Latest / 1 to 100 / E17: Impossible to Bootstrap with Josh Perk

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E17: Impossible to Bootstrap with Josh Perk · 1 to 100

0:00
Who was the person that crashed our?
0:02
This this Riverside. I was just like like hard
0:05
bashing, like all the Riverside FM, like Studio UR LS.
0:09
I just found this one and it worked and there were people
0:11
here. Oh dude, that's the path.
0:13
Is that what they teach you at YC now?
0:15
Like they're like, hey, there's two things raise, raise 7 on 70
0:20
and then just like hard smash the Riverside UR LS like that's
0:25
like that's basically what they tell the founders now.
0:28
Yeah, you know. Oh, and live in Mission Bay,
0:30
right. That's.
0:30
What they got? Oh Jack, I don't know if you
0:33
gave him context but that comments even funnier based on
0:36
what you are describing. Which is a perfect way for me to
0:38
say like my name is Josh. I'm the CEO and cofounder of a
0:41
company called Vector. We are AY combinator backed
0:43
company that does not live in San Francisco because we don't
0:47
believe a majority of the the hype around like AVC backed
0:51
company but we are VC backed. So we're like some somewhat
0:54
traders, but not fully. So you're like reluctantly.
0:58
VC backed yeah yeah. And there's like, yeah, like I
1:02
grew up like one of those like hackers that were just like,
1:05
there's no need for VC, Like I don't need to sell my soul to
1:08
devil. But I ended up building a
1:09
company that like, yeah, money helped it a little bit.
1:12
But I I think we we don't need as much as we used to need.
1:17
Yeah, I think money is. I don't want to call it an
1:20
underrated part of building a company because it's probably
1:23
not underrated, but it is a helpful thing.
1:25
I think even when you hear people say that they're
1:27
bootstrapped, especially in like software, I feel like even in
1:32
that context, it means you brought, like you brought some
1:35
significant money to the table in order to make that happen,
1:37
right? So 100% I like we're building a
1:40
business that like I couldn't tenability builds bootstraps
1:43
like my AWS bills $130,000 a month.
1:46
Like it helps to like ungate the ability to build that product,
1:50
you know? I'm just like looking up what
1:52
the company does in real time. But of all the things to be
1:55
expensive for like sales software, I would not think that
1:58
the software part is expensive. I would think that the the CAC
2:01
is the expensive part. Yeah, it's like really
2:04
interesting dynamic for us. So I'll tell you about what
2:06
we're what we're building, but like ironically our expenditures
2:08
are the opposite. Like we're 99% inbound, like
2:12
organically grown and it's our software that's super expensive.
2:16
Like we have we have two sales reps.
2:18
So like the the reason it's so expensive for us, like we're
2:21
building a contact based marketing platform.
2:23
So we're, we're basically trying to go after these like legacy
2:26
ABM platforms like 6 cents and demand base that tell you like
2:29
which accounts on your website and which companies showing
2:32
intent. And so the most expensive part
2:33
of building our company as we process like 10 billion rows of
2:37
intent data that's happening across the Internet every single
2:40
night. And so just like the massive
2:42
compute power to figure out like who might be buying certain
2:47
software tools using this sort of like raw ad bid stream data,
2:51
it's just like really, really expensive to do.
2:53
So pitch us man, Why? Why live vector over $0.06?
2:57
Yeah, because it's better. It's cheaper.
3:01
No, like the the so $0.06 demand base, like if if you guys are
3:05
familiar with that space, they sold this story for like 10
3:08
years that it's like, hey, the biggest problem in pipeline is
3:12
that purchasing is happening not on your website anymore, right?
3:16
And they would like go to these marketers and get them like all
3:19
fearmongered and scared of like there's the dark funnel and you
3:22
know, people don't come to your website anywhere to purchase
3:24
anymore. And like the solution they gave
3:26
them was like account level intent, right?
3:28
And like for 10 years people like is that even real?
3:31
Like is intense bullshit. Like does like can we detect
3:34
that purchasing is happening off our website?
3:36
And, and you've never been able to answer the question because
3:40
if I tell you that a certain company is in market for what
3:43
you sell, like you can't validate that, right?
3:46
Like what are you going to do? Like call like all 3000 people
3:49
at the company and say, like, was someone at your company
3:51
researching this thing off of our website?
3:53
They're going to be like, I don't know, like there's no way
3:55
to validate it. And so having contact level
3:58
intent saying like, Hey, I saw Jack and he wasn't on your
4:01
website, but he's been researching this, you know, AI
4:05
generative ads creative for like the last three weeks.
4:08
Like he might be in market for what you're saying.
4:10
Like you could call Jack and feel like, were you researching
4:13
this or not? So like you can call BS and like
4:15
whether the technology works or not.
4:17
And like the thing that we're spending a lot of our, our
4:20
resources and energy doing now is like figuring out like, well,
4:22
how do you actually reach Jack? So like the thing most people
4:25
buy Vector for is like contact level advertising.
4:28
It's like how do I make sure only he sees my ad?
4:30
Which is like, really crazy. OK, so this is like, you know, a
4:35
plus ABM basically? Yeah, drop the A and we put like
4:39
AC in front of it is what we're going for.
4:43
CBMC. BM contact based market baby.
4:47
Take me way too long is. That what your website says.
4:50
Yeah, I think it's in the H1, right?
4:52
Do we hang on? I haven't looked at it in a
4:53
while. Wait, hold on.
4:55
I'm not even on your website. I'm doing it.
4:57
Yeah, vector dot CS Yeah, turn intent in the pipeline, the
5:00
contact based marketing. Yeah, OK.
5:02
OK. Yeah, I'm on your LinkedIn page.
5:04
See even I'm not doing research on your company on your website.
5:08
Yep, Yep. Probably like sitting over there
5:10
and like ChatGPT, right? Just cannibalizing my organic
5:13
traffic right now. Yep.
5:20
You got to do what you got to do.
5:21
You know? It's like you when a guest shows
5:25
up to the podcast, you got to just run it live.
5:28
You do. You do what you, you do what you
5:30
can, you know? So yeah.
5:32
It's best if you have 0 context to it makes for more
5:35
interesting. Yeah, you go and admit this is
5:37
this is the first 5 minutes of every pod.
5:39
Yeah. That's true.
5:42
It doesn't matter every other context in that we didn't read
5:45
the the script ahead of time, so.
5:48
Why are you? What is it called?
5:50
Seed strapping. Are you seed strapping?
5:52
Are you a strapping? What are you?
5:54
What are we doing? Yeah.
5:56
OK, so here's the thing that that I've learned is like, you
5:59
don't know what's coming around the corner, right?
