Startup Therapy Podcast

Episode #114


Ryan Rutan: 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 startups dot com and we'll pick it up from

Wil Schroter: there. Welcome back to another episode of the startup therapy podcast. This is Ryan Rutan from startups dot com joined as always by my friend and partner, the founder and Ceo of startups dot com Wil Schroder. Well as startup founders, we often fantasize even before we've begun our companies about what happens when we sell them and those fantasies are often just a little bit different than the reality. You want to take us back in time to when this, when this was your reality and you were selling your first company.

Ryan Rutan: Yeah, I mean, I've, I've been through this and lived it like to the end degree and frankly like I had a good experience and yet what we'll talk about today is all the ships you deal with like, like how much on the other side of that curtain, everyone forgets. Like we're working so hard right to get to this amazing place, but nobody really does the math to say. And then what like specifically what happens next? Right? If we all did specifically the folks that are working in the organization, the last thing on their mind would probably be let's sell this thing, right? Because what's typically on the other side for most folks is much worse than where they came from. So I think, you know, that's worth unpacking. I think for the founders and the founding team etcetera, you know, we think about the payday sometimes, but we don't think about what specifically happens to get that payday. We think, oh, I guess we sell and we just get rained on with cash and then that's it. Right? And it's like, no, there's actually a lot more to it and it's kind of not awesome in most cases. So going back in my case to give you just a little bit of context and what we'll build on this in my case, I sold my first company and we had a dozen people. So I mean we're small In the acquiring company had like 40 or 50 people. So they were also small. But I gotta say, I think the average on our age was like 22 years old. So to us, we're getting bought by Google before Google even existed, right? Like, I mean at least we were, we couldn't believe it and Ryan, I'll never forget this moment where, where I sit down with the team and I said, guys, we're going to be able to buy any laptop you want, we have that kind of money now that kind of money.

Wil Schroter: Real computers.

Ryan Rutan: Oh my God, I'll never forget this moment. So we drove down to this local computer story, you'll remember this micro center and yeah, yeah we it's it's it's the nerd's computer store and I'll never forget like we're so proud right? This is post acquisition. We grab these these shopping carts and we're walking around micro center like kings because we have over $10,000 to spend on computer equipment, right? And we're just loading up the cart with all this stuff and everybody is so happy and like there's part of me in the back of my mind at this moment right? That at that time I was thinking we were walking these same miles like six months ago we were super broke like we're determining whether or not we could buy this corded mouse versus this corded mouse and those were like key decisions we were making. Yeah like well we've got to make sure

Wil Schroter: we got the one with the six ft cable. That way the mouse will reach from your desk to my desk when we need to share the mouse that we buy. Yeah,

Ryan Rutan: I'm telling

Wil Schroter: you like these

Ryan Rutan: were these were key decisions. And so so this is again immediately post acquisition. So I remember going through bought a printer like that was getting a laser printer was a big deal back then and like you know somebody got a laptop and their mind was blown. Laptops were a big deal. Anyway, I'm old. So the point is at that very moment we were still in upside town, right? We were just like, this is awesome. Everything about this is awesome, right? We're getting well paid. We've got, you know, all these things going on. And I remember that sort of being the end of it right now. That that's the interesting part. A few months later we'd win a big account and become what is now like a $6 billion dollar company. But at that time what we didn't know what was coming and you know what we'll talk about today was there's a whole life on the other side of an acquisition that no one really plans for. And sure as hell our staff had no concept for what was about to happen and it blew us up.

Wil Schroter: Yeah. Yeah. Things change very, very quickly. Right? You go from the shopping spree at toys r s moment to nothing but

Ryan Rutan: chores

Wil Schroter: for yeah, for a new boss, right? It's not the same thing anymore. So going back to that, like how rapid was the transition for you? And I can tell my own story about this as well. But like how quickly did it change?

