Podcast: The Importance of Pivoting in Business, an Interview with Ryan Born

By Ryan Tansom
Published: July 19, 2018 | Last updated: March 21, 2024
Key Takeaways

Pivoting can save your business and help you succeed as an entrepreneur.



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 Growth and Exit Planning that helps in exit planning, value building and financial management.

About the Guest

Ryan Born started his career in the Atlanta office of PricewaterhouseCoopers’ (PwC) Assurance and Business Advisory Services Practice where he gained experience in an array of industries. He later transferred to New York City to broaden his experience in the firm’s Tax and Legal Services division. After PwC, he served as VP of Finance and Financial Controller at during which time the Company was acquired by Getty Images for $208 million. After WireImage, Ryan angel invested in Internet Marketing Inc. (a 2012 Inc 500 company) and, the largest one-stop resource for finding and comparing new condo developments, where he also served as CFO. Most recently, he relocated to Los Angeles and founded AdRev / AudioMicro, Inc, which ranked as the #5 fastest growing media company in the USA as part of the 2015 Inc 500, the #1 fastest growing company in the San Fernando Valley (by the SF Valley Business Journal in 2014), the #6 fastest growing company in LA (by the Los Angeles Business Journal in 2014), and the #40 fastest growing company in North America (by the 2015 Deloitte Technology Fast 500).


In 2014, Zealot Networks acquired a majority the company for $20 Million and later increased its ownership position in mid-2015. AudioMicro, Inc. operates 4 brands — AdRev (a YouTube asset administration service & multi-channel network), DashGo (a music distribution platform that distributes music to retailer such as iTunes, Spotify, Pandora, YouTube Music Key, Sound Exchange, Shazam and many more), AudioMicro (a micro stock music & sound effects licensing platform) and ImageCollect (a subscription-based celebrity photo library). The Company is backed by DFJ Frontier, part of the largest VC network in the world with over $7B under management, and Fotolia LLC, a leading stock photo marketplace with over 30 million images that Adobe acquired in December ’14 for $800 million.

Ryan graduated Beta Gamma Sigma with an undergraduate degree in Accounting/Marketing & Art history and a Studio Art minor from Emory University. He possesses a Masters of Accounting Science degree from the University of Illinois at Urbana-Champaign and holds an active CPA license with the State Board of Accountancy of his home state, Tennessee.

If you listen, you will learn:

  • Ryan’s early career as a CPA.
  • His time with WireImage and what it taught him.
  • The only two things that generate wealth.
  • The changes in the media rights industry.
  • The problems Ryan saw with the system.
  • How AudioMicro and microstock changed the system.
  • How Ryan raised the capital for AudioMicro.
  • The mistakes he made early on in the business.
  • Ryan’s advice for building an effective pitch.
  • Why EBITDA is important and not important at the same time.
  • Other factors that buyers look at during a sale.
  • Why you need to break even as soon as possible.
  • The struggles AudioMicro had in the beginning.
  • The list of avenues AudioMicro tried that didn’t work.
  • Why you need to choose your investors wisely.
  • How AdRev worked.
  • Why Ryan didn’t hire an investment banker for his sale of AudioMicro.
  • The indicators that it was time to sell.
  • The dance Ryan and his investors did to get offers.
  • How getting the best offer is like playing poker.
  • The benefit of having a knowledgeable team around you.
  • What happened after AudioMicro sold.
  • The beginnings of HAAWK.
  • The thing Ryan is doing differently with HAAWK.
  • Ryan’s parting words for the audience.

Full Transcript

Announcer: 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: Welcome back to the Life After Business podcast. This is episode 102. Today's guest's name is Ryan Born. Ryan got his first taste of an exit at a company called Wire Image where he was the VP of finance and that watched and participated in Wire Image's exit for over $200,000,000 and after that entire journey he decided that he wanted to jump in, become an entrepreneur, and he started a company called Ad Rev that did video rights management, which he eventually ended up selling for over 20 million bucks. He has one heck of a story. And this episode runs a little bit longer than some of the other ones, but the reason I decided to keep the whole episode is because first I've never edited out any of the content in any episodes, but Ryan and I throughout the conversations, he really just took it from start, which is how he started the company, raised the money, how he got the venture capital funding, the partnership, how he pivoted a bunch throughout the process, some of the technical and the financial reasons he decided to sell and how he ended up doing that, but then he even really towards the end we had a really good conversation of what it was like for him working for someone else, why he's doing what he's doing right now, and it was just an overall, really fun conversation that I had because he really walked us through the entire circle of what it was like to be an entrepreneur from start to growth to sell to afterwards and I just had a really, really fun time chatting with him. He's got a lot of good wisdom, so I really hope you enjoy the episode. And without further ado, here's Ryan Born.


Announcer: This episode of Life After Business is sponsored by GEXP Collaborative. 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 buyer of your choice at the price you want.

Ryan Tansom: Ryan, how you doing today?

Ryan Born: I'm good. How are you doing?

Ryan Tansom: Good. I, uh, I'm looking forward to hearing your stories on the show. You've got some really interesting things that you've done in your past as you've become an entrepreneur and the different ventures that you're involved in, which are quite a few and you've got to know a lot of different pieces of wisdom I think we'll be able to pull out of ya. But for the, for the listeners that aren't aware of some of the things that you've done, can you maybe give us. Let's start at square one, like how did you become an entrepreneur and did you know that you were going to be one or was it an accidental situation and kind of give us back to square one?

Ryan Born: Yeah, sure. So I didn't know I was going to be an entrepreneur, but looking back on it, it was unquestionably like a natural path. I was really always hustling. I had jobs from the time I was 15. My first job was watering plants in Nashville, Tennessee, and I would work at a plant store and I would sit out in the hot sun in the summer and water the plants and um, that was, you know, I was just always hardworking, so I always had jobs and then I put my- basically through high school I would just work to various hustles, whether it be making and designing, drawing tee-shirts and selling them or sort of like running your type of lemonade stands. I always just, I always naturally thought you had to make money. It was like you got to figure out a way to make money and so you can, you know, for me it was like I can go out to dinner with my friends and I can have a milkshake or like whatever. I had disposable… I could put gas in my car. I didn't have to ask my parents for money. I mean they definitely supported me in, by all means. They were wonderful and I had a great education and everything. But in terms of like getting cash, which I never really wanted to have to turn to them. So it was just always doing one thing or another and it sort of naturally led me… At one point I became an accountant, a CPA, and didn't really love being an… I was an auditor actually at Price Waterhouse Coopers, which is a great firm, but I didn't really love for myself being an auditor and I ended up falling into media. I became an accountant at a media company which is best known as Wire Image and it's w i r e i m a g e,, and still around today and when that company grew and I ended up getting bought for $200,000,000 and I was fortunate enough to have had a common stock option grant as an employee.

Ryan Born: And I also had invested a little bit of money into their series C round. So I made some money as an investor. When I saw the founders of that company, who are still advisors of mine to this day, I saw them get very wealthy, it was like an Aha moment. It was so bizarre. Like no one ever told me. I wish someone had told me it… either no one told me or I didn't listen, one of the two, it doesn't matter, but, but no one ever told me. It's simply that they. All he had to say was this. They said they should've said, you know, a wiser person should have said, "Hey Ryan, did you know there's really only two ways to get to be wealthy?" And I would have said "no." Like you can be a doctor, you can be a lawyer, you can be an NBA basketball player… there's a lot of ways. And I said, "no, there's really only two ways" and one is you can inherit money and that's not, that's not a game plan. You know, that wasn't, wasn't my plan and two, you can do it through capital gains and capital gains more specifically is done by founding a company with literally nothing starting at zero, a couple of dollars invested, whatever it might be, and eventually growing it into something very, very big and selling it and your stock in that company is, you know, the gain, the gain on your stock. And so being an entrepreneur is really the only way, in my opinion, to create outsized wealth. You can work as a doctor, you can work as a lawyer, you can do very well. And I'm being a little bit narrow minded in what saying because there are plenty of people that have created wealth in certain other professions but outsized gains, enormous ones are done by being an entrepreneur. And so when I saw the founders of Wire Image do it, it was like, this is my time. I had always been hustling. I always been doing different things and I was finally ready to go out on my own. And that was when I founded a company called Audio Micro Inc, which had its biggest, its biggest brand became what was known as ad rev and so ultimately ad rev and Audio Micro Inc were my, my ticket to doing it. And I'm. So there you go.

