#140 - Tech Founding Lessons from an Incorrigible Entrepreneur - Jothy Rosenberg

[00:01:15] Episode Introduction

Henry Suryawirawan: Hello again, everyone. You’re listening to the Tech Lead Journal podcast, the podcast where you can learn about technical leadership and excellence from my conversations with great thought leaders in the tech industry. If you haven’t, please follow the show on your podcast app and social media on LinkedIn, Twitter, and Instagram. And if you like watching video contents, Tech Lead Journal is also now available on YouTube and TikTok. To support my work in producing this podcast and its various contents, you can buy me a coffee at techleadjournal.dev/tip or subscribe as a patron at techleadjournal.dev/patron.

My guest for today’s episode is Jothy Rosenberg. Jothy is a serial entrepreneur who has founded nine startups with exits of over $100 million. He’s the author of an upcoming book “Think Like a Tech Founder: Anecdotes of an Incorrigible Entrepreneur”. In this episode, Jothy shared his valuable lessons learned on founding and managing a startup, such as why and when you should decide to start up, valuable advice for founders (including letting go founders who don’t work out), dealing with failures, being the CEO of your own startup, and traits of a bad CEO we should avoid. Towards the end, Josie shared inspiring message about his story overcoming physical disability, which resulted in a foundation he runs called “Who Says I Can’t”, and also described his formula why people with physical disability so often overachieve.

I hope you enjoy listening to this episode and learning valuable lessons about founding and running a startup, especially if you are yourself currently running your own startup. And I’m also very much inspired by Jothy’s sharing about his story overcoming his physical disability. And I hope you can also get a spark of inspiration from his story as well.

And it would be really great if you can help me share this episode with your colleagues, your friends, and your communities, and leave a five-star rating and review on Apple Podcasts and Spotify. Your small help will help me a lot in getting more people discover and listen to the podcast. Let’s go to my conversation with Jothy after quick words from our sponsor.

[00:03:51] Introduction

Henry Suryawirawan: Hey, everyone. Welcome back to another new episode of the Tech Lead Journal podcast. Today, I have with me an author named Jothy Rosenberg. He’s currently in the process of finishing his book, actually. The book title is “Think Like a Tech Founder: Anecdotes of an Incorrigible Entrepreneur”. So as you can tell from the title itself, we are going to talk a lot more about founding a tech company, a tech startup, how to become a good founder. And many lessons learned actually from Jothy who has, I believe, set up nine startups in his career. I think there will be a lot of learnings, a lot of mistakes that he wanna share probably, and a lot of advice that we can learn from him.

And at the end, later on, we will also talk about something that is really inspirational to me. The “Who Says I Can’t Foundation” that he does. And I think we’ll hear a lot more later on in the conversation. So, Jothy, thank you so much for this time. I’m really looking forward for our conversation.

Jothy Rosenberg: Well, thank you for having me on, Henry. I’m so glad that we got connected. And that I can do this with you. I’m looking forward to the interactions.

[00:04:48] Career Journey

Henry Suryawirawan: So when I read the first few chapters of your book, I can see so many things that you did in your career highlights. I always like to ask my guests to share a little bit more about themselves, if there are any major highlights or turning points, which I’m sure there are plenty, that you can share with the audience here. Maybe to just give a little bit of background about yourself and something that we can learn from your journey.

Jothy Rosenberg: Sure, sure. Well, I started off getting a strong technical background. I got a PhD in Computer Science at Duke. And then I stayed on at Duke as a faculty member for five years, mostly teaching grad students. But actually I did teach one undergraduate course. Everybody called it Computer Science for Poets. And here I was with 400 students trying to teach them how to program in BASIC, when all they wanted was a science credit.

But while I was there, I was doing research. That’s kind of the expectation if you have a position like that. And I was on a NASA contract and we were supposed to build a single board thousand processor, essentially, a supercomputer to go onboard the space shuttle. And this was just a fantastic project. So much fun. And in order to build it, I had to buy two traditional supercomputers, the kind that sit up on a raised floor and have Halon fire protection. And that was just to simulate the single board computer we were building. And I felt like, wow, if this is something that could make a huge difference to NASA, being on the space shuttle, this ought to have application in the non-NASA commercial world.

But I didn’t know anything about starting a company, but I said to my wife, I gotta do this. And she said, okay. She’s such a good sport. She said, where do we have to go for that? And I said, well, we can’t do it here in North Carolina. That’s not true anymore in 2023. But this was 1987. It was true. You really couldn’t start a start up there. And I said to her, we’re gonna have to either move to Boston or Silicon Valley. And she said, oh, please, please, Boston. She’s from Ohio. She said, there’s gonna be an earthquake and California’s gonna fall into the ocean, so please don’t do it there.

Anyway, I’m not gonna drag this out. It didn’t work out in Boston. So we moved to Silicon Valley. And I started my first startup there, it was a supercomputer company based on the work we were doing for NASA. And it went fine. But you’ve all heard of Moore’s Law. And Moore’s Law was our real competition, meaning traditional computers were gonna catch up to us eventually. But we had a pretty good headstart. The machine we made was no longer a single board computer, like for NASA. This had 32,768 processors in a machine that was the size of a four drawer filing cabinet. And it didn’t need any special air conditioning, it just plugged into standard wall current in a standard office. But it ran Unix and it was blazingly fast for the time.

