Tom Raised $100 MILLION for Ecommerce Acquisitions and Here's How!

 Summary

In this conversation, Jon Stoddard interviews Tom Shipley, an accomplished entrepreneur and investor, discussing his journey from military service to building successful e-commerce brands. Tom shares insights on the importance of tenacity, grit, and calculated risk-taking in entrepreneurship, as well as the lessons learned from his military background. He elaborates on his experiences in building and scaling brands, the evolution of his current venture, Foundry, and the significance of recruiting and fostering a strong team culture. The discussion also touches on navigating partnerships and private equity in the business landscape. In this conversation, Jon Stoddard shares his experiences navigating investment decisions, overcoming significant business challenges, and learning from failures. He discusses the importance of strategic agency integration and capital efficiency in acquisitions, as well as the need for cultural integration in mergers and acquisitions. Stoddard emphasizes visionary thinking for growth and the importance of prioritizing family and making a positive impact in life.

Takeaways

No deal is better than a bad deal.
Tenacity and grit are essential for success.
Calculated risks can lead to greater rewards.
Building a strong team is crucial for any business.
Diversity of thought enhances organizational performance.
Trust within a team is fundamental for high performance.
A healthy culture can weather challenges and conflicts.
Private equity partnerships should be collaborative, not micromanaging.
Speed is a competitive advantage in business.
Continuous learning and skill development are vital for entrepreneurs. The right investor can make a significant difference.
Business challenges require quick and effective planning.
It's essential to balance risk and reward in business.
Learning from past failures is crucial for growth.
Cultural fit is vital in agency integrations.
Visionary thinking attracts the right talent and opportunities.
Capital efficiency is key in acquisitions.
Asking the right questions leads to better solutions.
Prioritizing family and impact is essential in life.
Business is a game that should be taken seriously but balanced with personal values.

 Watch the Interview Here:

Transcript:

Thanks for joining us on the top &A entrepreneurs. I want to first talk to you about my first sponsor. It's DueDilio. You can hire due diligence professionals on demand. It's an &A due diligence marketplace and service providers acquisition entrepreneurs. It's free to use, free to sign up. You only pay when you engage with the service provider. I like to say no deal is better than a bad deal.

So you could take a look at the prices. It's for offline, online businesses. I'll tell you what, if you're borrowing money, you're gonna require, they are gonna require due diligence. So let's get into my guest today is Tom Shipley. He's an investor, strategic advisor, co-founder of Foundry and e-commerce aggregator. He's also a founder of Atlantic Coast Brands, which did in the past are still doing 1 billion in revenue.

Is it 1 billion or 2 billion in revenue? Okay. So over the, we've launched a large number of brands over the years and all the brands that we created from scratch and the revenue that we generated was over $2 billion. Wow. That's amazing. Hey, so how did you get started? I'm going to want to go back all the way back with this Atlantic coast brands. How did you get started with e-commerce brands? And I know that we're going to get it to the later this,

the foundry and raising capital. But let's start with the Atlantic Coast brands and how that got started. absolutely. And I'll just take a quick step back is while I'm I was a kid from Cleveland, Ohio and Orlando, Florida. And what taught me a lot of what I needed to know about entrepreneurship is I was at Florida State University and decided to make a major shift to my life and start having impact. I moved to Israel at the age of 20. I served in the Israeli Special Forces.

Jon Stoddard (01:56.288)
And I'm going to say that significant amount of what I know about leadership and how to build things and tenacity and what you really need to be an entrepreneur, I learned in special forces. Man, it's I've already talked to somebody from that Israeli special forces. Is it three years for men, two years for women or is that still? Yeah. So it was. So that's the foundation. And what shifted is for special forces now. Again, not when I was there was three years for men.

But what shifted is, is that now they actually sign ask you to sign an extra two years because they invest at least a million dollars in your training. So they want a little bit higher of an ROI on that. Yeah. So you are from a tiny, small country or you spent time there that could be attacked at any second, any moment. How does it feel to be the responsibility on your shoulders on that part that you have to serve duty? I mean, here it's elective to serve in the Marines, Air Force or Army.

Well, it was interesting because I felt even though I was born in United States, I'm Jewish, so I felt that obligation and responsibilities is why I moved to Israel and did that. Also, I learned the power of the impossible. If you look at most successful businesses and how many businesses actually gets over $10 million, let alone $100 million a year and survives more than five years, we're talking about

a small percent of a small percent of a small percent. Yeah. Same thing as special forces in the Israeli army. It's 170,000 soldiers in the army. There's 70,000 combat soldiers. There's 10,000 that tried to get into my unit specifically. They've put a bunch of us through tests, including a day test. They pick a thousand of us to go through a week of hell and they try to break you physically, mentally. They try to any measure, everything, including your, not only your tenacity, but also your, your integrity.

And out of that, they picked 25 of us for an 18 month course. at the end of 18 months, there were 13 of us. So, but with that same focus and clarity that I had of I will be, and I saw, envisioned myself in the unit and nothing was going to stop me. You need the same level of clarity you do no matter what you do as an entrepreneur, because it's not easy. It's soul crushing. There's so many things that will happen.

