Ryan Rutan: Welcome back to another episode of the startup therapy podcast. This is Ryan Rutan joined as ever by my partner and Ceo of startups dot com Wil Schroder will today. We're going to dig into a topic that a lot of people have faced and probably even more people wonder about. And that's does bringing on investor mean that I'm hiring my own boss?

Wil Schroter: It does. I mean, you know, I don't think I understood this the first time that I took out an investor, if you've never done this before, here's how I think you look at this challenge, I guess right here, here's how I think you overlook it. It's probably best better way to say it. I think the first thing that, that folks do is they get so excited that they want and need cash, right? So they're not really thinking about what happens after that other than I don't have cash now and I'm about to have cash. So they're, they're thinking all positive. The second thing that I think is a bit of a misnomer and it's, it's hit or miss is I'm going to get all of this extra experience and guidance and connections, you know, with these new investors that's gonna help grow the business and if I'm young and I've never done this before, which is the case for a lot of people raising capital, that sounds fantastic, you know, right? I'm sure you're probably the same, but I was early on like the more help you could get from people that sounded like they knew what they were talking about sounded like a positive.

Ryan Rutan: Oh yeah and let's keep in mind that knowing what they were talking about was very relative to what I knew at the time, which was not much

Wil Schroter: Exactly right. And so uh so again, so on on its face it sounds awesome, you know, all positives, money, I didn't have guidance, I didn't have connections, I didn't have all positive. Uh and and then there's there's a certain amount of validation, you know, that that comes with it that folks feel here's the part we don't talk about. And this is kind of gonna be the impetus for this entire episode, which is what happens once we close that deal. Are we still running the company? Because you know, it sounds like we are we only gave up 20% or whatever. We gave up. So we have the majority of the company um were the ceo so or you know, executive or whatever it is and so we get to make all the decisions. Uh sounds like we're our own boss Until you test that theory. It's kind of the way I feel with my kids. My kids feel like they have a tremendous amount of autonomy and and for the most part they do until they have to push it until it's like I want to stay up past 10:00, you know bedtime and I'm like this is where your authority comes to a screeching halt. And I think that's I think what we should do is we should kind of just unpack, um, what are all the places during this journey where it comes to a screeching halt when, when you go to say, but I want to do this. And the answer is, you can't do this because truly someone else is actually running this company.

Ryan Rutan: Yeah. Well, absolutely. And you know, I think that the, the golden rule is always in effect, right? And that's that, you know, she with the gold rules. Um, never is that probably more true than than when you take on investment capital? Uh, simply because of the fact that, you know, the in a lot of cases, you are dealing with people who maybe do have more experience than you do, or at least believe that they do. You may not 100% relevant to the company, but they're definitely prone to injecting opinions. Um, and, and wanting to make sure that, you know, you're shepherding their investment in the way that they want.

Wil Schroter: Yeah. And look, I mean, I get it. Um, but I don't think again, I don't think the founders get it. So let's just say early in the process. Um, day one, we've signed all the docks. We've ignored a lot of those terms that are lawyer probably said you should pay attention to some of those things, but, you know, we're trying to get this company going. We just need to get the money in the bank. And we sort of ignored those things for a minute. It happens to everybody.

Ryan Rutan: Well, of course you did, because when you talk to the investor, they explained to you that they're very hands off. Right,

