← Problems to Profit
Problems to Profit
From High School Dropout to Multi-Nine-Figure Exits: The Mike Fata Playbook
00:42:33
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- [00:03]
A
All right, guys, welcome back to Problems to Profit. You know, I start this podcast every time and I'm like, I'm so excited about this guest. And like, I don't feel like that's enough. I don't feel like that's enough because, like this guest literally triggered me. I was sitting in a room, he was the speaker. Whole room's enthralled. Everybody's listening to this guy. He's absolutely brilliant. He's got the whole room captivated. And he keeps saying these like wild numbers and he's talking about exits. And for those of y'all that know me, I'm a hoarder. Like, I look at companies as kids and I fall in love with them and I automate them and that's my exit. And I have all these like, beliefs about what that means. And so anytime I find somebody that's like radically successful but completely contrarian to something I understand, I get triggered. Not necessarily in a bad way. Like it's triggered in a good way. Like I kind of man crushed. And so, like, it might be an awkward thing, we don't have to hold hands, but we can, you know. So I've got like this badass here with me. Like literal badass, multiple nine figure exits, hundreds of millions of dollars, transference of wealth. Like just a brilliant dude that has done things that I don't even fathom and understand. That makes me question, like just some of the realms of possibility around what I have. And he is so generous. He's taken time today to come share with us. Share with you. And guys, please. I hope you're as honored as I am to have Mike Fada on our podcast. Bro, welcome. Thank you so much for joining.
- [01:33]
B
Yeah, thanks for having me.
- [01:35]
A
Thanks for triggering me. Yeah, it's perfect, bro. So the podcast, Problems to Profit, we're always digging in. And it's funny because we always find clues. Success leaves clues. They're all the same clues. We see the patterns. And I'd love if you wouldn't mind sharing some of yours. I want people to feel you the way we did in that room when you talked. Would you tell us some of your story? How did you become the badass you are today?
- [01:59]
B
Yeah, well, I don't resonate with being a badass, but I can, I can share some of my journey with you. And I'm a Canadian and grew up in Manitoba, Canada. Grew up to a single mom and we were pretty poor. And I think that's a, a piece of it, right? Having that survival instinct. And I Dropped out of school when I was 14, so grade 10. Partly because I was a nerdy overweight kid that got bullied in school, but part because I wanted to to work and help my mom really, like, you know, pay some bills and get a little bit ahead. I fell prey to fast food. Ate way too much McDonald's and high ultra processed foods. Found myself at 18 years old weighing 300 pounds and was just literally sick and tired all the time. And one day I became sick and tired of being sick and tired and decided to do something about it and change my diet, changed my lifestyle. I lost over 100 pounds and got super interested in health and started a health food business. And that was the start of my success. But like, you know, we grew that company to $100 million. We sold it a couple times, and it's gotten me really into this space of believing that anything's possible. The poor kid that just put a lot of hard work in over 20 years could accomplish this. And I believe that everybody can. You know, there's nothing special about me. I can work hard, but there's really truly nothing special about me.
- [03:18]
A
I love that. I mean, and honestly, there is so many synchronicities in that that I don't want to go through all of them because I'll just milk the podcast. But I can't tell you how many people I've told that like God creates all people equal. We may change the equality of our pocketbook based on the decisions we make, but there is nothing intrinsically special about anyone. And it's so just that synchronicity right there, like resonates so much. Can I ask a question on you said we sold that company twice. How do you do that?
- [03:42]
B
Yeah, you know, it's interesting. So we sold majority to a private equity partner. But to back it up a little bit, when we were were doing about $50 million a year in sales, it was our 15th year in business roughly, and we had some other shareholders and we decided it was time to go and look for optionality for the business. Sell the whole company or look for other options. And I was at this YPO conference and a YPO member told me about selling his business three times. And I was like, how does that work? How do you sell a business three times? Oh, we sell to a private equity partner that is a financial buyer that buys, you know, minority or majority, but doesn't buy the whole business and then work with that company to grow the business and sell it again. So that's exactly what we did. We ran A, we hired an investment banker and ran a full auction process. And at the end of that auction process, we, out of the 100 companies that we marketed the business to, we selected a private equity sponsor, Compass Diversified holdings, that bought the majority control of the business in $132 million transaction, but allowed me to stay on and my team to stay on with ownership still in the business and continue to grow the business. And so that was the first kick of the can, but it also had, you know, we had a billion dollar sponsor. So we turned around and bought my friend's company, which was our largest competitor, the second largest hemp food company, in a $42 million transaction, merged the two businesses together. And then ultimately three years later, we sold the full company to Tilray, which is one of the largest cannabis companies in the world, in a $419 million transaction. So we got to sell it twice.
