329 | Strong Teams Start With Honest Founders | with Brian Anderson

Brian Anderson

I believe that in almost every situation, there is a deal structure that  puts everyone on the same side of the table. Or in other words, everyone rose in the same direction.  

Chase Clymer

Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game. 

On this podcast, we interview founders and experts who are putting in the work and creating  real results. 

I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.

Let's get on with the show.

Hey everybody, welcome back to another episode of Honest Ecommerce. Today, I'm welcoming the show Brian Anderson. Brian is a CEO and advisor. He's been on a few board of directors.

Your LinkedIn profile reads just accolades of what people want to be doing in this industry. Brian, welcome to the show. How are you? 

Brian Anderson

Good. I'm doing great. Thanks. How are you? 

Chase Clymer

I'm doing great. So I guess if you want to just set some expectations for the listeners, if you're trying to brag, what are some of the brands that you've helped do some cool things for?  

Brian Anderson

So I have my classical background, if you will, running lower middle market companies, right? So I've been CEO of, I don't know, three or four companies that are 50, 100, 150, $200 million companies. And in most of those, we were hired by private equity to go in, run it, grow it, and help them sell it. And so I've done that a few times and it's been great. But I have most people who only do that.

And I have kind of an unusual mix  that I've also done with a handful of startups. And that gives a completely different set of experiences. It's different energy, different skill sets, different everything. And then I've done some stuff in between as well. So I've got a really strange background, but it's been pretty cool. And it's given me a lot of great experiences.  

I worked  probably most popularly with AG1. Chris Ashenden, the founder of AG1, we became friends and he asked me to come in and help pretty early stage. I was there in 2017-18 and I was kind of their head of traditional growth and CEO of North America. So that was a super cool experience. 

I've spent most of my time doing something related to a healthy lifestyle. So, sporting goods, morphing into fitness, which is morphed into wellness, which morphed into supplements. And I've had one or two excursions outside of that. But for the most part, I do things I'm passionate about. And I'm passionate about sports, fitness and health. 

Chase Clymer

Absolutely. I guess there are folks listening to this show. And the business part of our industry is interesting to them. And they have aspirations to be a CEO one day. How do you do that? I don't think there's a really straightforward path out there to end up being hired as a CEO. What was your journey like? How unique was that? 

Brian Anderson

Yeah. My god, Chase. I've got a hilarious story for you. I always knew that's what I wanted to do. But you got to work your way up to it. You've got to get your experience in something and get that first break. But this is hilarious. My major in college had nothing to do with any of this. was a chemical engineer, hated every second of it. It was, it was just awful, but it was a means to an end.  

And I had this professor who was this older Chinese guy, and he was hilarious. He used to give everyone nicknames  and they were clever, funny  nicknames and mine was “Will be CEO”. So I guess I had that vibe a long time ago, but anyone who runs, who gets to the point of running a business and titles don't matter. GM, president, CEO, doesn't matter. 

But if you're running a business and running a team and responsible for P&L, you got to get there in some way. Some people come up through products or some people come through the commercial side of the business, sales, marketing. Some people get their chops in operations.  Some get it in finance. But it's really just about wanting it and gaining the breadth of experience along the way.  

Because if you're, let's say just a commercial person. I'm marketing and growth and revenue generation, you've got to get that experience and operations  and legal and finance and product  at some point along the way. 

So for those who want to get to a general management role of running a company or running a business, the best thing you can do along the way is make sure that you just use every opportunity you can to get a broad set of experiences because that really marks running a business well. You don't have to be excellent at anything except being a leader and team in HR stuff. But besides that, you just have to be pretty solid at everything.  

Because when you run a business, things are coming at you and you've got to deal with the sexy stuff like product and growth and marketing, all that. But you've got to deal with operations and warehousing and sourcing and legal and  finance and debt and all that crap that most people don't like to deal with. 

That to me marks that kind of the skill set  of a good leader is to be a really good people person, a good collaborative team leader, leader of people. And also a recruiter, right? You've got to build a great team and motivate that team. But other than that, you just have to be solid at a little bit of everything. I'm like an amateur lawyer and I'm an amateur finance guy and I'm an amateur operations person and I'm an amateur growth guy. 

