Startup Therapy Podcast

Episode #153

Ryan Rutan: Welcome back to another episode of the start of therapy podcast. This is Ryan Rutan joined as always by Wil Schroder, my friend partner and the founder and startups dot com, Ceo did already say your name Will Schroeder. Did I forget that part? Please

Wil Schroter: keep saying it will

Ryan Rutan: Schroeder Will Schroeder Will Schroeder. Hey Wil Schroder, I'd like to ask Will Schroeder a question today and it's you know, we talked to lots of founders like we get to, we get to talk to lots of founders about all the different challenges, problems, wins, losses, everything. But frequently when we enter two conversations with these founders, they will have already heard some things and and gotten some advice often very local, very parochial, very kind of their immediate circle of people who often don't have a ton of experience. Well Wil Schroder, how often I'm going to continue this for the entire episode,

Wil Schroter: everybody. Well,

Ryan Rutan: how often is this? Good advice?

Wil Schroter: I mean, I don't want to say never, but never

Ryan Rutan: knew where that was going. Alright, fair,

Wil Schroter: fair, Here's the setup. We're talking to a founder anywhere in the world and let's say I was talking about a pitch deck or the fundraising or something like that. And invariably they say to me, hey, here's the deal. I was told that this is what should be in my pitch deck. I was told that this is what the valuation of a company should be, et cetera, et cetera, Whatever it would be. And my first question every single time is who told you that exactly, right. And like my attorney told told me. Okay, cool, has your attorney ever raised venture capital? Well, he worked on a thing 10 years ago with a thing, right? And I'm like,

Ryan Rutan: here we go again.

Wil Schroter: Exactly. Here's the comparison. Um, I love my mechanic, he's really good with tools, but I wouldn't ask him to build my house, right?

Ryan Rutan: Like I've got this bump over here on my, on my right scalpel. Like would you take a look at that? Yeah,

Wil Schroter: it's amazing. And so you will talk about today is local advice. The advice you're typically getting either in your hometown or your immediate circle is often dead wrong. It's well meaning this, this isn't a case where, you know, you've got a villain here where somebody's trying to mislead,

Ryan Rutan: right? They're not that well informed. It's

Wil Schroter: the opposite there. They want to be your teammate. The problem is they have their helmet on backwards, you can't see the fast. I want to create some reverence here to the people who are genuinely trying to help. And also, they also don't know they're giving you bad advice. That's the worst part. 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.

Ryan Rutan: This is the thing, Yeah, I mean like they're so, so frequently, you know, and it's the, it's the old phrase, you know, the road to hell paved with good intentions. They are very well intended, right? They are absolutely trying to help and they don't know what they don't know and they may know more than you do. And I think this is where it becomes really dangerous. We're on a relative scale. Like yeah, but I had never thought of any of the things that they told me sometimes my answer to that is because you didn't need to think about any of those things. Dear child right. That was not useful stuff to think about. Yeah, I just like I go back to conversations that I had in my own early days as a founder and and and how many people would be like the lean back finger tenting, have you considered, right? And then like, well on one hand, yeah, probably because all I do is wake up thinking about this thing, right? I, I think about all of it. Yes. So I have considered it. I think the problem is should we be considering that, is that in any way, shape or form relevant to what we're doing and how do we do a better job of qualifying people that were getting advice from the first place. Right?

Wil Schroter: Well, actually stick with that. So the problem we have as founders is we just don't have context for how to qualify people. Right? So, you know, let's say we're just getting started in our career and then that's kind of a, you know, a straw man argument. But let's just stick with that. We're just getting started in our career. Every single person we talked to is more experienced than us. So by way of that, it's all better knowledge than we currently have. The

Ryan Rutan: problem is

Wil Schroter: we don't know if it's the knowledge that we need, correct.

Ryan Rutan: That's it right there.

