Ryan Rutan: Welcome back to the episode of the Startup therapy podcast. This is Ryan Ran joined as always by my friend, the founder and CEO of Startups.com, Will Schroeder. Well, if we listen to the zeitgeist, the economists, and all that's going on right now, it doesn't seem apparent that there is a recession, and yet indicator might we have that there's a recession at hand.
Wil Schroter: Yeah, my indicator would be every single founder that I talk to right now, and we talked to a lot. We talked to a lot of
Ryan Rutan: founders startup land at least. If it's not affecting the rest of the world yet, uh, we're definitely feeling it in.
Wil Schroter: Yeah, apparently all these founders didn't get the memo. Apparently everything's great and then nobody told us we just don't have any money. You know, Ryan, we have this really interesting purview where we get to see not only so many different types of startups, like, you know, different industries, etc. different stages of startups. So from idea stage, you know, all the way to pre-IPO stage, and we get to have very, very intimate conversations with the founders, specifically, not, not with the PR flacks now. With the, you know, person marketing trying to talk up the company, the person who all this shit is gonna fall on, right, who's being kept up at night.
Ryan Rutan: We're a fly on the wall in every corner of the economy by virtue of being talking in in conversations with founders in every economy.
Wil Schroter: You bet. Let's take stats and economists off the table for a second. Every single founder I talked to right now is scared to death and things are bad. Now, when I say that. Ryan, at some level, you and I are in the business of getting people excited about startups, and we have a business where people come and they pay us money to help build their startups, etc. So think of what it must be like if you and I are getting on our own podcast saying things are fucked up.
Ryan Rutan: Yeah, things are tough right now, but I think that's something that we, we take very seriously, the responsibility that we have to empower people feel good about doing these things, but to be real sober while they're doing it, right? We're like, OK, after 3 shots tequila now let's talk startups. Yeah, yeah, yeah, I'm in this with a dose of reality and, and I think that a big part of what we're gonna cover today is the fact that like you might have been thinking this was just you. Right, and it's very important to know that there are other macro forces at play here and while it may not be a great time in the environment, there's a pretty clear message there, which is that like, look, a lot of folks are going through this right now, stay your course, right? Hold on, and, and just be prepared for the reality of what the situation looks like right now.
Wil Schroter: Let's paint the picture of where we're at right now, right? Just to give a general sense and why we're saying this, OK? So a couple of macro forces are happening. We'll get into the the kind of the details of kind of how we got here. But essentially what we're saying is right now in the startup world, forget the rest of the world or anything else, in the startup world, we are in what we are calling a silent recession. Recession because shit's bad, silent because nobody seems to be talking about it, right?
Ryan Rutan: It's it's like, yeah, revenue is dropping off. We can't get clients to close. We're having plenty of good conversations, but no one's committing, I think is the one that I hear on just repeat right now. And people are like, yeah, because again, like the, the world's not fully scared, it's not shut down. We're not facing full on recession yet, and yet the decision making, particularly like in the in the B2B space, I'm working with a ton of founders on customer position right now in the B2B space, and they're all saying the same things we're in the conversations people are interested in what we're doing. They like the solutions, they are not pushing the the cash risk. just not moving forward.
Wil Schroter: And that's where things get a little bit funky. I, I think like if you, if you read particularly like financial news media like your CNBC's the world, things like that, they're gonna show you good stats and, and they're not lying that numer stock market, you know, returned incredibly. S&P did so well last year. It printed money last year. It's incredible, right? And so by that metric, you're like, OK, but things are OK, right? Or you look at inflation and you're like, oh wait, inflation means that people are spending a lot like the demand is high, right? The US consumers are must have money cause they're spending, right? Home prices are going through the roof. Like it must be because everybody's making a lot of money, right? Unemployment is pretty steady, all things being cool. So my my challenge is you look at all of these typical stats that would normally make you say, oh, I guess things are OK. But then you talk to the people behind it, the actual founders, and you get a much different take on what's happening. And so again, today we'll unpack why it's happening, what's unpack what to do about it. But, but here, just like you were saying, Ryan, if folks right now are like, I don't know, man, things feel feel kind of fucked up in my business. It ain't just you.
