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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!
Kim Kaupe - Episode 38 of the Cashing Out (M&A) podcast
00:00:00:08 - 00:00:20:14
Kim Kaupe
I always tell people like, go do the eat, pray, love on your own. You come into the conversation saying, I like apples. I don't like oranges. So that when you get in those conversations, they say, But look at the orange. Look at how juicy it looks that you're not like, Maybe I do like oranges. Maybe I could learn to like oranges, that you you know, you've done the work to say no.
00:00:20:14 - 00:00:33:13
Kim Kaupe
I've really thought about it either on my own or with a coach or with a trusted friend or family member. And, you know, I like apples. And while it does look like a very nice orange, I just, you know, I can't do the orange.
00:00:33:15 - 00:00:56:01
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. Kim is a one of a kind teacher who has made it her mission to help business owners scale from world wide stages to her online courses.
00:00:56:07 - 00:01:19:12
Todd Sullivan
With over 400,000 clients having benefited from her teachings. In our discussion, Kim describes how she was approached to sell her business last year and how she negotiated the purchase price and deal structure. But ultimately pulled out of the deal because it was not going to align with her values. Kim shares her advice on selling your company and understanding what you truly want in a sale before you begin the process.
00:01:19:14 - 00:01:46:07
Todd Sullivan
From wealth to celebrity, you need to understand what really makes you tick to make sure you get the outcome you deserve. I hope you enjoyed my conversation with Kim Kaupe. Kim, thank you so much for being here. I know we don't really know each other that well, but I've been doing so much research on you, watching videos on your website, seeing the products and seeing all the awards that you have won over the years.
00:01:46:09 - 00:02:04:01
Todd Sullivan
And I think the one thing that really jumped out at me, which made me feel like I really want to have this person teaching our fellow founders, is that like you seem to come from that place of like, how do we rise the tides for all boats, right? And that is very much where I am in my career.
00:02:04:02 - 00:02:25:14
Todd Sullivan
So I feel like a special kinship with you. I think one of the things I'm most excited about is, although you haven't sold the business, you've gone down that path, right? And you pulled out. You decided that that wasn't the right thing for you. And I think it's going to make for an incredible story. So much so that Mark Cuban actually had this time slot.
00:02:25:14 - 00:02:30:20
Todd Sullivan
And I said, no way. I'm sorry, you got to wait. Kim's up. So really, thank you for being here.
00:02:30:22 - 00:02:35:13
Kim Kaupe
Well, glad he kicked Mark out. I'll take a spot any day of the week.
00:02:35:15 - 00:02:51:13
Todd Sullivan
That's nice. Well, there's so much. You have so many accolades. I will just hand it over to you. Start where you think makes the most sense about your background so people can learn about you, and then we'll kind of jump in to that M&A process that you went into.
00:02:51:15 - 00:03:08:16
Kim Kaupe
Sure. I mean, I think my story is probably similar to a lot of people who are listening to this, which is we did not end up anywhere close to where we thought we were going to end up when we were in college or when we were young. I'm sure there are there is someone listening who said, I knew all along.
00:03:08:16 - 00:03:37:13
Kim Kaupe
It started with my lemonade stand and then it evolved and now I'm here. And so my story might not resonate with that lemonade stand owner. But it might resonate with somebody who's listening who said, You know, I didn't have a lemonade stand. I didn't have a baby sitting conglomerate when I was in high school. I didn't have a lawn mowing corporation when I was in the neighborhood growing up.
00:03:37:15 - 00:03:59:21
Kim Kaupe
I really went through high school and college thinking, I'm going to get a corporate job. It's going to be awesome. My goal is a corner office. I want to move up the ranks in corporate and entrepreneurship is really something that found me, which is why I always tell people I'm a bit of an accidental entrepreneur. It's not something that I dreamed of.
00:03:59:21 - 00:04:20:00
Kim Kaupe
It's not something that I studied. It's not something that was a huge goal of mine. It was just a great opportunity, something that found me that resonated. And I went, What the heck, Let's give this thing a try and give it a try. I did. And here I am 12 years later, continuing to have my own business and run it.
00:04:20:00 - 00:04:39:18
Kim Kaupe
And so I think it's just a story of that. You don't have to know from a very young age that you want to start your own business, to have a successful business, that it can hit you whether you are 20 or 30 or 40 or 50 or 60. You know, it's never too late to start your own business if you have a great idea.
00:04:39:19 - 00:04:58:21
Todd Sullivan
Again, that's great for me. When entrepreneurs come to me or wannabe entrepreneurs come to me and say, Hey, should I start this business? I often say, okay, wait, do you have a job? And they're like, Yeah, yeah, I have. I have a really good job. So are you deciding to either have that job or right a start a company?
00:04:58:21 - 00:05:23:19
Todd Sullivan
Is that your decision? And they say, Yes. And I say, Then don't start a company. Because the people that I would encourage to start a company are the ones that would say, Look, I have no other choice. I am meant to do this. I have to do this. I got to go. Right. And because I think it is so hard and so challenging and your idea A has to get to B, C, D, E, and maybe F ends up working right?
00:05:23:19 - 00:05:43:02
Todd Sullivan
So it is not for the faint of heart. So very brave for every entrepreneur, but especially one that didn't necessarily have the calling. Talk to me, though, about how and when you started, because I think you started in a very smart way where it was there was a little bit of a moonlighting situation going on, Right? So you able to pay the bills?
