Boris Berenberg: I Regret Selling My Business

0:00This sale impacted me individually a lot more than it impacted anyone in my life. Boris Berenberg. He thought he hit the jackpot selling his bootstrapped cash-rich software business. Two years later, he's filled with bitter regret. In this candid episode, Boris gets real about his exit, what he wishes he knew then, and what we can all learn now. If you can think of something that you could do wrong, I did all of it wrong. You don't have to be great, you just have to avoid enough mistakes. There was the category of people that went on to found something else, and then there were other founders that became alcoholics.

0:34The whole reason I want$25 million in a bank account is so it spits off the interest, right? So it means that you don't actually care about the 25 million, you care about the interest, which is cash flows. There's so much bullshit in the United States, but it is so much less than every other place that I go to.

0:57Hi, Boris. Hey, what's up? How are you doing? Thank you so much for joining me today. You know, in this podcast, we focus deeply on what happens after a founder sells his or her business. So my first question to you, how long ago have you sold yours? Almost two years. It was May 2nd, 2022. That was the final close date on the transaction. Fantastic. I would say congratulations, except that I know for a fact that you actually regret selling. And I would love to hear your reasons for that. Yeah, I mean, you know, I wrote a longer article on it. So, you know, if someone wants to Google my name and I regret selling my startup, they'll find it.

1:42I will post a link to it in the comments. It's a fantastic article. I really recommend everybody to read it. Yeah, I think that the main reason why I regret it is because I have lost my kind of self-definition of who I am as a result, right? I think everyone defines themselves differently. You know, some people define themselves, you know, as a husband, right? Other people define themselves as a parent. Other people define themselves as, you know, a marathoner. And I defined myself as a CEO and founder. And so when I sold the company, there was a very large gap left in my life. And, you know, I've been struggling to fill that, right?

2:38I mean, when I sold the company, I was very confident that I had a very specific thing that I was going to work on. And I did. and it went very very well until the market tanked and in the fall of 2022 my new idea which was a very let's say high budget item that I was working on all the buyers basically got laid off and fired and so that went to nothing and then since then I've just kind of been stuck trying to figure out what it is that I want to work on and you know not having that strong pull And it's a, you know, it's a morass of emotions and opportunities and feelings and risk and all this other stuff.

3:26In your article, you also talk about the financial side of things and why purely pragmatically it was not necessarily a good decision. You know, everyone sells a company for a different reason. I sold it because I had parts of the business which I really it's not that I even dislike doing it I just hated it right it was like this dread of like oh man I have to deal with x again and it had been a thing that I'd been dealing with for you know even before I started the company because it was an external issue. And, you know, after a decade of it, it felt like I was kind of like almost in an abusive relationship.

4:13And at some point, you know, like you have to leave, right? Like, and I was like, okay, I'll get enough money and I'll go work on this other thing. And I know everyone wants this other thing and the market's happy with it and blah, blah, blah. Right. And so in terms of the financial outcome, I definitely, I mean, first world problems, right? I'm doing very well. Let me start by saying that, right? Like, I'm doing very well. I'm happy to hear. I am, you know, in a very good financial position compared to pretty much anyone in the world, except a very, very tiny minority of individuals. However, I'm also not in a good enough position where I can like, sit and never work again.

4:55Right. And there are plenty of people who have sold companies who do fit into that category without ever becoming billionaires or anything like that. Right. Like, you know, and I can even tell you that one of the things I've been figuring out is like, there's this term of a fuck you number, right? So like, what's the fuck you number? And fuck you number that I figured out is$25 million roughly. Right. And the reason why I say that number is very specific. It's a, you know, I say$25 million with a 4 % rate of return, right? Gives you a million dollars in passive income per year. Government's going to take half of it, leaves you with 500K, you know, 250K to like live a, you know, good life in New York and then 250K a year for like experiments, you know, fancy trips, whatever, like to live an exceptionally good life.

5:47I think that this is a, you know, this is like the, the amount. And if you account for inflation and all these other things, it really is kind of like the minimum safe number if you want to just like stop working now. I'm 35. So if I want to stop working now, that's kind of what I figured out. I'm not there, right? I can tell you that. So yeah, I think that having sold a company, A, and B, since selling the company, having better understood how one should sell a company, right? It's made me kind of more aware of just how much money I'd left on the table, right? And how much, like, forget even like waiting two more years to sell, right?

