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Founder Reality with George Pu
AI is eating jobs, companies, and entire industries. Most people are watching it happen. This show is for the ones who refuse to.
Every week, George and his team break down what's actually changing - from the $285B market selloffs to the career decisions nobody's talking about - with unfiltered takes from someone who's built a $10M+ portfolio with zero VC and zero exits.
No startup theater. No productivity hacks. Just the real decisions behind building businesses you own 100%, in a world where AI is commoditizing everything except judgment, relationships, and risk.
If you're a knowledge worker wondering what's next, a founder navigating the AI shift, or anyone who'd rather own than be owned - this is your show.
New episodes weekly.
George Pu (00:00)
Welcome back to the founder reality podcast. I'm your host George pu And today I have something special to share. I have completed the manuscript and the draft for my first free ebook for my audiences. You so, it's been something I've been planning to do for a very long time. And it's actually based on a tweet that I posted just, think two weeks ago that said your first hundred thousand dollars should come from consulting and not VC. And you guys were very.
liking that tweet, was over 806 people who liked the tweet as I was recording today. And I think, you know, that inspired me to actually write it into a longer story. That's actually becoming helpful for all of us in the community. So I wrote about 350 pages, you know, on a Google doc for my draft. And you can read that in the description below, but I want to use the today's podcast to share with you a general story about what the book is about and what are the things you can take away from.
right? If you are too busy to read that to 350 pages. So the book is called the anti-unicorn, the consulting model, right? And the draft that went live this morning. And, you know, I'll share with you exactly what's in it. What's actually, you know, my story from that I have used for writing this book. And I'll share you three specific chapters. They'll probably change the way how you think about building companies. So without further ado, let's do it.
Okay. So here's why actually I think pissed me off enough to write about 350 pages. Every pieces of startup feedback. I think, you know, back in the days, six years ago when I was just starting a startup, or even, think we can go a little bit further than that. think like eight, nine years ago, when I was just about in the first year in college, you know, in a new country. And I didn't really know even how the banking system works, you know, let it know how to start a startup.
But I got a sort of like exposure, I think on campus about some successful entrepreneurs who have built really good technology startups. I think that really inspired me and it made me realize that, you know, like every one of around me in college was just looking to get a job after graduation. They're looking to work at Facebook, Google and whatnot. And it's nothing wrong with that, but I just genuinely felt that it wasn't the path for me. So
You know, so the long story short, I started learning about entrepreneurship and you know, like every single piece of startup advice that I consume at a time, you know, I went to Y Combinators blog and they had a lot of, you know, like content about just in general, how to build a startup. It was a very famous, you know, YouTube series that they have posted. you know, actually Sam Oman was the president, so he was hosting it at a time and it was just about, I think it was called how to build a startup and it was brilliant, right? There was like 42 videos if I still remember it right.
And I have gone through each and every single one of them. also bought books from very famous Silicon Valley investors and entrepreneurs, know, Peter Thiel, Thiel's zero to one, Ben Horowitz, hard thing about hard things and YC's blog. I read everything just about everything. Right. But eventually after so many years and I'm looking back, I realized I have wasted so many years of my life trying to pursue something that's, you know, specific about Silicon Valley insiders.
And not really accessible to the rest of us, you know, who are not living in a second Valley, who are probably further away from raising a venture capital round. And, you know, today I want to share with you that all those things assume that you'll raise millions, all the books, blocks, YC, they assume you'll raise millions. You'll scale very fast. You'll burn money to find product market fit. At least that's like the resources that I've seen for the past 20 years. However,
After my research, realized a number that nobody actually talks about. And it might be quite shocking is that only 0.05 % of startups has ever raised VC funding, right? And it's not a typo. It's five startups in 10,000 that has raised VC funding. So the problem I think really being that 99.95 % of founders are reading the device that are written for the 0.05%. And then a lot of us wasted years of our lives and then wondering why we're failing.
Right. It's like reading a manual, I think, you know, really about how to drive a Ferrari when you're riding a bicycle. Right. The advice is not wrong. I have great respect for everyone who created startup content, you know, at a time when it's hard to access those content, they made it free. However, the advice is not, it's not wrong, but it is just for someone else entirely, you know? And six years ago, you know, with my personal story time, I was that person six years ago reading that Ferrari manual while riding a bicycle.
