Ryan Rutan: Welcome back to that episode of the Startup therapy podcast. This is Ryan Rotan joined as always by Will Schroeder, my friend and the founder and CEO of startups dot com. Well, we talk a lot about startup failure rates and you know how, how often they implode and what happens when, when they do and you know, that can be irrecoverable and all that. But like what about the founders? Like we talk about the startup failure rate, but what's the pure founder failure rate? Like how many founders totally failed and then just cease to exist? Because I think this is what we worry about at night, right? Like if my startup fails, I'm gone too. How often does that happen?

Wil Schroter: It actually kind of happens. Never. I but I think this is the part of the story that no one gets the epilogue to. He actually hears what happens after the startup flames out as founders because most of us are hopefully only going through this once in our minds. This is how we play it out. This is what actually happens. The startup goes out of business all of a sudden. The next thing we know we wake up, we're sitting in some Starbucks as a barista for the rest of our life in some sort of indentured servitude, ruining the day that we, you know, once had our startup running and just can't wait

Ryan Rutan: to go home and cry herself to sleep in the basement on our parents' couch. Right?

Wil Schroter: There's two sides of this, one side of it is this bullshit story that we create for ourselves, right? This nightmare scenario that's going to happen, which is so, so, so baseless. And we'll talk through all that today. The other side of it is this barren existence of ourselves of the future where again, we're consigned to this fate. We're scarlet letter of the startup world and we, we cannot ever get past this. And we'll talk about examples today that blow that out of the water that make it sound so silly that you actually believed that at one point. But to be fair, it's probably the first and only time you've ever been through this. So good news. It's mostly bullshit. The stuff that's in your head is mostly bullshit and here's why and it's

Ryan Rutan: extremely limited, right? I had this conversation with the founder about two weeks ago and they were, they were so concerned that after winding down their startup, they were never going to be able to like go back into industry or get another job. And then we talked about the reason that their startup failed and it was because they had a lot of trouble getting any visibility and I was like, so a startup that nobody ever heard of failed and you're worried that that somehow the entire world knows about that part of it, like you think, know that you failed, but they had no idea that you existed. Like they don't know, you failed either. No one is ever going to know unless you walk in to the job interview and be like, hey, uh yeah, I'm Ryan. Uh my startup failed. That's why I'm here. It's not really because I wanted this job, but uh my company failed. Let me tell you about it. They have no idea, right? So like the, the, the spread and the impact of these things is so small and yet we assume that it's like if Facebook goes out of business and Mark Zuckerberg shows up the next day, like, hey, uh anybody have jobs for humans.

Wil Schroter: Well, look at this. We think it's funny you mention Facebook in an era of social media. We as humans are just pounded by so many messages and updates throughout the day. We're just numb to them. So that big post that Mia culpa that you're gonna post about how our startup didn't quite make it. And you know, we went down et cetera and the whole world is gonna sit and grapple with that fact for so long, no one gives a shit. Right. That's, that's gonna be the worst part of this entire experience to realize how little people actually care. And I'm sure it's a relief because we're gonna blow it up in our minds to be like, the whole world is gonna be on the edge of their seat as to what we did with our startup. No one cares if

Ryan Rutan: that actually worked. I would suggest everybody just blow up their startup on day one. So the whole world will know about it and then be like, just kidding. But now that, you know, we're here, come buy some of our shit,

Wil Schroter: right? Like wow, post that on social media. When we mentioned that cocktail parties, you know, when we talk about it on our resume, it's just gonna be this huge backlash. No one cares, right? It, it I'm not saying that euphemistically either, right? I don't, I'm not saying that like uh not a big deal. It's actually not a big deal. Here's why number one, we jumped into a super, super risky proposition that wasn't necessarily supposed to work to begin with. The fact that it didn't work. The only person that might have had this silly foregone conclusion that it was gonna work was us. Everyone else was probably like uh it's kind of a long shot to begin with

Ryan Rutan: surprised. It took you this long to fail, right? Yeah, your

Wil Schroter: investors, they invest in things that don't work. You're just one of them. This isn't like you're the first person to invent startup failure. But in our minds, how dare we, how dare we be the first person to puncture the veil of startup failure. It's like, guess what? You're one of 1000 people today. Sorry. Beautiful snowflake. You're not special. And that's a part of it.