- [05:23]
A
Geez. Wow. And those are numbers that like, boggle the mind. I have had so much, I guess, charge around exits. I looked at esopping a company and the gentleman that was working on the esop gave us a valuation of $105 million. And you know, later, I mean, it was a home building company, they started raising rates and that was going to change things, right, of how the financing was going to work. And so I paused it just that it was the first time I looked at myself and I was like, oh my God, am I wealthy? Like, I mean, I knew I was doing okay, I wasn't an idiot, but I didn't know that I was wealthy. And then I go and I put that on my financial statement for the value of the business. And immediately the bankers are like, you can't write that down. That's bullshit. You're a complete liar. And so like, I even still struggle with this and I get the privilege of sitting with a guy that did it twice. And I have to know something else too, because you shocked me. This is a little off the business side, and I hope you don't mind me swerving. Sometimes I'm, if you ask my wife, add. And sometimes I'm a dtd, as Carlos Mencia says. So I have to swerve. You know when I said you were a badass, you said, I don't resonate with that. And I'm pretty sure, like, of course I never want to offend. But like, if I took a poll and I was like, hey man, like, I need everyone, I told your story and I took a poll, they'd probably all disagree with you. How do you Keep this humility and this love because you're a guy that just doesn't. You don't have to do anything. Like, you don't have to. You're not in a have to mode anymore with what you've done. How do you keep that level of humility, that level of character? Show up here. Honor others. Serve with the success story that you've been able to build.
- [07:03]
B
I believe my success was created by giving back and never being above anyone. You know, even when we had a couple hundred team members in the business, I always would walk a mile in their shoes. The janitor wasn't below me. None of the team was below me. If things came up, I would go and actually do the work with them. And I've just. I. I feel like that's part of my success. I feel like that's part of my spirit. You know, I don't want to be removed from the work or above the work. And so, yeah, I get that. People say, mike, you're really successful. You're inspiring. I look up to you. You use the word badass. My ego can get in there and say, like, yeah, fuck yeah. I've created a lot of shit, and I've been really successful at the young age of 48. But I rely on being really humble and saying, hey, I'm just getting started. The world will get to see what I'm going to create. I'm still going to walk a mile in everybody's shoes. I'm still going to do the dirty work. It's not below me. And I believe that's why I'm going to continue to be successful.
- [08:12]
A
So that has been a common theme with everyone we've interviewed of you don't delegate what you haven't done. You have to live within like, like, like the other person shoes and kind of feel their world before you go and, and grow and scale and all that. I think the common theme of humility hasn't been talked about, but has been there. And, and since you. I mean, you didn't bring it up, but you demonstrated it, and it was cool. Can. Can we talk about, like, where humility should exist in a business?
- [08:40]
B
Yeah. And everybody's different. You know, I. I'm. There's no. What I've learned about entrepreneurship, there's no one right way. That's the opportunity in entrepreneurship, and that's the challenge. There's no one right way to do it. For me, I've just learned that I can't ask someone to do something if I don't know What I'm asking them to do, some leaders totally can do that. They lead and they don't know how any of the jobs work. Especially if you think about very, very large corporations where there's a thousand employees or thousands of team members there. The CEO doesn't know half those jobs. And he's a trained executive. He's never been an entrepreneur. He went to school for that job. Ok, that's not me. The way that I created success was like, and I started when I dropped out of high school when I was 14 years old. I started in construction with a, with a shovel and a pickaxe in my hand. I worked really hard and I understand, I understood the hard work. So when I started the business and we started all these like, jobs in manufacturing, like putting labels on bottles, I wanted to know how many labels you could put on the bottles in an hour myself and then say, okay, now I'm going to hire someone to do it right, because then I can move on to the next job and the next job to grow this business. But that's the only way that I know how to lead. It's not, that doesn't mean that's the right way. That's the only way that I know.
- [09:57]
A
And maybe I didn't ask the question right, but let me, let me, let me take it from a different direction because language gets lost, I think sometimes in translation because it's overused and in different ways. What does humble mean to you?
