If you want to reverse engineer things, you have to have a model with economies of scale that gets you to $3,000 to $4,000 per boy, or your model is not real. It is not scalable. What's going on, man? How are you?
I'm so excited to be here and talk about all my first millions. Talk about the millions I lost, a few learnings on scaling and whatever you want, Sam. It's great to be here. I love you for many reasons.
One of them is you're so catchy and you're so good at summarizing important things, but explain it in a very simple way, in simple to understand ways. But before we get into that, I need to talk about background because we have to do the OG software guys, you are the guys. We talked to the founders of HubSpot or guys who run multi or tens of billions of dollars, companies, they say, if you want to learn about software, Jason's the guy. But we have a bunch of sometimes 20-year-old kids listening to this and I want to give a little background.
I don't want to spend too much time on this. But basically what I know about you is you started a few software companies, including EchoSign, which you sold for nine figures. I don't know the exact amount, but you've said nine figures. Then you've been investing in startups as a VC for since 2013, which you said, I think you said you 10 extra fun or something like that.
Is that right? That is about right. What else did you do besides EchoSign? Before that, I started by my first million.
Between when the internet died for a while, I actually found it to start up making implantable batteries from nanomaterials, which I knew nothing about, which is interesting. We sold it for 50 million after 12 and a half months. It is kind of an MFM story. I learned a lot from it.
What was that company called? It was called Underground Devices and we did something that was thought to be impossible. We got by our competitor. It was a classic buyout after 12 and a half months when we took away one of our largest customers.
Did you raise funding? We did. It was hard. I'm dating myself.
This was one of the crumbiest points. We raised $9 million in our seat round and sold 70% of the company in our first round. That was the deal. That was the deal.
I was like, there was no negotiation. It was a different time. You and your other partners, I don't know how many you had, had 15 million left over to share after the $50 million exit. I'd say it was more like about 10 million or maybe even 8 million to share.
It was enough. Interesting for the first million. It was just enough to not work for the man. I have worked harder.
I worked even harder on the next startup on EchoSign, which Adobe bought. EchoSign? Was that basically what DocuSign has now? You guys just sold earlier?
Yeah, a lot of learnings. Yeah. DocuSign, I'm really datum. I'm a pretty myself.
DocuSign was basically a printer driver company when we started. We were the first web solution. I wrote it all myself in PowerPoint and crappy wireframes and we built it. We got to $1 million a month, burning $4 million.
We got to $12 million ARR, growing 100% with 110% revenue retention and cash deposit. We sold it in 2011. 2011 was a long time ago, in Internet time and in real time. It was just before we understood the metrics around recurring revenue businesses.
Even my board, my investors, they weren't sure we had a good business. If I said to you today, Sam, I've got a business doing $1 million a month, growing 100% with 110 revenue retention and profitable, you would say that's the ticket. DocuSign was bigger. We had about 36% market share, but we were cash deposit if we were 100%.
We only raised $4 million. When you sell your company to make your second millions, sometimes the second one is there's a certain logic in it and the logic actually in some way can be stressful. It can be stressful. That was a very complicated decision because it made sense on paper given the team wanted to do it and part of the team wanted to do it and given how little we'd raise.
Am I gut? I knew it was a motion. I knew it was the wrong thing. Scott Galloway came out a while ago and I didn't get to talk about this, but he had this awesome presentation.
You and Scott are similar in that. You have beautiful language. That's what I describe these times. They pick their words beautifully.
Scott has this thing. So Scott sold L2. I don't know how much. I think one to 200 million.
I forget the exact amount. He was like, well, I wanted to have 9-figure exit and I wanted to do it in this database because that's what I knew. I worked backwards and I sort of reverse engineer it. He said something like he was like, I knew I needed to have an international presence.
I knew I needed to charge at least $50,000 a year for service. Then he left all these things and spent eight years or however long building it. I love that because I love reverse engineering. I'm like, they want to create this amazing stuff.
I'm like, yeah, that's cool. Sometimes that works. But you can actually reverse engineer a bunch of stuff to figure out what's the rules of the game that I need to play and then you optimize for the rules. I wanted to have you on to basically reverse engineer what it takes to get either $100 million or even $100 million in outcome because I actually think those rules are actually the same.
I was like, Jason, I want to talk about this reverse engineering thing. You banged out this five or eight point thing. You said that a lot of startups right now because they raise money in a zero interest environment, it's like $100,000 in revenue per employee. You said no.
The new minimum needs to be $300,000 to $400,000. Is that right? It is. If you're trying to reverse engineer whether your business model makes sense.
