Ryan Rutan: Welcome back to the episode of the Startup Therapy podcast. This is Ryan Rotan joined as always by my friend, the founder and CEO of Startups.com, Will Schroeder. Will, seems like on paper, all these startup founders are millionaires, billionaires, trillionaires, gazillionaires. What's actually in the bank,
Wil Schroter: zeros that they've they've got the zeros, they've got the zeros.
Ryan Rutan: They've got the zeros, but no, no commas and no no integers in front of that.
Wil Schroter: I gotta say, and this is, I just heard about midway through 2024 when we're recording this, um, if, if I were to go back among most of my founder friends, and a lot of my founder friends are founder friends, listen to this and say, how profitable in actual dollars. Were you last year personally, right? It's nothing to do with the business, right? I gotta tell you, I think it's one of the lowest years I've heard about in a long, long time, and again, we've talked about this winter go along, the
Ryan Rutan: worst kind of dry spell. Yeah,
Wil Schroter: yeah, and I think that, I think that while it's particularly bad now cause there's all kinds of weird stuff happening in the world, I think that this is something that as founders. We don't learn that it's a problem calling not getting paid until way too long, and then we've talked about this right in other episodes, right? We've talked about, hey, you need to get paid a salary. This is more about, hey, I'm worth so much money on paper, right? But dude, there's a lot of value in actually getting paid. Actually getting
Ryan Rutan: paid, real money, money that you can take to the bank, or take out of the bank, or take to a restaurant.
Wil Schroter: It, I think a good example of where it starts, when we infect ourselves with this, and of course we get infected by others talking about it, are this idea of what I call monopoly money millionaires, right? and it's interesting because we make ourselves monopoly money millionaires immediately. Do you remember like back in the day when startups.com hit its $100 million dollar valuation? Oh yeah,
Ryan Rutan: we, I think we celebrated with cap guns or something, didn't we? Probably, right? Which is actually super apropos, cause we were playing with fake guns while talking about fake money, fake
Wil Schroter: money. But again, you get it in your head that this is real money and and there's part of you that does have to keep that reality because if you start treating it like fake money, it's gonna be the most expensive money you never spent. But the other side of it is, if we look at it and say deferral, deferral, deferral, like I'll get paid later because I'm I'm making so much money on paper now. That is a dangerous game. And it gets worse. And so I, from my standpoint, like, the, the, the first point I try to make to people is you have two streams of income. You have your paper income, right, again, your stock, your equity, etc. Which statistically, will likely be worth nothing. I hate to say it, but like,
Ryan Rutan: Nothing. Yeah, yeah, sorry for that gang, but statistically, that's exactly what it's gonna be worth, right? For, for the companies that do get there, yes, it can be worth lots of money. It can be worth millions, hundreds of millions, billions of dollars. Statistically speaking, the value of that stuff is approximately equal to a lottery ticket.
Wil Schroter: You bet. The other side, of course, is getting paid in actual money. Now, I think what's been interesting, as I've been watching my peer groups, if you will, both founders and non-founders, as they're getting through their 30s, 40s, and on the 50s. You're starting to see a really interesting divide between people who were deferring to later to get paid, and people who actually got paid. Here's what I'm seeing for the first time. I'm seeing non-founders, right, starting to creep up a little bit higher than they did in the past, OK? And what I mean by that is you got a guy who's an attorney, a doctor, or whatever, and yeah, he, he wasn't making the big exitmoney.com style exit money back in the day. But he kept getting paid year after year. And all of a sudden we're sitting on quite a bit of cash. Meanwhile, other founder, using founder said one of the few people that defer so much of our wealth, are like, hey, another year went by, another year went by. I was supposed to get paid, was supposed to get paid. It was all seashells in in rainbows and unicorns heading into this, but banks bowel still says 0.