Now, your iPhone 7, which is so many years back, was much faster than our computer. Just to give you a sense of how fast things have changed. So I learned a lot. I was one of the founders and we built this great machine. We sold it to American Express and the New York Times, and it wasn’t a general purpose computer. It did some things extremely well, like search every word that the New York Times had ever published in their, you know, 200 years or 150 years. And it could do unstructured text searching just like that. But it wasn’t jumping off the shelves. In four years, we sold a hundred of them, which is considered good for supercomputers. Well, that kind of ended.

And I did a, you know, a short stint at a company that was a big software company at the time called Borland. And Borland ironically moved me to Boston because they’d just done an acquisition of a company in Boston. And we were supposed to be here for one year and then go back. But when we got here, my wife and I loved it so much. We loved it much more than California, which, and all the people from California listening to this are gonna scratch their heads and say, what? But it just worked out better for us and the schools were just fantastic. And unfortunately, the California taxes had started to hurt their schools.

And since we’ve been here, I’ve started, actually, eight more. So a total of nine. The current one is my ninth. They’ve been in a variety of areas. Internet infrastructure, security, various kinds of hardware startups. I’ve had two that had what I consider to be pretty good exits, which were all sold for over a hundred million. One of them was in the middle of the internet bubble, and so it just was off the charts. But I also had a whole bunch that just failed.

And so, you know, I’m jumping ahead, cause you know, sort of why did I write the book? But I see a lot of people that write books and they tell all about all the great things that they did. And there’s nothing wrong with that. But I feel like people learn more from all the bad things that happened and maybe, you know, understanding why did it happen and how could it have been avoided?

You also asked what were some of the major events or turning points in my career? I would say making the decision to leave academia and going to do startups was, you know, kind of a major thing. But I’ve always had an interest and it still has to be sort of in the back, to go do teaching again. And maybe writing this book is partly an outlet to try to teach a little bit. The move to Boston was significant. I found that some things that were going on in Silicon Valley at the time, to me were sort of worrisome. It was becoming a monoculture, meaning it lived off of almost exclusively the tech industry. And if the tech industry goes down, the whole Silicon Valley area is in trouble. And you can tell, because you can drive up and down 101 with no traffic.

But Boston has a very diverse economy. There’s a strong biotech industry. There’s a very strong financial services industry, a medical industry, and tech. And so any one of those can be down and the others are not down. And so there’s a balance there. And so that was a very big deal, founding my first company, which happened here. And where it was my idea and also first time being a CEO. Those are major milestones. And learning that there can be very difficult and some cases bad investors surprised me and I learned about that. And that the challenge of founders. So these are all things I talk about in the book, but those are some of the highlights of real learning experiences.

Henry Suryawirawan: Wow, hearing what you just shared and also looking back yourself, right. I believe it’s a pretty long and exhilarating journey, I would say. Founding like, nine startups! That is really great to me. Like being a serial entrepreneur. And you have had major good exits, right? More than a hundred millions. But as you said, right, there’s so many that also failed along the way. And I think there are so many first experience that you had that we will learn from this episode.

[00:12:34] Jumping into Startup

Henry Suryawirawan: Maybe let’s start by going back to the time when you decided that you want to start a startup. Because I believe many listeners here have these aspirations to, you know, become a founder or creating a startup. And since the listeners here are majority from tech, maybe let’s just focus on a tech startup. So in your mind back then, what made you decide to become a tech founder, right? You said that you worked in academia before, and what made you decide to actually jump from academia to a startup?

Jothy Rosenberg: I guess what I was seeing was that, I knew that a lot of technology is developed under government contracts. I had a NASA contract, but I was aware of contracts funded by the Pentagon. For example, as a grad student, we were on the earliest versions of the internet, which was actually called the ARPANET at the time. And it wasn’t called DARPA back then. It was called ARPA. But then they decided to put the D in the front to make sure it was clear that it was the Defense Advanced Research Projects Agency.

So I knew that that was happening, that a lot of tech was being built under government contracts. And yet, a lot of it, which clearly wasn’t unique to the military. I’m not talking about, you know, weapon systems. I’m talking about networking technology and things to do with, just broadly with the internet and solving other hard tech problems. And it didn’t seem like they were coming out of the contractors, the government contractors that were doing these things.

And that’s been a theme for me my entire career. But at least as far as getting started, sometimes ignorance is bliss and I didn’t know how hard it would be. I just, I wanted to try. I was at least aware that of what I didn’t know. And so on that first one, I was one of 12 founders. But the other folks were more experienced. And so I felt like I could learn from them. And they were excited that I had done this research that was very aligned with what they wanted to do. They all wanted to build a supercomputer that was affordable. That was the goal.

The company was called MasPar, which was just, it’s not a very clever creative name for massively parallel. But yeah. The idea was to build an affordable supercomputer. And then when I came in with the work we’d done, that fit really well with what they were doing. And they were very excited to bring me in and have me join that first group of, there were 11 and I was the 12th and a grad student of mine went with me. And so we were 13 people building this company. Hardware and software all had to be built. And then we could declare success because it was a supercomputer, it was affordable and people were buying it. But there were also the challenges that I mentioned earlier, Moore’s Law and very difficult to make it good enough. To make it perfect was definitely a stretch. But we had bugs and we only had a hundred customers, but there was no internet to distribute updates on. And so we would have to ship floppy disks to our customers a couple times a month. And luckily you don’t go broke shipping floppy disks to a hundred people.

