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My guest for Episode #263 of the My Favorite Mistake podcast is John St.Pierre, an entrepreneurial strategist, business growth advisor, and co-host of the “Entrepreneurs United Podcast” — with Rich Hoffman. They recently had me as a guest.
John has over 25 years of experience co-founding and growing successful businesses across various industries including co-founding and growing two companies to over 50 million dollars in revenues each.
John is currently the majority owner and chairperson of Rhombus Group, a private holding company formed in 2003 comprising several small businesses. His mission is to help entrepreneurs, intrapreneurs, and their companies achieve their goals and dreams.
He’s also the author of The $100M Journey: Your Guide To Growing The Business Of Your Dreams Without Going Off The Cliff!, a book that shares my proven strategies and insights on how to scale your business while avoiding costly pitfalls.
In this episode, John shares his profound insights on the pitfalls of trying to grow a business too fast. John recounts his journey of co-founding and expanding a company to over $50 million in revenue, only to face the harsh consequences of rapid, unsustainable growth. He shares his mistakes, such as
- taking on excessive bank debt,
- making poor hiring decisions, and
- losing equity control,
which ultimately led to him being fired from the very company he built. Through this candid reflection, John emphasizes the importance of patient ambition, protecting equity, and aligning business strategies with personal life goals, offering invaluable lessons for aspiring entrepreneurs.
Questions and Topics:
- What's your favorite mistake?
- Did you take time off to reflect, recover, and reset?
- Did previous opportunities lack alignment in purpose, best-in-world potential, and economic value?
- Did board members or executives push back on your growth decisions, or was everyone all in?
- What advice do you have for founders on when to take money, how much to take, and who to choose as investors?
- How was the news of your firing delivered?
- Are there specific growth points that are particularly risky, like 10 million or 50 million?
- How can founders ensure they don't have blinders on and miss potential pitfalls?
- What's the common theme for the businesses within Rhombus Group?
- Tell us about the Entrepreneurs United podcast and how you and Rich Hoffman decided to start it.
- The book's website
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- Video version of the episode
- How to subscribe
- Quotes
- Full transcript
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Automated Transcript (May Contain Mistakes)
Mark Graban:
Hi. Welcome back to my favorite mistake. I'm Mark Graben. Our guest today is John St.Pierre.
Mark Graban:
He's an entrepreneurial strategist, a business growth advisor, and among other things, he's co host of a podcast called the Entrepreneurs United Podcast. He co hosts that with Rich Hoffman. They recently had me as a guest on their show, so I'll put a link to that in the show notes. But John has over 25 years of experience in co founding and growing successful businesses in various industries, growing two of those companies to more than 50 million in revenue. So before I tell you a little bit more about John, welcome to the podcast.
Mark Graban:
How are you?
John St.Pierre:
Thanks, Mark. Thanks for having me. Excited to speak with you today.
Mark Graban:
Yeah, well, it's good to see you again and continue, in a way, a conversation that we had before. So thank you again for being here. But John is. I'll tell you a little more about him. Currently the majority owner and chairperson of Rhombus Group, a private holding company formed in 2003 with several small businesses.
Mark Graban:
He's also author of a book titled the $100 million Journey, your guide to growing the business of your dreams without going off the cliff. So we'll talk about that later. It's a book that shares a lot of strategies and insights about scaling your business. So it's going to be a great opportunity to cover all of that. But John, as we always do here, the pressing question, I'm really curious to hear your answer on this.
Mark Graban:
What's your favorite mistake?
John St.Pierre:
Yeah, Mark, my favorite mistake for me is my biggest, and it certainly was not my favorite at the time. I don't know anybody who at the time of making a mistake would go, oh, this is great. However, I think in the story of my journey and when the story's told, in the end, the mistake that drove me to find my purpose in life, to align my life's goal and mission, my life plan, with what I wanted to achieve as an entrepreneur, was the story of one of those companies. You said that I grew to north of 50 million. It was successful on the way there.
John St.Pierre:
However, there was an end to it that wasn't so successful. It was one of my biggest mistakes, one of my biggest failures. And it was really, you know, trying to over grow a business more than it could afford to grow based on my aggressive desire to build this business to $100 million. And let's go and let's buy this new company and let's hire some more people and let's start this new division over here. And as we were doing all of that and it was fun.
John St.Pierre:
We had an amazing culture and amazing people. I made some pretty big mistakes, and one of those was, you know, taking on too much bank debt to grow the company. One of them was trying to grow too fast. One of them was I made a couple of terrible hires that really cost me, raised a little bit too much capital, and my equity was getting diluted along the way. And so as much as the company was growing and the company appeared to be successful, my equity was being diluted along the way.
John St.Pierre:
I was losing control of the boat, so to speak. And ultimately, six months after raising our last round of capital around $20 million, I was fired from the very company I spent 15 years growing. My heart, my soul, my everything. And again, not favorite at the time, but that was five years ago today. Five years and a few months ago today.
John St.Pierre:
And the journey since then has been an awakening, a rebirth of, really, what I'm trying to do in life and really a realignment to really, what I was trying to do in my life. That, ultimately, is my favorite mistake.
Mark Graban:
Wow. I mean, I appreciate you sharing that. And like you say, a favorite mistake is not always the biggest. I'm not asking guests, what's your biggest mistake? As they say, time heals all wounds.
Mark Graban:
That's sort of true. Or given enough time, five years here, true enough to talk about it?
John St.Pierre:
Yeah. I mean, time certainly heals for sure. However, it's really the finding yourself again. And not that I felt completely lost before this event, but had this event not happened, had this mistake not happened, I was heading in the wrong direction. And I could be sitting here today talking about this business that I had grown, but I had lost myself.
John St.Pierre:
I really wasn't accomplishing what I wanted to accomplish in life. I could be miserable. I could be in a whole bunch of different areas that I'm not in today. Now, this mistake hurt people. It hurt me.
John St.Pierre:
It hurt my family. It hurt friends I care so deeply about. It hurt a lot. However, had it not happened, I don't think this whole new world would have opened up to me. The reflection, the perspective to take these learnings and move them further in my life, to further develop myself as a human, as an.
