From IPO to Bankruptcy and Back: Scaling Across Full Lifecycles with Mike Krupit

Introduction and guest background

00:00Bill Gallagher: Have you ever had a week when you're completely slammed, but somehow nothing actually moved? Is this one of those weeks? That's not really a time problem. It's a busyness habit problem. My new book, Busy Is Broken: Do Less, Scale More, is all about growing by doing less, not more. Read or listen to a sample chapter over at busyisbroken.com. That's busyisbroken.com. It's also on Amazon and other booksellers.

00:28Bill Gallagher: Yes. I got no voice today. Couple weeks of traveling. I'm toast.

00:39Bill Gallagher: So what does it look like to go from startup all the way to exit? Mike, our guest today, has done it a few times across a variety of sectors. We're going to share all about that. We're going to see what the discerned lessons are from all of that today. How do you go from startup to exit multiple times across different sectors? That is the topic of our show today.

01:08Bill Gallagher: Hey, everybody. I'm Bill Gallagher, Scaling Coach and host of the Scaling Up Business Podcast, coming to you now. I don't know. We're closing on 700 episodes, and we've been doing this for ten years. And it is a real pleasure to talk to people every week and hear something new and share stories and things like that, our clients, their experiences, authors, CEOs, etcetera, all that and much more. Plus, we've distilled some of the stuff into a book coming out now, Busy Is Broken. It's probably on sale now—preorder by the time you get this—some special things for people who preorder, special events and some additional goodies for that. Busyisbroken.com is where you'll find that.

01:50Bill Gallagher: So find that and more. Also, our regular workshops, things like that, scalingcoach.com. Of course, you can like and subscribe wherever you're getting this right now. We like to bring it to you everywhere we can.

02:05Bill Gallagher: Alright. My guest, Mike Krupit. Did I say that right?

02:11Bill Gallagher: It's good to check that beforehand, but I did not in this case. Now I should go on and mispronounce it for the rest of the show.

02:22Mike Krupit: When people ask, I'm reminded of middle school where they said it rhymes with stupid.

02:30Bill Gallagher: Painful. Like, not that anybody's self-esteem has got trouble in middle school. Middle school's a rough time for everyone. So Mike's got thirty years of building companies in different roles: CTO, COO, CEO. He's worked across a range across the country, range of industries, that kind of thing, and through all different stages. CDNOW, is that right? Help take that one public?

02:57Mike Krupit: Yeah. That was part of three IPOs. Yeah. That was one of them.

03:01Bill Gallagher: Yeah. That's a big deal. That's not—many people part of one or two IPOs. Three is a lot. Right? So across a big range, a founder of this Projectify company that also works with people now in that kind of situation and has been featured in the Philly Business Journal as most admired CEO. Welcome to the show, Mike.

03:23Mike Krupit: Great. Excited for our conversation today, Bill.

03:28Bill Gallagher: Well, okay. So here's the deal. I think a good place to start. Right? You've been through all this range, like successes, but also some failures, M&A, growth, IPO, all that kind of thing. As you think back about that, what do you think is the most surprising thing that earlier stage entrepreneurs would have about a lifetime of that?

Why people matter more than ideas or timing

03:58Mike Krupit: Perhaps the most surprising is that it's not about the idea or the product or service. It's not even about the timing. Did I pick the right time to launch it or grow it? It's that the people matter most. Having the right people in the right seats is ultimately the biggest determinant of success.

04:23Bill Gallagher: Yeah. You know, it's funny. We talked to so many guests and leaders over time. The reliance on people, like, people drive us crazy. People are tough, and yet you can't do anything really big on your own.

04:37Mike Krupit: You can. And even in today's very fast-moving market of AI-enabled companies, you can't surround yourself with hundreds of AI agents and expect the same kind of success as if you were to surround yourself with, you know, 10 good people.

04:59Bill Gallagher: It's for sure a multiplier. Right? I have a team around me, and yet some of the things that I've been able to do faster this year and last year because of AI is unbelievable. The ease of producing our show today. I've written a book. The process of writing the book, AI-enabled throughout—I had to write it, but using AI throughout for research, for organization, for proofreading, for feedback, all that kind of thing, remarkable.

