Bhairav Patel recently achieved a significant milestone with the sale of Atom CTO, a venture that exemplifies the culmination of strategic planning and resilience in entrepreneurship. In this discourse, Alan and Bhairav delve into the intricate journey leading to this exit, elucidating the factors that propelled the company towards acquisition. Bhairav reflects on the initial vision he and his team held for Atom and the evolution of that vision amidst changing circumstances and personnel dynamics. The conversation also highlights the unpredictability inherent in the entrepreneurial path, particularly regarding exit strategies and timing, and emphasizes the importance of delivering value to clients to attract potential buyers. Ultimately, this episode serves as a profound exploration of the realities of entrepreneurship, shedding light on the multifaceted nature of business growth and the nuances of exiting a venture. The dialogue between Bhairav Patel and Alan Clark delves into the intricate narrative surrounding Bhairav's recent divestiture of Atom CTO, a venture that epitomizes strategic foresight and meticulous planning in the realm of entrepreneurship. The conversation unfolds with Bhairav articulating the foundational intentions that guided the inception of Atom, wherein the initial deliberations encompassed the dichotomy between cultivating a lifestyle business versus orchestrating an enterprise poised for acquisition. Through a methodical examination of the evolution of Atom, Bhairav illustrates a trajectory that was not merely circumstantial but rather a calculated progression towards an eventual exit. He reflects on the various transitions, including personnel changes and the inherent challenges that accompanied the scaling of the business, emphasizing the necessity of alignment among the founding members to mitigate conflicts and maintain a coherent vision. As the discussion progresses, Bhairav elucidates the pivotal moments that crystallized the notion of an exit. He recounts the organic evolution of relationships with other companies, particularly Taybridge, demonstrating how these partnerships were not just opportunistic but foundational to Atom's growth narrative. The conversation also touches upon the unpredictable nature of market dynamics and the realization that an exit strategy is often contingent upon external factors rather than solely the entrepreneur's aspirations. Bhairav candidly acknowledges that while they harbored ambitions for growth and influence, the eventual sale was as much a product of timing and circumstance as it was of deliberate strategy. The episode culminates in a reflective discourse on the notion of success and the disillusionment that can accompany the sale of a business. Bhairav candidly shares that the experience of selling Atom was not marked by a grand celebration but rather a series of administrative procedures that lacked the dramatic flair often associated with entrepreneurial exits. This revelation serves to demystify the entrepreneurial journey, presenting it as a continuum of challenges and triumphs rather than a singular, climactic event. The overarching message resonates with aspiring entrepreneurs, emphasizing the importance of adaptability, resilience, and the understanding that the journey is as significant as the destination itself.

Takeaways:

1. Bhairav Patel discusses the strategic planning involved in the sale of Atom CTO, emphasizing that the exit was always a part of their vision.
2. The journey to successfully exit a business often involves navigating various challenges and aligning the interests of all stakeholders involved.
3. Bhairav reflects on the importance of building a company that provides exceptional value to clients, which can ultimately lead to acquisition opportunities.
4. The conversation highlights the unpredictable nature of business exits, where timing and market conditions play a significant role in determining outcomes.
5. Bhairav and Alan emphasize that a business exit is not a grand, climactic event but rather a natural progression in a founder's journey.
6. The episode underscores the notion that the narrative surrounding business exits is often romanticized, when in reality, it is a complex process that requires careful consideration and planning.

The real world entrepreneurship podcast with bhairav patel and alan clark.

Welcome to the Real World Entrepreneurship Podcast where we tackle the practical challenges that startup founders and small business owners face and give our own unvarnished opinions.

My name is Bhairav Patel.

I'm the Managing director of Atom Ventures and Atom CTO where we partner with small businesses and startup founders to help them define and build their tech vision.

And I'm Alan Clark.

I'm the founder of the Business Growth Partnership and we work with high potential businesses who help them unblock the blockages that are preventing them from reaching their full potential.

Hi everybody.

Time for another new episode of the Real World Entrepreneurship Podcast with Bharav and I.

And this one I'm actually really quite interested to hear about because in a world where there are hundreds and thousands of startup advisors, this is going to be the story not of a startup on a scale up, this is going to be the story of an exit of actually in the journey that most of us want when we start up that one day we will exit the business.

Bharat Exiting Head business last year so for those that have followed us through, you'll know a lot of the stories, a lot of the learnings about trying to get to the point where somebody would actually want to make you the offer that you're willing to accept.

Well, that happened so far.

Let's start off with just a little bit of how did this come around?

Was this always part of the master plan and it executed perfectly or was there more to it than that?

