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The Wise Exit is an open dialogue with fellow founders and former business owners sharing real stories and offering honest advice around selling their companies to some of the top acquirers in the world.
Beyond the entertaining and educational exit stories, host and M&A Advisor, Todd Sullivan is here to help demystify the Mergers & Acquisitions (M&A) process. For example:
- How much is my business worth?
- What is Net Working Capital?
- When should I get a Quality of Earnings analysis
- Should I hire an Investment Banker, M&A Advisor, or Business Broker?
- When do I talk to my Key Employees about a possible transaction?
We hope you enjoy... and learn a few things along the way!
KENAN SALEH - E51 | CASHING OUT PODCAST
00:00:00:23 - 00:00:14:08
Kenan Saleh
I think if you have an idea and you have a lot of conviction in it and you feel like you have the skills to operate, to build a team, to build products, you should go for it right away. And I don't think you need to wait or join a company or get a job to do any of that.
00:00:14:13 - 00:00:48:08
Todd Sullivan
Welcome to the Cashing Out podcast, where our fellow founders share real stories and offer honest advice around selling their companies to some of the top acquirers in the world. My name is Todd Sullivan, CEO of Exitwise, where we help business owners create the exits they deserve. Today, my guest is one of Forbes 30 under 30. Kenan Saleh, who co-founded Halo Cars, a transportation ad network while he was still in college after striking a business development deal with Lyft, one of the largest ride sharing platforms in the world at the time, Kenan made the decision to sell Halo to Lyft.
00:00:48:10 - 00:01:15:03
Todd Sullivan
Although he was just nine months into launching his business, Kenan decided to use M&A as a way to more quickly achieve his vision for Halo and reduce the competitive threat of the sleeping giant he had just woken up. In this episode, Kenan and I discuss his decision to sell so early in his entrepreneurial journey how difficult due diligence is after signing an LOI and his advice for other founders thinking about the M&A process.
00:01:15:05 - 00:01:41:03
Todd Sullivan
I hope you enjoyed my conversation with Kenan Saleh. Kenan, thank you so much for being here. I've been really excited waiting to have this interview with you. I've just been amazed how intentional you were building a business in school and then executing on a vision very, very quickly and having one of the kind of biggest companies in the world, frankly, come out and offer to buy your company so quickly.
00:01:41:09 - 00:01:58:10
Todd Sullivan
I think our fellow founders are going to learn so much from your experience, because I know you're really willing to share a lot of like the mindset and the learnings that you had going through this M&A transaction. So, you know, I also want to say Mark Cuban had this spot and I had no problem bumping him when you said you would take it.
00:01:58:10 - 00:02:00:09
Todd Sullivan
So really, thank you for being here.
00:02:00:11 - 00:02:09:16
Kenan Saleh
Well, thank you. I didn't know I bummed out. Mark Cuban. That's a no for me. But thank you for having me. I'm excited to share my process and my learnings from the experience.
00:02:09:18 - 00:02:21:23
Todd Sullivan
I think a great place to start really is back in school, right? You're looking for or you're part of a class and looking for a business potentially to start. Can you take us back there of how you developed the idea?
00:02:22:01 - 00:02:42:13
Kenan Saleh
Yeah, I actually I started my company while I was in college. It was during my senior year and I got inspired. The previous summer I did an internship working at a venture capital firm. Really? It was actually not even a venture capital firm. It was really an angel investor in Indonesia, of all places, and it was one of the first angel investment groups in Indonesia.
00:02:42:16 - 00:03:04:06
Kenan Saleh
They were trying to it was a very nascent VC and startup ecosystem and they were trying to grow it. So this was somebody I worked for who was European, so the company before and from France, and he moved to Indonesia to help build up their ecosystem there. So I work with him for a summer and I was just basically his intern, you know, helping with looking at the deals, helping with their portfolio, all of this miscellaneous stuff.
00:03:04:06 - 00:03:19:14
Kenan Saleh
And that's what got me inspired. So I came back to school wanting to start a company after seeing all of these entrepreneurs in Indonesia and thinking that I could do that too. And I really liked what they were building and I really loved everything about that ecosystem. So when I came back to school, I was looking for like, What can I start?
00:03:19:14 - 00:03:36:00
Kenan Saleh
What can I do? What problems can solve? And Halo was was not the first idea. Actually, I was working on. There was a couple others that I was iterating on, and some were working, some were not working. And then Halo was the one that I really got excited about, got a lot of traction, and then that was one that we took full time.
