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Want to make your business the best it can be? Think about selling it. Bo Burlingham, 25-year editor at large for Inc. Magazine and contributing writer for Forbes, shares his insights from a lifetime of studying companies and the disruptive success lessons learned from owners selling their company. An extra length show packed with stories and insights to make you money and keep you happy.

Bo Burlingham

Bo Burlingham

Contributing Writer at Forbes | Former Inc. Magazine Editor at Large

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Life After Pi: Documentary about Rhythm and Hues winning an Academy Award 11 days after declaring bankruptcy.

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Disruptive Business Excellence: Small Giants and Finish Big

Bo Burlingham

Click here to download the transcript PDF now.

Mark S A Smith: My guest today is Bo Burlingham. He has accumulated massive insight in the world of business success, because he’s been the editor at large for Inc. Magazine for 25 years. He’s a contributing writer to Forbes, and he’s the author of five books, of which I have two in my hand right now. One is The Great Game of Business: The Only Sensible Way to Run a Company, with Jack Stack. A Stake in the Outcome: Building a Culture of Ownership for the Long-term with Jack Stack, Street Smarts: An All Purpose ToolKit for Entrepreneurs with Norm Brodsky, Small Giants: Companies that Choose to Be Great Instead of Big, and his newest one is Finish Big: How Great Entrepreneurs Exit Their Companies on Top. Welcome Bo.

Bo Burlingham: Well, it’s a pleasure to be here, Mark.

Mark S A Smith: Thank you so much. I can’t wait to share your accumulation of business knowledge with our listener. Today, I want to talk a little bit about Small Giants, and then talk a lot about Finish Big, your newest book.

Bo Burlingham: Right.

Mark S A Smith: Along the way, you’ve talked to so many companies. You’ve interviewed them for Inc. Magazine features, you have collected all this wisdom and sorted out the bull, and really honed it in to what really works for businesses through quite a few business cycles.

Bo Burlingham: Mm-hmm (affirmative).

Mark S A Smith: Tapping into that knowledge is really an extraordinary thing today. Let’s talk a little about Small Giants. A lot of my listeners are small giants. They’re CEOs, CFOs, Chief Revenue Officers of smaller companies, and they listen to this so that they can get the insights they need to be extremely successful.

Let’s talk about the small giants that you’ve talked to and some of their secrets to be small but giant.

Bo Burlingham: Okay. The essence of it is the subtitle of the book, namely companies that choose to be great instead of big and the point of Small Giants is to emphasize the notion that great and big are two entirely different concepts.

Mark S A Smith: Yes, they are.

Bo Burlingham: It’s easy to forget that because you’re constantly under pressure from all sources to get as big as possible as fast as possible. Inc. is a magazine that frankly encourages you to build your company as big as possible as fast as possible.

Mark S A Smith: Of course it is. That’s been the Wall Street mantra, is grow big, grow fast, make money.

Bo Burlingham: Right. Depending on where you get your capital, you may in fact be under tremendous pressure to do that. The point is, there’s nothing wrong with getting as big as fast as possible, but it’s not necessarily gonna make you a great business. Ultimately, that’s a decision that we all have to make for ourselves. Namely, what exactly is a great business.

What was interesting to me was when I looked at companies that were certifiably great in their own industries. In other words, even their competitors would cite them as examples of great companies in their businesses. They all had certain characteristics in common and that I found very interesting.

Mark S A Smith: Let’s talk about some of those characteristics.

Bo Burlingham: Sure. The first characteristic was that these were all companies that were run by people who had a very clear idea of who they were, what they wanted, and why. These people couldn’t have made the decisions that they did if they hadn’t been clear about that, because many times, people were telling them they were crazy.

Mark S A Smith: Yes, of course. The most disruptive companies are told that they’re crazy.

Bo Burlingham: Right, exactly. In spite of that, you say no, this is what I want to do, this is where I think we should go. You have to have a confidence that comes from knowing exactly who you are an what you want and why.

Mark S A Smith: I like to use the word authentic, authenticity to define …

Bo Burlingham: That’s true.

Mark S A Smith: Those behaviors. You are 100% you, nobody else but you, and you know it, and you’re good with it.

Bo Burlingham: That’s true, that’s very good. Maybe I’ll steal that from you Mark.

Mark S A Smith: It’s all yours Bo. You know, writers share freely. Take my stuff my friend, I’ll write more, just like I know you’re gonna write more.

Bo Burlingham: The second characteristic that I found they had in common was they all had a very interesting relationship to their communities in which they did business. You know, it wasn’t just that they gave back a lot to those communities, it was also that they almost adapted to personality of those communities. In other words, it was hard to imagine them being some place else.

Mark S A Smith: The example that I’m thinking of is Anchor Steam.

