The Entrepreneurial Journey (ft. Reid Tileston)

Reid Tileston:
You gotta understand, are you an equity employee? Which is what I was for the first club. Cause I didn’t really control my destiny. There were three of us, right? And any two could outvote the other one. But it was during those summertime in Sacramento that I had the identity that, you know what? I wanna control my destiny. I’m a business owner. If I’m gonna be the one doing this stuff, you know, and bless my partner’s heart, but I said, if I’m gonna be the one out here doing this hard work, I wanna control my destiny. I wanna own the upside. And I’ve not gone back since that point.

Reid Tileston:
So critical first step in this process is assessment. Understanding your avatar is.

Dana Robinson:
Exit plan is a podcast for business owners and those who want to be business owners. I’m always in search of the lesser.

Dana Robinson:
Known stories of entrepreneurship.

Dana Robinson:
In the exit plan podcast, you’ll hear stories from startup to sale and hear from the professionals who helped business owners achieve their exit. Hosted by me, author and private equity manager Dana Robinson. Along with my co hosts guests, you’ll hear real stories, tips, and tools that will help you plan for the exit you want, whether you are still working at a day job or running a business. Let’s get started with this episode of the Exit Plan podcast.

Dana Robinson:
Hey, everybody, it’s Dana Robinson for the Exit Plan podcast, coming to you today with a special guest. A friend of mine and a mutual friend of one of my publishing coaches also helped Reid with his new book, Grit It Done. Reid Tileston. Thanks for coming on.

Reid Tileston:
Yeah, Dana, thank you so much. It’s an absolute pleasure. Pleasure to be here.

Dana Robinson:
Well, we’ll probably talk about the book because I know you’re sort of on that tour promoting the book, but I love entrepreneur journeys and figuring out how people got to do what they’re doing. I want to get that out of you, get your story, and then I’d love to kind of get around the things you help people with their businesses in terms of what you do for teaching and coaching and helping people understand and learn the things that you and I probably didn’t know, we didn’t even know that we didn’t know back when we started our own journey. So let’s start with your early entrepreneur journey.

Reid Tileston:
Absolutely. What’s so interesting, though, is that what I always wonder is, what do I not know right now? That ten years from now, I wish that I’d known right now? I always stretch every day to answer that fundamental question. And I find that, you know, engaging with people like you and you’re going on your podcast and listening to it, I can sometimes glean pieces of that information. So I think that’s a critical, critical part to a critical question that I ask consistently. Yeah. For me, started when I was 23 years old. I had gone to Berkeley. I was working in finance in San Francisco, had $100,000 in the bank, and I knew that I didn’t want to be a spreadsheet jockey.

Reid Tileston:
I wanted to be more hands on. I was out at San Francisco’s second oldest pub, a place called the old ship saloon on Battery street. It’s pretty cool. It has a mast outside of a ship that sunk in 1851 during the gold rush. It’s talking to two private equity pros that were looking at acquiring franchisors. In doing that, they came across this cool concept called anytime fitness. They started looking at how the unit franchisees did, and I was like, this sounds pretty cool. This could be an interesting opportunity.

Reid Tileston:
Long story short, that’s what got me started in the small business, entrepreneurial business ownership space way back in 2007.

Dana Robinson:
Wow. So you didn’t even know about France. I bet you didn’t know what a franchise was. And you hear some smart money guys talking about buying and optimizing franchises, and you’re like, yeah, I got to get in on this.

Reid Tileston:
Yeah. I mean, high level. I thought of franchises. I thought about, I think, what most people do, right? McDonald’s, Burger king. I kind of knew they were franchises. I knew that there were all these franchise american locations all throughout the world, and that franchising was this uniquely american thing. But that’s the extent of it. I knew nothing about it.

Reid Tileston:
And these two individuals were one. One was my older brother by two and a half years, and the other one was another associate that he. That he worked with. So there was a lot of personal stuff around that as well. The other part, too, is that we were talking about a fitness franchise. The way that my parents met Dana is that they were at the starting line of a running race in the seventies. Pretty warm day, so mid eighties, and they were worried about skin shaping. So my dad, Fred, who’s six’two, and his first cousin Terry, who’s six’five, were literally in their short shorts and their tank tops and the good portion of untrimmed body hair.

Reid Tileston:
We’re lubing up with Vaseline to avoid chafing, just like this. And my future mother walked up, and she was like, hey, guys, I forgot my vaseline at home. Can I borrow some of yours? It was like, it was a completely cold approach. And then that’s how that story began. So the whole fitness thing aligned, too, because it was in my DNA, so knew I didn’t want to be a spreadsheet jockey. Knew that I wanted to do something that was more hands on in the real world. And this alignment to fitness plus good concept, very fast growing, that’s what set me up down this path, then went out in the California Central Valley. So we each put a third equity into the deal.

Reid Tileston:
You know, I was going to leave my job and get paid the same amount that I was to run this, you know, fitness franchise. We were going to open up dozens of clubs, and life was going to be good. December 2007 is when the first club opened in Sacramento, California. And that’s right when the great recession began. But I got to tell you, Dana, that’s not what the challenge was. That was, in my judgment, we’ll say 20% of it. The other 20% of it is that learning by doing, first time being a, you know, on the ground business owner, there’s a learning curve. That was 20% of it.

