Aaron Alpeter

Bio

Aaron Alpeter is the Founder and CEO of Izba Group, a supply chain platform built on a single mission: help founders start, scale, and exit businesses worth buying. After five years at Unilever, Aaron left to work directly with founders and built Izba Group into a portfolio of three operating companies — Izba (consulting & operations), Sourcify (global product sourcing), and Slotted (a fulfillment RFP evaluation platform) — supported by two podcasts, Ecommerce on Tap and Build a Business Worth Buying, and a suite of newsletters including Assembly Required, plus dedicated publications for Izba, Sourcify, Slotted, and Izba Group partnerships. A 3x founder, angel investor, and M&A advisor, Aaron has supported five acquisitions and built or scaled dozens of startups, with the portfolio generating over $2.1B in enterprise value and $2.5B in successful exits across more than 100 brands on five continents.

Intro

The salient point of this discussion revolves around the critical importance of unit economics in the startup ecosystem, as articulated by our esteemed guest, Aaron Alpeter. With a rich background honed at Unilever, Aaron elucidates the pitfalls that entrepreneurs often encounter when they raise excessive capital prematurely, leading to misguided investments in marketing without a foundational comprehension of their operational capabilities. Throughout our dialogue, he shares invaluable insights into how startups can effectively navigate their supply chains, scale operations, and strategically plan for exits from inception. Aaron's unique perspective, derived from managing companies that have collectively achieved over two and a half billion dollars in exits, underscores the necessity of aligning business practices with long-term objectives. As we explore these themes, we aim to equip founders with the knowledge to foster sustainable growth and operational excellence in their ventures.

Conversation

The dialogue between Jothy Rosenberg and Aaron Alpeter presents a profound exploration of the intricate dynamics that underpin successful startup ventures. At the heart of the discourse lies the critical concept of unit economics, which Aaron Alpeter asserts is foundational for any burgeoning enterprise. He elucidates that many founders fall into the perilous trap of amassing capital prematurely without a coherent strategy for its utilization. This misstep often leads to misguided investments, particularly in marketing, which can exacerbate an already tenuous financial situation. The conversation stresses the necessity for startups to meticulously evaluate their economic models before embarking on aggressive scaling, ensuring that the underlying business framework is robust enough to sustain growth.

Moreover, Alpeter draws upon his extensive experience within Unilever, an organization renowned for its operational excellence, to delineate the stark contrasts between large-scale corporate operations and the fledgling nature of startups. He emphasizes the importance of leveraging lessons learned in established companies, particularly in areas such as supply chain management and strategic planning, to navigate the complexities of startup life. The narrative also touches on the significance of preparing for an eventual exit, elucidating that every founder will inevitably transition out of their business, whether through sale, succession, or retirement, thus highlighting the importance of building processes that facilitate such transitions.

In conclusion, the episode serves as a clarion call for entrepreneurs to adopt a disciplined approach to both operations and growth strategy. By prioritizing a sound understanding of unit economics and operational preparedness from the outset, founders can enhance their prospects for sustainable success and favorable exits. This insightful discussion not only provides actionable insights but also instills a sense of urgency for founders to critically assess their business models and operational strategies at every stage of their entrepreneurial journey.

Takeaways

• One of the most critical aspects of startup success lies in understanding and mastering unit economics before attempting to scale operations or raise substantial funding.
• Founders often make the grave error of raising excessive capital too prematurely, leading to hasty investments in marketing without a solid operational foundation in place.
• It is essential to build a startup with the eventual exit in mind, ensuring that processes are documented and operations are scalable from the outset.
• Many startup founders mistakenly equate increased activity with preparedness, neglecting the need for a solid strategy and understanding of their market.
• The journey of entrepreneurship requires not only grit but also a keen awareness of market demands and the ability to adapt offerings accordingly.
• Aaron Alpeter emphasizes that every founder will eventually exit their business, whether by selling, stepping away, or other means, which underscores the importance of building something worthwhile.

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Hello.

Please meet today's guest, Aaron Alpeter.

You know, one of the biggest mistakes that people will make is they will fall into this trap of raising too much money too soon and not really knowing what to do with it.

So they dump it into marketing.

And really one of the key things that we focus on is unit economics.

And we were, we were preaching this before the pandemic and, you know, to somewhat deft years.

What if the secret to building a.

Great startup isn't the idea, it's the operations behind it?

My guest today, Aaron Alpeter, knows this better than almost anyone.

