Why Chasing an Exit Could Be Killing Your Business w/ Dave Whorton

Summary

Summary of "Why Chasing an Exit Could Be Killing Your Business" with Dave Wharton on The Ed Mylett Show

Introduction

In the April 29, 2025 episode of The Ed Mylett Show, host Ed Mylett engages in a profound discussion with Dave Wharton, an experienced tech investor and founder of multiple successful companies, including the legendary Drugstore.com. The episode centers on Dave’s book, "Another Way Building Companies that Last and Last and Last," which challenges the conventional startup mentality of seeking rapid growth and exits. Instead, Dave advocates for the Evergreen business model, emphasizing sustainable growth and long-term value creation.

I. The Flawed Traditional Startup Model

Ed begins by expressing his disillusionment with the prevailing trend where entrepreneurs start companies solely with the intent to sell or exit. He remarks, “It’s gotten, it’s just, it’s the norm now. It’s not why you should be starting a company, in my opinion, just to sell it and exit it” (04:03).

Dave expands on this, highlighting the narrow definition of success in today’s entrepreneurial landscape. He notes that “50 to 60% of those companies outright fail” and emphasizes that the majority never reach the coveted public offering or significant exit (04:03). This model is not only risky but also excludes countless potential entrepreneurs who lack access to Silicon Valley’s venture capital networks.

II. Embracing the Evergreen Business Model

Dave introduces the concept of Evergreen companies, which prioritize longevity over quick exits. He outlines the Seven Ps that define these sustainable businesses:

1. Purpose: Companies must have a deep, meaningful purpose beyond just making money. Dave states, “The ones that build the great companies are doing it for a deeper purpose” (10:46).

2. Perseverance: Sustainable businesses endure through economic downturns and challenges. Reflecting on century-old companies, Dave remarks, “You have to have tremendous perseverance” (10:46).

3. People First: Prioritizing employee well-being and customer satisfaction ensures long-term success. Dave emphasizes, “If you treat your people well, they'll take care of everything else” (12:08).

4. Profit: Contrary to Silicon Valley’s revenue-focused models, Evergreen companies value profitability as a measure of value delivery. Dave asserts, “Profit’s critical. It really tells you how much value you’re delivering to your customers” (12:08).

5. Private: Staying private allows companies to plan for the long term without the pressures of shareholder expectations. Dave explains, “Private is really important” (12:08).

6. Pace Growth: Sustainable growth rates, typically between 15-25%, enable companies to scale without overextending resources. “15% growth over 30 years leads to something 67 times bigger” (12:08).

7. Pragmatic Innovation: Continuous, capital-efficient innovation ensures competitiveness over decades. Dave highlights, “If you’re going to be around 100 years from now, you’re just going to have to adapt, you’re going to have to innovate” (12:08).

III. Leadership Characteristics in Evergreen Companies

A significant portion of the discussion delves into the personality traits of leaders who drive Evergreen companies. Dave observes that successful Evergreen leaders often align more with introverted qualities. He notes, “Introverts are generally people who have a very strong internal compass and they’re not looking for external validation” (20:30).

In contrast, the extroverted, high-external-validation-driven leaders prevalent in Silicon Valley are less suited for the Evergreen model. Dave advises that leaders should prioritize internal satisfaction from creating value and nurturing their teams over seeking public acclaim.

IV. Talent Acquisition and Retention Without Venture Capital

Addressing a common concern, Dave and Ed discuss strategies for talent acquisition and retention without relying on venture capital funding or extensive equity offerings. Dave suggests:

• Competitive Base Salaries: Ensuring employees are well-compensated at the base level.

• Profit Sharing Plans: Implementing multi-year profit-sharing based on economic profit, which takes into account the cost of capital.

• Equity Structures: Offering fixed-formula equity options that align employee rewards with company growth without the complexities of public market fluctuations (27:27).

Dave emphasizes the importance of alignment with the company’s purpose during the hiring process, ensuring that employees understand and are committed to the long-term vision (27:27).

V. Evolution of Leadership in Evergreen Companies

As Evergreen companies grow, the need to upgrade leadership becomes critical. Dave explains that founders must recognize when their team lacks the experience to navigate new growth phases. This often necessitates bringing in seasoned managers who can propel the company forward without undermining the existing culture. He recounts, “Bring in people who have actually seen more and have more experience” (40:30).

Ed adds that this transition can be challenging, as it may involve redefining roles rather than outright replacing loyal team members. The focus remains on mutual growth and respect, fostering an environment where both the company and its leaders can evolve together.

VI. Personal Growth and Company Longevity

Dave underscores the importance of personal growth for founders and leaders in maintaining company longevity. He argues that Evergreen leaders must continuously develop their own skills and adapt to new challenges, ensuring that their personal growth keeps pace with the company’s evolution (40:30).

VII. Final Takeaways and Advice

In concluding the discussion, Dave offers several key insights:

• Evergreen Companies Are Assets: Even without an exit, these businesses hold significant value and can be passed down through generations or used for philanthropic efforts (53:55).

• Building for Significance: Focus on creating meaningful, impactful businesses that contribute positively to society, rather than solely aiming for financial gains.

• Patience and Consistency: Sustainable growth requires patience and a consistent commitment to the core principles outlined in the Seven Ps.

Ed echoes these sentiments, reinforcing that building an Evergreen company is about creating lasting value and legacy rather than seeking short-term gains through exits.

Notable Quotes

• Dave Wharton [10:46]: “If you're going to build something that's really meaningful to society, treat your employees well, really serve your customers well, you're going to do really well. Just a byproduct of that, not the goal.”

• Dave Wharton [20:30]: “Introverts are generally people who have a very strong internal compass and they’re not looking for external validation.”

• Dave Wharton [27:27]: “Make sure that people are aligned with your purpose. You need to be able to clearly articulate from the earliest days, what is the purpose, why does this company need to exist?”

• Dave Wharton [40:30]: “If you as the founder cannot upgrade the team at critical junctures, then you will no longer be able to lead that firm effectively.”

• Dave Wharton [53:55]: “Just because you're not going to let it go doesn't mean it's not an asset for your net worth that you can leave to your children or grandchildren or to something philanthropic in your life.”

Conclusion

This episode of The Ed Mylett Show serves as a compelling argument for redefining entrepreneurial success beyond the confines of rapid growth and exits. Through Dave Wharton’s insights, listeners are encouraged to adopt the Evergreen business model, fostering companies built on purpose, perseverance, and sustainable practices. The dialogue not only critiques the existing venture capital-driven paradigm but also provides a roadmap for building lasting, impactful businesses that can endure the test of time.

For those interested in delving deeper, Dave Wharton’s book, "Another Way Building Companies that Last and Last and Last," is highly recommended for its comprehensive exploration of the Evergreen model.

