Grow through Acquisitions with Tom Shipley

In This Episode

• [02:31] – Stephan introduces Tom Shipley, who recounts his entrepreneurial journey, highlighting his beginnings and major achievements.
• [07:37] – Tom shares insights on the value of routines and attention to detail instilled in him by his time in the army.
• [11:15] – Tom reflects on his experience in the Defense Forces and its impact on his business mindset, stressing the importance of grit, tenacity, and discipline.
• [16:03] – Tom clarifies the concepts of risk and risk tolerance.
• [21:50] – Tom underscores the power of adhering to a personal rule as an essential success strategy.
• [24:11] – Tom outlines his approach to building iconic brands through direct response and omni-direct response marketing. He also offers advice on responsible acquisitions and how to leverage existing brands for growth.
• [29:41] – Tom provides examples of successful acquisitions, overcoming operational challenges, and the importance of cultural alignment in business. He also recounts his experience in averting a potential liquidation, efforts to rebuild, and securing funding extensions.
• [42:24] – Stephan introduces Byron Katie’s five questions.
• [50:25] – Here are the ways to connect with Tom Shipley.

Jump to Links and Resources

Tom, it’s so great to have you on the show.

It’s great to see you and to be talking with you again.

So I would love to have you share a bit about your storied background, how you ended up doing M&A roll-ups, all that stuff, your humble beginnings, the superhero in training, and all that. So, can we start there?

Absolutely. I guess, like a lot of entrepreneurs we come from, there are always adversities in everyone’s lives. I guess I’m no different from that perspective because I’m a kid from Cleveland, Ohio, with dyslexia that I didn’t know I had most of my life. The challenging part was being raised in a household where my dad was having challenges, and he made it his outlet that I was less than others. But again, we all have adversity, and the question is, how do we channel that? And that, for me, was just a fire that kept igniting and growing inside me for wanting to impact life. And I’m going to say that. 

So, I was at Florida State University, and life was great. Suddenly, I showed up at my parent’s house, and they said, “What are you doing here, Tom?” And I said, “Well, once you know is at the end of the semester, my life is meant for a greater impact, and I’m going to be leaving university at the end of the semester, my sophomore year and going to move to Israel and join the Israeli Defense Forces for this very young nation.”

The army will teach you that grit and resourcefulness are crucial in both life and business. Share on X

And, of course, my parents did not take that very kindly. And Stephan, we always look at our defining moments and for me, standing up to my dad, which was this pillar and this tower in front of me, and after he made a strong statement of what I should be doing and saying no was one of those defining moments. And then he said to me, “Tom, remember your mediocre athletic ability. You don’t know the language, you don’t know the country, and what are you going to do? What are they going to do with you when you get there? They might not let you in, and if they do, you will be pushing papers.” 

But with that fire inside my belly, it was, you tell that to a 20-year-old kid, you doubt them. For me, it was just that I’ll show you. And that’s exactly what happened. I started my journey, and it was that classic journey of identifying the goal and, along the way, you become that person.

So, I clearly wasn’t a person capable of being successful in the Special Forces in the Israeli army. I created that vision along the way and did not accept what the numbers said. I became that person and learned some of the most valuable lessons in life from those three years in the Special Forces.

Eventually, most things work out due to momentum, grit, and tenacity.

What were some of those lessons?

I’ll start with this. I’m going to say this especially pertains from an entrepreneurial perspective. I’ll start with one which a buddy of mine told me, “Tom, you can always take another step. Remember, when you look around you, everyone looks like they can go forever; they’re looking at you and saying the same thing. And no matter what, you can always take another step.” 

I’m going to say that in business, we always have adversity. Even when you think you’re done and everyone around you and your advisor says you’re done, you might as well hang it up. The question is, do you have the grit and the tenacity to take that extra step and the next extra step? Eventually, most things work out because there’s some momentum on the side.So is that grit and the tenacity. 

Another one is as a medic, you’re taught that where you’re in a mass casualty environment, you’ll never have the resources, and you have to improvise. They say that in Hebrew, a good medic improvises. I say just a good entrepreneur improvises also. We never have the resources we need. It’s all about resourcefulness. The other big thing that I learned was about the team. We had a very small team, and from the numbers perspective, 10,000 soldiers tried to reach out and get out into my unit.

We went through a battery test, and they picked a thousand of us for hell week. Out of that hell week, 25 of us were picked for an 18-month course, and 13 of us finished it. They weren’t the most obvious ones that I first met that first day that actually met. But as I got to know these incredible human beings, I’m going to say that the quality of their character, tenacity, and grit is very clear. I’ve seen what they’ve done in life, and it has been incredible.

We can only go as high as the people we put around us. It’s all about teamwork, integrity, quality, and people who don’t accept the status quo.

But I also learned that I was able to go to a higher level that I only achieved because of the people around me. So, as we’re building our teams and our companies, we can only go as high as the people we put around us. So, to me, it’s all about teamwork, integrity, quality, and people who just don’t accept the status quo and are always pushing each other.

I love that. When you’re talking about Hell Week and about building teamwork, it reminds me of a book I’ve read multiple times to my five-year-old, the Way of the Warrior Kid by Jocko Willink, the former Navy Seal. And how discipline is so integral to a successful life that it starts really young. So, I’m curious: Hell week and everything that you went through built your discipline and how that shows up for you today.