Bo Burlingham: Yeah, well Anchor Steam is classic because when Fritz Maytag bought it in whatever it was, 1976 or earlier, it was basically a brewery that was about to go out of business, even though it had been around for almost 100 years at that point. It had been started actually during the Gold Rush, and then it had been through all of the earthquakes and fires and everything else that had happened in San Francisco.

Mark S A Smith: Yeah, it stood the test of time.

Bo Burlingham: Yeah, exactly. Fritz bought it because he used to go to a bar and I don’t know, for whatever reason, he liked this beer. He didn’t know anything about beer when he started, but after he bought it, he quickly discovered that it was very bad beer and that frankly, everything you’re supposed to do with beer, the company didn’t do, so he had to really sort of reinvent the whole thing and he did. He created what turned out in retrospect to be really the first of the craft breweries.

Mark S A Smith: Yeah, you’re right. Even pre-dating…

Bo Burlingham: Jim Cook, Boston Breweries, Sam Adams.

Mark S A Smith: Sam Adams, exactly, thank you. You know it.

Bo Burlingham: Actually, it predates it by quite a lot, although you might not know that if you’d listen to Sam Adams self-promotion. But, it’s true. Fritz, he got in there and for him, his identity as a San Francisco business was extremely important. Anchor Steam had its initial brewery in San Francisco and a lot of the decision when he had to grow, well where was he gonna grow? In his mind, that was never really a big issue because he would only consider growing in San Francisco. In fact, when he ultimately sold the company, that was a major question that he considered. He wanted to sell it to people who were going to keep it as a San Francisco institution and they have.

Mark S A Smith: That’s wonderful.

Bo Burlingham: Now, that’s not to say you can’t have great craft brews elsewhere, including Boston or wherever.

Mark S A Smith: Even your kitchen.

Bo Burlingham: Yeah, right. The country is full. I mean I love to go around and sort of sample the local craft brews.

Mark S A Smith: Absolutely.

Bo Burlingham: There’s some very, very good ones out there.

Mark S A Smith: There are.

Bo Burlingham: But, it’s not Anchor brewing because Anchor Steam, or the Anchor Beers are quintessentially San Francisco and I found that with actually with a lot of the companies. Zingerman’s for example, which is the company that really sort of started my whole search for companies like these. The quintessentially Ann Arbor business. If you know Ann Arbor, but you’re sort of not quite sure whether it’s in the east coast or in the mid-west. It’s university town and has I’m told the highest number of subscribers to the New York Times of any community outside New York.

Mark S A Smith: Interesting identity, yeah.

Bo Burlingham: It’s identity and that pervades the kind of character that Zingerman’s has. The thing that struck me about that is you know, that’s very different from large companies, which actually try and make the experience the same wherever you go.

I mean, look at Whole Foods for example. Whole Foods was a small giant when it was in Austin, Texas, but John Mackey wanted to take it national and saw an opportunity, and so he took the company public and so forth and now, you know the pressure is on Whole Foods to have a similar identity so that when you walk into a Whole Foods in San Francisco, it’s the same as if you walk into a Whole Foods in Milwaukee.

Mark S A Smith: Right, it’s a … but, I think the difference here between a large company and the small giants is the large company has an identity that is homogenous versus the small giants have an identity that’s localized.

Bo Burlingham: That’s very true. Good way to put it, Mark.

Mark S A Smith: They are connected to the community, the identity of the community and that’s what makes them so unstoppable and so disruptive in that particular case. It’s also I believe how small giants can disrupt the big companies, the big giants, by maintaining that local identity. Identity’s the most powerful thing we have. For example, you live in Oakland, and we’re stealing your team over to Las Vegas you know.

Bo Burlingham: Well, The Raiders, but you’re not stealing The Warriors.

Mark S A Smith: No, we’re not, we’re not stealing The Warriors. The point is is that, Oakland and The Raiders is such an identity component.

Bo Burlingham: Yes.

Mark S A Smith: There’s gonna be a transfer to that. People love to hate The Raiders or love The Raiders because it’s part of their personal identity.

Bo Burlingham: Yes.

Mark S A Smith: I think that’s such a big tide to understand as you’re creating a business that’s gonna be a small giant, is your authenticity has to link to the identity of your community, extremely tightly.

Bo Burlingham: It’s true, you’re absolutely right and a lot of us in Oakland who wonder exactly how long The Raiders are gonna last in Las Vegas. Don’t forget that we’ve been through this before when The Raiders moved to Los Angeles. They didn’t stay there forever, they came back.

Mark S A Smith: Keep in mind though is that LA has had other pro teams. This is the first pro football team that Vegas has ever seen.

Bo Burlingham: Yeah.

Mark S A Smith: Since we have two million in the county, I think it’s gonna go really well ’cause people are gonna fly into Vegas to watch their favorite team beat The Raiders.

Bo Burlingham: I suppose that’s the theory behind it.

Mark S A Smith: I love it. It really is about authenticity and community identity. This with the things that you’ve seen.

