Founder's Story
He Said No to Goldman Sachs. Said Yes to $3B+ — Michael Paulus' Journey from Underdog to Billionaire Builder | Ep. 192
Fri, 21 Mar 2025
In this inspiring episode of Founder’s Story, we sit down with self-made billionaire and serial entrepreneur Mike Paulus. From humble beginnings on a blueberry farm to founding multi-billion dollar companies like Adapar and Assurance IQ, Mike shares powerful insights into building businesses that last, navigating liquidity events, and why he still identifies as a gritty operator rather than a yacht-dwelling billionaire.What You’ll Learn:Why saying no early in your career can lead to massive opportunityThe underrated power of bootstrapping and how it sharpens your edgeHow to think like an investor—even as a founderThe future of lean teams, AI, and the one-person billion-dollar businessPractical advice for young professionals entering the workforce todayWhat it means to build with conviction and stay close to the customerQuotes to Remember:“I like to think of myself as the underdog, even now.”“Your customer is your real boss—not the VC.”“Put your investor hat on before you commit your time.”“Find a rocket ship. Don’t ask what seat. Just get on.”Follow Mike Paulus:💼 LinkedIn🌐 EncoreInvestment.comOur Sponsors:* Check out Avocado Green Mattress: https://www.avocadogreenmattress.com* Check out Indeed: https://indeed.com/FOUNDERSSTORY* Check out Kinsta: https://kinsta.com* Check out Northwest Registered Agent and use my code FOUNDERS for a great deal: https://northwestregisteredagent.com* Check out Plus500: https://plus500.com* Check out Rosetta Stone and use my code TODAY for a great deal: https://www.rosettastone.comAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy
Chapter 1: How does Mike Paulus feel about being a billionaire founder?
Hey everyone, welcome back to Founders Story. Today we have Mike Paulus, the billionaire founder and CEO of PCM Encore. Mike, normally we kick it off with, you know, tell us how you became an entrepreneur, but I think I want to do something slightly different. How is it when you hear somebody introduce you as Mike Paulus, billionaire founder and CEO?
You know, it's interesting. And I talk to a lot of my portfolio companies now. I love being in the fight and I love being the underdog in industries. And it's funny, you know, when I remember after we had sold and I was done at Assurance, I wouldn't play golf for a couple of weeks and I guess was living that like, quote unquote, billionaire life. And I was kind of miserable. I'm terrible at golf.
And I love building things. I love being with teams. So for me, I like to think of identifying myself still as that kind of gritty entrepreneur and not as the person that's kind of made it and is on their yacht in the Caribbean.
You still identify as an entrepreneur. I like that, Mike. That's really good. So let's go back in your story. What even made you start the first company that you had?
Chapter 2: What inspired Mike Paulus to start his first company?
Yeah, it's a great story. So I grew up on a farm in Washington State, a blueberry farm, and those were long, hard hours, and I knew that wasn't for me. So headed down to Stanford, and that was the first turning point in my life, being in Silicon Valley, understanding technology, getting to meet a lot of really smart people, changing the world, and It's kind of a funny story.
I was going to go be an investment banker at Goldman Sachs, and I'd accepted the offer. I was going to start that summer. And I met Joe Lonsdale, one of the Palantir co-founders, and met him in the Palantir office. And it was the middle of the financial crisis. And he said, man, what could we do to prevent something like this from happening again?
Chapter 3: Why did Mike Paulus say no to Goldman Sachs?
And I was intoxicated and went to go work and eventually leave that company. Initially, there was no salary. We were two folks in an apartment in the marina in San Francisco. And it wasn't about the money. It was comparing a very hierarchical banking structure with the freedom and creativity that came from an entrepreneurial journey.
wow, that's okay. I mean, we got to break this down. So you saw the problem that needed to be, or you were told about a problem that needed to be solved. I mean, talk about timing, right? I think I've heard so many times, some of the greatest companies have come out of that time or times like that. And then you take no salary. You just grind and hustle.
Chapter 4: How did Mike Paulus approach the challenges of scaling a startup?
I think, you know, that that's very common in the beginning. What happened when you started to get traction? Did you have to change? Did the company have to change when you when you got some serious traction? I mean, you're growing, whether it's revenue, people, whatever, you know, whatever you want to talk about. But was it a change in you or is it a change more in the team?
Yeah, it's a great question. So I think we knew there was thematically a very big problem. And something that's neat about Joe Lonsdale and a lesson I've learned from him is he doesn't attack small problems. He attacks massive problems. And I think you're like a palantir. It's a startup sort of 20 years in the making. And Adapar was similar.
It wasn't going to be a quick MVP that we could take to market. It was, we need to aggregate all of the assets that these complex investors have so we can better understand the risks they're taking and help them with their portfolio.
