Startups: Lessons from Success and Failure with Jothy Rosenberg

Speaker A: Welcome to Future Proof, the podcast for founders, marketers and sales leaders who want to scale with clarity. This show is all about using AI to drive revenue, simplify operations and build systems that actually work. No theory, just practical strategies you can use. Right away, child. Today I'm joined by Jothi Rosenberg. Jothi is a serial technology entrepreneur and cybersecurity innovator with over 30 years of experience building and scaling venture backed company. He's founded multiple deep tech and software startups with several successful exits including two over $100 million. He's the founder and chairman of Dover Microsystems, a Forbes Technology Council contributor and a past TEDx speaker known for translating deep technical expertise into real world business impact.

Speaker B: Sh. Welcome to the show.

Speaker C: Thank you. It's been, it's been so long since I saw you on my show.

Speaker B: I know. What, what is it like two weeks? Maybe.

Speaker C: Maybe two weeks? I'm not sure.

Speaker B: Maybe, maybe two weeks. I love that. Yeah. No, first of all, you're an inspiration to so many people and I was so inspired by your story uh, while we were chatting on your show. And I'm like, ah, I need Jody in my life. So here we are having you join me and we're going to talk about all things startups, scale ups, exits, AI and more. So, uh, so Jodi, can you just share with me your life motto of who says I can't? Because we just saw that on your water bottle. You're, you're welcome to show it by the way.

Speaker C: Right, right. So it's, it's like, it's like my brand. It's. And it, I don't know if it's on camera, but I have my, my book which started this all is called who says I can't? It's back there. And it came from the fact that When I was 16, I was diagnosed with a rare form of bone cancer that only hits kids. It's called osteosarcoma. And there's only a thousand cases a year in the United States, so that's pretty rare.

Speaker B: Right?

Speaker C: And it required that they amputate my leg above the knee, which was a big shock for a kid who's 16 years old and very active. And. And then everybody started saying, well, you can't ski again, you can't swim, you'll go in circles, you can't bike, you'll fall over. And it was just can't, can't, can't, can't. Which is, I mean it was already bad enough. And then to have that is just, just, uh, Demoralizing. And so I fought back and, and my way of fighting back was to kind of tackle one of the things I wanted to do at a time. And, and the first one was, well, I gotta get really good at crutch walking. Cause I'm stuck with these things. And so I started climbing mountains on crutches and. Have you ever been to, um, Acadia National Park? Mount Desert Island? Not yet.

Speaker B: Gonna go after this show.

Speaker C: It's, it's, it's up in, it's up a ways in, into along the coast of Maine. Anyway, it's got 26 named Peaks and they're all, they're all pretty tough climbs. And I did every one of them. I got a tiny bit of ocd, so I got every one of them. I recorded the date and how high it is and all that. Anyway, I, I worked on skiing and, and you know, and I became a double black diamond skier. And I wrote, you know, people said you can't ride your bike. Like I said, well, uh, I got a bike and I've trained and I, I've ridden from Boston to New York City four times. And I've done this, this 192 mile ride across Massachusetts every year for 18 years. And, and then the final one is swimming. And I, I went back to swimming and I, uh, became a, a competitive open water swimmer. And last month I went out for my 30th time doing the Alcatraz Shark Fest swim and did that again. Anyway, that was the, the um, impetus behind the. Who says I can? And of course.

Speaker B: Yeah.

Speaker C: And then of course people said, oh, well, you know, getting a PhD, that's really hard. You can't do that. So I got one. I mean, that's the only reason I got one. And then they, they said, you know, the hardest thing in the world is, is building a successful startup company. I said, oh, okay, I guess I gotta try that. And I've, I've had my share of failures. Out of nine, I've had, you know, only two successes, exits over a hundred million. But I've had, I've had some that hit the wall with no skid marks.

Speaker B: Let's say that, you know what that's, that's called a safe landing. I think you taught me that term.

Speaker C: Right.

Speaker B: Yeah, you said, you probably said that because it sounds familiar. It sounds like something you would say.

Speaker C: It is probably something I've said.