For so long, I thought the advice I was reading online, know, from YC, from VCs, on Twitter, on different places, I thought they were written for people like me, except in reality, it's really not. I was sitting in a tiny dorm room in Waterloo, which is like a very small college town, an hour away drive, know, an hour and a half away actually, from Toronto. And that's the town that most Americans have never heard of. You I was 19 years old.
I was a recent immigrant and I barely understood even how the banking system work in details, let alone, know, let alone how, you know, the startup world works. Right. But as I said, I took notes for everything, program essays, YC videos, zero to one, and also lean startup. So everything I took notes, like my life depended on it. And such is that I still love those books. I still love those resources, but at a time I thought I was, you know, if I can just follow a formula.
I become a really hardworking person, you know, doing everything that the guy is supposed to say I'm supposed to do. I made it. Right. But I didn't realize at the time is that, you know, basically the books assume a certain degree of who you are, the reader. It assumes that you have access to Silicon Valley, VCs, the entry networks. They assume you're either us citizen, a us green card holder, or have a us work permit. And they also assume that you probably come from a wealthier background.
have a Stanford degree or Berkeley, or have at least $2 million in your bank, you know, to burn either in your personal account or a company account. It's harsh, but I still think that it's true. And to be quite honest, I had none of that. You know, I was in Canada, I was on a student visa and I had zero connections at a time. You know, I didn't know that yet, right? That's the problem. So back then I was like barely 20. I thought I was, wasn't good enough. I kept on thinking that raising capital, raising funding,
It's not a star is not about the product that you built. Sometimes it matters to just raise the funding first, you know, and build a great thing is because cool things just cannot wait. You know, those are all devices that I've heard pitch after pitch alternate pitch competitions. try to optimize for raising capital. I've heard, you know, successful stories, like videos on YouTube over and over again. Right. And I even pitched to venture investors, venture capital investors, both in Canada and the States. And I think I keep hearing back is like, Oh, come back when you have more traction.
And, or like we don't invest in Canadian companies or let us know when you move to SF. And the last thing I think was very harsh, you know, but true. It's like move to SF as, you know, as if I can just like quit my school, get a visa, get on a truck, you know, get a U-Haul and just relocate to the most expensive city in the world. Right. If you're listening, you'll probably realize what's the problem. And after months and years of this, I've suddenly realized after failing so many startups, after failing so many times.
after burning hundreds of thousands of dollars playing their game. I finally realized that I wasn't playing the game wrong. I was just playing the game that I wasn't supposed to play or I wasn't even allowed to play because I don't have the game those people say I should play. So that's why I found a different game. And understanding and knowing the problem, I think it makes it easier for us to get into exactly what went wrong. And now let's move on to the solution.
There are over 50 books or articles or different things online written by successful founders, entrepreneurs about how to pitch VCs. There are hundreds of podcasts about how to raise your series A and there are thousands of articles about, you know, what VCs are looking for. Right. But do you know how many books out there that actually talks about how to build a hundred thousand dollars plus in consulting revenue that you can use to get yourself started and eventually transition into a product company to scale and make more capital, make more, make more money.
Right? Zero because nobody talks about it because that's, you know, and the problem is like people who are writing those books, they're giving advice to speak at the conferences. They all have raised VCs because that is the only path that they know. Right. But I have been building successful ventures for a while now. I've been building simple direct. I've been building ANC. I actually made millions of dollars in actual cash instead of raising from venture capital. So those are not actually paper valuations, except I didn't have.
Any venture funding or engine investing. have $0 in funding. And that's when I realized, okay, I've, I've taken a complete different path, right? I'm in Toronto, Canada. I'm not in Silicon Valley. I'm actually very far from that. And I use my own experience to prove that the consulting first model actually works. Right. And for most founders, to be honest, I've done the analysis and I realized that it's actually a better path for you to, instead of, course, instead of starting a product first.
and trying to raise venture capital, is a very, like I said, 0.05 % win rate. Consulting way, you can start any day. You don't have to build a product. You start with a value proposition and get paid using consulting while you learn the problems from your customers. And you're validating their problems, right? Your solutions with real money instead of using surveys. And you're building eventually when you decide to build a product after realizing and consulting the problems from your customers, you're building exactly what customer need.
Right? Because at the first place, they're paying you to solve their problem manually. First, it proves that the problem is big enough and it proves that your customers actually want to pay for the problem. And then when you're ready, when you know how it works, you automate it, you build a product, and then you spend even less time on your customers. And you can drop the price significantly from the consulting revenue. And I think that is so underrated because that is actually you're building from a position of strength.