Ryan Rutan: Yeah, when that conversion moment doesn't come, when the paper money doesn't turn to real money, and you've put lots of time and that's the thing like with with deferred comp, with deferred cash, it doesn't earn any interest, right? It's not compounding, right? That lawyer, that doctor may have been taking a lot less off the table than you planned to, but while you were planning, they were actually doing it and you. year that compounded and grew well for them, while you as the founder, just kept compounding your growing emotional debt, sleep debt, financial debt. So those things compound, unfortunately, but there is no interest earned on comp deferred nor on happiness deferred or all these other things that we tend to just kick off to the side as founders while we're chasing
Wil Schroter: the dream. I agree. What's interesting is I remember years ago I moved to Hollywood. Mr. Schroeder goes to Hollywood, and I remember I was starting a company that's doing casting for television. So I moved to Hollywood and my co-founder was a talent agent in Hollywood. I represented all these different people and so put on this podcast, I lived like a 100 different lives, like this is a whole other life, right? Yeah,
Ryan Rutan: I keep waiting for people to call us out on this. Look, Will's on his 99th life. What kind of cat is he?
Wil Schroter: It can't possibly be true, but somehow anyway, and so I, I move out there and we're running around trying to get clients, like all the major networks and stuff, and we're working with talent agents and all these people because we're trying to do casting for television and my my my buddy, my co-founder is educating me the entire time about how Hollywood works, how deals work, etc. And I'm coming at it from the, hey, if we go to the networks, if we go to the the talent agencies, etc. and give them a piece of the deal, they're gonna be so excited about a piece of the deal, they won't care that we can't pay them. And he's, it's not really the way it works here. I was like, what are you talking about? Like people always want the back end deals, he said, yes. But they also want the front end deals.
Ryan Rutan: They want the front end cash, yeah. The front end cash makes the the the back end deal worth waiting for.
Wil Schroter: Exactly, and years go by, and we're working with all these different players with the Hollywood community, and we end up working with or getting a meeting rather with uh Ari Emanuel, like the famous Ari Emanuel, you played Ari Gold in in Entourage, right, but the actual guy who wore it
Ryan Rutan: better, him or Jeremy Piven, who actually who who nailed the role?
Wil Schroter: No, he, he, he was amazing. He said this whole thing up on this is the best part about it, right? He said so the all the people that were at the top of the food chain at Endeavor, which was his agency. A lot of what happens in in Entourage actually did happen to to to Ari in the real world. anyway, fascinating character, and but he sets it up and it's this amazing like Hollywood big meeting where we go in like to the the ante chamber to the ante chamber, like the waiting room of the waiting room of the waiting room. Yeah, exactly, there's all these beautiful people like hopefuls or whatever, and just two schlubs from Ohio, right? Anyway, we, we finally get past the 6000 guards it takes to get into the meeting, and this was the best part, right? As assistant sits us down, has a whole thing of food and whatever, and she's OK, the meeting will start in about 10 minutes, and of course Ari won't be here. And I'm looking around and I'm like, There's literally no one in
Ryan Rutan: the, no one else here, right? I'll, I'll pitch to the buffet. What do
Wil Schroter: I do here exactly? And they're like, no, Ari's gonna designate someone to come in and sit on his behalf. He literally said a proxy, OK, but this is the point. Somebody comes in, but just 11 of his hench people, and and sits down with us, as if this isn't weird at all, right? Like, for them it's
Ryan Rutan: not another day in
Wil Schroter: the office. Exactly, it's like going on a date with somebody except they don't show up, they send a proxy in their stead, right?
Ryan Rutan: They send a proxy. My friend Jen is going to come and hang out with you for an hour to see if it's worth me spending my time later. Exactly.
Wil Schroter: So anyway, but this is the point. So we sit down and we're having this discussion, this is just like everything we did there was weird, but we're having this discussion and I'm like in great news, we're we're willing to give you cause it endeavors huge 1% of the company, and he's, that's fantastic. Ari will be very pleased to hear that, but let's get to the heart of the matter, how much will you be paying us?
