Episode Transcript
Hello? Hello. It's Andrew from XO capital and this week, Danny and I, while Danny jumped on a Twitter spaces, that was just going to be me monologuing for about 30 minutes. So. Be grateful to him for jumping on with me and having a much more interesting discussion. We talk about the XO community. Launching a courses, launching a course motivations for picking a startup idea. When to quit either on a product or even an acquisition.
So I hope you enjoy.
Enjoy.
How's it going?
Good. You know, tax season is never super fun. So I'm just going through our updated tax returns before sending them all away. You know, it's remarkable, like this is maybe foolish of me, but financial accounting is different than tax accounting, even for public companies. So public companies can put out fully audited tax statements and then report something totally different to the government that they didn't pay taxes on.
Which I think is, it's a, that's, what a weird, what a weird thing. Like Enron, for example, they put out audited financials and their, their auditors got in trouble for, you know, not actually auditing the financials, but what they were reporting to the government, had they reported those, those fake document, not fake documents, but those inflated numbers to the government, I think the government would have flagged it and said this, this doesn't look right.
Yeah. And prevented that fraud. I just don't know why there's a. Differentiation between financial accounting and tax accounting.
But couldn't think of anything more boring to talk about on a, on a lovely Friday morning.
It's if you know how to, or maybe this is like unrelated to the difference between those two, but it's kind of, it's a wild, the finagling that you can do and not, you know, not pass that, that line, you can stay very much in sort of the, the gray area you know, when, when doing your taxes or when reporting your financials, it's It's pretty wild.
It's like a crazy, it's like a, it's like a superpower, I feel like.
Yeah, but easy to get wrong. I mean, our guys, I, I like them. They do a great job for us, but the first draft they sent back was like all wrong. The deductions were all wrong. And this is like, this is super, our stuff is super basic. I mean, there's like, you know, a bunch of different LLCs.
So there's complexity there, but in terms of like the actual P& L, they're like really, really straightforward.
Yeah, yeah, but you guys caught it. It looks, looked, looked correct
as long as it's showing Showing a loss It's correct.
Did you want to talk through something or was there something on your
mind? I might have back so so back says and he's listening right now and he's in the first XO pod So I thought I'd throw This together to see if anybody wanted to like chat or ask questions. The XO pod is, is interesting. We put together like a little acquisition group. And not to like buy businesses all as one person, but just to kind of have like a support group to go through and share deals, et cetera, et cetera.
And it's going pretty well. It's like the most active. So it's all a discord. Danny, you're in there too, right? You're seeing the activity. It's like way, it's, it's active. Like people are, people are interested in this. Just trying to find a way to provide value without having it to be, having it have to be me.
You know, in meetings or answering all the, all of the stuff. Never really had any success launching a community. But it does seem like there's, I don't know, there's something interesting here. I don't know if we'll do another one. It's like. Much work, little pay, but, it's kind of cool. Maybe make the whole XO discord just paid and, see what happens there.
Then it might make more sense to say like, okay, the whole thing is paid. Now, once a week I can do these, I can do like a call where you and I are on there and people can just jump in like kind of webinar style and ask questions or, or whatever and see if, see if the value is there too. I've also kind of been like.
I'm not really a course person, but I've been like recording some videos and creating a little worksheets. And if I keep doing that over the next 12 weeks, that'll be like a 12 module, six hour quote unquote course. But I don't have the balls to sell a course. Balls, balls isn't the right word. I just, I feel weird about it.
I don't know why. Have you ever created a course, Danny?
No, not as like a solo person. We've sold courses like as a part of when I ran like a consulting thing with like a team and I wasn't like, I was an employee there and I we put out courses that we sold, but nothing like with. Me the person
behind it. What's your feeling on courses? Do they work?
Do they provide value? I've taken a couple, you know, like I forget when we all started we took Ryan Culp's course
Yeah, I Man, I don't I don't I I haven't benefited from them. I also feel and maybe this is like a arrogance, but like I always feel like my situation or like the thing the subject matter of like what i'm taking the course on is like I'm like looking for something very specific and generally those courses like never address them or they address them too broadly where like I have, I kind of, I feel like I didn't progress forward in any way.
So like, I, I generally enjoy like these like little groups. Where we can be very specific about questions or problems I'm trying to solve versus like a, you know, courses like made to be broad strokes to get, you know, 100 people to buy it. It hasn't been very, very
beneficial. Yeah, the fascinating ones are what's that guy's name?
Justin, the LinkedIn guy. Yeah just in Welsh. Yeah, just in Welsh. So, I mean, his whole thing is so interesting because he's like growing on social talks about growing on social and then has a course about how to grow on social. It feels so weird to have that be his whole thing where he's just like, I just post about growing on social media and then I grow on social media and then I create courses about growing on social media.
