Welcome back to another 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, as founders, we spend years and years climbing out
of startup mode, the chaos, the ramen, the will payroll clear.
Yeah.
You finally get to the top.
You know what you sell, you know who you compete with,
you know how you get paid, and then somebody or something
walks over and hits the reset button, and all of a sudden
it's, "Hop in the family truckster, kids. We're going
back to startup land." And that's where every established
company's sitting right now.
AI didn't- Yeah … knock on the door, it kicked it in.
Yep, yep.
And it took moats that we spent decades digging and
filled them in with dirt over a freaking weekend.
Yep.
So today on Startup Therapy, every assumption you made about
your business just expired.
Yep.
Your org chart is now a museum exhibit, and the only people
who survive this are the ones who are willing to run naked
into the abyss one more time.
But the good news is we've done this before.
Yeah.
And that uniform always fits.
Yep.
The bad news is so is your competition.
Yep.
And they have no payroll to protect.
I'm Ryan, that's Will, or maybe that's Will- … depending on
where you're watching this, and surprise, we're a startup again.
We're a startup again, whether we wanna be or not.
And so like- Exactly … that's the most interesting part
about this, is that the world changed so fast.
So fast.
It hit the reset button so fast for so many people.
You know, we've got a, a very broad range of people as far as
their businesses that listen to this podcast and, and we're very
thankful for, for all of them.
But, you know, of course, a pretty good concentration of
folks that are in tech and who build software companies,
et cetera, and all of them, 'cause we talked to all of
them, are like, "Huh, well, that's interesting. You mean
what I spent," like you said, "like a decade building is
a prompt now? Cool." Yeah.
Or if you're in any content business whatsoever-
Didn't see that coming
yeah, didn't see that coming.
And look, I mean, some folks are in a fortunate position
where, like this, you know, new generation of AI helps them.
But I'm gonna argue that it imperils far more
people than it's helping.
I think it helps, like, 1% of people at the expense-
Yeah … of 99% of people.
And, and so it forces all of these instantiated businesses
really of all sizes to restart.
And here's what's crazy about… You know, this isn't
like one of those case, like when the internet came and
you just had to, like, you had a different form factor.
This is like every single aspect of what it means
to build and operate a company has been reset.
And so- Yep … all of a sudden, size, which used to be
a virtue, is a liability, right?
Huge.
Damn.
Huge liability.
Right?
Which sounds- Huge liability … a lot like where startups
start to come in, right?
And products that we could always rely on because we were
the only people that had the capital to build it, or- Yep
… we'd, you know, been around in the marketplace long enough,
all of a sudden it's like, yeah, not that important, right?
You know, damn.
Right.
Yeah.
Right?
And it wasn't one little fundamental shift, right?
It was three at the same time, right?
Mm-hmm.
AI walked in and flipped all three switches off
in the conference room.
Cost to build went to zero, right?
If you had software content product that took real effort,
real money, real time- Yeah
that effort is now a weekend hackathon, right?
Bananas.
The cost of staff and systems collapsed, right?
Having enough revenue to fund a big team used
to be an advantage.
Yeah.
Now that headcount is the damn anchor, right?
And the boat next to you doesn't have one.
That's the real issue, right?
Okay, so- There's somebody just speeding past you
where we're like, "Stroke.
Stroke.
Where the hell are they going," right?
And now the last one, I think this is one of the ones that's
incredible and, and I think you and I are enjoying this
thing right now, which is that everything can now be built.
Un- unbelievable.
The stuff that we wouldn't even dare to think of even
six months ago, we were like, "Wouldn't it be cool?
But no, we can't do that." Yeah, of course we can't do that.
That's gone, right?
Now it's all buildable by almost anyone at almost zero
cost and basically overnight.
Yes.
Everything has changed.
And, and honestly, like I, I'm sure you probably feel the same
way, this just feels like the visible part of the iceberg.
Like there's a whole lot more to come.
Which is a perfect setup because I think at one point,
let's use startups.com.
Startups.com has been around- Sure … for 15 years.
We're a very well-instantiated company.
We've got a bunch of products that have been in the market.
To our credit, we're pretty, uh, diversified
across, you know- Yep
revenue lines and income lines, et cetera.
But everything we do is based on one of two things.
We either built software or information that we sold.
Yep.
And now nearly all of it can either be, and this applies
to everybody, not us, but uh, can be built overnight, right?
Yep.
Or now you don't need us to gate that information.
Right.
You literally just ask Claude, right?
Or ask GPT- Yep … or ask whatever.
Like, you know, the, they may not give you the right
answer, but you don't need us.
You're welcome for training that, right?
Yeah.
Like we, we had a lot to do with those answers.
Yeah.
You're welcome, Claude.
But here's what's interesting.
