Scaling Impact: Scot Chisholm on Evolving from Founder to Leader

We were last 24 hours and everyone's, you know, crossing the T's, dotting the I's on the paperwork. And we get an email that says deals off. And we're like, what? And they said, you missed, you missed the deadline to submit your signatures by 30 minutes.

What?

They're just fucking with us.

Yeah.

And no dead silence.

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Hey.

And welcome back to the Tacos and Tech podcast. I'm your host, Neil Bloom and I've got a little treat for you guys today. I've got a long time friend of the pod, friend of the ecosystem, serial founder, the founders, founder, founders, coach and investor Scott Chisholm. Hey, thanks for being back in the pod.

Thanks for having me. And in real life, I know in real life, we'll see if this setup works and we can get us on camera, but just for people that maybe can't see we're here in real life. We're here.

We are.

I know we're here in La Jolla in another friend's office. Patient partners. Beautiful office right at The COVID here, which has also become a little bit of a startup hub. There's a few other companies working out of here too.

Must say the La Jolla Cove is a lot nicer. Over the last, I don't know, three to five years. Yeah, I've sort of come back and visited. Better shopping, better restaurants. Kind of cool because you're really sleepy and like totally, you know, average age was probably 80 back then. Now now it's like a little more youthful. Yeah, I like it.

Yeah, well, it's good.

I'm somewhere in between that. I'm not quite 80 yet, but I'm.

Headed that direction in startup years. Like our bones all feel like.

That's exactly right.

Yeah. Yeah.

Still 180.

Yeah.

Well, it's good to have you back in town, man. I already like knowing just a week ago that you're coming back in. It was fun to re engage with a bunch of other founders who are going to come hang out and do some dinner. I know you spoke at a conference, but tell us, just high level, what.

Are you doing now? Yeah, I love coming back and visiting. I'm now in Whitefish, Montana with my family. We moved around Covid time. Not the most unique story, you know, everyone kind of scattering and then we honestly got trapped there for a while. And then it was when I was transitioning to executive chairman at Classis and then. And then everything went virtual. So I was like, wow, isn't that convenient? So we ended up staying there. I'm a fan of the seasons and it's a mountain town, all that stuff. And we ski, but still absolutely love San Diego. Still consider it my second home. And I come back here, you know, quite frequently. So awesome to be here again. The weather is much nicer than Whitefish right now, which is about 7 degrees. Oh yeah. It gets to negative 30. Are you serious? The difference between Whitefish and say like Boston or. I grew up, grew up is that you don't have that wind off the, off the Ocean. So negative 30 feels like 20 in Boston. So that big of a difference.

Really great.

Because it's a dry. It's like 120 degree weather in Phoenix. You know what I mean? How it's like that dry heat, it's kind of the same thing, but the mountain.

There's a little bit of like a San Diego crew that's in Whitefish now.

A ton of San Diego. Ford Blakely, Ryan Swagger, Hinge Capital. There's just a lot of entrepreneurs and investors and stuff like that in that general area. And Also in Bozeman. Big Sky. Yeah, it's. The flights are pretty easy, but I'm not exactly sure why the connection was with San Diego, actually, especially Encinitas. It's like a really specific Encinitas connection where people go back and forth. It's a really nice compliment to San Diego. They both have, like, it's. There's, you know, they're very different, but the vibe is somewhat similar. So it's a much smaller area, obviously, but yeah, it tends to be. Tends to feel good for San Diego folks. So Montana folks, I don't know if they'll be listening to this, but they probably hate me for recruiting. But, hey, come on in.

So you, I mean, take us back a little bit.

You.

You were on the pod, I think we recount. It's been five years. You're deep in, like, growth stage of Classy.

Yeah, yeah. I was CEO of Classy at the time. This had to be like, what, 20, 19. 19ish. 1819. Yeah, that's exactly when it was. And, you know, we were tens of millions in revenue, doing billions on the platforms. We were absolutely at scale and we had raised, I don't know, 30 million, 25. 30 million Series C a year or so before that. And, you know, by most accounts, you know, an outsider looking in. We were on top of the world. We were crushing life. There was actually an article, and I talked about this in my. I was at the Real Leaders conference at Torrey Pines and I was talking about this phase of the company specifically and San Diego Union Tribune. That's how you say it, right?

Yeah.

They wrote an article and the headline was, you know, 37 year old. I forget how old I was at the time. 37 year old, you know, creates the most valuable company in San Diego or something. It's me with like a weave. I have, like, long hair and I look, I'm like glowing. I have this, like, smile and all this stuff. And in reality, as you kind of alluded to you later after that podcast, like, that was the period of time where the wheels were coming off. So that article, it's always funny, right? When. When your company's crushing it, no one wants to cover you. You're like, where the fuck's the press? Why won't people cover me? Why are they covering my competitors? And then like the periods where you're like, sucking or like you have an internal dispute or like you just don't feel like being public. They want to, you know, people are all over you. And so in this article, I remember Having a. And I think I did a pretty good job of faking the smile, but I literally remember. And I was like, man, this is like the most hypocritical, ironic thing ever. That there's, you know, you never know the headline. But just the way they were covering it, I was like, if they only knew that we had this crazy internal dispute going on with our series C investor and they were trying to push me out of the company. If they only knew that I was having panic attacks every single day and going to the bathroom and have no idea what to do. Practically, like paralyzing self doubt. And then this article gets put up there. Right. Like, it's just. It was, it was the perfect thing because it's like the dichotomy of reality and like people's public perception.

Yeah.

And like you read a TechCar in chart. Okay. You're like, how are they so far ahead of me? How are they? How are they like, you know, up into the right. And there's always this backstory you don't know about. It's either really much longer. They've been doing it for 10 years.

Yeah.

Or there's just all this conflict or whatever and then you're just not seeing it. So for me, it was like, you know, it was a really tough, tough time because, you know, they underwrote the series C investment to a certain growth number and we weren't hitting it straight up. We just. We just weren't hitting it. And part of that was because we're a B2B software company. SaaS targeted at nonprofits, helping them with their fundraising and their donor management. Basically, you can think of it like, classy is like HubSpot meets Salesforce meets Shopify essentially for nonprofits. And you know, we, we were. Our DNA, that company was basically SMB sales. Like, we targeted small to medium sized nonprofits. We had the playbook. It was 500 bucks a month. It was transactional. We had this freaking mean sales team. Probably not the most efficient, but we were just entering the space with brute force. We were like. And it was, it was, it was, it was calculated move. Like we raised. We bootstrapped for a while and maybe we can get into the fundraising history later, but. But then we raised a bunch of money and it was calculated because we knew that the space was kind of noisy and we needed to bust through the noise. And it worked, but there were a lot of inefficiencies. We had to fine tune the knobs and all this stuff. And this new investor wanted us to Move up market. And they wanted us to work with bigger organizations. And so no problem with that. We agreed that was part of the investment thesis.

Who doesn't want to sell bigger deals?

Yeah, totally. And so the issue was that we had to rewire the DNA of the company, especially the sales of Mar the go to market function. Like, you can't just take an SMB seller and throw them in an enterprise seat. It's not going to work. So it's basically building a new company and they wanted us to do it in a year. We're like, there is no way we're doing this in a year. This is going to look pretty ugly actually for a little while there. And I wish I was even more explicit looking backwards, but we had a lot of tough conversations around this and we thought it would take maybe three years and that was unacceptable to them.

Wow.

At one point I said, what, What? What's the end game here? Like what? Why are you so upset? And he looks at me, I'm not going to say any names. And he says, scott, I'm in the IRR business. The entire internal rate of return business, that's all I care about. I was like, wow, okay.

Yeah.

So that's where we're at. We're basically a spread. This is this whole point of this whole endeavor. This mission driven company is basically down to like extrapolation on a spreadsheet.

Yeah.

Okay. Awesome. I feel, I feel really good.

Yeah.

Really empathetic.

I feel really good.

Right.

I feel really good. It's like letting that. What is it? Into the hen house.

Yeah, the wolf.

The wolf into the hen house. It was like, sort of like that. Yeah.

But you had such secret sauce. I feel like around training such a sales army. I mean there is a huge generation of tech salespeople in San Diego and everywhere who started it at Classy.

Yeah.

I mean hundreds of people who, who have so much to kind of show from where they started and what you had to do to get from the bottom up.

