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The "No BS" version of how startups are really built, taught by actual startup Founders who have lived through all of it. Hosts Wil Schroter and Ryan Rutan talk candidly about the intense struggles Founders face both personally and professionally as they try to turn their idea into something that will change the world.
Welcome back to the episode of
the Startup Therapy Podcast.
This is Ryan Rutan,
joined as always by my
friend, the founder,
and CEO of startups.com.
Will, Schroeder will, I think
there's this dream scenario
where we build a startup
and we get it cranking.
You know, it, it achieves
some level of escape velocity.
And then we can just bring
in somebody else, hire a
killer operator and, and,
and sit margaritas while
the money multiplies.
Right?
So from what I hear, handing
off a startup is pretty
easy for about 48 hours.
And then after that, entropy
starts filing status reports.
You've, you've done
this before though, man.
So like, walk me through how
well or not well did this go?
It always breaks, like
kind of for the same
reason, but the problem is.
It doesn't break right away, so
it looks something like this.
Uhhuh.
Okay, I'll rewind back.
Let's, let's go back like
this is, I, I, I've tried this
a few times, but I'm gonna
cite one specific example.
In the early, early days of
startups.com, long before it was
startups.com, this is like 2000.
Two, 2004.
Mm-hmm.
We're going way back in
the way back machine.
Yep.
I had started building all
of these companies that were
all like doing pretty well.
Like, you know, one of 'em
was swap lease.com and it
was making you millions of
dollars and you know, whatever.
And so I'm building all
these companies like biz
plan.com, which is, you
know, what we have today.
Yep.
And my idea was, and it wasn't
a bad idea in theory, and I
want everybody to hear that.
'cause the theory
is the problem.
The idea was I'm gonna build
these businesses, I'm gonna
invest my own cash and I'm
gonna get 'em told they're
EBIT positive and have a
substantive way to keep growing.
Okay?
Sure.
So swap a lease.
And for those of you that
aren't familiar, I think the
company's still around them.
Nothing to do with it anymore,
but a lot of you to get in
and out of car lease, it's
basically, uh uh, transfer
your lease to someone else,
not literally swap cars.
So that got to, I'm trying to
remember, this is a long time
ago, but that got to like $3
million in revenue, let's say in
Ryan, maybe 1,000,005 in ebit.
Yep.
Makes sense.
In like
pretty short order.
Yep.
And then the next business
I did right thereafter, like
a year later, had the same
trajectory and I was like,
okay, well this is, this
is at the beginning, right?
Yeah.
You know, so taking that
much now I just need
to keep starting as many
of these things as I can.
And that's where it
started to fall apart.
But the, the other part of
it was, all I need to do,
my value is I'm idea guy.
This is like the, the
dumbest thing, right?
I'm Idea Guy and I just go in,
I get it started, I bring the
idea together and I let it run.
I go start the next one and
everyone will just keep.
Piling cash on me.
Everybody's idea of the
startup dream right there.
Right.
You, you just nailed it, right?
Yeah.
Would just, would the
idea guy just why would
work cocktail napkins hand
'em off and then somebody
else turns 'em into cash.
Perfect.
And, and, and I thought it
was an awesome situation for
someone else too, because
someone else has already
figured this thing out.
All they have to do
is not fuck it up.
Yep.
Like that is your mandate.
Just don't screw this up.
Right.
Everything's going fine.
Right.
Don't screw this up, but,
but easier said than done.
As countless startups have
proven, the second part was,
okay, this here, here's my plan.
I'm gonna keep starting
another one of these companies
like every 18 months.
And the reason it's gonna
work so well is I'm gonna
put really ambitious founder
style managers, CEOs in
place of each of them.
So each of them will have their
own like quarterback superstar.
Right.
Right.
I mean, this sounded
like a really good plan.
When I talk to business
founders, you know, like startup
founders and whatever, um,
business owners, I was gonna
say, a lot of them were like,
look, I wanna get to the point
where the business is working
for me and I can go, you know,
be the equivalent of sit on the
beach and sit margaritas and
have it just send you money.
Yeah.
The chief margarita
officer, I never heard that.
I love that.
And I tell 'em every time I
said, it's an awesome dream.
And like every dream you
wake up at some point.
Yeah, it's what a nightmare
you have on your hands.
So what I thought we could
talk about in this, this
episode is like really,
really dig into why it doesn't
work, why it sounds awesome.
'cause everybody
has the same idea.
I'm just gonna hire the super
capable person and they're
gonna run things even better
than I did and blah, blah blah.
Right?
Like, and it like
kind of never works.
I'm sure there's some
situations, there's
someone that's gonna email
us, make Oh, not true.
I made it work.
Yeah.
And, and I always say like.
I get that someone did
something differently.
Like when we say you
can't raise capital in
30 days, so is not true.
I made it work.
Yeah, someone did.
Yeah, dude, I get it.
Like you made it work, but
we're talking to the 99.9995%
of people, not you, sir.
That, that's like
Brad Pitt emailing me.
Like, what do you mean you
can't just go to LA and become
a, a international uh, actor?
I did.
It worked for me.
Yeah, red Pitt, you did it.
That's the point nobody else
did anyway, so I thought
today would be kind of fun.
To talk about, like, like
really kinda lay out why we
all think this dream can exist.
Like kind of what it looks like.
Probably talk about why
it won't work, right?
Like, you know, kinda where
it breaks, but, but more
specific because I, I like
to be tactical in how we
give, you know, this advice.
I would say let's,
let's finish it off with
what we can hand off.
