From Basement Beginnings to Business Empire | Gregory Gragg

Gregory Gragg:

I think persistence and not being afraid are two critical parts of failure. You're going to fail. Everybody fails. There's not one person out there that hasn't failed, and if they tell you they've never failed, they're lying to you. Everybody fails, like we're all salesmen. I'm a salesman, you're a salesman, everybody's a salesman. And whether you're selling yourself or you're selling your kids on something or you're selling your business and your products, you're always selling something.

Nick McLean:

Hi, I'm Nick McLean, and this is Ambition. Out of the 13 businesses started by Gregory Gragg, only four are still operating, but they're bringing in millions. So what sets these four apart? Today we're going to find out. I met Greg through an acquisition deal that involved marketing and was impressed with his expertise and impressive business portfolio. Greg started Gragg Advertising in his basement 31 years ago. It has since skyrocketed to an award-winning agency, creating integrated campaigns for both digital and traditional media. He's also the Chairman and CEO of Blue Chair, an asset management company that oversees his multiple businesses. In this episode, Greg shares the lessons he's learned from $5 million mistakes, delegating to his team, creating out of need instead of desire and negotiating his way out of bankruptcy. You're probably going to want to take notes during this conversation. It's that good.

To start off, I thought maybe it might be interesting to hear what inspired you to start Gragg Advertising? What was your vision for the company when you started and how has that vision changed over time?

Gregory Gragg:

Well, Gragg is a 31-year-old firm, and so when I first started, I had been working for Time Warner Inc. and then I came back to Kansas City from New York City and I was a director at an agency and that agency went out of business. I had gotten a job offer from Fox Sports Northwest, and I was headed out to Seattle and about a month later, that agency that I had worked for here went out of business.

And so once I got out to Seattle, back in the old days, I had a brick phone on my backpack and I was backpacking up Mount Si outside of Seattle and I started getting phone calls from individuals saying that the agency had gone out of business and that they wanted me to come back and they wanted me to help with their marketing accounts. And so I jumped on a plane back to Kansas City and ended up with 10 accounts out of that deal and really worked out of the basement of my house for 6 months, 7 months looking for, hey, is this what I want to do or what am I going to do here? And so I decided I was going to grow the agency and make a go of it, and so rented 630 square feet from a guy named Nick Gatzulis who owned property in Downtown Overland Park, and I went from there. Funny thing was the heat didn't always work, and so there was always ice on the inside of the windows of that office, but it was a good start. I enjoyed it.

Nick McLean:

Well, Greg, I got to tell you, if you could have consulted me, I could have helped you transition your business overnight. The big entrepreneurs, they start in their garage, not their basement. If you just would've made that small tweak.

Gregory Gragg:

I know. I should have taken a lesson from all of the tech people out in California and started in my garage instead, but it seemed to work out. I was in my basement, I was a jack of all trades, I was a one man band and I was writing copy, I was producing commercials, TV, radio, print, and so I was doing it all. And then I do the accounting at night. So I was burning 14, 15 hour days doing that during the week, and then I'd take the weekends off. I'd always took the weekends off and enjoyed it and hung out and went out and partied a little bit. But always Sunday night through Friday, that was the rule. You're going to bust it. But that gave way, things changed. We ended up ... I'm very entrepreneurial and so I've started 13 different companies and so I started taking the money I was making and investing in other companies or starting other companies, and my vision was to start other companies and then build into an equity group situation.

And I've owned everything from restaurants, to breweries, to trucking companies, to gyms, you name it, I've owned something. And so we just ended up right now with what we have now, which is IntegraShield, Gragg Advertising and Lever1 and Blue Chair, which is where all of our owners sit. And so it just evolved. Everything evolved from ... Really the things that worked evolved from need not desire, which is important. Is it needed in the market? Is the product needed in the marketplace? Lever1 is a PEO, a professional employee organization, and they help small business. We co-employ small businesses and it's needed because small businesses can't afford insurance, they can't afford 401(k)s, their workers comp rates, their unemployment rates are always horrendous. And so Lever1 mitigates that and co-employs as individuals. And then we've got a group of about I think 5,800, 5,900 co-employed individuals across all 50 United States that leverage the power of those individuals. And that's the whole purpose of a PEO is to leverage.

