Episode 393: From Failed Investments to 70+ Startups

Show intro

Corey Kupfer00:02Do you want your business to grow faster? Are you open to new and out of the box ways to drive revenues and increase value? How do you imagine the most successful entrepreneurs and business leaders double, triple or expand their businesses tenfold or more? The answer is deals. This is a weekly podcast featuring conversations with business owners, executives and leaders as we reveal behind the scenes details that give you, our listeners, the confidence to pursue your own deal driven growth. On this show we discuss a huge variety of deals, everything from large, complex mergers and acquisitions, capital raising, joint ventures, strategic alliances, real estate, affiliate and sponsorship deals, franchising and more. My name is Corey Kupfer and I've been supporting deal driven growth for businesses for over 35 years. As a successful entrepreneur, professional negotiator and attorney, my goal is to help you strategize, plan for, find and complete deals that will help your company grow faster. Welcome to the DealQuest podcast. Let's get started.

Corey KupferAndrew Ackerman is a serial entrepreneur turned early stage investor and innovation expert. He has invested in over 70 startups in the past two decades. He is currently a strategic advisor and head of Reach Labs, Second Century Ventures, consults on corporate innovation strategies, CVC accelerators, venture studios, and is an adjunct professor of entrepreneurship. He has previously been managing director at DreamIt Adventures where he launched and built both their ed tech and urban tech, prop tech and construction verticals. He has written over 60 published articles for a bunch of publications, Forbes, Fortune, and more. He's been described as lean startup meets The Alchemist. That's a discussion about his book, The Entrepreneur's Odyssey, which you can see behind him if you're looking at the video. We're definitely going to be talking about that book and all his experience in the funding entrepreneurial world. I'm excited to have you on the podcast and welcome.

Andrew Ackerman02:02I'm excited to be here. Thanks for having me.

Corey Kupfer02:03So listen, before we get into all that, I want to take you back to where you were as a little kid growing up, maybe 8, 10, 12 years old. What did you want to be? Because I'm guessing entrepreneur, investor, all the stuff that we read probably wasn't it at that age. But you tell me.

Andrew Ackerman02:18Yeah, a little. When I was a little younger than that, I had my first shock to my system when I found out that I was too big to be a jockey. And it doesn't take that much to be too big to be a jockey. So then my second goal was astronaut. I grew up religious, so I didn't know if they had kosher food on the space shuttle. So I tabled that and I was without direction for a couple of years.

Corey Kupfer02:44I love that. For a lot of us it's too small to be something, like for me it was too small to be a basketball player, but for you it's too big to be a jockey. That's a new one. I love it. I remember, this just brought back a memory I hadn't seen for a little while. I grew up in a lower middle class neighborhood in Brooklyn, but one of my neighbors, turns out he was the father of a girl I dated for a very short time. He actually owned a couple of horses in the Trotters. It was surprising because we didn't live in horse country. But I think he and a couple buddies, I still remember the names Keystone George and Lucky Miracle. We used to go to the track. I might have been less than 18.

Andrew Ackerman03:20And I was a precocious raging degenerate too. But I was never into the trotters. I was more into racing.

Corey Kupfer03:28Yeah, exactly. This is only because there was a guy on the block who actually owned trotters. Funny. One other question, looking back. What was your first deal of any type?

Andrew Ackerman03:37Ooh, my first deal I negotiated with my parents really hard for the Millennium Falcon when I was a kid as a gift. That took a lot of doing, a lot of doing. And as you recall, that was the coolest Star Wars gift in the original series.

Corey Kupfer03:53Oh yeah.

Andrew Ackerman03:54X-Wings were nice, but the Millennium Falcon meant that you had arrived.

Corey Kupfer04:01And the implication clearly is that that negotiation was successful.

Andrew Ackerman04:05Yeah, it was involved. A little bit of reason, a little bit of moral suasion, little bit of blackmail. No, no, really, I love it.

Corey Kupfer04:15All right, so listen, let's talk about your journey because you become an investor and supporter of so many early stage companies. But how did you get there? What was the journey to where you are today?

Andrew Ackerman04:28Yeah, my journey looks really odd if you look at it from the start. It looks like it makes sense in retrospect. But it really wasn't as purposeful as maybe I might make it out to be. So I started off, let me give you a little background. We started with childhood. Both my grandparents were entrepreneurs. One of them owned a bunch of candy shops. He'd go to edgy parts of town, open up his candy shop, newspaper shop, build it up, maybe a toy shop sometimes. And then when the neighborhood got better, he'd sell it and he'd move further out. Very much an immigrant businessman. And my other grandfather, he'd been in the country I think four generations already. He started off doing everything from Zippo lighters after World War II, ended his career creating insurance products. I remember visiting him in the Empire State Building, which as a kid, that was a big deal.

Corey Kupfer05:20Oh, yeah, sure.

