Scaling Through Acquisitions: The Playbook for Explosive Growth Through M&A with Tom Shipley – EP 269

Justin Donald: Well, Tom, welcome to the show. So glad to have you here. Thanks for joining us, and in person as well.

Tom Shipley: Justin, can't tell you how excited I am to be here.

Justin Donald: Well, I got a chance to attend one of your M&A events live in person, with our mutual friends, Thanh and Tim Francis, and they put on a great event, as you know. And you guys, you and Matt, were just fantastic, and Brian Burt. It was just a killer event and demonstrated your expertise in the industry really well. It was so well done. And your daughter spoke. I mean, it was just awesome.

Tom Shipley: Well, what lights me up is to be around entrepreneurs. I love entrepreneurs who are looking for what's next or how to take their business to the next level, and they're open-minded, and they're curious, and they're hungry. And you put me in that environment is what gives me energy.

Justin Donald: It's so fun. Well, we had mentioned off-camera, and I think it's worth mentioning, we both have built our own mastermind communities, and part of it is like, "Hey, we want to serve. We want to bring smart people together.” But then there's this selfish part where we're both kind of like, “Yeah, this is the community for me.” Like, this is where I get to learn, and you get to learn, and we get to surround ourselves with amazing people playing the game of business and life and wealth creation at totally different levels, with awesome ideas and great concepts, different business strategies that you would have never thought could be businesses standalone. It's really fun, right?

Tom Shipley: It's like, how do you level up? You surround yourself with really smart people that are harder and curious and then are always out to find a new way to do things, and that's what I love to share what we've learned right and wrong along the way. But more than that is, I mean, we're doing deal reviews, as you do, but deal reviews every single week, and we get to learn lessons and listen to creativity from the group. And I love that.

Justin Donald: Well, we're going to get into successes and failures today. We have to, right? It's like the foundation of any entrepreneur. You learn some of the best lessons that you ever get from the failures, where in the moment, it's the worst thing ever, and then future pace it by a year, two years, five years, 10 years. It's some of the greatest lessons and findings that we will ever get. It's the information that we couldn't see until it beat us down. Pretty fascinating stuff. So, you've had experience buying companies, starting companies. You have scaled a beauty and cosmetic brand over 2 billion in revenue. You've had a number of different brands over the years. I think you've been in the Amazon space. You've been in the media agency space.

So, you've really touched on everything. And I'm curious for you, is there a niche that you like better than other niches? Do you find that market timing impacts that? I would imagine that's yes, but yeah, how do you decide what industry or what niche you want to go into?

Tom Shipley: Well, there are two things: what industry I like versus what industry I'm betting on now. And I'll share this is that I spent so many years as a merchant and a marketer and a biz dev guy was as I'm doing as we built our beauty brands and did acquisition along the way. But I mean, I started in other products, my first business. My second business was all around beauty for 18 years. And there's so much that is beautiful, romantic, and science and storytelling and impact and things that it's a beautiful industry to be in. And so, I love products. However, the product business, a brand business, is a very challenging business.

And I kind of shared with you, in general, when you’re starting businesses from scratch, it's like being dragged through asphalt and glass. And building any type of brand, skincare, yes, but any type of product brand from scratch is like being dragged through asphalt and glass with a rope being pulled fast by a car. So, it’s tough.

Justin Donald: I couldn't agree with you more. And today, it's like if you have the option to build or buy, why not buy? I mean, so it's not fail-proof, but it's way more risk-adjusted.

Tom Shipley: That's a great way of saying. Risk-adjusted, basically, is the riskiest thing with any business, any product name, campaign, any program, is getting it off the ground and getting the metrics to work at some level of scale. Once you do that, then it's basically, you know what you're dealing with. And the question is, how far can you scale it? And then tweak it as you go and evolve it.

Justin Donald: Well, I love being a student in your last event that you did, and not your live DealCon that you did, but the last kind of more boutique event. And I think one of my big takeaways is you had said something to the point of acquisition can solve many, if not most of your problems. You might inherit bigger and better and higher quality problems, but they're exactly that. So, from a life standpoint and from a business standpoint, can you elaborate how acquisitions can really kind of help you take a struggling business into a successful place, or a life that has become stale and you're on a plateau and kind of like reimagined and full of passion and life and vibrancy?

Tom Shipley: So, I'm going to go to an extreme edge case to start with. It was my second business, and I had this crazy idea. The first business was we were able to develop a playbook to develop a brand using direct response marketing. How do you develop iconic brand? And decided in 2005, myself and a partner in Richmond, Virginia, we said, "Let's take this to the industry that no one's ever successfully did it with.” And people looked at two former Special Forces guys just saying, “We're going to build a $100 million beauty brand using direct response marketing.”

Justin Donald: That's pretty hysterical.

Tom Shipley: Yes, every part of I said, “Well, camouflage. It's just same, but different.” What was being laughable, because no one did it. The way you launched a beauty brand back then is either through with a $100 million or $200 million launch budget, or you were very good, and you figured out, and you got lucky through PR. Those were the two main tried and true methods, and I just knew that I could prove them wrong and that you need economics, great storytelling, great conversion, that we can actually, and the science and product we can actually win. So, we went financially all in, and at the end of 12 months, and I said financially all in, I told Pam, my wife, I would not do that again.