But we couldn’t make it with bug free. And that was a little frustrating to me. It was naive, but frustrating. And that’s why I went to Borland by the way, cause I asked people around, " Who’s building the best quality software in the world?". And I wanted to go learn how to do that. And that’s why I actually joined Borland.

Henry Suryawirawan: So compared from then, right. You said was 1987, right when you started. And now it’s 2023. Of course, a lot of things have changed. What you saw, maybe, the technology was initiated in the government projects. Now I think it’s like ubiquitous. There are so many technologies available and around us.

[00:16:36] When to Start a Startup

Henry Suryawirawan: So what would be your advice for people who are thinking of founding a startup or building a tech kind of like technologies, what would be your advice for them to actually start thinking, okay, should I or should I not start the startup? And what would be your lessons also for them in this modern era, right? Like what they should think about before they actually think whether the startup is gonna be a successful one?

Jothy Rosenberg: So a lot of startups, tech startups - we’re gonna be talking about tech startups this whole time - are started by a couple of people, couple of three people. They understand a problem, because they came out of a market that has that problem. And they’re motivated because they see no one’s solving this problem and they can solve this, whatever it is. They can solve this problem. And that’s a perfectly good, if not sometimes very, you know, great way in which to think about, okay, do I have something that can really be a startup? I mean, if there’s a big problem in a big market and you, because you come out of that market, know a lot about it, then you’re like 5 or 10 steps ahead.

The challenge still, of course, is that so many tech founding teams end up building a technology, let’s call it a “solution” that’s still in search of a problem. And it’s so important to start with a problem and make sure you understand it’s a big market. If you have a great market, you can have a less than great product and still do fantastically. Or you can look at things and say, I have incredible technology. But there’s no identified great market. It doesn’t matter. You’re not going to succeed. It’s just, well, yeah, everybody will find exceptions, but you’ll rarely succeed.

And so the most important thing is look at your group of founders. You need to understand enough about the technology that you have the right people that can build something. But it’s even more important that you understand the market and the problem really well.

Henry Suryawirawan: Thank you for that advice. Because I think that speaks true. I talked to so many product people as well, they also speak the same thing. Building something that people want, that solves the real needs. Not like building a technology in search of the problem, like you said. So I think that’s a really good advice.

[00:19:01] Definition of Founders

Henry Suryawirawan: So you mentioned a couple of times about founders. Most of the startups that I know also have a team of founders, not just one. Although there are some which have just one founder. But why do you think so many startups have many founders? That’s the first thing. And what would be the role of these people who somehow, maybe they’re friends or maybe they just get connected, right? What will be your advice for them to become a strong founder, right, that can lead this startup from initiation up to the success?

Jothy Rosenberg: I’ve had some startups where I was the sole founder, up to this most recent one. There were six of us founders. And that team, they’re a group of people that all came together at the same time. It’s very hard to add somebody late later as a founder. There’s not a formal definition of founder, but there is a sort of an informal. You’re there at the beginning. You are the thought leaders of the company. They get a different kind of stock, and that’s important to understand. They don’t get options which vest over time. They actually get, well, if it’s done right, they get shares which are reverse vested, meaning you still need to stick around at the company. You don’t just get the shares and get to walk away.

And I’ve always had it, so they reverse vest over four years. But instead of paying, let’s say 25 cents a share when they exercise them some period of time later, they paid more like 0.001 cents for the shares. And they pay for them upfront. And that protects them from being considered income. Instead they’re capital gains, cause you’re gonna hold onto them for a long period of time. And they’re yours, except that the company has a right to buy them back at this price you paid, depending on if you leave early. So those actually end up being important because those do distinguish the founders in an economic way.

But the most important thing is they have the knowledge and then they’re gonna be the leaders. I would typically have meetings with the founders to talk through everything that was going on with the company. They weren’t on my staff meetings. I would have, you know, typical staff meetings where I would have the head of marketing, the head of sales, the head of legal, the head of engineering product. But I would separately have a meeting with the founders. And I wanted to make sure they were aware of everything that’s going on. They would have opinions, they would say, what, what about this, what about that? They didn’t have a formal role like that, but they have an informal, very influential, very important role. So it is difficult, I will say.

[00:21:44] Advice for Founders

Jothy Rosenberg: The larger group of founders you have, the more difficult it can be to deal with. You want me to expound a little bit more on why that is?

Henry Suryawirawan: Yeah, sure. So I think it will be great because if people have, you know, more than two or three co-founding teams, right? So that means there are a lot of perspectives. And what do you think will be better for the founders to actually align on, right? So how can they work together or what are some of the maybe anti-patterns they should not do whenever they found a team?

Jothy Rosenberg: So, I would recommend to people to keep the founding team very small, which is hard because as you’re founding the company, somebody comes in, you know, let’s say they’re your first employee after the founding team has come together. And this person says, “Hey, I’m a very senior person. I think I should be a founder too.” And that becomes a very slippery slope if you do that.

Okay. You’ve got your founding team and you’re moving forward. And like I said, this founding team I have right now is six people. And they’re not all gonna have the same views and they’re gonna feel like they should have, maybe, more influence over the strategy, the direction of the company. Sometimes this founding team would say to me, Hey, we should be the ones driving strategy. Well, okay. But you know, once you’ve got a head of marketing and a head of sales, those people know a lot too. And so, you know, honestly, the founding team is not really driving strategy. They have a role in it.

