Best of: Sometimes, Dreams Do Come True
Introduction:
If you’ve been listening to this podcast, you know we spend a lot of time talking about all of the things that can go wrong for a business owner. And yes, in part because we started recording these conversations just a couple of months before the pandemic hit, we’ve had plenty to talk about. Even this year, with the worst of the pandemic behind us, we’ve been talking about everything from excess inventory to lost clients to layoffs to ineffective marketing to surviving the valley of death. So, with that in mind, this week, I’ve chosen to replay an old episode both because it offers an inspirational message and because, well, we here at the home office need a little break. It’s the episode we recorded two years ago when Karen Clark Cole sold her business. Especially given that Karen had only recently been through a tough period that prompted her to take time away from the business, the conversation is a nice reminder that sometimes things do come together. It’s also full of great advice for anyone who thinks they may want to sell their business one day.
— Loren Feldman
Guests:
Karen Clark Cole is co-founder and CEO of Blink.
Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.
William Vanderbloemen is founder and CEO of Vanderbloemen Search Group.
Producer:
Jess Thoubboron is founder of Blank Word Productions.
Full Episode Transcript:
Loren Feldman:
Welcome Karen, Jay, and William. It’s great to have you all here. Let’s start with the obvious: Karen, congratulations!
Karen Clark Cole:
Thank you.
Loren Feldman:
Are you thrilled?
Karen Clark Cole:
Yes, I am. For a lot of reasons.
Loren Feldman:
Give us one.
Jay Goltz:
No, give us four.
Karen Clark Cole:
Well, one, I’m happy to be through the process. It was absolutely grueling and has gone on really since the beginning of the year. So it’s been a long, grueling eight months, nine months, and the last three have been super grueling. And then the last month, one level above that, like wildly grueling. I don’t know.
Loren Feldman:
We’re gonna want to hear more about that.
Karen Clark Cole:
Yeah, I feel like I need a year-long vacation, but that’s not going to happen. Because, for the second reason, we have a big job in front of us. We have an unbelievably great partnership with the company that acquired us. So, the sky’s the limit. I’m super excited. It’s the best of all worlds in my mind. I’m excited.
William Vanderbloemen:
Hey, Karen, I’m curious. I’ve talked to people who’ve had similar outcomes that you had, and they’ve all said to me, “Man, if I had it to do over here, here are three or four things I would have done five years ago so the process wouldn’t have been as grueling.” Do you have any top-of-mind things like, “That took a lot of time, and if we’d have done that five years ago…”?
Karen Clark Cole:
Yeah, that’s a good question, William. So three, three-and-a-bit years ago, we had decided to take on investment money so that we could grow the company. And at that point, we were looking at selling a third of the shares to get investment money, and that process was long and complicated. And then in the end, we pulled out. We just couldn’t get to an agreement, and that was so stressful that I had to take a leave of absence. And so what that did, though, is it got us ready for this time.
So for this time, it was grueling, in that it was just intense due diligence. It was a public company, KPMG, law firm, bank consulting. We were being grilled at all angles, in all ways, even by our investment bankers’ standard—just the highest level of due diligence that there is. But we stood up to it. We did great. We came out with flying colors. So I’m really, really proud of our little company for surviving all that and then coming up no problem, all systems go.
So we really were prepared, and that’s because we had that false start three years ago. But more importantly, we got the valuation that we wanted. In fact, we got more than we had ever thought we would ever get, because the company was organized for our profit, for our EBITDA, for our revenue, for our gross margins. We’ve been tracking that really closely for the last two years just to make sure that there was nothing that could bring us down, when it came to valuating the company. And so we really were in great shape.
And also, there have been many other companies that have come to us over the course of 21 years trying to buy us. And so we knew what the important trigger things were, such as making sure the EBITDA matches, and then we have our net, and then the top line, middle line, all those lines all have to be going in the right direction. Plus, we have to be in a hot market. We’ve got to have great retention. We’ve got to have all these things that we know really matter—we absolutely had in place. So it was perfect timing for us for all of that.
Jay Goltz:
Well, you also—correct me if I’m wrong—are going to save literally millions of dollars in taxes by doing it this year rather than waiting until next year.
Karen Clark Cole:
It was important. I mean, it’s unclear if it’s really gonna change, but even so, in Washington, we have other things coming. That didn’t get us started this year, but it made us want to finish this year, for sure.
Jay Goltz:
For sure.
Loren Feldman:
Are you sticking around?