John St.Pierre:
As an entrepreneur. And so, for me, that's what makes it more of a favorite. But the wound is still there. You know, you make a mistake, and, you know, sometimes mistakes are irreversible, and you can't go back and change it. You can't go back and redo.
John St.Pierre:
There's no undo button. Right? Right. And so your perspective, your introspection on what you're going to gain from that mistake. To further, you know, move your life in the right direction is very important.
Mark Graban:
Did you, I mean, did you take time off to kind of say, look, I'm going to reflect, recover, reset, however you might have been thinking of it at the time?
John St.Pierre:
Yeah, I did. I really didn't have a choice. I mean, I woke up the next morning and I didn't have access to my email account. So my calendar is empty, my email box is empty. It was kind of like a hard stop, right?
John St.Pierre:
And by the way, mark, that was 20 years, right, from college, it was 20 years of a hard run. I was running hard all the time on the go, never taking time for myself. I'd always take time for my companies. Hey, executive team, we need to go on a retreat for two to three days to sit in a room and really strategically think through this business. But I had never once done that for myself.
John St.Pierre:
I had never once took myself out and said, what is the strategic plan for you? What's your life plan? What are you trying to accomplish? I was always doing things for my family, doing things for the business, really not focused on the mechanism. And so, yeah, it was a forced sabbatical in a way, but I did intentionally take longer.
John St.Pierre:
I took about a year. Not that I wasn't involved in doing other things during that year and working on other business ventures, but I committed to myself for the next year. I'm not going to really commit myself to a new full time role anywhere. I'm going to take walks every day, I'm going to work out every day. I'm going to eat healthier.
John St.Pierre:
And I really took the time for self reflection to figure out where am I going in life and what is my life plan? What's important to me.
Mark Graban:
Yeah. Because as a founder, as an entrepreneur, as a CEO, I imagine, like, yeah, there's these questions of what to do next. Do you start another company, if that's in your blood? Would somebody hire you as CEO of a company that someone else had founded? And is that role reversed of now?
Mark Graban:
Maybe you're not causing another founder to be fired, but maybe replacing one who had been fired. I'm curious how you thought through the universe of options. You're not gonna go on job websites and post a resume. It's a different consideration of, okay, what to do next. And did you have anyone helping you think through that?
John St.Pierre:
Yeah, well, I certainly had some friends and my wife, different mentors that I've had in my life that I certainly was consoling with during that time. But as I was doing my research back to your question mark, I put my life in front of my career at that moment. It was a question of what do I want to achieve in life? And then I'm going to align what I'm going to do in business to that plan, as opposed to I'm just going to be this gung ho executive entrepreneurs going to go build things. But it's not connected to my life plan.
John St.Pierre:
So once I develop my life plan, the strategy I use, I recommend this to all entrepreneurs, is I use the Venn diagram from Jim Collins book, good to great, the hedgehog concept, which was I had heard, like, if you can find the sweet spot between these three circles of this Venn diagram, that's where success lives. And the three circles are, what are you most passionate about? What can you be the best in the world at and what can drive you economically? What can really drive your economic engine? And so I literally sat with that and I started journaling for the first time ever during a sabbatical.
John St.Pierre:
I'd never journaled before. Why do I need to journal? Why do I need to? In my mind, I was just growing things, right? So I started journaling and I started thinking about, okay, what am I most passionate about?
John St.Pierre:
What can I be the best in the world at? What can drive my economic engine? And from that, that drove the next step to your question, which was, okay, well, if this is what I'm most passionate about, what would be the best in the world? That when we drive economic engine, well, then maybe going to get another operational job is not what I'm looking for. What I think I'm most passionate about is I love working with entrepreneurs.
John St.Pierre:
I love helping entrepreneurs build their business. I love being an entrepreneur myself. But I want to own a business. I don't want to operate a business. So how can I use all these lessons and learnings from this mistake and this company that I had grown to north of 50 million and lost it and apply all those learnings of, I'm never going to do that again, but I'm going to do this to other businesses and help them grow.
John St.Pierre:
And so I subsequently did that. I started working with other companies that I had investments in, and we grew one of those companies from a little under $5 million in the mid 2000, you know, 2016 ish time period to north of 100 million in 2022. And it was, it was then that I realized, you know what, I gotta tell the story of these learnings that I've applied to this business, but, yeah, it was clear to me that I didn't wanna be an operator.
Mark Graban:
Yeah. And then saying, I need to share these stories. That's the genesis for the book.
John St.Pierre:
That's right.
Mark Graban:
Yeah.
John St.Pierre:
Yeah.
Mark Graban:
So, I mean, so come back and we'll definitely explore the book a lot here and lessons learned. But a couple other follow up questions I wanted to ask about your story. You talk about that Venn diagram. Do you feel like previous opportunities maybe only had two of those three, instead of having all three aligning around purpose, what you be the best of the world at? What has economic value?
John St.Pierre:
Yeah.
Mark Graban:
Or is it more than that?
John St.Pierre:
Well, you know what's funny about that is somebody had asked me recently, John, if you could be the CEO of any company in the world, what company would you like to be the CEO of? And my answer, Mark, was, I'd like to be CEO of the company I lost because that company fulfilled all three boxes. And I didn't know that at the time necessarily, but I think I did because I was very passionate in the sports industry. I'm very passionate about sports. We had grown into one of the largest youth sports global companies in the world.
John St.Pierre:
It was driving our economic engine. It was doing really well for me. And so that kind of fit all the boxes. And so when I lost that, it was like, okay, now what? And to your point, when I had a couple of conversations about becoming the CEO of another company or starting a new business, I started looking around those circles going, well, they don't fit the three boxes like that other one did.
John St.Pierre:
They only fit two or they only fit one. And so I had to find the one that fit all three. And for me, that was really working with entrepreneurs and helping them build the business of their dreams.
Mark Graban:
Yeah. And when you think about culture, I wanted to dig a little bit more. And you say that company had an amazing culture. So in what ways? What were the key attributes that made it amazing or that you would want to help cultivate or see in other businesses?
Mark Graban:
And is what's amazing to you different than what might be amazing to a different entrepreneur?
John St.Pierre:
Yeah, probably. You know, I guess, for starters, we were in a fun industry, right? So we're working in the sports industry. It was a global business. There was a lot of travel involved internationally for the sports business.
