A reflection on “Winning Angels: The 7 Fundamentals of early stage investing” by: David Amis and Howard Stevenson
“Start with the end in mind. ”
Stephen R. Covey, The 7 Habits of Highly Effective People
As a winning angel, you may go into each investment opportunity for the same reasons, but with an open mind you will get different results. Regardless of how you end, you should have a plan for that end when you begin the investment.
Recently, I was watching an interview with founder of Carol’s Daughter, Lisa Price. She talked about how some of her supporters were very upset with her when she sold her business years after success. She said it was always the plan to sell. REPEAT. She went into business with the goal of one day selling her business.
That was surprising because most people are invested in their ideas and want to see the success forever. But, you can see success forever with a business you started. It just may not be in the CEO seat.
I did a little digging on Carol’s Daughter and found information I would have never thought to look up had I not read this book and learned about harvesting. Crunchbase.com didn’t have all the information that I would have liked to see, but what I learned was this:
Company Name: Carol’s Daughter
Founded: 1999
Acquired by L’Oreal: 2014
IPO Status: Private
Funding Rounds: 3
Total Funding Amount: $18M
Funding Status: M&A (Merger and Acquisitions)
# of Lead Investors: 3
# of Investors: 10
Among the investors list is Will Smith and Shawn “Jay Z” Carter.
In other words, all positive. Carol’s Daughter has been fortunate not to have to deal with negative harvesting (Chapter 11 or Chapter 7).
Great post, Elaina. Just last night I was reflecting on the importance of beginning with the end in mind, regardless of the endeavor. In doing so, one may be able to begin scaffolding possible workarounds for likely hurdles that will come up in the future.
I also appreciate you including the information about Carol’s Daughter and the founder’s realization that many of her supporters were upset with her when she sold the business. I have seen that time and again, most recently when a friend of mine chose to sell his craft brewery to a large bottling and distribution company. People were irate because this decision didn’t fit what they wanted for the business, nevermind the fact that most of them had no part in building it in the first place. This is an important reminder that doing the right thing isn’t always popular. But again, if you have a goal in mind from the beginning and a plan to get there, outside pressures are less likely to influence your decision-making process.
Elaina,
Great job finding a real, and relatable example. Just checking Wikipedia on Carol’s Daughter, that’s really cool that Lisa Price started the business as a side hustle. I think one of the key take-aways from this book and my SME interview is that investors need to have some proof that you’ve got a good idea, and people are buying or ready to buy your product. They won’t invest at the idea stage, but pretty close to it if you can show them some proof a good product or service.
Thanks, Tripp!
I love the Carol’s Daughter story. It is true inspiration of what can happen when passion meets hard work.
You’re right. An entrepreneur would be hard pressed to get investors off of an idea alone. There has to be real time examples on how the investor will see a return.
Wow, Elaina! That was a great post and I’m glad I stopped by. Your post really put things into perspective for me (because thinking from the entrepreneur’s perspective) I had a difficult time understanding why exactly an entrepreneur would want to sell their company. I completely forgot that this is not a bad thing in some cases ( I think I was thinking along the lines of being forced to sell the company because things are just simply not going as planned). This information on the Carol’s Daughter brand was helpful because it certainly showcased that not all harvests have to be detrimental to the business. This company is still thriving and with investors like Will Smith and Jay-Z on board, it brings further value and the necessary support to the organization’s branding; and, will facilitate profitability for years to come. Nice work!
TK,
Thanks so much! I really try to comment my learning and thoughts to real life experiences and stories that I have read. I have followed this story closely because I have met Lisa Price (founder of Carol’s Daughter) several times. We have never talked about her company, but her spirit is so genuine. She makes me want to support her. She is still very much so involved in the inner workings and decisions of her brand, it’s just at a new level! I shared this story because it truly inspired me to think differently when thinking about approaching and planning the future of my business. Even with that, I still have a hard time thinking of the day that I will not be in complete control of what I put so much time and effort into. I guess it really just depends on how long you want your legacy to live on.
Best,
Elaina
Great post, Elaina. Just last night I was reflecting on the importance of beginning with the end in mind, regardless of the endeavor. In doing so, one may be able to begin scaffolding possible workarounds for likely hurdles that will come up in the future.
I also appreciate you including the information about Carol’s Daughter and the founder’s realization that many of her supporters were upset with her when she sold the business. I have seen that time and again, most recently when a friend of mine chose to sell his craft brewery to a large bottling and distribution company. People were irate because this decision didn’t fit what they wanted for the business, nevermind the fact that most of them had no part in building it in the first place. This is an important reminder that doing the right thing isn’t always popular. But again, if you have a goal in mind from the beginning and a plan to get there, outside pressures are less likely to influence your decision-making process.
Trip,
Excellent thoughts and thank you so much for your response. Selling a business that others have invested in, in different ways, can definitely be a “touchy” subject/topic/decision. This is just another example of why business isn’t for the faint at heart and some decisions will be unpopular to some. In other ways, it may actually be the best thing for the situation! If you sell your business to a company/entity that has more resources to catapult it to the next level AND you can still benefit from it, that doesn’t sound terrible to me. With the methods of supporting, there are still other ways to stay involved.
Elaina
Your comment about the plan always having been to sell the business struck home for me. Before this course, I have always considered a business enterprise to be a project that should last until it burns. But I am realizing now that creating a company with the purpose of handing it over to someone else opens up a lot of possibilities. I have had issues with letting go in my life, so it is no surprise to me how I viewed these ventures originally. But now that I know that letting a business go isn’t the end of the world, I think I am better prepared to come at these projects with new strategies, in the hopes of presenting a product that someone else would care enough about to take it to that new level.
Colby,
I can relate to your response on so many levels! It didn’t occur to me that someone would create something to let it go either…the thought FEELS counterintuitive, but now I know that it’s not! You put that very well, “letting a business go isn’t the end of the world, I think I am better prepared to come at these projects with new strategies, in the hopes of presenting a product that someone else would care enough about to take it to that new level.” Wow! I love that thought. We won’t last forever and it isn’t guaranteed that our children or nieces and nephews will want to continue our legacy, but it doesn’t mean we can’t create a structure that will still allow them to benefit from our hard work and to hopefully have the means to create their own dreams.
Thanks for stopping by. I enjoyed reading your comment.
Elaina
Great post on Harvesting! I enjoyed reading about the Founder of Carol’s Daughter, Lisa Price. It was a nice touch to include the information from Crunchbase.com
The only reason that I can think of that consumers would be upset about the selling of a business is if the product changes under new ownership or if they are afraid that it will in the future.
Hi Elizabeth!
Thanks for stopping by ! It is always nice to see your responses to my post.
I think your right about why they would be upset. Also, in this case the consumers were upset because this was a black owned business that consumers were very proud to support. When she sold to L’Oreal, many didn’t consider it black owned anymore. I have mixed feelings about that notion, but mainly I disagree with the “angry” consumers. That’s another topic for another day!
Elaina
I think your opening statement summarizes nicely. You need to be sure what the investor’s goal is before investing. Check with them to see if they even what to sell, and if they want to sell what their exit strategy/condition is. Since my business idea is small, I don’t ever see myself selling or getting investors but I learned alot about the process in this class.
Thanks for stopping by, Jacob.
You never know what the future holds. What you business is now may not be what it is in five years. If at that time something magical happens, it’s always nice to keep an open mind of the possibilities and if you can make a few extra (million) along the way…why not!?