05:27Mike Krupit: Correct. So it's a great multiplier, as you said. It is a tool for people to use. And so I meet entrepreneurs today who say, well, I'll just spin up a hundred agents, and they'll be managed by other agents. And you know what? Just surround yourself with 10 people and let each of them spin up 10 agents. But the scale comes from the people who you surround yourself with.

05:52Bill Gallagher: My son was like a founder, raised money, and did a few companies. And they—three of them in a row didn't go anywhere, and he dabbled with a fourth. And then he folded his work in with another guy, and they built a company called Midjourney. And Midjourney became a very big deal, and—I roughly, this is not exact, but roughly—there as he left the company, there probably were 55 employees, a lot of community leaders, and then about a million paid users or maybe more at that point. Right? But that's in a couple years, so that is—it's still somebody. 55 is not nobody. Alright? It's remarkable. And then a, you know, multibillion-dollar valuation on the company at the time. That's a remarkable growth curve, and that is the multiple of AI. It's still not by yourself. Right? Even that.

06:50Mike Krupit: And I'm going to guess that the reason why Midjourney became what it was wasn't only because of the technology—and I hear great things about the technology—but it's those 55 people who were there for the early period of the company.

07:05Bill Gallagher: Well, and the technology, if you don't adapt and evolve, right, it becomes common. Like, you know, other people soon develop your capabilities and that kind of thing, and what you're known for is hard to hang on to that edge over time unless your team pulls together and continues to pivot through.

07:21Mike Krupit: Yeah. Right? The barriers of entry that we see as lower now for ourselves to get into business are lower for everyone else as well. So it levels the playing field, and it makes a lot more competition. So you've got to figure out what's my secret sauce.

07:37Bill Gallagher: Yeah. You know, it's funny. With expected IPOs coming, depending on how things go in the market conditions and the—there's a lot of ifs there. But it is reasonable that we might have $3 trillion companies, new trillion-dollar companies in a short period of time. Right? And that is, like, mind-boggling when those companies didn't exist five years ago.

08:01Mike Krupit: Yeah. And therefore, what does that mean for five years from now and, you know, or five years from those IPOs? There's just so much uncertainty there. And while there's an excitement to that uncertainty and a lot of, you know, dreams of innovative opportunities, the other side of that is we're struggling to make decisions in this period of uncertainty.

08:25Bill Gallagher: Yeah. And it doesn't necessarily solve that, like, making decisions. Look. So my son's now an AI scientist at Anthropic, and so he's working on the latest versions of the Claude tools. And so I get an unusual inside sort of help in using AI well for our business. Right? But if I just go to AI with a decision for a client or for ourselves—

08:51Bill Gallagher: I get pages of stuff. Making sense of it and deciding what to do, it's not sort of deterministic.

08:57Mike Krupit: It's like an aid to something. You cannot just lean into it. And that's why we need to surround ourselves with the right people, because the need for human reasoning has not gone away.

09:11Bill Gallagher: I think that's a… So let's loop back then to your story, not just one, but many. Many industries, different outcomes, difficult ones, joyful ones. And I'm sure even some of the joyful things had many challenges along the way. If you think about across your whole career arc, what are the… Like you mentioned people. What are the big patterns you see? And maybe you can connect to some specifics of the companies and what it looked like.

The arc from founder to CEO

09:39Mike Krupit: Yeah. Let's see. So as part of the whole theme of having the right people in the right seats, the biggest mistake that I made early in my career that I subsequently took a different approach at other companies is the, for lack of a better word, I'll call diverse perspectives. We are very comfortable to bring on people like ourselves.

10:08Bill Gallagher: Mhmm. Because we get it.