Ryan Tansom: That's awesome. I think you and I were chatting a little bit before the show is what are the things, you know, because I think there's that whole entrepreneurship like seizure I think is what they call them, the email or you know, or the, the realization like, okay, yes, this is the way to make money, have freedom, all the different things that kind of align up for someone willing to stomach the risk to jump in becoming an entrepreneur. How did you know what you were going to be doing for your business? Was there, like, was there, did you have some inklings that you knew exactly what you're going to be doing, you just were waiting for the right opportunity? Like the, uh, the gains that you've made from that acquisition that you went through or like how did what, what line you up and then what exactly did you do?

Ryan Born: Yeah, it's a good question. So when I was at Wire Image, because it's, it's important to kind of go back to that point in time. I was in my twenties, I was living in, in New York City. I was their accountant and ultimately I was their financial controller and VP of finance. We had offices in 12 different countries. Um, and the thing that I was doing was, it was a photo industry, so we were aggregating and licensing still images, so just photos if you think of it, non non non video, video wasn't as big back then. This was the early two thousands. And the industry of the, the photography industry was going undergoing some changes and I was… So I was following the industry very carefully. Like I would listen to the conference calls of the public companies in the space. They were known as Getty Images and Jupiter Media was, was a company at that time. They're no longer around but – actually Getty ended up following them up. But anyway, um, so following what they were talking about on their conference calls and following the industry. And I came across a bunch of startups in that space that we're doing what's called microstock and I was fascinated by micro stock. I was like, this is the future of photography. And the difference between microstock and traditional licensing was that… So in the first first photos went through what was called rights managed licensing and rights manage licensing means, "Hey, you're People magazine, you want a photo?" Then the photo agency says, "well, where are you going to publish it? Oh, you're going to publish it in People, okay, well are you going to publish on the cover or are you going to publish it on the interior? Okay, are you going to publish it a quarter of a page and a eighth of a page, a whole full page spread?" Okay. Depending on how you want and how big's your circulation, et cetera, what countries are you gonna run it in. Depending on all your answers to all these questions, they'd be like, here's your price. So you said a quarter page, you said US circulation of a million. We say it's $400. So then they finally publish it. Then you, then you find the image being published. Then you send them an invoice and 90 days later they pay you. I was like, this is crazy, right? I mean, this is like a lot of work to go through.

Ryan Tansom: I was going to say, I can't even imagine that like quote sheet and how someone would actually come up with that 400 bucks.

Ryan Born: One of the most out of the world things and now I'm on a sort of a tangent here, but that we used to do as they used to sit there and go through all the magazines, entertainment magazines, and they would flag with little post-it stickers all the images that were Wire that were from Wire Image and then they would pass that flag magazine with like all these like little sticky things over to someone in the sales department to actually create an invoice and then send it to the magazine to have them pay. And of course then I was on the accounting side and like 90 days later they'd pay it or you have to chase them down to pay it, whatever it was. And they pay by check and you got to deposit the check. It was like totally bizarre. So anyway, what this is all to go into. The next thing that happened in licensing was called royalty free imagery. And royalty free imagery with like you can pay it started on CDs and discs and you'd get this disc of a thousand photos, 500 photos and anything on the disk you could just use as much as long as you bought the desk because let's say the discussed thousand bucks. You could use all the images on it over and over and over again, and then the next step was microstock and microstock was sort of an offshoot of royalty free licensing and it meant the difference was it was crowdsourced, so the photographer instead of having… It also used to be, if you want it to be a photographer, you'd have to send them slides of your work and they'd sit there and an editor would review them and they'd be like, okay, this photographer's good enough. We'll we'll add them to our roster and he's a- He or she is allowed to submit images and oh, this photographer's not good enough. And it was like, this is ridiculous. Like crazy. Some microstock solved all that, like anybody with a digital SLR and now, you know, iphones have amazing cameras on them and cell phones. But anyway, um, as, as cameras went digital, they went from film to digital in the first DSLRs, one of the more popular ones, which was the Nikon d 100. And when those came out, people around the world could just take photos in their home studio. You could be in Latvia, uh, Croatia or Russia, you can be anywhere in the world and submit them to an agency and they would just review them on the screen and instead of accepting or rejecting the photographer as a whole, as a contributor, they could just pick and choose individual images they wanted.

Ryan Born: So they were, in short, crowdsourcing massive amounts of photos. They were licensing them for as little as a dollar and in short that was microtransactions, like little small dollar licenses. And it was no longer back to the people magazine example, like, are you going to use it on the cover? Are you gonna use on the interior of a page, a page, half a page, a whole page? Like all that stuff went away and it was like, if this isn't a magazine, it cost this one price, and it was, and it was crowdsourced imagery and simple and the ones that emerged, that I saw were called, there was istockphoto which Getty ended up also buying a shortly after they bought Wire Image, there was um, Shutterstock, which today is a public company, I believe it's valued north of a billion, possibly a billion and a half. There was Fotolia which ended up getting bought by adobe for like $800 million at the time. I saw them when they were very, very nascent and I said, I want to have one of those. That's the future of we're doing celebrity photo licensing. Microstock's going to come into this space too and that's what we should be doing. And so again, that's a long, long story of when Wire Image got sold. And I was like, it's time to go out on my own. I wanted, I actually initially wanted to start a microstock celebrity photo agency. And believe it or not, that was the first vision for what ultimately became Audio Micro, which had really not much to do with celebrity photo licensing at all. You can kind of tell from the audio name and then to what ultimately spun out of that was ad rev which had nothing to do with photo licensing and the journey ended up being a successful one. But I thought I knew what I wanted to do.

Ryan Born: I thought that celebrity micro stock was going to be a hit and was gonna let me retire on some private island in. The reality was that wasn't it. And we had to pivot a number of times. In fact, throughout the journey of Audio Micro Inc, um, which had an initial name of Image Collect inc, which was the celebrity microstock that I wanted to start. Um, there were like six or seven… I don't want to get the number wrong… different pivots of products and services that we, that we launched and which all, almost all of them died except for ad rev, which really took off. So, um, and then there was also… I guess I'll tell it in baseball terms, if I got up to bat, I had one company, but each of our products was, it was a turn at bat. I probably got up to bat seven times I hit, I hit maybe one single, I got one walk, I got five strikeouts, and then on ad rev, I closed my eyes and I hit the ball as hard as that good. And it cleared the fence barely. And I pulled a hamstring running home, but I got there.

Ryan Tansom: Well I think it's, I think it's a really good, I mean it's a good analogy and I think the pivots is something that a lot of people don't necessarily talk about it because it's like, oh, how did you do it? And then it's like, "oh, I hit this Grand Slam." But the reality is like most times people are pivoting and constantly trying to figure out where they're going. And so I'm curious as you were kind of going a couple of things is like, did you sell funds, you know, maybe maybe take these noises. Like did you sell funds to start off? How did you actually structure it because as you were pivoting, I think how people have their companies structured, how they're capitalized, impacts whether they're able to pivot or not, but then also as you're pivoting, what was gravitating you towards certain things? Was it a need in the market or, or was it was a type of business model because obviously that microstock business model was extremely appealing and they kind of transferred itself into various other parts of it. So kind of walk us through the, the, the underlying workings of that, the pivots and the structure.

Ryan Born: Sure. So the very early capitalization of the company was so was myself with no job, so I was, I'm going to work on this full-time so with no for no paycheck and if I fail I'll go back to being an accountant. So I at least had like a plan b to fall back on. And the money that went into it was most of my… I had savings from the sale of Wire Image. I cleared a little bit of money in the sale of my, of my stock and I put a good amount of that into… I started – first employee, I was just paying them out of my pocket. I wasn't paying myself anything. And then I also got to- this was a 2008 ish and there were zero credit was really loose. I think it's still kind of is at this time, but anyway, like you could get zero interest credit card with like $50,000 or maybe it's like 25, $25,000 limits. And I got two of them and it was like, oh, you don't have to pay this for a whole year. All you gotta do is like make the minimum. And so I had like two zero interest credit cards that I put a lot of the early bills, whether they be software development or hosting and storage. And I sort of was like, I'll figure this out later. And then. But I didn't wanna I didn't wanna like put myself into debt. So I um, I went quickly, went out to raising capital. So when I landed, so after Wire Image was sold, I, my wife and I moved from New York to Los Angeles where she, she's from and right as I got off kind of their plane, I started going to networking events in. The first one I found was the Los Angeles Venture Association known as Lava, l a v a, I think it's like is their site.

