Transcription
Money is oxygen, and if you run out of money, you're [ __ ].
[music] Welcome back to the Further Faster podcast. Today we have a legend entrepreneur out of New York City, someone who started three companies totaling over a billion dollars in total enterprise value and exits. He started amazing companies like Vocaloity and Cloud Sherpas and more recently BetterCloud, which he exited for $750 million. David Pitus is one of the best founders you could ask for when it comes to inception stage. He shares incredible learnings with our founders here at Antler on a routine basis, and they're always talking about what they learned from him, the mistakes that he helps them avoid, and the guidance that he's been able to give them. So, I couldn't be more excited to welcome you on the pod today.
I'm very excited to be here and just so everyone knows, the first couple companies I didn't start, but I was a very early founding employee at Vocosity, uh, one of the first employees at Cloud Sherpas, and then started BetterCloud, um, which was the biggest of the three.
Well, you know, I think that one of the things that I learned at LinkedIn, we always referred to Jeff Weiner as a as one of the founders because Reed said there are multiple founding moments of a company. And when you describe Vocaloity, I think about that as a founding moment. Maybe you can share a little bit about like that that moment when maybe when you took...
Definitely. Yeah. So, so I, I, I went to Emory, um, as you know, and and uh, when I [clears throat] came out of school, started working at this company, Vocaloity. It was under a different name at the time, and it was a, it was a voiceover IP business, basically doing reverse calling cards. That was essentially what it was in 2004. And I was a marketing assistant at this company. And my job, my first job at this company was to find Bulgarians who lived in the United States because the only country we had phone numbers in was Bulgaria. So my job is to find Bulgarians. And I became friends with... Anyway, that's a whole different story, but learned a lot about uh, guerrilla marketing in that time. Was going to like club parties of Bulgarians in Chicago and like handing out the cards, going to... So that was how I started. That company, which was 15, 16 people within six months of me joining this company, first job out of undergrad, within six months, every person was let go. Like, literally everyone was fired for various reasons, including one was not even showing up to the office. Like, literally just didn't show up. One person was wiring themselves money just to their direct bank account, not even trying to hide it. One person was sleeping with the other person. Like, and so it was just, at the end of six months, me and an engineer here. That was the only two people left at the company. And the founders took me out for lunch and they said, "Dave, do you want to be CEO of this company?" [laughter] And they said, "It's going to be, you're the CEO and he's the CTO."
And of course, I said yes. But to your point, that was really like a full refounding of the company. And then it was me and him in a 20-person office. We each got our own private offices, which were, I was very happy about it, like 22. And we were sitting there, him and I. And I said to him, "How do we do all this stuff that we do?" And he said, "Oh, we use this open-source PBX platform called Asterisk." And I said, "I don't know what open source is and I don't know what a PBX is." And he started explaining to me and he said, "Yeah, we can use this open source software and like make money from it." I said, "We can make money on their..." I it made no sense to me. I had to ask him like a hundred different ways about open source. And then a PBX, a phone system. And we ended up really changing the entire company from this reverse calling card business, literally what it was, to a first, first really multi-tenant cloud PBX running on the public internet for SMBs, which back then, which I don't know who's listening, most of the people at Antler, I think, weren't even born, you know, this time where it's like people, you know, we're talking about DSL lines. We're talking... Anyway, it was crazy. And that was, um, we got that business to about 20 million of ARR over 5 years. And so, yes, it was a refounding for sure, a refounding moment of that company.
Unbelievable. And I know you've had lots of interesting experience as a founder. You now have your own podcast and company, Not Another CEO. You share all of these learnings and you go back to those days and you think about what happened in those moments and what you learned and some mistakes. Uh, I'm curious if there's, uh, maybe one you want to start with from from that experience, then we can move on.
Yeah, I mean, there are so, I mean, the mistakes are endless, right? And one of the things I ask, I ask people on the podcast, what is the biggest challenge that they've had in their entire... And everyone answers the exact same way. They immediately go, "Oh man, I don't even know where to start." Like, everyone answers it the same way. And I made so many mistakes. And and just things like, I mean, first of all, I mean, I think if I have to say one of the biggest mistakes, and I running out of money in these kinds of businesses. Money is oxygen. However you fund the company, money is oxygen. And if you run out of money, you're [ __ ]. Like, just period. And in 2008, we were running out of money and we were negotiating with a venture firm. And we, we got a term sheet from that venture firm, but we were fighting over the the 2% dilution and this thing, very small, little terms. And we were literally arguing with them. The market crashes.
Yeah.
That term sheet gets pulled. We could have signed it. We could have had the money wired, but that term sheet got pulled. And because of that, we couldn't make payroll. And in one day, at 25, 26 years old, I had to fire half the company in a single day.
Crazy.
And we ended up getting the deal done with that investor, two and a half times liquidation preferences, three board seats, all kinds of crazy ratchets and crazy [ __ ] that the common shareholder basically made zero at the end. And it was all because we were not in control of our financial situation and the money that we had in the bank. That was the mistake that I swore after that. I swore I would never, ever, ever get in that situation again. And every company I've been a part of, and BetterCloud specifically, I always took money when it was available. And I didn't really, I fought for clean terms.
Yeah.
But I didn't necessarily fight on the margins on dilution and this and valuation because at the end, I, I realized that you, you just, you need that in order to keep building.
Yeah. And this is an important topic right now. You're seeing in the market these crazy valuations at seed and series A, specifically for AI companies being wildly overfunded. Founders wanting to, you know, get the maximum valuation they can get. You manage and coach a lot of founders. How do you think about that topic of of what valuation to take, what to optimize for in those conversations, specifically with early funding, but I think with any funding?
