In Search Of Excellence - David Kidder: Becoming Successful and Discovering Who You Are | E69

Episode Date: July 11, 2023

Welcome to another episode of In Search of Excellence! My guest today is my good friend, David Kidder.David is a serial entrepreneur, active angel investor, advisor to Fortune 500 companies, sought-after speaker, and author of four books, including two New York Times bestsellers, “The Startup Playbook” and “The Intellectual Devotional."David has been a co-founder and CEO of three venture-backed startups, including Clickable, SmartRay, and Bionic, where he is currently a CEO.We are talking about his background and early years, college experience, his first company, how to be successful as an entrepreneur, how to overcome the fear of failure, and what the future holds for our kids in this constantly changing world. Tune in to learn more! 02:15 David Kidder’s background and early childhood05:22 What is Montgomery Ward?08:26 The advice to companies that get offers to be bought by private equity firms11:45 How to hire the right person for the job?15:26 As a young entrepreneur, how to figure out what is good?19:30 The story of David's uncle, Roger Franchi23:25 How important are mentors for success?26:02 How important is the college experience today? 30:24 How to advise kids on caring for their mental health?35:04 The advice to students on how to deal with mental stress and negative thoughts 43:28 The start of David’s first company at 19 46:55 What is a roll-up?49:40 Fear of failure and how to bounce back from failureSponsors:Sandee | Bliss: BeachesWant to Connect? Reach out to us online!Website | Instagram | LinkedIn

All the joy is left lived really in the valley, in the grind, in the relationships, in the experience, in the discovery, in solving. This just launched an incredible mindset shift in me, but also just changed my life and how I think about leading people. I started over and I went out and said, I'm going to do 20 years of learning in one year. And I started to write the startup playbook. I did 40 interviews with the best living entrepreneurs I knew, friends of friends. The journey of sort of becoming friends with your mind, which is going to take half your life. So being patient with the journey. Welcome to In Search of Excellence, which is about our quest for greatness and our desire to be the very best we can be, to learn, educate, and motivate ourselves to live up to our highest

potential. It's about planning for excellence and how we achieve excellence through incredibly hard work, dedication, and perseverance. It's about believing in ourselves and the ability to overcome the many obstacles we all face on our way there. Achieving excellence is our goal, and it's never easy to do. We all have different backgrounds, personalities, and surroundings, and we all have different routes on how we hope and want to get there. My guest today is my good friend, David Kidder. David is a serial entrepreneur, active angel investor, advisor to Fortune 500 companies, sought-after speaker, and author of four books, including two New York Times bestsellers, The Startup Playbook,

and The Intellectual Devotional, one of which is behind me today, and I hope you all go in and buy it. David has been a co-founder and CEO of three venture-backed startups, including Clickable, SmartRay, and Bionic, where he is currently a CEO. In 2008, David won the prestigious Ernst & Young's Entrepreneur of the Year Award. David, it's a true pleasure to have you on my show. Welcome to In Search of Excellence. I'm incredibly grateful to be here, my friend, and look forward to the conversation. You grew up in upstate New York in a place, small town called Delmore, in a middle-class

family. Tell us about your paper route, your Wilson's, things during tennis racket that you put on layaway at Montgomery Ward, and what you were like as a kid. I've done your homework. These are first- first questions. Yeah, loving home. Wonderful parents, psychologist and writer and two older sisters, a younger brother and lots of memories. Not a lot of resources, but lots of love and learned if I was going to sort of experience things, first-to-first experiences in life, I'd probably have to go create a lot of them. And that started with a paper route and just jobs that turned into companies that turned into a career.

You mentioned the Wilson Sting. It's actually probably one of my greatest treasures of my life. I was starting to play tennis at 10 or 11 years old. You mentioned the Wilson Sting. It's actually probably one of my greatest treasures of my life. I was starting to play tennis at 10 or 11 years old. And of course, I only wanted what I couldn't afford at the time. And so I had to put this Wilson Sting on layaway for two years and got a paper route up at five, five in the morning in upstate New York. Snow, rain, craziness. And eventually, after about two years, I was able to obtain it. And it's in my office, my other house. So I treasure it. Isn't it great to keep those first mementos? I mean, it's hard to save them as a kid,

but when you have them and you look at them every day, it's a reminder of where you were and how far you've come. Yeah, I mean, I feel, I mean, of course, the things that create us, the relationships, the people, a lot of, you know, everyone experiences trauma in one form or another. But just the perseverance of moving through those things and having the courage to ask hard questions of yourself and about your life and who you're becoming is, these are the artifacts along the way way. I think it's important to save artifacts. Just over my head here, I have several of the last couple years of different patents and trademarks and pictures of all the co-founders of companies.

They just remind you that there's so many small things that happen along the way that turn out to be big, and it's important to save them because you'll create more, and it's important to create more. There are mile markers on the way looking forward. A lot of our viewers and listeners have never heard of Montgomery Ward. It dates us a little bit. Can you please explain what Montgomery Ward is and if you know what happened to it and how it's even relevant to what's going on today with some of the retailers that we've seen fail over the last 20 years? That's so funny. Yes. It's, it's an equivalent to a Sears or a Kmart, probably, I guess,

maybe a little more down market version of Macy's 30, 40 years ago, but one of the original sort of like, you know, small town retailers and not unlike most, you know, supporting, most, supporting local communities was important. And then over time, the Costco's and Sam's Clubs and Walmart's and then eventually Amazon's just eroded that share. They disappeared. I guess Sears will be the most equivalent in this era of a bygone big box retailer. But Montgomery Ward was one of them. What's left of Sears today? Because Sears is definitely not the company it used to be. I grew up in Michigan, suburban Michigan.