00:03:36:03 - 00:04:02:23
Kenan Saleh
But it was an iterative process for me, which I think oftentimes people don't talk about. That is like working through multiple different kind of ideas and iterations of the startup and of the business. And ultimately it came from a marketing insight. I've met kind of a co-founder of Mind who had worked in advertising, and the insight was basically that online advertising had developed a lot in the last ten, 15, 20 years, but offline or outdoor advertising had not so looked the same.
00:04:03:02 - 00:04:19:21
Kenan Saleh
It didn't use any of the tech or the data that had me online advertising so effective. And that's where we saw the opportunity. And we saw rideshare networks as this new burgeoning real estate and sort of like this new mobility network. And that was an opportunity to enter the market. And so that's where that idea came from.
00:04:19:23 - 00:04:43:19
Todd Sullivan
That's great. I mean, there's a lot to unpack the beginning of that, how you're inspired to be an entrepreneur are based on seeing all of these investor presentations, right? Seeing all the different types of businesses and probably the traction that they're seeing. I would venture that you have a huge advantage when you're thinking about starting a company, when you know how it has to be presented to an investor, right?
00:04:43:19 - 00:04:57:21
Todd Sullivan
Because you in fact are the investor in your company and the questions that you want answered before you jump in, I bet you learned a lot from reviewing all of that material and probably put you well ahead in school.
00:04:57:23 - 00:05:25:15
Kenan Saleh
Yeah, I think that that was valuable. Actually. The more valuable thing for me was just before I thought I had I sort of had like a mythical understanding of what startups and entrepreneurs were, and it seemed like something that was out of my reach and was I couldn't do. And then what was more important for me was it kind of demystified when I was there that these are normal people working on normal things, and I didn't think that they were any different from me or special.
00:05:25:16 - 00:05:39:06
Kenan Saleh
I thought actually I saw what they're doing and I can do that too, and that was the most important thing. And then there was learning some stuff about how to position to investors, and that was very helpful. But the most important thing for me was actually the demystification of what entrepreneurship is keen on.
00:05:39:08 - 00:06:04:04
Todd Sullivan
That's a great point because my partner Brian and I discussed this quite a bit. I came from a family of entrepreneurs my grandmother, my mother, my father, and so it was natural and he came from a very different background and that entrepreneurship was not like embedded in the family. It wasn't something that he was exposed to. So I can understand why that would be the bigger impact that you say, wow, this is a career path moving forward and look at the people that are doing it.
00:06:04:04 - 00:06:05:12
Todd Sullivan
I can do this too.
00:06:05:13 - 00:06:19:12
Kenan Saleh
And so my contacts in both both my parents were physicians and I entered college thinking I wanted to be a doctor and I didn't know what starting a company was. I didn't know how to start a company. I just didn't know how to do any of that. And it seemed like something I couldn't do. It was inaccessible to me.
00:06:19:12 - 00:06:21:11
Kenan Saleh
So that that was very important for me as well.
00:06:21:13 - 00:06:27:13
Todd Sullivan
Can you explain what Halo is? Right? You're obviously in the advertising industry - why don’t you go from there.
00:06:27:15 - 00:06:54:00
Kenan Saleh
Yeah. So Halo was a rideshare advertising startup. What that means is that it was a way for drivers, rideshare drivers, Uber, Lyft drivers to earn extra money while they drive by showing ads on top of their car and then inside of their car as well. And they were able to earn extra money without doing extra work. It was passive income from the advertising revenue and it is targeted at full time drivers who did this for 40 hours a week or more and they could make significant extra money through this revenue stream.
00:06:54:02 - 00:07:16:00
Kenan Saleh
And what we did is we provided that to the drivers, we provided the equipment and the platform to the drivers there and extra money and they just set it up and then they started earning and then we also ran the ad network and sold that to the advertisers. So we were selling this new, exciting, interesting advertising medium and then drivers were benefiting from the incremental earnings on top of their their rideshare earnings.
00:07:16:04 - 00:07:27:15
Kenan Saleh
And that was the business and that's what we started in college and Philadelphia. And then we expand to New York. We started a bunch of their markets and that's what we brought into Lyft, and it expanded beyond that to that was going well, that's awesome.
00:07:27:15 - 00:07:50:07
Todd Sullivan
So very quickly you're able to expand outside of your kind of home city and you're clearly getting traction, right? There's a real pain or an opportunity for drivers to make more. They're not having to do anything else, right? So I can see how they'd be really interested in signing up and now it's a new way to get brands in front of, I guess, really consumers that have you really have their attention inside.
