Startup Therapy Podcast

Episode #1

Ryan Rutan: what if I told you that working on more than one startup idea is actually the fastest way to fail at all of them today on the startup therapy podcast. We'll explore the dangers of division and the power of

Wil Schroter: focus. Welcome

Ryan Rutan: to the startup therapy podcast. This is Ryan Rutan from startups dot com. I'm joined by my partner Wil Schroder who over the course of a 20 plus year career has started nine or more startups and at one point and this is germane to our conversation today, you had five or so going in parallel and we want to talk a little bit about why that might not have been the most optimal approach to things.

Wil Schroter: Yeah, to say the least. And preface by saying Ryan, you and I have talked to thousands of founders at this point about how many of them are interested in trying a few ideas all at once and seeing which one takes off this idea that we can place multiple bets and just kind of hang out and see which one is going to be successful and then just go all in on that.

Ryan Rutan: It works for spaghetti cooking,

Wil Schroter: why wouldn't it work? Exactly. And I'm gonna share a little bit of my backstory. Having tried this experiment and watched other folks try it in my case, having tried it for nearly a decade across five different companies and actually having some success. So this isn't a total horror story. This is even in in spite of some of the success that I had running multiple companies at the same time. How I would still recommend people generally don't do it.

Ryan Rutan: Let's set the stage a little bit. How did you arrive at that point?

Wil Schroter: Let's see. We're gonna go back into my deep and hallowed history in the early 90s, I started one of the first interactive ad agencies and from there we grew that to a fairly large company and that's only Germane because we're working with lots of big clients in parallel all at once. So I built the first near decade of my career, working massively in parallel with large clients to build lots of websites, lots of interactive solutions, etcetera.

Ryan Rutan: Got it. And so that puts you in a frame of mind that not only is this possible, but maybe this is how it should go.

Wil Schroter: Absolutely. I thought that's maybe more efficient. So in the early two thousands we had sold the agency and I thought to myself, instead of working across multiple clients, I've got a million ideas for startup companies that I want to get started in all kinds of different industries. Why don't I just build an agency where I'm the only client so to speak, and we just start cranking out these amazing businesses with our own tools and our own knowledge. And in my mind, the idea was to build a portfolio of companies where I could work across all of them, which is really the same as being able to pursue multiple ideas and see how that worked out.

Ryan Rutan: Now you're building an incubator for your own ideas,

Wil Schroter: you bet, you bet and an important caveat here. Unlike most founders, I had some resources in order to pay staff to work across the different companies, which means even though my time was being stretched in focus across the different companies, I still had other folks helping me push those individual agendas forward. And even then it was a terrible idea and a lot of founders think, well, hey, it's just me right there. Like, well if I work on multiple things, I could understand why my time would get stretched and I couldn't get things done. But I'm telling you that even with the additional resources, it's still started to come apart at the seams.

Ryan Rutan: And I think that's an important point because one of the very common things that we hear from founders who plan to exit, hope to exit are about to exit a company is that this is going to free me up both time money, experience, all this stuff is going to make it so that I can now go and do all these other different things that I want to do and typically the thought is in parallel. Right? And so it's not just the case that it's a bad idea to do this, if you're a first time founder who can't decide what he wants to work on or she wants to work on. But that even if you're an experienced founder with an exit under your belt and resources in terms of time money team, it's still not an optimal approach,

Wil Schroter: correct. And we'll dig into why I'll give you a little bit more meat to how my personal journey went started off in roughly 2002 with a company called Swat Police dot com. And some folks that may have used this service. It's the largest auto lease assumption marketplace. We transferred billions of dollars worth of auto leases and like letting people get into and out of cars, it was a great idea a little bit ahead of its time, but it still worked out really well and maybe the fallacy of it was that it worked really well, really fast. So in my mind, if I could build something this quickly, get it to market this quickly, get it to profitability this quickly. Why not just keep doing it. And so from there about everybody.

Ryan Rutan: Just keep doing it. You don't mean just keep doing swap all these, you mean mission accomplished, moving right along. What's the next one?