IntegraShield's internet security as well as compliance monitoring. And so we work pretty closely with the FTC, FCC, FCPB on their regulations as well state's attorney's generals on all of their regulations and associations of all different kinds on their regulations. And so that product is a great product that helps people.

And Gragg Advertising, you could argue is advertising really helpful. I really believe that advertising and marketing is very helpful. I mean, you've got to get the word out on a product or a service so people can benefit from it. Now the government's kind of arguing that point on the lead gen category, and so there's some regulation coming in as it pertains to lead generation, but the point is still there that we're trying to make sure that we get the word out and we educate people on at least the basics, the FABs, the features, advantages and benefits of the products that are out there that we're representing. That's kind of a background on all of it.

Nick McLean:

Well, Greg, I tell you what, I can tell that you took the weekends off because you only started 13 businesses. I mean, how can you feel like that's successful at all? 13. Geez, I'm joking. That's amazing that you started that.

Gregory Gragg:

It's ridiculous. I had to promise ... 10 years ago, I promised my partners I would not start any more businesses and focus on the core businesses and the successful businesses we had. And I owned a CrossFit gym at the time, and it was only making probably 60 grand, that a year, and I closed that and focused on all of this. Now I own some other things on the side. Right now I own a boat restoration group and a company out in California and we restore sailboats. We'll buy an old sailboat and restore it and then sell it too.

Nick McLean:

Well, I'd like to go back to something earlier that you mentioned that I think is very common with many business owners. You talked about wearing so many different hats, burning the candle at both ends. Obviously you were able to remove yourself from the business to some degree. How were you able to do that? How were you able to uncover or decide that it was time for you to remove yourself, start putting in more managers and whatnot? Because again, I think that that's a challenge that so many business owners face. The ones that are successful perhaps continue to grow the business, the ones that aren't maybe stall. So I'd love to hear your thoughts on that.

Gregory Gragg:

It's a good question. So I'm a big Gerber guy, the E-Myth. I don't know if you've ever read that book, but I read it before I started my businesses and with other couple other books that I read, Business Mistakes, Shackleton. And so there were three or four books that really made an impact on me when starting the business. And in Gerber, Gerber's philosophy is you got to know where you want to end. And so you start where you end. And so where do you want to be when you're 65? What do you got to do when you're 55 to get where you want to be when you're 65? What do you got to do at 45, blah, blah, blah, down on the line? And so the point they made in that book as well is you'll never make any money working for yourself. If you are a one man band, you're not going to make a ton of cash.

So I mean, even if you're an attorney and you're billing at $500 an hour, if all you got is yourself, you're going to end up carrying the weight. And if anything happens to you or the environment changes or the industry changes, you're going to be stuck. And so diversification as well as delegation is the key and pushing things down and not thinking that you are the cat's meow, and so many business owners think that things can't survive without them, and that's a bunch of garbage. Things will survive without you. You build process and procedures, you put those in place, you manage what you expect, inspect what you expect. It's the rule and you manage that way. Right now, I get KPIs on all my reports on Fridays. I look at them over the weekend. Sunday morning, I have my coffee while my wife's sleeping and looking at reports for two or three hours before everybody gets up. And then I show up Monday and have meetings with all those individuals. I'm versed on what's going on and I know where it's going. So you manage it, you don't do it.

And so, so many owners, so many entrepreneurs get caught in this, "I've got to do it. I am part of the process. I am in there doing it," and you'll never get there. You'll never get rich that way. The way you get rich, if that's what your goal is or the way you build an empire is delegation and pushing down and holding people accountable and having them agree, I don't make one plan, I don't do any plans. All the people that work here do the planning. And I do that on purpose because if it's my plan and I give it to them, then they have a hard time meeting that expectation. But if I say, "This is your deal here, you tell me what your plan is and you tell me how you're going to get there, and you tell me when you're going to get there and you tell me how much money you're going to make and you tell me what products you're going to develop," and I just let them go.

So part of that deal and pushing down is empowering other people to take charge. I mean, because some people want to take charge and you're always going to run into those people that don't know how to take charge. For one reason or another, they can't do it, they don't have the capacity to do it. But you'll find a large chunk of the population has that capacity or has that want. And if you give them the resources to get there, which is a Shackleton statement, they'll get there.

