E283: Callum on Building Trust, Board Power, and the Agglomeration Exit Strategy for Entrepreneurs

Episode Transcript
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Speaker 1 (00:06):
Hello and welcome to the How to Acceit Podcasts, where
we introduce you to a world of small to medium
business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors,
and other influencers with the sole intent to share with
you what it looks like to buy or sell a business.
Let's get rolling and now a moment for our sponsors,

(00:33):
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(00:57):
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Speaker 2 (01:06):
Hello and welcome to the How to Exit podcast. I'm
your guest host Roger Glowski. Today we're diving deep into
the often overlooked human element behind building, scaling, and exiting businesses.
Our guest today is Callum Lang, a serial entrepreneur, investor, author,

(01:27):
and business innovator. Callum is also founder of the Veblin
Director Program and a community of global investment leaders called Guild.
His primary focus is M and A, which he does
through the Unity Group, and he's been involved in over
one hundred M and A deals and he's the author
of four best selling books, Progressive Partnerships, Agglomerate, Entrepreneurial Investing,

(01:55):
and Boardroom Blueprint. One common thread across all of his
work is his extraordinary insight into the psychology and motivations
of entrepreneurs and investors. With that, Calum, welcome to how
to Acces.

Speaker 3 (02:11):
Thanks Roje, looking forward to the chat.

Speaker 2 (02:15):
All right, well let's get right to it. To start,
would you explain what the Veblin Director Program is and
what is the Guild member?

Speaker 3 (02:25):
Sure. Let let me give you a bit of context.
So you mentioned that my core business is doing mergers
and acquisitions, and so myself and my business partner Jeremy
have been doing that for about ten years now. And
I think when you're doing the volume of transactions that
we've done, so as you mentioned, well over one hundred deals,

(02:48):
you start seeing problems and challenges and opportunities. Because we're entrepreneurs,
we see as opportunities. One of the things that I
was there's a lot of people on boards that were
not necessarily on them for the right reasons, or they

(03:08):
were very much on them for their own reasons rather
than representing all the stakeholders. And I also saw that
a lot of very talented people weren't ever getting the
opportunity to sit on board because the wrong gender, they
didn't look the right way, they hadn't gone to the
right schools, they weren't connected to the right people. Yet

(03:30):
they were hugely talented and much more committed to the
success of all stakeholders. And so one of the things
that I was kind of lucky enough because of the
M and A, I ended up on lots of boards,
and I started to see some of the sort of

(03:50):
ways that you can get in, some of the inside
tricks to get into a board and how to affect change.
And so I set up the Director program to help
leaders to basically get their first board seat, because that's
part of the problem is it's a little bit like

(04:10):
at the beginning of your career, nobody will give you
a board seat unless you've already got a board seat.
And so I set up Verblin Director program to help
people get their first board seats, and we've now got
well over two hundred and fifty people sitting on three
hundred and fifty four hundred boards around the world, and

(04:30):
it's great. It's an amazing community. And so that's that's
its own separate business, but its own team it runs.
It's very effective. Obviously, you know, some of those companies
then want to go public or work with my other business.
So that's a great value add But the other thing

(04:51):
that we noticed was when you start putting people on
boards one of our it's not enough just to on
the board. I mean, that's great for status and prestige,
and it can be quite lucrative. Ideally, you want to
be a great board member. You want to add real value.
And when you ask companies what's the real value that

(05:15):
they want from their board members. A lot of companies
are trying to raise capital, and what we were hearing
back from our members was like, I don't know anything
about raising capital, but this company needs to raise some money.
And so I've been raising capital for fifteen years. Mostly

(05:37):
it's a very painful, excruciatingly painful, frustrating tact. But in
recent years it sort of flipped the model on its
head a bit and started to have quite a lot
of success raising capital, and so I put together a
whole lot of content around how to raise capital, kind

(06:00):
of working back to front, starting with what investors want
and then working back to creating the investment vehicle for them.
And that's, as you mentioned, we've now got a great community.
There's around five hundred people in that community or building
their own networks of investors, learning how to raise capital,
sharing deals and so it was originally kind of to

(06:24):
solve a problem for the Veblin Director program members, but
obviously it's taken on its own entity and its own
life as well. So yeah, that's kind of those two communities.

Speaker 2 (06:37):
So you started out as an entrepreneur, but one of
the things that you recognized along the way is the
value of having a board of directors or participating in
other board of directors. So Veblence sort of adds that
component to building businesses. And the other is developing relationships
with investors and having an investor network and guild really

(06:59):
fills in that piece. So those are two main pieces.
Would you say that they're often missed by entrepreneurs and
growing their businesses.