Jon Stoddard (04:20.465)
And occasionally you might get a streak of luck and the wins behind you, but I guarantee you it's never as good as you think it is. And that the worst of times is never as bad as you think it is. And again, it's, it's those valuable lessons about always putting one foot in the other. And there's always a finish line. There's always an end to everything except for this incredible game of life, which is an infinite game. Yeah. I got to tell you this. have a buddy that was a Navy seal and the training and the three.

duties he did over Afghanistan. Then he went on the shark day and he goes, John, that was a piece of cake. Doing business is a piece of cake. What I did for the last seven years. Would you share the same story on that? Yeah. Yeah. Cause I remember that I came back out of Israel and I had a hundred dollars in my pocket and I saw a product in Israel and it wasn't the United States. And I went, my God, I, you know what I have to lose, right? You know, it's like, okay, you were talking about risk. You're taking fire. That's risk business. You know, it's like, what's

What's the worst that can happen? Right? So therefore you take a different level of risk and your level of tenacity and hard work for me in the army, well, you always had Friday and Thursday night and Friday where it was combined. There was no sleep on Thursday night. And so when I started my first business, that's exactly what I did is I said, well, I sleep in the army. Now that I'm building my business, why would I ever sleep on Thursday night? Just make it one long day. again, I had different levels of expectations back there and then my mode of working.

but it's the same grit and tenacity that you you through it. And it's just a great game, the game of business. Yeah. How would you translate that to somebody that doesn't take the military route? I mean, I was in the Air Force, but we didn't go through that kind of training or in live fire like you were. I got a couple of buddies in the Marines that did. But having those life changing events, how would you say to somebody that doesn't go through that?

how to look at life and go, look, it's not as bad as you think.

Jon Stoddard (06:22.189)
or just take more risk? What's the worst that can happen? Yeah. So let me, that's a very good point. There's a couple of big points there is, can't underestimate a couple of things. First of all, tenacity and grit is that I will bet on people with tenacity and grit more than anything else, because there's one thing working hard for a short period of time or going for something with a big idea, but everything gets difficult. And the question, the thing is, is that I look for entrepreneurs that I back.

with that grit and the tenacity and the heart to keep on going even when there's tough times. And also the other thing is that I also noticed that the guys that try to get into my unit with the biggest ego and failed over and over again. There's a difference between confidence and having ego. And I can't share you how many businesses I've seen over the last couple of decades that have failed because of ego.

So tenacity is a very important piece and keeping a level head. And the other thing is risk, is understand that in life, I don't know, who wants to get to the end of their life and say, wow, I was really good. I didn't take any risks my whole life on anything. I mean, I don't have any scratches, don't have any scars, don't have any sore bones, don't have any great relationships, don't have any meaningful stories, don't have any epic adventures.

but man, I got safely to the finish line and here I'm dying. Who wants a life like that? So we take, I don't say take stupid risks because that's just stupid. Okay. But take calculated risk and go big. And sometimes by adding a zero onto your idea, create the foundation, but by adding a zero, sometimes it is easier to go for a big concept than playing small. And I'm to say playing small is the most soul crushing thing. If you think of yourself a decade from now that you can do in your life.

So that's why I say to people that want to go for it is take the risk, go for it. What's the worst that can happen? I'll share a quick story if it's okay. Something that, so Atlantic Coast brands, again, was, let me answer your question. After the army, I started my first business. It was a product business. Eventually I saw that my weaknesses in business were in, I'm a strategic guy. I'm a marketing guy. I'm a merchandising guy. I did not understand this whole thing of operations, analytics, accounting, computer systems, how it all works together.

Jon Stoddard (08:44.089)
and the operations. I have this passion about my weaknesses that I just don't like them. So I ended up getting a master's degree, bachelor and master's in industrial engineering. But you think to, again, you were in direct consumer marketing. So you understand it's about processes. It's about large volume of process systems and analytics is the core of it. There's an art and science to every business. So industrial engineering is it gave me that great foundation.

that when I got into direct to consumer marketing and omni-channel marketing, it was the perfect foundation that allowed me to put together blueprints for business and execute on it that very few people could. So as it was getting that skill set, so that was my degrees. I ended up launching my first omni-channel business in 1999 and early days of email, if you remember.

early days of Google AdWords. was such a great wild ride, but it was Omni Channel also. also did, we ended up having 14 pages in the SkyMall magazine. We did full page ads, advertising. We mailed millions of catalogs out every month, driving people to our website. So it was an incredible time. And that was my first brand, the T-Shippley catalog. We put to some acquisitions, bought a division of Boise Cascade. remember,

My first real business is, here I was growing this at the same time, buying businesses that were bigger than I was a division of boys at Cascade. What did I have to lose? If I brought in good people around me that knew how to execute and good advisors, you go for it for some, because basically I knew what the G GNA leverage that I can get. So acquired a division of boys at Cascade and what an incredible experience and learning. So again, it's how I grew my first business is also when I

sold those businesses off in early 2001, stayed around for a year for the transition. Spent a few years consulting again. And then I had this idea is when I take my blueprint and exactly what I did in the product space in the office and business product space and apply that to beauty industry, which was exploding in 2005 and show that we can build iconic beauty brands instead of the $200 million launch budget, we can actually do this through direct consumer marketing.