I do not think that, again, terms matter the most in my opinion. Valuation, you do not want to get out over your skis. I mean, we have seen, look at all the companies that raised in '21.
Totally.
There are very good companies, like companies I'm aware of that are very good companies doing a hundred, 150, 200 million of ARR, like real companies, but they raised at 7 billion,
Yeah.
9 billion, 5 billion, whatever. And they're so out over their skis. There's literally no exit path. Like, there's just nowhere. They've raised a billion dollars. They're doing 200 million of revenue. That's a hard situation to be in. And I think multi-time founders, when I was going through one of my fundraise, I called someone that I really trust and they're a multi, I think they're sixth company that they founded, very successful. And they said to me, "Dave, do not maximize for valuation." And they told me they had, this is '21. They said they had just gone through a round and had an offer at two and a half billion and took the offer at one billion because he said, "I just want to make sure that I have some way to exit this company and make everyone money. And if I'm at two and a half," he's like, "I know myself, I'm not even sure I can get to the seven and a half that I would have to get to." Anyway, so what I coach people is I say, "Look, at the end of the day, if it's the right person..."
That's the most important, especially early stage. This is someone you're basically going to be with for a decade or more.
Yeah.
This is someone who's going to have to trust you. You're going to have to trust them. They're going to maybe have to bridge you at some point. They're going to have to help you when you're going through this. I had, I got engaged, married, and two kids during the process. My investors, in some cases, were even giving me life advice. Like, you want these people to be the people that you want next year, for the next decade.
Yeah.
And valuation, it's not, you know, it doesn't mean anything until you actually, you know, get liquidity. It's just a [ __ ] number that. And I think that we're going to see the same problem we saw in '21 that we're seeing now for those companies in '21. We're going to see for these AI companies, but I don't think it's going to take four years. I think we're going to see this problem in 18 months where people are going to be ready for series B and not be able to raise because they're doing 3 million of revenue and AI is no longer this crazy sexy thing and they're going to be stuck. And then what?
Yeah. So interesting because there are two founders that I funded recently that have reached over a billion dollar valuation. And this is their second company or third company in one case. They both wanted 10 to $15 million valuations on day one because they knew that they could outpace that. They were thinking about their series A. They were thinking about what comes next. They want to gather resources and build momentum and build sort of a sense of credibility and gravity around the business. And it was like a second-time founder move, kind of what you described. Here's a $2 billion offer. Let me take it at a billion. Or that Silicon Valley episode on HBO, "No one told me I could take less money." [laughter]
You know.
But it's, it's really true. And I don't, and I think even though we can say this now, and I have founders who really trust me, and I say this to them.
It's really hard when you're a first-time founder. You believe the valuation of the company is a representation of your own personal self-worth.
I really believe that. I think you look at it and you say, "I want to be able to tell people that I raised at a $200 million valuation."
Right.
Because you've never been through it. And then once you've been through it, you realize, "I don't want to be sitting underneath a $200 million valuation when I've fought three million of revenue because I can't get out from underneath that."
Yeah. The status game should be EBITDA. [laughter]
That's a good point. Yeah. Exactly.
People do raise on these status games. They want to tell their friends and family, "I raised in this firm or at this valuation." But ultimately, are you creating any customer value?
Yeah. And you probably have a bunch of stories. I know between uh, between jobs, you wrote out some of like your most impressive rules about being a founder. One of them, "Don't run out of money." But I imagine some of them have to deal with the customer. You talk a lot about, um, the, the BetterCloud 100. Yeah. Is that the group?
Uh, maybe you could talk more about what it is to focus on the customer and focus on the problem and actually build real value.
So I think right now, again, let's talk about the companies. Right now, you're raising a lot of money very quickly and you're trying to get as many customers as you can on your platform. We all do this, and especially in the early stage. And when you do that, it's almost inevitable that when you sign the customer, you kind of just leave the customer to use your product and go and try to sign the next customer because you're trying to get growth as fast as possible. To me, I had been through that experience at at Vocaloity, specifically, and it was not good. And we had people who were very unhappy with the platform. And when I left, I promised myself that I was going to do it differently. So at BetterCloud, the first 100 customers, we had a product called Flash Panel in the beginning. We said, for the first 100 customers, we are going to treat these 100 customers like they are literally the most important people in the world. And when we sign them up to be in our, what we would now call design partner kind of stage.
We spent time with every one of those hundred one-on-one, every single month, like, period. Every one of those hundred. My favorite thing we did is we recorded a video for each hundred customers. This is before the script and all that. You could just do editing. We actually recorded it with our team.
So me, the engineers, we had some guys in Argentina that were working for us. They got involved. We recorded a video for each customer and said, "Hey Jeff, thank you for installing Flash Panel. I hope that Antler really gets value from this." We sent them a t-shirt, a handwritten note, all in one package.
Yeah.
And we said, "You are part of the first 100 customers of this platform, and we are building this for you." And and we were sincere about it. We did so much for that group. We did something, I don't know how much I've talked about this. We did one thing where we took all the features they had requested, put them in a Google form and sent the Google form to the hundred and we said, "Whichever feature gets the most votes, we'll build next sprint."
Yeah.
They did it. We built it and told them, "Hey, you did you asked for it." Like, we were, it was this real kind of engagement.
And those 100 customers, many are still customers today, number one. Number two, those customers were my references for my series A, my series B. They were the ones that did our video case studies. They were the ones. And there's something about making people feel like they're there at the beginning. I always tell people, I was customer number two ever for Marketo.
Yeah.
Which became this massive thing. And I was so proud that I was there in the early days. And Phil and John were asking me, "What should we do about this? What do you think about this, Dave? Did they really give a [ __ ]? I don't know."
