Ryan Rutan: Welcome back to another episode of the start up therapy podcast. This is Ryan Rin from start ups.com joined as always by my friend, the founder and CEO of start ups.com will schroder will, you know, we talked to lots and lots of start ups at all stages and you know, there's that early stage where we're, we're chasing revenue and we're trying to get those first dollars in or increase revenue. Let's talk a little bit about what, what is good revenue and what's bad revenue.
Wil Schroter: All revenue is good revenue bingo way back in the day. No news is good news, Gary good news. I think that for a lot of founders, they actually believe that like there's bad revenue. And so, so here's what I hear, you know, in some of the founder groups, I remember hearing this recently, hey, you know, I've got this consulting project that I'm doing, but it's not exactly our core focus, right? And they're like, you know, is that bad? Will investors look at it the wrong way? And I'm like, isn't the whole point of doing this? So you don't need investors or, you know, even if you do get them, it's revenue. I think what we talk about today is how incredibly OK. That is. In fact, it's probably preferable.
Ryan Rutan: Yeah, when I hear people say things like we're making money, but it's not our core focus. I'm like, uh hey, hold on right at early stage, start up like I get what they mean, but I also hear what they say, right. So I understand that they're saying like, look, this is a little bit of a divergence from the product that we think we're supposed to be building, but it's somehow related. Not even to your point. Like it kind of doesn't matter. Money in is money in. If you were otherwise gonna go spend that time trying to chase investment dollars, which has no certainty of outcome. Maybe we just go straight at the problem and make some money. Sounds so crazy.
Wil Schroter: Imagine that. And every time I've ever done a start up and I'm sure you're feeling the same way. There was always a different version of what we do that paid the bills so that we could actually do what we do. And I'll give you like, this is kind of a funny example because this is actually how my career started before I started the web design agency back in 94. Before that happened. I was working at a main, so funny, a mainframe sales company. I literally in old movies when you used to see a giant room filled with computers like tape drives and stuff like that. Those were mainframe computers. They were so big that you would need a gymnasium to house them. This is irrelevant to the story. But I just find this absolutely hilarious. Anyway, I sold those big pieces of iron, literally called it big iron back then. And the company I was working for, needed some help with building essentially AC RM. Before people knew what AC RM was. Right. And we're doing everything with paper. I mean, it's gonna go how far back we're talking like all of our files were literally folders of files, you know where that, that whole idea comes from. Anyway. So I told my boss, hey, why don't I build a database which nobody had ever heard of it. So frame computer, why don't I build a database in order to manage all this? Now, when I say that my day job was selling, you know, I was selling mainframe computers, but at night I was gonna learn how to program now that programming in what I was able to do there all of a sudden started to make money for me. And that underwrote me going, hey, maybe there's something to this. I kind of know technology, I kind of know sales, right? And how funny is that I would have never in a million years thought of starting like one of the first web design companies if it had not been for created this consulting side hustle one off thing also important to note while I was a theater major with no interest in business whatsoever.
Ryan Rutan: Look, I acted like I knew what I was doing and it worked right. The only place that helped. Yeah, it's so funny, man. I mean, like so many, so many of these hysterical parallels with the, with our early stories, I had something quite similar on the medical side of things where very similarly all of a sudden medical offices were like, you know what? We have these computer machines sitting around, but we seem to have a lot of paper piling up near them. And so doing the same thing, I was building out databases, did things like connect the building software which they had to the patient record software, which they had to electronic medical record software, which they didn't have. That was the stuff we were, we were manually inputting. And so yeah, it was, it was crazy and kind of same thing, right? Like I made a little bit of money from that and then that sparked the interest in technology. Then that became a thing that I had this core skill set and people sort of knew that. And that was how I, I told the story, I'm sure before, but that was how the agency started when I say I ran into a friend and university. I literally mean, we accidentally made physical contact with each other. And he's like, oh man, hey, you know, computers and I went, yes, vague. But yes, I know computers and I met them all and he's like, awesome. We need to build a website. Can you do that for us? And I went, sure, literally. And you'll, you'll love this. Well, I ran to Microcenter later that afternoon, grabbed an o'reilly's or somebody a book on HTML because I had no idea how to code a website. But I knew the rough basics. It was like, and over the weekend I learned by Thursday deployed the site, got paid a couple 100 bucks and I was like, this is the future. All right. And so my agency started on accident based on somebody's request. But, and that was, this is the way it goes, right? And to the point where they don't always start this way. But I know you and I both spend time advocating for this. I talk to people all the time who are in the early stages of building product. I'm like, hey, let's take a beat and think about how we could deliver this as a service, like quite intentionally. Right. Let's think about how we can turn this into a service so we can start making money later this afternoon instead of Q four and it's Q one and it works out great, right? So many, so many benefits of doing this, not least of which the money, I
Wil Schroter: agree. So what's really interesting to me is again, this concept within start up lore that doing anything that isn't specifically like coding the project or building the core product is some bizarre anomaly that should be avoided. And I'm like, I don't think you understand how this process actually works. And here's what I would say if you rewound back on us, Ryan back into like our earlier days when we were kind of falling into these things.
