Why would someone want to buy my company?

There’s a new school of thought in startup financing based upon a book called Ultimate Exits by Dr. Tom McKaskill. You can download the Ultimate Exits e-book and it’s accompanying workbook for free from Dr. McKasKill’s website. (He’s also got a ton of really great e-books on Amazon.)

Eric Dobson summarizes the book’s key themes for us:

“[Entrepreneurs have] been taught our goal is to create shareholder value and [to the contrary] the book says in the short run you need to create acquirer value. The reality is if you create certain products that fill a known obvious niche for a big player you may get a speculative bump on your valuation that may far exceed anything you can drive in revenue.”

Filling an obvious niche is very much like listening to your customers to learn what they want to buy.

Eric thinks this viewpoint is full of great lessons for founders.

“If you are going to build something, build something with a need in mind. Understand who the acquirers are. Be able to names names. [For example, approach an investor and say,] ‘Here are three companies that need what I do and they would be interested in me because I’m going to do this [specific plan] and I plan to liquidate in 3-5 years.’ Just have a solid plan to [take that approach].”

Most importantly:

“You can always change your plan, but do it out of opportunity not out of duress.”

Listen to the full episode part 1 and part 2.

If you don’t know where you are going, it’s hard to know when you’ve gotten there.

Eric Dobson starts us out with a simple, yet profound statement, “If you don’t know where you’re going it’s hard to know when you’ve gotten there.” What’s more, he focuses in on his role as an angel investor.

“There’s nothing more impressive than an entrepreneur who knows the plan: ‘I’m going to accomplish this [specific thing] and I know who I’m going to sell it to.’ [I love this approach because] it shows maturity. It shows the kind of planning that you need in today’s market to get a company from its inception all the way through its growth pains and into a marketable form where someone else is going to buy it and create new wealth.”

We’re reminded of the old adage that “failure to plan is planning to fail.” What’s interesting is this runs in the face of some other advice that says “just get out there and do it.” Too much planning can cause analysis paralysis, while too little planning can leave you without a rudder. In a theme we see over and over again, being a founder is all about balance.

Listen to the full interview part 1 and part 2.

John Lee Dumas talked about the fear of going out on his own as impostor syndrome, and how his mentor got him over it.

“I think staying in the corporate world is much more risky because you don’t have multiple revenue streams. [Having multiple revenue streams] spreads your risk much like an investment portfolio. That’s much less risky than if your entire revenue is based on one job or the whims of one boss. You can go from 100% revenue to 0% in one second. I might go up and down but I have other sources to make up the difference. Even now, I can make up domestic speaking engagements with international speaking [which adds international diversification when domestic speaking slows down].”

Talking about entrepreneurship like a collection of revenue streams make it sound more like a life investment strategy. Any investment advisor will tell you to diversify your holdings, and any insurance agent will tell you to mitigate your risk exposure. What David is really talking about is entrepreneurship as a life and career strategy. It can be daunting to keep a number of paying projects in the air at the same time. That’s why we often talk about success habits that help our guests (and will help you) be more efficient and successful. No wonder David thinks “getting fired was a gift.”

David Meerman Scott recalls, “I jumped into my own thing 14 years ago after being fired from a corporate job for having too many radical ideas. Today, I deliver speeches, write books, and serve on advisory boards for startups.” It doesn’t take a deep thinker to realize that sure does sound like a better gig.

Listen to our full interview with David Meerman Scott (part 1 and part 2).

The tried and true playbook doesn’t work.

David goes about his career by “trying to not do what everyone else does.” He thinks by business people fail themselves by focusing on what everyone else does while it’s been his experience time and time again that “the tried and true playbook doesn’t work.” Instead, he advises founders to “go agile, do things differently. Focus on what’s interesting to your buyers, not what’s interesting to your venture capitalists.”

“Focus on your buyers” is a very similar message to what John Lee Dumas told us about “listening to your audience.”

David notes how many VCs might have built up their money 20 years ago and since they were successful in that way they think the business playbook hasn’t changed. David knows from his own experience that simply isn’t the case and he challenges founders to be nimble and get out there and not use the old playbook.