I think initially, and I'll, I'll speak from personal
experience- If we rewind back a year or two years, which
isn't that long ago- Yeah … I think our initial reaction
to all of this was something more akin to y- how do we
protect ourselves, right?
Mm-hmm.
You know, these new things are happening, and how do we
take what we currently do- Yep
and protect it?
Which is a, a, a logical- Yep … you know, response.
But I think at some point- Makes the move … and we
have a unique purview, and I, I don't wanna overlook this.
See, most businesses, their business isn't
talking to thousands of other startups, right?
Right.
All day long, all the time.
Whereas that actually is our business.
Yes.
So we're watching disruption happen across every single
plane all freaking day.
Yeah.
So, like, in other words, like, the, the siren song
of how things are changing is blaring on our speakers
because of who we literally s- work with every day.
Every time someone sends me a pitch deck to look at and says,
"Hey, w- you're disrupting this space," my first thought
isn't just their pitch deck, it's, "I wonder what the
guy who's getting disrupted right now is thinking?"
Yeah, yeah.
My father-in-law, uh, ran a law firm for a long time, and he
was a, a successful attorney.
Uh, he retired a couple years ago.
And I talked to him about this, and I said, "Man, did you get
out at the right time," right?
Yeah.
Like, right before this whole thing was a problem
because you practicing law is about to be a prompt.
And I don't mean it in a derogatory way- No … or
dis- you know, take away from what he's saying.
It's, that's even a, an issue.
That's, it's even on the table.
Right.
Right?
Like- Yep … dude, you made it 50 years without that even
being on, on the table, right?
Yeah.
And now overnight.
So I, I think about him.
I think about folks like that who are being disrupted.
Yeah.
And I think every time I see all of these people all day
long, Ryan, that are disrupting it, I'm thinking there's
s- there's 10 people on the other side of that disruption.
Yeah.
And, and all the people that work for them.
That's a problem.
Yeah.
What's crazy though, man, like I'm gonna push back on
disruption just a little bit.
And I, I- Mm-hmm … I'm mincing words with a really
particular purpose here because in a lot of cases you're not
even getting disrupted, you're just getting speed run, right?
They're not actually doing anything different
than what you're doing.
They're just doing it faster- Yeah … with a much lower
cost infrastructure and a lot less bulk, right?
Right.
It took us 15 years to build the castle and one weekend to
find out that the drawbridge was just a decoration, right?
Why?
Because everybody else is just running.
We're like- Yeah … "But the castle's over here." They're
like, "Yeah, but the promised land's that way," right?
Yeah, yeah, yeah.
Shit.
We've got, uh, spears and shields, and somebody
on the other side's- Yes
g- got a musket, right?
Yeah.
So, here's how it would… Uh, if we say s- stop and say,
"What just happened," right?
"What the hell just happened?" Yeah.
Let's put it in three containers.
This is kind of where I'm seeing it.
The first y- you just mentioned a moment ago.
The cost to do kind of everything, not just build- Yep
but operate- Yep … went to damn near zero.
Now, a lot of people- Yeah … push back on that,
and they'll say, "No, it didn't really." Like, yes, a couple
things went, you know, lower.
Da, da, da.
Let me put it this way.
If they haven't yet, they will be.
Yeah.
H- here's a different way to think about it.
If there's a cost lingering out there that hasn't been
optimized, AI'd, whatever, it means that there's 50
companies thinking about how to do it because that's- Yeah
the only morsel of ta- of, uh, on the table
that's left for them.
They're just twiddling their thumbs waiting for Fable
to come back, like, "We've got this. We've got this."
So the first is with the cost going to zero, that's a
huge problem because I don't think- Yeah … enough people
understand how much things being expensive allowed the center
to hold when it comes to- Yeah
any business.
The castle and moat analog is a really interesting one because
that was the way it worked.
That's the way we thought it worked.
And because of the high cost, because of all of the, you
know, the time complexity, all that stuff, the basic goal
was to build something big enough that would function
and serve enough people It costs enough to build it.
It'd be hard for other people to build it, and
then just try to stay there.
The point was to just try to then maintain status quo so
you keep making money for year after year after year, and that
worked for a long time, right?
But all of a sudden, that's gone, right?
Yeah.
And what you start to realize was that y- you know, your
moat was never the code.
It wasn't the product.
It wasn't the team.
It was the time and money it took to write that
code, to build that team, to do all those things.
Yep.
AI just made those damn near free.
Which is a big problem.
Right?
Which means most companies never actually had a moat.
They had a head start.
Yeah.
And head starts expire, and they are expiring at record
rate, faster than strawberries from Meijer at this point, man.
Things are just going bad left and right.
That's a problem because, uh, it's twofold.
One, because our time and investment, that moat that
we had built, all of a sudden doesn't exist in the
same way that it used to.
Yep.
But more importantly, that's also because the other people
that are c- up and coming can actually build a better
product in almost no time.
