The Breakdown Ep 35: The Truth and Myths of Starting a Business with Sam Harris
All. Right cool. Welcome, to the breakdown it's Monday April 23rd. I believe April 23rd we. Are joined today Kirby, at Wells CLO bunker labs and Sam Harris who we, have a long kind, of like what's. Your title right now but Sam. Has. Been a part of this organization since, the beginning using, the first cohort with Kirby and I I mean, almost four years ago I know right it's pretty crazy seems, like a different lifetime, it. Does things move pretty fast we've all had a couple businesses, in that time. So. It's at that point about having lots of businesses Sam he's seen, it all been through it all we're gonna have a chat, today just about like. Demystifying. Entrepreneurship. Kind of and. And, all. The. Scary. Stuff that, you don't really talk about I guess it's not all Mark. Zuckerberg, and the social network and like. Exactly. Shark Tank it's not this glamorous, it. Can be at times but it's not this super glamorous thing, so we. Thought Sam be a great guest to come on and we can talk about just some of our experiences over the last few years. Successes. And mostly, failures, I guess, that's. Learning experience, learning. Experience learning spaces so, please. Stay, tuned that we have a great show coming up for you on the breakdown. All. Right cool back Sam, what's going on so what's new with you these days well. I got a I got two big things going on I am currently, the CTO of evolved security, which is a cyber security firm here. In 1871. We. Are both, a cyber security training academy, so we teach people how to become cyber security professionals, and currently the number one ranked program, in the country for that and we. Place people, you. Know into you, know organizations, with, to, get jobs as security analysts and people come from all, kinds of backgrounds and, learn how to become security analysts and, then in addition to that we also provide cyber security consulting. Services for corporations. And what. I'm doing is I'm building software that. Streamlines, that process so the first thing that that. I'm building is a quote calculator, right. Now the whole process of generating a quote and figuring out how much something's gonna cost take days and I've been able to squeeze that down to literally. Seconds. That's. That's. My main job oh yeah. If, that was sound kind of complicated, Sam's, a complicated, guy you know he buddy but he's incredibly smart and, he, solves. Problems. Very quickly you can create a ton of value that's, like the, first thing I reckon I know when, I met you independent one of the first brain trusts you were seeing a computer, coding. And. Just. Creating. Value like that is Sam Harris in a nutshell so, I know you're early memories are like good Sam yeah no, same way same way yeah, brilliant. Guy that's for sure, are. You, talking. About tribe, absolutely. Let's, back it up a little bit so sure a couple, years ago what. You started tribe what was tribe yeah, so tribe was a collaborative. Task management, software. So it was basically Trello, before Trello. Yeah. For. Those that don't know what Trello is what is that so Trello is a it's. A drag-and-drop task. Management software, that was started by frog, Creek software, I think and it sold for 450. Million dollars to JIRA tribe. Was not sold for 450 million dollars daily. So. You have a team and you can basically assign, them, asks and track whether they're doing it within, the software, we. Use it here Labs yeah yeah. Yeah, just out. There a lot of people used it for a little while and they stopped, that. Was kind, of the problem so right so what does that progression look like that so you searched you served tribe went, through a couple accelerators, but. I, went, through TechStars yeah we went, through the bunker like thing of you know it's the first program, went through and then we went through TechStars and then we also went through a program called the north of millennials which was one of those awesome. Experiences. That you only get to have as an entrepreneur. We, was, the world's first startup decelerator so, we. Went. To an island in the middle of Mediterranean, and drank, kamata's and surfed with billionaires, for three weeks and that was the whole program Wow. What, do you learn from that you.