Chase Clymer

Yeah. I'm glad you're highlighting that because I was going to be like, this is the only place where you want to be a jack of all trades, master of none. 

Brian Anderson

Yeah. 

Chase Clymer

You just need to be able to talk about the finer points of that area of expertise and be able to delegate and know what good looks like. 

Brian Anderson

Yep, totally. And I'll add something to that. Company size has a lot to do with how good you have to be at getting in the weeds. If I'm running a $100 million company, then I've got money flowing in. You've got money to play with. 

If I'm weak at tech or if you can build a senior team or a team of C level team or a VP level team or whatever. You've got the money to build to bring in really damn good people. And that's at the end of the day, that's what it's all about, right? You know, I feel like a good visionary leader understands the business and where it needs to go and what's going to make it, what's going to make it grow and flourish. And then you put the best people possible in place and then sort of create that collaborative leadership. 

But inevitably, for a larger company, you've got the means to go hire really good people. But in a small company, like the startup phase, early days, 5, 10, 20 million in revenues, you can't just throw around cash and hire competent, C-level people for two or three or $400,000. You've got to get in the weeds. So that's a big part of it. Like you were just saying, I do agree that you have to get it across all functions enough to lead.

But when you're running a larger company, you can lead and pull the puppet strings. But when you're doing a smaller company, you have to get in the weeds. When I dive in and help a smaller company, a $5 $10 million company, I look at that legal bill and I'm cutting that bill because I'm going to do the legal work myself. If something's really intricate or tricky, I'd pull a lawyer in. But I'm not paying $500 an hour and racking up a $50,000 legal bill. I'm going to dive in and do contracts myself.

CFO, can't afford a full-time CFO. Get a good fractional one and then get in the weeds. Same thing with operations. Same thing with growth. I totally agree with you. But really, it's very company. It's size dependent. 

Chase Clymer

Yeah. 

Brian Anderson

Right. If you've got the revenues or if you've raised enough capital to go hire good people. That's the other part. 

Chase Clymer

Regardless, you're still hiring for your weaknesses. You understand what you're good at and what you can take on at those smaller revenues. 

Brian Anderson

Yeah, 100%. Chase, that’s one of the most critical things is being honest with oneself about what you're really good at and what you're not. Right? I can tell you like if you asked me the question, Of all the functions that needed to run a company, what are your strongest points? What are your weakest points? What are the ones in the middle? I can answer just like this. Because I know myself and I've had to deal with it. Right?

I know there are certain functions where somebody gets hit by a bus, I step in and we're good to go. But there are other functions where I'm like, oh shit, we've got to find somebody really good at that because I really don't know what I'm doing or I'm not very good at it. Tech is not my thing. I need a strong tech team, strong tech resources in the company. So what you just said is very true, which is sort of know your weaknesses, know your strengths.

And so that's a self-reflection thing, right? It's about knowing ourselves. But also it's about recognizing who's really good at what they do in the organization. Let's say I come in and join, let's say I invest in an early stage company and I come in to run it  or help run it. Or if I get hired by private equity to come run a larger thing,  it'll take a month or two or three to really do it well.  

But the first step is to get to know all the people. And the whole point of it is you get to know who's really strong and who's not. And then try to mentor and guide the people who aren't as strong in their function. But at the end of the day, you might have to cut your pay. Understanding, you have to understand each function well enough to know where the weaknesses are. And then you have to  step in and figure it out. 

Chase Clymer

Absolutely. What was your first job where you actually had that CEO title?  

Brian Anderson

That's good. Well, I think the first general management title, first time I ran a business, in which my title was president. And then after that, I was mostly CEO. But again, to me, the title didn't matter. I was running a business. Well, I'll back up a little before that. So what got me into this diabolical business of consumer products and relatively small companies was I went to the Wharton Business School and two buddies of mine from Wharton invented a product. 

When we all finished, most people were heading to Wall Street and working 18 hours a day and making lots of money. And that's probably what I should have done. But these two guys were like, man, we're going to launch this product. We're going to do this. We're doing it on our own. We raised a few million in capital from classmates. They were co-CEOs and I dove in as head of sales and marketing. And we grew that company from a few hundred thousand in revenues to 45 million in five years, and then eventually sold to private equity.

