How I Reverse Engineered A $100 Million Exit - Jason Lemkin

you want to reverse engineer things you have to have a model with economies of scale that gets you to three to four hundred thousand dollars per employee 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 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 like you're so catchy and you're so good at summarizing important things but and explain it in a very simple way and simple to understand ways but before we get into that i need to like talk about background because we have to to the og software guys you are the guy so like if we talk to like the founders of hubspot or i mean like guys who run multi or tens of billions of dollars companies they say if you wanna learn about software jason's the guy but we have a bunch of like sometimes twenty year old kids listening into this and i wanna like give have a little background and so we don't i don't wanna spend too much time this but basically what i know about you is you started a few software companies including echo sign 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 in startups as e for like since two thousand thirteen which you said i think you said you ten x extra fund or something like that is that right that is about that is about right and the what else did you do besides echo sign before that before that i had a a startup where i made my first million between when the internet died for a while i actually founded a start up making in implant batteries from nano materials which i knew nothing about which is interesting and we sold it for fifty million after twelve and a half months it is kind of a an m m story and i learned a lot from it what was that company called it it was called nano devices and we did something that was thought be impossible and we got bought by our competitor it was a classic buyout after twelve and a half months when we took away one of their largest customers did you raise funding we did and it was hard it was i'm dating myself this was one of pre points we raised nine million in our seed round and sold seventy percent of the company in our first round and that was the deal that was the deal that there was no choice there was no negotiation it was a different time and that meant that meant what what you and the founder you and your other partners i don't know how many you had had fifteen million left over to share after the fifty the fifty million dollar exit but i'd say it was more like about ten million or maybe even eight million to share so 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 echo sign which adobe bought so echo sign was that basically like what doc is now you guys just sold earlier yeah a lot of learnings yeah we actually doc believe i mean i'm really dating myself doc was basically a printer driver company when we started we were the first web solution i wrote it all myself and powerpoint and crappy wireframe frames and we built it and we got to a million dollars a month burning four million so we got to twelve million arr growing a hundred percent with a hundred and ten percent revenue retention and cash flow positive so if we and we sold it in twenty eleven and twenty eleven was a long time ago in internet time and in real time it was just before we understood the metrics around recurring revenue businesses and so even my board my investors didn't like they weren't sure we had a good if i said you today sam i've got a business doing million bucks a month growing a hundred percent with a hundred and ten percent revenue retention and profitable you would say that's the that's the ticket that's the ticket now doc was bigger we had about thirty six percent market share but we were cash flow positive and growing a hundred percent so you know we only raised four million so when you sell your company to make your second millions sometimes the second one is is there's a certain logic in it and the logic actually in its own way it can be stressful right it can it can be stressful it's a comp that that was a very complicated decision because it made sense on paper given the the team wanted to do it in part of the team wanted to do it and given how little we'd raised right but in my gut i knew it was emotionally i knew was the wrong thing to do a scott gallo came out a while ago and and i didn't get to talk him about this but he had this awesome presentation you and scott are similar and that you're you're just you have beautiful language that's what i that's what i describe these has to be only they picked their words beautifully scott has this think so scott sold l two i don't know how much i think one million to two hundred million i forget the exact amount but nice nice exit and he was like well i wanted to have nine figure exit and i wanted to do it in this data business because that's what i knew and so i worked backwards and i sort of reverse engineer it and he said something like he was like i you i was like i knew i needed to have an international presence i needed i i knew i needed to charge at least fifty thousand a year for a service and then like he lifts all these things and then he spent eight years however long building it and i love that because i love reverse engineering and what i tell a lot of people i'm like they wanna create this amazing stuff and i'm like yeah that's cool and sometimes that works but you can actually kind of 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 and i wanted to have you on to basically like reverse engineer what it takes to get like either a hundred million in revenue or even a hundred million because i actually think those rules are actually the same i was like jason i wanna talk about this like reverse engineering thing and you like bang out this like five or eight point thing you said that a lot of startups ups right now because they raise money in a zero interest environment they're it's like a hundred grand in revenue per employee and you said no the new minimum needs to be three hundred to four hundred thousand is that right it is if you if you're trying to reverse engineer whether your business model makes sense like this is one thing that reverse engineer certain business models have economies of scale and some don't and if you wanna go really big you want a business with economies of scale and if you step back in the old days of software the old adobe microsoft into its made a million dollars in revenue per employee a million dollars okay you'd have a bunch of engineers they go they go off in their offices everyone used to have a private office to code you'd spent two years building a piece of software a small team you'd put it on a dvd rom that or cd rom that cost fifty cents and then you'd package it