Lessons - The Million-Dollar Exit Decision Every Entrepreneur Must Make | Robert Croak - Silly Bandz Creator

In this lessons episode, learn when to sell your business and when to keep building by understanding how personal goals and timing shape long-term success. Learn why early exits can bring life-changing returns but may limit growth potential, learn how losing money through rushed investments teaches the value of building a strong financial base first, and learn why even successful entrepreneurs must stay humble and strategic when transitioning into investing. One last thought or question with silly bands because obviously it achieved massive scale. How do you decide as an entrepreneur when you want to hold on to something versus when you want to sell it? Because I know that when you have that kind of scale, you're getting offers from private equity or or strategic buyers. So what's the words of wisdom based on your experiences to what you should do? Should you start with the exit in mind? Should you hold on to the business long-term? Should you sell it at the right time? This is a very personal answer because everybody has different opinions about this. How do you think through these ideas? I don't think anyone should buy or acquire a business solely with the exit in mind, but I do believe once you scale a business and it's life-changing money for your family and your future, you should always take the burden hand. So let's talk silly bands. When it was at the height and I was getting all these offers that you talk about, they were pretty substantial 35, 50, 60 million dollars. And I said no to all of them because I felt I could take it from 100 million to 200 million to two who knows what? When you were making when you 60, 30, 50, 60 million, was it like a 1x revenue that you were getting offers out or was it like multiples? It was like a two or a three out. That's not bad. I thought you were like a 65 million revenue, a 65 million dollar op. Okay, so you were getting more? No, it was like a two or three x-months. It's not bad. So for me, now it's different. I think if you're starting out and you build something meaningful, you should stay the course long enough that where the exit is life-changing money in burden hand. One thing that I learned with silly bands and thereafter is that I invested too freely after silly bands into too many startups and I went backwards financially for a little while and that was something that I learned and would never do again. So I think it's important for people to understand. If you build a cool company and you can sell it for a real dollar amount and move on and really figure out the next phase of your life, whether it's retirement, getting in shape or whatever it may be, you should do it because you're not always going to be able to sustain growth no matter what your business model is and what type of business. So if you can sell it for a meaningful dollar amount, I would sell it. The peak was 200 million, right? Was that over a period of time? Over a period of time. That was over a period of time. So you rejected, are you upset that you rejected offers? I'm not upset that I rejected some of these offers because it got me here. I wouldn't be in this seat if I sold silly bands for 65 million or 55 million or 100 million because I wouldn't have went on to continue to build more and more companies. I probably would have bought a beach house, bought a couple more cars and then just retired and it did angel investing and never built anything. So for me, I really enjoy the building process. I like taking the idea from napkin to being online to being in retail stores and to seeing that success, especially when I can bring others along the way. Like recently, we just launched the Puzzle Company Paragon Puzzles and I did that with Elizabeth and she really wanted to do something in the puzzle space. She's a big puzzler. So I did that and I love seeing that process from her brain to my brain, from napkin to in stores and now it's starting to grow and get popular and that is the coolest thing that I get to do every single day other than educating people. I love that. I absolutely love that. I mean, you have such a good mindset around like sort of your life story and I think it's important because a lot of people, they don't realize that everything happens for a reason and even not selling happens for a reason and ultimately, ultimately not selling could be more, help you be more financially successful in the long term because now you made some investments and we can talk about why a good business operator doesn't always mean they're a good investor. That's also a thing that I there. That could be a whole episode for sure. But that that forced you to figure out, okay, what's next in life and you've done that like very, very well. Yeah. Like I don't think that if you had a 65 million dollar exit, would you be on TikTok? I have no idea. Probably not. Probably not. You never saw Tom from my space again. He's gone. He's gone. He's literally filming birds in the Yucatan somewhere and nobody's ever seen him again because he has all this money. So yeah, I think me not exiting silly bands, me going through all the trial and error and failure since silly bands has made me what I am today and I think it has helped me craft being such a good educator because I've done it all and I'm able to then extract all the good points and bad points from all of that experience to be able to help others because I have people right now that have $10,000 to their name and I have people that have 10 million, 20 million to their name, but everyone needs help along the way. Yeah. And using that, you know, that point is a segue. Just because you're good at building a business doesn't mean you're good at investing. So all your most of your content right now is around investing and finance. So what happened when you made some money and this happens to happen to me, happened to a lot of my friends as well. They start, they make a little bit of money and you start to go into angel investing and you have no idea what you're doing and then you lose most of it and what has actually happened in my case and a lot of my friends as well, we just stay away from angel investing and now we just go into to real estate and stocks and maybe a little bit of stock picking because like I don't, I'm not good at betting on the jockey and figuring out like pre-revenue if a company is going to hit and I think that when you have a little bit of money, it's exciting to try all these new ways to invest, but I have one friend who is like actually an angel investor, he probably does 50, 60 angel investments a year. Outside of that, I know people that are worth hundreds and millions of dollars that suck at it and they've stayed pretty much away from it. Right. And I won't, I won't name names of one guy in particular is worth several several hundred million dollars and he will not write a check more than fifty thousand dollars because every time he does, he loses his money. So he's like, what's the point? And then he just started going to