Startup Therapy Podcast

Episode #5

Ryan Rutan: what does it cost to be happy as a founder, how much are you willing to sacrifice to build the exact culture that you want? Is it possible to optimize for profit and happiness, how does profit enable happiness? We've asked thousands of founders what they care about most. We get responses like team mission culture and if we were looking for a list of things you should obviously care about those would be great answers. But we think that being happy takes far more deliberate action and highly specific goals today, on the start of therapy podcast, we're going to explore why we think optimizing for happiness is the right move. Hey, this is Ryan Rutan from startups dot com, back for another episode of the startup therapy podcast with my partner and co host Wil Schroder. Well, Where in your 25 year history of starting and scaling companies, did happiness become an objective and not a byproduct? When did you start to give it merit as an outcome that you should plan for?

Wil Schroter: Well, honestly, it became a priority way too late in life. And I think that was the genesis, a lot of, a lot of this topic, it was the fact that we tend to think of happiness as something you get toward the end of this startup journey, right? You know, we worked so hard, we make so much sacrifice and somehow happiness comes in the end kind of like with a paycheck and unfortunately that's kind of the narrative among startups, right? Is that that the happiness comes later, we're building toward that happiness and and I don't think that's entirely wrong. I just don't think that's entirely necessary, right? I I learned over time after doing a whole bunch of startups, but I didn't necessarily have to defer being happy and we're building a culture where everybody else was happy just because we were in startup form.

Ryan Rutan: Okay, so what changed?

Wil Schroter: Well, if you can recall Ryan, like when we started startups dot com, call it six years ago, we were in a much different place than when we where we had been all of our lives prior. We were all becoming fathers for the first time,

Ryan Rutan: I had hair,

Wil Schroter: much

Ryan Rutan: has changed,

Wil Schroter: we gotta hold really, really fast. And and I remember God man, I remember sitting down in our conference room talking about this and I remember saying, damn, we all got old, damn, we're all about to become responsible parents. What the hell happened? And it started to kick off this conversation about how this time around, you know, with this startup, how things had to be different and up until that point, you know, that was my ninth startup. Up until that point with all the other startups, it was the same routine, it was start startup work every waking hour, kill yourself and then maybe things work and they usually don't, but maybe they do this is the first time we were forced to stop And say, yeah, it's not that easy this time, right? Like at 6:00 PMclock or any any bit later, we're now taking time away from our family and that's all of a sudden. Not okay, right. And we're grown ass men trying to figure this out,

Ryan Rutan: right? Yeah. At that point, priorities have to shift. Um, you can no longer just make the trade offs. You know, when we were single founders, it's a very different story. Even as a married founder, it was a different story. That's that exponential increase in humans that occurred in my house was happening. It it meant that there was it was an exponentially harder trade off to make.

Wil Schroter: And I think it was it was the catalyst of forcing a discussion, right? Whereas before we could have all said, yeah, I get it. You know, we're going to work insane hours, we're not going to be all that happy about it, you know, let's call it what it is. And I think this time around we said, look, we're going to have to make significant sacrifices to make our families work. And by way of that make the business work, what other things would we be sacrificing,

Ryan Rutan: Right? And I think that's the right question to ask, right? Exactly. How much are you willing to sacrifice to build what you want?

Wil Schroter: Exactly? And, and I I don't think this is a conversation that startups or founders tend to have, we all generally say we want to build a positive culture, a happy environment, etcetera, but I don't know that we're very deliberate about this process where we sit down and think very specifically about what sacrifices we're willing to make. More importantly, what we really care about on a go forward basis in the startup, things that were not willing to compromise on anymore and kind of list that out as our bill of rights, so to speak to say, this is going to be the genesis of the entire company going forward.

Ryan Rutan: Yeah. It really has to start there, right? It has to start with the goals and they have to be super specific. If they're not, then you're not gonna have any, you know, achievable path to get that sort of like, well, I'd like to find the gold at the end of the rainbow, but I don't have a plan for getting too. So you gotta find that goal first, then you work back to that. And I think it does come back to being willing to make those sacrifices that it takes to achieve those goals. But again, if you don't have these really specific goals, what's interesting, I can go back in time and say I still made a lot of the same sacrifices in some cases. I made worse sacrifices and I still, well, I wasn't getting what I want because I wasn't clear about what I wanted. And so I think that that being able to sit down and say, here are the clear immutable goals of the organization, whether those are our culture or profitability or you know, the team that we work with. I think that really, really matters. Um, so what were some of the examples? Well in going back to that conference rooms, we were sitting there and talking through these things, what were some of the examples that you can recall of things that we were clear and sure we wanted to accomplish?