Wil Schroter: right. Oh, yeah, yeah. And and and you know, we won't need to do this, this is in case of an absolute emergency, so on and so forth. And and that's sort of true. But what we'll kind of get to here is the absolute emergencies are actually the things that that kind of changed things. Um, before we even look at it, how much, you know, capital plays a part in, in the cash in the bank and who controls it plays a part. It's also important to note that when we take this money, we're also taking it with a very specific set of conditions. You know, investors are here to make a return, they're not here to invest in a lifestyle business where we grow the business to five million. And we start to take some, you know, some fat salaries out of it and, and live for the rest of our lives like that. They have a very specific agenda. And if you're talking about more professional investors like venture capitalist, etcetera, they have a hard coded agenda that they need to return all of that capital and a lot more Within 7-10 years in most cases, even less. And so just bear in mind that the moment we take on that cash, we instantly have to be, be under the assumption that this thing is going to have to achieve some sort of liquidity. And the reason I say that is because those conditions and those requirements are about to drive everything in ways that were so unaware of right now. Right now, we're thinking, oh, well, growing the business sounds awesomely, Why wouldn't I want to do that? Let me put it this way. There's a million different ways to grow a business. We're going to be limited to very few and and those, the delta and those decisions and those options is going to become increasingly apparent as we grow the business. We'll get into more of this. But I just want to kind of like, you know, a little preview of this. Um our boss and our bosses needs are going to become very apparent as the business evolves and as the funding evolves. But at its core where this all starts is they may have wired the money into our account, it may have transferred from their account to ours. But the conditions of that money, we're all set up in the operating agreement that we signed and prior to that, the term sheet that we signed to suggest when those decisions are going to be made, exactly how they can be made. And to be fair, right? Most of the time you make tons of decisions that no one cares about, right, You know, you make a marketing decision to hire, decision whatever nobody cares. People start caring when ships goes sideways, right? And that's when that's when having a boss matters. If you look, if all you did was create a company that was a rocket ship growth, probably no one would bother you. Yeah, except it doesn't work that way, like at all.

Ryan Rutan: And, and it's it's an incredibly important point because what you're talking about is the your decision making isn't impacted 99% of the time, let's say maybe 95% of the time, but it is impacted in those moments where decision making is most critical, right? When you're making day to day, you know, fairly mundane decisions about what to do with the business, marketing decisions, hiring decisions. Um you know, other things that are, are less critical and in times where, you know, things aren't moving sideways or down, it doesn't matter as much right? But then when you get into these, you know, the time at which you are going to find yourself having a boss is the time where you would also typically appreciate your autonomy the most. And so it's correct to sort of double whammy of, right? Not only do I have to answer to somebody else now, I have to answer them at the moment where I would least like to, and I think that's something that people don't anticipate. Um and they also get lulled to sleep, right, you you can forget about this because you may take on the money and you know, maybe you go, you know, 16, 18 months. Um, and everything is copasetic and you're very used to not having them sitting on your shoulder, shouting in your ear. And then all of a sudden things do change and they come back in a very, very, very different way. That can be extremely unnerving and unsettling for founders as it should be. Right?

Wil Schroter: Absolutely. And let's talk about some of the inflection points that as a founder, you are invariably going to hit that inherently have friction and inherently this is where it's going to start to come up and, and this is where when, you know, folks like us who have done this many times before, you know, we'll talk about this later, but we opted not to raise capital because we don't want to go through this again. Right?

Ryan Rutan: And so they have done that not going back unless we absolutely have to.

Wil Schroter: Absolutely. And, and frankly we have the not bad experiences. It wasn't like, you know, like, oh my God, this was so horrible. It's just one of those things were like, you know what, if we could build something without having that component again, even

Ryan Rutan: better.

Wil Schroter: Ah, So here, here were the inflection points and if you've just raised capital, please listen closely on this one. Here's what almost 99% of the time will happen, you're going to run out of money, right? There is why? And this goes back to what we started with the VC or the investor that you're working with. They need to see growth growth cells. Companies don't sell that are, that are, that are generating any revenue relatively speaking. Um, or generating any growth, even if you're not generating revenue, but you have, you have a ton of growth, ton of user sign ups, etcetera. You're growing like facebook kind of thing. Um, there's an interested market to buy you Where there's not an interesting market is when you're just growing 10% year over year, Right? Or you've spent five years and you're making less than $1 million dollars in revenue. Kind of like there's, there's no way an investor is going to get, get their money back on that type of growth. So they want to put the gas on this. They want to make sure that hiring happens fast, that marketing happens fast, That product development happens fast, which on its face sounds awesome, Jonah's face sounds like something you'd absolutely want. Here's the thing fast

Ryan Rutan: is expensive.

