The Wise Exit

Robb Green - Episode 63 | CASHING OUT M&A PODCAST

00:00:00:20 - 00:00:13:23
Robb Green
So I said, All right, well, how much money do you want to put in the bank of Dad? She hadn't got her wallet and she happened to have after Christmas or something. She had $400. So she hand me $400 and she's like, I want to put $400 in the Bank of Dad. And I was like, Oh, bad news.

00:00:13:23 - 00:00:27:02
Robb Green
Unfortunately, Bank of Dad just failed. And she goes, That's okay. I just got insurance with Mummy. And I. And I was like, All right. Key concept. She's got it. She understands the banking system.

00:00:27:04 - 00:00:47:05
Todd Sullivan
Welcome to the Cashing Out podcast, where a fellow founders share real stories and offer honest advice around selling their companies to some of the top acquirers in the world. My name is Todd Sullivan, CEO of Exitwise, where we help business owners create the exits they deserve. Today, my guest is Robb Green, a serial entrepreneur who got fed up with corporate America.

00:00:47:05 - 00:01:22:15
Todd Sullivan
So he bought a ticket to China, found a supplier of innovative pet products and seven years ago launched his first business on Amazon. Since then, Rob has built and sold nine SBA eCommerce brands. Rob mastered this playbook so well that he's now buying Amazon focused e-commerce brands and optimizing these businesses for cash flow. In today's discussion, you'll learn how Rob evaluates opportunities, how he decides when it's time to sell a business, and how he brings his teenage kids into these companies and exposes them to the highs and lows of the life of an entrepreneur.

00:01:22:17 - 00:01:42:15
Todd Sullivan
I hope you enjoyed my conversation with Robb Green. Robb, thank you so much for joining me today. I've been really excited to chat with you. We've been talking to a lot of clients in the eCommerce world, and I feel like as much as that was my world, maybe what, ten years ago is when I sold my last e-commerce business.

00:01:42:20 - 00:02:07:12
Todd Sullivan
The world changes so quickly and you've built multiple brands in this space specific to Amazon, but I think you just have visibility into this world of building e-commerce businesses the right way, setting them up to exit. But you're also kind of have the pulse of what's happening in the M&A market today, particularly with the e-commerce aggregators. So when we had a chance to get you on, I immediately bumped Mark Cuban from the spot.

00:02:07:12 - 00:02:09:16
Todd Sullivan
So I really appreciate you being here.

00:02:09:18 - 00:02:13:04
Robb Green
Good choice. And just to be a little more clear.

00:02:13:06 - 00:02:23:03
Todd Sullivan
Yeah. So just to give us a sense of your background. I'd love to start with you. How did you decide? Like I got to be an entrepreneur?

00:02:23:05 - 00:02:40:23
Robb Green
Yeah. I think I always wanted to be an entrepreneur. I should know the path and how to get started or what to start with. You know, with the traditional round, with the college finance degree. Then got an MBA after that and worked for a bunch of Fortune 500 companies. But I was never really a great fit. I don't I don't think of myself as a good employee and a little bit too much.

00:02:41:01 - 00:02:58:00
Robb Green
I kicked too many tires and ruffled too many feathers, I think, to be a good employee, but I just didn't really know what to do. So I found my way into e-commerce kind of happenstance and started doing some drop shopping, teaching myself learning. And then that led to building brands, started building the first private label brand in 2015.

00:02:58:01 - 00:03:18:15
Robb Green
And since then I've done, let's call it a handful plus, exited three of them, sold one in ‘19, one in ‘20 and ‘21 bought one. We're in current acquisition mode trying to buy more. Been a crazy whirlwind the last few years in e-commerce. I know we'll get into that, but you saw a lot of money flat in and now you don't have a lot of buyers and I've seen a lot of people trying to sell.

00:03:18:15 - 00:03:24:19
Robb Green
So the whole it's done the typical ride, it's been up and down. It's been a roller coaster in our space for the last few years.

00:03:24:21 - 00:03:42:08
Todd Sullivan
I think it's so interesting the way you described it as like I kind of wanted to be an entrepreneur. I didn't know where to start and you're shortchanging yourself because I think you made this decision, right? You took some class, did you went to China like you. You just decided to go and do stuff that no one else was doing.

00:03:42:09 - 00:03:45:09
Todd Sullivan
Can you talk a little bit about that? Because I think it's really interesting.

00:03:45:11 - 00:03:58:19
Robb Green
Yeah. I mean, the first business I did, I just made a decision. I found an opportunity and I said, you know what? I'm going to create a website where to start doing this today, like I called a buddy. I said, I'm doing this with or without you. You want to do with me. Fortunately, his wife was smarter than he is and talked him into doing it with me.

