Latest / Beyond Fulfillment Podcast / Raising Capital vs. Bootstrapping: Unpacking the Startup Growth Dilemma with Andrew Ackerman

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Raising Capital vs. Bootstrapping: Unpacking the Startup Growth Dilemma with Andrew Ackerman · Beyond Fulfillment Podcast

• 0:04
  Huge.
• 0:04
  We had some parents coming to us and saying, guys, you like Crack for parents.
• 0:08
  In a culture obsessed with growth at all costs, we rarely hear the truth about long term survival.
• 0:15
  My guest today, Andrew ackerman, has spent 25 years navigating the messy middle where most companies fail.
• 0:23
  A two time founder and veteran investor, Andrew's experience spans Fortune 100, consulting, managing director at DreamIt, and bootstrapping through the 911 crisis.
• 0:36
  He has seen the full lifecycle of leadership from every side of the table.
• 0:40
  Today we're moving past the hype to focus on durability, looking at persistence versus stubbornness, knowing when to pivot and when to double.
• 0:49
  Down the investor's lens, what separates an investable team from just a good idea and the power of story.
• 0:57
  Why?
• 0:57
  His book, the Entrepreneur's Odyssey, uses narrative to help founders survive the trenches.
• 1:04
  Whether you're in the trenches or just investing in the next generation of builders, this is your road map for building something that lasts.
• 1:11
  As always, if you found value from this content, please like and subscribe.
• 1:17
  All right, Andrew Ackerman, welcome to Beyond Fulfillment.
• 1:20
  Hey, thanks for having me.
• 1:22
  Absolutely.
• 1:23
  We appreciate you taking the time.
• 1:25
  So Andrew, you've had Quite an illustrious 25 year plus career as an entrepreneur.
• 1:32
  You've founded several startups, had some successful exits, angel investor, been involved with several accelerators, you teach entrepreneurship, and most recently you've written a novel about entrepreneurship called the Entrepreneur's Odyssey.
• 1:51
  So if you could, for our listeners, I'm sure this will all be very valuable stuff for them.
• 1:55
  Can you just quickly give us your backstory and how you became an entrepreneur?
• 2:00
  Yeah, yeah.
• 2:01
  So the, the truth is like, my story is kind of a zigzag.
• 2:04
  Like a lot of people have these really great bios where everything leads from beginning to end.
• 2:08
  I jumped all over the place.
• 2:10
  You know, I started my career as a consultant dealing with like Fortune 100 clients.
• 2:14
  Big, big businesses.
• 2:17
  Ultimately decided that wasn't for me.
• 2:19
  I wanted something faster, scrappier, cooler.
• 2:22
  And that was like 99, 2000, where the Internet was starting.
• 2:24
  So I jumped, joined the first startup, did that for eight years, got out.
• 2:30
  Then I had an opportunity to join a family office.
• 2:33
  I'm like, well, that's great, let's invest in startups.
• 2:35
  Let's do a whole bunch of other things.
• 2:38
  And from there I ended up going back and doing another startup.
• 2:42
  That one was kind of interesting.
• 2:44
  Didn't end up, you know, the expression experience is what you get when you didn't get what you wanted.
• 2:48
  That was an awesome experience.
• 2:50
  So then I went back to another side of the table and I started investing kind of more systematically with a company called Dream Adventures.
• 2:58
  So, you know, don't for your audience, like, don't be afraid of like jumping around.
• 3:04
  Don't be afraid of having kind of a varied career path.
• 3:06
  Like it can work out and it can be really interesting.
• 3:10
  Okay.
• 3:10
  Yeah, appreciate, appreciate that intro.
• 3:12
  And there's a whole lot to unpack there.
• 3:15
  So let's, let's talk about your first startup.
• 3:17
  So you're kind of young in your career.
• 3:19
  You do the consulting thing at the Fortune 100 with the Fortune 100 companies, realize that's not what you want.
• 3:25
  And so you, you get involved with this, this startup called Bunk1, which is right around the advent of the Internet.
• 3:34
  So I mean, what.
• 3:35
  Take us back to that time as you jumped in and I'm sure you're excited, as many founders are.
• 3:41
  I mean, what, what was that like?
• 3:43
  That experience is starting out your first entrepreneurial venture?
• 3:47
  Yeah.
• 3:47
  So let me kind of paint the picture because some of your audience might actually not remember this.
• 3:51
  This was around 99, 2000.
