Focus, Cash Flow & Comebacks: Inside EMERGE Commerce with Ghassan Halazon

Well, I never understood folks that shy away from learning what others have to offer, right? You know, so someone calls you and says, hey, I have this, you know, wild idea. I think we'll do great together and let's go to the moon and the stars. I think the immediate answer should be like, listen, sure, maybe it's not what we're looking for at the moment, but I'm happy to hear what you have in mind, right? Get that initial offer just to understand, number one, wouldn't it be interesting to for free understand what people are willing to value you at and what are they willing to offer you.

Welcome to the Startup CEO Show. I'm your host, Mark MacLeod. In this episode, I sit down with Ghassan Halazan, co-founder and CEO of Emerge Commerce. Ghassan's on a 15-year journey as an e-commerce CEO, over a dozen brands. He's done over a billion in GMV. He's sold companies. He now is a public acquirer of companies, and he's taken Emerge through a big turnaround, which he, uh, he covered on this episode. So if you're an e-commerce entrepreneur, especially, you're gonna wanna tune in, but there's lots of lessons here for entrepreneurs in all sectors. I really hope you enjoy this episode. Kazan, welcome to the Startup CEO Show. It's a true pleasure to have you here. How you doing today?

I'm great. Thanks, Mark. Nice to be with you here and good to be back.

Yeah. Yeah. It's been a long time since you and I chatted, so really looking forward to this. For folks who don't know, just to set context for what we're gonna talk about, could you Tell us about Emerj Commerce.

Yeah, so Emerj is in many ways a second coming of sorts. I've been in the e-commerce game for over 15 years now, building, buying, selling, restructuring e-com companies for a living. And Emerj was founded as a sort of next generation e-commerce portfolio company, and we did so acquiring early on distressed e-commerce companies and then sort of graduated it to more niche market leaders with a track record of profitability. We were diversified, um, and decentralized in our first iteration of the model, and today, uh, Emerge has, uh, sort of evolved into a much more focused portfolio, grocery and golf verticals in e-commerce and omnichannel. And, uh, we do so across Canada and the US, but with a maniacal focus on what we've learned, which I'm happy to go through today, and sort of a less is more mindset. And, you know, everything that we do is tied to brand and community building and really building lasting businesses.

Hmm, interesting. What made you pick grocery and golf as verticals?

Yeah, so once upon a time, Imerge had about 120 million GMV across everything from grocery and golf, which we're still in today, as I said, to pets, outdoor gear, experiences. And so we have this eclectic group of brands and assets. And the idea or the aspiration back then in 1.0 was that we would build this sort of Constellation Software or Berkshire Hathaway of e-commerce, we pretty quickly found out that e-commerce and consumer in general is much more fickle and much more hands-on than software is and than these boring cash flow style businesses out there that folks are rolling up. And so we really needed to buy stuff that exhibited best-in-class customer lifetime value relative to customer acquisition cost. That's a key metric or, you know, or sort of guiding principle of ours from an analytical perspective. But more than that, as I said, we wanted— we really wanted to find and double down on lasting brands. And so you needed to see that with community. You needed to see that with customer experience. And yes, we wanted businesses to be growing and profitable. We also wanted a big opportunity. And so both those verticals, which happened to be Emerge's original DNA when we went public about 5 years ago, you know, we kind of went back to them because we realized, A, we understood them very well. B, we had market leadership positions in them. C, we had a huge TAM in each of them. We think there's a multi-hundred million dollar opportunity in both of those verticals, and that's both organically and through acquiring a series of businesses in our respective niches.

I saw TrueLocal as one of your companies. I was a customer many, many years ago when I first got into CrossFit and suddenly needed to like eat ridiculous amounts of calories. And of course protein had to be a bunch, a lot of those calories. They, I don't know if they did this just in our gym, but our gym was promoting TrueLocal. Right. Yeah. And then I saw my buddy Adrian, Adrian and I were the ones doing the Tulum event together.

Right, right.

And he had the founder of TrueLocal on his podcast.

Saw that.

And it sounded like a tough business to run.

Yeah, you know what? I think now that the dust is settled and what I would say is the verdict is out on the model and the business. I always like to say, number one, you know, TrueLocal is a brand and a community. Like very few others. It's a very special business that intertwines between local farmers and suppliers with customers that care about their local supply chain and, you know, want transparency from where their food sources and genuinely care about supporting local. In a year like this where Buy Canadian and support local is front and center, that's been a huge tailwind to the model. But originally building that model from scratch for the founders that came before us, there is a lot of heavy lifting. You needed to figure out your supply chain, you needed to convince farmers and suppliers to get online on a region-by-region basis, which to their credit, they were able to unlock unlike any other player nationally. So TruLocal's the only national player that does this. There are other smaller regional folks, but we're number one in scale, but also the only national player. And I think once that foundation was set, when we were able to sort of come in to TrueLocal, it was more about right-sizing the business and taking a data-driven approach, i.e., growing up the business to start making specific choices around where to double down, how to price the product, obviously, how to elevate the customer experience in certain ways through technology. And then a bit of AI lately. And I think that like when you look at the model and the TAM, and you know e-commerce quite well, Mark, one of the largest hidden gems, and I don't think they're necessarily a secret anymore, in all of D2C is a company called ButcherBox in the US. And that is a $500 million revenue business bootstrapped from the ground up. And you know this as well as I do, you cannot reach hundreds of millions bootstrapped in a broken model or in a very difficult model. That's not to say it's not a hands-on model, which it is, but scale and profitability are available both at $500 million in our— and our level with Emerge, which by the way, I mean, we're approaching sort of $40 million GMV now collectively between grocery and golf today. So it's a more streamlined portfolio, But we have scale and profit and cash flow. So I think that, that's to say it's very hands-on, but at the end of the day, compared to all the hundreds of e-commerce models that we've screened and the tens of businesses that I've personally operated, whether it's acquired, restructured, sold, I can tell you TruLocal has some of the best CLTV to CAC ratios out there, and that's a testament to the brand and the model.

