Startup Therapy Podcast

Episode #104

Ryan Rutan: Welcome back to another episode of the startup therapy podcast. This is Ryan Rutan joined as ever by my partner, friend and founder of startup dot com Wil Schroder Well, it's no secret that in the life of a founder, we make tons and tons and tons of sacrifices, right? What might be a secret is that it's a secret to pretty much everybody else, right? And that we don't necessarily get the type of return that we might expect from this sacrifice. We have these conversations all the time with founders, but I think you had one fairly recently that I think would be a cool jumping off point for this episode because it illustrates sort of the entire spectrum of, of where we get this wrong as founders in terms of our expectation around what that return on sacrifice should look like.

Wil Schroter: Well, sure, so a lot of founders, you know, at some point, especially if they've raised money, I think this is usually, I think they're looking at the cap table or they're looking at their life situation and a few things invariably come to mind and I think there's kind of no way around this one is so far down the cap table and I'm 100% invested that at this point it doesn't really buy me a ton to keep moving forward. And so they're thinking about, you know, hey, you know, maybe I should go do something else and that's just a catalyst for this discussion. The real discussion is okay, so I look around and I feel guilty because I feel like all of these people that I've run along on this journey, I owe debt to write significant debt I owe to the investors because they backed me, I owe it to my staff because obviously, you know, they were willing to be part of this journey. You know, in some cases, depending on their relationships with my customers that you know, I owe it to partners, all these different people, Yeah, your spouse,

Ryan Rutan: your friends, your family, all the people who have in some way, shape or form, supported you through this because it takes a village to raise a founder. Right?

Wil Schroter: You bet. Alright, So before we get into this next topic, I just want to let you know what we talk about here is like 1% of the conversation. You know, really this conversation is going on all day long online at groups dot startups dot com. Where Ryan and I pretty much talk endlessly with founders about every one of these topics. So if by the end of this discussion, you like the topic and you want to dig into it a little bit more with Ryan and I just had two groups dot startups dot com and we'll pick it up from there. And what's interesting is if you're one of those people, you likely don't have a lot of touch points to all the other people. The founders are in a unique spot where they actually have a relationship with every aspect of the company, right. You know, if I'm employee number 200 I may only have two relationships. But if I'm the founder, I have 200 employees. So I have 200 relationships, right? So there's a lot of exponential allergy to it. And so this one founder in particular, this is actually pretty recently was saying, look, I'm at a point where logically I should probably be moving on. But emotionally, I just don't think that I can, you know, I've got so much connected to all of these other people and I owe them such an incredible debt for the time they put in. And so I basically sat across from and I said, yeah, but do they feel the same way? Yeah. You feel like you owe them, but do they feel like they owe you anything in return?

Ryan Rutan: Right. Well, think about what the contracts for those debts looked like, right? They were one sided handshakes, You shook hands with the sacrifice on their behalf without them knowing or agreeing or deciding what the value that sacrifice was to them. Right? And and so this is where it starts to get a little twisted because they don't see it the same way you do and with good reason, they can't

Wil Schroter: write the way I described it to them. And I use this term a lot. I said you've created a phantom debt, you've created this debt that you feel like you owe all of these people. But incidentally none of them feel the same way and if you really, really, really dissected it and you look at each individual person that you think you have this phantom debt phantom contract with. Do you really think if the ship goes down, they're not going to be jumping on the first life, right? Perhaps while you write it to the bottom of the ocean?

Ryan Rutan: No.

Wil Schroter: And here's the thing, he actually, you know, as we're having this discussion, you could see his mind was going right and he's pretty torn up about this as anyone would be and he just stops And he says, Shit, No one feels the same way. And I was like, okay, well, and stick with that for a second. Think of how much debt you've created for yourself without ever doing the math to see if anybody else had the same contract you did. And that was a turning point,

