From Success to Significance

All right. Well, welcome back to the Meaning of Money, a live show for founders, investors, and families who have already made money and are now focused on what wealth actually makes possible. I'm Stefan Whitwell, and I am thrilled to have Mark with me here today. Mark is a proven entrepreneur — he's built seven companies, sold three, and co-founded And Capital. Looking forward to diving in here. Welcome, Mark. That's awesome, Stefan. Listen, you and I had a great chance to connect about a week and a half ago. It's super cool what you chat to your audience about. Hopefully we're going to have a great chat and get to some of the parts that I've learned through both sides of the equation — selling a business, and now acquiring businesses from founders, and all the good, the bad, the ugly, and the truths in the middle. There are quite a few out there.

Will money solve all your problems? True or false

Let's start with — when people are working toward that exit, it's such a big, monumental event, the first one in particular. On a practical level, often one of the big benefits is just finally getting some needed liquidity, some cash flow coming in. And there's a bunch of emotions that come with that. I think many people, leading up to that point, think, “oh my God, so many problems in my life would be solved now that I have money.” True or false? And what was the experience like for you? I think the answer is, I don't know — I think it is true and false, and I don't want to over-complicate the answer, but it's true and false. My story I can talk about exclusively, and I can give you a bit of history from some of the other partners, because we've been on the other side of writing those checks that are transformative for people. In my case, in my wife's case — I came from a background that didn't have a lot of money, and so the end goal of life was to sell our business. We had the opportunity to do it at around 45 when I sold it. The reality was, that was it — I worked my entire life to be able to do it, get a check, and move on. We're thrilled we did it, because we did it, I would say, for about half financial reasons and about half — in our mind — life reasons: about spending time when I had young kids, having some flexibility, being able to make sure that our kids could go to any school they wanted to. On the flip side, both things happened. We had some financial relief. What we realized is that the lens you put on it getting there may not be the lens you need getting from there. In other words, whether it's enough money, or the right type of money, or whether it was structured properly — in hindsight, if we were to score ourselves on a scorecard, we'd probably give ourselves a B-minus. We got some things right, but not a lot of things perfect. I don't think we really fully thought through what life after an exit looked like — from cash flow, to daily expenses, to growing kids. Kids are least expensive at eight years old; they're very expensive as teenagers. So that would be the first part of the answer.

From a hundred miles an hour to zero

And the second part is there's an emotional part of yourself, and as an entrepreneur, that's a big part of your purpose in life, a big part of how you look in the mirror. The thing I learned — I'm not saying it's right or wrong, because I don't think any of these things are that dramatic — was that I went from a hundred miles an hour to zero. And that seemed like the goal. But I've got to tell you, when you're sitting in that zero part of the goal, and you start to ask yourself, “what's my purpose, what defines me, what gets me excited, what drives me?” — I would make sure I factored that into any exit on a go-forward basis. My experience in going from a hundred miles an hour — having all this human energy around you, and dynamics, and offices, and you're on planes, and you have excitement in meetings — to “hey, I have my entire day to do whatever I want” — that seems like the goal, but I'm not sure it is, in many formats or structures. It could be scary and overwhelming and confusing. I think too many people — what you just said — should take that into account a little bit more beforehand.

Don't sell your baby alone: get help before, during, and after

But in the beforehand, Mark, it often shows itself in a different way. It's a scary time — “I'm selling my baby, I'm worried about all the details, it's not done till it's done” — and there's this excitement and anticipation building. Often, trying to get people to focus on those things at that moment in time is hard. But you've been on both sides. How would you put it into words, if you were talking to an entrepreneur friend at that moment — things are crazy, you need to take some time to think about this? Well, two things. I'm not sure there are two things, except maybe getting married and having children, that are more impactful and emotional than selling your business. And you may argue selling your business was harder than having children, because you always wanted to have children, and you never know — so it may actually squeak onto the podium, in the silver spot. I think there are a couple of things. Don't do it alone would be one — whether you have hired advisors, or trusted bankers, or a great lawyer, you need somebody who can be at least a balance to you, understanding the process. Number one. And number two, I think you need to clearly articulate to that person that you want help leading up to the process, the process itself, and you want some strategy post-process. The reason that's important — both sides of the fence — is, one, most businesses, unless you have a very clean transactional exit, you're going to need to be around, and in some sort of role that is not easy for a founder. So you want someone who can help you structure that part of it. And the second one is, you want someone who's going to ask you some tough questions around: well, if you got the check today, what are you doing with the check? Are you taking the check and putting it in a bank account and living off the interest? Are you spending the money, are you going to buy a yacht, a Porsche, whatever you want to go do? So that you at least can understand what that means to you. Some of that we did well, and some of that — because of the background we came from — we didn't. We didn't think we had a plan. It was more money than we ever saw, but it wasn't as much money as we thought. And that's the really interesting part as a founder: the check is a big check, but is it actually what you thought it was going to be, for decades or generations? Sometimes it is, and I love those founders who are like, “this is generational wealth, I don't have to worry about anything” — but they still usually do. People who have an exit that's transformative — there's still work to be done in life.