So it was unique in that we knew there was a bunch of innovation, a bunch of patents, a bunch of work to do just on the infrastructure before we really even had a product that was ready to And I think that was very invigorating to go. And it was a time where you have things like the lean startup and everyone's talking about MVPs and getting to market very quickly.
And I think that for some businesses, and certainly that was the case for my next business, that was the case, that this was the exact opposite. I think as a young person, Just out of college, these were mission-critical systems for the biggest banks and endowments and wealth managers in the world. So in a way, you kind of had to grow up quick. You had to be serious.
You had to be someone that they could really trust. So I think that was probably the biggest change is I think my early 20s probably looked a little different than most other people did maybe enjoying their time out of college. Yeah.
I have a book title for you in case you ever write a book from blueberries to billions. I would read that book. Okay. So you, you, you exit this company for multi-billion dollars. What was the, what was the, that process?
Like, I mean, I would imagine I've, I've heard, you know, due diligence processes, you know, some good things, some nightmares, just the process I imagine of exiting something like this. What was that like for you?
Yeah. So there were two big companies I built. So Adapar is still a private company. It's worth about $3.5 billion today. They report on more than $7 trillion in assets. So there my liquidity has really come from tender offers and the secondary market, which is incredibly robust nowadays. It's pretty remarkable. When I started out, that really wasn't a thing at all.
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Chapter 5: What are liquidity events and how can founders benefit from them?
Your banking team, your legal team, those guys are going to be in the foxhole with you. And critically, we had a business that was growing well, that was profitable, that was a great business. And it has to start there with numbers that are very compelling.
And thank you for sharing this. I don't think a lot of founders or entrepreneurs know that there's more than just you have your company and you can sell your company to somebody. or obviously you have a company and you make money from profits. You were just talking about secondary markets and other liquidity events. Can you explain them?
Because I think a lot of people have no idea that there's other things you can do with a company and on how to make money or have other types of liquidity events.
Yeah, for sure. And I'm seeing kind of all varieties. So the first piece is a lot of venture capital fundraisers now have secondaries where employees can take money off the table. There's some funds now that are trying to buy a majority of the company. And the venture capital market, it used to be such a negative sign if a founder was selling anything.
And I think now the thought is this could be a 15-year journey. So if we can let you take some capital off the table and have you be motivated for that long term, that benefits us both. We're seeing structured options where you can bring in debt instruments if you've got the right kind of momentum and take some money off the table there. And then there's active brokers.
And there's, I think, better and worse brokers that will approach you as an employee with potential buyers for your shares. And certainly now in a family office setting and advising high net worth individuals, there's a lot of interesting tax efficient options. If you're part of a bigger company like a Microsoft or a Google or something like that,
There's things like exchange funds where you can actually get diversification, get into an index without actually selling your stock and incurring the taxes. So it's a space that has really evolved to the benefit of employees in the past 10 years.
Thank you for sharing that. So fast forward, you exit the other company, you go golf, you realize you're not good at golfing or you don't enjoy golfing because you want to get back it. You want to get back into the grind of entrepreneurship and you decide to start a family office. How is it being on the other side of the table where you're now the investor?
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Chapter 6: How does Mike Paulus apply his entrepreneurial experience to investing?
Yeah, it's a great question. So when the golf wasn't working, I went to my wife and she said, hey, we got three young kids. I've seen how hard it is for you to start two companies. So you're not doing that again. So I kind of joke that the next best thing is to be a capital provider and a close advisor to those that are disrupting industries. And I think I really kind of get that same joy there.
And I'd say I tried to look at my entrepreneurial journey as an investor. And this is advice I would give to entrepreneurs. I think too many people, when they're looking at a job offer or a business, they don't look at it like an investor. And I think if you look at kind of
being two for two in terms of kind of multi-billion dollar businesses that I spent my time on, it's because I looked at dozens and dozens and dozens of things and said no, and didn't settle for a good enough business, but really put my investor hat on and went for a great business. And at Adapar, when I had no money, I took whatever money I had. It might've been a hundred grand.
And I invested that in the seed round. Because if I was going to spend my time on this, I was also going to put every penny in because for me, time is more valuable than money. And it was the same thing at Assurance. I was all in. We bootstrapped it. I put every penny in, moved to a new city with the family. So I guess I always like to think of entrepreneurship through an investing lens.
Is this a really world-class investing? And then I look at my investing with an entrepreneurship lens, and that means how can I help? How can I help this team? How can I help this company? How can I be value-add? So You're making a strategic investment with capital, but then you're putting yourself and your time and efforts behind it.
And I do that because I think I don't know how to be anything but an operator and help. But it's also a cycle where you get access to the best investments because folks know you'll be all in and you know you're not just capital, but you'll be beside them and helping them build the business.