- [10:10]
B
Quite simply, humble for me is not being above anybody, you know, and that doesn't mean that I don't, I'm not in a leadership role and I lead people, but I don't believe that I'm better than anyone. I don't believe that, that, that, that people are lesser and, and they can't achieve, you know, just as much or way more than me. And, and, and it's not just a thought. I, I show up with that. I, I, that's why I, I can, you know, I can, I can, I can continue to do the work at any level in the organization. It really doesn't offend me.
- [10:44]
A
It's, that is literally the perfect response and thank you. One of my favorite phrases is humility doesn't have to be quiet, it can be loud, but it's still peaceful. I think you're humble like the oceans are, bro. Like you are wise enough to sit beneath the rivers, the lakes and the streams and they all flow into you, granting you your power. Beautiful. Thank you for a perfect definition of humility. So let's get back into business because like any anytime, like I see character traits of not gonna call you badass, incredible entrepreneurs and beautiful stories, I have to dive. So I had to swerve there. But like, let's get back into some of the business piece. Like as you were maybe going into that second time, the second exit. Was the process different than the first?
- [11:39]
B
Very different, yeah, yeah. When we sold the business the first time, we went through a formal process. You know, hired an investment banker, took about a year, year and a half to auction the company, find which company was going to be the best partner and ultimately go down to one business and do due diligence and close with them. So it was close to an 18 month process. The second time that we sold the business, it was really all about timing. Yes. We had grown the business in those three years to be twice as big. So instead of 50 million, we're doing $104 million a year in revenue. But the timing just lined up. And since I had been in the business for 20 years, I saw the timing like no one else saw the timing. Canada legalized recreational cannabis in 2018. And so all these cannabis companies went public and they had billions of dollars on their balance sheet. The U.S. legalized hemp for commercial production in the U.S. trump signed the farm bill, which, which we lobbied 20 years in the U.S. to legalize hemp. Finally, it happened in 2018, literally weeks after Canada legalized recreational cannabis. And the third kicker was the FDA, the Food and Drug Administration in the U.S. gave us grass status for our hemp foods, which is generally regarded as safe, basically saying hemp hearts and hemp protein, the hemp food products were legit, they're legal. Every big food company in the US and really in the world could then use them. And I said, if that's not the time to go and market the company, like just the timing is right. And I knew the CEO of Tilray. I had met him through ypo and so I phoned him up and I said, brendan, we have this great company. We had met before, but maybe it's time to have a discussion. We did that deal in six weeks. $419 million transaction, six weeks, no bankers involved, all just a deal that was put together and we closed that within three months. And, and so, you know, my big learning of that is, and we talk about this, you know, in business, like timing is everything, but it's really everything because the same is true for my third nine figure exit, which was the first portfolio company that we sold. It was all about the timing.
- [13:50]
A
Wow. So I love that because timing, timing. I mean, timing's critical for everything. I think every stock trader wants to, you know, have timing. Like, everybody's looking for timing.
- [13:59]
B
And it sucks when you miss it. Like, I've never missed it. I've always. I've always been right on it. But I've had friends that they had opportunities and offers to buy their business. They said no because they thought that they could make the business grow faster. Something happened either internally in the company or a black swan event happened to their business. They went over the waterfalls. Their business was worth a quarter of what they were offered six months later or worse. I've seen a couple go bankrupt and then they lost it. And so they could have had these tens of millions of dollars of deals, but they miss that, and that sucks. That hurts me watching other people, watching entrepreneurs go through that. And so timing just. I warn everyone on the timing. It doesn't always get better. And if you think the timing is perfect, like, react.
- [14:43]
A
So this is so good. And there's like, I'm writing notes and I have like 50 directions. We could take this. But, you know, since exits are the thing that I have very little confidence and understanding and I'm good on a lot of pieces of business. I'm not the exit guy. Like, timing is a critical factor. What are some other factors I would love to kind of pose? Like, when should you look at exiting? Why exit? How do you decide?
