SaaStr Podcast #376 with ZoomInfo CEO Henry Schuck: “10 Mistakes the CEO of ZoomInfo Made on His Journey to IPO (Part 2)”

Ep. 376: In part two, ZoomInfo founder and CEO Henry Schuck shares how he built a business from scratch and grew it into one of the most successful IPOs of the 21st century—and what it was really like…the good, the bad, and most of all, the ugly. He reflects on where he went wrong, what he would do differently, and how to avoid making the same mistakes he did.

 

This episode is sponsored by Outgrow.

 

This episode is an excerpt from Jason and Henry’s session at SaaStr Annual @ Home. You can watch the full session, and if you missed the podcast with the first half of the interview, you’ll find that here.

 

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Henry Schuck

We’ve shared the transcript of episode 376 below:

Jason Lemkin:

Now this one is probably a little more later staged focus, I would imagine, mistake number five.

Henry Schuck:

I think it matters. I said investors here. I think this is if you have a board, this one applies to you.

Jason Lemkin:

We all have boards, I mean, we all get to a point where we have a board. So what does this mean that your voice was important? How were you not being heard? How were you not being distinctive here?

Henry Schuck:

It was more like I wasn’t trying to be heard. You start this business. It starts growing. You put a board together. And when you get that board together, I’m a public school product, I went to a public high school. I went to public undergrad and grad school. And all of a sudden, I have a board, and it’s filled with these guys from Harvard and Penn.

Jason Lemkin:

I see. It’s intimidating in a way.

Henry Schuck:

And they just wrote you a big check. And so you have this feeling that when that happens, that you should be deferring to these folks, like they’re the smartest people in the room.

Jason Lemkin:

You do. You fall into this mode, almost like it’s parental relationship. Don’t you?

Henry Schuck:

Yes.

Jason Lemkin:

I hate it. I hate it. I will never be that person. But you default. And they act that way toward you. They treat you a little bit like their older son. Don’t they?

Henry Schuck:

Yeah, a little bit like their older son. And they’re respectful of it. But I think you let yourself fall into that older son role too because these guys just gave you a bunch of money. Now there’s a board. They’ve invested in all of these other businesses. You trust them. And they went to the best schools in the world. And now they’re sitting in your conference room at your little company, and telling you, “Hey. What about this? What about that?” And so I remember after my first board meeting, I grabbed one of the guys on my board. And luckily, he was an investor and an operator, and so he had started a business and grown it. He sold it to S and P. And I said, “Look, Randy,” his name’s Randy Winn. I go, “Look, Randy. You guys just tell me what to do, and I’ll just go do that. You just tell me what to do. I’ll go do what you want me to do.”

Henry Schuck:

And he was like, “Whoa. That is not how this should work, Henry. This should not work like that. We’re not in the day to day the way that you are. We don’t understand the inner workings of the company. We’re going to give advice, but it’s your advice. It’s your job to listen to that and then decide what you’re going to decide internally at the business. But don’t just, it can’t work where we just tell you what to do and you go do it. Don’t view your board relationship like that.”

Jason Lemkin:

I got you now. Yeah. This is a super important mistake. And we’ve all been through it. I certainly am not going to live my life this way now. But especially the first time as a founder, and even the second time, the deferential relationship to your investors, it can be subtly toxic if you let it go on for too long.

Henry Schuck:

Totally.

Jason Lemkin:

It can be. They don’t know. And they will, even many of them will even encourage it. They’re used to it. They’re used to this slightly imperial relationship. And today, it’s almost worse. I was working with a company that … Because people will write big checks today into early stage companies, where someone came in very early and gave an early startup $50 million too early, and just started telling them how to raise the company, immediately told them to go buy competitors, which they’re not ready for. Immediately told them to hire 50 reps in a different city, in a different city, and they did. The CEO was deferential because that was 10 times what he’d ever raised before, and did all of it. And guess what happened to all those mistakes, they were terrible. Right?

Henry Schuck:

Right.

Jason Lemkin:

50 reps in a new city that you’ve never met, and hired in 60 days when you’re in the low millions ARR. What’s that going to do to your company? Right? And starting M & A when you don’t even have time to hire the VP, when you don’t even have a VP team. Right? And that’s destructive. You lose years. Right? So balancing this is hard. But if your founders … Don’t be too … Be respectful, but not deferential. There’s some sort of ism there, isn’t there?

