EP219: What To Do When Disaster Strikes: The Entrepreneur's Real Test

Speaker A: Is Michael Gilmore. I'm his co host and welcome to the show. This is an interesting topic because we're really going to get deep into how to mitigate the loss in a disaster and how to maximize the benefit of in a disaster. And there have been a lot of times in my life where I've gone through a disaster and it's actually turned out better on the other side. And there's been a lot of times I've gone through disaster and it's been obviously horrible. We can't change disaster. We cannot change what happens to us when disaster strikes. But what we can do change or uh, what we can manage is how we respond to, to that disaster. And today that is the topic we're going to hit. And I have done it both ways. I've gone into a disaster and went home and curled up into a ball and let it roll out and uh, have more chaos follow and failure. Or I've done it the other way too, where I embrace it, understand it, fight it and win back. And let's get. We're going to go deep into this. Michael Gilmour is our guest. He comes in from Australia and he came up with this topic. And I love this topic. Michael, I have to say, but I'm curious why you came up with this topic. What was your thinking behind it? There he is.

Speaker B: Hi there. I'm, um. Here. I'm here. It is so good to be here. For the completed entrepreneur, it's my favorite time of the week where I get to interact, calling with other entrepreneurs. Those in the room are those when it's syndicated on podcasts and everything. And it's one of those special moments in my week where giving back to the entrepreneurial community and when I looked at this topic, Colin said what to do when disaster strikes. It happens to every entrepreneur. And it's something that's quite often just not talked about. And I thought, gee, it'd be really good to unpack this one. And I know in my business career I've had so many disasters. Like, it's just, it's been, uh, so many disasters, so many highs, so many lows as such. And I know there's be some people in this room right now thinking, yeah, I'm going through one of those moments when there's disasters. Yeah, you've lost a part, uh, a key partner, you've lost a key client, you aren't able to raise some cash or something like that, and you were really banking on raising that cash. There's a whole lot of things on the business side that can really impact you with a disaster. But there's also on the personal side as well. What do you do when your child gets really sick? That's a disaster. What do you do when you have friction between your partner and yourself? What do you do in these personal circumstances or your personal finances really struggle or there's myriad of different things can happen and every story is a little bit different. Colin And I was thinking, to be quite blunt, I was thinking this is a topic that no one talks about. They always talk about, man, I triumphed over adversity. I did this, I did that, it was just awesome. And look, I then saw a unicorn floating through the sky and a pig flew as well. And all this sort of stuff. Everyone talks about those times, the great times. But how about the really tough times? Those tough times when you're waking up every hour and you just can't get any sleep. There's times when you feel all alone, you're in your business and you don't have anyone you can turn to. There's times when no one around you seems to understand what's going on. There's times when you go to a friend's birthday party and you think it's so frivolous compared to what you're dealing with. These sort of things are important for an entrepreneur to actually to wrestle with, to understand, to come to grips with, to. These are really important. And how do you deal with them in a decision making sense? And how do you deal with them, um, in an emotional sense? Because out, uh, of all the things an entrepreneur faces, the disasters will take the biggest emotional toll. So how do you deal with that? And so Colin, I thought to myself, this is a topic we need to really unpack. So if you're in the audience there and you're saying, oh wow, this is, this sounds really interesting. I've got something to contribute to this or I have some questions or whatever it is, put your hand up. We'd love to have you up on stage. We can see we've already got JL up here. Maybe we can flip to JL there and JL Fire away with your questions on this topic and then I'll come back to Colin. Hello, good afternoon folks. Or good evening to some of just. Yes, good morning for me. Oh, uh, good morning. There you go. Good evening, good morning, good afternoon. Depending on where you are. I just wanted to say I'm so glad that you covered this topic. This topic is a kind of a, how do I say it is the calm before the storm for some of us, some of these topics, when disaster hits, it's the beginning of the ending. You just don't know it. I guess it just depends on how you react to it.

Speaker A: Right?

Speaker B: But people, like you said, they don't talk about it. They don't talk about it at all. I had a startup and one of these things kind of happened to me and it kind of led to the beginning of the end of my business. Not the end of my business, but the end of me being with my business. So I, um, am just here to listen and learn and contribute. When you called it, um, on.

Speaker A: I think that's going to be a fascinating story. But before we put pull, before we lean on you, J.L. michael, let's get down and dirty. You brought this topic up. And this is all about stories and learning from actual events. I've got two right now in my mind right now that I'd like to talk about two disasters. There's probably about, uh, Give me about five minutes. I'll probably have ten. But I got two right now. But I'd like for you to go first. You gotta share with us a time when you went through a disaster and almost felt like this is it, or whatever. And how you dealt with it in how you dealt with it. Like, I opened the show up by saying maybe that you didn't deal with it and that's okay. Everybody deals with disaster differently, right?

Speaker B: And.

Speaker A: Or maybe you did deal with it in a particular way and you turned it around. It made it a better outcome, or at least you had a better mindset from the outcome that you had given the disaster. So why don't you start with sharing your disaster? One of them. And I know you've had many.

