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Mondays with Matt
#6: Why You Should Bootstrap Your Business
01:09:05
Matt and Chris discuss the merits of bootstrapping a business versus seeking external funding.
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- [00:02]
A
You're listening to the Build you'd business podcast, powered by Turnkey Coach, where we help business owners find freedom over fear. I'm Matt Reynolds and I'm his brother, Chris Reynolds.
- [00:12]
B
Join us as we help build your business and move from fear to freedom together. You're listening to the build you'd business podcast. I'm your host, Matt Reynolds, here with my brother, Chris Reynolds. Hey, man, welcome to the show.
- [00:33]
A
What's up?
- [00:34]
B
Hey, if you. We just finished a great podcast. We're batching a few of them today. I'm hot. I'm looking at mine. I'm like, I'm all hot and sweaty and red. And we had a great conversation. And so today is, if I've decided to start the business, should I bootstrap it, I. E. Should I self fund it with what little money I have, or should I go get a loan or go get investors, get some form of debt or give away equity? We've done both. And so I think we can speak to both. And so I'm just going to, like, give it to you for a few minutes and let you open the show.
- [01:13]
A
I'm a huge proponent, big fan of bootstrapping. And I think that bootstrapping is, is the right choice for most businesses. And by Most, I mean 99% of businesses. There are businesses where it is the wrong choice, where the thing that you're pursuing is so huge and so, like, you can't envision a world where, you know, Sam Altman decided to start, you know, OpenAI chat GPT in. In a, you know, on his own dime, like, and the guy's very wealthy, right? But I mean, he's probably not doing it that way. So obviously there is a time to raise capital. But that is not, that is not for everybody, right? Like, not everybody actually needs to do that. And so why do I think that, why do I think bootstrapping is the right choice for 99% of businesses? Primarily the reason, I think it is because bootstrapping is a forcing function for establishing a healthy perspective from literally day one of your business on the way that you should be thinking about profits. Businesses exist to generate a profit. Businesses that do not generate a profit are not businesses for very long.
- [02:35]
B
That's right.
- [02:36]
A
And I think that it is really, really important that early in the process of owning and starting a business that you're already thinking about that, well, that's easy to do.
- [02:47]
B
If you're spending your money, you're going to think about cash burn. Like, am I burning cash? Am I spending More cash than I'm bringing in.
- [02:55]
A
It's exactly right.
- [02:56]
B
If you're spending your cash, if it's your cash. There's something intrinsically that happens in your brain when you're spending someone else's cash that you'll spend often, most of the time, maybe always a little more frivolously. Cash.
- [03:11]
A
There's no question about it. I even think that the first time you ever do this in terms of raising capital, it's. It's a lot worse. I'll describe why I think that is, but before I do that, let me also clarify and, and Matt and I have both done this in a very similar way, actually. In my first business, we bootstrapped that business for. It was roughly eight years. Bootstrapped, took $0 of investment in that company for eight years. We built that company to. I think it was probably around a hundred employees at that point in time. And we had no money. We were super poor kids. I had no money.
- [03:55]
B
We were raised in rural Arkansas as Southern Baptist preachers. Kids with a dad that had a church in rural Arkansas of maybe 60 people. Yeah, that was our.
- [04:07]
A
We just didn't have money.
- [04:08]
B
Not only did we not, were we not trust fund kids. I've often joked, I still don't know to this day if I've ever had a Happy Meal because Happy Meals were for rich kids.
- [04:18]
A
Yeah, we didn't get the Happy Meals.
- [04:20]
B
We got the All American Meal, no cheese. And you often couldn't afford soda, so you had to have water.
- [04:25]
A
Yeah.
- [04:25]
B
So you get the All American Meal, no cheese, small fries, bag of fries, eight fries. Yeah, right. And water. And that was if you were lucky and you were on the road trip for the family vacation, which was to go camping in another rural Arkansas place.
- [04:41]
A
That'S what we did. That was the fun.
- [04:43]
B
That was our upbringing. So to build what you've built, especially bootstrapping for the first almost decade is pretty incredible. Like you never went and like you guys just started, started with the business.
- [04:59]
A
Look, I, I don't know that I would have done it that way if I knew better. I didn't know better. I didn't know how to raise capital. I didn't know anybody who had any money. One of the, one of the interesting little factors there is that when you first start, you probably don't know anybody with very much money either. Like unless you're, unless you grew up around those kinds of people. Right. And we didn't. So. But later, when the business was very clearly going to work, when we were able to Generate profits. When we were able to build a company that we knew if we had additional capital in the door that we could grow it more based on the dollars that came in, then it was time to raise capital. Right. And so when we talk about bootstrapping, we are not saying that forever you're going to run this entirely on your own dollar, on your own dime. What we're saying is it makes a lot of sense to start that way. And how long you go is primarily around the dynamics of the business. But there is a point in time when it might make sense to raise capital. There might also be a time where you decide, you know what, I like it at this size, and I don't have anybody that tells me what to do. I am my own board. I'm a board of one, and I can do whatever I want. So that's also awesome and totally fine. But that's a topic for another day. We'll talk about, like, maybe when to raise capital, how to think about raising capital, what that means in terms of board seats and all that kind of stuff. But for now, it's important to note that there are very, very good reasons to start as a bootstrap company and move your way into capitalizing the company over time. And you did the same thing.
- [06:45]
B
No? Yeah, exactly. Right. So I will say that for the biggest companies in the world, the Fangs, right, which now has to have Nvidia, and I don't know, there's extras, but the Metas and the Apples and the Amazons and the Nvidias and Tesla, public companies are funded because they're funded from public stock. So they have shareholders and people give them money and you give them stock. By its very definition, a public company is not bootstrapped. Walmart is not bootstrapped. Amazon is not bootstrapped. Right now, I would assume that we don't have a ton of listeners who are running public companies at this point. Most of them are in their first one to three years of business ownership. And so in private business ownership, I could not agree more that you want to start as small as humanly possible and allow the revenue of that business to build the budget of the business. And so I want to tell our story. I want you to tell your story, but before we do that, because I know we're both big students of the history of technology world, that's just super interesting to me. I have a history degree. And the thing that I love about, well, I love World War II. I've watched everything and read every book. I can get my Hands on in World War II, which has nothing to do with this podcast for the most part. But I also love the history of Silicon Valley and the family tree of that most of our listeners will know and will put a picture in their head of Steve Jobs and Wozniak in a garage. Or Sergey. Sergey. And who's the other guy from Google anyway?
- [08:31]
A
Larry Page.
- [08:31]
B
Thank you, Larry Page. That's what. And they were kind of bootstrapping in the early days. What has changed from the kind of late 70s and 80s to 90s to now in the tech industry with that bootstrapping world.
- [08:47]
A
Yeah. Such an interesting conversation. And we could probably, we could spend a whole podcast off talking about that and even the history of technology, which would be very fun. But here's what I'll say. What changed is that an enormous amount of capital entered the world. That's what changed. And this is hard probably for most listeners to. If, if you're not in this world, it's not something that's just going to click immediately. But it's easy for me to skip over this fact. Most companies that are capitalized, most companies that have received money from other individuals that do not work in that company or part of the organization are funded with private funds.
- [09:27]
B
Right.
