April 28, 2025 • 28 mins
In this episode of Investing in Accessibility, co-hosts Kelvin Crosby and Chris Maher dive into the difference between a Lifestyle business and Exit business. Kelvin shares his personal experience with his company, See Me Cane, explaining how he chose to build a Lifestyle business rather than pursue rapid growth through venture capital. He highlights the benefits of having more control, balancing social mission with financial goals, and the creative funding strategies that made his business successful. Chris elaborates on the decision-making process for entrepreneurs, discussing how market size, funding sources, and growth potential influence the choice between Lifestyle and Exit businesses. Entrepreneurs must carefully assess what aligns best with their personal goals, whether it's pursuing venture investment, scaling quickly, and aiming for a liquidity event, or opting for alternative funding sources, maintaining more control, and adopting a slower, more organic approach to growth.
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Episode Transcript
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Kelvin Crosby (00:06):
Welcome to Investing in Accessibility, a
Samaritan Partners podcast.
We're not waiting for change,we're investing in it.
Join us as we speak withentrepreneurs and thought
leaders that are focused oncreating a more accessible world
.
(00:32):
Hey, so good to see you, eventhough I can't see you.
It's another beautiful day inthe neighborhood and I'm so
excited that you're here atInvesting in Accessibility.
I'm your host, Kelvin Crosby.
We're going to be talking aboutlifestyle businesses and exit
(00:52):
businesses and before we getinto that, let me bring in my
host, Chris Maher.
How you doing, man?
I'm good, Kelvin.
It's good to be with you today,as always My friend, how have
you been?
I've been good.
We just got rocked over here inCalifornia with the earthquake
and out of this recording I tellyou I went swaying to the left,
to the right and just a rumble.
You know it was quite theexperience,
Chris Maher (01:10):
But you're okay?
No, damage?
Kelvin Crosby (01:12):
I'm okay.
Good, no damage.
I was about an hour away fromthe main part of it and I know a
lot of people had thingsfalling off their walls and
everything.
But hey, we're okay, just theCalifornia wall falling off the
walls and everything.
But hey, we're okay.
Chris Maher (01:25):
Yeah, well, I'm on the other side of the country,
about an hour outside New YorkCity, and, and we were spoiled
about a week ago, things weregetting warm and the flowers are
starting to bloom, and thenlast week we got cold weather
and rain and it was a littledepressing.
I'm ready for spring to be here.
I'm ready to welcome the warmweather and and the flowers
blooming, that's for sure.
Kelvin Crosby (01:46):
So let's get into today's topic and that is
Lifestyle businesses and Exitbusinesses.
And I think one of the coolestthings about today's topic, this
is going to really help us, aspeople that want to invest in
businesses and everything,really understand what the
difference between Lifestylebusinesses and Exit businesses.
(02:08):
So, Chris, kind of tell us whatdoes a lifestyle business mean?
Chris Maher (02:15):
Sure and this is a conversation that I have quite
regularly with entrepreneursthat I speak with and just to
provide some definition aroundLifestyle and Exit.
Lifestyle, to the name, tends tobe a business that the founder
or co-founders are focused ongrowing more slowly, more
(02:39):
organically, having, hence thename, a little bit better
balance in terms of work-lifebalance with family to support
their kind of desired way ofliving.
Typically, they're growing thebusiness off of cash flow or
very minimal, maybe family andfriends or self-funding versus
professional investment.
(03:00):
And they've got pretty muchtotal control over the
trajectory of the business interms of how fast or slow they
want to grow and whether or notthey want to sell.
You know, have an exit or atransaction or a liquidity event
is a choice they may or may notmake.
And then versus an Exitbusiness, which is very much
about growth.
About scaling that growth asquickly as you can.
Taking on outside investors,professional investors like
(03:31):
venture capitalists, where thereis an expectation that there
will be an exit or a liquidityevent and that could be an
acquisition, a merger, an IPOand the expectation is that's
going to happen sooner thanlater, within five to seven,
maybe 10 years on the outside,and typically the founder or
(03:51):
founders are giving up asignificant amount of equity to
take on that capital to do thatfaster growth towards the exit.
Kelvin Crosby (03:59):
So what's really interesting is I had to make
this decision whether I wasgoing to make See Me Cane a
Lifestyle business or an Exitbusiness, and because I had to
look at some numbers.
One is that 10% of visuallyimpaired people use white canes.
That number is very interestingwhen you think about that.
(04:20):
So out of the whole populationof visually impaired people that
could use canes, only 10% ofthem use them.
Well, is that market really bigenough to really scale for an
Exit business?
And I had to make that decision.
And in my case, I made adecision to make a Lifestyle
business because I knew if Iwanted to scale this business, I
(04:44):
want this to actually come tomarket, be successful, do the
things it needed to do.
I had to be creative and I hadto have the flexibility to be
creative.
Because when you have an Exitbusiness, you don't have a ton
of flexibility to be creativeand you don't have time on your
side.
(05:04):
In an Exit business, thoseinvestors are going to want your
money.
Those investors are going towant an exit as fast as you can
possibly make it happen.
And the other thing is for me,I really needed to make sure
that See Me Cane was going to bea valid product for the
visually impaired.
(05:25):
So for me, I was able to takepottery sales and fund the first
Prototype of the See Me Cane.
I was able to do pre orders toget the first 125 See Me Canes
sold and then I was able to takemy first investor that was
essentially doing a social goodinvestment in my company,
(05:48):
knowing that the investor wasn'tgoing to really have a return
on his investment, but maybe, wehave hopes.
And lastly, going and buildingpartnerships that can cover
different costs of my business.