Yes.
In almost no time.
Yeah.
Now, they still have to market it.
They still have to do customer acquisition, et
cetera, which isn't a given.
Sure.
But, but they can get to the parity at a product level,
if not much faster in many c- or much bigger- Right … in
many cases at very little cost, which is dangerous.
Here's why.
It means we can now have 30 competitors overnight,
but here's what's- Yeah … even more dangerous.
It means those competitors kinda don't have to worry about
going out of business 'cause it's just two dudes in a room.
Right.
Right?
That's the dangerous part.
It used to be- Right … that when you had a lot of
competitors, you kinda just starved them out.
You kept running- Yep … and eventually, your- Literally,
it was castle warfare.
You just- Yeah … you just rode out the siege.
That's all you had to do.
You do, right?
In our lifetime at Startups.com, countless competitors, right?
Yeah, yeah.
Across all the businesses that we've had, et cetera.
Oh, my God.
I mean, so much that we don't even pay attention anymore.
Go back to the fundable days.
How many, how many crowdfunding for equity platforms, uh,
appeared overnight and then disappeared nearly as quickly?
Once a month, like clockwork, a, a friend of mine, another
founder, was like, "Oh, my God, did you hear about
this company in your space?" I'm like, "I didn't, and I
actually just don't care."
Yeah, don't care.
And, and they can never believe that I'm not all,
like, wired up about it.
Yeah.
And it's because I've seen so many people come and go so many
times- Yeah … that I realize that, like, it's only a problem
when it becomes a problem.
Like, like, in other words- Yeah … if, if they happen
to hit that threshold and they're, I'm somehow losing
lots of business, maybe, but until then, it's not a problem.
And I say that to say because I knew they
would go out of business.
I knew that if I just held on longer than they
could, that eventually they wouldn't be around, and that
largely held true, right?
Yeah.
Here's a good example.
How many competitors did we have at Zirtual.com, our
virtual assistant business?
All of them.
Actually, yeah, like literally If you get down into who is
actually a competitor of that company, tens of thousands,
because there were these lots of little agencies or big agencies-
Yep … there were individual people, like millions if you
count the individuals, right?
Right.
So yes, lots and lots of competition.
And we started as the biggest, 'cause we bought the company,
and we ended as the biggest when we sold the company.
Yep.
Right?
Like, not because we're anything special, because
it's really hard to unseat incumbents, right?
Yep.
Now, all that said, all that said, the difference
in this case is these cockroaches never die.
Right.
Like, these cockroaches are gonna be around forever nibbling
away at our market share.
Yep.
Right?
And that becomes a problem.
So that, that's one of three things that just happened.
People can get to market fast, they can get to market
meaningfully, and they can afford to not go away.
Big problem.
That's actually the biggest one, right?
The, the afford to not go away is the biggest problem.
We talk about this all the time.
Like, if you can just stay around long enough, you start
to solve so many of your little problems and then some
of your big problems, then you become a viable company.
And, and- Oh
it's just got really easy now to stick around
for a long, long time.
That's what I'm saying.
And if you're funded as well, again, assuming you spend
your money right, you can- Yeah … really stick around
for a long time, right?
Yeah, yeah.
The second thing is because the cost of staff and systems has
plummeted, you're now competing with people that don't have
your ballast, your dead weight.
Right.
Right?
Yep.
And so, you know, if you're a company right now, a
software company, that's got 100 people in it-
Yeah … which isn't massive.
I mean, it's a good size.
No.
I'm not, I'm not knocking it.
But it's a lot more payroll tax than two people.
Right.
And it's like, wait a minute, what if, crazy to think,
in today's terms with the tools that are available
and the pace of everything, I need 10, maybe 20- Yeah
at t- tops, right?
Yep.
Think of how dangerous those other 80 people are to the
future of your company, right?
Yeah.
That's scary as hell.
You know, we'll, we'll talk about that some more.
But the last part that I think people are just
coming to terms with is that everything can be built now.
For example, in the past, y- we talked about this a moment ago.
In the past when we sat down and we scoped out our
roadmaps, et cetera, they were always fundamentally
delimited by man hours.
Yep.
Right?
Yep.
I mean, and we had a good sense for how many man hours
could produce a product, and the timeline, and
everything else like that.
And so we could scope what our product could be, the
limits of what it could be, et cetera, in very
verifiable terms because we…
Of course it can't be bigger than this, 'cause that would
take- Right … 200 people that we, we don't have, right?
So we would conceive of things fairly constrained.
Yeah.
Always.
Like, y- we almost always started with the constraints.
Like, what are the resources we have available?
What can we do within that?
And it was extremely constraining.
It wasn't a little constraining.
Yeah.
Now that those limitations are off, you're not just
competing with what you did, you're competing with all the
things you didn't think you could do five minutes ago.
That's what I'm s- Right?
