What do founders get wrong about life after an exit?

Episode 86 - John Rood Transcription Jason Kirby (00:52.35) Hey everyone, welcome back to Fundraising Demystified today. We have John rude with me today, an exited founder who sold this company for more than eight figures to private equity and also wrote the book Beyond the Exit. John, welcome to the show John Rood Jason, thanks for having me. It's good to be here. Jason Kirby No, I'm excited to talk about your experience and what you've done, but to give the audience a little bit of color, you built a material business, you spent years building it, and you had what most founders dream of is an 8-figure exit. Can you tell the audience a little bit about what the company you built and we'll kind of talk about kind of the process of selling it and why you sold it? sound good? John Rood Yeah, sure thing. So I had started and built an educational services business in the test preparation niche. So we started out helping students succeed on the law school admissions test, ultimately built a business in the medical pre-medical education space, pivoted from where we started with kind of tutoring and services to be more software-based and more content-based. And then ultimately that was one of the larger pre-medical test preparation businesses in the world when we sold it. Jason Kirby (02:04.14) Wow. And I guess in that process, you took it from a service business to a software business. And for founders that don't know, that's a material difference when it comes to exit value. What gave you the insight that you needed to switch to a software business? John Rood So I think it was two things. And one was luck, and then one was skill. So the luck was we saw some places in the market where our students were not really being served with some of the software and content solutions from our competitors. So we had an opportunity to go build that, which was great. And so it's always great to serve our customers better. And then the second was, and this is where I think I did some smart things. I had a really good advisor who had worked for our competitors for a long time and then had a great MBA and was a high-level consultant at a big firm, one of the smartest people I've ever met. And one of the great things he did for me was he took me around to private equity firms well before we were interested in selling and just said, hey, sit down with these people, meet these people for 15 minutes, talk to them, see what they want, see what kind of businesses they want to buy. And sure enough, exactly as you had said, You know, a small tutoring business is not really worth very much, but a scaled business with software content, tens of thousands of students is worth much more. Jason Kirby Yeah. And so that's something I want to kind of point out. You had an advisor and in this case, could be an investor, advisor, mentor, whoever- but you know, that understands the business, understands, you know, the, the economics of private equity, that can introduce you to how to start thinking like that. At what point in your journey did they kind of introduce you to this concept of private equity and, you know, those conversations? John Rood (03:51.214) I think we were probably five or six years in, and we ended up selling when we were eight years in. So, you know, I think we were big enough to have those conversations. Like it would have been a little absurd to go, you know, go to the, you know, downtown high-rise and sit down with the full investment team and say, you know, to your point, I've got a hundred-thousand-dollar tutoring business. Like that's just not the way to create the right relationship. But, you know, I think it was when we were large enough and interesting enough that people could see at least some path forward to us being a tuck-in to something else that they were doing at some point in the future. Jason Kirby And so you start those conversations two years before you actually ended up selling. And I think that's probably what led to maybe a more successful outcome. Guess, walk us through from the spark of like, okay, now I know what the end goal is that's going to maximize enterprise value. I do X, Y, like what did you do with the business to maximize the value? John Rood Well, I think that it's really the basics. Mean, kind of after we had that strategic direction of we can't just be a one-to-one services business, it was really clear what we needed to do. We needed to build software and content that gave us substantially higher gross margins and then just scale that as quickly as we can. And I probably talk all day about how you do that in the education business; probably not super interesting to your audience altogether, but I mean, functionally, it was just the blocking and tackling of growing that business and scaling in a smarter way as we could. Jason Kirby (05:20.902) And how much did you grow? Like, were you growing faster than you were before? Like, you invent, did you play any, like, so some things I talked to founders about is like, there's these certain financial games you can play in terms of investing in certain parts of the business can drive top line revenue and give you a greater multiple, like almost five X six extra money that you invest because you're invested