Speaker 3 (07:07):
Yeah, and I think again taking it back to the
topic of this podcast, which is how to exit. You know,
oftentimes when founders reach that point when they want to exit,
and it's normally because they've reached a point of frustration
and they maybe start talking to buyers. You have to

(07:29):
think about it from a buyer's perspective. Buyers are looking,
you know, they're not going to buy anything unless they
trust you, and so building relationships before you ask for
something is really really important. But they also want to
know that the business is an ongoing entity even without you,

(07:50):
and a board is something that serves that purpose. So
I think people often entrepreneurs are quite sort of they
have a negative perception of boards because the sort of
the public perception of boards is that they're there to
stop you doing the fun stuff. So I think that

(08:10):
the way I explain it to Veblin members is, if
you're an entrepreneur, you build your business by taking risks
and trying new things, and most things fail and some
things succeed and you build it up, but you know,
the whole thing is held together with chicken wire and
masking tape. It's like it's incredibly difficult to build a

(08:34):
successful business and eventually you get to a point where
you want to step down from the day to day
running of the company, and now you need to trust
your baby to someone else. And that's very scary because
if that someone else uses their initiative and does something wrong,

(08:55):
it could destroy twenty years hard work. And so that's
kind of where the idea of boards came from, which
is like, Okay, I'll put a CEO in place, but
I want some sanity checks. I just want to make
sure that they don't do anything really crazy and destroy
everything that we've built up to this point. And so

(09:17):
that's kind of the idea that people think about in
terms of boards, which is they're they're there for good governance.
They're there to prevent anything too crazy happening, and that's fine,
and at a big company level, that's generally what they're
there for. What we tend to focus on with Veblin
Director program is at the beginning of the journey, and

(09:37):
it's about being a board that is supportive. How do
you help the company grow, how do you use your
contacts to help the company grow, how do you do introductions,
how do you become an advocate? All of those things
where it's important from an acquisition point of view is
that if I'm looking to buy your company, if you

(09:57):
are the only senior executive, you're CEO, the founder, you
carry all the cards despite the fact you telp me
you hardly work in the business, which is what every
entrepreneur says, but we all know it's not true. I
know that if you get hit by a bus, that
business is probably in trouble. Whereas if there's a board
of directors in place, I feel like there's more continuity.

(10:21):
There's some people there that have responsibility for the ongoing
process of the business, and that makes the company more
valuable because it has that continuity.

Speaker 2 (10:32):
So there's a level of maturity in building a business
where it goes beyond the entrepreneur, the founding team, you
have an outside board, it starts to have more of
an institutional or at least more of a duration beyond
the life and the career of the management team. So
that's an important part of the process. I want to

(10:54):
focus a little bit on the trust element and really
the human psychology that's involved, because I think in your
most recent LinkedIn post, which really resonated with me, my
career really started out as a trusted business advisor. So
in your post you said the most valuable investment that
you can make is building trusted networks. And can you

(11:18):
expand on that? Why is trust in general so fundamental
when doing business and what do you mean by trusted networks?

Speaker 3 (11:26):
Yeah? So, look, businesses, everything in business is trust. You
know that, There's what's what's the slogan on the back
of the dollar note in God we trust or something?
You know, everything everything is about trust. And one of

(11:46):
the things you notice is the more people trust you,
the faster the whole process goes. And so, for example,
one of the things we talk about in Veblin Director
program is building your profile. When I was a young
entrepreneur and I would go and have meetings with successful entrepreneurs.
If I was lucky enough to convince them to meet

(12:08):
me for a coffee, I then had to spend the
first twenty minutes of that meeting selling myself, convincing them
that I was serious, that this is what I you know,
it was worth their time to have a conversation with me.
That's hard work. What you do when you build your
profile in public is people start to trust you already

(12:31):
because they start to hear your thoughts, your values, what
you stand for, how you deliver value, And so when
you meet them for the first time, they already know
that they can trust you on a certain element. And
so what happens is if you, for example, you read

(12:52):
this that blog post because you didn't know me, you say, right, okay,
this aligns with my values. Is someone I want to
do business with, I notice you as a product, or
I want to take my company public. We can get
straight into the logistics of is this a good deal
for me and you to be doing rather than spending
time on are you the right person to be doing

(13:15):
this deal? And so trust is really about increasing. The
more trust there is, the more velocity you get in business,
and the more velocity, the faster everything goes, which is
a key point. So in Uh Come in which book,
I talk about this. But one of my first kind

(13:36):
of realizations on this was when you're a young entrepreneur,
it's very difficult to build trust because you're young and
green and you've got no idea what you're doing. But
you can leverage off other people's trust. And so the
first time I realized this was when I was trying
to raise capital for my business as a young entrepreneur,