Ryan Rutan: It's not just you. That's an important realization, right, because there, there are things that we can fix in our business, certainly there are things that we can do, but there are forces that we can't fight. We just have to outlast. Nothing else. You
Wil Schroter: bet. And and so, you know, let's start off with, again, a little bit of how we got here, a little economic history lesson, because I think for most folks, again, we knew things were weird, like COVID was supposed to shut the whole show down. And in the US specifically, I can't speak to other countries because I didn't follow it closely, but in the US specifically, we pulled off a magic trick. I mean, it's no less than an economic magic trick. We somehow went from an economy that was supposed to have imploded. We pumped up everything we. Could we put billions of dollars into the economy through PPP and everything else like that. We made interest rates stand near zero. We did everything we could to keep the momentum, and it worked. Holy shit did it work, right? Record IPOs, this is 2021 record IPOs during a time when we were in lockdown.
Ryan Rutan: Yeah, the irony of companies going public when the public couldn't go public, right? Stay inside your houses but
Wil Schroter: buy stocks, right? But I mean, when we look back, I can't imagine I'm by no means. pretending to be an economist here, but I'm just saying, you know, seeing it from the startup's perspective of how it worked, when we look back, that will be maybe one of the most genius moves economically at a macro level that anybody's pulled off in a long time. And it looks like, you know, knock on wood, that we're getting close to, you know, our our desired soft landing where you pull a move like that and it doesn't rubber band back to you,
Ryan Rutan: right, inflation risk, right? That was the bet was that this thing whip saw it back on us, but all signs point to we're probably. OK. Right,
Wil Schroter: let's map back to how this affected startups specifically, cause I, yeah, we keep talking about at the macro level, let's talk about the micro level. Here's what happened to startups and and most of the folks listening were running a business around this time within the last few years. First thing that happened, we went from holy shit, it's all game over. I know that's how we felt, right? People are buying, people are like, what what the hell is happening? By
Ryan Rutan: the only one watching CNN. Yeah,
Wil Schroter: exactly, right? All of a sudden, interest rates go to 0% and capital blow. Which was the goal, by the way, right? Like, I mean it was 1999 all over again. We were having these massive, massive funding rounds that insane valuations, and then most importantly, in this we'll get back,
Ryan Rutan: we had to rewrite posts that have been on our site for a decade around like what constituted a a precede round from a funding amount and in a seed round the Series A. I'm like,
Wil Schroter: yeah, in a matter of 18 months,
Ryan Rutan: how much in your precinct?
Wil Schroter: It was crazy and just and everybody and their brother at the time was opening up a venture. Your fund because there's so much, you know, LP money out there. I mean, it got nutty the first time
Ryan Rutan: ever founders were outnumbered by VCs.
Wil Schroter: Let's just, let's kind of play this out though. Now a whole bunch of things start happening when you create that momentum. And as, as we're describing this, remember that they also happen in reverse, which is how we got here, OK? When the money starts flowing, it comes from, let's say two places, high net worth individuals, angel investors, stock market's doing really well. All of a sudden people have a bunch of money they didn't have 5 seconds ago and their. And bullish about putting it somewhere, right? On the other side, you got LP money, investor money. Capital's cheap all of a sudden, right? Interest rates are super cheap. You can dump tons of money into high-risk investments, right? And then the third part of that is because you can dump all this money and pump all this stuff up, you have lots of IPOs. You have lots of exits, yet you have a lot of big activity.
Ryan Rutan: All the things that stimulate the overall startup environment, right? Because it's not just about those outcomes. Uh, it's about everything that happens downstream, right? This is the very thing they get people. Excited about going out like, hey, you know what, we'll go start a startup. So it's pretty easy right now. The brother is ringing the bell to NASDAQ. I want to get in on this too. Same thing for invest.
