“When I let go of what I am, I become what I might be.” – Lao Tzu

 

Another Year of Letting Go

2020 was – for me – a year of letting go. Some things happily. Some not. Some voluntarily. Some not.

Today, I’d like to talk about one group of them: businesses and business relationships.

 

Partner Buyouts 

I reluctantly said goodbye to two very profitable businesses. One in Switzerland and one in Brazil. Both were direct response publishing companies – essentially knockoffs of businesses that my partners and I have developed in the States.

Our earlier efforts at globalizing our business involved replicating our US models in other countries entirely on our own. The publishers, writers, and marketers that worked for these companies were our employees. That approach had mixed results.

In Switzerland and in Brazil, we found successful local businesspeople that had ongoing businesses in the direct marketing space. We formed partnerships with them to convert their smallish B2B businesses into larger consumer publishing businesses like our own.

In the beginning, we provided the capital, the cash flow, the business model, the products, the training, the advertising campaigns, and the operational and logistical support. They provided the local leadership and hired the local employees.

Despite the unequal contributions, we gave our partners 50% of the biz. We felt that if sales grew, their share of the contributions would increase. And that’s what happened. Revenues (and profits) grew fantastically. We felt brilliant.

However, great success often creates unexpected problems. In the case of these two businesses, they were the same: After five or six years of learning our business, our partners decided they didn’t need us anymore. They told us they wanted to buy us out!

This did not please us. Our idea, in starting these businesses, was never to cash out big-time one day. Our objective had always been to build a large, global, stable company that would last for at least 100 years.

We tried to dissuade them, but they were insistent. We could have, in theory, refused their offer. But that would have led us both into an unhappy business marriage. So, we negotiated a fair price and arranged for the divorce.

Lesson learned: In the future, I suspect we won’t be making any more 50/50 deals in situations like this (where we are providing most of the value at the beginning). We can still be generous to our partners – and we will. But we will want to prevent something like this from happening again.

 

Going Public 

Two companies I’ve had an interest in since their inception made a deal to go public this year.

Again, this wasn’t a move I wanted. I’ve had a bit of experience with converting from private to public, and I didn’t like the public experience. Lots of extra paper work. Lots of formalities that are more necessary than fun.

But the real problem with having a public company is that its purpose changes. It’s no longer about building a bigger and better company for the long-term. When you have public shareholders, the pressure becomes all about increasing the share price. And that leads to decisions you might not make if the biz were private.

Plus, as I said to them back then, “What will you get from it (going public) besides a bunch of cash? You don’t need more money. You make enough as it is.”

Our partners in this case are younger than we are. They grew up in a different time. They have a different perspective about the long-term benefits of having a successful business. Going public at a multiple of 10 to 15 times earnings seemed like a “no brainer” to them.

If and when this is finalized, the payout will be very substantial. All the current shareholders will enjoy a big payday. But there’s also something sad about saying goodbye to a business that you’ve taken pride in for so many years.

The takeaway: Understand your partners’ long-term objectives. If they are about cashing out, don’t get emotionally attached to the business from the get-go.

 

The Yearly Clean-Up 

My partners and I also said goodbye to three or four smallish companies this year by closing them. After several years of struggling and several million dollars in capital calls, we decided to pull the plug.

I don’t doubt our decisions. For different reasons, each of these companies had proven to us that they didn’t have a formula for growing long-term profits. Over the past 30 years, we’ve learned that, in most cases, when a new business can’t achieve profitability by the end of year two, chances are it never will. The wise solution? Take your ego lumps, close it down, and walk away.

This was not an unusual year in this regard. Every year, my partners and I have closed a few of our businesses. Expecting that, we try to start more businesses than we will likely close. And that strategy has worked. It’s one of the reasons we’ve been able to continue to grow.

Still, there is always a little sadness in closing a start-up you once had so much faith in. It’s like euthanizing a beloved pet that has a terminal disease.

 

Putting on the Mute Button 

And finally, I said a sort of goodbye to a business relationship that I once very much enjoyed. I did not sell my shares. I am still the largest shareholder. But I decided to stop being actively involved because I was driving everyone crazy – trying to push growth at a rate my partners were clearly uncomfortable with.

I normally don’t mind irritating my partners and key executives in this way, because I always consider my role to be the speck of sand that irritates the oyster. But it was getting bad for everyone, so I pulled away. I’m sad about that, too, but I’m mostly worried. I was first worried that the business would collapse without me. That didn’t happen. So now I’m worried that it will thrive!

 

The Starting Up 

Except for the letting go of life itself, each year brings with it an infinity of potential starts. I don’t think a week has passed in the last 40 years when I didn’t spend at least a few moments contemplating a new business or project. And I enjoy that.

When I was in the middle of my career, most of those ideas were business concepts, of which I set a fair number in motion. These days, apart from my main business, I rarely start a new business on my own. The ones I have are almost too much to handle. Plus, I’ve promised the family: no more new ventures!

Even so, I am regularly exposed to new business opportunities that are sometimes hard to resist. I’ve pawned off most of these opportunities on my three boys. Each one has his area of expertise. And each one is doing a better job than I could at this stage. It’s actually a lot of fun to see them work. And a great relief to be able to say to someone that wants to pitch me on a business or investment: “Speak to my son.”

 

Conclusion 

Growing entrepreneurial businesses is always a process of birthing, protecting, nurturing, and then, sometimes, letting go.

Nature tells us that we cannot hold on to anything forever – and that, sometimes, however hard we want to hold on, we must let go. As Jack Kornfield says, “To let go does not mean to get rid of. To let go means to let be. When we let be with compassion, things come and go on their own.”