A SEAT at THE TABLE: Conversations with Today's Top Industry Leaders

Why Venture Capital Might Be The Wrong Way to Fund Your Startup

October 30, 2022 Nick Fogle, Founder & CEO, Churnkey Season 9 Episode 21
A SEAT at THE TABLE: Conversations with Today's Top Industry Leaders
Why Venture Capital Might Be The Wrong Way to Fund Your Startup
Show Notes Transcript

Mention venture capital and everyone imagines multi-million dollar rounds of funding, the thrill of founding the next unicorn - all leading to a windfall of cash when the company has its IPO.

At least that what’s become somewhat of an urban legend.

The reality can be quite a bit different.  The road from startup to cashing out is typically frustrating, frenzied and at times even frightening. 

I’m Jane Singer and thanks for joining me here and being part of our international community.  

Today we’re joined by Nick Fogle, Founder & CEO of Churnkey, who shares some advice and cautionary tales about the pros and cons of venture capital.  

Nick  fought through the 2008 recession and bootstrapped his side business, Wavve, and eventually sold the company for a mid 7-figure sum. 

Taking everything that he learned from gaining venture capital and customer retention, Nick then founded Churnkey. 

In this episode Nick talks about:

  • The Potential Pit Falls of Venture Capital
  • The Highest Impact Areas Where A Founder Should Invest Their Time 
  • The Top 3 Lessons He Learned While Fielding Acquisition Offers And Ultimately Being Acquired

… and much more!

Whether you’ve got heaps of venture capital funding, are an established corporate or are bootstrapping it, you need good people on board.

One of the biggest challenges companies face is trying to find top talent - particularly to fill critical leadership roles.  Nowadays, having the right people can really determine a company’s success or failure.

That’s why top corporations and even smaller enterprises rely on Asianet Consultants to help them fill key positions. 

Since 1988 Asianet has been working in partnership with its global clients to help them make the right strategic hires.  They have a well-earned reputation for being able to fill even those difficult to fill positions.

So if you need to recruit new talent - or think that you might be doing that soon, head on over to their website. That’s asiannetconsultants.com.

Now let’s sit down with Nick and get the inside track on venture capital funding.


Connect with Nick Fogle:

Churnkey website:

Asianet Consultants website:   https://www.asianetconsultants.com/

Visit A Seat at The Table's website at https://seat.fm

[00:00:00]Jane Singer: [00:00:00] Nick, I'm so happy that you're able to join us today on A Seat at The Table because what you're talking about is so relevant in today's economic environment. We've had two decades where venture capital's been front and center, and people see it as an easy pathway to making money. because you only hear about the unicorns .

[00:00:18] You only hear about people with these multi-billion dollar valuations , but that's sort of the tip of the iceberg. You know, there's everybody else. So I'm really interested for your take on this.  You've had so much experience with this.  What do you think, from your point of view, what are the pitfalls of venture capital?

[00:00:36] What do entrepreneurs need to be aware of?  

[00:00:38]Nick Fogle: [00:00:38] It's  a deep question that I could speak on for a long time. Go ahead.  I would say  it comes down to incentives.  So if you think about a startup and the founders behind that startup, everybody has different incentives for what they want that business to become.

[00:00:55] And if you need venture capital to fund that and sustain it, [00:01:00] the outcome that a venture capitalist is looking for is going to be very different from what many of those founders are looking. Right. So when you look at venture funding, they're placing a lot of bets across different startups. You as a individual startup are not unique to them,  in so far as they're writing a lot of checks.

[00:01:20] Right? Right. And it's a numbers game for them. They're placing a lot of bets, and  the formulas. They need one of those to 100 x or at minimum a few of those to 10 x. Right. Otherwise, their fund doesn't work. Their LPs will be. It's just the way it's structured, and that incentive requires startups to grow really, really fast.

[00:01:42] And in some senses, they will help you to inject this capital into your business. But if you don't know where that capital can be used effectively to grow profitably, then you're going to be on this venture capital treadmill, as people tend to call it, where you [00:02:00] raise a lot of money in a series. You blow through that money and every 18 months you've got to raise another round.

