224: How One Consulting Client Led to an 8-Figure SaaS Product with Chris Taylor

Today I’m talking with Chris Taylor, an entrepreneur who turned a consulting engagement with Nissan into a software company serving half the automotive industry—then sold the business for multiple eight figures without ever raising outside capital.

In this conversation, Chris shares how a consulting project with Nissan became the foundation of his company, how that journey ultimately led to an acquisition, and the earn-out lessons every founder should understand before selling their business.

We also talk about building culture, why founder communities like YPO and EO can accelerate growth, and how AI is changing the economics of software and services.

Mic Drop Moments

• “Once you’ve survived that experience and gone through it all, you have actually learned so much that it does derisk whatever you do next, greatly.” – Chris Taylor

• “If you’re growing a company, especially for the first time, by definition, you’re always stepping off into the dark.” – Chris Taylor

• “If you ever start to feel really safe and settled, you’re probably starting to flatten out, and you might just want to sell.” – Chris Taylor

• “There is no technology advantage now in this world of AI.” – Chris Taylor

• 00:41 Bootstrapping vs Venture Capital
• 01:45 Is Every Growth Stage Equally Hard?
• 04:27 Why Founder Communities Change Everything 1
• 0:16 Is SaaS Dead in the Age of AI?
• 13:20 Why Outcome-Based Billing Could Kill SaaS Seats
• 16:35 How Chris Got Nissan to Fund His Next Startup
• 26:30 Turning Consulting Into a Scalable Product
• 29:46 The $25M Slide Problem That Started It All
• 35:32 Why Everything in Business Is Negotiable
• 40:52 Creating a Category Almost Killed the Company
• 48:27 The Real Path to Getting Acquired
• 52:13 Building Culture Without a Company Office
• 58:40 Designing an Office That Curates Culture
• 01:04:26 Earn-Out Lessons Every Founder Should Know

Brad Weimert: Chris Taylor, you turned a consulting contract with Nissan into an eight-figure-plus software company, which you then sold for multiple eight figures. And in your retirement, you created Red Fridge Society, which is like a coworking/entrepreneur community downtown Austin. Thanks for coming to hang out, man.

Chris Taylor: Thanks for having me. It’s a shame we have to record a podcast to hang out more. We’ve been talking about doing this for a while, so.

Brad Weimert: Well, I’m excited to hang out in your bunker, speakeasy in your house, or did you sell it?

Chris Taylor: I still have the house. Yeah.

Brad Weimert: Beautiful. And also at Red Fridge, wherever else.

Chris Taylor: Yeah, it’s interesting. I built this house to entertain and have the rare basement in Austin that I did use, basically, a speakeasy bar. But now that I have the Red Fridge Society, like I literally haven’t been down there in six, nine months. Because I’m always just entertaining down there because it’s a much more lively experience where there’s just kind of random awesome people there all the time.

Brad Weimert: Well, we’ll fix that.

Chris Taylor: Yeah.

Brad Weimert: For starters, bootstrap forever, or would you take outside capital to build the company at this point?

Chris Taylor: So, at this point, interesting. So, my identity got tied up a little bit in being bootstrapped. Bootstrapping enterprise software company back in the day, much easier now with AI, and would definitely recommend it for a lot of these kind of smaller focus AI companies. So, I think I almost have to be bootstrapped. But there is an irony there, which is once you go through the experience of growing and selling a company, all the VCs came out. I know everyone in town. I’ve been here for over 30 years. All the VCs come out of the woodwork, and it’s a blank check for whatever you’re going to do next. And it’s very flattering. And you know why?

Because once you’ve survived that experience and gone through it all, you have actually learned so much that it does derisk whatever you do next, greatly. So, as easy as it would be to raise money, I would have to bootstrap whatever I do, just because it’s literally what I built my brand on.

Brad Weimert: Hardest jump, 0 to 5 million, 5 to 10, or for you, 10 to exit?

Chris Taylor: Yeah. So, interestingly, I heard something recently that I agree with, which is every order of magnitude is about the same level of difficulty. So, zero to one is X hard, and 1 to 10 is about the same level of difficulty. I mean, I didn’t get super far beyond 10 before I sold my company. Like, then that kind of scale is equally as hard again. And so, I think I would agree with that. And the interesting I think what you also find is that various founders tend to like one of those three levels, right? Are you the zero-to-one person that just loves the ideation and creating and getting it off the ground? Do you like that kind of just past product market fit, kind of figuring out how to build the team up to kind of 50-ish members? Or are you a scale person?

And I think that there are certainly people that are good at all three or at least grow through all three. But I think an entrepreneur’s heart of hearts, they probably like one of those three better. Yeah, and I think I’m probably that zero to one more than anything. And was good at the one to 10, actually, don’t think I was great beyond that.

Brad Weimert: Yeah. I think it’s uncommon to find people that are good all the way through and/or enjoy it all the way through.

Chris Taylor: Yeah, I didn’t get to learn it all the way through, right? I mean, I tell entrepreneurs all the time, but a lot of times you hear the, “Oh my gosh, the imposter syndrome that everybody has in life, but especially founders of, am I qualified to do this?” I had no idea what to do next. I’m like, “Well, then you’re doing it right, right?” I mean, if you’re growing a company, especially for the first time, by definition, you’re always stepping off into the dark, right? By definition, you’re going to grow past the size and a team size and a market size and a strategy size than you were yesterday. And it’s always going to feel like it’s new for the first-time entrepreneur. So, you’re doing it right if you got that feeling. If you ever start to feel really safe and settled, you’re probably starting to flatten out, and you might just want to sell.

Brad Weimert: Yeah. I mean, I like that frame in general, sort of similar. When you find yourself confronted with something that seems really difficult, it’s probably the time to pay attention and set the f*ck up.

Chris Taylor: Yep. Or surround yourself with advisors, like, I mean, my…

Brad Weimert: Or be careful.

Chris Taylor: Yeah. And this is one of these kind of bootstrap versus VC. And my brothers had a couple of VC exits. We talk about this a lot is the thing about the bootstrapping, it’s very lonely, right? VC typically comes with the board. It comes with that ecosystem around that VC, and recommendations and intros and maybe the other founders that are in that VC. And if you’re bootstrapped, it is especially solo bootstrapped, like I was, I was a sole founder. There are some stuff you just can’t b*tch down to your team about. There are things that you need peers. So, I think some combination of advisors that have done it before that can help you miss the very obvious potholes if you’ve done it before that you’re about to run over.