00:05:43:04 - 00:06:09:13
Kim Kaupe
Absolutely. I tell people all the time exactly what you said. If you have a full time job, geez, stay there as long as humanly possible, unless you are fortunate enough to be independently wealthy and in which case can be my friend. But if you're independently wealthy and you don't have to worry about rent or you don't have to worry about your college date or you don't have to worry about loans, then yeah, quit your job tomorrow and start a company and have fun.
00:06:09:13 - 00:06:29:20
Kim Kaupe
But for, you know, 98% of us out there, we do have to worry about rent and we do have to worry about the electric bill and the grocery bill. So if you have a steady paycheck that offers you not only cash but health insurance or a401ka retirement fund, stay there as long as humanly possible. So that is what I did.
00:06:29:21 - 00:06:49:15
Kim Kaupe
So actually, if you look at any interviews that I'm with, you will hear me say, yes, we started the company in January of 2011, and that is true. But two things can be true at once, which is, yes, that is when the company started. But I did not quit my full time job until the end of March of that year.
00:06:49:15 - 00:07:15:12
Kim Kaupe
So for three and a half months, I was full blown, working a full time job and doing this on the weekends and at night and really losing a lot of sleep. And it just got to the point where I physically could not do two jobs at once. But I also really made sure that I had enough money to say, okay, ten 99% of startups fail.
00:07:15:17 - 00:07:33:11
Kim Kaupe
You are not a snowflake, you are not a unicorn. There is a 99% chance that this is going to fail. So when it fails, you know, let's just say when it fails, do you have rent know? Can you afford food? And I saved up enough to the point where I was like, okay, I have three months of runway.
00:07:33:13 - 00:07:57:05
Kim Kaupe
At the end of three months, I have to go get a job at Starbucks or I have to go, you know, start doing something else because I have run out of money. There is no more dollars in the piggy bank. And so I always tell people when they're thinking about entrepreneurship or thinking about starting a business really looking at it holistically because it's it's not realistic.
00:07:57:05 - 00:08:14:05
Kim Kaupe
If you do have a huge mortgage, if you do have two kids that are going to private school, if you do, you know how the X, Y or Z car payments to say, Well, I'm going to quit my job and start a peanut butter company. I don't care how amazing the peanut butter is. You have financial responsibilities, but you have to take care of.
00:08:14:06 - 00:08:34:14
Kim Kaupe
So really kind of evaluating that and saying, is this the right decision for me at this exact moment? So you might start that peanut butter business once your kids are, I don't know, out of high school and in college and you don't have to pay for them anymore. But really kind of saying, am I in the financial position to actually start this company?
00:08:34:16 - 00:09:00:02
Todd Sullivan
Yeah, it's an interesting perspective to say, okay, when it fails in back in from that, how much time do I have to actually finance it? Was there anything else that you felt like, okay, I physically can't do it. I have the capital to start, but was it a customer in hand? Because three months is not very long. Kim To figure out whether you have something that can pay the bills or not.
00:09:00:02 - 00:09:11:14
Todd Sullivan
Right. I'm typically telling people 18 months would be the short window. That's how much protection you should have. But was there something that said else that said to you, this is viable, we're going.
00:09:11:16 - 00:09:41:06
Kim Kaupe
Yeah. So again we we had warm customers and hand and the way that we run our agency is very much on a model of I know exactly what my profit is going to be before we even begin. So I tell you that this water bottle costs $4. I know that the water bottle cost $2. I know before we even start producing the water bottle that I'm going to have $2 in profit and also running on an agency model.
00:09:41:06 - 00:10:11:23
Kim Kaupe
At the time, all we really needed was our brains, our phones and a computer, which is very different than some of my other fellow founder friends who were starting apps, who needed developers, who needed programmers or fellow founders who were starting product based companies, you know, Jenn Starting away or Lauren starting suite. Lauren's like all of these entrepreneurs who needed factories and machines and products and, you know, we didn't have that.
00:10:11:23 - 00:10:25:19
Kim Kaupe
We were running on an agency model. And at the end of the day, an agency is really your idea. It's your ideas and are your ideas good? And so with that, we didn't have a lot of upfront capital that we needed to spend.
00:10:25:21 - 00:10:46:15
Todd Sullivan
Okay, that's such a great answer. So it is different for everybody. You understood that revenue was coming in, you understood the costs, You knew you could pay the bills. Really with the first handful of customers, that's fantastic. Maybe you could jump in to what the company did and how it evolved over time as as every company does.
00:10:46:17 - 00:11:09:18
Kim Kaupe
Sure. So when we started the company in January of 2011, it was a very different landscape in the entertainment and music industry where our home base was. So I always like to remind people if we can get in a little time machine and go back to 2011, you know, there was no such thing as Spotify. We were still downloading songs from the I Tunes music store.
00:11:09:23 - 00:11:39:07
Kim Kaupe
Pandora had just just started as kind of like an online streamer for radio where they still had ads and it was really a totally different there was no Instagram like really just a totally different landscape from where we are now. So when we started the business, it really started in the music industry and it started with CDs and physical products in Walmart and Target and Best Buy stores.
