In episode 617, Einar Vollset and Tracy Osborn join Rob Walling for a bootstrapper news roundup episode. They cover a wide range of topics from ProfitWell’s big 200 million exit, spreadsheet mentality, watching an acquirer ruin your company, and much more.
Topics we cover:
[3:06] What’s your take on ProfitWell’s acquisition?
[5:52] Watching an acquirer ruin your company
[14:03] The spreadsheet mentality
[23:09] If you can’t buy it twice, don’t buy it
[36:00] Balancing realism with optimism as a founder
Links from the Show:
- Tracy Osborn @tracymakes I Twitter
- Einar Vollset @einarvollset I Twitter
- Episode 611 | Bootstrapping ProfitWell to a $200M Exit (with Patrick Campbell)
- Watching an acquirer ruin your company
- Episode 605 | Building a SaaS with Little Dev Experience, Using No Code for Your MVP, Bootstrapping a Two-Sided Marketplace, and More Listener Questions
- The “Spreadsheet Mentality” sucks, and kills the efficacy of jobs
- If You Can’t Buy It Twice, Don’t Buy It
- 14 Critical Things Investors Look for In A SaaS Startup
- Applications for TinySeed’s Fall 2022 SaaS Accelerators Will Open September 12th
- MicroConf Youtube Channel
- MicroConf Europe
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you.
Rob: Welcome to another exciting episode of Startups for the Rest of Us. This is a news roundup episode where I pull Tracy Osborn and Einar Vollset on the show. We talk about ProfitWell’s $200 million exit. We talk about spreadsheet mentality, watching an acquirer ruin your company, and cover other news stories related to bootstrap, and mostly bootstrap founders.
If you are into this show and haven’t checked out our YouTube channel—you really should—I am releasing what essentially are Rob solo adventures but are videos and pretty tightly edited. They’re about 7–15 minutes covering topics ranging from the top 10 avoidable mistakes SaaS startups make, SaaS pricing models explained in five minutes, whether micro SaaS products are profitable, ideal customer acquisition funnels, how to come up with a go-to market strategy for SaaS, and on and on. It’s just free educational content. It’s microconf.com/youtube. I hope you check it out. With that, let’s dive into today’s news round-up.
First up, we have Tracy Osborn. She is @tracymakes at Twitter, the program director for TinySeed. Welcome back to the show.
Tracy: Happy to be here.
Rob: Excited to dive into some fun bootstrapper news here today. And Einar Vollset, you’re joining us again as well.
Einar: Thanks for having me.
Rob: Absolutely. To kick us off, I have two fun questions that I’m going to dive into, but before I do that, do you know how I send an outline in advance so that you can prepare? These questions are not in the outline. Do you know the outline I slacked you this morning?
Tracy: I was waiting for him to say that.
Rob: This is going to be a wild ride, people, so buckle up. Tracy Osborne, we at TinySeed, are opening applications for the next couple of batches. When is that happening?
Tracy: That’s going to happen on September 12th. We’re opening applications for both of our accelerator programs, that is TinySeed America serving everything on this side of the timezone, Canada, the US, and all the way down to South America. Then we have TinySeed Europe which serves Europe, the Middle East, and then Africa.
Applications will be opening for two weeks on September 12th for both accelerators. It’s one application. You can choose which to apply for or if you’re not sure if you are in a different location, say Australia, and you’re not sure which is the right one for you, you can also choose that option as well. We’re very excited to get this rolling. This is going to be for our Fall 2022 batch that is starting in November.
Rob: Excellent. With that, I need to find out, Einar Vollset, is it GIF or GIF?
Einar: It’s a GIF, of course, it is.
Rob: Ah, hard G.
Tracy: We’re not talking peanut butter here.
Rob: We all agree. This is not good radio. One of us has to hold on to the GIF.
Tracy: Everyone has to agree because that’s the way it goes.
Rob: Send your hate mail to questions@startupsfortherestofus. ProfitWell sold for north of $200 million actually. We remember the number as $200 million, but if you look at all the articles, it says more than $200 million and some more than that. A bootstrap company, some services, a lot of SaaS, $200 million exit/merger. I know when I interviewed Patrick on the show a few weeks ago, he interchanged it because they got quite a bit of stock and everything. Einar, what’s your read on this acquisition?