Ryan Rutan: Yeah like. I, I just explained that. Yeah,
Wil Schroter: I, I, I was like, it's like uh this percentage of the company, and he, and he was like dumbfounded, almost like I told him I was gonna pay him in Cheerios, and he was waiting for like the explanation of it, right? No concept of deferred comp. And my co-founder Alec was just like, look man, this is the way this industry works, like people get paid now because they don't know if its me around tomorrow, and that always stuck with me. It always stuck with me because I was like, that's why they have so much money, because they actually get paid.
Ryan Rutan: It's it's a lesson for all founders, right? And look, I, I wanna be careful here too, and, and not overselling the, the challenge here, right? This isn't all desperation. I think a big part of what we're saying here is Just don't wait to pay yourself, right? I, how many times have we seen this play out, well, where it's like, there could have been cash there, but because we decided to do this, we wanted to grow more, we wanted to try to defer taking salaries off the table so that we could add a new product, add another division, acquire a company. or just keep our overheads low so that investors want to give us more money. Whatever it was, sometimes it's just a decision, right? Uh yes, a lot of startups struggle to ever make enough money to pay anyone, right? Yes, that happens. There's no money, there's no money, but I think the scenario that we're talking about is where there is money, and we're just deciding not to take it off the table as founders. And we're deferring payment. We're not just not paying ourselves cause there is no money, we're deferring payment. I just, I don't want to let that go by the wayside because I, I don't want people to get too much, oh my God, there's no way to make money with a startup. No, clearly there is.
Wil Schroter: What I want to now talk about is the tale of two startups. Startup one is one that doesn't make a lot of money, but it makes money every year, right? Startup 2 is the one that's going to make billions. But it actually makes no money, but not today. Yeah, but not today. I've got tons of friends that are founders. What I've found over the years is that the ones that made exceptional money did it through deferral, just to be clear, right? It's like a risk reward type thing, right? Now, the the the part that no one wants to talk about is that's a small number of them, and this a subset of founders, OK? The massively large subset that no one talks about cause no one wants to talk about it. Are all the people that deferred and came up empty handed, right? Right, and you and I have worked on things where we deferred and came up empty handed, right? It happens.
Ryan Rutan: Come up with nothing, absolutely nothing, or negative amounts in some cases, right? It happens.
Wil Schroter: Yeah, absolutely, absolutely, and again, the stories are for the the big successes, unless you have an epic fail and you get a movie made out, but He heard of that. What you don't see or hear about enough, because they're just not as sexy, are the people that just keep making money every year, right? Every month, every week, like, the business, it's, it's a $2 million startup, right? $2 million business, but it makes $350,000 a year, and people look at that and oh lifestyle business or whatever, it's, yeah, bro, but I got paid last year.
Ryan Rutan: What was your lifestyle like while I was running my lifestyle business? I, I still I would love to go back and find out where the first time that was used pejoratively and just laugh at it. I want to go back about where the first time was like, it's a lifestyle business. I was like, isn't that the point, isn't that what we're trying to do here?
Wil Schroter: The other thing I would say is this, throughout my career, like last 30 years, I've thought about this a lot lately, where I've thought about, I've had two different versions of how I've played this game. I've had the deferral version and I and I've had the if you pay me version, right? All my bills get paid because of the if you pay me version, right, of all the things that I did that were like, maybe I shouldn't defer, right? So I'll give you an example, like, back in the day when I started the agency, right? Yes, we had a big outcome and, yes, it became a big company. But I got paid every week along the way, and that added up, right? That paid for my house, that paid for all the stuff in my life, and it wasn't that I did anything extraordinary and the business did well. It was that I made sure every single month I got paid, right? And I, I like, when I think about creating wealth, etc. I think early in our careers we keep trying to think about this, this step function, this jump the line, this I'm gonna do something extraordinary, and there's some value to that, right? But I think if you zoom out, which I cannot do now that I'm not young, and look at just the different paths to get to where you want, which is financial independence or whatever it is that you're trying to get to, it's a great way to get there is to keep defer or not get there is to keep deferring.
Ryan Rutan: Exactly, just keep deferring, just keep deferring, right, until the point where there's Now no longer anything to defer, and you're just one of those uh untold millions who deferred and came away with nothing.
