SPEAKER_01
I raised a million dollars from all of my friends and family, all my social network. I could have self-funded. I easily could have raised another venture around then, but I intentionally didn't because I know I'm not going to lose the money from every single person in my social network. I'd rather die than do that. We're here with Ben Rubenstein today. Could not be more excited about this one. True Time Exit and Founder, over $650 million in assets. Going to give us the full playbook on how to build a sales team at scale, how to position your business to sell to an eventual strategic buyer. I mean, he's done it twice. His newest thing is probably going to be more successful than his last two companies. All this stuff is going to be super valuable, but you're going to love how we started the episode.
SPEAKER_01
[SPEAKER_00] Okay, Ben, welcome to the show. Yeah, thanks for having me. Thanks for hosting. [SPEAKER_00] We are in Ben's beautiful backyard here in Austin, Texas on Lake Austin. Ben, the first question I want to ask you because we have a lot of folks who are in the content space, who are in the digital marketing world, but we don't often talk to them about sales teams. And sales teams are something you've kind of mastered the art of building. You built a 2,000 person sales team before. I just want to kind of start first principles here about how you go about building those sales teams.
SPEAKER_01
Yeah. So look, when you're very small, it's very different than when you've scaled something fairly large. So in the early days, you've got to figure out what to sell and how to sell it. And so the first hires you want in those days, you want someone to have really high sales IQ. It's probably you as the founder are doing most of the selling at that point. So you want to first prove that you can sell it as a founder. Then you hire people who you're not necessarily telling them what to say and what to do. You know they're super smart. You know they're good at sales, but you're tracking everything and seeing what's working and what hasn't. Then once you have a critical mass of sales and recorded calls and content around those sales, that's when you can start building scripting. So the people you hire later on are the complete opposite of the people you hire in the beginning. The people you hire later are people who are super coachable, great work ethic, great attitude, but they're probably not coming from the sales world. They want to follow your process. In the beginning it's the exact opposite. You want to hire someone with a high sales IQ who may not really like the scripted world. So that conversion is difficult too.
SPEAKER_01
[SPEAKER_00] Totally. How do you go about that first initial sales script? Did you have a process for that?
SPEAKER_00
[SPEAKER_01] Yeah. So I made a lot of mistakes in building scripting. At Yodel, we knew we needed to build a script. We had a big enough sales team. People were doing things all in different ways. So it was super not scalable and very difficult to manage. It's much easier as a manager when everyone's saying the same thing than everyone's saying different things. So we needed to make a script. So what we did is we brought all the best sales people in a room. We listened to all their calls. We talked to them all about how they did their scripting. And we built this script based on our top sales people. And we rolled it out to everybody in the company and it completely flopped. Did terribly.
SPEAKER_00
Yeah. [SPEAKER_01] And the reason it did so poorly is one, no one had ever sold with these words. It was a Frankenstein mismatch of a bunch of different things. And two, it had no credibility. People said, "No, what I'm doing is working. I don't want this script you're forcing upon me." Right.
SPEAKER_00
[SPEAKER_01] And so what we did was we completely scratched that, threw that all away. And we looked at our top salesperson who was doing something in a very standardized scripted way. We recorded all of his calls and actually used word for word what he wrote. We then took one of our sales leaders and we said, "Only use these words." So we had the words of somebody who'd made lots and lots of sales using this exact script. And we had a salesperson who people wanted to emulate using those exact same words. Yeah.
SPEAKER_00
[SPEAKER_01] And then that person crushed it and beat everybody else. So then instead of having to force a script down everybody's throat, we said, "No, no, you can't have it. We're not going to be down the door saying, please, why is he making so many sales? I want it." So we had complete buy-in of the team and we knew it was going to work because these actual words had made sales before. Yeah. Let's do a quick refresh on Yodel and just talk about the background of that business, the problem you guys were solving and the early trajectory there.
SPEAKER_00
[SPEAKER_01] Yeah. So I started Yodel 20, 21 years ago, back when I was in college. We helped your local business, your local dentist, doctor, plumber, electrician, get online and advertise online. So the early days we were competing against the Yellow Pages. I remember being in college, seeing them deliver a pallet of Yellow Pages to our dorm because I live in a big high-rise. And then it went straight into the dumpster. And I knew the Yellow Pages was this $20 billion market. People would spend $10,000 a month to have ads in Yellow Pages and nobody used them anymore. The consumers were going to the World Wide Web where businesses had not been advertising. And we had to convince local businesses that people went to the internet, to the World Wide Web to find them. So it was this interesting moment in time where consumers were behaving one way, but businesses were behaving separately. And our idea was to bring those businesses to the 21st century. So in the early days, it was website design, getting a small business their own email, creating a website, driving traffic to that website. It was early days of Google AdWords, Yahoo search marketing, which was Overture at the time. We then added review solicitation, reputation management, social media, mobile when that came out.
SPEAKER_00
It was kind of like an OG digital marketing agency almost, right? You had this portfolio of services that helped businesses modernize. [SPEAKER_01] Yes, but when you think a lot of digital marketing, you think about driving traffic to a website for commerce. This was all services businesses, none of it was e-commerce. Okay. So it was mostly services businesses. [SPEAKER_01] Yeah. It was all services businesses that were phone call heavy local businesses. So we were replacing people who, instead of going to the Yellow Pages and finding a local service, were going on to the web to buy a local service.
SPEAKER_00
[SPEAKER_01] solicitation, reputation management, social media, mobile when that came out. [SPEAKER_01] It was like an OG digital marketing agency, right? You had this portfolio of services that helped businesses modernize. [SPEAKER_01] Yes, but when you think a lot of digital marketing, you think about driving traffic to a website for commerce. This was all—none of it was e-commerce. [SPEAKER_01] Okay. So it was mostly services businesses.
SPEAKER_00
[SPEAKER_01] Yeah. It was all services businesses that were phone call heavy local businesses, right? So we were replacing people who, instead of going to the yellow pages and finding a local service, were going on to the web to buy a local service. [SPEAKER_01] Got it. Got it. And then say I'm an entry level salesperson, how would you coach me about keeping one of those people on the phone? I'm sure at the time it was different cold calling, but that to me seems like the magic of cold calling is like, "Hey, this is Brian from Yodel." And they just immediately hang up. Right?
SPEAKER_00
[SPEAKER_01] Well, there's different stages to the call, right? There's the intro, which is the most important part, which I think is so crazy that sales organizations have SDRs, which are their most junior people. [SPEAKER_01] Right.
SPEAKER_00
Do the hardest part, which is the beginning. So I have always, we had a small SDR team, but I really felt salespeople, and we do this today in my company today, need to be there from the beginning to the very end, because the beginning is some of the hardest part. So the first part is the cold call, the introduction, then there's the demo or the presentation, and then there's the close, which I would say is a close second to the hardest part, which is getting someone to give you their credit card. [SPEAKER_01] And this is all on the phone, right? This is— [SPEAKER_01] Yes. We would try to do—
SPEAKER_01
One call closes, primarily.
SPEAKER_01
Sometimes the second follow, but for the most part, one to two call closes, very short sales cycle. So the intro—I mean, there's either you're talking to a decision maker or you're not talking to the decision maker, right? So a dentist, for example, calling a dentist, you're rarely going to get the dentist on the phone. Calling a plumber, there's a good chance you're going to get the plumber on the phone. So what we'd do on the gatekeeper—the gatekeeper—we tried a lot of different scripts. Probably one of the ones, it seems very simple, that worked the best was just tell them it's Ben, right? Just the name of the game is making sure, creating confidence that this person knows who you are and just getting past the gatekeeper. The more you are fumbling around, the more trying to explain why you need to talk to them, it's only downside from there. I would say for when you get someone directly on the phone, a mistake a lot of people make is feature dumping. Here are all the things that I do. But your customer doesn't care about your features. They don't care about what your product does. They care about the end result and how it helps them, right? So call somebody directly to Yodel, we want to get you more business, right? We also found that questions were much more engaging than statements, right?
SPEAKER_01
Yeah, you got to do that discovery, the qualification. Yeah, like can you handle new phone calls? Can you handle more business? Yeah. It's like the Jedi mind trick, right? You're like, are you even eligible to take our services?
SPEAKER_01
Well, the reality is there are some people who are so busy that I definitely see in Austin, especially in the contracting world, you don't want new business. You're happy, you have a lifestyle business. If that is the case, there's nothing we can do to help you. And no, actually, we would say, well, would you like more of a different type of business, more targeted business, more quality business? I think the other thing is being very specific on their vertical, right? So it sounds like you know what you're talking about, they'll have a lot more respect. But ultimately, you're there to help them. One of my favorite sales books is the Challenger Sale. Have you ever read that?
