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Startups For the Rest of Us

Episode 732 | Lessons Learned Bootstrapping to a $615M Exit

Tue, 24 Sep 2024

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In episode 732, Rob Walling interviews Jeff, a mostly anonymous and retired founder, about his mostly bootstrapped business and subsequent exits. Jeff shares how he started the company in 2003 and how he persevered in the early, lonely years to achieve traction in the business. They also discuss finding fulfillment after a huge, life-changing exit. Topics we cover:  2:17 – Jeff, the retired SaaS founder you haven’t heard of 3:32 – Refreshing the bank balance after multiple exits 5:26 – ARR multiples across several exits 8:11 – “Accidentally” SaaS, growing the business in the early days 11:35 – Getting through the toughest moments in the journey 16:31 – Why did the business work? 20:14 – “Short term generous, long term greedy” 24:32 – Staying busy after an exit 32:09 – Giving back to founders Links from the Show:  Purchase The SaaS Launchpad before September 30th to get access to a live Q&A with Rob TinySeed Retired Founder (@RetiredFounder) | X Contact Retired Founder Beyond The Finish Line 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! Subscribe & Review: iTunes | Spotify

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0.349 - 14.976 Rob Walling

You're traveling through another dimension. A dimension not only of sight and sound, but of mind. A journey into a wondrous land whose boundaries are that of imagination. That's a signpost ahead. Your next stop, startups for the rest of us. Welcome to this week's episode. I am Rob Walling,

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15.396 - 35.384 Rob Walling

And you might recognize that intro from the amazing and talented Rod Serling, who created and wrote so many episodes of one of my favorite series, The Twilight Zone. But this is not The Twilight Zone. This is Startups for the Rest of Us, where every week since 2010, I've shipped an episode focused on helping bootstrapped and mostly bootstrap startup founders.

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35.924 - 55.664 Rob Walling

We're founders who seek freedom, purpose, and relationships, and we don't want to sacrifice our life in order to build our startup. But we want our startup to change our life for the better. Today's conversation is pretty incredible. It's a founder who effectively bootstrapped. He uses the word bootstrap because they raised a couple hundred thousand dollars.

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56.105 - 73.016 Rob Walling

And if you're in venture capital land, that is bootstrap. Usually it's anything less than a million is considered bootstrap. built his company with a co-founder for 15 years, and had three subsequent exits to private equity, where he sold a portion of his equity in each one. The last exit was for $615 million.

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73.136 - 96.137 Rob Walling

It's an incredible story, and my guest today is extremely knowledgeable and extremely accomplished. Before we dive into my conversation, the SaaS Launchpad is live. It is the best course I have ever created. It is the most comprehensive. There are reviews coming in already of people who are blown away by the depth and the quality and the quantity of the content.

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96.557 - 119.637 Rob Walling

It's at saslaunchpad.co if you're interested. And as of the day this episode goes live, if you buy the course in the next six days before September 30th, you're going to be able to get on a live Q&A call with me where we're going to do a group call, talk about questions people have from the course, or probably about anything else, to be honest. saslaunchpad.co. I'm so confident in this course.

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119.677 - 138.771 Rob Walling

We have a 30-day, no-questions-asked money-back guarantee, so really there is no risk for you to check it out. That's saslaunchpad.co. And with that, let's dive into my conversation. Jeff, thanks so much for joining me on Startups for the Rest of Us.

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139.54 - 141.161 Jeff

Hey, Rob. Thanks for having me.

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141.221 - 168.458 Rob Walling

So as background for folks, you are at Retired Founder on Twitter. And your story is pretty incredible. I'll call it your personal H1, which is your Twitter bio. It says, Retired SaaS Founder sold the business for more than $600 million. seeking purpose and community post exit. You bootstrapped a company and sold it for a crazy amount of money. So why hasn't everyone heard of you?

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168.518 - 175.664 Rob Walling

Why does it, why is it in your name across the marquee? You know, there's people with huge YouTube followings that have like done a fraction of what you've done. What is the, what's going on there?

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176.192 - 192.197 Jeff

I guess the obvious answer would be I must not be that interesting. But perhaps beneath that is I like to keep a low profile just for my own safety and security. And by being anonymous, it also helps me be completely authentic with anything I have to talk about.

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193.041 - 211.32 Rob Walling

And then we'll dig into that today. You're willing to talk numbers and all this stuff you were telling me in the pre-interview. I was like, whoa, okay, that's great. And so that is, you're anonymous, but I have vetted that you, in fact, have done these things. And so folks listening, as the first anonymous guest, it's kind of neat to have someone who has had... such an incredible journey.