But we did it, and suddenly we were at the end of our rope that at the end of one year with $331,000 in revenue, we had slight loss, but the lifetime value was exactly what we said, and the customer acquisition costs and print, radio, and online was great. The challenge…

Justin Donald: You had a pathway, but you're out of money.

Tom Shipley: We have no money, and no one's going to lend these two crazy guys in Richmond, Virginia, invest in us. We've tried everything, even though we had the metrics to show it worked. Invest in us, loan us. And so, what I learned in my first business, my first business got in trouble, and that's a different story. And accidentally or fortunately, someone brought to us the opportunity to buy a business, and it changed everything for us, and we had no money back then. I said, “Well, what do you do when you run out of money? You buy a business.” So, my partner and I were doing some consulting with an amazing business to get some income coming in, business in Hoboken, New Jersey. We're in Richmond.

And they were a $15 million business, $1.5 million EBITDA. They had nine products, and they were a supplement company, but they had everything we wanted. We sat there in their offices, which were really two townhouses put together at that point in Hoboken, but they had fulfillment out. They were shipping, I think, 15,000 packages out of the kitchen. They had their programming team on one floor. They had accounting team and customer service on another. It was interesting the way they were doing this, and they were lean, and they were $15 million in revenue, $1.5 million EBITDA, but they were great internet marketers. They had a great tech stack. They had everything we needed.

So, we joked that, "Either we're going to build this or buy you.” And they said, “What do you mean buy? Make us an offer.” And we made an offer for somewhere about two times EBITDA for that business. And they said yes. And we wrote up a term sheet. Now, we have a term sheet to buy the business, and we're sitting there thinking, "We can't pay our bills, but with this, we have cash flow, we have profit, and we have a platform.” And with that, we went out and raised the money we needed. It was profitable growing a business over five years. And so, what did that solve? And then we put our little $331,000 business on top of this $15 million platform. Within three years, we did $100 million. And we did a billion dollars over that first skincare brand. But it was that acquisition.

So, let's take a step back with your original question. What did it solve? First of all, we had a cash flow issue, and with…

Justin Donald: So, you have negative EBITDA in your business, right? You inherited 1.5 million of positive EBITDA overnight.

Tom Shipley: Overnight.

Justin Donald: I'm sure you structured that deal pretty intelligently as well, for not a lot of cash outlay at the beginning.

Tom Shipley: No. We basically went out and got mezz lending, so we grade them 85% cash, and three years later, we bought out their 15% for the same amount of money we bought out the 85%, because we're able to scale the business. So, it was a massive win for them. It was great for us. It gave us the platform we needed. But again, that was the deal at the time. The mezz partner we brought in was phenomenal. And a mezzanine, for those that aren't familiar, is basically, it's debt, and then they have a little bit of an equity kicker, which, if we're successful, gives their investors or their LPs the return they're looking for. But what it gave us was great internet marketers. They had the tech platform that we desperately needed, especially to do continuity and extended product lines.

So, you go down the checklist of everything we needed, rather than two guys in an attic in Richmond, Virginia. It gave us everything. So, it solved 12 different massive issues that we had like this, and then, because we had a negative cash flow conversion cycle on our business, again, it took us 90 days to break even the way we did our customer acquisition cost. Suddenly, we're able to go put a line of credit in place again, and therefore we're able to then have, it grew to $17 million, our working line of credit.

Justin Donald: Working capital is everything.

Tom Shipley: That's it. And combined, it gave us the tools we needed to scale.

Justin Donald: Oh, that's awesome. What a great story. And for those of you that aren't familiar, like mezz debt is going to sit behind senior debt. So, it's interesting. So, you're probably going to pay up to be able to get that, right? So, charging higher interest rates, but then you paid it down as quickly as you could. So, a brilliant way of doing it without it sounds like you didn't raise any equity at the beginning to do that deal.

Tom Shipley: Nothing.

Justin Donald: So, you guys retained all ownership.

Tom Shipley: Right. And we had nothing left. Well, of course, I think they got 5% on the business, but from our perspective is we had nothing left, so we couldn't kick in equity. So, a lot of debt lenders will want you to put in 10% to 20% but at that point, we were done.

Justin Donald: Wow. Well, that's exciting. Something else that you've said often is that if you add a zero to anything, like you have this add a zero philosophy, but if you add a zero, what does it look like? Like, how does that change the game? And so, I'm sure you've done that in these businesses. I mean, that's a prime example of one, but I'd love for you to kind of elaborate on that philosophy.

Tom Shipley: Sure. There's a number of things about adding zeros to businesses. First of all, and I do it in life, just in general, the problem is it's our prefrontal cortex. It's the way we're wired. We put our hand on the stove. We say, “Don't do it again.” But as entrepreneurs, we have failures. We hit the wall. Things challenge us, so our brain is wired, “Don't stretch. Don't get burned.” And therefore, we take less risk and less risk. And therefore, we get not comfortable, we get stuck in our status quo. And the way that I break out of that is it starts with the mental exercise that says, “Okay, take your current business, add a zero to it. What would it take to be at that level? What would it look like? What would the operations?” And then I go to the next level and say, “No, add another zero to it.” Not that I’m saying that's what you should do, but it's a way of getting a mental breakthrough.

