10 Acquisitions E3: Top M&A Entrepreneurs Mark "I Buy Revenue" McRae

Summary

In this conversation, Jon Stoddard interviews Mark McCray, a seasoned entrepreneur with a rich history of starting and owning over 30 businesses. Mark shares insights from his early entrepreneurial experiences, his transition into mergers and acquisitions (M&A) through the Epic group, and the importance of building a strong team. He discusses the nuances of evaluating business opportunities, his investment philosophy, and the strategies he employs to manage cash flow and ensure long-term success in his ventures. In this conversation, Jon Stoddard discusses the intricacies of business acquisitions, emphasizing the importance of cash flow, strategic partnerships, and effective time management. He shares insights on creating efficient systems within businesses and the value of outsourcing tasks to enhance productivity. Stoddard also reflects on the significance of enjoying the people you work with and the continuous journey of learning and improvement in the business landscape.

Takeaways

Takeaways

Mark started his first business at age seven selling bin bags.
Epic group provided Mark with valuable M&A strategies.
He emphasizes the importance of team dynamics in business success.
Mark prefers to buy businesses with a strong revenue history.
He believes in the philosophy of buying forever, not flipping.
Understanding the fundamentals of a business is crucial for success.
Mark advises new entrepreneurs to start small and gain experience.
He values long-term relationships with his team members.
Mark's investment strategy focuses on self-funding and conservative growth.
He prioritizes businesses with steady growth and longevity. Everyone is different in their approach to business.
It's about where cash is most valuable and how to manage it.
Buying businesses should focus on current profitability.
The ecosystem of businesses can enhance value.
Time management is crucial for effective decision-making.
Partnerships should be chosen wisely based on values.
Systems and procedures are essential for scaling businesses.
Strategic decision-making can accelerate business growth.
Outsourcing can significantly improve efficiency.
Continuous learning is vital for business success.

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 Transcript

Jon Stoddard (00:00.142)
So welcome to the top &A entrepreneurs. have a guest. He's another Epic member. What Epic group are you in, Mark? I was the original. Another OG. Yeah. The Beta group. The Beta group. Great. Mark McCray. I'm reading this bio that you sent over. He's a serial entrepreneur who has started and owned over 30 businesses.

Born in Glasgow, Scotland in 1964 and the first business at the age of seven. So I have to ask you, what was the business at age seven? Well, it's funny, my mother and father were market traders. So they used to sell things in the flea markets. And my job was to help them in the flea markets every weekend. So what I...

decided to do one weekend was I noticed that everybody who came into the markets, they always came unprepared because it's usually just, it was some kind of social event. So they would, you know, they wouldn't bring bags to carry things and things like that. So I bought, I remember correctly, I bought bin bags, you know, these black bin bags you get at, you know, 10 pence each and sold them at 20 cents. I stand in the

in the corner and just sell black bin bags. And within a month, I actually made more money than my mother and father. jeez. And I've been independent since then. There were days where they had, you know, this whole apparatus around them. And I was selling these plastic bags and I made more money. that's so cool. Now, I got to tell you, this is, if you characterize this, this is, that's a picks and shovel business. Yeah. Like gold mining, none of the gold miners made any money.

The only people that made money were the sell the picks and shovels and you were a picks and shovel there. That's very cool. Yeah. So it's kind of been, I've owned different types of businesses since then. Even when I was in school, I'd sell chewing gum or I'd sell, you know, sweets or, I would deal in, in vinyl records as they had them in those days. Yeah. Your audience might not remember those. Yeah, no, no. I, I'm in the same age group as you. So.

Jon Stoddard (02:20.718)
We remember those records. It's just like you can't walk around the house. You can't stomp around the house because it skips. So tell me about this, your Epic and you've made 10 acquisitions in your career and three since &A. Now, why did you take Epic if you're already making acquisitions?

I think it's like anybody who's interested. I still buy books in finance. I still try and learn every day. I still would never purport to be an expert. It's a passion. And also the way that I tended to do it pre-epic was just brute force and ignorance. It was just buy something.

Whereas Epic, you learn a lot of different strategies about how to finance things, how to put deals together, how to try and do it with trying to take money from your own pocket. you know, anybody who's has a passion about something, they really have a kind of eclectic knowledge that they've got from everywhere. you know, the

I think that Epic is a great starting point for somebody who's never been in &A. And I think &A generally is a kind of a misnomer. think that the deal maker is probably a better description of it. Because the &A, that whole industry is actually very old fashioned. It hasn't kept up with the times. And I think that somebody who sees an opportunity,

and can see a way to exploit it or to add value to it or to bring together those resources, which is probably the true definition of an entrepreneur, the ability to bring together resources to make something happen. And I think that there are quite a few people in the Epic group who sort of they epitomize that deal making process.