Like, you know, what, what you
actually can hand off and feel
pretty good about it and what
you can't, like, you could try
guarantee, it's gonna blow up.
Ryan.
If, if we were to think about.
Why this doesn't work?
Like why wouldn't this work?
Right.
I would say the first
thing I would say is we
fail to estimate entropy.
Yeah.
This, this, this concept that
that's, everything's okay now.
But chaos ensues.
You know what I mean?
I, I think that's
a big part of it.
I think that there are so
many little things that we're
doing as a founder that don't
really like, they're, they're
not in the job description.
Right?
Right.
They're, they're not.
Even if somebody asks you,
what did you do today?
You wouldn't even
remember having done them.
That's a great way to put it.
I didn't even think about that.
There are hundreds of
these things, right?
There are just hundreds of
these things that we just
do nearly out of instinct.
Having run that particular
business, they just
become muscle men, right?
It's just, it just, right.
It just happens.
And so I think that the,
the laundry list or laundry
list of laundry lists
that are those things.
A big part of where
the, the, the handoff
starts to break down.
Right.
It starts to fail again.
Not for like one big reason.
It's like, oh, we hired someone
and they only speak Mandarin.
Gosh, silly us.
The team only speaks English.
This isn't working
for one big reason.
Right.
No, it's not that it's like.
Thousands and thousands of
little things that just go
off the rails, one after
another and not even off
the rails to the point where
like, you can even notice it.
Right.
It's, it's against a
death by a thousand cuts.
That's the interesting part,
right?
Yep.
Um, and it happens over
such a long period of time.
Yep.
And so imperceptibly, but
it happens at a moment where
you're also not paying attention
to what's happening anymore.
Correct.
Which, which is in, you said
it a moment ago, I thought
that was really interesting.
A lot of things you don't
even realize you're doing.
Right.
Like there's probably 20 things
you and I will, will do this
week@startups.com that we don't
even realize that we're doing.
We just had a, a customer
issue bubble up a few minutes
ago before we got a yes.
Got this recording.
And you and I both
know instinctively
what to do about it.
Yep.
Right.
Like we didn't even
realize to discuss it.
We both, we, we know exactly,
but new person coming in that
would otherwise do what we
do has no history like we do.
Right.
We have the benefit of over a
decade of dealing with this.
Yes.
Like we know all the outcomes.
Like there, there's nothing
new to be discovered here.
New person, even if they're
experienced, doesn't
have our experience.
Doesn't have our experience.
And, and I think part of it's
like, it doesn't even get
documented or handed off.
The first time they see that is
the first time they see that.
Right.
So it just, it just
pops outta nowhere,
catches 'em by surprise.
And they go like, well, this
wasn't in the job description.
This wasn't when, like the,
the, the stuff that you.
Talk me through, this isn't
what you, you told me I was
gonna need to have to do.
And I think that's just
because again, we are so
used to doing this stuff,
we just forget about it.
Right.
It doesn't go in the
brochure, so to speak.
So let me, let me
set up my situation.
'cause I said I, I've been
through this a couple of times.
Yep.
The first time was with the
agency, and I've talked about
this in previous episodes
where I tried to like.
Fire myself at least three
times and it never took, yep.
I kept getting dragged back.
But I wanna talk
about time after that.
And it's kind of what I set
up a moment ago where I was
talking a little bit more about,
uh, having, wanting to run
all these different companies.
And so we get a company that
essentially became bizplan,
et cetera, and we, we get that
up and running and that's,
that's doing, again, I'm trying
to remember, this is like
20 years ago, but let's say
it's doing somewhere between.
Two and a half to $3 million
on about a million to
1,000,005 in net income.
Okay?
Yep.
So, so again, let's, let's
just round it and say 3 million
in gross, 1,000,005 in net.
Okay.
And we got to that point,
I wanna say in less than
24 months, which for a
self-funded startup is awesome.
Is awesome.
Yeah.
And that's real money.
I, I don't care who you
are and how big time
you want to get with it.
Million five net to the founder
is a lot of frigging money.
Yeah, right.
It's good
money.
So my thought is, you know,
what's cooler than 1,000,005,
five businesses that are
throwing off 1,000,005?
Yeah.
Right?
And, and so my journey to the
bottom of the ocean began,
it's, so here's what happened.
I, I just wanna lay this
out because I, I want folks
to hear this isn't theory.
This is me saying,
here's what happened.
And I've watched this
happen so many other times.
Here's my thought process.
My thought process was
this isn't that hard.
Okay.
We have a business that
is very straightforward.
It's basically a SaaS
model, uh, company.
There's no service
layer whatsoever.
We don't even know
who our customers are.
I mean, like, other than
going into analytics or
looking at their account,
we'll never meet them.
Okay?
Like totally blinded.
All you have to do this is back
in the day, you can appreciate
this as the c uh, CMO.
All you had to do is
feed the AdWords engine.
And if you fed the AdWords
engine in 2004, uh, it
would spit back money.
Right?
It would, I mean, like
it would just puke
money all over you.
It, it
was, it was a beautiful thing.
I was also new like what is Yes.
The dawn of pay
per click, right?
The dawn
of pay per click.
Yeah.
I forget about that.
Incredible.
So, so I go out.
I hire a very good CEO, okay?
Mm-hmm.
It's a guy, uh, both of
you know, we played hockey
at his house and, uh,
he's just a great guy.
He's a CEO of, he's been CEO
of multiple, uh, internet
companies, and he's, he's a dear
old friend and he is awesome.
