Nathan Motyl On Five Things You Need To Know If You Want To Build, Scale and Prepare Your Business For a Lucrative Exit

An Interview With Jason Hartman

Focus on automation and AI where applicable. Many startups decide to “circle back” to this area, and never fully close the gap. That choice will have a material impact on forward operational cost and revenue. This often eliminates the truly repeatable and more mundane work, so that precious resources can focus on features that reduce costs or drive revenue. Time is our most precious asset, do not squander it!

As a part of our series about “Five Things You Need To Know If You Want To Build, Scale and Prepare Your Business For a Lucrative Exit, I had the pleasure of interviewing Nathan Motyl.

Nate is an accomplished executive with a diverse background in science, finance, and information technology. Starting his career in finance, he quickly transitioned to the IT department of a small engineering company, where he honed his technical skills across multiple disciplines. His expertise expanded to include Business Intelligence, Database performance, and enterprise workload management.

With a passion for driving digital transformations, Nate currently holds the position of SVP, Global Operations, Architecture, & PMO at Solera. His focus lies in optimizing product design to create new or optimize existing sales channels, increasing top-line revenue, and maximizing customer wallet. His track record of success in recent companies demonstrates his remarkable capability to identify strategic product changes that drive revenue growth and generate positive business outcomes.

Nate’s unique advantage stems from his multidisciplinary background in science, math, finance, and technology. This diverse skill set enables him to approach problems from a distinct frame of mind and filter, leading companies towards greater efficiency and profitability. His ability to restructure processes, streamline management, and leverage other modalities has consistently boosted EBITDA for the organizations he has worked with.

Additionally, Nate possesses expertise in driving business evolution with AI, making him a sought-after leader in the industry. His in-depth understanding of artificial intelligence and its applications enables him to leverage its power to propel businesses forward and capitalize on emerging opportunities. By incorporating AI-driven solutions into his strategies, Nate drives innovation, streamlines processes, and fosters sustainable growth for organizations.

As an innovative and strategic leader, Nate continues to make significant contributions to the industry. He is recognized for his outstanding performance in consolidating start-up companies into a cohesive entity, receiving numerous awards for his exceptional achievements in this field. Nate’s passion for driving revenue growth, coupled with his analytical mindset and deep understanding of technology, positions him as a valuable asset in achieving tangible business outcomes.

Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

My path is an interesting one. I started my college career in chemistry, only realizing I wasn’t a fan of labs my junior year, so I switched to finance my senior year where I received my B.S. Shortly into my first job, I joined the IT department and never looked back. For several years I had the opportunity to directly manage many IT disciplines, from network, infrastructure, and security to database, system engineering, and application support/development. Following that I concentrated on database and BI technologies for a time, with a special focus on performance tuning and workload management; then started moving into executive management, becoming a chief shortly after receiving my MBA. I got into the digital transformation/corporate consolidation niche 10 years ago via referral from a former colleague. I found this sort of work incredibly challenging and rewarding; never does a day go by when I do not see or learn something new.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

Mistakes can be valuable teaching tools. While I’ve made many in my career, the funniest I’ve been involved in was from one of my staff. When I was starting out, we worked at a company with large database servers serving millions of people globally per day. As part of the SDLC, we would prep non-production environments for testing. Our performance environment was identical to production in size, so the two were very similar. One day he came up to my desk panicked and said “Nate! I just shut down production!” I looked at him for a second, and said, “Did you turn it back on?” He said “no” and proceeded to turn the production services back on. While this did cause an outage, it only lasted a minute or two. This person was a very seasoned engineer but had made the mistake of confusing production and performance environment remote console screens and shut down production by accident while prepping for a test. The lesson? Two really…first, stay calm. In this situation, you can see how my senior engineer panicked, and while properly reporting the problem didn’t think to do the simplest task first; turn the environment back on. Also, my reaction at the time, had it been anything other than calm and direct, would have cost our customers a longer outage. The second lesson, if a mistake can be made it will be made. Error prevention, that is, making the error impossible to occur, is the only way to prevent.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

One of my favorite quotes is from Marcus Aurelius “You have power over your mind, not outside events. Realize this and you will find strength.” Every year, as I learn more and gain more experience, this quote becomes truer. Focus on mental clarity and health. Focus on what you can control and do your best to hedge against those elements outside of that. Something that people don’t always realize is that executive roles aren’t always easy. I’ve found that each rung of the ladder I’ve climbed, the role is more demanding, more stressful, and you have to rethink work habits regularly to keep on top of things. One time I was at a business dinner with several other executives, and the topic of stress came up. Every single person at the table had a “hospital story” about how stress, and the lack of stress management put them there. That is, everyone except me. Some of these stories were pretty shocking, and I realized that managing yourself, your mental clarity, and overall happiness is key to being of service at any level (i.e., put on your oxygen mask first). This quote has been instrumental in helping me manage stress, and compartmentalize challenging moments so that you can keep serving your team and drive success.

