Buying a Mountain and Scaling Cash Flow Machines: An Interview with Summit Co-Founder Ryan Begelman
Ryan Begelman is the co-founder of Summit, a community-driven event series that's been described as TED meets Burning Man meets Davos for Gen Y.
Over the past decade, Summit has featured the likes of Richard Branson, Jeff Bezos, and Jessica Alba, among a host of standout speakers and global luminaries.
Ryan recently left Summit to focus on acquiring profitable businesses, while continuing to coach global executives and pursue his study of mindfulness and meditation.
Put simply, Ryan’s career is fascinating. We’re thrilled to dive into some of his lessons today.
Summit’s Early Days
Summit was initially my co-founder Elliott's idea. It was formed around this basic notion that we should get other entrepreneurs together and ask them a bunch of questions about their life, their origins, and their future. Back when we first got started, there wasn't a podcast ecosystem like today so it was harder to just interview people that we wanted to meet.
Because of that, we pulled together a big ski trip and paid for it ourselves. Over time, that trip organically started to morph into a legit community. In tandem, as that community scaled and folks felt a real connection to the tribe, Summit became a business opportunity that we could actually sell tickets to. Profit and cash flow aside, it really became a vehicle for us to pursue our lifelong passions, which were building an amazing community and getting to meet brilliant folks from all over the world that we had the privilege to learn from.
Summit, for me, became this kind of skeleton key that I could use to go explore both myself and the world at large. We loved skiing, so we bought a ski resort for Summit. We loved surfing, so we rented this place with a great surf break and hosted events every afternoon and evening.
Notably, one of the unifying threads of both the leadership team and our members was that we all hated working in offices that corporate America was known for. In 2008, my co-founder and I hit the first wave of digital nomadism. We sold all of our worldly possessions and put everything into a backpack, first moving to Nicaragua, then Tel Aviv and Barcelona.
Of course, my friends in private equity thought we were insane. But as more and more friends would want to come crash with us and co-work out of our houses, we realized we could just invite people we admired to live with us for a bit. That connection and sense of tribalism is impossible to match in corporate America. As we hosted more and more people, Summit emerged organically into a series of retreats, speaker series, and trips with friends.
Over time, like with Powder Mountain, we’d just rent bigger and bigger houses, ultimately moving on to rent out a whole town for a long weekend. That swelled into a larger vision of raising $40 million from the community itself to finance an acquisition of our own mountain.
While that larger vision seemed clear in hindsight, at the time it really originated from a basic desire to spend time with like-minded entrepreneurs in a tight-knit community.
When I think about how I got my start, it all came down to a desire for freedom.
By freedom, I mean being able to dictate my own schedule, gain financial independence, and retain a certain amount of control over my priorities in life. With all that in mind, I first went into private equity after college with the purpose of leaving as quickly as I could.
I wanted to learn about building, buying, and selling companies as quickly as possible.
I left The Carlyle Group in 2008 to become the CEO of Bisnow Media. With a relatively small investment of capital into the company, I was able to turn it into a $7 million a year profitable enterprise. That was my first real experience in entrepreneurship.
When I co-founded Summit, my partners and I bootstrapped the whole thing. Since that moment in time, I’ve become endlessly fascinated with scaling businesses without being indentured to growth or restrained by constantly finding new sources of capital like taking on venture or alternative equity financing.
To be honest, venture isn’t necessarily a bad thing. But from the perspective of my priorities and how I wanted to live my life, I kept coming back to freedom. I wanted to be able to do whatever I thought was best for the business without having to appease investors.
Focusing on Cash Flow
From day one of my entrepreneurial journey, I adopted this mindset of collecting cash flow businesses and scaling them into a successful mini-conglomerate of my own.
Even if a business I start or acquire a stake in isn’t generating cash right now, I need to make sure it has the right margins, team, and growth trajectory. Then, within the first 24 months, it usually starts to throw off cash if the right systems and processes are put in place.
My focus on cash flow directly correlates with this idea of passive income, referring to income streams that you don’t have to actively spend all your time checking in on. In my own life, these passive income machines are the businesses in the background keeping the lights on.
Since I was a little kid, I’ve been absolutely fascinated with replicating that model. I spent a tremendous amount of time reading every book about every founder who developed these models. Some of my favorites include Ray Kroc, Bill Gates, Steve Jobs, and Ted Turner.
In turn, those books and the lessons they carried created a lens through which I filtered a myriad of incoming opportunities and helped limit what was relevant to spend my time on.
For example, an e-commerce business that’s always having to hold liabilities in the form of inventory in order to scale wouldn’t be up my alley. On the other hand, a newsletter business that’s relatively cheap to build and has high margins would be a perfect target.
As long as the inputs that I invest have the potential to compound over time, whether that be capital or my attention and energy, then I’ll start paying attention to a new opportunity.
Acquisitions and Bootstrapping
If you're trying to optimize for well-being as an entrepreneur, especially with a focus on avoiding the anxiety of high-growth companies, I highly recommend shifting your attention to buying businesses that already have product-market fit and are profitable with quantifiable traction.
In most cases, these businesses are just not run as efficiently or as well as they could be. That’s not a knock at all, it’s just the truth. There are tens of thousands of baby boomers retiring every year who don't have anyone to leave their businesses to. At the same time, the majority of these lifestyle businesses are too small to sell to private equity or take public.
If these circumstances are in play, that’s when I’ll want to come in.
I’d acquire these businesses and then implement modern marketing tactics and highly efficient systems. In the same way you don't necessarily need equity to start a venture-backed business, you can also raise capital in the form of debt to quickly turn around these outdated businesses. In the right scenario, debt as a tool can create incredible leverage in your favor.
Finally, it’s important to note that it’s quite hard to bootstrap and build multiple businesses from scratch. It's just easier to buy businesses and spread your risk. As you acquire more of these businesses, you get better at it. You’ll quickly improve your skills across all aspects of company building: sourcing, scaling, financing, diligencing, underwriting, and closing.
Optimism and Mindfulness
When it comes to your day to day fulfillment and happiness as an entrepreneur, I recommend keeping a journal of what lights you up. Pay close attention to what drains you over time. For example, track what calls you finish and notice your energy is abnormally low. At the same time, ask yourself which calls you finish and find yourself fired up and optimistic about.
Based on some of this real-time feedback of your emotions, start crafting a life around what gives you energy. In turn, do your best to automate or delegate the necessary but energy draining work that just needs to get done when building and scaling businesses.
At the end of the day, what you should try to be doing is building a lifestyle and profitable businesses around your niche set of interests. Every single person has a unique skill that they’ve mastered over time, but just don’t know how to sell or scale in a profitable way.
When it comes to making day to day decisions about spending your time, it’s critical that you remain on offense at all times. Every hour, you can either go on defense and settle into the default mindset of reacting to your inbox, or you can go out and create opportunities from scratch that didn’t exist an hour prior. Always remember, you’re either on offense or defense.
Finally, I have to note the importance of developing willpower and the ability to stick with something and stay optimistic about it for extended periods of time. That’s a superpower.
And of course it’s hard, because sometimes your physical and mental well-being suffer. That’s part of the process, and in turn you’ll find new outlets and ways to find balance. In my own life, I’ve found mindfulness and stoicism to be amazing levers in improving my happiness.
At the end of the day, this is an endurance game, so it’s critical that you train like an athlete.