So I, I wanna start by
saying he'll probably
hear this episode, or I'm
gonna mention it to him.
The point of this isn't
that he did something wrong.
The point is he was really good.
And it didn't work, right?
Yeah, it didn't work.
And so I'm saying this wasn't,
this isn't a, I made a bad hire,
it wasn't a selection issue.
Yeah, yeah.
No, that's my point.
That's what makes
it worse, right?
Yep.
So here's what happens.
This is when I was leaving
Columbus Ryan and, and I'm
gonna go to Los Angeles,
started another company.
It was afford it, right?
And, uh, I'm like, listen,
and I just started a company
before that got cast, which
is what brought me to, um, LA.
So I get there and I'm like, and
I, and I, I tell the c, the new
CEOI said, Hey man, you know,
just keep doing your thing.
You've got, you know, full,
uh, control of this thing.
I'm gonna be as hands
off as possible.
And Ryan, I was
beyond hands off.
Like I, I was like, didn't
even know what was going on.
Right.
Yeah.
I think that's the,
that's a challenge, man.
It's a handoff, not a hands off.
Right.
I think there's a very important
put distinction there, man.
Yeah, yeah.
Because like, you
can hand it off.
Um, but I think the minute
you go truly hands off,
you're gonna run into trouble.
Right.
Because it's, look, and
it's, it's the difference
between founder supervision
and supervision, as you said.
This guy's talented.
He's done this multiple times.
He's done it.
He, he had done it before.
He's done it since.
He just didn't do it this time.
Why?
Because it's not the same thing.
Right?
Founder supervision is
different than just supervision.
And I think that, and to your
point before it happens over
that period of time, and it's
not like this massive implosion.
It's an erosion, right?
And, and little misses
start to compound when
you're truly hands off.
Right?
And I think a, a big part of
that is, it's funny 'cause when
we go back and look at it, and
I'm sure you can do this now.
You see those things.
You can see those things.
You go, oh well yeah, all
the warning signs were there.
But I wasn't.
And, and the person that
took the helm didn't
know the warning signs.
Right.
They, they hadn't seen
the canary die in the
coal mine, so, right.
They had no idea what
this stuff meant.
And I think that's really where
this, this begins to go wrong
and why it's so funnily and,
uh, kind of obviously avoidable.
Win the founders in the
seat like these, the, the
same erosion that happens
to someone else does not
happen to the founder.
Now, this isn't to say that
founders can't fuck up startups.
We do it all the time.
We're good at it.
Right?
But we do it differently.
Let me walk through
kind of what happens.
Sure.
So, lots of fanfare.
We bring in new person,
which always happens.
Yep.
You know, you want, you
know, hype that person up.
Talk about what, what
a great handoff is.
They wanna say, you know,
how you've done this amazing
job of leading the company.
It's, it's almost like this
carbon copy, uh, template
that everybody uses.
So I'm like, oh man, I'm
free to go do other stuff.
And I, I was already
committed to all these
other companies anyway.
And so here's what happens.
I move, so I'm across the
country, whereas before
I was there every day.
Okay.
But now I move from, from
Columbus, Ohio to Los Angeles.
Now I'm not around anymore.
I'm, I'm like physically
just not around.
Whereas before we were
all in the same office
and little things happen.
Okay?
Now I'm not being specific
to, to this company.
I just want to, uh,
generalize a little bit.
Little things happen.
Example, customer has a blowup
and it's just not handled
in quite the same way, okay?
Right by itself.
Not, not the end of the world.
Okay.
A not great hire.
Okay.
So it's, it's, you know, you
know, um, you know, what's
the issue with hiring?
It's a's hire A's, but B's
hire C's and C's, higher
D's kind of thing, right?
Like, if, if, if you don't
get good people, well.
A person gets hired,
that's like a C. Okay.
And then all of a sudden that
sets the bar for other people
hiring that are C because they
don't have that same intensity.
Or maybe in some cases you, I'm
not saying it here, but like
charisma to be able to pull in
the, that A level talent and
all of a sudden talent starts
to degrade, but it happens
over a slow period of time.
Right.
The other is.
Just, you know, um, that
urgency or freakishness, and
we'll talk more about this
as, as we get into this,
just isn't quite there.
Sure.
And, and overall, I think
the best analogy I can use is
Ryan, given that we're both
parents, it's the equivalent
of if we left our kids
alone, fend for themselves.
Right.
Fridge is stocked with food.
Right.
Lately everything is fine.
Okay.
For some period of time,
nothing would go wrong.
Right?
Nothing would go wrong.
Absolutely fine.
And we were like, what
have we been stressing
about this entire time?
But then someone's gonna spill
a can of soda, someone's gonna
back up a toilet, someone's
gonna not mow the lawn.
Right?
Just stuff we would've
paid attention to.
Okay?
And as every moment of entropy
expands as problems, beget
problems, we come back to a
house that is trashed, trashed.
We're like, it was going fine.
What the hell happened?
Were there any signs, like
were there any specific
spilled soda moments that you
saw at the time but ignored?
Because I wanted, I
wanted like more of an
emotional reaction here.
It was like, yeah, I saw this
thing happen, but I was so
happy to not have to deal
with it, or I was so glad
that it was something else,
or like, or I just felt like
it wasn't that big of a deal.
Were there any of those
moments that, like you saw
that then, like in hindsight
was like, yeah, that was.
Probably cost me a fortune
while I was hands off.
Uh, in most regards, I was
still the financial person.
