Lessons - From Startup Success to Multiple Exits | Courtney Reum, Founder of M13

Welcome to Lessons episodes of Success Story, part of the HubSpot podcast network. These lessons episodes will be shorter conversations with past guests, valued members of the success story community, and myself. They'll be focused on teaching you actionable, insightful takeaways that you can use to upscale your personal and professional life. The first time entrepreneur, building a company, first company, two exes is not common for most people. So the process of building that up, when did you understand how you'd like to carry that company? What was the milestone or the revenue number where you're like, hey, this works. We have product market fit. Let's continue to grow. We don't need to playbook for the entire cycle of growth. But what's that product market fit point when idea is validated, and then also after that, walk me through the exit, the acquisition, and then pivot into M13. Sure. I mean, I think the, you know, one thing that really attracts us to spirits on paper was that because innovation was so hard, I won't go into all the reasons it's really hard, but it's really hard for new incumbents. It's really hard to get distribution. There's no pivoting to some other product, you know, something sitting in a bottle, you know, I mean, and you're really at the best, large, I mean, we did spirits, which is a little different than wine, a little different than beer. So what I'm saying is pertains most of the spirits, which you can't really sell direct to consumers. So I don't really, I don't really, it's harder to get accurate data, especially that of who my consumer was, what their purchase occasion was. I mean, all kinds of things you have to really, I would say, in many ways, do my hand. And so one of the things that attracts us to spirits was there, there are companies that sold, you know, an average exit could be easily like eight to 12 times sales, because it's that hard to do. So to the Victor goes to spoils and, you know, there's, of course, there's come business sold for a couple times sales, but there was, you know, Gregus, I think, I think the Cardi bought Gregus. I haven't said this that out loud in a while, but I think something like 14 times sales, because it was that creative, because it was growing so fast and they need a vodka. I think multiples have come down and things have changed a little bit, that's what it was like then. We saw that opportunity. Of course, we should have known there's a catch that the reasons I can go for 10 times sales is because it's hard to do. Still nothing, still, in many ways, still nothing harder. I've tried to do with lower, lower odds if you start from, you know, kind of a standing start. I think if you have unfair advantages, which is what we're always looking for, or relationships. Thankfully, I do now, so I'm put a gun to my head to start a spirits brand, which might be about what it takes. But I think the point where we had something, it was, you know, we never had the total number of distribution points of like an absolute or a Gregus, of course. But we had, we were in the very high-end places, we were in kind of like the trendier, we were very on-premise, which means we were in bars, clubs, restaurants in like major metros, New York, Miami, LA, you get it. So we had it, those places. And I think, I think the simple, simple metrics are stuff like reorder rates and same-store sales, because if people are actually reordering Veeve or calling for it, that starts to tell you have something. So that's kind of the anecdotal stuff, and then, you know, there's a whole bunch of metrics in terms of like cases sold in revenue and reorder rates that kind of let you know that, hey, you might be in the ballpark of something that someone wants to acquire. The funny thing is, I would say, you know, we all read about these companies that like everyone's following our ourselves to buy and this and that. But the reality is, even most things that get sold when we talk about this in our book is like, most things are a nice to have, not a need to have. And Veeve in all-candidates was very much that. Like people were interested, but no one was willing to like, you know, give up their first born for it. So, now it's a dance of like, making sure you, we, our last chapter of our book, shortcut, your startups, talks about how, assuming you think you might want to sell, if there's even a chance you might want to sell your company, you need to build it with that in mind so that you have the option, but not the obligation. And I think what a lot of people do is go, I don't think I want to sell it. And even if it's less than 50-50, then one day you decide you want to. It doesn't mean all is lost, but it means you have some work to do because there is a whole, you know, art to the, what I'll call kind of like, you know, we did some things to get noticed. We left the breadcrumbs one time, we bought a billboard right by our biggest distributor so that people saw, you know, stuff like that to kind of give the, the appearance that we were doing well, even though we were, but if a tree falls in the wood. So, it's a lot of, it is a lot of those breadcrumbs and it's a lot of, you know, I joined some industry groups and went to a couple conferences with people that I'd never met to try to build that relationship just so it wasn't like a thirsty, cold email, say, hey, want to buy me a slide of number across the table, right? And there's, there's a whole art to that, which I don't think I've mastered, but I've mastered enough that they've been able to sell some stuff. But I think that's a huge, you know, some people I talk to get really, no one's called me to buy my company. I'm like, and no one probably ever will, but that doesn't mean it's not a good company. It doesn't mean someone won't buy it for a number that makes you very, very happy. You just have to put on the radar and make them, you know, in gold, we always say something in the fact of momentum or the appearance of momentum and, you know, you just have to kind of create your own lock and create your own momentum so that people all of a sudden go, wait, I'm here about V of everywhere. Maybe I should call them and find out more. You know, that was, that was kind of the, the goal. Is that something that you look for now? Like, when you put money into companies, do you look for owners that are building to sell that have that mindset from yesterday? Is that something you train over because they're just walking through like that? Well, I think what we do, you know, adventure, the goal in general is not to, um, with some exceptions, like you're, you know, I have a fun with a finite life expectancy. So it's not great if someone holds it for 20 years, something they build, um, even if it's, you know, even if it's a great company. So yeah, we, you know, we have to look for the quid, but I think the flip side is what, what we do look for is we want someone who has a big vision, someone who, as I said, we want to be at the forefront of consumer behavior. So those companies can be big. So I want some of the big vision, um, and don't get me wrong. I've sold companies in the tens of millions and hundreds of millions that I've started, but I'm not, you know, for it to be a venture back company, I can't, I, like, if it took one check and sold for 25 million, a lot of people will probably be happy. That's not how venture capital works. So it's, it's power laws. We have to, um, you know, back people who, who tell us they want to build something big, but we have to believe it because occasionally at the person who says they want to build something big, they've got a little lightning of battle. And the first offer that comes across the table, then they want to take and you're like, a lot, that's not, that's not as much as it's a lot for somebody who's never gotten a check before, but, yeah, I got you. And that is attention. And look, we always want what's best for the founders, but that's why we just try to be upfront about like what are, what are both our, our, our objectives. Like no one's trying to hang on too long. No one's trying to get you to do something that we can't do. But if you want to build something there, you know, there are, there was things that, who knows how big they can get like an open mind. What was the, what was the, the process between, after you sold V, you're like, listen, I really want to build VC. I really want to go in. I want to, I want to have a vehicle for venture. I, you know, maybe we can bring in some LP money. We can, we can find some great deals, find some great founders. Like your, your mindset or your thesis for what M13 was going to be. What was that? Yeah, I think we, we kind of like, I, I can't say my, you know, my brother had more of a vision for M13, but I think we kind of in some ways fell into it by based on our activity set in the macro. As I said in the macro, living in a place like LA at the time. And, you know, now we have offices in New York and some other places. But, um, at the time, LA is just having this moment of like how things are built, like harnessing media and social media and influence or stuff. We were pretty well versed in that. And then you're kind of in LA. Um, and then, you know, tech enabling different brands to grow it, um, you know, to scale much faster and get the J curve than they ever previously were able to. So, um, that was all happening. And the last couple of years of Veeve, we, I think kind of knew it wasn't our, uh, are there, they're a few big future. So we had, we had made some angel investments. We had joined some other boards. And so, um, you know, all in consumer tech and some of those have gone really well. Another couple of other companies got acquired, one of one public, um, and then we had some investments personally that, that did really well. We had a, um, you know, we put in some of the first million on ring. The video doorbell that's I think Shark Tank's biggest product ever, um, things like,