Startup Therapy Podcast

Episode #185

Ryan Rutan: Welcome back to another episode of the startup therapy podcast. This is Ryan Rotan, joined by Will Schroeder, the founder and CEO of startups dot com. And as you're all now getting used to on occasion, we bring in a whole bunch of our founder friends into the audience who will be very quiet for the first half hour or so while Will and I drone on and then we'll get to hear from them. The episode will get way more exciting. We're digging into an interesting one today and one that may be a little painful for some folks uh certainly will and I experience this a lot in our, our founder conversations. Well, you know, as, as we talk to founders, we're starting to see more and more. There's this sense of entitlement around like what should be happening to me as I build my company, right? Am I entitled to funding? Am I entitled to success? Am I entitled to customer acquisition? Am I entitled to a great team? What as founders are we actually entitled to when we sign that founder membership card?

Wil Schroter: I don't mean to be a jerk, but we're kind of entitled to jack shit. And to be fair, that's probably what we'll get. I mean, if we, we're calling it what it is. But, you know, I've been sitting in a lot of founder groups lately and just listening very closely to what folks are saying and I understand where they're coming from. But when we talk about, hey, I'm going through the funding process, they don't talk about funding as if it's something that they might get, they talk about funding as something that they will get, but just haven't gotten it yet.

Ryan Rutan: Foregone conclusion. Yeah. Correct.

Wil Schroter: Yeah. Yeah. Yeah. It's, it's only a matter of time while on the one hand, I think there's some built in optimism which I think is, you know, important. We

Ryan Rutan: have to have it right. We have to have it.

Wil Schroter: On the other hand, it kind of comes with the other side, which is, of course, I, I'm entitled to it. But in other words, usually the word entitlement to me is a bad thing and generally it kind of often is, but they feel like if, if I've got the deck together, if I've got what I think is a good idea and I'm out pitching, I'm just waiting for the money, you know, I haven't got it yet, but I'm waiting for the money. That's one side of it. And I think that there's a lot of aspects to what's become this entitlement mentality for founders. And the reason I think we should talk about it today is because it's a really, really bad path to follow because it, it almost always ends in disappointment. And as I listen to these founders closely talking about how fast we didn't scale or how we're still get, trying to get the product market fit or I haven't gotten my exit yet. I'm scratching my head going, you know, that, like, never happens. Right.

Ryan Rutan: Right. Yeah, neither has almost everyone else. Right. That is the, the, the law of averages says it's going to stay exactly like that. We do see it a lot and I think that, you know, there's nothing wrong, like you said, with the optimism piece of it, we have to be optimistic. We have to believe in what we're doing. But when we start to believe in it to a degree where we become blind to the reality, this is where it gets dangerous to your other point. It also becomes disappointing if we assume. And we expect that funding is just a foregone conclusion and just, oh, man, I've talked to all these investors. They just don't get it right. They don't understand. They're just a bunch of idiots. Once I find the smart one, once I find the right one, then this is a foregone conclusion. I'm gonna get funding. This is just a matter of time and then they just keep spinning wheels and they're zero traction. No progress in the startup and it starts to take an emotional toll on them and they start to get burnt out and it's all predicated on this bullshit assumption that this was a foregone conclusion to begin with. So that's where we really cross the line from being optimistic into being, you know, dangerously optimistic. Or, you know, we crossed line into Hubris at that point. I think that's where we have to really, really watch our step.

Wil Schroter: Ah, hubris is a great way to put it. I hadn't thought of that word and that's exactly the kind of the, the, the word I've been looking for, which is odd to me because we're just getting started out. It's like we haven't had time to become cocky yet. Yeah, exactly. And I think we're doing it, you know, kind of indiscriminately and I think what ends up happening is we set ourselves up for failure. So let's talk about funding. This is the first pass that usually really makes me scratch my head. We talk to founders all day long. We work with a lot, create a lot of pitch decks, et cetera. And what founders genuinely don't understand is how the statistics are so stacked against them. Let me give you a fairly easy one for every one check that'll get written from a founder from a um sorry, an investor, there will be 99 founders that don't get a check. I mean, there are geometrically more founders out there looking for money, then there are investors investor checks don't, don't grow exponentially year over year founders do. Thankfully. So, think about that. Think about the hubris in thinking, I'm the one, the difference is you don't understand the numbers. When you hear you're one out of 100 that'll get funded. You might be like, oh, ok. Yeah, I, I could see why that would be highly unusual that I'd get funded. But if you don't know that and you just go out there and you hear about all these people getting funded, you assume people are just handing out money left and right. Right. Because

Ryan Rutan: all you hear about are the ones that get funded. You don't care about the other. Right. So for every 100 companies that get funded, there are 900 sitting around going what happened. Like, why didn't that work? Right. The other thing that I see is that people tend to think of funding as this vacuum conversation where, you know, again to your point, there are lots of other people seeking funding, guess what? They're seeking it from the same people you are. This isn't about just the merits of your deal. It's the merit of your deal against everything else they could possibly possibly do with their money, including not investing it in startups. Now, if you're talking V C, that's what they do. But if you're talking early stage funding, friends and family, they might rather leave it in their 401k. Probably a better place for it. If you're talking angels, they could invest in hard assets. Right. They could do a lot of other things they could put it into the market. There's so many things people can do with their money again. Be optimistic, be excited about what you're out to do, but be really realistic about the odds of this and what drives the odds. Because think if we just say with you versus 100 it's like, well, I'll just be the best. Yes, of course. That's what you have to go and try to do. Right. Every kid bouncing a basketball right now wants to be lebron James or Steph Curry or someone. Right. And the odds are stacked against them in exactly the same way. And we all get that and yet somehow the minute we become startup founders, we're like, yeah, but I got this. Never done it before. Have no experience, but it's totally me. Right. Like, no, no chance anybody's gonna beat me at this game. Right. And that's where we get in