Wil Schroter: Oh, there's a bunch and we'll walk through because I really want to go through some detail on these. But I will say it was an interesting point in life, not just because because we're all becoming fathers for the first time, but also because we had all been around the block a few times at that point I was 37 years old. I've been running my businesses since I was 19. I had seen a lot and I was kind of young enough to still make course corrections in my life and how I was going to spend my my day Yet old enough that I had seen a few things before and I could realize what was a bullshit path and what wasn't yeah. You know, for example, up until that point until the point I was 37 I was working every waking moment of every single day, it didn't even occur to me that I could work an eight hour a day. Like that just seemed heretical, right? And so the idea of not going on vacation to me was a badge of honor, right? I mean, in retrospect, this is the dumbest things in the world,

Ryan Rutan: right? But let's stick with that for a second because I think this is important for all founders to know particularly young founders, that it wasn't that we got to a point where this was okay and figured all this stuff out. We just got to a point where the rest of life forced us to examine this and we started making what we will argue today, better decisions about what we optimized for. So it isn't necessary to have gone through all this to get to this point, those badges of honor didn't stack up to being able to optimize for happiness. We just realized that we could, but that could have happened at any point in the journey, in my opinion,

Wil Schroter: agreed, agreed. And this was just a moment that was very arresting in a positive way, where we said, okay, we're about to buckle in and do this thing all over again with startups dot com. What have we learned, you know, kind of taking it out and putting it on the table and say like, what don't we want to do again? So some of the things that really came to mind, I thought about across all the different companies, a bunch of venture funded companies throughout that path. What are things that really stuck out to me that I really hated and things that I really liked and incidentally the things that I really hated became more of the defining characteristics, for

Ryan Rutan: example,

Wil Schroter: when I look back on all the different companies that I've worked on, what really became the highlight weren't the companies, it was the people that I was working with sometimes good, sometimes bad, Right? I ran an agency for nearly 10 years. What I remember about the agency is clients yelling at me, that's what I remember. You know, we grew and became a really successful agency, but my highlight reel involves being chewed out from from clients at all different stages in our growth and how much I just fucking hated that, right? And then when I think about doing venture funded companies listening to investors just chew me out over why my idea was horrible or about maybe why we weren't performing and things like that. And again, I always caveat this, these are actually good people, but it sucks getting chewed out all the same. And then the last piece was just people that, that I had worked with, you know, employees or what have you. I just hated seeing everyday, right? And I'm sure they hated seeing me. I'm sure like I'm on far more, you know, than the opposite. Yeah, yeah. So, so let's call it what it is? But I started to think about all those things and I said, you know, at the end of the day, I don't want to work with people I don't like anymore. It's just that simple. Right. And what sucks is if it feels like you have to and and maybe I did write, you know, maybe I did have to work with investors. I didn't like because I needed the money. Maybe had to work with clients. I didn't like because I needed the money. Maybe I need to have had to work with employees I didn't like because I felt leveraged in some capacity. Right? But man, if you add all of those things up, not having to work with people I don't like anymore. It was like

Ryan Rutan: the

Wil Schroter: biggest win ever, right? Just not getting into those relationships or God forbid getting out of them as fast as possible. You know what I mean?

Ryan Rutan: It has so many impacts on the day to day. I mean we all know the math on this. We spend more of our waking hours with these people than our own families in a lot of cases. And so being able to say I'm going to build a company culture out of people who I actually want to spend time with because whether I want to or not I am going to spend time with them. Right? So let's make sure that yeah. And like it's, it's the no jerk rule. Right? Let's just let's just not have them around

Wil Schroter: and and I think, yeah, I know it's not easy. I think it manifested in a lot of our policies, you know when we started hiring people, the first question we asked is are they a culture fit, right, is this somebody that I'd want to have a beer with on saturday, Right? Because we can teach people more skills, but if they're kind of an asshole, there's nothing we can do about that. There's, there's, there's no un asshole

Ryan Rutan: skill, right? Be a lesson that people don't unlearn. Yeah,

Wil Schroter: Yeah. And so, you know, I remember that became a really, really important core value for us and we'll get to this later. But I think when we talk about how hard it is to stick to that value may have also been one of the hardest things for us to stick to because it's really easy to get into situations, whether it's investors or customers or coworkers, etcetera, where you start to load the

Ryan Rutan: relationship. Yeah, there's an entirely another discussion around what the cost to stick into these goals are. And I don't know how to address that at some point, but you're absolutely right. It's not as simple as saying fundamentally, here's where we stand, let's do this. And then from that point it becomes very easy making these big fundamental decisions is the easy part actually because there's usually a clear reason for doing it when you have to live through that on a daily basis, it becomes significantly more different.