Yeah, yeah, I enjoyed it for sure. All right, so food, I get that we all eat golf, especially in the context of a North American market, feels seasonal. So does that create lumpy performance for you?

It's a good question. And, you know, we kind of look at grocery and golf in tandem as, you know, sort of seasonal parallels to each other in a way, you know, get true local in Q1, you have your sort of new you and health Focus, which is the biggest time of the year, and correspondingly, the lowest CAC available is during those early times. In fact, we're celebrating 10 years of TrueLocal this January, so it's going to be a big deal for us campaign-wise. The golf is a little different, and it's actually a little nuanced, maybe to your surprise. But Q4— rather, Q2 naturally is the start of golf season, so no surprise there. It's huge. And that was a big reason why Emerge did the numbers that we did in Q2. We had a million-dollar EBITDA quarter, and you know, a big part of that was the new acquisition we made, a company called Tee2Green. So Q2 is pretty clear-cut. Q3 is also mostly golf season strong. Starts tapering down in September, October. Obviously by then things tighten up, although the nice weather right now has been helpful. Keeping the flow and the momentum going on golf. And then Q4, interestingly enough, part of our business, specifically the experiences and tee times part under underpar.com, which is the market leader in Ontario for discounted experiences and available in California, Arizona, Florida, and other golf states, is actually quite solid because golf courses come to us for their presale vouchers for next season. So they'll start discounting and it's sort of a cash flow advantage for these courses to pick up all that cash and then the redemptions happen, you know, in April, May, June, July. And so it actually is a pretty solid quarter for experiences, less so for some of the equipment and apparel, although Black Friday, Cyber Monday is, you know, a big boon to that. But then Q1 is sort of where it gets quieter on the golf side. But fortunately in the US, especially in California, our largest market in the US, the weather is nice all year round mostly.

Mm-hmm.

So that offsets that too. So it's a little bit of that effect.

Got it. Cool.

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So you sort of alluded this to already, to some of this already in terms of the importance of LTV to CAC, kind of say these lasting brands, but what else is on your checklist when you're looking for an ideal kind of target?

Yeah, no, it's a good question. And that mindset has evolved over time. I think we've moved from what I would characterize as sexy and high-flying to frankly more boring, more consistent, more cash flowing today or this year rather than down the line. And so a great example is T2Green, the acquisition we just made. It's one of those old school, 38-year-old business. The founder and operator bootstrapped it, sole proprietor, never raised capital, has a long-term relationship with one of the big banks. And, you know, so we came into this business and in a way were, you know, quite opportunistic in the sense that, you know, the founder wanted out, needed other personal, had other personal reasons to move to, you know, Florida and so forth. And we were able to structure this deal quite flexibly. So we got it at 2.5 times EBITDA, a bit less than that. We got 5-year terms on the payment plan. We had 8-year terms on the inventory that we acquired. We acquired a couple of million bucks in inventory, and you're talking Callaway, TaylorMade, Adidas, Puma type inventory, like, you know, top-notch stuff. And so obviously that's a really solid structure and multiple, and it's not an everyday thing. But I, I would say we side on that sort of equation where we can plug something in and importantly have that synergy on day one, right? Unlike in our past lives, we were buying pets and then outdoor gear and then, you know, golf and grocery, nothing to do with each other. No real synergy here. The reason we were able to grow, um, Tea to Green 31% in the second quarter, which woke a lot of people up to what we were doing again, after being in the trenches and turning around the company over the last couple of years was the fact that on day one, we were able to apply everything we knew about digital ads meets golf, as well as bring our reach. We have 400,000 golfers that we can now promote Tee2Green's retail stores, their road shows. I should have mentioned they do about 70 different pop-up stores across Ontario. Every weekend they'll do 2 shows, you know, in Kingston, in Sarnia, in Newmarket. And people will flock to these shows for all this discounted equipment from prior years. Think like clearance or outlet style hubs. And so we're suddenly with our advertising and with the reach we brought to it, these nice little shows turned into mini like rock concerts. People were like, that's amazing. And we got great content out of it for future ads and And, you know, I think it's really transformed our thinking that the Emerge of today is looking to acquire stuff that's actually already working, already profitable, not necessarily crazy growth, and digitize, modernize, and apply all our analytical frameworks to expanding and accelerating the growth.

Interesting. So are you— would you say you're looking for diamonds in the rough?