Spending expands to fill the check

I also find that people's spending tends to expand exponentially, and sometimes what seemed transformational at one point in your life suddenly doesn't feel like nearly as much money as it might have seemed earlier in that journey. There can be a moment of, “oh my gosh, I've got to make sure I've got enough here.” You're totally right. The one thing I'd add is, as an entrepreneur, for the most part we have a flowing cash-flow engine. Whether you're taking salary out of the business, or dividends, the business is a big part of your lifestyle from a cash-flow standpoint. And when that stops, it is a change. As a founder, that was a change. And now, as we are partnering and investing with founders, one of the things I'm super transparent with them about up front is: the things that are in the business, how you run it, will not be the things in the business, how we run it, and it will impact your lifestyle. So let's be up front and transparent about that, and let me help you take the learnings and plan for that.

Living off your money versus the security of a paycheck

The other thing I find is that there's also a psychological shift that can be uncomfortable for people, between living off just your money — even though that was originally your goal — versus the emotional security that comes from getting that constant paycheck. That can also be initially kind of abrupt, confronting, emotional — “this is uncomfortable” — even if by any rational measure you've got plenty there. I can only share my own experience. There were a couple of years post-selling the company. To frame it up: we were very fortunate. When we closed the transaction and I was able to step away, it was early-mid 2019. I still had responsibilities for the company, so they were still paying me for some cash flow. And then early 2020 hit, and the world ended. We had no operating company. We were sitting on some cash, and that was amazing. So when you think about post-transaction euphoria, I'm not sure you could have gotten better, in the sense that we didn't worry about an operating company, we were sitting on cash, and we could go live out this craziness of the world without the stresses that 90 percent of the world had. But following that, when I realized that I needed to do more in life — that my purpose was not trying to figure out how many golf games I could get in at my age, and I had young kids who would look at me and say, “well, Dad, what do you do now?” because they used to know what I did — I tried to get back in. And I'll tell you, there were some of the darkest days I've ever had, because I was trying to figure out what I wanted to do. Was I trying to be an investor? Was I trying to be an operator? I thought it was the right thing to be investing in things that I understood but I didn't control, and we had no cash flow. And then, as a family, you try and evolve, and you're like, “hey, we wanted to move” — as everyone was in their COVID retreats — “back to reality,” and you buy a house, and then you're like, “oh, , I don't have...” In Canada it's a T4, which is a tax-bearing document that shows your income, and the government's like, “well, hey, you have lots of assets, but you have no cash flow,” and the banks are like, “hey, you have lots of assets, but you have no cash flow.” That was excruciatingly hard on my ego. And my ego, not being “I'm better than that” — my ego being, “wow, do I feel this worthless, when you shouldn't, after all the success in life?” So I would say to entrepreneurs, you've got to be okay to ride that wave and have more self-balance and confidence. And through my family, and us doing a bunch of other partnerships, and me getting back to operating, I sort of got back to that level ground of understanding the ebbs and flows. But honestly, it probably took me two years. It's that significant? It's not a couple-week thing. No, no, not at all.

Coaching the founder through the earn-out

So tell me a little bit about the after part. As you mentioned, there's always a transition for the owner. Sometimes there's a clean exit and you're out completely, but more often than not there's an earn-out — some period of time where you're involved, and it is tough, because you're no longer in control, and there are things being done that are maybe done differently than the way you would have wanted. How do you coach the CEOs, because that's crucial to that post-sale process? That is your life for a little while afterwards. If the goal is for you to be able to celebrate life and enjoy the different chapters — this being one, having a different set of challenges than the one just prior — what advice do you have for the CEOs on how, in a practical sense, to deal with those emotions in that situation? It's a great perspective, and I would say we don't have — I don't think there is — one solution to that. But we worked really hard, because our investment company is not structured as a typical private equity company. We didn't go raise a fund that has to exit.

Permanent capital: how And Capital is structured

Just for those watching, tell us a little bit about your company. Yeah. It's very unique, I would say, for everybody listening. It's kind of a permanent-capital mindset, which is the thing that everybody, if you've been in the business long enough, thinks about. I think the value you create is not about how to understand private equity — you create way more emotional depth in your podcast, which is what I love. So this isn't a sales pitch — let me go super fast, and if people want to know more, you can reach out on LinkedIn, and I love talking to entrepreneurs. The first one is, our investment company was set up in a structured way that we had the flexibility to do deals that were great for entrepreneurs, that built long-term great organizations, in the sense that we didn't raise a fund, we didn't build a bunch of capital that way. We had this idea of permanency. One of my partners was in basically a pension fund that had to pay people for decades, if not more, and my other partner is in real estate and self-storage, which you never want to sell if you don't have to. So the way we even structured how we formed the company — all three of us had a very long-term view in it. The second key part: for those who go look it up, I used to be in marketing and advertising, and I joke and say the branding of our own capital company was the worst branding I've ever done in my life, which is that we called the company And Capital. The reason we did that was to force ourselves to realize that writing a check for a company is, at times, the easiest part. How do you make the company better? How do you grow the company? How do you align with the founders? How do you build something that people want to go work for? So we sort of said, hey, if we could figure out a way to do that part first, and be really good at it, and then we had capital to invest, then maybe we had a bit of a different model in the marketplace. So that's how we got there.