Wil Schroter: And so if I know anything about basic finance, let's say just in life, then I'm more experienced than you are. But it doesn't make me Warren Buffett like it's not quite the same thing and we're in a business in the startup business where half good advice is worse because it's misleading. It takes us down paths that waste time and in many ways actually takes us to the wrong place. Were given a map. If the destination is off in the desert somewhere. Yeah, it's a problem. Yeah, it

Ryan Rutan: is. I mean, so that that's a great that's a great analog actually because when, when we do start to follow bad advice, right? It's like going the wrong direction. When you have very little resource in this case, let's just stick with the analog. It's the tank of gas, right? We've got a quarter of a tank of gas and we've got a hell of a long way to go before the next, the next stop. If we go the wrong way, we run out of gas, Right? So when we take bad advice, when we follow bad advice, when we spend time money, energy, all of these resources that are in such a limited supply for founders, really bad things happen, Right? So we have to avoid this. We have to qualify the advice as it comes in and you know, get second opinions, right? Like you get a second opinion on anything, right? So why are you not asking for second opinions on things that are going to drive the direction of your business for good or for bad.

Wil Schroter: But Ryan we don't know that we're supposed to right? We assume that it's good advice. It's just like getting actual advice from a doctor, right? And the doctor says, here's the problem. Most people just assume like every doctor must be the same. They're all equally qualified or have the same treatment plan. It couldn't be further from the truth, right? There's so many different ways to take a look at an indication. So in this case it's just multiplied by so many things. It's everything from your fundraising to your pitch deck to your marketing, to your corporate structure, how you incorporate, you know, everything. And everyone's got an opinion, what we'll do today is we'll talk about how to qualify everybody. Right? Well, look at all the common folks that you're probably ran into and I'd probably say it's worth, worth saying this. If you're listening to this and any of this is starting to resonate a little bit, take all the advice you have and just put it aside. It may be good by the way, it may be good, But let's talk about what are the filters you can use and who, who are the common folks you're typically going to run into in your hometown that are going to lead you astray unwillingly sounds fantastic top of that stack local investors

Ryan Rutan: like

Wil Schroter: nobody, nobody owns the crown of giving bad advice than local investors.

Ryan Rutan: I

Wil Schroter: think it's because we assume that if you can write a check that you're qualified to be an investor and I, that's where it all starts. You know what I mean?

Ryan Rutan: It does. And, and it's funny, like I actually have

Wil Schroter: a very, very

Ryan Rutan: personal story about this one talking to an investor introduction through an uncle's friend of a friend, something along those lines right here. The typical setup where it's like somebody I know knows the person who knows the person knows a person and talking to this individual and they could write the check that I wanted them to write. Uh, and it was also coming with a whole lot of advice and luckily this wasn't my, my first rodeo. So I was already a little wise to the fact that not all advice was created equal. Uh and yeah, so to that end, like you know my partner at the time was like, you know, but these, you know, these guys made a ton of money like we need to listen to what he's saying. I'm like, okay, do you remember how he made his money you ready for this one will coin op laundry.

Wil Schroter: Right nailed it.

Ryan Rutan: Nothing wrong with that business at all. And the guy made lots and lots of money. But what coin op laundry has to do with a scalable sas business can be written on the edge of a dime with a fat marker right? There just there's there's nothing, there's nothing comparable there. I mean like yeah, there's some basic stuff right? Like okay, we can let me, let me talk about how I set up my chart of accounts on a paper ledger. Sweet, let's do that. Um I can translate that to quickbooks or something else. That'll be okay advice but it was pretty limited, right? The problem was that the advice was coming in in the same quantities as as the, as the money where the potential investment didn't take the investment in the end and, and probably for the best because I don't know that we would have been able to totally avoid the advice or had, we would have created all kinds of strain and stress, but it was pretty obvious that right. Like this person was well intended and it's sort of knew what he knew and was trying to apply that to what we were doing, but he didn't know anything about what we were trying to do. And that was where that's where the disconnect begins and boy can that chasm widened over time

