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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 their 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 we help
founders to overcome lots and
lots of little hurdles along
their way, hoping that someday
they'll hit the promise land,
win the big prize, get some
sort of a liquid exit, or just
accumulate enough cash from
the years of their startup that
they finally now have something.
Financial to show for it,
and then you and I could
just hang up our hats
and say, job done, right?
Mission accomplished.
They've, they've gotten there.
Now.
Nothing else has to happen.
If only, except that this
is actually the moment
you and I. Get absolutely
terrified because what do we
worry about at this point?
We worry about them
blowing all of it.
Um, and it happens so often.
You know, Ryan, part
of the story, right?
The mythology when we talk
about, uh, founders cashing
out and having the big exit.
We always assume that ends well.
And, and it, it does enough,
you know, I mean, it's not
like it always ends poorly.
And we've done some episodes on,
on how the founders themselves
deal with that, you know,
from an emotional standpoint,
a psychological standpoint.
But what we often don't
talk about is do they
hold onto that money?
You know, when, when,
when they make that cash.
Where does it go?
Does it always go
where you think it?
It does because fortunately,
it's not in the majority,
but there's enough founders
that mess this up with
the same amateur mistakes.
Amateur, because we're all
amateur at making money.
Right.
We're all immature
at making money.
So like when and if that
happens, you're learning
for the first time what
to do and what not to do.
So whenever I get a call from
a friend that says, Hey, I
just had a big exit, right?
Which Ryan, you get these
like, it warms your heart.
It's, I mean, it's the
coolest thing ever.
It's fantastic.
It's the founder equivalent
of just saying, Hey,
I just got married.
Hey, I just had a kid.
Right?
It's just such a seminal event.
There's always a few
things I say outside of
the financial advice.
The first thing I always
say is that you've
earned every cent of it.
Every penny you have
earned every cent of that.
Or if they buy a house or
a boat or whatever, I'm
like, you earned every
square inch of that house.
Right?
And I say that to say
there's a lot of guilt that
comes with, uh, financial,
windfall and exit, you
know, things like that.
And a lot of the people
around them are kind like hand
wringing a little bit, like,
you know, either screw them or
how do I get my hands on it?
Or you name it.
Right.
And I want, I want them
to hear at least one
voice that's like, yeah.
Dude, you earned it.
Do with it what?
You will earned it.
But you earned it.
Yeah, but that's not the secret.
It's yours.
You shouldn't, you shouldn't
have to feel guilty about that.
I mean, despite the fact that
it came so quickly and so
easily and without any sacrifice
that you probably should feel
a little bit bad about it.
Right?
My God.
Like we go through so
much, and again, like
it's not like everybody
gets one of these, right?
This isn't a
participation trophy.
It's not like, you know,
be a founder for 20 years,
get the golden parachute
and right off into
the sunset.
Yeah.
Never.
Right.
And so for this one, I have a
speech that I, I lovingly call.
Congrats.
Now don't fuck it up.
And, and there's a lot to it.
And you know, Ryan, you and
I have talked through these
concepts on this show, you
know, over the years, but I
thought it'd be really helpful
for us to basically unpack.
Not just the speech, like,
you know, what we're trying
to convey in the speech, but
really the key points of the
speech that people get wrong.
And I wanna say for folks that
are listening, this isn't just
for, Hey, I've had an exit, this
ha, this has to do with having
money at all or having enough
money where the position flips.
Where for the first time in
your life, you're worried about
losing it more than making it.
Again, sometimes
that's a windfall.
Sometimes it's just
work and it's life.
But I think what happens
is there's a severe lack of
direction at this level, at, you
know, at this level of wealth,
if you will, particularly
for founders who are seeing
it for the first time.
And I remember hearing this,
do you remember the guy we
both used to talk to a lot?
Uh, Steve, Steve, I'm not gonna
use the last name, who was doing
financial management for, um.
And Steve would always
talk about, oh man.
Um, you'd talk about the
speech he would have to
give to athletes on the
day of signing, you know,
whatever sport they signed.
And he's like, he'd start the
same way as yours by any chance.
Pretty much.
Congrats now don't fuck this up.
Exactly.
Congrats on signing
with the bulls.
Now don't fuck it up.
Right.
And what he would say is.
I would have to try to
explain to this 21-year-old
kid who was in study hall
three years ago, right?
Yeah.
What to do with tens
of millions of dollars.
Right.
And he just got
five seconds ago.
And how everything you're
about to do is a bad idea.
Yeah.
Whatever your
instinct is right now, now at
point, everything is jeopardy.
It just puts it in jeopardy.
You just, there's nothing you're
gonna do that won't just put
this at risk at this point
based on what you understand.
And there's a lot of
parallel here because he
was talking to athletes.
And with athletes, the
idea is the money comes so
fast and so young, right?
You don't, you don't
hear about people getting
assigned when they're 60.
It comes so fast and so young
that they haven't had time to
like learn how life works yet.
Uh, so, so they're
very vulnerable.
The second part is they
assume they'll make more.
So let's say, you know, let's
say I, I sign with the bulls.
And, and I get a $5 million
upfront check, and I go out
and buy, you know, I pay cash
for jewelry and cars and in
house and, and private jet
and whatever, and like I burn
through 4 million in six months.
I'm like, well,
what does it matter?
Make 10 million a year.
You do until you don't.
Yeah,
right.
Until, until you pull a tendon
or you get, you get hit on
the field or you, you name it.
Right.
Exactly.
That.
Or you just suck and,
and you don't care.
Resign.
Right.
Yeah.
Just get cut.
Right, right.
So I guess what I'm saying is
this advice, however, is not
just for cashed out founders,
and it's not just for people who
just signed, uh, to go play with
a major sports league, right?
It's for everyone.
All of this applies in
the same way, but as
you have more wealth, it
just applies a lot more.
What I would open up with is
the key here, if you've come
into some cash or if you've
been, you know, started to
make more money, is to step
back and recognize how your
position has changed, right?
Like, like you can't just say,
I'm gonna keep doing things
the way I've always done 'em.
