Ep.102 The Hundred Million Dollar Startup: Ankur Nagpal On The Key To Growing & Selling Your Business

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1:31Look, we've had a lot of entrepreneurs on this podcast. Many are in the midst of growing their company, but Ankur Nagpal has been there, done that, got the millions. He's reached the goal that so many entrepreneurs work towards, which for him was selling his edutech company Teachable for a nine-figure sum in 2020. Ankur has ticked off so many accolades, Forbes 30 under 30, tens of millions of dollars in funding, and of course, a large exit. But behind the accolades are more challenges than you might expect. from getting a cease and desist from Facebook to almost being kicked out of the country.

2:01I'm so thankful to Ankur for being so open about his journey. This episode was so interesting and such an insight into being a true, true entrepreneur.

2:14Thank you so much for joining me. Yeah, I'm excited. I feel like we're going to have a lot to talk about. I can't wait. So I'm going to start asking the question I ask everyone. at the moment, do you feel like you are more working hard or hardly working? Definitely working hard. And I'm someone, by the way, I love that statement because I feel like that was always the old Indian dad joke. Anytime they came to a dinner party, you're like, are you working hard or hardly working? Definitely, I'm back. I'm back building a company again and it feels great. Yeah. You loving being back in the working hard?

2:43I am. I think what I equate it to is it's fun the way climbing a mountain is fun. It's type two fun. It's not necessarily fun in the moment sometimes, but you look back and you're like, I can't wait to do it all over again. Which is clearly exactly what you're willing to do. So I'd love to get some context on your whole story, especially for anyone who might not be familiar with what you've done or even just where you're from, your background, kind of what led to where you are now. I'd love for you to give us a bit of a whistle-stop tour of your life and into your career. Cool. To summarize my entire existence.

3:15Entire life, your entire existence. So I think I identify as a third culture kid in a lot of ways because I'm Indian, but I never lived in India. I grew up in Oman in the Middle East, but never quite belonged there. And now I'm American, moved here for college. And yeah, I think that sort of lack of cultural identity defined a lot of the early part of my life. But yeah, I was able to move to America for college, studied here, started a couple of businesses, ran a venture fund. And now here I am. Wow, that was very concise. I'm so impressed with how concise that was. I've never been able to say anything that concise.

3:48I want to zoom in a little bit on that decision to come to the US for college. What was it that really drew you to that? So in a lot of ways, it wasn't even my choice. My dad had always read a lot and fantasized about this idea of an American education and how that was a way to get forward in life. So from when I was very young, they saved, you know, we were middle class, they saved whatever they could with the idea that they would one day send me and my brother to study in America. So right from the age of like 11 or 12, it was always inevitable that I would one day take my SATs. And that would be the plan for me.

4:22I didn't have a choice, but I'm very grateful about how it all worked out because the kind of freedom you have in this country and the sort of like entrepreneurial spirit, it's unmatched. And I think the best way of describing it is if you actually look at the UK or Europe or any other country and you look at who the hundred richest people are today and look at the list a hundred years ago, it's the same names, but you look at the list in America and it's all different. Right. And I think that's something really powerful about this country. Yeah, that's fair enough. I'd never really thought of it in that way.

4:55I think that, you know, there's no doubt that the U.S. for entrepreneurship is like a great place to be. I think that I've spoken a lot about why the UK is not necessarily a great place to be for entrepreneurship, especially for women. Not that the stats here are that much better in terms of female funding. But I think that understanding that and understanding the landscape, like I definitely have this feeling when I come to the US and I speak to lots of entrepreneurs, it's definitely like it's in the water, like there's something going around here. And there's this kind of openness to entrepreneurship that I haven't experienced anywhere else.

5:28Yeah, I think the thing that really struck me is I started dabbling in business when I was in college as an 18 year old, 19 year old. And people took me seriously. Now that sounds like silly, but I remember at the same time I went to India and I was talking to some business owner there and he kept asking me where my dad was, which is very deflating as an 18 or 19 year old, where all you want is to be taken seriously. But over here, especially in California and Silicon Valley, people took you seriously as a teenager and everything stems from there. Yeah, that is really interesting. And as someone who went to university where I think you would assume that that type of thing was encouraged to.

6:08I didn't have that experience. So I think that's quite an interesting parallel. I'd love to speak more about your time at university, college, and the businesses you started there. Could you tell me a little bit about that? Yeah, absolutely. So I moved to America when I was 17, thought I was a good Indian kid. I was like, probably you should be a computer engineer. Interned at Amazon my freshman summer. So I was 18 years old, living in Seattle. That's when I realized I actually did not like being a software engineer. Felt pretty lonely and isolated. I was the first time, it was a summer, I was 18, away from family, didn't really know anyone.

6:42But that coincided with the launch of the Facebook platform. So you could build applications on Facebook. Facebook was very popular in college at the time. So I started building silly little applications in the evenings. I didn't even have a fake ID. I couldn't go out. We need to be 21 to drink in the US. So you're just building Facebook apps. I guess I can't go out. I can't go to the bar. So let me sit and build. Those are the two options. It's either go out or build Facebook apps. Yeah, basically. I do think if I had a fake ID, my entire life's trajectory could have been quite different. Yeah.

7:09That's so funny. Yeah, because I remember trying to get one pretty desperately that summer. But either way, I started building these silly little Facebook applications like quizzes and games and stuff. And by the end of that summer, I was making$20 a day. That feels like not that much today, but at the time, it meant everything, right? I was like, that's lunch, dinner, like, you know, that's real meaningful money. And when I went back to college then, which was my second year, I then built, kept building these apps and scale that business over the next couple of years to, you know, at our peak, we're doing tens of thousands of dollars a day, which was quite a lot for a 19, 20 year old at the time.