Justin Donald: Mindset first.

Tom Shipley: It's mindset first. So, let me give an example to this, if I can. So, it was the beginning of COVID. Drew and I knew we were going to sell our business, but everything was put on hold the very beginning of COVID. We lived in northern Bergen County, New Jersey. Our offices were then in Jersey City. It was a three-and-a-half-hour commute.

Justin Donald: That's crazy. Wow.

Tom Shipley: Every single day. So, suddenly, I didn't have this. I had no interest in watching Tiger King every day and getting drunk. So, it was a great opportunity just to reach out to my network and talk to people that I don't get a chance to talk about and catch up. I called Brian Burt, here in Austin, and who has a great Amazon agency. I met him years ago through another mastermind I was in. And so, I said, “Brian, we've always talked about doing something together. How about now? Let's buy a brand together.” And he said, “I'm game.” So, then a day later, talking to Brian again, I said, “You know, we talked about that one brand. Why don't we buy over time 10 brands? Are you game?” He said, “Yeah, that would be a lot of fun. And we're putting our time something with a higher ROI. I think that would be great.”

And then I thought about it for the weekend, and we talked on the following Monday. I said, “Brian, let's start doing this. Any interest in buying over time 100 brands?”

Justin Donald: Whoa, you really upped it.

Tom Shipley: So, it's a crazy, stupid statement that I start with this. Then I was reading an article by a Harvard professor. I forget his name right now, but he wrote, he said, "One of the best questions you can ask that gets past operational blocks is what would have to be true to make this possible?” Because typically, you talk to operations people, they'll tell you, "Well, we can't do it for this, this reason,” which is great, but then you reverse it to them, your operations people, your CFO, the people that are meant are there to protect you, and say no, and you would ask question, is, what would have to be true to make this possible? Well, that's what we did is we said, "What would have to be true?” And we have operating assumptions.

Atlantic Coast brands, we had challenges managing over three brands at any one time. Why? Because where do most of your resources go? It goes to your largest brands, where you have your higher ROI. If you're going to implement new product, new campaign, you want to put it in your largest brand or your smallest brand. So, therefore, it's this reinforcing loop that basically your energy goes for your biggest brand. So, we said, "What would have to be true to make this possible? Let’s rewrite all of our operating assumptions.” And we did that. And I said, “Okay, let's go through. Can we make this true? Can we make this true? Can we make this true?” And Brian and I said, “Yes, we can do that.”

And then the final gap we had was capital. This brand, because the marketplace and the way deals were meant, because it was competitive in the Amazon and e-com space, it was primarily cash deals again.

Justin Donald: Yeah, it got hot. I mean, there were bidding wars.

Tom Shipley: It was stupid. So, when we started, we were one of the first people out there. We were one of the first groups out there, and the only one who had raised the money was Thrasio, and that was when they did their first round. However, they're the ones who created the barrier as far as how big of cash they were paying, so we had to follow suit to be competitive. So, with that, that was part of a model. I said, "Okay, then in order to do this, we need to raise $100 million.” And for some reason, my voice didn't crack when I said that. And then we went out. We met with seven private equity firms. We had a 12-page deck to pitch it, and we met with seven private equity firms. We got six term sheets for $100 million, a piece.

And then we picked our two favorite. We said, "How about you come in for 50 and another one, come in for 50? We'll put you guys together, and we'll go out and launch this thing.” And that was it. We raised $100 million. And so, what did I find out from adding zeros? If I went out and said, “I want to buy a brand with you, Brian. Let's go and bring the outside capital,” you think anyone's interested in putting capital on Brian Burt and Tom Shipley buying a small little Amazon brand? No. Could we recruit a team? So, by suddenly us going big, and also, the step that I didn't share is that we had this idea, then Brian went out and put together meetings with some senior people from Amazon, and we pitched the idea to them to recruit them on board, and we got several team members, senior team over Amazon.

So, suddenly, when we met the private equity, it was Brian, me, and these several senior team members, which basically said, "And we're operators.”

Justin Donald: Legitimize you. Yeah.

Tom Shipley: That's exactly it. So, suddenly we were the winning team and willing to back. So, by putting a zero onto it, we're able to create this big vision, recruit better people, get better capital, and it puts us in a better position.

Justin Donald: I love that. Well, it's interesting. You said something just kind of nonchalantly that I actually think I want to bring some attention to, because you said you met Brian and some others through an early mastermind that you're part of, and I'm very familiar with some of the masterminds that you've been part of. I know some of them don't exist anymore, but the relationship still lasts. And you and I have been part of a lot of masterminds, a ton, and we've now built our own. And I think that one of the most important things to touch on is this idea of leveling up your peer group and your mentorship, and how masterminds really like they fast-forward that. They exponentially charge it. And I would love to hear your thoughts on the impact that the early masterminds you were part of led to the success that you had.