He spent years at Unilever, one of the most operationally excellent companies on the planet, before jumping into the startup world and discovering that the founders raising millions had no idea how to actually run their businesses.

So he built one company to fix that, then acquired another, then built a third.

And now his Izba Group has helped founders create over two and a half billion dollars in exits, including a diaper brand that went from a million in revenue to a billion dollar acquisition.

Aaron is one of those rare people who can translate big company discipline into startup scale action.

And in this episode, he's going to share exactly how founders should think about supply chain, unit economics, scaling and building toward an exit from day one.

I'm Jothi Rosenberg and this is Designing Successful Startups.

Let's get into it.

And hello Aaron, and welcome to the podcast.

Thank you so much for having me.

I am very happy to have you here and I like to start with the simplest question possible.

Where are you originally from and where do you live now?

Yeah, so depending on when this podcast comes out, that second part may change.

But I am originally from the great city of Ohio.

I was born and raised in the Columbus area, went to Case Western my freshman year, did some volunteer work in Sweden for two years, and then moved back and graduated from Ohio State.

And right now, as we're recording, I still live in Montreal.

We moved here about two years ago.

My wife had the opportunity to be the head of Canada for her company.

And so we're like, yeah, absolutely, let's go have this international experience.

But we will be moving back to Charlotte, North Carolina at the end of June.

Did you make a mistake in not saying the Ohio State?

Probably.

They'll probably be fined or, you know,.

The Ohio State University.

Everyone in my wife's family except her went to Ohio State.

And they always say the Ohio State University.

And I have a lot of fun when I visit them because I'm from Michigan and that's an intense rivalry.

Boy, you know, the way I say it is I want Michigan to win every game except for the last game in November.

And it's a great year.

Okay.

You're one of the, one of the few founders that I have had on this podcast, and you are, by the way, episode number 115.

But you're one of the few people who has really spent some serious time at a very ginormous company.

You spent part of your career at Unilever, and what, what you said to me before was that you kind of back then thought you might just stay there and retire there.

Absolutely.

I have nothing but good things to say about Unilever, despite knowing all their warts and things like that.

But I was, I was really lucky.

I was recruited out of college to join a rotational program, and so I was able to work in a factory.

I ran import export for North America.

I did business waste material planning, all these sorts of things, and I was kind of really on the fast track for being there.

And I just loved the brands, I loved the mission, I love the people.

It was a really great place to be.

But, you know, I kind of was looking at where the world was going.

And so, you know, you start to see about Blue Apron and Harry's and Warby Parker and all these interesting companies that are being created in the D2C space.

And I really desperately wanted to get into E commerce.

And I did my best to network and say, hey, I'm willing to take a pay cut or to go down a level to join the E commerce team, or we'll move to London, we'll do these sorts of things.

And the answer that I got back was that, hey, yeah, you seem like a smart guy, but you don't have any E commerce experience, so we don't want you on the E commerce team.

And I was like, man, well, that's kind of a catch 22, because, you know, here, here I am, I can't do it.

And so I, I kind of just accepted that for a few years until I got the opportunity to.

To work on a startup.

I was connected via a mutual friend to the founders of Hubble Contacts.

They had just raised a little bit of seed money and now they were tasked with actually pulling this off.

And so they had no idea how to build a company from an operational perspective.

And I'll always remember, you know, meeting them in Port Authority at a restaurant, and they just simply asked, how do we supply chain?

And that kind of kicked off some consulting and then me joining full time and ultimately changing the course of my career, my life.

And before we start talking the whole rest of this, this episode about startups, I just want to probe a couple things about the experience at a gigantic company.

Now, Unilever is a British based company, correct?

Anglo Dutch.

Yeah.

Oh, it's Dutch as well.

Okay.

And you know, from their perspective, the world is probably Procter and Gamble and them.

Right.

I mean those are the, those are the ones that are duking it out.

Yeah, there were a few other ones that were in there, depending on the category, but yeah, they were typically some strong feelings and strong words for the folks in Cincinnati and, and, and remind.

Us, excuse me, remind us what some of the brands all of us know and use that come from Unilever because not everybody looks at the bottom of the, of the bottle and, and looks at the name.

Yeah, they've gone through quite a bit of change over the last five years in their portfolio.

But at the time you had Hellman's Mayonnaise.

I can't believe it's not butterfly, doveºax suave tresemme magnum ice cream, Ben and Jerry's kind of Lipton tea.

You kind of go on and on.

Wow.

