Afford Anything - How I Paid off $500,000 in Credit Card Debt, Then Launched a Company With $35 Million in Annual Revenue — with Rand Fishkin

Episode Date: September 28, 2022

#404: When Rand Fishkin was 25 years old, he carried $500,000 in credit card debt. Less than a decade later, Rand was the Founder and CEO of a company that grossed $35 million in annual revenue. In this episode, Rand shares the story of hitting his financial rock-bottom and making the ultimate comeback. Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every choice that you make is a trade-off against something else, and that doesn't just apply to your money. That applies to your time, your focus, your energy, your attention, to any limited resource that you need to manage and allocate. Saying yes to something implicitly carries trade-offs. Everything comes with an opportunity cost, and that opens up two questions. First, what matters most? And second, how do you align your decisions accordingly? Answering these two questions is a lifetime practice, and that's what this podcast is here to explore and facilitate.

My name is Paula Pant. I'm the host of the Afford Anything podcast. During the month of September, we do something different than what we typically do throughout the year. We pull four episodes from our vault of more than 400 episodes that we've produced and share them with you to highlight some of our favorite interviews, and we theme these around the acronym Fire, FIRE, F for financial psychology, I for investing, R for real estate, and E for entrepreneurship. We've played F-I-N-R in the previous three weeks today. In honor of the letter E, we share with you our interview with Rand Fishkin. When Rand was 25, he carried half a million dollars in debt. By the time he turned 35, he was the founder and CEO of a company that grossed 35 million in annual revenue.

In the interview that you're about to hear, Rand tells the story of hitting rock bottom, engineering a turnaround, and becoming the founder and CEO of a successful eight-figure company. And by the way, I should note the significant difference between what a company growth is. and what its founder earns. As you are about to hear in this upcoming interview, Rand has a personal net worth, a liquid net worth, of less than a million, despite the fact that his company pulls in 35 times that amount. We're going to go deep with the numbers. We get personal, we get intimate, we pull back the curtain and reveal a lot of numbers in this episode.

So if you have any interest in peeking behind the scenes and listening to you. and listening to a full financial exposure with the founder of a private company, then you're going to enjoy this episode. We originally aired this episode in August 2018, and we are thrilled to share it with you again today. Here he is, Rand Fishkin. Hey, Rand. Hi, Paula.

It's good to talk to you. Likewise. Thank you so much for having me. Absolutely. Thank you for coming on the show. I want to just dive right in to how you, Got started. You are now what most people would consider to be very successful, but a younger rand had half a million dollars in debt. I'm giving away the problem here, but can you describe

exactly how you got into that situation? Yeah, it turns out when you stop making the minimum payments on your credit cards because you can't afford to, the interest rates and penalties rack up pretty darn fast. And that's what happened to my mom and I. We started a web design, web marketing business back in, well, in 2001, I dropped out of school to join her firm and basically do that with her. And it was just the two of us for a long time. And we made every mistake in the book. We spent money on all the wrong things. We hired people that didn't work out, you subcontractors that didn't work out. We accepted contracts from clients who didn't pay. we thought we needed fancy office space to be able to close deals and signed a lease that we couldn't really afford.

And once we had about $150,000 in debt, I think that was in 2004, we were unable to make some of the minimum payments on that balance. And we were paying ourselves. I mean, my mom was taking home nothing or next to nothing. I was taking home $400 every two weeks. So, you know, not even enough to pay the rent. And I was living with Geraldine, who was my girlfriend at the time. She's now my wife. We ended up with this half a million dollars in debt and had to find a way to dig out of that over the next few years, which was pretty painful itself. So that $150,000 was were your expenses and the remainder was interest and fees?

Exactly. Wow. Ouch. And this was all on a personal credit card, correct? In your name? This is on about a half dozen different, mostly credit cards. One, I mean, one was like an equipment loan for our office equipment and computers and stuff. And I think one was like a small business loan. But yes, maybe all in my name except for one that was in my mom's name. And how old were you at this time? I was 22 when I dropped out of school and started working there. So between the ages of 22 and 25.

Wow. That's quite a way to start your life. It was jumping in the deep end for sure. And I think that it's not something that I recommend to folks who are now trying to build startups and build companies, especially in the tech and marketing world, which is where I am. The advice I give is certainly, hey, spend some time at another company or two, even if it's sort of a painful, no fun experience. Because even just six months at another job, I think would have really opened my eyes to what the working world is really like. as opposed to having to do everything for the first time. At the time that you had all of this debt,

you had the experience of debt collectors showing up in person, which I'm not sure I've ever met anybody who has had that experience. Tell me about that. Tell us about that. Sure, I can tell you it is much worse than a postal worker showing up at your house and dropping off mail. But I've heard much better than a bounty hunter looking for you because you skipped bail. So right in between those two. Yeah, it's a weird experience.

I mean, it definitely, it's one of those stomach dropping sort of scares you a lot, even though the consequence is not actually that significant, right? It's just an intimidation tactic that financial agencies use to try and muscle you out of money. It is legal. It's certainly legal and reasonable as long as they're not overtly threatening, you know, violence or things that they can't actually threaten. But one of the big things that they will threaten you with is papers that say you're being sued for this amount and you'll have to go to court and all those kinds of things. And thankfully, I did not end up having to go to court.