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211.861 - 232.163 Rob Walling

I want to start by taking us to the end, so to speak, the exit, and you can explain how it's actually exits. But what I really want to go to is that moment that you refresh that bank balance and you realize I never have to work again. Like I'm all set. What was that emotion? What was that feeling?

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233.09 - 244.279 Jeff

Oh man, the first word that comes to mind is relief. And following that, probably enthusiasm. As a bootstrap founder, it's very difficult to take a lot of risk.

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244.959 - 259.69 Jeff

So when we sold the business the first time to a private equity firm, and if anyone wants to contact me on Twitter or wherever, I'd be glad to share details about who our banker was, who the private equity firms were, but I'm going to keep those keep those anonymous as well for now.

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260.17 - 279.219 Jeff

But I was excited to work with people and actually be able to put money into the business and pursue some of the crazy ideas that I had as a founder. But when you've got 98% of your net worth wrapped up in your business, it's really challenging to say, hey, you know what, this is a crazy idea. And I think it's a 5x payoff if it works. It's hard to pursue those things.

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279.48 - 301.034 Jeff

But the first thing was relief, man. If I listened to your latest podcast and your guest talked about sleeping for 14 hours. If anyone gets to retirement, I don't know if this is good news or bad news, but the best thing is the sleep. It's just so great to sleep. It's so peaceful. Oh, it's so peaceful. I went a dozen or more years where I was asleep. I was unconscious, but I was still at work.

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301.054 - 307.599 Jeff

You know, my dreams were all involving work and to be able to actually get to sleep is great. So that was the first thing.

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307.97 - 323.825 Rob Walling

The biggest perk, yeah. And to give folks an idea of the timeline real quick, we'll talk through this in more detail, but you co-founded the business in 2003. You sold a majority share of it to private equity in 2017, so 14 years ago.

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325.547 - 342.234 Rob Walling

But then you got what they call a second bite at the apple and a third bite at the apple, meaning you rolled equity and you had another exit in 2020 and then you had a final exit in 2022. That's the $615 million exit. And it was 14 times ARR. So that's an interesting thing.

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342.314 - 363.445 Rob Walling

Let's talk about that real quick because people ask all the time, like if I'm doing 2 million and growing at blah, what's my revenue multiple? And it's always like, it just depends. You know, I can do a bell curve of like of the past, 20 exits that I know of. I can give you the range, but I know a friend of mine who is a M&A advisor and he got someone a 23X ARR offer.

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363.926 - 379.877 Rob Walling

And then I heard someone three days ago who got a 2X ARR. So is that the range? It's two to 23. It just depends, right? It depends on the space and the market and the growth and this and that. The most common parts of the bell curve for SaaS tend to be in that, what is it? Four to, it's about five to seven, but you see five to eight and it depends on the market. So

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380.717 - 383.278 Jeff

14 is a great, great multiple.

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383.418 - 384.298 Rob Walling

Why was that the case?

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385.258 - 405.024 Jeff

It was a combination of things. I mean, the market was very strong at that moment in time in early 2022. So that can't be disregarded. But the mental model I use when describing this to people considering selling their business is a slot machine. And I didn't know this going in, or I would have had some better numbers. But

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405.384 - 422.739 Jeff

you know, just excluding market conditions, you take your revenue is sort of the first reel of a four reel slot machine. And then you take your gross margin. And I'd never really calculated our gross margin. I mean, I knew how the business worked, but I'd never really dug into what our gross margins were. And we were about 90% gross margin. So it was a mature product.

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422.86 - 438.992 Jeff

It was all our own code and open source. We didn't have any licensing costs. So we had high gross margin. That's reel number two. Third is retention. And I knew we took really good care of our customers. It was one of the reasons we had, I think, such a good outcome and took so long was our patience. But we took really good care of our customers. We had 117% net retention.

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439.012 - 441.734 Jeff

So it was a- Negative 17% churn. Yeah, negative 17% churn. That's-

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446.937 - 448.258 Rob Walling

It's unbelievable.

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448.638 - 465.371 Jeff

And happy to talk about some of the strategies that helped that. My favorite of which is short-term generous, long-term greedy, which I'm glad to talk about later. But the fourth reel is growth. And at the time we sold, the first time, we got seven times revenue. So seven, not nearly as good as 14, obviously.

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465.571 - 481.941 Jeff

But if you think about that slot machine, our growth was only about 20-22% a year when we sold. So if we would have had 100% growth and 90% gross margin... and 117%, that would have been a jackpot. But we were kind of like jackpot, jackpot, potato for that last reel on growth.