Wow.

And another thing was you said, did you say you, did you say B to C?

I thought I heard something else when you, when you were describing the model.

Yeah.

So Unilever is a fantastic company and their supply chain was ranked number one in the world while I was there.

Not because I was there, but I just happened to be there when they were ranked as number one in the world.

But they were really at its core a full pellets to Walmart type of company.

They, they really didn't do anything in the direct to consumer space.

Okay, so you said D to C. D as in, as in dog.

So.

Because when I, when I've written about the various business models, you know, there's B2B and B2B2C and B2B2C.

And I never actually heard about D2C.

You know, that's funny that I have never heard it.

Yeah.

Direct to consumer, business to consumer.

It's I think basically the same thing.

Okay, one other question about Unilever.

So when you look back on that experience from the perspective of founding startups or even just working at startups, what sort of training, what sort of experiences did you get while you were at Unilever that have been very helpful to what you had to do at startups?

Yeah, I think that there are a few things that really resonated with me and made me better in startups.

But then there were also some key things I had to unlearn.

The first thing is that when you're working at a massive company like Unilever, you appreciate scale.

You appreciate what it means to save half a percent.

And that half a percent meaning $10 million, right?

Like, those things are very real, very tangible.

When you're in a large organization, you end up being very specialized.

And so when you're in a small organization, you've got to be a little bit more broad.

You know, saving 0.1% doesn't mean a whole lot because fewer people are interested in saving 20 bucks.

But when that 20 bucks is 10 million, you know, obviously there's a lot more focus there.

So I learned about systems, I learned about scale.

I was able to see all these things that this big company was doing.

And then as I was building Hubble contacts, I was able to take that big company mentality, but then take it down to first principles.

And so one of the key things that I learned that had a big impact on that business.

And then the rest of the business that I've worked on is this concept of S and a P planning or IBP planning, effectively measuring what you want to have happen versus what actually happened versus what you thought was going to happen.

And just kind of looking at those intersections.

And what I found is when I was in between and I was consulting for Hubble while still working full time at Unilever, I was getting better at both jobs because I was able to attack the problem from both sides.

So, you know, when I was thinking about, you know, building out things for Hubble, I'd say, okay, well, Unilever has this, they have this and they have these people, and this is how I do it.

Where does that make sense here on a small scale?

And a lot of times those principles carried over perfectly.

And it was really, really good to think about, hey, here's how you should manage cost, here's how you should think about inventory turns, here's how you think about all these other things.

But at the same time, when I was working at a small company and going back and working on my day job, I was able to say, oh, you know what?

I understand now how, you know, a change in demand impacts inventory, impacts finance, impacts valuation.

And so I was just so much more competent and fluent in how I was able to be productive in that, in that big company environment.

And so there were lots of things there where I think it's, it's not one was better than the other.

It was really just this, this trade off was interesting.

When you start a new company, the impetus, the motivation has always got to be, hey, there's an unsolved or unsatisfactorily solved problem out there that I identify and I am going to go solve and I'm going to create this company to do that.

Your current startup, which is Isba or Isba Group, right?

Is the, the, the real name of it, right?

Yeah.

So I actually have three companies, two podcasts and a newsletter, all in the supply chain space.

But the original, most well known company is a consulting business called Isba.

And, and so going back to, you know, okay, what was the problem?

What was the, the thing that, that drove you?

You know, I, Aaron, Peter has to, has to do this company because there's an unsolved problem that I know how to solve.

And what was that?

You know, I, I wish I had a better story than this, but you know, I'd say that this was something that happened accidentally on purpose.

So I, I started Isba initially because I was going to moonlight and work nights and weekends while building out Hubble.

And you know, I, Izba is a Russian word that means cottage or shack.

My wife is Russian.

At the time we didn't have any kids and we wanted to save for a down payment on the house.

And so the joke was is whatever I earn here will be the down payment on the house and we'll go and do that.

I ended up joining full time at Hubble and then leaving and kind of consulting in between other full time roles.

And eventually what I recognized was that there was this untapped need, certainly at that time for supply chain expertise.

There was so much interest in E commerce.

There were so many people who were raising money to come in and solve a problem, but they didn't understand inventory, they didn't understand sop.

They understand finance and parcel and transportation and all of these other elements that go into actually running a profitable business.

And so what I recognized was that, you know, I was getting all of this inbound, all these conversations, all these referrals of just, hey, can you talk to me?

Can you share these sorts of things?