(13:57):
it's very difficult to raise capital. When I put a
board of directors in, I could leverage off their reputations.
I could leverage off the companies that they were working with.
So I had somebody from Google, so I could say,
I have someone from Google on my board that's incredibly valuable.
And it's a shortcut to an investor that, Okay, this

(14:19):
is not just some kid with an idea. Some kid
with an idea that's got some kind of tacit support
from somebody that's smart enough to be working at Google.
And so it's this idea of leveraging on trust and
leveraging on other people's trust where possible. So a board

(14:42):
is a very small network. I'm a fan of creating communities.
I think, you know, ultimately all the fun stuff in
business happens when people come together and start doing things.
And so if I take Veblen Director program I mentioned,
we've got two hundred and fifty plus people in that community.

(15:04):
They're all sitting on boards. By definition, they're all ambitious,
driven individuals. They're leveraging those board seats into other board seats,
so that network becomes more and more valuable over time.
And of course now companies are coming to me saying, hey,
how do we get in front of that network? We

(15:26):
would like to pay to get our message in front
of that network. So you can see a very tangible
value proposition there as well. So yeah, I'm a big
fan of building trusted networks just because it speeds and
speeds things up.

Speaker 2 (15:43):
In the two kind of work handed hands, you build
this trust that gets you onto a board, and by
being on a board, it creates credibility that gives people
more trust in you know, your experience and your knowledge.
So it's part of building a career, part of building
a business. You know. One of the things you mentioned,
particularly in progressive partnerships is really how to leverage relationships

(16:06):
and how to continually to you know, move up if
you will. And you have had a variety of different roles.
One of the reasons I was excited about interviewing you
was particularly because you've had the unique perspective of being
an entrepreneur, being an investor, being building networks of people
in a variety of different formats, being you know, an

(16:29):
innovator when it came to business models and knowing how
to take companies public and a variety of different roles
where you had relationships with vendors, customers, investors, you know,
et cetera. So along the way, you've developed a broad
range of tools and techniques that you use to develop

(16:51):
the relationship, to develop the trust. How did you acquire
that sort of range of sort of skills. Was it
it come naturally where you're just good at sort of
putting yourself in other people's shoes, or was a skill
that you sort of was hard won through a variety of,
you know, failed experiences.

Speaker 3 (17:11):
Yeah, I think it's mainly lurching from one failure to another.
I think one of the things that I've done throughout
my career is try and go one step beyond. So
if I'm if I'm trying to sell to a particular

(17:33):
type of individual, then I want to figure out what
are the problems that that individual has, because then I
can articulate my solution in the best way to them.
The thing with that is that as you do that,
you start to learn more and more about that individual,
You see more problems, and then you see other ways

(17:53):
to solve problems for them, and so you create a
new business around that. And so you kind of if
you track my career. A lot of it is solving
one problem and then going and that that gets you
into the heart of a of a particular client avatar,
and then you realize that actually they've they've got this

(18:15):
problem as well. So then you're going, well, okay, I've
already got a relationship with them, so why don't I
try and solve this problem. So if you if you
take if you take Unity Group, we had taking all
these companies public. We wanted to find good people to
sit on boards. We were finding people that weren't good people,
and so it just became easier to train people up.

(18:39):
Start with people with good values and leadership tendencies, and
then train them up and put them in and and
then the big thing that they needed most was that
they wanted to learn how to raise capital, and so
then you you add that component to it. So I
think a lot of it is just being open to
trying to understand what are the challenges that people are

(19:02):
facing and kind of work backwards from that. Ye don't
always get it right, but if you're not asking the question,
you'll never get the answer.

Speaker 2 (19:15):
Understanding other people's challenges is a real skill. Does it
involve human psychology? Does it really just relate about being
relating to people where you've had similar experiences? How do
you do it?

Speaker 3 (19:30):
So, I think you've got to start with a genuine
curiosity and trying to understand what is the issue or
what is the blockage point. I mean, I make a
point of surrounding myself with smart people, you know. I

(19:50):
think at the heart of Veblin or the heart of
Guild is this idea that if you surround yourself with
people that are already playing at higher level, it elevates you.
And so if I can continue to attract great people
into my communities, then it forces me to play at

(20:11):
a higher game. And you see that, you know, a
lot of the stuff that you're trying to figure out
yourself somebody else has already figured out. But yeah, I
think you just got to get curious. And I think
also being clear on who you want to work with,
I think is the probably the most overlooked piece. So yeah,

(20:35):
lots of people kind of parrot the advice of follow
your passion, and I've never been a huge fan of
follow your passion because the market doesn't give a shit
a passion about quite frankly, it only cares about what
it needs. And so what I think is far more

(20:56):
valuable is to say, who are the people that you
want to work with? And when you figure out who
are the people that you want to work with, and
then combine that with something that you have some innates
talent at, then it becomes much more fun because I mean,
we can all all think back, you know, if you
think back to when you were growing up and you

(21:18):
had some of those really terrible minimum wage jobs, but
actually some of your fondest memories are often from those jobs.
Like the jobs themselves were terrible, but messing around with
your mates doing the job was a bunch of fun.
So it wasn't actually the job, it was the people
that you're with.