This is one thing to reverse engineer. Content business models have economies of scale and some don't. And if you want to go really big, you want to business with economies of scale. If you step back in the old days of software, the old Adobe's Microsofts into its made $1 million in revenue per employee, $1 million.
You'd have a bunch of engineers. They go off in their offices, everyone used to have a private office to code. You'd spend two years building a piece of software. It's small team.
You put it on a DVD ROM that costs $0.50 and then you package it up. That costs $0.50 for $1. And then someone would sell it for you between $50 and $400. This was a really good business.
There were 90% margins. And the classic Adobe Microsoft into it, $0.50 of every dollar went straight to cash flow. It was $50.50. We don't see this anymore in companies of public.
It was so profitable. So that was a million. And then things just desert for whatever you want to call it. It got crazy.
And we reached a low in 2021 of $100,000 in revenue per employee for all these unicorns. $100,000. So we got only 10% of the vision as we used to be. Now the pendulum swung back.
So we historically were at a million per employee. The low point was $100,000 per employee. When employees in the Bay Area probably cost you $250,000 fully burdened with insurance benefits and that. So you're losing $150,000 per employee.
Now every public company, at least public SaaS software company is at $300,000 to $400,000. Pub spots at 310, which we talked about. A cloud flayers at 400. That's where you have to be.
And so. When? When do you have to be there? So one way to think of if you're lucky enough or unlucky enough to look at it to raise capital, angel money, venture capital, whatever, it bridges the gap.
It bridges the gap to get you to $300,000 to $400,000 per employee. But you're going to have to get there. And if your product isn't profitable enough, if your gross margins are too low, if it doesn't make sense, it makes some changes. Right?
You have to have a model. If you want to reverse engineer things, you have to have a model with economies of scale that gets you to $300,000 per employee or your model is not real. It is not scalable. And then you have another point here.
You say, going multi-product and say it's a huge issue of how, when and where to figure out when to go to multi-product. But did you say at like 10 million or revenue you want to go? What did you say for going multi-product? By the time you get to 10,000 customers, you better have a second product.
That this is the, this is the, no, obvious thing. That can be bigger than the first. This one took me a while to figure out to be bigger than the first. For HubSpot, CRM in two years will be bigger than marketing automation.
And HubSpot for years was a marketing company. In two years CRM, it sales product will be bigger than its marketing product. It has to be. And you want to be there by 10,000 customers.
This is the same for econ businesses too. Like they sell a handful of SKUs and then they reach like some type of critical mass and then like, all right, we need to create more stuff. So like we made the other, and now we need to make toothpaste or shampoo or something like that. But the second one has to be bigger.
This is the one to think. This is the mistake founders make. If the second, what's easiest is to add a product extension. Okay.
We sell shampoo and e-commerce. Okay. Let's sell shampoo and conditioner. That's the easiest thing because our customers already know us.
If they buy shampoo, they'll buy shampoo and conditioner. But the problem is if you, if you, if the second product isn't bigger than the first and the first one's still growing, you never catch up. It's never enough. Right?
You're adding 10 million a year, right? And you want shampoo and conditioner and it does a million. It's first year. It's great, but it'll never get there.
The second one has to be bigger than the first. And this is, it's too, we all default to the easy second product and you actually have to do the harder one. That's interesting. So at the hustle, so we had, I don't remember a million and a half subscribers.
I think we were doing a million a month in revenue and like a media company is basically, you build an audience and then you launch multiple businesses to that audience. So whether it's advertising, conferences, software, whatever, that's kind of typically how media companies are weird. It's usually a collection of small businesses and or different businesses. I think we were at a million a month, I forget, I think about that.
And I wanted to create a subscription service called trends and it was like, and dude, I fucked it up so bad because I charged $300 a year, which is so stupid. It should have been $30,000 a year. It should have been way more expensive. I think in the first month we did, I don't remember exactly, but in the first month we did almost a million in sales and then it was a pain in the ass.
But by the end, I think when we sold, I think we were at five, maybe 10 months later, we were at five million a year in sales with it, but it only had like four or five people running it, which was profitable. But the mistake I made was the thing of not making it bigger than the first thing. And I so like intimately know that mistake. And it's really hard because I'm like, well, this is like a clear extension to do this than this.
But it just because it's also like a psychological thing of like why pay attention to this thing, just put money back into the main thing. This is an advantage to hiring a VP of sales, for example, founders under price their products, usually the under price. And we're so, because we know what's more important to get the product off the ground and get a hundred customers than to optimize pricing as founders were always going medium or long, right? So we always leave money on the table so that we can make people happy and get them going.