Man, it was just the routines you pick up and always follow because the details matter. So in the army, they start with things about how often you clean your gun, and you always look for what they used to say, which is the elephant and the barrel, which is really a little bit. It’s about focusing on the details while always keeping your eye on the big picture and putting that discipline in your life. 

For me, there’s always been structure and discipline, but there’s also been a point of what I consider hard and difficult. It changed my definition of hard. In the army we had what they call kamshishi, which is Thursday and Friday, which means that there’s no separation. Typically, during our training, we didn’t go to sleep on Thursdays or Friday nights. 

So when I started my first business, I said, “well, in the army, I didn’t sleep for Thursday or Friday night, so why should I sleep on my business on Thursday and Friday?” So, I used to call all-nighters my first business. Now, I also realize that the level of expectations I have on myself would be unfair to put on other people. So, I always try to keep somewhat of a balance for my team and not push my level of high expectations on them. 

Something really important that I learned along the way, though, is that there are environments that I feel most people succeed in. At least the people I want to be attracted to and be around. There are those environments that are very challenging. I’m going to say that there are environments. I’m going to bring Amazon, for example. In my opinion, Amazon working there has high expectations and pressure.Most people cannot survive, but they are an incredible organization. 

I work best in an environment with high expectations and low pressure. I don’t want to ride people; I don’t want to micromanage them. I like to set high expectations, see the best in people, and help them rise to that level. If they don’t have the inner strength, I will go back to that core team of what I learned of Tier 1 operators. If they don’t have that passion and commitment to what greatness is, they don’t have the discipline, sense of curiosity and hunger  to achieve it. So, they won’t work best in my environment. I like people who thrive in a high-expectation, low-pressure environment. Again, that’s another big takeaway there. And then people that really follow through have strong discipline. 

What did you learn from the book that was your big takeaway, your child’s takeaway?

Well, one thing that just jumps out at me is the warrior code. When you develop discipline and these habits of excellence and how you show up in the world, you have these mantras that kind of go play in your head and help you show up more powerfully and be the best version of yourself. And so he went through all these different warrior codes, from samurais to the Vikings to the US army, et cetera. And yeah, he just explained the process of developing your warrior code. 

My 10% rule is that you can always give an extra 10% in everything, often making the difference between good and great.

The protagonist in the story developed as he was a little, you know, kid who was getting bullied, and he had to turn into a warrior so he would no longer get bullied and he would be strong and be able to do pull-ups and so forth. That just really struck me. So I’m curious: Do you have a warrior code or some sort of mission vision values that, for you, were heavily inspired by your background in the Special Forces and having done all that warrior training back then?

It’s funny; I mean, the fact is that I just don’t ever quit is ingrained. But certain parts of me were there, and there was a match between who I was and my values. When I went in, there was this match for that, such as, I just don’t ever quit. I still don’t ever quit. I also have the energy to never really get exhausted. I also learned that there are two different types of people in the world for me: those people who give me energy and those who don’t. I learned that in the army. 

I find that there used to be a long criteria list that I used to have as far as what people I want in my life. And I made it really simple. Intuitively, I feel I know whether someone gives me energy or not.  It involves drive, passion, commitment, and their view on the world.  It’s about the depth people have. Curiosity and integrity are a big piece of it. People without integrity drain me. 

There was an interesting exercise during that hell week, during which we hadn’t slept for a few days. And finally, they let us lay down. And quickly, within an hour, firecrackers went off; gunshots went off. They pulled us out, and they had us. We are just barely able to stand at this point. We just can’t. They had to stand in two long lines. And they said, “Okay, we want you to go out into the desert. Between the bushes, you’ll see a nightstick, a fluorescent, a phosphorus nightstick. When you get there, it’s about 100 meters away. We want you to race there, do 100 pushups and return as fast as possible. We’re timing each person.” 

Of course, you’re just sitting there waiting for your turn, waiting for your turn, falling asleep, standing up and then it’s your turn. And suddenly I went. I remember that I went down, and did my 100, and went, was that 99 or 100? Then, I went down to that extra one dead, extra two because I just didn’t know.  Then I came back, they typed and clocked me.  The next morning, they called out 14 people’s names and said, “You’re out.” It turns out that those people weren’t out because they were slow. They were out because they went out in the field where they didn’t think anyone was watching them. They never did their pushups. 

I work best in an environment with high expectations and low pressure.

And the question is, if you can’t trust people when they’re alone to do their jobs, why would you risk your life, son? Why would you risk your life with them? And I’m going to say that the morality call of integrity has always been part of who I am and what’s important for me and the people that I want to surround myself with. I don’t want to surround myself with people where they’re question marks.

Yeah.

Whether I do bills or deals, it doesn’t matter how great a deal is or whatever I want to do. It’s the quality of their character that drives me.

Yeah. And you know what’s funny is you’re always watched. You’re never alone. There’s no such thing as a private thought. Suppose you get really metaphysical about it. How you do one thing is how you do everything. And if you’re embarrassed about what you’re thinking about, that’s a problem. Because a lot of people, a lot of souls are listening in and God as well. So, yeah, something to consider.

There’s an interesting rule I picked up at that period. But this is not something that was taught to me; it was something I just picked up, which is my 10% rule. My 10% rule is you can always give it an extra 10% for everything in life. That 10% makes the difference a lot of times between good to great. I’m going to say most of the time, as far as what can be done is special, whether I’m doing something for my wife or my daughter in business, the 10%.

