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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.
Ep 266 - Are Startups in a-
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[00:00:00] Welcome back to the episode of the Startup Therapy Podcast. This is Brian Rutan, joined as always by my friend, the founder and CEO of startups. com, Will Schroeder. Will, if we listen to the zeitgeist, the economists and all that's going on right now, it doesn't seem apparent that there's a recession. And yet, Indicator might we have that there's a recession at hand.
Yeah. My indicator would be every single founder that I talk to right now. And we talked to a lot. Yeah. Talk to a lot of founders. Startup land, at least if it's not affecting the rest of the world yet. Uh, we're definitely feeling it in. Yeah. Apparently all these founders didn't get the memo. And then nobody told us that we just don't have any money, you know, Ryan, we have this really interesting purview where we get to see not only so many different types of startups, like, you know, different industries, et cetera, different stages of startups.
So from idea stage, you know, all the way to pre IPO stage. And we get to have very, very intimate conversations with the founders [00:01:00] specifically now, not with the PR flax, not with the person marketing, trying to talk up the company. The person who all this shit is going to fall on, right? Who's being kept up at night.
We're a fly on the wall in every corner of the economy by virtue of being talking in conversations with founders in every corner of the economy. You bet. Let's take stats and economists off the table for a second. Every single founder I talk to right now is scared to death and things are bad. Now, when I say that, Ryan, at some level, you and I are in the business of getting people excited about startups.
And we have a business where people come and they pay us money to help build their startups, etc. So think of what it must be like if you and I are getting on our own podcast saying things are fucked up. Yeah, things are tough right now, but I think that's something that we take very seriously. The responsibility that we have to both empower people, feel good about doing these things.
But to be real sober while they're doing it, right. We're not like, okay, I have three shots to kill. And now let's talk startups. Yeah, yeah, yeah, yeah. I'm into this with a dose of reality. And I think that a big part of [00:02:00] what we're going to cover today is the fact that like, you might've been thinking this was just you.
All right. And it's very important to know that there are other macro forces at play here. And while it may not be a great time in the environment, there's a pretty clear message there, which is that like, look, a lot of folks are going through this right now, stay your course, right. Hold on and just be prepared for the reality, what the situation looks like right now.
Let's paint the picture of where we're at right now, right? Just to give a general sense and why we're saying this. Okay, so a couple of macro forces are happening. We'll get into the kind of the details of kind of how we got here, but essentially what we're saying is right now in the startup world, forget the rest of the world or anything else in the startup world, we are in what we are calling a silent recession recession because shit's bad.
Silent because nobody seems to be talking about it, right? Yeah, yeah. Nobody seems to be talking about what's actually happening. It's like, yeah, revenue's dropping off. We can't get clients to close. We're having plenty of good conversations, but no one's committing, I think, is the one I hear on just repeat right now.
Right? People are like, yeah, because [00:03:00] again, like, The world's not fully scared. It's not shut down. We're not facing full on recession yet. And yet the decision making, particularly like in the, in the B2B space, I'm working with a ton of founders on customer acquisition right now in the B2B space. And they're all saying the same things in the conversations.
People are interested in what we're doing. They like the solutions. They are not pushing the cash register, they're just not moving forward. And that's where things get a little bit funky. I think like, if you, if you read particularly like financial news media, like your CNBCs of the world, things like that, they're going to show you good stats and they're not lying.
Numerically, the stock market, you know, returned incredibly. S& P did so well last year. It printed money last year. It's incredible, right? And so by that metric, you're like, okay, but things are okay, right? Or you look at inflation and you're like, Oh wait, inflation means that people are spending a lot. Like the demand is high, right?
The U. S. consumers are, must have money because they're spending it, right? Home prices are going through the roof. Like it must be because everybody's making a lot of money, right? Unemployment is pretty steady. All things being equal. So my, my challenge is you look at all [00:04:00] of these typical stats that would normally make you say, Oh, I guess things are okay.
