Unlocking Value Creation with Orchid Black's Jim Barnish
October 13, 2021 | Episode 13
Unlocking Value Creation with Orchid Black's Jim Barnish
October 13, 2021 | Episode 13
Unlocking value is another one of those buzzwords that really just seems to be everywhere lately, but Eric really dives into why Unlocking value is a lot more than just a bit of jargon in this episode with Jim Barnish.
Jim Barnish has spent the last two decades working as an entrepreneur, but that doesn’t mean failure is a stranger to him. In fact, he says there were a lot of sleepless nights along the way wondering if he was going to be able to bring things together.
If you want to learn about some of the most common issues that can hold businesses back, and how you can move forward despite those problems, Jim’s your guy. Learning to navigate around these obstacles and create an effective and consistent method of growing companies in a meaningful manner was what helped Jim achieve success.
Now he’s turned that success into the secret behind Orchid Black, his company.
Orchid Black is all about helping businesses grow and succeed. Founded in 2018, Orchid Black managed to survive the pandemic, and rebrand into something that could bring real value to the future.
Learn why Jim thinks human capital is the most important resource a business can have, and how that can really shape a fantastic future for businesses of all types.
Inspired by the rare and beautiful form of an orchid, this interview will tell you why Orchid Black cares more about finding perfect partnerships instead of just finding opportunities that might kind of work. It’s all about embracing hidden gems, and learning to find them.
Eric: All right, and we are back with Becoming Legends. I’m your host Eric Grundhoefer. Today with me is Jim Barnish of Orchid Black. You can find Jim at Orchid.Black. Jim is the CEO and founder of Orchid Black. You can find him also on LinkedIn if you have to. Jim, thank you so much for being here. I appreciate you. I appreciate your time. Please do me a favor, tell the audience who you are, what you do, and why I do it.
Jim: Yeah, absolutely. So, from my start in my family business at the ripe young age of 15 until today, I’ve really spent the last two decades as an entrepreneur, operator, VC, and even consultant throughout these years. A lot of hard work, a lot of failures, sleepless nights, failed projects, failed acquisitions, stagnant growth, you name it. Things kind of started to cobble together and no matter what the role I had, in or on the business, all of the growth stage tech companies that we were either investing in or working alongside, really had a lot of common value creation or growth obstacles, strategy and talent misalignment, lack of product market fit, misaligned cost and pricing, go-to market, expansion failures, you name it.
And ultimately, navigating through about 30 acquisitions, five exits as an investor or operator, and a bunch of shareholder value, really, came to the conclusion that there needed to be a much better way to get there, to navigate around a lot of these obstacles, if you will, and develop a path or a more methodical approach towards building technology business, and making them worth so much more. And so ultimately, you might call this a methodology, you might call it, really, whatever you want, but the focus is on how do you grow companies in a more meaningful manner. And that’s what we do at Orchid Black. From the way that you’ll see the growth all around me on the screen to what we do with the companies that we work with. We essentially help founders navigate growth obstacles and make their companies worth so much more.
Eric: That’s amazing, man. That’s absolutely amazing. Now, I know, and my audience listening knows too, like, and I told you I don’t do really any research because I like learning in the moment, and I don’t have any of these rehearsed questions. So, I wanted to touch on a few things that you said in there. First off, I want to go off of the brand. I think the brand is really, I mean, how did you come up with and again, being reputation management branding, like that’s kind of my thing. So, I love what you’re doing. I love the concept of it. If you could just touch on when you started Orchid Black, like the year, I don’t think you mentioned it. And then how did you come up with the idea for that entire concept of the orchid and growing? So, if you can shed some light on that, that’d be fantastic.
Jim: Yeah, sure. So, I love talking about it, actually. We, my co-founder and I have been doing this together for about a decade. But Orchid Black or, as it was formerly called prior to our rebrand Morgan Hill Partners, has really been in existence only since early 2018. About the first quarter of 2020 during everything that the world was going through, we took a step back and looked at what we were saying to the world and the messaging that we were putting forth and this stodgy-old brand, Morgan Hill Partners just sounded more like a lawyer or attorneys or private equity or something that wasn’t like what we are, which is an exciting growth services brand that serves innovative founders.
