So I'm really excited to have you guys on because you represent one of the more inspirational stories of what I believe is possible after deciding to wind up a search fund, which I believe you did in 2014. And not to give up too much of what you've been up to since then. But I think it's pretty safe to say that you've gone on to some pretty incredible success that I've been admiring from a distance for almost 10 years now. But, but we'll get there. Before we get there. I thought we could begin by you guys sharing with us the story of your search, you know, how your search process started, how it progressed for you guys, and ultimately, what led you to making the decision to wind it down without consummating an acquisition.
I can start with a bit of background, Neil and then just kind of jump in and help me out. So Neil and I met, after graduating from McGill, we were both finance grads, and we actually met on graduation day, like diploma day getting our diplomas at the ceremony. You know, this guy tapped me on the shoulder, turn around, it is Neil. And he goes, Hey, I'm Neil Cuggy, nice to meet you. We're actually gonna be working together at RBC Capital Markets in two weeks. And I just want to introduce myself. And so that was like the, you know, the very first time we met. And sure enough, a couple of weeks later, we started working together in investment banking, I was focused on retail, and worked on kind of some of the big like, Dollarama's IPO and financings and things like that.
And, you know, was on the tech and telecom side, and a few years into our careers as bankers, we started talking a little bit about how it could be cool to go into business together. And I think we felt a lot of complementary strengths and weaknesses between us. And we felt that we would make great partners. And the question really became, how do we go about it? And the first part of the How did we go about it, We kept asking ourselves, like, you know, what's the great idea? Right, like, how do we start a business? Or how do we get into it? And how do we find a great idea that we want to pursue? And we kind of got stuck on the great idea. Neil, I'll pass it over to you.
Yeah, I think that's pretty accurate, John. And luckily, we were spending a lot of time together at RBC Capital Markets, and the investment banking division, late nights and throwing around what those ideas could be. And I can't remember exactly how we came across the search fund. But I know that there was a lot of deals that we were working on from an M&A perspective at the time that, you know, pretty classic entrepreneur thought of, we could do this, or we could do it better than them. So that kind of spun off to just start to put together PPM and some fundraising docs and some phone calls and meetings with potential investors. And that was all kind of in in 2013. And like you said, that lasted up until until 2014. So happy to dive in any part of that journey.
Yeah. So the why search fun for us was really we didn't have this great idea at the time that we wanted to start of business, we knew we wanted to go into business together. And we knew we wanted to, you know, have an impact on a business in a way that we couldn't do in a larger organization, as bankers, right. And so it kind of all came down to what's the best way to go about it and discover the search fund community.
Okay, so you guys raised your search fund in 2013. You begin the search process, doing all of the things that so many of the folks listening to this would be very much familiar with. If we fast forward, you know, many months after the formation of your fund, was there a moment a particular experience a particular conversation that planted this seed in your head that said, Hey, I think we should move on and do something else? Was it an organic idea? Was it thrust upon you? Just kind of bring us back to that moment, if there was a moment where the idea was catalyzed in your minds? That said, hey, maybe we should consider winding this up and doing something else?
We ran the search fund for about a year. And it was honestly an incredible experience, right? We were able to travel to all sorts of different cities because we were agnostic in terms of location for the business. We got to know a bunch of different In industries, we got pretty serious about a couple of businesses. One was an advertising business in Atlanta, there was like an online content business, based out of Vancouver, and there was a coffee roasting brand, based out of Chicago. So those were kind of a few of the pretty serious ones that we were looking at. And I think one of the challenges that we came across at the time was the valuations were getting really high. And so it was difficult for us to get a deal done that we thought, you know, that would be at a fair price. I think that was one of the pieces.
And then the other piece that we talked about. And I do remember, our office was just outside of Montreal, we went on a long walk together, as the third deal fell apart. And we kind of said, like, what are the key takeaways here? What are the next steps? And I think that's when we really started thinking about the importance of finding a business that would be not only something that we think could be a great investment, and something a great purchase price, but also something that we could be equally passionate about. And something that we thought we had an edge and we can run the business or have some kind of insight into the business that would be different from others. And it really was right, it was kind of through that conversation, you know, over over the course of a few weeks. And we talked to some of our search fund investors and ultimately made the decision to to wind down the search. That's sort of how I remember it.