Yeah, I've never raised money, but I feel like if I did, I would want somebody like yourself versus somebody who might be the opposite of that. That seems very helpful. And with your experiences, who wouldn't want someone that has the experience that you do and the knowledge of going the ups and downs? I'm curious about a challenge.
I'm sure throughout this time, there's been some sort of challenges that you have gone through. Was there a lesson that you tell every entrepreneur based on a challenge that happened to you?
Gosh, that's a good question. You know, very early on in my career, I was actually interviewing for a VC role I didn't get. And an investor at Accelgate gave me a good piece of advice, which was go fish in your own pond. And that's something I've taken. And, you know, don't go do what everyone else is doing. You know, zig rather zag.
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Chapter 7: What are the benefits of a bootstrap mentality?
And what you see is they're way closer to the customer because ironically, if you're raising capital and you're relying upon capital, your customer is not really your customer. It's a VC. It's whoever's raising your next round. Where if your paycheck, what's going to operate your business is going to come from your customer. they're truly your customer and they're your entire focus.
And I think it creates a product market fit and it creates an obsessiveness because you also look every day and say, how can I serve my customer better? You're not also thinking, how will what I build look to the person that's going to lead the next round? So I love that part. I think you think about your money and hiring so much differently.
When every new hire, you have to have the customer revenue to support and you're looking at A-plus individuals and you're looking to get the most out of everyone. I think sometimes when you raise a lot of capital early on, it's sort of scaling teams for its own good, right? And things can be overlooked. Not everyone's really operating. So I think there's a tenacity. And I think there's a grit.
And I like to think of myself as an underdog. And in any market, If you're bootstrapped and you're new, you are the underdog, right? I think sometimes if you go out and raise a big seed or a big series A from a name brand venture capital fund, I think sometimes it's hard to be the underdog, right? And that's the right approach in some markets, right?
At Atapar, we've raised hundreds of millions of dollars. We were solving really big problems. We were a SaaS software company. That's going to take a lot of fundraising. That's the right way to run that business. And something like Assurance, where we're focused on life insurance, right?
and we get upfront commissions from our agencies, that's a business that you can really bootstrap effectively if you're customer centric. So I'd also say that I think a bootstrapping mentality can help every single entrepreneur, whether you're in a sector and a business model that actually truly supports bootstrapping.
I think I've seen a lot of people that have raised capital, but they have that bootstrap mentality and they treat the investor capital like their own.
I like that bootstrap mentality. I'm going to start, I'm going to figure out something that I think there's something there. That could be a book in itself, bootstrap mentality. So there's a lot of talk around the one person or one employee billion dollar business, the one employee unicorn, because AI is going to enable or is already enabling us, you know, one person to do the task of 10.
How do you see this in the future where companies with less and less employees are generating more and more revenue?
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Chapter 8: How is AI influencing the future of lean companies?
Yeah, I want to say at our time of our exit at Assurance, we were maybe 100 or 120 employees. And we were generating multiple millions of dollars in revenue per employee. And I think that was really judicious use of technology. looking at what you really need to do in-house and what you can outsource and find partners.
I love the Acquired podcast and their focus on do what makes your coffee taste better, I think is becoming more and more true. And I see it like, as I look at my first company, I had a part now 15, 16 years ago, we had backend guys who were thinking about servers, who were thinking about different operating systems and And then, and you needed a ton of people to build all that.
And then I, you know, you look at the next round and we had AWS, so you no longer needed the backend engineers. You had microservices. It was a given you were going to deploy these on browsers and you'd have to work, worry about all these localized things. You had all these great frameworks to you. So already that was a step function.
And I think now with, with, with AI, you're seeing the next step function in, in productivity. So I can see it there. I think some of these AI guys are kind of cheating. They're like, well, we're only five employees, but we've spent $50 million trading our AI models. But I do think that you can be more and more efficient.
I think a lot of what now product and engineering leadership is less around the code and more about... creatively thinking about how you can link together all these incredible solutions, how the data flows, you know, what, what, what the needs of the customer are. But I absolutely think you can do more with us. And I'm a big fan. I'm not convinced.
I've seen 15 person engineering teams that are building more than 300 person engineering teams. And I think at a lot of big companies that there's always a, you know, I think Bezos called it his, his pizza box role, but there's always a team of 10 or 12 folks. I don't care how big the company is. That's putting that company on their back. And I,
it stands to reason then that people can do, you know, a lot more with less.
And I do think finding awesome service providers and really thinking through who do I actually need to manage and have in-house and where can I find great partners, you know, recruiting, HR, finance, even sales, you know, there's really interesting organizations that are just specializing there that are really interesting.
when you're looking at companies knowing that they could possibly be disrupted with AI talking about, you know, the cost of services going down, we've had great guests on here that have, you know, that are way more expert than I am when it comes to AI and stuff that they all say the same thing, that the cost of services will continue to go down as you know, the AI and software can do a lot more things.
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