And always expect the same,
Malcolm, because Ryan, in,
in your life, as you saw
your, your wealth position
change, you started to see
your relationships change.
You know what I mean?
A hundred percent, man.
Like
it's, it's what I will call
the three js of wealth, right?
It invites these three things
into your life judgment, right?
Did you earn that?
Do you deserve that?
Should you have that jealousy?
You shouldn't have that.
I should have that right,
or jockeying, which is,
uh, you have that now.
You should probably give
me some of it, right?
Hundred percent.
I, I should probably position
myself so that I can get
some of what you got.
And invariably it happens.
And the more visible it is to
anybody else on the outside, the
more of it's going to happen.
And, you know, uh, which
kinds of bring us to point
number one in the congrats.
Don't fuck it up.
Speech.
Uh, point number one, never
ever, ever tell anyone
how much money you have.
Right.
Yeah, because you're putting
a bullseye your back.
That's it.
That's why it's hard.
Athletes, all three
js right there.
That's, that's why
it's hard of athletes.
It's literally in the paper.
Yeah.
Like, you know, it's
everywhere pops up in
everybody's social media feed.
Can you imagine if everyone's
income was publicly
available to everyone else?
Like,
like the lottery check.
Everybody has to stand up
and smile with their paycheck
in their hand every week.
Exactly right.
That'd be amazing.
It'd be amazing.
Uh, and, and humiliating, uh,
for, for, uh, for, for any
founders in the early years.
But so we have the only people
with checks that were giant.
IOU.
Yeah, right.
Um, maybe zero again, this
period early in my career,
I'm building my first company.
The company starts
to do well, right?
And I'm not fabulously
wealthy or anything.
It was just the first time
we were getting like some
distribution checks that they
were starting to be meaningful.
And I was fortunate enough
that my, my business partner
happened to have a father
who was a billionaire.
Uh, you know, someone
that you obviously know,
he had like a totally
different understanding of.
Like, it was so cool because it
was almost like, you know, you
and I came from modest means, so
wealth and the things that come
with it were, were new to us.
He grew up with it now.
Like he watched his dad earn
it, but he grew up with it.
So like in his house, like at
the dinner table, they were
talking about billionaire shit.
Right, right.
That was definitely
not happening at
my, my dinner table.
Nope.
Wasn't happening
at my dining table.
No.
So, and, and he always, he
always did a good job of
offering me advice that I was
totally unprepared to accept.
Right.
Like it was, and, and he
was only a few years older
than me, so, but again, even
though he was only a few
years older, the store of
knowledge he had was, you
know, generations older anyway.
Yeah.
Uh, the pay grade was different.
Yeah.
Yeah.
And so we were sitting down
and, uh, we were talking
about our distribution checks.
And again, they weren't
enormous, but they, but
this was the first time
this was all happening.
And he says to me, he
says, now will just.
I gotta give you
a piece of advice.
Don't tell anybody about this.
Mm-hmm.
Like, don't tell anybody
about this check or, or the
money you're about to get.
And I'm like, like if
it was social media, I'm
proud of it back then I'd
be, I want, I'd be live
streaming it at that moment.
Right.
Yeah.
And this is how like far
off the reservation I was.
And so, you know, when I give
this speech, Ryan, all I have
to do is picture 22-year-old.
That I'm giving it to
and it has so much more
emotion, like, you're gonna
make all these mistakes.
Yeah, buddy.
Don't do it.
So here's what he says, and
this is some of the best
advice that I've ever gotten.
He said, will never, ever.
Tell anyone how
much money you have?
No one.
No one at all?
Yeah.
Never, ever
mentioned the number.
And he said there are only
gonna be two outcomes.
Outcome number one is
they're gonna judge you by
it when you say the number,
either it's either higher or
lower than what they make.
Yep.
And they'll make an
assessment, uh, uh, against it.
That's number one.
And that sucks.
Number two, they'll try to
find a way to take it from you.
It'll look like you
have a bunch of money
that shouldn't be yours.
And there's some way, whether
they're a vendor, a family
member, uh, like a, a lost soul,
a charity, you name it, right?
They will look at that in and
magically say, you owe that
to me in some way, shape, or
form, or I plan on getting
from, well, it comes in a
lot of ways, shape.
It comes in a lot
of forms too, right?
It's not just like people
coming with a major handout.
What I realized was after people
knew I had gotten the check.
I started getting the
check, meaning like people
just assumed I was gonna
pick up the tab for stuff.
They're like, well, we're all
out together and you know,
you got paid and so you're
gonna buy dinner or drinks or
whatever it happened to be.
Right.
So, and it doesn't come in
like just amazing people assume
it's gonna come like, you
know, uncle Larry wants alone.
Yeah.
Uncle Larry also wanted a
loan, but it was actually all
the little stuff that I found
a lot harder to deal with.
Nuance around the first
exit.
Yeah.
It isn't interesting though
if people didn't have that
information, that expectation
just wouldn't happen.
Right.
Like, I, I'll give
you an example.
Within my family, when they go
out to dinner, like anybody but
me and they go out to dinner and
the check comes, they naturally
divided among them uhhuh.
Right.
Just a very natural
things to do.
Right.
None of 'em have a ton
of cash, you know, so, so
they divide among them.
Yep.
As soon as I'm present,
everyone looks the other
way when the check is sick.
Man, I've never once in 30
years have ever been at a
family dinner or, or a family
event where anybody has
ever said, I've got this.
Yep.
Ever.
That's it, man.
You got the check ever.
You get the check.
That's, and I'm not
angry about it, but it's
an observation, right?
Yeah.
And that observation is a
hundred percent based on
them having a sense that
there's some sort of money.
That I have, that they're
entitled to by virtue
of me having you have
more than you need.
So some of it's
logically theirs.
Yeah.
And, and so you mentioned
this a moment ago though,
the money gets extracted
in lots of ways, right?
Yeah.
And often it's with a smile.
It's in, it's in ways that
you wouldn't think about,
which is family member
calls you up and says, Hey,
uh, just, you know, I'm a
little behind on something.