00:07:50:09 - 00:07:58:04
Todd Sullivan
And then on top of the car. So how long does it take before you start entering into acquisition conversations?
00:07:58:06 - 00:08:21:03
Kenan Saleh
We had an unusual and that it was very fast. We started working on it while we were in college. This is late 2018, early 2019. I graduated from college in May 2019 and then we took the company full time right after that. So we raised our seed round for Pre-Seed round in May of 2019. Then we moved to New York in June of 2019, and that's when we everyone dropped.
00:08:21:03 - 00:08:40:12
Kenan Saleh
My co-founders dropped out and we took the company full time and then we officially sold the company in November of 2019. So just a few months after. But November is when everything closed. We actually signed the term sheet in. I can't remember if it was August or September, but it was one of those two. So this was like three months after we started working on it full time.
00:08:40:12 - 00:08:41:11
Kenan Saleh
So I was very fast.
00:08:41:13 - 00:09:00:00
Todd Sullivan
Before we get into kind of the term sheet and all that kind of due diligence story that you're going to go through, What was the decision like? What are you thinking that says, Yup, now we should do this, we should partner with Lyft, we should sell the company and go from being founders to employees at Lyft.
00:09:00:02 - 00:09:15:08
Kenan Saleh
Initially, for us, we were talking to left in a partnership contacts. They reached out to us and they said we we had launched and there was some press. They reached out saying we heard about your launch, we're interested and we want to get to know this space. And this is an area that we've been following. Let's just get to know each other.
00:09:15:10 - 00:09:37:19
Kenan Saleh
And so at first it was just an introduction call. Second it was it kind of expanded to a partnership call, like we wanted to do a pilot with them. And it was not an M&A conversation for the first four or five, six calls, and it turned into an M&A conversation at the end. But for us, really, when we were thinking about it, we just saw the ability to do more with left than alone.
00:09:37:19 - 00:10:01:21
Kenan Saleh
And we saw, we were looking for like the one plus one equals three type scenario. And we saw the ability we thought we could scale our product much more effectively from within less. And we saw really good synergy on the data side where Lyft knows who the drivers are, who the riders are, they know the way the ride is going and they have all sorts of data that would be very interesting from an advertising perspective for targeting, for measurement and so forth.
00:10:01:23 - 00:10:13:02
Kenan Saleh
So we really saw as that we would be able to realize this company and this vision much at a much larger scale and much higher impact from within. So that was the real reason why we decided to sell the company.
00:10:13:07 - 00:10:32:06
Todd Sullivan
That's great. You've got this vision and you know that you can grow it faster, maybe derisk the future and really get to see your vision through. But there has to be some kind of economic decision because we talked to a lot of founders is like, is now the right time to sell? You know, maybe if I do go another 18 months, I'll get more at the end.
00:10:32:06 - 00:10:53:18
Todd Sullivan
Our valuation should be bigger. You and your co-founders must have had that discussion. And, you know, it's a very personal decision. And I'm a huge fan of kind of first time entrepreneurs putting a win on the board and I mean, like putting a win on the board. Selling to Lyft is enormous. What it does for your entrepreneurial career, a career in general going forward.
00:10:53:20 - 00:11:04:21
Todd Sullivan
So I'm sure you thought of that. But you know, like financially, was that a discussion where you said, like, hey, we should take our chips off the table now because for whatever reason.
00:11:04:23 - 00:11:20:20
Kenan Saleh
Yeah, well, for us, it was first the question was, you know, is this a company that we would want to sell to and we want to partner with this company? And we got to the yes, on a philosophical level, kind of separate from economics. Then we started talking about economics. And does it does it make sense for us?
00:11:21:02 - 00:11:41:08
Kenan Saleh
And what was helpful is that we hadn't raised a lot of capital, so it was easy to make a deal that was beneficial, that was good for our investors and that was good for us and that was good for Lyft. So we had a lot of flexibility there. And also we knew that they were interested in this space regardless kind of with or without us.
00:11:41:11 - 00:11:57:03
Kenan Saleh
So for us, what we were thinking in our decision was do we want to partner with Lyft now or do we want to compete with them in the future? And we thought maybe we could compete with them, but we saw a much better future working with them than against them. And that's why we decided it was the right time to sell as well.