Jon Stoddard (11:03.085)
And then of course there's a B2B aspect. And once we create this brand with this great pull through, we'll put in a retail and the product will fly off the shelves. And that's exactly what happened. We had two, you know, two special forces guys, but my partner was a a former ranger. So we were two guys starting this business outside Brisbane, Virginia. And with this dream that we're going to create this a hundred million dollar skincare brand. And the first year we did $300,000. And then what we did is,

We found a business that was doing million of business and a million and a half of profit, but they had in New Jersey, they had an infrastructure systems processes. And so we gave the two young owners a deal that did, they didn't think they can refuse. We bought their business using mezzanine financing to do that. And they bet we were able to get the financing because they were cashflow positive, not based off the startup that we just did. And what that did is you put our business onto there and that's how.

we took that business and they had 15 million in revenue, we had 300,000. The next year we did 35 million, the next year we did 125 million. Wow, yeah, that's a leapfrog. That's amazing. And back then you didn't have SaaS platforms to plug into, so we were building things along the way on the fly, but it was rapid growth, but taking playbooks and just playing bigger. Yeah. So again, it was...

So that was a hydroxone was our first brand and that over the life of that we did a billion dollars of revenue. Next man was Karen A for women's hair regrowth. We were category king. created this concept about how do we take this idea, which was a men's issue and some women's were using men's product and create a woman's solution to this and say we're only about women. One of every three women suffer from hair loss. And so right now Karen A is still the category king and you find it as for CVS, all top.

10 % of the business, 15 % of the business is Amazon and the rest of it is Omni-channel online. And yeah, there still is a small segment of infomercial that the business generates, but I sold that business off last June. did you? Yeah. Who did you sell it to? kind of equity group? Yeah. Private equity group. Yeah. And with all the brands and of course, along the way, also have other smaller brands like Christie Brinkley Beauty.

Jon Stoddard (13:17.713)
which is a partnership with Christie Brinkley, but it was just an incredible ride. love the product business. And then the idea came up during COVID when suddenly I didn't have my three plus hours of commuting back and forth and going to the office and had all this surplus time. And so while we knew we'd be selling our business, Atlantic Coast Brands, the question is, what do I want to be spending the next?

few years of my life doing, what is that billion dollar idea? What is something that can be category defining and is the winds of the market are at us? So I started looking at acquisitions. love acquisitions. I started business from scratch, a little bit tougher. I love acquisitions. love, and so I looked at the aggregation play first with Econ. And then I started through a buddy of mine who has an Amazon agency looking at the Amazon spaces.

And since Amazon does so much of the heavy lifting, we started looking at building an aggregator to buy Amazon businesses. And then that's when we discovered the first business that really got significant scale in funding was Thrasio. This is April of 2000. I saw that Thrasio closed its first big funding round of equity. I said the world just, and they had a $750 million valuation back then, now they're at 10 billion. I said the world has just changed that we're

in the past, getting institutional money behind Amazon brands was very difficult. I said the world has just changed. do. are the Netflix or what became for search engine became capital is available. I said they broke the glass ceiling. So therefore made took this side hustle of a business. Created a big vision for we will be the future in the way we'll be the leading digital, omnidigital CPG company.

where Procter & Gamble, Church & Dwight are stuck with legacy. They're basically number one clients of the retailers and bricks and mortars. They don't have to be slave to that. It's all gonna be about the consumer and direct consumer and we'll sell to those other channels. But this is the re-imagining, re-envisioning the way brands are built and scaled. So that was the idea behind Foundry. Met with seven private equity groups, got six term sheets between 50 to $150 million.

Jon Stoddard (15:40.471)
put two of my favorite together and that's how we raised the money for this. Now, along the way, when I started with what is that next big thing, you take momentum step. You don't really start with the big idea in mind, you take momentum step. And one of the educational processes I did along the way, which you'll appreciate was Roland's Epic Course. Epic Challenge. Yeah. Why did you think that you're going to hey man, I need to get better at this acquisition. I'll take Roland's course.

Did you already know Roland or did, how did that relationship? I knew Roland from War Room. Yeah. War Room for a couple of years. you're okay. Everyone should be constantly improving your skillsets. Every day. And fine tuning your craft and expanding your craft and expand your knowledge. Because the game is about, is about your knowledge and your network. And that's really what the whole game's about. So whenever I can sharpen the sword and learn new skills,

And Roland is brilliant in this tool sets and structures and frameworks that he presents are brilliant. And not only that is within Epic, you have this network of great people that are just driven, hungry, different people at different levels. So whether it's someone at low level who is an operator that you can access for later, or whether it is people like Peter Lang. You know, Peter? I know Peter. I've talked to him a couple of times. Yeah.

Okay, so, Pierre Lang, who I saw his one of the presentation in one of the courses and I reached out to Peter and now Peter and I have just are launching as we speak, what I believe is the next my next billion dollar business and a new aggregator platform. So, but just fast forward with Foundry. So we got that funded great partners hired a C full C suite hired a CEO dinner first few acquisitions.

And now that I brought in again, a seasoned CEO that I believe has the ability to create an exit IPO event in three to four years, my job role is done there. I'm an entrepreneurial investor now and not an operator. So I stepped out of that role and started, took the last 90 days to look at the marketplace, to identify what the next big opportunity or opportunities that I'll be working on.

