Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about some of the hard times they have come across in their entrepreneurial careers. They also give a list of eight coping strategies to help with these hardships.
Items mentioned in this episode:
Transcript
Mike [00:00:00]: In this episode of “Startups for the Rest of Us,” Rob and I are going to be talking about how to cope with hard times. This is “Startups for the Rest of Us,” episode 266.
[Theme Music]
Mike [00:00:15]: Welcome to “Startups for the Rest of Us,” the podcast that helps developers, designers and entrepreneurs be awesome at launching software products. Whether you’ve built your first product or you’re just thinking about it. I’m Mike …
Rob [00:00:23]: And I’m Rob.
Mike [00:00:24]: … and we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Rob?
Rob [00:00:28]: Well, we just made the announcement. HitTail has sold, and so I’m down to one software product, just Drip. It feels really weird.
Mike [00:00:37]: I can imagine. Well, congratulations on getting yourself down to just one.
Rob [00:00:41]: Thank you. I appreciate it. We were talking before. We hit “record,” and I genuinely don’t know how to feel. Of course, I’m happy, of course. People are saying, “Congratulations,” and it does feel great to have a nice little exit and have some cash in the bank, be able to focus on Drip; but at the same time, there’s just a lot of emotion. It’s a big change to not have this thing. I’ve owned it for four years. I spent between 18 and 24 months, full-time, just building it up. So, I did find it a bit emotional, I’ll say, to see it go and to realize today, like, “Huh. I no longer own that, and someone else can do what they want with it.” They might redesign the marketing side, or add features to it, or add services or whatever; and I just have no involvement anymore. So, it’s kind of a trip.
Mike [00:01:18]: Cool. Well, on my end, I’m still taking preorders for the new app that I’m working on. Right now, I’m looking at maybe writing some paid ads to drive some cold traffic that I’m going to try and convert to preorders. So that’s my next step in the validation process; to validate the channels that I might try to use for this. I have some ideas based on the conversations that I’ve had from people, and the preorder process has been going pretty well. Nobody I’ve talked to has really had a problem with that. So that part has been going well; but right now I’m focused on trying to figure out where my sources of traffic and customers are going to come from. That’s the next step for me.
Rob [00:01:51]: Yeah, I think that’ll be a fun experiment to run. When you run the ads are you going to run them to the landing page and ask right away for a preorder? Are you going to just ask for an email address and nurture them? What’s your plan there?
Mike [00:02:02]: It’s a work in progress, and it could adjust as it goes along. What I’m thinking right now is I’ll set up a landing page, start collecting email addresses and make it look like – initially, it’s, “This is the problem that it solves. Are you interested in this?” and then put them on a mailing list. Once they get on the mailing list start interacting with them individually to talk to them about the specifics of what it is that they’re trying to solve, why. Although it’s a cold lead at that point, my hope is that those people will have not heard of me before and talk to them and try and convince them to preorder. I do realize that there’s always going to be some shortcomings with that, but without a finished app to show them I’m reduced to showing them mockups. But the goal will be to get them on the phone and talk to them and walk them through some screenshots of what it’s going to look like, and convince them to preorder without having them know who I am. Right now, most of the preorders have come from people who I either know directly, or who know of me, so that makes it, I would say, a little bit less qualified. They’re trusting in my name more than – not necessarily more than the product – because they have heard the product. They’ve seen what it looks like. They’ve seen what it’s going to be capable of. But what I really want to know is can I convert somebody who doesn’t have any association with me first?
Rob [00:03:13]: Yeah, I think that’s probably a good way to handle it. Obviously, I was thinking of the traditional, you know, having a landing page and just doing pre-launch. Like, “Notify me when we launch.” You know, having the value prop and everything. But I think since you have been doing basically high-touch one-on-one so far, and it’s working, I think it’s a really good experiment to figure out if that is something that you’ll be able to do with cold traffic, because that one-on-one stuff and doing the demos it really is magical. It’s so different than just trying to convert someone with words on a page. So, if you’re able to do this, and able to send cold traffic and then basically do demos and get preorders, I think you’re really on to something. And if you aren’t, I guess it would be back to the drawing board to try to find better traffic sources.