Reid Tileston:
I’m going to tell you that 60 plus percent of it, which is a key thing that I always talk to people about when they’re considering doing franchises, is frankly the franchisor straight up told us, go to a small town of like five to 20,000 people, you’re going to crush it. We thought two of us were on board. Two people were on board to do that. One partner was avidly against that, just not from a small town. We don’t really understand small towns. So we chose to go to a bigger market, which a franchisor said, we don’t recommend it. And they were right. The market was completely mediocre.

Reid Tileston:
So here I am, and I go through this story in the book. You know, here I am. Basically, the club is not making money. I’m trying to pound the pavement and figure out what to do. And that’s where, no joke, I rented a purple superhero suit from the franchisor called captain running man. I pounded the pavement in the sweltering summer. He is Sacramento, so nineties, low hundreds, selling these short term summer memberships and flipping them into automatic renewal. Just a ton of work.

Reid Tileston:
And it was hard. Then got the club to make a couple thousand bucks a month. So it’s not going to be a great IRR or a great return on investment for us, but the club’s breaking even, and I knew exactly what I’d done wrong. And we can talk about some of the cool details of how, of what I ended up doing next. I got very lucky, I like to say, and then that I was able to parlay that into success with the future fitness franchises and other endeavors I went to. But the key part, which I outline in the book, and griditdone.com, available for $0.99 through the end of maybe, is that the key? You know, first step here is assessment. You gotta understand, you know, are you an equity employee? Which is what I was for the first club. Cause I didn’t really control my destiny.

Reid Tileston:
There were three of us, right? And any two could outvote the other one. But it was during those summertime in Sacramento in the purple superhero suit pounding the pavement that I had the identity that, you know what? I wanna control my destiny. I’m a business owner. If I’m gonna be the one doing this stuff, you know? And bless my partner’s hearts, they had jobs. They were doing their thing, being supportive as they can. But I said, if I’m going to be the one out here doing this hard work, I want to control my destiny. I want to own the upside. And I’ve not gone back since that point.

Reid Tileston:
So critical first step in this process is assessment, understanding what your avatar is.

Dana Robinson:
Okay? So you got a lot juice out of the squeeze, as it were, because you learned you could make bad choices, you could ignore wise advice. You also learned you could figure it out and solve for that by hard work. And then as you’re doing this hard work, you’re realizing, yeah, even though there’s a purple suit that I’m sweating in, I can, if I have the right business structure, control my destiny. And I’d rather do this than go back to sitting in an office.

Reid Tileston:
Yeah, absolutely. And I was, at that point, I was all in. I mean, one unique thing about me, I think I get it from my parents, is that when I set my mind to do something, I just won’t stop. And I love the idea of grit. I think that Angela Duckworth’s book on that is just, if people haven’t read it, like, read it. Grit is such a powerful thing, right. Passion and perseverance is that I set my mind to something. I just won’t stop.

Reid Tileston:
Right. I was. I was going to open a number of anytime fitness clubs because I committed to doing it. But what I realized is that, you know what? I want to have ownership of these clubs if I can. Right? I want to be the one that controls it because I’m the one out here doing this, this hard work. So that was kind of the core the core identity crisis. Once I commit to something, you know, I’ll. I’ll finish it, or I’ll, you know.

Reid Tileston:
Well, I guess I don’t say die trying. Well, maybe I’ll finish it, or I’ll die trying, basically. So I was. I was motivated to make something happen.

Dana Robinson:
I want to ask what you know about the franchise, the partnership, and all that, but let me divert, since we’re on the subject of being a little bit. I have this problem. When I grew up, we had an unfinished list of things on a whiteboard in the laundry room, and it was kind of my parents maybe way of dealing with life to be perpetually unfinished. So I’ve, you know, for better or worse, inherited this, you know, OCD, level a, must finish everything I start. And it serves well in a lot of ways. But I’ll tell you, from an entrepreneur standpoint, there are a lot of things I look back on and go, like, I should have put a bullet in that thing, like, six months in. The kind of fail fast mentality was not. It’s very hard for me to comply with.

Dana Robinson:
I get it. Philosophically. What’s the balance for you between the grid, it done and hanging there, and this. What we know in entrepreneurship, at least, is fail and change fast.

Reid Tileston:
Yeah, absolutely. And academically, too. I mean, there’s a sunk cost fallacy, right? You should never, never. And this is peer reviewed wisdom. It’s. It’s. It’s a law, basically, should never consider what’s happened in the past, you know, as an indication of what you should do in the future. Just ignore it.

Reid Tileston:
And we see people that violate that, violate that rule all the time. The way that I overcome it, quite frankly, is that I just go all into things. I get to the point where, you know, for reasons that relate to my childhood, to my upbringing, to relationships, right, the whole nine yards, that’s where I can find that energy and that passion to just keep on going forward. And what happens is, you know, things get nuanced. And I’ll give you a concrete example of that from a different part of my life. When I was in business school at the University of Chicago, Booth School of Business in 20. I was there from 2013 to 2015. In 2015, I got to be the teaching assistant for a class on entrepreneurship through acquisition.

