The $50M Exit Playbook Most Founders Don't Know - Chris Van Dusen

Summary

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Proven Podcast – Episode Summary

Podcast: Proven Podcast

Host: Charles Schwartz
Guest: Chris Van Dusen (Senior Partner, Slico Capital)
Episode Title: The $50M Exit Playbook Most Founders Don’t Know
Date: January 2, 2026

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Episode Overview

This episode explores the realities of building, scaling, and ultimately exiting businesses for significant payouts, as seen through the lens of Chris Van Dusen’s extensive experience as a founder, operator, and venture capitalist at Slico Capital. Chris candidly breaks down common misconceptions founders have about valuation, the challenges of funding rounds, and the operational shifts necessary for a company to become attractive to investors or acquirers—dispelling romantic notions about entrepreneurship and revealing a playbook focused on proven fundamentals.

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Key Discussion Points & Insights

1. Chris Van Dusen’s Background and Perspective

• Background: Chris shares his “accidental” journey into entrepreneurship after his first California employer went bankrupt, leading to starting and merging marketing firms with his wife, launching and exiting a top CBD brand, and eventually joining Slico Capital.

  “I ended up starting a marketing firm... Then started what ended up being the second largest CBD brand in the world... Now, senior partner at Slico Capital.” (B, 01:49)

• Slico Capital’s Focus: Early- and growth-stage investment, helping founders navigate venture capital and achieve successful exits, including rollups and public offerings.

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2. The Company Lifecycle and Funding Rounds [02:50–07:00]

• Lifecycle Explanation:

  • Start with personal/friends & family capital
  • Angel investment follows (“professional panhandling” stage)
  • Pre-seed/seed rounds introduce institutional capital (firms, family offices)
  • Series A, B, C, etc.—the “alphabet soup” of funding
  • Pathways: rollup (private equity), IPO, lucrative cash-flow businesses

• Key Terms:

  • EBITDA: Earnings before interest, taxes, depreciation, amortization—core metric for valuing mature businesses.
  • Rollup strategy: Combining multiple similar businesses under one roof to multiply value.

• Notable Quote:

  "The earlier you are, the harder it is to peg value. So what will end up happening...is what's called a capped SAFE." (B, 09:54)

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3. Angel Investors vs. Venture Capital [05:36–07:00]

• Difference:

  • Angel: Investing personal funds, often earlier stage
  • VC: Institutional, pooled funds managed with structured vehicles, spreads risk over many investments

• Notable Quote:

  “One is, I call it binary. One is saying, I have my own money... The other might be a venture firm... using a fund or some kind of structure.” (B, 05:52)

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4. Proven Pathways: What Actually Attracts Investors and Acquirers [07:01–16:30]

• Core Five or Six "Investor-Attractive" Elements:

  • Stage-dependent, but consistent fundamentals:
    • Clear revenue and/or path to profitability
    • Defined, repeatable systems and processes
    • Strong, coherent company culture and vision
    • Measurable and realistic growth plans
    • Robust customer acquisition and retention strategies (the “flywheel”)
    • Clean and organized financial reporting

• Founder Reality Check:

  • “If you start your entrepreneurial journey thinking, I'm going to have work-life balance. No, no, you are thinking of it wrong." (B, 12:20)
  • The journey is all-consuming, not for people who want the easy road.

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5. Myths About Entrepreneurship and Company Value [08:47–14:21]

• Valuation Reality:

  • Early-stage companies with no sales: “I’m valuing assumption, I’m not valuing guarantees.”
  • Later-stage: Tangible revenue/EBITDA creates real value.

• Gross vs. Net:

  • “You’re making $5M. That’s what matters, not the $50M in sales.” (A & B, 11:51)

• Emotional Detachment:

  • “Most business owners... don’t understand that their business is not their identity.” (A, 09:08)

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6. Culture, Systems, and Scaling Beyond 7 or 8 Figures [14:21–16:30]

• Culture Dilution:

  • Can’t expect employees hired at scale to match founder-level passion.
  • “An employee is an employee even at startup companies.” (B, 14:59)

• Keys to Scaling:

  • Early brute force gets you to 7-8 figures.
  • Post-$10M: Must invest in systems, culture, decentralized leadership.

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7. Hot Verticals & Pitch Best Practices [16:30–19:44]

• Current Hot Sectors:

  • AI, solid “boring” businesses with proven demand.
  • Avoid fads like crypto: “No, no, no crypto projects. We actually aren’t invested in that.” (B, 16:30)

• Best Pitches Sell the ‘Wind’, Not the ‘Sail’:

  • “Sell me the wind, don’t sell me the sail. Even crappy boats catch flight if the wind’s good enough.” (B, 18:12)
  • Tell a compelling story, not just specs.

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8. Flywheels, Systems, and the Power of Retention [21:28–27:45]

• The “Flywheel”: Creation of self-sustaining growth via customer referrals and retention.

• Example – Dropbox

  “Once you had all your photos in there… you needed more [storage], the only way to get it is to get more people.” (B, 24:00)

• Non-tech Example – CPG/CBD Brand:

  • Created movement, targeted overlooked demographics (middle America, 45+), tapped into the right influencer channels.

• Key System Questions for Founders:

  • “Have you created a flywheel?”
  • “Are you hiring more people, or could you optimize systems with technology, AI, or process improvement?”

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9. Distribution, Competition, and Surviving Industry Giants [28:27–31:22]

• Incumbent Threats:

  • Industry giants will “swat” upstarts once they become a nuisance—sometimes leading to buyouts.
  • “As a nuisance is when you get bought.” (B, 30:28)

• Rollups:

  • Acquiring several small players to contend with larger competitors.

• Direct Vs. Passive Entrepreneurship:

  • Not everyone is suited for the grind—being a proven operator is a safer transition from corporate to entrepreneurship.

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10. Lessons on Co-Founders, Vision, and Maintaining Alignment [34:30–35:29]

• Co-founder Dynamics: Many failures happen due to co-founder or vision misalignment.
• Every employee should at least know and be able to articulate the company vision (“within reason”).

  “If they don’t spit out within reason, it’s kind of the same thing, you’ve got problems, 100%.” (A, 34:54)

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11. The $5M vs. $50M Exit Playbook [35:29–39:14]

• “Hogs get slaughtered”: If a founder is burnt out, the first priority is to replace them with proven operators—don’t push exhausted founders.
• Real exit process takes at least 6 months, sometimes years, and involves deep optimization (not just cost-cutting—but honest scrutiny of every expense).
• “We’re going to figure out how you take a little break and we’re gonna get some proven operators in there to pressure test whether or not we can get it there over the next two years.” (B, 36:20)

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12. Preserving Relationship-Based Businesses [39:14–43:41]

• The “Handshake Economy”:

  • Deep, multi-decade client relationships are difficult to transfer.
  • Assess for customer concentration risk by looking at contracts and asking direct questions.

• Choosing the Right Advisors:

  • Pick investment bankers and service providers based on expertise and industry connections, not geography or price alone.
  • “You get what you pay for.” (B, 42:48)

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13. Board, Advisory, and “Smart Money” Connections [44:05–49:19]

• Board Role: Post-investment, VC partners help by introducing the right talent (investment bankers, M&A attorneys, strategic connections).

• Smart Money > Just Money:

  • “There is money and there is smart money. And they are very different.” (B, 48:08)

• Research Your Investors:

  • “If not, then I’m just a piece of meat with a wallet. And that’s a little different.” (B, 49:19)

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14. Character, Networks, and Founders’ Deeper Purpose [50:12–54:46]

• Living a Legacy:

  • Chris’s involvement with “Alder”, building generational leadership, supporting Tier One special forces veterans transitioning to business.