6:33Or this or that. It was just like, I did a bad job of hiring legal representation. I did a bad job of hiring financial representation. I didn't run as aggressive of a process as I should have, right? Like, if you can think of something that you could do wrong, I did all of it wrong. And so, yeah, financially, it's also not as good of an outcome as I'd hoped. And, you know, when there's any kind of an exit, you immediately become a target, basically, right? So from, you know, marketing stuff, right, where like, you know, after the exit, I immediately got harassed by every single wealth manager in the world, right, to, you know, people who think that now they can sue you to whatever else, right.

7:19And so especially if you don't have like a great exit, right, like you become a target, and now that money is even more at risk. And I think in the, in the article, I mentioned this concept of like what I call dragon mode, right, which is like, you know, you read a book or like you watch a movie, and there's like a dragon sitting on his pile of gold. And you're like, well why does a pile need why does a dragon need a pile of gold that he just sits on right and it's like once you've sold a company or you know i would assume that even people who just inherit money right have the same problem where they're like okay i have this pile of money and now i have to protect it um and it's not just uh you know a case of going out and you know adventuring for more gold which you know i looked at your history and i guess you've exited five companies now.

8:05Four. Okay. Fifth one coming soon probably. Not all exits were equally great. So they were very different. I've learned my lessons and made my mistakes for sure. I can relate to a lot of what you're saying. The funny thing about advice, right, is that all advice that we hear is like very trite. It's like work hard, right? Like be honest, right? Like this kind of thing. You're You're like, oh, it's all useless. And then after you go through all the mistakes, you're like, it's all correct. That's all the advice that's really out there, right? It's the straight stuff of like, get good lawyers, get good accountants, right?

8:42I totally agree with you. It's quite a funny phenomena that we all know what to do. We all know what's right, what's wrong. But actually internalizing it enough to act on it or having enough conviction is hard. And that's why we keep learning lessons from our own mistakes instead of other people's mistakes. I'm absolutely with you on that one. Yeah, I listen to a lot of like audiobooks and, you know, business histories and podcasts on these topics. And I'm like, I'm trying to basically turn it into a situation where I hear it enough times that maybe I internalize just a little bit of it. Right.

9:21Just avoid a little, a couple fewer mistakes. right it's like yeah the old mongerism of like you know you don't have to be great you just have to like avoid enough mistakes kind of thing um which hopefully i'll get better at i was writing a blog for a long time and one of the reasons i started doing a podcast is because i realized that when people actually see another person sharing their mistakes with them emotionally uh that creates a very different level of conviction than if you read the text which is much less personal so i i love that you know your face shows quite a lot of emotion about your your lessons because that is exactly what helps people um get the message yeah i mean you know even with the blog post uh that that it it got on like the front page of hacker news and i was reading the comments i was like trying to stay out of the comments as much as possible because people were attributing a lot of tone and emotion and things to what I had written that I hadn't, right?

10:30Like I avoided talking about how much the exit was for, right? I avoided talking about, you know, aspects of my personal life that I've mentioned here. And there were like, I did go in into like one comment and kind of responded and I was like, Hey, I'm not saying like my life is bad because I sold the company. I like this. Great. Like I, you know, have like, I'm not in a situation where the acquirer is, you know, some bad company that's treating me poorly. That's not the case. They treat me very well. Um, you know, uh, I have a lot of autonomy in the new organization that I'm in. I have the freedom to, you know, try build things in my spare time and nights and weekends.

11:08I have a good partner. I have a very healthy relationship with my family. I get to travel a lot. Like, I have a great life, right? It's just I have a gap in it also from this internal perception of things. And yeah, hopefully the, you know, that comes across a bit clearer here than in my writing. For what it's worth, my first exit was 13 years ago. And I talked to hundreds of people who exited businesses and uh this regret is usually a very temporary thing and then you move on and then you look back at it with a lot of gratitude uh that uh your exit taught you so much so sadness will go away i'm sure no no i'm confident it will right like it's it's this beauty of how our brains work of like we rewrite the past to romanticize it right um i always say it's like i i got engaged when I was 18.

12:07And long story short, let's say she cheated with my friend. And, you know, at the time I was heartbroken. I literally like I've been working in tech already by the time I was 18. And I, you know, for like two years, something like that, maybe even three. And at that point, I was like, Oh, I'll just get another tech job, I'll move back home, whatever. And I couldn't do it. Like I was like, completely broken. I ended up washing dogs at PetSmart, which if anyone is like seriously depressed and like finding, oh, you know, can't afford therapy, go get a job at PetSmart washing dogs. It is highly effective.