7:46Yeah. I mean, that's incredible. That's very life-changing. It was entirely life-changing. And basically, as soon as I realized I could do things on the internet and make money. I was like, why ever get a job, right? Why ever do anything but this? And so tell me about how that evolved from that point to getting to the point where you started Teachable. So I ran that business till about the time I graduated. I was 20, 21. Spent a couple of years after that was running a consulting company. And then there was a period of just trying ideas that sucked. It was literally almost two years of different things not working.

8:20I figured I needed a change of scene. So I was in New York for a weekend. I was 23 years old. And when you're 23 in New York, you're like, why would I live anywhere else? So on a whim, I moved here. And I think that catalyzed, that put something in motion. I started teaching a little bit in person and online. And then that eventually led to building Teachable, which first started as a side project. It was just like, my friend had online classes. I was like, how can I build a platform for him to sell online classes directly to his audience? And that became Teachable. incredible and so where did you start with actually thinking okay this is an idea i think it works and you know as you say there's some testing of the product itself but actually in terms of okay getting funding starting to execute the idea starting to get it out there where did you even start at that point so the idea evolved right which is why i always tell entrepreneurs like don't worry if your initial idea is too small because it'll keep iterating my first idea was let me find YouTubers and get them to put their classes on Udemy, which was a marketplace.

9:20Then I was like, these YouTubers are actually not that good. Let's create our own content and put it on Udemy. Then we're like, Udemy sucks. Let's create our own website and put our content there. So it evolved at every single stage. But after we launched our own product, it probably took six months before I had conviction that this is a real startup. And then I went to Silicon Valley and raised money. But for six months, I was just working on it by myself, got it to the point of, I think three,$4 ,000 a month in revenue. And then I was like, okay, this could be a real business, went to California and raised money.

9:50So I think that's really interesting because I think that so many people, the second they have an idea and the second they have some sort of proof of concept, especially in the US and especially when it comes to Silicon Valley, that is immediately when you go to Silicon Valley and you start pitching the concept. It's very normal for tech businesses to raise before there is a product and before there's recurring revenue. What made you want to get to the point where you were actually having even a small amount of recurring revenue before you were going to Silicon Valley? Yeah. So there were a couple of things.

10:23One is I was scared of my own psychology. And what I mean by that is I had so many ideas in the last few years that I would get really excited about. I'd be like super into it. My friends would ask me, how's that project going? And by then I've moved on to something else. So I wanted to be sure that this was lasting and this is what I wanted to do. That's one. Second thing is when we raised money for this 2013, 2014, it was hard to raise money. You needed to have proof that you could build a product and have revenue. So the combination of both those factors meant it was almost six months before I raised money.

10:53But in retrospect, I probably should have done it a little bit sooner. Really? Because I couldn't afford to hire anyone until then, right? So engineers were expensive. I had to do everything myself. So let's talk about you raising that money for the first time and how you even went about that. Was that the first time you'd raised? First time I'd raised money, but thankfully, a lot of the people I met when I was in college were contacts I had. So I could go back, hit up people. I had a starting point. But even then, it was months, I think, close to a couple of months of conversations that weren't even rejections.

11:26They were just conversations. You'd be excited and then you'd never hear back. Right. So because no one tells you they're not going to invest, right? They're always like, oh, it's a great idea. I love it. And then you never hear from them. But then eventually, after about a couple of months, our first investor, this guy, Matt Brzezina, he didn't know he was the first investor. He didn't even ask who else is investing. He's like, OK, cool. I'm in. Send me your wire information. I immediately ran to the bank, opened a bank account right there, right then, casually replied to his email a few hours later.

11:55And after he invested, all of the rest of the round, just 20 other investors, happened in the next like week or two. So that just shows how investors are so like hive minded when one happens, all of them come running behind. Especially with angel investment because there's this lack of due diligence that you don't get obviously when you've got VCT or private equity or whatever it might be. With angel investment, you're obviously asking someone who's probably, they're not gonna ask for your financials. They're not gonna, I mean, they might ask for a P &L. They might ask for, you know, a number of different things.

12:24In San Francisco, it's all vibes. It's all vibes. When you do VC, you obviously have like a month of due diligence where they're going through every single... I think it's funny because I've been through both sides of it. And I think they both have their ups and downs. Like for instance, when we sold our company, right? Which we had all kinds of diligence and I'm skipping ahead a lot. We had like consulting firms, we had ENY, we had tax, we had all of this stuff, but no one actually used the product, which is crazy when you compare to pre-seed or whatever, where people are just in the product.

12:52So I think both have their pros and cons. Some of the most comprehensive diligence processes in my mind sometimes overlook the really simple stuff. Like how do I feel using this product? Right. Yeah. No, absolutely. I think there's definitely different sides of both of them. It's more about knowing what to expect at every stage. What would you advise to someone who's going for their first, like, as you say, your first investor was an angel investor. So someone who at that point hasn't got anyone else quite to bite, but is having a lot of these conversations, people are seeing, seeming excited.

13:22What would you advise to that person? So the one tangible thing everyone can do is whenever you talk to someone, what I would do is ask them, even if they say no, if you can put them on a monthly or weekly update list and just be very good at sending a monthly update every single month on exactly the first of every month. The reason this is important is most people, both people don't do anything. And if you can build a track record that this person executes, that helps a lot when it comes to raising money. Like for every subsequent round we raised, it was an investor who had already been on our updates.