6:00
Like we have theories of of how we think we can build the
6:03
company. But every time I like get to a
6:07
new chapter, I'm like, oh, like there's an interesting
6:10
opportunity and like, oh, I'm gonna like change the way we
6:12
think about about the company. And so like, regardless of what
6:16
round we, we associate it to, whether it's seed or a like, I
6:21
think I fall into the state of like raise as little money as
6:25
possible, right? Like, I think this like
6:26
treadmill, like ABCD, just for the sake of, it's kind of silly
6:30
at this point. Like we're aiming for
6:32
profitability this quarter. Now, that doesn't mean that like
6:34
we won't find an opportunity next year where it's like, wow,
6:37
if we had $20 million, like imagine how much faster we could
6:40
run at this, this opportunity. But I, I personally, I think
6:43
this topic should be way less polarizing than it is.
6:46
It's just like, what's the best thing?
6:49
What's the best way to build the business in a way that makes the
6:53
business as good as possible, that gets you to the outcome
6:56
you're looking for, right? Like some founders, like one of
6:58
my best friends, like his dream is not only to like IPO company,
7:02
but be in the S&P 500, right? Like it's not money driven.
7:05
It's just like that's the legacy of what he wants to build.
7:07
And he's raised a little bit of money to do that 'cause he
7:09
thinks that's like the right vehicle to get him there.
7:11
Like I just think it depends on what your motivation is for
7:13
building a company. I don't think the capital market
7:16
can meet that though. Do you think the capital markets
7:19
are designed to meet that? Like I think that founders
7:22
having a clear eyed view and being on every part of the
7:26
spectrum makes perfect sense to me.
7:28
I don't think the capital markets are organized to meet
7:32
founders at every part of the spectrum of desired outcomes.
7:36
Like the, I mean, and this is like the US has the most
7:40
sophisticated capital market in the world like and and what we
7:44
have is banks with loans, bootstrapping and venture like
7:52
unless there's a capital source I'm unaware of that is not a
7:56
bank your customers or VCs like what do you, what do you do?
8:01
Yeah, I think you're, I think you're right into like further
8:03
go down that, that track. I think capital is being
8:06
massively disrupted right now. And I think that like VCs in
8:09
particular having to figure out like, how do we go earlier in
8:12
earlier into startups and convince them to take capital.
8:16
I've seen that a lot. Like I've had PES reach out to
8:18
me and like 2 years ago when I started the company, they're
8:21
like, hey, we're just, you know, we're just catching up and like,
8:24
you know, we want to build a relationship with you.
8:25
And once you get to $20 million, then we'll, we'll do like A PE
8:28
deal, right? And those same PES are like a
8:31
year later, they're like, well, tell us when you get to 10.
8:33
And now they're like, oh, you're getting close to five.
8:35
Like that's interesting. Like let's start talking now.
8:37
Like I think founders are able to build more with less.
8:43
And I think that it's really disrupting like their deploy.
8:46
I think there's a lot of cash that needs to be deployed that
8:48
they can't figure out how to deploy.
8:49
No. No, sorry.
8:50
I totally agree with that. But their models can't support
8:54
$30 million outcomes. Would that like, no, like, dude,
8:59
AP fund has to deploy $400 million.
9:03
They can't sit there doing $4 million triples.
9:08
Yeah, that would take forever like that.
9:10
It would take a hundred of those, actually, Right.
9:13
And so like, I'm just saying that the capital markets like,
9:17
yes, they are going earlier and yes, they're willing to accept
9:20
different things. But at the end of the day, like
9:23
the fund math is, the fund math is the fund math.
9:27
Like, what are they gonna do? I mean, you and I are not
9:30
investors. Thank effing God.
9:32
I don't want this problem. You know what I mean?
9:36
It's hard. I tell all my investor friends
9:38
all the time I don't want your problems because your problems
9:43
are really hard right now. Yeah, yeah, I, I and you have to
9:47
remember like I only think about like the one play inside of like
9:51
my investors, right, which is just like the company I'm
9:54
building. Can I get them to their investor
9:56
math, right? Can I get them to 100 or 1000 X
9:59
return that makes sense to return their portfolio.
10:02
But the thing that I think is most interesting for founders
10:04
is, is like, I don't know the answer to your question.
10:07
Like I don't understand what VCR and what these financial
10:09
institutions are going to do. But I do think it's important
10:11
for founders to understand those dynamics because it's the story
10:15
that they need to understand if they're going to fundraise,
10:18
right? Like you have to be able to tell
10:20
that vision. Like we're really honest with
10:22
our investors on like where we think the company can go.
10:24
So we don't have to like morph too much of our story to fit
10:27
into this like billion dollar IPO sort of story.
10:30
But I think that's the thing that like especially a lot of
10:32
younger founders need to understand that VC math of like,
10:35
yeah, if you if you're going to raise right, like the story
10:39
you're going to have to explain to them is how they're going to
10:42
return that capital. And I'm going to guess to your
10:44
point, like the story's probably actually only going to get
10:47
harder and harder because if the if the VC mouth is already
10:50
difficult and now less companies are going down that path right
10:53
now, it's not how do I get you to a 50X return or 100 X return?
10:56
It's like, oh, we need this one company to to return not only
10:59
the portfolio, but the next two because so few people do this
11:02
now. And and people like you are
11:06
making it worse. You're not even taking that much
11:08
of my money. Yeah, yeah, that's not my
11:10
responsibility. I have to deploy 200 million and
11:13
you're like. Pick a different career field.
11:16
I need, I need, I only need 5, you know, and I get 100 X Year 5
11:21
and I'm like, yeah, dude, can you please take 30 another X
11:26
dot? You know what I mean?
11:27
Like that would be kind of better.
11:29
Yeah, yeah. Then.
11:31
Rishabh, how do you think? Like do you think cuz it you
11:35
your last round was way oversubscribed, Do you think
11:37
that's like a a tailwind that impacted that at all or do you
11:42
think that's totally disconnected from your
11:43
experience? No, no, no.
11:46
Everything that Josh is saying is correct.
11:48
This is like exactly, exactly the problem.
11:52
The, the exact problem is that there's an incredible amount of,
11:57
there's only going to be more capital by the way, because we
11:59
have a lot of IP, OS and a lot of M&A, right?
12:01
Like the same company can get M&A three times in three in
12:04
three days, right? So there's a lot of capital
12:08
sloshing around, right? That capital is going to go back
12:11
to investors. There aren't enough public
12:14
companies for them to invest in, as evidenced by the fact that
12:17
every IPO has popped like these IP OS popping is a, is like
12:22
exactly a consequence of not enough, not there's not even
12:26
enough public companies. So there's not enough public
12:28
companies. So then they go to PE and VC,
12:31
then the P and VC consumes the capital and there's not enough
12:35
private companies. And so like, the best thing you
12:40
can do is like, OK, what's the like most CapEx heavy investment
12:45
that can give me the largest size outcome?
12:47
It's like, like, weirdly, your, your incentive as a, as an
12:51
investor is like, I'm going to go find a bunch of model
12:54
companies to put the money into because at least there's CapEx
12:57
to, to consume that capital. Because all these app companies
13:01
are saying, yeah, like Gary tells them to raise 3 on 30.