Eventually that turned into people asking to, you know, hire my services and those sorts of things.

And so really what, what ISPA has become now is, is a, a group that focuses on helping founders to start, scale and exit their businesses.

So we'll do the day to day blocking and tackling for a brand if that's what they need.

But we also do fractional leadership, fractional strategy.

If there's a plan or an unplanned change at the top, we can fill those roles for a period of time.

But we really want to work with people who have a goal of exiting one day.

And we've created about $2.5 billion worth of exits for the founders that we work with.

And so we've got a really good understanding of what a supply chain should look like, smell like, taste like, based on the life cycle that they're in.

It's clear the connection between what you learned at Unilever and, and, and what you're now doing the startup for.

You know, you explained it, but now it's just really clear because, you know, this is what you're doing for founders.

And founders can't know everything.

They, they, in fact, you know, most founders that are going to be your customers, basically.

I mean, they have an idea, they think they can solve it, they think they can improve the world.

But you're right, they don't necessarily know supply chain.

Not very many people know it particularly well, actually.

So it's a clearly important need that you're fulfilling.

Well, my current startup, which is a, it's, it's an IP licensing business, we make, we design hardware, we don't make it and we license it to people and they put it in their chips.

So that for.

We don't really have a, a very significant supply chain issue because this is something that comes out of people's heads in our office or in their homes.

And it's a, it's a design.

And, and to do the design, you need some tools from some vendors.

But it's not a complicated supply chain problem because we're not making a product otherwise.

If I was, I don't know anything about it, I would, I would need this kind of thing.

And, and you've helped a lot of startups, it sounds like, with the 2.5 billion and exits.

And you mentioned exits in several things that you've written to me.

You're very focused on exits.

Is part of your business model to end up participating in some way in those exits?

Are you getting some equity in the companies you work for?

Maybe one day.

But today, no.

We're just here to kind of coach people.

And what I tell people is that every founder will eventually exit their business.

They're either going to sell, they're going to quit.

Right.

Or pass it on to someone else, or they're going to die.

Right.

And I think that's just morbid perspective.

But the reality is that working toward an exit doesn't mean that you have to sell.

Right.

It just means that you're building the processes, the capabilities, the bandwidth in order to go beyond yourself.

And so we work with a lot of folks where their goal is to sell the business.

And so, you know, we've been around that.

We, you know, we, there's a diaper brand that we worked with when they first started doing a million dollars called Coterie.

We, you know, we're running their supply chain and the relationship kind of shifted over the years and they just exited for a billion dollars to mammoth brands last year and we're still working with them on the integration, stuff like that.

And so, you know, there's, there's so much stuff here that we can work with and teach.

And our, our mandate isn't to tell the founders what to do or to even be there to kind of say we know better, but it's about to teach them about the trade offs that are there to help them understand that, yeah, you have this ambition of being a billion dollar company one day, but before we start building out a, a supply chain that's worthy of a billion dollar business, let's focus being a $10 million brand first.

And so helping them understand where they should be putting efforts, where they should be putting capital in in order to have the most efficient outcome for what they're looking to do at that stage is really a key part of what we look at.

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Now back to the podcast.

So you're not just focused on supply chain, you're really focused on helping them scale their business, right?

Yeah, supply chain is our home base.

That's kind of where everything comes back to.

But we obviously have been around and seen a lot of different strategies when it comes to how to enter a new market, how to enter new geographies, how to get into retail, what it looks like to deal with hypergrowth, or to work with a brand that has declining revenue.

Right.

How do you deal with profitability and investors and all these sorts of things.

And so a lot of kind of what we will do will be some therapy to some level, but it's really about like, hey, you know, you're the founder, like this is your call.

Our responsibility is to teach you what the trade offs are and to share what we've seen other people do and be successful.

Have you observed that founders frequently.

This is my own observation.

So I'm just curious if you've seen this.

So they're ready, they're ready to scale because they are seeing that, you know, the unit economics are such that if they can just go find more customers, every time they do, their bottom line looks better and better.

And so they decide, okay, I'm going to scale.

And they frequently start by spending a lot more money.

And I've seen more than one company who actually, at this seemingly later stage than you think of companies failing, have gone out of business because they scaled in the wrong way.

That ought to be like music to your ears because if you're teaching them how to scale, that's going to be the main thing you make sure they avoid.

Absolutely.

I mean, I think like not every exit needs to be for a billion dollars.

Right.

Grins just sold for 1.2 billion after two years.