Ryan Rutan: When will says rewind, he means like hitting the back button. It's a thing that we used to have.
Wil Schroter: But that's the thing man, like you go back and you look at, you know, our earlier times we happened upon that. I wasn't doing customer discovery. I wasn't like, you know, thinking how to raise alternative capital. I was just like, hey, we need AC RM I will build database, right? That was
Ryan Rutan: it. I need lunch. Therefore, I need money.
Wil Schroter: That's exactly it. There was, there's nothing else to it but that base instinct which was opportunity equals money equals good was spot on. And I think we've gotten of new, a bit distorted narrative among start ups. That is I'm just gonna focus on my start up and everything else including how I pay my bills is secondary.
Ryan Rutan: We've decided to focus on user emotional product outcome fit. Yeah.
Wil Schroter: OK. I don't get it. So I think what we talk about first, let's talk about the fact that we have to talk about this blows my mind, but let's talk about this that timeline in your, your horizon for how long you're gonna be alive is all that
Ryan Rutan: matters directly correlated to the amount of cash you have or your ability to just support your basic costs. And I mean, your basic cost as the founder, we talked about this before. Well, you said it beautifully. Companies don't run out of money. Founders run out of money start ups, don't run out of money. Founders run out of money at the minute. You don't have cash to pay your bills, let alone the company's bills or feed yourself game over, right? We don't get to continue to go, we go directly to jail, not actual jail, just founder
Wil Schroter: jail. I think we have to look at the start up. Not as this like fake set of rules where it's like as if nothing exists and we just get to do what we want and when I see people provide this advice a lot of times and, and I don't fault them for it. I understand that it's coming from a good place. It'll come from like VC types that are like, hey, if you're not fully focused on this one product, you know, you're not focused and it's like, hey, cool, I also have to eat, bro. Yeah,
Ryan Rutan: if you're hearing that from somebody at that early stage where you haven't yet hit any kind of road anything, you're probably talking to the wrong damn people anyway. It's like, what are you doing chasing DC at that point, it was like, I have this idea go away
Wil Schroter: the amount of not broken but almost like clueless advice that are given to founders. And when I say clues they can buy super smart people, right? I'm not even gonna like K a straw man argument, super smart people that like you should only be focused on building your product at the expense of everything. And I'm like, yeah, sure if you just got a giant VC check maybe and even then maybe not, right, maybe, but for 99% of the rest of the world, guess what? Crazy they gotta pay their bills, right? And all that matters in whether you're funded or not is your runway? Runway equals how long do I have before I run out of cash? And as you said, it, the first step is how long till my start up runs out of cash. The second step is when I run out of cash and usually those two things kind of go hand in hand. You know, there's
Ryan Rutan: usually not a long gap. I'm like, ok, great start ups out of money. I have got a year to go. Never.
Wil Schroter: Yeah. Right. Right. And so initially the first thing, all that should matter like the Mazos hierarchy of needs here is runway. How long can I survive? And I just wanna like distill what I mean by survival. I'm not even talking about making payroll. Right. Ideally. Yes. Right. I'm talking, I cannot afford any more beef, a roni to live on like that at that
Ryan Rutan: level. Right. My Mongo DB hasn't been paid in months. Right. Like I'm not eating.