00:03:58:19 - 00:04:15:23
Robb Green
And we started a little dropshipping business and then I bought it. It sounds crazy when I say this now, Todd, but back in 2014, I bought an online course and I just signed up for it, started learning about making my own products. I just booked a trip to China. I said, I'm going to the largest trade show in the world called the Canton Fair in Gwangju.

00:04:16:01 - 00:04:35:19
Robb Green
I've been there half dozen times. It's insane. It's like 11, 12 million square feet. It's unbelievable. It lasts for two weeks. It's just crazy experience. But I went and I was like, This is exactly what I want to do. This is easy. Like, this is a no brainer. We're going to figure out how to buy products and figure out how to brand them and figure out how to do all this stuff or start building brands as opposed to selling somebody else's product.

00:04:35:21 - 00:04:50:22
Robb Green
And that really led me down that path. But the real big catalyst for me is I had a job and I had corporate corporate America and our two young daughters, and I want to be able to spend my time with them. You know, we live in Phoenix. It’s hotter than Haiti here in the summer, so we try to get away from the summer and with a job, it's pretty tough to do.

00:04:50:22 - 00:05:08:21
Robb Green
So fortunately, once I was able to start doing this, you know, we've been gone. We leave for the entire summer. Kids go to school. Then two days we're out. We come back maybe two days before school starts. We avoid the entire summer, which, you know, this summer is 110 plus four. I don't even know how many days straight it wasn't here, but it was.

00:05:08:23 - 00:05:25:13
Robb Green
That was the designing. And I believe that everyone wants to design their life and it might as well design a dream life. So for me, I feel like entrepreneurship is really the path and allows me to have my lifestyle and have my dream life with my family and be healthy and live a great life.

00:05:25:15 - 00:05:50:05
Todd Sullivan
That's great. I can envision going I haven't been to that trade show in China, but I know the mentality that I have that that just looks like a sea of opportunity where I think a lot of people would be like, What are you going to do there? That just looks like confusion. And so, I mean, that's that's fantastic to make the decision to do it, find the product, put a brand on it, and then give it the distribution that you are enough to build up a company and sell it.

00:05:50:07 - 00:05:56:15
Todd Sullivan
All right. So you made that decision. You've got the products in mind. Can you tell us a little bit about the company and the trajectory?

00:05:56:17 - 00:06:18:02
Robb Green
Yeah, The first business I started, it was a dog product business. I didn't even have a dog at the time. Todd I'm a little bit ambivalent about the product or the category. Found an opportunity I still like. It sounds crazy now makes me laugh or I think about it, but it was a little dog booster seat is for little dogs under 20 pounds, so boost them up in the front seat so they can look out the window and see what's going on.

00:06:18:02 - 00:06:48:04
Robb Green
And you can attach them to like a harness so they're safer and then they can see around and they're not in the owner's lap. We sold 40 of those per day for years and years on Amazon. Right? And so that was the first product we did with that product. I created a little brand out of that sold that they, in 2020, partnered with another friend, created a coffee product business that again, I don't drink coffee, done coffee product business to make coffee French press cold brew. We needed supplements that go in there.

00:06:48:04 - 00:07:06:02
Robb Green
I sold that one in 2021. I bought a fitness brand, which is really one product from a friend of mine, turned that into a small fitness brand so that in 2019, I guess I'm really not I haven't been like entirely passionate about a category or subcategory. I think sometimes people get a little clouded when they get the passion.

00:07:06:02 - 00:07:25:10
Robb Green
I'd love to find something. I was super excited about it all in on. But right now, you know, we've done some stuff with the kids and named a brand after them. Arts and crafts for kids. We've done a lot of different stuff and created new products and new brands. And then the distribution channel you talked about is primarily Amazon, but we do sell Walmart, Shopify, things like that.

00:07:25:12 - 00:07:47:09
Todd Sullivan
It's fantastic. It sounds like you had some overlap there, right? So if you sold the dog product in 2020, but the fitness product in 2019, right, you've got some overlap. And did you ever think about, you know, that dog booster seat? Do I couple that with dog collars or leashes. Yeah. Or some service that's related Dogs. Yeah.

00:07:47:11 - 00:08:07:22
Robb Green
Yeah. Sorry. We had a bunch of products. You know, we had a handful of products, not just the dog booster seat was that was the first one. So we had like a backseat cover for dogs going to the car front seat. I think back then I really didn't understand the value of building a brand that I do now. I think it was more of like I'd call it more of a combination of products right underneath a brand name, underneath a logo, underneath a trademark.