John St.Pierre:
We had a very entrepreneurial culture. All the divisions were run by vice presidents that had their own p and ls that ran their own little businesses within our business. So that was cool and entrepreneurial. We had a lot of fun. We had that kind of little bit of that.com feel with the ping pong table.
John St.Pierre:
It was really a fun environment. And the one testament to all of that, Mark, is I don't remember ever running an ad to hire somebody. And we had north of 500 employees, all of our employees that we were hiring for the most part, maybe with the exception of an accounting role or some back office roles, were all warm network referrals, people who wanted to come work for our business because of the culture, because of the team, and subsequently, I had a lot of my best friends working in the business as well. So from that perspective, it was just a very enjoyable place to be. Our retention was very high, and I always think it's evidenced by the people that want to come work for your company.
John St.Pierre:
You don't even have a job posting out there. You're not even looking for somebody, but people are knocking on the door. That's the kind of culture we had that I never had before and haven't yet since been able to replicate.
Mark Graban:
So, John, I want to ask maybe just, like, two other questions related to the story. And then we have focused on the book and different lessons and principles and things you're sharing with others along the way. You talked about some of those different decisions that turned out to be mistakes in terms of growth, debt, hiring, losing control of the boat, as you put it. Did you have board members or other executives on your team that were, I don't know, like, pushing back on some of those decisions of, hey, John, you might be making a mistake, or was everyone sort of all in on that boat?
John St.Pierre:
I definitely had some, you know, a couple of the people that I've had in my life at the time, like, are you sure? My wife being one of them. Are you sure you want to raise this much money? Like, are you sure you need to do this? Uh, are you going.
John St.Pierre:
Aren't you going a little too fast here? Uh, but I couldn't see it. I. I was so, you know, I'm a set target, hit target person, Mark. And for me, it was.
John St.Pierre:
I had made a commitment. We're going to grow this company from 10 million to 100 million in five years. I had this vision. I had the plan, and. And it's almost like anybody that would get in the way, I'd give them all the excuses to why, no, no, we have to do this.
John St.Pierre:
This is. This is why it's important. It was so goal oriented, but it had a disconnect to what we were ultimately trying to grow and achieve. And one of the words I used from that, that I lacked, ultimately, was I lacked patient ambition. I was ambitious, but I had no patience.
John St.Pierre:
I wasn't willing to wait that extra time, slow, build the company a little slower with a little more stability. It was all go all the time, and we got too far over our skis. And so those people that were there providing that advisement, unfortunately fell a little bit on deaf ears. And those are the people that certainly, in hindsight was like, yeah, you were right, sorry, but too little, too late for that.
Mark Graban:
Yeah. I'm curious what advice you might have for other founders. I think of them, and this is going back 20 years ago almost exactly. There was a startup software company in Austin that I started working for in late 2000, and there are a couple rounds of venture funding. The co founder CEO got pushed out and replaced by somebody that was pretty tight with the VC firm that had brought in most, if not they were significant investor.
Mark Graban:
Anyway, this is a very broad question. I guess it might not be just a piece of advice, but as you coach people now, or as you may share in the book on this, what advice do you have for founders about weighing the question of when to take money, how much to take, who to ideally choose who is investing in you?
John St.Pierre:
Yeah. Well, that story is very familiar, and.
Mark Graban:
I wasn't, I don't know, even now. Okay, well, why he got replaced, other than he wasn't their guy or, you know, they didn't think he was the one to bring it to the next stage. Right?
John St.Pierre:
Yeah, 100%. And that's certainly what happened to me. But the person doing that sale, that this person's not the right person to take it, is potentially the person who wants that role on the backside. At least in my case, it was. But I'll tell you, in the book, I go through seven principles, and the question you're asking is principle one and potentially principle two.
John St.Pierre:
Principle one is protect your equity. Protect and grow your equity. A lot of entrepreneurs, mark, start their companies, and the first thing they do is, hey, Mark, I got this idea. You want to do this business together, me and you, 50 50, or even.
Mark Graban:
Worse, four of them gave away half their equity.
John St.Pierre:
Yeah, there's four of us here. Let's do this together. 2525-2525 how does that ever work? No one ever provides the same equitable amount of contributions to the business, and it ends up becoming a disaster down the road. But immediately, off the bat, they're diluted.
John St.Pierre:
And, Mark, I had never started a company, ever, without partners. I don't know if I lacked the confidence. Maybe I lacked the capital. Maybe I lacked something, but I always wanted to bring people along with me. And right off the bat, I was deluded.
John St.Pierre:
Right. But then it gets worse over time, because we glamorize as entrepreneurs. Oh, I raised a million dollars. Oh, I raised $5 million. I raised 20 million.
John St.Pierre:
Everybody thinks that's the way to grow a company, but as you do that, your equity goes this way. And so what happened in our case, our company was going this way, my equity was going that way. It was completely disconnected. And so I asked entrepreneurs all the time. I was like, you know, would you rather own 10% of a hundred million dollar company or 100% of a $10 million company?
John St.Pierre:
Because there's a big difference, but ultimately, it's the same amount of value for you, but it's ten times the work, if not 20 times.
Mark Graban:
Yeah. And maybe it's more. It's not as simple as this, but if you don't have 51% of the company, there's all sorts of bad things that could happen. Right?
John St.Pierre:
Yeah. Well, I would argue even if you don't have 51%, because when investors invest in your company, let's say you own 100% of your company, and investor comes in and says, hey, mark, here's $2 million. I'm only looking for 25% of your company. The entrepreneur, like I did, thinks, oh, that's fine. I still own 75% of the company.
John St.Pierre:
But guess what? In that agreement, they're going to want to draft with all their legal assistance, is going to have all these veto rights, control rights, all these different things to protect our investment, which I understand. But ultimately, you're still giving up control of the business. So I think one of the biggest myths for entrepreneurs is if you own a majority of the stock, you own a majority of the control, and that is not always the case.
Mark Graban:
So that's why I was, as I was asking it, that's why I was thinking like this. This feels like that's probably not true because I haven't lived through any of that. I think. Yeah, that's a really key point, so people will learn that and a whole lot more in the book. Again, we're joined by
Mark Graban:
John St.Pierre. The book is the $100 million journey, your guide to growing the business of your dreams without going off the cliff. I think. Final question I wanted to ask about the firing, and maybe this is a short answer.