I was still the CFO Uhhuh,
so I'm watching our numbers
and they in shorter, they
stopped growing, but they
start dropping a little bit.
Okay.
Then I'm watching our
customer complaints.
That that was it.
I'm watching our customer
com Customer complaints
grow because our product
was starting to suck, right?
But our team was just
milking what it was.
Instead of improving the
product, they just like.
How we dealt with
complaints, right?
Yep.
Which is not the same thing.
And I was like, ah, damn dude.
Well if you just deal with
the complaints, I'm sure
like it'll fix itself.
But here's the thing, Ryan,
no one was, was sitting down
saying, we need to restart
this whole thing and, you know,
prevent improve the products
so that problems are happening.
Mm-hmm.
Yeah.
Yeah.
Everyone was like,
oh, the problem is
that there's problems.
Do you see what I'm saying?
We'll
just get, we'll just get
really good at tackling
people who have problems
instead of tackling problems.
We need more.
Customer support, not
more product innovation.
Yeah.
Right.
Yeah, yeah, yeah.
And, and that's the kind
of thing where little by
little, with every day
that goes by, that you
don't improve the product.
You double down on
the problems, right?
Yep, a hundred percent.
And if your mandate, let's
say, as the CE, who's been
handed the keys to this thing
is just keeps sending checks.
Think about this, man.
You can keep sending checks
for quite a long time for
something that's fundamentally
falling the fuck apart.
That's where I'm so distracted.
I'm like, are the checks coming?
Yes, I'm good.
Move forward.
Okay.
But I'm not around anymore
to really pay attention
to what's happening.
So, so was it the case, like
when you saw the numbers start
to drop and the complaints
rise, uh, did you ever consider
stepping back in at that point?
Or did you just hope the
team would course correct?
Or was it even more like,
just sort of head in sand?
Here's the problem.
It happens so slowly.
That I, there was
nothing to react to.
Right.
Uhhuh.
Imagine this, imagine this,
uh, imagine you're doing say
$200,000 a month in revenue
and that 200,000 goes to 198.
Yeah.
Not really like, you
know, burn the house down.
No.
Yeah.
We not, I'm not,
nobody's ringing a bell
and screaming about it.
Yeah.
Exactly.
And, but the next month
it goes down to 1 97.
And again, it's still a
big number and your net
income number is still huge.
And like, so like overall
you're like, huh, you know,
like good month, bad month,
you know, maybe it was a bad
quarter, you know, whatever.
You will change our Google
marketing, you know, whatever.
But here's what happens.
And as A-C-A-C-F-O for a long
time, I can appreciate this.
You lose the memory of
what your baseline was.
So for example, let's say
you started at 200 KA month
in MRRA year from now.
You're now at 168, but
the problem is you dropped
by like a thousand, 2000,
5,000, whatever throughout
the course of the year.
Yep.
By the start of the next
year, you sort of forgot
that you used to be at
200 K. Yeah, yeah, yeah.
Now I can say it's the
boiled frog challenge.
Yep.
It's exactly it.
That's exactly it.
And so it never gives you this
holy shit moment to jump out
of your seat and fire alarm,
you know, into this thing,
and that's how it breaks.
Doesn't break because
one major thing happened.
I might, right?
Yeah.
It breaks because all
these little things happen.
It spilled cans of soda, the un
unloaded lawn, and you weren't
around to correct for it.
Yeah.
And because
you were so, next thing you
know, you got a business up
on blocks in your front yard,
which just happened.
Well, that's kind
of what happened.
Okay.
Yeah.
So, so, you know, uh, let me,
let me fast forward to that.
So years go by, this
isn't like a couple months
or whatever this is.
Years go by and I fly back to
Columbus and I'm meeting with
the team, and the team is fully
checked out at this point.
I I, I bet if they were all
on the podcast right now,
again, a great group people,
they'd be like, yeah, we
were pretty checked out.
But yeah.
Yeah.
At that
point we're like, Will's gone.
We just send him checks.
That doesn't feel that great
and fuck this, I'm not gonna do
any more work than I have to.
Right.
And frankly.
I get it.
I get it.
Yeah.
I didn't get it at the time.
I get it now.
So I come back and we're doing
like a little strategy session
for how things are going, which
I rarely did at this point.
I'm like three years removed
by this point, Ryan, and I
remember sit down with him
and I said, Hey, let's go over
the strategy for next year.
And they're like,
what do you mean?
And I was like,
what do you mean?
What do I mean?
It's like we
just keep doing the same
thing and you just keep
ignoring us and that's it.
Right?
Yeah.
Pretty much.
Right.
And I was like, and by the way,
it's all my fault, all my fault.
I, I, I, I take full
responsibility, but never
saw it coming and Yeah.
Yeah.
Uh, remember toward the end
of this is when you showed up.
This is, you know, before
we had started what, what
is now startups.com and so
you saw some of the ghoulish
stuff we had going on.
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.
I remember thinking at
some point, what was it?
The, let me encapsulate
the thought.
It was like, uh, when the room
smiles, but the numbers frown.
Believe the numbers.
Believe the numbers, right?
Like, yeah.
Because there, there was
this sense that everything
was fine and right.
And like, and it was like, yeah.
Oh, you know, we're just,
we're just doing what
we need to be doing.
Yeah.
It was, uh, yeah, it was a sense
that there was this sort of a
disconnect between like the,
the attitudes and the actions
and, and like the, the outcomes
that were actually happening.
And I think it's one of those
things that you, you do realize
at some point, which is that
founder mode has become a meme.
