Startup Therapy Podcast

Episode #10

Ryan Rutan: Yeah, yeah. When does the startup truly die? Is it when the market rejects the product? Is that when the company bank account runs dry or is that when the founders themselves can't afford to eat. In this episode of the startup therapy podcast, we explore the difference between the company's runway and the founders runway. We'll discuss how the founders personal finances have a dramatic impact on the life expectancy of their startups and what you can do to extend that runway and keep your startup alive. This is Ryan Rutan from startups dot com. I'm joined by my partner Wil Schroder for another episode of the startup therapy podcast. Today we're going to talk money were more specifically the lack of it and what it does to us as founders on a personal level and how that impacts the business. You know? Well, I was thinking that this is basically the same advice we've been given every single flight we've ever taken in the event of a sudden loss of cabin pressure, put your oxygen mask on before helping others, right? Because that's sort of capture the

Wil Schroter: essence, right?

Ryan Rutan: So, so, you know, you wrote an article about this and and it's been a couple of years ago Now. I don't think it really matter. It was five years ago or three or four years from now. This is a topic that is has always been german two founders and I and I don't think is going away anytime soon. But what what brought you to the point of feeling like you need to write this?

Wil Schroter: Well, I think it's because when we talk to founders, we usually ask them the same first few questions. I think the first one we say is how are you doing? And they start to say, well the business is doing X, y, Z, which is, which is the right answer

Ryan Rutan: is you, you

Wil Schroter: how how are you specifically doing? And and the first thing we're really asking is like emotionally, how are you doing? Are you holding up, are you healthy? Are you okay? And because they're probably not

Ryan Rutan: right, that should just be a big single checkbox within no, next to it.

Wil Schroter: Yeah. And, and, and so that's usually where we start and it's us just trying to remind them that we're founders to, we go through the same stuff and we're probably not okay to, and we could have a conversation about that, but as that evolves a little bit and we unpack it a little bit. We say, how are you holding up? How are things at home, so to speak? Like are you able to keep the lights on at home? And it's it's interesting to me because most of the founders kind of take pause and they're like, well, what do you mean? And we say, well, your business looks like it's maybe grown a little bit. What are you eating? Can you, can you keep the lights on at home? It's odd because no one's ever asked them that question before,

Ryan Rutan: Right? But it's all they're

Wil Schroter: thinking about

Ryan Rutan: their landlord

Wil Schroter: might have. Yeah. And so I thought it would be helpful to really kind of dig in to what, what does it mean for a start up to fail? And we say that, that the startup doesn't go bankrupt, the startup goes bankrupt and fails when the founder goes bankrupt. And I wanted to really talk through what that actually means.

Ryan Rutan: Sure, yeah, I mean, the, the, the startup, unlike the founder themselves, can exist in many states, right? Like right? As humans, we have to keep eating. We typically need a roof over our heads and, and, and a lot of other nice to haves, um, and necessities, but the business itself can survive in a lot of different states. And I think we should unpack that a little bit later. But yeah, the personal finances are so inextricably linked to the health of the startup, particularly the early stages. I know of course early it can be less and less important as time goes on. But at those early stages, there there's very little separation between the two