Jon Stoddard (04:33.741)
Yeah. So I think that the true &A's, you know, the lawyers and the big banks and institutions who are going after a hundred million dollar deals and upwards. Yeah. I think that's a different animal from the people who are in Epic Group. Yeah. So the companies you purchased before the sheer brute force and ignorance, and now you go to Epic, you get this training and it shows you all kinds of new ways to know money out of pocket.

So what did those deals look like? I mean, the size of them and take the first one example. So you tell me about that one. I think a pre epic was probably a health food business. And in terms of size in U S it's probably about, I don't know, $250,000. Yeah. And it looked like a good idea at the time. So I just bought it. I mean, obviously I think that

In order to be successful as a deal maker and mergers and acquisitions, I think you've got to have a core skill. In other words, I see a lot of people who struggle that come in from things that are either they're not financed, they're not business, they have had a traditional, they work, I don't know, say as a school teacher or something and they haven't been exposed to that. I think they really do struggle because they're

as a lot more goes into most deals and most people anticipate, you know, they think that if you can do a deal, that's the deal over where it's just the beginning of the story, you know. one of my having owned so many different businesses in different countries gives me a broader perspective on how business and finance works. And it gave me a lot more touch points. whenever I bought a business, I was always looking to apply

you know, that philosophy of a business is a machine. And if you make that machine work better, it gets more productivity. It goes faster. So, you know, I'm looking for businesses that are kind of all clunkers that I can turn into Ferraris. So, know, so that one of the things I look for is not so much the industry. And I know a lot of people like to try and keep their businesses in the same universe. And there's a lot to be said for that.

Jon Stoddard (06:57.207)
But I'm more interested in the people and it's a kind of, you know, built to last philosophy. You know, that book that it's, it's more important, the people who are on the bus than where the bus is going. Because if you get the right people, you can point them in any direction. So I've had a team of people around me now where the majority of those people have been with me for 15 years plus. So your company or, okay. Yeah.

So my core team has been with me a long time. So they know my strengths, I know their strengths. I know where I think we can add value to deals. I think I've got gut feel, know, it's a very visceral thing sometimes when you buy a business, can just be, you know, hits that button. You just know that's going to be good. How did that start? mean, cause there's a lot of people in Epic that look at this and go, okay, if I,

I'm outside of the industry, I don't have knowledge, but how do I start building this team and the expertise? You know, and I see Patch Baker does a great job at it. Adam Lyons does a great job. Obviously you got 15 people working for you and use them on the same deals on there. How did you just start doing that going, I know that's what I need first or we should have that guy or this person? I think it's more a guy. It depends. I mean, I think Patch and Adam are great people to learn from.

And I think that people who are just starting off should start off, you know, I see people who have never owned a business who want to come in and do a $10 million deal. And I haven't seen any of work yet. In fact, I've been called into two or three epic ones to try and help salvage some of those deals. I think they should get the feet wet, know, do some takeover the administration rights for some Facebook groups, buy some forums or blogs or something

to get that sense of what it takes to run a business. my own, you see the sort of normal journey or course that I see people who want to do mergers and acquisitions as they see the idea that it's a way of making a lot of money quickly. So then the next jump they make is, well, I need marketing, right? So they think I need to acquire a marketing company and that's usually a mistake.

Jon Stoddard (09:21.837)
because it's very specialized field and marketing today is not where it used to be. You know, I spoke with over 150 marketing companies last year. It's the industry is not for people who don't know how that works. They'll get eaten alive basically. So to answer your question, it's a bit of a long way to answer it is that my own journey has been, I've added people as I've needed those skills.

There was a deal last year where I wanted a board for credibility. So I literally designed what I thought would be the perfect board. So I needed a very high profile person as a chairman for credibility. I needed a marriage as an acquisition lawyer. I needed somebody who was in accounting that was familiar with that. I needed somebody who was in a similar field from the acquisition that I was targeting. And I

I handpicked those people from LinkedIn. I didn't know any of them. And I got them on a Zoom call like this. And I had a little slide deck and I said, okay, this is what I'm trying to achieve. This is why I think you would be the right person for it. And this is the reward you're gonna get if you agree to come on board. And of the five people that I handpicked like that, all five agreed to come on board. So there's different ways to do it.

And I think, you know, mergers and acquisitions and deal making and business in general is the, you know, I would encourage anybody to do it, regardless if you don't know what you're doing, but I think that your expectations should be realistic. You know, often I'll find somebody who will ask me to help them on a deal because they have got past that initial introduction. They've done the letter of intent and now they actually have to run the business and they don't know what to do.

because they've never owned a business and it's common sense. So there's different stages at which people get stuck. And the only, yeah. No wonder that when you look at those businesses and they come to you, are these Epic members or are these just other people from all over the world? Well, lately it's been Epic members because that's the environment I was in or quite active in last year. But previously it was kind of,

