Jean Moncrieff: Building A Purpose-Driven Company

Speaker A: Foreign. Hey everybody, it is Nick Bradley here and welcome to this week's show. So joining me today is John Moncrief. Now, John is the CEO of the Small Giants community. And if you haven't heard of the small giants community, we'll put a link into the show. Notes. But they are a network, a global network of purpose driven business owners who

Speaker B: are committed to building companies that are great rather than simply big.

Speaker A: And I think that is a important distinction, particularly this idea of purpose driven in a world that is going through so much change and disruption right now. Now, John works with leaders of those companies, the CEOs of those companies. He focuses on building valuable businesses.

Speaker B: So very much aligned with how I look at the world.

Speaker A: But he does so through the lens of freedom, purpose and long term impact. And he's also the author of a new book which is called Finding the Business Owner's Guide to Building a Valuable Company and a Meaningful Life.

Speaker B: So what you're going to get out

Speaker A: of this conversation today is both of those things.

Speaker B: We're going to talk about what makes

Speaker A: a valuable company, but we're not going to talk about it through the lens of metrics and data and all the things that a PE firm will talk about. We're going to talk about it through the lens of what that company can

Speaker B: do for your life, what level of

Speaker A: freedom it can give you based on what you're trying to achieve. So I certainly hope you enjoy this conversation. I had a great time talking to John about this and I know that

Speaker B: you are going to get a lot out of it.

Speaker A: So welcome to Scale up with Nick Bradley. John Moncrie.

Speaker B: Hey everybody, it is Nick Bright Bradley here and welcome to Scale up for another week. So today I have a good friend of mine from the other side of the world, even though I'm not quite sure if you were actually born there, but we'll get to that in a second. No, um, John Moncreath is on the show.

Speaker A: He is the CEO of the small

Speaker B: giants community and he is the recent author of the book Finding Freedom. Welcome to the show, Nick.

Speaker C: Thanks so much. I'm super excited to be here and to have this conversation today.

Speaker B: Brilliant. Where are you from?

Speaker C: I was born in South Africa. So we're the same hemisphere, Right? We're born in the same hemisphere.

Speaker B: I didn't think it was Michigan.

Speaker A: No.

Speaker B: Then again, you don't know. I've lived in the UK for 24 years and people go, oh, you're definitely from Australia. Ah, can you tell?

Speaker C: Yeah, I get to. Are you From Australia? No, South Africa. It's the same hemisphere.

Speaker B: How did you. Let me just ask, how did you end up in America?

Speaker C: I, uh, mean, more recently landed up in America because I've taken over leadership of the small giants community. So I'm between Zurich and America at the moment. Right now I'm in Zurich, just come back from the States, um, and it's kind of going between the two locations. But essentially it came down to taking over this community and spending a lot of time on the ground just to make sure we're doing the right things and building the community properly.

Speaker B: Okay, brilliant. Well, let's definitely talk about that in a bit more detail later on as well. But let's talk about your book. So Finding Freedom. I think as we go through this, uh, let's hear a bit about your personal story as well as to what led you to this. And then, um, we can get into a really interesting theme today that we were kicking around before we press record. And, um, I'm looking forward to that. But let's learn a little bit more about you. Yes.

Speaker C: So Finding Freedom came from basically building a business and starting a business. And if you think of that show or that movie, Little Shop of Horrors, a little bit like Rick Moranis or whatever the character was, where you start off with this little thing and you're kind of nurturing it, this is a quaint little thing. I think I put some love into it and get it growing, and before you know it, you're kind of feeding this thing and feeding it, and it's, feed me, John, feed me. And I was chasing output, I was chasing revenue. 5 million, 10 million, 15 million, 20 million. And I thought that's what this was all about. Uh, it got to a point where I wanted to sell the business and it wasn't worth what I thought it was worth. Um, I basically got involved with a publicly traded company. The CEO on the other side of the table kind of agreed with my thinking to start with. And over a few lunches and then getting into knocking out a deal and having signed a deal with them, I realized that this wasn't going to be the deal that I wanted to take. And I completely felt sort of a captive of my own of this thing that I made.

Speaker B: So I'm going to jump in. Did you do the deal or did you walk away?

Speaker C: I walked away in the end. Um, and the story is very closely connected to this community of small giants. Back in 2011, 2012, when this was going on, I was part of this community called the Small Giants. And there was a roundtable cohort where we went behind the scenes at other, uh, businesses. And a few of the folks in that cohort said to me, have you tried eos? Have you tried great game of business? And essentially I lent into this team and realized that I would have to build a leadership team. I would have to pull myself out of being the center of everything. So over 18 months I kind of lent into this community, worked on the business and ultimately got a point where I sold it to my management team. So was able to walk away. And uh, and that was the, that the exit 18, 18 months down the line. But I think, you know, having gone through that experience, I realized that so many of us are going through the same thing. We, we kind of. Somebody put it really well. The other day I was just wallowing in my own ignorance and uh, you can get stuck there for years. You get stuck in that.

