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The "No BS" version of how startups are really built, taught by actual startup Founders who have lived through all of it. Hosts Wil Schroter and Ryan Rutan talk candidly about the intense struggles Founders face both personally and professionally as they try to turn their idea into something that will change the world.
Welcome back to the episode of
the Startup Therapy Podcast.
This is Ryan Rutan,
joined as always by my
friend, the founder,
and CEO of startups.com.
Will, Schroeder Will, why is
it that every time as a founder
that we hit the startup lottery?
I. We think that it'll
just happen again.
Right?
This feels like a thing, but,
but, but hang on, let me,
let me set the stage here.
Picture yourself in
early 2021, I think.
Yeah.
Yep.
So the world's slowly recovering
from, from a pandemic.
Tech.
IPOs are everywhere, and
suddenly Peter Chesky, the
co-founder of Wish is a.
Brand new billionaire company.
Stock source to memory
serves like 31 bucks.
He's now got a net
worth in the billions.
And so he naturally celebrates
in a very billionaire way and
buys a belaire mansion, right?
And it's only 15
million bucks, right?
Which, when you're worth what,
like 4 billion on paper, kind
of doesn't matter, right?
Like, who cares who's
sweating 15 million?
It's, it's literally a a, an
almost incalculable fraction.
But then what happens Will.
We all do the same thing.
When times are good, when the
riches are flowing, we assume
they're gonna keep flowing.
And what's different about
this, not just Wish, which
I think is a fascinating
story, but also just any kind
of payout or big payday, it
could be a good year, right?
Right.
It could be a good quarter,
it could be a good whatever.
Yep.
But when we get, when we
receive a substantial payout,
whenever that time might be.
Okay.
Now wish was a rocket, right?
Yeah.
That thing like grew so fast.
It was everywhere.
It also worked particularly
well during the pandemic.
Mm-hmm.
Because everyone was at
home and they were on
their mobile devices.
Yep.
And which was serving
up junk, popping away.
It was so cheap.
Right.
And they built this whole
story behind it, like this,
you know, bigger story
for the, for the street.
And they said, look, it's not
just that we're selling cheap
junk, it's that we're building
this amazing like third party
logistics infrastructure
to be able to do that.
Right.
That's gonna be worth
more than Amazon.
And you know.
Told the story and
so it goes out.
Has an amazing IPO to your
point, you know, had hit a
market cap of 18 billion,
uh, Peter's worth, I think
4 billion at the time.
Yeah.
And I'm watching this whole
thing and then I, and then I saw
the headline, bought a mansion
in Bel Air, and I'm like.
Of course he did.
Right?
No.
And, and, and look, I,
I don't begrudge anybody
for spending their money.
Right.
Uh, the irony was I was
thinking about it, right?
Like, my wife and I were
shopping for a house in Bel.
It wasn't a mansion.
It was just a house.
But like, we're shopping
for a house in Bel,
like a year before that.
Yep.
Can't begrudge the guy.
Yeah.
And I sure shit didn't have an
$18 billion IPO, but my point is
all I could think to myself is.
This guy feels like
he's worth $4 billion.
Yeah.
And numerically he is.
Yeah.
He was.
And 15 billion or 15 million,
I think it was the price tag.
15 million's, a rounding error.
It is, it's literally
a, it's a, it's a tiny
incalculable fraction.
Right.
And if, if you went to even
the most curmudgeon accountant,
and instead, I wanna make
this purchase, that accountant
would be hard pressed mm-hmm.
To say.
That's ridiculous.
Okay.
Yeah.
Again, this is the point though.
This is, this is why we're
gonna set up with wish.
Now I'm intimately familiar
with wish because I
made a Wish too on Wish.
Yeah.
I bought their stock.
Uh, I don't remember
exactly where I bought
it, but I held it.
Through the entire drop.
Yeah.
Now it's bounced back a
little bit since then.
Right.
But when it peaked,
okay, I do remember this.
It peaked at $31.
Yeah.
Okay.
So Ryan, if, if you're looking
at your payouts, and this
is what this is all about.
If you're looking at
your payouts and you're
thinking, I'm at $31.
Worst, worst, worst case,
we go to 15, 10, maybe.
Nine on the worst
day we'd ever have.
24 months later, Uhhuh,
it's trading at 38 cents.
99%, 99% percent
reduction.
Ouch, right?
For everybody to own the stock.