Wil Schroter: and I don't think that founders really appreciate that right there thinking, well, the business has a little bit of money left me, We raised a little bit of money and there's money left in the bank account, but secretly kind of behind the scenes, they're running out of all their money to, because let's face it, starting a business isn't the fastest way to make money later. It is. but in the early stages it's the fastest way to lose your money, right? It's incredible. And so the founder, let's say they raised a little bit of cash because I want to talk about it first from a company that has a little bit of a buffer. Just to prove the point. Let's say that you raised a little bit of money, Maybe it's 700,000, uh not $0 but not millions of dollars and you've got some cash in the bank, you're using that cash to pay people to pay partners etcetera. But personally, you're not really taking any of that money home, right? Maybe you've got at best some really meager salary. Well, during that time I gotta pay rent, especially if you're in an expensive city like san Francisco or L. A. Or new york, where rents extraordinarily expensive, right? Gotta keep up with your bills, right? You've got your your lease payment for your car, maybe you've got your, your travel bills, your food bills, all these little things that are part of your life that no one's really paying for, right? So what you inevitably do is you go into debt, right? You start firing up credit cards, you start kind of starting to chip away at some of those savings etcetera. And in pretty short order, they're all gone Right? And so maybe the business is doing okay. You know, maybe at that point, the businesses generating 2050, a month and people are getting paid and it's losing a little bit of money, but it's still around and still doing okay. But you're broke. Yeah, right. That's the part where people aren't wrapping their heads around, that if the business starts to dip and you're broke, you're done, the business is done or at the very least you're done

Ryan Rutan: right with the business done, right. Which, which at the early stages that it's often the same thing, right? You have a diverse founding team, which is, you know, 34 people, maybe one of them can, can dip out and then the business can survive. But if all of a sudden the solo founder Ceo is like, hey guys, I'm out of money and well I can continue to pay all of your salaries. I have to leave now. I hope that this continues to go well. Like I don't think we've heard that story at least not that ends positively

Wil Schroter: Never. So when we talked to formative teams that have just gotten kicked off, like somebody that just came off of a startup weekend, right? Or somebody that just got accepted into an accelerator and got, you know, a $20,000 check or something like that question I always ask is, how are you going to keep the business running personally? Right? How are you going to be around long enough paying your own bills in order to keep this business going, Which probably won't be paying any bills any time soon. And I gotta tell you, Ryan, it's typically the first time they've ever been asked that question, which kind of freaks me out if I'm being honest with you right now

Ryan Rutan: Does not account for this. I've, I've seen, I've seen the 10 years of financial projections you've done for the business and you haven't thought about next month for yourself yet.

Wil Schroter: Yeah. And, and you know, so some young founders can say, hey, well I'm still in college, which is actually a really good answer, right? You know, it is, you do have like a structural system or you know, I'm living, my parents or my spouse is taking care of things. Those are all the right answers, right? But that's typically not what you get. You typically get. Well, I just assumed we'd keep building the business until it could pay me. And it's like, dude, good luck with that. That Delta almost never gets crossed, right? But it's important to figure that out.

Ryan Rutan: In theory, it works right. Eventually the business can pay you whether you can survive until that point is the question, right?

Wil Schroter: You bet you bet. And so what the business needs in the near term is actually a little bit of a foundation to be able to go back from, in other words, the business needs you to be able to say ship the business ran out of money, but I can keep afloat long enough to get back into the game, right? And you know, I've been through this before and actually I'll just, I'll play this out because I think this, this really taught me a huge lesson. I was in college starting one of the first interactive agencies, a company called Blue Diesel and I was 19 at the time just dropped out of school in order to start the business and I had maybe hundreds of dollars in the bank, right? But I was a college kid. You know, I, I lived on nothing That said the business was growing a little and I was making hundreds of dollars per month in order to kind of cover my costs. And I remember specifically my costs were $525 a month with food. So it's columbus Ohio, it's in the 90s, you know, I was 19, I weighed £50 less than I do now that was a different, different human. But regardless the business started to grow a little bit, we started to get a few clients, nothing crazy. We weren't making much money. And then all of a sudden we hit a drought period. This is maybe a year and a half, two years in and at that point I couldn't pay anybody, everybody quit immediately, which what else are they going to do? And I was making no money personally. I had a lease that I had signed on. I had some recurring bills that I had signed on and I had to go to all those vendors and say, hey man, like I can't pay you anymore. Right? It was, it was embarrassing and disheartening. After all the hard work we had put in. I remember sitting across from the least manager at this, this kind of nice office that I just signed off on and just almost in tears because I had to tell this guy that I couldn't pay my rent and it was just, it was embarrassing. However, I then moved the business back into my campus apartment. Right. Which also not the coolest thing in the world. Had the folks that I was contracting with and or paying just come into my apartment to work nowadays. That might sound kinda cool back then. It was not that cool. And so, well, here's what happened. And this really changed things for me by being able to kind of dial back, cut back all the expenses and be able to keep myself in business or go to bed. We took about nine months to a year to still run the business but run it with almost zero costs long enough for us to kind of get our mojo back, start to get some clients and we have some big client wins and then get back in the game. Yes. But it only worked because I was able to maintain my personal runway to keep myself alive, which really meant not having to get another job to shut down the business and be able to grow, dial back and grow again is what made that a huge business right? And really saved us.