Three kinds of founders: transactional, transitional, transformative

And why is that important? Because we've spent a lot of time focusing on how we connect with founders and do great structured deals — so that post-deal, we're not all arguing and fighting. We have not done it perfectly; our track record has been very good, but with a couple of big learnings and misses. But what we have learned is this. In our world, we put founders in three buckets, and founders typically put themselves, emotionally and behaviorally, in three buckets. One is a transactional founder — that founder typically knows they want a value for their business, and if somebody gave them that value, they would literally leave the next day and be totally okay with it. Those founders should try and figure out if that's what they are, because then they can structure a deal that way. Let's start with the second one: a transitional founder typically cares about the three C's. They care about their culture, they care about their customers, and they care about the community in which the business operates, because typically it employs people in a community, or a micro-community. So those founders care about what happens post-check. Typically those founders want to — or need to — stick around in some sort of deal for a year to three years, based on whatever; sometimes it's two, sometimes it's 18 months. That's important, because you need to align on those three C's: what's going to happen with them, how do we value them, how do we think about them on a go-forward basis, because that's where the conflict's going to come. You and I do a deal, you're happy with the check, you're happy with the terms — and then suddenly I shut down the office in a small town that employed 50 people, that you go to the hockey tournaments and the baseball tournaments and the grocery store with every day. That's a big problem. People don't think it is, but it's a massive problem. So understanding if you're that transitional founder is super important. And then the last one we've identified is transformative: “hey, I do want to be out, whether it's three to five years. I have a bunch of ideas for my business that I've never done, either because of capital, or my conservatism, or whatever it is, and we want to find a partner that wants to take our business from A to B, and I'm okay going on the ride, I'm okay working hard, and I'm okay if some of that capital stack comes out based on performance, because we're going to double or triple the company, we're going to go acquire my competitors.” But it's a very different type of deal, and a very different type of relationship with the founder.

Aligning the deal to the founder — and learning from the mistakes

So we spend a ton of time with founders trying to agree and identify which one of those three you are, and then, once we're able to identify that, we spend a lot of time trying to build deals based on that. Where our errors happened at times were when we were starting out and excited about businesses — we would hear the initial feedback from founders that said “I'm transitional” or “transformative.” And if you get a transactional founder but you're building a business based on the other two, you're going to have conflict. That was our mistake, and we made that mistake once; I don't think we'll make it again. I joke around, but now people are asking me to actually build a tool. A good person to reach out to, a good friend of mine, John Warrillow — he runs a podcast called Built to Sell — has actually asked me, “well, you should build a tool that founders can actually start to self-identify with.” So we're working on it right now, because I think it's super important. And one of our other big learnings: if you have a multi-partner enterprise, typically all partners aren't the same. So what happens is, if you have three founders in a deal, and you do one type of deal, someone in that deal is going to be pissed off, and it's not going to go very well. Part of our advantage is we actually can go to those founders, based on our structure — if you have a 10-million-dollar enterprise value and you own a third, a third, a third, we actually could structure it a third transactional, a third transitional, and a third transformative, based on the partner. That takes a lot of work, and it is not typical in the marketplace, and it's not easy. But that's also why we don't try and do spray-and-pray investments. We go deep into the investments we do, because we're entrepreneurs, and I've seen the bad side of what you and I are talking about, and the good. It makes a ton of sense. I've never thought about applying that. In our company, the goal is to figure out, as many firms do — personality tests — and to identify what people are really passionate about, what they like to do and what they don't. I've got somebody on my team who is incredible at certain back-office operational stuff, and if she's telling you the truth, she'd be happy never talking to another human being again — an incredibly important part of the team. And I've got another person who would be happy not to be doing the stuff she does, but prefers to be talking to people. When you stick the wrong person in the wrong seat, it's just impossible. I never thought about founders in the way that you divided into those three categories, but you're 100 percent right. If the deal structure sets them up with the wrong kind of mindset of what that founder is looking for, then it's just a really interesting framework. I think it makes such a ton of sense, because the human dynamics in these things are at least as powerful, if not more powerful, than the theoretical fundamentals of the transaction.