And then sometimes you can get a founder who gets off the rails and he gets very difficult to manage. And because this group came together at the very beginning and they all went together, went through some difficult times when things are lean. There’s a strong sense that they should be treated differently than everyone else. And that starts to create a rift within the rest of the company. And then when you have one of the founders who is just being so disruptive that it’s hurting the company, then as the CEO, you’ve gotta make a really tough decision. Cause how do you let a founder go? How do you ask a founder to leave?

And it’s happened. And it’s really, really difficult, because it scares the rest of the company. Cause these are people that have been there from the beginning. They’re the leaders and then suddenly one is asked to leave the company. But you know, you gotta do what you gotta do to make sure that you don’t let the culture go spiraling down because you’ve got somebody that’s just not happy any longer. And sometimes it’s just time to move on for somebody that’s been there a long time.

[00:24:20] Letting Founders Go

Henry Suryawirawan: So from your experience looking at this, letting founders go, right? If you have to summarize, what would be some of the key things the co-founding team should think about whenever they want to ask a founder to leave the group? Are there certain things that you learned from that experience?

Jothy Rosenberg: Yeah. So I have a philosophy in all hiring of “hire slowly, fire quickly”. You hire slowly for the maybe obvious reasons that you wanna make sure you get it right. And hiring people is one of the hardest things you do. Because you have this artificial situation where you’re, you know, it’s somebody you don’t know, it’s a stranger, perhaps. And you’re talking to them. And you’re not in a work situation, you’re just talking to them, sitting in a couple of chairs. And from that, you’re supposed to decide if you’re gonna make a big bet on them.

And then if things don’t work out, with a normal employee that you hired like that, you say, “You know, it’s not working out. And you need to go.” and I mean quickly, like the minute I find out that somebody is having a negative influence on the productivity of the people around them, I don’t wait. I’ll make the decision to let them go right then and there and you move on.

Well, with founders, you really cannot fire quickly. Because it’s such a big deal when you let a founder go. That you have to flip things around and say, I’m going to fire very slowly. And you work with that person, you work with the rest of the founders. It’s frankly almost exhausting. And then ultimately, well, the ideal thing is that person and you and the rest of the founders all ultimately come to an agreement that it’s time for them to leave.

They’re fully, I mean, hopefully it’s been four years, they’re fully vested, you know, the reverse vesting that I talked about. And so they earn those shares and they own a lot of them and they get to benefit in however the company turns out. So my advice is you normally hire slowly, fire quickly, but with founders, you have to fire very slowly and carefully, because of the huge impact it’ll have.

Henry Suryawirawan: Right. Thank you for that tips. I think many people would have found it quite unique, right? Fire slowly. But I think it’s probably for the better of the company as well, not to disrupt, you know, the whole idea of being a one unit team, right?

[00:26:47] Dealing with Failure

Henry Suryawirawan: So another thing that you mentioned in the beginning is that actually you had experienced failure as well. The statistics still speaks true, maybe, eight out of 10 startups fail, right? And still, many people want to think of starting a startup. What makes people want to give this experience a try? And from your experience, did you actually regret experiencing all those failures, despite you have two exits, two massive exits. But at the time when you had that failure probably you would think differently, right? When you had the bad situation or you wasted effort or all those things, do you think you will regret some of those journey?

Jothy Rosenberg: Oh, I guess so. But the good thing is that time sort of heals wounds. And then, yeah, I can sit here and say, " Wow, I worked really hard on that one." One of the phrases I use is we hit the wall and there were no skid marks. I mean, we just hit the wall fast and hard. And those are regrettable. And at the time, it seemed like absolutely horrible. But I guess one of the things that I’ve observed in myself and in other startup people is they’re eternal optimists, almost sort of pathological optimist, maybe. And they just keep trying again and again and again.

And there’s another aspect to why do startups at all. And to me the answer is simple. If you work, and it was good that I did, I worked at a couple of big companies surrounded by startups. But I did a stint at Borland. Four years, five years maybe. And then I did a stint at a defense contractor. And so those experiences teach you that it’s not that big companies don’t want to be innovative. It’s that they really can’t be. They become very risk averse. They’ve got too much to lose. They’ve got too many shareholders, they got too many employees, they got customers, etc. And you can’t make radical changes.

I mean, think about the most recent announcement that Intel made where they said, we’re gonna drop everything but 64 bits in the x86 architecture. And they’ll probably get a lot of pushback. They’ve had to keep the basic core of the 8080 working all of these years. And think about how hard that has been for them versus somebody that just says, I’m gonna start from scratch. I don’t have any installed base.

So even though big companies would like to be innovative, they can’t be. And so if being innovative is important to you, well, then you kind of gotta be at a startup. Now you don’t have to found a startup. In fact, I recommend people who think they wanna be at a startup, join a company that’s got a hundred people. And that’s still a startup. And that’s still gonna be a company that can bob and weave and pivot and make changes that would, you know, make the head spin of people that work at a big company.

So, I don’t know if that answered your question, but that’s why I keep doing it. It’s that you get addicted to being able to innovate and move quickly and change things and try another angle. As long as you don’t run out of money. That’s the other problem, of course.