Tom Shipley: So, I'll start with this is that I love being in the room with like-minded people that are open to learn and grow. It levels up your game. And also, if you're in a true community that they built, you're helping each other solve problems. The best relationships are built through shared experiences, and those are the ones that last, as I have found, decades. And again, as you go through this, because you're going through journeys. And again, if I look at the early days of people that were in Russell Brunson’s Inner Circle, it was, yes, it was Brian, it was James Friel, who were at our event, but it was also Alex Hormozi. And again, the caliber of people there are incredible. And everyone kept on leveling up again to a different level, which is just pushes you.

I shared with you a story, but I like to share it here, is that the power of a mastermind. So, in Russell Brunson's Inner Circle, when we were doing 70 million and 100 million a year, we were obviously one of the biggest people in the room coming to my first mastermind event. So, I also looked at the opportunity for me to give back and mentor people while coming in there and being in a different environment. And they're marketers. I love people that are passionate about marketing and marketing game, marketing tactics, and strategies. So, I thought it would be fun, so I joined it, and I'm coming out to our first meeting, and they say, "Bring your spouse.” So, love to bring Pam along whenever I can. And Pam's a therapist.

So, we were about to leave for this event, and then we got the call from about a month before, got a call from our manufacturer, $500 million manufacturer of FDA products, FDA-approved products, and our main product, our continuity products, they manufacture it, and the sole manufacturer, they're $500 million a year manufacturer. So, we're good until we weren't. We got the call from our rep, who said, “I have some bad news. We just ran out of money, and we chapter seven, doors locked, everything's closed, and we're done.” And we said, “Can we get our product out?” They said, “No, you have to go through the bankruptcy courts to get your product out.” We said manufacturer, but they had the license. They had the approval of the FDA.

And so, we called our attorney. They said, “Well, you can't do anything until it goes through bankruptcy and figure out a way to get the bankruptcy courts.” And then I said, “How long will that…?” And that could take three months. It could take six months. It could take a year. And then, on the other hand, I said to our FDA attorney, "Okay, we have the resources. Let's go out and let's get our own approval.” She said, “I'm going to rush it, and we might be able to do it in 18 months. I could bring it on 16 months.” Now, if you're shipping out a monthly beauty product, let's talk about shampoo and hair regrowth product. What's a woman going to do? Is she going to wait 30 days?

Justin Donald: No. She's going to find a new product.

Tom Shipley: There she is, and she's going to cancel. So, let me just share this with you. In that September, we got three term sheets to buy the business, one for 55 million and one for 65 million and one for 75 million. We were doing $600,000 of profit a month. Quickly, our profit went from $600,000. Cancellations of our continuity went to $600,000 a month loss.

Justin Donald: Oh, my goodness. That is brutal.

Tom Shipley: Brutal. So, suddenly, going from the high wind at your back, you're at the mountain, finally, you're seeing the moment of crossing the finish line with the yellow band, and you're crossing it, and we see ourselves there, and suddenly, just having our legs cut off from under. It's what I call the lowest, right?

Justin Donald: That's right.

Tom Shipley: And everyone physiologically happens in it. For a lot of people, it's your gut. For me, it's a lot of times I feel the weakness at the knees, just a little bit of just feel that emotion. And so, we tried a lot of things, and our bank called up right as I was leaving for Boise for the first Inner Circle meeting. And our lender, or main lender, called up, and we have two different forms of debt, but our mezz lender called up and said, “You know something, we're cutting our losses. We're going to take the brand, we're going to liquidate as quickly as possible, and take what we can, and we're moving on.”

Justin Donald: Oh, my goodness.

Tom Shipley: And I said, "Give us a little time.” They said, “No.” So, here I am, the Big Shot walking into this, and I'm running along the Boise River with Pam. It was about 6:30 in the morning as the sun was just starting to come up, and it was a cold day. But it was dark and it was damp, so I could barely see Pam through the mist, and you can cut it with a knife. And I said, “Can we talk about the situation?” And we go really dark. And Pam said, “Let's do it.” She said, "What's going on?” She knew exactly what's going on, but it's part of the process. We go through it. I said, “Well,” I shared the situation. She said, “Okay, if you can't talk the bank out, turning things around and not pulling the company, what's going to happen pulling their note and their line of credit?”

I said, “What's going to happen is that 1,000 people in our ecosystem are going to lose their jobs.” She said, “And then what?” I said, "We're not going to have anything, any assets left, because I'm personally guaranteed on the second line.” She said, "Then what?” I said, "The way our tax is structured, we’ll probably owe the IRS money.” She said, "Then what?” I said, "The house is gone and the cars are gone.” She said, "And then what?” I said, "Then we're…” She said, "And then where are we living?” I said, "An apartment.” And she said, "And what are we doing the next day?” I said, "Getting to work.” And she said, "And where were we in five years from now?” I said, "Selling our next business between 30 to 50 million.” So, she said, “So, what are you afraid of? What's holding you back? Let's go.”

Justin Donald: I'll tell you what, having a soulmate that is in it with you that can really kind of cut down what life and lifestyle has looked like to go backwards is a true treasure.

Tom Shipley: Oh, my god. I get emotional. I get very emotional thinking having your ride and die person that's there, it doesn't matter what they're there, and they believe in you no matter what is just it's probably one of the best things I've done. And it is the best thing I did, and the smartest thing I did is basically Pam, and kept us together for all these decades, and made it my number one investment of time is Pam, period, and the girls.

Justin Donald: That's awesome.

