← Success Story with Scott D. Clary
Success Story with Scott D. Clary
Lessons - The Truth About Venture Capital Nobody Tells You | Rand Fishkin - Author of 'Lost and Founder'
00:13:51
Loading summary
Transcript15 lines
- [00:00]
Scott
Indeed is a success story, partner. Now here's your tech hiring tip of the week from Indeed. 73% of tech workers say flexibility is one of their top priorities. So if your job posting doesn't mention flexible hours or remote options, you're basically invisible to three out of four candidates. Keep that in mind. Look, hiring tech talent right now, it's tough. You are competing for people with super specific skills. Everyone wants hybrid work and the salary expectations are through the roof. It's a lot. That's why Indeed actually makes sense. They're the number one place where tech people go to apply for jobs. We're talking 3 million tech professionals in the US and 86% of them have applied through Indeed. It's not just some job board where you post and pray. They've got tools like smart searching and their tech network that uses AI to connect you with people who actually have the skills that you need. Companies using the tech network saw over four times more relevant applications. That's huge. More qualified people, way less time wasted. Whenever I've needed tech talent in the past, Indeed is the only platform I choose. And if I needed to hire top tier tech talent today, I'd still go with Indeed. Post your first job and get $75 off at indeed.comtechtalent that's indeed.comtechtalent to claim this offer. Indeed. Build for what's now and what's next in tech hiring. In this lessons episode, explore how the culture of venture capital shapes modern entrepreneurship and why it often limits sustainable growth. Discover why most startups fail under hypergrowth expectations. Understand how alternative funding models can build profitable and lasting businesses, and uncover how redefining success beyond hustle culture leads to bal equity and genuine fulfillment. I think that the ideas that you champion around entrepreneurship are very important because it paints a very pragmatic picture for people that want to start something and potentially are just looking to go find VC money and think that that's the only path that they can take, which it's not.
- [02:04]
Rand Fishkin
Yeah, well, and even for people, one of my big frustrations, Scott, is that even for people who don't raise venture, they build their companies in the media ecosystem and the echo chamber that is dominated by venture. Right? And so even if you are a startup that is an agency, for example, a consulting business, the concepts of blitzscaling and hyper growth and growth hacking and, you know, maximizing growth rate of hustle culture, all of these things are weighing down on you regardless of whether you are actually, you know, in that, in that funded structure. So I Think this is, this is one of my big challenges, right, is that even though many venture capitalists would say, and they do say this all the time, right? They say VC is wrong for 99% of companies. And if you're a tech entrepreneur, it is marketed to 100% of us, right? It's the, it's the ocean that we're swimming in. So I, I think it's really, really wise to understand why does that asset class exist, how does it function, what's the goal behind it? Right? The goal behind it is to avoid taxes. And the goal behind that is essentially maximize growth at the expense of long term survivability. So you know, if you look at the Small Business Administration, right, in the US which, which looks at tons of small businesses, so people with whatever, two to 100 employees, the average survival rate over five years is like, I think it's 55, 58%. It's down a little bit in the last few years because of COVID and stuff. But the average 5 year survival rate for a venture funded, as soon as you raise that first venture round or the pre seed or the seed round that would lead to a venture round, your five year survival rate drops like 15%. That's a lot worse than a restaurant, right?
- [04:19]
Scott
Yeah.
- [04:21]
Rand Fishkin
So it's a very strange, strange world. If you are an entrepreneur and I don't think it's talked about enough that these high failure rates exist. There's also the culture of, I think the whole ecosystem around it creates this idea that, Scott, let's say you start something tomorrow. What you're essentially told is, hey, yes, there's a high failure rate, that's part of the game. But you are special. And if you are good enough, if you are a true champion, if you work hard enough, if you sacrifice enough of the rest of the things in your life and you put your full energy and effort and you devote everything to this venture, you may be able to prove yourself as one of the big success stories. I hate that too. Like that does not work well with my mental model and how, how I want the world to be, right? I want a world of far more equity and far more distribution of opportunity rather than maximizing inequality by saying, for every 500 entrepreneurs, there will be two or three big winners and a few who do okay, and the vast majority will fail entirely. I think that's what we have in society, American society, at least overall right now. You know, if you look at the wealth distribution, income distribution, it's basically a tiny few massive winners, right? A Few, you know, maybe another 10% who's doing pretty all right. And then kind of this, oh man, you do, you know, whereas when we were born, you know, maybe I don't know how old you are, but 30, 40 years ago, you really didn't want to be in the bottom 40% of Americans. Now you really don't want to be in the bottom 70%. And it feels like we're going to a place where you wouldn't want to be in the bottom 90%, you know, in another 20 years. That's ugly. That's not the world I want to live in.