And you're not building in front of position of please God let someone pay me or please let me raise additional rounds before I run out of Right. Traditional venture capital way unfortunately is about that. It is about raising money and keep raising money and growing, keep raising money until either you get acquired, you go IPO or you pass out. Right. There's, there's no other way around. And the companies that try to have another way around usually get crushed or get disapproved by their investors.
So I'm personally arguing that there is a better way that you can actually own a hundred percent of your startup. You can start with consulting. You don't actually have to quit your job. If you're thinking of creating startup equals to quitting your job and playing full time on the offense, like what YC has always said, you have to be full time. You have to be committed, right? And even for that advice, yes, it's true. You should be committed, but you don't have to your job to do it, right? That's YC's way. I fully respect that.
However, right, thinking about YC and all the other VCs is that you have to think about they of course have their own best interests in mind. When they tell you move to San Francisco, of course that's because they know SF has one of the best, if not the best venture capital ecosystem in the world. And if you move to San Francisco, there's a higher chance, maybe a huge higher chance that they will make a lot more money from their investment in your startup. So think about and really realize where they're coming from.
Because I think that's super important. So, you know, my book, it of course is that playbook. I it's free by the way. ⁓ and I'll link the book in the description. The book is that playbook. talks about consulting first. talks about how you can actually use geographical arbitrage to your advantage. And at the end of the, of the book, I actually talk about how you can think about the next 30 years instead of the next three years, right? The 30 year compounding mindset that I've been talking about a lot on my Twitter.
And I don't really think about like the three year exit fantasy or five or seven year exit fantasy that many founders have, especially venture capital funded founders who are forced to be making a sale or forced to go public. know, and we're seeing like, it might actually not be the way for you to build a company in the 2020s, especially in 2025 when AI is so advanced. Let's not play their game, play your game. Right. So my thing is really about that. I don't want to talk about theories.
If you actually read the book, which I'll get to in a bit, you'll see that I actually use all my personal experiences. have talked to founders who are raised $300 million, you know, in venture capital. I've talked to those founders and they're close friends of mine. And I will let them tell you exactly what they think about venture capital funding. There are real stories, there are real numbers, real decisions and real mistakes that I have made or other people have made. So you don't have to, right?
Let's talk about the book a little bit. First of all, I just want to emphasize that the book is free. I'm not making money from the book. I only thought to write the book because I think, you know, I sometimes I don't want to be too harsh, but I it like the poison mindset that a lot of us have been taking it when we think about, okay, we want to be a software entrepreneur. We want to be a startup founder. And the default way for us to actually go at it is actually to convince investors to pour money into our startups.
And I personally had that mindset for many years just because the things that I was reading, right. And I, it has costed me a lot of time. It has made me pretty unhappy and insecure about myself just because I thought I wasn't raising venture capital money and, like I have failed raising venture capital money, right. I had to play a delicate game between investors, et cetera. And, you know, the book itself, I think it's an antidote of that. think I really wanted to make the future generation of entrepreneurs.
or would be entrepreneurs or even college students, you know, know about this book. actually prefer, you know, I really wish when I started, I would have read this book. I think that would have made my life incredibly easier. And I'll probably be somewhere else right now. you know, but, you know, anyways, let's get to the book. it has 13 chapters. It has different parts and, it has around 350 pages, give or take. And right now it's a draft, of course. So it's, it's actually Google doc. So.
because I really wish, I, I, I'm hoping the community, can actually give me more advice before I refine into a third draft, right? And then after third draft, I will iterate it just like how we iterate software, how we iterate everything. I will iterate through the book and then obviously make more improvements and then hoping that eventually you'll be good, you know, so, it would be good. And when it's good, I'll make a PDF out of it. I'll probably even make an audio book out of it. And then, you know, I'll give it away for free because that's why it is about community, right?
So I'll give you guys on this pod three specific chapters and what I talked about. And I hope it gives you some value. And if you read nothing else, those three chapters are the ones that you should read. And I personally really believe it will fundamentally change the way you build your companies. So let's go. So the first chapter, I think it's pretty important. It's about why most founders fail and why...
you think it's your fault. know, when I failed, I thought it was my fault every time, you know, when I was raising capital in 2022 and it was, I was almost there, you know, I was almost closing with the investor and I have pitched them so hard, the investors from New York and it just fall through and I blame myself, you know, even for the years after that, I blame myself for not pulling it through. this chapter, chapter one is all about the lie that we've been told.