Ok super. Thank you for all of that. Let’s now shift to the main part of our discussion. Can you tell us a story about how you were able to build a business from scratch, scale and sell it to a bigger firm?

My best story along these lines actually doesn’t result in a sale, rather it was so successful we decided to reverse course and keep the product. In a prior engagement, I started getting into driving top-line revenue via product & services strategy. I was given a product to manage that the then leadership wanted to sell for $2–3M. It hadn’t been touched in years, hadn’t onboarded a new customer in 5, and was on a clearly downward spiral to extinction within the decade. During my initial product assessment, I hosted some user forums, checkpoint meetings, and discussed the market with competitors as well as symbiotic 3rd parties. I quickly learned we had two unique strengths (1) the customer base LOVED this product…but the lack of attention to features over years resulted in a general distaste for many. Second, the product was exceptionally well architected. While a bit “dusty”, some upgrades surgical and feature additions were all we had to focus on, as scale would be simple in the current design. As one of the first feature offerings, we launched a full eCommerce strategy, inclusive of payment processing. Within less than a year of this “relaunch” we had signed our first customers in over five years and closed the gap on the current year quota. By the second year, they had surpassed their annual quota in Q1 of their fiscal year and went on to be the most profitable product in the company (and still is today). The valuation sits at 200% of where we started and continues to grow. The lesson here? Understand your assets and problems before determining solutions. By “validating” that the original assumption of “product was unsavable”, we transformed the least profitable product in the company to the most profitable.

Based on your experience, can you share with our readers the “Five Things You Need To Know If You Want To Build, Scale and Prepare Your Business For a Lucrative Exit”?

I’ve been involved with a lot of diligence in my career. Companies have their own “methodologies” determine value, but there are some key areas of focus that apply to them all.

1. What’s your story? All businesses have a story on how they started and grew. Conditions of the market, large customers, integrations, etc. Many firms, regardless of their investment intent, want to understand that story. Did you get lucky? Was there a particular niche you targeted? Did you hit a favorable market condition, that will either dry up or grow in the future? Be clear, efficient, and thoughtful about your audience when you convey this.
2. Manage your pitch content! This is incredibly important. If you are seeking investment of any sort in your business, you must have a reason for that investment to occur. That reason is usually expressed in PowerPoint or some other form of pitch deck. You will want to start building and maintaining that from the instant you decide investment/exit is going to occur. Generating on the fly often results in an unclear or lackluster showing. Remember your audience, and what sort of information they want to see. Show them your projected revenue, favorable market trends, and/or competitive analysis. Align it to your story so there is cohesion between your strategy, tactics, and history that resonates with them.
3. Triple check information. Make sure all the data in your pitch deck and other diligence material is 100% accurate. Nothing can blow up a deal quicker than a decimal point in the wrong place!
4. Ensure you have a handle on your budget. While seemingly obvious, there are pitfalls that can blindside everyone. For example, do you know when your auto-renewals take effect? Many contracts have auto-renew terms that will sign you up for year(s) of additional unplanned costs if you don’t know or otherwise cancel appropriately. Are you clear on cloud entry versus scale up costs? Many cloud vendors offer lower entry costs for new customers, but also, many businesses starting out only need to “function” versus “scale.” That scenario can be dangerous if not managed and understood. More on this in my article on strategic investment here: https://www.linkedin.com/pulse/meso-investment-model-nathan-motyl-mba. Are you going from on-premise to cloud compute? Make sure you understand the EBITDA impact, as that KPI is valuable to many investors!
5. Focus on automation and AI where applicable. Many startups decide to “circle back” to this area, and never fully close the gap. That choice will have a material impact on forward operational cost and revenue. This often eliminates the truly repeatable and more mundane work, so that precious resources can focus on features that reduce costs or drive revenue. Time is our most precious asset, do not squander it!

In your experience, is there a difference in approach for building a service-based business versus a product-based business when you have the intent to eventually sell the business? Can you explain?

Yes and no. Service-based versus product-based businesses are fundamentally different in almost every way, from financials, to marketing, to sales. That said, I have found that while fundamentally different, in many markets they are symbiotic business models. If you have the opportunity, especially in the technical market, to offer both you can not only create new sales channels, but by pairing them both you can also increase your win rate as you offer a more complete solution. If you are selling your business, revenue potential is one of the primary focuses. By effectively widening your sellable surface area you drive up asset value.