That was painful for anybody
who, hell, who had $4
billion worth of that stock.
It
was a lot more painful.
This is what we're teeing
up with, right At that
point when his stock kind,
you hits that milestone.
Yeah.
He's down to somewhere around
38 million of, of value.
Now there's a whole
bunch of caveats to that.
People thought,
well, 38 million.
I mean, dude,
thank God he bought
that house that
was a 50% hedge on
his future net worth.
Right?
Holy shit.
Yeah.
Yeah.
And, and so, you know, uh, you
could make the case, well, 38
million stole a lot of money.
It is, it's not that liquid.
It theoretically sounds liquid,
but you're the main principle
in a, uh, in a public company.
You can't just fire sale at all,
actually make it worse.
You just solve that.
Yeah.
Especially at a time where
it's gone from $31 to 38
cents, not a good look.
If you're like, I'm just gonna
let go of what I got left here.
Yeah.
And, and, and I'm not
intimately familiar with,
with anything Peter did with
his money, so I, I I don't
wanna pretend to be an expert.
Yeah.
However, what I do know
is that when you have that
kind of money in the market,
you don't take it out.
Right.
Uh, you don't take it out
because you borrow against it.
Yep.
It's also a tax
strategy, et cetera.
For those that aren't familiar,
the reason people get all
pissed off at rich people for
not paying taxes, truth be
told, they pay tons of taxes.
But what, what, what they,
what they hear are the
headlines are this guy Peter,
his stock goes to $4 billion.
He takes out a loan Yep.
Against $4 billion and
that loan's not taxable.
Correct.
So he now gets cash
in his bank account.
It's gotta pay it back.
But he's got cash in his bank
account with no, uh, taxes all.
Anyway, a long way to
say when times were good.
Peter did what we all do.
He says they'll
continue to be good.
Yeah.
This is just the beginning.
Oh, brother.
It, it, if divided, we are
master extrapolating
of our best day ever.
Right?
As startup found is real,
like best day ever, probably
gonna look like this
for the rest of my life.
Like I said, the stock has
bounced back a little bit,
nowhere near where it was
before, and that's fine, but
that's not really the point.
The point of the story
isn't, isn't that it
went up and went down.
It's that when it was up.
He spent and felt and
thought like we all do.
Yep.
That's gonna continue to go up.
And honestly, I, I've always
felt, and I always tell founders
when they have their moment,
they've got like a cash out
moment or a sale moment or
whatever, tell 'em the same
thing every single time.
Um, generally everybody
ignores me, but that's okay.
I say, treat this payout,
treat this distribution,
treat this whatever you're
about to get, as if it's the
last payout you'll ever have.
Because numerically,
statistically, statistically.
It is.
Yeah, that's it.
Missed last game.
Tough math.
No ones.
That's real math.
Yeah.
Great.
No one believes that,
Ryan, because at the time
someone's giving them
a giant chunk of money.
And they're like, well, if I can
do it now, I can do it again.
It's the guy who wins
a ton of money at the
blackjack table, right?
And just has an amazing streak.
Does he take 10% of it
and keep gambling and
put the other 90% away?
Double down?
Why would you at that point,
because clearly it's replicable.
Clearly
I'm winning.
Right?
I mean, it's, it's, it's
Vegas over and over.
I told you this once before.
So when, when my wife and I
go to play, um, blackjack at
the casino, that's our game.
We always do the same thing.
We show up at the table, we
put down a ver relatively
small amount of money.
We, we both buy the equal
amount of chips now, I
don't know why, but she's
really bad at gambling.
Um, it's blackjack.
There's not really
a lot to be bad at.
Yeah, I mean, this is
why we play it anyway.
So she tends to be
pretty bad at it.
And as the night continues,
um, her money just like slowly
dwindles and I, I'll give
her more chips and, you know,
to keep her going anyway.
My streak goes on.
I tend to win.
I have no idea why, but I, I
tend to win it at the table.
But what my wife does, as
I'm getting more and more
aggressive and excited and
whatever about my winnings,
my wife is siphoning my chips.
Yeah.
Off the table and
into her purse.
There you go.
Okay.
And so at some point in the
night where it's like, time
to go, I'm like, man, you
know, we didn't do very well.
And of course she's like,
we actually did really well.
We did okay.
I just took all the
chips off the table.
Right.
And we actually have,
we made a ton of money.
I'm like, oh, well
that's a nice, nice find.
