· Peter Rahal, David Senra
[00:00:00] S1: Yeah. [00:00:00] S0: You've said this thing in like half a dozen ways, like in subtle ways since we've had this conversation. [00:00:00] S1: Yeah. [00:00:00] S0: You're obsessed with time. [00:00:00] S1: Yeah. So if you think of it as, like, the analogy is like aerodynamic. I want to be super aerodynamic through things. And then my goal also is, like, being on the other side as an investor, I want to maximize value, but not really. If I want to maximize value, I would run an auction and I wouldn't care. But I don't really want. I want to make sure the investors make money and they're good with the underwriting. So, like, you want to walk to the line where it's like rich, but not too rich, right? You can actually, if I'm on the other side, I can underwrite it pretty easily. I want to make sure all my stakeholders make money, and that's my approach. So, the con of that is maybe we could have gotten an extra 100 million valuation, I don't know, but I don't really care. Like, I want to make sure that everyone feels good. And then I- [00:00:00] S0: Why do you not really care? And I agree with this. I want to get your thinking out in the open. [00:00:00] S1: What's, like, 2%? It doesn't matter. It just doesn't matter. And I care about money, but I don't really care about that type of money. I care about how the people on the team feel and are excited and aligned. And I've seen on the other side of the table, and founders just prioritize enterprise value that early, and it's just fucking gross. [00:00:00] S0: Why is it gross?
· David Senra, Peter Rahal
[00:00:00] S0: Why is it gross? [00:00:00] S1: Because it's not about that. Like, it's about, in this stage, it's about the right people and it's focusing on the mission. It's not about maximizing enterprise value at this stage. [00:00:00] S0: And if you're good, you're going to wind up with the money anyways. It's just going to take over. [00:00:00] S1: Yeah. And, like, we got a good valuation, which is fair. But I don't want an investor feeling like, "Fine, we'll do it, but I disagree." [00:00:00] S0: So you said if you were on the other side, you could underwrite it. So essentially, you want to do a deal where, like, if you were Neil, you would take the- [00:00:00] S1: Yeah. [00:00:00] S0: ... "That's a good deal. You should make that investment." [00:00:00] S1: Yeah. Exactly. And that's how I underwrite it. Because I'm operating as a CEO, and then I'm operating as an investor too, because I'm participating in all this stuff as well. Which is a conflict, but I'm generally trying to bifurcate, like, all right, Peter's the CEO, but he's also an investor. [00:00:00] S0: You mean you're putting more of your own personal money into the company? [00:00:00] S1: Mm-hmm. [00:00:00] S0: Why would that be a conflict? [00:00:00] S1: Well, because if I could lower the valuation for me, like... [00:00:00] S0: Okay. [00:00:00] S1: Yeah. [00:00:00] S0: You would self-serve. [00:00:00] S1: Yes. [00:00:00] S0: You're trying to do what's best for the company, not just best for- [00:00:00] S1: Yeah.
· Peter Rahal, David Senra
[00:00:00] S1: Yeah. [00:00:00] S0: I read Michael Bloomberg's autobiography for the first time, like, five years ago. And then I knew he has one of the most profitable private companies in the world. [00:00:00] S1: Yeah. [00:00:00] S0: And I've heard crazy rumors that we don't even have to get into, which is, like, way richer than even... Everybody knows he's really rich, but I heard he's, like, orders of magnitude richer than has been reported. And he raised, I think it was Merrill Lynch, if I remember correctly, 30 million for 30% of the company. Then he winds up buying that first, like, 10% slug back to them from them, like, 10 years later, and whatever. It was like 200 million he paid for that, right? And then he bought the other 20%, I think, in 2008 for like 4.5 billion. So if you look at it, one of the best investments he ever made was buying back his shares, right? And essentially now owning all of his company. I think it was all of it or like 90%, something like that. And Merrill Lynch's point was like, "Well, we paid 30 million in like 1979, and by 2008 we made 4.7 billion on it," or whatever the case is. Could you see an example, a future? Because I do think you are kind of obsessed with control. Anybody's obsessed with quality and control and everything else tends to... I could see you wanting to buy back the shares at one point. [00:00:00] S1: The opportunity presented itself, for sure. The governance is set up in a way where I have that. So as long as that's there. But yeah, I don't- [00:00:00] S0: Governance is set up that you have control.