Karen Clark Cole:
Yeah. I love my job. It’s never been a retirement strategy. For me, it’s just: “How can we grow, take over the world, and not have the risks?” Because up until two weeks ago, Kelly, my co-founder, and I were absolutely solely responsible for the health and all the financial risk of the company. Our houses were still connected to the line of credit, to our leases, to everything. So we’re the guarantors for everything in the company personally, and so taking big risks to grow and really go global—which is what we want to do—it was just too much, at the scale that we were going to head to.
And so now we have a partner in crime that has so many great things that we can benefit from, and lots of really smart people with global experience. And we’re on a global stage overnight. And I’m not the only one figuring out the vision, figuring out how to get there, working on the strategy. I’ve got people to help me do that now, which I’m totally ready for us to have some mentoring and some support and some colleagues to help drive the company forward.
So yeah, we’re a wholly-owned subsidiary. So our company is going to operate pretty much exactly the same as it has been. Even our tax ID is the same, our bank account is the same. All of our employment agreements are the same, and I’m still the CEO. Everyone has their same titles, roles, and responsibilities. I have a new boss, which—honestly, it’s fun. I mean, he’s really great, smart.
Jay Goltz:
I’m gonna write that phrase down: “I have a new boss, and it’s fun.” I’m gonna write that down. Yeah, I got it. I’m gonna write that down, and a year from today, I’m going to call you. Maybe we’ll have it on the podcast. And I’m just going to go, “So, is it still fun?” That’s all.
Karen Clark Cole:
Yeah, but I like things that are complicated and hard, so this is good. I’m ready for a new challenge.
Loren Feldman:
You were bought by an Indian company called Mphasis. Is your boss in India?
Karen Clark Cole:
No, he’s based out of New York. We’re actually owned by Mphasis U.S. Corporation. They have a couple of different corporations in the company, and so we’re owned by the U.S. part of the company. All of the leadership is based in New York—in Manhattan, actually. So we inherited a beautiful office in Midtown. So I’m pretty excited about that, too.
Jay Goltz:
Correct me if I’m wrong, but in your case versus my case, you need to grow it because you’re in a hot, growing, technologically-driven business that you can’t afford to go, “Oh, I’m just gonna sit back and coast a little bit.” I assume that that’s part of it. I get it, I think, right? You need to stay out there or you’ll get smothered by somebody else.
Karen Clark Cole:
Jay, you’re totally right. They will pass us by and step on us as they’re going by.
Loren Feldman:
Karen, it’s interesting to think, back to when we started this podcast at the beginning of 2020, as you referred to a moment ago, you had come through this period where you had been trying to bring on an investor, and I think you told us that you went through a period of time where, every week, you thought the deal might close. And it didn’t, and it was so stressful, you took the sabbatical that you referred to. You came back. At that point, when you came back, did you know that you were going to shift strategies and try to sell—
Karen Clark Cole:
No, we committed, at that point just to focus—which we did—back internally on the company, get everything back in order, because my eye was off the ball during all of that, which was another lesson from that—to make sure that the day job is most important. And all of the due diligence and the hundreds and hundreds of meetings that I’ve had… And so, no, we focused on our organic growth internally, on getting our systems in order, and getting all those things that I talked about that we know are necessary just to have a healthy company. We brought in a new COO, and he really helped with making sure that we had a close eye on our utilization and that we were running the company in a really ship-shape kind of way, just so that we would not have any ill effects from that sort of tumultuous eight months that we had before.
And then a big part of deciding to do this was our clients are really asking—and our employees as well—to be able to build the products that we design. I use the metaphor “architects and construction business.” We’re really the architects. We are working on the strategy. What should the building be? What kind of building? Is it a house? A warehouse? And then we take it all the way through to design, measuring the last stud and the last nail and the size of the windows—all that stuff. But then somebody else builds it, and so our clients want us to be able to actually launch the products that we design, and our employees want to be able to see their stuff go live as well and have some sort of involvement, control, be able to help it. And so we just couldn’t do that, and building an engineering practice is really risky, because it’s totally different than our design work.
And so we’ve been toying with ways to do that for the last 15 years—seriously, in the last five—really trying to figure out: How can we do it? And so at the beginning of this year, we started looking seriously at ways to be able to do that. Should we take on investment money again to try to hire somebody to come and build this practice internally, like somebody really high-level who knows what they’re doing? And then building a practice ahead of the work is a big investment, because we just bill by the hour, and so we generally don’t hire until we can see the work at least in the pipeline.
