Founder's Story - Three 9-Figure Exits: Founder's Story with Investor, Author and Serial Entrepreneur Mike Fata | S2: E14

Episode Date: February 8, 2024

Mike Fata's entrepreneurial journey began with a pivotal decision: to prioritize his health. Co-founding Manitoba Harvest Hemp Foods in 1998, he dedicated over 25 years to studying natural health and entrepreneurship. As Chairman and CEO, he led the company to a nine-figure sale to Tilray in 2019. Today, as CEO of Fata & Associates, bestselling author, and keynote speaker, he champions sustainable and health-focused ventures. Fata also serves as Chairman of the Board for Nuts for Cheese, Mid-Day Squares, and advises a diverse portfolio of companies. Subscribe to our newsletter so you don't miss out on exclusive interviews and special content: https://foundersstory.beehiiv.com/subscribe For more info on guests and future episodes visit pix11.com/impact and https://fox5sandiego.com/fox-5-partners/impactful/Our Sponsors:* Check out PrizePicks and use my code FOUNDERS for a great deal: www.prizepicks.com* Check out Rosetta Stone and use my code TODAY for a great deal: www.rosettastone.comAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

Welcome to Founders Story, the podcast where trailblazing entrepreneurs share their extraordinary journeys, uncover the passion, grit, and vision that drive the world of business and innovation. Welcome back everyone to another episode of Founders Story. We had to find an incredible entrepreneur investor who was going to talk to us about growth, about exit, post-exit, and then what do you do next. That's why we have Mike Fata, who's an incredible investor, advisor, mentor. There's so many companies we'll dive into, but he sold his company twice. The last exit was $419 million. He's incredible. We've done a discussion and interview before,

maybe two or three years ago, Mike, was that? When we first talked to you, I believe. Clubhouse days. Yeah, that's how we met, right? So, and I was super inspired from that discussion. So thank you for coming on today. And I also want to say that you are the author of Grow 12 Unconventional Lessons for Becoming an Unstoppable Entrepreneur. We're going to dive into that as well. But welcome to the show. Yeah, thanks for having me.

I guess this is the second time. We started the show surprisingly back in 2020 and it morphed into Clubhouse. So this is the second time you're on, but we're going to dive in. Mike, before we go into all these things, the exit investors, all the companies, everything you're doing now, because I know it's a lot, but you never look stressed, by the way. Why don't we dive into first your story? What was that spark that you said, I want to be an entrepreneur? Yeah, I grew up with a single mom and we didn't have a lot of money. And so right from when I was young, I thought, hey, how can I make money? You know, just help out, help the family out. And started back in the day like a paper route.

And but what got me really into business was leaving school early. I dropped out of high school and started working to make money and then hit my passion for health. but kind of the hard way. I weighed 300 pounds and ate a lot of junk food, ate too much junk food. One day I thought, hey, I'm going to change things around, started a weight loss journey. And that got me interested in the health food business and started the business in 1998. That's incredible. What do you say to people when they're like, I want to follow my passion? What do you say to people when they're like, I want to follow my passion? What do you say when people say that? I know there's a lot of mixed feelings around when

people say this. Yeah, I'm a big believer in it. You could say it a different way. You know, if people are familiar with the Ikigai, what do you like to do? What are you good at? What does the world need? And what will someone pay you for? If you triangulate that into a business, you're likely going to be successful. So like, what do you like to do is a simpler way to say, what are you passionate about? Because when you say what you're passionate about, you're right. Some people are, it's polarizing. People say, I don't know. You have to be passionate about something. Well, what do you like to do? You know, do you like to play soccer? Are you involved in sport? Do you want to build widgets? Are you a plumber? Do you like to play soccer? Are you involved in sport? Do you want to build widgets? Are you a plumber? Do you like water?

