#61, Rob Ryan, Co-Founder of Ascend Communications — Embracing a bootstrap mentality, picking the...

Welcome back. This is From Startup to Grownup, and my name is Alisa Cohn, and today I am thrilled to welcome Rob Ryan to the show. Rob Ryan is a legendary entrepreneur. He's best known as the co-founder and former CEO of Ascend Communications, which was ultimately acquired by Lucent Technologies. Ascend designed and manufactured equipment which allows us to access the internet, and it was one of the leading vendors of modems in the '90s. So in many ways, Ascend was responsible for the rise of the internet. Rob also wrote a book about his model for starting companies, The Sunflower Model, which we talk about a lot in this discussion. And Rob gives insights on how you can apply this model. Rob is also the subject of a movie coming out soon, The Man Who Saved the Internet with a Sunflower. This episode takes us into the Wayback Machine back to 1989. Rob talks about the many crises and pivots the company had to make to be successful. Then Rob demonstrates exactly how they use the Sunflower Model to figure out where to pivot to. So it's an incredibly helpful demonstration about how you can use this model. It's really about thinking through in a rigorous way, what are your core competencies and then how can you apply them to the market? You'll really find it fascinating and very practical. We also talked about the key characteristics of great leaders and why Rob doesn't use PowerPoint. At the end, Rob suggests we do a call-in show. Should I do a call-in show? Do you have a question for an upcoming live call-in show? Email me at alisa@alisacohn.com and let me know if I should do a call-in show to have people get coached by me and/or the entrepreneur guests that I have. For the moment, please enjoy this great conversation with Rob Ryan, legendary entrepreneur, and co-founder and former CEO of Ascend Communications. Rob, welcome to the show. I'm so excited to have you.

Alisa, I am happy to be here.

Thank you so much.

As your big fish. That's right.

I told off air, I told Rob he was my big fish. The reason Rob Ryan is my big fish is because he is a legendary entrepreneur. And just by way of background, he built Ascend Communications, which was acquired by Lucent, which then, you know, there was an IPO along the way. So we're gonna hear all about that background. And I met Rob when I was at Cornell in 19— some date that I was at Cornell Business School and Rob gave a guest lecture there. And I was so taken at the time with what he had to say about entrepreneurship. So like, I'm very excited to welcome you to this podcast so I can like dive deep into—

Dive deep.

Entrepreneurial pursuits. But give us— we're going to talk about your background and whatnot, but what are you working on these days?

So I'm working on a couple of things these days, about 3 things. One is myself and an Israeli couple, we produced a full-length film called The Man Who Saved the Internet with a Sunflower. So it's a 2-hour film that right now we have out to 28 or so film festivals, and we're hoping that one or more of them picks it up. And that hopefully then leads to a distribution agreement with a streaming service. Which are quite familiar, what the streaming services are. So that's an ongoing process. The second thing that I'm working on is sort of sporadically still mentoring entrepreneurs, but instead of having them up where I am now in my cabin in Montana, uh, we're doing a lot of it on Zoom. And, and these entrepreneurs are coming in from well, people like yourself who recommend. And a lot of them are very experienced. So they're second or third or fourth time entrepreneurs. So my role with those is slightly different. Like the last one, this was his third or fourth, but this is his first as the CEO. The others were chief technical officer. And so, you know, the role I'll play with him is, you know, that jump from being a chief technical person to being the guiding light for the company. And it's non-trivial, as he already is finding out. So I'm not asking anything. I'm not a Y Combinator. Some of the most rewarding moments is just dealing with and giving back to people. And the other thing is occasionally in a blue moon, once in a blue moon, I don't know how often blue moons come around, but once in a blue moon, you'll have an entrepreneur say thank you in the form of sending you a check at an IPO. And that's happened 2 or 3 times. Which is amazingly fun because you've got no agreement with them or anything, but it means more, you know, when it's done like that.

That's amazing.

And then the third thing I'm working on, and it's at the embryonic stage, is an organization called Heroes and Horses, which is a vet organization to restore the vets. And it's run with a Montana guy, Micah Fink, who's an ex-Navy SEAL. And he's very unique in how he takes the men on a journey. And it's literally a 41-day immersion, and 21 days of it is in the wilderness in Montana. So it's quite a— and I suggested to him that we had maybe 3 more days for 44, and we give some introductory course in entrepreneurship. That's evolving because there's a lot of interest in it, and he wants to keep it for the men that have graduated from his immersion. And he's got about 900 that have graduated from the immersion. So we'll see where that goes. We're, we're going to have some meetings on that in person in my home in Hawaii in February. And I think we'll have the SEALs and some Marines and what have you, you know, out. And we'll literally have a meeting to decide what is it we want to do and what do we do when we grow up. In other words, instead of just giving some entrepreneurship kind of training, which I clearly can do, I want to understand from them, you know, what they want to do, uh, because they have, they have a little bit more than a typical combinator type thing. It doesn't care about— you have an A, B, C, D company there. You help A, you help B, you help C, you hope they all do well, and then you get a big amount of money back. And in these guys' case, they all know each other through war. They're all warriors. And what they want to do is something more of a sharing in a community. So I want to understand how that works, and it's going to be different, and I'm really actually excited by that.

Yeah.

So they're not driven by money as much as Silicon Valley or Austin or, or Boston is. Yeah. Wow.

That's a lot. I want to definitely dive into a number of those things. It just strikes me that, you know, you're my big fish, a little bit advanced in age, and like, here you are continuing to experiment with things and be an entrepreneur.