· David Senra, Peter Rahal
[00:00:00] S0: Governance is set up that you have control. [00:00:00] S1: Yeah. [00:00:00] S0: Yeah. [00:00:00] S1: And I'm good with power, so I don't abuse it. [00:00:00] S0: Are you going to continue to raise money? [00:00:00] S1: I mean, if we have a need, but right now we don't. [00:00:00] S0: But in every round, you put in more money of your own? Is that what you said? [00:00:00] S1: I should, yeah. [00:00:00] S0: Okay. [00:00:00] S1: Oh, yeah. [00:00:00] S0: Okay. [00:00:00] S1: Yeah. What the fuck else am I going to do? [00:00:00] S0: All right, so I'm on the phone with Neil, and he was like, "Peter's one of my favorite kind of founders," like the founders that he likes to back, which is, I kind of hinted at it earlier, which is like, nothing's that you wake up and just like, you don't focus on what's good. It's like everything is just not good enough. And all you see are the kind of flaws in your business, and you kind of attack those flaws, try to make your business stronger over time. Again, very common in the history of entrepreneurship. So I guess he came to visit you, and it was him and somebody else, and it was you and a bunch of people that work with you, and you were doing taste tests or whatever of maybe new products or existing products. And like, "What do you guys think of it?" "This is awesome." And you go, "Wrong. This is shit." And then he goes, he said, "Not only did he say it was wrong, that everything was shit," and then he listed all the deficiencies and the things that he wanted to- [00:00:00] S1: Yeah [00:00:00] S0: ... to fix.
· David Senra, Peter Rahal
[00:00:00] S0: ... to fix. [00:00:00] S1: Running a business is like a river. As long as it's flowing, great. But if there's something blocking that flow, you need to fucking fix it. Like, if something's in the way, I ruminate on it to the point where I can't sleep, that I have to fix it so I can sleep. I ruminate on the problems. So they just nag at me. This is actually a problem I have. A flaw of my leadership style is I don't acknowledge the wins or success. I'm only preoccupied about what's wrong. So, I'm working on that. But I actually outsource that to people internally to like, "Hey, make sure we're like, say, like our birthday is tomorrow." I fucking hate birthdays. But our birthday's tomorrow, so I'm like, "Please do something so we can acknowledge our birthday." But, like, I don't do that. So I outsource it a bit internally, but yeah. If you just fix that, I don't know, the approach makes sense. [00:00:00] S0: Yeah, it's almost like what Elon does. So we just had Zach Dell on the podcast, and Antonio's on his board. And he says the first, I think it's still to this day, like the first two years, every conversation that Zach Dell had with Antonio, is it Gracias? [00:00:00] S1: Yeah. [00:00:00] S0: Antonio Gracias is, "Hey, Zach, how's it going?" "Good." "What's your bottleneck?" [00:00:00] S1: Yeah. [00:00:00] S0: He refused to talk about anything. [00:00:00] S1: Yeah.
· Peter Rahal, David Senra
[00:00:00] S1: Yeah. [00:00:00] S0: And he's like, "What is the bottleneck? What is the in way or critical path? And then we're just going to talk about this. The entire conversation is this. And then the next thing that is resolved, okay, what's the next bottleneck?" And it's just over and over and over again. It's just relentless focus on the bottleneck. [00:00:00] S1: Yeah. I think it's like, all right, my job is to scan the holistic picture of the business and react to the problems and then go fix them and get the fuck out of the way. Just like constant confronting the problems. [00:00:00] S0: I think this is, like almost all the elite entrepreneurs have this exact same mentality, where it's like you can even go to like, Buffett and Munger would talk about this when they were talking about people operating all the subsidiaries of Berkshire. It's just like, just tell us the bad news because the good news is- [00:00:00] S1: Yeah, exactly. It's like the river running. I don't care- [00:00:00] S0: Just tell me the bad news. [00:00:00] S1: Exactly.