Brian: Hey everyone and welcome to bright and early the podcast for people building early-stage startups.
I’m your host Brian Rhea.
I talk to entrepreneurs, product people, designers, and marketing pros to learn what works, what doesn’t, and why; giving you at least one thing to apply to your business first thing tomorrow.
my guest today is Tyler Tringas Tyler is the founder and a general partner at earnest capital where he makes seed stage investments in bootstrappers indie hackers makers and real businesses he was previously the founder and developer of storm a per a micro SAS that he grew and eventually sold Tyler welcome to the show hey Brian thanks for having me totally my pleasure it’s great - great to meet you I I first came across your work or liked what you were up to like 2016 2017 or so there was a talk that you gave about building storm mapper so he was like b2b rocks is that my talk right okay yeah so I came across that that talk was like this this is killer so for folks who may not be kind of familiar with your with your background can you give us a little bit background on that how you grew and sold store mapper and get to where you are today sure yeah no I’ll try to summarize it was sort of fire burn II know it’s funny that you saw that talk I mean that was a really fun experience um Alex who runs b2b rocks invited me to speak and and I was so kind of confused because it’s a it’s a big b2b SAS conference I mean you know most of the other panels were like how to raise your Series C financing round you know how to how to hire your you know 15 sales lead you know and things like that and I was like are you sure you won’t use it yeah yeah they’re gonna they’re gonna love it and you know watching people’s faces as they kind of came along this journey from who is this guy and what is he talking about to like oh that’s interesting was was pretty funny but yeah I mean the the journey kind of well it started with where did it start I’m gonna say it you know it sort of started with my first foray into startups which was a sort of total and abject failure in which I learned a lot but I had a background in clean energy I was working in sort of the finance sector so advising investors in clean energy at an idea for a solar startup that would kind of be a web application that would help people switch their homes to solar and I quit my job and I started working on this adventure to sort of accelerate a couple of years worth of work there you know basically it just wasn’t a sort of typical venture scale business didn’t really fit the model and I didn’t know that I thought you know I have this business idea it’s got code involved I need more money than I have so I should probably go pitch feces and race around venture capital and yeah and that’s kind of the premise that I started from and the process went you know I would say pretty badly in the business ended up shutting down and I basically lost all my money and I had to basically move to like Southeast Asia become a digital nomad and radically cut my cost of living and figure out what I was going to do with my life and somewhere along the way I had managed you to just through like kind of constant experimentation on the side I built this this little software product that was essentially just a little widget that I was doing some freelance coding on the side for e-commerce companies on Shopify and they said hey could you build us a store locator okay you know sure I can do that I think I know enough to piece it all together and use some Google Maps and all that and and then I had the idea that hey you know seems like a common enough product that maybe instead of you know just charging an hourly rate for this I can productize it and so I you know bash together the the most Minimum Viable Product you have ever seen in your life I did the the whole first version on a single flight from San Francisco to Quetta sightings that’s quite the constraint yeah really I did you know cuz I I had so many things I was spinning and I had this idea and I thought you know I think this is a good idea but I just can’t get pulled into a huge long project on it and I was yeah so I was going down to Argentina where I was actually on what of like my first dates with the woman who’s down my wife which is kind of cool but yeah but yeah I built the whole first version on the flight launched it and lo and behold to 36 hours after writing the first line of code I had a handful of paying customers from my current and previous clients there and then you know basically was five years of running this business as a sort of distributed what I call just internet small business so it wasn’t it wasn’t a rocket ship that was pretty straightforward you know predictable slow and steady growth eventually hired a team they were kind of all around the world we ran it as a pre palm company and although it kind of grew fairly let’s say slowly or at least not exponentially because we just kind of grew it carefully it was you know five years later a very very profitable business that is the kind of thing that there’s plenty of people out there that want to buy owned and continue to operate and two years ago I sold the business right where you and I hear more about that the the selling and and how that’s led to your where you’re at right now we’re young were you continuing first were you continuing to freelance as you were building up store mapper like after that first 36 hours or did you did you say oh wow okay I’ve really got something here and you went all-in how did you manage that yeah I mean the the timeline is a little weird because I launched the you know the MVP version while I was still kind of technically working on the previous startup and so I was juggling like my typical schedule was like working 80 hours a week and it was sort of you know 50 hours a week trying to get this startup to go somewhere 15 to 20 hours a week trying to freelance so that I would have some kind of cash flow and then I’d have like five to ten hours to try to nudge this little product along and build Sanders and talk to customers when I shut down the startup and and I moved to to Thailand briefly I I continued I ramped up my freelancing and ramped up working on store mapper because when I left I had you know a pretty massive pile of credit-card debt to be honest and I needed to dig my way out of that hole pretty fast so freelancing that kind of