[00:02:06] You've got to go do the series B now.   And   it's this never ending cycle where eventually you get to be Uber, which is an excellent example of what can happen when this path goes wrong. It's a company that's exploding, like growth is like crazy. You know, it's back to the old Facebook model where  you grow at all cost and,   as you look at Uber, I forget how many they were making up letters.

[00:02:26] I feel like by the end of  it was like series D, E, F, maybe G, I don't know. But,  the company still wasn't profitable. They had gotten, so accustomed to freely accessed capital and cash and just throwing that at user acquisition strategies. And, today they're profitable, I believe.  But  their valuation suffered tremendously.

[00:02:47]And  I think some of the early investors, all the early investors did great. I mean, that's a best possible outcome if you are an early investor in Uber, right? But if you look at  what it took to get there and, maybe how [00:03:00] that path changed. Another drawback here, and don't let me speak too long,  like I said, I could rant about this for a while,  but another problem with once you go down the 'venture road', and I'm not totally opposed to venture, I'm just saying I think founders, need to be aware of what can happen. Let's talk about two examples. So, okay. Yes  I could start a business and I could focus on growing it slowly, organically, over time, and using angel investors or my own family funds or something  to grow that.

[00:03:31] It's going to take,  two or three years to start actually making  meaningful growth , but at that point, I'm free to do whatever I want with the business. I can put it on autopilot and just be a business operator and generate free cash flows. So, tremendous outcome, if you like, lifestyle, right? So that's one way of doing it is  the bootstrapper approach.

[00:03:51]There are a lot of people that call that indie hacking. It's become very popular recently.  The alternative though is the venture route where you have an idea [00:04:00] and you do a  seed round and you spend money quickly hiring and building a product and paying for ads, that sort of thing. And before long you're out of funding and you're either like, Okay, do we shut down or do we raise again?

[00:04:15] Well, you're going to raise again if you have  any success or any history that venture capitalists can look at and say, Okay, like maybe they're going somewhere.  So it could be the same startup idea. And with venture funding, you're on this treadmill now and you don't have four or five years to access those free cash flows.  And then 18 months later you've got to raise again and your valuation is climbing, but you have no access to the business' liquidity. You can pay yourself a salary, but you're kind of trapped as a founder in this model where  you've got to either get acquired or go public. I mean, those are in all livelihood, those are the most likely outcomes and  takes a long time to go public.  Ye takes a very long time. I mean 10 years I think is, I mean that's a conservative estimate in my opinion. [00:05:00] And then the acquisition is kind of a roll of dice, right? Like you're looking for a strategic acquisition and kind of leaving your chances up to fate.

[00:05:09] So  that's a high level view of my perception of VC is it comes down to incentives and the incentives between a venture capitalist and a founder are not always aligned with what they want the future. 

[00:05:21] Jane Singer: [00:05:21] Right. Yeah, I can understand that. I mean, the thing is, it looks  from the outside looking in that it's sort of a free ride if you have a company, that's being funded by venture capital, where you're just focusing on growth and you're not having to simultaneously having to worry about the bottom line. 

[00:05:39] I'm sure that  when you are  dealing with that kind of a situation, there's things that we're not aware of. But for a lot of companies that  are not venture funded and they have to try to be profitable and also try to grow, it's really tough. Whereas it just seems like, oh,  if you're a venture funded, you can just [00:06:00] spend money and then when you run out, you just go back for more. 

[00:06:04]Nick Fogle: [00:06:04] You're exactly right. It's exciting too. It's like a rush of adrenaline. You get this big funding raise, Tech Crunch covers it.

[00:06:10] It's all in the news. You get your in-laws brag about you,  you've got all this hype,  you can hire, and that's like a very powerful feeling, having that much capital that you're then free to allocate it.  But you're kind of, giving up longer term freedom and gains with the hope of doubling down that this venture funded pathway to growth is going to work out.

[00:06:33] And in some cases it does, and in some cases I think it makes perfect sense to raise venture money because if you've identified a growth channel or a good acquisitions channel that can be profitable, why not pour fuel in the fire? The problem is when you don't have a clear pathway and  if you've got a lot of money and you're throwing things at the wall, seeing what sticks, that's more likely a recipe for disaster where you end up getting diluted  having to give up tons of equity in the future, or just failing all together when you [00:07:00] otherwise may have had a business that could have been profitable in a few years.