Transcript

[Ed Mylett]

So hey guys, listen. We're all trying to get more productive and the question is, how do you find a way to get an edge? I'm a big believer that if you're getting mentoring or you're in an environment that causes growth, a growth based environment that you're much more likely to grow and you're going to grow faster. And that's why I love Growth Day. Growth Day is an app that my friend Brendan Burchard has created that I'm a big fan of. Write this down growthday.com forward/ed. So if you want to be more productive, by the way, he's asked me, I post videos in there every single Monday that gets your day off to the right start. Got about $5,000, $10,000 worth of courses that are in there that come with the app. Also, some of the top influencers in the world are all posting content in there on a regular basis, like having the avengers of personal development and business in one app. And I'm honored that he asked me to be a part of it as well and contribute on a weekly basis. And I do. So go over there and get signed up. You're going to get a free tuition, free voucher to go to an event with Brendan and myself and a bunch of other influencers as well. So you get a free event out of it also. So go to growthday.com forward/ed. That's growthday.comed.

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[Ed Mylett]

Hey, it's Ed Mylett. Let me share something powerful with you. You know, in uncertain times, the smartest people I know protect what they've built. That's why Advantage Gold is a part of our program now. And what about what they're doing is they're giving away a free gold and Silver investor kit that walks you through exactly how to get started. Text Wynn to 85545 to get your free kit. That's win to 85545. Don't wait for the next crash. Be the one who's ready. Protect, prepare and prosper. Message and Data rates may apply. Performance varies. Always consult your financial and tax professional. This is the Ed Milet Show. Welcome back to everybody. So my guest today's really interesting guy and I'm glad that he's here. I've told him that off camera because it's finally time somebody writes this book that he's written. I'm a big believer in the premise of the book. He's a very experienced tech investor. He's a founder, founded a bunch of different companies. One of them obviously is drugstore.com, good technology, kind of legendary in the Silicon Valley world. Worked directly with John Doerr for a long time. But he's written a book that I think so many of you that run small businesses, medium sized businesses, businesses and someday big ones need to consider this perspective because he is right and the world is going in a very strange direction. So the book is called Another Way Building Companies that Last and Last and last. And we're going to talk about sort of this flawed model the world has of raising money constantly and trying to exit with Dave Wharton. Dave, welcome to the show. It's good to have you.

[Dave Wharton]

Thanks Said. Happy to be here.

[Ed Mylett]

One of my favorite books is Built the Last by Collins. And Good to great. I love his work. And when I saw your work, I thought this is down the same vein, so to speak. And I, I just. This Instagram world today where everyone's starting a company to sell it and exit it is such a strange, perverted reason to start and create a company. At least to me it is. And it's gotten, it's just, it's the norm now. It's not why you should be starting a company, in my opinion, just to sell it and exit it. So let's just start with that premise, your experience and why you felt the need to write this book for maybe to shift culture a little bit in the entrepreneur space.

[Dave Wharton]

Yeah, no, Eddie, hit it. We have so narrowly defined business success today that it appears the only thing you can do is start a company, maybe raise a little bit of money. If you're fortunate, you'll get in the venture capital path, raise a lot more money. But the end game is to sell the company and for a very small percentage to go public. And that's it. That's the, that's the process. And so it's so narrow. And the model is such a tough model. The success rate, as you know, is very low. If you go in that path, I mean, 50 to 60% of those companies outright fail, total loss for the investors for the founders for the teams. And at the end of the spectrum, 1 or 2% ended up becoming the ones you might hear about in a magazine or be read about. But that's of the universe of ones that are venture and that, you know, thousands of companies, there's very few. And some people will argue that only 10 or 12 a year even matter. So what about all those other people who don't have access to Silicon Valley, don't have access to angel investors, and kind of get them the right introductions. Could be somebody sitting in the inner city of Chicago, Baltimore, could be somebody who's actually a recent immigrant. They have to understand there's other great ways to build businesses. And frankly, businesses will have stronger foundations and last longer. The one than the ones today that you describe that are being popping up on Instagram all the time.

[Ed Mylett]

They are, by the way, like, people know I'm an angel investor. I'm gonna let you in on a secret. I lose money most of the time, and I don't lose a little bit of it, I lose all of it most of the time. And. And usually one of the big red flags for me is when I feel like the person who's built or is building the company is very anxious to raise money or to exit. Because a lot of times raising money is just masking a problem. It can expand a problem. And an awful lot of the other times, the person doesn't really want to create something of value, they just want to get out of it as soon as they can. I want a company that, to quote Collins and yourself, built to last. So let's talk about the antithesis of raising the money and trying to get out. We'll go back and forth here today a little bit, but what are some of the personality traits, characteristics of a leader and of a company that is going to last and last and last, to quote you?

[Dave Wharton]

Yeah, that's a great question. And it really does start with that founder. I think you mean when you say the leader and you know, what is their goal in life? What is their purpose? Is their purpose to do something to change the world? You know, to have a real impact, to kind of draw from Steve Jobs to make a dent in the universe, Correct. Or is it, you know, kind of a nervousness around generating some wealth so they can actually be at a certain social status? The ones that build the great companies are doing it for a deeper purpose. There's something that's moving them to want to either build a really unique organization to the benefit of the employees, or they see something in the world, in the marketplace that they'd like to see done differently. And then like, I can do that over time, I can do that. And sometimes it's the combination of those two. But I very often hear from people who are running Evergreen companies and founded them that they did it to build a remarkable organization. I've heard from others saying, I've done it because I want to change the world. And often I just have the intersection of those two. That's not what you hear from people who are generally raising money in Silicon Valley. What they say is, I'm going to build something big. I'm going to make you rich as an investor. Investor. I'm going to get rich, and we're going to do something really important. But the rich part is really, really important. That whole conversation, the way I think about it, is if you're going to build something that's really meaningful to society, treat your employees well, really serve your customers well, you're going to do really well. Just byproduct of that, not the goal, it's the byproduct of delivering that value. And so what do these companies have? They're scrappy, they're incredibly resourceful, they're creative. These are some of the most creative companies in the world because they don't have the luxury of raising 4 or 5 million dollars followed by another 20 million and doing what you said, which is just loading up a bunch of people, building some product. You know, if you're going to do this on your own fuel, you're going to have to get really smart about this. You know, a real fun story that brings us to life is the founder of Spike Ball, Chris. Have you ever heard that story from Chris? How?

[Ed Mylett]

Only through you, but yes, please tell it. Yes.