Wil Schroter: trouble here, here's where I see it. I see it again. We talk at our founder groups and we just use those as, as kind of this, this mechanism that exists in many other circles. But we've got, let's say a group of 8 to 10 founders and we're all going around the room talking about updates and one person says, you know, we just completed our round of funding, which is fantastic. The problem is, especially in the earlier stage groups. The rest of the people in the room are like, well, why didn't I get funded sometimes? You know, they, they don't say that out loud but it's kind of what they're thinking.

Ryan Rutan: See it on their

Wil Schroter: faces. Yeah, you can see it on their faces. And I think to myself, man, why would you think that, why would you think that because that person got funded? That, that changes your outcome at all? And we talked about this in another episode about how what happens to me doesn't affect you whatsoever and how everybody's journey is dramatically different. So I was trying to remind folks it's wonderful that you got funded that if anything, it actually reduces the odds that someone else will get funding. There's a finite number of checks.

Ryan Rutan: Yeah, there's one less check out there for you,

Wil Schroter: right? But we only hear about the people that got funded. There's no tech crunch article that's like, oh my God, Ryan's been looking for funding for six months and no one will, will email him back. That article doesn't exist, right? And so I think we have to go into this with some straight up humility and say, hey, guess what, I'm trying to do this. I understand that the probability of me locking this down is really unlikely to your point, Ryan. That's why I gotta go all in. I gotta make sure I didn't miss anything on my deck. For example. Right? I gotta make sure my, my emails or my intros to investors are as tight as possible because I can't afford to waste a single one. And if by the end of that process, I'm still not funded. Guess what? That's OK. I have to plan another route to grow this business because I know that funding is pretty unusual. This is the

Ryan Rutan: conversation I'm constantly having with people, which is what's Plan B look like. What's Plan C look like? What does the unfunded optimization look like? One of the episodes we did was around optimizing for the likelihood of the outcome, not just the size of the outcome. And I think that's, that's absolutely apropo here because that's what we have to do. Like we can say like, look, we're gonna go try for funding, but while we're trying for funding, we better be actually working on building the business in ways that we have control over. This is something again going back to just this. I people don't really understand how the funding process works or they think they do, but they get it wrong. One of the challenges is that it's a process that we have very little control over. The only real piece of control we have in the entire funding process is whether we choose to seek it or not. Once we get past that part, yeah, we can pitch all day long, we can work on the deck, we can make investor, we can do all this stuff, but we don't have control over the outcomes. We can decide whether to seek funding or not, but we have to decide to continue to optimize the business outside that and continue to move things forward, which by the way also does increase that very small percentage likelihood that you actually get funding so important in either case. But I think this is one of those things where people get it twisted and, and they forget that there is a path outside of funding, which is the vast likelihood, right? So don't lose sight of that. Yeah,

Wil Schroter: it's, it's where most people wind up just, just to be clear, we didn't take funding. So let's look at another one. Let's say I've got funded or maybe I've just got things rolling and now I've got this sense that success has to come to me quickly. Not even just I, I deserve success, but it has to happen fast, right? Let's say three years, I deserve to know whether this thing is going to be the right fit within three years and I get it in my head and guess guess who else gets in their head? My whole staff, my old staff is like no startups, figure it out within years. We get product market fit and the thing scales and we go crazy, et cetera and I scratch my head. I'm like the difference is Ryan, you and I have such a different purview. We see 20,000 startups per month coming through startups dot com. So we see everything, the good, the bad everything, right. And we realize the number of companies that actually wind up finding product market fit, getting to scale, sometimes getting the profitability in three years are so few. It's needle in a haystack and yet it's become an expectation in the startup world and that's new, by the way, didn't used to be like that.

Ryan Rutan: Yeah. No, I, I, I remember that we, we started starting businesses. We just sort of assumed they would fail, right? And then we just kept assuming they would fail and eventually they didn't. And that was what success looked like because there was no like happy founder narrative back then. You know, I, I remember and I've said this in the podcast before when I would, I would tell people that, you know, I was a founder, I was an entrepreneur. They would always get this sort of like sympathetic look like, oh, he's unemployable, right? Like, oh, poor poor guy can't get a job, right? No, I'm doing what I wanna do. So, yeah, the, the sense that we deserve success is a tough one. The idea that it should happen quickly is another tie this back to funding. I did a call on Monday this week with the founder who was seeking funding. And I, when I asked like, so why, like, what is driving this need for funding. Why do you need this? It's like, well, in order to hit this revenue by, by year two so that I can start to pay myself this. And I'm going, oh man, like I, I know how this ends and it's, it's not that like even if you get funding, like it's unlikely that you're gonna get what you're after. So like even if you succeed at the thing you've set out to do, you're unlikely to get the crown, the prize that you were actually after in this case, because the expectation, it's just we're really malaligned with the reality of the situation. And it's, it's so hard to have these conversations and try to unwind that and try to help reset expectations without simultaneously just smashing somebody's hopes and dreams, right? Because it, it's a good idea. It's, it's a business and it could get funding. But the time frame that they were setting out the expectations they had for like how they're gonna be able to use the money. Like we're gonna raise a million dollars and then I'm gonna use half of that to pay myself for two years.

