The Wild Story of Mike Lynch’s Rise From Janitor to Tech Billionaire

25:10It's like a panic response. And I feel like you just had your panic response in front of the mayor where you're like, Warren Buffett says, and then you just parroted some shitty Buffett quote. I'm like, I don't even like Buffett. Why am I bringing this up? And I just called her an idiot. It's like you take an exit off the highway and you're like, this is not my destination, but now I'm stuck here. And then she was like, she was like, she told me what her politics was. I guess she's like, she's like, I'm a Republican, but I'm just barely right of center and most of our town is Democrat. And I was like, yeah, but that doesn't really matter.

25:41All you do is fill potholes and make sure the beach is clean. Why do your politics matter? What do your beliefs have to do with this? Yeah. One of those things where just 10 seconds after I said that, I was like, shit, I'm blowing this. I just am insulting you constantly. I'm not meaning to. You're like, how long have I been on Twitter? Like I've just been on the internet for too long. I can't like function in society anymore. Yeah. And so anyway, I just thought it was like a horrible meeting that I blew, but she handled it well. By the way, the last time I met with the mayor, it was in San Francisco.

26:20And so I met with London Breed. She was just a council person, whatever district. I don't even know what it was called. Literally eight hours later, I met with her at like 5 p.m. that night ed lee died and she became mayor and so i told this woman as i was leaving i was like hey last time i last time i met with him last time i met with the mayor um this woman london became uh mayor because the real mayor died and i was like shit which means you're either gonna die or and i was like freaking i said that uh and so anyway i just i believe it like the men in black pen at the end to just flash her memory and just erase the entire conversation.

27:01Oh man, it was horrible. But anyway, I thought it was fun. Have you been interested in politics at all? Or are you just totally on the sideline? I'm only interested in politics from a marketing point of view, meaning it's like something you watch in a movie. It's like when you watch The Hunger Games and you're like, that's ridiculous. It's so great. This concept is so ridiculous. People just sort of fighting for the death, for the amusement of others. And then I watch like UFC 306 the next day. And I'm like, oh, I guess that's kind of similar. Or there'll be like a politician who's kind of like, you know, actually catering to the rich, but just trying to keep the poor, like the masses, you know, like just subdued enough so that they don't revolt.

27:39And then you see kind of what some of the politicians do. So it's interesting to me that this is real life, that this is actually how things go. Like I watched a full Trump rally the other day, like end to end. I don't know if you've ever seen all these, but like I started where before anyone's on stage and I'm like, what's the set list? like who's the dj of this because it's it goes macho man so it's like macho macho man this is like nobody on the stage and the whole crowd is sitting there they're all enjoying it and i was like there's like 30 minutes of just like a set and the whole that musical set that playlist should be on spotify it was like macho man the song that was the song that he came out to no that was the one like the warm up the crowd one before he comes out and which is funny by because macho man is by the village people which is like a gay band yeah but they played them all ymca they put all the hits actually another village yeah and then you see the the son comes out the daughter comes out whatever anyways uh there's a whole so i am interested only in the like the theater of the whole thing all right let me tell you one other quick story i met the i met ed lee one time the guy i was working for michael birch he got invited to this thing and he was like i don't want to go of this political thing.

28:44You should go as my proxy. Ed Lee being the mayor of San Francisco up until like 18 or 20 or something. Yeah, so this was when he was the mayor and the room was Ron Conway, who is like a big shot, super angel investor, invested in pretty much every hit Silicon Valley startup. Probably the most respected angel investor in Silicon Valley. And Mark Pincus, the guy who created Zynga, Jeremy Stoppelman, who created Yelp. And it's basically like eight of those people and then me. And they just assumed I was like, you know, the scribe who's there to write meeting notes. And that's kind of what I actually was.