Ryan Rutan: right? The answer is no. Yeah. And then it's, it's such a horrible position to be in from an emotional standpoint. You know, you just feel completely gutted at that point, right? Coming to that realization helps, right? That it's like, okay, well, I shouldn't have that expectation Does't make the position feel that much better. But I think that at least at that point you've got some understand that like this isn't enough malice, this isn't out of neglect or that they don't care, they're just not tethered to the business in the same way that the founder is, you know, to your point, if your employee number 200, you've got a couple of the threads and a little bit of time attaching you to this thing. If you're the founder, you are literally woven into the fabric of this business and and all of the outcomes directly impact you write all the sacrifices that you've made over time. By the way, which employee 200 wasn't there to see any of right? They weren't there when you were, you know, scraping together the change out of your couch cushions in your college dorm to find the money to kick this thing off. Right? They were there after this was a mid sized revenue company that looked like it had all of it shipped figured out probably not true, but they didn't see all that initial sacrifice, right? They weren't even there when the debt was accrued and so therefore trying to have some expectation around their acceptance of that debt or even recognition of it is a fallacy, right? We just can't do that. Unfortunately, we do feel all the debt and we were there for all of it. So for us it's very visceral, very real. But nobody else around us has the collective picture to to another point that you made some of them will write some of the investors will will have understood some of the sacrifices that you put in some of the early employees will have an idea of some of the sacrifices, right? Particularly the ones that also involved them anything outside their direct sphere of influence or contact is not fair game for any level of expectation from the founder on that individual. Right? And collectively, everybody may have some percentage of the debt, but they're certainly not going to

Wil Schroter: understand the entire sacrifice you made In nearly 30 years of doing this and and having worked with well over 1000 people in putting massive investments in time and capital, etcetera into a lot of relationships. I can honestly say, I can maybe count on one hand the times I felt like I was ever even repaid a little right. And I'm not even saying like full repayment. And again, the fallacy isn't that I wasn't repaid. The fallacy was thinking that, that somebody owed me a debt to begin with. So I just want to recognize that. But founders listening to this and they're saying to themselves, huh, well, I've got five people on my team and you know, we all love each other and we work really hard and you know, we're down for each other and all those things maybe right? It probably feels that way now because you haven't gone into a bunch of shit yet, Not the way you will over time, right? Try running out of money for six months and see how many people are on the other side of that, by the way, I'm not saying they should be. Yeah, that's the other side of it, right? The investment there isn't the same. The sacrifice isn't the same because we're the founders because, you know, we have this massive upside and equity and everything else in this were willing to sacrifice more and that's totally fair. But but to your point, I think we think of our sacrifice in their sacrifice very differently, right? What we're willing to do is eons beyond what they're willing to do it. And more importantly, more importantly, if things go sideways, they'll get another job tomorrow because they can their relationship is fluid. Right? Same with investors. If things go sideways, most investors have 2050, 100 other investments to move on with.

Ryan Rutan: That's right. They've got other things to think about, right? We've got one. Again, we are completely tethered to this thing. Everybody else has some tangential connection to it. And it's an important point to consider, right? Because as you think about how that impacts you, and particularly the decisions that you make based on, right? And I think this is where it gets dangerous. So, you're in this position now where you're starting to think about how much is my team willing to sacrifice on my behalf, right? And there's a team we can use collectively, like everybody around you. It's really important to consider. And I can literally hear some of you thinking, but they've been through all this hard stuff with me, right?

Wil Schroter: It's always hard. That

Ryan Rutan: may be true. The start is always hard, but here's the difference between the different types of hard things, right? There's the hard things of like, let's figure out how to get to market, let's figure out how to launch that product. Let's figure out how to get those first few customers right? And those feel good to run through, right? It's hard, right? And it's it's a lot of work and there are sacrifices made by everybody at those points to like push this boulder up the hill. Now when the boulder starts to slide sideways because you're out of money, that's a very different hard thing to go through, right. There are challenges that are not the kind where everybody wants to run through them with you and feel like a hero. Right? And so I think that you really have to be careful as you do the calculus on what is everybody else's sacrificial input. Going to look like It's going to be exponentially different than yours in the wrong direction. Right? It's to your .6 months after running out of money, it's a pretty empty ship at that point, right? It's you and a bunch of debt and all the sacrifice that we've been talking about packed into whatever is left of the boat, right? And that's about it.

Wil Schroter: There's also dramatically different friction, right? So if you, me or Elliot or you know, some of the folks on our team leave, it has dramatic impact because it affects so many people, right? Conversely, if people on those teams leave, it doesn't affect anybody, right? In other words, there friction is just so different and so just I want to build on that for just a second, What we forget is that again, we're willing to invest all this sacrifice and we have and they're willing to sacrifice as well, you know? But let's, let's not be like ignorant of the fact That if someone on the team gets a 30% higher offer somewhere else they're gone.

Ryan Rutan: Yeah, that reduces the friction for them to leave real quick.