Perfect.
Those, taking the chips
off the table when, when
you're up is exactly
what we're talking about.
Yeah.
And what I wanna unpack is,
you know, when, when we go
through this today, I wanna talk
about why people don't do it.
Yeah.
'
cause that's the important,
I think everybody logically
gets it when you say this.
Now everybody goes, yeah.
Okay.
That makes sense.
So as, as I start winning,
I should suck some away.
Everybody understands that.
And yet no one sees it as
that moment where like, oh,
these are the winnings, this
is the time to sock it away.
Yep.
And I think, look, I, you,
you've said this before, but
I, I'll say it again, man.
It, it's good Times
make for bad decisions.
Really bad
decisions.
Right.
Really bad.
Because there you can
make Yeah, because you're,
everything's going well, right?
Yep.
We got a big payout.
And again, like, could be
quarterly windfall, could be a
private sale, could be an IPO,
kind of doesn't matter, right?
Whatever that is, it's.
Easy to believe that it's,
it's just the beginning.
Yep.
Right.
It's a home run.
But I'm gonna treat it like
it's a base hit and like I can
just continue to do that and bat
more and more and more of those.
And this is where it really
starts to go wrong, but
it's because we're on
the high of that success.
Right.
Right.
And it's funny, it's like,
uh, professional athletes
are so known for this.
Yes.
Right.
They, they, they get
the signing bonus.
They go into the NFL, the NBA,
you know, wherever they go.
They all have a money
manager that more or less
says the same thing to them.
Yeah.
Which is don't blow all
this money on dumb stuff
because you'll probably
never get it again.
Yep.
And of course most of them
are like, are you kidding me?
Uhhuh?
Right.
What if it's a million,
it's 10 million.
I don't even hit
my prime yet.
Exactly.
He said as he got his last
check, and it blows my mind
because in that moment there
are no signals to tell you.
Yeah.
Stop.
'cause you're winning.
Because you're winning.
Yep.
Right.
When I was running my first
company and we started to
make some serious money, I
was like, well, companies
just grow every year.
That's just the way it goes.
Well, we do right just 20%
year over year, forever.
What could go wrong?
Dot com bust.
Yeah.
Yeah.
Insert.
Insert.
Pretty predictable.
Cyclical.
Oh my god.
Economic.
And here it goes.
Oh
my God.
It's it.
I mean, I look at it
now like when something
good happens to me.
I instantly just wait for
the other shoe to drop.
Yeah.
Right.
Where wherever there's a
windfall, I'm just like, no.
And, and my wife and always
have, have this joke.
We say, the money's spent,
we just don't know where yet.
Exactly.
That's exactly it.
Yep.
Nobody's going to take it.
It's already
been claimed.
They just haven't called us yet.
Exactly, and so I think,
well, actually, Ron,
let me ask you this.
When you think about founders
that are like, you know, in that
prime moment, they've got the
glow, whatever, why do you think
they're so prone to making bad
decisions or like, like what
does that look like to you?
I think it's, it goes back to
this like projection of hope
thing that we've lived on from
the very beginning, right?
Yeah.
We've had to believe against.
All odds that this
dream that we had can
actually become something.
And we kept going against
all the odds, right?
While things weren't working,
we weren't making payroll, we
didn't have revenue, we lost
the contract with the, the
co-founder left with half the
ip, whatever it is, right?
Like there's all of every, every
one of these success stories.
There were a shit ton of
challenges and hurdles that led
up to that point, and because
they were able to succeed
despite all of that stuff.
I feel like what happens is in
that golden moment when all of
a sudden the glow is upon us.
Yeah.
Now it's like, okay, if I
was able to do it when shit
was completely sideways.
Of course it will just be easier
from this point forward, not
realizing that this isn't a
change in the tides, that this
was a, a payback for what had
been put into that point, right?
All the efforts that have been
put in this is that moment.
This isn't just a change in
the environment, that now it
will just always be like this.
We get like, oh, this is
our new normal, right?
This is the new low watermark.
We'll just always be here.
It'll be great.
I think that's what
ends up happening.
I think you, you, when we're
in those moments, and I've
certainly had them myself, where
it's like, I worked so hard.
Through such tough circumstances
now everything feels better.
Everything feels easier.
So clearly if I could
do it, then with all the
advantages I have now, it'll
be that much easier to do it
again and again and again.
Right, right, right.