Henry Schuck:

You have a voice. They want to hear that voice, actually, if they’re good investors. But if you don’t take the opportunity to share that voice, you just take what they say and go run doing it, in that situation, Jason, the founder has to be able to go, “Whoa. Wait a second. I don’t have a VP. I’ve never been to that city. It’s far away. How am I going to do this? It’s going to break all of this stuff.” And so often, when I think about the business today and I get advice from the board, I’ll say, “I totally get that. I will tell you right now, if I go try to do that now, it’s not going to work. For all of these reasons, it’s going to break. I hear you. And I think we can get there over the next six months, or over the next year. And I’ll work on getting us there. It’s just not for today.”

Jason Lemkin:

Yeah. That’s the answer. Anyone listening to this that’s struggling with that, with sort of an imperial group of investors, that’s what you say. You can yell or argue, but that doesn’t accomplish anything. If the point is valid, but not today, people want to hear that. They want to hear that’s a good idea, but not now. We’re not ready. Give me time.

Henry Schuck:

The number of times I’ve had that conversation, and then the board will go, “Got it. I totally appreciate that. You should go fix that, so that you have the opportunity to make these types of investments along the way, but totally get that it’s not for today.”

Jason Lemkin:

Yeah. So number six, thinking you’re getting away with under investing in management, up scaling in HR. We might’ve touched on this one too on the hiring and the people. But what was this real mistake? Where did you? We all under invest. But what are the painful memories here from underinvestment?

Henry Schuck:

I had this really valuable experience in that. When we acquired ZoomInfo, it was a company that was in our space doing something similar, but doing it in a completely different motion. And so it’s as though all of the things you thought you might do along the way, you got an open book case study to your competitor doing. And in this way, we under invested in middle management along the way, especially in our go to market motion. And instead of investing in managers, people to manage a group of people, and get them motivated and keep them focused on metrics, we invested in a bunch of automation. And so instead of investing in a manager to manage sales folks, we built a lot of automations so our sales team would never miss a followup, you would always see what’s going on in their accounts, would be alerted if their account logged into a trial and took a bunch of action. We basically automated managerial functions, and that made for a high margin business.

Henry Schuck:

But then we acquired ZoomInfo, and what you saw was a very opposite approach. Instead of investing a bunch in automation, they invested a bunch in managers in that go to market motion. And you saw that when you invested in great managers, the outcome was in a lot of places much greater than just investing in automation all along the way. And they trusted people. They hired good people. They hired good managers. They created good structure. And so when we went in there, we’re like, “Okay. Well, that works.” You can invest in managerial talent along the way, and it scales the company. At the time we acquired ZoomInfo, ZoomInfo was growing faster than us. And we’re like, “Well, this is why.” They’ve taken a different approach, invested in management along the way, invested in HR and strategic HR, and up scaling their employees. And we just invested in automation. But combining those two things is really incredible. But I think the learning for me here is if you hire great managers, you can outperform any investment in automation.

Jason Lemkin:

I think that’s a profound takeaway, especially today, because so many founders want to maximize automation at every level. Right? Not just in engineering and product, but in every level. How can I do this through tools and systems? And how can I run this in Notion and do this in Slack and automate it? But I don’t think it’s a replacement. I think it’s an addition. You have to do both. That’s where the magic is. When you do the tools and the people, then you pull ahead. Right?

Henry Schuck:

100%, yep.

Jason Lemkin:

But it’s not a crutch. That’s a good challenge. You have this whole DiscoverOrg, ZoomInfo thing, rename the company. A lot of stuff going on there.

Henry Schuck:

Maybe I can talk about why we changed the name because I think it’s an interesting case study for-

Jason Lemkin:

It’s a big deal to change a name.

Henry Schuck:

It’s a big deal to change your name.

Jason Lemkin:

It’s a big deal. It’s a big deal.

Henry Schuck:

Now it was made slightly easier by the fact that DiscoverOrg is just not a great name. And throughout the years, it got messed up in every different way possible. When we made the acquisition, I remember being in a meeting with our senior executives. And it was like, “Okay. So should we change the name?” And no one wants to tell me that we should change the name. No one’s ready to go, “Yeah, Henry, that name that you picked while you were in law school, it sucks. We should change it.”

Jason Lemkin:

Yeah. It doesn’t work. It’s got two different things going on, the uppercase O, it’s all very confusing.