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A
And that's different than the stock market, first off.
- [09:31]
B
So you say most, I would say all. Every single company that when we say the word capital, because this is kind of an early business podcast, that just means money. Right. So when you bring money into the company that's not yours, the term bootstrapping is a ground roots term that means you've started the business entirely with whatever you have in the bank and your.
- [09:59]
A
Sweat equity computer and Internet connection.
- [10:02]
B
That's it.
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A
Whatever.
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B
Right. That you're paying for, you bought the computer and you paying for the Internet.
- [10:08]
A
Right.
- [10:09]
B
And when you bring in money or capital, there's only two ways to do it. In the beginning, because you're a private company, you have to hit certain benchmarks to become a public company. It's very difficult. That's an IPO Again, another story. Probably five years from now on the podcast. Right. Something we haven't done is go public, is that you can either bring on debt so you can get loans from a bank or from somewhere else debt, or you can bring in money from private individuals, which are often called angels in the early days. So an angel investor is a single person or family who've decided to give you money in exchange for equity or occasionally for convertible debt. And to make those terms really simple, it just Means it is debt right now. And if you can't pay the debt back, you give them the equity.
- [11:06]
A
That's right.
- [11:06]
B
So essentially you're trading percentages of ownership of the company for money from wealthy investors. And these types of investments, these angel investments, are the highest risk, but they're also the highest return, potentially the highest return. They're also, because they're the highest risk, they often go to, most of the time they go to zero.
- [11:29]
A
That's right.
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B
But for people who have done it well, you hear about the people who invested in Uber, Tesla, whatever, in the very early days, and their $10,000 investment is now worth $10 billion.
- [11:46]
A
Right.
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B
But for every $10,000 investment that goes to 10 billion, a thousand go to zero.
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A
Yeah.
- [11:54]
B
So you have three options early on in business. Bootstrap it all on your own. Grow slow, grow small. Do the best you can with what you have. Take on debt, which means you have to have collateral for that debt. So you often have to pony up, you know, you have to take out a second loan on your mortgage. You have to put up money in a CD if you have money in the bank, which most business owners don't have, a hundred thousand dollars or $200,000 to collateralize the loan, or you have to accept money from wealthy individual angel investors to give you money from there. And I won't spend hardly any time on this. It goes from essentially angel investor, like individuals, to institutional investors, which is venture capital, which is often tends to be still more risky, still more early, Series A, series B. And that term just means, like every time you raise money, it's a new letter, right to private equity, which often doesn't come in until you get to like series C, series D, series E, series F. And then eventually, if a private equity company comes in, they're either trying to extract as much profit as possible out of the business, or they're trying to IPO the business and go.
- [13:06]
A
Public, or they're trying to sell it to a strategic investor so, you know, a competitor or something like that.
- [13:12]
B
So if you're a business that, say, bringing in something between 50,000 a year and $250,000, you're under a million, let's say you're under a million dollars in total top line revenue per year. Our argument is 99.9% of the time, you should be bootstrapping with everything you have, not taking out debt, not taking money from investors. There are lines that you can cross. I think at a maybe a 3 million to $5 million mark of top line Revenue, you might think about taking on angel investors, individual investors. Until you hit that mark, bootstrapping is the way to go.
- [13:52]
A
Yeah, for sure. And I think part of this is just let's think about the mindset of what happens when you take capital, large amount of capital, let's say, from something else. So, you know, you have an idea and the idea it's, you know, I'm sure some of you on this that are listening to the podcast have seen Silicon Valley and it's a good example of, you know, you have an idea, you think this thing's going to work, you're going to go, and maybe you've proven it out to like a teeny tiny degree. So there's this range on. You've got an idea. How proven out is it? Well, go back to my example. Eight years in with a ton of revenue and a ton of customers. It's extremely proven out. But if you just have an idea floating around your head, you've never, you have zero customers, you have no, you know, your pre revenue. It's very unproven. And so the question is, what are your tendencies whenever you are taking a large amount of capital from somebody else, where your tendencies are to spend too much cash, that's number one. Like most of the time what happens is people who have not ever been exposed to a large amount of money get completely drunk on the money very quickly. Like it's crazy. You literally lose your mind. That's what happens. You're like, oh, there's like there's infinity money now. Guess what? There's not infinity money. There's a finite amount.
- [15:15]
B
Where does it go? So it goes to payroll primarily. You hire a bunch of people, you give all the people that have been with you since the beginning big raises, Right. And you spend money on advertising and marketing tremendously more than you would have spent if you were bootstrapping the thing.
- [15:31]
A
More lavishly on travel. Maybe you start bumping up the way.
- [15:35]
B
You'Re, you're, you know, first class seats, fancy, nicer hotels. Yeah.
- [15:39]
A
Better restaurants. I mean, this is what happens, right? And, and you just, it gets fat. I mean, it's really what, what we call it, it's just like it just gets fat. And so people are terrible at this. At the end of the day you don't want to do that because it sets a bad tone from day one. I think what it does is it puts you in a position to set bad habits early in the company's history. And so again, there are companies that have done this. Well, there are people who have done this well, but you've got to be a certain kind of person. And this is really what turns into a unicorn when you take a large amount of capital. So let's take that off the table because most. Most people listening to this are probably not even thinking about going to raise a large amount of capital. Bootstrapping is probably the only thing that you've ever really thought of, you know, to start a company.
- [16:27]
B
Or debt, which I would also argue. Don't do debt.
- [16:30]
A
Don't do debt. Not at the start. Again, there are good ways to use debt later, but this is not the time, you know, to do it. When we think about what happens when you start a company with your own money, and let's just say that you have the total amount of money that you have to put into a company is $0. Okay? Because that's how much money I had to put in to my first company was $0.
- [16:52]
B
You were how old you were really young?
- [16:54]
A
22, I think. So I had $0, I think, you know, up until that point in time, I finally had gotten a salary at that point of maybe $40,000 a year, I think is what I was making. Graduated from college with, you know, engineering degree, and. But up until that point, I had made so little money that I was just completely comfortable. And we talked about this before Matt and I grew up poor, so I didn't know anything fancy. And so it was not a big deal for me to do that.
- [17:25]
B
40,000 was fine, totally fine in southwest Missouri.
- [17:29]
A
It was plenty of money.
- [17:30]
B
You were a network administrator for credit unions in this. In our small town, and did exactly the thing we talked about last week, which was you started a business with our cousin, and you were kind of the main coder. He was the kind of the designer guy. He was. The more creative you were, the more logical. You guys started this business, but you lived off the salary of the network administration business for the credit unions.
- [17:56]
A
That's right. That's right. There comes that point where you have to stop. And for me, that point was pretty clear. It was pretty exciting. My wife had just graduated from college. She thought that she had been in conversations with the person that she was working for at the time, and they had said, hey, there's some good opportunity for you moving forward. We'll give you a salary. She had made no salary up to that point. So I was like, well, we can now just live off your salary and then I can go in full time. So that's what we did. I did it a Little early. Because what we found out, you know, a week afterwards was that the raise for her was 25 cents an hour difference. And I was like, oh. And that's what we call the burn the ships moment where garage sales. There's nowhere else to go. Basically.