My mom sort of managed the financial side of things and essentially made deals with these collections agencies and with the banks. And over, I guess that would have been over the next three years, we were able to pay off that debt. Not that we didn't end up paying the full 500,000, right? So my mom, Jillian, she would call up a bank, say, Bank of America, right? She'd say, hey, we owe you, you know, $100,000. But the original sum that we owed you was $10,000, and this is $90,000 in fees. How about we pay you the $10,000 and you write off the rest? And basically, you know, my credit report looked terrible, but they didn't come after us for more money or try and sue us and send us to court.

So it eventually worked out, but it was a terrible, terrible way to go. And it's completely backwards because the way a services company, right, we're consultants, we're building people websites and we're doing the design and then we're helping them with the marketing and, you know, later years, SEO, search engine optimization. That should be an extremely low cost business, right? You can do it from anywhere. You don't have to have a big team or employees unless you have lots of clients. So, you know, we just made it.

all the mistakes. And you never told your dad. He eventually found out, but you didn't tell him. Yeah, that's right. My dad's sort of an interesting guy, and he's got a lot of anger issues and a lot of issues around money in particular. And we both sort of thought that he would not react well to that. And so, well, I think we worried it would be much more severe than that, right?

I think my mom worried that, you know, would sort of break up with the family and that he would try and step in and make a worse mess of things and that anger would be unhandleable, which I think based on experiences around, you know, for getting a coupon at home and seeing how he reacted to that, I can understand where she was coming from. Wow. So tell me about what happened next. As you said, you had a consulting company, a marketing consulting. How did you proceed from there?

How did that lead to your next business? During this time period, I think it was actually 2003, we stopped being able to pay our subcontractors in the SEO field. And we basically had promised that work to clients. And so I had to learn some of those practices, including SEO. And so basically, you know, did a lot of research in the field and tried to figure it out. It was very complex and confusing and a very opaque. industry and secretive. The search engines themselves, you know, Google and Microsoft and Yahoo were super secretive about how they operated. And so I created this website called SEO Maws,

which tried to open source a lot of the information about how SEO works, at least everything I could figure out about it. And that was a mediocre blog back in the early 2000s. And then over time, I got better at writing and I got invited to speak at conferences because of the success of this blog. I think I learned, you know, sort of what worked in the industry and I was able to have some success for our clients, which helped us to make some money. And then that also brought in new consulting clients. And that's how we were basically able to pay off the debt. So we built this reasonably successful consulting practice over the sort of four years following the creation of that blog. And in 2007, we launched a

software subscription. We didn't really know what it was, but we had some tools that we had built. We put up a little PayPal paywall so that you could send us $39 a month and get access to the tools we'd built to do SEO for ourselves and our own clients. And in the middle of that year, we looked at the numbers and said, oh my gosh, this software subscription is making as much as our consulting business. And it's only been around for six months. We should we should double down on this thing. And so at the end of that year, we had paid. paid off the last of our debt, and we raised a round of funding from a venture capital firm here in the Seattle area called Ignition Partners. I was made CEO at that point, and for the next seven years was CEO of this company and grew it from, you know, a few hundred thousand dollars to a little over $30 million in annual revenue and then stepped down as CEO, worked there for another three and a half years or so, and just left recently to do a new business. Wow. There's a lot in that story to unpack, but the first thing, the first comment that comes to mind is I've rarely heard of a person being $150,000 in debt, well, more than that, but $150 in principle. And then deciding to essentially start a blog as a way of getting out of that. Sure, yeah. So I think maybe the right way to think about it is that those two events are somewhat disconnect.

Okay. One thing that I certainly had in my early 20s was a lot of cognitive dissonance and compartmentalization, right? So I knew that in theory we had this money. I knew that these debt collectors were coming after me and, you know, it all seemed like kind of a pain in the butt. But I didn't process how sort of dangerous and life affecting and negatively impacting it might be if we didn't dig ourselves out. I sort of just relied on my mom to sort out the financial side because I was just responsible for the work. You know, I was supposed to do the client work and the designs and the SEO and that sort of stuff.

So I just kind of buried myself in that. And this blog was almost like a personal passion project that was related to work, but not directly. And then it started getting us business. And that felt fun and good. And so I kept focusing on that aspect of it. And we got lucky. You know, we got very lucky that we were in the search engine optimization field at an

early time when there wasn't a lot of resources out there. We were lucky that I sort of became a good writer about professional topics and that very few other folks in the field were open about what they were learning. I was very lucky that Google decided to stay so secretive as it grew and that they were very non-transparent with information about how they worked because it forced people to go out on the web and look for other sources like what I built with Maws. Yeah, we got lucky with the tools and with that business and got lucky that, you know, these venture capitalists were interested in backing us. So just a lot of right place, right time digging out. And, yeah, I think that we executed well on some of our opportunities and poorly on others. You know,

the book talks about mostly mistakes that I made. But we were not super savvy to say, hey, let's build a blog and do content marketing and then build a software business because of the high margins and relatively low investment cost. We weren't thinking nearly that sophisticated about this stuff. That is one thing that strikes me about your story is that in hindsight, a lot of the decisions make sense, but it seems as though probably a universal threat of most entrepreneurial journeys is testing things, seeing what sticks, and then moving in the direction of what's working. Yeah, I think that's right. I think a lot of the very sort of financially or entrepreneurially successful folks I know, they muddle through a lot more than you'd think. And I think that's actually