Wil Schroter: That sounds awesome. Maybe we will raise if we can start doing that, that

Ryan Rutan: guess who's gonna say no to that right before they write the check or go not write the check, you're investors. So, yeah,

Wil Schroter: but how do we get here? How did we get to a point where in the startup world I have to be successful within three years because I gotta say it wasn't always this way even in the startup world. So I would argue and, and take my hypo hypothesis for what you think it's worth that. The true startup culture, the way we know it now mostly came in the nineties with, with the advent of the dot com era where you had companies that could go to market on this new thing called the internet in this crazy new way. That was actually just really hard to do prior to that.

Ryan Rutan: Yeah, it gave exponential reach where you had at best geometric reach in the past. Right.

Wil Schroter: Correct. Correct. And so, and then really post nineties into the two thousands. Like that's when the startup culture really started to kind of like take hold and that's when our expectations changed. And the reason I say that is because if you talk about talk to somebody who built a business in the eighties, the seventies, the sixties, et cetera, no one would talk like that. They were like, are you out of your mind when

Ryan Rutan: my great grandfather started this at the turn of the century? Why? Uh you know, that was, that was it right? Businesses took a long time. All of the big businesses that we knew in the seventies, eighties even coming into the nineties before dot com had taken an exceptionally long time to build because that's how it worked. Like, you know, Sears and Roebuck didn't just, you know, turn on digital customer acquisition and like, hey, look at that, we've got the entire country buying log cabins in the mail, uh, which still blows my mind and that was one of the things you could buy. I kind of love that. I wish Sears and Robuck still had a log cabin for sale. I'd get one.

Wil Schroter: We started to build this really short term mentality and I think it just got exacerbated over time and I think it's put us in a dangerous situation. So I think the short term mentality would be an example. Like when we started to talk about building your M V P and lean startup and the idea is you're not gonna build shit. All you're gonna do is you're gonna throw up a landing page, you're gonna run $1000 of Google ad words and you'll know within like a month or so you're gonna landing page test this thing. You'll know whether it's a successful company. And all I kept thinking to myself was that's the most irresponsible way to launch a company that I can possibly imagine. And I'm not saying it didn't work for somebody. I'm sure it did, right. But I remember thinking companies take 7 to 10 years to build if you're lucky, if you do things, right. Why in God's green earth would you think that it's gonna take you a month to figure out what they're running? This business, there's

Ryan Rutan: a strategy there, you can validate certain things, right? And I talk to founders about this all the time when we're talking about M V P, one of the things that gets left out and I think again, it's part of this speed mentality and, and we can talk about it again where, where, what some of what's driving that and obviously the internet both made it available to us and popularized it, right? Because of then the advent of social media, then we all see people achieving, you know, the the ones of people who have done this, you know, faster at scale or by the way, are saying they did that, you know, not everybody tells the truth on the internet. It's not probably not a news flash here, but I think that that is, it's a, it's a big part of how we got to where we are and you know, to this this notion of speed and things like, you know, using a landing page to test. Great. Yeah, do that but be mindful of what that validates when I'm talking to people about their M V P. One of the things that I remind people, we have to actually validate is the provision of value, right? People leave that out of their M V P s entirely and they're just like we just have to hurry up and find out. Will people click a button? Will people offer to pay? Will people pre sale. Will people join a waitlist? Sure. Because at that point, you haven't had to do jack shit to prove anything other than what it says in the landing page, right? So what you've proven you can build is a clever marketing ruse. That's it. It's not a business until you actually start to provide value. People appreciate the value and come back for more of it or tell other people about it. Now you validated a business, guess what? That takes more than a month in a landing

Wil Schroter: page. It does. And I think that again, this kept perpetuating this myth, that success is a short term metric and that I deserve success back to our entitlement. I deserve success in a very short term. And I kept scratching my head going, you know, while we have made some things better, faster, cheaper, right? And it has helped, I mean, it does take less time to build a successful startup than it did before. It's not that fast at some point you're defying gravity and every now and again, every now and again, a startup does just that right? You get an Instagram moment, right? Where it's just the thing goes nuts overnight, right? Or Tinder, it goes nuts overnight. It actually does happen. But it is such a lightning in the bottle moment where like the likelihood of ever recreating that even again, I would say this with the same founders is almost zero, right? It almost never happens again. But we stamp that in our minds. We say, well, that happened, sold for a billion dollars within three years. So that happens. So that is the new, you know, four minute mile and, and that's what I should be pacing toward. I get anxious about that. I get anxious about that because when, when we start pacing toward unrealistic goals, we set ourselves up for failure. And when we set ourselves up for failure, it also kills us to build what should be great companies. If you had taken your time and you had paced yourself and you had realistic expectations and said, ok, it takes 7 to 10 years to build a good company. Well, hey, that's a long run, right? If you're sprinting trying to get it done in 33 years, come on.