Absolutely untrue.
But it sure feels like
that and, and it's easy
to make that story right.
So easy to make that story.
At that time, I, I'll give
you an interesting counter
story that one of the few
times I've seen someone
go the opposite direction.
Okay, so this is late nineties.
This is at the, the, the
formation of priceline.com.
Uhhuh.
Now a, a lot of people
don't really understand
like Priceline like now.
'cause it's not the
company it used to be.
Yeah, yeah.
But when Priceline came out.
As an IPO in the late nineties.
It was one of the greatest IPOs.
It was a massive,
massive success.
Jay Walker, who's a fascinating
individual, who's the, um,
the, the, the founder of
Priceline was on the cover
of Forbes and, and they said
he was like, the next Edison.
Like it was a big deal.
Well, it just so happened
that one of my closest friends
from high school actually went
to go work for him on the,
when they were figuring out
what price line would become.
Mm. So he was there like one
of the first like 15 employees.
Oh, wow.
Right.
Like long before it
became Priceline.
He's there through
the whole journey.
He's the whole journey as
this thing, you know, turning
into what it was gonna become
and like, like a $27 billion
IPO, which is, it's a lot now.
Hell of a lot back then, then.
Oh my
God.
Yeah.
Right.
Anyway, as, as they're,
they're leading up to the IPO.
They haven't gone IPO yet.
He goes in, uh, to talk
to Jay Walker, who was
like a mentor to him.
Right.
And Jay loved him.
And, uh, he said, Hey
Jay, I'm resigning.
Joe's like, wait, what?
Uh, he's like, are you kidding?
Like, like, what are
you talking about?
He's like, yeah, my toys
and I'm going home.
Yeah.
And so you said, he's like, I
want to exercise my options.
Like, you know, I'm, I'm
making these numbers up because
I, I don't wanna share his,
his numbers, but like, I'm
ex exercising my options at
a hundred thousand dollars.
When, if I saw it through
the IPO in six to 12 months,
um, you know, past lockup,
it would be like $2 million.
Right.
So like a massive difference.
Yep.
And.
Jay's mind blown uhhuh.
He's like, why would you, what
are like, look around man.
Look at what's happening here.
Right?
Yeah.
And so finally,
finally, he breaks down.
He's like, this is
the dumbest thing I've
ever heard in my life.
Okay.
And, but, you know,
begrudgingly writes him a check.
It was more than a
hundred, a lot more than a
hundred thousand dollars.
But, um, writes him a check.
My buddy takes it.
He quits.
He puts himself
through law school.
He buys a house with it.
He buys his first house with
his family, bought some cars,
whatever, like, uh, invested
it in his future, right?
Yep.
Basically bought all the
things that, you know,
money will stabilized
himself.
Yeah, exactly.
Massive.
IPO, uh, price on has
a massive IPO and then
basically right into the.com
bust all those options go
under water and nobody's
options are worth a penny
because they were, and they
were still in lockdown.
So like this is, yeah,
they're, they're all
locked up.
You cannot,
you can't.
Right.
So right after the
IPO, you can't sell.
So everybody watched
their, their paper value
go through the roof.
I mean, just popping bottles
everywhere.
Right?
Straight back down, right?
Yep.
You know something that's
really funny about everything
we talk about here is
that none of it is new.
Everything you're dealing
with right now has been done a
thousand times before you, which
means the answer already exists.
You may just not know
it, but that's okay.
That's kind of what
we're here to do.
We talk about this stuff on
the show, but we actually
solve these problems all
dayLong@groups.startups.com.
So if.
Any of this sounds familiar.
Stop guessing about what to do.
Let us just give you the answers
to the test and be done with it.
We, we've got a great photo of
me and a couple of my friends
from Priceline and then a couple
other buddies at the same time.
And, and we're all
like 25, right?
And we're all
standing on a beach.
Right.
And just like, like
just in this great pose.
Not like anything crazy,
just like just five or
six dudes on a beach.
You Yeah.
High school friends.
Catching up like blown
away by our good fortune.
And then when I look at that
photo now, I was like, that one
bust, that one bust that one.
Yeah.
I mean like the beach photo
was great 'cause like again,
it was just five or six
dudes standing on a beach.
It wasn't like anything crazy,
but I remember the sentiment.
I. Ryan at that time where
everyone was like, we're gonna
make so much money and we
don't even know what to do.
We don't know what to
do, we want to do it.