• 3:53
  Internet was still young and new.
• 3:54
  Everyone was talking about like getting eyeballs, right?
• 3:57
  Like no one had figured out revenue models yet.
• 4:00
  You had companies like, even, like Lycos was still around.
• 4:03
  Excite was still around.
• 4:05
  This was kind of the Wild West.
• 4:07
  Stuff was hard back then.
• 4:09
  Even putting up a webpage was hard.
• 4:10
  There was nothing like Squarespace or wix.
• 4:12
  You had to kind of code it yourself.
• 4:14
  So that's the world I'm coming into.
• 4:16
  And I team up with these two guys.
• 4:18
  They're huge camp fanatics.
• 4:21
  They loved, I loved camp too, but they were like beyond.
• 4:24
  And they wanted to do something in the summer camp space.
• 4:27
  And it began with the vision that kids should be out there playing, but the parents, they want to know what's going on.
• 4:34
  They should be able to see those photos.
• 4:35
  They should be able to send messages to their kids, but all without ruining the integrity of the camp experience.
• 4:42
  From there, we built a whole bunch of features and it was really hard back then.
• 4:46
  Even taking photos and uploading them were hard back then.
• 4:48
  We made a very simple password protected photo gallery where camps could take and post these photos for, for their parents to view.
• 4:57
  And it was, let me tell you what actually happens with the knowledge that runs your business.
• 5:04
  Someone spends a week writing an sop.
• 5:06
  It goes in a binder, the binder goes on a shelf.
• 5:09
  And when a new hire has a question, they find the person who knows and they ask them.
• 5:15
  That's tribal Knowledge, it's valuable and it walks out the door every time someone leaves.
• 5:21
  With Quickly Doc, you just film your experts doing the job.
• 5:25
  It takes five minutes.
• 5:27
  QuicklyDoc turns that into a professional searchable documentation that your team can pull up right from their phone.
• 5:35
  So when someone searches how do I reset the controller?
• 5:39
  There's the answer straight from the person who actually knows.
• 5:43
  Film it once, reference it forever.
• 5:46
  Go to QuicklyDoc.com beyond for your free pilot and stop losing what your best people know.
• 5:53
  We had some parents coming to us and saying, guys, you're like crack for parents.
• 5:58
  Like, I spend two months of my year glued to the computer, hitting refresh, just waiting for those photos of my kids to pop up.
• 6:05
  It seems a little trivial right now, but like, that was hard back then and that was the kind of the basis of the first business.
• 6:12
  I mean, that sounds like social media before social media had been invented.
• 6:16
  Well, so there was the beginning of it.
• 6:18
  It wasn't social media in that we didn't have a lot of parents talking to other parents.
• 6:22
  It was really just they would come, they go to their camp's website, they'd find within that website the, the Bunk one services, the photo gallery, the email systems.
• 6:31
  It was more like a one way window into camp.
• 6:35
  Okay, all right.
• 6:36
  So you mentioned everything was hard back then and, but ultimately you were able to get it done and deliver the value.
• 6:42
  And a lot of parents really loved it and like you said, they were, they were like addicted to it.
• 6:46
  So, I mean, that whole process too, I mean, what, what was that in terms of the, the first step in entrepreneurship?
• 6:56
  I mean, challenges, setbacks, what with that?
• 6:59
  Can you speak more to that?
• 7:00
  Yeah.
• 7:01
  So let's talk about one of the first ones that kind of set me back.
• 7:04
  Right, so again, back in this time, not a lot of sophisticated websites.
• 7:09
  We figured we'd go to conferences and we went to like these physical conferences where you have directors walking around looking at everything from like pool toys to peanut butter substitutes.
• 7:18
  And here we are in our little booth at the furthest corner of the camp conference because we can't afford a big booth.
• 7:25
  And as the directors are passing by, we're like, hey, does your camp have a website?
• 7:28
  And like, yeah, yeah, we do.
• 7:30
  And they keep walking.
• 7:31
  And like, we know that what they mean by a website is they have a page or they have like the equivalent of their brochure and that's it.
• 7:40
  But in their mind that's problem solved.
• 7:42
  They've other things they need to do.
• 7:44
  But we knew that they had no idea what they were missing.
• 7:47
  We just, we couldn't crack the code of how to get them out of that preconception that they already had that problem solved.
• 7:54
  Until we figured out that the key phrase was, but do you have a password protected photo gallery?