You know, it all started with reading Aaron Ross's book Predictable Revenue way back in the day. Now that's probably like old. Too old school now, the approach, but the whole bdr, sdr, ae. And you know who I really, really admired for so many years was the CRO of HubSpot, Mark Roberge. And I was honored to actually have him on as a guest on my sort of private podcast for founders. We'll talk about Highland a little bit. But I loved Mark because he basically approached sales like an engineer because he was an engineer. So he became the sales leader of HubSpot and brought them from zero to way over $100 million in an IPO by literally taking more of an analytical approach. He is humane. He's not like the spreadsheet jockey that we were talking about with the investor. But he really looked at the process and the steps in the process very analytically. And I was very attracted to that, being an industrial engineer and a process engineer. And so I just studied everything he did. And we also took the other page out of HubSpot's playbook, which was inbound marketing, which was like, we were so content. First we hired this, is this, get this, we hired two writers and an editor before we hired our first sales rep. Wow. Like, we were that dedicated to content and we were doing this before anyone, minus HubSpot. We were looking at what they were doing. It was very early days of HubSpot. They were very early. They were in like their series B and like, wow, incredible. Look at what they're doing with blogging. This sounds so silly now, but like, like, holy shit. Like they're able to get people to visit their blog and then download a guide and then that's like, shows the intent as a qualified lead and that's their funnel. Like we can do that.

Yeah.

So we started doing that. We just started writing crazy amount of content for nonprofits in the space. Like the deepest stuff that existed on fundraising, on leadership, on operations and all these topics. And then they'd come in and they would download whatever the resource was and they'd end up on our lead list. And so we just created this incredible scoring system, incredible calling system. And so by the time this, you know, obviously there were kinks in the, in the armor sometimes, but generally speaking, we're phenomenal at basically content marketing and flipping that into a qualified opportunity, maybe better than anyone in the space. And we brought Mark Roberge's analytical framework to our sales team. And I think every rep on the team, every sdr, they knew their place and, and they saw how it worked and it was like magic for a while. It really was like we were, I, I still think we're the best sales team in the space by far. And you know, GoFundMe is not a sales culture. So when we ended up getting bought by GoFundMe many years later in 2022, I think that was one of the biggest assets. Think about it, like we had to meet. I mean, I'd probably put our sales team against any sales team, nevermind, just one of the Nonprofit space. But you're right, it's so cool. It's like almost like the PayPal mafia, but the classy mafia. I know people have referenced that. Like generally it's kind of neat, but a lot of it's the sales side.

There's not a lot of tech sales talent, you know, broadly in San Diego. And most people can trace the roots back to classy.

So cool. Prior to that, our first director of sales, one of my biggest mistakes was waiting so long to hire this person, but she came from active, so that's actually another route. Right. Like totally it came from Active and then eventually more of the DNA came from Salesforce and then eventually other tech companies like Okta, Atlassian, we kind of had everything that makes sense, but it was really an active Salesforce stack, if you will, from a, from a, you know, inspiration perspective.

And so that's where the playbook was on. That was what we raised on of like we figured something out, we can scale it. And yet here you are getting asked to do something like completely different pivot and the customer's not even really asking for it too. How'd you get through that all the way through selling to go to GoFundMe?

Yeah. Because what people don't realize is there's two things that are missing. You can't. Yes. It's the sales talent and the sales capability. When you're moving up market, you can have an amazingly successful SMB rep that just straight up fails when they get put in the enterprise seat because it's strategic selling. It takes longer. The sales cycle's longer. It's more like honestly like pitching an investor than it is a transactional sale.

Yeah.

So it's not like the person could never learn it, but it is a huge learning curve there.

Yeah.

And we did that. We like literally put them in the seats and the whole team failed. I mean, once you do that, there's no returning. They don't want to go back to SMB. So you either have to let them go or they quit.

Right.

And we had probably. Well, you know, this was this. We poached our best talent and put the enterprise.

Yeah.

And then we lost them all.

Yeah.

Sucks.

Yeah.

Such a bad cultural move.

Turnover of town.

And so we just had a wide ranging amount of poor decisions that were essentially all rooted in this. The acceleration of the move up market. These artificial acceleration of the move up market. Because by the way, you years later, it worked. It was a huge piece of our success. And guess how many years it took? 3. So it's like, hey, told you so, motherfucker. But, but either way. So the other two things about moving on market is one is the demand, right? Like inbound marketing generally casts a wide net. So you don't, you know, enterprise marketing tends to be way more focused and it's like more technical and it's more. You're you going to have the CIOs and the CTOs and the CEOs. You're not going after the director of whoever, director of X. So there's a lot more targeting that needs to happen. And you know, we didn't have the pipeline, so that put extra strain on the reps who also didn't really know how to sell into the enterprise to build their own pipeline. Another thing that, that really, that really hurt. Then there's the product, the third one. Yeah, sure, we sell an enterprise customer and guess what? The reps are selling the roadmap, not the current product. They're like, oh yeah, don't worry, we'll have like 20 more enterprise features. And like it took double the, you know, double as long. And so the expectation game that you play with the prospect that becomes a customer churn goes up. So you have all those factors. If that's not sequenced correctly, then you're really putting yourself in a really compromised spot. And if you lose your reputation when you move up market with some of you, let's just say, thankfully, like Shriners, I ended up selling to Shriners Children's Hospital. Great, amazing partner and then Salvation Army. And those were the two that like stayed with us. And there were some hard times. I mean, they were like, guys, yeah, did you just sell us a bunch of bullshit or is this like gonna work? Like, I put my name, my head in the for you. So, you know, that was huge. And they stuck with us. And that was one of the reasons why we had this sort of eventual gravitational force because those brands were huge. But it took so much like convincing and concessions on our end just to keep them around because we just weren't ready. But they didn't want to go back. There was this formal RFP process, all that stuff. And so they were like, well, we're kind of stuck with you like a marriage.

Yeah.

And you know, here's what we need from you to make it work. And we just busted our ass to try to catch up. And we did. But again, that all took years. That was not. It was unrealistic to expect that we'd be able to make a full change to the enterprise. So now Classy sells Mostly to mid market enterprise. The SMB business is mostly self service or product led would be the term, I guess these days. And that's fine. And it works. And then you know, the small, small and individual causes use GoFundMe, so the whole thing is covered. But the sales team now, where the economics are better, are focused on mid market enterprise, which makes total sense.

So you're saying you needed this kick. Maybe you just didn't know you needed the push.

I would say that we knew that. I mean when we went in and we were pitching the series C to not just them, but to others, and we had a couple term sheets, we're lucky to have a few. And the alternative term sheets we didn't take were at a lower valuation by call it 10, 20 million dollars. And looking backwards, that seems like nothing in the grand scheme of things, but at the time that, that felt like a lot of money and it is a lot of money, but it's like the delta there for the pain we experienced and the choice we got, which was basically picking someone that really had an enterprise pedigree and didn't understand where we were at also as a private equity firm, not a venture firm. So they're, they're, they're protect their, their downside risk people. They're not upside. Yeah, you know, future 1 out of 10 is going to be a winner, people.

Yeah.

And we were almost read, but not quite. It's like they, they swam downstream, we swam upstream. Odd fit for that moment in time. Two years later, three years later, maybe it would have been a great fit. But that's kind of the point, right? It's like, and we chased valuation, they gave us the best valuation, they gave us good terms. And so what that does, when you chase valuation, it puts more strain on performance, especially initial performance. Because if you, if you say, hey, like, I'm agree, okay, fine, I'll give you that X valuation now. Your performance needs to be perfect. Do you know what I mean? So like the partner sticks his neck out and then they're like, oops, classy, missed the quarter. Oops, classy, miss the next quarter. The partnership, what the fuck? You convinced us that it's worth X. Yeah. And so that was the dynamic. Right. But the way they reacted to that was not good, not good at all. I mean, everything from blocking capital coming into the company. So we were, we had about, at one point, we had about six months of Runway. Salesforce wanted to do a invest in us, they blocked it. They wouldn't let Salesforce invest. They Blocked all stock options going to the two employees. So new and existing, we couldn't do salary promotions or promotions. We couldn't plus up people. So we were really handicapped there. And then they just did a shock and awe campaign of bullying and harassment to me to try to get me to self select out. In fact, their office is not far from here. And I remember getting called into their office and it was the head of the firm and the partner and they basically just yelled at me for two hours and tried to convince me to quit on the spot. And the other board members didn't know they were doing it. So you know, that's this.