Ryan Rutan: Yeah, there are very few people who run 10, 4 minute miles back to back. Right? It's not the way it works. I don't

Wil Schroter: know, man. And so the way I see it, when we talk to these founders, I say, look, you're in year 2.5 and you're shocked that you don't have more traction. Guess what? You are like 30% of the way there, not 90% of the way there. And you could make an argument to say, yeah, but in the first three years, if like nothing's really gained traction, there's usually a reason for it. There's a, a good set of statistics that would say if you haven't figured something out within three years, the probability that you'll figure it out in year six is fairly low and there might be some truth to that. But the other side of it is, or it actually takes a long time for you to find your footing and build the business that you're supposed to build. Like there's no reason it has to happen in under three years. You're not entitled to that timeline. We weren't, that's for sure, for

Ryan Rutan: sure. Yeah. Yeah, I think there's so much danger in this speed aspect of this, right? And when, when I talk to circle back to funding again, when I'm talking to founders about funding, one of the things we, we often talk about is this enabling or is this accelerative? In most cases, it's accelerative, meaning that it's just gonna make things move faster. It doesn't mean you're gonna get to success sooner. It just makes things move faster. Enablement capital is like I have to preorder, I have to pay a manufacturer to make my widgets before I can sell them. There are just few, very few cases anymore where I see that enablement capital is really a real thing, but a lot of people seeking accelerated capital and I find that to be, you know, part of this dangerous mentality that if we can just make it go faster, it'll be better. Rarely are things that just simply move faster through space better off. Right, especially at an early stage where we don't really know where we're going and we don't know, we don't yet have product market fit and yeah, it can accelerate some of those things maybe. But, you know, it may also give us false negatives and then, and then turn us away. We've also got a burn rate at that point. So, you know what else happens in that case, we fail faster And I know there's that whole fail fast mentality. Yes, but they don't mean entire failure. They don't mean giving up. They don't mean quitting and shutting it down. I mean, like find what's not working and then fix it totally different story. And I think that one of the other things that's not accounted for when we talk about things like, yes, there have been examples of these companies that move really fast that sets a false expectation that I have to do that. And I think that's really dangerous because it puts a ton of pressure on the founders beyond that. And we, you touched on this will but it is getting faster, right? We can build things faster. We've got low code, we've got no code, we've got, you know, shops that specialize in prototyping and M V P, we have all these resources we didn't have before, which in theory allows us to move faster and lowers the barrier to entry. So yes, some things can move faster. But guess what? Else that means means there's a whole lot of other people moving that wouldn't have otherwise been there when we lower the barrier to entry and we make things faster and easier, we get more entrance into the market. And so for whatever we've gained as a, as a collective startup community, we've probably offset by the fact that there's just that many more of us which look for us like this is exactly what we want. We want more founders in the world, we want more people building businesses, but we also have to be cognizant of the fact that that means there's more competition, more confusion, more messaging in the market, which just make things more difficult. And again, not that many more check writers, we've seen an exponential increase in the number of founders and a slightly linear increase in the the number of people who are funding folks, right? So not exactly the perfect storm, right?

Wil Schroter: What gets me concerned though is that again, if we create this entitlement as founders, we then radiate that out to our team. Now play this out, the team joins and they're like, well, of course, we're gonna exit this thing. So I get stuck in this thing and of course, we're gonna have an exit. Where did that come from? Exactly. It came from us as the founders. If we started to have that entitlement, a different way to approach it, a pragmatic way to approach it would be we're building something of value if at some point that something of value has uh value to someone else, wonderful. But the goal here isn't to say we're all going to exit. The goal here is to say we're creating value. If I start to say I deserve an exit. Here's what happens. I start second guessing the longevity of my business. I'm more focused on getting out of my business than building my business. And guess what? That doesn't lead to building a business that you're gonna get out of? I mean, it's kind of the paradox, right? And again, we'll go back to the founder groups. I just saw this the other day. Wonderfully, one of our founder groups, members had a wonderful exit like a, a big exit to a, a public company. And, and we're so happy for kind of on everybody's faces for a minute is where's my exit, right? Si similar to funding, et cetera, you read about someone in your community and they exited and your first thought because we're all selfish idiots is where's my exit? You know, why isn't this happening to me? And it goes back to the entitlement. We're not entitled to an exit, not just like funding, it might happen. And if it does, that's wonderful. Right? Obviously, if it does, that's wonderful. But the reality is the statistic statistical reality of us getting to an exit is so incredibly low that to say I deserve it. It's just like an exercise in madness. You know what I mean? Yeah, I

Ryan Rutan: was mentally drawing a far side comment where, where it says, uh, recent startup exit and it's just a person carrying a cardboard box filled with the things that used to be on the desk from the startup that shut down. Right. Like, sadly, that's the higher percentage, right? This is the way most startups exit, which is sort of quietly into oblivion. We're not here to tell you not to not to build a company, we're here to tell you to build a company, but we want to make sure that we have the right expectations and that you're looking at this objectively and understanding what, what the realities of the situation are because that is required for success, right? If you are going to be successful, you have to be looking at this realistically, it cannot come from a place of entitlement. It has to come from a place of pure understanding of exactly how difficult this is and still having a willingness to go forth and try to do that. Right?