full developer rates while also building up recurring revenue turns out to be a pretty good strategy for that nice did you did you ever consider raising money for storm mapper or had the experience of trying to raise it for your your other startup kind of soured you on the process I mean I definitely never considered it you know for it for the for the dual reasons that you know I had just wasted a huge amount of my life trying to raise money for a business that you know wasn’t a fit for for you know this this fairly wide array I think we probably pitched like two to three hundred investors over the course of a couple of years yeah and so it’s definitely very turned off by the idea and at the same time I don’t think there existed any kind of fund or you know platform or anything that would have invested into remember anyway so no I didn’t consider it yeah okay well so speaking of which here your now on the other side of the table can you just tell listeners who may not be familiar with earnest capital what what it is and what you do yeah earnest capital u and we call it sort of funding for bootstrappers which yes I know that’s that’s a bit of an oxymoron but but that’s our goal is to be sort of bootstrap er friendly capital so we make we make early-stage investments in companies that you know I just throw a lot of words in there because I feel like a lot of people have a different name they self-identify with but if you consider yourself a bootstrapper an indie hacker a make or something like that we’re probably gonna be interesting to you and we provide a couple of things we have an investment structure that is sort of collaboratively developed with this community to to try to be more aligned with you know hey I want to build the next base camp or a wild bit I don’t necessarily want to grow exponentially and I don’t necessarily want to sell or IPO you know we want to we have a structure that we make investments on that we say okay cool that’s great you know whereas almost every VC is going to say well sorry you’re not a fit and then the second thing we have is a community of awesome sort of mentors that are a lot of you know bootstrapped operators and ceos of either current or previous companies that are both investors in the fund so they’re then investors in you when we make an investment and they’re on hand through kind of a slack Basecamp zoom calls all kinds of stuff like that to help you work through any problems that you know a lot of them have been through as well yeah yeah so you are you you call your the financing structure the shared earnings agreement and you kind of shorthand it is seal SEL is how you so can you give me like explain like I’m five how does a seal differ from a convertible note or a an equity investment that we’re probably more more familiar with yeah so if you’re familiar with convertible notes or safes which is the the sort of you know dominant toolkit that most early stage investors use right now it’s basically I’m gonna give you this money and then later when you go raise your next round then it’s going to convert into equity right and it’s a sort of function of you know what is the sort of valuation of that round and what are the terms we agree on but but in the interim it’s kind of nothing right it’s this sort of IOU and then once you raise that round okay now I’ll convert and I’ll have equity we’ll all have equity and pretty much we’ll only see our money back when you sell the business right so it’s between those terms and the strategy the idea is we sit there we get you know no money back until you get acquired or you IPO the business so that’s kind of the traditional toolkit we’ve done is it’s it’s not fundamentally so different so much as it layers on more options so we try to keep a lot of that open so if you raise money from us and then you decide to go and raise venture capital or maybe not necessary venture capital but just another round of equity we do kind of the same thing we eventually just convert into equity and and you know we sort of go from there but the idea is to sort of keep some of these other avenues open as well so let’s say you want to you want to build like I said earlier kind of the next base camp for the next while bit you want to build a business that you want to run for 10 15 20 years you want it to be very profitable but you don’t necessarily want to sell it well you know a lot of traditional investors would say well you know that’s not a great outcome for me you know you’re like yeah yeah I mean if I put $500,000 on a convertible note into Basecamp that would not be a great outcome for me I’d still be sitting around waiting for them to raise around or sell the business you know even though it’s extremely successful business so basically what a shared earnings agreement does is it layers in a kind of profit share so we say as you as the founder start to generate a lot of economic it’s whether that’s you know cutting yourself dividends or paying yourself a really nice above-market you know healthy salary we start to get a percentage of that basically on a quarterly basis and we get paid that until we reach a sort of capped multiple of our initial investment so in sort of simple numbers if we invest $100,000 you maybe give us let’s say 30 percent of your founder earnings until we get let’s say three or four X are our money back okay and if that is that pretty standard what you’re doing in your deals right now is about three to four x it varies quite a lot to be honest because you know we’re seeing interest from companies that are as early as if they just launched the product a few months ago they’ve got very early revenue to companies that are doing you know a million dollars a year in revenue and so we’re trying you know yeah it was you would not do the same terms for those two companies so it really does vary on us you know substantially on a deal ygo basis okay and so just just so if I’m understanding this right so then I I take I take 200 grand from from earnest and then a year goes by where I’m not I’m not taking any founders earnings or I’m not paying myself anything above above market rate I’m not paying anything back to earnest yet is that right correct yeah it’s it’s not like debt in the sense that there’s a repayment schedule it’s depends on the outcomes of the business and it’s always a function of what you know the economic benefits going to the founder we get a