Speaker B: It's so first of all, kudos to you on all of those accolades. Just getting a PhD just because you know so many people. Yeah, I don't think they would do that. You're, you're, you're definitely unique in that perspective. I can see what drives you to have nine startups. I haven't met a lot of people who's had nine startups. And you're, you said this is my last one, but I don't, I don't see that, I don't see that anytime soon.

Speaker C: Well, I, I guarantee you it's my last tech startup.

Speaker B: Okay, good.

Speaker C: Um, a, uh, nonprofit. Okay, sure, maybe, maybe.

Speaker B: Right.

Speaker C: But yeah, no, not another tech startup.

Speaker B: No, it's, it, it's unbelievable what you've accomplished. So what I want to talk about is the entrepreneurs of every day. Right? So it's the folks that run small business, medium sized business, tech startups or want to start a company going back. And first of all, we do want to talk about your book because I think that book is like the bible for, you know, creating a startup. I, I got your mail by the way. Thank you for sending me the book. I went through it really, really briefly. Didn't finish the book yet. But I do want you to share the reason behind the book. And you have a course coming out. You've just impact kind of projects after another. Tell us more about that.

Speaker C: Well, the impetus for all three things, you know, my podcast, the book and the course is a, uh, feeling like I learned a lot of this the uh, absolute hardest way possible, like making mistakes. And I sure could have used help along the way. And so I'm going to try to fill that in. I'm going to try to give that help. And I'd love it if, you know, so you're going to laugh because this is an unrealistic goal, but I would love it if we could turn the statistic that says 8 out of 10 startups fail into if you take my course and if you, you know, read the book for you, Mr. Next, Next Generation entrepreneur, maybe we can have it be 8 out of 10 startups succeed. Right. So that was the impetus. And, and, and more specifically the book came first. It really was. I kept track of what happened, good and bad, along the way of all nine. And, and, and in, in many cases I, I like really capture the details of interesting stories like bad things that investors did, for example, or board members that were off the wall or whatever. Just, just um, interesting things and also maybe lessons learned. And, and so the, the book is written primarily in the first person. Think of it as like a memoir, but only of my entrepreneurial career, not of my personal life. And so, and it, it just kind of goes somewhat chronologically from. But, uh, what do you have to do first? Well, you have to form the company, you have to figure out who the founders are, you have to raise a little bit of money and then it goes on into. Well, you gotta figure out what your market is and, and then you gotta figure out what your MVP is and then prove product market fit and, and so forth all the way to the last chapters about getting acquired. So, you know, that kind of progression. So 31 of these, uh, 31 chapters anyway. So, you know, because that was my stories, I decided to do the podcast so I could start getting a guest entrepreneur a week on like yourself. Just. And your episode dropped recently, didn't it?

Speaker B: I think.

Speaker C: Or has it not dropped yet?

Speaker B: You sent it to me. You sent me an email. Yes, you did.

Speaker C: Yeah, it did. It did come up. Yeah. Right. So this is their stories and they're fascinating. I mean every single one of my guests has been a great role model explainer, you know, talking about how they, how they came up with the idea, what they're doing, why, where, what gave them the, the background to do it, et cetera, and mistakes and successes along the way. And then the third leg of the stool is the online course which I describe as if there were no constraints on me, like what the publisher put, which, which was, look, it's a black and white book and Its limit is 250 pages. And you know, there, there's no such thing as a downloadable resource, uh, when you have a printed book.

Speaker B: Right.

Speaker C: So I wanted, I wanted to relieve all three of those constraints. And so it's more like. It was. My course is more like 750 page color book with me talking, but I also have visuals that are next to me as I'm talking and a lot of downloadable resources like checklists and self assessment guides. And you know, here's a great template. It's worked for many, many startups of a term sheet. Here's, here's my favorite 47 questions that every investor doing due diligence has asked me over the years, so and so on. And, and so it's, I divided it up into four courses actually. So it's overall, it's a program called who says you can't start up? Uh, it's, I think I'd love to get feedback on it, but I, I think people are going to, uh, get something, something good out of it.

