Podcast: Post-Sale Expectations, a Discussion with Bobby Martin

By Ryan Tansom
Published: December 21, 2017 | Last updated: March 22, 2024
Key Takeaways

Bobby Martin shares the wisdom he has gained from starting and selling his own business as well as what investors (such as himself) look for in an investment company.



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

Bobby Martin believes that too many startup founders pivot too early, quit too early, and expect rapid takeoff. Through his experience of starting and selling First Research (a leader in sales intelligence) for a $26 Million to Fortune 500 firm, Dun & Bradstreet, he’s learned first-hand the challenges and solutions at each stage of entrepreneurial growth. Bobby is the author of The Hockey Stick Principles: The Four Key Stages to Entrepreneurial Success, which was named an 800CEORead Bestseller. Bobby’s current adventure is as chairman and co-founder of Vertical IQ, a leading provider of sales research insight for banks. Bobby is an angel investor and serves as an active board member with several innovative start-ups, including Local Eye Site, Boardroom Insiders, MyLifeSite, Sageworks, and etailinsights. While he is a national speaker, he is still a hometown guy and focuses most of his investments in North Carolina where he has lived and worked.


Before founding First Research with Ingo Winzer in 1998, Bobby spent more than six years with Bank of America as a commercial banker in Wilmington, North Carolina. He graduated with a degree in economics and banking from Appalachian State University. Bobby is married, has two children, and is an avid tennis player.

If you listen, you will learn:

  • When Bobby decided to become an entrepreneur and how he jumped in with two feet.
  • How he grew his company, First Research, and some of the major milestones that he hit during its growth.
  • How Bobby created business value by figuring out his business model, going to market, and pricing his services.
  • The triggering event and inner dialogue that made Bobby want to sell his company.
  • How Bobby came up with the price that he wanted for the business and how he actually agreed to sell.
  • Information about Bobby’s experience about closing and what happened afterward and why he now wishes he’d read Bo Burlingham’s book, Finish Big.
  • What Bobby wishes he would have done differently and why it was harder than he thought it would be to sell his business.
  • How Bobby recalibrated himself and reset his mindset so he could move onto the next step in his business journey.
  • How knowing what you want out of your business is important.

Full Transcript

Announcer: 00:08 Welcome to the Life After Business the podcast where your host Ryan ransom brings you all the information you need to exit your company and explore what life can be like on the other side.


Ryan Tansom: 00:18 Welcome back to the Life After Business podcast this is episode 72. Have you ever wondered if you would regret selling your company once a deal is done? Well on today the show Bobby Martin, who sold First Research to Dun and Bradstreet for 26 million dollars, shares with us his exit journey and some of the things he wish he would have done differently. And after going through the emotional rough patch post sale and ten years later Bobby is now an angel investor in eight companies, the owner of Vertical IQ and the author of the book Hockey Stick Principles. If you want to peer into what it's like to be on the other side of a business acquisition and merger, Bobby's episode is a must listen to so that you don't have to be sitting there listening to my episode or Bobby's episode or reading the book Finish Big going, "What happened to me? I wish I would have known a bunch of different things so I could have planned this differently." Listen in. It's worth your time. So without further ado I hope you enjoy the episode with Bobby.

Announcer: 01:12 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 time frame to the right buyer at the price you want.


Ryan Tansom: 01:12 Bobby, how are you doing today?

Bobby Martin: 01:12 Great. How are you, Ryan?

Ryan Tansom: 01:38 I'm good. I can't tell you how excited I am to have you on the show because as we were just chatting a little bit your podcast interview that you did with John Warrilow and Bo Burlingham's books sent me down this entire road with my company and this show. So the fact that you're on is awesome and I think for the listeners ability… you got a very real story that you do a very good job explaining the ins and outs of it. But you know for our listeners, can you kind of go back to the day that you first became an entrepreneur because it was First Research the company that you started. But you know when did you decide to become an entrepreneur and how did you jump in with both feet?

Bobby Martin: 02:16 Yeah that's a really interesting, relevant question for all entrepreneurs, but I have heard that you know it's like people become entrepreneurs for a few different reasons. And I think the one that's maybe overlooked a bit that is that certain people become entrepreneurs not so much for business reasons but for psychological reasons. And that you know they sort of don't fit in with society very well. They don't fit really well into structures and they're not also not really the retiring type who say, "Oh, well, I am just gonna go live in the woods" but they are just not going to fit into systems. I worked for a bank in the 1990s and I was a calling officer – and it became Bank of America actually, it was NationsBank – but I knew… well my original goal when I first signed up to go work there after college was I was going to be CEO just for my driven personality.

Bobby Martin: 03:13 It would be so cool, but as a few years went by it became more and more obvious that that wasn't going to happen. A lot of the things that frustrated me so much was the inability for me to do things myself when I see something that would be a great idea that I couldn't actually make that happen. That other thing is just the contradictions. There were so many contradictions in the business that are just naturally there. It just drove me psychologically crazy.

Ryan Tansom: 03:13 I love it.

Bobby Martin: 03:46 And now my plan was actually to ride my bike across the country. And actually my now wife, we had been dating for a few years, she asked me you know tell me big picture what's going on or whatever with us and all I talked about was wanting to ride my bike across the country and quit my job. But I never included her in the plan, so she dumped me.

Bobby Martin: 04:07 So it took me two years to get her back. But actually that was sort of the time frame around '97, '98 was the time frame I knew I wanted to start my own business. And I was like wow it's so cool that that's actually an option to start my own company. And I had four or five different ideas. You know I got – a lot of entrepreneurs have way more ideas than that actual time but I chose the industry research one which was in guess what. The reason I chose that is because I was so frustrated working at the bank because they couldn't implement my idea of providing call prep sheets to all the loan officers and so I was like so frustrated that I started it.