Wil Schroter: I think with investors and more so with the people that are talking to investors. When I explain to people the difference between a local investor in a competitive investor. Number one, I've never met somebody who's ever understood or even had the definition brought up to them here it is, it's this simple competitive investors invest for a living, they invest on competitive terms, they invest in competitive markets and competitive industries, they can't mess around. What does that look like. If you, if you go to a competitive market, let's say like san Francisco would be obviously the the most competitive market, the folks that invest there are competing with lots of other investors for the best deals, They can't spend six months asking you asked nine questions, they can't spend 30 minutes asking you asked nine questions if they don't get to the point, if they don't ask all the right questions immediately and if they don't make a decision today, someone else will take that deal that's a competitive investor also, they already know what the market terms are. They know what evaluation should be at a seed stage versus a venture stage. Rewind back to your local investors. Here's what a local investor, it's so different. It's their definition. Local investor looks like this. Local investors, some person in your hometown that made money doing something, something, yep. And that is their sphere of influence. Yeah.

Ryan Rutan: Which by the way, could have been inheritance, could have been, you know, retirement pension from, from a long term job could be a lot of things that lead them to because sometimes, you know, we're talking about relatively small checks. We're talking about people getting a lot of advice from somebody who's about to stroke a $25,000 check, which When you need $25,000, it's all the money in the world. But when, you know, you're a $12,500 million like

Wil Schroter: bit different, but you can get Astronomically Great advice for $25,000 or astronomically shitty advice for $25,000. That's the problem in this case. The local investor, they don't know, they're a local investor. They don't know what they don't know. It's like the person who never left high school football. As far as they're concerned, their NFL quality, right? Because they've never played in the NFL for these folks again, well intended, but They'll they'll say dumb ship, they'll, they'll say, Oh, I like 50% of the company for $50,000, right? Like they're on shark tank or some dumb stuff like that. That's not at all how investing works. But what will happen is invariably the local founders, we'll talk to local investors. Why wouldn't you will talk to two or three local investors and here's how they'll get led astray Number one, the local investor will take their personal opinion of how companies scale and say, this is what you should be doing. You shouldn't even be raising until you, until you've got at least a million in revenue. Right? Or again, I'll give you $50,000 for 50% of the company. The company is only valued based on multiples of earnings, right? Which just by the way, is not at all how startup valuations work in case you're curious about that. But again, they're not competitive investors. They actually don't know any better. But they're like, hey, I made money in my corner laundry. Right? And so that must make me qualified to write this check. Yes. It makes you qualified to write a check. Here's a good example. I actually invest in the stock market. I have for 30 years. Right, turns out, I'm actually not warren buffet just because I can write checks does not make me a professional investor by any stretch. So if you're taking stock advice from me, you'll probably lose all your money by the way. But if you're taking stock advice from me without any understanding how competitive investment works, you are screwed. And this is where it starts.

Ryan Rutan: Yeah. So I think in sticking with the theme here to kind of go through the cast of characters we're gonna get bad advice with and then marry that up to how we're qualifying that advice. Right? So I think that the the overarching theme for this part of it is money has not all been created equally. Right? And so therefore we cannot really use that as the barometer for this is good advice or bad advice. You know, they have a lot of money or they can write the check air go. They are also qualified to tell me how to do things, right. That is not true. So this is where we have to be really careful. We want to consider where did the money come from? You know, what else are they doing with it? Is this something that they're they're very, very used to doing and seeing. Right. Are they professional investors? Are they competitive investors or are they just somebody who can write a check? Right? And a little bit of diligence goes a long way on this front. Right. Didn't take me long to find out this was a coin up person and and that that was going to limit their purview as to what building software looked like

Wil Schroter: totally. So let's talk about how to qualify a local investor because if you're, if you're listening this far, first questions on your mind, should I have listened to that person? Here's some of the basics for how to qualify local investors. Number one simple. Is this, how many checks have you written in the past year? Not in your life in the past year. A competitive investor is constantly writing checks. Right. There was