Speaker B: Yeah, uh, one of them. I had one happen this week. But wow, okay. Which I'll. I'll share, but I'll go back to. Yeah, I'm working my way through it, but back in 2000, 2000, 2001, and I end up raising numbers of millions of dollars in venture capital. And it was, I remember finally getting the signed documents, all that sort of stuff. And I don't know, half a dozen or so small investors, but one major investor. And I'll never forget, I was in this dingy old office at the time and it was an online business. It was amazing idea, amazing concept that it was getting invested into, by the way. And I remember getting the signed papers and I leapt to the roof. I'm, um, sure my head hit the roof. I was so excited. And particularly when you see that first it came in tranches from the major investor. And I remember seeing the first. My bank balance, the first time the first check hit, and I was so excited. Now, the fast forward, was it 18 months or something like that? And just so happens that investor was compact computers. And at that time, I woke up one day, and the business model was basically burned down your cash. And I employed 25 people or some of that. Right.

Speaker A: The business model was what? Burn down what?

Speaker B: Burn down the cash, and then you get your next tranche as you.

Speaker A: Got it. Okay.

Speaker B: Yeah.

Speaker A: Okay. Got it.

Speaker B: And you met your milestones, all that sort of stuff. So we smashed the milestone. And so, uh, I put my head out to the. For the next tranche money. And so the guys from Compaq said, look, it's not coming. And I said, sorry, yeah, it's not coming. And I. I said, oh, I'm sorry.

Speaker A: You're.

Speaker B: You're obligated. And they said, yeah, we know, but we're merging with Hewlett Packard, and you're just one of many small little investments. This is getting in the way of this global merger of these two huge companies. And Basically, we've allocated $300 million in legal fees to clean these things up. And lawyer number 455 will speak to you in six months time. This I'm obviously paraphrasing a lot. Yeah. And I thought, holy crap. Like, we ran their cash down. We did exactly what we said we do. We've done everything right. And I was like, I'll never forget that phone call. And the guy from Compact Australia said, look, I'm really sorry. I know this is not something you want to hear. I said something I want to hear. You got to be kidding me. It's just like, I'm, uh, looking around all these people in my office and everything like that. They've all been working the rear end off to deliver this product and everything. And it was the ultimate disaster. The ultimate disaster. I had no wriggle room. I had to instantly raise capital. And if I didn't do that, we're dead. And if you've ever raised capital, had to do it instantaneously, you'll understand that basically, it's impossible.

Speaker A: It's expensive or impossible.

Speaker B: Yeah. Oh, yeah. It's expensive or impossible. And. Yeah. So what did I end up doing? It's funny. I'm emotionally getting back, remembering. It's funny. Emotions are a very strong memory. And, uh, one of the first things I did was I spoke to the staff. I said, this is what's happened. I'm really sorry. I put all the cards on the table. And the second thing I did was I spoke to these small investors and I said, this is what's happened. The third thing I did was I went and personally visited every, uh, account payable, or if I couldn't visit them, I called them up and I said, this is what's happened and we're working our way through it. We need some time to work our way through it. But I will keep you up to date, uh, basically all the obligations you have to do. And let me tell you, this is one of the most humiliating things you feel like you're doing as an entrepreneur. But to this day, because I did that, I'm held in high esteem by many of those people because I was right up front, said, this is what we're doing. And yeah, uh, and I did. I kept them informed. And the biggest issue for me was making sure we weren't trading while insolvent at any time. As soon as you trade, if you trade while insolvent, by the way, which is you're incurring debt, when you know you cannot pay, then that's a jailable offense. It's one thing that if you have the support of your small investors and they can tip some money in and everything like that to try to keep it going and all that sort of thing. So as soon as that, the number one issue for me was soon as that was pulled, then I had to close the company. Because whatever you do as an entrepreneur, you can always live to fight again. But it's very live to fight very hard to live to fight again from jail. You've got to do the right thing by everyone. And you have to be very clear on the law, uh, around these sort of times. Yeah, so that, that's what I ended up doing. And emotionally, I remember my wife, uh, she's the most wonderful person in the world. She really is. She went and got a church m minister to come around and try to spend some time with me. And it gets the point where you just don't want to talk any BS anymore. You really do. And I said to the guy, I said, he goes, oh, I really care what you're going through. No one can understand what you're going through. They have no idea. And I said to him, I'll decide. I'll, uh, work out whether you actually care or not. When you give me a call in two weeks time, you become really like, just cut to the chase. And I was very abrasive with the guy because you still have time. I remember going up in the elevator, Colin, and I put my head down. I end up working. I was up at about 4:30 each day. I uh, began to the office around um, six. And it was, I put my head down in the elevator and I'd say this. It was like a mantra. It was into the breach. I now come the breach of a gun and you get shot out of the gun and I put my head up, I step out of the elevator and it was like you're instantly into chaos instantaneously. And it was emotionally the toll that took on me was really hard. But it was hardest when I was working till late at night. And one time my wife said to me, she said need to tell you something. And I said okay. Today Tim, our uh, son, he used to always, his job was to set the table for dinner and he'd say is dad coming home for dinner? And ah, my wife would say he's not able to come to dinner. But then she said something to me which it actually broke me. Colin, he said today he stopped asking. Today he stopped asking. Yeah. And it was yeah, that I was working, trying to rescue this whole situation, rescue everyone else and look after staff, look after. I was trying to do everything to keep things going. In the end we had to really look at the cold light day and sort of crunch the numbers and everything and said okay, we just got to close this thing down. So we put it into administration and it came out of administration. In fact all the administration.