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482.261 - 490.724 Jeff

But perhaps the private equity company that acquired the majority stake saw that we had a lot of potential because we weren't aggressively spending in sales and marketing at that time.

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491.564 - 503.589 Rob Walling

And let's give folks an idea of what the business was. We're not going to name the business because very quickly someone could find your identity, but it was a bootstrapped SaaS company. And what industry did you operate in?

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504.059 - 515.887 Jeff

Yeah, we were business-to-business security software. And if anyone wants to find me, I'm not hiding, send me a message online or on Twitter or something. Just like with you, glad to introduce myself. But it was business-to-business SaaS.

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516.387 - 532.838 Rob Walling

Got it. And starting in 2003, there really wasn't, I put in quotes, there wasn't SaaS. Constant Contact was around and MailChimp was just, and Basecamp was a couple years later. But were you charging a subscription when you launched it in 2003 or was it one time back then and then you migrated to subscription later? Yeah.

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533.086 - 554.642 Jeff

It was an abject failure to get one-time licenses is the honest answer. That's amazing. I'm a salesman by trade, so of course we were trying to get $100,000 for the software. And then the way it used to work is you'd pick 15%, 20% maintenance ongoing. But we weren't able to do that. We were two guys and a dog, and the dog was a loner. and nobody wanted to give us the money.

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555.122 - 576.772 Jeff

It was really Salesforce that I recall as being one of the real earliest pay-as-you-go. The difference in our case, we adopted the pricing model of a subscription, which I think was very healthy for customers and for customers and for the tech companies. But we were still on-prem. So we were shipping servers, still probably shipping on-prem servers to customers.

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576.792 - 584.558 Jeff

But it was really the licensing that was rather novel at that time in 2003. And again, driven out of necessity, not some kind of foresight or wisdom.

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585.296 - 600.943 Rob Walling

Ben Chestnut, co-founder of MailChimp, I interviewed him at MicroConf, and he basically said the same thing. He was like, we were just charging one time because that's what we thought software was. And then suddenly we realized we need to, I don't remember why they switched to subscriptions, but it was very much an accident for them as well.

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601.483 - 620.63 Rob Walling

So talk to me, you told me offline that you started in 03, you became profitable in 07. So four years of what I would call grinding. Were you working a day job at the same time? Because how can you be an unprofitable bootstrapped company? Those two things aren't, you don't have burn rate because you don't have cash in the bank.

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621.277 - 639.568 Jeff

Yeah, I was not working another job. I was unemployable at the time. And for clarity as well, we did raise $350,000 of an angel round. So mostly bootstrapped is how I should call it. And that was the last capital. Yeah, that was the last capital. And I said, I had a previous company that I sold.

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640.348 - 657.223 Jeff

in a dot-com company that we, let's not venture into to waste time in the interview here, but I had a little bit of money left over from that after failing at a couple of things in between. So we were burning money at home for a long time. It was a tough first five years.

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657.884 - 670.611 Rob Walling

And was it so mostly bootstrapped is obviously what I refer to that as. So as you hit profitability in 07, what did the company look like? Was it still small? Was it you and your co-founder? Did you have much of a team?

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671.499 - 693.495 Jeff

Yeah, it was the first year we did a million dollars of revenue was 2007. I think we were at about seven employees then. So it was just the two of us for a year. We did $9,920 of revenue our first year in 2003. Yes, I remember, and I have a copy of the purchase order I could put my hands on right now. That's cool. That was a big day. Yeah, a million dollars of recurring revenue.

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694.634 - 718.145 Rob Walling

In the journey between 03 and 18, which is 15 years, that's when you retired. You did the first part of your exit, partial exit in 17, then you retired in 18, and then you had these other exits afterwards because you just owned shares, right? What I want to find out is... Do you have a memory of, I guess, one of the hardest time periods or one of the hardest moments?

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718.705 - 734.814 Rob Walling

A time where you kind of said, well, this might be it. This isn't going to work. Or maybe it was months of stress fighting spammer. Every entrepreneur has many of these stories, but do you have any go-to story of like, this was terrible?

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735.871 - 750.526 Jeff

Yeah, I'll give you one early and I'll give you one late. The one early is sort of a combination of stories, but I remember a year in, two years in, something like that. I mean, we're doing almost no revenue and it's just not working. I think we were a little bit early.

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751.147 - 766.578 Jeff

for the market we were in and it's security software so it's difficult to get a beach head and just thinking, man, if I had any other opportunity, I mean any opportunity, like three grand a month and a dental plan and just like relief from the pain I'm going through, I would have jumped on it.