Yeah, I think that's pretty accurate. Definitely. And you position it as a conversation, but it was, it was like a soul searching, six hour walk around a huge island. So it was a pretty, pretty interesting afternoon spent there chatting. And I think the other kind of practical thing that helped us is, as John was saying, there was some valuation and structure concerns for a lot of the deals that we looked at. And obviously we were running kind of the economics and the models to see what what the numbers look like. And there was a point I can't remember exactly when it was but there was a point that we went back to like our original financing, fundraising documents or PPM and said like, the deals we're looking at look drastically different than what we thought we would be getting into from an economics perspective.
And that was partially industry, partially timing, partially Canadians. We were also like, super rare. The youngest searchers at times were young guys, and the smaller businesses were given us more love and attention than the the multi million dollar into debt businesses. So that you know, the kind of practical triangulation of those things as well made us say like, Is this really the right thing to do for us and for the investors?
So I want to get into some of the dominant emotions that you guys were feeling at that time. And why I want to get into that, I think is twofold. Number one, I know that when I was searching, and certainly while I was operating, fear of failure was something that was ever present for me whether it was conscious, probably sometimes unconscious, or otherwise, it was certainly there, at least in retrospect. And I had something similar when I decided to step down from my role as CEO, which is this concept of quitting asking myself, am I quitting? Am I a quitter?
So there's a lot of cognitive dissonance for me, because I never put anything in my life. And I mean, frankly, this sounds odd to say, but I've never really failed at anything of substance in my life. And I presume that describe you guys as well, top of your class and McGill, investment bankers, etc. How did you think about, you know, quote, failure? How did you think about, quote, winning in the way that I did? And like, what were some of the dominant emotions that were just kind of running through your minds and bodies at the time?
I think that was a large part of that walk that we had when the one of the more exciting deals fell apart. So I think, you know, John definitely was positioning as okay, what are the other opportunities to go out and make a success of ourselves and do right by all stakeholders involved? And I was probably a little more focused on man like, this is this keeps happening and why is it happening and why is it happening now? Why is it happening to us? Which which probably led me back to the, to the documents, as I was saying before, so I think, you know, having one of the things we've learned over the 10 years, since we shut down the search fund and started our other businesses is really just about what is your identity? Are you an entrepreneur? Are you an employee?
Are you a father are you mother, whatever it may be, right? So having your identity tied to your search fund, it's tough to, it's tough to disconnect those two things, and then say, this is a failure, and I'm not a failure. But if your identity is I'm an entrepreneur, or you know, I'm a businessman or woman that's gonna go in and crush it and build a business, no matter what's in front of me, then that definitely kind of helps reframe the question and helped us push through a lot of the tough conversations.
Lots of people who contemplate similar decisions are fearful of disappointing investors, their investors. I guess, did you guys feel that? Or did you ask yourself that question at all? And once you actually made the decision, were your investors disappointed? I mean, what did you learn that, you know, after having been on the other side of that table specific to that question?
I remember being concerned about our reputation, right, which was something that we had worked really hard to cultivate, we've been early on in our careers. And I also remember having a significant amount of stress on both sides, right. Like if we were to continue the search, we knew that ultimately, we were using up the cash that we had raised, right, so there's a burn rate during the search, and there's this pressure to close a deal before you run out of cash. But the flip side is going back to our investor base and saying, we still have some money left, but we don't think this is going to turn into a successful outcome. And so we want to give you back the money that we still have. It was we were definitely scared of the investor reaction.
And I would say the actual reaction that we received was quite the opposite of our fears, it was a lot of understanding of the situation, it was like gratitude of about being transparent around our decision, actually having money to return back to them. I think we ended up returning a significant amount of the cash that we had raised, was it 60%. And the last piece was at the time, we didn't know exactly what our next step would be. But we kept in touch with the investors and let them know that if there was going to be a next step, we'd offer them the opportunity to participate in it. Once we figured out what it was, which we felt was kind of a fair continuation of, of the relationships that we had built.