Speaker B: It's really interesting. This is, I mean obviously I talk, you know, a lot too much about, you know, exiting companies and what that means. But, but you know, I'm, I'm less interested in the transaction. I'm more interested in the stories around it like this because there are so many challenging stories, right? Uh, like more than there should be. I mean, okay, I've been involved in it for a long time, so I know it really well. But you know, I've had to educate myself like anybody. But even just what you went through, I mean obviously you ended up well when you're doing what you love doing now. But I mean that's a very, very typical example of what I hear on a day to day basis.

Speaker C: And that was I guess the impetus for the book. I was hearing the story over and over and over. And I hear from somebody who would say to me, I was sitting in the boardroom, Dave. I was just about in tears and I just didn't know how to fix this thing. And I went to a Vistage meeting and somebody talked about Eos and I kind of started putting EOS in and I started building a leadership team. And what really changed wasn't that he put in Eos or whatever. It was the mindset change that Dave had that got him thinking differently, that he needed a help. He needed to go from being the smartest person in the room to trying to become the dumbest person in the room. Right? And I just saw this. Whether it was a company that was banging its head at sort of 4 million, the founder, uh, well, the brother walks out, Elizabeth, the sister takes over and she leans into the team and they go from hitting their heads for years at 4 or 5 million to sort of going to 20 odd million. And I just saw these stories over and over. Either somebody sheds a suit of armor or there's a change in the leadership. It fundamentally came down to a change in leadership and very often tied to mindset.

Speaker B: I think it's also ego and sometimes people think it's um, ego is like, you know, someone who's arrogance or, or whatever. It can actually just be someone who hasn't got confidence.

Speaker C: Just the fear.

Speaker B: Yeah. And control. So. So I often say to people, if you try and you know, you don't want to, you don't want to control your business, you want to be able to curate above it, you want to be in charge. But control is bad because, you know, you're stuck in everything if you're doing that. But usually that's a fear response. I wrote about this in, uh, one of my recent newsletters because I was like that when, when I was running companies a decade ago is I. I felt that if I stopped, you know, working at a certain level or making decisions or trusted other people that everything would just crash. And I think that's a very, I mean, it's a very common thing that I see. People get themselves into that state, that mental state as much as anything else, and emotional state and hey, you find

Speaker C: like, I might as well just do it myself kind of attitude or you're helicoptering into, into the weeds all the time because you, you're not confident that you've built the right people to take over and you probably haven't brought the right people in. You know, somebody was talking about bringing in a players for that leadership team not long ago. And uh, very simplistically, we often think of a players as these fantastic kind of people out there that we've got to go and find. But I think it's almost like sticking a light bulb into the socket and if the wiring's done right, the thing lights up. But it's as much about the company that you've created and your values and your culture as the person you're plugging in. And I think it's kind of put that a player into a socket and they light up. But you need to be surrounding yourself with those folks from day one. And I mean, I work with your assistant who's phenomenal. So even though I'm not sure the size of your company, but just running this podcast, you know that you need somebody who's insanely good at running the Podcast and the team behind you. So it doesn't have to start at hiring an expensive of person. It's what am I doing really kind of badly at the moment that's sucking my energy that I can bring somebody into first. But it's that mindset shift or would a CF fractional CFO be right and bring that person into sort out just kind of thinking a bit like that to start.

Speaker B: It's one of, it's one of the hardest things to get right. Absolutely. And um, I think the reason is. Well, you know, we're talking today when there's a whole heap of AI disruption and change coming. So you know, my point around people may be uh, misplaced in a few years time. However, I always think, you know, from a leadership and strategy and creativity perspective, we're going to need people. But you know, it's not just about the capability, it's. I talk about this on stage sometimes about the um, the cultural alignments as well as the capability alignment. So someone's ability to do the thing is one part of it, but their, their willingness to do the thing and do it in the right way, which affects everyone else that you may have, you know, built your organization around. That's where the real magic kind of exists.

Speaker C: Exactly. And to me that's like that kind of light bulb going in and lighting up. And if the two things, if the socket doesn't match, it's not that the

Speaker B: person's for too long. And I reckon in my career if someone said to me, what's the biggest thing that you've done consistently badly? It's holding on to people much longer than I should have and it is

Speaker C: bad for them as well. They can go.

Speaker B: I know, it's just you think you're doing the right thing. So let's talk so finding freedom. So I haven't had a chance to read the book yet. So take us through it. Take us exactly through the. We probably touched on some of it already. But um, yeah, take us through the key elements of it.

