This AI Startup Idea Has 500 Million Customers Waiting For It
Summary
TLDRIn this insightful discussion, Jason Cohen, the founder of SmartBear and WP Engine, shares his entrepreneurial journey and wisdom. Cohen emphasizes the importance of clear communication and compelling presentations, reflecting on his experiences in building and selling successful companies. He candidly discusses the challenges all startups face, highlighting that success often hinges on excelling in key areas despite setbacks. The conversation delves into the decision-making process for selling a company, the concept of 'optionality' in business, and the value of generating customer value over merely saving time or money. Cohen's pragmatic approach and strategic insights offer a wealth of knowledge for aspiring entrepreneurs and seasoned business owners alike.
Takeaways
- π The importance of clear presentation and storytelling in business proposals, as poor presentation can lead to misunderstandings, even if the idea itself is strong.
- πΌ Jason Cohen's successful entrepreneurial journey, starting with SmartBear and then WP Engine, both of which grew significantly under his leadership.
- π The significance of profitability and efficient business operations, as illustrated by SmartBear's 50% bottom line profit before its sale for two billion dollars.
- π€ The value of asking the right questions to improve presentations and to guide decision-making in various aspects of business and life.
- π§ The role of AI in assisting with generating questions and providing a structured approach to problem-solving and idea clarification.
- π οΈ The comparison between focusing on making a product better versus focusing on saving time or money, with the latter often being more appealing to customers.
- π‘ The idea that all startups have issues, but successful ones excel at a few critical aspects that outweigh their shortcomings.
- π° A candid discussion on the motivation behind entrepreneurship, with the acknowledgment that financial success is a common goal.
- π The concept of 'optionality' in business, where a company maintains the freedom to pursue various paths such as selling, raising capital, or going public.
- π The insight that who you have on your team or board, rather than the firm itself, is the key determinant of success in business partnerships.
- π― The emphasis on focusing on the most critical problems that areι»η’ing growth or causing customers to churn, rather than trying to fix every issue at once.
Q & A
What was the initial business model of Smart Bear when Jason Cohen started it?
-Smart Bear was bootstrapped by Jason Cohen, and it operated profitably for seven years before being sold, making millions of dollars in profit without external funding.
How many employees does Smart Bear currently have, and what was its sale price?
-Smart Bear currently has hundreds of employees, not thousands as sometimes reported. It was sold in 2020 for two billion dollars.
What is the significance of WP Engine in Jason Cohen's entrepreneurial journey?
-WP Engine is one of the largest web hosting companies in the world, which Jason Cohen bootstrapped for a few years before raising significant funds and building it into a company worth billions of dollars.
How does Jason Cohen engage with the startup community through blogging?
-Jason Cohen has been blogging at smartbear.com for years, providing insights and advice that are highly valued by the startup community, especially those actively building companies.
What is the key takeaway from the discussion about presentation skills in business proposals?
-The key takeaway is that the quality of information is less important than the quality of its presentation; a well-presented idea is more likely to be understood and accepted.
What is the role of AI in improving presentation and communication skills as discussed in the script?
-AI can be used to generate questions that help refine thoughts and presentations, and to provide a neutral summary of topics, which can help identify what should be emphasized in a presentation.
How does Jason Cohen approach the use of social media, particularly Twitter, for business interactions?
-Jason Cohen uses Twitter strategically by engaging with certain people whose opinions he values, responding to their posts in a timely manner to increase the likelihood of interaction and visibility.
What is the concept of 'Richer vs. King' as introduced by Jason Cohen in his blog post?
-The 'Richer vs. King' concept is about choosing between a guaranteed large sum of money and a risky gamble for potentially more, illustrating the decision to sell a company when offered a life-changing sum.
What does Jason Cohen suggest as the minimum amount of money one might need to consider a 'rich lifestyle' in America today?
-Jason Cohen suggests that around 20 million dollars is needed to have what would be considered a rich lifestyle in America, taking into account taxes, inflation, and investment strategies.
How does Jason Cohen define success in business despite having problems or issues within the company?
-Jason Cohen defines success as having one or two things that the company excels at, which can compensate for numerous other problems, as long as those key strengths do not diminish.
What advice does Jason Cohen give about focusing on value rather than time or cost when selling to customers?
-Jason Cohen advises to focus on selling more value to customers, as they are more likely to pay for increased value rather than for time or cost savings.
Outlines
π Founding SmartBear and WP Engine
The speaker begins by discussing the challenges of presenting ideas effectively, referencing his career in improving presentations. He introduces Jason Cohen, who founded SmartBear Software, which he grew for seven years before selling it for a significant profit. Cohen is also recognized for his role in WP Engine, a major web hosting company. The speaker appreciates Cohen's blog, which is popular among those actively building companies, for its insights into successful business strategies and his unique personality that combines logical thinking with a passion for innovation.
π Enhancing Presentations and AI's Role
The conversation shifts to the importance of clear and compelling presentations, with the speaker sharing his approach of asking simple questions to improve a presentation's clarity. He also explores the potential of AI in enhancing presentations, suggesting that AI could help in asking the right questions to guide the presenter's thought process. The speaker emphasizes the need for a clear narrative and the use of titles that convey the key message of each slide, rather than just labeling the content.
π‘ The Craft of Social Media Engagement
The speaker discusses strategies for effective social media engagement, particularly on Twitter, by focusing on interacting with select individuals within a short window of their post to increase the likelihood of response and visibility. He also touches on the perception of being 'always online' and the benefits of this approach for building a strong online presence. The discussion includes the speaker's experience helping successful individuals with their social media presence and the importance of not getting addicted to the platform but rather using it strategically.
