Dan Martell - July 27, 2015


How To Sell Your Company


Episode Stats


Length

5 minutes

Words per minute

214.06837

Word count

1,196

Sentence count

64


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode, I talk about how to sell your company and why you should be selling your company. I've been fortunate to sell the last three companies that I founded in a relatively short period of time. The average time it takes to sell a company is about 3 years, but the average is about three years.

Transcript

Transcript generated with Whisper (turbo).
00:00:00.400 How to sell your company.
00:00:02.000 I know this is going to be an exciting topic
00:00:03.600 because a lot of people, they think about
00:00:05.700 what's their exit strategy?
00:00:07.000 I mean, and maybe it's only 15 years down the road,
00:00:09.600 but at some point, if you have aspirations
00:00:11.500 to sell your company, especially if you're a venture-backed
00:00:13.300 company, like I've done, you know, I've been fortunate
00:00:15.600 to sell the last three companies that I founded
00:00:17.800 in a relatively short period of time.
00:00:20.100 The average is about three years.
00:00:21.600 But what I want to share with you guys is a strategy
00:00:23.500 that I've extracted.
00:00:24.600 The first time, it was completely opportunistic.
00:00:26.900 The second time, I kind of got lucky,
00:00:28.700 but we did some really smart things and then the last time
00:00:31.040 it was very much engineered at the beginning.
00:00:33.380 Not because I was trying to build a company to sell.
00:00:35.440 I actually don't suggest you do that.
00:00:37.100 But it was thinking through what really worked
00:00:39.880 in the first and second company,
00:00:41.520 creating a system that I'm gonna share with you guys
00:00:43.880 so that you can start down that path.
00:00:46.320 So the first thing I wanna share with you guys
00:00:47.820 is white space.
00:00:49.020 If you're gonna sell your company,
00:00:50.580 you've gotta understand the market
00:00:53.220 and the industry that you're in
00:00:54.960 and then kind of figure out three different sections
00:00:57.720 of kind of categories of companies that would buy you.
00:01:00.220 Some companies will buy you for your technologies.
00:01:02.200 Other people will buy you because of your customer base
00:01:04.600 and kind of the traction you have.
00:01:06.480 And other people might need your expertise
00:01:09.040 and they're trying to get into this industry
00:01:11.340 and get going so that's what they want to acquire.
00:01:13.680 So usually those are the three buckets
00:01:15.760 but then in each one of them they have white space
00:01:18.340 where in these big companies,
00:01:20.420 typically publicly traded companies,
00:01:22.140 they have a vision for where they want to go.
00:01:24.420 A product roadmap, a strategy document.
00:01:26.880 And what you guys do fills a white space in their strategy.
00:01:31.820 And that's what you want to find out.
00:01:32.980 Now, it's not like these things are published online,
00:01:35.380 but you can identify some players.
00:01:38.300 I like to kind of figure out like five to seven
00:01:40.920 for each category.
00:01:42.260 So that'll work out to about 21 total companies.
00:01:45.560 And then try to get to know the people within those companies
00:01:48.000 to figure out if those strategies work.
00:01:49.940 When should you start doing this?
00:01:51.540 Right at the beginning.
00:01:52.780 When you start your company, you should make this list.
00:01:56.200 Because the second tip I want to share with you guys
00:01:58.320 is the 21 people.
00:02:00.120 You know, I really, or the 21 people
00:02:02.520 of those seven companies,
00:02:04.140 really there's three people, stand with me here.
00:02:07.400 There's three people you gotta think about
00:02:09.360 when you're selling your company.
00:02:10.400 There's the CEO, the corp dev guy,
00:02:12.980 and the product manager.
00:02:14.480 The CEO is obviously responsible
00:02:16.080 for setting the budget and strategy.
00:02:17.940 Are they gonna buy you?
00:02:18.780 The corp dev guy, the corporate development person,
00:02:21.360 sometimes the same as CEO,
00:02:22.600 is responsible for actually acquiring your business.
00:02:25.040 So there's a person's full-time job is to acquire a company.
00:02:27.800 The product manager, the third person,
00:02:30.080 they're the most important person.
00:02:31.420 They're your internal champion.
00:02:32.460 They're the ones that are gonna decide,