Dude, I'm under price everything I've done. I've under priced. Yeah. You know, it's an 80% of founders, not all.
But it's a I hate this term, but it's a feature not a bug because as painful as it is, you can fix pricing later, at least for new customers. It's harder to fix it for grandfather customers, right? But for new customers, then just double it to 600 and 1,200, 1,800, like it is, it's hard. I think it's like rooted in like a passenger syndrome, I'm like, I don't know if this is good enough.
And then you talk to every talk to a good sales person, you're like, dude, like I could like just put a zero behind that. I'll sell it. You know what I mean? Like if you talk to a good sales person can get it done.
A good one will not rip people off, but a good one will get the full value for your product in ways of founder, you almost never can't. You almost never can, right? That's why a lot of the classic Sasser contents about hiring a VP of sales, because that's why in the first quarter, the first nine days, you should see a lift from a VP of sales, at least because they can run this playbook with the same leads, the same customers, the same dynamics for trends or something else. Someone with the confidence that's 30,000 for trends, knowing it's cheap compared to Gartner or Horace or whatever, they'll take that off your plate if they're good and you'll see a 30 to 100% revenue lift from someone that's great, right?
Yeah. Sometimes mediocre will rip your customers off and never understand your product and misspell trends and never read it and not know what it is. I mean, everyone will actually see a revenue decline from founder-led sales, but a good one will solve that piece, right? So I think the other thing, you know, you just didn't give it enough time either.
I sold a company at four and a half years. But that was like, I was okay. I don't regret that at all because I wanted to get some financial freedom and I was broke. I think I paid myself the first two years, my salary was 20 grand, the third year, maybe 100 and then the fourth year, I think I paid myself a few hundred thousand dollars.
But I was like, I was fucking poor. So I was impatient in what you talk about all the time. The worst thing is a tired CEO and I was tired of being poor, basically. And that was a huge mistake, by the way.
Pay yourself way more if you can, is what I've learned. As soon as you can afford it, pay yourself market is the learning. Yes. As soon as you can afford it.
And you had this other thing on here, you talked about you want 30% of your revenue to be outside of North America. That's very intimidating. That's probably the most intimidating thing here is going global, at least in my opinion. I think it's a very intimidating thing.
Obviously some businesses just doesn't really work, right? If you're highly regulated, it can take a long time, for example, right? If you're very specific. But at scale, at scale, the average public software leader gets about a third of their revenue outside of the US.
The majority of hustle customers, small businesses, are outside of North America. The majority. And so let's step back in terms of reverse engineering, right? If there's a couple things, if you don't lean into them, you're going to have less revenue than you otherwise would.
International and partners are two of them. If you try to only sell direct as an issue too. And so how do you do this? How do you learn how to sell in France, right?
Germany and Milan and London. If not as complicated as it sounds. What you do is build your business, build your brand, right? Be, find a niche where you're one of the top two or three folks.
You don't have to be, you don't have to be hustle everywhere, but find a little segment where you're better, your little area. And watch who wants to buy you. And if you're in software, what will happen is Australia, New Zealand, UK, some parts of France and others are very used to buying from US companies. They will find you if you are the best vendor.
They will find you. You don't actually have to find them. Now, traditional industries won't find you, right? It's going to be tech focused folks.
It's going to be early adopters. It's going to be cool kids, but they will find you. And as soon as you cross 5% of your revenue in an area, then invest in it. Just invest in it.
As soon as you see a cluster in England or New Zealand or somewhere you didn't expect Chile or Brazil, like support it. And then the cheat code, this sounds obvious. Okay. The one one is just support it.
The one that takes work is also localize your product earlier. And most of your engineers don't want to do this. They don't want to localize the product into Spanish and Portuguese. Turn into 30 languages.
Not super complicated engineering tasks, but 95% of engineers just don't want to do it for a variety of reasons. So you can get going in the English-ish countries and even in Europe, right? But you're not going to penetrate certain areas if you don't actually look like your product. But that's the second cheat code.
The first one is just be welcome to it. You don't have to go hunt customers in Japan if you have zero. You don't have time as founders. Going to Japan is like the worst place ever to go because the culture is so different.
And there's been so many failures of Japanese companies wanting to come to America and America to Japanese because the culture is wildly different. Because I actually looked at one of the ways that I researched cool company ideas is I like a Japanese publicly traded company. So there's one called Usabass. So Usabass is a media company in Japan.
