Reuben Hendell is an Operating Partner at Madison Alley Global Ventures, a leading independent advisory and M&A investment bank. After a series of successful exits and a fruitful career operating businesses, Reuben now helps companies from a very early stage and sets them on the right path towards scaling, building value, and eventually exiting. He also provides strategic and M&A advisory services to digital marketing, e-commerce, and DTC companies.
Here’s a glimpse of what you’ll learn:
- The lessons Reuben Hendell learned from his sales background
- The early days of digital marketing
- How Reuben mentors business owners and leaders
- Tips for creating more value for your business
- What does paying it forward mean to Reuben?
In this episode…
How can you optimize your business for a future exit? What strategies can you implement to increase your business’ value?
Having spent years scaling and exiting businesses, Reuben Hendell, an M&A expert, has learned the value of preparing for an exit early. It is essential to optimize your business for success by focusing on the right products, team, and market. Reuben advises business owners against waiting until they are ready to exit to start fixing their businesses. He instead helps companies to create more value to be more attractive to potential buyers.
Reuben Hendell, an Operating Partner at Madison Alley Global Ventures, joins Rich Goldstein in this episode of the Innovations and Breakthroughs Podcast to talk about how to prepare your business for a successful exit. They also discuss the early days of digital marketing, tips for increasing company value, and how Reuben helps business owners optimize their businesses.
Resources mentioned in this episode:
- Goldstein Patent Law
- The ABA Consumer Guide to Obtaining a Patent by Rich Goldstein
- Madison Alley
- Reuben Hendell on LinkedIn
- Kevin Lee on LinkedIn
- Young Presidents’ Organization (YPO)
Sponsor for this episode…
This episode is brought to you by Goldstein Patent Law, a firm that helps protect inventors’ ideas and products. They have advised and obtained patents for thousands of companies over the past 25 years. So if you’re a company that has a software, product, or design you want protected, you can go to https://goldsteinpatentlaw.com/. They have amazing free resources for learning more about the patent process.
You can email their team at email@example.com to explore if it’s a match to work together. Rich Goldstein has also written a book for the American Bar Association that explains in plain English how patents work, which is called ‘The ABA Consumer Guide to Obtaining a Patent.’
Welcome to Innovations and Breakthroughs with your host Rich Goldstein, talking about the evolutionary, the revolutionary, the inspiration and the perspiration, and those aha moments that change everything. And now here’s your host, Rich Goldstein.
Rich Goldstein here, a host of the Innovations and Breakthroughs podcast, where I feature top leaders in the path they took to create change. Past guests include Joe Polish, Ryan Dice, and Thomas Shipley. This episode is brought to you by my company, Goldstein Patent Law, where we help you to protect your ideas and products. We’ve advised and obtained patents for thousands of companies over the past 29 years. So if you’re a company that has software, a product, or a design you want protected, go to goldsteinpatentlaw.com where there are amazing free resources for learning about the patent process. And you could email my firstname.lastname@example.org to explore if it’s a match to work together. You could also check out the book I wrote for the American Bar Association that explains in plain English how patents work. It’s called the ABA Consumer Guide to Obtaining a Patent I have with me here today, Ruben Hendell. Ruben is an expert in tactical marketing growth and m and a. After series of successful exits and a successful career operating businesses. Ruben now helps companies from a very early stage and sets them on the right path towards scaling, building value, and eventually exiting. He’s a partner at Madison Alley Global Ventures, and I’m happy to welcome Ruben Hendell to the podcast. Welcome, Ruben.
Thanks, Rich. Happy to be here.
Cool. So, um, uh, I happen to know that you started out in sales and I love sales. So, um, so tell me about how, how, how that all happened and, and really what it was like to to start your business career in sales.
