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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.
EP261
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Ryan Rutan: [00:00:00] Welcome back to the episode of the Startup Therapy Podcast. This is Ryan Rutan, joined as always by Wil Schroter, my friend, the founder and CEO of startups. com. Wil, founders are pretty important to a startup company. They sort of don't exist without them at the early stages, but at what stage does it become just a thing the founder keeps doing well beyond the point of, of needing to be there, right?
At what point can we just pluck that founder out and everything continues to go as planned?
Wil Schroter: I think it works never, although it's also the dream, right? The dream is like, I'm going to build this thing and eventually. Backfill myself with someone else and they're going to do things just like I did. In fact, better because they're more talented or they're more seasoned.
They're more whatever, right? That we're finally going to put management in place. I, I remember, uh, an old friend of mine, you remember Artie Isaac, uh, yeah, I remember Artie was, was working to find his backfill at the agency and I was on his board at the time. And, uh, and he was like, we'd like to hire.
Management. He didn't even say like better management because [00:01:00] he's like, we need to hire management, like anybody talented or, and, and I get that because, you know, we all feel like frauds and like, we all believe that we're going to bring the real person in that really knows how to do this. And it fails like every single time.
So today I, I, I, we definitely need to talk about if this never works, why this is, is such a fantasy, you know what I mean? Yeah.
Ryan Rutan: I mean, you know, and we, we see it manifest in a couple of different ways. Like there's the, you know, the, the replace the founder, um, which you do see happen and again, to your point, kind of like rarely do we see it work out.
The other one is ever seen a business get sold and then see bad things happen to it. It's not exactly the same thing. But it's damn close, right? Like, post acquisition, things just don't go well, right? I sold a relatively simple business at one point in my career. Um, and within a very short period of time, it ceased to exist.
Um, because I was no longer at the helm, right? And there were other factors, sure. I'm not saying like, [00:02:00] had I been there, everything would have been fine. But there were, there were clearly some things that happened that probably wouldn't have had I continued.
Wil Schroter: I think I've tried to, if I had to go back over 30 years of my career across nine companies, I think I've tried to do it, uh, bonafide, like made a CEO hire, you know, basically my backfill at least seven times in my career.
So no stranger to this one. It wasn't, it failed seven times, right? So the conventional wisdom is either you made a bad hire or you just always gotten back involved, et cetera. That's the wisdom. Not true. Not true at all, right? Uh, in every case, I could not wait to find someone else, because I was actually working on something totally different.
Like, it wasn't like I wanted to sit there in, in, in, um, like, involved in what people were doing day to day. I was gonna go run a different company like I had no time to do this so I could not have been more disconnected and every single time I had to get pulled [00:03:00] back in against my will, right, it's like wanted to come back.
Um, because I don't think people are taking stock of what really makes the founder contribution unique. How it's kind of not really a job. It's like a DNA of the company.
Ryan Rutan: You know what I mean? Yeah, of course. I mean, it literally born from the, the thoughts, the dreams, the vision of the founder. Um, and to the extent possible you impart that on the rest of the team, you might even try to impart that to a new hire.
I think that's also, you know, it's interesting because I think some people might make the case like, well, but what if it comes from within, right? Like what if this is somebody else? We've seen this, right? We've seen it from, you know, junior employees who continue to be promoted up and then took over a company.
We've seen co founders eventually, you know, change roles or take on the CEO role. And still, outcomes are not stellar in most cases. And I think it does go back to that, like. The companies do take on a shape and I think your, your DNA analogy here is, is the accurate one. Um, they take on an innate form that mimics that [00:04:00] dream of the founder and the vision of the founder, the skills of the founder.
Once you extricate that, right, you, you take that out of the equation, things change a lot and, and
Wil Schroter: fast. I think at which point, and let's, let's be clear, at which point the business doesn't need to be like wildly innovative anymore. Then sometimes you can make that transaction or transition. Um, in some cases where the business seems to be run and not grown, not, not to say it's not going to grow, but like just running it day to day.
And by the way, that's a totally different aspect of the business, right? Take Apple, right? You know, considered one of the most innovative companies, right? And obviously you've got one of the most iconic founders in Steve jobs, and then you've got a phenomenal CEO. In Tim Cook, right? So, so Tim Cook is a great CEO, not taking anything away from him, but he ain't coming up with iPhones, right?
