Being acquired is the dream of many, if not most, entrepreneurs. Three years ago, this was the situation facing Mark Endras, co-founder of TradeRev, as KAR was poised to take a 50 per cent stake in his company. Although many mergers and acquisitions rarely meet their potential or fail outright, this has been a win-win for both organizations. Last week, KAR bought the remaining 50 per cent of TradeRev; Endras will be KAR’s chief innovation officer.
One of the secrets to this successful partnership? “It wasn’t just about the money,” Endras says. “We picked a partner that shared our vision and values, and who complemented what we were already doing. They saw the same transformation coming in our industry and wanted to approach it the same way we did.”
Although Endras and his leadership saw the potential in the combination, he understood that he also needed to bring that level of awareness to the rest of the organization. His solution: Communicate as much as possible. Otherwise, people would come up with their own stories of what was happening, which would either be wrong, negative or both.
To make a successful transition from startup to sustainable business, Endras says, founders need to focus on leading rather than managing and operating. During the early stages, he notes, founders are involved in almost virtually every decision. “In order to scale your business, you can’t do that anymore. You have to become more involved in building your people to lead.”
He learned this difficult lesson during an offsite gathering with his senior leadership team. “That was the hardest thing for me, because you create a company and you want to be involved so deeply and make every decision, but the best thing you can do is let go because you’re really just in the way.”
One of the most valuable exercises he conducted since the company’s beginnings was working on core values. Endras credits his mentor for prompting this insight: “He challenged me when he asked ‘What is the end goal here? Who are you as a company?’ ”
Endras and his team hired an external facilitator for a two-day offsite to figure out the answer to this crucial question. The first step was to have an honest dialogue with each other. “There was a lot of conflict, as we talked about what we liked about each other and what we didn’t like. Even though it was hard at times, that openness really brought us together. The goal of this feedback was not to be mean. We did it so we could learn to really talk to each other and be honest about why we’re not working well together.”
Once that trust was established, they moved on to define their core values. This was essential because the team realized and agreed that they were going to focus on this from that point forward. Every future decision would reflect those values.
They also saw defining their values as a crucial step to scale effectively: “When somebody in support is dealing with a customer issue, they have our values in front of them and can make decisions right away about the right thing to do. We don’t need to be there. It makes us more effective and efficient as a company.”
But defining core values is just the beginning. As Endras recalls, he and his executive team realized the toughest part was living them every single day. “In order for company values to stick and make a difference, they have to come from the top. It’s your responsibility to lead by example first, especially with your executive team. I had to show I would make the toughest decisions based on our values before I could expect others to do the same.”
Despite the fear attached to living up to this standard, Endras sees it as “incredibly liberating.” The impact it had on the rest of the organization was also profound. “It shows people in the organization our core values are not just fluff. People respect and realize there is a higher purpose here and we are not just trying to make a buck.” This has been invaluable to the rest of his company, Endras says, because it drives their approach to innovation and their culture, as well as their reputation. It also provides clarity for the people he brings on board.
If he could go back in time and give himself some advice, what would he say? “Don’t spend so much time working on your business plan or product until you know who you are as a company. Without your core values, you are lost.”