Ryan Rutan: You're part of a snowball. It's, yeah, it's, but, you know, I think that as we go through these things, we, we talk about this a lot that we go through these things and we assume as founders that we're the only ones going through this until the minute we open our mouths and talk to other founders and we find out that everyone is going through the same thing, right? And in this case, it's a shared experience. It's almost a shared non experience, right? It's a shared fear of what was about to happen as we shut down the startup or as it fails and then it ends up being this like wink worth of time that just disappears. And then to your point, we're just boring people at cocktail parties with it. Right? Or maybe the next family reunion it comes up like, how's the startup, Bob? You know, it failed. Oh, cool. Try the pecan pie. Right?

Wil Schroter: Nobody cares. Yeah. Think about the last time someone gave you a career life update where you just wrestled with that response for weeks and months on end. That's exactly how much people care again, especially in an era where we're so overwhelmed with so much information. But let's take that a little bit further as far as this perception that we have of what losing looks like, what losing it all looks like. Here's generally how it goes when I ask a founder, you know, what happens? What's your nightmare scenario? It's something like this. Well, I've got to let go of everybody in the company. Terrible, of course. Right. Awful. Right. I've got to tell my investors, people believed in me for a long time and, and now I have to disappoint all of them. You know, I'll be forever branded as the, the, the one founder that didn't make it. It's like you forget that like 90% of their, their investments won't make it. I'm gonna be a laughing stock in my personal community, my professional community, et cetera. Everyone's gonna talk about, uh, it's will and Ryan, the cautionary tales of, uh, of starting a company. Right. Here's the part that we don't process then. What? So we're like, ok. So you had the conversation with the investors, you had the conversation with your staff. All awful conversations that last way less long than you think it does then. What? Well, well, the, well, yeah, exactly.

Ryan Rutan: Right. No response.

Wil Schroter: Ok. Now, let's take it further. They're like, well, you don't understand. I'm in financial straits which happens, you know, it's usually part of the process. I'm gonna have to go back and live with my parents. That's gonna suck. I'm gonna have to go get a job that's gonna suck.

Ryan Rutan: So, did everybody that got a philosophy degree, right. They have the same problem but they don't see it the same

Wil Schroter: way. And then what, what we keep blowing up in this monstrous scenario is that once we get past those seminal events that we're so hung up on that we're losing all of this sleepover. Nothing really happens after that.

Ryan Rutan: Nothing changes for the, for the negative, at least.

Wil Schroter: Yeah. OK. Play that out. So the negative stuff actually goes by pretty quickly way faster than we think. You can't fire your whole staff over and over, right? As much as it sucks. You can only do it once, right? Hey,

Ryan Rutan: Ryan, uh you've called me uh four weeks in a row to let me know that I no longer work at the startup. I, I, I get it, man. I've actually moved on. I've got another job and we're, I'm doing fine. Thanks for calling Bud. Uh If you could keep it between like business hours from now on, that'd be great. Thanks. Yeah.

Wil Schroter: So now that those things have been taken away from you in a good way, those negative things you talk to your investors, you shut down, the company did all those things, by the way, it costs you weeks, not years. Now, what? Well, you're gonna wake up tomorrow and you don't have to do that shit anymore. It's done Right. You don't have to keep ripping the band aid off.

Ryan Rutan: Right. And, and of course, there are some things to solve. Like you said, there may be, there may have been some financial obligations. There may be, you know, now there's no incomes. We gotta fix that. Yeah, there'll be things to do. Right. But they're not outright disasters and you're not trapped and it's not some purgatory that you're stuck in for time and memorial. Right? You just got some new shit to go do. Now

Wil Schroter: also you're 27.

