The 4 Steps That Led 6 of Our Clients to Achieve 9-Figure Exits

Steve Sanduski: Hi, everybody. Thanks for joining us today. I'm your host, Steve Sanduski, and our guest today is Mark Moses. Mark is the founding partner and CEO at CEO Coaching International, and he has successfully built and sold two companies. He's been the president of EO and YPO Orange County chapters. He's the author of the great book Make Big Happen. In his spare time, he's completed 12 full- distance IRONMAN triathlons, including the Hawaii IRONMAN World Championship five times.

On today's show, we talk about what it takes to build a business and then exit with a nine-figure valuation. We're not talking theory here. CEO Coaching International already has six client firms complete these nine-figure exits, and there are even more in the pipeline. On the conversation, Mark and I pull back the curtain and we talk about what you, as the founder, the CEO, need to think and do to be able to make this big exit happen. We talk about the mindset you need, the blind spots you must avoid, the people you need to surround yourself with, and the courage you're going to need to make the tough decisions and overcome the challenges that you will, no doubt, face.

Be sure to listen to the end, as Mark shares the type of exits these companies had and the key attribute the buyers were looking for in the companies they bought. I got to tell you, I was really surprised by this key attribute. If you ever want to have a nine-figure exit, then you're going to need to make sure you focus on having this key attribute in your company. All right. With that, please enjoy my conversation with Mark Moses.

Mark, welcome to the show.

Mark Moses: Steve, thank you.

Steve Sanduski: Mark, it's always great to have you here on the podcast, and we've got a terrific topic lined up here today. There's been some amazing results here with the

CEO Coaching International

clients of CEO Coaching International. The company has had six clients complete nine-figure exits, and so today we want to talk about how does that happen? Why don't we just start with what does it take for a company to reach a nine- figure valuation?

Mark Moses: Yeah, so I think what it takes is, first, thinking that you can, and a real desire to think big, and stretch yourself, and stretch the people in your organization to think big, and really believe that it's something that you can do.

Steve Sanduski: This idea of thinking big, do the entrepreneurs that you work with, that you've seen have these big exits, did they start day one with that type, that level of thinking, or is it something that just evolved, as the company started to have some success, they started to realize, "Wow, this could really be something," and so they kept stepping on the gas and stepping on the gas?

Mark Moses: Yeah. I would say, of the six, I would say that one of them, Grasshopper, clearly did. Their vision was to have one million entrepreneurs signed up on the Grasshopper system, and they sold it long before that. They hadn't even hit 100,000 clients when they sold it, but they had that vision right from the beginning of a million.

In some of the other cases, I don't think so. I think they believed that it was in stages that, "I could get from X to Y," and then when they got to Y, they started thinking, "Well, what could I achieve next, and then what could I achieve next," and they kept doing the right stuff like that whole 20-mile march that Jim Collins talks about in his book Great By Choice. Then, eventually, they can begin to see that $100 million in revenue is possible, and $100 million in valuation is possible, and even meaningfully more.

Steve Sanduski: In your experience, if someone listening to this says, "Hey, I want to get to $100 million in revenue or $100 million in a valuation," do you encourage them to set that big goal as early as possible in the business or do you say, "Hey, let's look at some more reasonable goals here in the short to medium term and then we'll worry about the 100 million down the road"? What's been your experience? What kind of recommendation do you give as a coach?

Mark Moses: I like thinking in three years. I can see that far. It's hard when you run your business to think five years or 10 years because there's so many things that change in the industry and the market and disruption, and I just can't see, in many businesses, that far. Some businesses I can, like recurring revenue businesses, I can see a little further than that but, generally, I like to think in three-year timeframes because I can see it. If I meet somebody, and they have a $10 million business, and they say, "I want to be at $100 million three years from now," I think they're smoking dope or something stronger because, realistically, that's a lot of wood to chop going from 10 to 100 in three years. Now, if they said, "I want to go from 10 to 30 in three years," it's still a big leap,

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but I can see that. Now I want to dig into the how they're going to make it happen.