Wil Schroter: Absolutely. And so I thought, okay, let's build another one. So we built another company. Uh, it's actually part of our product set at startups dot com today. It's called biz plan dot com. I know that one well and same idea. Let's build this. Let's get it out there. Let's start to build a use case around it. And that started to go pretty well if they can rub two for two Now, mind you, at that point, I didn't quite understand, I hadn't seen it yet, but the time and energy that I was putting into biz plan creating a product from nothing was taking away from time that I spent on all the little details of swat police that I probably didn't appreciate at the time regardless, this plan started to do okay. And I thought what any other entrepreneur would think, how about another and then a few months or about a year and a half after that, how about another year and a half after that. How about another

Ryan Rutan: and you, you provide a beautiful analogy for this in the, in the article that, that follows the same topic, which is tequila shots in the same sense that you know, one more would be a great idea. Another one would be a great, you know how it ends? Never is awesome

Wil Schroter: because after the first one, you feel great, you don't, you don't realize what happens when you stack them all together. And what ended up happening was the next three companies that I did. It ended with a company called Unsubscribe dot com, which incidentally I founded with a friend of mine, Jamie Simonov who then went on to start ring dot com, which he sold for a billion dollars this past year.

Ryan Rutan: How many was he working on at the time? So it was ring and six others right?

Wil Schroter: Actually Jamie had quite a few under his belt as well. I mean, he and I were definitely cut from the same cloth in that we had always been working on numerous things and we both had this idea that you could work on numerous things and make it work. I would probably suffice to say that Jamie focusing on only one thing which is Ring probably had a lot to do with the outcome. It's the credit goes to Jamie for what he built, but the focus can't be overlooked. But here's what's really interesting about that. You know, the fifth company there again was unsubscribed dot com allowed you to get off all of your junk mail. What's interesting is Jamie and I both started the company together. Right. Both of us had had some success in the past. Both of us would go on to kind of build our own companies, me with startups dot com and he with ring thereafter unsubscribed it. Okay, not great. We sold it and got our money back, but it was a venture funded company. It wasn't that big of a win. Uh, and Jamie and I would probably look at it as a bit of a loss in the grand scheme of things as far as our time in our career. However, both of us were clearly capable of making it happen and the fact that we had our heads in so many different things did not help us. Sure.

Ryan Rutan: Right.

Wil Schroter: And you could even say if you're trying to eliminate some of the variables here. Hey, you've got to founders that know what they're doing. But we weren't exactly focused by the time that we had founded unsubscribe dot com already had four other companies under my belt that I was running. I wasn't just stopping by to see how they were going. I was doing the financials, I was building the product. I was writing the copy for the sites. I mean, I was as involved in the business is as you could be in most cases, I was also the largest shareholder. So you know, I was very tethered to what the business was.

Ryan Rutan: All right. Well, so to some degree, it sounds like things have worked out okay at this point. So there's obviously more to the story here, let's, let's dig into that. Where did it start to go wrong?

Wil Schroter: Okay. Well as I'm watching each of these companies grow or sometimes stall a little bit or sometimes creates some problems. I'm realizing that I can't invest any more energy into any one of them because I'm stretched across too many. I also don't know specifically where to put my time because they all have problems, right? Like the nature of a startup, if you were to do two or three at the same time is nothing but problems. I think there's this concept that the good startup, the good child, if you will, we'll just show nothing but promise and it'll be so obvious that that's where to put all of your time, I've never seen that to be the case. I've also never seen it to be the case, that it happens quickly whereby you've got this idea and it just takes off and it's so clear that the idea has so much momentum by itself, that it just raises its hand and says, drop everything else. This is the idea

Ryan Rutan: and we know this, right? We know that even when you're solely focusing on something, it can take a long time and some luck and the right circumstances to achieve any kind of growth that looks even a little bit like a hockey stick, right? To have any indication that things are going the right direction. And that's when you're fully focused. So the idea that if you're dividing your time across multiple companies, multiple ideas that somehow one of them is going to magically take off by itself without your focus a little bit of a fallacy,