Ryan Rutan: The one at the grocery store. There was the one at their 19

Wil Schroter: 62. It's like A competitive investor will probably have written 2-5 checks in the past year. A competitive investor likely has all of their investments recorded publicly in a place like crunch base dot com, right? They don't hide all their investments. A competitive investor likely more so in tech by the way, likely is on twitter. If your local investor hasn't written a check in three years, wrote one check three years ago is struggling as to whether or not they're going to write you a $50,000 check. It has never existed in a professional portfolio of investing in companies. You have a local investor and their money is good. It's exactly worth the same amount. I wanted

Ryan Rutan: to touch on this. Right. So yes, we're not saying don't work with local investors. We're not saying don't take money from local investors. We're saying be very careful what advice you end up taking from local investors right? Without qualifying. Right. If you have to send your power point over to an AOL address another just minor red flag, potentially the

Wil Schroter: chances are, yeah. If it's top male. If it's a well, chances are you're about to get really shitty advice. Now in that case though, the question would then become well, where where do I get good advice? Like, okay. Yeah, this actually is where I'm getting all this crappy advice. Where do I get good advice? You have to seek out competitive investors use some of the criteria. We just talked to by the way, they're probably not in your hometown. They're probably on twitter, reply him on twitter. DM on twitter, right? Like these people will talk to you. It's not like you can't get good advice. It's just that it didn't occur to that you're allowed to ask. You can ask us therapy at startups dot com. Ask us the same question that you would have otherwise ask your local investor. And here's the thing Ryan, you and I are in office hours with founders all day long, right? We just sit around and we just bullshit with founders the cool part of our job. And every single time I go to give them a piece of advice about anything. I always have a stop gap where I say, am I the most qualified person to give this advice. I'm 100% sure no one else uses that filter. Right. Like it's as if I have an opinion, I must be qualified for it.

Ryan Rutan: Even if they don't I watched I've literally sat in rooms with people who I know their background and then I hear them say things that have nothing to do with that background. Why? Because they want to help. And I've watched people manufacture responses simply because they didn't want to say I don't know. Not because of their own ego even write it was because they didn't want to leave that founder without something. So they just assumed like I just got to fill dead air, right? They need an answer, right? They're gonna be they're gonna be dead in the water without it. So I'm gonna I'm gonna toss them a lead balloon, Right? Not helpful. Right? So this this is what ends up happening, right? I see this time and time again. And I tried to apply the same filter. Did this yesterday was was in an office hours talking to

Wil Schroter: somebody and we

Ryan Rutan: got more into the kind of a deep sales process thing. And I had to say like look, I actually have somebody that would rather you talk to about this on the team uh than me, right? Like I will get you through customer acquisition will get all the way up through, you know, lead qualification generation. But now we're talking about like a really deep kind of philosophical sales question. Like I've got somebody better for you than this. Here's my opinion. But take it with two grains of salt and then call this chap, right? You have to do that, right? So if you are somebody that's listening right now, who's out there giving advice to startup companies do exactly what we'll just suggested, ask yourself, am I really qualified to give this advice? Am I giving this based on my own experience? Am I am I giving it based on the experience from things I've heard, which is better than just making it up, but still not great because if you haven't been through it yourself, chances are you lack the context to really understand how to apply it to somebody else's situation. And even then, right, I find myself going, alright, so this is, you know, I've done something like this before, but here's where your situation is different. And so here's where you're going to have to take my advice Knowing that it's gonna be 70% of what you need. That last 30% is going to be on you to contextualize this and figure out how it applies to your situation, right? But that's incumbent on me to help them understand that this isn't definitive, right? The person giving the advice has to be open and honest about that. And again, like in so many cases they're just not able to. And so we as the founders then have to turn back around and say, look, look, it's incumbent on them to know this, but we know that most of them aren't going to know what they don't know. So we have to measure it.