It's like what, you know, it's like trying to squeeze a balloon. It's like. I took that one. I thought, you know, I've had some interesting ideas, but generally speaking, it's all stuff that like, doesn't work anymore. You know what I mean? Like, this is what worked last year. The stuff changes so fast and it doesn't work anymore.
Yeah. The like I think we had this talk before and I feel like maybe this, this is maybe why I think like your blog and our blog on XO has. Seemingly benefited some folks is like, it's not very helpful once you're successful, then you start like writing about writing about it. Cause like for him, the whole premise was like, you just got to do it for a long time.
Like his thing was like, I did it for a long time, every single day. And then two years later, here it is. And then like, kind of the message is like, you should just keep doing it every day versus. So it's like, you know, we talk about it as we're doing it in some weeks, it's really, really sucky and really bad and like some days it's good.
And some days it's in between. And like, that to me feels more, I don't know, something about that feels a little bit more authentic. And it's like. Emotionally and mentally like aligned with where maybe a lot of our community is. And so it feels more beneficial or there's some alignment there versus like, here's this guy who like, he says he generates, you know, millions of dollars a year being a solo entrepreneur, like doing this stuff.
It's like, well, like, how was it like, and what was it like in like, you know, day 30 of the, of this process, you know, and you're like. You know, maybe a 2000 days in so yeah, it's it's interesting.
Yeah. I invited everybody that's listening to speak, by the way, Kyle, if you want to jump into feel free or Siobhan, if you want to chat to but yeah, the, that authenticity piece of like not this is how you should do it, but like, this is how I am doing it, that subtle shift feels much more palatable.
In the context of a course.
Yeah, which is maybe why like a community that's like a discord that feels like more real time resonates or it feels, yeah, it feels more beneficial to me than, than of course I just, I bought like a couple of courses that I think one out of the 10 I've purchased, I've gone all the way through. All the ones I've sort of like, pick and chose different things.
But yeah, hasn't, hasn't been the most fruitful, I would say the courses that I've taken.
Yeah. Many of them are like those books that if you read the title, you kind of don't need to read the book. What's that one about checklists? It's like you know, I don't know, it says something about checklists in the title.
You're like, Oh, okay. So like use checklists. Thank you. I don't need to
read the book. I get it. The check, you mean the checklist manifesto?
Like how do I? Yeah. Yeah. Yeah. The whole book about why you should use checklists. So just use checklists and
you don't have to read it.
It's like the state of, it's like the state of business books today.
Yeah. Yep. , but on the acquisition side, one of the posts I was thinking about doing that I haven't done yet, and I know Danny, you have some opinions on this is like when to quit.
You have an interesting relationship with, with quitting as, as even an option that I thought might be fun to chat through.
Hmm. Yeah, that's a good one. I'm happy to talk through it. The other thing that was sort of on my mind This is sort of related to journey a little bit is like, and journey is like a one off.
So for those, like it's something that we're doing outside of our existing portfolio, essentially we bought something in an entirely separate entity with the expectation that. We look for a buyer in 12 to 24 months. And I was going through this, like kind of like brain exercise of the business of like, how much of my time maybe should I be spending to like, kind of set it up to be, to look really great as a potential acquisition versus like kind of the weeds and like grinding and doing the little incremental things.
Like move the needle a couple of steps. I feel like that mindset and just the tasks even look very different. And I was kind of just like going through and creating a list of like, what sits on the left side of like, I'm going to hold this thing for 10 years. And like, what does that look like to do this?
Versus like, Hey, there's like a couple of broad strokes that I can apply that could make this really appealing to. Like a strategic buyer and that could take up a lot of my time. So like, you know, what does that investment look like? So that was also another thing on my mind that, you know, maybe it's worth talking about, but the quitting thing is yeah, it's sure, sure.
You and I can go back and forth on it. Cause yeah, I do have a, I don't like quitting. That's the thing. I guess, and. Yeah, in the context of what we do, sometimes it's the right thing. And, and honestly the best thing to do and the faster you do it, it's the most, it's the more beneficial thing, which it's a hard mindset for me to, to accept.
Yeah. Yeah. The quitting one, I I think maybe I think differently about it because I've launched maybe close to 50 and this is, this is obviously stupid and says way more about me maybe than it should, but I've launched like 50 full end to end, like SAS products with a new domain. off, you know, automated billing, all of that stuff.
And I'm maybe like four for 50 XO being one of them, all of XO being one of those four. That's it. So quitting for me is like, well, I didn't get any customers. I took a bet. I, you know, I should probably shouldn't have built a thing to start. That's maybe a mistake, but I mean, keep just like not quitting and keeping that something like that going.