Look at the grains
of sand around here.
Each one of them is a dollar.
And imagine they're
all yours, right,
dude.
And, and or not.
Again, this is, this is where I
started to learn firsthand how
quickly, 'cause I didn't believe
any of that could go away.
Right.
I just, I was like, if,
if it's worth 10 now
it's worth a thousand.
And I not, because I was
being so arrogant, I just
didn't know any better.
Don't know any better.
And, and it just, it just
feels like that, right?
Like you're watching it grow.
Yeah.
You've started to put
something into it.
You understand how you made it
grow, but you don't understand
how could I possibly turn this
around and, and like, again,
like ask, ask Peter, right?
Right.
If you had asked him, could this
thing possibly could, should
we hedge a bit here, could this
thing possibly go to 38 cents?
What do you think his
answer would've been?
Well, I mean, no possible way.
Right?
It's, it's at 31,
it's gonna go to 300
Uhhuh.
Right?
Exactly.
You're thinking the opposite
direction, like none of
that makes sense now.
I have no idea what the
dude did with his money.
Right.
For all I know he cashed it all
out and, and you know, put it
in T-bills for hell if I know.
All I'm, all I'm relating
to is his purchase and his
stock price as, as just like
a general idea that like,
let's put it this way, if he
had known, known that it was
gonna be 38 cents, he sure as
hell wouldn't have been buying
15 million feller mansion.
Right?
Like what I had the cape for is
picture the worst case scenario.
And spend toward that.
Right?
Like, like, like what
is, what is the worst
thing that could happen?
Relatively, right.
Because the other side of
it, like things, when things
go bad, they usually don't
happen overnight per se.
They happen fast, right?
But you do have time
to, you know, to react.
So he might've sold
at five bucks, right?
That've been 150 million
or what, you know,
whatever that maps back to.
But regardless, it does happen.
You know, the, the floor
falls out all the time.
It does so much.
So, like I said, my, my, my
wife and I, like we bet on it.
We're just like, yeah.
Matter our time.
Yep.
Yeah, that's the thing.
I think to your point, when we
manage towards that, that worst
case scenario, right, regardless
of what happens then, like if
it doesn't end up happening,
then we're better off If it
doesn't end up happening, right?
We're better off.
In either case, we're better
off, but the, the minute we
turn a lucky payout lucky.
Lucky I, you know how
I'm using that word here.
Fortunate payout, right?
We work hard.
Mm-hmm.
We get something, but that
one time event, we turn
that into our baseline.
Yeah.
Forgetting that it
is blip not trend.
Once that baseline disappears
and the floor's gone, that free
fall is a lot harder and the
crash is way more significant.
Right.
If you're not managing
towards that downside, um,
it will jump up and you
agreed.
Agreed.
And so.
Again, I think we've got this
fantasy that, that there's
another payout coming.
Yeah, of
course.
But, but here's like Ryan, if,
if you had just gotten the big
payout and I was trying to, um,
pitch you on the idea that there
will not be another payout.
Yep.
And by the way, think of how
negative I sound in that moment.
That's the
thing, man.
Especially, especially when
it's coming from somebody.
Like, it actually kinda doesn't
matter who it's coming from
unless it's coming from a
copy of you who went through
exactly all the same shit you
just went through to get there.
You're like.
Right.
You don't know me.
You have no idea what
my struggles were.
Like you don't know what it
took to achieve this and what
I am capable of and clearly
capable of doing this.
Again, if we look at the
stats, if, if when I make
the argument that this has
nothing to do with you Yep.
This has nothing to do with you.
Right.
This is just saying
that's statistically Yeah.
This will be your last payout.
Yep.
And, and, and when I say
statistically, let me explain
the statistics I'm using.
'cause some of them apply
and some of them don't.
Statistically looks like
something like this.
At any given time,
there's 10,000 venture
backed startups in play.
Yep.
Right?
Um, few thousand new get
added to the thing and
few thousand die off.
So there's 10,000, uh,
active at any given time.
About 1% of that give or taker
is gonna have like the big, big
exit, like the ipo, et cetera.
And Peter, you know his credit.
Yep.
Got to that exit.
Right.
Very hard deal that 1%.
Easier to do in 2021.
A lot harder to do
before and after that.
Definitely timed it right.
Anyway.
Beyond that, a total of
15%, including that 1% are
going to have some sort
of positive exit at all.