• 8:00
  And then all of a sudden you'd see them stop and come back because they'd had their parents, their camp parents kept saying, I want to see photos of my kids.
• 8:08
  And they were all worried that if they put photos of kids up there, like unsavory characters would look at them and bad things would happen.
• 8:14
  So the magic word was that 1Password protected photo gallery.
• 8:20
  Because that was a pain point they had.
• 8:22
  And that was the first time I learned the value of, or the necessity as a startup of having that one, say eight second phrase, one eight second question that actually went right to the core of the pain point
• 8:37
  that you're solving and got people's attention.
• 8:40
  And we learned it right there standing in front of a booth, in front of like two or three thousand camp directors.
• 8:46
  Okay, so that's amazing.
• 8:47
  So you have this aha moment too because obviously everyone in sales and everyone in business, they know about finding the pain points and really speaking to that.
• 8:57
  But you quickly realized that how important it was to really get to the heart of that matter immediately.
• 9:03
  And so when you figured that out and started using that as your marketing, in your marketing, what happened next?
• 9:09
  So immediately you'd see it like at the conference, they're walking past, you have a website, they keep walking, you have a password protected photo, say stop, turn around.
• 9:17
  And came to us.
• 9:18
  Like the phone calls went better, the emails got responded.
• 9:22
  Like once you have that, it's like the key to the lock, it just starts opening up.
• 9:26
  So ended up, started making more sales that way.
• 9:28
  And then we applied the same kind of logic to the other products that we rolled out.
• 9:33
  Worked for some, didn't work for others.
• 9:34
  But that's how you know if you have a real pain point.
• 9:37
  But that was, that was one of the main turning points.
• 9:40
  You know, I won't say it was easy after that.
• 9:42
  I mean it, there's still a lot more we had to do.
• 9:45
  But that was the first time where we started to realize, yeah, we've got something here, right?
• 9:50
  This is going to work.
• 9:52
  Okay.
• 9:53
  And so through that process too, I believe you were there for eight years and you eventually scaled it up and exited that company.
• 10:00
  I mean, what was that whole, you know, because like you said, it didn't get so much easier after that.
• 10:05
  Clearly the sales started coming in and then Everyone, many are familiar with the pains of growing and you know, all the, the stuff you have to do.
• 10:16
  But what was that process of scaling that like into, to the eventual exit?
• 10:20
  Oh, super bumpy, right?
• 10:22
  I mean, the highs are highs and the lows are low, right?
• 10:24
  So I remember about a couple of months before our first summer, what was our key competitor went out of business.
• 10:31
  And we're ecstatic.
• 10:32
  We're like, okay, that's great.
• 10:33
  Field's all ours.
• 10:35
  Awesome.
• 10:36
  And you know, we get through the summer, all of a sudden, like, you know, we're kind of out of money, right?
• 10:42
  We had, and here's the best part, right?
• 10:44
  We had a VC that was interested in funding us.
• 10:47
  We're all excited, okay.
• 10:48
  You know, we're low on money.
• 10:49
  It's no big deal.
• 10:50
  We have a term sheet.
• 10:50
  We were actually slow walking them because we wanted the numbers from the summer to come back really strong and we were going to try to get a higher valuation.
• 10:58
  What we didn't count on was two planes hitting the World Trade Center.
• 11:05
  Our VC was actually in the World Trade Center.
• 11:08
  And on 911 it ceased to exist.
• 11:12
  Fortunately, the guys that we were talking to were still around.
• 11:14
  They were okay, but company didn't exist.
• 11:16
  So neither did the term sheet, which meant we didn't have money coming in, which meant that we went for over a year without salary because we had no other choice.
• 11:29
  But yeah, the lows are low.
• 11:32
  Okay, so clearly that was a low point.
• 11:34
  And I mean, just, just talk about like the, the mental battle of making it through that, right?
• 11:40
  Where like you're already struggling and like you said, cash flow, you have this term sheet, you have this Hope for this VC you're trying to negotiate for the best deal.
• 11:49
  911 happens, wipes them out.
• 11:51
  And then I'm sure at that point you might not have foreseen having to go a whole nother year without salary.
• 11:58
  But I mean, what, what was the, the mental battle like going, going through that as a founder?
• 12:03
  So in some ways it was good because we didn't know.
• 12:07
  We didn't know, right?
• 12:08
  You know, we were like stupidly optimistic, but we knew we were gonna go most of a year without salary because we were in a seasonal business, right?