Speaker 2 (21:38):
And so my first job was driving a truck and
we transported horses and it was mucking out the stalls
in the back of the trailer. It was not the
nicest job, but we had a lot of fun doing.

Speaker 3 (21:50):
It exactly right. And look, I did you remember those
VHS cassette tapes. I worked in a factory taking the
stick off those from the ones that have been returned.
Like that was as this hot factory in the summer,
listening to rubbish radio over and over again. But we
had so much fun because it was all young board

(22:12):
kids doing exactly the same thing. Now now I don't
want I've got my own two young board kids, so
I don't want to hang out with them. I want
to work out. I want to hang out with driven,
ambitious people that want to make a real impact in
the world. And so if you start by figuring out
the avatar that you want to hang around with, and

(22:37):
then look at the problems that they face, and it's
quite possible there's similar problems to problems that you face yourself,
then that I think that gives you a very good
basis and not just to monetize how to solve that
problem for them, but to come at it from a
place of real empathy because you understand, yeah, you care

(22:59):
about them, because you want to spend time with them,
and say you have that interest in that empathy in
their challenges.

Speaker 2 (23:07):
Well, I know that you also invest in companies really
all over the world, and you've invested in companies in Colorado,
so you might be familiar. Today was really the first
day of Boulder Startup Week. I don't know if you're
familiar with Startup Week, but the whole concept of startup communities,
which really kind of reached around grew expanded to cities, towns,

(23:32):
communities around the world. Is this started here in Boulder.
It was started by some of the co founders of
tech Stars. If you're familiar with tech Stars and the founder,
one of the co founders, Brad Feld. He's a venture

(23:52):
capitalist and he's written some books that I think aligned
with some of your thinking. So one of your concepts
is to value first, that you know, in developing networks.
He in developing what he called the Bolder thesis, which
was how to build a startup community, how to really
add value. They had this mantra of giving first, of

(24:16):
giving before you take. And there's also Adam Grant who
wrote a book Give and Take that's very similar and
very much aligned with you know your approach, which is
you know before you expect returns in order to develop relationships,
whether it's investors or others. There's an element to giving first.

(24:36):
How does that work? Why does it work?

Speaker 3 (24:40):
Yeah, it's weird because it's such an inherent idea. Now
it surprises me when when people still see it as
kind of new innovative look. I think it comes back
to this idea of trust. And so if you go
back to kill Darney's book on influence and the law

(25:04):
of reciperiosity, that's one of those key things that if
you give give first, then people are that there's a
social obligation for them to at least pay attention. And
you can see it, you know, at a very very
basic level when I talk to people about their LinkedIn strategy,

(25:26):
for example, how you do it. So a lot of
people will just go and try and connect to the
people that they want to connect with on LinkedIn. Now,
if you have any level of profile on LinkedIn, you
get overwhelmed with connection requests. And so, like me, I
ignore most connection requests because there's just too many of them.
Come in. If somebody has commented on one of my

(25:51):
posts two or three times and so we've had a
bit of a discussion on something, and then they connect
with me, then even if I I don't know, even
if they're not you know, necessarily a high profile connection
that i'd be looking for, I'm more than likely to
accept that connection because they've taken some time that they've

(26:15):
done something first for me by building traction on my post.
And so I mean that's a very very small example.
It's a very easy thing for people to do, but
it makes a real difference. And I think again it's
just kind of this this idea of the more trust
there is, the more speed there is. And I think

(26:37):
the bit that people get wrong is they often try
and shortcut the process. And so you know, if you
if you take the content that we talk about in guild,
the idea is that you try and build a relationship
with an investor. First figure out what it is that

(26:58):
they're looking for. What's the problem that they're trying to solve.
Is it capital appreciation? Is it yield that they're looking for?
Is it they're looking for safety? Are they looking for risk?
Are they looking for do they want to learn? What
are their objectives? Start with that and then go out
and try and find deals that potentially match that. As

(27:19):
opposed to what most people do when they are trying
to raise capital, which is they say, right, I've invested
a year of my time building this startup. Now I
need to find an investor that wants this startup, which
is kind of like looking for a needle in a haystack.
And so if you then kind of take the if

(27:41):
you take that through to sort of the pitching experience
of raising capital. And this is where the media doesn't help.
Things like dragons Den or you know that those pitching
shows give the impression to young entrepreneurs. The way that
you raise money is that you just have an amazing pitch.