Right. And that's about the 0.05 % number that I've talked about. Only five startups in 10,000 startups, know, in 10,000, in 10,000 startups, only five ever raised venture capital. But somehow if you think about it, all the resources, all the books, all the tweets, all the articles, they all assume that, you know, you will. Right. And even when you do raise venture capital, you are that fortunate 0.05 % of all founders.
You do raise venture capital, three out of four VC backed startups will never return cash to their investors, right? Meaning that you give up 20 to 40 % of your company to angels, to investors, to VCs for absolutely nothing. The company probably goes bankrupt and you don't get anything out of it. Your investor to get anything out of it, right? That's another trap. And the third is called the geographical trap. 75 % of all the US venture capital goes to three cities. And I know you can already guess what is it.
San Francisco, New York, and Boston. If you're not in one of those three zip codes, you're fighting basically for scraps and you're getting trash valuations of your startup every time you do raise something. And for example, like for me, I'm personally in Canada and if you're in Canada, only two to 3 % of North American VC money flows North of the border. It's like a no man's land for them. It's like Ireland, you know, or Northern Europe. It's basically getting the same treatment. And even if you're in the US.
If you're in Wyoming, if you're in Montana, if you're in Arkansas, even if you're in Texas, it's a lot harder to actually raise capital from venture capital fund, like, you know, venture capital firms and also intro investors just because where you are, right? Which is ridiculous. And, you know, and if you go back and if you see the advice written by people, they're mostly from San Francisco and there are four people from San Francisco and they're about raising money.
that is almost entirely concentrated in SF, right? And I was sitting in Waterloo, at the time. So that's basically, like I said, that's when I realized the system is broken. It's not working entirely as designed. It is working for people who are the Silicon Valley insiders who know what they're doing and who are in that network particular group. And I'm not just trashing SF. I have been there many times. I respect a lot of VCs there.
I've dined with them. have a really good experience going out with them and also talking to them and learning from them actually. And also founders, of course, but it's not a system that works for me because I'm not in San Francisco. You don't have to be from San Francisco, but you have to be in San Francisco and live in there long-term and also getting a little bit lucky for something that for that to work. Right. So the system that is not designed for me. And I was basically thinking as I was reading this book, I was writing this book, sorry. I was thinking like,
What about people who are in London, England? What about people who are in Finland? What about people in South America? What about people in Toronto, Vancouver? Or even Arkansas, Wyoming, Montana? Or anywhere but California and New York? What if we're in those places? And that's the antidote. So for this chapter, really want to share with you that stop trying to play their game and when you don't play their game,
you're not being subjected to the same scrutiny or expectation that you have to raise millions of dollars for it start to work. And in reality, a lot of people do make it work when they're not raising venture capital, right? If the world is only about VC, if the world is only about raising capital, I think we will be in an extremely, extremely small world, right? So I try to just let everyone take the blue pill, take the red pill. You know, it's your choice.
Right. Go with that route. If you are actually a Silicon Valley insider, but for 99 % of us, it's not. let's go through the consulting way, which is an extremely new way. You know, I have basically proved myself of how to actually build a startup. So chapter four is called the revenue lie. And it basically talks about why everyone tells you to build a product first and charge later. Right. And this is also coming from a personal experience about how
You know, I almost went bankrupt. My company almost went bankrupt a few years ago, just because the Silicon Valley playbook tells you this, tell you to build a great product or at the very minimum building an MVP, minimum viable product and launch it out for free or super cheap as a pilot program or beta program or whatever, get users, get traction, right. And then show that you're growing and eventually raise money on attraction and then keep pumping the growth. So that's essentially.
the Silicon Valley Playbook and the idea is that you will figure out monetization later. You know, when you actually have more capital, when you have more employees, when more people are using your product, you'll figure it out. And that is true if you have more than $2 million in your bank account and you have more than 18 months of runway. But for me at a time and for many of you, if you're bootstrapping or actually if you just have never raised any investor funding.