• 12:16
  All our money came in in the summer.
• 12:18
  So when we didn't get the VC money in fall, we knew like, well, there's not going to be any more money coming in until June.
• 12:25
  So we knew we were going at least that long without getting paid.
• 12:29
  Now the one thing we had going for us was that we were all in the right stages in our life for that.
• 12:33
  We were all single guys, and we all had a little bit of money socked away.
• 12:38
  But not everyone's lucky.
• 12:40
  Not everyone's in that point in their life.
• 12:42
  And a big decision about whether or not now's the right time to jump out and do a startup has to be a discussion of, where am I in my life and what kind of bumps can I absorb?
• 12:55
  If you're married, does your spouse have healthcare?
• 12:58
  If you have kids, they have a stable job and they're gonna pay for private school if that's what you're doing.
• 13:05
  I probably couldn't have done that at this stage of my life, just gone entirely without salary for a whole year, hoping that in the summer we'd make enough money that, you know, we'd be over the hump.
• 13:18
  Okay, so you go through that period, and then what.
• 13:21
  What happens next?
• 13:23
  So fortunately, we were right.
• 13:25
  And fortunately, we were right.
• 13:26
  Summer was great.
• 13:28
  We made enough money to start paying ourselves.
• 13:30
  Not like, awesome money, but enough that it's like, okay, we can breathe a little easier.
• 13:34
  We even brought on a few more people, and then we just kept growing.
• 13:38
  We grew organically.
• 13:39
  Now, I think we made a mistake, actually.
• 13:41
  Right.
• 13:41
  I think we should have gone out and gotten more VC money.
• 13:46
  I think we should have done that.
• 13:48
  Because even if we.
• 13:49
  Even though we were able to bootstrap, at the end of the day, there's a certain discipline that people who have done this multiple times bring to the table.
• 13:58
  And I think having that advice and that discipline in, you know, behind us would have made us a better company.
• 14:06
  But we didn't.
• 14:07
  We bootstrapped, and we just kept growing.
• 14:08
  And, you know, ultimately we.
• 14:10
  We look tags at the company.
• 14:13
  All right, and what.
• 14:13
  What was that process like?
• 14:15
  Did you basically come to the decision, like, it's.
• 14:17
  It's time to exit and actively put the company up for sale, or.
• 14:21
  How did that.
• 14:22
  That come about?
• 14:23
  Yeah, it's never a simple story.
• 14:25
  Right.
• 14:25
  So, you know, put yourself in the mindset of 2005.
• 14:29
  Right.
• 14:29
  Super booming time in the Internet.
• 14:31
  Like, you know, we had a really bad time in 01.
• 14:35
  It was really hard to get money.
• 14:36
  A lot of people didn't.
• 14:37
  A lot of companies went under 2002 kind of bad, but we made it through all that in 05.
• 14:42
  It's booming again.
• 14:43
  A lot of the big companies are thinking about, we got to do stuff on this Internet thing, and we can't move as fast to these startups.
• 14:50
  So there are a lot of big companies that were acquiring Other companies.
• 14:54
  So I went to the CEO and I said, listen, we've been doing this for five years now.
• 14:59
  The market's hot.
• 15:01
  What do you think about putting the company up and seeing what we can get for it?
• 15:04
  And he said, you know, I'm okay.
• 15:06
  I just don't want to sell it for less than it's worth.
• 15:08
  We had a discussion about what we thought, you know, the company would.
• 15:11
  Would sell for, and we'd bring in an investment banker to go out and kind of shop it around.
• 15:19
  Found a great guy, came in pretty much where I thought the.
• 15:23
  The offer.
• 15:24
  We talked, like, 100 different companies, everything from like, the usual suspects to guys like Hallmark.
• 15:31
  Right.
• 15:31
  Because, you know, the messages you would send from your computer to your kids, they're printing out, are kind of like greeting cards in a way.
• 15:37
  So it's really creative process.
• 15:41
  Went through the whole process.
• 15:41
  Got an offer I thought was fair.
• 15:43
  The CEO thought was a little bit low.
• 15:45
  So there we are.
• 15:46
  We're kind of sitting at the table, and I said to him, listen, if you think that offer is too low, you should be thrilled to buy me out at that price.
• 15:54
  But I've been here at this point, it was six years.
• 15:56
  By the time we were done with the process, almost seven.