Where people also go wrong is they sometimes sabotage ... Owners and entrepreneurs sabotage other people. They don't want them to be better or smarter or stronger than they are. And that's another mistake. I mean, you're only as good as your stable, and if you can't put people in there that are super strong and smarter than you and bring more to the table than you can bring to the table, you'll never get there. Surround yourself with great people, the greatest people you can afford. And as a small business owner, you can't always afford the greatest people. And so you have to look for those opportunities. You have to look for the right people. And if you keep working on it, you'll find them. I've gone through a lot of people unfortunately.

And so it's important to realize that there are people out there that care and that want to succeed and they don't have the tools or they don't have the resources. But if you give them those tools and those resources and say, "Okay, write your own plan. Tell me where you're going to be. I might adjust it a little bit and give you direction, but you're free to run now. I'm going to get out of your way. Run and report to me weekly on what you're doing and how you're doing it and where your revenue is and what your product development is, and let me know." And I've found that that succeeds the most by empowering those people and giving them that opportunity.

Erica Brune, who is the CEO of Lever1, she started with me as an operations manager at Gragg, and now she sits on top of that organization. There's 50 plus people there, their revenue is $300 million. And so I mean, I gave her the tools, same with Darryl. Darryl's sitting on top of a $25 million agency, and he built his team, he did what I asked him to do, and I gave him direction and he took it from there and built it and continues to manage that day to day.

Now I'm really teaching each of those CEOs to elevate themselves. How did they escape the day-to-day pressure. And they're all trying to get there. Now, I'm working on my CIO now and the president of IntegraShield to do the same. I need them to elevate, but Darryl and Erica embraced it, and I said, "When you're ready to take the CEO title, take it." Erica took it immediately, and it took Darryl a while. I had to go back to him and say, "What the hell, dude? I just gave you the right to take the CEO title and bounce me out and force me out." And so he did. He took it, hired a president and moved forward. And IntegraShield's not quite there yet. And so I'm waiting for that opportunity as well is to grow her. And then my CIO, I had a conversation with him this year and he's an owner, and I'm like, "Dude, just hire the people. Hire the people. This will survive without you. In fact, we want it to survive without you. That's when you know you've been successful."

Because as an entrepreneur, what do you want to do? Do you want to work your whole life grinding 15 hours a day? Hell no. That's crazy. You can't do it. That's not sustainable. It's not sustainable. You will burn yourself out. And so get to the point where you can work on projects that you want to work on. You're still probably working. If you want to work 30 hours a week, you can do it. I don't work 30 hours a week. I work probably 50 to 60 hours a week, but that's me. That's my animal. That's the stripes I have. I like to do it. And so I gave him that power where I'm like, "Look, you don't want to work 50, 60 hours a week on this. You want to bring people in that can do the job better than you can do it, and you want to educate yourself, and then you want to manage and you want to educate yourself and then push the rest of that team to educate themselves to get where they want to go." And that's a long statement to your question.

Nick McLean:

Well, I think that's great. It's a great answer. One thing it made me think of was the concept of if an idea is brought to you that is perhaps 90% as effective as it could, you have the potential as the manager to try to move that from 90% to 95%. But also you've got to think about though what the motivation will be by the person that brought you that. If you try to make all these changes, then motivation drops from 100% maybe down to 50% and you're getting an inferior output, I think what you're talking about, there really is a summary of that concept, if you will.

Gregory Gragg:

It's empowerment. And in the old days, I was hard to work for because I was stuck in this position where I thought I mattered the most. And when you realize that you don't matter the most and you're not the smartest and you're not the brightest, and that other people have good ideas and that if you can empower them, they'll run harder for you than you making them run. I mean, that dictatorial management style is a thing of the past, and that just doesn't work. And I was a football coach for 25 years, so in the early days it was very old school coaching because that's what I was taught. But as I progressed and I progressed in business, those philosophies took over. Thank God those kids are like fifth graders through eighth graders, and I'm a monster, and you can win, you can succeed by empowering people and by motivating them.

Now does that mean that you go way to the other side? No. You have to hold people accountable. You say, "What is your goal? What do you want? What do you want out of this deal?" They tell you what they want and you say, "Okay, I agree with that. Here's what I want." And so we need to both have skin in this game. And so can you design something that meets what we both want and then they go off and develop it. I didn't tell them what to do. I didn't do their budget. And I have this conversation with them all the time and they're like, "Hey, can we do this?" And I'm like, "Sure. Is it in your plan? Do you have a vision? Is it well-thought-out? Have you looked at all the options?" And all I want them to do is twist it like a Rubik's Cube and figure it out, twist it around, look at it, do the analytics on it, do the analysis, and then write a plan.