• Skill Bridge Example:

  • Helping elite military veterans build business networks; “Your network is your net worth.” (B, 53:39)

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Memorable Quotes & Moments

• On Entrepreneurship:

  “Congratulations, you don’t have a 9 to 5 anymore. You just have it all the time.” (A & B, 13:13)

• On Business Identity:

  “Most business owners... don’t understand that their business is not their identity.” (A, 09:08)

• On Systematization:

  “If you can't fire yourself out... you haven't built a business, you've built a prison.” (A, 21:17)

• On Channels for Funding:

  “If [AI] is consumer-available... sometimes it's not ‘I need more bodies’, sometimes it's ‘I have bad systems’.” (B, 20:33)

• On Board Role:

  “Part of my role on your board is to introduce you to the best investment bankers...who could actually buy you downstream.” (B, 44:05)

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Timestamps for Key Segments

• 00:53 – Chris’s career arc and Slico Capital’s mission
• 02:50 – Explaining lifecycle of startup funding
• 05:36 – Angel vs. VC differences
• 08:16 – Five key things to attract investment
• 09:08 – Emotional detachment and valuation fundamentals
• 12:20 – Founders and the myth of work-life balance
• 16:30 – Sectors that attract investment
• 18:12 – Sell the wind, not the sail—narrative in pitching
• 21:28 – What real systems and flywheels look like (Dropbox example at 23:00)
• 25:30 – Non-tech flywheel example: CBD brand in CPG
• 28:27 – Distribution, incumbents, and the “swat” effect
• 30:28 – When being a ‘nuisance’ gets you bought out
• 33:43 – Hard-won lessons on the jump from executive to entrepreneur
• 35:29 – Doubling or 10X-ing exits via gradual optimization
• 39:14 – Human capital and relationship/trust-based businesses
• 42:48 – Picking the right investment banker/board/advisors
• 44:05 – VC’s advisory role post-investment
• 46:32 – “Come prepared”—the three questions every founder should answer
• 48:04 – Distinguishing ‘just money’ vs ‘smart money’
• 50:12 – Building character, network, and legacy (Alder and Vet Skill Bridge programs)
• 54:46 – Wrap-up, where to find Chris and connect

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How to Connect with Chris Van Dusen

• LinkedIn: Chris M. Van Dusen
• Email: [e-mail]
• Instagram: @chrismvandusen

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Final Takeaways

Mastering the art of the high-value exit is not about slick decks, more bodies, or the latest trend—it’s about optimizing systems, deeply understanding your market, crafting defensible growth flywheels, and being relentlessly honest about your numbers and capabilities. Layering in trusted relationships and smart advisors accelerates value creation—and, when done right, enables founders to move from $5M to $50M exits (and beyond).

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Transcript

[A]

Welcome to the proven podcast where it doesn't matter what you think, only what you can prove. On this episode, Chris shares he helps founders navigate venture capital, understand what investors actually want, and turn million dollar ideas into multimillion dollar exits. This one's unforgiving, unrelenting, and it's just trying to help. The show starts now. All right, everybody, welcome back to the show. I'm excited to have Chris with you. Thank you so much for joining.

[B]

Thank you so much for having me.

[A]

I'm really excited to be here. Absolutely. There's a bunch of people who don't know who you are, so if you could get everybody kind of caught up, that would be amazing.

[B]

Absolutely. So, Chris Van Susan, senior partner, Slico Capital. We're an early stage growth stage venture firm. Home office is out of Rochester, Michigan. We have offices in Dallas, Louisville, Miami, as well as I'm out here in California.

[A]

Yep. And we're here at Skull County.

[B]

So thank you here at skullcandy.

[A]

Thank you guys for doing that. Yeah. So can you tell people a little bit about your history of what you've done that's allowed you to get to this point?

[B]

Absolutely. So I grew up in the Northeast. It wasn't always from this nice, sunshine laden place here in California. Grew up in Connecticut. Went to school at the College of William Mary in Virginia. Graduated degree in economics. I actually played baseball at a fairly high level. Thought that's what I was going to.

[A]

Do, but I know the feeling.

[B]

Yeah. Unfortunately, Tommy Johns is. What was the destiny?

[A]

I just couldn't find a strike zone. That was my problem. 92 mile an hour fastball, and I kept hitting the guy where it was.

[B]

So graduate degree in economics. Started in sales, ended up in finance. Moved out to California the end of 09. Problem is there was this little thing called a real estate recession that was happening.

[A]

I don't know what you're talking about.

[B]

A whole much bigger thing, right?

[A]

Yeah.

[B]

And so when I got here, company I came out for went bk, went bankrupt. So I'm now this marooned person in beautiful Southern California. Little cost of living difference between Williamsburg, Virginia, a little bit. Just a little. And so I was this accidental entrepreneur. It wasn't something I set out to do.

[A]

Okay.

[B]

Ended up starting a marketing firm. Met my wife shortly after she started a firm. We ended up merging those back in 2018, which was fun. And part of the reason we did is I had the opportunity to start what ended up being the second largest CBD brand in the world with a few other people. And we sold that in 21 co founded liquor distillery, sold that in 21. So a beauty care brand in 19. It was just kind of this crazy five year period of my life. But in 2017 I also met this guy, John Garcia, who founded Psycho Capital. And I loved what they were doing. It's totally different than traditional venture. And so the opportunity to join beginning of 22 in January as a senior partner. And so I do now absolutely love it.

[A]

So what you guys do there a lot is you help people exit, you help people in that whole process. There's a lot of stuff you and I are going to go over in this that's going to kind of leave people in the dust. Sure. So let's get everybody caught up on some terms when we go into this. When we're talking about exits and we're talking about ebitda, we're talking about things, let's kind of get everyone caught up on some basic ones just so they can understand what we're doing as we go into this. Absolutely.

[B]

So let's actually just look at it as the life cycle of a company. Right. So let's say me and you had a great idea. Maybe we have our own cash, we're going to start there. Hopefully we're going to produce something that we say, okay, that's interesting. Could be the, you know, MVP, minimum viable product for a tech company, for a SaaS business. Could be a new widget or a new, you know, apparel, whatever it is.

[A]

Right.

[B]

We're going to use our own capital traditionally and we're going to try to get something going or we're going to do what we call a friends and family round. Yes, that's where we go out professional panhandlers and we go to our friends and family. But what's funny is it's actually a really important time because these are the people that love you, trust you, want to see you succeed. And so I always say if you can't get that, then you should probably question whether or not that was the best idea. Right. And so friends and family round, it's also where you start talking about the angel investing. Right. And so usually at that point you now have some seed capital, you're going out and you're trying to do a little bit more, maybe try and get it on some shelf space or you're finishing R and D, or you're making your first order and then you're going to move into what they call pre seed or seed round. And that's where you're going out traditionally now to more Institutional type capital. And what I mean by that is venture firms or family office, right, People outside of your network and you're now going to bring in capital to grow to that next phase. Then there's what I call Alphabet soup. So there's A, B, C, A, Extension B, Extension A, 2. Everyone has their own names. But the reason why I say this is, this is all the different kind of funding mechanisms that go along till eventually you get to a size where you're profitable. You use the word ebitda, right? You have ebitda, which is earnings before interest, depreciation, taxes and amortization really means your profit dollars. And so as you're on your growth trajectory towards that, as you get up to that level, maybe you're a target for a roll up. And that would be a private equity term meaning someone, right, is sitting out there going, if I took 10 of these businesses, five of these businesses and put them together and then shored up all of the back office or allowed for selling contracts to be against all 10, I'm going to make the business more valuable, right? From an EBITDA perspective, from a private perspective. And as things grow, so do their values on an enterprise level. And so maybe you're a target for that, maybe you're a target to go public because you're that large. But you just looked at a company that was an idea through funding mechanisms, through growth, to get to where they're either sold or they go public or they just continue to be amazing cash flow generating machines, right?