So it's interesting that you, you asked that specific question because it is, it was part of our plan.

Right.

So when we first started Atom, we obviously had the conversations about whether it was going to be a lifestyle business or it was something that we eventually wanted to sell.

Right.

And there were.

So the, I mean the, the journey itself was interesting and I'm sure I'm going to write a fair few things about it over the next few months.

But know, we started off with six of us and as you know, when there's six people in there, you're going to have to be pretty aligned in what you want.

Otherwise the business just goes off in really weird directions and there's a lot of conflict.

Right.

But when it got sold, there was only two of us left.

So that kind of shows you how a number of people along the way were just, just left for different reasons, all of their own reasons.

Right.

We didn't throw anybody out, but it was more along the lines of, you know, their priorities changed, they didn't really stick with the vision, whereas my vision was quite firm from from the beginning.

You know, we wanted to create a business that allowed us to help companies not get screwed over by tech.

But I also wanted to, to kind of invest in the companies as well.

Right.

Once we built up enough money we wanted to be able to put some cash in or at least do some, you know, work, sweat equity etc, and as we grew we were able to do that with a number of different businesses and as.

And and so this is when the thought happened.

Probably not on day one, but most in a.

Probably the two, three years in I guess after we realized that it was a real business.

Because again, when you look back, you understand the pattern that we've been talking about for years, right.

And we've did a podcast on this where once you hit five years you're a real business.

A lot of companies fail in the first year and we had those statistics in, in a, in a previous podcast.

But generally once you've gone through the into year three, you're pretty likely to get to year five and then year five and beyond your you're there as a business, right.

So probably around year three I was thinking that okay, as people were leaving the business, it obviously was more and more onus on me to get things done, sales and obviously consulting and blah blah, blah.

But it and I knew it wasn't manageable unless we scale and add in more people.

But then every time you bring in new people that causes a downturn really because they have to take time to warm up and get into the business.

So it struck me that as we would really quite embedded in a lot of the clients that we were working for, we were really their IT team or their IT advisors, CTOs.

It struck me that ultimately one of these companies is going to make it big and either want us or will take a chunk of the team away, right.

Because it'll removing us would be too big of a, a deal for, for them as a business.

And then you know the guys who obviously I'm working with the Taybridge as you, as you'll see online, you know those guys I've been working with from, for many years and we'd always talked about it, right.

So there was always a natural inclination for us to get together.

It so happened that by the time we got to the sale there are actually like two or Three other companies that are interested in.

In either merging with us or acquiring us or doing some other things.

Right.

And that was just a really weird coincidence because I hadn't manufactured any of that.

That just kind of happened.

How much of this was circumstances aligned and things happened rather than Barab saying, okay, it's the 1st of January by the end of June.

Yeah.

So none of that.

Like, we could never predict this.

And because the strategy always relied on us, on other people.

So in a way, it's probably very poor strategy.

You wouldn't give this to.

You wouldn't tell a company, go, go.

Your strategy is going to be rely on other companies growing.

But because we were investing in them and we believed in them, we knew that they were going to go somewhere.

We knew that these people were, you know, good, good business people.

Right.

We knew that they could grow the business.

And I, I was very confident that what we were doing was helping them grow through, through the, through the, not just the technology, but the advice and the, you know, the backup that we gave them.

So it was, in one sense leaving your future in the hands of other people, but in the other sense, you were pushing them, you're driving them forward as well.

So.

But, you know, the, the timing of it all was at least two years ahead of what I thought it would be.

I'm really interested what you had to say there, that this isn't a strategy you would never advise other people to do.

And that was.

I think what you were referring to there was that you were in control of the timeline and how this happened.

Is there ever a sale where the seller is completely in control of all the dynamics?

Now, I'm sure you'll come up with some example, but for any transaction you read a willing seller and a willing buyer most times that will admire how to make their own mind up at a time since then.

So you are never in control of the exit.

You have to wait until they're ready.

You can't make them ready for most of it.

And that may be their growth plan, that might be their financial position, that may be the economic environment, that might be another opportunity.

So I wrote a note down here which, like exit strategy really developed once the business is established, and I hear so many people, and it does kind of wind me up, which is why I wanted to talk about your exit, which is.

Oh, yeah, we've not yet started, but we've worked out an exit strategy.

Yeah, stop me.

Bloody ridiculous.

Because, you know the world will be different by the time you're mature.

You need to know how you might exit and make sure that there is a potential for that.

But that's nonsense.

No, I have nonsense.

Some people build and say, I know exactly who buy it and why because I'm going to solve a problem for them.