Wil Schroter: And that's what we've talked about this in other episodes, but I want to reiterate this, creating something that's a base hit. But actually pays you, which then sets you up to go work on something that might not pay you. That was our playbook at startups.com for exactly this reason. We went into the business and we said, look, whatever we're starting out with may not be our long term business. We're gonna do some consulting, we're gonna do some small sass, we'll do all kinds of stuff that that doesn't even scale. We're actually gonna get paid, yeah,
Ryan Rutan: but it makes money. Week over week.
Wil Schroter: You, me, and most folks have had a paycheck here for over a decade. Right? Like, we actually got paid
Ryan Rutan: and it doesn't go unnoticed, right? I, I can go back to in thinking through, cause I had similar scenarios where it's like there were times where I tried it through the deferral method. It was like we're just gonna keep compounding this, we're just gonna try to make this thing blow up and then we'll get our payout at the end, the ones where we're just getting paid all the time. And I'll say this, like, for whatever like fun there was in the hope of the big outcome, I was definitely healthier, happier, and actually got to really great outcomes, doing the thing where you get paid consistently the entire time. It changes your mentality so much when you're deferring, there's a lot of other things that are happening cause like you're starting to maybe accumulate personal debt or liquidate savings, or even if somehow you you were able to just pay all your bills, but you're not accumulating anything else, you're setting yourself back in a lot of ways, and it changes your thinking changed mind. I won't speak for everybody else, but it changed my thinking, and I started to make decisions that were not necessarily on path for what I had set out to do, but all of a sudden you start doing things like, OK, now because we've deferred comp for 3 years. We have to get to this bigger outcome. So in order to get to that big outcome, we have to try this big swing, which led to a big miss which led to closing down the company. And so what did we actually do there? Not only do we not get paid by not getting paid, it which is a possibly, you know, look, there's there's plenty of philosophical discussion we had here, but I'm just gonna go ahead and say bad decision to not pay yourself when you can. Because then it impacts your thinking, right, which then led to bad decisions, which made it even harder to get paid. Holy shit, what are we doing here?
Wil Schroter: 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 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.startups.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. And again, we're not saying, hey, we have a ton of money to distribute and we're just somehow not paying ourselves. I'm sure that's a problem no one has, right? Wasn't
Ryan Rutan: paying myself a mini. Exit every year, right? I was just paying myself enough to put food on the table, gas in the car.
Wil Schroter: But part of that is actually an intentional decision to say, hey, what we're gonna work on right now is what will make money. Again, it may not be scalable, and it may not be the core product. Hell it not be what we actually do, it may be totally different.
Ryan Rutan: Buys you some runway, it buys you everything. Yeah,
Wil Schroter: but exactly, but it keeps us alive, it keeps us going, and guess what? Over a long enough period of time, The fact that we weren't taking money away versus putting it in, is gonna make a huge difference. The visual that I always have in my head, Ryan, I've always had this in my head when I'm making this decision, is I think about an hourglass, right? And I think what I'm deferring. Money in my bank is at the top of that hourglass. And it's going away to the bottom of that hourglass. It's going away slowly, but it's going away, right? When I flip it, and I say, hey, this just makes money? The money that I'm getting is just dripping in there, it's adding up over time, right? Versus the the one version where it's it's chipping away, it's the other version where it's adding up. Early in our careers, we just haven't had enough years to understand how that stacks, how that compounds, but holy cow, over a long enough period of time, It matters. And when I've talked to folks, and they've said, hey, what are the biggest exits you've had or all the money you've made. I'm like, honestly, I've done OK, but the reason things have worked well for me is because I never let that deferral run for too long, right? Yeah, I've had down years where like like we're just putting money in and we're getting money out. I have. However, I've always said, at which point it starts to become too much. I'm gonna stop doing it. I, I'm gonna walk away. I'm just like, it's just not worth it. And at the time that was brutal, but I gotta tell you, it's the only reason I have money in the bank now, cause I put
Ryan Rutan: a
Wil Schroter: stop to it.