π The Freedom to Pursue Passion Projects
The speaker and Jason Cohen delve into the topic of financial freedom and its impact on decision-making, particularly when it comes to selling a company. Cohen shares his perspective on the 'Richer vs. King' concept, explaining the choice between a guaranteed sum of money and a risky gamble for potentially more. He discusses the significance of crossing the 'freedom line' where financial security is no longer a concern, allowing for the pursuit of projects based on passion rather than financial necessity.
πΌ The Reality of Scaling a Business
Cohen reflects on his experiences scaling businesses, highlighting the shift from the chaotic early stages to a more structured and mature phase as the company grows. He emphasizes the importance of focusing on the key aspects of the business that drive success, despite the inevitable presence of numerous problems. The speaker shares insights from his interactions with successful founders, noting the commonality of challenges and the importance of identifying and addressing critical issues that could hinder growth or lead to failure.
π€ The Value of Building a Good Company
The conversation concludes with a discussion on the importance of building a company that offers optionality, allowing for various outcomes such as selling, raising more funds, or going public. Cohen stresses the significance of creating a company with growth, profitability, and satisfied employees and customers. He also shares his views on the role of private equity firms and the importance of the people involved rather than the firm itself in determining the success of a partnership.
Mindmap
Keywords
π‘Bootstrapped
π‘Profitability
π‘Web Hosting
π‘Blogging
π‘Product Market Fit
π‘Exit Strategy
π‘Investment
π‘Customer Discovery
π‘Value Proposition
π‘Optionality
π‘Imposter Syndrome
Highlights
The importance of effective presentation in business proposals and how misunderstandings can be clarified with better explanations.
Jason Cohen's entrepreneurial journey from small businesses to founding SmartBear and its impressive growth and sale.
The significance of profitability and employee count in the success metrics of a company, as illustrated by SmartBear's sale for two billion dollars.
The role of WP Engine in the web hosting industry and its bootstrapping phase before raising significant funds.
The influence of blogging in building an audience and the impact of Jason Cohen's blog on industry insiders.
The comparison between successful individuals who balance logical thinking with the excitement of doing what's cool.
The introduction of Zeec, a platform for CEOs and boards to collaborate more effectively, and its founder Ed Norton's background.
The discussion on the potential of AI in improving presentations and the idea of using AI to ask the right questions for clarity.
The strategy of focusing on the most compelling aspects of a business to drive success despite other issues.
The concept of 'rich versus king' in entrepreneurship and the personal financial thresholds that influence decision-making.
The idea that all startups have issues but successful ones have key strengths that outweigh their problems.
The importance of identifying and focusing on the critical problems that truly affect a business's survival or growth.
The advice against seeking product-market fit through leading questions and the need for genuine customer discovery.
The principle of selling more value to customers rather than saving them time or money, which can be more compelling.
The discussion on optionality in business, emphasizing the power of having multiple paths forward without the necessity to take any.
Insights into the role of private equity firms like Silver Lake and their impact on company growth and value creation.
Transcripts
I mean how many times have has has
someone proposed something everyone's
like h i don't get it but then someone
else is like look what this is really
about is blah blah blah everyone's like
oh that sounds great that I want well
you just said you know it's not bad
information it's bad presentation I made
my whole career doing
[Music]
that all right Jason we're live this is
how we start we just jumped right into
it can I give the can I give
my like brag about you intro of what I
know about you and then you can kind of
correct anything that I get wrong of
course we have Jason Cohen so Jason
Cohen originally started you had a bunch
of smaller businesses but in the early
2000s you started was it called uh it's
just called smart bear or smarter Bear
Just Smart bear that was 22 years ago
believe it or not smart so 22 years ago
you started smart bear you grew it for
like seven years bootstrapped it making
millions of dollars in profit sold it
that company now has a thousand plus
employees has sold recently or traded
recently for like two billion is that
right yeah it actually doesn't have that
many employees it's more like hundreds
which is part of why it's impressive
because it's yeah it was sold in 2020
for two billion and it doesn't have a
th000 employees it's super profitable
like it was publicly said then um what
the profits were it's 50% bottom line
profit God so just just a a printing a
cash printing machine then you started
WP engine of which I'm a customer of WP
engine is one of the large web hosting
companies in the world uh that company
you bootstrap for two or three years
then you now you've raised I think2 or
$300 million it makes many hundreds of
millions of dollars it's worth billions
of dollars and all along the way you've
been blogging at uh as smartbear.com
I've been reading that for years you are
not the loudest person and that's the
reason why I wanted to have you on is
because you're not the loudest person
but anyone who's like in the thick of it
and trying to build great companies
everyone reads your blog like the the
the the 1% the 1% read your blog you've
got a really good audience of people
actually building it and the reason I
like you is you and daresh are a little
bit of the same personality to me
there's like this Vin diagram and it's
like it's like people who are wildly
successful like we're talking
billionaire successful but then also are
just do just because it's fun and
at the same time have this weird like
logical way of thinking but then can
like disregard that logical way of
thinking and just do what's cool and
what's exciting which is really rare to
have someone who's both an engineer but
also understands like ah it I'm
just going to do it because this is cool
and you do that so like Sean he just
dm'd me on Twitter and I was like dude I
just got this automated DM from you he's
like oh yeah I built this script that
automatically DMS everyone who follows
me on Twitter so he's that type of guy
where like he's got like a thousand
projects that he will never even talk
about but it's like a little thing that
he had to get on the weekend but you
also have WP engine which is this
massive unicorn and so that's why we
wanted to have you on the Pod well yeah
I mean WP engine's a like one of the top
10 web Platforms in the world and then
you're also tinkering with like these DM
autod DM scripts because you're like
yeah this is useful I like this and so