This one's really fascinating to me.
Yeah.
Because I don't think that there's enough people,
particularly incumbents- that can do this restart.
Like mentally, to be able to say- Yeah … "Shit, it doesn't
matter what we did before or anything like that." It doesn't.
"This is new world, and we're gonna build with
new world in mind." Yeah.
By the way, in many cases, w- that new world will deliberately
destroy what pays our bills.
See Google.
Yep.
You gotta start tearing apart the castle and building wagons.
You gotta start killing the sacred cows and, and eating
them 'cause it's time to go push… Like, we gotta run.
Like, it's, it's time to go at this point.
Building a tree house while you're chopping down the tree.
Exactly.
Right?
Yeah.
And I think, again, I'm using Google as a perfect
example of this, right?
Such a smart, innovative company, obviously incredibly
well-funded, and they're like, "Okay, AI is making
search go away, but search pays 70% of our bills."
And they aren't small bills, right?
No.
"So now we have to innovate on search, um, on AI that
is gonna displace search and still pay our bills. Like,
it's, it's the opposite- Yeah … of what we wanna do."
Now, Google's a smart company.
They'll figure it out.
But think of how many companies are in that quandary,
where they're like- Yeah
"Yeah, but the next thing involves people not needing
what we have." Take our virtual assistant business, right?
If we still owned our virtual assistant business, the obvious
thing would be, "Well, well let's move all of the virtual
assistants to be virtual, to be AI based," right?
Yeah.
Okay, but we literally get paid to, for people.
Yeah.
Right?
Like, if we don't have people anymore- And
we pay lots of people.
Yeah, yeah.
I mean, let's over- look, there, there'll be hundreds and
hundreds of people on payroll.
That's actually our product It goes back to my
father-in-law, you know, in law.
"Hey, let's build an AI that does all the law for you."
Yeah, we get paid hourly, man.
Mm-hmm.
That's, like, doesn't… That's the opposite of
what works well for us.
That's the thing.
Like, the existing models don't work within the new
technologies at all, right?
Mm-hmm.
They're actually, in some cases, directly
competitive, to your point.
Like, if all of a sudden, you know, wow, we can deliver, uh,
legal advice at, at 10X the rate in terms of speed, cool.
You don't get to charge any more for that, right?
R- right, right.
And so now you just cut your billable rate by a, a
magnitude of, of 90%, right?
You're down, like, to 10%, because that's
how long it takes now.
Now- So not exactly a great outcome for them.
Now imagine, right, you and I are walking into our
staff meeting, our executive staff meeting, right?
Yeah.
And let's say we're a 100-person software company, and the
first thing we're saying is that, "Hey, we gotta start
thinking like a startup." And everybody high-fives.
"Oh, yeah. Absolutely." Yeah, yeah.
Back to the startup, back to the ground, whatever.
Like, right?
Yeah, flexible.
Y- yeah, yeah, yeah.
Agile.
Right.
Let's go scrum, guys.
Okay.
But our first order of business is, and now how many jobs that
are being done here are still gonna be relevant that we still
need to staff up for, and what do we need to, to swap out?
Yeah.
That's where the conversation- It's- … starts to get a
little bit different, right?
This is the part nobody wants to really talk about, right?
Th- th- this is- A huge piece of just- Yeah … what
made each of us valuable five minutes ago just got
replaced by a chat prompt.
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 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.
Let's unpack this one, because this is the human element
which makes this so difficult.
I would argue for a second that there's probably a lot
of other aspects of this pivot that an existing instantiated
company can kind of figure out.
This one has no, no winner, because this just involves
people that worked so hard to build this thing no longer
having a place, but even worse- Yeah Essentially,
in some cases, asking them to dig their own grave.
Yeah.
Let's say that you've got a 20-person customer support,
customer success team, and you say, "Hey, we gotta
think like a startup. With AI, we could probably do the
same thing we're doing with 20 with two people." Yeah.
Okay.
Write the playbook for us.
Like- Yeah … I guess we start with a shovel.
We dig the hole about six foot deep, then I jump in it.
You pelt me with rocks, and it's g- day over, right?
Like, yeah.
Like, how does that conversation go?
And I say this with reverence, the ultimate protected
class, the engineers, right?
Yeah.
The engineers have enjoyed a period of magical
unpredictability, right?
Like- Yep … if you've been an engineer in the software
business in the last 30 years, life has been pretty
good as far as job security.
And now we go to what's always the highest line item, which
are the engineers, which see job security, right?
And we say, "Hey, good news, guys.
We're gonna build 10X more with 10X less people." If you're
the engineers, and your job historically has essentially
been the gatekeeper of what gets built, right, which is
a very powerful role, and the CMO who, you know, who, who
engages you on the marketing side and the CEO, the director
of product, you know, all these different roles, have always
basically had to rely on you and your team to be able to
get stuff done, whether it was, you know, uh, product designs,
whether, whatever, and all of a sudden you're not as important
as you were five minutes ago.
