Ryan Rutan: Welcome back to the episode of the Startup Therapy podcast. This is Ryan Routan joined as always by my friend, the founder and CEO of Startups.com, Will Schroeder. Well, I think we're all pretty well aware that taking risks is part and parcel, maybe even the foundation of entrepreneurship, right? But I think here's an interesting reality that you forced me to examine this week, which is that risk is a luxury, not at the fault, right? And most people actually can't take risks because they don't have the safety net to survive, even a small failure. It's good with you, man. Let's unpack what it really costs to take risks and like, when can we actually afford to make some of these gambles and how to identify like what our minimum viable risk pool uh looks like, uh, so that we can change the trajectory in our startup and uh probably your life.
Wil Schroter: I know, isn't it weird that like this is. isn't something everybody talks about like all the time. Like when you think like the first conversation you're like, hey, I'm thinking about starting a company, what is my specific number that I need in order to be able to take risks? What ends up happening is, well, one, no one talks about it. They, they, everyone knows that like, hey, it would be great to have more money, so no surprise there. But nobody really understands to the penny exactly what that number needs to be or what it buys you. I think we should probably first unpack the luxury of risk, right? Like, really being able to. Take a risk at all is a massive luxury and a lot of people don't think about it that way. Like, I'll give you an example. When I was first starting my career, I was dead broke. People would tell me, oh well, you could risk all you want because you have nothing to lose. I was like, no, hold on, if I lose, I have nothing to eat. I think it's great. That's the part that you missed. Not that I have nothing to lose. I have nothing to to pay money with to eat if I lose, right? That is way different. Yeah, saying that that I could afford to lose. Something would be a luxury. Not having anything ain't a luxury. And I, I think that's where it starts. When we start to say, we say, what would it take? How much money would it take for me to be able to take a risk and survive it? That's the part that that nobody talks about. Then the other part of it is, what is it like? What optionality opens up when you can take risk?
Ryan Rutan: Right, which is huge, right? And it's something that again gets ignored. Right?
Wil Schroter: And so there's this concept in economics called the management base, and what that means is it's, it's when a company. Or could be an individual has enough income, could be savings, what have you, doesn't matter to cover their base expenses, like their base management, so that they can take risks beyond that. Now, when people say that's why the rich get richer, that's kind of what they mean. Rich people, and you don't have to be 1% for this to be valid. Rich people can afford to take risk. It's like
Ryan Rutan: the risk buffer that they have. Yeah, it's like I'm not, I'm not betting the house. I'm not betting the farm, or maybe I'm betting the 2nd house or the 3rd house or the 4th farm, right? Like, and that's, and that's why you can do it. You know, it's funny. I think that one of the, one of the places I think this comes from is we get so caught up in, in the idea of what will it take for the business to work? How much money does the business need? How much money does the will operations take? And of course, all that does need to be factored into this. But I think that it's the, it's the personal costs that just get completely and utterly forgotten in so many cases. If you were like, well, I know kids are expensive. Let's find out how much a kid costs. OK, kid's gonna need to eat this much, can eat this many diapers, this much stuff. OK, great, fine. All of that's covered. And then you have the kid. And you forgot to factor in like that you have to keep eating at the same time, right? Like you also need to feed yourself or the kids, you, you're both gonna be in trouble. And I feel like that's where this starts to go wrong, is that people just don't adequately calculate or that they make these, you know, these poor assumptions around like, well, I'll just, you know, start paying myself right away from a business that has no revenue, and somehow that'll make the ends meet. Again, to your point, it's not that big of a number either that we need there, but it has to exist, that buffer has to be there, otherwise, even a tiny pothole can take you off course in this journey.
