“My wife and I were offered $100-million for our company when we were $10-million in debt and we declined.”  Okay, you have my attention.

When I was a young President of an outdoor sports distributor, I was recommended to attend a weeklong training offered exclusively to presidents of companies.  You had to be recommended by a prior attendee, who was also a President of a company.  A fairly unique and surprisingly transparent group of people.

This training was called ‘The Center for Entrepreneurial Excellence’ and was located in Dayton, Ohio at the IAMS Pet Food corporate campus.  IAMS had recently been sold to consumer brand giant, Procter & Gamble and was in a transitioning phase.  Interestingly, this weeklong training was free and they considered the executive willing to surrender a week of time, payment enough.  They wanted us there for the right reason.

A real gentleman came in dressed in a polo style shirt and khakis.  I always remember those khakis for some reason.  It was the corporate uniform of the season, unless you worked for IBM and a blue suit and red tie were required.  He started with “if you don’t love dogs or cats and are not passionate about pet health and nutrition, you do not want to work at IAMS.”  He went on to tell us that in the two decades he had owned and led IAMS, no person, no matter how qualified, had stayed with IAMS longer than a couple of months if they did not care deeply about pets and own a dog or cat.  Interesting.

The gentleman sharing with us was Clay Mathile.  He shared that he had convinced his wife to buy IAMS pet food from the original owner by selling their house, moving in to an apartment and basically starting over at a time when they were becoming empty nesters after having raised a family.  He was all in.  And thankfully for him, so was his wife.  Clay shared with us IAMS strategies for success in the land of dog and cat food giants.  Identifying and pursuing a channel that they could dominate while operating in relative obscurity so as not to awaken the giants they wanted to ultimately beat.  Fascinating strategies were underscored by passionate commitment to the health of animals, not the wealth of the owners.  So with stealth, strategy and zeroed in focus on a single lane, IAMS dominated…a channel that had not been valued as a dog and cat food sales channel.  It wasn’t.  It was a dog and cat owner channel made up of hyper passionate dog and cat owners committed to the best care of their animals.  (Yikes, don’t tell them I called them animals.  Their ‘kids.’). IAMS targeted the veterinary channel for selling dog and cat food.  And it worked!

The lesson of the week could be drilled down to a single statement.  “If your company is not passionate about the health of your customer to the point of obsession, you are not meaningful to them.”  This lesson was reiterated over and over by imbedding in us that every decision must be guided by this simple question:  Is this good for the health of our customer.  I took from that a new commitment to the health of our sporting goods retail customers and that idea became and obsession that allowed us to separate our company, selling the same products to the same group of retailers to the point that we developed a ‘co-ownership’ with our partners that effectively shut our competition out.  Another story.

We as a group were very intrigued by Clay’s telling us of declining the $100-million offer for his company, when $10-million in debt.  Finally on the last day of training, which was really a leading of C-change in thinking, we were ready.  When offered the $100-million, IAMS owned a 60% market share of the veterinary channel pet food sales.  Clay knew there was more to be done to protect the health of pets and deepen IAMS market share within their single market vertical.  So, after talking in depth with his wife, praying and considering, he turned down the offer.  There was more to be done.  By the way, the suitor in the $100-million offer was Procter & Gamble.

So IAMS kept their head down, their focus solely on the veterinary channel and commitment solely to improved products that contributed to pet health for another 10 years. After these next 10 years, the Mathild’s were no longer in debt.  IAMS “owned” the veterinary market for pet food with an 88% market share.  Their up and to the right had ever so slightly shifted downward.  It was time to sell to a company whose reach involved existing market channels dominated by the giants.  

Clay sold IAMS to P&G in 1999 for $2.3-BILLION in cash.  23X what they had offered him 10 years prior.  Each % of market share growth in their single channel, equated to almost another $100-million in valuation.  At that time, this was the largest cash purchase that P&G had ever made.  And there were provisions that protected the health and welfare of dogs and cats through IAMS products.

The Mathild’s awarded their team with $100-million in bonuses from the sale.  The original amount offered for the company because the team bought in to the timing and most importantly, the purpose of the organization.

Knowing when to hold is best understood by a clear understanding of your market, your strategies and girded by a corporate culture immovable in the face of giants.

David, the young Jewish boy killed the 9 foot giant, Goliath, in front of him with a string and a rock because he had trained on those lonely hillsides as a shepherd protecting his sheep from lions and bears with that same string and rock combination.  When in the face of attack from a better armed foe, his training and his ability proved themselves.  He knew when he stepped up, victory was already assured.

“Trust in the LORD with all your heart; do not depend on your own understanding.”  Proverbs 3:5 (NLT)

Clay wanted more than anything for us to understand the need for focus on faith when building something amazing.  “Great companies are bought, not sold,” he continually said to us.  Great leaders serve, he showed us.

“Know when to fold them.”  Timing is everything.  Your time is coming.  Trust.  Believe.  Succeed.