12:42Is that getting paid for like, you know, therapy basically. Um, but you know, I look back at it now and I'm like, oh man, like that was such an important growth moment for me. Right. And it pushed me to change my behavior in many ways, right? Because like, I get why she, you know, cheated on me and left me, right? Like, I was pretty shitty at the time. You know, I'm still not amazing, but I was much worse then. So I think in the same vein that this experience will kind of get rewritten in my mind of like, okay, well, I learned all these lessons, right? I'll build something else. What would you do differently if you could turn back time?

13:25Oh, everything. Absolutely everything. I, you know, it's, um, you know, again, like I outlined a lot of this in the blog post, but I think the first thing is, you know, before even considering selling, right, is I would restructure how I thought about running the business. so I started by saying okay uh I want to do x right with x being like not deal with the people who I didn't want to deal with and I was like so the solution is throw everything away so that I don't have to like deal with them right and take the money and then try again and like that's a very extreme solution right and instead I think what I should have said is like hey here's the thing I want to do, right?

14:10What is the minimum I actually need to do to achieve it, right? So for example, hire a CEO, right? Like that could have been the minimum to achieve it, right? Like hire someone to be the CEO, check in with them once a month to make sure everything's on board, use the free cap. And just for context, also my business was a hundred percent bootstrapped and very cashflow positive, right? So it was like, had plenty of money to do whatever I want with, had no investors that I had to go and you know appease anything right so like could have just hired a CEO let them kind of run it whatever could have hired the business had different parts of it and it was really just one well let's say two out of the three parts that I didn't want to deal with I could have hired general managers to manage those parts of the business right I could have gone to therapy and talked with a therapist about my emotional problems of dealing with like the parts of the business right i could have hired a business coach um one of the downsides of not having investors was there was no board right so there was nobody to call me on my own bs right like i was the end-all be-all so i could have hired a paid board right whose job was to to challenge me and hold me accountable and all these things you know i could have sold part of the company and not all of it right um i could have run again like i could have hired better you know representation throughout the sales process there's like the spectrum of everything i could have done is literally everything other than what i did um because i took such a extreme and narrow kind of approach to solving things so in that article of yours you also mentioned how you didn't fully understand what your values were and how when you did understand your values after you sold your business, you realized that you shouldn't have sold it.

16:03Yeah. So the values thing actually came out of something different where I had something going on in my personal life after I sold the company, went to a therapist, started working with a therapist to deal with this unrelated personal stuff. And the therapist was kind of like, hey, how do you benchmark your own decisions against yourself? And I was like, what do you mean? It's like, make a decision. Think about it. What feels right? He was like, okay, yeah, that doesn't really work super well. You may need some kind of guidelines, you know, and guidelines that you would review it and assess over time and understand like, are they still actually your guidelines or not?

16:46Because it's very easy to trick yourself situationally. And so he gave me this exercise and the exercise is it's a sheet of paper with a list of, I want to say, 30 or 40 or 50 values that are commonly held by individuals. And that you pick the top 10 most important, you ignore the rest. And then you take those top 10 and you stack rank them, right, in terms of importance for you. You'd think like, oh, why not just stack rank all 50? Stack ranking even 10 takes a surprising amount of time. I think it took me a few hours in multiple like like multiple like 30 minute increments kind of like to restack rank restack rank restack rank um i kept doing it on different flights i was on actually um but uh it uh it's amazing how clarifying the process is of what you give a shit about and how much relative to one another right like how much do you care about friends versus family right different for everybody right how much do you care about wealth versus power right how much do you care about power versus recognition right like there's all these things that you know are very personal and um stopping and asking yourself to understand why like what do you actually value and why does that you know matter and for me what happened was i had these top 10 right and i looked at them and selling the company, I think impacted negatively four or five of them.

18:22Yeah. And, you know, I was even, I was even teasing my partner the other day. She was like, she was like, what would happen if we broke up? I'm like, yeah, that would impact one of my values. Right. And selling the company impacted four or five. So like, think about like the, the psychological harm that happens in a breakup, right. Versus like, imagine if it was four to five times worse than that. Right. Like that's kind of the degree of impact that it had on me. Um, and you know, unfortunately I'm very lucky that I have good management tools at my disposal. Right. So, and it's, it's, it's again, you know, like we were saying, it's the basic things that we all know, right.

19:03It's like, go talk to a therapist, work out, be healthy, sleep consistently, right. Like spend time with friends and family. Don't drink, don't do drugs, right? Like it's pretty, pretty well understood a set of things. Yeah. So, you know, I've been able to manage it, I think pretty effectively, but I think actually in the group that you and I are both in is also Patrick Campbell, if I remember correctly is his name. I remember he's like Twitter, I think it's Paticus, but he's the co-founder of ProfitWell and I listened to a podcast with him where he went through the sale of his company and clearly somebody much smarter than me because he's like, oh, before selling my company I did research on the process of selling companies and what happens to founders and I was like, oh, that's interesting and he says, he's like, there's two categories of founder that he found there was the category of people that went on to found something else or like work on something else really important to them.