I'm not advanced in age. I'm reverse aging, Alisa Cohn. I'm on my way back. You know, it'll be 76 young, a young 76. There's an old 76 and a young 76 in March.

Yeah. Wow.

Well, I'm still playing singles tennis against a very high-level player, you know, pro.

All right. Well, I love that. I think, you know, what I was sort of wondering, though, is like, It sometimes feels to me like once an entrepreneur, always an entrepreneur. Were you always an entrepreneur? What were your first early entrepreneurial experiences?

Oh my God. I had them all. I had the paper route. Everybody has a paper route. And I had way too many customers, so Sunday paper would overwhelm me. So, Dad had to help deliver that in a beat-up Volkswagen. Then I had gathering up golf balls, you know, that were hit in the woods and selling them back to the golfers. Sometimes we gathered them up while they were on the fairway, but that's another story, you know. Um, then, you know, it had the landscaping business, which meant mowing lawns and weed whacking business. And, and then, you know, while I was at college Well, you know, I had 2 or 3 jobs that were not terribly entrepreneurial in that case, just a lot of work. So the whole essence of my upbringing was, you know, work is good. Both parents worked. My dad worked 2 or 3 jobs a week. So, you know, what I grew up in is that I could see what real hard work looked like, and I could also see that that hard work was put in without any benefit of great reward in the future, right? There's no IPO or anything that's going to occur. So that actually shaped me quite a bit because when people bitched or moaned about working too hard at Ascend, I would have a very nice conversation with them behind closed doors about what what real work looks like. And it generally went away. They miraculously were lifted and they moved forward in a great spirit of happiness.

Right. I can imagine what those conversations look like. Tell us about ASCEND. What was the original idea for ASCEND? And then I know there was a pivot. Maybe talk us through that history. And then what ultimately happened to Ascend.

So I founded Ascend, uh, in 1989 with my wife and 3 other co-founders— Jeanette, Speck, and Jay. And all of the— Jeanette, Speck, and Jay were primarily engineering. Jeanette ended up being my head of engineering. She was versatile in both hardware engineering and software engineering, but especially software engineering and especially architecture. Spec was hardware and Jay was everything. He could do hardware design, but he also could go out with me on marketing meetings and sales meetings, which I used him a lot in that capacity. And then Terry did everything the rest of us didn't want to do. So all of the GNA basically was Terry. And when we started the company, we wrote a business plan about connecting with boxes, hardware that were the on-ramp and the off-ramp to a new service, new at that time called ISDN, which was Integrated Service Digital Network, which the carriers and the Bell operating companies were expected, going to promise to roll out big time for data service. So we, we put a little plan together. We wrote it just for 4 or 5 of us, and we then went out to the venture community. At that time, that community consisted of some of the premier ones were guys like Kleiner Perkins, Greylock, NEA were all in the top 5 category. Fortunately for me, I knew at least one person. My ex-boss from Intel was a partner at Kleiner Perkins. So we got a meeting and the meeting wasn't really formal or fancy. And I'll tell entrepreneurs this. He said, come down to the red carpet lounge. At United in San Francisco Airport, and I have an hour before I get on a plane, you know, to go to Boston, from San Francisco to Boston. So we rushed down there. We didn't have PowerPoint or anything. We had a flip chart. So I'm like anti, anti-tools that don't add that great value to me. I've never used PowerPoint. Ever.

Wow.

So we had a flip chart and we flipped through and all of the members were presenting because we had practiced that all of us presented. So Jeanette had a presentation for a portion of the slides and Jay did. And then I had the front and the back end. And then I asked for the order, like something entrepreneurs frequently forget is asking for the order. And he said predictably what I knew he would say, which is that he was one, you know, really impressed with the team. Two, he liked the presentation. And three, he had, uh, he had to digest it more and then bring it to his partnership. So the net, the next stage was digestion. You know, he did that on the plane, and by the time he got to Boston, he called us up and said, I'm gonna I'm going to bring you in to the main partnership, which he did. And we again didn't have PowerPoint. We had this time, you're going to love this high-tech, Alisa Cohn. Foam boards. Foam boards. We had 5 of them. And you know that show, Vanna White was standing next to the—

Wheel of Fortune.