Henry Suryawirawan: Yeah. So you mentioned this eternal optimistic kind of mindset, right? I think that’s really key to me. Whenever you work in a startup, sometimes it frustrates the person who work there, because there is no process, there’s no good amount of resources, right? Everything needs to be started from scratch. I think becoming an optimist is really key. And whenever you seem to find a failure, you don’t give up, right? You always have to find new ways of solving the problems.

[00:30:20] Lessons from Big Companies

Henry Suryawirawan: So you mentioned about working in big companies, right? I’m sure there’s also a lot of advantage there compared to working in startups. And you even mentioned that you work in big companies before you actually jump into startups all the way. What are some of the lessons you learned from big companies that you apply in startups?

Jothy Rosenberg: Well, you can learn a lot about process. You can learn, because one of the challenges as the CEO of a startup is that you can’t have too much process early on, because it’s sort of unnecessary when it’s just 5 of you or 10 of you. But as it gets to be 25, 50, 75 people, you start needing some more process. Process around how you’re gonna hire, process around product changes, around deciding what your strategy should be reacting to what you’re hearing from the market in a way that is fast, but also makes sense. And then, of course, dealing with your board and with your investors starts to require a certain amount of process.

And you learn a lot about process at a big company. And you might learn both good and bad lessons from it. I’ll give you an example. So Borland was a large company that had very efficient, useful process. And I almost never felt like there was too much process at Borland, even though it was a 1500 person company. And it was the third largest software company in the world at the time, only behind Microsoft and Lotus. Of course, some of your listeners are gonna go Lotus. What’s Lotus? Well, Lotus got swallowed by IBM as people that do remember Lotus would. We were just behind Lotus.

But then, I was at a defense contractor where they have gotten so bogged down in process. And some of it’s mandated by the government and they can’t help it. But it just, it makes their overhead rates. You know, if a defense contractor is proposing to do some work that’s being asked for by the government. If you look at what the overhead rate for some of these companies is, it’s like over 200%. So you take somebody’s salary and it’s not multiply it by 25%, it’s multiply it by 250% is how much that person is gonna show up in your budget to the government. That’s because there’s so much process and that’s not their profit. That’s just what they say their overhead rate is. Then they tag on another 8% or 7% as their profit. It’s an amazingly expensive way for things to get done.

When I joined a company that should have been acting like a startup, and I was going in as CTO and then eventually I became the CEO later. And they told me about these things they had called PIGs. P-I-Gs. I said, what’s a PIG? They said, Process Improvement Group. They had six or eight groups that met regularly to come up with and manage a whole six or eight different processes. So they had a group to define a process and to manage it. I said, you have got to be kidding me. There are only 75 people at this company and you need six process improvement groups. Something’s wrong here. So it can take over even a smaller company if you let it. Too much process.

Henry Suryawirawan: Right. So the learning here is process is good at a certain stage, right? So when you’re small, probably you don’t introduce too many. But as you grow larger, I think good process, especially you have seen in the big companies, right? Of course, they have good processes that we can follow. But also don’t get too bogged down in unnecessary processes. I think that’s the key lesson.

[00:34:16] Being a Startup CEO

Henry Suryawirawan: You mentioned also in the beginning that you had to decide to step up as a CEO for the first time, right? Of course, if you wanna found a team, there’s a high chance also you have to become a CEO. And for many tech people, we sometimes want to just deal with technologies, right? Mostly also opt for CTO. But in your book you discuss like why someone should consider becoming a CEO. So maybe you can walk us through the thought process here, why someone should think about becoming the CEO of the startup they found.

Jothy Rosenberg: Okay, so first of all, let me say this. Tech startups in their first phase, which is probably the first 18 months or so, the CEO has to be very comfortable, and if possible, have a deep understanding of the technology. Because they have to go out and they have to talk about it. They have to sell it to investors, at the very least. And if every time they’re supposed to talk about the technology, they have to bring the CTO with them, well, that’s pretty inefficient. And they really need to be able to answer those questions.

And so there’s a phenomenon which is common where one of the founders is gonna be the CEO. And they understand technology and that’s appropriate. But sometimes at the 18 month mark or so, that person is not the ideal person to be the CEO any longer. And bringing somebody else in who has market knowledge or is really good at sales and marketing. And you can’t be great at everything. And so if you’re a technology person who understands the market that you came out of, understands the problem, you’re probably a great startup CEO. And then you might have to switch into the CTO role or some other role and bring in somebody from the outside. And that’s a hard thing to go through. I went through it a couple times. Twice. And it’s still really was hard. But it happens a lot.

So one reason that you wanna consider being CEO is because you’ve got that knowledge of the market, of the technology, and you can represent it, you can sell it, you can pitch it in your pitch deck and you can raise money much more easily, if that’s true.

Of course, the other reason to do it is that as you move through your career, you were probably an individual contributor and then maybe you ran a small group or you led a small group. You might not have been the manager, but you can still lead as a coder for example, or on the engineering side, you can lead as an architect. You can lead a team of 5, 10, without being their “official manager”. And in my opinion, the only reason to move up to the next level where you’re managing the next level of people that they themselves are managing others, is because you’ve got the experience, you’ve got the knowledge to understand all of the big picture. Not just a feature, but you understand the whole product or you understand your product in the context of the customer’s full system.