Wil Schroter: Yeah, but the thing is, startups in general, live and die by FOMO, the fear of missing out. So that's what started to happen. As soon as you see some idiot, like, dude, how did that guy go IP? Are you serious right now, right? And then all of a sudden that FOMO explodes like a virus, which is what we are all about. It's a very nature. of being a startup is the fear of missing out.
Ryan Rutan: Everybody's a minor all of a sudden running looking for picks and shovels, right? Like I got 100%
Wil Schroter: 100%, right? You've got entrepreneurs that are like, oh my God, I need to get on that. You get investors like, hey, I need to get on that. You got all the talent. That's like, dude, I, I need to, you know, get some of that Uber money.
Ryan Rutan: I remember having some friends about friends that were staunch bootstrappers who in those moments decided like, maybe I should and did go and raise capital. That's worked out OK, so not so much, but that's different story, but he just he was it speaks to the the momentum at the time and and kind of the the hype and the excitement at the time of what was going on and how much fervor there was around startup space and how much funding was flowing into it, and how many outcomes were happening.
Wil Schroter: Now, the the challenge is you get a whole bunch of expectations that get set in that moment that we're all dealing with. Now again, this is where the history lesson here is, is particularly important. All of a sudden, the expectation is that capital will continue to be there, right? Well, you know, we'll talk about this, but that got pulled, OK?
Ryan Rutan: Once you prime the pump, it just keeps pumping, right? Doesn't it just flow and flow and flow?
Wil Schroter: The second is that we'll always grow, right? Like the nature of a startup is growth. People just assume that you're just always gonna grow up into the right, which is awesome. It sounds great, but most folks haven't been around long enough to see. Actually works right doesn't doesn't quite work out.
Ryan Rutan: You can turn the hockey stick the other direction without a whole lot,
Wil Schroter: but also remember that there's so much momentum that gets carried again, you know, kind of the centrifugal force of FOMO, right? It starts with the founder and and the investor, right? They start that goes, but now they've got a bunch of capital. They go hire a bunch of people. The media covers the fact that they raise money, that they're hiring all these people, etc. Now the media is spitting this up, right? Now more people are reading the media saying I don't wanna go work for those companies. I wanna do business with those companies. I wanna buy that product like the whole thing compounds.
Ryan Rutan: Another interesting indicator in that time, right? Sc specifically what you're talking about around around the hiring, right? It the first time ever, I started seeing Roundup posts on LinkedIn that said like these startups are hiring. That never would have existed before, right? Unless it was caveat it was something like, here's some startups who are hiring in case you can't get a Job, right? That would have been the caveat previously during that period, all of a sudden people were like these hot and fast growing startups are hiring, like it just big list one after the other after the other. Everybody seemed to be posting one of these things on LinkedIn at some point.
Wil Schroter: And so again, the expectation setting starts to get real dangerous, OK? It's kind of like our greatest strength and our greatest weakness, greatest strength that helps us do optimistic, complicated stuff, greatest weakness. It doesn't occur to us that things can change dramatically. So, let's fast forward a little bit. A couple years ago, I if, if my date stamps right and and I suck at dates, but um I think it's like mid 2022, kind the wheel stops, and I don't recall exactly what the event was that caused that, so to speak, you know, cause I think we're still mid-COVID or, you know, close to close to the end. I don't know, but I remember when it happened. I remember it happened in April specifically, and why do I know this, Ryan? Cause you and I were going over our Numbers for our businesses and for folks that aren't super familiar, we own a lot of different websites, you know, we own Startups.com, but at the time we own Zrtual, virtual.com, which is a virtual assist business, business plan.com, Fundable.com, Launchart.com, clarity, you name it, right? These are all slightly different businesses, right? I mean, they're all, you know, under the, under the same umbrella, but we watched them all start to drop
Ryan Rutan: the entire portfolio at the same time, which is a good indication that it's something other than the internal management or mechanic. So that specific business.