Yeah, to some extent. I mean, I think that, you know, we're really, well, I'll tell you what we're not looking for. You know, we're not looking for, you know, growth at all costs. That's a given. We have no interest in venture-backed companies unless they're de-stressed. Okay, so we're not looking to jump into the next round or be the next, the bigger next fool kind of thing. We're way more interested in saying, okay, this is a smooth operator. He, him or her have, done this, been through the trenches, have a really tight team and a recipe that works well in today's relatively volatile environment. And then we're gonna come in and work our magic just like we did with Tea2Green, just like we've been doing with TruLocal after, you know, essentially transitioning the founders out. There was a period where the business came down from the peak essentially, which is when they laugh. And over the last couple of years, we've really reignited that growth, but we've done so at an increasingly profitable clip. And we only do that now because again, like we figured out what we do well and we figured out what to be focusing on. And so we have no interest in coming up to clean up after folks. It's too much work or to reverse engineer profitability when it's not already there. It's just not our jam. It might be someone else's jam. Our jam is for there to be cash flow and profit today, which means less pressure on us to execute.. And as you know, when you have less pressure, you tend to do a better job and have a bit more freedom with what you're looking to apply.

In the beginning of your career, you were in investment banking. Were you in this vertical? Is that where you got some of the inspiration for this?

They call it a recovering, uh, yeah, yeah. Investment banking career. I, I, I don't know. I think, I think, look, certainly having done a couple of years on the street in, um, in New York with Citi, did my MBA at Georgetown and all of that early influence of capital markets, capital allocation, M&A, you know, capital raising, you know, of course has come from those areas. I had started my career in e-commerce at 25. I guess you can call it a career now. It's been 15 years, but I moved from Wall Street, which at the time we had really tough years on Wall Street, 2008 to 2010 was my stint there.

Yeah, I remember.

So not exactly. Right. I think as time goes, you know, the slogan is I was an investment banker, but no, I was actually a couple of years on Wall Street just kind of grinding out, trying to survive really tough times. But my first iteration was not M&A driven. We built a really cool company. We were in the Groupon space at the time, and we built a $0 to $30 million company, and then we merged with our largest competitor as that deal space fizzled. And so we had a, you know, kind of a couple of hundred employees in my mid-20s, and it was sort of the first thing that I touched, and it was you know, this feeling of invincibility at the time. And obviously as the space fizzled, we got punched in the face a couple of times. But you know, I kind of came out of that experience thinking there's gotta be a smarter, more cost-effective way to scale e-commerce. And that was around the time that, you know, Shopify, who you know very well, and I loved your show with Tobi and—

Amazing.

Yeah, absolutely. Shopify and other enablement companies in e-commerce had started emerging, pardon the pun, and, and, you know, that paved the way for the bootstrap e-commerce entrepreneur of today, right? That's what— because before you couldn't, you couldn't do this. You had to, you had to have a huge dev team and you had to like it. It took money and it took time and you were losing money. And so you had to be bailed out by that next round, even if it wasn't called a bailout. Bailout. But with these emerging technologies and platforms, you could now find 8 people, you know, tucked away in somewhere remote running a $1 or $2 million EBITDA company, right? And that's where the idea of Emerge came from, which was merging e-commerce companies under a holding company and acquiring stuff that works today, and, and is profiting today, and then help them share in technology, resources, back office. And that's how this whole thing came about. And, and, and truthfully, in what I call Emerge 1.0 now, which was, you know, kind of that first 3 to 5 years, including the original go-public phase, uh, around the pandemic, I think the mistake we made in retrospect was that we went and acquired things that had nothing to do with each other, thinking that these businesses were consistent enough on their own and steady enough. And so the problem was that a lot of these things peaked at the pandemic when everyone thought that was the new norm. Mm-hmm. This would become the starting point for more growth. Turns out a lot of that was artificial and, and in pretty much all of it came down from the peak at the same exact time, Mark. Acquisition-driven companies like ourselves were loaded up with debt to acquire companies and minimize dilution. And that interest rate, interest rates on that debt skyrocketed as, you know, those businesses decline, you know, causing this essentially perfect storm, right? And so that's where we're like, probably need to focus on fewer bigger opportunities and go deeper into them rather than go broad. And that's kind of what resulted in the, the merge of today.

Okay. I, I wanna talk a bunch about, yeah, about that, that transition. Also life as a public company. But you said something really interesting that I wanna dig into first, right? Like with Bytopia, you merged with competitor and like that happens sometimes where these conversations show up and like, uh, some of my clients tell me like competitors reach out and they want to talk and hey, should I talk to them? Like they're, they have hesitation. So what was that experience like? And do you have any recommendations for folks? I realize it's a sample size of one, but you know, yeah. Any recommendations having gone through it for, for folks, um, getting reached out to, do you mean, or, or like meaning someone's listening or watching their competitors reached out to them?

Oh yeah.

How do they approach that? Yeah. What did you learn going all the way through and marrying your competitor?

Well, I never understood folks that shy away from learning what others have to offer.

Right. I agree with that.