- [18:47]
B
Like, actually remember having a garage sale at your house.
- [18:49]
A
Yeah. We had to do something to live.
- [18:51]
B
And we went out there and sat on your porch and you sold all your shit off.
- [18:55]
A
Yeah. That's what we did. But I had already made the decision I was already gonna go do this thing. And so, you know, at that point, I was able to go 100 miles an hour.
- [19:03]
B
Hold on. So there's a really important point here. There is a hunger that you cannot experience without being bootstrapped and poor.
- [19:14]
A
Yep.
- [19:15]
B
And so when you had. Why do I. I get emotional in.
- [19:19]
A
Every episode, Turn into grandpa.
- [19:23]
B
You had a wife who'd been your girlfriend since the fifth grade, by the way. You were not quite starting a family yet, but you were close, and you're living off her small salary. And it's like, if we don't make this work, we lose the house. You had bought your first house. It was like an 1890s bungalow in Springfield, Missouri, for not very much money.
- [19:47]
A
Nothing. Yeah.
- [19:48]
B
And it was like, if this doesn't work, we lose the house. We have to go live in an apartment, go move in with the in laws. And that doesn't happen with debt or angel money. But I would argue that there are lessons to be learned there that cannot be learned any other way.
- [20:06]
A
Yeah. There's no question about it. There's a fear, there's a hunger, and it is the thing that drives everything else. We'll. We'll talk about this in a minute. But there's an important reason, I think, to tell this story, because as people think about moving into this area, you want to be a founder, you want to be an entrepreneur, you want to start your own thing. When we talk about doing it with zero capital, that doesn't mean that it costs you nothing to do it. To be super clear like, it. It costs you a lot to do it.
- [20:43]
B
Sure.
- [20:43]
A
Because you're going to, first of all, need a set of traits to even make it work. But number two, for a while, you're going to have a level of stress that you have not ever experienced in your life.
- [20:58]
B
Yep.
- [20:58]
A
And part of becoming the person who eventually is able to grow these kinds of businesses whenever they want is learning how to handle the absolute shitstorm of stress that you will deal with on a regular basis. And really not let it bother you.
- [21:18]
B
Yeah. There are three variables that I talk about in the book that we can pull levers on in business as we get successful or not. And it's time, effort and capital. When you're 22 and broke, there is no capital.
- [21:34]
A
Right.
- [21:34]
B
There's only time and effort. And so you're like, you were young, you were married, you didn't have kids yet. You're like, I can work 80 hours a week, I can work 100 hours a week, I can do whatever I have to do to make the mortgage payment, which is I talk about a lot in the Barbalogic podcast and background. It's a voluntary hardship piece that you're like, I'm going to choose hard. Now, you and our cousin, you guys were well spoken, good looking, socially adapt guys in a world full of computer engineering nerds.
- [22:08]
A
Yep.
- [22:09]
B
And so you could sell, you probably could have raised money then.
- [22:14]
A
Yep.
- [22:14]
B
Probably on the idea. And you started in, I'll make this super simple. And if you want to correct it, correct it. But you started in banking software and that's where you thought you were going to go. And then the door opened for insurance software and you moved into the insurance software space and built a great big business in insurance software. But at the time it was like, look, we don't have any money, but we're young and we have time and we have effort. We don't have a family of four, we have a family of two. Where you guys are both young and married. That was it. You had wives, no children. You're like, I can work a million hours a week, we can live off the wives salaries and we can do everything we can to build the business and bootstrap the business. And the lessons, I can only imagine the lessons that you took from that, that you use now as somebody who sold an eight figure business, that you still take those lessons. And still, I know because I'm one of your big, probably one of your biggest clients that you take those lessons. And you to this day, having sold a major business, you still bootstrapped the business, even your second business to this day, as if you're still hungry in 22.
- [23:30]
A
That's right.
- [23:30]
B
But you're not, you're 42 or whatever you are.
- [23:33]
A
We've talked about Andrew Wilkinson a little bit on this podcast, but he said the same thing. He said, look, I think most companies need to approach cash like, hey, at the end of every month, return everything but you know, a tiny percentage right back to the owners every time because that Tightness is, is important for the company to be able to grow, to be able to think about like, hey, we've got to stand on our own two feet. We need to generate profits every month. We need to be able to do all of this, you know, in a consistent way. So I intentionally, on the second company, did not massively capitalize the company because what I wanted was for the company to immediately have to solve its own problems, stand on its own two feet, become, you know, something that could grow into something really, really big. One of the other factors I think that's really important in those early days and I think this is something for those of you that are young and kind of thinking through this, it changes your life for so many reasons. But I think one of the reasons is that you learn a certain level of resourcefulness that becomes critical in your long term approach to everything. Basically, you run out of time first. That's the first thing that happens.
- [24:43]
B
Well, you don't have any capital, you have no capital. So that's gone.
- [24:46]
A
So you got time and you've got energy. Right. And maybe at 22, you've got enough energy to just. So I don't go all the time.
- [24:52]
B
But eventually everyone has the same amount of time, right?
- [24:55]
A
Eventually you're going as hard as you can in all the hours and it's 18 hour days every single day. And you realize there's no more time. Before you get to that point, there's a change that happens and that changes everyone that you know and everybody that's ever told you how to live life has said, you know, you know, there's a pretty clear way to do this. It's eight to five and it's Monday through Friday, and this is what we do. If you try to do that when you're bootstrapping a company, you will fail. That does not work. That is a completely unrealistic way to live your life. In the starting era of a bootstrap company, it will not work. And so what you learn is that there's all these hours. There's like a ton of hours that exist in the day.
- [25:43]
B
Yep.
- [25:44]
A
And in the weekend and all these places. And people will tell you, and I am, I genuinely am not trying to espouse hustle culture here, but there's an aspect of it that is just right. And, and that aspect is you are going to find yourself in a situation where people are telling you, hey, you know, this is too much. Well, if you got to do all this work, you know, beyond the 8 to 5, Monday through Friday, like it can't be right. That's totally wrong. That's just completely wrong. Sure you're going to find yourself working for me, it was crazy early mornings. It's every single weekend.
- [26:23]
B
All the weekends I work, every day is the same.
- [26:26]
A
Every day is the same.
- [26:27]
B
Saturday and Sunday are no different than all the other days.
- [26:29]
A
Absolutely. And now, you know, I'm 43 years old, I've got three kids. There are things that need to be done in the house. There's sports to go to and all those things. But the thing that I still do, I still wake up every Saturday morning at 5am and I work from 5 in the morning until about 7:30 in the morning every single weekend. Because I love it. That's why. And when I take my kids to a practice, I throw my laptop in the car because driving home is just an additional drive. I might as well just sit in the parking lot, tether through my phone and get a bunch of work. Work done, right? Why? Because I love it. That's why. Eventually you learn to love the work. And loving the work is the thing that has to happen in order for that business to become the thing that it needs to grow into over time. And that is the grind of the bootstrapped world is all the pressure that you have because at the end of the day, you gotta pay the mortgage, you gotta buy groceries, you gotta do the things you need to do. And so that pressure, I think that pressure is hugely valuable. And I think having a giant pile of raised capital removes the pressure, which is not good.