And you stuck with it.

And I said in that meeting, I'm not self selecting out. Yeah, because it was easier to try to bully me to quit rather than rally the rest of the board to fire me. And that ended up being like the saving grace because, you know, and I was pretty much honestly, like so mentally exhausted. I did resist in that meeting. But then I got back and you know, there was probably a 24 hour. We ended up rallying money to buy them out. And it was about 25 million bucks. And it was the hardest money I ever raised because imagine going to like Salesforce and say, hey, we need you to invest another 5 million. Oh, by the way, our serious investor hates us and wants out. They're like, what? You know what I mean? Like, this is odd. So we couldn't raise from new cat, new people because they're like, no way I'm touching that thing. You know, and then from existing investors. Like, I like kind of knew about that. But like, what is going on over there? You know what I mean? Because like investors are a little distant. And so that was really hard. So we ended up, we ended up raising it. We were last 24 hours. And everyone's, you know, crossing the T's, dotting the eyes on the, on the paperwork. And we get an email that says, deals off. And we're like, what? And they said, you, you missed. You missed the deadline to submit your signatures by 30 minutes.

What?

They're just with us.

Yeah.

And no dead silence. And their lawyer said to our lawyer, no, it's really off. And we're like, holy all of that. I mean, that took three months, at least six months to raise the money. And I remember I was, I was basically in tears. I was walking around the block around Petco, which I intended to do, and I called Carrie, my. My wife, and I was like, it's over. Like, like really, like, it's over. And that was every, that was my whole entire adult life.

Yeah.

You know, wrapped up in that company. Certainly all my net worth, but a lot of my, my own like self confidence and my own everything of my identity. Yeah, everything. And so I went back home and I remember it was like 8, 9pm And I was just like, so just what the do I do? And I made this last town area and I called the actual owner of the firm that was across the country and never talked to him before in my life. He didn't pick up. I left a voicemail and I was pleading and I literally said, I know that we've had like, I know that both sides like kind of hate each other right now, but just let us live. Just let us look from founder to founder. I know you started something a while ago. Just founder, let us live. That's all I'm asking. And he never responded, but probably slept an hour that night. And I woke up the next morning to an email from the lawyer, the deal's back on. And it said, if you pay $50,000 more in legal expenses, no joke. And so we were like, you okay, fine. And we paid it. We're like, get out of here. And that was it. And we literally. And I, a lot of people when I tell the story, they're like, that's like very abnormal to buy out your series C investor for $25 million. Like, you know, it doesn't normally, that's like a normal course of business. So I think the odds were even stacked against us more than we were realize when we're going through it. But it just felt like, it felt like absolute life or death survival. So we didn't even think about it. You know, we were just like, we have to do this or we're dead.

Yeah.

You know, and, and literally no other option.

Might as well, you know, they, they painted the picture like, oh, we'll take control of the company, you guys, your equity, be safe. You're out as CEO. That's the way they painted it. And this, this, this path was risk everything and fight. But I'm really glad we did, obviously, because it ended up working out. We, you know, from the point of the buyout to basically, you know, the next round we did and then the eventual acquisition, we 7-10x the value of the company. And that was in a couple years. Wow.

Yeah.

And it wasn't, you know, it was like we had a cancer. Seriously, when this was going on, it was a cultural cancer. And even the people that were in the lowest level seats, they had no idea what was going on, but they felt it. You could just feel it. It was like a tone change across the company. Not only was I distracted, they forced us to hire a bunch of executives that came in and good executives by the way, still friends with several of them, but we just sort of tossed them in there. And you know, it was my fault. Like, I mean they didn't have that instruction, they didn't have direction of like, who is this company? Like, what is, how do you, how do you operate in the classy way? What does it mean to be an executive? Classy. So they would just bring the DNA from all these other companies. It was like this just like melting pot that just didn't work in the right way culture. I mean it was breaking and they just ran the company, the executives ran the company. All these different directions, no kind of, no fault of their own. Honestly, when I look back at us, really like it was on me. But that, that hurt us even more. So you had, you know, fiefdoms, you know, all this politics and all these weird things that would never happen in classy. Like we were so tight at the top. Our, it was mostly a relatively inexperienced founding team and then like a senior leadership team would be from like active and others. But we hadn't yet gone with the high powered executives. So when the, you know, the investor wanted us to grow faster, like, well, you obviously need this DNA and this DNA and this DNA. You need, you know, white hair, this and that. So we brought in again, I don't want to throw the executives under the bus because actually some really talented people without cohesion, without sort of a unified, you know, operating rhythm that's got to come from the top's got to come from the CEO with unification from the board. They were lost. And that was tough because then all of a sudden you had people basically trying to bring, trying to do the right thing, but bringing the company in all different directions. So that was another thing that was sort of on the back of that. But anyways, when we bought out the investor, I did a total reset. It was like you have a near life death experience. You start to say, okay, first of all, how in the world did we get here? How did we let that happen? Like, how is that possible? And how do we build a system and a company that protects against that moving forward? And there were two sides. One was the executive side. This is really the system side in my own leadership. And then there was the soul side. The soul side was the values, the mission, the vision, which when we got into this dispute, went out the window way too quickly, and it was ignored by the investor. Obviously, they just wanted quarterly results. But we didn't do a good enough job of protecting the core. We were able to be pushed over too easily just by the influence of one shareholder. And we knew that we never wanted that to happen again. So, you know, we ended up philosophically and more mechanically and operationally designing, very intentionally designing the way we built the system and scaled from there to protect against those two things and to make sure that the essence of the company, the things we cared about most, the soul, not only did we protect them, but we amplified them moving forward. And they didn't live or die with the founders. They're still in those four walls. I'm not the CEO. You know, one great example I always think about is Yvonne Charnette, the founder of Patagonia. He hasn't been the CEO for decades, but, you know, when you look at Patagonia, they have some of the strongest belief systems on the planet.

Yeah.

And so he somehow ingrained that in the very fabric of the organization, even when he wasn't in the. It's almost like he is in the CEO, but he's not.

Yeah.

And that was something I always looked at and said, wow, that is true leadership. Like that is high leverage. I gotta do that. How do I do that? You know what I mean? Like, how do I work on. Jim Collins says it's clock building, not time telling. How can I do more clock building?

Yeah.

You know, and that's what I started focusing on. And at first, people were like, why are you focused on that? You know what I mean? Like, even the people that had fought for me and for the team, they're like, I know that we just bought them out. I know this is. Why are you, like, so over la di da doing, like, mission vision stuff? And I'm like, trust me. You got to just trust me. Because it was all part of this new way of operating, this new operating system. And it ended up working, and it did ingrain it very permanently into the fabric of the organization, into the culture. And now the current CEO of Classy, it's under GoFundMe. Sarai Alexander and others have done a phenomenal job of carrying the torch, by the way. Sarai was part of that executive group that I'm talking about, but with direction, with a framework and understanding the classy way, she can now take that to the next level and she can make it her own and make it theirs. And the people that are there now, and that's true succession. That's true. I think company building and scale and it all came from that really bad place. So it's a silver lining, I guess, right?

Yeah. Wow.

I mean, you have just. Everything we learn as founders usually comes from the hard stuff, that's for sure.

Yeah, totally.

But how about though, it merging with GoFundMe?

That's gotta.

Been a hard feeling as well, after you've won this battle and rebuilding. Take us through that a little bit. Yeah, especially one. One thing. Codefunding is now a series of companies that have kind of come together.

Right.

A few different San Diego companies as well, too, I think.