Wheel of Fortune. Each of us had a foam board. Okay. And by the way, this was mesmerizing to the Kleiner Perkins partnership who had never seen quite this theater that was being put on. Because normally lights go out, PowerPoint goes on, and they go to sleep. But no lights went out. No lights went out, right? Each of us were standing there. They loved it right from the get-go. We had a raucous meeting, which apparently I must have controlled pretty well. And they— I asked for the order, and they gave us the order. They said they were going to be a lead, and they gave us several names they wanted us to work on. And off we went to try to secure them. And lo and behold, and this is another lesson for entrepreneurs, especially in Silicon Valley, it's brutal. Is the first one I went to, we gave our little dog and pony show. We were as good the second time as we were the first time. And then I asked for the order and they said no. And I said, why? And they said, you, we don't like you. We don't think you will make a good CEO. And I said, well, thank you. I won't waste any more time. With you, and I disagree, you know. And off we went, you know. I did tell my, you know, uh, partners at Kleiner, and they said, oh, the hell with them. And, you know, we eventually got it funded. We started building the, the box, and then two-thirds of the way building the box, the carriers decided they were not going to roll out ISDN. They were not going to roll it out. So we had built a box that connected to a non-existing service. So this is stage 1 crisis at the company where we had to go into the board and explain exactly what I just said and somehow get them signed up to give us more time to, to do an innovation. We did that and We went in with an idea of a thing called bandwidth on demand. And they actually liked the idea, but this time they said, we want you to go out and get a whole bunch of customers and even have people pay for it before this— even build it. And so they gave us some names and this bandwidth on demand multiplexer box went into the video space. This space, except in that timeframe, 1990, there was no such thing as what you and I are doing now. There was room videos, and they were very expensive, and they had very high-speed links to them that were very costly. And so our box, in theory and in practice, was going to reduce their communications costs significantly for their room video. Well, we built it and, you know, it was a partial success. We built it up to about $16 to $18 million in revenue, profitable, barely profitable, but we were profitable with that little business. The bad news was that it was about 75 or 80% of the total market for that world, and it was still only an $18 million company. So, the board informed us that they were going to sell the company for about $30 million. Crisis number 2. And I had a long discussion with the board and convinced them because of my charisma and other things that they shouldn't do that and they should give us yet another chance. So, off we went and we put ourselves into one of the conference rooms. And fortunately, a week before, I'd read a paper by C.K. Prahalada on the core competencies of Honda. And I had the team read that same paper. And we started to delve into what are our core competencies? What are Ascend's core competencies? What is it that we're really good at? That's a hard exercise because it's easy to hand wave. I mean, hand waving is something like, "Oh, well, we're really good with hardware and software in the communication space." Now, that's an okay statement, but it's useless. It's not detailed enough. When we got done grinding away, the team and I, maybe a day and a half on this, We came out with, we're really good at analog and digital dialogue, and we can do it with any switch in the world, any protocol in the world, any country in the world, and there was a lot of anys that we had. So I put that in the center of a circle, like a spoken wheel, if you will, and then I asked the team, Great. Let's keep that in mind and let's now innovate. You can come up with any idea as long as it exploits the stuff in the circle. It's okay if it needs more stuff, but it's not okay if it doesn't exploit inside.

Yeah. So that core competency was your jumping off point.

It was, and you had to exploit it. We didn't come up with specific product ideas or algorithmic ideas. We came up with industries. We said, well, what about the, what about the internet? That's a dial-in kind of an environment. What about remote access? That's where people, you know, dial into a corporation. What about telecommuting? What about, you know, dial-up video? With the market we were already in. So we had, oh, maybe 8 or 9 industry ideas, okay? So we put them up on a whiteboard, along the top of the whiteboard next to each other. And I said, okay, so we've got 7, 8 things here. We know what our core competencies are. So how are we going to decide that we should spend more time in one of these versus the other 7? Are we going to sit here and argue with each other? Because by the way, they were all super smart, super aggressive, and could argue forever. And/or I'm going to suggest as a logician, I was a mathematics guy, and I said, let's go and talk about criteria. And they said, well, what are criteria? And I said, these are things that your brain is going to use to distinguish one thing from another. So I said, here's an example of criteria: uniqueness, or slash differentiation. If something is incredibly unique, that's going to get my excitement. If, for example, we applied uniqueness, value, and leverage to our core competencies, we applied those 3 and we said, how unique is our core competencies? How valuable are they to the customer? To the customer? And how leverageable are they? And we scored that 1 to 10. And so maximum of 30 points you could get for the core competency. And they had just gone through that. And we realized that our core competencies were strong. What we didn't know is whether we could apply them anywhere. So now, we started to do the same criteria concept, except now applied to the opportunities. And we came up with 15 or 20 criteria. The team came up with this. Each person If you were in the room, you couldn't be a vegetable. There were no vegetables in the room. You had to participate. Each team, each person put 3 or 4 criteria in. Now, none of us are stupid. You know, all of us understand that the criteria are not all made equal and that, you know, in theory, we could weight the criteria saying this one is heavier than this one. Mathematically, that's easy to do. I didn't choose to do that because I then went to the next step, which is I built a matrix. I had criteria down one set. I had on the other axis, I had the opportunities and I said, we're all gonna score, okay? 0 to 10. A 10 is a perfect fit. Every cell we're going to score and they're gonna be 5 numbers or 6 numbers in there. In that cell, a representation of your score. And then we did this cell by cell. So what does that do? Um, when you put the numbers in, and here's what generally would happen, two things would happen. Either everybody would send a agree and say, oh, this is a 7 or an 8, and so you got 5 7s or 5 8s. And, or sometimes, and this is the really interesting stuff, you'd have people say, oh, it's 8, 9, 9, 9, 9, and somebody put a 2, a 2 down. Whenever you had that kind of outlier, we would spend a lot of time on the outlier. The person who gave the 2, we would never badger them. That was against my rules. We just simply said, explain the 2. You most likely know something we don't. Or you're confused, one or the other. And so they would start explaining, and half the time they were confused and half the time we were confused. And so the team began to understand. It took 2 days of doing this to fill in the cells and, and rank. And when we ranked, it came out internet first, remote access, telecommuting, and video was in fourth place, our business in fourth place. And at that point, I stopped and asked the team two questions. I said, how do you like the process that we've been going through? They love the process we were going through. They thought it was super collaborative and super reasoned and logical. And then I said, how do you like the results? That we have achieved. And then Jeanette popped up saying, I don't know how we got here. Our current business is in fourth place. Three things are ahead of it. And I said, well, Jeanette, have you been in space or Mars? I mean, you've been in the room. You know how we got here. And I said, so you're holding out on me, girl. Tell me the criteria and stuff that you haven't told me about. And she said, well, no, I told you about everything. So she said, I just feel like you cornered me in a corner here somehow. I said, well, you want to do it over again? By this time, we're 4 days into this, right?