Einar: I’m stoked, not just stocked for Patrick. Patrick is a good dude. I’m super happy for him. Whether a merger or acquisition or however you want to call it. It just once again puts down this notion that somehow bootstrap businesses or mostly bootstrap businesses can only be small, tiny inconsequential things. If you look at income, I still don’t know how much cash he got versus how much stock is in the joint entity, which is probably where the merger/acquisition bifurcation comes from.
Rob: Approximately 50-50. I asked him on the show.
Einar: Okay, he’ll probably get a great outcome if they do an IPO on top of that, but if it was all cash, if it had been, it wouldn’t surprise me if that outcome for someone like Patrick would have been better than your standard VC success IPO billion dollar exit because there’s just no dilution.
As an early-stage investor like we are, you know that if people start raising a lot of money and going that path, as you keep pilling money in, you’re going to get diluted, and obviously that’s what happens to the founders themselves because they don’t have a way to put more money in. They’re just getting diluted for every round.
I’m super stoked. It’s so nice to see more of these types of successes because every time I talk about this, I talk about MailChimp, and sometimes that’s almost such an outlier outcome that people think it’s just a once-in-a-lifetime you can’t draw any inferences from it. The fact that you’re seeing outcomes like Patrick had just opens people’s eyes to it and it’s a great thing all around.
I actually think it happens much more than people know. We did the article on the depth of the software iceberg a year or two ago, and again, that speaks to I guess someone with less social media reach than Patrick, this thing could happen without anyone noticing. He wouldn’t have made any news, he wouldn’t have done anything. It’s just a great outcome for Patrick and the team, so I’m stoked for him.
Rob: Me as well because it’s a big piece of the TinySeed thesis. The thesis of TinySeed doesn’t work unless some bootstrappers can grow their companies and be ambitious with it. Awesome.
Let’s dig into our next story, which is watching an acquirer ruin your company. We will link all these up in the show notes. This is on the Kelsus blog. Yes, it’s an interesting story because it’s essentially an acquisition. It’s a development firm that helped out with software piece and then they did a hardware component that they essentially kick-started. Then someone acquired it and ran into the ground, basically.
You can read the whole piece if you’re interested. There’s a section called the rug pull at the end where they talk about the new acquirer basically shutting it down. With that, Tracy, I’m curious to hear your thoughts.
Tracy: I want to be sympathetic to the founder because this is a common story, something I’ve heard from a lot of folks who’ve been acquired, who then watch their baby that they grew from infancy to a place where it can be acquired. Going off to a new parent. The new parent making decisions that they didn’t plan, didn’t expect, or don’t think are the right decisions. The product suffers and then the parent company shuts it down.
I feel like that’s a very common story that I’ve heard in a lot of places. I have empathy for the founders going through that situation, but when you make the choice to be acquired as a founder, you are giving away the ability to make decisions afterward.
Again, empathy. It sucks to watch people make decisions that you don’t think are the right decisions, but you made that choice in exchange for either some acquisition money or maybe just to have that little check mark on your resume saying that you have taken a company to acquire, you sold it, and then you can have (theoretically) an easier time doing your next startup or at least having that win on your resume.
You do that in exchange for not being able to make the decisions anymore and therefore what happens afterward, you want to see things succeed as a parent company, but it’s up to the parent company, the acquirer, to do with what they bought, and it sucks to see that.
Rob: How about you, Einar?
Einar: I wanted to be sympathetic to this and I’ve seen both sides of the coin here in terms of post-acquisition things going really well and post-acquisition things going terribly badly. It’s actually not uncommon in acquisitions that people assume that a lot of the time you do an acquisition, you get a bunch of cash, you walk away and bada-boom. But a lot of the time, you end up with some equity in the acquiring company, or the new entity, or whatever, and your success from there is dependent upon how that goes.
I’ve seen people have an exit and then three or five years later have another exit that’s five times larger. It can definitely go both ways.
I actually think with this thing, I’m a little bit more sympathetic to the acquirer than perhaps the writer of this piece just because it’s one of those things, like the parable with the elephant where it’s like five blind dudes touch an elephant, trying to describe what it is.
In this particular case, they raised a reasonable size kickstarter, but not like tens and tens of millions. It was like $188,000, which for an advanced native iOS and Android app, almost isn’t enough money just to build the apps out, let alone do the hardware production. There is still a fair amount of risk for the acquiring company.