If you have, let's say $50,000 instead of 2 million or even less than that in savings and you need to pay rent, right? And that revenue way of getting your product out and making money from that, you know, $29 per month, $49 per month, $99 per month, $129 per month. It is ridiculous. You know, you cannot make money from that. And especially looking at 2025, how expensive housing is, how expensive, like everything, groceries, cars, gas.
It just doesn't make any sense. know, like if you charge $29 a month, how, like how and when are you ever going to break even? Never. Right. And that was me actually for so many years ago. That's why this chapter was so personal for me. When we started SimpleDirect, we charged $29 per month for businesses to use our financing platform. And at a time that's everything I've been taught. We thought that was a slow move. It was a low barrier to entry. We figure out what competition is pricing.
And we figure out that we can lower our price to target, you know, our customers better, get users first scale later. Right. So the story basically being that we had 20 customers who are paying us $29 per month. And that's, know, roughly, think $600 in monthly revenue, but it was costing us almost $2,000 a month just to support them. You know, customer support, infrastructure, and most importantly, my time and also my team's time.
Right. Building features that are requested and helping those customers. We were losing a significant amount of let alone like we had a sales team at a time. We actually pay thousands of dollars per month for our sales team to give those businesses a call and trying to convince them to sign up for our $29 per month program. So you can, you can imagine how ridiculous, how crazy, how out of touch that was, but
That was the story of what I've learned. That is the thing that everyone's saying that it's things I should do. You know, no one told me that, you should never do that. You know, I thought if I keep doing that, if I lose money at first, it's okay. Losing money is expected. That's what Silicon Valley tells you. And I bought it. I bought it in, right? And that's the part that eventually almost killed us because those contractors, I later realized they were happily paying other companies.
You know, like I was just speaking with one of the customers, I think a few, a few years ago, and he told me that he actually pays a Google ads consultant $12,000 per month, $12,000 per month for the Google ads for consulting them to get more leads. And it was not $29. It was not $290 per month. was $12,000 per month. You know,
So after learning that I realized that I was super, super undercharged and I was losing money every month. was basically living very frugal at a time as a student with my team. We weren't paying ourselves an honorable salary. We're just trying to make it. And we took the worst possible advice and we were losing money on $29 per month. And eventually I realized screw it. Let's do the consulting way. And I had to figure out basically to charge $2,000 per month for the same services.
to our customers and eventually it was actually quite easy. And the key is basically I'll be very brief about the key is to convince your customers that a you are the person accountable. Right? So when we are pitching $29 per month services, we weren't actually pitching as a service. We were pitching as product. We were pitching as I, look at this beautiful product that we have built and you need to learn how to use it. First of all.
But more importantly, you need to use it and you need to do the onboarding. You are responsible for your own success. If you don't use it, you're not going to win. You're not going to be successful at financing. So that was our pitch, right? But our customers, on the other hand, they expect accountability, right? If you're a business owner, think about it this way. Why do you pay your accountant? Why, why is that right? It's because when you pay your accountant, he or she gives you a sense of relief that, okay, this person
Got it. This person is going to help me succeed on the accounting and filing my taxes. And I don't have to worry about it for that long, as long as I have this person. So that is a premium that we pay to having a peace of mind, right? That's a premium that we pay because we know somebody's on the line and somebody will be accountable for their actions. If there's somehow it doesn't go through. So customers love accountability. Customers love that there is something that they can hold accountable to. So that's very, very important.
And if you're just a product, you can always argue that, you're responsible for your own success. If you're being charged a SaaS fee every month and you're not using the product, it's your fault. It's not our fault. know, like we always go with this dances. And I think that is why a software company cannot build themselves really well. And the second point I think is about product versus service. For service, obviously it's very clear what you're going to deliver. You're expected to handhold the customers.
You're expected to give them personalized onboarding. You're expected to be available when the customer needs you on the product. We all know how it goes. It's like internet company, um, that controls your bill. gotta pay your wifi bill every month, right? You can't reach them that easily. You have to call them. You have to be holding a line for 10, for like an hour. Every time you're speaking with a different person and that is a product, right? Whereas a service like calling, coming back to the accountant example, a service is different. You call the accountant, they'll answer.
and you can let them know your problems and they will help you with that. And they're not going to charge you extra for that probably. you know, that is the expect, that's what customers do expect. So that's why I have learned to actually bill our services $2,000 per month. Yes, we did get more customer support tickets. Yes, I had to do a lot of presentations online to those customers and their salespeople about how to use it. And yes, there many emails and everything around that, but that's totally okay.
