Nevin Bannister of Blockmetrix: 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
The most important thing to know when you start a business is that not everything will go as planned. You might make incorrect assumptions or the industry changes, and you will have to pivot along the way. A good entrepreneur does not get too attached to a plan and knows how to improvise and keep moving forward.
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 Nevin Bannister.
Nevin Bannister is the Co-Founder and CEO of Blockmetrix, a fast-growing Dallas-based Bitcoin mining startup. Having founded startups that have sold for over $800 million combined, his ventures chronicle a strong leader excelling in employee development with a consistently innovative approach. In 2015, Nevin had the foresight to begin focusing on crypto and has become an investor in a number of blockchain technologies, exchanges, and currencies.
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?
I have always loved the early stages of a startup, with all the unknowns and everyone doing whatever they have to do to get the company to its goal. Launching a startup in the cryptocurrency space encompasses all of that, plus you are in an industry that is itself still in the “startup phase.” Crypto is still the wild west and comes with so much opportunity.
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?
Early on as an entrepreneur, I often found myself taking on too many duties and not delegating. I once spent weeks working on a spreadsheet to track all of our KPIs because I didn’t think anyone else could do it correctly. Once I finished, it was ugly, clunky, and hard to follow, but it worked. I gave it to one of the younger guys to show him how to use it and all that it could do. He went to work on it and brought it back to me 30 minutes later and he had completely rebuilt it! It was now beautiful and way more functional than the one I took weeks to build. I should have trusted him to build it in the first place, since that is why I hired him. If you hire the right people, they will be better at their job than you are, so get out of the way and let them do it.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
My close friend and mentor told me, “You have to be in the river to catch a fish.” This advice taught me to take risks and try new things. If something did not work, at least I was in the river with other fishes to catch. And thanks to being “in the river,” I have taken chances on business ideas that have turned into some very large exits.
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?
In 2012, I started a saltwater disposal business with my business partner. I first learned of the saltwater disposal business after reading an ad for a small company for sale. We saw great growth potential in the market and purchased the small saltwater disposal business and expanded rapidly, building more sites, and buying a trucking company. We grew from 10 employees to 295 in less than a year. Eleven months in, we filed to go public and ended up selling to a public company.
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”. Please give a story or example for each.
1. The most important thing to know when you start a business is that not everything will go as planned. You might make incorrect assumptions or the industry changes, and you will have to pivot along the way. A good entrepreneur does not get too attached to a plan and knows how to improvise and keep moving forward.
2. You can’t do it without a good team, so you must learn to spot talent and put people in the right places. Many of my top managers came from lower levels of the organization. When I see an employee with potential and determination, I coach and develop them to advance and reach their career goals. Making my team around me better helps me to have a strong team of loyal employees. When you take an interest in people and help them advance their careers, they become great employees.
3. Do things right from the start. When you are starting, and things are moving fast, it is easy to be sloppy and say we will fix it later, but sometimes later comes too late. You never know when a chance for an exit will happen, and if your accounting is a mess and you don’t have good policies and procedures in place, they will assume the rest of the business is a mess. The opposite is true; if everything is organized and in place, they will assume the company is well run.
4. Focus on profit and watch every dollar that you spend. You have to lead by example on this. If you treat every expense as a big deal, so will your team. If you let the little expense go without scrutiny, so will your employees and the little expenses will add up to big ones. Remember, when you exit, the purchase price will probably be a multiple of profit. I like to look at expenses under a multiples magnifying glass. That first-class ticket for a business trip might not sound too expensive at $1,000, but what if you multiply it by 10. Would you pay $10,000 for that ticket? Because that is what it would cost you on an exit multiple.
5. I like Homer’s quote: “The journey is the thing.” Not all exits are huge financial wins, but the lessons you learn along the way are invaluable. Every time you grow a business and exit, you become a better entrepreneur, and the next one will be bigger and better, and you will get there faster. Enjoy the journey and don’t beat yourself up over mistakes you have made, because they make you better.
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?
Nearly all of my experience has been on the service side, so I am probably not the best to answer this question. The only thought I can contribute is that for a service-based business, the more contracted revenue you have, the more valuable your company is. Meanwhile, with a product-based business, the more unique your product is relative to other products, the more value you have.
How does one go about the process of finding a buyer?
It depends on the size of the business. For smaller businesses, there are business brokers that can help you find a buyer. For a larger business, the large investment banks have teams that will help you run a process to sell. Sometimes people file a public notice for their company to go public purely to attract buyers.
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?
I build every business with the thought of an exit in mind, because it keeps you focused on profit. If you are running a business for residual income, great, but you never know when that might change, so keep it ready to exit.
Can you share a few ways that are used to determine a good selling price for the business?
Selling price is typically industry specific, so you will need to study your market to find the correct multiple. You can also talk to a business broker as they will generally share that information for free.
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. :-)
Business success does not have to be a zero-sum game. Help as many people as you can along the way. Too many people think that if they help others succeed, it might take away from their own success, but the truth is the more people you help the more people you will have cheering you on.
How can our readers follow you on social media?
I’m not on social media often, but feel free to follow me on LinkedIn.
Thank you so much for joining us. This was very inspirational.