10:10Mike Krupit: And we lose the appreciation for the fact that different experiences, different backgrounds, different perspectives, different ways of processing information are critical to the success of an organization. And, you know, when you're surrounded by 10 like-minded people in a room… I think how did I hear it once? If there are 10 people in the room and they all agree, then nine of them are unnecessary. And so we… It took me a while to be okay with not only the concept of 10 different opinions in the room, but the ability to identify those people who are not like me, who would bring those complementary strengths into the room with me, to the point where I once had a boss at one of my companies who said to me, "Mike, you're not micromanaging your team enough." I said, "I beg your pardon." I said, "I hired people who can do their jobs better than I could." And he says… How did he frame it? "You didn't get to where you are today because other people are better than you. He says you're the best, and you're better than all of them, and so you need to determine how they get their work done." I didn't last at that company much longer after that. There were several bad leadership moments like that that convinced me to sort of move on. But the stories that he gave me are great because I now use those as teachable and coachable moments for the rest of my career. Right? But the ability to fill the room with people who do what they do better than I do. I had a client who was running a CEO peer advisory board, and I had one of the members, a client, say that he wanted to hire a salesperson. And he said that, "I don't expect them to be better than me because I founded the company. I know the products and services really well." And one of his peers said, "Wait. You don't come from a sales background. You're not focused on it full time. How can you tell me that bringing on an experienced salesperson who's 100% focused on sales shouldn't run circles around you?" And it really changed the tone of that CEO, of who he was gonna go out and hire, because he had to reset his expectations and figure out, "How do I hire a really good salesperson even though that's not my background?"

12:55Bill Gallagher: It's a really funny thing. And we so often fall into that trap of thinking… I don't know if we think well of ourselves or we just think so badly of everyone else. Right? And then that leads us to start a company, and then we're surprised when we get and are surrounded by mediocrity that we can't count on. I think it's because people then show up mediocre and don't have a chance to show up great around us.

13:20Mike Krupit: In part, that's a requirement of our being good leaders, is to give people the opportunity to show us what they can do, to allow people room to fail, to create that safe environment that encourages people to do big things. And yet, you know, one of the things you said there kinda reminded me that majority of people who start businesses do so because they're not good at working with others. And so we're already starting from a deficit of, well, you know, I wasn't successful working for others. I wasn't successful working at a big organization or for a corporate structure with all the processes and politics. So I founded my own little business. And now that it needs to grow, guess what? I've gotta figure out how to get all this people stuff right.

14:09Bill Gallagher: Yeah. Alright, look. I wanna be in charge. The problem is even if you are and you find people who will just do your bidding, your customer wants to be in charge ultimately.

14:22Mike Krupit: Well, the… Yeah. The the source of revenue is your number one priority.

14:27Bill Gallagher: Right. What is this shift? So founder to CEO, you've done a range of company types and sizes and that kind of thing. But if I'm an early stage entrepreneur, I started the business, what do you see as the arc that I go through as the leader?

14:46Mike Krupit: I think the first moment is that moment of delegation. Right? And I mean, delegation is talked about a lot. And it's a difficult thing because we start by delegating tasks, and eventually we realize we have to delegate accountability. That we can't be expected to manage a whole bunch of complex work. We've gotta have the right people to manage their own work. So, so getting good at delegating accountability. The second big milestone to achieve is the processes. Right? So now we have multiple people working with us. It's the systems and processes that help us, that help keep us aligned. And so maybe it's an operating system for our business or a system upon which we run our business, or maybe it's just some structure we came up with, but it involves, you know, meetings. And I never forget. I got my first management job early in my career. And I went home to my then wife, and she says, "How's your day?" And I said, "It was awful. I spent all day in meetings." She says, "Isn't that your job now?" And it was like, "Yeah. I guess I'm enabling teams to get things done." And so we have this aversion to meetings, yet when our job is to sort of keep… To have the systems and the processes to keep people aligned, a lot of that time is spent meeting with people, one-on-ones and groups. Obviously, enough time carved out for our own deep work, our own thinking. The the the next part after that is the, for lack of a better word, I'll call it the letting go. The realization that I have several things that I need to do, fiduciary accountabilities, you know, investor relations, press relations, or vision, right, being the visionary. There are things that I need to do that no one else in the organization can do, and I've gotta let go of all the other things. Right? I've gotta trust that the systems and the processes and the people that I put in place get it done.