Jon Stoddard (18:01.961)
And so one of the biggest things I'm spending most of my time on is this platform that I'm building out with Peter. Interesting. I got a question about your exit and the Army Special Forces. Did he stay on with the company that you sold or did come with you on the, or did he off the merry-go-round? So he actually stayed on with the company and he works with the private, for the private equity from that.

How difficult was it to find all the people to fill in the roles for this new venture? With every business, number one thing you should be spending, your number one job is recruiting. Your number two job is recruiting and developing the culture. Framework, structure, everything, basically is getting the right people in the right roles is the biggest domino you can do with any business. So I spent...

half my time just recruiting, recruiting through networks, using professional recruiters, doing everything I can to find the best talent that to bring in the organization. Yeah, I think it's a mixture of Dean Smith from North Carolina and Marcus Limonis. It's recruiting, recruiting, recruiting people, process products. There you go. That's it. That's That's it. And you and the one thing we, you know, we spent a lot of time with and it's interesting. Remember, I'm an engineering background, structure, processes and numbers.

I spend a disproportionate amount of my time engineering culture into every one of my organization. It has to be deliberate because the key thing that is evolving and so much important for any business to compete is speed. The only way you can compete in speed is through a great culture and a functional culture. So what are you looking for an individual to create this culture or that

mirrors yours. Now, is there everybody comes from a different background? mean, it's just like, if you could say, want to hire all special forces guy, I know a guy out of Detroit, Michigan, that's all he does is hire, you know, for his companies, he buys, he just hires these special forces people. I'm very big in diversity. Again, I like diversity of thought, diversity of background, diversity of ethnicities, diversity of religion. So I again, there's this thing about a fabric company.

Jon Stoddard (20:24.765)
diversity, but there is more of, it is absolutely true that I only fill organization with high performers. A high performer could be someone who works hard and is steady. They're never going to be the CEO, but they're a high performer, but they're people that you can rely on and get the stuff done and don't take excuses. And so I'm going to say high performance in every level and people who get it. Those are my core criteria. And then

from a culture perspective is they have to work great in teams and with people. I've had superstars that are incredible, that are just so toxic. And I fired them and then increased the performance of the overall organization. And so again, there's things that I look for that I look for and there's certain things that I hire against. Big Egos, no room for in any of my organizations. Yeah. I mean, there's a, I don't know if you know Simon Semenik, he does-

Yeah, so he's got this great presentation. It's seen millions of times on YouTube. said, anybody that joins the SEALs, the biggest ego leaves the earliest or gets the teams usually in trouble. the trust and performance. It's the performance capacity and trust. I will take someone who, again, trust is everything and there's this, it's interesting. And this level of trust where not only you trust in the capability,

and you trust in someone's heart, but also you sincerely believe that they believe they trust in your capability and they trust in your heart, that you only expect the right for them. you and me actually looking at someone saying, I sincerely look at them as a 10 that they only want the best for me. And if you can have an organization where you're surrounded with people that you trust and you believe trust you.

at the highest level, you can perform extraordinary things. This is how in Special Forces, you get to that level of performance because you have that level of trust that's there and you can do extraordinary things. Same thing as organizations. The other thing is that it's never there permanently. There will always be changes and shifts that will restructure that. And John, I'm sure you've heard this before is there's four different levels that every time you put together a couple, a team,

Jon Stoddard (22:44.237)
company. Same thing as you form this group together. You go through everything's fine. And then always 100 % of the time, there'll be some level of storm storming, little things that will conflict if I start, you know, dating my wife really loved her, suddenly, she starts saying over and now suddenly she's squeezing the toothpaste from the bottom from the top and it's driving me crazy. Little things get on your nerves again, it creates whatever level of storming there is. If you're healthy, you can get through that next level and get to a

norming where everything is good, we work well together. And if you're very fortunate, you get to a high performance where the winds at your back and you do extraordinary things. Then you hire a new person onto your team and you go right back to storming. But if you're healthy, you get through this. So you want to create a culture where you can get through the storming, get to norming and performing. You all have focus, you all know the outcome. You're rowing in the same direction. You aren't doing everything you can because there's so many projects to do.

You're constantly reprioritizing, but staying clear on the focus, what the mission is and asking the right questions and teaching organization to ask the right questions. Yeah. I've taken a little, I'd say stoicism training from Tim Ferriss, you know, it's not as bad as it seems. Like the, if they're scrolling from the bottom of the toothpaste or top of the tooth, say, man, life's not over. Don't let that bug you. Focus on the right things. That's it. That's it. That's it. Perspective on everything. Yeah. So you

raised a hundred million debt-free fund. think I'm just reading your press release here, Lightbay Capital and Monogram Capital Partners. How did you decide on these guys to work with them versus the other seven that? Yeah. I pitched seven, we got six term sheets. one was, the sixth one, the seventh one was this two early stage. They want to come into the next series. I had a look at,

The way they operate, the way they interact, are they more collaborative? Do they want to micromanage? What is the culture? What is the feedback from former CEOs, good and bad, that work with them? How well do they understand space? Capital is one thing is how much value added they can bring. Typically, if you're in private equity and you have a large shop where you have access to hundreds of millions of funds, you know these are smart people to be in with, okay?