Speaker B: Uh, well, first of all, I love the passion of wanting to even create that, which is what excites me the Most, because how many other founders have gone through a hundred million dollar exits? That's not what they're going to do. They're going to just try to go and make another a hundred million dollar or a billion dollars. Right. Like so the fact that you said let me stop and think and I want to turn, you know, 80% success from 80% failure. It's kind of the people that, like I said, we need more of those in this world because, because there's so many people listening to bad advice, I want to say from people that may have not done what you've done. And you know, like I said, education in general is poor. That's why you had to do so many things and fail. Right? Because there wasn't anything out there that

Speaker C: told you what to do.

Speaker B: And, and I include myself. It's like every day we're taking risks and trying to do things and flat fall flat on our face and we're like man, I wish. So I've always paid for advice, coaching, do anything I can so I can get to where I'm trying to go faster, quite honestly. So, so tell us a little bit more about some of those failures if you don't mind. Because at the end of the day the failures that we all have is, is a mountain and the success is like tiny and, and everybody praise you for the success so they don't see the failure. I, I want to chat a little bit about that because I think that'll be inspirational and motivational for some of the people here.

Speaker C: Well, the fir, the, you know, the, the first one uh, is there's really sort of neutral, but I want to talk about the second one which was the first opportunity where everyone on the team really wanted me to be CEO, but I had the worst case of imposter syndrome. And, and then the first investor I met with said, who do you think you are putting yourself out as the CEO? I mean he was really huh, harsh about it and he was wrong. Because what I learned since then is that the person with the passion and the vision should be the CEO, even if they've never done it before. You can get help, you can get coaching. Your board should help you. And the second investor said all that, but I was already kind of too far. I, I flipped the switch and I went and did something else. I was still one of the founders of that company. And it went from 2 in, in two years with only uh, 4 million invested on 2 million in revenue, sold for $106 million because the market was ginormous. It was just perfect, perfect product, market fit. So that was not a, uh, failure for the company, but it was a. It was a personal failure because it cost me a lot of money to. To not be the CEO and to instead be, you know, a founder advisor.

Speaker B: Ah.

Speaker C: So that was, you know, I, uh, still count that as kind of a. A bad thing.

Speaker B: But I had.

Speaker C: I had. I had one a bit later where it was the. The classic case of if we build it, they will come. Which, if you find yourself doing that, stop immediately. Don't do that. Go figure out what the market is first.

Speaker B: We.

Speaker C: We were a little bit cocky. It was the same team that had done that first one, but we all got together again and we wanted to do another one. And I don't know why we were kind of being dumb about it, but we were so smitten with our technology that we wanted to apply it to a different market. And we ended up spending a year, more than a year, Maybe it was 15 months going out to different markets and saying, we have this great technology. Do you have a problem that we can solve? It's. I mean, it's just nuts. It's nuts. And that one was truly hit the wall, and there were no skid marks.

Speaker B: Safe landing.

Speaker C: Right? That's what we talk. That's what we call it. That was, that was one. Uh, another one was where there were, uh, two of us who founded the company, and we also funded it initially. And then what we were setting out to do, we were too early to market by at least a decade, it turns out. And so we did a pivot. But we. We'd also let the company grow to. To a, uh, headcount that was not smart when we hadn't yet figured out exactly what we were going to do. And we kept convincing ourselves that we needed all these people to help us figure out what it was it should be doing. And we were, you know, that wasn't getting anywhere. That first pivot didn't get us anywhere. And at that point, I was gonna. The other guy was the CEO and I was the coo, and we were. He was gonna leave and I was gonna take over as CEO, but I. I felt like, well, CEO of what?