Ryan Rutan: Absolutely. You know, it's and it's not an uncommon story. In fact, I have one that that nearly mirrors it in, in a lot of ways started a similar time, very similar business. I actually started mine in, in the, in the college apartment and never moved it out and managed to say that we did move apartments once to create some more workspace. Um, it worked out that both my roommates were actually also employees, the company. So we were able to just say, hey, let's move across the street and have a little more space so that we don't actually have to use our bedrooms offices with letting these, you know, this horde of developers into one bedroom and a bunch of designers into the other and it was hugely impactful because we knew we were going to continue to pay for that. Like we had to have somewhere to live. So why not just keep the business here domiciled in the home Sure. And you know, you talk about, you know, making sure that we can stay fed. And I've heard you tell a very similar story to this one. But there was a point at which we went through something similar where we were also facing a little bit of a drought, we had a couple of projects drag on and all of a sudden we were kind of upside down in them and you know, it took us longer to do what we thought we would do. So, you know, our billable hours were done in making $5 an hour to complete these projects. Like we gotta get some cash in so we can pay the rent on this house slash office and feed ourselves. And then we took a slightly more drastic step, which is that we went directly to working for food. We did a couple of websites and a couple of digital campaigns in return for some pretty healthy tabs at a couple of local restaurants and you know, it worked. And so, you know, it, it gave us the time that we needed to recover, grab a couple of new clients and kind of get back on the horse and do it right. But we were able to stave off our personal failure, which absolutely would have led to the business failure because as you said, you know, these were all college kids, some not even in college, but all college age kids who without a single pay check would have bounced, they've been gone, we would have had to all just go our own ways and it would've been the end of the business,

Wil Schroter: right? And if you, if you think about it this way, typically in the beginning of the business, the only real costs are yourselves, right? So at which point you can't afford that specific cost, then you're done. Right? And so when the business gets bigger and you've got, you know, dozens of employees and you've got tons of partners that you're paying out, marketing budgets, etcetera, different story at that point, the business itself has to be viable. But in the formative years really, you're probably going to go through this ebb and flow where the business pays you for a couple of months, right? Because it's maybe doing well or you raised a little bit of money, but then it goes back to zero and often negative and then you sort of have to figure it out by yourself,

Ryan Rutan: yep. About every time I would set myself up on automatic payroll. Yeah, and get it done, I would have to turn it back off again. But every time I was like, okay, I paid myself pretty regularly the last three months, let's just go ahead and automate that and then the next month I'll be like, shit, I turn that off, turn it off

Wil Schroter: quick. That was a good feeling, we're all done here. But you know what happens is I think folks think about building a startup as like it's getting a job, we're okay, I'm going to join my own startup and I'm gonna just get paid on a regular basis and that's just the way it works, the startup is my new income, that's my new salary and that's going to come from there for as long as I decided to run it. That's just totally

Ryan Rutan: not true. Absolutely

Wil Schroter: right. That that can happen. You know, it does happen, it's cool, right? But it probably won't right. And if you're fortunate enough to be able to kind of stay the course and be able to only get your income from the startup, fantastic, right. You know, forget everything we just said. But if you're like most startups and you're probably going to kind of go through this ebb and flow of, of startups, doing great startups, totally bankrupt startups, doing great startups, totally bankrupt. The only common thread there is whether you're paid right in more specifically whether your bills are paid and so what we often talk about is to plan a, to plan approach one is how do you keep the business kind of growing and or moving forward? And the other is how do you just maintain your own cash flow, your own situation? And by the way, often the two aren't necessarily the same plan. For example, often the way you're keeping your lights on is with another job, right? For the job that, that you didn't quit, right, That is a perfectly viable plan. You know, people talk about, hey, I'm bartending on the weekends in order to, to pay my personal bills. Dude, that's exactly what you're supposed to do.