And then peer organizations, EO, YPO, for example, or with a little bit what I’m building with the Red Fridge Society, these type of ecosystems where you have people that have gone through before and people that are going through it at a similar stage of you, those two things will both help you business-wise and mental health-wise in ways that I cannot express how important those things are for people. So, yeah, that’s like the biggest advice I give to all founders is make sure you get in a room where you can really talk about this stuff, because it’s important to be able to do that.

Brad Weimert: Yeah, I couldn’t agree more. I think that, in particular, it can become lonely when you’re going through challenging times. I think when you’re doing well, actually, I take that back. You can be lonely no matter what. Yeah, by design, you shouldn’t be talking to your team about all the problems, all the things. There’s plenty of stuff that you want to be a good leader, and it doesn’t make sense to communicate those things to other people on the team.

Chris Taylor: Yeah. It can be lonely and fun or lonely and miserable. Like, even though like when things are going great, but there are still stuff you can’t talk about, right? I mean, you don’t walk into a cocktail party and be like, “Hey, I took a million dollars out of the company yesterday,” right? There’s only certain rooms like EO, YPO, those types of peer groups, instead of being like, “Well, that was really pretentious,” people are like, “Oh, well, why’d you take it out? Why didn’t you leave it in? Why do you invest it? What are you going to do with it? You’re going to diversify?” It becomes a conversation about the motivations and quick high five, and then, “Okay, great. Tell me about it. Let me understand it.” Whereas in a lot of other rooms, that you would just be total pretentious jerk. And so, yeah, if you get in the right room, it allows you to be yourself and talk about the things that are top of mind, both the wins and the losses.

Brad Weimert: You talk about sort of learning to be a new leader at different phases in the company. And I think one of the things that has been interesting to me is sort of the different level of responsibility you have around your communication as you grow, like, when do you talk about finances? When do you talk about numbers? When is it okay to actually expose what’s going on in your life? And as you grow through life, or grow as an entrepreneur and make more, invest more, become wealthier, you can f*ck that up badly in a way that isn’t contrary to your previous version of you, right? Like, it was okay to talk about numbers when they weren’t really big numbers. You know what I mean?

Like, in the rooms I was in, it was fine, and then all of a sudden, you can tell that it will just land, like you’re an arrogant asshole, right? And so, then you have to sort of start to parse that and own, or I feel like you have to own that outcome. So, you mentioned YPO and EO, and Red Fridge in Austin. Are there other groups that you feel like fit that bucket for connecting with entrepreneurs and being able to have a peer group?

Chris Taylor: Yeah. I think Hampton, which is a newer one. The Sam Parr starter is a good one. It skews a little bit more tech. EO and YPO are actually low percentage tech, surprisingly low percentage tech, I would say. Each of them had their own slight criteria. EO’s kind of depending on the chapter, 1 or 2 million in revenue. YPO tends to be 10 to 15 million in revenue. Like, Hampton’s 3. So, you’re selecting in size, but yet, they go much bigger than that. There’s this digit tab and a bunch of other ones that aren’t necessarily limited to just CEOs. EO and YPO are nonprofit, which gives them…

Brad Weimert: I didn’t know that.

Chris Taylor: So, they tend to be a little bit cheaper. They’re self-moderated to your forums, and things you’re doing are self-moderated, but basically all the dues and the money just funnels back into events, and you have things for the actual chapter, so they tend to have a much more kind of well-rounded set of value that you’re getting for your dues. And they’re greater organizations. And the Austin EO chapter is one of the largest in the world, think 220 people, and there’s two YPO chapters here now.

Brad Weimert: What’s more underrated when growing a business: focus, culture, or solving enterprise problems?

Chris Taylor: More underrated? Okay, make sure I answer the question correctly. Back to my identity, so things I have to say, as I was kind of known as the culture guy. I was a bootstrapped culture guy. That was kind of my, okay, so I have to say culture to that. But the thing I was worst at and got better at was focus. All these things are important. You can’t be enterprise software if you’re not solving enterprise problems. So, I think that’s kind of like integrity as a value kind of have to have it.

Brad Weimert: Well, sort of, except if you have, and let me reframe that one. Obviously, the reason I gave you those three is because they were the three for you, right?

Chris Taylor: Yeah.

Brad Weimert: But the enterprise problems, I guess, part of it is, one, you could sell some sort of software to enterprise. The other is you can create software for enterprise and solve a bigger problem. So, it’s one thing to sell software. It’s another one to go and embed yourself and try to find a solution and create it. So, you had contracts that were 1 million to 5 million on average for a contract size?

Chris Taylor: Yep, basically.

Brad Weimert: I mean, it doesn’t take very many sales for it to be…

Chris Taylor: It does not. And I did not make many. Well, I was primarily in automotive industry. There’s literally, like, 10 customers, right? Like, would you go? Because a lot of them are conglomerates, and I had half of them, and then, for a lot of reasons, the other half was going to be hard. And so, that’s a much longer story. I tried going into other industries and had a little bit success, but not enough. But, yeah, that’s one way to go. Although I do think it’s very different now, though, right? I mean, the world is very, very different, both in culture and because of a lot of the work from home and everything happened post-COVID. But also, you read a lot about, is SaaS dead? Is this world of the vibe coded?

I mean, it’s like, kind of having a moment, like, literally, like, this week, I’ve seen 10 or 15 different articles or hot takes, at least on LinkedIn about it. And whether it’s today or tomorrow or the future, if you think about the $100 million Salesforce contract that some of these large companies have, I mean, yeah, five years from now, that’s going to be a weekend to work, to say, here’s the 80% of what we use and create it specifically for us, and have the exact same inputs and exact same outputs, and basically recreate that. That is going to be a thing. So, I think the age of massive SaaS companies that are hundreds of millions of dollars in SaaS to start today, and to try to do that, but especially traditional SaaS, that is over.

What I think the niche SaaS that bootstrapped, there’s only so many moats in this world of AI. Technology is not a moat. When founders come out to be like, “We have this like technology advantage,” I’m like, “Okay, you’re smoking something, right?” There is no technology advantage now in this world of AI. You can have data advantage, right? We have unique data somehow that allows us to train a model to have unique perspective. You can have a unique go-to-market strategy. “I know everybody in this industry. I have this partner that I’m selling through that gives me access to something that I understand very well.” You can have that, but the technology itself is invaluable.