If you could just spot me alone,
I'll get you back right away.
You know, I love you so much.
I'm so happy, you know, uh,
for your, all your success.
Thanks for being able
to take care of me.
That's a really cool
thing you're doing.
And it's honest and
it's authentic and, and
you feel good about it.
You're writing the
check and you know what?
Now, now that I made some money.
There you go.
Right.
You'll never see
that money again.
I, I was talking to a friend
of mine the other day and I
was like, in my life I have
given so many quote loans.
That have never been paid.
I don't think I've
ever been paid back a
loan in my entire life.
Okay.
Yeah.
And I've given a lot.
And what's crazy about this is,
this isn't me bragging about
how much money I give away.
A lot of these loans were tiny.
It's like 500 bucks.
Yeah.
Which makes not getting paid
back that much more messed up.
Right.
That's the thing.
It's like,
oh, well, at least
wasn't 500,000.
Like No, it was 500,000.
I would understand.
Right.
They defaulted on it.
They needed in the first place.
Mm-hmm.
They didn't have it.
Yeah.
When it's like 500 bucks,
you're like, you assume that's
coming back to you at some
point, because at some point
in pretty much everybody's
life, they can scrape together
$500 to save their familial
honor.
The other side of it is that
means you had the money and you
chose not to give it back to me.
This makes it way worse.
I'd rather just say, go
fuck yourself anyway.
The idea of never telling
anybody how much money you have
is basically this idea of not
painting a target on your back.
'cause again, you've
gotta understand people's
motivations and lemme give
you some other examples
'cause it comes up in way
more ways than people realize.
When I was out raising money for
the, for the first couple times
when I was out raising for, uh,
you know, last couple companies
out raising venture, um, as
part of your intros, you know,
I would talk about how we grew
a company at 700 million and we
sold it and blah, blah, blah.
And I'd, you know, done some
other companies, whatever.
Immediately.
And Ryan, I want you to
put one VC in your head
specifically that you and
I both know specifically.
'cause you, I want you to
picture him saying this.
Well, how much
money did you make?
Like, like how much
money did you put?
Am think you're
tenting right now?
Yeah.
Or like taking a nap on a couch
Will, which 1:00 AM I doing?
You're already there.
Yeah.
Well, how much
money did you make?
How much did you make
Personally the guys?
And it was always guys, when it
was the guys that were asking
me this question, you, you
could just see the insecurity
just pouring off of them.
And chances are they
probably made more
than I had.
Please say number smaller
than number I can say.
Please say a number
smaller than the number.
I can say.
Exactly.
That's, yeah.
Yeah.
That's exactly it.
Right?
That's exactly it.
It's all they wanna
know nothing with a B,
nothing with a B,
nothing with a B,
exactly.
They don't care how much money
they make, they have no interest
in my personal wellbeing.
They just wanna know that
their's is bigger than mine.
That's it.
Yep.
Right.
That's it.
And that's all it comes down to.
And, and I would never share
that information because
it, it again, it never
leads to anything positive.
And it always frustrated them.
They were always like, well,
what are you holding back?
What I'm holding back is I, I,
I have no upside in telling you.
What are you grasping for,
is the better question.
Right?
Isn't that what
I'm holding back?
It's what are you reaching
towards right now?
I already
know the answer.
I don't mean to worry
about it whether you do.
It was always interesting to
me because the folks that had
more security about it never
asked, never cared, and you
could always see the insecurity
pour through when they needed
to know that number and so.
Play this out at
different levels.
Again, you know, I'm
talking about exits
and things like that.
That's just one outcome
with with one group, right?
This goes down to salary, right?
Distributed, whatever.
Like, you know, like people
take this number very seriously.
And by the way, and again,
I hate to be chauvinistic
about it, it's almost always
dudes, almost always like.
I can't think of many
women in my life that have
ever asked that question.
Right?
Profession.
My grandma
presses me from time to time.
What my grandma presses
me from my grandma presses
me from time to time.
Yeah.
I was saying like, like,
you know who's never
asked me that question.
My wife has never come up.
I mean, she has access to our
information, but it's never
even like, like, but a question.
She just doesn't care.
But I look at, you know, other
friends of mine that I've grown
up with, they would kill to
know that information, right.
Not because it benefits them,
not because somehow with that
information, they're gonna do
something positive in the world.
It's literally an ego thing.
Yeah.
Just an ego thing.
And it will likely just
make them feel bad.
Yeah.
Yeah.
I find myself just saying
over and over again,
man, it's like, look, I'm
not public about money.
I'm fortunate and I'm grateful.
That's what I'll say.
Like it's just that it's it.
That's what you need to know.
I've done, I've done some
good and I'm happy about it.
And, uh, I'm happy to
spend some time with you.
I'm not happy to
spend my money on you.
That's,
yeah.
And so, um, this concept of
not painting a bullseye on
your back isn't insignificant.
So here's what I did with it.
I painted the world's
biggest bullseye could
possibly find, right?
I'm like, did it come in the
form of a. Yellow Lamborghini.
Will a red Lamborghini.
Much different.
Ryan.
Uh, that will come much later.
Yeah.
Sorry.
It was so comical, like how
badly I use this information.
Every single bit of what I just
told you that you shouldn't
do or what will happen.
Yeah, I did do and did happen.
Right?
That's that's why you
know, to tell the story.
This is speculation.
You're,
you're here to
warn everyone else
they Right.
And it's so funny because I
watch my friends go through it.
Now, here's why people share
that information, because
they wanna feel validated.
I wanted to feel validated.
I was a poor kid.
I'd made some money, right?
Everyone thought I was gonna
be a giant loser, right?
So it was validating
for me to say.
Red Lamborghini or
whatever, right?
Yeah.
What didn't occur to me
was, I thought it ended
at that it's, Hey friends,
look red Lamborghini.
Oh, you're validated will,
you're not a total loser.
Right?
And that was like that first
off, that didn't happen.
Right.
They're like, you're now
a loser with a Lamborghini
and second only losers
by the red ones will.
Yeah, exactly.
Exactly.