Speaker A: We don't. The rest of the world doesn't understand what that means.

Speaker B: Oh, administration. It's not bankruptcy.

Speaker A: Sort of like a bankruptcy protection.

Speaker B: Yeah, it's a bit like the chapter 11 hexion.

Speaker A: Chapter 11 states versus chapter 7. That's right.

Speaker B: Yeah. Yeah. So what it is, you're doing a deal with your creditors? Yeah, it's chapter 11 and yeah, okay. Chapter 11. Okay. That's what it is. I ended up doing a deal with the creditors. Every one of the creditors said these guys have done nothing wrong and look, it's just one of those things that happen in business and all that sort of stuff. And they actually voted to take 10 cents of the dollar. I can't remember what it was now. And for the business to continue and to get recapitalized and continue. And so they voted for that. But I think Colin, the thing that really struck me was I've never felt so lonely in my life. I've never felt so lonely. It was.

Speaker A: Were you worried about the way other Paul thought about you? At that point, I'm just curious. Not your family.

Speaker B: I didn't have the, I did not have the mind space for that. The thing I had to do. And I actually went through a ritual every morning. I looked in the mirror, you have your shower, get your clothes on, all that sort of stuff. You look in the mirror and you say, do I like what I see? In other words, am, um, I operating with integrity? That was the key thing for me. The absolute key thing for me was I'm operating with integrity and am I doing my best. Other people will not understand, but was uh, I doing my best. For instance, one of, one of my exec guys. One of the things you'll discover by your team during these times is the immense uh, pressure that comes on your team as well. Put this way, we have to get rid of majority of the staff, but you get some individuals in the team, the management team who really do not understand what you're going through and how little control you actually have other than trying to operate with integrity. And they, I heard one of the guys, one of my key guys was down the local pub and just absolutely blasting me to numbers of the staff, the other senior staff and everything that I was, I was an idiot. You have no idea what I'm doing, everything. And of course it came back to me and that was really hard to take. It was really hard to say. But the thing to understand is in those times some, um, of even your closest confidants need to blow off steam. If they don't, they'll implode. And I had to find it within myself to be gracious, gracious towards him and fast forward quite a number of years later. And I reached out to him and he'd been running his own business and all that sort of stuff at this stage. And we got together and he apologized profusely for his conduct. He said, I never realized because he'd been through not something like this been seen how little decision making power sometimes you have. And we've become great friends since. Great friends. Awesome. Uh, and it's really, it's a really tough time. You must operate with integrity. If you do not operate with integrity, then what happens is that no one will ever follow you as a leader again. Yeah, yeah. You have to operate with integrity. And even if they do not understand what you're going through, which they won't by the way, they'll have no concept of what you're going through and just understand that. I had to pick a term that's the cross you chose to Pick up. Yeah. When you became an entrepreneur, sometimes you just gotta go along and bear that. And that's really tough. It's really tough. And the small investors, they lost everything. They lost absolutely everything. Uh, I went back to them as a number of years later and I had another sort of business opportunity and they invested in it. Wow. And I remember when they said, here's some money to put into it and all that sort of stuff, I started crying. I couldn't help myself. Because this is where the question is, Colin, you asked before was, how do you know? Are you worried of what people think? And I go, no, I was too concerned about other things. But in that moment, I suddenly realized they saw me in a way that I didn't know. Uh, they saw me. They saw me in a positive light. And, um, they said, no, look, you did everything right, but we're happy to put some money with you. And I tell you what, I made sure they made up an absolute killing on the new venture. And they did. They made a killing. And I did everything I could to. So that was the case. And so many things made up on things. It was an incredible journey. The other thing I ended up making decisions about is when you have your business go down. Yeah. One of the things. And you've got other investors involved and all that sort of stuff is the first thing an entrepreneur normally does is doesn't take a salary. Let me tell you, that is the stupidest thing you could possibly ever do because everyone else around you is assuming you are taking a salary, including the small investors. They're assuming you're taking sovereigns, take your money that's been agreed to off the table. So if you've got some cash still in the business and everything like that, then take the money. And the reason why is because you can always put it back in. But you can't put it back in if you don't have it. So take the money off the table. That's number one, one of the lessons I learned. And, uh, yeah, it's. You think it's like brownie points, like you're a hero because you're not taking your salary. Everyone else is looking at you and saying, you're an idiot. And I learned that that was a hard lesson to learn. So I didn't take a whole lot of salary for quite some time. And when this first happened, Colin, and what it did was it put my family through hell. It really did. And so on the home front and everything like that. Yeah, we finally, in the end, I, uh, couldn't Continue on with the business. We closed it down, all that sort of stuff. There was too much emotional trauma such. But yeah, so I've um, got this. We had nothing. We really had nothing. And I was juggling banks on the house and that sort of stuff. And there's all sorts of problems like going to the bank and saying look, you can either foreclose or you can take my like 50 grand with a crackhouse. I can't remember what it was. And you just put it on, put it on the mortgage. And so at least I can manage it from a 19% interest rate down to a 5% interest rate. You're having those sort of conversations. And every time I went out somewhere for a meeting or whatever, dare I say I ended up launching another business straight away to that. I had no choice. I had to do something. And uh, every time I went out I'd come back thinking I would have a sign, a for sale sign put on the house by the Mac. It was tough, uh, it was really tough. I went from being worth

