John Maddox co-founded the digital agency Ten Fast Feet in the depths of the financial crisis. Despite his timing, Maddox was able to grow the business to $2.3 million in sales by 2013, when he got a call that would change his life forever.
I asked Maddox what he would change if he had the chance to do it all over again, and he explained that he wished he and his partner had agreed, from the outset, on a formula for valuing their business. That way, if either had wanted out, there was a formula already in place.
Listen now to hear his story.
About John Maddox
John Maddox is a father, serial entrepreneur, public speaker, tech startup investor, consultant and mentor. He is CEO of Serious Startups, a partner in Ideashares, founder of YouPaidFor.IT, and the host of The Crowdfunding Pitch Show on SuperTalk 99.7.
Over the last several years he has worked with publicly traded companies, startups and small to mid-cap companies. He specializes in business logic, marketing strategy, web and mobile application development and helping driven individuals to become more successful.
Click to Tweet: Tune into this week’s episode of #BuilttoSell Radio as @johnwarrillow discusses #valuation formulas with @JohnMaddox | http://goo.gl/Iimq2F
Some Highlights Of The Show
Business: Ten Fast Feet
1:50: “An interactive agency doing web applications and mobile apps.”
3:00: Investing during the recession.
5:05: “We spent the day going over his business plan… That afternoon I signed a deal for about $240,000. That turned into a pretty sizeable recurring revenue client for us and really gave us the cash-flow to hire more people and expand the firm.”
Click to Tweet: [#Podcast] A large recurring revenue client that we signed gave us the cash flow to expand and hire via @JohnMaddox | http://goo.gl/Iimq2F
5:35: “It felt like I was in the hamster wheel chasing the cheese.”
7:30: Partners: two sides of the same coin.
8:00: The Gordian Knot Conundrum.
9:30: “I found out I was having a massive brain hemorrhage and ended up having to have emergency surgery to save my life. That kind of sparked the whole process, which ultimately ended up with me selling my stake in my company.”
12:20: “My partner and I had a falling out … and when I was in the hospital before my brain surgery I did a little bit of a self-analysis … given a second opportunity in life and one of the things that I wanted to do with the talents that I have… I was informed that the majority of my brain hemorrhage was in the part of my brain where verbal communication happens … that moment of self-discovery.”
13:00: “Just doing things in the short term was not going to be what I was going to do in my life… You should take your gambles when you are young.”
14:00: “Something I would share with everybody … make sure you have your [documents] in place before you start.”
Click to Tweet: [#Podcast] Hindsight is 20/20 “I wish I had a predetermined valuation formula.” with @JohnMaddox and @JohnWarrillow| http://goo.gl/Iimq2F
14:51: The buy-out and no pre-defined values.
18:10: “Massive orders of difference [between what he and I thought my shares were worth].”
21:30: The deal structure.
23:45: “The first iteration of Serious Startups was what I wanted to do with my previous company.”
24:04: “We acquired a startup publication … leveraged that as a promotional tool to dive into the startup space and create relationships.”
25:33: “There are two types of selling: the unicorns, the large scale acquisitions … and you have the type that might be acquired but into more of a regional company. The most important thing to take into account is that recurring revenue is one of the most attractive reasons for acquisition and provides the highest valuations.”
Click to Tweet: Most important #valuation factor is #recurringrevenue it’s attractive and provides the highest valuation|@JohnMaddox http://goo.gl/Iimq2F
26:45: “What are the processes that you can prove have directly implemented your year-over-year growth.”
27:15 john@seriousstartups.com | @JohnMaddox
Click to Tweet: [#Podcast] Is Your Partnership A Ticking Time Bomb? with @JohnWarrillow & @JohnMaddox |#builttosell http://goo.gl/Iimq2F
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