#565 Startups Are Chains, Not Ropes: Lessons from 70+ Investments with Andrew Ackerman

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Mehmet: Hello and welcome back to any episode of the CT O Show with Mehmet today. I'm very pleased joining me, Andrew Ackerman, author of The Entrepreneurs Odyssey. Andrew is two times founder. He's an investor. He's a teacher also as well. [00:01:00] Today we're gonna talk a lot about entrepreneurship, as you can guess. Um, we're gonna talk about also lessons learned.

We're gonna talk about also what Andrew have learned, you know, from. You know, interacting with different founders also as well. So great stories I believe we can talk about today. Andrew, again, thank you very much for joining. 

Andrew: Thanks for having me. 

Mehmet: Yeah. As I was telling you just before we hit the record, that usually I.

Don't like to spend much time on behalf of my, um, guests to speak about themselves. So I will leave that to you a little bit more about kind of your background, your journey, what you're currently up to now, and then we can start the discussion from there. So the floor is yours? 

Andrew: Yeah, absolutely. We did a pretty good job, right?

So, uh, you know, I've done two startups over the course of my career, uh, and along investing and then ultimately started working with an accelerator. Uh, I've done probably 71 or 72 investments over the course of my career. Uh, mostly early stage stuff, and I'm focused [00:02:00] mostly on prop tech and construction tech.

But I've invested in almost everything over, uh, God over the past 20 years. Um, and like, like you mentioned, I, you know, in what I jokingly call my spare time, I teach entrepreneurship, actually just gave my final yesterday and I think some of my students actually still like me, so that should be nice. Um, and I wrote the book, which I'm sure we'll talk about later.

Mehmet: Absolutely. We'll talk about later now, and very few people, they pass through all these different stages, right? So being a founder and, you know, later investor being an accelerator, you know, uh, director and then teacher, if you want to pick up like, you know, the role that the most. I would say shape the way, how you think about the startup world, the entrepreneurship, what that would be.

Andrew: So it would definitely be the seven years I was running Dream its accelerator [00:03:00] programs. Uh, and in part because like it changed so much over the seven years. Uh, actually it was a really interesting post that a friend of mine put on LinkedIn that I commented on. Uh, she was talking about you, the stages an investor goes through.

Right. You become an angel investor, you're excited, you know, you start dropping a couple of checks and you're like mostly relying on gut. Uh, then there's kind of that humbling experience where like things that you thought were like definitely gonna happen, just die. Uh, and then if you're in a, uh, a fund, you start getting kind of conservative in the next couple of years.

You try to do things with consensus. You work on your, your, uh, your kind of process, but they're a little bit overly, um, conservative. And then once you've gone through that phase, you have a more balanced approach. And that kind of emerge as a more mature investor. And I remember thinking to myself, you know, that my journey was a little bit different.

So, you know, I did go through a little bit of that first, like, oh my God, I'm making angel investments, trust my [00:04:00] gut. Uh, uh, I probably some combination of got lucky on my first investments and also didn't have that much money to waste. So I, I didn't like go nuts that way. But the real difference was when I joined DreamIt, uh, when you're in an accelerator, you're in investing in a different way from a regular VC fund.

It's like a regular VC fund. You know, that might, they might make 10 investments a year across all the partners. So if there's two or three partners, you might actually pull the trigger on two, three max four investments a year, and the money goes in. You're usually investing in a seed or a Series A if you're early stage, and it's supposed to last them about 18 months.

So you make your three or four investments and then it's about a year to 18 months before you realize like, how did that work? Like are they gonna succeed to raise their next round? Are they going under? Uh, [00:05:00] and for the ones that kind of go under, if you wanted to kind of go back and figure out. What you did wrong or what decision factors weren't optimum, you kind of can't figure it out because you're still on the outside of the, the startup kind of looking in.

So you don't, you don't actually see what was happening. So you're trying to like, it's almost like you have your hands, you're reaching into a black box and trying to figure out what's going on in there or what went wrong. Now when you're running an accelerator, it's a much different business. So I was doing.

Uh, I was running one cohort a year. There's some that do two cohorts a year, but it was 12 plus or minus startups a year for my first two or three years. Uh, and I looked at a thousand startups each to get there. And when I, you know, I would take my 12 startups, I then spent the next three months living with them physically.

This is the early version of, of the accelerator meeting with them multiple times a week, like really [00:06:00] seeing what was happening. I was in the box. Seeing what was happening, not like reaching my hands into that dark box, trying to figure it out. And what's more our expectation given that we were investing so early was that, you know, a third of the portfolio would be dead within six to 12 months.

Uh, and that was okay 'cause we were investing so early, we had bigger stakes. The economics worked, but it was a different expectation. What that meant was I was seeing about three or four times the number of startups making three or four times the number of investments. Getting much more, uh, feedback, direct feedback on what was happening, right?

I thought it was a great founding team. The founding dynamics are screwed up. Okay, I understand what I didn't see, and I was getting that feedback in a third or a half the time. So that meant that period of time that a lot of investors go through where they're kind of slowly figuring it out was very compressed, uh, at the accelerator.[00:07:00] 

So I, I think I learned a lot faster. My learning curve was a lot steeper, and that's, you know, that's number one. The other big thing is as an accelerator, uh, you're much more focused on bringing in other investors, right? Right. You're a vc, you might lead the round, you might, you know, follow somebody. But with an accelerator, it's almost all about bringing in a lead investor.

And as we went later stage. And as we went for companies that were already post revenue, but looking to get to their Series A, uh, we focused very heavily on helping them with business development. Like we went vertically focused specifically so that we could work, you know, more deeply on this. Uh, so then I ended up going very deep into corporate innovation, corporate venture funds, innovation teams, and trying to understand what it actually took to get a large company to pilot with.

You know, a three person team and, [00:08:00] and that was a very different skillset than I think I would've gotten anywhere else. 

Mehmet: That's, you know, like, um, I meet a lot of people who works in this space. Um, they tell me it's rewarding to see, like also you betting on small teams and them seeing like big.