• 15:59
  I said, if you don't think that's a good price, buy me out.
• 16:02
  You should be thrilled to get the shares back.
• 16:05
  I'm just ready to move on.
• 16:07
  So ultimately, we worked something out.
• 16:08
  There was an orderly transition, and he bought me out.
• 16:10
  Company was sold a couple years later roughly at the same valuation.
• 16:14
  So it all kind of worked out well all around, but that's it.
• 16:20
  I didn't realize this coming in.
• 16:23
  Selling the company is never a straightforward thing.
• 16:29
  Right.
• 16:29
  There's always twists and turns.
• 16:32
  Okay, all right, so like you said, you got the exit done, and then, you know, you.
• 16:37
  You joined a family office and you got the experience of investing in a lot more startups in the coming years.
• 16:45
  I mean, talk.
• 16:46
  Because, I mean, again, very ultimately, despite the bumps in the road, very successful, first entreprene venture.
• 16:53
  Right.
• 16:53
  To exit and then have the ability to invest in others.
• 16:57
  I mean, what.
• 16:57
  What did that process teach you in terms of dealing with all those subsequent startups and them pitching you for money?
• 17:05
  Yeah.
• 17:05
  So it's kind of interesting, right?
• 17:06
  You know, now you take for granted, like, this rich universe of, like, blogs and podcasts about entrepreneurship and about investing.
• 17:15
  Back then, there really wasn't that many, weren't a lot of resources out there, so you relied on kind of your own experience and if you knew other people in the same boat as you, kind of what they did.
• 17:25
  So I made tons of mistakes, right?
• 17:27
  I even started my first couple of angel investments before I left dreamit because we were making a little bit of money and I just got totally lucky.
• 17:34
  I got lucky.
• 17:35
  In retrospect, I should never have done that investment.
• 17:37
  It was a pharmaceutical investment.
• 17:39
  I know nothing about pharma, but I got lucky.
• 17:43
  So I got a little hooked on it.
• 17:44
  I made a couple other investments.
• 17:46
  The thing that I found was kind of interesting was the path from an angel investor who makes an investment a month, maybe an investment every two months, all the way through to making it more systematically and ultimately running
• 17:59
  an accelerator.
• 18:01
  So I went from thinking, hey, man, I'm seeing like three or four startups a month.
• 18:05
  I'm going to make an investment every two or three months.
• 18:07
  That's awesome.
• 18:08
  I got great deal flow to then at the end of, like, after the family office, after my next startup, when I'm running DreamIt's accelerator program, they're like, great.
• 18:17
  You need 12 great startups for your cohort.
• 18:20
  Applications open.
• 18:21
  You've got two months to find them.
• 18:23
  And I looked at over a thousand applications to get to those 12.
• 18:29
  So I went from like getting a handful of inbound a month of thinking I was awesome to getting a thousand startups in two months thinking I wish I had more to choose from.
• 18:40
  That was like a huge change in mindset.
• 18:44
  Okay, yeah, that's like night and day, right?
• 18:46
  So, I mean, look, let's talk about that too, because you have 12 spots to fill.
• 18:51
  You have roughly a thousand companies to look at.
• 18:53
  That.
• 18:53
  That's roughly 1%.
• 18:55
  And you're saying I need more to choose from.
• 18:59
  So, I mean, why do the.
• 19:01
  I mean, 99 or so of all these companies you look at not.
• 19:05
  I mean, not cut it.
• 19:08
  You know, there's a whole bunch of reasons, right?
• 19:09
  Like, I kind of joke around that, like, all the successful good startups are kind of the same in a certain way.
• 19:15
  And what I mean by that is, like, the startup has to check a whole bunch of boxes for it to be investable, for it to be ready, right?
• 19:22
  It's got to have like a painful problem.
• 19:24
  It's got to have a great solution, unique solution to the problem.
• 19:26
  It's got to be something that's timely, right?
• 19:28
  There's a good reason why it couldn't have been done five years ago.
• 19:31
  The market has to be the right size, the team has to be good.
• 19:34
  All those things have to be good before I'LL say yes, but if any one of them is bad, I'll say no for different reasons.
• 19:41
  Everything's awesome, but your market's too small, dude.
• 19:43
  I hate to win and not make money.
• 19:45
  Can't do it.
• 19:47
  Great team, great problem, but I don't believe in you as a team, okay?
• 19:51
  Doesn't do me any good.