13:55I typically put hundreds of people in these updates and it builds this like body of work that you're reliable. You actually do stuff and people find it a lot easier to invest in someone when they see a trajectory, right? If you see one point in time, it's very hard to know. But if I see a founder getting more impressive, you know, month over month, that helps a lot. Yeah, I think that is such valuable and tangible advice. I think that it's so easy for I get messages from people all the time who are saying, you know, I'm at this stage. I just can't get an investor. I can't get an investor. And I think, you know, I've often then got people to send over the deck or send over, you know, how they're talking to people because I want to like dive into it.

14:32And so much of it is, okay, if this person is not going to do due diligence, how can you do that due diligence for them? How can you present this to them in a way that they feel like they've done the due diligence because you are overly communicating and overly reporting in every way, which is essentially exactly what you're saying. I'm shocked at how few companies do it. I've invested in probably 100 companies at this point. Less than 10 of them send me a reliable investor update on the same day every month. It seems like everyone should, but everyone doesn't. It's a great way to differentiate yourself.

15:05Yeah. No, especially at that beginning stage where you've got lots of these different kind of angel investors. So at this point, you've raised some money for Teachable. What was the first sum that you raised? The first sum we raised was a little bit over a million dollars. Okay. And what type of investors were they? They were all angel investors. A lot of founders of other successful companies, which is ideal. It's my favorite type of investor because they know what it's like. They're not going to annoy you with silly stuff. And yeah, from there, we raised another million dollars six months later, but that was enough to hire engineers, build a team and get going.

15:35And who was your first hire? First hire was Noah. He became our CTO eventually. He was an engineer. And I remember I interviewed him and he said he'd join. But one of his conditions of joining is that I never write code again because I was a really bad engineer and I built the first version of the app and it was very clear it wasn't going to last. So he's like, if you stop coding, I'm in. But he was great. He was great. And then we built our engineering team subsequently from there. I think three out of our first four people were engineers. If you're talking to someone who is looking to build a tech company and looking at that first hire, looking at which side of the business it should be on if they are already coding or if they are the big dreamer, but they don't have that experience.

16:18What would you generally recommend as the formation of your probably first three hires as someone in your situation? Yeah, I think ideally, initially, non-technical people are mostly useless. And I say this as basically a non-technical person. So if you're a non-technical founder, I think everyone else should be technical. And that includes design. I just mean building the product in some way, shape or form. I think marketing and Demand generation comes a little bit later. But again, this is such a general rule that, you know, there's a lot of great companies that break it for good reason too.

16:48And so you've raised 1 million, then you've raised another million. How far into this process do you start actually making significant revenue as a business? So Eva, so when we raised our first round of funding, our creators were doing about 40k a month in sales and we were making 10, 15%. We're making$4 ,000 or$5 ,000 even then. And we kind of grew every single month from that point onward. So it depends on your definition of significant. It took us, I want to say, yeah, we raised money in May 2014. It took us till November 2015 to do a million in annualized revenue. So about a year and a half.

17:23But at every stage, we were growing quite reasonably. And how from the initial idea of what Teachable was, because I haven't even gotten to define it yet on the podcast, I've now just realized, is how does it evolve from that initial idea all the way to what it was around that point where you are making significant revenue? Yeah. So funnily enough, the idea did not change much. The idea was, you know, at the time we didn't use the word creators, but we're like, teachers should be able to sell their courses to their own audience on their own website. They shouldn't have to go through marketplace.

17:56They should be able to build a beautiful site with their courses, content, coaching. Not a very innovative idea today, but back then there was no creator economy or anything. The idea didn't change much. Our business model did. At first, we were charging 15 % of sales, but most creators eventually said that was too much. And we evolved to a SaaS model where, on average, our creators paid us$70 a month to use the platform. Okay. And that was better than a commission structure. Correct. Because the creators felt like, hey, look, if I'm getting my audience to buy from me, why should you keep anything?

18:25Right. And why is it going up so much with each kind of sale? I completely understand that. I think that so much of the creator economy has been based on other industries in terms of things like commission models, when actually a creator is doing so many different things in the kind of the fact that they are creative directing, they're doing the content, they're doing stuff that often would have costed $100 ,000 to produce on their own. Yeah, exactly. And we're not really like a lot of our creators, like, you know, if we have Seth Godin on our platform selling a marketing class, we shouldn't charge a percentage because if Seth told people, come to my house and give me a check, some people would, right?

18:59They're doing it for the creator, not for us. Our value is the software and the technology, not like if we were generating more sales for creators, I would take a percentage. But if it's just the creator selling to their own audience, it doesn't make sense for us to take a percentage. No, that makes complete sense. And how did it get from that point where you've raised a few million, you start making significant revenue to the point where you started to think about a sale? Yeah. So there are quite a few years in between. So we started, we hit a million dollars in annualized revenue at the end of 2015.

19:29And from that point, we grew pretty much, I think the first year we grew 4X and 3X and 2X. At no point was I thinking of a sale, but in 2019, we're fast forwarding a few years, the business was doing quite well. We're doing 20 million a year annualized revenue. But at the same time, I was starting to get a little bit tired. We were Right. Six years in, everything started to feel, 100 employees, everything started to feel like it was taking more work as we're a grown up company. And at the time, this offer sort of came inbound. We were not looking to sell, but this private equity company told us about this company in Brazil that is much bigger than us, doing really great numbers.