SPEAKER_01
No. So it's a great book where they look at all the different sales personalities out there. So there's the sales personality who is a—you're the friend, right? They buy someone because, you know, I take you to dinner and you like me, we play basketball. Yeah, the relationship builder.
SPEAKER_01
Relationship guy. Then there's the intellect, right? Oh, this person's super smart, I should buy from them. Then there's the expert. Wow, this guy knows more about that. And there's all these different sales personalities. But when they studied all of them, the one that made the most sales was the Challenger, which was: you believed one thing, I challenged your belief. And now you realize, whoa, actually the world isn't the way I thought it was in the status quo. I just learned something.
SPEAKER_01
That is so interesting. I'm just listening to that because I've built and sold my agency in the last year and a half. And I feel like with every single client and prospect, I almost wore each one of those hats, you know? For some, I was the friend, for some, I was the intellect. And then you're so right. Whenever you have a sales call with a prospect and they think, I was selling TikTok shop services or creator content, whatever it is. And they think it's supposed to be a certain way. You actually push back—healthy pushback. And you're like, no, no, no. I've seen it this way. Here's the proof of me being right. You can almost guarantee that they're going to respect your opinion more.
SPEAKER_01
Yeah, exactly. Most people think this is the case. I understand. And it makes logical sense. You think that's the case, but let me show you why the world has changed. Let me show you why that opinion isn't crazy, but this is actually what the data says.
SPEAKER_01
[SPEAKER_00] Yeah. Yeah. Yeah. So okay, let's go back into this kind of sales thing, because a lot of people are worried about where the job market's going to go. And there's so much uncertainty about white collar work right now. Yet it does seem like sales is one of the more durable things. That might be one of the last places where job loss even occurs, because there's so much nuance. There's so much magic to the sales process. Especially enterprise sales. I mean, these are very hard, complex processes. Right. People don't always buy because of logic. They buy because of emotion. Right. And they buy because they connect.
SPEAKER_01
[SPEAKER_00] Yeah. Yeah. Yeah. So, okay. Let's, I want to go back into this sales thing, because a lot of people are worried about where the job market's going to go. And there's just so much uncertainty about white collar work right now. Yet it does seem like sales is one of the more durable things. Like that might be one of the last places where job loss even occurs. Because there's so much nuance. There's so much magic to the sales process. Especially enterprise sales. These are very hard, complex processes. Right. People don't always buy because of logic. They buy because of emotion. Right. And they buy because they connect with somebody. They buy because they trust somebody. And my space at Setpoint, it's such a heavily regulated, especially all FinTech, lots of regulation, lots of ways things can go very wrong. And so you want to make sure you are with a party that is trusted and legitimate. It is much harder to build that trust completely without a human. What are some of the qualities you see in the best enterprise salespeople?
SPEAKER_01
Curiosity. I think they're incredibly curious, not about just the customer and discovery, but they're incredibly curious about the industry. Right. They know more about their prospects' business, oftentimes than the people in that business. Yeah. And so they're not seen as a salesperson. They're seen as a resource that's helping them in other ways. Some of the best salespeople I know do all these things to help the customer that have nothing to do with the sale. Right. They're just an expert. They're this great connector.
SPEAKER_01
[SPEAKER_00] I was going to say the other thing. Building a lot of value. Amazing networkers, right? They have a Rolodex that's tremendous. So that's helpful in sales, but it's also helpful with your prospect. Like, hey, I know you have this other problem. Let me connect you to so-and-so. Let me help you with that. Yeah. Yeah. Yeah. They're very obviously smart, but they're hungry to learn and they're excited to learn. Yeah. Okay. So I've heard on a couple of different episodes, you mentioned that the average person at Yodel was making a hundred dials a day, maybe more. Yeah, probably average a hundred. We had plenty of people who did 150. And closing one?
SPEAKER_01
[SPEAKER_00] No, the best people were closing one. Yeah. I mean, it was a real sales can be a really difficult job, right? Right. You know, I think I was telling you this earlier about, if you're a great hitter in baseball, right? You hit what? 300. [SPEAKER_00] 300. Yeah. Which means you failed seven out of 10 times. Right. Right. Okay. You're the best at your craft and you failed 70% of the time. At Yodel and a lot of sales jobs, you make a hundred calls and you make one sale. That means you failed 99% of the time. So to be able to overcome that constant rejection and loss, you need to be somebody who's got a phenomenal attitude.
SPEAKER_01
Yeah. Yeah. You have to fully detach from everything. Well, you have to see it as, okay, I made 99 phone calls and I made no sales today. You can look at this in two ways. Well, the next call, the odds are it's going to not work out, right? Because 99 times it didn't. Or you look at it as, oh, I made 99 calls. The odds are in my favor, right? Like I should get one out of 100, right? That's the, so you're seeing the same problem and coming at a completely different attitude. And it's amazing in sales, how much of the sale has everything to do with the salesperson's mentality and not the person on the other side.
SPEAKER_01
[SPEAKER_00] Yeah. Yeah. In sales, the number one objection that's hardest to overcome is the reason you wouldn't buy the product. So you look at the product, why would I not buy this? That's the objection you always have a hard time over.
SPEAKER_01
Yeah. And you kind of have to have those objections mapped out and ready to address them very specifically. So we had every single objection we knew we made 80 million calls a year. So we had heard every, we called every small business in the United States four times. So we'd heard every single objection many, many times over. And we had phenomenal rebuttals to every single one of those objections. But if you didn't believe it and understand it, you weren't going to be able to sell it. [SPEAKER_00] Well, and it's timing, right? A lot of the time, I'm sure people just weren't ready to even buy, right? I mean, what was the offer? Like, what was the ticket price?
SPEAKER_01
For a small business? Yeah. So we had a product that the low end was about $200 a month. And then we had customers, probably our average was six, 700 a month. And we had customers in the tens of thousands. [SPEAKER_00] Yeah. Yeah. Interesting. Interesting. So I feel like Yodel was a perfectly timed business, right? You mentioned this key insight where you saw the yellow pages being thrown in the dumpster and this was the old world and people weren't adapting to the new world. And it definitely seems like there's probably an opportunity maybe hiding in plain sight today. Like, do you see any similar opportunities to what Yodel did to modernize an industry in 2026?
SPEAKER_00
[SPEAKER_01] Well, I think it's interesting. A lot of people will say to me, oh, I have this idea. Is this a good idea for right now? Or you know, sign an NDA. I have this idea. I want nobody to know about it. Anytime I get an NDA, I mean, that means somebody hasn't actually built a business before.
SPEAKER_00
Totally. Right. Because the business isn't the idea, it's the execution of it. I mean, Yodel was not that exceptional of an idea. There's plenty of people doing online marketing, even at that time. Yeah. For small businesses. Right. And there's plenty of others who did it. Why were we able to scale in ways others couldn't? OpCity was referrals in real estate, connecting consumers to residential real estate agents. People have been doing that for a very long time. Right. So it's not, or your Setpoint, what I'm doing today in the infrastructure and asset backed lending, there are other parties who do this. You win, not only because you execute more, but you understand your customer better. So I like to think of it differently and say, it doesn't matter what your idea is, who is your first customer? Right. So at Yodel, my co-founder, his father had a number of different car dealerships in Connecticut. And so that was our first customer. His dad put him in charge of the internet stuff, right. Get us a website, do something there. So we could do whatever we wanted with that customer to figure out,
SPEAKER_00
very long time. Right. So it's not, or your set point, what I'm doing today in the infrastructure and [SPEAKER_01] asset backed lending, there are other parties who do this. You win, not only because you execute more,
SPEAKER_01
but you understand your customer better. So I like to think of it differently and say, it doesn't matter what your idea is, who is your first customer? Right. So at Yodel, my co-founder, his father had a number of different car dealerships in Connecticut. And so that was our first customer. His dad put him in charge of the internet stuff, right. Get us a website, do something there. So we could do whatever we wanted with that customer to figure out, was what was going to work, and really test things out with a very captive party. At Op City, our first customer was a brokerage, Home City Real Estate. They were in Austin and Dallas. They were
SPEAKER_01
about 2% of the market, bought about 40% of the online leads. They were how we learned everything. Our office was physically in their office. Yeah. Set point. Our first customer was Homeward, who was on the board of Homeward and we're solving their problems. And we have another private credit fund. So we are building our own formula one car for ourselves and also use that software for other parties. Yeah. So to your question of what should be built now? I would say to people, where is, who is a customer or somebody you know who's having some pain that you could build something for to solve that pain? That it's not just for them, but works with many, many other parties.