I say never go for perfection because the amount of effort and energy it takes to achieve perfection on anything could be 10 times the amount of effort. And you don’t get the same return. But you can always do that little bit extra that makes things special or adds value.

Why would you risk your life with people if you can’t trust them when they’re alone to do their jobs?

And sometimes, if you consistently do that 10% over your lifetime in your business activities, you’ll see that there is a difference between the level of success businesses have and how you delight your customers. It really doesn’t matter. Well, your product is designed with your execution. So, I find that that is the biggest ROI. And if you train your team to consistently follow the 10% rule, there’s a great return there.

Yeah, you gave a great example just a few minutes ago. You’re doing extra push-ups just to make sure.

That’s exactly it. It cost me nothing. In the end, it saved me everything.

Yeah. Cool.

So that period was amazing. I returned to the States to get my education and finish my educational path. I thought doing that in the United States would be easier than following here in Israel. And, of course, coming out of Startup Nation, I did my first startup at that period of time.

Did you go back to Florida State, or did you go somewhere else?

No, I went to the University of Central Florida.

Okay.

And your ideas of risk and risk tolerance are so totally different. I had a hundred dollars in my pocket. I had a business idea, and I took some risks. I rolled the dice with a hundred bucks, not knowing I had anything else. I was lucky enough to be able to sleep on the floor of my parent’s apartment since there were no other bedrooms or places for me to sleep there. But that was good and better than sleeping on a rock bed on the riverbed. 

For me, there are two types of people: those who give me energy and those who don’t.

I had nothing to lose, and I started my first business as a product I saw in Israel. It’s nonconsequential now, but I saw it In Israel, and it was successful. You know, I said I can do it in the United States. Two Israelis had done this in California. So I started manufacturing car shades, the corrugated pieces of cardboard. 

And for me, it was just an incredible season. It exploded throughout, you know, the East Coast. Finally, I saw myself not only selling in flea markets to make some cash while I was waiting for it, but I was also selling to Albertsons grocery stores and waiting for their 120-day terms to pay me. I called up one day, and again, it’s what you have as far as risk.

Before that, I was maybe a shy kid, but here I was calling up Ford Motor Company, talking to the head of marketing and saying, “Listen, imagine a million billboards and a million cars. I’m coming up to talk to Chrysler next week. I’m free at this time, can we meet? Then I called GM and did the same thing. Suddenly, I was able to have meetings with one of the marketing heads in each of these organizations. I was a kid with this idea and this vision, but it was probably one of the best educations in my life. I can say financially, it was fine while it ran its course, but from a business perspective, I learned more than I did throughout my degrees.

That’s cool. Do you know the story about Steve Jobs as a 12-year-old?

No, I don’t.

I think you’ll find this relevant. So he wanted to build some sort of device, an electronic device, but I forgot what it was. Some sort of filter wave thing or something,

So what happened? Was he cold-called one of the founders of Hewlett-Packard? He had just found the guy in the phone book and had lived in Palo Alto. And so we called him, and the guy answered the phone, and he said, I’m Steve Jobs, I’m 12 years old, I’m trying to build this thing, and I’m wondering if I can just get any spare parts for it that you don’t want to keep. And the guy was impressed by the tenacity of this kid, and he said, sure, come on over.

He ended up giving Steve a job in the factory building of these devices over the summer. And all the stuff that happened that just really catapulted Steve into a whole new level started with him doing the thing that nobody else would dream of doing, of just cold calling out of the blue one of the founders of Hewlett Packard. I just think that’s such an inspiring story.

It’s a great story. And you’re so right. People are so shy that they won’t even pick up their phones these days. They won’t call someone because they fear doing that and want to follow norms. Okay. And to me, what do you have to risk? Because the greatest fear that I have in my life is the one I’ll have when I’m nine years old and that of regret. So I will do. I don’t know. The two things I’ve always fought are that and life immediately of niceness and mediocrity. To me, those are just big fears that actually drive me: what can I do to think of doing and therefore is.

Whether it’s bills or deals, it’s the character of the people that drives me.

And by the way, I have that part of me that battles that there are some people that it doesn’t even know. Discomfort doesn’t even register in their psyche; they’re the first person out there. That’s not the way I’m wired. So, while I have voices screaming at me internally, don’t do it. The question is, why not? What do you have to lose and to push past that discomfort? 

You talked about habits and discipline, and I’m going to say atomic habits. Especially when you do things enough time, it becomes a habit. I used to be afraid of heights. I remember once I was hiking through it was in somewhere in the DNA desert. It was a group of other 19-year-old kids, and we were just walking down on this riverbed, and then people were hopping over rocks and tripping, and I went, “Hey, there’s a little go trail there, let’s take that.”

So I started going down a go trail, and five people were following me. I kept on going, and suddenly I realized that I was about 15 feet up and I was at the edge of where it ends, but just about six inches away. I just had to hop, and I could get to the next path. I counted 2 and 3, then I counted to 10, then I counted to 20, and I froze because I was afraid of heights. And then I hesitated as I made the jump, and then I fell. 

I’m lucky that when I fell onto the riverbed, I ended up luckily on my thigh, smashing my canteen. It broke my fall because I could easily have killed myself. But it’s the risk of hesitation. So the hesitation in my mind is that no matter what the discomfort is, I go at the count of three, and that lesson about the count of three I went to was the first time I jumped out of a plane. I’m afraid of heights. Count of three, you go.

