Why Would I Just Buy Myself a Job? Turning Down Private Equity

Keep learning, right? Keep trying new things. Double helix is in, it's our DNA, and if we can say, well, actually unconscious incompetence, getting up to unconscious competence, recognising that that is actually level one again and going up, continuing eternally. Funnily enough, once I no longer cared as much about that business, it ran way better because I wasn't as much of a control freak. I didn't have to be involved in every decision. Welcome to My Shout, the podcast where we have candid conversations about family business transition. Joining me today is David Cordover, the CEO of UpScale and founder and former CEO of Kids Unlimited.

We're gonna have a conversation about why David turned down the first private equity offer he had for Kids Unlimited and what that taught him about founder dependency. So lemme go grab this coffee off the stove and I'll introduce you to David. David Cordover is the founder and CEO of UpScale, but that's not the story we're here to talk about today. David's actually a, I guess, multi-business founder, if you wanna call it that. Founded his first business at the age of 16, called Chess Kids. Took that to Chess World in '99, ran an international chess comp in 2002, labelled as the first franchise chess business in the world and the largest in Australia.

And then that business became Kids Unlimited around 1999, and you've since sold that business and moved on. Thanks for coming to the show. That's a pleasure. Thanks for the - coffee, mate. - I'd love to just sort of go on that journey with you, like, a little bit, if you, more if you like. So maybe tell us a bit about, you know, 16-year-old who decides to leave school in year 10 and go and be an entrepreneur. What's sitting behind that? I didn't decide to be an entrepreneur.

I decided to leave school. So yeah, I didn't get along very well with the school system. I was, I guess, independently minded. And so my excuse to my parents was that I would leave school and become a professional chess player. So from the time I was about 12 or 13, I got into playing chess. And by the time I was 14, 15, I was like pretty addicted to it. I was really passionate about it. And so I said to my parents like, I'm gonna drop out, become a professional chess player.

I'm not getting along with school. I was at my 10th school in 10 years. So it was already a bit unstable. So yeah, dropped outta school and like most 15-year-olds who drop outta school, I just spent the first six months or year like watching TV until four o'clock in the morning and sleeping till three o'clock in the afternoon. So I just had to develop clever ways to avoid my parents', you know, ire or wrath, depending on what it - was. - Lemme pull that thread a little bit.

So you said you went to 10 schools in 10 years. I'm assuming that's because you moved around the world a fair - bit. - Yeah. Yeah. My dad was an oceanographer and so he was consulting and he did marine resource development projects. We would move, you know, every six or 12 months at - the very latest. - Yeah. I imagine for your old man to be doing that, he would've been highly educated. How did he feel about his eldest not wanting to be in school? Very supportive, actually.

Yeah. So, you know, he was, you know, he was a free thinker. He was, you know, he understood that there were different paths to achieve an outcome and he wasn't locked into, you know, you've gotta do school, university, job, 40 years in the office and then, you know, golden handshake. So he was very supportive of alternative pathways to everything. But yeah, he was obviously highly educated, spoke eight languages, you know, worked in, you know, 60-odd countries all around the world. You know, it was amazing. Was an amazing - person. - I'm curious, where did the, where did chess come into this?

Where, how was that, was that something your parents passed on or is it - just - the chess came because, in grade, you know, six, a friend of mine and I, we used to play chess in the classroom when we finished, you know, our work early. My entrepreneurial mindset, you know, showed itself right away because, you know, halfway through grade six I said, oh, let's organise a little chess competition in the classroom. Everyone can pay 50 cents and the winner gets all the prize money. You know, all the 50 cents that we'd collected.

So we did that. Unfortunately, I was a little overconfident with my abilities. And so in the grand final, of course it was, you know, this friend of mine, Julian and I, and then he beat me in the finals and he got all the 50 cents. So that taught me a good - lesson. - So then you leave school and decide, if mum and dad are to support my decision to not go to school, I'm gonna go and teach chess. Yeah. So I was, it was more that I was gonna be pro, like I wanted to be a professional player, a professional chess player.

So I was the Australian under-16 champion. I was, you know, getting up there and capable in, within Australia, but the only way to become a really world-class chess player was to go and play in Europe. And we didn't have the funds to go, yep, great, here's the money to go and spend a year touring Europe and playing chess tournaments. You know, there was a really wonderful lady by the name of Hilda O'Callaghan. She, her son was the Western Australian under 12 champion. He was at the local chess club with me.