And if you do that for me, I'm like, "Run. Run like the wind." Because I ran so hard. I ran and failed so many damn times that, and I learned so much. I learned so much. And thankfully a little bit of luck and persistence played out and I was successful in four of the ventures, what I started. The rest of them shut down or failed, and I've lost more money than you could [inaudible 00:17:50].

Nick McLean:

You brought up two themes that we often talk about on the show. So the first theme I'd like to talk to you about or go into more detail on is failure. How has failure impacted where you are today? Has it been the reason why you are here? Or how do you think about failure, especially as it relates to perhaps advice or counsel you could give to other business owners?

Gregory Gragg:

Failure is painful, but it happens and you work through it. So resilience is stronger than failure. And so if you have a greater resilience to get back up once you've been knocked down and move forward, then you win. You can win. Where people go wrong is they fail once and they're like, "Okay, I tried this and I'm no good at it and I'm going to give up." I was a collegiate athlete, I rowed, I rowed in a boat and I worked my way up and worked hard to get into that varsity boat and get in that boat and row. And that persistence of not giving up and literally pushing yourself to the limit of what you're capable of beyond what your mind thinks you're capable of doing is critical. Pushing harder, trying more or looking at it from a different angle or figuring out why you failed and not making that mistake again, which is the same rule I have around here.

These CEOs and presidents, I'm like, "You can make a mistake. Just learn from it and don't make it again." And I mean, we've probably made mistakes that cost us 5 million bucks, telltale told, but it's all part of the process. You just have to be able to weather the failure. And a lot of people have failed and moved on. From Thomas Edison down the line, there's tons of failure out there, but they just don't give up. Their persistence is greater than ... Their vision is greater than the failure. Also, some entrepreneurs are like me and I have no fear. I lack fear. And so not being afraid is critical as well. And so most people you talk to, they're like, "Oh, I can't start a business. I don't want to risk 100 grand, or I don't want to risk 2 million. I just don't want to do it." And I mean, no risk, no gain. I mean you have to risk something and you have to believe in yourself.

And not having that fear behind you is really probably one of the greatest things or the greatest gifts I have is I just wasn't ever afraid. 28 years old, starting a company and turning down a job with Fox Sports and starting my own business. I mean, people were like, "What? Are you crazy? I mean, you could go work for those guys, go to every football game, basketball game. That's a great job." And I was just like, "This is what I want to do. I'm just not going to compromise on what I want to do." So I think persistence and not being afraid are two critical parts of failure. You're going to fail. Everybody fails. There's not one person out there that hasn't failed. And if they tell you they've never failed, they're lying to you. Everybody fails. We're all salesmen. I'm a salesman. You're a salesman. Everybody's a salesman. And whether you're selling yourself or you're selling your kids on something or you're selling your business and your products, you're always selling something.

Nick McLean:

I couldn't agree more. Oftentimes I'll talk to other folks that are wanting to buy a business because that seems like the next best path for their career or their lives or whatever. And ultimately we get to the topic of risk tolerance. A lot of times they'll tell me, "I'm really nervous about this" or "I'm really nervous about that." Immediately in my head. I think to myself, when it comes down to it, when they have to sign on the dotted line, are they going to be willing to do it? Thinking about myself, how I've responded in those situations, sometimes I wonder, do I have no fear or do I evaluate risk differently than those folks? Now, I know you mentioned that you have no fear, but do you also think it might be this concept, you just have a different way of evaluating risk so it doesn't feel as risky to you?

Gregory Gragg:

Yeah, I mean, I'm a numbers guy, and so I'm good at Excel and I sit down and project it out, and I have rules that I follow myself. And so it's like whenever I do my plan, I always cut it in half and see if I can make it. I cut the revenue in half. I'm like, will I make it or not? What cost could I cut?

And so even before I go out into a venture, I'm analyzing that risk or what am I going to do when it all falls apart? And maybe that's a little bit of neurosis that I have of analyzing just the negative side of it. But I guess my feeling is, and why I have no fear is if I can do that and I can show that the business can float even with half of the revenue that's coming in, and granted, you're going to make cuts and you're going to make hard decisions, which I've done before. And so I've gotten into those situations and I'm like, okay, I know what to do now. I know I need to cut this, this, this and this, and I need to look at sales or I need to look at operations, or I need to look at the product itself. Has the product gone bad?