But they made me feel like they did. And I would tell people, "You got to try this product. I was there in the early days." There's something about building that kind of community around your product. And and I think especially most of us sell to personas that never get exposure to a brand new startup. They read about it, they hear about it, but to be in and talk to the founder and who the [ __ ] who am I? Who cares? But to that person,
Yeah.
They care. So, yeah, I, I believe in that. I, I urge every single person to to do that with their first customers, cuz it pays off so many, you, you don't even know how it's going to pay off down the road, and it pays off many times over.
It's such a stark difference. I remember you telling me about at Vocaloity, one of the suggestions that you got on managing customers was to actually just like leave them on hold longer or actually like keep them at bay cuz they'd probably just hang up and that would solve some of the issues. And then here it's the opposite. Let me get on a plane. Let me be in your office. Let me, you know, name a product after you.
I imagine that that really changed the way it felt to have product market fit, to have durability, to go raise your subsequent rounds.
Yes. Yes. And you knew, you know, at the end of the day, what we're built like, I had never been in IT. I had never been an IT person.
Yeah.
So I needed these people to tell me what their jobs were about. When we made our major kind of evolution [clears throat] pivot, you can call it, when we were just going from managing Google Apps to becoming the SAS management platform. The the pivot came from me sitting and literally watching an IT person do their job. I went and sat behind an IT person and watched them. And they were in like 27 tabs in Chrome because they were using all the different SAS apps and they were going to the admin console of this and this and this. And I just sat there and watched and I said, "What the f? We should just fix that."
Yeah.
And and and my So, yes, the point like, I think for a lot of us, like being able to have those customers that will let you in and give you that that kind of visibility into their job, into what they need, their challenges, I think it's really powerful. I love it. Before we go too deep into like the company building and the later stages, just giving the audience, I would love to hear, you know, your thoughts on frontloading your time and and doing some of this hard work in the beginning, the sitting with the customers, flying to see them, building out the BetterCloud 100. You know, for these founders that are starting companies today, it's never been easier to build product. It's never been easier to post on TikTok or get distribution. But it does cause them to skip over I think some of the more important moments of actually finding out what are they building, who are they building it for, how do we focus our time. I love you just talk about like the art of zero to one a little bit and getting out of those first moments.
Yeah. I So I Well, first of all, my opinion in today's world is that I don't think product, unless you're talking about deep tech or something like that. I don't think that product is a moat anymore. I, I really do. I, I think we've reached a point where
Anyone can build product pretty quickly.
Yeah. I mean, for the most part, I think it is trust that is the moat. And I think trust comes in many different forms, from many different activities. But trust at the end of the day, I think, is the moat now. So it's how do you build the relationships with these people where they see you in person or they talk to you enough and they they start to trust you, and they will then give you their time, their money, all of that stuff. How do you do outreach that is so targeted? You have no excuse in today's world to not do the most targeted outreach with all the deep research tools. And how do you do outreach that is so targeted that people get that and they're like, "Wow, you actually want to solve my problem. You did the work to understand me." That's trust. Like all of those things, I think, is trust. I think the quality of the product is trust. Just vibe coding something and you go to use it and it sucks. That's not trust. I actually think a lot of the stuff happening with forward deployed engineers and all that is interesting because I think it builds trust with the customer. You have a use case. Our product doesn't fully solve it. Let me put a person there with you to make sure that builds trust. So I think all of that is when I think about this, I think that trust is now that moat that you build. And zero to one, everything you're doing is not scalable. Everything. And that's good. I have people who tell me like, "No, you know, Dave, I think I got to figure out the machinery of the SDR to the AE to the..." I'm like, "You're this is not, we're at the very early stages." You know, or people who want to get pricing perfect. I have, I have founders who call me and say, "I want to get the pricing. Do you think I should do this or this or this? But if I do this, I may lose this much. I may leave this much money on the table." And my message is, first of all, BetterCloud, we changed pricing nine times in 12 years, 11 years.
And no one knows your price. People like, "No, no, but if I publish it, then I change it, they're going to be upset." I raised the price. No one remembers your price. No one looked at your website. No one cares. But in the beginning, that's the most, that's the best because you can do stuff that doesn't scale.
You can go on an airplane and meet every single one. You can bring all your customers to you. You can, you can do the forward deployed engineer at no cost to the customer. You can, you can do kind of crazy ABM stuff at that stage because it doesn't need to scale. It doesn't need to be this repeatable thing. And so, and I think that that's where you build a lot of the beginnings of this trust. By the way, I think thought leadership goes into the trust as well. I think being out there and talking to the market about what you're doing, that builds trust. People like, "Okay, this person has opinions and thoughts about where this market is going to go." But all of that is hard to do. It's really hard.
Yeah.
But that's what I think you need to do versus in the past, just setting up the infrastructure and building the first product. That was, that was the time-consuming thing.
That's not the, I don't think that's the real time-consuming thing. Now it's the other pieces.
Right. Yeah. You mentioned time-consuming. I'm curious to hear your take on on how you spend time as a founder in the early days.
I mean, I work. I don't, you know, the whole 996 and I don't know what's right or what's wrong. I think all the founders that I've been around and my own experience and watching my dad with all his businesses growing up, like, I think it is all-consuming.
And I don't think of that as a bad thing. I, a lot of people are like, "Oh, you know, you got to work like this or what." I think if you really do care about what it is that you're building.
Yeah.