Wil Schroter: Yeah. Yeah. And so initially as founders, we should be most focused. I'm simply saying, hey, how long can I survive in anything I can do anything I can do to extend my length of survival. The converse which we talk about all the time. Ryan is anything I do to like, burn through things faster or don't generate revenue, shortens my runway and air goal. My lifespan. Look,
Ryan Rutan: I wanna tie this back to something that you. It was a question that you hypothetically posed at the early part of the episode, which was what will investors think about this? Right? Here's what smart investors think about this. If you can see a company that has figured out how to extend its runway off into infinity because they figured out how to make cash and now they want to raise more money to augment the product or add capacity or do something else. It's great investment, right? You and I both stroke checks like this is exactly the kind of thing I look for. I don't wanna think if I give these guys money when my money turns out so does the party, right? This is the, it's not, it doesn't feel good at all. And so I don't think that these things are counter to funding at all. Now, does this fit in the VC SPACES is how they look at it? Do they want you going back to a service based model? Hell no. Right. But as we talk about all the time, that's a very specific tool for a very specific purpose and with kind of one outcome, well, sale or, or public right, or failure, which is most of them. Sadly, so I think that it's really important to remember this. Like this isn't an impediment to raising funding. It should help the case if you're talking to the right people, this should actually help the case for early stage funding. Here's
Wil Schroter: a typical scenario that, that you and I hear all the time and I want our audience to hear it so they understand exactly what we're talking about. Founder comes to us and says, hey, we've got an opportunity to consult with the client around the kind of stuff that we do. So, so imagine the product is one thing and I'm not pretending that all start ups are only product based companies. But for the purpose of illustration, let's assume this one is, let's say it's got a software product again, just keep it simple. They're working really hard on the product. They're spending nights and weekends, you know, building that product in the interim, there's a client that says I have a similar need to this. Can I pay you on a consulting basis to do an implementation or something like that. And the founders are going ok. Well, it's not really what we do. The idea is that you'll buy the product. Right. Not that you'll hire us personally for consulting. That's what we were doing in our old jobs. That feels like a step backward. I'm like, no, not at all. Are
Ryan Rutan: you kidding? That's one way to build up the actual product. Right. Exactly. Exactly. So, yeah, it's so many other things. We'll get to this later in the episode.
Wil Schroter: So you'll get to you when I'm calling broken advice. And again, I want to put that in the right place. You'll get to this broken advice which says, well, no, now you're taking focus away from the product. Of course, you are.
Ryan Rutan: Look, when, whenever I hear this one, man, I cannot help it, I just like my blood pressure goes to 300 it's a distraction. You know, what's a bigger distraction winding down your company? Right? Because you have no money. There's so if we talk, I wanna talk about distractions, like I can think of a few that are significantly bigger than going and making money from something that isn't coding your product or whatever it is you think is the thing you're trying to get to. And I was talking like, you know, like, think of your product, think of whatever this, this future state that's gonna take time that we don't want to distract ourselves from. Think of that as the dream house until that thing is ready. How about we pitch a tent and hunt and camp on the land so that we can actually survive long enough to enjoy the dream house. Right? Like to me and I think to you, because I guess maybe the way we came up, it just makes sense. But now to your point, there's so much advice out there to the contrary. And sadly, largely from people who have one experience having done it that way or in a lot of cases, absolutely zero experience having done it that way. Like how many times have you heard advice and then ask somebody. So how did that work for you? And they're like, oh, well, if you know, uh so uh I didn't actually do that, but right there, there's so much of this out there. So just be careful founders, please. Well,
Wil Schroter: OK, so I keep picturing this visualization, Ryan of, you know, when you get on a flight and they say in case of an emergency, secure your mask before you know, helping your child, right? And that's exactly what we're talking about. Like literally keep your lifeline around so you can save, what is the product in this case, save yourself, so you can save the product. And that's why it's so important. Now, if you just raised $10 million ignore what we just said for a minute or a minute, a
Ryan Rutan: minute. You're good
Wil Schroter: that money was there so that you can focus on the product. Awesome. Congrats for the other 99% of people out there. You don't have that luxury. So that consulting, while here here's what happens. Consulting is eating up 80% of our time. Right. You know, again, it's, it's preventing us, we're, we're doing consulting so we're not building the product. It's slowing everything down. It's making it harder for us to compete All these things. You said it a moment ago. It also slows you down, out of money.