29:21How old were you? I'm 25 years old, maybe 26 years old at the time. But it's pretty fascinating to see what happens in these meetings. I thought it's just kind of going to be a luncheon. It'll be some sandwiches, some small talk, whatever. And a couple of things stood out. One, Ron Conway is famous for taking notes. I don't know if you've heard this before, but he carries with him a giant yellow legal pad. And basically everywhere he goes, he's just like furiously taking notes. And he's taking notes often for like, he's actually like very quick with people. Meaning if you would, hey, Ron, I just wanted to introduce myself.

29:52He's like, what can I do for you, man? And then you're like, I just need an introduction to this person. He's like, tell me about your business real quick. And you tell him and he's like, cool, I'll make the intro. And he just like moves on. Like he's very quick because a lot of people want his time, but he's just furiously taking notes at all times. That was the first thing that stood out. Second thing was Pincus and Jeremy Stoppelman basically just ripped Ed Lee a new one to his face, which I thought was pretty amazing. What did they say? They were like, how do you expect us to run a business here?

30:18They were like, it's so expensive. None of my employees can live in the city. On top of that, if they did live in the city, there's just like incredible homelessness and like, you know, drugs and open air drug markets in the middle of the city. What are you doing? What is this? Like, and they, you know, they were not as hostile as that, but they were very pointed. And then I got to watch, you know, a politician do what a politician does, where they say a lot of words that don't mean a whole lot. Is that what he did? I was like, okay, cool. So I see that even in the private, off-air, supposed-to-be-productive meeting, what is he going to do?

30:52He's not going to actually say anything of substance, nor is he going to do anything of substance. And that was kind of my takeaway from the meeting. Horrible takeaway. I mean, I mean, like that. Right? And I don't mean it. I don't think he had any malintentions. It was just like, these are hard problems to solve in the first place. figuring out the solution and then actually being able to do anything about the solution would take so much. It's how I felt when I was in a big company. You would see something and you're like, we should not do that. We should do something about it. We should do this better.

31:21And then you might even try a little bit. And then the forces of bureaucracy are just weighing down on you at all times. It's just a lot easier to just say F it and move on. You're like, well, my computer battery is on low battery and that email might take longer than this computer battery has. So we'll just forget about it. You know what I mean? Do you remember we did an episode really early on in the podcast back when we used to record in your office in that tiny room with a table and one microphone in between the two of us. And we had Daniel Gross come by and then it became three stooges on three stools sitting around one table.

31:54And one thing he said, he got acquired by Apple. His company got acquired by Apple when he was really young. I don't know, 22 years old or something like that. And he got advice from somebody. I forgot who it was. It's like some super legit Silicon Valley person. He's like, hey, we just got acquired by Apple. What's your advice for me when I'm there? And he was like, the guy told him, he goes, don't give yourself brain damage. He goes, what? He goes, you're going to be in this company and you're going to see so many things that could be so much better. And you're going to try to do them. And for the first year, you're going to try to do them.

32:23You're actually going to make a little bit of headway, but you're not going to actually get the results that you want. And it's still going to be slow. And he's like, basically, you're going to just keep ramming your head against the wall, trying to change this giant, enormous company. Don't give yourself brain damage. Find a way to enjoy your time there. Meet cool people. Learn from them. Pick up the technologies. But don't try to turn the direction of the ship. And then he goes, and then I did exactly, I made that exact mistake. I went and tried to turn it around and change the way we did things and all that.

32:53He's like, that person was right. I shouldn't have given myself brain damage. And he was a kid when we talked to him. I think he was 25 or 26 or something. He's amazing, by the way. He was amazing then, too. Yeah, he was one of those good finds early on. Can I tell you about something that I read this week? So I read about this in, I think, The Atlantic. But have you ever heard of this podcast called Philosophize This? Philosophize This is what it's called. Well, you texted it just before this, and I checked it out, but I had never heard of it. All right, so let me tell you this story. This is pretty amazing.