Wil Schroter: Yes. So what I'm saying is like they're not going to sit there and go, nope, I'm not gonna take any money from anyone else because you know, advance my career whatsoever because I'm willing to sacrifice for this company now to be fair, everyone thinks that everyone thinks like, man, I could just as soon be getting paid more somewhere else. And that startups, that's usually pretty true to be fair. But what I'm trying to say is everyone else is going to be looking out for themselves, No one is going to be creating this sacrificial debt that we create as the founders, right? In some of the debt, I feel is legit, I mean founder debt right? Where we're saying, yeah, those people, you know did sacrifice for us. So the investors did sacrifice for us and there is a debt to be repaid. I actually do agree with us. You know, repaying what they've invested, right? But what I don't agree with is thinking that all of them feel the same way. Like Yeah,

Ryan Rutan: no, it's, it's a uni directional sort of debt.

Wil Schroter: Yeah, right? If we announced tomorrow 200 plus people that we don't know if we're gonna make payroll right, which by the way, you know, is one of those things where if that's the case, everyone should leave. But if I were to announce tomorrow, hey, Ryan, you and I aren't going to get paid like, oh, that sucks. You know,

Ryan Rutan: like it sucks,

Wil Schroter: but we'll be around, right. It ain't the same thing. Now there's a whole bunch of reasons, right? But at its core we're willing to make sacrifices that other people aren't willing to make and they don't feel indentured to us in any way, shape or form. Yet, as founders, we indenture ourselves in the most bizarre ways, you know,

Ryan Rutan: Absolutely true. I mean, some of them are necessary. But yeah, some of them are quite bizarre. Some again, some of its inescapable and you know, we have to do these things right? Like if we want to see, you know, cash flow positivity, we may have to take the pay cut as the founder, right? We cannot expect everyone else to do that because they don't have the agency to recover that, right? I think that's, that's one of the things that really comes back to and why we can't expect them to make the same sacrifices because they don't get to decide and they don't have enough control over win. That debt may be recovered. Or if it ever will write as the founders, we are operating under the assumption that these sacrifices do have a payoff and that we are the ones with agency and control over making that happen, right? The eternal optimist in this tells us it's okay. I'm gonna take this hit now. It'll pay me back later or this is what's required to keep going. Even if I'm uncertain about the payoff, this is what it takes to keep our momentum or just even keep moving at all. Right. And so huge difference between that and employee 200. He's like, hey, sorry, you're going to take a 50% pay cut for the next two months. They're not thinking they'll probably make that up. They'll take really good care of me. They'll probably, you know, invest some more equity for me. They'll do some really cool things. They're thinking holy sh it, I'm gonna get paid half for two months and they're probably gonna go under in the third. I'm out of here. Right? So like the signals and

Wil Schroter: the agent and I'm okay with that. By the way. I mean like,

Ryan Rutan: right, we have to be, we have to be okay with that. Yeah,

Wil Schroter: exactly. But what I see over time in every founder is that we start to create, like I said, this phantom debt, but we create this pact that I have to to service all of these people no matter what happens to me and that no matter what happens to me, my health, my wealth, my relationships and everything apparently have have almost, you know, no limit because I've created this pact, right? And yet no one else feels that same thing, right? No one else is like, I'm going to destroy my health wealth and relationships for will or Ryan's sake. Right? I mean, again, it's so exponential for us. The hard part though. And what we're really getting at though is getting out of it, right? Think of how many founders probably listening right now are in a situation where all this stuff going on around them is unhealthy at so many levels, right? At so many levels. And yet we're like, we can't leave, we can't take ourselves out of this situation. And it's like, is that true? Like no, we owe it to all these people. Do you really think all those people are really okay with you killing yourself to get there and if they are fuck

Ryan Rutan: them. I'm just gonna say, yeah, I've got a pretty specific response for that are like, well you've got two choices Ryan ride or die, right? Well that's not true.

Wil Schroter: Yeah. And so, you know, again, let's go back to the reciprocity for a second because I think that's, you know, one of the core pieces and I think when we were talking to the founder and we said run through your list, you know, I always make everything into a spreadsheet, make a spreadsheet listing all those people you're worried about, you know, that you feel indentured to and be really honest and say if they were in your situation, would they do the same? Would they run themselves into the ground for you? How

Ryan Rutan: many yeses were in that column?

Wil Schroter: I mean, and again, I'm going to keep coming back to this. I don't think they should have to run themselves into the ground by the way, the same reason, I don't feel like you should run yourself into the ground, right? No one on that list hopefully is saying, Hey Ryan, I know this is destroying your life. I know this is the worst decision for you and your family, but you have to keep doing it. When has

Ryan Rutan: that ever happened? Right. Like I'm trying to think of a situation where somebody came and imposed this on a founder. I'm sure it's happened. So there's probably somebody listening who's going, you know, my investors came and told me I had to do this or I had to do that and yet like I would say that has to be in the vast, vast minority. One of the other things that's really important to consider in all of these sacrifices is this is self imposed.