I focused on what worked, not what someone wanted me to do.

David tells us, “I kept getting fired from the corporate world. I would focus on what worked and not what someone told me to do. In the early days of the Internet [1995] I was trying to shift budget spending from print and direct mail to online marketing.”

“[My boss and I] had a difference of opinion and in that organization they valued the boss’ opinion more than the people who were actually doing the work. I like organizations where bosses listen to people who have tested their opinions and know what they are talking about.”

“I thought for sure I’d be a corporate guy for another 10-20 years. Getting fired was the best gift I was ever given in my professional life. I did think in the back of my mind that I could go out on my own.”

David tells us his wife and one of his trusted colleagues made the difference for him and encouraged him to get out there as a professional speaker. We’ve heard similar messages about using mentors to push you forward. “They supported me to live on my own wits and that made it a little bit easier.”

I hustled business from my parents’ friends.

Going back to the earlier days in his life, David recalls cutting grass, raking leaves and shoveling snow for neighbors.

“I hustled business from my parents’ friends; I negotiated prices. What that taught me is that I could live by my wits.”

It’s a great lesson for founders. Many of us can think back and realize we always were entrepreneurs with lemonade stands, mowing grass, or “hustling” business like David recalls.

It might be terrifying to leave that corporate gig, but if you do the right planning, build your content footprint, and keep plugging away at telling your story, you’re very likely to be able to make it.

John cites “creating profit” as the key for his business success and he’s very transparent about how he does it. In fact, he shares all of his income reports each month on his website so other entrepreneurs can learn from his successes and failures.

We ask John where all the money is going.

“Most of it is going straight into our bank account.” John says he’s happy to invest money back into his company at the right time and on the right things. He’s a big believer, however, in living “below your means” so you can “use your savings as a runway for 6-12 months in order to focus on the quality of the service.” John says he’s ready to “weather the downturns and invest when the time comes.”

We loved his closing comments about entrepreneurship and how he manages his business.

“The entrepreneurial journey is a roller coaster. There are ups and downs. We’re preparing to be agile when the time comes that we need to be flexible. We make mistakes and we learn from them. We share that in our monthly reports. Our mistakes and failures are right there in print. A lot of people find that valuable. We project transparency. Other companies are doing the same things. Transparency connects you to your clients right away in a meaningful way. Share it all and people will feel like they are growing with you: an intimate connection that you can’t achieve in any other way. If you can’t create a connection with your clients you are setting yourself up for failure.”

Listen to the full episode!

John Dumas, who we interviewed in our first episode, took up this cause right away with his business, focusing on leading with value first and monetizing second.

In fact, he determined to provide as much value to his audience as possible without considering how to monetize that audience until six months after his launch. He believes focusing on value first allowed him to enjoy income that looked more like a “waterfall instead of a drip” when he did start to monetize (something you can see forthright in his transparent income reports).

John tells entrepreneurs to “go pull the trigger” and “let things go where they go.” While being “a person of action,” he’s also adamant that each of us invest in ourselves in terms of education and in the belief that our goals are possible. Given the chance to take a shot, John believes we should take it even if we’re scared.

How scared? John has an answer for that, too, when he tells us about the value of mentoring.

Listen to the full episode.

John’s podcast and its offshoot businesses leverage his listener base to create revenue and profit. John tells us that his listeners were asking him “how to create products and services.”

His answer is simple: “Listen to your audience and [they] will tell you the services and products they need.”

John cites his recently launched Mastermind group, Fire Nation Elite, which is a closed Mastermind group with 100 members. The mastermind group generates $13,500 each month. It’s a major revenue source for EOF with expenses under $5K month. He started it because listeners were telling them wanted to interact with other elite entrepreneurs. So he opened the group and capped it at 100 members — and sold out in less than a week!