Bo Burlingham: Yes, it’s that, and it, well it’s a couple of other things. They have these incredibly personal close relationships with their customers and they create these what I call cultures of intimacy internally.

Mark S A Smith: Oh, yes.

Bo Burlingham: That’s one of the reasons that the owners keep it small is because they want to have that quality, which inevitably, once you get above a certain size, you’re gonna lose that.

Mark S A Smith: Mm-hmm (affirmative).

Bo Burlingham: You’re gonna have to run the company differently. It’s not like that’s wrong, it’s pretty much inevitable if having a certain sort of intimacy in the workplace is important to you, then keeping the company small relatively, whatever that means, I use the standard, what I call human scale and by that I mean that a company where it’s still of the size that pretty much everybody can know everybody else.

Mark S A Smith: Yeah. Right. At least the owner knows everybody’s name.

Bo Burlingham: Right. There are a few other things that I found the small giants had in common. Some of them I found out the hard way because some of them got into trouble after I wrote the book.

Mark S A Smith: Uh oh.

Bo Burlingham: When I went back and looked into why they got in trouble, I realized it was a chapter missing. When we did the 10th anniversary edition last year, there are two new chapters, including one called “How Small Giants Fail.”

I came up with three key factors financially. Number one was that they don’t keep updating their business model.

Mark S A Smith: Yeah.

Bo Burlingham: In other words, you can have a business model that works for a long time, but the environment may change and that business model may stop working.

Mark S A Smith: There’s a lot of business models under disruption right now, so I think you’re absolutely right. The business model has to undergo continuous renovation and transformation for this to work.

Bo Burlingham: That’s very true. The second factor I found was that you had to have a healthy balance sheet. In other words, you couldn’t let yourself get into a situation where you had so much debt or so little cash that you weren’t gonna be able to pay your bills, your payroll first and foremost.

Mark S A Smith: That’s absolutely true. Cash flow is king.

Bo Burlingham: The third one was that you need to have steady gross margins and you had to protect them, which can get difficult over time because things change and as you say, cash is king, and if you get into a situation where you let your prices erode through competition to the point where you no longer making enough gross profit to be able to run the company the way that you want to, the way that you’re set up to run.

Mark S A Smith: Mm-hmm (affirmative).

Bo Burlingham: You can get into big trouble. One of the company’s that I wrote about in Small Giants literally came within a week of going out of business, because the bank was threatening to pull its loan and that would have been the end of the business.

Mark S A Smith: Mm-hmm (affirmative).

Bo Burlingham: Fortunately at that point, it had a new CEO who understood what was going on. What was going on ironically was that its number one product, the product in which it had built its whole reputation, had become the biggest danger it had. In other words, the thing it had to do was actually to get rid of this product.

Mark S A Smith: You gotta kill your cash cow sometimes.

Bo Burlingham: That’s exactly right. Fortunately, they were able to do it and they emerged from the whole thing.

Mark S A Smith: Of course, there’s stories about the Fred Smith being in a one paycheck away from disaster when he was staring FedEx and all those wonderful stories. You know, Scott Adams, the guy who writes Dilbert observes that capitalism is a failure engine, because all businesses go out of business, but everybody gets paid along the way. I think that’s a wonderful observation and the point is because the three things you identified, you have to have an evolving business model, you have to watch your balance sheet, and you have to watch your margins.

Bo Burlingham: Right.

Mark S A Smith: When you can do those three things, you will survive and thrive in a disruptive environment. I love that. What a great conversation there. That’s really terrific Bo.

Bo Burlingham: Great. Unfortunately, I had to learn those lessons the hard way.

Mark S A Smith: That’s okay, you’ve got the scars and bruises, just like me and a lot of other folks who are listening.

Bo Burlingham: Well, one of the greatest companies that was in Small Giants, which I really loved, is a company called Rhythm and Hues.

Mark S A Smith: Yes.

Bo Burlingham: Rhythm and Hues was a winner of …

Mark S A Smith: Special effects, yeah.

Bo Burlingham: All kinds of Academy Awards.

Mark S A Smith: If you’re a person who watches credits at the end of a movie, you see Rhythm and Hues show up on a regular basis in your favorite movies.

Bo Burlingham: Yeah.

Mark S A Smith: Yeah.

Bo Burlingham: I suppose that their crowning creation was Life of Pi.

Mark S A Smith: Oh, yeah, amazing.

Bo Burlingham: If you ever saw Life of Pi, you know about the tiger on the boat and in all those ways, well all of that was computer special effects.

Mark S A Smith: That’s right.

Bo Burlingham: In fact, Rhythm and Hues won the Academy Award for that picture 11 days after it filed for Chapter 11 bankruptcy protection.

Mark S A Smith: Oh my goodness.

Bo Burlingham: There’s quite an interesting video called Life After Pi, which is about the demise of Rhythm and Hues. It’s a sad video, but it’s very insightful. They’re a company whose business model, which had served them well for a very long time, the environment was changing. They weren’t able the business model to adapt to the new environment and ultimately, you know.