Ryan Rutan: Yeah. Right out of money. Yeah, it may be taking up 80% of your time now, but it's creating 100% of your future runway, right? I want you to think of it that way like this is what matters, right? Cool. I only have 20% of my time to spend on my product. 20% is an infinitely higher number, incalculably higher number than 0% of your time, right? Because the minute you can't do the work anymore at all. Hey, and, and we hear so many lame arguments for this like, wow, co competitors are gonna beat us to the market or like, you know, I only have a, I've given myself a year to do this. OK. Cool. Father time. Like when have you become the arbiter of like how long a start up should take? And why did you put an arbitrary time frame on it? Why did you put that pressure on it. There's so many of these like, really lame arguments that we hear around why people think they need to do this. And largely they weren't created themselves. Somebody else told them, they heard it somewhere, they read it somewhere, they saw it somewhere, you know, it was in a movie, it wasn't whatever. And it's just, it's not the reality guys.
Wil Schroter: I think we need to focus a little bit more again on the importance of runway because what people don't realize you just talked about this. You said that, you know, it's all about giving myself a year and getting it done quickly. That's actually not what it's about. It's totally counterintuitive to what people think. And unless you've built start-ups before you often don't realize this. Here's what I mean, start ups and not just start ups. The business of building businesses is a game of attrition. It's not about how fast you grow. It's great if you grow fast. That's cool. It's about whether you can stand to be around long enough to be successful at all. Right? And those timelines are way longer than what people think if they're like, oh, we wanna get this in three years, dude. I kind of don't care who you are. There are so few instances where people can build anything of merit in three years and you'll get all these people talking about. Well, here's an example of, of this venture funded start up that did this. That's yes, there are outside cases. Right. Here's another outside case. There are people that can run a four second or four minute mile. Can you? Yes, it can be done. But you're not gonna do
Ryan Rutan: it. I'm giving myself a year to achieve that. Will I Yeah.
Wil Schroter: Yeah. Exactly. Right. Like, yes, it can be done and you won't do it. Right. I wanna make sure we separate those two things. What matters most, what we should be thinking as founders, like our core directive should be survive, be around long enough to build the thing we're trying to build and guess what our best years might be five years from now in heretical to think. Right. But true. Ok. So like at start ups.com, we are in year 12 right now. Right? And our best years might be five years from now, right? I mean, kind of hopefully in some ways. Right. Like when you look at it but I think when people think, oh, I can only focus on the product, which is cool. I get, I get the spirit of it, but the reality of it, the importance of it is. Yes. But is it coming at the expense of longevity almost
Ryan Rutan: always? Right. Right. But part of it goes back to like it's built on a false set of conditions. I think people enter into this with some of the wrong assumptions like, ok, I know I have to quit my job to build my start up. Not actually true. Right. Not, not true at all. It'd be nice. I won't be able to pay myself until the product's done and we're making money from that. Ok. True. You probably can't pay yourself early on. But I think that people set these arbitrary timelines based on things like that. Well, I can only afford to go without a salary for a year, so I need to focus on the product so that we can get this thing in position at to your point. Like that may not actually happen for three years. Here's one curveball for you start making money from the beginning using some kind of service, some kind of side hustle some kind of consulting. Ideally, the more connected it is to your actual product the better because then you start to take away learnings that you can actually use to improve that product. But then you also don't have to go without a salary for a year, right? You can start paying yourself off of the service revenue. I think this is the other thing that people think it's like, ah, you know, I have to get to this certain arbitrary point because I've set these arbitrary limitations around what I can or can't do. And if you just open that back up, think more flexibly and like, OK, if we start generating cash, we can start generating salary, uh we can buy ourselves more time that year. Now becomes two becomes three, becomes four. Which as we've said, 100 times in the podcast, these things take a lot of time. It's not a sprint. They can be, you can sprint and then the race is over. It's not what you
Wil Schroter: want, you know, something that's really funny about everything we talk about here is that none of it is new. Everything you're dealing with right now has been done 1000 times before you, which means the answer already exists. You may just not know it, but that's ok. That's kind of what we're here to do. We talk about this stuff on the show, but we actually solve these problems all day long at groups dot start ups.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. Ok? Let's shift gears. Let's talk about the fact that we all get survival. Let's talk about the fact that in that time, the things that we do, how we engage with customers, et cetera. And I kind of talked about this a moment ago when we were talking about how we started our web design businesses is also what I consider to be paid product development, ok? And paid product discovery. So an example, right, if you and I rewind back to the kind of almost pre start ups.com when we launched fundable.com, our fundraising platform for start ups and we're trying to get people onto the platform. And the challenge was we needed people to have like their pitch deck docs together and financials together and everything in order to be able to, to prepare their race and nobody had them, which was kind of a nonstarter for us because we're like, ok, great. You know, you wanna raise in the platform and you're not prepared for anything. Yeah,
Ryan Rutan: it was if we had built the gym and then we invited in a bunch of people who'd never worked out before. They had no idea what to me, my first day in the gym, like, do I hold this over my head? I, I don't know what to do with.