So that was not a general management role because there were two CEOs. But I was head of sales and marketing, head of everything  related to marketing and revenue generation. And I was involved in other parts of the business. So after that, my door got knocked on by a bunch of recruiters and I ended up as president of  a company no one's ever heard of. It was called EB Brands or EB Sport Group. But we had a strategy that people would recognize. 

We licensed well-known sport brands and sold fitness accessories under those brands. So we licensed brands like Under Armour, Reebok, Everlast, Weight Watchers, and then we would produce products under those brands and sell them to big retailers. And this was a long time ago. It's just pre-D to C. But that was the first time I was a true general. Truly ran a business. And it was successful. It's a $30 million business when I got there. And was about $1.21 when  I exited.

Chase Clymer

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Chase Clymer

You mentioned earlier and just now, private equity has played a bit of a role in your career.  And  what are those investors looking for in making a hire like yourself? 

Brian Anderson

Proven history of growing and exiting, really. And also, you have to be well-liked.  Any sophisticated recruiter or VC group or private equity is going to look into your background. And if you've got skeletons, it's not going to work out. It's about proof points. It's about having been there and done that because they made a big investment and the partners at that firm are tied into it, right? They're in that for the long run. They'll make a lot of money if the company exits for a lot more money. So experience is a big deal. 

And I think that plays into the founder world as well, because certainly, lots of people found companies, lead it forever and do great and become amazing leaders and grow companies big.  But sometimes people bring outside CEOs in and that's often the reason. The reason is often to give investors for a future capital raise or for a future exit confidence that somebody's been there done that. 

Chase Clymer

Yeah, I've seen that quite a few times with companies I've worked with or brands I'm familiar with. Founders can get them to a certain point. They believe in themselves, but they understand the best thing for the business is to get someone that other people believe in to do the job. 

Brian Anderson

Yeah, that's a very common scenario. And I've been part of startups, but I've never purely founded a company that was 100% my idea and I was the leader. But I've partnered with founders and invested in early stage companies. So I've been around it a lot. But it's interesting how different people get to that place for different reasons. Sometimes people start a company, what's required to start up is kind of a beautiful thing to me that I'm missing some elements. I've always considered myself an entrepreneurial guy, but maybe not a pure entrepreneur because I've never been the guy that's my idea and I'm going to knock down every wall until I make this happen. I'm a wall knocker downer. But I'm typically not that idea person. The sort of umph that it takes for founders that are just ready to knock down every wall to make this happen is beautiful. I love being around that energy. But what happens is then the complication of a business comes at them, right? Oh, shit, I've got HR issues. I've got to raise capital. I'm running out of money.

We've got debt, operations messed up, new tariffs are coming, like whatever, right? And quite often, the things about which a founder is passionate, maybe it's product, maybe it's the commercial side of the business building the brand in the business or social, they do it for that reason. They're passionate about that. And then they get down the road and they're like 90% of my day is full of other stuff. 

Chase Clymer

Yeah, right. 

Brian Anderson

I don't even get to do the stuff I like anymore. So sometimes it's a recognition that this thing has gotten bigger than my skill sets are appropriate for. And I really need somebody who's been there, done that to help us get to the next level. And sometimes it's a desire thing. Some people are like, I've been successful. I can do this, but I don't like doing it. You know, like I enjoy product and marketing, but I don't enjoy legal and finance and accounting and dealing with investors and operations or whatever. So I feel like the reasons people bring outside leaders or CEOs vary.  

Chase Clymer

Yeah, I've even seen some people. What gets them out of bed every day is they love that hard finding product market fit, building a business. They love that zero to one part of it. And then when things get easy, they get bored and they're like, I just want to go do it again. And then I oftentimes see that maybe they're not bringing a CEO. They're just selling the business. 

Brian Anderson

Yep, exactly. And when it's time to do that, if someone has been successful enough that they've got a realistic exit, they've got a strategy to sell, sometimes it helps to bring in somebody. 

Let's take this scenario that you just said. Someone founded a business that was really successful. And they're like, want to sell it and go do it again because I'm passionate about some other thing. That can work just like that. No problem. But what's going to happen is when they sell it, whoever buys it, whether it's PE or VC or private investors or whatever, are going to put a leader in there.  