Wil Schroter: Let me give concrete terms so the audience can listen and and Ryan, this is stuff that, you know, you and I have lived through as we're building Startups.com. In the formative days of startups.com, back in the days of Yo, when we had essentially no revenue, every single thing that could have gone wrong could have broke us. Any of the, the smallest like speed bump could have broke us. OK. Now, as we got a little bit further into the business and our monthly recurring revenue started to increase, and we had just enough money to pay everyone a very paltry like below living wage salary because all the money we had, all of a sudden, that was a Level up, and this is where I want to start to kind of illustrate this. That was a level up, even though none of us were getting paid properly, even though we're still eating into our savings while we were getting paid because it just wasn't enough to cover the delta, it wasn't zero. We had stemmed the loss of each of us individually so that we could be around longer. Now pause there because at the time that doesn't sound like a luxury, right? And for folks listening, like, OK, well, where's the luxury part? Here's the luxury part. At that stage, we were competing with other companies because remember, Ryan, this is like the fundable days, right? Yeah. We were competing with other companies that didn't have a consistent income. We're competing with other companies that had maybe raised some money and the clock was ticking gun to the head where they didn't know that they were going to be around in 18 months, so they couldn't make the same decisions we do. And and that's the crux of this, OK? And watch how that that played out. Like at the time in the formative stages, a lot of people don't know this. Before startups, we were fundable.com. We were essentially a crowdfunding platform. And how many competitors did we have?
Ryan Rutan: Dozens of dozens. It was gros.
Wil Schroter: At least 30, OK. Early in that cycle in the in the crowdfunding hype, if you will, I call it 2012, we looked at it and said this actually isn't a very sustainable model, like the model of we get paid when people are successful, etc. I was like, it's gonna work for some people, it's gonna work for very few people overall, and it sure as hell isn't going to support 30 different companies trying this. So we moved to the model that essentially became startups.com, which was the Sas model. OK. How many of those companies that we were competing with are still around today?
Ryan Rutan: 3. Yeah, yeah, it's it's a, it's a, it's, it's countable on one hand at this point. Yeah,
Wil Schroter: and of those, they're doing horribly, which isn't my point. My point is that we made a decision to establish a management base early on, and that gave us a very massive leg up from everybody else. What it allowed us to do is take some risks, you know, like building startups.com, that wouldn't pay off for a long time, but we had just enough money coming in in the bank to keep us alive, to be. Around for if that bet paid off.
Ryan Rutan: Yeah, to survive, to survive the the missed bets, right? And that was where everybody else ran afoul. They had taken on cash, they made big bets. The difference was there was nothing to sustain them beyond those bets. If those bets did not work, it was game over. And that's exactly what happened, right? They were, as you said, they were flashing Mario, right? And uh they kicked the wrong to building up
Wil Schroter: an extra life. And so let's stick with that analogy because I think it's beautiful and if you guys love video games as much as we do, you can appreciate it. Flashing Mario means you are on your last life, right? Like this is it. Like you get hit one more time, one more thing goes wrong, game over. OK. The extra life, which is essentially a lot of what we're gonna talk about, you know, the kind of this this risk pool we call it, gives you enough cash, enough time to fight another day. Now, while we, that first milestone, the reason I brought this up, while it felt shitty, if I'm being honest, at the time that we were getting so underpaid for our efforts, etc. If you look back, it's the only reason we're here today, because we look. At our business and, and we did things a lot of other people didn't think about that helped us. We created a professional services arm to help people build like pitch decks and stuff, which wasn't really our business, but it put food on the table so we could be around long enough to go start the
Ryan Rutan: luxury of time, which is perhaps the greatest luxury of all in startup land. Correct. And
Wil Schroter: and for for our business, you know, for the business of startups, being able to have time is directly correlated to being able to take risks because most of us are, are on a timer. We raised money, the money's gonna be out in nature. to 24 months and we're done. The moment you can create some longevity, which is what we did, albeit at a pauper's level, like I want to be clear, like it's not a big number, at a pauper's level, it set us apart and be able to create this financial threshold, however minor, to be able to stay around, gives you the luxury of risk. Now, I'm gonna go the other direction, right? I'm gonna go, what about at the highest levels, the luxury of risk, OK? Google, Microsoft, uh, Oracle, they can. Take bets that no one else can take. Just no one has the money, right? So it goes the other direction too. There was just an announcement that that came this week. We're in the, the first month of 2025, so time stamp this, that there was gonna be this Stargate project, right? It was a big announcement this week and like Oracle was in it and Google was in all these people, and it was gonna be a $500 billion bet. Now that's a bullshit number, it doesn't matter. What does matter is there are like 10 people that can make that bet that bet. So assuming that thing does anything of merit. Only 10 people have put away enough money to make the bet to benefit from it.