[00:07:03] Yes, that's true.Jane Singer: [00:07:04] That's true. Although you have been getting a salary all along, so I suppose it's no worse than having a regular job and ending up losing it  because the company hit hard times or whatever. 

[00:07:14] Nick Fogle: [00:07:14] yes, that's a very fair trade off. I think some of these  very lucrative venture back company salaries are going to be be challenged in this recessionary environment we're entering.

[00:07:26]  As you mentioned, We've been riding this really nice tail end of easy cash, easy access to liquidity for a long time now, and if that starts to dry up, which it appears to be doing, suddenly, you're not able to pay everybody $120,000 after your series A. So you may have to pay yourself more of a fair salary.

[00:07:48] But  it is a good point when you look at your five years of,  the venture funded treadmill. You've made a nice salary, you've worked like an animal and felt a lot of stress.  But on the other side,  you do have to worry if you're this [00:08:00] bootstrap founder who is eating ramen noodles and, paying yourself the most minimal amount that you can get by on.

[00:08:07] Jane Singer: [00:08:07] Well, that's just it. I mean,  people tend to want to keep all the control, but at the same time, they also want to have the salary and everything else.  So it's interesting. It seems to me that when you're getting  these huge rounds of funding and you're able to be paid fairly well and you're able to hire people  and do marketing and advertising, and at the end, if it fails, it's someone else's money as opposed to bootstrapping it, right?

[00:08:34] Yes. Getting paid nothing. And at the end, if it fails, you've also lost your  capital.  You do struggle to understand why venture wouldn't be ideal. 

[00:08:43] Yes. And the Nick Fogle: [00:08:44] other side of that bootstrap argument is, it's exhausting in a different way. With  the VC backdrop, if you have any metrics of success that you can go against, you can create another startup with a different idea and say, Hey VCs, we lost all this money last time.

[00:08:57]We're not going to do it again. I learned all of this [00:09:00] last time. Now I've got this new thing. And you can start it all over again.  If that's something you'll want to do. If you're doing the Bootstrap thing though, it can be extremely demoralizing to have spent all this money. In fact, can I tell you a story?

[00:09:11] Sure. Sure. So in 2015,  my one of my previous businesses, my co-founder and I, we had this brilliant idea we were go We had day jobs at the time, but we were convinced we could do what we'd seen Twitter and Facebook do.  And we're not in the Bay Area, we're in Charleston, South Carolina, which did not have any kind of access to funding or anything like that, that you have in some of the larger metro areas.

[00:09:35] We were also first time founders. We had no idea what we were doing, right. But we just, we read Tech Crunch, we saw the news. We were like, Oh yeah, like, we're smart guys and we've got a great idea. We can raise a lot of money and build this thing to be a  billion dollar company or something.

[00:09:49] So  our idea was let's make Reddit for audio. Wow, cool. This was back,  right after Serial, the podcast had come out, right?  So yeah, I think it was the 2015 era [00:10:00] and we were really into podcasting.  We had this idea that people have a much more intimate conversation over audio. It's funny now.

[00:10:09] Yes. To fast forward, and this may destroy my whole argument because we're like, Oh, Clubhouse is great. Twitter Spaces is great. Well, that's essentially what we were trying to build as first time founders in 2015. We thought it was a great idea. But we talked to all these venture future capitalist firms, and they were like, first thing was like, where do you guys live?

[00:10:26]We were like, Charleston, South Carolina. They said, can you move to the Bay Area or can you move to New York? I said, No, we have families and we have day jobs. Oh, you've still got a day job?  So you don't have skin in the game? You still got your day job. And we were like, Okay, well,  So then we left our day jobs and we were like, All right,  we were all in.

[00:10:45] And we were spinning our savings and everything, building this idea. We had no idea what we were doing in terms of building a profitable business. We were just trying to grow, grow, grow, grow, grow. We got an advisor. We had all these discussions. Long [00:11:00] story short, we spent about 18 months, thousands of hours building this mobile app and a whole platform.

[00:11:06]And, we en ended up having to sell that product for pennies on the dollar.  we just could not raise money  from venture capitalists. But here's the silver lining out of that experience, we learned about the problem space. We learned about audio, and we came upon a problem that audio is very difficult to share and promote online.