There's no real divide between work life. Like, for me, it all, it still is. I don't even, I, I sold the company three years ago. I'm advising a bunch of companies. I'm on calls all the time with founders in the middle of the night on Sundays just because I love it and I enjoy it. So I don't know when people talk like, I think as a founder, you, you have to assume that that's what's necessary. And that's why, by the way, a lot of exited founders are so scared to go back. I literally just came from a meeting with a guy, very successful, sold two companies, made a lot of money.
And the conversation with him is he's like, "I'm scared because I only have two speeds." And I know that if I start something, I won't see my kids, I won't see my wife, I'm going to, you know, neglect my health. I'm going to..." And we want to wish that that wasn't necessary, but unfortunately, I think that is what's necessary to build a company. And probably not even zero to one, probably zero to 20, zero to 15. Like, not zero to one. Like, it takes a long time. You know, um, I, I tell people, recently, recently I went with my wife, we were looking at old photos of of our family and we were looking on the photo album or whatever, and with the kids, we were looking and they were like, "Why are you not in any of these photos?" And it was like the first time that they walked, each of them. It was, you know, the weekend trip to their grandmother's house. And I'm not in any of the photos. Like, almost zero.
And my wife said to them, "Yeah, your dad, yeah, he was working. He was, he was on calls. He was traveling. He was whatever." And that's the sacrifice. And that, you know, it, it, it can be painful.
But it's also, I think, what's required.
Yeah. I remember you joked with me that you didn't see your kids until they were a certain age. And then I [clears throat] went and I, I went to your, uh, the book launch for Shoveling [ __ ] and they were talking about how they made a conscious decision about the kinds of parents they would be. And maybe you can tell, maybe a little about that story.
Yeah. Right. That's a, I forgot about that. So, yeah, Mike and Cass Lazero, uh, from Buddy Media, which was a really successful company here in New York. And I interviewed them for the podcast. And they talked about in their book, uh, called Shoveling [ __ ]. And then in the, in the, in the discussion, they talked about how they actually knew that this is what it was going to take. And they made the decision that at that stage of their kids' lives, they were willing to make this sacrifice, not to see them, not to be there for them, first of all, for their kids to see them doing that and to see the work ethic. And then also for them to be able to hopefully be successful enough to spend the time with them later on in life. And, and, um, you know, I don't know how much of that is true, like that they actually had that thought at the time, and how much is, you know, hindsight. But, uh, but I believe that. By the way, I think that seeing the work ethic, again, all these, I've done now 75 interviews for the podcast. And I ask everyone, where does the work ethic come from? Where does the drive come from? And such a huge portion of people talk about watching their parents in whatever, as, uh, professors, as, you know, founders, as, whatever, truck drivers. And they're like, "That was what gave me..."
This drive. And, and so I think that actually, it is important for, for, um, but, but the sacrifice when you're going through it,
Is very painful.
Yeah. You mentioned your dad had some businesses. And then I saw your kids running around with the matching cakes and everything. So it sounds like you're also imparting this on...
I'm trying. You know, when we were doing the promotion for that, my older son, Noah, he looked at my promo. He wanted to see what I was doing. So I showed him my LinkedIn promotion for the event. And he said, "I could do better than this." I said, "Really?" He said, "Yeah, let me, can I try?" I said, "Sure." I gave him the Google Drive file with all the assets. And he went on Canva and in a matter of 10 minutes, him and his brother did a whole Canva video, literally in 10 minutes. And I published it and I got more registrations, literally from that LinkedIn
Really?
Post than I did from my own LinkedIn post.
That's incredible.
It was amazing. And so they, you know, yeah. I, I think for them to see that and to be part of it and and understand the dynamics. We do these CEO dinners at my apartment. Um, probably like 10 CEOs maximum. And my kids sit in the kitchen and they watch and listen. They don't participate, but they listen to the dinner. And the last one was "How to Drive an AI First Mindset at Your Company." And they sat and listened. And when the, when the CEOs left, they said, "Oh, papa, what are you..." That guy was talking about this. Like, I didn't understand that word. I didn't, you know, and it's amazing, you know, to have that exposure.
That's incredible. I mean, for them and for you to see them take it on. I think when I started a, a company back maybe 15 years ago now, when we got our first product and put in people's hands, there was this moment of realization, like, you can do something and the world will react to you. And for them to have that moment where they create something and it's the best performing post for you is got to be an amazing feeling for your kids.
Definitely. I, I, you could see it, you know, they were so, and they would ask me every day, "How many registrations did it get now? How many now?" You know, and, and
It's a positive, virtuous cycle of dopamine versus like being on TikTok and LinkedIn and Instagram. This is something where like they see positive reinforcement behavior in something that is actually really beneficial to them and how they're going to grow up and lead and build companies themselves, probably. Now, for Not Another CEO, I've been talking to them about becoming my Reddit posters and to like go look for Reddit posts that are relevant to Not Another CEO and then post our articles, you know, and but look, they, I think that, um, I think that kids are, they're, they're really capable of a lot. I mean, if you, if you think about the tools that they have today,
Yeah.
Their knowledge is way beyond what I could even dream because back then I'd have to go find an almanac or like open something up, start reading a magazine, a book, or this. I'd have to go seek that out. Now,
They're just walking around talking to their phone, talking to the Google Home, you know, asking it questions. The speed on things like Canva is amaz, the Canva stuff. When I watched him do this video editing, I was like,
Yeah.
"I would I would have paid someone to do that video, $5,000."
Yeah.
Like, I don't know, $2,000 and 10 minutes. He's like, "No, you want music?" "No, no, no problem. I'll just put the music." You know.
Back to sort of the founding moments. We talked about the intensity and the time that it takes to build something meaningful. I've learned so much watching your podcast, but also just from hearing you talk and finding some heuristics on what we look for in founders. And so I'm curious as you look for founders, you decide where am I going to invest time to coach someone or maybe even invest personally. What are you looking for in those people in the beginning?