Wil Schroter: That's what I'm saying. Right, right?

Ryan Rutan: We did this right? We chose this. We did this at best. The people around us could say like, hey, why are you doing this to yourself? Right, But put yourself in the investor shoes. If they see you putting in longer hours and kind of wearing yourself down, but you're accomplishing stuff and they feel like, you know, you're just throwing yourself at it. Are they really gonna step in most of them and say like, hey, maybe you should take a couple of weeks off or hey, maybe we should slow things down. Hey, maybe we should go a little slower and again, yes, that has happened, right? But again, vast minority going back to a whole bunch of points we made earlier around whether they have the visibility, whether it's in their own interest. You know, can they even tell that you're making the sacrifice or the peace of the sacrifice that they see, the one thing that they see may not add up to this huge burden that you're actually bearing. And so they're not going to have enough signal to go ship slow down, stop doing what you're doing. You're gonna kill yourself, right? And we want to see this

Wil Schroter: through, just stick with that. Um, that's the point. Look, they made their own spreadsheet of how much has will and Ryan sacrificed or more specifically, you know, the negative trajectory that they're on who in good faith would be like, Oh yeah, keep doing that By all means you owe me right? Like kill yourself, you owe me, right. No one is saying that I feel like founders over time we become the elephant with the chain on their leg and over time you just don't need the chain anymore. Right? Because no one put it on there and it's just like this, this phantom shackle, it's there. Yeah. And you just, you pretend I guess I can't leave. I guess I can't do this. Here's a funny thing. You know, we acquired six companies in each of those cases. I had the same conversation with the founders and it made sense. The founders like, look, I owe all these people, it's a very noble thing to feel, right. So again, I'm not trying to like necessarily say don't feel like you owe anybody anything. I'm saying there's a limit, right? There is a point at which that debt doesn't make sense. But here's how it played out. They all said, I want to do well by my staff. I want to do well by my investors, etcetera. In the end, I can do well. That would be great too. And I don't think that they were being immodest or you know, anything else like that. I think they were basically saying, hey, at this point, I want to take care of everybody else. If I make a little bit great. But if I don't, not the end of the world, I'm not going to kill the deal, Right, Right? Yeah, it is. But here's what happened. In every single case, no one cared, Right? All the investors talked about, I never got a single investor. This is over. Ryan was 60 investors right across all the deals that we did, 60 different firms. Yeah. Or in Angels. In some cases, not a single one reached out to me during all of these incessant negotiations and said, you know what, I really want to make sure the founder gets taken care of.

Ryan Rutan: You're never

Wil Schroter: right. They didn't they didn't care less. Right? If anything was the opposite. If anything, they were like, you know, how am I getting mine now? To be fair, that's also kind of their job. But it's

Ryan Rutan: why they got into it right? Right? It wasn't that they were just like, I have this extra stack of money sitting over here. It looks silly there. It's blocking my view out my window. I should give it to somebody to build a business, right? They did it with an intent of a return. Right? So

Wil Schroter: yeah. So that's their job. I'm not knocking them for what I'm creating here is some perspective, right? When it comes to the time where you think everyone's gonna treat you right, right? And everyone's gonna be thinking about you and all your sacrifice. They will not, no one will give a shit, right?

Ryan Rutan: But take that a step further. I think that, you know, and this probably comes from I was listening to and I want to get too metaphysical here, but I was listening to some stuff on ego last night and it's fairly timely, right? Because it was talking about, you know, the ego being that voice in your head, right? And I think as founders, we end up accidentally absorbing a whole bunch of other egos, right? On behalf of nobody that asked us to, which is to say that we start to hear these other voices in our head, Right? So it's not even like, I think you were talking about, you know, do we have the expectation that they're going to try to take care of us when the time comes? Um, I think in a lot of cases were worried about the opposite, right? It's all of the founders that we dealt with, right? They were saying, you know, I want to make sure I take care of my investors because they're hearing that voice of that investor chirping in their ear. Here's the thing. They made up that dialogue, right? We make up that dialog. Those are not their words. Those are not their thoughts. Those are not their desires. We've invented all of that,

Wil Schroter: right? And think of the cost of that.