She and my mum started talking, and my mum obviously said, oh, you know, David's a bum. He's dropped outta school. He is just like messing around. She said, oh, I'll get him to like, give some lessons to my son. I was, you know, a few years older and a bit better. And so she gave me my first chess coaching job. You know, here's 10 bucks to come and like, play a game with James. And it kind of, that's where it started. And then it just evolved because, again, I just needed to find a way to get outta the house so that the first opportunity was with my brother's primary school.

And we lived literally over the back fence was the school oval. And then my brother's and sister's primary school. So I would organise on a Tuesday to go to the Waverley Chess Club, which I, where I was a member and pretty actively involved. And I had a key to the club. And I used to go to the, you know, I'd get up in the morning, you know, early, you know, 11 o'clock or 10 o'clock in the morning. I'd jump on the train one stop down to Mount Waverley train station.

I'd use my key to get into the chess club. I'd borrow some chess sets from the chess club. Nobody knew about it. I'd put 'em in my backpack. I'd go back to home. Go jump the fence, go across to the local school, move all these tables and chairs, set up all these chess boards, wait for the kids to flood in. We'd play some chess. I'd teach 'em a few things. They'd all, bell would go, they'd all run back to their classes. I would pack everything away, move all the tables and chairs back to the breezeways, take the chess sets back in the backpack, back to the Mount Waverley Chess Club, put 'em back in the club so that nobody knew they'd gone missing for the day.

And that would take all day. And so I could say to my parents, look how productive I am. I'm spending all day and I've got this. And it was just a volunteer thing. And we ended up with about a third of the kids in the school coming to that chess school. It was about a hundred kids, ended up being two days a week. And from that, a school down the road, Camelot Rise Primary School, heard about what I was doing. So they were running a medieval fair.

And the teacher said she wanted to have a chess activity 'cause it fit in with the theme of medieval, you know, medieval era. So she heard what I was doing at Glendal Primary School. She found me and said, Hey, can you come down and do this activity on a Sunday afternoon? I said, sure, I can borrow the chess sets anytime I want from the club. So I went down, played a little exhibition match, organised some stuff, and she said, this is great. I want you to come every week.

My son's really into chess. My daughter's into it. We're gonna have a chess club at lunchtime here at the school. You're gonna come every week. I said, yeah, sure. She said, but you've gotta get paid. I said, oh, I don't know how that works. I'm 16. Like, she said, gold coin donation. So I took calico bank bags, you know, those old Commonwealth things, hang it over the back of the chair. Kids'd come in, drop a gold coin in there, and we'd play chess and organise it. And that was my first paid gig.

And then, you know, as you know, would happen, somebody else heard about it. Somebody else heard about it. And before I knew it, I was riding my bike around to 10 different schools a week. And, you know, bags of gold all over the place. So how long between, I'm running around a few schools in town and running chess club to, I'm now running a, you know, national chess champs. Like, how, what's that? What's that period? It's a few years. So the, it was about, yeah, '96, '97, I bought a house and I took all my gold coins down to the bank and said, Hey, can I swap this for a mortgage?

Which they very graciously did. And I moved into this house. I got a couple of friends at, you know, in uni, they came and paid rent to help me pay off the mortgage, and I made sure that they had a job and I'd give them some chess coaching work to do. Okay. So that was kind of the start of a business, because now I had people working for me. You know, all the kids are learning, they've gotta have a place to play. And so we started a national competition.

It grew and spread across the whole country. We ended up with about 10,000 kids a year playing in that competition. And then, yeah, that led to all sorts of other things as well, as it does. So what does that look like when you're standing up franchisees? Because you can't be - everywhere, right? - I was very, I guess, lucky. I picked up the phone and I called the, you know, the one person who I thought would give me the best possible advice about expanding via franchising. And that was Jim Penman.

So he had this little franchise called Jim's Mowing. So I just, you know, I guess being entrepreneurial and not knowing what you don't know, I thought I'll just pick up the phone and call Jim and see if he has a chat with me. Not knowing that that's a crazy thing to do. Right. Who would, why would he help some random, like chess-playing kid? But he did, to spoil the end of that story, franchising wasn't the right model for what we were doing, and we ended up buying all the franchises back and taking a different approach.

And so then, is that what then evolves into Kids Unlimited? Yeah. So we built relationships with schools over a long period of time, you know, teaching kids how to play chess and running school programs, you know, running this national schools competition. And then, come 2014, so by this stage I had four children and all of those kids doing after-school activities, and used to be Friday afternoons, I would knock off early to take my son to a swimming lesson. And so I'm sitting in traffic on North Road in Ormond at three o'clock on a Friday afternoon.