13:06
And so it's just like, my man, like if you take 3,000,000
13:10
bucks, like I can't, I can't sit here and like write, you know,
13:16
400 of those checks, like my wrist hurts, you know, So that,
13:21
that like the, the anyways, I think like company building
13:24
right now is like, like stranger than it's ever been.
13:27
I, I think like the ability or the desire for companies to
13:31
consume a lot of capital has a bit never been lower.
13:33
And it's not because there's not interesting things to use that
13:35
capital for. It's just that at some point,
13:39
capital is not the limiting factor for a given company.
13:42
It's something else. And actually, most companies
13:45
right now, capital is not the limit.
13:46
I mean, it sounds crazy to say out loud and there's a lot of
13:48
people who are going to get mad at me for saying this, but
13:51
capital is not the limitation for most companies at at, at
13:54
this point in like the general ecosystem.
13:57
Yeah. Well, we've got, we have
13:59
economic headwinds and, and it depends on your industry, right?
14:02
But like in our contacts, Rishab, you and I with, with the
14:08
customers that we serve, there's just not as many customers who
14:11
are looking for software right this moment.
14:13
And so you could go spend as much money as you want to, but
14:17
it's not probably going to have, it's not going to be as
14:21
efficient as it could be. So why would you spend as much
14:23
in this context? And there's obviously there's
14:25
nuance there. I assume you're spending a
14:27
decent amount, but like you're probably not spending as much as
14:29
you could in that context, so. Yeah.
14:33
I mean, I'll be the first one to say that there are segments that
14:38
are directly reflective of the structure of.
14:40
So Josh, I don't know if you know, but we sell into the
14:42
e-commerce world basically, right?
14:44
So and you probably sell to SAS, right?
14:48
It's probably your, Yeah. So in the e-commerce world
14:52
between a weak American consumer in the first half of the year,
14:56
right and the tariff uncertainty, like a segment of
15:02
e-commerce has been particularly negatively impacted, right?
15:06
And so like Jeremiah's right, right, like at least my company
15:12
is called firmat the, the we are not capital constrained in, in,
15:17
in acquiring those customers, but the reality is that that's
15:22
not their P0 issue. And so the cost of acquiring a
15:28
given customer is like at this point so high that it's just
15:33
basically not even worth it in that particular segment.
15:36
And so you basically just say, OK, I'm just going to go to the
15:38
other segments, right. So like we, we have that type of
15:42
thing happening. But yeah, it just, it just
15:44
speaks to your point actually that there's a bunch of
15:49
companies for whom capital is not the, and it sounds like
15:51
yours is not capital constraint. Like you have other whatever the
15:54
constraint might be. For us it's a market constraint,
15:56
whatever your constraint is. Yeah.
15:58
Well, and I think that you bring out a good point, which is
16:01
especially as technology gets a little bit easier, it's going to
16:03
attract like younger Renegades of, of SAS founders, which like
16:08
it's always been like a, a young person's game anyway.
16:10
But I think the thing that's dangerous is taking young
16:14
impressionable founders. And you know, for example, like
16:16
we went to YC, but we went to YC when I was in my 30s and my Co
16:19
founder was in his 40s. Like we had served in the
16:20
military. We had like been executives like
16:22
we could, we could differentiate like one, one piece of wisdom
16:26
from the other. And I think you, you go to YC
16:30
and you sort of get this sort of blind conventional wisdom of
16:32
like, hey, there's going to be a bunch of hype.
16:34
There's going to be demo day, you're going to raise at this
16:36
and it's going to trigger your safes.
16:37
And like this is like the path that you get set on.
16:39
And there's not a lot of people that are out there sort of like
16:41
questioning, do I, do I need to, to do this?
16:44
Which is really scary. In fact, the person I was
16:46
referencing earlier, my, my friend, he's the founder, his
16:49
name's Bukhari, is the founder of a company called Security
16:51
Pal. And he actually had like a
16:54
public feud with Gary Tan recently, like on this exact
16:57
thing where my friend, I don't know if I can share in this
17:01
thing, but oh, yeah, here it is. He like he my friend had an
17:08
article published about him on like seed strapping his company
17:15
and Gary Tan like literally quoted it being like this is
17:18
this is dangerous and like everything's fine and dandy
17:22
until like someone gives your product away as like a loss
17:24
leader. And there's like a lot of
17:25
honestly like fear mongering and in sort of like in here's why
17:29
you should raise capital. And I think a lot of, like young
17:31
founders will like, follow this blindly and not realize like,
17:35
there's this other motivation in VC math that like needs to be
17:38
true for this like system to stay in place the way it is.
17:43
It's also hard because even in the context of like, and this is
17:49
like a not supposed to be a anti VC take, but they come along
17:53
this way even in the context of like building a company to that
17:57
huge exit. Like if if I were to say that
18:00
somebody sold their company for $300 million, you would most
18:03
people would look at that and be like, oh wow, that person's
18:05
rich. But there's a lot of cases in
18:07
which the founders actually walk away with next to nothing.
18:10
When you have like the, the, the preference tax and all the, you
18:13
know, the, the dilution that happens and all of those things,
18:17
you can, you can build a company to a scale like that and walk
18:21
away with almost nothing. And if you're, if you are like
18:24
an older founder who's been around for a while and you've
18:26
seen some of these things happen, you might be more
18:29
inclined to be like, actually, I'm just going to own 90% have
18:32
no press tax that are a problem for me.
18:35
And I'm going to sell this thing for $30 million and walk with
18:38
27. And in that context, like it's
18:41
less pain, like there's probably less like stress to get there.
18:44
Those outcomes are easier in some ways, I think probably
18:47
harder in some ways as well. But like, if you have the right
18:50
connections, if you know, like, if you're very focused on who
18:53
you're trying to sell to that context, it's probably an easier
18:55
outcome as well. And then you've got the ability
18:57
to say like, I, I actually feel pretty confident about like what
19:00
this could turn into for me, as opposed to like you start to
19:02
build that scale and you actually don't have any idea
19:05
what it's going to turn into. Like there's a, there's a
19:06
massive problem with that. That said, like Rishabh, I know,
19:10
I know you're, there's other ways in which you can cash out
19:14
money in that process, right? And there's other ways of like,
19:18
and it's not necessarily always about the cash.
19:19
Like maybe there's the goal. Like for you, your goal is to
19:22
build a Unicorn basically, right?
19:24
Like that. It's about the journey as much
19:27
as it is the destination in your context.
19:28
It's my perception, at least from what you said.
19:31
So I think there's a, it depends on what you're looking for, but
19:34
I think there are a lot of founders who are like, I don't
19:37
know, like even for myself, like I, I spent 10 years as a founder
19:42
and granted a lot of this because I just didn't know what
19:44
I was doing, but I, I had a negative net worth After 10
19:46
years of doing that, I was like, I'm done with this.