You know, so, so someone calls you and says, hey, I have this, you know, wild idea. I think we'll do great together and let's go to the moon and the stars. I think the immediate answer should be like, listen, sure, maybe it's not what we're looking for at the moment, but I'm happy to hear what you have in mind. Right. Get that initial offer just to understand. Number one, wouldn't it be interesting to, for free, understand what people are willing to value you at and what are they willing to offer you. That's great. Now, some people say, well, I don't wanna be sharing, you know, all my competitive edge and tricks and the whole shebang. And you really don't have to. So you can say, hey, you know, present me an offer. I'll have to chat with my, you know, my board and management team and so forth. And I'll, I'll get back to you. And, you know, if you negotiate in good faith and find there's common ground, then it's tit for tat, assuming the size is equal, right? If someone's a billion-dollar company and the other one's a $10 million company, then you have to make a decision. Are you willing to give a bit? Because they're not going to buy you if you don't share. So don't feel like— it's kind of like that saying too. It's like, what are we like? Like the idea is saying, who cares about your idea? Same thing, like competitors, unless you have something super proprietary, don't think, you know, they're living and breathing and thinking of this. They're probably looking at 10 to 20 different things to buy. Like no one's dreaming of, you know, your little P&L and a couple of things on your margin. Like unless you have something super special to hold back on, which in which case, yeah, that makes sense. Don't feel like everyone's out to get you all the time. Like no one cares, to be honest, you know? And even I, when I look at, oh, I mean, we were on the other side of this. We were looking at tens of different companies. We had tens of LOIs out. Like last thing on my mind was I'm gonna steal their ideas if we don't do this deal. I mean, hey, I learned a thing or two, But that's fair game. So I would say like always be open to understanding, you know, what that looks like. But in terms of like mindset, I think only, only the founder, only the CEO who's being approached knows in their heart of hearts if they, you know, if they are willing to continue on the same journey, if there's alignment philosophically, culturally, body language is important. There's a lot that goes into whether these are the right people for you. That's a totally different question on whether it's the right time for you to sell.

Sure. Yeah. Yeah. No, I agree with that. You know, so I agree, like you don't necessarily have to open up the kimono to get an offer, but obviously the more you share, the more qualified the offer is. And so it's a bit of a dance, right? And what I tell folks is like, show a little skin. They show a little skin, like, you know, you, it's like back and forth, trust building. But if you get an LOI that's based on nothing, that is worth nothing. It's toilet paper, right? You know, so you have to disclose a bit.

I think I take it for granted a little bit because we've been a public company for 5 years and we're naked out there. Like, whatever, like look up whatever you want. Now, obviously operational chops and details around what we're doing is next level DD kind of thing. But like our audited financials are there. Our metrics are there for the last 5 years. Everything is out there. So, and guess what? I'll tell you for what it's worth, I don't see any other competitors beating us because of it. We're still number 1 in our 2 verticals, right? Like, so there you go. Like, it's all out there for everyone to see and it still doesn't move the needle. So, there's not too, too much to worry about unless again, there's some proprietary technology that you don't want to lift the veil on yet, and that's fine. You can do that after a signed LOI too.

Yeah, yeah. Yep. That's fair. All right. So let's talk about going public. You know, one of the reasons why I moved on from FreshBooks, which was my last CFO gig, is because they were threatening to go public. And I use that word threatening very deliberately because I have no desire to ever be the CFO of a public company.

And then not only me, you're the one with the white beer. So I don't know what you're talking about.

That's true. I'm also considerably older than you, so that's fine.

No, I got, I got a couple.

But not only are you public, but you're public on the TSXV, so the junior Canadian exchange for any non-Canadian listeners. So you're a truly brave soul. So yeah, tell, tell me about that, that decision. Yeah, the whole process to go public and, and then let's unpack life as a public company.

Yeah, there's a lot to unpack, so I don't know if we have enough time for all of that, but I, I'll tell you that the Emerge model that we built early on to take advantage of the opportunity of rolling up niche market leaders at reasonable multiples, and, you know, sort of leverage our collective scale, leverage our ability to access capital, leverage our stock. All of these things made sense in the context of being public company, right? Being a public company gave you, on paper at least, access to all of the above. And the thing that jolted us to go public, for better or worse, was the actual, uh, the pandemic craze. So e-commerce and a couple of other verticals, remember Zoom and some of the health tech stuff, every— these were like what, what way they used to call back then COVID darlings. I mean, it was a terrible terrible term, but especially with people suffering, but at the end of the day, e-commerce got lifted up. And so we were approached and the people around us in those early days were very heavily concentrated on Bay Street, so Wall Street of Canada for your international listeners. And so there was a tremendous appetite to raise capital for us in a very immediate fashion, with very flexible or open terms, common stock, no pref shares, no board seats, no nothing to go out and leverage this capital to acquire companies at less valuation or multiple, lower multiples than we were trading at or being valued at, which is the ultimate arbitrage for this sort of stuff, right? And so it was very compelling. We had a great pipeline in front of us. We were starting to do very well with our existing portfolio, which as I said, constituted the grocery and the golf and a bit of experiences. And so the actual reason for going was to propel and to accelerate what was already working. And with that capital early on, Mark, I gotta tell you, it felt like the right decision when we went public. You know, in those early days, it kind of happened exactly as planned, if not better, early on. In other words, we traded higher than we ever imagined. We were a $150 to $175 million company at the peak. We got the capital we wanted in short order. We took that capital, we matched it with debt, that equity capital, we matched it with a debt facility, and we went away. We went shopping and acquiring great businesses, great brands like TruLocal. We acquired a company called Wholesale Pet. Which was like a $3 million EBITDA business that we subsequently sold to Tiny as part of our, you know, kind of decision to zone in on grocery and golf and restructure the debt later on. And so we bought like credible quality businesses. The one flaw, and there were a few intertwined in this theme, but the flaw was that the miscalculation was that we bought things that number one, were at, turns out were at the peak of their existence and not the start of a new wave. Okay, so we timing was off. We matched it with debt thinking revenue would go up, but instead our debt levels were too high for where they leveled out at. And interest rates going up obviously didn't help anyone, especially debt-driven roll-ups. So all in all, I think what that, that was just a conundrum that frankly, by the way, wiped out many e-commerce aggregators, they call them aggregators, they're companies that buy, bought e-commerce sites, Amazon sites. And these were like supposedly world-class operators. Like one of them is called Open Store, which is backed by Keith Rabois from Opendoor. And that business wrote off 95% of its book and wound down most of that business. Like a couple of months ago, Thrasyo, the face of the Amazon rollup, billions of dollars raised, went bankrupt and came out of bankruptcy and, you know, kind of reorg. We came pretty damn close, I gotta tell you, because we had a mountain of $32 million in debt with a business that was supposed to have, you know, $7, $8 million in EBITDA, suddenly had $4 million in EBITDA. And so if you have $4 million in EBITDA, that sounds nice on a press release, but wait till you find out you have $5, $6 million in debt servicing cost, interest cost, and payments owed to brands. So the result there was that like we had to focus and obviously we made it, not only survived, but now we've sort of made it to the other side where we've eliminated 80% plus of our debt, paying down the debt with selling off these non-core businesses. But I think I kind of detoured here to tell you what happened, but like back to your original point on being public, it makes sense if you have consistency, you have stability, you know how to use capital markets to your advantage. And frankly, stability is the word because if you're public, you can't be declining.