That is a phenomenal outcome.

That is an anomaly.

Right.

Not every person who starts a business is going to have that level of outcome.

You know, I think if you ask most founders if they could sell their business for $50 million and they own most of their business, would they take that deal?

They say, yeah, absolutely.

Like I would love to walk away with 35 or $40 million.

That sounds like a great outcome.

And so part of this is understanding what's their fundraising strategy.

And you know, one of the biggest mistakes that people will make is they will fall into this trap of raising too much money too soon and not really knowing what to do with it.

So they dump it into marketing.

And really one of the key things that we focus on is unit economics.

And we were, we were preaching this before the pandemic and you know, to somewhat deft years, like, yeah, yeah, it's fine, like I just need a couple points here and it'll be good.

But then all of a sudden post pandemic and you have the cooldown in the economy and interest rates going up.

Now there's this really big focus on like, oh, I gotta be profitable.

Like I gotta make sure this is, this is something that can sustain me because there isn't a VC that's waiting to give me another $5 million just to figure things out.

And so we, we have been in these hyper growth situations.

We have also been in, in situations where slow organic growth is the best thing for the brand.

And again, our goal is to, to teach the founders to help them understand what options they have and then to help execute whatever their vision is.

We've mostly been talking about is.

But at the very beginning you made it, you know, you, you talked about your other startups.

Were they always interlinked and forming an ecosystem or is, was that sort of something that happened and it just was this very fortunate outcome that you've got an ecosystem now?

Yeah, like I said this, this all happened accidentally on purpose.

I think a lot of this was trying to do the best that we can.

Opportunities present themselves.

You're like, huh, this doesn't exist.

Or this could be really helpful for our clients.

Should we look at it?

And you know, about four years ago we were approached to purchase a company called Sourceify which came out of YC.

And so we said, hey, you know, we do a lot of sourcing, we've got people who are looking for these sorts of things.

And it was a different business model touched on a different icp.

And so we said, yeah, let's do this.

And so we were able to take one of our senior leaders from isba, put them in as the general manager and he's done a phenomenal job kind of rethinking and rebuilding this business in the age of AI and in the age of post e commerce hype that was out there.

And so really what SourceFi tries to do is be more of a do for you type of service, whereas the consulting business is more of a do with you type of service.

And so we work a lot with pre revenue brands, large brands that want to source something different than their hero SKU.

And we've got boots on the ground in about 16 different countries and basically help people get through those sorts of things.

And is there another one besides sourceify and isba?

Yeah, the third business is a software product called Slotted.

And this really came out of what we were seeing in the consulting business over and over again.

The purpose of Slotted is to help brands and providers normalize the fulfillment RFPs that they see.

So you know, lots of brands will have a situation where they get five to 10 proposals in PDF format from a provider and they're like, okay, well I got to figure out, you know, which, which provider to choose.

But it's often very difficult to say, okay, well this person is, is, has a peak surcharge.

This person is including first pick with an order.

This person's charging by pallets versus cubic feet.

And so what our tool does is we help normalize all of those responses so that both the brand and the provider can have a more streamlined RFP process.

It's meant to be a standalone self service tool.

But obviously if people need help negotiating or need help figuring out which providers to work with, we have ISBA that has done this a lot.

We placed about $150 million worth of fulfillment contracts last year.

And so we're very well versed, very well known in that ecosystem.

Are they all independent businesses or are they.

And you're the head of all, all three of these?

Yeah, great question.

So we, we, they all stand alone.

Although we do have a holding company which is the ISPA Group, which owns all or stakes in each one.

And so I have fantastic leadership that looks after the day to day and the strategy for each one.

And most of what I do is, is well, sales jumping into where it's needed, things like this.

But I'm really lucky to have such a great team around me.

Okay, so they're all under your group and you're the leader of the main group.

Is the group.

Okay, understand the structure.

Tell me a little bit more about how your, well sort of what your vision is and how you're going to grow all of this and you know, are you heading for an exit as well?

I guess all of that is part of my question.

Yeah, it's a great question.

I joke that I'm not a very good consultant because we give so much stuff away, but I'm very much someone who believes in just doing the right thing, putting good stuff out into the ecosystem to see what comes back.

And so our goal right now is just to help as many brands as possible and to make as big of an impact as possible, knowing that the money and the revenue and any potential exits could come down the road.

You know, obviously with all the artificial intelligence that's come out that's forced a rethink of, of each of the businesses that we have.