Wil Schroter: I think if we zoom out and we say, what am I entitled to? What am I not entitled to? If we really kind of kind of sum this up, I would say that I'm entitled for the chance of funding, not funding, right? Ideally, I'm gonna build a business with or without it, but I'm entitled to the chance at funding. I I should get a shot at it and I think that's absolutely true. I'm entitled to be able to build a business that will hopefully be successful sooner than later. Right. There's, there's no upside to being later, but I don't know when later is going to be. I really don't and, and sooner will never come quick enough. And it could be 7 to 10 years. It could be 12 years. And I know lots and lots of successful founders that spent easily a decade before they even got their footing and wouldn't trade it for anything. I think again, we've got this broken mentality. So I think I'm entitled to some success. Ideally if I make it happen, but the time frame, I gotta throw that out the door, it'll happen when it happens, I'll try to make it happen sooner than later, but it's gonna happen when it happens. And finally, I'm not entitled to an exit unless I've created something of value that people want. It's kind of that simple. If I've built something of so much value that everybody wants it, then I'm actually entitled to an exit because I know people want it. But if no one's knocking, guess what, I'm not entitled to anything. I didn't build something with enough value to an external party to make that go, whether it's an IP O A sale, et cetera. So when I think about what we're entitled to as founders, I have a very narrow purview. We're entitled to our own focus, our own vision, our own way that we want to build this thing and absolutely nothing else. You know, something that's really funny about everything we talk about here is that none of it is new. Everything you're dealing with right now has been done 1000 times before you, which means the answer already exists. You may just not know it, but that's ok. That's kind of what we're here to do. We talk about this stuff on the show, but we actually solve these problems all day long at groups dot startups dot com. So if any of this sounds familiar, stop guessing about what to do. Let us just give you the answers to the test and be done with it.

Ryan Rutan: And that's what we would call the episode except that there's a whole bunch of people sitting here waiting to ask us questions and, and, and provide perspective and do all that. So normally that's where I would hit uh hit pause, but uh we don't have to do that today. So awesome. And just to put a cap on it, I agree with you will. I, I, I think the the entitlement ends at kind of the the decision to do this at all. I think we're all entitled to try this, right? And all the things that come with it and nothing more. So we've got some comments in the chat. It looks like we're all back up. We all ready to, to get involved in the conversation here. Let's see, I'm looking for the first, uh, Roman, you said 16 years of schooling. I, I have a feeling that was just a, a comment on, on some of the introduction around the preparation for this. And I think I have a feeling you were being sarcastic, but did I read that wrong?

Wil Schroter: Well, I wasn't being sarcastic. It's because I think you guys asked the question of how do we get into this mode of expecting stuff? And it's 16 years of schooling because we're like, you put in the work, you get the grade, you put in the work, you get the grade and it's like we're just conditioned to it. Wow. I hadn't even thought about that. That's a really good point. We've been conditioned for so long to get the reward for the work. We're so unconvinced that if we do the work there's no reward.

Ryan Rutan: Yeah. Well, we left the rat race. We have to expect not to find cheese at the end, I guess.

Wil Schroter: Yeah, it'd be like working a job and then on any given week you don't get a paycheck and you're like, what are you talking about? Like, that's exactly how this works. It's kind of what it feels like an entrepreneurship. You really don't know when that paycheck's gonna come, you know, that you keep spending money to go to work every day. I mean, nice to start making some. That's a really good point about about the uh the expectation.

Ryan Rutan: Dina. It feels somewhat as a result of the message to founders that you have to believe in yourself to the extreme to succeed 100%. And I think this is where we were talking about early on that you have to be optimistic, right? We have to believe that we can do this if we don't believe in ourselves, no one else is going to. But again, we gotta be careful of that line between optimism and, and hubris where we just put ourselves at risk of one having expectations that are just so poorly aligned with reality and then being disappointed when we don't achieve them. Was there anything specific in that like in the narrative that where we have to believe or you, you're struggling with that? Now, is there a point in your, your startup where it's like I've been living on optimism for so long that I just, I don't have anything else or what's driving that for you? Well, I actually very pretty recently started in the game. So not where I am personally, it's more of just this ethos I think and story around like, I don't know, a lot of stories that people tell of like I think it was mentioned elsewhere of like, oh, we're turned down by all these people and, and they persevered and that's like that's why it came about and kind of that being a essential part to you being successful in the future. And you're kind of tiptoeing this line between that and then also like being realistic and seeing the statistics and if everyone took the statistics, like have that in your face every day, no one would start anything because of that because it's like, not rational to do so. So it's kind of this hard, like, I think that's why there's a roller coaster up and down because you're kind of going between these two extremes. But there's kind of no way to like, not do that. So, no, I think, yeah, the best we can do, I think that the roller coaster will always exist. I think the best we can do is try to, to level out the peaks and valleys a bit, right? Where we make sure that we maintain that appropriate level of optimism. But again, not allowing optimism to take us so high that when we hit that turn and come back the other direction and reality rears its ugly head. And we, we head for that. Uh is it Paul Graham the trough of despair or the trough of sorrow, right? Yeah. So that the the the landing in that is uh is it a lower velocity because we hit that at some point?