And the one most favorite thingabout my whole thing is I'm
(06:11):
being creative around how am Igoing to employ to have this
human being made?
Because there's a lot of taxoptions there as well as grants.
And so when you think in thoseterms to build your business, a
Lifestyle business allows youthis flexibility and an Exit
business you might be able topull this off, but there's not a
lot of time on your hands whenyou think about it in those
(06:33):
terms.
Chris Maher (06:34):
You're a great example, Kelvin, I think of an
entrepreneur's choice to go downone path or the other, and I
think for you, there are severalfactors that you had to weigh
to choose the path of aLifestyle business.
One is, and this is reallyimportant, when it comes to an
(06:54):
Exit business, what's theaddressable market, or the TAM,
the T-A-M, the total addressablemarket.
And you did the numberscorrectly, it's more of a niche
market for the See Me Caneversus something that has much
greater opportunity in terms ofgrowth.
So that addressable market sizeis critically important,
(07:18):
especially for professionalinvestors like myself, venture
capitalists that are investingin companies that are Exit
businesses.
The other thing is funding, andyou got incredibly creative,
from self-funding to thenfunding off of revenue to
finding one or two individualswho really believe in the social
(07:40):
mission of your business andare thinking about it less as a
for-profit investment, or areturn investment, and more of
like hey, I want to be along onthis journey.
And then you also have apartner, is a nonprofit, to help
assemble and sell your canes byleveraging and providing
employment to the community,which is amazing.
(08:01):
And so what you are notsacrificing by going with a
Lifestyle business is the socialmission of your for-profit
business.
You can balance your socialmission and your financial
mission, whereas Exit businessesmany times, when you take on
that outside capital, thatprofessional money where there's
(08:22):
the pressure, as you said, togrow and scale as quickly as you
can and to get to thatliquidity event, the financial
performance of the business andgrowth of the business tends to
take priority and the socialmission or cause or impact that
you're driving for tends to takea back seat and it might not
(08:44):
even be number two.
It can start to go down thatlist pretty quickly and so
that's another potential con orsacrifice of going down the Exit
path.
But two things that you didreally well is you sized up your
addressable market and you usedamazing creativity around the
funding of your business and itwas a conscious choice that you
(09:05):
made to balance the socialmission and the profitability of
your business.
Kelvin Crosby (09:11):
There are some other businesses that are out
there that have done othercreative ideas.
That are lifestyle businessesthat have been extremely
successful.
Chris Maher (09:19):
In terms of other lifestyle businesses, there are
a couple that come to mind.
One is a company that providescompanion care for families that
are traveling with familymembers or loved ones that have
disabilities and or are agingand need assistance and need
(09:43):
pretty consistent care.
And the entrepreneur.
I met with this entrepreneurseveral months ago and she was
really thinking, oh, I need toraise venture capital money, I
need venture capital money toscale.
But when we started talkingabout her business, she's got a
business that's doing about ahalf a million dollars in
revenue after only starting thebusiness a few years ago.
(10:05):
She's got three full-timeemployees, including herself,
and they're profitable.
So what they do is, they matchfamilies that need companion
caregivers for when they takevacations and when they travel,
with registered nurses who haveexperience in the caregiving,
(10:27):
and specifically with peoplethat maybe have dementia or
physical and or developmentaldisabilities, and so they pair
them together and they take afee for that.
And as we dug into theirbusiness and she talked about it
more, I said you think you needventure money, but like, could
you double your business thisyear by just doing a little bit
(10:48):
more marketing and with the samethree people on your staff?
She's like absolutely, there'sno doubt in my mind.
I'm like, okay, so you coulddouble your business and go from
half a million to a milliondollars, be even more profitable
.
So scaling, doubling yourrevenue year over year without
adding any bodies, I go thatwould be amazing.
Like, why do you need venturemoney?
And she's like, well, as Iscale, I'm going to need more
(11:10):
technology to manage thebusiness in terms of managing
the network of nurses,connecting with families, all of
that.
I said, okay, well, if youdouble your business the next
year and you have even morecapital to self fund with from
your operation because you'reprofitable, couldn't that be
where you get the capital tobuild out the technology?
She's like, yeah, you'reprobably right.
(11:31):
And I go and if you had alittle bit of technology, could
you then the next year doubleyour business again and go from
one to $2 million?
She's like, yeah, I'm fairlyconfident.
And she kind of, as we talkedabout, I didn't even have to
tell her.
She's like, yeah, maybe I don'tneed professional investment.
I can grow this business 100%year over year for the next two
years.
(11:51):
And then I asked the question Igo and, oh, by the way, like
what do you want to be when yougrow up with this business.
You could have a really nicelifestyle business where you're
retaining the majority of theequity in your business, you're
controlling its growth, you'recontrolling the strategy.
You don't have the pressures ofoutside investors wanting you
to scale this quickly and get toan exit.
What's so wrong with that?
(12:13):
Right?
And she's like that's a reallygood point.
Now here's the math on aLifestyle exit versus an Exit
exit.
So a lifestyle business, theentrepreneur may choose, hey,
we're never going to sell it.
We're just going to take a nicesalary, pay ourselves nice
bonuses and dividends at the endof the year and we're just
going to run this and hand itoff to the next generation.
(12:33):
Amazing.
Or, you might grow your businessto three or four million
dollars in revenue, maybe youget to five and down the road
there is a strategic partner,acquirer that approaches you and
say buys your business for youknow, 12 or $15 million.
Okay,on what, what a typicalmultiple might be.
(12:55):
If you're, if you have retainedby a lifestyle business, you
still own 80, 90 plus percent ofthe business.
That's a significant outcome orexit for the founder.