Mark Graban:
How is that news delivered?
John St.Pierre:
It was delivered at the end of a board meeting after a company summit. So we had a company summit, and then at the end of the summit, we had a board meeting, and at the end of the board meeting, they asked me to stay behind the room. And one of the partners that we had in the business, who was a majority partner of the business, delivered the news to me that was passed down to him from the private equity firm that owned a minority of the business to basically they wanted to replace me with somebody else. And this was six months after that equity firm joined the company. Right.
John St.Pierre:
So it was obvious they didn't have faith that I was the right CEO to take them to the next level. And potentially, Mark, based on the mistakes that I made that I discussed earlier, maybe they were right. I'm not going to judge that at this particular moment, but that's how it was delivered. And the learnings were massive and it.
Mark Graban:
Came as quite a surprise.
John St.Pierre:
You know, it came as a shock. But for a couple of months leading up to that, I felt something was wrong. I felt the target on the back, everything being questioned. Right. And I was reaching out to my mentors going, something's not right here.
John St.Pierre:
Something's not, you know, not correct. So you could feel the change in the temperature. But certainly after 15 years of growing a company, what I would have expected is, hey, John, we want to bring in somebody with more experience growing a company to 100 million. We're going to bring that person in. We want you to move into this role.
John St.Pierre:
May the president role and kind of work with the, like. There was blood, sweat and tears into this business. I was a board member, I was an equity holder. I co founded the business. This was my vision to grow it.
John St.Pierre:
So the shock of the system wasn't the, we want to bring in some additional executive support to help grow this. It was, you know, here's the door. Get out of here.
Mark Graban:
Right. Because there would have been different ways to help coach you up or provide some resources or partner with you and. Yeah, correct. Yeah. But I'm glad you found the positive or, you know, the, as you were sharing earlier, the opportunity to connect to life plan and purpose and goals.
Mark Graban:
And so let's talk more about that and the book. And I'll put a link in the show notes to the website for the book. I watched the intro video there, John, and there was a bleep in there. And I don't think we need to do that here. And what I think you said was, I'm paraphrasing that you said in the video, you made so many mistakes, you have all these learnings.
Mark Graban:
And what I think you said was, correct me if I'm wrong, I'd be a dick for not sharing it.
John St.Pierre:
Yes.
Mark Graban:
Okay. Came across. I thought, well, there's a colorful way of putting it and thinking of the serious question there is. Like that comes across as, I think, a very impassioned desire, if not obligation, to help others.
John St.Pierre:
Yeah.
Mark Graban:
So if you could tell me more about that.
John St.Pierre:
Yeah, well, for sure. I mean, again, when you're going through a massive failure like that, you know, there's two ways to take it. Poor me, I'm the victim. And I certainly had those days. But then you kind of move to perspective.
John St.Pierre:
Okay, this sucks. But you know what? I got a beautiful family. I got my health things, you know? Yeah.
John St.Pierre:
Okay, what's the worst case scenario? What do I need to do? Right? Then it moves to introspection. And, okay, how did I put myself in this position?
John St.Pierre:
What are the key things that I did that put myself in the position for this to happen to me and to others and to the business and everything else? And that's where the principles started coming out. And I had an investment in another business. And I said, you know what? And it was actually the partner in that business who challenged me.
John St.Pierre:
He said, look, I know you wanted to grow that business to 100 million, and it didn't work out. And I feel bad for that. I've been along this whole journey. I've seen everything that's happened. But why don't you take all those learnings and apply it to this business?
John St.Pierre:
Let's grow this business to 100 million, but let's do it the right way. And that kind of was like, okay, this is interesting. And so I crystallized all my learnings into seven principles. I call them seven principles of entrepreneurial success. And we applied those seven principles to that business.
John St.Pierre:
And at that particular time, Mark, writing a book wasn't. I just failed the big business. I'm not going to go write a book about simply the failure. I got to figure out what this means. But we took those seven principles and successfully grew that business to north of 100 million the right way.
John St.Pierre:
And when I saw that about to happen, I was like, I have to tell this story. Because these seven principles are so critical to entrepreneurial success, and if you violate one of them, you can find yourself really in some big trouble. And that's where the book was created.
Mark Graban:
Yeah. So there's. Boy, there's a redemption in that, even more so of taking those lessons learned and then applying it. And then that makes for a very different book than a book just focused on, for example, how to not get fired as a founder. Yeah.
Mark Graban:
Is there something special about the 100 million number in terms of what that means for next steps for a company or sustainability or. I mean, it's just a good brown number goal.
John St.Pierre:
Yeah. So there's a lot of people who say, you know, this is great, but I don't necessarily want to grow 100 million dollar company. I want a $10 million company or a $5 million company. And my message to them is, look, the principles still apply, but you have to be bold. When you put something on a book cover and let's go.
John St.Pierre:
But what's interesting is when you talk to really bold entrepreneurs that have big visions, somehow, some way, 100 million comes into play. And it did for me. Like, for me, that was something that I just had. As if I could grow a company to be worth $100,000,000.01 day or grow to $100 million in revenue, that would be a high level that's different than 10 million or a million or different. So for me, it was kind of a stretch goal that I always set out there.
John St.Pierre:
And inevitably now I'm connected to a lot of entrepreneurs that have 20, $30 million businesses that want to grow to 100. I have some entrepreneurs that have a one to $2 million business that I work with that envision someday in the next 1020 years. They want this business to be worth $100 million. They want to create $100 million worth of net worth. And it's a big, hairy, audacious goal.
John St.Pierre:
And the reason why that's relevant in my story, Mark, is if you want to build a lifestyle business where you fulfill your financial needs for you and your family, you have a small business. There's thousands, if not millions of people that have lifestyle businesses that are doing very, very well. Create a nice amount of wealth for them and their families, and it's a great place to be. It's the american dream. But there are also another set of entrepreneurs that want more than the lifestyle business.
John St.Pierre:
And if you try and grow from a lifestyle business size to a high performance business size, that's where all the cliffs are. That's where all the danger can be. That's where the vultures come out and try and really clamp onto your business, or that's where the litigation risks become bigger. You know, everything becomes just massively bigger. And if you're not careful on that journey, on that journey from a lifestyle business to high performance, you can really get hurt.