So, but secondly, I
realized that all it did
is make people hate me.
Like, they'll, they'll secretly
high five you, you, you'll think
you're getting that validation
or whatever, but really they're
like, look at that guy, right?
Yeah.
Little does he know all five
of those were middle fingers.
Fuck him.
But seriously, man.
And so then the other side of
it was like, almost like, like
frigging uh, rats to cheese.
All of these like vendors come
outta the woodwork, right?
Yeah, yeah, yeah.
Financial planners, life
insurance people, realtors,
car dealers, you know,
like accountants, like you.
All of these people just pour
out of the woodwork, right?
Yeah.
And everyone wants
to be your friend.
If you really like steak
dinners, it's a great way to
get a lot of free steak dinners.
But short of that, it's their
job to go find these people.
I get it.
Like, but I think it's gross.
And so it was all of
the wrong attention.
Completely self-inflicted.
Completely self-inflicted.
Completely self-inflicted.
That's the thing.
It's, it's so easy just
not to say anything.
Well, yes and no.
I mean, it, it technically,
you know, physically it's very
easy just not to say anything.
I think to your point,
emotionally it is
psychologically it
can be quite hard.
'cause you are looking
for validation, right?
You're want to go back and
tell those people who said,
you should just get the job.
You shouldn't risk this,
you shouldn't do that.
You should just spend your
time here instead, why are
you doing all this nonsense
and this will never work out?
You wanted to show them in
a way that was irrefutable
because they didn't believe
all the other things you've
told them all the way through.
They needed some quantifiable
measure in the form of a
bank account or a check.
Right.
They made them go, huh?
You were right.
And we do need to be right.
Sometimes
I had a situation with a
co-founder around that same,
around, uh, the, the venture
time, uh, who had, who'd
done fairly well for himself.
And I remember him grilling
me on the number, right?
He's like, just
tell me the number.
And what it was is he wanted
to know whether I, whether
or not I had more leverage in
our discussion in the future.
Right.
Ergo, if I had a big number,
he was in trouble because
he couldn't like big time
me, but if it was a small
number, he could leverage me.
I'm like, how
transparent is this?
Is this ask?
Right?
I'm like, dude, I'm not
telling you anything.
And so what's interesting
about that is when you
tell people nothing, you.
There's just so
much less to go on.
And they look at
it one of two ways.
They look at it.
Either he's hiding a lot of
money or he is full of shit.
He doesn't wanna say how,
how small the number is.
Right.
But either way,
both are an option.
So you're not stuck with
the check, so to speak.
Right.
You're not, you're not getting
leveraged one way or the other.
Correct.
And so the best thing is
no information at all.
So that's, that's where
the conversation starts.
Like, like step one.
Shut up.
Yeah.
Step one, don't announce
anything, right?
Don't social media,
this thing, right?
Don't become an influencer
with, with all your new
money and your 12 pack abs.
And so the next thing right,
is a massive mentality shift,
a massive mentality shift
from offense to defense.
The idea is, up until this
point, up until this point,
we've played offense.
Meaning we're just trying
to make money because
we have none, right?
Yeah.
We have nothing to defend.
And that's most of the world.
Most of the world has
nothing to defend.
So every, every effort,
every dollar is upside.
The reason that top 1% that
everybody talks about behaves
so differently is because
making more really won't change
their lives, but losing it,
Allah, taxation, et cetera,
will definitely mess them up.
And so, uh, the next thing I
explain that topically is look
from this point on in life.
All you can do is lose.
You've already won.
Right?
You've already won.
Now all you can do is lose.
And Ryan, it takes people
a while to get to, to
get this mentality.
Do you know what I mean?
It does, man.
Well, we've
been a contestant
for so long, right?
We've been a
contestant for so long.
Now we've won the prize.
We're no longer a contestant A,
we're now the custodian, right?
Of the trophy.
And so I think it is, it's
a super hard mentality
we've been chasing for so
long that once we have it.
Like, how do you make that
momentum shift from running
on adrenaline to running on
caution and care and, and just
making sure that you keep what
you have so long in build mode
that maintain just doesn't even,
doesn't even enter the picture
for us.
Lemme give an example.
Let's say you had $5 million,
which is a ton of money, okay?
But I'm, but I'm just gonna
use this as a reference.
It doesn't have to be 5 million.
This, this applies
to 500,000, right?
So I'm just using it
as an arbitrary number.
$5 million, depending
on how you invested it.
You could earn, let's
say, $40,000 a month,
which is a lot of cash.
Okay.
Yep.
For the rest of your life.
Rest of your life.
Without, without
depleting the principle.
Yeah,
exactly.
Without ever touching
the principle.
Now, there's part of you
that says, well, if it's
five, I could make it 10.
Right?
You could.
Here's the thing.
What you can earn or, uh,
accomplish with $5 million
gets you to 90% of what most
people will ever want or need.
Yeah.
Yeah.
Which means you've
won, you got to 90%.
Right.
But invariably 'cause of how
we're built as founders we're
like, yeah, but the next 10%,
you know, I'm still flying
commercial, not private,
you know, you name it.
Right?
And it's like, okay, but
now think about this.
If you win, you get 10%.
If you lose, you lose 90%.
It takes people a while
to understand for the
first time in their lives.
That's a mentality shift.
Yeah.
Like you have something to lose.
Whereas before you
kind of didn't,
didn't, and you just, you needed
more because you had none.
So you need more to have
something, but then you gotta
go from more to keep, you have
to move from more to keep.
It's a hard mentality to shift,
especially at that point where
you've just finally truly
numerically realized success.
From a financial standpoint, you
feel like it's like telling Tom
Brady, don't ever play again.
You just won the Super Bowl.
This is not a good time
to play more football.
And he's like, this feels
like exactly the time
to play more football.
Exactly.
Okay, so let's, let's
talk about that.
The problem is, the moment
Tom Brady wins the Super Bowl,
the moment you get your 5
million or you know, whatever
the number is, again, the
number here is irrelevant.
The moment you get that, you
feel the most invincible.