Because just having five customers were paying us $2,000 per month, that is $10,000 in monthly revenue. If we call it MRR, think about how many people I would need to get $29 per month to $10,000 in MRR. And imagine the same, the amount of customer support that I have to do for those customers. Would I actually be making money at the end of the day? Of course not. Right?
And the cost of delivering that $10,000 services is just about $3,000 per month. And the margins are quite high because it's mostly my time. It's mostly me doing the work and I easily can make $7,000 a month in profit. Right. And that was basically my story. We went from, you know, we went through on many, many customers. We were building money to just five customers and we're printing $7,000 per month for a small business. Same work, same customers.
The only difference I would say is just the different pricing models and the different way that we sell this to our customers. And when I call our customers, I'll let them know about this. You have to be careful about this. but when you're selling them, you're basically just telling them exactly what benefits they get out of it. I sort of was learning from, you know, the customer who paid $12,000 to Google ads experts. And I was trying to, Oh, what did they, what did they tell you? Like, why would you pay $12,000 to get Google ads advice?
And they're like, yo, he was basically like, he's, yeah, this guy called me and he told me that if I pay for Google ads, I can get three to five leads every single month, at least qualified. And then from those three to five leads, I can actually then close at least one or two. make $15,000 per job. So, you know, if I close two jobs, that's $30,000. So yes, I'm paying him $12,000, you know, plus taxes per month, but I'm making way more than that. You know, I'm making $30,000. So I'm happy with that.
So that is when I captured the, basically the way that customers actually make those decisions. They don't make, they make rational, actually rational decisions and they look at the numbers and look at the projected value of how much we can create, you know, in order to make a decision about how much to pay. So I basically did the same thing. I went, I went ahead and I basically show the customers, okay, we're doing direct mailing for you guys. And we have this like extremely efficient platform.
to actually help you, you know, get your mail to customers about your ads. We have this QR code that kind you know, you can track exactly how many people do reader ads and you will get at least 35 leads, you know, on any single month. And I'm here to support you to do that. I'm here to make sure that we're only delivering the mails to existing customers or new constructions who are very valuable for you, the home improvement company owners.
So I made five phone calls and explained exactly how that is on the phone. And yes, I have existing relationship with those five customers. They're already using our services. So I was able to close through them on the phone right there. They're like, oh yes, send me more details. I'm really interested. And that was basically almost there. And then I closed all of those deals in the next two weeks. And that was just how I made $10,000 per month. Out from, you know, whatever shitty number we had at the time. don't even remember. You know, so that was really the pattern.
which is basically finding a painful problem, charge real money to solve it manually, right? If you don't have a product and add on an ad, I did not have a direct milling product at a time. I did not have any of that at all. You know, I just had an idea and then I built a solution after solely when that, when they signed the deal, I was doing it manually through a few direct milling providers and chat, GPT and Claude to find the optimal zip codes. So yes, I was doing the work manually.
but I was trying to fulfill the value proposition I shared with our customers. know, revenue first, product second, right? That's what I mentioned in my book. That's the entire different game that we should be playing. And that was chapter four. And last but not least, you know, I give, if you read that book, basically I give you a lot of frameworks about how exactly to do that and how to be successful, right? I think a lot of things I talk about is like how to go from zero to $10,000 in MRR.
Right. And, and, and for my example, yes, like, know, direct mailing 2000 a month, I would never imagine our customers paying for that because back in the days when I was being on the phone, we actually had a salespeople calling these customers and trying to tell them that it's only $29 per month. Most people would think what's the catch and hang up, or they're just not interested or just stall. Because we weren't direct about the problem that we're solving for them. And we're basically saying, oh, it's, you know, it's really up to you how to make the best out of it.
Little did we know it's not actually how it works. Customers don't like that. Customers want accountability. the other chapters of the book, Bain talked about that. And I do want to talk a little bit more about like one of the last chapters, chapter 11, which really talks about the 30 year mindset, which is about like building for decades and not for exes. I'm not sure if I ever talked about it on the pod here yet, but you know, it's basically, I do believe that is the most contrarian chapter in the entire book because
Everyone's talking about building to exit, right? Like I read a lot of really helpful resources from VCs and founders, and it was basically all about building to exit, you know, sell to Google, sell to Microsoft, get acquired, or go on IPO, you know, anything like that. Start the next thing and get bought, right? Obviously that's a Silicon Valley dream. And of course you're creating a lot of value for your investors, for your employees, but the fallacies that most of us think that is possible, except
that doesn't really happen. Even for companies who have raised venture capital. If we look at a hundred companies, we'll see exactly how many actually got acquired or IPO. It's probably just one or even less than one, right? I will say maybe 0.1 or 0.5%. That is likely the number because I've seen founders around me who have raised venture capital funds and I've seen founders getting bought out with nothing for themselves because it's about the preferred liquidation preferences in the term sheets or whatever.