All the school traffic's out there and I'm in like, I'm an impatient person. I'm really impatient. So I'm sitting there going, oh man, like road rage is starting to build. I'm thinking, this is insane. Like, I've got a million things to do. I'm running four businesses at the time or something, and I'm, this is just like, what am I doing here? How much is it really costing me for this $16 swimming lesson? I did the math and it was like $750. If I valued my time at like 50 bucks an hour or something, it's like $750 to take my son to a swimming lesson, which I think is costing me $16.

There's something, there must be a better way. Why isn't there like a Chadstone shopping centre for after-school children's activities and all the parents would just drop their kids off there. Gee, that would be, that'd be a great business. So that was my idea. So a few months later I bought a building and started a centre that we called Kids Unlimited and started running different extracurricular programs all focused on STEM. So that was like the kind of extension from chess into STEM education. So this is circa 2014.

You've already got multiple businesses running. You decide that this is the next big thing. The kids are still young at this stage, so it's not like they're jumping into the business to help. So how do you keep all that propped up? Yeah, I mean, business gets easier as you get bigger, as you've got a team around you that you can delegate stuff to. 2014, you know, I've got a 2-year-old, a 4-year-old, a 7-year-old and a 9-year-old. And so for me, this was always a family business because the business was actually part of the family, right.

As much as the family was part of the business, the business was actually part of the family. Like it was a child as much as any of my human children were. Right? And so, you know, I guess I was able to just have that all blended together. So, you know, all of my kids were part of the business, not as employees, but as - customers. - You've got multiple businesses running. You've got this growing Kids Unlimited business. You obviously no longer have it. So at what point were you sitting there thinking, maybe, maybe this isn't my, this is not one of the children I want to hang onto.

Like, when do you, and how do you reconcile that? Right. Yeah, yeah. Look, so probably the journey started in about 2018, 2019, where we were approached by a private equity firm and they said, Hey, are you interested to sell your business? And I think a good entrepreneur always explores all opportunities, you know, so you would never shut the door. And so I was like, oh, okay, what does that mean? I haven't sold a business before. Like, what does that, what does that look like? You know, tell me more.

But that was 2019, and by the time we'd got through some, you know, a bit of due diligence and all the rest of it, it was March 2020 and we all know what happened then, COVID. And so, you know, here we are delivering face-to-face services, and like our revenue drops to zero. So I guess that's what got me thinking about the idea. I got some really good advice from one of the guys that was working with the private equity firm, and he said to me, you know, because, you know, I was obviously a bit nervous about the idea of selling a business.

I'm like, well, if I sell my business, what am I gonna do? And like, and he said, look, when you sell a business, what you're doing is you are accelerating your journey. You're bringing multiple years of profits forwards into one year. And so you are accelerating time, you're compressing time, and that allows you to do the next thing. So when you sell your business, that's not game over. You don't have to retire and hang up your shoes and take up golf. You know, that was probably the advice that I got, which took me from, oh no, I don't wanna sell this business because this is my baby, into, I can see the advantage of an exit.

That was for me, the unlock, I guess. And then there was COVID. And COVID was tough on businesses that were doing face-to-face delivery. If you're delivering face-to-face services in schools where schools are pretty much closed, especially in Melbourne, if we were in Perth or in Queensland, it would've been different, but we were mostly Melbourne based. That's two years with no revenue. We did all the right things. So, you know, week one, the first school closed in Melbourne, we shifted, I think it was 132 classes that week to online delivery, right?

So, you know, we were technologically capable. We shifted to online, but the environment was simply that everybody was Zoom fatigued. So it just wasn't there. It just didn't work out. And so the challenge, you know, was I've got people who've been working for me for 15 years that I had to say goodbye to. And you know, you go, well, I spent 20 years building, you know, this. And it wasn't this business, but, you know, there were connections in schools and it was things that compound over time.

I spent 20 years doing this and it's all gone, and just like that, that sort of shook me a little bit. And I was like, this, I've got to like, I'm taking all this risk. I really felt like business was double or nothing every single day. So, you know, yes, it looks like you're doing well, but you know, it's all on the line tomorrow. So I think I just reached this mental point where it was like, I've gotta take some money off the table. I've got to build a base.

I've got to, and I'm ready to like, move on. I'm ready to leave the business. And funnily enough, once I no longer cared as much about that business, it ran way better. Because I wasn't as much of a control freak. I didn't have to be involved in every decision. I was like, look, I nearly lost this. The whole thing was going to zero anyway, so who cares? Like, and that was really freeing. It was like, yep, we'll just do what we do. If it goes to zero, it's gone.