a wonderful thing. I think it makes the journey feel less inaccessible. It feels like, oh, wait, no, this is a possible thing, right? This is open to other people. I can muddle through too. Everyone else made mistakes. Everyone else messed this up. Everyone else had these, you know, really tough times and hard struggles. So I am not alone when I go through that. I think that's actually been a big, big lesson for is learning how not alone I am when I screw things up, you know, in really bad ways. That's right. You described there was a scene in your book in which you talked about during the early years being invited to some type of a meetup in Seattle in which you were surrounded by people in the industry that you, whose reputations you had known for a long time, people whom

you had really looked up to, other entrepreneurs. And when you met them, you were struck by how incredibly vulnerable they all were. Yeah, that's absolutely right. Yeah. So it's a, a group of Seattle entrepreneurs, which I'm still part of that group and, you know, and I've joined others as well. And I think that feeling of being not alone is really, really powerful. I actually urged Geraldine last year, two years ago, to build an email list with a few of her writer friends so that they could sort of share their stories and lean back on each other and, you know, ask for help and have discussions on these topics. because I think that feeling of not being alone is just huge.

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Head to Wayfair.com now to shop Wayfair's Black Friday deals for up to 70% off. That's W-A-Y-F-A-R.com. Sale ends December 7th. One of the things you talk about to get a bit more into the entrepreneurial weeds of it is the difference between a service business and a product business. SEO, MAUS and later MAUS was both. Can you describe what the pros and cons of each are? Yeah, roughly speaking, a services business is one that has relatively high marginal costs,

meaning for each new client that you serve, each new person that you're helping, you need to invest quite a bit, right? A very similar amount to the amount that you invested with the last client. Maybe you've gotten a little more efficient or your processes and practice have gotten a little better. But generally speaking, person A who needs a plumber and person B who needs a plumber, you're going to spend a lot, similar amount of time working on their house.

A product business is the 10,000th bottle of, you know, whatever it is, nut-based milk that you sell at the grocery store is vastly easier to produce and to sell than the first one was. And so it scales considerably better. That being said, usually a product-based business requires a lot more upfront investment, usually requires a bigger team, it requires more sales and marketing efforts. Oftentimes, the cost of customer acquisition is such that the payback period takes a lot longer, right, whereas the plumber basically makes money as soon as they provide the service to that one client. So, yeah, there's a, there's a lot of differences along those. I think one of the problems that I see is this myopic view that we have had. I think that's starting

to change, but especially in the technology world, there's a very myopic view that you can only be one or the other. You cannot have both services and product. I think that's, totally wrong. And I think there's a bunch of companies that have proven very nicely that you can do that and do it well. You know, big companies like Salesforce and HubSpot and then plenty of smaller companies as well. I also think that there's a misnomer that having a product-based business is somehow more impressive or more worthy of notoriety, just because that's what the the press tends to cover. They are much more likely to cover product-based business. businesses than services ones. And that's mostly because product-based businesses need a lot more

press because they need to scale their customer awareness and branding to get the new customer development they need. And I think there's a myth, a terrible myth that I tried to spend a good amount of time in the book busting that you as a founder will always or almost always make more money as a founder of a product-based business than you will as a founder of a services-based business. And that in fact, from most of the examples in my world, the reverse is true. And that's because services-based founders tend to own much more of their business than product-based founders, because product-based founders have to almost always raise external capital. And because, in general, services-based businesses, you know, as a founder, you can pay yourself a considerable amount more.

You can take out the profits. And in a product-based business, that's really true. That's right. The math that you outlined in that book was pretty eye-opening with regard to the reality that a person could found a business that does eight figures in revenue and still not actually have that much money personally. Yeah, yeah. I mean, people are always shocked when they're like, oh, you built Maas, and it's going to do whatever it is, $50 million or more in revenue this year, and you own 20% of that business. And you're sort of the chairman of the board. You were CEO for a long time, and you're the founder. So you must be rich, right? Like you must have a lot of money. And don't get me wrong. Geraldine and I certainly have more wealth than I think the average American.

By a good shot, I think we're in the top 20, 25%. But certainly not the top one or even the top 10. We don't have a million dollars. You know, we have less than that. We have a mortgage on our house. And we live in a lovely city, which is Seattle. And it's expensive here. But it's not nearly the level of wealth that I could probably

named 20 friends of ours who run consulting businesses and have much, much more money. And they're sort of shocked, right? Because they go, but Rand, I've only been running my business for five years. And it only does, you know, two million dollars a year in revenue. Your business is 25 times that how what's going on? And then you have to explain that, you know, once you raise capital, you can't really pay yourself the profits. Profits aren't actually the goal. Growth is the goal. And so the idea is that you take the profits and reinvest them in the business. So I had a nice salary at And now I have a nice severance from the company, which I very much appreciate and is helping me get started with my new business. But it's pretty different.