Ryan Rutan: Well, here's where it starts to change, right? The moment you kind of settle in. It's kind of like like the analogy I would use, it's like waking up next to a stranger and if anybody's sold a company and has been through this, they've got to be nodding right now because like yeah, I know exactly where this is headed. You wake up the next day post sale after your big celebrations and all the things that you did your big announcements and all these things and you got to go back to work, right? You know, many cases you're doing earn out or you know, whatever it is and certainly the folks that work there have to go back to work. Maybe you get out of it, nobody else does. And so they show up the next day they've got their new name badges and like we want you to introduce you to your point of contact. The worst person you could ever meet post going into witness protection, right? Oh my God. Oh my God, your hands. Your point of contact is just a kind way of saying the person that's going to replace you right now as the founder, there's like a whole bunch of things. You're kind of concerned about going into this. You're concerned about who am I going to report to? You know, do I still have a job? I'm not a ceo anymore. So I'm something else most likely and you're dealing with that. But you know, you have a spot, right? And you're paid the rest of the staff not so much. And so this one isn't just about how are we affected because you know, I think obviously we think about that, but Ryan, we've got to think about how is everyone else in the organization affected, right? Because they're kind of fucked because they show up, right, and they're running accounting because you know, they were the only person that took an accounting class in college. So you know, they're they're our accountant. Sure, But acquiring company actually has real cfos and accountants and people who do this for a living for real and they kind of don't need you, right? Or you're, you know, on the dev team and you're using this killer kind of next gen code base that's just bleeding edge, right? But cto at acquiring company does not. And while he thinks it's really cute that you use this great new code base and that'd be great that if someday they could, he doesn't need that right now. And the people that he's hiring don't use that and you're like, hmm, how'd that happen? And so this is happening everywhere in the organization all at once to everyone, everyone wakes up and goes, who is this person next to me? And does this mean I don't have a job anymore. So like think about that.

Wil Schroter: Yeah, we've talked about this in terms of, you know, fast growing startups, People, you know, get left behind, right and the organization can outgrow them and they can become less relevant to the startup over time, But to your point when there's an exit involved, this happens like that, right? Like everybody who's going to become irrelevant tends to become irrelevant within the 1st 48 hours to three weeks, right? It's just super, super quick. All of a sudden you realize I don't have a future here. I had a job a couple of days ago, we all got really excited about selling this thing and maybe I'll get a little bit of money from that, but it's not going to replace my salary for the next couple of years. So now I have to figure out what I go and do next, which can really change the sentence in the office around, you know how everybody's feeling.

Ryan Rutan: Well five seconds ago as the ceo or somebody on the founding team, you were making all the decisions and you know, Ryan, you and I sit in a room and we make a decision and we just go, right and all of a sudden the go park gets taken out, right? Like you and I can make a decision. But the next step is to go ask for permission from someone else, right? That's not what we signed up for, right? Ironically, that's also not how we got here, right? But that's how it works. And you know, let's say like the Ceo or the founder where we get really messed up in this exchange in this discussion is we sit down, we have this great heart to heart with the other ceo, right? And we really feel each other and we really see, you know, dare I say synergy, right? But there is an awful lot in between those statements and those discussions that doesn't get covered right. There's a million day to day decisions or thought processes that we kind of assumed we'd still have like we'd still control but we absolutely don't. And when it comes to the rock paper scissors, decision on these things, we lose it. Don't matter what

Wil Schroter: rock, we're not holding any of those three objects that were like rock paper scissors. Why

Ryan Rutan: do I have a feather? Like

Wil Schroter: where does this fit in? Like when do I win?

Ryan Rutan: Don't. That's perfect. No, it's amazing. And so we just don't do that math. We're so hung up on, you know, we've probably been doing this a long time Like maybe like 10 years and we're so hung up on just getting past the finish line. We're not taking the time to say, okay what exactly is on the other side of the finish line and not just for me, but like we're saying,

Wil Schroter: yeah man,

Ryan Rutan: right? And that becomes a big

Wil Schroter: issue. I remember, you know you were using the example of making a decision and then sort of having to go and ask for permission definitely ran into that. I had a year earn out period. And so there were decisions that I was trying to make that continued to get stymied and at some point I was just like, well you know what it's going to be their issue, right? I think this is the right thing to do, this is what I would do, this is how I would grow the company, they don't want to do that, that's fine. At some point I just kind of became slightly more peaceful with it. There were some decisions that were obviously more painful, like the parts about letting go of the staff. Um the people, they chose to let go of, the people they chose to keep happened pretty early on. So that was just like a big wound. But then over time healed a little bit. The part I had more of an issue with was some of the decisions they were making right because I had no control in that, right. At least with when I made a decision I could go and like seek

Ryan Rutan: approval and fight for

Wil Schroter: it. But I remember distinctly having the impression right? The thought like the, the, the metaphor in my mind and probably this being based on being like, you know, 22 years old was like they're driving this thing, like a rental car. That was how it felt. It was

Ryan Rutan: like they were just reckless.