Mark Graban:
Right? Right. Yeah. I mean, it's the cliff or cliffs, as you said, for the founder or founders or the company going off a cliff. And, you know, so I was going to ask, I think, you know, in the subtitle of the book, it says going off the cliff.
Mark Graban:
But it's not just the cliff of, let's say, growing too quickly, taking on too much debt. When I was in business school, I remember one of the core lessons they would talk about is the biggest reason seemingly successful companies fail is that they grow and expand too quickly in a way that's not sustainable. It's common enough story that even 25 years ago, they were warning us against that. Like, what are some of the most common cliffs that a company or a founder might be getting near?
John St.Pierre:
Yeah, well, I'll go through them, if you don't mind, real quick, and you tell me where you'd like to dive in. We talked about principle one, which is protect and grow your equity. That's a cliff. You could be really dangerous there, right. If you give up your equity.
John St.Pierre:
Principle two is you have to build your own capital. If you don't build your own capital through net operating cash flow, you can grow yourself poor, you can grow too quick and not have enough cash flow to sustain the growth and put yourself in big trouble. And if you don't grow your own capital, guess what? You go to banks, you go to investors. It violates principle one, you end up giving up control of your equity in the business.
John St.Pierre:
So principle two is build your own capital. Principle three is reinvest smartly. A massive cliff. When we were growing our business to north of $50 million, the one that we lost as we were growing it, we were taking profitable divisions and taking the profits from those divisions and going wide into other divisions that took massive amounts of investment as opposed to doubling down on your winners, your high gross margin opportunities to further develop more capital. Principle two, to further protect your equity.
John St.Pierre:
Principle one, so they all tie together. Principle four is you got to build a team and a culture of entrepreneurship. You need to build a team that cares about your business as much as you do. A team that's motivated and driven on the mission and vision bhag of the business, they're financially motivated. To help grow the value of the company, you have to build a culture of entrepreneurship.
John St.Pierre:
Principle five is protect the house. The amount of entrepreneurs I talked to today that still don't do vulnerability assessments on their business. Being an entrepreneur is a game of whack a mole. You hit one, two, three, down, and four, five, six, pop up. Or if there's 100 holes in the boat, you plug 99.
John St.Pierre:
And the one hole, you don't plug water is coming through.
Mark Graban:
Right.
John St.Pierre:
They're going to find the vulnerabilities. You have to plug them. You have to be really wise as you're growing a business, because, you know, today, you know, frivolous litigation to employee litigation. I mean, there's so many things you can, that can happen to your business if you're not tight and secure. Principle six is how to access owners liquidity.
John St.Pierre:
Another cliff. As you're growing, you could grow your business for 20 years and never get a dime for it and lose it someday. How are you accessing your owner's liquidity along the way? To move some of your wealth from your business's balance sheet to your personal balance sheet and tax efficient manners? Very important.
John St.Pierre:
And then principle seven is how do you move from CEO to chairperson? There's a lot of entrepreneurs I talked to today. They've had businesses for 10, 15, 20 years, and they're exhausted. They're fatigued. They can't grow their businesses anymore.
John St.Pierre:
They're actually tired of it. They start hating their business because they are the operator of their business. They're not a business owner. They're a business operator. And so if you want to be a real business owner and grow a high performance business, you have to replace yourself with these entrepreneurs, move yourself to a more strategic level in the business, and become the chairperson of it.
John St.Pierre:
So those are the seven principles which equate to what the cliffs would be in my mind, yeah.
Mark Graban:
And like you said earlier, if you violate one of them, there's real danger. If you're violating a couple of those principles, it's either more cliffs to potentially go off of or the cliff comes at you faster. You don't see it. Something sneaks up on you. Right.
Mark Graban:
When you talk about detecting the house vulnerability assessments, I mean, it seems like that would be really important to make sure you're seeing the cliff, that you're not a wily coyote who sees the cliff after he's already run off the end chasing the roadrunner and you got nowhere to go. But, well, he levitated midair for a minute until he looks down and poof. But, you know, real world doesn't work that way. Whether it's a coyote or a business, you have other. Other thoughts or tips on making sure that you don't have blinders on.
Mark Graban:
There's a cliff coming off to the side where. Okay, well, if the wind blows now, I'm going to go off that cliff even though it looks safe. I'm torturing that analogy.
John St.Pierre:
Yeah. No, but your question is spot on, in the midst of growing that business that I failed on, one of my biggest mistakes, rich Hoffman, who you now know, I was having a conversation with them. This is the midst of growth. I mean, we're maybe 40 million of 50 million. We're going, right?
John St.Pierre:
We're cooking. And he has a call with me and he says, john, who's coaching you these days? You guys are growing pretty big. Like, rich, I don't need a coach. I got this.
John St.Pierre:
I got my plan. I know what's going on, right? And I was making these massive one door decisions, irreversible one door decisions with no guidance. I tell you today, Mark, I barely order lunch. No, I'm kidding.
John St.Pierre:
I order lunch. But I don't make any one door decisions without my board of protectors around me. I have now, like a world class small, medium sized business CPA, not the mom and pop bookkeeper who does my taxes, right? I got what, private wealth advisor, you know, handling that side. I got a commercial insurance broker, a corporate attorney, a litigation attorney, an estate trust attorney for irrigable trusts and trusts.
John St.Pierre:
I got this board of protect coach, mentor. I got these board of protectors. And whenever we're faced with a big decision in our business, we do not make the decision unless we get unanimous consent from the entire board of advisors and protectors. We just don't. And when I talk to entrepreneurs today, I think it's their biggest weak point.
John St.Pierre:
Do they have a world class team of advisors? And I remember reading this book when I was very fresh 20 years ago. I'm reading rich dad, poor dad, and he would say, you know what, every advisor, you can get world class advisors around the table, it's worth every dime. Meanwhile, most entrepreneurs are like, oh, you'll do my taxes for 2000, you're going to charge me 3000? Okay, I'm going to do the 2000, right.
John St.Pierre:
And we're dollar fool. Sorry, Pennywise dollar foolish. And we don't see the return on investment, on getting the best world class advisors on our team and what that return on investment can be. And that's been a big change for me.