Reid Tileston:
It was the first time that Booth had taught this class, and I got to be one of the tas for it with these two first time adjuncts. And doing this was, like, 40 hours a week, Dana. But it completely changed my life because of the relationship that I had with those professors, and afterwards, I got this intrinsic drive, and I said, you know what? After I go out and crush it with my next, you know, business endeavor, I’m going to go back, and I want to be an adjunct professor. And ideally, I want to do it at Chicago Booth, right? So I go out, you know, have some. Have some. Have some success. For now, it’s like, hey, I want to do this right. Unfortunately, you know, no opportunity is available at Chicago Booth.

Reid Tileston:
So, you know, I shifted that goal, and now I’m an adjunct professor at two other universities, right? So adapt as need. As need be is kind of how I apply it. But when I set my mind to something, I will just do it. And when I actually drill down to what gives the fuel to actually accomplish that, to ask where the passion and where that perseverance really comes from. If you take the next, you know, layer back, what factor drives that? It’s one thing, and it is one thing only, and it is relationships. It is always people that I’ve come across in my life that have provided that deep, powerful, incessant energy to just do things that are required to, you know, get to what the end goal is. And in the case of the fitness centers, you know, where that. Where that came from.

Reid Tileston:
If I want to be on, I’ll be honest about it, is that I, after the first club didn’t do well, I had a chip on my shoulder. I wanted to prove it to my older brother that I could go out and crush it with this thing, right? And eventually I did. And so let’s talk about that.

Dana Robinson:
Tell me. Tell me. You know, you want to own something, and you have two problems in a franchise. One is you’ve got three people in a partnership, which means you don’t control your destiny, and then the other is the franchise itself. So talk about, you have this. Aha. And then did you go back to your brother and renegotiate, restructure? Did you stay in the franchise world?

Reid Tileston:
Yeah. Yeah. So what happened is, so those two individuals, let’s just say that they were happy with how the first club was doing, and we all had capital constraints, too, right? We’d all kind of put, like, most of our liquid net worth into this deal. So those two guys, again, complete luck. They were done. They were happy for me to go off and keep on pushing forward, but at this point, they’re like, okay, like, we learned our lesson in this one. Like, the two private equity pros getting out in the real world. Like, we’re good off this.

Reid Tileston:
Read like, we wish you luck, you know, and, and there was some strain there, but it wasn’t, it wasn’t bad, right? They’re like, we wish you luck, you know, we’re not gonna, we, even if we wanted to, we can’t fund any future ventures because we don’t have any more money. And this was 2008, 2009, by the way, no one was funding anything, was falling apart. But you had one individual in the California Central Valley. And by the way, Dana, I had driven and diligenced almost every market for a fitness club in all of northern California as. For as far. As far north as Eureka, as far down south as not quite Bakersfield, but other towns in the Central Valley, right? So, like, I knew the California market exceptionally well and I was sitting there going like, the one mistake. It’s so simple. We just chose the wrong market.

Reid Tileston:
There’s like 20 markets now where I could open up a club and crush it from day one. One such market in a town that was eventually newspaper in Sacramento, the Sacramento Bee actually ranked this town as like the third hardest hit town in all of California by the Great Recession in like 2010. They made a list or something like that. I was like, that’s amazing. But this is like, Sacramento was bad, this was worse. Foreclosures were out of the roof, unemployment was, I think it was like 18%. Don’t quote me on that. You know, when I was looking at opening the club, but there was limited competition and I knew the club was going to crush it from day one.

Reid Tileston:
And this is where I got really lucky. There was a desperate landlord who had built out a strip center before the great Recession. And he had a couple anchor tenants, but he had to lease out an additional dollar amount, otherwise the bank was going to foreclose on his property. He was going to be in default on his covenants, rules and restrictions. And this, by the way, is 2009. So the bank, with 100% certainty would have put him into bankruptcy, right? He was desperate, but what he also had, and this is where I got really lucky, he had say he had the least, like, he had 80,000 sqft available. I believe he’d negotiated a tenant improvement allowance for all those 80,000 sqft before the great Recession. So the bank also had to give him that credit.

Reid Tileston:
And I only needed 3500 sqft. So after, you know, we relationship building, over a year of relationship building, we eventually came to a deal where I put all the little money that I had into it and the landlord basically paid for the entire costs of opening the club for no equity. And all I had to do was pay maybe 40% above what market rent was at that time, which in no way, shape and form was way lower than the market value of the money that I got. And I was able to, for very little money of my own, open up a club in a market that, as anticipated as a franchise or told us to begin with, crushed it from day one. And I had all the equity in it. And then I used that to finance additional clubs. Then eventually the lending markets loosened up and other people started taking other great markets out there. But I had my little empire of anytime fitness clubs that were spitting out, you know, excellent cash flow for someone that was, you know, 26 at that time, had managers that ran them for me, salespeople and personal trainers.

Reid Tileston:
It was, I was living the dream, basically. And I attribute it just to luck of the great recession, basically, that I was able to, to make that happen. So that’s how I look.

Dana Robinson:
You were resourceful. I think this is, this is an under there. There are many under or underutilized under sought talents in the workforce and in entrepreneurship and business. I heard work ethic is actually the one thing at the top of every employer’s list that no one seems to have anymore. But resourcefulness, it’s not as in demand when the money’s easy, as you say. We had a run of almost a decade of cheap money in business and real estate, and it allowed a lot of people to do a lot of things without having to think out of the box, get creative, maybe not have to grit that much. You got to congratulate yourself a little bit for being that resourceful and persistent, to keep showing up at a landlord and keep pecking away and saying, I know there’s an opportunity here that’s resourcefulness. And to say, this person has the resources from the tenant improvement allowance the bank gives him to fund your build out your launch, defer rent.