- [15:08]
B
Yeah, I think. And there's different. Not every entrepreneur is going to want to build a business, exit it, and you're going to be one of them. Right. Like, some people want to build a business to have a good cash flow and the business is just paying them cash and they're thinking this is going to happen in perpetuity. That sounds like a cool business. That wasn't my business. So I was trained in the build significant enterprise value in the business and then sell it to unlock all that enterprise value that you gained. So we weren't going for the maximum amount of profit in the business. We were going for the maximum amount of growth. And really, I'm a quality guy. So we were going to building world class. Because my belief is whatever your niche is, whether you're in the food business or you're in the construction business or whatever your business is, your tech business, if you build the best quality, the best in the world, there is going to be someone that wants to buy that business. And so the second part of your question, like, how do you know when the time is Right. There's a lot of different factors. I would say if an offer comes up to you and the offer seems right and the timing seems right, take the deal. A good friend of mine said to me, they use this in professional sports, right? If you have a professional sports team and you have a hot player and someone comes and wants to trade your hot player and like, buy them and you get this crazy deal, you, you get a first couple round draft picks and, and a huge cash bonus, you take that deal. Because if you're late on trading a player after they're hot, you get nothing for it, right? So being early and even this thought of leaving some cash on the table is a very healthy way of thinking about exiting a business because that stands in a lot of people's way. They, they like, they don't want to leave cash on the table. It's a positive thing because that means that being a little bit earlier or hitting that is the right timing.
- [16:54]
A
I loved your talk yesterday. And you know, I was thinking of all these questions I was gonna ask you because I had the opportunity to meet with David Green from. He built Hobby Lobby. And he's got this kind of beautiful idea on like turning a business into a dynasty. And like, you know, the family crest was a major thing. Like if you go back 1,000 years, the Rothschilds have a family crest. I mean, like, and that's kind of like a business logo. Like, so, you know, he, he wants to transfer his business and continue the values and arguably one of the more successful gentlemen I've met and just brilliant, good quality philosophies and, and I loved it. But, you know, after your talk, I was thinking, I'm in the home building business and I think there's significant growth to that industry over the next 10 years based on supply and demand in America. And now everybody, all the politicians are talking about more supply. But then I look at kind of population decline globally and it may not be a great business in two generations. So you really put me in this place where. Which was beautiful and thank you for that. Where I have to think like, you know, maybe I'm not going to be in this business, maybe I'll do something else. Maybe there'll be an exit and some other piece. Another thing I loved about your talk, if you're okay with me doing a swerve again.
- [18:11]
B
Yeah, yeah.
- [18:12]
A
Was you had a passion and you had a passion for like, health, you had a passion for helping, you had a passion for people. You had your son in the room. There were all these things that you were bringing to the table, that seemed more important to you than the business. And I could be off, but that's what I was getting on my read while I was watching. And if I'm off, please correct me, but if I'm not off, can you explain that? Because I think a lot of people get lost in like they fall in love with the business and they can't love anything else. They lose themselves.
- [18:45]
B
No, it is. And I've experienced it a little bit. Thankfully, I got past it. Right. As entrepreneurs, we can have our whole life in our business, our whole Persona could be our business. People say, people come up to you and what's the first thing they say? What do you do? You know, not, not who are you? What's your family values? What's important to you personally? What do you do, you know? Oh, I'm the CEO of XYZ company and I was that, you know, I was the founder of Manitoba Harvest. I mean, I'm still, I'm the founder, I still am the founder, but I'm not the CEO anymore. I'm the CEO of Mantoba Harvest. And here's what we do. And that's a, that's a big accomplishment because we're making this world a healthier place and, and we're bringing back this ancient crop and all these wonderful things. And yeah, that did help me and I did live like that. But at the end of the day, my soul searching was, who am I, you know, what am I all about personally? And health is a big piece of what I'm all about. Because I was £300, I lost £100, I've kept it off for 30 years now. Fitness and health is a big part of who I am and what I want to give to the world and to my family. I'm also, you know, I'm a single full time dad. Like family is really important to me and the values that I create internally for my family are important. So you, you brought it up and I think like, yeah, some people create a business so they can create a business and an empire that has values and, and that they could pass that on to their families. I want to, I want to pass my personal values to my kids. I don't want to pass any money to my kids. And I said it and I think maybe you heard it in the talk yesterday when the question came up was that you asked the question, it was, you asked. So you know, like wealth and Rowan, who my son that was in the audience is, you know, he's heard this before, like I'm wealthy, my kids are not wealthy. They are not going to get a hand me down from me because I believe that that is going to be a disservice to them. All I've seen in this world is people that grew up with more of the silver spoon where life was easy and they had everything and they, they got a Porsche or BMW when they turned 16 and they got their first business paid for. There's more challenges in those types of people than there are like great success stories. And I believe that working hard and working for yourself and finding your way is super, super important. And, and so that's my, that's my, that's my core values as a human being and that's my values as a father. And so that's how I conduct myself. It's, I don't, I don't live that through the business well and it shows.