But it's also been very exciting because we've been able to build and to iterate and to do so much more than what we've done in the past on our own.

And so, you know, we're leaning into things such as, you know, operator led, AI consulting and helping people figure out how to get leverage on their labor that's out there.

You know, I think that, you know, could an exit exist down the road?

Sure.

We have conversations from, from time to time, but we've got a long way to go for what I think the potential of this business is.

And I'm having a lot of fun doing it.

Are you going to, you said you're going to move back from Montreal to the States at some point and will, will the.

Are.

Are you completely virtual or do you, will you have a headquarters or you know, or is that just such an antiquated term I shouldn't even ever say it?

Yeah, no, we, we've always been, been remote first.

That's kind of been what we.

We've been before.

It was cool with COVID and we find that people got a great taste of what it was like to be virtual during the pandemic and those roles are becoming more and more difficult to lock down.

And so we find that being virtual and being remote first is actually a great selling point in terms of people wanting to work with us and to be where we are.

The nice thing about too is that by nature of the work that we do, we are clustered in areas where there's naturally startups natively or there are large airports where we can get to easily.

And so we've got folks really all across North America, but support staff and other team members all around the world.

And so yeah, we're remote first.

We do make an attempt each year to bring the whole company together, at least the folks in North America, where we can have an in person retreat and just kind of get to know each other because there is value in being together.

You, you had mentioned to, to me that the, the location you might like to end up in is, is Charlotte, North Carolina.

That's what my wife had said.

Yeah.

Okay, so.

But you've been in Montreal for a little while.

Montreal's colder than I'm in Boston.

Montreal is significantly colder than Boston and, and a hell of a lot colder than, or I should say it the other way around.

Charlotte is a heck of a lot hotter than Montreal.

Do you, have you experienced that?

Because I spent 10 years in, in, in Durham, North Carolina and, and I had to adjust to.

And I'm from Michigan and you're from Ohio, so you know, that's roughly the same I had to adjust to.

Okay, so when I lived in Michigan, there's certain things you don't try to do in the winter, like working outside on your, on your yard because your yard's frozen.

In North Carolina, you have to not plan on working outside in the summer.

And so are you familiar with that?

Are you prepared for that?

Oh, yeah.

We were in Charlotte before we moved to Montreal, so we, we kind of knew what we were getting into and what really was behind.

But both places are wonderful.

I mean, we have really, really loved Quebec and you know, if it were up to me, we'd be here for a few more years.

But it is such a wonderful, welcoming place and the winter is fantastic.

People joke that I should probably get a job with the Quebec Tourism Bureau because it's, it's one of my favorite places I've ever lived.

I mean, the fact that it's so cold in the winter actually is an amazing thing because we've been able to do things like ice fishing, dog sledding.

We go ice skating, a local park a couple times a week.

It's just a really fantastic place.

I think the worst season, at least in Montreal is the spring because it's kind of not quite cold enough, but not quite warm enough and it's muddy and wet.

But we are, we are getting out of that.

It is almost summer now.

I have very great.

I have wonderful memories of Quebec because when growing up, Michigan has no hills either does Ohio actually.

No.

And, and the ski hills there, like, you know, the tallest mountain in for skiing in all of.

Of Michigan was 400ft.

And, and so we like to ski.

So we would pack up for Christmas week every year and drive with.

In a, in a Ford LTD station wagon with four screaming kids.

Six people in this car would drive to.

All the way to Montremblanc, which is another 90 minutes north of Montreal.

It's beautiful.

And yeah, and, and ski there.

And we got, and it's really cold there.

Okay.

Because it's up high and it's further north.

It would be.

Sometimes it would be at the bottom and not counting windchill, 20 below zero.

And, and, and, and we would still, we would still go skiing.

Anyway.

Wonderful memories of, of Quebec.

So back to my.

I actually have a sort of.

My, my last question is stepping back a little bit from a specific startup, but the fact that you have done several startups and you have this group of startups right now.

One of the things that I always am impressed by in startup founders is that we all, and I'll include myself in that, have a lot of grit.

And grit is things like resilience and determination and just stick to itiveness.

And probably the most important adjective would be courage.

And, and I just would love to hear.

And I always love to hear founders story about where they think their grit comes from.

There's no debate.

You've got to have a lot of grit.

But just where does it come from?

Hi.

The podcast you are listening to is a companion to my recent book, Tech Startup Toolkit how to Launch Strong and Exit Big.