Wil Schroter: It's expensive and it usually doesn't work. It usually doesn't work because it kind of can't, well, just to be fair because it kind of can't write in other words, um, you get to a point in the business where you're testing everything for the first time. You're testing product, you're testing marketing. You're testing the hires. I mean, all the people you just hired just got here, how would you possibly know that they're all going to work out, right? And so you're, you're putting culture together. All of these things are in this very formative stage all at once and it's a clusterfuck, right? There's, there's almost no way it's going to work right out of the gates on top of that were deliberately burning so that we can grow faster because we anticipate raising more capital. This is inflection point number one. The point where we're almost invariably going to run out of money and go back to the well, right, Whether things are good or bad. Either way, we're going to run out of money, right? That's the nature of it. When we do, we get to go back to our investors, our existing investors. And we say, would you like to put in more money in this conversation generally does not go well. And you start to realize that all of the decisions you made and all the things you thought you agreed upon aren't what you thought they were. The investors come back and start to say and they start to say that was a bad hire that marketing was was a terrible plan or um, the valuation you thought you were going to get is terrible. We're gonna mark it down, whatever. Um, this is the first time where you get like in your first fight with your girlfriend, so to speak, right?

Ryan Rutan: Yeah. And well, they have the power of hindsight at that point and they're allowed to, because they have the money to move forward. And so, you know, they get the benefit of being able to use all of the hindsight and decisions that they didn't inform at the time. Um, and, and maybe, you know, it's, it's better that they didn't, but they're still going to use that. They're going to weaponize everything that you've done in the past as you move into this next round of capital discussion,

Wil Schroter: correct. And if things are going really, really well, you know, you have a little bit more momentum to be fair, there rarely going that well, right. I mean, it's just a very turbulent and difficult part. Um, it's also tricky because let's say you've gone from seed to, you're going to series a or kind of, you know, wherever you are in your capital raise. And we're just talking about companies raising at that level, the same, the same thing applies for just keeping it in the family or, you know, private wealth, whatever. Um, when it comes time to raise that cash, there's a tremendous amount of consternation because number one, by the time you go to raise, you kind of need it. Now, you have staff, you have a lot of ongoing expenses, You've got an office and he's got all this stuff and you absolutely need that cash in a relatively short period of time startups rarely give themselves enough time to raise more cash and it's usually we need, we've got six months left. So you've got this dire circumstance. Now, the very people that might have been somewhat optional to you, your existing investors are absolutely critical to you in whether or not they jump on board for this next round. Absolutely changes the game of whether or not you're going to raise more money. Think of how awesome it is for a new investor that's never seen your deal to hear about your great idea, your, your your existing funded company and then to find out that none of your existing investors are participating biggest red flag in the world, right? And the investors know that. So what they have to do is they have to be on board with the idea that they'll give you more money, which means now you're pleading your case back to them again to participate. Going back to you want to know who has control the person who determines whether you're ever going to get funding again. And these are the inflection points that start to add up and add up. And the point is, you're going to hit this point, whether things go good or bad, there's gonna be a point over and over where you're gonna have to keep going back to the well and asking for more money or asking for help, you know, in quorum on critical decisions in realizing that you're not in control of these things, they may own 20% but they kind of make all the decisions.

Ryan Rutan: Yeah. Well, so what you're saying, I mean, it's really, it's really about power, not equity, right? We're not talking about somebody's position within the cap table relative to anybody else. We're talking about the amount of leverage that they have and it can be quite outsized and an asymmetric to, to the amount of equity that they've got. Using your example of somebody who's, you know, in the first round and when you're ready to go and seek a second round of funding, whether that's, you know, further seed or series A um, if they say they're not in that sends the same signal to investors and it's not a good one. And so we're really talking about the amount of leverage and power that they have. And while it is somewhat aligned with equity, there's certain decisions where, you know, the amount of equity may may come into play here. It's really not the core consideration. It's really, you know, what can they stop me from doing what's hard coded into the operating agreement, the term sheet that we agreed upon. But even outside that, what fundamental decisions can they impact simply by saying yes or no.