00:11:57:03 - 00:12:05:03
Kenan Saleh
So that was the other consideration and why we didn't say, let's let's revisit this in six months or 12 months. It was unclear if the opportunity was gonna be available in six to twelve months.
00:12:05:05 - 00:12:24:02
Todd Sullivan
Thanks. Kenan, that explains it really well. I think. You know, we just had Melissa Kwan on and she talks a lot about not raising a lot of capital. She bootstraps everything because it gives you so many options and the fact that you did a small seed and I love that you said, like every shareholder has a good economic outcome, right?
00:12:24:02 - 00:12:47:04
Todd Sullivan
It happens quickly. You don't raise a lot of money, so you've created options. I think that's one side I think people really need to understand. The second that I hear is that you went into this as a partnership or business development relation ship with Lyft. And so many times we see that those business development relationships that get very strategic turn in to acquisition conversations.
00:12:47:04 - 00:13:08:19
Todd Sullivan
So as founders, you really benefit from creating those relationships with the bigger guys. And then to have kind of the foresight, it's like, hey, we either join forces and see our dream through or we may have a very difficult fight on our hands. I think that that shows a lot of awareness. So amazing. All right, so you at least you're signing a letter of intent, right, an LOI or a term sheet.
00:13:08:21 - 00:13:22:10
Todd Sullivan
And now. Right. A lot of people like, okay, I'm selling my company, but the real, real hard work starts. Can you talk about what you went through from signing till November where you're like, it's official.
00:13:22:12 - 00:13:50:14
Kenan Saleh
Yeah. I mean, the time period between signing the LOI the deal closing is referred to as the due diligence phase. And the due diligence phase is actually for the company that's being acquired the worst, the most painful time period. And for the company that's acquiring, it's actually like a very nice time period for you to basically they get due diligence and they get to look at everything and then decide if they still want to go through with the deal.
00:13:50:16 - 00:14:10:01
Kenan Saleh
And it's a little asymmetric because the acquiring company can pull out at any moment if they see something that they don't like, whereas the company that's being acquired is sort of committed and the selling company in theory could pull out. But once you sound like you often don't want to, you want a deal to go through and it's more so that the acquiring company diligence in you more than you are diligence in them.
00:14:10:05 - 00:14:27:00
Kenan Saleh
But in theory, it's supposed to go both ways. Sure, But this is like actually very stressful time period. We basically were ready to sell the company and we were just trying to get through the diligence process as quick as possible so we could close. And the period between was weird. It was a weird limbo where we had basically sold the company, but we were still waiting for it to be confirmed.
00:14:27:00 - 00:14:49:16
Kenan Saleh
It could fall apart, you know, they could pull out at any moment technically, and they were doing really detailed diligence and all of our software, our hardware, operations, all of our contracts, and they were just looking at every part of the business does a lot of work. I think people there's another part that I didn't realize. It took basically 50 to 60% of my time, my co-founder's time, just answering the diligence questions, doing calls.
00:14:49:17 - 00:15:11:10
Kenan Saleh
We had to go meet their executive team and the diligence process took a lot of energy as well. And we took more of our time than actually operating the company. So it was hard to make progress on the business during this time period. So yeah, it's a actually like a very, you know, this that time period. There is a very anxious time periods for founders and it was for us as well.
00:15:11:12 - 00:15:32:02
Todd Sullivan
Yeah, I think we need to do even better job of educating our founders that are going through that due diligence process of what to expect at our time. And some of the advice we do give today is that having somebody in that financial seat, whether it's a controller or up to a CFO, really, really saves the business people.
00:15:32:04 - 00:15:49:07
Todd Sullivan
People that are operating the company, a CEO a lot of time because it's very hard to do that due diligence and run a company. And the worst thing you can really do during that due diligence period is let your business slip, right? Because that's ammunition for the buyer to come back and maybe change the purchase price or back out.
00:15:49:09 - 00:16:21:03
Todd Sullivan
So I appreciate you saying I would say that it's not difficult. It's just very time consuming. The questions that they ask, you know, the answers to. But you just have to keep giving more and more and more. And it seems like that kind of Q&A never ends. I do like that you said it's really due diligence kind of back and forth, because a lot of times in these exits there is a structure involved, right, where you're getting equity in the business that you're going to well, what is the value of that equity or did they value that appropriately?
