Peter Gudmundsson joined the show and shared with us his journey of business, from startups to new ventures, to the dot com bubble and the evolution of business over the last couple decades. He shares a bit of his strategy for selecting companies to work on, how to raise money, and the big lessons learned from every experience, regardless of outcome.
Thankful for this episode’s sponsor, WindowCraft (https://windowcraft.biz).
#85: Turnarounds, growth, and strategy with Peter Gudmundsson
February 15, 2021 • 1:00:11
Aaron Spatz, Host, America’s Entrepreneur
Peter Gudmundsson, CEO, BeHome247
You’re listening to America’s Entrepreneur, the podcast designed to educate, entertain, and inspire you in your personal and professional journey. I’m your host, Aaron Spatz. And on the podcast, I interview entrepreneurs, industry experts and other high-achievers that detailed their personal and professional journeys in business. My goal is to glean their experiences into actionable insights that you can apply to your own journey. If you’re new to the show, we’ve spoken with successful entrepreneurs, Grammy Award-winning artists, bestselling authors, chief executives, and other fascinating minds with unique experiences. We’ve covered topics such as how to achieve breakthrough in business, growing startups, effective leadership techniques, and much more. If you strive for continual self-improvement and enjoy fascinating and insightful conversation, hit the subscribe button. You’ll love it here at America’s Entrepreneur.
We’re going to dive right into today’s segment. I’m super excited to welcome Peter Gudmundsson to the show. Peter comes to us from a wide variety of background. You may recognize some of the companies that he has helped lead in the past. I’m going to cherry pick a couple of them, but there are many, many, many more to talk about, but anywhere from Jobs.com to Beckett Media to RecruitMilitary and there are so many other things that we don’t want to leave out. But I just want to welcome you, Peter. Thank you so much for making time for me to be here this morning.
Good morning, Aaron. It’s a pleasure to be here.
Absolutely. So hope you get your coffee because it is a brisk, but really breezy morning.
Iced tea on an icy morning.
Iced tea, man. I don’t think I’ve ever seen that before. That’s awesome. Well, my favorite lead off question actually is, you know, tell us a little bit about where are you originally from. Are you a DFW native? If not, give us a little bit of background.
Well, you’ll figure it out my accent here as soon enough, that I sound pretty American, I think. But actually, I’m a naturalized American citizen. I came to the US when I was four years old from – actually I was born in Denmark. My father worked for the United Nations. My mother had worked for the United Nations. He was from Iceland. You’ll see the little antique maps on the wall. He was from Iceland. My mother, from Manitoba, Canada. And we grew up in suburban New York after living in Denmark and Pakistan like I mentioned. So I grew up pretty normal suburban life of the 70s.
Wow. Wow. So, growing up, so how old were you then when you – you said you’re four or seven?
Yeah, about four. I’m 57 now. I was born in ‘63, came to the US in ‘68. And yeah, so the rest is history. Moved to Dallas in ‘96, but we’ll get back to that I’m sure.
Nice. No, that’s fantastic. One of the things I think it’s really cool is when folks that come up in a family, you know, whether they’re foreign diplomats or they’ve had international business experience. Granted, I mean, I know you’re four, but still, it’s a really cool opportunity to be able to grow up, even if it’s just for a few years, in a foreign country.
Well, it was. Long before the word diversity got such a currency in our society, we grew up talking about what went on at the United Nations that day. The Nigerian ambassador said this and then the Indonesian said that and so on, and that was just normal dinner party talk which I enjoyed.
That’s amazing. So, how long was that a part of your life? Was that your entire growing up?
Yeah, pretty much. So I graduated from high school in ’81. I grew up in a little suburb of New York, as I mentioned, named Bronxville near Yonkers or White Plains if you’ve heard of those places. And so my father retired from the UN in the mid-70s. So I would have been in what’s now called middle school. But then he became the Icelandic Consul General. So instead of working for the United Nations, he worked for the Foreign Ministry, the State Department equivalent of the Republic of Iceland. And so he represented Iceland’s interests in the New York area. But same deal though. It was listening. It was very much tied into the diplomatic community and all that. So I grew up with national service being a very important thing. It’s just that I switched countries because I grew up in this country. I’ve joked for years that I played baseball better than I played soccer. So I touched them right there.
Sure, sure. No, that’s fantastic. I appreciate you sharing a little bit about that. So let’s jump forward then into your professional career. So going all the way back, looks like you did a few years in the US military. And then following that, you went to work for Morgan Stanley and then after that, you were quickly trusted and it looks like senior leadership roles and you’ve kind of maintained senior leadership roles your entire career. So give me a sense of what was going on there in the late 80s, early 90s.
Well, so originally, I went to brown University in Rhode Island, studied history. I thought I would probably end up going to getting a master’s degree in international relations or something like that. We often default to what our parents model for us. But along the way, I also wanted leadership experience. So I went through a Marine Corps’ Officer program, became a US Marine officer, a field artillery officer actually, and really enjoyed it and learned the art of leadership. And so that was great, but I didn’t know anything about business. Like I said, we grew up talking about international affairs, not entrepreneurship or general management or business in general. So having read a lot of history and served in the military context, I decided that business was a better path forward.
So I went to business school when I got out, at Harvard, and had a tremendous experience in learning the science or the management aspect of businesses. It’s an art and a science. It’s a head and a brain and a heart, if you will, both. And from there, I didn’t really know what I wanted to do. And the recruiting machines come to campus and I found out that Wall Street loved me. Nothing magical about me, but I was able to articulate that as a Marine artillery officer, I was able to deal with people and numbers under pressure. And that little line, the Wall Street folks just ate up. They just loved that because that’s how they saw themselves. A lot of testosterone in the air. They really loved hearing that pitch.