This is the book I wish I'd had as I was founding and running eight startups over 35 years.

I tell the unvarnished truth about what went right and especially about what went wrong.

You could get it from all the usual booksellers.

I hope you like it.

It's a true labor of love.

Now back to the show.

Yeah, that's a great question.

I first and foremost would go back to my parents.

You know, my mom is the hardest working person I've ever met.

And you know, I mean, growing up, she would, you know, she had five kids.

She would get up and work kind of a midnight shift at Tim Hortons, then kind of get us off to school and then go work at like a gym or some other place like that, and then come home and make us dinner and then somehow go to bed and kind of do it all over again.

And she did that for years just to kind of help make ends meet.

My dad is also one of the most hardworking people that, that I've, I've ever met.

Works in a different way, I think.

My mom is like, hey, let's put in a ton of hours.

My dad's like, hey, do the hard thing.

And, you know, we grew up as a family of runners.

That was kind of the, the main thing that my parents, that's how they met in college.

And so I think there was very little question about what sport we would choose in high school.

And I just remember, you know, my dad as a coach for me and my sister, just kind of saying, hey, you know, we're going to go out, we're going to do 10 miles today.

And that's just.

It's not going to feel good, but you're going to do it.

Remember being on a family vacation in Colorado.

We were at Rocky Mountain national park.

And, you know, it's a nice place.

But he decided, hey, we're going to do some hills.

And so we, we pulled off on the side of the mountain and she's like, all right, just do repeat hills.

And, you know, here we are at altitude.

And I think I'm like 14 or 15 at the time, and it's just kind of getting beat up.

But it was just this, this constant idea of if it's Hard.

Do it right.

Nothing that is, is ever worth anything was easy.

And so sometimes I feel like I'm attracted to things that are hard because they are hard.

And, you know, so I think it's.

I kind of go back to some great experiences that my.

My parents and family and I've just had in my life, and I've always kind of looked after how to do things.

I mean, another good story that was pretty formative.

But I remember, I think I was in like a seventh grade and my parents set us all down and, you know, we had kind of had like a family meeting, and my mom and dad said, hey, we really want you guys to go to college.

Like, that's really important.

But here's how much it costs to go to college.

We don't have that kind of money.

And so you're going to have, you know, each of you are going to do three things.

One is you're going to do your best in school.

Two, you're going to play an instrument.

And three, you're going to pick a sport.

You do the best you can at sport, and hopefully one of those three or one of those combinations of three will get you out into college.

Go do something.

And, and so that was, that was really, you know, at an early age was like, okay, I got to do this.

Like, this is.

This is on me.

I've got to do it.

I was in Boy Scouts growing up and was an Eagle scout at age 13, which is.

Was pretty, pretty odd from what I hear.

And just have always kind of had this, this chip on my shoulder that if something was going to happen, if I was going to make something happen in my life, I had to go earn it.

I had to go create that outcome.

It wasn't going to be handed to me.

What instrument did you pick?

I played the viola for.

So did I.

You know, nine years.

Yeah, but you, you, you gave it up, huh?

No, actually, it's.

It's sitting right there.

My oldest daughter is.

Is currently playing the violin.

She's almost nine.

And so, yeah, every time, every now and then we'll get something out and I'll kind of teach her, help her, kind of coach her as she's doing the violin.

And I have a goal this year of playing a duet with her somewhere.

You know, I gave up the viola for all the wrong reasons.

It had to do with peer pressure and being made fun of.

And I'm looking at retirement within the next short period of number of years.

And I think I've even forgotten how to read music.

But I bet I can pick that back up and I would.

I love that instrument.

I love the viola.

Yeah.

It's amazing how the things you take for granted when you're younger, you come back to.

You're like, man, that was really cool.

I enjoy.

There's something about creating music and just being able to kind of even just like playing things by ear.

And I just love doing that.

And so it's not uncommon.

For maybe a couple times a month I'll get it out, I'll just start playing something random like, you know, my sister's in it or my, my daughter's into Taylor Swift and so I'll try to pick out a song from that.

And she likes that a lot.

And that's funny.

And, and the sport was, was track and field or track and field?

Cross country.

Cross country.

And have you, do you keep that up?

Do you run a lot?

I, I don't, I do other exercise things now, but yeah, my dad ran a lot, kind of all throughout his life and he's not moving around as well as he used to.

And so I look at them like, you know, I kind of want to keep the cartilage in my knees for a little bit longer.

And so I do have a goal of doing a marathon one day and that one day has been one day for like the last 15 years.