Brad Weimert: Or integrations.

Chris Taylor: Yeah, integrations, ugly integrations, remote, something you have to really kind of grind through, and relationships with those places, potentially to have integrations kind of like a take on the go-to-market strategy. So, you can have all those things, and they work really well when they’re really narrow, right? When you’re like because, yes, I will buy your thing that’s very specific for gyms, right? That put together, and you have some of these big names, and you’re trustworthy, and you’ve got these workflows that I have that are already there. It’s not worth me building my own, because it’s so specific to what I do. When you start to get horizontal, that starts to break down.

Those are great, $1 million, $2 million, $5 million, $10 million, $15 million companies maybe that may not be traditionally VC backable but can be fantastic lifestyle businesses for those entrepreneurs. I think we’ll see. And Austin’s uniquely qualified, I think, to do businesses like that, and then you’ll have your hyperscale or OpenAIs and stuff like that. That’s going to be happening primarily on the West Coast. That was where the billions are going now, where it’s winner take all. Those are the new horizontal SaaS platforms, the equivalent. And I think it’s going to be hard for the big guys out there.

Brad Weimert: Yeah, I agree with you. I also think that’s all kind of to the answer of, “Is SaaS dead or is it dying?” And one of the takes I’ve heard is the switching costs from SaaS is actually what’s going to erode, right? So, robots will be able to take you from one SaaS platform to another easily. So, the moat that you’ve built your whole company on this one SaaS platform, like Salesforce moving to HubSpot, one of the barriers is, what a f*cking pain in the ass. But if you can have robots just go woop, woop, then that’s going to help that transition. But the other is the pricing model. And so, the idea of SaaS being a per-seat proposition is offensive, first of all, always has been.

And second, I think what we’re tooling for inside of Easy Pay Direct right now is to be in line with the tokenization of the world, which is what AI is doing, is, hey, how much juice have you used from the engines? And so, the new billing platforms need to be able to allow for outcome-based billing and usage-based billing. And if you aren’t able to get really creative there, you’re not going to be able to be in the game, because we’re not going to pay per seat for stuff like it doesn’t make any sense. Because software is going to be so flexible in the future, it’s either producing the outcome you want, or it’s not. And there’s no sense in spending a bunch of money on all of these features and functionality that don’t give you the outcome you need.

Chris Taylor: Yep, you’re basically getting closer paying for the value, right? I mean, seats were a really bad proxy for that, because if you look at how many seats that’s not getting used out there, of course, enterprise software. So, the closer you can get to the value, the better. And I agree with you, the tokenization of that and the usage basis of that is a proxy for it. I think it’s kind of it’s hitting consultants too, right? Whether you’re build-design or even a lawyer, because the reality is people using these new AI tools, people expect to get 90% more efficiency even from their lawyer, right? Well, how could you be charging me 20 hours to do this piece of work, where I kind of just did a first draft in five minutes myself?

And so, I think you’re going to see even the services industry is going to move much more to deliverable base, which is closer to value-based, right? We’re going to do this transaction for you no matter what it takes, and it’s going to be flat fee of this amount. I think you’re going to see more and more of that, because otherwise the businesses just won’t be tenable, right? Because that’s the only way they’ll be able to maintain any margin.

Brad Weimert: Totally agree. Before, well, it’s the only way they’re going to have any demand, right? Two weeks ago, we looked at design firms to do, like a full brand overhaul on a product and company. And what would have been $50,000, $100,000, we had multiple design firms that were competing at $6,000, $8,000, like, ouch. But they can also crank that out at a tempo that they never could before, right? So, yeah, they can’t make as much, but they can do a lot more volume if they do it well.

Chris Taylor: Yeah. I think it goes back to the same thesis of it is a golden era to be starting something right now, because if you’re starting over $6,000 to $8,000, highly leveraged, and be able to go get is fantastic. When you have a $10 million consulting business, and suddenly your average ticket size is going from $100,000 to $6,000, that’s a very tough transition, right? And you’d rather be the guy starting over from the ground up and growing into that with the new model than trying to rework your old model in this new world. So, it’s a golden age before software and services for people to come in and be the AI native version of the old thing.

Brad Weimert: Yeah, I agree with you. Well, AI can’t keep its little tentacles out of every conversation I have. It’s part of the times right now. But let’s go back to a simpler time when you sold Nissan on the idea of your brand-new company, Square Root, solving a problem for them. This model, I’ve now met multiple people that have gone this route, which is like approach a large enterprise company and somehow embed yourself into the company and get a contract to go fix a problem for them that they may or may not know they even have, but they sort of write you a check to go do that. How did that start? And I want to talk about that transition, but let’s start with what problem they paid you to solve, or if they knew.

Chris Taylor: I moved down to Austin, actually, in 1995, so I just had my 30-year anniversary last year, and I worked for a company called Trilogy, and I was like the kid to join their two-person automotive team. And then over the 10 years I was there, that team grew to be hundreds of people and almost $100 million, right? So, I kind of grew up in that industry. I had a lot of relationships with the manufacturers, especially deep one with Nissan, because I had been managing their West Coast accounts before I left. So, I had this point in my life where I left Trilogy. I was trying to figure out what to do. I’d always want to do. I was not quite 30. I’m actually I was 30, 31, and I had met my wife. We weren’t married.

So, I had this opportunity where if I ever want to do the entrepreneur thing, this is kind of the time, right? I’m not married. I don’t have kids yet. I’ve got time. I’ve got this break in my career. If I do another five-year career, it’s probably going to be too late. So, that was the first impetus. So, this is the time I want to go do it. And I knew enterprise software is what I’d done my whole life. And back then, it was super shiny object and high multiples and where you wanted to be, right? So, I want to build an enterprise software company. This is the time to do it. I didn’t have the idea. What I did have was 10 years of relationships. I had fantastic relationships with and trust built with the automotive industry, such as the Nissan relationship.

