How can a $100M bootstrapped business collapse?

Episode 103 - Matthew Whyatt Transcript Jason Kirby (11:14.249) Hey everyone, welcome back to $100 million exits. Today I'm excited to have Matthew Wyatt on the show with us. Matt, let's just go right into your story. When you had reached out, I learned about you starting a business at the age of 22, growing a software company to over, to aggregate over a hundred million dollars in sales, which sounds like every founder's dream. You're growing and scaling this business, but it didn't work out the way people would expect. Tell us a little bit about that business, how you got $200 million in sales and what happened thereafter. Matthew Whyatt (11:48.782) Right, so, well, thanks for having me on Jason. So, started the business at 22. So how did somebody start the business at 22? Well, I worked in the industry. I worked for businesses and I saw those people and I thought, you know, I can do this better. And of course, 21, 22 year old, Ego says, I can do it better, I'm better, smarter and faster than everybody else. So let's go ahead and do that. And so we did, and we started the business. We started selling software that was on the stock market. So we sold a stock market trading software and we bought some products from a supplier. We then put a UI on top of it and some training and sold that to the market. And we were able to buy those pieces of software for a couple of grand and we then sold it for 10. And then we just got, because I was always a sales and marketing guy. So these businesses, they had great tech, but they were tech businesses. So we just became very, very good at marketing and very good at selling. But of course, back in those days in 99, what does marketing and selling, what does marketing look like? Well, it was a literally, an advert in the newspaper, which was one column wide, an inch wide and five inches long, a couple of inches long. And it was just text. And people would phone our 1-800 number because we were really good at copywriting. I spent a lot of money on copywriters to get the ad tuned perfectly because copywriting was, you know, is still very important. But back in the day when you, so it's the only way to do it. That's how you do it. So we grew that business. Now we sold that and then we moved into other interesting areas. We had a look at Jason Kirby (13:07.741) Yeah, super. Matthew Whyatt (13:17.013) data sources for horse racing. We looked at a whole range of things. And over time, we built this culture in the business. even though we had developers, we had service, we had finance, we had all that sort of stuff, I would start most of my business meetings, most of my company meetings by reminding everybody we're a sales and marketing organization. We have software. We're not a software company. And that the distinction of that meant that everybody in the business needed to line up behind sales and marketing. And so, that was the driving force of it. Because I'm a salesperson, right? So, and I'm in sales and marketing. It's like a, know, a band is not a guitar, it's a band. It's, you know, we're here to produce music. It's not the functions of the music. So it's not the pieces of music. So we grew that over time. I had a really, really strong sales culture. We had leads coming in all the time. And we made sure that the salesperson were really, really well looked after. Of course, everybody in the business was looked after, but sales was the top of the tree. And so over time we did that and we continued to grow, create partnerships. We opened offices across all of Australia and New Zealand and some into Asia. And we really grew the business and we started diversifying. We bought real estate agencies because I had an idea on a weekend. I got really crummy service. I was going to buy a couple of houses, one for myself, one for my mother-in-law, one for my mom. And so we were going to buy three houses. I had some really crappy service and I thought, you know what? This whole industry needs to be shaken up. I'm going to go buy a real estate agency. So by the end of that, you know, I presented at the board and of course, 28 year old full of ego making many, many millions of dollars says, we're going to change the world in the real estate sector. We didn't. but we thought we would. So by the end of the next week, we owned a real estate agency and then we bought race horses and then all of this sort of stuff, all of it came together. Jason Kirby (15:13.01) About the actual horses? Matthew Whyatt (15:15.511) We owned 15 horses at one stage. was, yeah. We, you know, we, it. Jason Kirby (15:21.298) Sales and marketing, I got the buy-in of like, you're not a software company, you're sales and marketing company, but now you're a horse racing company? Matthew Whyatt (15:29.645) So we were, so we were, absolutely. Oh look, you we did so much because it was, because I, so I was young and I had a very myopic view of the world. We need to just be a sales and marketing organization. And then I took on partners and this is the story. This is part of the story that starts to see the cracks in the organization. I knew I could sell. I knew I was good at engaging with people. I knew I could motivate and run a sales team. Everybody else was a mystery to me. I didn't understand people in finance. Didn't understand people in service. Didn't understand why they would be happy to do those jobs. I just wanted to be in sales and I love selling. Jason Kirby (15:31.528) you Matthew Whyatt (15:59.692) And I still love selling. so, and I took on partners, we need to diversify. And these partners were in their late fifties and they were very successful and our board members. And I listened to them because I thought, well, these guys are older and they know more than I do. So we started breaking out into other areas. had a real estate company. had a horse racing, a blood stock business. We imported health products from Hong Kong and, and Europe. Blood stock. Yeah. So blood stock is, is owning. Jason Kirby (16:24.392) Wait, did you say blood stock? Matthew Whyatt (16:29.285) owning animals. Matthew Whyatt (16:33.548) Not like a vampire. Yeah, no. Yeah, that's right. It's, blade six, you know, Matthew on the gold coast. No. So blood stock is the, is the name of the, is the, is the type of business where you own horses. There you go. So, so we had all these things going on and, then, so we, and we had about six businesses at one stage. We were sitting at the top. read Jack Walsh's book. And Jack Welch's book said, we're either going to be number one or number two, or we're going to get out of that space. And we, looked at the businesses and we were selling medical technology, doing a whole bunch of stuff. And then we said, well, we've got to really consolidate. We've got to make sure. And then I started paring down the businesses and the crack started to appear because all of those organizations were feeding off my original business, which is bringing in millions of dollars. And so, so we started pairing those down and then the cracks started to appear with those partners who were owned pieces of the business. And, and so, so that's how we grew it by being focused on sales and marketing. And then the problem started occurring when we started to diversify and losing, losing focus. And then when it started to really fall to bits is where we had business partners who wanted to drive us in certain directions. I started to get firm about where we wanted to go, how we wanted to be in perceived and how we're, what direction the business was. And then they started getting really quite toxic. So we had had to undertake a