And so you jump into this crisis manager mode that you've already pre-planned in your brain, and maybe you're right. Maybe that's why I have no fear because I've already gone through and there's no way you can account for every scenario. You can't account for everything that can go wrong, but you can't account for some of it and then you can manage it. Any business to a degree can survive downturn if you know how to manage it or you know how to react to it. And where most entrepreneurs fail is they refuse to react to the downturn. So things aren't going well, and they're like, "Okay, things are going to improve. Things are going to improve, things are going to improve things," and all of a sudden it crashes. It never improves. And so change and innovation has to be part of that.

And so you build that into your model that, okay, if things go wrong, then we're going to change it and I'm not going to wait and timing is everything. And we've changed and evolved, and I have a lot of theories on product or business growth or business growth models. Most businesses have this exponential growth rate that goes through the roof, they mature and then they fall off and die. That's true of every business, but there's a piece of that. There's another curve that you can put on top of it, which is called the innovation curve. And so if you're constantly innovating that business, you tighten that growth curve and pull it back to the growth model. But you're always going to have to be improving your product or adding a product or adding another service to your entity and evolving that.

Like AI right now, I mean AI is so incredible and people that aren't adopting AI right now, they're missing the boat. I mean, unbelievable opportunities here. And so I mean, we are looking at it and going, "Okay, how can we cut 80 hours down to 10 hours?" And it's possible, we can do it. You just have to be willing to do it. You have to be willing to innovate and put a little more energy in it. And if you're in a position to do it, and this is another thing, it's time and money. Either you're spending time or you're spending money as an entrepreneur, and so is it your time that you're going to have to invest in that innovation to make that company grow? Or are you going to spend the money on the people that can help you get there and spend the money on the people is what I say.

Nick McLean:

I wouldn't disagree. Separately, you've brought up concepts of hard work and luck. As you think about your own career, as you think about what other business owners might need to hear, what are your views on the interplay between hard work and luck? I'll tell you, some folks say it's all hard work. Some folks say it's all luck. Some folks say, "That's a stupid question, Nick. I want to get on with my day and run my business." What are your thoughts on the interplay between those two concepts?

Gregory Gragg:

I think opportunists, good entrepreneurs are opportunists and they keep their eye on the market and they have a sense, and I have a sense sometimes, I get a sense, and it's a reality of situation. If things are downturn and things aren't going well, I think about it and I think of options and I've already thought about it and I know what to do, and is that luck that you've pre-planned or you've gone through all those scenarios in your mind and so you know what to do and make the course correction. And it generally isn't this huge course correction that you're going make. It's usually something little and you twist the knob one piece or you pull the lever halfway down, and that change in the business model makes all of the difference. Now, that might be for a restaurant, that might be your menu. Maybe your menu's not good right now and you need to change it, which is a whole other topic. My wife's vegan, and so there's such a huge opportunity for vegan food. And so people don't realize that it's generally one change. Again, they get stuck.

And so is that luck? I don't think so. I called it luck, but really it's persistence, it's making the change, it's the commitment to say, this isn't working, this isn't working. We have to change. And I think a lot of that came from a lot of different aspects of my life. Sports, being a collegiate athlete, coaching. "Hey, if something's not working, you need to make your adjustment in the second half and we need to make sure that we're going to be able to beat this team." Granted, I'm dealing with sixth graders, but the fact of the matter is our coaching staff would make the change. We'd say, "This isn't working. Let's analyze what's going on here. What defense are they running? What offense are they running?" And so we'd go in at halftime and we'd figure it out and say, "Okay, we're going to make these three or four changes and see if it works."

In the end, out of all those years, my net was a winning record, and so it did work. We made changes on the fly, and I think that helped me as I was running my businesses to make changes and not be afraid. So is it luck? I think it's probably more persistence and then more analytics and thinking, sitting down and thinking and then not giving up. I mean, I just can't give up. I just don't know how to do it.

Nick McLean:

I think that's a good quality to never want to or even be able to give up.