in the right thing in the business. Like, was there any kind of strategy around that that you guys played into? John Rood Yeah, you know, one of the things that I learned and I, you know, I was a, I was a humanities major in college, so I have no finance background whatsoever. But one of the things that I learned is that when you make investments in your business, and you have clever finance people, you can sort of just say that those are, that that's capex as opposed to something different. And, and oftentimes kind of get that knocked off of your costs. So I think that to answer the question, When we invest in software, we invest in content, and we expect that software and content to be valuable for five to 10 years. That turned out to be, I would say, an extraordinary investment. Jason Kirby Yeah, it's basically taking your EBITDA and increasing it sort of artificially to then, you know, that little bit of increase, you know, could be multiplied, or depending on whatever multiple you sold that, like, five times, know, six times. exactly. Could have a very material impact. And so I always just challenge founders to think about, you know, what are the things you can do, like investing in certain things in the business in terms of growth or EBITDA, can, you know, there's a multiplier effect, which is pretty powerful. Jason Kirby All right. So. When you get two years down the road, like what, what actually kicks off the sale process? What's kind of going through your mind? You know, why did you kick it off when you did? What happened there? John Rood (07:09.848) So there's a couple of things that came together at the same time and the right time. So one of them was it started to get clear that we were large enough to sell. So we started to get quite a bit of just inbound from competitors, from kind of the search funder crowd. When we got search fund emails, they're all exactly the same. We get one at least once a week. This was like, OK, you know, this is material enough that, you know, that's interesting. I would say that that aligned with the time in the business where we had gotten, I think a lot of the value out of what we had built, and sort of to kind of get the next level up, we would need to make to your point earlier, like a substantially larger investment in technology and people and management, et cetera. So as I was thinking about that, I didn't have any money when I started this business. My parents were teachers; there was no trust fund for me. And so I didn't have any money, and all my net worth is tied in that business. So it was just time where safeguard my family's future to make sure that we actually got something out of the business, which a lot of entrepreneurs don't. It was time to think about taking some chips off the table. And then that, I think, happily coincided with one of the private equity groups that we had met a couple of years ago popped up on my radar again and saying, hey, we're looking to do a roll-up in this space. That's kind of what set us off down the path. Jason Kirby So here's some terms that you've mentioned: search fund rollup, and just for the audience's perspective, just want to give them a quick education. Like search funds are often led by MBAs who raise a little bit of money to go hunt down a deal and spend two years trying to hunt down a deal and then raise financing from those investors to actually close on a deal. So they're basically prospecting. And so you're getting a lot of that prospecting. Then rollups are when you basically buy one platform company that is like kind of a core piece to a strategy, like in this case, maybe test prep as a platform. And then they buy a bunch of bolt-on companies to stack on top of it and increase the value. Those are strategies we talk about often. And I think founders need to know that those exist out there so they know what language to use when having conversations for a potential exit. When it came down to the exit, so it was one of those firms you met two years ago. It wasn't one of the new... So that's something also like... Jason Kirby (09:31.522) How important do you think that relationship was to doing the deal with them as opposed to others? John Rood I think it was medium important. So I think that we were gonna we would sell that business with or without the folks that we had met previously, just because it wasn't an attractive business at that time. I think it was easier. Number one, it's nice to know the right people; that makes things, I think, go a lot more smoothly. I think it's nice to have some relationships, and you know, there's always there's here's a cap on the value of relationships where it's like, okay, you wanna do a deal with people that you kind of know and trust a little bit, and you're friendly with. Now, is that worth $10 million? No, that's not worth $10 million, but is that worth a little bit of extra trust? I think it is. So I think that having a group where you already knew the people, thought they were good people, I think that was really beneficial. Jason Kirby Yeah. And being able to, having done that little bit of a road show early on, helped kind of set the stage for what inevitably happened two years later. Yeah. And when you ran your process, did you hire bankers? You guys do it