Jay Goltz:
So when you closed on a particular day, and that day, money shows up in your account, and all of your liabilities go away, I just want to know what goes through somebody’s head when they go to bed and they wake up the next morning, and they realize they’ve got a zillion dollars sitting in an account somewhere and they’re completely set. Can you just give us that emotion, when you opened your eyes in the morning, what you thought about?
Karen Clark Cole:
Yeah, I mean, it’s awesome. For me, Jay, I’m not interested in going and retiring. I’m not interested in leaving the company. And so for me, to have all of what you described, and now we get to go fast… I mean, I love to go fast, and I love to go big. And I’ve got big ideas.
That morning, I had to get up really early, because I had five meetings, all to do with: What are we doing now? And so I haven’t had, honestly, a lot of sleep in a long time, and it’s not coming anytime soon. Because now, we’ve got the New York time, and we’ve got some folks in India—some folks on the leadership team are in India—so our calls are late, and they’re early, and then they’re everything in between. So it’s been kind of non-stop, but I’m on fire. This is what I love. I love to be busy. I love to be doing big, exciting things. It’s less of a kind of relief feeling, and it’s more like, “Holy crap! This is all my dreams come true, all of them at once.” And my veins are tingling. It’s like that.
Jay Goltz:
Wow, that’s a good answer. That’s a good answer. So, did you buy some new shoes?
Karen Clark Cole:
I bought a new purse.
Jay Goltz:
Okay, there you go.
Karen Clark Cole:
It’s really nice.
Jay Goltz:
Okay, I also want to know, the day you made the announcement to the employees, what was that like? Do you think everyone knew?
Karen Clark Cole:
No, there were a couple of dozen people. Blink has 28 shareholders—had 28 shareholders—and that means that the money that the company received—and there’s a big earn-out portion—the money that we received upfront gets split, pro rata, across those 28 shareholders. So it was not all to me or Kelly. We were majority shareholders, but then we have 26 other folks who participated in this sale, and they all had to agree to all of this. They had to review and sign six different documents, times 28 people, over the course of three days. It was really intense. We were DocuSigning, like documents flying back and forth.
My CFO, he was an absolute rockstar, because we had to route them one at a time through all these people. And so meanwhile, I’m communicating with all of the shareholders to have everybody on standby, “These documents are coming.” And they had to be last minute, because we were literally negotiating up until half an hour before we had the closing call. Before, it was going all through the lawyers, and then the investment bankers, and then to us, and then the reverse. That was sort of the pattern, with 100 calls in between, with various different due diligence folks, with different workstreams.
But then at the end, it was just me on the phone: all weekend, early in the morning, late at night, seven days a week, negotiating directly with Mphasis with their head of legal and business. And then in the end, in the sort of final hours, it was by text. While he was on the call with somebody else, something just came up, [he’s] texting me because he can’t call me because he’s on the phone, and it was like that. And then we had the closing call, which was a Zoom call with all the bankers, all the lawyers, all the business owners. There were 30 of us on the call. Everyone just sort of went around their boxes saying, like, “Check, check, check.” Just like a flight taking off.
After months and months of this—I get goosebumps just thinking about that moment—everybody went around and I was just waiting for one more thing, because it was like that. Like, one more text, one more item that we have to clear. And everyone went around, “Check, check, check.” And then the head lawyer on their side said, “All right, we’re good. I’m going to initiate the funds transfer.” And at that moment, I just started shaking. I’m like, “This is it!” Because everything was already signed. And I was like, “Oh. My. God.”
Jay Goltz:
I assume it was incredibly rewarding to see these 28 people get a bigger check than they probably ever had in their life.
Karen Clark Cole:
You know, Jay, that is the thing I am most proud of. Not only did Kelly and I make this up and do well for ourselves but, wow, we brought a lot of people with us, and I’m so proud of that. Just the ability to be able to do that is life-changing.
Loren Feldman:
Are most of those 28 people still employees?
Karen Clark Cole:
Oh, yeah, everybody is. Yeah, we haven’t lost anybody yet. Hopefully we won’t. We’re working really hard. So to answer your question, Jay, because they’re a public company, the timing was really tricky. We did our official signing. Everything was DocuSign, but we still printed out the forms. The CEO came to Seattle. The head attorney, who was our main business guy, came to Seattle and a couple of others. So we all got in the room, and we signed the documents. And then at that moment, we considered it closed. And so then they have to make an announcement to the stock exchange in India, and then I made an announcement.
