Zero to Tesla
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“I really only like doing business with people I trust,” he said. “I don’t have anybody in Canada that I think would be a good fit.” Later in the conversation, he added, “If you ever decide to sell your company, we should talk.”
It seemed like an omen. On a FaceTime call to my wife and two sons I brought it up, “I’m thinking of switching careers. I’m thinking I might bring 500 Startups to Canada.”
My younger son, Rishi, age 4, stuck his face in front of the camera and said, “Yayyy, Papa’s going to work for 500 Starbucks!” I didn’t bother correcting him. If that’s what it took to make the family happy, then I was going to go work for 500 Starbucks.
When I returned to Toronto, I called Ian into my office. “Ian, we’re going to accelerate things a bit. You’re taking over as CEO.” I then called Dave and said, “Remember our conversation in Dublin? Well I haven’t sold my company, but it’s probably going to happen sometime in the coming year, and in the meantime, I’ve named a new CEO, so let’s talk.” We set up a time to connect, and I called Bob back to say, “I’ve been thinking about it, and I guess it wouldn’t hurt to let you take a look at our books. But I’m still not particularly interested in selling.”
Within a couple of months, in February 2016, Bob sent me a term sheet. Ian and I sat down, worked out what we thought the company was worth, and compared it to the offer. I called Bob back to say, “Listen, we really like you guys and want to preserve the relationship, but we’re too far apart. Let’s drop the deal and just get back to doing business together.”
Bob’s response surprised me. “Let’s keep considering this while you explain to me why you think it’s worth more.” We both agreed to revisit a potential sale in a few months.
By this time I was thinking that, even if it didn’t work out with Recorded Books, this thing might actually sell to someone someday, so I started doing some research on M&A firms. The last time we tried this, it hadn’t worked out, so this time I did some online research and came to the conclusion that, for a good M&A outcome, you should figure out the best firm in your industry and call them rather than waiting for them to call you (because they won’t—they don’t have to prospect for business). I got several referrals and eventually chose Patrick Manion at Pagemill Partners, a company that had done several transactions in Canada but was based in Silicon Valley. In April when we picked back up with Recorded Books, Patrick managed the conversation.
Patrick enlisted Ian and our CFO, Lee Chesworth, to start developing material for the potential sale. Our monthly numbers were continuing to skyrocket, and rather than lowering my expectations, I had increased my perceived value of the company, which I thought made it pretty unlikely we’d come to an agreement. Patrick was very encouraging, though, and he urged me to let them follow their process. I didn’t get involved in most of the conversations as Patrick, Ian, and Lee worked together to present Recorded Books with the information they had requested to “help them get their heads around our price.”
Several times I was convinced it was going to fall through, but eventually we settled on a price we were both comfortable with and signed a revised term sheet in July. Then lawyers and accountants got involved. By the end of October, we had a definitive sales agreement with a closing scheduled to happen in a couple of weeks. Ian and I were having daily conversations with each other, with Pagemill, and with our lawyer. But closing kept getting delayed by one piece of paper or another that was required by the Recorded Books lawyers.
By the end of November, our revenue numbers were so high that I called our lawyer, James Smith at LaBarge Weinstein, and said, “James, listen, I’ve always been kind of ambivalent about this, and it’s looking now like I might do better keeping the company, plus the closing keeps getting delayed. Can you get me out of the contract?”
A few months earlier, James and I had been on a call together with Audible, trying to negotiate a publishing partnership. They were being really aggressive on terms, and immediately after the call ended, James called me back and said, “Sanjay, just tell them to fuck off.” I loved James.
James’s advice to me this time was, “Sanjay, you signed a contract. Don’t be a dick.”
With the contract signed, me resigned to not being a dick, and closing imminent, I scheduled a celebration party for December 8 in San Francisco (so I could invite my friends at 500 Startups). This was against the advice of Patrick at Pagemill who said, “You never know. Sometimes these things just don’t work out.”
“The company’s doing so well that, even if this sale doesn’t work out, I still want to throw a party.”
The party went ahead with the closing still in limbo. At the party I was asked to give a short speech, so I stood up on a chair and, after thanking everyone for coming, I said, “People have asked me how I feel about losing my baby. Let me tell you, this isn’t like losing my baby, it’s like having my thirty-five-year-old son finally move out of the basement.”
There were lots of laughs in response, but my sentiment wasn’t completely true. With Ian running the company for the past year, selling Audiobooks didn’t change what I did day to day or feel like a loss. But it had been a great experience, and I didn’t sell because I wasn’t having fun. It was just time to move on and take an offer I hadn’t expected to get.
The deal finally closed on December 30. Congratulatory e-mails began flying around at nine o’clock that morning, when Recorded Books announced they had wired the funds. But there had been so many stops and starts that I refused to join the thread until the money landed in my account. Around two o’clock, Lee called me to say, “It’s here.”
A huge weight lifted from my chest. I had sold my company for an undisclosed amount that vaulted me overnight into the ranks of the ultra-high-wealth. I looked up at my assistant, smiled, and said, “Book the private jet.”
It had been a long, hard process, but Ian, Lee, Scott, and James had done most of the heavy lifting. Our staff didn’t have stock options, so I distributed a bunch of the money via bonuses and deposited the rest in a checking account while I figured out what to do with it. But one thing I was going to do for sure was celebrate. A few weeks later, nine of my closest friends and I flew down to Miami for a few days of degeneracy.