Gregory Gragg:

I mean, I've got to tell you, there was a point in Gragg's life where we were servicing an industry that was under fire by the regulatory groups and they shut everybody down. And we were doing business, we were doing killer business, we were killing it. And I mean, we had the largest clients in that space nationwide, and we had everything going for us. Well, they shut them down. Well, as an unsecured advertising agency, you have no position. I mean, you're an unsecured creditor. And so we got stuck for $5 million. And so I'm sitting there looking at a $5 million bill. My partners are like, "Screw this, shut this show down. We're just going to go bankrupt. Let's go bankrupt" because everybody else was going bankrupt. And I'm like, "Nah, I'm not going to go bankrupt," which would've been wiser to do.

And so many groups out there went under and I went back into the market and I negotiated deals with our vendors and stretched people out and not on purpose. I went to them and spoke to them and say, "Here's the deal. You can get nothing. You can get nothing. Or I can give you 55 cents on the dollar. Will you take it?" And the majority of them took the 55 cents on the dollar which was better than getting nothing at the end of the day. And so I just negotiated my way out of it, and those vendors are still my vendors and they're like, "Thank you, thank you, thank you for staying in business and thank you for stepping up and at least negotiating with us and getting us something for our money at the end of the day." And they wrote off the rest of it, and I had to count that write down as it's net revenue, so I was taxed on it, but the fact of the matter is at the end of the day, it worked.

And so is that luck? Is that being backed in the corner and you have no options? I don't know, maybe a little of both. Maybe desperation and persistence and the ability to not give up and looking for a solution and going from there. Most of the businesses that we've had, I've shut down just because I didn't feel like they were making the money that I wanted to make.

And so I found the four groups that were making the money, the kind of money I wanted to make, that's where we ended up at the end of the day. And that's what you got to be smart with too. Not that I'm Walmart or anything like that, but take a lesson from Walmart. If you put a store in, the store's not making money, don't try to drag it forever. Sooner or later, you cut bait and you move on. And so that has to happen too if you have a pool of entities, which is what we had. And so slowly I had weeded the bad performers out that we didn't want to work on anymore and stop that business, shut it down, which is good. Learning how to shut a business down the proper way is always a good thing.

Nick McLean:

Sure. I've talked to a lot of business owners. Every once in a while, the business owner will be almost prideful that they've gotten the business to the level they have with virtually no sales or marketing or advertising efforts. As the owner of an agency, I know what your response is, but instead of ... Beyond just laughing and saying, "That's foolish," what wisdom can you share to folks that might have a reluctance to pursue marketing because they don't think it's a worthwhile expenditure?

Gregory Gragg:

It's opportunity. And so if you look at marketing as opportunity, and so do you need that opportunity? Sales is opportunity. New sales is opportunity. And so when you're starting to look at just business, business philosophy, opportunity, sales and marketing is opportunity. And so do want that opportunity? If it's just you and people are coming to you and your product's great, I'm happy for you. But again, you have to again, look at that growth of your business and maturation of that business and it falling off sooner or later. Will that be sustainable? My answer is no. Every business dies. And so sales and marketing is a way to hedge that bet, to put that word out there, to gain more consumers, to gain more consumer trial. And without that sales and marketing, how are people learning about your product? Is it just word of mouth? If so, that's great, but your reach, your cone of influence, your opportunity in the market is somewhat restricted.

There's always somebody you can sell more product to, I guarantee it. And if you're at a point with your product where you feel like you can't sell any more product, then in my opinion, what I would do at that point is I would build another product because it's like, okay, this product is working and it's good. Let's build another product and let's market it and get it up and running because this seems to be cooking on its own. Now, do I need to innovate that product that's going on? Yes, I need to manage it, but I've always believed in marketing and Lever1 as a PEO, we have blown Kansas City up. We own this market as a PEO. And so it's one of those situations where we did it through Erica getting out, shaking hands, being part of the groups, getting herself involved, introducing herself, working her rear off, going out there and pushing.

In addition, we ran a ton of public relations. I mean, we were writing content and writing articles and still do today, social media, email campaigns. We're just building it and hedging it to the point where people, other PEOs, bigger PEOs that want come into Kansas City, I mean, I get a call a week, they're like, "We want to buy you. You own Kansas City. We want to buy you." And I'm just like, "We're not where we want to be to sell yet." But they don't feel they can do it on their own. They want to purchase it instead. Knock on wood, I don't want to get ... I'm humble. And so the fact of the matter is it all can be taken away from you, but you want to get to that point where you are top of mind [inaudible 00:34:23] everybody possibly can be, and marketing and sales does that for you.