Speaker B: This episode is brought to you by IMS. IMs help use AI, modern marketing and proven sales systems to create predictable growth. If you want better leads, stronger positioning, and systems that can scale without complexity, visit ims.net I mean, and so I

Speaker C: started to, you know, talk to a lot of people, and I found a guy who'd been A business partner of us, and he had a great idea and he was about to go do it himself, and I said, why don't you come do it with us? We'll slim the company down. Uh, our engineering team will be already ready to go, and they're good, and we'll figure out exactly what the product needs to be. But we know what the problem is, we know what the market is, and so let's go do it. End result was good, but along the way, after about a year, he, he decided that he wanted to go alone and he found a, uh, a, uh, board member that would help him force me out of the company. And, you know, luckily I was, I was a little smarter by now and I was better protected. And so when that did well, it, it sold for 25 times revenues. And, and it was a good outcome. I, and I, I did much better on that one. So that, but again, it felt bad because I'm getting forced out of a company that I created from scratch. And it's, you know, that's one of the, one of the things about our business is that it's like any industry, it's made up of people, and there's good people and bad people. And, uh, and you try to surround yourself with good people, but you're, you're not always going to succeed and just always try to protect yourself and, and protect the company from bad people.

Speaker B: I know. I, I, uh, appreciate you sharing that because I've heard that kind of stories before where founders were removed for whatever reason it was. And it's, it's unbelievable because like I said, it's just. I don't know what it is. There's that bad characters exist, whether it was greed or something else, politics. But at the end of the day, it doesn't matter. Right.

Speaker C: If it wasn't for you, it was. He wanted, he wanted fealty. He wanted just absolute blind loyalty. And I like to have discussions which sound like disagreements to some people who expect fealty and I, I think healthy discussions as long as in the end, you know, like he was, I, I'd made him CEO. So if he made a decision after hearing all the arguments, then you go with that decision. But he didn't like the fact that I like these discussions and didn't agree on that.

Speaker B: At the end of the day, I think you need to question everything before you do it. To me, it's the quality of the questions we ask. It's not, uh, what really matters. So we should be literally poking at everything that we do. As a business to find out if we're doing the right thing, the right price, the right strategy and so on. Jody, knowing what you know now about, you know, growing businesses after businesses, uh, what would you do differently in any of those circumstances? Is there any that comes to mind where. Man, I would have done this first versus that. And uh, I know the book is the blueprint, but it. Could you share any experiences?

Speaker C: Well, I would say that sort of at a general level, without any specific market or technology or anything, I would say no company has failed because it stayed lean too long.

Speaker B: Mhm.

Speaker C: So stay lean because you need to have your cash last as long as possible and certainly stay lean until you've figured out exactly what the market is and what you, you know. And you prove product market fit. Because once you prove product market fit, the world does change for a startup. And I'll say this, I say it all the time, but I'll say it here. No startup has ever succeeded that didn't prove product market fit. And so it, once you have proven it, the world opens up investors like you, because you know what product market fit means is you found a market, you found people that will pay you for what you've built. And more than one, more than one customer, like at least three. And so you know, for example, don't hire any salespeople until you've proven product market fit. Because you, whoever you are. And where even if you think, well, I'm not a sales guy, actually, if you're one of the founders of the company, you are a sales guy. You can sell this product with this passion that you've got. You can sell it. So you have to sell it. And you don't need all the process that a VP of sales, or a CRO, whatever they're called, is going to put in place. So don't hire sales. If you do, they're going to get frustrated and you don't need more than like one marketing person, you know, Ah, ah. At this stage. So it's so easy, especially if you're an ex. This is funny. An experienced entrepreneur is more likely to build too big a team than an inexperienced entrepreneur. And the reason is, is that they've got this great team already formed that they've worked with and they want that whole team to stay together because they trust each other and they're so efficient. And that is the. I made that mistake. It's, it's a problem. So anyway, so I, that's why I said the first thing is to stay lean.

Speaker B: Love that. That's Great advice. I want to switch a little bit to AI because, because it is so top of mind for every entrepreneur, especially when you're talking about staying lean. I think AI is one of those things that you could use to, it's a leverage tool. Right. So you use it to do things and cut a lot of resources or overhead or whatever you want to call it. Tell me more about your thought process. How are you leveraging it? What would you have done differently in any of your startups if you had AI? Anything you could share? Jody?

