Startup Therapy Podcast

Episode #141


Ryan Rutan: Welcome back to another episode of the startup therapy podcast, this is Ryan Rutan joined as always by my friend and the founder and Ceo of startups dot com, Wil schroder will we talk about all things startups and you know, all things founder related, One of the things that, you know, we're all chasing some kind of success, right? And so we, I think there's probably some misconceptions of what success actually looks like um is it really like the private island, private jet giant yacht? Like, is that where we draw the line, Is that what success looks like?

Wil Schroter: No, first off, because we won't get there right, 2nd 2nd off, uh what's funny is we all pictured like this super bowl moment, we're like, you know, when we see somebody ring the bell at NASDAQ and like, oh my God, like that must be the moment, right? And I think what we don't realize is, well that is a celebration, you know, celebratory moment, it really happens way before that. And in ways that I don't think first time founders especially really appreciate until long after it happened. So I thought would be cool, is if we could start to talk about some of those seminal moments that maybe some of the people going through their startup right now are actually feeling right now and don't even realize that these are the moments of success, these are probably some of the best moments of their, their, their career and they may not even realize they're happening or in some cases how close the most important parts of their careers are to their success, you know what I'm saying that they're closer than they think, hopefully. 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. Well 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 start startups dot com and we'll pick it up from

Ryan Rutan: there. Right? Right? Yeah, if you're if you're pinning success on the exit or, you know, some other major cataclysmic event, um then it's tough, right? But if you start to think about in the terms we're going to talk about it, it's far closer to you than you think. Um it's funny, but it's something you said sparked a thought of me, which is that there's a lot of parallels between childhood and parenting here in that a lot of these success milestones are things that we didn't necessarily appreciate when we were going through them until later, when you don't have them and you're trying to recreate those moments for your own Children, I'm going through a lot of these now where it's like, man, and I'm sure that it wasn't, but my parents made this seem effortless or like that, it just sort of happened like these these things, these things existed in my life, which, you know, not necessarily took them entirely for granted, but I certainly didn't appreciate them as being really important moments at the time and now or nor the effort that goes into to achieving them and now as a parent where I'm trying to create some of these milestones for my own kids, I have a much better appreciation. So I think that, you know, to your point as we look back on these things and it gets easier to see, but in the moment, uh you know, it can be tough. So what do you want to start?

Wil Schroter: You know, I just want to pick up on that for a second last night. I just had this moment with my son Will, he's five years old and uh I had this moment where Will is just a terror, right? Basic whatever. I would have been at five years old,

Ryan Rutan: right? You've got this 9.5 year old version of my house.

Wil Schroter: And so he's acting like a psychopath. Um and you know, all I can think to myself is I just want to hit the fast forward button on this again, This is the parallel, I just want to hit the fast forward button on this so I can have the not psychopath version, but then like an hour later we're laying on the couch and he's got his little jammies on, right, and he's all cuddly and he's like, dad, I just want to snuggle with you and I'm like, this is the best thing ever. I never wanted

Ryan Rutan: to end. I want this to stop. You. Don't, don't, don't, don't move forward. Stay the size

Wil Schroter: difference though. He's this adorable little dude, Right? Conversely, when I think about the milestones that we hit that make us feel successful and I think of all the horrible times we had before that, like making payroll, there's no version where I'm like, oh, it's great to not make payroll. Like, nope, glad we're past that one.

Ryan Rutan: Well, yeah, we'll gladly fast forward past that point. Well, that, that's a good one. So why don't we dig in there? Let's talk about, let's talk about specifically making payroll because it is one of those milestones that we can certainly take for granted. Like once you get there, there's a huge amount of relief, but it's probably not celebrated in the way that it should be because that's a big deal so differently. Not making it is a really big

Wil Schroter: deal.

Ryan Rutan: Everybody notices that, right? Everyone notices that one.