that's the that combo we've we've come
to find is a really good fit with us on
the Pod somebody who has ambition in
scale but also is a tinkerer at heart I
want to talk to you about some different
ideas so check this out Sean uh on your
computer and Jason if you have a
computer do this too go to z. apppp so
it's the word deck but with the Z so
zeec doapp okay so it says zeex
reimagine how CEOs collaborate with
their board you scroll down whose face
is that yeah Ed Norton Ed Norton the
actor is the founder of this company
that's funny he's I believe he's like if
you Google like this company Zack and
you see like them doing presentations on
CNBC and like that he's talking
he's the founder of this company dude I
just booked a demo call in 45 minutes
just in case it's Ed Norton who's going
to I just might get a free call with Ed
Norton this might be great if it's not
Ed Norton I'm immediately hanging up
this
Zoom I saw an interview with him and he
said he's super active but these guys
are they're like I guess Ed Norton's
father I think was like business person
and he was a raised around business and
he uh he was I saw him give this
interview and he was like yeah the thing
about when I work with all these
companies I invested is they're horrible
at telling me back the story they're
horrible at giving a presentation and I
so I just I wanted to create software
that would just help them be better at
that at telling the story explaining how
the company's going and to make our
meetings more productive and to teach
them how to do presentation and I think
this company I don't know if it's
software yet I think it's still a
service I'm not I'm not entirely sure uh
but I I saw this site and I was like
what the is Ed Norton doing on this
little like software site but Ed Norton
is this is his company doing it and you
know it's not just the experience of the
viewer and and just wanting people's
time to not be wasted which it also is
that but it's also more compelling like
if you're trying to propose something if
you do a better job it's more likely
that it'll happen I mean how many times
have has someone provoked post something
everyone's like h i don't get it but
then someone else is like look what this
is really about is blah blah blah
everyone's like oh that sounds great
that I want well you just said you know
like what I mean that's just bad present
it's not bad information it's bad
presentation I made my whole career
doing
that well yeah we have like we have
these college we have these college kids
come on once a year twice a year and
they like pitch their company and Sean's
very good at hearing what they said he
goes that's actually a great idea you've
explained it horribly here's how I would
retell that and you will tell this
beautiful story
and then everyone's jaw is dropping and
we're like yeah we're in and uh he does
that all the time he's very good at that
you know we've done pitch competitions
at Capital Factory for 15 or 16 years
and it always goes like that so can AI
magically fix it all I don't know about
that but like Could It Could It Go from
like negative 10 to at least like a two
out of 10 you know maybe well I think
you said three I I thought of three
interesting things while you were
talking I think you you prompted three
really interesting ideas the first is
you're right that most decks are
terrible and they're not and everybody
attacks us from a how do we make the
slides fancier pre's like hey what if
you were hangliding while you were
looking at the slide deck it's like no
no prey just chill out it's not that's
not what we need and other people pitch
is like you know what what if a designer
just designed everything it's like cool
but the actual message is the the part
that's out of order jumbled up and
unclear it's foggy and that's why this
deck is no good not because the
background color needs to be soft pastel
pink and so you you start to look at
this and one thing that I've done is
uh whenever somebody on my team makes a
presentation I inevitably will try to
like try to make it better and the
easiest way to make it better is just to
ask a couple of questions right like a
couple of simple questions one is like
if people are going to remember one
thing from this presentation what should
it be what's what is the number one
takeaway oh it's the thing on slide 37
cool let's make that slide one and then
that thing you want them to take away
let's make that the title right like
that that'll be the title of that slide
and you just sort of go on you know you
ask like five questions and you can make
a presentation much better with five
questions I've also started using AI in
this way so instead of going to Ai and
basically go to chat GPT instead of
asking a question and getting an answer
which I think is how most people use it
I'll go to chat GPD and I basically say
I'm trying to do x uh but I'm not sure
where to start what are some questions
like ask me some questions so that I
could start thinking about this the
right way and it' be like well it seemed
like you know we did this when we we did
an episode where we were picking us we
did a fake like stock of paloa we're
picking a stock it's like pick one stock
that you know just like for fun like
we're all horrible stock Pickers but
let's do it just for fun and I went and
I I wrote that how should I be thinking
about this like well if you're picking a
stock what you want to do is this right
and you might want to ask yourself the
following questions what's an area I
really know about what's a thing that I
really believe in what am I looking for
something short-term or longterm right
and it asked me a bunch of questions
that made me get more clear and I think
if AI was going to do anything it would
what it wouldn't do is just take my
input and make it better it would
actually stop stop me before I even
vomit and it would just say cool let's
just establish a couple of ground you
know how long is this supposed to be
absolutely getting getting interviewed
and getting interviewed by it makes a
lot of sense especially if it has some
context of what you're saying and so the
the questions can be even more pointed
another thing I've heard once which I
really like I haven't used this a lot
but it's it's neat which
is one thing that AI is good at right
now is just giving you the Bland neutral
summary of the topic right it definitely
can do that so if you ask it for the
Bland neutral summary the topic it will
tell you the most obvious boring stuff
so that's what you don't say it's like a
negative space so like well this isn't
interesting anything that's not this
might be interesting now maybe that's on
you to think of what that is but maybe
there's some like multi-step process
where the AI could be like H okay I
heard all their crap now I'm gonna go
ask myself what the then I'm gonna go
try to find the stuff that they said
that's not in there then I'm going to
try to enhance that then I'm going to
try to build like maybe a multi-step I
could do that maybe not again there's a
lot of maybe and could have I know but
if it were obvious and easy it wouldn't
be a good startup idea this has to be
something a good startup idea has to be
at least somewhat difficult to pull off
