Why I sold a profitable business

I've sold two businesses in the past couple of years. I had started and incubated and got going. And normally people think when you sell a business, what you're doing is you're cashing out, right? Somebody came in and made you a big offer. And look, when I sold both these businesses, I didn't have to sell them and I didn't sell them really for the money. Like they were making money. I sold them because they ended up in this kind of gray area of businesses that are good businesses, but they're not the right business for me. So I'm going to tell the story of these two businesses, and one of them we haven't announced the transaction yet, so maybe this video will come out by the time we announce it, and hopefully give folks that own businesses and are thinking about them and what to do with them some context on how to think about businesses kind of in this category. They're good businesses, they're making money, but they're kind of in this gray area where it's not the right fit for you. So the first business we sold, it's going on about a year ago now, was a business that was doing about a couple million dollars worth of revenue. And the reason it was mildly profitable was because it was in the hospitality industry. And I had started it with two other partners and it was a drive-through coffee business. And basically we had had the insight that drive-through coffee shops like Dutch Bros or Scooter's, they weren't popular in San Antonio yet. So we decided to get ahead of the market and basically, well, go in and create some of these things. We did it with four locations eventually over a couple of years. The first one we opened up kind of mid-COVID, and it was pretty good. Like, things were well going, well, people wanted basically what these drive-through coffee shops are, which is not really much in the way of coffee. They're basically sugar dispensaries. You get caffeinated sugar is the way I describe the drinks that these type of places sell. There were a couple of things that I learned about that business during the time, even though it was making money, weren't things that were a great fit for me. And as I started to see those things, I was like, oh, I'm not the right owner for this business, even though I was probably the right person to start it because I was passionate about it. Eventually, those kind of things that were starting to go against this business, like, I just wasn't excited about it as much anymore. Actually, I went to my two partners, one of which was the CEO and working in the business, and I said to them, like, look, here's what I'm seeing happen in this market. A, none of the three of us are really passionate about this coffee stuff. Like, there are other people who live and breathe this, and I've met some of them. That's not us. Number two, like, these coffee shops, while they're profitable, like, if you want to grow them and grow this business, you got to go buy another piece of land and rent the spaces and go build another coffee shop and like all this stuff. Like, they're just very capital hungry. And number 3, like, we were seeing after we had started during COVID that the competitors like Dutch Bros and Scooters and now Seven Brew, like, these guys were spending $10, $20, $30, $40, $50 million to come into our market where we had been one of the first one of these drive-through coffee shops to start. And were competing with us. And all of that just, well, frankly, just didn't leave us that excited about the business. We ended up selling the business. We ran a process with a broker, and I was happy to sell the business because we sold it to some folks who frankly were further along than us. They already had about a dozen locations. They were a local chain here that had built up here in San Antonio, and they were guys that just frankly loved the coffee business. They lived and breathed being in this type of business. And so ultimately it was one of those things where you can have a business that's a good business, but it's not the right business for you. And I call this kind of gray area type businesses where like, frankly, when you have something like that in your portfolio, you probably should get out of it. Hopefully you can end up giving that business or selling it to them, ideally at a profit, to some people who are going to truly be passionate about it and potentially be able to get more value out of it than you could. And we did by selling it to a strategic. They added it to their portfolio, they transitioned all their systems, and frankly, they're running the business now better than we could because, well, frankly, They got a lot more resources than we do and more passion than we do. And the second business we just sold is a business called Scalepath. We had launched that going on 2 years ago now, and it really was at a time when I felt like I was speaking more to people who were aspiring and early-stage entrepreneurs. And basically it's an online community for CEOs. And as I've spent more time kind of creating content and who I like to I like to talk to and who I like to focus on and frankly, how I'd like to spend my days. Operating an online community like that, it doesn't excite me that much. I love the people that I've met through it. I think our customers are great people and it's a profitable business. Like we've got some members who are getting a lot of value out of it. But in the end, like I look at it and I'm just not passionate about it. It was sending me money. Like it was doing okay. It wasn't a wildly profitable business. These community type things are pretty darn hard businesses, frankly. I mean, I guess there's some people that really thrive with them, but by and large, you're always having people leave and unhappy members and people going out of business or starting business. You're always having that kind of stuff going on. And it feels like you're kind of hosting like a cocktail party all the time. Like you gotta just try to like delight people. Learning who I was as a person, learning what I was interested in and kind of discovering more about myself really allowed me to eventually kind of understand, well, this is a good business, but it's not the right business for me. It's the right business for somebody else to take over. And eventually that was the way we thought about getting out of the business, which was how do we go find somebody whose total passion is exactly what this business is all about? And we found that in this guy, Rand Larson, who's taken over the business. He's the CEO and we're gonna roll over some equity and be part of the business going forward. But by and large, like he's gonna get to run with it and we're super excited about it. And so if you look at businesses that you're involved in as an owner, whether you have one business or multiple businesses, you can have a situation where obviously outcome number one, the business isn't making money. And that universe basically tells you, eventually have to shut it down. You have the other end of the spectrum where you're meant to do this business. It's wildly successful. It's making a whole bunch of money. And obviously you can keep going all in on businesses like that. But then you have this kind of middle ground where it's a good business and it's making money, but it's not necessarily a right business for you. And I think there's nothing wrong when you see that situation to be real about it and don't feel guilty about it. And as a seller say, hey, like, this business has a future. But it needs a better home than I can provide to it. And it's time to make a transition. I look back on my career kind of buying businesses and creating businesses. I think a lot of us like me have learned from the Warren Buffetts of the world where it's like, oh, you buy and you just keep stuff forever. And as I look back on my career, I wish I had discovered this idea that some businesses, well, you just need to leave them at some point. I needed to be better at selling businesses when it made sense. And in this case, you know, I'm glad I finally learned the lesson. Maybe 10 or 20 years too late, but I'm excited to have, you know, help these businesses find right homes and go on to the next thing. So, all right, well, hopefully it's helpful. If you like stuff like this, I do a weekly newsletter, and, uh, here's a link to it. Sign up for it. I'll send you an email because everybody needs more email. By the end, I talk about subjects that are important to people that own one or more businesses, and maybe that's right for you. So sign up here. Thanks. Let me know what you think of this video in the comments below, and I'll catch you later.