As we talk about in my book Make Big Happen, the first question is really figuring out what you want, and I'm now trying to corner you into a three-year period. The second question is about how are you going to get what you want? That's where I try to test that thinking as to do I believe that they have the chops to do that, the people to do that, and the money to do that? Because growth costs money, so that's what I try to figure out, if I believe they can really do that and, really, do they have the commitment and the heart to really go after that, and drive?

I would say one of the characteristics of the nine-figure guys that I've had the opportunity to work with in nine-figures, guys that have built business they've exited for over $100 million, all of them consistently have incredible drive to achieve, incredible drive to win, and incredible drive not to be beaten by their competitors.

Steve Sanduski: Is that drive something that is just innate in these people that you've worked with? Is it something that maybe was shaped and formed in their childhood, perhaps, or is that drive something that can be developed over time in their 20s, let's say, that can be fostered even, let's say, with a coach? Is that something that a coach can help stoke that fire, or does that really just have to be intrinsic to the entrepreneur to begin with?

Mark Moses: Well, I don't know if I know the right answer to that question. However, it's my belief, from my own experience in running my own businesses and competing in athletics and watching friends of mine compete in athletics, you got to have the drive. I don't think that's something that you learn over time. I believe that somebody either has drive or does not. Now, can you still build a $100-plus- million business if you don't have that killer drive? I believe you can. You don't even need to be that good, but there are some practices that you can follow that will enable you to be that good.

Steve Sanduski: What are some of those practices?

Mark Moses: Well, the biggest one is, assuming you know what you want, I believe in ... and you and I have talked about this on the show several times before, and I write about this repeatedly. Figure out what you want and then go hire the absolute best people in the country or in the world to drive you to that outcome. You haven't walked down that road before, in most cases. Go find the people that fit your values, fit your culture, that you want to work with, that have been down that road, and you believe can take your company down that road also. Have the courage to put your ego in your pocket and go get those people, align them with your organization and your values or ensure that they are, and have them do it for you.

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I would say A Wireless, Rich Balot's firm, was a great example. At our annual summit this past year, I put up a photo of the management team that I worked with back a few years earlier. Then I put up a photo after we exited the first time, and then we exited a second time. Then I put up a photo of what the organization looked like today. What was remarkable to me was the only guy in the photo that remained was the founder. Every single other person had been replaced in their journey from ... at least at the leadership team level. They might still be in the organization, but at the C-suite table, or the leadership team, or executive team level, nobody remained.

Steve Sanduski: Now, in your experience, is that totally common in that, hey, it's just the founder, it's the entrepreneur that's going to make the rise here, and everyone else is going to fall by the wayside, or is it just vary from company to company?

Mark Moses: It varies from company to company to a degree, but only to a degree. In a smaller firm ... take TaskUs. TaskUs just put their announcement out, oh, about a week ago about selling their business to Blackstone at a valuation of over 500 million. If I look back to when I started working with them four years ago, they had just come off a year doing five million in revenue, they were on the way to doing 15 million in revenue. The people that were sitting at that table then, other than the two founders ... I don't think that there is anybody in the company that was sitting at that leadership team table that still exists in the firm today at the C-suite table from the time I started coaching them four years ago. You could look at Grasshopper, and the only guy that remained through the end of the journey, other than the founders, was Don Schiavone and ... but everybody else was replaced.

Again, I'll go back to ... I don't want to sound cold with that and what about the people that helped to start the company and get us going? I'd rather take the other side of it. The people and systems and processes that get an organization to a certain point are not the people and processes that will take the organization to the next point. Let's say an organization goes from zero to 10 million or zero to 20 million, and we'll call it that start-up phase. Typically, they aren't people that have been running a much larger organization.

As you build and you want to go from, say, let's say 20 million to 100 million, it takes a different skillset, and talent, and somebody that's been there before that has the systems and processes and knows how to lead. It's pretty hard to do winging it with ... because the founders often have not been down that road, and they're winging it. By bringing on this top talent, it enables them, and it enables the founders, even if the founders aren't that good, to still execute if they bring on some really, really awesome people.