They own three products. One of them was sort of like CD Insights and it was doing 30 or 50 million revenue. The second one was a news app called Newspicks. That was doing another 30 million.
And then I think they had one more thing. And I remember going and trying to download their app and it was all in Japanese and I really figured it out. But I eventually translated it and I was like, I'm going to make this app in America. And I'm going to do it at the hustle.
And so I built out this whole thing and I was going to launch it and everything. And the culture of what they were trying to do, it required users to leave feedback and opinions on news, which is not so common here. And I remember like, fuck, why is this Japanese idea not working? And then I realized I was just reading Wikipedia or whatever.
And there's this whole term to describe the failure of American companies trying to break into Japan because the culture is so different. And it scared me like hell to do anything involving Asian cultures because our cultures are so different. I'm like, I can't never crack that. Whereas Germany, France, it's mostly similar.
But yeah, the whole Japanese thing freaks me out. I'll give you two examples, but like Salesforce got 10% of the revenue in Japan in the early days, 10%. Now they didn't, you can Google it. You can see what Mark Banyoff said.
They didn't plan it. They got dragged into Japan. Some of those new partnerships and others. But my point is that wasn't on their day zero plan.
Okay. But it took off there. I was just talking with Howard Lerman who he's got a company called Rome, but he founded Yexton, took it up to a billion. And they were huge in Japan.
And we were talking about how he was going to do Japan the next time. But they got dragged into Japan for small businesses. They got dragged in. So my point is don't show up to Japan with no traction asking for a tour in the city.
Like if you, if somehow in your first hundred customers, first 500, you've got five in Japan. Don't don't don't dismiss them. Don't be snarky like some folks are. Don't say doesn't matter.
In fact, say, oh my God, we got five customers for Japan and our products, not even in Japanese. We've got something good here. Like let's pick a pause and let's figure out what the heck is going on. Like Salesforce did and get 10% of our revenue from Japan.
That's how you do it. Is there a sweet spot for how much you charge? I think with a lot of people starting out like what I did, like well, my business was too strong in that we had users and advertisers are advertisers for spending six figures a year, but I had to acquire fucking four million subscribers in order like make it work. That's hard.
Yeah. And so is there like a price point where you're like, you want your average customer to be paying 50,000 a year? I think that pricing is over-discussed. And I'll tell you why.
There are, we have all now bought 200, at least most businesses have bought over 200 SaaS apps. Okay. It's too many, 200 pieces of business software. And we all kind of know what stuff should cost.
Like we know what notion should cost. We know what hub spot should cost. We're on Riverside. I know what Riverside is.
What do you guys pay? 300 bucks a month. Okay. Like, okay, let's say you pay 300 bucks for one of us a month.
Now if someone else has a better version of Riverside and they want 50,000, you're going to kind of block, right? But what if someone had something that was better than Riverside? It was $30 a month. It would seem too cheap, right?
It would seem too cheap. So my point is there are organic price points. And what you want to do is anchor around them. Go figure out the couple of products out there that are most similar to yours and charge the exact same way and either charge the same pricing or if you're nervous, charge a snitch lower, 10% lower, 20% lower.
If you charge too much lower, you're telling the market you're not as valuable as Riverside, right? Or you're not as valuable as hub spot. And you can actually, customers will bounce off you if you're too cheap. If you're too cheap, they will get confused.
So anchor around the comps. If you're truly 10 times more valuable than Riverside, okay, Riverside's very good. We're using it to record the session. If you're 10 times more valuable, maybe charge twice as much because you're telling the market we're 10 times more valuable than the leader, right?
We're 10 times more valuable. But whatever you do, founders that say there's no one like us, there's no comp, try harder. Try harder. It doesn't have to be the same as you.
Just, it feels the same. It feels the similar amount of value, a similar type of utilization. Do I use it eight hours a day? Do I use it once a month?
Do I use it as an API? Is it metered? Is it per seat? Just hundreds of apps like you.
And if you price similar to similar value apps, you remove friction. You remove friction from the sales process. And that's what you want to do until you're really big. And this is why we also under prices founders because you want to remove friction.
We want every deal to close in the early days, don't we? We want every deal to close. And so your job as a founder, if you want to scale, if you want to reverse engineer things, your job, because no one else in your company will do this. Your job is every day to relentlessly remove friction from your customer acquisition process, remove friction.
And people added at scale the classic one is contacting you, you know, you go to website, you're all excited to buy on your own. But I got to talk to a rep. Well, they've, yeah, there's a couple of reasons. One reason is they've gotten to hundreds of millions of revenue and they actually want to add friction to the sales process, right?