Wil Schroter: They were like, we don't give a ship was

Ryan Rutan: banging up against whatever

Wil Schroter: put whatever grade fuel in it, it doesn't matter, just drive it fast, driving hard, do whatever that was what it looked like from where I sat, it was like they were treating this thing that I had built like a rental car and that was really hard for me to swallow and I had really very little power to push back or to control or to change any of those decisions right? Again like I was the guy with the feather in the rock paper scissors and they would just kind of laugh and that was really, really difficult for me to watch because there were things that happened where you know, clients got hurt, staff got hurt, reputation got hurt. And again, like on one hand, I know that like I'm months and months, you know less months as every every month goes by from being separate from this and yet it didn't feel okay right? In fact, I think to some degree it made it feel worse had they treated it really well? I mean in the end they did like they've they've done well with the business but had it been a better experience throughout I think on that you know those those last weeks would have felt very, very different. I don't know, it was like giving somebody something that you really care about and then just watching them maltreated and then knowing that you're going to walk away without even being able to observe it anymore. At least in that turnout period I was kind of there and I could see what was going on and then once that was over it was just like, I wonder what's going to happen when I'm not here, right? And I remember there was a period of probably two months post earn out that can't be described as anything other than like anxiety and depression, um that was exactly that I was worried about what was happening and it just made me feel bad. There's days I didn't want to get out of bed just for wondering what was going on inside the company that I was no longer part of

Ryan Rutan: 100% and at some point you're walking the halls realizing you're a relic, right? In other words, nobody from the existing company, right, is dying to see you more involved, right? If anything, you're a pain in the ass, because you know, you're running things on your own now, you're trying to run things on your own, kind of, you know, maverick style inside this larger organization and you really just pissing everybody off right there, just like get in line and so you know, everything that, that was one of your superpowers. Again, this kind of Maverick style in order to get you here is exactly the opposite of what people are looking for, you know, in you specifically now, at some point, you're sitting in a conference room and you're looking around and you're realizing if everybody was being honest, if you had to put your honest hat on, everyone would be like, can you get out of here now because because really you added value to get here, but now it's time to step off the train and that is a tough pill to swallow, you know, my turnout was kind of different, it was over five years, so I had a excruciatingly long time to kind of digest all of this and to be fair, like I said, I had a good turnout, like I was treated well, but the last year of it, second last year of it, I'm walking into a room and everyone's like, that's the guy that's hurting out, right? Like in other words, whatever he says, be sure to go ask somebody else what the real answer is because what he says is basically useless, right, yep, I think of that, okay, so this is a tortured analogy, but tell me if you can buy some of this, it reminds me of like, again, we have our kid and someone else takes over our kid, right, adopts our kid, what have you, right? Or you know, becomes the new parent and that first kid is like, oh, you know, Ryan will like, you know, their, their dad right there, so important to you and someday we're sitting there throwing the ball and new dad comes over and says, you know, son, let's go out for dinner and he just totally ignores you what happened and it's like you're gutted, you're gutted, right? Because the thing you created the thing, you love so much is not yours, right? And you watch that walk away and you watch it in the faces of all of the people that were so attached to this thing for so long that you rallied so hard. And here's the fun part. You convinced them that this was the promised land. That's the worst part because you convinced them to work crazy hours to make all these sacrifices to get to this place and now you're there and everyone's all pissed. Right? Again. Some people made money and, you know, some people are happier for it for a minute, but they all have jobs still, right? Including you. And now you're on the other side of it going, I'm sorry, right? That's a tough place to be.