No.

So that's where there's no forgiveness and that's why e-commerce is naturally volatile. So why would you do that? So good point.

Mm-hmm.

That's a mouthful, but that, yeah, that's a lot of learning.

And then, you know, stock markets of course want not just stability but growth. And then, but you actually shed some assets and your GMB went down. Right. So I'm guessing you got punished for that.

We got punished for that. We got mostly punished for having too much debt relative to our profit at the end of the day. Of course, no one likes declining assets. And the reason Emerge in the last couple of years is up 100-something percent, although we're still down from the peaks, well down. But the reason we're being recognized now is this new model that I mentioned that, that, that is focused on winning categories with synergy and buying things very opportunistically and modernizing them and growing them like we're doing. Suddenly our new model has high double-digit growth. So if you look at Q2, Emerge grew 70% year over year. And of course that's not apples to apples 'cause we've added the acquisition, but even stripping the acquisition out, we report that our organic growth is double digits as well. So in other words, apples to apples comparison. And then we are profitable. We did $1 million in EBITDA in Q2, which was a big, a record for us under the, this new, model. And then our debt's down to $4.5 million net debt from $32 million. I even still surprise myself saying that because there was no way in hell we thought we were going to get there. But look, we fought the good fight. But now my point is on the growth side of things, we've layered in organic growth underlying everything, which is very important. And that's the growth you don't want to be hiding. That's the growth you need to be keeping up., but then on top of it with acquisitions, we, we can aim for 50, 60, 70% growth overall, which is our model, right? So if you look at a Constellation Software, as you know very well, their organic growth is more like 2%, 3%, right? But, but then they're growing 20, 30% with the acquisitions.

So when you're going through all of this, at one point on paper you're worth a lot. Over time, you're worth less. I mean, what, what was your state of mind?

That's a really good question. Um, and I actually had a partner who's no longer with Emerge right now, and I actually gave him, and I don't know why I gave this talk, but he reminds me of it. Like the eve of going public, I told, we were having, uh, a beer kind of celebrating the, the event, um, at our, at our previous office, and we were sitting on the weather was like reasonable. So we're sitting outside on this balcony of the office and I told him the biggest thing that's gonna piss us off is that I know, and this wasn't confirmed yet, like we were going public at a certain level and I just said, I know that we're gonna see the stock fly like we've never imagined before at some point.

Mm-hmm.

And we're gonna feel so good but so bad at the same time because we're not gonna sell any stock., you know, in, in venture when you're in, you know, in, in Canada and in a lot, a lot of other places, you don't go out taking company public, raising it to here and suddenly selling your stock because everyone runs away. If you run away, you're the lead, everyone's behind you. You're still a relatively young company. You don't get to do that. And obviously there are people who do that and ruin their reputation and make some bucks along the way, but I'm not one of them. And so I told them, we're gonna, we're gonna see this thing fly. And it did. It flew to $150, $200 million. I owned, you know, at the time, probably something like 12 to 15% of the company. And I did get some looks and some calls around, you know, but at the end of the day, in my mind and in my heart, I probably felt like that was running way too fast for what we were actually worth. But I'll tell you something, Mark, I don't think now in retrospect where we are now is also what we're worth. I think we're You know, we're undervalued and I think it's just a matter of time of building up the real stable picture that reflects a real valuation, which is hopefully OTW.

Right. This brings up for me, and you could speak to this theoretically or actually, but like when I look at the business and I agree it's undervalued, it's trading at a fraction of revenue, I think in terms of its market cap.