But you don't want to do that until you're at tens of millions of revenue. You want to every day come into work. And if you can't do anything else on your company, remove friction. How can I make sign-up?
You're having to add single sign-on? How can I make an easier to check out from my e-commerce thing? How can I make the bundle leader? How can I make support better?
Remove friction. Having support that happens automatically in seconds rather than waiting five minutes on the dumb bubble, that removes friction, doesn't it? Whatever it takes, remove friction. The last point you have is the most challenging.
It's getting to net revenue retention of 100%. Yes. And we've, you're, I don't know how you would describe yourself. I think of you as you're a, you're a CEO founder type, but I think that you have an edge on sales and operations.
The churn part, I think, and this is maybe, maybe not even, I think that's mostly product. Maybe it's, it relates to who you sell to and how you position it, but it's like product. And it's the hardest part is like figuring out how do I make something that integrates in someone's workflow or how do I make something that's so essential to someone's life that they not only do they not want to get rid of it, they're going to tell their coworkers and their coworkers are also going to have to start using it. It's so freaking hard.
And I think it's part, part, part science. But you said that you have to have 100% net revenue retention. The good news is that a lot of the big boys suck at first. I think Brian Halligan.
I think he told me that they were churning out something like at 1.5 to 10% or maybe even more per month. And he was like, it was horrible. And it took us four or five years to figure it out. But what do you have to say about churn and retention?
How do you, how do you make it good? If you want to reverse engineer things to your point, you need to really obviously have a path from at a product level so that you can eventually get to that 100% right? And you can stage it. So I don't know if HubSpot, if HubSpot really was turning 5% or more in the early days, let's say it's revenue retention is more like 50% in the beginning.
Okay. I think he told me there was like a quarter or two where it was like existential crisis bad, where it was like, you know, it was something like that. And I think they're like year four where it was like, this is not going to work if you don't forget this. Yeah.
Well, I know from when I talked to it was 75% from him direction, like 30 million revenue, which is kind of late. It's they still hadn't totally figured out until they went multi product and a bit into the midsize of SMB. But the point is like on the one and the other VCs were critical, blah, blah, blah, but they did have a plan to get there. They had a plan to get there.
They were going to little bit up market, a little bit up market, not a lot, just a little bit into bigger small businesses and to have more than one product add value. In fact, it's interesting. HubSpot nominally has raised prices, but the average customer day pays 11,000. The average customer, two years ago paid 11,000, the average customer, four years ago paid 10,000.
Okay. So what HubSpot has done, which a lot of folks don't do, they get wrong. This is why HubSpot is one of the reasons to settle is they're adding more value for the same dollar. They're adding more value each year for the same dollar.
That software is supposed to be a service, that software as a service we forgot about it. In 2023 and late 2023, we get SaaS became software as a rip off. Everyone got massive price increases for no benefit, right? Some folks will grumble about HubSpot, it has raised prices.
But overall, the prices haven't gotten that much. And now they have five times the amount of software that's 50 times more powerful, right? It's like 250 times better than when Brian started. That's what you've got as fire to as a founder.
The flip side is, here's the, like, if you have a high-term business and HubSpot started, there are a lot of folks start in high-term business. Be honest, build a spreadsheet. I know you and I talked a little bit about this in the hustle in the early days because you had high churn as a media business. It's inherent to a media, you had high subscriber churn.
Okay. You were stressed about this. I actually wrongly, wrongly challenged you to be less stressed because I thought you were a great founder and would figure it out. But you got to put in a spreadsheet and say, look, if you have churn north of 3% a month, 3, 4, 5, and that is endemic to certain models.
Look at what gravity does to you around when you get to double digit millions, when you get 10 million, 15 million, 20 million, usually gravity weighs you down because you're losing so many customers each month, it almost becomes impossible to replace that leaky bucket. So the hustle was a daily newsletter. We sent an email six days a week. We were at one point.
I'm trying to remember. We were at 1.7 million subscribers. We lost 50,000 subscribers, maybe it's 40,000 subscribers per month. And we were adding like 4,000 a day or something like that.
It was insane. Can you imagine that losing 40,000 people? We were like, how are we going to fix this? And eventually we did.
But I know that like, companies like, I don't know what the hustle is at now. I think they're close to 3 million subscribers and the churn is really low. Morning brews at like 4 and 1 half million subscribers. And you want to know what all the newsletters do that people talk about.