Wil Schroter: Yeah. It's like basic self awareness, 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. So the other archetype and I can identify with this personally is what I call the hometown hero founder, Right? It's, it's the every town has when there's somebody in your town that did really well, right? And they're the tallest midget, you know, according to all local lore, they were the one person that kind of broke out and did something amazing. And the reason I'm so familiar with this person is because it was me, I was the one idiot who like made a big company in the Internet in the 90s in Columbus. Ohio. Right. So I was that guy, I was the hometown hero founder and at the time I genuinely believed that my purview of what I understood about startups and the world at large was very accurate, right? Because good things happen to me, thereby I have all this knowledge. Apparently

Ryan Rutan: I have done it once. I can help everyone do it always. Exactly. And

Wil Schroter: then I had maybe one of the most, both humiliating and like come to jesus moments in my life, I ended up because I started this business, I ended up moving to Los Angeles and while I was there I started to get introduced to a whole bunch of competitive investors who had never met before and I was actually starting another company that was raising money for and this incredible thing happened. I'm sitting across from these investors And they're making investment decisions in like 10 minutes. They're like, oh yeah, that's cool. I'm, I'm totally in like, well, well where do you go next? Like, no, just want your money, right. And I'm like, wait what? Like that's not how investing works and it is, I just didn't know any better. So I went from like basically this hill jacket, Ohio that had no idea how the world actually worked and I just didn't, it wasn't my fault wasn't anybody's fault. You didn't know

Ryan Rutan: on a relative scale. You know, it was true when you were still in your hometown, right? When you were still in columbus Ohio, that was still valid, right? You did no more than that, the people around you, right, go somewhere else, context changes.

Wil Schroter: And then I started raising in san Francisco and then I moved to san Francisco and I started to see how like actual competitive deals worked. And I mean, needless to say it's served us very well with what we do at startups dot com because we have a bigger context. So this we're not like in a know it all situation, but we have context. We know enough startups dot com as a whole to know there are things we don't know this is the nature of life, but also we know when you're getting kind of shitty advice, the local founder, that hometown hero. The problem with their advice is there so sure it's accurate. Yeah,

Ryan Rutan: they want it to be, they want it to be for their own sake, for your

Wil Schroter: sake. They don't know any better.

Ryan Rutan: Right? They don't know any better. They want it to be true so that you can go forth and succeed. What they don't know is that they're spinning you up, getting you dizzy and sending you off down the wrong path into a dark dark forest. Right? Not good. Right? Again? Not intentional.

Wil Schroter: It's the high school quarterback getting you ready for the NFL. Alright, I'm sure you had that one big game and that was sweet, But this isn't the NFL, right,

Ryan Rutan: Please please go get me that news clipping one more time. I'd like I'd like to see hoisted on the backs of the other 17 year olds, let me see that one. That'd be

Wil Schroter: Great. So back to qualifications on this one. Right. And I think this almost ties into your coin up experience with the investor one is when is the last time you did something in this industry? I haven't been in the professional services business for 20 years now. To be fair, it actually hasn't changed. So it's just, that's kind of a one off. Right? But I, what do I know about it anymore? Right. I know how it works. I know the mechanics, but it's been a long time again. That's unusual that that industry hasn't changed too much. The other is have you been in my industry? Ryan, you, you and I deal with this all the time. We talked to people from every conceivable industry. You and I happen to have some personal experiences in a handful of industries or by proxy. Some people we've worked with have been close to that. We kind of get it, but we aren't experts in that industry. And so yes, I understand a lot about startups, but you're a food and beverage startup. I have never put something in a can. I have no damn clue right how to run your food and beverage startup. I can give you generic advice about how to put together a pitch deck. I can give you generic advice about hiring, etcetera. But if it's going to be specific about how to scale this business. I'm the wrong person and I help startups for a living. It's like my first rodeo now, imagine how unqualified your local hometown hero is by comparison