percentage of that okay and and so then when I win it when it starts to grow and I do start you know pulling a little bit of money off of the table for myself in exchange for all of that hard work in exchange for earnest taking off some of the risk early on I’m going to send 30% of that your direction exactly yeah so let’s so let’s say we had agreed and and just to carry it all the way through we had agreed that I’m gonna pay you Forex and so after a couple of years I’ve gotten to what did I say originally two hundred thousand so I’ve paid you back that two hundred plus another two hundred and now an acquirer comes in out of nowhere and says hey we love your business we want to give you you know eight million dollars for it whatever it doesn’t matter you were at that point you’re fine with that as well because you are going to get a percentage of of the the of that of the purchase price right yes have an upside there okay all right yeah exactly yeah so I guess one of the things I’ve wondered about is I mean the the DVC model works as it may have you know it works because from time to time you know that one company and the fund just knocks it out of the park and earns back the fund is there any part of your is there any part of your thinking that most of your companies will just you know operate as a profitable business novel concept and you’ll and you’ll learn you’ll earn back that you know three to five expert or even variable you said but you’ll you’ll earn that back but from time to time there there might actually be an outlier is that even is that part of your thinking at all or sure it is yeah I mean you know I think there’s there’s nothing in our model that you know prohibits us from backing the next you know Atlassian or something perhaps effectively their way you know all the way to a sort of massive valuation and yeah and so um we think about it but it’s not something that we optimize for I mean one of the things one of the things that we kind of question and you know I don’t know how much of your audience will care about this because it’s kind of getting into the investor side of things but you know one of the basic ideas we question is there’s this sort of dogma that there’s this kind of iron law of startup physics which is you know most of your your attempts at SRI a company are gonna fail some people say 90% some people say 70% but a lot of you’ll think it’s a fixed number that says you know most of them are gonna fail so the only way to make it work is for you the ones that don’t fail to be as big as possible right and that’s the basic model of all a venture capital we kind of see it as something that actually there’s an interplay back and forth between you know ratcheting it up both the risk and the reward right so if I write you a check and then I say look here’s the milestones you’re gonna need to hit to raise your Series A in 12 months you need to grow 7% every single week you know you need to double double triple triple triple your business you know all of these kind of things then you’re gonna take a lot more risk you’re gonna maybe hire more aggressively you’re gonna spend more money on customer acquisition you’re gonna do a lot of this stuff that maybe it’s gonna increase your chance of being like a unicorn but it’s also in my opinion going to be increasing your chance of also you know burning down the business right and that’s okay I mean you can choose where you want to be on the risk reward kind of profile but but you know our premise is hey you know if you just grow more sustainably you hire more slowly you focus on you know organic free customer acquisition those kinds of strategies you maybe are gonna grow slowly or less fast than you otherwise would have but you’re also just less likely to just outright fail okay and that’s our basic premise yeah it the thing that’s so attractive about what you’re doing tiny seed and in DBC as well but it just it seems like from the from the outset there’s there’s tighter alignment between the founders outcome and your outcome so if you know if I get funding from a traditional VC firm who genuinely has my best interest at heart it isn’t isn’t pushing me too hard and you know in any of these other things that can happen that at the end of the day if in a couple of years someone comes along and says we want to buy the business you know from you four for five million dollars and puts two million dollars in my pocket is the founder well that that’s life-changing whereas you know the the general partners are that fund are like not even gonna notice mmmn and so yeah so yeah I couldn’t I guess can you talk a little bit about about that how that have you seen that alignment between interests already already playing out or are there other aspects of it where you feel like maybe it keeps it keeps you and your network from from pushing founders may be harder than they want to go talk about both sides of that coin yeah absolutely I mean I think I think you hit the nail on the head in the sense that you know that this was my direct experience was you know I sold the business for a number that you know would not even register in a you know a typical VC portfolio but was totally life-changing for me and and in you know in many cases you know between a mixture of the structure and the strategy and just the way that you know your investor is gonna is gonna kind of advise you they really go to great lengths to say you know if you if you raise a little bit of money early on and you get an opportunity to sell the business for four five million ten million 15 million dollars you know they’re gonna immediately be like well you know I’ve got this great series a investor let me get you like three term sheeds or maybe they’re even on the board and they they literally have a right to to block the sale because they invested at a 50 million dollar valuation and so they’re just gonna get their money back and so you know they actually have let’s say rights to even block that kind of a sale but but in general there’s just all kinds of misalignment both at a structural level and just a strategy like how do they run their business level and one of our principal you know kind of guiding principles here is that we want to be aligned with the founders in almost every possible scenario so it’s one of the reasons why you know I didn’t want to be sitting on boards and making decisions and having even the ability to