And, and look, I think
it's a little overblown.
Yeah.
Founder mode isn't a meme,
it's also doesn't have to be
like a full-time lifestyle.
I, I think it's become
too overblown, but it
is a metabolic rate.
It's how we process
things, right?
Like a, a founder is going to
digest information and energy
and do something with it at
a different rate than someone
else who comes in, right?
And again, we both have a lot
of respect for this individual.
We both know him.
So this isn't about the, the,
that person's capability, but
the way they think, feel, and
operate within that business
is entirely different.
All right.
And look, on one end of
the spectrum, you could
hire somebody, not, not
this individual, like
hire somebody that's just
like, they go full apathy.
But let's just say that whoever
you hire, I don't care who they
are, whoever you hire, they're
gonna be closer to apathy
than you as the founder were.
They may be really close to
where you are, but they're
gonna be at least some degrees
closer to that than, than,
than you are because the costs
are totally different, right?
The stakes are completely
different for that individual,
and you can't ignore that
babysitter and a parent.
Yeah, right, exactly.
A babysitter's concerned,
a parent's entire life
is wrapped, you know,
wrapped into the outcome.
I, I remember, like, I'm,
I'm fast forwarding to
around that time, this
is like circa maybe 2011.
I'm not always great
with my dates, but 2011,
uh, we're wrapping up.
One of the companies that
I had, I had started called
unsubscribe.com and we were
selling it off to, uh, to
trusted id and, uh, Jamie
Siminoff, who is my co-founder,
who, you know, started Ring the
doorbell company after that,
and Jamie sat down with me.
I'll never forget
what he said to me.
He said, I'll never
do this again.
I was like, what do you mean?
He said, this was your
idea, the unsubscribed idea.
He said, and I basically went
all in on someone else's idea.
Yeah.
And it never felt like mine.
I never, um, I, I never
felt like the, the
ownership, et cetera.
And it, and it felt
like I was taking care
of somebody else's kid.
And I mean, to, to
Jamie's credit, he is
very honest about it.
Right.
And, and self-aware.
Um, yeah.
Great lesson for him.
Great lesson for him
and, and I thought that's
really interesting.
I mean, we co-founded
the company together.
Our names are on the
incorporation documents.
Right.
But he felt it wasn't his.
Right.
Sure.
He felt it was a cool idea
that Will had, so let's go,
let's go do it together.
Yeah, yeah, yeah.
But it wasn't like we.
Both were at a bar one
night and it just, like,
the conversation sparked.
So, so stick with that for
a second because, because I
think a lot of folks are, are
gonna need to hear this twice.
So that was somebody who
started as a co-founder?
Yeah, a co-founder.
Great point.
Right?
And they didn't feel like
they had the ownership.
Right.
Now they clearly like the,
you know, financial ownership.
Yes.
But idea and passion, ownership.
No.
And so if you can't
create it at that level.
We have to recognize that
anybody we bring in to
transfer to a new leader, if
they didn't originate that
idea, it's gonna be some even
lower version of, of that
level of feeling of ownership
for that individual, right?
We have to act
accordingly.
Most people work for a company
who, who wasn't their idea.
Right.
I mean, like 99%
of people, right.
So I say that to say,
but founders feel a lot
differently about this.
Right?
And, and Jamie, who I, uh, he
had started like six companies
before that definitely, you
know, knew what that feeling
was like of being able to
kinda like, you know, sell your
own thing and notably felt.
Not being able to
sell something Right.
That that was, that was truly,
that he felt passionate about.
And I, I get that.
I get that.
And so, so what I would say
there though is, um, there's
this really interesting
thing where we have to
recognize when we're handing
something off that who we're
handing it to ain't us.
And I, I tell you what.
I think there's a, there's
an opposite argument
that people try to make.
Like, that's the point,
man, I'm not a great CEO,
I wasn't cut out for this.
I wanna find somebody who
was built for this, that is a
career, CEO, you know, you, you
name it, has the credentials.
I don't have and, and
could put the energy I
don't have into this.
And I get that argument.
Yep.
And they're still not you.
Right, exactly.
That.
Yeah.
That, that, that
makes them different.
But that doesn't
make them you right.
Correct.
Correct.
So let's talk about
what you can hand off.
Okay.
Like, I, I don't wanna do
this, like nothing can be done
because you absolutely can and
should hand off tons of stuff.
So if you're okay with it,
let's, let's start with
the, what you can hand off
and then let's get into
what you can hand off.
Like, just like danger will
Robinson signals all over.
Right, right,
right, right, right.
I think, I think you can very
much hand off operational
tasks like COO level tasks.
What do you think?
I think so
I, I think that that's, I
mean, like I'm, I'm going
through and like, I'm trying
to think of why, why I said
yes to that so easily and
like where it might break.
But I think that because by
and large those things are,
are, are highly documented.
They're highly regimented.
They're, they're
operational, right?
So they're, they're
repetitive by nature.
And so yeah, I think that
the, the operational stuff
can be to, to a degree.
I think it does still come
down to some things like.
This is what I'm wondering.
I'm wondering if there's a
paradox and a bit of a, of
a trap here in that those
feel easy to hand off from
a structural standpoint.
Again, like
documentation, all that.
I'm wondering though if,
if that, if that puts us
in that dangerous position
there when something does go
wrong, um, that the reactions
are different, right?
That yes, you can, you
can put somebody into
that rule to execute it.
Um, but I still feel like
there's, there's always
the risk that the, the
reactions don't marry up.