But at the of the day, the investors get their money back. It's not even their money. It's their LP's money. And the founders wasted years of their life, sometimes extreme, five years, seven years, 10 years of their life wasted on building companies. And maybe they get like a few million dollars for scraps, like for 10 years of their life. It's just like for basically being that person who cares about the product day and night, who gets sweated about this day and night and just like struggle to build a company, start a company. And that part is real.
and just getting paid pennies on dollar. know, if they work at Google, they probably wouldn't make some more money than whatever they made there. So that's the irony. And I really wanted to use this chapter talk about how I think the traditional VC pass about like basically building fast scaling aggressively and eventually exit it for like five to seven years, start over, repeat.
I don't want to talk too much about it, but I've also know very deeply how VC fund work, right? For a VC fund 10 years, it's usually 10 years and usually starting year five, year six, year seven, they'll start to exit the startups. So your VC partners, unfortunately are not with you for so long. They're only with you for likely five, six, seven years at most. And they'll pull it out. They'll sell their equity. They'll push you to obviously raise another round because when you raise, let's say from series B to series C,
Your VCs can talk to those series C investors and get bought out from them. And it happens all the time. It's normal, you know? So it is of course, again, great advice for VCs, great, you know, like, understand that the game is hard for them as well, but you know, that's not the point. The point is that VCs do make a lot of content and VCs do poison readers a little bit and founders a little bit in the way that they think, you know, that they have to exit. They're building for the exit. Once they sell this company, they'll do another one.
And then perhaps they'll sell the other one too. So my model is a company model, which I'm trying to do. You know, I'm 27, I'm so young. So I can't tell you that, oh, you know, I've built significant success from this, right? But my path was building profitability, stack businesses, never sell and reinvest your profit into more businesses. So Warren Buffett does it really well, but except most people find it to be boring, you know, unfortunately. And I hope that I can own my businesses forever.
You know, I hope I can own them forever as much as I can. want to build the companies that are not just here for the next few years, but I want the companies to be here for the next decades, ideally forever. It is a Berkshire Hathaway model, which I adapted and Warren Buffett doesn't just buy companies to flip them, right? He buys them to own them forever and compound the value over decades. And that is sincerely what I'm doing now with my companies, SimpleDirect, ANC and everything else that I've built.
And in this chapter, I talked a little bit more about that. hope that, you know, just by thinking a little bit different about compounding that you can actually understand exactly where I come, where I'm coming from at this, because for founders, know founders who've basically squeezed five, seven years of their life. And like I said, get millions. Sometimes if you're lucky, tens of millions of dollars, and then they don't know what to do next. Right. If you go on Reddit, everyone, like a lot of people are like that. They say, okay, I just got a huge checkbook. I sold my business.
Now I have millions of dollars, but I do not know what the heck I'm going to do next. You know, that is crazy. Right. And that is a loss of purpose. And for most founders, when they reach that stage, they're in their forties, they're in their fifties, right? They're in their late thirties. Starting something at that age is incredibly different. And that is why many of them actually do not do another startup again. They become investors in VC, in angel. I know the, know it's ironic, but it's actually happens all over time. You just don't have to drive again.
to be building and starting something over when you were in your forties. It doesn't make sense, right? And I hope that for every one of you who are reading, who are listening to the podcast, reading the book, I hope that we do not fall into the fallacy. If you're young and listen to this, I think that's even more important because you can resist the pressure to sell, know, reading the chapters, you can reinvest your profits strategically. You can acquire other cashflow businesses, which is the most incredible and also interesting parts of my model.
And how to think about valuations when you never sell, right? And why ownership beats valuation every single time. I own a hundred percent of my business. I'm proud of it. I will never give up the good equities for venture capital or for injury investors or for anything else. And I'm here for the long-term. I'm here for the next 30 years. Right. And when you're not thinking about exit, exiting your business actually makes your decision a lot better because then you're focused on your customers. You're focusing on profit margins. You're focusing on revenue.