We had an all-hands company meeting, and we got everyone to come. I made an announcement there, so most people didn’t know. And then I followed it up immediately with a letter to the employees with all the details, because I knew the announcement would be shocking for most people. And then they had time to read that letter that had a lot of information in it. And then we had a group practice meeting. We have sort of five main practice areas in the company, and the heads of those practice areas had group meetings with all those folks to answer questions right away. For two weeks now, we’ve been doing—I guess, it’s only a week and a half, my God—we’ve been having a lot of one-on-one meetings with everybody, so we’re covering everybody in the company. We have daily Q&A sessions with me and Kelly at lunchtime.
So all kinds of vehicles. And then in the staff meeting, I’m talking through questions again. So we just want to make sure that everyone hears and sees it, in every way shape and form, that we are the same company, essentially, with this turbo boost infusion into the company of not just—well, the cash isn’t coming into the company, so it’s not even that. We’re just global, and everybody wants to have a big impact in the company. That’s why we’re here. I think a lot of people can see that this is going to allow us to have a bigger impact. So what we need to prove in the day-to-day is that the things they love about Blink are the same. Our cultural framework is the same. I’m still there. I still care about everybody. Nobody’s employment agreements even changed. We’re still the same legal entity. So far, I’ve had a lot of calls with clients to help them understand that it’s the same, but better. So, it’s been exhausting.
Jay Goltz:
You earned that purse. You did.
Karen Clark Cole:
Thank you, Jay.
Loren Feldman:
How did you manage to keep the secret? You said it was shocking for most employees.
Karen Clark Cole:
I think COVID helped us, because everybody’s still pretty much remote. And then, on my calendar, we had to be really careful about making things private, for sure. But I don’t know. I mean, I don’t know. But we did. It’s just, we’re careful. And COVID helped, for sure.
Jay Goltz:
That is funny that COVID happens, and someone’s gonna come back to their office somewhere in this country and find out the office has been gone for six months and now it’s a restaurant. It is kind of a funny concept.
Loren Feldman:
Karen, I think you said something about the upfront payment. Is there an earn-out aspect to this deal?
Karen Clark Cole:
Yeah, so we got 70 percent cash upfront, which is great and high and totally amazing. We could hardly believe it. And then the 30 percent is earned out over a two-year period. So half of it after the first year and half of it after the second year. And those are dependent on us hitting our revenue and our gross margin targets, which are our targets. So it’s using our model, and we just have to stand behind our own model.
And so this is not even taking in all of the additional revenue that’s gonna come from us just being a combined entity. Like already, all of their customers—not all of them, but a lot of their clients—are, like, “Hey, when can we get some of that design work? Hey, we want to meet these guys.” And it’s working on both sides. So there’s going to be a lot of additional uptick and growth from that. But our targets, we have to preserve the core and make sure we’re growing in our own way as the highest priority, because they’ve paid a lot of money for what we do, and they don’t want to get in the way. And they want us to keep doing what we’re doing, because that’s what they love.
William Vanderbloemen:
So Karen, how much of your brain—for the next 100 days, say—is focused on current client retention versus, “Okay, let’s grow”?
Karen Clark Cole:
Yeah, it’s probably half and half. I mean, we have a lot of great people in place in the company who are really more tightly connected to the clients than I am. So with all of our current work, I’m not in the current project work, and so our teams are really the care and love and feeding of our clients. And really, at the end of the day, as long as we keep producing great work, there’s kind of no question. So we just have to focus on producing great work and just being focused on what we do best.
Jay Goltz:
I think, given what you do, if I was a customer, I would buy the story that you’ve got better resources—versus, every time my bank gets sold, and they try selling me their bill of goods. Yeah, right. It’s always downhill. But in your case, I would think that is an advantage that you join a bigger group that’s got more resources. So I don’t think you’re going to have any big retention problem.
Karen Clark Cole:
We actually just got one client we were working on landing, and once they found this out, they’re like, “Oh, that’s actually good. Now we know that you’re big, you’re strong, you’re not going away.” And that, to me, is the most exciting thing. Like, now I can say with 100 percent certainty that we are a generational company and our grandkids can work at Blink. And that, for me, is like, “Wow, I can go to the grave knowing that.” It’s pretty awesome.
Jay Goltz:
So of all your employees, was there anybody—from top to bottom—who was concerned about… Just tell us about the one person who was the most concerned. Did you get any out of left field, like, “Oh, am I still going to be able to park in my same spot, my whatever?”