At a time when you're actually
most vulnerable because you
think I'm a winner, right?
Yeah.
I go out and I win, so
I'm gonna go win more.
That's, that's what I do.
It's all I do.
Correct.
Because up until that very
second, it's been all wins.
It's not until you lose
it, until you realize,
oh shit, it, it, like, it
only goes one direction.
So I always give you, um, uh,
give people a, a casino analogy.
And I say when you go to the
casino, you can win forever.
If you go to the blackjack
table, you can keep on winning.
Right.
But if you lose it all, you
can only lose it all once.
Now, let's apply this
to this concept of all
you can do is lose.
Let's say you've got your $5
million, and in your mind, I'm
gonna bet it all on, on a new
startup, I'm gonna, you know,
put it all in, in frigging
crypto, you know, you name it,
whatever your high risk, high
reward strategy is, right?
You know, you're betting
on an IPO, whatever.
If it goes well and you get from
five to 10, that sounds awesome.
Okay?
Yeah.
And, and that will give
you a very marginal
improvement in life.
Because you can already
afford most of the things
like that you'd want.
Yep.
You've
already got everything you
need and most of what you want.
But if you lose it, right,
you unless wanna go from
fishing boat to a boat that
you can fish for boats in.
Yeah.
Then right.
But if you lose it, 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.
Here's the part that
that, that folks miss.
You don't get it back.
And I think the reason this is
such hard advice for founders
to, to process at that time is
because when you've just won
so much, it's hard to think
about not being able to get it.
Again.
It's an athlete, you know,
that young athlete getting
that $10 million as a signing
bonus saying, well, if I'm
worth $10 million now, I'm
worth at least 20, 30, a
hundred in the future, right?
Until you get injured.
Until the stock market
changes, until, until
COVID happens, until you,
you, you name it, right?
Until something happens with
or without your control that
removes it from you in the
statistical probability that
you'll ever get back here
is infinitesimally small.
It's tiny.
That's the thing.
I think people don't
realize that there's an
elasticity there, right?
It is very easy to hit fortune
and bounce back to zero.
It is not easy to bounce
off of zero back to fortune.
It just does not
happen statistically.
It just doesn't happen.
It's so, so difficult and you
know, the, everything had to
align the first time to have
to, to create the wealth.
Not very much has to align for
it to go the other direction.
Right.
You can just, a couple
bad decisions can
absolutely end it all.
I think that that's what
we have to understand is
that like the upside is
marginal, the downside.
Is catastrophic and
can be complete.
Right?
We have to reprice risk in
terms of thinking tiny gains
versus irreversible losses.
But
this is a huge mentality shift.
We've never played
defense 'cause we didn't
have anything to defend.
We've never played
defense before.
Right?
And, and I remember like
again early on around
that red Lamborghini
time, I bought a. A house.
I moved outta my campus
apartment and moved
and bought a house.
Nothing crazy.
Extremely modest house.
And I thought to myself, man, if
I screw all this up, I'm gonna
get kicked outta this house.
And the first time in
my life I was like, I
have something to lose.
And I've never had anything, so
I didn't have anything to lose.
And I was like, oh damn.
For the first time, I have
to start making decisions
based on a defensive scenario.
Not just all offense.
And Ryan, I'll harken back to
when we bought virtual, right?
Remember when we were,
we're putting the plans
together, our financial
plans, our risk assessment,
et cetera, was basically like
all downside risk, right?
In other words, we are already
running a successful company.
All we could do is fuck it up.
So how do we make sure
this doesn't hurt us?
Correct.
Right.
If it goes well, that's not
a hard problem to solve,
but if it goes south,
isn't that funny though?
But just stick on that
for a second, man.
Because this is where
everybody's like, they
get out the spreadsheets
and they're like, can I
multiply it by a thousand?
Multiply it by 10,000,
multiply by a hundred thousand.
Oh my God.
It's gonna be amazing.
Yeah.
Right.
And you don't need
to plan for that.
You don't need to
plan for success.
Yes.
Scale comes with
some challenges.
Believe me.
They're all really
fun to solve, right?
Yeah.
And they're all a
lot easier to solve.
It comes to challenges, failure.
You've got revenue and cash.
Yeah.
A lot of leverage to do it.
But nobody thinks enough
about the downside.
Like what if this
absolutely rees?
What if this thing becomes
an anchor around our
neck and we're in deeper
water than ever before?
Yeah.
This is where you've gotta spend
your time doing the calculus.
Agreed.
And so for, for a lot of
folks, you know, again,
they get this big, uh, pile
of cash and they're like,
how do I basically bet it?
I just want at the table,
I, I hate to align Building
a startup or, or doing
a startup With gambling,
it's not the same thing.
People like, oh,
there's, there's risk,
or there's luck involved.
Not really.
It's not like anybody
that's never tried it.
Anything just magically
money fell outta the ceiling.
Like it doesn't work like that.
But regardless, it would
be the equivalent of having
like a chance in hell
lifetime, uh, chance that
you could win this incredible
hand at the poker table.
Then taking all of those
winnings and playing them on
another hand being like, well,
if I just had this big win,
I'll have another big win.
It's like, dude, you know,
statistically unlikely it was
that you got that first win.
Yeah.
The dumbest thing you
could possibly do is say,
I'm gonna do that twice.
Now that doesn't mean go,
don't try something else.
It doesn't mean quit working.
It means.
For the first time, your number
one job in life is do not
lose.
You gotta, you gotta
move to preserve your
optionality, right?
This is your new job.
Preserve your optionality.
Buy yourself some
time compound quietly.
Like I, I have often
heard and like, I, I think
it's a great, it's like
a cool off clause, right?
Commit to a cool off period
where like you've now just
done something you're not,
because how often do we see this
will sell startup wire hits?
What's the first thing
they start doing?
Investing in other startup
companies, they start
buying shit or investing
in startup companies.
They make one-time decisions.
I would argue buying shit
is usually a better idea.
Better idea.
Right.
At least some of that has a,
a liquidation value, right?
Yeah.
Right.
But yeah, it's, it's, it's
a massive mindset shift.