Sure, thanks. I actually got some very early advice. I, I was working at a ski shop, actually, I’m a passionate skier, still a passionate skier, and was actually, uh, selling skis on 57th Street in Manhattan, uh, in high school actually. And, uh, and then in college as well, and was seeking advice because I, I wasn’t actually planning on being in sales my whole career. I wanted to, uh, go into marketing, uh, eventually be a little more strategic, but I was given advice by several, uh, slightly older, trusted relatives and, and contacts who said, well, but, but if you want to go into marketing, you have to really know what it’s like to sell. But, but not sell skis. Uh, you know, you have to know what it’s like to get, uh, somebody’s signature on a contract. That’s, that’s everything. And I really didn’t have a lot of context at that point.
So I took that advice. And so when I graduated from college, instead of going right to graduate school, or instead of trying to jump right into, you know, actual strategic marketing, which I eventually spent my career in, uh, I actually went and found a, a sales program at the time, uh, IBM, at and Xerox offered some of the deepest and most what they would call consultative type selling training programs. And so I took the advice again, of, of lots of folks giving me input and went into sales at the time for at and t.
Awesome. And, and so what do you think some of the things are that you learned, um, by selling that really helped you, um, in the next stage when you got into tactical marketing?
Yeah, I think, I think it didn’t only help me in marketing, it kind of helped me in life, Rich, I would say that what, uh, and there was some very rigorous training going on that really helped me understand this. But I, I think very simply what it taught me was to listen, uh, and to really spend the time engaging with somebody, somebody you’re selling to or just somebody you’re working with, uh, really starting by listening, trying to feel those folks out for what their interests are, try and get a little sense for what their context is and, and really, you know, kind of gear whatever kind of discussions one was gonna have in those contexts, uh, you know, around who I was with. So kind of really tailoring the moment and the message, uh, you know, subsequently the marketing, but the moment in the message to an under, you know, based on an understanding of, of who you’re in the room with and what that interpersonal relationship is.
Yeah. And then, and I guess that carries forward to all types of deals, right? Like it’s, if you can if you can listen to someone and really get their context, then it doesn’t matter if you are, um, you are selling something for a few thousand dollars or you’re, you’re doing a hundred billion or even a billion dollar deal, right? Like, it, it all starts with having someone, uh, um, feel heard, like listened to
It. It all starts with that. Yeah. And in the sales context, honestly, your ability to persuade and be passionate about your ideas or passionate about what you’re selling, uh, whether you’re selling ideas or selling a pair of skis or whatever it is, your ability, you know, to understand who you’re trying to persuade, right? To get your point across is massively important. If you can actually get into that mode, uh, be comfortable talking about things, you know, and you’re trying to accomplish, while at the same time spending as much time thinking about who you’re talking to and what they’re thinking about, it really puts you at a significant advantage in dealing with people and being able to, you know, at the end of the day, not just sound, but persuading people to ideas.
Absolutely. And so, so I guess you move into, uh, into marketing was about kind of persuading, um, from one to many, right? Like, um, from, from one to one, sometimes they call it belly sales, right? To, to, to finding ways to, um, convey a message to large amounts of people. And I think you were involved at the very early, um, stages, or the very early times of, of digital marketing. Is that, is that fair?
You are correct. We, uh, my colleagues and I started, uh, uh, one of the first digital agencies the year of the founding of the browser in 1995. Let’s all not do the math, please. And, uh, we were there from kind of day one, and we all kind of came from this background of what used to be called database marketing. So there used to be kind of advertising and database marketing, right? And advertising is what most people still know today. It’s kind of like TV and a little less print now, but tv, radio, those kinds of one way mediums. Uh, we were actually grounded in what’s called direct marketing, where we use direct mail and to telemarketing to get messages to, you know, subsets of audiences, right? Hence the direct. And really the way we looked at digital marketing was, uh, in, in the same context of now, we just had this incredible tool set to interact with consumers, again, in defined and targeted ways, but through a variety of digital mediums, whether it be a website or email, or ultimately social and those types of things. So it’s really kind of a continuation of targeting messages to segments of folks. Uh, of course the internet really enabled two-way conversations that made it kind of very cool. Yeah,
That’s funny. It’s, uh, um, I had, um, I dunno if you know Kevin Lee from did it. Um, so Kevin, I’m not sure, went to college with Kevin and, um, basically, um, well, he got a job from out of college at McCann Erickson, and in 1994, uh, he came to my office with this great, um, you know, uh, well, by the way, for those who don’t know, McCann, Erick is a huge advertising agency on Madison Avenue. I don’t know if it still exists, but it was one of the biggest, and he came to, to me and my, my best friend with this idea that he was gonna start an internet marketing agency in 1994. And we just laughed. I, we were like, yeah, nobody’s gonna spend any money on the internet <laugh>. So I kind of proudly tell the story about how I just totally got that one wrong.