Andrew Ackerman05:21Unfortunately, they both passed when I was fairly young and my dad was a doctor. So I had not exactly role models, but I had this vague image of wanting to do something more in the business world. Didn't know the word entrepreneur at that point in time, but that was what I meant by it. I knew I didn't want to be a doctor or a lawyer or an accountant. So fast forward. I come out of business school and it's the 90s and startups aren't a thing. VC is this one guy in my entire 600 person class who did it and no one knew what Ben did. It's ironic because now Ben and I are pretty close. We only kept in touch because we ski together. But it's the 90s, you're coming out, it's the University of Chicago. And I'm thinking, okay, right door is for investment banking, left door is for consulting. And if you're here for marketing, you're in the wrong school. So I went for consulting. I figured I'd fall in love with an industry. But what happened instead is the world caught up. And I remember we were on this one project in London. We were building this intranet system for these two companies that were about to merge. That's what I want to do. It didn't exist four years ago when I graduated, but now it does. So I moved back to New York. Within nine months, I'm in my first startup. And then there were some twists and turns as well.

Corey Kupfer06:35Yeah, I want to get into some of those twists and turns. But it's funny because the candy store you mentioned reminded me of an early entrepreneurial story for me. I won't tell all of it because people have heard part of it, but they may not realize this part of it. So people who've listened to the podcast before probably heard me tell a story about how at 13, 14 years old, I used to get paid a penny a piece to put flyers in doors, grocery stores, that kind of stuff. And they used to hire kids and pay us a penny a piece. If you were delivering two at a time, you got a penny and a half for each. It was good money, meaning at that age, if you make above minimum wage, it's great, right. The candy part came in. And this is not something I would say that I am proud of in retrospect in terms of ethics. But it was somewhat entrepreneurial. We got these samples of boxes of Starbursts candy to hand out. And we handed out some of them. Some of them we ate. I will tell you, past my 14th year, I've tasted Starburst twice since then because I ate so many of them during that time. And then also we had some leftover boxes, which I proceeded to sell to the local...

Andrew Ackerman07:51Oh, so the candy stuff. Yeah. I'll tell you a funny story. People sometimes ask me what I look for in an entrepreneur when I'm looking for a startup. I'm looking for some kind of prior entrepreneurial experience. An exit's awesome. Prior startups are great, but they're really all indicators, right. What I'm really looking for is do they have either instinctively or have they trained themselves with that instinct to hustle for a deal, to hold the pen out until somebody signs. I remember this vividly. I can't remember the startup the guy did because it wasn't that good. But we always ask, what was your first entrepreneurial experience? And we have a lot of people saying paper routes. Not many people did paper routes, but whatever, right? So this guy says, when I was in fifth grade, I noticed that a lot of my classmates, well, male classmates, would show up to class, they'd forgotten their pencils. So I went out and I bought a box of pencils and I rented them out for a nickel a day. He didn't sell them. He rented them pencils as a service. So I talked to Mark, who was interviewing with me, and I'm saying, I don't really care for his current startup, but I'm going to back one of his next startups. There's that way of looking at the world. You just see things a little differently when you learn to be an entrepreneur.

Corey Kupfer09:08Yeah, no question. So tell us, what was that first startup? And then any other significant ones or stories from that journey?

Andrew Ackerman09:21Yeah. So basically two startups. One was a pretty good success, the other is, well, you've heard the expression, experience is what you get when you didn't get what you wanted. It was a hell of an experience. First one was a company called Bunk One. We did what we call now internet services for summer camps. So back in 2000, it was hard to get a website up and it was really hard to get password protected photo galleries. So we did that so people could see their kids at camp. We have one way email systems where you could send a message from your computer and get printed and handed out to your kid. And that was a big deal back in the early 2000s. I mean for reference, you could sell a four by six print for four bucks. And I feel a little guilty even saying that.

Corey Kupfer10:00No cell phone cameras for younger folks.

Andrew Ackerman10:03No, no cell phone. Even now, they take the cell phones away for the integrity of the camp experience, which now as a parent I do believe also. So that was my first one. We didn't take venture funding. We had some offers. One of them we didn't pursue. One of them actually disappeared on 9/11, literally. We had an opportunity to buy our competitor, which I think we stupidly passed on in retrospect. And then ultimately we put the company up. It was time to exit. Got a good deal. CEO didn't love the deal. I thought it was a good deal. So I negotiated with him. I said, hey, Ari, if that's too little for you to sell at, you should be thrilled to buy me out at that price. So that was my first startup in a nutshell. Did family office work. I worked at a family office which for those of your listeners not familiar, that's basically a rich old guy or in some cases the family of a rich old guy. In my case it was just a rich old guy who needed someone to manage his money, invest his money, and in this case incubate a couple of his ideas. And my second startup was Digital Memories for Parents, which we can talk about if you're curious.

Corey Kupfer11:08Yeah, I'd love to talk about it. That's a great example of m&a negotiation in action, by the way, the way you handled that exit. So tell us about Digital Memories.

Andrew Ackerman11:14Yeah, so I mentioned that the photos were a big part of the Bunk One product. So I was recruited by a guy, a restaurateur, but he had this grand vision for organizing all sorts of memories you might have. It could be photos, it could be voice notes, it could be memos that you got. It could be where on the wall the mark is for your kid at certain ages. It could be when they lost their first tooth. It was an interesting vision. It was right idea at the right time. But he didn't know how to do this. He knew how to run a restaurant, which is definitely an entrepreneurial venture, but a very different kind of venture. And he saw what I built at Bunk One and he thought, okay, this makes sense. It ultimately didn't work out. It was a little bit of founder drama, which is to say there were lawsuits and hurt feelings, and ultimately the company ended up, ended up killing the company. But I learned a lot.