But then you talk to the people behind it, the actual founders, and you get a much different take on what's happening. And so again, today we'll unpack why it's happening. We'll unpack what to do about it, but, but here, just like you were saying, Ryan. If folks right now are like, I don't know, man, things feel kind of fucked up in my business.
It ain't just you. It's not just you. And that's an important realization, right? Because there are things that we can fix in our business and certainly the things that we can do, but there are forces that we can't fight. We just have to outlast if nothing else. You bet. And so, you know, let's start off with, again, a little bit of how we got here.
Economic history lesson, because I think for most folks, again, we knew things were weird. Like COVID was supposed to shut the whole show down. And in the U S specifically, I can't speak to other countries. I didn't follow it closely, but in the U S specifically, we pulled off a magic trick. I mean, it is no less than an economic magic trick.
We somehow went from an economy that was [00:05:00] supposed to have imploded. We pumped up everything we could. We put billions of dollars into the economy through PPP and everything else like that. We made interest rates damn near zero. We did everything we could to keep the momentum. And it worked. Holy shit did it work, right?
Record IPOs, this is 2021, record IPOs during a time when we were in lockdown. The irony of companies going public when the public couldn't go public, right? Stay inside your houses, but buy stocks. Right. But I mean, when we look back, I can't imagine, I'm by no means pretending to be an economist here, but I'm just saying, you know, seeing it from the startup's perspective of how it worked, when we look back, that will be maybe one of the most genius moves economically at a macro level that anybody's pulled off in a long time.
And it looks like, you know, knock on wood that we're getting close to, you know, our desired soft landing where you pull a move like that, right. And it doesn't rubber band back to you, right? Exactly. That was the big risk, right? That was the big fear was that this thing whipsawed back on us, but [00:06:00] all signs point to we're probably okay.
Right. Let's map back to how this affected startups specifically. Cause I, we keep talking about it at the macro level. Let's talk about the micro level. Here's what happened to startups. And in most of the folks listening, we're running a business around this time within the last few years. First thing that happened, we went from holy shit, it's all game over, and I know that's how we felt, right?
People are buying, people are spending, wait, what the hell's happening? Am I the only one watching CNN? Yeah, exactly, right? All of a sudden, interest rates go to zero, and capital flows, which was the goal, by the way, right? Like, I mean, it was 1999 all over again. We were having these massive, massive funding rounds at insane valuations.
And then most importantly, and this is what we'll get back to this. We had to rewrite posts that have been on our site for a decade around, like, what constituted a, a pre seed round from a funding round and a seed round series A. I'm like, yeah, in a matter of 18 months. How much in your pre seed? It was crazy.
And everybody and their brother at the time was opening up a [00:07:00] venture fund because there's so much, you know, LP money out there. I mean, it got nutty the first time ever. Startup founders were outnumbered by VCs. Let's just, let's kind of play this out though. Now a whole bunch of things start happening when you create that momentum.
And as, uh, as we're describing this, remember that they also happen in reverse, which is how we got here. Okay. Yeah. Yeah. When the money starts flowing, it comes from, let's say two places. High net worth individuals, angel investors, stock market's doing really well. All of a sudden, people have a bunch of money they didn't have five seconds ago, and they're feeling bullish about putting it somewhere, right?
On the other side, you got LP money, investor money, capital's cheap all of a sudden, right? Interest rates are super cheap. Money's super cheap. You can dump tons of money into high risk investments, right? And then the third part of that is because you can dump all this money and pump all this stuff up, you IPOs, you have lots of exits, you have a lot of big activity.
All the things that stimulate the overall startup environment. Right? Because it's not just about those outcomes, uh, it's about everything that happens downstream. Right? This is the very thing that get people excited about going out like, Hey, you know what? [00:08:00] We'll go start a startup. This looks pretty easy right now.