Right, now, if you take outsideinvestment from VCs, you're
going to dilute yourself forsure, and in some cases you can
(13:18):
dilute yourself down to 15%,maybe plus or minus 15%.
To get the same outcome on anexit, you've got to grow your
business to probably be in the20 to $25 million range to get a
three or four time multiple.
So a lifestyle business canstill actually provide the
founder the same exit amount interms of dollars as if you took
(13:43):
outside investment and grew itto be a much bigger business.
Because you're going to takedilution, no doubt, and in some
cases it can be significantdilution, and so that's just
when you start to think aboutnumbers like that.
For some people the lifestylebusiness can become a much more
attractive road because youretain the majority of equity
you you contain control.
You continue to control thevision of your social mission
(14:05):
and the financial performance ofthe business side by side,
versus the financial performancestarting to take priority in a
pretty significant way whenthere's an expectation from
professional investors to get toa liquidity event.
Kelvin Crosby (14:18):
But this doesn't mean that an exit business is a
bad idea.
Building assistive services andprograms and all of those
different things.
There is a very lucrative wayto build investment and get
investment.
If you have a product, serviceor a program that is serving a
(14:46):
universal access for all kind ofmodel, when you think in that
term, there's your opportunityfor an Exit business.
So, Chris, kind of talk to us alittle bit about an Exit
business and what are the thingsthat a lot of these Exit
businesses that are in theaccessibility space are looking
(15:08):
like?
Chris Maher (15:13):
Yeah, I think it's a great point, Kelvin.
Part of that is focused on alarger addressable market, as we
talked about, but also theability to scale the delivery of
those products and services tomore people or to more
businesses, which then gives youa greater opportunity to scale
your revenue to a significantlevel.
(15:34):
But by getting it into thehands of or to more people and
businesses, that's also givingyou a chance to have more
dramatic, permanent and systemicchange for good.
So scale is a big part of,especially what I look at as as
(15:54):
a venture investor.
You know, addressable marketand scale have a lot to do with
the whether or not something iskind of, you know, venture
worthy in terms of an investment.
And so one example where it,within the accessibility and
disability space, that has shownthat you can achieve scale not
(16:16):
only in terms of delivering theservice to the greatest number
of people, but also in drivingsignificant revenue that then
can get to liquidity events, anda great example of that is
digital accessibility.
So digital accessibility,website remediation.
There are numerous examples ofcompanies that have raised
significant venture dollars,like in the tens and tens of
(16:37):
millions.
Some of them have gone public,acquisitions have started to
occur where private equity iscoming in, or larger players are
acquiring smaller players, andthis is driven by a couple of
things, right.
A big part of what was drivingthat in the early days was, I
think, legal risk mitigation,because companies were starting
(16:59):
to get sued because theirwebsites were not accessible,
and so it was kind of likeinsurance, which is not a you
know, don't not not the bestkind of reason for doing things
is like we don't want to getsued.
Laws are changing, right.
So Europe, in June of this year,all websites have to be
digitally accessible, otherwiseyou're going to be paying fines.
(17:19):
But also, I think it's theindustry's realizing that hey,
if our website is accessible tomore people, that's a better
customer experience, that'sgoing to generate more revenue,
which is better for our bottomline.
The other thing about thedigital experience is there are
certain.
So first of all, a couple ofstats.
Only 4%, the last statistics Isaw about 4% of all websites on
(17:42):
the internet are actuallyaccessible.
So there is a massive portionof customers that you're missing
out on because of that as abusiness.
But then you also throw intothat, like 80% of people like to
be in dark mode, whether ontheir phone or on their computer
and dark mode, you start tolose on a lot of functionality
(18:04):
and graphics and images as well,and where accessibility can
accommodate for that, and sothat's a great example where
there's been significant ventureinvestment, significant growth
and now they're starting to getto outcomes in terms of IPOs,
acquisitions, private equityacquisitions as well.
So I think that's a goodexample of a space, within
(18:27):
disability specifically, thathas shown that that you can have
successful exits.
Kelvin Crosby (18:31):
When we think about some of the businesses, so
like when we look at digitalaccessibility I've been in this
space myself and it definitelythere's so much going on in it
because the general populationcan benefit from it and when we
think in those terms from a Exitbusiness, when we look at that,
(18:57):
we're seeing there's a lot ofopportunities besides just the
disability market that reallygrows it.
I mean, can you give us somesuccessful exits that actually
have occurred with theaccessibility first in mind for
people with disabilities, butreally had a bigger outcome?
Chris Maher (19:18):
Yeah, it's a great question.
That's the whole curb cuteffect concept, right?
So, where you know, years agoit was put into law that all
curbs had to have the cut inthem for people with largely
physical disabilities.
You know wheelchair users.
But the general populationloves it right?
Parents pushing children instrollers, the delivery person
(19:42):
who's got a dolly they've got topush up, you're walking around
with your wheelie bag fortraveling?
I know just personally.
When I'm walking in the streetsof New York I always go
straight for the curb cut whenI'm going up and down curbs
myself.
That's like captioning.
Closed captioning on TV.
I know the younger generationand me, now that I'm getting a
(20:03):
little older and my hearing'snot as good, using captioning
all the time.
That was obviously created forpeople with disabilities.
Speech recognition, so likespeech to text, is another
fantastic example of that wasbuilt for and developed for
people with disabilities.
The general population has seenamazing value in that and they
use it all the time.
Something as simple as atoothbrush the original electric
(20:27):
toothbrush was made for peoplewith limitations to their motor
skills and I don't know too manypeople that don't have electric
toothbrushes now and still usethe old school.
Do it yourself.