The fairness opinion and the lunch that closes the deal

I remember, as a young banker, I worked at James D. Wolfensohn, a really big M&A boutique, and we had a client who was a very acquisitive CEO of a large bank in the US. He was constantly meeting with CEOs of smaller banks that he wanted to acquire, and he would have us do the fairness opinion. As a wet-behind-the-ears kid fresh out of school, I thought a fairness opinion was where the CEO was asking us what we really think of the deal. And after a couple of years it became very apparent that, no, he was just asking us for a fairness opinion to cover his butt from a legal standpoint. He did not really want our opinion on whether he should buy that company or not, because he'd been in the business for 30 years and he knew he wanted to do it. But it all came down, not to our analysis — that, by the way, we often spent all-nighters trying to get right... You've got to model it. They're going to model it, right? It came down to whether that guy could have lunch with the company he was looking to acquire. Those two CEOs — could they stand each other for lunch? If they could get along, that deal is going to happen. And if they couldn't — if they didn't go off on the right foot, and the CEO of the smaller bank did not like that particular gentleman — then it wasn't going to happen, or it was going to be a hostile takeover, and in something that regulatory-intensive, it was better not to grow that route. So it was just amazing to me. Here I was — I went to the Wharton School, I studied really hard, grades, analysis, got to understand the fundamentals and logic, worked all night on it — and at the end of the day, it's whether the two guys get along at lunch.

IQ, EQ, and treating founders as human beings

It's funny. I think one of the advantages we have is that I didn't come up through that. My partners are way smarter than me at that — especially our partner who really leads our investment strategy, Pablo. He's super smart, and he and I are a great partnership, because I am the entrepreneur, and I'm way better at the intangible things and understanding how to model those, for lack of a better term, than at how to model the financials or how we're going to do the business deal. That combination gives us both the IQ and the EQ, which actually helps, because these are human beings — they're not models, to your point. And by the way, please take it that it is not perfect. The other thing we've done is we've been a perpetual learning organization that's okay with the mistakes. Sometimes the mistakes suck, because you've got to go to a founder and say, “we screwed up,” or I've got to go to the next founder when they ask me the hard question of, “did you do every deal properly?” and I need to stand and say, “no, I wish I could go back and do one or two deals differently.” To the best of our ability, we try and fix those in learnings, and we try and wear them as t-shirts, as I say, so that we're not hiding from any of those things. Because in our world — and that's why I try and do these podcasts — we're not trying to have some secret thoughts. The more information we can share about the learnings, the more positivity we have, because we love the entrepreneurial spirit. We know a bunch of businesses in North America need to transact in the next little while, and we'd like them to transact in a way that keeps these businesses employed, these communities employed, and all of those great things. We want people to get excited about these businesses, we want the sellers to understand that there's a lead-up, there's a transaction, and there's a post, and we want the buyers to understand that maybe if we look at the buying a bit differently, we don't have to keep buying and flipping businesses to make capital. That would be our goal.

The lost art of the long-term outlook

The long-term outlook — I think it's so important, and highly lost sometimes in today's modern, quick culture, where you've got five seconds, and if you can't do it, two or three seconds, and if you can't do it, one quick transaction. One of the things we do in our practice — we do a lot of tax strategy, tax planning — at least in the way that we practice it, where we try to aggressively implement all the low-hanging fruit, the stuff that's admittedly even boring, but clearly black and white, at least in the US, from an IRS standpoint — it can sometimes take... a plan might be a 10-year plan. And I have to pinch myself and laugh at just how counter-cultural that is, because a 10-year plan — it's like, are you crazy? But whether it's a business, or tax planning, or raising a child, one ought to look a little further ahead, I think, to get great results.

Buffett and Munger: a friendship and a long-term mind

I've actually got a book on my desk from Charlie Munger that I haven't finished reading, that I picked up, I guess it was a year ago, a little over a year ago, at the last shareholders' meeting in Omaha that I went to. Listening to Warren talk about his history, which he did a little bit more of because it's the first meeting post the passing of Charlie, it was really very moving at many levels — to see the deep friendship and brotherhood and partnership that these two men had built together. The depth of their friendship, and very different people — they were not shy to fight or disagree, and passionately hash out ideas — but there was a love, a deep love, between these men. And so many great things have come out of not only their long-term relationship, which I think reflects their spirit of longer-term living, but also how they approached business. There are all kinds of neat examples where they bought businesses because they wanted the owner, who would stay on. I think there's more than one formula. You have yours that I think is working really well, and dare I say Warren might have his own model that's slightly different but may share some things in common. What is in common is that longevity. He's looking to acquire companies in part to get the business, but also the great management teams, and has profited extremely well because of that. That's again different than a lot of the culture today, which is all around immediate results, and everything is about speed, speed, speed, latency, latency, latency. I even remember Google came out a few years ago with a challenge of the five-second marketing video. What I like about that, on a positive sense, is there is a tremendous distillation and discipline to try to distill the core of your message down to the simple, and there are great insights and power that come from being able to be that clear about what your core is. On the other hand, not anything can be accomplished in one second.