00:08:08:00 - 00:08:31:18
Robb Green
And so it wasn't really about building a true brand, which is what we're trying to do now as we focus on acquiring a business that maybe has the right branding but doesn't understand distribution or sales and marketing. So I think I undervalued the branding back then, and that's something that I've really learned in the last few years, is now I want to build a proper large brand that can exit for, you know, nine figures instead of seven or eight.

00:08:31:20 - 00:08:51:00
Todd Sullivan
Man, if we had hours here, I'd love to hear, you know, really, what is your definition of that? Right? Because it sounds like if you've got a lot of products under a single brand, that that can resonate with a single customer, that you are in fact building a brand. But it sounds like you have more a bigger vision for what that could be.

00:08:51:02 - 00:09:03:15
Todd Sullivan
Can you tell me on on the dog products you sold that business. What was like, what was the decision? How did that come about? Somebody approach you or you made the conscious decision, We want to be out of this category.

00:09:03:17 - 00:09:21:04
Robb Green
Yeah. So let me take a step back in in what I was by myself for quite a while, running things, right? Typical solopreneur, wearing all the hats. And I realized I needed a better structure. And one thing I didn't want to do because I had a couple brands at the time, I didn't want to have a team that I then when I saw the brand, I lost a team member, right?

00:09:21:05 - 00:09:41:12
Robb Green
I feel like I'm going to put time and energy, coaching, money, invest in my people. I want to keep them. So a friend of mine, Steve, gave me this advice. So everybody works for Solving Alpha. It's one entity in the middle and all the employees work resolving out for each brand. Each LLC, which is a brand, pays solving Alpha to manage the brand for them.

00:09:41:14 - 00:10:11:08
Robb Green
So essentially it's brand management, like an agency, but they're all my own. I own all of them, so I'm not doing agency for anybody else. That allows me, I think i read, Built To Sell at the same time, that allows me to spin off or peel off one of the brands without destroying my team, affecting all the time energy we put in the team and we can sell the brand by itself, be an APA, not have to worry about any assets under it, just do an API and peel it off and sell it.

00:10:11:08 - 00:10:29:02
Robb Green
That way. It makes it very easy. So each one is built to sell, but we don't have to sell it, you know. And that structure has really allowed me and you guys a great question about, you know, what's the catalyst for deciding to sell a brand? Sometimes we've reached a maximum number of products. I mean, there's only so many ways to make coffee, to be honest with you.

00:10:29:04 - 00:10:47:01
Robb Green
There's only so many sweet devices to make coffee with. At some point you're like, All right, listen, there's only so many things we can do in this category because we were very niche in that category. So I think about it that way. That was an opportunity. Maybe the opportunities in that category are too difficult. Maybe the ROI isn't attractive in that category.

00:10:47:06 - 00:10:53:09
Robb Green
It might be time to move on and sell that brand, pull the capital back and then reinvest in another better opportunity.

00:10:53:11 - 00:11:03:09
Todd Sullivan
So when you make that decision to sell, you know, what is the process? Have you identified buyers? Are you bringing in brokers or bankers? How does that look for you?

00:11:03:11 - 00:11:22:11
Robb Green
I've done it a couple of different ways. I've used a broker twice and then I did the last one, the bigger one on my own. I have advised a ton of friends with this for some businesses. Unpaid advice, but advice, by the way, Todd it's just a free consultations to my friends. But I am the highest paid unpaid free counselor to my friends.

00:11:22:11 - 00:11:43:16
Robb Green
But I ran the last process on my own, so I targeted specific companies that I thought would be in the market. This was during the heyday of the aggregators back in 2020 and 2021, and I was extremely patient, reached out to see if it makes sense to have a conversation, had a conversation with a bunch of them, created enough interest with a few of them that they were bidding against each other.

00:11:43:21 - 00:11:54:01
Robb Green
So I ran my own process as a as a traditional investment banker would. That's great. I knew the industry well enough to be able to do that. And then kind of play two offers against each other.

00:11:54:03 - 00:12:14:06
Todd Sullivan
What I think is interesting is, you know, we're in a lot of transactions all the time and, you know, you have founders that say, I've got this business, I want someone to buy and I just want to walk away. And and that's a very difficult thing to do. But you've set up a process to be able to do that, but you're also approaching the right buyers, right?

00:12:14:06 - 00:12:36:00
Todd Sullivan
Those aggregators already have the staff, they have finance, they have h.r. They have marketing, they have tech. And so if they're plugging in a new brand into their engine, that makes a lot of sense to not need the people. So it does reduce the type of buyer that you're going to go after. But it sounds like you were really aware of this going in so highly strategic.