And so I ended up on Wall Street. Probably not a great choice for me in retrospect. I didn’t really enjoy it that much, but I did learn a lot about financial analysis. And to this day, I format my spreadsheets in the way that I was taught at Morgan Stanley and so on. But I didn’t last there very long. Only about two years. A client of mine at boiler finding company offered me a job to leave.
I was assistant to the president of a company called Tasco. It’s gone now. It was bought by AERCO a while ago. It was small in the world of energy, only a couple of billion in sales. And we were an independent refining company. And I was essentially – to put in military terms – like a general’s aide. I was helping the CEO on a special projects and so on. But I realized that there was not much of a future for me. In the oil refining, either you’re a petroleum engineer, meaning you’re in Louisiana somewhere at the refinery trying to figure out how to get more product out of a given barrel of crude. It’s a science thing. It really wasn’t my background. Or you’re a trader, and a trader or a marketer, they call it, which is someone who stares at a screen and moves crude around the world as a trader. And that was a little – I’m not ADD enough to be a trader. So that didn’t work.
So I ended up going to work for KKR’s media company. And for viewers who don’t know, that’s Kohlberg Kravis Roberts, one of the famous New York based private equity, one of the first private equity firms, actually. It was famous in the 80s for barbarians at the gate. There was a book written about their takeover of RJR, RJR Nabisco.
Anyway, they had founded a media company called K-III Communication. That’s K-III. It later changed its name to Primedia. And I was an acquisitions guy there for about three years. I did a corporate private equity, which is we didn’t call it that at the time, it was called business development. But it was buying magazine, trade magazine companies, information directory publishing companies, and so on, for the benefit of our corporation. So it was a little bit like a media conglomerate, if you will. And there was tremendous experience in private equity. In fact, a lot of my peers who did a similar role at the time, they ended up as private equity people. They spent their years in private equity. But I aspire to run things, not just own them. And so I went on a path of running things and that’s really the common theme of my career.
Yeah. No, I definitely notice that. And so having such an interesting opportunity where one of your own clients decides to offer you a job is pretty fantastic. But going from there and then the Primedia and then just going forward. So, you know, I’m assuming there’s a lot – I mean, there had been a ton of learning as you’re assisting the CEO, as you’re working with this guy, but then also, you’re taking your business school experience but then you’re taking your real world experience at Morgan Stanley, and then also being this guy’s right hand, man. And then that kind of sets you up. So help me understand then what did that look like for you?
I think early in a career, it’s really helpful to understand the perspectives of capital and the perspectives of management. And not to sound too much like a Marxist, but I did learn that at Brown as well is that that capital has a different – not completely opposing, but a different set of priorities to management. And then you can take one step further, labor. And management is a form of labor. And so what I learned at Wall Street and at the height or the top of a public company like Tasco was what does capital want? And capital basically wants a return. It wants to make more money based on the money that is put at risk.
So you understand risk return, you understand various tools, just kind of cashflow, multiples analysis, premiums paid in comparable transactions, things like that. You learn a little bit of lingo and most of the business of course. Well, I always say it’s 20 buzzwords and maybe ten concepts. So you can master those. You can just keep applying them.
Yeah. It’s really kind of true. But the repetition of applying those lessons is really what it’s all about. And so it was a tremendous experience to be sort of at the top and see how money thinks. So to this day, now when I manage boards of directors, I understand where they’re coming from, which is, how do they maximize the value given a certain level of risk for an investment. And so that’s what I learned. Later on came the management lessons. I learned the leadership lessons earlier, what I’ve called the heart aspect of command but the head aspect is management. And I learned the theory in business school and then applied it later on in various CEO roles.
Well, yeah, I appreciate you making that distinction because there absolutely is a distinction between leadership and management. They’re not one in the same. And so, you know, learning the science, the art and the science of the management side of things and all the know-how, all the technical things, but then the leadership, the people, the understanding of how all that kind of comes together and to lead and inspire and move people in a certain direction. I think it’s fantastic. I mean, it takes years to develop. I think we’re all still developing. But help me understand the Jobs.com situation. So it looks like you were there at Primedia, but then you moved over to Jobs.com.
Yeah, exactly. So, yeah, I spent seven years at Primedia, three years in New York doing the corporate work and then four years, we bought a company here. I didn’t work on the deal, but we bought a company in ‘96 called Westcott Communications. It was a distance learning satellite television company here in Dallas, about 600 employees, about 75 million in revenue. And I was originally going to be the COO. At the last minute, they decided to make me the CFO. And I said to the CEO of the corporation, “I want to be a COO. I don’t want to do the effing part.” I called it. And he said, “Well, it’s going to be good for your career to do the effing part.” And I said, “All right. So I’ll do chief financial officer.” And actually, it was really good in retrospect. A tremendous experience, learning, budgeting, capital budgeting, financial budgeting and then cost accounting. All those things that I had learned a little bit in theory, but frankly HBS is not a great accounting school.
So it was good experience. Then I moved to COO finally and then ultimately president running that division. But I started getting calls. You’re too young to remember probably, but in the late 90s, it was the internet bubble, the first internet bubble, which led quickly to an internet bust. And I very stupidly ran into the burning building of the busting internet, if you will. In fact, my joke at the time – so this was June of 2000. I should put it in context. So over the previous year and a half or two, I started to get recruiter calls for various dotcom CEO jobs.
