WALKING ON WATER — AN ENTREPRENEURS GUIDE- Part 1 (Introduction)

“The distance between genius and insanity is measured only by success.”

Elliot Carver — James Bond Villain

This Article is part of a series of eleven articles from my book. You will find the links to the next feature article at the bottom of this page.

SKIP TO A PARTICULAR ARTICLE IN THIS SERIES

Part 1- Introduction
Part 2- The Beginning of a Business
Part 3- Planning and Goal Setting
Part 4- Act As If
Part 5- Financing your Business
Part 6- Investment Bankers
Part 7- Your Management Team
Part 8- Lawyers, Accountants, and Auditors
Part 9- Doing Your Homework
Part 10- Strategy & Growing Your Business
Part 11- Exit Strategies & Keeping Your Sanity

INTRODUCTION

When I started my renewable energy business over 20 years ago, I was told by people that once I secured a power purchase agreement from a utility I would be able to easily access money to grow my business. Not so. When I secured the agreement, I was told that if I built the wind farm, money would come. Wrong again. When I built it, I was told there would be even more money when I took the company public. Didn’t happen. I felt like I was on a treadmill trying to reach that ever-elusive pot of fame and fortune, only to realize that I had built a multi-million dollar business that survives to this day, long after I sold it.

We hear about Google, Microsoft, and all the instant Facebook and social media billionaires, but in fact, most entrepreneurs end up having to make our money the normal way — by trial and error — without the benefit of being in the limelight of fame. There are also many who fail, even before they ever get a chance to prove themselves. And unlike many other successful entrepreneurs, I make no excuses about my ups and downs and the trials and tribulations of starting a business. But I have also started more than just one. To date I have incorporated about twenty-seven companies. One was an absolute disaster and had to be shut down, fifteen were running OK but didn’t make it big, and five were extremely successful. Of those last five companies, I sold four and took one public. If you put it into context, that puts my rate of failure for a business startup at about 60 percent, not bad considering the national average is 98 percent. However, I’d like to think of it more as a 40 percent success rate instead of being 2 percent for the national average. I have also raised about $177 million in venture and working capital over the years, with my last company achieving year-over-year revenue growth of about 700 percent. The most important statistic, however, is that I only lost about $40,000 on the one failed business without losing a single penny of investor capital. That said, I lost $22.7 million when I sold my business to another company for equity and their stock tanked a few years later. Something that can still upset me and wish death upon certain individuals, even 10 years later — even if I am running another new multi-million dollar business.

So there are three things I would like you to glean from the numbers above: one, my rate of success for new businesses is above the national average and two, I didn’t lose a lot of money on the business I shut down myself. Three, if you sell your business, sell it for cash, take less money, but run away as fast as you can because the new owners will usually f*** up your idea.

Over the last twenty-five years of being an entrepreneur, I have come up with a formula for creating pretty much any business in any country and any industry. At first, I thought I had a personal skill that set me apart from others, but my success created a lot of ripples on Facebook with friends and family. They saw a massive change in my lifestyle, going from pretty much bread and water to private jets, yachts, and St. Barth’s vacations. And after attending a couple of Business Mastery events with Tony Robbins in Fiji, people started asking me questions as to how they could improve their own businesses. I wasn’t even a speaker at the event. I was just trying to get out of the office, have an excuse to go to Fiji, and have a legitimate reason to write it off, so to speak.

At first I shrugged off this newfound interest, but when I started helping my friends, family members, and even high school buddies in places as far away as Germany, Sweden, and Australia, I realized that this formula worked for anyone. I then decided to help some random people that I had met in Fiji, and last I checked, a couple of them just took their companies public. Come to think of it, I should have charged them something for my services as a consultant, but I wasn’t in it for the money. I just knew I was on to something. I also knew that because my own businesses operated in multiple countries and continents, I was pretty comfortable that this is a global formula that works just about anywhere.

Ultimately, you need to get yourself organized when you are starting a new venture. That means that you cannot simply rely on a great idea and wait for a high net worth individual to give you money based on that idea, and then make instant profits or wait for that ever distant sale of the business. More importantly, you need to set your own milestones, reach them, and ultimately create the success on your own, and only then will money follow. Don’t rely on that future pot of gold, but rather, ensure that you have the daily cash flow to survive and thrive personally. This book is intended to give you an outline of what you need to do in order to get yourself to that point. It is a brief insight into my formula of steps I’ve taken that I believe will work for any startup.