Corey Kupfer12:09Yeah. So, all right, so you have these two startups, one successful exit, the other less so. That exit from Bunk One is a good example of how even smaller m&a transactions require the same negotiation skills as larger m&a deals. Did you go right into investing at that point?

Andrew Ackerman12:20This goes back to it being a zigzag path, right. So I'd say about five years into the eight years at my first startup, a friend of mine I had met at business school, he was getting his PhD, ultimately went on to found an angel group and then a VC fund. Still in touch. Awesome guy. Ira Weiss, Hyde Park Ventures. He was doing angel deals as a pickup gang on a couple of deals. And you'd say you want in, you don't want in. And it was a soft commit to do a certain number of deals over a period of time. So he brought me this deal. It had to do with a compound you would take that would bind with amyloid plaque in your brain so that if they did a scan, it would show up. And the reason that was important is if you have Alzheimer's, it corresponds very well, correlates well with the buildup of amyloid plaque. You don't know if it causes it or if it's a side effect. But it's the only thing that tells you for sure that you have Alzheimer's and not dementia or something else. And unfortunately, the only way you could tell up until that point was an autopsy. So not really a helpful way to tell while someone's alive. So I thought it was pretty cool. I put the money in, did well. Truth is, I had no business investing in pharma. I didn't know the science. I didn't know any of that. I barely knew the industry. But I got lucky. And as you probably notice in life, if you do something and get lucky, you get hooked. So I did it again and again. I just managed to get better at what I was doing before my luck totally ran out. And then eventually, just to fast forward, after the family office and after my second startup, I ended up joining DreamIt Adventures, which was at the time one of the top five accelerator programs, third oldest accelerator in the world. And I ended up running their New York office.

Corey Kupfer14:13It's interesting because we talk to a lot of entrepreneurs who build a company, sell it for a lot of money, and then they're in that place where some of them frankly struggle. What is their identity? What do they do now? And then that's when they jump into angel investing, thinking, oh, okay, I don't want to run another company, but this is the way I'll stay in the game. I'll get some skin in the game, whatever. And it works for some, but it doesn't work for a lot of others. They don't like the lack of control. They get frustrated. It's not as exciting, whatever it is. So I'm curious as to what you've seen with others. And obviously you've been in it and done it with a lot of companies, so you must like it and have obviously gotten good at it.

Andrew Ackerman14:55Yeah. So the good thing about being an angel investor is you don't want to invest, you don't have to invest, right. It's not like you have a timetable. You gotta deploy your money. You like the startup, you invest, you can put as much time into it as you want or as little or up to, until your startup says, dude, leave me alone, which they won't, because you gave them money, even though they're thinking it. So it's pretty good. And it can cut both ways in that if you're a startup founder and you know the industry, you can give great advice in that industry. If you're a founder in roughly the same industry, but maybe you sold products to small businesses. This is another company that sells to small businesses, different industry. You can give good advice there too. Or you had a tech startup, it's another tech startup. As long as you steer clear of the stuff that you don't know anything about, you can give good advice about, this is how fast you should move. This is how fundraising works. But the further away you get, the more the best thing you could do is write the check and just step away. So I see this sometimes with, no offense, with lawyers, and I'll tell you why. It becomes tricky, right? So lawyers are objectively very bright people. You have to be pretty bright to pass the bar. But their entire life, they've been focused on a different set of metrics, right? So if you're a lawyer, a, you bill by the hour, right? So speed is not necessarily rewarded. Number two, if you're working at a big firm, when you're working your way up and certainly when you're handling the client relationship, you are thinking 24/7 about how not to mess this up, right? The last thing you can do is screw this up. You want to make sure you papered off all the eventuality. Even if you know in your heart of hearts 99.99%, never gonna be an issue. You got to paper it over in the deal because God forbid it goes south, and then the partner comes, he's like, dude. Or your client's like, that's it, we're done, right? So you are incentivized to go slow and methodical. And there's no incentive for a lawyer to get a deal done, right? You kill the deal. You protected my client's interests, right? But however, the deal could have made lots of money, right? So your incentives aren't to complete the deal and certainly not to complete the deal fast. Then you meet this really cool startup. Maybe you met them because you did their legal work, their formation work, and you love what they're doing. You believe in what they're doing, you've chosen well. And then they ask you for advice. The smartest thing you can do at that point is say, dude, I've never done what you do. My entire incentive structure is the opposite of what you need to do. Let me find you someone who can give you better advice. What actually happens is, hey, he's asking for advice. This is fun. I'm gonna give advice. It's like your Aunt Frida giving medical advice. And we know she's not a doctor.

Corey Kupfer17:41As you know, you're talking to a lawyer.

Andrew Ackerman17:43And I actually say the same exact thing, right?