Ryan Rutan: Exactly, yeah, there's no shame in that game at all. In fact, we just had a podcast listener email in uh this morning saying that, hey, you know, I'm loving the podcast, A lot of this is resonating with me. It's making me feel better about what I'm doing. Um you know, I no longer feel like I'm alone in all this. And his personal story was that he's, he's, he's got his regular job and he's working to, to, to build a business until he can kind of let go of the first wing and take ahold of the other. And that's, it's a super, super common scenario.

Wil Schroter: You know, uh one of my favorite favorite stories and uh you know, Ryan, you're well aware of this one is the Airbnb story, you know that brian Chesky told and fred Wilson told that the venture capitalists who funded those guys or didn't find him, I can't remember if he put money in or not. I think he might have said no,

Ryan Rutan: I know that he wishes he had, if

Wil Schroter: he either way, I definitely wanted to be in on that deal, but but the better recollection, um actually comes from brian Chesky himself, from Airbnb and he actually told it in an interview on our site and I'd highly recommend you hop on startups dot com and, and either do a search for brian Chesky, C H E S K Y or Airbnb and you have to read his story. It's just so powerful. But I'll steal one anecdote from from this story, brian's very, very honest in the story that he tells us and how Airbnb came to be. But really how brian came to be, you know, uh if I remember the story correctly, uh brian was an art student from Riz de that moved back in with his parents, you know after he left art school and started Airbnb wasn't a really cool start for him. And at one point the business was trying to grow, brian was trying to figure it out with this with his founding team. But they ran out of money. They ran out of personal money as well, right? And they were just trying to get this thing going. So this is around circa 2008 Brian during the presidential elections, went to the Democratic National Convention in Denver and raised money by selling Obama owes in Captain McCain's for $40 apiece. Come on man that literally has nothing to do with the business they were building. But they raised $25,000. They

Ryan Rutan: got a little bit of runway and it went right back to it. And

Wil Schroter: it turns out if I recall that Captain McCain's didn't sell too well, you know, in retrospect, maybe you know why, but they ended up using those to eat for that point on in order to kind of keep the lights on, right? It did. That's Airbnb this isn't some ragtag

Ryan Rutan: operation

Wil Schroter: as it's growing companies

Ryan Rutan: in history and it's not an anomaly right? There are so many of these great stories and I'm sure there's thousands more that we haven't heard. But this is the kind of stuff that it takes and I think that, you know, you've made an important point earlier, which is that the two are linked when they're sinking, right? So personal finances going down, it means the business can get drug down with it, right? But if you can keep yourself alive, the business can stay on life support for as long as it needs to, right, push pause on a business, you can't push pause on life. And so I think that is something else I'd like to explore a little bit, which is what do we actually have control over in these situations? Right. Like it's easy enough to say, well, we're running out of money, let's just make more money. That's often the hardest thing to do because if that was possible, you probably would've already done it and you wouldn't be having this discussion. So I think it'd be, it'd be good to to back up for a minute or two and just talk about what of these inputs? Do we really have control over both on the personal side and on the business side, right. You can turn off a lot of expenses on the business side and the business will still be fine. Right? I think that as businesses grow bloat is a real thing, you know, we do this all the time. So this is not something, you know, even even at the stage of the company that we're in with startups dot com that we're immune to. We do regular sas audits and we find stuff that we haven't touched for months and we're like, why are we paying for this? We turn it off. Just good business practice and the business doesn't suffer for turning off right? And in, in cases of extreme need, you can, you can go further than that because the reality is that business doesn't need any of those things to survive. It might need them to grow, might need them to grow faster, but it can live without them. There are things on the personal side you can do as well, but there are things on the personal side you cannot do. For example, when I was listening to you say about your, you know, your monthly fixed expenses of $525 a month as a college student, I'm thinking, you know, like I can't go back to that, right? There's no version of me packing my five person family Into a lifestyle that, that's $525. I literally can't do that right unless I give away a couple of my kids or something. Not a good way