Ryan Rutan: Yeah. Right. So we're killing ourselves over imaginary voices in our heads from people who don't actually care. They don't care, but they're not imposing this stuff on us the way we are on their behalf without them knowing it sounds kind of stupid, right? Because it

Wil Schroter: is, we're so hypersensitive to everybody else's welfare. While conversely, no one is particularly concerned about our own right now. Again, part of that's our job, right? It's part of our duty to be able to take care of the investor, to be able to take care of the staff. Like, you know, that's, that's again, that is part of our job. But to your point, I think we glamorize the reciprocity of that relationship. If I take care of the investors, you know, they're gonna appreciate everything they did know they won't, I mean maybe 10 generally, you know, maybe you'll get a high five or a coffee

Ryan Rutan: someday. There's gonna be a statue built in a fountain in their yard. They're, they're investor palace, right?

Wil Schroter: Yeah, no, like, and so, and from the employee's standpoint, all the employees we talked to when we acquire these different companies, none of them were saying, hey, I just wanna make sure that, you know, insert founder name is well taken care of here. No one cared, right. Other than what are they getting paid. So I can kind of compare my rate or what I'm getting paid against. Sure, sure. Again, incredibly selfish and I'm not knocking them for like there's a time and a place for that and on exit. That's probably the time and the place for that discussion.

Ryan Rutan: They were employees not volunteers, right? This wasn't the resistance where we, we all signed up to do something fundamentally that we believed in. Hopefully that that also exists. But the first thing that they fundamentally believed in is that we were going to pay them for the work and they would be compensation, right? And there would be, that would be beneficial outcomes for them, right? That's why people go to work. So that should be the expectation that we

Wil Schroter: have. But here's what happened. In every single case. Everyone was 100% concerned about themselves. Right. And by the way, that's fine. I'm not knocking their position. What I'm saying is as the founder kind of helps to be cognizant of that fact, right? When you get to the goal line here, no one's gonna be worried about where you're standing there. Really worried about where they're standing, Right? And so the founder needs to step back this founder that we've been using this discussion. But founders in general and just do a sanity check to say yes, I do have an obligation to take care of folks. But guess what? I also have an obligation to take care of myself.

Ryan Rutan: Right. And that's the one that we completely forget about, right? The person who has accrued the most debt and the most sacrifice through all of this is usually the last one on our mind and that doesn't pass the sanity check, right? That just doesn't

Wil Schroter: the way I always look at it and you know, kind of what I counsel even the founders that were acquiring with, you know, when we do acquisitions, I always tell the founder look, all I care about is your welfare here. Like obviously I want to be able to do a good deal, but I care about founders more than anything. And so I'll tell you what's going on in my head. You don't have to guess, you know, some kind of take that off the table. But I'll also give you a bunch of questions you may not be asking, right? So you can kind of see around the corners with some of these things because I've seen this a million times. This may be the only time you've ever done it. So let me just kind of give you the answers to the test and how this thing goes. You know, here's all the things you're gonna be piste off about, right. That you didn't get what you thought. You did hear older, the conversations you're about to have, that you don't realize how you're, you're about to have and here's kind of how they'll probably go. And when I first lay that out for folks, they're very suspicious there like some weird negotiating.

Ryan Rutan: Yeah. Yeah. I

Wil Schroter: know. I mean it's, it's, it's because it's so bizarre. And then as it unfolds, they start to realize that all the things that I was saying actually happened. Not because I've got some like, you know, sixth sense just because these are the way things tend to go,

Ryan Rutan: we've done this before,

Wil Schroter: and they start to scratch their head going okay. He wasn't actually just playing some weird mind game with me. Like he was actually saying, I should worry about this stuff because as a founder kind of what you go through. So in a lot of times, deals don't happen. So my whole thing is if this deal happens or doesn't happen, I still want to have a relationship with you. Exactly, right. If it doesn't happen, I wanna make sure we're on good terms and if it does happen, we're married for life. So we also want to make sure we're on good terms,

Ryan Rutan: definitely worth investing in the relationship

Wil Schroter: for sure. You know, by the way, I just want to mention if what we're talking about today sounds like the kind of discussion you wish you were having more often, you actually can, you know, we're online all day everyday working through exactly these types of topics with founders, just like you. So any question you would have, or maybe some problem you just want to work through. We're here and we love this stuff and we're easy to find, you know, head over to groups dot startups dot com and let's just start talking. But here's the thing, I think a healthy exercise for founders is to zoom out and say while I do owe something to a bunch of folks, I need to recognize that they don't feel the same, which, which allows me in good conscious to say, hmm, maybe I do need to think about my own welfare and for so many founders and Ryan, I think you'd appreciate this. This is a foreign concept.