[A]

So there's a lot of things, you went over there, there's a lot of different things that we have to pull back on. So there's, what is the difference if someone says I'm an angel investor versus vc, what is the difference in that dynamic for most people?

[B]

So traditionally it's whether or not you have a firm and you're raising outside capital.

[A]

All right?

[B]

So that's the biggest thing. So right now if you had a company and I had money in my bank account and I said, I believe in what you're doing and wrote you a check, that's an angel investment right? Now it also is what stage? Okay, when you look at it from a venture perspective, I'm a, let's call it, syndicator or I'm a sponsor. So what ends up happening is I go, hey, I really like this company. We're going to put together a deal, a fund, some kind of, we'll call it, vehicle that we can go out and go to others, receive their capital as A money manager. Now, we're going to invest that money into this company, but we're the ones that hold the keys to being able to make that investment. So one is, I call it binary. One is saying, I have my own money and I'd like to invest a small amount in these kind of emerging companies. And the other might be a venture firm that likes the same type of deals, but is using a vehicle, meaning using a fund or some kind of structure, some kind of product that they're going to raise a bunch of money. And then that might be one investment amongst many others.

[A]

It's interesting to talk about one investment amongst many others because a lot of people say, hey, I'm going to come in, I'm going to buy this one company and say, I'm selling my company. My first company I ever sold was an IT company. Like, hey, I'm going to sell this one company. And for me, it was a one to one ratio, which means I listed, it was sold, it was gone. It was very rare. Just it happened. It was great. As I've gotten bigger and as I've learned this, you will purchase five or six of them because you, I think it's called rolling them up. You roll them up into one and this way they're worth more. The problem is most people, when they're sitting here, like, what is the proven path? What is the way that I go from, hey, I have this fun idea, I want to get funded, I want to do all these things. What are the proven things you can do inside your org? If you walk through and you go in and say, hey, I want to do this, I want to get to the point of either getting someone to invest in me or getting to the point where I can even say, okay, I've got this, I want to sell it, I'm burnt out. Which of course never happens to entrepreneurs when you're completely never at, hey, our weeks are nice vacations. So yay going into the situation. When you go into a company, it's okay, you're struggling, this is where you are. If you want to be more attractive to investors, no matter how they are, there's very specific things you need to do, be it culture, be it systems, be it whatever it is. When you've walked in because you've had a lot of exposure to this, what are some of the things that, when you walk in, like, okay, these are the core five or six things that you need to do this before we can even talk about getting the next round of funding.

[B]

Yeah, it's really stage dependent. So if you were an early stage company, right? So let's say that angel investing or pre. Seed. Or seed, you might be in revenue, you might not be. You might hopefully have your R and D done enough to have that thing that we're looking at going, oh, I see what you're doing. What's hard is now putting a valuation on that.

[A]

Right.

[B]

So there's a bunch of mechanisms you can do, which I'll save everyone from to be able to say, okay, you don't have a value today, but we believe in what you're doing, so we still want to invest.

[A]

What gives you. Sorry to interrupt. Why do you sit there and say it doesn't have a value? If someone comes in is like, hey, I want to sell this, I want to do this. This is who I am as an organization, you don't have value because a lot of these people, they don't understand. This is a problem with most business owners. They don't understand that their business is not their identity. That's two completely different conversations. So they'll take it personally. When you go to someone say you do not have value, what does that mean to an organ?

[B]

Yeah. So let's look at it as two different stages. Kind of on that, on that trajectory we talked about earlier. If you're an early stage company, you have no sales, you have no ebitda, you have an amazing new product. Right. That you've put some money into. I can't value you, right, Because I'm valuing assumption. I'm not valuing guarantees. Now let's say you have $3 million in sales, right? But you're not profitable. Okay? You have sales, not profitable. So now I'm looking and going, okay, what are your sales contracts? Right. We have this very, very long in depth due diligence process, but it's still put a true value on you at this point. Right. Now let's go to the far other side and say you're a business doing $50 million in revenue, $5 million in EBITDA, right? Okay. I can put an enterprise value against.

[A]

You because it's tangible.

[B]

Because it's tangible. And so when you look at this continuum, the earlier you are, the harder it is to peg value. So what will end up happening, and I'll explain. One vehicle is what's called a capped safe. Okay. What that means is I'm going to invest in you at no valuation, but I'm going to give you $100,000. Usually that safe will have a value in the future. Let's call it $10 million. And then traditionally, because I'm doing it now and taking a lot of execution risk. Right. You haven't sold anything yet. We don't know if you have product market fit. We don't know if you have anything. Then I'm going to get a 20% discount on that round.

[A]

Right.

[B]

So 10, minus 20%, $8 million valuation for my $100,000.

[A]

Right. And I think most people don't know that there's multiple rounds when you're doing. There's always multiple rounds. And how you negotiate those rounds are important because most people think, hey, I'm going to sell the business. I mean, you're done with it. I'm just going to sell it. Not understanding that there's probably going to be more rounds coming. And if you're the business owner, there's ways to get residual from this for a very long time if you've done this effectively.

[B]

Well, what's interesting just to kind of riff off that is let's assume we do peg in value on that company that has no sales and no EBITDA and just a product, well, you're worth a million dollars and you need $500,000 to do your next thing. So you're going to give me 50% of your company. Probably not. Right, Right. So instead you're saying, I still need the half a million. And you have individuals who invest at that level, meaning at that timeframe, and would say, okay, I believe you can get there. So 10 million is the cap like I used before, and I want the discount when you're all the way to the other side. Now I can say, okay, in your industry, SaaS, advanced manufacturing, name the industry vertical you trade, meaning your value is based on three, five, 10 times your EBITDA. Yeah. So that $5 million in EBITDA times, call it 10, your business is worth 50 million.

[A]

Right.

[B]

And they're like, wait, but I'm doing $50 million in sales. Okay, you're making $5 million.

[A]

Right. And people don't understand that there's a big difference between gross and net. There's a huge difference. When you talk about verticals, certain because everyone goes as entrepreneurs because they have this great idea, they sat down and they said, hey, I've got grandma's cookies and grandma's cookies recipe, which is great, but no one but you and grandma want to eat them. Go do something else that's going to create because know what your real goal is. If your goal is to create freedom, it's a very different Conversation that I want to create grandma's cookies.

[B]

Well, let's brief on that.

[A]

Okay.

[B]

Because this idea of I want to create freedom and I talk about the entrepreneurial journey I've had, the few exits that I've had, but I've been around entrepreneurs and you know, inside of our company, we have 40 different portfolio companies. So I'm around CEOs, entrepreneurs, people with big dreams all the time. If you start your entrepreneurial journey thinking, I'm going to have work life balance. No, no, you are thinking of it wrong.

[A]

100%. I agree.

[B]

You are saying you are signing up for a 24 7, 365 slog and only luckiest are successful.

[A]

Yes. I think the best example I've heard of Chris was you're going to watch this much in your life.

[B]

Yeah.

[A]

That's how much energy you can either do it in three years or 30 years. It's not going to change the amount that you have to work though. So you've got this much, you've got to pay that Piper.

[B]

Yes.

[A]

So it's the conversation of, I don't want to have a 9 to 5. Okay. So then you just work 5 to 5. Just all the time.

[B]

Yeah. So congratulations, you don't have a 9 to 5 anymore.

[A]

You just have it all the time.

[B]

Just all the time.

[A]

Just all the time.

[B]

What's interesting, we romanticize this idea of being an entrepreneur. And by the way, I love it. I love it. I love.

[A]

Yes. But I don't think people should be that. Because there's some people who have entrepreneurial traits and they're adorable and I like them because I watch Shark Tank and I'm like, you're very cute, please go away.

[B]

Yes.

[A]

And then there's the people. And the easiest way I get people to figure this out is you do a word association game. So if I say cat, you say dog. If I say house, you say whatever it is. If I say employee and you spit out paycheck, congratulations, you're an employee.