Wil Schroter: to do

Ryan Rutan: that. Yeah, So, so you know, we have control over certain things and we don't in other cases and I think that often the priorities get a little skewed there. I have definitely talked to founders who were still paying for things they didn't necessarily need had expensive consultants that they were, you know, if this guy can just figure it out, then we'll be making more money and I'm like, and you you're living out of your car now, why are you paying this guy if you can't like the business will be okay, turn that off and and save yourself for a minute and feel better about life. And I think you're gonna move forward as a as a more capable founder at that point.

Wil Schroter: Well, I think part of that too is I don't think founders treat their personal life and finances sometimes as importantly as the business, right? Because the business becomes this thing that they're constantly talking about and presenting and their ego and pride is tied to it and by the way, that's fine and they're so worried about the start of failing because it's a reflection of their own failure, et cetera. But they don't have a problem running themselves into the ground personally financially to do it. And we all have, by the way, I've done it

Ryan Rutan: right. Which is ironic because that's the thing that your friends actually see and judge you on, they don't know whether your business is doing well or not. They know what your business is doing based on what you tell them it's doing, but they can watch, you can watch you disassembling your entire life to make that thing work and that's what they're going to judge you on. So if you really are worried about other people's opinions, focus on your personal

Wil Schroter: life first you have to and you have to have a plan whereby you can keep the lights on, okay? We keep saying this, but but but it's such an important point. We get all over zealous about building the business at the expense of our personal life. And let me give you just a few different examples of where that's happened at both. The lowest amount of money folks could have the highest amount of money folks could have. Right. Three examples. The first example is uh I'm 26 years old, you know, not a college kid, like almost too much of a strong example. I'm 20

Ryan Rutan: six years I think that's still a college kid now. Well yeah,

Wil Schroter: It probably is, but I'm 26 years old. My expenses are really low, but even still I'm burning through all of my cash right? I just didn't have much in savings. I didn't have many credit cards, you know, whatever I was using to kind of to foot the bill and I'm 18 months in and I'm kind of out of cash, Okay, you know what the answer, there is get another job right, do anything else work on the weekends, working nights, do consulting, get a real job and do your startup at night, whatever you can do to kind of keep the business moving forward, just make sure you're refilling your personal coffers because you just can't run much longer.

Ryan Rutan: I want to drop one more thing in there and this is something that I love to talk to you about, which is a service proxy. So a lot of times we're talking to startups that are building a product of some sort and that can take lots of time, lots of money. And so one of the things that that I often explore with people is to say, look, if you're trying to build this big product is gonna take a lot of cash to develop, develop a service based offering that has maybe almost no cost to begin and use that. Now. It's not the thing you want to build the end, but it will probably teach you a lot about the business. It'll probably help you hone the process that you want to turn into a software tool or an application and it will generate cash almost immediately. Absolutely. If it doesn't, you might also think about not building that product because maybe there's a market there, but it's another great way to do that.