The toxic celebritization of the billion-dollar exit

A couple of things. Let me maybe start there and work backwards, because something you said I've never actually heard anyone express, but I think it's a super important thing that I have not had the opportunity to lean into. As you're saying it, I want to make sure your listeners hear it, because I do think it is insanely important. But I have a habit of over-simplifying everything — I'm sure if you ask anyone who works with me or lives with me, on my best day it's a great talent, on my worst day it's the most irritating talent in the world. The one thing you said that I'll bridge back to Buffett and Munger: everything lives in this tick-tock, fast world, but I think there's another component of that for entrepreneurs, and that component is over-hyped, over-communicated — you know, everybody sold their business for a billion dollars, and everyone's flying on private planes and doing all these things, and that's the benchmark. Just go on social media and you'll understand how this deal closed. And I actually think that's toxic to some of our founders. I really do, because I think it de-values how you think about yourself, and the value you create, and the value of your business. Does that mean if I sell my business for five million dollars I'm a failure, because that person sold it for a billion dollars, because I don't have a private jet and don't care about it? I think the divergence of those thoughts is not good right now, for multiple reasons. One, we need to transition some of these businesses — supply and demand of these services. Until AI can put in an HVAC and keep our kids safe and cool, we need HVAC companies. We need plumbers to make sure the toilets work. And these businesses are not all billion-dollar businesses. These big celebrity celebrations of how they sell — from a founder standpoint, I don't think all of that is healthy. I think we do need messages like yours around founders who've done it, and what is reality — I don't know if “reality” is the right word, because everyone has their own different reality — what is at least a different perspective. That's the first piece.

The multiple just gets you on the field; structure is everything

And then the second piece that I don't think is healthy in the celebritizing of transactions, and the wealth of information, and the speed at which you can get it, is I think it narrows down the lens of what the key priorities in selling a business are. I always joke and say the multiple is the one that drives me the most crazy — and, bringing this back to Buffett and Munger, I think he once said, “I'll buy your business for a billion dollars if I can pay you a dollar a billion years.” Like, no problem, I'll pay that amount. And I think that's — “hey, if I don't get this multiple, this is the way I value my business.” What we always say to founders is: the multiple just gets us on the playing field, that's it. And then we spend way more of our time on deal structure — which type of founder are you, tax structures (to your point, they're complicated), what is the longevity of your business, what are we committing to? So we frustrate founders at times. We like business brokers, and we're super supportive of them, but I joke and say we end up with the bridesmaid way more than we do the bride with brokers, because we're always like, “sure, we'll give you a multiple, but we're going to give you a realistic multiple, because we don't believe in bait-and-switch.” And more importantly, we're going to exhaust you talking about deal structure — a broker situation that is painful for them, because they want to put value in front of founders, and that's their job. So we always say, look, we're happy being the bridesmaid, but once you get to the point where that structure doesn't work based on the multiple, please call us, because we will work our asses off on the structure side. I don't think people spend enough time on this — the celebritization, or the Hollywood-ness, or whatever word we want to use, of the unrealities of what deal structures are. I think founders need to have way more self-confidence in — that's not how the world really works, and your business has great value — and spend time on the things that matter to you, and understanding if you're a transactional, transitional, or transformational founder, and spend time on deal structure, to your point.

Keith Richards, and finding the part you love

So I'm going to bring Keith Richards into this conversation. There we go. I don't know if you've read his book. I have a really weird, diverse set of music tastes. Look, I'd be the first to say he's not necessarily my top pick if I'm going to one musician, but I fell in love with him when I read his book, Life. One of the things that really jumped out at me that was cool was his description of the early days in that band, before they had money, before they had celebrity, when they were couch-surfing and they didn't give a . What they did care about is they would spend eight hours trying to get this one sound right, going to and listening to other musicians and experimenting with other ways to explore the sound, the vibe that they were trying to figure out. What really jumps out at me is just that passion behind what they were doing. Although, of course, they benefit from the wealth that they've gotten, which has been enormous, I'd be willing to bet that his greatest joy would come from his family, and just his true love for music. So I think one of the other things entrepreneurs need to be thoughtful about is finding some aspect — it's going to be different for every man and woman — but some aspect of your entrepreneurship journey that they love, that's meaningful for them, that's fun for them. Because not everything about being an entrepreneur is fun or easy, so there's some aspect of it that you enjoy. My challenge to entrepreneurs is — I lost three friends in the last two weeks, different stories, and it really hits home about the importance of making sure that you're grounded, and that you love what you do, and you take time to stay grounded in that appreciation. To your point, when you get too hung up on certain aspects of the exit, or even the number — because some of the numbers are more than you need by any normal standard — that's when a lot of the emotions and ego come in, and it's just like, remember what you're in this for. And I think that needs to continue regardless of which of the three types of founders you are.