Like, like Apple's innovative
Ryan Rutan: days are behind it. He'll figure out how to deliver them in mass, but he's not the one who's going to be like, Hey, you know what? Yeah, exactly. And so it, at
Wil Schroter: which [00:05:00] Apple's in a tough spot because that business needs to be innovative. Let's take a, another case of a business that does not.
So let's say you're running an insurance company. And granted, you know, I've got some good friends, um, who've come up with new models for insurance, and there's some innovation behind it, and that's where the founder DNA matters. But I'm talking like old school insurance, like just regular old insurance, right?
And insurance company could run for the next 200 years with no innovator behind it, right?
Ryan Rutan: Like they're just, it just needs to be run. Think of a couple of businesses pretty close to you that fit that mold. Well, yeah, yeah.
Wil Schroter: The insurance capital of the world in Columbus, Ohio. Right? So here's what I would say with that from a.
Can someone run a business better than us? Of course, right? But what we're saying is when you take the founder out, the founder DNA, that vision, that consequence, and all those elements, Something is lacking and you can't put a LinkedIn job posting up to replace that. [00:06:00] I think we have a really hard time as founders really understanding what that value is or damn near impossible list to replace.
Ryan Rutan: Yeah. Yeah. I mean, I think that inherently like, you know, founder to founder, we kind of know these things. We may, we may know this about ourselves, but even, even then, like, and I, I'm curious. Like, do you remember what it was that diluted you into believing, right, that you, that you could be replaced? Because clearly, like, it's tough to see from the outside to my point earlier where there's, there's so many things that you just really can't fully impart.
You can't pass on to somebody else. You can't transfer vision in the same way that you can transfer a skill. Um, because it's not repeatable by nature, you're, you're constantly looking at to something that doesn't yet exist. So you can't like show somebody how to see that, right? You can explain what you see, but you can't give them the ability to keep having vision knowing these things.
Right. And, and having been through this seven times, go back and try to try to pull out, like, what was it that made you think like this time it's going to work or, you know, ah, I'm not that necessary. [00:07:00] And where did it turn out to be just absolutely wrong? Well, okay. So the, the first one
Wil Schroter: was, I just assumed that vision, uh, you know, the vision of what a company should be, how it should operate, how it should, culture should work, et cetera, was something you could read or deliver and impart and move on.
Currently
Ryan Rutan: business school agrees with you.
Wil Schroter: Right. Right. Of course. It made a big business out of it. But here's where, here's where that falls short. Right. That assumes that the recipient has as much passion about what that, what became of that vision as you did. Right? Years and years ago, uh, when I was doing a startup, and I've talked about this before, a startup that I did with Jamie Siminoff, you know, the founder of Ring, and we did a company together.
And, uh, it was, it was my idea. I kind of came up with it. I brought Jamie in, uh, and I brought my other friend Josh in. Um, and, uh, and Jamie became the CEO. Years later, after we sold the company, Jamie came back to me. He's like, I'll never do that again. I was like, what's that? He's like, I'll never work on someone [00:08:00] else's vision.
And he said, cause it sucked because when I'm up there pitching or talking to partners or whatever. I didn't really care about it and I was like, Hey, Jamie, the reason I didn't want to be the CEO is I didn't care about it either. Sold yourselves into co founding a company. Yeah, we agree again. Um, but, but I guess my point is, um, he, he, he was saying there's a lack of authenticity.
When it's not your baby. There just is. Um, and, uh, when you're getting up there and you're saying we have to unsubscribe from every email when it was your idea you could be dumb enough to be passionate about that. Because it was your idea. When it's just an idea somebody else's idea I hesitate to use this analogy because it's got a lot of personal undertones to it.
When you're talking about if it's your kid versus someone else's kid when it's your kid You're willing to overlook all of their their issues and everything else like that, [00:09:00] right? When you're taking care of someone else's kid you want to protect it, but when the kid's a jerk It's a jerk, right? You don't give it the same latitude and I think there's a lot to be said for that,
Ryan Rutan: right?
You don't bring it home. You don't bring it home the next time
Wil Schroter: Yeah, kinda, right? No, seriously, like, I, I think from my experience in, in handing that off, I assumed that when someone took the job, they just got vision. Like, they just, right? Like, all of a sudden they were like, Oh, um, obviously, I'm thinking like back in my agency days, obviously we're going to build the most impressive pages that the internet's ever seen, right?
That's the vision. That's amazing. The people that we hired that to do that job that would have inherited that vision. They didn't give a fuck. They don't care about any of that
Ryan Rutan: stuff. Just don't care. They don't care at the same level, right? And, and that, it matters so much. Again, if you're just executing, you're doing the same thing over and over and over again, right?