Everybody, their brother is ringing the bell to NASDAQ. I want to get in on this too. Same thing for investment. Yeah, but the thing is, startups in general live and die by FOMO, the fear of missing out. So that's what started to happen. As soon as you see some idiot, you're like, dude, how did that guy go IP or are you serious right now?
Right. And then all of a sudden that. FOMO explodes like a virus, which is what we are all about. It's the very nature of being a startup is the fear of missing out. Everybody's a miner all of a sudden running, looking for picks and shovels. Right? Like I got a hundred percent, a hundred percent, right?
You've got entrepreneurs that are like, Oh my God, I need to get on that. You get investors. They're like, Hey, I need to get in there. You got all the talent. That's like, dude, I need to, you know, get some of that Uber money. I remember having some friends, founder friends that were staunch bootstrappers, who in those moments decided, like, maybe I should and did go and raise capital.
That's worked out okay, so not so much, but that's a different story. But he [00:09:00] just, he was, speaks to the momentum at the time and kind of the, the hype and the excitement at the time. Of what was going on, how much fervor there was around start space and how much funding was flowing into it and how many outcomes were happening.
Now, the challenge is you get a whole bunch of expectations that get set in that moment that we're all dealing with now. Again, this is where the history lesson here is particularly important. All of a sudden, the expectation is that capital will continue to be there, right? Well, you know, we'll talk about this, but that got pulled, okay?
Once you prime the pump, it just keeps pumping, right? Doesn't it just flow and flow and flow? The second is that we'll always grow. Right. Like the nature of a startup is growth. People just assume that you're just always going to grow up into the right, which is awesome. It sounds great. But most folks haven't been around long enough to see how that actually works.
Or it doesn't quite work out. You can turn the hockey stick the other direction. But also remember that there's so much momentum that gets carried again, you know, kind of the [00:10:00] centrifugal force of FOMO, right? It starts with the founder and the investor, right? They start that going, but now they've got a bunch of capital.
They go hire a bunch of people. The media covers the fact that they raise money, that they're hiring all these people, et cetera. Now the media is spitting this up, right? Now more people are reading the media saying, I don't want to go work for those companies. I want to do business with those companies. I want to buy that product.
Like the whole thing compounds. Another interesting indicator in that time, right? Specifically what you're talking about around, around the hiring, right? Yeah. First time ever, I started seeing roundup posts on LinkedIn that said like, these startups are hiring. That never would have existed before, right?
Unless it was caveat of was something like, here's some startups who are hiring in case you can't get a real job, right? That would have been the caveat previously. Yeah. Yeah. During that period, all of a sudden people were like, yeah, yeah. These hot and fast growing startups are hiring. I can just big list one after the other, up to the other.
Everybody seemed to be posting one of these things on LinkedIn at some point. And so again, the expectation setting [00:11:00] starts to get real dangerous. Okay. It's kind of like our greatest strength and our greatest weakness, greatest strength that helps us do optimistic, complicated stuff, greatest weakness. It doesn't occur to us that things can change dramatically.
So let's fast forward a little bit. A couple years ago, if my date stamps right and I suck at dates, but um, I think it's like mid 2022, kind of the wheel stops. And I don't recall exactly what the event was that caused that, so to speak, you know, cause I think we're still mid COVID or, you know, close to it, close to the end, I don't know.
But I remember when it happened. I remember it happened in April specifically. And why do I know this Ryan? Cause you and I were going over our numbers. For our businesses and for folks that aren't super familiar, we own a lot of different websites. We, you know, we own startups. com, but at the time we own Zirtual, uh, Zirtual.
com, which is a virtual assistant business, Bizplan. com, Fundable. com, LawnShark. com, you name it, right? These are all slightly different businesses. Right. I mean, they're all, you know, under the, under the same umbrella, but we watched them all start to drop. Yeah. The, the entire portfolio at the [00:12:00] same time, which is a good indication that it's something other than the internal management or mechanics of that specific business.