up that cost fifty cents for dollar and then someone would sell it for you between fifty dollars and four hundred dollars this was a really good business that were ninety percent margins and the classic adobe microsoft into it fifty cents of every dollar went straight to cash flow fifty cents we don't see this anymore in biz in companies go public it was so profitable so that was a million and then things just the z or whatever you wanna call it it got crazy and we reached a low in twenty twenty one of a hundred thousand in revenue per employee for all these unicorns a hundred thousand so we got we only were ten percent as efficient as we used to be now the pendulum swung whack so we were historically we're a million per employee the low point was a hundred thousand per employee when employees in the bay area probably cost you two hundred and fifty thousand dollars fully burdened with insurance benefits this and that so you're losing a hundred and fifty thousand per employee now every public company at least public saas software company is at three hundred to four hundred thousand hubspot at three ten which we talked about a cloud flares at four hundred 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 depending on how you look at it to raise capital angel money venture capital whatever it it bridges the gap it bridges the gap to get you to three to four hundred thousand dollars per employee but you're gonna 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 make some changes right you have to have a a model if you wanna reverse engineer things you have to a model with economies of scale that gets you to three to four hundred thousand dollars per employee or your model is not real it does 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 pick figure out when to go to multi product but did you say at like ten million or in revenue you wanna go where what did you say for going multi product by the time you get to ten thousand customers you better have a second product that this is this is the non 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 year crm its sales product will be bigger than its marketing product it has to you you wanna be there by ten thousand customers this is the same for e comm businesses too like they sell a handful of skus and then they reach like some type of critical mass and then like alright we need to create more stuff so like we made deodorant it 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 it what's easiest sam is to add a product extension okay we sell shampoo in e commerce okay let's sell shampoo in conditioner that's the easiest thing because our customers already know us if they bought shampoo they'll buy shampoo and conditioner but the problem is if you if you if if the second product isn't bigger than the first and the first one still growing you never catch up it's never enough right if you're selling a hundred fifty million of shampoo and you're growing twenty percent year you're adding ten million a year right and you launch shampoo and conditioner and it does a million in its first year it's great but it will never get there the second one has to be bigger than the first and this is it's too it 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 kinda typically how media companies are weird it's usually a collection of small businesses and or or different businesses and i think we were at a million a month i forget i think about that and i wanted to create a a subscription service called trends and it was like we like and dude i fucked it up so bad because i charged three hundred dollars a year which is so stupid it should have been thirty thousand dollars 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 it can but by the end i think when we sold i think we were five like maybe ten months later we were at five million in a year in sales with it but it only had like four or five people running it which so is profitable but the mistake i've 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 just do this than this but it it just because it it's also like a a psychological thing of like why pay attention to this thing just put money back into the main thing this is an advantage to hire a vp of sales for example founders under price their products usually they under price them we're so we're because we know what's more is it 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 almost always leave money on the table so that we can make people happy and get them going dude i've have under price everything i've done i've under priced yeah and and so have i and so have eighty first percent of founders not all but it 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 six hundred and twelve hundred and eighteen hundred like it is it's hard i i think it's like rooted in like can pass syndrome i'm like i don't know if this is good enough and but then you talk to if you talk to a a good salesperson 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 salesperson can can get it done a good one will not rip people off but a good one will will get the full value for your product in a ways as a founder you almost never can you won't you almost never can right that's why a lot of the early classic sas contents about hiring vp of sales because that's why in a in the first quarter the first nine days you should see a lift from a good 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 something with the confidence ask thirty thousand for trends knowing it's cheap compared to ga or forest or whatever they'll take that off your plate if they're good and you'll see a thirty to a hundred percent revenue lift from someone that's great right yeah someone that's mediocre will rip your customers off and never understand your product and misspelled trends and never read it and not know what it is a mediocre growing will actually see a revenue decline from founder led sales but a good one we'll we'll solve we'll we'll solve that piece right so i think the other thing you know you just didn't give it enough time either i sold the company at four and a half years yeah 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 i think i paid myself the first two years my salary was twenty grand the thirty year maybe a hundred and then the fourth year i think i paid myself a few hundred thousand dollars but i was like i was fucking poor at and so i i was impatient in what you talk about all the time the worst thing is a tired ceo and i was a tired i was i was tired of being poor basically and that was a 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 to learning learn always soon as you can afford it and you had this other thing on here you talked about you want thirty percent of your