The difference between, are, [00:10:00] are you flying the plane or designing one, right? Are you a pilot or, or an aeronautical engineer? Right. And that's what it comes down to, right? If you just know you need to follow a certain set of rules and you're the guidelines, here's a max altitude, max speed, here's all this stuff.
And as long as you stay within those parameters and you, you, you operate it well, Things will do well, right? But when you, when the destination is unknown, when, when the form factor is still, you know, not completely there, when there's still two or three more growth phases or a pivot or two to go through before you finally get to that point where you're really doing what you want to be doing, the idea that somebody else is going to pick up that and run with it and carry it to where it needs to go.
It's ludicrous, right? It's go back to your, go back to your, your, your analogy around kids, right? You stop parenting just because your kids start going to school. Do you assume that that person is going to now pick up and just take them the rest of the way though? Now they'll get everything they need from over there.
We hired the CEO. They're good, right? Now the kids, the kids will be raised by, no, right? Because they don't understand them at the same level. They don't have [00:11:00] the same level of passion for the outcome. None of the, none of the inherent, uh, needs of that child or your startup are going to be carried forth by that teacher, that, that new hired gun CEO.
Wil Schroter: That also radiates externally. You know, when you show up at client pitches, when, when, um, Tim Cook is on stage versus Steve Jobs presenting next gadget, it is not the same, right? Now, to, to be fair, that guy was a master salesman in Steve Jobs, right? So like almost anybody would have a hard time replicating that, right?
Right. Right. Um, however, it's also just not the same, right? Like, I would almost argue, and maybe I'm stretching here, but like, if Steve Wozniak, you know, the other co founder of Apple got up there and presented a new device, there would be something special about the co founder of Apple. Presenting it, even though was a weirdo, right?
Ryan Rutan: No, it's, it's a different spark. Yeah. It's strange guy. Yeah. You would fly over the heads of most people. They wouldn't understand what he was saying, but there'd be a very different level of energy, right? Like you can put, you [00:12:00] can put Tim Cook into a, into a turtleneck, but you cannot make him Steve jobs, right?
The energy is not there. The passion is not the same.
Wil Schroter: And I think as founders, we, we overlook that, you know, we're just like, Oh, well, again, um, you know, uh, other person can do my, My CEO role, my managerial role, my experiential role better than I can. And therefore, I guess that all these other things keep happening.
The founder is, is not a job, it's an institution. It is baked into what the DNA of a company is. And you kind of can't hire for it. But I also don't think that's necessarily what people are trying to backfill. When I was trying to backfill, I was like, dude, I want to go do other stuff. Like
Ryan Rutan: I need somebody to be sitting in this chair.
That's not me. The motivations are important, right? And the reason why, but, but I think that's the, there's a danger in that too. Right. If that's like, I want to go do something else. Cool. And that, that's a, that's a strong motivation, especially for founders. Like we love a shiny ball, right? We are ready to go chase super dangerous because then we can decide that like, look, [00:13:00] I'm, I'm going for the right reason.
I'm gonna go build something else. This isn't, this is really what I want to be doing. Cool. But like at the cost of what, right. You're extracting yourself from a situation that still probably needs you. I remember realizing at one point that a part of the challenge I was having was that, uh, you know, I was having several meetings a week with the team.
Um, but the other 300 meetings that only happened in my head. Where a lot of the vision was sorted out, where a lot of the, the, the passion was rekindled. All of these other things that were happening were only happening to me and for me by me. Why? Because I was the only one that cared that much, right?
I'm the only one who's going to have a meeting with himself in my own head, right? Like, we spend so much time in, in our own heads, um, that we forget that there's, there's not an audience there, right? I, I realized at some point that like, I was having trouble separating the conversations I'd had with myself and the ones that I'd had aloud with my team.
Like, like, where was, which, which one of those actually had an audience? You're just always in pitch mode. You gotta remember, sometimes you're just pitching to an audience of one and it's just you.
Wil Schroter: That, that was always my fatal flaw with you guys. I was [00:14:00] like, it's all worked out! And you guys would be like, have you bothered to tell us?
Yeah. We just need to
Ryan Rutan: execute to the plan.
Wil Schroter: Share the plan. Right? Yeah. Remember to share the plan. Yep. So the second part that I think that we have a hard time understanding called the value would be the pain of consequence that a founder or founding team feels that is so dramatically different. And I'll give you a tiny, tiny example as this, the CFO of the company as well.