Uh, but that was around the same time. And, you know, he went on to, to grow this company, did it, it was a s e m agency. I think maybe they’re up to 500 employees at a certain point. And, uh, you know, I just kind of continued along with my law practice thing, kind of as a, a small business person. But, uh, uh, yeah, it was just interesting how I, I totally missed that trend. And, uh, you know, I, uh, I I love to tell that story cuz it’s, you know, fun to laugh about now. Uh, yeah, rough. I was,
But we certainly didn’t know it was gonna work, that’s for sure. Mm-hmm.
Yeah, no, absolutely. But, uh, you know, that’s great. And you, you, you, you, um, operated a bunch of businesses, you grew a bunch of businesses, um, and, um, that had exits to kind of major household name companies. Um, and, uh, and I guess through that experience you came interested in, in helping other businesses to, um, to exit or help them through their growth? Um,
Yeah, I, I had a, a series of, um, uh, Zelig type moments in my career. Uh, you know, some luck, some, you know, luck is the well prepared, whatever those were. So I had a great kind of series of, of different types of moves to different types of companies. You know, ran eBay’s marketing services businesses for several years, actually built McCann’s digital agency. Funny that you say that. Mm-hmm. Uh, called M MRM Worldwide. Uh, that was, uh, I spent, uh, six years doing that. Uh, then also started to incorporate, uh, some of the e-commerce aspects to digital, right? If you just will incorporating transactions in the flow of, of digital communications, I would say through it all. Uh, and, you know, I was lucky enough for three of those four, the last three of the four to, to, to have the c e o role and title.
And as you well know, and I’m sure your listeners know, that’s, you know, that that’s really a role as much about leadership as anything else. Um, and, uh, I enjoyed that. I enjoyed leading people, managing people and, and mentoring people, uh, very specifically working with kind of some of the most senior management in the companies. And it was, and along the way I both sold businesses, but I also acquired a lot of businesses into the businesses I was running, divested some businesses. So I had a lot of transactional, uh, experience, you know, with smaller types, businesses that we would buy to augment our capabilities or those types of things. So when I kind of decided that, uh, if you will, the, the burden and joy, but you know, the goal of, of running these big companies was, you know, after doing it for 30 years or so, it’s kind of enough, uh, I kind of decided to sort of focus on those two areas as you’re kind of saying one, you know, focus on mentorship, but also focus on mentorship, uh, with helping some of these independent size businesses, you know, prepare themselves better strategically, operationally for eventual exit.
Hmm. Absolutely. And, and is that, um, the nature of the work that you do, um, at, uh, Madison Alley?
Yeah, precisely. So, uh, we have, um, uh, you know, lots of folks that once we have what we call a mandate, once we, you know, kind of, uh, uh, companies decide they want to work with us, um, you know, that, that kind of execute, uh, some of those aspects of the deal. And, you know, that’s a lot of banking activity, et cetera. Where my role really comes in is kind of twofold. One is, uh, kind of to be out there and available and present for, uh, CEOs and founders to be able to reach out all along the cycle of, of where they are as we were talking about, right? So, so I really encourage, and this is kind of one of the things we’re doing somewhat uniquely, is I’m really encouraging conversations that, uh, you could almost say should start maybe when exit isn’t a glimmer, but you know, at least three to four years out for when your company might be ready or when you might be ready, or when it might even make sense, right?