True wealth is lived: health, wealth, and purpose

I think it carries through to that challenge of understanding what your purpose is. I always say true wealth is lived — it's not a thing that you own or have, but it's lived, at the intersection of health, wealth, and purpose. And purpose is often one of the toughest things for people to figure out, particularly around that time of transition, but even beforehand. I heard this great clip that a friend forwarded me. She worked for a billionaire in the oil patch here in Texas, and he was given a big award by the business council, and he had this great video where he talked about the importance of getting rich slowly. He says, “I attribute the billions I've made to the fact that I got rich slowly. We were not in a rush.” And he said, sometimes there's this rush I have to make this number fast, I have to get big fast, and there's this implicit rush behind the word “scale.” And ironically, Buffett would always talk about compounding, which is just doing little things, little things, little things, that add up and accumulate into staggering amounts of impact. So the clarion call to founders, regardless of what stage you're at, is: dig deep and find the aspect of it that is meaningful for you, and embrace that through the transaction, and then maybe find new ways to realize how important that was to you, and new ways to create meaning in your life.

What your spending says about you: the F-150

One of my favorite — and I'll go ahead and put you on the spot, Mark — is that how people spend their money also tells you a lot about them. If all you do is draw out and spend a bunch of money on Porsches — okay. If we were getting to know you by just looking at your balance sheet, or just looking at your income statement, what would we learn about you? What would we learn is important to you? You ask me an honest question, and unfortunately or fortunately, the reality is I answer them, and sometimes I shouldn't. How would I answer this? The only thing I bought when I sold my company was a brand-new F-150. And interestingly, the reason for that was my dad had one, and when my dad passed away, I took over his. It was one of those things that, when I ran my company, I probably could have afforded that, or a fancy car, but I just didn't, because of my upbringing. So it was the only thing I bought, and I put my dad's license plates on it. It doesn't mean we haven't bought other things, but that was it.

From success to significance

But I think what you said is super important, and a very good friend of mine sold his business — a guy named Jeff Collin — and these are not his, I don't think he came up with this, but he lives by it super well: you spend so much time trying to get to success, but as an entrepreneur selling your business, you've got to find a way to move from success to significance. I just think it's such a great way to frame it up, because success, for all of us as entrepreneurs, is unfortunately competitive and comparative. Usually, as entrepreneurs, one of our best attributes is eternal discontent. So that is not easy — when your attribute is eternal discontent, and your mechanisms are comparison and competitiveness, that is not very fulfilling some days. But I would also say, besides my family — I have two daughters, who I always joke I was not a full human being, because of that competitiveness and preparedness, until I had daughters who taught me how to slow down and understand the other half of life, which is the emotional narrative and conversation, which has been amazing — I don't think I understood what the significance part looked like. And by the way, I still don't today. I think I'm working on it, I'm trying to figure that out. When I said earlier we're going from a hundred miles an hour to zero, I think some of that was the gap between success and significance. I joke on my good days and say I think I went into the shadow of the valley of death, which is a dark place, because it was like two cliffs. Success was over here, and success was defined by selling my business for a number — I was a failure below that number and a success above that number, which is ridiculous, for the record, but that was the number. And significance — I fell off the cliff a little bit, and I don't think I realized the hard work it would take to climb back to significance in some sort of balance. So my perspective to founders would be — based on my perspective in the marketplace that I was in, and the size of transactions that I'm in, which aren't 500-million-dollar checks, for the record — I think if you can understand a little bit, emotionally, of starting the runway to significance before you transact, I think you're going to have a much more holistic, successful transaction, beyond the financial pieces. To your point, which is why you do your podcasts — sure, there's the money part, but there's the emotional part, there's the intellectual part, there's a purpose-driven part, and I don't think enough people in this space spend enough time on all of those. Take that as my learning. When I joke and say I went into the shadow of the valley of death, I think it's because there was a gap between those, and I didn't build a bridge — I tried to jump, probably — and it took a lot of work. And I'm still working on it. The other thing I realized is I didn't define success properly enough, because people ask me every once in a while, would I have sold my company in hindsight, and the answer is of course yes — but then, if you really push me, I'm like, well, if I had all the knowledge I have today, maybe not. I love how thought-provoking you are around the emotional side, the intellectual side, and how you try to frame it differently than the transactional side. I think it's amazing what you're doing for founders.