Speaker A: uh, would

Speaker B: have been probably 20, 30 million bucks to overnight to be minus half a million overnight one day to the next. Yeah. And during those periods of time, Colin, the thing you learn really quickly is who your friends are. That's the thing you learn as an entrepreneur. Fast forward a number of years. I had a friend of mine, he had a public listed company and everything out there and went through something very similar. Some, another firm actually defrauded him. They actually, I think they ended up going to jail. But it basically bankrupted his company. And I went to his office on a Saturday and I sat across the desk from him and I said, you've discovered a few things, haven't you? Yeah. He goes, yep. Said, you've worked out who your friends are, don't you? Haven't you? And he goes, yep. Said I'm here. And he uh, started crying. Yeah. And it's tough. And even right now you probably hear it in my voice. I'm reliving some of the emotion of those times. It will scar you for life. And you'll learn so many lessons and you'll learn so many things as an entrepreneur. And you know what? There's a good reason why a lot of VCs are actually happy to go along and invest m with entrepreneurs that have been through something like that because the entrepreneur learns so much in that process. They learn so much and as long as they can keep their integrity. But that's the story.

Speaker A: That's a great story, Michael. That's a Great story. And I hear it in your voice, not uh, see it in your voice, how emotionally it impacted you and retelling that, what's challenging. Um, I know there are people in the audience too who would like to come up and talk about their story. And if they would like to, please just raise your hand and come join us. You might not know this, but this is actually the content used for a national article that is published on Startup Club. Startup Club gets top billing on Google and whatnot. It's quite a popular website. And uh, I posted the URL right there at the top. You can also sign up to that email list that we have there as well. But Michael, if you want I can jump into. I've got about four or five disasters in my mind to go from, from business to personal. And I've got one that I've been thinking about talking about that happened in 1996, if you want to hear it.

Speaker B: Yeah, fly away, Colin. This is almost therapy for us both I think because any entrepreneur being through, look, there's horrible times you go through and sometimes sharing them, it just, yeah, you really relive some of the emotion and the memory, but it actually helps. I had a bit of a disaster this week which I'll share towards the end of this, which was, which is interesting. But over to you, Colin. 1996, what happened?

Speaker A: Yeah, I have a very similar story to what happened to you in 2000 around the dot com crash and anyone who follows my story. I lost a hundred million dollars when I was 29 years old. But, but I'll. We could talk about that. Maybe not. Let's let me go back to 1996. We were uh, three business partners who started a company. It was called Internet Direct out of Canada. It became the largest ISP in Canada. But in 1996 we were uh, I think we're fighting for. We're number two, I believe, Internet service provider in the Toronto area. We serviced about a hundred thousand customers, which was quite a lot at the time for uh, an Internet service provider. The telecoms had, hadn't started yet or they were just jumping in on it. And we had set up an office with about 500 phone lines that would manage the ISP. ISPs Internet service provider and the utility company. I think it was not the phone company. I think it was another company was digging through, doing some digging up through the ground or whatever it was and managed to splut. Managed to cut all 500 phone lines.

Speaker B: Oh geez, I had that, I had that.