[Dave Wharton]

Yeah. So Chris is fantastic. So Chris had played spikeball as a kid, went to go buy it, years later, found out that it, it was no longer in production or distribution, bought the IP to it, but kept his job full time. And then what he started doing is he started getting it back into production, low volumes, selling it off hours. He was reaching out to different kind of social groups and others to say, look, you know, you should try this product again. And his wife basically said, you know, you're working some pretty long hours. Is this all worth it? And he said, I think. I think it's going to be worth it. Then there was a moment in time where she came to him and said, chris, you are making more money selling spike ball off hours, at night, on the weekends. I think this is what you should do. And that is a very successful company that Chris built. And could he quit his job? No, because he wasn't raising outside capital. The normal model would have been if you're mentoring somebody in the venture capital path would be okay, quit the job, raise a couple million dollars from some really high profile angels, see if you can get a little bit of momentum, some traction, then go raise a bun for money. Didn't do it that way. The gentleman owns the entire firm. He controls his destiny and he's having a great time.

[Ed Mylett]

I just want everyone listening to this. You're considering starting a business or you own one, that you're a real one if you're doing it this way. I'm not suggesting that guys that take their business and they've got VC folks and that's a real business as well.

[Dave Wharton]

That is.

[Ed Mylett]

But so many of you feel like I'm not real because I haven't raised $20 million and I we're not shopping this thing to exit at 24 months from now, eight years from now, I still see myself associated with the company that I'm building right now. That should be the norm, not the exception to the rule. And so the term evergreen is a term most people know for me, like even when I create content, there's content that I create that'll do really well for a week or a book you write that does well for a week. But I wanted to write an evergreen book, meaning that eight, nine, ten years from now there were still sustainable value to the content that I was creating, that it had meaning and impact. You talk about the characteristics, the seven Ps of these evergreen businesses. So right now a lot of you ought to be pulling over to write. But if you can't, I want you to hear from this man because these are the things that need to be involved in your business for it to be sustainable. And last, which are you can go through all seven if you like, or a few, whatever you choose.

[Dave Wharton]

So first it's purpose. You have to have a deep, meaningful purpose. A North Star that's more than just making money. And that's what's really going to get people excited about supporting you in the building of this business. Hopefully they'll be around for generations. Second is perseverance because you're going to go through some tough periods. If you look back 100 years, look at our 100 year old companies, what they've been through the Great Depression, two world wars, they went through the Vietnam War, they've gone through the most recent Great Recession, they've had to navigate all that well, that's going to happen to everybody. Looking forward to. I can't predict when or what, but that's just the world we live in. So you have to have tremendous perseverance. Things like very low debt levels, like investment classes will teach you in business school, there's a way to optimize your capital structure. So much equity, so much debt, you get a tax benefit, all that. You know what evergreen guys say? No debt. Because debt is the way you lose your company, you lose.

[Ed Mylett]

Thank you. Thank you. Sorry, I didn't mean to interrupt you. Everybody rewind 30. I'm not gonna interrupt you again. You don't have to add a bunch of debt and put a bunch of pressure on yourself to be a real entrepreneur. In fact, if that's on your balance sheet, I don't believe you probably have an evergreen business, more than likely. Didn't mean to interrupt you. No, just the reason I get so excited. No one is saying what you're saying right now. It's so. It's actually counterculture, which is nuts because you're right. Anyway, keep going, keep going.

[Dave Wharton]

So the third is people first. And this is just the basic principle that if you treat your people well, they'll take care of everything else. Your customers, your suppliers, their families, very importantly, and your communities. I mean, if you think about what's this all about? So very important idea of people first. Profit. Well, in Silicon Valley, profit historically has been looked on very negatively because then you can put a multiple on profit and you're going to be worth a lot less money than a speckle evaluation based on revenue or just the idea. But profit's critical. I mean, if you think about it, it really tells you how much value you're delivering to your customers, how much will they pay you above the cost of delivery. And if they'll pay you a lot, that actually should be seen as a very positive thing, not a negative thing. And by the way, that's what gives you the resources to reinvest in the business for growth, to pay bonuses to your employees, to give dividends to your owners who deserve those. To do an acquisition. I mean, to pay down debt if you have some to do an. It's incredibly important. So profit private. And this is one that I think catches most people by surprise. I'm not talking private for four or five years under a private equity mantle or a venture capital. I'm talking about private forever. You're never going public, you're never being sold. Because if you're being Sold. Ultimately, you won't have longevity by definition if you go public. As we know today, shareholders of public companies hold that stock for very short periods of time. CEOs of public companies last in that role less than four years on average. It is a very transactional model today. So private is really important. And taking advantage of the fact you can take planning horizons as far out as you want to go in a private company. 10 years, 20 years, 50 years. I've heard people talk about 100 year planning horizons for other companies, particularly if you look at spaces like ag. That's how they think about our forestry. Paced growth. Critically important. Not growing so slow that your team doesn't have opportunities for growth because there's no new jobs being created. But not so fast that you outstrip your cash, your culture, or your management. Management's bandwidth. All three of those are very important. So you have this kind of bounded growth range. It could be everything from 8% on probably the low end for something like a design firm to maybe 25% on the higher end. Now, if you're a really small company, of course, you could have higher growth rates than that. But I'm talking about larger companies that are more established. And this is the magic. This is Warren Buffett talks about. This is what Einstein called the eighth great wonder of the world. Compounding growth over long periods of time leads to very big companies. So 15% growth. And you know this, Ed, because you've done these investments. If you're going at 15% and you're a tech startup, you're out of business, nobody's interested, you're. You're dead. Call living dead. And if you're profitable, you're really dangerous because you can't actually naturally die. So they have to find a way to kind of shut you down or sell you on the cheap. 15% growth over 30 years leads to something 67 times bigger. So if you start at 10 million, you're at $670 million. If you started that at 100 million, you're at 6.7 billion. This is how you build enterprise rental car. It's pace growth over very long periods of time, as an example, or a Meijer or an Edward Jones or all these wonderful evergreen companies. And the last one's pragmatic innovation. And that's simply a recognition that if you're going to be around 100 years from now, you're just going to have to. You're going to have to adapt, you're gonna have to innovate. It has to be literally wired in your DNA, everything from Kaizen, the principle of continuous improvement. Because you're gonna have to do that to be competitive over long periods of time. To invention, true invention, an R and D lab, or partnering with your suppliers to come up with new ideas. But doing this in a very capital efficient way, because you don't have the luxury of going out and raising $200 million to do a moonshot. You're gonna do this from your own capital and not from a lot of debt. So this is that bullets you talked about Jim Collins bullets before cannonballs. Shoot that little bullet, figure out if you hit the target. If you do, then put more energy into it. Or Robert Passenger Radio Flyer will talk about planting seeds. Just you got to plant a lot of seeds. You got to get those seeds in front of the market and see which actually germinate. Or Jim Goodnight at SAS Institute talks about digging a lot of holes. You just got to dig a lot of holes. Not expensive holes, little inexpensive holes. But when one of those holes gives, just keep digging and make something of it. So that port, that part's really important. And then these 7Ps actually act as a system. You can optimize any one of those. But you have to think of them as a system too, because there are trade offs between those P's. And sometimes those trade offs are real and sometimes they're not real, they're false trade offs. For example, people say being purpose driven means that you're probably going to be lower profits. What? Or for people first, you're going to have to have lower profitability. It's like, wow, what if I have lower turnover and have lower recruiting costs because friends invite friends to apply for jobs. It's like it doesn't even make sense. But in very short time horizons, you can see that. But over long time horizons, those trade offs don't exist. It's all win, win.