Mike [00:03:54]: And that’s what I’m trying to figure out right now, is whether or not the traffic sources that I have in mind are going to be good ones, or do I have the marketing campaign or the ideas about what cold leads would actually want down yet; because I know what the people I’ve talked to want, but can I translate that into words on a page and convince somebody to walk through the process. I know that it’s not going to be perfect. I know that my conversion rates are going to be radically lower than the ones that I’ve experienced so far, but I still want to walk through that process and see what that looks like so that I have a sense, moving forward, of what I can expect once I get to the point where I’m actually doing a full-scale launch.
Rob [00:04:29]: Very cool. What are we talking about today?
Mike [00:04:31]: Well, today’s episode is inspired by episode 11 of the “Startup Chat” with Sully and Heaton, and there they talked about hard times that they had come across inside of their entrepreneurial careers. So, what I thought we’d do today is we’d talk about a couple of different hard times that we’ve gone through, and then go through some coping strategies for hard times in general, and walk through what people can do, how they can evaluate where they’re at, and map out how to move on.
Rob [00:04:56]: Yeah, I was really struck by episode 11. That came out several months ago. But in listening to the story, I found myself resonating with their hard times, and you can just feel the pain that they went through. Coming out the other side, they learned so much from it that I feel like this episode can offer a lot of value to folks maybe who’ve listened to this podcast for a long time and aren’t in tune with what our hard times have been, because I don’t know that we’ve ever sat down and talked about multiple hard times we were experiencing.
Mike [00:05:23]: So, to kick us off, the first hard time that I’ll relay came from back in 2008. At the time, I was running a consulting company. I was actually running my software company and my consulting company at the same time, but I was much more focused on the consulting company. And in December of the previous year, I went out, and I got an office space, and I looked around for somebody to hire. I went to Monster.com and hired somebody through there. I brought in probably, like, a dozen people before I made somebody a full-time offer. And over the next – I’d say, the first four or five months of the year, we were doing great – we had a lot of solid work coming in, and the future looked good.
[00:06:01]: I’d say probably around the fourth month or so of the year – it was probably April-May timeframe – when things started to just not come through. There were engagements that we were expecting to come in, and they didn’t come in. Then the next engagement didn’t come in, and everywhere we looked the world was kind of coming to a grinding halt. This was systematic throughout the entire consulting industry at the time, and it was because of the massive economic meltdown in 2008. One of the first things that companies do when they come on hard times is they start cutting services, and the first service to get cut is what they consider to be “extraneous expenditures”, like having consultants come in and spending anywhere from 6 to $10,000 a week on them. So, almost overnight, our entire consulting revenue dried up, and I ended up letting go both of the employees that I had, and I still had an office space that I was paying a couple thousand dollars a month for. I was in a lease that I couldn’t get out of, and I’d say probably the next five to six months were really, really hard, trying to string things together.
[00:07:01]: I floated the company for a couple of months on credit cards just to make ends meet, and at some point I just said, “Look, I can’t do this anymore.” That was when I let go both of the guys that were working for me, which was really hard because one of them had been the best man at my wedding. I’d known him for 15 years. The other one, I knew that he had a wife and two kids. It was just a very difficult time for me – obviously emotionally, but also financially – because I had dug myself a $75,000 hole, and it was not easy to dig myself out of.
Rob [00:07:31]: What toll did that take on you? What impact did it have on your emotional state, on your day-to-day life: sleeping, eating, emotional state – all that stuff?
Mike [00:07:41]: Oh, it was awful. I didn’t sleep well. I didn’t eat well. I gained weight – and, of course, all those things roll into one another as well. I mean, if you’re not eating well, then you’re probably not going to sleep well. And if you don’t sleep well, you’re not going to eat well either. You’re going to overeat. You’re going to be anxious, stressed out; and all of those things just snowball onto one another.