00:02:34.440 should we buy or build this thing?
00:02:36.700 And are you the right company that they should acquire
00:02:38.920 if they're evaluating other ones?
00:02:40.580 So if you think about it, if you do that strategy map
00:02:43.160 and you get 21 companies, and then you really distill it down
00:02:45.880 to seven really high potentials,
00:02:50.300 then for each one of those, there's three,
00:02:51.920 and I call that the 21 people principle.
00:02:54.540 There's 21 people in the world that are responsible
00:02:56.740 for potentially a huge outcome for your business
00:02:59.820 and if you could build that list
00:03:02.120 and strategically over the next three years
00:03:04.760 go to the events where they might be at
00:03:06.680 and reach out to them, talk to them,
00:03:08.520 and build those relationships,
00:03:10.120 I think from a outcome point of view,
00:03:12.460 there's probably nothing that could be higher leverage
00:03:14.800 than doing that activity.
00:03:15.960 So I wanted to share that with you guys.
00:03:17.260 The third thing that I think is really important
00:03:20.860 to understand is how do you get in contact
00:03:22.460 with these people?
00:03:23.300 You know, like, why would they respond to your emails?
00:03:26.300 Or, aren't they competition?
00:03:27.700 For a lot of these, they might be competitive
00:03:29.300 in the sense that if they're going there
00:03:30.600 and you guys are building something in that space,
00:03:32.400 it's competitive.
00:03:33.400 But what I like to say is, you know, big companies,
00:03:36.400 Google, Facebook, LinkedIn, et cetera,
00:03:39.100 like, they are huge tankers.
00:03:41.800 It's really tough for them.
00:03:43.000 You guys might go into your office
00:03:44.200 and on a Monday change strategy 180 degrees.
00:03:47.000 Trust me, big companies,
00:03:48.700 we're talking at least a 12-month cycle,
00:03:50.700 if not 16, maybe two-year strategy maps.
00:03:53.200 You know, they're not gonna just quickly do that.
00:03:54.800 So what I suggest you do is teach them to connect.
00:03:57.780 Teaching to connect.
00:03:59.580 That is the way that you can approach them.
00:04:01.880 And you might say, hey, I notice you guys
00:04:03.580 are maybe going in this direction.
00:04:05.340 Here's our company, here's what we do.
00:04:07.580 And I would love to come in and teach you guys
00:04:10.060 how we think about this process.
00:04:12.180 Because what you're doing if you're going in to teach them
00:04:15.020 is you're explaining to them or demonstrating
00:04:16.900 that you're a thought leader.
00:04:17.960 That you have deep domain expertise in this area.
00:04:21.460 and that if they were going to acquire a company
00:04:23.900 down the road, you'd be the right person
00:04:25.700 because not only do you understand it,
00:04:27.860 but you taught them.
00:04:29.220 And I think that's a really strong position to be in
00:04:31.280 because you want to get those relationships going now
00:04:34.960 so that in the future, if at some point
00:04:37.840 you have one of them or some other company
00:04:39.720 you didn't even know about
00:04:40.600 approach you to potentially acquire a company,
00:04:42.860 that you could quickly go back to those other 21 people
00:04:45.740 that you already have relationships with
00:04:47.340 and start the process.
00:04:49.000 That will give you a 3x increase in potential outcome
00:04:53.340 because you're not starting cold at that moment.
00:04:56.180 You actually have warm introductions.
00:04:57.680 These are people you know and they already know,
00:04:59.880 like, and trust you because you've taught them things.
00:05:02.020 So that's my strategy at a high level.
00:05:04.340 The white space, the 21 people, teaching to connect
00:05:07.860 that'll allow you to potentially sell your company
00:05:10.520 and have a huge meaningful impact on your life.
00:05:12.700 That's what I would wish for everybody watching this video.
00:05:15.020 If you have aspirations to exit your business,
00:05:17.020 That's the way I think about it.
00:05:18.420 It's how I advise all the companies I've invested in
00:05:20.820 to do it as well.
00:05:22.420 I hope you found this video useful.
00:05:23.820 I'd invite you to like the video as well as leave a comment
00:05:26.920 with any questions you might have.
00:05:28.120 I answer all of them.
00:05:29.620 And I also want to challenge you guys to live a bigger life
00:05:32.420 and a bigger business and I'll see you guys next Monday.