I think grit is the number one thing. Back to like grit, work ethic, that's the number one thing that I want to see because I know how hard it is.
Yeah.
And I know how many issues they're going to run into. And finding that person who just has that.
Yeah. And a lot of times that comes from some deep, deep-seated chip on their shoulder. I sometimes it's something that happened to them in childhood, something from being from an immigrant family. Um, there's something like, I've not, if you really dig deep enough, people will have a really. I, I interviewed, um, uh, this guy Flint Lane, who had a company called Build Trust and, you know, a couple billion dollar public company. He sold it, went private, two billion or something. And then he started another company three weeks later. I, I don't know how old he is, but probably late 50s or something like that.
And I said, "Why did you do that?" He's like, "The chip on my shoulder." I said, "From what?" And he said, "Because, you know, as a kid, I was bullied."
Yeah.
And I'm still proving those people wrong.
Wow.
You know, and he's built multiple huge companies.
And you know, like, there's, I think that grit and that work ethic that comes from somewhere deep.
That's the first.
I think the second thing for me is them understanding their customer. Doesn't mean they have to have been the customer. Similar to me. It doesn't mean that you have to have been the customer.
Yeah.
But you have some deep understanding of that customer because you've spent time with them, right? You've listened to them. But, but when you're explaining it, I can tell when people explain it and you're like, "Oh, they definitely know."
Right.
What that customer, not just saying they need a product that does. No, but that customer, I would always say for it, what I learned quickly is they're underappreciated.
They have, they're underresourced. They're overworked. Like, that is it. And if you can truly understand that, then it starts to, then you can get to the product. But do you understand that persona?
I think that's the second one.
And then the third one to me is, is it someone who,
If I was an employee, I would want to follow.
Because I think that when you're going through building a business,
Yeah.
You can have someone who works really hard, who understands the customer, and all that, but I don't believe in the world where we're going to have one AI, one person with a hundred AI agents doing all the... I, I don't believe it. Not, not in the foreseeable future. You're going to have to build teams with human beings.
And human beings want to be led.
Yeah, for sure.
And somebody, in whatever form factor, has to be able to be that leader that I'm like, "I'll run through a brick wall for that person." And that can be evolved over time, but I think the, the, the core of that is somewhere in them. So, those are things that I look for. But grit and the work ethic has to come first because it's just, it is such a shitty job. It's such a hard job and such a shitty job that you need, you need to have that.
Yeah. I appreciate you keeping it real and honest with everyone. Like, people need to hear this stuff, especially in this market where it might be easier to fundraise and it's easy to quit your good job and go do this thing. But, and the other side of that funding announcement, you actually have to do the work.
Yeah.
And it is, it is intense. And I see it every day.
Um, you mentioned, uh, a few super interesting things to pull apart there, but one of them being inspiring people to join you. So whether that's first employees or co-founders or first investors, how did that evolve over your multiple journeys?
Yeah. Well, I sucked at that. So, actually, I'm, I think I was good at it like a quiet, um, leader where people, I, I led by example.
Yeah.
I think people saw that no one was going to work harder than me. Like, truly, I think they saw that I was going to do whatever is necessary to be successful. I would take care of them one-on-one. I would spend good time with them, but I wasn't good at doing it more broadly. And, um, that was something that I really, really, I was really bad at. Like, I was bad at pitching. I was bad at speaking publicly. I really hated speaking publicly. I, I, you know,
You said that a few times, but I really hate. I now I like. I now I love it, but I hated it.
It, if I had to go and speak in front of 10 people,
Publicly, like on a stage, I would black out. I would get up on stage, come off stage and be like, "Did I say something? What did I say?" I was so nervous about it. And, um, that for me was one of the biggest skills that I had to, it was probably the skill that I had to develop the most as a leader of a company that, you know, we're up at 350, 400 people and we had thousands of customers and a lot of investors. And being able to go out and communicate effectively to a big group of people, I think really was one of the major unlocks for me. And even when I left BetterCloud, someone said to me, they said, "The thing they looked forward to the most was our all-hands every month. They said, 'Dave, when you would come to the all-hands and you would talk to us, I would get amped up for the next month of work.'"
And I'm going to miss that excitement. That, and that took me a long time to get to the place where I knew how to touch on those chords. By the way, it's the same as getting investors excited because investors have to believe that you're going to go take this to to the moon. And to do that, you have to be, you have to show that excitement. And, um, and so, anyway, that was for me one of those things. And I, and I, I, when I talk to founders,
It's not if they're good. Again, none of these things you have to be good at day one, but you have to want to be good at them.
You have to want to be the, the founders that I hate working with, and they're not necessarily the worst founders. They're just the ones that I hate working with, are the ones that don't want any feedback. Like, I, I, cuz then what's the, like, what's the point? And most of those people will, most will not be successful.
Some, if they happen to hit the lottery with the right time, with the right product, with luck and everything, they'll, they'll crush it.
Yeah.
But the best founders that I see and that I work with are the ones that are, they hear everything. They listen to everything. They don't necessarily do everything you say, but they're constantly taking that in, constantly taking different inputs and trying to get better at what they do. What, what is the magic to getting good at this? Is it just repetition? Or did you, was it Toastmasters? What did you do to...
The speaking?
Yeah.
So, the speaking, um, it got really, it really got bad to the point where I was avoiding good opportunities, like marketing opportunities at conferences, because I was scared to speak. People would ask me to do a video testimonial or do something, and I would refuse to do even that. I wouldn't have done this, like, for example.