There was I think we had maybe 12 outside investors and John and I put money in the search as well. And there was just one conversation, that I remember being more difficult than all the others. And I think it wasn't disappointing, it was just like it was just colder than all the other ones. But everyone else was like, you know, you guys are gonna go on to great things. Don't worry about it. Thank you for, you know, being good stewards of our capital. And if there are any other introductions that you guys need, go for it. And you know, for the most part, if the investor base of your listeners is composed of regular search fund investors or funds that do a lot of search funds. It's kind of part of the game too. So it's not, it's not as bad as you make it out to be in your head.
Yep, that is exactly aligned with my experience as well. Okay, so you guys had lots of valuation concerns, the market had changed a little bit, you had three deals fall apart on you, you didn't really find a business that was well aligned with your passion. But you knew you wanted to do something entrepreneurial. How did you guys think about what to do next?
So I would say, our next step was we didn't want to rush into anything. But we felt like we had already left it, you know, taking the step to leave our corporate jobs. And so we had the option to go back to what we were doing before, but we thought we'd give it one more try in terms of coming up with another business or another way into a business. And so we started talking about things that we're passionate about, things that you know, industries or types of businesses that we think would be growing or have some kind of rising tide into the future. Which I think is one of the important characteristics of a great search fund business, to define a business that's an industry where, where the tide is rising, we were thinking about subscription businesses as well through the search fund. And so that stuck in our mind in terms of wanting to have predictable revenue. And so that combination of some of the search fund criteria, some of our personal passion, and then just finding an industry that we thought was ripe for disruption, innovation, and progress. And so that's how we fell into Good Food.
Tell us a little bit about Good Food. I mean, certainly, if you're Canadian, and you're listening to this, chances are you're already quite familiar with the brand. I know I certainly am. But for those who may not be familiar with good food, tell us a bit more about it. And if you could maybe share with us a few metrics that help us understand the size of the company. And where are you guys have grown it to today?
Yeah, so we, in case you're not familiar with Good Food, so we're a weekly meal subscription business, we offer meal kits, prepared meals and and other day part add ons, like record breakfast products. And we took the company public in 2017. But it was a pretty incredible rise from 2015 to 2017 and beyond. Today, we're about 1000 Employees, coast to coast, and deliver pretty much everywhere across Canada. Do you have anything you'd like to add there?
Yeah, I think that gives a good sense of scale. And I just wanted to double click on what you were saying before, like, I think one of the things that that we tried to really think about and sit on and and and experiment with before we started good food was how do we how do we take those kind of search fun tried and true criteria and apply them to to the next thing we're doing. So whether that's starting a food business, or starting some other type of business, which we also contemplated at the time, I think the kind of rocket ship of the first three, four years of growth, we went from, you know, starting packages with the first week we did 12 deliveries at John's apartment in downtown Montreal. And by the time we went public, we were probably doing 25 million run rate of sales, and then probably another two years that are a couple of 100 million and runway to sales.
So it was a pretty massive rocket ship in a perishable highly complex lots of logistics, food business, and making sure that we were focused on recurring revenue asset light business models. The margin thing in a food business is notorious for having difficult margins. But I think we've been able to prove we figured a way to make it a decent margin business. But I think that was a really key lesson in learning that we wanted to not forget from the search fund, successes.
Unbelievable. So you went from closing down or winding down a search fund on your own terms, which admittedly differed from your expectations when you had raised the search fund year, so before but now, you know, you blink and this is a billion dollar brand, a publicly traded company 1500 employees 300,000 Customers, unbelievable. When you guys look back, if you were to kind of zoom out on your search experience, you have the benefit of hindsight, you have the benefit of time having elapsed. What are some of the major generalizable lessons that you extracted from your experience as searchers, and specifically as two searchers, whose outcome was different from their original expectations, what lessons did you learn from that experience that you think others who are maybe contemplating taking this plunge might benefit from?