And Trilogy was also known for hiring just fantastic people. So, I work with a lot of amazing people at Trilogy that we also had a lot of mutual respect for, most of which in Trilogy. Had a lot of people kind of come and go at Trilogy, so I wasn’t poaching from Trilogy, but folks that I’d worked with in the automotive industry. So, I literally went to my stakeholder, Nissan, that I knew well, and I knew the industry. I knew the business very well, because I work with them, and I was like, “Hey, I know you have this problem over here in order management that we’ve talked about before. If I could go get Jeff and Elizabeth to join me, would you let us take a crack at solving that and go do a couple of $100,000 project to go work it out?” And Nissan was like, “We love Jeff and Elizabeth, yeah, of course.”

And so, I went to Jeff and Elizabeth, and was like, “Hey, I just got a contract with Nissan. You want to do some 1099 work?” And they’re like, “Yeah, sure. Sounds fun,” and Joe basically started no real employees for the first couple of years, actually, but kind of started this. And in my heart of hearts, like the goal was always find the product, right? Do the project to find the product. That was always the goal. And in my little naive heart of hearts, I thought that was going to be a four-month project process, right? We’re going to get in, we’re going to embed, we’re going to find the product, we’re going to sell it to the industry, and we’re going to win, right?

So, four years later, we found the pay dirt that actually ended up to be the product that other people beside, you know, the Nissan relationship grew, but it was mostly project work. And then we found the one that other people in the industry were really interested in and that became the now was the transition from how do we go from this services company now doing five-ish million in revenue to this product company. That ends up that’s a hard transition.

Brad Weimert: So, it would never occur to me. It never had occurred to me to approach a giant company and say, “Hey, will you give me a few $100,000 to go try to solve a problem you have? Was this learned behavior from you? Is this a path that you’ve seen other people take?

Chris Taylor: I mean, not necessarily, but again, it goes back to, and again, this is true, and this part is true today in this much more complicated time. It goes back to relationships, right? I mean, effectively, I started my company off of relationships, and it’s trying to always be a person of high integrity that was good to work with, and some people could trust. It’s 10 years of that paying back is what started my company, because Jeff and Elizabeth trusted me, and Nissan trusted me, and I put those together to form a company. So, whatever the version of that is for someone’s industry, I mean, I have a ton of folks that are leaving over the last five years, some of my old team looking for new things to do, or just people I’ve known from around the tech industry forever.

They’re talking about a transition of like, I’m just kind of sick of what I’m doing. I was thinking about maybe hanging out my own shingle, maybe doing some fractional C-level executive or whatever it is. And it’s the same situation. I was like I know your reputation. It’s fantastic with me and everyone we know. I guarantee you, if you just do a post on LinkedIn and say you’ve got three slots for fractional advisor for product or CFO, or whatever the person’s role is, you’re going to be inundated, because you can build a company off your relationships. I start there, and one or two things is going to happen.

You’re either going to love the fractional work and do it, and if you want to start to get people under, you can turn that into either just a lifestyle business or a real company, or you’re going to find some company you fall in love with, and you’re going to want it full time. Either way, you don’t realize the power of your reputation and the folks that go down that path, 99 out of 100 times, that exact thing, one of those two things happens, and they love it.

Brad Weimert: What is your advice for a 25-year-old entrepreneur that doesn’t have that track record in relationships and reputation?

Chris Taylor: As niche as possible, something that you’re truly passionate about, you can fall in love with that, you know, you still got to find that first customer, right? Start with the first customer you can find, whatever that is, and whether that’s just something you need to go build, or something that is still in your relationships, but go pretty niche and build something that is valuable for that niche that you think you can go on.

Brad Weimert: Okay. This is the interruption where I’m supposed to take money and let somebody else advertise on the podcast, but I don’t really want to do that, so I’m going to remind you that I also own EasyPayDirect.com and if you’re a business that’s accepting credit cards or needs to, you should understand why we have thousands of people a year come to us off of platforms like Stripe or PayPal and why they prefer Easy Pay Direct. You can check us out at epd.com/bam. That’s epd.com/bam.

Brad Weimert: I like that. I like this exercise, but the other thing that I have seen people do really effectively, a couple of my friends basically had a company. When they started out, they had a few clients. They went to headline clients, and they were just like, “Hey, we’ll just do it for you. Just let us do it for you for free, no charge.” But then they had that brand on their customer roster, which gave them credibility to go get other brands, which I like.

Chris Taylor: Yeah. No, I like that too. Interestingly, it’s not so much harder to actually get them to pay at least a little bit of something for that, because there’s so much investment from their side, right? I’m going to take a winger on this young person to come in and do this thing they say they can do. It takes my time, it takes my energy, it’s a distraction, what if it doesn’t work, you know, all these things. So, the time cost is actually the big part of that for that. So, discount or whatever, lighthouse customer, we’re going to basically build this thing bespoke for you.

The other way to do that, and the way I did it basically, is the, “Hey, we’re building this thing. I am going to build a product out of it, full disclosure. In our contract, I’m going to have all IP rights. I always share them with you, though, because the stuff we build for you kind of have but I have full right to go use it other places, even if it’s a competitor, yada, yada gets all lawyer stuff, not hard to figure out. But by engaging with us early, you’re going to get exactly what you need, because I’m building the first version for you. And so, you’re going to get exactly what you need. It’s going to be cheaper, faster, and better, because we’re using product mindset around this problem that you have. And then once we’re successful with you, we’re going to take it to the world.”

That’s a way to actually fund the company. “We have this thing. I want you to try it.” “Sure.” Like, go get your free customers. I actually need to go hire some people to build this thing then you go and build it for someone and figure out how to genericize it from there. Not the fastest way. Go raise a bunch of money is the fastest way. But it’s a way to do it if you have that network that you can go get that first customer.

Brad Weimert: You planned on this thing taking four months. It took three and a half, four years. What were the major bottlenecks to get there?

Chris Taylor: A couple of things happened, right? One is we were a little victim of our own success within Nissan itself, which is we were very good at that problem we were solving. And so, an adjacent problem popped up, and before you know it, like we were actually just the Nissan consulting revenue was growing faster than I could actually grow the company. And it was so much easier to sell another dollar to Nissan than it was go sell $1 to anybody else, because there’s all just long enterprise sales cycles. You have to go and do that. So, I didn’t focus enough on the selling in general. And it wasn’t such a layup going to these other manufacturers like Ford and Volkswagen, et cetera, that, yeah, when you say, “We built this thing. Do you want it?” “Yeah, we don’t really do it exactly that way.”

