25 Lessons from 25 years in the Startup Journey

So, you know, we burnt through a bunch of capital. I could tell it wasn't working. And you know, as a cfo, I certainly felt a lot of loyalty, right? It was a big decision for me to leave. I felt fiduciary obligation to the investors. I'd raised most of the capital myself. But then I googled free long distance alternatives and like very quickly came up with a list of, I think it was like 180 companies. And that just sort of cemented the decision for me. Like, how on earth do we win? How do we generate a return for our investors when there are literally 179 other free competitors? So when a customer runs out of free minutes on our platform, they'll just start making calls on somebody else's free platform. They're a race to zero. I left and long story short, that company failed. So that was, that was a hard lesson. Welcome to the Startup CEO Show. I'm your host, Mark McLeod. This is our 50th episode, so a bit of a milestone and as a result, maybe a different take here. Rather than having a guest, you're just going to have me. I'm not sure. The world needed another podcast, but here we are 50 episodes in and I've been really thrilled with the response. So thank you so much for listening. Thank you to all the guests for this episode. I thought I'd take a look back. I recently celebrated my 25th year in the startup world and at the anniversary of that, I kind of recapped 25 lessons that I've learned over the years. There are hundreds of others, but these were kind of 25 things that stood out. And so I thought I'd maybe expand on that post that I wrote at the time and kind of walk you all through those lessons. The first lesson is that time timing is almost everything when it comes to a startup outcome. And I've been on both sides of this lesson. On the positive side, I was CFO for a company called Tungle back in the day. Some of you may remember that as a really, really great meeting scheduler, far greater than Calendly, even though the outcome was much smaller. And we were raising our series A in 2008. 2008, many of you may remember. Either you read about it or you lived. It was a challenging time. We had a mortgage crisis and a severe recession and we were raising capital. And the deal closed three days before the Lehman Brothers crash. And Lehman Brothers was a big deal. And there them failing precipitated just a shutdown of the financial system, largely and you fast forward a few months later, venture capital had largely dried up and we'll never know. I can't go back and redo it, but I feel like if that deal had even been a week late, we wouldn't have got that deal done. And so we were really lucky to have timing on our side there. On the worst side of this, the second company I was ever CFO for was a company called Hexago. This was a telecom infrastructure company. And you'll probably fall asleep reading, you're listening to this. But basically the Internet that you and I connect to today is on a type of infrastructure called IPv4, and it has a finite set of IP addresses. And so Hexago was betting like, well, hey, we're going to run out of these things. And we built this connection capability on top of a protocol called IPv6, and it has infinite address space and we're going to build a giant company. Well, it turns out, you know, I left that company and got, I don't even know, 2005, like a long time ago. The world still hasn't run out of IP IPv4 addresses, so definitely got the timing wrong on that one. And, you know, when I look back on all of my outcomes as a operator, vc, banker, angel, at least half of the outcome was luck and timing. So good to have a good dose of humility there. That's the first lesson. Next, hot markets make life easy. I entered the startup world in May of 1999. For the history buffs, you will know that that was right in the thick, almost at the peak of the original.com bubble, when companies were being viewed as a multiple of, like their website traffic. Companies with absolutely no business model like pets.com were going public and worth crazy amounts. And unlike today, these outcomes were, you know, these companies were going public much, much earlier in their life cycle and they had no business being subject to the scrutiny of public investor markets and quarterly earnings pressure and all that stuff. And, you know, I came in really with no prior experience in the startup world, quickly raised a Series A. And actually I was completely unaware that this bubble was happening. I just thought I was really good at fundraising. And it turns out that anyone with a pulse was getting funded. And, you know, we had another the dot com bubble burst, you know, shortly after that. And things were good for a while until that 2008 downturn that I mentioned in the first lesson. But then we had an unprecedented run, you know, in the history of bull markets. Bull markets have lasted about 4.5 years on average. And I don't know what the previous one went, but it was like, I don't know, 13 years unprecedented. And so there's probably many of you listening today who had never experienced a downturn until 2022, right? And back in 2021, companies were raising at 80 times revenue, like valuations that make just no sense. And so those hot markets made life easy. And, you know, now we're kind of living a more rational market. My third lesson, sometimes the biggest opportunities are inside established markets. And in fact, many times they are