Wil Schroter: Well, that's the funny thing, we manage all of it, like we are the management, right? So, so we are the constant either either we are which is possible but either either we are fully incompetent across the board, which you don't, I can't take off the table or something else is going on. But I do remember specifically in April of that year, something being off. Now here's where it gets really up. What happens is we assume right. It's us. We're doing something wrong. Remember going through all of our different budgets and everything and all of it doesn't spend all of our like checkout pads and like what the hell is going on?
Ryan Rutan: Competitor spending on every platform I could find, right? Just like what is it that we're doing wrong that everybody else is getting right and they're beating us.
Wil Schroter: Fast forward to today and you kind of, you know, look back retroactively on that period, Ryan. We didn't do anything differently. We did the same thing we were always doing. Just stopped working. Now, we have, like we mentioned at the top of the episode, a unique purview where when the storm is coming, we're not the only people hearing it, we hear it from lots of other people. And that storm started when I could start to hear my friends who were raising rounds, saying, huh, seems to take a little bit longer. When I listen to some of my investors saying, you know, I think we're gonna pause on this one for a second.
Ryan Rutan: We're considering gold, like as in the metal. Yes, it's in the metal.
Wil Schroter: It wasn't one thing, it was kind of a little bit of everything. All of a sudden, like 5 seconds ago you couldn't find an engineer or a marketing person because they had 28 job offers. All of a sudden, I get like a message from someone like, hey, you guys hired by any chance? which I hadn't gotten like in 18 months, like I we were chasing other people out. You
Ryan Rutan: move April to the end of that year, holy hell did
Wil Schroter: that. Oh my God, right, night and day. Now, here's where it's. Hard to respond in that moment. So let's say it's mid 2022, and this is us as well as everyone else. Is it a blip or a trend? Who knows? Maybe, you know, maybe it's just a bad quarter. But that bad quarter becomes another quarter, another quarter, another quarter, and particularly for folks that are in the fundraising cycle, which means you've raised previous rounds, the expectations that you're going to raise more rounds, and you have hired and built infrastructure based on that expectation, which is reasonable when it keeps coming in. Right? But you don't expect it to stop. If someone came to me for advice and said, hey, you know, I'm through my Series B, you know, so I've I've raised precedes, see, Series A, Series B, and I'm going into my C. It feels like things are slowing down. What should I do? Honestly, my advice would be, boy, you're this far along, kind of have to hit the gas, right? Hitting a hard stop is gonna prevent you from getting a Crop. Essentially hitting a hard stop, if we're saying no more hiring, you know, a circle in the wagons, then You're trying to go for your C round and investors like, well, it doesn't look like you're hiring. It looks like, you know, like you're planning for things to stop. I don't want to put money into that.
Ryan Rutan: Let's see. So you're by all other measures, all of your signals say that we're we're about to pump the brakes across the board, but you want me to pump cash into your business. Like,
Wil Schroter: yeah, exactly. It's a very bizarre all
Ryan Rutan: by the time you're that far down the funding path too, like you have much of a choice. So if you're on your way from B to C, you don't get to just be like, well, you know what, we'll just hold. be, we'll just stay here, right? Generally
Wil Schroter: not, right. I'm like, you're 8 months pregnant, you gotta make this baby. But at that moment, when things start, like, you can't really tell, like, you know, is it just something off in my business? Now here's the thing, since we sit down with lots of other founders and have these really intimate conversations on a daily basis all throughout the day, what was interesting to me is I'm talking to some of my friends who are further along in different businesses, different industries, right? Um, totally different industries, but all having kind of The same problems, like, and they're like, yeah, I'm having a tough time raising around or investors are pushing back or or or like, you know, boy, we kind of missed our quarter and stuff like, and I'm like, you know, it ain't just you, but at the time, Ryan, they can't tell. At the time they're thinking, what what do we do wrong? Cause
Ryan Rutan: you don't have that macro view, right? So you, you assume it's it's just you, which
Wil Schroter: is dangerous. At that time, inflation starts going crazy, this is going back to the macro review again, we're mainly talking US economy. Ryan, you're in Europe now, maybe you can start to speak what's happening in Europe. I don't mean to be so US centric. I just don't know any other markets. At that time, interest rates are going up, yeah, you're like, OK, you know, how how important could that possibly be? VCs have raised so much money in these last few rounds, like they've got it deployed, etc. and then the weirdest thing happened. They just stopped writing checks. Investors just stopped writing checks. The thing they get paid to do, they stopped doing for a really long.