Henry Schuck:

But what I told myself in this process was, “Look, if it’s better for the business, I’m going to change the name.” So just let’s convince me that it’s better for the business, or that contrarily, tell me that keeping the DiscoverOrg name is worse for the business, because I’m not going to be able to live with that decision.

Jason Lemkin:

Good way to put it.

Henry Schuck:

I’ll never be able to live with the decision that I put some weird personal feeling of mine associated to the name ahead of the success of the company. And so we went out and we did a study, and everything came back that it was really clear we should change the name to ZoomInfo. It had much larger brand awareness in the market. It was a better name. So we switched the name. About four months after we made the acquisition, we announced to the team we were changing the name. And I was pretty sure, actually, we were going to keep the DiscoverOrg name when we started that process because DiscoverOrg at the time was the more premium brand.

Henry Schuck:

People were spending more money annually on a DiscoverOrg contract than they were on a ZoomInfo contract. But the awareness just wasn’t even close. And so we made that decision. And then as part of the sort of putting the two companies together, the big learning for me is, or the big learning for me was culture, the culture we had built was really important and valuable. And I think we went into the acquisition going, “Well, that company’s growing faster. It’s doing all these great things. Let’s not upset the apple cart much here.”

Jason Lemkin:

I see. That’s interesting topic. Right?

Henry Schuck:

Yeah. And so we just sort of sat back and let the two organizations kind of have their own culture. And then after six months or nine months, we’re like, “Nope. Let’s unify this thing.” The culture that we’ve built at DiscoverOrg is a great culture. And we shouldn’t be embarrassed about it. If you come to our offices, there’s no ping pong table. There’s not a game room. It’s just not something we believe in. We believe you’re doing important work, and we want you to come in and be focused on that work. And ZoomInfo was like ping pong tables and game rooms and shuffle boards. And the minute I didn’t do anything about that, everybody back at DiscoverOrg was like, “Well, what the heck? You’re the dude telling us we’re not that company, and all of a sudden, you’re okay with it over there.” And so it had-

Jason Lemkin:

Those guys have Wine Wednesday.

Henry Schuck:

Right. So it hurts you both ways if you don’t have a very clear culture across your company. And then once you have it, you should feel really good about it, and convicted about that being part of your success.

Jason Lemkin:

But let’s just dig in there for one second because culture, it’s a complicated topic. What does it even mean? It has so many … So when you decided you needed one culture, what did you do? Did you take out the ping pong tables and the colors? Just give us one or two steps that you did because easier said than done to blend two cultures. Right? Easier said than done.

Henry Schuck:

Totally. Couple things. One, I did get rid of the ping pong tables and the shuffle board thing. But I donated them to a children’s charity, or a children’s group in the community. Kind of hard to get mad at me when I donate arcade game to a children’s, like a Boys and Girls Club outside of Boston. And then we took people from the DiscoverOrg offices in Bethesda and Vancouver, and then we stuck them inside of those offices.

Jason Lemkin:

That’s important. Right?

Henry Schuck:

And made them team command. And once you did that, it just changed the … Nearly instantly, you saw an uptick in ASP and ACV across the go to market teams. It molded-

Jason Lemkin:

Oh, I see, because they have the experience, so they brought that DNA in of the higher ACV.

Henry Schuck:

They brought that DNA in and people saw them succeeding and went, “Oh, I get it. That’s the way we should do these things.” Or “They are really successful when they do it that way.”

Jason Lemkin:

Yeah. Was there a little bit of sadness when Pac Man went out the door? Did people watch? How did you manage that little piece?

Henry Schuck:

I think we did it on a weekend.

Jason Lemkin:

On a weekend.

Henry Schuck:

So I don’t know about that. Maybe a little bit of sadness, but I think everybody was okay.

Jason Lemkin:

All right. Yeah. It’s a change. Right? We laugh, but it’s a big … These small things, people pay attention to them.

Henry Schuck:

They matter.

Jason Lemkin:

Right. They matter.

Henry Schuck:

They matter.

Jason Lemkin:

All right. This one almost looks like something I would see on the wall at ZoomInfo. So I want to know what the story is, the power of positive thinking, everybody. I’m ending the all hands meeting with this slide, folks. Great job in Q2, but this means more than it looks. Right? What is this mistake?