(28:01):
And in fact, if you kind of google how do
I raise money, everything comes out Silicon Valley. It's like,
here's the uber deck. So just repurpose the uber deck.
They raise billions and then go and knock on a
thousand doors. What you do when you approach things like
that is you're not trying to build relationships. You're just

(28:23):
trying to be very transactional. You're just trying to hope
that you find somebody that's waiting to write a check.
And that doesn't exist in today's world, Like nobody's going
to write a check until they trust you. And so
if you say to somebody, what you need to do
is build a relationship with an investor, spend three months
getting to know them, and then tell them what you're

(28:46):
doing and building and how you could add value to them.
Most people won't want to do that because it takes
three months time. They'd rather just spend that three months
knocking on a thousand doors. Actually, yeah, you end up
saving time by building trust upfront, and I think it's

(29:08):
a difficult thing for people to get their heads around.
But if you can build those relationships ahead of time,
if you can start to have I think, if you
can start to think in terms of when you meet someone,
this person might not be valuable to me right now,
but at some point in the next twenty years, they
could be incredibly valuable to me. That's a much more

(29:30):
useful strategy and often comes back to you tenfold because
at some point down the line that there will be
some opportunities to work together.

Speaker 2 (29:41):
That's really a longer term view, isn't it. I mean
you're looking at over your lifetime, over a career you've made.
Actually a number of points. One is this long term
view that if you look at the you know, over
your lifetime, you're developing these relationships and they come back
to you over time. The other is that it's just easier.

(30:02):
It's just rather than going out and pitching to a
thousand investors hoping that they will like your company, it's
easier to get to know and develop a relationship with
the investor, understand what they're looking for and mold what
you're trying to build to fit them or to find
opportunities that would fit their criteria. So it's just an

(30:25):
easier flow.

Speaker 3 (30:27):
Yeah. And look the example I giving Guild, and it's
a brilliant example from the court records of when Elon
Musk was trying to get out of the Twitter sale.
But it's screenshots of his text messages to Larry Ellison,
And it was when he was looking to buy Twitter,

(30:48):
and he sent a message to Larry Ellison, the head
of Oracle, and said Hey, I'm looking to buy Twitter.
Are you interested in participating? And Larry said sure, how
much do you I think? And Elon's a you know,
one to two billion and Larry says sure, I mean, and.

Speaker 2 (31:08):
It doesn't get any easier than that, right.

Speaker 3 (31:12):
And but what's interesting is when I that's shocking because
the numbers are so big, but when I looked at
kind of the last half a dozen dozen investments that
I had made, they were all followed a fairly similar pattern.
It was people that I trusted had reached out to

(31:34):
me and said, Hey, I've just invested in this company.
You should take look, or you know that I can
get you an allocation into this company I'm already in,
and because I trusted them and because they were already involved,
it was very easy for me to say yes. And
you kind of contrast that with the idea that most
people have, which is if I send my pitch on

(31:58):
LinkedIn or or a colder email, that the investor is
just going to go, oh, you know what. I've got
absolutely no investment ideas, I've got nothing going on in
my inbox. But well, look, here's a brand new email
from a person I don't know about, a company in
an industry I know nothing about. But it's a very

(32:20):
compelling prech So let me write them a check. Where
do I send this check?

Speaker 2 (32:26):
Now, it doesn't happen that way. It has to be
a friend of theirs who's already in the deal, who
care exactly, who says there's no more room you can't
get in, and then that's the deal they want.

Speaker 3 (32:40):
Yeah, So look, Knowing that, then you start saying, well, okay,
I'm going to stop wasting my time spamming databases and instead,
how do I go about building real, meaningful connections and
investments and get those referrals from people that genuinely want

(33:01):
to connect me to the right people.

Speaker 2 (33:03):
Let's shift gears a little bit. This is another potentially
transformative topic. It's AI, which everyone wants to talk about today.
In fact, just today, your friend Daniel Priestley was featured
on Steven Bartlett's Diary of a CEO podcast discussing really

(33:24):
the profound impact of AI agents, and during the podcast,
Daniel described his experience of using AI for an M
and a transaction, really using it from beginning to end,
which he described as incredibly efficient and saved him at
least one hundred thousand dollars, probably mostly in lawyer fees.

