Podcast: How to Be a Strategic Seller, an Interview with Josh Elizetxe
Learn how to make a market for your business so you can sell to the right strategic buyer for the highest value. Josh Elizetxe shares his invaluable insight on the sale process so you can get top dollar for your company as well!
About the Host
Ryan is an entrepreneur, podcast host of the show Life After Business and the co-owner of Solidity Financial. Having personally experienced the hazards of selling a business, he joined up with his friend Brandon Wood to educate others on the process. Through their business (Solidity Financial), they provide a platform for entrepreneurs called The Value Advantage™ that helps in exit planning, value building and financial management.
About the Guest
Josh Elizetxe is an Internet advertising veteran and successful serial entrepreneur. Last year, over 100,000,000 people interacted with websites and brands owned by Josh's company. He serves on the board of the Phoenix Coding Academy and the Fleischer Scholars Program. Josh is a sought-after company advisor and Angel Investor in the software (SaaS), ecommerce, and advertising technology industries.
If you listen, you will learn:
- When Josh decided to become an entrepreneur and how he decided to take the lead in his venture.
- Some of the goals Josh made and milestones he met as he snowballed his company from startup to success.
- Some of the benchmarks that Josh had been tracking mentally so he knew he had gotten to the point where it made sense to sell.
- The trigger when Josh knew that he was not doing what he should have been doing.
- How Josh managed all of the factors that go into the decision to sell, the tactical strategies he used, and his tips on making the transition.
- Thoughts on valuing a company and setting a price, as well as convincing a potential buyer that the company is worth that price.
- How Josh picked the partner he picked and how he removed emotion from the decision.
Announcer: 00:00:09 Welcome to Life After Business. The podcast where your host Ryan Tansom brings you all the information you need to exit your company and explore what life can be like on the other side.
Ryan Tansom: 00:00:19 Welcome back to the Life After Business podcast this is Episode 70. Have you ever wondered what the perfect strategic sale looks like? Well on today's episode, that's exactly what we're going to be talking about. You're going to hear step-by-step how Josh Elizetxe perfected the sale of his company to one of his clients and partners. Josh started his company at the age of 15, and by 20 years old was managing around a hundred million dollars in marketing spend for some of the top companies in the U.S. and the Fortune 500. After burning out and being a hundred pounds overweight, Josh decided to sell his business and within six months he created a market and sold his company to one of his strategic partners. The wisdom and experience that Josh shares throughout his story is some of the best has been on this show.
Ryan Tansom: 00:01:02 So listen in to hear Josh's exit story, the things he learned along the way, and what he would do differently now and how is life after business is a happy one filled with the things that he wants to do. Running different companies and making a difference in multiple different industries. So without further ado I really hope you enjoy this episode with Josh.
Announcer: 00:01:24 This episode of Life After Business is brought to you by Solidity Financial's growth and exit planning their proven process gives you clarity on all of your exit options and how those options impact your financial success, timing and future happiness. Sell your company on your timeframe, to the right buyer, at the price you want.
Ryan Tansom: 00:01:24 Josh, how are you doing today?
Josh Elizetxe: 00:01:50 Hey, I am doing fantastic.
Ryan Tansom: 00:01:51 I'm excited to have you on the show. I saw you speak at the Rhodium Weekend where there's a bunch of digital entrepreneurs and you got up and you told your story and I knew that I couldn't wait to have you on the show because of how unique of a story it is especially with your age and how wise I thought you were with what you were saying up there.
Ryan Tansom: 00:02:11 So for listeners who did not get to see the presentation, can you just take us back and explain to us that the early age when you decided to become an entrepreneur and how you took the lead.
Josh Elizetxe: 00:02:26 Well, I'll take you. I won't take you all the way back, but I think a lot of entrepreneurs have similar tales of growing up and you know kind of looking in retrospect it's apparent that I was definitely leaning towards entrepreneurship. I didn't know when I was in high school. I was studying to go to medical school and being the youngest in my family and my sisters not going to college graduating or being doctors and lawyers all of that pressure kind of inherently fell on me. So I was kind of focused more on medical school than on beginning my entrepreneurship than beginning a business. I knew I liked computers because I would help my friends make music, I would work on stuff at the school computers, and I knew that I liked computers. And I liked video games. So anyway when I was in high school freshman and sophomore year I was spending a long time at the library.
Josh Elizetxe: 00:04:01 I received an email on one of my blogs and I was writing and under pseudonyms because I didn't want everyone to know some young teenager in Phoenix, Arizona, writing about you know various topics like I didn't think people would listen to me. And so I got an email one day and said "We'd like to advertise on your blog for 400 dollars" so I printed that out, showed it to my dad and my dad said, you know, "that's a scam, don't believe it, the Internet's dangerous, I don't want you playing on the Internet." Of course like any other teenager, I didn't listen - which I'm glad about today in retrospect that I didn't listen. So I went and I convinced my dad to create a PayPal account. And I used the PayPal account to request money from these guys and they sent the 400 bucks.
Josh Elizetxe: 00:04:45 I printed that out, showed it to my dad. He said, "it's just numbers on a screen, it could all go away. Don't trust it." Again,dDidn't listen to him and it was funny, because 30 days later I received another e-mail that said you have received 400 dollars. I was like, "Oh maybe they, you know, maybe they accidentally sent it again or you know... I didn't know if I should refund them, do I e-mail them, like what do I do? And so I guess I misunderstood. They meant 400 dollars per month for a little banner ad on the blog I was writing about. The blog was about the first - very very first iPhone and its release and all the features it would have. I was just obsessed that phone and I wasn't sure I was going to ever get one because the seven or eight hundred bucks, more than that.
Josh Elizetxe: 00:05:27 And so I was infatuated with the device, I was writing about it under my pseudonym on a on a random blog I created in Phoenix. And so here I am writing this blog. I learned how to put a little picture a banner ad in the sidebar on the blog and they were paying me 400 dollars a month for that and I was like, "Wow, 400 a month. That's crazy!" Like that how long does this last. Like
Josh Elizetxe: 00:05:50 I'm already thinking in my head I'm like 400 x 10 - woah like I could maybe buy a car, I'm over here thinking of all the stuff... they ended up advertising for a long time with me. But what really clicked for me was the fact that I made something for free, with my own two hands, that was now making enough money to help out at home, to buy my own stuff and to save up for a computer. And so if I could do this with one Website, I thought I should be able to do it with dozens of them so that that's kind of where that epiphany kind of happened for me when I realized - I learned how to program, I learned how to design - and I could make money. And then the whole Pandora's box of services - the services industry - opened up to me, it serendipitously opened up to me because a teacher one day in high school asked me you know "What are you reading?"
Josh Elizetxe: 00:06:53 I said, "Oh, it's PHP Programming for Dummies." "Oh, are you a programmer? Are you a coder?" And I was like, "Oh, I guess, I mean, you know, I make websites and all that." "Oh, wow, a friend of mine needs a Website done, how much do you charge?" And so that's whent Google became my best friend and I searched, you know, how much do people charge to make a website. I was going to do it for free-
Ryan Tansom: 00:06:53 I was going to say, how much did you charge?