[Ed Mylett]

This is so good, guys. Just so you know, as an entrepreneur of, you know, 30 years, having someone try to move culture back to some version of sanity to me is a really, really exciting proposition. So, hey guys, I want to jump in here for a second and talk about change and growth. And you know, by the way, it's no secret how people get ahead in life or how they grow. And also taking a look at the future, if you want to change your future, you got to change the things you're doing. If you continue to do the same things, you're probably going to produce the same results. But if you get into a new environment where you're learning new things and you're around other people that are growth oriented, you're much more likely to do that yourself. And that's why I love Growth Day. Write this down for a second growth day.com forward/ed my friend Brendan Richard has created the most incredible personal development and business app that I've ever seen in my life. Everything from goal setting software to personal accountability, journaling horses, thousands of dollars worth of courses in there as well. I create content in there on Mondays where I contribute as do a whole bunch of other influence like the Avengers of influencers and business minds in there. It's the Netflix for high achievers or people that want to be high achievers. So go check it out. My friend Brennan's made it very affordable, very easy to get involved. Go to growthday.sled. that's growthday.com forward/ed hey, it's Ed Mylett. Let me share something powerful with you. You know, in uncertain times, the smartest people I know protect what they've built. That includes my father in law by the way, who've been buying gold for a number of years up until his passing. And it paid off for him every single time that he did it. And I'm licensed so I can't tell you where to put your money and I would never do that. But I can tell you this, he bought it because gold is timeless. And that's why most of the smart people I know have bought gold. It's real, it doesn't vanish when the market takes a hit. And right now, many smart people I know are investing their money in gold and silver as part of their retirement plan and their future planning. That's why Advantage Gold is a part of our program now. And what I love about what they're doing is they're giving away a free gold and silver investor kit that walks you through exactly how to get started. Text wind 85545 to get your free kit. That's win to 85545 don't wait for the next crash. Be the one who's ready. Protect, prepare and prosper. Message and data rates may apply. Performance varies. Always consult your financial and tax professional.

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[Ed Mylett]

Let me ask you the the other side of the coin. Are there any personality traits? We're going to stay in the 7Ps. We're actually going to come back to pragmatic growth because that's where the rub happens in a minute. But before we do that, are there personality traits or characteristics of companies that you would avoid immediately? So personality traits of a founder or characteristics of a company with all of your experience that you go. That's a non starter for me right there, that stuff.

[Dave Wharton]

Yeah, let's talk about the founder first. If you think about two buckets of kind of introverts versus the extroverts, what you experience in Silicon Valley is a lot of extroverts. You know, classics like Mark Benioff and Ray Lane, bigger than life personalities. They're moving mountains by themselves. You don't even know if they have a team because they're just doing such amazing things themselves. They need a lot of external validation. They need to go into events and be surrounded by people. They need a lot of reinforcement that they're doing the right thing. Evergreen leaders are more aligned to introverts. In fact, I did an informal polling of the group a couple years ago. It said how many of you guys kind of self identify as introverts? And about 80% of the people in the room raised their hand. So we do have both extroverts and introverts, but it's more biased towards introverts. And introverts are generally people who have a very strong internal compass and they're not looking for external validation. They don't need to have people tell them they're doing things well. They know they're doing things well. So I see a general orientation towards introverts. I wouldn't cancel out extroverts because there's some very talented evergreen leaders with that too. But you see that more commonly. So if you need a lot of positive feedback, you want to be on the front page of, you know, Forbes magazine. You want people talking about you on Wall street and stuff like that. This is probably not the path for you. This is a path where you have to be get much more internal satisfaction from having happy employees, having customers send you notes, just saying, I've never had an experience like this before with your company. I will always be your customer if that's where you get your validation. And as far as business, you know, there's kind of this concept of winner take all. And I think it made a lot of sense like during the dot com boom when I worked closely with John, Dora, Klein and Perkins. I mean this was a land grab. And so the idea being is there were obvious sectors, for example, where there were going to be e commerce players. Let's get there first, let's put a stake in the ground, put a lot of money around it, hire a team, build the infrastructure and just be first and we'll win in being first. Well, there's some valid. That's valid in some ways. There's also many examples of where the second mover actually won. MySpace did not. Sure, we've seen this over and over again, so that kind of undermines it a little bit. But if it's truly a winner take all market and it's going to be a market that is impenetrable after that happens. You might think of Ebay would have been an early example of that. Like who's going to create the exact same thing as ebay? Amazon tried it sure. Didn't work. Others tried it, didn't work. I mean they grabbed it. Sure. You might argue in those cases that it's really wise to raise a bunch of money until you pull back and you say, well, ebay actually didn't raise that much money. Guess what? Google didn't raise that much money.

[Ed Mylett]

True.

[Dave Wharton]

And Amazon didn't raise that much equity capital. It raised a lot of debt out of Europe. In fact, if you kind of sum up how much venture capital went into Apple, Google, Microsoft and Amazon, I think it totals less than $25 million.

[Ed Mylett]

Is that right? Really?

[Dave Wharton]

These are our trillion dollar saying as.

[Ed Mylett]

A percentage of the market cap of these companies is non existent.

[Dave Wharton]

Well, think about it. Microsoft, Bill Gates wanted Dave Marquardt to join the board of directors. Dave was a venture capitalist. He didn't need the money. He said, well, I'll sell you 10% for a million dollars. That's how Dave got in and built this incredible relationship. Apple, as you know, raised very little money and was in a very scrappy time before I went public. I can't remember the toll wasn't. I'm not sure it was more than $10 million. Might have been less. Google raised some angel and then $25 million from Kleiner Perkins and Sequoia and it was well on its way. It was already generating revenues at that point, selling search boxes to the enterprise. And then a few years later when it figured out the AdSense model bank, you know, this thing took off and then with Amazon, you know, there's a, there was a small angel around, I think it was about a million dollars. And then Kleiner put in, I think eight and a half million dollars, something like that I may have, that's off. And that was enough to get into a public offering. So some of our biggest successes in technology really didn't need that much capital. And then you contrast. This is going to blow your mind, Ed. So in the first 40 years of the venture capital industry, through 1999, $25 billion of capital was deployed. That includes Google, Amazon, Electronic Arts, Starbucks, FedEx, you know, you name it, all those companies. Uber raised $25 billion. One company, I mean, how out of whack are we?