You actually disclosed your salary in the book was as $220,000. That's right. Yeah. Yeah, which is, it's such an amazing amount of money, right? That's nothing to complain about. And I want to be clear that I don't disclose this stuff to sort of rub it in people's faces or to say like, oh, look how much money I made. Or to try and say that, you know, this is a paltry sum either. I don't want to discount how lucky I was to have that that salary at the end of my career there. But I also want to be very open and honest for people who might be following in that path and thinking, ah, if I build a successful company like Rand did, I will become vastly wealthier than if I stick to a services business or if I go work at Amazon for

five or six years, because that's not true. You know, a level three software engineer. at Amazon is out-earning me by 50% plus. Exactly. That was my first thought when I read that that was your salary, was I was shocked that it wasn't higher because 220 is on par with what the director of a nonprofit might make, with what an attorney might make, a higher paid engineer might make. I mean, it's a wonderful salary, right? It's multiples of what an average American takes home, but it is not what I think people imagine it to be. Exactly. When you're the founder of a company that does,

30 or 40 million in revenue or 50 million in revenue. You just imagine quite a bit more. Right, right. But as you outlined in the book, there is that difference between starting a company that relies on outside investors and brings in outside funding versus not. And that creates an impact certainly on growth, but also on how much you're taking home at the end of the day. Yeah. And I think this is not just a story for founders, right? This is also something really important to consider as an employee, I think it's an important thing to consider as an investor. I think it's probably pretty important to consider as a voter, just to think about how economic distribution works and where it goes and why it goes in those directions. Certainly anyone

who's thinking about, you know, becoming an entrepreneur, starting their own business, or joining an early stage business should be thinking very hard about these things, right? Especially if they have financial requirements in their life related to family obligations or personal goals or obligations, health issues, all that kind of stuff. You know, this is stuff that really impacts folks. And I think the mythology is really unhealthy. And so it helps to have these other stories and the statistical data to combat that. What do you hope are some of the major takeaways from the book? My biggest concern and the biggest reason that I wrote the book was I worried about how pervasive the Silicon Valley startup mindset was becoming in business overall. I think that it's

impacted how entrepreneurs in hundreds of sectors that have nothing to do with tech think about building a business and what gets amplified in the press and what popular culture covers and how entrepreneurs and small business owners think about what they're up to all the time. And so the biggest thing I wanted folks to do was to challenge some of that thinking, to ask whether those are the right things for them. Because not everything, certainly not everything that startup culture has produced is terrible. Some of it is really cool and awesome and can be wonderful when applied to your business and can be healthy. And then a lot of it is very specific to only that world and maybe not even right for our world. And so certainly shouldn't be applied to other places.

Most of Lost and Founder is challenging those pervasive myths. of, you know, how should we hire and fire people? How do we build culture? What actually does culture mean, company culture mean? What are core values and why do they matter? And when do they mean something? When do they not mean something? And then talking a lot about finances and there's certainly a couple of chapters that touch on raising outside investment and what, you know, what you can expect if you do or don't. Spend some chapters talking about issues around depression and anxiety, which are pervasive in the entrepreneurial world, no matter what sector you're in. And then a lot of a combination of sort of personal advice and professional stories that I think might lead people to another direction in their careers.

Are there any specific examples of myths of startup culture, specific examples that you would want to name? Oh, sure. Every chapter in the book actually starts with a quote from some notable, Silicon Valley startup person, your Elon Musk's and your Peter Thiel's and these types of folks, Mark Andreessen. Right. One of them, Jason Freed is going to come on the show in a couple of weeks. Oh, awesome. Yeah, terrific. You can give them a hard time about that one. No, actually, I'm a huge of startup luminaries. Jason is definitely near the top of my list. But yeah, a good one would be, I think it was Jason's quote, was the one that's related to, you know, building, product is the easy part, right? Building software, that's the easy part. It's acquiring customers

and doing the marketing. That's what's difficult. And I challenge that very directly. I think that is true for you because you come into, you Jason, right, come into the startup game with these particular skills. And I think it pays for an entrepreneur to be very self-aware and to invest in self-examination to understand why, you know, something that is hard for them might be easy for other people and what's going to be hard for them and whether they can build a business that plays to their strengths and that not just compensates, but almost avoids their weaknesses. For example, I hate doing sales. I dislike it. I think it creates a lot of inauthentic behavior and I don't like the relationships that get formed from sales communications and I never wanted to

sales team. I have a few friends who are in the sales world, but I tend not to like salespeople. And so I built a company that was completely self-service and required no salespeople, as opposed to, oh, how do I find a co-founder who's good at that? Or how do I get good at that over time? I just said, I'm not going to do it. It's those types of lessons of, oh, it's not just this one path that's an option. Here's another path that's an option. And you made the point that a founder's strengths and weaknesses will be inherited by the rest of the company, almost passed down in the genetic code. Yeah, that's exactly right. And as a result, that's why it's so important to understand what those strengths and weaknesses are so that you remain aware of it as it grows

throughout your company. Right. And as your company scales, those missing elements and those strengths become magnified. So how do you, and I realize this is actually a much broader question, but how do you develop self-awareness? Yeah, I think you have to make it a discipline like anything else, right? So one of the ways of doing this, and I talk about a few in that particular chapter, but one of the ways of doing this is to keep a log of successful projects, successful hiring, confidence that you have about interviewing people, confidence that you have in your network, and you will often be able to identify those things.