Josh Elizetxe: 00:07:02 I was going to charge maybe five hundred. I don't know the exact amout... maybe five hundred bucks, maybe it's more. I don't think I would have asked for a thousand, I think that would have been way too high at that point for me to even have the bravery to say something like that. And I came back the next weekend - after the next weekend, and the Website was done and my teacher's friend was so blown away because she had been quoted thousands of dollars for several months project.
Josh Elizetxe: 00:07:27 And I think to see in a weekend, and it's fully operational and so naturally I always tell - when I go to speak to students in schools and people that want to be entrepreneurs - that they create a massive amount of value and then price it underneath the market average and you don't naturally build word of mouth and you have to be willing to kind of bite the bullet. Obviously I didn't have any big expenses being a teenager and I could charge 500 bucks, get it done in a weeked, and that was you know pure profit margin for me. It was just me doing the work. So the word started to spread very quickly that there is this young kid who is really fast and really good at programming websites and he can whip you one up
Josh Elizetxe: 00:08:07 you know for a few hundred bucks in a weekend's time and so naturally word of mouth just started to spread. And so I was... I was balancing my high school with with my my blogs and then with my service business and the one... the one thing I had to keep up was I kept my word with my dad. My parents said, "If you keep up your good grades, you can keep making websites, you can buy a computer, you can spend all day on the computer. And so I ended up keeping that promise I graduated valedictorian from my high school-
Ryan Tansom: 00:08:07 Congratulations, my gosh.
Josh Elizetxe: 00:08:41 Thank you. That was exciting for me, just because it was it was a challenge to say, "OK, if I keep my grades up, how about I keep them the highest you know of our 500 plus students. I'll graduate number one and I'll be running my business. And I did have to end up dropping varsity football, track and field, a lot of sports. I still stayed in student government, so I was still involved. I had to give... dedicate my weekends to what I didn't even know would become a huge business. I was just doing stuff because it made money and I wanted money so I could help my family and buy my own things and buy my own car. That was really it. I think necessity is the mother of invention. I could say some philosophical thing that, you know, I just felt that I was yearning to enter the world of entrepreneurship. It's like, no, I just wanted to make some money. Nobody wanted to hire me because I was 15 years old,
Josh Elizetxe: 00:09:33 I was too young. And I like making websites, because I was doing it already for free and for fun. And people wanted to pay me and I was like "uh, sure!" That's kind of where it started, that's how it actually started.
Ryan Tansom: 00:09:41 Well, and you snowballed really fast and I think you know to give the listeners a little bit of a peer into the company that you did create. Kind of run us through some of the milestones that you were tracking from ad spend that you were managing to employees, because, I mean, you know, and the rapid growth behind it if you can give us a little bit of a peer into how fast and the dearth of the company that you've built.
Josh Elizetxe: 00:10:11 I mean the first three or four years... a student the other day - I run a non-profit foundation for underserved high school students along with several others - but I speak a lot to students and a student asked me you know how did you get into passive income? And I was like well I said, “I'm barely scratching the surface of now what you call quote unquote passive income. Everything needs to be active because I'm very involved in everything I'm doing.” But I said, “First you have to be willing to work for a dollar to two dollars per hour with no one saying thank you, no one being appreciative of you, but you just putting your head down, getting better and better and better and willing to adapt and learn.” And so I started off the first three or four years with really just me doing everything from deepening my voice on the phone so I sounded older to potential clients, you know, saying yes to everything under the sun… you know, can you program this calendar,
Josh Elizetxe: 00:11:07 so that it send me an e-mail with this this and this, and I would say sure and I would go to Google or I'd go to the library and I figured out how to do that. And so I became really good at programming became really good at designing just out of the client's needs. And I knew that if I could fulfill that for them, they were going to pay me. They were going to be happy and they're going to tell more people which meant more money which meant more clients. So I knew that I had to figure that out. And I had no one else to do it, so I had to figure it out. So if you know the first three or four years were thankless in terms of
Josh Elizetxe: 00:11:34 you know sleepless nights you know keeping up straight As in school, student government, all of these things, in addition to my business and not telling anyone about it because it was not hip or cool back then to be programming websites on the weekends instead of, you know, drinking with your buddies, you know, underage drinking all you crazy stuff that could go on – especially in the area that I grew up in, a very hostile environment… drugs, alcohol… so people would say, you know, “Josh, you’re on the football team, you’re on the track team, you’re in student government, you’re super popular, you should be going to all these parties!” So I would come up with these random excuses to get out of it. So I could go home and make websites because I knew what I was working towards, and I knew if I didn't give up – you know, I don't care if anyone believes in me or not,
Josh Elizetxe: 00:12:16 but this is something- it feels right. So I just kept doing it and I started to increase my prices over time as I learned about supply and demand. And that was that was really just a coincidence because I had a client say you know can you get it done in two or three weeks. You know we have a big launch. I said I don't think so because I got two or three clients that I'm working on right now. So what if we paid you a lot more, so you could prioritize the project? I said, “Well absolutely we could figure that out.” So I started to learn about supply and demand and how to how to manage that. And then of course you know going to business school after high school I learned about the theoretical side of it and the strategies and you know I've been reading from the time I was about 13 or 14 years old, I’ve been reading you know one or two books a week cover to cover and not just skimming, I read the entire thing, and most of it is about business concepts, competition, you know, autobiographies.
Josh Elizetxe: 00:13:08 But anyway that's your question: I went for three years. It was this first it was I want to make- save enough money to buy my own computer and split the internet costs with my dad so I could have Internet at home and not be chained to the library anymore. Once they did that I could work for eight hours after school. So my productivity tripled. Then the next goal was I need to save up to buy a car because I don't think my parents will have the money to buy me one
Josh Elizetxe: 00:13:31 and I'm tired of taking the bus. So if I have my own car, that would save me an extra hour in the morning hour and a half that I could be making another website versus waiting for the bus. So then it was like OK now I need a laptop because I need be able to make websites while I’m at school in between classes in between breaks I need to be doing that. So it was like I need to save up enough money to do that. And so just little by little by little, started to grow and grow to the point where you know I was making more money than any of the teachers I knew. But I was thinking of it that way. It wasn’t like, “I’m making all this-“ For me, it was, “Nice, I get a laptop now.
Josh Elizetxe: 00:14:10 Nice, I have enough money to help my family out now. Nice, I can, you know, buy myself my own school supplies this year. That was that was an exciting moment for me when I told my parents it’s OK I got it this year. I'm going to buy my own backpack, I'm going to buy my own stuff. You don't have to give me any money and I'm going to buy my own car, my own insurance. And that to me was way more gratifying than just going around and saying I make more money than you. I mean that that was never a goal of mine. It was really just independence, financial independence. And so from when I graduated high school I went to Arizona State University at the Honors College and the business school and I studied computer information systems there which was a mix between business and computers.