Wil Schroter: You do need to believe in yourself. That's kind of a given. But I, I also think that you have to have a level of humility in this process again and, and, and, and I'm sure you see it too, which is, hey, funding isn't easy. Right. Like, if I get it great. But that, that's a long shot success isn't easy if I get it great. But I'm not gonna try to get in three years or not gonna believe I'm gonna get it in three years if I do. Wonderful. Right. Or, or exit would be wonderful. But, like, I'm not like silly enough to realize that like, out of all the startups out there, the probability that I'm gonna get an exit is so incredibly low that for me to just be assumptive, you know, entitled to that, that outcome is ridiculous. I think what's healthy here and this is really what we're trying to say is to understand how statistically off we are from all of these outcomes and look at them as that is like basically the total outlier. It's why they write articles about people like this, you know, like, like Drew Houston from uh Dropbox has this amazing story. It's actually on the startups dot com site. His back story about, you know how he kind of like, you know, went to the edge and came back, Brian Chesky from airbnb, same thing where he and his partner were selling Obama Os, right? And Captain Kane's at, at a rally in order to like make enough money to, to keep the lights on, right. And that's all they ate for like a year after. Right. And those stories are awesome. They're mostly fabricated but they're awesome. Right. Because we hear about that and like, oh, my gosh. You know, if I don't persevere I'm not gonna be airbnb or I'm not gonna be dropbox, et cetera. Well, guess what? We get to hear all the stories and when that doesn't work out and the only thing you have left are boxes of cereal. It doesn't always go very well. In fact, statistically, it usually doesn't go very well. Right. It would be the equivalent of when people say they want to get in a relationship, they're single and they go out into the world, they're like gonna meet one person and that's it. Not gonna meet more people and that's gonna be the perfect relationship forever and we're gonna be married and make Children and do whatever we need to do. And that's it. And you look at that person like, are you insane? We are, uh Ryan and I are, unfortunately those people that see all of these people come into this for the first time with these expectations and this is why we're doing podcasts like this. Just like, dude, take it back, take it back a second. It doesn't exactly work like that. Right. And I hope it does. I hope, I hope the first person you meet becomes the person you love forever. Probably not a great idea, but whatever. But that's it actually kind of not how this whole thing works. I

Ryan Rutan: think the other hard part of it is that not only are founders seeing this but like, everyone around you in your ecosystem sees it who don't, who know even less than you do. And so like, I can talk about this personally. Like my mom has definitely said multiple times like, oh, you'll know in a year whether or not this is something to continue pursuing and like trying to educate her of like, no, I might not know. I mean, I probably won't. But I try, you know, I'm like, no, that's not necessarily the case. There's not like a time that, you know, or don't know, that doesn't mean I like need to do at this time, you know, but living in that world with everyone else too that makes it I think hard as well. It's a great point. Yeah. And the people around us have so much less context we talk about this all the time. It's like you, you can get sympathy from people who are non founders. If you're lucky, you've got some founders in your life and you can get some empathy from them because they understand it. But for the people on the outside of this trying to understand, right? And again, like it comes from a good place. What your mom is really saying is I'm looking ahead at your future and I want to know that you're secure and I want to know that, you know, you'll be ok and that you'll, you'll thrive as a human, you know, both professionally financially existentially. So let's check in after a year and make sure you're not just heading on a straight downhill to nowhere. So I get it right. We get the motivations behind it, but it doesn't make it easier to deal with. And again, to your point, even as the founders, we have a limited amount of understanding and data around how this is gonna work out. So having to listen to the, the opinions of everyone, all of the pundits, you know, around us who have less information would kind of like, I don't know, be me commenting on Tom Brady's throwing arm. Like I never, I've never played a football match in my life. Not that kind of

Wil Schroter: called a match. That's why we know you haven't played it.

Ryan Rutan: Yeah, exactly. See, there you go. Ok, a football game with your hands, the hand you

Wil Schroter: said that, that you, you, I'll come back to you by the way,

Ryan Rutan: that will live forever. Yes, I know. All right.

Wil Schroter: Moving on to my man, Roman. Back to you, my friend. Uh the stories that are told were the loudest, the loudest are the ones where the founder perseveres against all odds. Uh The dropbox founder getting turned down by Google. It's funny, we both said the same thing in carrying on. It often feels like startups are built on belief and blind optimism, Roman, how long did it take you to realize that those stories actually weren't true and, or were just such a, an outlier that you actually couldn't build anything on those stories? I think rationally. I know they're not true. But if you hear them often enough every day and you see little pieces of proof, you have to kind of convince yourself about that constantly, continuously. Right. So that's the challenges and also when you have little other data other than belief in optimism, like if you really don't know what the next step is and when it's gonna happen, you kind of almost fall back to that as a default. I think what's terrible about this? I love these stories and they're so entertaining again, we have a ton of on startups dot com and I read all of them. I, they're wonderful. Right? One when I said they're not true. What I mean is you often get kind of like a, a revisionist history of what actually happened there. Yeah, you get the

Ryan Rutan: Instagram version. Yeah. Here's the best parts of what I just went through.

Wil Schroter: Yes. And then the second part that you don't hear is typically at the time, number one that struggle they're going through was not cool. Like when they're, when you're eating nothing but the same cereal every day because you tried to hawk it at an Obama convention. There's no part of you that's waking up in the morning. And go man nailing it right now. This is gonna be a billion dollar company. You're like cool

Ryan Rutan: story, shitty

Wil Schroter: diet. Yeah. I remember Brian Chesky from airbnb was like, dude, I had to move back into my parents' basement. Right? How cool do you think things are going for me at that time?