You have to start playing
defense for the first time
ever because there's something
to lose, like you said it,
you have to, it's almost
like shifting from playing,
I don't know, something like
tag or hide and go seek.
To capture the flag.
Right.
You now gotta cover
what you've earned.
Yeah.
You just don't
wanna play offense.
Great.
You cannot just leave everything
you've earned fully exposed
More often than not.
Here's what I hear, though.
I see.
Yeah.
But Will, and I hear this a
lot, I don't want people to
think I'm a one hit wonder.
I've gotta show to everyone
that this wasn't a fluke,
and then I can do it again.
Now, once again,
I, I'm recounting
27-year-old will, right?
Yeah.
You know, years later
when he is like, okay, I
had some, some success.
I've gotta go do it again.
Right.
I get it.
I get the validation need.
Isn't that funny though?
We don't learn it
the first time.
Right?
We go out.
We do.
Exactly.
Exactly.
If they were, if we were going
to achieve validation, doing
it once, would've done it,
and yet we're like, Nope, I
gotta tell everybody so they
can see I'm not the fuck up.
They thought I was
and they're like.
Nah, you're just the fuck up.
They got lucky.
And you're like, well,
I'll just do it again.
And they'll believe
me the second time.
Right.
Geez,
what's broken with, with that
whole line of thinking and
it sends so many founders
off the wrong direction.
Yeah.
Is that the whole point is
you only needed to win once.
Right.
That's it.
The whole point is you only
needed to win once and, and,
uh, you know, we talked about
this on, on previous episodes,
mark Cuban said it best.
Right.
And I'm not a huge Cuban fan,
but I gotta give guy credit.
He's like, you'll
need to win once.
And, and Cuban
did only win once.
Remember like we went down that
rabbit hole and we looked at all
the other stuff that he's done.
I'm not knocking him
as an entrepreneur.
I mean, again, he is done
way better than I have.
He had one that
worked really well.
Yeah, but Cuban's whole life
was one single moment in the
nineties that changed everything
for him that he earned.
Right?
Uh, and since then, has
never done anything even
remotely close to that.
Right.
I mean, I mean,
Don bought the bs.
That was pretty cool, but
like, like in general,
that was his thing and he
didn't have to do it again.
Now, every now and again,
someone does a Steve Jobs,
Elon Musk, you know, uh,
a three-peat kind of thing
or something like that.
Like, okay, cool, but you know,
who does, who's not running
around trying to do that?
Bill Gates, other than trying to
solve malaria and give the whole
rest of the world his money,
dude was like, Nope, I'm good.
I built, you know, you
might have heard of,
it's called Microsoft.
It runs every, you know.
Yeah.
Every poorly running
PC on the planet.
Uh, and like, so in his mind,
the, the win once, now it helps
if you're, if you're Bill Gates
and you're hitting that, that
threshold, but for all of us
are the mere mortals among them.
Right.
You only need to win once.
Right.
Saying that I have to win
twice would be the equivalent
of saying, I, Hey, I just
won the Powerball lottery.
I'm gonna take all that
money and put it on more
Powerball lottery tickets so
I can win more power bowls.
It's like you could.
You could do that and
it might even work.
I mean, statistically my,
however, you don't have to.
That's the point.
The point is you don't have to.
Now lemme put it differently.
The other reason that I went
out and I wanted to go do
it again and I would end up
doing it eight more times.
You know, starting
eight more companies,
some work, some didn't.
Was that I was 27, I
don't my whole life ahead.
Yeah.
Like even now as I'm much
older, I wanna go out and
build and do more stuff.
Like I don't wanna hang
it up just 'cause I
made a couple bucks.
I get that part.
But that's different than
I have something to prove.
I have something to prove is
a wildly dangerous preamble to
the documentary you're about to
build about how you lost it all.
You don't want that to
be your claim to fame.
Right.
That one, the top of
the charts on Netflix.
Yeah.
Look, I, I think at some point
I had to have the conversation
with myself and sort of separate
my, my identity from velocity.
Yeah.
And say like, I can slow down
and I can be happy with what
I've done and still be me.
And to begin to chase meaning
more so than magnitude.
Well, we talked about
that last episode, right?
We, we talked about,
yeah.
Pointing your canon
somewhere else.
Somewhere else, right?
Imagine that another
bucket, this bucket.
Be full, right?
Yeah.
Well, how, how about this?
You solved that problem.
You solved money problem.
Now go solve 50 other problems
that you know, or things that
you can pursue in your life.
But I think.
We have to adapt
that mentality first.
We have to men adapt a
mentality that if I only ever
win once, still won 99.9%
more than everyone else.
That's not to say
I'm better than them.
It's to look at the gratitude
in saying, damn dude, the
probability that this was gonna
happen at all is freakishly low.
So for me to look at that and
say, but I deserve another.
Generally doesn't.
Well,
the other side of it is like,
to, to look at it in a slightly
different way is to say like,
do you wanna risk that, uh,
that you've already got?
Right.
You're now in the the 0.1.
Yeah.
Do you wanna risk that?
For what reason?
Just to rejoin the 99.99.
What are you actually
doing at that?
There's
some really fascinating studies.
Remember which book I I was
reading this out of is in
the past year it has more
of a reflection, not of
the book, but of my memory,
of the psychology money.
It was called the
Psychology Money Uhhuh.
Yeah, yeah, yeah.
And, and in the Psychology
Money, so the author talks
about why is it that people
who were wildly successful
and wealthy found the
need to risk everything.
To become more
successful and wealthy.
And he gives a couple, uh,
case studies of different,
like, you know, famous rich
people that lost it all because
they was insider trading
or, or, or they kind of like
overstepped the, the bounds.
And I always thought that
was fascinating because I
thought to myself, these
are really smart people.
Like really interest and
already wealthy people
already wealthy, right?
They already like won by
orders of magnitude, you
know, they were in some
fraction of that 0.1%.
And I think to myself, the
essence of the book, what about.
What they had made them feel
like they didn't have enough.
Right?