There was a lot of just translation between the way that this is the danger of doing, what I just said, people should do this. Sometimes you can overbuild to a single problem, right? So, yeah, it’s like build specifically, talk broadly. Go talk to a bunch of people and understand what the problem is and then solve it for the person that’s paying for you with an eye towards, okay, we’re going to build this piece really bulletproof and scalable, because we know everybody needs that piece. That piece is actually just Nissan’s, right? So, that piece we can kind of build and consulting level quality, not product level quality, but I know which pieces of this are actually going to be relevant to the rest of the industry. I’m going to spend more time and energy making sure that those are ready to go for the rest of the industry.

And so, we didn’t do a good job in that getting out and understanding the industry problems as well, and kind of locked in the one at Nissan, frankly. And then it became clear, as that grew very quickly in Nissan, across all their different divisions and even internationally, that that was a problem that was more generic across the industry, and still had the same problem. Because we were expanding so quickly inside of Nissan, it was still hard to go take time and energy and get the team to go focus on sales and the painful startup of the new customer, versus, yeah, we can just go get another million bucks from Nissan Australia.

Brad Weimert: Okay. So, let’s talk about that. So, you get a contract with Nissan. You rally some other people. You’re like, “Hey, we’re going to go solve some order management problem in Nissan.” While you’re trying to figure out your big idea for a software platform, other problems pop up in Nissan that you get assigned to fix, and you’re making money doing this. At some point, you decide that you’re going to build out a software product. What is the problem that you found, and what was the product? And how long did it take you to actually stand it up? Because this is like a pivotal moment for you, right?

Chris Taylor: It is.

Brad Weimert: You go from functionally being a consultant to actually having an enterprise software platform, which then also all the things you just said, it means you have to go sell this sh*t to other people, which means you have to have other business functions within the company. You’re no longer just engineering, right, designing stuff.

Chris Taylor: Yeah. And so, yeah, there are some lesson here of half of entrepreneurship is surviving, right? Eventually, if you stay in the game, you’re going to figure it out, or maybe not the game you thought you were playing, but you’ll figure out a game that allows you to go through. So, surviving is half the game, right? And so, in this particular example, we were doing a bunch of order management stuff, so we had 10 data sources we needed for that. So, mainframe ordering system, inventory, pub off, stuff like that. And then we did an analytics project for the Nissan LEAF back in ‘09. We got access to like 20 other systems, or lead systems, and all that. And then we did a project for the after-sales, and we had all that.

So, we ended up having deep expertise on all this data, and actually had it in one place, more so, frankly, than their internal IT team did. And so, we had this unique asset, which was understanding and access to all this data. And so, then when this use case popped up, this small use case where they basically wanted to do a survey to dealers, asking a bunch of stuff about their after-sales service processes, and then give them an action plan. And we kind of sat down, and it was like a small 100K project that they were, and literally, that the only reason we got offered to is because the purchasing person that had done our other stuff needed to bid it out, so it wasn’t a single bid.

And so, they were literally bringing us in to fail because they already had the vendor identified that they wanted to use on that side, which is like the vendor that after-sales liked and does a great job, right? But they brought us in. And so, we kind of came down and talked to them. We’re like, okay, so couple of observations, like first observation is half the questions on this you already know the answers to, and we actually had it, right? Half of this survey, I can just tell you what the answer is, periodically, quantitatively, tell you what the answer is. You don’t have to ask the dealer about it. We can just tell you how their customer success is, because we know we have the Salesforce data and we have the survey data.

Second thing is, what’s going to happen to this printed out sheet that you hand the dealer after, is there any follow-up? Is there any…? And so, where it came down to is, “Hey, you should ask these three questions. The rest of it let us actually just build a dashboard off data we already have.” And then, instead of having a static action plan, let’s put it online and have it so that your field team can actually go and have ongoing conversations and track it. And then you can hear a corporate, you can start to pull it together. So, that’s a long way of saying the problem we ended up solving, I called it the $25 million slide problem. We’re doing a bunch of analytics for Nissan. We’d sit down with a bunch of executives all the way up to the President.

We’d show them a slide, and the slide would say, “Hey, did you know that if you just got your retention in the southeast to where it is in the northeast, there’s $25 million in incremental profit? Did you know if you just got your accessory attach rate to where all this demand signal says it is, but the dealers aren’t ordering it, you can have $25 million incremental profit?” And then everybody agreed that was real money that was there. The problem is, I have 1,000 dealers. What do I tell that one to do? So, I want to get my $25 million. It’s not evenly distributed. It’s not the same solution for everybody. Some people don’t even have that problem. Some people have it in 10X what it is.

And so, our insight was the way that not only Nissan, but Walgreens and all, any kind of multi-unit retail, the way they solve that problem is they build these large field organizations, right? You’ve got Nissan USA, and you have your northeast region that has a VP in it, and it goes down to the New York MSA, and there’s the person that has 12 dealerships that they basically drive around to, and they’re the buffer between corporate strategy and execution at the dealer.

Brad Weimert: So, let me say it another way. They hire a sh*tload of humans to go through all the physical locations to go assess this.

Chris Taylor: To assess it, and to coach, and to convince, which coaching would be the nice version of that. There’s some carrot sticking, I’m sure. Yeah. And so, we saw that gap, and we’re like, so we want to solve that problem. The way you solve it is you equip those field people to be much, much more effective. And there are two things they need to do to be effective. They need to problem identify a lot better, right? So, how can we turn these non-technical people into expert data scientists by giving them the answer? And then how do we have them be much better accountability coaches to convince people to do this? What that looks like is, yeah, I mean, literally for Nissan, we had 4,000 different metrics in the system.

Every which one could be compared 20 different ways. So, it grows very exponentially, very fast on the data points. And you’re expecting a fuel person knowing which four should I talk about, right? Like, this month, right, like, literally. And so, that was what tool did, said, “Hey, for this dealer, you should talk about, yeah, we’re trying to drive customer success, literally, 150 of those metrics correlate to customer success.” For this dealer, which one should I talk about? You’re like, “Hey, you’re training, and we see that you have huge turnover in your team, and only 10% of your team is trained. We see people that have 80% of their teams trained, all these like things downstream.

