Greg Shepard, Founder at BOSS Capital Partners, Founder and CEO of the 12 startups that have successfully exited, one of which was AffiliateTraction acquired by Ebay for $985 million. Greg in this episode explains how he managed to create so many successful companies and shortly explains the BOSS system. He also talks about the major mistakes he saw other early stage founders making and talks about the mistakes he has done himself in the past.
BOSS Capital Partners: https://www.bosscapitalpartners.com/
BOSS system explained in greater detail: https://www.gregoryshepard.com/
For founders who are too early for Greg's investments, submit your idea here: https://startupbattle.typeform.com/to/sMFwMAhz
This is fun reason radio and today's guest speaker have Gregory shepherd founder ad, boss Capital Partners and the legendary founder with fourteen personal exits,
one of which was a Philly attraction that was acquired by eBay for nine hundred, eighty five million dollars.
So, he also has numbers exits of his companies that he has invested in so, in this episode.
We'll really talk about those acquisitions, those sales and how he managed to make that many successful companies. So, Greg, let's get off by. You're giving us some background on yourself and on boss capital.
Okay. Well, thank you very much. So, that transaction. I was part of the transaction, but it was fourteen company. So, what happened is they bought my company, and then we did a carve out a fourteen companies from me bay and that trends.
And then we sold twelve and they bought another one of mine a different company. And then the whole transaction during the carve out was, like, nine, nine hundred, twenty, five, nine or eighty five, something like that.
Then later on one of the assets we bought was sold for one point, eight billion.
And the other one, one of them was sold for seventy five million another one sold anyway, you get the idea and private equity awards for transactions between two hundred and fifty and a billion because it was extremely complex.
I mean, it was nearly.
So, you know, I've done all these startups, right? I've done I've done fourteen exits to date to this year. Twelve of which I founded and ran as the CEO myself.
The other ones, I was a heavy hand in the most recent one, which was just a few weeks ago. I was the for and what I,
what I do is I use this system,
I invented called boss,
which stands for the business operating support system and so, basically,
over the years I tried every possible thing I could try for,
like twenty five years.
And what I mean,
by that are different operating systems operating systems or things like agile and scrum and con, Bon and six Sigma and forty X and GSM and,
and it goes on and on,
and during that process,
I tried different things at different times in the business and I found that there are all of these little things out there that the people over the years have invented some old,
but they're not efficient stand alone and they're not good for all companies at different stages.
So, I use some of the stuff that was out there and then I reinvented a bunch of new things in order to create a system that helped with. The problem that I was trying to solve my personal mission is to help more entrepreneur succeed.
And by doing that, help us wealth distribution. So, what I was trying to do is just solve the problems. So, then I went out and did twelve hundred interviews to figure out why entrepreneurs were failing at what stages you know, what was going on.
And it was a pretty,
pretty interesting situation that,
that we went through where,
excuse me where what we found out is that if you go out and you ask why they fail,
why they fail,
they fail most of the time it says not enough capital.
And actually, if you asked another question, right after I'd say, why did you have enough capital? What what what did you need capital for you find out that they didn't really need capital?
It was just just a series of different mistakes that they made during the business process things like, over funding the business, or overpricing the business, or getting too much it too soon.
I mean, there's a series of different reasons why these things happened and so I created boss and there's five stages of boss, there's five levels and businesses, and there's five reasons why businesses fail all those things are aligned.
So the first part of boss is the North Star.
And the North Star is the most important part of the whole process, because a lot of entrepreneurs don't realize that, you know, the concept of understanding where you're going before you start.
Is critical, it sounds really silly, but a lot of times they don't understand. Right? So they don't know that, you know, if you you end up where your directionally headed, so you don't ready firing you ready aim fire right?
So, you look and you say, okay, this is what success looks like, and you back into how do you accomplish that success and that's the first step. So there's what is your business why should somebody buy your business.
So, what is your business and your product and why should somebody buy your business and your product? And who is this person that buys your business?
And who is the buyer of your business, your and your ideal acquisition, and the ideal customer profiles and once you have all this stuff worked out, then you can be directionally. Correct?
And you can intentionally send your business in the direction that needs to go into. And then the second part is the strategy, this is the plan. Essentially, the plan is divided by functional areas.
So there's typically four functional areas, including the SEO, five functional areas.
So you have the house just there, and then you have the sales and marketing people, and then you have service delivery and then you have shared services.
This is operations like, you know, this is HR this is accounting. This is legal and so on. And then you have product and engineering.