Ryan Born: And I was like, okay, well that's where the venture capitalists hang out at these events. So I'll go there, I'll show up and to start to network. So I started meeting venture capitalists. And this is funny. This is a really funny story is absolutely true is I, after I, as I got involved with Lava, just going to their events, getting to know the executive director, a really a great guy named Len Laundry. As I got the new land, he said, "well Ryan, you know how to use a camera." There's a whole other story I haven't told about me becoming a photographer on my nights and even while I was the controller at Wire Image, I also would spend my nights and weekends as a photographer. I taught myself how to use the DSLR. Anyway, so they said, "you know how to take pictures. We have our annual event. Would you be our photographer for the annual event?" I'm like "sure I'll be a photographer. No problem. I can handle that." So I would go around the room. I was going around the room and I was talking to VCs and I'd be like, Hey, can I get a picture of you guys together? And then after doing that to a couple of VCs, I said, "oh, can I also tell you about my startup idea?" And I literally pitched these two guys, David Kremmen and Scott Lanette from a fund called DFJ Frontier. And they were like, I remember to this day, Scott says to me, he goes, yeah we'll take a meeting. And I was like, shocked. I was like, oh my gosh, DFJ's going to take a meeting with me and like… And I.. The funniest thing is after I sold the company, I was going through my photo archive and getting it all organized and stuff like that. And I found the photo that I took of the two of them [Ryan interjects: Nice!] and I sent it to them and I go, this is when we met and it was just like magic, you know, it's just like that magic moment that turned into the company. So they funded me after obviously they took a meeting and there was more meetings and more pitching and diligence. Ended up writing a $500,000 check into the company to capitalize it. And they were preferred shareholders. So they were traditional VCs, early stage venture capitalists, venture capital firm out of southern California. DFJ Frontier was the name of, I think today the fund is called the Frontier Venture Capital Fund. They may have changed their name slightly, but anyway so that, that was the first kind of money…

Ryan Tansom: What percentage did they get of that? How did you guys get the terms and conditions of what that structure was going to be, like what you were going to be getting for the $500?

Ryan Born: So this was my first time raising VC. So they wrote me a term sheet and if I recall correctly, the pre-money valuation on the business was a million bucks. And so for 500 grand they essentially bought a third of it. Now I know that some people may think, "hey, that's half of it!" But you have to add a million plus 500 to get to one point five and then divide 500 by one point five to get to what they owned on, on what's called a post-money valuation basis do. Anyway, that was the terms of it. And I was like, it wasn't great because these days most startups in for seed funding, they uh, you can kind of follow the market a little bit if you read a lot of the things like tech crunch or whatnot. Like the pre-money valuations are like 5 million bucks for a lot of these San Francisco and even LA-based startups.

Ryan Born: So they've come up five times since then. And had I had, I raised on like a $5,000,000 valuation when we sold obviously would ended up being more for myself and our employees because we had an option plan and employees had stock in the company too. But anyway, I took it. I took it at a million. I was, it was a term sheet at, I didn't want to haggle with it. I wanted to get going and it was like, that was kinda how, I mean I talked to advisors, one of which is a founder of Wire Image and I got advice, I'm from him on how to work a term sheet and there were certain certain points that we went back and forth on particularly the liquidation preference and whether what they call participating versus non-participating and you know, things like that. I could go in a little more in depth if you want me to.

Ryan Born: So a few things were negotiated. It wasn't like I just took it but the valuation I just accepted that $1,000,000 pre-money and then throughout the rest of the company they invested another 500 k so they ended up putting in a full million because we burned through the first 500 k and I made what I would looking back on call a number of, maybe mistakes with the money early on. Not, not like huge ones, but just things I just didn't need to spend it on or like, you know, I hired a certain… [Ryan interjects: learning, learning mistakes] things like that. Yeah. So anyway, they ended up putting in another 500 so they all and they had put in a million and then a strategic investor actually Fotolia that company I mentioned earlier that was a microstock photo company, ended up putting in 200 k. So all that we raised in the history of the company beyond my initial investment of my time and some of my savings and the zero interest credit cards was one point about 1.2 million dollars of outside capital came into the company and its history.

Ryan Tansom: So, which is great context because I think one of the things that, you know, I've interviewed other people on the podcast or through stories is like when you're pitching these people and they'll. And nowadays you know, the biggest difference between a lot of traditional businesses and a lot of people that are VC-backed is there's always usually an exit, like what's your exit strategy? How am I going to get my money back? So that's the biggest difference I've seen with people that don't have, that they kind of just chug along until they realize, oh crap I need to sell versus usually it's pushed forward and you pivoted a bunch with, you know, as you're using other people's money and you've got partners that have invested in this. How did those dynamics work? I mean, as you were pivoting and you were doing these different things, what was their input and was there an eventual exit strategy in your pitch to begin with?

Ryan Born: Um, to begin with? Yeah, I think I had a, it's all a story, right, of what you think is going to happen in the future. It's all a – the fancy word people use these days is a narrative, but I believe in mine was definitely found, but it was, you know, there are these players in this space that are acquisitive. There are errors, Getty Images, there are these other microstocks today. Shutterstock is big enough to do acquisitions and they have done some. And so I think my initial pitch deck had a selling after we grew to a sizable business in terms of revenue and EBITDA, a selling to one of the larger players in the space. So it was an industry that existed licensing of content. In the case of my initial business plan, and uh, it became, um, a, a micro stock music company was what I was pitching a basically if I stock photo with selling photos, Audio Micro was licensing music. So as people would be creating video on their phones, people would be creating more video period. They would need music to accompany that video and they would turn to Audio Micro as the place where they would be licensed in that music from it. And it would do millions and millions of dollars in revenue, which it, which it didn't. I had to pivot like, you know, it was much smaller than I thought. But uh, yeah there was so, there was an exit kind of part of my pitch deck, my VC pitch deck unquestionably. But that, you know, that was in years, you know, everybody's pitch deck, right? Yeah. I've seen a ton of them myself now and they're all like, okay, we're starting at nothing but in year one we're going to do, you know, half a million dollars revenue to we're going to do like two and then beyond year two, they come up with these crazy numbers and by year five and six it's like [Ryan interject: Unicorn!] six million dollars in revenue and an $8,000,000 in EBITDA and you're going like, do you know how many companies on the Nasdaq even do 8 million EBITDA on $50 million in revenue? You know, it's like very few, you know, but like anyway, so I always think, oh always have a joke about like anything beyond like one year or is just just a joke, like don't even look at it. But at least people should put reasonable numbers in there because if they put unreasonable ones I immediately am like, I can invest. Like this is just too, it's too far made up to be reality and I like to be with people that are more on a realistic wavelength. So anyway. Yeah. But I probably had numbers like that somewhere in mind, but they were probably a little bit toned down from the average entrepreneur.

Ryan Tansom: Well, and I think it's interesting that, you know, with your, um, with your, with your exposure to that acquisition, did you understand going in the, you know, the EBITDA, the valuation that the financial benchmarks that you're, you're marching towards you that so many people don't even think about that stuff. And so you know what's also being a CPA. So whether the financial benchmarks going in, did you have kind of like, so you had this exit strategy but the valuation in mind as well and how did, how did you measure that kind of stuff? Does that make sense?

Ryan Born: Yeah, I think, I think I understand it. Here's what I'd say. The accountant in me says that accompany that doesn't make any money isn't worth anything. That's the accountant in me. But I learned a very valuable lesson at Wire Image, which was, that's not true. And the company's worth what someone will pay for it regardless of what it's actual EBITDA. If it's got EBITDA, it's a lot easier to start to put some multiple on it, you know, and come up with like, you know, even if you just do like a discounted cash flow of some sort, you can come up with something that somebody would pay today in order to receive what this thing's likely to generate in the future. But what I really- and so the economy was like things that don't make money or what are worth nothing, but what I realized that Wire Image is that that's not true because by nature of a company that needs capital, that needs cash, whether it be through even an IPO or a startup that just needs cash to get going, by nature it's going to burn that cash. That's why it needs it, you know, so it's not going to be making like very unlikely to be making any money while it's burning that cash unless, for example, that cash has put into what they called PP&E or property plant and equipment. Like maybe in your case of your, you and your dad's business, it was like purchasing copiers, for instance. If they, if you needed to buy 12 copiers to start the cash flowing, you might need the money to put towards that and, and you know, those assets would be potentially collateral for if you had raised it as debt, they might be collateral, but anyway, and buildings or whatever, they'll totally real estate. Exactly. But, um, I realized that that wasn't true because Wire Image, we were actually, we were growing really well. We were growing the revenue at that company.