[00:11:28] There's no good way to share audio clips on Facebook or Twitter or anything else. So that's kind of a last ditch Hail Mary effort.  I pulled an all-nighter and I built this tool.  And you see it now, it's the audiogram. It's a way that  you can actually upload your audio as a podcaster and then you can animate the wave form into a video and share that on social.

[00:11:50] And,   people see this all the time now, but we were the first ones to commercialize that. Wow. Because  we saw this need, and if we'd been ventured back, this was not a big market [00:12:00] at the time. We could not have pursued this. And,  we were able to retain large stakes of this company. I mean, we each ended up owning  over 40%.

[00:12:09]We brought in a third partner at one point, but for a good three or four years, we bootstrapped this small business as kind of a lifestyle business. And it grew and grew. And,  eventually in 2021, we had a mid seven figure acquisition for that business. Wow. Congratulations. Thank you. Yes.  At the peak we were doing about $150,000 a month in recurring revenue.

[00:12:32]We had very low expenses. We had a support person. These were all contractors. And,  each month we were making about a well over a hundred thousand in free cash flows. And, Excellent. That would never have happened if we had gone the VC route. We  would not have had the autonomy and freedom as founders to say, Hey, we just want to distribute this as cash flow and profits to the partners.

[00:12:52] We would've had to just double down on growth even if we didn't have a solid growth strategy. Right, right.  Interesting. Yes. So that's my long [00:13:00]  story of my own personal experience with the venture backing. Part of that too is like, well, you didn't actually raise venture money.

[00:13:07]  So you know what happened there.  I have another venture story where I, was part of a founding team that did raise venture funding. I'm not even going to get into that. But, suffice it to say that experience  wasn't, we didn't nearly have the outcome that I had with this one. 

[00:13:21] Jane Singer: [00:13:21] A good point. And I think that, like you pointed out, I think it's going to be very interesting to see in the next couple of decades   how the venture segment  plays out  as interest rates are being raised and as the market is just getting to be a little bit tighter on the free money  that's sort of been raining on us for two decades .

[00:13:41] I'm just an outsider looking in. But it does appear that you could take anything and put the word "tech" as part of it, and people were running to fund it. And even if it was something  that was, you just looked at it and you said, What about this is some tech innovation?

[00:13:55] But because it was technology, people seemed to think that it was gonna be the next [00:14:00] unicorn. . You probably have better insights than I do on it. 

[00:14:03]Nick Fogle: [00:14:03] You're spot on there with the macro climate and how interest rates, I mean, that controls everything.

[00:14:08] And that's why the market had become so frothy in the last  decade or so. 

[00:14:13]Jane Singer: [00:14:13] As we're looking at this whole scenario of starting up, whether it be venture capital, backed, or whether it be bootstrapped, you point out and very, very, accurately that the founders initially wear a lot of hats and it becomes challenging to figure out where to best allocate your time in order to grow, particularly when you may not have as many staff as you want, or you don't have people who know the business as well, because the business is new.  Where should founders be focusing their attention?

[00:14:42] Nick Fogle: [00:14:42] It's a hard problem, particularly when you're doing the bootstrap thing and you don't have a lot of of funding to out outsource and delegate initially.  I think it's all about identifying an individual that's willing to pay for your product. I would think that is the most crucial thing you can do when [00:15:00] you're starting a business is identify your market and gradually you want to identify a few things.

[00:15:06] It's kind of like the scientific method where you've got a hypothesis. Your hypothesis is, I have a business idea. I think people will pay for this, and I think it can grow and scale to be a successful, profitable venture. While your first step in doing that, you have to build the most basic version of that product, and once you do that, you need to get it into the market as soon as possible.

[00:15:30] You don't want to uh, and that was the mistake we made with this previous business where I thought I had to build this fancy mobile app and all of the things that everybody thought we needed, right? You don't want to listen to the market and the people that are saying, You need this feature, you need this.

[00:15:46]listen to the people that are willing to pay for the most basic version. And if you can launch something that you're,  I think Reed Hoffman,  said this, the LinkedIn founder.  Your first version should be a product you're frankly embarrassed about. It should be something that [00:16:00] you feel a little unsettled that this is going out in the market and that it's a reflection of you.