Speaker C: I would have, I would have definitely used it just because it's, it's a very, you know, it's a focused window. It, it's got access to this, you know, enormous corpus of information, including uh, answers to almost any question an entrepreneur could ask. Right. And, and I would, I would be asking it questions every day.

Speaker B: Uh, right. Every hour.

Speaker C: Maybe every hour. This, this, this situation. And, and that'll get easier by the way, when we have more, you know, natural language interfaces to, to AI. They're almost, you know, all the big ones are, are still chat based. That'll, that'll be coming soon. And, and, and so you know, you, you have a situation and you say, well, I've got, I've gotten this feedback and I've gotten this feedback and, and uh, and you know, and I'm, I'm still struggling to get product market fit. You know, where else should I go? And the uh, AI will ask you a few more questions to fill in its information about what you're doing and it's going to come back with here's, you know, here's a nice self assessment checklist. You know, go, let's go through that together. Or you go do it. Um, because it's going to help you zero in on where your, you know, strengths are and weaknesses are. I, I just did the lesson on scaling and I was using, I use Claude, I like Claude a lot. So I was using Claude and I was, you know, firing questions at it about sort of the criteria that we should be thinking about when we're trying to determine are we really ready to scale. You know, it's more than just, yeah, I've got product market fit. There's, you know, so fill out the rest of that checklist that you, you should have a, uh, uh, yes, next to all of these things, that's something you could do while you're operating the company. Just as, as, as easily as me doing it. When I'm trying to make sure I haven't left anything out in my online courses now.

Speaker B: Do you think AI is going to change? Obviously it's already changed so much. But like in your book, you've outlined every single step. How do you see businesses operating in the future than what it used to be? Like your nine exits or eight exits I guess. Are you done with the nine? Not yet. Right.

Speaker C: You're still got an offer for it on Friday night, but it's not a good enough offer.

Speaker B: Okay. Yeah, so like, let's just say we did right when this episode came out.

Speaker C: We got an offer, we had an offer in writing.

Speaker B: How drastic do you think the change will be? Do you think there will be like a one person company operating a billion in revenue or a hundred million in re? Like could that even happen with AI agents? Like tell me more about that. Sounds insane.

Speaker C: Yeah, that does sound insane. And I don't think so.

Speaker B: Okay, good. I feel better.

Speaker C: I don't think so.

Speaker B: I have a big team. What are we doing here?

Speaker C: Yeah, well, I mean there's, there's just uh, you, you can't let the AI, uh, agents kind of run wild. They need, you know, very hands on, detailed supervision and I mean you can, if you interact with chat, GPT or Claude or any of these things, you, you realize quickly that you, you, you ask them something and you get an answer. You kind of need to, you know, then ask the next question or.

Speaker B: Right.

Speaker C: So I think that no one has enough bandwidth to manage, you know, all the agents you would need to successfully run a billion dollar company.

Speaker B: I see what you mean. Right. You almost need, you almost need like six agent to one person ratio, kind of like managers. Hey, I manage these six. You manage?

Speaker C: Yeah.

Speaker B: You're going to need more than one person.

Speaker C: I uh, get it. But I think things, I think the speed of startups could go even faster.

Speaker B: Love it.

Speaker C: Now you're still limited by how fast do the people you're selling to respond.

Speaker B: That's true. Right.

Speaker C: You can't control that. And that was, that's, I've seen that always be a limiting factor. You, you know, you, you'd say, well this, my sales cycle from the moment of first, first meeting to contract signing, you know, is 60 days. How much do you think that would shorten given how many meetings are needed?

Speaker B: Right.

Speaker C: Even with AI? AI could help make sure that you, you know, haven't missed anything, that everything's ready that you know, and it would help get some of those things that, that you're going to need for the next meeting ready so you could be ready more quickly. But is your customer? I, I, I think that it's going to speed up your operation, you know, the, the startup's operations. You might need a, you might be able to get by with being slightly leaner, which is, which is good. And, and that's all really dramatic. And that alone could change the ratio from say, you know, 80% fail to 70%, 60%. It could, that's a huge difference. Agreed. Mind blowing.