Ryan Born: It was going very well, but it was burning a lunch money and as the financial controller and VP of finance of the company, I was like, man, we're like, we're like, we're, we're, we're in for, you know, if we don't, we don't raise more cash, we're going to run out and we're gonna be in a very bad place and who's going to buy this thing that doesn't make money? Well, I realized that Getty came in after Getty came in and bought it for a ton of money – it was like 200 Mil – They… I realized they wanted it regardless of whether it made money. They wanted it because it had dominant market share in entertainment photography and they didn't want to be number two in any market of photo licensing. They want it to be number one and and they needed to take out their number one competitor, regardless of what it's EBITDA was. And for them to put together a deal at that price wasn't, was totally doable. They were big. They could do it and, and maybe after they bought it they would figure out, you know, economies of scale in which you know, which things on the, on the, on the burn side don't need to be there. For instance, we can consolidate all these employees. You don't really need your office, so there goes the big rent in Manhattan. We can take half your sales staff and integrate them into ours and the other half for maybe they didn't need. I'm not, I'm not saying that's exactly what happened, but like they can come. We're accounting department, which I was a part of. Well we don't, we can just assimilate that into ours. It's just more, you know, spreadsheets to do. And our team has a little bit of bandwidth to do it.

Ryan Born: And so, you know, in short, um, I, you know, I wanted to build a company though that was making money because, and another thing and you know, sort of anecdote I try to live by if you or I've told myself is get to break-even as fast as possible. And the reason you want to do that is because then you're not beholden to investors. You don't have to have outside capital. You can, if, if you can still raise it, if you show them that you can build a business, you don't have to, you're not going to go out of business if you don't have it. And you can at that point decide like the world is your oyster. You can keep operating it and growing at a certain pace or you can raise more capital if you can deploy that and grow faster, you can, but at least you're not going under without having more money. And so try to sprint. I, I sprinted as fast as I could towards break-even um once I had the kind of runway to go up, which was the growth, the growth of address, I was able to get us to break-even and then some, ultimately we were generating significant amount of EBTDA.

Ryan Tansom: So were you pivots Ryan associated with like kind of walk through, which by the way all that context is huge with understanding your strategies on the business and where you're, where you're sprinting towards. So was the pivots because you were listening to the market and understanding how you know, what you needed to actually deliver. And then what were the strategic mechanisms you were put in place to sprint to break-even and did that sprint had to do with your pivots?

Ryan Born: A bit of it. Yeah. Yes and no. So, but I know what were your questions hitting on and I'll, I can address it. So here goes, so Audio Micro. So it started as Image Collect. I wanted to do celebrity photo microstock, celebrity photo licensing, sorta what wire image was doing, but just crowdsourcing it and licensing it more by subscription. And then through the rights managed process of flagging the magazines like I described and I- the first thing you need to to to build a content library, whether it be photos, whether it be music, whether it be video is you need content, and then the second thing you need is you need buyers. We need people to license that stuff and there's a little bit of a chicken and the egg situation where if you don't have buyers is going to want to give you their content and put it up on your site. Like if you have no traffic and you have no, nobody's ever bought a photo from you, why would a photographer one put a photo with you so you could say, oh, we really need some customers first in order to get the libraries. But the real reality is you need some content so you've got to get content. So I was trying to get celebrity photo archives together from photographers that I had gotten to know that warrant Wire Image and Getty photographers when I was doing nights and weekends are shooting. I would stand next to a lot of guys and gals on the, on the photo line and I'd be like, what agency do you work for? Are you independent? Do you actually own your images or does your agency on your images? So I quickly figured out who owned what and then started trying to get archives together to put on Image Collect.

Ryan Born: But this was 2007 and eight and the economy hadn't fully collapsed and these photographers didn't want to put their images with me. I didn't have- one, I didn't have any buyers and they knew that, but two, they were like, well, um, you still used to getting $200 or $400 or $100 a picture from a magazine. If you're going to price it by subscription for like, let's say $100 a month for 25 images. So it's like $4 a pop that's way too low. You're going to drag the market into the gutter and I want to you know I'm still happy with my current situation. So I tried to get archives, meaning libraries of of images from like the last 10, 20, 30 years as well as current images from new events that were happening every day and I couldn't. So I went with my plan B, which was I'll do microstock music. The music industry looks a lot like the photo industry did 10 years ago when they do licensing into a video film or television show. They're doing rights managed. They're saying where's your film going? Where's your TV program being syndicated is the music the theme song, is it music? You know, all these different questions before you come up with a price. And I was like, that's crazy. You got to have a microstock outlet. So Audio Micro was really like my plan B and I realized after getting a music library together and sound effects library together and getting some buyers that that market was a lot smaller. They call it the sync licensing market. Without going into too much detail on what synchronization licensing is, in short it's the attachment of music to a moving image you're synchronizing with [crosstalk]. So for instance, use in a video much more simple of any sort, whether that be tv, film or Web video. And that market was a lot smaller. Just the sync licensing market was a lot smaller than what I thought. And in for instance, the photo markets like to have have still imagery used to be around a $2,000,000,000 a year market of total annual revenue. Not huge, but, but not paltry. I thought music licensing was going to be bigger than that. And Sync sync licensing would be that big, but it's not. It's somewhere – depending on whose estimates you use nowadays – it's pegged at like 300 million maybe growing to $500, $600 million. So it is a growing area but it's just not as big. And so Audio Micro as a library where people went to microstock licensing of music for videos just it was, it was a single. Again, back to the baseball analogy, it wasn't a home run. It was a living business. I had revenue, I had customers, I was able to, you know, we had, we had gross margin, we had gross profit I should say on, on that revenue, and we, after we paid our software developers and our employees, there was some leftover, but it wasn't big.

Ryan Born: It was just a single and I couldn't, I couldn't see it scaling bigger and bigger and so we tried a number of other things. One. So here's what we tried. The next thing we tried was around 2000 – there's actually like a video out there somewhere of me pitching this and one of the judges… funny enough is a guy named Chris Sacca who's really big investor these days, but he judged my little pitch at the launch conference and basically we pivoted into a bunch of different other marketplaces. So we had a microstock music marketplace of Audio Micro. We took that technology, that whole back end of crowdsourcing content and an ecommerce storefront and we did cartoons, so we would aggregate cartoons from cartoon artists and the idea was to license them to editorial publications like New York Times or somebody that would want to run a cartoon or even a local paper too. Um, we did tattoos. So the idea was to aggregate tattoo art and then license it to people that want to get a tattoo. They could buy the full-on color artwork from our site was called Choose Tattoos and they would also get a stensul along with that artwork. And then they would take that artwork to like their local parlor and say, this is the dragon I want you to put on my arm. And their artists could then, you know, use the stencil as the outline and use the color one as, as inspiration for the, you know, basically getting the right dragon. Because if you're going to put something on your body, why don't have it mocked up once or twice, right? Or try and hold it in front of your arm in the mirror and flex a little bit. Do you really want that dragon? You know, so that was the idea.

Ryan Born: We did infographics, so we would crowdsource infographics and then we'd also finally I was able to do Image Collect, so actually did finally launch subsequent though to audio micro launching and we had already renamed the company has Audio Micro Inc at the time, so all of them failed. So except for Image Collect, Audio Micro, Choose Tattoos. We sold a few tattoos but not enough, so realized it wasn't happening. Stop investing in that Cartoon Z, which was a cartoon marketplace. I think we sold one cartoon. I was like, that's not working. Infographic stock, which is the infographic marketplace. I didn't… We didn't sell a single infographic license so like that's not working. So finally though, address sort of was when we launched all of those marketplaces, which is one of our pivots. Again, all of them failed except for Image Collect. It was. That was more of a walk like it did okay. It got, it got some revenue, it had some margin. It was an existing business as well as We had going for celebrity photos and it was alive but not huge and I was like, well, you know, what's, what's, what's happening next? And almost around the same time as those businesses launched with the whole like, you know, big tech conference, it's called called the launch conference. Well, I'm also leaving out a whole pivot in between. So prior to all that, I'm sorry.