33:26And there's a takeaway in this article that is a little bit different. But his name is Stephen West, and he's the host of this podcast. And the podcast talks about different philosophies and things like that. Because the thing about philosophy is even if it's interesting, it's pretty academic. And it's not exactly applicable to real life. And it's also snooty. And there's a lot of people talking about ideas that don't really change my day to day. And he has this podcast that does the opposite of that. It's fairly applicable. It's fun to listen to, whatever. Now, the thing that's interesting about this guy is that he was actually in his...

34:02I think he got taken away from his parents at the age of nine. And he was homeless off and on for a little while. And then left high school at the age of 16. And then starting in 2013, he started stocking shelves inside of a grocery store. It was a pretty crappy job. But he was able to find meaning in these books. He would listen to an audio book. He said seven hours a day. He goes, I would listen to an audio books on philosophy seven hours a day. In the last hour of the day, I would do just a silly podcast. It was manual physical labor, but I loved it because I was able to listen to these books all the time.

34:37And so by the time a few years had passed, but he had listened to so many of these audio books that he kind of was like, I devoured Western philosophy. And I felt like I knew all about it and I loved it. And so he read Tim Ferriss' 4-Hour Workweek book about life design. Do you remember the concept of life design, which is like, you can build any life that you want to build, but you have to map out what does my day look like? How much money do I think I need? What does this all look like? And he got really inspired by that, which is funny that this deep philosophy nerd got into Tim Ferriss. And so he launched this podcast called Philosophize This.

35:16It took off. And so this podcast now has 2 or 3 million monthly downloads. The YouTube has 150 ,000 subscribers. But Stephen West, the guy who's the host, there's not too much information out there on him. I think he has a Twitter, but he basically just tweets out when there's a new episode. But what interested me a ton is that the article was written about this author who's like her father was in a philosophy, but he was kind of unsuccessful. He just studied all day and how the idea of a podcasting being possible right now, someone like Stephen West, he's able to make a full-time living doing this now based off of just a hobby.

35:54And there's this quote there that says Stephen doesn't preen or preach or teach. He just talks to you like a smart, curious adult. And I read that line. And that reminded me of something. Do you remember what the old pitch for was at the hustle? Yeah. You're smart, no bullshit friend. Right? It's something like that. Yeah. You're smart, no bullshit friend telling you what you need to know about the world of tech and business news. And that was also the line for the Milk Road. It was like you're smart, no nonsense friend telling you about all the news that's going on in the crypto world. No coincidence.

36:27Yes, no coincidence. Heavily inspired by the hustles. Heavily inspired. But there's like now that line is used a ton. And I'm sure I stole that from someone else as well. And I read this biography about Gideon Gartner. He's the guy who started Gartner, which is a research firm that is worth, publicly traded$40 billion, does billions in revenue. His whole shtick early on was, I want to treat my customers like they're adults. And I'm just going to talk to them in a fun way, but in a professional way. And we're going to keep things short. And the idea is we're going to treat you just like a smart adult and we're your friend.

36:58That's an interesting takeaway because in business, you can come up with a new technology or whatever that takes off. You can come up with a better product. But one way I think to stick out is branding. And branding is a nebulous thing where it's challenging. What's a good brand? And this whole idea of we're just going to treat our customers like smart adults and we're going to be casual about them. that is a shtick that I have seen work in so many different industries and it has worked consistently he does uh that wonderfully you and I do that wonderfully that podcast founders which I love does that wonderfully there's so many different content niches that do that wonderfully but there's so many different brands that do that wonderfully with this idea of like we're gonna be cool but not like actual cool but more like casual we're gonna be your friend you know what I mean

37:47all right let's take a quick break because i gotta tell you a story let me tell you that the first time i tried to run payroll for my team i was using a traditional bank and you know the type it's got a janky interface it's built like a 2002 tax form and it was open only during business hours and i hit send and it froze they flagged the transaction they locked my account they put me on hold for 45 minutes and then they told me i got to visit my local branch and that was the day i started looking for a new banking solution after asking a few founders what they were using i found out about Mercury.