right, because the market exists already. You just need to disrupt it and the customers will move. So many of you may have just grown up with Netflix and not even remember that there was a time when we walked to a store named Blockbuster and picked up a DVD or actually a video cassette even before that and brought it home. And that was an established market. Blockbuster owned it. There were lots of mom and pop video store chains. But like, that was an established and not particularly fast growing market. And Netflix came in and completely disrupted it twice. First of all, with the exact same form factor, here's video DVDs, physical medium for watching the video, but we're going to ship it to you. You don't have to go anywhere. And now with what we see today with streaming, social networking, right? There were social NETWORKS Before Facebook, MySpace was a thing in the world. In my personal experience, accounting software was a category existed decades before FreshBooks showed up. And so established markets figuring out a new way to disrupt and delight a big market that exists already can be a great way to build a company. Lesson number four, a poor market, meaning a market that has no money, is a bad market. You know, customers, especially from the point of view of venture investors, right, who are chasing outsized returns, either your customers need to have money to pay for your offering directly in the case of right Software as a service companies, or they need to be valuable indirectly, right? In the case of Meta or any other social network, right? So we don't pay a subscription fee to Meta, but there are so many active users that the advertising revenue and the data revenue is really compelling. So I lived this lesson with the. I guess it would have been the third company, but I was CFO of the company called Mobivox, and we were in the voiceover IP space and particularly focused on free or cheap long distance calling. Now, when your offering's free, it's pretty hard to make money. And freemium, right? Having a free base version of a product and then upgrading into some kind of premium version that Business model has come in and out of favor. It was a particularly big deal at the time. And so our hope was we'll give away a bunch of free minutes in the hopes that our power users will run out of those minutes and then become premium customers. Now, there are three preconditions for freemium to work. First of all, you must have a large addressable market. So check. We, we did. We absolutely did that. Second, the incremental cost of serving those free users needs to be near zero. Right? And that is true with software. It was absolutely not true with us because we were paying telecom carriers for every single minute of call, whether we were paid for that or not. And third, the third prerequisite for freemium to work is that there needs to be such a compelling difference between the free product and the base product that the users who are truly engaged are just going to naturally convert. And that again, was not really the case with us. Right? We were selling minutes to talk to people and the paid minutes were exactly the same as the free minutes. So, you know, we burnt through a bunch of capital. I could tell it wasn't working. And you know, as a cfo, I certainly felt a lot of loyalty, right? It was a big decision for me to leave. I felt fiduciary obligation to the investors. I'd raised most of the capital myself. But then I googled free long distance alternatives and like very quickly came up with a list of, I think it was like 180 companies. And that just sort of cemented the decision for me. Like, how on earth do we win? How do we generate a return for our investors when there are literally 179 other free competitors? So when a customer runs out of free minutes on our platform, they'll just start making calls on somebody else's free platform. They're a race to zero. I left. And long story short, that company failed. So that was, that was a hard lesson. Lesson number five, big opportunities are often tiny markets. Today I'm recording this. On the day that Shopify announced its 2024 results and its Q4 2024 results, they crossed 1 trillion in GMB. They did 9 billion in revenue last year. Just phenomenal to see. I was around in part of the Series A fundraising process back when Toby was raising the A and so many investors passed because they were concerned about the tam, a total addressable market. They didn't think that you could build a venture scale company offering an E commerce platform. That obviously turned out to be very wrong. And that's, I guess, what makes venture Venture, right? You kind of have to predict the future based on information that you have today. And so in that case, VC's got it wrong. That leads me to lesson number six, also with my VC add on. You know, when I look back in my time and venture and my time is an angel time, fundraising on behalf of companies, right? Just looking in the rear view mirror, the thing I noticed is that the best startup investments were based on a simple, crisp insight about a market opportunity. An insight that unfortunately was only obvious after the fact, but the entrepreneur was able to articulate very clearly. Right? It was not a complex pitch. If it was a complex pitch, that turned out to be a red signal, but if it was a really simple pitch that actually turned out to be a positive signal, it's just you wouldn't actually know until years