Ryan Tansom: No, I want to know. I think it's important, Ryan, because like I think so many people don't realize that you're having to that because, well first of all you're trying to make money. You're trying to also scale and not just have a hobby business, all with in mind that you've got investors need to. So I think it's a, it's a tough mental gymnastics that a lot of people don't necessarily realize or talk about the fact that they got to keep all those in balance.

Ryan Born: Totally. So I'm going to take one so I'll real quick, I'll finish what I was saying. But I think with almost around that same time ad rev was born, but before I go into the story of, of being born, I wanted to go into one previous pivot that I didn't even mention, which was as I saw Audio Micro sort of not scaling to be as big as it needed to be to get liquidation for the investors, just like you said, I thought that there was a time on the Internet and you may remember this, where everybody was publicly sharing everything they did and they still almost are probably, I shouldn't even be like, there was a time, but there was a time when it got ridiculous. Twitter came out and people were taking pictures like here's my, here's my lunch today. I'm eating, you know, I've gone to the, now I'm going to the bathroom. Like, seriously? They were lie. They were telling you everything they were doing. And I was like, I wasn't, you know, the kind of person that really wanted to do that for myself. But I was like, if people are doing it, like I'm missing something, this must be the future. So one of the, I saw this startup emerge and this startup was the public sharing of your credit card transactions – Actually not liking this one was called Blippy and it raised like, I don't know, 10 or $15,000,000. And when I saw the headline I was like, that's where I need to be, publicly sharing of something. And the funny thing is Blippy, as we joke about a little bit, if you will, was not that much unlike what Venmo is today, where like you can if you have it set to public… [Ryan interjects: Yeah, I guess you're right, no kidding.] Yeah, yeah. Hey, you're like, look, my friend just paid for his, his dog walker at your party. Yeah, they're paying you back for the bachelor party, Bro. So cool. It's publicly sharing of your life. Blippy was public sharing your credit card. Like every time you swipe it, it would say Ryan bought soap at CVS Pharmaceutical who wants to watch that? But if. But if that's what's happening. So I decided in a dumb way I'm laughing about it. I was like, voicemails, we're going to do public sharing of voicemails. There's got to be a bunch of funny voicemails out there. And so we had this platform called Audioo and it was spelled audio with an extra o, so might even still be up, I don't know, probably has been taken down, but anyway, where you could like extract voicemails from your phone and post them there.

Ryan Born: We had various methods of you publishing your voicemail to us and the idea was people would vote on them and we did this whole launch at Tech Crunch Disrupt and I was on stage and we had Johnny Brennan from the Jerky Boys there who's an awesome dude. And he was like, just, it was all hype, you know, trying to like get people to publicly share their voicemails, but no one wanted to do it. The only revenue I was able to earn… and what was the revenue idea there? Like, nothing. I thought maybe we'd have advertising on the site, we would just make money off of Google adsense or whatever. But the only revenue was able to generate was I did get one phone-related software company too, like buy some display ads on Audioo. But anyway, beyond that small little check I got from them, it was like, this is a failure. So if- shut that thing down. And um…

Ryan Tansom: What are your investors saying is this is happening?

Ryan Born: Yeah, it's funny. You know, here's, here's what I'd say. So the, the lead investor from DFJ, the guy whose photo I took at that Lava event was, was ended up being a guy named Scott Lanette and to this day we're still buddies and it's, he's so encouraging and so positive. It is mind blowing to me because I'm like, you know, I'll kind of crap on an idea if somebody tells me something. Like I'm kind of a first person two sometimes shut things down and Scott's just like always really positive. He'd just be like, go for it, try it, go for it. And he was just always like on the sideline rooting for us. And he was never… he was just always so positive. He was never the opposite and he would never shut things down and so you know the answer to your question is he was shockingly supportive of everything we ever did. He just, he just let us do our thing. I mean, he was just a good person about it and I don't, I don't know that I've seen it, but I've heard about it. I've heard of toxic investors. I've never experienced one. In fact, you know, and even in my new company, Hawwk, like our lead investor, he, he, his name's Jim Andelman and, and he said to me something like, my motto as an investor is a little bit like the hippocratic oath, which is do no harm. You know, do not harm the patient, treat the patient, help the patient be helpful. And so I haven't experienced that, but I have, you know, anecdotally had people telling me stories of like, oh my gosh, you won't believe what this guy who put in 50 k is trying to do to our thing. And it's just like, I don't know what to say, but the best… you have to pick and choose those your investors really wisely. And I think in my, my, I was just lucky, you know, I mean sky was Scott as a gem and he and I was lucky to find them. No, nope,

Ryan Tansom: so as you're presenting and stuff like this, as you're going through like you know your brain where you're still having your eye on the bottom line and as you're pivoting and stuff like that, was there a timeline or a valuation or a specific person as a buyer that you were targeting that was making this all like to give you the motivation to wake up and keep taking the punches?

Ryan Born: Later on there was. So once we hit on Ad Rev and I can get into what that actually did because it is a little bit different than the other ones. I was just the marketplace businesses. I started to realize that there were players in the space that that would want to acquire that type of business or did do that type of business, which that business is sort of an offshoot of content licensing and it was, it's called rights management and essentially what we were doing at Ad Rev, and I could get in if you want to hear it, let me know, but the story of how it sort of happened, but what we were doing was we were fingerprinting music and finding youtube videos that use that music without a license. The ones that didn't pay for it and properly get a synchronization license to use in their video and there were millions of these videos that we're using music without a license and we would get those rights holders paid whether they be the owner of the master recording, which is typically known as a label, or the owner of the underlying composition, which is typically known as a publisher. Didn't matter. Whoever owned either the master or the publishing was a potential client for us. If they own, if they own both even better. And we ended up specializing in a type of music really known as film and TV and trailer music, which is typically actually owned by both sides the master and publisher are typically owned by the same party known as a production music library. But anyway. And so that's really what took off. And then within ad rev we grew a full service division for large production music libraries where we would handhold and give them very white glove service. We built a Self-Service Division where people could upload on their own; independent artists, could upload and contribute their musical works to us for administration on Youtube. And then we built an MCN, which is multichannel network, which was a very hot term. It's now kind of looked down upon, but we built our own MCN, which was an aggregation of youtube channels.

Ryan Born: And we would help them grow their own channels and provide them with different benefits for signing with us. And their revenue would pass through us. We would keep a percentage of it. And we ultimately grew. Um, once our EBITDA was kinda kinda going nice and steady, we were able to acquire a music distribution company called Dash Go. Music distribution was the, is the concept of taking musical works, recorded music and, if you will, an album and putting that album with itunes with Amazon music, with Spotify, with Deezer, with a Google Play Music with all the various streaming services. So we ended up buying a distribution company and then collectively that made up all Audio Micro Inc which had ad rev with the full service self-service in the MCN had had dash go through the acquisition with music distribution. It had which was the sync licensing microstock synchronization licensing and it had and it had an image collect which is the microstock celebrity photo licensing.

Ryan Born: And that whole entity was what ended up getting acquired. And, and I, I sought out a, we didn't use a banker, sought out a number of potential acquirers in the rights management, licensing and distribution space, primarily. Music image click was a very small piece of that photo licensing business wasn't too much to speak about. The rest of it was around music licensing, distribution administration, and was able to at the end of it all, make you know, make a deal happen. And it was a very fruitful deal for everybody.

Ryan Tansom: So what was the triggering event that led you to seek out and why did you not hire an investment banker? And then we'll start with those two questions.

Ryan Born: Yeah. So we, you know, as we were growing, we started to make these lists, let's say fastest, the most valuable ones. They Inc 500, so Inc 500 lists the top 500 fastest growing private companies in the United States every year – at least it's the fastest growing ones that applied because not every company even wants to apply, but we made it in the 2013 list which was related to our growth from through 2012, so for the three years ending with the end of 2012. We made it in the 2014 list. We made it in 2015 list and I'm going man, like are we going to be able to hit this thing from our analysts like every year like this in pots impossible. You can't, you can't keep growing that fast, like in the thousands, thousands of percentages over three year periods. You can't do that forever. And I remember like I used to blog and my website is and at one point I had written a blog about Digg. I don't know if you remember the company dig with two Gs. Do you remember that one? Yup. Yup. So the store, it was like, it was a story, a Digg and it was like basically how Digg had what one point gotten offered a billion dollars. I think we got to

Ryan Tansom: I know it's just a stomach ache.