[00:07:57]: It really wasn’t until about a year to two years later before I got my financial legs underneath me again before things started to really turn around. So it took a long time, and it was just a lot of work to get out from under it. And in terms of an emotional toll, it was just awful. I felt terrible having to talk to the guys and tell them, “Look, this is just not going to work out. I’m going to have to let you go.”
[00:08:20]: At one point, I remember I had taken a trip to go see a prospective customer, and I was on my way back and one of the guys called me from the office, and he say, “Hey, I’m just working on this over here.” I was like, “I let you go a week ago. Please stop working.” I was like, “I can’t pay you for this.” I felt bad, but there was really nothing I could do. I was already in debt up to my ears.
Rob [00:08:40]: Yeah, that’s tough. Yeah, before you get to your second hard time, I wanted to throw mine in. It’s probably the hardest time I’ve had as an entrepreneur since I left salaried work, and it was in 2014. I’ve alluded to it in the past; but, in essence, what happened is 2013 was a very good year. HitTail brought in a lot of revenue. I think we did two MicroConfs that year. Just everything was hitting on all cylinders, and coming into 2014, Drip had launched – at late 2013 – and I had assumed it was going to start growing – right – because, “I’ve done this before, and DRIP’s just going to take off like a rocket.”
[00:09:18]: Of course, that didn’t happen. Drip launched to a nice 7, 8, $9,000 a month; and then there was this five-, six-month period where we were trying to find our positioning, trying to find our market, trying to find the headline, trying to find the right feature set and all that stuff. It was trying to find product-market fit, in essence. Before that time, I had a lot of cash in the bank from 2013 revenue, and I hired a couple developers – a couple extra ones in addition to Derek, so there were four of us. Three of them were developers. And right around March of 2014, I was making some angel investments with some of the cash I had, and I also learned that I had this enormous tax bill. It was the biggest tax bill I’d ever had, and it was because 2013 had been such a big year, and my estimated taxes from the year prior didn’t really cover it. So, now I had a burn rate on DRIP, because I’d essentially over hired – planning for growth, so to speak. But I had so much cash in the bank, I knew it would back it; but then a huge chunk of that cash went out to the IRS. Then the estimated for that year went up. So it wasn’t just paying the previous year, but my estimated taxes were huge.
[00:10:21]: Then all my angel investments that I’d committed to suddenly seemed like they all came due at once. So I wrote a bunch of checks to those, and it was super stressful. My bank balance dropped by 90 percent to the point where I was making lists of “How am I going to cover payroll?” and I was pretty stressed-out. This was early – let’s say, between March and June of 2014. Then things rebounded, and it kind of just bounced around to that year. It wasn’t until Drip really started growing in, let’s say, August of that year – that’s when the hockey stick started. It wasn’t until then – so it was a solid five, six months where I was having trouble sleeping. I was thinking constantly about, “Where can I get cash from?” I was looking at my 401(k), which is something I never do. I mean, you hear me talk about on the podcast about how risk-averse I am, but I was thinking, “I need to cover this thing, because I don’t want to essentially lay someone off who I hired 60 days ago.”
[00:11:16]: So, overall, it was a rough year. It was a really good learning experience for me, both to be more aware of taxes and estimated – stuff like that – not to over commit just because I have cash in the bank. I just wasn’t looking hard enough at the upcoming expenses. There was actually another expense. Like the hotel expense for MicroConf came through late, and I should’ve known that it was going to come through, but I didn’t think of it. So, it’s kind of like that. I’ve become more wary and more aware of, “Just because I have cash in the bank, obviously, I need to be looking down the line and figuring out what big expenses are coming here in the next 90 to 120 days.”
Mike [00:11:49]: Yeah, sometimes those budgeting things are really hard when you’ve got the money in your checking account, and it’s not always easy to set that money aside in your checking account. It’s not like you’ve got little folders where you can tuck the money away or tag it for different things and say, “This is, kind of, already spent.” What was the timeline there? You said there was, like, five or six months where –
Rob [00:12:05]: Yeah.
Mike [00:12:05]: – it was bouncing around, and you were kind of unsure whether or not you were going to make payroll?