Yeah.

And they said, hell no. They would have actually strung Jeannette up by her toes. And so the team said, Rob, tell us what the next step is. And I said, the next step is we have a hypothesis. We haven't proved anything. Our hypothesis is that our core competencies would be best exploited in the internet. And we now need to go out and test that. And I called that the walkabout. We're gonna do a walkabout. We're gonna take the Yellow Pages of all the internet providers, which was some 300 or so. And we're going to contact 300 and we're going to see how many of them we can meet with. And each of us are going to take at least 50 and get this done in your spare time. And they all, of course, yelled at me. And by the way, I don't want it willy-nilly. So we're going to stay here a little longer and we're going to come up with 4 questions that all of us agreed to ask. So that we get consistent and uniform information back. And we did. And they did. Over the next 3 months, we visited 150— 150. So we came back and what we realized, that is, that the internet infrastructure was a freaking gold mine. That our core competencies played extremely well there. And they had a huge problem. They were going bankrupt. The internet was going bankrupt. It was going dark, very dark. They were either going bankrupt or they were being sued or both is what we discovered in our poll of 150, which is about 50% of all the internet. At that time.

Yeah. Wow.

And we realized that, okay, now you go into stage 2.0 of the walkabout, which was, wonder if we could sit down with the best of those and actually design a product to solve the problem of them going out of business. So remember, we didn't have a product. You know, we just had high core competencies. So we sat down with about 3 or 4 of them. They were the most enthusiastic of the 150. And we literally on the back of, I think, a napkin in one place, were designing. Now, how did we begin the design? Well, we began the designing with the accounts, with the old box. Remember, we had the video muxing equipment box. So We had built hardware and it was off working, and there we expected to be able to exploit that hardware, and they liked that idea too. And so they said, okay, let's make this box bandwidth 2 T1s worth of bandwidth coming into the box. And then they would ask questions like, can you break the 2 T1s into any bandwidth segments that we wanted, like in chunks of 64 kilobits. And we said, of course we can. I'm going to say, of course you can, to everything, by the way. And, you know, we started to design a paper prototype. So at that point, with these three or four, I asked them to give me a check. Remember asking for the order? And they said, "A check for what?" I said, "I want you to pay for these units. And I want you to pay for 2 units each. But here's how I'm going to use the checks. I'm going to go running back to a very skeptical board, and who's already a little ticked off at me because this is our second reinvention." And at the back of your check is going to be your home phone number, and they're going to call you and ask you all sorts of questions. And they said, well, how much is the check for? I said, 2 units. Well, how are you going to price the units? I said, well, you already told me. You already told me what the costs were to put a customer on the internet, and I'm going to give you the grand discount of, you know, the box is going to cost you $55,000. And it's going to support up to 100 users. And that's about half of what your cost at that point was. And they said, okay. So they wrote me a check for $110,000. 3 of them did. And I said, I'm never going to cash these checks. I'm going to wave these checks around in front of the board in a triumphant meeting on a board meeting, and they're going to think that I've conned them into something and they're going to call you up. If you say nice things, then we're in existence. If you fart around, then we're out of existence. And so they said nice things and off we went. And the board then got excited. They went from selling the company for $30 million to excited, wanting to put more millions in. So they wanted to put another $10 or $11 million in. So at that point, that extra $11 million came to about $17 million that Asen would have had in it. We had only spent, uh, at that point about $5.5 million. So now we had a bunch of money sitting in the bank, which I didn't want, but they were now insistent on getting more shares of, of Zen. And off we went. We built the first product called the lovely name of the Max. The Max. And our, our group of 150, many of them became testers of it and they loved it. And they started ordering prototype amounts, you know, 2 to 4 for testing, and then later, you know, larger amounts. But here's the wonderful part of this story. We got all of them, right? Every single one of them were ordering. But then later, the big guys wanted to get into the internet, right? And so the big guys were buying up the little guys, like they were buying up UUNet and PSI Net. So Microsoft I think bought UUNET and AOL bought somebody else. So now as they gobbled up the little internet providers, we were the provider of the network. So all of a sudden we were the provider of MCI Network or Sprint or AT&T or Microsoft or AOL. And, you know, it ended up as the SENS started to grow, We ended up pretty much owning the entire infrastructure of the worldwide internet. You would have to look hard to find somebody that wasn't using our equipment inside the infrastructure. I think it was over 90% market share.

Incredible.

As that translated into dollars, the company grew from that $17 million up to billion in revenue. But here's the really fun part and lessons for your audience. We did it profitably. We had over a billion in profits. You know, at no time didn't we have profits. Remember, we were profitable when we were a very tiny company because any jackass can spend money but not make money.. But it takes actually the true entrepreneur to actually use a small amount of money to grow a big thing profitably. Yes. And so that's what Ascend did. And Wall Street, by the way, God bless them, really appreciated that because I would literally say that I said to you and they would nod their heads saying, you're right. And they split the shares. We had an IPO in 1994. Which was exactly 5 years after we founded the company, I took it public and they split it, I think, 3, 4, 5 times. I mean, literally every time I turned around, I had more shares. I was selling like a madman, but I kept having more shares. This is a very good problem to have, by the way. I'm not complaining. High-class problem. Yeah. And then after that, I took a little time off, you know, found my way to Montana, bought the ranch in Montana, which I'm still here. I truly enjoy. Bought the place out in the Big Island of Hawaii and then started mentoring entrepreneurs, mostly out here in Montana through an organization called Entrepreneur America. And, you know, I used Sunflower again and again, and several of the startups grew into multi-billion-dollar companies.