38:13And so now my payroll is two clicks. I can wire money. I can pay invoices. I can reimburse the team all from one clean dashboard. That's why I use it for all of my companies. And so do 200 ,000 other startup founders. And so if you're looking to level up your banking, head to mercury.com and apply in minutes. Mercury is a financial technology company, not a bank. Banking services are provided through Choice Financial Group, column N-A, and Evolve Bank and Trust members FDIC.

38:40Dude, when I went to Austin to record all those podcasts, I had a list of the people that we're doing the podcast with, and I was supposed to be excited about them. It was like, oh, I'm going to do a podcast with Tim Ferriss and with Monish Pabrai, Joe Lonsdale, right? Then there was all these meetings in between. And then there was one meeting that came up at the last second that I got super excited about, and it was to meet Tim Urban. Tim Urban's the guy who writes Wait But Why. He's wrote a bunch of books now. and so he's got this blog that I love so we go and we meet with Tim Urban and I'm like dude I go isn't it insane that you have this little blog on the internet and you used to just write whatever was interesting to you and then one day the richest greatest entrepreneur in the world slid into your DMs and was like yo I like your stuff and it's like you want to hang out And you're referring to Elon Musk is a huge fan of Tim Urban.

39:35Elon was like, hey, this is awesome. You're awesome. This is awesome. I'd love to meet. And the background being Tim Urban runs a blog called Wait But Why, which when you and I were in our 20s, it was the hottest thing going. And it's still popular, but it's like an intellectual blog, but silly. It's kind of the same description of what you said, right? Yeah. It's a guy who's smart. He's writing about the stuff that's on his mind. And he's honest the way he writes it. and he treats you well, whatever. So he was like, yeah, it was crazy. Then Elon meets him and Elon basically says, I would love for you to write.

40:08He's like, a bunch of people want to interview me. They want me on 60 Minutes. They want me on this. They want me on that. But I actually want you to write about what we're doing with AI, with Neuralink, with Tesla, with SpaceX, like all of these things. I would love you. And you could write whatever you want. I'm not saying write something positive, but I like your writing. I'd like you to write. So then he wrote these series with Elon, basically. He wrote a Neuralink series. He wrote like a AI series. He wrote like all these things. They were super popular. And I was like, how crazy is that?

40:35Could you have imagined that when you started just writing on your random blog that one day the richest, most powerful entrepreneur in the world will just slide into your DMs and just say that to you? He's like, no, he's like, no, I obviously couldn't have imagined that. But he goes, I did always have a rule, which is my rule when I write is write for equals. And I said, write for equals. I immediately, I was like, ah, I love that. What is that? And he goes, it's a big temptation on the internet, which is to create content that you think is for the masses. Let me tell you about how this all works.

41:08I know you don't know. I'll dumb this down. I'll sort of water this down. I'll shave off some of the edges. I won't tell you about anything of the unknown. I'll tell you all the known stuff because that's what you want because you need a lunchable and you want your cracker and your cheese and then you want your ham and then you're going to put those three together and that's what you're going to get for lunch. And he goes, I also don't want to go the other way, which is I'm trying to impress all these people. And therefore, I'm going to act out of character, trying to write to impress people who I think are more advanced than me.

41:37And I'm going to fluff up my language, use all this jargon and try to make it sound smarter than it really is. Instead, I just sit down. I just try to write for equals. And he goes, the beautiful thing. He didn't say all this, but the beautiful thing of that is when you actually put yourself out there, you will attract by definition like minded people. You'll attract the people who like what you do will be the people who like you. And then you could just keep being you, which is a lot easier than trying to guess what other people might like. And so there's like this flywheel that starts. And I would say this is probably the most common mistake that I've made.

