Beginning With the End: Using First Principles Thinking for Success

Alana Muller 0:09
Welcome to Enterprise.ing, a podcast from Enterprise Bank & Trust that's empowering business leaders one conversation at a time. We'll hear from different business leaders about how they found success in cultivating their professional networks and keeping them healthy and strong. I'm your host Alana Muller, an entrepreneurial executive leader whose primary focus is to connect, inspire and empower community. We at Enterprise Bank & Trust thank you for tuning in to another episode.

Alana Muller 1:23
Hello, listeners, welcome back to Enterprise.ing podcast. My guest today is Jared Ribley, managing partner of Capstone M&A. Jared’s background spans over a collection of career categories, including business ownership, territory development, sales and management. At the start of his professional career, Jared’s efforts were focused on understanding the operational needs of numerous Fortune 500 clients. As a result, he was able to bring that relational acumen into the environment of his own companies. In 2011, Jared was introduced to the world of private and confidential business sales. The array of skill required encompassed inside of the brokerage business quickly became a rewarding mainstay. Since then, Jared has successfully sold over 100 businesses and more recently formed Capstone M&A with his partner and mentor, Kevin Short. Jared Ribley, welcome to Enterprise.ing podcast.

Jared Ribley 1:32
Hi, thank you for having me.

Alana Muller 1:34
I'm so glad you're here. You know, I have to admit, having been in the M&A world myself at one point, I know that traditionally, intermediaries make their clients available to an existing market for M&A consideration. But Capstone seems to thrive on creating a different type of market for every client. Tell us more about Capstone M&A and its unique approach to marketing its clients.

Jared Ribley 1:56
So, thank you, Alana. Capstone M&A focuses on the one- to 20-million dollar enterprise valuation space. We are a little bit regional, just because a lot of what we do is still in person, but we're not bound by geography. And, furthermore, the antithesis of what we were after was that a lot of times, that one- to 20-million dollar space is a little bit maybe too complex for typical “Main Street” business brokerage, and often not large enough for the investment banks of the world. So unfortunately, that level gets looked over, and maybe underserviced too often. So, that was kind of the design. And then, as you mentioned, who you're marketing to, should determine how you market. So understanding who's on the other side of the deal should dictate your behavior more than maybe you would think about initially.

Alana Muller 2:52
Yeah, I love that you are basically giving a voice to companies that, I love how you put it, that on the one hand, maybe they're too complex for certain investors or potential purchasers. And on the other hand, too small for those that have the funding and ability to do this. So it's like you're filling in where there's a gap in the space. And I think that that serves both sides of the transaction well. Is that what you're finding as you engage with different kinds of organizations?

Jared Ribley 3:21
That's exactly it, yeah. Especially when you start reaching or going through that lending ceiling of five million that the SBA has, then it gets to be a little bit desert-like. So understanding how to navigate that situation really has been valuable.

Alana Muller 3:36
Have you found that there's a particular type of company or industry that has become, I don't know, an area of expertise, or a place where Capstone can play most effectively?

Jared Ribley 3:47
HVAC… what we have the most experience or backlog with is manufacturing, trucking, niche service providers, some medical spas. Those are kind of hot industries, for whatever reason, maybe driven by private equity and institutional capital. We come across those quite often.

Alana Muller 4:09
One of the things that I'm curious about, it's a place that I know that you're working, is that sell side business, you have a platform that I know you're part of called “Ready For Exit.” Can you talk about what that is and how you leverage it to serve your clients?

Jared Ribley 4:23
Yeah, thank you for asking about that. So the Ready For Exit was a culmination of over a decade of headaches, and it was born to solve a problem, basically. You know, with you having background in the industry, sometimes it's a little bit like the Wild West, and you know, especially when you get to the closing process, and it's just chaos, and it takes a village, but how do you shepherd that process? And so anyways, basically, we designed a platform that's digital in nature that kind of begins with the end in mind. So, we took every cratering point at which a deal tends to fail, and we reverse engineered it to begin with that question to vet out the landmine before going to market. And so, ideally, once we get to market, we've already scripted this narrative. And we understand kind of a SWOT analysis, we understand the strengths, the weaknesses, etc. And we can navigate that better at that point. So, yeah.