- [21:24]
A
Like I was watching your son just interact with other people and I'm a parent. I've got an eight year old boy and a six year old girl. And I grew up like you know, not in El Paso, Texas. I grew up in the like little trailer park in Kenya, Tio Texas, next to El Paso Texas in the shithole and tons of love, no money. And when we figured that out, I got real hungry. Now I've got like, I've got the money. Like the money's there. Like we've got the fancy house, the fancy cars, all the ego shit. Like, and you know, it's cool, it's sexy. Like it'll get you social media followers, you know, and it's fun to like ramp up a McLaren, but it's not what counts. And like I look at like that, that's the stuff I admire more. Like when I see a parent and a father and their son's in the room and they're conducting themselves well around all these high level players. There's good parenting in there. So we'll get back to maybe some strategies and tactics. But I think this is really critical too because I will tell you my biggest fear is raising shit kids I don't want. Like that is why I asked a question on the values, you know, translation to the next generation can do. Do you mind if we go into some kind of parenting philosophies and like what business, family money?
- [22:40]
B
Well, I'm an open book, so share.
- [22:42]
A
Share with me some of that. I think a lot of people need to hear this and, and frankly I do.
- [22:46]
B
I'm a servant based leader. Okay. I have been since I started the business. It's the only way that I know how. And what's a servant based leader? It goes to walking a mile in the shoes, like labeling the, labeling those hemp oil bottles and then hiring the first team member to label and, and then asking them how they do better, how what they need to do their job better, where they want to go, you know, do they want to ultimately be in quality control or sales and what's a path for them to get there. So when I became a parent, I was like, I've been doing this for a while, you know, and not everyone parents that way. But it became natural for me to say, I don't want my kids to do what I want them to do. I want to really, truly understand what my, what both my children want to do in this world. Yes, I want them to make a positive impact, but I want them to make a positive impact that's important to them. So to really understand what they want to do and then support them in their path to get there, that's what's really important to me. And I think money and power and ego and fame is an obstacle in that it takes away from it, you know. And so yeah, we live in a big house, you know, and there's some obstacles to being this whole thought of my kids saying, oh wow, like I have to make it for myself, you know, because all their friends and would say like, you guys are, you guys are rich or you're wealthy or whatever. And like that's why I'm very clear, that's why an audience of 200 people, I'll stand in front of my son and say like I'm wealthy and you're not. You still, you're still working for it. And that's, that's the conversations we have at home. It's, it's, it's. I want to normalize that for him because that is, that, that, that is the challenge that he's going to face. But he has my absolute support. Whether he wants to be a lawyer, a doctor, a plumber, a school teacher, whatever he feels like his path in this world to make a big impact for himself, I'm there for him. I'm going to coach and support him all the way along the way.
- [24:39]
A
I love that. So you, you want to create the hunger it sounds like that you had.
- [24:46]
B
Yeah. And it's not. And I try. It's just what I know, I don't want him to live the same path. He's not living the same path that I had because we Were. We were really, really challenged, you know, single mom and my mom was, was, was poor and just working a couple of jobs, didn't have a lot of time. I have a lot of time. Wealth. I have time with my kids. They were homeschooled up until a year ago, and they decided to go back to, to school. But I have the time to spend with them, which my mom didn't have. And so I'm taking the values that I learned from my mom, which may be a little bit of a different situation given, given the success that I've had, but it's those, it's those same values of believing in them, supporting them, being really transparent with them. And I'll give you example of that. Transparency, like teaching them how, you know, they do their own laundry. Could we have someone doing the kids laundry? For sure we could. Is it important that I think that they know how to, like, clean after themselves, cook their own food, shop for, for their own food, understand how a budget works? And there's some exercises that I go through with them on that. I think those are important skills so that when they hit adulthood and they're off on their own, that, that, that they know they, they haven't, they have a playbook, you know, they know how to do it.
- [25:58]
A
I really appreciate you honoring us with that swerve. I think you have a, a level of authenticity and just transparency that is really admirable. I'm terrified of having those conversations with my son.
- [26:16]
B
Like, you got a couple years. You got a couple years still, but it's coming.