Wil Schroter: We get to a point where early on, we were just starting off, no one's making payroll and that's kind of the way it goes, sometimes even a services business, you can kind of like, you know, help defer some of your comp, but generally speaking, if you're getting into this for the first time, you're not making your own payroll for a very long time. Maybe sort of making other people's payroll as you go. But every single time that I was lying in bed at three in the morning staring at the ceiling, it was usually about payroll. It was usually like if X, Y and Z doesn't happen, then I'm not going to be able to make payroll. And I would just see like this Viewfinder image of each of each of my employees going through my mind. Like like a yearbook photo where they're all getting crossed out right? Like it was oh my God, it killed me. It killed me. Yeah. Well

Ryan Rutan: it's one of those pressures you can't just take on as a founder, right? Like there's so many things that there's there's hits to the business that we can just absorb right where's founders And you just take it and we just take it and take it. But when you're talking about paying money out to somebody else, like there's no way that we we absorb that and and shelter them from that other than paying their salaries right? The minute you don't do that real things happen to them right? Like they can't make more rent bills, whatever. Yeah. It's a it's a nasty one. And it's it's the one of the few things you can't shield people from.

Wil Schroter: Yeah. When I think about it now, when I think about payroll and when I think about what it means to have all these lives affected, it's not what people think when they're outside the company, right? When I'm gonna barbecue and someone says, hey, are things going okay? And I'm like, yeah, they're going good or going bad. They think about themselves just naturally they have a job where they go where the only thing that can really happen in most cases is they get fired in that horrible of course, and they have to fend for themselves. They don't understand that what we have to do is fend for everyone else. So all of a sudden we're taking on everyone's life story right in the burden that comes with that, which is brutal. And I think for a long time as we're trying to figure all this stuff out, we're sitting there going okay ship if everything goes south, um my whole world's gonna be messed up. But man, so was this person and that person and that person and we start to get to a point where we're stressing out over everyone's lives and then one day we're not, and then one day we're not and then one day we wake up and payroll got covered and we don't even really notice it right, except the next week happens, the next week happens next week happens and all of a sudden payrolls covered and all of a sudden what used to be one of the most gruesome aspects of our anxiety just goes away, Yeah, goes away and all of a sudden we're like bullshit, right? We find a whole other problems, but at that moment it's off our shoulders. Yeah,

Ryan Rutan: which is a good feeling and it is a success point. And I don't, again I don't think we give it enough enough wait here because for as bad as not making payroll is making payroll shouldn't just be like, okay, now we're in a comfort zone. And I think we'll talk about this a little bit later. I know we wanted to talk about a couple more topics related to this. Um but think about all of the things that that empowers, right? So for everything that that that not making payroll derails and disables. Making payroll does a lot of things. I mean I don't even want to count up the the millions of dollars that we've pumped out in payroll at this point, but think about where all that's gone right? It's it's it's real and again, part of that is because we don't directly feel it, we see, you know, maybe by by proxy we kind of understand what people are doing with it and of course they like to get paid, but its life building for everyone who's receiving that salary. And so again, once it, once it sort of leaves our, our accounts no longer are is no longer a problem or our benefit. But a lot of really amazing stuff is happening on the other side of that. And so it's a really interesting and it's such a black and white thing, right? There's not really a spectrum to, to payroll, you're either making it or you're not. And if you're not making it, it's fucking awful. And if you're making it, it's awesome. So I'm glad we started with this one because it is one of those that it's, it's absolutely so stark and its contrast of what happens when you cross this seemingly, you know, not that it's a minor milestone, but it like to your point, it's not one that we look at and go like, all right, everybody heads down, we've got to make payroll. Like this is what we're gonna do. Like we're aiming to make payroll now. I don't think I've ever said that to anyone nor heard anyone say that. Of course if they're not making it, they're talking about it. But to your point, the minute we start making it, the conversation goes away, which is kind of odd, we need to celebrate it.