42:12Every content creator makes is this feeling that maybe I should bend my content to the masses, or maybe I should bend it to impress these folks rather than just the simple right for equals. Three words. I thought it was wonderful. But my point in bringing this up is that this goes beyond content. This is about running your company a certain way. And Tillman Fertitta, he's this guy who, what does he own? He owns Landry's and... A bunch of restaurant chains that are popular. A ton of restaurant chains. Steak houses and stuff. I read his biography and he told the story. He's like, let me explain a little bit about my philosophy.

42:49And apparently it was like 1130 or something at one of his restaurants and someone ordered an omelet. And the rule was like breakfast ends at 11 or 1030 or something. And they like turn the customer down. And he heard about this. He goes, dude, the eggs are right there. Just say like, I'm going to go scramble you some eggs. Like, I got you. Let me take care of you. And it's just this idea of like following rules versus treating someone like a human. And it's like a huge deal. And what I'm saying is so simple, but it's actually hard. At Hampton, we only have 20 employees, but I still have to remind people.

43:24I go, just act like we're a mom and pop business. Treat people a certain way where you own a corner bodega and you see the same people every day. Like, oh, you want the usual? I got you. And that's actually really hard to do. It's hard to teach people how to do that because they want to act a certain way. But here's another good example. Anon, our friend Anon, who runs a company called CB Insights. I don't know how big they are, but they're around the idea. They're around, let's say,$100 million a year in revenue. And so CB Insights makes a very professional enterprise-level business that costs$100 ,000 a year.

43:57Their website, up until recently, the homepage said, without data, you're just an idiot with an opinion. And they have a newsletter that he sends once a week to all their customers as well as their potential clients. And at the end of the email, he signs it with, I love you, Anand. or like they would say things like please buy a subscription because i owe people money uh like they would use this like a lot of money yeah he would like use these funny things and i would see that and i'm like not everyone's shtick is to be funny but everyone's shtick should be like to not change necessarily from just treating people like a human and so when i saw this line about philosophy which is like a very like lame thing like i've tried to learn about it and it's They don't want you to approach this topic because it's very guarded.

44:45And I love that this guy's doing this. And it reminded me that we should be doing this with a lot of different things. There's also another angle of this, which is a lot of people, when they go into a business, will start thinking about what industry do I like? What product do I like? And when you're told to follow what you like, you typically think, oh, I'm interested in healthcare or, you know, I really like media and you just pick at this like really like 9 ,000 foot level. And a different way to do it is work backwards from your customers. So which customers do you respect? Which customers do you love?

45:21Which customers do you want to understand? And which customers would you want to hang out with? Right? So pick your customer and then work backwards from that. So instead of picking an industry and trying to find a business, you could pick a customer and try to find a pain point that could become your business. I think with Hampton, you did a good job of this, which is you want to hang out with all of your customers. They're cool people. Those are the type of people you like to hang out with, business owners and people who are somewhat successful and trying to do interesting things in their life.

45:45So you picked a business where you like, understand, and are attracted to that customer. And therefore, you'll always sort of stay in love with that business. Another version of that that I found for myself is most of the time for any business, you're not building product most of the time. Actually, as an entrepreneur, when you sign up to start a business, you're actually signing up to try to grow a thing. Yeah, you're selling most of the time. You're selling most of the time. Paul Graham wrote a blog post, startups equals growth. What is the differentiator between a small business and a startup?

46:18It's that a startup is designed to grow fast. And a small business might be like a barbershop or a nail salon, doesn't have to grow fast. And so if you're going to be focused on growth, 90 % of your brain, and that therefore selling, then it actually makes sense to work backers from what is the type of sale I will need to do to make this successful. So for example, I've had ideas where I'm like, oh, that would be a great product. I would love to make that product and companies would benefit from that product. But the problem is to do that product, to make that product grow, I would need to do enterprise sales.

46:49Something I do not know anything about, nor would I want to know anything about. I'm not curious about that, right? And so actually that business is not that product, it's enterprise sales. And do I want to do enterprise sales every day for the next seven years? Do I want to build a team that's really good at doing enterprise sales for the next seven years? I found for myself, for example, I love running ads. Like the first time I started doing an e-commerce business and I was like, wow, I can just set up this one ad and this ad will be my salesperson. It's a money machine. He works all night.