Yeah. And just to clarify, Rob, just I wanna clarify the Sunflower. I wanna just make sure everyone understands. The Sunflower is kind of the codification of Rob's initial, I would just say innovation process in terms of like the core competencies in the middle, and then maybe let's call the use cases around the edges, like the picture of a sunflower.

Yes. So the picture is exactly what Alisa said, which is the core competencies in the middle, the petals are all the potential innovations, and then the stem is, let's say, all the driving forces that are external to you that you don't have control of, that if they go against you, the whole flower falls over and dies.

Yeah.

And the actual process of Sunflower, I described two-thirds of it to you already. Remember, I described the competencies, the walkabout, the decision matrix that we went. The only thing I haven't described to you, and that's the last third, was the execution phase. Yeah. And that phase is, to me, is no sense innovating if you can't execute. And we had a, I called it King Of. So it was another set of meetings with the teams and the company where I said, what is it we want to be king of? We know it's the infrastructure, so we know what it is. But what does that King Of statement mean? I mean, each person, you know, how does that get translated? Well, after a couple of days of talking, we literally had a king of tree.

Oh, wow.

So for each organization, engineering, marketing, sales, manufacturing, we had measurable king of statements. So for example, in sales, to give you an idea, our version of what it meant to be king of is that for every internet provider in the world, and some of them are in the world of independent, some regional holding companies, some are in exchange carriers, some are international. We had different categories. We had an 80% penetration, 80% penetration. We owned 80%. That's our version of— And these were measurable goals, and that's an example of the arm on the tree or the branch on the tree that was due to sales, right? But if you, Alisa, was my, you were my Jeanette, you had engineering and that had all of these products and themes that we had to implement, like making all of the communication interfaces, first of all, building them all, second of all, making them interwork so that they intercommunicated. And so all of these things sum total up to 4 whiteboards of a huge tree, the King of Tree. And that began what we managed ourselves to and talked to the board about. So that was our board meeting, a summary of the King of Tree and where we stood was the board slides for each. Board meeting. And we executed to that plan. So in theory, if you worked at Ascend and I walked up to you and said, where do you work? Maybe I didn't know you because the company kept growing. You'd say, oh, I work in a marketing organization. I'd say, great, what are you working on? And you'd say, well, I'm working on, you know, making sure that lollipops are really good and we have a whole bunch of them in the corporation. And I'd go, I don't know where that is on the King of Tree, but I'm not going to come pounding on your head, but I am going to go pound on the VP of Marketing's head, you know, because little Alisa is off working on lollipops and that isn't part of our tree. We all agreed to become king, we had to do the tree.

Yeah.

So it was an amazing way to, as you can see, get the focus of a whole company on a mission.

Yeah.

The king of mission. And we executed.

Rob, yeah, you had to have executed to have such amazing success. And I'm just reflecting, a lot of the founders that I coach, they'll ask, how do we make sure that we stay aligned and how do we use goals and is there a good goals process and should it be OKRs or SMART goals or what? But I think what you are bringing up is it doesn't actually matter what process you use. You can use OKRs. You can have your king of trees as long as you have something which really helps everybody, as you just said, come to agreement and then helps everybody in the organization figure out where do they fit inside of the larger corporate context and corporate goals.

Yeah. And by the way, each person has a sense of belonging and a sense of accomplishment towards the king of mission. But otherwise, they're floating around. A lot of people right now in today's corporations, they don't have a clue how they factor into anything meaningful in the corporation. And I'm going to tell you that probably 50% of them in that category. There's a lot of people that are wasting their lives, wasting a lot of money, and the corporation ain't getting anything out of it. It's lose, lose, lose. Across the board. And I was not big on all of the tools. Like today, if you're in any corporation, you're seeing 6, 7, 8, 9 different tools, right? Everything from Slack to Microsoft to blah, blah, blah. You've got tools coming out of your yin yang. All of them are supposed to be enhancing your performance, but none of them do that. In fact, two-thirds of the time people are confused how to use the tool and how to move between the two. Yeah, tools. We were really simple. We had accounting software, we had engineering software, uh, you know, for tools if you will, but everything else, you know, you could do it in an Excel spreadsheet, which we did. And everybody knowing it and believing in it is much more more important than all of the fancy tools.

Right.

And I'm still the same way. You know, I haven't changed any. If I ran a company today, you wouldn't see me bogging down the company with 12 different tools, you know, that we were using.

Yeah.

Because ultimately your best asset is you, is Alisa Cohn. And all of the Alisas in the company, that's the best asset. And if I'm not harnessing your brain and you're not staying harnessed, to your mission in marketing, then we're not gonna achieve it.

Right.

You know, we're not gonna get there.

I totally agree, and I love that. And Rob, you're bringing up also what I think that requires is kind of management skills. So the skills with you and the leadership team to be able to have a discussion and agree on the things and then have that cascade down into the, you know, the individuals inside of the company so they understand what they're supposed to be doing and how they're fits the bigger picture. And I guess I'm curious, what do you think and how did you learn management skills? And how would you give advice to entrepreneurs about the importance of management skills and which ones are the most important?

