What to do when you lose it all?
Callum: “From an investor’s standpoint, you’ve got half the world’s economy locked up in small businesses like us”
“And you smack your head against the wall until something breaks. And hopefully, it’s not my head.”Callum Laing, https://www.callumlaing.com/
With my business partner, Jeremy, we had come up with an idea to solve a problem for small business…
Find out about their ambitious idea – Agglomerate – to help small businesses group together to create a publicly listed company.
“The thing with creative ideas is they’re always brilliant when you first have them, and then you have to test them against the market.”Callum Laing, https://www.callumlaing.com/
Callum Laing is the Founder & CEO of MBH Corporation PLC, helping small businesses owners leverage the capital markets whilst retaining full control of their companies.
Callum has been there, done it, got the t-shirt and rang the bell!
Different type of creation…not just creation of a book – though Callum has done that a few times! – not just creation of a product – not JUST the creation of a BUSINESS which Callum has also done – BUT the creation of a whole new type of asset class – a TYPE of BUSINESS – which is helping small businesses collaborate so they can play with the big boys…
Today we’re speaking to Callum Laing, Callum is the founder and CEO of MBH Corporation PLC. And he helps small business owners leverage the capital markets whilst retaining full control of their companies. Well, from my point of view, Callum has been there, he’s done it. He’s got the T shirt, and he rang the bell. So Callum, it’s just so lovely to speak to you, we haven’t spoken for such a long time. Welcome to the chaos to creation confessions podcast.
Thank you very much looking forward to say I was going for a long time since
You’re the author of three books. I’ve got one of them here. I’ve started colouring in the dots. So Progressive Partnerships, then you did Agglomerate. And now you’ve done Entrepreneurial Investing – three books. Yes. So talk to me a little bit about the books before we get in and talk a bit more about what you’ve been dealing with MBH.
Sure. So firstly, thank you for your help. On the first book, you were quite heavily involved. And the Progressive Partnerships was kind of a philosophy that I had pulled together through just starting and building businesses and, and being young and without any resources and no money to do what I wanted to do, I kind of had to figure out how to partner with people to achieve the results that I wanted. So progressive partnerships was basically that journey, and our companies can apply it.
And what’s interesting is I put that book out four or five, five years ago, it seems to have had a real resurgence in kind of the last six months with with COVID and stuff, people are passing it around and, and getting getting good stuff out of it. So that’s very nice.
So that was that book, then myself and my business partner, Jeremy, and you worked on Agglomerate. With my business partner, Jeremy, we had come up with an idea to solve a problem for small business owners, which was a lot of our peers had built, ourselves and affairs had built successful businesses reached a certain level. And then the exits were always disappointed. And you know, you kind of read about these companies selling to WPP or Philips or whoever. And I’ve always sounds good. There’s always like this big number quoted, but when you look behind the scenes, almost all of these deals are structured as a three year or five year earn out. And the founder has to go along with the business and and the problem with our founders is that we’re not very good at suddenly becoming employees again. And the idea of having some bureaucratic accountant tell us how we should run our baby that we’ve been building up for the last decade or more, never goes very well. So there are friends and peers where we were seeing them being fired from their business within sort of six to 12 months of that or leaving in disgust because they just, it wasn’t what they signed up for, and leaving a lot of money on the table. So Agglomerate was really our attempt to put forward an idea that we were working on while we were writing the book, which was a little bit ambitious. But it was this idea of create a publicly listed company exclusively for the use of small business owners. So you sort of become the ideal buyer. And then those business owners share in that it’s a sort of a collaborative listing process. So yeah, we put that together. That was in fact, I got a picture of it that the boxes arriving like four years ago last week or something.
Wow. It’s been that long.
Yeah. So that was quite interesting.
And then, yeah, and then Entrepreneurial Investing came out at the beginning of 2020. And that was really more looking at it from the investor side. So a lot more It was written for small business owners. It was like, Look, these are the problems that you’re going to face as your business gets bigger. These are the challenges. This is the solution that we’ve come up with. And Entrepreneurial Investing was much more written for the investor to say, Okay, look, this is why these businesses and basically if you think about it from an investor’s standpoint, you’ve got half the world’s economy is locked up in small businesses like us, and they you know, they don’t get any presses. So The swimming pool maintenance company in Spain or plumbers, electricians in the UK, very unglamorous, unsexy businesses, but they make up the bulk of the 50% of the GDP 90% of private sector employment. And there’s no way for the capital markets to get into that. Because they don’t want to invest in a single small business because it’s too risky. It’s too illiquid, they can’t get their money back out again. And so you just got this weird situation where you’ve got half the world’s economy, that’s off limits to the trillions of dollars in the finance markets.
