This is really going to be a pure gold if you’re thinking about your exit. I know we’ve had a few guests on talking about it. To me, Mac is definitely, if you’re an American looking at the eCommerce or sort of that classic mid to upper seven figures and you’re looking at where you’re going, Mac really has a great plan to help you get a successful exit. In this episode, he’s going to share the inside scoop on ExitDNA strategy. We dive in into why you should start thinking about your exit strategy way before you’re ready to sell, how to spot and build strategic value that buyers will drool over, always nice, and really get a little bit surprising about who might buy your company. At the end of the day, it’s usually not going to be who you think it is. Plus, he dropped some wisdom on balancing our lovely entrepreneurial hassle with, you know, having a life. So whether you’re grinding towards seven figures or already cruising past eight, this conversation is packed with insights that could seriously level up your exit strategy. Go grab a cold one, kick back, and let’s dive into this encore presentation of my chat with Mac. Trust me, your future self will thank you for tuning in. Enjoy the show.
A.J. Lawrence:
Hey Mac. Again, thank you for coming back on the show. So, you know, it’s been about a year, what’s been going on since the last time you were here?
Mac Lackey:
Gosh, a year, yeah. I think like a lot of people, it was a really interesting year. For me, because I already was working from home. I had already set up my life in a lot of ways, sort of optimized around what I wanted to focus on. But a lot of my plan for 2020 was speaking at events and trying to just help entrepreneurs. And so I had, you know, speaking engagements booked in Europe, I had them booked on the west coast, and all these cool things I was excited about, and those just sort of fell away with travel bans. And so, you know, I guess as much as anything, I focused on the same thing, which was my ExitDNA program. But it was really, you know, reimagined in terms of delivering it over zoom, finding people I could help over zoom, and that was new for me. You know, I’ve been a, I would say a reasonably good marketer of my companies when I was an entrepreneur, but I certainly was not and still am getting better at marketing myself and how I can help people. And so that was sort of fast track. So yeah, that’s been a big learning experience for me. I’ve enjoyed it. It’s been intellectually challenging to think differently about how to promote myself, my programs. But yeah, my focus has remained pretty consistent, you know, mentoring, advising, investing in founders, and then a couple of cool little opportunities have bubbled up. But that’s been pretty consistent for me this past year.
A.J. Lawrence:
I want to kind of touch on your background as an entrepreneur because you’ve been doing this so long and you’ve had what looks in hindsight like success. But obviously it probably was a little bit choppier in your shoes. But you talk about some of the things that have bubbled up. How do you see like, one, both how COVID infected, how those bubbled up, but also like your experience of what you’ve done so where you are now capable of doing for these opportunities.
Mac Lackey:
Yeah. One thing that’s really interesting, you know Steve Jobs had that great commencement address at Stanford and he talked about connecting dots only really works looking backwards. And now that I have the benefit of 25 years of hindsight, looking back over a long journey, I can sort of see a pattern that I adopted early in my career that now is like deja vu again and again and again. And that’s basically just really committing to listening and just being super curious about what’s going on in the world. And so early on, that sort of execution was I was an entrepreneur in a town that didn’t have entrepreneurs. I was an entrepreneur before it was cool to be an entrepreneur. So I just had to constantly listen and learn because I didn’t have a mentor. I didn’t have anyone to show me the path. Well, fast forward a decade later, that same sort of intellectual curiosity was helping me see trends really, really early. I think one of the things, I haven’t done that many things right, but one of the things I did right pretty consistently was get on a trend early. You know, I launched my first business Web 1.0 company shortly after Netscape launched the commercial web browser. You know, I was in the, you know, content is king category before someone said content is key. You know, so I think the same thing is playing out now. And Covid was really, really a good example of that is I just kept asking myself, what’s going to change as a result of this new dynamic? What’s going to remain the same? What are other people doing? And just that constant, really questioning what’s going on.
Mac Lackey:
I don’t know.
Mac Lackey:
It’s almost like little bright lights sort of, you know, appear. There’s something I want to lean into. I want to learn more about that or I want to think about that more deeply. So long story short, I think I felt it a lot in the past year because there was so much change going on as a result of COVID. It accelerated that natural process of me just asking a lot of questions. But yeah, that’s something that’s I don’t know, really served me well. And I felt it a lot in 2020.