And the turning point was at my best friend's wedding, this guy Elliot. And at his wedding, someone else, I didn't want to give a speech because I was too nervous. And someone else gave a speech, his other good, really close friend. And the speech was amazing. Like, actually amazing. I was crying, laughing. And when the guy stopped the finished the speech,
I said, "You did all of that with no notes or no nothing. How?"
And he said, "What do you mean?" Like, I know him. He's my good friend. I had the three things that I knew I wanted to say about him,
But I didn't prepare the script.
I said, "Oh, okay. That's kind of interesting." And so, I had been trying to memorize.
Yeah.
Every time I would do public speaking, I would memorize.
And that was my first mistake. As soon as I stopped memorizing, it already got easier. That was the first. The second is that I was using, once I got into that mode, I was using the decks that the team was building for me.
Yeah. [snorts]
But I wanted the decks to be in my style, my cadence. And as soon as I made the decks my own,
Yeah.
The animations, that became really good. Yeah.
And then the third is I stopped speaking on any subjects that I wasn't a true expert in. Like,
So because one of my realizations when I was doing my own self-analysis is I was getting on stage and worried that people in the audience would say that I'm wrong or that what I was saying is not accurate or whatever. But then as soon as I chose, I said, "I'm only going to speak on subjects that I'm positive that I have my own firsthand experience." It may not be correct.
Yeah.
But it's at least from my experience, I can say with certainty, this is true.
Yeah.
And so those three things changed everything. So now you've seen me speak a number of times. If I do the same presentation at two different events, the words will be different. The topic will be the same. The outcome will be the same. But I'm not scripting anything. I'm not, all my decks have my own animations, my own way of talking.
And I will only talk about sub, people will sometimes ask me to talk about subjects where I say, "I'm not an expert in that subject, so no, I won't do the talk, but I'll do it on this subject." So those are three things that that helped. It's like this, um, you have this level of obsession over the business. And it's almost like that's a license to talk about the things you're already obsessed about and know so much about. And people want to hear that. Yeah. You know, they want to know what it's like to obsess about the work ethic, the team building, all the things you've learned and the mistakes you've made. And we see that in the podcast.
Yeah.
Um, maybe you can share a little bit more about that and what Not Another CEO is.
Yeah. So, Not Another CEO, it started as a podcast like July of 2024. And it was just supposed to be like a fun side project. You mentioned that I wrote this long Google doc that was 50 plus lessons. It's, I don't know how many, 60, 70 pages of a Google doc with all these lessons learned. And the feedback I got was amazing. But to this point of impostor syndrome and even like being the, I said, you know what, that was only my experience.
Yeah.
Maybe other people have a different experience. So I started the podcast literally just for my own edification of like, did people do things differently? How did they do things? What, you know? And so that's how I started it. Now we are, I've over a year into them, well over a year into this. We've done an episode every Tuesday for that entire time. We're at 70-some episodes. And it has gone from just a podcast now to this Substack, Not Another CEO Substack. And then from that, now we have, we're running CEO communities in New York and in Atlanta. And from that, we're starting like master classes on specific topics like fundraising, like hiring, like firing, all of this stuff. And really, we're trying to make it the number one place for CEOs to grow themselves and their companies. And I, because I, I'm loving it. Now, again, there's no real commercial model right now. Right now, I just spend money to do all this. But I do think that there's an opportunity where a lot of the advice that's out there, I find to be too much fluff and too hard to actually imple, like actually do something with. And so the point of this is to be really tactical and to get in the weeds on running businesses. And, um, you know, someone asked me the other day, "A lot must have changed in your advice over the last 18 months because of AI." I said, "Nothing changed. Running a business is running a business. Does AI change some elements of how you do these things? Sure. But running a business is running a business." And that's kind of, so my view is that's going to be the way it is. And, um, taking the knowledge now, having interviewed so many people, it's the, the learnings from these people is just, um, I feel like I'm training my brain like a small language model of like, cuz you just talk to people, you're like, "Wow, you, you have done amazing things and done it in a, in some ways in a different way or re, you know, you're, you're kind of reinforcing what I have seen, but you did it."
In a better way, you know, and so I've it's amazing. It really has been great. And uh I started interviewing VCs, hopefully you'll be on the podcast, I hope.
Um and that's been interesting, too, because that's a different approach now where I'm actually asking VCs from the seat of a founder. You know, I asked them how long between meeting a founder, first time meeting a founder and knowing you want to invest. The answers have ranged from 10 minutes to 30 minutes.
Yeah. Now they don't invest in 30 minutes, right? But they know if they do or don't want to invest within like that time. Founders don't understand that, right? Founders think, well, I'm, you know, if they if they like, you know, they tell me that they like me, they'll follow up with me, blah, blah, blah. They, you know, they'd like to hear if I get a lead, then maybe they'll invest. The reality is that's not [clears throat] true. Like one investor said to me, he's like, "If I don't email you right after you leave my office, I'm not interested." like [laughter] and and so you know so that's these kinds of things though as a founder, it seems so obvious when you've been through fundraising too many times but when you haven't, you don't know that and it's an unfair game it's actually an unfair game because you're going in thinking this that whatever and on the other side of the table is someone who does this all day long every day and you don't even know it's it's it's so anyway but yeah that's how this thing has evolved and and that's the goal for it is to be the number one place that CEOs come and read the articles, they listen to the podcast, they go to the master classes, they join the community, and they they hopefully um, you know, they they can be better at their jobs because of that.
Yeah, it's incredible. I mean, every Tuesday morning get in the inbox and playing with the the AI that's trained on all of the CEO's knowledge. It's really amazing.