Corey Kupfer17:46Yeah, no, exactly. But I actually say the same exact thing. I think even a step further. Here's the other thing I say about most of us lawyers, right? Not only that, but first of all, any generalization is not true for everybody. But overall, lawyers, personality wise, tend to be more conservative, right, in their personality when they start. Then you go to law school and you spend three years reviewing everything. You read cases, there are no cases about things that went well. You spend three years looking at stuff that went bad, right? All the ways that went bad. So you're already risk averse. You now get trained to be over indexed on risk. And what I always say, and frankly, it's been a competitive advantage for me and it's why clients actually, I mean, I do strategic and business advice, consulting, whatever, it's been a huge competitive advantage for me because what I always say is, listen, my job as a lawyer is not to eliminate all risk. You cannot be successful in business without taking risk, right? My job as a lawyer is to identify risks because the good entrepreneurs and business leaders are willing to take risks, have it not work out, and you make another decision. What they don't want to do is be blindsided, right? So you got to make sure they know the risks so they can make the business decisions, right? And then you got to be able to help them balance risk with the upside and opportunity. And that's something generally that lawyers are terrible at. But frankly, it's been great for me.

Andrew Ackerman19:04We all appreciate this, Corey, right? So I have a family friend. We go back, families go back four generations. I knew his great grandmother, she lived to 104, had a shot of vodka every day. So Jason's been my personal lawyer every time I negotiate with the company that I join. For many people in your audience, they know this, but you're the CEO of the company, but you're also negotiating with the company on your contract, which is a weird set of mixed incentives. So my lawyer, when I'm negotiating for me against the other side of the table of the company before I take a role. So Jason would come in and you go through all the stock option plan and everything and we're on this conference call and we get to registration rights. The other lawyer's like, oh, you want to talk about registration rights? And Jason says, yeah, not really. It's going to change five times before anything really goes. These are good enough. Let's move on. The other lawyer was like, we could do that. So. But that's the mark of a good lawyer, right? Knowing if you're that confident that you can say, listen, I could spend three hours papering over this, but it probably doesn't matter. And here's why. That's awesome. And if you're on the other side of the table, you're an entrepreneur. I would argue that the right way to, for lack of a better word, use a lawyer is not to say, make me safe, but to say, hey, show me where the risks are here. Tell me what's a big risk, what's a small risk. Tell me what I should negotiate hardest for and what I can live with in the worst case scenario.

Corey Kupfer20:28100%. You and I are 100% aligned.

Sponsor break

Corey KupferLet's take a break from the show for a minute so I can tell you about an incredible resource my team and I have put together for you. Secrets of Deal Driven Growth. Creative Ways to Grow Your Business Even in Challenging Times is a powerful ebook that helps you take DealQuest podcast episodes and apply them to your own life and business. This is the ideal tool for anyone looking for creative ways to grow as deal makers. And you can get yours now. It's as easy as heading to coreykupfer.com/workbook and downloading your copy. While you're there, you can also consider joining our dynamic deal driven community of founders, experts, small business owners and entrepreneurs. Now back to the show.

Corey KupferAll right, so listen, let's talk a little bit about the incubator world and then I definitely want to talk about the book and everything. There are people who definitely have experience with the various incubators. You hear about Y Combinator all the time, for example. There are people who actually don't really fully understand what an incubator does, right. So talk to us about that world a little bit.

Andrew Ackerman21:34Sure. You just included most of my family, at least before I started. Just to start with incubators, accelerators, sometimes venture studios, they all mean the same thing. So let me put it on a spectrum for you, right? So startup gets started, they take money out of their own pocket. Maybe they get a little money from friends and family, they get a little bit more further along, they might get angel investor money. Those are people who get involved really early, take a lot of risk, like to be involved, but they're not your Uncle Sal that at Thanksgiving filled the awkward silence by saying, okay, I'll give you 20 grand, right? So they're in it for the money. And then eventually when you get further along, you're actually raising money from venture capital firms or VCs. Now there exists this kind of gray area between the friends and family round, meaning people who just, I trust you, I don't know what you're doing, but here's 20 grand and the VCs coexisting with the angels. Maybe before, maybe after, there's a phase where a company like an accelerator lives. So what an accelerator or an incubator looks for, classically speaking, is a startup that's probably pre revenue, right? So it hasn't gotten out there, it's probably got a product done or close to done. It's pretty rare that they'll take people with an idea or a cocktail napkin as we call it. But sometimes they do. They're okay with the team not being perfect, right? They know that there's gaps on the team. They're looking for entrepreneurs that are coachable. Even if they don't all have it down, they will get involved and dive into that company over a period of time, usually three months, sometimes more. Work with the entrepreneur every week, sometimes multiple times a week, and his team to get that company to the next level and then introduce that entrepreneur and that startup to potential investors, angel investors, micro VCs, so they can raise their first round. Sometimes they'll do this at an event called demo day, sometimes they'll do it other ways. And in exchange for all that extra heavy lifting, they usually get a decent chunk of the startup. 5, 6, 7, 8, 9, 10% of the startup for not a lot of money, but a lot of sweat. So that's the accelerator world, the incubator world. And it exists in this weird sort of diamond in the rough zone. You're looking for diamond in the rough, you're kissing, not to mix metaphors, you kiss a lot of frogs. Very few of them turn into princes. And in fact they turn into the geeky, pimply 14 year old of the prince first, if you're lucky, and then they mature into the handsome prince. But that's where we live. That's what an accelerator incubator does.