after you made the investment. The big illustration of this point for me is Uber. It is obvious now, with the benefit of hindsight, to look back and say it's a fundamentally better experience to just get on an app and have a car show up. You know, when it's coming, you don't have to fumble for change and get a receipt. You just get in the car and you get out. And you know, we can debate whether Uber drivers earn a good living, but if you set that aside, it's a better experience for a driver to just know exactly where their next fare is going to be, rather than aimlessly driving around hoping someone to flag them down. So we have that. It's very simple to pitch what Uber is. It's simple to describe, but it's only with hindsight and with scale that we see that it's that, you know, simple pitch was true, right? If someone had walked into my office when I was a VC and said, hey, I want to disrupt the taxi market, I'd be like, dude, you're mental. That's a solved problem. Like taxi medallions, unions, like people aren't struggling for ways to catch a cab today, right? So I would have passed and Travis was pitching me back in the day, I would have missed out on a multi billion dollar company once again. That's why they call it bencher lesson number seven. So still staying with my old dusty vc hat on. Sometimes great outcomes can come from near defeat. So many years ago, I invested in a company called LocalMind and was a really great founder. You probably know him and listen to his podcast, the Lenny's Podcast for product managers. So he's gone on to do really great things. But he had built this company called Local Mind and It was really great early traction, but no sense of a business model that could be attached to this. And, you know, he's quickly running out of the seed capital that he had raised, uncertain about the future. And the board encouraged him to, like, hey, you know what, maybe it's time to just, like, shop and see if we can find a home for this. He did that and managed to get the folks at Airbnb really excited. And Airbnb was a small company then and couldn't really afford to pay cash for their acquisitions. So, long story short, we sold local mind to Airbnb back when Airbnb was worth a billion dollars. And I don't know when Lenny sold, but I can tell you that when my fund sold, Airbnb was worth $30 billion. And so this, you know, kind of near defeat, it would have been a super modest exit, maybe an equa hire actually turned out to be a fantastic return. So once again, we got lucky there. Going back to my first point, but you just never quite know until everything's done. Lesson number eight, most founders I speak with, they don't regret raising venture capital, but almost all of them regret how they spent that capital. And that is probably particularly true now in a climate where capital's a little harder to raise. Although things are kind of softening up a little bit. The technical reason why companies die is because they run out of cash. There are underlying causal reasons. We don't have the timing right, can't find the right channel, disrupted by competition, whatever, but you can keep iterating, you can keep screwing up and keep going until you find something that works. As long as you have cash, right? Cash is blood. When we run out of blood, we die. And we run as humans. And when we run out of cash in a business, we die. And it's really, really simple. So that's a very common lesson and definitely one that I've lived. Lesson number nine, you cannot a b test the decision to sell your company, and there is actually no right answer. So on that last point, the example I like to bring up is Facebook. Way back in the day, Facebook was super early. Yahoo, rest in peace, offered to buy Facebook for a billion dollars in cash. It was still a young company then. That outcome would have completely returned the fund for Excel. Mark would have been a complete stud multi millionaire, never needed to work again. He polled his leadership team and asked them, what do you think? Should we take this deal or not? Went around the room, right, one by one, what is your point of view? The leaders that said he should Sell, he fired and of course he didn't sell. And fast forward a bunch of years and Yahoo's a distant memory. And I don't know what Meta's worth today, but obviously many, many, many billions might even be in the trillions for all items. It's a big company. I lived a much more modest version of this a couple of times. Second comp, no, third company I was CFO for was a infrastructure company called Terrascale. And we built scalable storage software serving applications like Facebook. Right. Facebook was kind of just going like crazy, growing like stink and just building out giant server farms to keep up with its demand. It's probably still doing that. And we were kind of the storage back end for use cases like that. And we were raising our Series B when a public company named Rackable Systems, I don't think they're around anymore, just swooped in and made an offer to buy us. And that offer, to be clear, was life changing for the founder. We returned 10x on invested capital. I had invested in it personally, plus I had stock options. It was a great outcome for me. I bought my first house with that money. But you never know, maybe we would have still been riding that wave today. Look at the kind of data requirements and the storage requirements. I mean they're just following Moore's law, you