Scaling Success: Alexis Sikorsky's Journey from Operator to Advisor

SPEAKER_00 0:00

Welcome to the Living the Dream Podcast with Curveball. If you believe, you can achieve. Welcome to the Living the Dream with Curveball Podcast, a show where I interview guests that teach, motivate, and inspire. Today's guest is someone who doesn't just talk about scaling and exit. He has left it. Alexis Sikorski is an author and a strategic advisor to owners who are interested in scaling fast and exiting. We're going to be talking to Alexis about his book, Cashing Out, and also about how he was able to successfully scale and exit his Switzerland-based software company, New Access. So we're going to be talking to him about how he transformed from operator to advisor and is now helping owners who are interested in scaling and exiting. So, Alexis, thank you for joining me.

SPEAKER_01 1:11

Thank you, Curtis, for having me.

SPEAKER_00 1:13

Why don't you start off by telling everybody a little bit about yourself?

SPEAKER_01 1:18

Okay. Um, born and raised in Geneva, Switzerland, um I was always an entrepreneur. Like I started my first company when I was 15, uh, export-import company out of my parents' garage. They I don't think they I think they still haven't forgiven me about this one. Um, but I was always an entrepreneur and up to year 2000 when I started um um Bespoke Internet Development Company that very quickly in 2003 turned into a banking software company that I grew through well through easy and hard times, right? Because in between we had the global financial crisis, which really didn't help us as a banking software company. But long story short, in 2015 uh we got acquired by a private equity. Uh I stayed on board up until 2019, where I ended up selling the remaining of my shares to the same private equity and left the company. After that, I took three years of um retirement. And after that, I went to do an executive MBA at Oxford here in England, and started meeting entrepreneurs and you know, meeting and talking to entrepreneurs like shit, they're making the same mistake I made my whole life. So basically, I started a very teeny tiny advisory practice to help entrepreneurs basically not make the same mistake I made.

SPEAKER_00 3:11

Well, talk about Vic because as you said, you you know you did a nine-figure private equity exit. So talk about the part of the process that founders romanticize and the the part of it that they underestimate.

SPEAKER_01 3:29

So many. Um well, first of all, I think the biggest mistake um founders make is thinking private equity is the enemy. Um that's very, very common because private equity are very good at lots of things, but they're really not good at communicating well what they do. Um so they tend to think that oh, a private equity is gonna come by my company and it's gonna be an absolute shit show and it's gonna be a nightmare, and they see private equity at the enemy.

SPEAKER_00 4:05

Well, at what point did you realize that new access wasn't just a new business that you was building, but it was an access that you were going to eventually exit?

SPEAKER_01 4:15

Uh exactly. I would say an hour after the private equity came and visited me. And that's one of my biggest mistakes. Uh, I was absolutely not ready for a private equity exit. I was not even considering it, to be honest. Um when they came, it was like five, six years after the global financial crisis, and I've been through five, six years of like proper grind, really like not nice, not pleasant. And I was not ready. Uh, I was like the the conversation went actually very weird with the private equity, and I've been super, super lucky to to be approached by good guys actually. Um what happened is they came and at the time at the time they came, the the company was let's say back to breakeven after four or five years of proper losses. Um but when I say proper losses, I was to the point where I literally had mortgaged my house and I was in a very bad situation and I was exhausted and I chose, I still don't really know why, but I choose to be strictly honest with the private equity. And they came and I said, Listen, um, I appreciate you coming. Um I'm I'm exhausted, I'm really ready to sell, but I cannot sell right now because my company is just break-even. We have no value in the company. So I said, I'll I'll make you a deal. I promise you that if you come back in two years, uh, in two years I'll be back to profitability, and then I'm not gonna go through a whole process and everything. You make me a decent offer and I sell to you in two years. And they say, Yeah, thanks for sharing, that's interesting, but we're not gonna do that. We're gonna do something a little bit different. You're gonna go back home, you're gonna do a business plan, you're gonna tell us exactly where you think you're gonna be in two years, and we're gonna talk. Said, okay, I did that, I made a well, very optimistic business plan. And two years and a week later, they came, they look at my business plan, and they say, Okay, so we're gonna buy your numbers in two years, we're gonna buy 11 times a bit uh in two years, but we're gonna pay you right now, we're gonna give you 85% cash and 15% turnout.