47:17I don't even have to think about this business. My calendar doesn't need to be booked with calls. I don't need to send cold emails every day. This ad will just keep hustling out. I'm sending out these armies to the corners and they're selling for me. Do you talk to the ad? Like, hey, sweetheart, how are you? I honor my ads. I'm like, thank you so much. You take this tiny commission, this small CPM fee, and in exchange, you can sell 24-7 around the clock to every single city in every single country all around the world. You are an amazing employee to add. And so I work backwards from ad companies or content.

47:52I love creating content. So if the main way to grow this business is content, then don't. I want to do that. So picking your business based on what is the sales method is a far better way to build a business that you love and that will actually succeed than to pick the product or the industry that you think you like. Yeah, I completely agree. You said something earlier. You said you start studying how you make money and then you realize you don't know shit and then you kind of learn it. And then you start like, all right, I know it. I just could give myself 10 years and then I care less about it than I thought.

48:26Are you in that stage? In and out. So I think, by the way, everything goes to that stage. I want to know it. I know it. Oh, shit. I thought I knew it. I didn't know it at all. And then you finally get to the point where you actually know it, but you only know it in your head. You don't know it in your hands. You don't know how to actually do it. Right. It's that example I gave one time on the podcast of I watched this guy make this amazing, like, you know, scrambled egg and it was fluffy and it was perfect and it had chives and it was just looked so good. And watching that, I was like, I, I know step-by-step what he did.

49:01Cause he showed me step-by-step what he did with the camera, with the audio, with the instructions on the screen. But if I went and tried to make that egg right now, I'd make a horrible mess everywhere. And so first you go from, I, I, I intellectually know the blueprint and I know it in my head, then I know it in my hands. And then at a certain point, you still enjoy maybe the craftsmanship of doing it, but the novelty of figuring out how to do it, of solving the puzzle, that goes away because you kind of solve the puzzle more and more. And I think a good thing in life is to sort of seek new puzzles.

49:33So right now, for example, the puzzles I'm seeking, the things I'm more fascinated about rather than how did this business get to 5 million ARR with 60 % EBITDA margins is the creative process. How do the most creative people in the world who create dope shit, how do they live their life? What do they do? How do they think? What is the conversation they have in their head? Which is the same thing I used to ask about entrepreneurs. I just find myself more gravitating towards creative people who are living maybe a unique life or an artist-based life. And then what are they doing? That's where my current fascination is.

50:04You're drifting towards these beatnik artists. I'm wondering how the politicians gain all this power golly we are sellouts aren't we no we're not sellouts we're grownups alright where do we go from here I guess that's it that's the pot I feel like I can rule the world I know I can be what I want to I put my all in it like my days off on the road let's travel never looking back

50:36All right, this episode is brought to you by Mercury. They are the finance platform of choice for over 200 ,000 companies. Shouldn't be surprised because I use it myself for not one, not two, but I have eight different Mercury accounts. I have seven for different companies that I'm a part of, and then I have my own personal account because now they have personal banking, which is a really cool feature. I highly, highly recommend it. Like I said, I use it myself. And the reason why is because the way that Mercury works is beautiful. It's very intuitive. And you could tell that it's actually made by a startup founder.

51:04It's an entrepreneur. You could tell it's made by somebody who used other banking products in the past and didn't like all the different rough edges and annoyances and decided to actually fix it himself. And really any type of entrepreneur you are, let's say you're an agency, well, one of the things every agency has to do is be able to send invoices, easily create them, send them to customers and stay current on your balances with all your customers. Well, you can do that inside Mercury. And so I think that Mercury is great. Highly recommend you check it out. And thank you for sponsoring the show.

51:29For more information, check out mercury.com. Mercury is a financial technology company, not a bank. Check show notes for details. I'm looking for a free gift.