you know fire the founders or any of that stuff so I said okay well how can I do that and feel comfortable with that the main way is that Nagiko we think through every one of these outcomes and say how can you you know if the founder decides this is the best outcome for the business how can we just be set up to say okay we agree great you know and that that flows through every aspect of how we set our terms and and how we structure and essence to how we how we advise them and yeah I mean I think that’s something that you know a lot of founders are looking for because yeah you you you know those are seriously life-changing outcomes that basically had taken off the table by you know other kinds of early stage capital yeah yeah I’m curious what you what you’ve seen in your portfolio companies so far because like founders typically are seeking funding to solve you know one of two problems either financial debt because they’ve maxed out their credit cards trying to get their product to them to the market or wartime debt because they’re like paying the bills by doing freelancing and consulting and then only able to spend a few hours a week on the thing that’s that’s actually more likely to result in financial independence like the growth of a scalable asset and so like so financial debt and time debt what advice do you have for founders who find themselves in either of those situations well I mean the first thing I always say is that I’m not in the business of talking people out of bootstrapping right you know I think that you know there are many situations where you should probably just continue food strapping the business maybe I haven’t quite found you know that kind of product market fit maybe the product is not the one that you know that you should actually be spending your time on you know maybe you haven’t quite found the kind of growth engine that that first one that’s gonna get you you know kind of repeatable customers and and maybe it makes sense to just continue kind of you know bootstrapping and making it real long and you don’t actually need to raise capital really ever there’s there’s always a way to do it without capital but you know to answer your your actual question I would say in our portfolio what we’ve seen is a lot of the second one so you know it’s primarily basically founders who’ve got something that’s doing well on the side and it started to grow and they’re working on it nights and weekends and you know you just kind of reach that inflection point where you’ve got a bunch of customers so you’ve got support requests and feature requests and you’re trying to sort of you know spin all the plates of the business but you’re not really making enough money to go full-time or to make that first I have hire to help offload some of that bandwidth and and that’s one area where we’re super comfortable coming in and we feel like we add a ton of value so I would say we’ve we’ve made 10 investments so far since since we’ve launched in February so we’re doing almost two a month and I would say probably six or so of those were more or less some variation of that scenario where you know basically they raise the capital to be able to go full time with the idea of you know before the money gets spent that they’re kind of back to they or that they get to break even example exists they have existing traction they just need to be able to go in on it full time so that they can get to close it close to like close to a baseline salary on the runway that you’re giving them yes exactly okay all right yeah and I would say that is that’s both what we’ve seen a majority of the cases and you know what what I originally sort of designed Ernest to be really you know targeted for because I saw it as the most acute need where people genuinely don’t have an option there it’s like you just have to muddle through right now and so that’s what we designed it for but what has turned out to be the case is that you know even as companies mature they both have a need for the capital but they also really really value the other aspects of working with earnest so working with a cohort of other entrepreneurs to collectively problem-solve working with a ton of amazing mentors that can help you you know hire the right people see around corners solve problems all that sort of stuff and so we’re also making investments and companies that are definitely further along that you have already been working on it full-time maybe they have a small team but they want to make a big hire you know a lead engineer a head of marketing that kind of thing where you know you don’t really want to just sit there and wait for your MRRR to creep up enough to you know make that that hire straight out of your cash flow and you also just value all that other stuff and so we’ve seen I think at this point probably 30 40 % of the companies are more in that category okay yeah your Ernests list of of mentors is extremely impressive like you’ve got some superstars in there and is it is it ever a like what’s the right way to ask this is there ever a problem for some of your portfolio founders to get a little bit like starstruck and not push back against the advice of like DHH and just go along with it is that is that something y’all ever have to address so far we haven’t really had to I mean I think I owed it pretty head on from both directions I mean it was something that we were concerned about I think maybe overly concerned about at the beginning but you know all of the mentors I wrote this post called you know earnest mentorship which kind of summarized you know a talk slash you know series of emails that I send to all of them kind of really articulating like hey you know your job is it’s not to just kind of sit back and pontificate it’s not to armchair quarterback how people should run their business you know your your job is to actually help problem solve it’s to ask good questions it’s not to just give your knee-jerk you know answer to this question is to say you know help them think through it and come to their own conclusions and stuff like that and I think a lot of mentors have have really responded to that and that’s resonated with them and then on the founder side you know we just constantly reiterate from the get-go that hey this is your business you know everything here is this is an all-you-can-eat buffet of you know interesting ways to get advice get help you know that kind of stuff