A lot of the time there’s this notion with founders at least—and I know this wasn’t the founder writing the piece—that if they get to the level of success where they can get acquired, then it’s really just an operational thing after that. It’s just priorities and they […] it up somehow because of some internal malign big company issues. It definitely would have succeeded if it just kept going. I’m so sad I sold it.
A lot of the time there’s a fair amount of risk that the acquirer is taking that the founders of the sellers just don’t see. In this case, after the acquisition, they end up getting a distribution deal through Apple, which is a huge thing. Do I think that this company could have done that by themselves? Probably not.
The alternate universe is one where this company just fizzled out six months later, and that was the end of it. It’s often portrayed like it was guaranteed success. They just had to do the right thing and because of incompetence or because they’re a big company, they screwed it up. I just don’t buy that a lot of the time. It just doesn’t make any sense.
Even if they did, in some cases, there’s an allusion to another acquisition that became a higher priority. Well, that’s the nature of business. In some cases, you have to make hard calls. It’s like, okay, if this one acquisition turned out to be something that they didn’t quite go as quickly as they hoped or they found another thing that was a much higher leverage thing, it was the right thing to shut down the smaller thing and focus on the bigger opportunity. That’s the difficult decision you do need to make in business. I guess I’m not particularly sympathetic to this story, although I know it’s frustrating to see it for sure.
Tracy: You can have your cake and eat it too.
Rob: Sell it and then keep control. There’s a good quote from Tim Cook, paraphrasing, but he says, there will always be more really good ideas than we can ever pursue and that’s piggyback on what you said, Einar.
I used to love to use that at Drip, both before acquisition and after the acquisition, because people would suggest feature requests. Especially after the acquisition. We’re a 125-person team. Salespeople would come, marketing, like hey, you should build this, you should build that. I’m like we’re not going to build that. People would almost be insulted, like what? But it’s a great idea. There will always be more great ideas than we can possibly implement. That’s what you’re saying. It’s prioritization.
As someone who has sold several companies and had most of them, frankly, shut down or run into the ground afterward. Drip is the exception, but HitTail doesn’t exist anymore. There were three or four smaller deals that I sold, and those are floundering around. There are certain ones that people tried to autopilot and got nuked, but then having sold Drip and seeing things like, hey, the whole color palette is redesigned, the entire UI is now different and has a side nav, and I don’t like that at all, and there was the pricing changed three years ago.
There’s just all this stuff they’ve done that I would not have done or would have done very differently. You know what? I still use Drip. I still like the tool. I let it go the day that I sold it. I still worked on it for a while after that, but I was under no delusion that somehow I still had control of it after I let it go.
You signed the docs. The money needs to be worth it, is what I’ll say. The money needs to be worth it such that you walk away. Or if you don’t walk away, that it’s worth just writing it off mentally.
Einar: I think the money is going to be worth it. A lot of the time also, what else are you going to be working on if not this? Is the money good enough? In some cases, people sell too early because they’re like oh, I’m just so bored of this successful thing and I can just easily start another successful thing.
I see a lot of the time people selling, particularly if they sell pretty early so they can’t retire on the money really, end up thinking oh, I was successful. I’ll just be successful again. Then they try again and luck does play in and things that are outside of your control. I do think that happens a fair amount of time.
Rob: On a recent episode, I was talking with Ruben Gamez and talking about how the second time, third time, fourth time, it’s a little easier, but it’s not as easy as it should be, as you think it’s going to be. There’s still that massive uphill getting to the MVP, spending 6 to 12 to 18 months finding product/market fit where it’s like, wait a minute, I should know how to do this. Shouldn’t I be able to just have product/market fit right from day one? And you won’t.
We watched David Cancel. We watched Heathen Shaw. We watched all the founders who are four-, five-, and six-time founders still take years, pivot, and grind it in order to get to a place where they have another successful business. I definitely think you have a leg up, but it’s not nearly as much as one would think.
Einar: It happens even on pretty high profile folks with lots, almost what I would call unlimited resources. Just thinking about the Twitter co-founders. Several of them have tried things that just should work, but it just doesn’t. They shut it down. It was just like this is not going to work.
Rob: Our next story is called the spreadsheet mentality sucks and kills the efficacy of jobs. This is posted on Medium and the hypothesis is.
Rob: Hold your comments.
Einar: Okay, good. Is it Google? Is it Google Spreadsheet?
Rob: That’s true. It’s only the Google Sheets mentality. He basically defines spreadsheet mentality, which is just an interesting term. I’m not quite sure why that term is used, but whatever, it’s that what gets measured, gets managed.