yourselves? Like, how did you guys go about running the process and letting the world know you're ready to sell? John Rood Yeah, we hired a banker. think that it was probably the market would describe it as a limited process. So we went out for a relatively select number of buyers because we already had an offer on the table that was, I think, pretty good. So it's just a matter of figuring out, you know, was that top dollar? Was there more that we could do? And so I don't I don't actually know if that was the right approach or not. I think that It's always I don't know a single entrepreneur after talking to hundreds of them who doesn't kind of Monday-morning quarterback their sales process. And the challenge of it is that when you make a mistake, you know, you make a mistake in like your daily life or whatever, like, know, like whatever, like you could have bought milk for 10 cents less at the different store or whatever, like who cares? But like if you make a mistake in your M&A process, it costs millions of dollars. So I just, you know, there's some entrepreneurs probably that said that they did it perfectly, but I don't think I know any. So did I do it perfectly? No. I don't think so, but I think I did as best I could at the time. Jason Kirby What would you, like what were some of the things that you would have changed when it came to running the process piece? John Rood I think we could have gotten more buyers involved. think that, yeah, I mean, I think that that's probably the big one that stands out. But again, it's tough to complain about it because, you know, what were my goals in this process? I wanted to have chips off the table. I wanted to let the company continue to grow without every dollar coming in on my bank account. And we succeeded in those things. Jason Kirby I think that's a very reasonable perspective. And you mentioned kind of founders playing Monday morning quarterback and like what could have been, what could have happened. And like when we sold our company to Walmart, there's a lot of Monday morning quarterback, what we could have done better and blah, blah, blah, blah. That would have made material changes and so on. So it's something that I think is a pain for all founders to go through. But I think what you said there, it's like, well, you still ended up accomplishing your goal. Could you have gotten more? Did you have, say, been greedier or like reached for more? Jason Kirby (12:40.684) Yes, possibly. But you never know what happened. You know what you know now and you have what you have now versus what could have maybe not happened or did happen. And I can speak from experience. I had a board member get greedy and we all lost a lot more and pushed and we lost the deal. John Hood Yeah, you know what? And what's interesting about it is that that Monday morning quarterbacking to me is totally divorced from any actual utility that people usually could get from having more money. So I've had these conversations with people that got $100 million in proceeds and are modest people. They don't need their own private jet, functionally have no utility. They could lose 80 % of their money and their life would be totally the same. But are still gonna Monday morning quarterback their process, right? So I think one of the things that emotionally founders have to do is just make sure that they kind of go through this process of thinking like, well, wait a second, like I have enough. So, you if I had more, it would not change my life. Like, yes, I could have been like, you know, like a big strong man and gotten max top dollar, but that doesn't matter. Like it just doesn't actually matter in people's lives. So I think there's a process where we kind of learn not to let that wake us up in the middle of the night, like, one year, three years, ten years later. Jason Kirby (13:59.584) It's so important that you mentioned the word enough. And I think that that's often a challenge I have with founders when we first engage, because we're always helping founders. Like ultimately the end game is some kind of exit, but there might be a couple milestones to get there. And it was looking like, I to be a billion-dollar company. like, do you really like, that really the life that you want to live for the next like 10, 15 years? And it's like, if you had $20 million or $100 million, would that be a material change in your lifestyle from how you perceive yourself today? No. It's like, but if you sold for $20 million in two years versus doing this for 10 years for a billion, like, you know, what's, what's actually a change, what's worth, you know, having that, that security scenario. So, I think it's a very important question for founders to ask themselves. What is enough and what are they willing to do to get there, to create that outcome? So you sold the business. Yay. But what happened after? John Rood So I worked in that business for two years under our new owners, was, you know, again, like it was pleasant people. You know, we had no problems with the deal. Like, you know, the money came, the things happened that people said would happen. I think there's always a transition when you've been an entrepreneur, you know, functional your whole career. And then, you know, suddenly you have investors and bosses. It's just