but at the end of the day like it’s your company you have total control over it and have to be the one to make the decisions so so far so good all right hey you listeners we’ll get back to the interview in just a second but this is a great time to pause and let you know that bright and early is brought to you by transistor dot F M transistor offers you professional podcast hosting and analytics they host this very podcast and listen y’all it just it could not be any easier product is ridiculously easy to use if you’ve got a question Justin and John the guys behind the software are super responsive I’ve needed to reach out a time or two for some help they were all over it so if you’re thinking about starting a podcast for your business just pop on over to transistor fm and let them know that Brian said yeah it’s the other thing I think about your story that’s kind of interesting is that you you personally experience like the slog of a personal debt as a bootstrapper I mean you’ve you’ve shared publicly before like you were and a bit before here you you were under a significant amount of personal credit card debt trying to build store mapper so you’ve experienced that and now as like raising for earnest like you’ve done the fundraising tour which is similar to what founders of startups seeking VC investment you know have to do alt you know slightly different context but you you haven’t had the experience of getting to be the entrepreneur with some traction getting funding from from from an institution like earnest or India or any those others I’m just kind of curious like what has one of your experiences taught you about the challenges of getting a new venture off the ground and and how have you brought those lessons into the way you’ve structured earnest one thing I’ll say is that like I’m incredibly jealous of our portfolio companies right now I mean you know it’s the most you know energizing time of my day every Monday we do like an all founders weekly call and and then there’s constant activity and slack and Basecamp we sort of alternate between the two for you know synchronous kind of chit-chatting and then longer kind of a synchronous threads go in peace camp and and so there’s a lot of activity and it’s incredible you know I sometimes I think about you know like I tweeted a couple these things that I could share you know it’s like one of our founders was really struggling with you know getting an integration to an API at a you know very large tech company and he was just kind of grappling with it and one of the mentors jumps in and says hey I actually lead an engineering team on this product let me see if I can dig in and solve this for you I wish I had you know that kind of network yeah yeah but you know it’s funny it’s not funny it’s it’s interesting that you know you mentioned but you know I I have talked about how I had a ton of credit card debt and when you go around now and you talk to entrepreneurs who are kind of famous bootstrappers a lot of the folks that are in urban toward community a lot of folks that aren’t and you talk to them about those early early days um you often hear pretty similar stories I would say you know it’s sort of a very small percentage of people just sort of casually cruise into bootstrapping a good majority have some sort of you know famous story like mine involving you know massive credit card debt you know living moving back in with your parents you know selling your house and moving into a car all that kind of stuff super common shockingly so you know and and then the other side of the coin what you often don’t hear are people who are you know famous for bootstrapping who you know frankly didn’t necessarily fully bootstrap you know they have a you know they inherited a big chunk of money or they had a spouse who had a you know very high-paying white-collar job that paid their bills while they while they built the company and so you know it’s basically it all boils down to like it’s really tough really on you know there’s this really big hurdle both you know on every aspect just in terms of getting customers filling the product all that sort of stuff but also the money side of the equation it’s just a huge hurdle early on the kind of stuff that the amount of money that some of these companies would probably spend on their you know on their annual retreat now was just an insurmountable amount of money for them in the early stages and and so that’s one of the things that you know really drove you to want to build this is to say hey look you know once you get over that hump you know you can you can grow a company really really well from customer revenue and and all that sort of stuff but early stages it’s it’s really important to get to get a boost there yeah I think I lost track of the question but no no no that was good thanks so much what um are there any trends that you’re seeing either in your either in your current batch of companies that you’ve invested in or just any trends in general that you’re seeing from applications or things that you’re keeping on a kind of a pulse on that that other startups ought to be thinking about other founders can be thinking about yeah I think there’s two so one is just about kind of you know how folks are running their companies and we it’s not a rule that the companies that we invest in have to be remote companies but you know we are remote I’m here in Rio de Janeiro right now and a group of mentors is very diffused and remote as are the companies that be back and just by coincidence I think probably a 8 out of 10 are distributed you know remote remote teams and there’s been a really interesting and good discussion about you know how you need to be very cognizant in how you build your company who you hire and what processes you built if you’re gonna run a distributed team versus some of the just cultural operating systems that you inherit from being a you know person who you know knows how work is done in the modern economy in a non distributed office so you know there’s been a really active discussion you know community around you know what things you need to do differently or it or or really think more about that just kind of work in you know a co-located team things like you know how to make sure you’re building culture or things like how to foster you know tighter relationships with your with your team one interesting one was you know how to hire so you