Tracy: Qualified stuff versus quantified.
Rob: Yes, Quantity versus quality.
Tracy: It’s the stuff that you’re going to measure versus stuff you can’t measure.
Rob: Basically saying that if you lean too far into that, that there are these soft skills and soft interactions and all types of stuff that you can’t measure in a spreadsheet that is important, which, I agree with. In software development, you can’t rank developers. If I had ten developers working on a project, I’m not going to say, oh, this one fixed more bugs. This person wrote more lines of code today. It’s not quantifiable.
It’s only quantifiable in a softer way of, I know who’s shipping a lot of stuff and I know who doesn’t have very many bugs. There are many roles where this applies. I guess I haven’t worked at a company that went so far overboard in this direction that I feel like this article is necessary. Is it a straw man? Is this a straw man argument where it’s just, hey, look, there are MBAs doing things. I’ll throw it to you first, Tracy, what’s your take on this piece?
Tracy: I’ll have to admit that I’ve never worked at a company larger than, I guess technically larger than TinySeed for about three months, that one does not count. I’ve always been a small company person, but I can see this mentality where people at small companies look at people at large companies and are like, oh man, look at all those middle managers that are just trying to be like, was it OKRs? Just trying to create something they can track from quarter to quarter so that they have hard data on whether things are working or not and then it doesn’t work because you’re talking about people processes and hiring and “soft skills” and whatnot.
I can see where the struggle is because I know as a manager, I think about this at TinySeed where I’m working with Alex and there’s a part of me that’s like wow, I really wish there was a way that I can know definitively every quarter if I’m doing a good job. I can see the temptation to be like, all right, I’m going to figure out something I can track, and I can take that thing that I track and I’m going to track it over time, and then I will definitely know.
That’s the thing, this spreadsheet mentality is that there are a lot of parts that come into that process. I guess they’re warning against that, but I also think that’s logical that you know that’s not the way to go, I guess.
What I’m trying to say is I can see the larger picture of what this person is talking about, but I agree with you that at larger companies. I don’t think it’s like everyone is working off the spreadsheets. Like your Facebook, you’re not going to have a certain manager just working off spreadsheets, and that’s the only way to manage the entire company. There are going to be a lot of inefficiencies and a lot of people process, but it makes for a good article. It makes for a very strong argument, makes for something that’s clickable, so could be a straw man.
Rob: The title is clickable. Yes. I do like that there’s one bullet towards the end of the article as he’s concluding and he says, whenever we encounter something we can’t track immediately within Excel, we need to think to ourselves, could this still be important? I like that sentiment, but I guess intuitively, that’s just how I run businesses, anyway.
I use Excel for budgeting and I use Excel for tracking our subscriber list growth and our YouTube follower growth. There are a bunch of other crap that’s not in that Excel spreadsheet. I guess since I maybe do the opposite of this, naturally, I’m having trouble understanding the point of it. What do you think, Einar?
Einar: I agreed, despite being a big fan of Excel.
Tracy: Big fan of spreadsheets over here.
Einar: Except Google Sheets. Yeah, Excel specifically. Again, it’s one of those things where it’s similar to the other story. It’s easy to criticize when you haven’t been on the inside. It’s easy to say oh, these big companies are doing it wrong.
My one objection to the whole article was it’s not really what is the alternative here. Just pay attention to the things that aren’t trackable? Sure, but a lot of people do that or at least try to do it. It would have been a stronger story if it was with something novel or something structured or something that allowed you to actually track the things that he’s claiming aren’t being tracked or at least put it to the forefront.
Rob: It is interesting the way you say that because these types of articles is actually well-written and well-reasoned. We’re critiquing it, but it’s a good piece, and people should read it. But this type of stuff has been coming out for what, 15-plus years, since Dig, Hacker News, Reddit and all these things started back in the day. I do find that the more of these pieces I read about anything that’s critiquing something, is I’m always like, okay, so what’s your solution then?
You can critique all you want but, (a) have you been in their shoes or are you just criticizing from the stands? Are you back seat driving? And (b) so what’s the solution? He does offer some stuff at the end that’s a little vague, but it’s not like a whole new idea and thought process.
Tracy: There are things that are coming out or things that have been around for a while that help quantify qualitative processes. For employee engagement, there are quite a few tools out there that paying your employees, asking them how things are going, allows you to track moods over time or how folks are doing in general. You can have a way of tracking how happy your employees are.