then it's consistently your job to revisit that and to look at, hey, I once was great at marketing. Now, four years later, it looks like because I've taken my eye off of that or because the field has advanced or whatever it is, it looks like that's becoming a weakness that I need to reinvest in or that we as a company need to reinvest in. So I think that's an ongoing practice, not a one-time thing. Right, because there will always be unknown unknowns. Yeah. you can spend your whole life getting to know yourself. I actually think that's one of life's great adventures. How important is feedback from others? And what I mean by that is how do you

discern between what is helpful and what is noise? This is one of those things that I think was always tough. It is helpful and I think wise for relationships to not keep score. Right. So you know, you and your romantic partner or you and your business partner, you and your employee, right? You don't keep score about who was right and who was wrong and how many times and therefore we should not listen to you anymore and we should only listen to me, that kind of thing. And I totally get that instinct, but it's also helpful to have some sense of it so that you can wait feedback and wait the opinions of other folks, right? There are people who develop expertise or have skills and you should in a particular arena or broadly, and their opinion or the opinions of several people

like them should carry more weight than people who are not very familiar with those fields, don't have that expertise, those kinds of things. So I think that that's one challenge in that. Another one is that we found that anonymous feedback internally, externally, obviously it has a bunch of challenges because of astroturfing and sort of the nature of the web. But internally, we found that anonymous feedback was often inaccurate, overweighted to negativity and sort of personal grudges, whereas transparent feedback where folks identified as themselves was much healthier. So I would definitely urge people to go that route if you're looking to get feedback from your team. I also think that one-on-one conversations are a much better way to get more real feedback,

but you have to first create an environment where people don't feel like their jobs or livelihood or reputations or career progression are threatened by the feedback that they give. And the only way to do that is to call out people who've given very critical feedback in positive ways and to recognize and reward them in front of the whole team. And that's a hard thing to do. A lot of people don't have the, I don't know, they're too arrogant or too conceited. You know, they don't feel like they can be vulnerable in that way. It's a hard thing. What are some other ways to create transparency and to create honesty within a team? I think that it depends on, so first off, I want to be clear that, you know, in the book, I talk a lot about transparency because it's very important to me.

However, I don't believe that transparency is a panacea or that everyone, you know, that everyone should invest in it. I think you should only invest in it. And if it is a core value for you as well. So I use transparency as an example of a core value, but I'm not suggesting everyone take exactly my core values, right? You should have your own. That's what should be part of your company. Building your own is a much better idea than using someone else's because you think they'll help get you ahead in business. If your only goal is to grow your revenue or your profitability or whatever, then, okay, fine, you're Goldman Sachs, right? That's your, you know, your true north is just money. And I think it can actually pay to be transparent about what your values are

so that you attract the right kind of people. And that can work well. But in terms of building it, if you decide transparency is a core value, it's something we do want to invest in. I think you have to recognize that transparency is very different than honesty. Honesty is just saying things that are true. Transparency is identifying things that are uncomfortable that people would not normally share, that create a pit in your stomach when you think about telling other people about them and then choosing to do that anyway. And that's incredibly difficult to do, particularly publicly. Yeah. For a lot of people, it really is. How did you have the courage to continue growing to kind of contextualize that question a little bit? Thinking back to your very early days before you received any outside funding, you described yourself and there was one other guy I think his name was Matt.

Yeah, yeah, Matt didn't mention. Yeah, and you were both taking home, what, $1,600 per month? Yeah, yeah. You guys were both taking home so little at the time. My mom was taking home nothing. And your mom was taking home nothing. And it would have been so easy to stay where you were. And as you grew, as your company got more profitable,

not added more team members, not made more investments, and just focused on earning, kind of eating the profits rather than investing in growth. What gave you the courage to grow and how did you figure out how to make wise decisions between what to take out and what to put back in? So I might challenge some of the phrasing of the question because here's a good example, right? I left Maas at the end of February. I started a new company, Spark Toro. We raised some money at very favorable terms. And my co-founder and I are planning to build a very small, very profitable company. So intentionally doing exactly what you said, right?

So I'm not sure that it was courage. I think, in fact, that it was a feeling of not being worthy and not being good enough. A feeling that to be taken seriously as an entrepreneur, to be respected, to earn the attention and praise that I wanted, we had to grow big. We had to be like the big kids in Silicon Valley and raise a bunch of money and build a big team and have a lot of revenue. And whether we made money was not the focus of that. And whether we were happy was not the focus of that. And whether we were, you know, bringing something wonderful to the world was not the focus of that. The goal was a high growth rate and a lot of revenue and people, right? Because those were the things that I thought were

impressive. Those were the things I thought would sort of, I don't know, make me look like all the other people who were on the covers of magazines and getting written up in TechCrunch and were admired by their peers. And I think that's still true today. I think that a lot of people bias to doing the thing that seems like it will get them sort of looking like the people they admire rather than questioning why they admire them and whether that's a life that's good for them and pursuing those kinds of things. So I want to be clear, I'm glad that I did it because I think if I had not, if I hadn't raised venture capital, if I hadn't built a big or a medium-sized company and pursued growth and gotten to a size I was uncomfortable with, I think I would always be questioning myself.

I would always be saying, boy, Rand, you are just, you're not good enough. You have high potential, but you're a low achiever. I think that's what my data was said about me. And so I think as you get older and you experience these things, you go through them, then you come to the realization, the awareness of, hang on a minute, that's not really what I want. I don't want the thing that the magazines are selling me. I want this other thing. I want to build a profitable company. I want it to be small in number of people who work there. Small might mean 10. It might mean 50. Could even mean 100 someday. You know, I'm not putting that. But it doesn't mean. a thousand and I don't want the constraints of being forced to grow and not being the only

path to success and to an exit. So yeah, I think this is a sort of lesson that you learn over time. So yeah, the thing that encouraged me to do all those things with Maas was not, I don't think it was courage, at least not in the classic sense. I think it was jealousy or, gosh, you know, a feeling of not being worthy, of not being worthy, of not being good enough of needing to prove myself. I think those are the drivers. Were you aware of that at the time? No, God, no. Just, you know, 20-something kid doing this thing that he thinks is impressive and not really having the realization of, wait, maybe I'm doing this because I've been sold a sort of late-stage capitalism bill of goods. Tell us about your new