Dana Robinson:
All the things that landlords have the power to do, had a big incentive to do it, and you’re doing him a favor keeping him out of having foreclosure land on him. That super resourceful. What happened after? I mean, did you still own the fitness brands? Did you eventually package them, sell them? What’s. Tell me more about the fitness journey.

Reid Tileston:
Yeah, absolutely. And one thing I want to nuance too, because you make an excellent point, is that that landlord and I, excellent relationship. So what ended up happening is had the clubs. And that point I caught a bit of what I’ll call lonely owner syndrome. I come from an educated family and I just, I knew I kind of achieved my goal with the fitness business, and there’s a lot of interesting things I probably could have done with it with 2020 hindsight, but I wanted, I knew I wanted to get more out of life at that point. I kind of had that same moment I did when I was behind the spreadsheet in San Francisco, and that led me to decide I wanted to go to business school. So conversation I had with the best club that I owned, with the best manager, who asked me about the story of how I met her later in the book, too, said, listen, I want to go to business school. I want to sell the rest of the clubs, and I want to hold on to this one.

Reid Tileston:
If you want to buy it, very much open to that conversation. And if you do, great, we can talk about it. If not, then I’d love for you to keep on running it. You know, what do you think? And she said, oh, yeah, as long as you own it, I’m going to run it. Just sign the checks. And this was already a top performer in the system. Great market, did really well. And she said, yeah, you own it, I’ll run it, and we’ll go from there.

Reid Tileston:
And so I sold the rest of the clubs, and I decided I was gonna go to Chicago booth for a business school. And then what I did at that point is I made my brother and the other investor whole on their original investment in the first club. I was under no obligation to do so. Our operating agreement just said, you have to have the ability to invest in future clubs, which they didn’t want to do, but I think in those situations, and I was nudged, you know, this was a deep decision for me, and I was nudged to certainly do it. But at the end of the day, there’s, like, no substitute, I don’t think, for doing what the right thing is. And it’s important to acknowledge that they got me involved in this space, if that makes sense. And they kind of started the journey, so did that. And then also one of the people that I asked to write my recommendation letter for business school was the landlord from the, from the second club.

Reid Tileston:
And, you know, we have, we had a great relationship then. We have a great relationship to this, to this day. And one thing I really learned from him is it’s just relationship cultivation is so important. Like when we signed the lease for that club, he’s based out of San Francisco, and I don’t drink currently, but back at this point in my life, you know, alcohol was a part of my life, actually had alcohol before I went out in that purple superhero suit, which I outlined in the book, too, which is a funny story. But, you know, I met him in San Francisco. We signed the lease, you know, on the hood of my car in downtown San Francisco. Then we went to a pub afterwards and had a shot, you know, to our future success. Right? And I think that it’s just relationships like drive results, to me, they provide intrinsic motivation.

Reid Tileston:
And I just think it’s really important to be thoughtful about how to cultivate that with, with people.

Dana Robinson:
Dana Robinson here.

Dana Robinson:
Quick plug for my book, the King’s Fly swatter.

Dana Robinson:
You can see it here behind me. If you’re watching this, I’ve got it in my hand. It’s a beautiful hardcover book, printed to make it giftable, something that you can share with a family member buy as a gift.

Dana Robinson:
So this latest book, it’s a fable about a person who has a really crappy job. Let’s just start there. This is a book that most people can relate to because we’ve all had crappy jobs. This is the story of Ubar, a servant in the court of a babylonian king who masters his boring, monotonous job and then learns to listen to the king, hearing him rule the kingdom while quietly swatting flies behind a cane. Eventually, Ubar becomes the wisest and most.

Dana Robinson:
Successful man in the kingdom.

Dana Robinson:
The story is fun, and it’s easy to read, but it’s not mythology. It’s my story. And as I shared the idea with colleagues and friends, I learned that it was their story. And guess what? It’s your story. If you’re at a job, any kind, one that you love, one that you hate, one that’s just enough to get by. This little book gives fresh perspective on how to leverage that job to get you something greater than a paycheck. The lessons in this parable are entrepreneurial lessons, but not what you might think from the current entrepreneurial zeitgeist. If you or someone you know are looking for a real pathway to entrepreneurship, here’s the secret.

Dana Robinson:
Your job is the way out of your job. It’s counterintuitive, but once you see how it works, you can’t unsee it. Learn the way of the fly swatter from the parable of Ubar and from the stories I share from my 30 year business journey.

Dana Robinson:
You can get a free copy of.

Dana Robinson:
The King’s Fly Swatter by going to danarobinson.com.

Dana Robinson:
I love that. This is sort of the great tale of entrepreneurship, overcoming the obstacles, building something de risking, but also keeping maybe I’ll call it the golden goose. A business with great people who love you and who you’re able to support and build a life and a future for. That enables you to get the ultimate owner freedom. A lot of entrepreneurs don’t understand. The smart people don’t operate the businesses. They own them, and then they engage and nurture great operators. And so you got to move from owner operator to truly an owner, which is what private equity does.