revenue to be outside of north america that's very intimidating that's probably the most intimidating thing here is going global and at least in my opinion i think it's a very intimidating thing obviously some businesses this 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 hubspot is now a majority the majority of hubspot customers small businesses are outside of north america the majority and so if you so let's step back in terms of reverse engineering right if you there's a couple things if you don't lean into them you're gonna have less revenue than you otherwise would international 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 in germany and milan and london it's 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 in the top two or three folks you don't have to be you don't have to beat hubspot 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 bind 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 gonna be tech focused folks it's gonna be early adopters it's gonna be cool kids but they will find you and as soon as you cross five percent of your revenue in 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 the this sounds obvious okay the one one is just support it like make your product open right this the the the the one that takes work is also localize your product earlier and most of your engineers don't wanna do this they don't wanna localize the product into spanish in portuguese turn turn into thirty languages not super complicated engineering task but ninety five percent of engineers just don't wanna do it for a variety of reasons so you know you can you can get going in into english ish countries and even in europe right but you're not gonna penetrate certain areas if you don't actually look product but that that's the second cheat code the first one is just be be welcome to it you don't have to go hunt customers in japan if you have zero like 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 like wildly different because i actually looked at but one of the ways that i researched cool company ideas is i like to look at japanese publicly traded companies there's just one called usa base have you heard to user base so user base is it's a media company in japan they own three products one of them was sort of like cb insights and it was doing thirty or fifty million in revenue the second one was a news app called news picks that was doing another thirty 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 couldn't really figure it out but i eventually like translated it and i was like i wanna make this app in america and i'm gonna do it at the hustle and so i built out this like whole thing and i was gonna launch it and everything and the culture of what they what they were trying to do it required users to leave feedback and opinions on news which is like not so common here and i remember like fuck why is this japanese idea not working and then i realized i was just like 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 like do anything involving asian cultures because our cultures are so different i'm like i never crack that whereas germany france it's like mostly similar but yeah the whole japanese thing freaks me out i'll give you two examples but like salesforce got got had ten percent of the revenue in japan in the early days ten percent now they didn't if you you can you can google it you can swap see what mark van said they didn't plan it they got dragged into japan some of those through 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 le who he's got a new company to go rome but he founded y and took it up to a billion and they were huge in japan and we were talking about how he's gonna do japan the next time but they got dragged into japan for small businesses they got dragged in so my point is don't don't show up to japan with no traction asking asking for a tour in the city but if you if somehow in your first hundred customers first five hundred 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 it 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 take a pause and let's figure out what the heck is going on like salesforce did and get ten percent 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 pronged in that we had users and then we had advertisers or advertisers for spending six figures a year but i had to acquire fucking four million subscribers in order to like make it work and it was really hard acquisition yeah and and so is there like a price point where you're like you want your average customer to be paying fifty thousand a year i think that pricing is over discussed and i'll tell you why there are we have all now bought two hundred at least most businesses bought over two hundred saas apps okay it's two many two hundred piece of business software and we all kinda know what stuff should cost like we know what notion should cost we you know what hubspot costs we're on riverside i know what riverside is what do you guys pay three hundred bucks a month okay like okay let's say you pay three hundred bucks four hundred bucks a month now if someone else has a better version of and they want fifty thousand you're gonna like a month you're gonna kinda ba right but what if someone had something that was better than riverside it was thirty dollars 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 wanna 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 smidge lower ten percent lower twenty percent 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 hubspot and you can actually customers will bounce off you if you're too cheap if you're too cheap they will be get confused so anchor around the comps if you're truly ten times more valuable than riverside okay riverside is very good we're using it to record the session if you're ten times more valuable maybe charge twice as much because you're telling the market we're ten times more valuable than the leader right we're ten times more valuable but whatever you do founders that say there's no one like us there's no comp tri harder try harder it doesn't have to be the same as you just it feels the same it feels a 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 there's 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 wanna do until you're really big you and this is why we also under price founders because you wanna 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 wanna scale if you wanna 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 contact me you know you go to website you're all excited to buy on your own but i gotta talk to a rep yeah well they yeah there's a couple reasons one reason is they've gotten to hundreds of millions of revenue and they actually wanna add friction to the sales