- [27:43]
B
Yeah, agreed. We did the same thing. I started later than you. I was, you know, 29, 28, somewhere in that ballpark because I had been a public school teacher. I thought that was gonna be the career. I got my master's to be a principal and did the same thing. And then when I opened the gym, and the gym grew exponentially in the first year, and I knew nothing about business and had to learn everything that I possibly could about business and read things like the E. Myth like we talked about last week. And all of the sudden I was in a position where I was passionate about the thing that was making me money. But at the same time, we didn't have savings, we didn't have capital. Public school teacher in southwest Missouri. Like, I was probably. I think I was taking home 30 grand. Like the take home was 30 grand a year. It was terrible. My wife was also. She was a kindergarten teacher. So maybe we're making 60 total. And then all of a sudden it was like well, you got to make it work. And same thing when you come from a background like ours. We didn't have a plethora of wealthy people we could go to. And none of us knew that that was even an option.
- [28:45]
A
No, I didn't know it was an option.
- [28:46]
B
We didn't know that not bootstrapping was an option. Like bootstrapping was the option.
- [28:51]
A
Yeah.
- [28:52]
B
And so when we launched the business, launched the gym, it was bootstrapped. And then I can remember both at the gym and when I launched the online coaching business in 16 for the first, I think in the online coaching business, the one that I own now, that has turned into Barbalogic Inc. I think I only got paid for coaching.
- [29:12]
A
Yep.
- [29:13]
B
So I was the owner, the founder, took no dividends, no pay cut. You know, they're. People often call themselves CEO. You know, we weren't a Delaware C corp. There wasn't really a CEO at the time. But like I was the founder, I was the owner, but I didn't take any dividends or pay. I got paid the same thing all my coaches did. But I also ran the business. And because there was a hunger there. And then it did well enough that the end of the gym and moving into online coaching that my wife also got to leave teaching. But that put an extra sense of pressure that now I have to support the family entirely based on this business that I own. And I can remember calling you and I was like, I've run this gym. The gym is successful. And by the way, when I say the gym is successful, I remember there were days when I taught at school that I would again, I'm probably taking home between two and $3,000 a month, take home pay. And I would sometimes make $2,000 in a day, day at the gym. But that first year, the gym, I made 60 grand, which was good, but it was also one income on 60 grand. And so it wasn't $2,000 a day times 365 days. That's what you made. And then when I opened the online coaching business, it was like, look, I'm going to pay myself the least amount I can possibly pay myself and take all of the rest of this and put it back into the business. We're going to make sure we're profitable. And we did the same thing. We ran for five years having never raised an ounce of capital, zero debt. We didn't even have any credit cards. I mean, if we had to pay something with a credit card, I paid it with the personal credit card. And then the business would just pay it back every month. We didn't run any debt lines, no business credit lines, nothing like that. Five years in, and by the time I think we were at between 2 and a half and 3 million in revenue before we took on Angels. Do you remember in ball, the. Were you in a similar ballpark?
- [31:17]
A
I think we were probably close to 7 or 8 million by the time we took it.
- [31:21]
B
So if you're listening to this and you're like, yeah, I'm making 500 grand a year, which is great, especially if you're one, two, three employees, you're crushing it. You're not ready to take on debt or capital from Angels. That's not the time. The key here is that if you bootstrap and you do it well and you live lean, which we'll talk, I think in one of the next couple episodes about if you've run a business for a while and you've gotten some of that fat, some of that bloat.
- [31:52]
A
How to get it off, how to.
- [31:54]
B
Trim that fat and run lean. So for you newbies out there who are starting this out, if you learn how to run lean from the very beginning, you don't buy the biggest house that the bank gives you the freedom to go buy. You don't go buy the best car you can possibly. You live basically a Dave Ramsey lifestyle in those early years. You don't run up debt, you don't have credit cards, none of those sort of things. And you just use the thing that you have, which is time and effort, because you don't have capital, it puts you in a mindset. Then in the future, when it's time to raise capital, if there's the opportunity to do that, you just don't change the mindset.
- [32:33]
A
That's right. Yep.
- [32:34]
B
The mindset stays the same.
- [32:36]
A
That's right. And so part of what I think will be helpful is just to. Let's go through a couple of the big sort of high level reasons or the valuable things that come out of bootstrapping. So we've talked about already. Look, you know, it's just a better mindset. So one of the aspects of that I want to make sure is really, really clear is that you become a more realistic and grounded entrepreneur just from bootstrapping. And here's the reason why. When it's your own money, when you've got that much skin in the game, I mean, technically it's all the skin in the game, Right. If it's. Or if you have a business partner, maybe it's 50% of the skin in the game. But at the end of the day, you got a lot of skin in the game. Lying to yourself about the market size, the price you can get for whatever you're selling, the value that you bring to your customers only has negative consequences.
- [33:27]
B
Yep.
- [33:27]
A
Right. Like there are. There's no positive spin to it. Who you spinning it to? You like you're the investor. Nobody cares like it. So when you take capital, you can lie to yourself for a whole lot longer. You can convince yourself there's a lot more market out there, but you can't do that when you're bootstrapping. And I think that's a great practice. I think what it gives you is the opportunity for infinite pivots, and it's the infinite pivots that ultimately create all of the opportunity. What do I mean by infinite pivots? So when I talk about pivots, I'm talking about you start a business with a particular idea and you substantially change that idea because you learn something while you're running the business.
- [34:15]
B
And by the way, this happens like, 99% of the time almost every company. And you're a perfect example.
- [34:20]
A
Yes.
- [34:21]
B
You're like, we're a banking software company.
- [34:24]
A
Yep.
- [34:24]
B
And then insurance came in and said, I think you might be an insurance software company.
- [34:29]
A
Yep.
- [34:29]
B
But because you were bootstrapped, you were able to pivot. Had you raised capital on banking software.
- [34:36]
A
Yeah. What is that? That's the investment thesis. Right. They. They. They're investing in that.
- [34:39]
B
That's right. You have to go to the investors and the board and say, in fact, we're pivoting to insurance. And I would imagine there was a significant amount of pushback. Now, for us, we were a successful business. We were profitable. B2C. We didn't raise money until we were ready to go. B2B and government sector.
- [34:58]
A
Yep.
- [34:59]
B
But as soon as we did that, we're locked into B2B in government sector.
- [35:03]
A
Yep.
- [35:04]
B
I can't go back to the board and the investors and go, hey, B2B and government sector didn't work. We're going back to B2C. We both have the story of you had the freedom to pivot to the insurance industry from the banking industry. I no longer have the option to pivot from the B2B and government sector back to B2C. Luckily for us, it's worked. But if it hadn't, I would be doing a down round, raising capital, selling off most of remember whose equity is in the ownership of the company. It's mine.
- [35:43]
A
That's Right.
- [35:44]
B
It's the founders. And so you're selling your equity. So you sell your stock, but you don't get to take the money.
- [35:52]
A
That's right.
- [35:52]
B
The money goes into the business. And so you sell that on the idea that we believe we can pivot this way. So you guys were able to pivot before the capital raise? Yep, we pivoted after the capital raise. We now have kind of the. The flags planted that this is where we're going. And again, they've worked out, so it's worked well. But it was risky for us. You guys were able to essentially pivot on a dime. I remember the story like you went to some conference that was mostly for, like, banking people, and there was an insurance guy there and he's like, do you think you can write insurance software for this? And you're like, yep, yeah.