Four accountabilities that define a real CEO

17:05Bill Gallagher: So why don't you… I'm sure there was a point in your life where you were a poor delegator, and then there was a point where you became a better delegator. And I want you to tell us about that time and what happened for you.

17:20Mike Krupit: In, well, in terms of being a poor delegator, yes. When I took that first management job, I was that management job that I complained about. I was the worst manager possible. I made every mistake in the book. I didn't have training. I didn't have a role model. Didn't have a mentor. Didn't have a coach. I hired the wrong people. I dealt with conflict in a very ineffective way. I maybe was a poor communicator. I over-communicated the wrong stuff and under-communicated the right stuff. And I probably micromanaged the business. Right? And that's the biggest challenge when we're delegating is trusting, giving them the accountability, and I probably didn't.

18:11Mike Krupit: So the moment is, when I got my, for me at least, when I got my first performance review as a manager, I was a five-star engineer. I was a three-star manager. And that was very upsetting to me, having been wired to be a perfectionist. And you do a lot of soul searching at that moment. First is like, am I in the right career, or should I just stay an engineer? But the biggest one was, well, what did I do? Right? And so one of the things that has stuck with me to this day that I use a lot with clients who are sometimes offended by it is that ancient Chinese proverb, the fish rots from the head. The fish stinks from the head. It's like, if my department is not performing, if my department is not effective, if we're not meeting our goals, what am I doing wrong?

19:01Mike Krupit: And it's that self-realization that this is on me. This is not them. This is me. And it takes a while for, I think, especially entrepreneurs who are growing into the CEO role and scaling an organization. It takes a lot for you to be able to say it's me. I've been working with some entrepreneurs now for six years, and they still don't think it's them. But yeah, we've been engaged for six years.

19:35Bill Gallagher: They're hoping you'll figure out who it is?

19:38Mike Krupit: Yeah. Because it's always someone else. And they're willing to, you know, what is that Einstein quote? Right? The definition of insanity is taking the same steps and expecting different results. So it's that moment that says, it's me. What can I do differently? And I've learned that now. I've honed that throughout my career in realising that in any case, not just in my leadership work, in any case, the only person you have control over in the room is yourself. In any relationship, the only control you have is yourself. So how can I think? How can I communicate? How can I process something? What behaviour should I exhibit? And so to me, a lot of the success in becoming a strong leader is not the ability to master others. It's the ability to master yourself because you're the only one you have control over.

20:42Bill Gallagher: Now have you gone sort of founder to CEO more than once?

20:50Mike Krupit: Yes. I started as co-founder to CEO, and then the last two companies I started, I was CEO and founder at the same time, but CEO of a two-person company is really not a CEO.

20:58Bill Gallagher: When you say founder versus CEO, yeah, what explain the difference in your mind with this.

21:02Mike Krupit: Well, the founder is the person who gets the company off the ground. Right? Who says, hey, I've got an idea. I've got a product. I've got a service. I want to go into business for myself. We reach this moment that we have to say, did I just create a job for myself, or am I creating or am I building a business? Because let's say you get it to the point where it's meeting your initial goals. And if the answer is I've just created a job for myself, I've got a little boutique business and it makes me happy and it gives me the compensation that I need and the flexibility that I want, then you're done. Right? You know, you're never the CEO of anything. You've just created a job for yourself, and you're the founder of that business. It's when you say I want to build a business, and I want to get this business to a certain size. Right? I want to go from 1 million to 2 or 2 to 5 or 5 to 10, what have you. Where you realise that it's not about my direct contributions to get there. It's about the people, the processes, the systems that we put in place. My ability to be a strategic thinker and a visionary. My ability to communicate. My ability to identify the right people. And so that's the biggest part of that evolution is to say, I'm the, as a founder, it's about me. As a CEO, it's about the organisation.

22:35Bill Gallagher: Yeah. I think when you start a company, you list yourself as CEO right away. Right? Sometimes if you want to telegraph the stage, you might say, I'm founder. But founder and CEO is the most common thing. And then you find out there's three people in the business, and two of them aren't getting paid.