• 19:52
  I still can't invest.
• 19:53
  So all the startups that we said no to all had their own unique reasons we said no to, but it was usually because one of those links were broken or since we were an accelerator, we had like a
• 20:05
  higher tolerance for links that were broken but fixable if we thought the entrepreneur was coachable.
• 20:10
  But it couldn't be like irredeemably broken.
• 20:14
  And that's why we always wanted more, because there could always be, even if we had 10 startups that we were happy with, it was always like, if I saw another 100 startups, would I find one even better?
• 20:25
  You know, would I put them in and drop the lowest one out?
• 20:28
  But it's a totally different mindset when you're doing it kind of at scale than when you're doing it, you know, kind of onesies and twosies for yourself.
• 20:38
  Okay, so, and then you got, you ran Dreamit for the accelerator program there for, was it about eight years or so?
• 20:46
  Yeah, it was about seven years.
• 20:48
  We went through a lot of changes.
• 20:49
  Right.
• 20:49
  So we started off with the program I just told you about, like early pre revenue startups, and then about halfway through, a little less than halfway through, we decided to go a little later stage.
• 21:00
  So instead of like pre revenue, pre seed startups, we ended up taking startups that were kind of on their path to raising a series A and already had revenue, in some cases, they had as much as a million
• 21:11
  dollars annual recurring revenue.
• 21:15
  Okay, now a question for you too, because I know a lot of entrepreneurs, particularly ones that listen to this show, you know, deal with this.
• 21:24
  Right.
• 21:24
  And you, you alluded it to, with, with your previous company in terms of whether to bootstrap or whether to raise money.
• 21:32
  Right.
• 21:33
  And the pros and cons of each.
• 21:34
  Right.
• 21:35
  So I mean, what, what are your thoughts on, I mean, clearly it's, it's dependent upon the situation, but I mean, what are your thoughts for, for entrepreneurs who are wrestling with that issue?
• 21:44
  Sure.
• 21:44
  So if you're the kind of startup where VC money makes sense, almost always the answer is you need to take the money.
• 21:52
  So I'll unpack that for you.
• 21:54
  When I say if you're the right type of startup, if you're doing a dry cleaning company or you're doing a car wash or a restaurant, you don't need VC money.
• 22:03
  VC money is a horrible idea for you.
• 22:05
  First of all, you're not a fit for them.
• 22:07
  But also, why give away a piece of your company when you can get a bank loan and not give away any of your company?
• 22:14
  So all those other traditional small business startups, like that's not, that's not what we're talking about.
• 22:19
  Like you can make a lot of money at it and like, I respect the hell out of the people that build like very large consultancies.
• 22:26
  But it's a different type of business for you guys.
• 22:28
  Go out there.
• 22:29
  If you can grow out of revenue, grow out of revenue, that's awesome, right?
• 22:33
  If you can grow out of like taking a loan and not every selling part of your company, that's great too.
• 22:38
  But for a tech startup where a very small subset of all the startups, like we don't have any other option, usually banks won't lend to you because they don't know what you're doing.
• 22:50
  You're doing something totally new.
• 22:51
  You don't have any hard assets, you're writing code.
• 22:54
  I mean, even hard money lenders won't lend to you because they don't understand what you're doing.
• 22:58
  The only people you can raise money from are angels and vc.
• 23:02
  Now should you or shouldn't you?
• 23:05
  So in that context, in the I'm building something new context, ideas have a lifespan, right?
• 23:12
  So there's a lot of really, really hungry entrepreneurs that are all attacking these problems.
• 23:17
  They're all looking for some angle, they're all looking for some way to solve a billion dollar problem.
• 23:22
  Now if the problem could have been solved, like let's say there's no reason you could have done this startup, you could have done this startup five years ago.
• 23:29
  Odds are dozens, if not hundreds of people have tried it and there's probably somebody very far ahead of you or 100 people have proven it's not really a problem, that the market values now.
• 23:41
  That's why we say as investors, we're like, you got to have a why now.
• 23:45
  Now the why now could be technological blockchain didn't exist, so you couldn't do a lot of things.
• 23:50
  But now it can.
• 23:51
  AI for, you know, applied AI for any startup that wants to plug it in.
• 23:56
  Didn't exist two years ago, does now.
• 23:59
  Those are great answers for why now.
• 24:01
  It could be regulatory, right?
• 24:03
  They changed the law.
• 24:04
  Now we need to do this.