you know so you have a little running
start anyway that's interesting and then
the second thing is you said about
titles that's a huge pet peeve of mine I
I agree completely people will
say uh they'll they'll use the title to
label what is on the page which is
usually not useful because I can see
what's on the page it should be the
message you want them to take from that
one slide that should be the title so it
shouldn't say our team I can see it's
our team because there's three heads and
their stuff let's just say something
like you know our team has had three
successful exits or our team has to
collect you know Collective 30 years of
experience is the most boring thing you
could say but at least it's something
you know like what is it that you want
me to know about the team that's so
special that's what the title again AI
could prompt or even force that and it
also then helps your it goes the other
way too now it helps your narrative oh
yeah so I should put on the screen where
we all went to college and stuff I
shouldn't read that I should talk about
the title which says we've had two exits
so I should say yeah we exited this
thing in this space this thing and that
space and we work together there we've
been through the trenches that's why
this this team is totally drisk in terms
of people which you don't see every day
so we have plenty of risk but the team's
not one of them whoa that's a good
that's a good thing to say on a team
slide to an investor Investor's like
okay tick like I I don't quite believe
you that there's no risk but like I'm
with you I'm with you this isn't when
I'm gonna lose sleep over it I love that
um you know that should be the title so
like AI could help and that goes both
ways uh and and if you don't have good
titles you could say what should what do
you really want to say here oh let's
make a title this long okay now let's go
back to the text this is something you
could be prompted for and any
presentation is improved if you do that
all right everyone a quick break to tell
you about HubSpot and this one's easy
because I'm going to show you an example
of how I'm doing this at my company when
I say I I mean not my team I mean I'm
the one who actually made this so I've
got this company called Hampton you can
check it out join hampton.com it's a
community for Founders and one of the
ways that we've grown is we've created
these surveys where we'll ask our
members certain questions that a lot of
people a lot of times people are afraid
to ask so things like what their net
worth is how their assets are allocated
all these like interesting questions and
then we'll put it in a survey and I went
and made a landing page so you can check
it out at join hampton.com wealth you
can actually see the landing page that I
made and the hard part with this is with
Hampton we are appealing to a sort of a
a higher end customer sort of like like
a Louis Vuitton or Ferrari so I needed
the landing page to look a very
particular way HubSpot has templates
that's what we use we just change the
colors a little bit to match our brand
very easy they have this drag and drop
version of their Landing Page Builder
and it's super simple I'm not Technical
and I'm the one who actually made it and
once it's made I then shared it on
social media and we had thousands of
people see it and thousands of people
who gave us their information and I can
then see over the next handful of weeks
this is how much revenue came in from
this wealth survey that I did this is
where the revenue came from so it came
from Twitter it came from LinkedIn
whatever it came from I can actually go
and look at it and I can say oh well
that worked that didn't work do more of
that do less of that and if you're
interested in making landing pages like
this I highly suggest it look I'm
actually doing it but you can check it
out go to the link in the description of
YouTube and get started all right now
back to MFM here's what's funny is that
you know I've no idea if you are but you
you might be a billionaire or you're in
that realm and you've started
multi-billion dollar companies we asked
you about ideas the idea that you spent
most on is on how you manage Twitter I
find that to be hilarious give us the
second idea your your so your Twitter
social media management tool idea yeah
well it's not just Twitter like part of
what's neat about it is uh I the same
tool does LinkedIn and threads and uh
and uh Mastodon which isn't isn't really
working but okay here's some stuff I
think is is special and and also other
people could just do this even manually
if you want so one is um there's certain
people that I uh that I want to have
more interactions with so I have them in
a Twitter list because then you can
search for it right but I do a search
where it's the P people on that list and
they've posted in the last 20 minutes
which is a pretty small window and there
might be a couple of things like they
have some favorites or I don't know some
whatever okay and I'll look at that and
sometimes there's nothing in it
sometimes just one or two but I'll try
to if it's relevant to me then I'll
respond
somehow and because it was just it just
got posted it's much more likely that
they will respond or see it also if it's
a good comment like if I spend time
making it really good then their
followers who might see this over the
course of the next 10 hours
they may see my comment and upload it I
may be one of those comments near the
top that ends up with a lot of likes and
maybe some follows I've seen times where
I have the follow B because of a reply
to someone with a lot of other followers
right by doing it early I get that so if
I just scanned everybody that time frame
is important so it really focuses my
attention on that so I spend almost no
time on this and yet I have this big
outsized impact of what those what those
are whether I'm talking to that person
or the supplies um so that's something
you can just take like my system does
that but you can just take that the
other effect it has which is funny is
people are like dude you're always
online like I saw daresh post and like
bam you were there like in two minutes
what they don't know is yeah but I see
like 1 15th of what dares posts it's
just whatever it happens to be exactly
what he posted I'll see it so you your
perception is quote unquote I'm always
online but the fact is no it's this
trick and so it's like a really funny
trick that that has that effect why do
you care why do you care because you you
you had you had this one thing well no I
I asked that because you wrote this
other thing that I totally agree with so
uh let me let me say it this way I have
a bunch of buddies that are very
successful you have no idea who they are
they'll see me get popular on Twitter
and they go hey Sam can you uh can you
help me write some tweets and I'm like
dude why who gives a like you
you're winning who cares about this he
go I don't know it seems fun so I so I
help him write some stuff and every once
in a while it'll go viral and they get
whatever and they get addicted to it and
I'm like dude don't get addicted to this
get addicted to the thing you're already
doing that's way better and you have you