Mark Graban:
Well, I love that you, I mean, you've learned from mistakes and you have the passion to help others avoid cliffs, avoid mistakes that lead to that sort of catastrophic failures. One of the questions I want to ask about that for a couple of wrap up questions. In that path to 100 million, are there certain points in growth that are generally riskiest? It's 10 million. A danger, particularly danger zone 50 million, or is it very much depend on the company.
John St.Pierre:
Yeah. Well, if you take the dollars out of it and you ask the same question in terms of on the entrepreneurial journey, are there different phases where it's more dangerous than others? Right. Yeah, I think there are certain inflection points when you start a company who you partner with. I mean, the amount of partnerships that end the way they started in business are like 1%.
John St.Pierre:
Like I barely know any. Right. So how you set up the company right off the bat. Right. How you set up your operating agreements, your buy sell agreements, your shareholder agreements.
John St.Pierre:
Right. What people are contributing to the business. People rush into business. You don't rush into marriage because you're making a vow to be, you know, married here, but people rush into business partnerships like it's going out of style. Right.
John St.Pierre:
You got to be really careful on the onset. Then I would say the next phase is if ever you're at an inflection point in your business where you need to go raise capital or you need to hire somebody in your business is going to be a high level executive person to run your business, those parts are very dangerous. You got to make the right decisions on who you want to partner with, who you want to bring into your business. Do you really need that capital? Can you get the capital some other way?
John St.Pierre:
That's a very dangerous point. And those happen multiple times throughout your business life cycle. So every single one of them is a dangerous point. And then I would say when you start considering exiting the business, you know, I know a lot of entrepreneurs that exited their business because they thought it was the only way to monetize what they built. And now they don't know what to do.
Mark Graban:
Yeah.
John St.Pierre:
Or they regret.
Mark Graban:
Or they regret not being in the business anymore.
John St.Pierre:
Yeah.
Mark Graban:
Yeah. Well, thank you for. For sharing all that, John. And, you know, speaking of businesses, Rhombus Group, what's the common, is there common theme for the businesses within Rhombus Group?
John St.Pierre:
Yeah. So Rhombus Group is a holding company, a private holding company of ours. And we have five small, medium sized businesses within the different llcs, if you will. And it's really entrepreneurs as CEO's that are running those businesses. I'm the chairperson of those businesses and coach and guide them.
John St.Pierre:
So it fulfills my bucket of passion and need there with them. It's a very entrepreneurial organization. And all those companies aspire to very nice growth curves in their businesses. But I think the common thread is within all of those businesses. We're looking to grow intrapreneurs within them as well.
John St.Pierre:
Most of them are run by former entrepreneurs that are now entrepreneurs and partners and CEO's of those businesses. So I think for me, I've moved a little bit of my operator mindset to more of a mentor mindset leader mentor. So if we can lead and mentor people within our organizations to be more entrepreneurial and to grow within our organizations with a more of an entrepreneurial mindset, not only do they grow as a person, their personal balance sheets can grow, the companies can grow, everybody can be fulfilled in their life's objectives. So to me, that's really a common thread throughout rhombus group.
Mark Graban:
Yeah, well, I'll link to the Rhombus group website in the show notes, too. And again, the podcast, you mentioned Rich Hoffman again as your co host, entrepreneurs United. Tell us a little bit about the podcast. And even though I met the both of you together, I don't know the answer to the question of how did you two come together to unite to do Entrepreneurs United?
John St.Pierre:
Yeah. So rich and I have known each other for over 25 years. Our first job out of university, we were general managers with college pro painters, which is a franchise company that used to exist here in the United States for painting, a sister company of Certo Pro painters some may have heard of. And so, first job at a university, we're working together. We were general managers, became housemates, best friends, and we were sponges for leadership.
John St.Pierre:
Back then, we would read every book, go to every leadership conference. Life took us our different ways. And five years ago, we reconnected and said, you know what? Around the time of this failure, I'm like, hey, you know what? I want to put something together to help entrepreneurs.
John St.Pierre:
Would you do this podcast with me? And we're five seasons in. We come out every week. The Entrepreneurs united podcast. We run an event for entrepreneurs.
John St.Pierre:
Last year was in Austin. As a matter of fact, this year's in Charleston, South Carolina in September. And our passion is to really help entrepreneurs that have aspirations to build the business of their dreams and provide them with a sharpening of the saw experience from all these different experts that we can bring on the podcast and into our events. So that's the genesis.
Mark Graban:
All right, well, cool. Well, I hope people will check it out. I'm sure you can find it wherever you're listening to this podcast. Put a link to that in the show notes. Again, it's entrepreneurs United podcast and the book written by our guest here today, John St.
Mark Graban:
Pierre. The book is the $100 million journey, your guide to growing the business of your dreams without going off the cliff. John, thank you for telling us your cliff story. I really do appreciate that, your willingness to share, and again, I appreciate your journey to find something positive out of that and reconnect to things and to share that passion and those principles with others. Thank you for all of that.
Mark Graban:
Thank you for being here today.
John St.Pierre:
Yeah, thanks, Mark. Thanks for what you do.
Mark Graban:
Thanks.
Episode Summary and More
Scaling for Success: The Entrepreneurial Odyssey of John St. Pierre
In the landscape of business development and growth, the journey of an entrepreneur is fraught with risks, challenges, and occasionally, transformative mistakes. Such is the tale of John St. Pierre, a luminary in the realm of entrepreneurial strategy and business growth. With a storied 25-year career that encapsulates the rollercoaster ride of founding and growing businesses, St. Pierre's narrative is a compelling study in resilience, strategic recalibration, and the pursuit of alignment between personal purpose and professional endeavors.
The Entrepreneurial Journey
John St. Pierre's entrepreneurial saga is distinguished by his successful co-foundation of businesses across various industries, highlighted by the milestone of growing two companies to surpass $50 million in revenue. Currently, as the majority owner and chairperson of Rhombus Group, a private holding company established in 2003, St. Pierre's portfolio encompasses several small businesses, weaving a story of diverse entrepreneurial ventures. His experiences culminate in his authorship of the book, “The $100 Million Journey,” where he doles out strategies and insights garnered from his vast experience in scaling businesses.