For the hiring process, surely there are ways that you can quantify that by spreadsheet it. Quantify the hiring process in terms of how we’re coming through the door and then how fast things are being moved from stage to stage and the success rate of employees that are hired.
All these things are qualitative processes, but they can have a quantitative element to them. There are tools out there that do those things. Maybe it’s not just assigning a number on a spreadsheet and forgetting about it, but there are ways to make sure you have something to track the success of these processes.
Einar: And there’s even a TinySeed portfolio company, Suggestion Ox, that allows you to do anonymous feedback.
Tracy: I know, I was leaning towards that. Anonymous feedback from, is it just employees, or is it everyone? I can’t remember.
Einar: It could be anyone, but it’s mostly set up for employees.
Tracy: That’s what I thought.
Rob: Yeah, and as I’m thinking about it, I guess I did work for one manager who was definitely way further in the track everything KPI, OKR camp. Very MBA. I was just like, woof. But he also cared about people. Maybe a fun 50-50 on those, he’s like 80-20 where he wanted more metrics.
Tracy: Does it show a lack of confidence? I wonder if they can’t effectively promote what they’re doing so it’s easier to go to their own managers by having definitive numbers. It’s easier to tell a story of numbers than just being like, yeah, everything I’m doing is great.
Rob: I could see that. That an inexperienced manager or someone who maybe doesn’t fully understand their role. If I come in as a general manager, let’s say I’m a GM, which is someone who doesn’t understand the details of something. I could get hired to be a GM of a tabletop gaming company without ever having played a tabletop game or written one. I could become a GM of a SaaS company without really knowing SAAS metrics. That happens.
In that case, what else do you have to manage? It’s numbers. That’s probably where it’s either lack of experience or just a lack of intimate knowledge of the business, the business type, how it works, and how it should work that could lead you to rely too much on numbers and wanting to quantify everything. Spreadsheet mentality, people. It’s out there. Beware. Don’t fall into that trap.
Tracy: I like this article. I talk about design a lot and a lot of people struggle with design because it’s so qualitative. I actually do recommend folks to find something quantitative to track when they’re making design changes. Rather than just changing in color and thinking, oh, that looks better, to tie it to something like click-through rates on a certain button and whether there’s a benefit. I guess I’m like a pro-spreadsheet.
Rob: You are part of the problem. Yeah, it’s interesting. I don’t want to keep going on this for too long, but I do think that you can also go in the other direction where you do everything by gut.
There have been times in my life, especially early on, where I was trying to issue all of that because I was a developer at a credit card company, and, yes, there were too many numbers around, so when I went solo, I was like, I’m not doing any of that stuff. You can make the mistake in the other direction, too.
Tracy: Oh, my God. You just gave me a flashback from my previous startup, in which I didn’t track anything, and that’s one of the biggest mistakes I had because I just went off the gut feeling that everything was going okay and that the conference talks about how everything was doing okay, like at MicroConf.
Rob: Until Google decided it wasn’t.
Einar: That’s the nice thing about if you’re starting a bootstrapped startup. There is a number every month that tells you roughly how you’re doing, and it’s MRR. We did a lot of investor updates and in some cases, I keep reading this is the most amazing thing ever. That’s great and it’s great, but you didn’t add any MRR. Why not? You clearly need to focus a little bit on that because otherwise you’re screwed.
Rob: Yes, that’s the North Star metric. All right, the next piece is from entrepreneurshandbook.co, and the title is If You Can’t Buy It Twice, Don’t Buy It, And other practical money business advice. Basically, he talks about a $4000 TV. If you’ve saved up $4000, don’t buy the TV. If you can’t buy the TV twice, you probably can’t afford it in the first place, and he sucks.
Einar: First of all, where are you getting $4000 TVs from? Is this 1995? $4000 for a TV? They’re like $200 at Costco. Come on. At $4000, you can get 50 of them.
Rob: Yeah, you can get a 60-something inch TV for $1000.
Tracy: Isn’t that the point of the article? If there’s a $4000 TV that’s out there and if you can’t buy two of them, you might as well go to Costco and get the $1000 TV.
Rob: Today’s role of Hacker News commenter is played by Einar Vollset because he’s picking apart something completely irrelevant to the point. Every time one of these makes it to the front, there’s always someone quoting a sentence that’s so not relevant to anything. What are you doing?