SPEAKER_01
And so I think those are everywhere. Every business is. Well, and it's the fact finding process, too. I mean, it goes back to what you said about enterprise salespeople. Like you need to be very naturally curious to even find this problem that someone's experiencing. Because it sounds like with each one of these businesses, you almost started with a customer first and then just expanded into all of the same businesses that were experiencing that challenge. You start with a customer that you know is a pain. You say, is there a big enough TAM, total addressable market, that this is not some bespoke issue. I'm not an agency. Let me solve it for one
SPEAKER_01
customer. I built a ton of not only credibility, but understanding of the space. I know how to solve this problem and then I can scale it out to other parties. Right, right. And then, so with each one of these businesses, you did raise a little bit of money, right? Oh yeah. Yeah. We raised venture in [SPEAKER_00] all three of the companies. Yeah. And then, so I think in total, we said 150 million across the three? Yeah. About, yep. That sounds right. Yeah. So I want to get into your fundraising process, because we have a lot of listeners who are probably trying to raise money for their business and
SPEAKER_01
probably experiencing a lot of pushback from investors questioning how they're going to actually deliver on what they're trying to do, but where they find people and all that stuff.
SPEAKER_00
[SPEAKER_01] So I'd love to just dig into your fundraising process as well. Well, let's say for all three
SPEAKER_01
companies, it was very different because of the different stages I was at. So at Yodel, in 2005, the venture world was a very small space, right? And so nobody would give us any money for the first two years. Nothing. Nobody even talked to us. So the first two years I was living on an air mattress. I moved every two months for two years. We put every dollar we had into the company until we got to about a million dollar annual run rate. So we had some actual credibility. So bootstrap first and then? Bootstrap first. Yeah. And then, you know, we, and back then VCs, we'd pitch them,
SPEAKER_01
they'd walk out in the middle of the pitch. It was definitely not a very founder friendly era. That actually happened? Multiple times. Or guys would just be on their, at that time, BlackBerry, [SPEAKER_00] not paying attention. Yeah. Yeah. [SPEAKER_00] You know, you're 21 years old, you're asking for millions of dollars. So yeah. And also back then it was not today founders are put on a pedestal. Back then it was, [SPEAKER_00] if you want to take our money, we need to bring in a gray hair CEO. [SPEAKER_00] Right. Right. [SPEAKER_00] And I think a lot of VCs learned that was the wrong decision. [SPEAKER_00] For sure.
SPEAKER_01
[SPEAKER_00] But that's how it was then. But we pitched whoever we could get in front of. We ended up going with Bessemer [SPEAKER_00] because a lot of the partners there went to Penn and we also went to Penn. [SPEAKER_00] I mean, they're, yeah, we're raining now. Nice. [SPEAKER_00] Yeah. Yeah. [SPEAKER_00] So, so. [SPEAKER_00] Under some nice little canopy here. We'll be all right.
SPEAKER_00
Yeah. So I think networking through university, but I think the way I did it at Op City is probably the most scalable way. So at Op City, I remember we said, all right, we're going to make this a very tight process. So we said, all right, let's get introductions to some of the top tier VCs. And we met with 75 different firms and we didn't cold email any of them. We said,
SPEAKER_01
[SPEAKER_00] we want to get introductions from other founders. The best way to talk to VC is to get an introduction from another founder now. So we had 75 introductions and we did probably about 75 initial pitches and then got, I think 40 some second meetings from people who were interested. A lot of people will say no to you. I feel like that's a great conversion rate. Right. I mean. Yeah. I mean, one, I had already sold Yodel, so they wanted to hear more. And two, I think, look, a lot of people said no, because it's not the right time in their fund. Maybe they want to learn a little more to put you in their CRM, but they're not that serious.
SPEAKER_01
So you're kind of seeing who is actually serious. [SPEAKER_00] But you probably also had really refined the pitch and the packaging of like, hey, this is what [SPEAKER_00] we've done. This is where we're going. This is our credibility. [SPEAKER_00] Yeah. I would not do the 75 pitches before you do some friendlies pitching. So you can work [SPEAKER_00] through that pitch a number of times, which we definitely did. We then from that 45, I think, [SPEAKER_00] got about 20 some in-person meetings, probably about 20. Because back then, you really had to meet people [SPEAKER_00] in person. Then from there. [SPEAKER_00] Where were you at the time? Were you in Austin?
SPEAKER_01
[SPEAKER_00] I was in Austin. Yeah. [SPEAKER_00] Nice. But pretty much most of the meetings were on the coast, mainly in the Bay.
SPEAKER_00
Yeah. Yep.
SPEAKER_01
[SPEAKER_00] And then after that, we got, I think, about a dozen final meetings and probably got about six or seven [SPEAKER_00] term sheets. Yeah. And then when you had those term sheets, did you end up going with one or you had [SPEAKER_00] through that pitch a number of times, which we definitely did. We then from that 45, I think, got about 20 some in-person meetings, probably about 20. Because back then, you really had to meet people in person. Then from there. Where were you at the time? Were you in Austin? [SPEAKER_00] I was in Austin. Yeah. [SPEAKER_00] Nice. But pretty much most of the meetings were on the coast, mainly in the Bay. [SPEAKER_00] Yeah. Yep.
SPEAKER_00
And then after that, we got, I think, about a dozen final meetings and probably got about six or seven term sheets. Yeah. And then when you had those term sheets, did you end up going with one or you had a lead investor and then- Yeah. So what happened then was we had multiple that were both going against each other. And then you say, you know what? I like both of you guys. And we raised more money than we had originally planned, but it was at a better valuation and was healthier for everybody. [SPEAKER_01] Yeah. Yeah.
SPEAKER_00
[SPEAKER_01] And one other thing we did was we tried to keep a really tight timeline. So we said, okay, we're going to do two weeks of pitching like by Zoom, then two weeks of in-person, bang out all the first meetings and then final partner meetings, and then two weeks of negotiation and got the whole thing done about six to eight weeks.
SPEAKER_01
Yeah. Six to eight weeks from beginning of pro- Because it's- Well, beginning of pitching, I would not say beginning of process, but beginning of actually talking to people. Yeah. I feel like it's something that at least I learned back in the day trying to raise venture was that you want to have an end date. Hey, I'm closing the round on this date, either get in or get out. Is that something you thought was important?
SPEAKER_00
[SPEAKER_01] Yeah. But you don't want to set that. I think you want to have an end date to different sections. So you say the end date for our initial pitches is this day, not the term, right? Because you maybe want to extend a little bit two, three weeks, but we're going to try to get 75 pitches in this two to three weeks. Okay. Then I would say to people, all right, I'm coming to California. I know your partner meetings usually on Mondays, at least what they did back then. So I'd stack up two to three weeks of those in-person meetings. Now you know where you stand. You've got enough of it.
SPEAKER_00
[SPEAKER_01] Okay. This is when I need term sheets by because I'm trying to get everyone at the same time. Okay. This is when we're going to make a decision by. Yeah.
SPEAKER_01
So I wouldn't say the whole process, you can name the end date in the beginning. I would chunk it out. And if someone doesn't have founder relationships, because if founder referrals are obviously the best, it's a warm lead, but if someone doesn't have that great network to meet a bunch of tier one, tier two VCs through other founders, how would you recommend them starting this process? Look, I think VCs are trying to put themselves out there in the local community. It's not that hard to go to some event where you're going to see what, like, SXSW is coming up next week, right? Every VC in Austin is putting on some event, go to the Capital Factory. They have a bunch of VCs there. You can network pretty easily with VCs. You could cold email them, but you're probably going to get not necessarily the person you want to talk to. If you go to one of their events, you'll know, okay, this is the guy who I'm trying to target and go talk to them. Yeah, totally. That was something I definitely remember as well. It was a big reason I actually remember wanting to leave Denver because I went to a lot of different investor kind of networking things. And it was like, there's four people that could actually write a check and it's, all right, well, I've now pitched the only four people in this entire city. I need to go to a bigger market. Or you can do the same thing with founders, right? Yeah. If you're a founder, you should know other founders.
SPEAKER_01
For sure. Right. That's a problem. If you're going to try to raise money, I don't know one founder who's raised money. There's, you want to build a network of these people. Yeah. So go to lots of events, meet other founders, build some relationship with them. They'll happily send you to other. Do you think there are certain businesses that shouldn't raise money? Or most businesses trying to raise money. Raising money is a little more complicated than people think.
SPEAKER_01
Yeah. It's not raising money is taking steroids. You better hit 70 home runs, right? You're going to do a lot of bad things to your body. So it better be worth it. Yeah. I think most businesses should not raise money, right? If you have a healthy business, you should be able to grow it on its own and use the proceeds from your profits to continue to grow. And then you maintain control. The reason you raise venture is you're trying to do something either incredibly quickly. So you don't have the time for that organic growth or it needs so much capex that you have to invest so much or you're never going to get there to do it. But by taking venture money, you lose control. And also, in the VC world, nine out of 10 things they do fail, right? They make their whole fund back on one deal. So they only win if you become gigantic, but you might win by becoming pretty big, right? Right? If you hit a double, you're probably still very happy. They only want a grand slam.