00:11:39:07 - 00:12:06:08
Kim Kaupe
So obviously in the course of 11 years we have come a very long way from CDs and we are doing tons of other stuff now on tours with artists and festivals with brands. But really the through thread over the course of the 11 years is how do we make customers whether you want to call them customers or fans or consumers or guests, I don't care what syntax you put with them.
00:12:06:10 - 00:12:34:08
Kim Kaupe
You know, another human who is paying you money for something, you know, how do we make them happy and delighted and excited and leaving? They're being like, Oh my gosh, Todd just provided me the best experience ever. Or Todd just, I bought the best thing ever from Todd in his company. So really, that's been the through thread for 11 years of how do we get fans really excited or customers really happy and referring you to other people?
00:12:34:10 - 00:13:03:01
Todd Sullivan
Yeah, I love that. We're delighted, right? Delight the customer with something. Maybe they're not expecting something that will really resonate more than just for the moment, right? It jumps out to me that how fast the world has changed, right? Particularly media music. And you know, I'm not in those fields, but just the way you described it, how a business must have to pivot so quickly with what is hot, what is evolving and what is going to eventually dominate.
00:13:03:01 - 00:13:15:13
Todd Sullivan
Right. You have to be an expert as those fields really develop. So that's got to be really challenging. And so how was it building this business over that period of time? You did you see success right from the beginning?
00:13:15:13 - 00:13:35:00
Kim Kaupe
Yeah, we definitely found success right from the beginning, which is very, very lucky. And I know very, very rare. And I don't think necessarily is because of our smarts, although we are very smart. I think a lot of it is luck. I think a lot of it is timing, which a lot of founders have is don't agree with me about.
00:13:35:00 - 00:13:56:00
Kim Kaupe
But I really think it's true and kind of I have a handful of examples, but I'll give you one. You know, there was such a thing before Facebook called Friendster. There was such a thing before Facebook called MySpace. It had the same features. You had a profile picture. You had a little description of who you were. You had a wall that friends could write on.
00:13:56:04 - 00:14:22:06
Kim Kaupe
You had status updates. Why did MySpace die and why did Facebook take off? Well, there's a million different factors, but one of them is just luck and timing. You know, market it right by the college market. It felt safe. It felt, you know, so I always tell people, you can have an amazing idea. Brilliant idea, but it's it's the wrong time or it's just you didn't get that extra bit of luck.
00:14:22:06 - 00:14:44:06
Kim Kaupe
You know, most people don't realize that Lyft was actually launched before Uber. Why did Uber take off the lift? Didn't even though Lyft was first to market. You know, we love hearing that with founders. Oh, you got to be first to market. But are you first to market? You know, another example I like to give is if you walk in the grocery store right now, how many different water brands do you see?
00:14:44:08 - 00:15:07:11
Kim Kaupe
You know, how many different water There's life. Water. There is just water, there's Evian, there's nature's I mean, there's so many waters, but it doesn't stop Spindrift, a sparkling water company, from coming out of nowhere. You know, it doesn't stop people from continuing to innovate in this space. So I think it takes a lot of luck. It takes a lot of just good timing.
00:15:07:17 - 00:15:30:10
Kim Kaupe
But we were very lucky from the beginning that we had success early, continue to find success. And, you know, likewise with that, success brings a lot of offers for buyouts, brings a lot of offers for Aqua hires. And really it's kind of up to you and your North star of do you take those and what does that look like and what does that feel like?
00:15:30:10 - 00:15:50:20
Kim Kaupe
And I think that that's also an important conversation that a lot of founders don't have. We tend to just hear the success stories of, you know, so and so excited for $100 million, so and so excited. And I always tell people that I have no I know founders who have exited. I know founders who have made, you know, lots of money.
00:15:50:22 - 00:16:13:23
Kim Kaupe
And at the end of the day, they can be completely miserable. So it's really important that you find the right deal for you. Not all deals are created equal. There's a lot of different parts to a deal besides money or there's a lot of different parts of the deal besides kind of the PR story of, you know, the year we exited.
00:16:14:00 - 00:16:19:10
Kim Kaupe
There is a lot more work that goes into it on behind the scenes.
00:16:19:12 - 00:16:38:12
Todd Sullivan
Okay, So you clearly have some personal experience with that. First, I completely agree with timing, right? There are so many great ideas where, you know, there's the wrong time and it doesn't work and then somebody is in the right place at the right time with the right offer. And, you know, it really clicks. And it isn't that. It's just luck right there.
00:16:38:13 - 00:17:04:11
Todd Sullivan
These are just very talented people that can actually pull this stuff off. So when you talk about these outcomes, right, that we hear about in the news, the big dollars, a lot of that I think is smoke and mirrors, that it's not fully understood what is the real outcome, not just financially but emotionally? What are the things that founder or founding team had to give up to make happen?
00:17:04:13 - 00:17:27:00
Todd Sullivan
One of the things I see a lot of times is founders who raise lots of money, right? And they're forced into this path of sometimes kind of unnatural growth, and then they're forced into an exit because, frankly, they're not going to meet a valuation target that they have to meet. And they've been diluted so much that they end up with nothing in the end.