Right?
Say that again so
that people hear this right?
Say that again.
15%. Have any level
of positive outcome.
Correct?
Like it, it's like an m and
a kind of sale, like, you
know, you sell to somebody,
et cetera, and the sale price
is more than you invested.
Okay?
So again, some people
in, in the audience, um,
aren't familiar with this.
If Ryan and I raised a
hundred million dollars and
we sell for a hundred million
dollars, the first a hundred
million in almost every case
goes back to the investors
first, and we get nothing.
Okay, so yeah, we heard we
sold for a hundred million.
Yeah, but how much
did you raise?
We didn't, yeah, we didn't, and
by the way, the investors get
nothing either getting their
a hundred million dollars back
is right where they started.
Yep.
Right.
Exactly.
Also, not a
win for them,
but so, so keep that in
mind again, like, so just
to, to stick with the math
there, 15%, see any level of
positive outcome, but that's
at the VC level, right?
So that doesn't mean that
15% of venture backed
founders end up with any
kind of benefit or payout
and what you, you kind of
missing in those numbers.
Of the 10,000 that didn't die.
Yeah, right.
I mean like think of how many
levels this is going past Ryan.
This is saying there are
countless companies that
never get a penny of funding.
Right.
Okay.
And some of those
go on to do great.
Okay.
Sure.
We're not counting
those right now.
What we're looking for
is a cohort that is more
statistically like likely
to exit because of funding
and focus and, and momentum.
So we're basically saying
these are the people
that make it to the NFL.
Okay.
Yep.
Of the thousand, millions of
companies that get started.
Only 10,000 of them will
ever get a venture check.
Now, some people don't
understand what that means.
What that means is venture
capitalists are further
down the pipeline than angel
investors and other investors
before you get to them.
So what that means is
those 10,000 are still
the cream of the crop of
hundreds of thousands that
got invested before them.
So this was already
like getting vetted out.
So these are already
like the high draft
candidates to begin with.
Okay.
Even of the highest draft
candidates, the people with
the most capital, the fastest
moving ideas, et cetera, you
know, the freshest teams,
you name it, only 15% of
those would have any kind of
exit that's meaningful now.
Now here, here's where the
numbers get way better.
The number of people that
got to that exit, either IPO
and or sale and did it again.
Less than 1%.
Less than 1%.
Yeah.
It, it's, it's like saying,
what, what's your, what's
your roadmap and plan
for the future now that
you've had success once?
So like, well, I'm gonna
go get struck by lightning,
then attacked by a shark,
then survive a plane
crash, and then I'll walk
away and win the lottery.
Right, right.
These are quite
literally the odds.
You're talking about trying
to do like multiple accident.
It does happen, right?
Like we got the, we
got the Elon's, we
got the Jack Dorsey's.
Right.
They've
done it multiple times.
This is a bit different.
I, I think people mis
misrepresent these stats.
What we're saying is.
The probability of
doing that ever again.
Yeah.
The probability that Peter
from Wish is going to have
another wish is almost zero.
And when people say, well,
well, Elon Musk and, well, yeah.
The fact that you can
name who these people are,
Uhhuh, temperature, how
few of them are, yeah.
Right.
Or like, you know, you
could say, oh, well you
said you've had five exits.
Yeah.
But they're not
public companies.
Correct.
Right.
Correct.
Um, yes, there's lots of
people that could, that can
build smaller things and
sell for smaller amounts.
And if you wanna make the
argument that, hey, I could
have another, I'm just making
up a number, $10,000 payout or a
hundred thousand dollars payout,
yes, statistically probably can.
But as that number grows.
The probability that
you'll do it again,
shrinks, geometrically.
Yeah.
When we're talking about
exits that are larger than
a good annual bonus from a
Fortune 500 company, right.
The odds drop off really quick.
You bet.
Like I've got a good friend of
mine that I'm thinking about
who's been part of four exits,
Uhhuh, like who were companies
went public, et cetera.
Yeah.
And he's made millions
and millions and millions
of dollars doing it.
Okay.
Now that said, he gets placed
in these companies when
they're about to go public.
So that's, that's like basically
saying like, Hey, I'm gonna
bet on this hand when I
already see the dealers busted.
Right?
Yeah,
exactly.
He's pretty much like
chasing the finish line.
And if you're, if you're
one of the infant ally,
small number of people that
can do that, go do that.
Cool.
Yep.
