https://youtu.be/6rsNoTrAYY0
Jim Barnish is the Founder and Managing Partner at Orchid Black, a growth services firm that helps tech-forward companies build better game-changing businesses. We talk about finding your ideal client profile, value creation strategies for flatlining companies, and dissect Aaron Ross’ Predictable Revenue.
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Create Predictable Revenue with Jim Barnish
Our guest is Jim Barnish, who's a 20 year entrepreneur, operator, investor, and M&A expert. He runs today Orchid Black, a growth services firm, helping founders let technology companies grow and exit. Welcome to the show, Jim.
Thanks, Steve. Happy to be here.
Great to have you. So Jim, tell me a little bit about how you cut your teeth in entrepreneurship and then also, you know, where this journey led you, because you're a very early starter, as I understand. So tell us a little bit about that, and then I'm going to have a follow-up question about what you're doing now and how you kind of transitioned over to your current stage.
Sure. So I may be the only person your audience will ever meet that appears on both the 40 under 40 list and has also been growing and exiting businesses for more than half of their life. But ultimately I got my start in my family business that was doing well, but was your typical family run business really focused on trusting family and only bringing in family to help run and drive the business. And so at the ripe young age of 15, I was put in charge of finding our target acquisitions.
And then ultimately later on in charge of both acquiring and integrating these businesses into our existing business. And, you know, thinking about what most people are doing at 15, probably the other stuff I was doing, going to school full time. But ultimately was entrusted with a pretty major operation with very little to rely on other than my gut and a learner's permit.
Okay, so that was your family business, and this is where you got started, and are you still involved with it now, or are you focusing completely on Orchid Black, which is your current business? What are you doing right now?
I'm no longer involved with that business today. It's doing well through the years. While I was there, it grew to over 600 million, and now today, it is over a billion in our enterprise value. So a nice family business that's now worth, you know, quite, quite a bit and a lot of great, great success stories there.
What it really did was instill a fire inside of me to help founders and CEOs, similar to what my family was going through, that are founder led companies, wondering if their company could be worth much more and what to do to drive growth within that existing business, whether that's organic or inorganic. And so ever since the family business, that's what I've been doing is building and growing businesses focused on tech founders, CEOs that have typically hit some sort of growth stage revenue obstacle, you know, 5 million, 10 million, 25 million, and are ultimately looking to maximize the value of their business and leave a legacy for their family. Just, just like, uh, the family story I told.
And so what's really great about that is I've been fortunate enough to have worked with a number of other serial entrepreneurs, C-level operators, and investors who've seen and done it all and had a bunch of exits behind them as well. And that's what Orchid Black has really become is helping to turn good, but somewhat stagnant companies, tech companies into great high growth companies with a hand-selected team that can really drop in and provide guidance and operational support, whether that be around M&A like myself, or more allowing customer success, sales, marketing, partnerships, really anything that when combined with our playbook as an organization, we're able to help founders navigate all of the growth stage obstacles that could possibly be presented to them, because we've been there ourselves.
So how did you get Orchid Black started? What was, you know, how did it come about? Was it an M&A firm? Was it a consulting firm to begin with and evolved into this hybrid model or it was something totally different?
Yeah, it's a good question. Well, you know, my co-founder and I, Stephen Horowitz, had been doing the same thing that we do at Orchid Black for about five years prior to that, which is growing technology companies. But we realized the most that we could take on between the two of us at any given time was two, maybe three, in order to provide them the level of support that they needed. And so what we did is we took six months off, put together the methodology that we had been garnering and, and implementing, but more of a consistent, repeatable framework that we could teach to others and brought that out to a group of operators, the ones that I just mentioned before, are operating partners at Orchid Black, and brought them into the fold, and ultimately, we're able to scale that business into about a 30-person partnership as it stands today.
Okay. That's really interesting. Basically, you have a group of experts that you can pull in, and they help you fix up these technology, businesses improve them, and bring in the expertise that they don't have inside the business and put them on a faster growth trajectory and improve profitability?
Yeah, that's exactly it. It depends on the nature of the business as to what the core problems that we're solving for are initially, but ultimately one good example is we were brought a company about a couple of years ago, founder who had bootstrapped for 15 years, good business, good customers, but just was flatlining. He wanted to exit and spend his next chapter enjoying and investing in other startups.
But the company's current valuation just wasn't quite where he was expecting it to be and what he was accepting as an exit. And so he tried his usual ideas to generate new customers, but ultimately revenue cashflow was only getting worse. And so he called us in at Orchid Black to help. What we did is we implemented our programmatic approach towards growth and focused on presenting him with a roadmap on how to increase the value of his business over the next 12 months.
He was really pleased with the road mapping work that we did, that we actually brought our team in. He asked our team to come in and operate the plan alongside of him. And together we increased the value of that company from 23 million to 36 million in enterprise value in a matter of actually only seven months ultimately getting acquired by a strategic partner. That's kind of the everyone wins big philosophy and that's kind of an example of the way that we work with our partners and our partner clients.
So that's really interesting. So you basically seven months you managed to grow the enterprise value by about 50%. So what are the typical low hanging fruits that you can do? So someone is running this tech company, it's flatlining, it's stopped growing, they are burning themselves out, they ran out of ideas. What are the typical things that you can, the levers that you can pull when you come in and what is your process?
Yeah, we have hundreds of levers that we can ultimately pull but it all starts with our proprietary IP that we've built to diagnose what problems to fix first that are going to drive the most value creation in the near term and long term. And so if you kind of imagine doing that for not only founders, but for yourselves, you'll, you'll see that there is a objective lens that you can view a company's potential by right. And view a 360 perspective of the business.
If you will, the challenge was how to create something comprehensive, but also simple because there are hundreds of plays ultimately that we focus on. And so our focus and our answer became the value creation assessment or VCA, which is a system that looks at a company from every angle, the strategy, the people, the revenue, product operations, and hundreds of data points within each of these areas of the business.
The VCA is our system that examines a company from every angle—strategy, people, revenue, product operations, with hundreds of data points within each area.Share on X
And so when we looked at all these areas and all these disciplines that we could potentially affect, we're able to see the exact amount of opportunity within each of these areas as we dial in and compare those to benchmarks that typical companies will be at when we're analyzing, you know, at more of a benchmarking and scale perspective. And so what we do is we now leverage that VCA as a plug and play at every tech company that's seeking growth and exit that we come across.
And it helps us to not only diagnose these companies and present a value creation roadmap that shows them the best optimal path ahead, but also designs a level of impact that our team is going to be able to have on that company coming out of that plan if we are implementing the plan alongside of those founders. So it's really customized to who we are, what our team does, but also the hundreds of variables that would ultimately be our blueprints to putting things in action at clients.
So, can you give me a couple of examples of the kind of situations that a tech company specifically get themselves into? I understand generally they flatline, you know, they cannot grow and they need a roadmap, but give me some examples. What kind of levers are you pulling? What kind of changes are you making in order to get these companies growing again?
So typically, it starts on the strategy side, having a plan that's aligned around the team and that is hired for, from a talent perspective, that everyone has roles and responsibilities that connect directly back to that plan. And that there's not any missing from that plan. So, you know, initially that's one big low hanging fruit that usually exists is having a plan in place and talent aligned along the plan.
When we go beneath that into more of, you know,