Yeah, yeah, yeah. Not at the scale of Classy. That was their biggest so far. But y. It's a. There's probably three or four in there for sure. So I've known Andy and Brad forever and we basically the founders of GoFundMe, and we grew up together, you know, like, we were in our most formative years trying to figure it out because we weren't. We were both in the giving space, but not competitors. We were in the nonprofit lane, B2B. They were in the consumer lane, individual crowdfunding, so. But we use the same payments. Rails use all the same. You know, we're like sharing engineers and all this stuff. And so when there was an issue, we'd like. They were my first call. I'd go to wherever their freaking office was. They were very private. They would, like, not have any signs. I was like, like escorted in. And then we'd go to like, Korean barbecue. And they had this whole, like, convoy and stuff. Yeah, yeah, convoy. Like just super funny. And we would just, you know, share secrets and war stories and help each other out. So GoFundMe actually tried to buy Classy several times. And the. A couple of the companies that they ended up buying were in our space. And we're sort of like, okay, well, we'll go here. And they're much smaller, not at scale, but they really wanted classic because we're at scale and we just weren't ready. Like, we. We had a lot more to do. And so we ended up raising our Series D from Norwest Venture Partners after the buyout. Maybe only a year and a half after that 5x evaluation from the buyout. And we were just. And we were growing 60, 70%. And these are. We're at big numbers now and profitable. We're really crushing it. And did the norwest Venture deal, did a little secondary, which was great. Relieved the pressure for a lot of people. Including myself. You didn't have to worry about credit card debts, thankfully. And you know, kind of just turn the page on that whole thing. So it's like, okay, cool, like reset moment. What do we do from here? And I kind of had it in my mind after this and I let, I let Norwest Ventures know I was tired. I was 15 years and I just fought this battle. So I had this successor in mind and I was going to move to executive chairman and I did right after the series D. And that all worked out really, really well. And then GoFundMe comes around like six months later. So who raises $125 million and sells in six months? You know what I mean?

We do.

So we were in the most position of strength like we'd ever been in a company. So that just goes to show like this was strategically, the strategic rationale for this deal was very strong and even Norwest Venture Partners wanted to do it. And so the whole idea was, okay, classy, got the B2B side, GoFundMe's got the consumer side. GoFundMe was probably like 3 to 4x bigger than classy at the time, but we were still very significant. But everyone knows GoFundMe. GoFundMe has the brand, right, but we were well known in the nonprofit space. So could you combine both and sort of build this, you know, the world's biggest, biggest giving platform, a two sided marketplace essentially for giving. And could you help donors that come in through the GoFundMe side find charities that they would like or vice versa? And that's really still the thesis. And we're using, you know, our joint database and AI to make those things happen, which is, which is pretty amazing. Like the stuff they're doing now is incredible. So I think everyone's super. Still very, very much still bullish on the whole thing. A couple of things that I like, regret and I think it's for other founders too. Since this is a heavy equity deal. The whole idea was, look, we're, you know, we're better together. I agree it was the right move. I have zero regrets whatsoever. But as a founder, when you do it like a largely equity deal, you aren't in the driver's seat anymore. So you just, you naturally lose control and you don't really know what that's going to feel like, you know, so it's no fault of anyone's, but it's like, you know, now you're on the outside looking in and that's fine for the most. Christ, because I trust the operators and stuff. But you know, if like you have a plan to go public, or you have a plan to do X, Y and Z or anything, and that takes longer or shorter or you see something, you really understand it, you're not in those conversations anymore. So you just have to sort of like stomach it. You know what I mean? And like, that's tough. You know, that's tough. And so, you know, I harass the CEO and CFO and Soraya Law and I ask questions and you know, God bless them, like they probably, you know, we have a love hate relationship. But no, no, it's all. It's all good from that perspective.

I mean, you had just gone through fighting for every five year being to stay in control.

Yeah. And honestly, the first year was totally fine because I want nothing to do with it. I wanted a total break, you know.

Yeah.

And I started a couple other local companies and Highland the community for founders. But I wanted that. But then I was like, wait a second, you know, how are we doing? How's it going? You know? And then they would. They would. They would ask me, like, I still advise to write directly, which is great. I love her. She's so. She's awesome. And so I really just get a lot of joy out of that. So I'm more. I'm just a. I'm just an advisor now. But, you know, I think it's. It's in. In some ways it became the best of both worlds because I'm plugged in enough to know what's going on. I know the numbers. But there was that first period where I'm like, where do I fit in here? You know, I mean, like. And I'm sort of. It was so very odd feeling.

Yeah.

And Andy would always let me call me and he's on the board of directors. And I could have negotiated for or been on the board. And I ended up saying no because I was so burnt out. And that's the other thing. I probably should have just. I should have probably pushed for that and joined the board because then I would have put me in a different spot, you know. But you know, it's all work out in the end. So good. It's still great. It's a great combined company. The thesis then still makes sense now even more so. The market changed right after the acquisition. So it was no more like, you know, it was like, who said Andreessen probably rip good times back in the day. It was kind of like that. Like, it would have been harder to raise money. We would have had we had, we would have had to move. We just raised that money from Norwest. So we would have had to use that to get to profitability ability pretty quick and then win that way. But, you know, sort of as a partner with GoFundMe, we have an incredible advantage because that's an amazingly successful company, but also has a moat around individual crowdfunding. So there's just a lot there that helps. Classy and vice versa. So I think it's a great marriage and it even made more sense when the market turns because we weren't, you know, no one wants to be raising series E's and F's, you know what I mean? And we needed to get to 100 million and beyond and IPO independently. And that was kind of our strategy. But again, looking back on this is the right move. Like it's gonna, it'll work out. I think most importantly, it's gonna work out for all customers. It's gonna work out for anyone that's been involved in the company, shareholder wise and yeah, we'll see where it goes. Both companies never perform better actually, and they're at super scale now, so it's pretty cool. So I can gripe all I want, say, oh, I want to know, but like they're running the company better than I can. So let's, let's get serious.

Fifteen years in for sure.

Do you, do you ever.

You go to the office, people recognize.

You or are you still. Well, everything was virtual for so long. So, I mean, I, you know, I was plugged into some meetings here and there. Most of it's just virtual. We were actually going to maybe stop by today, but. Sorry, I had to go travel. So we'll see. I'll go back and business. But they took. So they got rid of the old GoFundMe office and they moved into the classy office above Petco.

Oh, cool.

Yeah.

So everything's there.

So that is downtown. Yeah. And they. I was. About a year or two ago, I got a box with all the stuff from my office. So they had kept it, you know, it had dust on it, some of the anchorman posters and some padre stuff. And I was like, oh, it was like, I almost got fired.

Yeah, you get this box.

I'm like, that's a little weird. But, you know, I mean, what are they supposed to keep my office forever? So that made sense too. Now I just recreated my office in my house.

Yeah.

Cool.

So you go through that huge battle, triumph and then, you know, take a little bit of a break. Well deserved. Break. And then you say, I want to be background founders or what? What do you do next after that?

Yeah, well, we started a couple of local businesses first. And, you know, funny story, I had a friend from high school, Craig, who is a master cannabis grower. He's really a good cannabis grower. And he. Yeah, right. And he had moved to Whitefish a long time ago, so he lived there. He's one of the reasons why, you know, we. We were there and my other co founder, Classy, lived in. Todd had moved to that area too, so we had some friends. But anyways, he was, you know, wanting to start something. He was going rec legal there. And so I was just going to invest in him. And, like, one thing led to another, and then I've become like a big partner in this thing. I'm like, okay, I guess I'm now in weed. I go from software to weed, and so I'm the weed guy. But what was cool about that little venture was that it birthed Haskell Creek. So Haskell Creek is a holistic pharmacy, basically. It's. It's essentially a much healthier version of a CVS or a Walgreens. And so it started initially with this cannabis thing. And we were like, oh, like, we don't just want to be a dispensary. Like, how do we bring in some supplements and some, like, organic skin care and some other stuff, things you'd find at a pharmacy. And then we realized these are really two separate businesses. There's too much laws around the cannabis stuff. It's too restrictive. It's, you know, taxes are insane, inspections. You know, it's. It's. It's a tough game. It's a tough game. And so we split the two. And so now they're two different companies. And Haskell is in its infancy in a way, you know, from a maturity standpoint. But we opened up a beautiful store in downtown Whitefish that's on. On the corner, one of the best corners there. And it's truly an alternative to Walgreens. Now we have partnerships with local practitioners. People come in, they can get supplements. It's all about prevention, not pills. That's kind of like the motto if you think about what we're trying to do there. So we're going to, you know, retail traditionally is a really shitty business model. The margins kind of suck. At the end of the day, I think the most successful chains are maybe like, on the bottom line, 3%, you know, so it's not SaaS. It's much different, for sure. You Know, the gross margins are okay, but then you get a lot of rent, labor, you have all these things. And so it makes it very applicable.

Things though from what you've gone through before.