19:48
I am going to like make making money a like prerequisite for
19:54
all the things that I do. And I'm not going to chase big
19:56
outcomes in that context. I need to like actually set my
19:58
family up well for success. Yeah.
20:00
I there's one, one thing that I think is important to say is in
20:07
software, it is extremely unlikely that you have a $300
20:12
million sale and the founder doesn't make a lot just because
20:17
of the way the ecosystem works, which is different than CPG
20:20
where it's mostly like growth equity investors and those
20:23
people behave differently. Software investors, it is like
20:30
there's this weird thing where there's like a lot of like
20:32
behavior that gets sort of like self regulated in the industry
20:37
because everybody knows each other for better and for worse,
20:40
right? Like, for example, like Gary
20:42
retweeting this tweet or whatever it is, right?
20:44
But the, the good part about it is that there's this like belief
20:47
that for mid sized outcomes, which is like in the hundreds of
20:51
millions in VC world, that actually the right thing to do
20:56
is to make sure that the founder and the team are taken care of.
20:59
So it's actually extremely unlikely that you have a $300
21:02
million exit and that the founder and the team are not
21:05
taken care of. Because for the VC, the
21:08
difference between a two and a 2 1/2 axe is 0, which is exactly
21:13
the issue with like the the math of you.
21:16
You either have to have a massive outcome or like yeah,
21:20
the difference between a double and a triple is very little
21:23
basically. Well, and that's why I think
21:25
that this is like Jeremiah to go back to like the, the way you
21:28
preface your, your statement before, like, I don't think this
21:30
is like necessary, like VC bashing.
21:32
I think this is more about like calling out the dynamics of
21:35
what's happening in the world right now and like educating a
21:37
founder to understand the trade-offs of their decision,
21:41
right? Like we're VC backed and it was
21:43
the right decision for the type of company we're building in
21:46
software where there's a lot of pull, a lot of opportunity, a
21:49
lot of competition, like a lot of costs, right?
21:51
Like that was the right decision for us.
21:53
And like we, we have a really obvious path on how like that
21:59
was the right decision for us as founders, how was the right
22:01
decision for our employees and a really clear path on why that
22:04
will make sense for our investors and our partners.
22:06
And so like, again, it's just, it's not that like you can't
22:10
build a good company VC, it's not like you're, you're
22:12
necessarily going to get your money taken from you.
22:14
But I think, Rishabh, to your point, it's just like you have
22:17
to look at your industry, you have to look at like what the
22:19
patterns are for VCs in that. And it just like make the right
22:23
educated decision. Yeah, I had like a really
22:27
interesting conversation and I'm not sure if you guys had this in
22:30
your companies after the windsurf.
22:33
Like, like, you know, thing, I don't know why of all of the
22:38
deals of this variety, the Windsurf 1 is the one where
22:41
people found morality about the team because there's been like 7
22:45
of them, right? But we found morality this time
22:49
about like taking care of the team.
22:51
And so I was talking to somebody on my team and he was like, Oh
22:53
yeah, what do you think about this?
22:55
And, and I was like, first of all, I think it's total bullshit
22:58
that like we find morality now. Like why now what?
23:03
Why not the first time it happened or the second or the
23:05
3rd or the 4th or the, you know, like we had lots of
23:08
opportunities to to like find morality.
23:11
But I also don't think it's like a like it is, it is kind of
23:17
unreasonable to view it as a moral issue.
23:20
There are deals that are available and there are deals
23:21
that are not available. And like, I think that the like,
23:26
my best guess is that the CEO of Windsurf was like looking down a
23:31
barrel and he's like, either I take care of 50 people or zero.
23:36
That's like probably in reality what happened.
23:39
It's not like 50 or 250, right? Like, I don't, I don't think the
23:44
250 option existed after the open AI deal fell through.
23:50
So I, I, I don't know, like, I, I find these types of things are
23:53
like the, the way in which people talk about the dynamics
23:57
of these things, like at some point actually confounds me.
24:01
And I, I think I mean for sure it makes the job of a founder of
24:04
a SaaS company significantly harder because we have like all
24:08
this random stuff happening basically.
24:12
Well, I think the thing that we can like, we can all certainly
24:14
agree on is like, you don't understand the dynamics of
24:17
something like that unless you've been in that scenario,
24:19
right? Like every time, like as I've
24:21
gone through my career, I've always like cursed up at the
24:24
person above me, right? It's just like, like, like you
24:28
don't know how hard it is to pick people in a layoff until
24:31
you've had to lay people off, right?
24:32
You don't know how hard it is to like cut budgets until you've
24:34
been asked to cut budgets. And like majority of society
24:37
does not know like the pressures that that CEO and founder was
24:40
proud and the dynamics be dealing with.
24:42
So it's very possible up to your point that like, yeah, maybe
24:45
like he knew the dynamics of the company were not looking good
24:48
and like this was the only outcome that had like anything
24:50
positive come out of it. To me, though, it comes down to
24:53
like, what was the expectations in the way that CEO is
24:57
communicating to his team, right?
24:59
Because like that, that to me is more interesting.
25:01
Like I'm really honest with my team of like, here's the
25:03
outcome. I'm trying to get you all to
25:05
right? Like I'm going to try to get
25:07
this to like a selfless journey. If all of a sudden I go do what
25:10
that CEO did, like they have the right to be mad at me, right?
25:13
Because I said a lot of bad expectations.
25:15
This is like how when reality like hits you in the face,
25:18
right? Like when reality hits you in
25:20
the face, it's like like USCEO know like truly like, hey, what
25:28
is like the likely outcomes here for this company?
25:30
Like let's just say we're we're fast forwarding three years in
25:33
the future and there's like a bunch of different paths, right?
25:36
And you're just like, Oh my God, like the expected value of path
25:39
2 and path 3 is like, I'm not sure I'm going to be able to
25:43
deliver an outcome for anyone. But all of a sudden sales loft
25:48
because they bought drift and loved me is like willing to buy
25:52
me and my top 10 executives. Like, what do you do?
25:55
You know what I mean? Like that's, that's like close
25:57
to the reality of like what happens in practice in these
26:01
situations. And here's the other part that
26:02
most people don't appreciate. And I was like trying to tell
26:04
this to the person on my team. I think even worse than the
26:07
acquire acquired company. So like the person getting
26:12
acquired, all of these deals have now taught acquirers that
26:17
they can do this. And this is the bigger issue
26:20
that most people don't get. It's like, oh, like Varun, he
26:23
like left his team out to dry. I'm like, dude, you don't get
26:27
it. Like the M and A-Team team at
26:29
Google said here's the deal because they've done it once
26:33
before, right? Like literally the same team has
26:35
done this exact same deal once before and they're doing it
26:38
again. And they're telling the whole
26:40
market that this type of deal is possible.
26:43
But no one when Twitter was mad at the M and A-Team at Google.