20:08And it was basically a blind date. He's like, do you want to meet these guys? They're in New York. Why don't you all get dinner and see how you get along. And we had a couple of these dinners over a course of months and started to think that we see the world in a very similar way. And eventually, things materialized to an offer. And yeah, and went from there. And at that point, when you've obviously had this inbound offer, did you start to think that you should be exploring or going out to market with to get other offers? Yeah, so we were not for sale, which meant the fit was really important And to me, it wasn't just like maximizing the price.

20:43At the same time, I wanted to make sure it was a good enough price. So what I did is I spent a week serving the market and finding out, is this like an 80th, 85th percentile price? Everyone was like, this is a pretty good price. At which point I'm like, you know what? Focus on the fit. I don't want to run a whole process. As long as it's a good enough price, let me optimize every other part of the deal. And from that point that that offer came in to the point that you actually sold, how long did that kind of take? It took a very long time. It took almost six months. And part of the challenge was they were based in Brazil.

21:14They had a Dutch company. We were a US entity. The amount of time I spent in midtown law offices for entire days at a time negotiating, it was a pretty painful process. There were many times at the end of the day, I'm like, just take anything. Just get me out of here. Get me out of here. I want to go home. But yeah, it was a long, long process. Yeah, because I often hear from people that if you're going outbound for a sale, well, the majority of people, especially in consumer companies, spend around two years talking to their buyers or who is going to become their buyers. And obviously, that's not from an inbound offer.

21:45So that's generally from a point of, okay, if you're looking to sell, you probably want two years of courting different options, talking to people, as you say, educating them on your business, making sure they really understand it and it's a good fit. And two years, I think that's not necessarily well known. I also just think it's very hard to sell your company when you want to sell your company. A quote I really like is, run your company like you're going to own it forever. Otherwise, you might just have to. And what helped us is they were very motivated to get the deal done. We were bought versus sold, right?

22:17They came looking for us. So from that sense, we were very quick at getting to the term sheet. What really took time is just the legal stuff. And I think it's because we were all inexperienced and our lawyers, lawyers do better the longer you drag it out. So eventually, I think it just got to me calling them. They kept flying from Brazil to New York, like maybe four times in a span of a month where finally they're like, we are not leaving New York till we get the deal done. And we just spent four days in an office and got it all done. Good way to do it. And what did that feel like at that point when you essentially realized that, you know, I'm sure you got probably caught up in the legals for a while, but then actually coming out the other end and you've sold this thing.

22:58It was a fascinating time. So for context, when they decided to fly up and say, we're going to get this deal done no matter what, I think it was like March 10th, 2020, people were talking about this virus going around. People were like, should we be wearing masks while we're negotiating? So the world was slowly, low-key falling apart. We didn't quite realize the magnitude of it. But the day we signed the final document turned out to be the biggest stock market crash in history because people freaked out about what was happening outside. They must have felt shit scared. Yeah. So that was on a Thursday.

23:33Now, on Tuesday, we announced the deal. That Tuesday then became the new biggest stock market crash in history. So the world was falling apart. So I still remember, like, you know, we were very subdued as a company as we had to be, right? Like, I remember, I think my exact words to the company are like, look, this is great, but like, just for the sake of everything, this is not the time for us to take a victory lap. Like, there was complete panic all over. So it actually was very anticlimactic in a lot of ways. It was back to work. Our business grew rapidly right after we sold. And it didn't quite reflect until I want to say, I don't know, two months later when the money hit the bank and we're like, wow, you know, like that happened.

24:13But in the moment, we're just so caught up with, you know, I don't know if people remember, but New York was in a terrible place at the time. Yeah, no, absolutely. And obviously at that point, I can imagine the emotional effect of understanding that you've sold it, but also suddenly coming into a huge amount of money. I want to quickly touch on, because I think this often isn't touched on enough, how much you were expected to continue at the company and for how long. Yep. So again, the reason I did this deal was that company was led by two founders. I think there's a big difference if a company is owned and run by founders.

24:49So I was upfront with them that I'm not necessarily the long, long-term leader and they get it. I mean, the founder there told me if I was you, I wouldn't be either. So we were very aligned. And the way my deal was structured was I owned equity in the company outright. There was no vesting tied to my acquisition. They made me a very generous job offer. And that job offer had a lot of stock options vesting. But about a year in, I basically gave back many millions of dollars worth of equity because I wanted to move on. And to me, the whole point of having money is when you're comfortable enough to say no to something that could be worth millions of dollars because your freedom is more valuable.

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26:12You'll also get a designated academic coach who's with you throughout your entire program. Plus, career coaches are available to help you navigate your professional goals. A different future is closer than you think with Capella University. Learn more at capella.edu. Hey, I'm Dr. Z and I'm a neurosurgeon. So that means long hours, early rounds, late nights, and everything in between. And through it all, I wear figs. They're comfortable when it counts and functional when I need them the most. So where do you wear your figs? On shift, on call, on the couch in the break room, listening to this podcast, wherever it is, they fit right in.

26:49And now listeners of this podcast can get 15 % off their first order. Just head to wearfigs.com and use code FIGSRX at checkout. That's wearfigs.com, code FIGSRX. So I want to talk about that, and I want to talk about kind of transparently what must have been an unbelievable and very confusing and very strange moment of feeling like you've kind of suddenly won the lottery, having an obscene amount of money suddenly in your bank account. What did that feel like? I mean, I'm going to get no sympathy. This is like the smallest violinist playing for this. But I do remember being like, wow, I just got a life-changing amount of money.

27:33But I'm stuck in my 400 square foot apartment. I can't go out and celebrate. Like the entire world is locked down. So there was a big sort of adjustment period. I don't think I did anything like I didn't have any extravagant purchases. I remember I bought a car a couple of weeks later because I wanted to go surfing. And having a car in New York is not necessary. It's definitely a luxury purchase. But even then, I bought a secondhand car, even though there was no reason to. I can't shake how I was raised and brought up. So from that perspective, I think eventually a lot of it settled down. But what I have used money for is really for freedom and independence.