You do nice, Kelvin.
And so those are just a handfulof examples of technologies,
(20:49):
services, assistive technologiesthat were created and developed
specifically for the disabilitycommunity, that had that
curb-cut effect where they, overtime, became valuable and
useful for the generalpopulation, and so that creates
greater addressable market,greater scale in terms of the
good and the value you'redelivering to a greater set of
(21:12):
customers, which then leads togreater revenue opportunity,
which then leads to morepotential liquidity events, or
exits.
Kelvin Crosby (21:20):
So when we think in these terms, this is where an
Exit business is ideal, and Ithink, as we explore more with
the Investing in Accessibilitypodcast, we're going to see more
and more examples of what itlooks like from the really
(21:41):
building an Exit business,because that's what Investing in
Accessibility is about isbuilding an Exit business that
is scalable.
And I think the key word thatyou need to remember whether you
want to invest in accessibilityfocused businesses or you are a
business owner that is lookingfor investment you're going to
(22:05):
want to really analyze this.
Can this be scaled beyond thedisability market so that way,
all people can have access?
This is extremely, extremelyimportant when you are thinking
about an exit business, becauseonce you start bringing in those
(22:28):
investors, the stress levels ofgetting that thing to be a
three-time X return or more is aticking time bomb I say.
Because you only got so muchtime before you get your
investors not very happy withyou.
And next thing, you know yougot some challenges ahead of you
.
So, Chris am I missing anythingthat we need to make sure we
(22:56):
cover today?
Chris Maher (22:57):
No, I think I think you've, we've nailed most of it
.
If I was just going to kind oftry to summarize a few things,
for whether you're anentrepreneur or you know the
professional investors, likeventure capital capitalists,
this is stuff they know throughand through around addressable
markets and the ability to scalerevenue.
The multi-use, it's not justfor one population.
(23:19):
It can be good for the generalor a broader or multiple
populations, but maybe someonewho is more interested in
becoming an angel investor anddipping their toe into early
stage investing.
But, I think for entrepreneursthis is a choice and I think
that a lot of entrepreneursstart off by saying, oh well,
I'm going to have to raiseventure capital to help grow my
(23:40):
business.
That's not necessarily the case.
As you've shown, there arecreative ways to raise capital
or get access to capital.
Some of those are dilutive,like taking on angel investors
or friends and family dollars.
There's non-dilutive waysthrough grants and government
subsidies, and then there's justself-funding through the
(24:02):
revenue that you're generatingwith your business.
That's a slower path, it's amore organic path, but you
maintain control.
You maintain control of theequity of your business.
You maintain control of thestrategy and the vision for your
business.
You also maintain control ofhow much or little you want to
emphasize the social good thatyou're trying to deliver with
(24:23):
your business.
Okay, all of that is withinyour control.
What you give up as theentrepreneur is the ability to
grow your business more quickly.
Maybe you're limiting youraddressable market and your
financial growth and then that'sgoing to limit whether or not
you can sell that business downthe road.
And if you can sell it, it'sprobably going to be for a lower
price.
The counter to that is you'regoing to own a greater percent
(24:46):
of your equity.
So there's still the potentialfor a very good financial
outcome if you are able to sellit.
If you choose to, you may not.
So there are pros and cons tothink about on that side and
then on the Exit business side,again, it's a choice and if you
want to go big and you want togo hard and go fast, getting
that professional capital, notonly does the money help you to
(25:09):
grow the business, you can justhire more quickly, do more
marketing etc.
You can go to market and scaleyour customers and your revenue
more quickly.
But hopefully you're choosingprofessional investors that are
also going to bring additionalvalue to the table Operational
expertise, a network effect ofcontacts that they've got in the
(25:30):
industry for introductions,strategic thinking about your
product roadmap, additionalideas around going into new
markets whether that's industryverticals, other geographies.
If you choose wisely, thoseinvestors can bring more to the
table than just capital.
They can bring real operationalexpertise and strategic vision
and know-how to help you growyour business bigger and faster
(25:55):
to get you to that exit or thatliquidity event.
Now, as you said, there are somepotential cons to that where a
lot more pressure on you to growyour business fast, your
work-life balance is going tofall to the wayside pretty
quickly.
The social mission of yourbusiness may start to take a
backseat to your revenue growthand you are going to have an
(26:17):
expectation that you need to getthis thing to some sort of exit
or liquidity event sooner thanlater.
They're all trade-offs, they'repros and cons and I think
entrepreneurs sometimes don'tspend enough time thinking about
it.
And it's not just at thebeginning when you start your
business.
I think it's also periodically,as your business is hitting
certain milestones, to revisitthat conversation with yourself.
(26:41):
But at the end of the day it'sa choice, and I'm not here to
say that one is better than theother.
I happen to be in the businessof investing in Exitable
businesses, but I believe thatwe're going to be partners that
are going to allow them to drivetheir social mission equally
with their financial mission andgrowth.
It's choice to be a Lifestyleentrepreneur might be what's
(27:04):
best for you and your team andyour family versus another
entrepreneur who chooses to godown the Exit path because
that's the right choice for them.
You just want to make sure youbalance the pros and cons of
each before you make thatdecision.
Kelvin Crosby (27:17):
I mean at the end of the day, when you think
about See Me Cane, I still amgoing to have to weigh out is
investment a good opportunity oram I okay being creative in
different ways of building mybusiness?
At the end of the day, neitherone is wrong.
Each one of them has its ownchallenges and, as we wrap up
(27:38):
Investing in Accessibility, youknow what I always say go live
beyond you're a challenge andwe'll see you in two weeks.