00:12:36:00 - 00:12:59:02
Todd Sullivan
I can see why if it's a very if it's a small set of buyers, you can create the competition yourself. You've had exits before. You know how to negotiate it. You know what you were selling for all those good things. I think you know, in general we always coach against doing these things yourself. But I think you had such a high level of expertise of what you were selling and who we're you're selling to.

00:12:59:04 - 00:13:02:14
Todd Sullivan
I'm sure that you got the dollars that you deserved.

00:13:02:16 - 00:13:18:11
Robb Green
I do think it's tremendous value from having somebody else negotiate on your behalf. I've seen this with a lot of my friends where they'll say, hey, you know, this is where we're at. And I'll say, well, this is what I would say. And they would have trouble saying that because it's their business. And they're kind of scared to say that, right?

00:13:18:13 - 00:13:40:19
Robb Green
Yeah, I do think there's tremendous value from having somebody else negotiate on your behalf and push harder because they don't have the same fears that the owner does, especially it's a life changing amount of money in most cases. And so people get emotionally wrapped up and maybe don't have the best skillset to handle that, plus negotiating the deal of a lifetime for them.

00:13:40:19 - 00:13:57:14
Robb Green
And and I also think about it that, you know, most of time everybody does their first deal. Their first deal, they know nothing. Then they know a little bit more on their second deal than their third deal. There's true value in expertise. As somebody who's seen 100 deals, they've seen all the ways it can go sideways. There is tremendous value.

00:13:57:14 - 00:14:09:21
Robb Green
If I had found somebody, Todd, that I felt could have paid for themselves, I would have definitely worked with somebody that could have paid for themselves. I just couldn't find anybody that I felt could make me more money than they were charging from an intermediary perspective.

00:14:10:00 - 00:14:51:18
Todd Sullivan
Yeah, that's gosh, that's a whole area to dive into at some point in that the quality of intermediary and specialty, it's really hard to identify. And then when you do identify it, those people are expensive. So in our business we really have to be selling businesses above $20 million in order to bring you the world class advisor. And yes, they should be the ones negotiating not only because they have the skill set in, the knowledge that they've been there before, but the buyer who knows that guy that they're talking to across the table because they've bought a business from them before or their competitors have, they know with two phone calls they can create instant

00:14:51:18 - 00:15:13:15
Todd Sullivan
competition. Right? So it really does level the playing field. I do agree with you, if the if it isn't a sizable transaction, then the cost of that intermediary may be too high. Right. We're we're challenging ourselves to try to solve that. For founders who have businesses that are going to sell under 10 million. And it's just it's a difficult problem to solve.

00:15:13:17 - 00:15:24:00
Todd Sullivan
But I really appreciate you saying that it's kind of core to what we believe. We put the absolute best world class team on the field and you're going to win, right? And that's what we want to do for founders done.

00:15:24:04 - 00:15:48:18
Robb Green
I want to double click into that last piece what you said, because I don't think that. But it's not the most expensive piece. It could be the cheapest decision you ever make in your life. And I think that framework around how people perceive it is really, really valuable for especially first time sellers. I had multiple friends that sold north of $20 million that did not take one piece of advice I gave them.

00:15:48:20 - 00:16:12:06
Robb Green
They did not negotiate that and cost them tens of millions of dollars. And that simple piece of advice to these aggregators is they sold and all of their earnout was based on a trigger. If one year from now, two years from now, we're at least at 85 or 90% of where you were the trailing 12 months, then you'll get your earnout.

00:16:12:07 - 00:16:32:17
Robb Green
And my suggestion was these guys are unproven entities, unproven operators, and you have no control over their performance. So when I sold, I negotiated a guarantee, paid out, not dependent upon a trigger. And most of my friends that did not do that did not receive their earnout.

00:16:32:18 - 00:17:01:04
Todd Sullivan
Yeah. I mean, you're saying what happens more frequently than not when your trigger is time, right? It's you will pay me regardless of the performance of the business, 12 months out, 24 months out, and then you're done, right? You're guaranteeing those payments as long as the businesses are solvent. But yeah, when you turn the reins over to somebody else, or even if you go to work there and you think the levers are in your hands, we have routinely heard buyers say, you know what, we're going to have to hit the pause button.

00:17:01:08 - 00:17:27:12
Todd Sullivan
We're going to allocate resources to another division of the business for six months. Just hold tight. We'll get back to you. And they never get back in. Your numbers drop because you don't have the levers in your hand. Yes, I completely agree that your advisors can do a great job at structuring earnout. So you can believe it in in, in in some cases, frankly, we've sold businesses to private equity groups where that earnout was even enhanced with rolled equity.