Wil Schroter: And I think, I think what we did a nice job of when we're going through this initial discovery as a team, when we were forming the company was being very specific about these things, right? Instead of just using amorphous goals, like we want to have a positive culture where everybody feels inclusive and good, Right? That that's cool. Of course you want that, right? I always joked to say whenever you make a decision like that or a decree like that state the opposite and see if they would make any sense, right? In other words, if you say we want a culture where everyone's miserable and everybody hates their jobs, okay, Like then what the hell was the point in saying that we want to culture where everybody like, what else would there be? Right? But that said, it's hard to stick to, but then we started to branch from there. I thought that conversation got really interesting in, if you recall it took months, this wasn't like a one day or one afternoon, it took months to get this all out of our head and really be specific about it.

Ryan Rutan: Sure, right? And then that was the challenge, right? Was to get it down to being able to say like, are we being as specific as we can about what we mean by this? Because any sort of wiggle room in the fundamentals of this was going to lead to bad outcomes, right? Because it's like, well, yeah, but, you know, this person's skills trump the fact that they're, you know, a so so culture fit and and so by being very clear on what we meant by culture fit, we were able to ward those things off. And I if we go back in time and I won't name any names that we can think through. Some situations where we had people who on paper would have been excellent hires that we passed on and I'm so happy that we did because we've now built the culture that we wanted and we have optimized for happiness. And so this discussion is probably very easy for you and I because we're at a state now where I think we have optimized for happiness and we're looking backwards into it significantly harder when you're when you're in a place where you're trying to build a company and saying like, how do we get to that point? But the the hindsight is a beautiful thing at this point for us.

Wil Schroter: Absolutely. And we started to look at all these different vectors in the company. One of the things that we talked about earlier, we're talking about, we're all about to become fathers. And I remember all of us sitting down having this discussion in saying, we don't want to take time away from our families. Now, nobody does want to take time away from their family. It goes back to my my opposite discussion right yet saying I don't want to do it and actually sticking to that is so damn hard. But here's where I think we did a nice job. I think this, this played out much better than I even expected. One of the things we did was we sat down and remember sharing, uh, you, me and a few of the other folks in the room saying what were our childhoods like? Because I think that became a powerful motivator of what we didn't want to replicate. And almost without prompting every single person in the room said, I never saw my dad or I never saw my mom, they were working all the time and, and I knew they were always busy. But if I rewind back to my childhood, it involves lots of blank moments where they weren't at the dinner table, so to speak.

Ryan Rutan: See I, I was actually exception to that rule in that my father who was a physician and buy by proxy and entrepreneur did make that work. So I had this great example which doesn't make it any easier, right? Because now you feel like you have something you have to live up to as opposed to something that you want to change. It's like literally the guy didn't miss out and I don't, I probably played 1000 sports matches across my career. He didn't miss one, right? I remember the one, I'm not even kidding, the one that my mom missed. I remember it because she was very ill. So I remember specifically that that was the one that she missed. And so they did, that was a fundamental rule in our, in our household, we don't miss these events. Right? So you're the same way that way. And I remember it specifically because it was specific, we weren't going to miss these things,

Wil Schroter: right? And, and I want my kids that I know you do too to have those same memories. So to be able to say, hey look, I want to create a culture where the Children of the folks that work here actually have amazing memories of their parents. They won't appreciate why mom or dad was there all the time, but we'll know that we've created an environment where they could be there all the time. So for example, we did things like we created work from home Wednesdays where the whole company works from home on Wednesdays and now we're beta testing also work from home Fridays and people are working, they're getting their jobs done, but more importantly, they're seeing their kids,

Ryan Rutan: right?

Wil Schroter: And we built a culture that makes that happen. It makes that okay, Right. And I think that's something I'm really proud of, but I'll say this, it's not something I think I would have intuitively appreciated before I was a parent myself.

Ryan Rutan: No, it isn't. And, and again, this is another one of those lessons that I'm not sure how much of it you can really take by proxy, It's kind of like when you hear people say like, oh, you know, I know what parenting is like I have, I have plenty of friends that have kids and and anybody who's actually parents just rolling their eyes into the back of their head and, and you know, letting out that long. So like you have no idea. Um, and so I think to some degree you have to go through some of this stuff firsthand to really appreciate it, but I hope we can shortcut that process for some folks just by talking about it.

Wil Schroter: I agree. And, and so I think what really jelled and I think this starts to go across a lot of the things that we commit to is everyone else agreed, right? Everyone else said, hey, I'm not going to miss a kid's soccer game. So when somebody goes to a kid's soccer game, everyone high fives them right now, I'll contrast this, that wasn't the way I felt prior to this arrow in my life, right? If I rewind back to the scrooge will from, from when, when he was 23 a guy who was probably in his thirties who at the time I thought was like Yoda age, right? Said, hey, I'm going to take my kid at four o'clock to a soccer game. I literally thought he was working a half day that day. Right? I mean again, I was, is it insensitive totally Right, But it wasn't me trying to be insensitive, I just didn't know any better, right? I thought, well we're going to work until midnight tonight, like every night for the next 10 years, like why would you be leaving at four?