SPEAKER_00 6:54

We'll talk about you know, you often talk about how owners are way down by their own business. So, what are the first signs that a owner is stuck in operator mode instead of CEO mode?

SPEAKER_01 7:10

Ah, that's super easy. Um it's always part of the very first conversation I have with my clients. Um when I when I meet uh a new client, um that's the first thing. Well, not the first thing, but it's one of the first things I evaluate, right? Basically, uh the way I put it, because I'm a little bit blunt. Um, okay, you what happened if you leave? And I'm a scuba diver, so I use this example. You go on a dive trip, you're gonna spend three weeks on a boat that has no phone and no internet. What happened to your business? Um most of them say, Oh, yeah, no, that's really not gonna be good to the business. And you have a few who say, Oh no, nothing's gonna happen. I say, okay, perfect. So uh you're leaving on Monday, I'm gonna actually buy you a plane ticket. You leave for three weeks and see what happens. So far, none of them none of them actually took me on that offer. So basically, if you leave for three weeks and your company completely crashes or like get in lots of difficulty, then you don't have a company, you have a job basically.

SPEAKER_00 8:26

Well talk about the apex process, walk walk us through the process and and talk about what stage owners often get wrong, assess plan, the execute at an exit stage.

SPEAKER_01 8:38

So the apex uh methodology is designed for company who wants to get to an exit. That's the first, like very, very important point. There's a big distinction um between a lifestyle business and a growth business. And I value both, I respect both, but on the lifestyle business, I basically bring no value because it's all about operation excellency and tax optimization, which are stuff I'm not expert of. So the the Apex is basically, first of all, and to answer your question, the one that most of them get wrong is they don't access their company. Like basic stuff, exactly that. What's your goal? Are you a gross business or are you a lifetime business? If you are a gross business, you cannot behave like a lifetime business. And that's conversation I have with my clients all the time. Um give you a super, super simple example, right? Uh if you sell your company, you're gonna sell 10 times a bit, give or take, right? So every time you take uh thousand dollars off the company one way or another, it's ten thousand you're not getting when you exit. So if you start seeing um founder that has like his holidays, his cars, his uh nephews, everything on the company, then it's probably not acting as a gross business because that's super inefficient. Also, you need cash to grow because you need MA. And when I start working with clients, I always tell them like cash is my ammunition. So they they don't assess the company well. Do you have your right number? Like, do you get a monthly financial analysis that once it's monthly and not quarterly because quarterly is too late? And if it's 50 pages that you cannot read, it's useless. Do you have the 10, 15, 20 numbers you need every month to actually run your company? Do you know what your unique selling proposal is? What's your USP? What makes you different from other companies? What's gonna allow us to grow? Do you know your market? Um, do you have an MA strategy? Like what are you buying? Um, do you measure your client satisfaction? But really measure your client satisfaction, not send bullshit uh forms that say, Oh, I have 9.5 after 10 client uh satisfaction. Do you actually sit with your client and talk to them? So all this assessment is part of like assessing the company, it's usually what they what they do wrong, and often they just don't don't they don't do it wrong, they just don't do it at all.

SPEAKER_00 11:26

Well, there's a lot a lot of noise around private equities. So talk about the biggest misconception that found us have about private equity buyers.