One of the reasons that I've always been CFO of all the companies that I've done isn't because I like finance like at all. Um, I mean, I do like having the, the wherewithal to know what the finances are and that's great. It's because at the end of the day, I don't trust anyone else to do it and not to say these are inherently there are untrustworthy people There's perfectly capable people of doing this stuff, right?
But there's this tiny little bit of detail that scares the shit out of them, [00:15:00]
Ryan Rutan: right? It's no one to turn over that other rock and just take one more peek, right? That number just doesn't seem quite right Why is that, right? Oh, we have, you know, an expense that's about to run out of control that nobody had eyes on and you catch it at the right time.
Yeah. No, it's, it goes, it sets, it goes back to that level of care, right? But your point, level of consequence
Wil Schroter: too. Okay. So stick with that. So, um, I can hire somebody to know what the expense is. I do it myself because I know why the expenses, right? Like, why is it there? Why is it that significant? Why, you know, why shouldn't it be there?
And who's accountable to that number? The answer is me first, right? But, but, but who else? Um, and the, the reason, again, that's small, but the reason I do that is because I know It'll be no more consequential to anyone ever than it is to me. The reason I learned how to become a CFO isn't because I'm any good [00:16:00] at math.
I'm terrible at math. It's because the numbers felt so consequential to me that the idea of relying on someone else for my consequence just terrified me. Now I understand why. Plenty of people do it.
Ryan Rutan: Yeah, I know. It doesn't, doesn't, doesn't feel right. Yeah. Yeah. I mean, and that's, and that's one, that's, that's one example.
Right. But I think then, you know, imagine extracting yourself from everything in the company. Right. Imagine you're no longer just looking at the numbers. You're not looking at the staffing line. You're not looking at the, uh, at, at, at the, at the customers, you're not looking at customer service. Not looking at any of it.
Right. At that point when the founder is no longer there, these things compound really, really quickly. Right. It may seem like, uh, it's, it can, sometimes it's a big thing, right? Sometimes a big thing comes along. You pull the CEO out. All right, you pull the founder out, you put in a CEO, some big, you know, black swan type event comes along, um, maybe just specific to the company and, and, and things go sideways.
More often in my experience, it's, it's death by a thousand cuts. It's that lack of attention to all of those minute [00:17:00] details. Where the level of care just isn't there because the level of consequences isn't there. Right. I think as, as, as founders, we have this inherent sense that like even one thread coming loose on the sweater needs to be addressed.
It's really important because it can lead to being threadbare. Really damn quickly, right? And we care about that. We don't want to end up in that situation. You know
Wil Schroter: 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 day long at 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.
Here's the way I always think about it. If an employee, let's say you hire a CEO. If an employee screws something up, they can lose their job. And that is consequential to them. [00:18:00] I'm not discounting that. If the founder messes something up, they could lose everything. They could lose everything. They could lose a hundred employees.
They could lose the entire company by way of their entire net worth. Um, all of the investor's money, if they have them. Their house, their retirement, their life savings, everything, right? Um, no matter how difficult your job is, you do have a bit of a firewall. That says, if things go really bad, like if this thing gets sued or something like that, like, I'm just quit.
Right now, there's a safety net. Right? There's a safety net there. Exactly. Right? There, there, but there is a firewall of consequence that an employee has, ergo the person you would bring in to backfill you, that you just don't have. By the way, it would be awesome.
Ryan Rutan: I would kill for that firewall, right? The narrative is so different, right?
You know, just imagine, you're, you're, you're a CEO who gets brought in, uh, to take over the startup company. Yeah. They brought me in to try to do a turnaround. Things didn't work out. Gave it my best shot. I'm on to my next gig, right? That's the narrative there, [00:19:00] right? Founder doesn't get to tell a story.
Anything like that. You are chained to the ship going to the bottom
Wil Schroter: of the ocean. And so because of that, the way you would respond to an issue, right? I'll give you some examples that are just so near and dear to me. Uh, you mentioned like customer support, things like that. Um, customer calls in, in there. I read about something.
Okay. And in, in support team and our support team is amazing. So I'm definitely not pointing to our support team. Um, but, but, uh, support team blows it off and they're like, Ah, screw it, here's a refund, you know, go away. All that person cares about, all that person cares about, reasonably so, is get annoying person off the phone and go back to my lunch break.