Yeah. So, I mean, business is business, but it's just different. You're like, you know, the metrics and the way you think about it is definitely different. I think the biggest one, and this got me nerding back out of my industrial engineering days, is inventory management. You have to buy a bunch of physical goods and hold them. It's not like E commerce or drop shipping. It's like we're buying, I mean, we have a thousand products probably in that store. So you're literally, that's what, that's why people don't, they don't compete with these companies. Right. First of all, cvs, I mean, they're, they're going through their own issues now. But you know, they, they, they have thousands of stores. So scale comes from many stores.

Right.

You know, that's why they do franchises and, or restaurants have chains, all that things. The economics is just big. What am I trying to say? There's better economics with scale. And when you have one store, it's like, oh, you can kind of see like a glimmer of hope there, but it's like, oh, now, you know, I guess I need to open 100 of these. That seems really daunting.

Yeah.

So people, I think it just takes people out of the market entirely. And it's just very difficult, like cash wise to be like, yeah, I'm going to fund a thousand products. I'm going to literally go to a thousand companies and somehow get them to put their shit in my store. So you end up having local mom and pops that are more simplistic and those work and it's fine. There's pharmacies like that all over. It's just very difficult to do retail. But I think inventory management is the number one and the number two. Even if that store is successful, maybe you make, you know, Maybe it's a $2 million top line business in that particular geography and maybe makes, you know, a great year. $500,000. Not bad. It sounds like, you know, it's like, shit cool. It's a, that's a, that's a large household salary. Amazing. But that's a lot of work to just get to that.

Totally.

So I think what we're trying to do is like, how can you make, first and foremost, how do you make this work for the community? Even if this, you know, even if this just Breaks even every year. How can it be a good thing for the community? That's number one. Number two is how do you make retail business model not suck? Is there a way to diversify revenue a little bit? And by that, I mean, like, partnering with local practitioners, doing things with them. We're opening up a healthy cafe as part of the store to draw people in, and then we have our supplements and the rest of the products. So trying to figure. Think of it like, you know, three. Three legs of a stool type of thing. And if we can get that to work and the business model looks okay, then we may open another store. And it would probably be in Bozeman or, you know, in a larger locale in Montana. And then that would be the next test and be like, what do we do from there? But honestly, if it just stays in Moyfish and it's just great there, like, that's good. That's cool with me. Like, I think we're okay with that. But I think the idea has legs. I think people want to take more control of their health. Ever since COVID they're looking for options, CVS and Walgreens. It's basically just a chemical factory. If you walk in there, like, every single product, I mean, they. All these feature basically, you know, candy and booze. Like, that's nothing against candy and booze. Is that really a health store, though? Come on. Like, totally. A lot of them sell cigarettes still. It's like, what? Yeah. Then the pharmacy is about, I think, 75, 60 to 75% of their revenue is from the pharmacy and pills. You can get fentanyl there. You can get oxycontin. I mean, hey, whatever you want, right? You just go get some doctor to prescribe you something.

Yeah.

So that has massive issues. And they were, like, completely, you know, subsidized because of COVID and the vaccines and all that stuff. And so now they're just, like, struggling. Yeah, big time.

Yeah.

And so, you know, we're. We're just this dinky store and Whitefish, it's like, not even. We're not even in David and Goliath land. We're like the. The peaky toe of David.

But you're making your own products, too, which is a big difference as well, right?

Some of them, yeah. I mean, like, more on the cannabis side. But, like, we do do, like, herbal, you know, sort of herbal stuff with local farms. And so we're adding that ingredient in. And then certainly the cafe is going to be extremely local. And food's obviously, you know, the primary medicine for everyone. So it's kind of philosophy there. And as we scale and get bigger, like we will do more and more stuff like that to make it more unique. But really the differentiation of that store is just the curation of the products that we do end up buying. They're all screen for ingredients. They're all like really ethical companies. And if someone calls us out on something, we'll look at it and we'll pull it off the shelf immediately. It's not like going to Target and the best branding wins. It's straight up like the best ingredient list wins in Haskell. And you know when you walk in the door that every single product you can pretty much trust. And again, if you call us out, we're going to look at that. Yeah, right. Like that's part of the relationship with the customers. And that seems to be really catching on. Which is. Which is pretty cool. That's awesome. And people say we need one in San Diego.

We all are saying, where's the Haskell Creek? The brand is so good, you know, and it's. And like you mentioned, there's like an Encinitas north county vibe that totally relates to all of that.

We can have a shared workforce with the amount of people that come back and forth from white fish and hands and knees. Yeah, exactly. Boseman, we're coming to Encinitas. Yeah, let's go.

So where is that? How have you stayed connected? I know that we actually have a few shared angel investments together.

Upcycle Lend. Yep.

Probably a few others if we sat here.

So you've stayed connected. Lend's having its third rebirth. They're doing well.

Yeah, I know.

Pretty amazing.

And including with a Lend Live or Classy Live product.

Classy Live crushed it. So, yeah, we actually bought the initial version of or one of the first offshoots of Lend. I don't even remember what it was called. Oh, Fondi. Fondi.

Yeah.

And then we turned it into Classy Live, which is basically like a hybrid and virtual events product. That's crushed it. Yeah, I think it's like 50% attach rate on the front end. So like 50% of new customers buy that up. Buy that product for pretty. That's a huge deal.

Yeah.

That's awesome.

So Josh and team did an amazing job. He came over and worked for us and was embedded for a while and then really helped us integrate that into Classy Stack. And that was our first ever acquisition. It was basically a home run.

Yeah.

Amazing.

Yeah.

I wonder who led that. Oh, that was me. We haven't done anything since. But.

But you stay connected to the founders, right? So, like, even after all this building your own and you stay connected founders, which is obviously what probably led to Highland.

Yeah. I mean, Pat and Marshall, you're talking about the classic founders, right?

No founders, just.

Oh, founders in general. Yeah.

Yeah.

Well, classy founders too. I mean, we'll start there. Like, I think, you know, every. Every founder, any. Every co founder relationship gets strained at some point. Everyone wants to kill each other. It's like, you know, Homer choking, Bart Simpson type of thing. Thing like that happens all the time, you know, and we went through that, but, like, we always had love for each other. We always had respect. And in the, the moments of, like, absolute pain, like that moment I was sharing about our series C investor, you know, Pat took me into a bar, had a beer and convinced me to actually fight. Like, I, I actually chosen path one, you know, door one, which was basically like, keep my equity safe and like, give up.

Yeah.

You know, so I don't want to pay myself as the hero of the story. Like, Pat actually convinced me, and partially my wife as well, to, To. To. To fight. So that's what co founders are for. You know what I mean? Like, you can, you can be at odds, but at the end of the day, you know, the, the business comes first in success and making sure everyone is taken care of. So just huge love and respect for them still. And they're all, you know, on to brighter pastures now, which is cool. But, yeah, no, I mean, I, I definitely still really wanted to be involved and supported other founders for sure. And, you know, like, when I got out, I took that break and one of the classy investors ended up reaching out and saying, hey, would you mind coaching the CEO in my portfolio, this founder? And he was like, around, I think, a million in revenue and, you know, kind of scaling to 10. She was in that phase. So past post product market fit, sort of initial scale phase, trying to figure it out. And that's when you really transition from being like more of a builder mindset to more of a scaler mindset, you know, And I found that most founders really struggle with the transition. They want to remain a builder forever or they just don't know how to transition. But my general belief is that more founders have it in them to become great CEOs. What happens is they don't make that transition cleanly enough. Maybe it takes too long, Maybe they struggle. And then the board, whoever turns it turns against them and they're. Or they turn against themselves. And they say I'm not really a CEO. I don't know, I'm not a CEO material. You know what I mean? I'm more of a founder, more of a builder guy.

Yeah.