Ryan Rutan: and and having just raised tons and tons of money, right? So it's like just you could almost hear the coffers uh ready to burst at that point, right? There was just so much money waiting to be, just stopped.
Wil Schroter: If I'm gonna point towards something, VCs caused the the startup recession. I, this isn't like, you know, evil VCs, nothing like that. I don't necessarily blame them, right? I understand why they made those
Ryan Rutan: decisions, but that was, that was the the the. Kind of the gross signal to market it was like, hey, we're gonna stop the the capital flowing into the startups at the at the at the top of their game, right, the ones that are closest to IPO closest to exit, whatever, that has a knock-on effect all the way down the food chain. Um, that just even just like basic inspiration, right? If you look up and going like, you see the best companies in the world going like, yep, we're not able to close our Series C. Right, you're going now is not the time to cash out my 401k and dump the family savings and starting.
Wil Schroter: Exactly, around that time, all of the big IPOs of the moment started to implode. All of them started to implode. Like I remember I'd put a bunch of money in a company called Wish. Do you remember Wish? Yeah, I do, right? That was like that fast retail, you buy a bunch of junk online, whatever and. And they had an incredible IPO. I mean, like I'm not knocking this company. I mean, I put money into them, so obviously I, I thought there was some story there, but my point is that thing went bananas, right, had a massive IPO, right? I don't remember what the market cap was at IPO. I believe it was over $10 billion you know, I should I should I talk on the top of my head. I actually don't remember. It was massive, right? It was massive. Within like 5 seconds, that thing was trading. pennies on the
Ryan Rutan: dock. And, and that was not an isolated case. It started happening to one after the next after the next.
Wil Schroter: Yep. So if you're a VC and you're like, dude, the way I make my money is not how I invested. The way I make my money is when I take companies public, right? Or they get sold to companies that are typically public. And now every company that just went out is getting eviscerated. I'm like. Yeah, like, let's let's pump the brakes and hold back. 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.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.
Ryan Rutan: I kept expecting to see like all of the VCs change their titles on on LinkedIn to Penny Stock Investor just by virtue of what happened in the market, right?
Wil Schroter: So here's what happens though, and this is when I say they caused it, I'm saying it's their fault cause they did cause it, but I understand why they, they caused it, right? And if I were a VC I would have done the same. Thing. So it's their fault, but I don't blame them. So once they pump the brakes and they say, oh damn, the markets got overheated, we gotta hold back. The last thing you want to do is spend 10 years investing into a company and then try to IPO it in the worst window possible. like Instacart was holding back, Stripe held back, you know, all these, these
Ryan Rutan: massive IPO conversations, yeah, people that we were fully expect. I mean, we're fully ramped up and on their way to IPO and then just hit paused.
Wil Schroter: Stop. So here's shit rolling downhill. We start off with no more
Ryan Rutan: IPOs. And picking up speed,
Wil Schroter: giant snowball. We start off with no no more IPOs. The no more IPOs mean later stage funding like uh CDE rounds for startups that are first along, start drying up. Now what a lot of folks don't understand, particularly founders, is that when the later stage investments stop happening, it takes away the incentive for the early investments
Ryan Rutan: that goes back to the FOMO.
Wil Schroter: The person putting in $200,000 into a startup isn't hoping that's the only money they're going to raise or that's the end of it, right? They're hoping they're going to raise 5 more rounds and then go public.