[B]

Yes.

[A]

If I say employee or job and you get angry at me uncontrollably and you want to stab me in the face, you might just be an entrepreneur.

[B]

Might just be an entrepreneur.

[A]

Because it's a different narrative. And people don't. People don't get that. People go in, they keep. Because our society, just like now, it's cool to look at Marvel because when I was in high school, it was not cool to read comic books. Yeah. I would have been so much cooler, but I was never been cool. And now it's all of a sudden cool to be an entrepreneur. I became an entrepreneur because it's who I was. It just, I'm not, I'm hireable, I'm not employable. If you're employable, you might not be an entrepreneur. And I think it's a big differentiation.

[B]

I think you're spot on. I think also just again, to build on it, one of the things I see inside of a lot of early growth stage companies is they've either now gotten their glide path or they're about ready to get it. And they've been working so hard. And traditionally it is founder or co founders, led or those first couple employees who really bought into the vision. And as you scale, what sometimes gets lost is the fact that while you are the entrepreneur, you are the 100% arbiter of the vision and the culture. But your employees sometimes are employees.

[A]

Yes.

[B]

And putting your values down stream on people who don't share that is sometimes really tough. And so it's really understanding at one point do you get managers who truly understand how to manage the people who are there for work? Now, great culture means they're going to over index the amount of effort they're going to put in. But an employee is an employee even at startup companies. And sometimes that is lost. And I think it's important as we talk about culture. Yes. To understand you can't push down to your 300, 300th higher.

[A]

Right.

[B]

The same. Look at them in the same way as you did. Higher, first five. Right.

[A]

And I think you can, you know, you can brute force your first set, seven figures, maybe beginning of eight. You can brute force this. As entrepreneur, you can just put your head down and go through walls. Some point when you get past that $10 million mark, all of a sudden it's like, okay, now I need to start looking at things different and look at systems. I need to look at culture. I need to look at decentralized command. I need to change the way I operate. And for most entrepreneurs, they're burnt out at that point. They're absolutely fried. And that's for my experience. That's when they go hunting for people like you. And they go, okay, give me money. My stuff is great. We're like, that's adorable. What do your numbers look like? And you're like, no, no, no. But, but it's great. It's really special and it's shiny. You're like, shut up, give me your numbers. So I think as they go through that, there's a couple things where when you Talked about verticals earlier. What are the verticals that you've seen that not only have succeeded the most but are the easiest to get funding for? Please don't say crypto. I might hit you with a mic.

[B]

I will not say crypto. No, no, no, no crypto projects. We actually aren't, aren't invested in that. You know, today, right now, anything in AI is really hot.

[A]

Yeah.

[B]

But if you kind of take a step back really solidly thought out businesses and there's a great GP at Benchmark Capital, I, I've drawn a blank on his name and I really apologize. So if he hears this, I apologize for not calling you out, truly understanding what you're trying to do. There's an old thing we talked about in marketing, right. I used to have a marketing firm which was everyone wanted to sell speeds and feeds back in marketing. So think the old school computers, think this ram, this hard drive, this whatever it was, but it was, we called it speed and feeds all your product benefits.

[A]

Right.

[B]

But Apple comes out and just tells you how you feel when you use it.

[A]

Yep. Identity.

[B]

That change is fundamentally very interesting. And there's a piece where I think every founder, every co founder needs to have a little P.T. barnum. Now the good part of it, the showman, not the bad part, but be able to weave a yarn, be able to tell a story and be able to say this is what's in it for you. Because at the end of the day, the speeds and feeds only get you so far. It doesn't mean that they're not important, but it's truly being able to tell that, that story.

[A]

Yeah, I think it's, it's the idea that people don't buy products and services. They never have. They buy product, they buy stories, identities and ways out of paint. And you know, you understood this, you own a marketing company. You and the missiles had marketing companies, agencies. So as you're going through those in those verticals, I still think it's the idea that if it works and it's simple and it's needed, I've always seen funding to those go happen fast. If it's something that's fluff, it's your grandma's recipe, you might have a bad day.

[B]

So you go through and really where that GP Benchmark told the story is sell me the wind, don't sell me the sail, right? Don't sell me the beam if you're selling me a sailboat. Right? Because even crappy boats catch flight if the wind's good enough. So what are you doing in a certain market that you either have an unfair knowledge set in or experience, or are you innovating in a current market or are you building a new one? And then if it's a new one, why is that one going to exist meaningfully? Right. What kind of consumer data have you actually mined to know this is going to work? Do you have commitments already from big companies? Right. Like, do you understand the incumbents? Because one mistake that entrepreneurs make a lot is they say, I have designed something that works for everyone, everywhere, anytime, always. And you're going, well, maybe, but probably not.

[A]

Right?

[B]

So we talk about it again in the little stories of I'd rather you an inch wide and a mile deep.

[A]

Exactly.

[B]

Inch wide, mile and an inch deep. And really what it is, is you could have the greatest. And I'll just use CRM software that starts in health care. And you're killing it. You're like, I'm going to insurance. And you're like, yeah, but do you know that well enough? And maybe you do, yeah, but then I'm also going to mortgage and I'm also going over here. You just keep saying, I can tackle it. And what you don't know is what are the incumbents, how long are the contracts? Right. Is this a long sales cycle, who owns it and why? And that kind of education chasm. You can't be an expert at everything all at once. Or maybe you can if we were back in the old school days where you just get a couple million dollars dropped on you, pre revenue. Kidding. Kind of.

[A]

Wasn't that a good idea?

[B]

Yeah. And then you're throwing FTEs at problems. And as we go back a little bit in one of your questions, the biggest thing I see is a use of funds strategy that makes sense. So when you're saying, I want to raise a million dollars.

[A]

Right.

[B]

What are you doing with it? If it's a ton of what we call OpEx, operating expenses, meaning hiring people, then I'm going, have you thought through your systems well enough? And especially with the, I don't want to say the advent of AI, it's been around for quite a while, but consumer available AI, sometimes it's not, I need more bodies, sometimes it's, I have bad systems. Yes. And if you think about that from just a cash flow management perspective, reworking your system traditionally used to be less expensive than hiring two new people.

[A]

People.

[B]

Yes. Right. And so a lot of it is, what are you doing with the use of funds? Like, is this funding R D? Is this funding a new Market. And you, you're now presenting why that market's going to be a game changer. So really during that process, I'm evaluating what are you doing with the money if I do give it to you?

[A]

So how do you, when we talk about systems, which are used my favorite word in business, I wrote something called system set you free. Yeah, it's the simplest way to do it if you can't fire yourself out. You know, we talk about this all the time. Go into a room. Here's a black marker, walk me through acquisition to fulfillment. Now here's a red marker circle where you're involved. The minute that marker touches you have failed. Because you haven't built a prison, you haven't built a business. That's just. It is what it is. People hear about systems all the time. You go in and you're professional at evaluating systems. So you can go back to your investors and say, hey, this is good. This is a good fish. This is not a good fish. When you look at that, what are some of the systems that you see that say, okay, yeah, that, I want that. What are some of the ones that you see the ROI on?

[B]

So when we look at say, consumer based businesses, I'm looking at, have you created a flywheel?

[A]

Okay, walk me through that.

[B]

Yeah. So what ends up happening in businesses is when you're acquiring a customer, there's a fixed cost traditionally, and so you acquire them once they're now in your system. What now if you haven't thought that through, I think that's a big liability. It's a big kind of red flag. I don't care whether or not you're running Facebook ads or you're doing direct mail or whatever your marketing du jour is to acquire your customer, the best, most efficient way acquiring new customers is through that existing customer. And so most people look at acquisition, they don't look at retention and kind of organic referral based acquisition. And so I think understanding that, that's a big red flag for me. But if you have that dialed and you can show me how the flywheel is working and you can show me going back to old growth, hacking back right in the, in the, in the 2015-19 range.