Wil Schroter: Yeah, I have been built that way. I mean, you talked to the base camp guys, you know, Jason and David, that's what they did for years before they ever had a viable product. Bennett Male chimp, they did the same thing. I mean, over and over. You hear these stories where people basically used a day job to to eventually replace their their day job with the new J job, a job that, you know, the paying gig. So that's that's example, number one example, number two, which a lot of people don't know about. There are no shortage of funded companies, right? And I'm going to say companies that have gotten funded for millions and millions of dollars. Actually, a lot of very close friends of mine, I can't say who I'm just violate their confidence, but we're broke. Company's doing great, right? I'll give you an example. It's just, this just blows my mind because it actually happens way more than people are willing to talk about. Company raises millions of dollars, but it does so over a fairly long period of time long in startup terms, Right? Let's say, let's say 5 to 7 years by year five, year six, year seven, that founder or the founding team has been funding this business personally for years before it ever raised money. So all their personal finances are long since gone right there. Personal coffers are way cashed and then they raised some money. Then they gotta shit salary based on what they raised because typically companies aren't the execs aren't taking a huge salary early on, but not nearly what they could have otherwise made in the market in many cases and in most cases nowhere near enough to pay back all the money that they took,

Ryan Rutan: they're often, they're often super happy just to get back above break even at a personal level right? Forget about recouping any of the, the historical losses there just like your rent can happen now or mortgage can happen or you know, whatever they need to pay for a monthly basis

Wil Schroter: but then it becomes a factor of the business is going to take X amount of years to hopefully exit or do something. But they're sitting there on what's actually a fairly successful business personally broke. This happens time and time and time again. I could probably name 20 of my friends this year right now that are dealing with that situation. Great companies kicking ass etcetera but are personally broke.

Ryan Rutan: Yeah right. They might have seven or even eight figure networks correct, right on their stock etcetera, but on, you know from a liquidity standpoint, they may be paycheck to paycheck

Wil Schroter: and then my favorite of course is where you've made a gazillion dollars and you're still somehow broke, which is our famous example of, I think it's 2000 and eight era Elon musk filing for bankruptcy in the California courts. I think it was during his divorce proceedings. That was that where all this came up. A lot of people don't know this. I mean if you, if you do a little bit your homework and dig in a little bit, don't look for Tesla bankrupt. Look for Elon musk bankrupt. However, it's just so funny because his version of bankrupt, let's see if we can bring up one of the, One of the examples he had Ellen was talking about how he was kind of down to his last dollar and trying to plead with the judge where he was living off of me or $200,000 a month. Uh, that he was borrowing from his friends. I've trimmed away all the fat, your honor.

Ryan Rutan: There's literally nothing else I can do and still survive. Now. I remember, you know, there was the other, the other story from, from, you know, one of the other stories from musk's history was I think it was post paypal but it was at the time he had invested then in Tesla SpaceX And solar city at the same time and was borrowing money to make rent. Right? And he talked about this and he was very open about this. Um, and so that just goes to that, you know, so his net worth at the time had still been north of $100 million dollars assuming the investments hadn't grown at all and yet he had to borrow money to make rent And it's just, it's, it's mind boggling.

Wil Schroter: Well look, it happens, it said here quote according to the filing, Elon Musk has been living off personal loans from friends since October 2009 and spending $200,000 a month while making far less. Does

Ryan Rutan: It name any of those friends? I'd like to see if they need some new friends, Jesus, right? You know, subsidizing my $200,000 month lifestyle would be would be awesome.

Wil Schroter: But during that time, a lot of the news that was going out there and I love how you know, people forget about all this stuff. I'm sure Ellen does not. A lot of people were saying, look, if Ellen goes out of business, what does that mean for Tesla? And at that time Tesla was struggling. Tesla was, you know, trying to raise debt etcetera. But even on the high end, this stuff actually happens, right? People actually do run out of money again. We can all hope to run out of money like Ellen does. But the point is personal runway is a real thing, right? And it has serious implications for the business itself.

Ryan Rutan: Okay. But so what does that mean personally? And and how can we set ourselves up to avoid or maybe at least minimize this?