SPEAKER_01 11:37

Okay, so there is two big misconceptions in my opinion, and I've seen both of them very often. The first one is um, oh, if I sell my company, I will not I will not remain control. No, you won't. You sold your company. So that's like I I think you uh English speaking people call it uh have your cake and eat it or something like that. Like you have to realize that if you sell your company, you will lose control of your company. Uh if you don't accept that, then don't sell. Like, I and I see that it seems ridiculous, but I see that all the time. I'm super pissed. I sold my company, I retained 20% of the shares, and now the private equity does not let me run my company the way I want it. Yeah, no, they don't, because it's not your company anymore, it's their company. It's like being unhappy by the way the guy who bought your car drives you, drives the car. It's not your car anymore, it's not your problem. And when when you understand that, then you understand that your your job completely changes. So you were the boss, you're now an employee. You need to accept that. Again, if you don't accept that, don't sell your company. But now you have two things. You're an employed CEO, which means you have to um report to the private equity, but also you're a minority shareholder, right? And that's when you understand, if you're smart and you if you if you choose a good private equity, that your goals are actually very aligned with the private equity goals, right? Because there are majority shareholders, you are minority shareholders, and you have the share the same goal, which is increasing the value of your shares.

SPEAKER_00 13:24

Well, let's talk about boardroom negotiations and boardroom negotiations. What gives a founder real leverage and what quietly weakens their position of negotiation?

SPEAKER_01 13:36

Oh, that's that's uh long and important topic. First of all, you have to understand something is private equity changed the life of founders. Like if you go back 20, 30 years ago, like before the boom of private equity, you were a founder of a small to mid-cap company. I'm I'm not talking and I'm never talking about the billion dollars company because that's a universe I don't know. But you have like, you know, a 10 million, 20 million dollars revenue company, and you want to exit. So basically, your only option at the time is a strategic exit. So you're negotiating with what? If you're a tech company, you're negotiating with Apple, with Microsoft, you're negotiating with giants. And there is one Apple, one Microsoft, and 50 companies that do what you do. So you're in a very, very bad negotiating position. Thanks to private equity. Um well, now the situation is a little bit reversed. There is a million private equity who are in position to buy your company, and there's not that many of your companies. Um so, first of all, you are in a better position to negotiate than you think you are. That's the first step. It's super important. Understand you're in a better position than you think you are. Then what makes you strong? It's it's lot it's lots of things actually, and and all of them important. First of all, private equity are fantastically good at trying to obfuscate what they do, trying to make a very simple uh business very, very complex. So they will inundate you with technical jargon and they will start talking about mezzanine loan and about uh lots of three-letter acronyms that don't you don't really understand, and they're gonna make you feel you're unimportant and you're not knowledgeable, and they are very important and very knowledgeable. That's literally like you buy a private equity to English dictionary, it takes you 15 minutes to understand what they're talking about, and you come prepared. That's super, super important. And then you're much better in negotiating when you understand what a private equity is. Private equity is very, very, very similar to real estate, actually. People think private equity is is similar to VC. Darwong is very, very different from VC. It's very similar to real estate in the sense that it is strictly a leverage play. Right? The the private equity is buying a company that does 10 million EBITDA, um, they're gonna pay it 100 million, they're gonna borrow 75 million, put 25 million cash, it's purely a leverage play, right? So basically, unless the company goes bankrupt, the private equity will always win. And while you understand exactly how they operate, you're much better in negotiating. Uh another, like it's it's it's a bit technical, but it's super important. Understand what they bring to the table. And that in in my case, for example, to go back to my experience. Um so as I said, they offered me 85% cash and 15% earnout. And at the point I was like, okay, I'll take the 85% cash and the earnout, I'll probably get zero. And I end up having more, getting more from the 15% earnout that I got from the 85% cash, because actually I didn't take into consideration what they're building to the to the table in terms of knowledge, in terms of staff, in terms of network, in terms of everything. Um so while you understand and anticipate that, it makes you in a better place to negotiate. Um, very concrete example. Um, the private equity will pretend they uh will buy a multiple of your EBITDA. Uh it's not actually the truth. They buy a multiple of something they call the nominal EBITDA. So that's something they calculate, and but they don't talk to you about it. It's something they calculate uh in a back room. Uh, I give you a very simple example to understand what a nominal EBITDA is. You fire somebody in November, in your EBITDA, you have 10 months of his salary, in the nominal EBITDA, you have zero of the of the salary. So the nominal EBITDA is basically what the company, everything else being equal, could be doing. And that's what they're buying. So I never, for one of my clients, go see a private equity without a calculated nominal EBITDA. Um, because now they know, like, I know what I'm talking about. There's multiple examples of how you get prepared. Uh, another way of preparing super, super important is do you due diligence on the private equity. I'm absolutely amazed that like people find completely normal that private equity does a six month due diligence on your company, but you're not gonna do even one week of due diligence on the private equity. It makes no sense.