Rethinking retirement: the 1950s model doesn't fit

Let me ask you another question. Another interesting “a hundred miles down to zero” problem that we have in society — society-wide, whether you're an entrepreneur or not — is, at least in the US, you have this 1950s concept of retirement, where you go from being fully employed to retired, and then the next day, or this year, you're doing something but you're not working at all. A lot of people in the US, that's not a reality for them — they need to keep working to make ends meet. And in many other cases, people just get busy with grandkids or whatever. I have yet to meet a single client who actually lives that crazy, outdated 1950s notion. But specific to the business world, there still is this actual kind of retirement concept where, okay, so-and-so is stepping down and now they are out of the company. When I lived in Japan, they had this really neat model where a lot of the older guys who were “retiring” would step down from their position, but then they would be retained by the company to “work” for, you know, 10, 20 hours a week, but with no defined responsibilities at all — zero — just be available to talk, or come to lunches, or come to a meeting. So there was this really cool continuity of relationship where it gave them some purpose, so they could mentor, but because they had no work responsibilities, that allowed them to be apolitical and get out of it completely and see it from a different perspective. And likewise, tremendous assets of experience and relationships that the guys now in the firm would surely value being able to tap into. What are your thoughts on ways that entrepreneurs, or non-entrepreneurs, can mentor others? Have you seen any models that work?

Advisors for perpetuity: keeping founders in the fold

It's a great question. I don't have an absolute answer, so if I go in circles, maybe there are at least some breadcrumbs along the trail. The first one is, there were two businesses that I owned that I basically had to walk out of, and I was done — and mentally and emotionally that made absolutely no sense to me. I'm a wealth of knowledge, and yet, when I walked out of my last business, I literally took a picture off my desk that my wife bought me, and there was nobody there — I think it was a Sunday — and I walked out and shut the door, and I felt like it was a sitcom, like Cheers. You remember when Sam Malone shuts the door at the bar, and it's over? And that's dating you and me, because half your audience is not even going to remember what I said. But what we figured out is a couple of things. One is — and we haven't done it perfectly, because if you look at all of our transactions, I think we got it right in about three, and one for sure we didn't get right — but we do what you just said. Founders that want to not work, once we complete the transaction, we keep on as advisors for perpetuity. Oh, really? Perpetuity — as long as they want to do it. Sometimes those flux on how it works — sometimes it's salary, sometimes expenses, sometimes whatever. There's one of them we pulled back in randomly — we're doing a sponsorship in one of those communities, a significant sponsorship, that's going to be a big deal, and I'm like, “hey, Randy, we want you to be in the PR, the press, because you started this business in this community 20 years ago.” And one of our other founders was on one of these advisory deals, and he's passionate, he wants to do work — this is crazy — he's actually working a night shift for us as a safety officer for five weeks. He works from 4 p.m. to 4 a.m., because this is his fund to still have a purpose, and in his mind it's his play money that he still has to earn. So I always joke with him, whenever he takes one of these gigs with us, “hey, Jamie, are you upgrading the suite on the cruise, because you're working the night shift?” But the secondary piece is, I think we're going to be in a significant knowledge gap if we just let all this expertise go.

Two phases of life, and reverse mentoring

There's an amazing professor at Harvard named Arthur Brooks who talks about the two phases of life — and I'm going to butcher it and over-simplify it — but the first one is the intellectual learning and doing, and the second one is having that advisory and coaching, experiential impact, where I can coach, I can mentor you. It's one of the things we think about a lot. There are some organizations out there that have amazing models of boards or advisory boards, and some businesses are doing a better job than us, even when they're in a roll-up strategy, of those founders getting elevated to the advisory board, and then they advise across all of them, and the resources can be pulled back down. I'm totally with you. We've always ingested this idea of reverse mentoring as well, which is the younger ones mentoring the older people in the organization. I should try to put an hour in my calendar — one of our team teaches me about technology every week, and it's the most humbling thing, and I move it, and she gives me , and I try to put it back in — because we're trying to keep that whole ecosystem of learning going. I don't think there's a perfect model. The one thing I would say is important in that model is, whoever's running the business needs an extreme amount of humility. For us, I get it jammed down my throat, because I'm not a subject-matter expert in the businesses we're in. That's part one. And part two is, you want the founders, even on their last technical day of their deal, to still have a high level of curiosity — of what could we do, or how could we do it, or “hey, call me if you have a new idea.” I think it's an active sport, I don't think it's a passive sport, and I don't think we get it right every day. If you found our founders on a bad day, they're like, “I don't...” — Mark called me in a week, or two weeks, or three weeks, or a month — and on a good day they're like, “oh my God, I'm jazzed and excited.” So that's how we're doing it. I'm not saying it's perfect, but we know we're giving it our best shot and we're learning as we go. I think that's really rare. You're one of the few, maybe the only firm I know of, that offers that kind of lifelong continuity. So smart and unusual. Hats off to you. And given the flexibility of the range, I think that's even better, because every founder is going to look different, they're going to want different levels of engagement. Not having access to that, to me, is just insanity. I see even in my business a bunch of PE firms that are buying wealth management firms, and a lot of guys that are just taking that transactional check. I wish I could tell you I took credit for it, but that's all my partner's — that's all Pablo's idea, which is a great idea. We embraced it, and it was a great creative solution to many things.