I'm no worse off than if COVID had kept on going. Why didn't we sell at the time? Was just, you know, the private equity firm was trying to screw us down. So it was a learning opportunity for me to go through a process. But it wasn't, it, the offer that was on the table, probably the main part of the deal that wasn't right was these golden handcuffs that they offer you. They're like, look, we'll buy your business today, but you have to work in it and grow it and run it for the next three years.

I'm like, hang on a second, why would I just buy myself a job? That's like entrepreneurs typically, you know, my feeling is that freedom is the number one value. That's certainly what I'm looking for. Like, I just wanna be free of the rat race, free of like the pressures of the world and get myself to a point where I've got, you know, flexibility. You know, I've got the ability to do what I want with who I want, when I want, you know, and that idea of like, yep, you're gonna give your business to somebody else.

You're gonna be locked in and I know I'm gonna do a good job, I'm gonna do a damn good job, but it's already sold and I've now got to spend three years working for somebody else and they're gonna get 80% of the upside. That just didn't work for me. The handcuffs is actually the difference, right? It's, I'm doing it for somebody else. The loss of freedom is not, yes, I'm still 20 hours a week or over or, you know, let's call it 120 hours a week in this business, that feels free because I'm not doing it for somebody else, as distinct from freedom in the sense of I don't have to go to work.

Absolutely. There's a huge difference. There's a huge difference. So, you know, I might have worked a hundred, 120 hours a week, like every week of my life and, you know, but it never felt like work because it was my choice. I was able to do what I thought was the right thing to do. I was able to like grow a business the way that I wanted to grow it, because I thought that was going to contribute. I mean, my main mission at the time was like building mental muscles, inspiring kids to become lifelong learners, doing all this stuff, which I thought was incredibly valuable for the world.

Not only could I let this thing go, but the other thing you said earlier was, I don't need to be involved in the decisions every day. So sit with that for a sec. What does that - mean? - The journey then? I guess the mindset was, firstly, I was burned by that downturn. And you've gotta, you know, as you come out of, and you know, you call it Phoenix, you know, you're rebuilding things, you are burned, you know, you're feeling the pain. And so I was like, well, I just don't care as much about that.

I just didn't, it wasn't, it was something that I was ready to move on from. I didn't care as much about it. And I knew that if I wanted to like, sell the business and actually get something for it, rather than just close it down, then I would need to create the business in a way that when that private equity firm, 'cause I kept contact with those PE guys and, you know, can keep the conversation going, can keep those options open. When I have that conversation with them, I can say, this business is set up without me, so you can golden handcuff somebody else, but not me.

So I deliberately tried to rebuild the business after COVID with a sort of a general manager role in place. So I put a general manager in place and I jumped on a plane and I went and spent the best part of a year in Europe, right? Because I couldn't be involved day to day. The time zone was too hard, right? And it was like very freeing because like, what will happen will happen. I really have to, and I had good people before that. But this was different.

I really had to trust the general manager to actually run the business. I had to trust the systems that I'd built as a business owner are gonna work. And you spend an hour a week basically mentoring the general manager of the business, but it's their problem. It's their business to grow it, incentivised in the right way. And then when it comes time to exit, you say, well, I live in a different country, you know, this can't possibly, you don't need to handcuff me, you can handcuff him.

But having gone through that, you know, the initial due diligence and the private equity conversation, you learn a lot through that process about what you need to do. And I expect that most family businesses, most small and medium-sized enterprises in Australia are not quite ready for sale. And so ready just means being well organised, clean processes in place, documentation in place, everything's ready to go. And it takes probably three years, I would say, you know, we sold in April 2023. And this, that journey obviously started in 2019.

And so yeah, it probably takes three years to get your business sale ready, to tidy it up so that you can get the acquirer enough confidence that you can get a good exit. Now, I think you can probably sell your business anytime you like, but there's a big difference between fire sale, I'm sick of this, I need to move on, and actually I'm gonna get value out of what I've spent 10 and 20 years creating. And then, you know, gotta be able to put that under the table and go, yeah, I, that was worth it.

You get an offer, it's a non-binding offer. You say, Hmm, that looks good. You sign on the dotted line, then they go into due diligence. And during due diligence, their job is to like pick at every single little part of your business to see where the risks are, to see is there something that you've said or promised or implied that can't be backed up by evidence? And at the end of that due diligence process, the acquirer comes back to you and goes, look, we found all these things that are risks that we didn't know about before.