- [26:19]
A
Yeah, I'm not there yet, but I am looking at it. And my wife and I have talked and I had a very similar view to you, and she had a different view. So we came up with a plan. And my plan is like, all right, well, I'm going to start them with 100 grand, and then I'll match their balance sheet every, you know, five or ten years after that. And, and so we, we, we. We compromised, which you do when you're married. I, I learned some rules of compromise, but, but I don't want to just, like, leave it to them. Like, I don't mind giving them a head start a little bit. But. And, and I, I find that interesting because that's, that's been a, A reasonably common thing with younger entrepreneurs that I've spoken to, younger entrepreneurs that I've spoken to. And, and my, myself included, we'll still call ourselves young in, in the 40s, right?
- [27:00]
B
Yeah. How old are you?
- [27:01]
A
I'm 42.
- [27:01]
B
Okay. I got a couple years at 48.
- [27:04]
A
We're still young. We're in the young group, but I think we all kind of, and I don't want to say judge, but I don't trust maybe is a better word. The lucky sperm club, as I would call them. I feel like I can definitely measure in at least my experience with them, a different level of motivation and a different level of the way they treat other people. And I don't ever want my kids to become that. Like the house they live in is not a, does not dictate who, who other people are to them. Does that make sense?
- [27:36]
B
For sure?
- [27:37]
A
Yeah. I really resonate with you on that. Okay, so I'd like to jump back into building to exit because I think at least in our economy right now there's, there's a major opportunity. A lot of entrepreneurs are, are aging, which means there's a lot of owners that are going to need to get out. 85% of businesses like shut down with the owner. That's a real statistic I got a few years ago, so maybe it's changed. 84, 86, whatever, but it's probably still fairly relevant. So I think there's a major opportunity for acquiring companies right now, and I think that's going to quickly coincide with a unique economic trend. You have AI, you have quantum computing, you have, you know, recessions and booms in the economy that will affect things and force companies to get more efficient, which means downsizing of people. And I think a lot of people who are younger employees today, in the next 10 or 15 years might be forced into kind of the heart to heart entrepreneurship world. So they need to face it, they need to dive in, which is why we're doing this podcast. I'd love to kind of get your take on this opportunity and maybe some shares you can give with the audience on like where this opportunity lies for them.
- [28:48]
B
Yeah, I think, you know, specific to the baby boomers and the, and the, and the kind of retirement age that's happening for, for entrepreneurs. You don't need to start something to be a successful entrepreneur nowadays. So innovation happens in a lot of ways. Innovation doesn't have to be creation. You can go and like pick up a business that started 30 years ago. The, the, the founder ran a successful business and then they're going to retire. And so they wanted some li and they sold the business. And your whole innovation in that business could be bringing the youth to it, bringing some technology to it, bringing a different way to market to it. That's a Whole lot easier. It can be a whole lot easier than starting a business, but it does, it's, there's a smorgasbord of opportunities because I believe that as entrepreneurs, the most successful ones that I've met are doing something that they, that really interests them. I use the word passion. Not everyone believes in passion, but I'm a purpose and passion guy. Okay. I exude it.
- [29:55]
A
You can use it with me, bro.
- [29:56]
B
I'm like, I'm like, listen, if you, if you like, if you like working in the trades and, and, and all you can think about is like water and you want to be a plumber, go out there and go after plumbing, right? If you're, if you're a gamer and all you think about is like, is like gaming and programming, maybe like getting into tech or getting into gaming or getting computer building is going to not only satisfy you, fire you up, but like you will outwork out, compete and out create others in that space. So like there's a smorgasbord of opportunities to go after and I encourage people just to think about, yeah, you don't have to innovation, you don't have to, you don't have to actually create something. You can just improve it, you know, and that's, you can be wildly successful that way. And that opportunity is available now more than it ever has been for entrepreneurs.
- [30:51]
A
I, we are so aligned in this. I agree. I don't think there has ever been a better time to get in and take control of your own destiny. If you can get kind of the fear piece out of your way. What do you think actually holds most people back? I know you've worked with a lot of entrepreneurs, you've dealt with a lot of people like ypo. Your, you're dealing with a high level group there. Like what, what holds people back?
