Every business wants the Disney flywheel.
You sell one thing, it pulls people into the next, and the whole thing spins faster. Cartoons, movies, parks, toys. Each one feeds all the others.
Callaway thought they had it with Topgolf.
The theory was beautiful. You'd walk into a Topgolf, get exposed to golf, fall in love with the game, buy Callaway clubs, become a Callaway fan, and come back to Topgolf to use your new gear. The whole thing accelerates.
Except it was all a mirage.
Most people who walk into a Topgolf aren't golfers. They never planned to become golfers. It's just an expensive night out with golf clubs involved.
The CEO was a smart guy. But he ran Callaway, and he’d been on Topgolf’s board for eight years. He was so close to both businesses that he missed the bigger picture.
Because there were real problems: Topgolf’s COVID boost was temporary. Their build cost per location was huge, and interest rates were going up. Competition was incoming.
Here’s the takeaway:
If a big decision feels emotional, go get an outside opinion.
My fix, below.
TOGETHER WITH BEDROCK
When you’re too close, you lose perspective. An outside read on the numbers would've raised a red flag for Topgolf.
That's what a Quality of Earnings report is for: a professional checking whether the numbers are actually real before you buy. Is the revenue recurring or a one-time spike? Are the owner's expenses buried in the P&L?
My firm Bedrock runs QoE for acquisitions between $1M and $30M. Flat rate, fast turnaround.
How to get outside opinions
It’s easy to get excited about your own ideas.
But stepping back to get an unemotional perspective has saved my butt more than a few times.
If you’re a business leader, CEO, investor, that kind of thing, I think the answer is building a strong peer group of people around you.
They’re important because your blind spot often doesn’t get exposed by the people at your company. It gets exposed by somebody who’s gone through it before.
I’m part of two groups myself: Scalepath, a virtual CEO network for small businesses, and Vistage (for businesses over $5M).
There are others out there, too: Hampton, YPO, C12 — worth shopping around to find the best fit for you.
That’s all for today!
Thanks,
Michael
P.S. Related - I’m holding a free talk this Thursday: How to get real feedback.
The more senior you get, the fewer people tell you the truth. That’s why you need systems to force honest feedback out of the people around you. I’ll walk you through everything I do.
How to get real feedback
Thu, May 28th, 12 CT / 1 ET
RSVP free
(I’ll send you the recording if you can’t make it.)
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