Kmart was all the rage. They were based in Troy, Michigan. I wrote my senior paper on Kmart, which at that point was the gold standard, the platinum standard of all retailers. But you look at the financial engineering of Sears and what happened to when a hedge fund manager took it over. Can these private equity firms or hedge funds come in today and just say, hey, I'm going to buy this? I've never run this business, but I'm going to cut

costs and increase profitability. Does that model work? I mean, it's sort of I think the thesis behind Eddie Lampert's play to acquire that company and then try to create value out of a dying asset was not on like a baby Buffett, right? Which was, hey, we have this asset and we can create value where others don't see value or there's some sort of annuity out of it. There's a very famous HBS case study where a private equity company bought Harley Davidson. And the secret was is that they had hired – they had two theses. There's a very famous HBS case study where a private equity company bought Harley-Davidson. And the secret was is that they had hired – they had two theses. One is we're going to fire McKinsey, right, who is spending tens of millions of dollars in fees, was a way to underwrite this transaction. Secondly was is that there was just – there was more value hanging in the ceiling in the factory of Harley-Davidson parts than it was the value of the company.

And I think that Sears was probably similar to that in the real estate assets. So real estate assets of Sears were in a separate company over a couple of years. I had a friend who actually run that business. And the play was, yes, we have retailing, but more importantly, we have footprint, warehousing, sort of distribution systems that we could leverage and create value from where others couldn't. So I don't think that's the way it played out. As we know, the story is constant sort of restructuring and financing and recapitalization, mostly from himself. But lots of lessons on, you know, the private equity model as a refounding model, as opposed to a sort of a conviction type of investor.

You've got a lot of friends who own non-public private companies who do well. All the private equity firms call them on a regular basis. Hey, let me buy part of your company. They usually want control, but sometimes they don't need control. And so many times they think, okay, I want to put money in my pocket. I don't want to go public, but sometimes they don't need control. And so many times they think, okay, I want to put money in my pocket. I don't want to go public, but it doesn't work out. They

now have a boss. They can't even write a check over a certain threshold, $10,000, whatever the case may be. And I know many companies that sold for a billion dollars, $250 million, where the firms, the purchasers ran into the ground. They didn't know how to run it. And then the founders bought it back for a fraction pennies on what they sold it for. What's your advice to the people out there who are considering that kind of move? I know you know tons of people that own private companies

during the SPAC craze. They all got phone calls. Hey, let me take you public. Those SPACs were a disaster. I think 90% of them are going to go BK. And I think something like 90% of them are below where they want, quote unquote, public. What's the advice to all those companies out there who are getting contacted by these private equity firms? Let us buy part of your company. I don't think there's any truth to buying or selling any part of your company. When you sell your company, whether it's 10% or 30% or 51%,

you're selling your company. Money is debt. It has a voice. It has control. There is no scenario where it doesn't. Sometimes you need a lot of capital to maintain a high growth rate of a company or continue to maximize the profit of a company that you own. But be of no illusion that once you sell one or 51% or 80%, it's no longer yours. And I've had four exits. I've had two that worked, two that didn't. Most recently was to Accenture about a year and a half, two years ago, which has worked quite successfully.

But the reality is, is that is that, you know, if if you can bootstrap and grow a company and maintain control, you own that control until you certainly until you sell that first dollar to private equity. And to some extent, that sort of second or third dollar to a venture capitalist. So that's a kind of philosophical lens to view it through. You know, I've done both. I've raised a tremendous amount of venture capital for two companies and bootstrap two. So I feel that the job of a founder is really, you know, this is not new information, it's really three things. It's to have a vision, number one, and be right and on time, right? Knowing the outside forces, knowing the need in the world

and knowing why us and having conviction that. Two is really about just talent, is putting the right people in the right seats at the right time for the right amount of time. And you basically can't make a mistake, one through 20 and two or three, 20 through 50, and maybe five people, 50 through 100. And if you make those mistakes, it's almost always fatal.

You get them in the job, the wrong seat, you have to remove them, replace them. It's 12 months and you're out of business. And the third is, is just never run out of money. So you can either raise it or earn it. And it's the same thing. It's oxygen and you have a lot more control for longer when you create your own oxygen.

And I'm a huge believer in that. As you said, it's hard sometimes to hire someone. You have a structural impediment to get rid of them. They have a big contract. They invest in full. I remember one of our portfolio companies, one of my first companies, we recruited one of the top five guys from Anderson Consulting, which was one of the biggest consulting firms, very prestigious firm.