know, it could have been a giant multibillion dollar public company, they will never know. Similar issue with that company Tungle that I mentioned earlier. Right. We had raised the Series A. It was sort of like local mind in the sense that we had lots of free traction, but we weren't clear about the business model. You know, Calendly didn't exist at the time. It's the exact same use case as Calendly. I actually think it was a better technology, but we weren't clear whether people would pay for a tool to help them schedule meetings. And so we sold to BlackBerry Research in Motion, as it was known at the time. Another great outcome, but who knows? Calendly has turned out to be an absolute beast of a company and with tons of revenue, really high valuation, and maybe we could have done that as well. So we'll never know. Lesson number 10. So turning my attention to Canada for a bit. The best and worst thing about the Canadian startup ecosystem is its proximity to the U.S. right. You know, we benefit tremendously from being so close to the US Venture capital, while it's global, now is a US industry and the biggest market for technology in most industries is the US market. So we benefit a ton from being next door. But we also suffer this insecurity. We're a tenth of the size of that market. And I feel like we cannot avoid comparing ourselves to our southern neighbors and having this deep insecurity. I actually think that's true about Canada as a whole. Right. Toronto aspires to be New York City, but it just never will be. We also had this giant brain drain. The C100 is a member organization kind of promoting Canadian interests and connecting Canadians in Canada to Canadians in the valley. And they shared a station, it's a few years old now, where basically there's 400,000 Canadians in the Silicon Valley area in the high tech industry. A few years ago, there was at least one Canadian on the leadership team of every publicly traded technology company in the us really visible examples like Patrick Pichette, who was CFO at Google at the time. That was massive brain drain. And then you're seeing that now with AI. AI is just the next wave. It truly matters, it's truly disruptive. And a lot of the leading thinkers came out of University of Toronto and University of Montreal. A bunch of the founding folks at OpenAI or Google or sorry, are Canadian. And we lost that talent, right? And you know, AI is almost like a sovereign battle now, right? Countries are, are fighting each other to have supremacy when it comes to AI, and we've lost that talent. So we benefit from being so close to the U.S. but we also suffer. Lesson number 11, being a VC kind of sucks. When I entered the startup world, I was completely enamored with vc. I remember being an auditor before joining this startup and I called up my client was a company called Solanas Technology. It's still around. And this guy, David Lowy, who you may recognize as the head of Google's Late Stage Growth fund, he was a VC at the time and I called him up to ask him if he had any questions on, on the financial statements of Solandus Technology. He didn't give a fuck about that. He certainly hadn't read them. I just called him up because I wanted to talk to a vc. And so when I entered the startup world, I set my sights on becoming a VC within 10 years. It took me 11, but I did it. And it was absolutely not what I think what I thought it would be. I think many people are enamored with venture because you think I've got the power, I've got the money, I'm learning about companies and I just sit back and the operators do all the work and I make money. And some of that's true, but most of it's not. In my experience, it's a pretty lonely job. I remember talking with a friend who was a partner at Bessemer at the time, and he told me, basically, hey, we convene on Monday mornings and then we all just fly off to the four corners of the US or further afield, meet with companies and then come back. And yes, we're partners, but we're kind of, we're actually silos. We're actually just kind of working our. Our own deal pipeline by ourselves. And I had partners at Real Ventures. My investment span was much closer to home, right? Mostly local investments, but it was still a pretty lonely job. And then you feel kind of powerless, right? You know, you succeed through the efforts of your founders, and so you do what you can to support them, but, you know, it's indirect. And then it's no question. Some venture funds make money, but as an asset class, it underperforms, right? You'd be better off taking your money and, I don't know, buying a index fund or something. And so I kind of realized that along the way, right back when I was a vc, geography mattered a lot more than it does now. And I just didn't feel like I could out Sequoia Sequoia as an example. Like, I can't compete with the Tier 1 Valley funds from my tiny little $50 million fund located in Montreal. And so I didn't feel there was any way that I could look limited partners in the eye. Limited partners are the people and institutions that give venture funds their capital and say, hey, you know what? I know most VC funds don't return, but don't worry, we've got it all figured out and we're going to deliver better returns. And give me your money. And by the way, back up that empty promise with my own money, right? So hit the ripcord on that one and pulled out a venture and never regretted it. Are you still taking your own meeting notes? Let me tell you about an AI tool that I'm using to take meeting notes. One it's called Fellow. It's an AI meeting assistant. It takes human level AI notes, it tracks my action items and decisions, and keeps everything in one place built with security and privacy. At its core, Fellow is the only AI meeting assistant that leaders trust to capture meeting notes and recordings while keeping your distance. Data save. Thousands of organizations are consolidating tools and relying on Fellow to capture their meetings. The team at Fellow is so confident that you'll love it. They're offering an insane deal to startup CEO listeners. 