You just don’t think twice about it. So I need to make that phone call. I need a call; whether I’m doing a capital raise, calling a private equity firm and hesitating, or whatever I’m doing at the count of three, pick up the phone and go boom. And that’s part of my atomic habits that’s ingrained in me.

I think Mel Robbins is famous for the five-second rule. Or you count down from five to one, or maybe it’s 10 to one, and you do the thing within that period or less, and you’re blasting off. And if you need to get out of bed but don’t feel like it, or whatever it is, you do it in that period. And yeah, that stuck with me.

And if you try to have rules you don’t break, like the five-second rule, then it’s just. Then, it’s a very powerful tool that you can use. So, just real quickly after that. I finished my degree. I wanted to buy a company but didn’t know how and couldn’t find the right one. However, valuations in the direct response world, which I was doing some consulting work with, are also getting out of control because of the .com. So, I decided to launch my own company. I found a niche, and I launched The T. Shipley catalog. 

Half of our business was online. We’re mailing out millions of catalogs each month now. Remember, I started by raising $10,000 in this business. And so it was just. And starting with nothing. But it’s the thing is to create that big vision. It’s a lesson I learned over time: the bigger the vision that you create, the easier it is to recruit your team and recruit people.

So, it was a big vision I created for this business. Clear niche with significant discretionary income. And so suddenly, I was off at launch. I ran out of money along the way. I got lucky. Fortunate that one of my contacts, I guess fortunate. But I say you make your luck. One of my contacts along the way, an investment banker from New York, brought me an incredible deal.

I’ve always fought against niceness and mediocrity, which are the big fears that drive me.

Boise Cascade was spitting off a direct response division. I could acquire it and pay off the money that I borrowed within 30 days from the deal structure we put together. It was so positive for us because we’ll talk about this briefly. The difference between a seller’s and buyer’s attitudes is here. I was able to buy a $15 million business, a profitable business that had been around for years. I was able to buy for pretty much as working capital, which I got back right away from that business. Now, why would any business do that? Well, they were a multi-billion dollar company selling off a division, and this was a small division, the big division that they said didn’t make sense. We will either have to close it down or find a home for it. And if they could find a home and they found a home, it was a rounding error.

They didn’t care about it, but they didn’t want to shut it down because it has such a legacy. Those are different. For me, as a buyer, it was everything. So, the buyer’s and the seller’s attitudes are typically never the same. Therefore, understanding the seller is really important. So, for me, that solved my cash crunch. It significantly increased the size of the business and put us on a trajectory. Emerged my business exit a year later.

However, the key thing I learned over that period was that I developed a blueprint for taking on a very obscure name and creating an iconic brand from it. And how you can use direct response and direct response marketing to develop iconic brands. Now we know that as true, in fact, because we see that all the time. But back then, it wasn’t a fact. So I said, let me apply this to an industry that hadn’t been done before and where we were told we would fail. You will never ever be able to build an iconic beauty brand using direct response marketing because direct response marketing is not looked at as something prestigious. I said I’ll show you what impressions union economics can do and what great storytelling and conversion can do.

That’s what we did. We went financially all in a year later and ended up with several different channels, great lifetime value, and great customer acquisition cost. The only problem was that we ran out of money, and I didn’t have enough money to pay our bills like my mortgage. My wife was very annoyed at that that I couldn’t pay the mortgage. We were worried about how we were going to pay for the food. So, how do we solve that for my partner and me? Go back to the playbook. Number one is that we bought a $15 million business, generating half of the million EBITDA. It was a growing, successful business.

The bigger the vision that you create, the easier it is to recruit your team and recruit people.

Because it was growing successfully, we could borrow money to create a great liquidity event for the two young owners who owned it. And then you put my $331,000 brand on top of this platform, which had the technology, funnel, stack, developer, designer, fulfillment, customer service, and everything we needed. Within three years, we made $100 million on the first $331,000 brand we created. We made our first billion dollars of revenue from that brand. But the key was the acquisition. What would happen if we didn’t do that acquisition? I don’t know. We would have found some way, but it would have been a lot longer. And so the legacy, as far as learning lessons over time is concerned, is what did it solve? Acquisitions can solve almost every business challenge.

Let me say it again. Acquisitions can solve almost every business channel. Remember, we had no money; we had no resources left. During that period, I didn’t have a tech stack. We needed tech, we needed new channels. We need to be really proficient in the online channel. And we were proficient in radio and print at the time. Online, we weren’t.

So suddenly, we bought the capabilities, the expertise, the technology, the platform, and the cash flow, and that will allow us to grow. And we had nothing. So people think that you need deep resources and balance sheets and have a lot of experience making acquisitions, and again, we were very young in our career back then, which proved that that’s not true. I’ve been able to do that again and again and again from an acquisition perspective. So that’s the story of the Line of Coast brands. It was brand after beauty, brand after beauty brand, including finding a really interesting purple lotion opportunity, which was our most successful brand.

Which one was that?

Keranique. And for it’s a leading. It’s still the leader in women’s hair regrowth. The reason why I say purple ocean again is that no one talks about the purple ocean strategy. They talk about the blue and red ocean. Right? I have always liked that you have your red ocean where you have so much competition. Commodities are there, and battles are being fought for pennies, shelf space, and exposure. The blue ocean is where I say that people don’t even know what the products are, And you have to do such deep education. 