I was observing that these recruiters had run out of real technologists. There are only so many to go around. So the next best thing to a technologist is a media person. And so I was a media or what they then called new media, not so new anymore. But a lot of these jobs required moving, and I wasn’t too excited about that. So when Jobs.com came and it was here in Irving, I said, all right, let’s look into that. And it had raised $60 million. Now they had burned through 50 of it, but they had raised $60 billion. They had another $60 million of advertising credits with CBS Viacom. That was the irony of dotcoms at the time as they were being promoted with traditional media, you know, billboards and radio and TV to get people online.
Anyway, my joke at the time was someday I will have grandchildren and they will ask me, “What was it like at the birth of the internet?” And I’ll say, “I don’t know. I was there the morning after and it was ugly, really ugly.” And so we were burning cash and I think two and a half million dollars per month. So to do the math, that meant we had four months of cash left. But when I knew that taking the job, I had asked for financial statements, but board members all said, “Oh, don’t worry. We’ll put more money in. This is fine. We’re going to go conquer the world.” And well, over the course of the summer of 2000, the world changed markedly and everyone went into reaction mode. And these investors that had promised or indicated they would put more money in were less inclined to do so.
So we ended up going through chapter 11. I joke that there’s an old book. What they don’t teach you at Harvard business school and one of those things is bankruptcy law. But that’s another tremendous ex experience. There’s nothing like a workout or a bankruptcy experience to really understand – again, back to capital. We’re really understanding risk, understanding what rights do bond holders have, bank debt, various forms of equity preferred common, and so on. Tremendous experience.
And I’m actually proud to say, it’s a very strange thing to say. We returned 10% of our shareholders, our equities money, which in the world of net, not return on capital, return of capital. That means you put a dollar in, you get ten cents back. But that was at a time when most were losing everything. So we did the right thing. It was also an exercise in ethics because what equity will typically want to do is swing for the fences. If there’s any hope at all, let’s take those last ten cents and just hope that it turns into something.
Well, we also had obligations to debt-holders and creditors and so on, and they don’t want you to swing for the fences. And that’s the nature of understanding how chapter 11 works or how bankruptcy works. And so we did the right thing by ultimately shutting down. You have to understand, strategically, we had a great name, but those were the days of strategy by URL. In fact, there was a board member who said to me, I said, “Well, what’s the strategy of the company?” when I came in and he said, “Well, we’re Jobs.com.” I said, “Well, now I understand that, but what’s the strategy?” They said, “Well, we have a great URL.” I’m like, “Well, that’s the beginning, not the end of a strategy or it’s an element of a strategy.”
So we are the number seven job board in a world that needed two. Monster and CareerBuilder, which later became Yahoo Jobs, were that two clear in a way winners. And we were just playing catch up and with a good name, but so what?
Wow, man. No, that’s nuts. I’d actually had someone on the show recently that described the dotcom bubble and getting to see both ends of that in terms of, you know, you’re there, it’s the wild west. Everything is just going crazy. It exactly what you said. You put dotcom at the end of your company name and instantly your valuation more than quadruples because you have to be a success. And all of a sudden it all starts to come crashing down. And so that’s a fascinating study in and of itself because we’ve seen these in different segments of business in terms of bubbles growing and then bursting. And so for those that are listening and watching and they were just curious about what makes that happen. Can you give us a little insight into – in terms of the mechanics of what causes, you know, whether it’s the financial crisis 2008or whether it’s housing, whether it’s in this case, dotcom, what is going on that makes that happen?
Part of it is that – this will sound enormously cynical, but there aren’t many new ideas. Most ideas are rehashing an old idea. And for example, my very first board meeting at Jobs.com, it was mid-July of 2000. And in fact, I wore in a suit and tie and some of my board members were making fun of me, like, whoever saw dotcomer wears a suit and tie to a board meeting. This was a little bit before the cliche of the hoodie.
The whole Silicon Valley look. But it was headed that way. I thought you show respect to a board. You wear a suit and tie. I was 35 years old and corporate, I guess. The other half were wearing suit and ties because they’d came out of more traditional worlds. But anyway, the reason I mentioned that is that I had one – I won’t give the name, but a name brand venture capitalist from a very well-known firm. He made a comment during the meeting and it was directly taken from a magazine article I had read the night before also, and I realized he had no secret sauce. He was just reading. There was a magazine back then called Red Herring. It was a print magazine that covered the internet. Again, a bit of an irony. And he was just chip shotting a comment out of the general press. So he didn’t have any special knowledge.
And so you realize that that’s the case with venture capitalists in general or what I call they follow the sea turtle approach to parenting. They lay a bunch of eggs, and if a few make it to adulthood, they’re considered great parents, but they don’t do anything to get you there. They just laid a bunch of eggs. And that’s what I learned through that experience as well. I want rather investors who are more like bear parents. They watch the cubs for a couple of years and helping pick your own.
So, anyway, but it was a very strange time. But bubbles form because people don’t have original ideas. So they tend to think that somebody else has the answer and they want to follow that for the fear of being left out. And for a while, it can work. I mean, I haven’t followed this whole GameStop thing too closely recently. But yeah, when you hear someone say, “I took it from ten to 100,” you’re like, “Well, maybe I can get it from 100 to 200.” And sometimes it works. Very often, it doesn’t.
Right. Yeah. I mean, same thing with there’s several different cryptocurrencies right now that are kind of going through the same thing. Do you go ahead and throw a couple hundred, couple thousand dollars at it just to see what happens? I don’t know.
It depends whether you consider it – well, and again, if you understand risk and return, you may as part of a portfolio. Or if you consider entertainment money you would have in a casino. If it’s entertainment, fine. By all means, have a good time, but don’t kid yourself that it’s retirement planning.
Right, right. No, that’s very well said. So the Jobs.com situation, you were able to return 10% of shareholders investment, which I think is phenomenal. Like you said, that’s not return on investment, that’s return of their investment, which is quite rare. But then from there, so how were you able to then leave that smoldering wreckage and move forward?