Ryan Rutan: There are just some trades you can't appreciate until you've been forced to make the trade. And

Wil Schroter: then that's what I'm saying man. And I understood it. I didn't appreciate it. And so I think this time around and kind of building a culture for happiness, there are a lot more things that I genuinely appreciated and therefore could kind of start to build a better environment. And I think it shows, I think, you know, the feedback we get from our staff and uh, in the feeling that we get amongst ourselves, it's, it's pretty obvious that the level of happiness is pretty damn high.

Ryan Rutan: It is. And I think that you touched on something really important, which is that we do also celebrate these things. We do give high fives around people going and doing the things that they should to drive happiness in their own lives. And I think that if you just make these policies and you say that like, look, you know, we're all about family. Okay. But if you don't get specific about that by saying that like, hey, we don't ever want you to miss a soccer game, we don't ever want you to miss a birthday. We don't want you to be late for dinner. Right? Those things are specific. And then if you go a step beyond that and say, we're also going to talk about these things as a company, we're going to talk about them when we do them, we're going to ask our staff if they're doing them and we're going to celebrate when these things happen, even though they're just these tiny, relatively inconsequential activities as a company. It's important because this is what concrete this into our culture and makes it real because otherwise I truly believe, and we've seen it play out. I've, we've been in companies where we said things like this and he said like, well, we're family first and then everybody still felt like the act was over their shoulders, right, saying like, well, yeah, but if you put family first, we're gonna whack you right, that cannot be the actual culture. The difference between stated culture and actual culture is often very, very stark and in our case it's just not. And we've done that very intentionally, very purposefully and we continue to make an effort at it every day and I think that's so important.

Wil Schroter: Yeah, and I think it comes from the top down, right, uh, inasmuch as, I think the team here, we've got about 100 and 70 people here, but I think the team here sees that we're living by that, you know, we're trying to be, um, call it engaged parents or we're trying to, you know, optimize for happiness in our own right. I think if, if we say, hey, this is going to be a cultural about happiness or, you know, personal engagement, etcetera, and then we don't do it. Or like you said, if we say that it's this culture of happiness, but then also say, and you're gonna be happy working 100 hours a week. That's not really, not really the same message when

Ryan Rutan: you redefine happiness and then pretend that that somehow, you know, it just fits the mold. It's it doesn't work, right, has to

Wil Schroter: be real. But look, man, um it's also it's not all of the, the bullshit things we try to layer on top. It's not things like the foosball table in the company outing, etcetera, that's not happiness. Happiness is fundamentally changing my life so that I live better because I work at this company, right? It's not the snacks in the break room, you know, it's not all the perks per se,

Ryan Rutan: it's the Fridays, right? If that's your definition of company culture, and that's what's supposed to make everybody happy to work there, Good luck.

Wil Schroter: Yeah. And and look at those things are wonderful and nobody's nobody's ever picketed over our free snacks, right? I mean, you know, everyone's happy, but the life changing things, the things that truly make us happy and more engaged at life and make us kind of more refreshed when we come into work are the things that really give us time to live our life in a proper way and I'm not even going to use the phrase work life balance because I think that's a horrible phrase that's often beat to

Ryan Rutan: death, right? But there don't get me started.

Wil Schroter: I would rather say work life optimization, right? And what I mean by that is, and I'm gonna, I'm gonna emphasize the work part of that. There are certain amount of hours in the day that we are incredibly productive. There are far fewer than any of us are willing to admit and they don't come that often. For example, I'm a workaholic, right? I'm insane about work, but you know what I went back through and a lot of these ties together, I went back through and I started to audit where I was most productive when I was most productive and how often in a week that I have my kind of shining ESPN highlight real moments Dude, it wasn't that much like I I found if I work an 80 hour a week or a 40 hour week, my net output of the most important things that I do is almost identical.

Ryan Rutan: Yeah, no, that's that's exactly it, right, I've found the exact same thing, right? The hamburger doesn't get better, it just has more bun at the end, like it's not the important pieces that I'm doubling down on, I just tend to do more of the work that kind of does need to get done, it'll, it'll help here or there, but it's not the high value stuff.

Wil Schroter: So what I've found that's worked well for us is we Concentrate our week into essentially 40 hours now. Again, if you were to go back to old 22 year old will and you would say, Hey, year old world, we're gonna consolidate all of our work weeks to 40 hours and just get everything we want to get done.