Steve Sanduski: Well, that's a great point that I wanted to explore here just a little bit more. You mentioned, well, sometimes the founders are actually just kind of winging it, and if they can bring in some talented folks who have been there done it before, that's going to help the entrepreneur. What else can those entrepreneurs do to

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continue to grow from start-up to 100 million? I'm going to imagine coaching is certainly going to be a key piece of that.

Mark Moses: Yeah, coaching does make a difference. I know, from my own experience, whether when I was playing tennis, or squash, or golf, or triathlon, I was always coached, and I was always coached since I was 24. I was always coached on the business side, so I got used to that because I always wanted somebody to talk to to bounce off my ideas and my thinking, and I wanted somebody to call me out when I might have been full of it and hold me accountable to what I said I wanted to get done and challenge my thinking as to where I wanted to go, and how I wanted to get there, and did I have the right people to help me get there?

I also believe that, although coaching really has can have a material impact, like the best athletes are coached and all that, but I also think following best practices and having an organization that follows practices that are winning practices that lets an organization have every opportunity to win. Let me give you an example. I'll give you two examples that I think are hugely meaningful. I'm going to say let's assume we've agreed that we're going to go out and get the top talent.

The next point would be ensuring that, as a practice, every quarter, you're getting together with that leadership team to review what went right this quarter, what went wrong? What did we learn? How did we do compared to how we said we would do? What are the biggest challenges we're currently facing, and how are we dealing with them? What are the biggest opportunities in front of us? We can't chase them all. What will be the most impactful? Where do we want to be by the end of the following quarter, and what are the activities that are going to lead us to that outcome? Who owns what, by when, and what's our process and system of holding ourselves accountable? I believe that that process of quarterlies ... If I take you through all six of our nine-figure exits, every one of them did this quarter in, quarter out.

The next point I want to make is most firms don't know what the specific and measurable activities are that will lead to the outcome that they want. When we ask them, they often give us an outcome like a sales number, a gross profit number, a gross margin number, a net profit number, but they don't give us the activities that will lead them to that outcome that they want. An activity is something that's leading. I do X, I get Y. For example, I make this many call per day. I make 100 calls per day, I'm going to get five appointments. That's a leading activity that we could keep score on, and we'll make assumptions. We know that if we need to achieve X amount of customers, you can back up the truck and know that you can go through the whole funnel.

I've talked about Bill Keen, who you and I both know well from Keen Wealth who ... he wants to drive new clients, every year, into the firm in terms of assets under management, so he needs to do prospect meetings. How does he get those? He gets them by getting people to come to his seminars, and it's a lot of

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people coming to his seminars. How does he get those? By making phone calls. The number we measure, if the calls don't happen, he won't get the people to the seminars. Therefore, he won't get the prospect meetings. Therefore, he won't get the new clients and the assets under management. However, on the contrary, when he's making the calls, all the numbers in the funnel fall into place.

Steve Sanduski: It's a real disciplined process that we often see that very few companies do that organically, that oftentimes it's an outside person like a coach that comes in and has this methodology that they can come in and they can help instill that type of discipline on a quarterly basis, like you're mentioning here, to be able to go through that process, to have that measurement, to have the outside person looking at it and providing that type of accountability. That's what I'm hearing you say here.

Mark Moses: That's what I'm saying. I'll give you another example. I was doing a annual planning session for a fairly large nine-figure company recently. They had somebody from Pepsi that was on the management team, and somebody from Sony, and somebody from Microsoft. This is a pretty impressive group of people. They all came up to me at the end and said, "It's amazing." If each of those firms, Pepsi, Sony, Microsoft, and they're all hugely successful, as we all know, would have followed a process like this with this level of accountability, they could have achieved way more than the already amazing results that they're achieving.

Steve Sanduski: Well, that's scary to think.

Mark Moses: It is scary, but as organizations get bigger, as you get deeper into the organization at different levels, they don't follow these best practices.