Ryan Rutan: It's the last thing on their minds, right? The last

Wil Schroter: Thing on their minds, I've got a whole bunch of friends that are somewhere between year 7-12, right? Which at that point you're so burned out, right? You're fried. Even if things are going well and talk

Ryan Rutan: about tethered to the business at that point, right? Like you are locked

Wil Schroter: here are all the things that I can't do right now. Right mentally. They believe they can't do it. I can't buy a house because I put everything into the company. I can take distributions, you know, whatever. I can't start a family, I can't take a vacation, You know, that you name every life event and there's an, I can't in front of it, right? It's painful. And the truth is they've created the shackle, right that they believe that they can't do it. They owe it to all these people. Even if things are going south and they know the company is going to fold, they're going to kill themselves for that entire last year trying to make good on everything that they wanted to do. I did

Ryan Rutan: minimize the impact to everyone else,

Wil Schroter: which is noble and it's a cool thing to do And I get it. But you can take it too far, right? There is a line we have to draw.

Ryan Rutan: You know what's cooler than being noble being alive, being healthy, being sane, right? Way cooler than being noble.

Wil Schroter: But here's the thing, you know, you mentioned this earlier. No one said to us, I want you to be super unhealthy and dig this grave for yourself. And yet we never drew the line to say, okay, this is about as far as I'm willing to take it, right. And frankly if we did, if we went to all those constituents and we said, look, here's where I'm at like I'm so overloading debt. I'm stressed out as can be, I'm going through a divorce because of this. You know, you name it, right? No one will be like that tough. Right. Right. Say that.

Ryan Rutan: Here's the sword, go fall on it, Right? Like it's not happening.

Wil Schroter: I mean I did it to myself. You know, I got to a point where I was killing myself and it wasn't until my wife like pulled me aside and like this is horrible like what are you doing? And she forced me by way of that conversation to analyze all the players in this situation and I think and again, this wasn't their fault. I think what I did run. I think I vilified all of these folks and these are my friends. I mean, again, this is this is a weird way to say it. But I pictured this version of them that never existed that had this secret conversation like you were talking about, right? Where there was like, no, you know, you have to push this. You made a commitment all these things. And instead I just started having those conversations with with all these villains, right? You know, that, that I thought were part of this, this drama and no one said anything like that. You're

Ryan Rutan: having imaginary conversations with your real friends, right? It's as weird as it sounds,

Wil Schroter: you know, on the topic of a company failing. They ranged from, yeah, you do need to pull yourself out of this too. You know, I actually don't care.

Ryan Rutan: Yeah. It's kind of the opposite end of the spectrum of where we generally picture that landing as founders, right? Which is that they're going to, you know, go red faced and scream and spit vitriol, right? Like it just doesn't happen again. No one else is as connected to this, right? Even the investors who have put in money, right? They know that a lot of these aren't gonna work out, right? That's why it is what it is, right? That's investing with a potential for return, right? It's not a T bond from the government, right? It's not a guaranteed return. And we've talked about this in other episodes. Their expectations are very different than what we think they are right for us. They're the only investor we have, or they're the only group of investors we have. And so we represent 100% of the value. We're probably 2% of their portfolio, right? Doesn't matter. It's not life changing for them, whereas it is life changing for us, right? The pressure that we bear to support 2% of their portfolio is 100% of our life. And this is where we get it wrong, right? And this is why we start to have those crazy imaginary conversations in our head where they're super mad at us. They're really upset. They tell us we owe them a bunch of things and send us off, you know, to try to take the hill by ourselves that they know we can't and we're just a sacrificial lamb doesn't happen.

Wil Schroter: You mentioned this, you know, kind of phantom conversation, a phantom conversation that I think I had for years and years and years and years with myself that no one else is participating in. I was a crazy person was that if I put all this sacrifice in at some point, it would get paid back in the form of appreciation, right? If I worked so hard if you and I we worked so hard to build startups, right? And that sacrifice and everything we did to get here, the next person that comes on board, You know, the next person gets hired, right, employee number 201 or you know, whatever we're at now comes on board. They're just gonna be overloaded with appreciation for what we've done, right. This has nothing to do with like them being good or bad people. But actually the whole point is it's not on them at all. Here are some different, some different ways this plays out. And I'm curious to hear your thoughts here. One way it plays out is, hey, we sacrificed so hard new team. You should be so appreciative for what it took to get here right and we feel honest about that assessment. Right? Another good example because Ryan, you and I are parents, we worked so hard to give our kids this better life so they should have this artificial appreciation for it. We get offended right. If they don't appreciate what we've done to get. Quite

Ryan Rutan: literally, quite literally we

Wil Schroter: get offended, especially as kids, like how would they have that context whatsoever? You know, we make this up

Ryan Rutan: such a bad expectation.