Right? Or whatever they want to do. Zero consequence. You're looking at it going, dude, I'm not going to get paid. Like this whole company is not going to get paid. I'm not going to get paid. Like I can't pay my personal bills because you decided this person was too rude and you need to get off the phone with them.
Right now, again, this isn't me saying like, you know, um, all of these, uh, unstable customers are terrible or amazing. What I'm saying is [00:20:00] that the lack of consequence that the customer service person might have versus you is dramatically different. Another example is in a sales process where the salesperson is like, yeah, you know, the, the, the, the customer was trying to ask for too much.
And we just, we just couldn't do it. And you're like, whoa, hold on, that's money. We can do it. If it involves money, we
Ryan Rutan: can do it. We talked about this last week, man. We got it. We got it. We got to do things we've never done before. If we want to grow. Right. We just did a podcast on this. If it's
Wil Schroter: consequential to you, meaning like if that customer doesn't pay you, you look at that and you say, we have to fix how, how we deliver our service.
We have to change our product. Remember, we dealt with this a lot with Zirtual where people would come to us, you know, our virtual assistant business, people would come to us. And they would say, hey, well, you do do this. And, you know, our frontline folks, to their credit, this is what they were supposed to say, um, say, no, we can't perform that service.
But you and I would look at that and say, that person was going to pay us like [00:21:00] 60, 000. Yeah. Yeah. Yeah. Let's figure it out. Yeah. Um, Let's find a way to make that work. Let's find a way to make it work. And so again, when you remove that consequence and that, and now we're not talking about front or, you know, frontline customer support or sales or something like that.
We're talking about the damn CEO. Right. The person running the company. When you remove consequence from them, that's a whole different, I mean, the, the, the, the weight and the value of that is, is tremendous. It's scary actually.
Ryan Rutan: And it's not that, it's not that they don't care at all. Right. And it's not that there aren't some consequences there, but I think when we look at the spectrum of consequence, they're far, they're far closer to the, I have a, I have a perfect and beautiful safety net.
Compared to the, the founder who just falls off into the abyss. One thing I want to be careful of here is, is giving people the impression that a founder has to run around and be in every single place all the time and be micromanaging and doing all the jobs. Like, yeah, I mean, pick your battles. Yeah. You got to pick your battles.
Um, but you got to care, right? And I think to your point, like [00:22:00] at the moment that that becomes somebody else who doesn't have that same level of consequence. Um, when, when you remove. When the buck no longer stops anywhere, right, when it can just kind of keep passing and it just passes off into the abyss and then the company disappears and you know, well, it wasn't great, but it's not the end of the world for them.
It's a really dangerous situation. So, but kind of the point around the micromanaging, like how do we, how do we draw the line? How do we start to pick those battles? Like, how do you decide whether you're looking at customer service, you're looking at the finance transactions or how do we, how do we strike that balance?
Wil Schroter: Right. And, and I think from, uh, from a, the. Leadership standpoint, again, you pick your battles. You know, you're not in every last detail. However, there's something about having that ownership, having that, that consequence that changes things. I, I'll give you the interesting example that always stuck in my head.
Um, years and years ago when I was running Swappolice. com, um, the, the, the company was founded not by me, but. by, uh, this, this auto dealership, this huge auto dealership network. And I would spend some time with the [00:23:00] owners of the, of the dealer network and they were old school fourth generation car dealers, right?
Um, own dozens and dozens of huge dealerships, right? You know, um, their, their great grandfather had a statue of him in the middle of downtown, right? That's how old school this was. Anyway, um, I would ask him how they, they did management and stuff like this, right? I'll never forget what he said to me. He said we walk around.
I know that is a joke, management by walking around. But he meant it literally. But that's no it's yeah, that's, that is how it goes. He drives dealership to dealership and he walks onto the lot, and every time he walks into the lot. He looks, he runs his finger across the hood of a car, says how, how dirty is it?
He looks to see how many of the, uh, the, the, the sales people are out and back smoking, right? He just looks for the little details. Because where there's smoke, there's fire. In that business, it was so amazing at how little it took to know when things were off, right? Like, like those, those things that you could see.
But the reason [00:24:00] he saw it that way, It's because he gave a shit, right? Like, he really, I mean, it was his pocket that he was dealing with. When that car was dirty, he wasn't going to make money, right? And that was very personal. Kind of, like, you could hire a manager to, and say, look out for these things, and they'll look out for these things.