Dana Robinson:
It’s what professional investment does. Did you realize you were doing that when you were moving those pieces into position to go to school? Or was it just like, I need the freedom to go to school and I don’t want to lose this little economic engine?

Reid Tileston:
No, that was the. That was the absolute vision for it. And I think about it as four avatars, which I outline in the book. One is, ask yourself, are you an employee? Right? Employees are great. They’re the backbone of the economy. The good ones get promoted. The bad ones find the door usually then, secondly, you have what I’ll call equity employees. Those are the CEO’s out there.

Reid Tileston:
They’re the ones that own some of the upside of what they do. They work on the business, not in the business. So, like you said, dana, think like private equity CEO, but ultimately, you know, their jobs at the peril of a sponsor or their jobs at the peril of a board, they don’t. They don’t. They can get fired. They don’t control their destiny. Avatar three is a. Is a business owner.

Reid Tileston:
I was a business owner for my first two clubs. You know, I was there in the trenches doing it. I love business owners, and there’s nothing wrong with that life. I think there’s actually a ton of character in doing that stuff. And I’m not one to judge and say that you shouldn’t. Right. I mean, it’s great life. You make a lot of money doing it is fantastic.

Reid Tileston:
But I think that a better life, which a lot of people aspire to, and I’ve been lucky enough to live, which to me is in so many ways like the american dream, is entrepreneurial business ownership. And that’s where, like you said, you work on the business, not in the business. But unlike the equity employee, you also control your destiny. Right? You are. Your job is not the peril of anybody else, except for your customers, ultimately, and to an extent, your team members. So it’s with that vision in mind that I wrote this book because I’ve been doing it for 16 years. I’ve tasted it, and it has allowed me to live my american dream. And ultimately, I just want to engage with, you know, your audience, engage with others about how they can.

Reid Tileston:
About how they can live their. About how they can live their american dream.

Dana Robinson:
I love it. Well, let me try and extract a little bit of the things that you bring to the table when you’re talking to entrepreneurs. Things you’ve learned, the lessons you’ve learned. And maybe this is outside the scope of grid at done, kind of. What’s in the book? Maybe it’s in the book. I pre ordered it, but I haven’t read it. And everyone who’s listening should pre order $0.99.

Reid Tileston:
Yeah.

Dana Robinson:
Quick commercial. So you’ve run this cycle of entrepreneurship through the challenges out the other end to the holy grail of owning and cash flowing from passively, from businesses. You’re teaching, your mentoring, you’re giving back. Writing, I know from doing it myself, is a pretty big piece of the give back, and it’s what motivates us to spend the time it takes to put the words on paper. What are some of the lessons you think are the common lessons that people can learn from you?

Reid Tileston:
I think that the one critical lesson which I outline in the book very early on, and it’s repetitive, and I I teach people this and I mentor it, and whole nine yards applies to business ownership applies to anything else in life. I think if you’re not all in, you are in the way. If you’re halfway in, you’re halfway out. Decide which of those four avatars, from a professional standpoint, really fires you up the most, really gets you going, really gets that mentality of, I’m just going to grit it done and make it happen and then stick to it. The ultimate commodity in life is time. Ultimately, Dana, I see a lot of people because, you know, again, I I was very involved in this stuff at Chicago Booth. I teach as an adjunct. Right.

Reid Tileston:
I’ve been successful enough in the space that people, you know, want to book calls with me. I think I’m book like a month out right now, but I always will do those calls because, you know, I want to get back to it. Right. But what I find is that people will spend a lot of their time, they will spend a lot of their money, they’ll spend a lot of their precious relationship capital going down a route of thinking about business ownership and then not actually doing things. And I want people to proactively choose either to do it or not to do it so that they can get all in to whatever makes the most sense for them. And a big reason that I wrote the book is I’m like, this is cool. I’m going to write a book that takes like 3 hours to read, although it is like, actually 6 hours on audible. I had too much fun recording it, you know, to too much fun recording it, you know, $0.99 through the end of May at least, and I’ll probably go to $8.

Reid Tileston:
So spend, you know, ninety nine cents, three hours and then really read the book. Because I put in there both the frameworks to be successful, but I also mix it in with, like, the actual anecdotes that people don’t always talk about, about what it’s actually like to own and run a business. The pleasure and the pain of people. One story I talk about is a key team member that I invested a lot in professionally and personally. And that team member left the business at a very bad time that could have had catastrophic consequences. And that was not a quick recovery for me. It was very painful. So I talk about stories like that that I don’t think get enough attention in some of the, you know, get enough attention per se, but I want people to decide either I’m all into this or decide, you know, what, it’s not for me.

Reid Tileston:
And then my. My wish is that they can find what they are all into before they spend, you know, time and money. And whether it be, you know, getting an MBA or whether it be spending, you know, $80,000 hiring someone to find them a business to buy. Right. Or something like that, is just decide if you actually want to be a business owner. And if you do, oh, I’ll tell you, it’s like the best thing can be the best thing since sliced bread. The autonomy, the freedom, owning your upside, the relationships that get cultivated along the way. And also, too, as a business owner, I mean, I get a vision of what good government can look like.