Alana Muller 5:29
That seems like such a reasonable way to go about doing business that, you know, it's funny that something like that hadn't been created before. Do you walk clients through that together? Or is that something where they go through, I don't know, they go to your site, or to the platform itself and they answer the questions one by one, and then it comes to Capstone? Or is that something that you walk them through from the start?

Jared Ribley 5:55
So, it's a part of our client onboarding services. So, I and we will sit down with the client, take them through the process, and every question has four predetermined answers. So, we know who we're dealing with. You know, these are Type A personality entrepreneurs, you can only probably have them captive for like an hour at a time. So, we had to make it very simple and effective, as well, as simple as effective. And so we sit down with them, and we go through the questionnaire with them. And at the end, there's actually a grade for completion. And the completion rate ties into our overall valuation. Because a lot of times, and I'm sure you can appreciate this, but if you look at business valuation from any Google search, you're going to get the traditional response, at least on the first page, which is it's a multiple of adjusted earnings. Like okay, well, let's go figure out that math problem. What Google may not tell you is that, yes, it's that, that's the basis. But everything after that financial analysis and valuation has everything to do with mitigation of risk and derisking. That's kind of what the program is designed around it. And yes, we sit down with them and take them through it.

Alana Muller 7:13
Very neat. That's great. You know, to shift gears a little bit, my personal area of focus these days is really about relationship building, building authentic relationships, and, and using that to generate more satisfaction in business and in life. And so, I'd love to hear from you both on a professional level and on a personal level, how have you been able to cultivate authentic relationships in the communities that you serve that, you know, lead to these long-term relationships that you have both with sellers and with buyers of companies?

Jared Ribley 7:44
That's a good practice and good philosophy, and I like how you stated that. I would say, I like working with people who keep the main thing, the main thing. Which is client satisfaction and ethics and things like that. So, quite frankly, I attach myself to those people, regardless of their personality or their personal interests. I like working with people who keep things very simple and focused. And in our world, the client is always, you know, within our circles of influence, whether it's wealth management, CPA firms, transaction attorneys — our person, the person that we're building the village around, is the client. And so, as long as that's the number one priority, I think most other things fall in place.

Alana Muller 8:31
Great response. I think, I'm not surprised to hear that based on the businesses that you're operating in. And one of the other things that I know you're involved with is an entrepreneurial initiative that has particular interest for me, and that's the Spark Tank. It's my understanding that it's designed to cultivate the mindsets of future business owners who may not have the current human or monetary capital necessary to really get business off the ground. Can you talk about your work with Spark Tank and how you arrived at the idea and what those participants are like, who they are and what kinds of businesses they're trying to form?

Jared Ribley 9:06
Yeah, so you said this was a two-hour podcast, right? Now, that one's an interesting topic. So, a few years ago, when the unrest happened, and I think everybody was kind of reaching for who am I, how do I help, etc. And that sharpened me a little bit and I thought, well, sure, I can solve the world's problems over a cup of coffee, but what's the actualization of that? Like, how does it go beyond a conversation? And so I started looking at what I know and leveraging my talent, my level of whatever I'm bringing to the table, and I thought, I looked at the, the economic, I guess, climate in America in general, and I thought, why don't these underserved communities… what is it about these communities that strangleholds them? Like, why, why do some communities make it, why do…

Jared Ribley 9:58
…And it was interesting because what I landed on was an economic response. And that was, well, the underserved communities don't really have an economy.

Alana Muller 10:10
Right.

Jared Ribley 10:11
I mean, you just, it's kind of obvious. And I thought, well, why is that? And a couple things led to the other and this domino effect of thoughts happened. And I was like, well, what did they lack then? And I landed on a strange answer. Because one, the obvious would… you'd probably say something like, well, they lack business loans, or they lack revenue, or… what they lack is safety.

Alana Muller 10:35
Yeah.

Jared Ribley 10:36
And so what's interesting is, if you approach it from that standpoint, and instill entrepreneurs and small businesses in those communities, they will start to spend within the community more and more.