00:16:21:05 - 00:16:39:08
Todd Sullivan
Do you really believe in the health of this business and the future growth? Like is your equity going to be worth something on the other side? So doing some due diligence, they're talking with previous owners who have sold to this acquirer before I think is usually paints a pretty good picture of what your life will be like on the other side.
00:16:39:10 - 00:17:01:20
Todd Sullivan
So yeah, is not for the faint of heart. And I completely understand what you say is like you're emotionally attached to this outcome, right? So you're far less likely as a seller to back out. It's much more likely that the buyer would see something that they weren't told. And and, you know, they get cold feet or they see another deal that they go under LOI that they like better.
00:17:01:20 - 00:17:07:01
Todd Sullivan
And for whatever reason, they're the ones backing out. But I appreciate you sharing the challenges there.
00:17:07:07 - 00:17:23:06
Kenan Saleh
Yeah. So in theory, like I said, it's supposed to be a two way diligence, but I've never really seen I've never seen a seller back out after an LOI and I've seen a lot of buyers back out. So it's very one sided. And also obviously as a seller, you agreed to exclusive during that time period. You agree not to shop a deal to anybody else, right?
00:17:23:06 - 00:17:29:06
Kenan Saleh
Whereas the buyer can still look at other deals. So it's a very asymmetric one sided time period.
00:17:29:08 - 00:17:47:14
Todd Sullivan
Yeah. The only times I really see a seller deciding, Hey, I'm going to hold this business as they see it's really, really working. And the buyer has come back and tried to change the purchase price, right? So it's like, No, we're not going to do that. All right. So so you get through it. You're feeling like, okay, now I am an employee at Lyft.
00:17:47:16 - 00:17:56:23
Todd Sullivan
What was that like the transition from founder running the business to now becoming an employee with a similar mission? Right. But it's different.
00:17:57:01 - 00:18:15:00
Kenan Saleh
Yeah, it's a lot different. I think one thing I didn't do enough of or I didn't know enough, I didn't spend enough time thinking about was what the role of our team and what each individual's role in my role specifically would be. Once we joined the company. We spent a little time talking about that, but I should've spent more time actually thinking about that.
00:18:15:02 - 00:18:34:12
Kenan Saleh
And then also importantly, I didn't spend very much time thinking about what is the team, who will the team be once we join, who will we be reporting to? Who will the person that I'm reporting to be reporting to? What's the whole team? What's our relationship with the other lines of businesses? Decision making? All of that is like, how are we actually going to operate within the larger company?
00:18:34:14 - 00:18:51:16
Kenan Saleh
We spent a little bit of time thinking about and, you know, asking questions and diligence on, but not as much as we should have. And so that transition was a little bit challenging for me. I went from CEO to basically like the head of product or the product manager for that line of business. And thankfully we weren't folded into the rest of the company.
00:18:51:16 - 00:19:13:10
Kenan Saleh
We were kept on the side, but they brought in one of their exec’s to be the GM of it. So that was a little bit challenging for me to kind of sort of give some of the responsibility of CEO to a GM above me. I got along with that person very well and that wasn't the problem, wasn't the person, you know, it was hard for me a little bit to not have that role and that was an adjustment for me.
00:19:13:12 - 00:19:26:21
Kenan Saleh
Ended up being fine, though in the end it was just something that we adapted to. And over the next couple of months we realized that we had new roles, but it was a lot different than running our own company. Certainly was like night and day, different from when we were running our own company.
00:19:26:23 - 00:19:54:00
Todd Sullivan
Yeah, thank you. I think it is really important to try to understand what everyone in your company is going to be doing on the other side. You know, just for the quality of life, your work life balance, what is that going to be and how are you going to be driving, you know, progress? Because often and I don't know your particular case, the structure of these acquisitions has some component of you are going to earn dollars as long as your division performs.
00:19:54:05 - 00:20:12:09
Todd Sullivan
And if you are now reporting to somebody else, what does that person thinking? Are they on the same page? Do they want to grow it the same way? So in those conversations, a lot of times we're coaching our founders to get to know those people and really try to align the incentives for you with the controls that you are actually going to have.
00:20:12:09 - 00:20:26:11
Todd Sullivan
And it's a very difficult balance. I can tell you, like the best investment bankers in the world are very good at that, particularly when they know the buyer. So if you had a banker that knew Lyft, that would be something that they'd have a really good understanding.
00:20:26:13 - 00:20:41:06
Kenan Saleh
I would add to that it's not just I we spend a lot of time with the person who is going to be the GM of the new line of business, and we feel very comfortable with that person and their vision and how they wanted to grow it. But I think what we should done more of is actually getting to know the rest of the executive team.