A.J. Lawrence:
It’s interesting you talked about that pursuit because I kind of jokingly call it like, your first child is amazing and it’s great as if a business is your first child. But it’s like even the stuff you do right feels like it’s wrong. It’s like, okay, I can do this. And by the time you get to like your third, second or third, you’re like, oh, wait a second, okay, this is going to suck. But I know it is and I can do these things to control the sucking. What are you seeing from the people in your program for the ExitDNA? Because I definitely think that preparation for getting ready, even if you’re not going to sell, to get ready to sell is really important because I completely- I got lucky in selling my last company but it was on the way down. I didn’t know prep ahead of time or I did very poor prep. And I recognize after the fact in looking at your stuff and looking at other people talking about that how different just a little bit of effort would have been in how that exit looked. So what are you seeing now with people, with everything going on?
Mac Lackey:
Yeah, that’s a really good question. And I think I’m seeing the quote attributed to Buffett and also Einstein but you know that compounding interest is the 8th wonder of the world, so whoever said that. I sort of think about exit prep the same way. It’s like if you’re starting a company tomorrow and you started doing little things tomorrow, just to be thoughtful about your future potential exit. You just might want to do it a decade in the future. Those little things that you do from the earliest stages compound into really significant value over time. And so as a strategy, you know, being thoughtful and proactive about exit prep is just a simple thing to do, but it creates a ton of value. The reality is just like your example, what most people do is there’s a point in time, some trigger event, some need or desire to sell a company, positive or negative, and that’s when they say, okay, now I need to get ready. And so the window is short. It may be two months, it may be nine months, whatever it is. But that’s not really enough time to let all of those simple things you could have done compound into value. Now what you’re basically doing is scrambling to put as many pieces together as you can. And so-
A.J. Lawrence:
Lipstick on the pig.
Mac Lackey:
Yeah, exactly. So I kind of, as a core philosophy, I tell people in ExitDNA like that’s one of the big critical shifts you have to make is it doesn’t matter if you ever want to sell your company or not. What you really want is you want the option. And one of the ways to create the option is to decide immediately that you’re going to be proactive about it. And once you kind of make that mental shift, those things start to happen again. That’s a core philosophy for me. It’s something I talk about every day within our program. But what 2020 did is highlight for a lot of people things that I used to say before 2020, that people would look at me and think, yeah, I think Mac being a little dramatic or he’s being a little crazy. But I used to say, you really never know what’s going to happen to the macroeconomic environment. Maybe we go into a recession. Maybe, you know, some factor that’s out of your control. And now you can see, because of 2020, most companies had a very black or white outcome. You know, March of 2020 either started an immediate negative decline of their business or for some maybe B2C eCommerce companies, it was a rocket boost. I was working with a company, I was on the board of a company that was planning to sell for probably, you know, 25, 30, 40 million in 2020 by April or May. It was hoping to make it to the end of the year. You know that’s how dramatic these outcomes are. And so my point is that’s an extreme example, but man, if you are prepared and you have the option, you can do things proactively in an instant and create maybe the exit value would have gone down to 20 million. Who cares? So yeah, I think 2020 for me was actually helpful in highlighting something I’ve been saying for a long time that I think people thought maybe Mac just paranoid because I’m always talking about factors out of your control. And 2020 hit it with a highlighter. Like sometimes you just don’t control.
A.J. Lawrence:
You don’t control the big things and then the cascading little things. You know, I’m literally hearing from folks I know who are big in the Amazon space here, and I’ve been talking about algae control just now the Suez Canal, you know, thing literally just a day or two into it. People I know who do big Amazon business over here are freaking out because they have the next few months on pallets over there. One of the things I liked and I dug in, you’re talking about kind of doing this proactive work. But in diving through, I talk about this because I’m a marketer. You know, when I talk with clients, there’s always so much noise. There’s do this, do that, do this. In reading, wearing my business owner hat, what I loved was the way you outlined, not like oh, we’re going to do all these things, we’re going to prepare you, but you actually had a bit of a process. Would you kind of talk a little bit about how you help people deal with the noise to get ready?