Ryan Tansom: 04:52 And I'm assuming your wife was involved in that vision.

Bobby Martin: 04:56 Well, no, because she dumped me right before I started it.

Ryan Tansom: 04:58 So you started the company right after… you started right after that whole situation.

Bobby Martin: 05:02 Well yeah I guess she waited to make sure it's going to work out OK before she came back. Just kidding. But it was… we didn't get back together a year or two after I started First Research.

Ryan Tansom: 05:14 Well I think you know the origination of the business and you hit on a lot of different things origination of the business comes out of frustration or some need. And you know us as entrepreneurs having a difficult time fitting into the framework I think you hit the nail on the head because it is so psychological and I think that's why I love your story so much because you grew a very successful company and if you wanted to just before as we kind of go through the different steps of the journey Bobby can you can explain the company and how you were growing because it ties into the book that you wrote, Hockey Stick Principles, but kind of explain the business journey as you were growing and some of the major milestones.

Bobby Martin: 05:51 Yeah sure. First up I'll tell you what we- do what First Research does – it… we provide, or First Research, I should say, since I sold it in 2007, provides industry profiles from the perspective of sales of marketing individuals. If you're a salesperson you don't have multiple industries and you would love to be like a specialist and only concentrate on one particular industry. You know when I say industry I mean pretty specific like convenience stores or funeral homes or furniture stores. Then you can use our industry profiles and read them, and they're 20 pages, or so and then al…l because of how we were the information the type of information we have he can walk in and meet with a business owner or executive and that person will say well you know a lot about furniture that gives that particular salesperson a huge leg up. And that's what he did.

Bobby Martin: 06:50 And so that was my idea. And the way the idea came up was that I was like I said a calling officer and I would go meet with all the different types of businesses and I'll never forget we were with one of our customers and the guy – it was Queensborough steel company Wilmington North Carolina – and the CEO was this guy named Mark and he was in the front seat and I was in the back seat. I remember where we were on Fourth Street in Wilmington my boss asked Mark what made this guy named Sam Callard such a good calling officer from BB&T bank and the response was, Mark said, well- because he was the Sam was a really good banker. And he said, Well he's smart. He asks good questions and then he paused and he said and he knows a lot about steel and I thought wow that's what I'm going to do because he was 25 years old.

Bobby Martin: 07:39 I'm like that's exactly what I'm going to do. And I went hog wild with it and it worked so well. Then I started forming these cheat sheets and all of these industries you know 10 or 15 of them and I noticed the other loan officers around me wanted access to them. But we had an industry research department, and so the way you're supposed to get information was to fill out a form, fax it in a week in advance and they mail you all this stuff. And I thought well that's just… that's efficient if you're trying to do an in-depth report. But if you just want to be ready to roll, that's inefficient. So I went to them and I said you should take my little your cheat sheet and put them up on the Intranet and they didn't want to do it.

Bobby Martin: 08:19 And it made me furious. And so I looked for a partner. I knew I needed a partner that took me about a year and I think it was very inefficient in that process. I was going to big companies like Dun and Bradstreet who ended up buying us and frost and Sellaband and a bunch of the big research companies. And thinking they can they would partner with me and they wouldn't partner with an individual. I know that now but I didn't then so I ended up on this individual and Inga Windsor. And he told me that "I'll write the first 30 industry profiles if you give me 30 percent of the company" as kind of a business deal and he says I don't know how to sell but I know how to do great research.

Bobby Martin: 09:02 Boy did he ever. He was a phenomenal researcher and so Ingo and I teamed up and that's how we got started in 1999 and the first year you know I started selling in March and by the end of that year '99 I'd only sold four thousand dollars worth of subscriptions. Best idea ever but it just got off to a slow start. Which is you know one of the premises in my book just takes forever. So that's kind of the Genesis.

Ryan Tansom: 09:28 Well and I think that that's a good dovetail into your actual business model because you know in the show we're talking a lot about business value where you were you're creating it. How you end up potentially transitioning it. But you know your book you talk about the slow, steady figuring out of the business model for the first few years so as you were figuring that out I mean 4,000 dollars you obviously knew you were onto something to keep at it. How were you trying to figure out your business model? How did you go to market? How did you price the services?

Bobby Martin: 09:55 Yeah that's a great question. So I will say I did a lot of things with a lot of… I was very naive. And so I did a lot of things at the beginning that weren't so bright. But one thing I did that was pretty smart was the business model I established and that was in 1999. I don't believe they were where they were hardly any SaaS business models around – software as a service – really that I know about. But I decided to price First Research according to an annual fee. Depending on how many people you had at that institution, that would be how much your annual fee is. Now,

Bobby Martin: 10:31 I started out you know basically I did this you know basically projection and I showed all these banks because I figured I'd give ou sell these banks and they would just pour in. And they were you know it was like the typical bank would maybe pay us say ten or fifteen thousand a year for 50 loan officers. You know that type of thing. Maybe be a 200 300 dollar per loan officers per year. So it wasn't expensive. I tried to price it like a Wall Street Journal subscription or a little bit cheaper per person. And… but I miscalculated I figured I could just mail the profile to the banks and they would eat it up but I didn't position my product well. So I was out there saying I can sell you a bunch of research which is going to make your bank much smarter when really I should have been positioning First Research to the banks as I could become an internal advocate for pre-call preparation.

Bobby Martin: 11:26 You know, I could become… and then I had to kind of sell myself to get those first subscriptions and I think that's true of a lot of new businesses. You think you have this great product when really at the beginning you have kind of an early adopter type product which is sort of incomplete. Therefore you have to sell yourself as a consultant with your product a lot of times, which is kind of how hack my way through it now.