Organization, big corporates, enterprises, you know, actually giving the trust to these guys with sometimes, you know, critical things, right? Yeah. Which usually they, they wouldn't, uh, do it. And I think by itself, this is something so. So big to, to, to learn, I would say like, uh, because it, it requires a different kind of skills.

'cause you are the one in the middle, as you said, between the founders, the investors, and the corporate. Mm-hmm. So it's a very specific. Place to be. I, you know, and this is why I, sometime I do similarities sometime it makes sense sometimes. No, but I say like, it's kind of, you know, you are the product manager in a [00:09:00] startup actually.

Yeah. In an accelerator, because you have to talk to different stakeholders and then try to, to, to, you know, see where things can go better. Like, can I help here? Can I get this there? Should I pivot from there? Mm-hmm. Now. And this is leads me to, to the question I want to ask you also, Andrew, which again, it's comes from experience both as a founder and an investor and running the accelerator.

You mentioned about, you know, what gonna happen in 12, 18 months, right? So, mm-hmm. I know it's kind of a cliche question. I know it's kind of, maybe you were asked multiple times about it, but I really want to understand from your point of view, because you've done this, you know. A lot of, for a lot of time what separates, you know, the founder?

I, I would say the founders. I would not say the startups. Mm-hmm. That survive from the one that really, they don't cross what you call, we call it the chasm sometimes. [00:10:00] You know what, whatever you want to call it. Like at the end they say like, 90% of the startups, they, they, they close in the first year, right?

Mm-hmm. Um. So what are the traits of the founders who make it? Sure. Lemme ask it this way. 

Andrew: I'm, I'm gonna give you, um, two totally different diametrically opposite answers to the same question. Sure. Uh, so you'll, you'll forgive me for being a little maybe inconsistent, but I think it's important, right? So there's two ways to think about this.

Number one is, there's no one thing, right? Think about a startup like a chain. So not like a rope. So I, the, the reason I make this analogy is let's say you have a rope, uh, and some of the strands are starting to fray. The rope can still work as long as, uh, the remaining strands are still strong enough. You can still use it.

You can pull things, lift things with it. It's fine. Now with a chain, if a single link is broken, the chain is useless. It doesn't matter how [00:11:00] strong the other chains are. So in a very real way, the successful startups. Are the ones where they have no broken links or in other words, they haven't made any critical mistakes.

They made tons of mistakes, but none of 'em have been critical enough to break a link. So they're kind of all the same in that they haven't screwed up in a critical way. Now it's the failed startups that all failed in many different ways. Like some of 'em went after a market that was just too small to begin with.

Others had the wrong revenue model. Uh, some had the wrong team, bad team, team, drama, you know, still others turned out the problem they were solving just wasn't that painful. Those are all different links in the chain that takes a startup and each one fails in its own, sometimes spectacular way. But you ask me what makes a successful team a successful team, in a way, it's just that they haven't screwed up any of those things in a major way.

So that's answer number one. Uh, now I'm gonna give you a totally different answer. 

Mehmet: Sure. 

Andrew: I'll say you, the totally different answer is the things that [00:12:00] separate a founder who will make it from a founder who will ultimately hit a wall are the ones that treat everything in life. Like a, an experiment. Uh, you know, I have a good thesis as to why I am doing this.

I have a well reasoned, but loosely held opinion like I am going to go to market with. I don't know, Instagram and Facebook ads because, and then he, you know, the founder will lay out his or her reasoning, but they'll run a test, right? They won't, you know, bet the pharma, they'll run a couple of small tests and if it turns out their cost per click isn't where they modeled it out to be, they're like, well, that didn't work.

Let's try something else. Or, you know, uh, an investor or know some other mentor will come to him and say, man, listen, I think you should do X. Mm-hmm. And the founder's like, well, I was planning on doing y. Uh, now a bad founder would be like, I wanna do y That's the end of it, right? You know, they're stuck.

They, they know what's right. They're not gonna [00:13:00] do it. They're like stuck in one place. An equally bad founder will the moment anyone else gives 'em advice. Just try something else. Like, oh, I should do, I should do Y instead of x. I will do that. They're like a weather vein. The good founders are the ones that will come and say, Hey ma'am, listen, I understand you said I should do Y, but the reason I was going to do X is this.

Sounds reasonable to me. You know, what's your logic for recommending why? And then if you come out and say, well, I understand what you're saying, but you know, some of the data you're basing your decision are wrong, here's other data, or here's other experience. And if that reasoning is compelling, the founder will say, you know, I think you're right.

I'm gonna try why? And if the found, if the logic that you give them is not compelling, you're like, well, that's just my opinion. They'll be like, well, thank you very much, and they'll keep doing X. So that ability to treat everything as a, um, you know, I'll go back to it again, a well [00:14:00] reasoned theory, uh, but loosely held, like willing to change it in, but only in the face of actual evidence.

Like that's the single most important trait that the founder can have. And when I see that, um, startup may still fail, right? There's certain irreducible risks involved. Fail for single quotes, dumb reasons, right? They will have done everything right and at the end of the day, it'll go down to that one irreducible bit of risk, uh, as opposed to other founders who will end up screwing some of the other links in the chain up, uh, because they're just either pivoting left, right, and center, or refusing to change even in the face of evidence.

Mehmet: Let me ask you kind of a follow up question on this, Andrew, and let's keep it like conversational, if you don't mind. Would that be different from a first time founder versus what we call them serial entrepreneurs, people who have [00:15:00] exited previous? Should we judge them the same way? Um, 

Andrew: well, so first of all, for me as an investor, um, I will judge them the same way because at the end of the day, I just need the startup to, to succeed or fail, right?

So it doesn't do me any good, like they did really well for a first time founder. I still lost my investors' money, so I still need to hold them to the same bar. But the difference is, um, if I think they're coachable and it's a first time founder, uh. Lemme think about, I think coachable. I'll do it either way, but I, I, I kind of run things through a different filter once it's their second or third time.