Wil Schroter: Good question. I mean, the first thing we're gonna want to do is we're gonna we have to understand that what we're prepping for this runway. It's not two months, three months, four months. There's no version where our startup is all of a sudden going to take off and start paying all of our bills within a few months. Most likely it's going to take 2-3 years now. The first thing people will say is, well, I don't have enough savings for 2-3 years. The average person doesn't have enough savings for a month. Of course not. So that's not the point. We're not talking about funding this with savings. There's almost zero chance you're going to be able to do that. You have to fund it with some sort of active income. Whether it comes directly from the business subsidized by the business or comes from something else that you're doing to keep things going or to reduce your expenses.

Ryan Rutan: Sure. Yeah. So you're you're aiming for essentially infinite runway and the way to do that is to dial your efforts down such that that's possible. Right? So you may not be able to do everything you want to right from the beginning, but you need to make sure that whatever you're embarking on whatever you're trying to undertake, you have enough resources to support that and continue to run the business.

Wil Schroter: Yeah. I mean, we've all been through it. Ryan, you've been through yourself.

Ryan Rutan: Oh yeah, man. So yeah, this is an interesting illustration here. Going back to my first two businesses in the first business started in college. Um, you know, as I said earlier, I was running it out of the the college apartment, paying a bunch of my friends to work. They're trying to make ends meet and but I didn't, I didn't set it up from the beginning with a good understanding of runway. Didn't understand it all. Didn't know what runway was. Had no idea what a burn rate was. Didn't really know how to manage cash for business, learned all these things on the fly the hard way. I remember watching the the foot race between a deposited client check and are pending rent check. Um, and you know, it's at some point you decide you don't want to do that anymore. Right? So after after selling that first business and decided to start the second despite having some savings at this point despite having a much better idea of of what it would actually take. And and possibly because of that. Um, I made a hard decision to before starting the second business to move back in with my parents some seven years after I had left home. Which is it's tough. And you know, I guess that may be more common now, but I'm I'm well, well outside the millennial bracket. So this was not something a lot of

Wil Schroter: doing

Ryan Rutan: didn't didn't make me cool. Right. They definitely did not make me cool. And and so you know, I had to do that for a couple of months until I I was comfortable with the cash flow of the new business. And and was able at that point to them take a meager step out of out of the home. But I went month to month with that first lease so that I could make sure that I can move back and I need to, I was ready with the escape plan. Ready to go back to nearly infinite runway. And so I think that it's important to build that from the beginning and it's, it's a hard lesson to learn. It may be hard to learn from hearing somebody else to tell you about it. But certainly once you've been through it, once you will not forget it.

Wil Schroter: Yeah. You know, and I think it's, it's a discussion that we should be more open to having. Right. I think for a mentor standpoint, you know, when we're talking to young startups, especially folks getting into the game for the first time. And I don't mean young by, by age that the founders are young. I mean young by folks who are just getting into it however old they are. I think a very fair and honest question is how are you going to keep the lights on at home? Right. And I think in most cases, the founders who have never been asked that question, which I think is a disservice to them. And I think at first that they're going to feel like you're kind of in their kitchen. It's a little bit too personal. But when you start to explain that, hey, look, I want you to be around for a long time. I want this business to be around. What can we do to come up with a plan that keeps you going for a while.

Ryan Rutan: Yeah, I know it's a fair question. It's a good question to ask. And you know, if, if they're worried about us being in their kitchen, sell them, we're worried about you end up sleeping on my couch when you're

Wil Schroter: on the money. That's exactly the case. Right? And, and I think once the founder starts to realize that hey, some of the things you have to do maybe a little bit outside the scope of your business, then that starts to become understood. And I bet, I bet if we started to query the million plus startups that are on startups dot com And said, how many of you either are currently doing something that has nothing to do with your core startup or had to in order to get it here. I'd be shocked if we didn't get at least 50% of the hands. Probably more.