Mark S A Smith: Yeah, they paid the price for that and listener, I don’t want that to happen to your business, so I suggest you grab a copy of Small Giants and read that book so that you can adapt and adopt.

You also mentioned, you said you had a final chapter.

Bo Burlingham: In the new version, I have a new final chapter, which is just an update on exactly what’s happened with all of the companies that I wrote about in the first edition.

Mark S A Smith: Oh, nice.

Bo Burlingham: Some of them have just continued to thrive. Some of them have been sold, including Anchor Brewing. People get old. Everybody leaves.

Mark S A Smith: Every business passes on.

Bo Burlingham: It’s true and that leads into Finish Big.

Mark S A Smith: That’s right. Let’s talk about Finish Big. I love your cover. You have a whale on it, and on your website,, you have an animated version of that tale, so listener you might want to go check out that really cool opening page of Bo’s website.

Bo Burlingham: Now that you mention it, I have to give full credit to my website designer, Round Hacks, because they’ve actually done both the Small Giants website and the Finish Big website, and they’re incredibly creative people.

Mark S A Smith: It’s very cool. It’s a very cool site, one of the coolest sites I’ve seen in a very long time. Round Hacks.

Bo Burlingham: Yes.

Mark S A Smith: All right, we’ll give them a link and a shout out on the show page.

Bo Burlingham: Okay.

Mark S A Smith: Let’s talk about Finish Big. Finish Big is about the concept of how great entrepreneurs exit their companies on top. In our conversation prior to recording this, you shared with me some interesting insights about entrepreneurs leaving their company. Of course, we’ve had John Warrilow of Built to Sell on the show, one of most popular shows we’ve done. This really odd mix, what John has done, you and John are friends and you collaborate.

Bo Burlingham: Yeah, I am a big admirer of John’s ’cause he was a source of mine in Finish Big. At that time, he had something called the sell-abilities scores, which grew out of Built to Sell. It’s not the value builder score because it turns out that building value and building a company that’s sellable turned out to be lo and behold the exact same things.

Mark S A Smith: That’s right.

Bo Burlingham: I’ve learned a lot from John.

Mark S A Smith: That’s really great stuff. Let’s talk about what you discovered as you wrote Finish Big. You’ve got some really extraordinary advice and by the way, this book is for people who are a starting a business, not just selling a business.

Bo Burlingham: That’s absolutely true. Oddly enough, I never really paid much attention to exits in the years that I’ve been at Inc. In fact, Inc. almost never wrote about exits.

Mark S A Smith: Yeah.

Bo Burlingham: One of the things I was doing for Inc., was a column with Norm Brodsky, who is a very successful entrepreneur. We’d done it for I don’t know how many years, I guess more than 10 years. He always loved his business and he loved telling stories about the things that he’d learned and then one day, he came back from a conference and I called him up to talk to him about what the next column should be and he said well, I think I’m gonna sell the business. Now, I found this totally shocking.

Mark S A Smith: Yeah.

Bo Burlingham: I said well maybe we oughta write about that. He said sure, why not? Ultimately we discovered a couple of reasons why not to write about in a national magazine. Let’s just say it didn’t make the process of selling the business any easier. It was a great experience and we developed a very big following as we told the story of what was going on as he negotiated to sell this business and it wasn’t just about the negotiations, it was about his own emotions.

Mark S A Smith: Yes.

Bo Burlingham: Which were very mixed and went up and down.

Mark S A Smith: Well this plays off what we just talked about in Small Giants in that if you’re a successful Small Giant, it is tied up in your identity. It’s tied up in your authenticity.

Bo Burlingham: Yes. You’re right, that’s true.

Mark S A Smith: Then to sell the company means that you are now divorcing yourself from this authentic world you have lived in for a very long time.

Bo Burlingham: That’s absolutely true and we began to write about it and it turned into a serial that we were just doing month by month. The thing that I noticed was happening was that there was a huge amount of curiosity among our audience about what was his experience like.

Mark S A Smith: Yeah.

Bo Burlingham: We got to the end of that, it was sort of ironic because finally after going back and forth for several months, he decided he was gonna sell the business. In fact, at one point, we asked our readers to advise him and we just got tons of emails from people, most of them saying, go for it Norm, go ahead, do the deal. He decided he was gonna do the deal and so the editor of Inc. at that point knew that there was such a big following here, that she made it the cover story. Norm decides to sell.

Mark S A Smith: Wow. Which illustrates that Inc. created a community.

Bo Burlingham: Right. Right.

Mark S A Smith: That gave a damn about the founders and the people involved.

Bo Burlingham: Right. A couple weeks later I was calling him up to find about the next column, which I assumed would be about the closing. He told me, I decided not to sell.

Mark S A Smith: This sounds like a TV show.

