#317: Selling Smart Passive Income (And What We Can Learn From It) — Pt. 1 featuring Pat Flynn and Matt Gartland

In short

This episode announces the sale of Smart Passive Income (SPI), a prominent creator business founded by Pat Flynn. The host and Pat discuss the strategic decisions behind building a sellable business, including separating the brand from the individual, turning down higher offers from VCs, and the unique circumstances of the sale to Liz Willcox. They highlight the importance of a company brand over a personal brand for sellability and touch upon the complexities of deal structuring and team scaling through fractional hiring.

Key takeaways

• Creator businesses can be sold if intentionally built with a company brand separate from the founder's personal brand.
• Prioritizing legacy and business integrity over immediate financial gain (like higher VC offers) can be a strategic long-term decision.
• Building a sellable business requires proactive planning to separate the founder from the operations, enabling future exit opportunities.
• Fractional hiring and strategic team building are essential for scaling a creator business sustainably, especially when cash flow is a concern.

Chapters

1. 00:00

   Big News: Smart Passive Income Sold

   The episode kicks off with the major announcement that Smart Passive Income (SPI), the brand founded by Pat Flynn in 2008, has been sold. The host shares personal involvement with SPI, having had their community acquired by them in 2020.

2. 01:15

   Why This Sale Matters: The Unsellable Creator Business

   The host explains that most creator businesses are inherently difficult to sell because the brand is often tied directly to the person. This episode aims to explore how SPI managed to build a sellable business.

3. 02:30

   Building a Sellable Business: Separating Person from Brand

   The discussion delves into the process of separating SPI from Pat Flynn, both legally and creatively, starting in 2018. This involved building a business that could operate independently.

4. 03:45

   Turning Down Venture Capital

   Pat Flynn discusses why they turned down lucrative venture capital and private equity offers that were higher than the eventual sale price, prioritizing the legacy and integrity of the business.

5. 05:00

   The Buyer: Liz Willcox

   The episode introduces Liz Willcox as the buyer, detailing how the connection was made through a Pokémon event and a conversation Pat wasn't initially part of.

6. 06:15

   Deal Structure and Licensing

   The conversation touches on the complexities of the deal structure, including how to license a person's name, face, and book back to a company they no longer own.

7. 07:30

   The Quiet Closing and Announcement

   The sale was closed in April, with the news kept completely confidential until this announcement, highlighting the strategic planning involved.

8. 08:45

   Matt Gartland's Role and Business Transformation

   Matt Gartland, who joined SPI in 2019, discusses his role in transforming the business to be more operational and less reliant on Pat Flynn, enabling the eventual sale.

9. 10:00

   The Importance of a Company Brand vs. Personal Brand

   The host and guest emphasize the distinction between a company brand and a personal brand, noting that while personal brands are powerful, building a separate company brand is crucial for sellability and long-term success.

10. 12:00

    Team Building and Fractional Hiring

    The discussion shifts to team building, particularly the challenges of scaling with limited cash flow. The concept of fractional hiring and using contractors for specific roles is explored as a sustainable solution.

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