How did I learn? So I think I'm a natural. I love it. I'm not going to lie to you. I'm a logician.

Mathematician.

And so I'm incredibly logical and analytical and reasoned, but I'm also an Irishman, okay? So I have a great sense of humor, and I also can read people, and, you know, before they can read people, I know what you're thinking before you know what you're, what you're thinking. And I want to make sure that you're connected You know, that's all I kept saying to myself. I want to make sure I harness your brain. And until you prove to me that you have no brain, in which case I've harnessed you to the exit, okay? But I'm going to assume that you have a brain and I'm going to harness it, okay? And, you know, and the best way to do that is a clear statement of what it is we're as a company going after and all the measurables so that No hand-waving horseshit can be done because that's not going to work. It wasn't going to work with me because if you were doing that, you didn't stay around and everyone could see that. So, the whole company became a very reasoned performance-based kind of entity. So, that just comes, I think, from my— remember I told you my work ethic.. And from my training, math and stuff, I wanted everything to be measurable. Hand waving is not going to make it for me. Sales is measurable, isn't it? Engineering is measurable. Oh yeah, manufacturing measurable. Why not marketing measurable? Why not G&A measurable? Everything was measurable and everybody had Here is where I am in the tree. If you do that, or your version of that, and one other thing, you have to be, I think, a couple of things. You have to be humble. You have to be courageous because people will try to test you at all times. And then you're going to be tested.

What does the test look like? What does that look like when someone tests you?

"Oh, wow. What does a test look like?" "Okay, so here's a test. You're trying to hire a new superstar in engineering or something. And Alisa is that superstar." And we go, "Yeah, you know, Alisa, you've gone through our gauntlet of 20 engineers interviewing you and we're going to make you an offer. So Alisa, tell me what you're thinking about. Tell me what you're thinking about in terms of your compensation needs. And Alisa Cohn whips out, you know, and says, I need $227,000 and 2% of the company. Um, you know, uh, and I'll, I'll say— I'll— in fact, I had the W-2 form. I would lay down the W-2 form and say I earn $80,000 and I am the founder of the company and have 5% of of the, of the, of the company. So I truly think you're magnificent, but we have a disconnect here. There's no way I'm going to give you anywhere close to what you just said. Okay. Because if I did that, I'd have to post it with a little yellow sticky on the front door so that everybody could see it. And as they saw it, they would realize that Rob had broken the trust with them because they're all down at the 70, 60 mark or whatever Sowers, you know, were. And Rob had broken that trust. Well, Rob doesn't break the trust. Rob never broke their trust because the minute you break the trust, it's known in 3 nanoseconds. And you've now got one person But then many more are going to quit and be incredibly unhappy with you. That's one example. And another example is, you know, one upper management person might get clubby, clubby with a board member, going out to dinner with a board member, talking about the company, you know, with a board member. So I call that an out-of-band signaling problem. And so here's the courage component. You go to that member of the employee, the upper management, and say, if this happens again, I'm going to fire your ass instantaneously, Alisa, so fast that your head will spin. And you're going to then call the board members, including the clubby one, and you're hoping they'll fire my ass. I get it. In fact, here are all the phone numbers. I would give them the phone numbers. Okay, test me on this. So you are not to have these meetings out-of-band signaling anymore. And then I went to the board member and said, I can't fire your ass, because you're a board member, but I want you to stop this right now. So does that take courage in Silicon Valley? Yeah, it does. And there's, you know, a million of those instances. And the board members themselves can give you, you know, a whole host of stories. But a lot of people lack courage. Here's a guy that doesn't lack courage a lot. Elon Musk does not lack courage. He has courage. There's a ton of CEOs that lack courage, you know. Um, they end up with bloated companies, you know, that they've overhired. Then they're firing 17% here and 12% there. Ascend never had a layoff ever, you know, not one. And Because first of all, we never got bloated to begin with. You know, if you don't get bloated, you don't have to have the layoffs. So, you know, there's a lot of this— people talk about all of the standard traits, you know, grittiness and, you know, IQ and all of this stuff to be an entrepreneur. But I think humility, humor, courage, you know, need to be on that list. The laughter equation is because you're in a hotbed. If you're operating in Silicon Valley, it's a meat grinder. If you can't laugh, you're going to melt down very quickly. And I'm very good at laughing. I'm also very good at being angry. But when I was angry, it was behind the door, behind the closed door, not in not in public, right? Um, you know, and I think it's just common sense. All of the things that I've just spoke about to me came naturally, very common sense. But remember, you have to have courage to encounter a person. You have to have courage to walk up to Alisa and say, you're a smart person, but you're not working at the level I want you to work at, and either that changes or the exit is the next thing you're going to see. Yeah, that takes courage. Yeah, people don't do that, and they think they're— I don't know what they think, but it doesn't bode well for you, right, or the company.

Yeah, people shy away from difficult conversations and from giving direct feedback.

Yeah, they sure do. And then— and it's across the board. It's across the board with employees, and it's across the board with the board members. As well.

Yeah.

Because, you know, they're willing to lie to themselves and they continue to have this obfuscation, you know, going on. And they don't make really great entrepreneurs. They're not going to be the ones that do transformative companies. The transformative guys like myself and Alon are brutally straight. Right. I mean, it's direct and they have plenty of courage, like Steve Jobs, plenty of courage, right? Without it, I think. But they also have humor. I didn't know Jobs and I don't know Elon, but my sense is he has this sense of humor.