Wil Schroter: And it's right. It's its brutalizing to a founder when, when you realize that it's really not your show, right? Again, you get to start on the show, but it's not your show, uh, and, and I think, you know, personally when I went through this the first time, Uh, we were raising money for, um, for a company, we've raised about $1 million dollar seed round from some fantastic investors, some well known investors. And we're going into our next round And we're doing okay. Not great meaning like we had some traction. We actually had a pretty good traction, but it was so early, uh, incidentally, it was in the, uh, it was in the middle of the financial crisis in 2007, So maybe the, the second now, worst possible time to be raising other than the coronavirus crisis. Uh, but, but the investors came in hard on me. You know, they were like, look, man, you didn't have enough traction. You didn't perform well enough. Um, we're not all on board with your next raise. We're not all on board with some of the people you want to bring on. Um, it was, it took me totally by surprise. Like, up until then I thought probably did actually, but I mean, think about that man, like one minute, I, I, I'm, I'm used to it being my show, so to speak. Um, you know, I co founders of our show, but, and then the next minute, um, all of a sudden I'm sitting across from bunch of people who are basically telling me what the answer is going to be like, all of a sudden, it's a worldly in our seed round, we haven't even gotten that far in our financing or the evolution of the business. And I kind of get this preview of what's to come that's basically telling me, look, man, you're you're only at the beginning of these discussions, like we're gonna be having an awful lot of discussions where once again you get some input, but we get the decision. And I think, I don't think a lot of founders really understand um the extent of that powerlessness, right? But make no mistake, those are your bosses, no matter what percentage they own at that point, you know what I mean?

Ryan Rutan: Yeah, yeah, I can it's it's it's about the control, not about the equity and the percentage they own is almost irrelevant, right? It goes back to at what point can they raise their hand and tell, you know, or raise their hand and say you're going to do this whether you want to or not. Right? It it goes back to, um, you know, that that loss of autonomy as a founder. And and it's interesting because you really don't feel this loss until these these really critical moments in the business, right? It's it's not rare, I would say it's far less common to have somebody come in and be very heavy handed, um, you know, before these these sort of critical moments in time, like the second fundraise or, you know, other other major financial decisions, anything that could impact their, their position within the cap table. And so from, from that aspect, there certainly is an equity component to this, right? Because as you look at that, that following round, um, you know, they're going to be concerned about how you price that round and so forth. And so, you know, the amount of equity they have at that point may increase their, their likelihood to, to get involved in a very heavy handed way. Um, but it really is just about the power.

Wil Schroter: Yeah. Look, if the stakes go up, right, That's one thing in other words, like, if you get to like a we work level or, um, uh, Uber level, like that's a whole other discussion,

Ryan Rutan: you know, well that's a great point, you know, as the stakes change, so too, does, does the discussion and, and the pressure around it. I think one of the other things we haven't talked about yet is that as you move through, what I'm going to call different classes of investor, this discussion can change and, and kind of the pressure and power that they have in these situations may change whether it's real or perceived, but if you're talking about a friends and family round, right, you know, there's a difference between Uncle Donald being mad at you. Um, and, and somebody at, you know, one of the top VC firms, right? So as we move through, you know, friends and family into maybe a first time or inexperienced angel to a very experienced angel or angel group up into, you know, VC PE, um, it changes a bit, doesn't it?