00:20:41:08 - 00:21:10:04
Kenan Saleh
And because it's not just the person that will be leading the division or your manager, they oftentimes have to report to the rest of the exec team for especially a big company like Lyft, which is includes CEO, CFO. We had a president, we had a bunch other roles that were very influential, and I think we should spend a little bit more time making sure that we were comfortable and on the same page about the vision with all of them, because we realized afterwards that it wasn't not everyone in the company was on the same page about the vision, and that became something we had to navigate later on we didn't know about until we entered.
00:21:10:06 - 00:21:21:06
Todd Sullivan
Yeah, that's interesting. I have to go back a bit because I didn't really even ask you. Did you have any representation in this M&A transaction, M&A attorney, investment banker or anything like that?
00:21:21:08 - 00:21:24:08
Kenan Saleh
We had obviously attorneys, but we did not have any bankers.
00:21:24:10 - 00:21:27:10
Todd Sullivan
So you were really negotiating it on your own. Good for you.
00:21:27:11 - 00:21:28:13
Kenan Saleh
Yeah, that's right.
00:21:28:14 - 00:21:39:18
Todd Sullivan
Good for you. And in hindsight, do you feel like you really structured the deal the way it should have been structured? Did you get the value that you were really hoping for?
00:21:39:20 - 00:22:03:12
Kenan Saleh
I think we overall did a pretty good job. We could have done better in a few dimensions in retrospect, but we didn't know a lot about how to negotiate it. There's a few areas I think we could have done better. One is that we really did not shop the deal a ton before resigning. We were just very excited about it and we went all in and we probably should have spent a little bit more time upfront shopping before we signed the original LOI and entered the exclusive period.
00:22:03:14 - 00:22:21:02
Kenan Saleh
We were a little worried and this was naive. We were a little worried that they might get offended by a shopping the deal and then that might, you know, dissuade them from going through. But I think we should have this is something we should have done much more a little bit more aggressively than we did. And then the other area, too, is that we could have structured it better.
00:22:21:04 - 00:22:41:08
Kenan Saleh
There's a lot of tax considerations that we were not very careful about, that we could have structured it in a much more tax optimized or tax advantageous way if we had made that a priority and we had focused on it, but we did not. And that was another area we could have done much better. We could have been more creative with how the transaction happened, where ours was in cash and equity.
00:22:41:08 - 00:22:54:16
Kenan Saleh
So cash upfront and then equity over time as we are an employee and as we stay at the company after the acquisition and we could have structured that better so that we would have paid less tax overall. And that's an area that we could have.
00:22:54:18 - 00:23:13:05
Todd Sullivan
That's great. I appreciate you sharing that. You know, shopping the deal is an interesting topic, right? When somebody comes in and is offering to buy your business and you don't want to offend, but we see that every single week. We have a founder that has been they receive an inbound offer and they say, what? What do we do?
00:23:13:07 - 00:23:37:22
Todd Sullivan
And it time and time again, what I can tell you is that the acquiring company, if they realize that you are going to get an investment banker on your team, that means that you are serious about selling and that investment banker is going to package you really effectively for them to understand the value and help work out a structure that makes sense for both sides, right?
00:23:37:22 - 00:23:58:04
Todd Sullivan
So that's one side of bringing the banker in. The other thing it does is when you have that investment banker that's focused on your particular sector, the Lyft’s of the world. No, You know, with one phone call, they could introduce competition into this. So we want to make this run really smoothly. We want the timeline to be favorable.
00:23:58:04 - 00:24:24:01
Todd Sullivan
We have the first advantage. Let's take advantage of it. We have the first mover advantage. Let's take advantage of it. And so, you know, getting representation actually really helps. And there is really very few times have I ever seen that a very serious buyer who is in the business of growing this way by buying companies gets offended by you getting really smart and getting a team around you and potentially bringing competition to a deal.
00:24:24:03 - 00:24:48:00
Todd Sullivan
So I really recommend that people get that kind of help from a tax perspective. Yeah, certainly. You know, the large buckets of is it a asset purchase or is it a stock deal? I know in the transactions that I always did, we were very aware of where the tax benefits would be and we made it very clear, if you go to change this post LOI, you're going to have an enormous tax gap to make up.