Mm-hmm.
Here, here's where I'm going with this.
Your first thought isn't going to be, "You're right.
Burn it all down. Let me get rid of, uh, two-thirds of my
staff and push all decisioning to somebody but me." Yeah.
No one is going to say that.
No one wants to do that, no.
Right?
And so again, this is what this episode's all about.
As leadership, you've gotta reset all these folks
who don't wanna be reset.
That's, I think that's gonna be one of the most challenging part
of this because, look, we built these companies on a giant stack
of assumptions, that these are the roles we need- Yep … this
is what they produce, this is what they cost, and all
of that was settled, right?
Now, all of a sudden, not only is that not settled, it's pretty
obvious that it's different.
And let's go back to the competitive angle of this.
Because even if you're like, "Look, we'll just try to
make this work. We'll just keep chugging along," you're
doing it with 100, they come along and they're doing
it with 10, maybe fewer.
That's a big problem, and there's nothing
cool about that, right?
Because it does, it means cutting back.
It, it means good people, generally good people,
get to- Yeah … get this place for reasons that have
nothing to do with whether they were good or not.
Not their fault.
I mean, literally not their fault, right?
It's brutal.
And- But it doesn't change the math.
That's the problem.
It doesn't change the math.
That's the problem.
To survive, you have to think like a startup that launched
this morning, and because that's exactly who you're
gonna be competing with, right?
There's somebody else that started yesterday who's now
nearly where you are after 15 years, because they can just do
everything that you did in such a short period of time under
such little cost constraint.
We have to rethink the org chart completely.
Let me do a little side quest here.
We did an episode years and years a- ago where we
talked about when small companies think about
competing with big companies.
Mm. And we talked about it like Luke Skywalker
taking on the Death Star.
Yeah.
You finding that, that- Yep
that one, you know, chink in the armor, so to speak.
I- in that episode, what we said is, you know, we don't
fear big competitors because we know they're slow and whatever.
Like, when that Death Star finally turns and that
thing fires up and- Yeah, yeah … uh, launches on,
on Alderaan, uh, game over.
Right.
But until then- Yeah
they are very vulnerable.
I want, for those folks that are listening that aren't part
of big organizations but are about to compete with them, I
want you to think about what we're saying very differently.
I want you to think when you go after big co-
This is the problem that they have to deal with.
This is the big, uh, storeroom they have for all
of their, their firearms that if you're similar to,
similar to the Death Star.
If you just- Yeah … if you just land on that, this
whole thing is gonna explode.
If I'm about to compete with Big Co., and I know that in
order for them to do what I do, they have to be a fraction of
the size because I can sell, right, I can sell stuff for
a dollar that they used to have to sell for $100, right?
So in order for them to- Yeah … to stay competitive, they
can't have all those people.
So I know when I'm competing with them, that the
consternation that it's gonna take, that their first
reaction is gonna be to try to protect all those people
and preserve- Yeah … that capital structure, right?
Yep.
That's the big problem, right?
'Cause the competitor's doing it with 10, not because
they're smarter than you.
They just started after the reset, so they never hired the
other 90 in the first place.
Yeah.
They don't have to solve that problem.
Correct.
They just have to solve the problem of how do we build it.
We have to solve the problem of how do we build and
how do we keep everybody whole while we're doing it.
So my side quest there was just letting folks
know that, you know, kinda getting to this game that
are these nimble competitors.
What you're up against isn't just, hey, this
is a bigger company.
You are up against a company that internally has a
time bomb ticking, right?
I will say this 'cause a lot of people haven't seen
the in- inner workings of, of enough big companies.
When a company gets up to a certain size, and there's no
magic number, but it could be 100 people, it could be 500
people, et cetera, the focus of all the people that work there
no longer becomes external.
It becomes entirely internal.
Yeah, yeah.
Your success within the company has everything to do
with what you do within that company, the politics and
everything else like that.
The external success, like how well the product does
in the market, kinda becomes nobody's personal benefit.
But the internal, how well your company did, how well you
promoted people, et cetera, becomes how you make more money.
My point is- For startups, the small ones, they can just
focus on how many customers are we selling, like how does
this benefit us directly?
Yeah.
But the people you're competing with, the actual humans behind
big logo, are just worried about their own frigging jobs, man.
They're just worried about updating their LinkedIn, right?
And making sure that they, they, they don't lose
pay on their mortgage.
So a lot of very vulnerable big logos right now.
Um, and it's- Super … I think it's important
to understand that.
Super.
And, and, like, I think the stress this time is a bit
different and, and it, it's pervasive through these
organizations because it's not just about like, "Oh, something
is happening to us that's going to make us have to change,
and we're gonna have to lay people off, or we're gonna
have to fire people, we're gonna have to change things."