[Ed Mylett]

That's out of whack.

[Dave Wharton]

In any one year we were getting up to levels of 150, $175 billion, a bunch of capital being deployed a year when it was 25, over 40 years that built these incredible companies that have these very strong foundations. They built from strong foundations. And that's one of my biggest concerns. When you raise all this money and you're moving this fast, how, how strong is the true foundation of that company? Now if you can sell and get out, doesn't matter. But if you want to build something.

[Ed Mylett]

Lasting, well, it matters to the acquiring company. And, and I always wondered this too. How can I tell when I'm looking at a company how it's really doing with all of this artificial cash? It's almost like the economy in general. It's very difficult to know the underlying metrics of a business that's taken on an a perverted amount of capital prematurely. It's just hard to evaluate the company, hard to know how they're really doing well.

[Dave Wharton]

And it's hard to know what the culture is like. It's hard to know how well they innovate. It's hard to know how close they are to their customers. It's hard to sense like, are they really a people first organization? Are they just flooding their teams with cash and soon as the stock price goes down, they're out the door?

[Ed Mylett]

Well, that's my question for you. So I coach, I have a entrepreneurial coaching group I have with Andy for sales called the RT Syndicate. And so these are real entrepreneurs in our group. And one of the questions we get asked a lot is this notion of should I take on debt or should I give equity away? And so that's one question of which most of the time our answer is neither, but particularly no on the debt side, at least for me, my Tolerance. What I don't like to see on a balance sheet, the pressure it puts on the company. But one real question I do get. I'm now an entrepreneur and I'm going to go with your philosophy, which is the actual textbook philosophy, which is, I'm not building this thing to sell it, at least not anytime soon. It's not why I'm doing it. How do I acquire and hold on to talent? What are your recommendations for that? Because I may be in a marketplace competing with companies that are getting artificially propped up with cash. How do I get good people? Because in order to grow my company, if we're a people first company, it's also right people, right seats, right bus, all that stuff. Do you recommend equity? A founder giving away equity, but then if they're not ever really going to exit, is that very effective? What are your thoughts about acquiring time? I know it's a hard question, but that's why I have the show and we do interviews a little bit differently here. I try to push the theory to its extreme.

[Dave Wharton]

It's a great question and interesting enough. When I was first on my learning journey around this, a guy named Pat O'Day, who was the CEO of Pete's Coffee, familiar with Pat. He posed this question to me as we're hiking on Mount Diablo in the East Bay. And he said, look, I'm concerned because I really like the ide conceptually of Evergreen companies, but I think you're going to have a talent problem because you're not going to be offering stock options because stock options effectively are worthless if you're never going to sell the company or take it public. So can you pay him enough cash, will be able to buy a house? You know, those were the questions he had asked and I thought it was a really good question. So I went and spoke to a compensation consultant that works with a lot of very successful 100 year plus family businesses. And they said, you know, we kind of think about that a little bit differently. You want to be competitive on base salary, but you need to have some kind of multi year paying out profit sharing plan. And better if it's economic profit, not profits. The difference between economic profits and profits. Economic profit, you take out the cost of capital. So you basically penalize the profitability of the firm by the cost of capital and say everything above that we will give you a very generous share of as a team, a very generous share of. And the way you allocate it can be done different ways, but that's how you kind of earn what goes into, it's called the bonus bank. Then on top of that, you can do equity. I've seen some great firms carve out a little bit of the equity, even when, for example, the family owns the majority of it. They might say, look, I want my employees to own a piece of this thing. And so I'm going to do something probably on a fixed formula to avoid market variation by the public companies and say, look, you can buy in at this price and you sell back when you leave at the same ratio, whenever it may be like 6 times cash flow, 8 times cash flow, 2 times book value, there'll be something like that. And so the you come in and you go out, it's on the same ratio. And then you enjoy the appreciation of value between the time in which you joined and you left. So there are ways to kind of bring in equity type things for you. But stepping way back, I think what's really important is make sure that people are aligned with your purpose. So you need to be able to clearly articulate from the earliest days, what is the purpose, why does this company need to exist? And then get behind that and then try to figure out what are those four or five core values in which you want to be measured against and you want your team measured against. And as you're interviewing people early in the process, say, look, I want you to understand what I'm trying to build here. I'm not building something to flip. I'm not building something to generate wealth just for myself. I'm building something that's going to be lasting. I want you to spend your career with me. I want you to help me invent this company. You're going to grow, I'm going to grow. We're going to use the guy. We're going to add more people to this. Yeah, we're going to be working pretty hard in the beginning because we don't have a lot of resources, you know, and we're going to be trying to generate our own profits. And so we might. In a venture capital model, we would have hired five senior executives in six months. Well, we're going to do that over three years. I got to pick which person will bring the most value with the cash flow I have today to move the business forward to the next level, the next person. So that if you hear this theme, creativity, creativity, thinking out of the box, approaching things, you have to do this in this model. Even business models, to digress them, you got to think differently. There are business models which are highly cash absorptive. There's business models in the exact same industries that are not. Nvidia is a good example of it. How many Factories did Nvidia build?

[Ed Mylett]

000 now.

[Dave Wharton]

Great that TSMC did a forum. It's fantastic. They had a good partner in that. But so an Evergreen founder has to be much, much more creative about this. And scrappiness for. But that's part of the joy. That's part of the journey. This is your hero's journey. How heroic is it? Being a good salesman and raising a bunch of money from angels and then being a really good salesman and raising a bunch more money from venture capitalists and then having that thing fail later because you never really had it. Right. Right.

[Ed Mylett]

Yeah.

[Dave Wharton]

That isn't the hero's journey. That's just a good salesman raising a bunch of capital. Making a run at it, trying to get wealthy. The true heroes. You know these people, Ed, they're the ones who are like, you know what? I'm gonna dedicate the rest of my life to this. And it may go slow or it may go fast. It may be small, mid or large, but this is what I'm going to do. And I hope it's large, you know. But if it's not, I'm going to have one hell of a journey doing this and I'm going to do with people I really enjoy.