And so you have all that knowledge, but you can’t do everything yourself. That’s a really good reason to move up, and that’s a really good reason to be CEO. Because you’ve got the experience and you’ve got the understanding of, like I said, the product, the market, and you are the ideal person to lead the whole company. You don’t have to be a super expert at marketing, a super expert at sales, but you have to know enough about them to bring in a good person that you can manage.

And so those are the two reasons I think for becoming a CEO of a tech startup.

Henry Suryawirawan: And you mentioned also like don’t think that we can do everything, right. So you need to find good people that you can delegate and focus on the things that you can bring much impact, like you said, right? The technology itself, maybe in the beginning, because you have to pitch it to the investors or to also find the product market fit to the users. And also maybe if you know a little bit about marketing, right? You can also cover that.

[00:38:18] Bad CEOs

Henry Suryawirawan: So in your book, there’s one chapter you talk about bad CEOs. I’m sure for many people who are not trained to be become a CEO in the first place, what are some of the traits or some of the practices that you think are very important for the CEOs to avoid, so that they don’t have to become the bad CEOs for the company they found?

Jothy Rosenberg: Well, I’ll answer your question by talking about the two bad CEOs without mentioning their company or their name. But just talk about their qualities or their characteristics that are bad. So, I had one company where I was the founder and we’d already pivoted twice and it still wasn’t working. And I thought, if I could find somebody that already understands a big problem in a big market that our technology could be fairly quickly adapted to. Because we were one of those companies that thought we had a great solution and then spent a long time trying to find exactly what problem are we solving here.

And so I brought a guy in from the outside. And what I saw in him that I loved was that he had a really clear understanding of major problem in the market that people were trying to solve, but were doing a horrible job of solving. And there was an enormous opportunity. But he had a concept of loyalty that just dominated everything that he did. And if anyone actually disagreed with him about anything, he got extremely upset and he considered that disloyal. And this became such a big problem that someone like me that actually brought him in, had to leave. It just wasn’t a good mix.

And so it was sort of this combination of micromanaging, meaning not really delegating, and the people that he brought with him, they had this strong sense of loyalty to him, which meant doing exactly what he said and never disagreeing or having a thought about it yourself. And it stifled the creativity. It stifled pretty much anybody from veering from doing exactly what he told them to do. It was almost military precision and military kind of loyalty. So that one was a problem.

Another one, the CEO turned out to be bad, but it was because of the board. This was another situation by the way where I had been there 15 months and then we felt like, and I agree with the board, that I was still new to sales and marketing. And I hadn’t really gotten as strong in those two areas as I needed to be to truly be a good long-term CEO. And so we were looking for potential CEOs. And my idea was we hire somebody that’s an absolute super experienced sales guy selling high technology stuff.

But the two candidates we looked at, one was like that. And the other had been a CTO of a really huge software company, had never run a small company, had never raised money from investors, and had never run sales or marketing. It didn’t make any sense. Everybody’s scratching their head saying, wait a minute, that doesn’t make any sense. But he ended up coming in, against me and the rest of the founding team. In that case, we had a total of five founders. And we all didn’t want this to happen, but we were told by the board member who was also an investor, that if we threw our weight around, he would abide by what we wanted, but he would never invest in the company again. And we weren’t gonna be able to survive without that. So we accepted it.

And a year later, and I had stayed for almost a year to help him learn. And then I left. And shortly after I left, I found out that the company ran out of money and closed. I quickly called up my co-founders and I said, I don’t understand what happened. And they said he forgot to raise money. He didn’t watch his cash. He didn’t know how to raise money, so he kept putting it off and putting it off. And ultimately, it just, boy did it hit the wall with no skid marks, and that was very sad.

So what’s the point there? The point is there are a few things which every CEO has to do, and do almost religiously. What are they? One, watch your cash burn. How much runway do you have? You have to have more than enough runway to sell your product, prove that you’ve got good product market fit. And if you see that your runway doesn’t get you to cashflow positive, which, you know, it’s not going to in the early couple of years, well, then you need to make sure that you begin the process of funding a round, well in advance of when your runway runs out. You don’t wanna be like weeks away from running out of cash right as you’re trying to close around, because even nice investors will take some advantage of that and make sure they get a better deal.

Henry Suryawirawan: Wow! I didn’t know that it could happen. Like a CEO forgot to raise funding, right? So I think that’s really a good lesson for all of us here. So one of the major responsibility of the CEO is to figure out the runway, the cash burn. And don’t forget to raise the money for the next round.

[00:43:37] Book Publication Time

Henry Suryawirawan: So Jothy, thanks for sharing all this. I think it’s really great, great lessons from all your journey. I wish you well in writing the book. So when will we expect to see the book being published, actually?

Jothy Rosenberg: I think the publisher Manning and I are both feeling pretty good about it coming out before the end of the year, but it will be pretty late in the year. They’re hoping that I’m done with the writing by September. I think that’s a little optimistic, but the problem is that I’m not writing, this is not the only thing I’m doing.

I’m still running a startup and I’m helping a defense contractor try to learn how to spin out technology into the commercial space. Like I told you earlier, I’m sort of, you know, I can’t help myself. I still wanna see that happen. But there are so many barriers to that happening. Anyway, very busy and also running a foundation. But I think it’ll come out before the end of the year.

[00:44:31] Who Says I Can’t Foundation

Henry Suryawirawan: Right. So let’s go to your foundation, which I think is also a very inspirational message, right? It’s an inspirational foundation. So tell us more about it, Who Says I Can’t Foundation? What is it all about? And what is the core message that you wanna convey out of that?

