What I’m Doing Differently as a 2nd Time Founder

What's up, everyone? Welcome back to another episode of Founders Journal. I'm Alex Lieberman, co-founder and executive chairman of Morning Brew. Today we are talking about all the things that you would do differently as a second-time founder based on the things you've learned as a first-time founder. My buddy Ankur Nagpal is the founder and CEO of Cari, which is a business that helps business owners build wealth in a number of ways, most notably with their Solo 401 product. And prior to Cari, Ankur was the founder and CEO of Teachable, a teaching platform for creators. Which sold to Brazilian education company Hotmart for $250 million. On this episode, Ankur talks through all of the ways he is approaching the second-time founder seat differently than the first time. I think this episode is valuable for any entrepreneur, but if you're a first-time founder, make sure to pay close attention because with Ankur's advice, you may be able to avoid some of the painful mistakes that lie ahead.

Let's hop into it. Ankur, thank you so much for joining Founders Journal.

Thanks for having me.

So you are one of the crazy folks that decided to do it again. I wonder how you're feeling about it at this moment. I feel like you're feeling pretty good about it.

I'm feeling great. I mean, again, I really missed the feeling of building something dope with people I care about. So that's been awesome. But I'd be lying to you if I didn't say, you know, sometimes I'm like, why, why did I? Why have I decided to torture myself like this again? But no, on the whole, it's been, it's been great.

Yeah, there's definitely something a little bit wrong with us. But I think it, you know, it's also kind of a beautiful trait of just always looking to grow and build interesting things. So I'm on the same page as you. But I want to talk about, you know, right after I think you started, you know, at the time it was called Ocho. Now it's called Cari. I think you were reflecting on the things you were at the time thinking about doing differently as you built your second business differently from when you were building Teachable. And I'd love for you to just take me through some of those things that you still agree with, that you still think that you would do differently as a second-time founder.

Yep. Well, so first let me start with the emperor of all caveats that, look, I've had, I've done this once, which is different from doing it tens of times. In all probability, I'll just make a new set of mistakes this time. So again, you know, just want to add a note that I've done this once, not a million times, but I definitely think by the end Teachable became this place where, to be quite candid, I didn't enjoy myself by the very end. Like once we hit a certain stage, I don't know whether it was 100 people or a little bit over that, I didn't love my job. I didn't love being CEO. I didn't love going into work every day. And that's kind of worrisome, right? Because you create this thing, you put all your emotional energy into it, and then you don't really love it. So this time around, I want to be very conscious about what we're building, what the culture is. And if at any point I find that, you know, being the CEO isn't as gratifying as it is right now, I'll be the first to step away. So that's already a mindset shift that's different from the last time. I think the first time when you're doing this, you, me, we all tend to have so much ego involved. And after a few years, you realize it doesn't, doesn't really matter. So as a result, this time I think I have a lot less ego involved and Being more willing to step back is a big thing.

Just know one reaction I have to that, and it's funny, I was literally talking to Austin about this yesterday, is it really is like, at least the story that I tell myself, I'm not sure how true it is, is when I, the first time I was a founder, it gave me kind of an ability as an adult to prove self-worth and importance to people, especially because I had stories of like when I was younger, I felt like I didn't belong, I didn't feel important, and this was my vehicle for doing that. And I think it can be a beautiful thing for motivation, but it can be a thing, like you say, where like your entire being grabs onto that identity. And so then all of a sudden your emotions outweigh your logic, meaning like it takes your, uh, mind more time than it takes your body to catch up to this idea that you're probably not meant for the role by a certain point. Yeah.

And to a certain degree, I think It's healthy to get to that point because it means you're probably losing some of the insecurity you or I started with. So I think it's probably a good thing. But I know initially I was terrified. I was like, oh, what if my investors want to replace me as a CEO? Now, like, if someone else wants to be the CEO, great. That's the hardest part of this whole thing. Have at it. So that's a paradigm shift. But I think like this time we're a lot more intentional about team size and trying to keep things small for as long as humanly possible.

Yeah.

So on a very tactical level, that means for certain areas like marketing, hiring freelancers more, hiring contractors more, but always being very thoughtful about do we really want to increase the size of our core team? Because that tends to become an irreversible decision and every single thing gets harder as you add more people.