Ryan Born: Right? Totally. And maybe I'm wrong. Who was I think I think it might've been Yahoo or somebody like reportedly offering them a billion dollars and they turned it down and like a year later Digg was worthless. Was zero. And maybe I'm exaggerating, I don't know if they sold for like $50 million or something and it still wasn't that horrible, but it went from a billion to basically nothing. And I just remember that in my block list is something like titled Something like hop off the train at the right time and it was basically like, things don't last forever and you know, we've seen this happen, whether it be, you know, economies and things going through economic cycles like, like growth and, and well they just, they just don't have them forever and we're in this weird period right now or we came off of the recession of '07, '08. And now we're halfway through 2018 and things or like have fully recovered beyond belief and the stock market's up wildly and real estate markets up really amazingly. Especially, particularly at least in Los Angeles. It is. And it's like, I'm just thinking even as we're talking, I'm like, this isn't gonna last. [Ryan interjects: Where's the hammer?] Like it's coming, it's coming. Like is it coming tomorrow? I hope not, but it's coming, you know, it's coming. And so my thought process after I had these great growth years, like three years in a row, I go through that kind of Inc 500 thing. I'm like, this can't go forever. Like, you know, you built something that's valuable like get out of it while you can before your growth slows. And also obviously I had seen, I knew internally just like almost like finger in the wind kind of feeling. It's probably a little more scientific than that, but basically am I signing as many deals as I used to sign? Like for three or four year period I was signing all kinds of rights holders to ad rev. Like lots and lots of clients were pouring in. But then slowly it was like, okay, instead of like a deal a day, it was like a deal every other day. Then it was like a deal every week and then it was like to deal every other week and I'm going like, okay. Like I can feel that this isn't a, you know, we've got to come up with a new, another new revenue stream or another new revenue line or another new product and service or we're not going to grow as fast. And so it might be wise to start thinking, looking for buyers. So why we didn't use the bank is probably a varied reason. I was, I'm pretty scrappy and I always never really could stomach the idea of putting a deposit with an investment bank. Like, like okay, if you guys can go out and find a buyer and close a deal, like I get that you could earn a commission. They typically command a pretty high commission. I think it's, I've never actually hired one, but I think it's like five percent.

Ryan Tansom: It's like three to 10 percent depending on the size of the deal. And it's. Yeah.

Ryan Born: Got It. Yeah. So I'm thinking why don't want to give them… Why do they get three to 10 percent or five, whatever the number was of a deal? Like that's crazy. They didn't work with a company. They're just sort of brokering this final transaction and I don't want to, you know, I don't want to give that up and I don't want to put a deposit with them where if they don't succeed they still get to keep the deposit. I get why they want one. They don't want to do work and not make anything, but I've just didn't really think it was fair. And so I was like, I can, I know who the buyers are, like let me try to do it on my own. And I went out on my own and there's… Part of me thinks maybe it would have been a smart idea to run a formal process with a bank where they have the whole book and they shop it and they sort of do the, you know, hey, they only want to- They can kind of play hardball with people and get to run the price up or whatever the game is. But like I just didn't, I just didn't do that and went out on my own and it was a ton of work. I mean I was like running around like crazy. Still trying to grow the business, answering client phone calls, simultaneously trying to sell a business, you know, flying around, you know, trying to meet these perspective buyers and work through the due diligence process and all this stuff. All the while the troops were back at home, keeping the fort down. But it was like, it was kind of wild, but it ended up okay and ended up just fine. And I actually think looking back on it, at the time, we got a great deal and it was, I wouldn't, I wouldn't take it away. I mean, it was, it was a good deal.

Ryan Tansom: If you, if you got some top line gross numbers or an employee comes on there. What were some of the benchmarks of how big the company was?

Ryan Born: Yeah, it was generating um, well over multiple double digits of top line revenue. I'm sorry. Multiple double digit millions. So… [Ryan interjects: 10 bucks!] seven, eight figure, multiple eight figures of top line revenue and it was generating multiple seven figures of EBITDA so, you know, you can, I don't want to give it away, but you can kind of guess where it was. And so it was a decent company, you know, and um, employee wise it was actually fairly leanly run.

Ryan Tansom: You did good EBITDA obviously. [Ryan B interjects: Yeah.] What was the… I think when you and I are talking, when I… I mean some of our mistakes were… it's the deal structure. So let's say you chose not to go with an investment banker, which their role varies depending on who you hire or choose to hire with the process and their goal is to drive up the price, but for the deal structure, you know, in what kind of role did your investors have or how did you help structure the deal and the terms and conditions? I think there's such a huge amount of gotchas out there because it's like, hey, by the way, here's your multiple millions of dollars, but then, oh by the way, and there's all of this other stuff from your involvement, what's going to happen, when you get the money? Well, you know, the taxes, all that kind of stuff that are involved in it. Did you go in eyes wide open? Did you have people that helped you and how did you kind of work through that?

Ryan Born: Yeah, so Scott was definitely extremely helpful as, you know, he was a large shareholder, his fund was a large shareholder in the company, but he was very helpful in terms of like advising, you know, I would turn to him a lot for all the questions and what we're coming through. He took a meeting or two with each potential, um, acquirer. Um, it starts with, you know, you go out, you try to find a potential acquirer, you end up once you get one LOI, which is a letter of intent, and it says we, here's a letter we basically want to buy the business for this much money here. The other terms and conditions upon which we would want to buy it. It's usually a couple of pages long, nonbinding, except for once you sign it, usually enter an exclusive negotiation period for a particular period of time. Maybe it's 30 days, 60 days, 90 days, something like that. And once you get one of those, you haven't signed it, but you've gotten one, you know, you can then go to the other ones you're talking to and you can go, well, I got it. I got it. My first LOI. Do you guys want to throw it in or not? And you kinda got to like push people towards doing that, you know, because they're going to kick the tires as much as they can and if they don't think that there's competition on the deal, they're not going to necessarily just write you an LOI and then the price on there is going to usually be… their first offers are going to be low, right? So we got like a crazy low. I was never going to take but it was an LOI and obviously I thanked them for sending it and making an offer. It's better than not making one. And then I went to the other parties and I was like, we got an LOI, do you guys want to put yours in? And then they put theirs in and then the third one maybe puts its entity to try to drive them up to a more reasonable price and you end up… We ended up, we actually had one that we entered into exclusive negotiations with and they were kind of slow to close. Like we were going to go with that deal and they were fairly… They were dragging their feet on like certain legal terms in the long-form agreements that were, if I recall correctly, it was something silly was like related to like indemnification baskets, which I don't even want to bore your listeners with what those are. But like you can let the lawyers figure them out and it basically means if there's a claim that comes in who takes, who takes the hit for it first, is it the buyer or the seller and up to how much, that kind of thing.

Ryan Born: And it was like they were dragging their feet and the exclusivity expired because the deal hadn't been closed by that point in time. And so at that point I notified them. I said, you know, our exclusivity period's expired. In good faith, I wanna negotiate with you to close this transaction, but just so you know, at this point, um, we are free to entertain other potential suitors. And we did. And ultimately another one came in and they wanted to pay much more. And then I went back to the one who would almost closed with and said, look, we got this much higher offer. Do you guys want to match it? Like we'll still close with you if you want to match it. And they were like, they were like, no, we'll come up the tiny. They came up the tiniest amount. It wasn't anywhere close to matching and they're kinda were like saying to me, well you know, we don't think that deal will actually close. Like we close, we have money and we close, we're closers. When we want to do a deal, we were going to do the deal and this other one, even though you got it, we don't really think it'll close and if you go with that one, just know that we might, we will, we will not be here when you come back to us, when you come back to us kind of thing. Right? It's like poker. Right. And you know, I had to have this, this thought. I was like, should I take bird in hand? These guys are going to close or telling me how they close everything and they got all this cash and it was true. They were, they went up their capital chain. They were private equity owned and they had a lot of money. And, or do you want to go with this other party and who they think may not close. And it was like, I'll roll the dice with this one. It's just a better price. And of course that other suitor actually did close and it was, it was reported at $20,000,000 cash for a majority of the business and you know, reality was, it was a little more than that, but that's, you know, that was a good deal, you know, one and 1.2 million in outside capital raised for an exit well north of $20 million and it was a cash deal.

