Note: This article by Jason Hartman was originally published by Authority Magazine on Oct 15, 2021.
An Interview With Jason Hartman
As a part of our series about “Five Things You Need To Know If You Want To Build, Scale and Prepare Your Business For a Lucrative Exit, I had the pleasure of interviewing Lisa Liu.
A legal maverick with a reputation for challenging the status quo, Lisa is the advocate startups rely on for proactive, creative approaches to structuring, operating and growing businesses. She skillfully leverages her finance in conjunction with the law to position clients for growth and successful exit. Bringing these unique insights to her work as a business attorney, she understands the big picture when it comes to supporting her clients’ business game plans.
Beyond client work, Lisa applies a business mindset and solutions oriented approach to confront high level and complex issues within the community. She serves on the board of directors for startup QuickHaven. She is also a limited partner in the VC firm, How Women Invest, which is changing the venture capital landscape by focusing on investments in female-founded and female-led technology companies, with emphasis on women of color.
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Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
In addition to practicing law, I’m an entrepreneur and a former investment banker — all areas I actively leverage for the betterment of my clients and the overall practice of how business is conducted.
My background in finance started out as a rebellion against my parents, who wanted me to get into law in the first place, but as I saw the ebbs and flows of the economy and the Asian financial crisis hit, I witnessed entire groups of entrepreneur friends disappear in short notice. It was at that point that I realized I needed to get back to a path where I can stay in control of my own life on my own terms and secure my future — so I went to law school.
As a lawyer, you gain a better understanding of how to play the business game. You learn what the rules are and, if you’re savvy enough, how they can be used as a business advantage. For my clients, this means I can go beyond quick-fix problem solving to examine and tackle the deeper-rooted issues fueling a situation. I’m passionate about bringing together the different elements of my background to help clients, especially women entrepreneurs, achieve the same level of control over their own lives.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
When Krista Mitzel and I first became partners, our initial partnership agreement was written out on a napkin. A little ironic since I spend my days meticulously drafting detailed contracts for clients. Our thinking then was that writing something down, even if on a napkin, is better than nothing at all. Luckily nothing bad happened to make this a major mistake — we still have the napkin in our office — but we certainly advise making sure your business documents are buttoned up!
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“I’m sometimes asked, ‘When will there be enough [women on the Supreme Court]?’ And my answer is, ‘When there are nine.’ People are shocked. But there’d been nine men, and nobody’s ever raised a question about that.” — Ruth Bader Ginsberg
This is a sentiment by which I live my life. When it comes to law, finance, business or anything else, equality is about having the same access, the same control and having the power to make the same decisions. In the U.S., 40% of all companies are founded by women, and women-led startups generate 10% more in cumulative revenue over time; however, only 2.2% of U.S. venture funding goes to women founders. These statistics need to change. As a limited partner in the VC firm, How Women Invest, which is changing the venture capital landscape by focusing on investments in female-founded and female-led technology companies, with emphasis on women of color, I vet and conduct due diligence on potential investment opportunities. I strive for a time when we stop raising questions about women’s equal access to participation in business.
Ok super. Thank you for all of that. Let’s now shift to the main part of our discussion. Can you tell us a story about how you were able to build a business from scratch, scale and sell it to a bigger firm?
This story is more personal but one that marries my different perspectives as an entrepreneur and a legal advisor. About once a year, Krista and I are approached by bigger firms wanting to bring on The Mitzel Group. But the way we service our clients and internal teams is vastly different from how big law firms operate. We’ve both been in bigger firm settings, and we know that the collaborative environment we’ve intentionally cultivated at The Mitzel Group is a rarity that can’t be found elsewhere or inserted into a different culture and survive.
I enjoy having the freedom to balance my work life with my personal life, which means being able to choose what clients I want to represent and find fulfillment in how I’m able to service them. To me, there’s equal value in being able to choose the big deals and the small mom-and-pop shops that aren’t pulling in as much revenue but are making meaningful impacts in their local communities. Additionally, being able to work with like-minded people and ensure they’re able to get a full night of sleep is important.
Sure, there will be late nights sometimes, but that should be the exception, not the rule. Building something of value doesn’t always mean you need to sell — holding onto your ideals and motivation are sometimes more worthwhile. We’ve helped numerous clients successfully scale their business and prepare for exit or sale. Each situation is different, but for all companies, the earlier they identify their core goals and motivations, the more successful they will be.
Based on your experience, can you share with our readers the “Five Things You Need To Know If You Want To Build, Scale and Prepare Your Business For a Lucrative Exit”. Please give a story or example for each.
- Know your “why.”
Why are you doing this? What are your drivers?
During the early days of targeted advertising, I worked with a technology client whose “why” was that they were looking at things through a very different lens than similar business models, and they were confident they could do things better than how things were being done by others at the time. The “why” was integral because they always knew they weren’t big enough to compete with the 800-pound gorillas in their space, but they were exceptional at one niche thing that the gorillas missed. They understood that they could make money off their “why.” Without straying from their “why,” they built something great, nurtured it and positioned it for timely sale as the market evolved.