know a couple of folks who have a lot of experience they’re kind of talked about how when you’re distributed and maybe you’re going to be more asynchronous you know clear writing and concise communication it’s just so much more important that one of the things that we recommended as you know several of our founders are making their first hires or are going out there and you know thinking a lot about hiring is that you know we have this this thing that we have taken from the kind of co-located office world that says hey when you’re hiring someone you look at their application and then you call them into the office and you have a face-to-face interview and that’s kind of migrated to in the distributed team you look at the application and then you hop on zoom’ right or you get a Skype call and you do a face-to-face video chat and that’s actually often the tool you’re gonna use the least to communicate with right video chat and so one thing that we’ve advised a lot of them to experiment with is hey run your interview process using slack using Basecamp using asana you know using github issues using the tools that you’re actually going to communicate with do your first layer of interviews just using those tools and then you know maybe later before you make a firm offer you want to have a face-to-face chat but before you get biased with someone who works really well you know face to face but actually writes these you know no Fellows of emails you know that are just you know absolutely unreadable and you realize oh my gosh I can’t work with this person you know use those tools and so I think that’s really interesting but with the broader idea of you know thinking a lot about how to do remote work and the second thing that’s been really interesting is a lot shorter which is just you know I’ve written a good amount about sort of you know how to find and that just like business ideas particular micro SAS but just in general and think about it a lot and one of the common refrains you hear in the I don’t know literature blog posts about this is to scratch your own itch and I think that that is good advice in the sense that it is easier to build a business where you’re scratching your own itch you know you don’t have to constantly do market testing you have an intuitive understanding of you know what the customer needs um yes exactly but but you need to have more interesting edges these days like if you know if you are someone who is a graphic designer at a big tech company in San Francisco and you like to you know drink pour over coffee and you know go to the movies you just don’t have very interesting itches like everybody has already trampled all over all those issues and there’s a million products for everything so what we’re seeing pretty often in companies that I’m really liking to invest in right now really strong founders with really interesting businesses are people that are coming from a different perspective either they had a you know a different industry that they were working in that they now want to build software for or they had something about their lifestyle that was just very unique and they’ve built a product for that and you know I think that’s a really great way to build a business but it sort of starts further down the line from what business should I build to just broadening the scope of your life and doing more interesting things so you kind of are very early stage you know yeah you you have a company that their business is to render end credits for feature films yeah that is a great one okay that’s an interesting edge
- that’s it’s just a fascinating thing that with the way you point that out like that so many like maybe the the makerspaces is matured enough now that the number of this guy this is this is not true totally but like the number of problems to be solved in running a software business are getting much harder to find but taking that approach to different industries it kind of sounds like what you’re what you’re describing yeah absolutely I mean certainly a more specific version of this is you know I think the the the typical stack of running software business or running uh let’s say just you know technology business is getting pretty full of generalized products so you know in terms of a CMS to host your site and a CRM to manage your customers an email marketing tool to talk to them and you know all that sort of stuff I mean there’s tons of really good you know kind of horizontal competitors there but if you’re gonna go and build you know email marketing but for dentists right or a CRM for waste treatment companies and things like that you know and you can actually go and build a whole bunch of specific features for that industry and you’re gonna build it ten times faster than the the kind of broad-based incumbents because you know frameworks have developed so much and you know you have all the advantages of everything that’s been built in technology today and so if you only get to you know 2,000 customers that pay you $200 a month that’s gonna be an incredible business if you you know don’t raise that much capital um there’s so many opportunities out there that I think are much more about you know not let’s say you know marketing automation like this but marketing automation for these people and I think that’s a really eats you know if that’s a thread that a lot of entrepreneurs should be pulling so tying tying that interesting itches back to the first thing you mentioned of remote work remote remote companies like that’s that’s a growing market Justin Jax have been talking about this a whole lot recently like so much of your product success is going to come down to the market that you’re in and riding riding a growing wave is that is there is there a a problem that that you’re you’re seeing recur over and over again around like you kind of mentioned a few of them but is there like a company that you’re waiting to show up at earnest with hey we are doing x4 remote companies I’m gonna actually I’m not gonna publish your answer I’m joking go ahead I wrote an entire entire blog post on the earnest capital website that was a request for startups where I just went through a litany of problems specifically around remote tools for remote teams and so I think there’s you know a ton of interesting opportunities there you know around around how to do you know long-term career management how to do short term employee engagement