They'll run checklists, and they'll do what managers are supposed to do. They just won't error in
Ryan Rutan: the same way. That's what's different. Again, at some point in a certain type of business, like you may be able to put processes into place that say like, look, somebody is going to go down that line. They're going to make sure the cars are all clean.
Somebody's going to make sure that the, uh, the sales team isn't all out of smoke break at the same time. Great. Right. But how many startup companies do you know that are in a position where things are that cut and dry, that obvious, that operational? Yeah, yeah. These guys have been selling cars since the Model T.
Of course, right. Yeah, I was going to say, I was, I was thinking like, wait, was the guy's last name Ford
Wil Schroter: by chance? Yeah, right, right, right. No, but it's, it was just interesting to me because it was so clear that it [00:25:00] was an owner level mentality, right? That, that, that, that there's a reason he's driving to these lots.
They have a massive staff. There's a reason he's doing it because you have to be in the weeds, right? When you try to extricate yourself, which I'm sure they've tried to do over fourth generations many, many times, you just kind of don't get that level of, I'm calling it ownership. And I don't just mean like an, uh, like a ownership of the company per se, ownership of problems, ownership of outcomes, ownership of innovation, you name
Ryan Rutan: it.
So let's talk about something that, that, you know, a, a hired gun CEO, basically nobody else in the company. Kind of does or even can have, and that's tolerance for risk, right? As founders, that's part of the game. Now is literally how this whole thing started. We were like, Hey, this doesn't exist. I might want to go build it.
There's going to be a lot of risk involved. I accept. Let's go. Nobody else has that. Nobody else even really can have the same level of risk tolerance that a founder can have because that's the kind of thing that tends to get you fired.
Wil Schroter: [00:26:00] It's interesting because it's almost like, uh, if the person had a high tolerance for risk, they probably wouldn't be interviewing for the job.
I say that at, at startups. com and in our history and what's going on 13 years now, right? We've hired mostly entrepreneurs, almost every single person, uh, we've ever hired has had an entrepreneurial background. So I would argue here, it kind of doesn't apply because almost everybody here has, has had the appetite for risk, which is why they've come here and why they're attracted to be here.
However, that's very unusual. Um, in most companies, the person that's interviewing has never taken a risk in their life and in their mind, even taking this job as a risk, which is again, I, I can't project my level of anxiety or risk to somebody else. Right? Right. Um, but it ain't the same.
Ryan Rutan: It's not the same changing jobs.
Yes, there are, there is some risk involved. It is not the same thing as starting your own business.
Wil Schroter: You bet. And because again, we're going back to kind of the core premise, which is when you start something, you chain yourself to that ship. And if that ship [00:27:00] goes down, you kind of go down with it. If you're an employee, while often it's like, Oh, I don't get paid as much or whatever.
It's like, yeah, but you know, you also don't have the downside, which for a mature company is less of an issue for a new company is a very different issue, you know, where it
Ryan Rutan: could go either way. Yeah. I mean the, the risk that a founder accepts from the beginning and the duration and the uncertainty of when it ends, um, is immense, right?
I don't know that there's any other. Larger risks that I've taken. I'd say it was less risky to start a family than it is to start a business. I think there's, there's a pattern there.
Wil Schroter: But play, I agree, I agree. Well, play it out though, like in, in how it manifests in trying to hand someone else that, the job of risk, for a person that may not be that, that risk tolerant.
Number one. As the founder, we can inherently take risks because we have the benefit of betting on ourselves. In many ways, depending on the situation, kind of can't lose the job. If we take a big product bet risk and it doesn't pan out, we take a [00:28:00] marketing risk, whatever, a hiring risk, whatever, and it doesn't pan out, eh, it's on us.
Right? We own the consequence, right? But we get the chance to roll the dice and, you know, And live to fight another day,
Ryan Rutan: hopefully. And often, the consequence for somebody who's coming in is, is asking for permission to do the thing, right? That's the risk for them, right? Let's just say the, the, the new CEO, uh, has to go for board approval or something, right?
Where a founder may not have had to do, maybe they have to go to the founder. I've seen all sorts of dynamic structures where Uh, where decision making was shared in some way, but that's a bigger risk for them often than the actual outcome. It's like going and saying like, Hey, I want to take this risk and, and, and being shot down might be a bigger perceived risk.
So they just don't even do it. Right. So they're, they're not going to try. And they probably don't have the same, the same risk bone, uh, that, that most founders have in the first place.
Wil Schroter: I think it would be safe to say the greatest personification we have right now, risk within an entrepreneur right now is Elon Musk.