company, SparkToro. Sure. Yeah. So it is also planning to be in the marketing software world, but not in SEO specifically. So we hope to basically build a large database that people can search of all of the sources of influence across the web and hopefully some offline as well so that you could, rather than spending weeks or months of work or paying a PR firm tens of thousands of dollars, you could in just a few minutes, you know,

say what are the publications and people and sources of influence that architects or foodies or mid-century modern furniture enthusiasts or plumbers, what do they pay attention to and how can I best reach them? One of the missions there is definitely to help marketers to do a better job with that and get more accurate, more complete data in a fast way. And also to sort of disrupt a little bit of the duopoly of marketing spend that is currently dominated by Facebook and Google. I think that there's a lot of a lot more opportunities.

for people to do marketing. But the default is just, well, let's buy some Facebook and Google ads and we'll call it good. Exactly. Yeah, that's always the first thought, right? Buy some targeted ads aimed at people who like X page. Yeah, exactly. Right. And how awesome would it be if you could also go to a, hey, for audience X that I want to reach, where else are they? Oh, they subscribe to this subreddit. Oh, they listen to these three podcasts. Oh, they go to this event. Oh, they read this blog. Hey, I could go do some marketing in all of those places, organic or paid marketing, right? I could try and be a guest on this podcast. I could sponsor this event. I could see if I could be a speaker at that event. I could write a guest post for this blog. I could sponsor this blog. And I think that

most of those opportunities get ignored because potential advertisers and brands don't even know that their audience exists in those places. I can see that being a benefit in really for both segments, because then the producers of those podcasts, the writers of those blogs, than get more attention from people who want to work with them. This is definitely a, I hope to help the marketers. I also very much hope to help the publications. We'll come back to this episode in just a minute, but first. Get you and your crew to the big shows with Go Transit.

Go connects to all the main concert venues like TD Coliseum in Hamilton and Scotia Bank Arena in Toronto. And Go makes it affordable with special e-ticket fairs. A one-day weekend pass offers unlimited travel across the network on any week. weekend day or holiday for just $10. And a weekday group pass offers the same weekday travel flexibility from $30 for two people and up to $60 for five. Buy yours at go-transit.com slash tickets. You mentioned speaking at conferences. I've always wanted to ask you this because I've heard of your travel schedule for a very long time. I know you travel a lot. How on earth are you productive while traveling? Ooh, I am definitely less productive.

while traveling. The only way I really justify and make up for that is that my experience has been that in-person relationship building, getting on a stage, it's so much different than someone who read a blog post or someone who saw me on Twitter. I say me, but the brand, whatever, Maas or SparkToro or whatever it is that I'm doing, the value is tenfold increase. And so if it means that for a week, my usual productivity is at 50% or 40% of its usual load. That's okay. It's a worthwhile tradeback. It surprises me to hear the SEO guy say that. I know, right? But it's absolutely true. So the closest thing to it is video, which is why Whiteboard Friday, the video series that I did at Maas, was so usually important because people watching you on video and

sort of consuming you on a regular basis, consuming your content on a regular basis in a video format with a human being that can connect with, much more powerful. And then shaking a hand, seeing someone on a stage, even more powerful than that. What has surprised you the most throughout this journey of going from being half a million in debt to being in this place where you are now? I think perhaps most surprising is the discovery of why so many things that I believed just a few years ago or early in my career or I'm sure things that I believe now, how over time nuance and experience and reflection and purposeful work can combine to make those untrue over time or to make them seem much more complicated than they were originally.

I think that the, I don't know, whatever it is, right, that we're just wide. to want simple answers to things, black and white. This is better than that. Product is better than services revenue. You know, raising money is better than not raising money. And the answer is never, it's never completely the other way. It's always, well, this is a bunch of shades of gray. Here are the shades of gray. Here's what's maybe right for me and maybe right for somebody else. I think that nuance, that's potentially the most surprising thing, especially from my years and my early 20s when you're absolutely convinced that the world is one way and everybody else is not seeing it. So you've learned that the world is more nuanced than you had originally thought?

Yeah, and I think that might be so broad as to not be valuable, right? But each of the beliefs that I hold can turn from, I believe this 100% to this is a very nuanced and complicated thing once you expend time and energy digging into it. Have you found that the more you dig into something, the more nuanced it becomes? Or kind of the more you know, the more you discover how much you don't know? Yeah, I think that's exactly right. There's sort of that curve of expertise, right? Whereas as you grow your expertise, you know, in the early stages you know nothing, then you feel like you know everything. And finally, you come to learn that you know nothing.

And then you have the confidence of knowing that you know nothing and that that is still vastly more than many other people, right? Which is something of a paradox, but also a really healthy and true thing. Absolutely. I see that in finance, and I'm sure that that is true in almost every other arena as well. Totally, yeah. Thank you so much for spending this time with us. Where can people find you if they would like to know more about you? Sure. So I'm rand at sparktoro.com. Our website is sparktoro. You can also follow me on Twitter. That's where I'm most active at Rand Fish. Excellent. And we will link to all of those in the show notes.