Like there's something that you like to do. And if you can do that enough, do enough repetitions of that to get good at it, then likely you're going to, and the world needs it. You're going to be able to profit off of it and be successful. But more importantly, not feel like you're working. Just feel like you're doing something that you love, right? I love that. Somebody recently asked me, if you were given a billion dollars, would you be doing the same thing

that you're doing right now? How do you feel about that? I 100% agree. Like I call it living your best day ever. And that term also for people strikes some people, but like, what is your best day ever look like? If you dissect like how you wanna spend your day, how much you wanna sleep, what kind of foods you're gonna be eating, what kind like how you want to spend your day, how much you want to sleep,

what kind of foods you're going to be eating, what kind of projects you're going to be working on, how you exercise, how you spend your fun time, your free time with your friends and family, what does that day look like? And that's your best day ever. And if you're not living your best day ever right now, I suggest like mapping that out, doing an analysis of where you are right now, and then there's going to be a gap there and move towards that gap. So that comment of like, hey, if you had a billion dollars or $10 million, like, what would you be doing? I'm hoping you're living your best day ever. And people can start that right now. You can scope that out and start working towards it.

I love that. You don't have to wait, right? You don't have to wait for the billion dollars. You can do it regardless so you you've gone through two exits you know the first one i know is was in my opinion very successful and then the second one was like extremely extremely successful um when it comes to like monetary i know you had a lot of challenges ups and downs i know things with your mom and other things in family um some things that were very saddening as well. But how was it from the perspective of exiting something that you spent so much time? And I know you had some family involvement in terms of people around you. How did that feel that, OK, I'm going to get rid of something

that I've been working on for 20 years? Yeah, it's challenging you know a lot of entrepreneurs people don't talk about as much that grieving process that happens when you sell your business because guess what i was living my best day ever running manitoba harvest i loved building the business the journey from zero to 100 million in sales is just such a ride we had a team of over 200 people showing up there every day working on this project i was i, I loved that work. It didn't feel like I was working. And so when we sold the business, it was life-changing for me, but really I wanted to show up and keep doing the work with my team and you can't do that anymore. And so there there's a definite grieving process and then you got to figure out, okay, now what, what are you going to do next? You have all the time and

resources to do something, but it can't be the thing that you're working on for the last two decades. So how do you know when it's time to say goodbye? Is there some sort of indicators or now that you're an investor, if one of your companies, your portfolio says, I got a great offer or I think it's a great offer, but I don't know, I'm on the upswing. I'm on the upswing. Maybe I can get better. Maybe I can get a better offer. What don't know i'm you know i'm on the upswing i'm on the upswing maybe i can get

better maybe i can get a better offer what advice would you tell them yeah timing is everything in business you know i look and say we sold manitoba harvest twice and both of the times was the exact right time the second for sure when you line that you know cannabis was legalizing in canada the us legalized hemp like everyone's focus and attention was on hemp. And we did a deal, that $419 million deal within six weeks, right? And so timing's everything. We actually, I had three nine figure Xs. I had my first exit as a chairman and investor in Soul Cuisine, same thing. One of the oldest plant-based protein companies in Canada and plant-based foods were just super hot. You had all this investment dollars going towards it. And we thought that was the perfect time to sell the business.

And we did a $125 million transaction, which was five times sales just because that was the right time. And on the flip side of that, unfortunately, I've seen a couple of friends and a couple of entrepreneurs that are close to me. And actually it just happened in recent where you miss the timing and then you go over the handlebars, you go over the waterfall and sometimes the businesses don't recover, you know. And so not only do you not get a nice exit, but it can suffer and businesses can actually close all on timing. So I get that entrepreneurs want to be bold and say, if I made it to 10 million, I can make it to 50. But that's not always the case. You know, sometimes it is a time to bring on a new partner, exit the business and think about what's next.

I love that. I remember in a personal experience, somebody was coming to us. Hey, we want to maybe buy your company. And we took it as an insult, funny enough. And, you know, within a year that business imploded. So looking back, like, holy cow, that, you know, that could have been something that was much bigger and timing was, you know, played in there. So let's dive into now that you've transitioned from really focusing on in the business, focusing on leading teams to now helping others do the same thing from the

advisory standpoint to the investor standpoint. How's that transition been and what's your best day, the best day in your life now? Yeah. Well, I realized, you know, after growing a hundred million dollar business that I liked the journey from like 10 to 50 or 10 to 100. You know, I'm not a startup guy. Startups are so tough, but when a business gets to like 10 million in sales, it's the perfect time to make significant investments to grow the business. Because at that point, you can hire and you need to hire your million dollar management team. You can make investments if it's in manufacturing and really in sales and marketing to introduce more and more people to the products. And so it's a major build phase.