Well, that's the funny thing. We manage all of it. Like we are the management, right? So, so we are the constant either, either we are. It's just possible that either, either we are fully incompetent across the board, which you know, I can't take off the table or something else is going on. But I do remember specifically in April of that year, something being, now here's where it gets really, What happens is, we assume, rightfully, it's us.
We're doing something wrong. Remember going through all of our different budgets and everything, and all of our different spend, all of our, uh, checkout paths, and we're like, What the hell is going on? Competitors spending on every platform I could find, right? Just like, what is it that we're doing wrong that everybody else is getting right?
Fast forward to today and you kind of, you know, look back, uh, retroactively on that period, Ryan. We didn't do anything differently. We did the same thing we were always doing. It just stopped [00:13:00] working. Now, we have, like we mentioned at the top of the episode, a unique purview where when the storm is coming, we're not the only people hearing it.
We hear it from lots of other people. And that storm started when I could start to hear my friends who were raising rounds saying, Huh. Seems to be taking a little bit longer when I listen to some of my investors saying, you know, I think we're going to pause on this one for a second. Yeah. We're considering gold as in the metal.
Yes. As in the metal. It wasn't one thing. It was kind of a little bit of everything. All of a sudden, like five seconds ago, you couldn't find an engineer or a marketing person because they had 28 job offers. All of a sudden I get like a message from someone like, Hey, are you guys hiring by any chance?
Yeah. Which I hadn't gotten like in 18 months. Like, uh, we were chasing other people out. You moved April to the end of that year? Holy hell did that get me. Oh my god, right? Night and day. Now, here's where it's hard to respond in that moment. So let's say it's mid 2022, and this is us as well as everyone else.[00:14:00]
Is it a blip or a trend? Who knows? Maybe, you know, maybe it's just a bad quarter. But that bad quarter becomes another quarter, another quarter, another quarter. And particularly for folks that are in the fundraising cycle, Which means you've raised previous rounds, the expectations that you're going to raise more rounds, and you have hired and built infrastructure based on that expectation, which is reasonable when it keeps coming in.
Right. But you don't expect it to stop. If someone came to me for advice and said, Hey, you know, I'm through my series B, you know, so I've, I've raised precedes seed series, a series B. And I'm going into my C. It feels like things are slowing down. What should I do? Honestly, my advice would be, boy, you're this far along, kind of have to hit the gas, right?
Hitting a hard stop is going to prevent you from getting a C round, essentially hitting a hard stop. If we're saying no more hiring, you know, a circle in the wagons, then you're trying to go for your C round in investors. Like, well, it doesn't look like you're hiring. It looks like, you know, like you're planning for things to stop.
I don't want to put money into that. Right. Let's see. So you're. By all other measures, all of your signals say that we're [00:15:00] about to pump the brakes across the board. But you want me to pump cash into your business like, yeah, exactly. It's a very bizarre all by the time you're that part on the funding path to you have much of a choice.
If you're on your way from B to C. You don't get to just be like, well, you know what? We'll just hold it be. We'll just stay here. Right. Generally not. I'm like, you're eight months pregnant and you got to make this baby. But at that moment, when things start, like you can't really tell, like, you know, is it just something off in my business?
Now, here's the thing. Since we sit down with lots of other founders and have these really intimate conversations on a daily basis all throughout the day, what was interesting to me is I'm talking to some of my friends who are further along in different businesses, different industries, right? Um, totally different industries.
We're all having kind of the same problems. Like, and they're like, yeah, I'm having a tough time raising a round or investors are pushing back or, or like, you know, boy, we kind of missed our quarter and stuff like that. And I'm like, you know, it ain't just you. But at the time, Ryan, they can't tell at the time they're thinking, what do we do wrong?
Because you don't have that macro [00:16:00] view, right? So you assume it's, it's just you. Which is dangerous. At that time, inflation starts going crazy. This is going back to the macro view. Again, we're mainly talking U. S. economy. Ryan, you're in Europe now. Maybe you can start to speak up to what's happening in Europe.