26:47
No one, no one found morality about that.
26:50
They found morality about Varun. Like this poor 28 year old CEO
26:54
who's like probably doing his best.
26:57
I don't know the guy, but like, my guess is that's what, that's
27:01
what's going on, yeah. Yeah, I think it all comes down
27:06
to the nuance, right? If you're, if you're right about
27:09
the ship that they were on and the options in front of them,
27:12
then then yeah, the guy should have some slack, right?
27:15
The way the world is perceiving it, because they don't have that
27:18
nuance. And frankly, we don't know if
27:19
you're right. Like we don't know what the the
27:20
outcomes there were, right? So everyone just always assumes
27:24
like the the company was doing well.
27:25
Like he could have taken care of all the other employees, but
27:28
instead he only looked out for himself.
27:29
Which like, I get why people knee jerk to that.
27:31
But I think your point is like, there are nuances in this that
27:35
like probably all of us and society definitely doesn't
27:38
understand. I think all that is true.
27:41
There's also the option that you could just write it out with
27:44
your team if you want to and see what happens like that.
27:46
That is like that is still on the table in his contacts.
27:49
I'm not saying he should do that, but I am saying like I
27:51
can. I think that some some leaders
27:55
will still do that, right? Like they'll still choose that
27:57
path of like I, I'm not going to look out for myself.
27:59
I'm just going to I'm looking out for what's best for the
28:01
team, what's best for the company, and I'm going to go
28:04
down with the ship for like a better term.
28:05
And there's that. There's at least like a respect
28:07
in that if you go that route. But to be clear, I'm not saying
28:12
that that was the path he should have taken.
28:14
I have no idea what the options look like.
28:16
And I can't even like, let's say let's say he thought he had a
28:20
30% chance of success. Whatever success is measured at
28:23
in this context, you've got 100% chance of whatever is in front
28:26
of you being a success. I don't blame somebody for
28:31
taking the the sure thing in that context either.
28:33
So especially when you are when you have nothing.
28:37
And I don't know what science situation looks like, but yeah.
28:42
Yeah, yeah, it is interesting. I, I think I have the unpopular
28:47
like opinion here, which is like, again, we don't know what
28:50
the details of the company were, but like, Jeremiah, I would do
28:53
what you just described, right? And, and I think that I, and I
28:57
think a lot of people rightly would look at me and be like,
28:59
dude, you're basically saying you would leave a good outcome
29:02
on the table, right? In order to write it down.
29:05
But I just again, this kind of goes back to like where I
29:07
started, which is like every founder has a different rhyme or
29:09
reason for why they started their company, right?
29:11
For some, it's like individual wealth, which like, again,
29:14
logically is like the thing that's easiest to resonate with,
29:17
right? But like the company like that
29:20
I'm running, right? It's like majority of my
29:22
investors were like my bosses, right?
29:24
Like the people that gave me money were like out of their
29:26
own, like personal, like wealth that they, they built my com, my
29:30
career, and then they invested my company.
29:33
Some of the people on my ELT were like some people like folks
29:36
that like I mentored and mentored me.
29:38
And now they're helping me build this company, right?
29:40
And so for me, there are considerations outside of my
29:43
wealth where I'm like, fuck, like if I have a 10% chance of
29:47
making them wealthy or a 90% chance of making me wealthy,
29:51
like I'm going to go for the 10% as like illogical as that might
29:55
be, right? That's just a motivation for me
29:57
and and why I built the company. But Rashad, I get your point,
30:00
which is like, yeah, like, fuck if you could if you can't
30:04
protect them all. Like it protects some of them,
30:06
right? Like, it, it's hard.
30:07
It's a real moral issue on both sides of it, I think.
30:10
Then then if you do turn down the the sure thing, yeah, tell
30:14
everybody about it. Yeah, I stuck it out with you.
30:19
I made sure that I'm taking care of the team.
30:21
Yeah, Tell the market, tell your team.
30:23
Make sure that everybody knows that you're like, you're
30:25
committed and you're at a. Yeah, yeah, before you like buy
30:29
like a a different house and a new car.
30:31
And they're like, actually, I think that guy took a secondary
30:33
on that shit. I was actually gonna literally
30:37
say, and then we can move to another topic.
30:40
But the irony here is actually the fact Pattern suggests that
30:44
he was trying to do the right thing for the team because he
30:46
turned down an investment at a $3 billion evaluation, which
30:51
guarantees him secondary with 100% certainty.
30:54
So he would have been wealthy, but guarantees the team nothing.
30:58
OK, Then he tried to get instead he chose an acquisition at a $3
31:02
billion evaluation at open AI like literally a week after,
31:08
which guarantees the team a lot and him actually nothing because
31:13
he has to wait for open AI to exit.
31:16
And then he landed the plane. And so like the fact pattern if
31:20
I mean like again, at this point, like there's always more
31:24
nuance than you ever know. But I just think that the
31:29
problem is that on Twitter, what plays is this person is now
31:35
wealthy and other people around him or not.
31:38
Like, the reason the Google M and A-Team got no press in this
31:40
whole situation is because no one on the Google M and A-Team
31:44
is like walking away with $100 million for like, structuring
31:47
this deal where they carved out only a piece of the company.
31:50
Well, now you're pointing to just like a larger problem in
31:52
society, which is like nobody reads the damn manual, right?
31:55
Like it's like, do you do you support this bill or not?
31:57
It's just like, I'm just gonna support whatever side like I
32:01
generally resonate with. And it's like, what did you
32:02
read? What's in?
32:03
It's like, Nah, like I just saw someone else write this thing
32:06
and now I have this opinion. You know, like at least you've
32:08
done your due diligence, right? You've seen some of the other
32:10
patterns of like, hey, he turned down this and he did this.
32:13
At least it's like fact based, right versus me over here just
32:15
being like, no, he's an asshole, right, because he fucked his
32:18
team like based off nothing. I don't know anything about the
32:20
guy. It's a bizarre conclusion to
32:22
land on, right? To moralize it, when every party
32:27
was transacting conceptually, they were choosing to make these
32:31
choices and then to, to finish with, oh, well, people were
32:35
harmed in it. There was an outcome that I
32:37
think is bad, right? Well, those employees were
32:40
continuing to transact with the business in a way that they were
32:43
consenting to, right? I don't think that makes much
32:47
sense to moralize it. I will say though, if I was an
32:49
employee at that company, I would feel some way about that.
32:55
So I, I don't know, like, yeah, especially you got stock
33:00
options, all that kind of stuff. Like you've got you, you bought
33:02
into a specific vision leadership and all that and then
33:06
they just get paid and you get nothing.
33:08
I, and I don't actually know that that's the case.
33:09
I, I haven't looked at any of this at all, to be clear, like
33:12
I'm aware of the headlines, but I haven't dug into any of the
33:14
details. But if there was a situation
33:17
where that happened, where something like that happened to
33:18
me and I got nothing, I would. I would not feel good about that
33:22
as an employee. Yeah dude, I don't know man.