Karen Clark Cole:
Loads of those kinds of questions, yep. Loads, for sure. And like I said, I sent out that document right after the announcement, which had a huge Q&A section where we tried to preemptively answer a lot of those kinds of questions. But they still come up, and somebody didn’t see that one, or they didn’t hear this conversation or that conversation.
Luckily, I have a really good rapport with most of our employees. Some of them are new, and I don’t know them as well, but for them, they have to trust, and it’s a leap of faith. And so if they feel like they trust me, and I’m being authentic right now—in terms of how I’m describing why we did this, and why now, and what the future looks like—I really have to call in all my trust tokens, because now is when I really need it. So that’s largely what we’re asking people to do, is just: “Trust us. Give us a chance. And you know, give us feedback of what you’re seeing that you like or don’t like.” So we’re just listening. A lot of listening.
Jay Goltz:
The 28 people, I assume they didn’t get handed a check. It just showed up in their bank account? Is that how that worked?
Karen Clark Cole:
Yeah, it got direct-deposited.
Jay Goltz:
The next day: anyone come in to your office in tears, saying, “I just want you to know that I’m going to be able to buy a house for the first time,” or, “I’m able to pay off my student loans,” or did you have any—
Karen Clark Cole:
No, not then. But so, what I did to let people know, I had to let the shareholders in under the tent about three weeks prior to closing. What I did is, I had a one-on-one meeting, and it was over Zoom—which was kind of great, because there’s some up close and personalness that you get in Zoom that you don’t get in real life. So the conversations were really, really personal. I just thought, like, “Who could ever imagine that Zoom meetings could be more personal than an in-person meeting?” It’s crazy, but it’s really true. And so I had a one-on-one, hour-long call with every single shareholder. And I told every single person myself, and I talked them through it. And I answered their questions. And at that time, they were all like that. Like, everybody had something. They’re like, “Oh my God, I can get…” “I can have a wedding!” “Oh my God, I can buy a house.” “Oh my God, I can buy a car.”
Jay Goltz:
“Oh my God, I can get divorced!”
Karen Clark Cole:
No, I didn’t have any of that, luckily. But at that moment, there were some tears, for sure. And it was really, it was moving. It made me really proud.
Loren Feldman:
Was the meeting where you told the rest of the employees over Zoom or in person?
Karen Clark Cole:
Yeah, it was in Zoom, because everybody’s remote and we have five offices, so people are spread around the country. And then, Kelly and I were going to go on a tour and go visit all the offices and meet people in person, but we actually got pushback from our shareholders, saying they thought that would be more stressful, because people are not really comfortable coming into the office all the time yet. And they would feel obligated if we were there, and they just thought being available on Zoom would be better. So we created all kinds of different venues, like a company-wide forum where people could drop in if they wanted. And then we’re making sure that we’re still scheduling a lot of check-ins with people. I was totally ready to jump on a plane and fly around, but most people thought we shouldn’t.
Loren Feldman:
Karen, I think you told us that when you were trying to land an investor to back Blink, the idea was that you wanted to go out and buy other similar companies to yours and kind of roll them up. Is that the plan, now that you have Mphasis as a backer?
Karen Clark Cole:
It’s not the plan. The plan is just to grow organically and then to add engineering to our clients, to grow those accounts. So it’s more of an account-growth strategy for our clients, as well as their clients, so that we can be full-service and really focus on expanding the clients that we already have. We really committed to doing all of the—it’s not even integration. We’re not integrating anything. We’re not touching anything in the first six months. There’s going to be very little systems integration, if at all, after that.
But we’re working very collaboratively with Mphasis and us to decide: What would be good for Blink? Like, would it be better if we use their accounting system, for example? Different ways to make us more efficient, but nothing is being handed down. And we’re just working collaboratively on how to go to market together on how to talk to our clients as a team, together—when to do it, when not to do it. But down the road, if it makes sense to do an acquisition, we can. It’s possible, but it’s not—we’re not even thinking about that yet.
William Vanderbloemen:
Karen, I’m wondering, thinking of our listeners—say there’s somebody that’s like, “Man, we might be five years away.” What are three or four quick pointers, say, “Hey, do this now so you won’t have a headache later”?
Karen Clark Cole:
Make sure that you have a real accountant or CFO. We had a CFO on board much earlier than companies our size would have, and that has made all the difference. We are absolutely by the book for everything, all accounting practices. And so there was no retrofitting of how we record any of our revenue, how we record any of our expenses. All of that kind of stuff was absolutely by accounting practices.