Bo Burlingham: I said what are you talking about? We’ve got a magazine out there with your face on the cover saying Norm decides to sell. He found something out that he hadn’t been aware of. It was basically a private equity company that was putting together a bunch of record storage companies like his. It turned out that the key decision maker, he’d never been told, and he found out at the last minute that the key decision maker was the person he trusted least to keep the promises that had been made to him about how the employees were gonna be treated afterwards and what was gonna happen with them and he said, you know, I can’t go through with this now.

Mark S A Smith: Wow.

Bo Burlingham: That was it.

Mark S A Smith: I think a lot of founders go through something similar to this as they sell their company. They’re caught between their identity and the need of the purchaser. How can we engineer our company to avoid this issue?

Bo Burlingham: That’s one of the things I found out in Finish Big, I didn’t know that is you have to do as much due diligence on the buyer as the buyer is going to do on you.

Mark S A Smith: I think that’s the first time I’ve ever heard that before. That’s really amazing. You’re absolutely right. As a company founder, that’s an important component. If you’re working for a large corporation, doesn’t matter. But if you’re selling your identity, you need to be doing the due diligence on the buyer.

Bo Burlingham: That’s partly because when you go out to sell your business, you’re not the only one who is selling.

Mark S A Smith: That’s right.

Bo Burlingham: But it’s also true that the buyers are selling themselves to you, particularly if there are different people who are competing to buy your company.

Mark S A Smith: True that.

Bo Burlingham: In the course of selling themselves, they may tell you things that frankly turn out not to be true. The only way that you could protect yourself against that is to really understand and find out what is the would be buyer’s real motive for wanting to own your business.

Mark S A Smith: Yeah.

Bo Burlingham: But in any event, Norm actually wound up selling after that. That was the end of our series at least as far as the real time part of that series went because afterwards, Norm realized that it wasn’t gonna help him to sort of keep doing this in real time. He did feel as though the time was right and that it was time to move on. So he did wind up selling a majority stake in the business, and that sort of started something else, but that we wound up writing in retrospect. In other words, we waited for the deal to happen.

One thing I realized based on the response that we’d gotten, was that there was this huge curiosity out there about the experience of selling a business and I thought gee, maybe there’s a book there.

Mark S A Smith: Yes.

Bo Burlingham: I went and talked to my publisher, who thought that was a good idea. He encouraged me to go ahead and do it. The first thing I realized was that aside from what I’ve learned from this experience with Norm, it was a subject I knew absolutely nothing about.

Mark S A Smith: Along the way, you wrote a magnificent book. I think, quite frankly, Bo, the reason I write books is so that I can master a topic.

Bo Burlingham: At the time I thought that the fact that I knew so little about it was a handicap. When I look back now, it was actually an advantage.

Mark S A Smith: Yeah, because you’re coming in fresh.

Bo Burlingham: Yeah. It forced me to do something that turned out to be key. Namely, I realized that in order to write this book, what I needed to do was to go out and interview lots and lots of people who had been through the process themselves.

That’s what I did. I wound up doing I don’t know, somewhere between 100 and 150 interviews.

Mark S A Smith: That really shows in the quality of the book.

Bo Burlingham: For me, it was an incredibly enlightening experience. I would say that of everything I’ve worked on, it had really the biggest impact on the whole way that I looked at entrepreneurship because I realized that there were a whole bunch of things that I had sort of assumed or taken for granted about entrepreneurship that weren’t exactly right. For example, one of the things was that I realized that sometimes when we talk about building a “company,” we think about it as sort of a construction project and the end of it is that you build a company.

I realize that’s actually the wrong way to look at it. Building a company is a journey.

Mark S A Smith: Yes.

Bo Burlingham: It has a beginning, a middle, and an end, and the end isn’t when you build the company. The end is when you leave that company.

Mark S A Smith: Yeah.

Bo Burlingham: Sooner or later, everyone is going to leave their company. You may wind up leaving feet first.

Mark S A Smith: Yep.

Bo Burlingham: You’re still gonna leave.

Mark S A Smith: Everybody’s gonna leave, yes.

Bo Burlingham: Everybody leaves. The second thing I realized was that we tend to look at the exit as you know, sort of something that happens at the end as an event. I realized also that that was really the wrong way to look at it.

Mark S A Smith: Yeah.

Bo Burlingham: It’s not so much an event as it is a phase of the business. You know, you have the startup phase, you have the growth phase, you have the mature phase. You have the exit phase.

Mark S A Smith: There’s a couple other phases in there as well. There’s an optimized phase.

Bo Burlingham: Yeah.

Mark S A Smith: There’s also a transition phase that we’re reworking our business model, so I’m absolutely with you in those particular phases, and there’s an exit phase.

Bo Burlingham: Yeah, and the exit phase when I thought about it, I realized that it has four stages to it. The first stage, it’s an exploratory phase. It’s when you find out well, what are the options here.