[A]

Wait, it's not 2015 right now. I'm very confused.

[B]

I know, very confused. If you went back there and said, what is that? One or two things, right, that people can't live without with your product, service, whatever it is, honing in on those and making that the core UVP or unique value proposition, and then Figuring out how to get other people to pare it out, what that UVP is. If you can do that. Well, that's a great business.

[A]

Can you give me a couple of examples or even one or two that ones that you've seen? Okay, well, these were really good.

[B]

Yeah. So the, the. I'll call it the most famous one. Right. As people in growth talk about. And this is what my agency did back in the day. That's why I talk about it often. Dropbox guy, the name of Sean Ellis here, actually lives in town. What they figured out was people wanted storage and back in the 2010 range, digital storage. What was that? Like, my files go there, like on the line. Yeah.

[A]

Like where?

[B]

Huh?

[A]

People don't understand cloud.

[B]

No.

[A]

Yeah.

[B]

And so they just float there. Like they're above me right now. Anyway. Sorry. It's okay.

[A]

I used to own an M. I used to own msp, so there's a lot of that. I was like, okay, no, no, don't feed it water. It's not thirsty. What are you doing?

[B]

Yeah, but once they got a taste of their. I think it was two gigs at the time, right. Or whatever it was.

[A]

I think they got to five at some point.

[B]

Yeah, but you could get a hundred gigs, or, sorry, 100 megabytes by just referring someone. And what ended up happening is once you had all your photos in there.

[A]

Now you need more.

[B]

You need more. And you were like, well, I could buy it. Who wants to do that? And I think actually the time, you couldn't even buy it. I don't think they had the model yet where you.

[A]

In the beginning, they didn't know it was really. It was Dropbox. You drop it in and it went away. I don't think they opened up the.

[B]

The paid version.

[A]

Yeah, they didn't have the one yet.

[B]

And so the only way to get more storage is to get more people.

[A]

Right.

[B]

So I remember just firing off emails because I was like, this is the best thing ever. Well, storage, everyone did that.

[A]

Right.

[B]

And if you think about all they said was kind of. And I forget, their marketing line was like, your stuff anywhere. And if it wasn't, that's a pretty good one. But the idea was that's what it was. And at the end of the day, people were like, yeah, my stuff anywhere, but I have more stuff than you're allowing me to store in here. And how am I getting more. Oh, wait, I got to tell more people. I'll tell more people because I'm going to get more storage. That flywheel just Kept going and they exploded because they weren't trying to say we can have your documents, we can have you. We don't care what you house in there. Right. That's you, this is your stuff.

[A]

So do you have one that's non tech related? Because I think there's a lot of people when they look at this and they're trying to build flywheels in their environments, tech's relatively easy. Again, I'm spoiled by this. I have a bias because I have a tech background. For me, tech is one of the easiest things to scale. It's not hard. I don't have to go out and buy warehouses for most of what I have to do. The costs going in, the hard costs are not that bad for me for not. When you're going into these and you're evaluating them, what are some of the ones that you have seen that are kind of easier to or do or have worked? Do you have another example? Yes.

[B]

You know, we've got a company now in the CBG space. I've sold a CBG company. It is very tough to acquire customers because traditionally they're very much a commodity. Right. And why I'm saying that is I don't care if it's toothpaste or a protein drink or for me, it was CBD back in the day. Right. There are a ton of competitors.

[A]

So how would you create the loyalty? Yeah, because they want to try the newest and latest and greatest thing. How would you create that loyalty?

[B]

So what we did was kind of twofold. One, we made it a movement, not just the product. And so we wore at the time less expensive. So we were democratizing the ability to have this amazing product where others were not. That was one. Two, we started to truly understand who our consumer was. And everyone was chasing the younger millennial cool hip demographic. Not that who our demographic wasn't hip and cool. Just that millennial demographic was what everyone wanted on the coast. Cause that's where the majority of the sales were. What we realized was the actual people who have a use case for this typically 45 + and they may live on the coast. But if you live on the coast, you also have access to a ton of education around. I'll call it full strength cannabis. Right. We were hemp derived CBD so we could ship all 50 states to all that. What we ended up finding was our most loyal and best customer who would subscribe and save and tell people we're in the middle of America and who they listened to or this isn't a political Comment. But Sean Hannity and Rush Limbaugh and those influencers of the day. So as we had them read more, more people would get comfortable with it. That was the, that was their influencer. It wasn't the people on Instagram saying, you should try this. Right. And what we found was that flywheel started because we would invest in that acquisition and they would stay with us longer, be more loyal than the millennials who, if you look at that cohort as an actual consumer, they are not loyal traditionally, unless there's a movement behind it. So we had that. Unless there's a movement. So think Tom's Shoes, for example. Right, Absolutely. But outside of that, it became very much trial. They want to try local, they want to try regional, they want to try the hip new brand, they want to try this.

[A]

And that's a very hard flywheel to build.

[B]

It breaks it automatically.

[A]

Yeah.

[B]

And so that was a really good way of understanding, okay, who is our customer, where do, where are they and how do we get them that, how do we keep them not only Loya, but enjoying the product?

[A]

I think it goes back to the idea of who, you know, where's their watering hole and what, what language are they using. Like, if I was going to create a dating website for 25 year old women, it would have very specific conversations about spontaneity and adventurous and travel. If I was going to create one for 35 year old women, it would talk about stability and family and, you know, all of that totally different thing. So if you don't know your audience's language, you don't know the watering hole that they're going to. In your case, it was those two gentlemen. You have to, you really have to know that. So when you're going in and you're analyzing these deals and you're looking at their systems and you're looking at their flywheels, what are the other things that you're looking at?

[B]

Well, so we took, we took really a marketing lens.

[A]

Right.

[B]

So now it's a distribution lens. Right. Is this something that can be sold online? How is it going to be sold online? Right. I realize that's still back in marketing, but it's really a distribution, it's a sales. Yeah. Then I'm looking going, okay, who's selling competitive products today? Right. What are your inroads there? Or do you not have any?

[A]

Right.

[B]

Because there's, I call it the, the old. The old biggest secret in a lot of products is traditionally there are things already baked. The success stories of new up and comers are there 100%. But like in CPG, a lot of times you see this brand comes out of nowhere.

[A]

Okay.

[B]

It's because they're seated by one of the larger companies already and traditionally will get an unfair share of shelf time and other things because of it. And so how are you going to compete against the incumbents? Right back when I had my distillery, you'd start doing success, like successful in a market, and then the big guys would be like, oh, no, no, thank you. I'm gonna run a sale on everything and just drown you out.

[A]

Happens more than you would know, Correct?

[B]

Yes. Right. So, like, how are you? How are you, what I'll call SWAT proof at that point.

[A]

Right? It happens. It absolutely happens. Say any industry I've ever been in, that's what comes in. And the. I don't know if there's a way, and maybe you know of one, I don't know of a way to avoid that when it comes in on that high of a level. It's like when I sold my IT company, we were crushing it. And then we were. We were 5 to 8 million dollars. We were doing okay. We were doing okay. And then someone else came in there, $150 million, like, guess what you owe now.

[B]

I'm like, I'm not going to purport that I have all this data that shows this specifically, but I would contend that a lot of companies that are uber successful, if you were to look at their cap table, they have industry players involved who help.

[A]

Yes.

[B]

I'll leave it there. Number two, very politically correct.

[A]

Well done.

[B]

Yes. Number two, we used to call it in the liquor industry, like, you just need to get to aaa, Right. You need to climb your way up the minor league ranks enough where you are getting swatted enough that you're starting to become a nuisance.

[A]

Right.

[B]

And as a nuisance is when you get bought.