Jared Ribley 10:52
And it's the thing that happens that the money stays in versus going out. And it provides jobs and then taxes, and then schools and then policing, and then all of these things kind of fall into place. So, strangely enough, it begins with small business, in that regard. I had what I thought was kind of an epiphany, not the only one that ever realized that. But, so well, how do you do something with that? So, I reached out with a local 501, here in St. Louis, called Civil Righteousness. I was already connected to them a little bit working with their economic division. And then I cultivated a relationship with Dave Geenens, who is the business professor of a Benedictine College. And the three of us got together and just started writing this script and building out this model. We had our first event last year, and it went really well. It taught us everything that was working and not working. And now, moving forward, the curriculum is going to be digital in nature.

Jared Ribley 11:50
So, it's going to be more scalable. And basically, we take people through how to write a business plan. And then at the end, there's an event where they pitch their idea to a group of people. And then, I mean, sure, funding is great, but, the real kind of goal at the end of the candidate's journey is to get what I call a listing with EquityVest. And EquityVest is a 501 that kind of acts almost like BizBuySell.com, but it's a 501, so all of your donation dollars are tax deductible. So, you can go fund your neighbor's business at the end of this. And so anyways, it's a very, very interesting thing. And we're looking forward to 2.0.

Alana Muller 12:35
Well, I love what you're doing. I think it's hugely important. And it reminds me of something a friend of mine said. He talked about the fact that often what underserved communities lack is access, they lack access. And so when you talk about sort of people being driven by fear, I think that's exactly right. There's a fear, you know, on both sides, right? So, I think the fact that you're providing access, you're providing education, and you're providing information and some credibility that people often don't have. You're using, what my friend said was, you're using your privilege in the right way. You're using it to help advance people and their companies. So bravo for what you're doing. It's great.

Jared Ribley 13:18
Very well said. Access is such an encompassing word, even if privilege was earned.

Alana Muller 13:24
Absolutely.

Jared Ribley 13:25
It's, I mean, it's still kind of your responsibility to go leverage that for better things.

Alana Muller 13:32
Yeah, well, and it's doing something beyond seeing something on the news and saying, “Oh, that's too bad,” but then actually doing something about it. So, I really applaud you for that. So, along those lines, whether it's with Capstone M&A or with Spark Tank, what's something you're working on now that you're especially excited about?

Jared Ribley 13:49
Within or outside of those things?

Alana Muller 13:51
Either way, I think you're doing some really cool things. So, I’d just love to hear some projects you're working on.

Jared Ribley 13:56
Learning how to turn back the hand of time and how to get around the aging curve. That's ongoing. I think I'll probably end up getting a cold plunge next. But besides that, with Capstone, we're trying to build the scale. I'd like to ultimately be in a position to just help other people, meaning associates and other producers. So, we are building the scale and we're finding ways that there would not be any disruption in the level of service if we brought on another associate in Utah, for example. You know, we're kind of building the ark at the moment. So, that's pretty exciting. So, finding the right technology platforms, now that I understand the business model better being in it for 13 years or something, I'm like, well, I'm just always interested in how does this improve? So, I have been working on that quite a bit.

Alana Muller 14:53
Is there a particular obstacle that you've faced that you had to overcome, which made you a stronger leader? Or some advice maybe for emerging innovators who are facing similar challenges?

Jared Ribley 15:05
I would say, I don't know if it's my OCD or what it is, but I have gotten to the point where I think in terms of first principle. And first principle is, you don't reason to solve, you solve and then backup into reason. And so it's starting with the most important thing, like the end result. So, start with the end result and then backup. Start with the beginning with the exit in mind, kind of, and so taking that mindset and that vibrato into operations is very beneficial. People, generally speaking, they really do like order. They like anticipation, they like to know where the expectation lies. And the more process- and systematic-driven companies that you have, I think, the higher the results, the more measurable the results, and the better the culture. I mean, strangely enough, it occurs to me that strong processes actually create good culture, and that that's a component. But otherwise, you have people becoming very frustrated with even their own level of output at the end of a workday. So, the only other caveat to that is learning how to effectively communicate it to everybody else. That is just as important as, you know, figuring out the thing.

