Ryan Daniel Moran
Appearances
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
Our business at its peak, we sold it for $16 million. Rudy, we were doing $10 million a year in sales when we sold it. It was doing a few hundred thousand dollars in revenue. That's how much that it had degraded. So we bought it back. We're on the same exact playbook. Hadn't changed. Same product, same people, same strategies. And guess what? The company is growing again.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
And that brand, if we were to just sell it to somebody right now, just based on numbers and profit, it might sell for like a million dollars. But we partnered with an influencer who's huge in the space, perfect person for this brand specifically. And we did not pay this person in the form of U.S. dollars in order to talk about our products. We gave him shares in the business.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
It was a small minority share, but if you calculate shares to dollar value, it's way more than he would get from a sponsorship deal. And we said, as soon as you sign this deal, the value of your shares actually goes up by 200%, maybe 300%. Why? Because the business with this person on the cap table is now a more predictable high growth company
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
And we could raise capital against that at two to three times what we could do if we were just valuing it on the revenue or profit or loss. So we can double the enterprise value with one key relationship.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
That's also true if we start adding advisors or CEOs and we start seeing these relationships as things that don't just make the company create more cash flow, they raise the enterprise value of what someone would be willing to pay for the asset. That that when I started seeing how all that all played out and how the numbers ran, that was where I realized how the big boys play.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
So when you start adding one X multiple, now we're talking about multi millions of dollars in value. But we as entrepreneurs are trained to just hold on to the whole pie. That might be why you're stalled out in your growth.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
The company declared bankruptcy and the bank had to choose who they were going to partner with to get the assets. And I made a bid. I didn't get the bid. In fact, the bank went with another private equity group instead. And that private equity group ran the business even further into the ground. So there were two owners after me that just beat up this dog.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
I cut my teeth as your traditional internet marketer, like many of us do, learning affiliate marketing or a skill set like SEO or pay-per-click marketing or whatever the hack is at the time. But about eight, nine years into my career, I realized that if you do this stuff for a real business, a real business meaning something that you can scale and sell, then then it works a lot better.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
And the private equity group that owned it the second time had an acquisition for one of their other brands. And so there was someone who was in charge of selling off or getting rid of the non-performing asset. And that person gave me a call and we started having some discussions. I knew that person from other relationships and they were now working at this private equity group.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
And they called me and said, would you like to have your old company back? And when they told me the number they wanted, I walked away. And we came back to the table and we negotiated and they had another number and I walked away a second time. And then there was a third round of negotiations and we got close to the price that I wanted to pay. And I bought it for pennies on the dollar.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
I basically bought it for the cost of inventory that was stored up in the warehouse. And I mean, quite honestly, that's what it was worth. It may not have even been worth that. The company had been completely destroyed. It was a total do-over. I brought this back because I wrote a book about building and selling this company. I didn't want the story to end with a bankruptcy.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
Let's at least have a good ending to the story.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
Thanks for asking. The most affordable and direct way that I could serve somebody is for them to grab my book, which is called 12 Months to 1 Million. That's my formula for building million dollar businesses. They want more advanced stuff. I'm on YouTube. Everything that I know is free. And I'm just my name on YouTube, Ryan Moran.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
If you want to build a brand that you can scale and sell, all my best free resources are available at capitalism.com slash playbook. That's our free resources for those who want to build a brand that they want to scale and sell.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
So I applied my skillset into a physical products brand. This was early days in the dawn of Amazon FBA. And when that was kind of a new platform, And I put all of my marketing efforts into customer acquisition and follow up sequences and search engine optimization and content marketing into what I would call a real business, which allowed me to launch products quickly.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
And I ran the math when I was, you know, 25 years old, seeing that if I could just get four products at 25 sales a day, that would be 100 sales a day. And at a $30 price point, that would be a million dollar business, which to me at 25, I never had a million dollar business before. So that was the end goal.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
But then you realize as you get to a certain point that, oh my goodness, there's something called enterprise value. in business. We forget about this as cash flow entrepreneurs. We think about cash in, cash out. Wait a minute, there's this whole other side of it called enterprise value. That's the value of your business when it is sold.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
And of course, there's a variety of different ways that you can calculate how much a business is worth. Poor man's math just is a multiple of profit. And our business at its peak was doing about $4 million. I think maybe a million. Now I forget. It's been so long. We sold it for $16 million. That was the valuation. But here's the kicker. Here's the asterisk. I didn't get all that money up front.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
Here's the takeaway that was so profound for me.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
I got most of it split with my partner, 50-50. But we didn't get all that up front. We carried some to ride with the private equity group. because they wanted to take it to $50 million, $100 million, and me at 29 going, you guys are the big guys with these deep pockets. You've done this before. You know how to build businesses to $50 and $100 million. Well, they don't know internet marketing.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
They don't know the skills that you and I have and everybody listening to this is so good at. It gets corporatized and bureaucracized. And so a few years after selling the company, the company went bankrupt. They got away from the playbook that made it successful. They got away from the entrepreneurial spirit. And I bought it back for a few pennies on the dollar.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