Wil Schroter: Well, it does. And also remember to that, um, just because a person has a bigger, a small stake, they have a fiduciary interest in the company either way. So a person can be an exponential pain in your ass, regardless of where they stand in the cap table, right? You could have a point, oh, 1% owner, but if they want to be an absolute pain and sometimes, um, not necessarily a, uh, they're a well meaning pain, right? They just want to check in right every week to see how things are going, that, you know, they want to get constant updates in the business and they're entitled to it, don't get me wrong, but at some point it actually becomes a huge nuisance where I see this the most. Well, yeah, and where I see it the most, it's micromanaging,

Ryan Rutan: right? It's micromanaging and it doesn't really matter when or how your

Wil Schroter: micromanaged, Yeah. What's commonly known as a party around where, uh, an entrepreneur will go out and they'll raise from like 40 different, um, founder investors rather, and all of a sudden You've got 40 different opinions on how the business is going, right Heaven forbid you have some hiccup in the business, you know, get written up on online or there's some, you know, big thing on social media now, you've got 40 interested parties, all trying to figure out what you're going to do about it. Right? It again, it doesn't matter how much they own in the cap table, they all get a voice and they will choose to use it. And it's at first when you're raising that money, You think, Hey, this is awesome. I've got 40 smart people that all think I'm great, they love my product that all want to put money in and you're like, well this is fantastic. Again, what great validation and then uh something goes wrong, right? And now it goes the other direction. We've got 40 people down my ass or, or mass or the other side of it, which is um I've got another round that I'm doing And not everybody likes the valuation. Maybe it's a down round now I've got 40 sets of attorneys that I've got to have, you know, sign off on something like this. Or I've got to sell the company and I've got 40 sets of attorneys. You know, when we bought some companies, we dealt with 40 sets of attorneys trying to do the acquisitions because we had all these, you know, interested parties. It's bananas.

Ryan Rutan: It is, it's absolutely nuts. Yeah. And that's the thing, there's all these other, these other kind of maybe their edge case, but like, let's be honest, we're, we're in the startup game, a lot of things are edge cases, a lot of things happened for the first time in this environment. Um, and yeah, and they can, you know, they can be highly unforeseen. They may not be clearly spelled out in the operating agreements or, or in the term sheet in terms of how this will be handled. Um, and it may be something that nobody's ever directly dealt with before or at the very, at the very minimum. Like when we did some of the acquisitions, we had 40 interested parties, We had to deal with 40 different people. Right? So even if they had been through before, they've been through it in their own way. And so they had their own color of that experience, their own, you know, desires for how it should end. Um, it's like herding cats into a burning hot tub. I mean

Wil Schroter: it's, it's as crazy

Ryan Rutan: as a thing can be right? We lived through it and we survived. But, and as you can see, I have very little hair left at the end of the fact.

Wil Schroter: Well, look, um, I think where it gets tricky for us as founders. Again, I keep picking on first time founders, but again, we, we all go through this the first time, but again, also for people that are, that are thinking about raising that, Um, there's no version where we raise the money and we get handed the money and they just say, let us know how it goes. Even if people say that, that's what's going to happen. It's not what's going to happen. And I want to be clear the investors deserve that information. I'm not, I'm not demonizing investors here saying they're bad people. I'm saying it's a huge extra level of oversight and management that we're signing up for, that, we're getting paid, so to speak for. But now we have to manage and you know, Ryan, this is probably a good time to talk a little bit about how in our own business with startups dot com, we chose not to go down that path. Um, not because we didn't need money. I mean, like any other business. We needed money. We did six venture funded acquisitions that cost a lot of cash. So we definitely needed money. But having had some of this experience and having had talked to enough folks, I think, you know, Ryan would be curious to get your take, but like for me, if we did the same business, but we had a boss going through it, it just wouldn't feel like the same company. I'm curious what your thoughts are.