And we can actually show you you’re going to make an extra $100,000 a month if you just get your training better. And so, we’re going to talk to you about that.” This deal I’m going to talk about training. That deal I might talk about the tire program, because that’s the thing we see, that there’s the most opportunity. So, we identified that. And then we say, “Hey, by the way, I know the best dealers that are your size. We know what the best practices are. It’s these five things. Which of these five things are you doing?” “Well, I’m doing those two. I’m not doing those three.” “Great. Let’s put a plan together. If you do these three things that dealers your size best practice are doing, and if you do three things, you’re going to make an extra $100,000,” and we’re going to make more money, and everybody’s going to win, right?

Brad Weimert: Amazing. Yeah, I want to talk about the platform and how you positioned it and how you fit it in. But I want to pause on that because the idea of taking functionally, a large, very distributed data set, so you have these data sources that you built up because you were playing in the different elements of the Nissan ecosystem. So, they were all in different places, right? You centralized it, you got it to a place, and at the time, we’re talking 2014, ’15.

Chris Taylor: Yeah, yeah, around there somewhere. Yeah, even the ‘09, ‘10, ‘11 probably.

Brad Weimert: So, yeah, very, very different era. But I wanted to pause on it because today, the same types of problems exist, but the solutions can be pump all the data into an LLM in some capacity. But the starting point, which is a challenge, is getting all the data and then flattening it or standardizing it in some central place so that a robot can benchmark it against best practices, what the metrics should look like, whatever.

But I think that opportunity exists, like for anybody that is terrified of enterprise, which I think most people should be, coming from a non-enterprise place, SMBs, mid-market, franchises, all sorts of places have that problem right now and don’t have a good way to coach a three-chain location, right, or five, or analyze their own business. But I think there are really creative AI solutions that can be put in place today. For anybody that’s listening, like, how do I apply this? I think those are practical ways to do it. How would you look at it differently today if you were to approach it?

Chris Taylor: Yeah. Gosh, everything’s so different today. I mean, I do think you’re right, data is one of those moat, like even just integrations and data is a moat, even if it’s their data, right? In this case, most of the data was actually Nissan data. We did have a lot of industry data sources too, and I’m seeing this, I advise a few founders now, and this is, organizations still suck at getting their own data out. So, if you actually have– yeah, I was talking about like, oh, how should we request the data from this large enterprise, one of our biggest customers having this conversation with the mind advisees, like, you tell them however they can get it to you. It’s like, because actually, you want broader data, right? Oh, do you have a feed already you give to somebody else that actually has that piece of data we need and a thousand other things? Just send us that. We’ll take care of it. Like, don’t do any, because you just want to make it easy for them to get it to you and be more data is better.

And then if you can take that internal data and maybe through buying it or aggregating it or doing some of these, go get some other data that’s external, or you can do benchmarking and some other interesting things or competitive analysis, then you can bring kind of instant value to that. And then if you multiply that forward, let’s say that you actually get three customers in a given niche to go do that, now you have a data set that no one of those could ever do, right, because they have their own data, but they don’t have the other person’s data. Actually, this is worth going down for just a second.

So, one of the big problems we had when we finally, because now we’re five years into this relationship with Nissan. We’ve built a crap ton of stuff for them. This first version of this product was built basically for them. It was called Coefficient, was the eventual name of it. Company Efficient Square Root. We’re very math oriented. Actually, I had trademarks on both those. I kind of owned math for trademarks. So, this first version of Coefficient was basically bespoke built for Nissan. And my contract was pretty good on IP rights, but there was like a competitor carve out in there. Like we couldn’t go sell certain things to competitors.

And basically, if I really wanted to turn the corner and become this product company I wanted to be, I had to negotiate that out and went and talked to the purchasing person that this whole thing started with actually, and they’re like, you got to go talk to the SVP that is at the top of this thing. And if he’s okay with it, I’m okay with it. So, I had this wonderful conversation today. One day, we went out to lunch with Kent and we had this conversation. And he is like, all right, what’s my motivation here, right? Like, right now, I’ve got this competitive advantage that I have that my competitors don’t. I was like, all right, well, fast forward here. If I’m successful in what I’m trying to do here, which is go sell this across the industry, do you agree that the benchmark will be great?

The velocity, instead of just taking your money, I’m taking everybody’s money. And I’m investing all that back in. The product’s going to get better. It’s going to bring insights and things you haven’t thought of we can bring from the manufacturers. Fast forward when I’ve got seven customers, do you agree that that will be better for you? He’s like, yeah, of course, you are, but you don’t have somebody because you have me.

I was like, yeah, so one of two things happens. I’m successful, in which case you get all this value, or I’m not. In which case, who cares? Because then you haven’t lost anything, because I couldn’t actually go and sell it to anybody else. And he paused and took a sip of his ice tea and said, yeah, I agree. And we got all the competitive stuff ripped out of the contract and that was the day we became a product company.

Brad Weimert: That’s amazing. Well, that’s another, I mean, I think I talked to my team about this ad nauseam, but no isn’t the end of the conversation, ever, right? And any rules that are in place currently, even if they’re contractual rules that you have, everything’s up for negotiation at any point in time. But the path to it, I think is beautiful, which is he started by saying, tell me how this could make sense for me, right? And even if he didn’t use those words, that’s what you heard, it just told me.

Chris Taylor: Or I was prepared to do. But now, all that being said, if you have this lens of I’m going to boost up my company by getting a cornerstone customer that I’m going to do some embed myself with and figure out the product, you should very much think about how you structure that initial contract to avoid– I avoided, I would say, half of the problems I were going to have and didn’t avoid the other half. And if anybody out there is trying to figure this out, happy to chat with you about what you should be thinking about when you do this. But again, wiser to have a conversation up front than it is later.

Brad Weimert: Yeah. It’s also incredibly difficult to have the foresight to cross all the T’s, dot all the I’s. In any contract ever, specifically if you’re new in a space, right? So, I think that’s an interesting balance, but I love the approaching it after the fact because everything is easy in hindsight, right? It’s like, oh, yeah, I should have done this. But I also see, I think a more common problem for people is allowing those issues to get in the way on the front end, specifically with new entrepreneurs where they’re like, yeah, I need this contract. Perfect. And the other party’s like, yeah, well, or f*ck you, or just, no, we’re not going to sign that, right? So, I think tackling, there’s some balance to be had there, but like, just getting going and doing it clearly served you better, and then crossing that bridge at the time. I don’t know if you could’ve negotiated that with Nissan in the first place anyway.