I've now been rebuilding that business. It's now pacing seven figures again. When we bought it back, it was doing a few hundred thousand dollars in revenue. Rudy, we were doing $10 million a year in sales when we sold it. $10 million. It was doing a few hundred thousand dollars in revenue. That's how much that it had degraded. So we bought it back. But on the same exact playbook, hadn't changed.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
Same product, same people, same strategies. And guess what? The company is growing again. And we're still fairly early in that climb up process, but now we're pacing seven figures again. We're still relaunching the product line. And the intent is to bring it back to its old glory days. And then we'll see what happens.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
We could sell it again or we could just build a really great business that we're excited to have. That's the full story.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
Here's the takeaway that was so profound for me. This is how valuable our skill set is as entrepreneurs or marketers and founders. Sometimes we forget because most of us grew up just wanting to make money. We just wanted to have a different life. And so we learn a skill set. We learn to monetize it.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
But when you apply it to a real business and you think about the enterprise value that it can create, oh my goodness, we have such a skill set. And we often as entrepreneurs sell ourselves short because we see all the problems in our businesses. But when you see that really deep pocketed investors and entrepreneurs
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
private equity groups, buy companies, get away from the thing that made it special and tank it, you realize, wait, maybe we're good at this.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
And maybe if we can combine those different frameworks, we can take some lessons from the finance world, we can take some lessons from the PE world, and we combine it with our entrepreneurial spirit and our marketing know-how, maybe we can build some really exciting special enterprises.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
Well, the first is thinking about enterprise value as separate from cash flow. So I like to say there's three types of money. There's cash flow, there's wealth, and there's enterprise value. Cash flow, obvious. You're not listening to this podcast if you don't know what that is.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
Wealth is the total amount of your net worth, what you could sell everything for from your investments and your real estate and all that. Enterprise value is what you can sell your company for. Now, most entrepreneurs, if they're smart, they take cash flow from their business and they invest for wealth. That's better than most.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
You have your cash flow business, you invest it into long-term index funds or real estate or whatever you invest in. That's better than most people do. But if you flip the whole thing... and you focus on enterprise value, you can build a company that is worth and can be sold for millions of dollars within a handful of years. And then you can invest and never have to worry about cash flow again.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
So we can flip the whole order. Of course, you can do both. But by prioritizing enterprise value, we think about the business differently. When you are thinking about how I'm going to maximize and increase my cash flows six months from now, the approach is going to be different than how do I build enterprise value over the next four, five, six years. Very different paths.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
Both are fine, but if you want to build something you sell, you think about enterprise value, you think about the person who's going to be buying the company, you think about where there is value different than the other businesses in your sector. When you start looking at that, then the guiding principles start to be a little bit different.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
Thanks for having me, Rudy. I mean, we knew each other when I was just scraping this little company together on the climb up even before I sold it and then bought it back. So you've seen the entire journey. Thank you.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
And to that point, Rudy, I don't know that I could have focused on building enterprise value until I had satisfied the cash flow part of my life. And I did that by having clients on the side. I did that by leveraging the skill set that I built previously. I did that as an affiliate marketer. Today, I have two businesses. One is capitalism.com. That is more of a cash flow business.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
And that gives me the space to be able to roll everything profit-wise back into the companies that I invest in and the brands that I hope to exit and sell or borrow against tax-free someday. And having that separation allows me to just let that ride, allows me to just keep compounding that. So I don't know that I could have done that and I not had my cash flow satisfied in a different way.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
So in some cases... It's okay to just say, this is my cash flow business. I don't need to scale this to 100 million. Let it pay for my life. Now let me put my attention into the thing that can compound over the next four or five years. And if we let all that ride, the enterprise value compounds very, very quickly.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
Well, one of the things I learned, but I learned this the hard way, is that as the controller of a very profitable company, I have the asset that everybody wants. So at 29, when I'm selling a company and people are dangling eight-figure checks in front of me, I'm sitting here going, oh... Oh, these people, there's this big checks. Yes, what do you want me to do, Mr. So-and-so?
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
I felt like I had none of the control, none of the leverage. I learned that I had all of the leverage. And if I had done one thing differently, or if I could go back and change one thing, I would have shown up to every one of those discussions with a potential buyer with my term sheet saying, these are the terms we will accept. These are the things that we will and will not accept.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
This is what we'd like to do. Let me know if you would like to proceed. We didn't do that. And so we were, we were the insecure guy trying to approach a cute girl in public.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
That's right. So I would have shown up with what I was looking for and who I was going to get into business with. And I didn't feel like I had that leverage because people were dangling big checks in front of me. And so when you realize that you're the hot girl at the dance, you are the thing that everybody wants, you show up with more confidence and then you can find the right partner.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
And that's the one thing I wish I could do over.
Living The Red Life
Company Exits The Smart Way With Ryan Daniel Moran
Forever exactly right. The last thing that I'll add to maximizing enterprise value is how dramatically things can change with a few relationships. So I'll give you an example. I now invest in e-commerce companies and we have a low-carb snack brand, a high-protein, low-carb snack brand.