Yeah.

No question about it. But you better be working at the same level that he's working. That was the same with me, by the way, at Ascent. You know, everybody worked way past your 60-hour weeks, way past. And it was manifested in, if you came any time, you'd see the parking lot full, you know, Sundays, you know, Saturday. It was the most amazing company. But it comes from, you know, it starts with you, right? I mean, at the top, right? And all of the people at the top and a clear mission. If people think they're on a clear mission and they have a clear path in it. And the other thing that I found with people is they love to win. Most people are very competitive. They love to win. So if you start to build a winning corporation, it is winning. We would get recruits, high-level recruits wanting to be on. We didn't have to recruit. They came they came to us.

Yeah.

So, all of this, you know, sort of natural to me in the— I excel on this kind of stuff, you know, one-to-one talking or one to a small group of people, you know, and if you're doing a startup, you better excel at that.

Yeah.

I mean, honest with you.

For sure. For sure. During this whole Well, I guess I would just say when I first met you at Cornell, you know, a number of years ago, quite a while ago, what I remember so much from our discussion or from what you were sharing and the question that I asked you at that time was, you know, there's so much grind to a startup. You know, you're talking about it now and the way you're talking about it, it's like, oh, it was meant to be. But actually there was a lot of grind and a lot of uncertainty and a lot of like not sure if you were gonna make it or talk to the board into the pivot and problems that you encountered. I guess I'm curious if you could talk a little bit about the toll that entrepreneurship has took on you.

I can. I think the toll question falls into multiple categories. It takes a toll on your family, your spouse, and your kids if you have children. We didn't. But in my case, it was It was Terry, my wife. I mean, it puts a real strain on a marriage. And fortunately, in my case, we're still together. So it's over 55 years. And so Terry hung in there because it absolutely requires an amazing spouse. Not only was she amazing to hang in there, but she was in the company for the first 2 years to hang in there. So that's one. The other toll that it puts on you is an enormous— if you're operating in anything close to a Silicon Valley type environment, it's a meat grinder and it's going to put a incredible amount of stress on your mind and your body. That'll manifest itself downstream in a lot of surgeries. In my case, surgeries for spine, heart, you know, over 5 or 6 surgeries in heart case and 3 in the spine case. Some massive amount of, you know, toll, if you will. Is that going to happen to Elon? I don't know. I mean, I don't know his constitution, right? But the way he operates and the way I operate, but he's operating across multiple companies that way. So he's upped my ante. I think it will take a toll if it hasn't already begun to take a toll. And if we were friends, I'd advise them to come out to Montana here and chill out with me for a while. And we talk AI. Yeah, you know, it's going to take a toll. It'll catch up with you even though you're brain is actively engaged and happy, your, your, the, the unity of your brain and your body is, is going to start to break.

Yeah.

Down.

Did it, Rob, did it take a toll for you on your mental health at all?

Yeah, I mean, uh, it did take a toll. You know, I, I was brought up in an, in an era that my father was in the military in World War II. He's out in the Pacific and all the shitpot islands, you know, fighting the Japanese. And so the men of that generation, my dad and others, uh, they didn't complain. Um, they came back. There was no such thing as, you know, stress disorder. They, they married and they had children, right? And they bought a little house, and then they worked a lot of jobs, you know, to keep everything afloat. That was the norm. I mean, I never even heard the term PTSD at all in that. So that was my norm, right, was just shut up and keep working. Okay, just grind it out. It's also Terry's, my wife's, norm. She was brought up the same way, right? Her dad was a World War II pilot over Germany. So, you know, don't complain about physical things, don't complain about mental things, just push through, push through it. It's still the same, by the way. You know, we're in our, you know, mid-70s, and if I mention something to Terry, like, can you look at this, she goes, well, what do you expect, you're old. I mean, just Forget it. Get your ass out on the tennis court, you know, keep playing, you know. So it was that kind of attitude that— and you better have an attitude similar to that if you're going to do a startup. I actually like entrepreneurs that are not going around asking for $200 million or some outrageous amount of money. But actually are thinking more in the bootstrap mentality. They're literally trying to build things with the minimum amount of money, in some cases zero. They don't actually raise any money. They bootstrap it. Because now you've got an entrepreneur that has got the integration of the management of cost with the creation of profits. In sync because if they don't create profits real quickly, they're out of business. A lot of entrepreneurs, if you look at the AI companies now and you spilled out a list of the AI companies that have been invested in and look at how much money has been put in each of them, you would discover numbers that would be mind-boggling. $100 million, $200 million, $300 million. Into these companies. And the very large numbers to me is an inverse relationship with success from my point of view. The more you put into it is, first of all, if you think of it logically as an investor, what does 10 or 20x on those huge numbers mean? You would have to be like a trillion-dollar company to make a return. But even from spending it, when you have that much money, you don't have the King of Tree, do you? Because you're just spending money willy-nilly on everything. You don't have the focus. So I look for extremely focused bootstrap kinds of people.

Yeah. Well, I wanted to know actually if you had advice for founders. You've mentored so many founders. And it takes a toll on them, of course, because that's what the game of entrepreneurship is. But I am curious if you would advise for founders about how to sort of, as much as possible, safeguard their physical and mental health.