And I have unique skills. Not a lot of entrepreneurs get to $10 million and for sure, not a lot have the experience from 10 to 100. And so besides my money resources that I can help these founders with, I can teach them and help them with insights on how do you structure your senior leadership team? How do you build culture in the organization? How do you build world-class quality and make a brand that is going to live on forever? And I can do all that very strategically without what I would say eating a shit sandwich, because we all know it's very hard to operate a business. Not being the entrepreneur that's in the CEO seat, but being on a board and being able to be a trusted advisor to the entrepreneur, I can really help them and put fuel on their flame.

I can only imagine because you're not the one that really makes the decisions for them. You can guide them, but they have to, in the end, make the decision. How is that feeling? Was that a transition to where you were really in control and to now, you know, you're more of the, you're more of giving the advice and hoping that they take the right path? Yeah, I've learned a lot through, I'll call it my time as a mentor, because whether I'm an advisor or a board member, I'm also, I'm providing mentorship to the founders. Well, here's the thing as a mentor. I'm not telling people what to do.

I'm sharing with them what I would do if I was in their situation, given the experience that I've had in the past. So usually that comes with a story of like, hey, I've experienced something like this before. Here's how it went down. Here's what the end result is. And here's what I would do again differently if I had the chance to take it over, which can be hugely helpful for an entrepreneur because it's what does good look like or what's an example. But I can't take it personally if they don't take that advice, right? So that's where I've really learned to say, hey, I'm going to put my best foot forward. I'll tell you how I would do it. But every business is different. The strength of an entrepreneur is they have to internalize all these insights

and then make the decision for themselves. So I just don't take that personally, whichever way they go, but I go full in with them to offer my insights. Well, Mike, let's dive into now, I know you have your unconventional wisdoms, your like growth is your thing. I mean, you know how to grow your own businesses. You know how to help other people grow their businesses. So if somebody wants to get into that growth phase, what's an unconventional wisdom? What's something you tell them when they're going from, you know, let's call it $500,000 to a million dollars

and then a million dollars plus. Listen, the first thing is to be successful and grow in business, you have to be your best self and you have to grow personally. So I'm a big believer that being an entrepreneur is like being an athlete. You have to think about getting the right sleep, exercising, eating well, training, doing some meditation and de-stressing exercises, you have to show up as your best self. If you don't show up as your best self to your business, it's not sustainable. You know, you can do little sprints like that, but over the long haul, it's going to work against you. So it always starts with like being your healthiest and your best self. Then when you have, which takes a lot of effort, right right you have to like learn these health practices

you have to have the discipline to to put those practices into place at home and in your everyday life and when you're traveling as an entrepreneur and all these things that add extra challenge but when you master that and you have discipline around that you could take those growth practices to a business and like that look what does that look like in a business standard operating procedures you know strategic planning and governance, surrounding yourself with other like-minded growth people, finding out what good looks like or what world class looks like, and then implementing that in your business. And so personal growth and professional growth go so well together as an entrepreneur, but it starts with your personal growth. I love that. Not a lot of people are talking about the personal side.

They're talking about the business side, the SOPs, like the specifics of the business, but not how you as a person need to grow. We recently had Jake from Midday Squares, which love the company. I really enjoy what they do from their marketing standpoint, all the things. So how do you see when you when you have a company like that, they're doing well, love what they're doing. And then do you take that what's working for them and go to other companies that you have and say, hey, maybe you want to take a look at this? Or do you bring those people together? Or how from an investment standpoint,

when you have a portfolio of companies, can you align companies together or like help them when it comes to their strengths? Yeah, for sure. I mean, my, I have, uh, nine companies in, in my portfolio right now. And I'm, um, I am taking best practices and learning the best practices that's working for, for each one of the different portfolios. And then, and then trying to share that, uh, either get the founders together, which I'm going to be holding the first Fata Founder Fest this summer, actually. And I'm looking forward to that to actually get everyone together. But we generally get together at trade shows