Ryan Tansom: 11:48 I can relate to that. Yeah. Yeah. Trust me it's a great it's a great product and service. [Bobby interjects: Exactly.]

Ryan Tansom: 12:01 So… you know how did… did you, you know, as you're figuring out the software as a service business model and the annual subscriptions, did you have any pushback as you were repackaging how people were buying services like that?

Bobby Martin: 12:10 Well it's not that they said when I would pitch it to them.. They didn't quite know how to- what to do with it.

Bobby Martin: 12:18 And so they would not say no not fully say yes, but most of them would show me a lot of enthusiasm. And that's what I call good meeting syndrome and I think good meeting syndrome appeals to more start up new Idea entrepreneurs than anything because you gave… people don't want to really let you down and they want to see the positives of something. So what they do is they give you this really good meeting. But then when you ask them to actually take action and sign a contract or roll it out or send you money that's where they pause and they will pause for months and that's what happened to me. I just had a lot of good meetings and never could close anybody. I finally closed like- one of my first customers was actually a CPA firm not a bank and they they became my lifeblood,

Bobby Martin: 13:13 the CPA firms, because they could… they were a little more nimble. They were a little more entrepreneurial. There was less structure. But I ran into some guy on the street in Wilmington down on the coast of North Carolina and he's a CPA and he asked me what I was doing.

Bobby Martin: 13:24 And he asked me if I had anything with food manufacturers or food distributors and I'm like, "No, but I can get you one fast." We wrote that profile in no time and he loved it and he bought it. He bought a subscription for like five hundred dollars a year and then he ended up referring to a trade association.

Bobby Martin: 13:44 And that's kind of how I got started because the banks took forever.

Ryan Tansom: 13:50 Got it. Yeah that makes a ton of sense. And you know with your crazy growth, too. Can you explain some of the milestones because you know as you're figuring out the first year or two you know then you end up clipping away at a very high pace. Can you kind of give us a little bit of you know benchmarks of how fast you are growing?

Bobby Martin: 14:05 Yes. Okay. So the first year 1999 I did 4,000; second year 2,000 I did 256,000 rather. Now keep in mind had no renewals so that was real… You know a book of business, I sold that much. Now the smartest thing I ever did was in I think it was January or February of 2000. I didn't have a lot of money at all but I knew this guy named Will Walley he was a really good salesman at the bank and he was very young, very charismatic and I really wanted him to join us and cut a deal with them. And I had to pay him like four grand a month plus commission. And I barely… I mean I hadn't paid myself in a year, well almost a year, and I went ahead and took that first little bit of money and paid Will. And now we had two people selling like crazy.

Bobby Martin: 15:01 And so the next year in 2001 I did I think it was seven hundred eighty thousand dollars worth of business. And really what I did as is I think I probably renewed the 250,000 so 500,000 more worth. So we were pretty rolling from there. And then of course the snowball effect after that. But the smartest thing I did like I said is hire Will when I didn't when I was really… I was not very conservative with that but it worked out well.

Ryan Tansom: 15:32 I was going to say a lot of entrepreneurs always have a challenge trying to replicate themselves and being able to have someone else sell for them as well because you know they're looking to you know put bread on the table so that was that was a big decision to make.

Bobby Martin: 15:45 Yeah I think part of the reason I was able to do that is like I said I was single at that time. No kids, no- my personal overhead was 2250 dollars a month. I mean that's that's all the money I needed. And I can wait tables and make that money. You know even back then and that was my plan back in the napkin plan. But at the time I was I was living off of savings and I didn't have a lot of savings at all. I cashed out my stock option plan to kind of get the thing started. And I spent most of that on technology getting things built out and then the rest of the money… I had 30 or 40,000 in stocks. And I took one of those loans against the stocks you know when I was living off of that.

Bobby Martin: 16:33 But um but anyway I tell people like when's the right age to start a company… you know and there's no perfect age. That's a very individual situation or question. But I think that 20 something is a fantastic time if you're not if you don't have a lot of personal overhead because the biggest overhead expense oftentimes is just getting the founders paid. And we just didn't have a problem I was able to invest so much. The other thing about Vertical IQ is we got paid up front. I mean I'm sorry First Research.. Veritcal IQ is my investing business that does the same thing. We get paid upfront. And so it's like if I sign a subscription for ten thousand dollars for a year and they pay a check for ten thousand dollars up front it was a wonderful financing.

Ryan Tansom: 17:18 And did you. Was that premeditated too because you know when we think about you know John Warrilow's got the value builder system and there's a lot of value building methodologies out there and it's get paid first and build a subscription model. Those two things that you did, you nailed. Was it premeditated or was it a necessity or how did you come to those… How did you come to that model?

Bobby Martin: 17:39 I mean I think it was both luck and skill. It was luck because I didn't do it consciously. I didn't read some book and go, this is clever, this is smart, this is what I'm going to do. But I think it was skill because I'd been a banker and bankers… It's a pretty good job for a young person because you meet with a ton of business owners. And I had a lot of financial savvy from being a banker especially a business banker. A fair amount. So I understood very well the value of cash and that you know the whole cash is king thing. And I knew that- I figured that I would go broke if they didn't pay me up front.

Bobby Martin: 18:22 That was true, but I never even considered raising capital right so I was accurate in that. But that's kind of how I came up with that – getting paid upfront.

Ryan Tansom: 18:31 So then you know when you sold, Bobby, because all that was you know you love being an entrepreneur and can you kind of just walk us through that? What was a triggering event? You know if you love being an entrepreneur so much and it was you starting to realize it was in your psychological nature that to enjoy it. You know what led you to sell?