[Ed Mylett]

Yeah. I have to tell you. And then the latter is what I want to talk about next. Those are the people, at least in my own way, that I admire most. So once you've done pretty well, you're in these circles as well. You know, you have friends that are entrepreneurs that have had big exits and you have other ones that have had like these long enduring family businesses that have value and strength and endurance and have made a difference a long time and they're proud of the brand, proud of what they've created. And just my default emotion is I have more admiration if I were picking for the person who's done the long haul and built something sustainable. It's almost like someone who had a really good family to me for three or four years and then, you know, it kind of broke apart. As opposed to someone who's had a long term beautiful family with children and grandchildren and a legacy. To me it's. It's what entrepreneurship is. The Range Rover Sport blends power, poise and performance with a design that's distinctly British. Free from unnecessary details. Raw power and agility shine in the Range Rover Sport. To truly make an impact, you need to take the lead, you need to adapt to whatever comes your way. And when you're that driven, you drive an equally determined vehicle, the Range Rover Sport. Like you, it was designed to make an impact. The Range Rover Sport combines a dynamic sporting personality, elegance and agility to deliver a truly distinctive drive. The assertive stance of the Range Rover Sport hints at its equally refined driving performance. Defining true modern luxury, the Range Rover Sport includes the latest innovations in comfort and convenience. Use the cabin air purification system alongside active noise cancellation for all new levels of quality, comfort and control. A force inside and out Range Rover Sport was created with a choice of powerful engines, including a plug in hybrid with an estimated range of 53 miles. Build your Range Rover Sport at range rover.com ussport so hey guys, you know what separates most businesses from others? The people that hire the best talent. And we all know when you're working in a small business and you own one, it means you wear a bunch of different hats. But here's the truth. Sometimes you really need an extra pair of hands. And upwork is the place that you can find those hands. Upwork is how good companies find great, trusted freelance talent in a variety of different areas. Companies turn to upwork all the time to get things done, finding more flexibility in the way they staff, key projects, initiatives where they want to go global with stuff. Top talent in it, web development, AI design, admin, marketing, you name it. Posting a job on upwork is easy. Upwork makes the business process easier, simpler way more affordable with industry low fee. So post a job today and you can hire tomorrow. On Upwork Work. Visit Upwork.com right now and post your job for free. That is Upwork.com to post your job for free and connect with top talent ready to help your business grow. That's up W-O-R-K.com upwork.com you know, one little piece of this model that I'd like you to discuss, and it's not so much in my prep for the book, but I want to ask you about it, is that you do have to have separators if you're gonna, you know, be in this model. And for me, I think one of the things that's moving to the forefront in all businesses, even ones who raise money, is the experience that either the customer experience is interacting with you, but also your business partners and employees. In other words, the experience. There's so many things now that are becoming sort of neutral with AI and other information so accessible. One of the separators of coming to work for me, we're going to go long and the slow and the right way is the experience, whether that be the recognition. Maybe it's travel, maybe it's how we treat you, maybe it's the extension of including your family or your spouse is somehow involved in our culture. But what about that notion of these evergreen companies having a not just culture but a culture of an experience of being. I think back to Google when they were innovating and having their fun rooms. They were the first that I remember. Wow. Those guys wear T shirts on Thursdays and they have a great time and they go play, you know, ping pong in between meetings. And it became an experience to work there. And I think oftentimes that can be a separator if you're going to build an evergreen company is just the, the process of working there or interacting as a client.

[Dave Wharton]

100%. 100%. And one of the things interesting is you point to Google and let's say people can fall a trap or like I have to do all the things that Google did, the ping pong tables, the free food, the free dry cleaning, all that you don't. Because at the end what people really want is want meaningful work. They want to work with people they enjoy. They want to have a boss that respects them, that sees that they want to be able to contribute more, respects where they are, treats them fairly. That is critically important. More important than the ping pong tables for sure. Now you can have that fun stuff too and that can be an add on. But at the end of the day it's the kind of the commitment the company is making to the individuals, particularly ones that are coming in at the beginning of their careers. The thing that blows me away about evergreen companies is the commitment they make to training people and developing people. It is at a completely different level than I've seen Silicon Valley, at least for Silicon county venture backed growth companies, they don't have time for it. They're moving too fast. If you get the job, you know what you're doing, you're out, right? They're not doing development. We have a company called McCarthy. It's one of the very large general contractors based out of Dallas and St. Louis. The CEO spends 30% of his work year on training employees at the firm.

[Ed Mylett]

The CEO does.

[Dave Wharton]

Wow. Oh. He said there's nothing more important than developing the next generation of leadership in this firm starting at first line management. Because if you've ever read Tom Peters work, he says it's made or broken by the first line manager because they are the ones that actually manage all your employees. You know, because that's. The vast majority of employees are working under the first line managers. They are very attentive at McCarthy to that first line manager training. So they can actually do a great job of bringing people in, onboarding and developing them, not being possessive of them, you know, seeing that there's better things for each of these employees with the organization. So the commitment to training and what happened was at Stanford Business School, Ed Lazear talked about this, he's an economist and he said the problem we've fallen into is that we no longer invest in training. And the reason why we don't invest in training is because the relationship between employee and employer is broken. So the worst thing you can do as an employer is invest a lot in training, something for two or three years, have them leave to get higher pay at a competitor. And that's what was happening. Evergreens asked for a different relationship. They're like, we're going to invest in you like we used to invest in people. But we want you to be with us, we want you to commit your careers to us. And it's not signed in on a legal document, it's not signed in blood, but it's just kind of. It's an understanding that we're going to invest in you at levels other people won't. But be with us and we have responsibility to make sure we create those opportunities for you. We have to pay you well. But please don't go look for, you know, greener grass elsewhere because it's pretty green here and it will help you understand that. So I think that's a pretty powerful thing, is that people can actually make careers. So we ask the question as people join membership and Tugboat Institute, you know, how's. How long has your longest tenured employee been with you? Well, here, 45 years, 50 years. What's your average tenure? 15 years.

[Ed Mylett]

Their average?

[Dave Wharton]

10 years longer than the life of most Silicon Valley startups. I mean, why. I mean, isn't that incredible? And the thing about know how and the knowledge and the relationships and externally and internally, it's powerful. And that stuff compounds too. You know, people, relationships, trust, doing things together.

[Ed Mylett]

What about, you know, MySpace, no pun intended. Not MySpace, the company, but Space. I'm in MySpace. The. The idea of personal growth. You write about this in the book of different topics, but personal growth and how that's sort of connected to longevity, because what I have watched happen over time is that the results of a company begin to exceed the personal identity level of the founders or the frontline leaders. Meaning a company can actually begin to outgrow the, the growth capacity of the founder and, and then it stunts the growth of the company, the innovation slows down, that pragmatic innovation that you talked about earlier and everything just sort of begins to become repetitive and slower. And it's really founded on the fact that that individual who's leading the company or individuals are not investing in themselves to grow themselves, their identity, their ideas, their ability to communicate, their ability to, to problem solve in a, in a more modern time. Is there a correlation between these long term evergreen companies and the growth strategy, the internal growth metrics of the person leading it or the group of people leading the company?