Yeah. So I decided at that time that – well, one, I had an obligation. I had a little bit of a military-esque sort of captain goes down with the ship type mindset. I probably should have walked away earlier, but I had taken the responsibility of being in charge. And until the board decided I was no longer in charge, I was in charge. And so I saw it through to its conclusion. I felt a legitimate obligation to do that. But once that was over, we sold the name and some other assets to Monster, who certainly, I think to this day, still owns the Jobs.com’s name.
I decided I was going to do something on my own. So I spent about a year looking for a business to buy, what’s now called a fundless sponsor or a self-funded search fund. There are different names for it. And I ultimately bought a very small magazine called the Dallas-Fort Worth Design Guide here in Dallas and then expanded it to San Antonio and Austin, and then started another magazine called Home Improvement Dallas. I ultimately sold all those, and it was actually a mini LBO kind of. I borrowed some money personally backed to buy these things. And it worked out pretty well. But with few zeros behind the important digits.
And all along the way, a former boss of mine from Primedia had started a private equity firm. His name is Charlie McCurdy. He started a private equity firm called Apprise Media and they were finalists to buy Beckett publications here in Dallas. And I had tried some years earlier to try to buy Beckett myself without success. And he was more successful and he needed somebody to run it. And I was his guy so I took over Beckett at the very beginning about January of 2005.
Wow. That’s nuts. So, yeah, I mean, and I think a lot of people can relate to what a staple Beckett was to your own growing up. Because, I mean, I had several Beckett guides laying around the house. In fact, I got sports cards laying back here behind me somewhere. They’re on the top shelf. And so, being able to be able to price those puppies out and understand what you’re working with. As a kid, a lot of that is just purely academic. Because you just want to to know, like, man, is this one worth more than the other? But the business beside or behind all that hadn’t been fascinating. So you’ve done a lot of media related things. So you had gone and started these publications. And so when you started, before getting to Beckett, and you just rewind it slightly. So what was this like massive personal financial investment? Were you taking out business loans? Did you have investors? What was going on?
It varied. So when I bought the Dallas-Fort Worth Design Guide, that was I had a personal loan. Well, yeah, a loan through the business, but personally backed. So it might as well been personal. And that was scary. The lesson there I learned very quickly what that feels like. Because it’s a little bit more abstract when you’re a hired gun working for someone else’s capital, but when it’s yours and you’ve got four little kids in private schools and this and that, it can keep you up at night. And in fact, I got very defensive. I was less aggressive in growing the business than I should have been in retrospect. I probably should have recapitalized at some point, brought in some equity from somewhere else, and then aggressively expanded to other cities.
I did expand. I started in Austin Design Guide, a San Antonio Design Guide, but I could have been far more aggressive if I had just raised a couple million dollars of equity. The equity markets weren’t quite as flushed as they are now. Now there’s lots of money seeking deals and there are too few deals to go around. Back then, it was a little bit more imbalanced so it was a little harder to find that. But yeah, so that’s what I learned back then.
Curious. You hit on a big point. It’s because I do feel like there’s been this massive, just rush of folks looking for deals, but there really isn’t a whole lot to go to. So why is that the case?
Yeah. I think it’s just – again, a little bit of what we were talking – I think bubble might be too strong, but we were talking about it before. I did mention that back in the mid-90s, when I was doing that private equity role for Primedia, a lot of my peers went into private equity and we had a long in-depth discussions, and this is talking 1995, ’96, saying things like, “Is there too much money chasing too few deals?”, “Should you go into private equity where you may not be able to find a deal?” Well, most of those for old friends have done very well as partners in private equity. And so it turns out that there were enough deals to go around or that where they figured out a way to deploy that capital.
But I’m a little bit like that individual investor that keeps looking at the market thinking it’s got to be near the top. It’s got to be near the top. And I don’t want to get in now. I don’t want to get in now. And then I’ve been doing that for 25 years. As it turns out, I’m more suited to management and leadership. So I like running things but I’ve often looked over the hedge up to the grass on the other side of the yard and say, “Was private equity a better way to?” As it turns out, there have been enough deals, that there have been enough economic expansion, that by and large as an asset class, private equity has done pretty well. But returns have also come down over time. I don’t remember off hand, but it’s something like, you know, 8% or 10%, which in a world of 0% on a savings account is pretty good, but it’s nothing like the heady 30% that back in the 80s private equity had when it was a new asset class.
That’s insane. That’s absolutely nuts. Yeah, no, because, again, it’s a fascinating thing to think about. Because then if you have a low supply of deals, but there is a tremendous demand for it, I mean, the price is going to move somewhat. And so it’s curious because doesn’t that means then companies are able to be valued at numbers that they really shouldn’t be valued at? And so it could create some type of problem, but I guess that remains to be seen.
Well, yeah, there’s a luck element and a lot of these things and it’s kind of like – and I joke that I know nothing about dating. I’ve been married for 33 years. But it’s a little bit like a dating analogy. Hey, there just aren’t enough women that I’m interested in. Well, you only need one. I mean, yeah, maybe the supply is constrained, but if you find the one you’re looking for, it’s all good and everything else is excess. It’s the same way with deals. I mean, if you’re an operator, like I am, you only need one at a time. If you’re a private equity firm, it’s different then. You need a portfolio. But then again, you’re also active in more markets. So you’re going to see more deals. Not good or bad, just different.
Sure, sure. Well, when we come back from break, what I’d like to do is I’d like to understand a little bit more of the story of Beckett. So you made a simple note on your LinkedIn profile. You just said you’ve tripled EBITDA over four years. And so I would love to understand what the story was there. That is absolutely amazing. And so we’ll cover that here in just one quick second.