I need to get on and just do it so I can cross it off the list.

Otherwise it's going to get to a point where it just gets harder and harder.

Yeah, yeah, definitely.

Well, I, I, I definitely have a sore knee and I say knee because I only have one leg and I've been that way for 54 years.

And so you put a lot of strain on when you have only one.

And I continue to ski and I bike.

But a few years ago I started a foundation to help people who become disabled kids.

Focus on kids who become disabled get into a sport that they love, but they're sort of blocked from getting into that sport because the adaptive equipment they need is very, very expensive.

And so I help them get that, that equipment with the goal being that the success at a high challenge activity like a sport rebuilds the self esteem that's almost completely wiped out by the event that made it made them have a disability.

And I know that from personal experience.

And the main sport I needed to get good at so that I rebuilt my self esteem was skiing on one leg.

And, and that was extremely hard to learn.

Took years.

But a few years ago I was helping get a couple of kids into Running.

And a running leg costs, even for a child size, about $21,000.

Wow.

And, and, and what a lot of people don't know is that insurance will not cover it.

Insurance might cover you getting ambulating again, walking, but they won't pay for any, any kind of sports equipment.

Uh, so I decided, well, I should know what this feels like to get these kids running.

Now I had not been running in 50 some odd years, but the brain really did forget how running felt.

But I tried anyway.

And, and I'm an above knee amputee, so that is extra hard because that knee is pretty important in running.

I tried it, I gave it a really good go.

I did do a 5k race and then I said, okay, I don't need this.

This is going to really be bad for my body.

And I re gifted that to somebody that was going to use it.

But, but, but that was so I think I would have, would have more pain in my knee if I had kept that up.

I'm sure.

Yeah.

It's funny, I, I basically was sedentary during COVID and just worked a ton and bad posture and all this stuff and ended up weakening the muscles in my back pretty dramatically.

And as a result, when we had our third kid, I was picking her up one night and it just felt like someone put a key in my back and locked it and I kind of threw my back out for.

It was like nine months.

And so I'm doing physical therapy, seeing a chiropractor a couple times a week, like just trying to get right.

And it was a bit of a wake up call to me to keep working out and to be stronger.

But it's just one of those things where during the physical therapy they had to teach me how to rerun and I'm like, what do you mean?

I ran competitively.

Like I should be able to do this.

Like, no, no, no, your, your mechanics are all wrong.

And so it was, it was pretty humbling for me to kind of learn the right way to do something that I had always thought I known how to do and was kind of a core part of my identity for many years.

I'm so glad to hear that you're back doing it.

That's great.

That's really great.

And you've motivated me also to maybe even get that viola thing started sooner rather than later.

Yeah, why wait?

I mean, it'll be there and it'll be fun.

Well, Aaron, this whole conversation's been really great and I think all of us, myself and the listeners are probably very impressed I am by this group.

You've created these interlocking complementary startups.

Doing one's hard enough, and you're doing three.

Or if you count the group as a separate thing, four.

Very impressive.

And thanks for spending the time with us and helping me create another nice episode of designing successful startups.

No, my pleasure.

And thank you so much for having me.

Now for your toolkit takeaways.

Toolkit Item 1 Before you scale, nail your unit economics.

Not after Aaron saw it over and over again.

Founders raise money, panic, dump it into marketing, and scale a broken business faster towards its death.

If your unit economics aren't working at small scale, more customers just means more losses.

Figure out what it actually costs you to acquire, fulfill and retain a customer and then scale.

Toolkit Item 2 Build your startup with the exit in mind from day one.

Aaron's point is powerful.

Every founder exits eventually.

You sell, you step away, or you die.

So the question isn't whether you'll exit, it's whether you're building something worth exiting.

That means documented processes, scalable operations, and.

A business that can run beyond you.

Toolkit item 3 Don't mistake doing more with being more ready.

Aaron built three complementary businesses accidentally on purpose, each one filling a gap the others exposed.

The lesson isn't to build an empire,.

It's to stay curious about what your customers keep asking for that doesn't exist.

Yet the best expansions often find you.

If you're paying attention.

Now, go audit your unit economics this week, not next quarter, this week.

And write down what your business would need to look like for someone to want to buy it.

And that is our show with Aaron.

The show notes contain useful resources and links.

Please follow and rate [email protected] DesigningSuccessfulStartups Also,.

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This is Jothi Rosenberg saying TTFN Ta ta for now.