Speaker A: You don't know how it worked back then. Anyone who knows telecom, back then, each phone line was a separate wire. Okay, so think about that for a second. Each phone line, all 500 phone lines were a separate wire that connects. And at the time, again, we were the largest or second largest ISP in Toronto. I'll put you on mute there, Michael, or if you can, put yourself on mute because we're getting a little bit of background noise if it. So, uh, we were the second largest provider and we were out of business instantly. We spent four years building this company. A hundred thousand people, or maybe 200,000. A lot of people. Customers were cut off from the Internet and we were pretty much out of business. If you're down like that and you're in, uh, unrecoverable and many scenarios like that, it would take weeks to recover. Okay, now I called everyone into the boardroom, and I remember this very. This very specifically. I remember exactly what happened. It was about 10am and I called everyone into the boardroom, all the executives, and I said, team, and I said calmly, here's what we're going to do. We're in trouble. Y' all know it. We're out of business, pretty much not due to our fault, due to a mistake a, uh, utility company made. We're going to put out a press release and tell everyone what happened instead of hiding behind it, we're going to face it. We're going to face it directly. And we put out a press release and it went out to the media in Toronto. And within an hour, every news station was reporting hundreds of thousands of people had been cut off the Internet from Internet Direct. And I remember that because it was constantly played all day long on the radio that Internet Direct, hundreds of thousands of people have been cut off. We became a household brand that day. You see where this is coming. We became a household name that day. They moved like fire. The utility, the phone company, they brought in people and 20. It took 24 hours straight work. We did not m. They worked overnight, 24 hours in a row, um, to splice each phone line and get the system back online. Because this was headline news. Okay? Our demise was headline news, but it wasn't about our demise. It was about all these customers who got cut off the Internet. Wow. And. And here's an example of a disaster turned into a positive outcome. Because we got resolved. The customers forgave us for being down for 24 hours or probably 48 hours or 36 hours or whatever it was. But we were successful in facing it directly and Coming out with a press release and making it news. And that was really probably the best example I have of turning a disaster into a positive. We had something similar about two years later. I don't know if you remember this. It was a scandal called Mafia Boy. He took down Yahoo and he took down a lot of websites. Yeah. And so we almost repeated the strategy and that this time we were really large. This time we're public. We're the largest in Canada. Service provider of Internet. And Mafia Boy was in Quebec. And he, uh, used our systems and the media tracked it down to our ISP and we had about four, 20 or so stations all parked in front of our building. So we announced a press conference and I ran the press conference, the Mafia Boy press conference. And literally it was funny because it hit cnn, it hit front page news all across the country. Uh, again, here was a scandal of, uh, an individual who was using our platform. And at the time we had all these consultants helping me out with PR and advising me and everything. And they're saying, like, just say this, just say that. But when I got in front of the cameras, I turned to the cameras and I said these. He was guy who took down Yahoo and a number of websites.

Speaker B: Yeah, he invented the DDoS. He invented the DDoS.

Speaker A: Probably the DDoS.

Speaker B: Yeah. It wasn't. He invented the DDoS.

Speaker A: Yeah, yeah, we had a lot of those in our time. But. But he, But I said this guy was a terrorist, a cyber terrorist, and he should be dealt with accordingly. And they literally had Bill Clinton on because he had some cyber terrorism thing. Cnn. And they had my clip on CNN running all day long. But again, here was another opportunity to take what appeared for a lot of companies to be very scary moment that somehow you were harboring a criminal on your network and turn it around to say, no, we actually exposed the criminal. We exposed the criminal. And here is what we did. And it turned into a very positive media event. And again now we became a household name throughout Canada in even getting some exposure in the US on that one. So there were two sort of PR events, negative, big events that we were able to turn into a very positive outcome.

Speaker B: Yeah, uh, that's great stories. Uh, I remember because I was. It's funny, uh, our lives were in parallel all the time. Here was in Australia, we actually had. I ran an ISP as well in Australia. We actually had the major telecommunication provider. When they launched their isp, they went to all the smaller ones like us, and they deliberately cut the phone lines. They actually sent people to cut the phone lines to be able to steal the customers there. And uh, I end up prosecuting them. Colin. And won the case and all that sort of stuff. It was a huge issue. It was a really big issue.

Speaker A: And that's probably the best example of torturous interference, which is a legal uh, term that we have in the United States and Canada. Torturous interference. You cannot uh, interfere with other people's contracts of customers. It's against the law.

Speaker B: Correct? That's, that's correct. Yeah. So there. But they actually had a strategy for doing all came out and all that sort of stuff. And so they end up paying millions and millions in the end. Yeah, but it was fun and cave. Wow, what a story. What a story. So what happened to me this week by the way? If you're in the audience, stick your hand up. We're telling some stories and stuff. Colin and I are having some great therapy here. For those of you wanna join us then feel free to come um, on up. So Tuesday night, Australian time here in Melbourne, Australia. I'm watching the TV and the treasurer of Australia gets up and he's declares the budget. And in declaring the budget he has all sorts different policies. So the first policy he decides to do is it's put a capital gains tax of 30%.

Speaker A: So like, uh, interesting because this is like an external shock. Like a lot of times you have disasters comes from external events, not internal events.

Speaker B: Correct.

Speaker A: That's interesting.

Speaker B: This is an external one. So he goes 30%, then he goes along and completely nukes family trust, all that sort of stuff. So I'm thinking, okay, so I've now doubled my tax probably at least. And I'm thinking what the heck is going on here? And it was just one bombshell after another. Basically it was, he said we're trying to make it much more equal and all that sort of stuff. And I'm thinking, okay, so you got two people. One is a sort of a worker earning $100,000 a year and there's an entrepreneur earning $100,000 a year. I said they're not equal because entrepreneur's taking all the risk. So the one thing the entrepreneur could do when my case was diversify income through family trust. And it helps them out from a tax perspective and it helps defray some of the risk. So they got rid of that. And I'm looking at this and going holy crap. Seriously? Seriously? Yeah. And you know, I'm, I'm looking at Singapore has a 0% capital gains tax rate was the US has been 0 to 20 depending how long you hold the asset for and all that sort of stuff. And uh, ah, look at all these different things Colin. And I'm thinking wow, how do you deal with these external things? And so the Reserve bank of Australia basically is going to be hiking interest rates as a result of this ridiculous budget. So they're going to be hiking interest rates. So it's harder and harder to get funds if I wanted to get funds through say borrowing or anything like that. So there's all these things happening external. And I know Colin, you've been through different things with hiking of interest rates and stuff which has been tremendous.