And we dial it back about what we wanted to say to the world, which is that we, in this lush jungle of opportunity, really hunt for a rare breed of partner, rare breed of founder, a promising business with a super unique offering. And we really started to embody the philosophy of this kind of prized exotic orchid that is a flower that can grow for up to 100 years, and it’s true value really emerges with expert pruning and care and cultivation. And looked at what we were doing, which is selecting the companies we can help the most, helping to prune and help them emerge to this new them, and really unlock value creation within the business. Combined with the fact that we only focus on companies that are in the black or cash flow positive. And it all just really coalesced into this really what we believe is an exclusive brand around founders and the innovation and value creation and growth that we drive with them.
Eric: That’s amazing, man. I absolutely love it. [crosstalk] I love the come up story. Like, I feel like people are always like, oh, we’re so sick of — Like, I’m a big Marvel fan. Me and my son have always watched those movies. And I always like to see where the character comes from. No matter how many times you’ve seen it, I like to see the new version of it. And that’s kind of what I feel like every time I meet someone is. Like, I love the come-up story. Like, I love that you also specifically, more than anyone that I’ve interviewed thus far in doing this mentioned failure after failure after failure after failure. Because everyone, just like as you know, on Instagram and Facebook, a lot of people don’t post their losses. And everyone’s like, oh, it’s a highlight reel. Well, yeah. No one wants to talk about the bad, right? And then if you do, like, you have to kind of do it in a way that it’s like a lesson versus like you’re just complaining. So, if you could, I want to talk about some failures, maybe that you’ve been through that have kind of led you down this path to what you are now and your success that you have now, and what you learn from those failures.
Jim: Yeah. Oh, with pleasure, because I agree. I mean, I don’t think people talk enough about the failures, which is really where all the learnings are. And I get it, right, from interviewing when we’re taking a job to anything, we’re taught that every failure has to accompany with a success. But ultimately, they don’t all, right?
Eric: Right, exactly.
Jim: Success really isn’t built on success. It’s built on failures. And so a lot of the things that boiled down to my founder journey, if you will, or the failures that I experienced, really, were both on the business and on the personal side. And I think, one big one that a lot of things stem from is this thing that we call burnout, right, founder burnout or a bunch of different ways to classify that. But essentially, it’s not being a good leader. It’s not being great to the support system you have, your family. And it’s not driving yourself or the business in the right direction. That’s exactly what it means. And there’s a reason why it’s in the W-H-O as an actual classified disease or a classified health condition, burnout, right?
And I would say, me, one of my biggest learnings was that every founder, I believe, needs an executive coach. I failed to lead my team in a lot of ways, to delegate to my team in a lot of ways. And ultimately, to really build the business in a lot of ways, whether it was at Orchid Black, or previously, because I was so caught up in the day-to-day in the business working 100 hours, that ultimately, I failed to realize that every hour wasn’t as productive, that the impact that it was driving with my team is this feeling that you can’t take time off it. Everything has to be all about the business. And I was burning myself out along with them at the same time and not being a great leader. And so I think getting an executive coach is something I encourage every founder to do, really taking a look at your own leadership competencies. And beyond just the vision, really the how you’re driving the team and leading the team along that vision and aligned with that vision. And that was probably the biggest learning that I had is you don’t have to do it all yourself. You got to spend more time on the business, and you’ve got to bring in the right people to support that vision.
Eric: That’s amazing. So, after that kind of realization, who was your first hire after that, then?
Jim: Yeah, that’s a great question. So, Steven and I are the co-founders of Orchid Black. We took a look at our honest competencies, and strengths and weaknesses and realized we definitely needed a third managing partner, one that was a true COO, if you will, had built services companies from the ground up and had many exits for services companies. Because even though we serve product companies, SAS companies, software companies, we really aren’t the experts in building services companies or weren’t.
But this third person who Steven happened to have in his network, who we both worked with previously as well, was the perfect complement, Howard, on our managing partner team to be able to bring us to the point where we were able to be a higher value add to the business, Steven and myself, and also get things done by an expert within the business. We also brought on other folks to really fill key gaps on the go to market side, since we were really focused on client growth at the time. And ultimately, definitely some incredible outcomes that came out of really taking a look at those honest strengths and weaknesses and bringing in the right people to supplement.
Eric: That’s fantastic, man. That’s one of the hardest things, in my opinion. So, I’ve been doing this since 2014. I’ve not worked for anyone since early 2014. And I’m a crap employee, I really am. Not because I have an ego or anything like that. It’s just because the way I manage is the way, and the way I lead a team is kind of like, and I never knew I always was like, I couldn’t do a business because I’m like this. But I realized really quickly that the way I’m like, is a super strength. Where it’s like, I’m going to show them how to do it and help them do it. And I work for them. They don’t work for me. Right? So, I love everything that you’re saying where you’re putting the right people in place to do that. You identified the company culture, that was the burnout that you were doing. I’ve struggled with burnout myself over the years of doing this. It’s crazy.