Fantastic.
For everyone else.
For everyone else, right?
It doesn't work out that way.
And so I think when we say
hoard this money, right,
because it's the last
payout you'll see, all we're
speaking to is the statistics
that we see every day.
Of how rarely people get
paid out again, and it's
always hard to believe.
Yeah.
I think, again, it goes back
to that all the reasons we
talked before on why it's hard
to believe for the founders.
Right.
But hopefully, hopefully this
is perking some ears today.
Uh, because it, it's,
it's unfortunate, but
like we've seen this over
and over and over again.
Right.
And it's always a massive
exit, either, it doesn't just
happen to the, to the IPOs.
It does also happen to
the, the, the little exits.
Right.
Right.
And while those are more
repeatable, it doesn't
mean you need or want
to lose it, does it?
That's okay.
So let's talk about, let's
talk about hoarding the gold.
Yeah.
Okay.
When you get it.
So, you know, our advice
to these founders, you've,
you've definitely heard
the part where we're like,
you know, don't lose it.
Yeah.
But more importantly, do what
my buddy did at Priceline.
If you're gonna spend it,
spend it on things that are the
foundational things that you
are gonna buy in life anyway.
Right?
Like in his case, his,
his law degree, his home.
Like those were, those make
sense now, maybe not $15 million
mansion in in, in Bel Air.
He bought a very reasonable
home and what he did, which
was fascinating 'cause he
was only like 26 at the time.
He basically.
Paid in cash for all the
things he was gonna spend
the next 20 years trying
to draw a salary Yep.
To chip away at, to cover it.
Right.
Which put him
exponentially far in life.
Genius way to spend your money.
Right.
I mean, I would just
call that an investment.
But what happens is for a lot
of us, because we're founders,
is we push the chips back in.
Yeah.
O
we're like, well, you
know, again, it's worth 50.
It's worth a hundred.
Yeah.
I'll bet on myself.
I'll bet on five other startups.
Or 10 or a hundred.
Yeah,
a hundred percent.
I had this moment early on, uh,
when we were growing the agency.
I don't even if
they're around anymore.
There was a company
called Compuware.
Oh yeah.
Back,
like, back in like the mid
nineties, doesn't matter.
And they were looking to make an
acquisition of a digital agency.
And we had just won a
big account, but we were
still ver like fairly
digestible at the time.
And, and I remember kicking
around numbers around like
50 million for a, for a sale.
Me and, and my business partner
Blaine, were like, if it's
worth 50, it's worth 500.
Uhhuh.
Let's, let's pass.
And we did, but my point
and, and we ended up
selling for more later.
But, but, but the, the point
is or not like that could have
just, that could have been
the best offer we ever saw.
And, and I would look at it
and say, you know, what had we,
had we sold then versus now?
I would still argue it was the
right decision because it, it
was a, a meaningful amount of
money on the table, et cetera.
Yeah.
And, you know, and we sold
for substantially more, but.
Uh, so what, like why risk it?
Right?
Yeah.
In retrospect,
I would've told
myself to sell it.
That's
what I'm saying.
Yeah.
You can lock in that save point.
Right?
So it just lock in
that save point, right?
It does.
It does so much.
Right.
Particularly when you
start to look at what the
actual differences are,
the benefits of holding
and, and increasing that.
We both know people that have
sold for 150 million and people
that have sold for a billion.
The happiness quotient
between those two folks
doesn't change much.
Right.
Right.
Right.
Gives you, yeah, sure you
got a lot more money, but it
doesn't change life that much.
Now, if you go from even selling
for a million, we've done
this to mean like one of our
earliest episodes will, yep.
$250,000 is a, is a life
changing amount of money, right?
Yep.
Some people go like, no, it's
not till you hand it to 'em.
They go, oh, oh, that actually
did change my life, so.
I think this is where it becomes
really difficult for founders to
then start to do the calculus.
It's like, so when, when,
when should I do this?
When should I sell?
I think the other thing
is like, it's not like
there's a whole bunch of
options for this either.
It's not like, it's not like
just any day of the week you
can be like, well, let me drive
it down to the dealer and I'll
just see what they'll give it.
Give me for it.
Right, right, right.
It's not, it's not a 57 Chevy.
Yeah.
Right.
This is a, this is a very
dynamic and complicated
to, to liquefy asset.
So like if you go back
in time, often only have
one chance to sell.
That's the thing.