Um I appreciate all that. And on the topic, you just sort of mentioned this idea of fundraising where the founder doesn't understand the other side of the game. I like every week I have a founder trying to create FOMO with me. I'm talking to these people. I'm doing that thing, but they don't understand. What they're describing to me is a bunch of people that are not interested in them, [laughter] right?
That's actually That's a good point. They're right. So, they're out there trying to tell me all the stuff is going on. I'm like, actually, what you're telling me is a bunch of people are waiting for a lead or a bunch of people are. And so, there is this asymmetry in the game and these things you see about people. And so, you sit back and you're like, okay, like I'm not going to lose this deal. I don't need to chase this deal, right?
Um, and so I just find that to be really interesting. I had another guy uh last year really good point that I actually didn't until you just said that. Right. They think that they're creating the FOMO. Yeah. They're telling you I'm meeting all these people. I'm doing but actually them telling you that. Yeah. By the definition because they don't have a a lead, right? People aren't interested. What they're saying is no one's gotten excited yet. I had all these meetings. All these people, they're they're soft committed. I have $4 million committed. Okay. Well, why are we talking now while I'm still looking for a lead? Right. Always.
That's an interesting that's a good one. Yeah. Maybe you should do a bunch of meetings with me and let's start hearing all the mistakes founders make in the interview.
It's super interesting. I um but I was curious for your for your side of it on um like how raw and real to be with founders because that kind of advice like I'll give someone um, you know hey the fact that you're telling me this tells me that there's nothing really happening here. Um I assume that the founders in your community they want to hear the real story but they're also trying to play a game they're not used to and so they're trying to learn it as they do it.
I don't I think it is very hard for investors to give really hard feedback to founders because whether we say it or don't say it whatever in times like we're in people want to be seen as founder friendly and they don't want to lose the deal because they came across rude to that founder or something like that. And I think everyone's constantly hedging. Yeah. And I think in the fundraising process, it's very difficult.
But I would assume that once you invest, then you're going to give that direct feedback. But I think you and I have talked about this. I've talked to very well-known VCs, not on the podcast, but very well-known VCs that in private have said to me, "I don't feel comfortable sharing my real opinions." Yeah. With a founder in a board meeting or whatever because I'm scared that number one, what if I'm wrong? Right. And number and they do it and I'm wrong. And number two, what if they go and they raise another round and they say, "I'm not going to give them the super prar rata because they've been harder on me than the other ones." Interesting. And it's this and he said it to me straight. Two two investors were next to each other and they were both like, "Yeah, yeah, I actually have that same problem."
But I think the founders need, right, this direct. By the way, when I started advising, I felt like my job was to be more like a therapist, right? Listen, ask some questions. Listen. And now I taken a completely different approach, which is look, I may not be correct. I tell everyone, I may not be correct, but what you're telling me sounds like 12 other people I've talked to, and this was the problem they were all having, and this is how I would solve the problem. And my pattern recognition, because my own experience, like I said before, it's only three companies. Maybe I'm wrong, maybe I got lucky, whatever. Now I've advised 12, I don't know, 14 companies. the the pattern recognition becomes very clear. And people say to me, "No, Dave, I have three ICPs." I'm like, "Well, that's the problem. You need one." No, no, no. We're trying three different We're doing three different things. I'm like, "Well, literally, that's the problem." 6 months later, they're like, "You know, Dave, that was the problem. We went to the one ICP and now we're crushing it." And it's like, when you hear that 10 times, Yeah. I don't feel like I have to hold back. But I'm not an investor. And if I was an investor, Yeah. that I don't know. I think I would do the same. But I do understand the dynamic.
I think you want to lean in and tell them like the raw, honest, hardest to hear thing because similar to, you know, hiring the best people in the world, they don't want to just go do something that's easier work for someone else. They want to do hard things. They want to do something meaningful with their lives. And I think you mentioned it earlier, the best founders are always taking everything and making their own decisions. So, if you're a board member and you give advice, if if I'm the board member and I'm giving you advice and I'm wrong and you take my advice, you're more wrong than I was because you took it, right? If I'm a board member and I give you advice and you don't take it, but I was right, you should have listened. Yeah. And, you know, we're one step removed as investors, which is sort of an unfair seat to be in, but as the founder, you have to be doing exactly what you said earlier, listening to everyone, getting the raw truth out, and then making your own decision from that information. And so sometimes I feel like what what you're saying which is you switched into that mode of giving everyone the honesty. It's like you're not doing anyone favors by not just telling them the reality, but you still have to make the decision. The is still on you as the founder.
Right. Which is you know one one of our investors he said to me I don't care before he invested he said I don't care if you do everything I say but I want to make sure you hear everything that I say. And he said I can tell even in the meetings that we're doing you're taking notes. And I tell founders, I said, "When you're in these meetings, I would physically like show that you're taking notes." And I would actually take those and when I coach founders, I tell them in the followup to that investor, I would actually tell the investor, "Hey, you mentioned X, Y, and Z." Yeah. Thank you for that. I am going to process that and and let me see if it makes sense or whatever. And what always works with founders is when they get that feedback and usually one piece of feedback is correct and if they go back in a quarter and tell that investor, you know, I took all that feedback, two of the things weren't, but this one really resonated with me. I tried it. It did work. I appreciate I'm like that's the thing that people want to see and and I think that that goes a long way. If if I go back to my journey, I wish I had taken a lot more of the advice actually and I did listen. Yeah. Yeah, but there were investors who have done this many more times, not as operators but as investors many many many many more times and I have for much much more successful companies and they gave advice that I um, you know I didn't I didn't listen to for whatever reason and I look back now and I'm like man if I had taken that advice like that would have been really that would have been really powerful.