And so you divide what needs to be done in those four functional areas, and the fifth being the CEO. And then after you do that, now, you've this huge list of things to do. Well, those things are missions admissions are from X to Y, by date.
Then you establish objectives those objectives are from X two by date and then you assigned tasks activities to accomplish those objectives.
But now you've got this big list of things, and you have to prioritize them. So you prioritize prioritize them by important and urgent. You do the important things first so the urgent things don't happen.
Most companies don't realize that when people are running around their hair on fire in a business, it's because they didn't prioritize the important things. First urgent things are assigned that. You didn't prioritize things correctly in the first place.
And then the second part of that prioritization is what has the highest impact with the lowest effort and then you go into to standardization, which is where you create accountabilities and best practices and triggers. So what?
And when something happens,
and how it happens,
and that creates standards in your company,
and then you move into optimization,
which is cause in which just means continuous improvement in Japanese and you just continuously approved by evaluating the standardization that you have in place.
And then creating new missions objectives and activities from that.
So that's like a very simple explanation of of how boss works, but there's a lot of stuff on the website. Gregory shepherd dot com that that goes into it further.
I'll definitely include the website in the descriptions this episode and yes. Seems like it's gonna be pretty pretty complicated, but let's get back to your personal exits. So do you think that's the reason for why you managed to build?
So many successful companies was because of this boss system that you've basically folder and invented yeah. Hundred percent, you know what I mean?
I tried everything over many many years with a lot of businesses at different stages and different functional areas. And I was trying to figure this out for myself.
You know, I, I was just like, how do I build businesses better and faster and more efficiently, and take
less money from entrepreneurs from investors. So I have less illusion. So I can make more in an exit. How do I accomplish this?
And I refined it down to the point where it was working and then I used it for Congress, congressional candidates, and I've used it for running a marathon and riding a bicycle, five hundred and twenty five miles and a lot of things. Right?
And I was like, this system actually works and I was keeping it for myself. I got to a point where I wanted to give back, you know, where I wanted to dedicate the rest of my life to giving back in helping entrepreneurs.
Because this is the area that I can help with this problem that we have in the area of well, distribution. And so I was like, okay, well, I'm just gonna start talking about it. So I started writing articles and talking about it.
And then I got a book deal with Forbes, and I've written a hundred articles for twenty nine publications, Fortune, Forbes, entrepreneur, stuff like that. And then it start to catch on with the universities.
And so we're doing workshops at universities. And so all of this stuff was just to, to help, you know, try to help. I mean, think about it. What industry would accept a ninety percent failure rate ten people walk in a room.
One person walks out successful like, that's just I mean, really? Like, nobody is, like, sitting here going. Oh, maybe we should take a closer look at this instead.
Everybody's like, yeah, let's just keep going and all the investors are, like, well, let's use, do risk, you know, risk analysis and stuff like that. Instead of like, okay, let's get to the root of the problem and really try to fix this and help.
I mean, if ninety percent of students were falling out of university, I think somebody would do. Yeah. You know so I decided that. That person would be me until somebody else came along. And this is how I decided I can help.
Awesome. Perfect. That's that's great. And that's awesome to hear that you're dedicated to giving back and that's actually why you're on fundraising radio and thanks a lot for taking your time to do this.
But, let's get back to the thing that kinda caught my interest, which is the two hundred interviews that you've made with founders who failed other than capital problems. What do you think was the major issue that you saw there? Instead?
I mean, you mentioned one that was, you know, over over, raising, raising too early for isn't too much reason to hide variation. But is there one that's not is basically pretty much. Everyone did this.
Maybe they didn't focus on customers enough for some other very similar mistake. That you've seen across all those two hundred interviews well, let me give you where the majority of the fall off happens.
So sounds good. Yeah, I mean, this is so the majority of the fall offs have happened after people who leave an accelerator and it's not because of the accelerator.
It's because the entrepreneur is not trained on how to run a business. They understand how to build a deck and raise capital from the accelerator. They help them with that.
And they understand the basics of running a business and they give them a mentor and they do the best they can but that's like, somebody getting a bachelors. And then sending them into Morgan Stanley, right?
It's you need to have more experience, you need to have more behind you to make sure that you don't make the mistakes that can be made.
And so what happens is, you know, there's this term, I use called the horse, and the horse is the business and the Jackie is the entrepreneur. So you're out there, trying to raise money and you draft a deck up. And then you start talking to investors.
Most of the decks don't have an exit strategy and investors don't get their money until the business is sold. So you're missing part of it. Like, how many give me a moment back? I don't know when I don't know. I'm just been in the business. Right? How are you gonna go to market?