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Peter, this has been fun already, but I want to dive back in Beckett as we kind of joked about a few minutes ago. But you’re able to triple the company’s EBITDA over four years. So what was happening there?
Yeah. So I was there 2005 to 2008. And you indicated you were a bit of a sports collector nerd at one point, and really, the early 90s was the high point of that experience. That’s when it was a bit of a bubble as well. Jim Beckett had started the company in the 80s and he’d been collecting all of his life, but in the mid-90s was when he really got serious about the business. And Jim’s success was being an honest man in a business that sometimes didn’t have honest people in it. Some of them. There were other price guides around, but his was legitimate, well calculated prices, and that helped build his brand. He’s a very honest, good man.
And so anyway, by the time I got there, the baseball strike or lockout of 1994 had really coincided with over proliferation of products in the industry. So take baseball for example. And remember, there’s more than baseball cards, there’s other sports collected as well, but baseball was still dominant. And there were four major manufacturers by the time I came in in 2005. So it was too much product. I think Alex Rodriguez had over a hundred rookie cards or something, different rookie cards. It was just too hard. On the one hand, it was good for Beckett because we helped make sense of it all, but it was bad in that it was too complicated for a lot of people to understand the hobby, and young people weren’t getting into it as much.
And then of course the rise of fantasy sports had really changed the industry also because it used to be that a piece of cardboard was the one way that you could vicariously get closer to the athletes into the teams. But with fantasy, you could start acting like a coach or a manager and making choices. And the leagues themselves were late getting involved with fantasy. And I think Beckett publications was a little late getting involved with fantasy. But all that said, so the sports was in decline. I think in the year 2000, there was something like 10,000 independent card stores in the country. By the time I got there in 2005, there were 2000. I mean, so it had dropped off a lot.
So anyway, to answer your question on how we grew EBITDA, it was actually not in the sports’ area. The sports, it has managed to climb. We did launch a few – we consolidated some titles, saved some costs – that helped. And then we also launched a title I was very excited about called Beckett Elite, which was covering high-end sports auctions.
Not just a piece of cardboard with Babe Ruth face on it but Babe Ruth’s jersey, that sort of thing. But our growth, our real growth came on what we very uncreatively called the non-sports category, which was Pokémon cards, Yu-Gi-Oh cards, Magic: The Gathering. These were other collecting phenomena that needed to covered as well. Now the pricing wasn’t quite as important, although we did cover pricing as well, but it was really going where the demand was. And even the card stores that had survived had very often started to dedicate shelf space to those collecting phenomenon. In another mixed media thing, we had a magazine called Massive Online Gamer. These were the days of World of Warcraft and things like that. And so we were covering that from a print magazine perspective.
So yeah, really, it was a matter of being a little bit nimble. And a lot of people in what they call the hobby, the card collecting, the sports collecting hobby, a lot of them sort of lived in the past. By definition, it attracted people who were nostalgic by nature. And so they had a tendency to sort of hunker down and complain about how things were better in the old days, not just at the sports they covered, but also in the way the hobby worked. We, however, tried to cover that, of course, but also move forward and figure out where things were headed. And that was successful.
Wow. Well, no, you’re bringing my memories, right? Because I mean, the early 90s though, that was known as the junk era in terms of baseball cards. Like you said, there’s a zillion of these different cards come out from every manufacturer. And so yeah, to your point, I might think I have this awesome Alex Rodriguez rookie card, but, dude, you and everybody else has the same one I’m sure, right?
But being smart because that was actually one of the questions and you already answered it, which was, you know, because I’m looking at the years that you were there. You’re there 2005 to 2008. So this is now we’re getting into territory where now things are going more digital. We’re starting to see a lot of pressure there. And so the fact that you’re able to ride these different fads, these different waves of interest. Because I remember, I mean, I was not active in Pokémon, but I remember it felt like everyone in the world was. And even just a few years ago, there was a few – I don’t know if it’s still going on right now, but people were going crazy about this game.
And so you guys had the wisdom, I think, you know, if the business is going to continue to go – because like you said, all those baseball card shops had shut down. I mean, if I was doing the numbers right, I mean, it was like 90% of stores had shut down. And so now you’ve got a small fraction of baseball card stores left or just trading card places left. And now you’re like, okay, well, our market is shrinking, but now there’s this expansion opportunity into these Magic: The Gathering and Pokémon. And so, I mean, you guys simply just seized an opportunity, saw an easy way – not easy, but just another way to take what you were already doing and just apply it to these different lines. I think it’s really cool.
Exactly right. There was another phenomenon at the time also, which was the growth of eBay. We had a saying that eBay both killed and saved the hobby, which is kind of strange. But it helped kill those card stores but it also helps someone’s sitting in the middle of nowhere in West Texas could find a card they were missing for their collection from a random dude in Maine or something. And that was kind of good on the one hand, but also kind of bad.
And then it took away kind of the pleasure that people use to very often talk nostalgically about taking a road trip and all of a sudden being in the middle of some little town, they see a card store and all of a sudden they stopped, negotiate with their wife or girlfriend and say, “Hey, just give me 15 minutes. I want to see if they have the Thurman Munson rookie card that I’ve been looking for to complete my ‘77 Yankee set” or something. And the thrill of finding the card was there, that’s gone with eBay when you’re just looking through lists to find things. But on the other hand, if you really try to just finish that set, then eBay was quite a convenience. It also allowed us to aggregate more data from the pricing perspective. So we got to be a little more efficient with the pricing data, which was a good thing from an operating cost perspective.