process right but you don't wanna do that until you're at tens of millions of revenue you wanna every day come into work and if you can't do anything else on your company remove friction how can i make sign easier how can i add single sign on how can i make it 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 the most challenging it's getting to net net revenue retention of a hundred percent yes and we've you you're i don't know how you would describe yourself i think of you as you're 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 naive 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 wanna get rid of it they're gonna tell their coworkers and their coworkers are also gonna have to start using it it's so freaking hard and i think it's part our part science but you said that you have to have a hundred percent net revenue retention the good news is is that a lot of the big boys sucked at first i think brian hall i think he told me that they were churning out something like at one point like five to ten percent 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 wanna reverse engineer thinks to your point you need to really honestly have a path from at a product level so that you can eventually get to that hundred percent right and you can stage it so i don't know what if hubspot if hubspot really was trading five percent or more in the early days let's say it's revenue retention is more like fifty percent 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 it was something like that i think there were like year four where it was like this is not gonna work if we don't figure this out yeah well i know from when i talked to it was seventy five percent from like thirty million of revenue which is kinda late it's they still hadn't totally figured out until they went multi product and a bit into the mid size of of smb but the point is like on the one yeah their vcs were critical blah blah but they did have a plan to get there they had a plan to get together they were going a 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 to add value and in fact it's interesting hubspot nominally has raised prices but the prop the average customer date pays eleven thousand the average customer are two years ago paid eleven thousand the average customer four years ago paid ten thousand okay so what hubspot has done which a lot of folks don't do they get it wrong and this is why have hubspot is one of the reasons so successful 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 saas software as a service we forgot about it in twenty twenty three and late twenty two we can saas became software as a rip off everyone got massive price increases for no benefit right some folks will gru about hubspot has rates prices but overall the prices haven't gone a much and now they have five times the amount of software that's fifty times more powerful right it's like two hundred and fifty times better than when brian started and that's what you've gotta aspire to as a founder the flip flipside is here's the like if you have a high churn business and hubspot started there are a lot of folks start in hydrogen churn business be honest build the spreadsheet and 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 immediate 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 you were a great founder and would figure it out but you gotta put in a spreadsheet and say look if you have churn north of three percent amount three four five and that is endemic to certain models look what gravity does to you around when you get to double digit millions when you get to ten million fifteen million twenty 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 we we 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 are at one point seven million subscribers we lost fifth fifty thousand subscriber or no maybe it's forty thousand subscribers per month and we were adding like four thousand a day or something like that it was insane can you imagine that losing forty thousand people and we're were like how are we gonna fix this and eventually we did but i know that like companies like i don't know what the hustle at now i i was assume i think they're close three million subscribers and the churn is really low morning brew at like four and a half million subscribers and you wanna know all all the newsletters do that people have talk about so we grew organically to a hundred thousand subscribers i imagine many do too and once you then you do paid marketing to get to many millions yeah and 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 gonna stay at three point five million three million drivers and we're gonna launch more newsletters that's the name of the the newsletter that's how you get to a hundred million in revenue for newsletters the exact same thing as software which is you go multi product but except unlike software the churn is outrageous and but thankfully the market size is like thirty million people but it's it's like crazy high that that that ties to the point of being very self aware about this right and that churn so you you turned out you had like you're churning out i i'm getting that math i think you're churning at about thirty percent of your growth each month right in that in that phase right it was four so if we sent an email to a million people and if we had a million subscribers in one month and we sent six times a week times four that's twenty four times a month we would lose roughly four and a half percent of the million so yeah that's that three percent to five percent 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 gotta be honest about gravity and come up with a strategy to address it right for small businesses just so that that that math just it it's you know and and you i think you would echo this around ten million of revenue you need so much growth to overcome that churn right you need like an epic 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 you need to understand which business you're in so you're in the conference business now i was in the conference business sorta i think my conference business was doing over the handful of years i think we probably did three million in revenue you do thirty million dollars in one year we're not the same ballpark but 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 per week like it just seems like just start a software company why start a conference business where you're you're in kind of an uphill battle it's a good question i mean the do you guys do you guys make up a profit on thirty million yeah we do but you but we've got to so saas annual is our big flagship event and so we get twelve thousand people in the bay area now it's every september it cost ten million