00:17:27:01 - 00:17:49:03
Todd Sullivan
Right. And if they had maybe taken a different approach to fundraising and building a business, they could have a smaller exit, but on a bigger portion, have more control, maybe even enjoy the process more. It's a lot of kind of hindsight, but, you know, you've clearly when you and I have talked, this is you've gone down this path, something didn't feel right to you.
00:17:49:05 - 00:18:08:14
Todd Sullivan
And so you ended a process. And I love to dig in to that as much as you're willing to share because I know our fellow founders. And did you say fellow founder, friends? I love that, right? Fellow founder friends. They they are going to find themselves with an inbound offer, right? Somebody is interested in their business and what they're doing.
00:18:08:16 - 00:18:41:08
Todd Sullivan
They're going to be very complimentary. They're going to throw numbers around and you could get enamored with that situation. But you're I mean, I say you're going into a gunfight with a knife, and I probably shouldn't use that analogy anymore cause it's horrible. But it's kind of the truth. We've become great at building businesses right over our careers, but when you go to sell a business that is a total different skill set and something that we hope we can bring to two founders bring real expertise.
00:18:41:10 - 00:18:53:08
Todd Sullivan
So when somebody is interested in your business, you start going down that path. A lot of things can go wrong. And I really don't know your story, but I would love to hear it from your perspective because I know we're going to learn something from it.
00:18:53:10 - 00:19:20:07
Kim Kaupe
You Yeah, I mean, something that I always think about when I talk to, again, fellow founder, friends that are thinking about selling or kind of going down that process or looking at that is kind of the two things that I always come back to is, number one, are you ready to have a job? And what I mean by that is when you talk to most founders, they're always like, Oh, I hated, you know, being employed.
00:19:20:07 - 00:19:43:10
Kim Kaupe
And, you know, they'll they'll name some firm or something like, oh, you know, it was terrible working at Morgan Stanley. I had to get out. Or so we say, like, are you prepared for a job? Because most of the time, no, I would dare say you would probably know more than I would. Todd But at least for the people that I've talked to 90% of the time, they want the founder to stay.
00:19:43:12 - 00:20:09:11
Kim Kaupe
Maybe it's only stay for a year, maybe it's for six months. I've heard three. I've heard two years, three years, four years. And you know, there's carrots attached to those sticks for how long you stay. So I always tell people, number one, are you ready to have a job? And when I say job, I do mean job. You are showing up on somebody else's schedule If they want you in the office, 9 to 5, you are in that office, 9 to 5.
00:20:09:15 - 00:20:40:22
Kim Kaupe
If they say you only have three weeks vacation, well, guess what, my friend? You only have three weeks vacation. So are you really prepared to have a job? So for some amount of time, six months, a year, two years, three years, depending on how the deal is structured. So, number one, are you ready to have a job that's always like first and foremost and number two, is the money enough to make a meaningful difference in your life?
00:20:41:00 - 00:21:10:11
Kim Kaupe
What do I mean by that? I mean, if I'm talking to someone and they say, Oh man, Cam, boy, oh boy, I have $400,000 worth of debt from college and credit cards, my mom is in a one bedroom apartment, you know that she's barely making rent on. And I have the opportunity to pocket $900,000. I'm like, wow, do it.
00:21:10:13 - 00:21:34:04
Kim Kaupe
Pay off your loans, you know? Oh, my God, That will be such a meaningful change in your life. If you are someone that you are happy, you know, you want the vacations you want to go on, you run a business, you like it, you enjoy your staff, you enjoy what you're doing. And someone said, okay, I'm going to put an extra.
00:21:34:08 - 00:22:03:01
Kim Kaupe
Let's just pick a number million dollars in your bank account tomorrow. But there are aspects of your life that are going to get worse. You only have two weeks vacation. You have to sit in an office that is, you know, you might say to yourself, well, wait a minute, I'm going to have $1,000,000 in no time to spend it, and then I'm going to be, you know, clawing my eyes out for three years to get to get the million dollars because it's going to hit in these different installments.
00:22:03:03 - 00:22:22:07
Kim Kaupe
You know, I'm going to I'm going to be miserable for three years. Then I would say, okay, we'll look at that offer a little more carefully, because if it's not going to make a meaningful change in your life or it is going to make a meaningful change in your life and it's not a good, meaningful change, it's kind of like, Oh man, I got a cloth through the mud for three years.
00:22:22:09 - 00:22:57:02
Kim Kaupe
That's really hard. And I think that's something that a lot of people don't necessarily consider or think about. So I had a founder friend recently and there unfortunately their parent was sick with cancer. Now luckily they run their own business, so they were able to move out to California where that sick person wise was able to kind of be with them, you know, really kind of dig in and help out in a way that if that person had a 9 to 5 job, that probably wouldn't have been possible.
00:22:57:03 - 00:23:14:09
Kim Kaupe
They probably would have had to stay where they were at and their employer just wouldn't have said, hey, you can't just pick up and, you know, relocate and work on your own schedule. It's just not possible. And so when you really kind of zoom out and look at it that way, you know, everybody says on their deathbed, what do you remember?