Jon Stoddard (11:50.471)
It was scattered. It was just, know, word of mouth or, you know, was introductions. Most people will do most deals through some kind of connection. The cold outreach doesn't work that well, but you know, it does work. It's just much harder. Takes longer. Yeah, definitely. And more numbers. Yeah, exactly. Yeah. When you come, when somebody epic comes to you, because I, that I'm seeing a lot of that.

a lot of collaboration between Mac and Emmerich because you described it perfectly. A lot of these people, some haven't owned a business before or completely unrelated field or not familiar with sales or something into the process of a funnel. how are you coming in? Are you coming in with an earn in? Are you asking for something or what's that look like? I always come in with no intention. And otherwise, I'll tell people that I'm happy to help with no

hidden agenda and no intention of getting any kind of percentage or reward. Because my hope is that during the process, they realize my values. they're, you know, they'll offer me something. in the process of that, it allows me to let people let the defenses down, because I'm not trying to make money from you. And there is, you know, so

You know, a good example is that when somebody has, they're getting close to closing a business and they actually have to deconstruct that business in order to understand it and figure out how they can scale that business. That can be a sticky point for a lot of people because businesses are all similar. They're a vehicle to make money. But the mechanics of it can throw a lot of people.

And certainly in deal sizes, so there's one kind of sector of deals, say $10 million plus, where most of the management's in place, right? You'll never need to understand that much about it. And then you've got those deals that are kind of, say, between 1 million and 5 million or below, right? Getting deals below 1 million is hard because the financials are usually very lumpy. The business is run really badly and it's very hard to get your head around whether there's actually anything there.

Jon Stoddard (14:13.473)
But of one of the smaller businesses there, you almost inevitably have to get involved. You know, there's no such thing as a totally hands-off, hands-free, I bought this business and it's gonna kick out something. You've got to- says that, but it's not true. Yeah, so exactly. So, but, you know, that's usually how I find myself involved with businesses is through some kind of

They've asked for advice and it's not that I'm some kind of genius. I've just screwed up more than anybody else. So in the process of all of the businesses, I've made all the mistakes. I've paid the school of hard knocks. Yeah. So if I ask you, how would that look like? We got a couple of businesses we are looking at to acquire.

you know, one was in the $6 million range in revenue, but I think the guy is too involved in the business. So we'd have to replace him and I don't want a job. And my other partner doesn't want a job. So if we brought a business to you, you'd look at and go, Hey, no, we could scale it, but we need to put this C-suite in place. Well, it's interesting you say that there's a couple of businesses where I've looked up for other people where they have determined

to try and make a business work that is failing and will fail. So an example of that, there was a business that I was asked to have a look at where it made $26,000 per year. And the group wanted to add sales, add marketing, add this, add that. I said, why even bother? This just doesn't make sense.

trying to put all of these resources into something that fundamentally probably won't do any more than it's doing that. So some people get this idea in their head that just because somebody will do a deal that you should do a deal. So if you have a $6 million deal, right? So, you know, I assume there's a reason why you want that particular business. And then there must be enough of the, you know, distributable.

Jon Stoddard (16:32.525)
profit to make it interesting for you. But once you remove that person from and you always have to assume that they're going to leave anyway, regardless of whether they intend to stay on or not. That, you know, so what is the market rate for a manager or CEO in that industry? And do you have enough knowledge of that business to oversee that transition? So that's where I mean about there's always usually a point at which you have to know something about the fundamentals of how a business works.

I have to point out, and that's like, you know, what Warren Buffett says, you know, I only buy things I understand. And it's really true because if you look at a SaaS business or a marketplace business, know, technology stuff, both of those have two different KPIs and drivers that build the business. And if you don't understand those, you'll never be able to grow it. And if you've never done it, it's just gonna be very expensive process to learn.

There's, I was listening to a book, an audio book, and I can't remember the entrepreneur's name who specializes in SaaS products. Smith is his surname and it's L Smith, but I can't remember his first name, might be Frank. And he discovered that in SaaS, for example, that most of the companies are very badly run. So what he added to it was processing procedures for how those companies should, can.

and should scale and now he's got a billion dollar business. Yeah, it's L Smith. I can't remember his first name. I'll write that down. And so his whole thing is about how you run a business. That's the value that he added that he could go in there, take a SaaS company where there was a bunch of programmers and the value that he added was in procedure rising the whole process.

And because SaaS companies are terrible. Another thing that are terrible to work with and terrible to run generally. I've had a couple and I don't enjoy them. So a lot of people aspire to have a SaaS company because they think they're going to be the next Zoom or they're going to be something like 98, 99 % of SaaS companies It's because of the frothy multiples they get on them. Exactly. Well, that brings me into another point about multiples.

Jon Stoddard (19:01.707)
you can get a sheet that will tell you what company multiples will sell for. I don't believe in that at all. So I don't care. And the reason I don't believe in it is because a lot of my deals are self-funded. And if I can't get all my money back in three years, I don't care what you call it. I'm not interested. Right? So you might have the best SaaS thing in the world. And if you give me a 15 multiple, you know, good luck. I'm not going to wait.