Speaker C: Yes, I looked at it in terms of three. Sorry, four key parts. So first of all, this challenge of mindset. So how do you, as a business owner you need to kind of switch your own mindset because the challenge really sits with that, with that business owner. So part one is, is all about mindset and switching mindset and the, the stories from those business owners that I talked about where that mind mindset shift changed. I think the, the, the second part is about kind of laying a solid foundation. So good, uh, strong leadership Team making sure that those fundamental things are in place, that you're taking feedback from what's going on in, in the market around you. So few people do that. And I see so many businesses who uh, I mean we were talking about AI a moment ago. The cloud will never happen and those businesses are sort of tiny fraction of what they used to be. And I think the same thing with AI. If we're not taking that input and thinking about how we kind of build that into our leadership team thinking and what we're doing and how we strategizing, there's a massive issue there. So mindset shift, build a foundation. Then a lot of the stuff you talk about, how do we build value in the business? How do we think about Moving yourself from the center of everything, sort of over reliance on too few clients or over reliance on too few uh, employees or whatever that is, recurring revenue, those kind of concepts. And then finally something I noticed in the small giants community, so there are ways of exiting strategic exit private equity. But I saw that a lot of the, the small giants businesses are looking at a longer uh, vision for the business and are looking to employee, um, ownership models. So whether it's an EOT or uh, ESOP or diy, SOP or worker co op or whatever, we're seeing a lot of these kind of bubbling up within the community. So I focused on what are all your options, um, when it comes to that process, to going through that exit process or that succession process and thinking about putting a team together. So I'm going into the detail because I think that's better left to somebody like yourself or other folks in that industry. But what I need to start thinking about, do I want to sell out to strategic acquirer or do I actually want to do something with employees? And what are the options if I were to do something with, along the lines of employee ownership, um, and then the kind of team you're going to need to assemble to make sure that you're thinking that through properly and have the right people kind of uh, supporting you. Because I think that that exit team is as important as your leadership team when you get to that stage. I didn't.

Speaker B: Most people don't appreciate that. But yes, you're right.

Speaker C: I thought I knew it all.

Speaker B: Well, yeah, I mean I am going to say that of course. But, um, I was having a really interesting conversation, uh, actually earlier today with another guest who's coming, who's, whose episode on the show will be coming out. And um, the construct was wealth management, but actually it was about Absolute clarity on the number that you need to build sort of back from.

Speaker C: Yeah.

Speaker B: And like, but, but the, the real number, not like a made up number that your business is worth, but like, let's say you are going to do an ESOP or something like that. Well, how much, how much do you have to extract from that particular exit strategy in order to serve the life that you want, you know, if your family, you know, so that you have that, that true freedom and financial independence. And um, this gentleman was talking about, his name's Alan Smith, fantastic guy. He was talking about the detail, the depth thinking you have to go through to get to that number. It's not just an arbitrary thing, but when you have it, then you can kind of come into my world, which is, okay, we know the number, we know why that number matters. Now we can construct back from that number. And when you decide to sell your business, whatever vehicle or option that you go with, you're pretty much certain or very close to certain to get it. And I was, it's crazy, isn't it? I was just thinking about this earlier because it's like not many people do this, John.

Speaker C: No, you need a team. You need that person. As you said, he's going to take you really deep to what I want out of this in terms of kind of wealth, then how are we going to get to it? And it's a team sport as well.

Speaker B: It's very much about that. And it's also about kind of leveling up and um, how your identity changes as a entrepreneur and business owner. And so like, you know, you start

Speaker C: making that shift, right.

Speaker B: And thinking it literally is levels. It's like, it's almost like if you think of ah, Donkey Kong, remember that game, you know, you gotta go to the next level because it was, it was level up, wasn't it in that game? Um, yeah. And then if you don't get that, guess what happens? You go crashing down and get, you know, stomped on by the ape.

Speaker C: That's right.

Speaker B: You are the ape. No, you get blown up by the barrels.

Speaker C: You're blown up by the barrels. That's right. Yeah, that's right. I haven't played that game for ages where you flip the little thing.

Speaker B: Yeah, it's great. But yeah, interesting. So wow. So I get. Because I knew that it was going to be obviously about how there are different options of creating freedom via your business. But the mindset piece is really fascinating because you could argue that just by getting your mindset shifting in the right direction for what you want to Achieve that creates freedom as well. Let alone, uh, alone just, just kind

Speaker C: of unlocking the mind of it and, and opening it up to what are the possibilities, what could this look like? And I think the key thing is realizing you need help, that you can't go this alone. I mean I think there's uh, uh, and there's that old African problem that goes along the lines of if you want to go fast, go alone. If you want to go far, go together. But I think if you want to go far and you want to go fast, get the right team together. Whether it's on the, the exit process or building your business. And that's the secret. It comes down to playing with a high performing team. Whether you're going through a succession process or you're going through a building process or, or whether you're starting out and you just kind of have these gaps and you're just getting the business off the ground. Get the right people in from day one.