dollars to turn the lights on that's a stress it costs ten million dollars to turn the lights on okay before you make a dollar okay so a thousand dollars a an attendee is your cost yeah about a thousand dollars per attendee is the full the honest fully burdened cost about a thousand we do we do one in europe in june for thirty five hundred that's much cheaper that'll be about three hundred dollars to turn the lights well three hundred dollars per ten but it's still like a million and a half to two million dollars to turn the lights on okay two million million half ten million what's the so you gotta get over that and then you've gotta pay people right and then you've got other expenses so until you cross if if it's funny i get it is a terrible business we talk about that i had a vc managing five hundred million dollars in revenue making millions and millions a year just in fees with a good track record call me the other day saying they wanted wanna to build a conference business because investing so hard it's like dude do you still get you still get paid if there's a natural disaster like a rain storm that was like my whole thing i'd like dude i work it all i've work it so hard for this freaking conference and if it rains attendance is down like it a sucks like one or two one or two days of like some crazy weather or something can like change things terrible the reason we did it was on accident we we built this community around content right so we built content and then a community and yeah we got some newsletters in some pockets podcasts so 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 i mean this is a long time ago like this sounds small today but our first meet up in twenty thirteen we had eight hundred people come and these were great ceos great ceos right ceos and now alright our gone public or have nine figure businesses and they all came and that what i i didn't know it would be a business but i knew we had product market fit so i wanted to build then i did another meetup up and then other meetup had a thousand and we had to turn people away and then then we did a one day event just to do it i didn't it wasn't a business i outsourced the first two years i never even looked at a financial statement now 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 this by the second year we had three thousand people and there was demand so the real reason i got into the business sam wasn't because i want to because after here he quit my partner quit and didn't wanna 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 the a community wanted this that there was demand organic demand and but yeah it this is a terrible business once it got once it got now you can do the math in your head right once it got over fifteen million in revenue it finally generated actual profits right but that's a lot of years not fake fifteen not pretending you're at fifteen not not claiming revenue that's not real but you gotta really just get over fifteen to clear the nut but they it's so a lot of trade show businesses on the high end can sell for fifteen times earnings but a lot of them can go for eight or ten if it's like a b to b trade show there's a bunch more companies a handful or more a handful handful yeah the best ones can go for twenty the best if it if it's been around for forty years and it's an annuity at that point and for somebody said it's always british companies a lot of british companies by trade show so there's inform there's euro money there's a bunch of them would you ever sell yeah hive they bought my friend ryan d company i believe the traffic summit yeah would you what could you sell sas for and would you do it we've had two folks that have approached us to buy over the years i wouldn't say we've ever had like a a term sheet to to to be on the table the learning from that is it's really been based on comps i know we talk about eb and blah blah blah it's really been based on comps right and shop talk was bought for a hundred and fifty million at a about our size probably under they got a good deal and money twenty twenty sold for a good deal it's sold for a hundred million what is only doing ten million revenue but both were like iconic dude well let's talk about that let's talk about that the guy who started those companies in is in hampton i've got to know him that guy is amazing what off the charts and then he sold he sold another company for thirty million but listen these guys started a google these guys started a tech company i believe like a payment company they sold it to google for a hundred million dollars they went started a conference it kicked ass they sold it for something like fifty or a hundred i twenty twenty for a hundred million and now it's doing a hundred million then they did it again with shop talk which is like a trade show for d d now i what's the other founder name there's it's a white guy in indian guy the white guy has a new one name it's called health because that i don't know i don't know i i know when neil i know deal a little bit i know neil a little bit but yeah h l t h you gotta look at this because here's what these guys do the it's the website is all the same yeah it's like the same avatars for and it's like the same graphic design oh and they just look just like shop shock or money twenty twenty it's the same thing again into again they do the same thing and he's it it he's done this like four times i i think this is their fourth time that they created show i should've known it it now yeah have you so i think this is significantly larger than shop talk and money twenty and so health is like it's they do these trade shows where they get all it's based what a trade show basically is a lot 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 type of transaction and what he does is he charges people so you can go for free but you have to offer up a thirty 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 they're eight hundred bucks per per ten minute meeting now at shop talks so i don't know what they are at they're eight hundred dollars per quick meeting and these guys pick a variety of niches where they're like alright 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 epic and a lot of people don't know this they they run other companies the guy i'm referring to i'll find out his name he is he's also on the board of a of a large private equity firm like these guys are killers that for some reason they pick trade shows as their main thing which bog bog everyone's mind was like why would about tech guys who can mike make their money in significantly easier ways start a freaking trade show they've knocked it out the park it's it's like a gem of a business study they are gems i will say