How can you justify the amount of money you're raising? Right? Oh, well, you know, I don't. There's no. Go to market and I don't mean a sales strategy. That's not a go to market strategy. People always say, well, I have a go to market strategy.
And then I look at it, and I'm like, no, that's not a total market. Go to market strategies were all for functional areas are prepped for going to market.
Everything is aligned correctly to go to market and not just oh, this is how I'm gonna sell my product and this is on the solitude a lot more complicated than that. So they're not they're missing those two things.
And so, now when they're talking to investors, the investor isn't convince that this Jackie can write this horse. And the fact of the matter is most of them can't. And so they get an investment.
They jump on the horse and they fall off and this happens over and over and then they go for another round and they're over budget and not on time, because it never written horse before. So, you can cross the finish line when they should, because they fell off a bunch of times and then they can't get another round.
So the the thing that I tried to do with boss was to take something from that stage.
So, an accelerator does a good job on the front end and this is after that because that's where the big drop off is it's like fifty percent of them happened right? After that.
So the ideas to come in and instruct the Jackie on how to ride the horse.
Say, here's a horse. This is how it works. This is the saddle. This is how you jump on if you do this, you're gonna fall off. If you do that, you're gonna fall.
Look out for this, so you draft it and then you put together a plan in the first lab you should be here in the second lab you should be here and so on and if you work, if it works out, right you will accomplish the finish line.
That's one big big deal. Okay. The second big deal is.
Listening to investors, that have never been an operator, so as an operator and an investor, you know, a lot of times the investors, like, telling them things.
And this is some guy that went to some business school and came out and then went right into private equity. And started working with private equity and listen to the other guys who came up the same way. And everybody was telling the same story in the entrepreneur, doesn't know any better.
They're listening to them, but they're listening to the people that have never built a business themselves before. Huge, huge mistake. They, they drive these entrepreneurs crazy and the drive, the businesses into the ground sometimes.
So, the other one is that, you know, listening to bad advice and focusing on the wrong things.
So, when you, when you're building a business, a lot of times, if I've been on panels where I've had a heated discussions with people about the concept of having an exit strategy, when you start with the end in mind.
If you think about this, a good acquisition is a synergy, you get the big multiples from a synergy. Well, let's breakdown what a synergy is a synergy is either the company that's buying you is either buying you to save or make money.
And most of the time, they're buying you to make money and why is that? They have accomplished building let's say ten thousand customers. And each one of those customers have an ideal customer profile.
So, that is who buys their product that they've proven.
Now, let's go back to you as an entrepreneur you're building a business and you're not tracking your up against your buyers up against your acquires.
Now, you're five years in two years in three years in whatever it is and you're like, okay I'm in itself. And now you're out there, looking for a buyer. I mean, that's where, first of all. That's insane. Right?
So you don't just build a product without having a customer to what business without having an acquire and why wouldn't you match up the requirements of those two?
So that you're moving towards that process,
the buyer of your business that has ten thousand customers has already absorbed all the cost all the cack all the customer acquisition costs associated with acquiring those customers and they have a cat to LTV ratio tack to lifetime value ratio.
The amount of money they make off the cost, the profit they make off the cost of acquiring a customer over the length of time in the amount of money they make on that customer.
So when they have saturated their customer base, the only thing to do to increase the ad cat to LTV ratio, the amount of money they make off of acquiring the customer and selling the product is by increasing the lifetime value.
And you can only do that one of two ways, either get them to buy more stuff, or extend out the timeframe that their customer of yours, most of the time, the combination.
So they're buying your company because your company is gonna grow their lifetime value increasing the multiple.
if you haven't planned for that ahead of time,
meaning your ideal customer profile there don't match up when you go to try to exit to them,
that is going to be a huge question mark and you can't fix it in the last six months of due diligence right you can't go and go.
Oh, sorry. Ninety percent of my customers aren't your and they're gonna be like yeah, well, this doesn't work for us and then you lose the acquisition.
So, starting with the end in mind, puts to rest some of the risks that you have later on, which at that point, the risk is fundamentally worse because at that point, you've got multiple rounds of funding.
You've got people there now, you've you've set your bar high in terms of your burn rate. You can't just turn around very easily and say, okay, I'm gonna fire fifty percent of my feet people and fifty percent of my customers and rebuild that.
And now your years out again.
You gotta do more capital money. You get underfunded, blah, blah, blah, right? That's one thing. The other thing is over pricing your business.