Rob [00:12:09]: That’s right. I was going to whatever lengths I could. I was going to go whatever lengths to make payroll – selling annual plans of things, and doing special deals to my list, and really just trying to keep the boat afloat. I never got to the point where there wasn’t money for payroll. I never had to do anything crazy, but I don’t like to be that close to the edge.
Mike [00:12:31]: Now did that have any sort of effect on your relationship with Sherry? Because I remember when I was going through stuff with my consulting company, things were not good in my marriage either, and it was just a stressful thing. I mean, it wasn’t like we were fighting or anything like that. It was always financial stuff. It was just like, “Oh, how are we going to pay for this?” “What’s going on over there with that bill?” Credit cards were mounting up, and when credit cards start to mount up and you’re carrying 50, 60, $80,000 on credit cards, it’s stressful. And it’s not just stressful on me; it was stressful on her as well, because I’m relatively open with that stuff. It’s not like I hide any of my money anywhere. Did that have any effect on your relationship at all? Or, is that stuff kind of insulated?
Rob [00:13:09]: Lucky for me, our personal stuff is insulated enough, and I didn’t put any money on personal credit cards or anything like that. I was still taking a salary, and Sherry was still taking her salary. So the personal stuff was actually fine. It was just the business stuff I was worried about. We didn’t have trouble with that. There were no fights over that, but I was just kind of a pain in the ass. I was pissed off all the time and just stressed out. Rather than pissed off, I was stressed out all the time – for months. There was so much stuff. It wasn’t just about money either, you know? It wasn’t like, “I need more cash.” It was like, “Why the hell isn’t this app growing?” “What’s going to bail me out of this? It’s DRIP growing. Why isn’t it growing? I’ve done this before so many times. Why can’t I get this app to grow sooner?” That was really the thing. So, I was just probably not the most pleasant person to be around during that time, and I think that caused more the issues than anything.
Mike [00:13:56]: Sure, and it’s funny because that – not funny, but it’s ironic that that anger carries over into other aspects. So, you get very frustrated very quickly about just little things. You’re trying to watch a movie on Amazon, and it’s not working, and you get really poised off really quickly – and it has nothing to do with Amazon, really. It has to do with the other stresses that are in your life.
Rob [00:14:14]: Absolutely.
Mike [00:14:15]: On my end, one of the issues was that my wife had stopped working the year before. So we didn’t really have that second income to rely on, which was a contributing factor; but that kind of stuff happens.
Rob [00:14:25]: Sure. It makes it hard, man. It’s hard to make decisions based on the current information, and it’s the best decision you make. Because I’m sure at the time your wife stopped working because you guys were fine. There was cash in the bank, and you had business. Then something changes so drastically, so quickly, and it’s like you can’t recover, and that’s where you get pushed to that limit.
Mike [00:14:44]: So the second hard time – we covered this in a podcast earlier this year, but the second hard time for me was essentially killing AuditShark. And, unfortunately, it was something that I had known for months, probably closer to almost a year, that that was on the horizon, and it was a very distinct possibility; but it didn’t necessarily make the decision any easier. I think when we did that episode, things were probably still pretty raw. The decision was still pretty fresh. But looking back on it now, I look at that and say, “Yes, that was definitely the right decision. I wish I’d done it sooner”, but I also think that there’s a lot of decisions that we make that we wish we had done sooner, and we just didn’t because we were afraid of the changes that were going to take effect because of that.
Rob [00:15:24]: Yeah, that makes sense, man. It’s hard to be into something five years and just make the decision to turn it off. So I know that was a tough one for you.
I think, to a lesser degree, my other hard time was just the recent sale of HitTail. There was a hard time during due diligence and everything, because where were some – we’re trying to transfer it over, and due diligence can fail pretty quickly, and then sales can fall through. And by the time you’re that far in, you are emotionally invested in exiting, essentially, and not owning it anymore. You know that the cash is in escrow, and that it can go into your bank account anytime. And so I actually had many sleepless nights just a couple weeks ago, wondering if the sale was going to go through. We had trouble transferring some servers, and some of their guys were in the Ukraine, and so it meant that I was up late at night. So, I wasn’t sleeping well. Like you said, I was eating, kind of, crappy, different times of the day, and it just – it was a tough week, two week span during that time.