Ryan Rutan: What's even more brutal is watching somebody not do that. Which is to say they didn't get to that point where they like said enough is enough, sunk cost fallacy, whatever else kicks in, or this is my only shot is I might as well blow it all, cause if I don't, I'm gonna have nothing anyways, and it is so agonizing to watch founders go down that path at the very end of that, where it's like they've deferred and they've deferred and they've deferred. And again, we talked with so many times in this episode on these episodes, but where everybody else around you can see it, and the founder can't see it, right? They don't realize they're the last one to realize. So the last one to give up hope, this thing really isn't gonna work, and they continue to push that deferment straight off a cliff.
Wil Schroter: And to your point, because they're already so invested in it. It's I'm at the casino, I keep losing money, so the only way to get back is to bet more money, right? T triple down on the bet,
Ryan Rutan: gotta bet more, double down, triple down, yep, kind
Wil Schroter: of works never. So with that said, I always think about it like this. Think about just our own P&L at startups.com, like our own income statement, right? On any given month, we don't need to make gobs of money, it be great if we did, right? We just need to not
Ryan Rutan: lose
Wil Schroter: money, means
Ryan Rutan: we're around to do it again next month, and the next month, and the next month.
Wil Schroter: Correct, right? Yes, even if we don't rush it, even if, again, in the terms of the base hits, even if it's only a single or a double, so long as we don't get kicked out. Those singles and doubles will add up to home runs, right? Over a long enough period of time. So when we're thinking about the business and we're thinking about, hey, what are the things we need to do to push the business forward, and this has been our thought process for over 12 years, you know, it's just occurred to me, our 13th anniversary is coming up. Holy
Ryan Rutan: cow, where are we going for dinner, Will? Oh, the company.
Wil Schroter: Well, it just popped in my head. I think he did it anyway, but in that time, in 13 years is a long time, and I think we've been around because we've been able to make those decisions. We're like, hey, we're not always just gonna swing for the fences and let whatever happened happen. Yeah, we're gonna take some shots, but we're gonna make sure if those miss, and they do, and it's the nature of it, that we still have enough revenue that that Ryan and Will can pay their bills, so they can be around long enough. Like next year and the year after 13 years later, to keep taking shots.
Ryan Rutan: Yeah, it'd be interesting to do the calculus on that and take a look at even the ones where we do see like the big outcomes, the big exits, how often those were the preamble is deferment versus now we got paid the whole way along, and then at the end we got paid out as well. I'd be really curious to see how That breaks out. And again, like that's that is only one small measure, right? Cause the big exits come along very infrequently, but you and I both know scads of people who make plenty of money every year after year running their businesses. I think you put it really nicely in a podcast long time ago, you said like they're having an exit every year. Right? If you're taking between 500 and a million off the table every year in real cash that you can actually spend or not, then you're having a mini exit every year of your life for as long as you keep doing that,
Wil Schroter: right? And it adds up, and again, this isn't to say swing for the fences and everything isn't great. What we're saying is at the expense of what, right? Because we can all afford a little bit of expense, a little bit of of risk as we go, but over a long enough period of time, That risk has a the the kind of cost you can't get back and again we talk that the casino theory where I'm gonna just keep betting until it comes back, and it's not really it's funny cause when when my wife and I go to the casino we always play blackjack. We don't play blackjack cause we love to gamble so much. We play blackjack cause it's the only game we know that can keep us at the table long enough to be able to just sit there and have a drink and enjoy ourselves.