Josh Elizetxe: 00:14:50 And that was a good match for me. I read somewhere online that said you know go for something you're interested in because if you don't, you're more likely to drop out and none of my brothers and sisters had their college degrees so I had to do this. So I ended up graduating in two years. I was- just turned 20 years old when I finished my bachelor's degree and I came out with no credit. So I was taking 22 credits per semester [crosstalk]. We have passed a million dollars you know in the dorm room. It was just me, but being my girlfriend was helping me out. And she would- She was studying accounting and when she learned something in her classes, she'd bring it back to the business. You know she was working with Deloitte and Goldman Sachs on Wall Street and she would ask questions to the people that she knew there and I would send her texts like, “Hey, what is you know how can we take advantage of depreciation on an Internet business.” Questions like that and you know she would talk to them. And so you know here we are.
Josh Elizetxe: 00:15:48 And I built a team of you know a couple of dozen people by 20 years old. By the time I finished Arizona university I graduated suma cum laude, top of the class. You know I always put in my mindset. I became addicted to the joy of achievement and that was my new addiction. It wasn't video games. It wasn't drugs and alcohol and partying. It was purely the joy of achievement. How can I push myself to that next level and next level that next level. And so that was that it, was it was not a race to graduate in two years, even though my business needed me, and it did work out. It
Josh Elizetxe: 00:16:22 was really just. Can I add five more credits, two more credits, three more credits. And like my adviser said as long as your grades stay up we'll let you do the overrides and you could keep adding as many credits as you can handle. I said OK I know this game already, done. And so graduating in just under two years at the top of my class, the fastest in AU history, that was not my goal. It was just to finish college for my family and for myself. And I believe that you go to college to learn how to learn. You learn a lot of new you know you learn a lot of adjacent skills that are transferable across business, across corporate America. To really answer your question, it was three to four years of slow but steady growth. I started to hire people that were outsourced freelancers because I Googled how to hire people if you can't have an office because I was in school all day. I couldn’t have an office.
Josh Elizetxe: 00:17:13 So I found O-Desk, and freelancer.com, and eLance and all these other various Websites. There's big ones now like fiber and others but I would post a job on there and people from Pakistan, the Philippines, all over the world.
Josh Elizetxe: 00:17:27 The Ukraine, even the US would apply to work for me and I started to build this team and now I could take on dozens of websites at once that we are building for a few thousand dollars a pop. And so the revenue started to really stack up and it really hit the trajectory that was impressive when a client of mine said you know if you guys were able to figure out some marketing and advertising stuff, then I could pay you every month instead of just a one-off Website build and I said, “Well that sounds interesting you'll pay me every month. I like that idea.” And he said, “Yeah. You just have to learn all this stuff.” So I did what I always do: I got every book on the subject, every video I could find on Youtube, everything on Google… I consumed it all and I went on Freelancer and
Josh Elizetxe: 00:18:12 I tried to reach out to experts. I hired them onto the team. I said now we're going to open this new division, we're going to go back to all of our old clients and say we built you a great website. We'll give you a free redesign if it's been more than a year if you sign up for one of our plans to market your business. So that quickly- I quickly realized that the hunger for proper online marketing... There were so many - still is! - so many charlatans and fakes out there because that area is so low that everyone is saying they could be Google ad or they could do SEO and now it’s Facebook ads you know it changes by name but it's still the same thing.
Josh Elizetxe: 00:18:50 And so I said we could do something at a high value charge less than the market same model until we get enough clients then we can start to raise our prices as we can prove it out then we can have a massive business. Along that process, one of my mentors I forget who it was – I don’t know if it was a professor, I don’t know if it was a friend - Someone told me that service businesses are generally hard to sell. They don't get a high multiple. I was like “What do you mean ‘multiple?’”
Josh Elizetxe: 00:19:19 When you sell it, blah blah blah, oh okay. Then I had to go back to re-engineer the business to productize our most popular service offerings. So I created a transparency tool that essentially – and this is the biggest breakthrough right here in the business that allowed me to exit the business and become, you know, relatively wealthy. I figured out that if we could build a free transparency tool where any company could plug in their agency, what they're spending, all of that- their reporting, Google analytics - we could audit for them how well their agency was doing and give them a score and recommendations and then if they want to do something about those recommendations, I coded in a one-click button that said you know are you tired of wasting money or something like that. And if they hit Yes I got an immediate text and an e-mail saying so-and-so wants to speak to you. So I would hop on the phone with them
Josh Elizetxe: 00:20:13 and I would take them to the process and say look if we can't outperform your current agency don't pay us anything. Period. Let us work for free, let us figure out [unclear] for free. So I was making that strong guarantee that they had nothing to lose and so they started to give us a shot. And so naturally agencies started to get pissed off that we are getting clients out of their work because I found out that you know a lot of its vanity metrics, dance and show. And here I am saying where the true ROI. Not Impressions, not clicks. Not none of that. How many coupons you downloaded how many coupons were redeemed. And what was their profit based on the spend for that month. We were able to show those numbers. And so again the word started to spread and they said are you guys using these people as not fire agency,
Josh Elizetxe: 00:20:59 you've got to work with these guys. We started picking up big accounts. I had a woman called me one day that ran a huge PR firm in Chicago and she was like, “Josh. We want to be your friend not your enemy. Can we private label, you know, white label your services for our clients to build in and out. We have clients like Ford, Nabisco, Kraft. I said “Absolutely.” So we were again taking a piece of the pie.
Josh Elizetxe: 00:21:24 Working on huge accounts and we got to managing 100 million dollars over a hundred million dollars through our platform, through the algorithms we built, through our services team. Dozens of people working for us maybe almost a hundred.
Josh Elizetxe: 00:21:37 There were offshore contractors, pretty much full-time contractors, for us. Anything from design, development, program-- algorithm, programming, you know - you name it. So all over the board. So data scientists, all of that. And I was still programming and I was still selling. But my role shifted to become more of a recruiter more of a sales you know bringing in the big sale and then retaining the big clients so that we weren't losing them. And then I finally had something to sell at that point. And that's when, at 20, 21, 22, when I decided in the next six months the business was going to be sold. And
Josh Elizetxe: 00:22:13 the reason why I decided that was because we started to work on side projects because I never wanted to fire any of my team members if we lost a big client. And so I needed a way to make money some from their help without just eating the cost. So we would come up with all sorts of businesses so we had a garage door retailer, a garage door parts retailer, totally random. We had a leading teeth whitening company, we had an apparel brand and these companies started to become significantly larger and actually out grow our main business and I saw that my team was having more fun working on those projects than they were working through the red tape that our clients provided for us. So I knew that I had to get out, but I couldn't tell anybody. I was working 18 hours a day.
Josh Elizetxe: 00:22:58 I was 310 pounds. I was flying all over the U.S. not because I wanted to but because I was putting out fires and I was stressed out and feeling burned out. But I knew I had to keep it up for the team and keep it going. But I knew there was a way out now that I had productized the service so that's when I went on the road to sell out.
Ryan Tansom: 00:23:18 But I was going to say - can I interject for a second? Because I like I think you're hitting on a ton of really, really good points that I want to peel apart just a little bit because you know first of all you know the fact that you were told by this mentor on what a multiple is and that services are not easy to sell a thing is unbelievably amazing because so many people realize too late what they actually want, they've hit that burn out. So you know if we can kind of go back and say OK, the fact that you knew what you were doing as you were creating the product… so what were some benchmarks that you had been tracking mentally whether it is it was it recurring revenue, was it a certain multiple, was it a certain dollar amount - what were you chasing to then when you've all of a sudden had that triggering OK, now I know I've got there. And what were some of the parameters that you or your mentors or people that you had seen had kind of helped guide you towards?