Bobby Martin: 18:50 Well that's a great question. It's a very important question because what happened with my situation is it kind of snuck up on me. In other words like I wasn't looking to sell First Research I had no desire or plans to sell the business. It was not one of my strategies per se. In fact you know I looked at it sort of humbly like which was accurate. No one would want our little business anyway. It's a niche. It's not going to go to a billion. It's not even going to go to 100 million and it's just a really cool business. Now granted we had like 6-7 million revenue and growing fast. It is a 50-100 million dollar market I guess market I guess you could say. But what happened was is that Dun and Bradstreet was in the process of building out profitable Internet businesses.

Bobby Martin: 19:46 They had read they had purchased Hoovers which is an information database for sales and marketing professionals but primarily about companies and then they purchased another company that provides information about people. And so it made sense that they fill out that with industries. I was at a Trade show actually and a lady in business development from Hoovers – now she doesn't even do mergers and acquisitions. She is literally like partnerships like sales. She looked at our product and our business and said just you know in three minutes at our trade show booth and told me, she goes "we should buy you." And about three weeks later some of their mergers and acquisitions people at D&B called us to look to start conversations about possible ways to work together. You know and quite frankly I was very confident. I told them two times I didn't really want to sell the business which was true. But whn they asked all the right questions well if you did want to sell the business, what would you sell it for?

Ryan Tansom: 20:54 So how did you start going… You know because you know getting blindsided with the out of the blue offer I think happens a lot. And so like you know how did that you know as you're you know grinding in the business, growing the business? How did that- How did you deal with that mentally? How did you start processing what she had said or the conversations that were going? Did you start thinking about like what was going through… what was a dialogue in your head?

Bobby Martin: 21:19 Well that's just it. It's that you know at the time in 2006 I was really I would say excited and confident. We were doing a ton of business.

Bobby Martin: 21:31 The business was fun and exciting and we had about 50 people. I was loving it. So I wasn't overthinking anything. You know quote unquote living in the dream. Now what happened was is that our people were talking to their people and then the president of Hoovers wanted to fly in and meet with us along with some people from D&B. And then I was in those meetings and we were talking about strategic ways we could partner selling each other's products, combining products. And I was looking primarily for a sales channel. But the president of Hoover's wanted me to drive him to the airport. He's like "You mind driving me to the airport? I'd love to catch up with you one-on-one." I knew that… I mean I felt like he was probably gonna ask me about something else but that's what he said.

Bobby Martin: 22:23 You know it probably makes more sense to just combine the companies. All of this sounds sort of complex and explains the fact that primarily company research for D&B for Hoover's was done in Austin Texas. People were down in Ohio and then Raleigh could be the hub for industries and that he could see us grow in really fast if we combined and the First Research would become this big amazing thing, so I was like, "Oh that's interesting. But I was like… but unfortunately… you're right. Yeah!"

Ryan Tansom: 23:01 Yeah. Right.

Bobby Martin: 23:03 And then they asked me they said like a couple of weeks later they were very patient. They call me and they said the people from D&B asked "What do you think the company is worth?" And I was like 30 million or something. And they're like well we think it's worth it twelve million I was like well let's just not, not for that… to their credit, they waited about three months. Like they didn't call me at all. And I was like I didn't care I mean I didn't want to sell. So I didn't care and then they called me back. "Well how did you do? How were your numbers? Did you actually hit those numbers?" Of course we did. So one thing led to another and we ended up selling him the business.

Ryan Tansom: 23:44 So look you know one thing led. It's so funny because there's so much in between there isn't there? Like when you decided… so you did… you gave the number 30 million. How did you come up with that? Was that a number that you had determined when you left the bank and that was what you wanted in the bank account? Was that just like some arbitrary number? Like how did you get to that, and then why did you eventually end up agreeing to sign?

Bobby Martin: 24:06 Well you know the 30 million is arbitrary in the sense that I mean obviously we benchmarked it to our revenue and benchmark it to our profits and that kind of thing. We were a profitable business. But it was… I think Inga was older than me. I was 30…

Bobby Martin: 24:39 What was my age? 37 or so? Inga was I don't remember what Inga was but maybe 57 and I had his interest in mind, too, because you know he had at the time about twenty seven percent of the business or 30 percent or something. And Inga was very open to that number. And I was like well it's good for everybody else. Of course a lot of the employees they had options, stock options, and so some of the executives that knew we were in talks. Most people didn't, but some people had to know were in talks and they were like "Yeah I wouldn't mind a couple hundred thousand." Yeah and I'm like well maybe this is and not. Of course I looked at the number too and I was like well I could do anything you know or it just opens up all kinds of things that keep in mind the whole idea is to grow. I thought he was going to. I thought it would be best for the business as well and in some ways it was best for the business. But that was also a big factor is what's best for the business.

Ryan Tansom: 25:26 And yeah what is best for the business and your vision because you obviously have a I mean did you have a vision of what you wanted First Research to be and was there like you saw some reality into that that partner or that that merger? Like what. Well in your head what did you want First Research to be?

Bobby Martin: 25:45 Well we were making the information more and more tailored more and more helpful. We knew that the information about industries standing alone by itself was only so useful to a busy sales person. They really want company information right next to it or like people information right next to it. So we knew that was a certain direction that we wanted to go in in some form or fashion. Right. And it was either through partnerships. It was probably through partnerships not through build. You're not going to get build 3 million records unless I mean we didn't rule it out we didn't rule anything out or even 10 million records. But a combination made the most sense to get that information together, so part of it was very strategic in that in that way. [crosstalk].