and when we're out in the marketplace. But yeah, if there's a new buyer at one of our target retail accounts and that's going to be beneficial to all the portfolio and someone has a relationship there, we're going to jump on that. To use the example of Midday Squares, Midday Squares is setting the example, I think, of how great storytelling and internal media in a company can really just catapult the business to success because it drives really low cost awareness

and almost a FOMO. People want to get involved, you know. And so I take Midday Square's example and share it with the other portfolio companies and say, let's up the conversation. Let's tell people why we're doing this. Let's give them a little bit behind the scenes of the business. And it really, really works out. I love that. And Founders Fest sounds amazing. So and you have some of the most incredible companies in terms of food so by the way if if i had a portfolio like that i would never go hungry it is amazing like all of the food i know the the companies that you support i think i tried almost all of them and they're they're great so last question for you from an investor's perspective, I know that markets go up and down and people are talking

about how hard it can be to raise capital, raise money. What do you tell companies when, or if you could give advice to a company right now that's like, okay, I'm at that level, I'm at that point, I want to raise money, but I've never done it before. I don't even know how to approach an investor. Is there any advice or something that you would tell them or a way that you like to be approached when it comes to somebody that's trying to, you know, pitch you or maybe build a relationship with you? Yeah, it all starts with a very strong strategic plan. So if you don't have a good plan of where you are right now, how you're going to grow the business, how much capital you

need to make those next steps of growth and clearly identify the use of proceeds of what you're going to use these investment dollars for. It's really hard to even even if you attract investors and you get in a conversation with them, you're not going to make any sense to them. So I'm a big believer in strategic planning. And, you know, if you're a half million dollar business, what is a million dollars of revenue look like? What's the growth path to get there? Do you need new team hires? Is it sales and marketing spend? What's that use of proceeds make up? And all that needs to be in a nice strategic plan that's clear and an investor presentation. And it is a resource that, you know, we have one of my give back projects, a mass mentorship project is fadafleishman.org. We've basically taken all of our

forms and tools and templates and made them available on the web for free at fadafleishman.org. And so we have investment presentation templates and strategic planning document templates and a whole host of other things that entrepreneurs can go and use because a lot of people are just not familiar with how to put together a good plan we've just taken the best concepts and the best templates of our plans and put them but that's where it really really starts and and you know i'm a big believer and you just got to live the business plan over and over again right a good governance cycle isn't make a strategic plan and a budget for the year and then put and then put it in the filing cabinet. It has to live on your desk. You have to look at it quarterly. You have to review it every month. You need KPIs on a weekly basis that you're judging

the business against. And investors are all over that. That's how they're going to live. So you start talking their language and provide a format that's easy for them to digest. You're more likely to get support. Amazing. I've used your tools before. I remember when you put that up. So thank you for that. I really enjoy the fact that you are all about impact. I mean, we're here.

Our name is Impact, a founder story. So everything we do is towards that. And I can always tell. And that's what I think really attracted me to learning about your story and the things that you say, because you are one of the most genuine people. Not only are you talking about what you're going through, but I can tell you're just a genuine person. And I think you were you really wanted to do good. And I can tell other people also feel that. So, Mike, thank you so much for being on the show. But if people want to get in touch with you, I know you speak to organizations like YPO, Young Presidents

Organization or EO or other corporations. If people want to get in touch with you for that, or maybe they want to buy your book or they want to find out more about like what you invest in, how can they do so? Yeah. All things me is at mikefata.ca, M-I-K-E-F-A-T-A.C-A. But I'm also really active on LinkedIn. I love posting and building community on LinkedIn. So hit me up on LinkedIn. Tell me you saw the show and happy to connect. Amazing.

I really enjoy your LinkedIn posts. I'm always inspired by them. So Mike, you know, it's been like three years. I think it's like three years later. It was great to chat with you them. So Mike, you know, through, it's been like three years. I think it's like three years later, it was great to chat with you again and just see, you know, the trajectory of all the companies that you've been helping and what you've been doing. And again, thank you so much for your impact and being here and giving up your time. Yeah. Thanks again for having me. Thank you for tuning in to Founders Story. Keep exploring, keep dreaming, and join us next time for more inspiring entrepreneurial journeys.