Ryan Rutan: It has to for them to get what they want out of it,
Wil Schroter: right? Now, here's where things were the, the high net worth investors, the angel investors got hit from both sides. Any investments they had made into current startups that were hopefully getting into the series ABC. and beyond rounds stopped, right? So if all the startups you're tracking, maybe you're on the board of a couple, all of a sudden can't raise a round, you're like, shit, the liquidity that I was gonna get from that $200,000 or whatever I put in is now at risk. At the same time, the very place you were extracting all this money that you were spending, the stock market just implodes because all those, you know, like wishes and all those things in the world all implode. So now all of a sudden you don't have any free capital, the high risk money you did invest goes away. And then the Fed basically says, hey, we're gonna crank up interest rates, strike out, well, if I can put my money anywhere, I must put it somewhere safe at this point, so you stop investing. So that's how this whole thing went downhill, and when the money dries up, it takes away the fear of missing out, and that's how we got here. We took away the fear of missing out, and that is what has caused our silent recession, but nobody, there's no metric for fear of missing out. You see it, you see it in all the startups, but, but we don't have like a like a CPI index or something
Ryan Rutan: lack of FOMO, there's nobody talking about the, the stock collective basket. It's like, yeah, but here's here's what it's, it's amazing, right? And so I mean like to your point, like they did cause it, you know, they're not necessarily to blame it as their fault, but it impacted them as well, right, as you said, then like you've got all of these startups, just this like massive s effect where by by stopping the me run all of a sudden like it just daisy changes all the way back to the beginning and and all of a sudden now and then it was really interesting too that when we did see checkbooks start to loosen up a bit and what would that have been like mid 2023, about this time last year started to see a little bit more interest, but do you remember like the raise requirements became insane like it. They were very basically putting money into things that were already working pretty well. It wasn't like nobody was taking a flyer on somebody just because it was a good idea. They were putting money into cash flowing companies. They sort of look a lot more like PD at that point, private equity versus true venture capital to me, and that did start to create a little bit of new momentum, but not a ton because it was getting so specifically directed into high performing companies.
Wil Schroter: Yeah, and so because of that, you know, shit falls downhill. Now we're at the end of like a two year cycle of that, and now all the startups that couldn't raise just haven't raised at this point, or or they're down rounded heavy, and by the way, if you if you're one of those folks listening, you know, founder whatever, this is part of the it ain't on you, right? I'm I'm sure you've put the weight of the world on your shoulders and it's kind of what we do. trust me, when you get to At this point in the cycle, it is very hard to navigate and I want folks to hear that. It's not that I'm saying, oh, you're not responsible for for your outcome, you are. But when everything is on fire, it's kind of everything's on fire, right? So I just want to be mindful of that.
Ryan Rutan: If all of a sudden we tilted the track up at a 45 degree angle, we would expect Usain Bolt slightly lower 100 m times, right? Like that's what we're saying.
Wil Schroter: There's a lot of folks. Folks that have never been through this. One, maybe don't even realize it's happening, right? You know, kind of why what's happening is happening, but also just from from an age or stage standpoint, just haven't been
Ryan Rutan: through it. I haven't seen it yet and and look, man, like, you know, as I startup founders like one of the things we're famous for is like getting the heads down and getting in our own bubble, and particularly like look if you're at like a series A or beyond. You're probably paying a lot more attention to the macro environment, right? You kind of have to, you have to know what else is going on, right? If you're free seed seed maybe Series A, probably less so, and so you may not be spending as much time looking at the macro environment as you really necessitously concerned with your micro environment of the shit show of a startup that you're running. I think it's so easy to to be running around bumping into the trees and completely miss out on the forest and kind of what's going on that that that well, so will be understandable.
Wil Schroter: The the analogy. was great. We went from running downhill as fast as possible to barely trudging uphill with 50 pounds on our back.