Wil Schroter: It creates an uncelebrated success. Is what I'm saying. Here's a, here's a good example when you make a monthly payment and you make the last payment. I don't care if it's your student loan debt or your car or whatever it is right at that moment when you write that last check, when you make that last payment, it feels awesome, right? You actually might go celebrate it because it's been you know harassing you for so long

Ryan Rutan: to go celebrate it.

Wil Schroter: Right? Exactly. But but it goes by so quickly. You write that check, you erase that off your your liability line and then the next day you wake up and it's just not there and it's just the end of it in, I think what we talked about in the previous episode was how often happiness in success comes from taking things away not adding to them. So I think this is this is this is an important point to say often we think of a founder must be successful because they have you know yachts and planes and all this stuff and that's sort of true if that's what you want, but when they really became successful was when one more massive liability was taken away because success can only be had when you remove the liabilities and let's face it payroll is like at the top of the charts when it comes to liabilities. And I think that's why we realized later on that. That's what makes us successful that we made that milestone.

Ryan Rutan: Sure. Yeah, I know I did to your point like it's it's one that should be celebrated um far more than it is. It is an inconsequential thing. Um and of course, you know it's a continuous battle. I mean ask a lot of businesses that just came through. Covid payroll that may not have been an issue for a long time. I'll bet they're really appreciative of the fact that you know, for the ones that made it through it and are back to being able to make payroll. Uh they're all probably celebrating that moment. Right? One of those things where once once you achieve it and it's taken away you have a much greater appreciation for it.

Wil Schroter: I'll tell you what if you've forgotten how important it is. Try not making it.

Ryan Rutan: It's just one of those you want to test the things that will and I say here's a great one. Just you know, cancel ADP next month and see what happens. See see how, see how things go.

Wil Schroter: So what happens with this transition over time is that we start escaping more liabilities. And again I keep thinking that folks assume that that this the success must feel like all the things we gain and really the success when we look back starts with all the things we take away all the liabilities we eject. And I think if we're being really close to home, let's talk about your personal liabilities the moment, all

Ryan Rutan: that credit card debt we racked up, you know buying things on credit so that we could preserve cash to make payroll. Yeah,

Wil Schroter: exactly. And so there's there's this early time that happens to everybody and I think everybody thinks it's just them. But it looks something like this and if you're a founder, you've most certainly been through this, you're at a point where you have to make decisions in the company but they're not what the best corporate decisions are there? What either you're going to buy something for yourself? Could be food or you're going to buy something for the company but its binary, you get one or the other

Ryan Rutan: right,

Wil Schroter: right. And whenever the company needs to grow, even if things are good, you win a contract or anything else like that. The only person that's willing to fund your business is american Express or Mastercard or Visa or your home equity line of credit or whatever what facility you're using. But it's always you, it's always your dough and at some point at some point you wake up and the company pays for something and you get to buy yourself dinner like things happen separately and you're like shit I'm not personally leveraged.

Ryan Rutan: Oh man, I just had this conversation with a friend of mine uh a week ago or so. He they were trying to make the decision, they've got a fair amount of money uh stocked up in the company at this point and they've got a good cash reserve. Feeling good about the business And they're still living in the three-bedroom house that they bought prior to starting this company. Um they've grown the company that's been 10, 11 years now. They also have four kids at this point and they're still in this three bedroom home that they did not intend to have four kids in. And so this was, the discussion is like, you know, I just don't really know what it was like. I can pull that cash out. Um, I can buy the house that we want to get. Um or there's this other division of the company that they're really interested in launching, that it's going to be very lucrative and it's even 10 years into this business that he's got, he's looking at having to make the trade off between. Do I do I reward myself personally, um, with these caches in the company's his money. Uh, and yet he's, he's still stuck in this point where, you know, his personal liabilities of the company liabilities aren't really separate. He can't make decisions in isolation. His personal financial life isn't really his personal financial life, it's still very much linked to the company. Uh And so to your point man, this is, this is one of those places where, you know, gaining a lot more money, would also solve this. But just even being able to fully decouple that and say, I'm going to make decisions independent of what the company is doing, which by the way, is what everybody else in the world does write an employee doesn't think, should I buy this house or not? You know, I better check the, I better check the company's 10-K. Right? Nobody's doing this, they're just like, okay, I'm making this money now, I'm gonna I'm gonna invest in house, so they don't have to go through the same level of scrutiny that we we do as founders, where it's like, okay, can I do this? Should I do this? What else does this cost me? Which is just such a uniquely uniquely founder type problem.