Ryan Rutan: It's a, it's a lottery ticket that most people can't afford, right? It's a game, it's a, it's a high stakes poker table you can't sit at.
Wil Schroter: Correct. And so, yes, that's why the rich get richer. But if you dial that down to not being ultra billionaires, it's also why founders who come from nothing, get richer because they can afford to stay around long enough to make it to the next level. What we did at startups.com is, is we put ourselves in a position to be alive longer. Enough, not get paid
Ryan Rutan: crazy. Exactly. And there's another, I think there's another really interesting aspect to this. When you do build that, that buffer, that risk buffer, right? We've got the luxury of knowing that we can survive a hit. It also becomes very apparent how big of a hit we can actually take. It's no longer, you know, because when you raise funds or you've got, you know, you've got, you know, a burn rate in front of you, you're saying I have to make as many bets as I can because one of these has to pay off in order for us to, to get ahead of this or we're gone anyways, right? So it's a Very different mindset and I think that when you're in a position where you're very clear, like our risk buffer is $30,000 or $40,000 you know that you can make a bet up to that amount and still be OK, right? Even if the bet fails, you're still able to move forward. In the, in the case where you're you're venture funded or even just, you know, angel funded, you run into a really different situation where you might be making bets, whether they, they, they have to succeed. There's no version of them failing and you're still moving forward, right? And so I think it puts you in this very different situation where the calculus of what bets you. Make become really different. I think it makes you a, in, in some ways a better decision maker, because you're making it based on a calculation of downside protection rather than optimizing for some upside that is highly, highly speculative.
Wil Schroter: And I also think that when people think about how much money we're talking about, they way overshoot it, which is a huge problem. Let's unpack specifically what the actual costs are, kind of categorically what these costs are, what some of these, these dollar thresholds are, so people can see what we're talking about. So, so what I'd say is, I'd break it. Down, having been through this a gazillion times, there tend to be when people do this math, uh, three major categories that people are concerned about. They're concerned about housing, they're concerned about transportation if that's important, and food, right? And and within food, I'm gonna add like necessary expenses to survive. Now, what's interesting about that is when, when people think about, you know, hey, how much money do I need to have, uh, to be able to take risk, they think about, well, if I had $20 million and that yielded, you know, 9% in the market, then it would allow me to pay this much for life. No, that is not the calculation, right? That is. Not even remote. In fact, the moment you go down the path of how much cash do I need to have stacked away so I don't have to worry about money anymore, you're doing the wrong calculus, right? That is absolutely the wrong thing. What you're saying is, what's the minimum money that I need in order to cover a minimum amount of exposure. So that might look more like what will it cost me if I need to suffer through 3 months of a pivot or of not getting paid, etc. It's the minimum that matters because otherwise you create a number you'll never get to.
Ryan Rutan: Yeah, exactly, right? And then and then you don't feel. Comfortable moving forward either way, you never achieve it, the safety is not there. And again, it makes you make those different sized bets, right? This also helps you keep those bets in line with what you can survive.
Wil Schroter: And, and let's build on that. The number doesn't have to be, here's a number where nothing in my life changes. In fact, I, I still, I would argue that this is absolute bare minimum, right? This is, you're in the fallout shelter, right? Eating 5 year old ramen noodle, right? Like this is not, hey, you know, I'm still driving my BMW to work. Like it's not that. Now, when we're. Talking a moment ago about where we were in the formative stages of startups.com, and we were saying, hey, we're all getting paid very little and having to subsidize that with our own savings. That's what I'm talking about. What we're saying is not nothing will change, and we couldn't have stayed on that path forever, but we could plan against that path. So I'm just, I'm just making numbers up. Let's say that you needed to make $8000 a month and whenever I say that, I always laugh because, you know, we're, I'm in the US Ryan, you're in Guatemala, $8000 a month is is. So different for like from from me to you. So what would that be in not the US?
Ryan Rutan: Oh, it depends. I mean, it entirely depends. There's lifestyles down here that that cost, you know, 2000 to $30,000 a month. There's lifestyles down here that cost people are making it on 700 or $800 a month, kind of depends, right? So yeah, you could do you could do a much deeper ramen budget here if you needed to, right? So get by here looks very, very different.