[Dave Wharton]

Yeah, it's, it's a really good point and it's a subtle point. This is where pace growth comes in. If you're growing a company at 15 to 20% a year, and let's say it's very headcount intensive, which most companies are, you have a hundred employees going to 115, 115 to 131. That's kind of where you're growing year after year. Silicon Valley, it's 100 to 200, 200 to 400, 400, 800. That's kind of a winning strategy. That is an extremely demanding leadership talent to be able to manage scale at that rate. And that's why you often have to bring in experienced CEOs, experienced managers and the founders kind of get pushed aside. In the context of an evergreen company where you're taking a multi decade timeframe, you actually give yourself breathing room to learn and adapt and go on learning journeys yourself. Now you will still reach a point, and this is very hard for evergreen founders where you're going to look around the table and realize, realize the people that got you where you are aren't going to get you further. And you have to start upgrading your talent and you have to bring in people have actually seen more and have more experience. Some of the people are going to go there right with you. But if you as the founder cannot upgrade the team at critical junctures, then you will no longer be able to lead that firm effectively. And that's where mentors come in, Ed. That's where people can kind of say, look, I see what you're doing. I think what you're starting to see is you're starting to lose some efficiency. And the reason why is because your team is now in a position where nobody's ever done this before and it's starting to really slow you down and you haven't done it before. So when we look at that head of product, I think that might be your first opportunity. Let's see if we can find a really experienced head of product from a company in a similar industry and bring them in. And the first time a founder does that brings one of those in and it's successful, they get it forever. They're like, oh, my God, that was an unbelievable unlock. Now I get it. And they start thinking about who came that they bring in in other areas of leadership. It doesn't mean you have to fire the person that was there before. You just say, look, you know, you've got a new boss. They're going to help develop you to the next level as they help take us to the next level. But that is a very important part of the evolution of Evergreen Company. But it's happening at growth rates that are 15, 20, 25%. Again, gives you some breathing room.

[Ed Mylett]

That's the rub, by the way, is the guy that founded it with his two buddies, or they've been there since the beginning and they sacrificed through the, you know, intermittent paycheck stage or whatever, and now that guy, the CFO that started your company may not be the CFO or the woman who should be the CFO going forward. And it's this. It's this idea of disloyalty. I'm gonna have to let this person go. But to your point, maybe not. Maybe they're rewarded for their loyalty because. And they fit your culture and your mission and your values. And so there's a spot for them. It's just not that spot anymore. And that's. It's one of the things that, at least in my mind, it's just an.

[Dave Wharton]

Honest conversation, which is, look, I think we're getting to the point now where we're holding back the ability of this company to achieve its purpose because of where you are. I'm not asking you to leave, but where could we put you, which would get you back on a growth curve doing something you might really enjoy. I've seen people pivot from product to HR and crush it in that. Or maybe they go from, you know, sales leadership into business development because now their team. So there's. There's a level of respect in an Evergreen company, which I really admire. I mean, I. I like to say that I feel there's a higher level of consciousness about the relationship with their. The human peers. You know, it's just not manic. It's not about getting, well, rich quick. It's about building something meaningful and doing it together. And that's incredibly rewarding. I mean, how cool would it be to sit on your front porch in a rocking chair with a bunch of the people that work with you and just reminisce about the incredible company you built? That's still going strong. You guys are well beyond it. It's going strong. You've transitioned leadership, you've transitioned ownership, You've transitioned control. And you're like, I think we've left it in a really good place. I think the psychological rewards of that and the relationships that were formed in doing that exceed anything else. I don't think you could earn enough money through a public company or a large sale to have what that would feel like later in life. And again, Ed, you probably have this. I have friends. I have many friends I really admire, but are starting to really question how they spent their lives. Some of these people were writing, as they say, writing checks their entire life. I wrote checks for a while, but not my entire life. But they look back and they go, you know, it's interesting. There's been so much capital out there for the last two decades. If I hadn't written that check, somebody else would've written the check. So what did I really do? How did I contribute the advancement of society, make a meaningful difference? If I was just the guy that got there first and wrote the check faster, but if I hadn't existed, the sand would have just filled the hole immediately. It would. It didn't matter. And a friend shared that with me, and it just. It was very profound.

[Ed Mylett]

Yeah, I totally agree with you. I'm just thinking so many different thoughts right now. This message is sponsored by Green Light. Hey, guys, I talk about Green Light all the time. I talk about Green Light, not on camera with my friends who have children. Because, you think about it, at least when I was young, nobody. Nobody taught me about money. Most parents don't teach that stuff. School doesn't teach it, even though they should. So let's be honest. Most of us learned about saving and budgeting way later than we should have way later in life. And so that's where Green Light's so awesome. It takes technology and helps your kids and your family build financially responsible children. Greenlight's a debit card and money app made for families that lets kids learn how to save, invest their money, and they can even be paid for chores and whatnot. And you can track their spending. Spending. Parents can send money to their kids and keep an eye on what they're spending. Meanwhile, kids and teens build money confidence. It's just super good. Millions of people are already using Greenlight. Start your risk free trial at Greenlight today. Go to greenlight.comed that's greenlight.comed to get started. Greenlight.comed let's step back for a second. I want to ask you. It's book related, kinda just like, like more like a macro look at the world right now, right? So there's all this talk about what AI is going to do to the world and is there going to need to be a, you know, guaranteed minimum income at some point and what's it going to do to the job market. And part of me kind of connects your work to this in the sense that there may be fewer jobs which may need in my opinion to cause people to go into business for themselves and create an economy expression of themselves as an entrepreneur. Maybe more people are going to move into being responsible for their own incomes. If I may be right about that, long term, let's assume someone listening to this right now, maybe they aren't an entrepreneur yet, but they're thinking, I have the itch that Michael Gerber called an email at the entrepreneurial seizure, so to speak. Would there be any overall advice for you, you know, trend wise, something passion wise that you say, hey, if you're going to do this long term business thing and it's going to endure and there's going to be all these ups and downs, way more downs than you think. Here'd be some of my advice of industries or places or don't look at all. If you don't have that entrepreneurial thing about you, what would you say to them?

[Dave Wharton]

Well, to your last point, I, I think you have to really want it. You're going to be an entrepreneur. I mean if you want to be a serious entrepreneur, that builds something of significance, you got to really want it. You, you can't have. There's no half measures, right. You're all in. There probably are industries you want to be careful of. I mean, if we want to pick on ones that are more obvious. Looking backwards, you probably did not want to be in a DVD video store when Netflix announced that they were going to start streaming. I mean that was the beginning of the end, right? And I'm sure there are equivalents of that today. Some people say that that'll apply to graphic designers and others like that.

[Ed Mylett]

Yeah.

[Dave Wharton]

One thing I do believe is I think if you're the best in any area, you will have a meaningful life and compensation won't be an issue. I don't care where it is anywhere. You know, you've probably heard of Jiro. There's a very famous movie called Jiro Dreams of Sushi.

[Ed Mylett]

I have not, I have not heard of it.