Speaker A: It's been killing small businesses. America is built on small businesses and we're paying 10%, 20% interest rates to fund our small businesses when big companies are getting billions in dollars in China and everywhere to fund their businesses and we're seeing growth. And I'm like wait a minute, there's no growth in the small business economy. It's a big business economy because interest rates are killing us.

Speaker B: That's absolutely correct. And because it basically is, it dries up capital and uh, it makes it really hard for the small business owner. And so I'm looking at all these different external shocks that are happening. So how did I react? One is both my wife and I, we got really angry not at each other but at the TV. So that felt good for about 10 minutes and then we realized okay, what are we to do? So the very next day we went out to lunch together and we mapped out a plan. We say these are the things we're going to do. And the number one thing in those circumstances when you get, when you get an external shocks like that, you have to, the first thing you got to do is collect all the information and come and get the facts. Go and get the actual facts. And so that's what I began to do. For the last few days uh, I've been just getting the facts, lining all the ducks up. What is the actual impact? And so one of the options we're exploring, Colin, and I know I've talked to you about this is what happens if we as move the companies to the US or Singapore or somewhere and the we just leave Australia. Yeah, yeah. So we become a non resident.

Speaker A: So you're trying to solve the problem already right? You're trying to mentally get.

Speaker B: Oh yeah. So I've already had meetings with organizations that specialize in doing this and I've uh, got another one on Monday and just basically getting all the facts. Okay. And then I'll do is just put a, put it in a spreadsheet and say, what happens if we stay? What happens if we go? What's the cost, what's the benefits? All that sort of stuff. And you make a decision off the facts, not the emotion. Because trust me, uh, I was raging at the tv, television. Then I sat down last night and I saw the opposition leader and he gets up and he said it's his reply to the budget. And he says all these things. The other guy said if we get into government we're going to repeal all of them. I'm like hooray, if you get into government, if you are elected and that sort of stuff. And they're typically the more fiscally responsible party and everything. Yeah, I was cheering for them and he basically said we've got to go on back small business and all that sort of stuff and these are the things that we're going to do. One of the acts we have in Australia is the Construction act and has 2000 pages of legislation that builders need to know to be able to build quotation marks safely and all that sort of stuff. And he said we're going to slash it down to 200. And he just went through one act after another how this could smash regulation and make it simplify everything, particularly for small business. And uh, I was almost on my feet. Colin. CHEERING Then I realized, but he's not in government yet. What am I doing? But yeah, so it's, there's external factors which will impact your business and ah, particularly if you are at the stage of looking for an exit and you go from doing, let's call it 10% capital gain to say 30% capital gain. That's a big chunk. And I've got to make some decisions around this. There's other options. And so it was interesting talking to the first firm I talked to about this. They've already had a stack of businesses leaving, wanting to leave Australia. Do exactly, exploring exactly what I was talking about. I then spoke to the head of the Angels community, uh, out of Brisbane, Australia, angel investment community. And he said I've had a really bad thing happen. And I said what's that? He said I've had one of my investments go completely ballistic and this little bit of money I tipped in is now worth $60 million. And I said that's great news. He said yeah, the problem is the government is wanting to take 10% unrealized capital gains.

Speaker A: Are, uh, they doing unrealized capital gains?

Speaker B: Unrealized capital gains. A new rule they passed, uh, unrealized capital gains 10%. So I've got to come up with $6 million.

Speaker A: Yeah.

Speaker B: And I just don't have the cash and I don't know what to do yet. I'm trying to.

Speaker A: Almost another show. I feel like we're diverting a little bit, but it is almost another show because, you know, it's disaster. Many people who buy options or employees get options and then they exercise them before the company sells and then things go wrong. And that actually happened in my, my life. Right. But before things go wrong and then they end up paying hundreds of thousands in taxes and they never even made a cent.

Speaker B: That's right.

Speaker A: Yeah. So that's a scary thing. Yeah, it's very scary.

Speaker B: The number one thing you've got to have in these circumstances also is a good personal accountant and a good corporate accountant. I actually have two separate account.

Speaker A: A good psychologist.

Speaker B: Yeah, the good psychologists at these times. Yeah, but you have a good personal accountant, good corporate account. So I've already talked to my corporate accountant, my personal accountant and said, uh, I can't talk to you yet. I'm gathering all the facts on how do we navigate our clients through this mess. I said yeah, that's fine, it's okay, we'll talk next week. And yeah, so it's, it's an absolute disaster.

Speaker A: I've got a, I got another external ah, shock one that I think, I think and this is the one that, the big one. Right. I was tempted should uh, I maybe not even bring this up. And those who follow my story know what I'm going to say here. They know what happened. But let's, I'm going to take you back again. It's the same company that the phone lines got cut. Uh, we spent 10 years building it, took it public, merged with a cable company. It went to over a billion dollars in market cap. I'm 29 years old, I own 13% of this company. At this point. We had signed up to a. When we merged the company, uh, I had an 18 month lockup and something happened in March of 2000. And that's the external shock that you were talking about. Right. We know what happened. The dot com crash right in it. And when we talk about a crash, people in the audience don't know this here right now, but when we talk about a crash, the nasdaq went from 5000 down to just 500. No, it was 1200. Just over 1200.