Josh Elizetxe: 00:24:17 Ya, you’re kind of talking about when I got to the point where it made sense to sell?
Ryan Tansom: 00:24:29 Well yeah because like you know like if you realized that OK if my you know the business before we built the platform before we started doing the white labeling and all these different things you know you were shifting the business model which a lot of people do- either they don't do it because it’s too hard or they don't know when to do it and they're trying to sell it and they find out the hard way that it's not worth any money. So you had shifted and you had done a lot of amazing things. And was there a certain revenue size, was there a certain number or benchmark or something that you were looking to... I mean, working 18 hours a day and flying all across the U.S., you said at 300 pounds like you said is I mean you were burned out and you were chasing the enjoyment of achievement and which I think could probably be a death cycle for anybody that is you know is as hardworking as you. So how did you make that judgment yourself on when was it enough?
Josh Elizetxe: 00:25:05 For me, I was looking at how many people I needed to hire every time the company brought on a certain amount of spend that we're managing so we're managing you know millions of dollars of YouTube advertising Google advertising search engine optimization, all of that. I knew that I could draw the line. And it was pretty steady. So every you know X-million of spend we brought on we had to hire five more people, for every new project we needed two more people.
Josh Elizetxe: 00:25:35 And so I knew that the growth curve was pretty linear in terms of adding more human capital to sustain the growth. And so I felt that just looking at my stress levels and I had shifted to become I was half sales leader and half people manager. And that wasn’t particularly where my strongest suits were and I knew that in order to get to you know a billion dollars in spend management or whatever that huge, lofty goal was that I would need to have maybe a thousand plus employees. And I felt like that wasn’t where I wanted to take the business particularly because I had something else that we had built internally we had a bunch of those sites that we had built internally whether were selling garage repair parts or beauty skincare online, whatever it was, and a couple of joint venture with some clients as well that were doing really well.
Josh Elizetxe: 00:26:29 And I just realized that you know we could chase the vanity metrics of how big is your office, how many employees do you have, what is your top line revenue... But I started to realize on my own that profit was what really mattered and impact and just kind of just being in it so much that you kind of you have to be introspective if you're working in the business all day you have to take at least a few minutes a day to just think about am I just doing this just to do it. Like when I was in school I could have got a Ph.D. and I probably would have gone after 5 Ph.D.s and I'm just at that mindset when I walk into something I go all the way, but I don't take a step back and say should I even be doing this?
Josh Elizetxe: 00:27:09 And I think a lot of us get stuck in that. So for me it was keying into that the scale of business needed a lot more people. That was something that I didn’t particularly enjoy. I didn't foresee having thousands of employees and overseeing that. That wasn’t something at the moment that really excited me and plus I kind of had a little bit of shiny object syndrome, but it was rectified- it was valid because these side projects were becoming million dollar side projects. They were very profitable and they required just one or two part-time people to run them. I knew I could scale that a lot more efficiently with my skill set my team and the fact that we've never raised outside funding no debt no credit cards, nothing. I knew that in order for us to keep growing that I would like to take an exit and take that money and invest it into the quote unquote side project and all of that.
Ryan Tansom: 00:28:01 So how did you know? I think that is a very insightful and I'm curious because you're so damn motivated and you're so able to accomplish what you put your mind to. Where were you were you flying around like where did you decide this is not what I want to be doing? Like when you said Okay you want to take because I think the biggest challenge and it's come up in the show before is you have to take some time to take a pause take a deep breath and go, “Am I running in the right direction? Should I be doing this?” Where were you when you did that and how did you determine that you were not doing what you should be doing?
Josh Elizetxe: 00:28:35 I’ll tell you exactly where I was. So I was making good money, we were profitable enough that I could pay myself a good enough salary. And so I was masking- not seeing a lot of things with just looking at the money I was making and I was driving supercars, my dream car, going from driving the city bus or riding in the city bus to driving my dream cars. And I was you know over 100 pounds overweight. I was rolling out of the cars. My back hurt, my eyes hurt, my neck hurt. I just I was sitting in the parking lot. I was in a target Target parking lot. And I was- it was like 10 or 11 p.m. at night and I was with my girlfriend Brenda and we had… we were sitting there and I just kind of said to her, I was like I feel that I want to take this company a different direction where we have a lot more potential. In order to do that
Josh Elizetxe: 00:29:32 just like a snake sheds its skin, and you have to be willing to sell something you've built and give it to someone who can take it to the next level so that you can do something else. And I feel like I'm at that point, but I can't tell anybody in the business because they're going to feel like their job security is at risk they're going to feel worry. So it may take six months to a year. I don't know how long it will take but I'm gonna try to sell that business without no one knowing- without anyone knowing so that no one is shocked but for me it was that moment of just I felt I was tired.
Josh Elizetxe: 00:30:03 I'd worked an eighteen hour day and I would work from 7 or 8 a.m. to 10 p.m. come home eat really fast and then get on the computer again and be putting out fires and all that stuff, working until maybe one or two and then up again at 7… it was literally like that for years and I just I thought that I had just got my report back from the doctor - I was pre-diabetic.
Josh Elizetxe: 00:30:28 Half my family has diabetes and I felt like I was dying. I mean really in that moment when I was sitting in Target parking lot I was like I… “What is this all for?” Like I have…
Josh Elizetxe: 00:30:41 I had the cars, I had the money, I had the lifestyle, I had the title… I'm CEO… I've got the big class A plus office. You know I've got all this stuff you know. And so what is it for? Like what am I actually doing here, what… Do I want to spend the rest of my life doing this? And for me, it's like I don't think so. I think that a lot of companies are really interested in what we've built. And I think if they had their hands on it that maybe they could grow it and I could take that money and I could put it into something that makes me and my team much happier now than I did. I decided at that moment it was boiling up to then and I said it right then and there it was almost midnight when we finished talking and my girlfriend Brenda was on board.
Josh Elizetxe: 00:31:20 She’s like, “I see how much you work. I see that you're not completely fulfilled.” And I could see that team is more excited working on projects that we own 100 percent of, that we have more control over, versus working for the client. You know she agreed and so that was all I needed that I kind of wrote in the midst of the point but I vented out and so I'm sure a lot of us entrepreneurs vent to our loved ones and kind of get that… even just a nod… like a comment you know babe, am I completely crazy or just a little bit crazy? She’s like, “No, no. I'm with you. I think they're right. You know I trust you.” She gave me her trust as well to say I trust you. You know she left Goldman Sachs and Deloitte to come work for me.
Josh Elizetxe: 00:32:03 And you know and so that was all I needed. And the next day, I started reading every article I could online, every book I could read online on exiting your business. How to strategically talk to potential acquirers and all of that. And that became my next project. In addition to running the business now is working you know 20 hours a day. I mean it was it was even more because but I knew that the light at the end of the tunnel was coming, so I was willing to put in that extra work push a little bit harder and because I knew that was coming.
