Shownotes
In the face of paralysis and adversity, how does Breakaway Sports’ Phil McCarthy keep up the fight? As founder of the Denver-based company, McCarthy now helps professional teams conquer the world with top-notch coaching and assembly services. Breakaway Sports’ business model is similar to being in a locker room and trying to achieve success on the field through a team. Drive and passion is important. You can be sure that the guys at Breakaway Sports love those sports, coached those sports, gave back and involve themselves in the community in a positive way.
Lacrosse and Hockey, Collegiate Success, Personal Adversity and Building a Business with CEO Phil McCarthy Former Owner of Breakaway Sports
We’re here with Phil McCarthy. He’s the Founder of Breakaway Sports in Denver, Colorado. We interview some of the best and brightest business owners and entrepreneurs in and around the state of Colorado. We talk about the ins and outs of running a business and being an entrepreneur inside shared by the top business leaders and entrepreneurs in the state of Colorado. Phil, welcome to Business Leaders Podcast.
I appreciate it. Thank you very much, Bob.
Phil and I have hit it off before the show and found a lot of common ground. I think that you are going to find that this is a special episode. Phil, tell us a little bit about what you did prior to Breakaway Sports.
Right from graduating from college, I went on and got my MBA right away. In my mind, there wasn’t a ton of opportunity out there in the early ‘90s, so I figured I’d scale up and get an MBA. From there I went to Wall Street and I was an options and futures trader on Wall Street. That’s a different world, but I learned a lot about that. I learned what you give to the business you get back, and they gave me an opportunity to move to Singapore and run their operation over there and contribute that way. I thought that was a huge personal growing experience as well as a professional growth experience. I appreciated that, but at the end of that I realized I couldn’t find the real passion in that for myself. I wanted to make a change from there. The question became, “What do you do next? What is it that excites you and will get you going?” I found that coupling my new business experience and my education, wrapping it around the things I care most about, which was playing hockey and lacrosse in athletics and the relationships I’ve built there, I came up with the idea that I would found Breakaway Sports and go from there.
Let’s circle back. You talked about lacrosse and hockey. Let’s talk about your collegiate effort and accomplishments in that area.
At a young age I realized that being an athlete and playing sports felt great and I could grow skill around that and grow confidence around that. I set my eyes on playing in college and did the type of things that would take to get there. I had great teammates, good coaching. I absorbed what they’re given me as lessons. I was aware of how I was growing as an athlete. When I got to college I was ready to grow again. At Hobart College we had a program that was strong. My senior year was twelve straight national championships. It was quite a dynasty. The expectation was that you came there to compete and grow a team that would continue that type of success on the field. Of course that comes with great coaching, amazing teammates and people with shared goals as well as trying to push themselves individually. We gained a lot from that. As well, I played hockey in college and was able to be the captain and achieved a couple of personal goals of being the all-time leading scorer of that school and sharing that with teammates that are my best friends in this world today. That athletic success created processes for myself and I’ve been taking those on in life ever since.
You went to Breakaway Sports which focused on those two sports and you went to college and you were a floor trader. What they don’t know is the adversity that happened en route. Let’s dig into that a little bit.
Athletics or whatever path you choose that helps you find skill and performance, drive yourself and create habits that lead you towards goals and goal achievement and then picking teams or people that you choose in your life to make your efforts bigger and more important. I used athletics around there. Other people use music and other platforms. For me, it’s important to become the person that can use those skills later in life and engage the world. I came up against a challenge in life where I woke up completely paralyzed on my left side one morning. It turns out that I had an arterial venous malformation in my right parietal lobe. I woke up paralyzed and in a position in life that I’ve never been, and you right away are like, “What the heck is going on? Where’s this going? It’s uncertain.” The fears start kicking in immediately. For the first time in my life I was not in control of where I was going.
For an athlete, that’s a tough place to be sitting.
You set your whole life trying to take care of the things you can control to lead you down a path where the outcomes tilt your way. I couldn’t make this tilt. What I did discover was how well athletics and those processes and being around people that share those same ability to want to compete and push you and make it better and how those skills help you through things like that. Everybody’s going to come up against adversity. My adversity of course was the challenge of figuring out how to mentally and physically come through having to learn to crawl again to get your body back. I felt I was prepared because of the things I achieved as an athlete.
You finished your MBA while you were still in the hospital.