(33:45):
But given AI's rapidly advancing capabilities and handing in handling
complex workflows, it can do data analysis, it can do outreach.
How do you foresee this technology affecting really the art
and science of building trusted investor networks? You know, as

(34:08):
AI automates more processes, really does the human element that
Daniel also emphasize. Do those skills of building deep trusted
relationships and understanding human motivations really do they become even
more critical for successful connectors?

Speaker 3 (34:29):
Yeah? I think so. I caught up with Dan in
Texas a couple of weeks ago and we were talking
about this because yeah, I think we're both fairly aligned
on this. I think there's you know, there's a lot
of talk about AI in the last couple of years,
but the reality is we've all been using AI very

(34:51):
very efficiently for the last twenty years. We've been using
it to give agency away. So Google uses AI very
successfully to serve us up for the best options when
we search for something. YouTube gives us all these selections

(35:12):
of what we should be watching next, and it's very
very good at it, as does Netflix, as does Spotify,
and so we have become excellent users of AI two
give choice away in return for saving time. When chat
GPT came out, really that was the first time AI

(35:35):
had been put into the hands of us as consumers
to actually use it with leverage. And I think what
is going to be very interesting is that you're going
to have a few people that become very very good
at creating a lot of agency using AI, so they

(35:57):
get more and more powerful, and more and more sophistic
more and more ability to get stuff done. And the
vast majority of people are just going to say, just
take away choice, like, just make my life easier. If
it makes my life easier. I don't care, and that's
fine as well. But I think for those of us
that probably listening to a podcast like this, you know,

(36:19):
we want to be on the end that is delivering
more value and being more efficient and getting more agency
for it. I think the challenge that we have is
that it's the technology is developing so fast that it's

(36:39):
kind of difficult to even figure out where it's going
to be six to twelve months from here. So Elon
musk reckons it within five years it will be a
million times as powerful. Now that's kind of hard to
get our heads around, you know, It's we can kind

(37:02):
of get our heads around. Okay, it's twice as powerful
as it was this time last year, but a million
times as powerful. So one of the LinkedIn posts I
asked a while ago was basically the prediction is that
within the twelve months from now, talking to AI will
be like talking to someone with the entire globes knowledge.

(37:26):
So it's basically like talking to God. So the question
is what do you ask somebody that knows everything? And
for most of us, that question is just too overwhelming, Like, yeah,
what do you ask? Like asking them? How you make
an extra thousand dollars this month seems a little bit trivial.

(37:46):
Asking them how you solve world peace might be too
like it. It's a little bit overwhelming and so.

Speaker 2 (37:53):
But you kind of have to separate out sort of
the consciousness sort of you know, this concept of you know,
a g I, you know, general intelligence versus uh, you know,
this sort of knowledge base all the data in the world.
So there's this human aspect of being able to think autonomously,
being able to uh have seemingly consciousness, and I think that's,

(38:20):
you know, to some extent, where the industry may be going.
But then there's this huge volume of data that no
one person could you know, retain or know everything, and
you kind of have both. We're not at the consciousness
level yet, but we're seeing so much progress that people
are talking about it and there's.

Speaker 3 (38:38):
Yeah, yeah, and I don't think I mean, like, I
don't think this is the forum for for that conversation.

Speaker 2 (38:48):
Well, but I think it is the extent of trust,
you know, in terms of developing human relationships, and this
idea of consciousness is is really the part of the
human to human connection. And you know, you're dealing with
human as opposed to a machine.

Speaker 3 (39:07):
Yeah, So I think that's kind of where I come
back to this, is that the tech is developing so
quickly and trying to predict what industries are still going
to be around in five years time, what roles are
still going to be around, is very difficult. I think
the things that will become more valuable are those human

(39:28):
connections and those human experiences. And I think you can
kind of see it being playing out in LinkedIn, like
people do the generic AI driven content post, but you know,
it's just fluff, you know, it's just kind of there's
nothing to it. Whereas if somebody starts a post talking about,

(39:52):
you know, something that happened to them in childhood or
a very real experience that they've had, we resonate with
that much more. And so I think those I think
that there is going to be a very large premium
placed on the power of personal connections and things that

(40:14):
can't be replicated by AI anytime soon.

Speaker 2 (40:17):
Makes sense. So let's bring it back to the human connection.
One of the areas that you were very innovative was
in developing this accomoration model, and one of the things
that's unique about it, again from this relationship building perspective
is that you created a model where you had multiple founders,

(40:44):
multiple companies inside of a parent company, and you had
to develop a trusted relationship with each one and align
the incentives of the business so that all the anti
these would be aligned, the interests of all the entities aligned.

(41:06):
It seemed to me that that model what made it
unique was that you thought about it very deeply about
how to build the relationships and how to be able
to persuade entrepreneurs that, you know, the entity as a whole,
the parent company's interests were aligned with the business owner's interests.