So like, I have a lower tolerance, what seemed to be silly mistakes if they've done it before, like they should know better. Uh, but, you know, not, none of this is a hard and fast rule. It's really just a question of like, not what you tell me you think, but how you respond when we have the dialogue that ultimately I'm making my decision on.

Mehmet: Now a again, [00:16:00] back on, on, on the same point here. So I know some people would come and tell you, Hey, like, Andrew, we hear you. We, we understand, but this is our gut feeling. And you know, or for example, they would tell you, you know, like, uh, I've always, like in previous lives, I've always done it this way and this is how I'm doing it.

So they show kind of stubbornness slash I would call ego. Would that also be a red flag in your opinion? Uh, when dealing with such personalities, and let's be frank, all all of us, we have ego. All of us, like we have sometime this, but, but when, when it crosses the line of being just kind of, you know, the traditional founder ego versus something which might become negative down to the, you know, down the road.

Andrew: I dunno, I think you've kind of answered your own question there. Right. No. What I'll usually do in those situations is by pushing, and then they're just gonna push 'em back, and it's just based, [00:17:00] they're not basing it on reason anymore. I'll say, you know, and respectfully, I disagree. Uh, this is not for me.

Nothing would make me happier than you proving me wrong. I wish you the best of luck, but this is not gonna be my investment. 

Mehmet: Right. Now I gotta ask you something, Andrew, because you mentioned, you know, being coachable and actually you teach entrepreneurship, right? Yeah. So how do you, how we define or how we spot someone who can be coachable?

Andrew: Yeah. I mean, you, it's actually not that difficult, right? I mean, you have to spend a little time with em. You have to work with em. But, uh, ultimately when you present, you know, Hey, I think you should do X, and you lay out your reasoning. It'll become immediately obvious if they're coachable, right? If they like get it, they think about it, they ask the right questions, and if it's compelling to them and they, they do it and they make the change, uh, they're coachable.

If they stick [00:18:00] to what they're doing despite it, uh, or if you kind of give them, you know, your ideas and they, they sort of say they're gonna run with it, but it doesn't happen, or they don't do it right. They're not right. It doesn't, it doesn't take that much. Uh, it doesn't take that much experience, so you can do it a couple of times.

Uh, you know, you get that gut. There are other stuff that are harder to get, but it, it becomes pretty obvious when somebody is just not coachable. 

Mehmet: Now there's another argument, and I'm sure like maybe you have been asked a lot of times where people tell you like entrepreneurship. Uh, it, it can be taught like it's something that can be learned the hard way.

Only I gotta go and fail by myself. How do we counter argue with these, with these people? 

Andrew: Would you rather learn from someone else's mistakes or from your mistakes, right? Like so many things in life. Um, [00:19:00] you could probably figure it out all on your own, but that's a painful way to do it. And it's gonna take you longer.

And like, you know, conversely, you're not gonna learn it all from a book, not even my book. Uh, you're gonna have to go out there and do it, but you'll do it better and you'll avoid, I hope, the stupid mistakes. And you're more likely to choose options that will succeed in the first two or three tries rather than down on trying number six or seven.

If you've got a little bit of knowledge to, to base it on, like, I'll give you some examples of like where Sure. A first time founder without good mentorship would make different decisions than a or serial founder or someone that's actually gotten decent, a membership or done a little bit of homework first.

Sure. Um, building in a bubble, right? So actually this is important enough. It's like the second or third chapter in my book, right? So a lot of founders, they. Have found what they [00:20:00] think to be a very painful problem, right? It's blindingly obvious to them, and the solution comes to them fully formed. I'm like, oh my God, this is the solution.

It's going to be awesome. Now, where an experienced founder and a first time founder diverged. Is the first time founder or you know, the one that's not coached, will immediately go out and start building, especially if they're technical, right? If they're not technical, they'll go out and try to find someone who can build it, maybe hire somebody.

But if they're technical, they'll be like, great, this is my nights and weekend project for the next three months, they'll start building. The experienced founders or founders that are getting good advice will not do any of that until they've gone out there and they've verified and validated it with a lot of customers.

They'll go out, they'll start talking to all the different customers. They'll go through what the problem is. They'll go through, uh, you know, what their proposed solution is and try to like really look and listen with an open mind. You know, are people leaning forward and saying, oh my [00:21:00] God, when is that going to be done?

Or they're, that's, that's kind of interesting, right? Uh, they'll ask the probing questions to see whether or not that problem is something that lots of people feel, or just them, or that's. Very painful to everybody or, yeah, it's kinda like a hangnail. It's not that painful, right? They'll be assessing that link in the chain is the problem big, painful, and frequent.

Uh, they'll also be assessing the response to their, their solution and they'll be like, well, you know, they seem to only lean forward at like one of the three things that I put on the table. Maybe the other two features I've talked about just aren't that important to 'em. In fact, there's a whole technique and it works really well with consumer facing apps.

Uh, and this is chapter three or four in the book called the Index Card App. Have you heard of it? No. Would you like to? Yes, please. Sure, no problem. So, um, I always ask first, 'cause sometimes I get on a roll and like, yeah, that wasn't interesting to me. So, um, [00:22:00] let's say you have an idea for an app. So step one, if you're gonna build it, is you sketch it out, you'll wire frame it.

Right, right. And our coding to it. So the, the thing to do at that point is to stop, take that wire frame and actually sketch it out on index cards. Right? Just as if there were different screens on your mobile phone. And then you go and you talk to 20, 30, 40 people who are your target customers in the book, the entrepreneurs is doing a qual, or the entrepreneur in the book is doing a qual recording app, and he thinks it's gonna be really good for.

Uh, you know, small on-the-go professionals, like real estate agents or general contractors. So he sits down with real estate agents, uh, and what he does is he's like, listen, uh, I think the person in the book that he's talking to, his name is Julia. So I say, Hey, listen, Julia, I'm building this site. Uh, before I actually build it, I want to test whether I'm building the right thing.