I don't mean to be so U. S. centric. I just don't know any other markets. At that time, interest rates are going up. Yeah, you're like, okay, you know, how important could that possibly be? BCs have raised so much money in these last few rounds. Like, they've got to deploy it, etc. And then the weirdest thing happened.
They just stopped writing checks. Investors just stopped writing checks. The thing they get paid to do, they stop doing. For a really long time. And, and having just raised tons and tons of money. All right. So it's like, just, you could almost hear the coffers, uh, ready to burst at that point, right? There was just so much money waiting to be deployed.
Just stopped. If I'm going to point towards something. VCs caused the startup recession. I, this isn't like, you know, evil VCs, nothing like that. I don't necessarily blame them. Right. I understand [00:17:00] why they made those decisions. But that was, that was the, the, the, the kind of the gross signal to the market. It was like, Hey, we're going to stop the capital flowing into the startups at the, at the, at the top of their game.
Right. The ones that are closest to IPO, closest to exit, whatever that has a knock on effect. All the way down the food chain. I'm down to just even just like basic inspiration, right? If you're looking up and going like, you see the best companies in the world going like, yep, we're not able to close our series seat, right?
You're going. Now is not the time to cash out my 401k and dump the family savings and startings. Exactly. Around that time, all of the big IPOs of the moment started to implode. All of them started to implode. I remember I'd put a bunch of money in a company called Wish. Do you remember Wish? Yeah, I do.
Right? That was like that fast retail, you buy a bunch of junk online, whatever. And they had an incredible IPO. I mean, like, I'm not knocking this company. I mean, I put money into them. So obviously I thought there was some story there, but my point is that thing went bananas, right? Had a massive [00:18:00] IPO, right?
I don't remember what the market cap was at IPO. I believe it was over 10 billion. You know, I should, I talk on top of my head. I actually don't remember. It was massive, right? It was within like, Five seconds. That thing was trading for pennies on the dock. And, and that was not an isolated case. It started happening to one after the next, after the next.
Yep. So if you're a VC and you're like, dude, the way I make my money is not how I invest it. The way I make my money is when I take companies public, right? Or they get sold to companies that are typically public. And now. Every company that just went out is getting eviscerated. I'm like, yeah, like, let's pump the brakes and hold back.
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 [00:19:00] 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 and be done with it. I kept expecting to see like all of the VCs change their titles on LinkedIn to penny stock investor, just by virtue of what happened in the market.
Right. So here's what happens though, and this is when I say they caused it, I'm saying it's their fault because they did cause it, but I understand why they caused it, right? And if I were a VC, I would have done the same thing. So it's their fault, but I don't blame them. So once they pump the brakes and they say, Oh damn, markets got overheated.
We got to hold back. The last thing you want to do is spend 10 years investing into a company. And then try to, IPO it in the worst window possible. Like Instacart was holding back stripe, held back, you know, all these, these massive IPOs, right? Of those conversations. Yeah. People that you, you, we were fully expect, I mean we're fully ramped up and on their way to IPO.
And then just a pause or stop. So here's shit. Rolling downhill. We start off with no more [00:20:00] IPOs and picking up speed. picking up speed. Giant snowball. We start off with no, no more IPOs. The no more IPOs mean later stage funding like, uh, CD rounds for startups that are first along start drying up. Now, what a lot of folks don't understand, particularly founders, is that when the later stage investments stop happening, it takes away the incentive For the early stage investments to happen.
Check. Goes back to the FOMO piece. The person putting in 200, 000 into a startup isn't hoping that's the only money they're going to raise or that's the end of it. Right? Right. They're hoping they're going to raise five more rounds and then go public. It has to for them to get what they want out of it.