Wil Schroter: 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. Well, I think we get conditioned to it for so long, right? I mean, we're we're thinking about it for so long because we've been in this this mode for so long where we've been using all our own cash and we're always last to get paid and we're always last in line for everything. And whenever the company has a problem, it's not the company's problem, it's our problem, right? Like we have to go fund that problem personally. And I think one day we sort of wake up, so to speak. And again, there's a there's a problem that the company has and it doesn't affect us personally. I don't mean emotionally, Right? I mean financially like one day we wake up and we're like, wow, the company can pay for that. It doesn't directly come out of my pocket. Right? And I'm not talking about like, yeah, I'm not talking about whether we make more profits or anything else like that. I'm saying the point at which either the company can buy a resource or I can eat and it's not one or the other. And look, I'm not just talking about like distributions and like, you know, can I make more money that comes much later? That's like, that's well beyond this milestone. This has to do with when ship hits the fan. Um, what's impacted right? In other words, if we have a low quarter, maybe I don't take home any money, maybe I can't pay my rent or my mortgage, right? Like those types of things or I can't make a life decision because the company isn't stable enough to sustain that life decision. Right? I mean, we talk about things like I can't go on vacation. This is even more so than that. This is, I am forever chained to what the performance of the businesses and the fact that I don't know what it's going to be week to week month to month. Year to year means I'm incapable of making personal decisions. And one day that goes away. You know what I mean? Yeah.

Ryan Rutan: I mean, it's so funny how linked these things are at the early stages, especially I was having Tacos earlier this week with another founder and really, really young founder quality quality founder is gonna do some amazing stuff, but he's still at that really early stage, it was time to pay. He plopped his credit card in there, I put mine in, bill, goes off. He's, he looks back down at his wallet, he looks up and he's like, it's a shocked look on his face, jumps up, runs down to catch the waiter because he used the wrong card, right? He's at that point now where it's like, you know, we're playing at like $30 close to the line at this point. Uh, and so he got up and ran after he came back all shape and she's like, oh man, I almost screwed that up like that, that was the company card and I got to keep At least 200 because I've got to buy this, uh, this, this thing I need later days. It's like, it's so funny at the early stage, man, like that's how close were playing it. And you know, lunch is sometimes a difficult purchase decision. Uh,

Wil Schroter: and I think, I think founders think that it must just be me, I must have handled finances poorly or I'm not a good, good enough founder to be, have these things take care of themselves. That's not the case.

Ryan Rutan: Like this

Wil Schroter: happens to everyone, we all go through it. It's all part of the process. It sucks. That's why we're saying it feels like success when you get on the other side of it,

Ryan Rutan: you know

Wil Schroter: that there's going to, the card's gonna clear like holy should imagine that right? I had a period early in my career where I remember I couldn't get money out of the A. T. M. Because you had to take out at least $20 and I didn't always have $20 in the 80s. I remember having that like