So we'd like to offer you half of what we originally offered. And in our case, the acquirer was much larger business and they had about nine consultants working for them. And you know, I saw it was like nine versus one. I was doing it all myself. They were doing commercial due diligence, legal due diligence, technical due diligence, and they just bombard you with questions, hundreds of questions. And I was really proud of the fact that when they emailed me a question or a list of 10 questions, I would have the answer back to them the same day.

That builds so much confidence with the acquirer because if someone asks you a question about your business and you're like, I'll get back to you. And then two weeks later, you get back to them, they can think, Hmm, what did he just manufacture? You know, he's recreating history and like putting documentation in place that didn't really exist or manufacturing a story. But when you reply the same day, you couldn't have made it - up. - Ducks in a row. Yeah. Yeah. And they go, wow, that's an organised business.

Right. And the sale of a business is all about, you know, this phrase which a mergers and acquisitions guy, you know, taught me, and it stuck with me. Unfortunately I learned that after the sale of the business, but the method of calculation of the value of your business is sustainability of future earnings. So that's the formula for when somebody comes to acquire your business, sustainability of future earnings. Future earnings is your profit, or what you say your profit's gonna be in the future. And then sustainability is just about risk.

Right? How sustainable are your future earnings? You know, and like what are the risk factors? So if you've got contracts with all your clients that say you've got a one month notice period, your future earnings are at risk, you've only guaranteed a month in advance. If you've got a five year or 10 year contract that your clients are locked into, the future earnings are much more sustainable. And so the value of your business is this magic number called an earnings multiple, which is the sustainability number, because that reflects the perceived risk, times future earnings.

But that multiple is not fixed. And that can impact the value that you get for your business 2, 3, 4, 5, 10 times. Right? And your business isn't any different. It's just the perception of risk that the acquirer takes on board. So the second time round, when I said, okay, now we're gonna sell, I followed a slightly different approach. It was what I thought was common sense. And yeah, in retrospect, I probably should have gone out and learned as much as I could about selling a business and then followed a process that somebody else had created.

But, you know, we'd come out of COVID, I was pretty burned. You know, I was like, the previous time I'd spent 50 grand or something like that with some consultants to help me prepare some things. I'm like, I'm not gonna spend another 50, a hundred, 200, whatever it's gonna cost to try and sell this. I don't even know if I can sell this business. So I'll just do what I think makes sense. And, you know, after I sold, I did then go and talk to people who are in mergers and acquisitions and exits.

And I actually, I probably got it about 80% correct. You know, correct, like, of the way that, you know, I would've been told to do it. But that was kind of luck more than good judgement, to be honest. So the first thing I did was I said, well, I expect that I'm trying to sell the business and I've got one buyer, I'm not gonna get as good a result as if I've got multiple people all bidding at the same time. So the second time round I'm like, okay, let's go and try and create a bit of a market for this business.

So I thought, who's going to, where's the best home for this business? What's a strategic acquisition? If you can sell your business to somebody who's gonna then take your IP and leverage it to a thousand times more people, that's a thousand times more valuable to them than it is to you. You've got a lot of good negotiating power. Right? So I tried to identify who are gonna be the type of businesses that are going to be interested in acquiring. I went and spoke to, you know, accounting firms and, you know, business advisers and said, look, do you know anybody who's in those industries who might, you know, we are exploring a sale.

I prepared a little information memorandum and splashed it around a little bit. So just quietly telling people we're up for grabs. And of course, the private equity firm was one of the people that we said, okay, we're back on the market. So we were able to then create a very different environment where we now had, we were talking to five or six different companies that were interested in acquiring. They were all strategic in some way. And we ended up with three non-binding written offers. So that was three people who said, yep, we're gonna buy your business.

Here's the calculation methodology, and if we use that calculation methodology, here's the number that you're gonna end up with. And then here's the structure. And as we were doing that, interestingly, the ultimate acquirer was not one of the companies that we'd approached. They heard about it somehow, and the owner of that business called me and said, ah, David, you know, I've seen what you're like, there's something going on. Are you like wanting to move on? Do you wanna sell? And I said, oh, yeah, actually, that's what we're doing at the moment.

He's like, well, you know, we'd be interested to investigate if that was something that, you know, you thought we were the right home for the business. And, you know, he was something that I hadn't approached. I said, well, here's our information memorandum. This is where we're up to. We've got a couple of offers, you know, feel free. And yeah, he was putting an offer as well. Without necessarily disclosing numbers, we're talking a better position coming outta COVID with a new business, not hitched to you, as distinct from what you probably would've sold for even with the handcuffs.