Jon Stoddard (25:09.045)
because typically private equity only hires and only the best rise up within it. But the question is, how do they manage and how do they communicate? And how well do they understand the domain? So how much value can they bring in doing? Because what you're trying to do, especially trying to become a category king and trying to define something new, is there's complexity in everything. So if you could partner to think through problems, that's the ideal. So your board meetings aren't about, let me show my numbers and defend.

Now I'll share with you an example without naming names. A friend of mine has a, his organization was, I guess had a public event for 3.5 billion and they went private again owned by private equity firm. Every time they missed their quarterly numbers, unannounced the person who's in charge of the private equity fund would get on a plane, fly down to their office, assemble the C-level team, yell at them for two hours.

and then he'd listen to what they're doing. And whenever they missed their numbers, even by a bit, even if they were extremely profitable, that's what, again, I don't operate well with that type of sharp elbows. I look for partners that are great partners. If I could, give one other example. Yeah, yeah, absolutely. Remember I shared with you when we started Atlantico's brand, we bought a company out of New Jersey. We've hired a great broker to find a...

the right mezz level investor to come and he brought five to the table and we gave, and then Evely, we got two quick term sheets from them. We had one with better terms, but the young guy, was a younger private, a younger mezzanine level firm. They were extremely enthusiastic and they wanted to be every part of our business. The other one, the terms weren't quite as good, but the gentleman from there had been around for a couple of decades.

southerner, they're out of Tennessee, one of the nicest guys I've ever met and very smart. And we just liked him and he's with seasoned. And so we decided to go with them, even though it wasn't quite as good of a deal. went with them anyways. We bought it when we got the money to do an acquisition. We did the acquisition and eight months after we, started the business, we had one company that was doing our order processing.

Jon Stoddard (27:27.405)
as well as our customer service and had the 800 numbers, everything we get turnkey. They went chapter seven, 11, chapter seven, liquidation, chains on the doors on a Friday. We were known like this. No one was answering our phone calls. No one can get through, get returns, processing anything done. get the orders out. It didn't have access to our customer files, nothing. This was in early phase. We put together a quick plan. We called up our our mezzanine lender. We said, John.

This happened to us. went, you got a plan? We said, yes, we do. said, when will you know if it's working? We said, give us three weeks. He said, me then. I immediately how he respond with stoicism said, you know what? These guys can fix it. I'm not going to overreact and get angry. It's business. Like a monopoly game. I start over and like, if you got a plan, let's see what it here, what it sounds like.

That's, and that's why I gave an example of is how do you pick? I look for people that are good or what are, what's the world going to be like with them when things go bad in, in every business, John, we have experienced to know that I don't care what something will go bad. And for those people who want to understand about risk in Q4 of 2018,

The wind was there back with our business. Things were going well. We were doing a not peak revenue, but we were doing extremely profitable at, I think we were at 85 million in revenue at that period of time. We had five offers to buy the business between 55 million and $85 million. So not a bad day for any of us. And our...

So supplier for one of our items that was a majority of our revenue went out of business, basically chapter seven again, and it was the only FDA approved manufacturer of this product in the world. And so with that and our business was auto ship revenue, that's most of it. So it was extremely challenging. We tried to save the deals. We did a few things in order to try to save the deals. Those didn't work. And suddenly we, because of everything coming together, by the time we got to

Jon Stoddard (29:44.301)
March of 2019, we went from making close to a million dollars a month to actually not even making enough before overhead of $600,000. So we were actually hemorrhaging cash and our lender called up and said they're calling our lines. there was basically we were done. But you know, we're just we were never done. I don't care what people say we're never done.

So I was out at Russell Brunson's Inner Circle meeting on Amboise, Idaho, and I went for a run with my wife. And this is just about attitude and philosophy. But I understand that I have, you know, if you look at our ecosystem, I have thousands of people that rely on me for their income, for their livelihood. So much, and you know, and I was running with Pam and I said, things are dark right now. She's, yeah, I said, can we go there? She said, yeah, let's go there. And I said, okay. I said,

What's she said? What's going to happen if you can't turn the company around? I said, then we're going to lose everything that I personally guaranteed. She said, and then what I said, well, we're going to lose the house and the car. She said, and then what I said, we're going to owe the IRS a lot of money still, even when that happens. If that happens, there's going be a big tax consummate. She said, and then what she said, it will be in five years. I said, back where we are right now. She said, so what are you worried about?

She sounds amazing. She sounds amazing. Yeah. have health in my girls. As long as I have my girls, said, so what? We start in an apartment. We start from the very beginning. So what? You know, it's life. Yeah. So again, it's looking at risk. What real risk is if it's come to them with the health of my daughters and my wife, that's scary shit. Yeah. And so I'm going to say, I have those, you know, I have, can't say that I didn't have those weak at the knee moments when that reality faced me.

but it doesn't matter. It's basically balance risk. And the end of that story obviously is massive imperfect action, clear plan, team that got on board. I got rid of some of the dead wood in the company that wouldn't take this new journey with me. And with that, it was among the best time I've ever had in the business with the team turning the company around, getting back to where we were. It was a blast. was a lot of hard work. But again, and it...