But for most of us.

So there's a.

No, there's a nuance in what I said and I think it is consistent with what you're saying.

Right.

And when I meant that it's not a strategy I don't necessarily advise others to take.

It's because it's not something that, you know, there was something very particular about what we were doing.

There was never any kind of.

As with any other company.

And as you said, there's never really any control as to when this happens.

Right.

Or how this happens or who it happens with.

It could have, as I said, it could have happened.

It didn't have to be Taybridge.

It could have been someone else and it could have been six months earlier.

It could have been six months later.

Right.

Or it could been different type of deal.

So all of Those, I agree, 100 that you're never necessarily certain of when the deal or when the exit is going to take place, if it ever takes place, because it could well be that you grow and just you start buying other companies.

Right.

But I think it's a situation where, you know, if you're setting out to say that I want to be acquired by one of our customers, that's a hard thing to.

It's a, it's a.

Not a bad strategy.

Not saying it's a bad strategy.

But you, you are.

But if you're being very specific as to like it's these three companies, you're leaving your, you're leaving yourself in the hands of those three companies.

What you should be doing is what I know you're is make yourself attractive to buy by being really good at what you do and, you know, being efficient and having, you know, a good team, etc.

Etc.

That is what everyone should be striving towards.

And you know, we obviously built that at Atom because that's what made us attractive enough to.

To be taken over.

I hear underpinning what you say, I might have gotten this song.

So correct me if I.

If I have, is that the colors of your exit strategy was that one, we will provide valuable services that will be so valuable a company will want to analyze what we do.

That's pretty much.

And you also had a view which was that your ambition wasn't to grow a team of 1,000, 5,000 10,000 people, which frankly would have been unviable.

Yeah, Unexpiable.

It was to get it to a point where we are a nice good fit and actually give me what I want, what we want out of this, which presumably is a financial benefit allied to a forward.

And I know that you're now working within the company that acquired you or sometimes for other people it's a chance to say, look, take the ship on, put a new captain in and I'll go away and do what I want to do now.

And what you've said there just at the very beginning was hugely important because when we first sat down with the six people that were talking around the table, there were some people that wanted to build a thousand person empire.

Right.

And I was very clear, and there were pretty much the majority was very clear that we don't want to grow.

We want to grow to a size that's manageable, maybe 50, and I think we hit about 30 something people at, at one point in time.

Right.

But we don't want to be that company that is essentially building a, a back, you know, having a, a bench of 200 people sitting there that we need to deploy at any point in time and then have to keep growing.

Whereas one person wanted to do that.

They were like very much, I want to be, I want to have like a thousand people.

And inevitably what we ended up doing actually was structuring the business in a way that allowed that person to go off and do that if they wanted to and give them the, you know, the resources to go and do that as part of the overall group structure.

But I was very much of the, of the focus that we don't want to be big, we want to be specialists and we want to be good at what we do, but also embed ourselves as much as possible into the businesses so that, you know, we show, we can really show that they would.

I be right in saying that this reflects something in you.

Where I was working with another company yesterday.

Two guys are taking an existing business.

They're not reinventing it, but they're making a major leap forward.

And one of the issues I was asking them about is what do they actually want for them out of this?

What will success mean?

Is it that they will be multi millionaires sitting in a, a glass office on the 55th floor watching tentacles in every part of the world?

Or as a technical guy saying absolutely no chance.

I want to be involved in doing what I do everyday life now, metaphorically.

I don't want to be on the tools But I want to be out investigating the latest tech that our guys will use.

I want to be problem solving the problems that they find hard.

Another wonderful famous Scottish business and entrepreneur.

I thought I was different for anybody that remembers the loser.

Lynn.

Hi fi very high end hi fi brand that made real world leading products not far from where I live.

I remember going to see him talk in my early career and I'm particularly struck by the fact that he said, I can tell you all about everything we can't do and next to nothing about what we do do.

Because if we can do it, I'll let the guys that want to do it.

That's our job.

But when there's a problem, then I get involved to try and solve it.

So I can tell you about all the things we couldn't solve technically, but next to nothing about the product that we do.

And that is a little bit about that.

He never wanted to be huge.

He just wanted to be really good.

And that I think is part of the driver for you.

You never really wanted to be that hands off.

You quite enjoy technology.

So why would you ever want to build a business where you're not involved in technology and solutions?

Is that fair?

Yes.

I think what's interesting is that if you'd ask, there's.

I think there's a couple of things at play.

One is starting the business at 40 gave me a different perspective than if I try to start this at, I don't know, 30.