Wil Schroter: Yeah, exactly. Exactly. But it's so heavy. What am I supposed to do with it? And so anyway, so we, we spun up essentially a consulting division which was not what we set out to build, right? We set up a consulting division to be able to build pitch decks to help people understand the fundraising process, et cetera. In that process, we also started to generate more revenue from that than from the actual platform, which wasn't the intent. However, every single time we signed on one of those clients and we're doing, you know, one on one integration with what they were trying to do with our platform, et cetera. We learned a lot, we learned that. Guess what? Understand, I don't understand customer acquisition. I don't understand my MVP product development and we start scratching our heads going, you know, the problem we're solving this whole funding thing is like 1% of the problem. And that became the discovery the Genesis for what became start-ups.com, which was a platform to help people with all parts of their start up, right? Every facet. But that came from the services business that was supposed to be like a moment in time for the product. The reason it happened is because the services allowed us to do paid product development. We've
Ryan Rutan: told this story a couple of times. There's a cautionary tale in here as well. We at the time had a bunch of competitors in that crowdfunding space that fundable was participating right now. Imagine had we not taken that service approach? If we just stayed, heads down building product, not taken away all those customer learnings, run all of the other places that we could help founders out. We would have ended up doing what 95% of our competitors at the time did, which was build a great crowdfunding platform for a crowdfunding environment that never really existed in the way that anybody thought it would. So they all built great product, you know, just like we did. Luckily for us, we built lots of other product based on that early discovery from running the service side of things. That's why we're still around. One of the reasons we're still around. And while most of them are not because we were able to take those learnings and apply them and expand the thinking around what we're doing instead of just being myopically focused on sprinting towards an arbitrary point in our product.
Wil Schroter: I think there's another thing that, that we did well, either intentionally or not, we didn't get so married to the idea that what we were building had to be the only thing that we could build
Ryan Rutan: or do kind of the opposite. Honestly,
Wil Schroter: we looked at it as a stake in the sand to say, hey, here's where we're gonna start. We'll see where it goes. And by the way, like we followed that methodology very well ever since, you know, we've always said, hey, let's, let's try to get something out there, let's learn from it and let's, let's see if there's anything worth building a product for. We've never regretted doing that. We've never regretted saying, hey, let's, let's check it out. Sometimes you just have to commit and go. Right. I get that. But if what you're doing, let's say in a services capacity is allowing you to service clients and learn more about them. You're getting paid to do product development. That is a win. It should be embraced, you know, not
Ryan Rutan: question, it should be uh enforced. In my opinion. I often, I often joke about, you know, Ryan's four pieces of product three that you want and one that you don't, if you're building product and you haven't run this as a service, then you're, you're sort of guessing if you run things as a service as a consultancy, you end up with what I call a proven proprietary process, right? Something that we do that we made up, that we know works. Right. That's amazing. Those are the three PS you want. If you don't have those three PS, you end up building some product and then typically you end up pivoting at the fourth p that I don't want to hear about, right. That just means you built the wrong shit first guys. It's not fun. It's not cool.
Wil Schroter: I think from a standpoint of saying, hey, how can we get paid to learn? Right? Look at it totally differently. Instead of saying like, how is this a distraction? What can we do now to generate cash, which is all that matters, right? To generate cash, but also to get right in front of our customers right now in the past when I've built other businesses, totally different businesses, totally different markets. I've always just tried to get in front of the customer early now, one of the way and we talked about this in one go and podcast. One of the ways that I did it early on was Manning customer service so that I could listen to every single person that came in the door. It's just the same version of listening to the customers and talking to them. But if if we did it in a way where we're creating a service that engages more customers, allows us to learn more directly. That's awesome. Yeah, exactly. If we can get paid for it. Oh, my God. Yeah. Extra bonus. Right.