different. So after two years of that, it was time for me to move on. And then... I was trying to figure out what to do next, like what to do with my life. And it was surprisingly hard. you know, one of the things that surprises me still is that I tend to be a very introspective person. like, you know, I journal, I think about, you know, the scope of my life and all this stuff. And just like, that's the stuff that I do. But I don't think I ever really sat down, like before the sales process and said, here's exactly what I want my life to be like, you know, after I leave this company eventually and however long that takes. And so when I got out of it, I, you know, I didn't know what to do. And that was a, you know, a real struggle for a while in my life. Jason Kirby (15:59.916) And I guess that ultimately led you to writing this book. John Rood Yeah, so I tell people I wrote the book for two reasons. One of them was utterly selfish, which is I'd always wanted to write a real book. I mean, I've got my name on 10 test prep books of medical terminology; that's not really what I had in mind. When I was a kid, I thought, what am I going to do? It's like, probably write a book in my life. So I wanted to do it, and I did it. So that was great. The less selfish reason was I really think that this is a part of kind of the entrepreneurial journey that people don't talk about very much. You know, I've heard it described as like the dark underbelly of the world of entrepreneurship where, you know, we think we're working really hard to get to a goal. We get the goal, and then people aren't happy. And that was my experience. That's the experience of, you know, I interviewed 70 people for this book with exits from 1 million to 700 million, you know, varying degrees of happiness and kind of, I guess, success in post-exit life. But universally, it was not as easy or not as smooth as people might've thought it was going to be. Like basically no one took the money, went to live on the beach, and was like, served like Tiki drinks for the rest of their life. And it was totally happy that didn't happen. Jason Kirby I always think it was like the visual of like what if the coyote caught the roadrunner? It's like, okay, well, now what? It's like, okay, you got the roadrunner. It's like, okay, you got everything you've been working for your entire life. You suffered and made a miserable pain to get to, and now what? I guess, across interviewing over 70 founders that have sold their companies, were some of the underlying themes that you saw that would be important for founders that haven't got there to know. John Rood Yeah, so there's a couple of things I would point to. The one that I think is most helpful for founders that are still on the journey is basically no one planned well for their life after exit. And there's a couple of reasons that I found, both in my own experience and the folks that I talked to, for why that happens. One of them is, from an identity standpoint, we can't think about ourselves as anything other than entrepreneurs. So that's just like, what we are wake up thinking about our business, we fall asleep thinking about our business. And so it's hard to imagine anything else than exactly that. So I think that's a big challenge. Secondly, I think that the sales process for virtually everyone happens so quickly. There's just not a lot of time in there to really sit down and think, what do you actually want? A lot of people were in positions similar to what I was in, where you've got a mid-sized business, you just get some demand for it, and then you get an offer, right? And the offer kind of comes out of the blue, and it's good enough that you have to consider it. and so for folks like that, like, you know, in my situation, when the offer came, like I hadn't thought, I hadn't sat down and thought, like, what do I want, you know, the next 30 years of my life to be like, and when you don't do that, you know, then you kind of get into sales process and it's like rolling a boulder downhill, right? Like, and everyone wants you to just get to close because everyone in your world is now financially incentivized to get your deal to close. Your banker, your lawyer, your accountant, whatever. And so there's just not a lot of time to think about that. So one of the things that I think is really important is making sure that people think through really holistically, like, do I actually want to have happen when I leave this business? The other reason why that's so important for folks on the journey is that I think that it informs the kind of deal that they want to have. Because if you've never thought about this and suddenly, you know, as a private equity group comes in and says like, well, we want to buy 70 % of your business, but you have to stay on as general manager for, you know, four more years to, you know, to grow this or whatever. do you really want to do that? Right? Do you really want to work for four more years in your business? Right? If you have to do that, is that worth a million dollars, $10 million, a hundred million dollars? Right. And so those are the things that are really hard to weigh when you are doing for most entrepreneurs, one big transaction in your entire life. Right? You'll only get one chance to do it. And if