- [06:25]
Scott
That's not the world I want to version of capitalism. It's an ugly version of capitalism and wealth gap.
- [06:30]
Rand Fishkin
Yeah, yeah, super ugly version. And look, I, you know, I think extremely highly of a lot of people who are in that world. Right. I have a bunch of investors who are venture back. Dharmesh Shah. Dharmesh, the co founder of HubSpot. Yeah, he was, he was the lead investor in SparkToro. He's been my friend for forever. I love that guy to pieces. I think he's a wonderful human being. I don't love the model of investing that he generally does and supports. Right. And he's had obviously an incredible success with HubSpot and with Venture backing. I know he thinks highly of HubSpot's venture investors from years ago and he invests in a lot of startups that go on to raise money. But I don't, I don't, I don't love it. And I, I think, I think in order for us to change that, we have to have lots and lots of role models that are showing a different path and doing it well. And that's, that is the most fundamental thing that SparkToro is trying to be, is a role model for a different kind of path. So we are doing our marketing differently, we're doing our growth differently, we're doing hiring differently. We think about what we want the next quarter, in the next year to be differently. We technically we are growing at a rate that a venture investor would be excited about, but we don't have to be. It's almost unintentional. Right. It's sort of like, oh, well, look at this happy accident that is going along. You know, SparkToro is going quite well, especially at the moment. I'm sure we'll have some down months in the future. But yeah, that's not, Our goal, is not hypergrowth. My goal is to work 30 or 35 hours in a week. Right. I want French or Italian hours. I don't want American hours.
- [08:19]
Scott
SurveyMonkey is a success story partner. Now look, we get it. You can hardly go anywhere or do anything these days without hearing about AI this or AI that. And if you're like most people when it comes to AI, you're impressed, but you have a few concerns. But what if AI was used not as a tool to replace people, but as a way to help understand people better? AI from SurveyMonkey is designed to do just that. From crafting the perfect survey, which is harder than you might think, to analysis that digs deep, finds patterns and surfaces, trends quickly. SurveyMonkey's powerful suite of AI capabilities makes it faster and easier than ever before to get insight from real people, helping you make confident decisions for your business. Try it today at surveymonkey.com/Scott Gusto is a success story partner. Now look, I talk to business owners every single day, and you know what I hear constantly? Scott I love running my business, but I hate dealing with payroll. And I get it. Nobody starts a company because they're excited about calculating tax withholdings and benefits administration. That's exactly why I use Gusto myself. And the smartest business owners use it as well. Gusto is online payroll and benefit software built for small business. It's all in one remote, friendly, and incredibly easy to use. So you can pay, hire onboard, and support your team from anywhere. Now, here's what sold me. Unlimited payroll runs for one monthly price. No surprises, no hidden fees when you need to run that extra payroll and when you hit a tough HR situation. And trust me, you will, you get direct access to actual certified HR experts, not a chatbot. Real people who know what they're talking about. Plus, they're the number one payroll software according to G2 for fall of 2025. And over 400,000 small businesses already trust them. Gusto today at gusto.com success story and get three months free when you run your first payroll. That's three months free payroll@gusto.com success story. Uncommon Goods is a success story, partner. Now listen, holiday shopping sucks. You end up buying the same stuff everyone else is getting from Amazon or Target. All the gifts are boring. But Uncommon Goods is different. They actually curate unique gifts from independent artists and small businesses. It's all stuff that you've never seen before. I was looking on their site and I found this cocktail smoking kit where you literally smoke your drinks with different wood chips. I had to get it. My brother, who thinks he's a mixologist, is going to lose his mind. That's the vibe of the whole site. Things that make you go, wow, I can't believe that exists. See, everything is handmade, or it's made in small batches. So the cool stuff sells out. And they've got gifts for everyone. Your dad, your weird cousin, your friend that's impossible to shop for. And here's the best part. They give a dollar from every purchase to a nonprofit you choose. Over 3 million donated so far. Get 15% off your next gift@uncommongoods.com success. That is UncommonGoods.com success. For 15% off. Don't miss this limited time. Offer uncommon goods. We're all out of the ordinary. 100%. Yeah. All right. I mean, have you been to Italy? Like, of course. I know exactly what you're talking about. If I remember, last time. Last time I went to. I was. I was last. The last European trip was Vienna, Austria. And the. I was on my phone on a Friday afternoon, and everybody was looking at me like I had three heads. Like, the fact that I was on my phone on a Friday afternoon, it was just a regular. It wasn't a holiday. It's like, what are you doing? Like, what. What are you working on?