Corey Kupfer24:04And what did you love most about your involvement in the accelerator?

Andrew Ackerman24:10I love that stage of the startup, right? It's infinite possibility. Zero money, but infinite possibility. If you picked your people right or picked your ideas right, you're dealing with stuff that's never been done before, right? Which is always exciting. There is that nothing new under the sun phrase. And the truth is you look at it, it's totally new, except it's kind of like what we had before, just different, right. So certain patterns still apply. I've saw that movie before, but it was a western. Now it's sci fi. So there's this mix of brand new world. Oh my God, blockchain made all this possible. AI is making all this possible. But the fundamental truths still apply.

Corey Kupfer24:51I'm amazed at how passionate some people get about this conversation. But what do you think of the whole SAFE...

Andrew Ackerman24:58Wait, SAFE notes, right?

Corey Kupfer25:01Yeah, the whole structure. For some reason there are people who hate these things. People who love them.

Andrew Ackerman25:09I teach entrepreneurship and we're talking about right now in class. So let me give the quick background for everyone else and I'll do this relatively quickly because I've been doing exactly this right? And so, okay, Corey, you got a startup, you got zero revenue. You want to raise money from me. That's awesome. How much of your company do I get?

Corey Kupfer25:26I don't know. But understanding deal value is always the challenge, right?

Andrew Ackerman25:27Right. I need to value your company, right? If your company is worth a million dollars and I give you 100,000, I should get 10% of your company. If it's 10 million, I give you 100,000, I should get 1%. But how do you value a company? Well, discounted cash flow doesn't work because you're not making money. Comps don't work because you're nothing. There are no comps. And it's all potential. Most of the time we just make it up. Yes, I'm only half kidding about that. But when it's really early on, one of the things we'll do is we'll punt. We'll say, Corey, I don't know what your startup's worth. I'm going to give you the money and we're going to let your next round, when there's more data, and the VC comes in, we're going to, whatever they value the company at, we're going to be pegged to that. And usually what'll happen is it'll be, okay, whatever they call it, if they say you're worth $10 million, I'm coming in at a discount. I come in at 8 million, a 25 or 20, 25, 30% discount. And then if I want to protect myself against the case that I chose really well, and you just knock the ball out of the park and your first round's at 100 million, I may put in what's called a cap, which is, yeah, 20% discount, but also not more than 10 million, right. So that's how we do it. In the beginning, the way we did it was something called a convertible note. So they would be, okay, I'm lending you this money. This is debt. You owe me a little bit of interest, and in 24 months, 18 months, whatever, you gotta pay me back. But really, what I'm waiting for is you to raise another round. Because if you raise more than a million bucks, that will convert into equity under the formula we agreed on. And that's really what I want. I want it to convert. Now, some founders got scared. They're like, well, what happens in two years? I can't pay you back. You can't take my company from me. Now, the truth is, if in two years you haven't raised money and the money to pay you back, I don't want your company. Right, no offense, it's probably a zero. And I'm not going to put a ton of my time into it because I have 24 other companies that I'm looking at. But if you still want to work on it, on that total outside chance, you'll turn it around, fine, I'll extend the convertible note. I have no desire to take over your company, but founders are afraid of it. So Y Combinator decided we're going to come up with something called a SAFE. And everything in the startup world has to have a cool acronym. SAFE, in addition to being so reassuring, stands for a Simple Agreement for Future Equity. And what that means is instead of me lending you the money and then it converts, we have a contract that says, I'm going to give you this money. And when you raise, you now have a contractual obligation to give me equity instead. So it's basically the same thing. There are a couple of nuances. I can't force you into bankruptcy. It's not a note. We don't get interest. There's no duration to it. And then there's pre money SAFEs and post money SAFEs, and the math gets really hairy. In fact, I just posted something about how both ChatGPT and Gemini got the math wrong when I was trying to make workbooks for my students, but they got it wrong in different ways. I'm like, I would have loved to put the two together and say, you guys work this out and come back to me. But I digress. So at the end of the day, the question is if I want to give you money. Corey, I've got three options, right? Or basically two. I got the convertible note or one type of SAFE or the other type of SAFE, which is we're punting on the valuation. Or we pick a number and I call it a price round. Fine, it's 8 million bucks valuation.

Corey Kupfer28:48Yeah.

Andrew Ackerman28:49It's a matter of preference. I really don't care either way. I don't think there's anything wrong with the convertible notes, but you want to do a SAFE, I'll do a SAFE. You want to do a price round, I'll do a price round.

Corey Kupfer28:58Got it. That's great. The deal structuring considerations are really important for founders to understand. It's funny how I find people are very passionate about some of these different structures. Let's talk about, anybody who's been watching the video version has seen it up behind you.

Andrew Ackerman29:10It's subtle, right?

Corey Kupfer29:11You mentioned it in the bio, The Entrepreneur's Odyssey. Tell us about the book. Tell us about how you, why you decided to write it and then what it's about.