SPEAKER_01
[SPEAKER_00] Was there ever any pushback when you were looking to sell Yodel and looking to sell OpCity? Like was there? Oh, look, OpCity, we, our investors were very, they understood why. And there was a lot of strategic reasons to do it, but you know, they had put in money 18 months before we sold the business. And so they want that money quite right. They want that money. And they, although they got a good return, it didn't necessarily return their entire fund. Right? So they would happily keep doubling down. Right? It's like, if you're playing poker and you're forced to go all in on every hand, that's not the healthiest thing to do.
SPEAKER_00
[SPEAKER_01] But in their world, you have to go all in all the time to get the really big returns. And so you want investors that you're completely aligned with what you're going to do. And by taking venture money, there is some natural misalignment. [SPEAKER_01] Yeah. I mean, I've definitely heard horror stories where exactly what you're saying, someone's ready to sell a business that they raised maybe 10, 15 million for, [SPEAKER_01] a good return, it didn't necessarily return their entire fund. Right? So they would happily keep doubling down. Right? It's like, if you're playing poker and you're forced to go all in on every hand, that's not the healthiest thing to do.
SPEAKER_00
[SPEAKER_01] But in their world, you have to go all in all the time to get the really big returns. And so you want investors that you're completely aligned with what you're going to do. And by taking venture money, there is some natural misalignment. [SPEAKER_01] Yeah. I mean, I've definitely heard horror stories where exactly what you're saying, someone's ready to sell a business that they raised maybe 10, $15 million for, and they're ready to sell it for 150. And the VC is like, no, you have to go all the way to 500 million, 800 million, a billion dollars. We don't want you to sell.
SPEAKER_00
Right. Right. And so there's that, where that founder would have made plenty of money at 150. [SPEAKER_01] Totally. That's a great outcome for the founder. Great example of why fundraising is not always the best move. Right. You have to want to, so I sold the first company for 342 million, second for 210. I want to go big. Right. And so I am aligned there, but I think a lot of people, your odds of success, the number of people who can buy you at those rates start to shrink a lot too.
SPEAKER_00
[SPEAKER_01] Yeah. I want to, okay, so you kind of just lived with that. Sold Yodel, sold Op City. Now we're building Setpoint, which is probably even maybe a bigger outcome? What I really like about Setpoint is it's a very big TAMP with very sticky revenue. The hard part about Setpoint, which is very different than the other companies, is the enterprise sale is long. Selling to banks and private credit funds and many of these originators. But once you're in, it's a very sticky product. It's a very needed product. [SPEAKER_01] And so having that revenue be able to compound on itself is, you know, Yodel and Op City did have some churn, which made it harder to scale.
SPEAKER_01
[SPEAKER_00] Interesting. So with Setpoint you were looking for more of a longer customer LTV, or more of a lock-in. [SPEAKER_00] Yeah. I mean, our net revenue retention is phenomenal.
SPEAKER_01
Right. So when you sell to small businesses, there's a lot of volatility. It's inherent. Yeah. You know, selling leads to small business, you get them too many leads. It's too much. They can't handle it. They quit. It's like their daughter's going to college. I literally can't pay for the service. Right. Or we got them not enough leads. Well, now they want to kill you because you didn't provide it. Or you give them just the right amount. They're like, thank you. I'm going on vacation. I'm done. So there are just so many things that it's hard to maintain, but when you're doing a one call close, it's an easy in, but it's also an easy out. When we're doing these complex enterprise sales to banks, it is so hard to get in, but it's really hard to get out. And so I don't have the time pressure that I've had in previous situations. We can take the time to build a phenomenal business. And then once you have it, it's amazing with net revenue retention.
SPEAKER_01
I think what's really cool about your story personally is you've gone into three different markets that are huge, but also ultra competitive, and then just out-executed people. So what's your process for finding an edge? Like, how are you going about winning in these different, really saturated markets? I think being very disciplined is important. The hardest thing for a startup to do is stay focused, and focus isn't what you do. It's what you don't do. Right. And so being very clear of the things I could do, and the things I'm not going to do, and the only things I'm going to do. [SPEAKER_00] Do you have a process for determining that priority list?
SPEAKER_01
We have OKRs in our team and we're constantly trying to cut them. Every quarter we have one theme. What is the most important thing that we, if we do nothing else, this is the one thing that has to get done, and making sure everybody's aligned on that. I'm very anti-meeting, which is, back at Op City, we used to take all the chairs away in conference rooms. So people had to stand. We had just glass everywhere. So you can see if somebody was messing around in a meeting and not actually paying attention. We had smaller conference rooms, so you couldn't have too many people in them. What I wanted to do that we got close to was take all the comp data and anonymize it. But if you're going to book a meeting with people, it shows you how expensive this meeting is for the company. And then you have a budget and you can only spend so much on these meetings a month. I want to do the same thing with email. It's very cheap to send an email, but it's very expensive for a company when 50 people have to read that email. I already disabled reply all. So you can email as many people as you want, but you have to intentionally think of the names of the people you wanted to put on there.
SPEAKER_01
[SPEAKER_00] Yeah. Yeah. I don't know how we went on this tangent. [SPEAKER_00] No, I love it. I think all of those things, when I'm talking to people who are in a large corporation, maybe they're like a big tech company, right? Google, for example, it's unbelievable to observe how much time is getting wasted. No, it's sad. So when I was thinking Op City versus Realtor, right? Op City was sold to Realtor. At Op City, we were small and it was us versus the world, right? And there are not many of us and we're all fighting the world to get as much new business. Realtor is the exact opposite. It was us versus ourselves, right? [SPEAKER_00] Yeah. Yeah.
SPEAKER_00
[SPEAKER_01] We were a portal with a hundred million unique users. It was hard to lose at that point. And so you just start fighting yourself and thus you can't get anything done. So it's a very different situation. You spend all your energy. If you're good at politically getting things done within an organization, you can. A lot of that is politics. It becomes this chaos is a ladder type situation. [SPEAKER_01] And there are not many of us and we're all fighting the world to get as much new business. [SPEAKER_01] Realtor is the exact opposite. It was us versus ourselves, right? [SPEAKER_01] Yeah. Yeah.
[SPEAKER_01] We were a portal with a hundred million unique users. It was hard to lose at that point. [SPEAKER_01] And so you just start fighting yourself and thus you can't get anything done. [SPEAKER_00] So it's a very different thing. You spend all your energy. [SPEAKER_00] If you're good at politically getting things done within an organization, you can. [SPEAKER_00] A lot of that is politics. It becomes like chaos is a ladder, like Littlefinger from Game of Thrones type of thought. [SPEAKER_00] Yeah. Well, it's this weird adverse selection thing, right? [SPEAKER_00] Because in a startup with founders, people want to be in that environment.
SPEAKER_01
[SPEAKER_00] They want to move quickly, right? They don't like the bureaucracy. [SPEAKER_00] In a larger company, people stay because they're comfortable in that bureaucracy. [SPEAKER_00] They've been able to succeed in that bureaucracy. [SPEAKER_00] Okay. [SPEAKER_00] So over time, all this buildup of people who want to be there accumulates. And then when new entrepreneurial blood comes in, the host rejects it. You know, no, no, no, we, we, we. Do you think it's possible to maintain? I mean, obviously Op City got acquired by realtor.com, like you mentioned, massive company.
SPEAKER_01
And is it inherently just not possible to bring that culture, that startup hustle into a massive organization, do you think? I mean, I think Amazon's done a very good job of it. Yeah. Right. I think Facebook or Meta has pivoted many ways. Is it because they silo the teams or what do you think is the reason? I think they're led by the founder. So keep the founder. Yeah. [SPEAKER_00] There is an ETF, I think it's called BOSS or something like that. Well, you can just invest in companies that are founder led. No way. There's a huge difference between when a founder is still running a company versus a hired gun. Yeah. The gray haired CEO.
SPEAKER_01
That's what we were talking about earlier. The theory used to be for VCs to bring in the gray haired CEO and they learned that all that entrepreneurial energy that was driving that business goes away when you do that. Yeah. And it also comes down to market sophistication.
SPEAKER_00
[SPEAKER_01] When I see someone sell their business and then it gets taken over by a new controlling team, they just don't have the same insights into the customer, into the problem, the pain points. When you have the original idea and it works and it gets that traction, it's very difficult to replace the critical thinking that was behind the idea for future decisions.
SPEAKER_01
Yeah. Oh, they're not one. They're not taking the risks, right? Founders are constantly evolving and taking risks in a way that larger companies aren't. And two, there's just not the same passion that you're going to do whatever it takes to win. Totally. Right. As a founder, you have that burn the boats mentality, the burn the boat story? Of course. Yeah. All right. You have that burn the boats mentality. Yeah. Tell them. Tell them the burn the boat story. Yeah.