(41:28):
How did you develop the trust? How did you get them,
the founders, the entrepreneurs, the companies to be comfortable with
working with you in that kind of a context.

Speaker 3 (41:41):
Yeah, so let me give some context to listeners. So
the agglomeration model is basically, we take a hold co
public and then we find owner operated businesses, typically old
economy ten twenty year old businesses, profitable cash generating in
things like boring, industries, accounting, transport logistics, that sort of stuff.

(42:05):
Those founders swap their private stock for public stock that
they carry on running the business. So, unlike private equity,
we don't put in a thirty two year old with
an MBA to tell them how to run their business.
They carry on running the business the way they've always
run it, and in effect, what happens is they become
co owners of a group of companies. So you have
a it's like a cooperative of small business owners that

(42:28):
all have a vested interest in each other's success. But
nobody can tell the other person how to run their business,
and no one can tell you how to run your business.
And so look, that's one of those things that sounds
fantastic on paper, and then you realize that business owners
are by definition bloody minded. Otherwise we wouldn't have got

(42:53):
to where we are, and so putting a group of
them together can be a little bit like herding stray cats.
And so some of it, some of it we developed
prior to launching the model ten years ago, came out
of the fact that we were small business owners. So
it's like, you know, what did we want? We wanted

(43:16):
The reason we built the model was that small companies
get unfairly penalized. It's very difficult, it's not a level
playing field. If you're a small company, you can't win
big contracts because big companies won't give big contracts to
small companies. You can't win the talent battle because you're
competing against big companies with much bigger resources, and so

(43:39):
small companies get stuck in this scale paradox and so
by putting them into a PLC, that solves that. So
we started with trying to solve a problem that we
faced as small business owners. We then had to say, okay,
how do we get this aligned self interest? And again
it kind of started off with saying, well, all right,

(44:01):
if we were going to try and exploit this system,
how would we exploit it? And you know, entrepreneurs by
definition always liked to push the lines and test the
boundaries and things. So the way that we set the
model up was every company is working on a perpetual

(44:23):
earning model, so the more profit they contribute to the group,
the more shares they earn. But then you realize that, okay,
you could game that system a little bit, so you
could put all of your expenses in one year and
so it goes down and then you have a very
profitable year and you get a bunch of bonus shares.
So we introduced a high water mark so you can't

(44:46):
to get your bonus shares, you have to have reached
a previous benchmark. And so a lot of it sort
of evolved over time, and we had some very smart,
smart people. I think the nice thing about it, you know,
like I said, we've done over one hundred transactions, so
over time in different groups, that's been one hundred people

(45:08):
thinking about this problem and thinking about, well, how do
you solve this in the most equitable way? And yeah, look,
I think it's I think it will always be a
work in progress. I mean I started a few years ago.
I started working on kind of a bunch of work

(45:29):
looking at companies that survive hundreds of years. Because in
modern society, nobody talks about longevity of companies. Everything is
about growth. So Wall Street is all about growth. You know,
the longest Wall Street can think about is ninety days.
Silicon Valley is all about growth. It's like you do

(45:51):
one round, to do a second round, do a third round,
do an exit like that. That's it. Nobody's talking about.
Is this company still going to be here in five
years time, or ten years time or one hundred years time.
And so I started looking at and this kind of
ties back to the boardroom stuff. You start looking at governance,
how why are some companies still here after hundreds of years?

(46:15):
Why did some companies last one thousand years and then
suddenly disappear overnight? Like what are the differences? And so
a lot of kind of what we built into the
agglomeration model is really around taking those best practices of

(46:36):
building for longevity rather than growth for the sake of growth,
which is kind of counterintuitive in today's market, but we
because we can do so many acquisitions, we get our
growth very quickly through M and A and then the
focus on the internal governance of the company is much

(46:57):
more sort of measured growth, which hopefully gives it longevity.

Speaker 2 (47:02):
Well, that's a consistent theme I think in some of
your comments is that you're looking at more of the
long term view and the long term value. Is that
also built into you know, the trust relationship. Let me
ask you this question about the aggomeration model. Do you
think that people were trusting in the model itself as

(47:24):
being self perpetuating and working to for everyone's best interests
and that the consensus with you know, you know, one
hundred people working together would solve the problem, or do
you think they were trusting in you and the people
who conceived of the model to lead them in the
right direction.