Can you, can you just expand on that? Because I don't think until you go through it, I don't think people truly grasp when you add a person to headcount, what are all of the downstream effects of that?

Yeah, absolutely. So you typically will be like, hey, this role feels like it needs another person. You end up hiring a person, but soon the work— anyone who comes, the work expands to sort of fit their role. Soon the work expands where they'll want someone under them. And before you know it, you start building this little mini empire and team headcount just explodes and every single thing becomes harder. Communication becomes something that Instead of being a few people around the table, you have to be very intentional about— you have to spend all this time doing fake work, like meetings on meetings and starting to just keep everyone on the same page. I started to find by the end of running my company, I had to spend so much time convincing people to do the thing that I thought had to be done. And that's when I realized I would be terrible at politics because it was infuriating to spend all this time just trying to like convince someone to do the thing that has to be done.

Totally. I mean, something, you know, as I went through your threads on this that you shared is like, you already talked about hiring fewer people. You also talk about paying them more. Talk about the part about paying people more. Why is that something that's important to you in this next step?

Yeah, absolutely. So there's 2 levels of this, right? One is when I built a company, by the end, you realize as a founder, of course you create this, but the early team does so much. And fundamentally, I do believe early startup employees, like the first few people, are undercompensated in terms of what are like, like norms of how much to give early employees. Like historically, a lot of people, you know, would give first employee 1%, and sometimes the waterfall goes down from there. And I think it should be 2, 3, 4 times higher because they're taking quite a large amount of risk as well. Um, and if the company becomes something and they actually stay for 4 years, 5 years, they've had such a big part to do with it. So that's part one of why I think people should be compensated more. Part 2 is if you're keeping the team small, the implicit understanding is everyone is doing more work, slightly more of a job than they would in another place. So therefore it's fair to have fewer people pay them more. You still save money on headcount, yet you have a team of motivated people. And finally, hiring people is painful, right? If you can reduce your turnover and keep people longer, that's ultimately going to result in a better business.

Totally. Well, another question about people is you shared you would only hire people that really value working at a high-growth startup. I guess there's 2 questions to this. One is, how long is that actually possible for? Because there's a point at which your team gets big enough where actually hiring the person who values a high-growth startup may become impossible because they want to work at a high-growth startup. The second piece to it is, okay, that's your, that's kind of your model for who you want to hire. How do you actually put that into practice? What do you, what are like the Spidey sense or things you look for to get that person?

Yeah. So I actually think, and I saw someone say this and I totally agree, I think the movie Social Network kind of changed the entire world of startups. Before that, right, like when I graduated college, and I'm a few years older than you, startups were a slightly weird thing to do. It was kind of strange to want to go work at a startup. It wasn't a thing everyone did. At some point, I call it the Social Network effect, may be related, may not be related, startups became trendy, they became cool, they became the place for random people to go. And a lot of people would approach a job search whereby, you know, they may work for Deloitte, they may work for Facebook, or they may work for a startup. Those are exactly the kinds of people I realized were not a good fit because they don't specifically want all that a startup entails, which is at times it can be the most exhilarating work of your life, but it can also suck. And you want someone who really, really wants to be at a startup because otherwise when things get hard, they're not the people you want to be in the trenches with. So a great way of sussing that out is whenever I'm talking to candidates, finding out where else they're interviewing. Like, if there's an executive who is seriously weighing us versus Facebook, it's likely not a good fit. Like, we're not gonna be able to pay anywhere near as much. We're like, they're just not in the stage where they want what a startup has to offer. And at an early stage where you can be picky about who you bring on, you want to find people that really want this uniquely, like, sometimes exhilarating, sometimes masochistic experience of, you know, building something where nothing exists. And by the way, all of this is only for maybe the first, as you said, you know, 10, 20, 30 people. At a certain point, it's fine and you can hire specialists.

Yeah, I love that. I kind of— my proxy always for the first few employees is like, I would look for someone that I thought would end up starting a company and I'd invest in their company. Like, that was kind of my almost like there's like the unspoken agreement that they're gonna help grow our business for the next 5 years, and then they're gonna go build their thing.