Wil Schroter: OK, so I'm overselling. I think $8000 is probably too much, but, but, but let's, let's stick with that for a second, right? Let's say that. What you could make in the market. Our audience is mostly founders. These are highly ambitious people. They tend to be able to kind of command those sellers. So let's start there. And Ryan, you and I both need to make $8000 a month and we get the business in MRR monthly recurring revenue, to the point where it's at $4000 a month that each of us can get paid. That is not sustainable. It's not like like, like long term, we can't keep paying our mortgages or or whatever it is that, that, that we need to cover. However, there's something really important when that happens and this is exactly We were at that time. Something important happens. We know that $4000 will keep coming, so we can budget against it. It's
Ryan Rutan: twice as sustainable as $0 coming in. If we have $8000 to cover and we got $4000 coming in, it is quite literally, it's twice as sustainable because at that point, you're, you're dipping into savings half as much as you otherwise would have been. Um, and this is what it like also just like the, the signal of life that it gives that, hey, it is possible, right? You've said this so many times, like 0 is such a specific number that's also really hard to react if we're at $0 we. I don't know how long it might take to get from 0 to $10. If you've gotten to 4000, we can each take home at this point. It tells you something about where we're at, and the likelihood of being able to get to
Wil Schroter: 80. You
Ryan Rutan: know,
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 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. What I'm saying there is when we're thinking about what that minimum number is, like if you and I were sitting down and planning our business and we said, hey, what's our, our minimum number kind of, you know, where we can still continue to take risks, we might have landed on $4000. Uh, and again, right now we're talking about just this example is talking about monthly recurring income, things like that. Uh, this could also just be. amount of cash in the bank. It doesn't have to be recurring income. Just using one example because it's easy to calculate. What we might say is, OK, look, man, all that matters, and this is what I want the founders to hear. All that matters right now is that we get to $4000 each in personal income, however we need to get there, however we need to get there, doesn't matter, right? If that means we also uh are bartenders at night, so be it, so be it, right?
Ryan Rutan: A lot of disappointed drinkers in my neighborhood. Yeah.
Wil Schroter: That's not a happy drinkers of mine. What I would say is establishing that threshold is OK, it's not awesome, not what we're trying to do, it's not the big goal, but it's gonna allow us to take some risk. It's gonna allow us to extend some timelines in in lifespan or blinking Mario, so that we can make a mistake and still be around after it, which is everything. That's the whole point of risk is that you can afford to lose. But
Ryan Rutan: I think it's, it's super important. I think you touched on this earlier, let me say it again. It's super important to calculate this risk pool down to the penny. Yep. And to be real, really realistic about it, right? Like what is the bare minimum, right? Not like, what, what do steak dinners 4 times a week look like? No, not, not for a while. OK, that yes, I know that you like that, but we're not gonna do that for a bit. So it's really important to bring that budget down because the smaller it is, the more likely you are to actually achieve it, right? And again, That the decisions you make to get there will be different, right? That $1500 client per month on the retainer that's, you know, is going to take up some of your time that isn't really part of the core business or the $1500 a month bartending job doesn't feel meaningful if you're setting this like we have to get to $100,000. But if you got to get to 50 or you got to get to 100, that's a meaningful change in that situation. So I think it's really important to calculate this down to the penny, you know, funny enough, we're. We're going through some of this right now at a personal level as we are calculating our personal risk in in moving to Spain, where taxation is going to become a very, very different story. And so all of a sudden you're looking at potentially facing, you know, 50% of your income going away to taxes. And so you go, OK, well, what does minimum viable life look like? And are we willing to make that trade? Are we, can we suffer that? Can, can we actually make it work one with half of our income. And then do we like that trade-off, right? Is that risk worth what we think we gain from being in a place like that? And we're going through that exercise right now, and it is really interesting when you start to look at where spending goes and what you're doing and paring it down to like, what do we actually need? It isn't that much. I mean, as a family of 5, it's not insignificant, right? But it's not hundreds of thousands of dollars a year that are necessary to run the family.