Ryan Rutan: What are you going to do with the second half of

Wil Schroter: your weeks exactly? We, we get a full vacation every week. And so I always use that contrast when people hear me talk about these things, they don't think that I'm just like in some kind of Netherworld where I don't understand how the world works. I'm saying I've been on both sides of this equation extensively and so I've had a good opportunity to compare the two and I'm just trying to suss out in my life which one of those those those strategies is bullshit. And what actually works. I do think when, when people say, hey, this company is all about work life balance and it's this ticket to pretty much not work that pisces me off right? I mean because it's a tremendous amount of

Ryan Rutan: work work life balance means basically I just get to do whatever I want, but I still get a paycheck right, that's not work life balance right? There's a balance is, is also key to this, to this phrase. I also hate the phrase work life balance. I think work life optimization is a nice twist on that. The thing I tend to references is work life blend right and that's how I feel like that's what we've kind of struck on allows people to have and do both. And really my big takeaway from from that whole thing is that happiness isn't about making a trade off, it's about realizing that you don't have to make them. That was when I found that I could be happy about everything I was doing was when I didn't treat it as a zero sum game time with kids means not achieving work, you work means not time with kids. It isn't like that right. It isn't a zero sum game. And to your point, we're not that optimized in how we spend our time. Anyway. So the idea that I moved 10 minutes here to pay attention to my kids and differ whatever I was working on for 10 minutes should not change the outcome of the company, right? Unless it was that, you know, the magic monopoly money man calling to to bias and I didn't pick up and then he gets hit by a bus right? Like, sorry guys, we'll find another one.

Wil Schroter: But but I think what's important there is that you've earned the right to be able to take that time to be specific there. I think at some point we have to, we have to concentrate on where and how to earn the right to take that time. And I when I say earn the right, I don't mean personally, I mean financially right, there is some point, some threshold where the company has to be viable enough that I can kind of take my foot off the gas just long enough to kind of do other things because I think where people get a little bit confused and and again younger will would have gotten confused on this one is When you're in this ship, when you, when you're 18 months into this thing, you're sacrificing everything, you're getting paid $0, you're just racking up debt in your entire life, feels like it's just compressing around you. There's no version of you that's like, oh, that's cool. You know, I'll just take some time off. I need some work life balance. You're like, are you out of your mind?

Ryan Rutan: Right?

Wil Schroter: So I think it's it's it's valuable for us to maybe dig in just a little bit as to what you have to do in order to kind of unlock a little bit more of that life, Right? And at its heart, we're talking about profit,

Ryan Rutan: right? So you can boil it down to just how does profit enable happiness. And I think that that is an interesting point because there's this sort of threshold that you have to cross, There's this minimum requirements that you have to meet under which work life balance just means you're probably in life mode and worried as shit about what's going on at work, right? And so until you hit that these these minimum thresholds, there is no real version of full happiness. And so let's talk about how does how does profit enable happiness?

Wil Schroter: Let me kind of start with the opposite, which is how does not having profit drive non happiness. Uh and yeah, yeah, I don't think anybody needs to have that explained per se. However, what I think is interesting is if we go rewind back to two year one of the startups dot com story, if you recall, there was a point where I was under so much stress, you would take me to the hospital, right? And so,

Ryan Rutan: so that was not a fun drive,

Wil Schroter: not a fun drive man. And I basically felt like my heart stopped. I had in retrospect was a full on panic attack. So before we get into the shangri La and we just sat down and made this, you know, this is huge statement that we're going to be able to, I have perfect work life balance just because we decree it. Um there's that ride to the hospital where I'm in the hospital for a couple of days having heart checks done to find out what was happening to my body right?

Ryan Rutan: Terrifying.

Wil Schroter: And during that time that was us trying to work our asses off to earn the ability to do things like take the day off on Wednesday. And so what we did, which I thought was really valuable was we were specific about what goals financially do we need to get to in order to start to unlock some of these benefits.

Ryan Rutan: Sure. Because there was this sense then then let's, let's use that. Let's use that very specific example about work from home Wednesday because it's something that I think our entire team loves. It's something that when I share that with other companies, in particular people that work in corporate, they just give me the stink eye at that point, they're like really you guys get to work on Wednesdays. And so let's use that very specific example. We had some very, very targeted financial goals and performance goals that we wanted to hit prior to fully enabling that. And then even when we decided to test it, we wanted to measure against that. We knew that there may be some some back slip. Right? And so back to that very early question we set around, what are you willing to sacrifice to achieve the company culture and the happiness that you want to drive. And so we were very cognizant that we said, look, we need to get to this level so that if there is some backslide around the financial performance or any other optimizations that we're looking at, that we're willing to accept those as a trade for optimizing for happiness. And I remember very clearly sitting down as a group and defining here's where we want to be, and then here are the things that we're gonna watch as we make these decisions so that we make sure that we don't overstep our toes on the cost of this particular happiness optimization, right?