SPEAKER_01
Actually, I'll tell you. So the burn the boat story is Hernan Cortez, a conquistador, right? He comes from Europe to conquer the Aztecs with his big ships. He has all his men take the little boats from the ships onto the land. And he says to the men, burn all our boats. They're like, why would we burn our own boats? Burn them all? I said, well, we have two options. We're going to win and take their boats back to our ships, or we're going to die, but there's no surrender. Yeah. And I think founders, because they put so much of their own heart and soul into a business, they're not going to surrender. Where if you're a hired gun, you're like, oh, I can go somewhere else. They don't have that same passion. But when I raised for Op City, before I raised the venture round, I raised a million dollars in $20,000 to $30,000 checks from all of my friends and family, all my social network, all my high school friends, all my college friends. My parents don't have much money. They put in 50 grand. Yeah. And you say, well, why would I do that? Right? I had money from Yodel. I could have self-funded. I easily could have raised another venture round then, but I intentionally didn't because I know I could potentially lose my own money. I could potentially lose some investors' money, but I'm not going to lose the money from every single person in my social network. I'd rather die than do that. That put that extra pressure on myself. Failure was not an option. I was going to win or die. Yeah.
SPEAKER_01
And so I think as a founder, putting that extra pressure on myself, but put yourself in a situation that you're either going to win or die. How do you kind of go back to the drawing board after selling two companies and then it must have been so stressful both times, right? I mean, to go through those experiences. Oh God. Yeah. And then you're still just like, no, I gotta get right back to it. I gotta start another one immediately. The question is why put myself through this? How do you even balance burnout? Is it more so like you love the game, you just want to keep going or?
SPEAKER_01
Well, I think I've learned so much through each of the companies. Yeah. I think it would be a tremendous waste to not use what I learned. Yeah. I learned something. So you want to put it in place and do that. Yeah. I think a lot of it is naturally who I am. What makes a founder great at building something is in their DNA and personality. So you're not going to stop doing something because that's who you are. This whole concept of oh, so-and-so is going to sell their business and then go retire to a beach. I know a lot of people sell their business. I've never, never, never, never, right. Because especially if you were successful.
SPEAKER_01
Yeah. I think it would be a tremendous waste to not use what I learned. I learned something, so you want to put it in place and do that. Yeah. I think a lot of it is naturally who I am. So what makes a founder great at building something is in their DNA and personality. So you're not going to stop doing something because that's who you are.
SPEAKER_01
[SPEAKER_00] Like this whole concept of "oh, so-and-so is going to sell their business and then go retire to a beach." I know a lot of people sell their business. I've never, never, never, never, right. Because especially if you were successful and you built something, you want to keep going and that's part of who you are. I like the challenge of it. I've met some amazing people and it built a really great team. So I want to keep working with those people. [SPEAKER_00] I think it's really cool. Quick side note. So you founded Op City with Michael Lamb, right?
SPEAKER_01
Yeah. Yeah. And he's a good friend of mine from college. And so good friend from college, founded Op City with them. And then you just ran it back. Now you're doing Set Point. Set Point together. Yeah. Yeah. How do you kind of balance that marriage? Because a co-founder is a marriage.
SPEAKER_01
It's a hundred percent a marriage. Look, starting a company with somebody as your co-founder is definitely like getting married to them. Totally. You spend more time with them than your spouse. You're probably making bigger financial decisions than you do with your spouse. The pressure is probably higher than with your spouse. So my co-founders, my two co-founders at Yodel, I knew both of them. They were friends of mine. One was from preschool. One was from the neighborhood in New Haven. Op City was Michael, friend from college. And then Set Point was with Michael and Stu, my other co-founder I knew for many years, because he actually ran a competitor to Yodel. We almost bought his company. But in all those situations, you kind of want to date your co-founder first, right? It's like, before you get married to someone, you want to make sure that they're your friend and you get to know them. And I see too many people like, "oh, this co-founder looks good on paper. I met him at this one thing." And then we went and started a business. I think you've got to know this person for years. Like have a deep understanding of their—
SPEAKER_01
[SPEAKER_00] Years, years, years, years. Yeah. Morals, decision-making. [SPEAKER_00] Morals. Someone you want to spend a lot of time with. Yeah. Right. [SPEAKER_00] For sure. And you can make financial decisions with someone you respect them. You have a really good dynamic. Michael and I understand each other's strengths and understand each other's weaknesses. And because of that, we actually don't speak that often. Because it's like, all right, you got it. I know that. [SPEAKER_00] So we don't need to have many meetings. Yeah. Because what do you mean? Not that often?
SPEAKER_01
[SPEAKER_00] No, we talk, but we don't. When we're dealing with problems in the business, we know each other's lanes. Yeah. Yeah. And we don't necessarily need to get sign off from the other person. Right. Yeah. For a second, I thought you were saying I talk to him once a week. [SPEAKER_00] No, no, no, we talk to him. But you also want to have someone that you can tell the truth to and be really, really honest with, which is really hard when you're the CEO and you have lots of other people that you can't necessarily tell your true feelings all the time. Totally. So three businesses—in how many people have you hired?
SPEAKER_00
[SPEAKER_01] So Yodel when I left was 1500, but we had probably hired a thousand, maybe 10,000 people there over the 10 years. Op City was 500 plus. Then at Realtor, we had 2000, so that was another few thousand through time. And then Set Point, we have 140, so many, a few hundred. So I'd say well over 10,000.
SPEAKER_01
Over 10,000 people. What are some of the number one ways that people were standing out? Like what were some of the traits you were looking for in the interview process?
SPEAKER_01
So we have a lot of folks that are probably looking for jobs. It depends on the role. Definitely. I would say the vast majority of people throughout that time I hired were salespeople. And especially when we built a scripted system, your resume no longer mattered, right? Actually sales experience was a negative, right? Because we had a system and we wouldn't get that. So there were three personality traits that we really leaned into. And if you had these three traits, you were really good at this job. And if you didn't, you struggled and it didn't work out.
SPEAKER_01
[SPEAKER_00] I'd say the first one was coachability. So coachability isn't just saying, "I want to learn stuff." It's I show you something and you can instantly repeat it and do it. You're a very quick learner and you know how to learn and you've practiced learning things before. Yeah.
SPEAKER_01
The second is work ethic, right? Just doing something more times gets you better at it. And especially in the startup world, there's a lot of mistakes you're going to make. I'd rather take one person who does something 10 times and makes four mistakes than does something five times and makes two mistakes. Because the first person got six things right and the other one got three things right. Right.
SPEAKER_01
[SPEAKER_00] It's like in basketball, right? If you're better at free throw shooting than I am, but I shoot a thousand free throws a day, I'm not only going to get to your level, I'm going to get better than you. I don't care if you're naturally taller, you're more talented than I am. If I just put in more hours, I'm going to get better than you.
SPEAKER_01
For sure. So people are willing to put in 10,000 hours to become an expert. And probably the most valuable thing by far, especially in a startup, is attitude. We talked about making 99 calls and getting rejected. How do you see that working with others? And like most things don't work out in startups. Do you see them as, do you see failure as this great opportunity to learn something or do you see it as a mistake and it just crushes you?
SPEAKER_01
It's funny. It's also something I seem to understand or seem to observe in a lot of different post-exit founders—their emphasis on just people and personality traits and all of that almost above skillset, you know? Look, the world may change with AI. I'd love to—
SPEAKER_01
And probably the most valuable thing by far, especially in a startup, is attitude. We talked about making 99 calls and getting rejected and how do you see that working with others and most things don't work out in startups. Do you see them as, do you see failure as this great opportunity to learn something or do you see it as a mistake and just it crushes you? It's just funny because it's also something I seem to understand or observe in a lot of different post exit founders is their emphasis on just people and personality traits and all of that almost above skillset. Look, the world may change with AI. I'd love to
SPEAKER_01
[SPEAKER_00] see the first billion dollar company with one person, but every other company I've ever seen
SPEAKER_01
is a group of people doing something together. And what I find is the worst part of my job is when there's some people issue I got to deal with that isn't moving the ball forward. And the best part of my job is when I see somebody do something amazing and we can celebrate that. Totally. So when you think of the spectrum, it's the people you work with and that your question of why do I keep starting these things? You know, if I've hired tens of thousands of people and I have a small list of people, they're just killers that I want to work with. I want to spend time with those people and build something really, really cool. Yeah. Okay. Quick question. Do you think
SPEAKER_01
[SPEAKER_00] resumes are still relevant? Again, it depends on the role, right? I think for many roles, how about this? For all roles, who you are is more important. For some roles, a resume is a prerequisite to get in the door. You have to know something about it. Now I think AI is changing a lot
SPEAKER_01
of that. I've previously said you need to know how to be a software engineer if I'm going to hire you as a coder. Now, maybe you don't. So I think resumes, in this AI era, nobody's an AI expert because it's changing by the day. The skills you know now are not going to be as relevant in six months. And so who are the best people of the future? People who are curious and smart and want to learn more. It's not the smartest or the strongest of the species that survive, but the most adaptable to change. The best people of the future are people who are great at adapting and changing. And we're talking about having three completely different companies. I want to work with people who want to change, who want to learn new things and are able to tackle multiple industries. Yeah. Well, dude, Ben, I think that was just a wealth of knowledge for people to observe. Thanks for coming over and doing this.