Speaker B: Let's talk about, because we touched on a little bit in terms of some of the foundational pieces and the building value pieces within your book. But let's talk about the leadership aspect here because before we press record you used a really interesting term which is the leadership vacuum. What do you mean by that?

Speaker C: So we hear a lot of talk about the silver tsunami and sometimes are surprised by, explain that to people who

Speaker B: don't understand it just in case they haven't heard that specific expression.

Speaker C: So we have the baby boomers who are aging out and a huge portion of them are exiting their businesses. I mean a lot of the businesses are tied up with those baby boomers and as they age out and retire they're looking at selling the business succession. Mean if you listen to the stats, it's anywhere between what, 20% of uh, and 80%. 20% of those business will sell, 80% will close. And uh, I mean I've seen, I saw something from McKinsey the other day was up to 90 something percent. And we don't hear about the businesses that trade and do all sort of, all sorts of different trades, do the deals. But essentially as these, this silver tsunami kind of gathers motion, I think right behind them you've got a bit of Gen X as well. Who's going to go through this? So as this thing gathers momentum we see more and more of these businesses potentially disappearing or evaporating and that causes a huge hole in communities. Um, it causes ah, instability in I think the social structure in terms of Social Security and all that kind of stuff. So We've got this going on. Then we've got ITR Economics and others talking about a potential depression in 2030. Whether that materializes to the extent that they're talking about, we're probably going to see some tough times in the years ahead. Um, but what's really interesting for me is the key problem here, I think is that there's a vacuum of leadership. And when I talk to business owners inside the small giants community and outside of it, very often they can't find somebody to step up and take over. So I had a conversation with our friend Ryan Tansum last, not long ago who talked to me about this and he said, John, I think he said for every business owner he talks to, there's about one leader who's actually capable of stepping up. So I started testing that and asking and what I found is probably closer to 5 of the business owners that I'm talking to. Who. There's, there's somebody who's ready to come in and step up and take over the business or into a senior leadership position and can take the vision that the business owner has and turn it into something over the next couple of years, take, take them from where they are now to what that vision looks like in two years. So I think there's this shortage of leaders and that's fueling the problem that we, we're dealing with at the moment. Um, so I almost think that if you as a business owner, as a business leader are, change that mindset to not trying to be the smartest person in the room to, to kind of turn yourself into being the dumbest person in the room and surrounding yourself with people who are able to take you to where you want to go in the years ahead and ultimately that they can run the business without you. I think you're almost building a competitive advantage at the moment when you are, because there's so many businesses who um, are ah, stuck wallowing in their own ignorance. And I don't mean to be harsh by saying it, but even the person who came up with that saying, saying I stole it from somebody recently, was on a podcast and he said for 25 years I've been wallowing in my own ignorance and it's only now that I'm able to step back and a very successful cabinet making business. When I was with him in Cincinnati recently, I said to him, paul, how are you thinking about the future and what's happening? And he said, I'm the only one in the business who seems to be able to see that far ahead and Kind of figure those things out. And I said, what happens if you get hit by a bus tomorrow, Paul? I don't know. It falls apart.

Speaker B: Let's unpack this a bit for people because I think it's a common situation, but there's also some pretty common reasons as to why it happens. Okay. And some of that we touched on a little bit earlier. But so you've got this, uh, if we talk about the Silverton pseudonymous. So you've got someone who's, let's say 60, 65.

Speaker C: Yeah.

Speaker B: They've had a business for 30, possibly 40 years and it's probably been a

Speaker C: lifestyle business most of that time, right?

Speaker B: Most of the time. Definitely. The ones that, the ones that can't sell, the ones you said that sort of 20% chance to intend, uh, or less even tend, uh, to be that. Right. You know, you're effectively, if you're going to buy it, you're buying a job and you're buying that person. There's so much key, key dependency, etc. But let's. I'm more interested in the psy, back to the point of leadership vacuum as to why that person, at scale, like as we said, we've seen this quite a lot, isn't just bringing in people that are better than them so they can step away.

Speaker C: Yeah.

Speaker B: It's intellectually, I know the ignorance thing is interesting, but it's not that hard to understand. Right. Like if I don't find someone to come in here and do this, I'm gonna have to do it forever. But they don't do it.

Speaker A: Yeah.