Speaker B: 1200. Yeah, that's right.

Speaker A: So uh, can you imagine if the stock market today dropped 80%? Can you imagine that? That is just such massive drop for such a technological, massive innovation like the Internet hitting. And broadband was just hitting in 2002, 2000 as well. And so here it was, we were like on top of the world. Company was doing very well. We had signed up to this. We spent 10 years building the company. Uh, and we signed up with this M merger. We did the merger stock went to a billion dollars. And within 18 months after the. No, without 18 months. Within six, uh, months to a year after we signed the merger, the dot com crash happens and the NASDAQ fell. We were trying to raise $50 million at the time and unfortunately we pulled the offering. We said, oh, we'll wait till it gets better. The Nasdaq went from 5,000 to 4,000. We're saying, oh, let's just wait until it gets better. If anybody's followed the stock market, it took 15 years for the Nasdaq to hit 5,000 again. But that, uh, that led to filing for bankruptcy protection. Okay. And unfortunately, the night the shares that were trading at $19 on the stock market, I ended up selling those shares for six cents a share. Six, uh, something a share. It was a disaster. And so that's when I basically, the day I, you guys get emotional because the day I found out that we were going to go into bankruptcy protection, I had, I was running a division of about 40 people and I called them all into the room and I said, everyone here, every one of you is being laid off right now, including myself. And um, when you make these decisions in business, you, it impacts you and your family. And Obviously I lost 98% of my wealth. It was a horrible thing. But there were probably about 15 paper millionaires who lost it all as well because we had options in the company. And there were hundreds of people who lost their job as well. And I will always remember that. I will always remember those people and how my decision to build a company over 10 years and then to mess, uh, it up over 10 weeks and exit. I will always remember how I impacted others. So I did go home that those days and curl up on the bed and just, I didn't want to think about it anymore. Now the one thing I did do is over. It took me a few weeks to get over this. I said, uh, what do I really love to do? My brother and I launched another company and it was in the hosting space at the time. And we love technology. We love the way technology affects and changes, changes the world. So we launched this hosting company and it became more one of the most successful Hosting companies in the world. We took it public in 2006 and in 2008 we sold it to a Fortune 500 company for 17 times EBITDA 130% over our publicly traded stock price. And, and this time we took all cash. So the lesson that I learned from that Michael, was that liquidity or control. We had an 18 month lockup. We're not going to allow our company to be in a lockup like that or my shares. I'll only allow if we do go down a path. I have to have, I have to have liquidity, I have to have cash or liquid stock. You know, I go through an exit. And the second thing is bad things do happen. And we saw that Repeat again in 2022. 2021 was hot. And then in 2022 you saw stocks collapse. You saw things were crazy in 2021 with NFTs and GameStop stock going through the roof. And so one of the benefits of this collapse, one of the things that, that I believe has helped change the world has been the book Start Scale, Exit, repeat. And the book never could have been written had I not gone through losing um, most of my wealth at that time in my life. It became the basis of Start scale, Exit, repeat versus start scale keep. Because bad things do happen and it happens to a lot of people. And in our life is a short life. And when we do make, we do have a success, we want to take some money off the table. And there's many reasons to do that as we go throughout our life. And uh, versus trying to hold on to that one big payday 25 years later because things can go awry, things can go off the rails. And it really became the basis of the book. And I've done now 12 very successful businesses, uh, multimillion dollar companies. I sold that. The second company that sold to a uh, Fortune 500 company, we sold it a month before the Lehman crisis. The DOC log. The other company that we sold recently to, GoDaddy, we sold it in 2020, 2021. And that was like six months before the tech wreck. I was asked to speak at MIT eventually after all these sort of like timely exits. And they, I was asked to speak there and they asked me why did you like, how are you so good at starting and scaling businesses and exiting and how do you get your timing so right? And I said that's because I really, I probably screwed it up more than most people would have by losing a hundred million dollars or more. 120, 130 million when I was 29 years old. And it really is the basis, it really did become the basis for the book. And, and today that book obviously has been a best selling book. 15 number one in on Amazon and 40 global global awards. And I really believe that we can learn from these experiences, these disasters. I didn't have to tell people. I literally was publicly embarrassed on the news on CN at the time in Canada, the cnn, sort of the CNBC of Canada, BNN News Network. And it was very embarrassing. It was nice to come back to the news Network though in 2008 and they ran a segment about myself, about how I had went from rags to riches to rags to riches. So that was pretty nice. Now life's a roller coaster. When you're an entrepreneur, life is a roller coaster. It's gonna go, you're gonna go up and you're gonna go down and it is, you're going to deal with disaster. And how you deal with that disaster, what you learn from it, that is the key and that's what makes you a stronger entrepreneur. And we keep coming back. We get knocked down, we get knocked down, we get knocked down and we keep coming back. Michael?