process of over a course of about a year, work out various board members so they could be off boarded. We had to sell off bits of the business. We had to give away bits. I just wanted to clear it out. I probably, I moved pretty quickly and not considering the, I guess the consequences of those things being sub 30 and always been the superstar. So I thought I just knew everything. let's, you other than how to run the technical side of a business, we employed a CEO because I obviously needed adult supervision and we were able to manage and work our way through that over that time. So yeah, so was, it was an interesting period of, of, of our lives. Jason Kirby (18:45.565) Interesting. Like that's an understatement, like with the scope of, you know, businesses as you're in. let's unpack a little bit walk, walk the audience back in terms of like, okay, you're 22. What year was this when you launched the. Okay. So like peak, you know, dot-com boom, but you're in Australia with this business. So you are, you found a hitter. got a business that's working sales and marketing. when was kind of this first bolt on idea that wasn't core. Matthew Whyatt (18:58.989) 1999. Jason Kirby (19:15.933) When did that come in? How many years in? Matthew Whyatt (19:23.409) 2003. So we're about four years in, we're doing really, really strong revenue. We started becoming very attractive to board members and to advisors. And by this age, our accountant had said, this is a runaway train. We need some adult supervision, basically. So we need to bring in board members. We need to start managing the business properly because we just had... We did crazy stuff at the end of the financial year. We had to spend money on stuff. So we bought, you know, photocopiers to a $20,000 just to see if we could reduce our tax. Just crazy stuff. Crazy stuff that was, you know, I owned Maserati. The company needed to buy me a Maserati. Like just, and this sort of stuff. So it was just out of control. Jason Kirby (20:07.596) needed, needed a Maserati. It's a good financial decision, trust me. Matthew Whyatt (20:09.677) Well, I certainly had a hand in saying what the company needed and the company needed to buy me a Maserati. Yeah, totally. Jason Kirby (20:18.248) 100 % totally justified. you're, uh, so at this point, you're, four years in your 26, you're printing money. Um, you bring in adult supervision, but it sounds like adult supervision might've failed a little bit in terms of your expansion of scope. Um, when you're at that stage, you bootstrap a business to this level. Like I talked to countless founders that have raised tens of millions of dollars and don't get to where you are bootstrapped. So you found obviously something that was making money and working. Um, When it came to like choosing board members, when you're bootstrapped, like when you're raising money, it's pretty obvious. Like whoever gives you money kind of brings in the board members. But for you, it's like, you kind of have to pick who you want. Like how did you go out and pick board members that, you know, weren't with you in the beginning to kind of be the adult in room, as you say. Matthew Whyatt (21:06.977) Yeah. So we got had some help from people that we knew and trusted and how do we pick? I picked people because probably picked poorly. Let's be honest. I picked poorly. So, so whatever advice I'm going to give, we can just do the George Costanza just do the opposite of that everybody who's listening, right? So I thought I picked people with credentials. I picked credentials as in people that had been who'd been there and done that. they said, I picked people who said they can do a lot. And one in particular guy who was quite, well, he was probably late fifties. So I thought, well, he knows everything. So I just had a level of trust with people that, yeah, I trusted people too much and they were involved in particular industries, stock market stuff and horse racing stuff and software development stuff, which that was the three main parts of our business. And so I thought, these people have grown reasonable businesses in the past. So I guess they know more than me. So I'll just, you know, they can be, they can be part of it and I can, and they would say, they said they could do certain things. And I said, I believed you. So I allowed them to come on board. Jason Kirby (22:20.904) Okay. And when it came to, made the decisions and you get them on board. You start reporting to these people. What was that like kind of having to report up to the people that you hired to come in and tell you what, you know, kind of keep you in line. Matthew Whyatt (22:42.029) difficult. It difficult because it was my way. Well, so it was my wife and I started the business. So I at no stage pretend to be anything other than a good sales and marketing person, a good ideas man, and lead singer of the band. But other than that, everything else was not for me. So my wife ran everything else. And so she's still involved in the business, know, 20, many, many years later, through all of our ups and downs. So Jason Kirby (22:43.036) Yeah. Matthew Whyatt (23:11.853) So I've always been reasonably collaborative with her. So what was it like? It was difficult to deal with these people. It was difficult to report to them. They was difficult when they didn't understand that my vision, it was my way or the highway. But also at the same time, I never felt like I really reported to them. It was certainly still the Matthew show. They pushed the business in my, in a certain directions and I believe them, but I guess I was, my ego was. was so massive that I just believed it was still my business and I still made all the decisions, which, know, in 10, 15 years in hindsight, I wasn't making, I was being led. Jason Kirby (23:51.068) interesting. They were, they were influencing your decisions ultimately. Matthew Whyatt (23:52.546) Hmm. definitely. yeah, definitely. were, so they were, they were, you know, not subtly, but going, this is a direction that's, they were, they were more adept at playing the boardroom game than I was in any way, in every way. I knew where the business, I wanted the business to go. And then really the everything, and my, my solution to most problems was just sell more and make more money. Got a problem? Make more money. We can solve. That was my solve. And, and these people with MBAs and Jason Kirby (24:17.618) Good solution. Matthew Whyatt (24:22.061) these people with 40 years experience or 30 years experience in business, they were saying, oh no, we're going to do it this way. We have to minimize tax or we have to maximize value or shift our IP to a British Virgin Islands company so we can avoid taxation in the jurisdiction and all these types of things, which we did. And we said, you know, we certainly managed it very, very interestingly. But overall it was, they were presenting ideas. were giving me, do you want, you want, you want. Coke or Fanta and both companies are owned by Coke, right? So they were giving me options that were serving them and not serving the business either one I chose. Jason Kirby (25:02.952) And you are the lion share owner, right? Like, yeah. So it's very interesting dynamic. I, I've definitely worked with a lot of founders that don't maybe have the share economics that you do, but maybe that board influence, the negative board influence of like self-interested, like, Hey, here's this cash cow. We're brought into briar ride leadership, but I want to, want my piece, you know, like I want to make sure I get paid on this as opposed to what's actually best for the founder and the situation. Matthew Whyatt (25:30.797) That's