have this post or it was a sentence
somewhere in one of your blog posts
where you're like uh I actually think
that people who have audiences that then
launch software products to those
audiences I think that's really dumb
because they're actually not going to
get that they're not going to get that
many customers that doesn't work but
that's not why I'm doing it I'm not I'm
not launching another product because of
social media okay so then why do you
care so I mean when I followed you I got
an automated DM from you you told me
that you built to do that why do you
care about building something like this
for social media it's strictly for fun
now what I have done for even longer
than WP engine is right and so that is
at this point just a part of who I am
and I get a lot of fulfillment out of it
and like you said you're like wow
there's a lot of good stuff here um
every time I hear that it feels good and
also it's really just the craft of it
like I like to try to get the thoughts
that I have as clear as possible or as
interesting as possible but there's so
much that gets triggered that way that's
useful to me and fun for me too and Sam
sent me this blog post that you wrote
that I loved um and I think it's called
Rich vers King and this is great because
we talk about money and we are honest
about the fact that many people get into
entrepreneurship because they want to
make a bunch of money and that's okay
you don't have you don't have to pretend
you don't have to like lie about that
part which is I think is is common
unfortunately um but you also built
bootstrap companies that enabled a great
lifestyle for you and your employees and
so I'm curious um can you explain for
people who haven't read richers King
post what is the premise of this post
and then how it's played out for you I
think the key thing that people really
like out of it is this uh two box
problem that I put near the end that was
my final decision of why to sell smart
bear which is let's say there's two
boxes in front of you and let's say if
you are wealthy suppose try to remember
when you
weren't in one box there's $10 million
like period that's what's in the box in
the second box which is opaque there's
either $20 million or nothing
and let's just say it's a 50-50 chance
of which one it is and the question is
which box do you want you have to pick
just one which one do you want well if
you don't have money yet I mean almost
everyone's going to pick the 10 million
for sure because it changes your life
permanently now you could argue you know
what kind of Lifestyle blah blah blah
but like that's a life-changing amount
of money whereas the other one is even
more money but it's actually not that
much more life-changing and there's a
good chance that you won't get it at all
that's silly this is why when you get
offered some money to sell the company
it's often a good idea to take it of
course it could be big in the future but
if you haven't crossed over to this
life-changing amount of money yet what I
was in that post called the freedom line
You could argue how free how much money
okay but will you cross over some sort
of line which maybe you should decide
for yourself it's it's awfully hard not
to take it now what's interesting about
the box game is if you're a statistician
or you're an economist what you would
say is there's no difference between the
two boxes because the expected value of
both box is 10 million so they're the
same and my point is no they're
not expected value is not the right way
to evaluate the situation furthermore in
real life I said that one box was 50/50
in real life you don't know what the
probabilities
are what's the chance the company will
grow and sell and be huge what's the
chance it's stagnant and it doesn't sell
what's the chance that it goes to zero
like nobody knows so it's worse than
that it's uncertainty meaning I don't
even know what the probabilities are are
much less risky which means I do know
what the probabilities are so it's
actually far worse so why know you know
yeah some people might take the other
box it's okay you can do whatever you
want obviously but most people will take
that sure thing when it's real money now
if it's $10 versus $20 you know whatever
you might as well take a flyer on 20
because who cares so the magnitudes
relative to your net worth also matter
which I didn't really talk about there
in that post because I wasn't getting
into that but that's also true that it
is it changing something substantially
for you or not is actually a critical
question so you're a great writer and
there's two or three great sentences
that I like out of this post it was uh
you very bluntly you say I was always in
it for the money especially in the form
of an acquisition I would tell everyone
here we're here to make money and if
someone offers to buy the company
someday I'm going to sell it and then
you said after you sold it you go I have
the freedom to work on any project I
want for the rest of my life while
simultaneously providing for my family
never again worrying about bills debt
having a place to sleep or sending my
daughter to any college she wants and I
particularly the I was in it for the
money I think that's just great to just
be very clear and knowing exactly what
you want uh in that post I thought that
I thought that was beautiful how you
said that also it's not incompatible
with things like I want our customers to
be happy I want our employees to also
make that much money blah blah blah like
it's not incompatible with other
positive things that you want to do
there's a big difference between I want
to make money and do ethical things and
create products that actually have value
and are not just uh middlemen or
something like that or Arbitrage
um you can say both in fact you probably
should so you wrote that post in ' 09 I
think originally and you have this cool
graph where you show like there's like a
threshold of that matters uh in 2023 24
what's that threshold you think now and
what do you think it was then well
what's interesting is um I it's this is
not relative so at this point at at at
WP engine also we've had a few secondary
rounds which by the way all employees
got to participate uh in as well um and
so now I have enough money that uh I
don't have a line anymore like it's okay
if I don't make any more money ever
again I really don't care you know I
don't care like oh can I get a a jet or
not it's not interesting to me just this
is personal right everyone's different
when it comes to money or what they want
in lifestyle I have the lifestyle that I
want I don't need more money so there's
no line like I just don't that that's
not what's motivating or what will make
a decision for me
anymore well what about Jason Cohen and'
06 when you
sold like was there what was the number
where you were like anything above is
gravy and that's that's a threshold for
me I think then I was thinking uh like
10 million um I think I think nowadays
it's it's much more clear that you need
something like 20 million this is all in
the US by the way to have what would be
considered to be like a rich lifestyle
in America because okay you know people
say things like um well I only spend you
know 80 to 100K a year right now so if I