Thank you for listening toInvesting in Accessibility, a
(28:02):
Samaritan Partners podcast wherewe invest in change for
accessibility, not wait forchange.
If you want to follow us, youcan find us on YouTube or
LinkedIn at @Samaritan Partners.
If you would like to invest inSamaritan Partners, email Chris
at chris@ samaritanpartners.
com.
If you'd like to learn moreabout us, go to www.
samaritanpartners.
com.
(28:24):
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Welcome to Investing in Accessibility, a
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Join us as we speak withentrepreneurs and thought
leaders that are focused oncreating a more accessible world
.
(00:32):
Hey, so good to see you, eventhough I can't see you.
It's another beautiful day inthe neighborhood and I'm so
excited that you're here atInvesting in Accessibility.
I'm your host, Kelvin Crosby.
We're going to be talking aboutlifestyle businesses and exit
(00:52):
businesses and before we getinto that, let me bring in my
host, Chris Maher.
How you doing, man?
I'm good, Kelvin.
It's good to be with you today,as always My friend, how have
you been?
I've been good.
We just got rocked over here inCalifornia with the earthquake
and out of this recording I tellyou I went swaying to the left,
to the right and just a rumble.
You know it was quite theexperience,
Chris Maher (01:10):
But you're okay?
No, damage?
Kelvin Crosby (01:12):
I'm okay.
Good, no damage.
I was about an hour away fromthe main part of it and I know a
lot of people had thingsfalling off their walls and
everything.
But hey, we're okay, just theCalifornia wall falling off the
walls and everything.
But hey, we're okay.
Chris Maher (01:25):
Yeah, well, I'm on the other side of the country,
about an hour outside New YorkCity, and, and we were spoiled
about a week ago, things weregetting warm and the flowers are
starting to bloom, and thenlast week we got cold weather
and rain and it was a littledepressing.
I'm ready for spring to be here.
I'm ready to welcome the warmweather and and the flowers
blooming, that's for sure.
Kelvin Crosby (01:46):
So let's get into today's topic and that is
Lifestyle businesses and Exitbusinesses.
And I think one of the coolestthings about today's topic, this
is going to really help us, aspeople that want to invest in
businesses and everything,really understand what the
difference between Lifestylebusinesses and Exit businesses.
(02:08):
So, Chris, kind of tell us whatdoes a lifestyle business mean?
Chris Maher (02:15):
Sure and this is a conversation that I have quite
regularly with entrepreneursthat I speak with and just to
provide some definition aroundLifestyle and Exit.
Lifestyle, to the name, tends tobe a business that the founder
or co-founders are focused ongrowing more slowly, more
(02:39):
organically, having, hence thename, a little bit better
balance in terms of work-lifebalance with family to support
their kind of desired way ofliving.
Typically, they're growing thebusiness off of cash flow or
very minimal, maybe family andfriends or self-funding versus
professional investment.
(03:00):
And they've got pretty muchtotal control over the
trajectory of the business interms of how fast or slow they
want to grow and whether or notthey want to sell.
You know, have an exit or atransaction or a liquidity event
is a choice they may or may notmake.
And then versus an Exitbusiness, which is very much
about growth.
About scaling that growth asquickly as you can.
Taking on outside investors,professional investors like
(03:31):
venture capitalists, where thereis an expectation that there
will be an exit or a liquidityevent and that could be an
acquisition, a merger, an IPOand the expectation is that's
going to happen sooner thanlater, within five to seven,
maybe 10 years on the outside,and typically the founder or
(03:51):
founders are giving up asignificant amount of equity to
take on that capital to do thatfaster growth towards the exit.
Kelvin Crosby (03:59):
So what's really interesting is I had to make
this decision whether I wasgoing to make See Me Cane a
Lifestyle business or an Exitbusiness, and because I had to
look at some numbers.
One is that 10% of visuallyimpaired people use white canes.
That number is very interestingwhen you think about that.
(04:20):
So out of the whole populationof visually impaired people that
could use canes, only 10% ofthem use them.
Well, is that market really bigenough to really scale for an
Exit business?
And I had to make that decision.
And in my case, I made adecision to make a Lifestyle
business because I knew if Iwanted to scale this business, I
(04:44):
want this to actually come tomarket, be successful, do the
things it needed to do.
I had to be creative and I hadto have the flexibility to be
creative.
Because when you have an Exitbusiness, you don't have a ton
of flexibility to be creativeand you don't have time on your
side.
(05:04):
In an Exit business, thoseinvestors are going to want your
money.
Those investors are going towant an exit as fast as you can
possibly make it happen.
And the other thing is for me,I really needed to make sure
that See Me Cane was going to bea valid product for the
visually impaired.
(05:25):
So for me, I was able to takepottery sales and fund the first
Prototype of the See Me Cane.
I was able to do pre orders toget the first 125 See Me Canes
sold and then I was able to takemy first investor that was
essentially doing a social goodinvestment in my company,
(05:48):
knowing that the investor wasn'tgoing to really have a return
on his investment, but maybe, wehave hopes.
And lastly, going and buildingpartnerships that can cover
different costs of my business.
And the one most favorite thingabout my whole thing is I'm
(06:11):
being creative around how am Igoing to employ to have this
human being made?
Because there's a lot of taxoptions there as well as grants.
And so when you think in thoseterms to build your business, a
Lifestyle business allows youthis flexibility and an Exit
business you might be able topull this off, but there's not a
lot of time on your hands whenyou think about it in those
(06:33):
terms.
Chris Maher (06:34):
You're a great example, Kelvin, I think of an
entrepreneur's choice to go downone path or the other, and I
think for you, there are severalfactors that you had to weigh
to choose the path of aLifestyle business.