right. actually at the end of the day, was, so at one stage I was only 50 % owner in the group. So I actually, I was able, so I sold bits and allowed people to come on board. But yeah, so at one stage I only had 50 % and that's the, one of my lessons I learned is either be the majority or the minority, don't be half. Because if you're half, then you're at stalemate. Jason Kirby (25:56.785) Interesting. Matthew Whyatt (25:57.108) and StarMate caused issues. I would rather be 49 or 51. In all businesses in the future, I am always either the majority or minority shareholder. It can't be half. Jason Kirby (26:09.064) So walk us through a stalemate. it the blood, what was it called? The blood, uh, blood stock business. I just find this fascinating. You have a software business that you're selling and it's that you own horses. So it's a, you know, not, not something I come across. Matthew Whyatt (26:14.785) Plus stock. That's one of them. Yeah. Yeah. So that was one of them. Matthew Whyatt (26:23.393) Yep. Well, we had horse racing software. So horse racing software, we wanted to continue to invest in the industry and that type of stuff. Jason Kirby (26:31.366) Got it. So you had software you were selling to the industry. So then you got into the industry yourself. Matthew Whyatt (26:34.059) Yeah, yeah, yeah. yeah. So and I knew nothing about horse racing, but I just knew numbers, I knew math, and I knew stock market. And, and we had a software product that we sold to the industry. and so we thought, well, this is fun. And I go to the races on the weekend and dress up and drink and go, this is fun. So let's go do more of that. And the next next obvious progression is to is to buy some horses to watch them race. Jason Kirby (26:58.664) And so what was the stalemate in that business decision of figuring out what to do next with the blood stock business? Matthew Whyatt (27:04.269) How to invest the money and where to invest it with those other businesses like the horses was one situation. Another situation is the person who owned the other 50%. They went out on a weekend and bought a quarter of a million dollar car on the company card, just did it without discussing or, we closed a big deal and we agreed before that we should celebrate in a way. We discussed over drinks that maybe we should buy ourselves a car. Nothing was in, nothing in writing, No, nothing was, was said that was a, an agreement, but yeah, he comes back on Monday morning with a quarter of a dollar BMW. Jason Kirby (27:46.204) BMW quarter million? Matthew Whyatt (27:48.866) This is Australia. mean, it's a, so our, our, have a thing called luxury car tax in Australia. So they stick it. So once you have a certain amount, gets out of hand. It was a, it was a very, very nice BMW. It was, you know, was an outrageous BMW actually, but it was a quarter of a million bucks. Jason Kirby (27:53.832) Okay. Jason Kirby (28:06.152) Yeah, I can't spending quarter million on BMW of all choices, but hey. So, okay, so this guy just totally goes rogue. Matthew Whyatt (28:12.301) So that was one of them. And he also then demanded to be paid more per sale. So not only one of the pieces of the business, but also wanted a cut of the sales, because I was getting a cut of the sales, right? was getting, every time we made a sale, I would get, because I was running the selling, running the sales part of the business. So he saw me earning more than him on a weekly, monthly basis. And that of course, you know, stuck in his neck a bit, didn't like that. So he wants to get paid more, even though his contribution was significantly less. He wanted a corner office, so we took over another floor of the building to expand the business. I had one corner office. He, of course, needed the other corner. And this is just to talk to my personality. So I sat in that office. We made it. Spent hundreds of thousands. I was fitting this thing out. We had a bar, a boardroom, sliding glass. It was opulent. Matthew Whyatt (29:10.705) And we sat there in the corner office looking at going, I've made it. Why am I not happy? I bought the the the cut and thrust of doing selling. Well, I'm now a floor away from my salespeople. I'm not I don't get it. don't know what I'm supposed to do now. So I sit there bored. I go to lunch and I just was so and I've actually figured it out. And I went downstairs got a, you know, three foot by two foot desk, put it in the corner of the sales room and started competing with my own salespeople. I worked for the sales manager that I actually employed and had the best time of my life, dominated, top salesperson, earning commissions, having a great time, taking leads like everybody else. That was great fun. And then there's another example of my odd personality. I love the startup bit. I was running a big business at this time and that wasn't fun for me. Too many people, 70 people. Jason Kirby (30:14.076) How big was the business just for context? Matthew Whyatt (30:16.769) Like 70 people, so not huge, but enough people to every single day, it was five, six, seven hours of, hey, Matt, you got a minute? Because I was the GM, right? Got a minute meetings, got a minute meetings were the, was a death of me. And it was nonsense. Nonsense like, you know, one customer service lady comes to me and says, Joanne, who was the receptionist is yelling at me. said, yelling at you? Or she's typing in capital letters on the internal chat. All right, what are we doing here? This is just, I hate everything about this. Jason Kirby (30:49.32) I've dealt with those. I'm usually the culprit of like mistyped messages that don't express my true intent. And then everyone's like, he's mad at me. No, just fast. That's just not finessing my words. Matthew Whyatt (30:52.717) You're right. Matthew Whyatt (31:02.637) Yeah. So it was just all of that sort of nonsense. I hired a GM to basically take away the, and he was a great, he was a German guy and he's absolutely got no time for nonsense. was fantastic. Oliver, fantastic guy. Still a very good, very good friend of mine. He was an excellent GM. He just basically told them to go away and deal with it. So yeah, go away and deal with it. Well, I'm, you know, I'm trying to solve problems because I've been solving problems since we were two people. Jason Kirby (31:22.62) That's good answer. Matthew Whyatt (31:29.623) And now we're 70 people, I'm still solving problems. So tell me about that. And how's your mom and all this sort of stuff. I tried to, and I cared about everybody and I do, but when you're at 70 people and everybody's got their own little fiefdom to build, know, customer service had managers and finance had managers and programming had managers. And so we had all this hierarchy in the business and everybody needed to, you know, get it. Cause I was available. I'd walk around, how are you going? How's your brother going with these, with the car issue that you told me about two weeks ago. you I just I knew stuff what was going on with everybody in the business. So of course, everybody felt they needed to come to me and tell me all the problems. Jason Kirby (32:05.042) Don't love that part about being CEO. okay, so you, you kind of are alluding to the beginning where you had this realization that like we're in way too much stuff. You know, the Jack Welch, you know, and they're like, if you can't be one, number one, number two, get out. So at what age is the business at this point? What year is it? And kind of when did you start pushing that forward? Matthew Whyatt (32:06.763) Not. Not. Matthew Whyatt (32:27.617) Yeah. we, we, so when, that the, purchase of the quarter million dollar