But just so you know a little more about me, I figured I’d give you a bit of my history. My family has been in the energy business for over 120 years, starting in 1892 when my great-great-grandfather decided to convert some of his old flour mills into run of the river hydro-generation facilities. That was about eight years after Thomas Edison invented the light bulb. Subsequently, my grandfather and then my father ran that business for over one hundred years. So, I come from a long line of successful entrepreneurs. Being self-employed is in my DNA, but it also means I have very large shoes to fill. In 1985, my father decided to sell our company to EnBW AG, in turn creating the third-largest utility in the country, which has now grown to over six million customers and energy revenues exceeding €18 Billion (2010). In 1985, we immigrated to Canada. I was about nine years old at the time. My father decided to get into the hotel and restaurant business (a lifelong dream of his) and was involved in many new hotel developments such as Delta Hotels and Journey’s End (now Comfort Inn and Quality Inn), and he launched a successful restaurant in the greater Toronto area together with my mother.

After a couple of years, my parents decided they wanted to take over a couple of hotels in the outskirts of Munich, Bavaria. When I was eighteen, I decided that I would go to Montréal to study finance and international business at McGill University. Like any child who comes from a relatively rich family, I was a little spoiled. I took so much advantage of it that when I was around nineteen years old, my father decided to cut me off financially — and I mean completely. That’s when I realized the value of the dollar. In about twenty-four hours, I went from spoiled rich kid to broke and hungry, particularly when I started to have mounting credit card debt and creditors began calling. There was a short period when I was collecting pennies and quarters to ensure I had enough money to buy some small fries at McDonald’s for my day’s meal. So I learned the hard way. There were a lot of hard feelings against my dad, initially, which over the years turned into respect and gratitude, because I never would have risen to such heights on my own if I had not gone through those hardships.

I finally understood the stories my grandfather told me about losing everything. He had lost everything to the Nazis in the Second World War when all of our copper power lines and electricity generators in the Black Forest were confiscated from our power plants. Having spent the war years in exile in France, my grandfather and his wife were left with nothing at the end of the war, except some suitcases with personal belongings and crumbling homes and buildings that had been mostly destroyed. But that didn’t stop my grandfather and his brother from going back, picking up the pieces and starting anew. It was not only for their sake, but because they were delivering a much-needed commodity — electricity. The people in post-war Germany and France needed us.

It was at that point when I had lost everything and was no different from any other bum on the street, I learned my lesson — I had to apply an iron will to ensure that I was financially independent, no matter what life threw at me. So I went about starting new businesses. And to avoid writing an entire book in this introduction, I am going to give you a quick excerpt of some of the most noteworthy ones.

As my first attempt at business, I decided to start a record label that focused on importing records from Europe, mostly electronic and dance music. When a hit would come out in Europe, I would try to license it for all of North America; then when the big record labels in the United States finally realized it was a hit, they would have to come to talk to me. That business went OK, but I got myself into hot water when I decided to start developing my own artists. I spent hundreds of thousands of dollars developing local Canadian artists, only for them to sell less than stellar amounts of records. I needed to find a new medium.

Montréal was not really a good city for business, which led me to move to Toronto. While there, I started getting into the online media game, building some of the largest Internet websites of the time. This was during the dot.com boom and the days of MP3.com — when the recording industry was still unaware of their future demise. Some of my bands started making hundreds of thousands of dollars on the Internet by having their music downloaded and tied in with advertising. I was finally on top of my game when at this point the Recording Industry Association of America decided to sue everyone off the Internet. When I was told to destroy one year of my work and take everything down, I said, “You guys don’t know your business model anymore.” That’s when I left the music business for good and ended up founding another company called Line Entertainment Holdings Inc. together with my long-term business partner Wayne.