Anyway, yeah, he says can’t buy it twice. Treat yourself, don’t trick yourself. Do you actually need top-of-the-line? Which, yes, of course, I do. Tracy, what’s your take on this whole piece? I thought it was neat food for thought, just a different mental model. What do you think?
Tracy: You’re laughing because I was nodding vigorously. Of course, I need top-of-the-line. That is absolutely the trap I fall into all the time. Why can’t I get the best thing ever for this new hobby? I’m just going to get all the top things for my hobby.
Rob: The $2000 espresso machine rather than the $200 one.
Tracy: Oh, talk to me about my copper jamming pot. I’m trying to jump into jamming and I bought a fancy pot from France, so I can do jamming. I could just use my own pots.
Tracy: Jamming, yes.
Einar: Oh, you make jam?
Einar: I see. Okay.
Tracy: She’s going to become a fish cover band.
Einar: I was like, jamming like this? I was like why do you need a pot from France? It doesn’t make any sense.
Tracy: On top of things. When it comes to things that are money matters, I guess rules of thumb are really easy. Rules of thumb are a good way to keep people on a budget if you don’t have other ways of tracking how your budget is going per month.
It’s a nice easy to remember thing where you can look at your bank account and you can look at what you want to buy and you can just think to yourself, can I buy two of these? Then if it’s a yes or no, you can go forward with it. It’s definitely a good rule of thumb.
It’s one of those things, like in every article, where it’s like it’s going very strongly in one direction. Then, of course, we can think of a thousand exceptions to the rule that things that do make sense to pay a high budget for something you might not necessarily buy twice, but maybe it lasts longer than the other thing. Therefore, it makes more sense.
There are a lot of exceptions to that rule. It’s something you can keep in mind without holding strongly to it, which does make it a good piece of advice for budgeting.
Rob: Einar, you strike me as someone who has a very tight budget and counts every penny each month as you send it. Tell us what you think about a rule of thumb for this stuff.
Einar: A rule of thumb is fine. I’d actually rather make more of a point. Tracey is right. You can make a point either way here. Is it worth spending more money on a higher-quality item if it’s something that you’re going to do?
I particularly like this notion of, is it an asset or is it a liability. Somebody early in my life, I forgot exactly who it was, told me basically don’t borrow money for something that depreciates, a liability, like a car versus it’s fine to borrow money for something that appreciates, like a house. all these are fine and if you need this advice, you need this advice.
I’m more interested in the meta-commentary around this like it’s such of its time. Everyone is convinced there’s a recession coming. Almost as a society, we’re talking ourselves into a recession because everyone is reading articles like this and thinking, how do I cut spending? Fire early? All that stuff.
That’s the more interesting point. I don’t think we would have seen an article like this time last year or at least it wouldn’t have surfaced or been something that resonated enough to be discussed.
That’s the most interesting thing actually around. I see a lot more of these now like how do you cut spending on this? Maybe do that, do the cheaper thing, don’t spend, extend your runway. I give that advice to a lot of our founders. I think it’s right. I do think it’s easy for us to talk ourselves into a recession that way because it becomes a self-fulfilling prophecy.
Tracy: The article would have been out beforehand because I also feel there’s an element of being judgmental because folks looking at people buying a $4000 TV, and they’re like why would you do that? Just buy the $1000 one from Costco.
Putting out these rules of thumb, I feel like it works for business, too, where you can see a business spending a lot of money on certain so and so and it’s easy to be like, man, there’s this rule of thumb why don’t you follow this? But you don’t actually see what’s going into that thought process. What is the decision-making behind it? Maybe there’s a larger decision-making process behind the purchase. It could be popular right now because of the recession but I feel like this mentality has been around for a long time.
Rob: I like the way he breaks it down, too, is it thinking about each of these as an individual and as a business? That’s kind of cool. I don’t see a lot of articles doing that. Normally it’s either personal finance.
Tracy: I did like the business side of things because it’s easy when maybe you got a chunk of money, maybe you did raise some VC. All of a sudden you have some money burning your pocket and you want to spend it on a bunch of things. I guess, in that case, you can buy a bunch of things because you have that ability to pay for something twice. Maybe that’s a good point.