SPEAKER_00 18:50

Well, many companies grow revenue, but they also grow complexity. So talk about the difference between scaling fast and scaling intelligently.

SPEAKER_01 19:00

Uh I don't think there are opposites. I think you can scale fast and intelligently, but you and you can also uh scale slow and being stupid. So the it it's all about transitioning, right? And that's actually it's gonna be the topic of my second book. Um company reach reach a tipping point at some point, somewhere between five and twenty million revenue, where everything that was an asset up to there is becoming a liability. Give you an example. Um you, as a founder, you are a fantastic asset. Like you know all your clients, you know the your product better than anybody, you know everybody in the company, you don't need any kind of processes, yeah. You know everything. But suddenly you reach a point where that actually becomes a liability. And you need to start processing your company, start having the right people, start having the right structure in place, start having the right methodology in place, etc. So it's all about transitioning from a like bona fide one-man show if you want. You can have a one-man show with 20 employees, but at the end of the day, we go back to that. If you making all the decisions, everything goes through use, at some point you become a bottleneck. And also you're probably not as good as you think you are. Uh, and that was very, very clear for me. Like, um, every day was a prototype for me because every day, while the company uh was growing, it was suddenly running the biggest company ever run in my life. So you get to whoa, that's complex. I'm not used to do that. I don't I need help. So at some point you need to realize that yeah, you need help and you need the right people uh around you to help you.

SPEAKER_00 21:06

Well, you know, a founder builds something for years, then they exit. So talk about the psychological aspect of what happens after the shift and how can owners prepare for that shift.

SPEAKER_01 21:19

Um I can this one I can only talk about my case and the few cases I'm I'm working on, and I get I get all my founders prepared um to that. Um founders and entrepreneurs in general are a very different kind of beast, in in my opinion and in my experience. A lot of founders are mentally different. Um lots of us have ADHD. Uh I noticed that like at least half of the founders uh I'm I met have ADHD. Um we Are a bit crazy, um massively um attracted to risk. Uh a lot of founders are gamblers. I'm not, but a lot of founders are also gamblers because we like risk, we like high-paste, um, we like adrenaline, we thrive on adrenaline, right? Because if you don't have this quality, you usually don't become an entrepreneur because it's it's a shitty job. It's it's like it's long hours, very low money. It's not a it's not a good job unless you really like are cut for that. So basically, you live in a high octane, high-paced world, and you need to live in a world where basically you're the center of everything. You have a very strong um you know social position. Your phone is is ringing all the time, you have lots of friends, you're like you're an important person. With like if it was video, you'll see all the aircodes around that, right? I'm not taking that seriously, but it's it's your day-to-day life. Um, if you sell to a private equity, you transition a little bit out of that because you're still very much in the center, you're still the CEO. So now you have um you have uh uh a boss, but your boss is not gonna be day-to-day with you. Um, and if you sell to a strategic, basically from one day to the next, you're out, right? You're out of a job, you're out of your social position, you're out of having the phone ringing every five minutes. Um, so two things happen. Um, first thing is I agree, I will remember that moment all my life. Where the process of selling your company, it's a six-month process, right? And a six-month process to culminate to one moment, or at least for me, it was one moment. You end up in a boardroom, you have lawyers and advisors, and you have 20 people in the room. And at some point, um at in my days it was a fax, now it's probably on your cell phone, you actually see the money on your bank account, and that actually concludes the sales. After that, all the rest is admin, right? But at that point, you know you actually sold your company. And for me, the feeling like I was running this company for 19 years, and the feeling is literally like an immense weight was lifted from my shoulder. And I came home, and you know, people imagine, oh, you must have partied like crazy. I went home and I literally slept for the first time in my life. Like entrepreneurs don't sleep, like you sleep with one eye open, and for the first time I slept. And after that, yeah, you need to be a little bit psychology psychologically prepared that your life is gonna change a little bit. And you have to be careful of one thing a lot of exited founders do that mistake, is they think that the skills and recipes that brought them to here make them super good candidate to start something new. And in lots of cases, uh, I want to say most cases, but I don't have enough data to support that. But in lots of cases, that's for sure, the next venture is gonna fail. And the reason it's gonna fail is actually you changed. You changed as a founder, and for me it was very, very clear everything I tried after that uh failed because when you start a company, you have very, very specific skills. And for example, one skill is to look at small numbers, and when you run a hundred million dollar company, you don't look at small numbers anymore, you look at big numbers. And when you start your new venture, suddenly you need to go back to looking at small numbers, and it for me it was too hard. It's like I don't care. The $5,000 difference, I don't care anymore when I should have.