section eight real estate because it was just like, it was an easier, it was an easier investment opportunity that didn't didn't blow up every single time, tried to do it. Well, that's one of the biggest parts of my message when it comes to investing in general, build your base, then start diversifying because a lot of people want to start out, they get their first twenty thousand dollars, they want to go buy a house. They want to go buy a duplex and flip it. You have no idea how to do it. If you don't have a partner that knows how to do it, don't do it because it is not the right strategy. For me, I think people generally should build their base, whether their base is a hundred thousand, two hundred thousand, five hundred thousand dollars. So that way they have compound interest doing its job and building wealth while you sleep. After that, then start diversifying, maybe get into real estate, try house hacking, get a couple duplexes, build that up, start building a portfolio there. But when you get to the phase of wanting to angel invest, whether it's through big platforms and startups or Uncle Bill's restaurant, you have to understand that in many instances like your very wealthy friend, money has a way of making people think they're smart. And it's really funny to me because we talk about people that are very wealthy with their boring businesses. And I think it is one of the greatest ways to build wealth is through boring businesses. And right now, there's so many businesses and these boomer owners that don't have exit strategies. So for them, they're willing to just lock the doors and walk away. They've got their millions of dollars. They've got their house paid off. And that is the huge, that is the biggest opportunity I think in entrepreneurship right now is buying these established businesses. You can get owner financing. There's a lot of different ways creatively to take over these businesses, add in modern technology, modern sales strategies and really make a lot of money. But I think the main thing with venture investing and I do it now too, keep your check sizes small, like you said, 50,000. My check sizes used to range between 250,000 and 500,000. Now I'm 25 to 50,000 on my checks. I'm actually going to leave here and go do a wire for a very important company in the human robotic space. But I think that is the key. Take more shots in your investing like that because you're going to have, you know, I have this thesis thesis that if you're going to invest in 10 venture deals, five or six of them are going to go to zero. Two of them are going to do okay. You just need one that gets you that 50 or 100 or more X. And that's where all the money and wealth is built. But don't start out doing that kind of investing. I think too many people start too early in that type of investing. And a lot of them are going to go to zero because like you said, they don't know how to bet on the jockey. They don't know what's going to scale. And a lot of these high flying companies take years and years to become liquid and become profitable. And a lot of people don't understand that when they're investing in these types of deals, we introduce these deals in the rich habits network in our private community all the time. And I always reiterate to people, do not invest this money if you expect it to be liquid anytime soon. Because some people think they can invest in a startup or invest in an apartment building. And they're going to be able to get their money back or see a return any year. It doesn't work that way. So I just always make sure that I share the good side of everything we do, but also the downsides, but also just give people a proper understanding because everyone wants to build financial freedom, but they don't know how to do it. And you're going to make mistakes along the way. So I think it's important to not go too fast in things you don't know. Is it what is it figure AI? Yeah, yeah, yeah. So one of my friends, I can name them because I'm sure he's very proud of it. So Shane Neiman, do you know him? Yep. Okay. So he put in money at like a $300 million valuation. And he's been, he's been like on the figure AI, and like, and for a long time. Yeah. And now the valuation, well, I can't say it. No, no, no, with the bread, bread, ad cocks, a very impressive guy, very, very impressive guy. Yeah, he's great. But I mean, he has a track record. So this is his third. I think if I'm not mistaken, second or third, second or third, one of the companies, he took public, which is like a, anyway, it's a point. The aviation company, archery aviation, very, very impressive guy. Now that company's blowing up. But I don't think, I don't think many people have that luck when they're putting their check. And the bigger issue is not, in my opinion, at least, the bigger issue is not the person that has the ability to write $250,000 or $500,000 checks. It's the person who is pulling in a $200 to $300,000 per year salary. And they, and they're you know, they're maybe they're intact, maybe they're like, oh, angel investing is sexy. Let me start writing $25,000. But then it's a significant amount of their money that they're putting in. And they're putting in money into this pre-revenue on, you know, pre-revenue, early stage startup. Nothing's proven out. First time founder, because they've never done it before. Right. As opposed to putting money into something a little bit more secure. And I think that that's the biggest issue that I have with angel investing, because just because you're pulling in a good salary, or even if you had a, say, you had a $10 million exit in, you know, a state with high taxes. Well, you have like what, $5 million after that? Right. 10 millions on paper? Great. Great exit. Amazing, amazing exit. But you can you can burn through that money very quickly if you think that you're a good investor, just because you were a good at building a business. Well, a lot of people and most entrepreneurs, especially male entrepreneurs, they all think that they're a lot better at it than they are. And it takes many, many years to learn it. I mean, even you admit that you made some mistakes in angel investing. I've had a lot of zeros in angel investing. But now I've learned rather than getting in, you know, day one, where it's the idea and the concept, and I'm one of the first five investors, I'm much more happy getting in at 100, 200, 300 million dollars on a company that's having a meteoric rise, because then I am not betting on a concept. I'm betting on a product that has already tried and true and usually built out. And so I think that's an important aspect of understanding where you're getting into the company as a process and understanding where that company can go from a market cap in the future. And that's why I'm betting big right now on humanoid robotics, nuclear, and still kind of the second phase of AI, which to me, I believe, is the software side of AI and the application side of AI. And that's where most of my money is going to go in the next three to five years. Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.