Wil Schroter: Yeah. It's like, you know, we're gonna spend 40 years walking through the desert together and it'll be great and we'll get to this place and and then it'll be great. And then you get there and it's just another desert and you're like, and by the way, now you're gonna walk by yourself and the rest of it, it's like nobody's real keen on on that answer. But that is sort of how it plays out, right? I mean, you do see some would say, but with really small organizations where their aqua hires that are done where the entire team stays on and remains relevant to some particular aspect or product within the company. But those are the exceptions that prove the rule right? The vast majority they're not buying the team.

Ryan Rutan: But even still, we hired these folks because they were gunners because they were, they were ready to tear it up and, you know, kind of go at something. But we also lured them with reward, right? We lured them with this idea that if you step up and you do what you're so good at doing, there will be some kind of exponential reward beyond what you could just get in the paycheck. Well now you're just back to getting a paycheck, right? And maybe it's a better paycheck, right? But the very people that you would have had to recruit to this, you know, misfit island of activity that you created are the very people that are not suited to just have a name badge, right? That's exactly what they didn't want to do to make it worse. You also took away all of the reward. Now look, you know, companies will sometimes, if they're smart, they'll create some upside structures for usually a fairly short period of time, six months to two years and, and that works for a minute maybe. But those reward structures are rarely anything compared to like what the deal itself was and they're mainly there to just make sure that the acquirer doesn't get screwed to make sure that everybody just doesn't run for the exits the moment they signed this check, You know, it's an insurance policy, right? And it's a good insurance policy, it's important. But how do you keep selling that? Right? How does that whole staff, the people that work so hard for you knowing that they're upside? If if it's even that is a 6 to 18 months, you know, two year maybe window, how are they possibly excited about taking that any further? How do you retain those folks? How do you sit across from them in year two and say stay here because this is important. 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 every day 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, right,

Wil Schroter: right? Because the benefits kind of unilateral, right? It's uni directional, you know, it doesn't have the same impact for them. And to your point, there's a diminishing return on that. And so yeah, it does become very hard and I think that it's exacerbated more by like if this was just, you know, a group of people who've been working in a corporate environment who were all of a sudden incentivized in that way, it feels very differently, right? But they answered to a different rally cry, right? You said this, these people were picked because they were the gunners, the hard chargers, the people who were willing to, you know, run with you into the abyss. And now we're in a corporate environment with some minor financial incentives and Hawaiian shirt Fridays and badges and you know, friday pizza, right? Like it's not the same thing, right? It's not the environment they want to be in. And incentives typically aren't, aren't strong enough to keep them. And so like in my experience and, and, and you know, having observed tons and tons

Ryan Rutan: of startups,

Wil Schroter: there's almost always attrition during this period, a lot of people don't even stick around for those incentives right there, like, you know what not worth it. I don't need whatever extra carrot this is, I'd rather go work on something that I want to work on just because that's the personality, right? Um and that's fine, that's fine and, and and they're often better off, right, It can feel very painful to watch them go. Um but then typically within a couple of months they've settled into something that they'd rather be doing. Um And I remember having so much relief at that point, like once I knew that everybody who had left post acquisition had landed, well, um that was really when that anxiety and depression began to melt off and I realized that at least 50% of that was tied up within the people that have been part of the team, Not just what was going on with the startup company itself. At the end of the day, the startup company was the people, right? It was the, at that .18 people that were with me. Um, at the point of the exit,

Ryan Rutan: I had a friend of mine that just exited his company recently and it was about a 10 year run to get there right. And so take that for a second, just the 10 years think of how much time You spend with people over the course of those 10 years to get to this point to essentially have that relationship and all of that unwound in a period of say six months. It's almost the equivalent of being married to hundreds of people at the same time and getting divorced from all of them right overnight. At the same time, gut wrenching, it tears us apart. And again, I'll keep coming back to this. And that's exactly what we were going for. This is exactly why we killed ourselves to get to this point. It's bananas when you think about it, right? And again, the idea is that we all got so well compensated. We all did so well that it was worth it. But here's the thing and maybe it was, you know, maybe financially everybody is well taken care of. And that's wonderful if that's the case. But what we got to remember is not everybody is retiring on an island after this, right? We have hundreds, you know, and whatever your numbers are, maybe hundreds of people, they're worse off. Right? And again, this isn't, this isn't an episode about, you know, why not to sell, This is about what to consider when you do right, you've got to look past the paycheck and you have to look across the next couple of years and say, what are we really signing everyone up for? And I think if you're sober about it, right, I think if you say, look, this was what we were headed towards, certainly what we told the investors were headed toward and they're perfectly cool with it for all the obvious reasons, this is what we're headed for, but now that it's happening, we have to be particularly mindful and delicate of how we deal with it next because there's a lot of asymmetry in the upside of the entire staff on this, you know what I mean?