In the past, there were always jobs for those
people to go to, right?
Yeah.
Now you're saying like, "The job doesn't exist at our company
anymore, nor the 15 other big competitors you would've gone to
historically to fill that role, to fill that need in your own
life." And so I think the stress and the pressure and the angst
and the anxiety is significantly higher this time around.
It is.
And, and look, I genuinely believe, and, and time will
tell, but I genuinely believe that, that this will also
create more new companies, which will then become-
100% … you know, another.
But they ain't there yet.
That's a, an opportunity for later, but it's
a problem for now.
So what we end up having to do as, as, as founders, as
leadership, is a hard reset, a straight up hard reset.
And I think most leadership, most founders, most CEOs,
haven't gotten the message yet.
They know the storm's coming, they can feel it.
Yeah.
They're smart.
Ryan, I don't think they actually appreciate
how much things have to change, 'cause it's hard.
I think it's hard.
Mm-hmm.
I think, I think they maybe do understand it.
They've intellectualized it, they know, and they
just can't do it yet.
And, and it's this… This is gonna be harsh.
I'm gonna, I'll try to say it as kindly as I can, but it's harsh.
It's sense of loyalty to the old org chart, right?
Yeah.
And unfortunately- Yeah … loyalty to the old org chart
is not actually loyalty to your people, because at some
point, it's actually the fastest way to lose all of them.
Yeah.
Because a company that doesn't adapt- It sucks … doesn't
get to keep anybody.
It sucks.
Right?
And, and the hard reset is sort of the humane option compared
to just going under, right?
Because that's the other choice, and it sucks.
Yeah.
There is no fun way around this, right?
And we're conditioned to exactly the opposite, right?
We used to fight over head count in budget meetings like
it was a status symbol, right?
We were trying to get as many people as we could, right?
It turns out we were collecting liabilities
and calling them trophies.
Yeah.
In this world, doesn't change what has to just happen now,
and it's awful and it's hard.
Part of that hard reset, of course, is people, right?
And w- you know, we've- Yep … we've definitely covered that.
Let's talk about the other side of it, which is the,
not what's changed, what's broken, what's lost, but how
do we rethink who our business even is in this new era?
Yeah.
Okay, so let's go this way.
If we said five minutes ago that our business was virtual.com
and we're a virtual assistant business, we have hundreds
of virtual assistants that people can pay for monthly.
But the hard pivot is no more virtual assistants.
Now, again- Yeah … we covered the people aspect of it,
so, so we're not overlooking the people aspect of it.
We're saying, but even if you had some way to contend with
that- You still, the biggest part of this reset is you
have to stop thinking about how you used to make money.
Yeah.
It doesn't matter anymore.
Right.
And that's the hard part.
Everyone's trying to protect their stuff.
They're trying to say- Yeah … "Hey, let's just not
make this change." And it's like, dude, the people that
are gonna win aren't the people that protected their stuff.
No, man.
It's the people that set it on fire, I hate to even
say it, literally what it's called, and restart it.
Which is why we're saying you gotta start again.
I think we're seeing a lot of people in a position now where
they're protecting their current business model, and that's in
direct conflict- Right … with the business model that would
win in the next five years.
Right.
The model loses, right?
The, if that's the game you're playing right now,
you're already losing.
The only choice is whether you cannibalize yourself on purpose
or let someone with nothing to protect do it for you, right?
Yes.
You've either gotta eat some of yourself or somebody
else is gonna do it.
Here's a great test.
One way or the other.
Ask yourself as a founder, if you were entering your
business, your industry, you know, whatever you're in right
now, would your business plan look to build exactly the
product that you have right now?
Like- Yeah … for most people, I can't fathom that
that would be true, right?
So- Yeah … if, if you were saying, "Hey, I'm gonna
go back to startup mode," you would build something
so geometrically different than what you have now.
Yes.
And the only reason you're building what you have the way
you are now is because of the liability of what you have now.
Right.
And what sucks is- Five seconds ago, that was your
greatest accomplishment.
The concept- Yeah … that it was a liability?
Like, I'll give you an example.
I don't know him well, but Dharmesh Shah, the, the founder
of HubSpot- Yeah … and I have had a good relationship,
you know, just for a long time, uh, for s- long s-
since before, uh, HubSpot.
And, and a few weeks ago, Dharmesh p- posted
something on LinkedIn that I just, I haven't been able
to stop thinking about.
He posts something to the effect of, I don't… You can look
it up, but, uh, uh, the effect of, "Hey, I just bought a bunch
of HubSpot stock," because the, the stock took a header.
Yeah, yeah.
Because the analysts are all saying that, you know, our days
are numbered, and, you know, SaaS is getting blown up, and
everything else like that.
Yeah.