Sometimes there's usually a one to three year transition period where the founder gets paid for a couple of years and they sort of off into the distance. The new owner has to hire someone to run that company. In my opinion, it's smart for a founder who's thinking of exit to not sell on their own and wait for someone to come in.

But to bring that leader in, bring their chosen leader in before the exit to number one, help prep them for the exit, right? Help maximize the value upon exit, right? Which is going to mean the sale price is going to be higher. And also to kind of make sure that they've groomed or prepped someone to take care of their baby. 

Chase Clymer

Yeah. 

Brian Anderson

Because if you don't do that as a founder and you just sell and then somebody's going to, you're not going to be happy for sure. There's no founder who's 100% happy with someone who was hired to come in and run their business that wasn't chosen by then. 

They're like, Oh my God, you should have done this. I would have done this differently. But I'm a believer in if you founded a company, you're ready to sell it and you're ready for exit. Bring in some outside help. Maybe it's a full-time CEO. Maybe it's just an advisor or somebody kind of like a right-hand person to sit there and help make sure the financials are crystal clear so that buyers understand what's going on in the business.  

Make sure that things are positioned on the financial side. Make sure the org charts are as clean as possible, the cap, just everything to make that company. To make the sale go as easily as possible and to maximize the valuation. 

Chase Clymer

Yeah. If you're just trying to ride off into the sunset and not have a replacement in place. That is a bad investment. 

Brian Anderson

Yeah, exactly. Right. Whoever is looking at buying your company is going to be like, because you then have to trust the new leader with the founder gone. It's interesting. I do a variety of things. I'm an advisor to a few companies on the board of a few companies. And right now, I'm not doing anything full time. I'm looking for my next full time gig. But one of the myriad of things I do is that I'm kind of an informal advisor to an investment banking group called CTH Advisors.  

And this concept of bringing the leader in pre-exit to help prep the, to help maximize the exit,  this group, CTH Advisors, has actually created a structure that  is exactly for that reason. So CTH Advisors is a loose affiliation of about 15 investment bankers  who raise capital and sell companies across a bunch of industries. And that's typical, right? It's an investment banking firm. But in addition to that, they've brought in seven or eight people like me. I'm one of them,  who are experienced CEOs who have built companies and exited companies multiple times.

And their concept is if we get a sell side investment banking engagement, meaning we found a company where, like I'll give you an example. One of the clients recently was a wine distribution company in Napa. A founder led business. They had built a hundred, 80 or a hundred million dollar company and the family was ready to sell. But this had been their baby for a long time.  

So they hired one of the bankers at CTH Advisors to be the banker on the deal and go find  buyers for it. But they also took one of my colleagues, who's an experienced CEO, and came in to sort of be the right-hand person, the right-hand man, if you will, of the founder, of the founding family, to kind of  handhold and guide them through the process. And it made the experience much better. That firm has actually trademarked the term CEO Whisperer.

And it's with that in mind. So people like my buddy Dan or I would come in and guide the  founders through the sale process to make it more comfortable and avoid pitfalls and try to maximize valuation. And they call it CEO whisper. So pretty interesting. But it's interesting that a firm has built an entire strategy around this. 

Chase Clymer

I mean, it does. It shows you the character of that business where they want everyone to win, which is great relationships to be in in the business world with when you folks have an abundance mindset, and they know that there is enough to go around when it's a good deal. So yeah, that's just a beautiful thing. 

Brian Anderson

An abundance mindset is such a good term. I'm glad you brought that up. This is unrelated to  what I do and what we're talking about right now. But one of my strongest philosophies in business or really in life that I've developed over time is exactly what you said. The abundance mindset is one I haven't heard in a while, but I believe that in almost every situation, there is a deal structure that puts everyone on the same side of the table, or in other words, everyone rises in the same direction. 

So I don't like adversarial relationships. There is a deal structure between a company and employee between two companies doing business together between a vendor and a supplier and a company, doesn't matter what it is. There's a deal structure that can be created where when you win, you all win. And when you lose, you all lose.  And when you do that, everyone's rowing in the same direction. Everyone's on the same side of the table. You avoid the adversarial stuff. And then when you crush it, you celebrate those wins together and everyone's happy. And when things don't go well, there's not a winner and then there are other losers. 