had 10 million I I could live off of
that and you'd be right but that's not
how people are I mean I'm not very
materialistic and even I wouldn't want
to do that oh I'm going to continue to
live at that rate forever isn't usually
what people want to do it could be again
if that's you then that's that's amaz
that's awesome perfect you know what to
do that's not really what happens so
probably more like 20 million because
you have to you have to there's a lot of
things to do but you have to think about
um averages and having a portfolio
that's balanced and then taxes and then
inflation and so even 4% of of Interest
taking out per year is actually kind of
a lot given that you want to maintain it
and keep up with inflation Etc and
that's where the 20 million sometimes
comes from is is H you know 4% of that
is like a little under a m a million
after tax and then you can have quite
what you what anyone in America would
consider a rich
lifestyle I'm happy that you put a
number on it one thing I think is cool
we should put this chart up are the
graph on on our YouTube channel so
basically it's like there's like the
levels he's like you can't afford to
lose your job you know at some point
you're at that where losing your job
would be detrimental to you okay then
you can own your own house then you can
and you wrot never look at the right
side of a menu right so you only look at
the dish you don't look at the price uh
never have to work again and then it's
like private jet and you can see that
like it's Asin totic the the the value
of the cash is you know definitely
flattening out the further you go and so
you draw that line and the freedom line
basically of like you never have to work
again you could have total total control
over your time as like the important
threshold yeah but see so much also
depends on things like
I mean if you're 26 and you get this
offer um and you know you do want to
work like you don't want to not work
again that's not what you're going to do
you're GNA do something so it's like all
right I don't need to never work again
quote unquote what I would like to but
but let's say you're burned out it's
been six or seven years you just want to
do something else and so well you know
you do take a ton of money off the table
then you can invest a couple million
into your next venture while still
keeping a couple million in the bank and
so no you couldn't live off that for the
rest of your life but you don't want to
live off that for rest of your life you
want enough to self fund something and
do the next thing and so I mean you have
to look at the goals of course that are
in front of you
um but certainly you don't want to adopt
other people's goals I mean I think
that's maybe the unspoken other message
of the post is what is it that you want
and how do you know that and how do you
get that and if someone else says like
no you should you should build a unicorn
like it doesn't matter what anybody else
says yeah play your game so uh you know
your blog is basically like a a gold
mine of startup with wisdom and I was
mining it last night when I was doing my
research for this going back through
reading some of the stuff that I liked
and there was a few things I had never
read that I actually really really liked
I wanted to read a couple of these get
you to react to them because you had
some uh like kind of just nuggets small
small short things that I want you to
elaborate a little bit on or maybe give
an example about just to make it real
for people um because they they rang
true to me so here's one you said all
startups are screwed up including the
ones that work it's just that the ones
that work have or two things that
they're excellent at even though they
screwed up a bunch of things that didn't
uh it didn't kill them they didn't die
um so explain this because I think
people have a perception of my business
is kind of screwed up that's maybe why
I'm failing the ones that work it's all
working it's all good it's you know that
it's something different right explain
that one yeah it makes sense that that's
our perception number one because we all
have like some form of imposter syndrome
of like somehow everyone else has their
figured out we don't um which of
course isn't true but it makes sense
that we all kind of feel that way um the
other thing is we see every problem in
our business and we only dwell on the
problems like the things that are going
well we're not spending time on those
things because that's not what needs
attention needs fixing so you know we're
spending 90% of our time on all the
problems of which there are many so we
feel like we're just drowning in in bad
things which we are that's the truth
then you look at a competitor or
whatever somebody on Tech Crunch and
what are you seeing some weird varnished
outside not true version of it where
they're super confident everything's
fine blah blah blah the the way I like
to say it is um whenever you see a
company kind of like immediately go out
of business go look at what they posted
on their Blog the previous week and go
look at the last podcast they did I
promise you it was 100% optimism
everything's going well we're growing
like crazy we're getting profitable
we're hiring people are loving I
guarantee it's all that the week before
they went
bankrupt that just proves that it's
now that doesn't mean
everyone's failing or everyone's not
failing it just proves that what you're
seeing is definitely not the truth but
you are seeing your truth and dwelling
on the bat so this disparity makes sense
but once you so so it's logical once you
know that you're like okay so it's not
like every it's not true that everyone's
public Persona is is the truth then the
other thing you can do is read the more
honest accounts of businesses like
Twitter or you know Facebook all the
stuff when they're coming up and it's
just full of like it's just R stuff
all the but what do you see in those
things not that you should be like
Facebook I'm not saying that but just as
an interesting Factor but what is it
about them it's like well here's this
thing there was something about
connecting people at on colleges with
the faces and the whatever that was just
so correct so good well we might say now
had such good product Market fit that
despite all of the other problems it was
a raging success uh at Twitter like this
idea that you're posting just the
headline of your blog post why was that
so perfect I don't know maybe no one
does people have theories it does
doesn't matter the point is it was so
compelling that all those other problems
just I mean there was a fail whell for
years for years they couldn't keep the
site up something about it again I maybe
I can't put my finger on it but
something about it was so compelling
they they succeeded despite this obvious
public massive year multi-year failures
you know so that's what I mean by like
okay so everything screwed up okay
different ways different levels screwed
up sure but everything's screwed up and
if there's those or two things that are
just so compelling whether it's
delighting people or so useful or it's
built into their workflow there's
various reasons why something might be
just so good and I have thoughts on that