Oh, yes, yes. Yeah, because the structure was the, it was set up differently. Like, it's very hard. Like people say, oh, you sold your business, how much did you sell it for? And then there's a number, but that number is almost meaningless, right? Because, I know of one business that was in an adjacent industry that sold for like $8 million or something. There was the number. But there wasn't cash. There was equity and earnouts and, you know, compensation for work that was being done. And, you know, maybe 80% of it was in stock of the new company, which was a listed company.

And then COVID came and their stock like plummeted. They lost 90% of their value. So in the end they sold for $8 million, but they only received in cash $800,000. So your structure is so important, you know, like if you sell for what, whatever a number is, but you are locked in the business working for three years. Did you get that number or was that your salary for three years' work? And what's the opportunity cost of you doing something - different? - Yeah, that's right. - That's... - And a lot of people will be like, I'm done.

I wanna go and retire. I don't want to be stitched here for another three years. Yeah. And look, sometimes you do that because that's the best way to extract the maximum value. And if you, and you know that earnouts are a legitimate, you know, protection and it can be a big upside for the seller as well. But the main thing for me was I didn't want to be working on somebody else's business for three years. In the end, the private equity guys are always gonna try and like squeeze you down.

And so when they came back and made subsequent offers in 2022 and 2023, when we sold, obviously they got outbid and so the actual number was much bigger. But yeah, it was more about structure. It's like, do - you - better number and better - terms? - Better. And the terms are more important than the number a lot of times, like, you know, if it's in stock and it can't be sold for two years, like it's a big risk. If it's an earnout and the business has to perform, it's a big risk.

You know, but you have to also be aware that you are almost never gonna get full cash payment on day one because that's too much risk for the acquirer. So you've gotta find a compromise. You've gotta find a balance that protects the buyer. You know, I would say if you can, if you're thinking about selling your business, get, start getting sale ready three years before you actually want to exit, and then allow yourself the flexibility to be working for a year or two in the business after you've exited.

You don't have to, but that will give you better negotiating power. I was limited in my negotiating power with the acquirers because I said I'm not prepared to spend a year or two in the business. If I'd been able to, maybe I would've got a better offer and a bigger - number. - So we sell out of the, one of the children. And you know, there's a bunch of folks who are gonna do that, and then they're like, great, and I'm gonna go put my feet up and I'm gonna go sit on a beach.

And that's what it looks like. It's, for you, what's the next, what's the next - thing - for me? Like I'm always looking at my journey and so the next thing for me was to go from business owner to investor. And so what that does is that gives you the ability to leverage businesses in the same way that at the layer down, you were leveraging systems and at the layer down you were leveraging people. And at the layer down you were leveraging knowledge or skill of some sort.

So you're just spiralling up and up and up and up in terms of your capability. So I wanted to get that next level of, okay, that's gonna be the investor level where I can leverage businesses and then that will give me greater impact in the world. That was, I guess that was my ideal. Reality doesn't always, you know, follow a straight line. Going through a process and thinking that, you know, you're gonna have, you know, a whole bunch of zeros in your bank account and ending up with just one zero is okay.

Like, you know, because you've still learned and it's still gonna give you better personal leverage. It's just that, okay, well, I don't have any money in my bank account anymore. I've gotta go back to square one. We'll start again. It's a really interesting sequence. If you sort of think about the comment you made earlier around, you know, the ability to get out just compresses time and allows you to move to the next thing. Get close, stop, COVID comes, step back, rebuild, get it started again. Come to that, the finish line's right in front of me and then the gut punch.

And you almost gotta start the journey for the third time. Did you ever get to that position and just go, why have I gotta start again? This is - unfair. - Oh yeah, absolutely. Yeah. It's, look, the mindset of an entrepreneur, it's one of the hardest jobs in the world to have, right? When you're running a business, you feel like you're double or nothing every day. Yeah. When you reach what you think is the finish line, and then it turns out that it's the start line again.

You know, I think there's lots of stories of business owners and entrepreneurs who go back to zero. While you are zero, like economically, you've got learnings. So the next time around what you've learned can't be taken away, right? Yes. Your money, your house, your starting point for the next thing can be, goes to zero, fine, zero. But what you can't lose is what you know and what you're capable of. And that shift in thinking, you know, I mean, to be honest, it was very hard. And I think there's lots of like, mental health challenges.

And I definitely struggled big time. It's like, this is so unfair. Like you spend all this time building and then you lose it all. And that can be for any reason. You know, it can be health, it can be, you know, it can be COVID, it can be, you know, a bad business decision. You know, I found it particularly hard because, you know, I like to take responsibility for the world around me. You've got this internal locus of control. If it was a decision that I'd made and you make a bad decision, you know, you sign a wrong contract or something and you lose it all, your company goes bankrupt.