how to just how to do like basic scheduling across time zones and you know all that sort of stuff I mean the the challenges we face right now just of scheduling our regular one-on-ones and and all of our group meetings across time zones it’s still well not even close to a solve problem I think there’s you know a ton of good opportunities there that I kind of documented a lot of them and you know I think one of my goals with earnest it’s it’s you know very much a sort of side project relative to to everything else we’re trying to do but it’s to be the you know the best kind of beta testing ground for remote tools for remote teams because between our companies and the companies that our mentors run we’ve got something like 30 you know of varying sizes remote teams that are a part of earnest and then earnest itself is a kind of meta remote team and so if you want to get a great you know group of folks to just kind of you know really help you refine an iterate a beta that fits this this category you know we want be really helpful there so we’ve actually like invited a couple of folks who are building those remote tools to to basically invite the whole community as beta testers and then hop into our group slack and just be on hand to get beta feedback and all that sort of stuff this is for companies that we haven’t even necessarily invested in you know we just want to kind of help I don’t know seed seed the ground with with new ideas here because it’s yeah cool listeners I’ll link to that but it’s also super easy to find just Google remote tools for remote teams earnest and it’s the very first one is there Tyler is there anything about the whole VC world that has just surprised you the most yeah [Laughter] there’s quite a few I actually just coincidentally died and I just tweeted a list of weird things that I’ve sort of discovered I guess I mean so many things are strange in this world I guess one of them that I think is a little bit bizarre is how few investors apparently actually need investments so even though there’s you know hundreds and hundreds of venture funds out there I saw and I can’t remember the the source on this but there was an analysis of you know cross-referencing who actually kind of led the round and it turned out to be like a vanishingly small number of firms it was like 20 or 25 of them we’re the only ones who are the actual decision makers and then everybody else will say you know great company you know I’m in for 100k assuming you get a lead investor right so it’s the contingent offering and this is very bizarre to me it never even occurred to me to sort of you know build a fund and then not actually be the one to sort of you know make investments to actually decide what companies were going to back so that’s been I guess I opening and yeah there’s just so much other weirdness you’re right I don’t know how much your audience is gonna care about you know how weird the world venturous I’ll leave it there okay at least agree okay I guess this is the final thing I want to just get your get your take on you’ve talked about growing growing slowly running uh running a calm company but you’ve all you’ve also experienced your your like you’ve got your scars like you’ve done your fair amount of sacrifice and I heard this quote recently and it says anyone who says you don’t have to sacrifice anything to grow a company is naive anyone who says you have to sacrifice everything is dangerous what do you make it at mmm yeah I mean I I completely agree with that I think are there are there sacrifices that you made along the way that that you I guess either with some some foresight or that would just straight up advice to anyone listening absolutely do not do this even if it’s what it takes to grow the company hmm you know I don’t know I will say one of the things that I think gets people in trouble when they run a company is their own personal kind of burn rate how much money they need that’s what I think drives a lot of people to start to cut corners to do slightly unethical things and and even though and I was very lucky I didn’t have any financial dependents you know I my family my parents everybody was you know was all self-sufficient and I didn’t have any kids I didn’t have a spouse who depended on me I didn’t have a mortgage so I was able to what I needed even though I had am out of credit card debt I was able to you know cut my my cost of living to you know hundreds of dollars per month and so you know was able to sort of take my time and I think where people get into real trouble is their business starts to do pretty well and they start to ratchet up their lifestyle and all of a sudden their kind of personal burn rate gets gets way out of hand and and that’s where people start to cut corners but I mean I think in terms of sacrifices in your business if you do it right you can view them as an investment right so certainly there were times you know when I was running my business where you know I was working you know a lot right I was working you know sort of 30 days in a row without a break I was working 60 70 hour work weeks and getting earnest off the ground as well you know I’m you know this past Thanksgiving or right in the middle of launching lots of fun in August and I remember this Thanksgiving I was I was at a I was visiting you know my wife’s family and we had a huge Thanksgiving dinner planned and they unde of family had flown in and I basically got up at like 4:00 in the morning and drove myself to a Starbucks to go and answer emails and send pitches and because it was a bunch of European investors and didn’t care was Thanksgiving you know so basically just having to crank out emails so that I could you know get back a little bit bleary-eyed but still you know have some family time and I think those are sacrifices yes but if you’re doing them right there an investment with you know with a payoff and so I think it’s you know making sure that you’re not kind of just doing pure hustle porn you know you’re you’re doing something that you feel like is gonna have a payoff in terms of letting you recoup your time recoup your flexibility have more impact on the world that kind of thing how can our listeners find and follow you online Tyler the easiest way is to follow me on twitter i’m tyler tringa that’s t rin GA s and we are also earnest capital e AR in like ern earnest and both of those are hilarious calm and earnest