I'm not going to wait that long. So I'm not going to be on the planet that long. Yeah. So I don't care. You know, as people say, well, this should have that multiple and that should have that multiple and it's great to sell it. And I might have the same argument if I was selling one to buy it. I tend to, like to, to focus on all companies. like them to be going for 10 years plus. I like them to have had no losing years. So I want steady growth.

preferably at least 10 % per year. And usually they're boring, right? So there, and that suits me great. I'm kind of business is that? Yeah. What does that look like? I find them more offline now than online. So, you know, I bought a medical aid supply company last month and, you know, not particularly exciting. That was, you know,

So something that if I was having a conversation with you and you told me, listen, I've had this business 30 years and I'm thinking of retiring, but I've, I don't have any children. What should I do next? And we have a look at the financials and it looks interesting. That's a business for me. Yeah. Right. So it's something that's uncomplicated because I'm uncomplicated. Something that is, I think is going to be there, you know, next year as Warren Buffett says, you know, he,

He was a big investor in Gillette. People, men will shave. Every day. Always. It's true. Your Wrigley's chewing gum. They're going to chew gum for a long time to come. So I'm not looking for complicated or the next big thing. I'm actually the opposite. I'm looking for something that has longevity and I don't buy to flip. I buy forever. so you've owned all, mean, at least you've owned all these businesses forever.

Jon Stoddard (21:26.035)
Most of them and some of them until I've got the something happened, they've morphed into something else or somebody's come along and offered me something, but I've never going to and actively said I've got a great business. I'm going to, you know, it makes, I'm going to try and sell it for four or five or 10 times what it's worth. I'm looking for a hedge fund to invest in it, or I want to do an IPO. I'm not that I'm more like Warren Buffett as long as it's doing okay. And it's making money. I'm happy to own it forever.

Well, how do you guys, am I going to do? I mean, if once you sell the business, you're to go buy another one. Yeah. How are you setting that up? you know, getting paid back. Well, let's talk about how you buy them now. I mean, let's say take the first, those first three. Post epic. How are you buying those now? Are you using the same strategies that Roland taught? No, not really. What you've learned over your career. Yeah. You know, so.

Let's take a marketing company, right? So of the 150 plus marketing owners that I spoke to, and it's another thing I think is a bit, I think people think they're gonna talk to people who want to exit all the time. Of the 150 people I spoke to, only one person wanted to exit. And that was for digital marketing agencies.

So, you know, and of those 150 people, wanted to exit, one was looking for money, and the other 99 % of them were looking for ways to grow their business. They would be prepared to give you a piece of their company in exchange for growth. And that's what most people who will cold call or knock on doors for businesses are going to find. It's not going to be that everybody's, you know, putting their hand up to say, I want to leave.

Most business owners are not in that, know, they're not looking to leave when you call them. Unless there's, you know, I call it push and pull. So when you're kind of trying to find businesses, you'll find that people aren't looking to sell. But if you've got some kind of deal flow funnel where people are approaching you, that would be different, right? So then they would be looking for the reason why they're- You're perceived as the savior or the money.

Jon Stoddard (23:55.661)
So that's a different thing. But so of those companies, the digital marketing agency will take away the extremes of people who earn 40, $50,000 a year or 18, $20, $30 million a year. But the majority of digital marketing agencies revenue is a million dollars per year. And the seller discretionary earnings is $250,000 per year, 25%.

for a typical digital marketing agency. If they're a CEO company where they generate their own traffic, then the margin would be 45 or $450,000 per year. And on a business or a deal like that, then it's fairly easy. So I would buy that company myself without asking anybody else to invite them in. And hopefully with some of the strategies that I learned in Epic.

not put, for example, if a company was earning $250,000, $750,000, not put 750 upfront, be creative about how that was financed. And for deals that were over a certain amount, I have a small group, not a big group, where I know that, for example, this person would be happy to invest with me for 100,000 and that person might be 200,000.

And most of them are ex-partners. So people who have worked with me before, if I tell them there's something good, there's a small group of people who would trust that because I don't invest in a lot of things or buy a lot of things anymore. And I'm a very conservative person and I think I'm a good husband of money. So I keep mentioning Warren Buffett, but he would probably think I was stingy.

I don't think there's any wrong with that, man. The guys lived in the same house for 50 plus years and spent the total of, I've got four or five books on Warren Buffett and people wrote about him and he's only spent like a couple hundred thousand dollars after over 50 years just on supplies for his business. That's running a $300 billion empire. And I think like that. So if you look at some of the things that I have been involved with,

Jon Stoddard (26:18.337)
I've been remarkably frugal. I've never been a person who would walk in and say, I'm going to deck out this new office, I'm going to buy this office building. I've always been the type of person that, you know, can we get secondhand furniture? What's the minimum we can buy? How do we make this run well? I can be extravagant outside of business, but I think the measure for me, if I measure a businessman, it's how well he runs that business.