[00:16:18]: Now that I’m out of it, I expected there to be a massive relief when it happened, and it’s hard to process. Like I said earlier in the episode, it does feel good, and it’s the right choice, and I feel good about it. But it doesn’t mean that suddenly all of that stress is – poof – gone, right? I think I almost need time to heal from that and then get some distance from it, because I’m still turning on that and having maybe some resilient feelings about it.
Mike [00:16:44]: You know what that reminds me of, is selling a house. Last year, I sold a property that I had up in the Adirondacks that I had bought back in, I think, 2003 or something like that. It was basically this little cottage on a lake that I had kept for all these years, and I sold it last year because it just wasn’t something that we used very often. It was a monthly drain, and, quite frankly, for the amount of time that we used it, it just wasn’t worth keeping it. But at the same time, there’re still issues with selling a property that, one, you don’t live in, and. two, you’re just not anywhere close to. I mean, it was a six- or seven-hour drive to get there, and it was a seasonal property, so selling it was problematic. When it finally got to the point where it was going through the process, and they had brought somebody in to take a look at it and inspect it, and going through all the paperwork with the lawyers – that stuff just takes time, and you do have sleepless nights when that kind of stuff is going on. So, I can definitely relate to that. I mean, I think that that’s probably a similar situation, and I think there’s a lot of listeners out there who probably will go through something similar at some point in their lives, because selling your house is something that a lot of people go through.
Rob [00:17:47]: Yeah, I do think it’s similar. There’s also some emotional attachment to a house, typically and –
Mike [00:17:52]: Yeah –
Rob [00:17:52]: – that’s part of it, you know.
Mike [00:17:52]: – Definitely. Yeah, with mine, it was a vacation property that – I grew up in that area. It was a very small lake. It was only, like, three-quarters of a mile long, or a half a mile long, or something like that; but I spent my childhood there. So I was very emotionally attached to the area – not just the place that I had purchased. So, yeah, all that stuff factors into it. It can be hard to let go. And when I sold it, all the paperwork was done, the money hit my bank account, and I’m just like, “Huh.” I didn’t know how to feel. I should have felt great about it, because it’s like, “Oh, I’ve got this financial burden, and I’ve got money in my account now.” I didn’t really know how to feel about it.
Rob [00:18:26]: I think that’s a good summary of how I feel. I don’t know how to feel about it yet, you know? I think as you move further away from it, I think that’ll become more clear for me. So it looks like you have eight strategies here for coping with hard times.
Mike [00:18:39]: Yeah, the strategies that I put together come from a couple of different sources. Some of them actually come from Alcoholics Anonymous. Other ones come from places like “The Huffington Post” and a couple of other places, and we’ll link those up in the show notes. These eight coping strategies essentially allow you to reflect on what’s going on, and work your way through it both mentally and emotionally. To start off with, the first one is to reflect on the situation. Whatever that situation is, you have to recognize that not everything is your fault, but that doesn’t mean that you shouldn’t take responsibility for some of the things that are. So inevitably, in any situation where you’re undergoing hard times, there are going to be places along the way where you made some mistakes. And you have to admit that you made some of those mistakes, because you can’t change something if you don’t take responsibility for the mistakes that you’ve made.
Rob [00:19:26]: Yeah, definitely in 2014 I was reflecting pretty hard on. “How did I get there?” I think I have several pages in my notebook where it’s like, “What did I do wrong so that I never do this again?” I did tend to adopt things as my fault. I took responsibility for what had happened. There were a couple unforeseen things. There were a couple foreseen things that I didn’t keep in mind. I’m a big, big proponent in taking responsibility for as much as you can handle, because I think that the sooner you do that, then the sooner your attitude will turn from one of kind of a victim, of “Everything bad happens to me,” to, kind of, the victor – right – someone going after victory and striving to overcome a hardship; and to look at it rather as something that’s beating you down, as something to overcome.