Mark S A Smith: Right.

Bo Burlingham: That’s something you may not have given any thought to when you think about going into business. But it’s ultimately going to be key because there are decisions that you’re gonna make along the way that are ultimately gonna affect your options when you get to the end of the journey.

Mark S A Smith: Right.

Bo Burlingham: The second phase really is what I call the strategic phase. After you’ve figured out what kind of options you want when you get to the end of the journey, you have to build into your company the qualities that are gonna allow you to have those options.

Mark S A Smith: What creates value for the option buyers.

Bo Burlingham: What creates value and what leaves you with choices.

Mark S A Smith: I think that’s a really interesting point. Listener, I want you to really nail that. It’s making sure you have choices. If you are narrowed down to a single choice, you have no negotiating power.

Bo Burlingham: It’s true. It may be that it turns out that the option that you really want to have is just simply not possible because of decisions you made early on. That happens all the time. Then we get to what most of us think of as the exit part, which is really just stage three, and that’s when you call somebody up and your lawyer or your accountant or you call up a broker or an investment banker and you say, I want to see if I can find a buyer for this.

That starts something else. If you look at most of the books on exits, it’s really about that phase.

Mark S A Smith: Yes.

Bo Burlingham: That stage is an important stage and you need a lot of help to go through it. It ends with the deal, whatever deal it is.

Mark S A Smith: Right. Transfer money to your account, and you pass over ownership and you have a big party, but there’s still another phase.

Bo Burlingham: Right, exactly. The deal is the end of it for the investment banker or the broker. They’re gonna go on to another client. But it’s not the end of it for the owner because there’s a whole other phase that most people are totally unprepared for and that is the transition from being the honcho, the head of your business that everybody looks up to and waits on all your words to figure out what they should do to a stage where nobody returns your phone calls anymore.

Mark S A Smith: Yeah.

Bo Burlingham: That turns out to be by far the hardest phase. Once you realize that this is really what you’re going through, that there are these different phases and it’s important to go through them, I mean you’re gonna go through the strategic phase even if you’re not intending to, it’s just gonna happen. That’s what building a business is all about. If you have gone through the first stage, which is the exploratory phase, and so you know what you’re doing when you’re in the strategic phase, you’re in much better shape, and you’re gonna have a much better, ultimately, stage three and stage four.

That was a revelation to me. I never realized that. I never thought about that.

Mark S A Smith: Do you have some advice for people in that stage four?

Bo Burlingham: Yeah, I do. When I wrote Finish Big, when I was doing my research for it, the shocking thing to me, cause I didn’t expect it, it became clear to me that a very large percentage of them, at least half, maybe more than half, were miserable.

Mark S A Smith: Wow.

Bo Burlingham: They were filled with regrets.

Mark S A Smith: Wow.

Bo Burlingham: It almost didn’t matter how much money they’d gotten out of it. There was something else that was going on and they were not happy about it. Of course, there were some people, John Warrillow is a good example, who were just fine, who just sort of sailed through.

Mark S A Smith: He’s off to another business.

Bo Burlingham: Yeah, he’s off to another business, exactly. I decided, well that’s my book. What’s the difference between the ones who wind up happy and the ones who wind up miserable.

Mark S A Smith: There’s no sense in having a journey to a place of misery.

Bo Burlingham: Right, exactly. Probably the title of the book should be Finish Happy.

Mark S A Smith: I don’t think you would have sold so many.

Bo Burlingham: No, I realize that I needed to identify the factors that separated the ones who wound up happy from the ones who wound up miserable. The first thing I had to do was define what I meant by a good exit. I decided that there were actually four sub cases, five factors.

Number one, as you go through the stage three, the process of selling the business, that you’ve been treated fairly, it’s been a good process, and that you’ve wound up being rewarded appropriately for what you’ve put into the business.

The second quality is made possible because of the first one, which is that you can look back on what you’ve done and feel a sense of pride.

Mark S A Smith: It’s your legacy.

Bo Burlingham: It’s your legacy and then all that blood, sweat, and tears that you put into building a business was worthwhile.

Mark S A Smith: Yeah.

Bo Burlingham: You contributed something of value to the world. The third factor was that you felt at peace with what had happened to the other people who’d been on this journey with you.

Mark S A Smith: Wow. That totally makes sense based on what you studied in Small Giants.

Bo Burlingham: Yeah. I had example after example of people who were not thinking about that because they didn’t know that they should before they went through the process and then things started to happen afterwards, which totally spoiled the experience for them.

Mark S A Smith: Yeah.

Bo Burlingham: The fourth characteristic of a good exit was that you were able to find something else afterwards that you were equally passionate about and you were able to move on.

Mark S A Smith: I think that’s so critical. Otherwise, you end up being rudderless and die.