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767.038 - 782.228 Jeff

And I remember a particular moment where I was fighting with the printer or something like that and I was just really angry and frustrated and I think that's one of the things, I mean I hope your audience takes from me and from each other is that it's hard. Man, it's hard and it's lonely.

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783.089 - 802.353 Jeff

And having somebody to talk to authentically where you're not in pitch mode and talking about how great it is and feeling like everybody else is doing great and you're not. But it's really hard. It was hard and it was lonely. The second one I'll give you was late in the process and was a contributor to deciding to sell the business. And this was 2015, I believe.

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804.674 - 822.648 Jeff

where we were doing well, and I had taken a loan. I built an office building for the company, and I took a loan of $6 million with a personal guarantee. I didn't have that kind of money, but the company had cash flow at that point to support that. And we had a security breach. Nothing was lost. but someone got through the first level of our security.

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822.668 - 844.002 Jeff

It wasn't our software, it was a piece of open source code. I don't remember what it was, but we were stuck. And one of our customers said, hey, we've got a red light on the dashboard here. Somebody broke through the front line of security here and they're checking the doors to the vault. Then another customer, same thing. We were under attack at that moment in time.

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844.162 - 867.159 Jeff

I just signed a loan for $6 million to build this. In security software, one bad line of code could ruin you. It wasn't our code, couldn't fix it, totally out of our hands. That's a moment I won't forget. That's a moment that all the ships were down and we didn't really have any ability to play the hand. Our team came together and when a fix was available, we fixed it.

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867.319 - 868.66 Jeff

That's one that I won't forget.

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869.696 - 890.47 Rob Walling

Yeah, that sounds terrifying. And that, you know, the longer you do this, I've seen so many founders now get hacked, get cease and desist, have employees embezzle. You know, it's just these edge case things you hear about. You're like, well, that's such an edge. That'll never happen. But it's like, no, it's either I have view across 191 companies. So that's a law of large numbers.

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890.49 - 909.423 Rob Walling

It's going to happen to some of them. Or, you know, you had your one company, but you did it for 15 years. And so the odds of something happening in that timeframe is, and it's terrifying. How did you handle it in the moment? Some people completely like freeze up and like, don't know what to do and panic. And that's like a there's fight, flight or freeze, I think are the reactions.

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909.923 - 917.229 Rob Walling

Do you remember panicking and then calming down and saying, well, we just got to fix this? Or what was you know, kind of what was your, your mo there?

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918.294 - 935.969 Jeff

Yeah, I've got plenty of weaknesses, but panic is not one of them. Equanimity, I think, is one of my strong suits. But this was a case, I'm a salesman by trade, so I didn't have any ability to understand really what was going on and had to rely on the team. And I believe it was a Friday night and we just got to the point where there wasn't anything else we could do.

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936.43 - 958.441 Jeff

So I think we approached it rationally and then... You talk about the events that just sort of happened to you, there's just a big wheel in the sky that spins and sometimes your number comes up and that could be getting a disease or getting in a car wreck or in this case having a piece of software that you were using that had a vulnerability. Fortunately, we were able to work through it.

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958.481 - 980.416 Jeff

Fortunately, the other safeguards that were present in our software held strong. I don't know if it's interesting, but a lot of security software you could say is like it's an alarm or it's a fence or a moat or a gate or something. We were a vault. We protected the vault. of some very important customer information, casinos, law firms, banks, hospitals, things like that.

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980.536 - 989.848 Jeff

So it was not a system that could fail without massive repercussions for everyone. So anyway, glad to have that behind.

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990.714 - 1007.725 Rob Walling

This is going to be a tricky question, or maybe you've already thought about this, but why did the business work? Why did it work so well that it was obviously a massive success for you and your co-founder and even the private equity firms that bought it and resold it? What is at that core?

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1008.205 - 1026.145 Rob Walling

Feel free to talk about you and your co-founder that you executed well because I think the founders themselves have to be pretty instrumental in any business like this working. But people say, well, it's the market or the idea was the right time. We got a little lucky with timing. How do you think about why this business works so well?

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1026.752 - 1047.32 Jeff

Yeah, a combination of things. It's always a great question in a group to say, hey, what percentage was success and what percent was luck? And it was definitely a combination. I think of it like winning a poker tournament. Sure, it's possible to not even know what you're doing and just go in 20 times in a row and win. I think, one, it was a good idea. It was my co-founder's idea.

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1047.64 - 1070.949 Jeff

It was ahead of its time. But it was a good idea and we caught a wave five years in, ten years in, that picked up steam. I would say we had a good division of labor in the startup where my co-founder was a brilliant coder. He was technical, I was sales. So if it had to do with code, it was him. If it had to do with the business, it was me. And we stayed out of each other's way, which was good.