Ryan Rutan: That's it. That's it. I think if you start with this in mind, this is why I'm, I'm having some of these conversations with people at that really early stage. They're, they're trying to figure out how to go from idea to some kind of an MVP to something bright. And I'm often the same like, look, look at a service proxy, look at something that is related either tangentially or directly. But it doesn't require a massive build out to get to the point where you actually start providing value for your users. Because once you start providing value, they can start providing you value in the form of cash, which is great value, right? Ultimately, we gotta find out people want that anyways. It's, it's so funny. I, I just wrote a post about this a few weeks ago on, on linkedin around mvps. And the fact that most people don't build an MVP, an MVP isn't really a thing. It's a process, it's a process of validation. And one of the things that irks me to no end is that people forget to validate the value they provide to people. This is why we don't get product market fit. If you provide value, you have product market fit. If you convince people to sign up for your newsletter or enter your, your funnel, do all these other things that people uses traction, maybe even pay you. But you forget to see. Did they actually get value at the end? You haven't validated the most important parts of this. You validated a marketing trap and little else, right? And this is where then we go wrong like, oh, well, you know, we had good early traction but now we're looking to find product market fit. No, you didn't and no, you aren't back it up and do something early on. Like you said, get in customer service, it be on the ground level. And I, I would argue there's no better way of doing this in the service because there is no abstraction between you and your customer in terms of how they use it where they get stuck when they smile, when they frown, how they benefit from engaging with you. And this drives an enormous amount of this free or paid product knowledge that we're getting as opposed to just having to look at behavioral analytics later and figure out where we fucked up product
Wil Schroter: wise. OK? So let's go totally other end of the spectrum. Let's talk about why it's still OK? If you're getting paid to do nothing to do with the product. Yes. Right.
Ryan Rutan: We're talking bartender Uber, whatever, right?
Wil Schroter: Doesn't matter. It does not matter. Right? A lot of times when, when I hear people say, hey, I'm raising cash and they say, well, if raise cash, how can I build a business? And I'm like, do you understand that like 90% of businesses get started without people raising cash? Now, I understand. It feels like a black box. It feels like, well, I know that I need money to hire people or to buy stuff to get started. So how could I possibly start with nothing? And if there's an absolute answer is you can't start with nothing, but you can start with the effort to create something. And that's the part that people miss again because nobody really explains this stuff. That's what we're here for. Nobody says, hey, guess what, sometimes what that involves is doing something now, that's an interim step to making money to do what you wanna do later. Right? Again, to be fair. It often doesn't come up and here's how that works. All that matters is cash is coming in doesn't matter how you're getting it. If cash is coming in, you will survive long enough to do something else. For example, you mentioned the bartending gig. There are no lack of start ups that were funded from bartending gigs that ended at three or four in the morning just to be clear and no one wants to talk about it. Right? No one wants to talk about it. Everyone wants to be able to say, oh, no, you know, I, I wouldn't do that. I'm too busy doing bullshit. If that's what it takes, Ryan, I'm gonna take you back to the Brian Chesky story, right? That not everybody's heard. So, so I'm gonna regale the audience with 30 seconds of Brian Chesky, who was the uh co-founder of Air BNB. And we have this beautiful interview on Start ups.com uh Google Start ups.com Air BNB. Brian Chesky, something like that. And you'll find him telling the story. One of the best interview interviews I've ever seen that said in the early early days. Uh They had nothing right, typical start up story, so nothing unique there. But Brian had this idea along with his co-founder that during the Obama administration election that he and his business partner were going to print up, they were essentially like Captain Crunch and Cheerios with Obama's face on him. Obama's were Obama s and then I just blanked on who's his competitor in the election would have Captain Crunch. Uh But come back to me in a second politics.
Ryan Rutan: Not our thing. Apparently
Wil Schroter: $2 for politics. Wow, we lose big anyway. So he went out to the conventions to the Republican convention in, in the democratic convention and sold those right now. Just so you get a baseline here, dude was selling boxes at a Republican convention to make money for what would become one of the biggest fastest growing start ups in history. Your bartending job is just fine.