90 days of unlimited AI powered note taking and recording, completely free. Visit fellow app CEO to sign up today and experience the AI meeting assistant trusted by leaders everywhere. All right, lesson number 12. Founders are both the best and worst things about their company. Often best and worst simultaneously, right? It takes a certain amount of craziness to start a company, especially to start a company where you're going to raise venture capital and try to achieve a massive and improbable outcome. The biggest recent example of that is Blake Shoal with this company, Boom Aero. With no prior background whatsoever, he's built a plane that literally did a supersonic test flight last week. I mean, that takes a certain amount of just batshit craziness. Elon Musk is crazy on a whole bunch of levels, right? Literally a rocket scientist, right? Trained himself to be a rocket scientist, built reusable like electric cars, right? Like he's just doing all these crazy things. Love them or hate them, there's definitely some craziness there. And that craziness has served him well. Stay on the CEO thing for a second. Lesson number 13. Great CEOs come in all shapes and sizes, right? You know, we have maybe this stereotypical image of a CEO. Tall, broad shouldered, charismatic male, unfortunately for the most part, especially in this industry. But let's look at Toby from Shopify. Toby is by far the most successful CEO I've ever had the pleasure of working with. If you've met him or you've seen him speak or listen to a podcast, just a painfully introverted, deeply thoughtful human, dropped out of high school and now leads a 10,000 person public company. I think that's truly remarkable. And the thing that I really love about his example is he didn't try to become all these things that he's not. Nothing you could do about the width of the shoulders. But he didn't try and become catching charismatic. He didn't try and be a public speaker. He hired Harley to do those things and so just built the CEO image, the CEO role in his own image. Which brings up my next lesson, right? Lesson number 14, which is that the best CEOs lean into their superpowers. They don't dilute by trying to figure out parts of the business or parts of the role that don't suit them. And so Toby is the poster child of that example, right? You know, he's introverted, he wants to be focused on technology and product. And so he's a publicly traded CEO. He should be the person doing the quarterly earnings and Going on cnbc squawk box. But he's not. It's Harley who does those things, right? So on the flip side, Harley completely feeds off that. He's like a force of nature. In my brief time at Shopify, my office was beside his and he'd just be like pounding call after call after call. He's just complete extrovert, boundless energy that doesn't seem to have changed. And Toby just hired him and built his management team and how he led the company around this notion of like listening. I want to spend time thinking about technology, driving technology direction, thinking about product, delighting merchants, just working on my mission to make commerce simpler for everyone. And I don't want to be bothered with all this other aspects of being a CEO. I love it. Lesson number 15, my base level expectation of venture capitalists and actually a board, boards as a whole is do no harm. Anything above that is a bonus. And unfortunately this lesson has come from being disappointed time and time again as an operator. And I want to make it very clear there are many, many exceptions to this. There are great venture capitalists who add tons of value. I've had the privilege of working with many of them and there are great directors who can provide game changing insights or contacts to help a management team get to the next level. But by and large, when I speak with my CEOs, you know, they're pretty frustrated with their investors and frustrated with their boards, right? Often the investors, even though they're on the board and have a fiduciary obligation to look out for the interests of all shareholders, are really just looking out for themselves. And I get it, right? They raised a fund and they have to return that fund with a multiple on it, right? Investors give venture capitalists money in order to generate premium returns. And so you have to be self interested, but it just creates a lack of alignment, right? I remember speaking with a tier one venture capitalist years ago who told me, and I quote, I would much rather a founder go into a brick wallet a hundred miles an hour trying to hit escape velocity rather than play it safe. And so that quote just speaks to the inherent lack of alignment that exists between VCs and the founders that they back, right? The VCs have a portfolio, they have a fund, they got lots of management fees. You