Andrew Ackerman29:20Okay, so let's see. There's three or four things that came together to make me do this. So number one, I've worked with well over a thousand startups at this point. So I find myself giving a lot of the advice repeatedly. In fact, one of the things that I do and for fun is I'll meet with other accelerators, other programs. I'll give some of the same content. I got an hour and a half about how you raise a round, how you find investors. I got an hour and a half of what the perfect pitch deck looks like. I got a workshop that's 45 minutes to an hour on how you get your elevator pitch done. And then there's all the miscellaneous advice, like, oh, there's different revenue models for you to look at, or here's how you do customer discovery. It's the index card method. We'll talk about that if you want. But so I gave all that advice. I'm like, if I ever write up a book, I can get it out to everybody. So that's one strand that was coming together. And then there was the fact, I had zero time. It just wasn't going to happen. The other strand goes back to business school. So there was a book that I'd read in business school called The Goal. Some people who went to business school a while ago remember The Goal. To this day, if you say, what's the Herbie? They realize that that was the heavy kid in the Boy Scout troop that was slowing everybody down. And it was a parable for where's the bottleneck in the process? But The Goal was a novel. It was written about a fictionalized manager that had to turn around a fictionalized plant, didn't know what to do, met this consultant on an airplane, very thinly disguised version of the author who ended up talking him through it, but it went through his regular life, and it put all these lessons in the context of a story. Now, it was not great literature, but it was a hell of a lot more interesting than a textbook.

Corey Kupfer33:48Right?

Andrew Ackerman33:48They all start with it, and they embed within those stories the lessons you want to learn. It's just a better, more memorable way to get information across. That's the third strand. And then when it all kind of clicked, that plus I'd left DreamIt and I was doing 17 different things, I'm like, if I don't write it now, it's never going to happen. So that's how I came to write it. And it is basically The Goal, but for startups, it's a fictionalized startup. It's based on a startup that I was actually working on for some time. It's a founder who is very much based on one of the founders who went through my program. It's an angel investor who's a blend of me and one of the OGs of the New York startup investing committee, who unfortunately passed a couple of years ago. And it's everything he needed to do, this founder needed to do to take the startup from basically an idea all the way through closing their first round of financing.

Corey Kupfer34:41Love that. I love books like that. And I think, I don't know why. I see this with speakers, just the story conversation, right. So I'm quote, unquote, professional speaker according to the National Speakers Association, right. And almost every one of my talks, I start out with a story. And I usually start out with, I don't even say, hi, thank you for being here, appreciate. Blah, blah, blah. I go literally...

Andrew Ackerman35:02Yeah, right. The hi part's boring. Get to the good stuff.

Corey Kupfer35:05Yeah. But you can work in your thank yous later or whatever.

Andrew Ackerman35:08Yeah.

Corey Kupfer35:08And just as an example, in my negotiating talk, and I do negotiating workshops, I usually start out by saying I wake up on an air mattress in my glass front office in Williamsburg, Brooklyn. It was the global financial crisis, right. $315,000 in debt. Creditors are calling. I've given up my apartment and I'm showering in my office. Okay. People say that's a hook.

Andrew Ackerman35:29Okay. I want to know how the story ends.

Corey Kupfer35:33Yeah. So there are a few, I have a good friend and client of mine, David Bach, who's written eight New York Times bestselling books. Automatic Millionaire, Smart Couples Finish Rich, whatever. Well, his latest book, couple years ago, was The Latte Factor, which was a parable. It was a story. So I love it. It's a great way to go.

Andrew Ackerman35:51It's harder. That's why people don't do it. I'll make a confession here. I don't like business books. I find them really boring, really hard to read. They're the same dude in the Midwest who ghostwrites with the same tone, kind of chipper. Hey, I'm going to name drop these three people and then I'm going to give you these three anecdotes. And at the end, we're going to have a summary with six bullet points. Well, guess what, dude? If I ripped out that end of chapter summary and I just stapled them all together, I'd have a great 20 page PowerPoint. I don't need to read the book, but even the good ones, my eyes glaze over. And that was the other thing. I promised myself I wasn't going to write something that was the same old, same old. And any of the articles I've written, I don't do anything that if you can get it somewhere else as well, I'm not going to write it. It's not worth my time. It's not worth your time.

Corey Kupfer36:39Yeah, I love that. It's interesting. I didn't do my authentic negotiating book as a single fictional story, but I told a lot of stories in it. And one of the things, so we used to have this thing, a lot of my Entrepreneurs' Organization buddies or whatever talking about business books. And the comment was that 98% of the business books should be an article.

Andrew Ackerman37:01Or a five page PowerPoint.

Corey Kupfer37:01And then you had 150 pages of repeated and whatever that was not necessary. And I remember that stuck in my mind. When I was writing my book, I said, I want nobody to ever read this book and say it should have been an article.