Mac Lackey:
Yeah. I mean, I think for me there are lots of little things you can do but there are some critical shifts I think people need to make. And so I talk a lot about these critical shifts. One is the notion I already mentioned, which is going from reactive to proactive. Just making the decision that you’re going to design your company so you have the option to exit. Just literally making that mental shift starts to put some things in motion. The biggest shift or shifts, I’d say there are probably two or three that I think people need to make. One is, you know, of my six personal exits, I never sold for a financial multiple. I never sold for EBITDA or a revenue multiple. I always sold based on what I call strategic value. And that’s a really, really big and important shift for founders to make. Which is not that your EBITDA doesn’t matter, not that your revenue growth doesn’t matter, of course it does. But if you take a little bit of time to start thinking about what are the things that we’re creating that are really powerful and unique and strategic, those are the real drivers of exits. You know, the reason someone comes in and buys your company is not because it’s doing 2 million or 20 million in revenue. It’s because you created a product that’s creating so much demand in the market that people have given you $20 million. That product in the hands of a buyer or the intellectual property you’ve created or the distribution channel, those are the things that actually drive acquisitions. And so I really try to reframe how people think about the assets they’re creating so that they have that sort of exit potential. The other one that I really, really like is helping people think differently about who was going to buy their company. And I was on the phone with someone literally yesterday, which one of my clients members, and it illustrated the point so well. They have a multi-generational business that’s been around probably 40, 50 years and they are going to exit. And they did what almost every single founder on earth will do, which is they will say, okay, let’s find a larger version of ourselves because that’s the logical buyer. Someone that’s doing, if you’re an Amazon seller and you’re doing 2 million in revenue, you want to find someone at 20 or 100 million because that’s who will buy it. And the reality is the best buyers, the ones that pay the biggest premiums that lead to the best exits, are people outside your industry that are trying to break in. So you helping founders open up the aperture of who all might be interested in buying my company across multiple categories and then helping them line up what is that what I call the irresistible exit story so that it becomes a no brainer. Why would someone in this new industry absolutely love to buy your company? So a lot of what we do is just really helping founders reframe these things and then start actively working through them. So that’s kind of my, you know, incredibly high level, I’m happy to go into details, but very high level. It’s almost about reframing how founders have thought about creating value and how they find the right buyers.
A.J. Lawrence:
Besides just entrepreneurs, you know, I don’t want to throw in avatar and all that craziness, but what type of entrepreneurs are best for working with you?
Mac Lackey:
Yeah, I would say, you know, one of the real luxuries I’ve had to some degree is my companies. My primary businesses that I build were in multiple industries. A couple of tech companies, a couple media companies, an apparel company. And then my exits were also reasonably diversified. Public companies, private companies, international, domestic buyers. And so my own set of experiences was reasonably diverse. I would say they were largely more modern tech-enabled businesses. So even if I were doing something with apparel, it was tech-enabled and high growth. But the reason I say that is because I have not really found a category or an industry that I’m like, ah, yeah, I just don’t know how to help a founder in that category. I do think the ones that I tend to naturally migrate to and find the most success with are those more traditional high growth categories. So tech, software, healthcare, you know, all those kind of things. But the other sort of guardrails I guess I would say is my sweet spot sort of feels like once a founder’s business or an entrepreneur’s business is doing seven figures in revenue, so it’s over a million. But it’s really kind of from that point up until like mid eight figures that I feel where I can create the most value. Can I help someone doing 100 million revenue? Sure. But it’s a different ballgame at that point. So the perfect scenario for me is probably a mid seven to low eight figure founder, first time exit potential in the future in one of those kind of growth businesses. Those are the companies that for me to add hundreds of thousands, millions if not significant millions to exit value just because we’re doing things so differently feels very straightforward. So that’s kind of the sweet spot.
A.J. Lawrence:
Now that is a good sweet spot because I got up to upper seven figures before coming back down to low, before bringing it back to mid with my last. And yeah, it’s so choppy and the planning and stuff. That is a really good spot because you kind of get all excited once you hit seven, you’re like what? And then it’s not that it’s harder, it’s just more complex, is what I would tell people. And then that like 3 million.