Ryan Tansom: 26:40 Right no I mean that makes a ton of sense and on paper makes all the partnerships seem like it's a match in heaven. So then how did you back into that 30 million because I mean you've got a multiple in revenue, if I'm correct, right, versus a multiple of EBITDA? How did you determine what it was worth? Was it a strategic number that you were trying to figure out whether they were going to build it and that's how much would it cost or was it like just actually cash flow projections or how did you get to that number?

Bobby Martin: 27:08 Well so we ended up selling for 22 and a half million plus a 4 million dollar earn out so it was twenty six and a half and I was very confident we could hit the earnout and would hit the earn out and we did.

Bobby Martin: 27:23 And so I think that we definitely look at mathematical models… I shouldn't say mathematical, so just financial models. We knew what our business was worth you know six and a half million sales going to 10 million x-operating margins and then you look at benchmarks and you go this company over here sold for this much, this company sell for that much. Now what we didn't do which was a really big decision Ryan was should we hire a quote unquote broker and other companies look at us as well. Right. Because usually when a company gets sold they get they put together a package and you get a broker and sell it and that broker says we're up and D&Bs were willing to pay that much I'll bet you another company out there is willing pay more and you drive up the price. But we decided not to do that because they were very motivated and they wanted to close by a certain date which was pretty fast and I didn't really want to fool with it.

Bobby Martin: 28:23 Tell you the truth. I didn't want to go around the country saying, "We're for sale, want to buy us?" And then meet with all these people and go through the stress and that's not it.

Ryan Tansom: 28:35 Do you regret doing that or not doing that?

Bobby Martin: 28:51 No only I regret not reading Bo's book, Bo Burlingham's book, Finish Big – or is it finished bigger, finishing very big? [Ryan interjects "Finish Big, yup"]. Yeah I think I would have been way better off. But I don't regret shopping it around. I don't think that would;ve helped us out much. We might have gotten a few million more but nah.

Ryan Tansom: 29:00 Yeah. And this is this is the this is why I loved your interview John and why I'm… you know if we can you know unravel why you wish you would read Bo's book, I think, Bob, is huge because it's you know I mean think about the name of the podcast. It's Life After Business. Knowing what you're going to be doing afterwards and why. And you know what is it that- tell us about your experience about closing and then afterwards, and then why you wish you would have read Bo's book.

Bobby Martin: 29:28 Well OK I'll start with Bo's book because I think Finish Big does a great job of enabling any entrepreneur to think through the process at the end. Hence the word finish. Now it does end differently even- if you sell you don't always end your CEO or president or founder or whatever. I mean there are plenty of stories of successful exits that Bo talks about. But there are plenty of stories of sort of like that probably would have done that differently had I known then what I know now. But I think that Bo's book does a good job of looking at this sentiment from many different perspectives and I didn't have enough of those perspectives like the perspective of the buyer, the perspective of the employees, the perspective of your own self worth and like what makes you tick without even knowing it. Like your own brand or your own shtick.

Bobby Martin: 30:35 Shtick is probably the best word for it. Then and then from the perspective of what's next right like if you say what happens next. Really thinking through that carefully as opposed to just selling on a whim. Because you know doing things on a whim have had worked very well for me. That's that's how I roll. That's how I started First Research just sort of on a whim. I'm gonna do this. Screw it, let's do it. Very Richard Branson like. And frankly a lot of my ideas at First Research were screw it let's do it. It worked very well, but unfortunately a sale is a much more strategic and has much larger ramifications with more pieces of the puzzle and more tentacles that Bo was able to bring out in that book. Hope that makes sense. But what was the second part to your question?

Ryan Tansom: 31:23 Well no I think that it's all intertwined to this because there's so much to the book. And you know Bobby when you sold you had you know when you say what's afterwards you know you're probably you're probably ingrained in your identity in the business and the people what you were trying to accomplish. I mean explain that that emotional process of when you soldthen what happened to your company afterwards?

Bobby Martin: 31:45 Yeah. Well first of all big picture there are three things that Bo points out that can happen when you sell your business. Generally speaking, number two your business. Number one your business can remain a company, meaning it has its own profit and loss statements, that it has its own divisions, I mean it has its own departments, has its own employees that do turnkey, take care of that product. That's outcome number one. Number two, you could become a division and a division of course is when you have some shared services like well no sense in having your own accounting finance department, We have… that's just operational we'll take care of that. Okay. When this is… you know, you have marketing we have marketing. Why would you hire all these people for marketing. We'll just do the marketing for you in conjunction with what we're doing or we have sales people too and we'll just have our sales people say hey would you like fries with that?

Bobby Martin: 32:45 And so that's kind of a division and you sort of pick and choose throughout the organization on what stays with the product versus what goes to the larger headquarters or whatever. The last option is you could become a product. And when you become a product you really just have a product manager. Now granted you have someone you take people take care of the product we write software for the code, do the industry research. But the company is more… has now become a product where there are no sales people or marketing people et cetera, et cetera. And those are the three things that could happen to you when you sell a business. You know I didn't see that really coming. I was always under the impression we're going to remain a company through the general comments that were made all along, but turns out that were a better fit

Bobby Martin: 33:35 probably as a product. And so what happened to our company was we became a product. And over time most employees were either laid off or left the company. And so the company the company per se was no more; it was just just a product.

Ryan Tansom: 33:52 So how did that I mean how did you deal with that when you're watching these people kind of flounder around like fish out of water at the D&B? I mean did you feel responsible for… Did you have regrets on how it went or what would you have done differently?