Josh Elizetxe: 00:32:37 And within six months, the business was sold off and I was on my way as well and…
Ryan Tansom: I want to dive in that process because I'm very intrigued because you know I went through that same thing with our business in 2014. But there was not a lot of resources out there which is you know why I do what I do for a living. And you know I didn't even know where to Google things because you know this back you know in 2013 and again because it's a secretive thing you get to keep your employees unfortunately you know unaware of so you kind of walk. Walk us through that journey where you know… what were some of the epiphanies that you had? What were some of the main insights? You know I mean with all the information you digested, you obviously gravitated towards certain things and can maybe give us a little bit of insight on that six month journey.
Josh Elizetxe: 00:33:23 Yeah. We're talking about the process of actually researching and figuring out how to sell?
Ryan Tansom: 00:33:28 So, like you know the things that I've done and we talk about on the podcast or the blogs that I write now are all this other stuff it's like OK what's the company worth and why, what are my options? You know how do I tell the employees, what are the tax strategies… there's so many moving variables that people don't necessarily know how to put together so what areas did you cover, what did you know what are some really good nuggets that you want to make sure other people know that you might not have known? And I mean just that whole process.
Josh Elizetxe: 00:33:57 Well, I’ll share a story. I'm a bit tragic I guess financially tragic but when I start to make money out you know I didn't know how to invest it. I didn't know I was saved them a savings account that pretended my math is I put it back or back in business. I had no clue on what to do there. And every one I asked had a different opinion until one day when I was at the Bank of America and you know they see this young with young guy coming in with high balances on their account the multiple business account. They're like oh you need to talk to our Merrill Lynch adviser and you know and and you need to talk to our other financial advisor. And so they come out dressed in suits and all that. They're just fresh given freshly minted from university but they're but finance her accounting degree and.
Josh Elizetxe: 00:34:46 And so they start talking about stocks and bonds and mutual funds. Jeremy portfolio all of that and you know I'm like OK and you know I must've been half asleep and just said OK sure I can match my money. And so I started to have the outside people manage my money because I thought that I'm really good at making it. I'm not good at saving it but I'm not good at investing it. I need to get people who are good at that and pay them to do that. That for me personally was the worst decision I made financially at the time because you know you get someone fresh out of university who has never made much money themselves let alone it's not their money and their lifetime. The way it's set up is that they're put against the client because the more they're trading in and out the more commissions they're taking.
Josh Elizetxe: 00:35:37 And so they need to figure out that that's the hard way. The my mentors a lot a 10 million dollars. So I was a very small fraction that some great in that respect. But after that when I made it my life mission that I will make the money I will save the money and I will learn how to invest the money until I get to a point where there's a billion dollars in my bank account. I need a family office and all of that I'll do it or if I make enough money I can play with the hedge fund and do those things go OK maybe and I'll rely on that by consultants advising the Tatra. But no one will actually be touching my money other than the one who made it with me. And so that was a big experience for me. So going from that I learned about it.
Ryan Tansom: 00:36:21 Did you read. Mean have you ever read the Tony Robbins book.
Josh Elizetxe: 00:36:24 Yup and I'm reading Ray Dalio principles Raynham or Dahlia's Priscilla's book.
Ryan Tansom: 00:36:28 Joshes is amazing. Yeah yeah that guy is a machine but. No I think your experience a lot of people have that the hard way. I mean it's it's it's it's a it's a cloudy will it mean it's colder with all advisers and I don't know what your experience is advises that you'd hired my business partner actually right now is he a fiduciary investment management.
Josh Elizetxe: 00:36:52 So he was kind of like I found him as my like confidant throughout our process. But even like the attorney's investment bankers a commercial real estate because everybody was kind of looking at us as like him as a pot of money they could make money off of. And that is kind of dodging people every different direction. Are other advisers he used throughout the process and then I. How did you end up figuring out who going to lead the transaction and actually find the person that you were in a sell to.
Josh Elizetxe: 00:37:20 Well I was one of my mentors told me a really good friend of mine requests his in the real estate business and he told me once for a fool and his gold or soon invited everywhere. And I realized that you know I'm not coming from money not coming from any high financial means whatsoever. I was new to me some new money I'm learning you know how to spend it how do you know how many see the I mean consumerism runs rampant so skinny is easy but you know for me I started to feel that same same thing that he mentioned to me that I kind of felt like it was getting by everywhere everybody wanted to manage my money. All I've heard of this investment being here. And so you know you as a marketer you learn you learn. You should learn sales everybody in sales. You learn what's in it for me. People are generally acting on selfish principle and that's that's natural.
Josh Elizetxe: 00:38:15 That's primal. It's a primal trait. That's not to say that everybody's selfish ingredient means it just means that people are generally acting out of self interest and that's OK because a lot of times you're looking for. Does your self-interest align with my self-interest. If so then that's it. But if your self-interest is in line with mine that's where we have a problem. And so for me. I was reading about Warren Buffett because like every entrepreneur that knows that Warren Buffett has read something about it. I was reading about how Berkshire Hathaway. They don't do a lot of paper. They don't do a lot of due diligence even on some of the deals they do. I'm talking hundreds of millions billions of dollars a lot it's over like five or ten billion dollars. Then they'll really bring all the lawyers and make well that they can do that.
Josh Elizetxe: 00:39:02 Why couldn't I broker my own sale. Why couldn't I figure out how how to do that myself. And so I thought about and I said let me figure out how to do it and I'm going to start work this tomorrow. I can get some help. So I went on I went looking for other advisers that do mergers acquisitions. I asked around and just had coffee with them pay them for their time and got all the different opinions that they gave me to spend a couple of thousand or maybe a few thousand bucks just talking to them consulting and revising and then I didn't hire any one of them to actually do the acquisition or do the actual purchase or any of that sell. I used their idea so they gave me good people to connect with.
Josh Elizetxe: 00:39:45 And I paid them for their time. And so just by doing that what I ended up doing is I went back to our White label partners who were had a lot of cash in the bank various stablished PR companies media companies traditional advertising and said you know what it makes sense. If. If. It were ever a part of your portfolio or we are part of what you do. And I started what I told them they said I'm thinking of raising money to take our algorithms and our platform mainstream. Which means that we won't be able to get the white label stuff anymore. So really label know that that you know it's coming to an end I'm going to raise money we're really going to take this up while we have a few people really interested but strategically investing in some of them are your competitor.
Josh Elizetxe: 00:40:33 Then I figure I'd come to you to think and ask and all the sudden you know they could say well wait a second we get X with this store because shut it down for everybody else that will be the most transparent agency of the whole.
Josh Elizetxe: 00:40:45 And so I started to sell them on that idea and it worked because all of a sudden they were like well I thought of design before. Would you ever rebuild something like that for a week. No we wouldn't rebuild it. We've already it's so good how it's built. Well I mean I would consider maybe know right. I don't know if you'll see this going back and forth. It's really just trawling up talking to people if their self-interest aligns with yours and. A target. And so I ended up selling a couple of parts of the business separately because if I sold it all together the fact that it was services days would have really hurt me. But the fact that I could pull it apart and kind of spin it spin it on the tech came all the algorithms the audit fooled and all that and then the services has been a sprinkle on top. I was able to get a higher multipleand that was just common sense. I
Josh Elizetxe: 00:41:37 was like I'm going to Safaricom you suffer. OK. By friends more than they sell ever. Every book every seller OK that I get to understand what I'm on this side of this side I'll be able to get prices whatever whatever they see the value in. So I'm going to create the value up front I'm going to pump it up and back it up legitimately because if they buy a company and it fails I'm in trouble. And so I lead with a high for now and I say I don't care if Ethan earned me out over 10 years especially by going anywhere. All of that. Luckily you know they. I ended up getting the majority of that upfront.