Henry Schuck:

I think this mistake is interesting because along the way, if I had a disagreement, especially when you’re not in control, if I had a disagreement with the board, or really at the board level, or if there was something that I wanted to do that the board wasn’t supportive of, you can get into these situations where you’re like, “You know what. You know what, I’m just going to … I’ll just leave. Everybody will be screwed if I leave.”

Jason Lemkin:

I’ll put the keys on the table. I’m going to leave the keys on the table, you guys.

Henry Schuck:

And there’s just nothing good that comes out of getting to–letting your mind go to a place where you’re like, “I’m just going to leave if they don’t trust me.”

Jason Lemkin:

Oh, I get it. Yeah.

Henry Schuck:

And instead of doing that, I think … I had a good senior VP of revenue. And he would tell me, “Well, that’s not good for anybody. So let’s just kind of unpack here why you’re upset about this, or why you’re not getting what you want from it.” And you don’t have to be a martyr about just one little decision that you guys aren’t in total alignment. And so the positive thinking part about this is I think really important too. And I’m kind of coupling two things in here. Not everybody is well trained to tell themselves a positive narrative about what’s happening in front of them. And it’s really easy to have some negative thing happen, and then spin around the drain around that negative thing over and over and over and over again. And there are two narratives you can tell yourself about any situation.

Henry Schuck:

And so I work really hard to constantly tell myself a positive narrative about the situations that I’m in. And that really helps you get through, I think, a lot, and not get focused on the most … Here’s a good example. We have a six month lock up after the shares go public. And I’m friends with all of the different employees at ZoomInfo. And some of my friends will come over, and they’ll share what their plans are with their share. Some don’t want to sell anything forever. Some want to sell some of their shares, and then sort of have a balanced approach after.

Henry Schuck:

And my wife was like, one night, she goes, “Well, why’s that guy doing that?” And I was like, “Listen. This is not a thing for me. Everybody can choose how they sell their own shares. There’s no story around how they feel about me or how they feel about the business. Everybody’s got a unique situation and how they think about their shares in the company. And I’m not going to impart their decisions on how they feel about the company, or how they feel about me as a leader.” I just can’t do that. And that’s a drain you could spin right down on.

Jason Lemkin:

You can spin right down on that, yeah.

Henry Schuck:

So giving yourself a good narrative along the way is incredibly important.

Jason Lemkin:

Did you have, because we all go through this feeling until a certain point of time, especially until you have a good management team, of once in a while thinking I’m going to leave the keys on the table? You don’t really do it, but it goes through your mind because you’re the VP of sales and marketing and product. And people let you down, or the board yells at you, and you don’t really do it. But you’re like, “I could just … You guys, your investment would be gone.”

Henry Schuck:

This is the martyr part of that whole thing.

Jason Lemkin:

This is the martyr. I still struggle with that myself. Did you have any … So you feel that way. Sometimes you feel this way when someone great leaves.

Henry Schuck:

Yeah.

Jason Lemkin:

You feel so … It was so great doing this with you, Jane, or Lori, and Anya. Any learnings? Maybe it’s not quite this mistake. How do you handle when the great ones have to move on? Do you struggle with this? Have you gotten zen about it at this scale?

Henry Schuck:

No. I haven’t gotten zen about it at this scale. So when the great ones leave, it’s a very … I spend a lot of time trying to convince them not to first.

Jason Lemkin:

Yes.

Henry Schuck:

And if that doesn’t work, then it’s just a business. And I’m thinking about, I remember I had a senior person leave about a year ago. And when he left, and actually, I kept him here for two years longer than he had wanted to. And he was a single guy and wanted to go find his wife and travel the world. And I spent time making sure the business was ready for his departure, which was the most important thing because I think when the great ones leave, one of your biggest issues is, oh my God. What am I going to do? They’re so important. And so once you take that piece away, it’s a lot easier to focus on everything else, so things are not in a panic.

Henry Schuck:

So if someone’s going to leave, I think my first conversation with them is, got it. Let’s talk about timeline. It can’t be a week from now or two weeks from now for your senior executive. Let’s have a transition plan here. And let’s kind of get to a place where the business isn’t going to realize you left. And if we can get everybody to that point, it’s just a lot easier to handle those situations.

Jason Lemkin:

Yep. Yeah, I still get sad when that happens. But it’s good. The best ones, with your help sometimes, will leave their replacement behind. Right? But sometimes you just have to help. Right?