Bo Burlingham: Exactly. I’ll get into that in a minute. For some people there was a fifth one. Not for everyone. The company that they had built had continued to go on and actually get better. For some people, that was very important. Not for everyone, but for some.

I want to get back to the point about finding something to do afterwards.

Mark S A Smith: Yes, it’s a critical point.

Bo Burlingham: I think a lot of people make the mistake of thinking that it’s all about the money. What they don’t realize is that there are a lot of things that you get out of a business that you’re not aware of until you don’t have them anymore. People would say to me that the worst questions that they could get after they had sold their business is being somewhere and somebody asking them, well what do you do?

Mark S A Smith: Oh, interesting.

Bo Burlingham: They didn’t know what to say.

Mark S A Smith: That would be really easy. Anything I want.

Bo Burlingham: Most of them didn’t want to say, oh gee, well I used to run a business. Then the follow up question was always well what do you do now?

Mark S A Smith: Right.

Bo Burlingham: It was a tough question for a lot of people.

Mark S A Smith: Yeah, you want a business that’s so tied to your identity, that’s a really difficult thing and I think it’s so important to consider what happens next.

Bo Burlingham: It is and that’s one of the things that you get out of a business, it’s your sense of purpose. It’s like why are you doing it, well, what I’m doing is I’m building this company. It’s who you are.

Mark S A Smith: Yes.

Bo Burlingham: It’s also your tribe.

Mark S A Smith: That’s right.

Bo Burlingham: In other words, that people that you see every day.

Mark S A Smith: That’s right.

Bo Burlingham: Who you relate to every day. It’s also your sense of accomplishment. One of the great things about business is that it sort of tells you how you’re doing.

Mark S A Smith: That’s right. It’s instant feedback.

Bo Burlingham: It’s instant feedback. That’s absolutely right. Business tells you what you need to do next.

Mark S A Smith: There’s a path.

Bo Burlingham: There’s a path and the business is telling you, okay, we need to do this next or we need to do that next. You can imagine that if you wind up in a situation where suddenly you have none of these things, you don’t know who you are, you don’t know what your purpose is, you don’t have people who you can relate to or even talk to about this.

Mark S A Smith: You’ve been exiled.

Bo Burlingham: You don’t have a sense of accomplishment. You’re sort of missing that sense of accomplishment at what you’re doing.

Mark S A Smith: Especially if you’re used to that instant feedback.

Bo Burlingham: Yeah.

Mark S A Smith: You feel like you’re in a vacuum.

Bo Burlingham: Yeah, exactly, and that can all be incredibly disorienting for people.

Mark S A Smith: No doubt.

Bo Burlingham: While the money can do lots of good things, it can allow you to take a vacation that you haven’t had for 20 years and to see the world, there are things like that, eventually, that wears off too. I know people who set out to see the world and it was great for a few months and then wait a minute, what am I doing.

Mark S A Smith: Mm-hmm (affirmative).

Bo Burlingham: Sooner or later you gotta find something else, so understanding that this is what lies ahead and that these are challenges you’re gonna face in the future once you leave the business can be extremely important because it can help you to start imagining and thinking about well what am I going to do after this.

You know, the easy answer is well, I’m gonna go play golf. Well, the people I spoke to who decide to go play golf said the problem was when they were running the business, playing golf was a tremendous form of relaxation for them.

Mark S A Smith: Makes sense.

Bo Burlingham: But afterwards, playing golf became a job for them.

Mark S A Smith: Golf went from relaxation to aggravation.

Bo Burlingham: Exactly. It stopped being fun.

Mark S A Smith: Ruined the game completely.

Bo Burlingham: Right. It did ruin the game.

Mark S A Smith: I would suspect that people who sell a business would be well served to move into running volunteer organizations so they can still engage in that tribe and they can still contribute. They’re tied to a joint identity versus to their own singular identity.

Bo Burlingham: That’s true and that’s important for a lot of people. In fact, it’s very important for a lot of people. But, there’s also something else there, which is there’s something about running a business that you don’t get necessarily from a not for profit organization.

Mark S A Smith: Yeah, it’s called profit.

Bo Burlingham: It’s the profit, but it’s also all the things that go with that.

Mark S A Smith: Right, of course.

Bo Burlingham: We sort of say glibly, it’s about keeping score. Keeping score is an important thing because it’s the way we have our self esteem, is that we can look around and we can say oh yeah, okay, we’re doing well. People need those kind of things.

This can take a long time. There’s this one person I wrote about. It wound up taking him something like 11 years to get through this stage and he was totally unprepared for it. He sort of wandered around and his wife saw that he was depressed. He refused to admit that he was depressed, but his wife and his children knew it.

Mark S A Smith: Yeah, makes sense.

Bo Burlingham: Eventually one of his daughters said you know dad, you’re actually a really good teacher. Maybe you should go back and teach. He thought about it and he said well, okay.

Mark S A Smith: Well now they sold the business, you can actually afford to teach.