Bobby Martin: 34:13 Yes. It was brutal. I mean, I completely miscalculated how hard it would be. I mean I was visiting a psychologist weekly. I was under so much stress I thought had like… was going to have a heart attack so ended up like having a stress test with the doctor where they put all these cords all over you, make you get on a treadmill to see if you're healthy. Like is he going to die? That type of thing. But I had physical pain, I wasn't sleeping well, and you know everybody was very stressed out and a lot of people were turning to me for answers. And as much as I wanted to give them answers it became clearer and clearer that I knew a little more than them but I didn't know the answer. Like I would do the best I could with information, within reason,

Bobby Martin: 35:02 but I just didn't have the answers. So I mean I'll never forget it. They were going to roll out this sales thing where how do we sell First Research type thing. I thought I was like one of the people who were really creating this go to market thing you know sort of the communication if you will across the franchise on how First Research would be sold. And I was like I got this, I got it under control, don't worry. And then I found out that it already went out there like I was like I'm working on it now with executives. We had this and then a few of the sales people were together like Bobby, it's already gone out. It's in our inbox. And I'm like wow I didn't even get it. It's brutal. Like it's really tough.

Ryan Tansom: 35:49 What did you think that… what was the biggest. I mean maybe you haven't even articulated it, but you know where did you struggle the most? Was it the lack of control or the lack of you know creativity that you were able to… like what was it that you actually struggle with – loyalty? – or you know exactly what couple of things do you think it was?

Bobby Martin: 36:05 Well it's it's a great question. I struggle at all things like that. So I struggle with the lack of control. I remember like we had a business plan that under the merger we were supposed to follow Matt and Paul hired a bunch of people. But when I hired a few people soon after the merger, I got chastised by H.R. because I wasn't supposed to hire anybody without going through this process and then finally I wasn't allowed to hire anybody. But the point was is that I didn't have any control over anything really within reason. Like I just didn't and that's just I didn't see that coming and I just didn't calculate for it. And certainly the other big thing is that they keep score differently. And so like First Research would quote unquote keep score a certain way.

Bobby Martin: 37:01 So like a sales person at First Research would be measured on his or her success over an annual basis. But then at a large company they usually measured success over a weekly basis for a monthly basis or quarterly basis. And so the measurements were much much shorter. Right. And so I was like if I missed a week I would say that First Research didn't hit its target for a week, I didn't think- I never thought anything of that. I always measured the business per year. I committed to sayig or if we committed to ourselves that we would sell 3 million dollars in new subscriptions in a year or something then hen in a year we would sell 3 million dollars. But what we didn't commit to is 3 million divided by 52, so I didn't know anything about that. Our sales fluctuate week to week too much.

Bobby Martin: 37:50 So that was absolutely brutal as I tried to… I was like oh how are we going to generate another $100,000 this week. We can't. And then they would say you've got to. Oh my gosh. This is new. This is different. I'm not used to this.

Ryan Tansom: 38:08 So how did you go about dealing with it mentally like or as you were starting to realize this and it's coming to you know your awareness, I mean how did you do with it as well as you were working for D&B and how did you like… What did you find out was missing and how did you end up like overcoming it?

Bobby Martin: 38:31 Well… I was I had to work there until June 30th 2018 like a year a year and two months. That's the only way I could really ever count it was just not work there anymore. Like because it was so different than what I was used to. So different than when I was comfortable with. Now keep in mind that's a good company like D&B, they didn't do anything wrong. They were great like they're really good businessmen and women they were… They know what they're doing like I don't want to imply they were bad and I was good. All I'm saying is I would be… I'm only telling you how I felt, right? Their strategy was probably sound and good but the only way to overcome it was to not work there anymore. I would like to left earlier, but I actually- I sort of became a sales person.

Bobby Martin: 39:24 You know I kind of got phased out of that role as president which was OK. I mean I didn't have bitterness over that. So I was kind of selling First Research in portions of the West Coast. I was going to Portland and Seattle which was cool. I kind of like that.

Ryan Tansom: 39:41 So you know what… What would you have done differently now that you know you know hindsight 20 20 what would you have done differently throughout the entire process?

Bobby Martin: 39:52 Well first of all that's a that's another – You ask great questions man – I think that honestly man I think that if I was going to sell to D&B now that I know what I know now that I would do it I would be much savvier in knowing what to expect. And I would go OK this is what we can expect. My job is to help a company I sold to execute to the best of their ability. To the best of my ability so that they can be as successful as possible. Don't get me wrong I didn't not execute but I just feel like if I had known then I could have taken all the emotion out of it and gone, "That's what we signed up for." And you know I gave a lot of the employees a fair amount of money, even more than the options.

Bobby Martin: 40:44 But I would probably do even more now like knowing them, I would probably say that's not enough options. You deserve more cash so I would take more money out of my pocket and give it to the people who had to do a career change. Now they all landed on two feet. One of the greatest things that came out of that was that a bunch of new businesses started of ex-First Research employees. Really successful ones, like there's this one company you should interview called Schedule Fly – they're fascinating guys if you can pin them down. But they are really off the curve in a good way and it's employees scheduling but three key people from First Research started Schedule Fly. I started Vertical IQ which is really jamming. It's kind of industry profiles for our primarily for bankers and CPAs and then Carolyne and Inga they started local market monitor which is jamming. And the list goes on and on.

Ryan Tansom: 41:49 So obviously all of your employees are pretty solid individuals. Did any of them hold hold it against you? Or do they just like mentally and financially and career wise all land on their feet without much of a hiccup?

Bobby Martin: 42:04 I would say they didn't land without a hiccup but I don't think they have they held it against me, no. It was a couple who were rumbling who were angry but most people I mean almost all of them were totally cool about it. Tell you the truth. They didn't blame me at all. And even though I said I kind of screwed up they still didn't blame it they were like, "Man, you did what I would have done." They were great. And no hard feelings. And there's other companies boardroom insiders that sprung out to lead D&B. That's a fantastic business. And all of them would make great interviews to get their perspectives on this merger too.