Like what was it that
made them say, any of
this is worth risking?
And I look at it practically
and I say it's just not,
and I think for, for a lot
of these things, the, the,
the psychology here goes is
much more nuanced, right?
Yeah.
It's, it's about risk a lot.
And a lot of times it's, I
don't deserve this, so I'm
going to gamble it until
basically life takes it from me.
Yeah.
I mean, they're gonna let
statistics prove to me
that I should have this and
more, or, or take it away.
Or in some cases, like
I, I think you and I
can both name founders
that, that fit this mold.
It's that.
They enjoy the, the chase
more than they would rather
chase than accumulate.
They just actually don't care.
I agree
that much about
what they've won.
Yep.
And they're like, honestly,
like, I just want to do this.
And I, I like the risk,
I like the adrenaline.
I like being on the,
the bleeding edge.
And so if I lose it
all, I, I lose it.
All right.
I, until they actually lose
it all, then they, then
they're very, they feel
very differently about it.
You bet.
Well, but you said something
once too, which I think was
really, really smart, which is
that create a save point, right.
Video game style.
Right.
Just create some level of
financial foundation that you
cannot slip back below and
then go risk whatever you want
above that, but keep yourself
safe at a different level
than you were before.
You see us do that in
our financial planet.
Yeah.
All the time.
Right?
Uh, we always have
a net income number.
That is our safe point.
Yep.
And, and we're basically
like, this is the threshold
at which if we ever get to
here, things have to change.
Once you pass this go,
you cannot go back.
But everyone knows what it
is and everyone knows that.
The consequence of that,
that safe point is, so
everyone knows to react.
If that didn't exist, if it
was just like, ah, it's just a
number and you know, it'll go
higher or low or, or positive
or negative and whatever.
Right.
It's up this month.
It's down next month.
Yeah.
Well, behavior doesn't change
and that's super interest.
And to your point, if you're
like, look man, uh, I've got
5 million, uh, in net in the
bank earning money, I really
need at least, and again,
I'm making these numbers up,
I need at least 3 million.
Feel comfortable in how I
wanna live, you know, with
my family or, you know,
whatever your goals are, right?
So I've got 2 million in play
Now, hopefully that 2 million
will, will, will double,
but if it goes to zero, I'm
not at zero, I'm at less.
Right?
But I'm not at zero.
It's tricky for folks to, you
can mentally put those save
points in place, but when you
start to get to them, this
is the gambler's dilemma.
The gambler gets to
zero, goes back to the
ATM, gets more money.
And says, okay, I'm gonna win
it back and then win back more.
And what, what happens?
Of course he loses.
Yeah, he goes to the ATM
again, he says the same thing.
I'll double it.
So I'll bet even harder.
Take higher risks in
order to get back to zero.
Once you establish the
mentality that you're willing
to lose, it's very hard to
unwind the mentality that
you're willing to lose.
So the premise there is,
at what point are you no
longer willing to lose?
Which tra challenging, you
know what I mean?
Yeah.
Especially when you're trying
to balance it against this
idea that I will win if I just
keep being willing to lose.
Eventually, I, I, I strike gold.
Right?
Right.
There, there is a payoff
to the end of this.
I think that's the, the,
the really dangerous
part because there's
absolutely no truth to that.
But I think a lot of people feel
that way and they're like, if
I just keep trying, eventually
I will hit a point where, you
know, this will pay me back.
Right.
It is the gambler dilemma.
It's trashed.
A lot of founders.
One of the places I see it
consistently is athletes.
The challenge that athletes, you
know, that, that have been in,
in whatever your league is or,
you know, getting paid because
they're, they're one of the
unique industries slash careers.
I suppose that you get
paid a lot of money
very early in your life.
In a lot of things, you
get paid later on in life.
You know, we're in the
startup industry, so
you have like, it's the
reverse in this case.
Yeah, right.
In most cases, you make most
of your money at your youngest.
Let's say you actually did
pretty well, uh, you got
signed and played baseball.
You did seven years in the
league and you made $20 million.
Okay?
At the end of that time period,
uh, you've quote retired, you
got plenty of money, you're
good if you just sat on that
for the rest of your life, let
some compound, let you know, let
some, uh, fuel your, your needs.
You'd be good.
But here's what you think, dude.
I'm an athlete.
I'm a competitor.
Right.
Um, I need to find
something that is a parallel
for what I just did.
So I'm gonna do startup
investing, or I'm gonna
start my own company, or I'm
gonna invest in my, my idiot
cousin's t-shirt business.
You like, you name it, right?
And what ends up happening
is you've got that
same gambler dilemma.
Like you, you need that rush.
You need that challenge,
which I get, but you also
don't have a save point.
Like, I need it so badly
that I'm, I'm not willing
to just like pump the
brakes or hit a cold stop.
I've hit points in my
career where I'm like, okay,
I've hit my save point.
I cannot, like, I cannot
afford to keep burning.
Yeah.
Yeah.
I did that with one of my
earlier startups, uh, with
Afford It, where like we had
raised a bunch of money, we
were doing really well, and
then we, we hit a point where
we couldn't raise any more
money and at some point I
was just funding the company
outta my own bank account.
Yeah, yeah, yeah.
And, and I realized that like
it'd gone on for a long time.
I've gone on for like two years.
Yeah.
I am, I am now.
Burning my winnings from my,
my previous efforts like, yep.
And, and quite specifically,
the money I, I'm setting
on fire every month.
I'm never getting back.
At first you're doing it because
you think it's just a bridge.
You think it's a short term,
you think it's whatever.
And then as the money starts to
stack up and you kind of forget
about how much money you spent
last year, et cetera, but you
zoom out and you look at it.
I'm like, really?
The probability that I'll ever
get liquid on this again and
even just put that money back,
much less earn what it would've
earned, uh, in the market,
whatever is pretty much zero.
It's hard emotionally to
stop yourself, which is why
we have this speech, which
is why we have little pep
talk to say, you're already
gonna mess everything up.
Okay.
And, and, and we get it.
The idea is, like you
said, a moment ago.