And he's saying, "But I don't believe that hype. Yes, I'm well
aware…" He's such a smart guy.
"I'm well aware of what's happening, but here's why
I think HubSpot is in a phenomenal position to
do something about it."
Here's why I bring this up.
I wonder if Dharmesh, behind closed doors, if I were to say,
"Dharmesh, if you were Dharmesh from 20 years ago and you were
starting over- Yeah … would you build exactly what you
have now?" I can't imagine, an amazing amount of respect
for him, he would say yes.
Maybe, but I mean, I, again, I can't put words
in his mouth, but I use him specifically for a few reasons.
One, because what he's built has been phenomenal.
I mean, an absolute- Yeah … juggernaut at every level.
Yep.
Second, he's so smart, right?
I mean, just like- Right … just absolute.
And third, he's in front of the curve.
Like, like, this guy isn't like some guy who's
like, you know, we, we should put out to pasture.
Like, dude is on his grind.
Uh, he's at the front of it.
And I wonder when he sits, you know, staring at the
ceiling at night, if he's like, "Shit, I'm in trouble,
man." Like, I- What I built, which made me a billionaire,
is now a massive anchor, and I'm smart enough to know what
to build next, and I can't.
Yeah.
I can't.
Yeah.
And that's the interesting thing, right?
And I, I started wondering about that actually when he
started building some of these little side quest projects.
Yeah, yep.
Right?
Like the, the little agentic company and some other stuff,
and it was like, to me, those looked exactly like, this is
what we should be building, but we can't because we're too
big inside HubSpot, so we're gonna go build them out here.
I'm gonna go do it over here.
I'm gonna go do it over there.
To me, that was exactly what those looked like.
This is what I'm saying.
This is, is a perfect example of someone who can
see what's next- Yep … but their hands are tied.
Their economics don't allow them to do it.
Now- Yep … again, I have complete faith in Dharmesh.
I'm sure he's gonna find a way to do something, even if it
means building HubSpot 2, right?
And that becomes the new thing, and- Yeah … and
people, you know, float out of HubSpot 1 to HubSpot 2.
I'm confident someone like him can figure it out.
But I use him because even he has this, this problem,
and dude's smart as hell.
The problem isn't about how smart the founder is.
I'm using him because he's so good.
The- Yeah … problem is with the dead weight that
he's carrying- Yeah, yeah … which, my point of this,
was his greatest success.
Bananas.
Yeah.
The very thing that you set out to build, the very thing
that you use to measure success becomes a massive liability
in, in this new world.
Yeah, it's absolutely wild.
It's a lot to just intellectualize, right?
Forget about actually doing something about it.
You gotta spend a fair amount of time just going,
"What the fuck?" Right?
Okay, not, not even what am I gonna do about this.
Yeah.
Just like, what just happened?
Like, huh?
Huh?
Yeah, right.
How can they just change the rules that fast?
Like, don't, do, do they knock?
Do they send a notice?
Do we get, like, 30 days, something?
Nope.
And what's interesting in his case is that he is the guy that
does the disrupting, right?
I mean, HubSpot was a juggernaut at every possible level.
You know, w- w- uh, we're a client.
But we look at that bill every month, and it's a big ass bill.
Yeah.
And we're like,
"Hmm.
How do we make that a, a not big ass bill?" So next HubSpot
that comes along, when Dharmesh 2 comes along, right, and he's
like, "Hey, I can do that, the same thing for 10% of the cost,"
gonna be hard to say no, and that's what he's dealing with.
So now, here's where it gets interesting.
All of these founders, all of us, have to go to these
bold new frontiers, right?
Yeah.
Like, we basically have to say, as painful as it is,
we're being forced to restart whether we like it or not,
and we have to build our plan, our strategy at this point.
has to exist around ideas we've never implemented before or were
afraid to- Yep … around a cost structure that never existed
before, around, in some cases, a market that doesn't exist yet.
Yeah.
Because again, we're building things at a new rate that
haven't, hasn't been proven- Yep … in a competitive
market that we cannot predict.
Right.
Holy shit.
You know who does really well with that?
Startups.
Yeah, it's so funny, man, like- Startups do really well with
that … when we look at it now, it's like, you know, startup
us had hope and no idea, right?
Yep.
Current us has a track record and a mortgage.
Yeah.
And I'm honestly not sure that like, yeah, we don't
look at that and go, "Oh man, it'd be so nice to be back in
that condition again," right?
Like, you worked- Well- … so hard to get out of it, and it's
like, can we have that back now?
Can I just go back to having nothing but ideas?
Because it'd be perfect right now.
But here's what I'm fascinated by.
And you know, we're all forced to relive this journey
whether we want to or not.
You know what it'd be like?
It's like if every single person in life had to go back
to freshman year of high school.
Like, for some reason- Yeah … there was some alternate
universe where the only way to survive were to like, take
our old ancient asses and drag us back to freshman year.