Jim: We all do. It’s something we don’t talk about too, right? And it doesn’t make us weak. It makes us human.
Eric: Yeah, exactly. Exactly.
Jim: It’s hard for people to realize.
Eric: It really is, man. And it’s like, I feel like you get the wrong — The people always say something, and it’s always the wrong person that you say it to. I know I’ve mentioned burnout to someone and they said something similar to like that to me. I think it was like an old manager I had years and years and years and years and years ago. And I was like, “Oh, I’m feeling burnt out.” And he said, “Oh, come on. What are you, weak?” Like, what are you, this?” Like no, like, it’s like, I’ve just literally had a mental capacity where I can’t let anything else in and I’m doing something wrong. All that I’ve realized is that when you reach that limit, you’re doing something wrong, and you need to fix it. And that’s what I want my listeners and audience to get from what you said is that it can be fixed. You have to just adjust and pivot and do those types of things.
Jim: Spot on.
Eric: Yeah, I love that you rebranded amidst the pandemic. That’s kind of what I did as well. Again, I know this is your interview, but just being like, I feel like we kind of had a similar mindset of my company was called Rank KO since 2014. And I hated the brand. It was not fun. It was old school. It was stodgy. It was that old school attorney type, like feel, and I really couldn’t do anything fun with it. And then I’ve been trying to rebrand for years. And then speaking of failures, those rebrands kind of failed. I tried to do them in a couple different ways, and those rebrands kind of flopped. But I never fully committed into doing Rank KO. And then now I’m Royal Reputation since January of this year, right after the pandemic. And I was like, it’s the time. It’s the perfect time. We have to do it. We have to do it now. So I love — [crosstalk]
Jim: I love the rebrand, by the way.
Eric: Thanks, man. I really appreciate that. Thank you. I love a good rebrand. So, you have these two partners. Speaking of, by the way, the orchid thing, so I was like we are so meant to meet today. One of my clients texted me and was like hey — they’re a flooring company. They have three locations in Tampa. Hey, we are selling orchids on Friday. And I was like that’s strange because I’ve never — I don’t hear about orchids ever and then today I have this meeting and then I have someone’s making me do a social media post about orchids that they’re selling on Friday. I was like today’s going to be a good day. [crosstalk] The universe is aligning us right now.
But yeah, man. Tell me about — Like, I always love this. Like I just said, I’m a superhero fan. Everyone wants to know how Bruce Wayne became Batman. So, kind of tell me how you jump into what you’re doing now. And maybe things that — more of your come-up as opposed to where the business started and where it went. But give me the come-up of, I know you mentioned a family business, I’d want to hear a little bit about that. Where you really, really started in your roots and then like kind of where you have planned for the company to go in the future. Like, what are your plans? Do you want to be this giant corporation? Do you want to kind of stay boutique, which I really am a fan of? And what are your goals there?
Jim: Yeah. I could probably talk for hours on just that. So, I’ll be brief on the history and talk about the future because that’s what I love doing the most. But from a historical, I grew up in my family business, like I mentioned, started when I was 15. It was the typical family business, right, looking to grow only trusting family. So, at 15 years old, I was put in charge of M&A, mergers acquisitions, which is for a 15 year old with pretty much just a learner’s permit and a lot of drive, is a lot.
Eric: That’s crazy.
Jim: I mean, right? And also, I was a full-time high school student and then a full-time college student at the time. So, it was ultimately a lot, but happens to a lot of people who are in their family business. And became an expert problem solver, really focused on data and driving insights from data. And eventually, moved from just acquisitions to full on focus on growth. And we grew pretty healthily from about 40 million when I got involved to about 600 million in revenue when I left. Now it’s actually over a billion, probably could be three or four billion, if we had done things a little bit different. The company still doesn’t have an advisory board. The company still doesn’t have a true board aside from the family.
So, a lot of things that help grow companies we didn’t do, but we did things in a different way, and it’s worked. But I still look at it and levers we could pull in a different way. And ultimately, right, you always look back and think about things like that. And I took a lot of those lessons and started focusing more on organic growth and exits as both the operator-consultant, and then eventually, as a VC. I worked with a local venture capital firm called Florida Funders to get off the ground here about four years ago, right before starting Orchid Black, maybe five years ago now. At the time, it was just a bunch of angel investors looking to do some really great things. And now we’re on our third fund there. My role was really helping to get the deal flow process off the ground, and the founder friendly mentality that a lot of VC firms tend to lack.