Speaker C: And I think there could be different reasons for that. If I look at some of the folks over the years, some is just as simple as it's a lifestyle business, it's comfortable and I'm very comfortable in this role. Until somebody walks in. Until key people walk in and say, hey, unless you make a change, we're out of here. We don't see a future. And suddenly there's this wake up that geez, I need to do something. Otherwise these people didn't leave. And then where am m. I? Where am I? So I think that's one of the common ones I've seen. The other one is where there's a suit of armor because of some kind of traumatic happening in the past. Um, a couple of those where when that suit of armor comes down and they, you know, the fear of letting that armor down, they go through it, they shed it, there's a definite change there. And then I think the third one is business Owners who are that kind of alpha type and just go, go, go, but that, that thinking that will get the business off the ground. Uh, I think Daniel Priestley is one of those characters who will say, I can get it to 2 million, but beyond that I can't. You know, I need a team, I need other people to take over. And I think there's so many business owners who are that alpha type, that gritty, kind of do whatever it takes to get it up and running, but they get to a point where they just hit a plateau and because of that personality and that type, they're unable to scale it. And I think you definitely have different,

Speaker B: back to my point around identities. You definitely have. Uh, I used to be asked this question quite a lot, um, when I first started this podcast actually, um, because I was a very much a scale up CEO, Right. I was put into investor backed businesses. I've started maybe two businesses in my life. Um, my advisory firm, I have now and then a business when I was like 17, which was a gym.

Speaker C: Yeah.

Speaker B: And the rest of it though has been going in and fixing other people's messes. And so the way that that was described, someone, um, I forget who said this. Like someone asked me, when you played with Lego as a kid, did you, did you actually build from the instructions or did you just kind of pull it all out and build something? And I'm like, I built from the instructions. Like I followed the instructions to the letter.

Speaker C: Well then you followed the playbook to the letter, right?

Speaker B: Yeah. Whereas like the creative entrepreneur, the startup founder who likes the chaos, we have, uh, instructions. I'm just going to build something here,

Speaker C: I'm going to do it my way.

Speaker B: Yeah, but they're archetypes, right. So I think I 100% believe, and I've seen this happen where it doesn't mean that you can't be both or you can't grow and change. Right. But there are lots of founders out there who are just really good up to a certain level and, and as soon as they hit the ceiling, they bounce back down. You get others who, you know, get to the ceiling and then they break through it. But in order to break through it, they've had to have coaching, mentoring people around them. As you said beforehand, getting themselves in different environments, they've had to change themselves. Like personal leadership, I often call this, in order to break through. And I think that is what happens, you know, back to. So leadership vacuum to me is not just someone's inability to bring people in, you know, in key roles. Et cetera. It's the ability for them to become better leaders themselves and.

Speaker C: Yeah, exactly. It's that, that kind of mindset shift that needs to happen, um, where you become more self aware and I want to become a belly. But I'm curious with private equity, right? I so often I see private equity come in and take over a business. The CEOs there for a while but they can't seem to get it beyond where it is. And ultimately they land up getting replaced by somebody from that private equity firm.

Speaker B: It's known before the deal. So I mean this, what I'm going to explain now doesn't happen in every situation, but certainly I've seen this happen probably more times than not. Is that true? And this is, this is in mid, um, market and lower mid market private equity. So transactions that are in the eight to nine figure range. So we're not talking about the smaller lifestyle businesses but you know, they might have been a business that scaled up to being attractive to a P firm. But through the process of acquisition and particularly the due diligence process, which can be 60 to 90 days, we're assessing that founders, um, intent, capability, uh, mindset, leadership, we're assessing all of that. And we've actually got someone on the bench ready to put them in straight away or within a very defined period of time. Um, and that's why you often see these guys last six to 12 months and they're out. But it's not like the point I'm making is that's not random. It's not like oh, we gave the guy a go and now it's not working. You know, holy shit, what are we going to do?

Speaker C: It's part of that playbook.

Speaker B: We knew that already. We kind of knew. We'll give them a chance and there'll be someone here on the, on the wings ready to be dropped in. And then off we go. I'll finish by saying this. One of the PE firms I've worked with in London, their investment director said to me, because I said, how often do you swap out the CEOs or the founders, the leaders? He said all the time. And I said really? Surely that's not the right thing. It's disruptive. He goes, if you look at the evidence across all the PE transactions that this guy had been involved in and his friends and whatever, he said, it's the number one value creation initiative that PE firms use because it was mhm. And it makes sense. Change of leadership, change of vision, you know, get the right person in the right Main seat and, and then let them go. And that's, that's it. Right. Ultimately.

Speaker C: And if you're a leader of a business listening to this today, that's the kind of way you've got to be thinking, am I.

Speaker B: Yes.

Speaker C: Am I able to become more self aware and to find the help I need to do this again? It might even mean me stepping out of the CEO role and getting the right person in.