Reid Tileston:
So it’s actually made me, like, both a better person and a better american. And I believe it can do that for everybody. So go all into it. But if it’s not for you, don’t invest the time thinking about it and don’t invest the resources thinking about it if it’s something that you’re not ultimately going, going to do. So I put a quick assessment tool in there for those reasons, and I highly encourage people to. You can follow up and you can have a conversation about it about some of the things I recommend people do that are good litmus tests of if they really have that gumption and that grit to be a business owner.

Dana Robinson:
Yeah, I think that. Let’s pause on that for a minute, because I have had multiple conversations recently with people who are trying at sort of a crisis. And I learned quite a long time ago that my wife, for example, I always thought she was an entrepreneur because she was always in business with me. And it wasn’t until we were rolling up property management companies where she at some point looked at me and was like, you’re just buying yourself more work. Like, you know, I’m not really the operator here. You know, I’m the manager, but I don’t like this. I’d rather have a job and not have you as my boss. And I don’t like being an entrepreneur or a business owner at all.

Dana Robinson:
And, you know, it’s funny, after decades of being in business together, to kind of have the realization, oh, my entrepreneurial zeal is enough to kind of, like, cover both of us. But not everybody should be an entrepreneur even if they want. So I’ve had some conversations that are along this line. I really want to be self employed. They want the outcome of self employment. And maybe there’s a little bit of shark tank, even myth in there of like, I want the rewards, I want the possibility to win big. All the entrepreneur stories are people who’ve accumulated wealth. Taking an exit on my whole podcast is trying to get entrepreneurs journeys.

Dana Robinson:
What is, is there an easy way for someone to just put a bullet in that? Like, I. You’re not, you’re not. You’re never going to really be able to get there if, if X, Y.

Reid Tileston:
And Z. I think the critical part is that just understand if you’re going to enjoy the journey, do your best. Understand if you’re going to enjoy the journey of trying to get to the top of the mountain, right? If you’re, if you can enjoy the journey, then the, the end outcome ultimately should not matter. And I think that’s what the critical part is. So if you’re doing, I think my judgment, my personal opinion, if someone’s doing it because they’re like, I want that hundred million dollar exit at the end, I would say that’s the wrong reason. Tell me why you’re gonna enjoy getting to that point. What is it that you visualize doing that’s, like, going to be really, you know, enjoyable for you or something you’re gonna get all into? Is it gonna be that you gotta raise money from investors? Is that part gonna be fun? Are you gonna relish, like, you know, the team members that you’re going to hire? Do you want to be the one at the cocktail party, who’s always thinking about, hey, ooh, this person’s, like, coo of this company or whatever, of the company in town. I really want that person to be my CEO.

Reid Tileston:
And you’re just going to hound them for nine months until they finally accept your offer. Right. But visualize what that stuff is actually like. And then if it brings a giddy smile to your face, like it’s bringing to mind right now, then that’s awesome, like, go out and do it. But if that stuff is, like, I don’t know, like, I don’t know if it’s. It’s almost binary. If you get jitters and anxiety about everything, then maybe it’s not the right path. But if, but if you get more excited about it and you get, like, giddy and, like, a six year old child about it, I would tell you, go do it.

Reid Tileston:
So you can choose whatever form of assessment you want. I think that’s a pretty good baseline one, and we all know that. Maybe we don’t all know, but, hey, whatever journey that we end up taking is going to have a lot of painful tasks, a lot of painful activities, a lot of painful conversations. Okay? There’s going to be a lot of kicks in the groin. I can promise you that with 100% certainty. And ultimately, you’re going to have to deal with those, right? And they can be devastating. They have been for me. I’ve seen it happen for countless other people.

Reid Tileston:
But with that said, that’s life, right? There’s a way to experience no pain, and then we wouldn’t know what pleasure was. So it’s going to be there. But if overall, you’re giddy about that journey, right, you get excited about some of those things, then, yeah, by all means, do it. And if it’s not with being a business owner, then, you know, find. Find whatever that is for you and do your best to align to it. So that’s a guidance. That’s a guidance that I give there. And that way, win, lose.

Reid Tileston:
At least you’re going to win by being all in and enjoying the journey.

Dana Robinson:
I love that. Let me challenge one of your ideas and see if maybe we can argue it out. I think that side gigs, when properly evaluated as a side gig, in other words, something that takes low risk, low capital, low time, provides an opportunity for someone to test their boundaries with these things that we’ll call entrepreneurship. Can they self motivate? Can they get up and do something where they’re not getting immediate gratification or getting paid? Can they deal with some anxiety and stress and still bounce back. So the side gig, to me, when it’s something that is low risk, also gives an opportunity for failure, which is kind of important. You got to fail and then keep it going and recover from that failure, you know, beautiful that you didn’t have to suffer the normal consequences of shuttering a business and then deciding to go reopen it, but you sort of had to have your existential crisis through that. What do you think? Am I wrong to say side gigs, an opportunity to dip your toe in business, and to say, am I that avatar? Is it a way to prove it out to yourself?

Reid Tileston:
Well, first and foremost, I always get hesitant about having conversations or arguments with attorneys, which I know that you are, but I would say this. No, it’s not. It is not wrong. It’s not wrong at all. Right. It’s not wrong at all. What I would say is that it’s not the only way either. Right.