So, what I mean, by that is entrepreneurs don't realize that investors want to get two to five times their money back. Okay. So, if you do around a ten million, you're actually right there if that's your first round, right?
There you're saying your business is gonna sell between twenty and twenty and thirty million.
Now, you do another round, you do another round and pretty soon your buyers, your business is just not worth what the evaluation it's so you either have to do a down round recapitalize the business, or try to raise more money and increase sales.
And that becomes the vicious loop, because it costs money to increase sales. So you have to raise money, which raises evaluation and around you go and pretty soon. Your company cost more to buy. Then it's worth. So, you have to think this through and plan it out.
And say, maybe I take a little bit smaller of evaluation in the beginning, and I grow my value evaluation overtime to make up for the, the beginning part. This planning your rounds.
And the amounts over time is different, because there's the push are the pool and so most people, what they do is, they say, oh, I need this much money to run my business. So that's how much they raise.
So, basically, the investors will give them this long leash to run on when the entrepreneur doesn't really? No. So how irresponsible is it to raise five million dollars when you think you need to.
That's like taking the money off your credit card paying interest and putting it under your mattress until you need it you know, so you need to plan your rounds.
So, you plan your burn, you plan your around and you try to keep the rounds smaller at, you know, typically like three rounds to an exit and this process eliminates some of the big problems that people have and why they fail.
Absolutely. And that's great. Story is great advice. I totally agree with you on the in terms of, you know, going into a business with having a finance goal in your mind.
I've discussed that with multiple of my previous speakers, and most of them said that, you know, it's not that necessary to have the acquisition plan in place. I'm totally in your face here.
If you have that thing, a goal that you're looking out to, it's just much easier to run the business, but we'll guard that. So, let's go and talk a little more about your personal experience. It's clear that you are super experienced.
You had so many exits, but I believe that you've acquired all that knowledge by your personal failure. So I'm curious. What's the thing that looking back at all those successes looking back at all your experience and your career?
What's the major thing that you've done? Wrong? What do you think like, what would you change.
I mean, s***, I made all the mistakes, I mean, that the bosses not just out of my, you know, studying other people's mistakes and other people successes, but also my own.
an example is,
I was building the company and I was building it for,
let me see,
at that point,
and I had built up a customer base and I went to try to sell the business and they were like, well,
happy your customers aren't in the that we have,
so we're not gonna give you any credit for those.
You will give you credit for the other half, but not for the so one X, multiple on one, half and five on the other half. And I realized, I was like, holy s***, man, this is a serious issue. I need to fix this before ourselves.
So I went back to my business. I turned down the offer went back to my business and I terminated half the customers. And then I rebuilt the company so that all the customers fit the same as the buyers that I had planned.
And I sold that business to eBay. So, I went from almost going out of business and losing the transaction to an award winning transaction with one of the largest companies at the time.
It was one of the largest companies on the planet is bigger than Amazon. So, you know, you have this.
This huge success from a lesson that was learned the hard way. I mean, the hardware, right? I mean, it was very painful. That's one less.
And I can tell you another one, which is where, you know, the best analogy I can use as I was studying the fire department because I've interviewed the Navy seals, and, you know, multiple branches of the military.
I have actually interviewed coming up at the CIA. So done a lot of lot of interviews with people to try to figure out how they run processes. You know, how do they do this?
How does the, how do they, how does it work you know, how do these incredibly efficient teams
operates? So, magically, and the fire department in California, we have a lot of Wired wildfires right? So these things they just get out of control. Yep.
So I asked him I said, how do you, how do you deal with the fires? And the guy said, he's like, look, you don't try to put out the fire because if you try to put out the fire, it just runs in front of you and behind you and all over the place. What you do is you prevent the fire from spreading.
So, you make fire lines these are like, roads or burnt areas that the fire can't double back on and then you get the the fire in case. So that's what they call it a containment.
So, one, if it's if the areas a square, which is the easiest to explain one line would be twenty five percent contained. Two lines would be fifty percent contained. And so on.
So, when you have a fire in your business, you know, a lot of the mistakes, and the mistakes that I made is putting urgent before important. So the urgent thing is telling you put out the fire put out the fire. The important thing is, like, let's not focus on that.
Let's just make sure we get it contained because a lot of businesses you go into these companies, you said at a conference table, and everybody's on the phone they're on the computer they're walking in and out and you're like, what? In the H*** is actually going on here, like, how is this business?
So disorganized now? So many fires that these people can't sit in a meeting for ten minutes and pay attention right? That is assigned for a company that really needs to step back in draft standardization.