Jon Stoddard (32:03.053)
positioned us for the sale of the business. Yeah. Any, any like this, would you say that's your favorite failure and, or, and then rebound and anything you learned from that? Like, I'm not going to sign personal guarantees ever again, kind of deal. In that situation, there's a lot of issues that I had there as far as, Cause we always go to always go, well, I'm not going to do that again. Right. And you can't be on a planet long enough to make all the mistakes. I'm going to say that.

We, the two things we should have done is there was one of the private equity groups who did not give us the best deal, but it was the clearest path to getting done. And we were a little bit greedy going for the best deal versus the surest thing. And a lot of money is a lot of money. And that lesson led to this great relationship, kind of learning from this Tennessee guy, the way he responded possibly. I'm going to, yes, those are, well, we didn't follow this lesson within 2018. So that's one lesson. The other thing is, is

We tried to save the business with one big massive swing that had risks to it. And it didn't work in a blow up interface. And I'm to say is that be very, very careful with those, those, those hung run swings. built my businesses by doubles and triples. And that's the way I like to do it. And with good fundamentals. And when you get away from your fundamentals, it's not, you start swinging for the fences. You're going to strike out. just happens. You just take the risk. And so I know better. we need, sometimes you know better, you do it anyway. So.

Those are big. And, then the other side coming out of it, it's, it's a clear plan, getting your team on board and massive imperfect action. Understanding this, that half things you're trying shouldn't work anyways. You don't bet the farm on them, but you keep on massive imperfect action, focus on the wins, go and build off the wins. And that's what we did and just grind it out. And you take things one, you you built a solution with bite size piece at a time. looks like this mountain that cannot be climbed.

But everything, you break it down to bite-sized pieces, you can. So anyway, so amazing journeys. And I'm really excited we're at now is, and again, I'm fortunate that I was able, moving here to Austin and developing this relationship with Peter. don't think I mentioned is what we lived in New Jersey. part of the great COVID migration South. We to Austin last year, October.

Jon Stoddard (34:23.703)
So being able to build relationship with people like as smart as to Peter, but actually, as you know, Peter's developed this programmatic &A process and that's way he's been able to roll out these agencies. But then what I found easier sometimes is by adding zeros onto idea, it becomes easier. So the question is, how not to grow by one agency at a time by rolling them up, but how can we do something on a really big level? And the idea here is that

The reason why agencies also typically bigger ones focus on bigger integrations because every agency is difficult unless you figure out some of the keys to integrate smaller agencies with the personality of the owner led decisions. And so we have, we've had that sound. So the idea that we're doing right now is we're basically integrating 10 agencies into groups. And every 90 days we're going to be forming a group.

And right now, Peter's process, he has 500 agencies in the pipeline. So, deal flow is not the issue. And so, the focus then is about aggregation, integration, and implementing standards. And then either if they fit our culture, then we're going to integrate them into our supergroups. If not, we're going to spin those off as they're on revenue stream because there are strong, there's not that, it's difficult to sell an agency that's doing $3 million of revenue.

But buying a group that's doing $30 million of revenue is a totally different world out there. There's a lot. It's a great asset class. And I was looking for great asset class. And I'm always looking from a category king. What are the inherent problems out there that no one's figured out how to solve? But we've figured out a way to solve them. And the agency aggregation is we have a mousetrap, which we're going to test off of different groups that sells a pain point that most agencies and agency holding companies like WPP have not solved.

Yeah. Is this with the Foundry Group or is it completely different business? So October 3rd, I left, know, my team's doing it. They're on their own. And this is venture. Wow, that's amazing. I mean, are you going to raise capital for this or is it kind of an Epic type? No, we're using some of the foundations of Epic and how to optimize cash flow. But the difference is, that...

Jon Stoddard (36:43.063)
But the deals, trauma deal structure, we're giving, the agency owners a third out of pocket. The rest of it is going to be in an earn out because we want to incentivize them to save for a successful transition of the business. So there was cash. I, and unlike I did with Foundry where I brought in one of the private equity groups who I said no to, said, Tom, I don't want to lose out. Next one we went in and I had the call with them this week. I said, I love you guys, but it's too early. I'm not bringing private equity this early to it.

We can do, so we're basically funding each group, the first three groups on their own through our network and a high net worth individuals and family offices. It doesn't take that much capital since every agency that we acquire comes in with cash in the bank. And so that's why I love this asset class. So it's very capital efficient and I don't have to raise that much to do every group. And then we'll bring in some type of big, we'll also overlay it with some debt instruments.

So be very capital efficient. Yeah. What I mean, what are the challenges that you don't know the answer to, to this new opportunity? mean, last time I talked to Peter, he, it was, Hey, I got this system for finding digital marketing agencies. And I got a whole bunch of, I think it was 45. I had 45 available for sale. He didn't know what to do with them. It was just there. So you guys got the

operations looks like solved, the capital source solved, and the acquisition solves. What do you don't know the answer to? The biggest challenge is going to be, remember I talked about culture? Yes. We have our cultural, we have Peter's cultural assessment that has my assessment also, meaning I can go into most organizations, a few hours and get a sense on the leadership and whether they're going to be a good cultural fit.