Ryan Tansom: 42:47 And that's why it's a good tie into you know what you're doing now. And so you know because you can tell the passion, enthusiasm of what you've got now and I know there's been some time that's lapsed but so let's maybe back up one sec before we talk about all these amazing businesses that you're involved in.

Ryan Tansom: 43:03 You know Bobby when you left D&B and had to re calibrate yourself in the six inches between your ears and understand who you are… how did you- what are the what are the different resources or things that helped you go through that process and how did you come out to where you are today?

Bobby Martin: 43:22 Yeah. You know the resources piece I think that I think counseling is really important. Kind of a combination of psychological counseling coupled with career counseling. I ended up finding a guy who I really liked a lot but it took me three or four years after I had sold. So I wish I'd had met this guy John earlier because it really is a process to think through sort of what's next. You know his company was sold 10 years ago which is crazy.

Bobby Martin: 43:57 And I think I also learned a good bit about the last 10 years. Like what would I have done differently from the last 10 years. And it was interesting because I ended up writing the Hockey Stick Principles which was absolutely a blast project. I loved it. And so I learned a ton it was like an MBA times ten primarily the interviews I did with successful founders were really interesting I learned a ton but I became an angel investor which is formula I mean a lot of people do that. But I've really enjoyed the way I've gone about it because I've invested in eight companies and in a very like early stage, laid back way. So I don't have a formal so much formality and that's made it really fun and quite frankly there are lot of them are successful life growth businesses where they're like you know millions in revenue, but they're not going to get to 100 million yet they have good operating margins type of businesses and niches. And that's been a really cool journey that I've loved because now I'm basically buddies with eight different founders of eight different types of business. And then Vertical IQ of course it's sort of the second version of First Research which has been a blast. We have about we have 16 employees and it's a really fun business it's doing really well.

Ryan Tansom: 45:21 So I guess as you look at these businesses Bobby how are you approaching your investments or your emotional tie and relationships to these businesses and your new business differently because of what you went through with First Research?

Bobby Martin: 45:33 Well yeah. See I kinda emphasize to them to really think through what it is they're trying to build like what is this you're really trying to do. About half of them are looking for the fast growth and the exit right they're looking for the sell out.

Bobby Martin: 45:53 However it seems to be more of an explosive like the scream on the scene was gather up some professional money, analysts get some really smart people and can build something and then maybe sell it. I felt like First Research was more of a cult culture. You know we were like a sort of family. All these businesses are kind of family like that you know what I mean like not all of them but a lot of them have that vibe. But didn'tlike people didn't really quit at First Research. We didn't have a lot of turnover. I don't think anybody ever quit there just because we were having fun and just sort of… It's like summer camp kind of thing but it wasn't lazy either. You know we- but we worked 40 hours a week right? Like we were 40 hour work week people. So my advice to the founders I work with is like, "I don't know,

Bobby Martin: 46:39 are you sure you want to sign up for the 70 hour kill yourself and then sell out and then have only 20 percent of your company when you sell out, make make two million, then it gets taxed down to like a million?" Like what is that? That doesn't seem like a great deal to me. I'd rather. I'd rather have a business that earns three or four or five hundred thousand dollars a year. And it's really cool. And I work 40 hours a week right. So I'm always encouraging people to make their business whatever they want to. Too many founders a new idea tech start ups that kind of thing think the formula is build it fast grow it fast pour capital into it and then sell it when really a lot of these businesses should just be how do I create a business that lasts for a very long time and it has 10 million in revenue, 25 percent operating margins, 20 percent growth, with a phenomenal culture. Should that be the goal? Right? And that's kind of what we're doing with First Research. We could grow- I mean, I'm sorry, Vertical IQ – we could grow Vertical IQ much faster, but we're just trying to enjoy.

Ryan Tansom: 47:52 Have you read the book Small Giants?

Bobby Martin: 47:58 Oh yes, yes that's Bo's other book. Yeah.

Ryan Tansom: 48:03 That's like to the t what he is talking about in that book about building a small giant where you don't have to grow a scale and you know take on VC money and all this other stuff. It's about building a healthy, sustainable business with good culture. And Bobby it was crazy, I asked him this question, I said, "Can you finish big and become a small giant?" And it's about — and I don't know if you've gotten adivce from all the different companies you're working with or the people you've interviewed, but can you finish big and keep the company that carries on without you while having this kickass family culture business? How do you balance that emotions, culture, financial returns all at the same time. I don't know if you've found a way to do this or if it's always a struggle?

Bobby Martin: 48:46 Well yeah it's a great question. I think well yeah I do think you can do it for sure. I think certain situations make that happen more naturally. For example if you get venture capital money and that the VC money is professional money, your chances are much lower because they really need to sell and they need it to look like other businesses they don't want you to [unclear] they are a little off the curb just because you feel like it and it's your culture. They're looking for growth and they're looking for an exit. So if you take VC it's hard to do but you can do it that is more difficult. I also think that the way to get that done is if you're going to sell in the future that try to sell over three to five year period to the perfect partner and really understand who you're selling to, what their intentions for your business are in terms of integration and culture change and that kind of thing.

Bobby Martin: 49:50 Because it's absolutely doable, but you know I just think that the other thing too is you want to put yourself in a position to have whatever you want in terms of a culture by having a business model that is profitable. Right? So if you have good margins in your business and you can earn 10 to 20 percent operating margins out of your business every year and you could still grow 20 to 30 percent a year and you have the right business model you know they have that SaaS business has that rule of 40 like the growth rate plus the operating margin should be 40. So if you can hit the 40 rule then you can do it you know I'm sure you have a couple of comments about that.