33:25
Feel like people always have feelings like I, I'm just like
33:30
you remember when the MailChimp, when MailChimp he sold his
33:33
company and, and people had feelings about that and he was
33:36
like you, you took the job without, without stock because
33:41
like I paid you an amazing salary.
33:43
Like you can feel how you want to feel.
33:46
Like I can't tell you how to feel but like you did not sign
33:51
up for a stock based exit here. Yeah.
33:55
Well, but that would make sense, right, because like he's
33:57
basically saying like you took the job.
33:59
You knew there was no equity. Now you're mad that like the
34:02
equity was worth something and I owned it all.
34:04
Whereas like, I'm not sure, Rashav, if you brought this up
34:06
as an example, because you're looking at my LinkedIn like I
34:08
was at drift when they got bought by Vista and then later
34:11
told the sales loft. And like the difference is, is
34:14
like they accepted that job without it.
34:16
Every company that gives equity like the HR like hiring manager
34:19
sits down with a little fucking spreadsheet, right?
34:21
And they say, like, here's your equity.
34:22
And when we hit these milestones, here's what it's,
34:24
it's going to be worth, right? And as much as we all know that
34:28
is a, a guess and a bet and there's risk in it.
34:32
Most employers sell it as a compensation lever, right?
34:36
They don't say like it is a meaningful part.
34:38
Like I've had, I've been in like negotiations where it's like you
34:41
get to pick one. We can't move both.
34:43
Do you want more equity? Do you want more salary, right?
34:44
Like we're putting it on the same level.
34:46
And so again, it's never a promise, but there are certainly
34:49
companies that do worse about like making it feel like we kind
34:54
of owe you this, right? And when when drift sold and
34:57
like I remember sitting, you know, in the internal all hands
35:00
and all of the early employees were like super excited.
35:03
David, David cancel and alias Torres were like super rich.
35:07
And I remember there being this moment where some of us like mid
35:10
mid level or mid stage employees were like, well, what does this
35:13
mean for us? Right?
35:13
Like are like, are we converting?
35:15
Are we exiting? And there was kind of this
35:17
moment of like, shut up, like this is exciting moment.
35:19
Don't ask questions. And I'm like, but I want to
35:21
understand like, did we get to the promise that we're at?
35:24
And fun fact, like not for me personally, right?
35:26
I was on like the side of Jeremiah.
35:28
I had some feelings about like what the result was because it
35:31
was better for the deal makers in the room than it was for some
35:34
of the employees. So.
35:36
But like you said, it's what you signed up for.
35:40
Yeah, dude, totally. And now you're running your
35:41
company the way you are because of those experiences.
35:44
Yeah, yeah, yeah. Well, that's the that's The
35:46
thing is now you're thinking about it like this is this is my
35:49
situation as well. We sold very early.
35:51
So we never got to a point where like the where that would have
35:55
where the equity would have ever made sense.
35:59
We sold super early, but the, we literally looked at it in terms
36:02
of like, OK, let's make sure that we're issuing shares at a
36:05
low enough strike price that there's potential for there to
36:09
be an outcome. And trying to think about like
36:10
the ways in which an employee would get something in this
36:13
context. And when we sold the people who
36:15
were shareholders where they were actually underwater, cuz
36:17
we, we sold, we sold the business before like we went to
36:22
market and we got an offer and it was, we were, we were looking
36:26
at raising money at the time. And so it just made sense to
36:29
basically change hands and move forward to business.
36:33
So everybody was technically underwater, but we still took
36:36
care of everybody. And it wasn't a lot like there
36:38
wasn't a lot of money in the pool, but everybody got
36:40
something in that context, right?
36:41
Yeah. Well, to Rashad's point, it now
36:44
take his side, which is like and no employee would ever know how
36:49
much like sweat and thinking and like throwing up like went into
36:53
that decision. Yet someone will always be
36:56
angry, right? Like someone will always be
36:58
like, you weren't thinking about us and you're like, there was
37:00
127 different variables that we had to consider here.
37:03
Like someone was going to be unhappy in this outcome.
37:07
It's true because we were like, we were taking money out of
37:10
somebody else's pocket. Somebody, all of us really
37:14
basically offered who legally were owed the money, had to say,
37:18
yes, we'll take money out of our pockets to distribute to other
37:20
people who don't legally get anything.
37:22
And yeah, those conversations that have to happen in that
37:24
context where it's like, OK, well, what does that look like?
37:27
Who get, How much do you, how much do you give away?
37:29
Who? Whose is it?
37:30
Like, yeah, it's hard stuff. You know what's funny?
37:34
You know what's funny? Josh is.
37:35
I don't know why we say blood, sweat and tears when in reality
37:38
it's usually vomit it. Is vomit.
37:40
It's always vomit. It's always fucking vomit.
37:42
Yeah, like as soon as you said that I was like, it's funny.
37:48
Like I've never had blood, sweat or tears about it, but not have
37:52
I had vomit about the stuff. Yeah, I think it's funny.
37:56
I think for for people that are listening that haven't been in
37:58
those like leadership or founder positions, Like it, it sounds
38:01
like like metaphorical, but like I remember the first time I had
38:05
to lay someone off, like I literally threw up the night
38:07
before. Like it is such a visceral
38:10
feeling. And I think this is it kind of
38:11
all like it's funny. All the topics we're talking
38:13
about here are sort of this sort of like should employees plus
38:17
their employers, right? Is like basically what we're
38:20
centering around here. And what people don't understand
38:22
is like almost always the person on the other side of the table
38:27
delivering the news, good or bad, feels as shitty as you
38:31
receiving the news, right? Whether it's like a layoff,
38:34
whether it's like an equity thing, like, yeah, like, again,
38:38
I kind of like I've pivoted my position here.
38:39
Now I'm on your side shop, which is like, this guy probably felt
38:42
like shit no matter what the decision was, right?
38:44
And he probably had a ton of logic on like, why that was the
38:47
right thing for him and the team that got rewarded as a side
38:50
effect of it. And.
38:52
Talking about the nuance thing, there's nuance and like the
38:55
actual circumstances and all that kind of stuff.
38:57
As somebody making those kinds of decisions, there's nuance in
38:59
your own thought. You're constantly going in
39:01
circles around like, OK, well, what about this factor?
39:03
What about that factor? What about this?
39:05
And you often times are coming to a decision where it's very
39:09
rare that I make a decision with 100% confidence in that
39:11
decision, right? Like I'm, I'm going to make that
39:14
decision and commit to that decision.
39:16
But at the end of the day, I'm I'm not making decisions where
39:20
it's like, I know with 100% certainty this is the right
39:23
thing. That goes back like if you're
39:24
talking about like different like strategies for a founder
39:27
and like whether they should see it or bootstrap for all this
39:30
sort of stuff. Like again, you probably like
39:32
scientifically you can make the most money by bootstrapping and
39:34
just like sussing it out. But the, the whole like if you
39:37
do get on the ABCD treadmill, it's like you selfishly can
39:41
probably make a little bit of money along the way as the
39:43
founder through those secondaries, right?