Ryan Tansom: 00:42:14 I got a lot of that. Go ahead go back. Why did you do that again because most people don't. I mean earn On-Site you hear that earn out stories that people get screwed left and right. So that was part of your negotiation tactics are like why were you just pumping up your confidence in your own products and services or. What was that. What was the thought process find that well.
Josh Elizetxe: 00:42:33 And the reality is a negotiation tactic. So fight it like come up to them and say look here's the deal. I said I can't sell this thing. Let's say I had widget with your code. And I was that was a code for 100 million dollars just because people think and base 10 1 million to. How did you ask anyone what you did. Number one million nine or 100.
Josh Elizetxe: 00:42:53 And reality is in reality I realize that that's all arbitrary and made up. But anyway so you go to the gold Acme Company and you say look I want to sell it for a hundred million bucks and they said jobs is no way to pay hugging my butt. I said Of course things are right so neither of them are now over. If you're telling me you would pay me 2 million a year for 50 years. The something that would make you the two million back in one month. That's ridiculous. And it doesn't make sense. We should not even be talking we tell them they're like Ah. But now ice. Age I positioned the price at 100 million. I
Josh Elizetxe: 00:43:29 put this called anchoring rate the thinking and thinking fast and slow.
Josh Elizetxe 00:43:33 The psychology behind thrown out numbers like that.
Josh Elizetxe: 00:43:36 So I got the numbers from Moulana did most most negotiated a really good book by a Harvard professor in negotiation that talked about. Most people don't want to throw out the first price. I actually used it to my advantage because I'm able to AIMCO at it when I do that. So I I throw out a hundred on the billing and they're like OK now all I have to do is like a car salesman. You walk on the lot where they ask you how much are you looking to spend per month. They're not looking at. They're not going to say hey Ryan he wants a one hundred twenty two thousand dollars and a guy. Are they going back. No. They say how much to spend. And he said six hundred a month. By you get this Madarati tip and you'll be paying it for 15 years but you'll be driving the bounty.
Josh Elizetxe: 00:44:16 So then the next thing you do is you get sent to get them in the car the way you do that businesses you get the faith that get them the post the picture on social media them in the car. Now
Josh Elizetxe: 00:44:26 their friends are like oh my god you bought a Madarati Reinbolt. Now you're obligated to buy it. And so get them to feel it. So what I did is I said I showed him the numbers. I said if we cut off our competitors with this tool here's how it would hurt their bottom line. And here's how it boosts yours. And so I started to sell the dream and legitimize it by actualizing a plan or if you were to take over and if you paid 100 million here's how fast you could earn a hundred million back. It's two months three years and it bears shareholder value. So now they're like Ah son I'm spending Cummock educating them and then give them that he says have come over the office talk to our team. Kids the software play with it. The army top when your competitors for weeks see how crazy they get out through the why not.
Josh Elizetxe: 00:45:13 Again they're like Ah but now they're hooked. They tasted it.
Ryan Tansom: 00:45:16 Are you doing this with multiple people or just one portable.
Josh Elizetxe: 00:45:19 They have multiple yuyu. You can never. You never want to place all your bets on one one person buying it. Because if I had a dollar for everyone that said oh I'd buy or I'd do it. Show me the money that the money is in my pocket and it's real. Then you're a buyer. Otherwise he just yanking my chain. So I had two or three that I was talking to all legitimately and getting them all excited and at any given point I could say Oh well I'm talking to so-and-so you anchor. You give them the keys as a test. Let them fall in love sell them on the dream the vision tacked onto whatever that they mentioned. So I want to buy a car and pocket about my wife's about to have a kid I'm going to I'm going to sell you on the safety.
Josh Elizetxe: 00:45:59 The comfort for road trips. I'm going to sell those things versus it's bad. You know all the ladies are going to look at you. You don't care about that because you're a mom and you are your wife find a baby. You want to have me. That's what I started to sell them on whatever that was. And you you just keep following up. I did everything myself.
Ryan Tansom: 00:46:20 I told him when you were. Yes we did. We had a similar process. We also did the same thing where we didn't tell our employees we had to bring in a couple key executives like our CFO and stuff like that which is fairly common on which there is also a risk if you don't have you know you know if you're not giving them a stay bonus or some sort of chunk. How did you go about bringing in some potential key employees and your team. And then you know if you're bringing them in walking around your office did you actually navigate those waters with your with your staff. Well
Josh Elizetxe: 00:46:50 you know I think that to be an effective leader you have to instill trust in your team and I think that they even if some of that may have been suspicious they trusted me so much hopefully and I'm not saying that we typically have. I'm hoping that I did enough to earn their trust and it showed that I brought in a few people mainly to talk to reporters from the companies get them involved and the way I did it was I told the truth. I said this week as may or may not want to buy the cover but I figure if we can get them sold I'm buying the company. We now have options because we have the ultimate interest and so now we can say we're not going to sell but we'll buy you 15 percent of a. that goes. We won't sell it we'll do that.
Josh Elizetxe: 00:47:35 We have leverage at that point. Worst case scenario we now and so bought in as a client that maybe don't never invest for me then never buy. But they're so bought in now that they'll they'll help us. Want to stay with us. That's why set is very low isn't threatening.
Josh Elizetxe: 00:47:48 And I said I'll add you it was that good. No you guys I did see didn't you.
Josh Elizetxe: 00:47:54 You weren't worried about the market or people like you know bad talking to you guys for sale you know. You know pinging agencies. I mean there's there's always that horrible you know fear of what I was. Everybody is saying if you're actually Isono but I don't know if you've ever.
Josh Elizetxe: 00:48:09 So the way you do it is if you ever walk through the mall there are kiosks and there's probably a dead sea mineral one of those companies. And with or this hair straightener you name it specially at this time when the holidays walked around the mall talked to a few of them I do time and you'll learn how they Dow and the way that they sell they say you know if you show a bit of interest they give you the demo against the process does not change in 2000 years. So then at the end of it you start to hesitate. And what they'll do is they'll say OK look my manager is not going today. If he was I would be able to do this. Can't tell anybody out but I can give it to you for 45 dollars. Everything included. This is my employee discount code.
Josh Elizetxe: 00:48:53 I'm out of my hair. I could do that now. Want to do that for you. Or is that too expensive for you. And so you ask the question if it's a guy the guy's going to be hurt by his ego. We could be looking woman thing is that too expensive for you. No I'll stick to. And if it is a female now she's going to say generally wow thank you for working with me on that. Could you do it for 40 or decimated gosh at that point. But at least now you have by and Tyson no longer an issue. So for me when I talked to the potential acquirers it was look I'm not talking to anyone like I'm talking to you. They say the word gets out the price is going to go up and if the word gets out.