00:17:27:12 - 00:17:45:13
Todd Sullivan
Right. So an investor, a seller gets a big check and they decide to take a percentage of it and invest back into the business. And if you can get really aligned and understand the mission and know that that private equity firm has a great track record of making money, that is a great way to get what they call the second bite of the apple.

00:17:45:15 - 00:18:10:04
Todd Sullivan
And we really try to do due diligence around every one of those buyers for our founders so they can make those types of educated decisions. I know I went off on a little bit of a tangent. I really appreciate that idea of like trying to advise around earn outs and how that advice not just there can be, you know, the cheapest advice you get because you can literally add millions of dollars to your pocket if you take the right advice.

00:18:10:06 - 00:18:31:22
Todd Sullivan
But speaking of that right, there are a lot of people that are not giving the right advice. I'm sure you come across that your industry. Right. Lots of people touting how I made billions of dollars on Instagram selling, you know, X, Y, and Z, Right. How do you think through, you know, who are the real who are the real entrepreneurs out there in your category who you would actually want to work with or sell to.

00:18:32:00 - 00:18:55:04
Robb Green
That is really difficult, to be honest with you, because I think e-commerce in general is a pretty new industry, right? So you don't have the same track record you have in a lot of the offline businesses. You see, especially even we talk just Amazon based businesses very, very new. These were not selling five or six years ago and all if they were, they were trading, you know, what X they were there was nothing.

00:18:55:08 - 00:19:23:10
Robb Green
And then all of a sudden you had all these first time entrepreneurs selling these businesses to finance people with a lot of experience and a lot of deal making. It really was an asymmetric information situation is what it really felt like. It really felt like a lot of friends just were stuck. When I think about things as I try to find people that are aligned with my interests, you know, I've got a small mastermind that we get together and we're all it's a little bit different than any other mastermind that nobody makes any money off of it.

00:19:23:12 - 00:19:45:05
Robb Green
So we're all aligned to try to help each other. And we all, like almost always have exited at least one brand and we all help each other. And that's really like my core group of like a board of advisors, I guess you could say. We all advise each other on what we're seeing. It gives us more information in the marketplace and allows us to kind of curate, Hey, I had this great experience with this lawyer, I had this great experience with this due diligence firm.

00:19:45:07 - 00:20:08:04
Robb Green
You know? Q of E use this firm for that or we used them and it wasn't great. Don't use these guys. So I think that's the best way to do it, is to try to find a group of people that really care about your success. I mean, I know it sounds kind of cheesy these days, but I really think trying to find people that care about you and your success, not just out there making a buck, I think is really the critical part for me at least.

00:20:08:06 - 00:20:28:12
Todd Sullivan
You know, you're you're speaking our talk track in that we do this because we know how hard the entrepreneurial journey is, and we want to make sure that our fellow founders get over the goal line. We want to help them finish that entrepreneurial journey. So for us, it is not for the money. We want to have them with the best possible teams to get the outcomes.

00:20:28:14 - 00:20:56:00
Todd Sullivan
In fact, I was thinking about it right. We've got a deep, deep bench of these experts and we do have one woman in Israel who only focuses on selling FBA businesses that where the product comes out of China, right? So it gets that specific for us. And the reason she's great at it is she was an attorney that focused on companies that had entities within China, and that was that's a very specific specialty.

00:20:56:00 - 00:21:15:00
Todd Sullivan
Right? So she is one of our kind of elite ecommerce investment bankers. This is super interesting. What else can you tell me about your career? You didn't just have that one exit, you're buying, you're selling. How are you thinking about, you know, building companies now for exit? Because I know you have a kind of the special sauce there.

00:21:15:02 - 00:21:38:10
Robb Green
So we are in acquisition mode now. We're reaching out. We've identified a few hundred brands we're interested in talking to and we're reaching out to traditional methods, emailing and LinkedIn, things like that. We want to have some conversations with them. I personally believe the next, let's call it 18 to 24 months are a great opportunity to buy for people that have a skill set that know how to navigate the e-commerce waters.

00:21:38:10 - 00:21:56:10
Robb Green
I guess you'd say like true operators, because the word on the street is that, you know, some of these aggregators are not doing as well as they'd hoped to be, and they've got some significant debt. One of them filed for bankruptcy a couple of weeks ago. They're going to have to liquidate some assets most likely. There's a lot of sellers as this space has gotten more complex.