Let's say, for example, having those extra 20 years in business allowed me to see what other people had done and how they'd run their businesses and, and knowing, you know, just the pain that a lot of people went through for running similar types of businesses.

That's why I knew that I didn't want to have something that had a thousand people because I had friends of mine with thousand people in their business.

And I can saw the, just the sheer ball ache that they had every day of the things they needed to do.

Sure, they had money and they're wealthy, but the stress levels were mental.

Right.

And they kind of weren't all they had at the end of the day.

I mean, I'm not saying it's a bad thing, but they had just people and buildings and things and they didn't have products or they hadn't.

You know, in this stage, we know we are now within another company, Taybridge, that has been on a great trajectory and you couldn't really show that.

So that was one thing.

So starting later helped me put a bit more perspective on it.

And then what other.

The other thing that changed was actually running the business.

Because as you run the business, you just unlock a bunch of new skills or you.

And you realize things that you like versus what you don't like.

And you quite quickly get to that, because especially anyone who.

Who's listening, who's starting your own business, you're doing everything right at the very beginning, even though there's six of you, there's different positions everyone takes.

And if you're the kind of md, you end up doing a lot of different things than you would normally have done in a day job, right?

Which is, you know, right now I'm doing literally one thing, but previously I was doing 15 different things all at the same time in different places, different countries, different industries.

So am I wrong?

This wasn't designed to allow you to never be too far from, hey, how do we solve this problem?

Was it the reality of your development and growth of Atom that you are running a business, not delivering CTO or getting involved in CTO problem solving?

So I was doing that as well.

So I was doing both.

So that's where it will kind of, you know, that's why it was so, you know, stressful and quite a lot of stuff going on.

So I was doing the podcast, I was doing the sales, I was going out networking, and I was also doing the work, writing documents, leading the teams.

Especially in the early days, right?

And as we.

And especially, I mean, when there were two or three of us who were CTOs, that was easier because I was.

I could focus a little bit less on that.

I would still do the work, but I would do less of it because there was someone else.

And then after a couple of people left, it made it mean that I had to do more of that work.

And then when I got the network, when I started establishing the network, then I could hide some of that work, back off to people.

But I was always involved, right?

Throughout the eight years, I always did consulting work.

And actually that was some of the highest revenue that we made was because of that.

But it didn't mean that.

Like, a lot of the times with some of the projects that we had, I didn't need to be involved.

And as you know, we always said to our clients that, yes, you might need me for the first three months, but once everything has got its own cadence and everyone knows what they're doing, then it just runs itself because we had the team behind me to know and to go and do the work.

Which is a lot, I would say.

But I know nothing about what we do day to day because the team do that because they know how to do it.

Exactly.

And not that you only got involved in the bits you can do, but I only get involved in the bits that require a particular skill set that actually I really enjoy being part of.

And that.

And you're right, so it is a lot of that.

So a lot of times I got involved where there either were problems, maybe there were problems with the development team not necessarily fulfilling what their client wants or the problem, the client had problems that they didn't know how to solve and I would help them with that.

So I would kind of come in where not as business as usual.

I would come in where there was something not quite right.

So you effectively built your dream business and you got to be entrepreneur, a guy that was learning new things about business as you grew and developed.

Well, also getting to practice your technical art.

Yeah, I mean, for me, what I love the most about it all was not only the fact that, you know, okay, you're involved in technology, but you get to see the business side and also get to see so many different.

Yeah.

Why the hell did you sell that?

Well, I mean, it was a natural point in time because we, we'd got to the stage with Atom where it was kind of post Covid.

We would grown, we were chugging along, the clients had really, you know, taken off.

And so there was a good opportunity for me to kind of, for me and the whole team really to go still do some consulting work, but also, you know, tackle a big, big.

It's a bit like my, I guess in many senses, it's a bit like my whale.

Right after.

I mean, anyone who's read my LinkedIn profile, you know, we worked at Aztec and the guys who I'm working with now are guys who I used to work with at Aztec.

And I think that there was a bit of unfinished business there.

I knew how well that business could have grown.

And for various different fact that we've discussed, it never, never grew to where it should have gone.

Whereas now you've got a situation where the guys I'm with, I can see the potential of what's going on.

And it, it was, it wasn't the sense of kind of giving up the business to do something completely different.

It's like, okay, this is very close to what I've been doing anyway, and there's a chance for us to make something really, really big.

And also, you know, the timing was, in a way, even though you can control it's Perfect, because AI and the vibe coding thing kicked off at the same time as consult like this, the sale happened.

So I talked to friends of mine.