He had been there, I think, for 30 years, was on their board. We thought, and he just retired. His son lived in Los Angeles. And I thought, gosh, that's a guy we should go after. The head of that firm, George Sheehan, had just gone to a company called Webvan. And that was all the rage. And I thought, gosh, if we can get this guy, that'd be incredible. And we did get him. And that was all the rage. And I thought, gosh, you know, if we can get this guy, that'd be incredible. And we did get them and even made the Wall Street Journal. This was back in 99, 2000. So I thought, okay, we're done. He's going to raise a ton of money. He had not worked at a startup, did not know the culture, was very corporate minded, and it didn't work. What's your advice to the founders out there who are going after to recruit somebody that big? What should they do to prevent that from happening? And when it does happen,

what's the best way to get out of that and hire someone else who has the right fit? Well, I mean, I have this model at my last two companies called the Timberlake years. And he was teasing me about this, but Justin Timberlake, regardless of how we feel about his life now, has had a really remarkable career. I guess you could call Taylor Swift a good example of this as well. Where you've seen him kind of going from the Mickey Mouse years to the band years, the NSYNC years, the solo years, then the SNL years. And each one of those chapters is sort of a graduation. It's a hallmark moment where the company moves forward and no longer looks back. And I think it's important to recognize that in each one of those stages,

you kind of have to have cultural alignment and mindset and metrics that everyone agrees, we're leaving this chapter and all the hard questions that we have good enough answers for, and we're pretty behind us. So nostalgia is the enemy in a way. It's also to say that each one of those chapters on your way from a zygote to a five-year-old to a 10-year-old to an ugly teenager, it needs different talent. So it's Mr. and Mrs. right now for 12, 18, 24 months until you're no longer that company. So if you bring someone in who only knows the SNL years or only knows the solo act years versus the Mickey Mouse or NSYNC years, it's almost fatal because it's the wrong

instincts, wrong experience. They're not bad people. It's that you haven't done the work to get to the SNL years. You haven't earned the right to hire them because you don't need them, and vice versa. They're the wrong people at the wrong time for you. So context and permission alignment as an organization from yourself and your board and your capital has to be basically perfect, honestly. There's so many ways to fail than there are succeed. So that's one of the issues. The second issue is if you have misalignment, as in we realized, wow, we hired this Olympian, this SNL person, and really we're in the in-sync

years. It's really critical for both parties to fix that immediately. Whether that person goes to, say, his public face, so it's a good exit, they take on an executive chairman role, but that's non-compensation, they're an advisor, they stay on the board. There's lots of ways to do that because their value will be valuable eventually if you earn the right. But for them to stay in the organization in those stages and there's misalignment is bad for everyone. You're young. You're green. You're 25 or 30 years old. You've never started a company before.

The younger you are, the more prone to mistakes I think you are. We are. And I remember someone said something to me that I didn't quite get until later on. At some point when you're young, you don't know what good is. What does that mean when someone says you don't know what good is? And who should you rely on to help you determine what good is?

For one example, I remember when I was young and we were starting a company, someone had a great resume. They were CEO of this company, SVP of this company, and that person looked phenomenal on paper. But when you really dug in and you did the due diligence on what he was CEO of and what he was senior VP of, it was thin, it was hollow, and it didn't really work. And it came to me that I thought, okay, now I understand that you don't know what good is. So can you talk

about that and how, if you're a young entrepreneur starting a company, how we get around that and figure that out as well? Yeah, just setting down some ideas here. So maybe if you're listening, you might write these words down and think of them as lenses, right? So one is on versus in. Another one might be to versus with. And the second one might be do versus say. So on versus in or on or in is really how much time are you spending working in the company versus on the company? And so when you're thinking about what is good and you're spending 100% of your time in the company. And so when you're thinking about what is good and you're spending 100% of your time in the company

building the sort of product and the model marketing to sell it, but you actually aren't building the company, you're actually not working on the company. And the balance of those two and your energy and your mindset and the sort of truth you're driving to are very different things and they're equally important. You're just going to spend less time in one than the other in the beginning. Because you're basically, I like the idea of, your assumption should be that you're dead trying to become undead.

Not that you're successful, not you should be out there being thought leadership. I've made those mistakes in the past as well. That the company literally is dead until it's not. And there's always this inevitability of the business where it's like a step function. You're literally out of business and all of a sudden something works. And it's not like how math, you learn math algorithmically speaking. You study, study, study, you're terrible, and all of a sudden it clicks. It's because you're working through the hardest parts of the business.

So the first thing is, am I working on versus in in and how much time am I thinking about those two things because they're equally important? Secondly, is the to versus with. Am I selling to the customer or am I solving with them? And so the question of what is good is really the evidence and the difference between those two tasks. Selling is important, but the first stage of selling is to solve with them. And because the truth lives in this last piece, which is, it's not what they say,

it's what they do. Right? So we have to look at the evidence, because the one place that will lead you to the promised land, and full circle back to your question, what does good look like? What good looks like is what customers do consistently and always with you because you solve with them and you built a great organization that can scale both in and on. So these, again, are mindsets. It's tasks that you're doing. It's the timing of those tasks. If you're not consciously thinking about your energy and how you're thinking work, you'll get lost in the success theater,

you'll get lost in selling, and you'll get lost in working in when you have the other part of your job, which is the unsolving and listening business. It's a totally different way to discover that commercial truth. The entrepreneur gene runs in your family, not with your parents, but your grandfather, your great-grandfather. Tell us about your uncle, Roger Fronsky, what happened to him when you were 16 years old, and what he told you seven months after he sold the last company. Yeah.