When there's just no traction, nothing to hold on to. Quitting might be the best option. Like the, the best thing that can possibly happen is like a failure of a startup happens fast and immediate, immediately. The worst thing is like what I've been through, which is you're slogging it out for five years.
And then it goes to zero and you're like, Oh, well I could have, I could have gotten a whole PhD in the time that I basically created zero equity, zero value for myself and yes, like experience and the learnings and all that stuff, but at a certain point, it's like, Jesus, I'm tired of learning. Let's, let's start earning.
You know what I mean? Yeah. Do you, so for us,
so for us, when we buy something and we have a thesis about what we're going to do with it and we play that out and it doesn't work. And we have, you know, potentially other constraints like outside investors, right? So for the, the one Danny's talking about, that was for flip fund one.
So the mandate is 12 to 24 months. We're going to try and double the business and sell it. Even if there's still some money left on the table, it's a quick in quick out. That's the, that was the pitch. That was the. That was the path of least resistance for me to raise the amount that we raised. So so that's what it ended up being regardless of like how I feel about that or how I would have liked it to be.
That's sort of what it is. So yeah, and, and in that scenario, we can also recycle the cash. So if we bought something, if we bought something and it was bad, we could try and sell it or it was bad for us. We could try and sell it in three months and go take another swing. And so the quitting thing, I don't even know if quitting is the right word, but if we bought something that was not a great deal for us or we were wrong about something or the market changed, I don't see any shame in saying, well, you know, that one didn't work, move on.
It doesn't feel like that's necessarily a, I mean, it is a failure, right? It wasn't successful, but I don't see, I don't feel a need to, let's say we bought something and we lost a hundred grand. I don't need to go make that hundred grand on that same deal that we just lost that on. Right. Like if you lose money on a stock, you don't try and like, Oh, well, I need to make, you know, eight more dollars per share on that stock back because I just lost that there.
You're like, yeah, I have a portfolio. Maybe I'll go buy more NVIDIA, which everyone should have done eight months ago. Yeah.
Yeah. This isn't necessarily perfectly in line, but I had a question kind of about like your experience building the 50 like like, I guess. What was like the motivation for like building them and then maybe I'm being like too, I don't know, like emotional, like focusing on kind of the emotional side of like building and being an entrepreneur, but like, yeah, what was the motivation or like, and, you know, for the businesses that you built, like, were they, were any of them built because you like, or how, how did you decide what to build?
Like, were you passionate about something or did you just feel like, Hey man, here's like a, Yeah. Logically, here's like a problem that exists. It looks like there's a market for it. Let me just go and try to quickly build something and see if it, see if it takes off
for the ones that worked or for the ones that didn't work
maybe for the ones that worked,
the ones that worked. So XO has worked, SuperSense worked cold email studios worked and The the computer vision company I sold worked. Those were all just straight opportunistic. It wasn't like I had a deep passion about the problem. It wasn't even, they weren't even problems I had. You know what I mean?
It wasn't like I was scratching my own itch. All of that advice, like doesn't really speak to me very much. And then like the 45 other projects were just like, I don't know, maybe this will work like cold email studio, for example, company I was at for five years, just went to zero. I didn't have a paycheck and I started a services thing to like pay rent.
You know what I mean? It was like practical and I was like, Oh, maybe this'll work. And I cold emailed 10 people, got two meetings. And like, I think both of them paid like 500 bucks a month or something. I was like, Oh, okay, sick. I, I do this now. Right. It wasn't, it wasn't any more sophisticated than that. And then a lot of the other projects are like, it varies from, I have had this problem.
I am trying to scratch my own itch. Turns out nobody cares that I have this problem. Nobody else seems to maybe, maybe I'm early, maybe I'm late. Maybe it's too small. I don't know what it is. It could be my timing. It could be my reach, could be my audience. All those things are, are factors, right? It's not to say like when you, when a business fails for you, that's not to say like the business can't work.
It's just you, the market, the timing, your reach, how you went about it. You know, your manifestation of the problem into some kind of solution that made sense to you but that, you know, maybe didn't make sense to anybody else. But yeah, I generally don't have like a deep emotional connection to to any of the things I built other than the one that I spent like five years on that one was heart wrenching.
You know, I think what is it? The first one hurts the worst. There's some saying about love. The first heartbreak is the worst, something like that. So that one was like that for me. And then after that, I was like, oh, well if I don't get so emotionally invested in these things, they're in some ways easier, the big transition for me, it wasn't like, it wasn't the idea or like my relationship to the idea, it was actually involving some, like bringing people like you and Danny and being like you know, full autonomy or like, you know, Mikey as CEO and just saying like, all right, you know, I trust you, that was actually a really big.
That was harder for me than, than the changing the emotional relationship I have with the things I'm building.