you kind of mess that up, like the cost of unrolling yourself from a deal that you end up not liking the terms of can be really challenging. Jason Kirby (ad) You're likely having trouble raising money or selling your company. Personally, I've had four exits, and I've raised over $145 million. If you want a free coaching session with me, just like subscribe and leave a comment down below. Let me know what you think of today's video for a chance to win a free coaching session with me. I'll select three winners every single month. You just have to like subscribe and leave a comment down below for a chance to win. Now onto the video. Jason Kirby Yeah, I completely can derail a founder post-exit. There's many people that go into a state of depression after losing a sense of identity or doing the deal in a way that again, a Monday morning quarterback too often. you kind of talk about this like mental preparation prior to, like what are the tools or like resources or networks that exist out there for founders that are feel like they can build a material business and want to know their options. John Rood Yeah, totally. So I think there's a couple of good things to do. So number one is just learning from other folks that have done it. So at the risk of over-self-promotion, like I wrote a book on how to do it; there are a couple other good ones too about the same topic that I think folks should take a look at. I'm happy to put those in the show notes. So number one is learning from books and articles. Number two is learning from other entrepreneurs. So one of the most impactful things that I did in my business was join the Entrepreneurs Organization. And now there's, you know, there's 10 of the YPO, Hampton, et cetera, et There's a ton of those now. So those are where, you know, that experience oftentimes lives, and it's hard to, hard to just kind of meet people who have sold a big business before, but that's, that's the way that you do it. And then the third way is there are lots of tools that you can kind of use for life planning. And I talk about a lot of them in my book; happy to, you know, talk about them now. But I think just like sitting down in like a way from your business and away from your family. Like really truly taking like one to three days to disconnect from everything and, you know, thoughtfully like journal and do exercises about what you want in your life. Like that, I think, is ultimately how people get to the right level of self-confidence to then go get the deal that makes them happy. Jason Kirby No, incredible advice. it's, you know, starting those conversations. I know it's like hard when you're a founder and you feel like running the hamster wheel and like, you've got to keep everything going all the time. but it's, it's important to start making those connections after you kind of hit probably like a million in revenue. And that's kind of when the, know, kicks in is after you a million in revenue, it's when you can start running these types of groups and getting exposure and having these conversations. so when it comes to the, the post exit. So you kind of talked about the psychological impact, what do you ultimately recommend that they start exploring that? do you see founders kind of, I would say what do you see as common for founders that do exit? Like what are the one or two or three things that they constantly always do after exit? John Rood (23:54.286) Totally. And it was remarkable how quickly these patterns developed when I started to do this research. Here's the things that founders do that turn out to be sometimes helpful for them and sometimes unhelpful or unhealthy. number one is everyone thinks that they're going to advise other startups and angel invests. Like 95 % of people do this and for the vast majority ends up kind of being like a phase. I drew this diagram after seeing this pattern over and over where like you exit your business. One of the things that happens is people stop like talking to you. Like unless you're like Elon Musk or like really, really well known, like, like, you know, you're like Reid Hoffman or something like, if you're me and you run like a little education business, the day you sell and leave the business, no one cares about you, right? You're not, you're not on the news. And there's this constant cycle of, um, you know, your employees need you, your vendors need you, your customers, all that goes away. Right. And so a thing that people do to kind of fill that lonely gap is angel investing because then like, like, just like, like manna from heaven, all of these really smart young people start like calling you and they're like, Mr. Rood, just need a minute of your time. And it's like very flattering, right? Yeah, exactly. So, so then you do, know, you do angel investing and again, like if you're someone like me, you may be in different situation. Like for someone like me, I don't know a lot of Silicon Valley people. Like I'm not well connected. I'm not a top investor. So the deals that fall to me are not the top deals. Right. So like I'm like I'm like the proverbial like dentist from Akron. Right. Where like deals that I get are like just like the word. And yeah. Exactly. Exactly. So you know you do that. You make some angel investments, whatever all the young