[00:16:04] Right? But if that works, if somebody's willing to pay for that most basic version, you're onto something. So that's the first step I would say  is identify the market and make sure people are willing to pay for whatever it is that you're  doing. And it's a beautiful thing if you can actually pre sell that before you've even had to build the product.

[00:16:22] That's harder to do. Yes, it is. Yes. I think the next step is to think about scaling. So you've identified, all right, this hypothesis, there are at least some people in the world that are willing to pay for this. So you need to look at how big is this market and what are the minimum amount of features we need to add now to this product to grow it further?

[00:16:45]and there are a lot of different strategies you can use. If you're bootstrapping, you can find a great place. Kind of a unique hack actually is Reddit is a wonderful place for finding ideas because everything is organized into these little communities. And if you were creating a tool [00:17:00] for,  I don't know if you were creating a new type of Hosting for a a web application.

[00:17:05] That's a great example because there are a lot of these communities of people that are web developers or people that build certain types of applications, and you could go there and say, Hey, you know, I'm building this product and would anybody be interested in using it? And if you get a large response and you can say, Okay, there's this community of people that all are willing to pay, then at that point you have really de-risked the business venture and that hypothesis.

[00:17:28] And I think that's the point where you can start to spend more heavily. I want to answer your question about wearing a lot of hats because  that's one of the hardest parts for founders. Yes. I think founders tend to have a personality where you are kind of a control freak. You want to do everything, and one of the hardest parts of growing a startup is realizing, okay, I eventually have to delegate out some of the things I'm doing because it's no longer feasible just to name a few different things.

[00:17:55]You've got to have some sales or marketing aptitude. Usually those are [00:18:00] two separate skills. You've got to be able to build a product or at least know enough about how to manage a team to build it.  So that's either spending time, writing code, or having some form of capital where you can outsource it to some developers, contract developers, and manage that.

[00:18:16] They actually build the right? You've got all the operational task.  Managing your budget and payroll and all the different expenses that are coming in, and then legal overhead, you've got to have your,  accountants and bookkeeping. It's a lot of hats and a lot early on, you're going to have to do most of that.

[00:18:33] I think the best advice I have for people who are first time founders without tons of capital already, is to find a, a co-founder who compliments you. You don't necessarily need, If you're a software engineer looking to start your first business, you don't want to find another software engineer, even though that's usually the easiest way to find somebody.

[00:18:55] It's like, Oh, I'm this type of person. I know all these other people that  we do something similar. [00:19:00] You wanna find somebody who has that opposite skill set who might be really good at sales and marketing. They don't have a clue about the technical side. That's fine. You can split that up and own it.

[00:19:09] So at minimum, I'd say the best way to solve that early on is to find  a co-founder that compliments you. 

[00:19:16] Jane Singer: [00:19:16] That's such a great point, and it's something that in a sense it's obvious, but it's something that we always overlook.  I think  you're right.  You do tend to gravitate towards people who are like you.

[00:19:26] So if you're a software developer, you're communicating with other software developers, they get what you're doing at that level. You know, it's easy to have that conversation, whereas marketing seems. Aliens, or if you're a marketing person, of course it's the opposite, right? You think that tech stuff is, you know, who knows what those boys are talking about.

[00:19:43] But you're right, you need that opposite skillset to have someone bring that in, in order to have something to seriously contribute. . 

[00:19:50] Nick Fogle: [00:19:50] Exactly. Yeah.  I was doing software engineering at  a large public company and my co-founder was doing sales and marketing at another tech company. I have  people I know in the industry that [00:20:00] have  met founders online and never actually met in flesh, which is wow is pretty cool that you can do that now.

[00:20:06] Meet somebody online, say, Hey, we've got this idea, would do, Youwant to work on it together? Higher risk in that because you can't actually meet the person. But if you start out gradually and get to know one another, I think that's a good recipe for moving forward. 

[00:20:18]Jane Singer: [00:20:18] Yeah, I think you're right.

[00:20:19] I think  being able to connect with people online has opened up a lot of possibilities. And if you do move slow, And you move into it step by step, you can build these kind of very strong relationships that benefit everybody without having to move to a new place. I mean, I think that's been huge that you can have people in different locations because as you were saying before, there was that pressure that if you wanted to be a tech startup, you had to, you had to move to Silicon Valley.