And if you can run your business in the smell of an oily rag and produce something phenomenal, that to me is admirable. If you're going to work in a Lamborghini and you're worried about payroll, I just don't understand that philosophy. Now these businesses that you bought since Epic, do the owners stay in place or do they, you got your, your team takes over? Both. So

Typically when you buy something that you're already in, and for me it would be marketing, then either you buy something as a platform and you bolt things onto it or you're absorbed. And every deal is different. So I might have a conversation with you and you say, well, that's interesting. I'd like to do it. And I can see the reasons why there's a lot of synergy between us. Then you would stay on. as long, and that's why I buy revenue. I don't buy.

the future, you I just buy revenue. So if I know that you're, can count on X, I'm happy to have that person run it forever. I'm not an egotistical person. I don't need to own things so I can say that I'm the owner. I'm looking for money at the end of this. Yeah. And how are you making your money back when you invest in the business? How are you structuring it where, you know, percentage of cashflow is moved to a different bank? How's that look?

Well, again, it depends. Everyone is different. Some of them are just, know, specifically for that. So let's say you buy a business at a million dollars and it's making, make it easy $300,000 distributable cash. Now, is that money more valuable in that business? You know, did you see something there that would, there's a reason why you can turn that 300 into 600 next year. And that's why you bought it. You moved that money in there or you could have bought it for

Jon Stoddard (28:41.805)
this is a good cash cow, I'm going to take that 300, move it over to this business where I can get a better return. So it's really money management, know, it's a, where is that cash most valuable? Where can you use We're going to get a better return on it. Yeah. Yeah. And are your businesses in an ecosystem when you buy, I had this conversation with Patch the last call we did and

You know, he does Richard Branson's Virgin where, you know, he's got an airline to take people to his islands. He's got a phone that people can buy. He's got this, a tourism business and he's got music and they're all buying in this ecosystem. I think maybe, you know, Rupat is, you know, is a much larger operator and he is a great strategic mind. And I, I think also

If you'd asked me that question 10 or 20 years ago, I probably think more like Patch or Richard Branston, where you can go and do all these things and travel here and put together things like that. You know, I really want to try and do it from my laptop now. You know, if I can't do it from Zoom, I'm not that interested. That's a good rule. It's just like, I do this business, buy this business from Zoom? That's it. So if I, you know, and all of the deals I've done

in the last year, I haven't seen them or met the people in person, you know, so there's, just been in zoom. But I, you know, I don't buy a thing with the intention of, I have a tourist company, and I'm going to add an airline to it. And then I'm going to add loyalty programs and all that I buy a thing, because it's making money now. And that's all I'm interested in. That's very basic.

Yeah, again, you said I buy revenue and it's just boring businesses. That's what Warren calls it too. Yeah. Yeah. So I don't think of I'm going to buy that and strategically I'm going to add to that from here. Naturally, the natural evolution is that if you're in whatever space it is, whether it's SaaS or marketing or you tend to attract people like or similar to that. But I will look at any business just because

Jon Stoddard (31:04.493)
I've had such a diverse background. I've got, you know, a kind of a good knowledge on a lot of different topics. I'm very good at trivial pursuit because I'm constantly reading about all this stuff. and like, you know, why did you take Epic? I, you know, I try and read a book a week that's related to business or finance. I, you know, attend a lot of virtual summits.

It's a passion. So I'm still interested in it. And if you were to say to me, you know, if we took away all of the money aspect of it, I'd probably still like to do this because I'm fascinated by how a machine works, you know, how that engine of a business works and how you can improve on it and how you can, you know, a lot of the time people don't know what they don't know. So when I'm looking at, for example, a marketing company and I can see that they're

The business is usually divided into two parts. It's like, how do you get business and how do you run business? So when you're deconstructing that business, if you first look at how do they get business, and I can see that they've got one stream of income or one stream of new business, their funnel, and I have experience of another 10 ways to do that. I'd be pretty confident that when I buy that business that's already profitable,

I can multiply that. Yeah. So where are you at with, you know, how your funnel looks for acquisitions? You said that they just kind of come to you now. Do you have an active funnel? mean, take a look at Roland's funnel Epic and he's on a course 11 now. So he's adding thousand people come to him and his podcast, million downloads. He's got a fantastic funnel and he takes the cream of the crop of

you know, businesses that he works with. Yeah, look, funnel as a Warren Buffett, right? So he's kind of in that Jay Abraham, Warren Buffett, he is at a different level. So as an investor, for example, you could say it would be egotistical and naive to say that I could buy shares and be as successful as Warren Buffett. I'd like to think so, but the reality is, is unlikely.

Jon Stoddard (33:29.173)
So if you're going to enter any industry, but let's say mergers and acquisitions, it would be naive to try and have as much deal flow as Roland, right? So, and then you want to be that person. I don't want to be Roland, you know, he's a very busy man. You know, I'd like to plod through my day. So in terms of deal flow, I was very active last year and I put together a team specifically to do cold outreach and bring businesses to me.