Ryan Rutan: Yeah. Right. You're 27 these things are infinitely easier to solve than the startup that you set out very happily to create in the first place. Knowing that that was nothing but an uphill climb right going and getting a job. It's not nearly the same process, right? You sort of show up, you talk about your skills and you're eventually gonna get placed with something, right? Building a startup company is completely uncertain. We weren't scared of that somehow. And yet the prospect of leading a normal life like 98% of the population does is somehow now the most terrifying thing ever. Now as serial founders, we do understand that there is a component of terror to that, but that's not what we're talking about. We're not talking about the fact that we're now not running our own company. We're talking about the fact that we're trying to escape whatever these short term pains are and they're just not that complicated. They're not big solves said differently. Every college kid faces the same challenge that you think you're about to have that you can't survive. Think about how much more prepared you are for this than they

Wil Schroter: are. Well, think about this. If I rewind back in, into my long and storied career, I mentioned 27 at 27 years old that was around the time, give or take that the dot com bust happened and all of a sudden our whole business imploded and I had to let go of scores of people. It had never happened before. It was the end of my life. You know, I can't remember a single person. I had to let go. Like if, if I really struggled to think about it, right? And it was a lot of people, right? I can't remember a single person and not because there was anything wrong with those people, they probably remember it, right. But in other words, it was a moment in my life that was so long ago that I barely even remember it happened. Now, let's fast forward 10 more years ago. I'm 37 I'm running five companies at the same time. And I told the whole story about when my heart stopped. I know I had to unwind myself out of all those companies because just shit was going so horrifically bad for me. Do you know? I can't remember a single conversation I had with investors, with partners with staff. I don't remember any of it.

Ryan Rutan: Right. And, and, and the, the important part of that is, it's because at the time, it seemed extremely consequential to you. It was inconsequential to the person on the other side of the conversation. If any one of your investors had started, you know, throwing your Star Wars relics from behind your desk at your face, that would be memorable, right? You would remember that if you know one of the employees shoved you into the broom closet and then put the mop handle in front of it. So you couldn't get out for two days. You'd remember that shit. The reason you don't is that nothing happened right? There were conversations, people absorbed the information and moved on about their days and went on about their lives, right? This is the point,

Wil Schroter: right? I wanna be clear at the time. I didn't feel good about it at the time. There's no version where I was like, oh, this won't be a problem. I'll just move along.

Ryan Rutan: How much pink paper do we have? I'm gonna

Wil Schroter: Right. Like, but every single time when those events happened, I had all the nightmares that all the people listening had leading into it. There's no version where I was cavalier about it whatsoever. I thought every single time it happened, it was end of days. This is it, my career is over. Never gonna get past this one and now I don't even remember it with the moral to the story sort of there being, you know, at the time it was the worst thing in the world. It's like when you break up with someone. Right. And at the time it's like, oh, it's the worst thing my whole life is ending. And now you sort of, kind of remember that person was in your life at some point. That's kind of how this goes. And I'm talking, I've been through nine companies over 30 years. It's not like I haven't been through this, I've been through both ends of both outcomes here numerous times. And I gotta say it sucked every time there, there's never a time where uh even now if things went horribly wrong, Ryan with startups dot com, neither of us would be like, don't worry about it, you know, I'm good. Yeah, of course. But to prove the point mysteriously here we are right. Time and time again. No matter how many times we've been through this, it seemed to be ok and not because we've got some superpower. You know what I mean? 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 startups dot com. So, so if any of this sounds familiar, stop guessing about what to do, let us just give you the answers to the test and be done with it.