just have this company. And so it's beautiful. The game changing disruptive software and other technology experiences that we love in our lives and our companies today would not exist without venture capital. But just recognize that there's this inherent lack of alignment and Then board meetings. None of my CEOs look forward to their board meetings. Jeff Lawson, who used to run Twilio, had the best perspective on his board. He really viewed his board as a second management team. And so even though he reported to the board, he managed that team the exact same way he managed his primary leadership team. Right? They had goals and objectives, they got a performance evaluation. He ran the board meetings. And I think the board deeply appreciated that until he got tossed out. But that's less about his board and more about an opportunistic short seller. Again, joys of being a public. All right, lesson number 16. The slowest companies use PowerPoint a lot. I've been part of a few companies that had really pervasive meeting cultures. You couldn't do anything without having a meeting. And you would see people really like high value people spend a week preparing slides for a meeting and they'd use the slides once. It just drove me absolutely batshit crazy. And when I founded my investment bank, kind of coming from that experience, I outlawed presentations. They were banned for internal purposes. I think when I study some of the great companies, there's two things. One, they move fast. And moving fast is inconsistent with needing to meet or all the time. By definition, you are not doing when you are meeting. So there's that. The other thing and noticed is that many of the greatest companies have a memo culture, not a meeting culture. Right. You know, at Amazon, when you show up for a meeting, if you haven't read, every meeting has to have a memo that's making it clear. Here's what we're here to discuss. Here's all the background information. Here's all the context. If you haven't read it in advance, the first part of the meeting is literally just sitting around and reading the memo. Right? There's no fancy slides. I absolutely love that. A, because you're not spending time building fancy slides. And B, because it's much harder to have broken telephone. Right? The context, the purpose, the facts, they're all just laid out for you. So I really love that. Lesson number 17, board observers don't just observe, right? They don't just sit there silently. Right? When we're raising capital, it can be tempting to concede. You know, sometimes someone is following in the round, they want a board seat. You're like, no, we can't give you more seats. Okay, well, I need an observer seat. Or maybe your previous investor is getting booted off the board. But they want to stay as an observer. And observers are not benign. You know, sometimes they're the opposite. Sometimes they're like the loudest people in the room. And so you want to be really careful about that. Right? Because they can really influence the dynamic and can sway votes. And, you know, we'll call up directors in between meetings and you know, like I said, they're not benign. So just, it's not, it's not a small concession to make someone an observer when they're asking for it. Do it because you really want that person to be on the board and, you know, part of the board and they're going to add value. Lesson number 18, when I look back on all of the, all of the deals that I've done, especially the fundraising deals, raised over a billion in capital, I've almost never taken the highest bidder. The thing I've solved for is alignment on two dimensions. Alignment in terms of like clean terms. You know, sometimes the highest bidder at high price per share comes at a trade off. Trade off is structure. Right? Complicated terms like instead of having a 1x pref, like let's say I invested $5 million, a plain vanilla term sheet would be okay, I invest $5, I'm going to get Series A preferred shares and on exit, I can choose to either get my 5 million back or I can convert and take my percentage of the sale price, whichever is better. That's how a preferred share works. But sometimes with structure, you start seeing things like a multiple, like I get 2x my 5 million back or my percentage of the company, whichever is greater, or something called a participating pref, which is I'll take back my 5 million and I'll get my pro rata percentage of whatever's left. So, you know, the higher you push valuation, the more the investors are forced to introduce complicated structure. And whatever structure you give in this round will just become the floor for future rounds. Right? If you gave away a double dip participating pref on the Series A, your Series B investors will demand that as well. And before you know it, you've been diluted down to nothing. So I've solved for alignment in terms of clean terms and then also alignment in terms of the, the, the investor that really shares the vision. Right? You know, if you want to run right and your investor wants to run left, it doesn't matter what they paid, it's going to be misery, it's not going to work out. And so I've really solved for those things. I've also, by the way, kind of solved for what I call the Tokyo test, which is like, Tokyo is really far away. From where I live, would I be excited going on a 16 hour flight across the Pacific to Tokyo with this person? Like I have to like them, I have to want to spend time with