Yeah. And again, we've been fortunate to see people do that. I think you've had people do that as well from your company. And there's nothing— there's no feeling as good to see someone, you know, cut their teeth building something with you, be in the trenches with you for, you know, 3, 4, or 5 years, and then go on and do their own thing as you become their biggest supporter.

Yeah, it's also just honestly the best test period for being an angel investor. I would say I'm a highly mediocre angel investor, but the check I feel most confident in is the Morning Brew employee who I watched for 5 years, and literally no due diligence went into my conversation with him. I just gave him a check.

Yep, absolutely. You already have handled so many of the unknowns at that point.

Totally. Okay, what's next?

So, um, other tactical things that are very important the second time around is we never codified our culture very explicitly. It became a thing that kind of figured itself out, which was totally fine when we were small. But when we were large, it fell apart because quite candidly, we weren't explicit about what we stood for. And as a result, we stood for nothing. And what ended up happening is different teams ended up having their own culture and there was no overarching sense of company culture. And that's something that by the time we figured it out, it was kind of late. So this time around it's been, let's be explicit and intentional about the things we value. And this is not just a culture document, right? Your culture is the behavior you incentivize. It's who you hire, fire, promote, and really try and incentivize those behaviors and reinforce it at every single step. And again, I think this is all just, you know, second-time founder things. The first time, first time, I don't know if you feel this way, but I look back and I'm kind of shocked that like we did anything at all. We pretty much did everything wrong. But, but yeah, this is something I feel strongly about this time.

Well, just to the point of doing kind of everything wrong and just I think your time being wildly inefficient as a first-time founder and, you know, there's like no way to avoid it. It's like the best teacher is experience. And I always come back to this experience I had with the founder of one of the founders of FanDuel, Nigel Eccles, where he's like, he's running 3 businesses now. And I'm like, how are you doing that while also being like a good husband and doing these other things? And he's like, On FanDuel, 80% of my time was a complete waste of time. So I just spend my time on the 20% now.

Yeah, that's, that's super smart. But it's knowing, yeah, knowing what 20%, right?

Exactly. On the culture piece, just before we move on to the next thing, what does it actually look like in practice to codify it and to live those values? Like, do you have any examples, like even within Cary right now? Like, how have you codified the culture and how do you incentivize based on the culture?

So we're very customer-centric, and I think that's something that We're trying to get every single person involved, either talking to customers directly and wherever possible. Like, it really does come down to you as a founder. Like, I replied to— I joke with people that I'm very, very bad at email. If you want to reach me on email right now, you'd struggle unless you emailed support@carrymoney.com. I see that all day and I'm replying to those tickets all the time, right? That is the— I use that email inbox more than anything. So that's a way of, if you do the thing, The team will do the thing. So there's no better way than by your own example to actually do that.

I love that. Um, okay, I want to, uh, talk through a few more tactical ones just because some of these are fun and wonky. Uh, the first one is modifying how equity vests. So you put a 5-year vest instead of like the typical 4-year vest, larger upfront grants. Take me through kind of that thought process.

Yeah, absolutely. So startup equity, um, now that I understand how it works, unintentionally screws over employees in a lot of ways, yet sometimes also hurts companies. One of the first things is things take a lot longer. So we ended up doing it for 5 years instead of 4. The other big thing that we messed up last time is if you hold shares in a startup for 5 years, you can actually pay no taxes when you sell your company. It's called QSBS. But we were not very thoughtful in terms of how we treat our employees. This time with our early team, we made sure they bought shares upfront. So all of their QSBS clocks have already been ticking for a year. That's something— it may not matter, but it could matter, and it could end up being a massive tax savings for them. So we're trying to be thoughtful in that sense as well. We're also trying to get rid of the exercise window that exists on options, where typically you have 90 days to decide whether you want to buy shares or not, which again, I think just does not work out for employees. These are all, again, very tactical things we've learned after the experience of going through this process once and trying to think about if this company works. How can it also result in the best outcome for my team?

Totally. I love that. Another one I want to talk about, because this is just extremely relevant to Morning Brew, is the nice thing about Morning Brew is we only raised one round of funding ever. We raised $750K on a convertible note while we were— it was actually right after I quit my job at Morgan Stanley, and we raised from 28 individual investors. There's 28 individual checks between $2,500 to $100,000. And it was all non-digital, it was all with physical paper. And I would say, I would say I loved having, you know—

Why didn't you use DocuSign?