Jay Goltz:
What you just said is very important and smart. They call it “recasting” where they go back and they say, “Oh, well let’s take that out.” That’s a very important, smart point you just made because you hired an accountant, the CFO, who was used to doing stuff in the public arena, which is extremely different than being in the private market.
Karen Clark Cole:
Yeah, like we’ve been operating essentially like any kind of public company for a long time. That made a huge difference. The other thing is just being careful with spending. I think just having an eye on what’s coming in and what’s going out and really understanding what makes our business successful. Like for us, the main levers are utilization, meaning we need everybody billing to clients, and so we can’t hire ahead of the curve. We can’t have people on the bench in between projects. That’s really expensive for us. So just having a really clear understanding of what the levers are, and for us, it’s pretty straightforward.
And then mostly focusing on—it sounds squishy, but—having a clearly defined great culture. I mean, it’s something I talk about a lot. We treat our culture like a business. We have a framework. We have ways to measure it, to manage towards it, to hire, to fire. All those things make it so that when we have an event like this, our employees are all in. We have a really trusting relationship with them. They’re just really invested in the company, and so that really helps when we have to give them some news.
We couldn’t tell them ahead of time. I’m normally really transparent in how we’re running the company. We do monthly profit-sharing, and I run through all of the numbers. I talk about: What are the levers that allow us to be more profitable? How they can help? So I’m really open about what we’re doing in the company, but for this I couldn’t be. And they have to trust me that I just couldn’t, and they have so far.
Jay Goltz:
So to the opposite of what William’s saying—because I agree, people are out there thinking, “Oh, what should I be doing?”—I would also like to say, if I was 20 years younger, I’d be thinking, “Oh my God. I’ve gotta do something like that.” And no, I don’t. This was a great thing for you. It makes perfect sense. Everything you said makes perfect sense but has absolutely no application to my situations. I’m in the opposite situation. I’m not in a growing industry. I don’t need to grow it like that. So anyone who’s hearing this should think about, “Does this apply to them?” Maybe yeah, but maybe not. It depends what kind of business you’re in.
Loren Feldman:
Karen, did you have other suitors?
Karen Clark Cole:
Loads. Yeah, loads. I just want to go back, though, to William’s point. I say this all the time, particularly to high school kids, “You gotta do what you love.” If you don’t love the business, you could never pull this off, right? Like, if I hadn’t spent 21 years of blood, sweat, and tears, I wouldn’t have been able to do that if I didn’t love what I was doing. And that’s why I’m so excited about the next chapter, because I love it. I think that’s the biggest advice to anyone. Rather than getting ready for a sale, just make sure you think your business is great.
But yeah, we had loads—like dozens and dozens and dozens of pitches, basically, that the investment bankers lined up with companies that were interested. At the beginning, we were exploring sort of four options for, “How do we get engineering in-house at Blink?” And one was, we get investment money, and we build it ourselves. We get investment money, and we buy us an engineering firm, a small one, that we can then take in-house and grow. One of the options was to not get money, but to have a really close partnership with an engineering firm that we would just go to market with. And then the fourth option—really the investment bankers presented this to us—”Hey, there are a lot of engineering firms that have the opposite problem. And they are bigger, and they can just buy you.” And so we started exploring that option, and not just engineering firms they brought to the table: ad agencies, all kinds of digital agencies, the gamut. Big global companies. It was pretty awesome to see that they all want to be in our space.
Jay Goltz:
Walk us through how you found this investment banking firm. I mean, that’s a trick in itself.
Karen Clark Cole:
Yeah, it’s all relational. Kelly had met one of the principals at this firm, Clearsight Advisors. You know, the firm we hired last time didn’t serve us very well, and so this time, we were way better at interviewing them, at knowing what we cared about. And mostly, honestly, we just liked them. If we’re gonna work together really closely for what turned out to be eight months, like every day, several times a day talking to them, we had to really like them and trust them, and that was the biggest thing.
Loren Feldman:
Tell us about how you handled the suitors. Did you end up with a bidding war?
Karen Clark Cole:
Yeah, that’s the whole strategy. So this is where we just let these bankers do their job, and we were just like, “Wow, why are we talking to that company?” They’re like, “Well, it’s gonna help us get leverage.” And so there was some of that going on, for sure. I mean, it’s a business. This is what they do for a living. Ultimately, it’s our choice, but they want to make sure that we are positioned the best way possible in this market of who’s gonna snatch us up. Their job is just to set us up so that we have all the choices we want.