22:54Mike Krupit: Exactly.

22:56Bill Gallagher: And the only person who's getting paid is your assistant. Right? So there could be that in some cases where you've got something like that. Well, I think when we think about CEO, it's like I'm an executive driving the future and the vision of the company. And I have a leadership team and a wider team. And then now okay. That's CEO. Right?

The CDNOW bankruptcy story

23:17Mike Krupit: Agree. I have this position description for the CEO that has four accountabilities.

23:26Bill Gallagher: Vision.

23:28Mike Krupit: Yeah. The face and voice of the future. Fiduciary accountability, making sure that legally and financially, it's a sustainable enterprise. People, ensuring that the right people are in the right seats, mostly at that point at the senior level, and outside face of the company. Right? And you're the one, whether it's press or investors or key partners or key clients, you're the outside face of the company. Everything else is someone else's job. Now, clearly, when we start a business, when we're in that one-person, three-person company, we have to wear a lot more hats than that. But we need to understand that eventually as the organisation grows, those are our only four things we should be focused on.

24:13Mike Krupit: One of the tools that one of my clients came up with that I keep stealing over and over again or I've perpetually borrowed is keeping a not to do list or a do not do list. And I ask my clients to keep it in a physical place, either on a pad or a whiteboard so that they can see it all the time, that it's not buried in some file. And every time that they do something that they know they shouldn't be doing or that they don't want to do, they've got to go write it down on that list. And I have a couple clients who I work with remotely, and so I know their office layout because sometimes I ask them to show me their office. And they have a whiteboard on the side. And in the middle of a conversation, I'll see them get up and go write something on the whiteboard, which I guess is a proud moment for me.

25:08Bill Gallagher: You know, I've been working this quarter with people in our workshops as we focus on execution often this quarter and in all sort of stages of our clients. And we've been talking about this about, like, okay. There's execution in your business, and then there's your personal execution, which is largely about your time management. How do you spend your time?

25:31Bill Gallagher: And having them let go of what they're not doing is a really useful thing. And we also like to advocate a not-doing list. And sometimes not that many people, but a few people will create like a never-doing list that they're just being really clear with. I like to talk about things that I've told my wife, hey, I'm never tackling that. Maybe someday I could take some, but for now that's like a never. And then the not-doing is like, yeah, I'm like, look, that is something that maybe should happen someday, but it's not anywhere in time for me. Like, it doesn't exist.

26:05Mike Krupit: That's a useful thing to let go of and be clear about what you're doing and not doing. Yeah, and so one of the things I ask for is boundaries, and that not-to-do list or not-doing list is one example of a boundary. Right? To set up those boundaries. Boundaries are healthy. And people think that I started a business and now I'm free of all boundaries because my experiences with boundaries in the past have been negative. But when you think about it, every relationship we have, every piece of work that we do, every hobby that we have, there's always boundaries. And I just want people to be explicit about them.

26:43Bill Gallagher: Yeah, I think being clear about who you are and what you're doing and not doing is super, super useful. And then thinking about that role. Like, if you've had to evolve your role over time, thinking about what's on that list and not on that list. In the book that's published this year, Busy Is Broken, I talk about this guy, Fernando Flores, who talked about getting really direct assessments from people and soliciting that honest, not polite, real feedback from people. And figuring out who you are for people and then either dealing with it or evolving it is really, really powerful. I had a couple of leaders in the company that I took over, and they told me that I was a bad CEO, that I was doing things wrong or whatever. And I heard them out and I'm like, oh, you're totally right. I don't do those things. And I'm never, ever, ever gonna do those things. They were so offended. I'm like, look, I get that you like that from the former CEO. It is reasonable, and there are CEOs who do that, and I'm never, ever gonna do that. And I mean, maybe by accident I'll do that sometime, but it's not at all anything I'm committing to. And I just wanna be clear. That's not the kind—here's who I am. And here's what you can count on. Right? And they both left. And, well, that was like traumatic in some respects. They didn't really wanna go, and I didn't really need them to go. But if they weren't okay with that, they did need to go. And things got easier after they went, not because they were incompetent. They were very competent, highly competent. But there was just a mismatch between what they were looking for from a CEO and who I was willing to be as the CEO.