Right. Now here's where things, where the high net worth investors, the angel investors, got hit from both sides. Any investments they had made into current startups that were hopefully getting into the series A, B, C, and beyond rounds, So if all the startups you're tracking, maybe you're on the board of a couple, all of a sudden can't raise a round, you're like, shit, the liquidity that I was going to get from that 200 grand or [00:21:00] whatever I put in, is now at risk.
At the same time, the very place you were extracting all this money that you were spending, the stock market, just implodes. Because all those, you know, like wishes and all those things in the world, all implode. So now all of a sudden you don't have any free capital, the high risk money you did invest, And then the Fed basically says, Hey, we're going to crank up interest rates, strike out.
Well, if I can put my money anywhere, I put it somewhere safe at this point. So you stop investing. So that's how this whole thing went downhill. And when the money dries up, it takes away the fear of missing out. And that's how we got here. We took away the fear of missing out, and that is what has caused our silent recession.
But nobody, there's no metric for fear of missing out. You see it, you see it in all the startups, but we don't have like a, like a CPI index or something like a Bobo. There's nobody talking about the stock collective basket. That's like, yeah, but here's, here's what it's, it's amazing. Right. And so, I mean, like to your point, like they did cause it, you know, they're not necessarily to blame it as their fault, but it impacted them as well.
Right. [00:22:00] As you said, then like, you've got all of these startups, just this like massive. Slinky effect where by, by stopping the front, all of a sudden, like it just shit daisy chains all the way back to the beginning and all of a sudden now. And then it was really interesting too, that when we did see checkbook start to loosen up a bit, uh, what would that have been like mid 2023 about this time last year, started to see a little bit more interest, but do you remember like the raise requirements became insane, like we were very specifically putting money into things.
They were already working pretty well, it wasn't like nobody was taking a flyer on somebody just because it was a good idea. They were putting money into cash flowing companies, they started to look a lot more like PV at that point, private equity versus true venture capital to me. And that did start to create a little bit of new momentum, but not a ton because it was getting so specifically directed into high performing companies.
Yeah. And so because of that, you know, shit falls downhill. Now, we're at the end of like a two year cycle of that. And [00:23:00] now. All the startups that couldn't raise just haven't raised at this point, or they've down rounded heavy. And by the way, if you're one of those folks listening, you know, founder, whatever, this is part of the, it ain't on you, right?
I'm sure you've put the weight of the world on your shoulders and it's kind of what we do. Trust me, when you get to this point in the cycle, it is very hard to navigate. And I want folks to hear that. It's not that I'm saying, Oh, you're not responsible for your outcome. You are, but when everything is on fire, It's kind of everything's on fire, right?
So I just want to be mindful of that. If all of a sudden we tilted the track up at a 45 degree angle, we would expect to seen both slightly lower hundred meter times, right? Like that's what we're saying. There's a lot of folks that have never been through this one. Maybe don't even realize it's happening, right?
You know, kind of why what's happening is happening, but also just from, from an age or stage standpoint. Just haven't been through it. I haven't seen it yet. And, and look, man, like, you know, as far as startup founders, like one of the things we're famous for is like getting really heads down and getting in our own bubble and particularly like, look, if you're at like a [00:24:00] series a or beyond, you're probably paying a lot more attention to the macro environment, right?
You kind of have to, you have to know what else is going on, right? If you're re seed seed, maybe series a. Probably less so. And so you may not be spending as much time looking at the macro environment is you really necessarily concerned with your micro environment of the shit show of a startup that you're running.
I think it's so easy to, to be running around, bumping into the trees and completely miss out on the forest and kind of what's going on with that. That, that, well, so totally understandable. The analogy used was great. We went from. running downhill as fast as possible to barely trudging uphill with 50 pounds on our back.
Investors were carrying us on their backs. Like they were doing the running for us. They were like, just save your, save your energy. We got you. Yeah. Yeah. Yeah. So what ends up happening is we get on this other side of it where folks are like, Oh my God, again, you know, my business is doing poorly. Uh, you know, what am I doing wrong?