Ryan Rutan: No, we just, we, we stuck around, we said like, hey, look, we tried it, it didn't work or we tried it, it did work. And uh we're gonna keep moving either way. We keep coming back for it. We don't have to either. That's the other thing. I, I know plenty of founders who have failed and tried again and succeeded. I know plenty of founders who have failed and tried again and failed and again and are probably on their third attempt and maybe third failure. I know the founders who have failed and decided to go on and do something else. I know founders who have succeeded and decided to go on and do something else, literally sold the company for significant amounts of money and then went on to have a career doing something else because that's what they decided they wanted to do. I think that's the thing that we, that we really rule out in all of our hysteria around this is that we still have a whole lot of freedom and choice. The moment all this goes down, right? And funny enough, kind of circling back to the point we were making earlier around how a lot of stress goes away. The minute we wind down the startup, like, yeah, you have those bad conversations with staff, you have the bad conversations with employees, partners, clients, whoever. And then it goes away. A a friend of mine sold the company after having uh wound one down. And he said, you know, it's really funny but selling this company has been far more stressful. There was an earn out period and he said the earn out, he was like, that was living hell. He was like, failing the first start up is like, that was easy by comparison, right? So, in this case, success was significantly more distressing than the failure, which

Wil Schroter: I thought the band it off as slowly as possible. Yes.

Ryan Rutan: Yeah, exactly.

Wil Schroter: Well, we've got two types of losses. Like we said, we've got losses that stick and losses that go away. What's interesting is most of the losses that are in our mind that are keeping us up at night. If you're dealing with this right now, play this out. These are the things that you're so worried about. Again. Tell my investors, tell my customers, tell them the world, but none of those losses stick around. Once you've pulled the band aid off, they're gone, you're done. Then the losses that stick like, well, I've got a reputational loss. It's never what, nearly what you think it is back to. Nobody cares. You're like, I've got a financial loss. Man. I had, you know, I had some home equity. I ripped through, I had some savings. I ripped through. I can't replace those. Not immediately, but it doesn't mean you'll never be able to do it unless you're 90 years old and you've got minutes to live, you got a minute to put that back

Ryan Rutan: in which case you don't need to worry about it anyways. Right.

Wil Schroter: So dark and so, but what I'm saying is in every case, we think that the losses that are momentary are the the biggest ones we're going to take. What we don't calculate is that they're momentary. It's a moment that will be a chapter like I just described that I actually can't even remember.

Ryan Rutan: It's entirely forgettable right back to your back to your dating analogy. You break up with somebody. How many years later do you remember what their favorite restaurant was or their pizza or anything? And things that were important at the time that then just become details of the past that just don't matter anymore. It's the same shit, right? Like you, we go through these things, there are so few permanent losses, things that really, really stick around. It. Kind of the only one that I can think of is that startup id itself and, and even then that's not always true, right? And maybe for you, but how many times have we seen people try and fail at startup companies? Multiple different founders that we know and then somebody else comes along and nails it right. And just gets it right. So, even the ideas themselves don't permanently lose their value or space in the world and, and founders certainly don't. Right. We

Wil Schroter: don't go anywhere. Here's the one thing though that we don't factor in when we talk about losing everything. There's a couple of things that we will lose and we will not miss, we're about to lose all that stress that we've been thinking about night after night, after night, after night. Because again, once we pull that band aid off and once, you know, we've let go of staff, we've shut down the company, et cetera. We don't have to think about that anymore.

Ryan Rutan: You pop that balloon once and then it's

Wil Schroter: done abs and of course, we're gonna be thinking, oh, well, you know, I'm gonna wrestling with that forever. Not really, every day that you wake up, you'll just start to forget about it like anything else in life and then you'll grow numb to it. And then eventually you'll be telling like a story now where Ryan and I can barely remember it. A

Ryan Rutan: 100% would actually stick with that for a second. So it's, it's funny, but some of my, some of my favorite failures have become anecdotes that I use when talking to other founders. And so they're no longer a negative piece of my narrative right there. There's something that I can use to help other people, right? Which feels fantastic. And so in most cases, when I'm sharing a failure, it's not with my head hung low and you know, the stick over my shoulder with my worldly possessions inside of it because that's all I've managed to accomplish since that failure. It's I'm now enlightening somebody and saying, hey, like, keep an eye out for this sign or hey, like you may want to consider this or here's what happened to me and here's a cool way to avoid that and it feels fantastic and they appreciate it. So even that isn't in that loss.