They did due diligence on us at first to create a big deck that they can present to these companies, and so they know how to do that. They pitched us, and then Kelly and I got in there, and then we pitched the company in multiple two- and three-hour long meetings. They were really, really intensive. But it was worth it. Because in the end, what mattered to us is that we wanted to keep Blink alive and be able to grow this thing and keep doing what we’re doing and keep serving our clients and be able to employ all of our employees.
And a lot of these companies, their model is: “Take us and kind of spread us around inside the company.” And so that was really not interesting to us. That’s not what we wanted to do. We wanted to be able to provide engineering, keep our core the same. And so this just ended up being a match made in heaven. And it was very unlikely. I didn’t think being bought by a big engineering firm was the way we were going to go. I thought it would be more like, bring it in-house and find someone who would invest in us to take some risk off the table. But I didn’t expect it would go like this.
It was exhausting what those guys put us through, the bankers, and they’ll tell you three, sometimes six hours of pitching a day over a course of a two-week period when we were in that phase. And by the end, I couldn’t even talk. My voice was totally raw. But we just trusted them, and they did all the negotiating for us. In the end, we were negotiating the finer points. But in terms of the big broad swath, they did all that for us.
Jay Goltz:
I think this is the case—and tell me if I’m wrong—I’m sure companies get people coming to them saying, “Oh, we want to buy you.” And I think the advice is: You really need to have an investment banking firm, because you’re not going to get the best deal if you do it that way. You need to go through what you went through to get the best deal. Isn’t that true?
Karen Clark Cole:
Absolutely. And like I said, it was exhausting. But not only the best deal financially, but just in terms of the terms, right? So many pages and pages and like, oh my God, the legal documents, and the back and forth. And then, also have a law firm that you love. So we’ve had a law firm that we’ve been working with for probably a decade now. They went through this last thing with us, and they were telling us, “You guys, this is a bad deal. You’ve got to walk away.” And so now they were so proud of us that they’re like, “God, we were with you guys through all that, and we’re so happy that we got to this point.” But they had our back the whole way through. So the bankers and the lawyers were worth every single penny, hands down.
Loren Feldman:
Karen, did you do due diligence on Mphasis?
Karen Clark Cole:
Well, a little bit. We asked them a lot of questions in our interviews, but we didn’t get into their books. But that’s Clearsight’s—our advisor’s—job: to make sure that these guys have the money, they’re financially stable, they are exactly what they say they are. They do all that beforehand. They don’t bring us anybody who doesn’t pass those tests. But yeah, we did lots of interviews with them, in terms of talking to them. For me, equity inclusion, or DEI, is really important. I asked them a lot of questions about that. We had a lot of good conversations about just what they believe in and what they stand for.
Jay Goltz:
One of the critical pieces of this is you got 70 percent of your cash out of it, which is great. That’s smart, because you never know what’s going to happen. You just don’t. But it’s not like you took 40 percent. That wouldn’t have been a great thing. You got enough out of it upfront that, I’m sure things will go well, but if not, you came out great either way. And I think that’s an important piece.
Karen Clark Cole:
It’s true.
Loren Feldman:
William, I don’t know if you can answer this. You’ve talked to us recently about the amount of time that you’ve taken away from the business and how you increase that every year. It sounds a little bit like you’re trying to make yourself operationally irrelevant. Is that with the idea that you might want to sell your business someday?
William Vanderbloemen:
No, no. I think the idea for me [is] I got some advice a long time ago that said, “Wise younger leaders spend their early years creating options for their later years.” And so, me moving back away from operational relevance at our company—I love that phrase—is more of a… I’ve probably got 10, 12, maybe 15 years of relevance left before I’m the old guy who needs to go find something else to do. When we get to that point, I want to have every option available to me.
Jay Goltz:
Wait. How old will you be then? I want to get to that age in 12 years. How old will you be in 12 years?
William Vanderbloemen:
I’m 51.
Jay Goltz:
So you’ll be 63. Hmmm, I’m 65. So I’m wondering, what does that mean?
Loren Feldman:
You’re irrelevant. That’s what that means.
Jay Goltz:
I’m irrelevant. Yeah, wow.
William Vanderbloemen:
Point proven, right? So, yeah, I just know…
Karen Clark Cole:
That’s terrible!