Ryan Rutan: Investors were carrying us on their backs like they were doing the running for us. They were like, just save your, save your energy. We got you. Yeah, yeah,
Wil Schroter: yeah. You know, so what ends up happening is we get on this other side of it where folks are like, oh my God, again, you know, my business is doing poorly, uh, you know, what am I doing wrong, etc. Listen, if you knew what was actually happening around you. I would say in right now, I'm curious your version, I would say 80% of the founders that I'm actively talking to and helping out with things are going through an absolute shit storm. The other 20%, things aren't going great, they're just not going that bad, but it was the flip side two
Ryan Rutan: years ago. That's a thing, I, and I think that's a big part of it was because of that. This is where this is where like the FOMO piece and kind of the slinky effect and the and the delay in a lot of what happens in the startup world is is so hard to navigate because The folks who were just getting started right around the time that things turned the wrong direction, had all of these examples of heroes right in front of them who were nailing custom revolution, building big teams, getting the outcomes they wanted, and then you started a time and it just lagged behind that just a little bit, and all of a sudden you're like, we can't figure out paid acquisition, we can't make it work. Yep, by the way, did you know that people raised prices 10% overnight one day in In the middle of all this because of all the shit that's going on, because they also aren't making as much money as they used to. Are you aware that like meta advertisement has reduced that exceed like 40%, nearly, you know, within like a one quarter period? No, they're not, right? All they saw was I saw the people just ahead of me achieve all this greatness and without even knowing that the floor got tilted up at a 45 degree angle, I think I'm running the same race and so I'm comparing myself to them, not only struggling against the reality of the situation. But I'm struggling against the unreality where I'm comparing myself to some version of this other business that no longer exists. And and just like seeing how painful that is for founders to go through that without having any of the catharsis of knowing like, it's a different situation, right? I can't expect to have the same outcomes that they should and I shouldn't.
Wil Schroter: The last time we had an economic peril, I mean, again, COVID was such an anomaly in the US and kind of how it ended up playing up real. That now that that being said, I don't want to overlook all the business that that truly got impacted by COVID, whether it was something that had, you know, supply chain issues, whether it was retail, you know,
Ryan Rutan: I had a couple friends that owned hotels. That was not a good business to be in in 2020.
Wil Schroter: I'm not ignoring that, but I'm saying as an economy, as As a whole, we did way better than we should have. My point is, the last time that we had a true economic like crisis was 2007, you know, Lehman Brothers era, 2008 financial crisis, right? And even that was kind of limited to certain things. And then obviously prior to that was a kind of 9/11 era in dotcom bust. Now I bring that up to say this shit does happen. Like it's, it's fairly cyclical. So let's talk about if you're in this right now like we are, like everyone is, what do you do about it? Like, um, Ryan, you and I have the benefit of being very old. I don't even know how I can say that in a sentence, but we do. We've been through this a whole bunch of times and we've been through it with startups, we've been through it in a lot of different capacities. At a high level, it's you go from grow at all costs to survive at all costs, and you have to realize the world that you're in, cause it ain't what it was.
Ryan Rutan: You have to, right? And I think you, you said it right, you gotta survive at this point, right? You gotta batten down the hatches and then keep the ship dry at some point, I think this is where it becomes really tough. I think the harder part of this sometimes, I think we can figure out how to not grow. I mean, I don't mean that literally. I mean like in the sense that like we can turn off the growth engines, we can stop putting. Money at risk, we can do things that are more safe, focus on revenue, all that stuff. I think one of the biggest challenges is how often do we stick our head out of the hole and and check the situation again? And what are those leading indicators that we should be looking for that say, oh, times are getting better right now? I mean, clearly you and I would just be like, well, your P&L, that's probably your guide, but I think there's there's this constant sense that like there must be something else. There's some other tea leaves that I can be reading. To know when does this come to an end and when do I need to get back in growth. The answer is it's really difficult, right? There there aren't like major again, like we don't have the same like, oh interest rates suddenly change, this means, you know, immediate benefit to the stock market doesn't necessarily mean immediate benefit to to the startup space and back that can create a a lack of desire. The starter spaces in the stock market. Well, let's just put our money there, that's far easier, far more liquid. Why go into this really high risk capital? So yeah, I mean it it definitely. It feels like one of those times where if you haven't already batten down the hatches, you should probably be doing. Yeah, and
Wil Schroter: and part of that is the expectation setting across the board and that starts with ourselves as founders. It doesn't matter what you had going on two years ago. The world is not the same. You're totally different environment, right? It'd be the equivalent of, of a restaurant owner at the beginning of COVID being like, why don't people come to my restaurant? Like, you know, just this COVID thing. It's like, yeah, it ain't the same environment, right? You do
Ryan Rutan: 4 turns a night. That's what we're gonna keep doing.