Right. And I'm no like Elon Musk fan boy, but by any means. But that guy has balls of steel, right? Like, I mean, [00:29:00] that guy is willing, I mean, I almost, I almost think he wants to get crushed.
Ryan Rutan: I think something's in his mind where he's just trying to like play with fire until it happens. There definitely seems to be a little bit of masochism there.
Yeah. Yeah, I don't, I don't think, I mean, it's not even, like, he's on the other side of a different spectrum, right? He's, he's in the upside down. He's the guy's not, not just, he, he seeks risk, right? Because he believes that's where opportunity lives and he's not wrong. Um, a lot of danger lives. There are a lot of failure lives there too.
Um, but, but he's, he's on the opposite side. I mean, the guy has a taste for risk. You bet. And,
Wil Schroter: and so, you know, oddly, and this is, this is kind of a weird segue, uh, Donald Trump was the same way, right? Donald Trump. And again, I'm definitely not to worry, but, but what I'm saying is like, if you look in his career.
It's a dream team co founders right there. But if, but if you look in his career at the stuff that, I mean, the guy somehow became president, right? I mean that, that, that guy's tolerance for like rolling the dice
Ryan Rutan: is just unbelievable. Yeah. Because [00:30:00] anybody else would have looked at that and stopped well before.
They would have been like, yeah, there's no way I could do that. Why would I, why would I even, why would I even attempt to risk? And I think this is where a lot of people shut down. This is the difference between a founder and a non founder is that we do the calculation of risk and we're like, yeah, it's really unlikely that's going to happen.
And there's, there's all kinds of, I was like, but I'm going to do it anyway. Right. And that's exactly what he said. Well, okay. So
Wil Schroter: sick with that. What I'm saying is there is a fundamental archetype. Of that type of person that's willing to do that, right? You know, we were, we were, uh, playing up, uh, jobs. He was certainly that, like, that guy was born for that, right?
In, in what he had done. Tim Cook is not, right? The current CEO of Apple is not, right? And, and again, I, I'm, uh, I have huge respect for Tim Cook. He's a phenomenal operator, clearly. I mean, look at his performance, right? But he's not that, right? And, and the reason I keep bringing up Tim Cook is because he's so good at his job.
Yeah.
Ryan Rutan: He's, he's a shining example of where it works and despite that. Correct. Exactly. But I, but I think it's, it's a great contrast too, because like if, if Tim Cook had been in an [00:31:00] 84, we wouldn't be talking about Apple right now.
Wil Schroter: Right. And I think that where it's fascinating to watch is as founders, because for us, uh, you know, the risk, um, the vision and all these things kind of, we kind of just do them naturally.
Yeah. Like, in other words, we don't even realize we're, we're exercising that muscle or developing that trait or have that trait. That's the only trait that we have. And all of a sudden, we're trying to retrofit and backfill that with someone new, you know, like that square peg, round hole kind of hire. And we're totally overlooking how different those traits are.
And, you know, in part of that, Ryan, might be just, um, We're hiring the wrong thing, right? Maybe what we should have been thinking about is I need CEO title, but I don't want to lose the founder DNA out of this company. So I need to operate as the founder. What I'm likely looking for is an operator. That's, [00:32:00] that's what I always hear.
Right? I want somebody to manage the day to day.
Ryan Rutan: Yeah, yeah. Manage the day to day. I don't want to work in the business. I want to work on the business, right? And so they want somebody to lay hands on that. Yeah, I think operations is a big one. Um, you know, I think that, and sometimes I think an operations person can take this role.
The one I'm increasingly seeing and kind of like have eyes on is the chief of staff positions. Uh, where they end up being this sort of buffer between the, the, the founder and everything else that's going on where they are filtering the feedback, uh, you know, gathering the information and then kind of acting as the liaison between.
That's been a relatively interesting, uh, thing that, you know, I've, The rule's been around for a long time, but I don't remember seeing them that often in startup companies the last three or four years. Um, and I've talked to a lot of founders who seem to be very, very pleased. It's one of those things where you hear, it's like, best decision I ever made, right?
No, they had said something else two years before and four years before that and five years before that, which I guess that's still fair, still the best, better, better, better.
Wil Schroter: I think that, again, it's, um, it's why people hire [00:33:00] nannies. Right. They're like, yes, I want the job as parent, but there's some parts that I could actually use some help with.