So, Phil, I have this philosophy that I've had now since 2014 called becoming. And it's led to all sorts of incredible deep work over the last, now, I guess, you know, eight, 10 years. He was my mom's brother, and he was a very successful entrepreneur and psychologist and advisor to some of the great CEOs of our time. You'd know them, the runnings for the large media organizations that we consume. And but he was a real just great, a great philosophical leader. And when he sold this company and he was almost 70 at the time, his last one, he got stage floor geostoma and he passed away seven months later. But on the way to the end, which was a new beginning, he and I obviously he was my mentor since 16. He shared some great wisdom, but the final wisdom of

his life to me was a day and a half before he passed away. I was the last to see him. And I was holding his face and he was paralyzed on one side of his body. We were forehead to forehead. And he said, don't focus on who you are to the world, focus on who you're becoming. And it really changed my life because I had spent, for reasons that I now know, mostly based in trauma and shame, my life trying to get to the top of things, right? And when you get to the top of something, you realize that there's nothing there. All the joy is left lived really in the valley, in the grind, in the relationships, in the experience, in the discovery and solving

and being of this. And this just launched an incredible mindset shift in me, but also just changed my life and how I think about leading people in my own vulnerability, but also theirs and what it takes to build great teams. And just you know, just really how to run organizations. I'll give you an example of this. And this is one of the things that came from him as well, is if you want truth, people have to be able to take risks. And if you want people to take risks, they have to be forgiven. So how do you create a culture that believes in excellence, but forgiveness and grace is required to get there. And so it's important not just to create rules and organization, like here's what we believe and here's the laundry list of things.

Because people really don't know when they're doing it well. You have to create like doctrine. They need to know when they're doing it right. And what we created and what I created my last company in the last 15 years is this rule called the seven to one rule. We try to do extraordinarily more good than we do bad in that ratio, which is literally statistically impossible. And that's the point, which is no one, we believe in high standards, but no one will ever truly reach them,

which means we're gonna fail each other. And so the point is, we want you to take risks. We want you to try, we want you to do excellence, but assume that when we make mistakes, that our default state to you is to forgive you so we can look at the problem shoulder to shoulder, not across the table. Why did you fail? We're promoting that idea shoulder to shoulder so we can look at it and grow. And when we do that with a cycle of trust and goodwill and forgiveness, we'll get people to live whole lives and we'll get to the commercial truth with greater trust. And ultimately, that is the whole

business is dead undead is getting to a point where commercial truth is what leads the organization because it's discovered, it's told, and it's converted into growth. You mentioned the importance of Roger, your uncle, being your mentor. I had several mentors as well, starting with my little league baseball coach, David Page, who really believed in me from the beginning when I was a young kid, was bullied, stuttered as a kid, and he always had my back. How important are mentors in our success and our future? And how do you earn being a mentor today if you want to seek a mentor? I mean, a lot of mentorship is self-serving. It's important, but I think a lot of it's cheap advice, honestly. I mean, mostly it's a transaction of someone who's trying to

get something or grow faster, get access or something, which is all important. There's nothing wrong with it. It just means that the mentors that really change our life, they don't give you cheap advice. They give you their hardest truths about themselves, about you. I remember reading this years ago, which is, you know, the one of the most powerful lines you can give someone in leading them, a sentence to them, is this idea, which is, I have high expectations of you, and I believe I know you can achieve them. And it's an atomic idea, which is you yourself have to have high standards and I have them for you, which means there are expectations for yourself and your life, especially inside of organization. But the belief in you, what mentors do, whether you're boss or something else, is they have a belief and a conviction in you.

Ideally, they'd actually have done it before, right? So, you know, and in their doing it, they'll have, you know, learning and understanding empathy for what you're going through to share how they did it, but not telling you what to do. And that's really the that's what true mentors do is they let you learn yourself. Michael Roger in particular was an insanely connected guy. I mean, ridiculous. I mean, and he never opened a single door for me in my life. And he could have done it.

He could have changed my life at any point from 16 to when I passed away. He helped me learn to care about people more than anyone else. And as a result of that, exchange value and ideas and relationship impact to help build and replicate his giftedness because he knew it would change my life. And he was right. So mentors do that. They let their life speak. It's not cheap advice. And it comes from a place of deep humility, learning, and empathy. I want to go back a few years to when you were growing up, graduated high school, went to college. You attended the Rochester Institute of Technology where you got a BA in industrial design. Was college important to you and is it necessary in a world today where

65% of students who go to college graduate with an average of $37,000 of student debt, which takes 22 years to pay off? And what's your advice to your own kids going to be on this? Well, I have three sons aged almost 13, 16, 18, and one going through the college application processes this summer. So this is a very active conversation in my life. Well, first is I don't think, I'm not trying to raise excellent sheep. So, you know, there are to some degree a halo effect around intellect and network value at the top, let's say, 20 to 50 schools in the country. And beyond that, none of it matters in my view.

It just, the diminishing returns is really about their experience and their development as a human. So I look at their college experience, not as an accreditation of their intellect, their, their heart, but also just their growth and their life experience as humans. You know, uh, my father, who's this sweet apostle like brilliant psychologist, he didn't give me a lot of advice, but he gave me two pieces of advice in my life that were really transformative. But when he walked out at age 18 to go to college, he put his kind arm around me and he said, don't come back. And he was kind of dead serious. He was like, you're, he didn't use these words, but like, you got this and also you own it. And I have told my sons this since they were kids, which is you own your life. Like your parents are imperfect, failed humans doing their best.