How does one go about the process of finding a buyer?

There are always services you can use for this as one option. Business brokers and business listing sites to name the more common offerings. You will find that some of the more effective means of communicating that your business is up for sale is by leveraging your network. In the technology market, private equity firms do collaborate regularly with many people to collect information like this. They’ll chat with vendors, consultants, boards, and other business leaders. Word of mouth gets around quickly in that market. You can also leverage your network to get some time directly with PE firms to pitch them (see prior answer on pitch content). The point? Diversify your paths of sale to increase your opportunity for success, and make sure you are keeping your personal network strong!

How can one decide if it is better to build a business in order to exit, or if it is better to stick around for the long term and let the company bring in residual income, or if it is better to go public?

There isn’t one clear path for these scenarios, it’s subjective based on market conditions, your business health/maturity, and your strategic intent. Taking IPO as an example, while you may be ready to go public (i.e., filings are done, your compliance needs are covered) maybe IPOs are moving in a generally unfavorable direction in the market, and you want to pause. The reverse could also be true, where you need to strike “now” to maximize your value but aren’t fully ready to do so. As for the build, sell, or stick it out question, that really has everything to your financials. Do the math…do the numbers work? I touch on a common scenario I refer to as “the inflection point” in my article here https://www.linkedin.com/pulse/meso-investment-model-nathan-motyl-mba/, where a firm has to experience a business transformation event. They can either continue to profit while adapting their operations to scale, or they fail to scale and get crushed by the weight of their cost of business.

Can you share a few ways that are used to determine a good selling price for the business?

This is a large topic, highly dependent on the market your business is in, and there is no perfect approach. A common starting place is the annual revenue method. Using this method you can take a KPI of annual EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) or Gross Sales and use a multiple for that; usually .5–3 depending on the situation. A second example would be gross assets. Sometimes your assets are the key selling point (i.e., physical equipment, patents, cash) and your starting price begins there. A third is projected revenue, where you can demonstrate clear trends that outline how strategic plans align with historic revenue, with a future outlook of increase/decrease to set the starting price. Whatever method you use, my advice is make sure you have a handle on your sales and asset data, and make sure you can explain historic trends and projections to defend your position. Also, if your price isn’t met, consider other forms of value, such as stock or board positions.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I am passionate about education. I feel strongly that our country can, and should, have free, best-in-class education for all. By encouraging differently gifted and diverse brains in a safe environment, we could truly elevate and evolve humanity. That potential is what makes our country great, but where I think we could do better. Would it be the worst thing to be a beacon for the best minds on the planet?

How can our readers follow you on social media?

My website www.nathanmotyl.com or LinkedIN profile https://www.linkedin.com/in/nathanmotyl

Thank you so much for joining us. This was very inspirational.

About The Interviewer: Jason Hartman is the Founder and CEO of Empowered Investor. Jason has been involved in several thousand real estate transactions and has owned income properties in 11 states and 17 cities. Empowered Investor helps people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide. Jason’s Complete Solution for Real Estate Investors™ is a comprehensive system providing real estate investors with education, research, resources and technology to deal with all areas of their income property investment needs. Through Jason’s podcasts, educational events, referrals, mentoring and software to track your investments, investors can easily locate, finance and purchase properties in these exceptional markets with confidence and peace of mind.

Starting with very little, Jason, while still in college at the age of 19, embarked on a career in real estate. While brokering properties for clients, he was investing in his own portfolio along the way. Through creativity, persistence and hard work, he earned a number of prestigious industry awards and became a young multi-millionaire. Jason purchased a California real estate brokerage firm that was later acquired by Coldwell Banker. He combined his dedication and business talents to become a successful entrepreneur, public speaker, author, and media personality. Over the years he developed his Complete Solution for Real Estate Investors™ where his innovative firm educates and assists investors in acquiring prudent investments nationwide for their portfolio. Jason’s sought after educational events, speaking engagements, and his popular “Creating Wealth Podcast” inspire and empower hundreds of thousands of people in 189 countries worldwide.

While running his successful real estate and media businesses, Jason also believes that giving back to the community plays an important role in building strong personal relationships. He established The Jason Hartman Foundation in 2005 to provide financial literacy education to young adults providing the all-important real world skills not taught in school which are the key to the financial stability and success of future generations. We’re in a global monetary crisis caused by decades of misguided policies and the cycle of financial dependence has to be broken, literacy and self-reliance are a good start. Visit JasonHartman.com for free materials and resources.