Wil Schroter: My wife and I talk about this all the time. I am militant about costs, right? I'm also our CFO, uh, and we go, we are so militant about every single penny that we spend at Startups.com. I go through the exact same process at home. Every month, at the end of the month, my wife and I sit down, I show her where every penny went exactly, you know, down to like $2 at Dairy Queen, right? Like every single penny
Ryan Rutan: and for $2 at Dairy Queen.
Wil Schroter: Um,
Ryan Rutan: so that's a fraudulent charge I don't know.
Wil Schroter: I know we don't do it because we're trying to be miser. We're, we're doing it because, but here's the, it actually maps back to this exactly. We're doing it because we know the more we can reduce cost, the lower our threshold for being able to take risk. It's kind of just that simple. When, when Ryan, every month you and I look at our, our P&L and our income statement, and we say, hey, what costs could we do without? What what things could we remove? And we take that active step and we always have. We do that because what we're really saying. is what cost could we spend somewhere elsewhere to take a better, more efficient risk? And so it's not like, like we're just trying to like, uh, be miserly, it's we want to take more risk, we want to do more stuff, but in order to do that, we gotta lower that threshold. We gotta lower it over and over. And so when I look at, when I look back personally at how big of a change this kind of the funds made, let's say, or how Much having even just a little bit in the bank changed my life. I want to rewind way back in the, in the time machine, uh, in the DeLorean.
Ryan Rutan: Let's do it. Let's go back because, because man, I, I don't think we can say this enough on this episode.nowing your risk pool, like and what it really looks like isn't just empowering, man. It it's life changing. It it's literally your Freedom fund, right? It's your Freedom fund. So, so dig into the story here, because this, I think this will, this will highlight exactly how different this number. Might be than what people are thinking. So
Wil Schroter: rewind back to what we'll go two quick moments in time. Will at 18 and will at 22.
Ryan Rutan: So when you say rewind, you actually mean rewind. We can't hit the back button. We actually have to hit the rewind button. That's how
Wil Schroter: far back the my, my wife the other day, she was, uh, entering her birthday and you know, you, you got to scroll the year. You still scrolling, aren't you? Still scrolling, huh?
Ryan Rutan: It's painful. I, I, I turn off the friction wheel on my mouse when I do that now.
Wil Schroter: Like, man, that thing goes, anyway, anyway, at at 18, I've got absolutely nothing, right, not a penny to my name. I would say, well, nobody had a penny to their name. It's I'm not gonna get in my backstory, but, but it wasn't great. And so if you could have negative money, negative money. OK, great, great. So I'm starting for for whatever is less than 0, no optionality, meaning I couldn't take a risk to do anything because I couldn't afford to lose again that nothing to lose is is such. It's what people who aren't really poor say. You're on the other side of it, trust me. You got everything to lose. You had nothing but
Ryan Rutan: rock
Wil Schroter: bottom,
Ryan Rutan: there's nowhere to go but up. False. Somebody will hand you a pick and tell you to fucking dig. Yeah,
Wil Schroter: exactly, you always go, it could always get worse, worse. A couple of things happened, where, you know, I'm able to put together a little bit of cash to start my business, you know, start this, this, this agency in um in 1994, and a few years later, the agency starts to like turn a corner, right? And for the first time in my life. I have $20,000 in my bank account. Now, to be fair, having $20,000 when you're 22 years old is a lot now. It was a billion dollars back then, OK? But I want to time stamp this to say, and that would be the last time it ever mattered that I had cash in the bank. OK? I want to time stamp that. I would go on to start 8 more companies, right? Take infinite amount of risk because I funded a lot of those companies myself. Like it wasn't like I was just using other people's money. I risked. Everything I had over and over and over again.
Ryan Rutan: But you risked everything you had, not everything you didn't have, right? Which is the difference, right? You had the risk pool to allow
Wil Schroter: for that. And here, and here's how I calculated it, and I still calculate it to this day. I always calculated it by saying, I'm willing to risk this much, and I'm willing to get hurt this much. I'm willing to risk this much to say that I'm willing to risk $10 but I'm willing to live on only $2 if that's. It took to risk the $10. OK. Now, again, you have to have the $10 to risk, but you also have to have, uh, the ability to operate on $2. So one of the things that I always did and, and, and Ryan, you can appreciate this because you've been through this exercise with me at the business level when we've acquired companies, etc. and we've done a whole podcasts about this. I said, all I care about is the downside. If the upside works, that's never a problem. And they're like, oh my God, what are we gonna do with all this money? Yeah, yeah, yeah.