Henry Schuck:

Yeah.

Jason Lemkin:

Sometimes they don’t see it.

Henry Schuck:

Totally.

Jason Lemkin:

So mistake number nine, this is maybe I’m thinking you’re going back in time. But it could be today too, which is not having a process around product releases for too long. It was willy nilly, you didn’t have story points. You fell behind. Engineering always told you it was impossible. Every release was 90 days late. Is this the kind of thread we’re getting into?

Henry Schuck:

All of that happened to me. That’s not this mistake, but yes, engineering told you it was too hard, it was too complicated. And then at some point, you just go, “Oh, wow. That thing is really hard.” But around not having a process around product releases, historically, we were very good at spinning out an MVP. And then we got it out, it worked as an MVP. And then we ran off and chased the next thing. And when you grow up-

Jason Lemkin:

Multiple products you didn’t finish, multiple products you didn’t finish.

Henry Schuck:

Multiple products we didn’t finish. They were out in the market. And our sales reps were demoing them, and customers were kind of using them. And so building a process around when you get to maturity, you should still get MVPs out. You should just keep the resources on that project so that it can go from MVP to something much, much more mature. And we didn’t do that for far too long. And it actually feels really great when you get this right because you’re releasing products that are 90 plus percent bug free, 99% bug free. They’re totally thoughtful. They get the nuance and the edge cases. They solve a full suite of problems. And then you keep resources on them because for the next three to six months, you’re taking feedback from customers and feeding it back into that new functionality or that new product. And that’s super valuable and something we didn’t do along the way.

Jason Lemkin:

Well, it’s interesting. We won’t have enough time to dig deep on this, but let me ask you a followup question because it’s even more interesting to me than I think it sounds. Even when I was at Adobe, my brief time as a VP there, I saw this too because at Adobe, you have 15,000 employees. Right?

Henry Schuck:

Yes.

Jason Lemkin:

So you can build anything you want, but when it scales, you can’t support it because you need 10 people to launch a competitor. There’s plenty of great engineers at Adobe, so you can launch any product you want if you give yourself even a year. Here’s a roadmap. You just go copy. Go copy ZoomInfo. Go copy anything. And 10 great engineers will do it, but then you need 30 people to support it. And even at Adobe, you could never maintain the resource growth that if it grew, unless it was instantly material, unless it instantly did mass amounts of revenue. So what you’re saying sounds simple, but it’s more nuanced because this is a multi year commitment to something, potentially.

Henry Schuck:

It’s a multi year commitment, and I think the other piece around this is, great, you launched your product. What does everything else look like? What’s the go to market motion look like? What does sales enablement motion look like? What does pricing and packaging look like? What does the product marketing look like, and the battle cards look like? And what’s the website page for this? And are we clearing messaging it? And so there’s this whole area around product releases where historically, I released the product and I got in the sales all hands and went, “Check this out. This is how it works. This is how you demo it. Go.” And when the organization grows, it’s just you can’t do it like that anymore.

Jason Lemkin:

Yeah. All right. Mistake number 10, this could mean a lot of things, not having the right account structure. Whatever this means, it’s probably true with everybody. But what does this mean? What does not having the right account structure?

Henry Schuck:

It is true for everybody. Not having the right account structure for us meant we took customers on, and we just spread them across account managers. And we were never really thoughtful, or we were thoughtful too late about: How do you look at your accounts? Do you segment enterprise and SMB? Do you treat them by usage together?

Jason Lemkin:

I see. Not segmenting early enough.

Henry Schuck:

Not segmenting, cohorting early enough. And the way that hurts you is every time you spend a little bit more time here, you go, “Oh, we really should’ve done it this way. This way’s a way better way.” And then you go, “Okay. Let’s do it that way.” And that means you’re handing accounts off kind of constantly. And so if someone builds a relationship with their account manager, and then three months later you go, “Oh, actually, this is your new account manager.-“

Jason Lemkin:

That’s the worst.

Henry Schuck:

“Because we decided this wasn’t the right way to organize the accounts.” And so being thoughtful about how you structure accounts and account load and segments is important, not just because if you get that right, it drives higher retention in your business, but also because you can really ruin a customer’s experience with you if you’re constantly shuffling accounts.