Jothy Rosenberg: So, part of when you asked me to talk about my background, I talked about my career. But part of what happened to me that led to this foundation is that when I was 16, it was discovered that I had a rare kind of bone cancer in my right knee, that only affects about a thousand. It’s all only in teenagers, only affects about a thousand kids in the United States a year. And the only treatment back then in 1973, the only treatment was amputation. Chemotherapy didn’t even exist yet. Three years later, that cancer is aggressive. It was in the bloodstream and it landed in my lung. And then I had to have half my lungs removed. But at that point in time, chemotherapy did exist.

However, the real point that led to Who Says I Can’t, is that during all that time, people were telling me “can’t”. You can’t ski again. You can’t swim straight. You can’t ride a bike, cause you won’t be able to balance on it. And I was hearing “can’t” so much that it was really destroying my self-esteem and sort of hope. And I kind of fought back and said, well, I’m gonna figure this out. And it took a long time, but I ultimately got good enough at one-legged skiing that, I’m currently a double black diamond skier.

Then somebody said to me, I was the CEO of a company, and somebody wanted me to fund their ride, which was supposed to help fund AIDS research, fund their ride from Boston to New York. And another person who worked for me said, " Oh, you sound so excited about that. Too bad you can’t ride a bike from Boston to New York." So I bought a bike that afternoon and I trained hard and I did the AIDS ride from Boston to New York three years in a row.

So I then wrote a memoir to try to help other people get some hope. And I started to, you know, in my own mind, figure out what’s going on here. Cause I kept meeting people that also were pretty determined and looking at sports as a way to feel good about themselves again and accomplish something that everybody else thinks you can’t do. And I turned that into a book and then I turned it into a TED Talk, which talks about why - my theory -why people who have a physical disability so often overachieve. So it’s a TED Talk. If you type into Google “Jothy TEDx”, you’ll find it. That’s all you need to type.

So the foundation is because the best way for me to feel like I can hands-on help kids overcome a disability is by having this foundation that raises money. And then we will buy, let’s say a running leg. So right now, we’re helping a 10 year old girl who was born without a right leg – birth defect – and never run, but a year ago, eight to nine, started to really feel like, wow, I really, really wanna run. And the reasons were that gym class was starting to leave her out. She would be the last one picked for teams, because she couldn’t run. And so if it was a tag game, she’d get caught first. And if it was a kicking a ball game, well she wasn’t much good at that either. Running leg for a 10 year old girl is $21,000. And insurance will not buy sports equipment for somebody with a disability. So that’s what we do.

And literally, every one I’ve touched, every one of these kids over the years, and I started it in 2013, we’ve changed their life permanently. And there’s no better feeling. There’s this little girl, she’s left out, she wants to run, her parents can’t afford it, we get her a leg, and she can’t stop smiling. And she’s just, she run to gym class with her new running leg on. They’d never seen her run before. She goes running in, and she’s so proud to show it off. It’s unbelievable!

Henry Suryawirawan: Wow! What a beautiful story, right? I also saw your TED Talk. It’s very inspirational. I could see some videos. You did this bike riding, swimming over the sea. A few other things that you did. Even you jump on a rope at the end of the TED talk. I think that was really cool.

[00:49:10] Who Says I Can’t Formula

Henry Suryawirawan: So in your talk, you also mentioned this formula for someone who wants to prove themselves, like who says I can’t, right? So maybe tell us a little bit more about that formula so that people can also understand why you think the people with disability most of the times overachieve.

Jothy Rosenberg: So I believe and it took me, it’s been 50 years since I lost my leg. This past January, it’s 50 years. It’s taken most of that time for me to kind of figure this out. There’s three traits that when combined make this happen.

The first is insecurity. Someone who has a disability has a baseline level of insecurity. Always. Constantly. Why? Well, because when you’re walking in your prosthetic leg, it’s easy to fall. Amputees fall on average of once a week their entire lives. And you fall in places and it’s humiliating or it hurts or it’s dangerous. But it’s more than that. You know, you get up in the middle of the night and you don’t have your leg on. You gotta grab a pair of crutches to go to the bathroom. That reminds you every day that you have a disability. And so there’s this latent sense of insecurity.

Okay. So then you figure out, oh, maybe I can do this sport, whatever it is. I can learn to ski if I work hard at it. And eventually, people start to clap for you. I’ll go skiing under a chairlift and I’ll get people in the chairlift, hooting, and hollering. And that makes you feel exceptional. And it’s just like a drug. It’s like the first time it happens, you go, well, I really like that kind of recognition. And so you want more of it. And so this combination of insecurity and exceptionalism, which sounds like it can’t possibly be true in the same person, is this instable kind of thing that causes you to focus and work hard.

And the third part of the formula is discipline. So insecurity by itself makes you crawl into yourself and be feeling sorry for yourself. Insecurity by itself is very, very dangerous. Exceptionalism by itself makes you arrogant and obnoxious. But you put those two together and they balance each other out. And then what seems to come naturally to people who’ve had a disability happen to them is discipline. You’re only gonna be able to keep up with these people that have two legs if you work really hard at how does this running leg work. It’s not the same as your biologic leg and you’ve gotta adapt to it and you’ve gotta adjust your brain to it. So discipline sort of comes naturally.