One is, and this is reallyimportant, when it comes to an
(06:54):
Exit business, what's theaddressable market, or the TAM,
the T-A-M, the total addressablemarket.
And you did the numberscorrectly, it's more of a niche
market for the See Me Caneversus something that has much
greater opportunity in terms ofgrowth.
So that addressable market sizeis critically important,
(07:18):
especially for professionalinvestors like myself, venture
capitalists that are investingin companies that are Exit
businesses.
The other thing is funding, andyou got incredibly creative,
from self-funding to thenfunding off of revenue to
finding one or two individualswho really believe in the social
(07:40):
mission of your business andare thinking about it less as a
for-profit investment, or areturn investment, and more of
like hey, I want to be along onthis journey.
And then you also have apartner, is a nonprofit, to help
assemble and sell your canes byleveraging and providing
employment to the community,which is amazing.
(08:01):
And so what you are notsacrificing by going with a
Lifestyle business is the socialmission of your for-profit
business.
You can balance your socialmission and your financial
mission, whereas Exit businessesmany times, when you take on
that outside capital, thatprofessional money where there's
(08:22):
the pressure, as you said, togrow and scale as quickly as you
can and to get to thatliquidity event, the financial
performance of the business andgrowth of the business tends to
take priority and the socialmission or cause or impact that
you're driving for tends to takea back seat and it might not
(08:44):
even be number two.
It can start to go down thatlist pretty quickly and so
that's another potential con orsacrifice of going down the Exit
path.
But two things that you didreally well is you sized up your
addressable market and you usedamazing creativity around the
funding of your business and itwas a conscious choice that you
(09:05):
made to balance the socialmission and the profitability of
your business.
Kelvin Crosby (09:11):
There are some other businesses that are out
there that have done othercreative ideas.
That are lifestyle businessesthat have been extremely
successful.
Chris Maher (09:19):
In terms of other lifestyle businesses, there are
a couple that come to mind.
One is a company that providescompanion care for families that
are traveling with familymembers or loved ones that have
disabilities and or are agingand need assistance and need
(09:43):
pretty consistent care.
And the entrepreneur.
I met with this entrepreneurseveral months ago and she was
really thinking, oh, I need toraise venture capital money, I
need venture capital money toscale.
But when we started talkingabout her business, she's got a
business that's doing about ahalf a million dollars in
revenue after only starting thebusiness a few years ago.
(10:05):
She's got three full-timeemployees, including herself,
and they're profitable.
So what they do is, they matchfamilies that need companion
caregivers for when they takevacations and when they travel,
with registered nurses who haveexperience in the caregiving,
(10:27):
and specifically with peoplethat maybe have dementia or
physical and or developmentaldisabilities, and so they pair
them together and they take afee for that.
And as we dug into theirbusiness and she talked about it
more, I said you think you needventure money, but like, could
you double your business thisyear by just doing a little bit
(10:48):
more marketing and with the samethree people on your staff?
She's like absolutely, there'sno doubt in my mind.
I'm like, okay, so you coulddouble your business and go from
half a million to a milliondollars, be even more profitable
.
So scaling, doubling yourrevenue year over year without
adding any bodies, I go thatwould be amazing.
Like, why do you need venturemoney?
And she's like, well, as Iscale, I'm going to need more
(11:10):
technology to manage thebusiness in terms of managing
the network of nurses,connecting with families, all of
that.
I said, okay, well, if youdouble your business the next
year and you have even morecapital to self fund with from
your operation because you'reprofitable, couldn't that be
where you get the capital tobuild out the technology?
She's like, yeah, you'reprobably right.
(11:31):
And I go and if you had alittle bit of technology, could
you then the next year doubleyour business again and go from
one to $2 million?
She's like, yeah, I'm fairlyconfident.
And she kind of, as we talkedabout, I didn't even have to
tell her.
She's like, yeah, maybe I don'tneed professional investment.
I can grow this business 100%year over year for the next two
years.
(11:51):
And then I asked the question Igo and, oh, by the way, like
what do you want to be when yougrow up with this business.
You could have a really nicelifestyle business where you're
retaining the majority of theequity in your business, you're
controlling its growth, you'recontrolling the strategy.
You don't have the pressures ofoutside investors wanting you
to scale this quickly and get toan exit.
What's so wrong with that?
(12:13):
Right?
And she's like that's a reallygood point.
Now here's the math on aLifestyle exit versus an Exit
exit.
So a lifestyle business, theentrepreneur may choose, hey,
we're never going to sell it.
We're just going to take a nicesalary, pay ourselves nice
bonuses and dividends at the endof the year and we're just
going to run this and hand itoff to the next generation.
(12:33):
Amazing.
Or, you might grow your businessto three or four million
dollars in revenue, maybe youget to five and down the road
there is a strategic partner,acquirer that approaches you and
say buys your business for youknow, 12 or $15 million.
Okay,on what, what a typicalmultiple might be.
(12:55):
If you're, if you have retainedby a lifestyle business, you
still own 80, 90 plus percent ofthe business.
That's a significant outcome orexit for the founder.
Right, now, if you take outsideinvestment from VCs, you're
going to dilute yourself forsure, and in some cases you can
(13:18):
dilute yourself down to 15%,maybe plus or minus 15%.
To get the same outcome on anexit, you've got to grow your
business to probably be in the20 to $25 million range to get a
three or four time multiple.
So a lifestyle business canstill actually provide the
founder the same exit amount interms of dollars as if you took
(13:43):
outside investment and grew itto be a much bigger business.
Because you're going to takedilution, no doubt, and in some
cases it can be significantdilution, and so that's just
when you start to think aboutnumbers like that.