Wil Schroter: Yeah, and I think we're realistic and I think this is an important part of this. We're realistic about the fact that there wasn't going to be a version where we're just clocking out at the end of the day, going home and enjoying this work life balance type thing while also losing all of our money.

Ryan Rutan: Like happiness tends to ebb with the, with the bank account,

Wil Schroter: right? Yeah. You know, whenever I see some rich guy getting interviewed, he's some, you know, recently minted billionaire that says, hey, I have life advice from you, money isn't everything, it's like, dude, because you have it right? I don't want to be the guy that's sitting up here saying, you know, happiness is everything you should optimize for happiness And our listeners going, what's this guy talking about? Like I'm losing so much money, like how would I be optimizing for happiness? You sound like you're out of your mind what I'm what I'm saying, and I think, you know right now, you, you know, I've gone through this is it's not an initial starting point while you can set the goals, you have to look for enablement goals to be able to actually pull that off

Ryan Rutan: right right now. I think, I think it is important to to have this stuff built in from the beginning. Um but you can always act on it to your point, there's a lot that has to happen before you can really turn these things on and see the manifest in the business. But I don't think it means you have to defer making the decisions, but you may have to defer taking the action.

Wil Schroter: Absolutely. And essentially what we did a nice job of and it worked out fairly well, I'd say is we said, look, there are certain thresholds of income, even if it's not profit per se. So I don't want to overstate profit, but there are certain thresholds of income that if we can get to at least this much cash coming in the door, we can breathe just a little bit easier and maybe kind of unlock some more opportunities around optimizing for happiness, taking a work from home Wednesday, et cetera. But it's important to know, we didn't just do this all out of the gate, we didn't have this this beautiful kind of decree that said here are all the wonderful things we're going to be able to do and we're gonna lose a bunch of money while we're doing it, were that optimistic

Ryan Rutan: sounds good. Let's go.

Wil Schroter: Yeah. And so I I think part of this for us that where it's worked well for us is defining the goals very well, as far as, you know, what parts of our lives were really important to us that we wanted to see significant change that the company could enable. I think we did that really well. The second was defining what milestones financially would put us in a position to allow us to breathe a little bit easier. But I think the last point that was really hard, was actually sticking to it right? Like maintaining the conviction to see it through, easy to say hard to do.

Ryan Rutan: That's right. No. Look, when we're having this P&L discussions, it's like, look, we we may see, you know, 10 or 15% fall off here, hopefully will be temporary as people adjust to this new change, but we're cool with that and we say that and we all feel good. We walk out of the conference room and then two weeks into the month where it's actually starting to happen, we might start to feel slightly different about it as as we start to see the performance change, right? And that's where you really have to remind yourself why you're doing this and that we took a fundamental stand that said this is important to us and we will stick to these goals. But yeah, it's it's not always easy that it's it's one of, I would say it's probably one of the biggest gut checks that you get as a founder because it's not like making one financial trade off for another, Like we'll spend less on this product this month, but we'll spend more over here because we think we're going to get a bigger immediate return on that investment. The returns on investment for optimizing for happiness are myriad and powerful. They're also just a little less obvious. And so I think that in terms of trade offs, it can be really hard to stick to your guns in this case. You feel the same way.

Wil Schroter: Yeah. And, and I'll give you a specific example early on when we're making this decree, so to speak. One of the things we all agreed on is that we don't want to have to answer to anyone, right? And again, when people say that, who would want to answer to anybody, but wait until you have to write, waiting to sign a big enough client until you raise capital to you until you do all the things where maybe at the moment of truth, you don't realize that you've just signed up for a new boss. But dude, you signed up for a new boss The moment you take capital, that person is your boss doesn't matter how much of the company they own. They can own 1%. If they now have the right to bitch at you all day and you have to take, it that's your boss. right? They may not be able to change your outcome or change your future as directly, But the moment they can tell you what to do another example would be a client, right? I mean at the agency at blue diesel with the larger agency, we ended up netting a huge client in a company called Eli Lilly that paid us $50 million dollars a year. If lilly wanted to call us up and tell us that we all had to come to work naked, we'd all be coming to work naked right? Like what they said was our future. Now they paid us handsomely. So you know, there's, there's an upside to it. But at the end of the day they were our boss. Right. And that's not terribly unusual. But all of these things start to stack. And when we were building the company, we knew early on that part of our strategy was going to be to do some acquisitions for some key products to help build up the startups dot com platform that cost money, right? Money, that business and energy. Yeah, yeah, yeah. And so the natural progression there would be, let's go talk to some, some venture firms. Let's go raise some money. We'd raise money in plenty of other companies before hell we, we own a fundraising platform that's raised a half billion dollars for companies like it's something we could have done fairly

Ryan Rutan: routine. Right? You bet.