Ryan Rutan: No, absolutely, it wouldn't. I mean, this was one of the early decisions that we made was that, you know, we, we didn't want to have bosses. Um, you know, we're lifelong entrepreneurs, but you know, we've all, we've all been in situations where we had a boss of one sort or another where there was an investor, a partner, um, whatever, right. And, and that was one of the early decisions that we made was that we're going to do this without bosses. We're gonna make sure that we maintained our autonomy and, and we're able to, to clearly run the company with, with our own, uh, with our own ideas and, and, you know, make our own mistakes and, and feel comfortable with that. And investors certainly fell squarely into the middle of that boss bucket. And we said like, that's just not something that we want to do because it would impact our, our enjoyment of the business. It would impact the company culture, would impact a lot of other really fundamental important decisions that we made. Uh, for example, we've talked about this a number of times on the, on the podcast, but you know, we're work from home three out of five days a week for everybody. And then the vast majority of our workforce is work from home all the time. Um, that's not gonna fly with a lot of investors. You know, there's certainly, um, you know, it wouldn't have been the simple proposition that it was when we decided to do it, we said, we believe in doing this. Let's do it. And that was the end of the discussion. Right. Three of us got together, we talked shared with the management team, everybody was on board and let's test it. We tested it. We liked the way it worked. Um, and, and, and it worked. Now we have objective evidence at this point that says that was a great decision and no impacts. However, if you get to a point where, you know, and even if even if you have the same objective data, but you're at a point where I want to raise more funding now. Um, and investors looking at that and saying, okay, well, you know, maybe if you guys hadn't let everybody work from home, you'd be in a vastly different position right now and then we would know the reality. That's not true. But it gives them one more piece of leverage. 11 more, you know, way to be a boss over. We're doing, even if they allowed it to happen at the time, um, they may block a future decision based on that decision, right? And that's, that's, that's absolutely the crux of this discussion, which is that things that, you know, decisions that you make can then be weaponized against you. Um, and and keep you from able to move forward and what you want to. And we said hell no to that. And I'm super happy that we did, there have been times for a little bit extra money for marketing would've been great, but we've made it work

Wil Schroter: well, you know, I think what's interesting, um, we made a decision very, very early in the business, a lot of people don't know this, but we said, we want to focus, how quickly can we get to Prophet, essentially break even and be self sustaining versus how fast can we grow remember. Those are often not necessarily the same paths or outcomes often what will happen. What I've done in other businesses is we focus entirely on growth. So everything is about metrics and growth. Um, and it's all about betting on the come. So we're gonna spend a lot of money right now in hopes that things work out so it grows quickly so that it eventually, you know, ideally is self sustaining or somebody buys us, you know, from our actual growth. And the challenge with that, the huge challenge with that thought process is it implies that there's gonna be some safe area down the road. You know, obviously in an exit of some sort would be the safest area, but some sort of, hey, we'll get so big that the thing will have enough cash, etcetera. And the reality is that rarely happens right. It sounds awesome, but it rarely happens. And we had a very different focus, right? We just said, look, our focus is do whatever we have to do in order to be self sustaining, right? Even if it was parts of the business that we didn't think would scale right? Just do whatever it takes to make sure that we absolutely hit break even so that we have unlimited runway. So we can step back, take a breath and say, what do we really want to build here,

Ryan Rutan: right? Which if this isn't obvious that path is not an option, it's not an available path. If you take on investment capital, right? That's just not an option. Nobody's gonna hear Oh yeah. We'll just keep, you know, breaking even. That's what we're really focused on. No investor in the planet's going to be like. That sounds that sounds good. I like the sound of that. I'd like you to just sit on my money forever and, and and never be able to get to a point where it can become liquid for me again, that would be fantastic. Well, please do

Wil Schroter: that. I think a big caveat and I agree with you. A big caveat to that would be an investor loves the sound of you getting to break even just in a very period. Yes,

Ryan Rutan: Yeah. Yeah. There's a difference here. They like break even.