SPEAKER_01
Of course, man. This is super fun. Now tell them anywhere that they can support you. I know you have your charity that you're involved in. Yeah. I'm very involved in an organization called CASA here in Travis County, but CASA is a national organization in most cities. CASA stands for Court Appointed Special Advocates. So we help kids who've been abused and neglected navigate the court system by training a volunteer. So typically if you've been removed from your parents for abuse and neglect, maybe you have a CPS caseworker who's overwhelmed. Maybe there's some lawyer involved. There's no one who really knows the child and is advocating on their behalf. We train a volunteer to spend a lot of time with that kid and go to court and say this is where the best situation is and help them find permanency. So I've been very involved. I've been on the board for 13 years. My wife, Sarah and I have both been volunteers. What's the website?
SPEAKER_01
[SPEAKER_00] So the one locally is casatravis.org, but CASA is a national organization.
SPEAKER_00
[SPEAKER_01] Got it. So if they want to support, hit the website and make a small donation. Yeah, to CASA Travis or CASA. There's Texas CASA. Every city, well, most large cities have a CASA. And I try to help other entrepreneurs as well. If you have any questions, feel free to reach out. Leave them in the comments, but otherwise we'll see you all next week. Peace. You know, you're 21 years old, you're asking for millions of dollars. So like, yeah. And also back then it was not today founders are like put on a pedestal. Back then it was, if you want to take our money, we need to bring in a gray hair CEO. Right. Right.
SPEAKER_00
And I think a lot of VCs learned that was the wrong decision. For sure. But that's how it was then. But we pitched whoever we can get in front of. We ended up going with Bessemer because a lot of the partners there went to Penn and we also went to Penn. I mean, they're, yeah, we're raining now. Nice. Yeah. Yeah. So, so. Under some nice little canopy here. We'll be all right. Yeah. So I think networking through university, but I think the way I did it at Op City is probably the most scalable way. So at Op City, I remember we said, all right, we're going to make this a very, very tight process. So we said, all right, let's get introductions to some of the top tier VCs.
SPEAKER_00
And we met with 75 different firms and we didn't cold email any of them. We said, we want to get introductions from other founders. The best way to talk to VC is to get an introduction
SPEAKER_01
from another founding now. So we had 75 introductions and we did probably about 75 initial pitches and then got, I think 40 some second meetings from people who were interested. A lot of people will say no to you. I feel like that's a great commercial rate. Right. I mean. Yeah. I mean, one, I had already sold Yodel, so they wanted to hear more. And two, I think, look, a lot of people said no, because it's not the right time in their fund. Maybe they want to learn a little more to put you in their CRM, but they're not that serious. So you're kind of seeing like who is actually serious.
SPEAKER_00
But you probably also like had really refined the pitch and the packaging of like, hey, this is what we've done. This is where we're going. This is our credibility. Yeah. I would not do the 75 pitching before you do some like friendlies pitching. So you can work through that pitch a number of times, which we definitely did. We then from that 45, I think, got about 20 some in-person meetings, probably about 20. Because back then, you really had to meet people in person. Then from there. Where were you at the time? Were you in Austin? I was in Austin. Yeah. Nice. But pretty much most of the meetings were on the coast, mainly in the Bay. Yeah. Yep.
SPEAKER_00
And then after that, we got, I think, about a dozen final meetings and probably got about six or seven term sheets. Yeah. And then when you had those term sheets, did you end up going with one or you had like a lead investor and then- Yeah. So what happened then was we had multiple that were both going against each other. And then you say, you know what? I like both of you guys. And we raised more money
SPEAKER_01
than we had originally planned, but it was kind of at a better valuation and was healthier for everybody. Yeah. Yeah. And one other thing we did was we tried to keep a really tight timeline. So we said, okay, we're going to do two weeks of pitching, like by Zoom, then two weeks of in-person, bang out all the, you know, first meetings and then final partner meetings, and then two weeks of negotiation and got the whole thing done about six to eight weeks. Yeah. Six to eight weeks from beginning of pro- Because it's- Well, beginning of pitching, I would not say beginning of process, but beginning of like actually talking to people.
SPEAKER_01
Yeah. I feel like it's something that, you know, at least I learned back in the day trying to raise venture was like, you want to have an end date. Like, hey, I'm closing the round on this date, like either get in or got out. Like, is that something you thought was important? Yeah. But you don't want to set that. I think you want to have an end date to different sections. So you say the end date for our initial pitches is this day, not the term, right? Because, and so maybe you want to extend a little bit two, three weeks, but we're going to try to get 75 pitches in, in this two to three weeks. Okay. Then I would say to people, all right, I'm coming to California. I
SPEAKER_00
know your partner meetings usually on Mondays, at least what they did back then. So I'd stack up two to three weeks of those in-person meetings. Now you know where you stand. You've got enough of it.
SPEAKER_01
Okay. This is when I need term sheets by because I'm trying to get everyone at the same time. Okay. This is when we're going to make a decision by. Yeah. So I wouldn't say the whole process, you can name the end date in the beginning. I would chunk it out. And if someone doesn't have, you know, founder relationships, because if founder referrals are, you know, obviously the best, like it's a warm lead, but if someone doesn't have, you know, that great network to meet a bunch of tier one, tier two VCs through other founders, like how would you recommend them starting this process? Uh, look, I think you, VCs are trying to put themselves out
SPEAKER_01
there in the local community. It's not that hard to go to some event where you're going to see what, like, stop by is coming up next week, right? Every VC in Austin is putting on some event, go to the capital factory. They have a bunch of VCs there. You can network pretty easily with VCs. You could cold email them, but you're probably going to get not necessarily the person you want to talk to. If you go to one of their events, you'll know, okay, this is the guy who I'm trying to target and go talk to them. Yeah, totally. That, that was something I definitely remember as well. It was like, that was a big reason I actually remember wanting to leave Denver because
SPEAKER_01
I went to a lot of different, uh, like investor kind of networking things. And it was like, there's
SPEAKER_00
four people that could actually write a check and it's like, all right, well, I've now pitched the only like four people in this entire city. I need to go to like a bigger market. Or you can do the same thing with founders, right? Yeah. Like if you're a founder, you should know other founders. For
SPEAKER_01
sure. Right. That's a problem. If you're going to try to raise money, like, I don't know one founder who've raised money. Like there's, you want to build a network of these people. Yeah. So go to lots of events, meet other founders, build some relationship with them. They'll happily send you to other, uh, do you think there are certain businesses that shouldn't raise money? Like, or most businesses trying to raise money. Raising money is a little more complicated than people think. Yeah. It's not raising money is like taking steroids. You better hit 70 home runs, right? Like you're going to do a lot of bad things to your body. So it better be worth it. Yeah. Um,
SPEAKER_00
I think most businesses are not, should not be, should not raise money, right? Like if you have a
SPEAKER_01
healthy business, you should be able to grow it on its own and use the proceeds that from your profits to continue to grow. And then you maintain control. The reason you raise venture is you're trying to do something either incredibly quickly. So you don't have the time for that organic growth or it needs so much capex that you have to invest so much or you're never going to
SPEAKER_00
get there to do it. Um, but by taking venture money, you lose control. And also, you know, the VC world, nine out of 10 things they do fail, right? They make their whole fund back on one deal. So they only win if you become gigantic, but you might win by becoming pretty big, right? Right? Like if you hit a double, you're probably still very happy. They only want a grand slam. Was there ever any pushback when you were like looking to sell Yodel and looking to sell OpCity?
SPEAKER_01
Like was there? Oh, look, OpCity, we, our investors were very, they understood why. And there was a lot of kind of strategic reasons to do it, but I, you know, they had put in money 18 months before we sold the business. And so they want that money quite right. They want that money. And they, although they got a good return, it didn't necessarily return their entire fund. Right? So they would happily keep doubling down. Right? It's like, if you're playing poker and you're forced to go all in on every hand, that's not the healthiest thing to do. But in their world, you have to go all in all the time to get the really big returns. And so you want
SPEAKER_01
investors that you're completely aligned with what you're going to do. And by taking venture money, just there is some natural misalignment. Yeah. I mean, I've definitely heard horror stories where exactly what you're saying, someone's ready to sell a business that they raised maybe 10, $15 million for,
SPEAKER_00
and they're ready to sell it for 150. And the VC is like, no, like you have to go all the way to like 500 million, 800 million, a billion dollars. We don't want you to sell. Right. Right. And so there's that, where that founder would have made plenty of money at 150.