Wil Schroter: Well, let me build on that at the end of the day. What you get is a clean slate. That is what the part nobody factors in. You get a clean slate to do whatever the hell you want. Now, here's what clean slate looks like in so many different ways. So many form factors. One form factor, clean slate means I get to wake up tomorrow and spend my time and attention doing literally anything else, right? Anything else that doesn't involve stressing about this startup? I can go donate my time to charity, I can go meditate all day. I go get another job that actually pays me. You name it. The point is I now have 24 hours to do something totally productive. Whereas for the last few months, years, it's been nothing but negative in, in life. Sucking number two, I have the ability to point my cannons now in any direction that I want. Now, maybe that direction right now is to go get a job. And maybe that, that's not the first thing I wanted to do, but maybe it's what I need to do right now. Number three, it takes 5 to 10 years to create anything meaningful. In other words, maybe you're 37 maybe you're 47. It actually doesn't matter. I'm just giving you, you know, kind of milestones.

Ryan Rutan: Maybe I'm 37. Let's, let's stick with that. Maybe

Wil Schroter: with any 5 to 10 year period of your life, you can create your entire world, you can create everything that's ever mattered. And, and I'll give you an example. And Ryan, you know, I've talked about this, it would say

Ryan Rutan: click back twice on the, on your podcast app and you're gonna hear us talk about this. Yeah. Yeah.

Wil Schroter: Elon Musk. Before he became the world's richest man, 10 years prior was filing for bankruptcy. Now, just to be clear, he went from bankruptcy to being the world's richest man. Ok. Now he's an outsized example at, for a lot of different reasons, but he also went bankrupt. Let's be clear he was outsized, he wasn't bankrupt before that. He already had the exit with paypal and one before that zip two or something like that. So he had a bunch of money.

Ryan Rutan: So we're, we're not talking about an inconsequential bankruptcy, right? It wasn't like, you know, I was, you know, dropped out of college, had a couple of weird jobs, you know, got some credit card debt, had to declare bankruptcy, you know, like sold massive companies made millions and millions and millions of dollars, then went

Wil Schroter: bankrupt. Yeah, then went bank. Correct. Right after having success

Ryan Rutan: and is now, you know, beaming the internet to my house through space from his richest man in the world

Wil Schroter: chair. I stick with that to say, and I don't think people misunderstand this. It's really important to understand this. 5 to 10 years, any 5 to 10 year period of your entire career can define your entire legacy. So again, if you're 37 years old, like I had, I had my shot, you know, now I'm consigned to work for the bowels of some bank. No, you're not. Right. Maybe for a couple of years you are and maybe that's probably the best thing for you, by the way. Hello? Benefits and a paycheck. That would be nice for a minute. Right.

Ryan Rutan: Yeah, dinners. Those are fun. Yeah, exactly.

Wil Schroter: The other side of it is if you honestly believe that that was your shot, then you don't deserve another shot. If you honestly believe that that's as good as you can ever be, you don't deserve another shot. You shouldn't

Ryan Rutan: take another one. Right? If that was as good as it was ever gonna get like you don't, please don't because like there, there's reasons then that you're gonna hold yourself back with the next one. Right. If that's what you truly believe, then go do something else. Right. There's plenty of things to do in the world that aren't being a founder. In fact, most of the things in the world aren't being a founder

Wil Schroter: also running yourself into the ground. Yeah. But when I talk to founders who've, like, had a hit more often than not, they've had a few misses before that. The problem is we always think that the one we're working on now must be the only one in the same way we think every relationship we're in must be the only one this person I'm dating in high school. If this doesn't work out, I'm screwed. I've got 90 years of just isolation.

Ryan Rutan: Right? Just me and some Lionel Ritchie albums.

Wil Schroter: That's so specific. Yes. Some Lionel Ritchie albums. What song specifically?

Ryan Rutan: I'm not gonna reveal that on a podcast. I wanted some things. I actually couldn't name a Lionel Richie song if we

Wil Schroter: get into that later anyway. So we, we, we get to this point where we're so silly to believe that the only time that we could possibly possibly have gotten everything right? Is this very moment in time, I'm 27. And if I haven't figured out in this year, I guess the next 60 to 70 years of my existence are just me staring at a wall, waiting, waiting to die. How silly is that?