28:08So one of the things I've now done since is go see my family a lot more than I used to. They're still in Oman. I now prioritize seeing them three or four times a year. I'm able to take us on nicer vacations than we have before. Things like that, I think, is what's made a real difference. Outside of that, everything kind of settles back to where you are. Yeah. And what have you learned about money since coming into so much? I think, firstly, again, I have a lot of friends who have and my perspective is different from others. But for me, money is a tool to live the life I want. My life is not a tool to make the most amount of money possible.

28:43And I know a lot of other people who feel differently about that. So for me, if I'm not thinking about money, that's its utility to me. I don't care about becoming a billionaire. This sounds silly, but I do have friends who are very, very caught up on that sort of treadmill. But then again, I do feel bad for them because typically that comes from a place of fear or all of this stuff is kind of formed early on in life. And I can imagine having the type of exit that you've had and feeling great about it and feeling like you've built something that matters and you've built something great. And you've also exited successfully.

29:19And that's, you know, fantastic. And so from that point onwards, it kind of being like, okay, well, I at least have this baseline of like, I've always done this. Like I've always achieved this now. Like no one can take that away from me. I'm comfortable. I don't need to think about money. It's not necessarily about, you know, suddenly living the most extravagant lifestyle possible. Yep, exactly. I think you soon come to a realization, or at least I did, that at this point, like money, it's not going to... Marginally more money will not change the quality of my life. It may change the number I go to the grave with, which is a dark thought.

29:52But, you know, like really, that's all that it really is. Does that mean with my next business, I don't want to have a huge outcome? No, of course I do. But I'm a competitive person. And it's a way of, you know, it's the way the sport is judged or whatever. But yeah, to me, I think it's what has been cool about it is just, yeah, being able to say no to millions of dollars at that job, because my independence is more important. My freedom is more important. Being able to do what I want is more important. So you said before we started the podcast that you thought after that exit, that you were done.

30:22Yeah. Talk to me about that. I was burnt out as hell. I remember at the time, it was quite funny because, I don't know, in America, especially, people are super into longevity and health. And everyone was posting this, here's how to have the best sleep, dark shades, and these 14-point checklist. I remember at one point while running Teachable, I was not sleeping well. And I tried all of that. I'm like, okay, no alcohol, like, like I am ass cold room, all of that. But turns out, once I sold my company, I slept great. The way to have a really good night's sleep is to have a nine figure X. Yeah. No, no, sorry.

31:01Actually, I should clarify. I should clarify. When I sold my company, it didn't change the quality of my sleep. But when I stopped my job. Right. So that's when I realized that something about that work was not sitting well with me. Like nothing really changed for me from like, you know, my stress level until I stopped working at my startup, not the money in the bank. And I can imagine that emotional difference wouldn't have been that much. Like, I don't think there would be much change in me doing my job from one day to the next if an exit happened on that day. And I can imagine that the, especially being a competitive person and having that kind of pride as well, I can imagine that you still want the job to be done just as well.

31:44Like you're exited, but you still want it to be the best company it can be. And in the year after we exited, we scaled from 25 million a year to 60 million a year. So it was like, you know, we did very well. But the quality of my life did not improve until I stopped working there. So after that, I'm like, you know what, I'm done with startups. I'm done with I'm done with I was so burnt out. I think by the end, probably didn't like being a CEO more than anything. It just felt like as a CEO, you're, you know, this tool, you're thinking as a corporation, not as a person. I just felt like my personal self and my professional self were diverging.

32:16So it wasn't a good feeling. But after that, I'm like, you know what, I'm not gonna ever start a company again. I started a venture fund because it felt like an easy thing to do, which sounds terrible, and spent a year and a half just traveling. So tell me about the change of mind in that you now have done exactly that and started another startup. I think nostalgia really comes at you because as time passed, I started to think, was it that bad? I actually think it was quite fun. And within time, you just remember the good times, right? It's weird how nostalgia works in your brain. I just started reminiscing the early days and how much fun it was.

32:58And all the later stuff that was harder was blocked out of my memory. And after a while, I'm like, you know what? I kind of missed that. And even though my life was great while traveling, the thing that was missing was meaningful work is an important part of what kind of makes me happy. And that was the only piece missing while traveling. Like investing did not fulfill that for me. Wanting to build something with people I cared about was just the thing that like, I'm like, oh, if I had that, I would have everything. And I remember I was supposed to go surfing in Lisbon, like in Portugal towards the end of two summers ago.

33:32But a few weeks before I was, I realized I actually wanted to stay home and work on this new idea instead. And that's when I knew I was like, all right, I guess I got to do it now. That's so funny. And I always say that the difference between people who are meant to be entrepreneurs and not meant to be entrepreneurs, and I don't mean that in a condescending way at all. I mean that because it's a very specific personality type and you've got to be a very certain type of person to actually enjoy that. I always say that the way of differentiating that is the fact that if you hear all of the narrative out there and all of the reality out there and all of the truth out there about actually what it's like and actually what it's like what you get once you get VC funding or just trying to grow it or trying to sell it or whatever it might be logically you should not want to do it like you should not want to do it and you should take all of that information and go that does not sound like a good thing to do and that's a great differentiator because every single true entrepreneur again don't mean that in a condescending way mean that you know you've got to be a little little bit a little bit but i also think like like not knowing is helpful like the first time around i didn't know the second time around i forgot like i mean i tell her like we see this jokingly but i'm like guys we're not doing this because it's easy we're doing this because we thought it would be easy right and i think there's some reality there where you kind of just forget which you've done again yeah i have i have but like i'm doing this now and i'm like wow i forgot how much work this was yeah but but there's also this element of building and trying to create something that doesn't already exist and sitting in a room with people and trying to hash something out that could never work but also could work and that like tiny slither of like hope and not just hope but like excitement that you could reinvent the way an industry works especially in tech like that cannot be replicated anywhere else I always like my favorite days at work are the days where it literally feels like a game like it feels like we've just thrown a load of shit at the wall and we've been like, yeah, good work.