Ryan Tansom: So a couple of questions on that is a is, you know, I think there's a lot of people that I've talked to, people who've been on the show that they just go with one buyer, which obviously you specifically found the reason why you don't do that. But then, you know, you had talked about you don't know, you did a couple of things that I see as extremely right. Um, which says a lot, but also the fact that you had mentioned that, you know, you don't need to be making money to sell because there's a lot of strategic reasons people will buy a company that's not making money, which business valuations and how they're valuing a company like that is up to them and what it's worth to them, but then there's a typical financial way which is a multiple of EBITDA or discounted cash flow. How were you strategically doing that, Ryan? Because you were strategically going to a strategic buyer because you said you knew the buyers. How do they value and how did you know what cards you were playing when you were looking for that number?

Ryan Born: Yeah. So I, you know, just on the EBITDA, because we had solid EBITDA, you know, had had a decent number. Um, what's kind of, what I think would work on that basis. But then Scott who does a lot of investments, um, he knew what companies in the youtube space were going for because he had either been in other deals or his partners and his fund were in other deals that were in the space. And/or his colleagues and they all talk, right? They all know each other, VCs know each other, they compete against each other and they serve on boards with each other. They know each other. And so he knew maybe from his colleagues as well what multiples other companies in their portfolios were selling for. And so he had, he actually, I remember him being in the meeting with the first suitor that had the very, very, very low offer – it was like the first LOI – and him saying back to them, well I know you know, companies in this space typically go for this multiple and it was way higher, you know. And I'm like looking over at Scott going like, is he like, is he bluffing or is he playing poker… and like we left the meeting, and I'm like, I'm like, who are you referring to? Like. And he's like, dude, I know for sure like this one sold at this multiple in like your work, you can get that much as possible so don't, don't take this deal at that price. And so he was very helpful in knowing the like it's a, you know, these are private transactions so it not like you can publicly know how much ATT bought Time Warner for, right? That's maybe pegged in public because it's so big and they have to disclose it because it's so material, these kinds of things when they're $20,000,000 deals, $50,000,000, even $100,000,000 deals, if they're not material to the acquirer, they don't get pushed out. And so the only people that really know the terms or somebody that might have been involved. Yeah. So he kinda, he was right. The truth is he was right. The number that he thought we could get was the number – maybe even actually a little bit better – we actually did get and he would, we would have taken less than that because that was the best I had at the time. But through this sort of, you know, different otherwise different suitors situation, the exclusivity expired, expired and expiring. And somebody's coming up on their offer. We ended up with the right number. We ended up at what would be considered market or maybe a little bit better than market price for our company at that time. Yeah. And it worked out.

Ryan Tansom: And was it, was it a multiple of EBITDA or multiple revenue and then the… How did that affect like the strategic? You know, maybe it was just a different way of actually getting to that value where it was a mold. It was a higher multiple because there was a strategic reason for them to do it because I think in the context of my question is there's, you know, what I, I usually tell a lot of our clients are people we've heard from is that like you said, a buyer, your company's worth what someone's willing to pay for it. So at the strategic situation, the multiples kind of go through the roof or they go out the window because there's a strategic reason. So was there kind of two different ways that you got to that dollar amount?

Ryan Born: Well they, they, they put forth that number, right? Like, um, I didn't, we didn't say it needs to be this number or we're not doing it kind of thing, which has got it. You let the market, honestly not a bad strategy. If you, if you asked me looking back on things, if you just tell the seller this is our number and we'll do the deal at this number and you're comfortable with that, they may come up to it and you're good, you know, you don't have to play this sort of silly game of back-and-forth, you know.

Ryan Tansom: Or they'll say yes and you left a shit load of money on the table.

Ryan Born: Well that's the other way to look at it. But as long as they're comfortable, it's true, you know, make a good point. You kind of consider yourself and there's always this. He who throws out the first number always loses, right? That's kinda like a business, call it whatever, you know, business-isms from Ryan. That's one of those things I've said is he who throws out the first number loses. But if it's because like you said, if you throw it out and it's, it's what you want and they take it, maybe you could have had higher so you're losing and if you throw it out and they're like, no way we're coming up that high, we're walking from this, peace see you later than you lose a potential deal. So it's like, it's always tricky. So I tend not to like to throw out the first number. I prefer for somebody else to. But anyway, in this whole situation we had numbers going back and forth with other suitors in this other one came in and they threw it out and it was, it was a number we were totally willing to take at that point. And it felt, you know, back to kind of what Scott had like, kind of guided us towards you. Like it felt like it was, it was a little bit above market price.

Ryan Tansom: Ryan, as you're going through all this, because you were running the company, keeping it afloat and flying all over, meeting with these buyers and doing all this stuff, did you have any inkling of what you were going to do or what your role was going to be in the business afterwards and whether you want to control or to walk away and how did that whole journey like once you signed, how did that all transpire?

Ryan Born: Yeah, so I had high hopes for the acquirer. I believed that they were going to execute a roll-up beginning with my company, that they would begin to acquire other companies that all had synergies that we're all in, in, in what I believe would be in the music distribution administration and content licensing space. You could even say content distribution, administration licensing. Didn't have to be music because I have, you know, the photo background and, and video background, too. So, um, I thought that that's what they would be doing and that I could play a very important role in their executive team and that there would be equity for me going forward so that I would be motivated to do great job and stay on. That didn't turn out to be the reality after the deal closed. It turned out to me like the deal closed, we got paid, we made it through the earn out, you know, and everybody got their, their payments and I was like, just an employee now. And I could come into work and I could make my base salary, which I had just been paid a significant amount of money and the base salary really wasn't meaningful anymore at the, at the number that I was being paid. And I wasn't, they weren't going to pay me lots more at a base salary. And I went from an owner to an employee and it was like, just totally weird for me. It didn't. Um, I didn't feel motivated, you know, I didn't need the base salary. And so why was I going to bust my butt anymore after I was comfortable in terms of, you know, what I had just cleared, um, you know, through capital gains, it was like, why, what, what else is there in life? I had an, I had put aside my social life, I'd put aside a lot of my family life and responsibilities. I had a young child and wife and I needed to kind of just get my life back in order. My… I was out of shape, my back was starting to hurt and all that's been corrected now feeling great and I've been playing lots of sports and exercising a ton and everything's good in that regard. But at the time it was like I felt burned out and just to work for a base salary. So I resigned and um, luckily…

Ryan Tansom: How did that feel?

Ryan Born: Um, it was sad, you know, um, I didn't want to, I didn't want to do it or they didn't give me any reason to say, you know. And frankly it was, it was, it was depressing, you know, like not just resigning but like the, the, the, the, the year plus after was like I went from, you know, having started something that through twists and turns and almost going out of business succeeded and got this good exit and you know, I felt like I had the golden touch and everything was great. I'm important, I'm CEO of a startup and venture-backed startup with an exit. And then I went from that to like sitting on the, you know, I go, I go work out, I get my smoothie and it would be like 10:30 in the morning and I'm like looking at the stock market going up and down. And I'm like, no, the phone's not ringing and nothing's blowing up in my email. And I'm like, I'm like, I'm like, oh man. And it, it really… as a happy as a time as a lot of people would think it would be, they're like you got paid, like go party, like whatever. It wasn't because one, I'm too old to go out and party and none of my friends want to party on Tuesday, you know, they all got to work and I might not have to work with they do, so there's no one to celebrate with and you know, when my kids in school all day long and so I can only see her when she's back from school, which is pretty much at the end of the workday.