Absolutely. For sure. So my last question there and then we can move on to other ventures. But as you were getting towards the end of your time there, what was the digital landscape? What was that doing to the company in terms of any kind of pressure in the way that the business was – ?
During that time, there wasn’t a lot of pressure from competing media in terms of making sense of the hobby. Some was on the horizon. Tufts had experimented with digital cards a little bit. It had not worked. I haven’t really kept up but I think they have some fractional card ownership schemes. I don’t know if Tufts per se but some of the companies, there are people that are doing more interesting things with digital collecting today than they were back then. Back then, the people were just sort of flailing around, trying different stuff. But no, it was largely still the old analog stuff but enhanced by eBay. And they were just starting to be some other trading platforms that were trying to improve on eBay. But again, they didn’t have much traction yet by the mid-2000s.
That’s interesting. Because I didn’t even realize until you brought it up, like, oh yeah, there was eBay and eBay came into existence during the whole dotcom rise and then just kind of take that forward. So like you said, you were no longer driving to a baseball card show in town or a hundred miles away, now it just changed. It changed a lot of things. So tell me about your exit there and then your next ventures.
Yeah. So what happened there is I actually fell in love with a startup idea. So while I was at Beckett, I met a gentleman who had worked for the Dallas Cowboys Star Magazine sometime earlier. And he was networking round trying to find a job in sports journalism and he’d come my way. And just quite unrelated to that, I asked what he had been doing recently. He said he was helping his daughter who was a personal historian with her business. And I said, “Personal historian, what is that? I’ve never heard of a personal historian.”
Well, it turns out that at that time and still today, there are personal historians, which are our writers who meet with typically older people and help them write down their life stories. So sort of like a biography services or autobiography services. And I just immediately was taken by that and I started researching – at the time, there was a trade association called the Association of Personal Historians – on my own time. I was still working at Beckett, but I just got really obsessive really focused on this space.
And I came up with an idea to sort of democratize that because most of those personal historians were charging around $10,000 to write a truly well-written book on behalf of this older subject. I had this idea to put out a product for about $1,500 that would be a two-hour interview that would be transcribed into a book with photographs. And my contention was that if you’re trying to preserve your grandmother’s life story, you don’t really need it to be Pulitzer Prize-winning. You just want the facts. Where did she meet your grandfather? And why did they move to Iowa? Or whatever the questions are. Things that will be lost when she passes on.
Anyway, so I started this company called The Priceless Legacy Company and I call it the love of my professional career. I really loved the concept. Unfortunately, I discovered it had a fatal flaw. So I raised about a million and a half dollars primarily from two different investors and myself. And long story short, it did not work. We found that everyone loves the idea. In fact, it was very common for middle-aged people, men and women, to break down in tears and say, “We didn’t do this for my father and he died last year and we will never make that mistake again. We’re going to do this for my mother and make sure we get her story down.” And then you’d say, “So really? When do you want to get started? How about Monday?” They’d say no. “And how about next year?”
There was something about the procrastination that everyone thought it was great idea, but they didn’t want to get started today. We also had the bad timing of starting right in the financial downturn of 2008. Timing does matter, but I don’t think that was really the primary reason. So we ended up doing about a hundred of those stories and it was a tremendous experience. A great team of seven people, but ultimately – my investors were willing to put more money in, but again, from an integrity standpoint, I said, “We have not figured out a path to profitability and it would just be good money after bad.” So as much as it pained me we shut it down around 2000, I guess it was – sorry. 2010.
It was tough. I joked to myself, I’m like the drunk at the end of the bar and a young, newly married couple comes in all excited, and I’ll say, “Love never works. You’ll be divorced in a year.” So I was just really unhappy about that outcome. But interestingly, in the eleven years since we shut it down, just two weeks ago – it’s very typical – I’ve been contacted by no fewer than 25 different business people who have found this space and they’re excited about it and they’re doing their research, and I’m like that drunk saying, “Don’t bother. It’s not going to work.” Or “if it does, come back and let me know” because there’s a pony in there somewhere. It’s a great idea.
I was really taken at the time with – there was a book called The Long Tail that came actually a little bit earlier. And the whole idea was that the way our media is headed was instead of 20 million people watching one network, you’re going to have half a million people watching lots of little networks. And that’s where we’ve had. It’s part of the political problems we have. But we’ve headed that way, but the same thing, nobody really cares about your grandmother’s story except 20 people who care deeply, and maybe someday, 80 people, and maybe someday, 160. But it’s that sort of micro-targeting that really excited me. And plus just the effect.
To this day, eleven years later, just two weeks, three weeks ago, had an email from one of the books we did. They said, “Look, it was one of the best investments I ever made my entire life. I look back at my mother’s book all the time. She died five years ago. We’re so happy we did this.” And, you know, in a sense, we were selling immortality to not always state it a little bit.
It was a wonderful, wonderful concept, but it just didn’t work. And the lesson there, the takeaway is just because something’s a good idea or just because it’s your passion doesn’t mean it’s a good business and business fundamentals live separate from passion. And that’s one of the bad advice, bits of advice, I think, we give our young people sometimes. It says, “Yeah. If you’re passionate about something, you can make it work.” Well, not really. I mean, not if it’s not meant to be. Being passionate is a great thing but being right is also as important. Ideally, you can put the two together.
Man, I’m sitting here just like, oh, I’m rooting for you as you’re telling the story. It’s breaking my heart, man. You know, I’d love to see that succeed. But your assessment of that is really – I think it’s an incredible lesson that I think a lot of folks can learn from as well in terms of separating – and this is where it sucks, right? But it’s like separating the logic from all your emotions.
