Why Most Founders Regret Their Exit
If you’ve ever wondered how to take a scrappy service business and turn it into a scalable, software-driven company with an 8-figure exit, this episode is for you.
This week on Fundraising Demystified, I sat down with John Rood, an edtech founder who sold his company to a private equity firm after years of deliberate scaling and a smart capital strategy. We discuss how he engineered the exit, the surprising truth about life after the deal, and why most founders struggle post-acquisition.
Whether you’re scaling, selling, or just getting started, this one’s packed with hard-earned insights.
What you can expect:
- 00:00 – The Brutal Truth No One Tells Founders
- 02:04 – How John Turned Tutoring into SaaS Gold
- 05:21 – The Finance Hack That Boosted His Valuation
- 07:10 – What Really Kicks Off an Exit
- 11:08 – The $10M Mistake Founders Keep Making
- 13:59 – What’s Actually Enough for You?
- 17:01 – Why Most Founders Regret Life After Exit
- 22:52 – Angel Investing: The Ego Trap No One Admits
- 28:22 – The Weirdly Happy Knife Founder Story
ABOUT JOHN ROOD
John Rood is the author of Beyond the Exit and the founder of one of the world’s leading pre-med test prep businesses. After scaling the company into a content-and-software powerhouse, he exited for over eight figures to a private equity firm. He now advises founders on exit strategy and post-exit reinvention, drawing from both his wins and the emotional landmines no one warns you about.
Connect with John:
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What Founders Get Wrong About Exits (and How John Rood Got It Right)
Episode Description: In this conversation, John Rood, author of Beyond The Exit, shares his journey as an exited founder who sold his educational services business for over eight figures. He discusses the strategic decisions that led to the transition from a service-based to a software-based business, the importance of understanding private equity, and the emotional challenges faced after the exit.
Jason Kirby (00:02.318): Hey, everyone. Welcome back to Fundraising Demystified. Today, we have John Rood with me today, an exited founder who sold this company for more than eight figures to private equity and also wrote the book on Beyond the Exit. John, welcome to the show.
John Rood (00:16.93): Hey Jason, thanks for having me. It's good to be here.
Jason Kirby (00:19.18): Now I'm excited to talk about your experience and what you've done, but to give the audience a little bit of color, you built a material business, you spent years building it and you had what most founders dream of is an eight figure exit. Can you tell the audience a little bit about what the company you built and we'll kind of talk about kind of the process of selling it and why you sold it. Does sound good?
John Rood (00:40.526): Yeah, sure thing. So I had started and built an educational services business in the test preparation niche. So we started out helping students succeed on the law school admissions test, ultimately built a business in the medical pre-medical education space, pivoted from where we started with kind of tutoring and services to be more software based and more content based.
John Rood (01:14.188): And then ultimately that was one of the larger pre-medical test preparation businesses in the world when we sold it.
Jason Kirby (01:19.18): Wow. And I guess in that process, you took it from a service business to a software business. And for founders that don't know, that's a material difference when it comes to exit value. What gave you the insight that you needed to switch to a software business?
John Rood (01:33.07): So I think it was two things, and one was luck, and then one was skill. So the luck was we saw some places in the market where our students were not really being served with some of the software and content solutions from our competitors. So we had an opportunity to go build that, which was great. And so it's always great to serve our customers better. And then the second was, and this is where I think I did some smart things.
John Rood (01:33.07): I had a really good advisor who had worked for our competitors for a long time and then had a great MBA and was a high level consultant at a big firm, one of the smartest people I've ever met. And one of the great things he did for me was he took me around to private equity firms well before we were interested in selling and just said, hey, sit down with these people, meet these people for 15 minutes, talk to them, see what they want, see what kind of businesses they want to buy. And sure enough, exactly as you had said, you know, a small tutoring business is not really worth very much, but a scaled business with software content, tens of thousands of students is worth much, much more.