Alright, well, I take that on the chin. 'Cause it was my decision. This felt like it was really external and it took a while to, I guess, to reconcile and to, you know, get my head out of the, you know, out of the gutter. It was, I mean, COVID was hard. And then, yeah, the next stage where you lose everything and you've gotta start again for the third time was very hard. And it's still hard, it's still hard for me now, like, but it, you know, I'm, you've gotta try and work through it and you've gotta try to be future focused, not focused in the past.

And you've gotta find people who can support and help you. And, you know, I've got somebody who I talk to every week and he's amazing and helps me to, you know, try and understand the world. And what he said is that emotional pain is a signal that you, that your model of the world isn't complete because something unexpected happened. Like, if everything, if you understand everything perfectly, then everything always goes according to expectation. You can't have any disappointment because everything's just expected. Right. When your model of the world expects something like, you know, I'm gonna have, you know, eight or nine zeros in the bank account and I'm gonna go and do my thing.

And I, you know, and then the reality is different. The emotional pain is the fact that it was unexpected. There's something about my model of the world that it is wrong. And like, it feels really painful. It's, you know, it can take you into very, very dark places, you know, especially when there's like significant difference between reality and what you think reality is. And everybody's got their own model of the world. And if it doesn't, like it's meant to be, like, that's the celebration day and on celebration day where you sign the contract and you're like, great, I'm gonna get this big deposit in my bank account, which is the first payment that's gonna, you know, be one of many over the next year or two.

And when it gets, like, I mean, in my case, it was the same day that, you know, misfortune befall me and, you know, I never got to celebrate. And that was hard. That the fracture in my world, that the reality proved itself to be different from expectation on day one. I do wish I'd had at least a day to celebrate and go, ah, let's have a party. But it just, there was no, - there was no days. - Got robbed of it. Yeah. But I've got to firstly reconcile my like, model of the world so that it aligns with reality.

And then I have to believe that it'll come in the future because of what I've learned. And so in the same way that I learned from talking to the PE guys and was able to get a better outcome later on because of what I've learned, well, maybe I've learned something about structuring and, you know, law and all the rest of it, that next time it will go differently. Yeah. You might get the belated celebration. There'll be another celebration. I've, I'm just, I hold onto that. There will be a celebration at some point.

You've come up against this situation, put you in a bad headspace. I imagine that puts strain on your family and your kids and everyone else. Like that's not a great place to be. And yet with some help and support, you've got a fairly balanced forward, out, forward looking, you know, mindset, which is admirable. I'm curious whether the, you know, someone's listening going, how do you pull your head outta that? Like what's the, what's your takeaway? What's your philosophical thoughts on that? Ah, look, there was three years of hell.

Let's put it like that. Three years of, and being in very dark places, you know, very dark places. And it's very hard to get, it's very hard to get out of it. I'm not out of it completely, you know, my head is still, you know, in a bad spot a lot of times. It's just like the rug's been swept out from under your feet. And yeah, it's betrayal, it's unfairness and it's hard to get your, you know, to get your head away from those things. Like, you know, you feel like you want to, you know, when you are suffering, you feel like you want the world to suffer.

You, there's anger, there's, you know, depression. There's, it's hard to get moving again. But you know, as an entrepreneur, you've suffered in the past, right? It's a scale. I mean, and I don't think that you end up running a business without the ability to like, just keep picking yourself up and keep on moving. I dunno if I've got the answer yet. In terms of like being able to share with your listeners, if you're in a dark place, how do you get out of it? I think the one, sounds like the one saving grace there is, and you kind of alluded to it, is I might have had a setback, but I haven't lost my agency.

Yes, I think. Yeah, I think just, yeah, believing that I've still got like autonomy over my own life. I'm not, you know, I'm not shackled to something else, that's helpful. You know, being able to talk it through with somebody and try and get some perspective is helpful. I dunno the answer. I've gotta be honest. I don't know. It's just really hard. And I'm not out of it, like yeah, I'm doing stuff because, but I'm not a hundred percent. I reckon I'm only functioning at 60% of my capability at the moment, but it's better than it used, it was 10% or 5%, you know, not that long ago.

And so, like, okay, you just gotta keep pushing yourself, you know, entrepreneurs, high performers, you know, the one thing that we have is discipline. Right. We have the ability to get up in the morning even when you don't want to and go, well, let's slog out because we've got this belief in the future that the future is gonna be better. We're like eternal optimists. And so, yeah. No matter how bad it is, no matter how much I've suffered, no matter how much my family suffered, no matter how much, you know, it's completely unfair and unreasonable and all the rest of it, you know, I've still got this optimism.