A lot of success there, but what I noticed is we’re funding the top 1% of companies there, right, that have all things aligned, are focused on growth, and we’re pouring capital into fuel that growth. But there were the next 10% that were really good companies that weren’t ready for that fuel, or that just didn’t meet the requirements of our VC firm. And so did a lot of research, notice that that was a pretty common trend of kind of that next tier of, call it B or B-plus companies that just needed a little bit more hands-on, a little bit more oomph, if you will. And it might be strategy alignment, it might be product market fit, it might be more of a predictable revenue engine. Whatever it might be, there was a couple gaps that were preventing them from seeing kind of that next level of scale. And that’s really where Orchid Black came from is left the VC firm, left Florida Funders to start what’s now become Orchid Black, and have a pretty interesting business model where it’s not a typical consulting firm. We don’t just put together a strategy and walk away, we help you execute it.
And in terms of the revenue model, or compensation model, it’s not just cash for fees. We actually strongly prefer taking upside, whether that’s equity or percentage of sales or something that aligns our incentives with company performance [crosstalk] as part of that, right? Because if we believe that we can do it, right, and we’re selecting the right companies, why wouldn’t we do that?
Eric: Yeah, exactly. You’re only investing in yourself then at that point.
Jim: Exactly. And the belief that you can work with these companies. But if you’re doing the right due diligence, and you’re augmenting the right companies, back to your question about how fast can we scale, then we’re picking the right partners, we’re picking the right companies, and it’s a miracle grow equation, if you will. We take on only up to eight, eight to 10, maybe. Right now it’s eight, but we might take on up to 10 companies into that growth program each year. It’s typically six to 36 months, depending on company maturity, and state and exit goals. And it’s companies that are looking to exit, that have built a great company up to a certain point. And that we know once we take a look at them and they meet certain qualifications, we have the right team members to supplement, we can have a really interesting recipe for growth and value creation and exit within the next three years.
And so to answer your question, it’s a pretty boutique feel in our growth program. We do take on other clients, enterprises, and startups alike that is all cash for service research and analysis and things that helps us to take on more risk into our growth program, which is a little bit more, right, upside risk-focus. [crosstalk] But then we have our services business and we have our growth business, if you will.
Eric: Yeah. And I didn’t mean to cut you off there, but I had a, just thought. Is it always only if the person’s looking to exit? So, it’s like you are looking for companies that want to grow and leave immediately. So, you help them with the sale of the business and everything like that as well? Okay, just [inaudible 00:19:36] All right. Continue.
Jim: In that growth program, we do. Like I said, there’s other fee for service projects that we take on with our research team and strategy consultants. But that’s more so just to allow us to take on more risk in these growth deals. Which is really the fundamental focus of the firm is that growth, right?
Eric: Absolutely. So, where do you see this going? How big are you trying to get? How big do you want to get? How big do the founders want to get?
Jim: Yeah. It’s a great question. I’ve got to temper that with the ability to have the right talent to grow these companies, right? Because we are looking for very seasoned CEOs, serial entrepreneurs, consultants, operators on our team that have done it all, and that have some great exits, but still want to keep going, right? Which takes a certain type of individual. Because a lot of people once they’ve made it, they want to be a little less hands on, right? Be more board advisor, right, be kind of investing companies, things like that. We’re looking for the people who still have made it, they’ve done really awesome things, had great exits and want to do another and then another.
Eric: They like the grind. Yeah, they like the grind.
Jim: Right. Which, as you know, I mean, that’s hard to find those people. So, provided we can find the people and match them with the right companies, you know, I want to keep investing all the great exits that we’re having with companies back into new companies so that we can take on more companies into that program. But ultimately, it depends on being able to find the right partners to partner them with.
Eric: That’s amazing. That’s absolutely amazing. I love that. I think this is a very — I’ve met similar companies, but I really like everything you’re saying. And it’s so unique and it’s very niche although it’s kind of accomplishing the same thing as others. But you guys are very standout-ish and I love that. I love the brand. This is amazing. Jim, thank you so much for being here. I really appreciate your time. I appreciate you and I love Orchid Black. For those of you that are listening, you can find Jim on LinkedIn. That’s Jim Barnish Junior on LinkedIn, or you guys can go to Orchid.Black. Jim, thanks so much for being here.
Jim: Hey, thanks a bunch, Eric.
Eric: Appreciate it.