00:23:14:11 - 00:23:43:12
Kim Kaupe
You know, when you're dying, you remember your friends, you remember your family, You don't necessarily remember the amount that was in your bank account. So really kind of look at what is your life look like? What is the time that you spend with friends and family look like? And how might that be affected? Because I think that that's something that most people don't consider because it's cooler and more interesting for that like PR story, like, Oh, I'm going to be in Forbes magazine, I'm going to be an entrepreneur, and they're going to write how I was acquired.
00:23:43:12 - 00:24:05:01
Kim Kaupe
It can be so cool and it is going to be cool. It's going to be frickin awesome. You're going to be on high, you know, busted open champagne glasses. But a week later, you know, when reality hits, you like a baseball bat, it's going to be like, well, are you ready for the baseball bat? Because that's what they think is the part that most founders don't think about.
00:24:05:03 - 00:24:27:18
Todd Sullivan
KIM There's so much in there, so much valuable advice. I want to get back just to a couple of things you use. You said Louie, right. And so that for for people that don't know, that is letter of intent. And that letter of intent is an abbreviated document that describes how somebody is going to buy your business or buy the assets of your business.
00:24:27:20 - 00:24:49:22
Todd Sullivan
And it is a negotiated document and it's really, really important because that is the basis for creating a purchase agreement. Right, that you will sign at the end that turns the keys over and gives you what you just describe as the job. And so I want people to understand, Louie, when you talk about a job, I want to kick back a second, right?
00:24:49:22 - 00:25:10:23
Todd Sullivan
Because in my assets, I add jobs, add founders, they have jobs. I completely agree with you. It is a totally, totally different mindset and you may or may not need to be ready for that. But what I like to tell our founders is that you need to describe when you go into a transaction, what is your absolute happy path.
00:25:11:01 - 00:25:37:19
Todd Sullivan
And if it is, I want as much money as I can and walk away. It's probably unrealistic. There's going to be a little transitionary period that you teach a buyer how your business actually runs. You're transferring relationships and contracts and whatever has to be kind of appropriately handed off, right? That's kind of one step. There is another where, well, we may be able to get more money for this transaction.
00:25:38:00 - 00:25:59:05
Todd Sullivan
If you were to stay, like you said, two, three years and you hit milestones, one could be just you remain employed and you get paid and one could be you helped build the business. So all of that, those different structures, you need to understand them. You need to describe what you really, really want to the people that are representing you and to yourself, right?
00:25:59:06 - 00:26:37:08
Todd Sullivan
If you know I am not somebody that is going to survive in that environment, I'm not going to be happy in that environment. Do not sign up for it. Right. Because you will you will be miserable. Now, on the flip side of it, I agree. I think I feel like we've had multiple conversations because we're saying very similar things in that if there is an opportunity to really change your life, I think our fellow founder friends are entrepreneurs that we need to think about it as a career path, not just I'm getting up to bat and I'm going to hit this grand slam and going to some island and swing on a hammock.
00:26:37:13 - 00:27:00:01
Todd Sullivan
That is not it. You're going to do this multiple times. And so I tell founders, if you can put a win on the board, like you said, pay off debt, help family, pay off a mortgage, materially change your economic life and get through whatever that earnout or employment obligation that you've made and start another company. Right. And you're probably going to do that.
00:27:00:01 - 00:27:19:10
Todd Sullivan
And what we're seeing is many more people thinking about I don't have to be on Forbes, I don't have to build, build $1,000,000,000 company. I'm going to enjoy what I do live in my sweet spot and I'm going to do it four or five times in my life. And to me, that that is really, really exciting to see that kind of evolution.
00:27:19:10 - 00:27:42:23
Todd Sullivan
It isn't so much, I'm going to start a business and work for it for 4550 years and re and sell it as retirement and newer generations now are really viewing this as, okay, this is a career path. I'll do it multiple times. So I think we're saying the same thing, right? You have to make a real personal decision if this is right for you and understand the consequences of what life is going to be like, you know, afterwards.
00:27:43:01 - 00:27:56:11
Todd Sullivan
So I'm sorry, kind of interrupt, but you've clearly had this experience. Can you talk to us a little bit more about were you approached for sale or did you decide you wanted to market your business for sale?
00:27:56:13 - 00:28:15:13
Kim Kaupe
Yeah. So I think just to touch one more thing on that is really I always tell people, you know, whether you have to go like, eat, pray, love on your own or whatever, like do the work by yourself or do the work. Maybe with a friend or a coach or something about what kind of your dream life looks like.
00:28:15:15 - 00:28:39:12
Kim Kaupe
Because when you get into kind of that negotiation process that lies, etc., you know, we're all human. We're we all look at those cool, shiny things and get a little sweet or or maybe I could look like, you know, maybe I could like that. Maybe that would be like, I like what Todd saying. He's very convincing. So I always tell people, like, go do the eat, pray, love on your own.
00:28:39:14 - 00:29:01:14
Kim Kaupe
You know, come into the conversation saying, I like apples. I don't like oranges. So that when you get in those conversations, they say, but look at the orange. Look at how juicy it looks that you're not like, maybe I do like orange is. Maybe I could learn to like oranges that you, you know, you've done the work to say no, I've really thought about it either on my own or with a coach or with a trusted friend or family member.
00:29:01:19 - 00:29:21:21
Kim Kaupe
And, you know, I like apples. And while it does look like a very nice orange, I just I can't do the orange really kind of doing that work beforehand, because when you do get to that process and you do get to those negotiations like, you know, we're all human, I'd be lying if I said I didn't get those conversations and say, Wow, that orange.