Speaker B: You might be the chairperson. I mean I, I talk about this a little bit, uh, under the guise of three exits. So exit the chaos is what most business owners have to do. Just because like if they've got a business where they're doing everything, it's chaotic, they hate it, they have got zero freedom. But you got that, that's the first exit. You've got to get out of the chaos. That's usually by bringing operational people in, in key functions around you. Right. So you're not doing marketing, sales, whatever. Then you've got exit the operation, meaning the business operation. And that's usually when you first hire your leadership team. And that's like when you have someone who comes in to run the company. So, so you're still owning it. You might be the 100% shareholder, but you've got a new CEO or CEO or something, but they're running the business so you don't really have to be there. A lot of the people that we work with, a lot of people think that we just exit businesses and do all that. We do get involved in that, but we also help people go through these transitions. Because once you get to exit the operation, you can hold that company if you want to, but then that's why

Speaker C: the value is right. It's going through that, that transition process that you're guiding them through.

Speaker B: You have to, we have to go through them in order. You can't, uh, sell it. You can't sell a business for eight to nine figures unless you've exited the chaos, exit the operation and then the third exit is exit the business. So sell your shares. You can't do it. You can't, you can't just sell a business. You can't just like have a chaotic business that sells for uh, a lot of money. No one wants it. It's a mess.

Speaker C: Yeah. When I was trying to do it, I was trying to exit the chaos. Right. That's where I was at.

Speaker B: Yeah. So if you do it the wrong order, if you do this in the wrong order, like you're not going to have, you know, it's not going to be successful. But what's really fascinating, and this is, I think your point, and probably what happens a lot in the, um, small giants community, is that if you can build that really strong leadership team, you can have multiple businesses if you want.

Speaker C: Yeah.

Speaker B: Right. So you can, you can, you know, sit above them.

Speaker A: Right.

Speaker B: You've got, in the business, on the business, above the business.

Speaker A: Right.

Speaker B: You can sit above the business, have these great leadership and management teams, running these assets that you own. And of course, you know, I always push towards a liquidity event because I think, you know, this, this risk in holding a company for too long. Right. Particularly with what's going on externally with technology and everything. So you don't want to be holding on to a business that's worth, you know, 50 million and all of a sudden it's worth nothing.

Speaker C: Yeah.

Speaker B: However, that's your choice. Right. That's your option. So I think for me, leadership, and I've seen this happen multiple times, John, where like you get the right person in at a very key role and then probably to your experience as well, the whole thing just transforms.

Speaker C: I mean, exactly to your point, what I'm seeing at the moment is the companies that are, well set up like that are able to take advantage of those businesses that are on the market at the moment that the owner just wants to kind of get out of. So some of the companies that I work with are just parachuting one of the leadership team into a new business, doing an acquisition for Next or nothing.

Speaker B: Yeah.

Speaker C: Um, and then sorting out the business model, doing some work with the bank and off they go. And you're right, there are a number of, of these companies that are now small giant companies, but have a couple of different operating companies underneath them. Or a few different operating.

Speaker B: Yeah, exactly. And interestingly, that is effectively what the private equity playbook is. So you can adapt the PE playbook for founder led businesses before there's a liquidity event. Because the first thing that happens is if I buy you a company, for example, the first thing I'm going to do is I'm going to assess the leadership, whether you want to stick around or not, whether you're the right person. I put an operating partner in. Right. Which is what I used to be, which is someone there. The simplest way to describe an operating partner is someone there to mentor the founder and the leadership team under private equity backing. But in reality they're really overseeing the operation from a strategic level because they're usually an exited founder.

Speaker A: Right.

Speaker B: They've been there in that environment, the first rodeo.

Speaker C: Right.

Speaker B: And they're in task of what's called the value creation plan, which is obviously what we do once we now own this business all the way through to the next transaction. But, but all of that you can do if you're a founder, uh, before you sell. Right. Because it's really just about understanding where the capability gaps are and putting the right people in.

Speaker C: Yeah. And thinking a little bit ahead of where you want. You know, that's where we're going. What are, what are gaps? And put the people in who, who are able to take you there to get you there.

Speaker B: Exactly. I'll give you an example of a business. Uh, I didn't work specifically with this business, but I know the. The owner. It's a. It's a plumbing business or it's a plumbing empire, I should say now. Um, and the guy inherited the business from his dad. So that was a succession play. And I think they had. I forget the number, but it might have been five to six trucks, as they call it, plumbing trucks that would go out there, you know, any day, servicing different needs. Anyway, um, they had a person running it. That person got sick. So this person that I know went and hired a guy from a bigger plumbing group in his state in the US that person came across and they went from something like six trucks to 60 trucks in. In under 36 months.

Speaker C: And now the guy way right, well, yeah.

Speaker B: And that guy, the guy they brought over because he was like a number two in this, this slightly bigger business. He now runs that. And. And my mate, he's now gone off and bought two other businesses. So he's got this portfolio. They're not even integrated. He's got the plumbing business. He's got some sort of education tech thing going on over here, but he hasn't sold that business. But it's making, I think it's certainly eight figures, maybe even more of revenue now. Crazy.