For some people the lifestylebusiness can become a much more
attractive road because youretain the majority of equity
you you contain control.
You continue to control thevision of your social mission
(14:05):
and the financial performance ofthe business side by side,
versus the financial performancestarting to take priority in a
pretty significant way whenthere's an expectation from
professional investors to get toa liquidity event.
Kelvin Crosby (14:18):
But this doesn't mean that an exit business is a
bad idea.
Building assistive services andprograms and all of those
different things.
There is a very lucrative wayto build investment and get
investment.
If you have a product, serviceor a program that is serving a
(14:46):
universal access for all kind ofmodel, when you think in that
term, there's your opportunityfor an Exit business.
So, Chris, kind of talk to us alittle bit about an Exit
business and what are the thingsthat a lot of these Exit
businesses that are in theaccessibility space are looking
(15:08):
like?
Chris Maher (15:13):
Yeah, I think it's a great point, Kelvin.
Part of that is focused on alarger addressable market, as we
talked about, but also theability to scale the delivery of
those products and services tomore people or to more
businesses, which then gives youa greater opportunity to scale
your revenue to a significantlevel.
(15:34):
But by getting it into thehands of or to more people and
businesses, that's also givingyou a chance to have more
dramatic, permanent and systemicchange for good.
So scale is a big part of,especially what I look at as as
(15:54):
a venture investor.
You know, addressable marketand scale have a lot to do with
the whether or not something iskind of, you know, venture
worthy in terms of an investment.
And so one example where it,within the accessibility and
disability space, that has shownthat you can achieve scale not
(16:16):
only in terms of delivering theservice to the greatest number
of people, but also in drivingsignificant revenue that then
can get to liquidity events, anda great example of that is
digital accessibility.
So digital accessibility,website remediation.
There are numerous examples ofcompanies that have raised
significant venture dollars,like in the tens and tens of
(16:37):
millions.
Some of them have gone public,acquisitions have started to
occur where private equity iscoming in, or larger players are
acquiring smaller players, andthis is driven by a couple of
things, right.
A big part of what was drivingthat in the early days was, I
think, legal risk mitigation,because companies were starting
(16:59):
to get sued because theirwebsites were not accessible,
and so it was kind of likeinsurance, which is not a you
know, don't not not the bestkind of reason for doing things
is like we don't want to getsued.
Laws are changing, right.
So Europe, in June of this year,all websites have to be
digitally accessible, otherwiseyou're going to be paying fines.
(17:19):
But also, I think it's theindustry's realizing that hey,
if our website is accessible tomore people, that's a better
customer experience, that'sgoing to generate more revenue,
which is better for our bottomline.
The other thing about thedigital experience is there are
certain.
So first of all, a couple ofstats.
Only 4%, the last statistics Isaw about 4% of all websites on
(17:42):
the internet are actuallyaccessible.
So there is a massive portionof customers that you're missing
out on because of that as abusiness.
But then you also throw intothat, like 80% of people like to
be in dark mode, whether ontheir phone or on their computer
and dark mode, you start tolose on a lot of functionality
(18:04):
and graphics and images as well,and where accessibility can
accommodate for that, and sothat's a great example where
there's been significant ventureinvestment, significant growth
and now they're starting to getto outcomes in terms of IPOs,
acquisitions, private equityacquisitions as well.
So I think that's a goodexample of a space, within
(18:27):
disability specifically, thathas shown that that you can have
successful exits.
Kelvin Crosby (18:31):
When we think about some of the businesses, so
like when we look at digitalaccessibility I've been in this
space myself and it definitelythere's so much going on in it
because the general populationcan benefit from it and when we
think in those terms from a Exitbusiness, when we look at that,
(18:57):
we're seeing there's a lot ofopportunities besides just the
disability market that reallygrows it.
I mean, can you give us somesuccessful exits that actually
have occurred with theaccessibility first in mind for
people with disabilities, butreally had a bigger outcome?
Chris Maher (19:18):
Yeah, it's a great question.
That's the whole curb cuteffect concept, right?
So, where you know, years agoit was put into law that all
curbs had to have the cut inthem for people with largely
physical disabilities.
You know wheelchair users.
But the general populationloves it right?
Parents pushing children instrollers, the delivery person
(19:42):
who's got a dolly they've got topush up, you're walking around
with your wheelie bag fortraveling?
I know just personally.
When I'm walking in the streetsof New York I always go
straight for the curb cut whenI'm going up and down curbs
myself.
That's like captioning.
Closed captioning on TV.
I know the younger generationand me, now that I'm getting a
(20:03):
little older and my hearing'snot as good, using captioning
all the time.
That was obviously created forpeople with disabilities.
Speech recognition, so likespeech to text, is another
fantastic example of that wasbuilt for and developed for
people with disabilities.
The general population has seenamazing value in that and they
use it all the time.
Something as simple as atoothbrush the original electric
(20:27):
toothbrush was made for peoplewith limitations to their motor
skills and I don't know too manypeople that don't have electric
toothbrushes now and still usethe old school.
Do it yourself.
You do nice, Kelvin.
And so those are just a handfulof examples of technologies,
(20:49):
services, assistive technologiesthat were created and developed
specifically for the disabilitycommunity, that had that
curb-cut effect where they, overtime, became valuable and
useful for the generalpopulation, and so that creates
greater addressable market,greater scale in terms of the
good and the value you'redelivering to a greater set of
(21:12):
customers, which then leads togreater revenue opportunity,
which then leads to morepotential liquidity events, or
exits.