To help you establish a
save point so that as you
start to go off the rails
a little bit, you don't
kinda like bump you back in.
You know what I mean?
Yeah, yeah.
Yeah.
I think it's, I think it's
important because I think that,
you know, again, it comes at
that time where you're, you're
gonna be the most confident
you've maybe ever been.
Right.
You've come through
a whole lot of shit.
At that point.
Everything feels like
it's going right.
Right.
You, you run into all these
paradoxes, like the gambler's
dilemma, the fact that you
are, you, you are at the
top of your game right now.
Yep.
Everything feels good.
So why wouldn't we
just double down?
Right?
Why wouldn't we just
keep going for this?
If you, can you go back in
time and, and think about
like when that shift happened.
Clearly, clearly it didn't
happen right at the, the
time of the first exit.
So what helped you to replace
Prove it again with protect it.
Now,
I, I can tell you exactly after
we sold Blue Diesel, like back
in the day that that was the
agency I was talking to you
guys about, I had a period
of like a couple years where
I was doing my next startup
and I wasn't getting paid.
Uh, I just wasn't right now,
I, I had, you know, stock
market earnings and all that
good stuff, but like, it
was the first time where I
didn't have active income.
And anyone that'll tell you
that, it just like exited
whatever they're doing.
Even if you have like a
strong balance sheet and
you've got, um, you know,
good earnings that you've
got in the market, et cetera,
not having active income.
Retired people deal
with this all the time.
Not having active
income has got a totally
different mentality to it.
It's because active income feels
like you're actively replanting,
you know, for future harvest.
Just pulling from what
you have just feels like
you're constantly in harvest
and never plant mode.
Yeah.
One is a renewable resource,
the other one is not.
It is a finite.
Resource.
Correct.
And, and I think for a lot
of people, the first time
you, what I call write, write
your mortgage out of savings,
so to speak, and it, those
savings could be, like I said,
you're earning in the market.
That's obviously, clearly that's
income, but when it's not active
income, it messes with you.
Yeah.
And the first time I wrote
my bills for the month.
Out of, uh, non-active income.
Yeah.
I was like, shit, that
money can go away.
It happens.
Wait a second.
This is an alarming trend.
Now we're going down.
Right.
And if I don't do anything
differently, it will just
continue to go down.
Exactly.
And and most of the founders
that I talked to that have
had an exit for the first year
or two, they're still trying
to understand like everything
that's just happened in their
lives that, you know, et
cetera, but nearly all of them.
We'll go back to
starting something else.
Now there's a litany
of reasons for that.
Part of it's boredom.
Part of it's, you know, again,
I gotta prove myself that
I can do it more than once.
You name it.
But one of them is, it's
kind of terrifying not to
have active income, uh, even
if you've done pretty well.
And so I think for a
lot of us, it's just
kind of how we're built.
For me though, I always kind
like, damn, dude, I've always
been in the mentality that it
can all go away tomorrow, and
I've genuinely believed that.
Now in 32 years, knock on
wood, it hasn't happened yet.
But at no point have I ever
felt more confident that it's,
that it's never going to happen.
And I think that's
probably saved me.
Yeah, no, I think that, I think
that makes a lot of sense.
You know, I think that the, the,
the minute you do feel that way,
it's, it becomes problematic.
I think it's interesting.
One of the things that
occurred to me was that we
do become comfortable with
this concept as founders.
That is kind of dangerous posts.
Post outcome, whatever that
ended up being, uh, whether it
was distributions and exits,
you know, taking on more
money and, and getting some
liquidity, whatever it was.
If you are in that position,
you end up now with a burn rate.
And it's a concept that we're
actually really comfortable with
as founders in a lot of cases
because we've had to utilize it.
It's like, oh, this is a tool,
a burn rate's a tool, right?
And so then when you end
up within a personal burn
rate situation, it probably
doesn't feel as uncomfortable.
I'm thinking through like some
of my friends, like people
that I knew who had, who had
been corporate folks, right?
Got laid off, decided to do
a career change, whatever.
Now they're not
an active income.
They had a hell of a
lot more urgency around.
Turning the burn off because
they're not comfortable with it.
Right.
But founders, on the other
hand, a lot of us have
become comfortable with the
idea of a burn rate, right?
That's just the
investment we make.
The difference in this case
is, unless you got some plan
for how that actually turns
into active income again, yeah.
It's just a downhill spiral.
Right.
I agree.
I agree.
So here's what I'd say, man.
The reason we give this speech,
the reason I'm so passionate
about this frigging speech,
is I want you to enjoy.
You hard earned exit.
I, I want that money to be
around long enough, right?
For, for you to be a champion
and not a cautionary tale.
And fortunately it's a small
few that become the cautionary
tales, but that all, all of the
cautionary tales that I've ever
seen, Ryan could have absolutely
been avoided, unquestionably,
could have been avoided.
They were never catastrophic,
you know, strokes of bad luck.
They were always in,
deliberately engineered
by the founder.
They brought it on themselves.
That's a great point.
Right?
And so the reason we give
this speech is we want
you to keep that cash.
The reason we give these this
speech is we at least wanna be
that voice on your shoulder.
I think it's the angel in
this case, where the devil's
like, we need a Lamborghini.
And the angel's like, dude,
you don't need a Lamborghini.
Right?
Obviously those people did
not exist on my shoulders
at the time, and I wish
they had because I would've
been better off for it.
So I think for
folks that that are.
About to go down this path.
Either you are on this path
now, newly minted, hopefully.
Congratulations.
I just want you to
think about these points
because they're all valid.
This isn't like an oh,
that's just your opinion.
These are all exactly how these
things go and the harder you
work at preserving your wealth.
The more likely you're gonna
be to have it in the future.
And when you have that
future wealth, you can
take some swings that you
couldn't, uh, make before.
The key isn't just
earning the trophy.
The key is keeping it.
If you're gonna work that
hard to earn it, work that
hard to frigging keep it.
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
startups.com community.
Check out the startups.com
community@www.startups.com
to see if it's for you.
Could be just the
thing you need.
I hope to see you inside.