Wil Schroter: Let's let's I'll give you this analogy, let's say you're tom brady, right? And compared to him all the time, I'm sure let's hear tom brady, and your idea is that you can come into a football game play for one quarter and then leave and the rest of the team will just continue to win super bowls, right, no matter how good you are at the moment, you're not there, you're not valuable and essentially, no matter how talented you are and I'm barely talented guy, I know tom brady, but wherever I was putting my time into one company, I was specifically not there for another company and that's what leads to failure. You can't create success by being not present, right. Startups don't germinate by themselves on a fraction of your time. Tom brady isn't winning super bowls by playing one quarter. In fact, tom brady has a hard time winning super bowls by playing all quarters by being one of the best quarterbacks of all time. That's how hard this game is, right, the moment you take yourself out of the game, the moment you stop playing, the moment you spend less time with one of your startups, you might as well call the game right? Because it doesn't work. Now,

Ryan Rutan: there's a huge amount of selection bias there too and that the one that you're spending any time on, right? And the minute you start to shift your focus to that one, because it's starting to look like it's doing a little better. Here's, here's the interesting flaw in that logic. If you're capable of seeing which one is going to do better with a very limited amount of time, then you shouldn't need to spend time on the others anyways, you should already know which one is going to work, right? So you're only gonna know it works when you dedicate yourself to it and you work through it

Wil Schroter: and along those lines, even if you put all of your time and one idea, the probability of success is still dramatically low. So doing anything to make your odds even worse by putting your time on something else as well. Only makes your probability of success even lower in my mind. And I'll just give you my personal thinking was that my value was around ideation, it was around product development to some degree, it was around fundraising and it was a little bit around when I say marketing, just kind of spinning up, getting our initial user acquisition done and if I could invest that part of my value, the rest could be then carried by folks that would operate the company day to day, whether an engineering marketing operating etcetera. And that's actually kind of true. Except for the fact that back to the tom brady example, the rest of the team is very capable of running on its own. But it runs especially well when tom is there. Right. And what I didn't appreciate is when I take myself off the team, it's not the same team anymore. They're all smart folks, but it's not the same team anymore. In the same goes if I was just running that the ideas myself, when it's all I'm focused on, when I have just one singular, painful focus that's haunting my dreams. That's when I'm in the zone the moment I say, well I'll just think about the idea when it's convenient or when it looks like it's working, it just doesn't work anymore.

Ryan Rutan: Yeah, I mean the ship is sort of sailed on multitasking, right? There's no, no shortage of evidence that even multitasking at a tactical level is less productive when you start to do this at the highest level of function where you're literally trying to lead the company companies through multitasking, sort of. No surprise that it doesn't end well.

Wil Schroter: Yeah. And if I look at my, my personal history across all the companies that I've done over the past 25 years. whenever I was singularly focused on something like Blue Diesel, the first agency that I mentioned, you know, that grew into a huge company when I split my focus across a bunch of companies, which all did okay, you know, not stellar. I pretty much capped my success and that's even when I knew what I was doing when I finished then with those companies and then focused all my time six years ago on startups dot com, lo and behold, you know, becomes worth $100 million. Right? I mean, I don't think that there that, that there's any variable there other than where I spend my time, those other ideas weren't necessarily better or worse ideas and maybe there was those would become $100 million businesses, but I wasn't focused on,

Ryan Rutan: Sure you didn't put $100 million dollars worth of effort into it. The let's dig into the motivation behind this a little bit and let's let's talk for a bit about why founders feel the need to do this kind of all the way down to the deep emotional fields, like why is it that they end up thinking like I need, I need to hedge my bets, Why is that right? Knowing? Because I think we do know that you know, the less, I'm not focused on this, we understand the danger. And it's certainly not an uncommon story and it's one that you'll be warned against, right? Don't split your focus. Don't split your focus and people do it anyway. So what is this super deep seated need to hedge our bets as startup founders? Where does that come from?

Wil Schroter: I think at the end of the day, it's very simple. Fear is much more painful than greed is pleasurable. We don't wake up in the middle of the night to greed, but we definitely wake up in the middle of the night to fear. And I think hedging has everything to do with preventing fear, right? I want to try failure. Yeah, I want to try multiple things because I'm terrified of failure, right? Not I want to put my money all in one basket because I'm greedy as hell that I want this thing to succeed.