Et cetera. Listen, if you knew what was actually happening around you, I would say in right now, I'm curious your version. I would say 80 [00:25:00] percent of the founders that I'm actively talking to and helping out with things are going through an absolute shit storm. The other 20 percent things aren't going great.
They're just not going that bad. But it was the flip side two years ago. That's a thing. And I think that's a big part of it was because of that. This is where, this is where like the FOMO piece and kind of the slinky effect and the delay. And a lot of what happens in the startup world is, is so hard to navigate because The folks who were just getting started right around the time that things turned the wrong direction had all of these examples of heroes right in front of them who were nailing customer evolution, building big teams, getting the outcomes they wanted, and then you started a time just lagged behind that just a little bit and all of a sudden you're like, we can't figure out paid acquisition.
We can't make it work. Yep. By the way, did you know that people raise prices 10 percent overnight, one day in the middle of all this, because of all the shit that's going on, because they also aren't making as much money as they used to. Yep. Are you aware that, like, meta advertisement has reduced Nebixy by like 40 percent nearly, you know, within like a one quarter [00:26:00] period?
No, they're not, right? All they saw was I saw the people just ahead of me achieve all this greatness, and without even knowing that the floor got tilted up at a 45 degree angle, I think I'm running the same race, and so I'm comparing myself to them. Not only struggling against the reality of the situation, but I'm struggling against the unreality where I'm comparing myself to some version of this other business that no longer exists.
And, and just like seeing how painful that is for founders to go through that without having any of the catharsis of knowing, like, it's a different situation, right? I can't expect to have the same outcomes that they should, and I shouldn't. The last time we had an economic peril, I mean, again, COVID was such an anomaly in the U.
S. And kind of how it ended up. Now, that being said, I want to overlook all the businesses that got, that truly got impacted by COVID. Whether it was something that had, you know, supply chain issues, whether it was retail, you know. I had a couple of friends that owned hotels. That was not a good business to be in in 2020.
Not ignoring that. But I'm saying as an economy as a whole, we did way better than we should have. My point is, the [00:27:00] last time that we had a true, uh, Economic like crisis was 2007, you know, uh, Lehman brothers era, 2008 financial crisis. Right. And even that was kind of limited to certain things. And then obviously prior to that was kind of nine 11 era in.
com bust. Now I bring that up to say this shit does happen. It's, it's fairly cyclical. So let's talk about if you're in this right now, like we are, like everyone is. What do you do about it? Ryan, you and I have the benefit of being very old. I don't even know how I can say that in a sentence, but we do.
We've been through this a whole bunch of times, and we've been through it with startups. We've been through it in a lot of different capacities. At a high level, it's you go from grow at all costs to survive at all costs. Yeah, yeah. And you have to realize the world that you're in because it ain't what it was.
You have to, right? And I think you said it right. You got to survive at this point, right? You got to batten down the hatches and keep the ship dry. Hey, at some point, I think this is where it becomes really tough. Like the harder part of [00:28:00] this sometimes, I think we can figure out how to not grow. I mean, I don't mean that literally.
I mean like in the sense that like we can turn off the growth engines, we can stop putting money at risk. We can do things that are more safe, focus on revenue, all that stuff. I think one of the biggest challenges is how often do we stick our head out of the hole and check the situation again? And what are those leading indicators that we should be looking for that say, Times are getting better right now.
I mean, clearly you and I would just be like, well, look to your P and L. That's probably your guide. But I think there's, there's this constant sense that like, there must be something else. There's some other tea leaves that I can be reading to know when does this come to an end and when do I need to get back in growth?
The answer is it's really difficult, right? There, there aren't like major, again, like we don't have the same like, Oh, interest rates suddenly change. This means, you know, immediate benefit stock market. Doesn't necessarily mean immediate benefit to, to the starter space. In fact, that can create a lack of desire in the starter space shelves and the stock market.