Jason Kirby (02:39.266): Yeah. And so that's something I want to kind of point out. You had an advisor and in this case, it could be investor, advisor, mentor, whoever, but you know, that understands the business understands, you know, the, the economics of private equity that can introduce you to how to start thinking like that. At what point in your journey did they kind of introduce you to this concept of private equity and you know, those conversations.
John Rood (03:01.326): I think we were probably five or six years in and we ended up selling when we were eight years in. So, you know, I think we were, we were big enough to have those conversations. Like it would have been a little absurd to go, you know, go to the, you know, downtown high rise and sit down with the full investment team and say, you know, to your point, I've got a hundred thousand dollar tutoring business. Like that's just not, not the way to create the right relationship. But, you know, I think it was when we were large enough and interesting enough that people could see, at least some path forward to us being a tuck-in to something else that they were doing at some point in the future.
Jason Kirby (03:36.45): And so you started those conversations two years before you actually ended up selling. And I think that's probably what led to maybe a more successful outcome. Guess walk us through from the spark of like, okay, now I know what the end goal is. That's going to maximize enterprise value. If I do X, Y, Like what did you do with the business to maximize the value?
John Rood (03:57.036): Well, I, you know, I think that it's, it was really the basics. I mean, kind of after we had that strategic direction of we can't just be, you know, a one-to-one services business. It was really clear what we needed to do. We needed to build software and content that gave us substantially higher gross margins. And then just scale that as quickly as we can. And, know, I probably talk all day about how you do that in education business. Probably not super interesting to your audience altogether, but I mean, functionally, it was just the blocking and tackling of growing that business and scaling in a smarter way as we could.
Jason Kirby (04:30.938): And how much did you grow? Like, were you growing faster than you were before? Did you play any, like, some things I talk to founders about are like, there are these certain financial games you can play in terms of investing in certain parts of the business to drive top line revenue and give you a greater multiple—like almost fiveX, sixX your money that you invest because you invest in the right thing. Was there any strategy around that?
John Rood (04:56.908): Yeah, you know, one of the things that I learned—and I was a humanities major in college, so I have no finance background whatsoever—but one of things that I learned is that when you make investments in your business and you have clever finance people, you can sort of just say that those are capex as opposed to something different and oftentimes get that knocked off of your costs. So when we invest in software and content and expect them to be valuable for five to ten years, that turned out to be an extraordinary investment.
Jason Kirby (05:04.174): Right.
John Rood (05:26.45): Yeah, it's basically increasing your EBITDA artificially and then that little bump, you know, can be multiplied depending on whatever multiple you sell at—five times, six times—which can have a very material impact. So I всегда challenge founders to think about where to invest for growth and EBITDA to maximize multiple.
Jason Kirby (06:08.91): Yeah, exactly.
Jason Kirby (06:19.982): When you get two years down the road, what actually kicks off the sale process? What's going through your mind when you decide to sell?
John Rood (06:19.982): A couple of things aligned. One, we started getting serious inbound—from competitors, search funders—at least one email a week. That told me we were big enough to sell. Two, the business had plateaued, and getting to the next level required major investment in tech, people, management. Three, all my net worth was tied up here; it was time to safeguard my family's future and take chips off the table. And it so happened a private equity group we’d met years before re-engaged, looking to roll up in our space.
Jason Kirby (07:44.814): Let’s define terms: search funds—MBAs raising capital to hunt deals and raise financing to close—and rollups—buying a platform and bolt-on companies. Founders need to know this language when talking exit.
Jason Kirby (08:38.606): When it came down to choosing a buyer, how important was your prior relationship with that PE group versus others?
John Rood (08:47.15): It was moderately important. You can sell without prior relationships, but knowing and trusting people makes due diligence and negotiation smoother. It’s not worth millions more, but that extra trust is valuable.
Jason Kirby (09:44.994): And when you ran your process, did you hire a banker or do it yourselves?
John Rood (09:53.346): We hired a banker and ran a limited process—we already had a strong offer and wanted to confirm top dollar. Every entrepreneur Monday-morning-quarterbacks their process because mistakes can cost millions.
Jason Kirby (10:50.702): What would you have changed?