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1071.349 - 1094.241 Jeff

We didn't go too far too fast. If I would have had an ability to raise venture capital early, I probably would have done it. And that probably would have been a mistake. So again, we took the long view on things, short-term generous, long-term greedy, anything we could do to get the product in the customer's hands and using it, we know we would succeed in the long run. We deferred gratification.

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1094.662 - 1115.679 Jeff

So we didn't have a big fancy office. We had a crummy office for a long time while we were profitable. We didn't get hit by a lightning bolt out of the sky is definitely one. So you didn't get killed. Didn't get killed. Cease and desist letter, sued by a customer, a breach, sued by... I know we never got sued, which is nice.

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1116.159 - 1137.134 Jeff

So really a combination of things, you know, Rob, over the long period of time, I mean... I don't want to shoo away any credit. I think we made more good decisions than bad decisions. I think we recovered quickly from our bad decisions. We weren't afraid to take certain risks that had favorable payoff conditions. And we weren't in a rush. We went, you know, we went, I call it bootstrap.

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1137.154 - 1140.716 Jeff

We had a small amount of money from outside investors that got us over the line.

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1141.414 - 1154.919 Rob Walling

Yeah, that's a big thing. I mean, there's so many directions I want to take that. I've talked a lot lately about how, or a bit lately about how I think success of when I look at tiny C companies are the founders multiplied by the market or the opportunity.

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1155.599 - 1164.503 Rob Walling

And the reason it's multiplied is let's say you have a founder who's a, you know, one out of 10, if we're just going to have a numerical rating scale, but it's like a great market opportunity.

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1165.163 - 1185.074 Rob Walling

they will execute mediocre and you know they may have a middling success but if you have a founder who's a nine and they have a real market or it's a market that they don't get a little bit lucky with or they don't hit at the right time or whatever then it's similar it's middling and we see a few tiny seed founders just like you are such a good founder and i'm so sorry that you

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1185.134 - 1203.23 Rob Walling

They're just not getting the traction. This sucks. But it sounds like between you and your co-founder, that division of labor, and it sounds like both of you really executed well. And then you have that market and you multiply the nine by nine or the 10 by 10. Suddenly you're at 100 versus these are all contrived. But you get the idea of what I'm saying. And there are more factors in that, right?

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1203.29 - 1223.464 Rob Walling

I mean, there's luck involved and there's all kinds of stuff. But it's crazy to see such an outsized outcome. There just aren't that many nine-figure bootstrapped exits like this. So I want to touch on something you've said a couple times now, and it's short-term generous, long-term greedy. Can you flesh that out, what you mean by that?

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1224.425 - 1238.834 Jeff

I think this is one of the benefits of being a bootstrap company. We didn't have a quarterly number that we needed to make. And that means you don't ever sell the product to someone who's not a good fit. You sure try not to. There could be an occasion where

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1239.634 - 1255.986 Jeff

there's a prospect and they really should buy your competitor's product, but you need the money or you need to make your number for the quarter. And we never did that. And then there were occasions where maybe the person we were dealing with had a very low budget authority, including our first sale of $9,920 in December of 2003.

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1256.046 - 1277.663 Jeff

And you think, well, geez, this is a customer that should be $100,000 a year customer, $50,000 a year customer. and the person you're dealing with is enthusiastic about it but they can't convince their management or they don't have the budget and we'd say, what do you got? Can you sign for $5,000? And we would do that. We would do that consistently.

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1278.103 - 1294.056 Jeff

The way our licensing worked as well was the product did not have a feature that would exclude someone from using the product because they'd exceeded a license count. So we sold on concurrent licenses, there's a number of ways to do it. There was also a generous way to do it was concurrent versus named users, which people liked.

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1294.756 - 1314.201 Jeff

And then if we thought, hey, you're going to need let's say 50 concurrent users and that's whatever it is, 10 grand a month, we would say, I'll tell you what, first year we're going to charge you for five and take advantage of us. I mean, just rip us in half. I hope you get up to 75 because I'll catch up with you next year. And if that's a problem, we'll work with you from there.

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1314.501 - 1333.133 Jeff

So you could be sitting around forever trying to get that 50 concurrent license thing, but I'll sell it to you for cheap for five because I know you're going to like the product. I know we're going to take care of you. I would say also, you know, we had a methodology or a viewpoint that like we never tried to avoid our customers. Like we had a phone number that spelled the company's name.