35:33Yeah, absolutely. Absolutely. I mean, when you're first starting out, you're literally creating something from nothing. The entire universe is conspiring for this thing not to exist. You have to do so much just to like will it into existence. But at the same time, whenever things get too much, I mean, I tell our team, I tell everyone that it's like, bigger pictures, zoom out, think about what it was like to be seven or eight years old. If you told yourself you get to like, hang out with a bunch of people you like and do whatever you want with the idea of making money. That's kind of fun, right?

36:02And yeah, whenever things get too much, that's what I remind people. It's like, this is all a game. We're monkeys on keyboards, basically. And so tell me about the idea behind Carry and what you said that you wanted to stay home and you wanted to kind of work through it. What was that initial spark that made you think, okay, we could actually redefine how this works? So the initial spark actually happened while selling my company. While selling my company was the first time I thought about personal finance, never really thought about it. I'm an immigrant, don't know anything about the US financial system.

36:31But I hired a lot of expensive lawyers and accountants. And I was blown away by the dark magic of what can be done in terms of how complicated taxes are. The US tax code is so complicated. It's adding 150 ,000 words every single year. But the good thing is people look at that and they're like, wow, those words are my enemy. But no, inside those words are a lot of things to help people, especially business owners. The challenge is it's very, very hard for the average business owner to access that. So I already knew if I ever started a company, I want to take that and productize that because one, again, it's like a game.

37:06It's fun. Two, there's a real dollar impact. And three, again, helping business owners is what my last company was. It's just very aligned with my mission. And so when you've started having this idea, you've started hashing it out. What was the point where you actually thought, I've got to get some people in a room together and I've got to start building this? So I remember I was basically trying to set up a retirement account for myself because I had my own self-employment income. And I found this like account called a solo 401k. It's a one person 401k plan, but it's the best retirement account in America.

37:34You can get a$70 ,000 tax deduction, your dollars compound tax free, you can invest it in anything, but all the platforms sucked. So I literally was like, I need to build this for myself. And when I couldn't find the right software solution, you know, I started harassing people like, let's go build this. I put out a Twitter thread to validate the idea actually, where I told people like, hey, here's this account. My friend is building this platform. Let me know if you want an introduction. And I got a waitlist sign up of like 70 or 80 people. I was like, okay, wow, you know, other people would do this and it's time to go build.

38:04And did you at that point think about going for funding? So I had the venture fund I was running, right? So I was like, early funding, I will fund this myself. I don't need to go externally. Of course. And when I started the company, I actually tried doing both. I tried running my venture fund and carry, but soon realized that I couldn't do both. And I ended up giving back almost 30 something million dollars to my investors being like, venture fund is done. I'm now 100 % focused on building. So tell me how that was, because I can imagine, obviously, within the entrepreneur space, one of the biggest frustrations, I think, of a lot of people or this, it's ingrained into a lot of entrepreneurs is that you're only as good as your last thing.

38:45And because there are so many people that have had one incredible thing and then have not necessarily managed to replicate that success. I can imagine that there was probably a little bit of pride as well in being like, I'm returning$30 million and I'm not going to do what I originally said I was going to do. Can you talk to me a little bit about that? Yeah, absolutely. So I'd raised a little bit over$70 million. I said I was going to be an investor, and that was great while I was burnt out. But as I started feeling myself coming back to life, I was like, being an investor, it's too passive. I want to actually do stuff.

39:13then I tried doing both and then I was like I can't this is not fair to my startup and my company if I'm spending time taking calls with other companies it just there's just too much actual work I had that had to be done that I'm like it's time to do the difficult thing and return a lot of my investors money it was easier for us because my fund charged no management fees which was pretty atypical a lot of other funds take up to 20 % in management fees we had no management fees so it It was a hard decision just because it's always hard to give back money. But as soon as I made the decision, I just felt lighter.

39:48And that's when you know it's the right thing to do. And yeah, I announced it. And most people were pretty happy, especially because the fund owned 20 % of the company. So they were like, hey, okay, if you're focused on this, we're investing in you. And that's really all it is. Yeah. So you had a very roundabout way of raising funding for the next thing. Yeah, exactly. Exactly. So tell me about the trajectory of building Cary and how it's gone from this initial idea of helping people with their finances, particularly higher earners and business owners, how it's evolved and how you've kind of validated the idea, but also created the product itself.

40:22Yeah, absolutely. So at Teachable, I always felt like one of the mistakes we made is we were very, very good at go to market and we were very good at growth without the underlying product being that strong. Like in the early years, it was good, but by the end, it got harder and harder to grow because our product just wasn't as good as it could have been. So at Cary, we took the opposite approach where we are spending$0 on paid marketing and really just trying to focus on content and like telling the narrative of, and teaching people how they can save money on taxes and letting our product actually do the work for it.