John Rood (10:56.51): Probably inviting more buyers. But overall we hit our goals: chips off the table and continued growth.
Jason Kirby (11:21.454): Founders often regret not being greedier, but if greed derails the deal, it’s not worth it.
John Rood (12:04.888): Precisely. I’ve talked to people who got $100M and still fret. It doesn’t change their life if they sold for $110M. You have to decide when you have enough.
Jason Kirby (13:09.57): So what happened after you sold?
John Rood (13:59.79): I stayed on for two years under new owners. Pleasant experience, but transitioning from founder to employee—even under friendly bosses—was jarring. After two years, I left and realized I’d never planned my life post-exit.
Jason Kirby (15:09.954): And that led to writing your book?
John Rood (15:13.622): Yes—selfishly I always wanted to write a real book, not just test prep manuals. But more importantly, I wanted founders to understand the emotional dark side of exit. I interviewed 70 founders with exits ranging $1M–$700M, and almost none found the post-exit phase smooth or what they expected.
Jason Kirby (16:29.678): It’s like Wile E. Coyote catching the Road Runner—then what? Can you highlight the key themes from your interviews?
John Rood (17:01.452): Four key challenges: identity loss, lack of planning, unrealistic expectations of post-exit life, and rushed sales processes that leave no time for reflection. Many founders jump into angel investing or new startups without healing.
Jason Kirby (19:25.484): Let’s dive into identity: founders define themselves by their business, so they struggle to see themselves as anything else.
John Rood (19:37.678): Exactly—lose the business, lose yourself. The sales process moves fast, everyone’s incented to close, and no one asks, “What do you want your life to look like after exit?”
Jason Kirby (20:07.104): So what tools or networks help founders prep emotionally?
John Rood (21:19.502): Read books (including Beyond The Exit!), join peer networks like EO or YPO, and take dedicated time—1–3 days away—to journal and plan post-exit life.
Jason Kirby (22:08.13): Post-exit, founders often jump into angel investing for ego feed, then burn out. Then they start new ventures immediately without reflection.
John Rood (23:21.12): Right—angel investing can be hollow. Deals come to top-tier angels; most investments are small and hard to track. Rushing into a new startup without inner work often repeats the same stress loops.
Jason Kirby (25:03.9): So, founders should ask: do I love building another business for its own sake or because I need purpose?
John Rood (26:29.158): Yes—plan based on passions. One interviewee pivoted to opera singing post-exit; another returned to childhood hobby of collecting knives and built a new niche business with Danish partners.
Jason Kirby (29:18.67): I’ve seen founders use exit funds to launch “parallel” startups, only to repeat burnout. Better to reflect on childhood passions.
John Rood (30:09.838): Exactly—quiet reflection seeds real happiness when status and money can’t buy it.
Jason Kirby (31:28.366): What final advice for founders about to exit?
John Rood (31:52.76): Functional advice: find mentors who’ve sold companies (via EO, podcasts, articles). Emotional advice: plan life post-exit—know your deal structure, rollover, earn-out terms, and decide if you want to stay in the business under new owners.
Jason Kirby (33:31.116): One more: founders underestimate the difficulty of working under someone else. If you think you’ll love it, discount happiness by 50%; if you dread it, it’ll be worse than you imagine.
John Rood (34:26.092): Yes—earn-outs can trap founders in roles they hate. If you dislike working for others, retreat to that reality before you sign.
Jason Kirby (35:26.51): How can people reach you and your book?
John Rood (35:55.544): LinkedIn or beyondtheexitbook.com. Book on Amazon—paperback, audio, newsletter sign-ups there.
Jason Kirby (37:10.35): Outside the book, what’s your post-exit path?
John Rood (36:03.104): Four pillars: father/husband, community giving, continuous learning, continuous teaching—now focused on AI training, which I love, even if it’s not the most lucrative path.
Jason Kirby (37:37.998): Great discussion, John. Links in show notes; thanks for sharing your journey.
John Rood (38:04.738): Jason, thank you. It was a fun discussion.