Ryan Rutan: Yeah, exactly. You'll, you'll be
Wil Schroter: ok. You're good. Right. But by a funny side note, he said, the Obama always sold really well and it's killing me what the Captain Crunch was. He's like, because we didn't sell any of those. I had like thousands of boxes of that Captain Crunch knockoff sitting in my apartment and that's all I ate for money. Oh, it's hysterical. So, anyway, my point is it's ok if, what you're doing, dude, if you're selling cereal at a political convention, it sounds so weird to say it. Except that actually happened if you're selling cereal at a cereal convention and that's how you're keeping yourself fed in this case quite, in this case, quite literally fine. Right? That's how he survived long enough to build freaking air BNB. Yeah.
Ryan Rutan: So you can bartend, you can Uber, you can do whatever you want. It doesn't matter. It really doesn't. And you said it before, like you're spending 80% of your time doing something other than your start up. You still have 20% of your time to work on your start up. Right. That's more than zero. Ideally, of course, as we said, a minute ago, you're doing something that's related ideally, but that's not always possible. You may not be in a position yet where you have enough Moxie in your space to be able to charge people your expertise. That's ok. Right. But recognize that and understand that that's going to directly and dramatically increase your time to making cash from that thing. Right. And it was Senator John mccain mccain, Captain mccain. It all of a sudden it just popped in like the minute I stopped trying to remember who the hell it was. All I could come up with was Romney. And I was like, no, that was the, that was the 2012, not the 2008. I was living in Cyprus at the time. so I didn't get to eat Obama Os or mccain Crunch. But uh yeah, the the point here is the source of the cash doesn't matter, the cash matters, right? Ideally, it's aligned. I wanna hit another point because I, you know, you and I suggest these kind of things to founders all the time. Like, well, hey, what if you just had everybody's favorite investor job? And the normal pushback is like, look, man, I was barely making it before with my job. When that was my only focus, I have no extra money, no extra time to build a start up company. Then I want you to think about that for a minute and think is this the time to be building a start up company? Right? Maybe there's some things in my house that need to be put in order before this makes sense at any level, right? Because if it wasn't working before and now you're gonna quit all of that and assume that you're gonna go raise funds and that's somehow gonna make life work while start up works. Doesn't end well.
Wil Schroter: Yeah. Or pick a battle. It could be one or the other. Either don't have time or don't have money. Right. You're going to run out of one. Right. Choose which one you wanna fight, right. And if you want to balance a little, you know, move to part time, take less work. So you have some cash coming in. Always a good idea by the way, but you don't get to have it all. I mean, it'd be cool if you could. And then people will say, well, if I raise money, I won't have to worry about it. Bullshit. Try raising money and not worrying about it. That's not the way it works. You raise a bunch of cash for the right reasons, by the way, you raise a bunch of cash and that money runs out. Yes.
Ryan Rutan: Has a finite lifespan.
Wil Schroter: It's just the same problem, delayed and now you create a whole bunch of other new problems that come
Ryan Rutan: with it. You've accelerated your spending now because in the beginning, let's just say we go the other route, right? We have that service based offering something consulting we're doing where we have that kind of minimum viable cash flow where we can just keep this thing going forever. Even that starts to change, you take on funding all of a sudden your spending is gonna go up now you could fall back to that level, that can be quite difficult, but you can, right? But if you just go raise funds and there was never any cash flow there. When that money runs out, that money runs out. At that point, you're waving the white
Wil Schroter: flag right. Here's the thing, like I said, you're gonna pick one or the other, you're gonna be a time or money, right? Ideally, you kind of balance both. But what I don't want to hear from start ups is any shame in generating cash however you need to get it right? I think this is, you know, we talk about this all the time, kind of this broken start up narrative that has evolved over time. And what ends up happening with these narratives is they're, they're developed around people who have done very well at the expense of everyone else. And again, in that chest interview, you know, for Air BNB, what he did so well was to say, look, yeah, you see Air BNB. Now let me tell you how, what I had to do to
Ryan Rutan: get here. Do you wanna know why I came up with a couch surfing product? Yeah, solving a personal problem, right? And then I was selling cereal so I could couch
Wil Schroter: surf. It was bananas. Now again, most start ups have that rags to riches story, right? I get that. But that's sort of the point they all did what they had to, they could do what they wanted to do, right? And it's all about paying, you know, paying those dues and part of the paying those dues is doing shit you don't wanna do, right? I'm, I'm sorry to say it, but that's part of the process, right? You talk to any founder that's done something amazing. They will tell you where they, they eat shit for a very long time to get there right behind.