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1333.794 - 1351.069 Jeff

And you could call that number and one of our people would pick up the phone and help you through a problem. And the idea was always let's try to give great support where no matter what, even if you forgot your password, we're not going to farm you out. to someone else, we're not going to send you through an IVR, we're going to try to get a human to pick up the phone.

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1351.37 - 1365.895 Jeff

And then after we surprise and delight you with some great service, we're going to take an opportunity to say, hey, by the way, is there anyone else in the, in the company, maybe that could use the product? Or, you know, is there are there other things we could do, we could do better than when once you've done a good job serving them.

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1365.955 - 1369.476 Jeff

So that's just another example of being generous and greedy at the same time.

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1370.461 - 1392.565 Rob Walling

Yeah, I like that. It's really long-term thinking. And I like the way you say long-term greedy. It's intriguing to be thinking that way because so many folks don't think about running a company for 15 years, right? Myself included. Although I have run MicroConf now for 15 years, I think, 14. As you were going along, did it feel like 15 years?

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1393.165 - 1411.271 Rob Walling

Or was it just something that you kind of, you didn't question and you just did every day? Similar to, I talk about why this podcast has shipped every week since 2010. People say, wow, that's a long time. It's like, doesn't feel like, I mean, when I look back, it's a long time, but like, I don't, this doesn't work for me. Like I do this because I love it.

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1411.311 - 1427.718 Rob Walling

And frankly, microconf is just something, it's just part of me and it's what I do. My last SaaS company, Drip, was not. It was not an identity and I never thought I'd run that business for 15 years. So I'm just trying to give examples of like some of those really fit of like, I'm just going to do it. And it, you know, it did what it did and others, I keep going.

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1427.738 - 1431.8 Rob Walling

So I'm curious to hear what your feelings were during that 15 years of working on it.

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1432.56 - 1454.855 Jeff

Yeah, it's a great question. I'd say time moved at different speeds in different parts of our history. So the first couple of years crawling over broken glass, it was like time in the dentist's chair. It couldn't have gone slower. The first few years felt like 100 years. Once we got to profitable and had a pretty good sense that we were going to be okay, that part went fast.

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1455.555 - 1474.145 Jeff

So from 2007 till the time we sold a majority share, that 10 years might have felt like two. Although there were some struggles, of course, along the way. I don't mean to think it was all sunshine and roses during that 10 years. But that time was really good. We had a small team. It was a good team. We worked well together. It was small enough where you knew everybody.

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1474.786 - 1480.929 Jeff

It was big enough that you could take a vacation and expect that the company would still be alive when you returned.

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1481.724 - 1497.314 Rob Walling

I want to ask you a question that I think some people are probably thinking right now, which is with an exit like this, you yourself took home a tremendous amount of money. Is it just shy of $100 million? Is that accurate?

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1499.755 - 1512.541 Jeff

I'm happy to walk through the transactions if it's useful, but I think the total was about $88 million. That went to you directly? That went to me from the equity sale in three chunks.

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1513.502 - 1529.916 Rob Walling

How do you keep going? Like, what do you do next? Like that money, I know it came in three chunks, but like, how do you think about how to stay busy? You're not going to, if I had that much money, I wouldn't go back and grind, right? I mean, hell, I have way less money than that. I'm not going to go back and grind. You know what I mean?

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1529.956 - 1541.646 Rob Walling

So it's like, how do you possibly think about what to do next to keep yourself happy, to have an impact, to keep learning, to stay sharp without maybe getting back in the game? Unless you, did you ever consider getting back in the game?

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1542.301 - 1562.452 Jeff

Yeah, boy, Rob, I could go hours on this. I'll try to distill it as best I can. Everyone has a number in mind, right? If I could get this amount of money, then I'd be set and I'd be done. Mine was $10 million. And I think most people, when you say my number is 10, you really think of 20. So that was life changing.

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1562.512 - 1588.579 Jeff

I was down there and then first check was 21, second check was about 40, third check was 27, 28. And I remember in vivid detail the day we sold, cashing the check, taking my family out to dinner in a limousine, what we had to eat. I could bring you to the table where I sat. Second time we sold, Rob, $40 million. It closed early in the morning. I was in a conference room by myself.

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1589.219 - 1611.224 Jeff

I don't remember what I did. that day. I don't, I mean, we might've gotten pizza that night. I honest to God, I don't even remember. And I'm not sure how useful this is to your audience, but I mentioned this on another podcast I was on. I think most people have a default perfect amount of spending, meaning like maybe you can afford to, you know, fly first class and stay in a nicer hotel and, um,

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1612.324 - 1627.254 Jeff

I don't know, have a decent car, you know, whatever it is. Everyone has their sort of ideal amount of spend. And when you have less than that, life is of course painful because you're wanting to rise up to that. There's also another side and I can already...