Thank you so much, Paula. Thank you, Rand, for that awesome interview. What are some of the key takeaways that we got from today's conversation? Here are six. Number one, you're going to screw up. And that's okay. We are all muddling through. I think a lot of the very sort of financially or entrepreneurially successful folks I know,

they muddle through a lot more than you'd think. And I think that's actually a wonderful thing. I think it makes the journey feel less inaccessible. It feels like, oh, wait, no, this is a possible thing, right? This is open to other people. I can muddle through too. Everyone else made mistakes. Everyone else messed this up.

Everyone else had these, you know, really tough times and hard struggles. So I am not alone when I go through that. I think that's actually been a big, big lesson for me is learning how not alone I am when I screw things up, you know, in really bad ways. When you see somebody's success, you're viewing the tip of the iceberg. You're not seeing everything under the surface, the fact that we're all failing forward. We're all a bunch of train wrecks. And the success that we see somebody else demonstrate is often the result of many, many failures

along the way. Furthermore, even if a person did get lucky the first time, even if their initial hunch was correct. They still had minor errors that created a gap between themselves and their accomplishments at their fullest potential versus reality. That's the thing. I think all of us, no matter who we are, no matter what we do, we see the gap between who we are and who we could be. And because we recognize that gap, we feel often inadequate. We feel self-doubt. We feel frustration. And I think that's true of everybody, regardless of what you have or have not accomplished. You can always compare yourself upwards.

You know, I was reading an interesting study the other day. Speaking of always being able to compare yourself upwards, there's a psychologist by the name of William James. He's passed away now. But in 1892, he wrote a book called The Principles of Psychology. And in that book, he made the statement that a person's achievements matter less than how that person subjectively views those achievements. In other words, your perception of whether or not you have been successful.

is more important than any absolute metric. And in the 1990s, researchers from Cornell and the University of Toledo demonstrated this when they showed that Olympic silver medalists are less happy than Olympic bronze medalists. The reason being that silver medalists are unhappy about the fact that they did not win gold, whereas bronze medalists are happy about the fact that they got a medal at all. And so based on the data that they collected, if a person were to win a silver medal in the Olympics, that person has a higher likelihood of being unhappy with the outcome than the person who won bronze. And the reason that I bring this up is because it goes back to this lesson that came out during this interview with Rand, in which he says essentially, you know what,

no matter who you are and no matter what you've done, you're probably never going to be this confident, self-assured archetype, you're probably always going to be somebody who is muddling through. And there's a great deal of hope in that message because if even the people whom we admire are people who are muddling through and who are vulnerable, that means there's hope for us as well. So that's lesson number one. Don't be afraid to screw up. Don't be afraid to fail forward because that's what we're all doing and we're all in it together. Takeaway lesson number two.

You don't necessarily have to build a gigantic startup in order to be financially successful. In fact, you can start a lean, self-funded, non-VC-backed business. You can bootstrap a solopreneur lifestyle business and quite possibly be even more financially successful than the Silicon Valley or Seattle headliners. My biggest concern and the biggest reason that I wrote the book was I worried about how, pervasive the Silicon Valley startup mindset was becoming in business overall, right? I think that it's impacted how entrepreneurs in hundreds of sectors that have nothing to do with tech think about building a business and what gets amplified in the press and what popular culture covers and how entrepreneurs and small business owners think about what they're up to all the time. And so

the biggest thing I wanted folks to do was to challenge some of that thinking, to ask whether those are the right things for them. There is an assumption that if you are the founder and CEO and chairperson of the board of a venture-backed startup that does eight figures in revenue, you're probably rich. And one of the things that I like about Rand's transparency and his message is that's not necessarily the case. In fact, you could start an incredibly small hyper-profitable company and end up doing better. So the lesson here is that a lifestyle business does not necessarily require a financial trade-off.

And that's great news for anyone who's interested in bootstrapped entrepreneurship. Key takeaway number three. In order to develop self-awareness, you cannot assume that the thing that you were once good at is the thing that you are now good at. I think you have to make it a discipline like anything else, right? So one of the ways of doing this, and I talk about a few in that particular chapter, but one of the ways of doing this is to keep a log of successful projects, successful hiring, confidence that you have about interviewing people, confidence that you have in your network, and you will often be able to identify those things. Then it's consistently your job to revisit that and to look at, hey, I once was great at marketing. Now, four years later, it looks like, because I've taken my eye off of that or because the field has advanced or whatever it is, it looks like that's becoming a weakness that I need to reinvest in or that we, as a company, need to reinvest in. So Rand talks about this concept with regard to business.

If you were once great at marketing, that doesn't mean that you still are. But this principle also applies to the management of your financial life. If you were once very good at saving money, that doesn't necessarily mean that you still are. Perhaps you've developed a self-identity as somebody who's frugal, somebody who saves, but are you? Or has lifestyle creep slowly infiltrated? Similarly, if you were once good at investing, are you still? Do you still invest? How are you now?