Then you get this in-between area where the demand is in that red ocean, and you’re creating a new vehicle, or you’re segmenting your solution for a segment of the population and going deep into it. Therefore, you can pull everyone from this very crowded, red, bloody ocean and pull them into your purple ocean, which is what we did with Kearney from Regrowth. Everyone was doing either straight grain or straight men’s, and they maybe had an SKU, an item for women, or some did unisex. One out of every three women suffered from hair loss. And yet, no one had developed a brand exclusively for women. And that’s how we were able to win. It was strong demand, and we created a new vehicle.

Now, it had to be a great product. Start with that. We had a PhD on staff. It was an FDA-approved product, so we were able to substantiate the claims. But it created a rare opportunity for us to dominate the market, and so many major CPG companies tried to beat us. Direct response companies try to beat our tickets, especially retail, which is brutal to stay on the shelves. And every one of them got delisted over time except for us. Again, that’s just the power of omnichannel marketing and the story of that.

Altogether, we made about $2 billion in revenue between all our brands over that 15-year period.

Congratulations.

When you think you’re done, there’s always more you can do.

I said it was a great ride. But along the way, every time we thought, and this is the other lesson I learned is when you are at the top of the mountain, and you feel that wind behind your back, and nothing can stop you, be careful because it’s never as good as you think it is. A concrete wall will most likely fall on your head, or you’re going to hit it. The converse is also true. When you’re at the end of the rope, and everyone says you’re done, and you really believe you’re done, you’re probably not done. There’s always gas in the tick. There’s always something you can do. It’s never as bad as you think it is because two years from now, you’re going to look back and say “Wow, I don’t know why I was so worried and scared at that period. I had more options that I was aware of.”

Yeah, that reminds me of the quote; this, too, shall pass.

100%. So I mean, we had those situations with Atlantic Coast Brands. We had challenging times, challenging years followed by great years. We were able to get 2018, and we got three term sheets between $55 and $75 million for the business for the brand. It would have been a very nice day for us. Then our manufacturer, basically the sole manufacturer of our continuity product with FDA approval on their product. They’re the only one in the world with the NDA. They went bankrupt.

Chapter Seven locks on the door. Suddenly, you can’t ship you. We called our FDA attorney and said how long it would take us to get a rush and eight so we could start manufacturing this. She said I think I can push it through in 16 months. What happens if you don’t ship your monthly auto-ships for 90 days?

Yeah. Wow.

You lose almost everyone on it. And that’s how you go from a $600,000 a month profit to a $600,000 a month loss. And the bank then called us up and said, “Guys, we’re just going to liquidate and sell what we can and get whatever cash. We are done because we’re done.” And I’m going to say that’s where everyone says you’re done. And you have to look in and say, “Okay, what do I have to lose?” And then you go all in the other way. And I’m going to say that, period. Those 12 months of my life were my favorite business ever, turning our company around and getting back two weeks at a time from our lender and proving that we’re turning it around.

And then a matter of rapid testing. It also goes back to the team. The members of the team weren’t all in, quit and left. Those that were left were unbelievable. And it felt like it opened up some spots. So I hired two superstars in the team, and the team’s energy on a week-by-week basis and the fun they had was incredible. That’s the same thing as high expectations, low pressure on the team, and just giving them the wind behind the back to support. Let’s have fun learning and testing.

I said this is the best, most incredible learning opportunity you will have in your life. So, let’s learn, iterate, and test all programs, channels, and offers because we’re in high-volume direct response. It doesn’t take much for us to find some winners. That changes everything.

How did you replace that manufacturer?

It’s a great question. So, we actually went through a bankruptcy process. We went through it with one of our manufacturers. Well, first, we try to get it to ourselves. Then, our manufacturer went after another manufacturer for other products that we had gone after to get out of bankruptcy. In the end, we partnered together and said, “Okay, we’ll let you win this ticket out of bankruptcy. We’ll give you our business, give us special pricing on it so we are able to get up and running but the problem”, why it took us over a year to get back to a strong level of profitability was we had to rebuild that. In that pool of auto ships, we have cut off lost subscription customers.

The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man. ― George Bernard Shaw Share on X

We said we would rebuild it because the money comes from there. Our business is just from your auto-ship customers, especially the long-tail ones.

Yeah. How did you come up with the idea of a hair loss kind of regrowth product just for women?

It’s funny because, a lot of times, it comes back to personal stories. So I was looking again. We were focused on skincare at the time, looking for beauty products and testing everything. We did everything from anti-aging skin cream to wrinkle cream to dark circles, which was one of our big winners. Then someone came up from our RD team and said there’s a big issue that women have with their enlarged pores, and women are very insensitive. And then there was the technology we can employ to actually shrink women’s pores so it doesn’t sit there looking that open for them. Then, we tested a campaign on the radio for what we called our product, a pore minimizer. Now, when you hear the word pore, what do you hear? Yeah, exactly. It bombed. 

Names do count from that perspective, but actually, my sister had basically suffered from hair loss because of death from chemicals in her hair just from over-treatment. And my mother doesn’t like to wear makeup. She doesn’t need it. She barely had a wrinkle on her face. And she has this incredible skin and genetics. And she said to me, “Tom, is there something you can do about this?” And my mom’s not vain, but she was losing her hair.