Alana Muller 16:29
So, you might have the answer, but unless they understand, it doesn't really matter, right? Well, and I like how you said, you know, begin with the exit in mind. It's sort of the Stephen Covey version, or the M&A version of Stephen Covey, I guess is what I would say. So, so smart. [Crosstalk]

Alana Muller 16:45
Well, one of the things that I noticed as you and I began getting to know each other is that you call your Capstone M&A co-founder, Kevin Short, your mentor and I know he's somebody in your life who's had a meaningful impact both on you personally, and from a career perspective. How did you meet Kevin? And what was the journey that took you from that initial meeting to a mentoring relationship and now to a business partnership?

Jared Ribley 17:11
Yeah, thank you for that one. So, Kevin, is kind of what I want to be when I grow up, right? So Kevin reached out, this was probably three or four years ago, and he was referred over by a gentleman by the name of Larry Guess. And Larry Guess heads up the Plancorp exit planning division of their practice, and Larry's just such a great, great guy. So, he referred Kevin over because Kevin was looking for brokers that he could refer potential clients to. And Kevin was a little bit frustrated because, and it's been my observation as well, that the business brokerage industry is a little bit fragmented, highly unregulated and unpredictable at times. And so, he was looking for a good referral source. And that's how we originally connected. And then over time, we've just had a number of different dealings, discussions... and that is what ultimately led to Capstone M&A. Which to begin, or go back to one of your original questions, you know, why did you form Capstone? It's to create a better opportunity for those people.

Alana Muller 18:20
Nice, really nice. I love that. You know, isn't it interesting how that, just the dominoes kind of fall once you have one solid, meaningful relationship where you've connected in such an authentic way? It begets many more relationships and that's really what happened with you and Kevin, right? You had that initial introduction, based on a problem that you're both trying to solve, and here you are, years later with a partnership. So, I think that's really special.

Jared Ribley 18:47
Very much so and it's great to just be able to watch and listen and learn from everything that he's spent years figuring out. That's very beneficial.

Alana Muller 18:57
Really great. Well, I admire the work that you're both doing, both with Capstone and with the work you're doing at Spark Tank, very exciting. So, there's one question that I always ask my guests, every single guest has answered this question. I'd love to hear from you as well. And it's this, if you could have a cup of coffee with anybody, and they can be living, not living, fictional or nonfictional, who would it be and why?

Jared Ribley 19:18
Living or nonliving really opens it up. I'd probably have to say Jesus. Sit down and listen. You know, I've read the gospels. I'm very familiar. But, that's somebody else's account. I want to hear it from you. You know, I want his perspective. I just gotta go straight to that probably.

Alana Muller 19:37
Go to the source, huh? Go right to the source.

Jared Ribley 19:42
Go to the source. Yeah, living would probably be Jordan Peterson. Ultimately, he was a psychologist and a professor, but now he's become an author, and he's starting to gain a lot of attention on different platforms. But his perspective on life is very interesting and very practical. I think he'll be one of the greats, but he's still alive. So you know, no one's great until they pass away.

Alana Muller 20:10
So, we can all keep striving, right. Keep striving. Well, I love that you gave me two answers, one here and one you know from the past, I think that's great. And I've loved to have you on the program. So, thank you so much for joining me. Jared Ribley, where can our listeners go to learn more about you to learn more about Capstone M&A and to learn more about Spark Tank?

Jared Ribley 20:31
So, you can go… probably the easiest way is to just go to CapstoneMA.com. You can go to Our Network page, and through there, visit Spark Tank and some of the other people and organizations that we’re connected to. So, that would be a really good way. And other than that, my contact information is in and out of the website. So, I welcome any conversations that come as a result of this. And thank you very much for having me. You're very good at what you do, by the way.

Alana Muller 21:01
I admire what you're doing as well. So, thank you so much for being on Enterprise.ing podcast.

Jared Ribley 21:06
Thank you for having me.

Alana Muller 21:08
Thanks for joining us this week on Enterprise.ing. Be sure to visit our website, enterprisebank.com/podcast, to subscribe so you'll never miss an episode. If you found value in today's program, please consider leaving a review on Apple Podcasts or telling a friend about us. Enterprise.ing: powering business leaders, one conversation at a time.

Alana Muller 21:29
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