[A]

Yes. And that was the strategy that I used and exit out. I was like, I just need to annoy them long enough and they're just gonna. Either they're either gonna destroy me, which is a little hard to do, or they're just going to buy me out because it's easier.

[B]

Yeah.

[A]

And the second company I sold literally was that they walk in, they're like, you're annoyed. I'm like, okay. They're like, we're just going to buy you. I'm like, okay. And that's how the deal completely happened. And I think it's a question I wanted to bring to you. There's a lot of People who are like, okay, I might not be an entrepreneur, but I have this experience. I want to go buy something, I want to go into it and please don't tell me to go biz myself. Do you ever recommend that path and a straight buy a straight by or if you don't have an experience as an entrepreneur or do you just say, hey, I'm going to invest in a fund, I'm going to find someone like what you guys do. Yeah, I'm just going to give you guys a bunch of money and then I'm going to go study shore erosion on a beach because watch it go in and out versus actually going in and doing it. Because it's a very different skill set being an employee versus an entrepreneur, as you said earlier.

[B]

Yeah, I think it's a yes and right. So, and what I mean by that is you can take, and I'm not a financial planner, but you can say, oh, I like these deals, I want to, if I'm a credit investor, I want to invest in them. But let's say you're the COO or CEO, right? Of an established company, lifestyle business that's going great and you're like, you know, I work here for five years, I've helped make the owners a ton of money. I know everything that happens in this business, right? And you have a non compete that expires or you don't have one, hopefully for you, you don't. Or it's not enforceable in your state. And you go, look, there's three of our competitors who alone aren't very good. But if I could roll them up, to use that term before, right. I can now compete against this company. Right. I'd say that might be unfair baseball, the fact that, you know, you have all this embedded trade secrets. But the idea would be at that point you've already shown you can run the company. Right now you're just balancing the debt that you took to buy the company and you're running it the same way and rolling it up and building teams and doing everything you did. But you actually are at that level a proven operator. And so I'd say that's a safer way to go. If you wanted to go from a career CEO to saying, now I want to be an entrepreneur, you're still a CEO and now you have a baked business. I think where individuals get in trouble is they go, I'm a whatever level in the business and I know more, right. I was like, I'm gonna go start. Right? And I think the problem is you don't know what you don't know.

[A]

Correct.

[B]

Right. I look at my own kind of trajectory and career and if I were to go back in time, a couple of the businesses that I started, if I had the knowledge set I have right now, I would've never started.

[A]

Bank account would look a lot different.

[B]

Yeah. And so there's this level of like, okay, I'm glad I did. It brings in this amazing experience and what I'll call battle scars to as I'm helping other entrepreneurs today and what I'm evaluating when I'm looking at investing, but it's hard and I don't think that's fully appreciated. As we were talking about earlier. So you say, oh, I can do that better or I have an idea for optimizing it. Well, that's great. Optimizing when you don't have any customers is real easy.

[A]

Yes.

[B]

And so now you've got to sit with a blank piece of paper and I'm not even saying write a business plan, say, how am I going to start this? How am I going to build it? What do I need to do? And I think that the best engineers, whether or not it's coding and tech or actually building a physical product can do those really well. But as a founder now it's your responsibility to do every single thing else from filing your LLCs to doing your taxes to remember we don't have all the money yet.

[A]

Right. Marketing, fulfillment, customer service. And I think there's is a conversation I heard Rudan, sushi chefs are great, but don't make your sushi chef be your plumber.

[B]

Yes.

[A]

Totally different things. You might have built a wonderful restaurant. Don't go try and be a plumber. Standard lane, inch wide, mile deep.

[B]

And what's interesting is now you go, okay, well I'm need co founders. Well, how many co founders you're gonna have? 5, 6 in every decision.

[A]

No. Yeah. And then what are you gonna. Yeah.

[B]

And then does everyone share in the vision?

[A]

Yes.

[B]

Because I would contend that a lot of companies don't hit their maximum success or just quite, quite frankly fail because of dissent between the co founders.

[A]

Yes. Also descent lower down the chain. If you're in a situation where again, you can't go to anyone in your office and say what is your vision? If they don't spit out within reason, it's kind of the same thing. You've got problems 100%. And that's where the culture comes in. That's where the next thing I was going to talk about where there are Companies that come to organizations like yours and they come and they say, okay, I want to do this, I want to sell, I'm done, I'm exit, I'm exhausted. And because of your guys expertise, you'll come and say, okay, great, that, that's nice. But if you can hold your breath a little bit longer, we can do this, this and this. Instead of walking away with 5 million, you're going to walk away with 50.

[B]

Yeah.

[A]

When that happens, because that's a different ballgame than most people are used to. Most people are like, okay, I'm going to systematize this, I'm going to get to a certain level and then I'm going to exit it. And a lot of the ones that you've seen and I've been blessed enough to see were like, no, you just did the appetizer. Just hold on, we can help you get to this next one and then have a massive multiplier. What are the things that you've gone through as you go go through it? And someone comes to you in that situation? Like, hey, you know, I got this from my father, I got it from my grandfather, got it from my grandmother, I got it from my mother, whatever it is, I built this or this org and I think I can get goofy numbers, $5 million for it, which is adorable. And you guys come and say, that's cute. I'm pretty sure we can get you 50 in two years. When someone comes into that, first off, for most people, they don't understand that when you come into that situation, what are the things that you do and you look at and you help them kind of step by step to elevate into that environment.

[B]

Yeah. So there's certainly a few things. One is, and I like saying this just from the get, right. Pigs get fat, hogs get slaughtered. So if you have an operator that in your example is saying white flag, I need out what I'm doing first. Yeah, right. Which is, all right, we're gonna figure out how you take a little break and we're gonna get some proven operators in there to pressure test whether or not we can get it there over the next two years. So that. Because you've. You've already told me you can't. Right, right. That's really important. That's not a bad person.

[A]

No, you've hit. You just you're here. Won't get you there. It's not that. It's the Tarzan theory. If I go from vine to vine, I have to let go of one of them to keep the Momentum. But if I hold on to what, it's over. Yeah. So there's a lot of times with founders, and I've run into that situation where I was like, I'm out. I'm empty. My sponge is full. I'm out. Having the ability to step away and have that go off and do something else is important.

[B]

So the next thing we look at is to go, okay, how realistic is it?

[A]

Right.

[B]

And why I say that is, if we just wanted to sell that $5 million business today, I don't care who you are, that is six plus months. And by the way, that's not shoring up anything yet. That's just the process takes that long.

[A]

It does.

[B]

And that's with a buyer at the table. Right. To do diligence, to do everything. So you're going, okay, I have all the regular investment banking things I have to do. I have to build a virtual data room. I have to get everything optimized in the company, if I haven't already. But that optimization could change that. $5 million in EBITDA company. Hey, well, all but ready now.

[A]

Right?

[B]

We've done it. Now. What does that mean? This is where you hear all of the bad terms for people in venture and private equity. Because a couple minutes ago we talked about throwing FTEs at problems. And traditionally, most businesses have done that.

[A]

Yes.

[B]

Therefore, if I'm looking and saying we want to maximize the amount of money you get for this business, then we are scrutinizing everything within the business today, which also means human capital.

[A]

Yes.

[B]

And if that's the biggest line on your p. L. Right. Is the amount of people, my question would always be, is that needed or not? I don't know the answer. It could be right.

[A]

And I understand the culture because, you know, I. When I sold mine, my. I paid more per tech than anyone else in the industry because I knew my clients would be exceptionally happy. And the LTV just skyrocket. We never had a client leave. So when someone came in, they're like, I want to buy your org. Your. Your salary's too high. I'm like, nope, you're done. You get to go away now. Just. It's over. So you go through there and you figure out those things. When you have an owner who is completely fried and they're exhausted, which I love that people think that they're not going to get there. You guys are cute. When that person gets there, is there a way to continue to scale and have them involved? Or do you just kind of say, hey, guys, go to Tahiti I'll talk to you in six months.