- [36:30]
A
At that point, you know, you're just saying yes to everything for a while. It's funny, you know, people talk a lot about this if you're. If you're, you know, on Twitter, X whatever. People talk a lot about how you need to say no a lot. When you are a bootstrapped entrepreneur. That is exactly the wrong advice at the start. You need to say yes a lot. After you've said yes quite a bit and you've been able to see a lot of hands at the poker table, at that point, you get to start saying no a lot. Right. But it's really important to note that your idea is not going to be right coming out of the gate. Like, it's not going to be right coming out of the gate, which means don't get too married to it. Right. Like, that's just. That's fine. Instead, you want to iterate your way to greatness.
- [37:14]
B
Sure.
- [37:15]
A
And that means you are going to need to get very pliable in terms of your. The way that you see the future playing out in your. In your world, you may have already told your parents and your family and everybody like, this is what I'm doing. I'm so excited about it. And you may feel a little bit of pressure that going to them and saying, actually, that's not going to work and this other thing's going to work. And you may have to do that six or seven times, you might have to do it 10 times.
- [37:41]
B
And that means a lot easier to do than someone who's giving you a million dollars.
- [37:45]
A
That's right. And actually it doesn't matter. Like, it's the right thing. Like, remember this, the people in your life that are not entrepreneurs himself, and certainly not successful entrepreneurs. They have no idea how this process works.
- [37:58]
B
Right.
- [37:58]
A
So they may feel like all those pivots are little mini failures. Well, you know, Chris has failed again at such and such or whatever. Like, nope, that's not how it works. This is supposed to be the way that it goes. So iterate, iterate, iterate. It's the way to go.
- [38:12]
B
Well, and remember, like, you can take some of these giant businesses and look at Facebook Meta, which was just gonna be sort of a social media network for college kids. And what it's turned into at this point, it's the whole world. It's Instagram, it's the glasses, it's AI, it's augmented. You look at Google, who is like, they were just a search engine, and now their phones and their Google cloud and their YouTube and their. So all those iterations occur with all great businesses. Steve Jobs, I want to have the personal computer at home. What's the thing that makes him all the money in the beginning? Because it's the ipod and the iPhone. Yeah, the computers are great, but these are the things, right? And so the iteration occurs no matter what. And so I think getting stuck in this is who we are, no matter what, will never pivot. And I think for us at Barbalogic, we were like, we were just gonna serve our clients. And then we're like, well, we got 60 coaches. How many clients can we serve? Yeah, if every coach has a hundred clients, we can serve 6,000 people. But a core value of our company is to serve as many people as we possibly can to improve their quality of life by experiencing strength. We cannot do that in the B2C industry. We can go from 6,000 clients to 6 million clients in the B2B industry and in government sector, while not leaving, we haven't left the B2C industry. That continues to be like the flagship alpha tester. We do all, you know, that's who we are. But I think getting stuck in that, being bootstrapped allows you to pivot into those places that you could not pivot had you raised the money on a story.
- [39:57]
A
I always use this image in my head, which is you're just walking down a path that is super foggy. All right? Just crazy foggy. And all you can see is, like, 10ft ahead from you.
- [40:11]
B
Sure.
- [40:12]
A
The reality is the iterations. Part of the reason that you have to iterate to find the thing that works is that you've just seen more of the path. You've walked down it far enough. Like, okay, Well, I don't know where this thing ends a mile from here. I have no idea where it ends a mile from here. But I know that 10ft turns to the right. I can see that. So I'm going to go out there and turn to the right and then what can I see? Well, I got a new 10ft and what am I going to do now? Right. There's a lot of uncertainty built into all of this and the ability to handle the uncertainty is a big part of the trait that can make you ultimately very successful. We'll talk about some of those traits in just a second. But before we do that, I also want to mention one other aspect that I think is really important to bootstrapping. And this is, I would say, almost entirely about pre capital. Okay. So this is not so much for the companies like Matt and I that have gone out and bootstrapped and then raised capital and then continue to grow it. There's this other aspect which is bootstrapping can enable or and encourage to some degree businesses to find the right size. The older I get, the more I love this idea that not every business needs to be a billion dollar unicorn, you know?
- [41:23]
B
Yep.
- [41:23]
A
It's like there are businesses that have failed because they tried to push to scale, that didn't make any sense in their actual business. And if they had just stayed at whatever size they were at and they could have just generated profits for 20 years, like a lot of profits for some people. That's not exciting. You're not going to grow the company, you know, whatever. But just know that that is actually a completely fine thing. There is nothing wrong with owning a company. No matter what you hear on Twitter and X and whatever the news, all the various places where people say, you know, you need to turn this stuff into, into unicorn businesses. If you're comfortable generating million dollar profits a year, you're fine.
- [42:06]
B
Yeah, right.
- [42:06]
A
It's fine.
- [42:08]
B
And not only that, I'm jealous. Yeah, right. For the people who are able to own kind of a mom and pop owned business, which is a handful of employees and generate whatever, 500,000amillion dollars a year in net profitability and you can just do that for the rest of your life, that's great. If I could go back and do that tomorrow, I would. But I went down a path where I was like, here we go, let's go as big as we possibly can. And so that's the. And. But that's why the podcast exists, I think, to be able to learn those lessons of. You did that in your first business, My guess is that you'll do the second option that we're talking about in this current business, which maybe not.
- [42:48]
A
Maybe you're kind of part of this idea, you know, which I think maybe will give listeners kind of an idea of, of the total range that's, that's available. I started a service business that was because I saw a need in the market. Every single person that I knew in the tech space was building SaaS software. Every single person I knew was building SaaS software. And I'm a contrarian. So I look at that and I go look, eventually, that's all the SaaS software we need. Eventually. Right now I realize like there's a ton of SaaS software out there to be made. There's a lot of money to be made for many decades in SaaS software. However, the thing that is missing is there is not a huge talent pool of expertise to help those companies build those SaaS products. That thesis that I had so far has played out exceptionally well. And what I actually did was I built a holding company on top of it at the very beginning where the idea is that the actual company is a bigger company. I have a holding company that my main company generates profits, send it to the holding company. Now the holding company can do whatever it wants with that. So it's my own little mini Berkshire Hathaway, which is the way that I can continue to grow companies, but let some of the companies stop growing at a particular size. The thing that I just mentioned is the thing that I actually think is really valuable. I would love to accumulate a bunch of multi million dollar revenue companies that never are going after a billion dollars. Maybe not going after $100 million, maybe they make 10 million of topline revenue every year and that's all they ever need to be. That's fine, I can get 80 of those. And it's a very interesting company at that point. Right. So there are lots of ways to compose this and get it together. But, but maybe to tie up this, this part of the conversation around bootstrapping and why we think it's good. Let's talk a little bit about some of the hard to find traits that are really important in a bootstrapped entrepreneur. And you're going to see these reemerge as, as we talk about different topics. Because these traits are ultimately just the traits of really good founders. They are also the traits of really good executives. Over time they're a little different. Really good executives have, you can be a really good executive and have less risk appetite as A founder, you cannot. You need a very high risk appetite. So let's talk about what a few of those are. The first main one that I think is really critical is an absolutely intense amount of drive.