Ryan Rutan: Say we went and had some fun, we entertained ourselves, Yep,
Wil Schroter: you bet. And it's always a, it's always a funny thing because my wife's terrible at blackjack, but she's great at stealing my chips. And so what ends up what that serious, it's it's a talent. It like what's happening I always end up winning. But as I'm winning, and I'm just talking to all the people at table and just having a great time, she's just siphoning chips off off my side into her purse. Here's why I say this, because we know that if we just keep betting more, we're gonna lose a lot, and we're we're gonna be pissed off about the whole thing, right? Yeah,
Ryan Rutan: you will eventually lose it, yeah. She is quite literally taking money off the table,
Wil Schroter: and literally taking money off the table, and what will end up happening invariably, this is it's such a great analogy, what'll happen is the night will go on for however long, right? And at some point, I'll get to a point where I'm kind of like tired or whatever, and I'll just make a big bet and lose, right? And I'm like, oh man, I got cleared out. We never bet that much money, so it's never life changing. And every single time, Sarah's nah, we actually made a ton of money. And I'm like, what are you talking about? And she opens up her her purse and she's got just filled with chips, right? And I'm like, Again, and she's, yeah, she's, I just took a little bit of money off the table every time we won. How appropriate is that? And so we walk away winners, we eat for free, so to speak, right? Not because we made some huge swing, but because we kept making sure that every time she did, I guess technically I won it, that we're putting a little
Ryan Rutan: away. You earned it, but she won it, right? There's a difference cause if you don't capture it, it's not yours. Yeah, making the money and keeping the money are two different tasks.
Wil Schroter: So I look at it like this, let's say Ryan, you and I are starting to do like we're early in our careers or in our 20s. And we're looking to start our our business. It doesn't even matter what it is.
Ryan Rutan: We look old for our twenties, Will, I'm gonna be honest.
Wil Schroter: No, that zoom filter will we'll fix it right up, buddy. We'll, we'll be 22 and
Ryan Rutan: take care of that in post.
Wil Schroter: Yeah, yeah, I'll pull my pimples right back up. So, if I had the knowledge that I had now, here's what I would have said, dude, it doesn't matter like what product we build or or what we do right now, so long as it just keeps an active stream of money. I'm not even kidding. If our product was like a marketing sass product, and I was like, yeah, but we're also gonna run a Shopify store where we sell high-end pillows, but that brings in enough money. It's not a big business, but it brings in enough money so we can keep building our sass business. I'm like, golden. Because the only thing we can do wrong is start that sand that going the wrong direction, the hourglass like chipping away the wrong direction. If we can get it going in the right direction, we're just throwing out a little cash, we can work on marketing sass business, our big idea for a decade. But we flip it over, and we have it just start chipping away at our savings, etc. We've got maybe 24 months to build Saasburger, right? Probably less.
Ryan Rutan: Oh man, if somebody would hand me a magic wand and say, look, you can put one superpower into this, you can start to grant one wish for any founder, and over again, the one I would pick would be elimination of runway, right? Because so often we see like great ideas, great things, great products, great founders, great teams, they just don't get to where they wanna go because they make decisions, they choose. To take on a specific runway and a burn rate, and then time runs out, and this is where it just goes the wrong way. So if I could fix one thing for every star in the world, I would just cast a little spell that said, your runway is now infinite, right? You're not gonna be running away with lots of money, right? You're not gonna be living large, you're gonna be calling me from your yacht, but you can keep calling me from your startup year after year. As long as you continue to want to work on it, that is a dream for me.
Wil Schroter: And to be honest, most of the startup founders that I know that have done the big dream thing, where they've swung for the fences, almost all of them, you know that that have succeeded, frankly, have been like, next time around. That I'm actually gonna do something that that that just makes money. And and and a lot of them had done something that just made money before, so they understood the the difference in the two. And look, it's sexy to go raise money, it's fun, right? Fun relative to when people are giving you money, less fun when they stop. But it's exciting, it's very rewarding. Oh, I'm, I'm gonna, your company is worth $100 million. Oh, I'm so smart, I'm so great. Yes, that part is cool. Yeah,
Ryan Rutan: exactly. No, it's a, yeah, it's a lovely ego stroke.
Wil Schroter: It is a wild distraction. From what we should be paying attention to, which is, is this actually making me wealthier, assuming that's the
Ryan Rutan: goal? Yeah. Is anybody other than investors giving us money, namely customers.
Wil Schroter: And now, like, when we look at our own business at startups.com, if we were to say, hey, here's something we can do that will clearly increase the the quote value of the company. So that at which point we want to sell the company or whatever, it, it will improve things. But over here's something we can do that would just make us more money. Like, by virtue of that, it's not gonna increase our valuation at a ton. Yeah,
Ryan Rutan: it's non-scalable, it's a service, it's a whatever, and yeah, so it's not gonna add to the scale value of the company.