i only know neil a little bit the other cofounder of these multiple companies money twenty twenty in shop talk but it is interesting in terms of convergent evolution that he got into it by accident to how so they built money twenty twenty to support their fintech they didn't build money twenty twenty originally to be a stand alone business they built it to support their startup like many of us do events to support our companies right jonathan wei yeah okay i don't know that i know the other and it took off it took it took off money twenty twenty took off then shop talk was that they did was was a heat 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 the these paid meetings right they just did it and going back to the conversation how do you get into something sometimes you you plan out on a whiteboard and sometimes like these guys for these these event they it found them it found them and then they then they leaned into and it became expert but i know i've i don't know jonathan them but i do know a little bit i've remember talking with him the last time i saw i'm in person and he's like man there's a hard business so you think and he built he like us he or like me he built a software business and it is 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 h t is wildly be successful but you've gotta 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 you gonna go why you gonna go to the fourth tier events in an industry and in fact most of them died at in twenty twenty most of the fourth tier stuff died it it sort of stumbled around when we all work together in in the office and in the bay area but most them never came back only the best ones really came back after after lockdown let me ask you one last question you are an investor yeah yeah so you've you've raised money for your own startups and now your latest one's bootstrap and you're an investor you've deployed tens or hundreds of millions of dollars into companies i have a theory i think that if you are if you're if you're if building wealth in a five or ten period is your number one or number two priority for starting a company yes 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 the first points on the board to make your first millions yeah i think what you call it you use the word she a lot or nickel if you wanna get a few nickel no your first it's a lot if you wanna get the money to not work for the man where we started this conversation listen all the stuff's harder than it looks it's all hard as we know but if you want to have an exit for ten to thirty million dollars ten to fifty million dollars which is still harder than it looks statistically right but north of ten then yeah you wanna raise only a fraction of that don't raise that much so if you raise here's a simple way to think about it if you raise a couple million dollars which is hard like it's not it it looks easy on the internet it's hard but if you raise a couple million dollars you've lost no optional the only thing you've suffered is some dilution the only thing you've suffered is some dilution after a couple million the game changes after a couple million the game changes and so yeah i i 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 of raise being won and done anywhere from half a million to two million whatever you can conclusion together and you use it to not to pay yourself that's that's what losers do you use it to hire few good people to der risk this investment to accelerate this investment use it to hire few good people and get it off the ground most of us need a little help like some folks just literally they can do it on their own they're two great engineers they don't need any help they can go it on their own most of us are not those people especially if you're a a business person it's harder to do it on your own right unless you build something on wordpress or or tools it's hard to doing you need a little bit of money but stop there you you not only do you maintain control and have less dilution but then any exit works then any exit works once you raise more than ten million it can be worth it but if you raise more than ten million here's and this goes your point this people don't get this in in today's world if you raise more than ten million you're signing up for a billion dollar exit and anything less than that is 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 ten million dollars you get addicted to burning more money too there's lots of issues that that creep out from that but you gotta 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 it it's not it's not generally not worth it find a way to do it with less and and everyone will be chill if you raise single digit millions or less and self or whatever everyone will be chill everyone will be chill they're not chill once you get to the double digit millions and it ain't ancient chill for a long list of reasons people start expecting a lot and too many folks these days think that venture capital free it has no cost there that 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 ten x lifetime i suffered my worst investing loss ever how worst loss ever five million of not all all of my capital some of its mind five million out of two hundred okay so it's not gonna change the pace but i've never lost this much money and you know what the founder said i tried what do you care it's not really your money what do you care it's really your money what do what you mean of there i could honestly sam i could 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 them raise all his money i put him in all of our saas events for free i promoted him constantly for years and then he says what do you care it's not your money i remember what when i i took a little bit of angel money and i and i remember thinking like i am like a steward a steward of this 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 harder money i felt so much stress i felt stress 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 twenty five thousand dollars i better go hungry or die in order to get a return from them because if they if someone loses my money i'm gonna wanna beat them up you you what i mean it's like it's like a big deal like this is someone's mortgage so i i i just took for a minute i better make this get a rick good return jason i appreciate you doing this man what do you what do people find you on twitter you're you're a twitter guy now announced instead a core even though you got famous on core so quo was great for five years and now it's non existent but yeah you can find me on twitter at jason l k or honestly if you're a business person find me on linkedin dude thanks for doing this you're the man i appreciate you and that's the pod