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1628.054 - 1647.063 Jeff

feel the eyes rolling in the audience, and my eyes would have been rolling as well, that when you're above that, if you have more money than you can spend, it creates a certain kind of an issue as well. And just some examples of that are feeling the need to maybe go do it again or give it away. And it's just more challenging than you'd think.

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1647.824 - 1664.897 Jeff

I made a lot of the mistakes that I think people who sold their business make. You do what the world tells you you should do. You go to try to work with nonprofits and you realize how frustrating and slow that is if you're a founder. I bought a bunch of stuff. I had four houses and a jet at one point and realized, you know, stuff isn't where it's at.

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1664.957 - 1668.08 Jeff

Experience and community and relationships are much more valuable.

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1668.8 - 1696.882 Jeff

than uh than that and i also grossly underestimated how much i would miss the structure and the purpose and the identity uh that i had in my in my former life and i know i've been talking a long time i can hear myself talking but i just i just want to say to the audience like if you're rolling your eyes right now or you're saying like what a moron just believe me when i say when i was starting i would have said the same thing like how is it possible you know you have this giant pile of money and you don't just write off into the sunset and

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1697.482 - 1701.103 Jeff

and spend the rest of your days with frozen drinks and sunsets and boats?

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1701.123 - 1716.987 Rob Walling

Well, it's boring. I did it for six months. And again, my exit was much smaller than yours, but I took six months off after and I was like, this is, I was in my early 40s, like this is not what I'm doing forever because I need to learn, like me personally, right? I need to learn, I need to have an impact, I need to do all that.

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1717.527 - 1736.854 Rob Walling

The thing I struggled with was my whole life, like growing up we didn't have much money so it was always a constraint. I had a very scarce mindset around money. And a big part of me for entrepreneurship was like, I want to have the freedom to work on interesting things that I want to, but I also want to be set for life at some point. That was a goal. And so I achieved that goal.

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1737.494 - 1756.223 Rob Walling

And then I was like, whoa, I'm like 40 years. That's been like the driving goal for me. My North Star was to have enough money in the bank and cash that I never had to work again. And then I was like, so what do I do now? And I had other, I had MicroConf, I had this podcast, I had stuff that I could work on and do, but I needed a new North Star.

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1756.523 - 1773.394 Rob Walling

And my new North Star became to multiply the world's population of independent self-sustaining startups, right? That is now truly my North Star. Like everything I do with books, the podcast, YouTube, MicroConf, TinySeed, that's what I do. Because it brings me joy. And it is I view it now as my legacy.

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1773.875 - 1788.907 Rob Walling

Did you have a similar transition where you were like, my North Star is growing the company or wealth or whatever. And then you had to take I mean, it took me six plus months to figure mine out of like thinking about it a lot. I was actually kind of stressed about it. But did you reorient around something new?

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1789.725 - 1813.763 Jeff

Oh, gosh, Rabia, congratulations, by the way, because you have accomplished something a lot of people in my situation or similar have not. Six months is a, you're much smarter than me and a lot of others that I've worked. And I stood up a group called Beyond the Finish Line It's btfl.org if anyone is in the same situation. But I can kind of distill a lot of the conversation is this.

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1813.843 - 1837.003 Jeff

I want you to picture a Venn diagram, two circles. One of them is doing something important with people you know and like and trust, right? It's being back in the trenches. It's going to war with your friends and being an important part and being useful in that. Okay, that's one circle. And the other one is absolute freedom and autonomy and independence to do whatever you want, anytime you want.

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1837.303 - 1855.28 Jeff

And as it turns out, the joke is it's not a Venn diagram, there's two circles. There's no overlap. That's great. And so the key, I believe, is to find something as you did, and I have friends that are in the group that have found something that is worthy of sacrifice of that second circle.

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1855.68 - 1874.996 Jeff

So if there's something that you feel passionate about, or you feel like you're giving back enough, you're useful enough, you're willing to say, I'm a skier. So I'm willing to say, you know what? We've got perfect ski conditions today. I got six inches of powder. It's blue skies. The lines are short. It's 20 degrees and the light's good. And I have to say, I can't do it. I can't go ski today.

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1875.457 - 1895.774 Jeff

So it has to be something that's worthy of sacrificing your independence. So kudos to you for finding that. And the North Star I use now or I try to use now is energy. So if I've got something, like I'm enjoying talking to you, I was looking forward to talking with you today. If it's giving me energy, it's good.