Mark's take on AI: the power of the “and”

Speaking of reverse mentoring, I can't let you go without asking you your take on AI. You've got a lot of different people out there saying it's the best thing since sliced bread, changing the world, and other people saying it's just horrific, it's going to end up with a tremendous knowledge gap and make everybody dumber. I know you have an opinion, Mark. Give it to me. Yeah — and I have an opinion, which I think is just that. I always say I never give advice, but I will give an opinion. Let me maybe start in our world. In our world, we're in the world of safety. We've got to get people home safe every night, to go to their soccer games with their kids, or dinner with their family. So there's a big part of our business that is practical — we have a training facility that we are hyper-sensitive about; we want it to be practical, we want it to be hands-on, we want to be the best hands-on. And in our world, if I'm very honest, I think at times we aren't embracing the “and” enough. This is an interesting thing — the “or” of AI. I think it's scary and dangerous and exciting at times, because you're like, well, if you don't adapt, it's going to wipe you out, and AI is going to run your world. But it's scary in our world to accept the “and,” which is: we need that practical piece, but if we don't embrace how that makes us better to our customers — how we collect data, how we provide safer environments because we have more information, how we can provide better training on scale — all of those things... At times we think it's the friction of an “or” — “don't put that training program in AI, because it won't be as good” — and it terrifies me that we don't live enough in the “and.” So from our level, I would say AI, the scariest place, probably emotionally and actually and from a business standpoint in our world, is embracing the “and” every single moment, every single day. And we don't have it right, and it keeps me up at night. So from our standpoint, I think AI moving from an “or” to an “and,” in many sectors and many businesses, is an uncommunicated and un-talked-about element that we need to figure out. So that would be one.

When effort equals outcome — and where AI drops quality

The second one: I do think that we're in this gray zone of, where does effort equal outcome, and how is that going to transform industries and jobs? What I mean by that — once again, I'll use examples from our business — is we push our teams to use AI to bring efficiency, but at times the quality is dropping significantly. Yes, we're getting an output. But you said something super interesting the other day, which is that sometimes the clarity in working hard on something, to get it down to one page, is the effort and the heart part. If I type in, “hey, give me interview questions” — which I'm actually going to go do today, this is a live example, for a new role we're hiring — between Claude and ChatGPT, it's going to give me an amazing list of questions that's going to be four pages long, and probably not get to the heart of what's the real issue in hiring this person. So I'm going to stop and go do two hours of work on it, to see, how do I narrow this down to what's going to be really important? So there's that gap. I watch it with my kids at school, and I watch it with our teams — it's this outcome-based focus that I think we need to use AI for. Yes, it can speed many things up, but is that the outcome we want, or do we just want to get there faster?

Wide boulevards and high curbs: an AI strategy

And then at a very macro level, look, I'm not an expert, and I love ingesting some of the content that, let's call it fiction — maybe at this point I'm not sure any of it's fact yet — but I do think it's going to be really interesting, because there are some outcomes out there that are perpetual AI acceleration, which is, the companies that are going to force against AI sooner or later are going to get their marketplaces impacted, and then they're going to be the highest implementers of AI. So I don't know exactly where it's at. I am not going to predict the future. For today, I think it's an amazing tool. I'm terrified when it becomes the primary tool, and I'm as terrified when it isn't a significant tool on a daily basis. That balance between those two things is an active sport — I don't think it can be a passive sport. And the last thing: I don't know, so I am a humble learner with a high level of curiosity about it, and I try not to have hard lines. A great professor once told me, “have wide boulevards and high curbs.” That's how I think about AI these days: I have to have a lot of flexibility in where we play it, but I can't let it impact our business too much, that we're in a death spiral. So wide boulevards and high curbs is my AI strategy right now.

Closing: the whole entrepreneur

Mark, I couldn't think of a better way to put it. It's been amazing having you on the podcast today. Thank you for being so open, and just humble and caring. Your perspective is really helpful for everybody watching, because you've done this — you've sold a bunch of businesses, and you're actively living on both sides. I've really gotten a lot out of the framework you created, the three different types of founders, and how you apply that. So thank you again. Great getting to know you better. I appreciate your time today, and above all your opinions. May we all be challenged to keep those boulevards wide and the curbs high. Yeah, and listen, one last thing — thank you. And to your audience: I think it's super important what you do, and part of the reason I jumped on when you and I had our first chat is that people don't talk enough about the whole entrepreneur — the emotional side and all the things. So thank you for doing that, and I think more people need to do it. If you and I can ever collaborate again to bring that whole view together in any format — you know my phone, and we'll always pick up the phone, because we need more of it, man. I really appreciate it. You bet. Thank you, Mark. Awesome, man. Have a great day. It was amazing. Reach out anytime.