Ryan Rutan: Every great achievement. I don't care whether you're talking a gold medal, uh an NFL ring, a start up, whatever it is, there's a lot of shit show and shit eating at the beginning stages, right? You don't just show up one day and you're like, hey, I'm the four minute miler. That's what my parents have called me since I was a kid, right? I haven't tried it yet, but apparently I am right. There's a whole shitload of work and sacrifice that goes into these things and look, we're not trying to make this worse than it is. We're just trying to make sure that you're aware of exactly what it is, right? Like somebody said it that every overnight success I know was 10 years in the making and it's very the case, right? Lots of time, lots of effort, sacrifice and lots of things that don't necessarily look like they would add up to, right? If we told you, hey, we know this guy who's currently um occupying a couch at his parents' house, he's also working on a cereal product, right? You wouldn't also be like uh probably building a start up to solve a dormant asset challenge, right? Called airbnb
Wil Schroter: tens of billions of dollars, right?
Ryan Rutan: You, you just don't piece in the other when you look back at almost every back story, 50% of it, 75% of it doesn't make any sense in terms of the narrative towards where it ends up. And that is just the nature of how these things are built.
Wil Schroter: It's definitely not linear whatsoever. And there's here, here's what I will say though. Here is the consistent part. It has nothing to do with whether or not he sold frigging cereal. Yeah, it doesn't, it has to do with the fact that he was willing to. That's the common thread that people don't get right. It's that I was willing to do whatever it, whatever it took to keep this thing moving forward.
Ryan Rutan: I had a poll queued up man for our free funding 101 workshop that we did last week. I had a poll queued up. That was kind of a trick question. And that the question was, what are you willing to do to move your start up forward? And one of the answers was essentially anything, right? And that was the only correct answer in my mind, right? Because if you're not willing to do anything to move your, your start up forward, chances are at some point it's gonna fail. You might as well stop now if you're like, well, I'm willing to risk this much of my savings. I'm willing to put in this much time. If you're gonna put arbitrary caps on it and put limitations on what you are and aren't willing to do, you're gonna run into trouble. Right. At some point it's gonna catch up with you also.
Wil Schroter: You're competing against people who are not willing to sacrifice. Right.
Ryan Rutan: Somebody will always be in the gym earlier than you later than you. Whatever it is right there, there will be those people.
Wil Schroter: Yeah, that's me. I'm willing to work harder than anyone that doesn't mean I'm gonna be successful. But dude, if I had to face off against me, right. The one thing I would be terrified about is how that he doesn't sleep, like how he's just like, like in, I might make bad decisions. You may build the wrong product to all these things. But that's the part that scares me the most is someone that's willing to just run through walls as
Ryan Rutan: a competitor. Any advantage that you can find. I don't care which one it is, right? You, you might be way smarter, you might have more money, you might have more time, you might have more whatever, right? You'd be willing to work hard, you're willing to do things that other people aren't. You have some special skill, whatever it is is you have to take advantage of them. I've said this before on the podcast. But to me, you know, building a start up is a process of turning variables into constant if you can turn that variable. Like, I don't know what all my other competition is doing. I don't know all the things I don't know that are gonna stop me from building the start up. But I do know that I'm willing to do anything or I do know that I'm willing to get up early. I'm willing to stay up late. I'm willing to put in the hours. I'm willing to risk whatever I have to do this, you've eliminated that variable at least, right? And, and there's a ton of them. But I think if you can pick whatever your variables that you can eliminate, you must, you have to, if you don't, they'll eliminate you, right? Look,
Wil Schroter: as far as we're concerned when we think about building a start up, all that matters is money, right? I'm gonna hold it. The Wu Tang uh uh quote cash rules, everything around me. That is literally the rallying cry, right? And if you're not focused on revenue, if you're not focused on, on creating longevity, then the rest of the stuff doesn't matter. You don't get to make those other decisions until you make the cash decision first. So in addition to all the stuff related to founder groups, you've also got full access to everything on start ups.com that includes all of our education tracks which will be funding customer acquisition, even how to manage your monthly finances. They're so, so much stuff in there. All of our software including BIZ plan for putting together detailed business plans and financials launch rock for attracting early customers and of course, fundable for attracting investment capital. When you log into the start ups.com site, you'll find all of these resources available.