A.J. Lawrence:
Yeah.
A.J. Lawrence:
Then 5 million, you’re like, I’m not sleeping much anymore. I definitely see that’s a good spot. And that’s definitely something I know from my experience. Someone like you would be really great, you know, listening to people bend through it, but then also have had the opportunity to learn multiple times. How long, you know, you’re saying around mid seven figures, do you say like, hey, come a year before you’re interested, or hey, come and this is a journey for whatever feels appropriate, you know, ongoing.
Mac Lackey:
In terms of our program, you mean? Yeah, I would say the absolute perfect scenario for a founder or entrepreneur running a company is if you are more than a year away from an exit. And I think the sweet spot is probably one to three. It is absolutely perfect because you have just enough time to really start creating a lot of value and letting it sort of compound, as we discussed. But it’s not so far out in the future that there’s no motivation to do the work. So a lot of the people I work with don’t know if they’re going to exit for sure. They’re trying to evaluate what that looks like. They’re trying to create that option. But most of them would say, I’d say over 50% of the people I work with would say, what if I could exit in the next couple of years feeling like I maximize value? That’s a great spot. I tend to say, you know, kind of no to people that want to exit in less than a year unless I have really unique insights to their industry or I know someone that probably would already be interested in buying it or something. Because it’s just they’re going to look back, and the reality is they’ll look back knowing they left millions on the table because they didn’t give it enough time. So that’s kind of my zone where I feel really good.
A.J. Lawrence:
Given your multiple exits and sort of your journey of sort of continually building on your entrepreneurial success, do you also work with entrepreneurs about what it’s going to be like of why they’re exiting, what that piece is? Because I’ve seen a lot and I know for myself it’s nice to have an exit but it’s not unless you really have that big whatever is your magic number exit. You’re not done. Either from intellectual curiosity or just yes, you may be better off financially but you are still in need of generating cash. So do you also work with your people on that?
Mac Lackey:
Yeah, I think it’s a really key insight. You know, one of the questions I try to figure out whether it’s someone I’m working with or even in a casual conversation. I had a call with a founder yesterday who was not in my program, I was trying to be helpful and he said he was debating raising capital or selling his company. And so I said, well, let’s dig into your motivations, you know, what’s really driving particularly the need to or desire to raise capital because that really changes the dynamic around your business. So the more we talked about it, the more clear it became that this individual, and this is pretty common, really feels like he was an idea person. He’s really capable at getting something started and going and moving and then kind of runs out of his interest and ability to get it to the next level. I can completely relate. I would say, if anything, my businesses, even though they were, you know, I was very fortunate to have seven multiple eight figure exits, I sold early. I sold quick and early because I recognized a couple things. One is it was not going to be my last rodeo. I knew an exit for me was not my only shot because I knew I was going to start my next company. So even if it was a couple million dollars and maybe that’s not enough for me to sit on the beach, I knew that this is just part of the journey. The other was being sort of realistic with myself that I wasn’t sure I was personally capable of getting it to nine figures. And so I think digging in with founders on what are the criteria that you’re using to evaluate if and when you sell, I have a whole session that’s literally called evaluating if and when you sell. And we look at five factors across their industry, macroeconomics, their personal financial situation, the human dynamics around them, whether it’s investors or employees or people that might affect it. And so I really recommend every founder looks at their business from a kind of 360 degree view, all these different factors. Because the reality is most people will have a single factor that drives the decision. You know, I need to sell because I need to fund my kids college. I need to sell because I’ve got debt to pay off. I want to sell because I want to retire in two years. Like there’s some usually trigger event and those things are fine, except there typically are four or five other pretty material factors that may say it would be better to sell now than to wait two years. If you’re an Amazon business and you’re seeing the consolidation that’s happening right now, you’re placing a pretty big bet. If you don’t sell into the consolidation, you’re basically saying, I’m going to be one of the few that survives on the backside with hundreds and hundreds of millions of private equity coming into the market and I’m going to wait until the next cycle happens. I think those industry and macroeconomic factors often get ignored and they’re pretty significant. So very long winded answer to your question, but yes, I really try to help the founder spin their business around a couple different angles to look at if and when they sell and what the big motivations are.