people that really wanted to talk to you after the check clears never want to talk to you again. Jason Kirby You have money, I'm gonna go after you. John Rood (25:19.726) Right? Like maybe they send you an update every year. Like if you're lucky, maybe not. And then tax time comes and now you've got like 35 K ones that you're trying to track down from these 23 year old kids running businesses where you invested $25,000, which is not an amount that you even care about. Um, and then you like get out of angel investing and put your money in mutual funds. Right? Like I see that pattern over and over. So angel investing is a, is a big one. Um, the other obvious one that people do all the time is they just start another business, and I've got some other business things. Like I don't think it's wrong, but I think it's, there's a emotional risk that entrepreneurs take where, you know, they get out of their business like two weeks later, they start to kind of get antsy. Like they're like, no one's calling. Like no one needs me. You know, am I, am I washed up at 35 or whatever? I'm going to start a business right away. Right. And the reason I think that that's risky is if you don't take time to like sit with that discomfort, like sit with that loneliness and with those feelings, I think you're just kicking that can like down the road of trying to figure out like who you actually are, what you actually want in life. So again, like a lot of the people I talk to have second businesses. The ones that are happy are the ones that were really thoughtful about what kind of a business do I want? Why do I want to do this? Cause like it's not, it's not for money, right? So there's gotta be a reason why I want to, why I want to have another business. And the ones that I talked to that were not happy were the ones that just said, you know, two weeks after I sell my business, I'm going to start another business as close to the old one that I just sold as I possibly can without violating my non-compete. Jason Kirby Rinse and repeat. Yeah, I see the same patterns. Being in the PEF group, there's now like 3,000 members of post-exit founders, and hearing these stories of like, sold my company two weeks ago, you're raising for my next. Here's no, take a breath, man. Because I did the same thing. Sold to Walmart and then I was just like, right back into it. Operating without even breathing for a moment. You know, kept going, kept going for at least three more years before I kind of like hit a wall. And I was like, why am I doing this? Why am I going through a max pain all over again? And yeah, I had to basically pull the, you know, pull the plug and, you know, took my chips off the table that I had at the company was at last and, you know, basically reflected for months. And I did probably jump too fast into what I do today, but I, you know, was, it was a lot of that thoughtful alignment in terms of this is what I want to do for the rest of my life kind of thing versus, you know, the tech startup route again. But yeah, it's a very common thing. Yeah. Angel investing, writing checks- great time to write checks in 2021. This is like lighting money on fire. I feel like every founder has got to go, every exit of founders got to write those like five angel checks. Why did I write that check? You just get excited. Yeah, let's do it. Let's get the money out there. John Rood (28:15.534) Same thing. John Rood (28:21.998) Yeah, there's a lot of things that feed the ego like that. And after you have left your business and no one cares about you anymore, that's like, that's what people crave is to have their ego fed one way or the other. Jason Kirby Yep. A hundred percent. When you're, you know, in the book itself, like are there any kind of like key takeaways that you want to highlight for founders that, you know, might be considering, you know, either have just recently exited and kind of want to know what to look for or might be on that trajectory to exit. John Rood Yeah, I think that it's all about planning and it's all about thinking about what are the parameters that actually make you happy. And so I've got a lot of stories in the book about exactly that. And a few of them are people that started other businesses and tried to make them big in whatever they were already doing. But so many of them were people that built big businesses in tech or whatever and then just ended up doing something completely different and are totally happy with that process. So, you know, I interviewed one person who had studied opera singing and after she sold her like large business, she became an opera singer and loves doing that. My all time favorite story though, I have a prop for it too, is I talked to this guy who had a big, what was it? It was like a technology integration provider like in the 90s, like when that was like a thing where you could make a lot of money like, Like putting software on people's computers at their office. So he built that he sold it to Like Hewlett Packard or something took like nine years off and like I don't want to say did nothing but like did nothing that was like business related and then one day he's at this conference for knives and watches because he loves knives and watches and he always has had a knife collection since he was a Kid