I remember early in my career
I had hired a very competent
COO, uh, and, and she went
on to do amazing things.
And I remember watching
her in the room with,
with the team, okay.
And she's basically talking
about, you know, what strategy
is and what we're gonna do next.
And, you know, all these things.
Just like, you know,
being a C-level person.
And I remember thinking she
has great authority, she
has great credibility, and
she's got great communication
and she's inspiring.
No one.
I, I just think about
that for a second.
Yeah.
Yeah.
She's a hundred
percent competent.
Competent, no issues there, but
0% as, you know, inspirational,
aspirational, I dunno.
Um, inspirational, let's say,
and I thought to myself, huh?
I didn't really see that coming.
And lemme give you
one more parallel.
Around the same time I hired,
um, a, a director of sales
who also went on, actually
both these people went on
to become very prominent
CEOs and the director of
sales, um, that I'd hired.
I was watching him
give the pitch.
He's wildly professional,
like very good, like
pitch man, right?
But I was like.
But there's no
soul in his pitch.
Mm-hmm.
His pitch is accurate.
What he's saying is true, right.
He's reading the room properly,
he's getting emotional signals.
All the things you
should do to work a room.
Yep.
Uh, when
you son, good,
good sales person.
Correct.
But it, it's like the difference
between Tim Cook pitching
and Steve Jobs pitching.
Yeah.
Yeah.
There's just no magic.
Yeah.
Right.
Yep.
And, and I realized when I
got up there, the reason I had
a certain level of charisma
is because I had a belief in
something, a religious level,
belief in what we were doing.
Yep.
That it wasn't a job for me.
It was a mission.
And I think like when, when
Tim Cook gets up there,
I'm not knocking Tim Cook,
I'm, he's phenomenal.
This is kind of the point
when Tim Cook gets up there,
he explains what the new
gadget's going to do, right?
But it doesn't make you dream.
When Steve Jobs gets up there,
by the time he's done, you
don't even care if it works.
Just like, like, damn seriously.
Sign me up.
What?
You invented the MP three player
that was made five years ago.
Amazing.
I want one.
I can't believe
I've never had one.
Right?
One.
I can't wait.
Yeah,
yeah, yeah.
And so, uh, so he, he had
this, this charisma, but it,
it, it really came from almost
a religious level, fervor.
Sure that he could deliver,
that he can't hand off.
That's my, he can't.
Yeah.
Yeah.
And like, and
they've tried, right?
They hire for IT companies
this where they'll like
try to bring in the pitch
person and all that stuff.
And it's just, and again,
like they'll give a great
pitch, but it is not the
same thing because it comes
from, it's the difference
between seeing a beautiful
sculpture, a piece of artwork
versus seeing a masterclass
done around building a home.
Right?
This is something you can
appreciate right now, right?
So like what an architect does.
Where it's very deliberate and
very purposeful and very like
specific, and it accomplishes
everything that it needs to.
Not that that's not
beautiful, not that isn't
amazing, but it gives you
a different feeling, right?
So when something is constructed
in that way, sort of like as
it should be, as opposed to
how it could be or, or why it
is, I think that's where that
really just, it's irreplaceable.
I I you, you don't
see this after once
founder led sales stop.
That pitch does sort of die.
Yeah.
That, that's what I'm saying.
And, and, and I think there's,
there's a, everybody here can
appreciate this that's listening
'cause they're all founders.
There's a difference between
buying from the owner, so
to speak, or buying from the
founder or buying for the
person, like who it's their
baby, than buying from a
person that that person hired.
It's just not the same thing.
It's the same way I feel when
I'm in a restaurant, right?
And the Mater D comes over
and asks me how I'm doing.
I'm like, oh, I'm doing great.
You know, thanks,
thanks for asking.
But then the owner comes over
and it just feels special.
And I know for a fact
that guy doesn't give
a shit how I'm doing.
Right.
But it's, but I just, I,
I feel this like sense
of like importance 'cause
like, you know Sure.
This idea of it, and like
I said, he, he's not gonna
like get me a nicer drink.
He's not gonna make sure
my bill's taken care of.
Right.
Like the mader d might, um, he's
not gonna do anything for me,
but there's just something about
his presence and his delivery
that just feels special.
Yeah.
And I say that to say if that is
a meaningful part of your job.
Or what, what your company has
to offer, you know, where you
work with your clients, where
you, your outward face of your
company, et cetera, and you
separate that and just say, oh,
now this person is that person.
I'm not saying it can't work.
I'm saying you have to recognize
you've taken something away.
And, and we're gonna get into
this in a moment when we talk
about stuff you can't hand off.
But I think when, when I
look at, I mentioned at the
beginning like COO level stuff,
there's stuff where I'm like,
you just need to be competent.
To do it well, you don't
need to be special.
Okay.
Yeah.
This is a bad example to
start with 'cause it's,
it's almost not true.
But hiring.
There's a certain, like
there's certain roles.
Yeah.
You seem to be competent, right?
You seem like not screw it up.
Yeah.
And there's certain,
basically you're hiring
like the third, fourth, or fifth
version of that same person
then that's what I'm saying.
Yeah.
Right.
If you're hiring
engineer 23, you just
need to not screw it up.
But when you're hiring engineer
one, you gotta be special.
So, you know, depending on
the maturity of the company,
and obviously if you're
thinking about kinda like
hiring somebody to replace
you, you've got a slightly
more mature company and that
could mean for any, any level.