28:40Mike Krupit: Yeah, that reminds me of a story when I took over at CDNOW as chief operating officer, and a bunch of new departments got moved under me. And the head of one of the business departments came to me and said, look, when I used to report to the CEO, there was always a lot of friction in the organization, so I'd tug their elbow and they would just sort of smooth the path for me. So can I expect that support from you? And I said, you know, that's not the way I work. You build strong relationships with your peers and you negotiate it with them and you get them to cooperate with you. I believe in leading with influence, not leading with power. So there is no tugging on my elbow. And he resigned the next day.

29:25Bill Gallagher: Yeah, look at this reconciliation. There's a difference. I had Marshall Goldsmith on a previous show, and he talked about working with Ford CEO who's implementing changes in meeting hygiene and behaviors and things like that. He had somebody famously come to him, and he encountered him. The guy had been missing the meetings, and he's like, hey, what's up? Like, I haven't seen you. And he's like, oh, yeah, sorry, I've had a lot going on. And he gave him a lot of sympathy. He's like, oh, I totally get it. I understand. It's okay. It's fine. And the guy's like, oh, thanks for understanding. He's like, oh, no, no. It's fine that you have that stuff going on. You just can't work here anymore.

30:07Mike Krupit: That's great. And by the way, you just reflected on your book. I love the title of it. I'm looking forward to it. Right? Busy Is Broken. Because if anyone ever tells me they're busy, it's like, well, what's wrong? Like, that's not good. I think if the badge of honor that you wanna wear is busyness, then what's wrong? Something's broken.

30:31Bill Gallagher: It's funny. I had a friend years ago who was an executive with a now defunct company. He was in the tech industry, and he described—he's like, okay, I've risen up in my role and that kind of thing, and I don't have anything to do anymore. And I feel like I'm actually successful now. We've got the team running. Everything's going good. So I just need to kinda, you know, keep it sprinkling along, like make sure people are empowered and that kind of thing. I feel like I've got my job. So I have more bandwidth.

31:12Mike Krupit: You know, there's a lot of—I've been writing about that a lot lately because there's a lot of perceptions out there that as long as I'm indispensable, I'm safe. Yes. Quite the opposite is true. Right? So even in your business when you're doing succession planning, but even in my own career, right, I couldn't have gone from CTO to COO unless someone else could do my CTO job. Right? I couldn't take on all of that additional accountability if all my other accountabilities weren't being handled by someone else. Yeah. And the fact that I let myself become dispensable opened me up to a lot more flexibility and new opportunities, as opposed to the opposite, which is, you know, made me more valuable so nobody was ever gonna fire me.

31:52Bill Gallagher: I had a client that worked with me for eight years. And I know another coach who was like, that's really great. And his thing was to become indispensable to the companies. And I'm like, well, you know, I mean, it's nice. I know them well, and I've been paid for a long time for the coaching work. But what I really like is to create a success story. I really like to work with you for like two, three years and sell the company and create a big exit. I mean, that's a much more enjoyable thing. That's a victory that I can brag about forever and we will both brag about. Right? Like, so graduating companies through an exit or a succession or something like that, not needing me anymore, feels like—and it still takes a couple years of work to get the work done. But—

32:39Mike Krupit: No, I had that a lot in the course of my business, and right now I'm struggling with it too, where if a client becomes too dependent upon me, I feel like I'm not doing a good job. Yeah. And my goal is to wean myself out of the engagement with success.

33:01Mike Krupit: Promotable successes the way you've just described.

33:04Bill Gallagher: We're not always successful. We're not always slaying. We're not always killing it. We're not always smashing. It doesn't sometimes goes badly. So you've referenced having some bankruptcies. Sounds like more than one, plural there. Tell us about one or more of those. Like, what was the company? What happened? What did you learn from it? Like, take us through those stories.