Speaker 3 (47:43):
So I think it's it's a combination of both. Say,
they've got to believe that the model is going to
work for them, first of all, because when they first
come into it, they don't care about everybody else in
the group. They just want to know that they're going
to be better off in the group. And so if
they can see that they can win bigger contracts, if

(48:05):
they can see that they can have some liquid stock
as opposed to being completely illiquid as a small business,
that they can be part of something bigger, that they
can have smart people around them with a vested interest.
All of those things are things that they're going to
take from it, and so they have to be sold
that that's going to be in their best interests. Going

(48:29):
back to the sort of concepts of progressive partnerships, which
is all leveraging off, starting small and then leveraging off.
The first deal is always the hardest deal to do.
The second deal is much easier because you've already got
one deal in So when we've got thirty companies in
the group, convincing another company to join the group is

(48:50):
relatively easy. So it sort of gets progressively easier because
there is that default trust. Well, okay, thirty other companies
have already come in, you know, the whole thing sort
of builds momentum, and so yeah, look, I think it
has to be a combination of things, and it has

(49:12):
to it always has to start with solving the needs
of the individual first and then then they can look
at the bigger picture after that.

Speaker 2 (49:24):
So you really pioneered this agglomeration model. Where do you
think it is today?

Speaker 3 (49:30):
Do you?

Speaker 2 (49:30):
You had mentioned it's sort of always evolving. What are
your what are your current thoughts on the situations in
which the agglomeration model would best fit?

Speaker 3 (49:41):
So I think so. I mean, actually, if you look
at the most successful investor of all time, he has
an agglomeration model, which is we're in Buffett basically bought
companies and so just keep running them the way you've
always run them, like I don't want to get involved,
Like wouldn't buy it unless it was a good company,

(50:01):
and so we just did that. But we focused on
much smaller companies. I think we built it very much
from the bottom up to solve a problem for small businesses.
And then some of the mistakes that we made, and
I like to think we've made every possible mistake along
the way, is we just sort of followed best practice

(50:23):
for the capital markets, and what we discovered was the
capital markets aren't actually particularly healthy for small businesses microcaps,
small caps. And the advice that the investment bankers give
you is basically, do what big companies do, So follow

(50:44):
the best practice of an Apple and a Berkshire and
a Meta and stuff, and that actually doesn't make sense.
It's you should do that when you're a big company,
but you're not a big company. So trying to play
big company games when you're a small company is faith
And so the biggest sort of jump in shift in

(51:05):
understanding came after about eight years of doing this, when
we sat down and said, okay, let's do this. Flip
this on its head. So what we've done is we've
built this from the small business up and it's very
very successful. It helps small businesses grow. Now, let's flip
it from the point of view of an investor. If

(51:26):
you were going to invest in a new public listing tomorrow,
what would you want from that company that would make
this an unbeatable investment for you? And basically what we
realized was that as an investor, you as you really
don't care about the company, You care about the other investors,

(51:48):
So you want more people to want to buy that
stock than want to sell that stock. Really, that's all.

Speaker 2 (51:58):
Okay, So my pologies, So we seem to have lost connection. There,
we're back. We almost were ready to wrap up the interviews,
so we'll just ask you one more question. Thank you
very much for our indulging with the technical issues. But Calum,
I wanted to get your sense that really, given the
market conditions I think, you know, particularly in twenty twenty five,

(52:19):
really we're in an uncertain economic climate, geopolitical tensions. They're
affecting business relationships between entrepreneurs, investors, acquirers. Is it making
it harder to build trusted relationships or perhaps is it
even more critical you know, to have that ability to

(52:40):
bridge the gaps. What's your thoughts on where we are
in the uncertainty?

Speaker 3 (52:44):
Yeah, Look, I think there's always uncertainty. I think we
all kind of have this idealized view that things were
easier before. But yeah, whether it's COVID or terrorism or yeah,
there's always something that we're brexit whatever, we're always lurching
from one thing to another. I think, you know, for entrepreneurs,

(53:09):
uncertainty creates value differentials, and value differentials is where we
make our money, and so uncertainty on its own is
not necessarily a bad thing. I think the what you
want to be able to do is to capitalize on
it as quickly as possible. And that's where trusted partnerships
come in. So you know, if people know that, if

(53:32):
they know you and they trust you as someone that
gets stuff done, then they will come to you when
they have opportunities. And that's basically the heart of the
whole idea. So yeah, look, I think we are in
uncertain times, but I'm not expecting that to ever change.

(53:57):
But I think putting some surrounding yourself with good people
that you can rely on to deliver means that you
will always be in a position to profit from that uncertainty.

Speaker 2 (54:10):
Well, this has been fantastic, Calum Wang. Thank you so
much for sharing your deep insights, particularly into developing strategic
relationships and navigating the human side of business. And I
want to thank Ron Skelton for giving me the opportunity
to host today's interview with that I hope to see
you again, and for those who want to connect with me,

(54:30):
you can find me on LinkedIn just Roger Glovski. So
with that, thanks very much,

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