Andrew Ackerman37:15So I actually had, I totally lucked out, by the way, with the publisher. But I kissed a fair number of frogs again. They did not turn into princes. And I was talking to one of the agents that I wanted to represent me and he's like, listen, this is really great stuff. But it's too much, not like all the business books that come out. They're one or two simple big ideas, and that's it. You've got a zillion ideas and they work all together. It's just too much. Well, that's the whole point, right? I don't want anyone to pick up the book and be like, well, that was 30 hours of my time for 10 hours of content or four hours of content, right? So, funny story, actually. I got introduced to my publisher, Routledge Press, through a friend who'd written a different book for a different label under the same Taylor and Francis publishing house. So I'm telling them, it's a novel and but it's about, it could be a textbook, blah, blah. They said, oh, we get business fables very well. We publish The Goal. Full circle.

Corey Kupfer38:10I love that. That's amazing.

Andrew Ackerman38:12Yeah.

Corey Kupfer38:13So before I go to my final two questions. Tell us. So, okay, you're still investing, right?

Andrew Ackerman38:17Yeah.

Corey Kupfer38:18You no longer, I'm sure somebody like you can't get out of mentoring and talking to startups, whether you're formally running an accelerator or not.

Andrew Ackerman38:27Very strong.

Corey Kupfer38:28Right. You have the book out. What are you focusing on? What's your main thing? What are you focusing on these days? Are you speaking about the book? What's going on?

Andrew Ackerman38:35Yeah. So my calendar looks like the pride flag because I do seven different things. They all have their own color, right. So this podcast on my calendar is in red. The book stuff is red. So when I do podcasts, it's red. When I talk with the interns that are working with me on the book, it's red. Whatever it is, that's red. I teach, we talked about, I teach entrepreneurship Tuesdays and Thursday mornings. That's in an golden yellow, almost an orange yellow. Then my family calendar is in light blue. But then I also work with Second Century Ventures, which is the VC arm of the National Association of Realtors. I built this platform for them called Reach Labs, that's in light yellow. Then I've also been working with this group called Thunder, which are a bunch of former founders who've had a number of exits, who are now basically a boutique investment bank. They talk to founders, you get to your series A, Series B, and usually it's a series B. And you got to think, am I going to look for an early sale or am I going to really double down? I'm going to do another four years. I'm going to raise my mark three, four, five times for the exit and go big. And if I am going to stay in, how do I raise my money? Do I raise it from pure equity or should I be looking at venture debt, asset based financing, what's the right mix of stuff? Or hey, maybe I'm going to go super big. I know five other companies in my space and we're all in the same place. I want to raise a war chest. I'm going to acquire number six, then number five, then number four and that big. I'm just going to kill the other two. That's the kind of stuff that these guys at Thunder are doing. And they're the only investment bank I know that are founders by founders for founders. So the way they do it is much more interesting. But that's blue. Then I got my generic stuff, which is in gray. And then that startup that I'm still working on. Because who's not working on a startup? That's purple. I think that's all of it. So that's what my calendar looks like. I don't think there's anything that takes more than 20, 25% of the calendar, though. I also do, sorry, I left out one color. I haven't been doing that a lot lately. But there's a darker color, green. When I do consulting with corporates for how they want to set up a corporate venture fund or a venture studio or other innovation team. But yeah, if you have a good idea, I'm happy to look at something else. I don't know what I want to be when I grow up.

Corey Kupfer40:55Love it. That's fascinating. Thunder sounds like they're helping founders think through some real strategic deals and company acquisitions at that stage. You are clearly a slacker. Yeah. Nothing going on, right?

Andrew Ackerman40:59Yeah, I mean, that's why we're doing a podcast at 6pm my time.

Corey Kupfer41:04Right. Before I ask my final two questions. I think I said that earlier, but there's so much that I can ask you. Obviously we could spend, we could do a podcast on each of those colors, right, which we won't. But we are coming up on time. And what Thunder does with founders thinking through m&a strategy at that stage is really valuable. Out of all this experience, out of all the aspects you've looked at it, is there something that you want to share? Whether it's a great lesson, a big mistake people make, a trend you think is important. Just anything that we haven't discussed that's valuable for the audience.

Andrew Ackerman41:31I'm going to do one really short and I'm going to tell you one that takes a little longer, so I'm going to share them both. The first one is if you find what you love and you do what you love, you'll never work a day in your life, right? It's fairly rare. I think it's fairly rare that someone finds their passion and they can make good money from it. And that's awesome. Most people work to live rather than live to work, but if you do, if you find that thing and you can make it work, it's a joy to behold. So for everyone out there that's getting started, just try to find that passion and find a way to make it something that can sustain you. The other thing I'm going to say is that the single biggest mistake people make, startup founders make, and I'd say whether it's a small business or a tech startup, it's the same for both. I'd even say you could be a mid sized company, you could be at 5, $10 million in revenue. The single biggest mistake that those founders make is they stay in their minds too long, they don't get out into the world. And what I mean by that is you have this great vision for what you want to do, right? Oh my God. I had this awesome idea, super painful problem, I'm going to go solve it, I'm going to build this website, build this app, build this device, whatever it is, and then you just go into a sweat lodge and do it. Or you need to hire somebody, the manufacturer, to come up with the plans. They manufacture it, boom. And that is the absolute worst thing you can do. What you gotta do is you gotta constantly be testing your own assumptions. You have well reasoned beliefs, but they should be loosely held and you should always be testing it. Every time you're doing something, how can I make this a cheap experiment, a quick experiment? This is a success if, right? So I'm not gonna build the whole site. I'm gonna go test what my cost per click is to see if I have a business here, right? Or I'm not gonna go out and build this site. I'm going to, this is in the book. I'm going to sketch out the entire app on index cards and I'm going to go to people and say, here's my app. Interact with it the way you would. Don't ask me questions. You just downloaded that app. But do verbalize what you're thinking because I can't read your mind. Oh, you click that button, here's the next screen, right? And you'll learn. What does nobody use? Why would you build that? Or they want to use this, but they're confused. Okay, you need a different UI for the cost. For $5, you can buy a package of index cards and save yourself months, months of dev time. But that's the mindset you need. The mindset you need to succeed here is don't just do something, stand there a moment, think about how can I test this quickly and cheaply.