So I'm gonna give you this index card. It's the first page of the app as if you just downloaded it. I want you to interact with it as if [00:23:00] it were the app, right? If it's a button, touch it, swipe, do whatever you would do. Uh, don't ask me questions, 'cause you know I'm not gonna be in the room when you download this app.

I can't answer it. The only thing I'm gonna ask you to do a little differently is to verbalize what you're thinking. 'cause I can't read your mind. So if I, if you're, I'm confused. I don't know what this button does. Just say that out loud. If you're like, I kind of wanna do X, but I'm afraid that if I do X something weird's gonna happen, just say that out loud.

Uh, but whatever you do, swipe, touch or click. Uh, I'll give you the next screen. And I'm just gonna watch you interact with these index cards as if you were interacting with an app that I'm gonna build. So he does this and he learns from that process which features, um, are really, really important to the customers, which features they don't use at all.

If they don't use it, don't build it. Right. Which parts are confused? Well, okay. I need to do to work on the user experience at this point, or the UI at this point. Um, he also kind of confirms based on how excited they are [00:24:00] about certain things. Whether the problem is really that painful and the solution is really that much better.

And then at the end when they debrief and they talk about it, like he learns a lot about stuff that, um, she wished she had in the app that wasn't there. So you can do that 20 or 30 times, uh, and it costs you about five bucks for the index cards and a pen, and you do it 20 or 30 times, it takes you a week or two and you save yourselves months and months of work.

And if you're not technical founder, you can't do it yourself. You service have tons and tons of money. 

Mehmet: Right.

This, this is gold, Andrew. The thing is always, I keep telling people, like sometimes I've, I've, I've met people who they know this stuff, right? Like somehow. Mm-hmm. And, and this is, I'm trying to relate to my other, uh, question or next question, but they still, they don't do it. Right. They repeat the same mistake.

Andrew: [00:25:00] I have a joke for you about that. Please. Yeah. I tell this joke all the time, um, and it, it makes, you know, like a spoonful of sugar makes the medicine go down. If I tell it as a joke or a story, it tends to like go over a little easier enough. If I say, here's the mistake you're making. This is also why the, the book is written like a story rather than just a, you know, list of advice.

So this old guy is in the middle of the street at night and he is looking down. They're looking down. And his friend comes along and says, dude, what are you doing in the middle of the street? In the middle of the night? And he says, well, I lost $20. And it's like, oh, okay. Let me help you look for it. So his friend starts looking for it with him, and it only takes like a minute or two because they're in the middle of the street.

There's like, you know, in the middle of the street there's not a lot of places for a $20 bill to be hiding. So after a minute or two he looks around and says, Hmm, I don't see it. Where exactly did you lose the, you know, the money? So the old guy says down that alley and he said, well, if you lost it down the [00:26:00] alley, why are we looking for it in the middle of the street?

'cause we know the lights better here. So now thank you for laughing. It's an okay joke, but as an analogy, the reason it works is, um, founders do this all the time, especially first time founders, but even repeat founders, they retreat to what they are good at rather than doing the stuff that's scary or difficult, but has to be done.

So let's, let's put this in the, let's say you are a technical founder, right? What you're good at is building stuff, right? Change the user experience, add new features. So let's say you have an app and it's just not taking off. Your first instinct is like, oh, I didn't build it well enough. It's not compelling enough.

Let me add a feature. Now that might not be the problem at all. Maybe it's your go-to market, maybe like you're not doing the right things to promote it. To say a technical co-founder who doesn't come from a, a sales background, that's the dark alley. They don't know what to do there. It's a little [00:27:00] scary to them.

So they'll stay in the middle of the street and they'll code. And for a, you know, a non-technical founder who maybe comes from a sales background, it could be just the opposite. It's like, oh, like LinkedIn ads didn't work, so I'm gonna go try this, or I'm gonna try this other, uh, sales automation tool. When the problem might be he hasn't kind of gone back and, you know, could just be the user interface sucks, right?

And he needs people to work on it. So, you know, it works both ways. But you know, the important thing as a founder is always ask yourself if like, you think you're kind of stuck and you're doing something. Are you looking for the $20 bill in the middle of the street? 'cause the light's better or are you going down the dark alley where the money's really at?

Mehmet: That's very deep. That's very, very deep now. Talking about the book. Um, and because you just, you answered partially the question I wanted to ask you. So you described it as the Lean Startups Meet The Alchemist. [00:28:00] Um, have you found from your experience that telling stories works better than, you know, traditional, what we sometimes call them self-development books?

Sometimes, you know, there are like thousand percent, 

Andrew: a thousand percent, um. I'm, I'm gonna give you a, a kind of weird answer to that, and then I'll tell you like the actual experience. Sure. Um, what religious text do you know of starts with, Hey meme, here's the 20 things you can do and here's the 50 things you can't do.

Versus starting with a creation story or the story of the founders. They all start with a story. Every single religion known to man. Uh, in fact, like one of the reasons Nietzsche wrote his philosophy book, thus book Darra as a story rather than as a philosophy text, he is like, my past six books are getting nowhere.

Right? Right. I'm gonna write it like a story. And that's probably his most famous book. Wow. I went from like [00:29:00] the Bible to Nietzche in like 30 seconds. Uh, but the point is like, I'm not comparing my book to either of those. What I'm pointing out is that, uh, we as. Human beings respond better to stories because we relate to them.

We're able to put abstract concepts onto concrete, often very colorful individuals, which makes it easier for us to remember and to relate to. So, um, I didn't start out with that thesis, you know, I'm not that highbrow. It kind of occurred to me afterwards. Uh, where I came across, it was in two places. One, when I was in business school, there was a book that was assigned to me that was called The Goal.

And it was my operations and strategy textbook, but it wasn't a textbook. It was the story of a manager that was assigned to turn around the plant in the Midwest and didn't know what to do, and he ended up meeting a mentor, uh, who kind of coached him through it. Uh, so it's all about that story as a novel.