- [11:46]
Rand Fishkin
Get off your phone.
- [11:46]
Scott
Look.
- [11:47]
Rand Fishkin
Look at the beautiful sunset. Look at this incredible plate of pasta before you.
- [11:50]
Scott
Let's go to a vineyard. Let's go drink. Let's go eat.
- [11:52]
Rand Fishkin
Let's go get an espresso. Get an aperitivo. That's. I mean, I don't think that at the. You know, at the end of my life, I'm gonna look back and say, I wish I'd made more money. You know? Like, I just can't see it. I just cannot. I wish. I wish I grinded harder. I wish I'd hustled more. Like, I don't. I don't think those are the things I'm going to be thinking about. I think it's weird that there. Maybe there are people who will feel that way.
- [12:27]
Scott
I don't know. I don't think so. Well, I think that that's why you have to find a way. Okay, so let's. Let's break down. I want to break down some. Some tactical advice for entrepreneurs on. On how they can build a company like Sparktoro, because everybody, like you said, is marketed, and they're in this ocean of VC investment. Or if not VC investment, then, okay, I have to bootstrap. But there's not a lot of bootstrap success. There are some, but, I mean, there's not a Lot. So how do you.
- [12:50]
Rand Fishkin
Yeah, and these are not the only two options, Right. There's a whole bunch of stuff in between that is poorly understood and not well marketed and not. It gets very little press, gets very little media, and for obvious reasons. Right. It's just. There's not that much of it. And also, it is rarely the case that those people have power, influence and wealth to impact media in the same. In the same way. Right. So, so what I would, what I would urge folks to think about is in the structure of your company, you can raise money from investors, private or crowdfunded, in ways that let you build the kind of company that you want to build. And there are supportive groups of investors who are like, like myself, right. Who are looking for opportunities to fund companies that have a. Hey, we're going to exist for a long time. Our first priority is sort of paying back our investors their initial sum. This is, this is how the SparkToro model works. We raised $1.3 million from 35, 36 angel investors. They're mostly folks, gosh, from my personal network over the years. So you. For our model, you do need accredited investors, but there are innovations on that model that'll let you crowdfund this same sort of thing. You can look at what Sahil Langavia did SHL on Twitter, and he basically built a fund structure that's a little more crowdfunding style. But those 36 investors put in between 25,000 and $100,000 each. And our goal at SparkToro is essentially to become profitable, which, which we have been for a while now, and then pay back that 1.3 million, at which point everybody gets to participate pro rata, meaning to their amount of shares in profit sharing. So if we make, you know, $100,000 in profit for 10 years, everybody, you know, all the investors get to split whatever it is, 35% of those profits, and founders get to. And employees get to split the. Hopefully, Right? Our Hope is that SparkToro is a several million dollar a year business, maybe even a $10 million a year business, and that our profits are seven figures, right? And that we can pay out that money every year annually. And that compounded over time, SparkToro will actually be one of the best, maybe the best performing investment in our investor's portfolio. And the only downside, the only shitty thing for them, ordinary income taxes, right? They'll have to pay ordinary income taxes on the money that SparkToro makes them. But if you can find, you know, sort of tax progressive investors, right, who believe in this that the one nice thing is if and when Sparktoro ever does sell right, if it if it if it's acquired by some other company in the future, good news on that money our investors will get capital gains.
- [16:07]
Scott
Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.