- [31:12]
B
There's a lot of different things. I think ultimately security, you know, like it's, it's, it's hard being an entrepreneur. You don't have, you can't, you don't have a 9 to 5 job. It could be a, it could be a 5 to 9 or you know, 24 hour job or 100 hour workweek job. I think the, and then you may not get paid. So for a bit or during different times. I think that that risk or the thought of risk is, is a deterrent for a lot of people. They want the, they want a little bit more security and cushiness in their life, which a lot of people that are in that space will also say, I feel like I Missed out. Now all of a sudden, I have a regret and stuff. So I tell people, if you have any ounce in you, that, hey, it's. Listen, entrepreneurship's not for everybody. If you feel like you just want to. You want to work for someone, you want to be an intrapreneur, you want to be part of a larger team, you want to be a number two in command or part of a team, do that. But if you have this, like, calling and this itch that you want to scratch, that you think you can make an impact and be a total boss, be in control of the business, you should go after that. The younger you are, the easier that is, right? Like, I started our business when I was 21. That's part of my success. People go, wow, you're 21? Yeah, well, I. Maybe I missed out on some of the parties or I didn't go to. I didn't go to university, I didn't travel the world or take a gap year or all these things that people do. But starting young, I didn't have a family. I didn't have huge bills. I could pay for my apartment rent and literally buy some. Buy some ramen or something and put everything into the business. So the younger you are, that the easier it is to start. I know that people that are, that are our age, in their 40s or 50s even, that, yes, there's still successful entrepreneurs to start out at that time, but it is a little bit harder.
- [33:05]
A
Well, sure. And they're going to have the work life, balance, conversation is not really a big thing when you're just balancing you. If you have a wife, kids, like a mortgage, everything else going on balance, balance all of a sudden becomes a huge part of the equation. That's a great answer. And we can dive into more fears as we go. But I also, I want to pull you because I could, you know, I can't keep you all day. We got dinner in, like, you know, a short while. So I probably only got you for another 10 or 15 minutes. And I want to jump into something that I know you are, you have mastered in lots of ways. I talk about technology with people. Every business is a tech business. And I think a lot of people, when they hear the word technology, it's kind of nuanced. They're thinking like, oh, it's digital as computers, but you could have better technology for efficiencies in a million ways. I mean, like, fire was a technology to cavemen, right? The wheel was a technology. What. What are some of the technologies? If you give Examples that you are able to leverage to outpace competitors, to grow your business and to scale.
- [34:08]
B
I'll give you my perspective for, for where I'm at right now and then maybe in some of the portfolios. But you know, AI is, is such a game changer. I, I'm, now I'm a solopreneur. I run my small family office and, and investments and some advisement and some coaching and, and I'm an author and I'm a speaker and do all these things, but it's just me and I could do that because I have AI and automation all around me because I don't want to build a big team. I've had a big team, but ChatGPT is one and that's probably my favorite one. There's, there's lots of them. Is your strategist, is your marketer, is your best friend, is you know, in your pocket all the time. And I, I don't think that the majority of people don't understand how powerful it is because they haven't given themselves enough time to just experiment. And when, when AI first came out and readily available on your phone, I put three 30 minute sessions a week in my calendar. I'm a big time block guy, time block my whole life into my calendar just to play around and learn how to prompt, how to ask the right question, how to interact with it. Just how to feel comfortable. A year and a half later, two years later, now I feel fully comfortable. I utilize it. And I think when I was an entrepreneur just starting out, when I was 21, if I had this tool, I would have way less team members. And it's not about like way less team, it's about way less time to actually, you know, create a design brief, create a job description, create a, create your content for a social calendar, create your website, you know, go and research all your competitors and get your differentiations. All these things that are just at our fingertips now that were never there before.
- [35:53]
A
Great answer. Okay. And then the one I've been like kind of saving for the end because like this is the one that I really want to tap into so people can understand it from a guy that's done it, because I can talk about it, but there's a lot of people that talk about the stuff they haven't done. Like I have businesses, they have value, they have balance sheets, there's enterprise value if you will, but I haven't exited. I'm still having fun and maybe I need to think about it, but there's a lot of I Would say smaller entrepreneurs that are basically operationally challenged and they don't understand the value of running a business. Like you can sell it and you know, people think of a home flip as a way to go create value. You know, buy a home, fix it up, turn it, sell it. It's more valuable. How much more can you do with, with a business? What is the best way somebody can generate wealth today? Is it, is it acquiring a business and running it in a way where they can sell it?