And plus we'll do some normal, the standard assessments anyways to understand them and their team. But ultimately when you bring these groups together, you still have to integrate cultures. Now again, we expect every agency to operate on their own. We're giving them tools and structure, but they have to work well collaborating with the other agencies. And that's part of the fit that we look. But until you actually pull them together and understand that.

Jon Stoddard (39:03.601)
There's going be happening, there's something either a health issue or one, the founder, because they don't want to be there, is going to leave early and will have to address those issues. There's always those operational and people issue address. But how do you bring in these 10 agencies to still work as part of an operating unit where they can then go and where they weren't able to potentially get a Fortune 100 client? Now they're big enough in the scale and the breadth of skills and they could do it, but you still have to operationalize this.

And I like to take complex things and make them really, really boring through process and system. what I love about Like a standard operating procedure and overwhelming like 10 commandments kind of thing or how we operate is standing operating procedure, standard systems, but standard also systems and how we integrate these businesses and how we develop uniformly with each group, their cultural Bibles in which they operate.

finding we ultimately our goal is to find one of the agency that's strong enough that as a CEO can work as from where they're used to running a $5 million agencies. Now suddenly they're the group lead over a $30 million agency. So again, making sure we develop them and nurture them with the right skillsets to do that. If not, then we're gonna bring in someone from the outside. So those are the big people issues. But the thing I love about this asset class is unless you're really, unless you screw it up,

You can't lose the equity in there. Basically, then you're selling it off. You're selling your group off at a less than you wanted to from valuation. We might have one or two of the agencies in this group of 10 that end up blowing up. You don't know. But however, by putting the other 10, but then you have other groups in the agencies that will grow by three X by putting in our systems and our sales processes. How do you, I'm going to go back to the adding a zero. I had heard it the different ways like,

You know, it's a process takes two years. How can we do it in six months? What are the skills and tools you use to say, okay, it's easy to add a zero just in your head, but how do we work backwards and chunks it?

Jon Stoddard (41:12.093)
And I'm going to answer this in two different ways. First of all, when I started, when I during COVID hit, I started thinking about what is a new business idea and I needed momentum. So I started creating a little business on the side that started generating revenue and then it wasn't really me. And then I took Epic and I started with the concept of let's just go and buy three or four. And originally it was agencies, let's buy five agencies and put them together. Well, let's do econ business, put five or 10 together.

is when I developed this big vision for, see the beautiful thing about the bigger the vision, the easier it is to attract the right people that are in not only as employees, also contractors, also vendors, and also capital, the bigger the idea is versus when you play small, sometimes it's just a lot more difficult. So therefore with this idea, we started this idea is what can we do from agency with Peter, but.

The bigger we made this idea into actually creating a, how do we create a three billion dollar company in the agency space? What would have to be true in order for that to happen? And John, that's the question, the most powerful question that I've added to my toolbox. And for me, it's about questions. If you ask the right question, you get the right answer. And my favorite used to be, what's the problem? That used to be my favorite question to ask.

And the second favorite question I learned along the way was why. If we solve this, or sorry, so what? If we solve this, so what? To really know why we're doing it and so what is really important. The third question that again, was by Dr. Martin, it was in Harvard Business Review. The question is, is what would have to be true in order for this to happen?

So come up with whether you're solving a problem. And the problem is when most people get in a room, they're solving a problem, they're constraint driven instead of abundance. So they think of things and they argue based on the way they see this. Instead, the approach is what would have to be true? Okay, so we want this to happen. What would have to be true for this to happen? And by coming that in that direction, you come up with

Jon Stoddard (43:32.653)
better solutions that can be executed coming out of the way you wouldn't normally think of it. So that's one of my favorite questions now is what would have to be true. So we do a lot of this in order to create a company that's worth a billion dollars by doing aggregate in order for us to do this to requiring small agencies, which is not done. What would have to be true? And then we start identifying what would have to be true. And then we start developing a plan on how do we address those issues?

And that's solvable, bite size issues. What would have to be true? Do you, and I'm not taking on Peter, do you think that you, if you had the great questions, what would have to be true for this to happen, but you've never done it before? You have to bring on somebody that's seen it or been there. by the way, that's exactly it is what would have to be true is, okay, we need an expert in this. So for this deal is Peter found Felix Blaraday who wrote two Y three X and basically is

With Felix's track record with 100 % of the business, they doubled their profit in two years. 100 % of every business he's implemented the system. And he's an agency OG that in England that he basically started the first and most successful digital agencies in digital age creative shop in 1994. So he's an OG in the space, built six agencies, sold them, but he's implemented this process consistently over six years. So Peter has brought them in as one of the key pieces is

on how to scale these business, plus his network is, then through Felix, we have a pipeline of operators, but the number one choice for an operator to help us execute is a woman right now who has a team of 6,000 people. again, she's worked through agencies for over the years. She scales, she's integrated, and right now her team, you don't leave her 6,000 employees. So again, she knows how to do things in integrating entrepreneurial agencies and how to integrate them.

and then how to run an agency at scale. So been there, done that. So again, so we're minimizing all the risk factor by putting in the right people and the right systems and structures. Is this kind of a process in your life learning? say, I can encapsulate this into a book and put it in a book, because this sounds really powerful. The book will come when I have time.