SPEAKER_00 26:18

Well, I know that CEOs are you know real good at diagnosing business issues. So talk about the patterns that come up again and again when a founder says something fails off.

SPEAKER_01 26:34

Exhaustion like not new age uh exhaustion, right? Not like oh, I want uh work lifestyle balance because I'm I'm I I'm old school, so we didn't have work lifestyle balance. We were working 20 hours a day and trying to survive on four hours' sleep. We didn't have a work lifestyle balance, um, but exhaustion in the sense that more and more people rely on you while the company grows, and that's true for staff, that's true for clients, and you end up taking millions of decisions every day, and every single one is urgent, and you get to the point where you start confusing what's urgent with what's important, and that's the biggest mistake, that's the the deadliest mistake because you get like drawn in day-to-day decisions that are very urgent but utterly unimportant, and you spend most of your time doing that, and you forget what what's your goal, you forget like where your company is going, you forget that your job is actually to have the vision. Your job is not to solve client issues or solve like fights in amongst the staff and all that stuff that you end up doing. Um, another way of putting it is you very, very easily tend to be too much in your company and not enough on your company.

SPEAKER_00 28:12

If there's a founder out there listening today that wants to start building towards freedom and wealth, what should they start doing different tomorrow morning?

SPEAKER_01 28:21

So, freedom and wealth are actually two different questions, in my opinion. Uh, wealth is uh depends what you mean by wealth. So if you have um family business and you think being wealthy is making a million dividends per year and live like that the rest of your life, that's very well. But when I talk wealth, I talk generational wealth, and I always talk about that with my clients. Like, what are you leaving to your kids? How much money do you need to stop working? And that's where money and freedom meet, right? It's what you number, uh, what's the number you need on your bank account to stop working for the rest of your life? And that's what they start, they should be starting working towards. What's the number and how do we get to that number? Because freedom, uh, financial freedom at least will happen when you sell.

SPEAKER_00 29:17

Well, talk to the listeners about your books, you you know, tell us what we can expect uh when we read them and where we can get them.

SPEAKER_01 29:25

Well, you can get it on Amazon, that's pretty easy. Um, what you'll get is I hope so. So um let me tell you why I wrote this book. Um I was working with uh founders. Um my special my specialty is scale-ups, not startups. I'm not really good with like the one-man companies and all that stuff. It's not exactly my specialty. So with scale-ups, and I was starting to think, okay, so I'm like very much saying the same thing and seeing the same trends. So when you get the book, what we will get you is a simple methodology to get your company to a point where you can consider a credible sell.

SPEAKER_00 30:17

Well, tell us about any upcoming projects that you're working on that listeners need to be aware of.