Early, as early as possible. Uh, just because there’s so many things about, uh, a business and how it develops that when you do get to market, uh, you kind of, all you do is you look back and you look how you prepared. And there the amount of folks that, that both I had personal experience with when I was running these companies and buying some of these agencies, but now just on a much larger, more frequent scale, talking to folks, the realization is you can’t go back and change the previous three to four years yet, you know, pretty much that’s what folks are looking at when they’re evaluating your business for scale. So, you know, kind of like, does dig get rocket science to go, well, if we could start talking about, you know, and making the right plans, and of course, the plans aren’t exclusively about how to optimize for exit. They’re about creating value, right? They’re about creating value and a better business because those are the things that people wanna acquire eventually.
Cause it’s really one and the same, right? It is like,
It is one
And the same. Setting up your business for exit is creating a business that’s optimized.
Exactly. So, so how do you optimize? And certainly, you know, if there’s some, there’s lots of choices for how you optimize, right? So certainly on the margin, having a view towards contextually what will appreciate the most, what will be most valuable in the market down the road, you know, this path versus that path. Those can be small decisions, those can be big decisions. So we’re really, uh, trying to change the nature of the process. And I personally spend a lot of time with folks that might be multiple years out, uh, and I’m, you know, sort of happy to give my time to them strategically, and there’s the bunch of different ways that we interact along the way.
Hmm. Yeah, absolutely. And so, um, your department there at, um, um, at Madison Alley, like you said, one of the innovative things you’re doing is speaking with them at an early stage. Like what, what are other ways you feel in which you are, you’re innovating how this process goes?
Yeah, so I mean, speaking with them in an early stage is sort of a very broad context, actually. What, uh, we’ve created, or what I’ve created really in the practice, uh, as, as an operating partner, is to really try and structure, uh, advice and guidance for some of these companies along the way. So, as an example, uh, many of these founders and entrepreneurs who, many of them which are very successful and actually even have significantly sized a hundred, 200, 300, 400 person companies, um, you know, might not have a board, as an example, might not have a board of advisors, might have, might have some informal advisors, but, but often they don’t have a board of advisors. And more often than not, you talk to these folks and they’re pretty lonely in terms of what they do, and half they do, and they’re some great associations out there, like Y P O and things like that that, you know, people do tap into, which I think is, you know, fantastic where they get support.
But, but at the end of the day, a lot of folks don’t have, uh, somebody just to talk to as a, as a peer, um, maybe somebody as a, or as a mentor, right? That has some of this experience that they haven’t had yet. And so, uh, again, it takes time to develop those kinds of relationships. And it’s not for everybody, but, you know, I found myself often kind of serving in that role. And then, you know, that starts to create structures like, you know, monthly check-ins or quarterly day of, you know, almost a, a, a faux board meeting, you know, kind of looking at the company the way a board would look at the company and review it on a quarterly basis. And so you get into, you know, there are different kind of ways to do it depending on the situation and the aptitude. But, um, you know, for the right kind of situation, uh, I’m, you know, really encouraging and providing that kind of time and guidance for them, uh, based on what they need and, and based on what’s gonna be most effective.
And, um, you know, of course it, it, it varies from situation, situation and company to company. But what, what can you, trends you notice in terms of like, what, what are the, the common weaknesses you spot in terms of, uh, the, the way in which they’ve set up their business, what needs to be developed to create that value, um, that, that will be recognized when they’re exiting? And also to create an optimal business? Like, like what are the common things that you think Yeah,
Yeah. So, yeah, and these again are, you know, service businesses basically. And, you know, in the, in the marketing services, digital marketing services world, you know, there’s probably 10 20, if you will, almost sublines of business. You know, do I focus on organic search? Do I focus on paid search? Do I focus on building websites? Do I focus on analytics? Those types of things. And you know, often the answer is yes to all of those. Uh, but the, you know, the kind of question is firstly, you know, what are the, where are you as a business? What do you hope to be competitive with? How can you scale? And when you look at it at a, what’s called a value proposition level, you know, where are the, you know, where are the things that you, that you have an opportunity to be most successful? What are those things going together?