Ryan Rutan: 12, and not a cent more. So

Wil Schroter: I was like, I need $14 damage a moment. Very real. I remember going this is you know in the early days to start my first company, I remember taking my girlfriend out um to the Spaghetti Warehouse which is a very classy establishment in Columbus and remember the bill came to $22 will never forget this bill came to $22 And I knew my credit limit on my card was like $24. Right? So what I think is interesting about that though is at that moment, you know when I couldn't pay that $20 bill, that was the world to me, you fast forward years later to the parts that people think are the big things like when I'm on the car lot buying a Ferrari, I'm buying a big house or something, right? Those were cool, but those were like 1% as valuable as far as the Delta in success as being able to go to a restaurant and by my girlfriend dinner right night and day, not even remotely close as far as the Delta in what success feels like, but I don't think we think about it that way because at the time we just think we're trying to get rid of liability and here's the big difference when we're getting rid of liability. It often happens week over week in these little tiny chunks, right? And we get to a point where we're like, oh okay, Like I guess I can, you know, buy lunch or I don't have to chase the waiter down to swap out guards, right? And so it, we don't feel it like this pent ultimate moment, the way it is like when you go to the car dealership, we buy, you know, whatever car we've been dreaming about forever like that, that feels more celebratory, but that moment, you know, driving the car home or whatever is a moment. It just feels that way for a moment. But dude, not being able to pay bills or being personally leveraged last year's about where the weight of the emotion is and that's why that's where the success comes from because you're not personally leveraged probably for the first time in your life.

Ryan Rutan: Yeah, yeah, I mean for me it was certainly, yeah, that was certainly the first time in life that I didn't feel that way up until that point. You know, I was quite young when all this started and then had never really had that that freedom, Right? And to your point though, it kind of, it comes on so slowly, right? It was it wasn't like there was something major that happened where all of a sudden now I'm in a different situation. It's something that happens slowly over time. You know, you're kind of chipping away at these little liabilities that then free you up to be able to do more of these things that you want to be able to do. And I think again, that's why there isn't like a moment in time that you get to celebrate, not like, oh, we landed that big contract and sometimes that happens and that maybe that maybe part of it, but it's not usually some seminal moment, it's just a little bit of relaxation around the liabilities, one of them disappearing here, a little bit casual coming in, all of these things happen. And so you don't feel it all at once. It's, you know, you start to get to go out more often, right? You can have three of those nights out a month instead of one and you know, eventually the lifestyle changes over time, it's like anything else. You don't notice that kind of growth because it's it's continual and it's relatively slow. Um but boy when you look back and contrast, you know what, your capabilities and your personal liabilities and freedom are now compared to what they were at the early stages. It's stark as night and day as it can get. But again, like in the moment you don't appreciate after the fact you do. So I guess it's our way of saying like, appreciate these things more as they happen, right? Try to try to notice this stuff happens. It is right,

Wil Schroter: right. It's hard to appreciate having less of a bruise, like still feels. Um but but let's, let's put it here though, I want to just like go away from all the painful stuff that doesn't happen. And let's talk about like the stuff that happens that is actually just glorious, right? That's just looking great. Right? And so I'll give you a quick story and I'm sure you feel the same as I remember there's a similar version for you as well where I'm at work and this is the first company and things are starting to go pretty well right now. Like it didn't feel well at the time, but it just felt like less pain, whatever. But it's really interesting thing happened. We're paying people enough that they could like have real income And and all our staff was super young at that time, you know with hundreds of people. The mean age was like 27 years old. Um maybe not even, maybe it's 25 doesn't matter, we're all very young and I remember the first person on our team came into my office and he closed the door and he was like, like almost a little bit shaken and I didn't really understand what was going on, and he said, um listen, I just want to tell you uh my fiance and I we just put a down payment on a house and and I thought there was gonna be a but like, it was it was gonna be like, and you know, and the bank came back and said like, the check bounced, like you you missed payroll again or something, I that's kind of what I was conditioned to know, right? And he's so serious that it was freaking me out. And he said, you know, when we first sat down, uh and I joined the company, you said that we're going to do X, y and Z. To be honest, I didn't believe you. That's okay. That's fair. I didn't believe you. Uh it seemed crazy you were talking about this internet thing and nobody believed this thing was gonna happen. But you know, I'm looking around that it happened, and I have to tell you, I want to sit down and just just let you know that I'm here and I want to tell you that we bought this house because of what you built and because what you brought me in on and he sits down and he looks at me and he just says, thank you and it blew my mind.