I have no idea. You know, you talk about, you talk about first-stage founders being dumb. I think we were the epitome of this. And, you know, there were— I would say there was like a lot of downstream effects, like when we sold the company, There was so much, it was so frustrating and annoying. Everyone, yeah, every signatures from every single person. How if let's say you want to involve a lot of people in a round now, how do you do that in a smart way as a company?

Yeah, absolutely. So we did this, we did what's called an RUV on AngelList, but really just pools together all these small check investors into a single line on the cap table. And the best part is you control their voting interests. So they get the same economic stake. But from a voting perspective, all their votes are consolidated into one single entity that you can sort of run the way you want. And this was great for us because what we did is part of our first round of funding was done from my fund. The rest, we wanted to get other people involved. So we had 200 investors involved, each putting in about $10,000 each. So we raised $2 million with 200 people, and it's one line on our cap table. So right now, if I want to do anything, all I need is 2 signatures, my fund and this entity, and we're good to go.

It's amazing. I love that. Way easier than, yep, you know, 500 pieces of paper.

And we still have 200 people to amplify anything we need, right? If we have a launch announcement, we have 200 motivated people that will help spread the word and all of that.

Exactly. Okay. This one is an interesting one that I don't know if I agree with it. Um, perfect.

That's good stuff.

Yeah. Okay. So there's 2 that I don't know if I agree with. I'll start with the first one, which is, Good corporate counsel is 100% worth the money. Not the place to skimp.

I—

so I agree that it's important to have a solid lawyer. And for reference, with Morning Brew, our first lawyer ever was a free lawyer from the Michigan Law School.

Yep.

Yep. But I also think there's like a spectrum where getting a lawyer— I don't know, like the name of the top startup law firms in New York City, but they're like, you know, $2,000 an hour or something crazy.

Yep.

I think my question is, is how do you know if you have kind of like the right or a good lawyer that you're working with? And how early did you involve them in, just say, your new business with Carrie?

Yep. It's really hard. I've also separately at a different time tweeted about how the most frustrating profession to deal with in the world is high expensive lawyers because the whole industry is, you know, predicated around Sometimes what is, in my opinion, not the fairest billing practices. So honestly, it's tough. I think it's important to not skimp on the things that are important. So for us, during our acquisition, it was important to make sure we get that stuff right because the difference is quite material in terms of finding the right lawyer. I mean, I think it's ideally you want it to feel like a partnership and you want it to feel like you just because you text them, they're not going to, you know, rack up $1,000 every time they respond to you. So someone where they're ideally bought into your mission, they believe you're going to be a large company and they're biding their time to actually make their money later on. Like, I think what happened with our council at Teachable is honestly, we didn't pay them very much through most of the company building journey, but they received a fair amount at the end when they helped us through the M&A transaction, right? So it kind of worked out for both parties and we're trying to do that this time too. With that said, not naming names, we don't love our current corporate counsel. So, you know, this, this stuff is hard.

That's hilarious. Okay. Next one that I feel like I definitely don't agree with is buying a premium domain name upfront.

Yeah.

So you shared in this tweet, we saw our conversion rate dramatically jump when we rebranded from usefedora to teachable.com.

Mm-hmm.

I think there's a question here if it had anything to do with the domain name and more that Fedora for the company. It's a terrible, it's just a horrible name.

Yeah. It's a horrible name. I just think, I just think even, even though we actually had to rebrand right now because someone with the original domain name got very litigious, won't get into details now, I do think it's quite high ROI because you can spend tens of thousands of dollars, which is honestly not that much compounded over the lifetime of a startup if you raise money, and it buys you instant credibility. Because when you're a brand new company, credibility is such a concerning thing. Like, can I trust this institution? with either my business or in our case, your finances, that it's super high ROI. So I stand by that one. Funnily enough, one of the domains we were looking at at one point was brew.com, which y'all could have been.

We looked into that in the early days of Brew and most definitely could not afford it. I don't know what it costs now, but it was like $100,000 at the time. 2 more before we sign off. The first one is you say be somewhat systematic in setting compensation upfront. Talk about what you mean by this and why it's important.