car was the beginning of the end. And then we started meeting with people to, started meeting with some strategists, business strategists to try to figure out how to get out of a 50 % shareholder, which of course is extraordinarily difficult. So that took a lot of focus and energy from the business. I, we eventually over time, we worked out a way and we moved through the process and you know, we saw the horses got side. I trusted him to sell the horses. And, we got, I still think that we might've actually got ripped off on that. I think he sold it to a friend for cents on the dollar. so all of those things just continued to whittle the end and dwindle the trust that I had in the whole thing. So we had to get rid of it. We to change the organization completely. So it was about 10 years in, 10 years into the business and we had to really make some serious changes. And so we did. And, you know, we, we, we, we canceled, not canceled, we, we, we bought our way out of various contracts. we, we, moved the business to another location. We really had to, to change the, look and feel and style of the organization, to make sure that we were able to continue to survive because I still had a genuine care for the clients. one story. I might show to show you how I cared about my clients is that. You know, one of my salespeople and they were absolute killers. These guys were murderers and we came through customer service and one of the customer service guys comes to me and one of those got him in a meeting and said, Matt, we sold a software package to trade the stock market to a guy who's a subsistence farmer from Tonga. he sold a tractor to buy the software because he's going to make unlimited money on the stock market. Jason Kirby (34:17.544) That's some red flags. Matthew Whyatt (34:21.142) So I had to go in the sales room and had a conversation with the sales person. goes, yeah, well, you know, then of course we measured them on selling, not on selling the right thing. So once again, I needed to make a credit example. So I said, look, I'm not going to take your commission off you, but I just want to do this. So I got a, wireless headset stood in the middle of the sales room, told all the sales people to get off the phone and said, watch me. So I called that person up and said, we've made a mistake. We've sold you the product. I need, are we going to give you your money back? and, we, from this is an example of how we do business around here. So I gave that customer his money back to 20 grand, like not small money. We gave him his money back. And I said to the salespeople, you won't be, we won't claw back any commission from deals that we've, we've had to cancel because we, didn't make it clear that we don't sell to people who can't afford the product. And so, you know, there's been people who have been, you know, and before that it was the wild west. was a bit Jordan Belfort. Jason Kirby (34:55.442) Yeah. Matthew Whyatt (35:18.282) It was a bit baller room. Jason Kirby (35:18.372) Yeah, was gonna say that's what kind of gave me those vibes. Matthew Whyatt (35:23.66) There was, and so I to make the call and said, this is the culture and how we operate. Anyway, so that was important for me to make sure that our clients are being sold to properly. We put a rule in place that nobody would be able to buy our software unless they sat down with an existing customer and watched them actually do trading. So you had to actually sit down with an existing customer. So if they were buying in Adelaide, there was a customer in Adelaide, you can go and see. Yes, that slowed deals down. but it protected us from any sort of blowback in every way, shape, form. Jason Kirby (35:57.032) Yeah. And that gets in, you know, especially with that kind of, you know, farmer selling attractor situation, I'm sure there'd be substantial blowback if that happened too many times and you didn't take the right path on correcting those circumstances. Matthew Whyatt (36:09.587) Oh, that's right. And then of course people get sold and then they said, I want my money back. And we look through and they haven't done any training. They haven't done any work. They haven't done any trades. They haven't done anything to actually just, you know, they haven't done the work and we say no. And then they go online and such and they start them canning us with absolutely no evidence. But of course there's no, there's no requirement to provide evidence. We, you know, there was websites back in those days that would allow people to put up whatever you like. And if you wanted to get it taken down because it's false. Jason Kirby (36:31.335) Yeah. Matthew Whyatt (36:38.476) You had to pay the company like $10,000. So these were online extortion businesses. You could put up any bad review online. And then if the business wanted that taken down, you got to pay 10 grand. Jason Kirby (36:49.915) Terrible business, but great business. Matthew Whyatt (36:52.776) Yeah, well, yeah, that's right. So I'll take you through the process of how the business sort of fell a bit felt apart, because I think that's that's interesting, in the sense that we trusted too many. But and this might be a through line here is my trust, take people at face value. Because I'm a I see myself as trustworthy. So I judge people upon my own. You know, people, you know, I judge people how I am. I I believe people, I trust people and I move forward. And this is, as I said, pretty naive back in the day. So first of all, I opened up a business in New Zealand, opened up. My son was one at the time. And once again, I was bored in, cause I was not in the selling. So I went to New Zealand and opened up an office of my own company and started a sales office. I took a literally a box of leads, paper leads, and I started advertising and I had a service office. like what I am in now, a small office and said, right, I'm now on the phone and I made phone calls and I grew, know, within six months we'd grown that business, employed five people that were doing about $190,000 a month of revenue, which is pretty good. And then I sold it to one of the salespeople there, one of the people that had, I'd sort of deputized as a person who could take over the business. And so we moved back. So that was my little sort of mini internal startup, right? And so he then ran the business for a bit and then stopped. Then we got a phone call after about another six months. For I've gone from a client saying, where's my software? I'm like, what do mean? Cause we were doing the customer service back in Australia. Anyway, long story short, turns out that he's been selling software without telling us, without telling us who the customer is, just collecting the money, $25,000 New Zealand, ripping people off, just straight up scamming people in our name. Yeah, that was super fun. And so he worked out to about court about $500,000 for 50 $500,000 he hadn't paid us. And of course, all of those customer service obligation was on us. We then had to play software and retrain and do all this sort of stuff. about half a million bucks, didn't get paid there. We trusted and this is all in a space of 18 months, I'm to give you the compacted version of how bits and whether we're at all really started to fall to bits and Matthew Whyatt (39:20.182) this might be something for the listeners is, I think Reagan said it is trust but verify. But I didn't verify. that was one thing. Another thing was our internal accountant who we hired when she was 21. Grew up through the business. was in her early thirties at the time. She was put through accountancy. She was trained to run the accounts in the business. I was