Last weekend in San Francisco, TwoBrain held its first Tinker Meetup.


Entrepreneurs who have complete financial and time freedom, and are seeking their next project, are called “Tinkers”. You can take the test to find out where you are in your entrepreneurial journey here.


One of our speakers was Will Hawthorne, an investor at Code Advisors.


Will is a partner in CodeAdvisors, an investment bank focusing on mergers and acquisitions. He’s negotiated deals for some of the biggest tech companies in the world…but he has a LOT to teach us about building a business worth selling. And that means a business worth owning, long-term.


Jay Williams is the interviewer on this episode. But anyone who pays attention to the TwoBrain message knows that we don’t believe in building businesses to sell. We want businesses that run themselves AND pay the owner long-term. We believe in building cash-flow assets.


Having a business that runs itself means you get the ultimate freedom: choice. You want to coach 2 hours every day? Perfect. Love it. Continue to serve.

Want to coach 5 hours every day? Wow. Plan for a time when that isn’t true, because that passion won’t carry you forever.

Want to coach 0 hours every day? No problem – after 22 years of coaching, I’m happy and comfortable in retirement–I enjoy going to my gym, being coached, and signing checks for ten minutes every second week.


But to get to the point of choice, you need to build a valuable platform. And Will is an expert on building extremely valuable platforms.


Great questions: “What’s the Halo Effect of your primary service?”


Great point: “CodeAdvisors doesn’t have a flashy website.” They’re known by what they’ve done, not by what they say they’re going to do. They’re chosen for many of the largest deals in history because of their reputation for success, not their marketing. Here’s their site. “People come and find us, and it resonates with the founders here.” Will only works with the top, and that means 20-24 companies at his door on a monthly basis. Out of those, he takes one.


“Public speaking is harder than negotiating,” he said, right after describing a $5B deal he worked on for Motorola.


“It’s almost never about the numbers, and always about emotion.” Truer words may never have been spoken about the buying and selling of gyms. He’s talking about Apple and Google purchases, but almost every CrossFit gym that’s ever been purchased yielded a higher price than its actual value. In many cases, the purchaser realizes too late that they’ve overpaid. Sometimes they realize they’re overpaying, because they’re buying the opportunity. And sometimes…they just love CrossFit.


“We raised $800 million for Twitter before they went public. We’ve raised over $500 million for Spotify.” He’s mostly working on AI deals right now. I include this note because the CrossFit industry has always been good at adopting new technologies ahead of other entrepreneurs, and we’re only going to have to get better.


“Most entrepreneurs are great at product, but not good at business. To build the product and sell it is a whole different skillset. The good ones realize they need a good operator next to them.” In the service industry, we commonly refer to the “owner-operator” model because there’s one founder, and that founder has to do both things. It’s the person who runs a great service but can’t run their business that really suffers.


“The people who don’t know their business COLD aren’t living their business every day. They’re not reviewing the metrics that matter.” he said. “If a CEO doesn’t know their numbers, that makes me very nervous.”

He gave the example of the CEO of JP Morgan reviewing 50 metrics every day. We think it’s important to know the big numbers really well instead of reviewing a lot of metrics every day. In the Founder Phase, we have entrepreneurs track 5 numbers. In Farmer Phase, we expand to 8 metrics. But we want you to know them extremely well, instead of trying to track 21 things with far less meaning really poorly.


“For gym owners, the most important metric is retention.”


“If you find someone that’s running a business they don’t like, or they aren’t excited about it, it’s not going to work out.”


“They have to be passionate about it. They have to be learning about their business.”


“When TJ teaches a class, there’s like 30 people there. There’s a huge difference because TJ loves his business.” He’s talking about TJ Belger of Will does CrossFit every day with TJ at 5:15am.


“If you’re desperate, people smell that.” If you’re running nonstop ads for cheap six-week challenges, or offering discounts or free trials, or pumping 30 new people in every month…what message is your audience receiving about the solidity of your business?


Will gave some very interesting ideas about earn-outs (where the management team and staff are paid 50% up front, and then the rest of the payment is made against retention and long-term sales.) I’ve seen this work well with one gym purchase in the Boston area in the past.


The second interesting idea was a client survey as part of the due diligence process. If the founder is really willing to sell, and the buyer is fully committed, then the last step should be to call the clients and gauge their commitment.


The first round of funding for any business should be a “friends and family round”–basically, the founder has to have some emotional attachment to success, or “skin in the game.” The bigger the founder’s commitment, the more likely the business is to be successful. This could be another reason why gyms that start in garages often have much greater success long-term.


Why does he do CrossFit?

“If I don’t do CrossFit, I’m a totally different person.”











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