Wil Schroter: Yeah, the asymmetry I think is an important piece and you know, depending on the size of the organization and the timing in which people came in and you know, how your stock vesting works, all of those things. I uh 2 3 weeks ago I talked to a fairly young female founder Who had come through an acquisition as an employee, but she was like employee, 35 out of 36 people. She had, she was literally like one of the last few in had only been there for like six or eight months. It was really enjoying the job and all that now considering starting her own thing because she's without a job and then she said you know, they had this this party where they handed everybody their their checks, their pro rata shares and she opens it up and it was less than half of one of

Ryan Rutan: her two week

Wil Schroter: paychecks. So

Ryan Rutan: it's like

Wil Schroter: how excited can one really good about that, Like you no longer have a job, here's half a paycheck is your reward. Ye

Ryan Rutan: Yeah, I kind of want to think through that one a little bit more. But no, but that's actually actually stick with that rent. That's part of the point is that again, we're so hung up on the moment of truth the moment of sale and be able to get out of it for many folks for all the obvious reasons, We've never been through this, we don't know what things look like on the other side, right? So we're a bit unprepared. So when we're handing out those checks and someone gets the equivalent of a funk, you check, right? We need to think through that, you know, we need to be prepared for that to be like, okay, like listen, not everyone is being taken care of here. So what does their path, you know, what was their outcome look like and what can we do about it? And I think part of what we need to be mindful of, its not just did everybody get well paid? It's also, and this is a big part of it. How is everybody gonna feel after this? What is the organization going to look like? Because here's what we're told when we got acquired in almost every case. And by the way, it's always bullshit. Here's what we're told. This is gonna be a great deal. We don't want to touch anything. You guys are killing it. All we want to do is leave things the way they are and let you guys run things exactly how you've always been doing them. Here's why that's bullshit. No company can exist meaningfully with some rogue entity where they have no fucking idea how it's going, letting them know from time to time that it's going well or it's going terrible and just doing a check in, these aren't investors that are looking for investment updates. They own this though, You are employees of that company and once the pixie dust wears off and everyone becomes sober, they're not gonna look at you a year from now. Like this one's hot startup that we bought, they're going to look at it as fall line employees that are here to do our bidding, whether no, no matter what was said on deal day or leading up to deal day and it's a tough pill to swallow, right? But here's what's gonna happen. Our staff after the first few weeks after their high fiving and talking about, you know, we made it, they're gonna start comparing notes, right? Hey, I met with my point of contact. Did you get a point of contact? Yeah, I did. And I point of contact really wasn't talking about a lot of longevity for what I'm about to do or based on the way they do things. I think this is gonna suck, right? Or remember when we could do happy hour at work? Yeah, that's not permitted. Right? That's actually against for, I'm sure a bunch of people violated in the past and there's a reason it's not their or their big companies, lawyers and uh, and the happier at work actually has some liability attached to it. But here's what's going to happen. Everyone's going to sit around in short order and they're going to start comparing the way things used to be

Wil Schroter: back in my day.

Ryan Rutan: Right the way like in America people talk about the way things used to be right or you know, things used to be better. Are you kidding me? Like didn't we have two world wars where people massacred each other to find better, but you know, people love, they love their revisionist history and they're gonna talk about when we were a family before and the culture was better and this and that they're going to avoid or kind of overlook the parts where they're like, oh, you mean when we fought all the time and complaining nonstop and never got paid and got overworked. Like, no, that gets thrown out the window, right? Apparently losing happy hour was the most important, you know, loss of this entire companies history. I think that's where it starts to unravel, right? You know, people start to say, what about when? What about now? And there's no way to fix that.