So the formula is insecurity + exceptionalism + discipline. And my final point about it is that I believe that everyone eventually has a disability. Everyone. Eventually. And it’s not always just something physical. Maybe it’s a relationship problem and it’s making you feel bad. But can you, turn these three traits to your benefit when you are feeling bad and something bad has happened and can you overcome it. And if so, well, how? And I think, if you think about, well, it’s made me feel bad about myself, that’s the insecurity part. But if I use the discipline that I know is in me somewhere, maybe I can start to achieve some goals.

And I forgot to say that earlier. Exceptionalism can come from, you set a small goal and you work hard and you achieve it, and you celebrate it. And then you set the next one and you keep going. Each one is no big deal, but by the time you’ve built on top of one, on top of the other, on top of the other, you know, it’s a lot. And you know, it’s taken me 50 years to be able to swim from Alcatraz to San Francisco. This year will be my 30th time doing that. Not only did I do those long bike rides I mentioned, but I’ve done one that raises money in Massachusetts 18 years in a row. And I’ve tried a few new sports. I’ve now started paddle boarding, which is kind of fun with a special prosthesis just for paddle boarding. So yeah. It’s a lot of work. But the rewards are worth it.

Henry Suryawirawan: Wow! It’s very inspirational hearing what you said. And also the things that you do. You did all this multi years, right? It’s not just one time and you stop, right? But you did it consistently. Disciplined, like you said. And I think it’s also very important that this is not just applicable for the disabled, the people with disability, right? But also people who are good physically, but maybe we had issues. We have mental health problems as well. So use this technique, use this formula to actually bring back the good in you. So thanks for this message.

[00:54:00] 3 Tech Lead Wisdom

Henry Suryawirawan: So Jothy, as we reach the end of our conversation, I have one last question that I would like to ask you, which is for you to share what I call three technical leadership wisdom. You can think of it like advice that you wanna give to us so that we can learn from your journey or your experience and all these startups and foundation that you’d set up.

Jothy Rosenberg: Yeah, I thought I had on this just a little bit. So number one. As a leader of a technology startup, every day, focus on cash burn and your runway. Cause if you run out of runway, the whole thing’s over. And the second thing that’s sort of related to that is people say, why do startups fail? And of course the obvious answer is because they’d run out of cash. Well, okay, but that’s too simple. Why do they run out of cash? They run out of cash because they didn’t find a big enough market. So first, make sure you got enough runway. Second, make sure you get product market fit.

My current startup number nine, is basically on its second life. Because in its first life, we got to the point where we were struggling to get product market fit right. I finally said, we’re gonna run out of cash if I don’t do something. I let everyone go except for me. And I’ve built it back up with a completely different market that’s working well. And I avoided the hit the wall with no skid marks. We’ll see how it finally turns out. So, cash burn, product market fit. That’s one.

Second, do not underestimate the power of culture, positive or negative. And cultivate a good culture and root out any threats to it. I didn’t always have a great positive culture at all of my startups, but I’ve learned how to do it. Besides, you know, hire great people, but then empower them. And don’t micromanage. And then I think you can build a good culture. But if I see someone that’s starting to be a spot of bad culture, it can spread. And so that’s when you say, okay, I flipped the bozo bit on this person, and they’re gonna have to leave.

And then the final thing is I have some very simple management philosophies that I live by. One is assume the best in everyone. Assume the best. Now they may not live up to it, but start off by assuming the best. When you hear something bad about somebody, assume that it’s not true. And find out what’s going on. Second, treat people like adults. Oh my God, that sounds so obvious. And it’s so often not the case. And the third is, and this is gonna sound a little trite, but again, it’s so powerful, is to follow the golden rule. If you are about to do something to somebody that you wouldn’t like done to you, don’t do it. That’s it.

Henry Suryawirawan: Wow. Yeah. So those are classic rules. Yes. People might think it’s simple, but it’s so powerful. Sometimes we forget that, especially as leaders. And especially in the situation where, for example, your startup is having a lot of issues, you know, maybe running low runway, for example, or finding product market fit, right? Sometimes we tend to forget about the culture and just chase goals, metrics, finding customers, right? I think what you said are really, really important and thanks for sharing all of them.

So Jothy, if people would like to follow you, find you online or continue the conversation, is there a place where they can reach out?

Jothy Rosenberg: Well, sure. I do have a website for the Who Says I Can’t part of my life, which is whosaysicant.org. No punctuation, no spaces just who says I can’t dot org. And there is a way to sort of message to me through that as well. And I think that through the book that I hope some people that are listening to this might consider reading. You didn’t ask me why I wrote the book, but I wrote the book because I think it’s important to be honest about our mistakes. And most of the book is filled with lessons learned from mistakes, not the great things. And other than that, my current company is called Dover Microsystems and it’s a cybersecurity company, hardware and software. And you could email me at Jothy, J-O-T-H-Y @dovermicrosystems.com.

Henry Suryawirawan: Right. So yeah, I think learning from mistakes is definitely crucial. And I read the early chapters of your book. It’s really exciting learning from the story you began the first startup, right? The mistakes that you made. I’m sure when the book is out, it will help a lot for the founders or many people working in the startup. So thanks again for that.

So thank you Jothy for your time. I hope I can see your book by the end of the year then.

Jothy Rosenberg: I will really work hard to make that true.

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