- [45:20]
B
Yep. Not for days or weeks or months, but for decades.
- [45:26]
A
Like compulsion. Yeah, yeah. Just complete obsessive compulsion about drive.
- [45:31]
B
Yeah, agreed.
- [45:32]
A
Yeah. And you wouldn't feel comfortable not doing it right. Like.
- [45:36]
B
Yeah.
- [45:36]
A
Like anytime you've been put into a position where it's like, well, this is just the job. Just do the job and, you know, get things, it drives you nuts. Like, you want to improve things, you want to drive things to be better and bigger and all those things. I think that that's a very important trait of a really good. A good founder. And specifically, I think, as we're talking about bootstrapping, because you don't have a giant pile of capital, that risk tolerance and that uncertainty thing needs to be higher than it is in the other one.
- [46:00]
B
Sure.
- [46:00]
A
Because you can live off of the capital that you raise and just drain that down to zero. In fact, there are a number of stories in Silicon Valley actually keep doing that over and over again. I think you need to have a ton. I think you need to have what I call high agency. And I think people talk about this quite a bit, but the idea there is that it is a belief that you have about yourself that you both can and should drive change to a better future in whatever the capacity is that you. That you would do it in.
- [46:32]
B
Sure.
- [46:32]
A
So the idea there is nothing is holding you back. There's some combination of internal locus of control, like, I am capable of going to do something. Like I can. I can change my world. And then also just a very intense amount of the next trait, which is resourcefulness. And we talked about this a little bit.
- [46:49]
B
I want to go back to high agency for a second because I heard this great story a couple weeks ago. So I don't know if you've listened to the Modern Wisdom podcast with Chris Williamson, Chris Willich.
- [46:58]
A
That's a great one.
- [46:59]
B
And so he had this quote, I heard the other day that he said, if you want to know who the highest agency person is in your life, he said, if you were in prison in South America, Africa, middle of the jungle, whatever. Have you heard? Did you hear this?
- [47:13]
A
Yeah.
- [47:13]
B
And he's like, and you had 48 hours to get out. Who would you call?
- [47:18]
A
That's right. Yeah.
- [47:19]
B
That's the highest agency person in your life.
- [47:21]
A
That's right. Who can move mountains?
- [47:24]
B
Who are you certain can get you Out.
- [47:26]
A
Yeah.
- [47:27]
B
Of the most dire situation in your life. That is high agency. And so then I. Here's what I was. By the way, you're my number two, so I'm not. I'm not. Yeah, you're. You know, I would totally trust you to be number one. I just. Andrew Jackson, my coo, is number one. He's got enough military background and can kill people with his bare hands.
- [47:47]
A
I'm pleased with number two.
- [47:48]
B
Yeah, Number two is good. But also I think you should consider that, like I thought about that. I said, how many people in my life am I that for that if they were stuck in the most dire circumstances? That agency of. Not only can you change your future, but you can change somebody else. You have total control of a thing. You will make it work out. I'll definitely do a podcast on this because it's been such a sore spot for me lately. I think that one of the greatest deficiencies in people that I've seen over the last 10 years is reliability.
- [48:20]
A
Yeah, these are very closely related.
- [48:22]
B
Reliable.
- [48:23]
A
Yeah.
- [48:23]
B
And I pride myself and my wife does as well. And I know you guys do as well as being totally reliable. You always know if we're say we're gonna be at the thing, we're gonna be at the thing. If we say we're gonna show up with this food or we're gonna deliver a thing or show up with a truck or whatever, you know, beyond a shadow of a doubt we will do that. But I am frequently let down by the majority of people in my life who say those things and then don't follow through with those things which tell me they're not high agency people.
- [48:55]
A
That's right.
- [48:55]
B
And so I think everyone should try to pursue more agency in their life and to be more reliable. But I think there is an innate piece, as you're explaining in some of these hard to find traits in entrepreneurs who can bootstrap and be successful, there is something innate in them that creates this high agency. I'm careful not to say I don't know it's always from birth, because I don't think. I kind of think you've been that most your life and I think I haven't been that most of my life or I wasn't that in the first, say, 25 years of my life. And then something happened over the course of. So I think things can change that and force you into high agency, resourcefulness, reliability, those sorts of things that we're talking about that create this ideation of a wonderful entrepreneur.
- [49:48]
A
Yeah, no, I That's. That's absolutely right. And I. We could probably do a whole podcast, by the way, on high agency, just because I have the same experience, by the way, where I'll. I'll get people that I feel like are really, really good to help, you know, with some of the projects we work on or whatever, and they'll be good for a short period of time. Then all of a sudden, they're just not.
- [50:05]
B
Yeah, yeah.
- [50:06]
A
But one. One aspect, and I think this is actually a sub point of having high agency, but it can also be thought of as its own trait, is just resourcefulness. Part of the reason that someone is high agency is that they are stellar at recognizing where they have resources that other people can't see. They don't recognize that they have a thing and how to use those to get shit done. I think that is missing in an enormous amount of the population.
- [50:39]
B
Sure.
- [50:40]
A
Great examples of this are just like, when you have stuff to do, maybe you don't have the money to just go pay somebody to get it done or whatever. Have you thought through all of the different ways that you could actually still solve that problem? How do you make sure there's an aspect of resourcefulness also that I think is probably somewhat controversial, but I definitely think it's part of a good entrepreneur, and that is someone who believes the rules largely don't apply to them. And I think part of the reason that that is the case is part of being resourceful is going, how. How strong is that wall?
- [51:18]
B
Right. So I joke with one of my other. My friends here, one of the most common. And by the way, you've been this way again your whole life. And I've been this way just in the past, say, 20, 25 years. I break the rules all the time now. And my wife is an absolute rule follower. I think yours probably is too. Your wife, would you say that?
- [51:37]
A
Yeah, 100%.
- [51:38]
B
And she'll say, you can't do that. And I say, I do what I want. I say it three times a day.
- [51:46]
A
With a Cartman accent.
- [51:49]
B
I just go, I do what I want. And what I'm saying is not, I'm better than anybody else or that to me, they're just rules that are made to be broken. They're rules that are not logical. They're like, if there is a better way around the thing that is going to cause me to break the rules, I'm going to do the thing that.
- [52:07]
A
Breaks the rules all the time.
- [52:08]
B
Now here's the deal. I also love living in an hoa. That is extremely strict and makes you take your trash carts in and not leave them out on the curb. Most people listen to that are. There's kind of a joke, a meme on Instagram and Twitter and stuff about just, like, pissing off the hoa. I don't want to piss off the hoa. I want a nice neighborhood. I want to clean up on leaves. I want to pull up. But, like, here's the deal. That's not the same thing as when I'm like, I got to walk two miles to get into this concert. Or I can just sneak through this. Like, I have a ticket. I didn't. You know, I'm like, I'm not stealing my way into the concert. Or, like, whatever. The thing is, like, I can take a shortcut to get to this thing. We can't hop that fence. We can't sneak through that. I go. I do what I want. This is the thing.
- [52:56]
A
There's a scale to this, and I think it is really important. I think it is worth spending a little time thinking through this for people, because you should be able to recognize in yourself if that is not possible for you.