Ryan Rutan: Oh, I'm sure, yeah, I'm sure maybe not in their current startup, but at least in one out of the, you know, if there are multiple time, I guarantee one of them has been through this

Wil Schroter: and I, and I think it's, it's more well understand because you know, we've, we've coined the term side hustle, right? So people understand that I could do my main job and then my startups, my side hustle. Listen, however, we term it, what we're really talking about is this is what I do to keep the lights on, this is what I do to try to build up towards the next goal, right? And I don't think that should be considered a side house, like things should be considered, this is this is how I build.

Ryan Rutan: No, it's it's the it's the booster rocket, right? It is what will help to propel and sustain that business. And you know, I think that when, when their social circle, when their friends, family, people who are close to what they're doing but aren't inside the business or haven't ever been inside the business, I think they're going to see this very differently than than you or I or most of our audience, would we respect the side hustle, right? Even before it was called the side hustle, even before it had a cool name, we were like, you're doing what you have to to keep this alive. And when you really get to the underlying motivation for that, which is to say that I will do something else. I will work a job that I don't like in order to be able to pursue this thing that I believe in. I mean man, that that's a ton of respect for me and I think a ton of respect for most people in the founder community because it's not about just staying myopically focused on the thing that you want to build, it's about being flexible enough to see that it actually gets built

Wil Schroter: Absolutely. And and I think that that's a taking your ego and putting it exactly where it should be focused on building the business, not destroying yourself in the process, but also recognizing that there's gonna be some twists and turns in the process. You know, we've got the term side hustle. If you recall, we developed the term in the startup business, not us a pivot. We need a new term for what it essentially means to to rebound or rebuild. Right? So when someone says, you know, where are you in the business? And you say, well, hey, I'm in the rebuild phase, you kind of know that means, oh, I get it. You build something didn't work out now. You're trying to kind of get finances in order in order to go do it again.

Ryan Rutan: Yeah, yeah. It's, it's the yeah, we need a better word than pause. We need a better word than rebuild. How about we do this. How about some of our listeners post in our comments section, either on Itunes or Spotify wherever you like to listen to us. Um, it'd be pretty cool to see if we can coin a new phrase that describes this absolutely critical and very common stage in in the startup lifecycle.

Wil Schroter: Absolutely. Or you could hit us up at a therapy at startups dot com and that would

Ryan Rutan: be my preference actually.

Wil Schroter: Yeah, let us know directly and and it's something, you know, we can dig into and over time as we start to get some guests on the show will start to go through their stories and I gotta tell you no matter who we get on here, no matter how prominent. No matter how successful. I guarantee there is a story that they have where they had to stop kind of restart and build all over again because frankly it's sort of part of the process.

Ryan Rutan: Well, I'll tell you what will I believe that to be true too. But if it turns out not to be, we just won't post that

Wil Schroter: episode. We'll edit it in with with our own words will voice over the way I see it is that it's not always ideal to have to kind of reset in and restart. But again, like we said, it's part of the process. I think as founders if we recognize that our own personal runway is meaningful is kind of the lifeblood of the business and build towards that. I think we're on the right step.

Ryan Rutan: Yeah, I think it's it's kind of like hit points and armor points, right? The business has armor points. We have hit points. You can run out of armor points and still be okay. You're out of hit points. You're dead.

Wil Schroter: Yeah. And you know what uh we said the employees can leave but you have to go down with the ship. Right? So all you need to focus on is keeping that ship afloat, both personally and through the business.

Ryan Rutan: That's a wrap for this episode of the startup therapy podcast. This is Ryan Rutan on behalf of my partner Wil Schroder and all the startups dot com family thanking you for joining us and we hope you'll continue to join us. Be sure to subscribe, rate and comment on itunes or wherever you love to listen to startup therapy. You can find all of our episodes at startups dot com slash podcast. If you're looking for more amazing resources to launch or grow your startup, be sure to head the startups dot com and check out startups unlimited. It's everything we have to offer from our online university to our amazing community of experts and founders and even all the tools we've built like this plan, fungible and launch rock. It's everything a founder needs visit startups dot com slash begin that startups dot com slash B E G I N. You'll thank me later.

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