Tom Shipley: But then where's the mastermind come in? Therefore, then I show up my first mastermind event, where Brian was there and James Friel, and other people that I know are in this…

Justin Donald: The Poulins are there. I had them on the podcast. I love them.

Tom Shipley: The Poulins are there. So, I’m going there, and instead of sitting there and hiding, which I do, Russell had a coach who got on a call with me in advance, and she said, “Tom, there is no shame. The only shame is what you hold in,” because that was my thing. I'm Special Forces guy. I've been a successful entrepreneur. I solve my own problems myself. I don't share my issues. I solve things. And suddenly I said, “Okay, share it.” And just very vulnerably, I shared the situation. And I hate to say this topic that we might want to talk about is shame. Shared it. And suddenly around the room, people started giving advice. And the first couple advice I say, “Wow, that's great.” And I wrote it down. The second advice, the third advice I got, and the fourth were stupid and horrible, but you know something, it inspired me for other ideas.

Thank you. That's great. And we went around the room, and then Russell went last. And I had a whole page of ideas. Bring it. And started the formulation of a plan. The next thing I do is I called because I was in War Room, Ryan, Roland. I said, "Guys,” here's where I'm in another mastermind, “Here's my situation.” And they started sharing ideas and sharing me specifics on what to do. I said, "This is great.” Went back to my company, and I met with my CMO, and he said, "Here are some ideas. What do you think?” He said, “We tried it all. It doesn't work.” And I said, “I know we've been together for seven, eight years, but we're done. This is your last day.” And that was really brutal for a number of reasons, and then with that, two of the people that were counting on most to execute without him there also quit because they were loyal to him.

So, then I went out, and I went to a recruiter. I said, “I'm looking for a person who is the best digital marketer you can find. That's just someone who's brilliant, that would be all in. I need the same thing for Amazon.” She went. She gave me a couple of incredible candidates. But then as I shared our situation, I found two warriors who said, because I'm not going to hire our situation. We're in this, and jumped in this, and I'm going to say the next 12 months, we're the best in business ever, growing from 600,000 of loss to profit, 600,000 a month loss, and then getting back to that level. Eventually, the company got to a $900,000 per month profit.

But going through that arc, and every day just testing and me talking with the bank, "Here's the plan. Give us two weeks. Here's our results. Give us two weeks.” Of reading the data, we're quickly implementing at speed and testing things we've never done before that we were hesitant, but everyone that was there were warriors. They were all in. I'm so proud of the team that was there.

Justin Donald: That's an incredible story, and I love the way that these masterminds, these relationships powered you through and gave you the insight to be able to make moves you otherwise wouldn't have made. I mean, it was more likely that you were going to fold than figure it out, and then you trusted your gut, also on the people that you needed to partner with to get you to that next level. So, it's a real testament to your grit, but also to your willingness to be vulnerable and your willingness to just share all the details and take coaching and accountability from your peers.

Tom Shipley: And you know this. The entrepreneur game is a brutal game. It's brutal, it's harsh, it's lonely, and even if you have a partner, you're not necessarily always on the same page, which makes it even lonelier. So, having a group of people that basically don't have a stake in the game, basically, and you can be honest and open and get feedback is just something that, and to give you that energy because, I mean, we're driven, we're possessed. Where someone said, who was it? My daughter said, “I came to a conclusion. Entrepreneurs are sick in the head.” And I said, "In certain ways, you're absolutely correct.” I would call it deviance. It's what drives us. We see problems that we have to solve it, that we have this we don't quit. We had this level of grit, where the level of stress and pressure that would break most people is our Tuesdays.

Justin Donald: Yeah, so true.

Tom Shipley: And I love surrounded by people that just are in it. We are the men in the arena, right?

Justin Donald: Yes. Well, and I think that your background, being in IDF Special Forces probably played a role in that grit and in your desire to figure things out. And I'm curious how those skills that you learned and developed there translated to being an entrepreneur and doing it at the highest level.

Tom Shipley: I had an unfair advantage when I got out and something, it's what the James Clear, Atomic Habits. Great book. But I always love the way he talks about is assuming the identity of the person that needs to accomplish whatever it is and see if he can pull that forward to now, because most of us become the person that we need to be to accomplish whatever great task we're doing. We never start off with the skill set. So, in the army, that's really where it was, where basically is a crazy 21… Back, I went as an old man at the age of 21, but a 21-year-old kid having this crazy vision. I can be in Special Forces in a place where I don't even know the language, and athletically, I'm okay. Now, I'm not top. I'm not an Olympian and have this vision.

But as an entrepreneur, we don't see the 99.9% of businesses that will fail to reach over 5 million or 10 million in revenue and last for over five or 10 years. We see us being the successful part of it. We ignore it. So, starting from those numbers, in this case, it was 10,000 soldiers try to get in my unit. A thousand are picked through, number of tests and batteries for hell week. At the end of hell week, there are 25 of us. At the end of 18 months, there were 14 of us. But again, that gave me my mental philosophy as far as framing for the entrepreneurial journey as far as what I can achieve. The other thing is the level of grit. I saw people breaking and quitting all the time, and someone gave me a great advice along the way.