See us as such. And what we have is truly an unconditional God-like love for you. But you're going to be on your own as soon as you realize this. And this is the moment that's arriving. So helping them game a system that's un-gamable, especially in the world of AI and super intelligence. We're going to become a tool-based, value-based, solution-based economy very soon. Getting a degree and perfecting a skill that's hireable is almost a waste of time. It's really about their ability to think and learn and solve hard problems. And hopefully I'd add this last thing, which I told

the boys, I've been, I just started sending them all sorts of articles about how to, what to study horizontally and orthogonally to become prompt engineers and how do they, how can they elevate and co-elevate their ability to solve harder and harder problems that are beyond their intellect because they understand the tools and the way to think about solving problems. So the commoditization of accreditation is going to accelerate. So that skill is going to be what matters. And so having studied industrial design, which is sort of engineering and art and problem solving and storytelling, it was a total gift to go to RIT. It's one of the best design schools in the country.

I actually won this Idea Magazine International Design Award before I left, which was sort of a rare award. And then the dawn of the internet happened. It was 1994. Silk and graphics boxes and R Razda and Pro Engineer. We were using all these tools. And I started my first internet company at age 20, 21. And RIT taught me to think. And it also taught me how to work extremely hard, like put yourself in the hospital hard.

So life was going to be easy by comparison by the time I got into the world relative to how hard I worked. I worked at a startup nearly part-time, 23 hours a week. I was an RA. I played college lacrosse and did a full load. Getting out and starting a company was like the beginning of a breeze of hard work for the next 28 years. So that's a lot to say, but just raise your kids to think independently with the great tools of our generation. And it's not unlike the graduate plastics.

We're in a place where AI is not unlike chat. TV is unlike not like Netscape and HTML for our lives. You mentioned you have a son going through the college application process, which is one of the most unpleasant, stressful things that they've ever done in your life. For a lot of parents, it's very stressful as well because your kids are stressed. So you're stressed. When you and I were growing up, David, it was all about the GPA, right? You couldn't get a job without a high GPA.

Today, a lot of the students still function or want to strive for a high GPA. But in the real world, I think at least my perspective, it helps you get another meeting with a potential employer. But at the end of the day, are you going to hire somebody with a 3.0 or 2.6 if they have the right skills and social skills and you like them as people? And as a corollary to that question, how are you advising your own kids, like I did my own kids, about the mental health issues associated with school, the application process? Is it necessary, as you said, to have the mentality that you're going to put yourself in the hospital?

Oh, that's a big one. So the GPA thing, I'll just get out of the way. I can't remember the last time I looked at a resume for hiring and even consider the GPA. In fact, I think it's actually a false positive, to be honest with you, unless it's extraordinary. I mean, a scholar is valuable, but like, it's just, it's, I would just assume if you get a good school, you're mostly smart. And really, it's what you did with it. It's, did you hustle? Did you create value? Did you continue to learn? Were you curious? One of my old, late friends was the founder of Zappos. Wonderful guy. Friends of lots of people, but a very authentic friend.

I remember he was- Friend of mine as well. Incredible guy. Incredible guy. And he would, you know, lots of journeys together. I remember he once told me, this is about four years ago, because he had no kids. He was just like, you know, what's the most powerful lesson you're trying to raise, you know, Jack, Stephen and Lucas?

And I said, well, you know, it was really about their grittiness, right? Kind of Duckworth's view of the world and something. He goes, well, if I had kids, I think the most profoundly important thing to teach them is curiosity. And I kind of thought of it as sort of a vitamin versus a pain killer, a software versus a hard word, right? But the more I've thought about that one thing that he challenged me on was, I think he was completely right. The curiosity as like an atomic skill of asking why, right? Why does that work? Why does it doesn't work? Why do I feel this way? Why did I do that? Why did you do that? Like the curiosity is the entanglement of our minds with opportunity in the world. And without it, you're sort of just, you're following

life is happening to you as opposed to you happening to life. And that fulcrum of curiosity is really what I hope is embedded in my kid's mind for their lives. That's going to lead them to life. And that fulcrum of curiosity is really what I hope is embedded in my kids' mind for their lives. That's going to lead them to grow. You don't grow without curiosity. It is the central sort of chemical in all growth. Yes, that's probably one of the most, I mean, yes, character and their ethics and all those things that they don't need to be perfect. No one's perfect. But they do need to, I think that's the one gift you can give them is a very deep and committed sense of curiosity

about themselves and about the needs of the world and how to grow. Isn't the applicant with a 3.0 or a 2.8 lazier and doesn't work as hard as the student with the 3.8 or 3.9? I think it's meaningless. I mean, because if you think about all the types of gifts of skills people have, the ability to test, the ability to study,

the advantages of learning how to take notes and study in class, where you sit, where you're oriented, disease,, disease, quite frankly, you know, Lyme disease and the things that we just don't, you know, mental challenges that you can barely see. It's just a single prism into the mind of a child and how they're becoming a human, becoming an adult. So it's a signal, but it's no less important a signal as all the other things you could show as signals about radical curiosity and challenging yourself and your becoming, right? You're the grit in your journey. Those are more important signals than a GPA. I mentor a lot of students, high school students, college students.