20:04Yeah. And then there were other founders that became alcoholics or like, like abusing some kind of substance. And he was like, that's it. It was like, That's a pessimistic view. Maybe, maybe he'll hear this and be like, no, you totally misunderstood what I said. But that's how I remember this, this segment. And it's a reminder to me to like, like you have to keep it on the straight and narrow, or you burn down the rest of your life. Okay, I'll invite Patrick to my podcast and we'll debate the... Yeah, we can have like a talkback, right? I like that. So Boris, going back to the time when you started your business, what was your motivation?

20:46So I was working for a company and they were making decisions that I was not in agreement with. And I felt that they were violating both the company values and good business practices and all this other stuff. Right. And I was completely ineffective at getting even teams to listen to me, forget the company as a whole. And so my manager at the time kept being, you know, saying something along the lines of like, if you think you're right, like, why don't you quit and start a company and prove us wrong? right like like it was this kind of thing it was like I was a bad culture fit there right so I um I think he was trying to very politely be like hey we want you to quit like but I was doing I was doing good work but I was a bad culture fit so they were like you can leave anytime you want but until then like please focus and do the shit we care about um but it was literally a lot of that right so it was a lot of that and then eventually I did quit and I didn't start a company I went to go work for like in-house for similar stuff that I was doing before.

22:01Um, my salary went up. I ended up at a Uber, small company, no one's ever heard of it. Um, and I was on the most amazing team of my life. And the team was, I think four of us and we did not even need to communicate. That's how well we understood the subject area and each other. Right. I remember there was one occurrence where like some news thing came out, like very important that we had to deal with. And this was like an eight page document, right? Like, and we did not have to discuss it. Everybody knew like what everyone else thought. Everybody else, everyone knew what they needed to do. And it was just this like, it was a really, really amazing like team I was on and probably the best of my life.

22:43And I was working probably like six hours a day. Like it was very easy hours. It was a hundred percent remote living in New York. The team was all over the place. And I just realized that that was it. I, at 27, had reached the apex of my career. Like, if I took a different job at any other company or even moved, like, to get a promotion, I would have had to take my dad, my boss's job. There's only one role, right? There were three of us reporting to him. So, like, the chances of us getting it are low. and if I moved into a role somewhere else within the company my pay would decrease because I provided a lot of value kind of as a niche contributor and I was like shit there's literally nothing else like that's it I have quite literally reached the apex of my career financially and in terms of everything else and I was like I just gotta start my own thing like I was like there is no way up unless I do my own thing and I started by finding consulting customers to work with nights and weekends.

23:46And then once I had lined up, um, about, I think$70 ,000 of consulting income for the coming year, I gave notice. Um, and so I knew that on, so$70 ,000 was roughly, I think it was about 25 to 50 % of my time was taken up for the coming year. And so I knew that like 70k was enough for me to live on and then i still had half the half my time free every week to like find more customers and grow the business and so that was that was it right like it was like i had enough i had enough security um in terms of income to start and i had uh you know free time to grow and i also had the confidence that should the business just like let's say i start working with the, you know, the customers, I do a terrible job.

24:42I lose them in the first couple of months, right? Like, I also knew that my skill set at the time made me extremely hireable back into this type of role that I had before. So I knew I could probably find, you know, an in-house job within a few months at the time. And so I was very confident that it was a fairly low risk, high reward activity. So basically, you wanted autonomy and you wanted to grow, rather than, for example, prove yourself or have financial freedom? I think it would be a mixture of things, right? I think very much a chips on shoulders, put chips in pockets kind of situation, right?

25:20Where like I'd been arguing with people for a long time saying like, hey, you know, like, you know, there's like the Google way of doing customer support, which is like the fuck you, we're not doing support, right? And then there's the like, I'm blanking on the name right now. Now, it's one of the hotel chains is like famous for, you know, the staff at the hotel are authorized to approve anything up to$500 in expenses to make like a guest happy without like any management oversight or anything like any employee on the floor can do it. And like there's a sliding scale of everything in between. And I was like, we need to be more like we're working with enterprise customers like B2B SaaS enterprise customers.