And so what I find is, um, you know, sometimes there’s not as much thought about that, um, kind of as you might think and, and people kind of are, are going where they’re being led, and that’s okay if the market’s leading you, but it’s also okay to say no. Right? Very often agencies grow by doing five things, and then somebody ask them to do a six thing, and they say, well, sure, somebody’s willing to do it, right? And then somebody else asks them to do the seventh thing, and all of a sudden they’re doing 15 things, right? And they don’t have the scale maybe to do those 15 things. So, as an example, you know, folks need to really take a look at that and have some discipline there. And what I would say is, you know, sort of in its better case, uh, a lot of the folks I start working with, they, that is where they’re focused, but there are so many other aspects.
Another kind of key aspect is really understanding that for potential buyers, as an example, you know, the clients that you have, the client mix that you have, the client concentration of revenue that you have with particular clients ends up being hugely important, right? The cash flow of these businesses, by definition, flow through the client, the B2B client relationships that they have, right? Where they’re doing marketing with these clients on, you know, and they might be marketing consumers or other businesses, but you know, the nature of this is right, you’ve got 20, 30, 40 clients that are fueling a hundred percent of your business. What does the mix, you know, what does that look like? Are you being strategic about that? I find that a, again, it’s a tough world, and growing an agency is not easy, and it’s a very competitive environment. So naturally people will almost take everything they can into that, and then things sort of start to get a life of their own, but having some dis but then the punchline is down the road, you know, they might have, uh, a couple of clients that are dom, you know, 40, 50% of the overall revenue, and then lots of little clients that aren’t necessarily maybe even that valuable.
And if some could almost be looked at as a distraction. So like you can sort of quickly see that you could look at a situation where while somebody’s happy, they’re growing every year, right? The way they’re growing, uh, with their client mix could, could really not be attractive to a potential buyer who is looking for, you know, basically a way to manage risk, right? Like, clients are a portfolio of risk and revenue, and buyers are clear-eyed about that. But when you run an agency or you know, really any service business or any business for that matter, you know, sort of the way you acquire clients, what they look like, what that mix is, you know, it’s not often the case. And, and again, if you’re, if you’re, you know, making something and you’ve got production capabilities and manufacture, you know, you’ve got lots of other assets to talk about, you’re talking about a service business, an agency business, there really aren’t any other assets. The assets are the clients and the work you’re doing for them, and that’s the revenue. So, you know, that’s another example of where sometimes folks, because it’s difficult to grow their businesses often, you know, are kind of taking it as they come, but that’s not necessarily gonna work. Um, and you’ve gotta start to look at that and be thoughtful about that and maybe make some changes.
Yeah. So I guess when you’re running a business, you could be too zoomed in and you’re like, well, we got another client, another hand sanitizer, um, company like that’s, we’re quartering the hand sanitizer marketing business, and it’s not even 2021 isn’t even over yet, you know, <laugh>,
Right? Exactly. Exactly.
Like, oh, um, yeah, yeah, wait, you know, but I guess when someone is more zoomed out, when someone is, um, looking to acquire them, they’re gonna look carefully at that. Like if they’re, if the clients are all concentrated in a specific industry, that’s higher risk. If, if a lot of the work is concentrated on, in, in a few clients, that’s also higher risk. Um, and, um, you know, of course, um, if you’ve, um, you’ve got some really solid, um, solid clients that are in growth industries that could be positive, right? Um, yeah. So it, so it just, um, so it, so I guess what you were saying is like applying another set of eyes that isn’t as zoomed in as, as, as someone might be when they’re the business owner running the business, um, looking to cover payroll. And so taking on new clients as they come, um, it, um, they might not notice things that you, you notice when you begin to look at how, um, how it’s all come together, um, from 10,000 feet.
Precisely. And, you know, I would just sort of emphasize on that point, the nature of, of building, you know, an, an independent advertising agency, um, you know, te can tends to be very, uh, founder, CEO driven. And so, uh, they can often get insulated, even, for instance, as an example, you know, you’d ask them about their, their senior team, their top team aren’t, you know, aren’t they sort of telling you what they think? And, you know, the, the nature of it is typically this comes with personality, this comes with confidence. All well warranted is the case, but they don’t have a lot of folks that they’re looking for or willing necessarily to, to listen to. I mean, that’s good and bad, right? They, you know, they have a vision, they have a drive, they have the accountability. But one thing I’ve, I’ve kind of always felt, and this comes from way back when, just, just the ability to be, you know, analytic about your situation, and really, you know, you need some ways to challenge what you’re doing, even if, even if things are going well, um, uh, especially in this world where everything’s changing so quickly.