Ryan Rutan: for sure. And I want to, I want to touch on something here really quickly and I don't want to go on too much of a tangent here because I think we could. Um, but I think we also have to be careful what we expect from advice, right? I think that the minute we enter into the conversation as a founder thinking that somebody's going to give me the entire answer key for all the tests I'm about to take. We're setting ourselves up for disaster. Right? So to your point, we can give some generic advice. Does that mean that you should be seeking out somebody who can give you more and more and more specific advice Maybe if that person exists, if they're accessible and all of that. But there's always going to be some degree of you, the founder needing to mold this advice to your own use, understanding your own industry, your own business. Because the reality is, in so many cases, we're dealing with founders who are building something that's just enough different than anything else that exists that there isn't anybody who's ever done it who can give you advice on exactly how to do that, right? Even they, they can say like, okay, I know your industry really well, but this is a new product category. You're doing something a little bit different. And so we always have to be really careful about just taking advice and using it wholesale regardless of the source. Even the most qualified person to give that advice, isn't you isn't in your business, Everybody's got some level of bias, right? Again, not with malcontent, but they just don't know everything that they would need to know to be able to actually make the decision. Actually take the actions right that is on you as the founder to take that advice and turn it into something that's actually valuable and useful. Alright. I surrender the floor.

Wil Schroter: I keep an example when I was initially getting advice, I took the first version I got as gospel, basically the first person I met was the most qualified doctor that that could prescribe,

Ryan Rutan: you know, whatever

Wil Schroter: I needed. And later on I would learn that like most of them are quacks without realizing it. So using the analogy at the very least every founder on every topic should be getting a 2nd and 3rd opinion because by default they will be different.

Ryan Rutan: Stay on that. Stay on that for a second. This is one of the fundamental challenges with local advice. Sometimes if you just start to think locally and you're just looking at that local circle, you will find out very quickly from all of the other people who have been given the bad advice and don't necessarily know it yet, but that's the person you should talk to, right? So this is the other thing that ends up happening is that you sort of get the same recommendation. It's like I need somebody that knows social media. Oh, Talk to Jessica. Jessica is the, you know, she knows more about social media than anybody locally, right? She might know 2% about social media. And it may also be true that she knows more than anybody else locally. Right? So this becomes one of the problems that when we I think this is one of the reasons people don't seek second opinions as often as they should because they can't find one, right? And they realized that they already are talking to the most qualified person in this local sphere and therefore they'll they'll confirm they're thought that this was gospel. Right? So I think that's where it becomes really problem. They get a confirmation that like, okay, well, you know, maybe I should talk to somebody else and everybody points back to the same individual says this is who you should talk to. Great. Right? So you got to get out of these local circles, you've got to break out of the parochial nature of where you're seeking your advice to begin with in addition to qualifying it.

Wil Schroter: Okay, So I would say the the third and final culprit here, Ryan, um, which I see all the time is the super successful, but totally irrelevant advisor. So this isn't even the hometown hero. This is this is one step removed and I would say probably my favorite use case here is your attorney because for for so many startups this is kind of their first pass. And just to be clear the probability that you are talking to a startup attorney is like 0.1% right. It's again sticking with the doctor analogy. You're talking to a podiatrist right that looks at feet every day and you need to have eye surgery. These are not the same. People

Ryan Rutan: never asked my dad about eyes never

Wil Schroter: exactly right what ends up happening. I'll give you one of the most common examples. The most common example. I talked to somebody and they say I had this idea I've been working with with my attorney and they say I need to get an N. D. A. Put together a nondisclosure agreement so that No one can steal my idea.

Ryan Rutan: There's your first red flag right there that tells you, that tells you most of what you need to know, doesn't it?