Heart and head. Like I said earlier, it’s a lot of heart and head. And it’s very similar to a movie. And we all have heroes stories, profile and courage type stuff, like, “Oh, yeah, then he mortgaged his house for the third time and it all worked.” You’re like, yeah, that’s great. You hear the story about the other 999 who tried that and it didn’t work and he lost the house. So, again, I don’t want anyone to be a buzzkill on this stuff, but it is important to stay grounded. That’s the importance of having a good board, having good casual advisors, and thinking through things logically and really understanding – like I said earlier – the relationship between risk and reward.
Sure, sure. My brain is just chewing on this idea as you’re talking about it. Man, how could that work? Because, sure, I mean, I’m just thinking there’s got to be a market for that, especially now that we have an aging population. So you would think that there is maybe a greater demand than there even had been ten years ago. But you know, who knows?
Yeah, I did a lot of thinking. I compared it to life insurance. How is it that people buy a product when they’re not even going to enjoy it because by definition they’re dead? You know, things like that. Because there’s a sense of family obligation to the next generation. But there’s something about storytelling where people are reluctant. They don’t want to seem like egotists. Oh, I’m not that important. Who wants to know my story? And that’s why we had this dual idea of selling to the middle-aged children for the benefit of their older parents or their parents. But like I said, it just didn’t work. Maybe someday someone will figure it out. But like I said, of all those business people who have contacted me over the years, to my knowledge, no one’s figured it out yet.
Yeah. Maybe offline we can swap some ideas. No, that’s fascinating. And I really appreciate you sharing that because it’s an important thing to see. You’ve had a phenomenal, phenomenal business career. Just the different things that you’ve done. And it’s important that I’ve spoken with a lot of folks that have gone through all sorts of challenges, right? And so it’s just made them better. They’ve learned a lot from it, but they’re able to kind of keep moving forward. And so help me understand then what was the next step for you then?
Yeah, yeah. So one of my investors asked if I would run a social enterprise, which I did for a couple of years called the Dropout & Truancy Prevention Network. It was for-profit, but it was a series of programs designed to keep kids from dropping out of high school. I didn’t really enjoy it that much, honestly. Working with urban schools was like banging my head against the wall. It’s a very cynical world that they didn’t share our idealism. But that’s okay. It was still interesting.
But then I decided – I really did an assessment of, you know, what am I good at? What am I able to do? And I do understand acquisitions very well – how to buy a business and ultimately how to sell it. And I came across a company that I knew the owner. We had actually been in the same regimen in the Marines back in the 80s. And the guy named Drew Myers had founded a company called RecruitMilitary. In fact, we had casually talks. Back when I was at Jobs.com, he was in Dallas briefly working for something called salute.com.
Which was a group for veterans. It was founded by or backed by Ross Perot, late Ross Perot now. And he and I had become friends. We didn’t really know each other that well in the Marines. And one thing led to another and I ended up buying RecruitMilitary. He was in Cincinnati and I commuted most weeks from Dallas to Cincinnati for about four years and grew it and ultimately sold it. It was great experience. It was a media business. Job fairs, job board, and a magazine called Search & Employ. And it was a really a great experience. It was sort of a little bit of a nostalgic trip back to military experience as well. And it was fun working with more recent veterans and so on until I figured out that they were as much younger than I was than the Vietnam vets were in my era and so that made me feel really old. Or even Korea to some extent.
So anyway, that was a great experience and it was basic LBO. Get investors together, borrow a little bit of money, get a little bit of equity, buy a business, have a plan for growing it, execute the growth plan. I was a little nervous. I didn’t want to get greedy. And that’s part of my orientation is that I am – like I said, the joke I made earlier about sea turtle parenting versus bear parenting. I’d rather have one or two things, nurture them carefully. And even if it’s a triple exit rather than a home run exit, I’m okay with that. Because I know I’ll just go do another triple. You score runs all the same that way. There are others that have a different psychological makeup who really enjoy swinging for the fences. And if maybe they’ll be Google, maybe they’ll be bankrupt, but you know, they’ll go for it. That’s not my mindset.
And so we had done very well with RecruitMilitary and I was able to have, like, it was like a 34% IRR for my investors and that was the right thing to do. So I sold it. And also, human capital businesses tend to be very cyclical. And I knew we were quite a few years into – I didn’t know COVID was coming, of course, but the saying I had at the time was “I don’t know when the next recession is coming, but I know we’re one day closer to it.” And so for all those reasons, I sold. As it turns out, I think the timing was quite good if you look at COVID because I haven’t really stayed in touch with where that business is, but it’s been tough. You can’t have career fairs with live people. And so that’s really – I’m sure. We had already started to experiment with virtual career fairs, which are done online. And I don’t know. Maybe they find that it’s a similar experience. It’s hard for me to imagine that.
Sure. Well, let’s go back. Because you glazed over a very important topic in about a sentence. And I think this is part of what has been a little bit of your – and I hate to say recipe for success, but it’s been part of your –
You might call it buy, grow, sell.
Right. So I would love to learn more about where your head is at when you’re making some of these decisions. So you identify an opportunity that you assess is either undervalued or it’s not performing quite to the extent that – you have a different vision for it. We’ll just put it that way, right? So you have a more grand vision for where a certain company could find itself. And so you come in, you present an offer to purchase that company and maybe you put up some of your own money, but then you’ve got to go grab other resources to be able to make that happen. So you’re reaching out to your personal network of people that may be interested in chipping in, or you’re going and getting – I don’t know if it is a private equity or whatever this may be in terms of getting funding.
And then I imagine before you even can do that, you’ve got to already have the growth plan written down so that you’re able to attract funds, right? So you present to them like, “Hey, here’s the opportunity. Here’s what I want to do. Here’s the potential that I see in this business. Would you like to be a part of this?” And kind of pitched them the dream. “Yeah, Peter. Sounds great. I’ll cut you a check.” And then you have a plan for exactly where all those dollars are going to go. You have a playbook as to what you’re going to do to help expand and grow and make the business even larger and more profitable. Am I capturing it okay?