Wil Schroter: You know, it took us about three years to get to to break even, which is light speed considering, you know, our bootstrapped company and we were we had a pretty big um, purview of what we're trying to do that said, it could have just as soon taken us seven years. Right? I mean, it would just happened to happen in that time. But, um, there was no way we could have predicted it would have happened to call it that quickly and three years. Still a long time. Uh, And so from a from an investor's standpoint, by all means you love to see that, you know, the liquidity and in a company doing that well, but if it comes at the cost of growth, if you're saying, look, it'll take us 2-3 years and we think we can get to $500,000 in revenue and be break even and not be burning capital anymore. Any sane investor is gonna, that's the dumbest idea ever. Like, like I need this thing to grow quickly and I need to see some sort of progress to show that there's additional capital that will be coming on, etcetera. And to be fair, that's exactly how they should be thinking, right? That's exactly how their business runs. So I'm not knocking him. I'm just saying that's the way it works. And I think for us, we knew going into it more than anything, you know, just kind of be candid about it. We just didn't want to answer to anybody. I mean, it's kind of that simple, like we just when, when a group of us sat in a room and said, we're going to turn left, we didn't want somebody else raising their hand and said, no, we want to go right, we just wanted to go. Um, and if that meant growing slower, if that means, you know, risking more of our own capital, etcetera. So be it. And to be fair, that's also by the way how like 99% of companies run, right? So like most companies aren't funded companies. Um, and so, you know, I think we're alone in that feeling, but we made a very deliberate decision and I'll say this Ryan and I feel pretty confident with this may be one of the best decisions we ever made

Ryan Rutan: continues to feel solid every day. Right? When I think back about the, on the things that maybe we would have done differently had we had capital, you know, where, where we would have put that money. Um, and this is just, I don't want to get off onto a tangent on fundraising now. But as, as I think about fundraising, I really break it down into just two major camps and there's far more nuance to it than that. But if I think about it just at a very high level, there's enabling capital and there's accelerated capital and none of the things that we would have put that into, we're enabling. Ie there wasn't anything that we weren't doing or couldn't do because we didn't have the money, it simply would have allowed us to do some things faster and faster is not necessarily better. Right? And in a lot of cases, I can say that we're a better business for having had to go slow for having had to figure things out under higher constraints rather than being able to burn money to get to the same answer or perhaps a subpar answer, right? That's the thing as you start to move fast. Um, a lot of things fly by, right? When, when you're moving at slow speed, you got time to take in the scenery. And I mean that literally and figuratively, um, when, when you start to, to go whole hog on growth, you can miss a lot of opportunities along the way simply because you're pouring cash onto this, this fire. And you know, something else we talked about, we talked about this and I think was the last, last episode actually was, was quality of life. Um, I can tell you that in my own capital raising experiences, there was a direct correlation and not in a good way between capital raised and quality of life, right? Because I couldn't at that point, I've taken somebody else's money. I couldn't give myself permission to take it easy at any point ever. Right. Right. Even when things were going well, they could still be going better. Right. And so it has so many impacts. Again, I don't want to turn this into into a full on fundraising discussion. But to your question about whether I still think this is the right idea. Yeah, I've gone back over it probably 1000 times and I still think that we're where we're supposed to be, um, at the time that we're supposed to be. And, and I think it's, you know, it's, it's working out exactly as

Wil Schroter: We wanted it to. The irony with all of this is we're saying this and I don't want this to sound like an anti investor rant. We run a fundraising platform. We've helped people raise $500 million dollars for a start. We connected with a lot of investors. So, so by no means, you know, are we anti fundraising at all? But what we do think is pretty important is we want people to understand what they're signing up for right with the last few businesses that I raised capital for. If I could have done it differently, would I have done it differently? No, I actually would have raised capital again. I mean, those were the right business is for the right reasons to raise money. The only point I think Ryan you and I want to make here is just understand what you're signing up for when you raise money, you have a boss, right? And you know, right? And the other thing we should probably just kind of touch on real quick is you're interviewing your boss at that point. You know, when you're out raising money, whoever you're talking to whoever you're trying to pull capital from there, not just a passive investor, they're literally the person who's going to be telling you what the most important decisions you're ever going to make are?

Ryan Rutan: Yeah. I mean, so as we, as we think through that, what would be do you have? Like one or two critical questions that you would ask an investor, that you feel like you could get some sort of a read on, on what they're going to be like as a boss?