And in preparing for our chat today, I did think a little bit about this. And we do have a lot of conversations still with people either contemplating to raise search funds or in their search or looking for investors or whatever may be and actually after this podcast recording, I have a conversation with a potential searcher. So we still try to stay involved in and allocate some money to the to the space and support entrepreneurs. So we have thought a lot about this and and try to apply it like I said in our day to days and I think one of the things is definitely keeping in mind that there's multiple ways to win. It doesn't have to look, it probably won't look traditional, to be honest. So what are the creative ways to get a deal done? If it's worth doing. The other thing that, you know, we touched on it a little bit, but when we gave the money back to our investors, the vast majority were, like I said, very, very grateful.
And John and I made sure that we told him like the next thing will come to you. And you don't have to say yes, obviously. But we'd love to continue the relationship. And I think three, we had for three out of our first four investors, were all from the search fund community. And they made, you know, 40, 50 times their money in some cases. So they were more than happy to kind of stick around. And it was all people that we got to know during the search that we admired and wanted to work with, or got introduced to that actually weren't in our search fund. So those relationships go long beyond your search period, or your owning of the business that you're you're operating. I think I'll do one more, John, and I'll throw it to you. The partnership thing is pretty important.
I know, Steve, you've done some podcasts on that. And there's a lot of data on both sides of partnership versus single search. And John and I, like we met in the checkout line at McGill. And we've probably been, you know, have eaten 50, 60% of our meals together since 2010. And it's been extremely valuable to have a partner there, through the ups and downs of the search, through the ups and downs of Good Food and all the stuff we've gone through too. So I don't usually don't recommend people doing it solo, just because you have to have some sort of support group or network to kind of go through all this space. So those are a couple of the ones that I had. But John, I'll throw it to you.
Yeah, I couldn't agree more on the partnership piece, I think the decision of who you partner with on the search, and I agree that I wouldn't have wanted to do it on my own. Is such an incredibly important decision. And I think I didn't fully realize how much of an important decision it was at the time, right? Because I was sort of breaking up the future into the small steps, right? So you go, oh, I'll operate the search for maybe a year or two, and then operate the business for a few years after that. Right. But once you start adding it up, here we are 10 years later, and we're still working together, and we're still bouncing ideas and very much complementary in the same way as we were in the past. And so I think that's a really important decision.
And then the other piece, I think, I know you talked about this in a few previous podcasts as well. But the search fund community is is incredibly rich, right? Whether it's existing, or current searchers that are collaborating with each other rather than competing, the investor base is tends to be very supportive of the search fund entrepreneurs. And like Neil mentioned, many of them, like are still mentors to us today. And investors and partners in different ways. And the community is growing. And it's just an exciting place to be. So I think those are a few of the things that I didn't necessarily know going into it that everyone should think about.
That's great. As we move to conclude here, guys, what would you say to current searchers, whose number one fear is basically not getting a deal done within their, you know, allocated to years of searching, and potentially to prospective searchers, whose fear of failure is kind of a number one reason why they haven't yet taken that entrepreneurial plunge? What might you say to those people, based on your experiences?
You mentioned that a little bit earlier, Steve, but it is an incredibly difficult decision. If you're currently doing a search, and you're asking yourself the question should I keep going, am I almost there? Or is it time to move on to my next step because this isn't going to work out? That's an incredibly difficult and and personal decision. But what I would say is, trust that it will work out right one way or another trust that it will work out and you will end up in the right place. And I think the other piece that's important to repeat is don't do the wrong deal just because you fear failure of not getting a deal done. And there is that thought and that pressure of is it better for me to close this deal and commit to it? But I haven't heard anyone say that, that ended up working out well for them, right. Like, at the end of the day, once you commit to the business into the deal, it's a five year or 10 year commitment to really see it through. And you don't want to take that lightly. So it will work out. But don't force it.
Yeah, I mean, it seems to me like, you know, you guys, in part because of the macro environment, because of valuations, because of you being more introspective about what you're passionate about, like the odds just changed. And I think like, people have to appreciate that. When you take a risk at some point in time, it's entirely possible that the odds that you base that decision on will change. Charlie Munger has this amazing quote, he said, I'm probably gonna butcher it. But he said, Life is like a poker game, where you have to learn to quit sometimes when holding a much loved hand, you must learn to handle new facts that change the odds. And that was one of the reasons why I felt comfortable stepping down as the CEO of my company, and presumably, why you guys felt comfortable doing something similar at a different stage in the journey. With with the benefit of hindsight, it's a bit of an unfair question, because obviously, you guys have clearly found your calling. Are you guys glad that you did it? And do you have any regrets?