and he needs these Danish guys who have this like these beautiful knives and just had don't have the right distribution They're not you know, kind of getting the market credit for what they've built. So we ended up putting together a company with them. They go on to make Inc 5000. They win Knife of the Year. Here's my profit. It's weird to hold up a knife on camera, but I got one of their knives. I have it with me all the time. It's a great knife. It's a great company. And it's just this guy just doing the things that he wanted to do when he was a little kid. And that's one of the things that I think can be a really easy shortcut in people's journaling is take 10 minutes and say like, What'd like to do when you were like 13, right? And those are oftentimes the seeds of what end up making people like really truly happy when money and status and prestige no longer can make them happy. Jason Kirby It's a valid way to look at it. And yeah, I know some founders that were building at 13. know, can't stop building. They will always be building. And then you have others that kind of tinkered in something and fell into a business that ended up becoming of material value and kind of reflecting back as it's definitely being an entrepreneur. There is no easy path. Sometimes it might be look easy on the outside in terms of what's actually going on the scenes. Everything's always on fire. There's always like a Issue that's, you know, arise. But as a founder, you're to be like, no, everything's fine here. Nothing's wrong. Everything's good. Please be our customer. Please buy us. John Rood Yeah, to your point, it's never fine. And people miss that. Entrepreneurs miss that. Just like the number of people who go from everything being on fire and then everything is perfectly fine. And then that drives them functionally insane is very high. So it's about how do you fill that niche? And that's what the work is about. And it's real work. Jason Kirby (32:16.718) Yeah. It's like a complete reset button for a lot of people. Just how do they self-reflect? There's coaches, there's a whole industry- seriously, founders after the fact, know, the books, there's coaching, there's all kinds of retreats and experiences for founders that kind of fall into it. It's like, oh, well, it's you, have millions of dollars to cry into it at night, but you know, it's a real problem. like, you know, it's still human. still have your problems change, but, you know, it's always an interesting adventure, you know, kind of after that from here, like what would be some advice to the founders that are getting ready for the exit? And, when they think, when you think about kind of what you had that mentor that was like two years prior to an exit, like how, like, what would be your advice to go seek that mentor or to, to kind of get ready for the exit? John Rood Totally. I've got the functional advice and I've got the emotional advice. And the functional advice is kind of exactly what you said, which is that you have to have find people that you trust that have done this before. And that's where I think the wisdom that you get from joining, you know, YPO or whatever. I think that's a great way to do it. In the absence of that, like studying, like, I literally listen to your podcast and the podcast of the other folks that are talking about these issues. I think they are really important. So I think finding out what those options are is important because that, again, like that molds the kind of deal that you want to ultimately end up with, right? Like everyone, like I think one of the things that you don't know if you've never sold a business or never been through the process is there's a headline number, but under the headline number, there's a lot of red tape, right? And so there's how much do you sell versus, you know, how much do you roll over if you sell the private equity? How many years do you have to stay with the company? Like what's your obligation level? What if you what if you hate it and you want to leave and Those are the things that I think that people you know, don't really consider but have such a huge impact ultimately on your happiness Once you're out or once you're at least like have you know gotten the first check I think one piece of advice that I always give folks and I try to say in a very neutral way, but I've never met a founder who sold their business and then was as happy running the business for someone else or like working for someone else as they were running their own business. I just never met someone like that. Maybe they exist. Is that- that was you? No, no, no. Maybe you're the one. But so, like however happy people think they're going to be after they sell, if they're still in their business, I always say like, discounted by 50%. So if you think your life is going to be better after you sell at work, like, Nope. If you think you're going to be miserable working for someone else, like it's going to be even worse than you think. And that's not anything to do. That doesn't mean that any of the people are evil. Right. Like, that doesn't mean that your new boss is going to be mean to you. It doesn't mean that, like, you know, that anyone's like done the wrong thing. Like we're just entrepreneurs. And so I think that people that you kind