He said, “Tom, understand this. When you're going through your worst trials and tests, you're to look to your left and see the person who is just big and strong and can go forever. And you look to your right, and you see the same thing, and you're there saying, ‘I can barely take another step,’ and understand that they're looking at you, saying, ‘I can't believe that guy's going to go forever.’” That we can't judge ourselves. We’re running our own race. We're doing our own thing. And basically, is you can always put one foot in front of the other, and another step, another step. And there's something very powerful when we have businesses, is about momentum. We have momentum. We just keep on going. We will figure it out.

So, what I learned in the military is that thing about grit, that thing about tenacity. So, I had an unfair advantage of what I considered what was real stress, what was real pressure, and what was really hard work. The next thing is that we're all trained as medics because our unit was especially for saving lives wherever they are, and rescues wherever people were. So, we're trained medics. Something they teach us medic is when you're in a mass casual event, you'll never have the right amount of tools and instruments and all the resources you need. So, it's about improvising. So, the expression…

Justin Donald: Being resourceful.

Tom Shipley: It's not about resources. It's all about resourcefulness. And that's the key thing. So, basically, you're trained on resourcefulness. So, for me, whatever was thrown at me is doing my first startup and then my second one, it was about, I thought it was a fun game. And the other thing is, is that I think, like you, is I don't like to lose. I like to win. And therefore, I mean, like a beast you are in pickleball, but business is a game. Now, it's a game I take very seriously, and I will not give up. Sometimes I've risked my own health, which was silly, as far as just going all in with businesses. But ultimately, what really counts are my wife and my kids, my family. That is real stakes. Business is the greatest game in the world, and I loved it, and I viewed that going in, and therefore I was able to take certain risks. I started my first business with $100 in my pocket.

Justin Donald: Wow. Well, and it's interesting, because you're experiencing these high-pressure situations that are life and death for you and for your brothers. But in business, maybe it's not life or death like in human form, but it's life or death in business form. So, you're very prepared for that.

Tom Shipley: And it's people's livelihood. And I'm going to say that, as I got back and became a little bit softer again, I got very plugged into the people around me and making sure that, again, it's brothers, it's your team, it's your family. So, again, family is a very difficult world in businesses. I take care of the people around me. However, we're a business, just like in my unit, if people weren't up to a certain standard, it didn't mean that I didn't care about them. They just no longer belonged in the unit. They didn't make the cut. Same thing in business.

Justin Donald: Inner circle. Outer circle. Yeah.

Tom Shipley: Same thing in businesses. Not everyone who's there from the very beginning is supposed to be with you. And by keeping them in your company, you're doing a massive disservice for them. I was talking to an entrepreneur this weekend. Now, I’m having coffee with her, and she was talking about one of her key salespeople, a longtime friend, but the person's holding the company back, being in the current position she's in. And I said, "So, why don't you let her go?” She said, “Well, she's a friend. It’s really tough.” And I said, “Well, have you started putting her on a program?” She said, “Yeah, she's been on a performance improvement program for 90 days for last year.” And I'm going to share this. I said, "That's just cruel to do to her.”

It's just unfair, because she will find a place that's really great, that she fits. She's not a good fit for you now in this position. And that's why I look at family is like same thing as, yeah, we're brothers or families or in units that I take care of the people around me fiercely. However, it doesn't mean that I'm going to keep them on the payroll when it's not a good fit, because I believe people have other evolutions. So, the lessons I learned in the military, there are so many of them, how to think strategically about which fights to fight, which fights not to fight, and just where ego can get the way of good decision making, which is obviously some of the biggest failures in businesses. But that I felt had given me an unfair advantage coming out of the army and doing my first startup.

Justin Donald: That's awesome. I know one of the things that you talk about is like life as an epic novel, and kind of living your life that way. And I'm kind of curious how you view entrepreneurship as a way to write your own life story.

Tom Shipley: The overall philosophy, and I learned it along the way. And the biggest thing that's tough for us too, because we take so much messages from outside people and judgment. But the reality is I view life is our epic novel. It's our novel to write, and who cares what the critics say about any page in the novel? It's for us to write, determine what's right for us. And I also believe that every chapter in your life is just that, it's a chapter. And I personally look at life in five-year chapters, and that Pam and I look at our lives every five years, and we either decide to re-up. We did this New Jersey with Atlantic Coast Brands. Life was great, so let's keep on doing for another five years. Let's re-up and stay in New Jersey, and we'll define it later.

And then it's by looking at those moments we can redefine it. I can change the business I'm in. I can sell my business. I can start a new one. I can do some transformation in my business. I can do, basically, is you're not trapped. A lot of people, business owners, and you've seen this, you work with so many that…

Justin Donald: They definitely feel trapped.

Tom Shipley: They feel so trapped on their EBITDA, the revenue, what they're doing. They might not enjoy it anymore, but they feel stuck. It's like having golden handcuffs in your jobs. And I'm thinking there are very few people that when they take massive leaps of faith, and they take jumps, that maybe that thing didn't work, but it's the next thing or the next thing. Just keep on going and trying again, and don't end up in a better position. And therefore saying, “I'm stuck, and I have no choice,” that's what freedom is about. We have choice, and therefore I like to make conscious decision based on chapters and even businesses. And in business, you can build almost anything in five years.