Yeah. Are there things you've updated your learning on recently where you had a guest on and they said you know what yeah I need to change that heristic. Um, I don't think anyone has it. Not that has changed my advice. I think just the it's given me even more confidence of my advice to go even further. Like ICP as an example, that conversation now has just come up so many times and the amount of segmentation some people did, Yeah. was so like, you know, ICP is like, oh, IT people at tech companies, you know, between 200 and 5,000 people. No, this is like people have 10, 12 attributes that they've selected. They use six different methods to identify those attributes outside in. They do, you know, it's like how much they they go like the level that they go to for that. Um, so I think that's one I think um, you know, definitely the not again not changed, but I think firing people. Yeah. it's such a hard subject really. It's a hard subject for everyone to go through. It's a hard subject to talk about, but it's an important part of the the journey. And the amount of people that talk about it as a critical positive moment for their company when they had to, you know, one person said, "I had to fire my co-founder and best friend." Yeah. Who hasn't talked to me since. And you're optimizing for the company. And you said at the end of the day, yeah, it was the correct thing for the company. And we wouldn't be where we are today if we didn't do that. Yeah, but talking through that, you know, like you and co- the co-founder breakup ones are really I didn't have to go through that like those ones are are really hard because most of the time these people are very close, very friendly. But it does teach you a lot of lessons about how do you set up the company the right way? How do you protect yourself? I've seen companies that are crushing it where the old co-founder saw the cap table with 20% of the company and hasn't was there for a year. Yeah. You know, and it messes up their fund rate, you So there's all these kinds of things where I think I would be even more um, I I guess I would drill in further there and say these are things you cannot compromise on.
Yeah. Just totally unapologetic about doing the right thing and the durable the company.
I think so. And even when they're really hard, which these things are really firing is just one where like every person who has to do it, it's the it even if you get good at it, it doesn't get easier, right? And but it's such a critical thing. I actually I'm writing an article right now for the Substack and the whole thing is I ask people CEOs how successful are you of 10 people you hire how many are the right people and the numbers range from six to seven so 60 to 70% hit rate at best these are very good CEOs, so that means 30% are not, so by definition those 30% have to get let go or leave the company by definition, that's a lot of people. Yeah. And so you have to get good at that motion you have. And um, anyway, so that's just an example where I there are things like that that I I feel it kind of reinforces my belief and makes it even more um and then there are things that like I did but I probably didn't do um, you know, some other people like the operating rhythm. I thought I was really good at operating rhythm. There are some people who just have machinery type operating rhythms for their for their companies and especially around strategic thinking. I think that was something I was weak at where some of these CEOs who really they start their strategic thinking, you know, in the middle of the year for the following year. I would wait and be like, well, I have to see how the year ends. I need to see and they're already by June, July already doing the next year kind of planning. So, it's things like again just some different examples like that.
Yeah, it's incredible. And I don't want to spoil it for the people watching, but there's so many good learnings on hiring and firing in the Google doc, on the podcast, from the way that you do reference checks or the way that you ask questions and interrogate people. I just think it's amazing. So hopefully they'll go and check that out and subscribe to Nother CEO and watch the podcast and and get the Substack in their inbox. Um, what's next for you? What are what are some things that we should be looking out for?
I mean this is uh, you know, right now I'm just uh when we you and I first started talking I had a lot of time on my hands. Now I have almost no time on my hands. I've gotten myself very busy in all these different things. You have this disease that a lot of great founders have that something always needs to be better. It [laughter] always fix everything. The world isn't perfect. Like I'm going to spend all my waking hours fixing. Exactly. It's exactly what it is. And I started being like this is not going to be that thing. But more and more time goes on, like I want this to be the thing that I do. And um I I'm more connected to this mission vision. Again, there's no business yet, but doing this is like something I've never been this connected to something because I I've felt the pain. And I know that if I can help people just overcome, you know, one or two things and avoid the mistake and do not only is it really good for them and valuable to them, but it will make their company more successful, worth more, all of that. So, um, anyway, this is what what I'm doing. But, um, yeah, would love for people to subscribe. You can just go to not another co.substack.com and, um, check out the podcast on Spotify, YouTube, all of that. And, yeah, this was I love this and love kind of the Antler. I I've really enjoyed getting to know the Antler founders. You know, you get them so amped up like at that residency and every time I present I get, I don't know, 30 of them reaching out on LinkedIn and email and I love it. Like the energy really, I say it every time, the energy in that room when you kick off a residency is the most for me it's so infectious. I've done a lot of events recently and that energy of the nervous energy mixed with the excitement and the whatever like that that period of time and I see it coming out of that and the founders emailing and they're so excited and and that's just um that's a really cool like thing to to be doing, you know, like anyway, I love that.
I appreciate that. I appreciate you saying it and for being on the podcast today, but also for talking to our founders and coaching them. Every single time you give that that talk, everyone comes back raving about it. They're asking how to reach out to you, how to [laughter] get in touch with you. Um, it's been incredible to learn from you today and for the years we've known each other. So, I appreciate that. Thank you. I want to thank David Pletus for being here today. He is an incredible founder here in New York who's built three companies to over a billion dollars in exits. Most recently, BetterCloud, which exited for $750 million. the insights we've learned today that he shared with all of you doesn't stop there. He's also the the founder of Not Another CEO, the podcast and Substack, which you should absolutely like and subscribe to. The learnings that he brings across more than 70 CEOs now who he's interviewed and the learnings that you can get uh from that audience is absolutely incredible. So, I encourage you to do that. And if you've loved this podcast, don't forget to like and subscribe to Further Faster and we'll bring more great CEOs and founders on to talk to all of you.
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