A.J. Lawrence:
Cool, I like that. And that is definitely needed because I think I just had the money and then it was like, oh wait, a life. Right now with everything going on, we kind of talked about like look, things are changing. You’re adapting to this, you know, the zoom environment, the virtual environment more. Even though you’ve been doing it, what are you seeing out there that is really exciting to you?
A.J. Lawrence:
From the space opportunities.
Mac Lackey:
I think what has happened over multiple decades, when I talk to young entrepreneurs, I think it’s really funny. My second company, which was really progressive at the time, I mean it was cutting edge in so many ways. We raised $2 million from friends and family, kind of angel investors and I spent $1 million of that 2 million building a content management tool and a very rift free eCommerce tool. And I tell people now like, that is basically WordPress and like for $19 a month you can do what I spent a million dollars on, you know, and had to hire 20 engineers to build. And so the thing that is really exciting now, and I think again, Covid was an accelerator to some of this, is the ability to stand up a company and launch something and reach the market is a fraction of the money in time that it was even two years ago. So what I’m seeing now is this ability to create significant value really, really fast. If you’re focused on the right things, you don’t have to worry about technology anymore. You don’t have to worry about, you know, in an engineering team anymore. You have to really think about product market fit, intellectual property. And if you get those things right, you can just turn up the volume. And so I’m super encouraged and motivated by that. I think there’s another factor that people really need to consider, which is I have this chart I often, if I’m speaking at events or doing a webinar, I always share this founder’s journey. And one of the key points of the founder’s journey is that so many companies tap out at a couple different levels, and one big consideration is if you are going to exit. Oftentimes the early exit is the easier exit. So rather than getting to $2 million in revenue and then saying, okay, I’m going to go get venture capital because I’ve proven something and we’re going to get it up to 20 or 30 million in revenue, the reality for a founder is if you sell now for $5 million, you may put 3 million in your pocket, maybe it’s 4 million. But if you raise venture capital and you get the company to 25 million in revenue, you may five, six years later put two or three million dollars in your pocket if everything goes well. So sometimes, creating value quickly and doing the early exit is actually easier than getting up to that next level and creating the big exit because you’re diluted. You have other people that are dictating the outcomes. You have other variables to consider. And I think a lot of founders don’t understand that. They’re like, oh, if I get to 100 million, I’m going to make so much money. Well, that isn’t always the case. The math might dictate that you’re better off with an early exit while you control the cap table.
A.J. Lawrence:
Just being on the buying side now all of a sudden that I’m going out looking to acquire smaller businesses, seeing businesses that in the past would have raised a few rounds now being available for sale. It is an interesting thing. I think it’s still small given the total marketplace of availability, but I do think some entrepreneurs are starting to think in that way. And it’s an interesting piece. Value is being generated further down or there’s more opportunity to generate value earlier into the development cycle of a company.
Mac Lackey:
I think the really interesting proxy for this for so many years was in like the food and beverage space, which I’ve never done anything specifically, but people used to always ask, why does Anheuser-Busch or Pepsi or Coke buy all these little vitamin waters? And you know it’s like, oh well, that’s where the innovation happens and it happens quickly. And somebody finds product market fit and proves something out and then Pepsi or Anheuser-Busch or Coke or whoever says we have all the distribution and all the resources in the world. Like yeah, of course they could put a team on developing that or they can just buy it early and take it to the moon. And so there’ve been a lot of examples of that happening in certain industries but now I think it’s becoming like the de facto corporate innovation strategy is like, let’s just acquire innovation early and fast.
A.J. Lawrence:
It’s funny because the agency I sold five years ago, we did a lot of work with the large CBG companies and there are indeed groups and I used to laugh at only with friendly members of my clients. Like we’re spending more money than it costs YouTube to get started and we have no revenue. We could have look, there’s five companies doing what you’re trying to. It’s been five plus years so now I am seeing them. That is outsourcing R&D is a huge thing and it’s kind of a fun part for entrepreneurs giving you more opportunities. You have two children, I think you have a 17 year old. I thought I saw you had a picture of your daughter for her birthday on Instagram.