SPEAKER_01 30:23

Um I'm working on actually two different projects. First, um, I I created a small company that's called Nightscale. Um, because one of the things I noticed uh with when when um company reach that plateau that I mentioned earlier, between five and twenty million revenues, depending, um, three things tend to happen. One is what I was describing earlier, the the founder's exhaustion and the founder starting to be a bottleneck. Uh so I help with that, and that's actually a surprisingly easy fix. Um I always do the same while I get the founder to recognize they are part of the problem, and the fact that they are stretched too thin is part of the problem. I actually make them do a little exercise that is very annoying. Um, but you do that for a week. At the end of every day, you spend 15 minutes and you put on an Excel spreadsheet all the tasks you actually did in a day. Like, oh, I talked to the client, I talked to the staff, I did an Excel spreadsheet, I did a PowerPoint presentation, etc., etc. You list everything you did, and after you have a week of that, you identify the tasks that you are uniquely qualified to do, and it you'll see it's way less than you think. Not the task that you don't have anybody to delegate to. That's a different question and that's a different fix. But the task that you really like, I'll give you an example. Talking to you tonight is a task I'm uniquely qualified to do. Uh, that's something I cannot delegate. If in even if I hire the best public speaker in the world, people want to hear my voice and not this guy's voice. So that's something I'm uniquely qualified to do. Um, there are a few stuff that you're uniquely qualified to do, and the bigger the company, the shorter that list becomes. Up to the way that you go to a publicly listed company, basically, the CEO's uniquely qualified list is one item is talking to investors, right? All the rest he can delegate, and he does delegate a lot. Um, so that's one thing. Second thing is I had them putting system and methodology in place. But the most important is you one of the reasons you get stuck is you need proper C-level people, and you cannot afford proper C-level people, right? You need uh like your cousin who's been doing your accounting is probably a fantastic guy, and I'm not saying you need to fire him, but he's not a CFO. Now you need a CFO. Now you need to ask yourself questions like capital allocation, uh, equity versus loan, how do I grow, etc., which are really questions for a CFO. But obviously, if you are a million-dollar Ebidda company, you cannot afford a full-time CFO because that's gonna eat half of your Ebidda, right? And that's true for a CTO, for a CEO, for a head of marketing, head of sales, etc. So what I did is I basically I called the friends I've been working with for 30 years, either as my employees or my clients or people I met in Oxford, and I created a group of C-level people, and we go in companies and help them fix stuff basically. So it's more like a short-term thing. So that's one project I'm I'm working on. Um and the other project is I'm writing my second book, and to write my second book, um, you know, when I talk to founders and I say, Oh, I think there is a plateau around 5 to 20 million. Uh, if somebody says, Well, no, that's bullshit, it's fine because I'm in a conversation. But if I want to put something in a book, it better be true. So I'm spending a lot of time doing interviews of founders. I interviewed probably like 40 founders in that particular time of the company.

SPEAKER_00 34:20

Well, so people can keep up with everything that you're up to, throw out your contact info.

SPEAKER_01 34:25

Um, find me on LinkedIn. Honestly, it's the easiest. I'm lucky enough that I have a uh a name that's pretty not very common, so I'm easy to find on LinkedIn.

SPEAKER_00 34:37

Close us out with some final thoughts, maybe if there was something I forgot to talk about that you would like to touch on. Any final thoughts you have for the listeners?

SPEAKER_01 34:45

No, uh, just re-reiterate an exit, a proper private equity exit, also a strategic exit. It takes minimum two years. So start working on your exits way earlier than you think. And also always, always consider MA. Like it's the easiest, fastest, and cheapest way to grow.

SPEAKER_00 35:10

All right, ladies and gentlemen. So check out Alexis' books and keep up with everything that he's up to. Follow him on LinkedIn, follow rate review, share this episode to as many people as possible, and visit www.curveball337.com to keep up with all things living the dream. Leave us a review, drop us a line with any suggestions or feedback for the show, and share the website and the show to everybody you know. Thank you for listening and supporting the show. And Alexis, thank you for all that you do and thank you for joining me. Thank you, Catispeak. For more information on the Living the Dream with Curveball Podcast, visit www.curveball337.com. Until next time, keep living the dream.