Wil Schroter: I think at this point in my life, and this is just personal to me, I'm curious you know how you say it, my ratio right now of value. Is for every $1 of money that I can actually earn, it's worth $100 of money that I could otherwise defer. And I think maybe I'm just jaded because I've been in this business for so long, and, and I recognize how that $100 has so little value. What's your ratio when you think about the same thing?
Ryan Rutan: I it's probably at least that high, maybe higher, like again, like we both played it out where it's like, because the reality is that 100 can become worth $0. You may, you call it 1000 to 1, that 1000 can still become zero. So it's like, The promise of something in the future. It's like the there's probably some parable out there that talks about a man with two chickens that consistently lay eggs, being laughed at by his neighbor who's that flock of birds is mine. Can you, can you touch them? Can you do anything? So it's it for me, I, I think I said it earlier, but it was like just the journey itself, like we're talking about this in the abstract now whereas it's as if we've gotten to the end and now we're looking back on it, but as you're doing this, as you're running it, having money to pay your bills makes it a lot more fun to keep doing what you're doing. Not having money to pay your bills, makes everything just suck. Hey, nothing's funny, you'll still believe in the business, but I can't do that right now cause I gotta go do this other thing. Yeah.
Wil Schroter: We talk about making deliberate decisions, and a lot of these are product and business decisions to say, yeah, this isn't necessarily ideally what I'd want to do. Everybody loves the idea of I just raised lots of money and I can just focus all my time on building the business. It's complete bullshit. That's not how it works whatsoever, but it sounds cool, right? But there's a part of that where nobody says, and I'm OK not getting paid. Potentially ever. In that part gets dangerous. Yeah,
Ryan Rutan: that's the thing. Nobody, nobody ever puts the that that last part on it. They're like, I'm OK not getting paid, right in their mind they're like for another month, for another 3, for another 6, right? They're not thinking ever, right? That just doesn't cross their minds. It's
Wil Schroter: interesting, and I'm only speaking from the founders at this point. I don't know many founders. I'm I'm trying to go through my Rolodex of the last 30 years and trying to think of any. That made a lot of money as being a salaried employee of a venture funded company of their venture funded company. So like, like the CEO, right? They're like, hey, yeah, the company never did well, but man, I own 4 houses now because I got paid so much as a salaried employee of my venture funded company. Like, I've heard that story never. I'm sure someone's figured it out and in congrats to them, but generally what I hear is, dude, I've been a salaried employee of a venture funded company and I'm a dick. Like I, I, I, I, it's, I deferred everything and and now I'm not sitting on a lot of cash, which I get. I, I, I understand why they get. They're not faulting them for it at all, but I'm just saying it's not what you think. The irony is I'm thinking now of a bunch of my friends who worked for venture funded companies. They got really well paid. I was gonna
Ryan Rutan: say it. There's plenty of employees who made out, yeah, like I, I got paid the entire time. Why didn't you? I didn't ask. I forgot.
Wil Schroter: Yep, yep, and it's it's funny. I, I told you this story before I'm just gonna uh recite it. I won't name names, but a friend of mine, he's the co-founder of a 40 to $50 billion dollar company, internet startup. He asked me out to his office in uh San Francisco. It is awesome. I was so happy for him and we're sitting in their cafeteria, and it's just beautiful. I mean it's ridiculously beautiful cafeteria, right? Cafeteria is the wrong word for it, that that's like that's a calling this like a steak restaurant, the nicest steak restaurant in your town a cafeteria. Um, anyway, but we're sitting there, and he's bemoaning the fact that he's about to get married like in a few months, and he's, I'm about to feed 20,000 people today, right? Whatever they want to eat, but I can't personally afford my wedding. Yeah. And it's not that expensive of a wedding, and they they've since gone public, like he's done OK now, but I like, I'm just saying even at that time, I just remember, I'm like, brother, like what's wrong with this picture?