- [53:06]
B
Right.
- [53:07]
A
So here's, like, where I think about this scale a little bit. We've talked before about the number of hours in a day that exists to do work. And if you want to get a really good sense of what I think about this, I think what you think about this, Matt, is just read Kobe Bryant's book, like. Like, Moment Mentality. Like, it's got a ton of good stuff in here about how you actually ultimately pull ahead in life.
- [53:28]
B
It's basically a time audit. The guy just outworked everybody forever.
- [53:32]
A
They can't catch up and built a.
- [53:33]
B
Moat and that where they could never cross the moat.
- [53:36]
A
Right? So here's rule number one that everyone in your life thinks is true and isn't true. You should work eight to five every day. You should take the Saturday and Sunday off. You should not work early in the morning. You should not work late at night. Is what I say to that.
- [53:49]
B
I do what I want.
- [53:49]
A
I do what I want. Because at the end of the day, that's not even a hard rule. That's not a law. That's not a, you know, an auditable offense or anything like that. But. But part of being an entrepreneur is pushing against all of those things. Why does that exist? That's a dumb rule. I don't like that rule. Sure. That rule is not serving me or the world in any good way. And so I'm going To do, do this other thing. Part of being resourceful, part of having high agency is the ability to engage with that complexity. Right. That's a hard, complex thing. Because you have to, you know, it's a little bit morally ambiguous and you can go too far down that road for sure. And we've seen this play out in stories of entrepreneurs where Elizabeth Holmes is a great example of this. It's like, well, she believed it really deep. But was it, you know, really the thing? No.
- [54:36]
B
So I got a speeding ticket a few months ago in North Dakota in the middle of nowhere. And I turned a five hour trip to a four hour trip. And I drove way over the speed limit, but not 110. I was driving, I don't, 90, 88, something like that on a totally flat, no turn, double four lane interstate with a median. And I got pulled over and I was like, speed tax.
- [55:02]
A
Yeah, that's right.
- [55:02]
B
You know what the ticket was? 75 bucks.
- [55:05]
A
That's all right.
- [55:05]
B
You paid 75 bucks, $75 to save an hour.
- [55:09]
A
Absolutely.
- [55:09]
B
Of resourcefulness.
- [55:10]
A
I do it every day. That's a great, that's a great trade.
- [55:12]
B
If I could have started the trip and say, hey, you can drive 70 miles an hour or 90 miles an hour, but you got to pay $75 right now at the beginning of the trip.
- [55:21]
A
Great.
- [55:21]
B
$75.
- [55:22]
A
Here you go, we'll do it. That's exactly right. Now here's the thing. That example is a really good example because I want to be clear that we are not saying that there are not consequences. Of course there are all of those things. Every rule you push against, anytime you break a rule, it has consequences, opportunity, cost. But the consequences are really. Yeah, they just a cost. And you just need to decide is it worth it or not? Right.
- [55:43]
B
It's the test.
- [55:44]
A
Obviously you need to be highly skilled in something. I think that's critical. We talked about that before. Being highly skilled is a requirement of being a good entrepreneur. And certainly if you're going to be a bootstrapped entrepreneur, you can't go hire a bunch of high skilled people because you have to be that high skilled person. So that's really, really critical.
- [55:59]
B
Which means lots of knowledge, lots of wisdom put into action over many, many years in order to become great at the thing.
- [56:06]
A
Yeah, and we'll talk about this one. I'll actually pull this one in now. Cause I think it's applicable. You need to be a learning machine. You need to become one. If you're not one. Now, I'm not even saying I'VE never met one that didn't love to read, that wasn't reading all the time. However, there are lots of ways to learn now. So if it's podcast, if it's. I mean, technically, I just probably consider all of that stuff. Books in various ways.
- [56:30]
B
Sure.
- [56:30]
A
Like podcasts.
- [56:32]
B
It's the accumulation of knowledge. You need to accumulate knowledge only come from books. And then it was audible and audio books and now podcasts. And now there's. There's a million ways to accumulate knowledge. The key is, are you in a never ending pursuit of knowledge?
- [56:47]
A
Yeah, because it never ends.
- [56:48]
B
That's the great right. That never ends.
- [56:50]
A
And for that to be the case, you kind of also need to love that. Right. So it needs to not be a grind. However, I will also say, just like anything else, when you start, it might feel like a grind.
- [56:59]
B
Yep.
- [57:00]
A
But eventually it stops feeling like a grind. Trust me. I remember when I was very young, I mean, I was pretty intense reader, even young, but it took me a while to get to the point where I could read effortlessly and my eyes just passed over the words and they went straight into my brain without me having to do any interpretation or whatever. I recognize there are probably people that have not actually passed that in their own life yet. And what I'm telling you is there may be a little bit of a grind to get to that point. I had someone recently tell me they can't listen to Audible, that audio books don't process for them in whatever way. And what I would tell people like that is I would say you should try it more and see if what's happening is your brain is just not used to accumulating information in that way. But I don't know, I could be wrong. You need to be extremely comfortable with risk. I think this is. This is an interesting one for me because I had a conversation this weekend where I was talking to somebody about this point that the only. I don't know any founders who are good founders who are not very comfortable with risk. And I would probably take that a step further. I would probably say that you love risk, actually, and maybe I might even say that you're addicted to it. I will openly admit that I am completely addicted to risk.
- [58:21]
B
Yeah, this is why most of us shouldn't gamble at casinos.
- [58:25]
A
I don't gamble at casinos for that very reason.
- [58:27]
B
And I used to play poker many years ago. I wasn't addicted to the gambling, but I also wasn't a founder back then. And I can handle these incredible swings. And luckily you and I both have wives that trust us, that go, like, we've never lost the house, everything's been okay, do the thing right. But for me, man, I remember this when I was like 19 years old going to architecture school, and I was a young just intern at an architect firm. And it was the end of the year, it was like December 30, December 29, something like that. And they said, here's all the bills we need to have, receivables we need to receive. These are all the vendors that owe us money. We need you to collect as much money as possible. And they gave me bonus structure of as you get, whatever. It was like the. I remember it like it was yesterday. I sat in an office and I made like 500 phone calls and collected money and cash checks. And there was something about the. And that wasn't really risk, but it was the. It was, you know, I was 19, but it was pressure. Yeah, it was pressure. And I could argue that there was risk and that like, if I couldn't collect the money, I was probably gonna get fired.
- [59:39]
A
Right.
- [59:40]
B
But it was the first time I saw, like, it's that for some of you listening, you might think, like, oh man, I'm still like kind of risk averse, especially on bootstrapping. It's my own money. The key is like, do you work well under high pressure situations?
- [59:53]
A
Yeah.
- [59:53]
B
When the pressure is highest, are you at your best? Is your IQ at the best? Are you hyper focused? Are you able to. Or are you someone. When the pressure is highest, are you a procrastinator, which a lot of people do. Like, the pressure is high. I just want to. I know I have to get this done, but I'm just gonna watch the Netflix thing or take the nap or do the thing if that's you. You're probably not wired to be a founder.
- [60:16]
A
That's right.