And so by positioning what we’re doing to investors and saying, I can look, now we’ve got a, a product, a financial product that allows you to invest in 20, 30, 50 small businesses through a publicly listed company, so you can get your money, invest in the morning, get it back out in the afternoon, if you so desire. And also, it gave me the opportunity to kind of share the journey, some of the things that we’ve learned since the first book, bloody noses that we got along the way. So yeah, that’s, that’s my book journey so far.
I speak to a lot of people, creators who create things, create books, or create courses or create businesses, but you can just create a business or a book or a course, you actually created a business class, an asset class. When you’re talking about Agglomerate, it took me so long to get my head around the the change that you were making, to the to the business world for business people. And it took a long time for me to get back because it was just so far at how this creation process works with these creation process creation process. How? How did you come up with it? I mean, what, like one day just, ah, let’s do it. How did that happen?
Yeah, it was Jeremy, that kind of came up with the idea. And I remember he basically what has happened was a couple of businesses that we knew had been bought by bigger PLCs and then destroyed, classic thing, we buy your company because you’re entrepreneurial and innovative. And then we want to turn you into a corporate, and you want to do everything by the book, like us, and the talent or leaves, and half the value is destroyed. So we’ve seen that happen. And Jeremy had been working on grouping businesses together privately to kind of get a better value for them. And he phoned me up one day, and he said, Look, what do you think about this idea about our own publicly listed company, and it just solved so many problems that I had had as a small business owner, and I could think of like a dozen people without even thinking about it, some of my friends that that would solve the problem for so yeah, we became business partners and started working on it.
And then yeah, it’s just the, the thing was with creative ideas is they’re always brilliant, when you first have them, and then you have to test them against the market. So I remember, the first time we pitched this to a business, we sell it, we really don’t know what we’re doing. But if you give us 100% of your company, we’ll put it into a public company shell. And yeah, that’d be really cool, right? And funnily enough, that pitch didn’t didn’t go down particularly well.
So yeah, we just kept refining and refining, and de-risking it and de-risking it for the small business owner. So that that basically, they could back out right up until the last moment. Because that was, that was really the only way we could start to get that traction. And then, yeah, you get out there and test it. And smack your head against the wall until something breaks. And hopefully, it’s all in my head. Yeah.
Cuz like, I’m imagining that. So imagine you go to a small business. And you said, right, when you were starting getting this out this idea of getting feedback from the market, because from my point of view, you there’s chaos, we’re living in chaos. There’s all this chaos over here. And our jobs as entrepreneurs as creators is to make something out of the chaos. So you saw you, you solved the problem that you were having that you could see a solution to a problem that you were having and that your friends were having and your colleagues are having. But that process of feedback, taking it out to market getting feedback, bringing it back in. I mean, were you afraid? Did you just go out there and say, right, I’ve got this idea. How did you think was there ever a moment where you were too afraid to put it out there? What was what was going through your head?
Yeah, I think you always questioning whether it kind of makes sense. I think what I think the more you do it and the more failures you have, the more you realise that the failures aren’t fatal. And so you can be willing to put yourself out there. Knowing that even if you don’t get the result you’re looking for, it’s probably a good Launchpad to something else that you haven’t even thought about. So that’s kind of the way I approached it.
And then, actually, it was much harder the second time because the first time we did it, we so we quickly were realised that when you’re pitching any new idea, you need to be pitching to people like you vision visionary. So for example, the first group of companies that we went for what all marketing companies, marketing, founders are typically created the visionary, they can see that the future, yeah, it never got off the ground, if we’re trying to do a bunch of engineering companies or accountants. Yeah, they need to see 50 years track record before they make a decision. So we have that, and then I’m happy to go and go into after this. But But that didn’t work out the way that we had hoped it would work out.