Ryan Rutan: Sure. Right. So it's not about driving multiple outcomes, It's about trying to get to any outcome and not for the sake of the outcome itself, but to avoid the outcome that everybody wants to avoid, which is failure. And so it kind of comes back to a very, very personal thing that drives this.

Wil Schroter: Well, let's dig into it. So let's talk about all the things that more or less fall apart when you start spreading your bets right? I would say the biggest one that's harder for folks to realize. But when you zoom out or when you play back the history of where you try to do it, it becomes painfully obvious is that moment I mentioned before whereby You're just in the shower and it's all you can think of. You wake up at 4:00 AM and it's all you can think of. Everything that you encounter everybody you talk to goes through this filter of this one singular problem or idea. It's where we are now with startups dot com and I haven't had an idea for another, you know, wholesale business since the day we started this business. And the reason is because it's the only problem I care about helping founders build companies is all I care about. And so everything that we do, you know, we did a whole bunch of acquisitions, all of those who were with the lens of how do we help entrepreneurs? I'm not thinking about the million other things that we're splitting my time and focus like we were doing before Back in the day with five. Cos I was thinking about how to assume auto leases, how to cast people for television, how to create an algorithm that could automatically determine whether email was spam or not. That is not a very healthy singular focus.

Ryan Rutan: You've got a couple of different contextual frames, right? It's the kaleidoscope model of focus. Horrible. Yeah. And I have to say like throughout the throughout the bill to startups dot com it's it's you know, we have done a lot of different things and yet to your point there all through that same contextual frame of helping entrepreneurs to build grow businesses. And we did some explorations early on. We talked about other things that could be involved and often they were just from a purely opportunistic standpoint and we're really like augmentations to the business model. Things like credit card processing. Right? Well we could become people's first merchant processor count. Sure that's an important thing for them to have and it would augment our bottom line but was that core to helping them to succeed. And the answer was no, they can get that somewhere else and somebody else can do just as good a job of it as we could. And so let's not spend our time on our focus there. Let's think about what's the what's the biggest hurdle that we can help them clear. Let's not think about anything that would be helpful. What are the biggest, likely barriers to their success. And let's tackle those at least first.

Wil Schroter: Let's build on the barrier concept for a bit too because I think this is just as important as the focus. I think it goes part and parcel every startup idea, whether it's a good idea or a bad idea has the same number of hurdles, right? People tend to think that if it's a good idea, that must mean that there aren't a lot of hurdles and I just kind of run through the obstacle course quickly. Total bullshit, right? None of that's true. The best ideas tend to have the most hurdles, which is how they become the best ideas because the opportunities are bigger, They're harder to make work. People are thinking, well

Ryan Rutan: that's what makes them a valuable opportunity, correct

Wil Schroter: right? Businesses that aren't working right? There are just nothing but problems in a bad product market fit tend to be pretty obvious, right? Because you're putting the product out there on the shelf and nobody's buying it is buying and businesses are working and a couple of people are buying. It's really hard to figure out how do you get more people to buy? It sounds counterintuitive, but anybody that's built a business that capped out at $20,000 a month in sales will tell you there's no way to know whether that's working well or not. You have to work 10 times harder to kind of move it to the next level.

Ryan Rutan: Yeah, because getting, getting that positive feedback, you don't have any sense for the scope or scale of that positivity right? It could be that. Well, this thing does just max out at 20K. But there's a lot of exploration that has to go into it. It's not as binary as this just doesn't work

Wil Schroter: well along those lines. It also takes time. There's no way to fast forward the outcome of these processes said differently within the first year, it's unlikely that you'll get any major indicators to definitively tell you that this is going to work or it's not now. There's usually negative indicators, plenty of them, right? That's kind of the nature of what this business is. But within the first year, if folks are expecting, hey, and you're one, I'm expecting to get some really positive indicators to let me know that you're too should be there. I would challenge you other than really trying to hypnotize yourself into positivity to find absolute indicators that tell me this business is going to be successful, good business, bad business. They take a lot of time to figure out, which requires an insane amount of focus during that period.

Ryan Rutan: Yeah, we rely on on very, very loose indicators. Things like while having my first cup of coffee this morning, a rainbow appeared outside my window, I'll use that there are these sort of finite hard facts that we can use to to indicate that we're on the right path. It's sort of like I have enough energy to keep tackling this, and therefore I will write.