Steve Sanduski: I want to go back and drill down on something that you mentioned earlier here. We were talking about the entrepreneurs and how, oftentimes, the early employees of the company don't end up staying long term because, as the company grows, they just may not be able to grow with it, but the entrepreneur is there, and they have to grow, so I'm curious. Have you noticed any common, I'm going to call them blind spots, that a lot of these entrepreneurs have so that, as the company continues to grow, is there one or two areas that, oftentimes, you see, "Gosh, this is a area where I typically see the entrepreneur really needs to focus some effort in improving their level of skill in this area if they want to have any hope of building a nine-figure business"?

Mark Moses: Yeah. It's a great, great question. Let's deal with the blind spots, but you also made a comment I just wanted to just chime in on. You said that the people don't make it with the organization. Although part of that's true, they don't make it in the C-suite at longer term. They could still be in the organization, but they're not driving the bus in maybe as the COO. Maybe now they're leading a team, or they're head operations, or they're no longer ... they might be a sales

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manager but not the vice president of sales or the EVP of sales. They still could be in the organization but not leading it.

Now I'll move over to blind spots. One of the blind spots is the CEO's ability to delegate and not be a control freak and want to micromanage everything. I've said quite a few things in that. If you want to micromanage top talent, you are going to lose. They're not going to stay with you. Top talent doesn't want to be micromanaged. The entrepreneur has got to have the courage and the confidence in the people that they brought on board, to let them fail, and to also recognize that it may not be done the way they would have done it or maybe the way they would have wanted it done, but there might be other ways to get it done, and it might even be better than the way that they would have done it. That's one point, having the courage and belief in your team to let them lead and not micromanage them.

Another blind spot that they have is ... I hear this all the time: "Mark, you don't understand. I can't get that person. Why would they want to come and work for my firm, my small firm? How am I going to get somebody like that come work with us?" I think that's a limiting belief. If you believe you can, you will. Those that believe they can, they do, and they are available if you're willing to look. If you don't know where to look, go hire a search firm and have them look for you. They will find you the candidate that you want.

Steve Sanduski: Now, this first one that you mentioned here about micromanaging, I'm really interested in hearing, as a coach, how do you have that conversation with the entrepreneur? Is it a dialogue? Is it a series of questions that you ask them to drill down so that they can come to the realization that that's what they're doing? How do you, as a coach, get them to flip that switch in their head and realize, "Oh, my gosh. You're right, Mark. I'm strangling this company because I'm micromanaging top talent and they're flying out of here as fast as they can because I'm being ... I'm micromanaging here"? How does that conversation between the coach and the entrepreneur?

Mark Moses: Typically, we'll flush that out by asking, "How are things going with your new COO?" "Well, I feel like he or she is frustrated with me or is not doing it my way." "Tell me more about that." "Well, they're not getting me the reporting or they're not communicating with me the way I am used to being communicated with." I'll listen to some of that, and then I'll suggest, "Why don't I get on the phone with the new COO?" or, "Why don't I meet with the new COO? Let me ask him some questions."

"Scale of 1 to 10, how are things going so far?" "Eh, maybe, uh, they're going okay. Maybe a seven." "What would make it a nine and a half?" "Well, to be honest, I feel like the CEO doesn't trust me. He's micromanaging me. He's set in his ways. He's not open-minded to new thinking." Just opening up that conversation between me understanding so I can relay that back with the CEO or entrepreneur.

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Additionally, getting together for these quarterly planning sessions flushes all that out, so what success a year from now, or what success by the end of the quarter? All of a sudden, the goal for one of those sessions, it's the same every time. Everybody wants the same. Where are we going? What's the plan? Who's going to do what? Do we have the right talent? Can we all get aligned and buy in to the same vision? That's typically what everybody wants in every one of these quarterly sessions.

Steve Sanduski: At these quarterly sessions, you said, oftentimes, you can flush it out at those events as well. Do you ever go into an organization, you're doing your first quarterly session or your first annual session with them, and you notice everybody is deferring to the CEO, the founder of the company, and looking to them for direction? Is it ever that black and white or do you, based on your experience in doing two or three hundred of these, you can just sense when something isn't right there with the team?