Justin Donald: I love that. That's very poetic, and I like that tagline. In a business, you can do almost anything in five years. I think that's super powerful. Great to remember, especially when times are tough, but also good to remember when things are so good that it may not stay that way. And you sometimes need to capitalize on the season you're in right now, because it may change.

Tom Shipley: 100%. Something I like to share is that when you're on top of the mountain and the winds at your back and everything is just perfect, it's never as good as you think it is. And when you're at the edge of a cliff, when you have no options that are left, and everyone is telling you to quit, and you're done with, it's never as bad as you think it is.

Justin Donald: That's good. That's powerful. So, what advice would you give someone who really wants to design both their life and their business, even just lifestyle in general, with greater intentionality?

Tom Shipley: The toughest question for most people to answer is, why? What's your why? And I'm going to say it's what's your why for now. It doesn't have to be permanent. Things change, we learn, we grow, but what's your why? What's really, really important for you, but think deep about that. And then how can you design your business and your life? And we all have seasons. Some season is I want to put more time into my kids, and that's really important for this season. And great. I want to figure out how to balance both. I want everything. It really doesn't matter, and what level of impact, and ultimately, when you have nothing, that next level of dollars that you're in seems to mean everything for you, when you have nothing and when you can't even figure out how to make your basic bills or keep a roof over your head. We talked about this.

Think about your life. What's my life 10, 20, 30, 40, 50, 60 years, whatever that point is where you're kind of done with your career and towards your really winding down, and you look back over the years, is what's important. You're going to think back to it's my wife, it's my kids, my husband, or a significant other. That's really important for me. It's the people that I impact along the way, and that's what really counts. Those are the stories that you remember is, look, who were the people that I was able to help along the way, and look what they're at now, and look at the impact I have in the world. So, as you say your why, how do you intertwine that? Especially as an entrepreneur, where entrepreneurship is as difficult, so how do you actually intertwine that to making sure that you're making the investments there, as well as figuring out a way to pay it forward?

Justin Donald: Yeah, I love that. That's so beautifully said, very poetic. And I'm going to just throw this out there, because I've been doing this for a long time, but I think that your spouse's why and your kids’ why matters just as much. So, you need to be fulfilling your why, right? Like you have to be filled up. But I think as the leaders of the household, like we really need to support our spouse, our kids in finding their why. And that's why for my wife and I, and for my daughter, we do these annual planning days, and we'll do it often, over a couple of days, and it's a pretty long outline that I have. And anyone that wants the outline that we use, I can link it here in the show notes.

But we dig into everything. We talk about career, finances, like passions, philanthropic stuff, sex life, like everything. And we drill down.

Tom Shipley: With your daughter?

Justin Donald: Well, no. That one is more spouse, so my wife and I, and then we have more of like a kid-friendly version of like dreams and goals.

Tom Shipley: How young were they when you started?

Justin Donald: So, we started doing our dreams workshops, probably when my daughter was like six or seven. And we've just kind of grown it as her attention span has grown. So, this full marriage and planning day, my wife and I literally dedicate a day to it, and sometimes it's two days, and we'll do an overnight. We'll go to our favorite restaurants during the process, but we dig into everything. And I think it's important that I dream and I have goals, and I share those with my wife, and that Jennifer has her dreams and her goals, and she can share them with me, and I need to help her accomplish those. And then we'll do that session with our daughter where she comes up with her dreams and her goals and things that she wants to do, and that informs even some of our travel, right?

So, like one of our next trips, my daughter wants to see the Eiffel Tower. I've been to France countless times. My wife's been to France, but we can't wait to go back, because this is a dream on our daughter's list that she's going to become alive when she gets to experience it, but we would have never known had we not done this exercise. So, it's powerful stuff, and even for my wife. My wife doesn't “work,” but she has the most important role of all, which is helping raise our daughter, and a lot of the things that she does around the home. And we used to be business partners in different ventures over the years, and she's done a lot of the accounting and books and all kinds of stuff.

But for her, I think she's in a season where she's looking to have some things that she's really passionate about that are outside of the family. But if we weren't doing these exercises, then maybe those don't come to light. I think it's so important that we dive deep.

Tom Shipley: And I love that. I know that the longer you wait to start that, it's more difficult. Especially kids in high school, and say, "Sit down, do it.” Getting High school kids to suddenly do things that is a lot more challenging than actually helping them on the journey. It's funny, because when my wife stopped working to have kids, and we had kids, and she wanted to stay home with the kids, and I remember I told her her job was, I said, “I'm working like I'm working so you can have every day and just have fun and enjoy and relish every moment with kids, no guilt, just all in because your joy would leave my fulfillment.” And she was talking to one of her friends, and she said, “Oh my god, I love our life. I love raising.” And her friends say, “I agree. I love this the best, but I would never tell my husband.”

“Why not?” “Because if he knew us having this much fun while he's working so hard, he’ll resent it.” I'm going, "Oh my god, it's the opposite.” Joy. And there are seasons for our spouses where it changes. And so, therefore, my girls both were in high school. It was a new season for her to go back and get recertified as a therapist and to start a professional career, which gave her passion, and whatever I could do to support her without pushing her. That's the key thing.

Justin Donald: That's it. That's huge.