Know I learned I learned two. Very important, things for that number one so. All accelerator, programs focus on, maniacally. Focusing, on a single KPI, and what you can do every single week to improve that KPI. What. Menorah more Newark Millennials showed me was that if you do that if you maniacally, focused on a single KPI you can miss your flank right, like if you're focusing, on this then you you miss the big picture sometimes and so by unplugging, by decelerating, they call it by, taking a vacation like, stepping away from the business you get a much better sense like the 30,000, foot level and. Sometimes. You realize like you're trying, to solve the wrong problem like, you're you're optimizing. Something, very efficiently that's not even the right problem to be solving the first place the, second thing I really learned is that it don't like if you treat investors, like a cash register then. You're never gonna get anything from them right. The reality is is that investors, are awesome people that you want to be friends with and you don't raise money from people you don't already know so. Building relationships, with people now you'll. Raise money from them 15, years from now but not 15, weeks from now mm-hmm, so. Starts that relationship, yeah, are they still taking applications, there absolutely, I think, I'd be qualified. They. Are missing. Civ Lian, I can't. Remember what it is is something to do with the UN. Trying. To help with companies that are trying to help development. In their, third world countries now I think they're big kind of focus this year I'm getting all that wrong but it's on their website the, normals, calm they they, have a focus. Now. Tech. Wizards know. It's still tech it's still very much tagged no it's it's yeah well it's a very global program, I mean there were in. My cohort there were people from you know China and, Africa. And, Europe. In the United States in South America so like literally in the whole world was there it, was amazing like all these different languages being spoken it was really, cool Wow. So. What was their that outcome. So, you went through several accelerators. Eventually. You decide to shut down that company yes what, was like the. Reason, for that and then what was the big lesson, you learned from that process. So. I would say that I mean. The. Thing I would say is that the most. Important, like thing you should be thinking about when starting a new business are mmm. Go. To market strategy product, market fit talent, acquisition, and capital acquisition, do, you have an edge in these four things and we. Did not have an edge in these things that's ripe I can't, remember I remember the very first. VC. Meeting I went into someone asked me what my go to market strategy was, and I said what's that yeah that's. The extent to which I thought about go to market strategy there's probably a lot of people that don't know what that is so what can you explain yeah, in layman's terms sure so so go to market strategy is, how, are, you going to get your product, into the hand of your customers okay and you. Need what, I would say like in trading, you. Know when you're trading like you don't put on a train unless you know what your edges against the market what do you know that other people don't know that can't be bought at any price right. And so I think an, example of that would be like like um. Red. Box didn't. Go to grocery. Stores and convince managers, to put the box in their store they even go to grocery chains, they went to private equity firms that owned, multiple. And they, used existing. Personal, relationships, that, could, not be bought at any price that went back decades, in order to do that right, and so like you know that's a go to market strategy.
That. Can't be barred any price that gives you an edge in the market that you know that's, what you need if you if you're going to market strategies I'm gonna buy ads on Facebook I Got, News for you like you're gonna struggle because, anyone can buy ads on Facebook and it's gonna be really expensive that's, a great point that's, a great point yeah so, then product, market fit I think, product market fit unfortunately. Very few things in life are truly. Binary, there's always subtlety, but I think product market fit is not one of those things if, you are rolling the ball up if you're rolling the the rock up the mountain and it rolls back on top you like Sisyphus, every day like, you don't have product market fit if. You are chasing, the boulder down the hill and you cannot, keep up with it you got product market fit like, are your customers, beating your door down are they taking. Your, alpha, product, that is full of bugs and just ripping it out of your hands and saying I don't care that it's not ready I don't care that as bugs I need it now or are, you like, going. And showing it to people and they're saying yeah I'll look at it and then they just don't yeah. Yeah. And then, for capital, acquisition, you, know the hard, truth, that most people need to understand is that I. Mean. First of all the best kind of capital acquisition, is customer capital right, like revenue, making. Money like that is the best kind of capital. Acquisition, way, VC's. And. Then. And then if you're going if, you're gonna raise VC, if you're gonna raise angel. Money like the hard truth, is that you don't raise money from people you don't already know right. So if you don't already know mostly. People if you already know people who work in the finance industry have access to capital that can allocate it to you you don't really have a relationship with those people chances. Are you're you're not going to probably. Not gonna raise money yeah, so. If you want to be the kind of entrepreneur the builds businesses, that raise money and start making friends now for 10 years from now yeah but. You're not it's very very like the people who actually break. Through in the thing is you can break through if you have an absolutely. Unbelievably. Awesome product, market fit you, know if you're hitting eighty thousand. Hurting revenues six months after launch you've, got 95% clothes right yeah of course you're gonna be able raise capital but the reality. Is is that, most. Businesses, just don't grow like that right there's that first two or three years we gotta sort things out and so you need someone to give you the benefit of doubt and the only people who give you a benefit of doubt or people already know you this, is such. Great advice I always recommend. To people to find their competitive, advantage like you know, for. My real estate business I like, niche down really. Far to figure out you, know what what do I have like you said it can't be bought for any price and you know I'm I'm. A veteran, and so I. I rent homes to homeless veterans and I've got that rapport with the veterans and so that, could be a very risky proposition for, other landlords, but because. Of the way I do it because of my background. It's. You, know I've got that competitive, advantage where I can, capitalize. On that that one niche that, that most other people can't. And, so it's, it's very similar to like what you're saying and something you just caught on something you just spoke, there about niche oh I really. Think that like there's a sweet spot when it comes to. When. It comes to what I what I call an echo chamber right. So you. You, know I've built two businesses, that only had one customer federal, government state government and in. Both those businesses, you know we did really well we made you know decent money and then one day the gut customer. Decided, that they were going to spend their money in a different way and our business instantly, was just yeah gone right, didn't go bankrupt didn't, you, know fail it just, worked for a while and then it didn't work anymore and so, I took a lesson from that I want to have a million customers or all given me ten dollars a month not one customers giving me ten million dollars a month right so, I built tribe and try. Never, got like, I mean we here you know just it was really hard for, anyone to know who you were because I was trying to get a million customers.