When I started unwinding the story of what made me confident and gave me self-esteem in the world, which was, “Where am I going now? I’m in a wheelchair,” and I was quickly unwinding, “I know how to find success. I’m a great teammate. I can give,” and started saying, “Where am I going to go? No one’s going to care about me. I’m not going to have opportunity and I may never run, walk, compete again.” You do have to turn that around at some point. The belief that allowed me to do that was other people, listening to others in a room, much like teammates. We had a goal of getting out of that room successfully and having a life of consequence. In the discussions that we had, we realized that telling yourself you can’t do something doesn’t create action. It doesn’t create direction. We were starting to tell ourselves and teach each other how to say, “This is where we’re going and here’s how get there.” You put a process in place for yourself athletically, and mentally you drive that process as hard as you can.
Telling yourself you can't do something doesn't create action. It doesn't create direction.
The start was working your body, get crawling. If they said crawl ten feet, I was going to spend the time it took to crawl those ten feet and then make the goal twenty feet. It was important for me to give back to my MBA. I was a month out from walking across the stage and graduating when this happened to me. About two to three weeks in to this recovery, I knew that getting back on track with my education was a big step. If I could prove to myself and the world that I could do that, then I could get back on track. I called my school. They sent me my exams. They let me take those finals in that recovery hospital with my head bandaged up, and send those back and I graduated on time. I got to walk across the stage with a major limp and a cane, but I got to do that. I knew I had my academics back on path and really what I had to do was replace what used to be athletics and performance with something new and my recovery process did that for me.
I think about the college pinnacle, where you’re doing well academically, you’re doing well athletically, and you’ve transitioned after college. Weren’t you coaching at that time as well?
Yes. Right after I got my MBA and this happened to me, I wanted to take a year and recover. I wanted to get my body back, I want to be able to give, and I found Berkshire School came to me. My brother was going to this boarding school in New England and they offered me a position based on being able to coach and teach them. They knew that I had that background and they hired me for that reason. They created a position for me, which was a blessing of course. I’ve always been thankful to that school for that. That year helped me discover giving to kids that are growing and the importance of what athletics gives you as a person and what you can accomplish when you have processes in place that make you successful in athletics are the key to life. I’ve always wanted to make a part of my life giving back in that way and helping kids and other people become aware of that.
You’re back and you’re in recovery and you had a year or so. What was the next step after coaching and about a year of recovery?
Some people would stay. It was a beautiful life you could give for the rest of your life, 20, 30, 40 years in a school environment. For me, at that time in my life, I had just accomplished getting my MBA. I hadn’t challenged myself on the business side of the world and I started out on that path and I want it to go down that path. I wanted to explore that for myself. I took everything I gained and gave in that school. I recounted what I was able to accomplish physically and mentally, what I was able to create for value for kids in school. I said, “I’m going to go on business.” I walked into the head master’s office and he got me in touch with an alumni that had a huge business in New York’s Spear, Leeds and Kellogg and Peter Kellogg gave me the interview and the opportunity to prove myself as a floor trader. I took that path.
You’re admittedly succeeding as a floor trader; you’re both domestic and international. At some point you decide, “I need to do something else.” What was that thought process like?
I was loving growing in the world of business and in finance. I was learning a lot and I was giving a lot and I was appreciating the opportunities that were given to me, having been able to go to Singapore and be trusted with running that office there and creating value for the business, being that far away. That was great. That made me believe in myself differently, that my character got me there, not so much them needing my trading skill. They need people that have character and that’s value. Most people are in transition often. Where I thought I needed to change was I didn’t have the why. I had the competition, I had the awareness that I looked for, for myself and who am I, and it wasn’t hitting the passion strings for me. I wasn’t applying myself to something that matter deeply to me. I was growing skill and competing, but I was missing that why. Thinking about how I can accomplish all three, performing well, growing my knowledge base, being a lifetime learner, and doing something that matters to me, I found that if I tied my business degree to those two sports and the relationships built around those, I could start a business. That’s where I decided I was going to start Breakaway Sports.
You started Breakaway Sports, but there was some homework that you did.
In transition you have to learn. People often ask you, “How do you learn when you need to learn new things?” I had a former coach of mine who was great. He was an NHL player and an amazing coach. He had a hockey store in upstate New York and I asked if I could volunteer and work for him for three to six months and bring him value of everything I learned in my MBA, and see if I could help him with some of the backend stuff. For that he would teach me how to run a business, what their relationships look like to manufacturers, how to buy effectively, what software systems he is using that he’s liked, how to lay out a store and what customer service looks like. The value trade off was I would go work for him and make any improvements to his operations that I could. He’d teach me how to do this and then he’d free me to be on my way to start my own business in a different market.
East coast guy and then you upped and move to Denver.