25:59I'm like, we need to be much more in the like bend over, make them happy and, you know, treat them in a much more respectful way. And not only in the like way we do support, but also in the way we develop the product itself. And they just were, they didn't, culturally, they just didn't want to do that. So a lot of it was me saying like, hey, I want to prove that my way is right. You know, that enterprise customers highly value a high touch, high service model of support for this. there was this element of like proving my own thinking right there was also the element of like hey i want to grow my status socially right because like saying like hey i'm a you know support engineer or whatever right it's like pretty low status to saying like hey i'm a founder ceo is pretty high status so i think there a lot of it was me chasing social status um a lot of it was chasing money, right?

26:53Like the business, you know, like I always find it funny if you're like, we're building a company to change the world. And I'm like, yeah, there are some of those, right? But for like a lot of B2B SaaS stuff, we're like, we're here to make money, right? Like I know that like, you know, Slack is like, ah, we're connecting, you know, work or whatever. I don't know. I don't know what their slogan is, right? But like everyone has these like nice slogans, but you know, ultimately like, let's, let's be clear here. And for me, like I said, I felt like I had reached my financial cap. There wasn't a clear path to how I was going to make more money.

27:25And autonomy, like you said, I've never had a particularly good experience working for somebody, right? They've usually not had a particularly good experience employing me. I have never in my life gotten promoted. Not once. I've changed titles by switching jobs. I've gotten demoted, especially now after selling the company. But I've never gotten a promotion, right? Which I think will tell you kind of like, I'm not good at working at someone else's set of ideas and ways of working, et cetera. And I have kind of my own thing and working towards that autonomy is important for me. Are you now working at the acquirer?

28:08Yeah. Yeah. And one of the reasons why it's working for me to work there is that I have almost 100 % autonomy. Okay. The only autonomy I don't have is that I have to set financial targets and report those to the CFO and then provide updates on how we're trending towards them. But that's about it. And I get asked to go to some meetings. But outside of that, right, like I hire, I fire whoever I want, however I want. you know you know i guess i don't have control over comp scales for my people that is that is one thing that i don't have but largely like it is it is a level of autonomy that is probably nearly unheard of in companies of this size and they are very understanding of how i want to do things and and are even interested in in you know working together to to see how i can expand influence on other parts of the company to kind of try and get them to learn from how I do things.

29:09How many hours realistically you spend a week working? I don't know if I should say that. You don't have to. It's okay. I try and I would say this, right? Like the way that I work is very, very clear in my mind, right? Which is first, I do all of my obligations to my employer. second i do all of the obligations in my personal life so for example i've been remodeling a house right now so uh i the amount of time i spend running back and forth to the house to see how the building is going and deciding on materials and all this stuff i i could not have imagined how much time that took um and then finally like in the evenings and stuff i will spend some time I'm building new things to see kind of like, is this something I should be working on?

30:00How should I be working on it? Right. Like, and then after that, then I also do some self-promotional stuff, like recording this type of podcast on, on a weekend or something. I don't know how you classify work. But I would say I probably work somewhere between 40 and 80 hours a week across all the different things I do. And there's also like times of intensity, right? We have a conference that we're going to in end of April. So that's going to be probably like 14, 16 hour days for the entire week, including the weekends, because there's going to be events around it. Even while you're there, you still in the evening need to get your primary emails and stuff done and et cetera, et cetera.

30:45So it's all over the place. I think one of the things that I'm lucky with is that at some point I really learned to, I wouldn't say enjoy work, but I feel like I'm not using my time well if I'm not working, right? Like maybe it's workaholism. I don't know. Maybe it's not trendy now, right? You need like good work-life balance. But for me, like if I am actually sitting down and doing a lot of stuff, Like that makes me feel accomplished at the end of the day. And even maybe to a certain point of detriment, maybe I should be working smarter. It's not harder, but yeah, that's kind of my approach today.

31:26So you mentioned that losing your identity was number one reason for regretting selling your business. So what are some of the ways you are thinking of solving that problem for yourself? I think that the main approaches that I'm looking at right now are two, right? One is start a new company. The other one is acquire a company, right? But basically it's like get back into the CEO game somehow. I think it's not like the point is that it doesn't mean like when you have four different values compromised, you can't find a solution to one of them at a time, right? Like you need to kind of solve it in a cohesive manner.

32:09And so there are very few things in life that will impact this many values all at once. And, you know, I've looked at, for example, like volunteer, right? Like, so I run a lot. A couple of the members of my running group are joining. There's a group called Achilles right now. Achilles are the people that run alongside disabled athletes and marathons and things like this, right? So like if you like I did a New York City marathon in November and you're running and there will be kind of along the right hand side, there'll be like, for example, a blind runner and they will have like a tether connecting their hand to the hand of an Achilles runner.