Ryan Rutan: But let's say you say me, let's say it together. That's

Wil Schroter: so much worse. That's so much worse.

Ryan Rutan: Yeah. So, to your point, right. This stuff is all temporary. Right. There's, there's nothing, there's nothing lasting about any of these woods. We blow all this shit out of proportion and we forget the clean slate aspect of it. Right. This is so, so important like that, we get to start over and it, it's not like I, I think that people also misconstrue that piece of it. They get that but they feel like starting over, starting from zero is a bad thing. You're also not starting from zero. We talked about this once before, very briefly, but you've compounded some stuff now, hopefully you learned some shit along the way. You spent time on the planet, you accumulated network, you accumulated skills, you accumulated, who knows what else? Maybe some money, you know, and maybe not, but you're not starting from zero. Right? We're not sending you back to birth. It's like, ok, now here's this and here's how it goes in your face. You're ok. Right. You've got a running head start on the person you were when you started that company. I think that's what we also forget. You're no longer the same person. You're further ahead in some ways and you can take that clean slate and do something amazing with it. Right? But that's not how we feel when it happens

Wil Schroter: Right. Imagine this when Elliott, uh our, our coo when Ellie and I had started to afford it, which was the, the previous version of what is today, is a firm or afterpay different companies, but same friggin idea. Except we had it way before they did. Right. If that was our only shot on goal, if that was all we ever knew if we said, ok, I think I was like 32. Maybe when we started that. If I was like, man, I'm 32 years old. I raised money from some really well-known investors. We went after it and we blew it. We had to shut the company down. Now, if that was my only, only, only shot on goal as being a startup, here's what I would have thought. If I was gonna do it, that would have been it. I'm the prime of my career. There's no way going forward because I'm gonna have family kids and all these responsibilities. I'll never be able to do something again. Now, freeze that thought for a moment. Except that five years prior to that, I was running a $650 million company, right? So clearly I could do it. I didn't do it this time. 10 years later, not even five years later, we start startups dot com, which wound up being wildly successful. So if all I took was that singular moment in the middle of my career as it would happen and I said, if it didn't work this time, then I've got nothing, then I would have totally overlooked the fact that wait a minute, what if I had started something earlier or what if I go on to start something again? The point is this one is just one shot on goal. This isn't the shot on goal. And when we get a clean slate, we get another shot on goal. That's what makes it interesting to me again. If Elliot and I had just given up and said, ok, if Ford, it was our shot, I guess that's not it. Let's go get crappy jobs and, and kind of rue the day for time, immoral as you said it right then. Yes, that's how it ends. But all of a sudden we wake up the next day and we're like, well, damn, we don't have to worry about that anymore. Let's go build something else. Could build something

Ryan Rutan: else. Hey, think of it this way. What if you've been successful, you'd still be selling Xboxes on payments?

Wil Schroter: Yeah. Yeah. Actually, I really hated that business. If I'm being honest, that's the thing.

Ryan Rutan: Like we, we wouldn't be doing this podcast right now. I'd just be playing an Xbox.

Wil Schroter: I agree. So, here's what I would say when we think about how big of a loss can we possibly sustain. There's a couple of things we absolutely have to take off the table number one, all the big things. We're worried about our, our loss of reputation or our loss of staff, you know, loss the company, et cetera. They're awful, but they go away. Second, we have many, many, many, many shots on goal in life to go build something amazing and maybe this wasn't our shot and that's ok. Go build another in the third one. The last one I think is the most important. We have a clean slate, like you said, Ryan, with all of those things that we've learned, we have a clean slate to build whatever the hell we want, either maybe another great startup or no startup at all. But once this is done, we'll always recover because we've got all the time in the world to make it exactly what we want it to be this time. So in addition to all the stuff related to founder groups, you've also got full access to everything on startups dot com. That includes all of our education tracks, which will be funding customer acquisition, even how to manage your monthly finances. They're 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, fund for attracting investment capital. When you log into the startups dot com site, you'll find all of these resources available.