We have an intern program each summer. I know you have generously said you'd love to speak to the interns. And one common theme of stress among all of them is, I don't know what I want to do for the rest of my life. It's very competitive either to get into college or get a job at Goldman Sachs or a tech company. How should students deal with mental stress, which has come to the forefront, thankfully, of our daily vernacular? And what's your advice to them if they are struggling too much with the mental stress and are having very negative thoughts? So there's an origin of those struggles, right? And I think this is, again, if you start to really unpack what I'm sort of trying to create a mental model for around the idea of

becoming. It's really these curiosity starts is what ignites the answers to these questions, right? About what am I going to do with my life? How am I going to grow? How am I going to survive these things? But if you back up and you think about this at a very high level, and I encourage people to really go as deep as they're comfortable in getting these answers. But think about it this way. Our lives, our reality, the one that we're struggling with, is really an outcome of your choices, right? So it sits on this pillar, the single pillar of our choices. And of course, you're going to say, no kidding, right? And you can read all sorts of structural learning from the outside in on habits and mindset and some amazing authors and thinkers on this stuff. But ultimately, the fatigue or the exhaustion I'm performing

in fixing yourself from the outside in will eventually run its course, right? It's the human nature, right? Because our conscious life, where we're trying to fix that, is really built off of what's below that. It's like being an iceberg in the middle of the ocean. We live at the tip, but our whole reality sits underneath it. So it's important to recognize that our choices really are just at the top of the iceberg. We're disconnected from the reason of the idea that choices are really just intentions. We are intentionally choosing our life, whether it be stress or lack

of stress, ownership, lack of ownership, behavior, lack of behavior, whatever those things are. So the question is, how do you change an intention if you can't change your choices permanently, which is what we're struggling to do, trying to get to the top of things because when we get there, we'll be happy. When you really understand that the intention is the change in intention, you have to get underneath the intention, which is the question of why. Why do I intentionally choose this life, stressful, unstressful, performant, non-performing, anxious, happy, all the dimensions of that. And so part of becoming is that first stage is just knowing yourself and being curious to ask, why do I intentionally choose this stressful, anxious life? And if you try to fix it from the

outside in, you know, and there's lots of ways to take you out of that journey, right? Drugs and other things, which are, I understand them. Sometimes the only way through is to go through them, right? There is no escaping. To get to the intention, you got to go through, not out. So once you do the work of knowing, you start to understand why. Then begins the wholeness of the journey, right? Of learning to live. Because what you discover, that there's actually something underneath the why, which is one of only two states, and that is fear or love. And so the more you get connected to the state that you're in, because you understand your why,

you know yourself, and now you can heal, right? The second stage is just the receiving of healing. You get to a state of being, right? Being that love as a state. So knowing, receiving and being that journey really is the journey of sort of becoming friends with your mind, which is going to take half your life. So being patient with the journey, being patient with the questions that you have to live because they're so difficult to receive when you're in your 20s, you're just learning. It's really important sort of surrendering around to the pressure of having the answers. But to come practically into this, and I'm happy to dive into those things because they're all sort of the gnosis of those things are real. The question of like, what am I going to do with my life,

and I'll just tell you the advice I give my sons, was your second question. And that is really the dimension around being curious to understand the outside forces that are happening in our lifetime. Outside forces drive almost all economic or professional success. It just does.

And so anybody who thinks they're self-made or it was their hard work, all those things being true, but I know lots of people who are self-made or hard work have failed radically, consistently, because they misunderstand the outside forces. Secondly, they understand the needs of the worlds that are either created because of those forces or the ones that have created because of those forces or the ones that have

changed because of those forces. So force, need, and lastly, and this is the most important one, is what is your proprietary gift? Not just what's your passion, but what's your gift, the impossible to replicate secret of your life that allows you to feel like every 10 hours is one hour that drives your becoming in solving that problem in the world because you have obsessed with the outside forces? When you have that concoction, that conviction going, all the questions of where you're going to spend your time in your life will be answered. You just have to care about them very, very deeply. What are you going to say to... Or what do you say to all of the 19-year-olds or kids in college or even kids or young professionals who are not kids anymore who don't know what their special gift is? How do they find it? And what do you say to people who say,

I don't have a special gift? It's going to take half your life to figure that out, probably. Reset your expectations. I mean, I don't really know. My most successful friends have been working 60, 80, 100-hour weeks for 20 and 30 years. So the idea that you're going to go out there and have the type of success, unless you have the extraordinary good fortune of the outside forces that benefit you, the reality is that you're going to spend

half your life, if you ask the right questions, working hopefully in peace and love those things in a relentless quest to answer that question. And you're going to learn a lot of things until that answer arrives to you because you're probably not ready to understand it. So I wouldn't, I wouldn't, it's, it's the wrong question to say, I need to know the answer. I'm struggling on answer. The question is, is, am I, am I a person who's will become the answer? And it's a totally different energy. It's a toy because you're, it's not just, you're going to work hard no matter what the question is, is what is the work of your mind and mind and your effort that's going to produce that answer? So the first question is, what would you tell someone who is seeking that question?

The second one was, they don't know. A lot of the questions of proprietary gift happen to you. They can originate in trauma. They can originate in tragedy or success, quite frankly. I'd argue that success is a very bad educator. I think of the things that have happened to me and I've gone through total brokenness, total failure. I built back from zero. And because of that, everything I do today was learned in that experience. Um, and it was brutal, but there's no way I would have experienced the moderate success I've had or

the things I've done today without going through that. And so that wasn't something I planned. I tried to avoid it like hell. It, it, it just was the inevitability of my career and all the learning will happen because of it. And all the learning happened because of it. And all the character lessons and the joy that's followed has happened because of being broken, quite frankly. Let's go back to college and your first company. You're 19 years old. What are you seeing out there? What are you motivated by?

And what prompted you to start your first company? I mean, I was, I got, I got exposure to entrepreneurship and the freedom of time young. So running my paper route, you know, I worked for a small sports shop called Mike DeRossi sports. I, I, you know, it was fast and loose. I did, you know, it was a little less, I realized when I wanted, what I wanted to be managed was a manager, leader versus player, so to speak, teams and sports and things.