Jason Lemkin:

Yeah. I mean, we know that, but it’s interesting. I hadn’t really thought about it that way, which is when you think about how to staff post sales, have a mindset of: How can I make sure that their account manager will always be the same, unless something happens, unless someone quits or leaves? But am I thinking about this the right way? Am I 100% sure that it won’t switch from Linda to Larry? Right? And if you’re not sure, you haven’t made the right investments here. Right?

Henry Schuck:

Yep.

Jason Lemkin:

And what’s your gut? I want to make sure we have a few minutes for our key takeaways. But when is it, I think I have a thesis, but when is it not too early to start segmenting post sales? When do you think it’s not too early? When do you know you’re late?

Henry Schuck:

When do you know you’re late? I think 100 clients is when you should be really thinking about how you’re-

Jason Lemkin:

Yeah. It’s statistically significant at 100. It’s already segmented out organically at 100. Hasn’t it?

Henry Schuck:

Yeah. It’s kind of, yes, it’s segmented out organically at 100.

Jason Lemkin:

Yeah. I was going to say five people because then you have enough to put to segment. If you have one person, there’s not point in segmenting. Isn’t it? But 100’s the right number. 100’s when you see the pattern, small, medium, and large, verticals, whatever it is. You’ve got 20 here and 30 here and 50 here. And you know, 50, 30, 20, you know how to allocate your resources. Right?

Henry Schuck:

Exactly. Yep.

Jason Lemkin:

Okay. We got a bonus mistake number 11. I’m sure there’s bonuses 12 through 100 out there too. But undervaluing communication and messaging internally and externally. Yeah. We all make this mistake. But what does this mean specifically?

Henry Schuck:

So specifically for me, this means getting your message right on any number of things can really mean the difference between success and failure, between getting your team behind you or not. And that goes from everything from your sales deck and your pitch deck, to the messaging on your website. But for me, where this happens most is internally, where I’m trying to get the team excited about some direction I’m going. At this level, I think the somewhat naive view is I come in and I go, “Hey. Do that. Do that. Do that.” And everybody goes, “Yep, we’re going to go do that.” And it’s just like it’s way more nuanced than that. It’s not like I just go … I can’t just go to my CTO and go, “Do that,” and he goes, “Yep. Okay. I’m going to go do that.”

Henry Schuck:

I have to be persuasive about it. I have to tie a story around it. I have to explain why it’s important to our business, why it’s important to his business. And I have to get people around the idea so that everybody is convinced that this direction from a product perspective, or a go to market perspective, is the right one. And how you message any of those different directions, it really makes the difference between everybody being really excited to run through a wall for you, and a couple people getting it, and a couple people being like, “I’ll do it. It’s just, Henry’s wrong.” And so, yeah.

Jason Lemkin:

Sorry. Go ahead. And tactically, besides the classic all hands meeting and now the all Zoom meeting, or whatever it is, this is challenging. You don’t necessarily want to send an email every single day with product advice. What are the hacks or learnings? Once you realize you need to communicate more internally, took me a while to figure that out too, I’m still learning. But what’s actionable? What have you done in the last two years or whatever to improve things?

Henry Schuck:

On big things, I write memos.

Jason Lemkin:

That’s interesting.

Henry Schuck:

And I might feel [inaudible 00:56:53]. But I will sit down and write a memo that goes like, “Here’s the direction I’m going. Here are the reasons why.” I’ll answer the … And I know what the negative pushback to things would be. And so I’m answering those in the memo. I’m laying it all out, and then I’m sharing it with-

Jason Lemkin:

Who do you distribute this memo to?

Henry Schuck:

So I distribute to VPs and above. Basically, senior directors and above. We have a senior management team and then the executive team, and I share it with everyone.

Jason Lemkin:

Yep. That’s an interesting one. And are they lengthy? Is it almost like a spec in words? Here’s the vision, here’s how we might do it, here’s what our goals are.

Henry Schuck:

Yes. They’re lengthy. They’re 10 to 20 pages.

Jason Lemkin:

Oh, wow.

Henry Schuck:

Also, by the way-

Jason Lemkin:

That is a good tip. Every time I don’t write a spec for something, it fails. Right? Even if it’s the smallest thing in the world. But this is next level. You’re writing a business plan almost for the initiative. Right?

Henry Schuck:

I am. And then it also, I’ll get halfway through some of those and go, “This is a bad idea. This is a bad idea.”