Part of the AB testing and wondering what problem you’re solving when you start a business and putting a business on a path is where are you going to start it? Everyone says location, location. The east coast had most of the hockey stores and lacrosse stores. I wanted to go where people weren’t and the Quebec Nordiques at the time were making the decision to move to Denver to become the Avalanche. The Minnesota North Stars were making the decision to go to Dallas to become the Dallas Stars. I picked Denver as my market and to be fair, the reason I thought it was best is there were a lot of people from the east coast moving there, which meant you wouldn’t been limited by your coaching growth and fields were plentiful. You wouldn’t be limited by field growth like in LA. It seemed a great place to live and has a very athletic young culture.
You’re in Denver and you have store number one. You ended up with how many stores all in?
Seven stores.
When you had the seven stores that you were working through, what was the progression or thought process as you expanded those stores?
What you have to get right is your first economic unit. Right in front of me, my day to day working was my store in Denver. I was able to figure out what value I could give to customers. What they were giving me as feedback is what was important to them so I could figure out the service part. You figure out what product selection you should have and how you lay that out. You figure out the business of profit and profit margins and the pricing and how to get it to be a profitable business. Once you’ve done that, as any entrepreneur wants to do, they want growth. I wanted to be able to run a store out of my market and people hadn’t been doing that back then in this niche of hockey and lacrosse. They stayed in their market, they knew everybody, they ran a community. I wanted to see if I could expand that.
To do that, I asked my younger brother to join me. He was in. That means you have a trusted partner. He gained from giving him partnership to do that. In a trusting environment where people weren’t robbing from you while you’re figuring out how to do this, I had a partner that cared about the business, cared about me, and we were together learning how to scale. Putting the second business unit in and running it with what we learned out of Denver, we’re able to do that successfully. I moved out from there to Seattle to Atlanta, added a second location in Seattle, and went to a couple of different locations here in Colorado. It’s based on what I learned through working with my brother in a new market and being around a trusted person with tons of characters who didn’t fear that. We put our minds together and grew a business that mattered to the employees and the customers.
You were chatting about how you interacted with your customers and how your previous experience influenced your behavior with your customers. Do you care to comment on that?
Breakaway Sports Denver: Our stores were meant to be an extension of the culture and of the things that they wanted to get from the sport.
The reason it was passionate and the ‘why’ for me was athletics. Because the people coming in cared about some things we cared about. They cared about exploring development, joy, fun, pushing themselves, and being creative and curious through sport, and that’s where we came from. As people came in the door, that’s how we viewed them. I used the vehicle of equipping them on a field, but our stores were meant to be an extension of the culture and of the things that they wanted to get from the sport even more than the on-field play. We built a business around making sure the athletes were getting what they wanted and feeling what they should feel.
I think about where you are when you’re coaching now. I think about what you were doing in the retail space. Not all that different than what you’re doing now.
I agree. Coaching is running a team, being on a team, being an athlete, or leading as a coach. Every major business is set up as a similar unit, whether you’re putting a team together to try to win games or have common goals. You have individual contributions and individual care for personal growth as well as team growth and environment growth. You learn that in athletic environments and you might as well use that that care and knowledge to grow business around it. Our business plan was similar to being in a locker room and trying to achieve success on the field through a team. It was important that the guys that I hired loved those sports, coached those sports, gave back and involve themselves in the community that way. We were coaching and we were running a business but as people came in, we were teaching them what was important about the game and how they should be aware of what they’re getting through sport and going on the field and doing that. I tied both of those experiences together and it is what built my business model.
You’ve got your team, got your players, I think it was seven players. The team’s assembled and then at some point there’s a decision or an offer to buy the business. You look at that and there’s a conscious decision to go ahead with the offer. What was that like in your mind to take in have built the team and then look at taking ineffectively passing that team off to a new coach?
It’s not an easy thing because you built something and you’re proud of it and it becomes a big part of who you are and the people you involved yourself with. We all built that company because companies are built by people. Concepts are driven, but people build it. We had got to a point where we couldn’t grow it further from where we were. We were enjoying what we built but when we were approached to see if we would grow with another company, i.e. I sell the business to them, and then see what our involvement would be with them to grow it further, I was attracted to the idea that the business should keep going. The thing that we built and the ideas of what we’re trying to accomplish through our customers should keep going and it could be more exciting going down a new path of growth and joining a new team.
For the folks out there, there will be those that have a business and never received an offer. What were the thoughts that went through your mind in trying to evaluate whether you thought it was a reasonable offer and then what did they want from you post sale?
You want to make sure that the vision for where they want to go with their company...