[00:20:46] If you wanted do something else, you had to move to another place, which might not be do. There are opportunities that have come up that we never would've thought about before. 

[00:20:55]Nick Fogle: [00:20:55] I think venture capitalists have realized, wow, there's a lot of great talent and great [00:21:00] ideas in different places, and those businesses can run much more capitally efficient because the cost of running business in Charleston, for instance, is much cheaper than in the Bay Area or in New York.

[00:21:11] Jane Singer: [00:21:11] Right. Yes, for sure. I think that's been a huge win for companies to not have to be saddled with the overhead of being in certain very high cost markets. Exactly. So you've gone through the process of building a business and successfully selling it. What lessons have you learned?  I'm sure you've learned a lot of things, but what have been some of the key takeaway?

[00:21:35] Nick Fogle: [00:21:35] I think, a lot of people have this dream scenario of an acquisition. It's kind of your ultimate goal as a founder, and for me it was a dream outcome. I'm very happy with how everything worked out,  but there's never a clear time for when are you ready to be acquired? Right? Right. Like we were initially approached in 20 19, I think January. Yes, January of 2019. We were approached, well, we had two calls. One was with Spotify, [00:22:00] and immediately we were like, Oh, well, like  this is going to be a life changing amount money. It's,  right, right. Yeah.  And this was a full two years before we actually were acquired, and it turned out that Spotify, we weren't even worth the amount of attorney's fees they would pay to do the deal.

[00:22:14] They didn't realize how small we were at the time.  But then that same month, we got another.  offer from an individual. And at the time I had like $200,000 in student loan debt. And the sum of money that they were willing to give us was large. It was enough to pay off my debt and catch up on retirement.

[00:22:32] Wow. And it was very hard to say no to that. Fortunately, my co-founder was in a much better financial position and he was like, I really don't think we should do this because look at our trajectory. Look at where we're going.  So that's another great thing about. Co-founders is you can kind of balance one another out with these big decisions.

[00:22:48] It's one thing to say we know what our business is going to be worth, but it's another thing when you have that dollar sum of money that somebody's saying, Hey, we will give you this today for your business. It's hard to turn that down. [00:23:00] So,  back to my experience, we turned this down and we said, Okay, well now we know that there's a dollar sum attached to the business and it kind of forced us to double down and say, Well, if we eventually want to get acquired, one these are all of the different things that we can do to help us achieve that goal. In fact, we reached out to the broker that represented the buyer in this business.  This was six months later, so there wouldn't be a conflict. We went to the broker and said, Hey, what are the things we can do to be more valuable?

[00:23:28] Right? Interesting. And, yeah,  they gave us a, a series of things we could do to improve the business' value. One thing in particular that helped us,  if you are running a SaaS business, a subscription software, you're always going to have customers coming and customers going, right. It's just the way things, If you think about Netflix these days, it's very public because every quarter people are, you know, at the edge of their seat wondering what were their churn numbers this much?

[00:23:55] Yes. How many people clicked that dreaded cancel button,  and [00:24:00] Wave was losing 13% of our customers per month?  Very high. That's a lot of churn, right? And the broker said, Guys, you're going to get destroyed under your valuation and not be nearly where you want if you can't handle this churn problem.

[00:24:16]So we ended up spending a full year, paid a fortune to consultants, all that. Doing everything we could to conquer, churn it. Eventually we built a internal product and tool within Wave that business and , this tool helped us to cut churn from 13% down to like 8%. Wow. Which, I mean that added at least seven figures to our valuation. Excellent.

[00:24:37] After we had the acquisition, we said, this is going to be our new business. So we took the product and have now created an entire business around helping others conquer that churn problem,  Wow. That's thank you. Yeah. Back, back to wave and  how do people know when it's time to be acquired?