Wil Schroter: It's such a bad expectation. And then of all the people that we connect with a great example and again, I love to hear your response to all of these, but A great example is when we sell the company or when we raise money later on, you know, we have kind of like a company event. We say new investors came on and they just put in money like, well they'll probably take care of me for the $500,000 that I created in home equity debt, in personal debt. All the debts that I run up from not paying off my student loans and all this other stuff. They'll appreciate all the times that I killed myself. They'll appreciate all the years. I didn't take salary. No one cares. No one cares. No, you're the only person that cared and once again you created an obligation that no one else signed up for. And so of those different scenarios. I'm curious which of those rings most true to you. I

Ryan Rutan: mean they all, they all do, right. We've experienced all of them. Um, you know, the parenthood one is probably the one that I face most often just because that's daily, right? I'm constantly sacrificing and giving and they're just constantly, you know, they're baby birds with mouth wide open, just asking for more without any pats on the back. But you know, in terms of which ones are most painful, right? Like I think I don't want to say I'm becoming callous to that. But I'm becoming aware enough that like, yeah, they shouldn't have any context for that. They don't know anything other than what I've given them and therefore I'm the one that set their expectations. Again, it was a one handed handshake, right? They didn't ask for any of that stuff. They didn't ask me to build them a better life. They just have what they have and then then that's it in the situation with investors, I think it's a bit easier because that is very transactional, right? Super transactional. I think the hardest one in my case to deal with is is around the employees, particularly at the point of exit right? Which I went through a situation where I've done twice where in the first case everybody was very young and any money that came to them was like manna from the heavens, right? They were just like, oh my God, it's just raining, raining money. It's free money. We did it. Um, and it didn't really matter what the check size was. Now, there were some comparisons and there were a couple of cases and, and that's where it did feel pretty awful. It was like there was no appreciation. It just turned into this check measuring contest, right? Which was like, why did so and so get and I got in right? And that really hurt, right? Because rather than like being super appreciative that like this happened at all right? And all of the sacrifice that I put in, especially in that business early on when it was just me for a long time just grinding away building clients, building the product, doing it all by myself. It was like, man, like the fact that you got anything should be a huge surprise and you should feel great about that. And instead you're bickering over whose check was bigger, right? Yeah. And just so like that was a tough one, right? But as we've discussed today, I didn't set any expectation for them and I didn't ask them to be obligated to any of that sacrifice. I didn't explain all of the things that I didn't sit them down and tell them son, here's what it took to get us to where we are today, right? Never happened. Right. It was just, hey, can you come on and develop like this? Hey, can you design this? Hey, I'll pay you this for that, right? And I'll give you this much equity. That was the contract. That was the deal. Anything outside of that. I have zero right to have expectations, Right? And here's the other thing about it. What is that appreciation going to buy you?

Wil Schroter: Right? It's, it's just, it's weird validation that you're expecting, right?

Ryan Rutan: Yeah. It has the same, You know, I, I analogize that wants to the stickers that you get on a helmet for outstanding play in football, right? So it has the same value as those actual stickers, right? The accomplishment getting there was the value, right? That's the validation that sticker is worth 4.5 cents, right? And that's what the applause and that's what the appreciation. Not that it's not that it doesn't feel good, but of course it feels good and and and validation always does, right? But if that's why we're doing this and that's what our expectation is, then make it part of the contract be like, hey, and by the way, if we do this, you're gonna clap for me and you're gonna thank me right? And that's in your employment contract. Otherwise why would they,

Wil Schroter: we'll stick with that. I think if we have an expectation of a contract to be fulfilled and we haven't put that down in writing, right, something that, that another party can review in the same way we have and agreed to, here's, here's what I'm saying that the part that I mentioned earlier where we say, hey, I'm gonna have invested all of this time and I'm gonna, you know, put myself in debt and I'm gonna kill my health and etcetera. And later on when either we get acquired or again, there's some event that somebody will come and top me up. Right. You know, part of that discussion must be that they're like, Hey Ryan, how much time did you put into this and how much cash do you set back? Let's talk about that balance. Let's make sure that, you know that all gets taken care of, you know, we obviously recognize the time you put into that and we should, we should top that up. That never happens. And yet in our minds, we keep thinking that all of that sacrifice will get recognized and repeat and the truth is no one cares,