And that resulted, you so you put so much and I got so much back. And this year I'm sort of taking it easier and I don't look for any deals at all. It's things about once a week somebody will contact me with an idea or they want to talk or they've got something. And that's, I'm comfortable with that. I like to really plan things out. like to really, you know, if I'm going to work with you,

I want to know I have enough bandwidth to commit to you and have enough time to think. You know, I really like to, before I move that chess piece, be convinced that's the right move. And if I feel under pressure, I don't operate as well. So I don't, I won't take on a lot of things if it makes me so busy that I know I'm not going to do well. Yeah. This is the time factor is such a, the only commodity you can't buy.

Hmm. Yeah. And I'm very jealous of my own time because you know, I'd, you know, I have a very leisurely day. And before Epic, I used to joke with people that, you know, I would eat when I was hungry, I'd wake up when I felt like I'd had enough sleep, there was no real structure to my day. You know, people say I have this very structured day, I wasn't one of those people, just, if I want to go to the movies, then I'll go to the movies today, you know, so that

And when I made it really structured, I got a lot of results, but I wasn't enjoying it that much. You know, it was kind of, I felt that by, you know, zoom call 150, I hated it. You know, I was like, this can't be bought. And the thing that bothered me the most was the structure of the timetable. So like if I'm looking at a deal, for example, I will

Jon Stoddard (35:56.447)
you know, look at the deal and I'll go away and I'll think about it and I'll kind of, you know, stick pins in it all the way around and go for a walk. And but when you, when I have a zoom call every hour on the hour for five or six hours during the day, I always felt I was not quite in top of it all, you know, so that's why I kind of backed off from it. A because you know, the businesses that I have are

are reasonably okay. And I have enough deal flow trickling in to keep me content. Yeah. Are you doing any deals with other Epic members right now? No. No. The one I kind of fell over about two weeks ago that the owner backed out. But no, I'm not. I was very active. I still look in an Epic whenever I go into social media.

but I'm not on social media every day anymore. I find that very distracting too. when I work, want to, I'm very productive when I work. if I'm going to work for an hour, everything gets switched off. Phones, the door is locked. I have no noise. I like absolute focus. And that's kind of how I, when I do work, I'll say, well, I'm going to do four hours today.

I'll work for an hour, take a 10 minute break, work for another hour, take a 10 minute break and try and achieve. There's usually something I have to get done. It's freedom. It's the freedom that, yeah. I think we're all working towards that, right? Wealth and freedom. Yeah. Yeah. So that's a good point. And at what point, you got to ask yourself, what do you want to get from this? You know, would another zero in your bank account change my life? It wouldn't change my life.

I wouldn't do anything different really from what I'm doing at the moment. Maybe another four or five zeros. I started flying around an airplane. Everybody has a price. Yeah, that might do it. But I'm at a spot, John, in life where I'm very content and I want to be with and work with people who are real. I think I can, you know, I want to like the person I do business with. I did a deal with somebody who

Jon Stoddard (38:20.013)
recently who turned into a nightmare. And you know, that person became somebody else when in the first 30 days, I 10 X their business and they thought that their IQ went up when the business was 10 X and, that became a problem for me because I didn't enjoy the conversations anymore. You know, I was starting to just, when I'm talking to them, it wasn't fun. And I was so,

I want to only spend time with people that I enjoy. So if you have a business and I can make $10 million from it and you're a real asshole, I won't do it. Regardless of the amount of money. Do you sell that business with that guy, that Dutenex? We're in the process of untangling ourselves. And that is the only reason really.

know, we are diametrically opposed and our beliefs and what we want to achieve from something. So I, you know, I have a good track record. You know, I don't think I've had a business that's failed, but they might not be meteoric like everybody else's. but people who are in and around my universe have been in and around my universe for a very long time. There's nobody who I've been a partner with that wouldn't be my partner again.

most of them have become lifelong friends. And that also helps in the terms of mergers and acquisitions. If you need an opinion and you can go to your network and say to people, what do you think? Because mergers and acquisitions is a team sport. It can't be done I believe it is. Yeah, because you have to have all these different opinions. I could see points of the deal where we need to bring in or we could do or.

we could offer. Yeah. So I think the original question was about deal flow. It kind of happens organically for me now. For now. Yeah. This is a big question. And I fall for this as kind of a weakness is extricating myself from $5 tasks to focus on the big stuff where you put systems in place. mean, did you ever have that problem or did you?