Ryan Rutan: I need more accounts.
Wil Schroter: Yeah, exactly. It's. When things go go negative. So, so here's what I learned with 200 in the bank. Yes, I put more money in the bank after that, but it never mattered. That was the one that made 80% of the difference for my whole life. Here's why. In my life, there were very few problems that I couldn't solve with that money. OK, now I'm 22, so health issues aren't, you know, an issue yet, right? The other side of it is I kept my expenses crazy low. That year I bought my first house, my mortgage payment, and this is different times, was $1400 a month. My payment, uh, at my campus apartment prior to that was $250 a month, you know, $500 yeah, like relative to $20,000 my and that was by far my highest expense at the time. My expenses were still very low. Could
Ryan Rutan: you could have cruised for a year or more on that.
Wil Schroter: Correct. Now, but here's what I'm saying, in the 20K could have been 10K, but here's what happened. There were lots of moments, lots of them, because I'm an entrepreneur, where shit went sideways, right? Where I had good. Years and then I had negative years where I not only didn't make money, but I lost money, lots of it, right? So you're making those investments and and it all goes away, you lose all of it, right? But never when things went super negative, were they so negative for such a sustained period of time that it ate up all that cash. And I want to talk about time, OK? Yes, I had moments, quarters, you know, uh, half years, maybe a year where things were really shitty, you know, from an income standpoint, etc. I was at a point where my expenses were never that bananas. I, I kept that management base low enough that I knew I could survive long enough. Your 20K or whatever your number is, has to do with when things go terrible, and they will, how much time does it buy you to do something about it? And I want to focus on that now. The mistake people make when they set this number, Ryan, I think is they say, well, hey, if I lose my job, I need enough money to, to live for a year. Let's say I'm just making it up, right? Yeah, you. You do nothing for a year. What were you doing for a year for a year, right? And so I looked at it saying, OK, if my income goes from $100 to $0 and I need at least $30 I'm just making up them, right? Maybe I've got enough to cover $30 for like 6 months to 9 months, which isn't that long in the grand scheme of things, but it also gives me just enough time to make adjustments to lower my expenses, right?
Ryan Rutan: You might go from 30 to 20 to 10.
Wil Schroter: Correct, right? I just need enough time to operate.
Ryan Rutan: Yeah. Things you wouldn't necessarily do now, you wouldn't even consider today because you don't have to. All of a sudden get put on the table in those moments where, you know, you are living out of the risk pool, right? We've all been there where it's like, absolutely, I would never go back to eating ramen again, says person who's now being paid, and will be eating ramen again in 6 weeks when they're not getting paid, right? Like you, you, you do, right? You, you, you can go back.
Wil Schroter: I never needed a fuck you lot of money where I, I never had to worry about money again. Like actually just never come up and not from lack. Of risk. I've done this for 31 years and doing nothing but taking risk.
Ryan Rutan: I think there's a difference between never needing to worry about money again and never needing to make money again, cause I heard you say never worry about money again, but I think you can actually get to a place where you don't have to worry about it, but you still have to keep making it, right? And as long as you do keep making some, then you don't have to worry about it. I think that's exactly what the security pool buys us.
Wil Schroter: The 20K for me was always about, if I get a significant problem, right? And again, those could be anything it could be a health problem. It could be a debt problem, whatever, right? I get sued, who knows, right? Uh, it's just enough that I can operate long enough to do something about it. It's not enough that no one can stop me. I am not invincible, but it gives me one extra life that I didn't have before to be around long enough to see if I can still beat that
Ryan Rutan: boss. It needs, it needs to be the amount of time that's between, hey, there's an iceberg and how long it takes to turn the ship so that we don't hit the iceberg, right? It doesn't need to be longer than that. It needs to be at least that long,
Wil Schroter: right? And again, we've been kind of. Oscillating between personal budget and company budget because I think they both have a very similar parallel, you know, when we were talking about just the minimum MRR. I love for founders after they listen to this episode, go, man, you know, these guys might be right about something like we might be looking at this all wrong. We've been thinking about how do we replace all of our salaries when our next milestone should be, how do we make just enough that we can stay around long enough to make the rest of our salaries because it always takes longer than you think.