00:21:56:13 - 00:22:15:22
Robb Green
It's harder to make money, it's more competitive, there are more sellers in the space and costs have gone up. So we try to find opportunities where we have a brand that's complementary to our skill sets. What are we great at, what they're lacking? The same thing. I believe that's a great opportunity for us to have a conversation and then can we find a way to make it work?

00:22:15:22 - 00:22:32:21
Robb Green
I've got one guy right now that I just messaged again yesterday that I definitely shouldn't reach out the way I did. I really would love to buy his brand. Hopefully this. I bought it by the time this thing goes live. But I really want to buy his brand and I just see so much upside in it. He doesn't make any money right now and that's a challenge.

00:22:32:21 - 00:22:49:01
Robb Green
Right? And we kind of left it at that. He had a number on his head and he just doesn't make any profit. And so hopefully we can come to a creative solution on how to buy it. But I have high confidence we could multiply his business very, very quickly. And so we're just trying to find opportunities where we can leverage our correct skill set.

00:22:49:06 - 00:23:05:12
Robb Green
And then at that point, as I said before, we tried to build it to sell. We don't have to sell it, but if we want to sell it, we have the right we've got, you know, 12 months of earnings behind it. We've got positive growth in the right direction. We've probably rebranded it. We've probably got more products in the pipeline.

00:23:05:13 - 00:23:15:17
Robb Green
We we've got it set up for the next person to take it and go and run with it if that's something that they want to do. So we just want to create a situation where we've got optionality. That's the number one thing I think about.

00:23:15:19 - 00:23:36:16
Todd Sullivan
That's great. What I hear is like, you're going to professionalize these organizations. Not only are you going to make them profitable and cash flow and put a growth rate on them. But when you put that kind of professional wrapper of accounting and data room, right, that a buyer can come in and say, I know exactly what this business is, it isn't weeding through a bunch of unknowns.

00:23:36:18 - 00:23:54:10
Todd Sullivan
They can put a real price on it, right? So I could see how you could take those opportunities where you see the vision of where it could go and, you know, you put your magic on it and you could be flipping those. And I don't want to use the word flip look like you're not adding a ton of value because I know you would be selling businesses.

00:23:54:10 - 00:24:14:23
Todd Sullivan
I know how that core of organization and systems in a business really adds value. So yeah, thank you for sharing that. I'm very anxious to start talking about your family and how you've introduced and you teach your kids, right? Because I have a young kids. I know a lot of our listeners have kids. How do they introduce to entrepreneurs?

00:24:14:23 - 00:24:24:01
Todd Sullivan
Yep. But before I do that, is there anything else that you would want to talk about having to do with kind of building and selling companies?

00:24:24:03 - 00:24:48:11
Robb Green
Yeah, I mean, I think you really touched on a really key part is financials. I can't tell you how many people we've spoken to who have maybe terrible financials or even maybe terrible grasp of their financials. I mean, rarely does the second conversation, the numbers actually match the numbers. We were told in the first conversation, I mean, they're not even close most of the time.

00:24:48:13 - 00:25:07:19
Robb Green
So the biggest advice I would give to I tend to be, you know, I'm a finance guy, so I tend to be a little bit more financial oriented. But I would say anybody that is looking to sell - plan ahead, start working on your financials well ahead of selling, not the day you want to go to market well ahead and think about are there things that you can do?

00:25:07:21 - 00:25:23:21
Robb Green
Maybe there are some easy expenses you could trim that compounds when you're selling for a multiple and I find it all the time. I'll give a quick story on this. Todd, a buddy of mine in the Mastermind, he we used to share all our financials and he put his financials on the screen and we were looking at him.

00:25:23:21 - 00:25:46:20
Robb Green
I just looked and I said, Wait a minute. And you sell light inexpensive products from China. Why is your shipping fee like 15% of your price? He goes, Oh, I ship everything via air. And I said, What? He said, Yeah, I don't want to deal with containers. I said, Hold on a second. You saw all these items, you ship them via air all the time.

00:25:46:22 - 00:26:03:18
Robb Green
He said, Yeah. I said, you're paying ten x the cost of putting in a container. You could hire a guy for 30 grand to do your few shipments a month and never have to think about it again. You would have saved and it was 120 grand and he has done for for X and I'm like that was for 80.

00:26:03:18 - 00:26:21:07
Robb Green
Yeah. Right there just yep. Into the ether. So I think getting a thought process around your financials is probably the biggest advice I can give to people who are or even considering selling is preparing those financials. And if you don't know how to do it, that's totally fine. Find somebody else.