Chase Clymer

Yeah. 

Brian Anderson

And I have a lot of friends who are lawyers. I don't mean to make fun of the profession. But  lawyers are typically trained to try to get the upper hand, right? Almost by definition. And that mindset in a business deal is one I don't like. I prefer a deal where it's balanced and fair. Everybody's happy going in. And when you win, you all win. 

Chase Clymer

Now, we've chatted about so many things already today. But is there anything I didn't ask you about that you think would resonate with our audience?

Brian Anderson

So my simple question to them would be what keeps you up at night? Really, right? Because  when you're when you founded a company, when you're running a company, you have a million things going on. Inevitably of the 20 things on your plate or your list, there are three or five that are really stressing you out. If those things keep repeating, right, if there are certain functions that are keeping you up at night or certain things that aren't going well in the business, then get some outside help. Right. Don't flounder with that.

And inside again, a lot of this comes down to size. If you're doing a few million in revenues, you can't go hire a high caliber CEO, you just don't have the money for it. But there are ways to get that, right? You can get fractional help. Like I do a lot of fractional advisory, like on my LinkedIn profile, it just says advisor, advisor, advisor, advisor. But those are companies who brought me in and said, you've got some skill sets that we're weak in right now or that we're missing. Can you come in for six months or a year and help improve those parts of the business?  

Sometimes those are cash deals, sometimes they're equity deals, sometimes they're a combination of the two. But those are situations where the CEO recognized that they had a weakness and went outside and didn't hire a full-time CEO to replace them, but went outside and said, I'd like to find somebody with the experience to help us with these weak parts of our business.

And I think that's a segue. How do you do that? I keep coming down to size, but if you have the revenues and or the capital, right? If somebody's raised a big slug of capital, then you've got the money to hire someone with a lot of experience because it's not cheap. Like someone's like me, if I'm just going to do something full time, it's not cheap. But there are other creative ways of doing it, right? 

I've done deals where I get a stake in the company and there's no cash involved. I've done deals where we create a deal structure where what I get paid in the future is tied to the upside of the company, right? Like, starting at a base of what the company is doing now, but I get a piece of everything above that. So there are creative ways that start with recognizing where I am now in my company and where I want to go. What are we missing? What is not super strong.  

And how can I go find a person or the resources to come in and help me crush it at those things that we need to be better at? And then get really creative on deal structure. Just sit down and hammer it out. And maybe it's  a retainer for a while. And maybe there's a commission type thing or tied to upside. Maybe there's an equity portion or maybe there's a combination of them.  I would say to a founder with revenues 5,10 million or less.

Don't just assume that you don't have a way to make this happen. If you recognize your weaknesses, if you find the right talent, there might be a creative way to work out how to come in. And then for companies that are larger, it's easier  because you've got cash flow. 

Chase Clymer

Well, that is a great segue into if someone's listening to this and they're like, I like Brian, I want to reach out, pick his brain, see if there's anything there. How do they get hold of you?

Brian Anderson

Just ding me through LinkedIn. That's probably the easiest way. I'm  not great about it. It may take a few days, but  ding me through LinkedIn. My email address is ba@smallpondgroup.com. Small Pond is a little entity that I created that no one knows about, but it's what I use to invest in companies and do consulting and advisory deals. So yeah, that's easy. LinkedIn, there are a lot of Brian Andersons. It's a pretty common name.

But if you search on LinkedIn, Brian Anderson, CEO, it'll probably come up  and see my photo and so forth. But LinkedIn or email ba@smallpondgroup.com. Yeah. And we'll make sure to link to that stuff in the show notes. 

Chase Clymer

Brian, thank you so much for coming on the show today. 

Brian Anderson

Thanks, Chase. Really appreciate it.  

Chase Clymer

We can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes. 

You can subscribe to the newsletter at honestecommerce.co to get each episode delivered right to your inbox. 

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Lastly, if you're a store owner looking for an amazing partner to help get your Shopify store to the next level, reach out to Electric Eye at electriceye.io/connect.

Until next time!