And if you want to get big, again, I'm falling back to the philosophy, you can't do it all yourself. So hiring a sales force that goes out there and then holding them accountable for their results and their new business sales is critical. Now, you're still always going to get those referrals. You're still going to always going to get new consumers that way, but can you get another 20% and pay for that sales force to get out there? Can you get another 20% when you're running an 8% marketing budget against it? And you can. I've seen it. I've seen it grow. Through my experience, through my experiences, I feel we've always done well at marketing and pushing the message out there and try to get top of mind and playing bigger than we really are. And that's what marketing does for you and allows you if you do it right, to position yourself as a brand and look bigger than you really are. And that means a lot to people and that credibility means a lot to people.

And so if you're top of mind and you look bigger than you are, people have a propensity to buy from you. Now, third party referrals, best lead source you could possibly get. And we build that into our strategies, we build that into our marketing and we build that into our trade shows. I'm at a trade show 26 weeks out of the year. I mean, I take 14, 15 people to dinner every night. I'm there. It's a mixture of current clients and prospects. Current clients are talking about us, prospects are asking questions, we're all drinking a lot of wine or smoking cigars or whatever you want to do. We're entertainers here. But getting the word out through third party referrals is great. Is that going to get you there totally? Not really. I mean, if you want that additional 20% sales or 25% sales, you're going to have to push that curve.

And I mean, all you got to do is look at the big boys. Are the big boys marketing? People say, "Well, they have the money to market." Well, yeah, they run it the same way we run it. I worked for Fortune 500, I understand what the deal was. You had a marketing budget and you stuck with it and you got more budget if you were successful and you increased sales. And so I mean, that's the way it works. We know that marketing and top of mind awareness works. And so for people just to think that they can naturally grow, great, I'm all for you, but you can grow a little more if you use marketing.

Nick McLean:

Well, one more line of questioning then we can kind of move to a conclusion.

Gregory Gragg:

Okay.

Nick McLean:

You're the type of person that seems to always be thinking about the future and envisioning different plans and whatnot. I know you're nowhere near the point where you're ready to remove yourself from your businesses entirely and shift to a more or less active involvement in your businesses. But you've probably thought about that. As you think about getting closer to the point at which you're ready to exit, how have you thought about this? What signs will there be to indicate that now might be the right time? Because I know for a lot of business owners, it's a very difficult decision and one they approach with trepidation.

Gregory Gragg:

I just have a target. I know what I want. I mean, I've already thought it through. And so again, start with the end in mind. I know what my number is. I've done the math, I know how I want to live and I know what I want to own in my older age or the next phase, and so I know what my number is. And so don't think for a second, I don't know what the EBITDA calculation or the multiples of these businesses are every day. I keep track of it, I know it, and I chart it. I'm like, okay, where am I at? Am I at my number? Am I close to my number? Can I hit my number? And so probably within the next two or three years, I'll divest some of these assets because we'll hit the number that I wanted to hit. Start with the end in mind. And for some it's possible. For some it's not.

If you're realistic, and sometimes my partners say I'm unrealistic, but I feel like we can hit the number. And that's important because how do you want to live after you sell your businesses? And I built these businesses to sell. I mean, I never built these businesses to hang on to them or give them to family. In fact, I told my kids, I said, "You may work for me while you're going to college or in high school, but you will not work for me once you get your degree and you move on." And they haven't. They're engineers and doctors and I mean, they've done other things. And so if they wanted to be entrepreneurial and start their own deal, I'd support it.

But have the end in mind, if you know where you want to be, and then try to do the math literally all the time and say, "Am I where I want to be?" And if I hit that goal, that's when I sell, boom. That's when I'm done. If I'm close or I'm charting to that over a TTM, trailing 12 months and I can hit that number on the multiple that I want and the market's willing to sustain it, then boom, start your package. Start your ability to sell your company and get out from under it.

But answering that question, again, I'll state, start with the end in mind, know where you want to be because so many owners and I try to [inaudible 00:39:47] I mean, we've got two deals on the table right now on acquisition, and so many owners have unrealistic expectations of what their business is worth or they have unrealistic expectations of letting go. And I've been in deals and we've probably had seven LOIs on the table in the last two years, but what I find in half of those is we get to the nitty-gritty of the deal and we've got the terms down and everything's ready to go, but they can't let go. They get down to the end and they're like, "What am I going to do when I let this go? Where will I go? What will I do?"