I'll let you take that. But I think it might also make sense for you, Neil to address the second question, which was like, if you're scared to jump in, right, and to start a search fund, which I know, I think was something that you struggled with more than I did. Maybe you have some perspective there.
Yeah, yeah, sure. So I think, I came from a family of entrepreneurs, my dad started a business and he was an engineer that ran an engineering consulting company, and then had maybe 30 to 40 people at the end. So you know, entrepreneurship was in my household and around me a lot of the time. But I definitely valued certainty. And you know, I like I'd like to finance business and like learning about businesses and raising money for them and selling so I think, you know, one of the things that I did in contemplating starting the search with John and kind of leaving the job that I been mentally preparing for, for all in university at least, was just kind of a classic pros and cons list. And you know, have your vision of what it can be and vision of what you want it to be and then kind of just reflect on that.
And ultimately, for me, what made me jump was the the vision that I had literally written out on paper and kind of read and reviewed a bunch of times was extremely powerful and and exciting and got me to make the move. And that can be different for different people and it can be as risky as you perceive it or as low risk as you perceive it as well. So it was just a matter of perception in the end and it's kind of the same thing around giving back the money like don't don't get in your head too much if you're doing the right thing. You're gonna keep your reputation intact, for sure.
Yeah, when I was wrestling with this decision myself, two kind of pieces of advice I still kind of keep in the forefront. The first is a really simple one is it's never the wrong time to do the right thing. And the second one was that you know, I was worried, just like you guys just like everybody about burning bridges with my investors, and I don't remember who told me this but someone said and it's so true, said it's not often what you do that burns the bridge, it's often how you do it that burns the bridge. So as long as you take care of the how good communication honest genuine, forthright the what is almost a material I mean, you know, within reason, of course, but I found that to be really helpful. And when I decided to step down, I just wanted to make sure that it was very upfront, very honest, very genuine. And the How, really took care of the what. Did you guys experience anything similar?
Yeah, absolutely. It's kind of the principle of like, if It shows up on the front of the newspaper, are you going to be proud or ashamed? Right? So same thing like have the conversations, have them early enough that it's not a big surprise. And obviously don't, don't throw in the towel, but you know, doing the right thing and doing it professionally, you're not going to rub too many people the wrong way. And I think you can benefit from making a tough decision like that, and even increase your reputation from making the tough call, because a lot of people that'll just avoid it and kind of write it to the end and not and not be true to themselves and not be true to their, their partners and other stakeholders in the game. So 100% Steve, I agree with that.
All right, guys, last question for you. It's a really simple one. Looking back, are you glad that you raised the search fund and did it and do you have you regrets?
Yeah, so I'll actually answer that this time. Let's go back to question number one. Definitely like, I think, for me, it obviously got me into my business relationship with John, it got us to meet all these fantastic investors, who we still interact with a lot today. Got us to a community that you know, is extremely passionate about business and plays at a world class level and plays full out all the time, which is it those are the people you want to be surrounding yourself with. Obviously, we were talking before the recording, Steve about EO and YPO. And getting in those kinds of groups only ups your standard, so totally, totally the right thing to do for us and definitely not a regret. And the lessons, like I said, they're gonna stick with us for the business that we're currently running. You know, we started another business recently around wilderness hospitality, that we've applied the same kind of thinking and thought to, and any other companies that we kind of go into the future. So for sure, definitely a recommendation and not a regret.
Awesome. Well, like I said at the beginning, you guys represent one of the all time great post search fund success stories. And I'm super grateful that you carved out the time to share that story with us. So on behalf of everybody listening. Thank you, Jonathan. Thank you, Neil, for your time. We really appreciate it.
Thanks Steve, happy that you reached out. Thank you.