Just because you were once good at doing a thing does not mean that that has continued on throughout your life. People are dynamic. They change. And that can sometimes lead to skill. atrophying. So in order to develop self-awareness, check in with yourself to make sure that your current sense of self-identity is aligned with your current behaviors, and that the skills that you once had have not withered as a result of resting on your laurels. And if they have, that's okay. That's what self-awareness is all about, is now you're aware of the situation and you can make the

decisions necessary to bring them back. So that is key takeaway number three. Key takeaway number four, be careful who you listen to and be careful who you take advice from. It is helpful and I think wise for relationships to not keep score, right? So you know, you and your romantic partner, or you and your business partner, you and your employee, right, you don't keep score about who was right and who was wrong and how many times and therefore we should not listen to you anymore. and we should only listen to me, that kind of thing. And I totally get that instinct, but it's also helpful to have some sense of it

so that you can wait feedback and weight the opinions of other folks, right? There are people who develop expertise or have skills, and you should, in a particular arena or broadly, and their opinion or the opinions of several people like them should carry more weight than people who are not very familiar with those fields, don't have that expertise, those kinds of things. Not everybody is insightful about everything, and some people have more clear insight than others in specific fields or particular situations.

There may be some people in your life who have a great deal of emotional intelligence, but they lack business acumen or vice versa. Pay attention to those around you, and in a non-emotional objective way, keep score to a certain extent or keep track of how good their advice historically has been about certain situations. Not for the sake of being angry or upset at them, but for the sake of evaluating their thinking framework and their decision-making framework so that you can decide whether or not they are somebody whom you want to turn to for advice or feedback around specific situations at specific times. So that is core takeaway number four.

Takeaway number five, know the difference between transparency and honesty. I think you have to recognize that transparency is very different than honesty. Honesty is just saying things that are true. Transparency is identifying things that are uncomfortable that people would not normally share, that create a pit in your stomach when you think about telling other people about them, and then choosing to do that anyway. Now, this insight has stayed with me for a long time. I had never stopped to ask myself, what is the difference between transparency and honesty, until Rand articulated that difference, at which point it immediately made sense. And what's relieving is that you don't necessarily need to be transparent about all things. It's okay to not be. So, for example, Rand has publicly disclosed his annual salary. That is transparency, but also, that's a lot of. That's a lot of. That's a lot of. not necessarily the right choice for everyone. Honesty is saying, you know what, I am not

comfortable disclosing my annual salary and I don't want to do it. And authenticity is leaning into that honesty and saying, I'm not comfortable doing it. I don't want to. I don't care what you think. I'm still not going to do it. That's an example of a situation in which honesty and authenticity could be at odds with transparency in that particular example. So I thought that was intriguing. As Rand says, there is a difference between transparency and honesty and and you don't necessarily need to embrace both of those values just because they're popular talking points or popular cliches on a mission statement. In Rand's book, Lost and Founder, so Rand actually went beyond just disclosing his current

annual salary. He actually has a graph in there in which he documents on a line graph his annual salary over the course of the past decade or so. By any definition of the word, I think you can call that financial transatlantic. But certainly you can be of service without going to that extent. So for anybody out there, whether you run a company or any other facet of your life, don't feel social pressured into overdisclosure. Particularly in this era of social media oversharing, it can be easy to forget that. So I thought that was an important lesson.

And finally, key takeaway number six, do not follow in the footsteps of the people you admire. This sounds counterintuitive. Don't necessarily follow in the footsteps of the people who are on the covers of magazines. Instead, ask yourself, wait a minute. Is their path the path that I truly want? I think, in fact, that it was a feeling of not being worthy and not being good enough. A feeling that to be taken seriously as an entrepreneur, to be respected, to earn the attention and praise that I wanted. We had to grow big. We had to be like the big kids in Silicon Valley and

raise a bunch of money and build a big team and have a lot of revenue. And whether we made money was not the focus of that. And whether we were happy was not the focus of that. And whether we were bringing something wonderful to the world was not the focus of that. The goal was a high growth rate and a lot of revenue and people, right? Because those were the things that I thought were impressive. There's a difference between what your ego wants and what your soul wants. Stay quiet enough that you're able to hear the difference. That's our show for today. Thank you so much. This show is part of a special series that we do in the month of September. This is part of our September sabbatical series in which we pull four episodes from our archives themed around FI

R and E, financial psychology, investing, real estate, and today, E entrepreneurship, we pull these four episodes from our archives and share them with you to highlight some of our favorite interviews. So I hope that you enjoyed today's September sabbatical episode representing one of our favorite interviews in the entrepreneurship space. Thank you so much for tuning in. If you are hungry for more, we have a book club in which we read books written by the authors who come on this podcast, we recently just started reading Happy Money by Ken Honda. Ken Honda is known as Japan's best-selling Zen millionaire. He writes about the Japanese art of making peace with your money. If you want to read that book along with us, I'm right there in the book

club with you, sharing thoughts, sharing comments. If you want to join that discussion, go to fable.com slash afford anything. That's f-a-b-l-e.com slash afford-anything. You can join our book club. If you want to chat with other members of the Afford- Anything community, we have a great community space where people organize based on either shared demographics or shared interests. So if you want to talk to other people in their 20s or 30s or 40s or 50s, if you want to talk to other people in the Northeast or the Southwest, if you want to talk to people who are paying off debt or saving for retirement or saving for their kids college. You can make all of those connections in our community. The community is completely free, and you can join by going to afford anything.com slash community.

That's afford anything.com slash community. Thank you so much for tuning in. If you enjoyed today's episode, please share it with a friend or a family member. That's a single most important thing that you can do to spread the message of good financial health. Make sure you're following this podcast in your favorite podcast playing app so that you don't miss any of our amazing upcoming shows. Starting in October, we're going to go back to answering questions that come from you. So make sure you're following us so that you don't miss some of those fascinating conversations. Thank you again for tuning in. My name is Paula Pant. This is the Afford Anything podcast. And I will catch you in the next episode.