39:45
Like if you're, if you're comfortable with sort of like
39:48
individually winning. Well, perhaps your team doesn't
39:50
like there's definitely some founders that made a lot of
39:52
money on the way where nobody else did.
39:54
And is that there's there's limits to that.
39:57
But I will say as somebody who's been a founder who is struggling
40:00
to pay their bills, having like, I actually think that founders
40:04
should. There's a lot of E CS I think
40:06
pushes the idea of like, oh, you should be hungry.
40:07
You should you'd be as hungry as possible until you get to the
40:10
exit. I don't.
40:13
I don't believe that that's the case because I think you make
40:15
bad decisions in that context. And so I actually think it's
40:18
probably healthy for leadership teams at startups to take some
40:22
secondary so that you're actually de risking your own
40:24
personal position enough that you can see this out and see the
40:29
end game here. So that would be my thought on
40:32
that. Yeah, I'm, I'm both internally
40:35
open and externally open that I think secondary is good.
40:39
And not only will I take it at every opportunity, but I think
40:43
that I will try to make it as available as I can given the
40:47
circum. Like our B was oversubscribed,
40:49
like Jeremiah mentioned. And that equals to opportunity
40:54
for secondary should anybody want it, right?
40:56
Whether it's an early investor, an employee, whatever it is.
40:59
And I, I think like, I think not only do I think that that is
41:05
good and important for the ecosystem because otherwise it's
41:08
impossible to bet big. Like nominally Stripe is forever
41:13
in secondary land, right? Like as the most extreme example
41:18
of this, like they will like never be in a like normal liquid
41:21
stock market. They're just like secondary in
41:25
their life now. And so I think that that's like
41:29
1 extreme, but it suggests that it's like not only possible, but
41:34
healthy, right? Gilly Renan, who's like one of
41:38
the best investors on the planet right now.
41:41
Do you know this VC fund called Cyber starts by any chance?
41:47
Probably the best VC, So probably the best seed stage
41:49
investor on the planet. He started his fund like 10
41:52
years ago and I or like maybe a little bit less.
41:56
And I think he's had eight companies that are unicorns, one
42:01
of which was Whiz. And I think like his total
42:04
portfolio value, I mean, Whiz obviously is like half of it,
42:07
but I think his total portfolio value is like 60 billion out of
42:11
like, yeah, it's like some ridiculous math.
42:16
But the number one thing he did 10 years in is start a $300
42:20
million secondary fund. And it's, it's, it's like
42:23
literally for as these companies are like going for big outcomes,
42:28
he knows he has to provide liquidity to the people who work
42:31
there. Yeah, I I don't know why it's
42:34
like and and I'm hoping like it used to be really frowned upon.
42:37
I think VCs have slowly started to to realize is actually smart.
42:40
I think it was like it was one of the HubSpot feathers.
42:43
Maybe it was it was Brian or something like he said, like the
42:46
the secondary he took it like B or C was like the worst
42:50
financial decision he had ever made, but the best company
42:53
decision he had ever made, right?
42:55
Because just it takes all that pressure off.
42:57
And I think, by the way, feces are smart enough to understand
43:01
why you're taking a secondary, right?
43:03
Like if you're taking a secondary to say like, Hey, I
43:05
want to pay off my mortgage and allow me to think clear, allow
43:07
me to take care of some people, right?
43:09
Allow me to like operate the rest of the business like they
43:11
can. They can tell if that's true
43:12
versus all of a sudden you're like, dude, I want to take
43:14
secondary because I feel like I like a bunch of it.
43:16
NVIDIA like shares would be like really fucking dope right now.
43:19
And they're like, oh, so you think that like the investment
43:22
in that is like better than the one you're taking off the table?
43:24
Like they know if it's because you're like trying to get
43:26
yourself out versus like create stability in your mind and like
43:31
lock into the next chapters of building the company.
43:34
And total amount matters too, right?
43:36
It's like if you take out a few million in secondary, you're
43:38
probably not trying to like get yourself out of the business.
43:41
If you're like, give me $400 million, that's that, right?
43:44
Yeah, yeah, yeah, you're done at that point, yeah.
43:48
I will say there's one situation I'm going to get flamed for
43:52
doing this publicly, but there's one situation in which there was
43:55
a company I wanted to invest in in their seed round.
44:00
And then I got the docs and it was a secondary and the founder
44:04
was taking a secondary in the seed round, like literally at
44:07
company formation. And I was like, now I don't know
44:13
how to feel like I'm super pro secondary, but in the seed round
44:19
I'm like, man, even like I'm hyper aggressive and even I was
44:24
like, man, like this is a different game.
44:26
Like now I'm gonna tap out like there are games that even I
44:31
can't play. That's interesting.
44:32
Do you know how much they were looking to get off that
44:35
secondary? I do I dude any more information
44:38
than what I said? Yeah.
44:40
Is going to make it easy to fix. Like there's enough people who
44:44
listen to this pod who I am confident will be able to figure
44:47
out who it is. Yeah.
44:49
Will not ask any more questions about that then.
44:50
But yeah, it's it does feel like you should as a founder, you
44:54
should have some skin in the game as well.
44:55
Like you, you need to have some evidence that you can continue
44:58
to carry out would be how I would think about if I was an
45:01
investor as well. What is your opinion on on like
45:03
the YC advice of like minimize dilution?
45:07
Cuz that that general, I mean, there is I know enough other YC
45:11
founders that I know that that is like the number one advice
45:14
that is like being passed around.
45:17
And I'm curious how you think about that.
45:21
It depends on like how deep you like dig into it.
45:23
Like I think of like the midwit meme a lot, which is like if
45:26
you, if your, if your goal is to raise the minimal amount that
45:30
you need, like that's fine advice, right?
45:32
Like don't, don't raise for like the crazy sake of it.
45:35
I think when I think that advice of like raise the least you need
45:40
is slightly different than like optimize for dilution, right?
45:44
Optimize for dilution is a little bit more of this like VC
45:48
overlordy. Like again, YC is like on our
45:51
cap table. And so we have a ton of respect
45:53
for like the what they allowed us to unlock.
45:55
But like we all understand like what YC represents.
45:57
And like, I don't know, does that make sense?
45:59
Like, do you know what I mean by like there's a difference
46:01
between like optimizing for the cache you need, Yeah.
46:04
Actually, this is precisely my problem.
46:06
Yeah, my precise problem is that people are optimizing for
46:10
dilution over other variables. So at the same cash, like I'll
46:15
give you an example different deal.
46:17
The I know the founder and he was like he was optimizing for
46:22
dilution over fund and partner. And so he chose because the
46:28
other firm and partner were willing to give a higher price.