Josh Elizetxe: 00:49:32 Honestly I don't want to stop because I have no reason to. I sit here my credentials were profitable. I'm 20 years old. I have six years to run a business. I don't care. I have every I have my green card. I have. I don't care whether Sukhumvit or not. But I want to talk about what it looks like and we worked together more intimately. That means you're your best. Maybe maybe I'll invest in your agency. I would like to buy that excuse me you know about them I know where I went up north maybe we'll give you exclusive licensing dark platform or whatever it is to you know kind of to get him excited about the potential of working together. And again people act generally of southcentral so they feel like if they start spreading the word it's going to hurt the bill or Ahmedi get turned off.
Josh Elizetxe: 00:50:15 I would like doctors didn't need the money. The US is crazy doesn't care. So I can lose this and they're the only ones that can help us with area and I want to set the work and find out that you were pulling our contracts for me and you that to their platform because I'm hoping that we can have an adult conversation in confidentiality because I'm being open here and if that's not them being interested in then we should be a we shouldn't have a paper on that we should be working together and so is being like as you said I agree.
Ryan Tansom: 00:50:43 Dahlia says these as radical Tristram's as radical transparency and get everybody on the same page and you can actually get some stuff on Zakopane that I didn't even know that Rosli guys want to pitch principles of reading the book. Now
Josh Elizetxe: 00:50:54 I'm like yes yes and yes.
Ryan Tansom: 00:50:56 So how did you and I love and I think what you did is absolutely perfect. And how did you know if you had the 100 million or benchmark and whatever the numbers actually had you know ended up being did you go off of like a multiple of you but. Did you literally show them the rate of return on a 36 month deal which then therefore multiples kind of go out the window because more of a strategic sale. How did you end up getting to that way that you valued it or the purchase.
Josh Elizetxe: 00:51:27 You know I knew as soon as I started talking about revenue that I would meet immediately. The purely logical side of the brain would turn on and 36 times a three year five year high. And I want to avoid that.
Josh Elizetxe: 00:51:44 Binary thinking and binary thinking it's very hard to negotiate with a binary thinker. So I knew that I needed that out out of the table. So right is sign them on the growth showing them that the the market that they're in they know the market very well. Getting them to understand the internal value of owning the asset versus their competitors owning the asset that's intangible. No that's that's something that's hard to quantify. But it is it is true. It is two points because you can look at. We are always looking at customer success. That's a number one way to drive more business from existing clients is going back them saying here's what we're doing for you and look how little you're paying us and Koscielny going back to them and eventually if they're smart enough to continue to raise the contact prices with you they the care of you to a point anyway.
Josh Elizetxe: 00:52:41 So any internal value of owning the asset was the competitors the growth trajectory where the market's going. How the code is built and how future proof it is to go. There are things that I don't have the fading whacked hard number but the data and then the whole Spingo here is the cherry on top. We're profitable you know we're doing really well and we do well. I plan to run this for the next 30 to 40 years. You know and here you know what the Billings. By that point you know but I don't know maybe not. I don't know. And just like that if for example if you what's the value of owning all four gas stations on the corner below go that means you're going to get a hundred percent of customers. Now obviously you could do a multiple and see what that looks like a her revenue. What about the population growth right.
Ryan Tansom: 00:53:31 What about with the number of cars that people are getting more cars. It's by far the helpful fact that we know it's crazy.
Josh Elizetxe: 00:53:38 So now they're like wow I see that as soon as I see to now what you want is you want to you want them to let them imagine the potential when they think over their business. Business like oh my gosh I could buy for 10 million bucks. I know instantly into make some money back in a year. But now that they're selling to you.
Ryan Tansom: 00:53:56 Yes. So as you have taken a few of these potential buyers in these partners agencies of yours and on foot to switch kind of like this. How did you get to the point that how did you pick a person you picked. Well I knew that I wanted the I knew that wanted the partner took over to me someone that I could.
Josh Elizetxe: 00:54:18 Work with amicably and someone that I think kind of how that vision. But at the end of the day it's their money it's whatever they want to do with it. They ended up internalizing that. The bill still completely private I had to buy all these not you know whatever non-competing non-disclosure followed that I didn't hear and I had to say on for six or nine months of just helping them out in a hundred different things.
Josh Elizetxe: 00:54:45 It was you know if you want to buy up a laptop for me and sort of the lake because you enjoy it that's up you know that a lot by me and I want to enjoy it.
Josh Elizetxe: 00:54:55 But at the same time you pay the fair market value for my good. Now your word. You want to step on it because you're rich and you just want to be in a whole lot not go going.
Josh Elizetxe: 00:55:05 So you I get a motion from there on that level because I don't want to be like whoever buys me I want to to work with them for years and see my vision. There's a whole load of crap people are going to buy it if they see their own business or your business and they're going to do that whether it's right wrong or it between.
Ryan Tansom: 00:55:23 So was it tough for you. You know especially the saying I'm like you know a lot of a lot of owners that I work with there's a lot of identity wrapped up into this. Maybe they've created and it's about 80 percent of deals fall apart due diligence because there's so much emotion wrapped up in that people become illogical and Neil was it tough to look at your business as an asset or you know did that was put through the process. Did you learn that and how did you how did you actually kind of remove the emotion from that.
Josh Elizetxe: 00:55:54 Well I think one thing that's certainly helped and I want I want that I know is that I have other things going on that were growing faster faster so I had that grass is greener on the other side suburb which I'm sure a lot of get in and get again and again it's a recurring thing. But that helped me realize that this is not unlike what I didn't think when I sell this company out never going out again. I also realize I'm a serial entrepreneur that I could do this over and over and over again and actually enjoy that process. And I was out. I was. Overstaying my visa for my own business. I was I was not nothing other than Kapre what surely could have become capable and I'm much more capable Rumaila running organization in a much more and wave it out when you're 20 21 years old.
Josh Elizetxe: 00:56:47 You just finished college. Just you've been working 18 hours a day seven years straight. You know you get supported just like this is something I've built. It's just like you paint the painting you paint a painting the values based on you know Picasso 50 million dollars. Why. Because I'm basically going for it that's why you know and so I thought about I said this is my Picasso painting. Picasso didn't just have one painting he had lots of art. And what if he had just that one painting and spelled out that being his whole life and just said no I'm not going to sell it that's 50 million you know people want to pay six dollars for pennies maybe defrosts miserable. He's not going to create anymore. He'll lose that imagination and creativity to feel like he's not worth anything or whatever.
Josh Elizetxe: 00:57:30 But for me I kind of realize all that. I was like an avalanche in my head. This is something that clearly has value. It's growing. People like it. I have to take my visa. I need to get them off the runway. Otherwise. It will die just from the black folks like. That's what I realize at that point. I think it is an asset and I need to get fair market value for cyclists feel good about letting it go but I can just wrap all my emotions into it.
Ryan Tansom: 00:57:57 I mean very very very well said Josh really mean that. As you went through that process and you save now must be a transitional event as pork's portfolio process. You know you've read every taking yourself out of this and you've looked at it and you get to side projects that you're now focusing on and you've built a very very successful portfolio of businesses as well at this point. What have you done differently this time around versus what you did the first time and how you've been and what you've learned.