And so it just started triggering. As far as the questions are concerned, why aren’t there solutions out there? And I started looking. There aren’t solutions for women. And why not? And then I found out how widespread this issue is, and I went,” Wow, it is big out there.” Then, we turned our PhD on it and said, “Okay, what can we do? How can we create a clinically proven solution for this?” And that’s where she went to work on it. But the inspiration from my mother and my sister said there’s something here.

Yeah. Wow, that’s such a divine setup, isn’t it?

100%. 

Speaking of divine setups, I feel there must be a similar one with the Boise Cascade division that you found for 15 million.

How did that happen at that period of time? It’s like. The same thing when we’re out of money, just creating with the acquisition of Urban Nutrition. Here’s one where, again, it’s the question of whether you are asking the questions. For example, in that situation, we met these two young entrepreneurs and helped them from a consulting perspective. They had this great supplement business that was growing so great; who knew they were open to a sale? And I credit my partner for asking them if they would sell. And they said, “For the right price, yes.” 

And so what I do a lot in conversations with people is I always like to talk about people and their dreams and long-term goals to understand that. Often, they talk about their current businesses and their desire to sell one day or open it up and find out what their goals are. That creates the context for conversations of businesses that you would never imagine you could ever buy, where you understand the motivation and create opportunities.

And we always like to talk about our dreams and visions. So, I think a lot of people think these are areas that are taboo. But we’re entrepreneurs; we like to talk about these things.

Yeah, kind of related story here. I heard this from Robert G. Allen, who I interviewed previously. He’s written a bunch of really big bestselling books, and millions and millions of copies have been sold, like The One Minute Millionaire, Cash In a Flash, Multiple Streams of Income, etc. He explained this thing called the Don’t Wanter, and he’s looking for someone who doesn’t want her, which is, I don’t want this thing. It’s a white elephant. It’s just not albatross around my neck. I don’t want it anymore. 

One of the ways that he would do this is to contact the landlords that are advertising units and just keep advertising week after week. Clearly, they weren’t filling their apartment buildings. So he would contact the landlord, and you say, “Hey, I’m calling about the ad of this such and such building.” And the landlord’s like, “Oh yes, you’re interested.” And he’s like, “Not in renting. I’m actually interested in buying the whole building from you if you’re open to it if you want to not have this problem anymore of trying to fill the units in your property.” And that’s just a cool idea to look for nontraditional opportunities.

The question is, sometimes going down beaten paths that have already been proven is great, but sometimes being the audacious rebel or just doing things unconventionally and having the audacity to do that. Sometimes, I’ve seen people do it risky and irresponsibly. Let me name a few people who did it that way: Bill Gates, Steve Jobs, and Mark Zuckerberg. You look at the founders of Airbnb, Lyft, and Uber. They had the audacity to break all the rules to create. They had a vision for the future, which the world did not see.

Yeah, well, Elon Musk, too.

Elon Musk in a very big way. And therefore breaks a lot of rules, pisses people off. But you know something? You cannot create new realities of the future from conventional approaches that are there. And people are going to hate what you’re doing, and after they condemn you for, you know, it’s like how many cease and desist and legal issues and rules and laws were broken by Uber with what they were doing.

But it was the only way they could create this ride-sharing revolution that they created at the end of changing paradise and breaking the rules of the taxis, which really had a monopoly on the different cities, which is incredible. I‘m going to say that there are patterns you can create to create non-conventional ways of thinking and whatever you can do in your life to create, tease, and look for those opportunities. It’s just a muscle. I remember we were moving to Austin, Texas, four years ago, and it was at its peak six months into COVID, and it was so hot down there.

The one criterion for moving there towards the end of summer is I want a house with a pool. But you couldn’t find all the houses where pools were rented because it was COVID then. So my daughter said, “I got this.” She went on looking for houses that had been on the market for over six months with large pools that basically hadn’t sold. 

She basically reached out to had our agent reach out to one of them that we really liked and made an offer to the owner that said, “It’s off the market now. It’s already September; you’re getting in October. The market’s going to radically change by the time you get to next spring. How about this? We’ll rent the house from you, and then you can start showing it in April, and we’ll be out of the house by June of next year.” He was able to get about 25% more for his house by doing that. It was a great solution for us again, but no one else was doing that. Everyone else is just looking at Zillow and the traditional places to rent houses and taking what they can get.

You know the quote by George Bernard Shaw: The reasonable man adapts himself to the world; The unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.

100% from that perspective. So, what is the other tool that I picked up? There were two things I picked up in Covid that were interesting and helpful. One started with a buddy of mine. I called him up; I said, “Listen, I no longer have my 4-hour commute a day to Jersey City and back.” I said, “Let’s do something fun, like buy an e-commerce Amazon brand.” Brian said, “I’m into it.” 

But then something I picked up along the way was one is, let me add a zero to that idea.What if, instead of buying one, we bought ten brands? I called him up and said, “Hey, let’s buy a series of brands.” He said, “I’m in.” But then I said, “What would happen if I bought and let me add another zero to that idea? What happens if we bought 100 brands over time?” And I said, “Well, the result would be, if we’re successful, it’s a new model for how to build a CPG company if we can pull it together and scale.” I said, “But everything that I know, I’ve learned, is you’re going to blow up. It wouldn’t. It will not work.”