Not a great novel, but, you know. Okay. Uh, but far [00:30:00] more memorable way to get that material across than just another textbook. Right, and not coincidentally, like the Entrepreneur's Odyssey files a very similar arc, right? You've got, the entrepreneur has a pitch in front of this like kind of kind of evening law firm.

Pitch Night meets an angel. Investors like that pitch sucks, but there's something there. Let me help you, and takes him through the entire journey until he raises his round, right? It's designed very much like the goal just for startups like that was always in the back of my mind. Then when I started working with the startups and the accelerator concept, I'm meeting with them every week with like 10 to 12 startups.

Uh, I found that I could go to them and I can say, Hey, listen a minute, uh, you got a freemium model, right? You, you've done an Excel model of your business. What percent do you need to convert from free to pay for your model to work? Oh, you need 2%. Great. Why don't you create a test? Just put up a page, buy now, see what happens, and, and we'll see what the numbers are.

I can give you that advice. It's very [00:31:00] good advice, to be honest. Uh, or I could tell you it this way, I could say, Hey Ma, listen. There was a company that went through DreamIt a couple of years ago in a similar situation as you. They have a freemium model. Uh, they needed 2% conversion to really make the business work.

Uh, problem was they hadn't built any of the paid features yet. So their idea was they were gonna keep building and then, you know, they'd be done a, a week or two before demo day. They turned it on and they'd pitch it. Uh, the problem was. Uh, then they show up in demo day. What if the numbers weren't there?

So we talked about it and we, we said, Hey, why don't you put up a dummy page? It says, you know, you know what you wanna build, you know what you wanna charge? Put a button. It says Buy now. And if anyone clicks it, it says, Hey, coming soon. Right? In fact, by the way, I had a real company who did the exact same thing 'cause they couldn't get a merchant account.

And what it said, it popped up, it says, congratulations, you get three months free. Right? So as far as the, the customer's concerned, it was a very real conversion. Right. It wasn't a test. I wasn't asking you would you do it, they thought they were actually [00:32:00] buying. Well anyway, the company comes back next week and like they're white.

It's like they have like a 0.1% conversion. It's like there's no way they're getting from 0.1 to 2%. They're like, our company's dead. Uh, and they asked, uh, permission. I said, listen, there's one part of our company, a lot of people seem to be, uh, interacting with. Can we pivot to that and build something based on that?

Uh, and my colleagues who were running dreaming at the time were like. Of course, like, you know, why go down a dead end build something new. Now, in the next six weeks, they built a company which later became SeatGeek, and that billion dollar company would not have existed had they followed their original gut, which was just to build it and see what happens.

And it worked because they thought instead, what can we do right now in a few days or less, uh, for no money? That can answer the question, that can make a breaker start. But I gave you the same advice two different ways, right? One was just the advice, the other [00:33:00] was the story. Now, which one do you think was more compelling?

Of 

Mehmet: course, 

Andrew: the story. Yeah. The take rate on my random advice is, oh, that's interesting. We'll, think about it. The take rate on the story is like, oh God, we gotta go test that. 

Mehmet: And I think this helps with the. You know, kind of founders we spoke about, like, you know, of course to test how coachable they are.

'cause if you go and tell them like, you have to do this same way as you told me, like when you tell them. I think you should go do Y and they tell you No, we're gonna do X versus you telling you, no, we think we should have done X because, and I think it's on the opposite side, the same thing. Like when you go and tell them something using a story.

Yeah, they might, it's like a, I would call it like bidirectional kind of, yeah. 

Andrew: Interaction. That's a good point. Like it's a subtle point, but you, you make a good point there, right? As good as I, I think I am finding coachable founders. Like, it's always easier to get them to do what's best [00:34:00] for them, uh, when it's not just me telling them they're wrong, right?

Because you know, they wanna look, I got it. Versus like, oh my God, these are people that they respect. They went through the same thing, they aspire to be them. Well, if they went through this, there's no shame in me going through this either. So it also makes it easier, I don't know, to kind of sideswipe ego problems.

To to avoid the, to detour the ego problems, potential ego problems. That's a good point. 

Mehmet: Right be because, you know, again, the, the, the whole point and the whole goal, I would say for any company is to succeed. And now, you know, when we go and talk to people, we give them examples. The way you mentioned Andrew, we, we, we can show actually founders who succeeded because they were also good at storytelling themselves.

Right? Yeah, of course. Like there's a lot of examples we, we. There's this famous thing that always comes up, like Steve Jobs, how good he was in storytelling [00:35:00] and you know, you know, just getting to the point using a story, of course. Mm-hmm. In the sense of, not a fiction story, but you know, walking you through such, you know, an experience like where you are today, where we are trying to take you, and this is how we're gonna do it for you right now.

Unfortunately, sometimes people, they, and with similar to anything in, in the startup world, and I've seen this, I'm not sure. Mm-hmm. If you have seen the same Andrew, and if you have discussed in the book also, um, I see people, they over utilize the term story in a way that it's so obvious. Like it's a made up thing.

It's not real. Now we can keep the story in, in, in the. Boundaries of making it really compelling. Anything 

Andrew: from a startup perspective. Yeah. Anything that is considered cool or hot, [00:36:00] uh, gets abused in the startup world. Right? They're all the black turtleneck, just, you know, verbal, right? Yes. The moment, like, you know, the moment AI became cool, everyone's like, oh, we use ai this by, do you know what this means?

Yeah. This is, uh, fairy dust. They sprinkle fairy dust on their idea. We use ai, like how It's a structured SQL database, right? We use blockchain. No. Right? Uh, it it, there's no distributed ledger here. Right? Or like, why, why would you do it? What's the compelling reason? But No, that's cool. Right? Gonna be whatever it is they come up with they're doing like, oh, it's cool.

They think they're gonna like succeed. So, you know, if they hear, I have to be a storyteller, they're gonna talk about storytelling. And after a while, it's kind of like when you see a LinkedIn resume which says, I'm passionate about X, you're like, oh my God, I threw up in my mouth. Right. You know, that's like the least creative thing.