them, right? This is a multi year journey. So I've always prioritized those factors in my own deals and kind of encouraged CEOs to prioritize those factors on the deals that I've advised. Lesson number 19, self awareness is the number one thing that I look for in CEOs. It's the number one thing that will help you scale faster than your business. Again, I come back to Toby from Shopify here, right? Toby had a great saying from the earliest days which is like I need to re qualify for my job every year, right? He works, he's 20 years now at the same company, he doesn't draw a paycheck, but if he did, it would come from the same bank account that existed 20 years ago. But it's not the same job. And he's had to transform himself many, many times over. And the thing that's enabled him to do this is his deep self awareness. Self awareness by the way, is a thing that I actually correlate quite highly with introversion. And Toby is very introverted and he has this habit. I had him on the podcast recently and I asked him about it and he was, he still has it where he'll replay his day. So he'll finish his day and just kind of replay it almost like a movie. And like I don't like how I behaved in that meeting. We took the wrong decision here. And he'll course correct either that same day or the very next day. So he's going through a learning loop every single day. And so basically getting 1% better every day. And 1% improvement every day is a 37x improvement in a year. It's transformational. And so I would argue that self awareness is why this first time CEO who didn't even want to be CEO and didn't finish high school is leading a 10,000 person, you know, market beater. It's because of self awareness. And you know, bottom line is if you think your shit doesn't stink, you're not going to be open to the cues and the feedback and you're not going to be growing. And so I really encourage you to just set ego aside, pay attention to the signals, get Input, get a 360 review, reflect, journal, think, take a hike, do whatever you need to do to get perspective and to build your self awareness. All right, we're getting into the Home stretch here. Lesson number 20. We stress wondering what people think about us, but people are too busy worrying about themselves. They don't care. I. I've lived this many times. You know, I went through two really big public decisions. First of all, to leave Real Ventures, and second, to shut down my investment bank, SurePath Capital. So, you know, when I decided to leave, Real Ventures was kind of a big deal. Could have triggered the key man clause where LPs could be like, yeah, this no longer makes sense. We want our capital back. Beta Kit covered it at the time, right? It was newsworthy. And I was walking away from a fund that I had invested in and walking away from a career in venture capital, and nobody batted an eyelet. So, yeah, Beta Kid covered it. But no, like, I went on, my career was just fine. So I could have sit. I could have just sat there and being paralyzed when what are people going to say? And either just stayed in a role that I no longer believed in. But, you know, the world went on. And it's the same thing. When I shut down, my investment bank had reached a conclusion that being a coach, you know, coaching, those coaching and advisory conversations were the best part of, you know, the thing that I love most about being a banker. And I knew that if I had to do over, I'd skip the banking and just be a coach. And so even though it meant, you know, helping my team find new jobs, it meant walking away for some deals. Covid helped. I did this when the world shut down and buyers stopped buying companies for a period of time. But it was a highly visible decision, and nobody questioned it. Nobody was like, oh, Mark, what are you doing? Mark's lost the plot. Nobody cared. And so I've lived this lesson many times. All right, lesson number 21. Overfunding masks shitty businesses. And so venture capital is a beautiful thing, but it can certainly hide a lot of inefficiency. Uber is was a wildly successful adventure investment, but it accumulated 29 billion in losses. It didn't actually deserve to exist in my books. Like, it doesn't make sense to subsidize something to the tune of $29 billion. Now you can argue again would come out on the other side. It's a disruptive service. It's completely changed the world. We're going through massive subsidies now in AI and again, you can see a clear J curve, and we're going to come out the other end that have completely changed our world. And so there are definitely cases where this extreme investment and this extreme losses make sense. But there are many cases where it doesn't make sense. I recently spoke with a CEO that had raised tens and tens of millions in capital and doesn't have a lot of revenue. Like there's no chance he's going to even return his investors capital. And I wonder like how did the investors put in so much money? It happened over multiple rounds. Like each time we should be thinking about is the traction there is this company worthy of more capital. And so venture capital can mask some really shitty businesses. Lesson number 22, humans have infinite potential. All right, for the last time, I'll come back to Toby here again. High school dropout, immigrated to Canada, ironically became an entrepreneur because he couldn't get a job. He didn't have a work permit in Canada, but he could start a company. And now he leads a 10,000 