Well, that’s accurate. I mean, it is accurate. It’s not quite as fluid as you made it sound. I mean, those are the right steps. But as you’ll recall what von Clausewitz said, no plan survives contact with the enemy. And so yes, you do write all those things down. You do have to present that you’ve thought about those things but one thing you also have to communicate is that it’s based on these assumptions and the assumptions will change. And so you convey – yeah, it’s a combination of conveying experience. And that’s what I said at the very beginning about learning how investors think. You learn to translate concepts in ways they understand. And there’s again a little bit of an art to that.
And you also learned the importance of networking. We haven’t touched much on that. Most people misunderstand what networking is. It’s really a way of living that you are in touch with a lot of people – or maybe not a lot of people. Maybe it’s fewer people that you’re very well in touch with. But you’re constantly leaning in trying to help other people. And so for example, over the course of my entire career, which my 31 years, I guess now, you know, postgraduate school, is I’ve always been networking with people and seeking to help people. I probably meet two or three people a week largely helping them.
And in fact, it’s a net outflow. I mean, I have given more than I’ve received. I’m sure of that. But it is a way to live. And when you come across a company that might be an acquisition, but it’s not a fit for you for example. Hand it off to someone it might be a fit for. And they’ll remember you. Also, when you hand it off to a potential investor, you say, “I’m not interested in investing for these reasons.” They get a sense of how you think. It’s not a fit for me, but it might be a fit for somebody else.
And so through that network, you build goodwill and equity across the way. So that when the time comes for the one you do want to buy, they know that – one, that you’re discerning, that you don’t just buy anything that comes along or pitch anything that comes along. And two, they remember that you helped them out. And they’re not going to invest just through altruism or a sense of retribution, but they will know your basic character and that will give them comfort as they invest. Because people risk is one aspect of investing risk.
And that’s how investors think. Because it’s just like hiring somebody for a job. Can they do the job? Will they do the job? And do they fit? That’s the same three questions that investors ask themselves. Will they be successful running this? Are they willing to work at it? Do they show character and resilience? That’s where having failure in your background like I did at Priceless Legacy or arguably at Jobs.com as well although I do spend that because it’s true as a success, not just for the return of capital, but it’s a little bit like the Alamo, you know, almost a tactical loss, but a strategic success and many, many military examples of that.
So anyway, that’s the longwinded way of answering, but it’s not all in the pitch. I mean, there’s a lot of salesmanship literature out there about the art of the pitch or sort of the Trump: The Art of the Deal type stuff. Actually, a lot of it’s done well before that. It should almost come to the point that when you are pitching, “Oh, we’ve heard about you” or “I know somebody who knows you and you wouldn’t be pitching this if it weren’t a good deal.” And I’ve been very flattered. Some of the more flattering comments I’ve had in my career is people have said, “Oh, you’re behind it, I’m in.” I said, “Well, I haven’t explained the deal to you yet.” “You’ll figure it out. If you’re in, I’m in.”
And that’s the ultimate, in confidence and that feels great. And then that’s not just a career well executed, but a life well lived when that happens.
Absolutely. No, that’s fantastic and I appreciate you sharing all that with just that entire process. And I know we’re all already up against the clock, but last few questions because you brought it up, which was, you know, what kinds of deals you been looking for? And then where did you grow your investor network? Where did you find those relationships? And then we’ll stop there.
Yeah. So two questions. What was I looking for? And this is the same advice I give to job seekers. Buying a company and finding a job have very similar tasks involved and that is articulate specifically, somewhat generally, and then very generally what you’re looking for. So in my case, I was saying information oriented businesses or content businesses, I try to avoid the word “media” because people think radio and TV and that’s not really it. Then if not that, then anything that’s sort of intellectual property rich and that included human capital businesses. And then the widest is anything accessible to a generalist. And so by articulating that, people I was networking with could meet me at one of those three levels. So a very specific level, a more of a general or a very general.
And so then in terms of the types of people, they’re really quite broad. I mean, some of my investors had been with me since Jobs.com. And so they were happy that I had returned 10% of their money rather than swing for the fences and that had impressed them in a way that they stayed in touch. And then just other people I’ve met along the way, you know, active and young president’s organization. I’ve tapped into – there’s something called the Search Fund Community.
Search funds you may have heard of or interviewed some people. Search funders are usually a couple of years out of business school. They’re usually – give or take – 30 years old. I’m a generation older than that, but I have been very fortunately blessed to be plugged into that world and it’s a very well networked world. Once you get a few investors from it, then investors like to co-invest with other investors. And it’s a little bit of a – not the madness of crowds, but the wisdom of crowds. And that, “Well, if Becky’s in the deal, I want to be in the deal too,” you know, type thing. And so I’ve had a lot of that sort of thing. So there’s no one way to network, but it is important to build these groups.
Wow. Well, that’s terrific. And again, I just want to thank you, Peter, for spending so much time with me this morning. I really do. I really do appreciate you sharing your story. How can people get in touch with you? How can they get connected to you?
Oh, yeah. So probably LinkedIn is the easiest. You can see how my name is spelled there. I think there may be an Icelandic heritage chef in Las Vegas. I think it was a similar name. But you’ll find me with that name on LinkedIn. And there you go. You just pitched it right there. LinkedIn is probably the best way.
Awesome. Awesome. Well, again, I just want to thank you. This has been an absolute treat. I really do appreciate you spending so much time with me this morning. Peter, thank you.
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