Josh Elizetxe: 00:58:28 I learned that a true business is one that you can throw money at and it will grow accordingly. So if you invest for money you're going to get more money back. That sounds super elementary but businesses aren't like that. I learned that I liked the idea of a business that can scale without being 100 percent dependent on adding humans to the business even though there are plenty of building our businesses that have proved that hollow out. For me personally being not confirming who gets to create a business to your design and I became okay with I said you know what I want to run something that's a little bit more digital I want to run something that could impact millions of lives. That I could. Work. With from my pajamas at home and have they'll have a huge team but they can work in their pajamas from home because they have an office.
Josh Elizetxe: 00:59:22 But not everybody has to be there all of them pretty much flipping it on its head and saying you know forget what the media talked about forget what you know. Magazines always talking about phone surveys and all the money and say profit King. Profits came. If I don't have to raise money then you know maybe that's a better thing for me. So something that's not capital intensive like you know going out and buying buildings to raise money for that. So digital scalable a large market. I love competition because competition training the marketplace so that they're ready to buy my product when they come out. So I like heavily heavily competitive industries. I like market growth but I prefer market size of our market growth of a disused market already like garage doors.
Josh Elizetxe: 01:00:10 It's not growing really fast the huge market and I could be a little hair a little pimple on the business and drive a billion in sales and no notice me. So that to me is you know things that I'm looking at and I just as I look back in retrospect and said you know working 18 hours a day in an office is not something that I thrive off of my mental state of slow and deep thinking is generally my home office or my home library. Sometimes the office oftentimes on text like some people would say. So I wanted to find those pockets of low build a schedule where I could really be Deats think and a lot of people looked up to. They read and they think a lot. And I wanted to make I want to spend at least half of my day reading thinking and developing my team and the other half you know selling or whatever else.
Josh Elizetxe: 01:01:00 I said Okay what business is it that you know and so it's you know e-commerce to be you know you know digital product all that. So I think I just kind of look back but what I didn't like we didn't work for me. And then looking forward and saying what's possible and kind of combining that ad and making that how I want to I mean that's part of the beauty of being an entrepreneur you can do whatever you want to do.
Ryan Tansom: 01:01:22 I mean to shame my friend very very seriously. Very well said If there's one thing Josh said you want to leave our listeners with or one thing you want to reiterate isn't all the amazing wisdom you've given us. What is it going to be. Well
Josh Elizetxe: 01:01:39 I would say a couple of things that the best time to sell and pudding's growing fast genuinely growing faster and better than ever before. But if you want to accept it's OK to exit the business. You know you bet there will be something after word it's very hard for. Foreigners to. Ever truly retire. My mentors someone in their 80s and they're still running a publicly traded company is a large private company. They just they love it. So you know thinking of all that and then realizing that one thing. One thing I learned quickly from my mentors growing many many more time when I am financially that they spend most of the day hiking working out and out the grandkids reading playing dominoes and chats and doing the things that are free and so freedom of time is much more wealthy than freedom than financial Serpe lots of cash in the bank account.
Josh Elizetxe: 01:02:40 It's what you design your life to be like. So it's selling your business is going to give you a key to a life that you're going to enjoy more than do it or if it's going to give you capital or something else. You truly think it's proven to be faster growing than do it or if you're dragging yourself completely insane and there's no one else that can help you and you still really track first try to talk to someone see if selling the best option to go out there. And remember Val price is the value that someone willing to pay. You can look at multiples of cloth of yes it always come down to something like that but try to lead with getting them in their shoes and selling it as they would want to see it so that day the multiple becomes arbitrary you know what ropeable. Who cares what matters is what is paid.
Ryan Tansom: 01:03:27 Business always the scope of the rules a little of it.
Josh Elizetxe: 01:03:31 Everybody all a certain type of attack the way how we say why you know I don't have guys in two years let me get two years. I want to do what I want to do. Let me do it I'm going to do it if I can work for it. And you're willing to work for you're willing to stick it out then build a life that you want and take no regrets. You know that my next goal is to run a. 100 plus million dollars a year in revenue work in my pajamas. I'm on track to do that. So you know if I can do that roaring out of bed at 24 years old being on and less than ten years ago Zifa riding the city bus and could have got together the money to pay for internet. You know I live in America and this happened and so not making excuses start taking action and make the life that you want to live. Josh
Josh Elizetxe: 01:04:15 I could talk to you for hours. Man I love it. I think you know for someone you know at your age you have more wisdom that I think a lot of a lot of people would wish to have in a life is a man I can appreciate it. I can't thank you enough for coming on the show. Ed what is the best way for listeners to get in touch with them if they want to hear morea.
Josh Elizetxe: 01:04:33 Well you can put the bat signal that usually anything to me right. Now I'm just kidding. I know you Google my last name.
Josh Elizetxe: 01:04:44 I'm one of two people in the entire United States. That last name. So they used it for my social media. And you know I'm on Quor coral is a good place to find me on my own. I have a live blog that I've been doing it for years but there's stuff on there and then I'm doing things like this podcast and all that stuff. You know I guess. There's no concrete one way to follow me should be despite that quite the. Twitter
Ryan Tasom: 01:05:09 Facebook Alperovitch and we'll put those in the Schoenaerts. Josh I appreciate you coming on the show cost of banks right here.
Ryan Tansom: Thanks for listening to the episode with Josh I hope you enjoyed it. So I had so many takeaways from Josh and his amazing wisdom and experience that it's going to be tough to narrow down to three. But if I had to pick three. Here they are. The first one is that really knowing the value of your business gives you so much control. Josh was able to walk away and negotiate with his partners the way he was because he understood the value that it brought to him for the cash flow. But he really understood Mr Teejay value that it provided the various potential buyers that he was bringing to the table. And the second amazing piece of wisdom that Josh rattled off in the middle of all the other ones was How to find people that align their self motos with yours.
Ryan Tansom: 01:06:02 I think there's so many people that get burned by advisers or consultants or professionals and we become very cynical. I know that happened with me in my situation. When you don't realize exactly what's driving the behavior and his quote about how a fool and or gold is invited everywhere you have to take ownership over understanding your situation and what it is that you need so that you can then delegate owning it just like you would your health is the exact way to take control over your exit. And the third one is understanding yourself and what makes you happy. Joshes ability to articulate how he had the ability to zoom out of his life say okay what do I want and why should I be doing this.
Ryan Tansom: 01:06:43 And the fact that he was observant of him being burnt out and then taking the necessary steps to get out of that situation and really identifying what is happiness is it time and freedom to jog to height to play with your kids to play with your grandkids to spend time with your spouse and understanding that if achievement is what drives you and that's what makes you happy being able to put yourself in a situation that it balances all these different things so really understanding who you are and what you want and why is extremely important. So if you're stuck until the end here. I appreciate it. I hope this brought you value and if it did go to iTunes and rates the podcast and you can also check it out on this show notes and I'll be a link there too. So until next week. Have a good one.
Written by Ryan Tansom
Ryan runs industry-specific podcasts on his website which pertain to mergers and acquisitions, and all the life lessons he wish he had known then. He strives to bring this knowledge to his listeners in a way that is effective and engaging by providing new material each week from industry experts.