Reid Tileston:
I would tell you that, in my opinion, in my experience and the data points around me, the people that I see that most successfully go down this route do it with a level of focus and with an all in mentality, and they also, in the context of buying businesses. And there is some data around this, but it’s not great. Tend to engage intermediaries to find the opportunities. So that’s my opinion about it. Now, I think that hedging with it and having side gigs is a great way to explore if it’s the right thing for you. But what I ultimately tell people is, you know, learn from my experience, learn from Dana’s experience, learn from others experience, because then decide what you want your destiny to be, and then just go out there and make it work, and then come back on a podcast and write a book about how you made it work and go from there. But what’s also interesting, too, is that, and again, I know that you. That you do doctoral level research.

Reid Tileston:
This is not what I’m researching now, but it’s what I hope to research in 2026, because. No, 2025. You know how long research takes is. Yeah, I want to start to. I want to do a study of people for PhD work that basically looks at the attributes of people that actually become business owners versus those that don’t. And I want to. One very critical research question for that is, is it something that you like? How did you get there? Did you do it by just hedging yourself into it through a side gig, or did it happen because you were forced to, that you lost your job and you just focus on it full time or you, or you quit your job. I think it’s a fascinating research question, quite frankly, and I really hope to study it in 2025.

Reid Tileston:
Currently, what I previously studied was business seller satisfaction, which is really cool. And we could talk about what I’m currently studying is business owner effectiveness and satisfaction. And then next thing to study is the attributes of individuals that actually go down this, go down this route so we can provide some good data around it. Because one thing which I love about academics is that it’s scrutinized, it’s data driven. But if you find good conclusions, they are very powerful. And I think that that question which you asked is one that needs some, that needs some critical analysis, too. And, you know, I’m in give back mode now, so I’m so, I’m happy, happy to do it.

Dana Robinson:
Love it. Well, I want to get into your research in a separate exit plan podcast that we’ll call the nerd hour, the business nerd hour. But you’ve. Let’s talk a little bit about acquiring a business versus starting one. I think this is super important for those that have, you know, maybe been in an operator seat, maybe they’ve had a side gig. There’s a lot of people who never thought about buying a business because they think you have to start it. There’s been popularization of the book buy, then build. So kind of popularizing the concept of buying a business and then applying your entrepreneurial skills.

Dana Robinson:
You’ve done some studies around entrepreneurship through acquisition, obviously. What can you talk to our listeners who are like, should I just buy a business or should I start a business?

Reid Tileston:
Yeah. When thinking about buying versus starting, I think it’s a no brainer, especially in the context that we live in right now. Silver tsunami is a real thing. They’ve been talking about it for the better part of 15 years. What’s so fascinating, though, is that at first it was like, business owners are going to sell these businesses in their sixties. This thing will be done by 2015. And now a lot of business owners are waiting till their seventies. Maybe they’ll wait till they’re in their eighties.

Reid Tileston:
Business ownership is a really good life. So we are living in an unprecedented era of business secession. I mean, it’s happening. There is more sellers out there than there have ever been. In addition, there’s also more buyers out there than there’s ever been because it’s getting popularized by the books that you mentioned by a lot of great influencers out there. You know, Cody, Sanchez, Walker, Dieble, other ones, people like me that are doing it as well. But let’s be clear. This opportunity is real and it’s not something that, you know, ended three years ago.

Reid Tileston:
It’s happening now, and it’ll probably happen for the next 510 years, in my opinion. But who actually knows? I don’t really predict the future much. So I think now’s a great time to buy a business. And let’s look at just. I think about it. I teach this stuff to mbas, right, to executives, whole nine yards, undergrads. But let’s think about it from just the average american standpoint. Someone’s making a lot.

Reid Tileston:
Median wage in the US is $1,118 a week, right? Let’s gross it up to $70,000 per year with some benefits and paid time off, present value, et cetera, et cetera. You find a business that’s doing $400,000 of EBITDA, 10% your equity into it, 10% seller financing, 80% SBA, seven a loan. Assuming that you don’t even buy, you don’t grow the business at all. It just stays flat on an inject. On an inflation adjusted basis, let’s assume that in ten years you sell it for the same multiple that you bought it for. So no operational improvements, no multiple expansion, no nothing there. You’re going to make more money while you run the business than you made before. You’re going to exit, have a low seven figure exit on a pre tax basis.

Reid Tileston:
You’re going to be a millionaire while you’re owning the business. You’re going to have a different level of freedom and autonomy than you had from your job. If you apply some of the principles in the book and actually work on the business and not in the business, you very well could attain, you know, absentee ownership or optional working so you can have an unrivaled level of freedom and autonomy. It takes work to get there and it’s hard and do not expect you’ll get that quickly. But if you do the right things and make the right choices, you can get there. In addition, I’m going to tell you that there’s going to be a lot of people paying in the process, but you’re probably going to make some very strong personal connections with some of the people on your team. You will also, if you join the right peer groups, make some life changing relationships with other business owners that you come across with. In addition, you’re going to get a view of what good government can look like.

Reid Tileston:
So to me, it’s an absolute no brainer to buy something given the world that we live in now versus start something failure rate for new businesses. 65% after ten years. Me being one of the experts in this space, I can tell you that there’s no great data about what acquired business failure rate is. But what I can tell you anecdotally is that it is significantly lower than 65%. It’s probably somewhere in like the less than 5% range. I can’t verify that, but it’s an absolute no brainer to me. Buy something versus start something. We do need people to start something, do the assessment with it, but I think it’s just a great low risk way to be a business owner.