[00:24:53] I think there's definitely an element of planning that should go into it, and  there's never goiong to be a moment where you're [00:25:00] like, you know, now's the moment. Let's get a broker. Let's  put it on the market. If you're building  a good business to sell it should be a business you don't want to sell if you, if you want to get rid of the business

[00:25:12]  then your valuation will probably suffer it's a hard problem, but if your business is generating decent cash flow and it's a good, strong business, it's pretty fun to run that business, right? , it's not going to make sense to acquire you. It's just a very difficult,   conversation to have at that point when the business is doing well and you need a evaluation that can justify giving monthly profit up. So with Wave, we ended up thinking, all right, well we're getting tired of operating the business. We're not great operators. We love the idea of building for podcasters and for creators. But  we'd spent six years in the space or five years in the space and we were ready to move on to something different and we thought that Wave would do better and be in [00:26:00] better hands if we found a new home for it.

[00:26:02] We found some  owners that would be more operationally focused. I think that's the key reason why we decided it was time  to sell it. And it just so happened that  December of 2020, we got three, Well, we actually got four letters of intent. These were offers to acquire the company unsolicited. Wow, that's great.

[00:26:21] I guess at the end of Covid, a lot of people  had been on the sidelines and everybody said, Oh, all right. Like, the world's not ending. Let's  find some good businesses to acquire.  We deliberated. And on Christmas Eve, we actually said, All right, I think this is the one we wan and  that kind of started the clock and for three months we worked toward all of the due diligence and data sharing that ended up coming to close and in, I think it was, yeah, March 31st, 2021, we,  got the bank wire and started transferring all the assets. , 

[00:26:55]Jane Singer: [00:26:55] What a journey. But congratulations. It's not easy.

[00:26:58] When you hear people [00:27:00] tell the tale and you hear about the valuations and what people have, sold things for, you don't hear about all the steps in between and how difficult it is to be able to create something  that's successful. 

[00:27:12]Nick Fogle: [00:27:12] There's a lot of it that's luck. And I consider myself very fortunate to.

[00:27:19] Found something that the market was willing to pay for and something that had so much demand for so many years. It's important to think about luck though with startups. There's definitely a luck element, but  it's possible to kind of improve your likelihood of getting lucky by being patient and staying in a market long enough to recognize, okay.

[00:27:42] Maybe this first product that we decided to create for podcasters and,  audio communities, markets telling us this is not viable. But there are all these other problems we've identified. And one of those problems we identified was audio doesn't share well. And,  so part of it was luck, like podcasting was growing really [00:28:00] quickly when we launched this tool.

[00:28:01]But part of it was also being close to a, a particular industry or space, identifying the problems. And eventually if you're patient and you work hard and long, You'll find one of those and we just happen to, to find it and benefit greatly from the rise of podcasting. 

[00:28:18]Jane Singer: [00:28:18] Right. Well, I think, it's a good point because you were involved and you had your hands in the clay and you continued to work on it.

[00:28:25] You saw opportunities that weren't initially what you saw, but as you got into it, other channels became apparent.  if I'm phrasing that very well, but

[00:28:36]Nick Fogle: [00:28:36] No, that, that's exactly right.  I get a lot of people saying, How do I get ideas for startups? How do I, come up with so  And my advice is usually, well, what are you passionate about? What would you like to spend the next four or five years working on?

[00:28:50] Is there an industry? Is there a potential product? And   number two is once you've identified that, don't get too attached to that first idea because it's probably wrong. It's probably not [00:29:00] going to be a viable business. But start, just start. Just  start building, and then listen to the market. Put yourself out there.

[00:29:07]Eventually you're go  And it,  you may spend two years trying a bunch of different thingss, but on the third year you're going to find that one new problem you identified is,  it's got a lot of market demand behind it. 

[00:29:19]Jane Singer: [00:29:19] Yeah.  Think these are all really, really good points and I want to thank you so much, Nick, for sharing all of this.

[00:29:25] You've really provided such massive insights.    How can people connect with you? 

[00:29:31]I'd say the easiest is Twitter. I try not to get too distracted on Twitter, but  I check at least daily and, my handle is Nick Fogel with my name and I c k f o g l e.

[00:29:41] I imagine you'll probably just throw that in the show notes, but  feel free to reach out to Twitter, connect with me and if you have questions or you know, just wanna bounce ideas around,  I try to get back to people pretty quickly. 

[00:29:51] Nick Fogle: [00:29:51] Yeah, that sounds great.  Nick, thank you so much. Really appreciate your taking the time to join us.

[00:29:56]Thank you for having me, Jane.