Wil Schroter: And so instead though, as we were doing these acquisitions, which were very cash consumptive, we ended up digging into our own pockets to do it right, Which is really hard unless you're willing to stick to the conviction that we don't want to answer to someone else. The easy path would have been to take an investor check and make all that stress go away, right. The hard path is to say, yeah, this could bankrupt us both personally and professionally, but it doesn't matter. We're willing to stick this strong to that outcome that we don't want to answer to someone else. And over the last six years we've had an insane number of offers to invest. Who knows? If anybody would have invested, it's easy to offer. Who knows. Any of that would go on. Um, we've had a whole bunch of companies coming that either like buying into the company, like a private equity company or by the company and things like that. And our answer is the same every time our answer is look, you know, we don't hate money, so to speak. You know, we're not that altruistic, but at the same time we don't want to answer to someone else. We've got a very specific mission around helping founders and we're not looking for another boss to come in, no matter what the dollar figure looks like, man, that's hard to say no to.

Ryan Rutan: It is, it's, it's hard to say no to. Um, and I think that's, that's key to all of this, right? Making sure that at the early stages when you make these decisions and you say this is what we're going to stand for, make sure that you feel as strongly about that as you can or don't make that decision because when it comes time to test the mettle of that decision, you don't get to rethink it at that point. Because if you do then you're off your fundamental path and the minute that starts to happen, the whole thing unwinds and whatever you've optimized

Wil Schroter: for at that point just

Ryan Rutan: starts to erode.

Wil Schroter: Also. I think if you if you make those commitments and management doesn't stick to them, it starts to feel like a hollow commitment, right? If you say we're all about families, but you know, we have two weeks of maternity coverage, right? I mean, those two things don't tend to sink to well,

Ryan Rutan: um, you

Wil Schroter: know, in our organization at startups dot com, we're primarily a female organization, right? It's very hard for us to say as it relates to moms in pregnancy. We're a family organization and yet we don't recognize the importance of family when you're starting a new family maternity, etcetera. And when, when we think about these policies, we have to think very critically about how they work for us now, but also how they're going to expand in the future.

Ryan Rutan: Yes, absolutely critical because the decisions can get harder, right? As things scale out as your staff ages. For example, if you make that policy with a bunch of 21 year olds, it may not cost you much all of a sudden when people hit that age where they decide they all want to start families at the same time roughly together. And that does happen in clusters, then uh, that can be a much harder decision to stand by. So back to my point about making absolutely sure that you're clear on the fundamental decision and why you want to stick to it and that it will remain important to you over time is really, really important.

Wil Schroter: Absolutely. And I think over time as the organization grows, you start to unlock these other things that you can do to create a little bit more of an optimized for happiness culture. But I just, I just want to reiterate that we didn't get to do all these things on day one, we intended them all on day one, but we've been very clear along the way about when and how we get to unlock these additional kind of opportunities. I, I am a huge video gamer. So I think of everything in video games, skill trees and I think about how you can unlock the next level in your skill tree based on your

Ryan Rutan: progression in the game.

Wil Schroter: Right? That's essentially what's happening here,

Ryan Rutan: yep, we started with snacks, we ended with maternity coverage and work from home Wednesdays, work from home Fridays. Yeah, it didn't all, it didn't all start at uh, at pure optimization for happiness, but we knew that's where we wanted to go and we let that continue to be the guiding light and we followed through on it.

Wil Schroter: Absolutely. And, and I think it's also worth noting that most of the most impactful things that we've done had have had no financial cost whatsoever. You know, when, when we said one of the core tenets is we don't want to work with people we don't like that has some implicit cost, right? In other words, not working with, say, an investor that we didn't like right, like would have an implicit cost because we don't take the investment, not hiring a person that we didn't like that could have really contributed to the business. Maybe they were a business development person that could have brought money to the table, It has an implicit cost, right? Work from home Wednesday, I would probably say we're better for it. We're probably more productive for it. But again, didn't have a, an explicit cost in that case. So a lot of the stuff we're talking about was as we're talking about unlocking with the growth and profitability of the business. The policies themselves may not cost a lot, but there's some, sometimes some implicit cost where you have more leverage now than later that starts to matter.

Ryan Rutan: So if we were to summarize our discussion today. I think we've come across three areas that, that are really critical to optimizing for happiness. We started with talking about committing to really, really specific goals. Nothing amorphous, make sure that they're, they're clearly understood by people making the decisions and the rest of the organization so that they can follow through on them and hold you accountable for them.

Wil Schroter: Yeah, I think if you literally pick three, if you said here's three goals, it's an arbitrary number with three goals, three things, and we could add more later. Let's pick three things that if these three things were in place and we could stick to them on a go forward basis, we'd be shocked at how great our lives are and how much the company enables us to do what we want.