Actually, the hardest piece was picking ourselves up after that, and going out and trying to pitch the same idea, again, when people just keep saying it like that, that one didn’t work out. So why should we trust you on this one, and, and that was where we really kind of had to call back into the sort of the bigger why behind what we were doing. Unfortunately, with this particular idea, there was a very strong why behind it, which is, look, if we can help good small businesses get bigger. Now you help a $10 million business case 20 million, they can’t do that without adding 100 accounts. And that has a far bigger impact on the economy than your original next Instagram app or whatever. But but that’s where all the focus is on that sort of high tech, high growth stuff. Whereas we liked working with these well established businesses that actually have solve a real problem and generate cash. So yeah, going going back to that, that sort of bigger why of why we were doing it is really important to keep us motivated.
Okay, let’s go. Let’s, let’s hit that. So it was the first agglomeration was TMG, The Marketing Group. So tell us what happened. So you how many founders did you bring in? How many people did you get in companies?
So? And yeah, I mean, it was a it was a whole process, I think, what we really intended to have 20 founders in the group, and then go public, and then we got seven out of that enough, and then three of those dropped out, for one reason or another. So we actually went to market with four, and realise that four was way too many. Already. Trying to go public with one company is a pain trying to do it with for small companies is very painful. But anyway, we got, we got listed.
And we, because we pitched this to so many people, what we’d had was a lot of people said, Look, we love the concept. But we’re waiting till you list, and then we’ll come in and join, which Yeah, it’s fair enough. So what happened was we listed and suddenly, like everyone wants to be a part of it.
And so a couple of things happened that kind of compounded that the market in were actually listed on the European NASDAQ in Sweden. And the Swedish retail investors just love the story. And there wasn’t a lot of stock for sale. So everyone was trying to buy the stock, which just ramped up the share price. Of course, as the share price went up the original founders were like, well, this is the best thing ever. And everyone else wanted to get in quickly because they wanted to get in before that.
So in that first month, we added a couple of new companies and the next month we added four more companies and the month after that we added four more companies and 17 companies in 90 days or something now, the the market cap of the company so that the share price went from one euro to nine and a half euros in 100 days. So the market cap went from 14 million to 300 million euros in the space of time. And then then we kind of came unglued because we were getting bigger and bigger companies wanting to join the group. But they needed cash out as part of the consideration. Sometimes they had like debt on their books that we needed to buy out, or they had minority shareholders.
And so we still have a 300 million market cap company, we can get cash. But of course, we couldn’t, because we were only, we’ve only been listed for 100 days at that point. So we got approached, who actually had it recommended to a financier in New York, is elected. We do this all the time, you lend us and you lend us the shares, we’ll put in an escrow account, we’ll lend you some money that you can use to solve the cashflow issues. And then you just pay us interest every month and and you have the shares back in two years.
Sounds like a great solution. As far as we know, this bloke have never previously broken the law. Yeah, and it turns out, we’ve subsequently turned out he did this to three companies to US company in Hong Kong and a company in Australia, all at the same time, we think he made about 72 million. Basically, what he did was we sent the shares, we never got the cash, he dumped the shares in the stock market to cash himself. Now, of course, if you dump, this was 3 million shares, and you just dumped shares that so the share price is kind of went from nine euros down to euros in a couple of years. So that was that that was an extreme.
I don’t think I slept for about two or three months, we were just getting hammered from everyone. And eventually, one of his team turned whistleblower and reported him to the SEC. And so this is what he’s been doing these emails is all the proof. And they said, none of these companies are in America, that’s fine. What you discover is trying to prosecute white collar crime over international borders is nearly impossible.
So yeah, that was quite painful. But actually, the biggest mistake we made was, and this was down to a lack of experience was everyone advised us that what we should do is get ourselves off the board and put some old grey hairs on the board and restore investor confidence. And in retrospect, that was actually the worst thing for us to do. We should have sat there and dealt our way out of it. Because once once is 3 million shares with GM. Yeah, we still have great companies in the group. We’re still doing that. Anyway, so we came off the board, we lost control of the board, the new board did absolutely not Well, the first thing they did was gave themselves huge salary pay rises. And then they tried to rebrand all the companies which nobody wanted. And eventually, they eventually tried to do a start up in the crypto space exactly when crypto fell away and and then eventually delisted and came off the market. Interestingly, the companies in the group are fine, because the holding company was completely separate. And the share price is not a reflection of the underlying value. So each of the companies just withdrew or just pulled out of the group.