Right. And sometimes it's hard to find that optimism kind of gets you up in the morning, you're like, yep, I, and the next time, like, what I'm building now, it's gonna be, you know, it's gonna be 10 x more than the last one for sure. Because of my approach, right. Because of what I've - learned. - Yeah. The compounding interest of all the lessons you already put - together, right? - Yeah. And you know, sometimes you see, you know, all of the, you know, the doomscrolling reels and stuff and you know, the guy goes around and asks all of the, you know, the millionaires and billionaires, you know, what's the most money you've ever made in a year?

And everybody answers with a number that's way bigger than what I sold the business for. And so I'm trying to think, you know, what did I do? What would I do differently from, I don't wanna repeat the past, what do I do differently? And one of those things I think that I would like to do differently, and I'm still working on it, is being more collaborative. So all of my enterprises that I'd created before, I never took anyone else's money. I was always doing my own thing.

It was always just me. And I think there's, you know, when you look at the world and you're like, all the really big, the really impactful businesses, it's not one person. It's always a team effort now. And the team is, it's more than just having a staff. It's, you know, investors, it's partnerships between businesses. It's a whole bunch of things. So that's one thing that I'm trying to do differently is to be more collaborative and, you know, maybe one day be open to the, like the idea of accepting investors as well on board and taking other people on the journey and on the ride.

Because, you know, there's something which I haven't learned yet, which is how do you create, you know, one plus one equals three where everybody wins? Where, because you know, what I've done in the past has been my business and, you know, I've gotta leverage people in the business who are staff and they can get remunerated in different ways. But I think there's just something different about, you know, partnerships and investments and like, I don't know what it is yet, but, yeah. No, that makes sense. And if I think about the Insta reels that you're talking about, right?

The first question is one, how much did you make in the year? And the next question is, you know, what's the biggest piece of advice you would give an entrepreneur? And it almost sounds like yours is, you know, my lesson after three goes at this is you don't have to go it alone. And collaboration may actually be the multiplier. I don't know if that's right or not. So my lesson would be keep learning. Right? Keep trying new things because that's the only thing that can never be taken away from you, is your own capabilities and your own knowledge, skills.

And again, this comes back to my educational theory of Kids Unlimited was there's knowledge transfer, you're giving information to somebody. There's skills development where they're taking that information, they're applying it, and they're practising that application over time. And then there's attitude, and attitude is how you go about everything in your life. An attitude comes from values and beliefs and all these other things. And so, you know, my advice would not be collaborate. I dunno if that's right or not, you know, and there's probably lots of good businesses that don't collaborate and they'll do very well.

Right. But everybody's coming on a unique journey and, you know, you might achieve everything that you want by yourself. So collaboration might be wrong for you, but what's not gonna be wrong for anybody is building more knowledge, developing more skills, and working on your attitude to make sure that you've got an attitude of spiral growth. You know, the double helix is in, it's our DNA. And if we can say, well, actually unconscious incompetence, getting up to unconscious competence, recognising that that is actually level one again and going up, continuing eternally.

And I, you know, I love, you know, martial arts. You go, oh, you're a black belt. Wow. What are you gonna do now? Well, that's just the first step on my journey, right? And that's why black belt, every black belt in martial arts will tell you, oh, that's the first step on my journey is black belt. And you're like, black belt. But that took you 15 years of working. Right? And I think the biggest lesson I could share, and the advice that I would give to any entrepreneur is like, be the black belt.

Always be feeling like you're on the first rung of a never-ending ladder. I reckon that's the perfect spot to leave it. I really appreciate you coming and sharing a coffee with me today. Thank you very much. Yeah, it's been good. Pleasure, good coffee. I'm glad you enjoyed it, mate. For those at home, today's blend is called Super Brazil and the shout is from the Genovese Coffee Factory. Interesting, Italian migrant family, third generation. Originally Alfio migrated to Australia back in the fifties and by the sixties he was at the Queen Victoria Market selling roasted coffee.

And through the seventies the A. Genovese and Sons company was spun up where they were producing what they called their signature blend, the Super Brazil, which funnily enough has coffee from 12 origins and the name Brazil just largely because marketing at the time made a whole bunch of sense that coffee comes from Brazil. And so why not Super Brazil? Definitely worth trying out if you haven't already tried it and you can pick it up most supermarkets. Thanks for listening to My Shout. It's been amazing having you on board.

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