00:26:21:09 - 00:26:43:07
Todd Sullivan
It's fantastic advice. I think it's fine to go out and start a business and you're looking for product market fit and then you start refining your unit economics. So maybe it makes sense at the beginning to airship. Now you're looking for cost savings. And just to be really clear about what you were saying is for every dollar that you save, you're adding that to your profitability line.

00:26:43:09 - 00:27:08:13
Todd Sullivan
And when you go to sell a business, you are selling for a multiple of that profitability or EBITDA as it's called. So in that case, you're describing a four times that $1. You do it 100,000 times $400,000 that can be in your pocket at exit. So yeah, really useful advice. And also like don't feel bad right, that your financials are not in order, majority of sellers are not.

00:27:08:18 - 00:27:34:16
Todd Sullivan
But you give yourself a big advantage to go get that straightened out because the first time you show your numbers and they're wrong, your purchase price, the confidence and everything else you share just goes in the toilet. So it's great advice. I really appreciate that. Rob, let's jump in. What I think is really exciting is that your family, you are teaching them the lifestyle, all the work life balance of entrepreneurship.

00:27:34:16 - 00:27:47:04
Todd Sullivan
You are speaking in your kids classes, They're watching your YouTube videos. Take me through that any way you want to share it. I'm like, fascinated about how you're bringing your family into teaching them how to build business.

00:27:47:06 - 00:28:00:12
Robb Green
Yeah, I mean, it's it's I live and breathe it. And I think that some people think about it like a work life balance. I think of it as a work life integration, right? So I've done this their whole life. They don't know any different, right? This is just how they've grown up. I took my oldest daughter. I wrote to my daughter.

00:28:00:12 - 00:28:16:22
Robb Green
Our two daughters are 15 and 13. I took my oldest daughter to China with me for nine days when she was nine. That's awesome. And so we went to the Canton Fair. I took her to Canton Fair, and this is in factories and it's in pigs feet and tried an eyeball or two. And so she got that experience.

00:28:16:22 - 00:28:34:22
Robb Green
Me talk about, I mean, a nine year old American kid in China and she got an eye opening experience let’s say it that way. People would take pictures with her, you know, can I can I take a picture with your daughter? Yeah. Especially to get in rural China a little bit more. And so that was one experience. I try to integrate things.

00:28:34:22 - 00:28:50:02
Robb Green
She actually came out last year. I'll come home when I learn something. I'll put it on the big screen TV and I'll teach my wife, my kids, and we'll talk about it. Hey, here's what's happening in AI. You should use this for school. Look at the research. You could do with this with AI. You're going to see another tool that your tool kit.

00:28:50:04 - 00:29:12:05
Robb Green
We just did this a couple of days ago this weekend. Talk about tick tock shops. I think tick tock shops are the best opportunity I've seen in e-commerce in a decade, no exaggeration. So we went through. What I've learned in the past few weeks is brand new in the U.S. in the last couple of months. So I went through and said, Hey, this is the products that are selling, These are the videos that people are creating.

00:29:12:09 - 00:29:29:22
Robb Green
This is how we think it works. We're starting to move on this fast. And then it's funny, my daughters had two friends sleepover this weekend, so I included them and their parents in this like teaching moment and they gave feedback, Hey, I use Tik Tok for this, I use it for this. And so we try to incorporate that as much as possible.

00:29:29:23 - 00:29:45:05
Robb Green
I created a brand named after my daughters a couple of years ago. So they're in the pictures, they're in the videos. They understand how it works, so they understand which things cost. I try to expose them to it. I wouldn't say they're, you know, die hard into it. Like they don't want to come to the office after school every day.

00:29:45:05 - 00:30:11:04
Robb Green
They'd rather play soccer or volleyball. Yeah, but they're exposed to it and we talk about it so they understand it. Like, okay, that makes sense or this isn't selling well, what if you did this? They've done product research. Todd So especially for the brand, it's in their name. Arts and crafts products we buy typically the best seller. Somebody looks at it and breaks it down and says, Hey, rate this product on ease of use packaging instructions.

00:30:11:06 - 00:30:25:20
Robb Green
So when they're kid centric products, I give it to them and they fill out the form and they say, Oh dad, this is nuts. They're harsher than I am. They're like, Just this. These instructions are terrible that I don't understand what I'm going to do it. This is a one pager, black and white. I can't read it in a six font.

00:30:25:20 - 00:30:41:09
Robb Green
What am I going to do with that? So I just try to expose them to it. And then we talk about on a regular basis because I want them to have the opportunities. I didn't grow up that way and I want them to have those opportunities. They're both getting paid by the business, so they fully fund their own Roth IRAs.