• 24:05
  Could be social.
• 24:06
  Covid came along.
• 24:08
  Now we realize we need to be able to work remotely, and it's not a horrible solution.
• 24:13
  So there has to be some discontinuity.
• 24:17
  That answers the question, why?
• 24:18
  Why couldn't we have done this three, four years ago?
• 24:22
  Now, keep that in mind.
• 24:24
  Right now you're asking me, hey, should I bootstrap and grow slower or should I take money and grow faster?
• 24:32
  Well, if you're in a tech startup and you're basing your opportunity on something that recently became possible, because that's what we do in this part of the world, then going slow is a death sentence because one of your
• 24:44
  competitors will take VC money, which will mean that they'll be able to grow faster, they'll build more features faster, they'll hire more salespeople.
• 24:53
  Right.
• 24:54
  They'll be able to pull ahead of you.
• 24:56
  And if it's the kind of business where there is something defensible, which is really the only kind of business we want to invest in, then somebody getting there first and building it before you means you're an also ran.
• 25:10
  So I'm not going to say 100% of the time, but 99% of the time, if you are a tech startup and you're building something on an opportunity that's just become available, you need to move as fast as you
• 25:21
  can, because if you don't, someone else will, and that means taking the money.
• 25:26
  Okay, appreciate that.
• 25:28
  All right.
• 25:29
  And Andrew, you recently wrote the book, it came out this past May, the Entrepreneur's Odyssey, and which is a story about entrepreneurship and novel.
• 25:40
  Can you talk about the book and what made you write it?
• 25:43
  Sure, absolutely.
• 25:46
  It's a couple things come together all in the same way.
• 25:48
  Right.
• 25:48
  So remember, at this point, I'd run DreamIt for seven years.
• 25:53
  Right.
• 25:54
  So I had seen, you know, people say, like, oh, you're exaggerating over 10,000 startups.
• 25:59
  Now, you remember from my story before, like, I needed to look at a thousand startups just to fill one cohort so you can kind of get a sense of, like, 10,000 is not an exaggeration.
• 26:09
  So I'd seen 10,000 startups, I'd worked intensely with dozens of them, coached, you know, hundreds more entrepreneurs, and, you know, I'm starting to get, in my not so humble opinion, kind of good at giving this advice.
• 26:21
  Right.
• 26:22
  You know, I feel kind of bad for the first cohort because I got a lot better since then.
• 26:26
  But I've noticed a couple of things along the way.
• 26:30
  And one of the things that I've noticed is I can just be, hey, David, listen, you got a freemium business here.
• 26:35
  You're going to live and die based on your conversion.
• 26:38
  Let's go out and test that.
• 26:39
  You know, before you build everything, let's run a quick test.
• 26:41
  I can just give you that advice, or I can say, hey, Dave, listen, you got a freemium business model.
• 26:48
  There's a company that went through Gmail a couple of years ago, similar business model.
• 26:52
  They were going to go and they were just going to keep coding, and then they'd get the demo day, and they'd be done, and then they'd see what, you know, the results were.
• 26:59
  But we told them, like, listen, you can't show up on demo day, and if the numbers aren't good, you got nothing.
• 27:04
  Why don't you go put up a buy now page, right?
• 27:08
  Make it look like there's something to buy.
• 27:10
  You know, what you want to build, just haven't built it yet.
• 27:13
  And then just see who clicks.
• 27:14
  Buy now.
• 27:14
  And if anyone clicks by now, you say, coming soon, right?
• 27:17
  But at least you have data.
• 27:19
  You'll know how many people are willing to go from free to paid.
• 27:23
  And at least you'll be able to see, like, if that number is where you need it to be, then you've proven out that assumption, and you'll be fine come demo day.
• 27:31
  And you know what they did?
• 27:32
  They tested it, and it turned out that their conversion rate was a tenth of where they needed it to be.
• 27:37
  And there was no way they were going to make that work.
• 27:40
  And what they decided to do is middle of the program.
• 27:42
  They scrapped that business entirely, took one small piece of it that everyone seemed to really love, and built another business based on that.
• 27:51
  And that business is a unicorn.
• 27:53
  Now it's seatgeek.
• 27:54
  But it's all because they didn't build and then see what happened.
• 27:58
  They found a way to quickly and easily and cheaply test that key assumption of what percentage of the people would jump from free to premium.
• 28:08
  Now, I just gave the exact same advice that I started out with.