Half times revenue. Yeah.

Yeah. So why not take it private?

Yeah.

Infinite capital seemingly in the private capital markets. You could get a PE sugar daddy behind you, continue the acquisition spree, but without the scrutiny and the costs of being public.

Yeah, I gotta be careful with what I say here as a public company CEO. Yes. But no, I can, I can at least opine big picture and what I'm seeing out there. You know, obviously there's been no shortage of companies. That have been hit, have been, you know, pushing hard to recover and never really seen full recovery and eventually going private through these partnerships with PE and otherwise. And you can't blame them in many cases. And, you know, I think that my stance on it when folks have asked is, first of all, A, I was too busy saving the company when we were low, just to be clear, a few years ago.

It's fair.

It was so damn dark down low in the basement that I had no time to even think about whether that's something I wanted to do. I had a $30+ million mountain of debt, and all I could think of is, listen, the minute I made the decision that I'm not bailing, all I could think of is how the hell am I going to climb this mountain and bring it down, right? And when I'm there, I don't want to be talking about this and that. Like, I'm just like, this is the focus I had full loyalty and alignment from my team and full support from my board to clean this up, which is critical. You need the people around you fully aligned and supportive, and, and they were, and they gave me the rope to do what I do best, which is go in, clean up, negotiate, get scrappy, and make things happen. And, and we really did. And the irony is, by the time I looked up, you know, suddenly our valuation is now a couple of hundred points above the low, by the way, a couple of hundred percentage points above the low, which was really low. So that's not the point here. The point is that I've gone through the hardest and ugliest and darkest time and it's like, well, now I'm starting to be rewarded. And now, you know, public markets could get very interesting for companies coming out of the dark side and surviving crazy times. So look at Carvana. Carvana is, you know, probably the the comeback of the decade, if not the century in the public markets, you know, kind of much bigger car company that was distressed, had some debt issues, came out of them, figured its way out, survived, and it's now up hundreds or thousands of percentage points. I own some shares at a very low value and just because I'm a big fan of, you know, watching companies get out of distress and I think there's huge arb there. So same thing with Emerge. I mean, we're up, technically we're up 8x from the low. The low was close to zero. Let's be clear here. So, and I think by the way, we're still 15, 20x away from where we, you know, we can go and go back to. And so I really do look at this and say going private now, not as interesting as maybe it would've been at flat low at the very, very low, because now I think even if we're undervalued, I do think there are eyes on us. Emerged moved $30 million in volume over the last quarter. This isn't just a doubling of stock since July. This is a doubling of—

You're talking about trading volume?

Yeah, yeah, yeah.

Okay.

Yeah, yeah. So we just—

Okay, so it's not trading by appointment.

Exactly, exactly. And that's the point of this, because usually when you see companies hurt, there's not much trading on the venture and so forth, but we've traded $30 million in the last 3 months, which by the way is 10x up year over year. And so for me, like I was just at a conference yesterday and I just had people that have sold, made money on Emerge years ago, 3x, 5x what they bought in at, looking at it for the first time saying, okay, so this is happening all over again, but probably we have this, you know, with a guy and a group that has the scars, the learnings, and frankly, the proof that they stuck around and stuck with it. And this is exciting. And now let's build for the next 10x, next 20x, because I've done it before. I can do it again. And I think we've earned a lot of respect and admiration in the community for making this happen and kind of continuing the course. So yeah, private. I'll tell you something. If we keep doing what we're doing and we don't get the real recognition, then of course, you know, in a year, in 2 years, 3 years, Of course, we, we'd be crazy not to look at other options, uh, if the market doesn't reward our, our continued progress, but it's starting to.

Yeah. Love that. So I'm curious, I dunno if you had like a pie chart for your time, how much is spent operating, or I guess you have operators, but working with them, acquiring versus investor relations. Maybe there are other buckets, but those strike me as—

Yeah, some of the biggest for sure. I, I would say that The Emerge of today is much leaner, which means I'm running out of time a lot, right? I'm doing a lot. You know, I'll just tell you what I, you know, kind of do at this point. I got, I'm the CEO and the founder of the holding company Emerge and the public company. So I deal with everything on the investor side, our messaging to them, our IR, our PR. I have no firms. That's us. That's me inside here internally running that external ship, working with the CFO on the audits and on our reporting. And so all of that jazz is one part. Honestly, the percentages with the other buckets I'm about to share really vary depending on time of year, right? Like audit's coming up, I'm deep. But then I also personally operate TruLocal. I am effectively the CEO of TruLocal as well. We have a terrific lead for the golf vertical who, you know, has been with me through this venture and the prior venture, Morris Finn. He's a great golf operator and an e-commerce operator as well. So he has most of that covered. I'm only there for guidance and, you know, advice. And I would say that if I were to really just drum it down, I would say it's probably 65% running through local, 35% public. And, you know, finance and audit and working with HQ.

Okay. So never a dull moment.