Mac Lackey:
Oh yeah.
A.J. Lawrence:
Shoots me if I put more than, you know, pre approved on an occasional basis. How old are your kids?
Mac Lackey:
So, I have two daughters who are 17 and 20, so one in college and one in high school.
A.J. Lawrence:
All right, so you’re much further. My oldest is 16, then I have a 14 and a 10. So you’ve already gone into that next phase, talking about your businesses, the multiple, you know, all this great stuff, and then you’ve lived in Spain, all this. Do you think about building a legacy?
Mac Lackey:
Yeah, it’s well, there’s a couple things that interesting. It certainly seems consistent with people right as you hit these certain milestones, some of which are your age, your success or lack of success, the age of your kids. All those kind of things sort of are factors and a lot of them are converging for me about the same time. I turn 50 next week, I have my 25th wedding anniversary this year. You know, this is a big year for those kind of dates. My oldest daughter turns 21, my youngest turns 18. One’s in college, one’s about to go to college. And so I think it’s really become natural for me to think about what does the second half of my life look like and what does the legacy look like. What I think is interesting is I basically started that thinking back in 2018 when I sold my sixth company. I sort of felt like, all right, to some degree, I’ve checked the boxes, I’ve made a million mistakes but I’ve done a few things right. I’m really happy with the life I’ve lived. I made the right decisions when my daughter was born, which is a whole long story. But not only did I build and exit my companies, I coached my daughter’s soccer teams, I carved their pumpkins, I drove them to school, I ate dinner with them every night. So my prioritization of life felt really good. And I thought, you know, I’ve been blessed and fortunate. I need to sort of turn that back on. How can I help others? And especially because I had amazing support from my family, my parents, my wife, in terms of being able to take the kind of risk I took at a very young age. And I see a lot of founders and entrepreneurs now and I’m particularly concerned about the trade off that they’re told they need to make. If you listen to Gary Vaynerchuk and I’m a fan of Gary Vaynerchuk in terms of what he’s done, and I don’t know him personally, but he also is really vocal about the hustle and the grind. And I fear that a lot of people are going to wake up in their 30s, 40s, 50s or whatever and look back and say, maybe I made a couple million dollars or whatever, but I wasn’t engaged in my kids lives or my health is deteriorated and now who cares? And so I’m pretty passionate about that and the execution of that right now is through working directly with founders in ExitDNA, because that gives me a vehicle to do it. But as I think about legacy, it’s something in there where I’m hoping that in some very small way a group of people will credit me with helping them not accept that trade off and make the kind of decisions that they’re happy and proud about, you know. So I don’t know exactly what that looks like yet, but that’s the way I’ve been thinking about it.
A.J. Lawrence:
No, I like that a lot because I think as an entrepreneur, the best thing you can do is take care of your family but then create opportunity by the things you create for others and keep expanding. This has been really great and I really appreciate it and I would love to have you back on the show one day soon. Because I think there’s going to be more conversation about the stratification of entrepreneurship and that exit and what it means to exit and all that as the space moves forward so getting your insight into that would be great. I definitely think, listeners, you should go check out exitdna.com and maclackey.com about these programs because I know from my experience in hindsight 2020, just some of the stuff on his site would have helped a lot in the last couple of years of my business before I kind of sold on the downswing. But no, I really appreciate this. We’ll have information about your programs in the show notes, so everyone please go listen to it. Mac, thank you so much being on the show.
Mac Lackey:
Oh, thanks for having me. And I genuinely love what you’re doing. I think you’re helping a lot of people and I’m super motivated to be helpful. If people join my programs, great. But you know, I don’t get out of bed every morning thinking about selling or trying to get people. I really want to help people. And I hope that some of the things that we’ve discussed and maybe some of the things that they would find out on various sites really encourage people to take those kind of steps. Because whether they work with me or anyone else or not, just shifting these mindsets really can help create the best outcome. So I appreciate you giving me an opportunity to chat.
A.J. Lawrence:
Great. Thank you. Talk with you soon.
