This AI Startup Idea Has 500 Million Customers Waiting For It

Summary

In 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

• 📈 The importance of clear presentation and storytelling in business proposals, as poor presentation can lead to misunderstandings, even if the idea itself is strong.
• 💼 Jason Cohen's successful entrepreneurial journey, starting with SmartBear and then WP Engine, both of which grew significantly under his leadership.
• 📊 The significance of profitability and efficient business operations, as illustrated by SmartBear's 50% bottom line profit before its sale for two billion dollars.
• 🤔 The value of asking the right questions to improve presentations and to guide decision-making in various aspects of business and life.
• 🧐 The role of AI in assisting with generating questions and providing a structured approach to problem-solving and idea clarification.
• 🛠️ 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.
• 💡 The idea that all startups have issues, but successful ones excel at a few critical aspects that outweigh their shortcomings.
• 💰 A candid discussion on the motivation behind entrepreneurship, with the acknowledgment that financial success is a common goal.
• 🚀 The concept of 'optionality' in business, where a company maintains the freedom to pursue various paths such as selling, raising capital, or going public.
• 🔑 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.
• 🎯 The emphasis on focusing on the most critical problems that are阻碍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

00:00

😀 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.

05:02

📈 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.

10:03

💡 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.

15:03

🚀 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.

20:05

💼 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.

25:05

🤝 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.

Keywords

💡Bootstrapped

Bootstrapping refers to starting and growing a business primarily using personal financial resources or the company's operating revenue, rather than external funding. In the video, Jason Cohen mentions that he bootstrapped Smart Bear for seven years, emphasizing the theme of self-sufficiency and organic growth in entrepreneurship.

💡Profitability

Profitability is the ability of a business to generate profit, indicating its financial health and efficiency. The script highlights the impressive profitability of Smart Bear, which was sold for two billion dollars with a 50% bottom line profit, showcasing the importance of financial success in business ventures.

💡Web Hosting

Web hosting is a service that allows individuals and organizations to publish their website onto the internet. The script mentions WP Engine as one of the large web hosting companies, illustrating the growth and scale that can be achieved in the tech industry.

💡Blogging

Blogging involves the regular posting of written, multimedia, or graphic content to a website. Jason Cohen's consistent blogging at smartbear.com is highlighted in the script, demonstrating the value of content creation and thought leadership in building an audience and business authority.

💡Product Market Fit

Product Market Fit is a situation where a product satisfies a significant need in the market, thereby experiencing demand from consumers. The script alludes to the challenges of achieving product market fit and its critical role in the success of startups.

💡Exit Strategy

An exit strategy in business refers to the plan or method for closing down a business or selling it to another entity. The script discusses the sale of Smart Bear, framing the concept of an exit as a significant milestone in the entrepreneurial journey.

💡Investment

Investment in the business context refers to the infusion of capital into a company in exchange for equity or other financial instruments. The script mentions Silver Lake Partners as an investor in TKO, highlighting the role of investment in business growth and expansion.

💡Customer Discovery

Customer Discovery is the process of understanding potential customers' needs and preferences to inform product development. The script critiques common pitfalls in customer discovery, such as leading questions, emphasizing the need for genuine market insight.

💡Value Proposition

A value proposition is a statement that communicates the unique value a product or service offers to customers. The script suggests focusing on selling more value rather than saving time, indicating the importance of clearly articulating the benefits customers receive from a product or service.

💡Optionality

In business, optionality refers to having multiple future options or paths available, which can be pursued based on changing circumstances. The script discusses building a good company to maximize options, such as the ability to sell, raise more money, or go public, without being obligated to any single path.

💡Imposter Syndrome

Imposter Syndrome is the feeling of self-doubt, insecurity, or fraudulence, often experienced by high achievers who fear being exposed as not truly competent. The script touches on this concept, describing the common perception among entrepreneurs that others have it all figured out while they themselves struggle.

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

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pod