But then I sat down, and I said, “Okay.” Then I read a Harvard Business Review article because it was COVID-19, and I didn’t want to watch Tiger King. It was about one of the most powerful questions you can ask: What would have to be true to make this possible? It takes people who have been through so much and have always reasons why and operational reasons why things can’t be successful. But asking this reverse question is what would have to be true to make this possible? So you think the other way. So then I started writing everything to be true. And what they were is a list of operating assumptions. And then I said, can I make that true? Can I make that true? Can I make that true? And yes, yes, yes, yes. And then that was it.

So, I chatted with Brian. I said, “What do you think?” He said, “Let’s go for it.” Going back to something I talked about earlier, it’s a big vision coming up with a roadmap for a $1 billion company, a new way to build a CPG company through programmatic mergers and acquisitions and with that, we were able to recruit some top people from Amazon, along. We had seven meetings with private equity, and we got six-term sheets. That’s when we raised $100 million to launch Foundry Brands. 

If you asked me originally what my ability to raise $100 million to launch this idea, I’d say if someone came to me with that idea, I’d say you’re doing something laughable that will never happen. But again, by asking very the right questions and challenging yourself, the first one is, what would happen if I had to zero on that idea? What would happen with another zero to that idea? Then, the other question is, what would have to be true to make that possible, make that vision, and make that roadmap possible to create Foundry Brands?

Yeah. Amazing. That reminds me of Byron Katie’s The Four Questions. Do you know about this?

No, I don’t.

Oh, it’s really cool. She’s an incredible personal development guru and author. So the five questions are: is this true? Can I know with absolute certainty this is true? And how does this thought make me feel? What would life be like if this thought didn’t exist? Then, the last one was actually turning it around, taking that thought or that idea, and coming up with the opposite. She applied these questions to people’s limiting beliefs. But you could apply it to anything. For example, if you have an assumption, you can’t achieve this because it’s not how things are done in the world. If you take the opposite and see and look for the evidence that the opposite is more true and run those questions on the opposite, that’s a very powerful way to live your life.

That’s really powerful. But, of course, you talk about limited beliefs. The biggest battles that any company has are existential threats to every company’s existence and future, which take place between the two ears of either the owner or the founders, the founders or partners at the top of every company. That’s the biggest battle because I’m going to say that what stopped me so many times from going to the next level was just limited beliefs of what I believed was possible and a tool that a friend of mine gave me. Mandy Keenan works a lot on limited beliefs with people. When I was dealing with this challenge where Atlantic Coast brands had our manufacturing going under, we were facing the end. I said the level of anxiety is almost crippling. 

And she said, “Tom, fast forward two years from now. What would the Tom Shipley of two years from now be telling you? Now, about this situation, what would you advice would you be giving yourself?” But that helped me whenever I get really stressed and have anxiety, that philosophy of going back to what I would myself two years from now.

But then I’ve asked that question: What will I be in two or five years, and what will I be capable of doing? And what is the scope and magnitude of doing that? And how can I, as an atomic habit, take the person that I will become in five years, and how can I make that person become that person now? What habits, philosophy, and attitudes can I have to make that possible? 

Acquiring existing brands can be less risky than building new ones from scratch. But remember, cultural alignment is essential in acquisitions to avoid losing key people and operational issues. Share on X

And so one thing I just want to talk about before we get it’s what I’m excited and passionate about and why, every six months, I spend a quarter million dollars to get 100 entrepreneurs in a room for three days to teach the art of responsible acquisitions. As I said in the podcast, I believe you can solve almost every business through acquisitions. Anyone listening right now who has a business, if you buy one business around, remember that if you buy one business a year, buying a business is an SOP. You understand the approach to it. You understand the SOP. It’s just a process you do. If you buy one business a year that’s a 30-year size for the next five years, you will have 10x your enterprise value.

You will grow 10x versus growing at 10-15% a year right now. And there are some risks, there are some bad years. You think that’s programmatic and approaching to grow organically, but there’s significant risk if you understand how to do it. So whether you want to 10x your exit, whether you’re having operational issues that you can’t do, or you don’t have a great operational team in place. A buddy of mine who spoke at DealCon at the event summit is the one I started Foundry Brands with. Brian was brilliant at marketing, sales, and development and had a good agency, but they weren’t great. They charged three times the market rate. He found a small agency struggling to make payroll with some of the best operators in the business. He did it for a bit of equity, increased everyone’s salary, and reduced stress and risk.

He acquired that business with their 1500-page SOPs, and then suddenly, they were able to give the best delivery in the business from an Amazon agency perspective. Imagine great marketing and great delivery in place. And that’s why he had a $200 million offer last year for his business. 

The question is, do you have the grit and the tenacity to take that extra step and the next extra step?

But again, it’s what acquisition saw your operational issues. If you have a business and you want to expand into TikTok, you can learn it yourself, you can hire outside agencies, or you can buy a TikTok agency that is profitable and knows how to do it. So again, you can solve almost every business challenge. You have the hubris that we had at Atlantico’s brands. Our mistake was that we grew despite our great successes because we did some acquisitions. Still, for almost every new brand, we developed them from scratch versus buying a brand that was doing two or three million dollars of revenue, that had momentum, that had some levels of success because we could scale brands from 3 to 30 or 3 to 50 or 3 to 100.