Rob: That’s the thing. There has to be an additional rule because let’s say you have $100,000 in your personal bank account. You can buy a lot of things twice. Should you? Probably not. There has to be more. He gets into it a little bit, and I don’t expect that’s a personal finance book at that point. It’s like decision-making of what you should and shouldn’t buy.
What I find that’s interesting is I grew up with not a lot of money, so I have always been super penny-pinching. I had to undo that, especially after selling Drip. Sherry kept saying you may need to fly something more than a coach at some point and you may need to just not sit and debate whether you should get the guacamole on your burrito at Chipotle. It’s $2. You need to just get this. So I do, I get the guacamole every time now.
Then there was this point where if something is under $50 or $100 on Amazon and I’m like,oh, I might need this XYZ adapter, I might need this thing. I just bought it now because sitting there for ten minutes and thinking about it is not worth the time.
The problem that I found is I now have a bunch of crap sitting around. When you’re buying physical things, about every 6–12 months I have to give away, or sell, or donate stuff that I bought impulsively that monetarily doesn’t make a difference in our lives.
Tracy: Can we talk about my jamming pot again? I am starting a new hobby.
Einar: How much was this jamming pot exactly?
Tracy: It was like $150 from France that was shipped to Canada. That’s exactly what you just said. I start a new hobby and then I look at what I can do to support this hobby. I also have a ukulele I’ve played about ten times. I liked the nice ukulele instead of the not-so-nice ukulele.
This is funny. Rob, you mentioned that you grew up poor because I also grew up poor, but I had a different reaction than you, which is fine. Everyone’s different. For me, there’s this habit where I want to go for the more expensive things. I remember not having those expensive things.
I remember not being able to afford occasionally treating myself to premium economy or business class, so I crave it. I lean towards it, even though I’m not as high income to support that all the time, but I’m just constantly clawing towards it because I feel like I never want to go back to where I was before.
That’s an interesting point and that shows up when hobbies happen, where I’m just like I’m just going to buy all the really good things, and then I have to get rid of the good things when it turns out the hobby didn’t stick.
Rob: That comes into personality. It’s like the nature and nurture. There’s a money mindset quiz or this test. I don’t remember if that’s exactly what it’s called, but I remember my kids and I read a book because I’ve been teaching them since they were little about money, how it works, and how to basically be mature with it and we all took this test.
Sherry and I took it as well. It was interesting to see across the kids that some of them are flippant with their money. They get an allowance and they spend it. That totally showed up in this quiz. It was based on a book. I’m going to have to look it up and see if I can link it up because I have no memory of what it was called. It was like a kid’s guide to money and finance or personal finance, and then there was a quiz attached to it.
Sure enough, Sherry and I both were savers. I was entrepreneurial and a saver, which totally makes sense. Cheap, but I want to start my own company. It’s like, hey, that describes me to the T. She was like a saver plus conservative almost. There was some additional thing because she grew up also without a lot of money, even more so than me. It really did translate well.
Tracy: it’s interesting to know those things about yourself just to introspect a little bit in terms of how you’re spending habits can compare to someone else’s spending habits, and then you can use that awareness in both your personal life and in your business life because that’s also something that probably bled through into my previous startup the the way that I don’t want to be cheap. I probably had more of a tendency to pay for things that I shouldn’t have paid for because of that mentality and just having awareness is like the first step to combating it.
Rob: I agree. There’s the Kolbe A, there’s the Enneagram, there is StrengthFinder, there is Myers-Briggs, and some true research psychologists thumb their nose at some of these because they’re pop. But I like them. I read them and sometimes I’m like, that really is exactly who I am. You’ve done a great job of describing me and then it’ll be like here’s your blind spots and here’s what you should do.
A lot of being a successful founder is knowing yourself, knowing your tendencies, and then fighting against them. Some people want to launch a product and they just want it to work and they’re never actually going to push forward, pivot, and make the hard decisions to get there.
Einar: Maybe we should have this Enneagram or one of these tests that you’ve been taking as the TinySeed filter.
Tracy: For a part of the application process?
Einar: Yeah, please do a personality test here.
Tracy: I feel like there will be maybe a difference between the folks that are accepted versus the ones that are, or maybe the folks who are good fits versus people who are not good fits. It’d be funny to see if there was a distinct line between the enneagram or something like that.
Rob: Personality? I think it depends. That’s the thing. I was recording a YouTube video for the MicroConf channel the other day, and it was like things investors look for in founders and companies. Part of it is, of course, the founders. There’s something about the personality, but I’ve invested in successful founders who are totally driven, like a Jordan Gal who’s just hungry and will succeed at all costs. Not at all costs, but he’s just very driven to do it.