as well of course um then uh then it it
you succeed despite those problems it
doesn't mean the problems are like okay
and you shouldn't attack them but it
does mean a few things that are very
useful one emotionally like get over it
it's okay everyone else screw up too two
you're not going to fix everything and
you don't have to because success
stories besides like Facebook blah blah
blah but even boot St solo companies
that person also does not fix every
problem they have of course how could
they there's just not enough hours in
the day so you don't have to fix every
problem oo that's a relief then it begs
the question which couple of problems
only should I be fixing right now that
really are holding me back that really
might lead me to go out of business that
really is hindering my growth the most
the most that's really why people are
canceling the most you know these These
are example things that might be that
critical problem or two identifying that
by answering questions like those that's
what you should do and you should be
seeking what that one or two you know
critical things are that's the reason
people don't cancel despite that crap
the reason people sign up the fight the
reason they advocate for you on Twitter
review sites what are they saying in
there that's so freaking good because
whatever that is you need every every
customer to experience that thing like
maybe you can change your processes or
your s your features or the onboarding
process whatever so that more people
will experience that amazing thing
whatever it is so identifying those one
to three key things the one to three
problems that's what you've got to do
then that's where you focus your time
whether you're a solar preneur or
whether you're WP engine you have uh
1,200 people those are the few things
you focus on on you know how do I remove
some of those barriers that I actually
should how do I enhance these things
that are the thing that's making it work
and though all the rest of it you don't
want to ignore you want to do it you see
it but you must just for capacity and
actually it's okay that you are and and
again I gave you lots of examples of why
it is okay in fact that you are so
that's what to do about that dude I
remember I used to host these events and
I would have I would get to we'd have
all these speakers come and they were
founders of every startup you've heard
of and I would hang out with them in the
green room with about six of them at a
time and it was nothing but complaining
and fear and I remember we had this guy
named Alex Alex started this company
called the athletic you guys know the
athletic it's like a um subscription
sports blog or Media Company they and
eventually sold to New York Times for
hundreds of millions of dollars I was
with him I think on a Friday and that
Wednesday the Wednesday before they just
released an article saying they had
raised $100 million in funding
everything was going great and they had
this beautiful photo shoot and he was a
ball of stress and I think he he was
just kind of um venting a little bit to
me of saying everything that was going
wrong how he's so frustrated with this
and that and I remember thinking I'm
like dude you're in the New York Times
like on Wednesday and you had this
beautiful photo shoot sounds like
everything was going great and he was
just it was just the reality was that
things were going mostly great obviously
you turn out all right but he was just
complaining so much to me because I was
just kind of a sounding board for him
and I remember like thinking after all
of these events that I've hosted that
was my major takeaway which is that the
people I admire they were shows
just like I was and that was like kind
of a game-changing kind of mind altering
belief that that happened doing those EV
I gotta be careful I gotta be careful
asking how's it going
you you never know what don't ask yeah
yeah yeah I was like how are you man and
was like just bitching constantly and
and and I also like I like EG I got to
give these guys respect I was eging them
on it's not like they were just like
bitching I was something does
change with scale so um before product
Market fit it's obviously you don't know
what you're doing yet that's the whole
point and then you do and you're
starting to scale up if you do um then
it's just all a show all of it
because everything's growing and weird
and no one knows what to do and and the
thing that got you to product Market are
the wrong actions to take when you scale
you're like all I'm doing is
experimenting not when you scale you
know what to do now you need to do more
of it you need specialists in it you so
it's a totally different Behavior it
becomes more like a like a tumultuous
ocean kind of thing where it's like some
things are riding high and fine and and
some things are not but it's not true
that like a 100% of the things are
broken it's just not true anymore
because we've had the time and the
people blah blah blah to build up to
that and you need to like as you scale
up you need it needs to not be a food
fight forever like it has to mature into
something because you can't you can't
operate like you were just saying with a
thousand people that's just complete
chaos so that's that it can't be you had
a good quote from the guy from box Aaron
Levy he he said
um he goes starting up is the act of
doing as many jobs as possible to make
sure your company doesn't die and then
scaling up is the act of shedding as
many jobs as possible to make sure that
your company doesn't die to make sure it
survives right I think that's uh very
true you know another thing that Aaron
Livy specifically said is uh um at any
given time half of the company isn't
working I just don't know which half
right dude Aaron Levy doesn't get nearly
enough uh clout I think uh as he should
so for those listening Aaron Levy
started box it's box.com he started box
which is uh it's like very similar to
Dropbox but Enterprise he started that
company when he was like 18 or was it 18
was he that young like he was just out
of high school I think and he's and it's
now a publicly traded company and he's
still the CEO he's been doing this now
for 15 plus years maybe that guy does
not get nearly enough credit that guy's
the man we should have that guy on yeah
Erin you're welcome on uh I have a few
few other spicy takes I want to get your
get your reaction to because I was like
reading this I was like oh I've been
guilty of that because a lot of your
advice even though WP is this huge
company and you could talk about like
scaling this big thing a lot of the
stuff that resonated with me was the
early stuff like the I don't have
product Market fit just pulling me yet
um you said one thing you know most
Founders who are doing customer
Discovery or like that early stage
research about an idea you go it's just
a Founder who's in love with their idea
essentially doing like fake sales calls
like just looking for evidence to
support their belief um I've definitely
done that I'm sure Sam we all have
that's why it Ring's true because of
course we all have done that yeah and
you asked like the stupidest question
ever which is like does this interest
you would would you buy this you know
what I