So we grew organically to 100,000 subscribers. I mentioned many do too. And once you then you do paid marketing to get to many millions and then you get a name after four or five years and then you quit advertising or you spend very little and you're just like, we're just going to stay at 3.5 million, 3 million subscribers and we're going to launch more newsletters. That's the name of the newsletter.
That's how you get to 100 million revenue for newsletters. It's the exact same thing as software, which is you go a multi product. But unlike software, the churn is outrageous. But thankfully the market size is like 30 million people.
But it's like crazy. But that ties to the point of being very self aware about this, right? And that churn, so you churned out, you're turning out, I'm getting that math wrong, I think you're turning out about 30% of your growth each month, right? In that phase, right?
So if we send an email to a million people and if we had a million subscribers in one month, I mean, six times a week times four, that's 24 times a month, we would lose roughly 4.5% of a million. That's 3% churn we talked about, right? And on the way up, it's sort of okay because the hustle is exploding and there's viral elements and it's great. But eventually gravity, that's the, you got to be honest about gravity and come up with a strategy to address it, right?
For small businesses. That math just, it's, you know, and I think you would echo this, around 10 million in revenue, you need so much growth to overcome that churn, right? You need like Epic, like you can't even, it's not even what your gut says as a founder. You need so, you need double digit growth per month.
Here's the insight. You need double digit growth per month to overcome that churn at scale, right? You need double. And you need to understand what your business is.
You're in the conference business now. I was in the conference business sort of. I think my conference business was doing, over the handful of years, I think we probably did 3 million in revenue. You're doing 30 million in one year.
So we're not the same ballpark. What I learned with the conference business is it sucks. It sucks hard. And for some reason, I still love it and same with media.
I freaking love it, but it's way harder, I think. And why are you in the conference business if you're supposed to know all of this great stuff about software? Because software seems like, we only, we all work the same amount of hours per week. Like it just seems like it just started a software company.
Why start a conference business where you're in kind of an uphill battle. It's a good question. I mean, do you guys think I'm a profit? I'm 30 million?
Yeah, we do, but we've got to, so Sashtranos are big flagship event. So we get 12,000 people in the Bay Area. Now it's every September. It costs $10 million to turn the lights on.
That's a stressor. It costs $10 million to turn the lights on. Okay. Before you make a dollar.
Okay. So $1,000 in a 10 D is your cost? Yeah, about $1,000 per 10 D is the full, the honest fully burden cost about $1,000. We do, we do one in Europe in June for 3,500.
That's much cheaper. That'll be about $300 to turn the lights, well, $300 per 10 D, but it's still like a million and a half to $2 million to turn the lights on. Okay. $2 million and a half to $10 million.
What's the outcome? I say, $10 million to 3,500 people. And then you've got other expenses. So until you cross...
It's funny, it is a terrible business. I literally had a VC managing 500 million in revenue making millions and millions of years with a good track record, call me the other day saying the one to build the conference business because investing so hard. Dude you still get paid if there's a natural disaster or a rain storm. That was like, I'm like, dude, I'm working so hard for this free conference.
And if it rains, a tenants is down, it just sucks. One or two days of some crazy weather or something can change things. terrible. was on accident.
We built this community around content, right? So we built content and then it's a community and they got some newsletters and some podcasts. We're not quite at your scale, but they have some scale. And then we just did meetups and just so many people came to the meetups in the beginning.
You've done them. And this is a long time ago. Like this sounds small today, but our first meetup in 2013, we had 800 people come and these were great CEOs, right? CEOs.
Now are, I've gone public or I have nine-figure businesses and they all came and that, what I didn't know it would be a business, but I knew we had product market. So I wanted to build and I did another meetup and then other meetup had 1,000 and we had to turn people away. And then we did a one-day event, just to do it. It was in the business.
I outsourced the first two years. I never even looked at a financial statement. The first two years I had a partner, he kept all the profit or the revenue. I just drove the engagement right in the content.
And so by the second year, we had 3,000 people and there was demand. So the real reason I got into the business and wasn't because I wanted to do it, because after the second year, he quit. My partner quit and didn't want to do it anymore because it was too much work. So I quit.
I had no ability to do this. I had no team. I had no blueprint. I didn't know how the revenue or the finances worked.
And I had to learn for the third year from scratch. And so it wasn't intentional. I felt like a community wanted this that there was demand, organic demand. But yeah, it is a terrible business.
Once it got, now you can do the math in your head, right? Once it got over 15 million in revenue, it finally generated actual profits, right? But that's a lot of years. Not fake, not pretending you're at 15.
Not claiming revenue is not real. But you got to really just get over 15 to clear the nut. But there's a lot of trade show businesses on the high end can sell for 15 times earnings. But a lot of them can go for 8 or 10 if it's like a B2B trade show.