Ryan Rutan: Yeah, for sure. No, I think that's the, that's the hallmark of like the most. Successful founders and the most successful startups that I know, they're not the ones that never fail. They're the ones that who can afford to fail and and keep trying, right? We got to come back and do this again and again and again, rebuild that risk pool, then take another bet, rebuild the risk pool, take another bet, keep failing until you don't stay in a position where you can at least keep failing.
Wil Schroter: and let me give an example of that because this is all around the same time. Prior to me having 20K in the bank, maybe even just like the year prior, I'm sitting with all my coworkers, which weren't many, like maybe 6 people. And I'm like, uh, I have to let all of you go, right? I have no money. I and I was always super open about the finances, they knew where we stood. And none of us were getting paid crazy amounts of money because we're all still in college. But I said, look, I've got to let everybody go and I've got to get rid of this office, which is like a big thing at the time. I gotta get rid of this office and I'm gonna move the business back to my campus apartment, right, which I gotta say like wasn't cool, you know, like now there's like, oh yeah, we worked out of our campus apartment or our garage or whatever, yeah, there, there was no like pageantry about working from your, I felt like the biggest. Loser in the world, let's put it that way, right? I get to that point, and here's what happened. We had no money coming in at the time. We had great clients, but just our cash flow sucked, right? And we weren't charging them. At the beginning of that year, I'm essentially broke. I'm working on my apartment and I am, I'm an employee pool of 1, OK? Things aren't going sweet. But here's what happened. Here, here's the game changer, and I want, I want folks to understand this. I was willing to go to zero from like a, uh, an expense standpoint, like my total monthly expenses if you can even. Imagine this, for $550 a month. I mean, this is literally eating ramen but only eating half of it so that you could keep going. Now, but here's the way I saw it, I just needed time. I just needed time to be able to kind of get on top of receivables, to be able to get cash flow going, and we were a services business. So for as long as I was waking up every day, I could output something for someone.
Ryan Rutan: It's again, it's a chance to stay alive at that point. You might have been flashing Mario at that point, but you were still flashing. It, but
Wil Schroter: what I did. To get, you know, my risk pool dollars back which just cut my expenses to zero. Ideally, I would have had $20,000 in the bank, and I could have kept everybody on, and we could have had a slow month, and I could have dug into that, and I could have kept going. But what I'm illustrating is the other answer is reduced to zero, but stay alive. So again, the focus here is actually stay alive. So I stay alive and and Ryan, you know this story, but at the beginning of that year, that's when we were selling websites in exchange for for wings and ribs. Literally, uh, we're trading food for websites and at the end of the year, we had one of the largest agency wins, lopsided wins in history of a quarter billion dollars. Now that never happens, right? When I say that clearly happened, but obviously a lot of things happen along the way. But the, the, the moral of the story is the only reason it happened was because I was alive long enough to see it. Had I shut stuff down like, oh, I guess I can't make my full boat, so I, I'm off to do something else, I would have never seen that. Now there's just as many stories that I can tell you that are mine that are, I held on and it still ended horribly, right? So it, it, it just holding on doesn't guarantee a good outcome. There's a
Ryan Rutan: guarantee here, right? Yeah, there's a guaranteed failure if you're not around.
Wil Schroter: I think a big part of what we're talking about here is recognizing that a risk pool needs to exist. Yeah,
Ryan Rutan: 100%, right?
Wil Schroter: And I think within that, if we think about, uh, if we put full focus with us, our teams, our, our spouses, you know, kind of looking at that, uh, dynamic of life, and we say, hey, I need to figure out. What my minimum viable risk is, right? What's the minimum amount of cash I need to be able to make risks so that I can have one extra life in case anything goes wrong, and I'm gonna do any and everything to get to just that milestone, maybe after that, you know, totally different tactics, strategies, etc. but whatever it takes to get to that minimum risk pool right now is all I'm gonna focus on, and if I can get there, then I can take a big swing.
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.