We’re still in touch with a lot of them as a couple of months to join us in the new venture. But it was an incredibly painful, hideously expensive lesson to go through. And we had staffed up we went from we did the first listing with I think a team of six. We staffed up to about 50 people in a few months, just in order to deal with like, Yeah, all these deals coming to us with media chasing us. And yeah, all of that. All the money suddenly dried up. So we had to kind of lay off all of those people and that was free version as well. So yeah, it was it was tough, and it took us took us about two, two years to recover.
So you telling us about this journey that you’ve been on. So a few years ago, you and Jeremy came up with this brilliant idea to solve your own problem. You’d seen entrepreneurs, SMBs, clients and friends having the same problem. And you came up with this idea to solve this problem. You test it out, and a few people, you pitched it to them. They thought you were a bit crazy. And I thought you were probably bonkers. So you refined this pitch, you got closer and closer and closer to what people wanted. Once you refined the pitch you and Jeremy just said, right, let’s do it. Let’s make it happen. And you went ahead, charged ahead, and you did it. And and you listed a company, you did an IPO. At that point, everything looked like it was going brilliantly all the figures were going up. Everybody was applauding you and you had like, you know, big, everybody wanted to get in on this fantastic idea that you guys have come up with. And then things started getting a bit sticky, a bit icky, you took some bad advice from a dodgy banker in New York, and bad advice and board changed to grey haired old guys, we know we don’t want those around. We want no head, old guys. No. Things started to fall apart. So what we started off being really fantastic and a brilliant idea and was going really, really well. And everybody wanted to have a part of started falling apart. Now. Most people at that point, most sane people will go right. Okay, maybe though, you know, maybe that wasn’t the right thing to do. Maybe Maybe it was a bad idea. You guys didn’t do that? What happened? What did you do next?
Yeah, say it was incredibly tough. But I think ultimately, we came up with the realisation that they had clearly been demand for what we were trying to do. First, we knew it solved a problem for us. But it also solved a problem for lots of other people. We also realise that if we didn’t do it, it probably wasn’t going to get done. And, and because small business owners is just flat out running their own business anyway. The finance world doesn’t think of small businesses as viable on their own, they think of them as something to exploit. So you have lots of people that do kind of these roll up in the list. So they’ll buy a bunch of small businesses, they’ll fire the founders, they’ll try and consolidate them all. And lots of people have done that. But it never starts with what’s right for this small business founder.
And we’re so we’re coming from this bottom up approach. We genuinely believe that was the right thing to do. We also we genuinely believe that like that bigger why driving it, which is if if those companies are successful, it adds a lot of headcount. The business owners themselves get liquidity, like ever. anything cool that’s happening in philanthropy right now is being done by entrepreneurs. But normally, they’re, yeah, actually geriatrics by the time, they’ve kind of got enough liquidity in their lives to do it. So if we can forward that process by 2030 years, so those founders can go out and solve bigger problems. So we kind of had a very strong why to try again.
And, you know, the problem with, I guess it the advantage of so much stuff going wrong so quickly was that we kind of got 10 years worth of lessons compressed into a very short, excruciatingly painful period. But it did give us a huge, huge amount of learnings. And it did mean that when we were able to launch MBH, as our current business, it was a much, much stronger proposition from day one, much, much better protected. And I think, you know, people always say, you know, at the end of the day, it was the best thing that could have happened to us. I’m not quite there yet. I think I could have learned some of those lessons without getting kicked in the nuts but ultimately, we learned a lot and it is a much stronger model that because of those those learnings.
Okay, so you pick yourself back up, you said, right, we’ve got a big why. We know why we’re doing this. This is important. We can’t if we don’t do it, nobody will. So you’ve got your big why and you said right, let’s do it again. So you brought all the lessons that you’ve learned in the 10 years worth of lessons that you’ve got in a couple of months. And you pick yourself up when you got on with it. So tell us now about MBH Group, and what’s going on how you started it again and how good isn’t it?