Speaker C: The secret there was realizing that he didn't know how to take it from where it is right now to where he wants to get it. So go and find somebody who knows that part.

Speaker B: He did it by luck. But in fairness, you're 100% right. In hindsight, exactly. What he did was get the right person in the right seat. But he had someone leave because they weren't well, and then he just happened to go and hire someone that he thought could be interesting. I should give him credit because it's a bit more than that. But it wasn't calculated. It wasn't that. He kind of got lucky with who he hired. But if you think about the principle of that, it's the same thing. The quickest way that I advise the founders that I work with to get to where they want to get to is bring the person who's done it, bring the person in, they've done it, and then get out of the way, lead them, but don't do the job.

Speaker C: And if you think of it as sports team. Right. You're not going to go and find the average players. You want to win the game. Yeah. So you're going. Everyone's got a role.

Speaker B: Yeah, yeah.

Speaker C: Right. And put them into those roles. Otherwise you're running over there to play defense there, and then over there to play goalie, and then over there to play, and you're never going to win. It's just you're trying to pick up the pieces.

Speaker B: That's the chaos.

Speaker C: So much energy, so much chaos.

Speaker B: Sounds exhausting talking about it, doesn't it?

Speaker C: Yeah, yeah.

Speaker B: Very good. Well, let's talk about. We've, um, alluded to the small giants community a few times. Ah. On this. On this conversation today. On this conversation. Um, go through it in more detail because I'm quite fascinated by what you now run. Uh, particularly the concept of small giants. Where did that come from?

Speaker C: Yeah, so, um, I have to give. A guy called Jay Gultz, who owns the Galtz Group in Chicago, came up with a name. So Bo Burning was writing the book, which is now Small Giants. And I think the book was going to be called something about Mojo, Finding Mojo, or Mojo, which is this. You walk in a business and you feel the kind of business equivalent of charisma, which is Mojo. Just this vibe, energy in these businesses. And he, he noticed that there were businesses that had this vibe and this energy, and he wanted to figure out what made them what they are. So there are so 12 or so businesses in the original research project and what ultimately turned into the book and the interviews that he did. And they ranged from, I think Selima Inc. Which is a. A lady who was selling dresses, so Solopreneur selling these one of a kind dresses, to Cliff Bar, who recently sold to Mondelez for 2.9 billion.

Speaker B: Wow. Yeah. That's not a small. Is that a small giant?

Speaker C: I. I suppose it's.

Speaker B: It's a giant.

Speaker C: The question there was, does every the, you know, does everybody have their number? And I guess for them it was 2.9 billion. And I think it was part ESOP. So some went to the ESOP, some went to the owners. Um, so this book was written and there were businesses that were, I think Norm Brodsky, City storage was around 100 million that he sold the business for and then still owned the property, which was a few hundred million. And then he bought it back from private equity because they screwed it up. Um, Paul Spiegelman, who wasn't in the book, whose co founder also sold the business for somewhere near probably 100 million or so. So there are some large businesses, but they're equally some small businesses. I think that this idea of a small giant is more about businesses that put people first, that make decisions by values that are very purpose driven. They've got a clear sense of what they're trying to achieve in the world and the difference that they're trying to make in the world. And that's what brought them all together. These are the businesses that we wanted to run, we wanted to create, that we wanted to grow. And instead of putting growth first, we wanted to create a business that was seen as a great business. Um, when it started. Couldn't really quantify whether there was a return on investment on this idea of purpose. But we started to do research. And I mean today we all know that purpose is as popular as protein at the moment. You kind of get it everywhere. Everybody's talking about having a sense of purpose and purpose is all over. Um, but yeah, so I think the kind of average small giant is probably somewhere between 10 and 250 million odd. Um, they do. Many of the businesses will get to 10 million and, and then get involved in communities like Tugboat, where Dave Wharton's working with them to become what he terms evergreen businesses. So just to continue and thrive generation on generation, um, we're more focused on building the leadership teams, so helping business owners and those businesses to build really great leadership teams. And we do that through our Leadership Academy and our Journey program. So we've got a bunch of programs that we take, um, CEOs, founders and next gen leaders through. But the community is really about companies who share a similar kind of thinking about how a business should be built. Um, and those are wanting to do it my own way. Deep sense of purpose, very, uh, closely connected to the community. So the community shapes the business as much as the business shapes the community and employees. All the different stakeholders, all the people are really well looked after, great relationships with them. Started in 2011, we're now 2026. So we've just come through our 16th kind of get together summit of businesses. Um, but we find all sorts of other ways of getting together during the rest of the hours just looking at, putting together a passport program where we go behind the scenes at a, uh, business here or in Munich, um, in September. So we'll go and spend time with them, with another business and learn from those businesses. And we have this R and D or Robin deploy kind of thing at

Speaker B: small giants where you go in, you

Speaker C: take something, you put it in your own business and you see how it works. And a lot of the businesses are grown off that R and D, that Robin deployment, uh, framework.