Uh, you know, I, I have a technical term for it. It's a little vulgar, but I call it, you know, it's, it's cool shit. Founders say, right, no. Right. I [00:37:00] tell 'em like, you wanna, you wanna thank Hemingway, right? You're not talking poetry, you're not like, you're not thinking aspiration like Nike. Just do it. Right.

You're a startup. Nobody knows what you do. Right. If you were a Nike as a startup and you went to an investor and said, just do it, would they have any idea you made sneakers? No. So that's not for you. Right? What you want are simple, concise terms that grandma understands that in like 10 seconds. Tell people what you do.

Right. And like forget about this. That is the essence of storytelling. But I'll take it one level back even Right? Good storytelling is. Uh, a skill, but it's based on another more important skill. The skill you need as a founder. And it, it's cultivatable is empathy. So empathy as opposed to sympathy or sympathy is, oh man, that hurts.

I can see you're in pain. Empathy is, oh man, that happened to me. I know [00:38:00] exactly how you feel, right? To be able to internalize that, and that makes all the difference, right? So if you wanna tell a good story. You have to be able to put yourself in those characters and how they would respond. You have to put yourself in the mind of the reader and what delights them.

If you're using storytelling to find investors, you have to put yourself in the mind of the investors. What are they looking for? Right? How can you tell your story in a way that actually connects with, you know, what moves them? Same for sales, even more so for sales, right? The person you're talking to, what makes that person get promoted?

What makes that person get a bonus? What makes that person excited? Right? Figuring that out is empathy. So if you cultivate that, everything else in the business world, everything else in life, I would say gets a lot easier. Suddenly, whatever you want people to do, it gets that much easier to get 'em to do it.

If you understand how to present in a way that makes them wanna do it. [00:39:00] 

Mehmet: Out of curiosity, Andrew, how much the story in the book has something from you, like kind of if there, if it's the right term to say, like it's certain Yeah. No, no, no. 

Andrew: Biography. Very good term. It's a very good, it's a very good question.

So, uh, before I wrote the book, I'd never written anything that was 200 plus ranges, a pages long I'd written. A lot of, you know, 500 to Android word articles for startup press, for the trade press, you know, because I, I need to talk both to startups who I might want to come to me so I can invest in, and, and also to like the people in corporations who, you know, are looking for innovation.

I want them to know to come to me and I can bring them startups. I can, I also do some consulting and corporate innovation and how to set up corporate venture funds or venture studios. So I, you know, I, I need to write for both of them. Uh, but all of those articles are me talking in my voice, right? And it's all kind of a, a kind of like me [00:40:00] narrating it in a way, uh, to write a book.

It gets really boring if everyone in the book downs the same, right? If everyone has the same motivations and all that. So when I sat down to write the book, I had three challenges, one of which was how do I make everyone sound a little bit different or more than a little bit different? So for the, uh, for Jason, who's the angel investor becomes the mentor, uh, it's, it's a large part me, but it's also partly, uh, one of the original gangsters of the New York investment scene.

A guy named John Aon, hence the name Jason, who passed a few years ago, kind of an older, he looked like a crotchety grandpa kind of guy, but he like solid, right? Really sharp guy. So I tried to. Make how, you know, the investors sound a little bit of a mixture about how he spoke and I spoke and for the founder who I wanted someone who had like, that kind of loosely held, but well-reasoned opinion, that kind of unflappable, willing to learn, [00:41:00] uh, mentality.

I actually had one very specific, uh, founder that I invested in, in mind. And then anytime I would write dialogue for him, for the, you know, for, um. Um, the entrepreneur in the book, I would ask myself, how would this guy say it? So I used him kind of as an, uh, as a translator. So it said it in his voice. Um, and in fact the reason the main character of the book is, is Black has nothing.

There's nothing inherent to the plot. It's just because the person when I'm basing it on, happens to be black. So it just helped me visualize that character saying the words he needed to say. Um, so that's how I made 'em all sound. Uh, different, unique and have their own tone. Uh, but that was, you know, I, I, I didn't come at this with any kind of professional training in creative writing, so that was my hack to solve one of the problems that I faced when I decided to write the book.

Mehmet: Interesting. You mentioned AI, [00:42:00] Andrew, and just, you know, on entrepreneurship, we've seen all the talk, uh, in 2025 about. It's now the best time to start. We're gonna see the unicorn. $1 billion company with single founder. All the, all these ideas that came out and realistically and from someone experienced like yourself.

Andrew: Mm-hmm. 

Mehmet: Is AI really making entrepreneurship easier without the, you know, all this, uh. Very dust you've talked about, right? Yeah. Which is to, to be realistic. Yeah. See, I, I have technical background. I can see things are much easier than funny enough, you know, today I was just like, I don't know. I found that old hard drive, which I was throwing for years.

10 years maybe. Yeah. And I started to see things that I wanted to do. [00:43:00] Maybe more than 10 is 15 years, I would say. And I, I didn't have the knowledge. I, and I, I just say start to say, oh my God, like if there was just AI at that time, I could have built these things. Now, of course, it's nostalgia, whatever you want to call it.

Yeah. Back to reality and from your experience, how you're seeing entrepreneurship shaping in the age of ai. 

Andrew: Yeah, so, um, I am in the fan, I, I, you know, the book, like, uh. Famous first lines. It was the best of times. It was the worst of times. Yep. I'm more in the best of the Times category, but everything is a two-edged sword.

So let me explain to you what I mean by that. So, uh, there's a ton of type, a ton of hype. Uh, I'm gonna talk to the founders or would be founders who are thinking about how they apply AI to their startup. It could be an applied AI startup. Meaning like, I'm gonna do X, but I'm gonna use ai. I'm not building the AI tools.

I'm [00:44:00] just using that as my underlying toolkit. Or it could just be, it's not even an AI startup at all, but I just wanna embed AI in my workflows to do things faster, better, cheaper. Um, that's never been easier, right? There's a whole range of startup ideas that were not possible before. Uh, these kind of easily plug in and play.

