Watch a climbing stage of the Tour de France bike race and you’ll see the world’s best cyclists performing a cat-and-mouse game as they ascend a mountain pass on an 8-10% grade. One climber will pull away from the relative safety of the pack, exposing them to the wind, only to be caught by the peloton a few seconds later.
Why would a climber spend so much energy to pull away if they know they will be caught? Because the climber’s breakaway tenderizes their prey, softening them to future attack.
Each breakaway takes a toll on the chase riders. Every time a climber sprints ahead, the pack must follow, and the riders are weakened. Even a lowly domestique can match one acceleration from an elite climber, but each acceleration by the lead rider becomes harder and harder for the weaker riders to follow, leaving them vulnerable to a future attack. Finally, the peloton is weakened to a point where they can’t cover the acceleration and the lead climber sprints ahead for good.
This kind of tenderizing is not limited to elite sports. In business, you may be determined not to sell, but if you experience enough hardship, you may soften to the idea.
How Jon Claydon Warmed Up to the Idea of Selling
In 2013 Jon Claydon started Streamline Marketing to help brands manage their affiliate programs. Claydon bootstrapped his business to around 30 employees but avoided hiring for some senior roles in favor of doing much of the work himself.
Thanks to Claydon’s lean approach, his business enjoyed 50% EBITDA margins, but his scrappy approach eventually took its toll. In 2019, at the age of 35, Claydon was diagnosed with shingles, which is a viral infection that can cause a painful rash. Claydon kept working through the pain. Days later, Claydon began experiencing soreness in his throat. Unbeknownst to Claydon, the rash caused by the virus had spread to his throat, which had begun to close.
Claydon was rushed to the hospital. Doctors recognized the virus was constricting his throat and immediately began working to try to save his life. The doctors were able to open up Claydon’s airways, but the experience changed him. Claydon spent several days in the hospital, which allowed him to reflect on his lifestyle. The doctors explained that when younger people are diagnosed with shingles, it is often due to stress. They encouraged him to slow down.
Claydon left the hospital determined to win some balance back in his life. He decided to sell his business to a private equity group doing a roll-up in his industry. Claydon received 70% of his proceeds in cash while rolling 30% of his equity into a new entity controlled by the acquirer. Claydon sold for enough money that he never has to work again, but he continues to be employed by his acquirer in a business development role because he enjoys it.
The moral of the story? Never say never. You may reach a point where life’s tenderizing may make you open to the idea of selling.