Wil Schroter: And also, I don't think people understand we even referenced this, the cost of creating something from nothing, right? It's hard enough to take an idea a product, something that no one has ever seen before, or understands the reason that they even wanted and bring that to life. If you're lucky in your lives, all of us, not just you, the listener or anybody else, if you're lucky to do this once in your entire career to create something from nothing, you're one of the minuscule percentage of people who are successful. Now take that miniscule percentage and divide it by saying, I'm going to focus on two things and try to make that happen. You start to realize the magnitude of dithering your focus.

Ryan Rutan: Well, you know, it's interesting, but it's it's it's analogous to buying more than one lottery ticket, right? And not not in the same sense of division of focus, But in the sense that it doesn't improve your odds much right? The odds are so long against you that having one ticket, that's one out of 300 million or having two tickets that are one out of 300 million, doesn't double your odds of success. And I think that people think that, but math doesn't work that way, right? And it doesn't work in the startup space either. When you divide that focus, when you have multiple chances, your chances are still so small that you're not improving your odds and it's at the cost of the likelihood of the outcome is so great and so uphill that it just absolutely isn't worth doing.

Wil Schroter: Yeah. And I think most startups and if founders are listening to this now, they're thinking to myself, well that's cool. But I really do have to ideas and I don't know which one to go with. It's not that anybody can tell you which one to work on. It's that we can kind of tell you pretty definitively that you only get to pick one now do I think everybody's just gonna pick one because we have some sage like wisdom here? No, I think people are still going to pursue to However,

Ryan Rutan: that was my hope I had just sort of hoped that people would just listen and go okay and sign off, flip a coin and then get to work building something

Wil Schroter: awesome. You don't think so, founders need to make their own decisions for themselves. All we can do is try to provide some more data points to consider the data point here to consider would simply be I know going into it that if I split my focus, I'm going to reduce my chances of success on either prospect. So with that, is there one of these that I'm willing to try for a longer period of time before I bother with the 2nd 1. Right? So it's to say yeah, in the end I may pursue two of these. but is there one of them that I'm willing to spend more time on initially in order to try to increase my chances of success?

Ryan Rutan: Sure. Yeah. So think about the opportunities that are before you and then picture yourself in the role of Rocky played by Sylvester Stallone right before he actually wins the fight when his face looks like it's been drugged up and down the street for a couple of hours and put yourself in that frame of mind and say now, now that this is your condition, which one of these things would you be willing to work on under those circumstances? Because that's what it's going to be like, right? You're gonna take a beating. So being able to determine which of the ideas and this is an entirely different topic, right? This is about, you know, making sure you've got enough passion to see something through. But I think it can be an important determinant in how to narrow your focus, which I think is something else that would be really useful for us to talk about when we are faced with multiple ideas. How do we decide? How can we help founders to understand how to narrow the field? Right. Because we know it's important for them to narrow the field. So what tools have you used moving forward from the point where, you know, you created your own incubator and realized that wasn't optimal?

Wil Schroter: Yeah. Well,

Ryan Rutan: what did you do personally to

Wil Schroter: get to that point? I looked at a few different things. One is I looked at what aspects of the business of the idea, am I particularly good at pushing forward? Right? So for example, if I was particularly skilled in marketing, I would look at the two opportunities and say which of those opportunities will my skill set most likely drive the business forward, right, I may even like one of the one business a more than business be, but if my inherent skill set is likely going to push business be towards success, I might start with that one first, right? Because again, starting something from nothing, you've got a tremendous amount of momentum that you have to create and if you're already starting with your foot in the hole trying to get this momentum going, not really going to help your cause So again, one of my first filters, if you will, would be where are my best suited to actually make this idea successful. Another one in Ryan, you know, I've talked about this and other podcasts is which one do I like better? Like, like where do I want to spend my time and my energy where I would actually be enjoying what I'm doing because those ideas tend to be ideas that work a hell of a lot better because I'm willing to go that extra mile because I actually give a sh it about the business.