- [36:47]
B
I get questions from entrepreneurs, so I'm going to answer it this way because I get questions from entrepreneurs saying, you know, Mike, what's the best way to finance my company through to an exit? And I said to, I say to them, what do you want to do? How do you want to have your life and your lifestyle? Because it's not one path. You can have a business that does a couple hundred thousand dollars a year, half a million dollars a year, $1 million a year, like a seven figure business that pays you $250,000 a year of cash and you operate that business and you're very happy. It affords you a lifestyle that you want. It affords you growth and you can operate it for a decade, decades. Right? And if that's what you're after in your lifestyle, that's okay. That's, that path is totally there. This, you know, that wasn't my path. My path was really building enterprise value for, for liquidity. And so I had to start thinking while I was building the business. I knew if I built the best business that I could build, like I build a world class business. I like the term operational excellence and world class for whatever you're doing. If you're building the best in class, you're likely going to have a chance to be able to sell the business. But long before you maybe want to sell the business, a strategic exercise to do is to say the business that I'm building right now, who would buy my company and what would be valuable to them in the company that I'm building? Because that may help you not get yourself painted in the corner of your business. I'll give you example of that. In, in, in, in the food business, I have companies that they make a, a protein snack bar and they, and they do very well with it. They start off and they're, and they're, and they're making bars. And the founders like, yeah, well, we're all about protein. And so all of a sudden we're going to make, go and make a, we love these protein bars. We're going to go make a, a protein drink and a protein chip and. Yeah, okay. If you were going to just have that company and operate it yourself and try to draw cash and cash flow from it, that might be okay if you could build that success. But if you're, if your plan is to grow this business and sell it one day, that exercise I was talking about is saying, who's going to buy this business? Well, there's not a big, there's not a big pool of companies. If you had a $10 million or $50 million or you know, protein bar business, you could probably find an exit. But not too many businesses want to buy a business that have that. In the bar category, in the beverage category and then in the chip category that are mixed, you're going outside of.
- [39:24]
A
Their zone of expertise.
- [39:25]
B
Yeah, you're just making it so that you're the buyer. Universe is, I don't know if it's impossible, but it's very, very limited. So it's just, it's a strategic lens to look through to say if, if you're, if you can narrow your niche and really focus and become best in class in whatever you're doing. And again, you know, food, construction services, whatever it is and think about it in a way that makes it easy to identify your potential acquirer in the future, you're, you're more likely to find that, that party and actually make that transaction happen.
- [39:59]
A
Almost the last question here I got, I got two more for you. For anyone that is looking to exit, are there any recommendations or strategies, tactics that you would recommend that they, they look at?
- [40:10]
B
Yeah. So having an intermediary, having an investment banker is, is, is a powerful tool because when you're going to exit, you still need to run your business and be successful in your business as you're going to look and run a transaction and look for the buyer and, and hopefully find the right buyer, go through due diligence and get to a closing. So an investment banker is that third party that, that can likely help in that. And there's different kinds of investment bankers. There is traditional banking, traditional banks that have an investment banking arm. There's specialists that would be industry specific. So if you're trying to sell your, your home building company is a different investment banker than that special then specializes in selling food companies and so trying to find the right investment banker for your industry and having conversations with them on how much they think your pump your company's worth, do they think that they could transact a sale? Who would be the likely buyers. How much would it cost you to do that? That's a. That that's a valuable solution. And you know, the best, the best case is that some company comes and tries to chase you and say, hey, I want to buy your business. You know, then. Then you don't necessarily need a banker. They are still an advisor could be really helpful in those situations. But if you know what you're doing or you feel like you have the. The confidence to know what your value is worth in the business and what kind of terms and deal you want to get done and they're chasing you, you can still transact that way.
- [41:39]
A
That's a great answer. Okay, this is the last question. And, bro, I'm so honored by your time and I really appreciate this. This is. I know this is an education for everyone and it is for me, so thank you for opening your brain. Last question. You're amazing. Like, literally, this. This is a mic drop and your mic.
- [41:55]
B
So I like the Mike. Mike Fada job.
- [41:58]
A
Mike Fada drop. Where can people find you? Like, where. Where can people go to, like, get more of you?
- [42:03]
B
Yeah, they can get all of me at my website. Mike Fada ca. So hopefully you'll drop that in the show notes, but we absolutely will. I'm also very active on. On social. LinkedIn is my prime platform because I love LinkedIn, but also on Instagram and. And I love connecting with people. So connect with me on. On LinkedIn or Instagram, send me a note saying you listen to the show, you heard me on the show, and I'm happy to connect.
- [42:26]
A
Awesome. Thank you, brother. I really appreciate this. Yeah, let's go have dinner and we'll go have an amazing day on purpose.
- [42:31]
B
Yeah. Thanks again for having me.