Speaker B: So interesting though, isn't it? So that. Just to play with the purpose point, because you're right, it's a very, um, used term. It's a very used term in the investor world now as. Ah, well, because you're finding that the people, um, who want to invest in businesses are, offer more often than not asking about impact and purpose as opposed to just money, so. Meaning that they will want to put money into a fund that has the right balance between impact and return.

Speaker C: Yeah, which is interesting.

Speaker B: I didn't used to be like that. Used to be very, very money, money, money. But I, um, would imagine, my question is, I imagine in your community the perception of private equity must go down.

Speaker C: Well, it doesn't go down well.

Speaker B: You, you know, but I'm joking. It's a leading question. But I mean, because, because there are different types of private equity. So it's a little bit unfair to say it is un.

Speaker C: And I mean, I think, I think a lot of these business owners are, uh, thinking about their purpose. I'll give you one example. Um, one of the members owns a managed service provider. And his whole purpose is around bridging the gap between the haves and the haves not. So he thinks if he can do that in his company with his employees, there's this huge divide in the States and everywhere else. And if he can try and make an impact there, he knows that he could take some money, sell off into the sunset, go play golf or whatever. But Eric wants to make that difference in the world and he set up an esop and you know, when he leaves and uh, and the private equity comes and makes the employees an offer, who knows if they're going to carry on with the same purpose. But his purpose is, is trying to bridge that gap. And he talks about being a shining light for other businesses to do similar things. And I hear this quite often where business owners sort of talk about being beacons for other businesses. So thinking about their purpose and being a beacon for other businesses globally because business is small business entrepreneurship, we can affect change in the world. We can have that massive change. And I think a lot of them care very deeply about that. I mean, that said, there are many business owners who have decided to go the private equity route. Paul Spiegelman, who co founded small giants, um, ultimately went strategic, looked at private equity first, nearly signed, and it was only because the CEO, they were going to parachute in and said to him, paul, I don't think we're going to hit the numbers. And he pulled back and he said, okay, not a good idea. Let's 11th hour pulled the plug and ultimately went with a strategic exit. But it's not, not to say then they're not exploring. I think another, another person's worried about the dental industry and how all the dentists are being rolled up, so patient care is going down and they care deeply about these things and they're trying to make an impact in the world.

Speaker B: It's interesting, isn't it? I do think the future is going to be more of a partnership between capital, uh, generally and entrepreneurship, or what I call operations, because, Because I think, you know, to make a bigger impact if done the right way. It's the marriage between those two things.

Speaker C: How do we solve the world's big problems?

Speaker B: Yeah, well, it's got, it's. There's a capital layer, right? Like, you know, I mean, and, and I think the problem sometimes is people get, um, you know, a fear of that, a fear of that world and because they don't understand it, it's like, it's like when you see most entrepreneurs or business owners don't like debt, for example, so, you know, it's, it is what it is.

Speaker C: Part of how we operate, what we do is just being responsible, isn't it, like.

Speaker B: Yeah, exactly. Well, listen, sir, it has been a absolute pleasure. I mean, um, we've been, uh, talking for some time in the. The social channels and everything else. It's great that you've, um, you've got the book out now because I know you've been talking about that for a while. Um, I look forward to you beat me to it. Well, I'm gonna, I'm gonna go and scrutinize the last section and just see how good the exhibit is.

Speaker C: But I, I really appreciate being, being here with you, Nick. I've listened to the podcast for years, got to know you, and, um, I love the work you're doing. I just wish so many more business owners would, would sort of stick the pods in the ears and, and have a listen because there's so much good stuff here and I appreciate you.

Speaker B: Yeah, I appreciate that. Yeah, 400 odd episodes into it. It's a, uh, it's a marathon.

Speaker C: It's been a marathon.

Speaker B: All right, so. Well, thank you very much and yeah, look forward to some future collaborations for sure.

Speaker C: Thanks, Nick.

Speaker A: Hey, thank you for listening to this episode of Scale up with Nick Bradley. If you enjoy the show just as much as I enjoy creating it for you, then I'd really appreciate you leaving a five star review wherever you listen to your podcasts. And while you're there, why not subscribe to the channel so you never miss a future episode? It really helps me, it helps the show. Plus it makes it easier for others to access the content that I'm producing week in and week out. And finally, if you want more information about about anything you heard in today's show, or to find out how you can get more help in scaling up your business and your life, click the link in the show notes now to learn about our coaching, mentoring and mastermind programs.

Speaker B: See you soon.