Speaker B: Yeah. I think, Colin, one of the things you often say is that entrepreneurship is a skill. It's like a trade. And the trade we have as entrepreneurs is we know how to make money. And when you've been through some of these experiences that you've laid and I've related and all that sort of stuff is that you know how to, you learn how to navigate them because it is a trade. There's a skill set that you go through. Is it in disastrous times, is it fun? No, it's not fun. But you work the problem. And the thing as entrepreneurs, for those of you in the audience or on the, on the podcast need to understand, is that there's not many people in the world who actually know how to make money, to take nothing and turn it into something. And they're called entrepreneurs. And if you have that gift, then it could be that this business fails, but the next one succeeds and you get back up and you just keep on learning and you get better and better and, uh.

Speaker A: Exactly. And I got a nice clip. I got a nice, I got a nice clip. You want to hear it?

Speaker B: Yeah. Far away.

Speaker A: You might recognize the voice.

Speaker B: Okay. He's going to keep you there permanently if you let it. You don't be a nobody. He's going to hit as hard as life. But it ain't about how hard you hit, it's about how hard you can get hit and keep moving forward, how much you can take and, uh, keep moving forward. That's how winner is done. Now, if you know what you're worth, then go out and get what you're worth. But you got to be willing to take the hits and not pointing fingers saying you ain't where you want to be because of him or her body

Speaker A: too.

Speaker B: You're better than that.

Speaker A: You got to hit and you just get back up. Take those hits. The character of an entrepreneur isn't about getting hit. We're going to be hit. Right? We're all going to get. Maybe we're not all Elon Musk. Okay. But when we get hit, it's about how we get back up.

Speaker B: That's exactly right. That's a great speech. Yeah. Because we will be hit. You will be hit. And you'll feel the lowest of the low at sometimes. But are, uh, you going to get back up? Are you going to get back up? And that's what entrepreneurs do. And you'll learn a lot. Let me tell you, uh, when you get hit and you're down on the, down on the mat, whatever, and you get back up, just say to yourself, I've just been on a million dollar training course. I better make sure I learn from it or whatever the amount of money it is or whatever the situation is. I've just been on a really expensive training course. Learn. Um, so the next time you hit, you don't even go down. You stand and you take it and then you deal it back. Yeah.

Speaker A: That's a great way to end it, Michael. Thank you. I love this.

Speaker B: Yeah, yeah. This has been a great show. For those of you who are wondering about start, scale, exit, repeat, that's the book that Colin's actually written and it's become the bible for entrepreneurs quite seriously. I'm going to sprink your book for a second here, Colin, because for those of you in the audience don't know it, just go and buy it. Seriously, it's going to cost you 30 bucks or whatever it is. I didn't know what it is. Go to Amazon. Just go and buy. Don't read book. Get the audible then and listen to it. Seriously. It's the best training course you could ever go on. It's full of so many of these sort of stories and stuff like that. It's really from the heart and it's the amount of wisdom in that book. It is just, it's years, it's decades of experience and interviews and you name it. There's so much stuff in there. Just go and get it. Just stop messing around. When we've closed the room out, first thing you should do is go to Amazon. Just go and get it. Or audible or whatever it is. Just go and get it. And trust me, Colin's not retiring off the book royalties or anything like that. He really isn't. So it's not for the money. He just has a love for the entrepreneurial community in this clubhouse. We've been doing this now for four years, Colin, and we haven't made a penny. I'm not aware of making a penny, that's for sure. And I know you're not aware of making a penny either. We do it because we love entrepreneurs and we want to share our experiences and our knowledge with you to help you out in your business. And this is what the show the Complete Entrepreneur is all about. It's about learning to live the life of an entrepreneur. And I look forward to seeing you at 5pm next week on the Complete Entrepreneur as, uh, a part of Startup Club. I'll finish with one last thing. Go to Startup Club, sign up for the newsletter. You'll get one email a month. And if you're thinking, oh, I don't want to be spammed, I'll just grow up, you're going to get one email a month and it's so packed full of awesome stuff for entrepreneurs and it costs you nothing. Yeah, cost you nothing.

Speaker A: And I know that's also Michael.

Speaker B: If you really don't like it, unsubscribe for him.

Speaker A: Yeah, there you go. And I, I noticed a lot of people in the audience here who are not members of Startup Club on Clubhouse. Yeah, you can click the logo at the top here and join Startup Club, but you really don't know what's going on in Startup Club unless you sign up for that mailing list. Because that's what tells you who are the speakers we have on. We have a lot of guest speakers coming on Startup Club and if you want to know who's coming on, go to Startup Club and sign up the email list. Again, it's not, uh, we don't do any advertising, we don't do anything like that. We just try to help people out here. This has been a, a project, passion project for Michael and I and so many other people, probably a dozen people who work on Startup Club now. And we're all basically volunteers and we do have some paid staff that help it out. But thank you very much and we'll see you all next week.

Speaker B: I can't look forward to it. See you later, everyone. All the best in your business. Bye.