Ryan Tansom: 50:34 No, no, I think it's I think it's good advice because you know it takes time to get your head wrapped around what it is that you want. So it takes a lot of because if you don't know what's out there then it's hard to figure out what you want.

Bobby Martin: 50:46 Yeah absolutely. And I think thinking through that carefully and slowly is is the way to go. And you know build the company the way you want it to be treated like it build it the way you want to make it. You want it to be some like… for example, a little things within the culture like if you want people to be able to work from home whenever they want, fine do that. If you want to have a cool office too then you can do that. You can do anything you want so long you make it work within a reason. Some of the guys I know they started businesses that are so good that they have unbelievable profit margins. And they have no cost in their business with millions in revenue and they don't work. That's how talented they are. Granted they created it that way.

Bobby Martin: 51:30 So everything they did they went about it that way. And the biggest thing they are good at is saying no. So the ability to say no is oftentimes one big yes. Right? And say you just set up the right business model and you could do anything. So.

Ryan Tansom: 51:49 You know I think it's important too because I mean you build it they – I mean that you just define what it is. You know finishing big while creating a small giant because you've built something that's sustainable without you and you did something that you like and you know even that working from home and that… you know there is this other lady who I've talked to where she had all these amazing things in her culture that were important to her but she didn't choose the right partner you know because… so if you sell to someone that doesn't allow your employees to work from home and then destroys your culture and you're going to be unhappy even though you've financially crushed it then don't do that.

Bobby Martin: 52:20 Sure. Exactly. That's right. The partner – and I'll tell ya, I also think in my book Hockey Stick Principles. You know avoid 50 50 partnership. It's a simple formula. Ow Fifty one percent or more of your company. You know otherwise you pretty much work for the other founders. You know the other founder. That's not a bad thing but it's a lot better if you have a particular goal in mind to build it the way you want to build it within reason. A big part of building the way you want to build it is keeping everybody's interests in mind right.

Ryan Tansom: 52:55 Right right. Well as we wrap it up here. I mean I know there's and you know you had a lot of great pieces of wisdom throughout the episode is there anything you want to highlight or leave our listeners with.

Bobby Martin: 53:03 Yeah I mean I think the biggest thing is that I hope people take away from my chat with the Ryan is that they're selling out is overrated so if you sell out you sell your company that's oftentimes overrated because having lots of money is overrated. And usually when you sell it's a financial transaction normally and having lots of money is more money more problems and that's for real like Notorious B.I.G. was right. It's just a bunch of headaches. And if you have a great business, you still are able to earn a really good profit and provide a ton of jobs or whatever, but owning – So having a lot of money and selling out is overrated but having your own company with your own culture running it the way you want to run it. It's like great to employees and has good margins is really great to its customers that's underrated right. Like I said that's kind of how I look at it. So I hope that people picked up that from my chat with you.

Ryan Tansom: 54:06 I enjoyed having you on the show so much. If the listeners want to get in touch with you or check out where you're at online what would be the best place?

Bobby Martin: 54:16 Bobby Martin dot me this be Bobby Martin Dot me. It's also a hockey stick principles dot com. But now just go to Barbie. MARTIN dot me and you can sign up for my blog. You can get in touch with me there etc..

Ryan Tansom: 54:33 All right thanks so much for coming on the show Bobby.

Bobby Martin: 54:38 Hey Ryan, nice to meet you, I enjoyed it.


Ryan Tansom: 54:41 Thanks for sticking around. I hope you enjoyed the interview with Bobby.

Ryan Tansom: 54:44 I am so happy he was on the show. It was his episode with John Warrilow's built to sell radio that got me and my dad really going because we've really had a good understanding of what we went through and between his episode and the Finish Big book by Bo Burlingham. It really changed my trajectory of where I was going. This podcast and the services we have with our firm. So my three takeaways from my interview with Bobby are the first one being knowing why you became an entrepreneur is crucial to your ultimate happiness because if being an entrepreneur is psychologically ingrained into who we are the business becomes a reflection of our personality and all the things that are important to us. So knowing why you became an entrepreneur will help you understand why your business is important to you and the relationship that you have with the business and how you're getting that happiness out of that vehicle that is known as your business.

Ryan Tansom: 55:42 The second one is knowing what's important to you in an exit. So if the first one is knowing why you're an entrepreneur what's important to the second one is knowing what is important to you in an exit, other than the numbers. So what Bobby said is after the money, there's certain things that are important to you whether it's changing lives, having people work from hom,e you know providing to the community, whatever it might be that will help you figure out how to be happy once that deal is closed so you're not sitting there working for someone else or have sold to professional money and not really understanding what the motives were is crucial to making sure that you can navigate and choose that perfect partner to transition the business onto. The third one is knowing what to expect.

Ryan Tansom: 56:28 So if you can do any justice to yourself is understanding how to dive into resources to get the different perspectives that Bobby was talking about. So read the book Finis Big and Small Giant by Bo Burlingham because they're amazing and they will provide insights that even this podcast or other books might not provide because of how well-rounded Bo handles the Finish Big interviews and in the context of the book. Interview and sit down with individuals or entrepreneurs that have sold or that are involved in the sales so that way you can understand their perspectives in real life and then the last one is listen to podcasts like this hopefully is providing us some value to see these other perspectives. So that being said if you can rate me on iTunes go to Life After Business shoot me a rating that would be super helpful and tune into next week where we've got great tax advice on how to defer capital gains on the state and federal level using a 10-31 exchange.

Ryan Tansom: 57:20 So we dive into how the 10 31 could be party transition plan to make the financials a bit more viable to get you out of your company with more money and sooner if that's what you want. So until next week.

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Written by Ryan Tansom

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.

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