In another example of listening to his audience, John tells about how people were seeing the EOF success and asking how to create their own podcast. They’d ask him, “How do I rank better? What are the tech specifics?” So John started Podcasters’ Paradise, a community where you can create, grow and monetize your podcast as a member. Providing tips, tools and tactics for podcasters in a tight community has grossed more than $115K since October 2013. It’s already a 6-figure product and more people are joining every day.

Key take-away: “Listen to the pains of the listeners and followers and then create something to solve it for them.” The same can be said for lean startup founders creating an MVP. Don’t overbuild and listen to the users who will ultimately spend the money you need to stay in business and profit. They might have the same needs and wants as you, but they also might now. Be attentive and listen carefully. Most of all engage!

Listen to the full episode!

In our Episode 1, John talks about “impostor syndrome,” which he personally learned about from Seth Godin. It’s a well-documented feeling that manifests as negative self-talk in men and women. You can read more about it in Valerie Young’s book, The Secret Thoughts of Successful Women: Why Capable People Suffer from the Impostor Syndrome and How to Thrive in Spite of It.

John tells us in the interview, “What held me back was the impostor syndrome: The little voice on my shoulder that said I couldn’t do it.” His negative thoughts and emotion kept making him push back his launch date, all the way from August 15th to October 1st. He tells us it was “all out of fear.”

How did he break through this fear? John tells us, “Breaking through goes back to the most powerful thing is any entrepreneur can do — get a mentor: someone you can talk to about your business and your fears.”

John formed a mentor relationship with Jaime Tardy, author of The Eventual Millionaire. As John relays her dealing with his delays, she said, “You will launch today or I will fire you.” He says that’s what allowed him to get over the impostor syndrome and launch. Delaying his launch ended up having one major impact. “All that did was delay my success by the same number of days. That six figure month [that happened in October 2013] would have come a full month earlier. I put myself back by waiting.”

Key Advice: Get a mentor, invest in yourself and embrace the impostor syndrome. Drive forward and listen to the advice of the people who have come before you.

Listen to the full episode!

1. Put in sweat equity BEFORE you go after investors.

99% of investors have been in your shoes. Never forget that. They put in incredible time, effort and focus to become successful and now have the ability to help startups. If they don’t see themselves in you, the chances of them backing your company go down immensely.

2. Have real interaction with your target customers BEFORE you go pitch to investors.

So often startup founders get so tied up in their idea (and fear of it being stolen) all of their research is done in secret. No human interaction. Get out, talk to friends, co-workers and family. Call up people in your projected demographic and get their feedback on the idea. It’s amazing the insight and FREE feedback you will get that can help you answer questions from investors you never could have anticipated.

3. Do your homework and determine which investors are the right fit for your startup.

So many startup founders only focus on their pitch, not on who they are pitching to. Remember that you’re talking to a fellow human. While at the end of the day it may strictly come down to how good your idea is, most investors will tell you that it’s their faith in YOU as an entrepreneur that is the biggest factor.

4. Make sure to focus on the value proposition of your idea as a solution. Not just a how much money it can make.

No matter what your startup idea is, at the end of the day you have to appeal to investors as potential customers and paint a picture of how it solves a problem for the end user. If you are truly solving a problem, it then comes down to execution and marketing to gain success. If convince potential investors that your value proposition is realistic, they will pay attention to your valuation in much more detail.

5. Limit your pitch deck to 10 slides or less, have a short explainer video produced.

The investors get 30, 40, 50 ideas presented to them each month. Not to mention all of the companies they own and have invested in. Complex business plans and pitch decks often cause them to tune out of your presentation. Start your presentation with a well done video that explains your business and the value proposition. Then dive into your pitch deck. Video is a powerful way to gain attention, and also shows more dedication to your business idea than just a PowerPoint presentation.

6. Be prepared to fail over and over before you find an investor.

It’s amazing how many entrepreneurs become depressed after getting turned down on their first pitch and never do it again. Remember that gaining an investor is just like selling a potential customer. Not everyone will buy or believe in your product or service, so why would all investors? Make sure to walk in to your pitch confident that you will win investment capital. If you don’t…try try again.