So yeah, that, that tends to be very helpful for folks.
Yeah. So they need to be coachable, right? You know, they need to like, not think that they know it all and be willing to listen to someone who’s been there and done that, even if it, it’s in a different context and, um, and be coachable, like willing to try on that. Maybe there’s a different way of doing things, I suppose.
Yeah, e exactly. And, and sometimes, uh, you know, people have different, uh, uh, criteria for how to be coachable and, uh, you know, so, uh, so often, you know, I, I meet folks that, that, that just haven’t interacted, uh, maybe with somebody who, you know, hasn’t fit the bill precisely. And sometimes I, I can fit into that slot for them well, which I’m, which I’m happy to do again if they wanna be coached. Yeah.
And, and like in that regard, and, and working with a lot of, um, kind of smaller businesses that are pretty far from a payday and pretty far from any type of, um, way in which I guess it could benefit directly monetarily benefit your firm. Um, you know, I’ve heard you say before the importance to you of paying it forward. So tell me like, what that means to you.
Yeah, I mean, what it very specifically means to me is, you know, I’m lucky enough to be, to be at a stage in life and a career where, uh, you know, I’m, I’m, you know, more focused really on trying to help the next generation of leaders, you know, than I am trying to transact a particular, you know, get another mandate to transact a business. That doesn’t mean that they don’t go well together, but, uh, you know, I am really measuring, quite frankly, my success by, you know, the amount of impact I can make, kind of pre any, uh, in, in market type process. Uh, and, and really one by one, right? How can we take, uh, these agencies, these entrepreneurs who might not have had access or been willing to kind of take in some of this advice? How can we help them, uh, and be, and how can I be supportive really as much as anything, right?
There’s, there’s the, uh, you know, expertise and context that, that goes along my experience. Of course, those are all very kind of practical things that certainly can give ’em perspective, yet of course, you don’t deliver, you don’t tell anybody what to do, right? You’re just giving perspectives. So people still need to make their choices and, and, and all of that. But the other thing I, I notice, or I’ve noticed really in doing this for the last few years is that folks really appreciate the support, just having somebody to be able to talk to about some of these issues, just having somebody that they feel comfortable talking with. And I’m proud that, uh, you know, certainly for some, for some of these folks, I’m, I’m able to fill that role, uh, because I think that, uh, it’s a very hard thing, uh, to build a business.
It’s a very hard thing to be an entrepreneur. Uh, it, it’s a very hard thing to find somebody, or some people that you know, you wanna let in and help you, and that you, you know, you’re, you’re open to those things. And so, again, when that match works, when that, you know, the early discussions and that matching chemistry work, and they have a need and they’re somebody who want, as you so rightly said, want to be coached, and it, and it makes sense in the situation, it’s, it’s really, I’m, I’m grateful for the opportunity to help.
Yeah. I love it. And, um, if people wanna learn more about you or get in touch with you, how they go about doing so,
Um, uh, certainly available, uh, on LinkedIn, uh, uh, easy to find me there and a fairly unique name. So, uh, not gonna be too hard to, to pin me down. And, and also madison alley.com. Uh, certainly the company that I, that I work with, uh, I’m prominent there as well, and easy to get in touch with us in that respect.
Awesome. Well, Ruben, thanks so much for taking the time to be on the, uh, on the show. I, I really appreciate it. I really appreciate, um, the insight from all of your experience. So thank you.
Thanks for having me. Rich pleasure.
Thanks for listening to Innovations and Breakthroughs with your host Rich Goldstein. Be sure to click subscribe, check us out on the web at innovationsandbreakthroughs.com and we’ll see you next time.