And, and my, my view is that that's actually incorrect most of the time. Sure, sure. There are some that are just like straight up, like they want to be behind a keyboard coding or something like that. Serious builders, like, and that does exist. But I would say the majority of people that start companies can absolutely be the CEO to at least 10 million and should be, it should really be a founder run company. And you can basically not only coach them and help them make that transition, you can help them organize the team around their strengths to make sure that they're optimized. 10 million and above and a lot of times to 100 million. And so the coaching was really centered around that transition. And I call it the second chasm. You know, the first chasm is really product market fit from, you know, the famous book Crossing the Chasm. And so this was the second chasm, which is basically initial scale builder to scale builder, going from builder to scaler. And I ended up, you know, doing a couple one on one clients like that or doing some coaching engagements and then realized like the one on one thing wasn't for me, it was too much ptsd. So like, you know, the founder on the call, they'd be talking about, they're like, I'm going through this horrible time and I'm like, I'd find myself laying awake thinking about their company. I'm like, that's not good. I need to like, no, I need a clean break. I can't just relive classy like over and over. So I went, I gravitated more towards group coaching. And it's, the setup is almost more like, you know, MBA program for founders, but like stuff that matters, not MBA garbage. And so you know, from an actual operator that's been through it and it's, I try not to be like overly prescriptive because I don't have all the answers. But I, I tackle the issues that I know are like the unsexy, thorny things that they're struggling with. And it's a lot around universal management, leadership, operations and people. It's not really about sales and marketing, although I do bring in guests and I talk about that. But that's what everyone thinks scale is. They're just like, I need to, if I get more leads, that means scale. Yeah, I mean that's part of it, but it's also like if you get more leads and you go to market, function strong but the rest of your shit is weak, you're just going to basically collapse from the inside. You're just going to implode. And so it's really about building that foundation super strong, teaching them how to be a better operator and people manager. Because in my view, founders really lack that skill. Typically they don't come from managing lots of teams or lots of people, rather they usually come from managing one or two or no one. So they're not only trying to become a CEO, they're trying to be an actual first time manager for the first time. Like, like starting a company. So it's all happening at once.

Yeah.

And typically their head's like way above that. They're like, oh, that's like kind of below me. I have to learn like management stuff like one on one. It's like no, like the fundamentals of how you manage people are kind of important. Totally. You know, especially when you start managing higher level executives, if you don't have that skill set, you, you're just going to be pushed aside as the crazy founder, you know what I mean? Like the weirdo visionary that goes in a padded room and figures shit out every once in a while. Not some, not someone that can orchestrate the team, that can drive a rhythm, an operating rhythm and produce consistent results every month, quarter and year. And so that's really what I, what I teach now. We got 75 to 80 CEOs in the program.

Amazing.

Yeah. And we let their co founder or co CEO come in for free. So you got that adoption. We're also working with their leadership teams or at least the concepts in the operating system, which I now call a North Star operating system, which was born out of the ashes at Classy through that whole time. And I market it as kind of like one part system, one part soul. So the whole idea is like how do you scale your company without losing your soul? And not only just losing it, how do you amplify it as you grow? And so, you know, I think that's been really cool because it's like stress testing the system with 75 CEOs. And it's one thing to use it for your own company, it's another thing to make it transferable. So that's been my biggest challenge. It's almost like building a product. Like the company operating system is like a product I'm working on. And it's like how do you make that scalable and transferable so someone can intuitively use it and it makes sense and it's not so classy esque, you know what I mean? It feels like, oh, wow. It's like the shoe fits and then they can customize it from there for their own company. So I'm very much viewing it as sort of platform. So that's been, that's been really fun. That's been a really cool, like, sort of product centric piece of this whole thing that I didn't expect, but I was like kind of forced into it because it's like, okay, well, what do I. How do I coach these guys? And what I found was that transition for builder to scaler, the operating system is so fundamental, you really need to lay one down, own it, and then make it your own. And that's really the one, two punch that we go through with every single CEO.

That's awesome. Well, seeing it publicly or hourly, the content has been phenomenal. I think you really, like, people really gravitated to what you were saying because it was so authentic and genuine, but also concise, which I would imagine is what carries over into the lessons with everyone as well too. Like, what are you, what are you seeing for kind of Highland going forward?

Yeah, I think that we, the whole thing is under a banner of less is more, you know, just like simplicity scales.

Yeah.

Actually it's one of our values of Highland simplicity scales. And we found that at classy when we, when we allowed things to get overly complex and not even just in that, like, sort of investor dispute, just when we allowed it, like, complexity is like an invasive weed. If you're like as a CEO or chief gardener, you know, and you gotta like cut the weed back with like the freaking, like, you know, machete or whatever. And you gotta keep your, keep your leadership team and the company clean and tight.

Yeah.

You know, like a hedgehog. And so that's how I think about it because if you just let it get unchecked, complexity will just choke you out, you know, and you lose the essence and the simplicity, what you're all about. And people forget and they get distracted. So anyway, so, you know, I think the core of Highland and the curriculum is just around simplicity scales. And we're going to cap it at 150. Founders will probably be there this year and we're capping that because it's Dunbar's number and it's like, okay. Which is like, you know, that's the biggest group or a community could be without losing complete touch with each other. And I found that as a 50, 50 members was a was or 50 people at Classy was a huge turning point. But 150 was the biggest turning point. So roughly. So we're gonna cap it there and then just see where that goes and just continue to make it really valuable and maybe treat it like, you know, like one in, one out type of thing. And we're working on a graduation program, not a formal graduation program, but like, let's just say a Highland member exits. How could they buy in to Highland? How could they become. Go from member to partner?

Yeah.

And could we eventually have some sort of fund or become an LP in other funds? Like, what does that look like?

That's cool.

You know, and I think that's really a really neat way to think about it so that it isn't just something you come in and you just leave and you're actually connected to Highland forever. But. But there's distinct phases. You clearly come in, you're in there for three years, you're soaking it all up. You adopt, your team adopts it, and then you sort of graduate to this next phase. But you're always connected to Highline. It always means something.

Yeah.

And so that's where I think it. It heads there. And then the North Star os, you know, there's a lot of a couple different operating systems that are very prevalent out there. The one that people tend to gravitate towards in tech at least, is okr. So that's really, you know, a glorified goal system is not really an operating system fully, but either way, people use that. And then there's eos, which is entrepreneur operating system system, which wasn't really around when I was like in the formative years of classy. But there's pros and cons of all these things. And I think, you know, my approach or my, my biggest criticism to at least the OS is that's very closed off. It's a closed system. You got to buy all their training, you got to buy all this, like, expensive. They got a thousand, sorry, a thousand human trainers out there. And you know, these are folks that maybe haven't even started anything themselves. They're just trained on eos. And so, you know, it's like kind of. I always just look at that with a pretty critical eye. I'm like, like, what type of advice are they really giving there? And I think EOS is very, very overly prescriptive where it's like you have to do this exact same thing this exact moment. And I think the approach with the North Star is more like an open source Framework, an open source platform where it's like, hey, here's the framework that's worked for me. You can build off of it, you can improve it, you can make your own templates, your own whatever, and then contribute back to the North Star community. And that's where I'd like to take it. And then if you wanted like, I mean now, I mean AI can basically do specialized coaching for you. So you know, I have, you know, a plan to do sort of an executive coach in a box type of thing or in your pocket rather not in the box. And that could be like an AI agent and that can take the place of a thousand human trainers and you're just asking questions or whatever else. And that'll be disruptively low cost. Right. Like I think EOS at bare minimum is 500 bucks a month. But I think that like with the human engagements, more like I want to say 5,000. Yeah, I think we, we could do this for five bucks a month, $1 a month. You know what I mean? Like it's not. So I think this could be just massively scalable to any founder in the world. And if, if, if the AI agent know, understands that North Star framework and then you can input your own North Star into it, then it's going to be able to contextualize the answers to all the questions. So much better. Yeah, like way better than just a human would. They'd have to learn everything. So I really do see that as an amazing benefit to entrepreneurs that are looking really even starting their company, but looking to scale in the future.

100%.

Amazing.

It's funny that EOS you see prevalently in non tech companies, like in EO entrepreneur organization which is predominantly non tech companies doing 1 to 10 million.

Yes.

Everyone's using EOs, which is interesting.

Yep.

And there's really nothing I would say like that prevalent in tech.

There isn't.

And maybe this is the thing that figures it out for tech and then goes to all businesses too.

And you would think that people would gravitate towards an operating system in tech because they tend to be like analytical and like I kind of want this all to make sense like a formula. Right. There's more to it than just it can't be overly formulated. But I would just think that that mentality would lead you to try to search for something or someone to build something and you know, we again, this was born out of the ashes at classy almost by necessity tries to balance the systems and the sole part of things. But I think it works, it Works for any company. It certainly works for tech. That's. We were a tech company. But you're right, Eos is, is predominantly non tech.

Yeah.