Tom Shipley: Yeah. Because we have a tendency as entrepreneurs to want to get things over the finish line. You can't do that with your kids.

Justin Donald: And execute, right? Like, let's get this done. Let me help you solve.

Tom Shipley: The most embarrassing story. So, Pam stopped working. She's home with Ayelet, our first daughter, and it's beautiful. And I'll take over the responsibility. She doesn't work, but if she can help me, support me, that'd be great. So, I want to ease the issues with her. So, on a sheet of paper, my first day that I go off and she's at home, I gave her a list of things that I could use support on, and put the task, start date, complete date, comments. When I got home, she gave me the comment all the same. It was all follow-up. Well, actually, it was FU, FU, FU. That's the last time I actually put something in writing like that. So, right now, I do text and, "Can you help me with?”

Justin Donald: Yeah, I love it. Well, it sounds like you guys have a real special marriage. I think doubling down on that relationship is the most important thing, because then your kids watch that being modeled. And I just think when the home is right, it's so much easier for the business to be right when you have a partner that's in it with you and trusts you and respects you and reveres you, that's a different atmosphere to be operating as an entrepreneur in or any business professional. And so, I love that you've doubled down there. It's something for us that we've doubled down in. And think it speaks a lot to your character that you prioritize family so much in these relationships. So, well done.

This has been awesome. Thank you for spending time with us, and I know you're heading back to Israel here soon, so I appreciate you being able to get in person here before you head back. But I would love for you to share a little bit about how people can find you, what you do. Talk about DealCon.

Tom Shipley: Okay. So, let me start with this. It was three years ago. We had friends who were always asking us, so I shared with you the importance of acquisitions, and I believe that every entrepreneur should be leveraging acquisitions, because basically is, yes, just your entry into what you do, private equity, which always means is private equity. It's not something big that you have to be a billion-dollar fund that's on it or 10 billion. It's basically real wealth is created through private equity, through investments. It's not only for you as an individual, it's also the businesses that you acquire into your business. So, the math is very simple, if you want to grind it out at 10% to 50% growth a year.

After five years, you're going to, and assuming nothing goes wrong, great, you increase your business value by 50%. Is that going to create the liquidity event that you really need? However, if you buy one business every year for five years that’s half your size, you'll 12 extra exit. Now, you don't have to go that extreme. You could do it every other year. It could be a 30 years of your size. But it's just the math is there that says here's how you create real wealth and real exit opportunities and strategic options for you and your business and your team and can create generational wealth. So, it's a playbook. It's low, as we were just talking about before we started. It is if you start a new business, new product, new campaign, the probability of success are under what? 10, 20, max 30%.

Justin Donald: Yeah, I mean, actually, I think it's 4% or less is your likelihood of success.

Tom Shipley: Correct. Yet, if you acquire a business, your likelihood of success is over 80% Okay, so therefore, and it's about focusing on the execution. There's a playbook on how to do this. So, people were reaching out to us and said, “Tom, teach us your playbook on how to do acquisitions,” what we call programmatic M&A. And I said, “I'm too busy doing acquisitions. That's how I make my money. This is where I have my fun. The answer is no.” Finally, my partner in that business at that time and I said, "If you show up in Austin, Texas, we'll do it. We'll spend three days with you.”

And we had a blast with 12 business owners teaching them our playbook. Then four months later, we did it for 25 entrepreneurs. Five months later, we did it for 40, and then we said, "Let's put some structure around this. So, now we do it every six months. We get entrepreneurs together, where our goal is to share everything that they can absorb over two and a half days.” And my goal is also to put very incredible giving, entrepreneurs that are thoughtful, that are looking to grow in this room. So, it's how many you put together. And therefore, the event, the speakers, everything is magic when we put together. We just had it at the Austin Proper. Our next event is going to be February 9 through 11th in Miami, Florida. And again, it's going to be 100 and probably 150 we're capped at each time, 150 incredible entrepreneur speakers in the room for that one also.

Justin Donald: That's awesome. By the way, we ran our events on the same exact dates, not even knowing that ahead of time, we actually hung out Friday before our event. That was just last week, and we're like, “Hey, we're both running this event here, Sunday, Monday, Tuesday.”

Tom Shipley: So, if anyone wants to, the website for that event is dealconlive.com. They can also email me at tom@tshipley. I basically put out content on Facebook, Instagram, and LinkedIn, primarily right now, and our goal is to produce more and more content, because I want more entrepreneurs to be scaling and achieving their dreams or acquisitions.

Justin Donald: I love it. Well, I give you my highest endorsement, having been through your program thinking that, wow, this is awesome, because it is programmatic, it is systematized. And I like that. I like that you've built SOPs around your actual process, that I think is really good. And your partner, Matt, is awesome. So impressed. Yeah. And so, yeah, couldn't endorse it more. For those of you interested in entrepreneurship by acquisition, this is it. And I like ending every episode with a question for our audience. So, if you're watching this, if you're listening to this, what is one step you can take today to move towards passive income and financial freedom to live the life that you desire?

So, not like most people living a life by default. How do you live a life by design on your terms, proactively building what you want? What is one thing you can take from Tom today to take action on your financial freedom and your life by design? Thanks! And we'll catch you next week.