The essence of St. Pierre's entrepreneurial philosophy lies in growth that is not just rapid but also sustainable. The challenges of expanding a business, from strategic hires to financial management, are dissected through the lens of his professional odyssey. Particularly poignant is his candid reflection on a tumultuous period where aggressive expansion led to significant personal and professional setbacks, including an eventual ousting from a company he deeply invested in, both emotionally and financially.
Embracing Mistakes: The Path to Realignment
The concept of a “favorite mistake” serves as a profound pivot in John St. Piere’s career narrative. Reflecting on his entrepreneurial journey, St. Pierre acknowledges one significant error: overexpanding a business beyond its financial capabilities. This misstep, characterized by taking on excessive debt, making a few detrimental hires, and diluting equity, ultimately resulted in losing control and being fired from the very company he passionately built. This moment, while devastating, illuminated the path towards a profound self-reawakening and a recalibration of his life's goals and missions.
St. Pierre's narrative transcends the tale of failure and rebirth; it encapsulates the essence of learning from one's mistakes and leveraging them to realign personal and professional aspirations. His journey underscores the importance of introspection and strategic recalibration in the aftermath of setbacks. The process of self-discovery during a forced sabbatical highlighted the significance of aligning one's life plan with business ambitions, setting the stage for future ventures rooted in wisdom gleaned from past errors.
Strategic Renewal and Mentorship
Post-reflection, St. Pierre embarked on a journey that emphasizes mentorship and strategic advisory roles, leveraging his wealth of experience to guide other entrepreneurs. His foray into consulting and investing in businesses reflects a shift from operational roles to strategic mentorship, aiming to foster entrepreneurial success without repeating past mistakes. Through the Entrepreneurs United Podcast, co-hosted with Rich Hoffman, and his continued engagement with the entrepreneurial community, St. Pierre has carved out a niche in empowering others to build sustainable, growth-oriented businesses.
This transition also led to the cultivation of robust, entrepreneurial cultures within the businesses he advises, emphasizing the importance of alignment between company objectives and employee engagement. St. Pierre's approach to leadership and growth now heavily factors in the harmony between passion, skill, and economic viability—a trifecta that he identifies as crucial for sustained success.
In summary, John St. Pierre's entrepreneurial journey embodies the quintessential rollercoaster of highs and lows, with his “favorite mistake” serving as a critical juncture that prompted a shift from aggressive, perhaps unsustainable, growth strategies to a more measured, purpose-driven approach to business development. His story is a testament to the power of resilience, the value of strategic recalibration, and the profound impact of aligning one's personal mission with their professional endeavors. As St. Pierre continues to shape the futures of burgeoning companies and entrepreneurs, his legacy offers invaluable insights into the art of turning setbacks into stepping stones towards greater success.
Fostering a Culture of Growth and Stability
The principles highlighted by John St. Pierre in his journey and his book, “The $100 Million Journey,” shed light on the importance of fostering a growth-oriented, yet stable culture within an entrepreneurial setting. St. Pierre's experiences lead us into a deeper understanding of how creating a positive work culture can significantly impact retention, attract talent, and ultimately contribute to the sustainable growth of a business.
Cultivating Patient Ambition
A pivotal concept extracted from St. Pierre’s reflections is the cultivation of patient ambition. St. Pierre admits to the pitfalls of aggressive expansion without a balanced approach to patience and thoughtfulness in strategic decisions. This lesson extends to other entrepreneurs as a reminder that while ambition drives growth, patience ensures longevity and stability. It emphasizes a mindful approach to growth, advocating for entrepreneurs to set ambitious goals while maintaining a sustainable pace and remaining adaptable.
Equity and Investment: Strategic Considerations
The challenges surrounding equity management and investment are critical areas St. Pierre addresses. His advice on protecting equity resonates with founders at various stages of their business lifecycle. St. Pierre’s principles stress the importance of making informed decisions about taking on investments, understanding the implications on control and equity dilution, and selecting the right partners who align with the business’s vision and values.
This strategic consideration extends beyond the initial excitement of securing funding, urging founders to critically evaluate the long-term impact of their decisions on ownership and control. St. Pierre's own narrative serves as a cautionary tale of how swiftly the dynamics can change when external investors gain influence over the company’s direction.
Mentorship and Community Building
Another commendable shift in St. Pierre’s career is his dedication to mentorship and building a community of entrepreneurs. By sharing his lessons learned, mistakes, and successes, St. Pierre has positioned himself as a beacon for others navigating the turbulent waters of entrepreneurship. His engagement in mentorship, through platforms like the Entrepreneurs United Podcast, and direct advising roles demonstrates the value of community and the exchange of knowledge among entrepreneurs. It highlights the role experienced entrepreneurs can play in supporting the next generation, contributing to a culture of shared learning and mutual growth.
Principles of Success Beyond Revenue
In discussing the allure of reaching a $100 million milestone, John St. Pierre elucidates that success in entrepreneurship extends beyond mere financial achievements. The essence of his message lies in the alignment of personal values with business goals, the establishment of a growth-oriented culture that champions both ambition and stability, and the importance of learning from setbacks. The principles he outlines are applicable regardless of the scale of the business, emphasizing that the journey towards any level of success requires a balance of drive, strategic planning, and the wisdom to learn from past mistakes.
As St. Pierre continues to inspire through his book and mentorship, his story serves as a testament to the importance of resilience, strategic foresight, and the power of a supportive entrepreneurial community. His contributions extend beyond the businesses he has built, fostering a legacy of empowered entrepreneurs who are better equipped to navigate their paths to success while avoiding the cliffs that once hindered his journey.
Thriving Beyond the Traditional: Embracing the Shift from Entrepreneur to Intrapreneur
To address the complexities and opportunities of transitioning from a lifestyle business to a high-performance enterprise capable of reaching the $100 million milestone, entrepreneurs like John St. Pierre advocate for a profound shift in mindset and operational strategy. This evolution emphasizes not just the external growth metrics but an inward leap towards fostering intrapreneurship within organizations. The notion of intrapreneurship—empowering employees to adopt entrepreneurial attitudes and actions within a company—becomes a cornerstone for scalable and sustainable expansion.