Mark Moses: At times, they'll defer to the CEO, but when you ask them in the ... You set this thing up right. You ask them what they want to achieve for the day, and they'll tell you that what ... Like I just mentioned, they want buy-in and alignment. They want to know what the plan is, like most typical things that haven't been clear, so once you begin getting clear on it and asking them what might get in the way achieving the plan, now, all of a sudden, the real issues start coming out, and that's what you got to get buy-in and alignment on from the team, because not everybody will agree to go the way that maybe the CEO might want to go. The CEO might be right some of the times, but might also be wrong. These sessions allow for some open-minded thinking about there are other possibilities and other ways to achieve the outcome that we want.

Some entrepreneurs are really hung up on, maybe, an old line of business that's no good anymore, and it's dying, and they want to just keep pushing it as opposed to exploring new ways to win or new channels. Businesses are getting disrupted so much faster today than they were years ago.

Steve Sanduski: I'm also fascinated by just this idea of coaching. What I mean by that is you've got coaches, people who are, for example, coaching the winner of the Stanley Cup, and then you've got other hockey coaches that are stuck at coaching junior hockey. As you think about the role of a coach, what does that mean? Are there different parts to a coach, you're part coach, you're part consultant? I mean how do you think about the role of a coach, and do you have to put on different hats and different roles, at times, depending on the situation that arises with the entrepreneur and the CEO that you're coaching?

Mark Moses: Great question. For me, I've been doing this for 10 years now, so my thinking has evolved on this. I'd like to answer two parts to this. I'll answer your question first, and then I'd like to go into what I like to call deeper. We'll talk about deeper in a minute.

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I would say that we're one-third coach where we're guiding the outcome that they want. We're one-third consultant. They're typically not hiring us for a consultant, a consulting project, because they're hiring a coach. If they needed a consultant, they'd hire a consultant, but most of us have built $100-plus-million companies, and we have very strong areas of expertise in certain areas, so if it's that area of expertise, we'll just put our consultant hat on. "Look, dude, I've been down this road. I've watched this movie 27 times. The way you're going isn't going to work. You got to consider this way." That's the consulting piece of it when available.

The third point is I would say, at times, and from my experience, the more I've been doing this, the more often it comes up is you're part therapist, maybe a third. That is helping the CEO with their mindset and thinking about when they lack confidence, or they're fearful, or they lack the courage to make certain decisions and helping them drill down to why they have those fears and why they lack confidence and courage and helping them find the way to get it so they can execute what they want.

Steve Sanduski: Was there a deeper part? We may edit this little piece out, but you had mentioned and then you'll answer the first part and then the second part, and we'll go deeper. Was there a deeper part, or was that the therapist piece?

Mark Moses: No, I'm going to get into that in a minute, Steve.

Steve Sanduski: Oh, okay.

Mark Moses: I don't know if I finished up this topic here real well, and I could go a little bit better on it. Maybe I'll just do a quick wrap-up of the section.

Steve Sanduski: Yeah, okay.

Mark Moses: Steve, in summary then, I think, in order to be an incredible value to the people that we get to work with, it's having that balance of being part coach, part consultant when it's in our purview and our area of expertise, and part therapist by helping our clients navigate through mindset when they've having ... no different than a professional athlete that might be struggling, and the demons or squirrels are running around in their own head, helping them through that.

Let me move to the other point that, in all six of these $100-plus-million exits that we've had, and we have several more in the queue that are about to happen over the next 12 months, I would say there's another common theme that happens in each one of those examples, and it has happened in all six of the ones that have happened recently at our firm, is that we don't only coach the CEO. We coach the CEO, the COO, the head of sales, the CFO, and other people in the organization that are hugely impactful.

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What we have found is, the deeper we go in terms of running and facilitating the quarterly planning sessions, communicating regularly with the different members of the C-suite, the more impact we can have on the organization, as a whole, and eliminate a bunch of that drama that exists between them, and the silos that exist, and the power struggles that exist between members of the leadership team. Helps bring out the best in their people.