Wil Schroter: But how wouldn't I know that my attorney said it. He understands loss. So obviously that's what I need to do. Here's the funny thing. No investor signs an N. D. A. It literally doesn't happen right? Can't happen. You will look like an absolute fool. If you take your N. D. A. And put it in front of an investor, it'll be so clear. You don't know what you're doing right?

Ryan Rutan: The N. D. A. Is literally a shield against productive conversations. That's what it is. You're like what I would like to draft right now is a document that will all but ensure that I can't have meaningful dialogue with anybody that would want to talk to because you draft that up for me bob. Absolutely right. I've got one ready boilerplate.

Wil Schroter: Yeah. You're going to need a private placement

Ryan Rutan: memorandum. No,

Wil Schroter: you're not. You're not. You need a freaking pitch deck. Like that's just not how it works. Now, here's the problem. An attorney, I'll just pick an attorney. An attorney sees everything through the lens of a law, right? Which is which is very often a very defensive practice, right? So if you're starting off, you're going to need an N. D. A. To protect yourself. You're going to PPM private placement memorandum to protect yourself. You're doing all of these things to protect yourself. What the attorney doesn't know is that's actually not how our business works. He's going to load you up with costs and a bunch of time and a bunch of fear that you actually don't need.

Ryan Rutan: And again some of those documents will actually prevent you from doing the things you want to do right. If you're running around town trying to foist an N. D. A. On people before you tell them anything about your startup. You've now ensured that your startup is going to stay one of the best kept secrets in town,

Wil Schroter: right?

Ryan Rutan: Counter to exactly what you're trying to do, right? So, in addition, this is this is exactly what we talked about, right at the top of the episode, you're going to get advice that not only doesn't help you, but actually takes you down the wrong road and runs you out of gas in that desert, right? You cannot do these things right. This can lead to the premature death of the business, and it's so fucking painful to watch these things happen.

Wil Schroter: We see another context where we have that rich uncle who made a ton of money in commercial real estate and within the family, he's considered the absolute Yoda guru, but we're building a dating site or, or a mobile app right in his advice over how you need to manage cash flow that has nothing to do with what we're talking about. Again, since he's the only person we know. I went through this when I was first starting the first few people I met with gray hair were the smartest, most important people I met. I specifically remember talking to some of my coworkers at the time saying we need to reel this guy in because his knowledge is so on point years later, the guy I'm thinking of is actually a great guy, but was worlds away from how he could actually help us. He would have done us so, so much damage, right, with the intent of doing good. And so I look at that and I say, wow, how many people is that the average founder gonna gonna come in contact with that are going to assume that because their domain sounds like good advice business, which again, speaking with that earlier analogy, the NFL, I know sports have

Ryan Rutan: the briefcase and the roller blades. I no business.

Wil Schroter: I know sports, so I'm obviously good at every sport that's ever been invented or finance is another one where we get led astray, right? We've got aunt jenny and she's a kick ass accountant. She's really good at closing the books. And she says, well, if you're going to raise money, investors are gonna want to know about, again your cash flow projections. And it's like, yeah, if you're starting a restaurant, right? Maybe, but that's, that's really not how most of this works anymore. All right. And again, she's not wrong. She's just applying it to the wrong person. Yes.

Ryan Rutan: And and at the wrong time, correct.

Wil Schroter: And so from our standpoint, you know, from, from a founder standpoint, what's so tricky is like, well, shoot, I don't know about any of this stuff. I don't know about finance. I don't know about fundraising. I don't know about marketing. How could I possibly know that the advice I'm getting is bad. What if all the advice I've been getting is bad, right ship.

Ryan Rutan: Look no further than the startup failure rates to assume that that might be true.

Wil Schroter: Yeah, yeah, yeah, yeah. Also people have very shitty ideas. so what it comes down to is it's about stepping out of your circle and in asking yourself who's the guru at this, Okay, chances are people who are gurus um there on twitter as an example, they're not the only place, right, But if you have a million followers on twitter and you're doing growth marketing, I'm not saying you're absolutely correct, you know, you're following, doesn't quantify your capability, but it's better than I'm not on twitter at all and nobody's following me and nobody has ever had an opinion on what I have to say,

Ryan Rutan: nobody's ever heard Yeah, exactly, exactly, yeah.