Then there are folks who are super pretty chill, but they still get it done and they’re not in a big hurry and are more patient, but they do. The commonality are things that we’ve talked about before, which is like, but are they shipping things relatively quickly? Are they working on generally the right things? Are they making some mistakes?
Most of what they do works, 60%–70% of what they try works versus the opposite where it’s like there could be like the victim mentality of like, oh, all these outside things are making it so I can’t succeed.
Tracy: It was interesting because I’m reading a survival book. It’s for wilderness survival so people are on shipwrecks and on top of mountains.
Einar: How bad are things getting in Toronto?
Tracy: You know me, I do backpacking. This stuff is right up my interest. One of the things it talked about for survival in these situations is to, one of the most important things, somehow have a good attitude. It’s impossible because there’s a case of people on a boat that are shipwrecked and slowly people are dying on this boat. There are two people left and they have to deal with this trauma going on. That’s the only way to keep your brain healthy in those kinds of super traumatic is to try to take joy in little things. That’s the only way you can protect your brain from just giving up.
It applies for business as well. You’re going to go through some really tough points in business and to have that survival mentality of rolling at the punches, noticing the good things, and celebrating the little wins, can lead to at least better mental health as the company is growing. That better mental health also is going to hopefully lead to a stronger company.
Rob: It’s the idea of having a grip on reality, or not even a grip, but it’s having a realistic view of what’s happening. Have you heard of the Stockdale paradox? it was mentioned in Good to Gray. James Stockdale was a former vice presidential candidate, but he was a prisoner of war in Vietnam.
He said, essentially, you need to balance realism with optimism, which is exactly what you said, Tracy. He said we were POWs and people who are like, we’re going to be out by Christmas, we’re going to be out by Christmas, we’re going to be out by Christmas have not enough realism, too much optimism, and they would inevitably die.
He said he lost a bunch of people who thought they were going to be out in three months. And then the people who said, we’re never going to get out, they didn’t have enough optimism, a little too much realism. He said you had to balance this thing about. This is our present situation, but let’s figure out how to make it better, and let’s figure out how to live with this long term until essentially we get rescued or whatever. We can break out of here.
Tracy: Or at least be able to look at your current situation and still have the mental fortitude to find something amusing or find some piece of joy. Maybe you tripped on a red rock and you find that funny, and you start laughing a little bit. That help protects your brain if you can try to find those little moments in the hard parts rather than going straight into despair.
Rob: Yes, and as a founder, what is it? Some realism and some optimism. We’re not just talking about TinySeed founders here, founders in MicroConf, founders wherever that we met. The ones that are just a lot too optimistic and don’t have that reality check are usually the ones that are working on the wrong things. Someone who is a little too realistic and is pessimistic about it, although some of those succeed, sure don’t enjoy it along the way. That’s the difference, too.
Einar: I think people who are too optimistic are more likely to succeed than people who are too pessimistic. I feel like some founders, and I don’t think this applies to any TinySeed founders that come to mind, they would starve to death on the beach around the bend from a world-class resort because it’s too risky to walk around. That’s probably the case.
Rob: And on that cheery note…
Tracy: It’s a good final conclusion.
Rob: Beach resort is a picture in my head, not the person starving to death around the corner. With that amazing picture in mind, Tracy Osborn, you are @tracymakes on Twitter, and you will be going through applications for TinySeed batches and the next batches.
Tracy: My DMs are open. DMs on the TinySeed funds, Twitter account, as well as my personal account are open. If you have any questions, call or email us at firstname.lastname@example.org. We love any and all questions whether you think you’re a good fit or have a question about the application process, feel free to reach out. We’ll get back to you.
Rob: And Einar, you are @einarvollset on Twitter.
Einar: Indeed I am, and most of the time it’s me complaining about how bad the Giants are this year.
Tracy: Following in Einar is a fun process.
Rob: It’s an experience. If you’re listening and we’re not connected on Twitter, I’m at @robwalling. Thanks to you two for joining me this week.
Einar: Thank you.
Tracy: Happy to be here. It was fun.
Rob: Thanks again so much for joining me this week. I hope you enjoyed that episode. We’ll have another news roundup coming at you here in the next couple of months. It’s Rob Walling signing off from episode 617.