Ryan Rutan: Right. Do you suppose they put it on Airbnb and charge them for it?

Wil Schroter: Yeah. Oh. Right. But like, I've got a story where, like, I got rejected from every college I applied to and I went to school for an entire year as a fake student because I was, I was afraid to tell anybody that I wasn't actually accepted to a college and a lot of people don't know that particularly a lot of my friends who I went to college with. Right. But at the time it makes a cool story now. Right. But at the time it was maybe the most humiliating moments of my life. Nothing

Ryan Rutan: cool about showing up and putting in the work and uh not getting credit for it.

Wil Schroter: Yeah. Yeah. Oh my God. It was humiliating. And so those stories sound cool. But also by the way, if you talk to most of those founders, uh maybe damn near all of them. If you talk to them behind closed doors and ask them about the same story that they were told, they'll often give you a different story, they know what's good for the press and they know, it's like the actual story, if they told the actual story and I'm not calling them like liars or anything. It just their story kind of, you know, makes for better press. It wasn't that awesome. And if you had to live through what they lived through, you probably wouldn't keep going. And one thing could have changed and, and they were gone too. So the stories are really misleading in some ways. They're, they're ex exciting. And I, I read those stories when I was first coming up and I love them and they really helped me persevere myself. I just learned that later on that they were kind of myths

Ryan Rutan: which leads us into Michael Lu's point that we use other founders as a baseline and it's really skewed 100% because who, who do we pick the best of the bunch? Right? Like we're gonna pick the founders who tell the narrative. That sounds like the life we would like to have the path we would like to follow the circumstances that we would love to have land in our laps. And again, to Will's Point, we're still getting a really filtered view of even that. Right.

Wil Schroter: Yeah. And I think as, as well, like I was thinking about like how we all try and enter our business as like a unique company, right? And yet imagine us all as like these individual unique snowflakes and then we try and compare ourselves to everyone, like for like, and you're like, well, hang on, are you unique or are you trying to be the same, like, which one is it? Because you can't be both? And it really screws with your head because, you know, you're always looking at what other people have and wondering, well, why can't I have that? And it's like, well, because you are on the same trajectory, you know. Yeah,

Ryan Rutan: you haven't done all of exactly the same things that they did at the same time in the same circumstances. Yeah, it's so hard though,

Wil Schroter: Michael. You also made this point soon thereafter that you think seeing people successful through social media has made founders impatient for success. We've never had a time in human history where it's been easier to fabricate how our lives are going and have the entire world know about it within seconds. I mean, this, I mean, every social media outlet there is, well, and you've seen like those, those like behind the scenes, like people with their feet in the sand and then they reverse the camera and it's a paint tray with a bit of paint with a bit of sound in it. And, and you like, well, yeah, this is how it actually is. People are trying to put their best versions of themselves forward because they want you to think that they're doing well. And I think you just, you, we live in this world now where only the good is shown. It's one of the reasons why I love what you guys have done is because you're not showing just the good, you're showing the complete polar opposite as well. Like the failures, the things that you had to go through to like, get there. And it's what drew me to startups dot com because I was like, finally someone's telling me the truth and it makes me realize I'm not alone and clearly not alone. You know, because there's many, many founders who share that and, you know, the, the whole, like, you know, wanting it now it's just so damaging. I mean, later on in the, in the comments, like I said, like, I've got this app on my phone that reminds me, I've only been doing this for four months as this version of my business because if I don't, if I don't have it, like all of a sudden the timeline starts to skew and then I'm like, I've been doing this for eight years, like, oh, you haven't, if it gives kind of gives me a kick up the arse to remember like where I actually am off. Like I barely got a toe off the start line. So we always, and, and we did another episode recently about this that were saying how much time you actually have, right? Like if you're 27 years old, you've barely started your career, people like, wow, I'm, you know, a quarter of the way through my life and it's like, no, not your business life, your business, like you graduated college five years ago, you barely started your career. You're like 10% of your career. All right. Moving on. So tas knowing that I don't have to have a multimillion dollar startup in the 2 to 3 years actually makes me feel a lot better about the organic growth of my business. I am 100% bootstrapped and focused on my users not interested in getting funding at the moment. What, what were you thinking there? Well, I think that, you know, I've been building my business and then I get into this world of like accelerators and getting funding. They're like, oh you're in the tech world, like you need to apply for this accelerator like they have all of these funding. And I'm just like, well, I don't feel like I need funding. Like, what am I like? My business is growing? Like I'm getting users like I'm making some money. Like things are going well, like why do I need funding right now? And it's just like all of these, like you need funding, you need fund. I'm just like, why, like, why do I need funding right now? It's just been a really interesting experience that I've been going through and I'm a first time founder, first time I've ever done this. Well, that's the challenge because you're coming for this for the first time, wherever you start getting your initial signals. Is what you're gonna assume the norm is, again, we're, we're going, uh, back to the dating analogy. I used, if the first person you dated was just the most horrible person in the world in your mind, people are horrible. Like, you know, I'm probably gonna meet more of these horrible people. It's hard to get a baseline until you've been doing this long enough. It's hard to get a baseline until you've seen enough other viewpoints. And the challenge is the viewpoints that are kind of the, the biggest mouthpieces are either fake success or a success. That's not necessarily the same as yours. So, someone raised $100 million and they went public. That's cool. But that's their path that has nothing to do with yours. And it's hard to differentiate that. Yeah, definitely. Yeah, because I, because people are saying that I need funding or, you know, all of my other, like I have an app and like, I have all these other friends that have like built apps and stuff and they're like looking at funding. Um And so I guess my question is like, when do I need funding? Like, how do I know what? And it's time to start raising funds, I guess. Well, here's the funny thing people think, well, I don't have something I need to hire engineers. I need a marketing budget I need. So that must mean that I need funding. Let me tell you there will be something you don't have for your entire career in this business. Right. That is perennial. It's actually something that, no matter how much funding you raise, you start raising money. And now the next issue is every 12 to 18 months, you have to be out raising money again. And now you've got a gun to your head persistently for the next 7 to 10 years trying to stay on the hamster wheel of funding. And by the way, I've been through it, Ryan's been through it like we help people through that all day long. It's not anti funding, but you're trading one set of problems for another. And so there's no one solution that kind of figures it all out. Anybody that's raised enough funding will tell you it's not all gravy the way people make it sound. There's a lot of ways to struggle. That's just one of them.