- [60:16]
B
When the pressure is high, no matter what, no matter how you feel, no matter what your emotions are, anxiety, depression, whatever, it doesn't matter. Exhaustion, you just do the thing. But you don't just do the thing and punch in like you're a blue collar worker. You do the thing at a level that you've never done it before.
- [60:36]
A
Yeah, you keep surprising yourself.
- [60:38]
B
Like, regardless of the external things, regardless of the external stresses and the anxiety and the exhaustion and the stuff, you just do the thing. So, like, that is absolutely a trait of a phenomenal founder, entrepreneur, no question.
- [60:52]
A
And the last one, which I think that led into nicely, is a generous amount of grit. And we've heard this word quite A bit. But the way that I think about it, and I think you'll relate to this well, Matt, is you can take a beating for a long damn time and be okay. So here's the thing. I think about it, like, I don't know if you're like, when I was a kid, my favorite favorite movie, one of my favorite movies was Rocky. I love the Rocky movies.
- [61:23]
B
Sure.
- [61:23]
A
And the thing about Rocky wasn't the best fighter in the world, you know, but that dude could just stay in the ring and get his face bashed in over and over and over. And the reason I think this is so applicable to entrepreneurs is that you rarely will even have time to celebrate the little wins that you get before another horrible thing comes and punches you in the face. And here's the thing, for many of you listening, you might just say, well, why the hell would I do it? And that's a great question. The answer to the question is that what you're actually doing. And there's actually a study and I have not been able to find it. I've read it once, but I have not been able to find it recently. But I want to find it. So if anybody ever finds this, please surface it for us. But there was a study that basically determined that the very best founders and CEOs were literally, it was just this trait. This was it, their ability to take a beating and stand up at the end of the day, lay down in.
- [62:25]
B
Their bed and believe they were still going to succeed. There's a great, I think I've sent it to you. The CEO of Nvidia, Jensen Huang, which is a trillion dollar plus business, one of the top five, if not the number one, most valuable business in the world. And they said, what would you go back and tell your 20 year old self? And he said, don't do it. I wouldn't do it. But here's the thing. Then he says, the superpower of great founders and entrepreneurs. They know it's going to be really hard. They know it's going to be so much harder than the blue collar job or the school teacher job or the whatever the thing is. And yet they have some superpower that says, but I'll make it. I'll be okay.
- [63:07]
A
Yep, yep.
- [63:08]
B
And it never ends. And so even for the guy whose company's gone from a $200 million company to a $2 trillion company in the past two years, and just imagine the stress that comes with that, he still didn't quit, the guy could.
- [63:25]
A
Yeah, sure could.
- [63:26]
B
Guy set. Guy's set for life. So he says, I would go back and tell the 20 year old self, don't do it except 55 year old self is still doing it and could get out. And so there is this thing about the grit that I would say that you're even addicted to the grit. There's a thing that you're just like, now listen, I don't want to be kicked in the nuts by my wife or you, my brother, or the people that I love that are in my inner circle. I do want to be clear, I'm not self deprecating to the point that I want to have the.
- [64:00]
A
Yeah.
- [64:00]
B
You know, just crap piled on me by the people who I love the most. But for the people who are outside that inner circle, you just learn to deal with the crap.
- [64:08]
A
Yeah.
- [64:09]
B
And you just go like, okay, like that's, you just have to deal with the thing.
- [64:14]
A
Yeah. Here's the thing. I think one of the things that we're really getting towards here is you think when you start this process that you are building a business, but really you're building a founder.
- [64:27]
B
That's right. That's so good.
- [64:29]
A
And the thing is those punches to the face, those are value. Every time it happens, the grind that lasts 20 years. Well, how good of a marathoner are you? Can you do it for 30? Can you do it for 50?
- [64:44]
B
Well. And how many people have gone through it? There's a part of it too that it's not a superiority complex. But it's like I have very few people in my life I can talk to about this. You're one of them because you're one of the few that have experienced the thing. Now I get for people who have been raised in this, but also I think there's a thing that when you're raised the way we are as poor as we were and have built businesses the way we have, how many people in our whole life can relate to that? Yeah, we weren't a trust fund kid and we didn't, we didn't start the business with the trust money. We bootstrapped it. We did the thing. We got kicked in the nuts and we did it for 30 years. There's something about that. That's the voluntary hardship that refines us that we choose. And by the way, I'm never going to talk down on blue collar workers, teachers. I think those are admirable positions that I think that the world desperately needs. But for some of you listening to this and for me and for you, I couldn't be it.
- [65:47]
A
Yeah, I couldn't do it.
- [65:49]
B
I was called to something different, like something in the universe called me to. Not that. And so I got called to a life getting kicked in the nuts, but also building business and refining myself and refining people and managing people and growing the thing. And I love it. I love it. And even in the times that I don't love it, which are short, there's months at a time. There's a month or two months where you're just like, you're overworked and you're burned out. You're like, I just need a vacation or I need a sabbatical or whatever. But it's funny that you'll come back from it and it's like, I'll go on vacation in Mexico, which I'm on right now as you guys listen to this. And I'm probably in an amazing place right now. And in about two or three days of just having a little bit of peace and quiet, my brain can't stop functioning on like, okay, where's the next place the business is going to go?
- [66:39]
A
Yeah, that's exactly what I do too. It's the same.
- [66:42]
B
And that's how you know, that's how you know instead of if now if I'm four, five, six days into vacation and I'm like, I can't wait to get out of this business and go get a blue collar job, probably not for you. Probably not for you and probably not for me. But I know what's going to happen this week. I'm going to go to Mexico. I'm going to be exhausted for a few days, two or three days in, I'm going to spend great time with family. I'm sitting out in the sun, I'm going to eat good food, I'm going to work out, and I'm going to be like, my brain's gonna start turning. It's not gonna turn at all the first two days, but by day three, day four, I'm gonna be like, all right, here's the next step.
- [67:14]
A
Here's where we're going and what it leads to. Right. Is this thing that we said over and over again, which is at the end of this path, whether it's a sale or the business fails. Right. That happens too.
- [67:26]
B
Sure.
- [67:27]
A
With that level of experience and with that level of growth as a founder, you could always go out and do it again. And I think it's really important to keep that in mind. When we think about what it is that is in our control versus out. All of those things essentially are about founders. But the specific route that I think you need to go that builds on those traits the fastest is bootstrapping. My recommendation to every single person who is thinking about starting a company is to start bootstrapped. And if you want to raise capital in the future to grow the company, absolutely do that. But do it once you're in a position to know that you've hit product market fit, you're able to generate profits, and you've got really, really good habits built into the company.
- [68:09]
B
Totally agree. That's another episode of the build you'd business podcast with Matt and Chris Reynolds. If you've received value from this, please give us a five star review on Apple Podcasts or Spotify or wherever you listen to your podcast. It's very helpful for us on the algorithm and helps us and share it. Oh, there's my nephew.
- [68:25]
A
We are shooting a podcast.
- [68:27]
B
Your kiddo just jumped in.
- [68:28]
A
There he is.
- [68:28]
B
So that's all right. So make Carter give us a five star review.
- [68:32]
A
Carter's gonna give us five star review and his buddy who's here is gonna go give us a five star review. You.
- [68:36]
B
So you guys have a great week and we'll see you next Friday.