00:29:21:23 - 00:29:41:20
Kim Kaupe
It's looking pretty dang juicy. It's it's looking pretty darn good. And so, you know, for me, it was I was approached by another company who saw what we were doing and said, we really like what you're doing and think it's really interesting and think it could be part of a larger movement that we want to make in the space.
00:29:41:22 - 00:30:04:19
Kim Kaupe
And that was really how the conversations started and begun. And again, when you're in those initial conversations, you know, again, people are maybe saying different things or you think they understand you, but they don't. But when you know, when you start to get into that process and you start to get the lawyers involved and you start to go back and forth, then you kind of realize, oh, man, this is getting real.
00:30:04:19 - 00:30:27:07
Kim Kaupe
You know, we got to put on our big girl pants and our big boy pants and have the big boy conversation, which also, by the way, comes with big boy and big girl bills. I learned very quickly that lawyers are not free. There's no free 99 pricing when it comes to legal. So you really have to once again say to yourself, how serious am I?
00:30:27:09 - 00:30:54:09
Kim Kaupe
Do I really want to do this? Because I always say, if you're waffling, when you get that bill for $20,000, $25,000, you know, then you're going to go, woop seduces us. I got to pay this legal bill and I'm not even sure if I want to do this. So really, again, doing that self-discovery work first, because as much as I wish that we could pay lawyers with hugs and kindness, we cannot.
00:30:54:11 - 00:31:13:20
Todd Sullivan
I want to add to that in that when we try to get founders to say what they really, really want, right, Because you have to say it right out of the gates. This is truly the path that I want to take on the financial side. We ask them to meet with financial advisors, right? And we do that. It's all totally free.
00:31:13:22 - 00:31:34:00
Todd Sullivan
And what you're trying to see is what is the plan that you want for the next period of time? And it could be through retirement. And we do this routinely and what you end up seeing is that there's a number that makes a lot of sense that achieves the things that you want to achieve, whether it's put kids through college or have a second home, whatever those things are.
00:31:34:01 - 00:31:52:22
Todd Sullivan
And there's a number that doesn't achieve those goals. And when you can see that real difference, it may make more sense to you to say, you know what, I'm going to keep building this business for another two years because now I'm going to go after this real financial goal that is in your mind and that you've really learned about.
00:31:53:04 - 00:32:18:16
Todd Sullivan
So I think that's really, really powerful. We just had a transaction and I can't really say the numbers, but there was a difference in what we ended up doing is getting her over that number for everything that their whole family wanted to do in their lives by structuring a deal a little bit differently and selling to a buyer that gave a much better, a more attractive way to get the numbers that she needed.
00:32:18:18 - 00:32:51:10
Todd Sullivan
And knowing that ahead of time is really, really important. I love your kind of apple orange analogy. So and then just riff on one other thing is that if you are approached and you are enamored by this initial offer, that is going to change. And as soon as you start spending money, the other side knows that and they are now going to use time to wear you down and you're going to be distracted from your business, you're spending money and you're going to make compromises.
00:32:51:12 - 00:33:12:11
Todd Sullivan
And so I cannot stress enough going into that fight, that negotiation without real professionals that will prevent you from spending those dollars that will negotiate. It's really the investment banker that will say, hold on, I know this playbook that these guys like to play and we're not going to let them play it. You're going to run your business.
00:33:12:11 - 00:33:29:12
Todd Sullivan
You're going to keep growing it until I come back to you with the exact thing you asked for. We are not engaging, Right? So I know I keep interrupting you. I'm very excited to hear all the elements of your decision. But all of these points, right, Like you're giving the real world. I'm trying to give kind of more of that kind of technical side of it.
00:33:29:13 - 00:33:32:10
Todd Sullivan
But please, please continue.
00:33:32:12 - 00:33:54:14
Kim Kaupe
No, I mean, I think of the technical side, as you said, is is so important. So again, whether that is a company, an investment banker, a mentor, you know, you definitely you can't go in solo. You're not going to win the war as a single soldier. You know, you need your backup dancers, You need your you need your full squad to come in and help you with that.
00:33:54:14 - 00:34:16:01
Kim Kaupe
And I think that that's another thing that sometimes as founders, we are so used to doing everything ourselves. We're so used to rolling up our sleeves, we're so used to getting our hands dirty. We're so used to like, you need me to pitch in like, I'm there, you need somebody, I can do it. And I think that bodes really well for starting and growing and helping a business to flourish.
00:34:16:06 - 00:34:33:02
Kim Kaupe
But in this particular arena, I think that it one of also those things that you can get in a little over your head fairly quickly because this is not the time to roll up your sleeves and DIY it it's just not the time and place.
00:34:33:04 - 00:34:47:23
Todd Sullivan
Yeah. So in yours you received the LOI (Letter of Intent) and you know, you found, okay, I'm spending money here and you did it start deviating from apple to orange at some point. Is that what caused you to to say this is enough?
00:34:48:01 - 00:35:04:06
Kim Kaupe
Yeah and listen it's really that give and take as well. So as you said, if you go in with hard and fast rules, you know, I want $1,000,000 and I want it wired to my account two days after we sign this and I'm never going to go in your office, you know, that's probably not a good way to go into it.