Kelvin Crosby (21:20):
So when we think in these terms, this is where an
Exit business is ideal, and Ithink, as we explore more with
the Investing in Accessibilitypodcast, we're going to see more
and more examples of what itlooks like from the really
(21:41):
building an Exit business,because that's what Investing in
Accessibility is about isbuilding an Exit business that
is scalable.
And I think the key word thatyou need to remember whether you
want to invest in accessibilityfocused businesses or you are a
business owner that is lookingfor investment you're going to
(22:05):
want to really analyze this.
Can this be scaled beyond thedisability market so that way,
all people can have access?
This is extremely, extremelyimportant when you are thinking
about an exit business, becauseonce you start bringing in those
(22:28):
investors, the stress levels ofgetting that thing to be a
three-time X return or more is aticking time bomb I say.
Because you only got so muchtime before you get your
investors not very happy withyou.
And next thing, you know yougot some challenges ahead of you
.
So, Chris am I missing anythingthat we need to make sure we
(22:56):
cover today?
Chris Maher (22:57):
No, I think I think you've, we've nailed most of it
.
If I was just going to kind oftry to summarize a few things,
for whether you're anentrepreneur or you know the
professional investors, likeventure capital capitalists,
this is stuff they know throughand through around addressable
markets and the ability to scalerevenue.
The multi-use, it's not justfor one population.
(23:19):
It can be good for the generalor a broader or multiple
populations, but maybe someonewho is more interested in
becoming an angel investor anddipping their toe into early
stage investing.
But, I think for entrepreneursthis is a choice and I think
that a lot of entrepreneursstart off by saying, oh well,
I'm going to have to raiseventure capital to help grow my
(23:40):
business.
That's not necessarily the case.
As you've shown, there arecreative ways to raise capital
or get access to capital.
Some of those are dilutive,like taking on angel investors
or friends and family dollars.
There's non-dilutive waysthrough grants and government
subsidies, and then there's justself-funding through the
(24:02):
revenue that you're generatingwith your business.
That's a slower path, it's amore organic path, but you
maintain control.
You maintain control of theequity of your business.
You maintain control of thestrategy and the vision for your
business.
You also maintain control ofhow much or little you want to
emphasize the social good thatyou're trying to deliver with
(24:23):
your business.
Okay, all of that is withinyour control.
What you give up as theentrepreneur is the ability to
grow your business more quickly.
Maybe you're limiting youraddressable market and your
financial growth and then that'sgoing to limit whether or not
you can sell that business downthe road.
And if you can sell it, it'sprobably going to be for a lower
price.
The counter to that is you'regoing to own a greater percent
(24:46):
of your equity.
So there's still the potentialfor a very good financial
outcome if you are able to sellit.
If you choose to, you may not.
So there are pros and cons tothink about on that side and
then on the Exit business side,again, it's a choice and if you
want to go big and you want togo hard and go fast, getting
that professional capital, notonly does the money help you to
(25:09):
grow the business, you can justhire more quickly, do more
marketing etc.
You can go to market and scaleyour customers and your revenue
more quickly.
But hopefully you're choosingprofessional investors that are
also going to bring additionalvalue to the table Operational
expertise, a network effect ofcontacts that they've got in the
(25:30):
industry for introductions,strategic thinking about your
product roadmap, additionalideas around going into new
markets whether that's industryverticals, other geographies.
If you choose wisely, thoseinvestors can bring more to the
table than just capital.
They can bring real operationalexpertise and strategic vision
and know-how to help you growyour business bigger and faster
(25:55):
to get you to that exit or thatliquidity event.
Now, as you said, there are somepotential cons to that where a
lot more pressure on you to growyour business fast, your
work-life balance is going tofall to the wayside pretty
quickly.
The social mission of yourbusiness may start to take a
backseat to your revenue growthand you are going to have an
(26:17):
expectation that you need to getthis thing to some sort of exit
or liquidity event sooner thanlater.
They're all trade-offs, they'repros and cons and I think
entrepreneurs sometimes don'tspend enough time thinking about
it.
And it's not just at thebeginning when you start your
business.
I think it's also periodically,as your business is hitting
certain milestones, to revisitthat conversation with yourself.
(26:41):
But at the end of the day it'sa choice, and I'm not here to
say that one is better than theother.
I happen to be in the businessof investing in Exitable
businesses, but I believe thatwe're going to be partners that
are going to allow them to drivetheir social mission equally
with their financial mission andgrowth.
It's choice to be a Lifestyleentrepreneur might be what's
(27:04):
best for you and your team andyour family versus another
entrepreneur who chooses to godown the Exit path because
that's the right choice for them.
You just want to make sure youbalance the pros and cons of
each before you make thatdecision.
Kelvin Crosby (27:17):
I mean at the end of the day, when you think
about See Me Cane, I still amgoing to have to weigh out is
investment a good opportunity oram I okay being creative in
different ways of building mybusiness?
At the end of the day, neitherone is wrong.
Each one of them has its ownchallenges and, as we wrap up
(27:38):
Investing in Accessibility, youknow what I always say go live
beyond you're a challenge andwe'll see you in two weeks.
Thank you for listening toInvesting in Accessibility, a
(28:02):
Samaritan Partners podcast wherewe invest in change for
accessibility, not wait forchange.
If you want to follow us, youcan find us on YouTube or
LinkedIn at @Samaritan Partners.
If you would like to invest inSamaritan Partners, email Chris
at chris@ samaritanpartners.
com.
If you'd like to learn moreabout us, go to www.
samaritanpartners.
com.
(28:24):
You can take the first step ininvesting in change by giving us
five stars and sharing thispodcast with everybody that you
know, so we can spread the word,so that we can give access to
all by Investing inAccessibility.
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