There's a bunch of companies. A handful. A handful. A handful.
A handful. Yeah, the best ones can go for 20 times. If it's been around for 40 years and it's an annuity at that point. And for some reason, it's always British companies.
A lot of British companies buy trade shows. So there's Informer, there's Euro money, there's a bunch of them. Would you ever sell, yeah, Hive, my friend Ryan Dijs company, I believe the traffic summit. Would you, what could you sell Sasser for?
And would you do it? We've had two folks that have approached us to buy Sasser over the years. I wouldn't say we've ever had like a term sheet to be on the table. The learning from that is it's really been based on comps.
I know we talk about Ibata and blah, blah, blah, blah. It's really been based on comps, right? And Shop Talk was bought for 150 million at about our size, probably under, they got a good deal. And money 2020 sold for a good deal.
It sold for 100 million. What is only doing 10 million revenue. But both were like iconic. Dude, let's talk about that.
Let's talk about that. The guy who started those companies in Hampton, I got to know him. That guy is amazing. Off the charts.
And then he sold another company for 30 million. But listen, these guys started a tech company, I believe, like a payments company. They sold it to Google for $100 million. They went and started a conference.
It kicked ass. They sold it for something like 50 or 100. It sold 20, 20 for 100 million. And now it's doing 100 million.
Then they did it again with Shop Talk, which is like a trade show for D to C. Now, I forgot what's the other founder's name? It's a white guy and Indian guy. The white guy has a new one name.
It's called health. Because that I don't know. I know a little bit. I know a little bit.
Yeah. HLTH. You got to look at this because here's what these guys do. It's the website is all the same.
It's like the same avatars for it. It's like the same graphic design. Oh, it looks like Shop Talk or money 2020. It's the same thing again.
They do the same thing. And he's done this like four times. I think it's the fourth time that they've created a new trade show. I see it now.
I should know. Yeah. So I think this is significantly larger than Shop Talk and money 2020. And so health is like a, they do these trade shows where they get all, it's based on what a trade show basically is a lot of people don't realize it's basically a marketplace that lasts for three days.
And so you get a combination of buyers and sellers and you hope that you create some kind of transaction. And what he does is he charges people so you can go for free, but you have to offer up a 30 minutes of your time to be pitched, I believe, to set up a meeting or you could pay money to set up a meeting with a, yeah, they're there, they're 800 bucks per 10 minute meeting now at Shop Talk. So I don't know what they are at hell. They're $800 for a quick meeting.
And these guys pick a variety of niches where they're like, all right, there's a bunch of buyers and sellers in this market. And they scale up these trade shows faster than anyone I've ever seen. I think it'll let me know this. They run other companies.
The guy I'm referring to, I'll find out his name. He is also on the board of a large private equity firm. Like these guys are killers. They've got some reason to pick trade shows as their main thing, which boggles, it boggled everyone's mind.
It was like, why would I have to tech guys who can make their money in significantly easier ways, start a freaking trade show. They've knocked it out the park. It's like a gem of a business, a study. They are gems.
I will say I only know a little bit the other co-founder of these multiple companies 2020 in Shop Talk. But it is interesting in terms of conversion evolution that he got into it by accident too. How so? They built money 2020 to support their FinTech.
They didn't build money 2020 originally to be a standalone business. They built it to support their startup. Like many of us do events to support our companies, right? China and Weiner.
Yeah. Okay. I don't know that. I know that.
And it took off. It took off money 2020 took off. Then Shop Talk was a that they did was a key seeking missile, right? They act like it was this was totally tactical.
And they even gave up on a lot of things and just did these paid meetings, right? They just did it. And going back to the conversation, how do you get into something? Sometimes you you plan it out on a whiteboard.
And sometimes I like these guys for these these event. They found them. It found them. And then they then they leaned into it and became extra.
But I know I don't know John in them, but I do know him a little bit. I remember talking with him the last time I saw him in person and he's like, man, this is a hard business. So you think and he built like us or like me, he built a software business. And it is hard.
I don't know. I would just caution folks like anything, everything's harder than it looks to get into. I would just caution folks that there aren't there aren't a lot of shortcuts and you need I'm sure that the HLTH is wildly successful. But you've got to be it's like, this is one of these businesses where if you're not in the top two, you're worthless.
You're worthless. You have no value at all. Nothing. Because they are marketplaces.
Why are you going to go? Why are you going to go to the fourth tier event in industry? And in fact, most of them died in 2020. Most of the fourth years up died.
