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.
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.
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.
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%.
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.
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.
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.
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