Jon Stoddard (40:48.001)
We're always in, you know, I need to put a system in place. I need to put people to do this. You know, one of the things I did in one of my first careers was with casinos. And one of my first big deals was to own a casino. is that it taught me from an early stage that everything must be procedureized. So when you're in a casino and you're a dealer or a group here and the first thing you do is you show your hands to the camera that you've got nothing in them. You've got no

turn ups or there's no pockets. Every move that you make is in a very procedure eyes way. In the old days, you used to go count the money. There was a procedure for everything that you did, you put it into certain denominations that had to be the right way up, the paperclip had to go over a certain way, very procedure eyes. And I've taken that forward in every business that I've owned is how do you procedure eyes that now, in terms of when you start growing, you know,

the first question, and that's one of the interesting things, John, is that when you take over a business, you'll inevitably find that the owner is doing things he shouldn't be. and one of the things that I think, right, the owner can't see those because he's been doing it for so long and custom or that's the way it should be done or whatever. So I like to tell people, know, take a week off and then they're like, fuck, no, the business will fall apart. Find my way. Well, let's see. Let's see what.

what holds together and what falls apart. Take a week off. They probably hadn't had a week off in the last 10 years, but they'll find that their team usually will hold it together. But it allows me to see where the actual problems are and what's really necessary. you know, why, you got to ask yourself, why am I doing this task? What's the end goal? So in companies like Upwork,

you know, the outsourcing companies and that particular company, I think I've hired over 500 people now and probably outsource people over a thousand people for various tasks. And one of the things I'm quite proud of actually is when you hire people in Upwork, you'll see that the, get to give them a score, but they get to give you a score. So my score in Upwork, for example, is 4.8 over say 500 reviews or some people who have been hired.

Jon Stoddard (43:10.549)
So I get a good score is because everybody knows exactly what's expected and how they're going to be measured and how they're going to be monitored. So, and that's another thing that I think I can add value to in a business is how do you, you know, how do you procedure-ize, put processes and procedures in place where it can be scaled? Because you can't scale if you don't do that. You can't have a franchise company and open a hundred franchises in a year.

if the engine is wobbly, because the faster that you go, the more wobbly it's going to get. So you've got to get that nailed down. looking at, know, so your first as a business owner or as an &A person or as somebody who's interested in business, your biggest leverage point is thought, right? Your biggest leverage point is thought. So if you have an idea here,

and you haven't just executed it, you get the result six months later. But if this part overhears wrong, you get a bad result. So leverage is your highest form. I thought it's your highest form of leverage. So I like the business owners to be thinking about where are we going and how do we get there? And I actually have a course that I put together for business owners called VSPOE, which is you got to have vision about where you want to go.

You've got to have a strategy to get there. You've got to have the right people to get there. And or is one of the most important things is one decision. And that decision should be, will it get me to my goal faster? And you can apply that to anything that you ask yourself. So should I go to the restaurant tonight and have a beer? it get me to my vision faster? No. So you don't do it.

So you could ask that one question about every single thing. And there's a reason why that question is there, which we probably don't have time to go into. And then execution, right? So how do you get that execute to get to that point? So that is you have operating systems like the entrepreneurial operating systems or measure what matters or different approaches that you frameworks that you can apply to businesses. My own personal one is the one that I invented because I think there are stages, smaller businesses don't need

Jon Stoddard (45:34.163)
it, you know, the entrepreneurial operating system, suits businesses that may be 50 people plus where you start to have that division of tasks. and one of the ways to do that, if you're asking for yourself, John, is to keep a time audit for a week. It's just write down everything you do during that day and see what really you need to be doing. If it's done on a computer, you probably don't need to be doing it. Right. So

That's number one. And there was a time a few years back where I went through, I had this notion that I was, I wanted total, they call it utilization of staff. So in big companies, they have a number, let's say you've got a thousand people and they want to know how productive they are over that eight hours, the utilization of staff. So they'll find them not very productive. So if you have a marketing company, there's virtually no marketing companies that have all

of the original people sitting in an office is all outsourced because you don't get utilization of staff. If you have a full-time Facebook person, you might not have enough work for them for the whole week. So they tend to be all contracted out. So I installed software to see what people were doing. And if you work for Upwork, they record your computer screen.

for any hour that you charge. So if you're an upwork outsource person and you go for lunch, you don't get paid. You go to the bathroom, you don't get paid. So it's 100 % optimization of labor there. There's a lot of arguments for and against it, but the reality is that's a lot more productive than if you're in an office with 10 people.

and you go in and you have a coffee and you find out how Auntie Sadie's doing or the latest drama or what traffic problems you had, you're lucky if you get a few hours work done during the day. you know, even before COVID, that model was kind of dying. And social media is just a waste of time, I swear to you. Yeah. I found that, and I don't monitor the staff anymore, but that exercise that we did, something like 60 % of the time was

Jon Stoddard (47:55.391)
on, was on, you're gonna like this, John. It was at that day, it was a YouTube, Facebook, there was no TikTok and porn. That's what people are looking at when they're working for you. So, and you're working in operations, I owned a call center at one time, made a hundred seat call center. And it's a very measured environment. You have things called predictive dialers and what they do is,