And my statement is, "You should have the end in mind." If this is the number that you want, sell it at that price. And at that point in time, you can take that money and invest it. You can take that money and build another business. You can just bank that money and invest it and go be a CEO somewhere else, for somebody else that's running a similar business, which is probably what I'll do. I'll probably go work for somebody else or get involved with somebody else's startup and then move on from there. But start with the end in mind, know what you want and then be willing to leave when you're there.

And I was trained as a salesman to always leave something on the table, and so make sure that the people that buy feel like they got a good deal and nobody's ever going to be 100% satisfied with the deal. But find that common ground where everybody feels like, "Okay, I got some of what I want. I didn't get everything, but I got something and I'm happy with it. I hit my number. It doesn't have all the dressings that I wanted to have, but I hit it. I hit my number" and then move on. And don't be afraid of it. So many business owners are afraid of what the hell they're going to do once they leave their businesses. And those are the same owners that are probably too tied to their business day to day and haven't delegated down.

Nick McLean:

Regarding negotiations, I've heard it a little bit differently. The way I've heard it is if both parties don't feel like they got a little bit screwed, then it wasn't a good negotiation. But I like the way you phrased it a little bit better, a little bit more positive.

Gregory Gragg:

Yeah, I try to keep it positive. I try to make sure that we feel good. You're never going to feel great, but don't let great get in the way of good. And that's how a deal works. I mean, there's never any ... I've been a part of so many deals that have broken down, and it's lucky if you can get a deal across the line, in my opinion. It takes a lot of hard work and negotiation and persistence and compromise. And so if you can get a deal across the line, great, which I've done before, but I've failed more than I've succeeded, quite frankly.

Nick McLean:

Well, as we move into the conclusion, not trying to imply that I will ever achieve the level of success that you have or anything along those lines, but some of the topics you talked about, specifically about empowerment and persistence, it's oddly familiar to the four pillars that are within our name. It's relationships as a cornerstone for success, servant leadership, which is a lot about removing the obstacles so that your team can be successful, not about making yourself successful, challenge the status quo, and then the last one is persistence or perseverance. So again, as you were talking about these, it was just oddly familiar to a lot of the principles that myself and my partner hold ourselves to and what we want to hold our firm to.

Gregory Gragg:

Yeah, you would say it's not really all that difficult, but it is. At the end of the day, those four pillars are critical, and you would like to think that you could achieve all of them succinctly and together, but it doesn't always work that way with people. I try to live by those. I mean, I try to be humble in my approach, and I think that plays a role too. Humility and being able to look at yourself and say, you know what? I'm not the greatest thing since sliced bread. I'm really not. I work hard and I'm pretty smart, but there are other people smarter than me and other people that can help me get where I want to go at the end of the day.

Nick McLean:

Well, Greg, really appreciate your time. I always feel like a conversation with you makes me energized about future prospects and views the world a little bit differently. I really think that reaction is the mark of somebody that gets it. And even if that doesn't translate to billions of dollars, I know that you're going to be happy. I know that you are happy with where you are in life, knowing that you want to push a little bit harder, you want to push a little bit longer, but that you're not letting business get in the way of happiness. You're not letting business get in the way of family. Similar boat, and I just applaud you for that and really appreciate your viewpoints.

Gregory Gragg:

Yeah, thank you for having me. I really appreciate your time, and I enjoyed the conversation.

Nick McLean:

One of the goals of the Ambition Podcast is to highlight what it takes to scale a business, the highs, the lows, the lessons and failures that ultimately lead to success. Greg's journey is just one illustration of the many forms that scaling a business can take, and it's incredibly impressive. From the 13 different businesses he started and his success in scaling 1 to 300 million in revenue, he is a leader that walks the talk. So many business owners I talk to maintain the belief that the business will falter without their ever present involvement. But Greg's story shows that he was only able to grow the business by essentially adopting the opposite mindset. I loved his honesty and clarity around the need for leaders to get out of the way and let their team do their best work. If you're trying to scale but are struggling with this concept, Greg's story is full of encouragement and inspiration.

Have you been enjoying Ambition? Leaving a review? Wherever you listen to podcasts is a great way to help others discover the show. I love reading what takeaways you found applicable for your own business or career. Thanks for listening.