Ryan Rutan: Yeah, I think that learning to do without is one of those core characteristics that make for a great founder, right? We just learn to make things work without, but we assume when we don't have things to will's point when we don't have, right? We, we have to do without and, and I want to have those things, the fallacy there is that once I have those things that everything just becomes easier and it just works, right? But there, there are tons of challenges in doing with just like there are in doing without, right? You you inherit a boss, you inherit a burn rate, you inherit, you know uh that, that acceleration we talked about earlier which may just accelerate you uh into the tree. Who was telling us the sledding story this morning was that before, before we hit record was telling us he went sledding for the first time and almost hit a tree. That's actually a great analog for what funding looks like. You're like. I wanted to move faster. I started moving faster and holy shit, things got dangerous really fast, right. So, be careful what we wish

Wil Schroter: for. But again, it's going back to the pacing element too to somebody's telling you, you know, maybe directly or indirectly, hey, you need to be moving faster and you look at that and you say, well, I would certainly like to get to success faster. I mean, who wants to wait? There's no upside to that. But on the other hand, at what cost in order to get to success faster? Do I have to give up a whole bunch of my own company to do that? Maybe and maybe that's not worth it? To me, another side of it would be in order to move faster. Do I have to like, set myself on a burn rate where I'm gonna run out of money in a really short period of time and have to keep raising money all over again. That's a dangerous path too. People don't give you necessarily the full story when they're trying to explain to you what moving fast means. There's a cost to it. There's a consequence to it. And that, that's something that I think on the other side of it, we really try to arm people with that information.

Ryan Rutan: 100%. Let's see here. Where are we at? Uh

Wil Schroter: Michael at the bottom? I realized I'm running a race by myself. So it doesn't matter how fast I run or walk. I like that. Oh Michael, what made you think of that? I think it was probably another one of you guys' podcast episodes. To be honest, I was just like, I always had this, like, I'm very, I'm very visual thinking and I just had this image of someone just dropping me onto a track and then I'm just like sprinting and then I look behind me and realize no one's there. And I'm like, why the hell am I running? And I'll just walk like by the time I cross the finish line, I'll have a lot more energy than if I just keep going. So, yeah, I think we're just so focused on trying to cross that finish line as fast as possible. And I use Apple as an analogy like as, as like a comparison of like, they very rarely bring something to the market first, but they arguably bring it to the market the best because they watch what other people are doing and then go, we could just do that better and then they usually spin it, you know, so that they were the first that came up with it, it's like edge screens, like it's not edge list. There's definitely a border around every one of your devices, but people just buy it. And I think that need to be first is oftentimes actually means that you're not necessarily the best at what you do. So

Ryan Rutan: we've made this comparison and joke a number of times, you know, ask myspace, how glad they were that they were in the social media market before Facebook at this point? Ask them, how, how much, how much are they enjoying that first mover advantage now

Wil Schroter: versus the best mover? Yeah. On that note, we gotta wrap up. I want to thank you all for being here. It's so cool because we get to see you guys first and we're thinking about you when we're making the podcast. So, you know, when we're talking about this stuff, we're, we're picturing you guys, but to have you here to have you guys share is actually it means the world to us and we appreciate the time you spend with us and listening to our stuff. Ryan. Any parting thoughts before we uh before we go away, just

Ryan Rutan: remember, you know, you're entitled to go forth and do this. Let that be enough, right? Let that be enough, be excited that we have that capability. We are entitled to a shot at this thing, right? And uh and you're entitled to keep coming back and asking questions, you know, we're always here. This is what will and I love to do. So, you know, use that piece of entitlement, right? Use, use the resources you have available to you and just uh keep on keeping on be optimistic, but don't be blind to reality and everything will be fine.

Wil Schroter: So, in addition to all the stuff related to founder groups, you've also got full access to everything on startups dot com. That includes all of our education tracks, which will be funding customer acquisition, even how to manage your monthly finances. They're so much stuff in there. All of our software including BIZ plan for putting together detailed business plans and financials launch rock for attracting early customers and of course fund for attracting investment capital. When you log into the startups dot com site, you'll find all of these resources available.

Copyright © 2023 LLC. All rights reserved.