So. I'm building a business now on the side where we are focusing, on. 850. Customers, right, so, it's not one and it's not a million and that's, a really great number, because, you can very quickly, get. To know the important. People have, them using your product, had them talking about your product and then every like comment have you heard about this thing like why aren't you on this thing it's, called echo chamber like people start talking to each other in a like hush like I have this you have this like I have this right, yeah and so it interesting. You can very quickly. Saturate. A vertical and then what's really cool is if you can saturate that vertical and there's another vertical is just like it that has another thousand, customers or another 2,000, customers and you just knock them off one at a time but, stay focused, in that beginning like know your niche get, that echo chamber, going so that you become someone, that's important, within that little world. I'm. Taking this alright so like four, years ago when. I was launching my app knowing that you guys both beta tested, by the way yeah where was this feedback. I. Shut. It down that's. Why. That. Was, four. Years ago. You. Know, well. You keep doing your thing man, one day I. Had. Another question, so last time we we, spoke we did a interview, once, before and, you're, just leaving tribe, at the time you're talking about the difference between like, tech. Companies, that, have, to raise money first and they just scale scale scale and, then eventually they. Make money hopefully, that's, the plan some. Of them do and. Then like lifestyle, companies, and I think you, know in this Shark Tank era, everyone. Gets so hung up on raising, money and raising money you know so, what's your perspective like, what you know on, on. That. Like do you still feel, like, the. Tech company. Like the the moonshot. Type company, is is the. Way to go for entrepreneurs, or do you feel like I mean 90%, of our companies I feel like around here are like. Lifestyle. Says yeah perpetual Services lifestyle companies so, you just don't see it as much but all you hear about in the media is. Like sure, tank and raising, VC money and that's what everyone thinks entrepreneurs, do, yeah. I would say look, I think that um I think where you are matters, right. I think Chicago is a very pragmatic town. Yeah, right we like pragmatic, business models that make money and. PCs, here invest in businesses, that make money I mean I was I've been told like until. You have 40,000, a month recurring, revenue, we're. Not gonna even invest, a million dollars in your business really yeah I've. Had multiple DC's tell me that so I mean and and, yeah there are companies making eighty thousand month that are raising series, a's at. 1 million our four million pre yeah, which, is like in the valley apparently, you can get a million bucks just a PowerPoint yeah um so it definitely the matters where you are as. To have what your vice is so my advice would be to like, you, know people who are not, in the valley like I don't know what, it's like in the valley um but.