Never, never a dull moment. Can't live with it. Can't live without it, for better or worse. But you know what, Mark? Like, I think, you know, I almost— I don't want to give the impression that making money isn't important. Like, it's obviously why we're here to some extent. Like, we want to build great brands. We want to impact communities. But the reason I'm still here is like, I genuinely see a tremendous upside in what we're doing. And I actually love connecting these dots. Like, the harshest time was the last year and a half. But if you think of that curve as I chart out, you know what I just said, $32 million in debt, the path to bringing it down to less than $5 million. So imagine how much better I feel here than here, than here, than here. I feel such tremendous energy and momentum and adrenaline thinking about what we've been achieving. And it's contagious because then team members are like, wait a minute, like some of the people that aren't with us or, you know, they said this couldn't be done, but it's actually being done. Like, you know, TrueLocal is supposedly a small niche little business that can't be profitable. No, it's not right. We've grown it again from the lows. We're double where we were right before the pandemic right now. From a revenue perspective, from a profit perspective, we're double where we were last year. And then the golf, like the acquisition to come in and say, oh, you know, oh, Emerge, you know, careless that, you know, they bought different companies or whatever. And now we buy a company and we grow it 30% and we make our money back in 90 days. Like that is, that is like sweet revenge. I don't know against who, but I'm loving every minute of this comeback. We're still in the middle of it, but I'm really excited about what we're going to show next.

I'd say a 90-day payback on buying a company is reasonably unprecedented.

I did tell the board not to get used to that notion because yeah, yeah. Or that I can do that again. I'll be the first to say, and, and when I say I, I mean the team and Morris and everyone involved in Golf. Yep.

So I'm curious, other than hanging on for dear life, what have you done to grow yourself a CEO so that you can be there through all the highs and lows and be the CEO the company needs?

Yeah, I think, I think, you know, one of my favorite things to do is write. I've been doing a lot of writing. Some of it makes its way to social and some of it makes its way to my notes. So some smaller thoughts. Coincidentally, I was telling my wife, we'd just come back from a trip that like literally my favorite place in the world to do some writing and some thinking is on a plane with no Wi-Fi. I'll never do Wi-Fi on a plane as a rule, whether it's available or not. I just love the productive quiet. Not so much when my daughter is flying with us. She's 2 and a half. Absolutely wild. But, but, you know, so I really enjoy writing and I have, I have a little— I'll tell you on my little tip. I don't know if it's a hack or not, but I have in my notes, I characterize things in different ways. So I have, for example, I have this, you know, ongoing list of something I'll just I call that specific note deep thoughts. Okay. And so every once in a while in this crazy world of ours, the problem I find, at least for myself, there's not a lot of follow-through with thinking. Right. It's always like we're running around, we think a bit, then we get, you know, jaw to death.

Yes.

And so occasionally I'll be like, okay, like, for example, let's say I'm frustrated with something and again and again, I'm just I'm not delivering what I think I'm capable of in something, business or otherwise, then it's like, okay, let me run with this thought a little longer. So it might be on a walk where I'm like, okay, I'm going to just think about this one thing. I'm not going to allow myself to think about anything else. Okay? Like, and I take my thought all the way to the end. And once I conclude that, it's usually like a really interesting conclusion. And I'll jot down that. I'll jot down that. And so this deep thoughts thing is like, I'll go through it, let's say when I'm on a plane once, and I'll just be looking at all my deep thoughts, just as an example, right? So I do a lot of that lately. I've been doing more of that. The other thing that I, I'm adamant on, I don't know if this is good or bad, but I've never joined any group workouts or any gym trainers or any of that. Like, I'm adamant that my gym time my workout time is my alone time. And I usually save, I like saving a lot of podcasts early, like when I have free time on the weekend, so that when I go to the gym or on a walk, I don't have to think about what I want to listen to. I just have like 6 or 7 in a row ready. Some of them are your show, by the way.

Excellent. And great to finally meet my one listener. Yeah.

And don't worry, I'm not going to be saving my talks and listening to my stuff. And so anyhow, that's— those are some of the things that I do. But a lot of it's like listening. I love listening to— a lot of people love this non-business stuff. I just, I really enjoy— I love listening to roll-up stories, big stories, bootstrap, hidden gem stuff. Like that's my bread and butter, you know, that's what excites me.

I love it. Well, I can tell you writing is super powerful. I've written for a large chunk of my career.

Right.

And I find that, yeah, writing crystallizes my thinking. I learn through the process, like I get very clear on a topic. So you're definitely preaching to the converted there. I'm curious, uh, I'm also like you, airplanes are very productive for me. Um, back when I was at Real Ventures and I would go to SF all the time, I would pound through emails and then I'd get off at SFO, connect to Wi-Fi and everyone's inboxes would blow up and like, oh, Mark's landed. They just knew.

Right.

But, and then my eyes would be bloodshot 'cause I worked so hard. But I'm curious, like, so that is an example of deep work, right? Having a deep work block, in this case a plane. But I'm curious, do you make deep work blocks in the office or is the office a bit crazy?

Yeah, it's called the weekend because the office—

Okay.

Yeah, yeah. The weekend. No, no, the office is a shit show.

Okay.

And it's more like working hours are where I view myself working for others on the team. What do they need of me? What can I do to help them win more? And, you know, I gotta check boxes on their list. Early mornings, which I don't have as much as I'd like, especially with my daughter now, you know, those are, those are sacred and very productive. I love the advice. I don't know who said it, but I love the idea of waking up and not looking at your phone for a certain amount of time and the mentality that you decide in the morning what you need of the world, not the other way.

I agree with that.