Wil Schroter: In this day and age there is no excuse, you know, to not be able to go outside of your circle and find other opinions. The problem isn't, isn't whether I can find those people is that I don't even know to look it, it doesn't even occur to me, you know what I mean?

Ryan Rutan: I think it occurs to people to still like stomp around their local, their local, you know, grounds and and talk to those people. I think that they feel like that proximity has something to do with this. Um and that I should start there. The problem is that when you start there, you often finish there or you at least set the course of your business based on what you hear there, that is a problem, right? Because we can often just starting off in the wrong direction. Yeah. To your point, this is no longer an issue of of access

Wil Schroter: right? Used to

Ryan Rutan: be used to be like, if you were in in you know, anytime, I don't care if it's big or small, you're going to be limited to whatever was there. If you're in a big town, probably got a better chance at good advice, then if you're in a small town, but not necessarily right, could have just talked to the wrong people out of a bigger pool. At this point, you have an ability to go out and talk to people who have demonstrated capabilities in the sphere that you're looking for advice on, right? You can see to your point, twitter linkedin wherever you want to go where people are having these conversations and other people are commenting back and agreeing and disagreeing or whatever. You can see the discourse, you can see the dialogue, you can talk to these people to you don't have to live down the street from them, right locality should not be how you're determining this. I can somehow here, there's like some some person out there listening to us right now, he's addresses like 70 to 20 Sand Hill Road and they're like, I don't know what the hell these guys are talking about. Like, I get nothing but great local advice around here. Like, I just walk up and down and just like everybody seems to know everything about fundraising around here.

Wil Schroter: Well, I'll give you a counterpoint when I was living in san Francisco or in in L. A. In some cases, let's say SAn Francisco. I also saw shitty advice because the problem with folks there is, they are so myopic, everything has to be a capital raise. Everything has to make it to venture. Everything has to be a big burn, big scale, big outcome. And I would watch people talk to founders who had no business going down this path and just using the entire single lens of everything has to be this again, it's the exact same problem. You need a huge engineering team. I'm like, dude, this, this is a valet parking business.

Ryan Rutan: Hey, look, engineers need jobs too. All

Wil Schroter: right. Oh my God, I was unbelievable how blindly myopic. This advice was being dealt out because it worked so big in the cases where it was applicable, that it must be universal and nobody took the time. I've yet to hear it, a pitch competition or anything else. I've yet to hear someone say this, You know, normally what I would say is this, but that actually doesn't apply here. Oh my God, you're a little bit of self awareness. And, and by the way, I don't think I'm qualified to give your the best advice here, but here's who you should probably be looking for. Right, I have never heard someone say that. I would love to if someone says that ever when I'm gonna pitch competition or anything, I'm going to step up and I'm going to hug them publicly in a very awkward, long hug kind of way just to show them how much appreciation I have for their self awareness

Ryan Rutan: and thus ensuring that they will never be that self aware again. Oh man. Be careful with that. We want these people to keep doing the good things. Will, Yeah,

Wil Schroter: Yeah. Okay. Okay. Okay. Maybe I'll turn it down a little bit. Maybe it'll just be a high five from

Ryan Rutan: across. That sounds

Wil Schroter: better. So here's what I'd say, chances are you're building your business no matter what stage you're at, whether you just had the idea five seconds ago or you're going to raise your series B it is incumbent on us as founders to be able to step back and find good advice to get good advice and Ryan you touched on this is to get lots of opinions. Our job isn't to blindly follow advice. Our job is to solicit advice from lots of places and synthesize it to make an actual good decision and chances are where you're going to find that good advice isn't from your hometown. 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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