Line Entertainment was an advertising, marketing, and television production company. We focused on product launches and street marketing campaigns. Some of our clients included the Virgin Group of companies such as Virgin Mobile and Virgin Atlantic, Louis Vuitton, Moet Hennessy, Twentieth Century Fox Film Corporation, Twentieth Century Fox Home Video, and CBC radio. The Virgin gig also gave me access to one of the most successful billionaire entrepreneurs in the world, a connection that would later grow to a mutual respect and co-operation on charitable initiatives. Nothing like being able to send an email to Sir Richard Branson when you have a business question. Sometime in 2002, my business partner Wayne and I noticed an opportunity in the digital television space. With all these new digital channels on the cable networks, we quickly realized they were desperate for content. Not knowing anything about the TV business, we decided to create a couple of pilot TV shows including a travel show and a cooking show. Recognizing the importance of timing for market entry, we were one of the fastest-growing media companies in the early 2000s.

During my media days, I had continued to invest some of my personal money into wind projects in Germany, never letting go of my family’s roots in the renewable energy business. So in September of 2003, when the lights went out across the northeastern seaboard of the US and Canada and our politicians started to de-regulate the electricity market, I decided to re-launch the family business, this time as a Canadian company. With about six months of prep work, I finally incorporated the business on April 16, 2004. For the first time in the history of all my business startups, my father actually thought this was a good idea. The day I put my father on my company’s payroll was the day when I felt like I had achieved the ultimate success. I was further rewarded by being able to bury the hatchet, tap his expertise, and create probably one of the most rewarding experiences in my life — working with my dad.

Over the next three years my team and I built a $2.2 billion dollar portfolio of about 3,000 MW of wind and solar development projects in the United States, Canada, and the Caribbean, starting with two simple wind turbines called The Providence Bay Wind Farm on Manitoulin Island. Similar to a real estate developer, our goal was to develop and permit projects and then sell them on to the large utilities and investment funds, making a handsome 250 percent return on our investment each time we flipped a project. I even went as far as helping my previous clients to design completely off-grid power solutions, including Richard Branson and his team, where I assisted in designing a wind and solar system for his private island in the British Virgin Islands. Our company’s revenue growth was exceeding 700 percent per annum, but I soon realized that we would need to access more capital and that could only be done south of the border.

In 2008, I took the company public on the Toronto Venture Exchange with all the fanfare, hoopla, securities filings, and fireworks of that process. My personal net worth skyrocketed from zero to millions in 4.6 seconds of hitting the button to open the markets. That was a rush to say the least, the most venerable day in my life. My timing was immaculate, because I saw the doom of the recession looming right ahead of us. These insights came from my new board of directors, who warned me that this recession would be a monster. Just before the entire financial market locked up in September of that year, I managed to raise sufficient capital for my company to weather the financial storm. With the volatile markets wreaking havoc on stock portfolios, my net worth was fluctuating by a million dollars on a daily basis, so I got into the habit of not looking at the stock price. But the company had money to grow, and I had an excellent income and job security because I was the boss — not a bad position to be in going into the worst economic recession of a generation.

At the height of the credit crisis, I knew that as a developer we would continue to be at the mercy of the economy’s cyclicality, and so I began looking for ways to diversify the company into other renewable technology-related businesses. A key characteristic of any good management team is the ability to see what is coming down the road. Seeing the credit crisis continuing through 2012 and wanting to ensure our company’s long-term survival whilst diversifying my portfolio, we bet the company on a single M & A transaction (mergers and acquisitions).

In April 2010, I sold my company to a NASDAQ listed U.S. multinational for about US$20 million, further bolstering our business and in turn becoming one of its largest shareholders. In hindsight, that gutsy move is what allowed us to survive the great recession. Six of our nearest competitors ended up going out of business — and because we had access to capital, it allowed us to buy their assets out of bankruptcy.

Today, the wind farms I built continue to produce electricity. And although I sold out and moved on, I am proud I did something to help the environment and prevent millions of tons of CO2 being pumped into the atmosphere. Even though assets may have changed hands, I can still drive by the wind farms and say “I built that”. That’s something to be proud of, and not a bad legacy to leave behind either.

Since then I have moved on to better and greater things, investing in a travel business and investing in startups. My passion has never been running a business, but starting new businesses. It’s where I thrive, it’s what I know, and it’s where the most money can be made. I’m passionate about starting companies.

And now it is your turn…

NEXT ARTICLE — CHAPTER 1 — THE BEGINNING OF A BUSINESS