It sort of stumbled around when we all worked together in the office and in the Bay Area. But most of them never came back. Only the best ones really came back after lockdown. Let me ask you one last question.
You are an investor. So you've raised money for your own startups. And now your latest one's bootstrap and your investor, you've deployed tens of millions of dollars into the companies. I have a theory.
I think that if you're building wealth in a five or 10 period is your number one or number two priority for starting a company, you should basically raise no money or very little money and you should not raise venture capital. Do you agree or disagree with that? If your goal is to get their first points on the board to make your first millions? Yeah, I think what you call it, you use the word shekels a lot or nickels if you want to get a few nickels.
No, your first it's a lot. If you want to get the money to not work for the man or we start at this conversation, listen, all this stuff's harder than it looks. It's all hard as we know. But if you want to have an exit for $10 to $30 million, $10 to $50 million, which is still harder than it looks statistically, right?
But north of $10, then yeah, you want to raise only a fraction of that. Don't raise that much. So if you raise, here's the other thing about it. If you raise a couple million dollars, which is hard, it looks easy on the internet.
It's hard. But if you raise a couple million dollars, you've lost no optionality. The only thing you've suffered is some delusion. The only thing you've suffered is some delusion.
After a couple million, the game changes. After a couple million, the game changes. And so yeah, I think there's something to be said for raising nothing, but most people raise nothing because they can't raise anything. I think there's even more to be said if you can, anywhere from half a million to $2 million, whatever you can collage together.
And you use it not to pay yourself. That's what losers do. You use it to hire a few good people to de-risk this investment, to accelerate this investment. Use it to hire a few good people and get it off the ground.
Most of us need a little help. Some folks literally can do it on their own. They're two great engineers. They don't need any help.
They can go do it on their own. Most of us are not those people, especially if you're a business person. It's harder to do it on your own, right? Unless you build something on WordPress or tools, it's harder to do on your own.
You need a little bit of money. But stop there. Not only do you maintain control and have less delusion, but then any exit works. Then any exit works.
Once you raise more than 10 million, it can be worth it. But if you raise more than 10 million, here's, and this goes your point, this people don't get this in today's world. If you raise more than 10 million, you're signing up for a billion dollar exit. And anything less than that as a disappointment.
It just might not even work out. Like there's so many variables you may run out of money, you might not get people. Once you start raising 10 million dollars, you get addicted to burning more money too. There's lots of issues that creep out from that.
But you've got to commit to a billion. If you don't see a billion dollar, if you don't feel it in your bones, then don't raise double-digit millions. Just don't do it. It's not generally not worth it.
Find a way to do it with less. And everyone will be chill if you raise single-digit millions or less and sell for whatever. Everyone will be chill. Everyone will be chill.
No, not chill once you get to the double-digit millions. It ain't chill for a long list of reasons. People start expecting a lot. And too many folks, these days think that your capital's free.
It has no cost. The social contract between investors and founders has broken down the last three years. It has broken down. I literally just suffered my worst investing loss ever.
I'm 10x, I've suffered my worst investing loss ever. Not all of my capital, some of it's mine. 5 million out of 200. It's not going to change the pace, but I've never lost this much money.
You know what the founder said? What do you care about? What do you care about? What do you care about?
What do you mean to that? What do you care? I had to bring in a friend to deal with him. I couldn't talk to him again.
I spent years of my life helping him. I helped him raise all his money. I put him in all of our Sasser events for free. I promoted him constantly for years.
And then he says, what do you care? It's not your money. I remember when I took a little bit of angel money. And I remember thinking I'm a steward of this cat.
I was like, I have to die to get a return. That's how I felt though. But kids don't feel that way these days. I was like, it's my life's mission now.
I have just like, because to take someone's hard of money, I felt so much stress. I felt stressed. I remember when I hired someone who had a kid, I was like, oh, I have a kid now. And then I remember feeling the stress when I took someone's money.
I'm like, this person just trusted me with $25,000. I better go hungry or die in order to get a return from them. Because if someone loses my money, I'm going to want to beat them up. You know what I mean?
It's like a big deal. This is someone's mortgage that I just took from him. I better make this get a good return. Jason, I appreciate you doing this, man.
What do you do? What do people find you? On Twitter, your Twitter guy now said, you know, you got famous on Quora. So Quora was great for five years and now it's nonexistent.
But yeah, you can find me on Twitter at JasonLK or honestly, if you're a business person, find me on LinkedIn. Thanks for doing this. You're the man. I appreciate you.
And that's the pod.