Ryan Born: You know, kids go to school for a long time, they're there at like eight in the morning until four. It's a long time, you know. And so it was like kinda like, what, what's going on? Like I was sitting there flipping- watching the stock market, the doorbell would ring and it'd be like or a package and I'm like, I'm like great. Like I just opened the door and then like next thing I know it's like, what are we doing for dinner? Can you make a grocery run? And I'm going like, what happened? How did all this stuff just happened when I was working before? But all of a sudden, like, I have to answer the door, I got to clean up my mess, like whatever, like, um, it sounds so silly, but like basically, it wasn't rosy, it just didn't feel rosey. I felt like I needed to be active, I need to be involved. And so ultimately, um, first we started doing some consulting for an animation studio in LA and that got me kind of back into working and then ultimately I was like being, you know, consulting while it pays, it just, isn't exciting because you're not the owner and you bring them all these ideas and if they don't want to execute them, it's just sorta like, that's, that's it. Those ideas die. And so I decided along with my co founder, a band to start a new company called Haawk. And part of it was just like, we just got to get, I just got to get active again. I just can't. I'm too young to just sit on the couch and flip the channels and answer the door, you know. So…

Ryan Tansom: I do! It's like so funny, Ryan. Like, I mean, even to this day, I know my dad's gonna listen to this and a lot of people can relate that have gone through this, what you've gone through it like how he, him and I as business partners would talk literally all day, every day and then it's about business because there's a reason to talk and now it's like we're still trying, but it's like I don't, I know you've got Comcast showing up and there's an HVAC and you're fixing this, but I'm like, you remember, you never used to talk about that stuff and it just happened. And there's just this whole void there that it's, it's tough to explain.

Ryan Born: Yeah, absolutely. It really is. So I missed it. And had to get back in there.

Ryan Tansom: So with HAAWK Consulting and what you're doing now, I mean, what's the goal? How did you, you know, what are you guys trying to accomplish and how were you getting your fulfillment and how have you approached this differently than you were before?

Ryan Born: Yeah, so with Haawk, um, we, we, the first thing was let's just be active. Let's start a company. And I just was looking for cool names and I've found haawk with two As dot com was available and it was pretty inexpensive because of the, I guess because of the misspelling though, it is a five letter dot com. Pretty decent little domain. So we just bought it like, well it could be anything. It can be, it can be a right, it can be a rights management business, which it actually is, or it could be like a cool company. I don't know. It could be anything. Right? It's Haawk. It's kind of a cool. And so it started with just like, let's get a name to go, we'll office get out of the house, let's get off the couch and let's build some things. Let's tinker, let's throw all the ideas we've got. So my co-founder and I did that and we ended up, you know, after, you know, just some time as well as just also just trying to get our sea legs. We just decided, believe it or not, to pretty much enter a similar space that we had been in. We just, we didn't have non-competes, which is crazy and I know… [Ryan interjects: no kidding] You're going to think I'm like some master of negotiation and I'm not. The reality of it is the buyers didn't extend, didn't ask us to sign non-compete agreements at the time of the transaction. They just simply did not. And that was more of an oversight in my opinion on their behalf than any… wasn't some clever thing we did or anything like that. And so we were able to just be in rights management and again, and so that was what, what- where Haawk started and it's done, it's doing a lot of things differently, but at its core it does rights management for social video platforms, including Youtube and Facebook.

Ryan Tansom: Are you approaching, you know, going through the whole 360 of the entrepreneurial journey and now that you're doing this and you don't, you know, you've gotten a windfall of capital gains. Are you approaching the operations differently who you're working with differently because you've got this, you know, very solid freedom of choice.

Ryan Born: Yes, to an extent. Um, a few things are different where I'm playing a little bit more of chess than checkers and I'm going after- I'm trying to use my time and go after the deals that make the biggest and most important moves and strategic moves rather than just sort of small jumps. Um, so there's some of that. I'm, I used to take everything ungodly seriously. Like just the smallest thing was, was like the world was on fire and it could be, it could be anything. And I was just like, I got to get to this email, I got to write back to this. I got to get this contract out, I got it, I got to do this. I gotta like everything needed to be done fast on nights, on weekends, all the time. And I realized, you know, having, after selling it like it's, you know, you need to spend, it's the 20, 20 percent of your time is actually really high. It makes up 80 percent of the value. You know, it's the old 80 slash 20 rule. And like if you just focus on those, that stuff, that's that 20 percent most important that makes up 80 percent of the value, you're going to be a lot less stressed and and that's kinda how I'm playing it this time around. That's the best way to say it. It's like I just don't take it as seriously. I've been through enough deals and transactions to where like the email can wait until Monday. That thing- you can get back to that thing later and you're not going to lose it. It's like the world is not on fire all the time and you don't need to stress over it. And so I'm trying to take that approach. Obviously I still sort of slip sometimes can slip back into the old way but much, much better at it.

Ryan Born: I'm taking care of myself first, like making sure I get my workout in everyday I can in the morning before I go in and you know, get to the what's on, you know, the company's to-do list. I'm just making sure that those things come first and that family comes first. I make sure I'm home for dinner time, I'm there through bedtime. If I need to get to something I can get to it in the evening after that, you know? Like just chunking it up and taking more strategic approach to everything versus the past where everything was a fire, everything had to be responded to quickly. It was all, I was on 24 hours a day all on weekends on holidays, on vacations, and it was just bad because all that stuff just wasn't adding a lot of value and it was cutting into like myself and so I just wanted to be happier in my day-to-day approach to things.

Ryan Tansom: I think that's pretty solid advice. Having balances and entrepreneur is tough and you know, realizing it when it's not too late is the key part. As, as we're wrapping up here, Ryan, your stories are awesome and there's so much context behind it. And I think, you know, if we talked about a lot, is there, if there's one thing you want to maybe highlight on some of the stuff that we talked about or if there's something that we maybe missed and you want to leave our listeners with, what would it, what would it be?

Ryan Born: Well, one thing I like to tell, or you know say to folks that are thinking about entrepreneurship is you know, you've got to get on the field and try. You're not going to score a goal if you're not on the field and try. You're not going to score a goal if you're not on the field and trying. And I think for a lot of people they say I'd a business if only I had the savings or I'll start a business once I'm married and settled down or I'll do. I'll have a kid once I'm settled down and have my company. Like whatever it is, it's like it doesn't work like that. Like you just have to get out there and do it. If the… I think a lot of the success that I've had is simply because I tried, period. I was in the game and therefore I had an opportunity to put the ball in the goal. If I never got off the sideline onto the field, warmed up, stretched, into the first quarter, whatever it is. I was never going to actually make a basket or win a championship or whatever you want to call it was not going to happen. And I think it's just all about trying and I, and I, I'm, you know, I think some, a lot, a lot of folks that want to be entrepreneurs want to be successful, don't even take the step of trying and getting on the field. So I would just simply say to those that are looking to start businesses or have an exit one day dream of these things happening or raising money or whatever it is, you've got to get out there and try. That is the first step. And for me, frankly, it was the most important step because if I hadn't had done it, if I hadn't said I'm not going to take a paycheck. I'm not going to put some savings into this thing and I'm not going to just try this thing out of my apartment and you know, we'll write the first check for the first developer strides the first lines of code and start making cold calls and getting composers and getting music into the platform. If I'm not, if I didn't do that, none of that stuff – trying the tattoos, the cartoons, voice voice mails, all the silly things – to the finally, you know, there are youtube rights management, ad rev taking off, you know, it wouldn't ever happen.

Ryan Tansom: I think that's some of the best advice that we've had on the show. I mean, it is because you just got to do it and you don't get really two tries at this. At life that is. And I think you articulated it really, really well. Um, if people want more of that and wanting to reach it after the show, what's the best way?

Ryan Born: Yeah. So a easy way to go to Ryan Born, r y a n b o r n just like the day we're born dot net. So go to If you want my contact info, click on the about link at the top of the page and if you read that page you will find my personal email and my phone number. You can also tweet at me at born, Ryan, that's b o r n r y a n on twitter. And um, you can find me. I'm definitely find-able. So, um, you know, I go, I'm happy to have people reach out, but I make them do the teeniest bit of work which is go find my contact info.

Ryan Tansom: I love it. Ryan, thanks for so much for coming on the show, man. I had a blast.

Ryan Born: Thanks for having me, Ryan. I appreciate it very much.


Ryan Tansom: Thanks for sticking in there and listening to the episode with Ryan. I really had a lot of fun talking to him because he articulated really well what it was like to actually be an employee. And that resonated with me so much. That 10:30 in the morning after the gym story storage just really made me laugh because what's the whole point? You know, as an entrepreneur you're willing to literally work 16 hours a day, but the moment you're working for someone else, it all changes. So I really think if there's one thing to take away is what is it that you want to do? I mean listen to him, he's back in the business of what he was doing before because it's just fun. So really knowing if you're going to be transitioning out of your company, what kind of things do you want to do? What problems do you want to solve, and who do you want to solve them with? And then have balance now and determine what you wanna do and how to create that life that you want regardless of whether your company's involved or not. I hope you enjoyed the episode. Give me a rating on itunes if you got time. Otherwise, I will see you 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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