Yeah, I think, I mean, there's no right or wrong way. I, I sort of, I do, I do like somewhat envy that. And I think it's sort of also, maybe like you're, that's like a part of who you are as a person. And it kind of translates into the way you build business businesses and the way you build business, which I think is really great.
And I'm, I'm super. Thankful, and I think for the three of us with Henry, like. The fact that we are very different and we like think about businesses very differently is it's an advantage versus all, all, all three of us like swimming in the same lane. Because yeah, for me, like the problem that like, yeah, the problem for me that can be good or bad in certain situations, it's like with, with the first business, like.
It was a problem that I had, but like, I, I, I thought through the problem for about like two, two years. And like, I, I solved it at the business I was at, cause we were like a sales consulting company. And so we were like providing a service to solve for it. And it just kept like, and I just couldn't get over the problem.
And then like, just. Continue to be something like that. I thought about, and then finally, like I had an opportunity to go build it, but like, you know, it was like, and then, you know, and then I built it, it didn't work, like, I couldn't get as many customers to like, feel like, Hey, this is something we could do.
And then we spent like another three months like pivoting and doing something else and then it became something, but like. You know, I spent like so much time on it. And to be honest, like that, like, I can't think of ideas very quickly. Like I, it needs to be something that like, I just like obsess over for a long time for me to be like, okay, like I can, I know how to solve this thing.
And, and I'm going to go and, and attempt an attempt to do it and. So I don't, I don't know why I'm that way. But it's just the way that I've been wired. And that's why I think it's interesting for me to like, think about quitting as something that is like advantageous for us as a business. Because there are clearly times when, when it is.
Yeah, but that, I think that tension and that those differences make us stronger as a group because I'll, I'll look at any speed bumps and headwinds and I'll be like, Oh fuck it, ditch it, kill it, sell it. You know what I mean? I'm out. Right. And you'll be like, wait, wait, wait, hold on. I'm just like digesting what this even is.
I think those that's like a healthy, it's a really healthy balance. Yeah,
yes. Yeah. And in terms
of success, there's no real right answer. We're having a call, you and I, Danny, the other day with a group that had built a relatively large business. And, the meeting was so slow, I thought I was in slow motion, like, I can't, I can't stand, I like, I feel like I'm living an entire life between sentences as these guys put their thoughts together, I'm like, Jesus Christ, just like, out with it gentlemen, like, just , say, just say the thing and But they had, if, if they had, if I had had that conversation with them without knowing their background, I would have 100 percent written them off as like too slow, uninvestable, no thank you.
These guys aren't going to get anywhere cause they can't even like, you know, they, they, they, they can't get out of their own way with any kind of urgency. And it turns out like I'm wrong. They've, they've built a much bigger business than I have ever have. And yeah, so there's, there's really no. I don't think there's an advantage, there's, I guess there are advantages and disadvantages to both sides, but there's no like clear winner here.
Yep. Yep. I agree. Yeah, it was calming. That call is like a, kind of lulled me to a nice,
nice sleep. Oh my God.
Yeah. What else?
Well, we've only got four minutes left. I got to jump in in three minutes, but I think we'll wrap up here. Maybe next time we could talk about the, Difference between like the your comments on journey about the difference between needing to sell it in 12 to 24 months, like a relatively short time horizon and what those constraints do to the decisions you make as an operator versus something that you're going to hold forever.
And how those might change those decisions because there, there are definitely things you can do to package an asset, to make it look more attractive to buyers that don't really add. Enterprise value. And I wouldn't, it's not deceitful. You know what I mean? It's not deceptive. It's just. Different than if you were taking a five to 10 year time horizon and saying, we're just going to hold this thing forever and we're going to cashflow it.
And we'll always do, we'll always take the long road. Whether that's a simple engineering feature where there's two paths, there's generally a short path that gets the thing done next week. And then the longer path, the quote unquote, right answer. I won't have any technical debt, but it might take a month or two.
You would always take that second bath path with that longer time horizon. Whereas. With a, with a two year hold period or less, you generally take the shortest path, the shorter path every time.
Yup. Yeah. Maybe next week, if we do this, I'll, I I'll have some like specific things that are on my list of like, here are three things I would spend, I'm thinking about spending my time on.
And here's like these three other ones and how I'm. Working through like deciding what to focus on with the you know, 12 to 24 month horizon coming up and maybe we can just kind of talk to those together. Maybe that's helpful or useful.
Yeah, I like that. I think maybe we'll just shell out for Zoom webinars so people can like raise their hands and stuff.
I think we're the only eight people on Twitter anymore. So Might be time to, might be time to move up.
Yeah Cool. Yeah, this was fun. Have a good one.
You too. Cheers everyone.