So this is something we— again, all of these are things we messed up— is early on there was a fair amount of arbitrariness in how we compensated people. And eventually when we had a real head of people come in, there was just so much cleanup they had to do, and it created this organizational debt that took a while to clear out. A lot of these are things, again, you don't realize till year 3 or 4, but if you do them upfront, it just becomes a lot easier. So now the difference is, I mean, look, we look at New York City compensation data. And we put people within a band and within a range so that in case wherever someone were to ask us, why am I paid this? It is defensible. And down the line, no one's going to be like, oh, I was paid, you know, X because of this characteristic about me or so forth. We never had any actual legal issues, but our VP of People, when they came in, was like, okay, we need to clear this up because you, you know, you have to be systemic about these things.

Yeah, same exact thing happened with us. I think The 2 things we did is like we created salary bands, which we didn't have. And then we also had basically tiers. So like, what is the actual job? Because I feel like that's something we did not do well in the early days of the Brew is people had no semblance of like what their job trajectory looks like in the company. I think candidly, it's probably because we didn't know what it was.

We didn't know. I had no idea what was happening with the company, so let alone, yeah, someone's trajectory or career. So yep.

Totally. Okay. Last one is ship as little product as possible. What does that look like in practice?

So at Teachable, we ended up building the most bloated product in the world because I never knew how to say no to a customer. It was if a customer came in with an esoteric requirement for something they needed, we'd build it and then we'd figure it out. And as a result, by year 5, we had accumulated so much tech debt that it became very hard to move forward. Right now at Carry, we're building a lot of product, but we're still saying no quite frequently. if it doesn't align with what is going to be our longer-term vision, and always having an eye towards, you know, will this scale or not? At Teachable, we sort of jerry-rigged the product together and then, you know, tried to grow at all costs. And it kind of worked. But by year 5, year 6, you could definitely see the challenges with that approach.

Yeah, it's interesting. It almost feels like as a first-time founder, some of your product decisions were operating from a place of fear. Like fear that customers wouldn't stay with us or be with us if we didn't do what they said. Whereas now it's, it's more of, uh, from a place of like having a longer vision and a longer, um, just a longer outlook on things. And sure, maybe in the short term that leads to certain product, uh, certain customers not staying with you, but also potentially those weren't the right customers in the first place.

Yep, absolutely. Fear, desperation, like anything for, for a customer. Also levels of insecurity, right? I'm like, I don't, I think one of the biggest meta lessons has been that I know a lot more than I thought I did. Like, the first time around, if someone gave me advice, oh, you got to do this thing because this is how things are done, I would blindly follow them. Now I realize a lot of these so-called rules were created by people who frankly didn't know any more than I do, and I can discard anything I don't like doing. Like, for instance, we Like we'd had so many one-on-ones as a company because we were told that's what good managers do. And now I think in some cases it makes sense, in some cases it doesn't. And just, you know, I just trust my instincts a lot more as a second-time founder.

Out of curiosity, just on that point now, uh, for your direct reports, do you have weekly one-on-ones or what, or is it with some and not with others?

Right now, zero, right? But we're, again, we're 8 people sitting around a table. We're, we're, we're talking all the time.

Yeah. You're effectively having one-on-ones 24/7.

Yeah, exactly.

So love it. This was awesome. I think we covered most of everything in the threads, but I'll make sure to throw them in the show notes and also throw in a link for Carrie so you can check out Ankur's new company. Anything else before we hop?

Nope. I mean, again, as I say, I think a quote I read that I'm trying to like really follow this time is the key to being a second-time founder and doing it well is to leverage the hype you have without quite believing it yourself. So that's, that's, that's going to be the goal.

Amen. I love that. Thank you so much for joining the pod, and we'll have you on again soon.

Thanks for having me.

I hope you enjoyed this episode of Founders Journal. If you like this format where I curate world-class entrepreneurs and investors to answer some of the most important questions for early-stage entrepreneurs, shoot me an email to alex@morningbrew.com to suggest a future question or challenge that you want answered, or if you have a specific expert in mind that you'd love to see on the podcast as well, make sure to share them with me. As always, thank you for listening, and I'll catch you next episode.