Thought, well, let's just put our money there. That's far easier, far more liquid. Why go into this really high risk [00:29:00] capital? So, yeah, I mean, it definitely feels like one of those times where. If you haven't already battened down the hatches, you should probably be doing. Yeah. And part of that is the expectation sitting across the board.
And that starts with ourselves as founders. It doesn't matter what you had going on two years ago. The world is not the same, totally different environment, right? It'd be the equivalent of, of a restaurant owner at the beginning of COVID being like, why aren't people coming to my restaurant? Like, you know, just this COVID thing.
It's like, yeah, it ain't the same environment, right? We do four turns a night. We always have, that's what we're going to keep doing. You better. If you were having 20 percent year over year growth, 20 percent quarter over quarter growth, whatever your great growth was two years ago, a year ago, doesn't matter.
It all gets reset. You had a hundred people on staff, right? And you're trying to hire as many people. Doesn't matter. You now have nine people on staff and you're trying to keep this thing around. The valuation was a hundred million dollars at that point. The valuation is zero million dollars right now.
It's like, figure out [00:30:00] how to keep this thing around long enough. It's so hard. It's so hard because those achievements are so difficult in the startup space, right? As a founder, the work that went into getting to that 20 percent growth rate, when you get knocked back off that, the feeling that like, I have to go through all of that again just to get back to where I was can be really overwhelming.
So like the best I can do here is be like, Buck up buttercup. Like, yeah, it sucks, but also like, because this isn't you figuring it out for the first time, I think this is something else where founders can get really discouraged. I spoke to a very discouraged founder today on the phone. I think he was feeling a little bit better about the time we got off, but he was pretty discouraged.
And we talked about exactly this, the fact that there are some macro forces in the market that are working against his particular business and that, you know, they were at a better place. They've been pushed back a little bit now. And I said, like, Man, I don't want you to think that, like, you have to go climb the same mountain.
You've already climbed it. You know the way. The first time you did it, you were hacking your way through trees and bushes with a machete, climbing over boulders. Like, you know the path now. Uh, and so I think that there [00:31:00] is some important, uh, dialogue around that, which is that, like, you've been somewhere that was better, and you've been pushed back.
Back by this, as opposed to hold back by this, your recovery may not be as difficult as it was to get there in the first place. It may also be, but most times like you and I've seen this time and time again, once you've learned the lesson as a founder, once you know how to get to a place, once you know how to execute on something, doing it again and again is typically a problem, right?
It can feel like that emotionally. It feels like that emotionally going from, you know, the a hundred million dollar valuation to the 0 valuation feels like I have to go create all of that value over again, maybe, but the good news is know how to do. He didn't the first time and it did it right. I think part of this is we have to treat it like the storm that it is right in storms are nasty.
They're messy. They leave a ton of carnage. They pass in time. Part of it is recognizing that this is a storm, recognizing that everyone around you, everything you had five minutes ago is that you can't take that for granted. We have to reset everything to reset everything and say, okay, new mission. New [00:32:00] mission is make it long enough so that we can be in the next good times when that storm passes and when things open up and when, and frankly, we have fewer competitors, things are cheaper, capital frees up because those investors have to put money in sometime, right?
That the, the public markets open up. So people, you know, have their, their, their wallets open again. We want to be around for that. Now, in order to Be around for that. We gotta make some cuts. We gotta make some changes. We gotta reset some expectations. Most notably ours. As the founders, right? And we have to do that with an eye toward longevity.
With an eye toward survival. No matter how small or compact this needs to be for a minute. That's what it's gotta be. So that we can be around long enough to get the big exit later, to get the big outcome later. And I'll tell you guys, like, you know, folks that are listening, folks that haven't been through this before, there is always another side to this.
Like there is light at the end of this tunnel. As hard as it is to see right now, been doing this for 30 years. Ryan, you've been almost as long across many companies. [00:33:00] There's always another side to this. You just got to be around long enough and make the hard decisions. Overthinking your startup because you're going it alone?
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