Wil Schroter: You know, this has always been such a controversial question. Uh, my biggest question to investors are, have you ever built a business now? Now? Now, just listen, it's not an unreasonable question, Right? It's not an unreasonable question. In fact, it may be the most pertinent question. To be fair. Most, most investors have not missed it differently. Most angel investors have. That's how, that's why they have the money in order to angel invest. Most BC investors have not. And, and I'm not saying it's, it's an absolute requirement. My, my purpose of the question isn't to to qualify you to say whether you know how to be an investor. I'm a founder. I don't know how to be an investor. Um, my question is, how good are you at understanding what it means to be a founder. Right. I'm about to go through an awful lot of hard decisions. I'm about to go through the total unknown here. Have you been through that first hand, Have you sat awake at 3:00 AM wondering how you're ever going to pay all that debt back? If you haven't, I'm not saying it's impossible. I know tons of investors that have never started a business before. They're, they're good folks. But the ones that I gravitate toward into your question, Ryan, you know, what would I ask and what am I looking for? I want to look for somebody who has absolutely been in my shoes because I know when we get to some of those really critical inflection points, they're going to actually know what it's like to have gone through this. And, and to me that feels very meaning. Sure.

Ryan Rutan: Yeah. I mean a little bit of empathy in the right and the right moments goes along. Absolutely. And it should inform their decision making. Um, and even if it doesn't inform their decision making, it may help them to deliver the ship sandwich with, with a little more, you know, seasoning on it or something like it just, there's, there's a lot to be said for knowing that somebody has, has walked a mile in the same shoes.

Wil Schroter: Um, even if they're using

Ryan Rutan: those shoes to kick your

Wil Schroter: assets. What about you, what would you would be like the most important question or the most important trait you look for?

Ryan Rutan: Well, one of the reasons I laughed was that, that's, that's,

Wil Schroter: that's at the top of my list, right?

Ryan Rutan: I'd like to know that, that somebody has some, some, you know, you know, relativity to me, right? That there's some, some common ground that we've been through some of the things same things together. Um, and so that would probably be at the top of the list. Um, the other one that I did look for was what experiences did they have in terms of, when things did go sideways, because

Wil Schroter: just when

Ryan Rutan: everything's copasetic, everything is copasetic, right? Everybody's cool when it's a party, right? Once the party is over and it's time to clean up and it's a huge mess, you know, who, who's who's cool in that situation and so really trying to look at and have some some specific information around deals, businesses that I know that they've invested in that haven't gone well, what that experience was like for them, how they felt and really just trying to kind of get a little bit under the hood in terms of how they handled that situation. Um and really as much from a an emotional standpoint as as from a practical standpoint, right, there are only so many things you can do practically speaking, it's really more about how they felt about it, because you can guarantee that will inform their actions and it will inform how they, how they interact with you. Um and that becomes supercritical, right? Even if hard decisions have to be made. Um if you've got somebody that you feel like is going to approach those reasonably equitably, um that goes a long way, right? Just to knowing that like if the ship does hit the fan um that I've got somebody who's who's capable of dealing with that in a professional way and so forth. So asking a few questions around deals that I know have kind of gone sideways was always one of my things.

Wil Schroter: Yeah, I mean I look at it is what's the biggest loss you came back from? Yeah. Right Because a lot of the folks that are in you know high level investment positions either have never had a loss right to I guess to their credit right? You know they did they did stanford google facebook uh you know number N. V. C. Um But they've never had to bounce back from anything. They've never had to go through the stuff that I'm going to go through. I'm not saying they haven't worked hard, this isn't about hard work. This is about coming back from an absolute ass kicking right? Have you had to do this? Have you lost everything and come back and that's not a requirement. But if you have you're probably gonna understand what I'm about to go through a little bit better. And I gotta tell you the folks that have are some of the most understanding people I know when when when when it comes time to say hey we're in a really tough situation. They'll look at that and they'll remember exactly what it was like and they may not come back with the answer you love. But at least you know it's an informed answer that they've lived through that when they're saying it to you. You know they feel you right which which means the world to me