Ryan Rutan: Yeah,

Wil Schroter: it was unbelievable like he might as well have told me that like I just won the super bowl. It was coolest thing in the world. Just this, this feeling of gratitude and here's the crazy thing. It felt great because I didn't ask for it, it felt great because I never, I never, it didn't occur to me that I never get that. And to be fair, it doesn't come very often, but when it does,

Ryan Rutan: yeah, but I think so, so part of that I think is that a lot of that is just obscured from us, right? And I don't know if it's a comfort level thing and because it's personal finance people aren't coming back and telling you how they're spending their money um in my case. And the anecdote you're thinking of was it was this is post sale. So this is one of those times where like you do expect some of these, these kind of seminal things to happen for people. Um and you know, I was running a company time that was built mostly on college students, I was one myself and so 90% of the people in the company were still in the University of Time and as, as we exit the company then, you know, checks went out to people pro rata and people came back from saying things like, you know, this is awesome, I paid off my student loans, you know, I was expecting to suffer from that for, for years to come. Uh, and so there were like these really cool moments, but I think those are a bit more obvious, right? It's the, it's the things that happen all the way throughout, like we take it for granted, but like somebody being able to make their mortgage payment of the rent every month, it's a big deal. So differently. It really sucks when you don't, right? So again, we don't, we take it for granted that these things can and should happen. Um, but they are valuable. They are extremely meaningful to the people that we, that we provide this for, right? And of course it's a, it's a, it's an exchange of value, um, gifts we're giving people that salary. Um, and you know, they do work that makes all this stuff happen and there's something just still so exceptionally cool about that. That's something that didn't exist, that we created these founders goes on to provide lifestyles for people. Um it's really not a better feeling,

Wil Schroter: you know, what's funny about that is that I get the sense that the friend who I'm thinking about, um that was, you forgot he even did that for him while he remembered buying the house. And you know, in all the moments he had there, he probably just, you know, a kind thing to do and heartfelt, but for me it was one of the most important moments of my life, right? And I think that at some point the business starts saying thank you at some point, um in so many ways we start getting, you know, rewarded for our effort in ways we didn't expect and didn't even ask for, and I'll give an example, this has got something true to you, and I um we get people that email us about startup therapy all the time. It's awesome. And by the way, if you have emailed us, thank you. Um and if if you, you know, send a comment or, you know, mentioned us on twitter or something like that, it doesn't go unnoticed,

Ryan Rutan: Right,

Wil Schroter: awesome. We don't do it for people to say thank you, but it's pretty cool when they do,

Ryan Rutan: it's pretty awesome.

Wil Schroter: And and I think you and I can go on with lots of stories about this, but people have sent us some very heartfelt um very deep um kind of stories that they've shared, um and they said, look, your podcast and startup therapy and remember what you guys have built whatever um has helped me through this, which is entirely why we're doing this, there's no other outcome here and that feeling, well what we're doing, what we're putting our bones into every day, comes back and help somebody and they just say thank you. Yeah, he's one of the most successful moments I've ever felt, I mean, in my career, it's it's kind of that simple, and I don't think there's anybody overlook it.

Ryan Rutan: No, there isn't. And you know, it's been interesting, but as I think back through some of those moments where you, anytime one of those things comes through, we, we tend to share it right. If an email comes into you, it, we, we passed around, everybody gets to see it. You know, if there's a twitter comment, um, you know, we screen cap and slack it out to everybody and it's, it's crazy. But those have created more excitement and more discussion than things like we got ourselves revenue targets or you know, we've launched a new product, all these things are awesome too. And I'm not saying that they're not as important, but the feeling that you get from knowing that this thing that you've built is actually having the types of impacts that you wanted to and in some cases beyond what you expected is such a special realization and it is a massive part of what it really means to be successful.

Wil Schroter: 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 had 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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