Yeah, so MBH UK PLC is listed on the Frankfurt Stock Exchange, which is a regulated markets, it’s one of the biggest in the world, it’s very liquid means a lot of shares being traded. So we started with an empty shell this time rather than for small businesses and we brought in. And when we decided to run the one industry vertical, we wanted to be across multiple industries so that if there was a downturn, for example, actually, during all of that stuff that was going on in marketing, there was also a bit of a marketing downturn as well. So we wanted to be protected across multiple industries.
So we listed in Frankfurt, coming up two years ago, so sort of November 2018. And we have now added, as of last week, I think we’re up to 17 companies in the in the group, we’ve got a combined revenue of 100 million dollars, $10 million of EBIT, we issued our dividends after the first year. So there was 110 companies listed in Europe last year, and by various different metrics were in the top three fastest growth for revenue and profit, and one of only five to issue a dividend.
So and yeah, it’s going, it’s going fantastically. We just got such a good group of business owners in the in the business, and, you know, we’ve been through COVID, which, you know, it’s kind of as good a stress as you’d like to put on the small business world. But these companies have worked so well, together. And even though they’re different industries, different countries, they all have a vested interest in each other’s success. And so and they’re all veteran entrepreneurs. So they’ve all been, you know, the average age of the companies in the group is 23 years old or something. So they’ve all been through downturns before. And so when COVID happened, and they just rolled up their sleeves got on with it shared best practice amongst each other. Yeah, it’s been, it’s been fantastic to be a part of it’s a real pleasure.
So and this time, it sounds like the growth, the immediate growth was a bit more calm, slower, you controlled. What else did you learn? So you guys still on the board?
Jeremy sits behind the board and does the deal sourcing and stuff. And I am the I says the see on the board. Yes, I think the most obvious one is to the external world, and the fact that we are across multiple different industries. But I think there was, yeah, the fundamental idea is the same, you find good well run companies, you bring them in, and you leave them alone. And that’s, that’s really the, the heart of the model. And it’s just, it’s incredibly attractive. And it gets more a kind of snowballs. Because the more companies that are in the group, the more case studies you’ve got, the more you can talk to someone like them. And then we’ve got companies coming in. And we’ve got companies in the group, caravan company, which is now looking like a genius move, because everyone’s by pure luck.
But yeah, we’ve got a taxi company that joined us recently in in Leicester, but they’ve got a shopping list of like 65 other taxi companies that they want to bring in with them. So we just acquired a real estate company in the US. And again, they want to kind of consolidate the brokerage industry in the US. So it’s just really Yeah, really, really exciting. And just the good people well experienced business owners that like, like to, yeah, work, work with other good entrepreneurs.
Sounds wonderful. So I mean, it sounds wonderful. I’m imagining people out there thinking, Well, my business is about 20 years old, we’re profitable, we’re doing quite well, but I can’t work out how I’m going to retire. I can’t work out how I’m going to get out of it. Who’s going to buy my business? What should they do? What type of companies are you looking for to join you in the future?
Yes, I mean, we kind of have our, I guess our target market, which is doing somewhere between in UK terms or your terms sort of, say half the half a million of profit to five to 10 million of profit. That’s kind of our sweet spot. Pretty much any industry. Right now we’ve got transport. We’ve got that Construction got education. But yeah, I open to pretty much any industry. And I guess the big distinction is these companies aren’t for sale, like the founders don’t want to lose control. You know, there’s, like you said, they’re probably thinking starting to think about, what am I going to do in five years time, pretty much guarantee that kids don’t want to take over the business. So this is a really good option for them. Because once they do get to that point where so they can join us, they get the liquidity of the stock, so you can start to sell down, take some money off the table, their risk is spread across 20-30 companies, rather than being all in one company, which as we know, can be a little bit hairy.
And then when they do want to retire, you’ve got a whole bunch of other companies in the group that have a vested interest in their success. So it’s very likely that somebody else in the group will say, Well, look, I’ll take over the running of your business, I thought a young manager came through, I’ll put them in, and I’ll oversee it. Because the way that we structure the deal, it’s the same for everyone, they get a multiple earnings on day one, and then every year thereafter, it’s a perpetual learning. So the more successful they are, the more shares they they have. But that means that when somebody wants to retire, another company in group would want to take over that because then they get the bonus shares moving forward. So yeah, it’s quite a nice solution, and 70% percent of all small businesses owned by baby boomers. So they’re starting to think about what’s next with that we all started about what’s next.