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1896.254 - 1908.638 Jeff

And it doesn't matter how much money you have in the bank, Robin, anyone else listening, it doesn't matter how much money you have in the bank. If you've got low energy, life sucks. It doesn't matter that you can push a button on your phone and have a plane come pick you up somewhere.

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1908.678 - 1924.265 Jeff

If you're not looking forward to the day and you're not looking forward to what you're doing, your energy is low, life sucks. And if your energy is high, it doesn't, you know, maybe I'm working on a home repair project or something. If my energy is good, life is good. So that's the new scoreboard because it's not money anymore.

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1925.137 - 1946.117 Rob Walling

Yep, and that is a big mental shift that I think some people make and some people don't. And so I want to wrap the interview and give folks a few calls to action because you have several different things that you're working on. You already mentioned Beyond the Finish Line, which is btfl.org. And as you said, if someone is post-economic, they can hit you up there.

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1946.597 - 1963.261 Rob Walling

In addition, you are at Retired Founder on Twitter and retiredfounder.com. And I wanted to read, not your H1, your H1 is hello, fellow founder, and you talk about your exit. But the second paragraph down is, this is not a pitch for anything. I have nothing to sell you. I have enough money. So I love that. I have enough money.

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1963.301 - 1980.485 Rob Walling

So I promise this is not an intro to my coaching service, paid subscription, or anything else. My only goal is to help founders. And so you have a contact page there if folks want to reach out. And what do folks, like what do you want them to reach out about? You know, what typically do people want advice from you about?

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1981.045 - 2001.232 Jeff

Yeah, so let me start with the negative response on that, which is the real generic ones I can't help with, like, you know, what kind of business should I start? Those I try to write, and I'll need to spruce up my website before this publishes, but I'll try to write a, you know, very basic response. you know, applies to everyone, answer to a very basic applies to everyone question.

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2001.652 - 2013.858 Jeff

The ones that are useful are people that have a particular situation or problem that I can help with. If someone does, you know, business to consumer or they're trying to open up, you know, a market in Asia or something, I can't help.

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2014.398 - 2023.988 Jeff

But I've had I don't know how many calls and this brings me energy so I'm so happy to do it which is why I don't need money, I don't have a coaching service, I don't have anything else, it just gives me energy.

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2024.909 - 2044.524 Jeff

I've been I think an authentic ear for the people who are going through it and that's where I think I can provide some good in the world from people who can't make payroll, from people who are thinking about a big partnership, thinking about selling. their spouses telling them to get a real job. I talked to a guy whose co-founder committed suicide in their apartment.

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2045.184 - 2065.393 Jeff

I've talked to people who are in the process of making mistakes that I've made. And I think it's really a relief for a founder to be able to talk to someone who's been through it and can say, yeah, me too. You're not alone and it's going to be okay. While not having to sort of like secretly pitch me for an investment, I make no investments. No investments in anything. That's the trade.

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2065.814 - 2070.824 Jeff

I'll not write a check, but I'll not ask you. I don't want any shares, warrants, options, nothing. I want nothing.

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2071.673 - 2089.429 Rob Walling

And they don't need to pay. You don't charge per hour. You don't have a product. Yeah. Very cool. All right. So that's retiredfounder.com if folks want to reach out. In addition, you mentioned to me that you are interested in doing more podcast YouTube videos. So if someone's listening to this and they feel like Jeff might be a good guest on their show, you can obviously ask him.

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2089.809 - 2104.645 Rob Walling

He's very open about a lot of stuff. You could dig more into the transaction. There's a lot more that we could talk about. But, you know, due to time, we won't. So feel free to contact Jeff either DM on Twitter or head to retiredfounder.com. Jeff, thanks so much for joining me on the show.

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2105.065 - 2108.429 Jeff

Thanks for having me, Rob. I really appreciate and enjoy your work. Nice to be in touch with you.

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2109.039 - 2137.097 Rob Walling

Thanks so much to Jeff for joining me on this week's episode of Startups for the Rest of Us. for B2B SaaS companies is finding people who are not the headline name who have had their name splashed all over everything that we all know.

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2137.637 - 2156.283 Rob Walling

It's people who have been grinding in the trenches and built an incredible knowledge base and experience, put in the hard work, learned the skills, maybe got a little lucky. Does it matter? Does it matter how lucky you get if you sell for that amount of money? I really appreciated Jeff's transparency and him sharing his knowledge. And as I said, he's now a tiny seed mentor.

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2156.703 - 2167.787 Rob Walling

So that gives you an idea of the types of quality and experience that we're looking for in that role. Thank you for listening to this episode and every episode. This is Rob Walling signing off from episode 732.

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