Steve Sanduski: I imagine it helps bring that alignment in places as well so if you, as the coach, were able to have these conversations with some of the other folks in the C- suite, you can get some different perspectives that maybe the CEO or the founder is not hearing, but the other people in the C-suite might be happy to share that with you and then, using your skill, you can figure out the best way to handle that information.

Mark Moses: Yeah, that's a great point. They trust you, and they trust that you're going to have their best interests in mind. You're being hired by the client, and you want to ensure that the client gets what the client wants. They key is how to deliver that message so that the ... we'll call it the COO or head of sales, still trusts you and willing to be open and share with you yet bring that perspective to the CEO in a way that doesn't jeopardize the relationship between the CEO, and that other person, and the coach, and the C-suite executive.

Steve Sanduski: Okay. I got a couple questions that I want to wrap up with here. This first one might actually be a big question, so you could maybe decide how far you want to go with it, but I'm curious about, with these six firms, what type of exit did they have? For example, was it a financial buyer? Was it a strategic buyer? Did they go public? Then, also, is there one key or maybe two keys that these buyers looked and said, "That's what I want. That's why I'm buying you," or, "That's why I'm making a big investment in your firm," whether it's super-fast growth or it's a strategic fit? Really, I guess there's two questions in there. One is what kind of exit was it and then, second, was there one or two big keys that really attracted the buyers to those companies?

Mark Moses: Steve, you'll be surprised to know that four of the six were sold to private equity firms. What I was surprised about in that, historically, strategic buyers would pay a much higher multiple because of the creative nature of the transaction, but these days with private equity firms so flush with so much cash, they're paying much bigger multiples than I have seen in my lifetime, and private equity firms have been outbidding the strategics in a fairly meaningful way.

Steve Sanduski: Wow, that is a big surprise. Mark, so then the other part of the question and what I'm really curious about is was there one or two keys that these private equity firms ... that really attracted them to these companies? Was it the fast growth of the company? Was it the industry that they were in? Were there any similarities in terms of what these private equity buyers found so attractive about these companies?

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Mark Moses: I'll make this point. Our average client is growing at 40% year over year, so the growth piece is attractive, so these firms are motivated by the growth. However, growth without amazing management ... At the end of the day, the firms that are making these acquisitions are buying talent, and they're aligning that talent to ... especially a private equity firm. They're going to buy whatever piece of the firm that they're going to buy, and they're betting on you so they can have another exit three to five years from now. They want another return, so they're banking on you to bring that to them.

Steve Sanduski: Whereas, with a strategic buyer, oftentimes, they've already got talent that they might drop into the company that they're purchasing, so maybe the talent isn't quite as important as the private equity firm. Is that fair to say?

Mark Moses: Yeah. I would say, in a strategic, I think what's probably more important to them is the ability to bring those customers on board and rolling all of that into their infrastructure.

Steve Sanduski: Right, right. Good. Yeah, yeah, fascinating. All right, so last question I want to ask you, Mark, is is there anything else that you want to share, that you want to mention that we haven't talked about yet?

Mark Moses: I would just say the summary comes back to you really want to grow an amazing business. You want to build a $100-plus-million business in value. Never compromise on hiring the best talent. Figure out where you want to be 18 months from now or two years from now. Hire that talent today, and you'll wake up 18 or 24 months from now achieving that goal that you wanted.

Steve Sanduski: Excellent. All right. Well, great advice, Mark. Hey, it is always fantastic to have you on the podcast. Congratulations for the six companies that had the nine- figure exits, and the rest of them you have in the hopper, and all the great work that you and the rest of the coaches are doing here at the team at CEO Coaching International. Thanks, Mark. We'll look forward to having you on the show down the road as well.

Mark Moses: Steve, I want to thank you. I know you've done about 70 episodes for CEO Coaching here. We appreciate you being our host. You do a great job. Everybody likes your style, loves your style, and I do too. Thank you for being our host. We appreciate you, pal.

Steve Sanduski: All right. I appreciate it right back at you. All right. Thanks. Take care.

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