. He's like, airline should be more fun. Let's bring some fun to it. British Airways sucks. So I'm going to start Virgin. Right? The record companies are leaving all kinds of interesting acts and not maximizing the sales and key things. And he starts Virgin Records. Right. And I think that's one of the things.

He's amazing. I got to see him speak at wherever I was. I felt like I know him as a sort of a personality and I sort of know what he owns, but I didn't quite have the perspective until I saw him and I was blown away. Now, the thing is that one of the biggest objections that I don't even get it directly, it sort of comes indirectly around the buy then build model is. It's like, well, you know, creativity and like, you know, starting a new thing is sort of part of, you know, entrepreneurship. And so sort of like buying something feels like you're kind of cheaping out on that creativity piece to it. And what I want to say to that is I strongly disagree first and foremost. And as you can see from some of the Things that I've done. What I like to do is really marry the old economy industry with the new economy industry. Like, what are the things that I can take from the new economy that we live in and apply to the old economy and build something tremendously awesome? When you look at Jeff Bezos, Amazon, we think of it as a website. It's not. It's a network of warehouses. That's what they're doing. They're running old school stuff right behind the scenes. Tesla is a car company. Okay. So the thing is, I think that Richard Branson sort of innovating these companies, these industries that are already there and sort of creating a mouth.

It's not like they're trying to invent the brand new widget of something, but they're making it better in some way.

That's right.

So I remember the first time I got in the Tesla Model S and I got in and, you know, the doors opened up and then the screen was beautiful. And then, and then my friend said, all right, sit up straight, all right, watch this. And he like floored it and my head snapped back and of course it was quiet. And I was like, holy crap. And I grew up, I'm 54, and I grew up seeing all these amazing Detroit concept cars, but Detroit never sold us any of those cars. They made crap, a lot of it. And there were some cool cars in the mix, but there was an awful lot of crap sold to us years. And then they teased us with these concept cars and then sold us the Nova.

I mean, the first time I met Jim McKelvey, who's the co founder of Square, right, you know, big St. Louis entrepreneur, he's got his new thing here going. One of the first times I met him, he was talking to me about he had this idea to build a car company. And I have to admit to you, I was like, I mean, that guy's wicked smart, but like, he's got it totally wrong on that. And it wasn't until years later that I saw the Tesla that I was like, oh, Jim McKelvey had it right the whole time. I just couldn't see it. I couldn't.

Maybe the Edsel was going to be a good car.

That's right. That's exactly the point. Yeah, yeah.

So here's the things I think I'm hearing. There's a lot, a lot, a lot, a lot of companies for there. And it takes a lot of time and effort and trial and error to build some of the core things. So if you can buy that piece of it for some good value. There's capital out there, a lot of different ways to fund it. Bank loan, SBA equity, raise, a whole variety of things like that. And then you could bring some of whatever it is that makes you special, you know, what's your secret sauce? And then you can bring that into it. You can leverage new technology, new tools, new ways of looking at the world and the industry to make that better. So build. Right? That's the title of the book. Buy, then Build.

Bill, if I was going to bring it to a head, this is what I would say. I mean, you're exactly right. What I would say is we have, you know, baby boomers own more companies than any generation in the history of mankind. They're retiring at the rate of 10,000 per day, and that's going to increase and it's going to last for the next 19 years. Okay. There's a huge amount of inventory coming, coming up for sale. It's estimated there's $10 trillion in business value that needs to change hands. So the confluence of the baby boomers retiring, this the, like, easiest access to capital we've ever had. It's no longer a constraint. And the proliferation of online marketing is creating, in my mind, probably the opportunity of our lifetime.

Great. Yeah. So Walker Dibel, buythenbuild.com if they want to go find out more about Walker and your book and your work, go to Buy then build dot com. It's all there. It's been a real pleasure, super stimulating, relevant, I think, for our listeners, our clients, and for me personally. So I've really enjoyed our conversation.

Me too, Bill. Thanks so much for having me.

Yeah. Reminder to our listeners, we're here every week with a new episode, talking to somebody about the whole world of scaling up and developing yourself as a leader, developing your company. All four areas of getting your strategy right, the people, the, the execution, the cash, all dialed in and working well. We're out for software like multiple growth, growth of profit and time, making your whole journey as the entrepreneur easier and more fun. So that's our goal. That's what we're out. That's what we promise. You'll find all that@scalingcoach.com we've now got over 160 episodes out there. You can go search through them, find something on a subject that's of interest to you. Listen to it on your next run. Drive, airplane, flight, scalingcoach.com we've also got downloads of all of our tools there. And I'll give you a copy of the book for free. You just pay the shipping and handling and I'll give you a copy of Scaling up for free so you can get started. Scaling up scalingcoach.com is our address. Thanks again Walker. Talk to everybody next week.

Thanks so much Bill.

Don't forget to register now for our next workshop on Scaling up to get one of our limited 100 discounts for our purchase podcast listeners, while supplies last, just go to scalingcoach.com workshops and then enter the code sup that's S U p for Scaling up podcast when you register. We'll see you there. Special thanks to the original growth guru Vern Harnish. This show is produced by Lucy Summers and audio production is done at Podfly Productions. Audio editing is done by Albert Burge and our show notes are compiled by Uncle Codena and proofread by Tim McGowan. If you got some value out of today's show, please share it, pass it along, tell somebody else about the show, go over to itunes or Stitcher. Wherever you get, give us a thumbs up and a review. We could really use that. You can let us know the parts that you loved with an email to info scalingcoach.com or if you'd love to hear more of something, drop us a line. Info scalingcoach.com thanks again for listening and keep Scaling Up. Are you ready to turn your goals into daily wins? You should check out our Scoreboard software. Powered by alignment, it's the official software for scaling up. With Scoreboard, you'll get an AI driven coach for priorities and KPIs and it'll help keep your team focused on what matters most. With Align, you can track your goals in real time and you'll even see results on the go. With their mobile app you can rest easy knowing that Align has world class onboarding and support to set your team up for success. This is really more than just software, it's what I actually use to manage growth in our Scaling up client teams unlock clarity and results with Scoreboard by aligned. To try it now, go to aligntoday.com Bill G One more time. Aligntoday.com Bill G that's aligntoday.com Bill G Check it out and try it now.