Ryan Rutan: And but there's a really interesting story within that story, which is, yes, he got there at the end. But getting there at the end doesn't change the fact that guy probably didn't have the wedding that he wanted to have, had to struggle through that, right? And so that's the thing, so even when you get there at the end, It doesn't erase all the shit that you swam through to get there, right? That's still there, whether those end up as being traumas or just bad memories, or regrets or whatever, like that shit's still there, right? It doesn't go away just because you did get the outcome at the end and I think we have to be really careful about saying that the ends justify the means, the ends justify the journey that we took. Not necessarily, right? And in in in fact, in most cases it just doesn't, right? The things that I've forgone as a founder, don't come back to me, right? Now, maybe the cash, but time with the kids, time with the wife, traveling, vacations, sleep, I don't know, all those things, they don't come back.
Wil Schroter: It's the classic line when the entrepreneur says, hey, I worked through all this, deferred all of this and like deferred relationships, etc. and you know what that company is worth to me today? My relationship with my wife and kids. That's it. So that's what it costs me again that I don't bemoan people for it because it's, I understand how you get shit, you and I understand better than any. How you get there, right? But the point of us doing this when we have these conversations, is to say you don't have to, or to say, hey, guess what, guess what? It's messed up, right? We often talk about how we have here on this podcast is a bit of a counter narrative. And I don't think it's counter narrative. I think it's just freaking common sense.
Ryan Rutan: I think it's just I think it's just the experiential narrative, like we've been through this, we can tell you. I, I did it last week. I was in the my my getting customers workshop within the within startups.com accelerator, talking to a founder, and we were like, look, you could continue to keep, he's limping along right now trying to get the product fully developed. There is an obvious service offering, and he knows it, he's the one that suggested it, but he's like, I just don't know. I keep, I'm getting advice from so many people not to go the service route because it doesn't scale, because it doesn't this, and investors look at it differently, and I said, cool, are all the people who are offering you that advice also offering to pay Your bills or take you out to dinner or put kids clothing on your kids. No, they're not. So guess what? Fuck their advice, decide what you need to do to make this work for you. And it was amazing because I, I think I put it pretty close to that bluntly, and he was just like, Yeah, it feels so good to hear that. He's, I'm just gonna go and I have, he had, he gets me like it was some ridiculous number of 12 or 15 clients that were waiting to pay him that he was saying no to so that he could build product instead of service. I'm like, dude, what are you doing? Go get the money. You'll be happy, you'll be happier, and guess what? You can use that money to develop your product, you can use that money to pay your bills to keep your runway longer, so you can stick around to actually get it right in the end if you want to, but man, the just the optionality that cash buys you. That that your non-bearer instruments, stock and deferred comp won't, incomparable.
Wil Schroter: The problem is it's very easy to get swayed by, yeah, right, you and I've lived through this. It's not like we've never been swayed. What we're saying we have been swayed.
Ryan Rutan: No, no, yeah, I've been punched in the face by that, guess what? This time I choose to duck, and I'm gonna tell everybody else to duck too. Here's what I
Wil Schroter: would say. It's not one or the other. It's not, oh, I have to do cash or I have to do risk or deferred comp. We can do both. What we're talking about here, what we covered today was really more about what happens when you go too far, when you optimize too far, when you say basically, I'm gonna make all my money later, and and the truth is that might happen. But at the cost of what, right, in the interim. So what we, you know, Ryan, you and I recommend the folks that are listening. Don't put all of your eggs in that one basket, right? Even if the other basket that you need to create is actually just a different way to make money, keep making money. The goal here isn't just to have the big exit, it's to be around long enough to be there for it to begin with.
Ryan Rutan: Overthinking your startup because you're going it alone, you don't have to, and honestly, you shouldn't because instead, you can learn directly from peers who've been in your shoes. Connect with bootstrapped founders and the advisors helping them win in the startups.com community. Check out the Startups.com community at www.startups.com to see if it's for you. Could be just the thing you need. I hope to see you inside.