AI tools existed. And that's a great time to be an investor too, right? Because like anytime you wanna invest in a startup, you wanna have a very clear answer to the question why now? Right? Right. So, you know, let's go back a, a generation or two, uh, for all the hype around cryptocurrency. The thing about blockchain that was really exciting was that there are certain problems that could not be solved with a centralized ledger.

And that blockchain with a decentralized ledger solved better. So if I asked Startup, well, why couldn't people do this five years ago? 'cause honestly, like there's so many really talented founders out there [00:45:00] that if it could have been done five years ago, there's a hundred people doing the exact same thing just with a different logo, right?

Which means you're either late to the party or it turns out there's some inherent flaw to everything. Uh, having a compelling why now is one of those key indicators of whether or not this is even worth thinking about. Now, blockchain came along very clear. Why now? Right. It didn't exist two years ago.

Couldn't have done it. We're in that same place with ai. Right. There's a lot of, uh, like, I'll give you a kind of a trivial example. There's a company out there that helps real estate agents write descriptions for their properties. Mm-hmm. My wife's real estate agent, she does it, her tool is called me. She sends me the drafts, I edit it.

Um, but there's a tool out there, uh, called, I think it was on June, where you can take the MLS data, you pop it in there and the AI will write it. And it's not awesome literature, but it's a heck of a lot better than most real estate agents write. Uh, and it's grammatically correct. Like one of the jokes out there is like you can tell a listing has been written with AI because [00:46:00] the words, they are there and there all used properly.

Uh, so anyway, uh, that tool couldn't have existed two years ago. True ability to take freeform data and create like pros didn't happen. So that is great. That means there's a whole bunch of problems out there that are now solvable or now solvable. Much better than the existing solution. That's awesome for entrepreneurs and, and by extension it's awesome for investors.

Now, where it becomes a two-edged sword is this, every time something becomes better, easier possible, a lot of people are gonna go after it. And the investors' bar gets higher. So I'll give you an example. You remember those, uh, you know, the hard drive you were looking at? Yeah. Do you remember, um, you may be old enough to remember if you were starting a, uh, any kind of a startup that was on the internet, you had to buy your own servers.

You may Oh yeah. To host them OnPrem. You may have had a room that was refrigerated with a cabinet for your blade service. [00:47:00] Now that was, that was a little bit before my time, but I remember my first startup. We had to go down to a, a center, a glo, world Trade Center. Uh, uh, no. Yeah, it was World Trade Center, actually, uh, where every time we wanted to expand and we needed more power, we'd buy another blade server, the CTIO, and I would go down there, we'd slide it into the rack, and then we'd connect the cables.

And I remember like by the time we added our third, uh, you know, our third server to it, the CTO was looking at me, he's like, I really should have labeled the cables. Right. It's like, I don't know what I can unplug without taking a site down. Uh uh and by the way, it's really cold in that room, but then, you know, just fast forward a couple years, AWS means you don't need servers.

You just buy fractional, you know, compute from us. And it's no problem. It's totally virtual. So the price of building a website or anything just went down dramatically. I didn't have to own any service. I can just rent them. And, you know, when I was starting out. There was [00:48:00] virtually no APIs, any, and there was no GitHub, right?

Anything you wanted to build, you had to build right nuts, right? You couldn't plug into anyone else. Now there's tons of APIs. You can pull stuff off the shelf. You can get code off of GitHub if you want. You can vibe code, right? I've had mixed success with, but it's, it's, you know, it does help, right?

There's a lot of stuff that you can do, which has reduced the time or the amount of things that you have to do yourself. So what used to take $5 million just to get out the door, went down to 500,000, then it went down to 50,000, then it went down to 5,000, and at this point you could do it basically for free.

It's just sweat equity and, and duct taping enough things together. Which is awesome, but it means the bar for investors have just gone up before. It'd be like, what do you have? I have a business plan. Well, what, you know, what can you do before I give you my $5 million? Nothing. 'cause I need to buy servers.

I need to hire, blah, blah, blah, blah, blah. Okay? Right. Now if [00:49:00] you're like, gimme $5 million, I need to build all these things, I'm like, hell no. What have you done with, you know, you have all these tools, like we've gotten to the point where I expect a working prototype and maybe even revenue. Before you raise money, 

Mehmet: right?

Andrew: The principle's the same, right? I want to see that a startup and the founders are scrappy and they've done everything humanly possible to get as far as they can and to de-risk as much as possible before asking for money. And the flip side of having all these great tools is now they can get that much further before asking.

So now to raise the same seed stage round. Like, I want to see more. 

Mehmet: And I think it became much easier. The, the, the thing that you just mentioned a couple of minutes ago about, you know, when you said about the wire frame and taking it and showing it to 20, yeah. I, I don't think I saw anything. Like I, I, I'm, I'm, oh, I'm an old guy.

I consider myself, right? So I never saw [00:50:00] something which you can do. As simple as this, even if you're a non-technical founder, like what you can do today, at least to show people what you're trying to build, which, mm-hmm. Some people, they would call it like the pre MVP even sometime. Guess what? Like these, some of these vibe coding tools, um, they do the job, in my opinion.

They, they do the job of showing exactly what you're trying to build. Yeah. And I believe they get you there. Just my 2 cents, if you allow me, Andrew. Because of this. And to your point about the why now, I think what would also will differentiate them, because this is the question, someone might vibe code the same thing that they are trying to vibe code, right?

So copying, so here where you as a. Founding team, you as your relationships, you as your empathy that you just mentioned. Mm-hmm. Andrew also, I think, of course they talk about the mode, the data, blah, blah, blah, blah. I'm not going into this, but [00:51:00] I mean that human aspect becomes also a mode because you know, you here where your net.