We're getting pushed in lockers or… Dude, I'm so ready.
I don't fit in a locker anymore, bro.
Yeah.
Like, you, you can't stuff me in there.
Even if you oiled me up first, I won't fit in a locker.
But here's why I use that analogy.
I use that analogy because the difference would be we know
what to expect this time, right?
Yeah.
When we did it the first time, you know, when you were in high
school for the first time, you didn't know what to expect.
Everything was bigger than- Yeah … it really was and et cetera.
Uh, similar with the startup.
We went in, everything was more consequential than we
thought it would be, et cetera.
At least this time around, when we go to do it again,
we kind of know how to operate as a startup.
Now, it doesn't mean we're gonna be successful.
It just means that massive gap of lack of experience
isn't there anymore.
Yeah.
But you know who it is there for?
Our competitors.
See, right, when at Startups.com, when we restart,
right, and we become, you know, a startup again,
even after 15 years, we're competing with people who've
never done this before.
By and large- Yeah … people who've never done this before.
Their freshman effort.
And it doesn't mean they're not capable.
It just means we're as capable as they are.
The difference is we know what the fuck we're doing.
Yeah.
Like, we know exactly- We get to, we get to go back to play
the level one dungeon, but we get to bring all of our
experience points- Exactly
and all the awesome loot that we gathered across
all those adventures.
Like, I'm bringing the level 52 flaming sword with me.
That's what I'm saying.
I don't give a shit what you say.
Exactly.
And so this is where it gets fascinating.
While we've got this forced reset and it's painful and
it's awful, and again, we, we covered that plenty, we also
have this new world where we have this unique experience and
an opportunity, right, at this incredible, you know, wealth
creation engine to be able to navigate this thing and hack
and slash and, and kind of, you know, rebuild ourselves- Yep
in this new version.
I think that's incredibly exciting, right?
Right, you and I, believe it or not, aren't the
youngest guys, but- Yeah.
Go on.
Tell me more about this.
I know, man, I got an awful lot of fight in me.
I am- Yeah … ready to reload, right?
I am ready to go back to that dungeon again.
Well, dude, do you know why?
Because energy just got taken off the table.
Mm-hmm.
Because you no longer have to survive all of that brutal,
like, build-up to the point where we can afford the team,
where we can afford the stuff, where we can do the thing.
Like- Yep … that's all gone.
Yep.
You don't have to have that just keep rowing and keep rowing and
keep rowing and f- hopefully we finally clear the wave break.
We don't have to do that anymore.
We don't need- Yep … the energy.
We need the experience, we need the knowledge, we
need the desire, of course, and we've always had that.
And so, like, I think by taking that level of grind
and energy, not that they're not gonna be a grind, but
y- you get where I'm going.
Like- Yeah
some of that just absolute shit uphill- Yeah … is gone.
That's why the competitors are just already right here.
Yep.
But yeah, man, I… Look, we've never been afraid of a fight.
We're founders.
This is what we signed up for.
And so- That's it … like, it feels like it's about
to be a lot of fun.
And yeah, there's gonna be some major challenges to navigate,
the people problems being really the only one that I don't
have awesome solutions for.
Yeah.
The rest of it I feel like we've got, and just gotta figure out
how to make the rest of it work.
But the good news is, and this is what I want folks
to take away from this, the good news is the people that
are gonna survive this little apocalypse- Yep … are
founders, are startups.
Yeah.
Right?
Which guess what?
It just so happens that's exactly what we are, right?
Like, we were- Yeah … literally made
to do this exact job at this exact moment in time.
Now we're being dusted off and, and getting the, the equipment
put back on us and pushed out in the field whether we like it or
not, but- I'm gonna regrow hair just for this adventure, Will.
I could have mine.
But this is also our moment to prove that we are
the founder that we are.
And again, we've proved it once.
There's no reason we can't do it again.
Yeah.
I think for a lot of folks right now, there's so much
fear about what's happening, you know, w- with these
existing organizations, and it's justified.
But I think the difference is if we step back and we
rethink about who we are when we attack this problem, and
we say, "Let's stop thinking about it as an existing company
that has these liabilities.
Let's start thinking about it as a brand-new company, a
fresh company that is exactly tailor-made for this type of
thing, led by people who have done this before," then we
turn into something different.
We don't turn into the big, slow Death Star.
We turn into the TIE fighter… Or, I'm sorry, the, the
X-wing fighter that can fly- Careful there, dark side.
Yeah.
I couldn't help but go to the dark side.
Uh, we turn into this fast, nimble, powerful thing with
a ton of experience, right?
And I think that is what's gonna d- differentiate the
companies that languish and get beat up from the
companies that absolutely restart, reset, and kick ass.
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 at www.startups.com
to see if it's for you.
Could be just the thing you need.
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