00:35:04:06 - 00:35:20:22
Kim Kaupe
It's a conversation. There is going to be a give and take. You're going to give a little. They are going to give a little. You're going to have to suffer. They're going to have to suffer. You know, So it's it's a little bit of that. And I think what happened with us is just as we were going through the LOI, as we were going back and forth, there were just a couple points.
00:35:21:00 - 00:35:58:14
Kim Kaupe
And I think any founder who has kind of walked in these shoes will know there are a couple deal points that just keep you up at night that you're just kind of like or or if anyone hasn't been in that frame reference, I'll give you something else. If you've ever been dating someone and you see like one or two red flags and you're kind of going to bed at night and you're like, But he's really nice, but he is really cute and like, he is funny, and you're kind of like, Oh, but there's there's one or two red flags that just like, Oh, and you're kind of like, do I push through thinking like, maybe
00:35:58:14 - 00:36:22:12
Kim Kaupe
the red flags won't, you know, be as red as I think they are? And just as I was kind of tossing and turning in bed over, over those couple of weeks, I just. Oh, Todd, I just couldn't get past those kind of initial deal points that they just really, really wanted. And was just like, I don't know if I can make that happen.
00:36:22:12 - 00:36:57:03
Kim Kaupe
It's just kind of that gut feeling. And I wish there was some sort of template or, you know, easy yes or no, take this quiz and are you ready to sell your business? But but it is so much of like sitting with yourself and saying like, is this really going to like, give me the keys? And I will say, Todd, like, it's one of the hardest things I've ever had to do in business because, yeah, on the other side of that bridge, there probably was going to be a press announcement and I probably was going to get written up in Forbes and I probably was going to get interviewed and people were going to send
00:36:57:03 - 00:37:14:17
Kim Kaupe
me champagne, and all of my fellow founder friends are going to be like, Oh, you did it, you excited? And so, yeah, I would be lying if I didn't say, Well, dang, I wanted a W on the board and I didn't do it. And you know what? It sucked because I really did want a W on the board.
00:37:14:19 - 00:37:34:11
Kim Kaupe
So but at the end of the day I just, I couldn't do it. So I think sometimes in business it's really hard to walk away and it's, yeah, it really sucks because you want to come on podcast like this and say like, oh yeah, and this really amazing exit and it was so cool. And so then I have to come on and be like, Oh, I did it.
00:37:34:13 - 00:37:41:01
Kim Kaupe
I took the on the edge. But it's, it's an all that I can sleep with, which I think also counts for something.
00:37:41:03 - 00:38:04:12
Todd Sullivan
And you still love your business, right? The business that you love, right. And you're growing it And so it's not kind of the end of the world to pull the plug. And you're right, Like we have our guests have built and sold companies. And that's what I was so excited about to hear from you is that how do you think about that decision to pull the plug when the deal is not meeting your terms?
00:38:04:14 - 00:38:31:03
Todd Sullivan
And the only advice I can give is to make sure that your terms are understood by your team before you start so you're not put in that situation. I'm wondering, did you do you have investors that anyone that you could consult with? Did you have a board that you could bounce things off of? Because that is a lonely ride, like you're saying, going to bed at night and trying to think about this to make that such a big decision.
00:38:31:05 - 00:38:33:20
Todd Sullivan
Were you on your own or co-founder or how was it? Oh, I.
00:38:33:20 - 00:38:56:08
Kim Kaupe
Have a co-founder. So that was helpful. And then I'm also extremely fortunate. So my husband comes from this world of investment banking and he worked at Bain for 16 years and now has his own fund and so is very well versed in a lot of this stuff. So his bill was free, lucky for me, but he.
00:38:56:13 - 00:38:58:00
Todd Sullivan
If it wasn't, that's a big red.
00:38:58:00 - 00:39:27:15
Kim Kaupe
Flag. Exactly. No. So he he provided me a ton of guidance and obviously he's done this so many times, really giving me insight on what the other side is thinking, what the other side is probably doing and strategies that they're using. And so that's why I always tell people in this case, I had my husband, but if I hadn't, I would absolutely go out and find someone or an organization such as yours to really say, I need help.
00:39:27:17 - 00:39:50:19
Kim Kaupe
I have absolutely never done this before. I have absolutely no idea of what the tricks of the trades are. And again, there's a lot of things that you can roll up your sleeves and learn on your own or watch enough YouTube videos to like, figure it out in. This is not one of them. This is one of those things that like this is just not one of them.
00:39:50:21 - 00:40:11:13
Todd Sullivan
Kim, thanks for sharing that because I know people are listening. They're going to say, I want to be like him. She can do it, I can do it. And the reality is, the few people that have said, Yeah, we did it on Exit on My Own, you find out that person was an investment banker before or their husband was an investment banker before, Right.
00:40:11:14 - 00:40:39:10
Todd Sullivan
And so there is that kind of insight. So I'm really glad that you had that. So it sounds like you're making a not only the right emotional decision for you and the right business decision, but you're coming also from a place of education around what M&A is like. So. So that's great. You know, I'd go anywhere that you want to go in this conversation, but I really want to be respectful of your time and I want to be able to talk about what you do today.