So fantastic story. I mean, like a roller coaster journey of, I mean, you know, I saw you ring the bell, and I was like, Oh, my God, it’s my mate. And he rang the bell. So anyway. What sort of advice would you give yourself? Now, if you could go back? Right to the beginning of this agglomerate journey? What do you think about what advice would you give yourself?
Annoyingly, we just had to get through it. That’s the problem is, when you’re doing something that hasn’t been done before, there isn’t really anyone that can can advise you. And, you know, the finance world told us it couldn’t be done because you can’t trust entrepreneurs. Yeah, I mean, I think we’ve probably rushed it a bit. But equally, I think you need to like the, the, the opposite of that is waiting for everything to be perfect before you do it. And, and the reality is, it’s never, it’s never going to be perfect. So better to get it out, learn the lessons, iterate and move on. But yeah, stick with it.
Stick with it. All right. I love it. Right. Because one of my key things like you never know, just keep going. What’s next for you? What’s happening next? So you’ve got MBH going on what else you want to what? If you got anything else that you can be up to with that going on me? What’s happening for you?
And that’s pretty much full time or they now, weirdly, launch the podcast.
Your podcast, it’s fantastic.
Thank you. So yeah, that was a another creative endeavour. And that that was actually triggered by talking to the business owners in the group. So we’ve had these regular calls, and I’ve listened to how they were overcoming challenges. And it was just so inspiring, listening to them. And I thought I wish there was a way of sharing that with the wider world. So yeah, as you know, I put together a system where people can go on to entrepreneurs can go onto this web page, they record three, three or four minute answer to the question, what’s the biggest challenge that you’re overcoming your journey and what did you learn from it? And then, yeah, that’s now a it’s a daily podcast that’s been going launched at the beginning of August and it’s just going crazy, I think where we’ve got guests up until the middle of October, signed up we’ve got the downloads are going nuts, and I’ve now got people wanting to buy the whole concept of me like what white label it and do their own, like parenting tips on nutrition tips or stuff like that. So yeah, it was just a little sideline because I was bored. one weekend has just taken on a life of its own.
You can’t stop – I mean, it’s like you’re always thinking I can share this. How can I solve this problem? Okay, so I’m going to start wrapping us up a little bit, because what I just want to know from you right now is this, you know, you talked about this bigger why that’s what kept you going when you were having months of sleepless nights when you screwed over that bigger Why? What is the bigger why for you? Because you know what? I think you’ve even got an even bigger, bigger, bigger why. So tell me, what’s your bigger? Why what gets you up in the morning?
I think one of the things I figured out a while ago was I kept looking for kind of what said, I’ve been an entrepreneur for 25 years, and I keep bouncing around different industries and kind of looking for what would be the perfect thing. And I realised, it’s, that’s not the way to do it. For me, it’s to find, who do I want to be working with. And what I realised was, I really like working with small business owners. But I like small business owners that have been doing it for a while that reached a certain level, they’ve got that experience, they’ve got the war stories. Whereas to me, no offence to kind of young startups, but that space drives me up the wall, because it’s like, there’s nothing there. It’s all like in the future, we’re going to just get 1% of the market. And so so basically, what I started with was like, these are the people I want to work with. And so this is kind of my, this is my sort of ideal, and exactly the right space to spend all day every day talking to coal business owners and a lot of yet retired business owners that become investors in what we’re doing, because the level we’re doing and that’s quite fun.
And obviously, your newest book with the Entrepreneurial Investing, you’re actually educating investors as well so that they can get part in it. You know, you’re kind of covered both sides of the problem for everybody. It’s been fantastic. Is there anything that you want to tell me?
Not while I was recording,
We’ll stop recording. We’ll speak later. It’s been awesome to speak to you again. It’s lovely to see you smiley face. And thank you so much for your time chat.
Callum on LinkedIn: https://www.linkedin.com/in/callumlaing?originalSubdomain=sg
Callum’s Books: https://www.amazon.com/Progressive-Partnerships-Business-Callum-Laing/dp/1781331855