Iterating fast when things look bleak

33:32Mike Krupit: Well, I'll share—since CDNOW is a well-known story, I'll even share the bankruptcy that we were working towards. We had gotten to the point where we were supposed to merge with Columbia House, and I was COO at the time. I hadn't been appointed CEO yet. So we were gearing up towards this private merger. It was this merger with this major private company. We were public at the time, and we put all of our eggs in that basket. And the owners of Columbia House pulled out at the last minute and left us in debt with big operating losses and no plan forward. At the same time, what was happening in the marketplace was there was the beginning of the dot-com bust, where now there wasn't a lot of capital available out there. And Wall Street, who was saying we care a lot about growth, now said we care a lot about profits. And we had no resources to turn it around. So we put the company up for sale, engaged investment bankers, and for the most part, myself and the General Counsel and the CFO were working on that. But in parallel, I had to be preparing for Chapter 11. The fact was that the business wasn't sustainable. And I remember at the end of the banking process, we were supposed to get bids from six players, and none of the six players decided to make an offer. Right? And so now it was, alright, well, I've got to start executing this Chapter 11 plan. And instead, we found a latecomer to the buying process, which was Bertelsmann, who had just come into $7 billion from their divestiture of AOL Europe. And they had $7 billion to spend, so they bought us at $3 a share, which was way down from our peak of like $39, perhaps. Right. But it was a way to keep the business going. But that process—we had 575 employees at the time, right? That process of trying to figure out a Chapter 11. And even later in my career, so having done a startup, raised some money—this is the last startup that I did. We got it to nine people, and we thought we had demonstrated a little bit of product-market fit. But when we tried to scale it, we realized that we didn't have it. It was just some anomalies. And no matter what we tried, we couldn't get traction. And I went back to the investor. He said, I'm willing to put more money in because it sounds like you're making progress. And I said, you know what? We built some great technology, a great product. We have a great team. But this next dollar you give me is at just as much risk as the first dollar you gave us. So you know what? I don't think we should keep going. We had a lot of false signals along the way, and maybe it was our own confirmation bias. And so just taking those nine people—myself and eight—and just saying, hey, go find something else. We didn't formalize it as a bankruptcy yet. We subsequently did. We ended up trying to tuck it into something else so that we could hold our heads up high and say, hey, we had an exit, we were acquired. But the fact was, no. I mean, for all intents and purposes, the technology and the business went out. The technology and the team went out of it. And that was all in the course of eighteen months—maybe twenty-four months max. The fact is that when you hire people and you create jobs and you create a product or a service, and all of this you feel has value, the whole process of saying it's not going to sustain and we have to bankrupt it is difficult because of all of the joy and pride that you got from it as you were starting it and building it.

38:12Bill Gallagher: Yeah. I think the personal attachment, the emotional attachment to the thing is very, very high. And I think there's value in hanging with it, but the bankruptcy and the failure can be something. So I've skirted bankruptcy on two occasions with the same company, and I shut down two other companies. And we sold off some others. But I just closed them, and I thought when we did, like, that we were putting them on pause, but I never went back to them. Like, I just got busy with other things. And we could have. And in fact, one of them was online food ordering long before Uber Eats and Grubhub and DoorDash and any of that kind of thing. We had a working food ordering with actual live orders in restaurants, right? And you shut them down.

39:06Mike Krupit: Yeah. And often, even though I said earlier that timing isn't really a critical factor for success, in many ways for failure, timing is often a major contributing factor. You know, too early.

39:23Bill Gallagher: Yeah. Too early. Wrong time. Yeah. Our food ordering was pre-mobile and lacked the same kind of integration that you have today in stores with the POS systems. Talk about the lesson. So if you were going to look at the lesson for the bankruptcies to younger founders and CEOs who have yet to face that, what is it that they need to look at when they hit a bleak patch?