mean useless question yeah yeah you're
into this aren't you
yeah you just ask these like leading
dumb questions you have another one I
think is pretty good you go sell more
value not more time customers don't
value their time they do crazy things to
save $2 don't sell them time because
they don't even value it um sell them
more more value yeah that's especially
true in consumer consumers really don't
value their time um but even in business
it's true and so like a classic example
is uh if you you you could have a
product let's say that um makes it less
expensive to get marketing leads
and so you could say this Hales your
cost because it does but what are you
they going to do with the money they
might just save it it's possible what
they could do is buy more leads so it
also could you could say the same thing
is double your leads so that's the same
thing half your costs or double your
leads same product but how much will I
pay for having the cost I will pay some
percentage of the cost that I saved 25%
that's actually kind of high usually
people won't pay quite that much they
should they should pay pay up to 80% you
know cuz why not but that's not really
how people think about it um so you
could you could maybe uh charge 25% of
the cost you save but if you say double
the leads what will they pay what were
they paying now for leads a lot what
will they pay to double the leads the
same amount they'll pay 100% more to
double the leads because they are
already willing to pay that for leads
they're as demonstrated by they're doing
it right
now so it's a difference between 25% of
one half of their spend which is an
eighth or 100% of their spend same
product so it's just now now yes that's
idealized and so forth but it just goes
to show saving money saving time it's
not a bad proposition but often the same
product can be shown to generate value
instead of Saving Time and all of a
sudden it's literally in order of
magnitude more valuable now you could
take all of that in price but as a a
quote that I took from Michael mausen
who's amazing um in finance but startup
folks haven't heard of him um he has
this great thing about this which is the
thing to do I'm paraphrasing but the
thing to do is to generate customer as
much value as you can for the customer
and then decide how to split it with
them so you could split it with them by
charging more you could split it with
them by higher retention they just love
you and they stay they're getting so
much value or getting new customers or
advocacy they love you so much they talk
like these are all ways you get value
harder to measure than price I grant you
that but they're they're very real it's
very real andur are their healthier
business and the risk and the growth
like very real and all those things so
um of course that's a that's a something
of a subjective statement I I get that
but nevertheless it's it's really useful
to think first generate a lot of value
then think now how do I split that with
the customer whether that's some price
some not and if so what how even if it
is price how am I positioning that with
them as in more value versus less you
know saving money or less cost or less
time something like that the only way
that this story not ends but uh the exit
you guys have to take this public right
there's a there's a variety of things
you can do when you're our siiz one is
going public one is that uh another PE
firm another one is getting purchased by
a sufficiently large company either
directly or due to another uh um
investment which again could either be a
private thing like PE or they could be
on the they might be on the public
markets and and therefore have a stock
sale or something like that you would
you wouldn't want that though right so
the the way I think uh you should build
a good company is you want optionality
the ability to sell and at good terms
but not not have to the ability to raise
more money at good terms but not have to
right the ability to go public but not
have to like optionality is power so how
do you do that you build a good company
in the usual ways a company that's
growing and is profitable and the
employees are happy as evidence as by
they stay and customers are happy as
evidence by they stay you know like
these very obvious things of like what's
a good company you do that and that
maximizes your options because you have
because it's good therefore you drive
that's what I've said all along and
still believe this very day that's the
right thing for us to do is that can I
ask you one quick question as we wrap up
we talked about um TKO Sean and I both
love them but this was the we were
talking about stocks he picked the
company that owns UFC and
WWE uh TKO is uh I don't know majority
minority owned or you know one of the
brainchild behind TKO is uh Silver Lake
partners and their CEO I think his name
is uh aan Durban is that how you say his
name um I was looking him up the other
day real fascinating guy does he sit on
your board is that right did I see that
no the no no there's there's um we have
several people from Silver Lake on the
board um really impressive interesting
people who have really helped the
company yeah what are those guys like on
the finance side um it's just this level
above what You' ever see
otherwise right because in finance you
either go to Wall Street to make a lot
of money or or you could do PE but like
this is the cream of the crop like they
have you know the you know um valid
Victorian from Warden doing like
spreadsheets right so and that and then
it goes up from there so it's just like
this amazing analysis and insight to
things plus of course they see a lot of
different companies so they can bring a
lot of like this is happening to a lot
of our companies now that sort of thing
another thing I will say that's special
is you think PE and you think okay well
they just take the companies apart and
don't care and of course there are those
kinds of PE that that absolutely exist
that reputation is earned with Silver
Lake though that's not the case that's
not the reputation they have so when you
have a a an investor who on the one hand
sure they can they can do all the
Cutthroat stuff um they're capable of
all of it but also they have that sort
of a view on what is product what a
success how do you build value that's
incredible so so solake has been really
amazing but obviously it it there two
things one is a lot of firms aren't like
that the other thing is it depends on
the person if a different set of people
on the board we have a different
experience and that's true of all
investors everywhere so uh a lot of
times people are like should I should I
raise money from X where X is some
Venture firm and the answer is always
who at X because the firm is is there is
something because there's a culture and
there's an attitude it's not nothing
it's not nothing but the number one
thing is who at the firm that's what
makes all the difference and
unfortunately that can change well we
appreciate you doing this man Jason
Cohen a smart bear on Twitter a smart
bear uh on a smartbear.com your blog
it's the best man you're the man we
appreciate this this is fun that's the
[Music]
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