I Would say that uh yeah. I think I think that the the moonshot. You. Know two. Hundred billion dollar business ideas. They're. Great for society, and terrible, for the entrepreneur. Right. Like I I think that that the five. Million dollar a year business that, you are pretty sure you can figure out and make run are great for the entrepreneur, and great for society yeah I think that they you, know like they're just they're, gonna work I mean like you know it's gonna work you know instead, of a one shot one, chance in a hundred thousand. Is you, know it's one chance in a hundred yeah. Right and those are odds you can work with yeah. Right, yeah Gary Vee always talks about knowing your DNA, so I think it it also comes down to that like you, know what, the person can handle the. Stress and, pressure behind, you know not ever making a dime for the next ten years well, you know and there's these things that people just don't talk about too like I've met, someone. Who you, know I'm you just won't say their name but like their, company has raised twenty, million dollars, and I'm. This individual. Took no pay for the first three years they, pay themselves thirty thousand a year for. Year, four and five they. Raised twenty million dollars. They, were the co-founders, been there since day one but, they were the CEO and off the CEO. I, have to raise a million dollars the VC, firm brought in a professional CEO oh this. Person became redundant, and, so now they're, on their own and so they've made a total of grand total $60,000, in five years of work they generated, a company, that on papers worth a hundred million dollars their personal. Ownership of that company is probably you, know in the eight figures but. You can't buy a beer with that money right and there's a lot of things that can happen between now and an exit yeah and and so like, that's winning, that's, what winning looks like yeah yeah exactly exactly, so, I mean it's just like, taking a nice meanwhile. Meanwhile. Right. Like I know people, who start a real estate business, who. At the end of their first year have made two hundred fifty thousand cash you can buy beer with that money yeah right, so like just like, these little businesses, like a plumbing, look the only entrepreneur. That I know that drives a Ferrari is a plumber, right. So. Like just stop, for a moment think about that if you if you're you know I mean a lot of people are saying I want to start a business because I, want to spend more time with my family and I want to have a better. Lifestyle, and I'm like then, why are you starting a tech startup Yeah right you should start a consulting, firm. Because. That makes money. That's. Right. Before. You jump right in you know cuz like you can get persuaded, by other people or society, or what just he's like obtainable, that's, that's, that's why I'm like I started brand or why you started tried yeah, it's, just it seems like. You just have to build it you know like. Hard work the hard work and yeah, and you'll a couple Pat's on the back and. What. Would you have done differently, I guess. So. I think so you know one time I read the statistic 95 percent of businesses fail in the first five years and the 95 percent of businesses survive the first five years fail the next five years I'm not sure that statistic, is entirely accurate but I always used it to tell myself I have a 1 in 400 shot so, the the, average business were four million bucks so, you have a 1 in 400 shot at 4 million bucks it's the best water you could ever ask mmm-hmm right like that sounds to me like a game, right. The. The thing is though yeah the thing is though that like you. Know probably. 300. Of those businesses, you could figure out wouldn't make it like, if you just like. Talk, to these people and listen like you could probably ease, I mean I think most people you, know with with you know any like solid, you, know grounding, about themselves in an education, could say yeah those aren't gonna work so, let's say there's really it's one in the hunter shot so. I think the real but. I've noticed the people who are see really successful, entrepreneurs, who are doing, well over. And over and over again I'm good, friends with one who is like built six companies and they've all done great is. What, they don't do right. It's like having a filter and saying. You know you run every business through the filter right now my personal filter, is do, I have an edge and go to market strategy product, market fit talent acquisition, capital acquisition, right, all, for all for an edge like, an, unviable, edge in all four of those and if I don't and I can't tell myself clearly, that I do then I don't do the business and I have have, business, people, come to me with business ideas people offer me jobs to be their CTO and I run it through this filter and I say no and.
So I think it's I think, when you're when you're winning it's way too easy to say to yourself, that you're successful, because you're intelligent and hard-working, yeah right and you and you don't see all the other telogen hard-working people that aren't winning and you don't think that they are actually, equivalent to you but. When you're losing it's far too easy to look at other people and say that they're lucky right. But you can be lucky, luck. A. Lot. Of luck is what you don't do yeah right and not doing a business that's not going to work saves. You a lot of pain yeah. Being. Honest with yourself about that early on saves you a lot of pain absolutely, so I guess what I'm trying to say is I think that really talented entrepreneurs are, not capable of taking a bad business and make into a good business I think they don't do bad businesses, to begin with. There's. A lot of tweetable. 