Speaker B: AI can definitely make that statistic real, I think 80% success as opposed to 20% success. Because you can do a lot more before you go and start marketing and doing sales prep a lot more if you use AI. Right. Which I think is a, uh, huge opportunity for entrepreneurs because I had a really powerhouse entrepreneur on the west coast call me this morning and say, hey, could you do a training on AI? Because I have all these seriously successful entrepreneur, it's a women entrepreneur group. And she's like, I don't know, I don't think we're leveraging AI properly. I'm like, oh, oh sure, absolutely. I'd be happy to. I can show you how to make custom GPT in a heartbeat, you know what I'm saying? Like, just keep making more resources so you can scale faster as a business. So I feel like that lack of knowledge is probably huge in the entrepreneurial space. Because if you're not in a tech space, let's say you're a, uh, business that is in a blue collar scaling something like that. They're not using ChatGPT like we are. I'm in it every hour, right? Like I'm doing something in three different tabs at the same time. So I, I feel blessed that I have the ability to do that. I want to ask you a quick question. This is going to be more personal. What drives you in the morning when you wake up? What is that, Jodi? When you get up it's like boom, boom, boom. I gotta go do the next thing. What is that?

Speaker C: I have, you know, several major projects going at any given time. So, you know, when I get up in the morning right now, I've committed to having this set of four courses with a total of, what is it, 61 lessons done by the end of the year and I'm doing number 50 right now. So I've got a, I've got a, so I've got that, I've got my own foundation and I, I've got a set of things for it. So I, I have a few big things. You know, the online course, selling my company and running my foundation. That is about helping kids who become disabled get into a sport that helps them regain their self esteem. That's the, that's, that's the essence of that. And, and so I have those things to keep me from being bored. I have those things. And even when I retire, I mean you, you might not think I'm close to retirement, but I'll be 70 next summer and I'm going to, I'm going to change gears where I'm not running a, a startup. I am going to do more with my foundation. I'm going to keep writing books. This book was my sixth. So I, I'm definitely, I have the bug every few years to, you know, write another book. And you know, I mean, look, here's. Okay, I'm gonna, I'm gonna answer your question again, but very succinctly. It wasn't just that at 16 that I lost my leg. But three years later the cancer spread and I lost a lung. And at that time my doctor told me no one had ever survived. So I have been living with a death threat sitting over me all this time. Now. It eased up a bit because, you know, what they didn't know back then was that because chemotherapy had just been invented when I had the lung diagnosis, so they didn't know enough, enough about it to, to say, oh, this is going to save your life. But it did in fact save my life. And now that it's been 53 more years since then or whatever, that's, since the, that's since the 50 years. So that it's eased up because it's been that long. But it's still, you know, once you are living for a long period of time with that hanging over you, it sort of forms, uh, uh, an aspect of your personality which I've described as hurry up and live. And that's the fundamental thing that drives me is to, you know, live.

Speaker B: Love it. It's so inspirational. Where can they find you? Give us your website address.

Speaker C: It's easy. Jothy rosenberg.com.

Speaker B: love it.

Speaker C: It's easy.

Speaker B: Absolutely. Thank you so much for coming and just hanging out with us. This has been amazing. We're going to be doing more things together. There'. Doubt.

Speaker C: So I'm excited about that.

Speaker B: First I have to devour your book and come back to you with a bunch of questions and just, just keep going. But yes, thank you so much. It's been, it's been amazing getting to know you and I hope to do so many more things in the future.

Speaker C: Well, thank you. And, and, and I hope I can get you to take a look at the online courses sometime and give me feedback and, and, and maybe, you know, and maybe if you like them, testimony

Speaker B: 100% happy to do it. I'm a huge startup guy, so anything I could do to help. I'm a huge impact guy too, so this is amazing. I' uh, thank you, Frost. My pleasure.

Speaker C: Yep.

Speaker B: Thanks for listening to Future Proof. If you enjoyed this episode, subscribe and leave us a review. It will help more leaders find this show. And if you want to see how IMS M helps companies grow smarter with AI and sales systems, visit IMS.net as always, thank you so much for listening and I'll see you next time.