In college, I had the very good fortune of joining a startup called the Idea Group, started by Bill Gillette, who really was a key influencer in my life. And he gave me a job immediately upon meeting him at RIT when he needed some computers fixed, and I just leapt at it. And then I ended up working for a number of years, and as a result of that, got exposure to the internet, which was 1995 because of that. And then as much as I loved design, I never worked in design ever again.

I became problem-solving in the world of digital, which was the equivalent. Same stuff. What's the difference between a physical versus a digital product? It's how you think. And then I started First Company. We worked doggedly for several years, two years, three years, and we sold that for a moderate amount and with two very good friends of mine. And then went to New York, did a roll up for three years

and another great experience and then started my next company and built the SaaS company, raised five million bucks and sold that for a bunch and then took a bunch of years off, two years off, traveled 42 countries and came back up married and started a family and started another two companies. Next company failed badly. Next company, it's just like you just keep building. And it's just all of that was really trying to continue to take very significant steps forward in my ability to build things, to solve problems. When I wrote the purpose of Bionic before I sold it, it was called this idea that we ignite growth revolutions.

And I didn't really realize what that meant until I thought about the context of money or success for our partners. But the truth is that all of it lives inside your mind. It's in your permission you give yourself. And the greater you continue to take these risks and grow, the greater your permission and the confidence you have to be able to go solve things, even if you don't know the answers. I mean, you're building a company today that has way more big questions in front of it than it does behind it. And every little signal is accumulative. It's compounding. And while it's a nonlinear path, you're like, I just need to do that five times

and then build a system that does it 50 and then 500 and 5,000 and it'll solve itself if I get these five right. Once you know how to do that, you start looking at all the components of the business. Each company teaches you a part of it. You know how to stack an organization to be able to solve something important and hopefully it grows. And your timing is right, but you're sensitive to all those things that you just didn't know before. So that's where the confidence lives is just keep taking shots until you're forced to learn it. So there's a lot to unpack in terms of what you said. Tell everyone. I mean, we got to go through these, David, one by one because they're very interesting.

And each one is a little different. But tell everyone what a roll-up is. I don't think they really... Most students don't really know what it is. It's not as common today. It's a little bit common if you're a private equity firm. But what is a roll-up? What happened to that company when it went public?

And give us the history of your next two companies. And then I want to know how you bounce back from a failure when you have a big success. What prompts you to keep going? A roll-up is where you have a hypothesis or a business plan, to keep it simple. You raise a bunch of money and you say, there are many of these similar companies in the world. And any one of them, albeit meaningful, is never going to be as valuable than more of them together. So it could be technology, engineering services,

could be... More often than not, it's not about deeper technology and SaaS, it's more services businesses, which is what we were with technology enablement. But there was just a lot of similar companies that together could build a really big company. If you got the culture right and all those things. And we were backed by Omnicom and I joined that company. It was founded by some other people and we ended up taking it public and it's actually still around today. And it was one of their big five big plays at the beginning of the internet. So there's lots of capital going towards businesses that could solve technical problems

in the beginning of the digital era. Today I'd say it's equivalent to, there will be equivalent to services companies in the AI era. People solving big digital, generative digital challenges for big companies will be similar to this. I think not unlike the internet era, which you were a wildly successful founder of one of the first generations of those businesses, this AI era, I think, has a similar level of gravitas around it. The difference between that and, let's say, the multiverse or, you know,

the metaverse, I mean, or even social media to some extent, while there's several big companies, I think this era is much more substantial than that chapter. So to talk about the failure piece, I can tell you about an experience around that, that I think is quite profound in terms of how to start over. But maybe just unpack that a little more because we can go lots of directions around that one question alone. Is there a particular piece of experience that you want to jump into that I can try to eliminate? I think we should expand on it quite a bit because I think one of the great motivators in our life is fear of failure. And I think it's the primary reason why people don't start companies, even though so many people out there, millions, tens of millions of people don't start their company. So you failed.

Maybe you can talk about one or two of your failures, what you were thinking, how depressed you were, how tough it was, and then how you bounced back from those. The one that comes to mind was it was called Clickable. And on paper and publicly speaking, it wasn't. People didn't really understand what had happened. But I'll just share with you what that story was and I think it'll be illuminating. So we had built this back in 2007 to 2012. We built a software company, a SaaS organization that was focused on data and machine learning related to search and social advertising.

So, you know, lots are lots of different APIs, lots of different frictions. So how you manage search and social across many platforms was difficult. And this will seem totally captain obvious, but if you could plug all of that data into a single interface that taught you and told you how you're doing every day and what you needed to do to improve

without having to think about it, you could just make decisions, that would make your job 10 times easier. And that's effectively what we did. And we've raised, you know, 30 plus million dollars over the period of like six years, a couple hundred people, 250 plus people. And we built this organization and we made one fatal mistake. And we did this at a very high profile level. We did this with Founders Fund and some of those famous VCs in the world, Albert Wenger at USV, Rick Heitzman at FirstMark, who are all, thank God, still friends of mine. But we ended up building, this is the story, we've ended up building basically a Siamese twin-headed kid in the world.