00:30:41:11 - 00:30:58:03
Robb Green
So they're both few years into fully funding their Roth IRAs with their earned income from from being employees. So that's a great opportunity, I think, for people to try to set them up for that, though they are we talk about investing with them. So we try to go through the whole gamut of what they can and can't do and how they can learn about it.

00:30:58:05 - 00:31:11:17
Robb Green
It's taught them the value of a dollar. I think they do not like spending on money ten I, 15 and 13 year old daughter and they do not want to spend money. They're like, I want I want to save it. I want to invest it. I want to have that money, make money from me.

00:31:11:18 - 00:31:37:02
Todd Sullivan
Oh, that's great. The word exposure, right? I think that that's what it's about. You don't have to push them or force them into it, but just share what this career path could be like. And it sounds like they're embracing it, right? They're understanding the value of money and doing product research and seeing revenue come in. Can you tell the story about when your daughter realizes that, hey, the business might not survive and how she decided to protect her revenue?

00:31:37:04 - 00:31:57:03
Robb Green
Yeah, So this is a there's a great book called How an Economy Grows and How It Crashes. I got to remember that it's an economist author. It's written, though, in almost like a parable style, but it's with cartoon characters. And so I read it with my daughter. She was nine or ten at the time, and it's great. It starts with three guys on an island.

00:31:57:05 - 00:32:21:05
Robb Green
They're each catching one fish a day and one guy says, I'm going to take a day off to build a fishing poles and catch two fish a day, right? And then it builds this whole multi island economy from throughout the book. And it teaches key concepts in economics and finance. And so I created a little game called Bank of Dad, and I said, All right, I want to teach you interest rates, so why don't you tell me what kind of fair interest rate?

00:32:21:05 - 00:32:40:12
Robb Green
And my daughter said 10%, I think I think it was a one, you know, half of 1% at banks back then. I said ten seems a little heavy. Well, we needed we needed time component And she said per month and was like, wow, okay, 10% a month, a little hefty, but it'll be fast. We'll get more feedback loops, we'll get more iterations so she can learn faster.

00:32:40:12 - 00:32:53:08
Robb Green
It was my thinking. So I said, Right, well, how much do you want to make money? Do you want to put it in the bank of Dad? She hadn't got her wallet and she happened to have it was like after Christmas or something. She had $400, so she had me $400. She's like, I want to put $400 in the bank of Dad.

00:32:53:10 - 00:33:07:20
Robb Green
And I was like, Oh, bad news. Unfortunately, Bank of Dad just failed. And she goes, That's okay. I just got insurance with Mommy. And I and I was like, All right, key concept. She's got it. She understands the banking system.

00:33:07:22 - 00:33:11:02
Todd Sullivan
So we believe in it.

00:33:11:04 - 00:33:29:16
Robb Green
She made $40 that month and her younger sister wanted it on the game. So now I'm running bank dad with two kids are give me everything they've got in their wallet because it's a 10% per month. I mean, my friends try to get it too, but I didn't offer it to them, so they were making this money. And I said, All right, well, they've got to understand that money does just go up.

00:33:29:18 - 00:33:51:10
Robb Green
Sometimes you lose money. So I've got to incorporate risk. What I did added to the game was at the end of the month, I would flip a coin and they would call it if they got it correct, they would get 15%. But if they got it wrong, they lost 5%. I needed to incorporate risk into the concept of the game so that they could understand like, Hey, it doesn't always go up.

00:33:51:14 - 00:34:02:11
Robb Green
I'm going to make investments and I'm going to lose money sometimes. But overall the expected value is positive. So this is still a good investment for me to make.

00:34:02:13 - 00:34:21:07
Todd Sullivan
I just I love it. I think it's just brilliant that your daughter went when you tried to scammer and say the bank went under, that she bought insurance from Mom. That was fantastic. I love it. Rob. This is has been awesome.

00:34:21:09 - 00:34:35:20
Todd Sullivan
Thank you so much for doing this. This was been awesome. I really enjoyed the advice around building companies for Exit and your your magic in selling businesses and then particularly how you're teaching your daughters entrepreneurship. Thank you so much for being here.

00:34:35:22 - 00:34:39:06
Robb Green
Todd Thanks for having me. I love talking about this stuff.

00:34:39:08 - 00:35:01:11
Todd Sullivan
Thanks again for listening to the Cashing Out podcast. Asked for more Founder Exits stories, please subscribe to the Cashing Out podcast on Apple, iTunes, Spotify, or wherever you listen to your favorite podcasts. And please remember ex it was dot com and the Cashing Out podcast are for entertainment purposes only. This should not be relied upon as the basis for investment decisions.