And you're focusing on everything that you should be focusing on instead of, okay, when is the next round? Right. I personally love the we work product, but we all know what happened to we work when you raise too fast. The founder was basically taught to only thinking about raising, raising, raising, raising in a private market. And eventually the money ran out and it collapsed spectacularly burning himself, burning the investors in the process. And yes, he's still very rich, but you know, he, he is the.
Anti VC in many ways he got out on top, whereas most founders do not. know, so I just want to share with you that these are completely different games and it has completely different outcomes. know, so, and I think if you're pre revenue, if you have revenue or if you're just having an idea, but you think it's too scary to start your own business because you assume that you need to quit your job. You need to basically sacrifice your earnings. You need to do many of these things. And actually a lot of my friends work in Apple.
and Google, they actually tell me that's the reason why they fear of building a startup because they've realized that they have to resign from their startups and they actually have to give up their high paying jobs, give up the condos, give up the cars, give up their spouses and many different things, right? Just to make a huge sacrifice to start a just like Jeff Bezos did when he quit his job many years ago to start Amazon. So that's what all of us think. But my book was the antidote. really...
have shared exactly what you can do to not do that. And even if you have a job, you can still make a very successful business by going through the consulting way. And I also want to just say that I'm not saying that VC is not good. I'm not saying that those investors are not good at all. I love many of them. I'm friends with many of them. I'm only saying that their advice and what they're writing is for their benefits most of time.
Why shouldn't it, right? Like it's for their benefits. It is something that, you know, they, they write to get exposures to founders who believe in the ideology, hey, who can actually play the game, right? So for those of us who are not ready to play the game, who do not want to play the game, we're not the target customers anyways, right? But the problem is when there are so many of those resources online talking about these different things, we tend to think that is the way to go. And let me shout, let me tell you that it is not right. And
You know, one last thing before I wrap up this episode is that, ⁓ I will put the description, the Google doc in description. So feel free to give it a read. Of course it's version 0.0.3. So it's going to be rough. There might be typos. there might be sections that need expansions. There's some, be some examples, any more details. And if you do have them, please let me know. ⁓ I left a comment open on the good doc. So you can actually comment and collaborate with me and telling me exactly why you change, you know, so.
That is the way to do it. I, that's how I want to do the book to make it free for the community, but also having the company help me back about how I can actually improve the book on a weekly basis. So please let me know what is confusing about the book, you know, what it's missing, what resonates, what doesn't, right? Like obviously let me know. I'm on Twitter, of course, at the George pu. And you can also email me at George at founderREALITY.com or just, know, like tweet, tweet to me about it. You can add me about it.
The final version, I'm actually looking to launch this in the next months or two. I'll make it available for all of you guys in a better way of reading it than Google Doc. So the draft is live, Google Doc, it's in the show notes. If you want early access or a rough version, if you're okay with being imperfect, it's yours today. So please give it a read and let me know what you think. And I really appreciate it. And of course, one more thing before we wrap.
I just want to emphasize again that I'm not writing the book to make money. Of course it's free. It'll always be free. I'm writing it because I really believe the startup advice industrial complex has fundamentally broken and it is poisoning. I'm sorry. It is poisoning a lot of young founders mind. It is making people be afraid of starting a startup. And I think aside from all the AI things that we have today that make everything building a lot cheaper and easier. 99.95 % of founders will never raise venture capital. So
Why are we pretending that every one of us would, right? Why is a hundred percent of startup advice assumed they well, and that is insane. So my book is for 99.95%. It is for the both track founders, the consulting first founders, right? The Toronto Arkansas, you know, ⁓ Oregon and not San Francisco founders. And it's for the freedom over growth founders. And I just wish that, you know, if that's you, this book is yours. And if you really, really need it, read it. know not many of us.
read these days those long old book. So if you do really need it, read it. And if it changes how you think about it, ⁓ send me a note and pass it on to the next founder. Right? Because I personally spent six years to realize this and I wish someone who's just out of college were 18, 19, 20, and who's reading this. And I think that will make my life, you know, a lot happier. And that'll make me a lot happier because, you know, I'm actually making a movement and not just writing a book and nobody reads. So
appreciate all of you. Welcome to 99.95%. I'm George pu and I'll see you next time.