And I think that's the thing.
So when, when, when you guys
said no to the Compuware
offer, by the way, they
sold in 2020 for, for $2
billion to a, a larger,
uh, software conglomerate.
Really?
Yep.
That's interesting.
'cause we had a $6 billion IPO.
So like, um, I'm wondering
like, which one of us maybe made
out better or worse than that
anyway.
They've been around since
1973, so maybe they'd just
been stacking up little exits
for, it was good company as
best I knew.
Yep.
So I think that it's, it's
difficult for founders if you
go back in time, like how would
you really, so you can say, in
hindsight, I'd go back and I'd
tell myself, take that offer.
I. What advice can we give
as, as that offer comes in?
Like, how do you decide, is this
the best it's ever going to be?
Should I just hold this thing?
Like that calculus gets
really complicated.
I, I've got a whole
formula for it.
Like, you know, when evaluating
these things, I look at
it and I say, basically,
where, where will this move
me up the chain in my life?
Like, safety is usually what
it's come down to, you know,
lifestyle, things like that.
And I always say, at this point
in my life, I'm not worried
about how much more I'll make.
I'm worried about losing
what I have and I think for
a lot of people, they just
haven't maybe been around
long enough to understand how
hard it is to get it back.
Right.
Oh God, yeah.
I know a lot of founders who
out once you out demotivated by
the loss
and lost it.
I don't know many
that that got it back.
And there there's no
way to forget that.
And so again, I look at it,
you know, personally, and,
and I say, okay, um, yeah, of
course, like everybody else,
I, I'd love to make more money.
Part of it's just the
achievement, but the
other part of it is like,
Hey, my life's okay.
Like the increases won't
buy me much more happiness,
but the decreases will
make me pissed off.
I just remembered,
uh, just remembered a
great Alex Trebek line.
It's so odd 'cause it's
coming from Alex Trebek.
I love Alex Trebek and somebody
was asking about gambling.
It's funny we're
talking about this.
He says, I hate gambling.
He said, well, why?
He's like, winning doesn't
bring me that much pleasure, but
losing fucking pisses me off.
Yeah, that's exactly it, man.
That's it though.
I mean, like, and that's, it's
kind of what we were getting
at a minute ago, which is that,
you know, those increases have a
very diminishing return, right?
Like yeah.
If you go from 1 million to
10 million, 10 million to a
hundred million, a hundred
million to a billion, yeah.
It, it is, there will be
some life changes that,
that come along with that.
Certainly how
impactful they'll be.
Don't know, but yeah.
Right.
It's also the, the likelihood
of that happening versus
the likelihood of the
opposite happening without
making those safe points.
So I think you're right.
I think once you've, you've.
Had the ability to buy
yourself some safety and kind
of minimize that downside and
say like, okay, like I'm, I'm
at least gonna be reasonable
with a portion of this.
Um, 'cause you're also not
saying like, don't celebrate.
Right, right.
Oh yeah.
Like pop the champagne,
don't enjoy your money.
Throw some con
competit, just don't
assume it's coming again.
Yeah, exactly.
Yeah, exactly right.
I think that's, that's
the important part.
So, I mean, here's
the thing, right?
I, I wish I genuinely wish more
founders would heed this advice.
I am a hundred percent sure
almost none of them will.
I think all of them that
are, that are listening
today are gonna have, they're
gonna be in two camps.
Where was Will and Ryan
when I needed that advice,
because I made that mistake.
Yeah.
The other camp is not
gonna happen to me.
Right.
Yeah.
That, that, that sounds
like, you know, real negative
kind of oldie, timey advice.
I'm, I'm sure that might
work back in your day.
Old men.
Yeah.
Right.
But it doesn't apply
to me, and I can just
already tell you, you're,
you're going to be wrong.
I don't want you
to be, but you are.
But here's the thing.
The whole point of this
journey is to get to a point
where at some point we can
cash in our chips, we can
fill our bank account, even
if it's a small amount.
What we don't wanna
do is ever risk.
Going backward from that.
So every time we get
a win, keep the win.
Keep the win.
'cause it's probably
our last win.
And if we do it right,
it's the only win we need.
Overthinking your startup
because you're going it alone.
You don't have to, and honestly,
you shouldn't because instead,
you can learn directly from
peers who've been in your shoes.
Connect with bootstrap
founders and the advisors
helping them win in the
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Check out the startups.com
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