Yeah, I mean, you can safeguard it by not taking yourself too seriously, especially as you get more successful, because then you think that you walk on on air and on water, which you don't. You're an ordinary mortal. You put your pants on or your dress, you know, same way as anybody else does. So don't take yourself too seriously. Laugh. Laugh a lot. Okay. Because life is funny. A lot of the idiocies that go on are really funny. If you allow yourself to laugh. And there are an enormous number of morons in the world, okay? And all you're trying to do is not actually be one of them, okay? But you can laugh, you know, and you can even call half of them morons most of the time. And but you can do it in a way that you're laughing and they'll start laughing, you know, uh, which is one of my favorite phrases for most of my entrepreneurs is you're moron, you know. And they'll start laughing and I'll start laughing and they'll say, can you be a little bit more specific? I go, yeah, I can.

Tough love from Rob Ryan. I love it.

Yeah, exactly. Just laugh. You know, you know Nick Sonnenberg.

Yeah, that's how we met. My friend Nick Sonnenberg, great entrepreneur and CEO and founder of Get Leverage, of Leverage.

Yeah, well, Nick and I are kind I'm mentoring Nick now, and we're going over different ideas. And I asked Nick how many times I've talked to him about being a moron. Yeah, yeah.

He says you're tough.

He's probably already— yeah, but it's, it's, it's tough in a way that I want him to be happy. I want him to succeed. Um, I want him to think more logically and organized. Um, and as people get more logical and more organized and reasoned. Remember, Sunflower is a process of taking everything down to the lowest elements, right? And Elon Musk calls that process, what does he call it? First design or something.

First principles.

First principles, exactly. Aristotle, way back, talked about it. Leonardo da Vinci Alisa Cohn talked about it. Taking things down to the most atomic level and understanding it at the most atomic level is something that's been going on with the best of the best for a long time. So Sunflower is a codification of that whole thing along with the King, the King of. And if people can learn how to think in a Sunflower way and then execute in a King of, away, you'll be amazed at what you can accomplish and what they will accomplish.

I love it. It's so good. Rob, just two more questions. What do you wish you had known earlier on your journey?

You know, I don't have any, Alisa. I don't have any regrets on my journey. At times I wish that I was more political and more savvy from a political point of view. You know how people play games in an organization or they play games outside of an organization. I have no tolerance for that, nor am I very perceptive in that space. And would that have helped me at some point? Yeah, but it would have changed Rob, you know. I'm, I'm, I am exactly who, what you see, very, very direct, very logical. I would have also liked perhaps, you know, an understanding, although Terry and I did talk about it, you know, how much this was going to really be a drag, you know, for All the years that I worked at Asana, I missed every anniversary, every birthday. It was kind of nightmarish. Fortunately, Terry was an independent woman and had her own things that she would go off and do, okay, and not have a guilt complex on me for missing everything as I did. She still does that. You know, I rarely will go out to events and stuff here in the, in the Valley, and she'll just go with girlfriends now. And I'm telling entrepreneurs too, if your, your spouse or your significant partner better be a really good one, and the relationship better be a really good one, because if it's a really good one, it's going to help you. If it's not so good, it's going to break and it'll help make a mess of you too.

Yeah.

Yeah.

Well, that leads into my final question. What advice do you have for other founders as they embark on their journeys to grow into leaders?

Think in a sunflower way, in the manner in which we've described. Really fundamentally challenge yourself to think in that manner. Be straight and collaborative and open with people. We shared our board slides with all of the company a day after we had given it, and we gave the board presentation to the company a day after. The only thing that we didn't share is anything that was of a personal nature if we talked about a specific employee. Everything else we shared. So all of our financials, all of our engineering milestones, et cetera, statuses, all shared. And that is something that I would encourage. Because when you do that and you treat people as adults, as grown-ups, Guess what? They have no excuse not to act like a grown-up. If they came in with some cockamamie proposal for me to give them recs for 5 people, I'd ask them if they had missed the last board meeting or what's wrong with their brain, you know, because they're seeing the same data that I'm seeing and they know our goals and missions and how how well we're doing or not doing. If you treat people grown up, 95% of them are going to respond grown up. And I would encourage that. And I would encourage being incredibly direct with people. It does them no good to let things slide. In fact, you can save probably 75% of things that are sliding away can be saved. But if you didn't do the directness, they're going to slide away. Wise. That's probably good enough.

Amazing. Rob, I want to thank you so much for being on my podcast. It's such a joy to talk to you, and you're such a fount of wisdom. So I just want you to know I really appreciate it.

Listen, you're great. Your questions were great. Anytime. You know, one of the things you might think of is real-time call-ins. So I've done a podcast like that where people were listening and then they had ability to call in. I was on a line and then you moderated the questions.

I love that idea. Okay, coming soon to From Startup to Grownup, live call-ins. First, my first candidate, my first guest is going to be Rob Ryan doing live call-ins.

Got it.

I love it.

It could be fun.

I love it.

You'll see. You moderate the questions. But, you know, I'm more than capable of moderating my own questions.

Of course.

But most people will be incredibly— they'll be good. They'll be polite. Remember the 95% rule. It's only 5% that are the morons and the true idiots. I love it.

Thank you again, Rob. I really appreciate it. Thanks for listening to From Startup to Grownup. If you like what you heard, give it a review on Apple Podcasts so other people can find it. And if you know of a founder or someone else who is meant to be on this podcast, drop me a line through my website, alisacohn.com.