Wil Schroter: You bet. If you were having 20% year over year growth, 20% quarter over quarter growth, whatever your great growth was 2 years ago, a year ago, doesn't matter. It, it all gets reset. You had 100 people on staff, right? And you're trying to hire as many people, doesn't matter. You now have 9 people on staff and you're trying to keep this thing around. The valuation was $100 million at that point. The evaluation is $0 million right now. So you figure out how to keep this thing around long enough.
Ryan Rutan: It's so hard, it's so hard because those achievements are so difficult in the startup space, as a founder, the work that went into getting to that 20% growth rate, when you get knocked back off that, the feeling that like I have to go through all of that again just to get back to where I was. It can be really overwhelming. So like the, the best I can do here is be like, fuck up buttercup, like yeah, it it sucks, but also like, because this isn't you figuring it out for the first time, I think this is something else where founders can get really discouraged. I spoke to a very discouraged founder today on the phone. I think he was feeling a little bit better by the time we got off, but he was pretty discouraged and and we talked about exactly this, the fact that there are some macro forces in the market that are working against his particular business and that, you know, they were. Better place. They've been pushed back a little bit now, and I said like, man, I don't want you to think like you have to go climb the same mountain already climbed it, you know the way the first time you did it, you were hacking your way through trees and bushes with a machete, climbing over boulders, like, you know the path now. Uh, and so I think that there is some important uh dialogue around that, which is that like if you've been somewhere that was better and you've been pushed back by this, as opposed to just being pulled back by this, your recovery may not be as difficult as it was to get there in the first place. It may also be, but most times like you and I've seen this time and time again. Once you've learned the lesson as a founder, once you know how to get to a place, once you know how to execute on something, doing it again and again is typically a problem, right? It can feel like that, emotionally it feels like that, emotionally going from, you know, the $100 million dollar valuation to the $0 valuation feels like I have to go create all of that value over again, maybe, but the good news is know how to do it. He didn't the first time and it did it.
Wil Schroter: Right, I, I think part of this is we, we have to treat it like the storm that it is, right? And, and storms are nasty, they're messy, they leave a ton of carnage, they pass in time. Part of it is recognizing that this is a storm, recognizing that everyone around you, everything you had 5 minutes ago, isn't, you can't take that for granted. We have to reset everything. To reset everything and say, OK, new mission, new mission is make it long enough, so. We can be in the the next good times when that storm passes, and when things open up, and, and frankly, we have fewer competitors, things are cheaper, capital frees up cause those investors have to put money in sometime, right? The the the public markets open up, so people, you know, have their, their, their wallets open again. We want to be around for that. Now, in order to be around for that, we gotta make some cuts, we gotta make some changes, we gotta reset some expectations, most notably ours. As the founders, right? And we have to do that with an eye toward longevity, with an eye to survival. No matter how small or compact this needs to be for a minute, that's what it's gotta be, so we can be around long enough to get the big exit later, to get the big outcome later. And I'll tell you guys, like, you know, for folks that are listening, folks that haven't been through this before. There is always another side to this, like there is light at the end of this tunnel, as hard as it is to see right now, been doing this for 30 years, Ryan, you've been almost as long across many companies, there's always another side to this. You just gotta be around long enough and make the hard decisions to actually see it.
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.