Ryan Rutan: Yeah, right. And so when, when things do get tough, you'll, you'll stick through it and it's a hell of an exploration. It's nothing easy to determine, particularly if you, if you don't have prior experience. Um, I think this is a much more challenging thing for first time founders to figure out, because they may not have been to that point in startup life where the only thing that you have left is the passion for the idea, right? And it's a common milestone. You hit it multiple times throughout the progression of the company as it grows and having enough desire to see the solution through, simply because you want to see it get built. You want to see the solution exists in the world, and I think that can be really hard for them to determine. I like your idea. You know, you can, you can focus on your skill sets and determine, you know, which one is more likely to push the idea forward. I do also think that's incredibly difficult to determine. I may be a talented marketer, but how do I know which one? My skills will be better met two. And all this is to say that it's not an easy decision. We don't have the answers, we just have some frameworks for helping people get closer to that answer

Wil Schroter: they do. And I think people may look at their ideas and say that I have this one idea and I think this is going to be successful. And the truth is the idea has very little to do with whether it's going to be successful, right? People will tell you this all the time, they'll say it's the it's the execution that makes, makes it successful and that's also true, but I think what they're implying within that execution is also the fortitude to see it through. Most ideas, we've talked about this before at inception are actually the wrong version of a successful idea, right? It's just it's it's a concept of what something might be, but then you actually get out there and you apply the execution in the fortitude and you shape it and transform it old school blacksmith style into the idea that you that will actually become successful, you know, this is just a catalyst. So where I think people get stuck when they have multiple ideas is there, they're trying to say which one on its face without any execution, without transforming without proving anything is the right idea,

Ryan Rutan: the reality is they're both valueless at that

Wil Schroter: point. It's literally like saying, I just had three kids, they just got born nine seconds ago, which one of these will be a track star, which one of these will be, you know, will go to Harvard, it's like how the hell would you know that right? There's no possible way, no matter how much testing you did right now to to to to test the D. N. A. Of each of these kids to say how will they turn out? You have to see this thing through in order to actually find out. And I think that's the fallacy of working on multiple things is people think you can get these definitive signals with very little input or effort or focus

Ryan Rutan: totally agree and to bring it full circle. One of the things that we talked about was this concept of what is the motivation for this, right? And and the motivation for for holding onto multiple ideas was the idea that we're somehow hedging our bets and we're less likely to fail. We're more likely to have a success if we choose multiple ideas and it sort of defray some of the risk of failure and we know that to be untrue. And so I think one of the things that could make this a bit easier is for people to acknowledge that this is just going to be a really hard choice, right? But that making that choice is going to make you more likely to have the success that you're hoping for and avoid the failure that you're hoping to avoid and and said differently, holding onto both of them doesn't really change things for you in in any way that could be construed as positive, having those two lottery tickets doesn't meaningfully change your odds of success numerically and in fact fundamentally we know that it it reduces them. And so to some degree, what we can provide founders today is, is permission to choose one, knowing that that is not. What's going to dictate your choice today is not what's going to dictate whether you're successful or not. That to me is the biggest fallacy here that somehow if I pick the wrong number today, I'm doomed forever to your point. These things are at such an early stage, the idea phase that there is no way to determine which one is better. They're both just ideas. The one that is better is the one that you're going to dedicate yourself to, your, going to dedicate time to and you're gonna blacksmith into a shape that is recognizable as a business and not just an

Wil Schroter: idea and really in paraphrasing and agreeing with what you're saying here is the only way to make your startup less successful or pick the wrong one is by picking two.

Ryan Rutan: Well, that's a wrap for this episode of the startup therapy podcast. In the meantime, if you love what we're doing, head over to itunes and subscribe and comment. If you'd like to connect with us directly. We are not hard to reach at all, email us at therapy at startups dot com will and I respond to every email that comes in. So don't be shy. What we shared today is a tiny fraction of the help that you can get from startups dot com. Whether you need to learn how a startup gets built, find a mentor, raise capital or get new customers. Really, anything that a startup needs, you can get access to thousands of resources on startups dot com. With that, let's get back to building our own startups. This is Ryan, written for my partner, Wil Schroder and the entire startups dot com community saying goodbye for now, Friends.

Wil Schroter: Yeah.

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