[B]

It is fully dependent on the human. They can be a great asset and knowledge transfer partner. Sometimes they can be an absolute cancer within the organization because they're not in control. And that is human dependent. Just to be transparent about it, you'd love to have them there. They have this unbelievable knowledge set from being there from the beginning or being second generation was they were there as a kid. They've watched how their dad do it. There's certain parts of the culture that.

[A]

The connections they have.

[B]

All of it. Absolutely. And that is also a thing that a lot of people in private equity don't think about is we buy this thing. But what you didn't realize is every deal inside of that company for the past 70 years was done in a handshake from family to family. And the kid, you know, the, the, the, the new CEO is the second generation and oh yeah, same with the client side. Right.

[A]

And they've known each other since diapers.

[B]

And the minute you remove that, you remove all of the.

[A]

So how do you prevent that? How do you. When you're walking in and looking at deals? Because I authentically don't know this answer. When you're look, when you go to deals and you have, you know, Billy grew up with Bubba their entire lives and Bubba Senior grew up with Billy Senior and you had all that. How do you vet that out?

[B]

Ask a lot of questions.

[A]

God bless your job, dude. Yeah, I'm just not doing that well.

[B]

No, I mean so we'll like. If you're looking at a standard kind of process.

[A]

Right.

[B]

Whether or not it's through investment bank and we typically bring in, we do some investment banking but we'll bring in investment bankers as well. Right. We're generalists as I mentioned. Right. We invest in all different industries but that also means we're not sitting there as a specialized investment bank. So if you're selling a consumer product, you're going to bring in the best investment bankers who by the way have all the connections on the other side. Right. To help you sell that business or roll ups or do whatever you're doing. But that's where you're going to go and say, okay, I'm going to look at what liabilities there could be inside of the business. And so you're going to get a list of their, your top customers, your list of all their customers really.

[A]

Right.

[B]

And then you look at. Is there customer concentration issues, meaning you have 20 large customers that make up 80% but really two of them are the majority of that 80% you go. Okay, that's interesting because if it's Bubba and the other guy.

[A]

Yeah.

[B]

And they leave, you've just totally destroyed the company. So that's the first one, you know, customer concentration, risk. Then you're going to actually call them.

[A]

Right. And what questions do you ask them again?

[B]

Depends on. Right. But a lot of it is, you know, how is this like what does the relationship look like?

[A]

Right.

[B]

How long have you guys been in business? What is your right intentions moving forward? A lot of it's based on. Before we ever ask those questions, how are the contracts written? Right. Is this a multi year, Is this expiring in six months? Then I'm probably going to negate it from value. Right. Like you're looking at a whole bunch of different things. And this is also what your investment bank's going to do for you as well.

[A]

Well, I think this is why people and not to step on anybody's toes. I think they choose investment banks incorrectly. They choose them by geographic location versus the talent that's in them. Because I authentically don't care if it's the investment bank down the street. I want to know the people that are in there going to vet it out, that they're going to have the experience. And I would prefer, and this is just me, someone who isn't local to me. I want to have someone who's coming in and has experience and are battle hardened. This is conversations I had for a long time. There's a, you could have a Harvard taught doctor or you could have a corpsman that served downrange. That individual went down range is going to give me a much better result than the Harvard taught doctor who just hasn't done it. So just because they were in the club, I want someone with fresh eyes to be able to detach.

[B]

Yeah. And you know, I think I'm gonna, I'm gonna talk in two ways with investment bankers.

[A]

Right.

[B]

They're either gonna be happy with what I say or they're gonna. I'm gonna get over it. Nice phone calls. Either way, you get what you pay for. Yes. And I think that entrepreneurs sometimes don't understand how to integrate the correct service providers to your point into what they're doing. Whether or not it's an M and A attorney, an investment banker, whatever it is, you get what you pay for. So if you're saying, look, this investment banker's only charging me X to sell my company versus Y, but you get the one that's very deep incumbent in the space knows all the players. You're probably going to have a better shot there, but they might be twice as expensive. Now I'd also say if you have, if you stand to make a large gain on this transaction, make the transaction happen over here. Don't go cheap because you, there's certain things that you can get kind of run afoul on.

[A]

I think it, I think it goes back to what you said earlier. When you're an entrepreneur, you have to do everything. And as entrepreneurs, even as a successful one, I had no idea about how to sell. I had no idea about investment bankers. So when I had investment come to me, I was like, I would just walk out the room because I was just overwhelmed because I didn't know what I didn't know. And so being able to sit down and find someone you trust where again I think that trust factor is more important than location factor and making sure they have their experience well.

[B]

And that's where you know going back to someone like us. Right. If we're going to invest earlier, it's called seed through that B round. C, A, B, even the C, a lot of seed. C in that round. Part of my role on your board is to introduce you to the best investment bankers. Because it's my job, if I'm really to look at it, to understand where deal flow is coming from, who else is in the space, why we're choosing you, who could actually buy you downstream, like what's your exit strategy and when. Therefore, before I made that investment, I've started to contemplate this, where you fit today, where you could go, who would eventually be your acquirer. Right. I mean, unless you're going to build something that you're endeavoring to take public because you can get to that size and scale. But if you're building something that maybe is a couple hundred million dollars in revenue and profitable, probably not taking that public, especially in today's market.

[A]

Yep.

[B]

But then who's your strategic. Right. Is it going to be a roll up? Is there going to be some kind of, you know, strategic that just comes in and acquires you as a bolt on.

[A]

Right.

[B]

Like where do you end up? And then it's my job to as we're helping you fundraise and why I say that helping you is we make. Make the lead or do the lead. But there's gonna be other investors. So now I'm going, okay, who else is strategic? Who has other investments in the space and other investment bank. So you're starting to weave this web of, of where you want to guide them to where they need to go to eventually get bought. Because the end of the day, my job is to return money in the form of a return to our investors and do the best for our founders. And that is not a seesaw. That is everyone is aligned. And so I'm starting to make introductions to investment banks and great M and A attorneys, good corporate attorneys, great CPAs who are entrepreneurial and have great connections. Today, when you're worth $5 million, right.

[A]

And you're going to sell it at 50 to 100.

[B]

And so I want to make sure that they're there guiding you along the way with the best.

[A]

When you guide them, what are the questions? You start them out. If they're starting into this and they're like, crap, there's a ton I don't know about this. Which at this point, however long we've been going at this, I'm sure a bunch of them are like, oh, crap. Yeah, there's a whole different world here. I'm like, what are some of the questions right off the bat you ask them. You're like, hey, make sure you have this stuff answered before you call me, which you can call me as much as you want. It's adorable. We'll just put your cell phone up. What are some of the questions that you wish that they were like, hey, just get this locked in, get this so it's sitting down and you know it to your core.

[B]

So again, I'm riffing off someone else. Culture, vision, capital raising are the three main focuses of a founder. That doesn't mean that you aren't in there. Right. Doing the wrenches and doing the coding. But ultimately this is your company. You need to own that. Which means you should be out telling the world about what you are doing. And in the process, you're going to meet a ton.

[A]

Yes.

[B]

And a ton of people are going to promise you the world and under deliver. I'm there to help you sift through what's possible and what's good and what's bad. If I'm on your board, if it becomes more pragmatic about fundraising, early stage actually have put together why you exist, why I should care what the opportunity is. Don't just sit there with a 48 page deck showing me every speed and feed and I come back to that because I have sat through so many of those. I'm so sorry. It's okay. And so there's this level of like, if you truly understand what your company is doing, that can be a very Short deck. If you see some of the best decks for the most amount of money ever raised for, you know, Silicon Valley traditional startups, they're like nine, 10 pages long.

[A]

The Sequoia decks.

[B]

Exactly. You look at those and you go, but that answered everything I needed.