Wil Schroter: Yeah, no, there's there's not really a way that you can meaningfully shift that narrative, particularly when they, like you said, if it follows that same sequence of events that you just described where they get their point of contact, they realized there's not a whole lot of time left in this and that it's not what it used to be okay again with with all the revisionist history included. There isn't really a way to positively spin that, right? The because I tried, right, I had lots of one on one conversations with the people who were my team that I brought along through the acquisition, the ones that the ones that were kept on and nothing much changed as a result of those conversations. I think, you know, there was a little bit of venting and maybe that they felt better for a few minutes, but it wasn't like I was able to enforce some sort of major positive mind shift around how they felt about this and that they now accepted this and we're excited that we were no longer a startup. We were a division, right? Just even just even the word I mean, because that's literally that that was how they referred to us, which from a leadership standpoint, probably not the right move on their part to just really call us the division because it's exactly what it sounds like. You know, we were divided, we were, we were something separate that existed on the side of this organization. We have been bolted on for commercial reasons that they wanted to achieve and everybody felt that, right. And there wasn't really a meaningful way for me to shift that narrative and eventually I gave up, right, maybe not the best leadership move on my part either. But at some point I just felt like I was banging my head against the wall and like I can't change the organization because they no longer have the power to do that. That in itself was extremely frustrating and depressing. Um you know, back to being the guy holding the feather in the rock paper scissors game. And so I no longer have the ability to enforce organizational change. And I have a bunch of people who I brought with me who are expecting it from me still right. And I think that was also very, very hard to deal with and and rightfully so right, like you brought us into this, aren't you supposed to make sure that this ends up being okay And most of them didn't realize and why would they that I had lost most of my power, right? I was always the one with the power. I was always the one who had the control of the final say. And yes, we made team decisions, but at the end of the day as the person leading the company that was my role was to decide which direction we were going to go, which one of the options we were going to choose. And they didn't necessarily feel that they also weren't sitting in the same meetings that they used to sit in. And so visibility just became a big problem. So they assumed I walked into that room and I had the same amount of power that I had when I walked into that room before that they used to sit in and it just wasn't true, right? And so that loss of agency for myself and the company and decision making hurt but it hurt just as much to know that I was letting the team down because they wanted change to be enforced. That I no longer had the power to do and it's fucking brutal.

Ryan Rutan: There's nobody on the other side that's looking to give you more agency, right? That's the last thing on their mind.

Wil Schroter: It's a slow choke out. It's the opposite. They're literally trying to peel away pieces of my areas of control, right? Part of that is getting rid of the people that you brought with you. Alright? Making sure that, you know, they start to replace team members who consistently side with or you know, adhere to my management philosophy versus the management philosophy of the company. Yeah. And there's this sort of systematic disarmament of the acquired founder

Ryan Rutan: and you know, what happens is that the acquiring ceo loves your maverick style, right? You know, doesn't love your Maverick style, the entire rest of the organization. They get no upside to your maverick style. Your maverick style equals. You're a giant pain in the ass, right? So all the ways you do things that accounting doesn't do them equals, you are a giant pain in the ass, right? All the way that you're all the ways your marketing team kind of structures things and goes to market the way they don't or or off brand on message, you are a giant pain in the ass. There's nobody on the power side of this equation that's saying to themselves, it would be great. Let's give those guys more power, right? Let's give them more agency, right? Because you're a giant pain in the asce And also if we're being honest, they're probably a bit jealous for good reason, right? They're looking at it going, you guys get to do all the ship that I wanna do, I wanna have cool Hawaiian parties, right? You guys get to have them, I don't have them. How can I give you more power? Right? Like there's just there's no version of this which ends well for us the acquiring company. And I think one of the considerations, you know when we're thinking about our path in the company and kind of you know the exit in the company and things like that has to be if things are great is greatest member. We all romanticize them to be why do we want them to end right? Like what about what we've done or what we've built or what we've created? Are we trying to put a bullet in? Right. I mean there are great, great great companies that are geometrically less great because they got acquired right? See anything that yeah, whoever required right. AOL who ironically acquired Yeah. Whoever acquired right? Like if you want to take all of the intention out of a company, go to go to some of these acquiring entities and by themselves, I'm willing to bet all of these companies all these startups, pre acquisition were great companies to work for post acquisition. Maybe not now. Now I can't speak for every startup that's ever been built. But if I if I were you know betting person I could probably put a lot of bets was this a cooler company Post acquisition or pre acquisition and make a lot of money because I went on damn near every bet. Right? So I just want to stick with that for a second as founders within the management team that the staff etcetera. If we're so hellbent, I'm basically ending this thing. Why? Right. There was seriously like, like, you know, what do we think is on the other side of this, other than a paycheck that's going to make our lives better? And if we if we did build something truly special, if we believe in this family that we built, you know, this this life that we've built in this product that we built, etcetera, why do we think that giving it to someone else, our staff, our culture, our product, everything is actually the best outcome. And again, I think these are things that are, are hard discussions, but they're real,