Jason Lemkin:

It forces you to do the work. It forces you to do the work. Right?

Henry Schuck:

[inaudible 00:57:58] objection well. And if I can’t answer that objection well, how am I going to answer in front of my team well? And then I’m just going, “Bad idea. We’re going to move to the next.”

Jason Lemkin:

All right, because we’re at the end, or almost over, depending on how you defined it, and thank you for all this time. You’ve got four key takeaways, but there’s one point related to all this. Let me just ask you for the founders out there. Some of the things you’ve said, the slides, I feel like one reason you made some of these mistakes, in terms of conservatism, was being bootstrapped. Right?

Henry Schuck:

Yep.

Jason Lemkin:

And it is, bootstrapped is not always … People on the internet act like it’s a choice. Oh, I’ll raise money or bootstrap. It’s rarely a choice.

Henry Schuck:

Yeah, yeah, yeah.

Jason Lemkin:

You’re coming out of law school. You’re investing 30 grand in the business. Back in the day in 2007, maybe no one was going to give you 10 million in the seed round. It probably wasn’t your choice. You probably didn’t turn away five million before a line of code. So some of the hesitation I hear here, if I was, I would say don’t beat yourself up too much on it. I hear bootstrapping scar tissue. But there’s overfunded scar tissue too. Is that a thread in here?

Henry Schuck:

Totally.

Jason Lemkin:

Yeah, okay.

Henry Schuck:

Totally.

Jason Lemkin:

It’s part of the evolution. Right?

Henry Schuck:

And I didn’t have a choice, Jason. I did it. I didn’t know what … I was in Columbus, Ohio. I grew up in Los Angeles and I went to college in Las Vegas. We launched the business in Columbus, Ohio. I knew there were people who gave money to businesses, but I didn’t know how to go get those dollars. And so what I knew was I could … If you ran a business that was profitable, that felt like a business that you could continue to run for a long time. And that was the only thing I knew how to do, and so that was the choice. And yeah, along the way because you have to be so precise with your investment decisions, that carries through. And at some point, you’ve got to go, “Okay. I’m going to make decisions that are objectively right for the business. And I’m not going to let my fear about execution or the unknown, really, keep me from making those decisions.”

Jason Lemkin:

Got it. So since we’re at the very end, if I could beg a favor, Henry. Can you read us your four key takeaways so that the 100,000 people on our podcast will hear them in your voice?

Henry Schuck:

Yes.

Jason Lemkin:

Because we won’t be able to dig into these four points.

Henry Schuck:

Totally.

Jason Lemkin:

Let me just hear you as a mentor give us these four takeaways.

Henry Schuck:

So the first one is look at the decisions you’re scared to make and evaluate the risk of not making them. And so take the fear of not making the decision out of it, and then evaluate what happens if you don’t make that decision.

Jason Lemkin:

Remove the fear from your decisions.

Henry Schuck:

Remove the fear from your decision. Ask yourself why you’re risk averse in certain areas, and whether your decisions are based on fact or fear. And on this one, often when you ask yourself why you’re risk averse in a certain area, you’ll get down to leadership issue, a product issue, you don’t trust execution, so get to the why of why you won’t put the dollars there. Consider what trade offs you’re making. Am I investing in go to market at the expense of product, or engineering, or something else? And take bigger bets, even if they’re long-term and don’t have an immediate payoff. Along the way, we didn’t invest enough in brand awareness and content creation to have a voice. Those were long-term things that would pay off, and we didn’t invest in them upfront. And so we should’ve taken bigger bets along the way here.

Jason Lemkin:

Awesome. Henry, this was amazing. This was one of my favorite sessions of all time. These are the same mistakes we all make and keep making. But I think you’ve given us an incredible set of challenges to just make fewer of these 11 mistakes. Right?

Henry Schuck:

I hope so.

Jason Lemkin:

That’s the trick. Isn’t it?

Henry Schuck:

Yes.

Jason Lemkin:

Just make a couple fewer, and then watch how much faster you grow.

Henry Schuck:

That’s right.

Jason Lemkin:

All right. So this was a 10. I’m sure everyone is quietly applauding in cyberspace during this global pandemic. But I’m deeply appreciative for the time, as we all are, so thank you so much.

Henry Schuck:

Thank you, Jason. Thank you, everybody.

 

Published on September 18, 2020

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