I was actually having dinner last week with a few people who were running, running similar businesses.

They've all pivoted.

They've all had to pivot because of the way AI has changed the scope of, of consulting and the way software development is done.

I think it will come back.

I don't think it's a permanent change, but I think, you know, it struck people who are in that world of startups at the moment.

It's hard and, you know, luckily I managed to.

To move across when it's perfect timing, really.

There wasn't a moment when you thought we're going to show the business or we're about to be made an offer.

And if there was, what did that moment feel like?

Yeah, I. I look back and I think it's weirdly anticlimactic in the sense that, you know, I talk to people now and I weirdly have to kind of tell them when they ask me what I do.

And I always, for some reason, I always tell them, well, I sold my business last year because I feel that that gives them better context as to what I'm doing now.

Because, you know, I often meet people who are, you know, startup events or whatever it is, and if I don't tell them I've left something, then they just look at you like you're some sort of weird CTO dude who's.

What's he doing here?

So I kind of put that context in, but it is, it's, you know, I never really kind of.

The, the process itself is quite time consuming and, and it's a lot.

It's like a lot of stuff going on at the same time.

So you never really have that moment, right, of it's all over because we moved into sale with all the documentation and that entails all of the work that has to happen.

Then there's a sale bit.

And because we were.

I'm working for Tabri, there's a bunch of stuff, admin things that need to go on.

So it's just a long period.

And so you never really have that kind of moment where you can sit back and.

And because all the founders are all over the world and there's no one really, there's only two of us left.

There was no kind of.

No one to kind of sit and, you know, take razor glass of champagne with and say, hey, we did it.

Until the moment you're saying the spa presumably, yeah.

And that.

Yes.

And you know, I obviously.

And at that moment, right at that moment, was there any sellers remorse?

Not at all.

Not at all.

And I think, you know that.

I think the whole like, you know, e signature thing kind of kills the.

Kills the glory.

Right?

Because you're just.

You're sitting in your room pressing a button.

It was.

If you're all sitting in a room signing together, that's a whole different situation.

But I've only ever done it in a room where literally we would sign the documents and then it would be phone the bank and see if the money has gone through.

The money is through.

You're like, well, that's it.

This is now those words completion.

Yeah.

No, unfortunately we never.

I mean and I've been through those situations as well.

But unfortunately now in this one it wasn't quite like that.

And I think, I look back and I think in many ways I'm actually surprised that we call it an exit.

But it is an exit, right?

It's a sale.

It's what exactly you do as part.

This is what most people dream of, right.

And I look back and I think, oh, it's just another thing that happened in.

And you just get off.

That's you.

And I think one of the things that if I can be very personal with this, you're not normal.

This is just part of the.

Part of the.

I know is just on a life journey where things happen and it is like everyday life and normal and I kind of extraordinary kind of way.

There's highs, there's lows, there's sidesteps, there's acceleration, there's deceleration, there's great relationships and some that went a bit.

And I think, you know, if I conclude on what we're talking about now, I think that kind of probably what I would love people to take away from this, which is Exit isn't.

Isn't the Hollywood book.

Hollywood movie.

Sorry.

It is an event, it's a things that happens.

And there isn't a perfect way to plan it or a regular way that is delivered.

It's just another part of your story and the business story.

And it's really interesting what you say there, which is like, was this really an actor?

Because so many people that sell their business the day after it sold, they're still running their business because they've got their airlock and actually by the time they do eventually exit, it turns out, well, I'm just going home one night and not goodbye the next day.

Yeah, exactly it.

And because you.

I think it's become this magical thing that is meant to happen.

Right.

That there's, like, you know, fireworks that erupt and, you know, suddenly champagne's popping in and, you know, you're on a yacht and it's not really like that.

It's.

It's really kind of just part of business.

It's a normal.

Can I just clarify for those opposites to run a podcast?

But I was totally on a yacht and there a fire watching off in the background.

Yeah.

I got to get back to my drinks.

Brilliant.

Well, I think that was a lovely little interlude on the reality of what most of us who may be listening to this are aiming to do.

Build something and move it on and move on to the next stage and do so.

Thanks very much for joining us on this episode of the Real World Entrepreneurship Podcast.

Obviously goodbye from me.

And it's goodbye from me.

Many thanks for taking the time to.

Listen to the podcast today.

If you like what you hear, please leave a review or subscribe.

You can find us on Apple Podcast, Google, Spotify, all the main podcasting sites.

And if you'd like to learn more from us, you can contact Alan, he's Alan at tbgp Co uk and you can find me at info at atomcto.

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