of think about that really hard and think through like, well, wait a second. Like, what does it mean to have a two-year earn-out where I earn five million dollars? Right. Like if I, if I hate this on day one, will I actually leave and lose five million dollars? Will I burn two years of my life, which is irretrievable? So I think when you're kind of in those first stages of thinking about selling, like that's really important to get some thought to. Jason Kirby Yeah, no, I think that's valuable input. And we talked about that with the founders we work with in terms of like a deal structure. It's like, you know, those early conversations when terms start being tossed around, having a good idea of what you truly want post-exit, you know, materially changes the outcome. It's like, you know, earn-outs can be very, very complicated in terms of whether you get paid, and it's like how much control you have, how much control you don't have. How involved did it be? How much of the range will be pulled against you? And it's like the stress that can cause. And if you've already made a material exit, do you really need that extra couple of mil that might come in after the fact? So I always say it's a very good conversation point to have with founders that they start to explore that. Then I guess for founders that are listening today that might be in this situation, might want access to your book, might want to reach out to you, what would be the best way for them to learn more? John Rood Sure thing. you can find me on LinkedIn. I communicate with people all the time there. The book is called Beyond the Exit. So it's on Amazon. There's paperback, audio version, et cetera. And then the website for the book is beyondtheexitbook.com. So I'll put that in the show notes, I'm sure. Feel free to jump on there. I've got an occasional newsletter that I send out. I don't do it every week, but I try to make it good when I do it. So that's a good way to stay in touch as well. Jason Kirby Well, let me ask you, outside of the book and maybe some general advisory, what do you do now? What was your post exit path? John Rood Yeah, sure. So I think it took a long time to get here. But what I settled on was that there's four things that I want to be in my life. So one of them is, and the most important, honestly, is a good father and husband. So I spend obviously more time with my kids than I did before, which is great. They're now at the age where they come home and they're like, daddy, we want to go play with our friends. Like, get out of my way. So that's not as important. That's still important to me emotionally. Number two, I want to give back to my community. So I try to do, you know, I do some volunteer work, some board work locally in the community. Number three, I want to keep learning. And number four, I want to keep teaching. So functionally, what that's meant in my life is I do a bunch of training stuff in the AI world, which like, if I sat down and said, what's a great business to start where I can maximize my money like AI training is not it. Like I would pick something else, but I just love it. Like I love to learn things and then teach them to other people. I've loved that since I was a kid. And that's kind of what makes me happy. So I'm doing a lot of that. Jason Kirby slightly adjacent to test prep. John Rood It is, yeah. mean, it's not an accident that I was in test prep either. But does not violate my non-compete importantly. Yeah, exactly. Just to be clear. Jason Kirby No, no, no one's knocking on your doors. Yeah. So Jason, as you were saying, I got Jason to, yeah, but not, not in competitive. well, John, it's been an absolute pleasure having you on the show and like sharing your experience and, know, clouded that people are like, you were writing these books to help founders just know that there is, there are answers for you out there. And that could be a starting point to like learn the language and learn the expectation you need to have as a founder, for preparing for these, like you said, like once in a lifetime. very large transactions, very rare that someone goes through it twice. So thanks for coming on the show. Appreciate it. We'll make sure to allow the links are in the show notes down below. John Rood (39:16.236) Jason, thank you. It was a fun discussion. Jason Kirby Thank you for watching today's episode. As a reminder, I'm your host, Jason Kirby. I have built and sold multiple companies with over 135 million in transactions as either a founder, operator, or investor across multiple industries. currently the managing director and founder of Thunder.vc, where we help companies and founders at all stages navigate what capital to raise and who to raise it from, and help improve companies' odds of raising capital. If you need help, reach out to us at join.thunder.vc. If you liked today's show, please share with your friends, give us a like, or comment down below. And as a reminder, this show is published weekly. To get notified of new episodes and our newsletter, be sure to go to our website at join.thunder.vc. And if you sign up today, I'll send you a few freebies on how to negotiate a term sheet, how to get a free list of relevant VCs, and much more. That's it. No more shameless bugs. Thank you and see you next week.