Mike [00:20:12]: And something else that you had just mentioned there was the fact that there are things that are going to happen outside of your control. That’s part two, is accepting that you have limitations. There are limits to things that are under your control, and some of those things you simply can’t change. That includes things that have happened in the past. Stressing over the things that you did, or the things that you didn’t do, isn’t going to change any of those things – and you have to accept that. There’s no other way to move on is to accept that there were things that probably happened that were completely outside of your control.
Rob [00:20:41]: I think that’s important, and I think there are things that happened that could be within your control, but they’re done now. You made a bad choice. You got yourself into this mess. Now figure out how to fix it rather than stressing about things that you did incorrectly, or you did poorly, or you didn’t foresee that you should have. That’s actually why I sat down and spent the focus time to write it in the notebook and figure out: “What did I do wrong? What will I not do again? What are the strategies that I’m going to use to get out of this over the next several months?” I used that, frankly, as a way of closure, so that I was, in essence, accepting my limitations; accepting I made some poor choices. Then at the end of that, I said, “Okay. Now I’m not going to think about that anymore,” because I’ve essentially documented it here, if I ever want to reference it in the future. If I suddenly come up with another idea of something I did wrong, I will come back. I will write it on this list, and I’ll be done with it.” I, kind of, brushed that dust off of me. I was done thinking about the stupid things that I did, or the mistakes that I made, or the decisions that I shouldn’t have made; and then I was ready to fight this thing head on. That’s a transition that I think you need to make in this. Kind of, accepting your limitations and not stressing about the past.
Mike [00:21:52]: The third coping strategy is to recognize that everyone makes mistakes. You can’t always be perfect. You’re not always going to out and be successful at every, single thing that you do. But at the same time, you have to make sure that you’re willing to make those mistakes, because if you’re not willing to make mistakes, then you’re not going to learn. You’re not going to grow as a person. But you have to be painfully aware that everything you do isn’t going to turn to gold. And even if there’s people watching you and you don’t want to make mistakes, you’re going to make them. You can’t always be perfect.
Rob [00:22:21]: I don’t accept this. I know that I’m not going to be perfect, but I still get pissed off every time I make a dumb mistake. Every time I look back at a decision that I made and I think, “You know, I should’ve made a different decision. I had the information,” or, “I was sloppy,” or, “I was a little bit lazy” or whatever, it infuriates me. So, of all these eight, this may be the one that I struggle with the most. I hang on to things for too long. And that’s why I’ve started adopting that approach of going into the notebook, writing down what I did, writing down why I did it, why I’m not going to do it again in the future, and essentially trying to close that chapter so that I can move on and fix the problem.
Mike [00:22:57]: The thing that gets me, I think, the most, is in situations like this – where I’m afraid of making mistakes – is that I’ll have a tendency to procrastinate, or hold off on making a decision, because I don’t want to make the wrong decision. I know conceptually, “Oh, I should just make a decision and move on.” But sometimes it’s really hard because you don’t have all the information you need. You know that you want to make a decision, but you don’t want to make the wrong one and waste a lot of time or effort. For me, I find that –
Rob [00:23:22]: I think that’s really –
Mike [00:23:22]: – challenging.
Rob [00:23:23]: – common. I do that from time to time, too. The procrastination on a difficult email, or a difficult decision – it’s like our lizard brain’s way of keeping us from making that hard decision, right? Because we don’t want to endure the pain of it.
Mike [00:23:37: The fourth coping strategy is : remember that you grow as a person through some of these experiences. These experiences are what help to shape you, and they help you learn, even if they’re painful. One of the things that you have to keep in mind is that the mistakes that you’ve made in the past are essentially what make you who you are today. If you’d gone through a hard time in fifth grade, for example, you’re going to remember that, and it’s going to influence who you are today, what decisions you make, and what decisions you make down the road. That’s true of anything that’s happened in your past. Anything that sticks out in your memory, those things shape who you are. But they also make you what you are. You wouldn’t be where you are today, or who you are today, without those experiences. So it’s important to just take a little bit of a step back and recognize that those things are important to who you are.
