Posted on 2019-10-10
I was the co-founder of a financial-education website called Investopedia.com. We started the company in 1999 and sold it to Forbes Media in 2007, where I stayed on to help transition the business to a new management team. Looking back on my sale, what shocks me is the number of experiences that changed me as an entrepreneur. Here’s what I learned.
1. Taking direction is hard— especially when you’re in the dark.
Once Investopedia was sold, we were still given some authority, but it wasn’t the same. There were times when we were over-ruled by our new boss, and not being in control got to be very frustrating. What I didn’t think about at the time is that I no longer had access to the big picture. We had become part of a larger organization and only had visibility into our one small area.
How this changed me: It used to frustrate me when employees wouldn’t immediately get behind my decisions. But now that I’ve spent some time as an employee myself, I realize that a disagreement might not be because of my idea, but because the employee doesn’t have access to all of the information. This doesn’t mean I’ve switched to open-book management, but it’s made it much easier for me to have more patience when trying to motivate staff to move in a certain direction.
2. Systems aren’t poor just because you’re small.
After the deal closed, we were excited to see how everything worked inside of a larger organization. We assumed that everything we were doing at Investopedia was wrong (or at least inefficient) and that we were going to get an education in business. This was true in some areas, but it wasn’t the case across the board. For example, our product development was actually more agile than our acquirer’s, and our developers could produce more with fewer resources. Turns out we had undersold ourselves.
How this changed me: I had an inferiority complex because I didn’t have any experience in a large company. Now I think this is part of my advantage. Not knowing how something is supposed to be done means that I’m not limited by the legacy systems that large organizations are forced to deal with. Common sense can go a long way.
3. Finding your motivation in business is key.
I’m not sure I ever thought about motivation prior to selling my business. Maybe it’s because early stage companies require so much energy that you don’t have time to think. I can honestly say that there was never a day where I didn’t want to get to work. This wasn’t the case after selling. Even though my job was virtually the same, about a year into working for somebody else, I found that there was something missing. In the past, I had used my commute to plan the day, collect my thoughts, etc. Now, I discovered I was no longer anticipating getting to my desk, but actually dreading how long it seemed to take to get through the day.
How this changed me: This might sound corny, but it took a good year after I left the business for me to realize that what I really love is the process of building something. It’s not just about selling it at the end. For me, it’s about the little victories and improvements along the way. Starting out a second time was tough for me until I figured this out.
4. You should run a business as if you’re going to sell it.
I have a confession to make: In all the years my partners and I ran the company on our own, we never once had a budget or a written strategic plan. We were always on top of the numbers, and the partners talked about goals and strategies continuously, but we never became formal enough to commit it all to paper. Of course, our investment bankers forced us to put this all together during the sales process. As much as we hated having to do multi-year projections and paperwork, thinking about the business and having to explain it to outsiders was actually a great experience. If an outside buyer would want to conduct due diligence on an area, it’s probably important. From double-checking old contracts to knowing what your true EBITDA is (without all of your personal expenses), I’ve come to believe that “pre-due diligence” and exit planning aren’t just for selling— they’re the best ways to run a business.
How this changed me: New ventures I get into will now have exit planning at their core. Not because I plan on selling, but because I think it’s a better way to manage a business.