Right. And then eventually once you figure out that, you look at your phone and you see, oh, well, a board member needs this. You know, a vendor needs that. And it's like, okay, now I can get to everyone else. At least I know I've set myself up for success today. I love that advice. I don't follow it nearly as much as I love it. But yeah.

What that is an example of boundaries, right? And intention, like when you, when I hear you say I'm here to serve others, on the one hand, I get that, but it also might mean like your day is defined by what's in your inbox or your Slack messages or your meetings. And then that's not necessarily an intentional direction. Like when I, again, when I was a banker, we were doing 6 deals at a time, right? It would've been so easy for me to just get caught up in that. And then just like, let the, let this happen to me.

Yeah.

But I actually carved out my entire mornings, no meetings.

Right.

That was my time for deep thinking, thinking through deal strategy. Let me review the data rooms before it goes out. Afternoon, like noon onwards, shit show. But I didn't care because the things that were most strategic, I, I did in the morning. So it wasn't just like, Yeah. First thing or the weekend, but like it, it was worthy of real estate in my day. And you know, you may, as an example, at one point be like, hey, I can't be CEO of the holding company and run TrueLocal. I need to hire someone to run TrueLocal, in which case now that's a strategic priority.

Right.

And then having those deep work blocks means it's gonna, you're gonna fill that far faster than if you're doing it along with the 100 other things that you're doing, right?

I agree with you, Mark, and I think that, yeah, longer term that would be the plan, you know, kind of parachute it in for the restructure and the cleanup. I think we've accomplished most of that. I'm very happy with it. I think the team is pretty autonomous, quite frankly. But I think over time, yeah, leadership there will also make sense. But I like what you said about blocking things out. I kind of been— what I've been doing at least is I find I looked at when are the days I am most miserable? And they—

okay, that's excellent. Good.

And they tend to be, uh, the days where I have early morning meetings with things that are not like— that I deem like absolutely critical. So for example, just a weekly meeting, it doesn't matter with who, but like there's a weekly standard meeting at 9:30 AM or 10 AM, and it's like, okay, like let's say my, my morning is off to a late start for whatever reason. I worked late, my baby was sick at night, whatever. Then I'm like, what the hell? Like, these are the same people. It's the same meeting every week. What's the point of it being so early and starting my day with this? Like, nothing against anyone. It's still important, but like, it could happen at 11 a.m., you know? And that way, at least I know that no matter what, I have a good hour of quiet and planning, you know, even if my schedule is delayed a bit or my start's delayed a bit. So now I try not to schedule any calls unless it's like a board call and there's like conflicts with time and stuff. I try to schedule no calls prior to 10, 10:30 AM. And that way, like, you know, it's sort of that earlier morning is for sure mine. And I have a bit of time to catch up as well, especially if I'm running late, which sometimes I am. Yeah, but I like what you said.

Well, I love that. And maybe as we wrap up here, this is not intended to be a coaching session, but I cannot help but react to what you just said.

I'll take it. Cool.

And, um, again, I love this notion of, hey, I'm here to serve my, my team and kind of unblock them. And that, that's commendable. Uh, and what I'm about to say might result in a similar outcome, but it comes at it in a different way. Like one of my fundamental beliefs is that the CEO is customer number one, meaning like Anyone who reports to you, their number one customer is you. They are here to give you leverage. And like, no one has more context or motivation or probably ownership in the company than you. And you look at the CEOs who go all the way, and I would say they're selfish and they design their role around like their unique superpowers and around the things that give them energy. And like the example I bring up all the time is Tobi from Shopify, right? Like it's not like Toby is the CEO. He should be the guy doing the CNBC Squawk Box quarterly Wall Street stuff, but he doesn't wanna do it. Harley does it. Meanwhile, Harley's like made for that shit, right? Like Toby just wants to spend time on product and technology. And so he's designed his role. He's designed the scope of the CEO role where he spends time around that, which means then he's forced to hire his polar opposite like Harley, right? Right. And design the leadership team around that, right? So that, that collectively it's complete. So just a thing to think about. Can, like, I would encourage you to be more selfish, right?

No, and appreciate that. I think I should be. And you know, I, I think that if you go back to what, what's, I think, responsible for most of our success or I should say early success here in this turnaround is this one word of focus. And I, even though the businesses are focused and what we're doing is focused, I definitely have a fair share of stuff going on across PUBCO, finance, which we had a transition, board, raising capital, debt negotiations, M&A, and then managing TrueLocal. That is, that's a fair amount. And it's not lost on me. And I think to your point, I think this next phase needs focus, not just for the businesses, but for myself as well, which means some decisions have to be made too. So I appreciate that. That's helpful feedback.

File it under free advice.

There you go.

Well, I really enjoyed this and congrats on that turnaround. I know it's not done, but bringing the debt down so much is massive. And I truly hope that the street rewards you for all of this.

I hope so too.

Yeah. Thank you.

Awesome. Thanks so much, Mark. Appreciate it.

Hey, thanks for listening to the Startup CEO Show. If you'd like to connect with me, be sure to visit my website at markmacleod.me or follow me on LinkedIn at @TheMarkMacLeod or Twitter @MarkMacLeod_. And if you want to tune in again next week, be sure to subscribe on YouTube, Spotify, Apple, or wherever you get your podcasts. We'll see you next time.