I also think that, you know,
things that, that you can
and should hand off are
anything where if you could
be gone long enough and
it can still get done, you
probably shouldn't be doing it.
Right.
Yeah, that's
fair.
You and I play test this once
a year, uh, in December when
I leave for my little hiatus,
uh, once a year and kind
of do go do whatever it is
that I do and I get to see.
One of my responsibilities
got done really just fine
without me, without me.
And my first thought is those
are all things I can hand off.
But I also see, and this is
not just specific to that
one month just in life, that
there are certain things
that, um, if I do hand off.
There's a problem.
I'll give you an example.
In the last 25 years,
I've been the CFO of every
company I I've worked at.
Okay?
Yep.
It's like my job I
never talk about.
Okay?
Yep.
But you and I have worked
together for a long
time in this capacity.
I will never hire
for that position.
I will never, ever, ever
hire for that position.
However, we've had
plenty of finance people.
People, people running
payroll, people doing
bookkeeping, people,
whatever, people handling
the ops side of finance.
Not the same thing as
it would happen, right?
Not the same thing, because I
wanna know at the end of the
day when that number goes a
little bit off, when it goes
from 200 to 1 98, I wanna be
the first person that sees it.
Yes.
Because I wanna be
able to jump into it.
Now, not everybody else,
you know, thinks about
the numbers like that,
but I sure as hell do.
Let's shift gears.
Let's talk about what
we cannot hand off.
Sure.
Because I think this is probably
the more substantive part.
Um, for you, if you think
categorically, if you were to
hand hand off the business,
what is the one thing you would
just absolutely not hand off?
I think one of the places that
you do start to see degradation
is, is within company culture.
And that's an interesting
one because it's, it's the
kind of thing where like.
It isn't necessarily
somebody's stated
responsibility either, right?
Yeah.
Depending on how big the
company is, how many co-founders
there are, how, how, how
broad or, or, or or narrow
the, the management team is.
But I feel like culture
is one of those and I, I
think, look there, there's
probably three or four for
me, strategy and vision.
You know, I think that
kind of to your point
before, right, like.
Tim Cook doing a good
job running the thing.
There is nothing
visionary about the guy.
Right.
Uh, he'd probably say
the same thing if he was
listening to this podcast.
Right.
Not his thing.
Yeah.
And by, by comparison at least.
Right.
He's not that
level of visionary.
Um, so I think strategy,
vision, culture is, is a big
one for me to some degree.
I think you use the example
of hiring, but I think like,
again, there's a point in time,
so I think it also depends
on the stage a little bit.
But I'd say that like
those, those two or three.
I think that they're super
important in that they
also link together, right?
Because if you've got, you
know, you may have the right
strategy, you may have the
right vision, but if company
culture has degraded to a
point where they're not working
together, they don't care.
You've lost, you know, passion,
you've lost drive, you're
not gonna achieve it anyways.
And so I think there's,
there are pieces of a system
that all tend to degrade
either one at a time or
together, but the impact's
kind of the same, right?
It's links in a chain.
I had this
one of the most fascinating
exit interviews ever with a
developer back in the day.
Okay?
And I've never seen someone
be so incredibly honest in
their exit interview, right?
Developer comes to me and
he said, listen, you know,
it's, it's my last day.
I'm going off to
another company.
He's like, but I need you
to hear me out when I say
there are two reasons or two
things you don't know about.
Now that I'm leaving, I, I can
tell you, I was like, oh, okay.
Interesting.
That's a, that's a
big lead up, right?
Yeah.
Um, he's like, I've been
embezzling from the company.
Right, right, right, right.
Uh, so he says first thing,
and this is like way back
in the nineties, he's like,
work from home is bullshit.
Right.
And we didn't work from home
like long before people could
like spell work from home.
Yeah.
And I was like, what?
What do you mean?
He's like, dude.
All I do all day is sit home and
do bong hits and sometimes work.
Right?
He's like, it's just an
excuse to just fuck around.
I was like, wow.
Wow.
Okay.
Too bad you're leaving.
Yeah.
And so, no, but he was
actually very talented.
Uh, and so the second thing he
said, he said, the reason I'm
leaving is because I didn't come
here to work for the guy that,
that you replaced yourself with.
Mm, yeah.
I was like, huh?
I was like, go on.
He said.
Listen, I know we're not
super close, but you recruited
me like you found me.
You sought me out.
Like, like you, you, you
got me a across the table
in a restaurant and you
convinced me to leave my job.
Yeah.
And I believed in you and
you're not here anymore.
Right.
And, and I'm not the only one.
That was the thing.
He, he really said.
He's like, you need to pay
attention here because you're,
you're losing your team because
they feel you abandoned them.
I was like, damn,
that's a, yeah.
Thanks for the heavy stuff
on your way out, bro.
Right.
Um, but, but he wasn't wrong.
He was a hundred percent
No, no, for sure.
On hearing that, did, did it
change anything about just even
how you, how you approached
handoffs or, or even like,
did it change your, your
feelings about them overall?
Like, like maybe this,
this is really isn't worth
trying to hand stuff off.
It was the first time
I, I, I didn't even
know it was a thing yet.
I mean, I was like
25 years old, right?
So I, I was learning on the
job, like everything was new
to me and I was like, huh, do
other people feel this way?
And so I just started to dig
in and I started asking a lot
of other people, Hey, like,
you know, since we brought new
guy in, are you still good?
They're like, no, it wasn't
even, it wasn't even like,
oh no, I'm, I'm cool, man.
It's fine.
Every person I talked to
was like, no, this culture
sucks now that you're gone.