00:40:39:12 - 00:40:59:08
Todd Sullivan
Right? Because what you're doing is exciting. I want people to know about this and your podcast before we go there. Is there any other advice that you would want to give to founders because you end through the full process signing at the DOT on the dotted line, or it is a, you know, different experience, but you went through to that late stage, which is intense.
00:40:59:08 - 00:41:05:05
Todd Sullivan
It's a lot of work. And you know, you made the call to pull the plug, which is incredible.
00:41:05:07 - 00:41:23:01
Kim Kaupe
Yeah, No, I mean, I think finally advice again would just be twofold. Number one, do that self-discovery with yourself before other people kind of chirp in your ear about what they think you should do. Because God knows when you start telling people that you're in this process, boy, oh boy, does everyone want to give you your their opinion.
00:41:23:01 - 00:41:48:07
Kim Kaupe
You're going to be having bucketloads of opinions. And so really do that self-discovery, work. And number two, like I said before, find somebody who has blocked any issues before or find an organization like exit wise, you know, find somebody that has been there and can help you and can give you some insights and tips and tricks, because these are not lessons that you want to learn on your own.
00:41:48:10 - 00:41:51:16
Kim Kaupe
It's just really costly and nobody wants that.
00:41:51:18 - 00:42:13:14
Todd Sullivan
That's great. That's great. So, please, I'd love you to tell about what you're doing today, what your company is. But you know, you have all of these accolades and so many people know what you're doing already. Maybe there are people in my audience that have not heard of what your business does. But yeah, please, please share. And I want to promote your podcast as well.
00:42:13:16 - 00:42:43:12
Kim Kaupe
Yeah. So I have a marketing company called Bright Ideas Only. We work with brands as well as music artists and entertainment properties to really help them serve their superfans. That's really at the core of what we do. So really looking at it from two prongs, the first prong being their brand, their logo, the colors, the type font, the website, what our people actually seeing when it comes to their brand.
00:42:43:12 - 00:43:05:13
Kim Kaupe
We do a lot of rebrands, which is something that I think not a lot of companies think about. You know, a lot of people say like, well, I'm going to be like Walmart and have the same brand for all of time. And that could be true for you. But more often than not, rebrands can be really powerful. You know, I love telling the story of Rx Bar.
00:43:05:13 - 00:43:32:03
Kim Kaupe
They are not a client of ours, but I just love the story that our Rx Bar was around for years and years and kind of how to okay success not great went through a rebrand that literally catapulted their business so grew their business by hundreds of millions of dollars, ultimately leading them to where they are today, literally based on a rebrand, helping consumers understand better what they do and what they have to offer.
00:43:32:03 - 00:43:54:02
Kim Kaupe
So that is kind of one prong of our business and the other prong of our business really more in the music and entertainment space is making physical products for consumers to purchase. So what does that look like? That looks like merchandise when you go to your favorite concert and you go up to the merch booth and you're buying t shirts and hoodies?
00:43:54:07 - 00:44:28:20
Kim Kaupe
We are doing all of that concept doing design work, production, fulfillment, etc., so doing merch lines and that can look like VIP packages if you are going to any concerts or music festivals that have the VIP packages, it could be that as well, or just specialty products. So it's a two pronged business. It's super fun. Like I said, I've been doing it for 12 years and so I feel like I have a lot of insights on marketing, on being an entrepreneur, presenting yourself, pitching yourself, pitching your business.
00:44:28:22 - 00:44:46:14
Kim Kaupe
So about three years ago, I started to really kind of open up my own playbook and my goal is really to help other people not make the same mistakes I did or get ahead faster. It's I kind of want to be that kid in class that waves you over and says, Come copy my homework. You know, don't worry about doing the homework yourself.
00:44:46:14 - 00:45:05:01
Kim Kaupe
Come on, come copy mine, because it's going to be a lot faster. And so really doing that with other leaders and executives and entrepreneurs, so about three years ago started sharing a lot of content on LinkedIn, on Instagram, and eventually on my podcast Coffee with Kim, that's on all major podcast networks.
00:45:05:03 - 00:45:27:00
Todd Sullivan
That's awesome. You know, I went to your website and I was looking at just the education that you're putting out there and some simple things like, you know, five things you can do to improve your LinkedIn profile. Like you're clearly learned this over a period of time and giving. I love it. That's what we're trying to do here is educate people around the things that we've learned and please don't make the same mistakes we did right.
00:45:27:02 - 00:45:40:18
Todd Sullivan
Kim, this has been awesome. Thank you so much for spending this amount of time and sharing your history and learnings, all of that for our fellow founder friends. I think I'm going to start using that now. But yeah, this is fantastic. I really appreciate it.
00:45:40:19 - 00:45:56:19
Kim Kaupe
Oh, thank you so much. This is super fun and I hope I can connect with anybody who's listening that's out there feeling like, How do I do this? Or have you run into the same thing? Chances are I've been there too, so I look forward to connect with you. Thanks for having me.
00:46:06:02 - 00:46:07:05
Kim Kaupe
Thank you.
00:46:07:06 - 00:46:29:09
Todd Sullivan
Thanks again for listening to the Cashing Out podcast. Asked 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 ex it was dot com and the Cashing Out podcast are for entertainment purposes only. This should not be relied upon as the basis for investment decisions.