SPEAKER_01
Totally. Like that's like a great outcome for the founder. Great example of why fundraising,
SPEAKER_00
not always the best move. Right. You have to want to like for,
SPEAKER_01
so I sold the first company for 342 million second for 210. I want to go big. Right. And so I am aligned there, but I think a lot of people, your odds of success, the number of people who can buy you at those rates start to shrink a lot too. Yeah. I want to, I mean, okay. So you kind of just live with the meat there. Sold Yodel, sold Op City. Now we're building Setpoint, which is probably, I mean, would you say is even maybe a bigger outcome? What I really like about Setpoint is it's a very big TAMP where very sticky revenue. The hard part about Setpoint, which is very different than the other
SPEAKER_01
companies is the enterprise sale is long. Selling to banks and private credit funds and many of these originators. But once you're in, it's a very sticky product. It's a very needed product. Yeah. Uh, and so having that revenue be able to compound on itself is, you know, the Yodel and
SPEAKER_00
Op City did have some churn, which was, uh, made it harder to scale. Interesting. So you want to, Setpoint you kind of were looking for more of a longer customer LTV maybe, or like more of a lock-in. Yeah. I mean, our net revenue retention is phenomenal. Yeah. Right. So that when you sell to small
SPEAKER_01
businesses, there's- So volatile. Inheritern. Yeah. It's no, you know, selling leads in small business, you get them too many leads. It's too much. They can't handle it. They quit. It's like daughter's going to college. I literally can't pay for the service. Right. Nothing. Right. Or, or I'm, uh, we got them not enough leads. Well, now they want to kill you because you didn't provide it. Or you can just the right amount. They're like, thank you. I'm going on vacation. I'm done. So it's like, or they got a business. There's just like so many things that it's hard to maintain, but any, when you're doing a one call close, it's an easy in, but it's also an
SPEAKER_01
easy out. When we're doing these complex enterprise sales to banks, it is so hard to get in, but it's really hard to get out. And so, um, I don't have the time pressure. You could say that I've had in previous, like we can take the time to build a phenomenal business. And then once you have it, it's amazing network current revenue. I think what's really cool about your story personally is you've gone into three different markets that are huge, but also like ultra competitive and then just out executed people. So what's your process for finding an edge? Like, how are you kind of going about winning in these different, like really saturated markets?
SPEAKER_01
I think being very disciplined is important. You know, I think the hardest thing for startup to do is stay focused and focus isn't what you do. It's what you don't do. Right. And so being very clear of like, here are the things I'm that I could do. And here are the things I'm not going to do. And here are the only things I'm going to do. Yeah. Do you have a process for determining like that priority list? You know, we have OKRs in our team and we're constantly trying to cut them. Um, and just finding, and we, and every quarter we have, what is our theme? You can only have one theme.
SPEAKER_00
What is the most important thing that we, if we do nothing else, this is the one thing that has to get done and making sure everybody's aligned on that. Um, I'm very like anti meeting, which is, I don't know if this, but like back at Op City, we used to, um, take all the chairs away in conference rooms. So people had to stand.
SPEAKER_01
We, everything, we had just glass everywhere. So you can see if somebody was messing around in a meeting and not actually paying attention. We had smaller conference rooms, so you couldn't have too many people in them. Um, what I wanted to do that we got close to, uh, was you take all of the kind of, um, comp data and you kind of, you know, anonymize it. But if you're going to book a meeting with people, it shows you how expensive this meeting is for the company. And then you have a budget and you can only spend so much on these meetings a month. Uh, I want to do the same thing with email. It's very cheap to
SPEAKER_01
send an email, but it's very expensive for a company when 50 people have to read that email. Uh, I do already disabled reply all. So you can email as many people as you want, but you had to intentionally think of the names of the people you wanted to put on there.
SPEAKER_00
Yeah. Yeah. Um, I don't know how we went on this tangent. No, I love it. I think all of those things, I mean, look, the modern company, I, at least when I'm talking to people who are in a large corporation, maybe they're like a big tech company, right? Google, for example, like it's unbelievable to observe how much time is getting wasted. No, it's, it's sad. So look, when I was thinking Op City versus realtor, right?
SPEAKER_01
Op City sold the realtor. At Op City, we were small and it was us versus the world, right? And there are not many of us and we're all fighting the world to get as many, much new business. Realtor is the exact opposite. It was us versus ourselves, right? Yeah. Yeah. We were a portal with a hundred million unique users. It was hard to lose at that point. And so you just start fighting yourself and thus you can't get anything done.
SPEAKER_00
So it's like, it's a very different, you spend all your energy. Like if you're good at politically getting things done within an organization, you can. A lot of that is politics. It becomes like kind of this, like, you know, chaos is a ladder, like Littlefinger from Game of Thrones type of thought. Yeah. Well, it's like a, it's this weird adverse selection thing, right? Because in a, in a, with founders and a startup and people are, want to be in that environment. They want to move quickly, right? They don't like the bureaucracy. In a larger company, people stay because they, they're cool in that bureaucracy. They've been able to succeed in that bureaucracy. Okay.
SPEAKER_00
So you get through time, all this buildup of people who want to be there.
SPEAKER_01
And then when new entrepreneurial blood comes in, it kind of like the host rejects it. You know, like, no, no, no, we, we, we. Do you think it's possible to maintain? Cause I mean, obviously, so Op City got acquired by realtor.com, like you mentioned, massive company. And is it inherently just like not possible to bring that culture, that startup hustle into a massive organization, do you think? I mean, I think Amazon's done a very good job of it. Yeah. Right. I think Facebook's or Meta has pivoted many ways. Is it cause they silo the teams or like, what do you think is? I think they're led by the founder. So keep the founder. Yeah.
SPEAKER_00
There is a, I think there's an ETF, I think it's called boss or something like that.
SPEAKER_01
Well, you can just invest in companies that are founder led, like a couple of companies. No way. There, I mean, there's a huge difference of when a founder is still running a company versus like a hired gun. Yeah. The gray haired CEO. That's what we were talking about earlier. The theory used to be for VCs, bring in the gray haired CEO and they lose, they learn that all that entrepreneurial energy that was driving that business goes away when you do that. Yeah. And it also comes down to just that market sophistication. I mean, when I see someone, you know, sell their business and then it gets taken over by
SPEAKER_01
a new, you know, controlling team, whatever that is, it's like, they just don't have the same insights into the customer, into the problem, the pain points. Like when you have the original idea and it works and it gets that traction, it's very difficult to replace, you know, the critical thinking that was behind the idea for future decisions. Yeah. Oh, they're not one. They're not taking the risks, right? Founders are constantly evolving and taking risks in a way that larger companies were. And two, there's just not the, there's not the same passion that you're going to do whatever it takes to win. Totally.
SPEAKER_01
Right. You're like, as a founder, you have that burn the boatsman, you know, the burn the boat story? Of course. Yeah. All right. You have that burn the boatsman. Yeah. Tell them, tell them. Tell them the burn the boat story. Yeah. Actually, I'll tell you. So the burn the boat story is Hernan Cortez, who's conquistador, right? Comes from uh, uh, Europe to, to conquer the Aztecs and his big ships. And, uh, he has all his men, you know, and take the little boats from the ships onto the, to the land. And he says to the men, burn all our boats. They're like, why would we burn our own boats? Like burn them all? Why? I said,
SPEAKER_01
well, we have two options. We're going to win and take their boats back to our ships. We're going to die, but there's no surrender. Yeah. And I think founders, because they put so much of their own heart and soul into a business, they're not going to surrender. Where if you're a higher gun, you're like, oh, I can go somewhere else. Like they're, they don't have that same passion. But I actually, when I raised for Op City, we're talking about fundraising before I raised the venture round, I raised a million dollars in like 20 to $30,000 checks from all of my friends and family, all my
SPEAKER_01
social network, uh, all my high school friends, all my college friends, my parents don't have much money. They put in 50 grand. Yeah. And you say, well, why would, why would I do that? Right? I had money from Yodel. I could have self-funded. I easily could have raised another venture round then, but I intentionally didn't because I know I potentially could lose my own money. I could potentially lose some investors' money, but I'm not going to lose the money from every single person in my social network. I'd rather die than do that. Yeah. That it put that extra pressure on myself. That failure was an option. Failure was not an option. I was going to win or die. Yeah.