40:55So it's gone pretty well. I mean, we're at 1200 customers now, about 600 ,000 in annualized revenue, not super fast for a little bit over a year. But my goal here is to just get the product to the point where it's so good, and then amplify it with marketing. And you're obviously, as part of this journey, you're building it to get to far beyond where it is now. How have you built the team with that in mind? What stage is it at now in terms of the amount of people on the team? What do you expect it to get to? Are you projecting an exit? And what would that look like? Yep. We're 11 people, almost all of whom are working out of our office in Brooklyn, which is really, really nice.

41:35And it's honestly great to just see people I like every single day. We've indexed very heavily less on pedigree versus people who really want to work at a startup. And to me, the bargain of a startup as an employee is you're agreeing to work really hard. Yes, it's fun, but you're working harder than your peers are for potentially less cash compensation. But in return, if the startup works, this is life-changing from a financial perspective, it changes the trajectory of your career. You're basically compressing what could be 20 years of work into a short period of time. So found people that really want to do that.

42:10I mean, focused on people I want to spend time with. I mean, that's the other realization I've had is you spend so much time with the people you work with. At Teachable, there were times where people I didn't always enjoy, but because they were so good at their job, that was fine. This time around, I'm like, I don't want to do that. I want to just be around people that want to do this. But in terms of our ambition, I mean, my goal is to build a financial institution from the ground up. The last major company to do that in America was Charles Schwab, who did it in 1975. So it's been a while. And Charles Schwab is a public company worth$150 billion.

42:43So I think that would be a nice outcome. So got a big trajectory ahead of you. Yeah, that would be a nice outcome. And knowing that you enjoy the building so much, even though obviously there's an element of probably every tech founder that wants to get to a great exit. How are you building it this time? Obviously, you've said that you're making sure you like the people, making sure you like working with the people. But beyond that, in terms of like how many years you're thinking it will take to get to an exit, whether you'd expect to go to IPO or whatever it might be, purely so that you can keep building it.

43:11What's that kind of mental preparation like? Yeah, so this time fighting to keep the team really small. Because again, I think Teachable was really fun up to about 50 people, somewhere in that range. After that, it got a lot less fun. So fighting really hard to do that. And everyone says that. What does that actually mean? It means for certain things, we may use more freelancers and outside resources versus full-time employees. We try and use technology as the first solution instead of hiring people. So we're really fighting for keeping the team really small. in terms of outcomes i'm not not really thinking of the exit to me whether you go public that's a liquidity strategy not necessarily like an an exit strategy and my goal is to you know to build this potentially forever with the one caveat that i don't need to be the ceo forever last time i just thought i had to be the ceo forever now i realize there are two different things if you're a founder you can go be a founder for five years and then hire a ceo and still be involved so i could see that changing because again i did not love being a ceo by the end last time so far i'm loving it again but we're small so we'll see and looking at this entire journey and looking at kind of the the biggest challenges you've had along the way and kind of so much of what we've spoken about has been these different stages of funding in terms of being able to get to like your overall goal because you've done such interesting threads on funding on twitter which is like actually i think how i'd originally found you which is funny considering how impressive what you've actually done this, I'm like, oh, Twitter.

44:40This is why content marketing matters. It's true. It's true. Could you tell anyone who's listening to this, who is either starting a startup or wants to start a startup or has a startup and wants to know more about the funding landscape, what are the biggest tips you would give to people in terms of making sure you're getting the right funding at the right time, doing it in the right way? Yeah, absolutely. So I think the first and most important thing, and I didn't get this for the first few years is understand your investor's business model. Their business model is predicated on such outsized successes that like, like our seed investors made 20 times their money.

45:19That's still not like an amazing outcome for venture investors. They want to hit a thousand X or, you know, several hundred X. But what that in turn means is when you're pitching your idea, you want to make it sound like really, really, really massive. Like for us at Teachable, the first pitch was talking about how we're like, you know, Shopify, but for courses, but you know, that didn't go too far, but then we didn't change the product at all, but just change the pitch to talk about how in the future information is bigger than physical products. And, you know, we're going to power all forms of information commerce.

45:54It's all silly words, but they really make a difference to convey the biggest possible vision of your idea. So I think that's super important to realize also where your investors' interests may diverge from yours. Because if you have a company that you own 50 % of that you sell for$100 million, that's a massive win for you. It's not a massive win for your investors. So they may try and persuade you out of those paths. So again, when you're taking their advice, just understand that you have different business models. The third thing that I did last time, and I'm doing this time too, is running my company in a way that you don't always need the next round of funding.

46:36We'll raise one round now, but after that, we're done. We're done in that we may raise again, but if we do, it'll be from a position of strength versus needing to raise money. I think the worst outcomes happen when people get into this trap where they need the next round of funding. So you do the thing to get the next round of funding versus what's good for the business. And that's when you start to lose track of your cap table, your board. And we were able to like, personally, I owned over half the company when we sold. And I had two out of three board seats. That was only because of the way we structured it.

47:07That's so interesting. I think that so much of that, I mean, I think so much of the funding landscape, you talk very specifically about multiples, valuations. kind of, you know, when to raise all of these different things. I think a lot of what's not talked about are the non-financial aspects of, are you building too big a board? Are you kind of, are you going against what your investor's kind of overall intention is or what your overall intention is? All of these different things that aren't necessarily thought about because you're thinking about how good your valuation is. Yeah, of course. Yeah, that's sort of the overall thing.

47:39It's like valuation is just one number. The quality of the people will end up making the biggest difference in your life. Like my two, three biggest investors at Teachable are now amongst my closest friends. It's a 10-year relationship at this point that just compounds and grows. Yeah. I mean, last round, Tala, for example, like we actually took the lowest valuation out of all of the ones that we came in purely because we were like, those are the best people. Like those are the best people. Those are the ones we want to build with. I'm not building a company that, you know, I want to hate being in because we will not get to where we want to get to.