And, and it's funny,
they weren't trying to
hype me up, like, you
know, you were so great.
They were more like trying
to like, not attack, but
like, like put it on me.
They were like, dude,
you left us right.
Not cool, bro.
Yeah.
And I was like, wow.
I didn't even see it coming.
And so to your point,
I was the culture.
Right.
I drove kind of our irreverent
culture and kind of like
our fast and loose and our,
everything else like that.
Ironically, we brought the
other guy in to make that go
away 'cause we thought it was
gonna be a liability, right?
Like every internet
company of the era.
And it turned out it was the
reason people that were there.
Founders admit culture, right?
Like we are correct the
culture, uh, to begin with.
I think in best case scenario,
you know, like the, the, the
hired gun, the replacement
maybe can maintain the culture.
But probably not.
Yeah, probably not even.
There's a difference between
culture being, it's, it's uh,
like wacky Wednesdays, right?
Or, or Hawaii T-shirt Fridays.
Right.
Like, just don't worry.
Even though Will's gone,
we're still doing Hawaiian
t-shirt, Fridays gang,
nothing will change.
There's just like, there's
company party, there's whatever.
Right?
Yeah.
And there's a dramatic
difference between some kind
of crazy fun just broke out.
Because everyone had
permission to just have
fun, you know what I mean?
Like, because the founder
was having fun or the manager
was having fun or whatever.
It's, it's, it's how we
fell into playing hockey.
Right?
Yep.
Like, you know, for those
that aren't familiar,
that@onepointstartups.com was
very serious about playing
hockey and on Friday at three
o'clock, the entire company
would pack their stuff, go
out in the parking lot and
play street hockey together.
It was incredible 'cause it
was a great team building
thing that like wasn't intended
for team building, it was
just, hey, it's nice outside.
We get to play
hockey in the street.
It was one of those things where
had we hired quote management in
like if private equity came and
bought us and put like actual
professional management, no one
was gonna be playing hockey.
Like this is just
never gonna happen.
Well,
probably not, but they probably
would've at least insisted
that we start with the, the
appropriate safety equipment,
which we eventually got to.
But if you recall, will, the
way we got to proper safety
equipment was somebody's
finger got slashed.
Okay, we'll get gloves.
Somebody got a
cut above the eye.
Okay.
We'll get helmets.
Right.
The goalies are complaining.
They don't wanna be goal
anymore 'cause they go
home covered in bruises.
Okay.
We'll get some pads.
Yeah.
That, that would've been
handled very differently.
Yes.
I would
say the other thing that
you can't hand off and
maybe the most important
thing to me is urgency.
Yeah.
Man, you can't
rent 3:00 AM panic.
You cannot Exactly.
That stuff.
It just doesn't.
Doesn't work.
Hire the three
and panic.
Right.
And Ryan, you and I get
really anxious about stuff
that most people would not
either see or care about.
Okay.
Wouldn't, wouldn't
even even register
sometimes.
Yeah.
And sometimes it,
it leads to nothing.
But more often than not,
that little bit of intuition
that we have, that something
feels off and we start
peeling back the onion.
More often than not,
it leads to something.
Yeah, and I remember like in
a, in a previous company, one
of my co-founders said to me,
they said, every time you get
that itch, there's a problem.
He, he said, I don't know
how, like, how you do that,
or like, you know what you're
tuning fork is, but as soon
as I hear you say, Hey,
this might be a problem.
Yeah.
I now look at it as it's
absolutely a problem.
We just don't know
where it is yet.
We, we, you and I even refer
to it as like the Spidey sense.
Right?
Exactly.
It's a thing where it's
like, yeah, exactly.
Yep.
I don't know exactly
what I'm reacting to.
It's something you feel,
it's the way that, right.
We are consuming the information
and energy around us.
Yeah.
At Lisa, this is part of what
I was trying to get at before
with the metabolic rate.
It just, we consume and, and
digest things differently than
anyone else does, and especially
where urgency is concerned.
You know it, no one sprints
after a problem, they don't
even know that they own.
Right?
And, and, and yet
with a founder, we
own all of it, right?
Every single one of those
problems is ours fully.
And so we sprint after.
All of them
now.
So the question becomes
obviously like, does
it mean we're chained
to this thing forever?
No, it, it doesn't mean we're
chained to it forever, but
we can't unlink entirely.
We cannot that that is, yeah.
If you wanna guarantee this
thing goes to the bottom
of the ocean, disconnect
entirely and see how that goes.
The key here is to disconnect
from as many things.
That you don't wanna
do, can't do, et cetera.
But while keeping tied to
the things that matter, maybe
it's the numbers, maybe it's
the culture, maybe it's just
that, that sense of urgency.
You wanna be tied
in enough, right?
You want, you wanna let the kids
alone, and I'm not equating, uh.
Fully grown people to kids,
but just people that, that
are acting on, on their own
agency enough so that they
can kind of do their own thing
and you're out of the way, but
you're never that far away.
You're never that far away
from what's happening from
your ear to the ground.
What's happening
with the culture?
Like I was saying a moment ago,
the developers say like, Hey,
you're gone and it's a problem.
You always wanna have
your ear to the ground, no
matter how much you feel
you need to disconnect.
You probably do feel like
you need to disconnect
quite a bit by this point.
You know, you, you, you
want to just recharge.
Yep.
And you deserve that.
By all means, get the break.
Do not get the break at the
expense of being connected to
your company because as soon
as you sever that tie, you're
screwed for the entire time.
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.