00:24:48:00 - 00:25:02:06
Todd Sullivan
And we would say this to the buyers. So we would have no games kind of played at the end. And I learned that kind of the same way you did is the first time like, oh man, did I mess that up and I got taken advantage of, or I could have structured it better. So I appreciate you sharing that.
00:25:02:08 - 00:25:26:15
Todd Sullivan
Look, this is an awesome story. What do you think the benefits of you starting a business with co-founders, raising capital and then selling it to one of the top companies in the world, certainly in the space that you're focused on and now working there, doing your earnout, what is that done for your career beyond giving you some kind of financial flexibility?
00:25:26:17 - 00:25:50:17
Kenan Saleh
I think what you said of for first time entrepreneur to get the first win on the board is very important and it builds a lot of credibility for the next time you plan to. And for me that's been is there's two areas where I've got a lot of value. One was getting the first win on the board and then using that to build my reputation for anything I do next, but especially if I'm going to found another company.
00:25:50:19 - 00:26:06:20
Kenan Saleh
And then the other area where it's going to be helpful is that it was very helpful to operate to join Lyft. I had never worked at a company before because I started my company out of college, but I never really had actually like a job or experience working in a tech startup or a big tech company. So it was actually very helpful.
00:26:06:20 - 00:26:35:16
Kenan Saleh
I learned a lot of skills while I was at Lyft particularly. I mean, corporate professional side and how a company that big operates, how they develop products, all the different functions, learning what a big company, how to structure it, how it works together. That was all things I didn't know before going in. So learning that was actually foundational for me at least, and something that I wouldn't have gotten if we had, you know, maybe I would have gotten it if we had grown really big, but it would have taken a long time to to get there and I would have learned it first time.
00:26:35:16 - 00:26:39:02
Kenan Saleh
So that was also extremely helpful for me over the last three or four years.
00:26:39:04 - 00:26:55:18
Todd Sullivan
Knowing what you know now, would you recommend to other founders to go try to get a corporate job in the industry that you're where you have all your ideas? Or is it just, you know, jump in when you're young enough, jump in and just go at it and start a company?
00:26:55:19 - 00:27:08:22
Kenan Saleh
I think if you have an idea and you have a lot of conviction in it and you feel like you have the skills to operate to build a team, to build products, you should go for it right away. And I don't think you need to wait or join a company or get a job to do any of that.
00:27:08:22 - 00:27:21:14
Kenan Saleh
And if if you're a fast learner, you'll pick up all these things that you don't know along the way. You'll actually learn it much faster as an entrepreneur. So I don't think you should. You know, if you have an idea, you have a team, you have conviction, you can raise money, you can do everything you need to do to build a business.
00:27:21:15 - 00:27:47:21
Kenan Saleh
You go for it and you should do that. You shouldn't wait. But if you want to start companies but they don't know exactly what they want to do yet. They don't have the idea. Or if they have the idea, they don't know how to execute on it and are uncertain. And for those people, I think that would be it would be wise for them to go work at take a company that you you think is think a company that you respect and is a company that resembles one that you would want to build in the future.
00:27:47:21 - 00:28:03:15
Kenan Saleh
So if you want to build a, you know, a fast growing startup in a certain industry, go join the best startup in that space. That's not the stage you want to be or similar are getting there and you'll learn a ton there about all the things you don't know and you probably get an idea. You'll meet people and all the skills that you feel like you're lacking.
00:28:03:15 - 00:28:14:17
Kenan Saleh
You'll you'll learn in there. So I would say it's a it's a more kind of like dependent on where you are in your confidence, in your ability to build a company, and then also the conviction that you have and the idea.
00:28:14:18 - 00:28:31:22
Todd Sullivan
Kenan is great advice. It's not like a one size fits. All right. You can just everybody is a little bit different. Their skill sets are different. So yeah, I think that that's awesome advice. All right. So now your you know, on your way out, you're good doing your next thing you want to talk about what you're up to next.
00:28:32:00 - 00:28:44:05
Kenan Saleh
Still, it's still too early to talk about it, but I'm working on some new, exciting stuff that I'm working on, a new company. I'm very excited about it and planning to share hopefully soon, but not quite ready yet.
00:28:44:07 - 00:29:04:08
Todd Sullivan
So given that you've gone through that kind of really accelerated entrepreneurial journey from startup to exit, are you going to build this second one differently now that you know what kind of that outcome can look like and what that outcome somewhat dependent on? Will you do do anything differently this time?