Corey Kupfer44:09This is probably over maybe 20 years ago. My wife and I were in this intense mastermind with Jay Abraham. And Jay Abraham is known as the marketing guru of gurus, right. Especially in certain sectors. I won't spend a lot of time on who he is, people can look him up if they don't know who he is. But Jay used to say, people would go to him, oh, my guru, how do I market, right. And he had a lot of ideas, whatever. But he always, always, always says, you gotta test. He said, listen, I may have a higher chance of coming up, that's with something that would work because of my level of experience, right, than you. I don't know. I don't know what the market's going to want.

Andrew Ackerman44:45I still do a test run.

Corey Kupfer44:46I'm still going to do an A/B test. I'm going to, you're not only going to test, you're going to test the content. You got to test the headline. You got to test the, where you post, where you market, you're going to test whatever. It's the only way you can do it. And fundamentally, no matter how much expertise Jay had, he always came back to the fact that you got to test. Hundred percent. All right, so I don't know which of the things you want to talk about. I'm sure the book at least. But anything else you want to tell people where to find or where to go or to get more.

Andrew Ackerman45:15Yeah, I'm not so full of myself to think that you really want to learn more about me, but if you happen to want to do that, my website is Andrew the letter B, as in boy, ackerman.com. There's more about me. There's links to the book. If you're like, forget that dude, the book's kind of interesting, but I've had enough of you. You can just go to Amazon. It's The Entrepreneur's Odyssey. There are a lot of puns in it, by the way. So the subtitle is A Novel Guide to Startup Success. So novel. If you look at the cover, which you can't actually see even if you're watching it, because it's below me and I'm too close. It's a picture of a maze and the founder's there with a saw, hacking his way through it. There's a lot of that. So if you like puns and borderline dad jokes, there's a bunch of that in there, too. So you can find the book on Amazon if you're so inclined, and if you read it and you love it, leave a review.

Corey Kupfer46:04Awesome. And I'm sure they can get to some of the other things you're involved in through the website.

Andrew Ackerman46:10Yes. And if you're super curious, you can find me on LinkedIn. That's everything that I do.

Corey Kupfer46:16Awesome. So, Andrew, my final question on the podcast is always about my highest value in life, which is freedom. And to me, that means everything from freedom around the world for people from oppression to why I've been an entrepreneur for decades and haven't had a boss. What does freedom mean to you and how does it impact your life and business?

Andrew Ackerman46:33Yeah, so that's the thing, right? Startup is a weird kind of freedom. On the one hand, you come to work, what am I working on today? I choose, right? Want to be there at 8 o'clock in the morning? No problem. I'm going to be there at 9 o'clock at night. I have to pay for it one way or the other. But you have total autonomy over it. You don't have to deal with, oh, that moron's taking forever. It's such an obvious idea that all goes away. Now. The downside is when it goes wrong, you are that, right. And if stuff doesn't get done, you're the boss that has to come down on you. Oh, it's like, we had a bad quarter, we'll have to do better next quarter. If it's a corporate, you have bad quarters as an entrepreneur, that's your bank account that goes down. Right. And that's partly why the other benefit of writing the book the way it is, it's not just a how to guide, but it actually gives you a sense of what it's like to be an entrepreneur, what that combination of freedom and pressure is. And it's not for everybody, right? Hey, if that's not your thing, that's okay. You find your freedom and it's a different kind of freedom for you. But for me, being a startup founder has ruined me for everything else.

Corey Kupfer47:40Andrew Ackerman, thanks for being such a great guest on the DealQuest podcast.

Andrew Ackerman47:43Thanks for having me. I appreciate it.

Show outro

Corey Kupfer47:46Thank you for joining me on this episode of DealQuest where we help you understand how deal driven growth can be your ticket to freedom. If you are interested in finding out more about my law firm, the services we provide to entrepreneurial and growing companies across industries all over the country, and my partner, Brian Meegan and I and my amazing team, just head over to kupferlaw.com. That's kupferlaw.com. And if you want to follow more of my content, head over to my LinkedIn page where I post regularly. Want to be a guest on the show? Apply at [beaguestondealquest.com](https://beaguestondealquest.com/). I'm Corey Kupfer. Until next week, wishing you the freedom and financial prosperity that I know your DealQuest will bring.