So it turns out as a business, what that means is we were solving two marketplaces at once. And what we realized is, because we had done a very big contract to white-label our company, we were growing fast, but not fast enough. So we white-labeled it and brought it to a very significant credit card company, of which the president of that company is still a good friend of mine as well. She has helped, you know, just been very kind to me over the years. But we took it to their masses, and we ended up really bifurcating the vision of the company.

So same promise, same patents and things, but it turned out we were focused on the small, mini-sized business, and we were focused on the enterprise side of the world. So before too long, we realized this is not one company, it's two companies. We lost focus. And it's really a fatal outcome, to be honest with you. So despite an incredible talented culture and people and brand and all the things that we won, the thing that our fatal mistake is, we lost focus. And we did that at the end of the day as a CEO, that's on you, right? The buck stops here is real. There's no one to look at. You can say you're the smartest, most brilliant board in the world,

but at the end of the day, you're making the decisions. And I had to take ownership of that. And we ended up almost being acquired in two different, for actually very significant numbers twice before we ended up raising a Series C. And we raised that Series C. My board basically said, we want you to sell the company immediately. And effectively, take that beautiful kid and rip it in two. Which is so heartbreaking because you love the people, you love the business,

and it's what we had to do. And so we had to do it very quickly. So while I was trying to do that, it nearly killed me. I have three little kids. I was working, honestly, 80 to 100 plus hours a week, night feedings, everything, leading this whole thing through crisis. And I had actually had a acid reflux heart attack I discovered years later where I got out of bed one night and fell as if a saber sword was driven through my chest, literally flat on the ground. And I thought I was going to die, literally die. And I just muscled through the pain. I went back to bed and kept working, literally. And I got a body scan a couple of years ago and they're like, oh, you have a, you almost died and here's the scar to prove it. I'm like, yep, I know exactly

what happened. It was really foolish, to be honest with you, but the stress was crazy. So anyways, this one night, David Smith, my chief revenue officer of the company calls me and he says, David, he said, why are you making this so hard? And I was like, what are you talking about making it hard? I'm killing myself trying to get this company just to safety. And he said, no, he said, actually, you're making this hard, harder than it needs to be. And I said, what are you talking about? He goes, he goes, this company is about you, which is why it's failing. And he said, and he goes, and I was like, I was getting angry, honestly. I was very angry when he said this to me. And he said, listen, David, he goes, you are more than this company.

And the sooner you realize it, the sooner the company will get to safety. Because we're all here to help you. And no one can help you because you can't see the company because you're seeing yourself. And he was 100% right. I was trying to drive and control out of self-interest to survive because I was afraid of failure. Beyond supernaturally afraid of failure. And I said, I was so exhausted. I said, well, what does that even mean? How would I solve this? He goes, you need to give it over. And I was like, give it over to what? He goes, to God or

the universe. And I was like, what does that even mean at this moment? You can imagine you're thinking through this in the crisis of it. He goes, well, what it means is, is that you accept all of the outcomes. And I, my next line, this is verbatim. I was like, I said, you mean failure? He goes, that's exactly what I mean. And he, and I, my next line verbatim was you mean public failure? He says, yes. And my next verbatim line is, I'm like, the cover of Insider? And he's like, yes. And in that moment, I literally broke. And I realized like, all of the possibilities are possible. Failure is equally possible as success. And it's not about me. and I couldn't control it.

And I literally surrendered. I literally at that moment gave it over. And as I was 32, I'm 50 now, I laid on the ground at my attic, my last home, little kids in the downstairs, and I sobbed like a baby, like a biblically on the ground, flat as I could get, sobbed for not for a little time, like a long time. And it just broke me. And I realized like, this is going to happen. And I finally accepted it. And I, um, I got up in this puddle and I sat there in this kind of Lotus position. And I started to like meditate and pray about this giving over part. And I realized, this is the mental model. I'm almost done. It's a long story, but it's an important one.

I felt like I was running through these paths of thorns. The harder I ran, the more it this moment, and probably one of the most courageous decisions of my life, is I imagined myself being lifted out of that road onto a clean, brand new road of life. Brand new. But I imagined that road as if I started to say, I re-upped. I re-believed. I felt foolish, but the truth was everything was still possible. All the opportunities in the world were still available to me if I believed it and thought it and found it. But I was wiser and humbler in that moment. And I began to walk again and I went to sleep. I went to bed and I slept for the first time in ages. And I got up next day. I was open, humble, honest, asking questions. I went back to that, got up again next day, slept and then slept again. And again, and about a month later, quote unquote, out of the blue, I got a phone call

from an old friend said, you want to sell your company? I said, yes, I do. He goes, great. Cause I need all of it. And within a month we were acquired. There's no co-CEOs as you know, he's like, there's only one boss here, my friend. He's like, you're out. I'm like, great. And then I was gone. I was out and I, and it was all, and we're to safety. And I started over and I went out and said, I'm going to do 20 years of learning in one year. And I started to write the startup playbook. I did 40 interviews with the best living entrepreneurs I knew, friends of friends. And I listened, I said the questions, how do you bet your life? And I learned a generation of learning that came down to the single introduction

called the five lenses that began bionic. And we bootstrapped a company next seven, eight years to 25 million revenue and sold it two years ago. No way that would have happened had I not gone through the brokenness. So success is a bad educator. It's a long story, but renewal begins because your willingness to go through the brokenness and give it over and start again. Thanks for listening to part one of my amazing conversation with David Kidder, an incredibly successful entrepreneur, venture capitalist, investor, author, and speaker. Please be sure to tune in next week to my incredible conversation with David.