00:29:04:10 - 00:29:22:12
Kenan Saleh
Yeah, absolutely. I think there's a lot of many, many, many learnings. Most of the things that we did well the first time that I would not do again and I would do it differently the second time around. One lesson that's very important is I really appreciate how raising small amounts of money or not raising a huge amount of capital gave us immense flexibility.
00:29:22:14 - 00:29:44:23
Kenan Saleh
And that is something that I would want to continue doing. It gave us immense flexibility when we were deciding what to do, because we didn't we didn't have a huge price tag that we needed to if we wanted to sell the company that we needed to sell. And we also did not have a time clock of when we needed to raise our next round or certain growth metrics that we needed to show in the next 12 months.
00:29:45:01 - 00:30:04:15
Kenan Saleh
And we also didn't have we didn't have a lot of investors with board seats and so forth who could kind of shape the decisions or had the ability to influence whether or not we would go a certain direction. And that was helpful. So I think that the flexibility, especially early on when you don't know how far the company is going to go, how big it's going to get was was very helpful.
00:30:04:15 - 00:30:20:14
Kenan Saleh
I want to do that again. The thing that I would do differently second time around are frankly on you know, when we were starting the first time, I don't think we knew how to hire very well or something we were very bad at. We made some good hires, we made some really bad hires, and we were hiring mostly kind of, you know, randomly.
00:30:20:16 - 00:30:38:16
Kenan Saleh
We didn't know what, you know, a good engineer or like any any job function, what a good one looks like, because we hadn't really seen many. We knew friends and we knew a couple, but we hadn't seen what an excellent person in every single one of the job functions looked like. And now I've seen a lot more. I've met many more, I've seen many different teams.
00:30:38:16 - 00:30:56:14
Kenan Saleh
I know what excellent looks like. And I also know kind of what companies hire from how to run a recruiting playbook. We didn't know how to do any of that stuff initially. So that's something that, you know, I would do, I would do differently the second time around. And there's also a lot of other a lot of other small tactical things that you that you learn along the way.
00:30:56:16 - 00:31:19:07
Kenan Saleh
But another big one is, I think I have a better understanding of the different functions that you need to build. And when you see a big company, you understand companies have they have designers and engineers and then they have product managers and then you on the sell side, they may have ease and you understand what's the machinery. So like what are the building blocks and what are the Legos that you need to put together in your company?
00:31:19:07 - 00:31:46:22
Kenan Saleh
What are all the capabilities that you need to have and the function that you need to be excellent at? Whereas the first time around, we didn't have that mental model. You know what a well-functioning company looks like and what the all primitives of a well-functioning company are. And that's something that I would be much more intentional about, sort of like it's going to sound like org design, which actually sounds very corporate, but you can think of it as like team structuring, who are the different people that you need and what do they do and when do you need them, When that was something that I didn't we didn't know the first time that I would
00:31:46:22 - 00:31:49:15
Kenan Saleh
be much more intentional about the second time around.
00:31:49:17 - 00:32:05:22
Todd Sullivan
This is awesome. I can hear right that you'll be very intentional about a lot of things. The funding. I can't agree with more. I think this is awesome advice. I'm really excited for your next venture. I feel like you're going to build it and sell it in like 15 minutes because this is like has to be a record selling.
00:32:05:22 - 00:32:07:07
Todd Sullivan
So building something. Well, no.
00:32:07:07 - 00:32:26:09
Kenan Saleh
Actually, I actually like next time around. I hope not to have such a short journey. I actually hope for that. We can build and operate it for a longer time period and maybe, maybe, maybe not sell it. But one of my hopes in the next company is that we we have a much longer journey and we can get to larger companies, company size and a deeper stage in the first time.
00:32:26:11 - 00:32:45:04
Todd Sullivan
Kenan you're certainly in rare to have built something so quickly have a great exit and then you know be at the beginning of your entire entrepreneurial career. So really wish you the best of luck. Thank you so much for sharing so much. The advice is, I think is invaluable for a lot of people. Just really appreciate you being here with us.
00:32:45:06 - 00:32:47:14
Kenan Saleh
It's great. Thank you very much.
00:32:47:16 - 00:33:09:19
Todd Sullivan
Thanks again for listening to the Cashing Out podcast. For more founder exit stories, please subscribe to the Cashing Out podcast on Apple, iTunes, Spotify, or wherever you listen to your favorite podcasts. And please remember exit dot com and the Cashing Out podcast are for entertainment purposes only. This should not be relied upon as the basis for investment decisions.