Best practices and things that are gonna keep the company moving smoothly you know, the whole idea of an urgent thing, being a canary in the mind right? Urgent thing. Canaries in the mind.
Canary dies, because it toxic gas everybody leaves the mind, right? So the idea of looking at a situation saying, okay, this is urgent and first thing, how did this happen?
So, dealing with the urgent thing is stopping it from spreading and then saying, how did this happen in the first place? So it doesn't happen again.
Most of the time people put a band aid on it, and they go as business as you and then it happens again and then it happens again and again and again and again, and those businesses are not high performing businesses and usually will live a short life. Great great.
So now that we've discussed that, hopefully, no one's carrying will die in the mine and to prevent that, you know, but let's talk about boss Capital Partners. How does it work? What do you invest in through Bosco partners?
Yeah, so boss Capital Partners was born out of so, you know, I've been talking about boss for a long time, and I get a lot of people submitting deals, entrepreneurs, so many deals, and I was making investments in the deals for a long time.
But then I decided there's so many good deals here, and I have all these investors coming to me because of my track record. And so I created boss Capital Partners.
I drafted in a couple of people that I've known that are really amazing people to work with me a bunch of investors that are really cool knowledgeable investors that understand boss and I've seen the success that boss has and so people
submit entrepreneurs submit their deals to Gregory shepherd dot com and then I look at the deals and that's that's how the whole thing works.
So, works in Kip we're not a fund so we individually fund each business through an a special purpose vehicle and that's how the whole thing works.
And we are very boutique, so we do like, one deal every three months because me, and the other folks in the business really get involved to make sure that a, the entrepreneur succeeds. We want to keep our track record.
Got it and now, I mean, ninety plus percent of my wasters are start founders or executives. Now major question. Probably a lot of them have is should I submit to Gregory shepherd shepherd dotcom or not?
So what stage to investing? Or do you have a specific field? That you're interested in so there's five stages to me. Okay, so that's Pre seed seed series seed a and B, we do Siri seed. So that's after.
See what that means is the product validate. There's five levels in the business also, like, stages, ideation, proof of concept. And then validation, we're at validation, which is the third, which is Siri seat.
So this is where you have a customer or some customers that prove that the product that you built is completed to at least to minimal viable product, and it's validated by customers paying for the product.
You can have just a few customers, but there has to be something proving that you're paying for the, that the customers are buying a product. And and then we go from there.
And for your listeners to know, to the value drivers, these are evaluation drivers that they need to make sure they have or growth margin and retention Gross says people like your product retentions as the people continue that it's sticky.
You know, that people will continue to, like your product and margin says you can do it at scale.
Right, right? Yep. And that's perfect definition of what's investing. I've personally never heard Pre. I already forgot the term that you view was after seed seed.
Yeah, that's that seed series. See, that's the term. I've never heard of. That's pretty interesting. And clearly, if you walk through the process, right? So there's five stages of maturity of the business.
So, ideation is preceed. Do you have an idea and you're trying to work on as precedes accelerators, get involved at that stage and then seed this is where you have a proof of concept so you've built your widget or whatever. Right?
And then, after that is Series C, now your which is built, and you've sold it to a customer, and now you need to start getting into growth. So think of it as Pre growth round as a growth round, and be round scale around.
So, you know, these stages of funding align with the maturity and the levels of the business as they move through their life cycle. Right right. Yep. Perfect definition.
And here, we're moving on to the last question if this episode, which is a call to action. So, what's the one thing you want to learn to do? As soon as the episode is over?
You know, I would suggest that you go to my website and go into boss. There's sixty second explainer videos.
And I've done a hundred, I mean, I've done a lot of work and I continue to a ton of work and I put it in the social media and the website. There's a newsletter and it's all there for you entrepreneurs to help you.
So, that you don't have to go through the mind field that I went through and we can make a path to help, make it a little bit easier and help more entrepreneurs succeed. There's so many good ideas.
There's so many good people.
We need to help with as well distribution thing. Entrepreneurs traditionally don't have that money much money when they started. That's why they're raising capital and I'm trying to make more of a millionaires. So I built all this for you. It's all free. Just go there and just learn about it.
Perfect, perfect call to action. I'll make sure that I'll leave a link to that website and yeah, my cultivation is go to the description of his episode.
And if you're too early for Gregory, if you're not, if you're currently at the ideation site, stage definitely go to the descriptions is up. So I'll leave another link to make a studio venture.
See, where I work because we work with those ideation stages. So, whoever you're pretty much go to the description is episode, you'll find something useful there and thank you Gregory for coming up and have a great day. Everyone.