Jon Stoddard (45:53.549)
And I say this, so this opportunity with Peter is a blast. He's great to work with, so is Felix. I love working, collaborating with really smart people that understand what culture is about and aren't driven by ego. Confidence is good, but ego is what kill you. So I'm enjoying this. At the same time, I also have a couple of really interesting strategic advisory work. One of my clients is in your neck of the woods, well, kinda.

He's in Phoenix snow teeth whitening, who again, he's pivoting his business to be the, again, in the teeth whitening space, is the category king in that right now and owns the online business, but he's basically doing acquisitions in that to become the leading premium oral care brand. And basically by aggregating business that earn premium oral care, again, it's a pivot.

having blast doing strategic partnership with really some good people. And I'm doing a really interesting, and again, sometimes things are just fun in the right parameters. So there's a project that I got involved with that's quickly evolving in the NFT crypto space and blockchain. And I'm not talking, I'm not buying pictures of...

artwork of clowns and unicorns and looking to get an arbitrage by getting lucky in this asset class. That's what crypto does to me. I don't know. I'm kind of naive on it. So basically, you know, when you really structure it down to you're talking about transaction, the blockchain, it's a very efficient, secure way of doing transactions period. So the question is, is what's a great problem that can be solved through the blockchain? Well, to me, it's impact investing. Imagine

that and imagine that instead of using traditional investment banking or basically fund structures to do it, we actually bring in the capital in through the blockchain and through crypto. But it's being done through people buying the NFTs, but instead of just buying an NFT with nothing behind this, these graphic images, basically every...

Jon Stoddard (48:03.445)
a time someone buys one of these, they're really buying into is an impact fund. And our impact fund is focused on brain health. It's about longevity and it's Alzheimer's, it's Parkinson's, it's brain injury. It's basically, our moonshot on this is to raise $30 billion through brain health, but we're doing them, the friend, and by selling NFTs. And by structuring this through, as we did through a Swiss organization through NFTs, we're minimizing any security risk with this.

And again, so it's a really interesting asset class we're developing and where 80 % of our proceeds are going through vetted deals that we find that impact brain health. And then 20 % of our revenue will actually, of the NFT profits will go for specific projects that are not for profit. But basically it's a new way of having impact. So I loved the idea of how can you take this Web 3.0 and use it as a platform which is authentic versus pictured.

betting on pictures of clowns and unicorns and use that as a front end to do something more traditional, but that has a real impact on the world. And therefore everyone wins in that situation. So it's putting a line things together. So again, I'm- I have a company work on a dementia therapy. I might put that in front of you. I'll send that to you. Okay, please do. Please do. Yeah. Yeah. So where are you, let me ask you about like,

how you keep seeing these larger opportunities add to zero. Who you seek out to say that's the great inspiration. Everyone. And I say that is that, I mean, I'm always learning and following different thought leaders. However, ultimately what I'm constantly doing is allocating time in my week to reach out and talk to people in my network. Constantly want to invest in expanding my network and also

Asking people the question is, what are you thinking about? Where do you see the big opportunities? And then at the end I'll say, I'm looking at these spaces if you know of someone, let me know. And that's how a lot of these opportunities have come up where a person heard I was doing it, they told someone else that I was interested in breakthroughs on blockchain, Web 3.0 and charities, then knew a person who sold his business in Austin for $300 million living in Switzerland and said, hey,

Jon Stoddard (50:28.213)
I know a guy and introduced me to someone who's been looking at this space for five years and has this project. I'm looking at a large number of projects, always on a regular basis. But inevitably, you have to go with where your passion is, where your heart is. there's also just with John, you've been through so much. You also have a good gut. And ultimately, we have to listen to our gut and not just talk ourselves into things. Yeah. And so, hey, that looks like a great opportunity, but it will hurt my family. know, ultimately, when all is said and as I said,

Businesses come, I take this game of business, which is the greatest game in the world, extremely seriously. But it's a game relative to your family. And therefore you have to choose where you want to make your investments. know someone said to me years ago, if you want to see where, if you want to see where someone's real priorities are in life, look at their checkbook and look at their calendar. How much time are they at? If people say family's number one on the calendar in your checkbook, is that where you're spending your time?

with your family, doing things and investing in them. And ultimately that to me is the greatest commodity in life. And we all have different ways we measure life, John. I look at it when all said and done in, I mean, hopefully 30, 40 years from now, maybe 50 years if I'm lucky, I'll look back and say, how many people's lives have the impact in a positive way? And how good was I to my family? Ultimately that's my measuring stick is other people have other measuring stick. It's not how much money I've.

left in some bank, know, left in investments is basically what the biggest impact that I had in life. Yeah. And I, I gotta tell you, I am really grateful for spending this time with you because the people that I interview that really have succeeded at the and A game, raised a lot of money. It all becomes about mindset and putting your mind right with your world and trusting your gut and your heart. Tom, investors.

Strategic advisor, co-founder of Foundry and Atlantic Coast Brands definitely earns a spot as a top &A entrepreneur. Thank you so much for your time. Appreciate it, All right, take care. And I'll email you that dementia therapy. Absolutely. I'd love to take a look at it. Great. Thank you, sir. Take care, my friend. Sure. I'll knocking you.