They monitor how long the average person takes to make a call. And then it dials somebody before you're finished the call because your average time is three minutes. And so you don't have even a second before your next call. It's like bang, bang, bang, bang. So environments like that where there's a lot of metrics involved, you get better utilization of the people who are working for you. And it comes back to that again, John, making your engine work well. You don't need to be.

that anal about all of the information, but you don't want a lumpy engine. You don't want to be away from your business and worry that somebody's doing what they're not doing their job. There should be measurements and processes in place where you can look at a dashboard and say on your iPhone, yep, that's going okay. Do your key people own equity in the business? No. Businesses? None of them do. And again,

I don't believe that you should have partners. So in the old days, or even now I still see it, you get a guy with an idea who doesn't know how to design a website, who brings in a web designer as a partner because he can design a website. And that's a commodity. Today it's a commodity. It's a commodity. Yeah. So anything that's a commodity is the wrong reason to have somebody as a partner. It's either insecurity or you don't know what you're doing.

There are times where I've had partners where it made sense, either financially, I needed the money, or they had some unique expertise where it made sense, or on occasion, it's because a friend and I just want to do something for fun, we'll be partners. But if there's no reason to have partners, then I don't believe you should have partners. If you can hire the person. Yeah, I get it.

Jon Stoddard (50:19.789)
Mark, we're almost at the end of the hour and I want to thank you for joining me today. This fantastic wisdom from Mark McCray from Scotland. Yeah, from Scotland, only Scotland, John. And it's been a pleasure. Thank you for having me. Thank you so much. My relatives are from Scotland. The Macalisters. Yeah, there you go. And John, if anybody wants to reach me, they can get me at mark mccray. Just my name.com.

I'll tell you what, what's right now it's going to happen because I do these interviews and I did it for with Marty and I did a patch and people reach out to him for guidance and advice, et cetera, coaching. Yeah. Great. Yeah. So if anybody wants to have a chat, you know, like I say, I'm more interested in, and you know, if there's some, something that, would be interesting for me and that person to work together, they can reach me at either mark mccrea.com.

or my email, is mark at markmccrae.com. And this call was, I mean, a really clear indication of how to work with Mark. mean, boring businesses, buying revenue, Warren Buffett type style and putting systems in place. So can I add some? Yes, that's exactly right, John. So you've done a few of these interviews right now. Yeah. Yeah. Of.

What's the three most important things that you've picked up or were epiphanies for you or the light bulb went on in those conversations? Well, the the systems in place and hiring the people and using Upwork, know, that's definitely affirmation of the style you do. love what Warren Buffett does and his ability to make a deal with a handshake. You know, he'll call somebody, send them a letter. like the business. They send them their documents.

and he likes it and makes an offer and it's a handshake deal. At some point, know, like how do you become somebody that can know the other person on the other side of the table or on the other side of the table and say, this is a good person, this is an ethical person and I wanna do a deal with them. I think that you get a sense of that as well from when you talk to somebody often enough or frequently, numbers don't lie, right? So.

Jon Stoddard (52:38.541)
And in the trading game, you know, in finance game, used to say you can't be half pregnant. So if you've got the numbers and you can show them, it's hard to avoid that. But I'm very much like that as well. why I say I'm more interested in the person. I don't care if it's the right person, whether they're an employee or a potential partner or whatever it is. And you can see that there is genuine intent to try and make something happen.

then I'll overlook a lot of stuff. You don't have to have an MBA or a degree or anything. I'm not looking for that. I'm looking for somebody who is trying to get somewhere and has more energy than me. Business is energy. So as I get older, I have less energy. I'm looking for people who want to do all the night shifts and do the crazy hours and go and do all the stuff I don't want to do. I'll prospect for you. But that's what's important.

So if that thing about procedures was one of the biggest things that you learned, what was the thing that you learned that you shouldn't do?

Jon Stoddard (53:52.491)
You know, it's back to this, it's the procedures. I mean, I shouldn't be doing any of this stuff and I need to ask questions before like, can I outsource that to Upwork? I really should be doing that and putting that systems in place. I think it's going to change my business and who I am if I have more confidence in that. Then I think you should look at, you know, measure what matters. yeah, I got it. And I use it now. I read it by

a couple of months ago and I build my business around that now. Like, and I just work on those, the objectives and the key results. Yes. Then you're going to get there, right? So the first thing is acknowledging that, you know, like I said, you don't know what you don't know, but once you say, okay, there's, I've got something missing and you start that journey to finding the missing piece. That's the first indication that, you know, you're going to get there.

because you can't stop the journey if you don't know there's something missing. That's right. If you don't see it. Yeah. So the realization that there is something missing is you've done fantastic just with that part, John. And have you enjoyed your epic experience? I love it. I love it. mean, it's really given me a eye opening about, I mean, it's literally if I'm looking at a puzzle and I didn't see what the picture was, it now gives me a picture.

And I just take the puzzle pieces and put them in their place. great. Yeah. John, thank you so much. And hopefully we can do this again.