person company. By the way, he's also a professional race car driver, right? At the same time as he's leading this company, he's put in the time and energy and personal commitment to figure out how to be a racing car driver in just a 24 hour Le Mans race in Daytona recently. Like absolutely mental. We all have infinite potential, right? All of us. Many people come from super humble beginnings. Didn't go to Stanford, didn't go to Harvard and change the world. And you know, the next person to change the world could be listening to this podcast today. I find that deeply Inspiring. Lesson number 23, our gut or our intuition always knows. It's always accurate. The challenge is listening to the gut, right? We're in this tech industry hyper rational and logical and we're just going to think our way through this and we're going to mind map and do decision trees and Gantt charts and whatever. We're going to analyze this shit to depth. In my experience, you know, my yoga teacher has shared with me that the rational mind, that's the one that we use most of the time in this industry, is really about 10% of what we're capable of. And our subconscious, our intuition is the other 90%. But for most of us, we never access it, right? Intuition requires space. It's why we have these aha moments when we're on a hike or you know, I literally woke up last night with like an outline for a book that I want to write and I couldn't get back to sleep. I wouldn't have come up with that in. I was sitting in front of a computer typing it out. It just happened in my subconscious. And so the key to tapping into that is to create space in your life. I had Josh CEO Augusto on the podcast not too long ago. He's built an amazing company. He's nowhere near done. Like Toby wants to build Hundred year company. And anytime he's making big decisions, he goes for a hike. Anytime he's interviewing senior executives to join his company, he takes them on a hike. And so he's creating that space to tap into his consciousness, or subconscious, rather. All right, last two lessons. Number 24. The number one reason why founders sell their company is because they burn out. I've personally done over a billion dollars in exits, and I've really noticed this pattern right now. There are obviously exceptions. A buyer swoops in and offers you a crazy amount of money, you're going to take it, right? Everything's got a price. But when founders choose to sell, choose to go and find a buyer, often it's just because they're done. And they could theoretically replace themselves as CEO, move to the board and keep going with the company. Right? They could separate themselves from the company. But in my experience, they often don't do that for a bunch of reasons. One is, for better or worse, their identity is completely wrapped up in being CEO of this company. And so they just need to get it to the finish line. Two, their net worth is tied up in these illiquid shares, so how are they going to put food on the table? And three, related to that, if they've been doing this for a long time, they're unemployable. They can't go and work somewhere else. And so they feel, rightly or wrongly, that they have no choice, like, I just have to sell this company. And so that can be tragic, right? I've. I've done lots of those acquisitions. And again, as I mentioned earlier, we can't a, b test these things. I don't know how that those companies that I helped sell would have turned out and how much bigger they would be if we didn't sell. You just never know. And so the key to Warren Buffett says, or maybe it was Charlie Munger. Anyway, one of them said that the most powerful force in the universe is compound interest. And the point here is the power of just keeping going. Just keep putting one foot in the other and building a company year after year after year after year, right? That is what creates market leaders. That's what unlocks enterprise value, right? And that's what transforms markets. These are marathons, not sprints. And so it can be tempting to just, you know, sleep when I die, bro, hustle, culture, whatever, bullshit. But the true path to building an enduring company is actually to run it in a sustainable manner, right? To prioritize fitness, eat real whole foods, sleep seven or more hours a night, have real boundaries between yourself and your company. That's. And so it can feel like you're going slower in the moment, but then you're not just draining the battery and you're not going to get burnt out. Last lesson. We've kind of talked about it already. Luck and timing equals at least half of startup success. I just want to end this by acknowledging that when these big outcomes happen, we got lucky. We got the timing right. The circumstances just happen to kind of fall in our favor. And the point here is just stay humble. Right? Of course, the other half of it is your blood, sweat and tears and your genius and your vision. But never lose sight of the fact that luck plays a huge role. And on that note, I feel really lucky and blessed that you tune in and listen every week. And thanks for listening to this episode. Hey, thanks for listening to the Startup CEO Show. If you'd like to connect with me, be sure to visit my website at markmcleod me or follow me on LinkedIn @the markmcloud or Twitter arkmclean underscore. And if you want to tune in again next week, be sure to subscribe on YouTube, Spotify, Apple, or wherever you get your podcasts. We'll see you next time.