Chris Taylor: Yeah, probably not, not that piece of it. But each of them is different. But the other way, I mean, the ideal way to do this stuff, by the way, is, I mean, it’s the old man behind the curtain thing is, don’t sell it as ours. You sell it as I’m going to build this for management thing for you. It costs a dollar an order, right? And now, behind the scenes, we’re going to put three people on it. You have a million orders, blah, blah, blah. And so, it’s basically, here’s why you’re getting all this value because I’ve got all these people doing all this work, but let’s just call it half a million dollars a year for these deliverables.

Now, when you do that, I can swap out to people for tech later. And effectively, the consulting versus product nature of my company has changed, but my contract has not, and my margins have changed, but my contract has not. So, if you can think forward to what you think you want your structure of your company to be and when you approach those first couple customers, you can talk to it about, you’re getting me, my time is worth X an hour, and them, their time’s worth X an hour.

But the way we’re going to put this in the contract is like this, because what we’re going to do long term is we’re going to deliver you high value, always evolving software, right? And usually, most customers like us sound great. In the meantime, we’re getting you, right? Yeah, absolutely. And then over time, you don’t have to redo the whole contract, swap it out, and your IP is cleaner that way too, because now you have it set up as you’re delivering the stuff and you’re building IP behind the scenes.

Brad Weimert: Yeah, I love that. That’s great. Reposition the contract for the deliverable to avoid selling the IP and software. Beautiful. So, what did you build? And how did it become applicable to the rest of the industry?

Chris Taylor: Yeah, so we basically had a platform that sucked in all the data, gave the prescriptive insights, and then maintained action plans. We had a community model. We had the dealers talking to each other about these best practices and what they were doing. And so, we had this software that was rolled out across all the Nissan dealerships and their field team used it every day. And then corporate used it for all the reviews. Hey, what are we doing with our bottom 10 customer satisfaction dealerships? Pull up the plan. Why is that one behind? And we became the process accountability platform across, but really, the industry, but for starters for Nissan, and then went and sold that to Volkswagen and Mazda and Subaru and eventually Toyota.

Brad Weimert: I heard it referred to as store relationship management.

Chris Taylor: Yes. So, I don’t know how deep you want to go down this particular rabbit hole, but there was a very fun, ends up nonproductive for my economic story, where you get 10 to 15 customers in automotive. We had about half of them, couple of them like GM weren’t buying SaaS software anymore because of some CTO-type things you do. So, you’re like, all right, we’re kind of running out of market here. Buy our traditional, go sell the manufacturer to manage their locations. But everywhere that had locations has the same problem. They have the same structure. They have field organizations. What if we go talk to hotels, banks, drug stores, Macy’s, all these type of places.

So, I took all the profits from the company and built a whole retail go-to-market team. There are 2,000 brands that were big enough to sell to in the retail world as opposed to the 10 that I have over here. So, yeah, we order a couple orders of magnitude bigger on TAM and market opportunity. So, that’s when we went from dealer relationship management to store relationship management because we’re kind of going and trying to create a whole new category, which had a little success in doing that, coining the term and getting it out there and talking about it on the conference circuit and all that for a whole set of reasons that didn’t work, but we got very close.

Brad Weimert: Well, okay, so the reason that I brought it up is because the idea of saying, hey, we have a unique solution. Nobody seems to be tackling it. I’m going to create a category is a bold move. And I think it’s important for people to think about and look at, hey, so I’m solving what I thought was a narrow problem. Turns out with some slight tweaks, this can be applied to a much broader set that creates a broader opportunity. I think that’s one major takeaway is like, how is what I’m going to do going to be directly or pretty closely applicable to a much broader set that would change the size of the opportunity dramatically.

The second is the pragmatic reality of, does that make sense, right? Is it a shiny object going to, that’s going to destroy the company or is it actually going to fuel and grow it? What caused you to decide not to go after that bigger market and to stay narrow in automotive?

Chris Taylor: Yeah, so your focus question you asked earlier, this is one of those. So, how those customers went out, and then we’re a little bit of a victim of our own success. Hired a sales team, wonderful inside sales guy, outside salesperson, and we had an amazing response at the beginning. I mean, literally, in our first week of hiring these people, we had C-level meetings with Bank of America, Home Depot, Lowe’s, Walgreens, like all these crazy meetings. And everybody’s like, yeah, we get it. You’re doing this for this whole industry over here. You get credibility. It’s not quite like us. We’re retail, we’re different, everybody’s different, but we get it.

We had a pilot with Home Depot literally within two months of starting this. Super, it’s like, holy sh*t. What have we been doing over here in automotive for the last 10 years, right? This is where the money’s at and this is the takeaway from this cautionary part of this tale is don’t go in the headwind markets, right? This is brick. Yeah, effectively our pitch and where are we now? Like 2012, 2013, maybe ‘14, is brick and mortar retail, right? Brick and mortar retail is getting crushed during this period, right? It’s all e-comm.

Only thing anybody cares about is driving direct to consumer sales. The buy online, pick up in store is probably the closest thing anybody cared about, the retail locations. We got Home Depot and new CFO worst quarter ever. Our pilot got cut, like right as before it got started, basically, right? We got assigned and then got cut. And then Macy’s went bankrupt, like when we had a pilot at Macy’s has a Neiman Marcus for the pilot there, right?

So, we had entered this headwind market that, even though everybody got it and wanted to do it, literally, they weren’t investing in their stores. There was just no budget, right? The auto’s a little different for a bunch of reasons and do that. And I mean, we flew really close to the sun on this one. It’s a very, another, I’m full of long stories you’ll find, but one of the things we’re known for is our culture. We are Fortune Magazine’s second best place to work. We’d just been featured in the magazine. We got a toothpaste thread because of our cool office space. We had five, six 1920s houses in downtown Austin. And I met some executives at Walgreens at a conference, and we had a good meeting. They liked our stuff, like it was cool.

And I overheard them say, they were talking to themselves, said, hey, let’s meet up in the bar later. And they left. I looked at chance, like, all right, see you guys in the bar in 15 minutes. So, we were like, happened to be there when the lower-level executive, we were meeting, went from meeting with their boss. And yeah, we were sitting there when they walked in, we’re like, hey, guys, you let me buy a drink. And we just got featured in Fortune Magazine, da, da, da.