48:09And there's so many other terms to negotiate for. Valuation is just, you know, just one of them. Yeah. Like there's so much that I didn't necessarily know at the beginning in terms of like watching out for nasty, nasty turns. Like, you know, someone can give you a great valuation if they've got two times prefs in there or something like that, where they're going to get paid back two times before you're going to get a single penny. The thing that surprised me is how much all this stuff is kind of made up and how in every new funding round, everything can be rewritten. So it's something to always like watch out for.

48:37Yeah, that's a really, really good point. And I think that it's really all of these things. I'm so glad I got well versed in. And I think if I hadn't got well versed in, I probably would have allowed myself to be really fucked over by this stage. I think especially from what I've seen overall, the US seems to be a lot more founder friendly than the UK. Correct. Yeah, the UK is probably still better than continental Europe. That's the threshold. So you really want to watch out for how founder friendly these VCs are or whoever it might be are, and making sure that you're not just throwing away everything else in the face of valuation.

49:08Because as you say, it might be that on the surface, this valuation is higher, but if they're getting paid back two times before you are, or if it's part of a smaller overall valuation where you sell, then it's not necessarily going to help. So this doesn't always work, but I do find if you can raise from people who have been founders before, they typically are a lot better about this stuff. Yeah. Because anyone who can put themselves in your shoes will be more empathetic. Yeah. And I can imagine if I would like, oh, actually, anytime I do angel invest, it is like in that scenario. You never want to make the journey harder for someone.

49:40You know they're making money for you. Like I think one of the best pieces of advice I was given was these people are lucky to be investing in your business. Remember that investors have a duty to allocate their funds. Like it is their job to get rid of this money. Therefore, of course, they want to do it in the best business as possible. And if you believe in your business, it is their privilege to be involved for you to go to work every day to make them more money. You're deciding who you're going to make rich. Exactly. So great. And just bearing that in mind as well, I think is so important.

50:10I'd love to know in hindsight what you feel like the biggest challenges were of the entire journey. It's always the human relationships, right? It's the most rewarding, but also the most challenging. I can think of several times when my most stressful times were when there was what I felt like I should do as a CEO and what I felt like I should do as a human or a person. And sometimes they're just different. And I still don't have the solution to that. But that's sort of inner conflict, right? Because I believe in your only one self. I don't believe you're your work self and your personal self and stuff.

50:45but as a ceo there are times those are in conflict and with time it gets slightly easier or rather you get desensitized but nowhere close enough to yeah that was always the time my question do i really want to do this and yeah those are always hardest hardest like everything else like product fundraising so much easier compared to that yeah because i think we as humans as well are like ingrained to a certain extent extent like you don't want to go to work and feel like you're being a bad person. And obviously at any point you'll completely avoid that. But even if like what I struggle with sometimes is even the fact that I have to go back to someone and say with a piece of work that they thought was great.

51:23And I have to go back and be like, this isn't great. And this is why. And there's an inherent part of that that makes you like, like the times I've had the biggest, like lose it moments have been like, I feel like I've been the bad guy every single day this week. And I'm also the person who needs to go to investors and say why we're doing not so well or why you know this has happened or whatever it might be and like those two things are so hard to get together because you feel like you're letting everyone down and you're being like wrong in all of the situations but it's it's part of what you have to do yeah the other thing that's always very hard is if things are inherently not going well you kind of have to still have a high morale for the sake of your team right which is again like like everyone looks up to you to decide how to feel.

52:09So if you're like, everything is fucked, they're going to think that. So you have to kind of have this shield of almost invincibility around you. And sometimes that's why I find it helpful to have a pure group of other founders so I can talk to them about that. But otherwise, it can be kind of alienating. Oh, 100%. You have to be able to ring fence and you have to be able to like, it's you are the one who started the company. It is no one else's duty to come to work and think that their job might not exist tomorrow. And obviously, that for the majority of the time is not the case. Like you're not on the verge that much.

52:40But actually knowing that, you know, when you get to a bit of a stressful point in terms of where's the next funding round coming from, when you get to a bit of stressful point in thinking, actually, we're not sure the business works past this level, which actually means we can't create a meaningful multiple for anyone. No one else other than you there decided to do that. And so they're there to do their job. And it is your duty for that person never to know unless they are at the level where they should know. And then even then, it's still your responsibility to make sure they're okay. It's your job.

53:09I don't know. If people don't feel happy at my company, it feels like a personal failing, right? Completely agree. Yeah. So yeah, that's always the hardest part. But at the same time, I mean, again, whenever that happens, I try and zoom out and think about, I don't know, it's still such a privilege to be doing this. I sucked at having a job. I don't think I could go back to having a job. Gotta make this work. Yeah, exactly. And before we end, I'd love to know what the best piece of advice is that you've ever been given. So I'm trying to think of who said this, but this is what I have to live my life by as well, is this idea of take your work seriously, but don't take yourself seriously.

53:46Sometimes, again, within all the companies I've run, culture, we always have, well, I guess, as you all say, banter. And it's just this culture of keeping things lighthearted, making fun of each other. And I think that's a really, really important thing I try and live my life by where it's not that serious. It's a game. Yeah, exactly. Live it like a game. Exactly. Try and play the game well. Sometimes you're not going to and that's, you know, that's life. Yeah. Oh, well, I love that. Well, thank you so much. This has been great. Thanks for having me. This has been amazing.

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