46:30
Even though I know that that firm and partner are like not
46:34
going to be as good long term because I know I know all of the
46:36
firms and partners he was talking to in this context.
46:39
So he like prioritized dilution over firm and partner for the
46:43
same dollars in and that I think I'm like, where is this coming
46:47
from? You know, like, yeah, so.
46:51
You know where it's coming from, the big logo out in NYC.
46:55
But yeah, it's it, it's really strange and and I think it's
46:59
like it's an over optimization. And you know, if you're
47:02
comparing like dumb money to dumb money, like sure, like
47:06
valuation in right. But it's so easy.
47:10
Like I look at our cap table, right?
47:11
And there's some folks on there that I'm I'm really thankful are
47:13
there, but there are others that I'm like, wow, you've opened
47:16
doors for us. You've like changed the way
47:17
you've been strategic, right? You have experience in the space
47:20
where we're building and there's all these other variables where,
47:24
yeah, I think to your point, VC in in a lot of founder
47:29
mentality, especially coming out of these like large accelerator
47:31
programs, like VC is not looked at as a partner.
47:34
It's looked at as like a required step of like, Yep,
47:37
you're gonna go do that thing and like be damned who it is.
47:40
And like, it's even in the psyche of like how some of these
47:45
accelerator programs work, right?
47:47
It's like, Hey, none of us are going to talk to these guys
47:50
until like this date. We're going to like coordinate
47:53
the date that we're allowed to start talking to them, right?
47:56
We're going to like coordinate the way that we talk about our
47:58
round being oversubscribed to, right?
47:59
It's all through the lens of like, let's play games with them
48:03
and like, let's be super fair, like they play games with us as
48:05
well. But like it's a, it's a two way
48:08
St. that, that a lot of these accelerators are kind of like
48:12
planting the seed. 11 interesting question I have for
48:17
both uses you've taken BC funding.
48:20
I kind of look at high higher valuation as being as
48:24
potentially limiting optionality in your business, which if if
48:26
your plan is to just raise, you know a BCDEF, whatever like that
48:31
really doesn't matter as much. But like for, for you, Josh,
48:34
like that's one thing I think about is like, OK, if you, if
48:37
you raise money at a $10 million versus valuation versus a $20
48:40
million valuation, that actually that $20 million valuation
48:43
reduces your optionality potentially if you don't hit the
48:48
milestones that you're hoping you hit.
48:49
So that's, I don't know, I'm curious what you 2 think about
48:53
that because I almost think I'd, I'd actually prefer to, to take
48:57
cash at a lower valuation. There's limits to that,
48:59
obviously, but yeah. Yeah, I'm curious.
49:02
Like Rishab is more experienced sort of further down the track
49:04
than than I do. I've only bootstrapped 1 and
49:06
sold it and now I'm in my first like VC backed.
49:09
But like to me, I there's always 2 questions.
49:12
It's like am I going to need to jump through another hoop?
49:15
And if I am, how small is the hoop I'm going to jump through,
49:18
right. So like, if you know, you're not
49:20
going to fundraise again, like, sure, like optimize for for the
49:23
valuation at that point, right? But I think we've all learned,
49:26
like you turn around any corner in a startup and you're like,
49:29
oh, wasn't expecting that problem or, oh, product market
49:31
fit went away. Like wish I had a little bit
49:33
more cash. Like it's really hard to predict
49:35
that you're never going to have to jump through another hoop
49:37
again. And so you're almost always
49:40
thinking about like, whatever, I take this out, I have to expect
49:42
that the next hoop is going to be harder to jump through.
49:44
It's like, yeah, that's my perspective.
49:46
Rishabh, what do you think? Yeah, I, I, I roughly agree.
49:51
I, I think you should never price maximize, which is why
49:53
this like minimize dilution thing is like crazy to me.
49:57
I think you should partner maximize and cash maximize.
50:01
So like I think if you think you need X to hit the next
50:06
milestone, raise 2X because you're wrong.
50:10
And if you think, and then you should just partner maximize
50:14
precisely Jeremiah, because actually the thing that limits
50:17
optionality is not your valuation.
50:19
It's whether or not that partner is going to be supportive to the
50:22
outcomes that are available to you at that point in time.
50:25
Because we all know that like shit happens, right?
50:31
Like, let's just say you like, I'm going to make up a story,
50:34
right? Like let's just say somebody
50:35
raises some insane round at like a billion dollar valuation,
50:39
right, like some AI lab something something OK, and so
50:43
they put in like 100 million at like a billion dollar valuation
50:48
and it's like Google comes knocking and it's like, I'm
50:50
going to pay you 500 for it. Like the fact that you raised
50:53
that billion dollar valuation is not actually the it's it's it's
50:58
that's not going to be the issue.
50:59
The issue is going to be like just the partner get it so.
51:03
Yeah. Is the partner actually going
51:04
to? Because the partner may be OK
51:05
with that outcome. Guys, well, this was fun.
51:09
Was this the topic for today or did I just completely derail
51:12
what we were supposed to be talking about?
51:13
Where you guys were supposed to be talking about?
51:15
We didn't touch on any of the topics, I don't think.
51:17
Yeah. Well, thanks for having me, this
51:20
is fun anyways. Josh, I have a question before
51:23
you go. What is the goal for that?
51:25
For, for us, all right, here's like a little bit of the
51:29
political answer, right? We, we, we know we have to
51:31
balance this because we are VC backed, which is the thing that
51:34
continues to surprise me is it goes back to like jumping
51:38
through the hoops. There's always more hoops than I
51:41
thought there was going to be, right?
51:42
When I started the company, I was like, man, wouldn't it be
51:44
sweet to make like $10 million, like let's exit as soon as we
51:47
can, right? And for some bootstrap founders,
51:50
like, that's the perfect outcome.
51:52
Like optimize for yourself, right?
51:54
I'm at the, the stage of the company where it's like, man,
51:57
like I can see this getting to $100 million.
51:59
I can see us building a billion dollar company, right.
52:01
And of course, like selfish, I need to figure out like how to
52:03
optimize for me and my family and my employees.
52:06
But like I, I do see a really big opportunity in front of us.
52:09
Like we're, we're going super deep into like ad tech right
52:12
now, which is like guys, you want to talk about like wasted
52:14
money and big dollars like advertising is where it's at
52:17
like B to B advertising loans like $40 billion.
52:20
Like we got the guys on this call that know all about that.
52:23
Like there's just so much opportunity in that space.
52:26
So like we're going big. Like I've never been the CEO
52:28
that like points to left field and says like I'm about to hit a
52:31
home run out of here. But like, I do see, I see the
52:34
ballpark we're in and I think there's some massive
52:36
opportunities to run around the bases.
52:39
I love that. All right, man, I'm going to get
52:41
my marketing team to take a sales call with you guys.
52:44
This was amazing. Let's do it.
52:46
Great to see you guys. Thanks for having me.