Intrapreneurship: A Catalyst for Innovation
Embracing intrapreneurship involves creating an environment where employees are encouraged to think like entrepreneurs. This mindset shift encourages a sense of ownership and responsibility towards the company's growth, driving innovation from within. John St. Pierre’s emphasis on building teams and cultures rooted in entrepreneurial spirit paves the way for a transformative approach to business development, where every team member feels equipped and motivated to contribute to the overarching vision.
- Key Benefits of Intrapreneurship:
- Enhanced Innovation: Employees are motivated to seek innovative solutions, driving constant improvement.
- Increased Agility: Companies can respond more quickly to market changes with a team empowered to act decisively.
- Greater Employee Retention: Cultivating a culture of ownership and personal investment reduces turnover rates.
- Enhanced Competitiveness: By fostering a proactive and creative workforce, businesses can stay ahead in their respective industries.
Strategic Reinvestment for Growth
A crucial aspect of avoiding the pitfalls on the journey to $100 million is the principle of reinvesting intelligently. St. Pierre's narrative underscores the significance of focusing on high-margin areas that promise greater returns on investment. This approach not only safeguards equity but also ensures that the business's capital is being utilized in avenues that offer substantial growth potential and stability.
Navigating the Transition: From CEO to Chairperson
The transition from an active CEO role to that of a chairperson represents a pivotal transformation in the lifecycle of an entrepreneur aiming for high performance and substantial valuation. This shift is not just a change in title but a strategic move to ensure long-term sustainability and growth. St. Pierre’s journey illustrates the importance of preparing for this transition through effective delegation, building a capable management team, and setting up governance structures that support long-term visioning and strategic oversight.
- Building a Successorship Plan: Identifying and grooming potential leaders within the organization early.
- Empowering Leadership: Encouraging a culture where leaders are made to feel like owners of their domains.
- Strategic Decision-Making: Shifting focus to broader strategic decisions rather than day-to-day operations.
The Invaluable Role of Advisory Boards
Emphasizing the role of a “board of protectors,” St. Pierre highlights the critical support that a well-composed advisory board provides. This consortium of experts, ranging from legal advisors to financial whizzes, plays a pivotal role in tackling significant decisions and guiding the company through rough waters. Their collective wisdom and experience become an indispensable resource in maneuvering through the complexities of scaling a business.
Vulnerability Assessments: Proactive Risk Management
In the pursuit of ambitious growth, recognizing and mitigating vulnerabilities across operations, finances, and legal frameworks is crucial. Conducting regular assessments to identify potential risks allows businesses to address these issues proactively rather than reactively, thereby safeguarding against potential cliffs that could derail growth trajectories.
Conclusion: The Intersection of Ambition and Prudence
John St. Pierre’s insights into growing from a lifestyle business to a company worth $100 million or more distills into a blueprint for robust growth, characterized by strategic ambition tempered with caution. By fostering a culture that values intrapreneurship, making strategic reinvestments, embracing the shift towards strategic leadership, utilizing advisory boards effectively, and conducting thorough vulnerability assessments, entrepreneurs can navigate the challenging transitions in their business lifecycle, ultimately achieving sustainable growth and resilience.
Fostering Leadership and Lifelong Learning in Business
In the journey of transitioning from a small startup to a multi-million dollar enterprise, the importance of leadership development and continuous learning cannot be overstated. Entrepreneurs like Mark Graban and John St. Pierre, with their wealth of experience in leading initiatives like College Pro Painters, outline a trajectory for developing leadership qualities that are essential for business growth and evolution.
Lifelong Learning as a Leadership Tool
Learning is an ongoing process, integral to both personal growth and business expansion. The stories of Graban and St. Pierre underline the importance of absorbing new knowledge, whether from books, leadership conferences, or peers, in nurturing a leadership mindset.
- Benefits of Continuous Learning:
- Adaptability: Staying informed on industry trends and management practices keeps a leader adaptable.
- Innovation: Exposure to diverse perspectives fosters innovative thinking.
- Team Development: Leaders who are learners inspire their teams to prioritize their own professional development.
- Resilience: Learning from failures and successes alike builds resilience, a crucial trait for navigating business challenges.
The Power of Networking and Community
Graban and St. Pierre’s journey also showcases the significance of building a robust network and community in the entrepreneurial world. Their initiative, the Entrepreneurs United podcast, and the associated events in cities like Austin and Charleston, serve as platforms for entrepreneurs to connect, share experiences, and learn from one another.
- Advantages of Entrepreneurial Communities:
- Shared Knowledge: Members can share strategies and experiences, learning from both successes and mistakes.
- Support System: Entrepreneurship is a challenging path, and a supportive community can act as a buffer against the trials faced along the way.
- Opportunities for Collaboration: Networks often lead to collaborative opportunities, leveraging mutual strengths for business growth.
- Increased Motivation: Surrounding oneself with fellow entrepreneurs fosters a motivational environment to pursue ambitious goals.
From Podcasts to Publications: Expanding the Learning Ecosystem
The creation of learning resources such as the Entrepreneurs United podcast and publications like “The $100 Million Journey” plays a pivotal role in disseminating valuable insights and guiding entrepreneurs through their development. These resources not only amplify the lessons learned from personal experiences but also draw on the expertise of an array of guests who bring a wealth of knowledge to the table.
Application of Leadership Lessons to Business Practices
Implementing the leadership and learning strategies advocated by Graban and St. Pierre demands a conscientious effort to integrate these principles into daily business operations. Encouraging a culture of learning within an organization, actively seeking out and nurturing potential leaders, and engaging in regular strategy discussions can propel a business towards its long-term goals.
- Creating a Learning Culture: Develop programs and incentives that encourage employees to pursue continuous learning and personal development.
- Leadership Development Programs: Identify and cultivate leadership potential within the team, offering mentoring and training to prepare them for future roles.
- Engagemet in Strategic Learning: Utilize podcasts, books, and other resources as tools for sparking discussions on business strategy and innovation.
Through their experiences and initiatives, Grab Samantha Simon and St. Pierre illuminate the path for entrepreneurs to transition from visionaries to pragmatic leaders capable of steering their businesses towards sustainable growth. By valuing and implementing lifelong learning and leadership development, entrepreneurs can navigate the complexities of business expansion with confidence and strategic insight.