Or is your net worth and how you can reach to these people and show them the why? Now I'm trying to connect the dots of, yeah, all the things that you mentioned, Andrew. I'm gonna 

Andrew: agree in part, right? So, uh, yeah. I mean, at the end of the day, like anyone can do anything. So at the earliest stages, the team is critically important.

Like, I have to believe that like, you can all do anything. I need to make sure that you're gonna do the right things, you're gonna do it. Uh, better and faster. Now, the, the other part which I, I think a lot of people kind of misunderstand is that first mover advantage Yeah. Isn't really that strong by itself, right?

Let's say you do something and it's really awesome and you get out there and like you're, you're ahead of the competition. Well, guess what, what took you a year to build? We'll take them three months to copy. [00:52:00] So if, uh, if that's all you got, they're gonna catch up and then you're all going to be fighting over it.

First. Mover advantage works really well in combination with some other sustainable advantage. So let's say you're a marketplace, right? Marketplaces are super strong because once you've got the supply, why would the demand go anywhere else? Once you have a demand, why would the supply go anywhere else?

That's why Craigslist. Which has looked but ugly for over 20 years is still strong because it's a marketplace. So if you're trying to create a marketplace, then being the first mover matters a lot. Or similarly, if you're doing something like Netflix where the algo, the suggestion algorithm is so important, like getting to scale and getting all the data so that your algorithms are better matters a lot because then someone else can copy everything you do, but then their suggestions suck.

Right? So, you know, first mover matters in [00:53:00] combination with that data strategy, but the first mover itself is not enough. So the beauty of all these tools is everyone can move faster, but you gotta keep in mind it's not that important that you be the first mover if you don't have that other piece that actually locks in your advantage.

Mehmet: Right? Just as a joke. Some people I saw, I, I, I think I saw it somewhere on the internet. Someone was joking, saying like, if you want to see web, uh, 1.0, just go to Craiglist because it looks really the very similar to the first pages that appeared on the internet. Yeah. But yeah, but it's a fact. As you mentioned, Andrew, they, it, it does the job that it does, it does supposed to do.

Right. So for all received, they're strong models. Yeah. They, they, they are, it's proven business model, right? Like no one can say it doesn't work. Like whether it's a, uh, ad portal, uh, [00:54:00] classified like, uh, tech, eBay, Amazon, like, all these are like success stories, which, which no one can, can, can ignore. Mm-hmm.

As we are coming closer and, and Andrew, I'm really, you know, I enjoyed the conversation with you today and I think we should do maybe part two later. Sure. Final. Final advices to founders and investors, you know, that you might want to share with us and very traditional question where people can get in touch and know more.

Andrew: Sure, sure. So, uh, I wanna go back to what I said before. The startups are a chain, right? Every link is an important, uh, link. If anything's broken, it doesn't work. Equally important for investors who are thinking about whether they wanna make an investment in a startup, especially if you're a new angel investor.

Uh, trying to get beyond just your gut and build a little bit of a, of a process and a checklist so you make consistently good decisions. But, you know, critical for the founder who, you know, like, [00:55:00] I'm doing this one startup. The investor might invest in 10 20 startups. Uh, but like, I got the one, but I wanna make sure my one is gonna be, uh, as good as it possibly can be.

So, um, the number one thing you can do. Buy the book. Uh, so I'm, I'm, I'm being a little bit facetious about it, like getting a great mentor is, is, is way up there. Uh, but finding a mentor is tough, right? I would say buy the book first 'cause it'll help you figure out who's a good mentor for you to have. And the reason I go back to the book is because the book runs you through all the links in the chain.

What are all the pieces that you need to have in place, uh, to know that you have a good business? Before you start to raise money, and then what are all the pieces that you need to actually successfully raise money? Uh, so it's all there and it's a quick read. It's kind of fun. There's a lot of, uh, puns and visual and, and otherwise, uh, you can get it Amazon, where you can get [00:56:00] everything else in the world.

I don't think there are any other books out there called the Entrepreneur's Odyssey. Certainly not ones with this really cool cover design that you see behind me. Uh, or the pun, you know, a novel approach to startup success. I told you they were puns. Uh, so you can do that. If you're interested in learning a little bit more about me, uh, my personal website is Andrew, the letter B as in boy.

It's my middle initial, uh, ackerman.com. Uh, but I won't be offended if you're like, hell, I've had enough of this guy. I just wanna get the book and move on. That's okay too. 

Mehmet: No problem at all. By the way, I make the life easy for my audio. I put the links in the show notes if, if they are listening on, uh, their favorite forecasting app.

If you're watching this on YouTube, you're gonna find it in the description. So you'll find the link directly to the Amazon link, uh, for the book, and you'll find the link for Andrew's website also as well. And this is usually how I end my, uh, episodes and, you know, really. [00:57:00] I was humble 2025 with all the support that I've got.

We closed the year and I counted it, you know, I think on the last day of December, how many times we were ranking somewhere in the world in the top 200 Apple podcast charts, and I figured out like we did it every single week without missing. But the, the funny thing, it was from different countries, so I counted, we made it up.

To, I think 44 countries so far. So that couldn't happen. So that means, you know, people are recommending the show. I really appreciate this. So this is, you know, something, I wanted to thank all people who listen, who tune in, who sometimes send me email suggesting things, change the cover, change this, change that I listen, I, I read all of the emails.

I read all the notes you sent me. So thank you for keep, keep them coming and. Again, if you just discovered this, if someone recommended this podcast for you, I [00:58:00] have a small favor. I'm trying to create an impact by bringing people like Andrew, who have done it before. You can learn from his experience. He wrote a book.

You can go and grab the book and read it, because I'm sure there's nothing better than having an idea in a book or maybe an idea on a podcast like this. You might not go and copy it. You might go and just. Get inspired by it. This is my theory, so give me a favor, subscribe and share it again with another friend or another colleague, and tell them to subscribe to our podcast.

And as I say, always this is, can be done without, the support can be done without, you know, all the encouragement I get from everyone. So thank you very much. Stay tuned for a new episode very soon. Thank you. Bye-bye.