But getting brands off the ground, there’s such a huge risk. It would have been easier for us to leverage our balance sheet to buy these businesses that were maybe breaking even, just buying their business, creating deals, and actually creating a destiny for those brands. So that’s what I want people to hopefully understand, which is that there’s some real power for that. Every CEO, founder, and entrepreneur is responsible for looking for leverage to create an unfair advantage. I’m sharing that M&A are unfair advantages that most CEOs are not taking advantage of, but they are accessible to everyone.

Yeah, I think it’s a paradigm shift for business owners. They’ve probably heard of M&A mergers and acquisitions, but they haven’t necessarily heard of the term roll-ups or programmatic M&A. And so they’re thinking in terms of, well, I could merge with another company, but that’s a big unknown. I don’t know if that company is operating with the same values and mindset that I have. 

And if they’re not, then this whole thing could fall apart, and whatever I’ve built over these last 10 or 20 years could be lost. So they see it as a big risk versus if you think of it as a roll-up opportunity, what If I buy five different agencies or five different widget manufacturers? I add mine to it, and then we achieve economies of scale, remove redundancies, and build something that is a big acquisition target because it’s a big player. Now, that’s a whole different kind of ball game.

100% if you know what you’re doing, you have the right advisors around you, and you can create deal structures that are low risk for your business, such as the deal terms are low risk. You’re not bidding from a financial perspective, your current business on the acquisition you’re doing. 

Potentially, ways that deal can be unwrung if it’s not going the way you or you can spin it up. Also, I like the rule of a third, the mini-buy business over a third. You’re talking about a cultural shift for your existing business. If it’s a third, it’s small enough to be absorbed, and you can. Also, my rule for making acquisitions is to not harm if it makes sense to run them in parallel for some time; I do. And seven, you actually nailed the most important criteria for acquisition, which is cultural alignment. There has to be the same people’s philosophy.

You can solve almost every business challenge through acquisitions.

Again, you cannot take an environment like this; it’s challenging. When you take a people-centric, nice environment, you merge it together with an Amazon-like environment. Again, there’s nothing wrong with either environment. You’re going to have cultural shifting clashes, and you’re going to lose people. People are the driving engine and a key reason for what you acquire often, especially in service businesses.

Amazing. All right, I know we’re out of time. So, where should we send our listeners or viewers if they want to learn more about DealCon? If they want to learn from you, perhaps I don’t know if you have a blog, a book, or something they can learn from. If they don’t attend DealCon, what’s their next step?

Okay, I’ll share this to start with. First, I’ll make it easy as my email is [email protected], and people can contact me. You can also Find me on LinkedIn, Facebook and Instagram, where I do a decent amount of posting and sharing in those areas. DealCon, the next event, is coming up on February 24 to 26 in Nashville. Go to dealconlive.com for more information and a link to our upcoming event. It’ll be a paradigm shift event. There are people there who have made multiple acquisitions. There are some people there that have never done an acquisition. My only criterion is I want good people who give energy, are on fire, and want to have an impact. Other than that, they’re entrepreneurs, and that’s what I want to fill the room with.

Typically, businesses make over a million dollars in revenue and up to 200 million in revenue. So you’ll see a mix of different businesses there. That’s the primary place. And, of course, if you reach out to me, we have an MA course I can more than happily share your information on also.

Okay. You also have a promo code for Dealcon. Save10.

Yes, Save10. 10% on Dealcon, 100%. 

Yeah, I’ll for sure do that. Awesome. Well, Tom, this was awesome and really inspiring. Incredible story. Thank you for sharing this incredible journey that you’re on with vulnerability and candor. And congrats on everything.

I appreciate it. From my perspective, it’s like you. Stephan is our journey in certain ways. Our journey is just beginning.

Yeah, for sure. All right, awesome. Thank you, and thank you, listener. We’ll catch you on the next episode. I’m your host, Stephan Spencer, signing off.

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Your Checklist of Actions to Take

Challenge norms. Uncover success by daring to think differently. Embracing unconventional methods can lead me to breakthrough innovations.

Look for opportunities others overlook. Business owners eager to sell unwanted assets can be a goldmine.

Give an additional 10% effort to elevate my results from mediocre to exceptional. It’s the small, consistent efforts that make the biggest impact.

Overcome present challenges by imagining my future self guiding me. This perspective can provide clarity and direction.

Cultivate environments with high expectations but low pressure for optimal performance. It’s about achieving without compromising well-being.

Apply military rigor to business for heightened discipline and efficiency. This structured approach enhances productivity.

Leverage limiting beliefs. Challenge and rethink assumptions to break mental barriers and foster growth.

Use mergers and acquisitions to scale my business rapidly. Buying existing brands can be less risky than starting from scratch.

Uphold strong ethical standards even when no one is watching. Integrity fosters trust and long-lasting relationships.

Attend Tom Shipley’s upcoming event, DealCon. This event not only provides the opportunity to learn from Tom’s expertise in M&A but also offers a chance for direct interaction with him.

About Tom Shipley

Tom Shipley is a serial entrepreneur, investor, and advisor with a background in the IDF special forces Unit 669. With expertise in brands and business roll-ups, his startups have generated over $2 billion in sales through Direct-to-Consumer Marketing and Retail. Tom also raised $100 million from private equity to launch the Amazon aggregator FOUNDRY Brands. The latest agency aggregator and CEO M&A summit aims to normalize a people-first acquisition model.