Bo Burlingham: It’s true. He began working to get his PhD. He wound up writing his dissertation on the experiences of business owners trying to leave the business.

Mark S A Smith: Very cool.

Bo Burlingham: It was very important to him because among other things, it made him realize that he wasn’t alone.

Mark S A Smith: Mm-hmm (affirmative). Yeah.

Bo Burlingham: A lot of people were feeling these same things.

Mark S A Smith: Absolutely fascinating.

Bo Burlingham: He got me thinking, what is the difference. When I looked at the people who had gotten through this and had sort of moved on, what was it that they had in common. One thing I noticed about them was that a very large of percentage of them were in fact spending their time helping other entrepreneurs.

Mark S A Smith: Yes.

Bo Burlingham: In one form or another. Norm Brodsky, take one example, he still spends at least 30 or 40% of his time just advising pro bono, young entrepreneurs.

Mark S A Smith: Fantastic.

Bo Burlingham: In fact a lot of people in John Warrilow’s value builder network, I spoke to them actually at an event in Las Vegas a while back and I asked them how many of you are former business owners who sold your business. Practically everybody in the room raised their hand.

That got me thinking about business actually because what do we mean when we say that you have a purpose?

Mark S A Smith: Mm-hmm (affirmative).

Bo Burlingham: It’s about who you’re serving. I mean, in business, at the very least, you’re serving your customers or you wouldn’t be in business very long.

Mark S A Smith: That’s right.

Bo Burlingham: You’re serving your family, very likely.

Mark S A Smith: That’s right.

Bo Burlingham: Serving your employees, serving your community.

Mark S A Smith: That’s right. It’s being of service.

Bo Burlingham: It’s service.

Mark S A Smith: Yeah.

Bo Burlingham: Identity comes from service.

Mark S A Smith: That’s right.

Bo Burlingham: People ask me, well how can I prepare for this? I usually tell them, figure out who you’re gonna serve.

Mark S A Smith: Really beautiful, Bo.

Bo Burlingham: Yeah. I like to think that it helps. When I look at the people who have done well and have really had very great exits, and are now doing better than ever, it’s because they’re able to provide service that is meaningful to them and they have the financial resources to really do it well.

Mark S A Smith: Yeah.

Bo Burlingham: To do it on a whole different level without the insecurity that most of us feel about whether or not we’re gonna be able to do afford the things that we need in our lives.

Mark S A Smith: And still be of service, that’s right. That’s a spiritual journey.

Bo Burlingham: That was my journey.

Mark S A Smith: Yeah.

Bo Burlingham: When I got to the end and I had this revelation that ultimately service is really at the base of all of this, that was like okay, now I understand something. I’ve discovered something.

Mark S A Smith: Beautiful.

Bo Burlingham: The interesting thing about this is when you’re building a business, it’s easy to be so caught up in other things that the last thing you want to think about is where you’re gonna end up.

Mark S A Smith: That’s right.

Bo Burlingham: I know that that’s a great frustration for people who try to help entrepreneurs get prepared because they don’t want to get prepared. It’s like I don’t want to think about, don’t tell me. I wrote the book obviously for those people but most of them actually don’t go out and pick it up to read. They’d really much rather read a book about how to build a great business or how to do something else and how to solve this or that problem.

Mark S A Smith: I think this work is actually the perfect book to read if you’re building a business so that you know where the journey’s gonna end.

Bo Burlingham: Exactly, and it’s people like you and other people who’ve actually been through the journey or are trying to help other people get through it.

Mark S A Smith: Yes.

Bo Burlingham: What they do is they want to buy copies of the book and giving it away.

Mark S A Smith: Yeah, I’ve given away a lot of copies of John Warrilow’s book and now we’re gonna be giving away a lot of copies of this book.

Bo Burlingham: Well good, I would encourage to give away as many as possible.

Mark S A Smith: They’re just little seeds of greatness, that’s what they are. Bo, this has been a fantastic interview and actually, it’s gone in places I never expected for it to go. You are an extraordinary man. I am delighted that you are sharing your wisdom with our listener. Thank you so much. Any parting words here before we end the show?

Bo Burlingham: I feel very privileged actually to be able talk to somebody like you about this who really does get it, who also has this ability to help other people in the process and you know this, I don’t have to tell you. You never get to the point where you feel like I really understand business. I really know all about it because in fact, that’s one of the great things about the business is that you’re constantly running into new situation and having to learn new things and I’m very privileged in terms of having through a lot of in many cases, lucky circumstances wound up being able to spend most of adult life with this.

Mark S A Smith: Thank you for your very kind comments. Bo, it’s an honor to have this conversation with you. Business is a moving target. We’ll never know it all and half the fun is the exploration and the journey. Thank you for the conversation and thank you for sharing your insights.

Bo Burlingham: Well, thank you Mark and good luck with your podcast. Obviously people are gonna learn a lot from the interviews you do.

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