Ryan Rutan: they don't even know

Wil Schroter: they didn't know right? You're

Ryan Rutan: talking about a written contract, like it would help to even say some of it out loud, right? Again. Like so much of this is based on predicated on these internal dialogues that we have with the egos of these other people that we've made up in our own heads. And then we have these expectations around it would be like sitting in a restaurant going, excuse me, where's my soup? You didn't order the soup, sir? Oh well, you know, we talked about it in my head like you and I had this conversation, I wanted soup. So like, why would we have this expectation that anybody would out of the blue a feel obligated to do anything for us and B do the thing that we actually wanted them to do without us implicitly telling them, right? It's as insane as it sounds right. If I had never told my kids that like making a bed is a thing, do you think they ever would have woken up one day and like, you know what, I should probably make this really flat and smooth again and just like it wouldn't

Wil Schroter: because it's just so beautiful, right?

Ryan Rutan: Yeah. Because they care nothing for that. It doesn't matter to them. Doesn't change their day at all to the negative, right? So they're not going to come up with on their own. So if we want things to happen as founders just like anywhere else in our business, we have to be the driving force behind it. If we're not the driving force behind it, which is setting those expectations, letting people know they are obligated. If that is in fact a fair obligation that's on us, nobody else, nobody else is going to invent the obligation and deliver on it and just be like, surprise. Here you go, Ryan, you can here to make you feel better. Like, wow, that's amazing. That's exactly how it went in my head when you and I talked without you and I talking this is amazing. Best day ever. Never going to happen.

Wil Schroter: Think of all those different aspects of what we've changed ourselves to. Yeah, we've changed ourselves to this future payout that we're going to get from this. You know, apparently, benevolent acquire slash investor or, you know, wealth creation person that's going to somehow magically come ingenious style repay us for, you know, all of our sacrifice. I

Ryan Rutan: was picturing the startup Fairy godmother,

Wil Schroter: right? Yeah,

Ryan Rutan: doesn't exist.

Wil Schroter: Does not exist, right? And and and the history of everything that I've seen, and I've seen a lot. I've never seen that happen, right? And yet we're all kind of convinced that that's, you know, part of the contract on the side of all the constituents that are already part of this thing, right? I can guarantee you if they get a better offer, right? They are gone, there's there's no kind of like massive loyalty, again that you've invented, right? This contract that doesn't exist, right? If one of our team members get a better job offer elsewhere, you're just gonna leave, right? They're not going to be like, oh, you know, boy, I, I really like will and Ryan so much that, you know, I'm just willing to sacrifice my career not advance it anymore. And look, that sometimes happens, right? And that's cool. But there's also a contract in their mind that if I do that, you know, if I'm loyal to them, that they'll repay me kind of worth having that conversation too, right? Yeah. As an employer, I'd like to have that conversation because I don't want you killing yourself and creating a contract in your mind that I didn't sign off on because I

Ryan Rutan: don't wanna be mad at me when I don't fulfill that. I didn't know I was supposed to write implied contracts are a really bad thing just in general, right?

Wil Schroter: They are, they are. And so Ryan, here's what I would say if we're at a point in our startup and we're saying this startup is killing me, right? It's no longer healthy for me or maybe the startups fine, right? It's doing fine, but I'm just ready to go do something else. The moment we invent this shackle, which usually, right around the time we start the company and it continues to grow, we have to stop at some point, which to zoom out and say, number one, the shackle doesn't exist, which is a tough thing to understand number to the people who we think are maintaining that shackle, don't feel the same way. And number three, if any of those people actually felt that way, that they felt like, like we should put ourselves in a leveraged position, ruin our health, our wealth, our relationships, etcetera. Those aren't actually the people that we want to be in business with to begin with. And of course, we don't know them anything. Alright, so that was fun. But let's actually keep this conversation going. You've heard what we think about this, but you know, Ryan and I would really like to hear what you think and we're online all day long, pretty much talking about every startup topic you could think of, from fundraising to customer acquisition to just really how to get all of this crazy startup stuff out of your head. And there's tons of other founders, just like you, they're weighing in on these topics so you'll get a chance to just hang out and meet some really smart founders. We're also super, super easy to find you head over to groups dot startups dot com and let Ryan and I hear what's on your mind, let's get to know each other a little bit and let's just start having more of these conversations

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