Dana Robinson:
Absolutely. I totally agree. I didn’t even think of the scale at which you could acquire businesses. In my first entrepreneurial life, I really thought you had to just start. And once you had money, some chips on the table, then you could buy a business or level up. But, you know, when I learned the. Sorry for the pause, your little tech difficulty disappeared. Now you’re back.

Dana Robinson:
I don’t know that there’s any. You know, I have one sort of private equity exit that, where I was a founder, took 13 years, right? So we started something. It took us 13 years to sell it to private equity. Private equity bought it, optimized it, flipped it three years later for about five times, we think, what they paid us. And then I was like, okay, enough of this startup thing. Enough of this starting from scratch thing. You got to buy a business that someone else has invested their life into. And then, as you say, you’re in an ecosystem where there are hundreds of fantastic books that will tell you how to optimize your business.

Dana Robinson:
And take this, what might be kind of a somewhat broken business that some 70 something person is divesting to you, and then optimize that your peer groups, as you say, if you join entrepreneur organizations and read everything from Michael Gerber to Gina Wickman to, you know, there’s hundred, literally hundreds of resources, and as you say, get around other people that are doing it, that you’re going to learn from and teach along the way, you’re going to give back the things you’re learning as well. But here’s the thing you described at the beginning of your answer to my question is also something a lot of people don’t understand, is that when you buy a house, you don’t have to have all the cash, right? You put a down payment and you borrow against that house that you don’t own yet. And folks that you maybe have heard this word, lbo, leveraged buyout is a word that you use to borrow against the thing you don’t own yet to buy it. So you can literally buy someone’s business, which is an economic machine creating cash flow, and you can put very little down. You can even borrow from family in some cases to have some of that down. You can get a SBA loan is the sort of the easiest pathway in most cases, and own that economic engine. And if you run it right, that can be just like Reed’s business, where eventually you’re the owner and not the operator, and you’re still generating the economics that give you the life that you want to live. So I’m a huge fan of buying and growing and even the cycles.

Dana Robinson:
I mean, you want to talk about where I was talking about learning, you learn a little business from a side gig. How about the cycles where you owned a business that was small and never going to get any bigger? I mean, I reached a point in property management flips that it wouldn’t have been smart to stay in that, because the skill that it takes to do that, I can apply to other businesses that trade at ten times the value you. But you could buy a business that’s a couple hundred thousand dollars and sell that later. And now you’ve got a chip at the table, the experience, the knowledge, some equity to roll into your next deal and buy a couple million dollar business.

Reid Tileston:
Yeah, absolutely. And for me, right now, that process that you just brilliantly summed up and outlined, that is the american dream, and that is alive. And that is well right now, despite what we hear, it’s a lot of work. It comes with personal guarantees, it comes with risk, for sure. It’s not for everybody, but boy, boy, I think it’s a super exciting thing to pursue, and it’s not something that you necessarily need to have worked in private equity to understand you. You don’t need to have actually gone through that 13 years that you went through of building it, then selling it, then watch the private equity guys flip it for five x. Business school is great. I love business school.

Reid Tileston:
You don’t need to go to business school. You don’t actually have to do that much. But I can tell you what a concrete first step is, is spend the $0.99 in the 3 hours. Like buy the book, read it, and if you want to chat, reach out to me afterwards, get a sense of what that life is actually like, which I think is fantastic, but it may not be the right thing for you, and then go off and really give this thing a hard look and consider doing it because the upside can be tremendous. And even, by the way, if you decide that you don’t want to do it, which is awesome, it’s great. My hope is that you’re going to look at your business owner neighbors, maybe they own a landscaping company or a janitorial company or, you know, a company that cleans graffiti off the walls of San Diego. Right. I mean, there’s so many cool businesses out there and be like, hey, you’re awesome.

Reid Tileston:
You know, I appreciate the stuff that you’re doing. So if nothing else, I hope that people get a continued appreciation for the fact that these small businesses, I mean, 43.5% of GDP, right, business, less than 500 people are the backbone of, the backbone of America. So now you, you did a brilliant, brilliant job laying out, laying that out.

Dana Robinson:
Love it. Well, thanks for coming on. It’s Reid Tylston. We’ll have Professor Tyleston back soon and we’ll nerd out on, on some academic and business stuff. The book is grid it done. A low risk guide to entrepreneurial business ownership, available on Amazon for ninety nine cents. And of course, reidtileston.com. am I right?

Reid Tileston:
Yeah. Yeah. Get the book at reidtileston.com for sure. And get it at www.griditdone.com.

Dana Robinson:
Yeah. And your website’s got some bonus stuff for those that get on the pre order. And of course, a big deal for everybody. Don’t just read the book. Review it. It helps us that are authors to see some stars, people. Of course, you know, you buy a book when you see a lot more stars. So we all appreciate it when you review us.

Dana Robinson:
Reed, thanks for coming on today.

Reid Tileston:
Yeah, my pleasure, Dana, thank you so much.

Dana Robinson:
Thanks for joining me on this episode of the Exit Plan podcast. I’d love to hear from you. Feel free to hit me up with questions or comments by emailing me at hello@danarobinson.com or leave comments and questions by calling 858-252-7785 call 858-252-7785 and leave a message.