getting email reports. Jason Kirby (39:26.287) Yep. Matthew Whyatt (39:49.773) cash positions, sales, all that sort of stuff. Because this is when our son was just born. So I took a year off the first year of his life. So I took a year off the business. I hung out at home with my wife and new son. And so I got these email reports, everything's looking good. We got tons of cash in the bank. I'm gonna go buy another office building. Sounds good. And the deal sort of didn't go through, and that's okay. It didn't go through because of one reason or another, not because we didn't have the money. And then I a phone call from the accountant saying, so I just got a call from the ATO, the Australian Tax Office, who probably has the same level of sense of humor as the IRS here, and saying, you haven't paid tax for about 18 months, what's happening? And we have a thing called we have a reporting period of every three months, you're going to pay tax in Australia, it business tax. Hmm. Hmm. So I call up her and well, Terry, Terry calls her up and we go through the process. Yeah. So she's basically been ignoring the letters because she was going through her own stuff, emotional, personal stuff. And of course, that bled over into business. She's been ignoring letters from the ATO because it wasn't Jason Kirby (40:39.782) wow. So six missed periods. Wow. Matthew Whyatt (41:02.508) And I've been operating the business as if we had a million bucks in million bucks cash. We didn't. So we had to pay the tax department a ton of money out of my own pocket because the business didn't have it. So that's the second hit. And the third strike you're out is one of our data suppliers, the TAB, the Australian horse racing totalizer agency board. We've done a deal with them to pull data from their servers, all very amicable and we'd met with them and done deals and everybody was happy and high-fiving. then they're launching a new software product, then you're launching a new data feed. We've spent months reprogramming our software to collect the data from them. And then on the day that it's phones blow up. Nobody's working, none of the data's working. What's going on here? And we find the TAB, Oh yeah, didn't we tell you? We know we've changed our programming language a couple of weeks ago, a couple of months ago. Didn't we tell you that? And so of course we couldn't sell any software for two months while we recoded the program. We had a bunch of unhappy customers we had to give money back to. And we had a cash burn of about $400,000 a month. Jason Kirby (42:23.813) That was the third strike. Matthew Whyatt (42:24.46) Who paid it? This guy. So, and of course, I do the right thing. I make sure my employees are looked after. I paid everybody who needs to be paid. And those number of hits really hurt the financial position and the emotional position and really taught an interesting set of lessons that I've carried through to today. Jason Kirby (42:44.583) Yeah, to say the least. Jason Kirby (42:54.782) You ended up selling the business at some point? Matthew Whyatt (42:57.548) So we actually liquidate, no we didn't. So all of the bits, right? All the stuff that wasn't core, right? So the horse racing, the software development, the health tech, the health business, those four businesses, we sold all those bits off, bits and pieces off for cents on the dollar. just needed to get rid of all of that sort of stuff, because it was all noise. And then that business there, and then when those three strikes hit us in about a period of 12 months, many dollars out of my personal bank account, sold my house, everything. Just trying to make sure that my employees had all their entitlements, everybody was looked after. We liquidated the business and then I had enough money to buy the database back from the liquidators because once again, I didn't want my clients to be left out in the cold. I have a very strong moral obligation compass when it comes to business. So to the significant detriment of my own bank account, but I'd make sure that if I say I'm to do a thing, I do a thing. And so I bought the database back and then engaged with the developer and we rebuilt. And then I went, you know what, I'm tired. we grew it again a little bit. And then I thought, you know what, I'm just going to put this into a caretaker mode, not selling any more products, just going to manage it, just going to keep, you earn the monthly fee that comes with the data. And then we moved to Bali. I said, you need a year off. So we did. We moved to Indonesia. So yeah, that's how it all, so we, from the boats, the Maseratis, the waterfront houses, all that sort of stuff. And then the through line here is, this is the lesson you trust to verify. And stick to your knitting, stick to what you know and what you're very, very good at. I think Scott Galloway said, you don't necessarily need to find your passion, but find what you're good at. And then find what you get out and do that, make your money, and then you can go have fun. But I just needed to stick with what I'm good at. Jason Kirby (45:06.979) Yeah, God, there's so many things. I like I want to have like a having like a nervous breakdown listening to like your story. just like, it's so intense. It makes me think of that Adam Sandler movie where he's in New York as a jeweler or something like that. He's like, just like the most high intensity just like all these things like, No, don't do that. Don't do it. doing it. Matthew Whyatt (45:31.68) Yep. Yeah. And I'm sure if somebody was watching the movie in my life at that time, they'd be screaming at the screen. Jason Kirby (45:37.221) Yeah. Stop, stop, stop. I'm just like, and you know, you have this integrity, know, to your benefit and detriment probably, but like with these employees, like it sounds like a lot of mistakes that employees are making and yet you're, making them whole. You're incentivizing them to not learn from their mistake. Like that's obviously. Matthew Whyatt (45:58.573) Look, the buck stops with the owner of the business. And the owner, if you don't, if I believe that you are, I certainly reaped the most number of rewards from the business, but also there's a flip side of that. If you're going to blame somebody for all your problems, you're to blame somebody for all your benefits as well. If it's, you know, there's a, so I'm very much the sort of person to say I have had ownership and accountability and responsibility for everything in my life. because that's the only way to be fully empowered. If you're to blame the government, are you going to blame external things? How did I cause this? How did I cause my success? How did I cause my failure? And then if you ask those, if you operate from within that lens, then you completely have full 100 % agency. That's why, know, two years ago I went, hey, I wouldn't mind moving into America. And so, you know, a year later we did. drop me into any situation, I have complete agency, drop me into the forest in the Amazon or in middle of India, I'll figure it out. Jason Kirby (47:08.167) lot of the attitude clearly shows that you leverage that to a degree until other people maybe started taking advantage of you and or not holding up their end of the deal and you tried to them blackmail. Matthew Whyatt (47:17.866) Yeah, I just expect people to hold their end up the deal because I always do. But I've learned that. I look, this, was very naive. I was very young. And of course, I thought that just being massively successful was the ticket, was the, it was going to solve any issues that I had. My most successful year, the year I made the most amount of money was actually the