SPEAKER_01
And so I think as a founder, putting that extra fine, doesn't, this is how I did it to put that extra pressure on myself, but put yourself in a situation that you're either going to win or die. How, uh, how do you kind of go back to the drawing board after selling two companies and then it must've just been so stressful for both times, right? I mean, to go through those experiences. Oh God. Yeah. And then, you know, you're still just like, no, I gotta get right back to it. I gotta start another one immediately. The question is why go put myself through this? Like, how do you even, how do you kind of balance like burnout? Is it more so like you love the game,
SPEAKER_01
you just want to keep going or? Well, I think I've learned so much through each of the companies. Yeah. I think it would be a tremendous waste to not use what I learned and I'm, and I learned something. So you want to put it in place and, and do that. Yeah. I think a lot of it is naturally who I am. So what makes a founder great at building something is in their DNA and personality. So you're
SPEAKER_00
not going to stop doing something because that's like who you are. Like this whole concept of like, oh, so-and-so is going to sell their business and then go retire to a beach. I know a lot of people sell their business. I've never, never, never, never, right. Because especially if you were successful and you built something, you want to keep going and you know, that's, that's part of who you are. Um, I like the challenge of it. I've met some amazing people and it built a really great team. So I want to keep working with those people. Um, I think it's really cool. Quick side note. So you, you founded Op City with a Michael Lamb,
SPEAKER_00
right? Yeah. Yeah. And then he's a good friend of mine from college.
SPEAKER_01
And so good friend from college, founded Op City with them. And then you just ran it back. Now you're doing set point. Set point together. Yeah. Yeah. How do you kind of balance that marriage? Because a co-founder is a marriage. It's a hundred percent a marriage. Look, me starting a company with somebody as your co-founder is definitely like getting married to them. Totally. You spend more time with them than your, your spouse. You're probably making bigger financial decisions than you do with your spouse. The pressure is probably higher than with your spouse. So I would, so my co-founders, my two co-founders at Yodel, I knew both of them. They were
SPEAKER_01
friends of mine. One was from preschool. One was from the neighborhood in New Haven. Uh, Op City was Michael, friend from college. And then set point was with Michael and Stu,
SPEAKER_00
my other co-founder I knew for many years, because he actually ran a competitor to Yodel. We almost bought his company. But in all those situations, you kind of want to date your co-founder first, right? It's like, before you get married to someone, you want to make sure that they're your friend and you get to know them. Uh, and I see too many people like, oh, this co-founder, they look good on paper. I met him at this one thing. And then we went and started a business. Like, I think you've got to know this person for years. Like have a deep understanding of their. Years, years, years, years. Yeah. Morals, decision-making.
SPEAKER_00
Morals. Someone you want to spend a lot of time with. Yeah. Right. For sure. And you can make financial decision with,
SPEAKER_01
you respect them. You are, have like a really good dynamic to like Michael and I understand each other's strengths and understand each other's weaknesses. And because of that, we actually don't speak that often. Cause it's like, all right, you got it. I know that.
SPEAKER_00
So we don't need to have many meetings. Yeah. Because like, what do you mean? Like not that often? No, we, we, we talk, but we don't, but when we're dealing with problems in the business, we know each other's lanes. Yeah. Yeah. And we don't necessarily need to get sign off from the other person. Right. Yeah. For a second, I thought you were saying like, I talk to him once a week. No, no, no, we talk to him. But, but, but you also want to have someone that you can tell the truth to and be really, really honest with, which is really hard when you're the CEO and you have
SPEAKER_01
like lots of other, you know, people that you can't necessarily tell your true feelings all the time. Totally. So, um, three businesses in how many people have you hired? So Yodel when I left at 1500, but we had probably hired thousand, maybe like 10,000 people there over the 10 years, uh, up city and 500 plus. Then at realtor, we had 2000, so that was another few thousand through time. And then set point, we have 140, so many, a few hundred. So I'd say well over 10,000. Over 10,000 people. What, what are some of like the number one ways that people were standing out? Like what were some of the traits you were looking for in the interview process?
SPEAKER_01
So we have a lot of folks that are probably looking for jobs. It depends on the role. Definitely. Uh, I would say the vast majority of people throughout that time I hired were salespeople. Um, and especially when we built a scripted system, your resume no longer mattered, right? Actually sales experience was a negative, right? Because we had a system and we wouldn't get that. Uh, and so there were three personality traits that we really leaned into. And if you had these three traits, you were really good at this job. And if you didn't, you struggled and it didn't work out.
SPEAKER_00
Uh, I'd say the first one was coachability. So coachability isn't just like saying, I want to
SPEAKER_01
learn stuff. It's I show you something and you can instantly repeat it and do it. You're a very quick learner and you know how to learn and you've practiced learning things before. Yeah. Uh, the second is work ethic, right? Just doing something more times gets you better at it. And especially in the startup world, there's a lot of mistakes you're going to make. You just, I'd rather take one person who does something 10 times and makes, you know, four mistakes than do something five times and makes,
SPEAKER_00
you know, two mistakes. Cause the first person got six things right. And the other one got three things right. Right. Um, it's like, or in basketball, right? If, if you know, you're better at the
SPEAKER_01
free throw shooter than I am, but I shoot, you know, a thousand free throws a day, uh, I'm not only going to get to your level, I'm going to get better than you. I don't care if you're, you're naturally taller, you're more talented than I am. If I just put in more hours, I'm going to get better than you. For sure. So people are willing to put that with 10,000 hours in to become an expert. Uh, and probably the most valuable thing by far, especially in a startup is attitude. We talked about, you know, making 99 calls and getting rejected and how do you see that, um, working with others and
SPEAKER_01
like most things don't work out in startups. Do you see them as, do you see failure as this great opportunity to learn something or do you see it as, you know, a mistake and just it crushes you? It's, it's just funny. Cause it's also like something I seem to understand or seem to observe in a lot of different like post exit founders is their emphasis on just people and personality traits and all of that almost above skillset, you know? Look, the world may change with AI. I'd love to
SPEAKER_00
see the first billion dollar company with one person, but every other company I've ever seen
SPEAKER_01
is a group of people doing something together. And what I find is the worst part of my job is when
SPEAKER_00
there's some people issue I got to deal with that isn't moving the ball forward. And the best part of
SPEAKER_01
my job is when I see somebody like do something amazing and we can celebrate that. Totally. So when you think of the spectrum of it's not, it's the people you work with and that your question of why do I keep starting these things? You know, if I've hired tens of thousands of people and I have a small list of people, I have, they're just killers that I want to work with. I want to spend time with
SPEAKER_00
those people and build something really, really cool. Yeah. Okay. Quick question. Do you, do you think resumes are still relevant? Again, it depends on the role, right? I think for many, many roles, how about this? For all roles, who you are is more important. For some roles, a resume is a prerequisite to get in the door. You have to have no something about it. Right. Now I think AI is changing a lot
SPEAKER_01
of that, right? I've previously, I would have said, you need to know how to be a software engineer if I'm going to hire you as a coder, right? Now, maybe you don't. So I think resumes, you know, in this AI era, nobody's an AI expert because it's changing by the day. I mean, yeah, the skills you know now are not going to be as relevant in six months. And so who are the best people of the future? People who are curious and smart and want to learn more. And what it's, it's not the smartest of the strongest of the species that survive, but the most adaptable to change. The best people of the future are
SPEAKER_01
people who are great at adapting and changing. And we're talking about like having three completely different companies. I want to work with people who want to change, who want to learn new things and are able to tackle multiple industries. Yeah. Yeah. Well, dude, Ben, I think that was just a wealth of knowledge for people to observe. Oh yeah. Thanks for coming over and doing this. Of course, man. Yeah. This is super fun. Now tell them anywhere that they can kind of support you. I know you have your charity that you're involved in. Yeah. I'm very involved in an organization called CASA here in Travis County, but CASA is a national organization as in most cities.
SPEAKER_01
CASA stands for Court Appointed Special Advocates. So we help kids who've been abused and neglected navigate the court system by training a volunteer. So typically if you've been removed from your parents for abuse and neglect, maybe you have a CPS caseworker who's overwhelmed. Maybe there's some lawyer involved. There's no one who is really knows the child and advocating on their behalf. We train a volunteer to spend a lot of time with that kid and go to court and say, this is kind of where the
SPEAKER_00
best situation and help them find permanency. So I've been very involved. I've been on the board for 13 years of my wife, Sarah and I have both been volunteers. What's the website? So the one locally is casatravis.org, but CASA is a national organization.
SPEAKER_01
Got it. Yeah. So if they want to support, hit the website and make a small donation. Yeah. To CASA Travis or CASA, there's Texas CASA. Every city. Well, most large cities have a CASA. And I try to help other entrepreneurs as well. If you have any questions, feel free to reach out. Yeah. Leave them in the comments, but otherwise we'll see you all next week. Peace.