[A]

That's all that should be there. So when someone goes, okay, I get that. I get where I'm going here. I know what I have to do. For me, the business owner, because that's my job on this side. It was me, the business owner. I know what I have to do. What should I be looking for on your side of the table? What are the questions? I should be. Let's say for some reason you guys got eaten by a purple dragon and you disappear. What are the questions they should be asking firms like yours?

[B]

So there is money and there is smart money. Me and they are very different.

[A]

Yes.

[B]

So let's say I only invested in health tech. If you're coming to me with your apparel company, why am I smart money. I'm just money.

[A]

Right.

[B]

And so one of the biggest pieces of. Of advice, I would say actually just opinion, because advice, you have to actually own this thing. I learned in EO years ago, you don't give advice because then you have to own that advice. Right. No, thank you. My opinion would be truly understand. When you're sitting across the table, like, what I invest in, you can find this really available. You can see what boards I'm on. You can see which deals I originated at the firm I like. You know, last one was AI. I've done cpg. I have a prop tech. Right. Like, there's certain things I. Like there are certain things in biotech, I have no idea. I have other partners, and that's their job. That's their job. Understand how to. Like, if we get intro'd say, I know you don't, but I would love for you to see. And maybe if it sounds interesting, bring a joy in because now that means you've actually learned enough about my firm.

[A]

And done the homework.

[B]

Done the homework. If not, then I'm just a piece of meat with a wallet.

[A]

Right.

[B]

And that's a little different.

[A]

It is. And I think knowing the person's character is vitally important. You know, one of the things we were talking about before we recorded, it's the type of character you have and what you do and the people you connect with. And I'm going to be selfish here because it's my podcast and I can do whatever I want going in. And one of the reasons I came out to Skull Candy and did this with you is because some of the stuff you do behind. You know, one of the things is you just. You mentioned you just did this event, and you get a bunch of CEOs that come together and you're helping out a very specific group of the population to reintegrate back in. I think that conversation, I'd love to share what that is, because that, for me, tells the type of person you are versus why I got on a plane this morning at zero to do this was because of that. That. That was the reason I came here. So I think when you're researching, not only are you researching businesses on your job, on our side, where we're business owners, researching the other way as well. So if you could tell a little bit of what I'm trying to be as vague as possible with, because I don't want to steal any of your thunder.

[B]

Yeah, no worries. So how I met John Garcia back in 2017, I said earlier in the podcast, I'd met him.

[A]

Right.

[B]

I met him in this group called Alder. Alder, like the tree. It's all around generational leadership, kind of living your legacy. Today, there's this great book by David Brooks, the political commentator. It's called A Road to Character.

[A]

So I know the book, I don't know the author.

[B]

Yeah. The simple question is, which is more important to you, your professional CV or what people say about you when you die?

[A]

Right.

[B]

And everyone goes, well, what people say about when I die? And I go, well, what are you doing about that today? And I go, yes.

[A]

Right.

[B]

Like, that's literally. I can give you 30. 30 conversations. I like that.

[A]

Right.

[B]

And so what this group does is it puts. There's about 200 of us across the country, and, you know, in. In major markets, Louisiana, Orange County, San Diego, Dallas. Right. Miami, dc, Nashville. And we get together and we have those conversations. And one part of it is I'll call Brain Candy, listening to amazing humans tell stories. And the other part of it is impact. And one of our initiatives is to work with Tier one Special Forces. And you go, what does that mean?

[A]

Right.

[B]

On the military, there's a thing called a skill bridge. And so traditionally, for the last four, six months of their time in the military, they will go off and they will work in the civilian sector in a company. And so that's what I call one to one, meaning maybe they come here to Skullcandy and they're an unpaid intern for four to six months, learning what it means to be out. And they've been in for 15 years or in for 20 years. It's a totally different world. And they're trying to figure out if they want to work here. And Skull Candy. Sorry, I'm not calling you out, Skullcandy.

[A]

Just saying.

[B]

Wants to figure out, well, is there a job for them? Do they have a skill set? Right. It's a skill bridge program. When you look at these tier one individuals, they already have amazing skills or they wouldn't be doing what they're doing. There's some of the most cerebral and thoughtful and certainly have leadership and team building and soft skills galore. Everything we want to hire, but on a resume it might say Pier 1 Imports, JSOC or Applebee's Seal Team 6.

[A]

Yes. Right.

[B]

Like, how is that running through an HR portal? It's not. And so a lot of them have these amazing skills that we'd all want to hire in our company, but no way to actually access that. And so we built was kind of this really interesting skill bridge that they skill bridge inside of the group called Alder. So now they have access to 200 CEOs, because it's really interesting. I've had so many conversations with these operators, these individuals, and they say, I'll go do the mission I'm tasked to do. And I'm not scared, I'm not worried. I know what I need to do. But you asked me to sit down in front of you, Chris. I'm scared to death.

[A]

Absolutely.

[B]

And that is an interesting reframing of. Oh, wait, they want to get reps.

[A]

Yes.

[B]

And reps means just like if they were going to do mission and go train. That's how they train. They've learned it reps. They get to meet 200 CEOs, ask questions about what we do, and start saying, oh, that's interesting. So instead of going to one company and the company doesn't hire them and they're back to square one, there's no obligation to hire out of this skill bridge. You get to meet 200 and learn what's possible.

[A]

Right.

[B]

And if we really think about it, I don't know about you, but my entire career has been based on something my dad told me when I was a kid did, which was your network is your net worth.

[A]

Yes. It's your leverage.

[B]

These individuals may have great networks, but probably not in the things that they're going to be doing now.

[A]

I've heard about before, when you go and you're looking for that banker, when you're looking for the firm that does this, hey, you're great in medical, but, you know, diddly poop about plumbing or whatever it is.

[B]

So now they have 200 new CEOs in their network. Their chances statistically of finding something they want to do as they transition out is much higher.

[A]

Yeah.

[B]

Also, we've had the opportunity for the 200 of us who don't hang out with these individuals all the time to learn how they could be a valuable asset in our companies. And whether or not it's our 40 portfolio companies at Slico, our company itself, or my network outside of the other community where I can go, you know, Joe, you'd be great meeting Stan over there. Right. And helping make those connections happen. And so we just got back from Montana. We launched the program. Absolute success, raised some great capital. We have four individuals who will kind of come sequentially in line next. And the program is kicking off. We couldn't be more excited. We just, we'll celebrate July having our first fellow go through the program.

[A]

Awesome. So for me, the reason I asked that was very tactical because what you're doing and the way you approach things are tactical. So that example of going through and saying, hey, we're going to go through this, this is why we do it, this is the result we're going to get is everything I've known about you since I've known you is this is how you approach things, and this is how your firm approaches things, and this is how you delivered information.

[B]

Right on. Yep.

[A]

There's a ton of stuff we went over and there's a ton more that people are going to want to get a hold of because there's a bunch of people who sat down and said, I don't know what that word means. What the hell is fte? So there's a bunch of people just lost and they're just overwhelmed at this point. If someone wants to track you down and they want to find out more information, how do they do that?

[B]

Easiest way, LinkedIn. Chris M as in Michael Van Dusen. Not the producer of Scandal, not the children's illustrator, the other one. Right, that's me. My email. Quite simple. C as in chris van dusenolicocapital.com and then also Instagram, which I am fairly active, is Chris M. Van dusen.

[A]

Same as LinkedIn.

[B]

Make it easy.

[A]

Perfect. And I really appreciate you. Thanks so much.

[B]

Thank you very much.

[A]

While many entrepreneurs are still chasing funding with flashy pitch decks or building products nobody asked for, the proven operators demonstrated that understanding your flywheel, knowing your numbers, and building strategic relationships is the true path to exit. Stop throwing bodies at problems and start optimizing systems that drive real EBITDA and unlock multi million dollar acquisitions.