Rob [00:24:23]: I think they have a way of feeling really crappy while you’re in them, and then, in retrospect, being pivotal points in your life – or, at least have the potential to be, if you look at them the right way and if you learn from them rather than make that same mistake over and over – which some people do, unfortunately. But if you’re self-aware enough to be thinking about this stuff, I think that when you’re in the midst of a hard time, it is much better to think about, “Wow. This time sucks. I feel like crap. I know a lot of other people go through it, too.” And you can come back to this episode. You can go to episode 11 of “Startup Chat” to hear each of us talk through that, and you can probably hear a little bit pain in our voices. You don’t just get over this stuff. It hangs around with you. There’s this resonant internal trauma that I don’t know if that ever goes away, because you remember how hard that was. So, if you’re in that situation, what I’ve started doing is: a) trying to think about other people who have gone through it, or go through something like this, and also realizing that there is opportunity here; that, “Even though this part sucks, once I make it out of it, I’m going to be a better entrepreneur, a better founder,” or a better whatever it is you’re trying to be.
Mike [00:25:30]: The fifth coping strategy is to not give in to some of your fears. Many of the fears that we have are more imagined than they are real. So, for example, not everyone is watching you or is thinking about you all the time. Many of the beliefs that we have, or the fears that we have, are very self-limiting. So going back to what you had said earlier; people procrastinate when they’ve run into a situation where they have a difficult email to write, and they either put it off or they take forever doing it because they don’t want to make that decision. They don’t want to click the “send” button, for example. There’s other situations where you’re simply afraid of – you know what action you have to take, but you’re afraid of what the consequences are. I think the reason for that is we’re more afraid of the unknowns than we are of the things that we know we’re going to run into. So, you click the “send” button. What’s going to happen? You might be able to think of two or three different situations that can come out of that, but you also know that there’s a distinct possibility that there’s other things that could happen that you just aren’t aware of, or you couldn’t even begin to contemplate happening. That’s what’s more scary. It’s not the things that we know could happen, it’s the fact that there could be things out there that are going to happen as a result of hitting that “send” button that you just didn’t even consider.
Rob [00:26:39]: I’ve gotten so much better at this over the years, and the first thing I ask myself now when I see things tanking, or when I feel hard times coming on, or when you get an email from a patent troll saying they’re suing you for some patent they own that they aren’t using. The first thing I ask is, “What’s the worst that can happen here?” “What’s my worst-case?” And if I don’t know the answer, I try to find out. I find an expert. I find a friend. I find the Internet. I research and figure out what is the worst-case outcome of the situation. Maybe that means sitting down with your notebook, or talking to your spouse, or talking to a trusted adviser, or someone. Try to get a reality check on your fears, because your fears can run rampant, and your body stresses out, and anxiety goes through the roof; but often the worst case is nowhere near as bad as you are feeling it could be. And if you sit down and logically think through what you’re actually afraid of, in most cases it’s not nearly as bad as you think.
Mike [00:27:32]: That one leads directly to the next one, which is remembering that you’re not alone in the world. There’s always other people that you can talk to who are going to listen. Whether that’s friends, or colleagues, or family, they can help to level-set your expectations and help to ground some of those fears, or biases, that you have and help you objectively look at them a little bit better so that you don’t sit there and dwell on them forever, thinking, “Oh, I should’ve done this.” or, “This could happen.” They can give you a little bit more objectivity than you might have yourself.
Rob [00:28:01]: Yeah, and like I said earlier, that can range from a spouse. It can range from your mastermind group – which I definitely talk to about all this stuff. It can be someone that you hire you might trust, and you can hire them through Clarity. Or, maybe it’s an adviser that you’ve had for a long time. Or maybe it’s a therapist. If you go to therapy already, someone can give you a sanity check on this type of stuff. I can even see having a consultant or some type of expert that you pay. It depends on your situation, but let’s say you’re in a legal thing, or a tax thing. It’s like getting a CPA or a lawyer to tell you, “Oh, the worst-case is this.” That’s actually worth quite a bit to hear from an expert that it’s probably not a bad as you’re making it out to be in your head.”