[Dave Wharton]

No beautiful film. I think it's still available. Maybe I'll watch on Netflix. He is the best sushi man in the world in Japan. In fact, at the fish market in Tokyo, they actually hold the best fish for him because he's proven he can can take that fish and turn to something so magical that is beyond the taste experience of anybody. He's extremely. I think he's 90 something now. Been happy his entire life. Compensation's never been an issue. You can charge whatever he wants for a sushi. I think that exists everywhere. And Joseph Campbell talked this about this too in a lot of his writings, which is, you know, if you follow your bliss, everything's gonna be okay. So even in the world of AI, where all this stuff's gonna be destroyed, if your deep, deep passion is graphic design, go for it. You're going to still find a way to, you know, do something incredible in that domain. If you're going to be okay in some of those fields. Oof. I don't think you're going to be okay, you know. And so I think one thing it does is I think it really fortunate or unfortunate. I think it's going to cause people to be very thoughtful about what they really want to do. And I think to really excel in that, I think that that's going to become very important. I also am not quite sure to your premise that there will be less jobs. Paul Romer, the economist, talks about this a lot. His Nobel Prize winner about. As ideas are introduced, there is discontinuity for sure. But typically things happen in an unexpected way. They end up absorbing all of the talent that's needed too. So this idea of AI Assist to me feels more natural that AI replacement. And I think, you know, yes, you may have less radiologists, but those radiologists with AI Assist are going to be really good. And so there might have been okay or mediocre radiologists. Go find something else to take advantage of AI Assist on to go do great things with.

[Ed Mylett]

Yeah, by the way, I know. I don't know. And I've interviewed enough people on the show that are expert. I really don't know. It's certainly. I do feel like, I just, I feel like more and more people. Entrepreneurship's just become very sexy through social media and Instagram and Shark Tank and. And I think a more real world explanation of this is A grind. It's hard every single day. It never leaves your mind. You probably do take it home with you more than you realize. And it's a. It's the ultimate for me. I'm not a singer, you know, I'm not a particularly good painter. Entrepreneurship, for me has been the greatest form of expression of my lifetime. It's how I express myself. And for a lot of you, it may be this part of you that's itching and yearning to express yourself a little bit more deep. And you don't have a desire to exit that form of expression. You'd like to build upon it and see what it can turn into and it can become. So I love the work you're doing. I want to ask you one last question, by the way. This is, like, flown by, I promise you, a certain timeline, and we've, we've blown through it because I've enjoyed it so much. But I think of friends of mine, like Sarah Blakely, who built Spanx with no debt, and she did end up eventually exiting that company. And, you know, I know one of the three guys that founded Casamigos Tequila. Three years later they had this exit and it's a billion dollars. And then everyone goes, goes, oh, I need to start a tequila company or a vodka company. And, you know, that's what everybody thinks. Oh, sure. Every alcohol company starts in three years. It helped having George Clooney as your spokesman. Right. That didn't hurt. So I'm just wondering, your advice to somebody listening who's, you know, they're sitting there going, I want to build an evergreen company. This was a really fruitful discussion. I'm going to certainly grab the book. There's no doubt about that. And we'll, we'll give them a way to get the book here at the very end as well. But something that they, they didn't cover in the interview that I wish they would have covered, and I left the floor open to you. One other big takeaway from the book or thought process idea would be, what. What would you impart on to somebody who should be building an evergreen company that lasts and lasts and lasts?

[Dave Wharton]

So one idea that came to mind because you made a reference to this before. Building an evergreen company does not mean going slow, and doesn't mean going slow forever, ever. And there's a gentleman named Ho Nam, who's a dear friend of mine at Altus Ventures, and he argues this very, very succinctly, which is if you go slow in the beginning and build a strong foundation, you know, your culture, your product development processes, your customer service processes, your sales processes, you will actually see accelerating growth over time and that'll be very profitable accelerating growth. So what I don't want people to leave with this impression is that this leads to small companies over a very long period. This could to very big companies, not in a decade, but over three decades. So if you're 30 years old and you've got this deep purpose and you're like, I'm going to do this, you're right, Ed. It's going to be a tough first five or six years. That's just the nature of this. Then you're going to punch through. You're going to get to sustain profitability. You can start strengthening your team. You're going to start, start adding additional products to your product portfolio. You expand your geographies and it's going to start growing faster. And so you may see an increasing growth rate over a period of time. And next thing you know, you're doing a billion in revenues, you're doing 2 billion. Not a valuation of a billion, actual revenues of a billion. And so I don't want this to. People leave thinking this is a small company phenomenon. You can build a small company too, on the same values, that's fine. But I don't want people to feel like they can't build something of significance. Significance.

[Ed Mylett]

And you know what? I don't want them to think either, brother, on your behalf that you're not building a massive asset just because you don't intend to liquidate it.

[Dave Wharton]

Right?

[Ed Mylett]

So just remember this, you're building an asset, building a business as an asset just because you don't plan on selling it or liquidating it anytime soon, if ever, does not mean it's not a tremendous asset. And some, in fact, some of the wealthiest people that I know never sell their homes. They just get other ones and that it's an asset. So just because you're not going to let it go doesn't mean it's not an asset for your net worth that you can leave to your children or grandchildren or to, to something philanthropic in your life. And so just remember that just because there's no exit doesn't mean it's not an asset. You don't have to sell something for it to have value. And that's what I don't want people to miss either. Go ahead. Final thought.

[Dave Wharton]

And that company, let's say you sold that company at year seven and you took out $20 million. That'd be an incredible outcome, right? Well, you build that at 15% a year for another 20 years, you'll take out more than 20 million every single year. So it's still, again, don't do it for wealth generation. But don't think this is like some, you know, philanthropic thing. Now what you're going to do with all that money is I hope you're going to give some to your community. I hope when somebody calls you up and says the hospital needs $10 million for that new wing, otherwise we're not going to be able to provide this kind of care in this community, you're like, I'll write that check. Check. I'll write that check. Because that's what I do for this community. I mean, that is a wonderful thing to be able to do with that kind of success.

[Ed Mylett]

I totally agree with you. What's really interesting about today's conversation is for so many people, this is actually, it's almost like a first introduction to actual entrepreneurship, not this other version that you've heard. And by the way, I have many friends, including myself, who have had liquidation events. They're great. It's just not the norm, nor should it be. And what we're talking about here are companies that create value, that change culture, that change families, that change communities, that can change lives. And this is a much more real, sustainable, wonderful medium, big and huge sized companies at every single scale and scope. So, guys, you heard from Dave Wharton today. The book is, and I love this book, by the way, another way building companies that last and last and last, last. The book's loaded, so go get the book because we just scratched the surface today. Dave, this was so good. It flew by. Thank you so much.

[Dave Wharton]

This is fun. I really appreciate it.

[Ed Mylett]

Enjoy Sun Valley, brother. God bless you, everyone. Max out, this is the Ed Milan show.