Ryan Rutan: Yep. Incidentally, that's exactly what we ended up with, right? We had the we don't want to work with people, we don't like number one, Number two, we don't want to take away from our families, number three, we don't want to answer to somebody else. And so, you know, it was it was enough. They were concrete. Um, I think by the time you end up with 5678 tenants to this policy that it gets harder for people to wrap their heads around. We had these three very clear and that helped us to drive the rest of our decisions. Absolutely. The second thing that we talked about was that there are thresholds you have to cross that enabled this, right? And the one that we talked about specifically was profitability, right? When you get to that point, it unlocks your ability to act on more of these things.

Wil Schroter: Yeah, it's it's really hard to build a mountain while you're standing in a hole and and so very inadvisable and very advisable. And I think that there can be certain things you unlocked at different points of your progression, it doesn't have to be just profitability. But I think we pointed out profitability because that seems to be like a very soothing place to start to do some ship that you really want to do. But even still there's no reason even in the early stages pre profitability you can't unlock some of these opportunities or some of these kind of happiness points. I just tend to think that they're a little bit easier to do when the businesses on slightly better footing, but you can level up to them.

Ryan Rutan: Yeah, yeah, that that little dark cloud of, we're still hemorrhaging cash, he's going to impact your ability to get to that balance point um or or work life blend point and I think it really just, yeah, you're going to have some sort of upper limit on your happiness at that point.

Wil Schroter: Absolutely, yeah, yeah.

Ryan Rutan: So then the last thing we talked about was then, you know, okay, you've got these really specific goals, you're now doing the things that enable you to act on them whether its profitability or something else. The last stage was there's a really tangible and relatively high cost of sticking to these goals and that it's not easy right? Setting them forth was relatively easy. Maybe even getting to the point where you could start to act on them was easy, but sticking to your guns when the ship hits the fan, it's

Wil Schroter: tough. Yeah, it comes down to there's a moment of need, I need a client, I need investment, I need to make a higher where you actually do what seems in the opposite of the company's best interest, because it's in the best interests of what's making you happy and, you know, it the moment you go to make that decision, it's that weird pit in your stomach where there's something telling you, Yeah, I know this is what I'm supposed to do for the business, but I fucking hate it right at that moment, at that moment, that's the moment of truth, that's the part. We're sticking your goals is actually the hardest.

Ryan Rutan: You know, something that we didn't talk about. But I think it would be an interesting thing, an interesting way to wrap this up is the fact that we're very open about optimizing for happiness as a company allows us to have dialogue around those types of decisions. So, for example, if any one of us were going through that in a vacuum and just trying to optimize for our own happiness or even for for, you know, happiness as a whole, but wasn't able to have that framework for dialogue that discussion or that that decision rather

Wil Schroter: becomes really

Ryan Rutan: difficult. The fact that we do have this and and it's the sort of the expectation that will make that decision. The fact that it's on the table makes it easier to do.

Wil Schroter: And we're open about the outcome, right? We all want the business to do well, but we also want to see each other do well. And I think we're pretty intense about that and we're pretty open about that discussion and when we're not doing well and I'm talking about, you know, all the folks in the company, we raised our hand and talk about it. It's like, dude, like I'm running myself into the ground, you know, I remember Ryan a few weeks ago, I was telling you that creatively, I was just tapped like I was in good shape physically I felt okay, but creatively like trying to, you know, write another book and do all these other things. I just had no more energy left. And I just needed to take some time off, like just go in that case, I just needed to go in my workshop and go cover myself and sawdust and build stuff, do anything that doesn't involve being in front of a computer and you're like, yeah, that's exactly what you need to do and kind of giving me the permission so to speak to do that without feeling guilty about it,

Ryan Rutan: right? And what's great about that is not only the permission on the back end, Right. Because we've set this culture. I know that's the right answer to give you right, know that it's okay to say that. That's okay. You also knew it was okay to come to me in the first place and say, here's where I'm at, right? The, the and and it's not incidental, right? This is something we've worked hard to build again. High cost is sticking to this thing, but we've done it and I'd say we're we're reaping the benefits of it

Wil Schroter: now.

Ryan Rutan: Well, I think that's a great place to wrap up for this episode of the startup therapy podcast. As always, in the meantime, if you love what we're doing, please please please head over to Itunes, subscribe and comment If you want to connect with us directly. We're not hard to reach email us at therapy at startups dot com. I've said this before, I'll say it again. We respond to every email that comes in. So don't be shy, what we learned today is a tiny fraction of the help that you can get from startups dot com. Whether you need to learn how a startup gets built to find a mentor raise capital, get new customers or if you just need to connect with founders who are dealing with the same things that you are. You'll find it on startups dot com with that said, let's get back to building our startups. This is Ryan Rutan for my partner Wil Schroder, and the entire startups dot com community saying goodbye for now, friends.

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