William Vanderbloemen:
Listen, listen. We have a succession practice. The vast majority of the time, when people call us for succession, they’re calling us later than everyone else on the board wanted them to call us. Most people stay too long. I don’t want to be that guy. And I want to have every option in front of me. If that’s to hire a CEO and just be chairman of the board and have the owner’s income, great. If it’s to sell the company to employees, awesome. Whatever the option. And if I am critical to the success or failure of the business, then I have eliminated options. So that’s the thing, Loren. There’s no, “Oh, here’s what we’re gonna do.” It’s just, “Wouldn’t it be cool if, when it is time for me to step aside, we had every option available?”
Jay Goltz:
So you don’t want to be some old, loser 65-year-old on Loren’s podcast, is what you’re saying?
William Vanderbloemen:
There are people who are 65, 75, and 85 who are still killing it. I just know that the overwhelming number of people that we manage succession for stay a little longer than they’re aware.
Jay Goltz:
You know what? I can tell you in what you do, you’re dealing with people that are in professions. They’re in the clergy. I could totally see that. Whereas if you own a company, and you take yourself out, as I have, to where no one’s calling me all day, I really am only working on the company—that’s where the difference between owning a company and having a profession is. I can see what you’re saying with somebody who’s in the clergy. It’s got to wear you out after a while, just like being a dentist or a lawyer or anything else. But if you own a company, and you’ve got people around you taking care of stuff, I think you could work at something and not necessarily have a problem. That’s my theory, at least.
Karen Clark Cole:
I know they say retirement is bad for your health. Sanjay Gupta says that, and I believe him. It’s good for your brain to keep working. Maybe it’s a different job though.
Loren Feldman:
Karen, do you have an employment contract for a specific period of time?
Karen Clark Cole:
Five-year, non-compete.
Loren Feldman:
Do you expect to stay for those five years?
Karen Clark Cole:
I’m going to stay till the day I die.
Loren Feldman:
Wow.
Karen Clark Cole:
Seriously, what else am I going to do? And besides, retirement is dangerous, they say.
Loren Feldman:
But there are other options besides retirement.
Karen Clark Cole:
No, but I love it.
Jay Goltz:
You could start a podcast. [Laughter]
Karen Clark Cole:
That’s funny, because I’m like, “You guys, you can lock me up for 20 years if you want. I’m never doing this again. You don’t have to worry.” And I said, “The only thing, if I was to go start another business, it would be goat farming. I really want to rent goats.”
Jay Goltz:
That makes perfect sense.
Karen Clark Cole:
You could use my goats for a day and they’ll eat your blackberries.
Jay Goltz:
To cut your lawn, yeah.
William Vanderbloemen:
No, no. Jay, Jay, Jay, now you’re showing your age. You rent the goat to do yoga.
Jay Goltz:
I have seen that. Okay. But do they do yoga all day long? They don’t cut the grass in the morning and then do yoga in the afternoon?
William Vanderbloemen:
Maybe you can get a bi-vocational goat. There’s your business, Karen.
Loren Feldman:
I just have one last question for you, Karen, which is, entrepreneurs talk all the time. I mean, I can’t imagine how many times I’ve been told, “I wasn’t a good employee. I realized I had to go do my own thing. I don’t take orders well.” Are you at all concerned about now being an employee?
Karen Clark Cole:
No, I can’t wait for somebody to tell me what to do.
Jay Goltz:
I’m gonna write that down, too. I’m going to put that in my folder for a year from now: “I can’t wait to have someone tell me what to do.”
Karen Clark Cole:
Oh my God. You mean, I can just go to work? Like, that’d be amazing. But no, I mean, thank God, they don’t want me to do that. They need me to keep running the company, right? Like, who else is gonna do it? They don’t know how to do it.
Jay Goltz:
No, I have to tell you sincerely, this really sounds like a great thing for you. And I don’t necessarily think you’re gonna have any problems. And good for you. It sounds like you found the perfect situation for you, for your company, for your employees. And hats off to you. There aren’t that many that pull that off.
Karen Clark Cole:
Thank you, Jay.
Loren Feldman:
21 Hats off to you.
William Vanderbloemen:
Very big congrats. Very big congrats.
Karen Clark Cole:
Thank you. It’s pretty surreal. I mean, I have to tell you, I’m like, “Whoa.”
Loren Feldman:
My thanks to Jay Goltz and William Vanderbloemen, and especially to Karen Clark Cole. Karen, thanks for taking us through all this.
Karen Clark Cole:
Yeah, thank you.