Wil Schroter: we've touched on 11 driving force behind this that numerous times. Um, but if you've taken on funding, for example, it may be the only outcome that you're really allowed at that point, right? You have to scale it. You have to either take it public, which is not the same thing as being acquired. But all of a sudden you've got oversight and bored and and and regulatory environment to deal with. It feels a lot the same if you've raised funding, you can't necessarily just keep it right. You can't write it off into the sunset because the investors are going, well, what about us? Right. We can I P. O. It and that's it. So. Exactly. Right. Because you've you've got all of this, this yeah this this new structure that's gonna come and sit on top of you and and audited financials like there's just whole whole nightmare. So as you're thinking about how you want to build your company, if you are truly trying to build something that you know, you believe has value that you want to have for a long time, this is where that that early question around taking on funding becomes important and this isn't an episode about funding. We've done done several of those, but that is one of those points where it's like why are we selling this? Well, because we have to, we are beholden to the investors. There's no way to make them whole again

Ryan Rutan: without

Wil Schroter: selling this thing. Like we just we don't have the choice to simply keep it right. We don't have enough cash to buy out the investors, we have enough cash to live well pay our staffs well, continue enjoying running this company in the way we want to run it without having to make any of these these really hard decisions and deal with being acquired. Um, but this is where we're at now. We have to do this. And so there's some of these really early decisions that that removes a lot of the potential future

Ryan Rutan: routes that you can take.

Wil Schroter: Um, and so those are important to consider at every stage. But I'd say that's probably in my experience, you know, with all the founders that we deal with, that's probably the number one reason that we see founders who otherwise wouldn't have sold, right. Some are very happy to do this, and that's all they ever wanted to do. And it's exactly what they want to do and they're very happy with the outcomes. Others are quite regretful. Um,

Ryan Rutan: I I can

Wil Schroter: tell both tails right? The, my, my first sale, I was, you know, the turnout was what it was, um, as we've described today. Um, the second one was more of a tragedy for me. And at the end, I wish that I had kept it because shortly after selling it, the business went, went down in flames. And that's always bothered me. Um, and I wish that I had just kept it what little I made on the sale of that one. Um, I could have just kept and continued to cash flow and I didn't have to sell it. I didn't have any investors. Could have kept that one. Could still be, you know, that could still be sitting over there somewhere now, you know, under management. Um, and I didn't have to sell that one, but I did. And I've pretty much regretted it since, since, well, six months after selling it when, when it, when it went bust. Um, yeah, so it's, uh, it's a good question, right, Why why are we, you know, so hell bent on building these, these dream machines, um, simply so that we can flip them over to somebody else

Ryan Rutan: who's gonna drive it like

Wil Schroter: a rental car.

Ryan Rutan: Well, right? And look at its core, I think that it's not about whether or not, you know, as founders were willing to sell or not willing to sell, like, again, everybody has their own incentives and Ryan, I'm sure you would agree neither of us are in any position to tell people what their incentives would be. But this is really about, it's about saying, look, I know that, that I want to get to this end game, but the Endgame has a very true cost, not just for me, but for every single person I'm pulling dragging across the line with me and when that time comes, when it comes time to kind of jump ship and say, okay, this is what we're going to do. I've got to be dead sober about what that means to me, but more importantly, what it means to every single other person that I'm dragging across the finish line with me and making sure all of those people are taken care of. 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, like all day long, pretty much talking about every startup topic you could think of from fundraising, the customer acquisition to just really have 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 were 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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