Predominantly small business. And they even, you know, they promote the system for companies. They basically say like, why would you want to be a hundred million dollar company? Why don't you just be a 5 million or 10 million million dollar company? And I at a fundamental level have no problem with that. If you're a great five to ten million dollar company. Profitable. Fantastic.

Totally.

But it's sort of the system itself isn't thinking about scaling beyond that. And so it breaks down. It almost doesn't need to. It's like for the small company.

Yeah.

And so it's designed for the small company. It's very prescriptive and because of that and it doesn't allow for you to build on top of it like a platform. And that's where I think it breaks down for an ambitious founder. And I don't mean like everyone needs to build a billion dollar company. I just mean like if you're trying to grow even beyond $10 million in revenue, which a lot of us are.

Yeah.

Well, what's the, what's the system for that? So I would say Northstar sweet spot is going to end up being 1 million to 100 million and that's going to be the sweet spot. I think it can scale beyond that. I think GoFundMe is even still using it. But like I think that's going to be the sweet spot. And I don't really think there's anything that exists. I've looked, I've tried.

Yeah.

And it's shocking to me that nothing exists.

Yeah.

I think it really is.

I know.

I mean it's, it's crazy.

So it's, each coach has their own system that is close to their group. But this is. Scale it and open it.

Yeah. It's building a common language too. Because imagine if like an executive that came from a company that ran on North Star, then went to another company that ran on North Star, how much easier that would be.

Yeah.

There'd be a common language. There's a foundation of understanding. And then obviously there would be unique pieces of each company. That's the, you know, all the different unique pieces is what makes that culture special and different. And that becomes differentiation internally and externally. So that'll never change. And it shouldn't, it shouldn't be like the exact same, but there'll be a familiarity with how things are run and they'll just be able to Plug in so much easier and that will reduce the learning curve. So that's like sort of crazy vision in my head. I think it's. It's very much like an open source project with, with common terms and, and, you know, common objects that people use to build things. And it's like, if we can create that common language from a. From a business system level, then maybe people will do things that I'm not even thinking about right now, and I hope they do with the, with the framework itself. Love it.

The next big project go.

Yeah.

Yeah, it's awesome. But in for the founder.

Which is for the founder.

Yeah.

And which is good anywhere too. Yeah, you just sparked something in me too, because I think we tend to attract in Highland, I would say really strong, really high potential founder, but sort of a Silicon Valley outsider, which I was. And I wonder if I just put off those vibes or whatever. But, like, what tends to not work in Highland, at least initially, is someone that has, like, graduated from Y Combinator. And the reason why it doesn't work is because they come in thinking they have all the answers. They think. And they have great speakers there. And I do want to touch on founder mother, but. But they've great speakers there, but they're like nascent companies. They don't even know what they don't know yet. So they come in and they come in there and they're like, I don't know about all this. Like, this just feels too structured, too bureaucracy. I learned to, you know, run fast and break things. You know, that's my mantra. It's like, cool. Yeah. But you can still have innovation to do this. Right? It's about coordination of your people. It's about alignment. It's about accountability. And so we found the biggest mismatch, actually, with sort of the Y Combinator crowd, but the biggest match with pretty much every other city in America and London for people that don't necessarily have access to the Y Combinator crowd and don't even want it interesting. And that's been super interesting. And so that makes me believe that there's hundreds and hundreds of other cities where people don't even have any. We're not even on their radar. They can't afford Highland as it exists today, but they certainly could afford $1 a month from an AI agent that's going to teach you this stuff. And that's really what fires me up. Like, that's the end goal, is to make it so accessible and so affordable for any founder in the entire world that you don't need to move to Silicon Valley. You don't need to be in the in crowd just to build a successful company, for sure.

But founder mode, how does that play into it?

Well, founder mode, you know what I did like, about what Chesky said there? So Chesky gave this talk at the Y Combinator headquarters and he talked about how, you know, for years and years and years, like the conventional wisdom, the advice that he'd been given was basically to hire great executives and get out of their way, which I basically did by accident in class. You remember the story. I basically hired a bunch of executives and I just like, let them fucking do whatever they wanted. So Chesky did that, but maybe not because he was under like, you know, existential threat, you know, in crisis situation. But, you know, the more he let them run the company, the more the company became dysfunctional. And he would try to get back into the details, but when he got back to the details, he was accused of micromanaging and he was accused of, you know, like, trying to puppeteer everything. And so he's in this really tough spot until one day, I think, I don't know if he fired the whole executive team and then redid it or he, he just had a reset moment. He was like, fuck this, I need to change the way I do it. So he started studying entrepreneurs they really respected. And one of those was Steve Jobs cliche. But hey, he figured it out, right? And he loved Steve Jobs. I think he even met him and knew him personally before he passed away. And one of the things Steve did really well on a first name basis, by the way, was he was able to stay in the details of the company and hold the bar on quality and some of the founding principles that made Apple special in the first place. Again, back to scaling without losing your soul. Pretty similar, right? It's like the same concept. It's like, how can you not become callous and sort of like, you know, sort of just shed all the special sauce as you grow and become too mechanical. And Steve Jobs was able to stay in the details and he was able to stay close to the product and all these things. So Cesky set up a new system, a new rhythm where he would have these elaborate reviews with, you know, product releases, all these things, and we back into the details. And Paul Graham, the founder of Y Combinator, penned an essay that sda. He called that leadership style founder mode. And founders across the world rejoiced, but they took it totally wrong. They basically said, well, all executives are bad. Let's fire Our executive team, we don't need a management layer anymore. Flat org charts for everyone. Oh, by the way, everything needs to run through, through me. I needed to meet every meeting. I'm micromanaging everything. No more delegation. All y' all are fucking assholes. I knew I was right all along, you know what I mean? Like that's where it went. Like Twitter was out of control and I'm looking at this going well, that's crazy because I really resonate with Cesky's story about the executives, but I don't really agree where people taking this founder mode thing. So I ended up writing my own essay about it. It's on my website, but link to it. Yeah. The essence is basically what we just talked about with Classy. It's the founder brings and the founding team and Even the founding 20 people, they bring unique things to the company. They bring a set of creativity, they bring a high bar for quality, they bring mission centricity, they bring, you know, this sort of innovative like layer, an ingredient to the culture. And if you get rid of those 20 people, like all of a sudden, just one fell swoop, there's gonna be a massive gap whether people realize it or not. And it doesn't mean that you have to keep those 20 in charge forever, but it's understanding that they brought something really unique and they created the culture and they created what's unique about the company to start with. And so it's all about figuring out how to ingrain those special principles or qualities as you scale. And it doesn't, you know, it starts and radiates from the founder. And in Cesky's model, he has, you know, put himself into the details to make sure that it's like getting close to the sun. So that radiates really brightness in certain moments. But where people got confused was founder mode is not about being in all the details all the time. It's about being in the right details at the right time. So it's about finding these high leverage moments in your operational cadence, in your rhythm to go really deep. But you don't stay deep. You get the hell out of there. Like a bird that fishes in water, they go, they dunk their head, they get the fish and they get out of there. And that's like sort of the picture in your head. It's like finding those moments where are the most important, like little the most important moments and elements of your company. And how do you create a review or a meeting or a check in, I call it, to make sure that the bar is held high for that specific thing. And the key is letting the people know why you think that's so important. And this is where a lot of founders go wrong too. They come in there and they're like, oh my God, like, that is horrible. You know, why isn't the pixel, you know, two, you know, spaces to the right? And the person's like, what a psycho. Like, this guy's micromanage the shit out of me. But maybe that pixel is tied to something fundamentally important that the founder figured out years ago. And if it's 2, if it's like 2 degrees over, then the win rate doubles, or it's tied to their brand or whatever, some special thing, and if they don't give the context, the person doesn't know. And all of a sudden the founder is ignored or they're accused of micromanaging. So it's laying the groundwork for a system that holds up the things that matter, the details that matter. It keeps the founder connected to those details for a while until they have a succession plan. And it's providing the context and the why for everyone else to go, oh, I get it. That's why this guy cares so much about these two pixels or whatever that example is for you, right? Yeah, that's the key. And then as you go and you. Eventually you create a succession plan, and that's the ultimate form of delegation. You hand off the baton to someone else and it's almost like, it's almost like when presidents hand the baton to the next president and when it's orderly, they write a little a letter and it explains. It's like a personal letter to the next president. Think about your operating system like that. It's the letter to the next successor. It optimizes delegation. It gives them the context, the framework and, and the recipe, and it elevates the things that are really special, that might be non obvious and probably are, and even obnoxious and annoying because the founder keeps harping on it. But then the new successor has context and they go, oh, I know why they look, duh, look. And then now they're in meetings going, that pixel's two degrees off. You know what I mean? Like, whatever that detail is, now you have someone else holding the line. And that's what it's all about. It's finding those special things that make you different and finding a way for everybody, the next leader, to hold the line.