worst year emotionally. I had more problems. There was more stress. Jason Kirby (47:21.595) Yeah, that's unfortunate. Matthew Whyatt (47:45.936) And really it didn't solve any, it didn't solve anything. So people more so, and I know that, you know, that's, that's the great line out of, know, I feel bad for your son. got 99 problems, but, you know, the, the, thing is money only makes you more of what you already are. So if you're an a hole, when you don't have any money, you're going to lots of money. You're just a bigger a hole. Jason Kirby (47:49.371) More money, more problems. Jason Kirby (48:10.695) So where to put? When he amplifies you, you really are like that. Matthew Whyatt (48:12.62) So it is only an amplifier and really, I choose to be happy. choose to, how I live now and I'm not, and I have a certain expectation of the world and that's what I see. I expect positivity and I do, get it most of the time. Jason Kirby (48:32.795) as a wild story from, you know, hundreds of millions in sales and being able to drive and live this live, you know, lifestyle, and then kind of having these cracks in the foundation start to develop and, watching it all fall apart. But yeah, it sounds like, yeah, you said you're high agency dropping into any situation, make anything work. and of course dropping so far with such a successful business, having to, to rebuild is no, no fun journey, but let's, you know, I think the clear indicator to anyone listening is you're a sales guy, but you know how, how to sell and that's your superpower. What, um, what makes you so great at sales and like, and does that translate into how you manage sales managers? Cause that's usually doesn't transcend. Some people are like phenomenal individual contributors as salespeople, can't manage where shit. So I'm kind of curious, like, where do you put yourself and like, are the lessons for either side? Matthew Whyatt (49:26.24) Yeah, interesting. So I am, I'm a great manager of salespeople and that is it. You put me trying to manage finance or service or software and those, and I am terrible manager of those people because salespeople are like me and I get what they're on about. and this was a boiler room-esque sales room. right? So this was a bunch of really strong men and women who are selling on the phone. And I was just really good at that. So I'm a really good individual contributor. But also I know salespeople because they're my people. And I can talk to them with with unpolished words and have them understand exactly where I'm coming from. For example, there's a person on the phone who was bottom of the sales board. And I was sort of walking through the sales room and I give these people a script and a process and a structure and said, follow this, follow the bouncing ball and you can do the, and you'll make money. And I was listening to him and was just crapping on. And I walked over and this is the day we actually had to pick up the phone to make a phone call. And I walked over, listened for a second and just reached over and clicked the cradle button and hung it up in mid-sentence. I said, that was shit. Follow the script. call them back and apologize for, you don't know how you got cut off and do your job. And took my finger off the cradle. He called them back, followed the script, made this up. And there was absolutely no doubt about who, know, because I was always the top of the sales board. You can't argue with the person with the points on the board. So do the job that I employ you to do. And they're all making really good money. This is back 20 years ago. And these guys are on 250, 300 a year. so, you know, be good, follow debt, do your job. And this is like none of the making on your cold call. This is all inbound leads. So easiest telephone sales job in history. if you do the job, if you're good and people literally, I had line up of people looking, wanting the job and I had a maximum of eight salespeople in the room. I didn't want any more. I didn't want it. didn't, I just knew that that was the number somehow gut wise. knew that eight salespeople was the number. Jason Kirby (51:21.607) Follow the script. Matthew Whyatt (51:48.051) including a sales manager. seven and the sales manager was expected to compete and sell as many as the sales people. Jason Kirby (51:55.527) So got to ask this question. So this is for our audience out here. There's like countless, you know, pre-seed seed stage series A companies, founders that are, you either maybe doing founder sales at this point. Um, and there's always this like, we're to raise some money and then we're going to hire a sales person and then everything's just going to work and we're going to magically grow in sale. So what's your advice to those founders that, you know, maybe you've been pulling off the founder sales, but don't really have a system and They're kind of banking on this. I'll have a, you know, $5 million and I can hire the best salespeople. Like kind of walk us through that illusion and what's reality and what should founders kind of be aware of when kind of thinking about their, their sales strategy. Matthew Whyatt (52:37.267) Boy, that's a huge question. Exactly what I deal with every day in my consulting business now. So first of all, you need to start with sales culture. And if you've had a culture of software development and or software of, know, just being really good at your job and you hire a salesperson, that person has to be able to, and it's a very rare person to be able to absorb the entire sales function. You're going to have to pay them a lot of money. to do that because selling is founder led sales is about passion and knowledge and excitement and stories. As soon as you start bringing in salespeople, they don't have any of those things. that somehow we have to codify that passion, that enthusiasm, those stories and often that gets left behind. you need to be able to foster that environment. And what I would suggest is the step one you should be doing is finding a consultancy or you find a business that can build out the sales process. Cause founders very rarely think about sales process and hiring and bringing in a salesperson number one. They don't think about it either because they're often, they'll hire a person who, unless they've been working in the exact industry, selling the exact product at that exact price point, they're new. And if they're new, they're not gonna have process structure, system script, thinking, CRM, how does that work? How do we engage with the customer? How do we engage with all of these bits and pieces that make up a sales process? You're gonna be in real problems. So the first thing that a founder needs to do is start codifying their own process. They need to record every sales call that they've done for some months. They need to record those calls. They need to record everything about it and start. figuring out exactly what the processes they go through. Then in doing that, they start looking at it go, this is where I'm waffling on. This is where I'm taking people up the garden path or I'm really not driving towards the issue here. So that's one. The second thing is in 2025, moving into 2026, marketing is doing most of the work the salespeople used to do. Matthew Whyatt (55:00.159) So if we think, so marketing, so Google's call it the messy middle now. So people become product aware or business aware. And back in 1999 to 2010, maybe even longer, people become product aware, they'd make it to happily pick up the phone or receive the phone call. And then the salesperson would provide the literature, the case studies, the customer, all of this stuff, right? They would