capital calm those are the best ways to read what we write my guest today has been Tyler Angus Tyler I really really enjoyed this interview thanks so much for coming on and chatting with me today yeah likewise I really enjoyed this - thanks so much okay let’s do some closing thoughts here first thing I just love the first version of storm APRA was built on a plane that’s just really fun to me the idea of setting a preposterous time constraint and seeing what you end up with at the end of it I just think that’s is fantastic overall in general I’m just I I just love that earnest capital and everything Tyler is trying to do there that it exists that it’s a long let you know along with in a tiny tiny seed and ndv see just introducing I think the concept to the bootstrapped circles indie maker circles to kind of add some nuance to the idea of taking investment and taking funding that it is not in and of itself inherently bad that taking it under there under bad terms is bad taking it when there’s not a good alignment between outcomes is bad getting having access to capital to run a business is not by definition a bad thing and and I just think there’s there’s gotten to be a bit too much dogma built up in our circles around that I’m probably super biased in the direction of of traditional VC investments because at a previous startup we had phenomenal investors who just like super traditional VC model and but but we’re just fantastic people if we needed a connection they could put us in touch with somebody we’ve got a you know our site has some couple hundred million URLs in Google hey how do we think through SEO well let us put you in touch with Rand Fishkin and then you guys hop on a plane and and go sit down with his team him and his team and talk about it like that sort of value that you get through those networks is fantastic in any way so I I don’t know I totally get and I know that there are many many many horrible stories about companies taking traditional VC investment and it going terribly wrong I know that that’s true I we also just need to acknowledge equally that there are many self-funded founders and entrepreneurs who are under personally are personally under large amounts of of credit card debt that is also no good and so it’s just it’s great that there are these new options coming into coming onto the scene that’s somewhere in between that’s bootstrapper friendly capital bootstrapper friendly investments funding that is so so great because for far too long funding for bootstrappers has been an oxymoron and it just doesn’t need to be so I am I’m a huge fan of earnest and the shared earning its agreement seal he’s talking about the way that it’s structured the alignment is solid I’m I am a fan I think what so one one per dog just kind of torque on it just a little bit one example of where I think well yeah one example of a bit too unfair a perspective over investment in startups our traditional investment is got it is a bit off those just tweet they got a whole lot of play last week and it says today is why C’s demo day where founders try their hardest to give away control of their company let’s celebrate bootstrapped and self funded founders with our own demo day reply with description mr are in link that is super super cool it got a ton of impressions got shared all over the place hopefully many of the businesses who were listed in that thread got some visits and saw a little bump that’s awesome I am all for celebrating bootstrapped and self funded founders what’s unfair about that tweet is that not a single company who raised money at ycs demo day gave away control of their company what they did do was to sell a percentage of their equity in exchange for having the ability to work on that company full-time I mean that’s that’s the trade-off and that’s that’s not by definition bad an equally unfair you know tweet from the other side could say let’s celebrate all of the self-funded founders who are you know wringing their hands and pulling their hair out trying to find time to both pay the bills and work on their work on their passion project while taking on mountains of of credit card debt and putting themselves and their family personally at stake you know for loans or whatever it’s just it’s neither of those things tell the whole tell the whole story and so I just I’m glad that this is happening I wish that there were I hope eventually there will be many many many hundreds of Ernests and that the Tyler will be able to do more than you know to to investments per month it’s just it is a great great thing to have this option because I mean if we’re you know when you are starting a a software company there’s no you you can’t take an asset to put up for collateral to your local bank to get a line of credit or they order to get a to get a loan you’re gonna like have some sort of personal guarantee your house or something like that that that might might be right for your situation but that’s the great thing about that’s one tremendous benefit of traditional venture capital is that there is there’s not a personal guarantee we are sharing some risk here there’s some likelihood that this thing isn’t going to work out that’s part of your model venture capitalists all good as the entrepreneur I’ll do my best to make sure that that doesn’t happen there’s there’s just anyway yeah that’s I think that’s all I want to say is that I I like I like arguments on both side of this of this position it’s highly recommend you check out the requests for startups remote tools for remote teams post Tyler’s got some interesting ideas in there I will also remember to link up to Justin’s I think he I think he’s got a tweet the thread somewhere maybe even a post just on you know the idea of that so much of your success will will depend a bit on the growth of the market that you’re in and so yeah like the future of work is more remote than it is today that’s probably a growing market and so it’s got some he’s got some interesting thoughts in there if there’s something that resonates with you personally that then connects to to remote work I think that’s I think there’s there’s something fascinating there and as always let me know what you think you can find me on Twitter I am beer a that is B is in Bradbury are as enrolling HSN Hugo II as an emerson and a as in Austin fine show notes have bright and early podcast calm and I will 58:26 talk to you next week