I get it. I get it. When I think about, um, the idea though of backfilling the founder, I think it's a huge red flag. I personally, I think when, when, when founders tell me, Hey, I'm thinking about backfilling myself, hire somebody. And I'm like, okay. My first reaction is stop, which isn't the same as don't, don't do it.
It's stop thinking you're just backfilling a job, right? You're not hiring another head of customer support, right? Like that is a job that lots of people can take, can be backfilled, et cetera. This one is unique. And frankly, I think when, when founders don't put, you know, take all these things into account, uh, that's where it fails.
You know what I mean?
Ryan Rutan: Yeah. And I think, you know, it's one of those, one of the situations where I think if they knew it was going to fail, they probably wouldn't do it. Now. I think there are scenarios. Maybe we do want to talk about that. We're like. There's some really strong reason where you really, like, maybe would go beyond want and you [00:34:00] need to not be running the business anymore.
That's tough, right? That's tough. Um, but I think to your point, even if you decided you want to do this, you may have some things you really want to go do, or you just really don't want to be running the business anymore. Are you willing to accept the fact that her data, right? Science here, folks. For data, the likely outcome is that the company is going to suffer and probably fail as a result.
Are you willing to accept that as the likely outcome? I think most founders would probably say no. I'm sure you've got a collection, I know I do, people who said, you know, did this, wish I hadn't done that because now the company's no longer there, whether that was, you know, selling the company or bringing in a new team or stepping aside.
Whatever it was that led the demise of the company, in most cases, they said, having have it to do over again, I would do it. I wouldn't do that this time around. And so what do we say to the founders that are in that situation where it's like they're, they're in that kind of a need category, right? Where it's like, I, I just can't do this anymore, but whatever reason that might be,
Wil Schroter: um, I'd say start to decouple it.
Decouple what the job is. [00:35:00] From what your contribution is, right? Because they're often different things. The job is politics and managing people day to day. And a bunch of bullshit that frankly other people are better at, right? 100%. But being the founder, setting the vision, being able to follow the important details, and run something down, run your finger across the hood of the car, and say, hey, something is off.
And, and, and be able to go in, you take that DNA out of a company and I, we haven't even talked about the culture of the company and how you're connected to the employees, to, to your customers, investors, et cetera. You cannot pull that root in pretend nothing's going to die. It just doesn't work that way.
So the first thing I say is to couple who you are as a founder and what your value is From what you're just trying to not
Ryan Rutan: do anymore, which is usually pretty operational. Yeah. That's a great point. Yeah. I mean, the culture aspect's a huge one. It's very rare that a, you know, a founder replaces themself with a CEO and none of the team notice.
Right? It's a big one. That's tough to navigate. I mean, that, and that, that alone is going to skew. [00:36:00] It's a problem if they don't yet. I haven't been for two years. Um, you've been getting the paychecks. So I think it is, it is tough. It's tough to decide like, and even if you're able to decouple it, right, there's still going to be some challenges there again, like decoupling parts of yourself and, and hoping that everything continues to go right, where like, you know, maybe you stay around to, to handle the vision, um, or you stay around to, to manage some of the really high level politics.
Maybe, you know, there's a couple of other co founders involved. We also didn't talk about that. I think we've kind of been positioning this as sort of a, a solo founder, um, you know, Uh, type scenario. It's, it's obviously very different when there's, when there's co founders involved, not necessarily easier.
In fact, in a lot of ways, it's probably more difficult. Um, because you're at the same time, you're trying to extract yourself. You're going to create an imbalance for, for, for your, your partner and co founder. Um, so yeah, it's a, it is a, it is a tough decision to come to. Um, but I think to your point at one that once you arrive at that point, you haven't really arrived, you've arrived at the, at the indication that maybe this needs to happen.
Pump the brakes, spend a lot of time really thinking about and [00:37:00] trying to, trying to abstract out the layers of kind of what the job is and what your unique value to the company.
Wil Schroter: Yeah, I don't think, I don't think there's any founder out there that says once they get rid of me, everything will be so much better.
I think they think here are things I'm bad at, or here's where I'm burnt out, right? So, so when they, when they, they pull me out of that, we'll be better off for it. And they are right. They're doing that though. They're doing that. They're making that decision at the expense of what they have that's, that's unique to them.
Kind of, you know, what makes them a unique asset to the company. So, so what I would say is, If you're thinking about making this move, or if you have made this move, right, separate the two, separate what it is operationally that you need to backfill and level up. And you probably do need to do it, but do not separate the part that is the DNA of the company that is taking the root completely out of the company.
And there's no room for that. That is your job as a founder.
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