20 minutes and we do this thing every week and I'll preface we do it's like called hax so sort of like a tool, a resource, a book a podcast something you're listening to you we're doing of like either, you cruise your life in some way makes, everything more efficient, so. It could be as simple as Gmail but what does like something that you use on a daily basis that I, so. I would say the most significant, thing that I've found in the last probably. Two or three years is I. Don't. Know if this is I don't disqualify a hack but it's um. Tony. Robbins book. Awaken. The giant within mm-hmm. I. Got into a deep rut I, kind, of really fell into this belief that you know that like leg gets a lottery right like and you call the thing and so I put my quarter in the slot I pull the slot and like you, know maybe I win and I put it you know and I put another quarter slot and pull the slot maybe I win yeah, and so I've started I don't know 12 businesses, right, and you know I've had you, know to have gotten the you know eight figure revenue like awesome businesses. I've sold to and I've, had a bunch of like just nothing's. Right, like some you know like nothing's like you know been bad like no one's you know got in trouble or like lost too much money but like they just go nowhere yeah and. I just thought you know I kind of really bought into this belief, that, it was random, and when, I read um when, I read awaken, the giant within it. Became, immediately, obvious, to me that, when, I was winning there were certain things that I was doing yeah, that I was not doing when I was losing and it makes economic sense why. Do these activities, lead. To success and these activities, don't and it. Was like whoa, I mean and within I within, two, weeks of reading, that book I I had I completely. Pulled myself out, of the mess that I was in and had an awesome paying job with a great company and a startup that is growing like crazy I mean like revenue, growing like crazy, so, I think that book is really powerful influence, yeah that's good thing yeah, and I think if people overlook, that a lot like you, know people. Are all that self-help, stuff you know I don't need that any tactical, information and, I found, that I've been fluctuating, back and forth a lot between like tactical. Like, how, information, and like stuff. That is more. Like, working on myself you know and yeah. I said. Look I'm a software developer I'm, a data, scientist, I have a degree in electrical engineering I've. Spent my entire life. Believing. In data and numbers and math and rolling, my eyes at. Self-help, books and and. Fighting what I call magical, thinking, and. It was very, it. Was an interesting, series I actually read three books in Rose sapiens. And then when, Bigley and then. Which. Is what led me to read this book and I. Mean, I gotta say I was wrong man like I wish I had been paying, attention to stuff 15 years ago like it could save me a lot of trouble so. Awesome. Second act by the way I read sapiens, that as per your request it was not all what I thought, was. Mark. Zuckerberg favorite book. So. Kind, of the counterpoint, to yours I've got a book also which ones do. Ya. Stole. My thunder but I'm gonna expound, upon what I've shared so. We talked about traction before and we're, deep in the traction, process, for tractioning, ourselves. So. This is a great book we're, working on it here it's it's a it, outlines, the entrepreneurial, operating.
System Which is basically a, framework. That you can use there's, a lot of frameworks out there but this is one and it's, it's great, to. Get. All your processes all your people all your all the different components your business on paper, and there's, also a ton of tools in here that you you can start to utilize and it's like a two-year process so it's not like you just read it implement, it you're good to go, but. That's, it's. It's been a great experience so far we're just at the very beginning of it here at, the bunker so we'll keep you posted on how it goes but, so far, everyone. Walked out of that first meeting and kind of like wow there's, a lot more clarity now so I highly recommend get, in the book and and start, enabling if you read the book it doesn't do anything like okay like but, if you start in lamenting it and actually going through the process that's, that's where the magic is I. Would. Say the same thing about, about. Awaken, the giant within there's, probably like 30, worksheets. Or tasks. We need to go do throughout the book I think if you blew through those and didn't actually do the the tasks I think he would it wouldn't really do anything but if you got it like actually, dig into those things and do the tasks that's, often the case with these books you got it no homework yeah. Find. Yourself. I want. The shortcut to get right exactly. Yeah. All. Right cool my hack is, launched lab online total, cop-out but its launch level online we've, been going through we're eight weeks into a cohort right now that has hundreds of military veterans active duty military spouses, and a couple civilians, to going through this program. We, filmed. An entire basically. Like our version of accelerator, through, ten weeks and film that entire experience and put, it online and, supplemented, supplemented. It with hundreds of hours of digital content and we, also went and we filmed another. Couple, like hundreds, of hours of the sales training and marketing and all sorts other cool stuff mental content, so. That new cohort, is. Gonna start next there that's coming up June. So, if, you, go to our website go to launch lab online Booker Labs org and. Then go to launch lab online sign. Up for that program. If, you're here at a stage entrepreneur it's really a great place to start you come get your feet wet and hear more kind of stories like this where. It's. Not all venture. Capital, and sports. Cars and, rainbows and rainbows and sunshine and yeah so, anyway. That's, great thank you so much for joining us today next week we have paul ride neuron he is the founder of shadow culture based out of Minneapolis.
Guys, A legend, you love them so join, us next Monday see, you soon. Correction. Yourself.