Mike [00:28:42]: The seventh coping strategy is to map out the appropriate course corrections. Essentially, what this amounts to is determining what things need to change, and how you can get there. You need to pick one thing that needs to change and fix it and, then once you’ve done that, figure out what’s next. Sometimes you can do multiple changes at the same time, but depending on how big they are, or the situation that you currently find yourself in, that can be more difficult than other times. You really need to sit down and logically think through, “What are the next steps here?” “How do I move on from this, and what needs to be done?” “What do I need to do?” Because just sitting and waiting for a situation to resolve itself is almost never going to actually resolve it – unless it’s some time-based thing where you literally have to wait until a certain date before you get more information. Typically, that’s not going to happen, but if you can sit down and walk through – clearly identify the one or two things that absolutely need to change, and those things need to change first – you can work on those and then iterate through the rest of them and eventually solve the problem.
Rob [00:29:40 ]: Sherry has a phrase that she used once. I don’t know if it’s common or not, but she said, “I went from ‘Oh, no’ to ‘Oh, hell, no.’” It just meant this mindset shift of feeling like, “Oh, no. Everything’s terrible whether I made a mistake. I’m going through a hard time. This is stressful,” to, “Oh, hell, no. I’m not going to allow this to happen.” That’s what we’re talking about here. It’s that mental shift from dealing with the stress, or dealing with the hard time, to suddenly shifting into fixing it, and figuring out the strategies that you’re going to sketch out in your notebook, or you’re going to talk through with the expert, with your spouse, with your mastermind group to correct this course, and to make things better – and not make the mistake again, but also to be able to fix it in the short term and move away from whatever hard time it is that’s plaguing you.
Mike [00:30:28]: The eighth coping strategy is to ask people for help. This could be in the form of accountability, or moral support. It could be guidance. It could just be you need an extra set of hands to work on something. But essentially you need a framework to help make sure that change is going to happen. Sometimes all you need is that accountability. Sometimes you need somebody to say, “Hey, this is something that you still need to work on, and it still needs to get done.” Or, if you just need somebody to say, “Look, you’re doing fine,” and, “Things are not nearly as bad as you think they are, but you still need to keep going.” Sometimes, that’s all you need. Sometimes, it’s just, sort of, a coach. But other times you will need that extra set of hands. If you ask for it, chances are really, really good that you’re going to get that help.
Rob [00:31:07]: Yeah. I think, as founders, we’re a little bit headstrong. I know that I am. I have a really tough time asking for help, but it’s something I’ve gotten better at over the years, and to letting people into my inner world as I’m going through hard times, rather than referencing them once I’m through them. I personally think, in retrospect, looking back at my life, I think it’s a mistake when you try to deal with stuff on your own, because there are almost always some people around who – if you give them the information and you let them know what you’re going through – they can help.
[00:31:36] That wraps us up for the day. If you have a question for us, call our voicemail at 888.801.9690, or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for “startups,” and visit startupsfortherestofus.com for a full transcript of each episode.
Thanks for listening. We’ll see you next time. [00:31:57]
Congrats on the sale! One question is how did you handle capital gains tax? My CPA advised me to expect 50% tax. Hardly seems worth it.
I’m not a CPA, but from what I understand, the highest bracket in the U.S. is 39.6%. I was expecting to pay that.
However, since I had acquired HitTail (rather than built it from the ground up), I had a tax basis and it will be viewed as a long-term capital gain since I held it longer than 18 months. Federal rates for capital gains are only 20%. I was pleasantly surprised by that.
The pleasant surprise was quickly lessened by the fact that I live in California, which has its own 9.x% tax on capital gains. So I did wind up paying close to 30% in estimated taxes thus far (I settle up next April).
So quite a bit better than 50%. Not quite as good as 20%.
I’m based in Oregon where our rates are similar to CA. 50% may have been the top rate (20+30).