- Understand your value proposition.
Know what you are delivering, and how you’ll deliver differently — or better — than your competitors.
One client I worked with, currently valued at $250 million, focused on being best in class for the sliver of the market that they targeted. They focused on what their ideal customers care about and created incredibly successful marketing on the story and lifestyle of the brand, rather than the product.
They knew their niche, they knew how they were different and they built their values, culture and products around that.
- What are your core values.
Your value proposition is an external factor. Your core values are fundamental to your business model. Understanding your values dictates almost everything. For my ad tech client, one of their values was about servicing small business underdogs. Their big complaint about the competition was that they offered technology, but no strategic guidance to the users of their tools and leaving them adrift to figure it out for themselves. Large companies can spend on ads, but my client’s mission was to enable smaller clients to make more strategic use of their ad dollars — and that’s what they did.
- Surround yourself with the right people.
Make sure your teams consist of the right professionals for the job, don’t just go with the people you know. Internally, this means build the team you want — people who share your same values and are aligned in the overall vision of the company. Externally, assemble the right team of advisors, which is especially critical when planning for an exit. You need to have the right professionals — lawyers, CPA/tax planners, bankers, investors etc. — to help plan the right moves to meet your goals. One great advisor might not be the right individual for a specific situation, so do your research. I’ve seen instances where founders have tried to scale for exit, brought on the wrong people — people in it for themselves — and ended up losing the company because a particular investor takes control. Do the work to build the right teams, otherwise you can lose it all.
- Don’t just be flexible, be adaptive.
Being flexible means reacting to whatever comes your way and modifying your original plan. Being adaptive is being able to anticipate challenges or opportunities and pivoting proactively to stay ahead of the game. Every business will ultimately have to exercise different forms of flexibility, and it’s important to learn how to leverage change to your benefit.
In your experience, is there a difference in approach for building a service-based business versus a product-based business when you have the intent to eventually sell the business. Can you explain?
Yes and no. There’s a difference in the minutiae. The marginal costs are going to be different for a service-based business versus a product, but on the other hand, the five fundamental points outlined above serve both scenarios well, especially when it comes to being true to your values. Your values will dictate how you build your team, how you serve your clients, and it’s completely reflective in your product or service — your corporate culture.
How does one go about the process of finding a buyer?
This is where things can diverge between product-based and service-based businesses. If you’re selling a product, you might find a business broker with experience in your industry. Service-based business owners will lean more on their networks and the extended networks of their professional advisors.
Ultimately though, the question shouldn’t be about finding a buyer, but more about figuring out the right exit and the right exit strategy. The right exit isn’t always to sell, there are different options and paths that might make more sense. It could be to sell internally from founder to key employee to build a legacy. Selling might mean to a competitor, a large company with internal resources, as a subsidiary to another company, going public, or becoming a franchisor or licensor.
Are you selling the whole company, assets, goodwill, technology licenses? When you sell are you hoping to walk away with a big check, or will you stick around indefinitely or for some finite transition period? Different buyers will be interested in different purchase scenarios, so that will influence where you look.
How can one decide if it is better to build a business in order to exit, or if it is better to stick around for the long term and let the company bring in residual income, or if it is better to go public?
This goes back to the outline above — your “why” and your values — to determine what’s best for you and meeting the goals for your business. Figure out what makes the most sense for what you are trying to achieve.
Can you share a few ways that are used to determine a good selling price for the business?
Always make sure to have a good pitch deck for whatever stage of the lifecycle you’re in. And going back to the value proposition in the above five points, ensure you can charismatically communicate how your company is unique and different. For example, the client I referenced earlier was potentially in a position to sell to one of the 800-pound gorillas, but they knew they’d be much more valuable to an online retail service looking to build on their technology in house. The special market niche they occupied would have a bigger impact for that buyer and drive a higher sales price. Aside from that, there are several traditional methods to determine valuation. Look for a trusted valuation expert and have a good CPA.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Give every woman a well-paying job and access to business funding so she can change the world! I’m being slightly tongue-in-cheek, but I believe the ripple effect that women can bring around the world is untapped. If every woman was able to earn a living wage, we would have better platforms to access opportunities. I’m a big advocate for not just getting a seat at the table but changing the room. How Women Invest, the VC firm in which I’m involved, is helping to make strides in this space by helping women realize that we can invest (literally!) in other women, which will have long-term impact around the world.
More women business owners and women-led companies means more women working and providing for their families, leading to new approaches and generational change for the betterment of everyone. I help both men and women clients secure funding for their business ventures, and I need to coach women differently because they’re often asked completely different, and sometimes irrelevant, questions. It’s not atypical for them to be required to jump through more hoops than their male counterparts. I’m helping to pave the way for future change-makers to shine.
How can our readers follow you on social media?
https://www.linkedin.com/in/lisawliu/
Thank you so much for joining us. This was very inspirational.