What to do when the numbers stop working

39:59Mike Krupit: Get outside-in perspectives. Right? So we are too close and, as you say, too emotional to what is going on. And that is a critical moment where the outside-in perspectives perhaps matter more than the inside-out perspective. So when things look bleak, go get other perspectives. Go get other opinions. Maybe it's a coach or an advisor. Maybe it's a mentor. Maybe it's—when I was struggling with my last startup, I went to the competitors. You get another CEO of a startup on the phone, they're happy to chat with you. Often they'll share with you more than you expect, especially if you're willing to be vulnerable, authentic as well. So get outside perspectives. Try to make your analysis as objective as possible. Right? Really look at numbers, whether it's what you've learned about the market, whether it's what you've learned about pricing, whether it's what you've learned about conversion rates, whatever you've learned that is not turning out, that is creating this bleakness, right? To really make it as objective as possible, and there's nothing more objective than numbers. I think the final thing is to be willing to take more risks. Right? So things get bleak and we get a little bit nervous, and we might get too conservative. And so if we've built a business that perhaps is iterative—and many business founders and business people do think iteratively—

41:51Mike Krupit: Be willing to iterate on riskier assumptions in tighter iterations. And so when I saw it at my last startup that we were running out of cash, I said, let's just, you know, in a sense, spaghetti at the wall, but do it in very tight iterations. So let's take this one feature and fake it till you make it. Tell everyone we have it. Throw up a landing page. Send traffic to it. See what we can learn. Right? Within a few weeks, we learned that—so we were a mobile app, and we thought maybe if we had a web presence, it would be all different. But you know what? Web presence, building that system would have taken a little bit of time and money. So let's go validate that. And so we made believe we had a website. We put up the shell of a website, and we drove people to the website and drove people to the mobile app and tried to convert them and found out the conversion rates were equal. Meaning, it wasn't the website that was holding us back. So be willing to take risks and iterate more quickly when things are feeling bleak. And finally, hate to call this something formal like scenario analysis, but map out the next few steps. Because when you get to that next step, emotions are still gonna be high. And so before you get there, make the emotional decisions. So if I spend another $10,000 in six months and want to get X number of customers and I don't, I'm willing to shut it down. I will shut it down. Do that in advance because in six months from now, you're gonna try to talk yourself out of it. So convince yourself before you start.

43:38Bill Gallagher: You know, it's great. What are your—what do you consider success? What are your boundaries? What are you willing to iterate on? We spent some time iterating on a new workshop recently. And as of last week, we'd registered over 800 people across two sessions, and it's still climbing. And then this morning, we were over 500, nearly 600 people registered for the workshop for the first session. I'm like, holy crap. We've hit on something now. Did we do a good job with it? Is it—like, is this? But, clearly, what we laid out is of interest. Like, we hit on something that bears interest in. So now we have to see, can we make it, like, really successful and repeatable over multiple sessions.

44:15Mike Krupit: Right. Well and the question becomes, like, what are the assumptions that went into it that you'll wanna validate coming out of it? Right? Exactly. Like, did it work? Pricing, conversion rates, things like that. Like, what are we expecting from these 600 people in the room?

44:36Bill Gallagher: Mike. If you wanna know more about Mike, his website is Trajectify. If you like what he's selling, you like his message, go check it out. Trajectify.com is a place to find out more about Mike. Mike, thank you so much for joining us on the show today.

44:54Mike Krupit: Bill, I very much enjoyed it. I appreciate it. Thank you.

44:56Bill Gallagher: Lot of great things in here and more. If you wanna find out more, go to Trajectify.com. If you wanna find out about our stuff, go to ScalingCoach.com. That's our workshops and that kind of thing, including ones like we're doing this week. And then I got the new book coming out, BusyIsBroken.com. Advance orders are available for that as you get this now. We're pretty excited about it. So BusyIsBroken.com, ScalingCoach.com, Mike Krupit, Trajectify.com. Thanks to my friend and mentor Verne Harnish for creating this whole Scaling Up mess that is responsible for our work and impacting the world. And to Wanda and the team for getting our show prepared and out the door each week. Thanks again for watching, for listening. We'll talk to you again next time. Keep scaling.

45:52Bill Gallagher: Thanks for listening today. One last thing. If anything in this episode hit home, my book digs into it further. Busy Is Broken: Do Less, Scale More. It's all about how to stop drowning in work and build a business and a team that scales without you. Available right now with content samples at BusyIsBroken.com. Go grab it. Be less busy.