tell the story of the business. Today, marketing is telling the story of the business. Marketing is providing case studies. Marketing is doing all that work. Salespeople are the begrudging last step in the process for most people. And so what happens then is that even if they do, even if you're making cold calls, if you're going out there and go, I'm going to do a bunch of SDR work cold calls, they're still going to Google you and they're going to Google you and they're to go find your Insta. They're going to find your website. They're to find your blog. They're going to find your LinkedIn posts. They're going to find everything about you in between those two calls. Because the thing is most buyers today, unless you're selling to a small business, once you get to a certain size of business, once you hit mid market, if you're selling to mid market and above, sorry, I'm gonna have a sip of water, excuse me. once you're selling to bid market and above, it's actually not about better, faster, cheaper. If your product provides us a benefit of better, faster, cheaper, we've got problems. because people, businesses don't buy products, people do, and people are often being measured. Again, you know, they're measured on KPIs and people are looking after themselves. So most products now you have to think about to reframe it as you have to, how does this look? to an outside person, if it all blows up, will they be safe in their job or they get sacked? So covering your ass and looking good are the two things. Once you go mid market and beyond, you sell the government, it's never about better, faster, cheaper. Like the Australian Bureau of Meteorology have just launched a new website and... Matthew Whyatt (57:07.101) Here's a quick fun game for all the listeners here. Have a guess how much a new website for the Bureau of Meteorology might cost. Jason Kirby (57:14.246) More than it should, please don't tell me that eight figures. Matthew Whyatt (57:17.963) $96 million. This is in Australia. This is for a country of 25 million people. Jason Kirby (57:25.83) man. Matthew Whyatt (57:29.385) And the reason it went through is because I'm sure that there was 15,000 cyber security dudes there. There was a whole bunch of committee and steering meetings, a whole bunch of change advisory board meetings. There's a whole bunch of stuff that just covered their ass, made them look good. And the actually outcome was a crappy website for $96 million. Nobody will be held accountable because the thing is they'll look at the paperwork and go, well, you followed all the steps. Jason Kirby (57:55.879) I really resonate with this and I bring this up to actually in the M &A process because it's very similar. It's like when selling a company, everyone's like, oh, we're going to sell it a strategic and we'll make 10 XR revenue. It's better than selling to private equity or whatever. And it's like, oh, sounds nice. But they're like, they think like we're going to sell to Google. It's like, no, Google doesn't buy you. Like a head of product or someone like that leads a division, a VP, that individual makes the conscious decision that they're going to look great if they buy you. And that's going to boost their career and their agenda. hack says very little to do with you and, or, you know, Google as a whole. and so many people just don't think about that. It's like, who's the person you're going to convince that you're, you're going to make them a rock star at the company. Cause you don't make them, it won't move the needle at all with Google. You know, unless it's like whiz, you know, the $32 billion transaction. But even then that was probably spearheaded by. Matthew Whyatt (58:34.037) Yeah, absolutely. Jason Kirby (58:53.444) someone in the organization who is now probably a rock star saying, I closed this deal. And that's all they care. It's just an ego in the midst between you and an acquisition or in this case, you and a sale. Matthew Whyatt (59:03.891) It's something you can put on your LinkedIn and get your next job. And so, you know, when selling to those businesses, you've got to make sure that there's an alignment and you've got to make sure that there's no way that even if it blows up, you don't look bad. Jason Kirby (59:17.51) That downside asymmetrical risk on the relationship. It's very much a key essential to any business dealings. All right. So you kind of covered this, this narrative, which I appreciate. Like, I think I've talked to so many founders who are just like, I'll figure it I've sold, I'll figure it out. And it's like, it is astronomically different. Like there's playbooks or strategies. And like when you remove the founder from the sales process, sales usually fall off a cliff. Matthew Whyatt (59:44.62) off a cliff. Because the thing is also often when they're doing found lead sales is because of referrals because of their their passion, their enthusiasm, you start getting you know, Jason Kirby and Matthew White show up and they've got a level of passion and enthusiasm for the product and thing that they're selling and you go, you know, I trust this guy, these guys are these guys. But you know, when Fred Jones shows up who works for Jason or Matthew, you know, they've got it, you know, they immediately have less stature in the business in the product and status in the sale. And low status in selling is, that's a whole long conversation about status in selling that is so important that the founder has just by the name. But if you're your BDM, you need to work real hard to get that status in that cell. Jason Kirby (01:00:28.646) So I guess how, how did they do that? How do they kind of develop that status of it's like, all right, I'm, founder sales, maybe I hire an agency to kind of, you know, build the sales culture, but you know, maybe make the first hire or two or, you know, it's outsource to begin with the kind of like learn the ropes. Like what actually are, what are the attributes of a successful transition to a sales culture in your mind? Matthew Whyatt (01:00:54.805) The value occurs in the diagnosis most of the time when it comes to selling. what I mean by that is, if we move away from the founder being the seller to a sales team being the seller, the value then moves from being, I'm part of something cool and interesting to being the value existing inside the diagnosis. So the salesperson needs to be firm. The salesperson needs to be confident in their ability to say no to the client. And this is not challenger selling where you tell the client they're wrong and stupid and we need to educate you on a certain thing. That's not what I'm talking about here. What I'm talking about is, for example, so I have a client who I helped them recruit as first salesperson. the salesperson, we got them to ask a series of 26 questions before the customer's allowed to see a demonstration. We actually held, they used it. So prior to that, the previous sales, but sorry, they hired the salesperson, that person failed. They had no salesperson for a while. They wanted to go again and have a salesperson. They got me to do it. The previous salesperson was selling the demo. And of course, yeah, sure. I'll see your demo and the demos unless we're, we're in a post, we're in a post software enthusiasm world. I just made those words up, but the idea is nobody really cares about your software anymore because software is not that fun anymore. I maybe AI thing that does some magical thing, but really, you know, back when I was selling software years ago, I'm about to launch a new product in next year, but you know, we don't talk about features because feet good features and good software