Love it. I'm excited to link to that for sure. Man, the world did erupt mode. It's kind of Funny. Andre Horowitz erupted around it and took their whole spin. Then the all in pod took around it. But you dove deep on it, which we really appreciate it. And pull back out as well too.

Well I think you know it was sort of being debated at a philosophical level, not an operational level. And I just tried to add an operational lens to it and say like here's what it actually means on a day to day.

Yeah.

Here's how you can think about it as a founder, as an operator and actually ingrain that philosophy into your company whether you're leading the company or not. Because founder mode is not just for founders. Founder mode is a mentality and it's for any. Any leader really.

For sure. Well you know what else for everyone? Tacos. Because tacos. Tacos and tech podcast brings everyone together. Do you happen to. Do you have a favorite that you miss when you're away from San Diego and. Or do you have a favorite Whitefish.

That's a great question. So I'll start with Whitefish. There's a place called Felisco's and actually there was. I think it might have shut down but the original was in Carlsbad really talking about. Talking about another San Diego connection and the guy just opened up. It's a really great Mexican restaurant. It's a little more high end. It's not like a taco stand or anything but. But it's excellent for a random town in northwest Montana.

Yeah.

Best tacos you get. Trust me, I liked. So there's. There's too many to like even name in San Diego. That's a cop out. But the one in Point Loma drawing a blank. Someone's gotta have said this in the past. Little mall next to the bagel place near the high school.

It's a guy's name, right?

Oh man, it's so good. The breakfast burritos. My kids still talk about it. And then we'll go with Mitch's gets honorable mention because that is really good. And most people go to play Mama Seafood but Mitchell's is probably the king for sure.

Those are good spots. But we're gonna go look up also the Jaliscos and find its Carlsbad roots.

Yeah.

And how it ended up in Whitefish.

And I don't know. I heard it shut down. I don't know why Carlsbad's like isn't it. Isn't Carlsbad booming?

These totally north county is where kind of the whole everyone has moved to for sure.

Interesting.

Yeah.

How does it feel also just from like, you know, you guys are solely rooted in downtown.

Yeah.

I feel like the startup community kind of builds around you guys a little bit too. You know, Startup Week come through every year. Right. They start crawl and everything like that. What does it feel like going back to downtown right now? Like, do you see and go into the old areas you used to hunt?

Do you want my honest answer? It's a little eerie.

Yeah. Yeah.

And we were on the border of. Of, you know, some. Some of the homeless encampments and stuff over in East Village. And you remember when it's very controversial, there'd be debates about how you deal with the homelessness problem, how you move the encampments, or if you do it all. But the reality was having a company right there, we'd have people get harassed, their cars broken into, females stalked, females actually physically assaulted. So it was no joke. I mean, that was. There was. There was actual repercussions of being downtown. I think the pros, you know, generally the office and the environment and the vibe and just being in the city and stuff were great, but I can understand why startups wouldn't want to do that. It's not safe. Why are you putting your employees at risk? Yeah, you know, and we were. We went there real early. So, you know, things change and, you know how that ebbs and flows downtown. It's like. It has, like, waves of awesomeness, and then it kind of like is a ghost town. It's just. It just seems like they can't all get it. Get it fully right at any given time. The one area that seems like it's always figured it out is Little Italy, which I used to live in. Yeah, maybe our office should have been there, but no, it's. It was an amazing office, and I was. I was really proud of all the startups that were downtown and stuff, and. But I had heard most had moved, you know, to north county, and I understand that too. It's pretty nice up there. It's pretty nice.

Yeah. Yeah.

Luckily, I probably your employees are not going to get harassed on the way from the parking garage.

Yeah, maybe.

Maybe not.

Are the majority of the Highland companies remote, or are there a lot of companies who are actually in person?

So we have a couple Whitefish founders. Whitefish is becoming. It's not nothing like San Diego or Austin or anything like that, but it's like this tiny little mountain town where like, some people come to hide and then they, you know, and there's like actual physical startups there, too. Cool. But generally speaking, it's virtual I give, you know, my master classes or do like the private podcast with guests every Wednesday. And that's been super fun. But we have founders all across the country. We have founder in Japan, we have a founder in Israel, and we have several in London. And we do these founder dinners where they're Highland dinners, plus some. And we're doing one on Wednesday. You're coming right here in La Jolla. And so we have 15 founders or 15 people total, mostly founders from Highland, but a couple others. And so that's just founders. Some are driving down from LA to be to come to that thing. So it's just Southern California Highlanders.

Yeah.

Which is really neat. We've only been like, we're only a year in.

Yeah.

And then there's a London dinner happening in next week, I think, and I'm, I'm not. I'm not going to be there. So there's a lot of these dinners are just happening without me there, which is just kind of neat to see. And they want to get together. So, you know, it's gonna be fun to see where this goes in the next couple years.

Yeah.

I love it, man. I vividly remember talking to you on the phone year ago. I was in the car in Coronado when you're pitching me on this and you're like, we're about to launch and here it is. And I'm so stoked to come to a Highland dinner. So thank you.

It'll be awesome.

Yeah.

Thank you for joining the pod.

Of course. I'm a friend. I'm a very early friend of this podcast.

Yeah.

For sure. And even longer. I mean, we were one of the first Startup Week spots.

Absolutely.

Probably seven offices ago for Classy.

Yeah. You know. Yeah.

I mean, what you. I was telling Jai Al, head of content, she's right over here if you're not on video. But I was telling her that you were top, top 10 people for sure. Help helping build the. The startup ecosystem here in San Diego. So much love and respect for that.

Thanks, man. It's all come from, you know, plopping as a new founder in town, not knowing what the hell I was doing. A lot of people giving and as soon as I could wanna said, now it's my turn to give as well and build an ecosystem for a hundred more classes.

Right.

So let's go do it.

And it needs coordination though. And you stepped up and you. And others. But, you know, people didn't even know that GoFundMe was in San Diego. Granted, part of that was because they were psycho. Private. But, you know, they didn't even know GoFundMe was founded here, you know, And I remember that one time, I think I was at that event. Andy still tells the story. I got up on the bar, completely on the bar at Quality Social, and I was, like, screaming at the crowd. How do you not know that GoFundMe is from San Diego? What do think, you guys?

I mean, yeah, it was.

I don't know what, like, sent me off, but I was like, we gotta coordinate this startup. Because then I was like, all right, Neil's probably a better. A better leader for this than me. I'll just scream at everybody, we need them again.

I mean, there's like kind of a new generation every three, four years of startup founders. They needed to show their roots all over again. So I'm glad we're telling the story and I'm stoked to continue building the team. So thanks, man.

You too. Thanks for having me. So much fun.

Cheers.

Tacos.

Tacos. And tech is on smash border green guacamole keeper counting, counting beans Contador Quentan frijoles Founders trying to raise some kids Queso la vida San Diego school of rappy rapping Fire tortillas round jalapenos in these modern times of craft beer and coffee My coding yoga posse fold the body origami we be surfing Coronado eating tacos el gordo the tacos stand in puesto lucha libre and sombrero Got a shout out to Costos by the ocean watch the sunset La Jolla shows entrepreneurs trying to get funded When San Diego Startup Week is popping in the summer Oceanside, the Tijuana SD be full of hustlers from couch surfing to penthouses right on the beach Tech leaders who believe stars are within reach we interview and founders who be shooting for the moon Hashtag SD techos with your host, Neil Bloom.

Startups get the party. Startups get the party started. Startups get the party. Startups get the party started. Startups get the party. Startups get the party started.

You want tech and tacos? Tacos in tech, you know we got it hey.

Startups get the party. Startups get the party started. Startups get the party. Startups get the party started. Startups get the party. Startups get the party started.

You want tech and tacos, Tacos in tech, you know we got.