• 28:12
  The difference is the second time I wrapped it in a story and the take rate on it when I do that was quantum level higher.
• 28:22
  Because the entrepreneurs could see themselves in that world.
• 28:24
  Like, those guys are just like me.
• 28:26
  They did it.
• 28:27
  It worked for them.
• 28:27
  I should be doing that, too.
• 28:28
  I totally get it.
• 28:30
  Right?
• 28:30
  They identify with it.
• 28:31
  It's a more memorable story.
• 28:34
  So once I learned along the way that I could give the advice or I could give them the story with the advice, and the last one was so much more effective.
• 28:43
  That's one thing that kind of hit in my mind.
• 28:45
  And the second thing was I'd actually written a book, read a book like this in business school.
• 28:51
  Not about startups.
• 28:52
  It was a book called the Goal.
• 28:54
  And it was a novel about a guy that had to turn around this printing plant and had a consultant as his mentor.
• 29:01
  But it was again written like a novel with all the lessons baked into it.
• 29:06
  So at some point I'm like, I got it.
• 29:09
  If I'm ever going to write a book about this, I know the power of stories.
• 29:13
  I've seen a textbook disguised as a novel.
• 29:16
  I'm going to write that book.
• 29:20
  The Goal.
• 29:20
  I'm going to write that book, but I'm going to write it for the startup world, for the startup experience, for founders or wannabe founders.
• 29:28
  Okay, love that, love that.
• 29:30
  We all know that.
• 29:31
  The power of a great story.
• 29:34
  And so you've released a book back in May.
• 29:36
  And what's been the response thus far?
• 29:39
  It's been really good.
• 29:40
  I've learned a couple of things along the way.
• 29:42
  So I went with a traditional publisher partly because I want this also to be an actual textbook.
• 29:49
  I teach entrepreneurship.
• 29:51
  I've used this book in my class now for the past couple of years.
• 29:55
  It works very well.
• 29:55
  I have a few friends who are using it.
• 29:57
  So I picked a publisher that had a very strong academic publishing route arm because I, I don't know anything about marketing on that side.
• 30:06
  Jury's still out on that.
• 30:08
  Right.
• 30:08
  So I went in that direction.
• 30:10
  We'll see how that plays out.
• 30:12
  As for the rest of it, like every time I get in front of people with the book, they love it, they buy it, the reviews are all five stars.
• 30:20
  The part that I'm still working on on this particular startup is the same thing we talked about in the very beginning of the.
• 30:25
  The podcast.
• 30:26
  What's my like, eight second hook?
• 30:29
  Right.
• 30:30
  How do I get them to like, oh, oh my God, that is different.
• 30:33
  I need that.
• 30:34
  So I'm still working on that kind of breakthrough kind of marketing hook for, for the book.
• 30:41
  Okay.
• 30:42
  All right.
• 30:42
  And so, Andrew, if people want to get in touch with you, if they want to get your book or they want to learn more about what you're doing in terms of the coaching and everything else, what's the best
• 30:51
  way that people can reach out to you online?
• 30:53
  Sure.
• 30:54
  So, you know, it depends, right?
• 30:55
  If you're like, oh, looks kind of interesting, but I'm tired of hearing that guy's voice, just go to Amazon.
• 31:00
  Right.
• 31:00
  There aren't.
• 31:01
  I think I'm the only book up there by the name of the Entrepreneur's Odyssey.
• 31:05
  And that's fine.
• 31:05
  If you are kind of curious, like, oh, I want to learn a little bit more, you can go to my website.
• 31:10
  It's Andrew, the letter B as in boy for my middle initial, Ackerman.
• 31:17
  And there's a lot of a little bit more information about the various things that I do and of course, you know, links to the book.
• 31:22
  And if you're really, really curious, find me on LinkedIn, take a look.
• 31:26
  You know, contact me directly.
• 31:28
  Don't just reach out to match.
• 31:29
  I only match with people that I actually know.
• 31:32
  I'm kind of old fashioned that way.
• 31:34
  But you can still message me through LinkedIn and you know, tell me what you're working on.
• 31:40
  Okay.
• 31:40
  All right, we will link all that in the show notes for everyone.
• 31:43
  All right, Andrew, thank you so much for taking the time to be here and sharing all this valuable wisdom from your journey with our listeners.
• 31:49
  We greatly appreciate it.
• 31:51
  Dave, thanks for having me.