is table stakes now being able to connect to stuff and do things that's table stakes. Like we're talking, we're doing a podcast online. This is, it's no longer that interesting. So it's the value sits in the diagnosis and the diagnosis is understanding the customer's So we've measured this in sales. This is something that people who are in that early stage selling piece could think about. If you're salesperson speaking more than 30 % of the first conversation, you've lost the deal. Jason Kirby (01:03:00.14) Mm-hmm. No. Yeah, that's it. Yeah. Matthew Whyatt (01:03:01.811) Ask questions, ask questions, and that's it. Jason Kirby (01:03:07.366) Yeah, it's actually very similar. It's just like anything I've ever done. this is like, ask as many, like have a, have a script for what are the kind of questions that give you open ended feedback that you can then use those words, you know, back at them when you kind of conclude like, okay, it sounds like here are your problems. You know, here are the things, is that correct? And then they go, no, yes. Great. We should book a meeting for a demo and I'll show you how we're going to solve all your problems. Matthew Whyatt (01:03:26.645) Yep. Yep. Matthew Whyatt (01:03:32.031) Yep. We actually move it to a, we look at the problem externally to us. So this is how I ask my clients to close. Well, Jason, it occurs to me that we're the right fit. Does that make sense? Or it occurs to us that we're a good fit. What do you think? Rather than, you know, it occurs to me, like this problem occurs to me as the issue. So rather than saying, I think it occurs to me this is right. And it gives it, it changes the language. It externalizes the issue and externalizes the Jason Kirby (01:03:48.166) Yeah, you're right. Matthew Whyatt (01:04:02.547) the problem at hand, but of course that person won't be ready to say yes until they've spent 25, 35 minutes kicking their own bruise. You know, how often does it happen? When does it happen? What are the consequences of it continuing to happen? What have you, how have you tried to fix that in the past and why didn't it work? Like that stack of questions. And the last one, the last sort of nail is why didn't it work? Exposes so much incredible information. Well, it doesn't work because you know, Fred in procurement or Fred in the warehouse, you know, where we gave him a new iPad with the new software on it and he's still using bits of paper. right. So it tells me it's not a software issue, it's a Fred issue. Right? So selling them a new bit of software is not going to solve the problem. So you don't sell them software. What you do is you sell them a front end consulting piece. I'm just using an example. So I'm a front end consulting piece. And then you go in that consulting piece. Your job is in the consulting piece is to get Fred on site. Jason Kirby (01:04:53.156) Hey, Matthew Whyatt (01:05:02.475) Do a whole job because he's the blocker. He's the guy that's good. So we had one lady we sold, we were in the mining software, but I was consulting to a mining software company. They're trying to sell their enterprise data warehouse thing. Um, know, many millions of dollars a year and they're like, Oh yeah, but, you just get to a point where you go, Oh, this person in the organization is going to be a pain in the butt. So we sell them a piece of consulting. We go on site, put the high vis on with the steel caps. We're on site in, you know, in the Bowen basin in Queensland. and you are talking to this person who wants, she loves her Excel spreadsheet. And we had to convince her that she would look good, her job would be safe, and she would actually be smarter and better and probably get a promotion if she helped us bring the software through. And result, that million dollar sale went through. That's a million dollars for the first year and then about 350 grand a year after that recurring. So it was a... huge deal and we had to sell them the idea of making sure that Mary was happy. Even though the CEO is in somewhere else, all of this hierarchy, everybody's lined up, but the admin person, you need to get to that. Jason Kirby (01:06:15.974) find actual key point of influence on getting that deal done. Matthew Whyatt (01:06:19.083) Yep. Because in every deal, last thing I say on this, every single deal that I've done in the last 10 years to large corporates and mid market and above, there's many, many, many people that can say no, and they can say no by inaction, they can say no by not providing data, they can say no by by, oh, well, we're going to make sure stock two compliance is there, you know, we're gonna, you know, the no comes in many languages and many forms, but it's still a no. And there's only a few people that can say yes. So you don't need to, yes, you need to appeal to the people that can say yes, but all the people that can say no, you need to make sure they're on sign. Jason Kirby (01:06:55.63) No, I love this. Clearly, Matthew, you have a wealth of experience of a wild ride of building and scaling a company, watching it kind of crack in the foundation, start to evolve, and then ultimately picking up the pieces, but still turning around and starting something new and being able to kind of demonstrate the sales experience across the board. Matthew, if someone wants to learn more about you, what you're doing at TechTorque, what's the best way for them to learn more and get in touch? Matthew Whyatt (01:07:25.355) Well, we've got techtalk.co as the website. Follow me on LinkedIn, Matthew Wyatt. That's where I put all of my ideas. don't gatekeep to use a modern sort of parlance. I don't gatekeep any IP. I think that sales and marketing is something that is an execution and a performance art rather than an activity level driven art. I share everything that I know about sales and marketing for the last 10 years since that episode. I've been helping businesses scale on board their first sales person, on board their first sales and marketing people. And also I've been helping them drive revenues and codify their sales processes. And that's really the key. That's where I live now in that piece for the last 10 years. I've been helping businesses do that. That's what we're doing here in the States. So just find me a LinkedIn, follow, join one of my webinars, see what you can learn because there's no, I don't think I need to hold back anything. That's not how I'm built. I fully figured that out through this conversation. I don't hold anything back. And many people do use my content and they go in and try to do it themselves, which is great. More power to them. Jason Kirby (01:08:36.902) I'm really glad I had you on the show. And the reason why I wanted you on was to really emphasize this, sales aspect. I can't tell you how many founders I talk to on a regular basis that as we were talking about earlier, like promised investors that like, Oh, give us your money and then we'll figure out sales and haven't actually had a salesperson or have managed a salesperson. And yeah, they're a tech culture, not a sales culture. And when you're selling, you know, a hundred KCV plus, you know, a human really does need to be involved as much as product led sales is great. People still buy it from people and scaling up those systems is crucial. So I really appreciate you coming on the show, sharing your insights, being vulnerable and sharing that wild ride of hundreds of millions in sales to have it wind down and sell for parts and then have to buy it back and rebuild again. It's a wild story. So appreciate you coming on and sharing that. Matthew Whyatt (01:09:26.067) Absolute pleasure, Jason. Thanks for having me.