We kicked off with a walk, where one of my friends got drunk, got lost at a bar, and showed up late for dinner at Byblos, a high-end South Beach landmark. When we asked him where he’d been, he proceeded to take off his shirt for no apparent reason. When the waiter told him to put it back on, he threw it at me and then slowly slid off his seat. We got his shirt back on, and my friends Raj and Neeraj walked him back to our Airbnb, smiling and taking pictures of him with his shirt on backward.
The next night, we went to see Steve Aoki at Liv nightclub, and things took a turn for the worse. One of the guys, Alex had a heart attack on the dance floor—he came stumbling back to our table shouting “Dr. Gupta, Dr. Gupta, I don’t feel well. I think I’m having a heart attack!”
Dr. Gupta was my friend Milan Gupta, a cardiologist in Toronto. Milan immediately became quite concerned and began asking him diagnostic questions. “Alex, have you had any coffee?”
“Yes, a few with dinner. Maybe four espressos.”
“Wow, you really like coffee. Anything else? Red Bull?”
“Uh yeah, four of those, too, just before getting here. I’ve been feeling tired. Can we go to the hospital now?”
Milan confidently stated, “Alex, you’re not having a heart attack.”
Alex, sweating and nervous, said, “I don’t know man. I think I’m having a heart attack.”
“Alex. I’m a cardiologist. You’re not having a heart attack.”
Forty-five minutes later Alex had checked himself into a nearby hospital in South Beach, where he was told by the attending physician, “You’re not having a heart attack.” Alex texted a picture to Milan of himself hooked up to an IV, giving us the finger. I managed to stay on my feet the whole time and avoid IVs entirely, but it was still
a trip worthy of the occasion, and when we came back to Toronto, I didn’t have to lay off half a company.
---
Shortly after returning to Toronto, I sat down with Ryan for lunch and finally told him the company had been sold. He didn’t ask what the final number was, but he knew it was a lot more than I’d bought it from him for not quite three years earlier. I was a bit worried about his reaction, but he’d had his own business successes post sale, and to my relief, he said, “I’m happy for you.”
He then asked, “So what’s next?”
“Well…”
EPILOGUE
One crisp Saturday morning last fall, my friend Neeraj Jain and I were taking a weekly walk through the trails of Erindale Park, near my home in Mississauga. Neeraj and I had many things in common, including having both married women from India, both owning our own businesses, and both having young kids. We also both suffered from severe cases of introspection, which made for interesting walks.
Unfortunately, Neeraj was in much better shape than me, so as we reached a plateau after I’d puffed my way up the hill, I begged, “Sit down please?” We sat down on a couple of large rocks overlooking the Credit River.
As I was catching my breath, Neeraj asked me, “Do you think you can distill success down to a really small number of traits or concepts?”
Minimizing my breathing requirement, I replied, “Not sure. Why?”
“I’ve been spending a lot of time thinking about it. Can you bring success down to just a few words, concepts, or traits that might help you predict it? Maybe even one word? If it’s possible, then maybe I can focus on that trait to teach my kids.”
“Nice. What have you come up with so far?”
“No, you tell me what you think first,” he said.
I looked out over the river, pondered, and then said, “Optimism.”
Neeraj shook his head and said, “No, no, you’re an optimist, but I know lots of self-deluding optimists who aren’t successful. Try again.”
I shrugged my shoulders. “Curiosity?”
He shook his head again, and I asked, “Well what do you think it is?”
“I know things are going well now,” he replied, “but you’ve told me a lot about the failures in your life. I think your word is ‘perseverance.’”
I laughed quietly, and without looking at him, I said, “Don’t be ridiculous. Look at how many times I’ve quit jobs and shut down companies. I even quit my first marriage. I quit all the time—that’s not perseverance.”
Neeraj spread his hands, pointed them at me, and enthusiastically said, “That’s my point! You quit all the time, but you keep coming back. You get another job, you start another company, and you got married again. That’s perseverance!”
I grinned. “Huh, what do you know? I have perseverance.” Then I looked up the path and said, “All right, I’m ready to persevere through this hill,” and we got up and started walking again.
As we crested the hill, I turned to him and said, “So what’s your word?”
Without a pause, he replied, “Soooo good looking.”
I hit him on the shoulder. “What about ‘deluded’?”
He laughed and said, “I change your answer. Maybe yours is ‘lucky’.”
AFTERWORD
People keep asking me where the title of this book came from. It wouldn’t have been written without the prodding of my friend Gaurav Jain. I was among the first to buy a Tesla Model S in Canada, and I took him for a drive to show it off, trying to prove it could do zero to sixty in three-point-nine seconds, as a review in MotorTrend Magazine had insisted was possible.
After a couple of head-snapping attempts, I think I had only managed four-point-five seconds, but the point was made: it was a fast car. Heading back to my office, Gaurav said, “Sanjay, you’ve really made it. So, when are you going to write a book?” He had already suggested this several times. As usual, I was noncommittal, and this agitated him. He turned to me from the passenger seat and said, “Sanjay, you have got to write this book. Stop putting it off! You have a great story: you went bankrupt, and now you’re driving a Tesla!” He smiled and added, “You should call it Zero to Tesla.”
“That doesn’t even make sense,” I said. But he persisted, and I don’t know if it was the suggested title or his enthusiasm, but I replied, “You know, I think you’re right. It’s time I wrote a book.”