One of the things we’d love to do for our auto customers is we do these innovation days, right? Austin was peaking back then. It was the coolest place to be. It’s like, fly your team down to Austin, we’ll give you one of our craftsman houses for the day. We’ll facilitate a trip to like one of the capital factory. We do a little mini accelerator pitch day for healthcare-type stuff that’s going on there. We can go tour Oracle’s new facility that they just built through our relationships, and then take our house and do your offsite for the day. And literally, I was talking to like level three executive, I’ll say, and Jeff, his boss walked up, and he’s like, Jeff, Jeff, come here. Listen to this.

So, I told him what I told him, and Jeff looked at him. He is like, well, where are we doing off our offsite next month? And he’s like, we’re going to IBM’s headquarters. He’s like, yeah, F that. Make it happen. Does July 22nd work for you? I’m like, didn’t you have to look? I was like, yes, it does. And so, we had, this is a guy that ports the president. He flew his team down, did it offsite, calls me up two weeks later and said, that was amazing. My boss, the president wants to fly down and do the same thing with his whole direct boards, my peers. I was like, done.

So, I had the president of Walgreens in my office for two years in a row doing his offsite, great relationship, 500 store pilot, 600k or so, contract on his desk for $8 million, $9 million SaaS deal on a few million bucks up front to do what he had verbally said, we’re in. Your stuff’s amazing. Your team’s amazing. We love you. We need innovative companies like you do it. But Walgreens had their worst quarter every quarter from that point forward, and every quarter, he called me and said, not this quarter, hopefully, next quarter will be better, and sat on his desk for two and a half years.

Brad Weimert: Damn.

Chris Taylor: Yeah. And that would’ve basically doubled the size of my company and proven out retail. And that single contract would’ve made my company worth four times, as much five times as my trend. And it just never happened. And everybody else went to hell, like, all these pilots were, everybody’s going bankrupt. So, I was like, all right, I was 15 years in or 14 years in, I was like, I need to stick the landing, getting kind of tired. Beating my head against this was fun, category creation, all that stuff, but it’s just not working.

If Walgreens works out, we’ve got a real company in that. But if it doesn’t, I need to retrench back in automotive, and the thing is we took our eye off automotive. Automotive went from 50% growth at year 10, because we weren’t really focused on it. We were shiny objecting over in retail. And so, I was like, all right, new strategy. How do we increase the TAM in auto? We put all our energy back there, figured out a good strategy, and basically paired back all the retail investment except for Walgreens and unveiled that at the big auto conference in February of 2020, got a contract with Toyota out of that new unveiling, two contracts with some of the industry players, had the Toyota executives in my office on March 8th when they got the call that said, you got to come back right now, we’re shutting down the office. You’re not allowed to travel and the whole world shut down, right?

So, like, had I made the pivot six months earlier, yeah, we would’ve had that contract under, and that contract alone would’ve got me back up to my 50% growth rate. And then the whole automotive industry fell apart, right? Shut down for four months. Chip shortage. Manufacturers didn’t have any cars. Existential crisis, but we had a bunch of inbound interests because we did this big coming out party to all these players in the industry. So, a lot of those players were like, oh, I didn’t realize you guys had so much traction. We didn’t realize you guys were so big. We get the thesis, but it’s so strategic. We’re either going to build ourself or we’re going to buy you. And so, in the middle of this crisis, a couple of those folks reached out and said, hey, nobody’s doing anything right now because we can’t sell to anybody, but our M&A teams are working. We’d love to talk to you about buying your company.

Brad Weimert: Damn. Wow, that’s crazy. So, I think about the, we’ll call it shiny object syndrome, but like, I don’t know that it was really a shiny object for you, right? It was a very strategic, huge opportunity. The way that I tend to think about these, as a bootstrap founder, and by the way, I think VC-backed companies look at this thing very differently. But I look at like a certain percentage of my time, energy, and money goes to the core, and a certain amount is allowed to go towards large scale future opportunities that may or may not work that are big and I’m building for the future. But what you said, I think is key, which is you took your eye off of automotive and it was growing 50% a year, and it went down to 10 as a result. In retrospect, do you think that there was a way to look at the retail side, build it slowly or kind of prove concept there without taking your eye off the prize?

Chris Taylor: Yeah, there absolutely was, right? Split that investment a little more. And again, I do feel like, again, my timing could not have been worse. It was just, we got so much interest in those first three months. Everybody felt like we just hit this pot of gold, right? It was so much easier having these conversations with two people, and even getting paid pilots signed. And it ends up we were at the beginning of the fall, right? And it’s like, those first six months people had money and every day after that, they didn’t. And so, I feel like a little bit of just not seeing that, not predict, yeah. This is on hindsight, very predictable, right? Not predicting that and seeing it and then getting caught up in it and running too long. The reality is what I really should have done is cut everything except Walgreens off two years earlier, then my pivot back to auto would’ve had paid earlier and I would’ve already had sold before COVID hit.

Brad Weimert: You mentioned culture. Now, your latest thing that I want to get to here, but I want to hit on culture first is Red Fridge Society is one of the buildings that you owned during the Square Root days. You had a bunch of bungalows functionally downtown Austin, just west of the core of downtown. One of them, you still have. What did that unique physical office space contribute to culture that you couldn’t replicate in a class office?

Chris Taylor: Yeah, I mean, a) it was very unique, right? I mean, it wasn’t class A by any means. When you’re in a bunch of 1921 houses, in your ‘20s houses, it’s very taboo now to say, your company’s like a family, your company doesn’t care about you, blah, blah, all that. But it really was at Square Root and if you go and ask, 95% of the team would say that it felt like a family. A lot of them would say it’s the best place they’ve ever worked because we really took care of each other, right? And doing it, I mean, literally we were dog friendly. We kept the living rooms as living rooms. You’d literally walk into a house and they sit down on the couch and the dog would come up to you and there’s fireplace there. I mean, it felt like you’re walking into someone’s home.

And it was very unique and people were proud of it, right? And I mean the whole concept for Red Fridge was, even back then, it was, oh, my parents are coming in town this weekend. Is it okay if I bring them by the office? I was like, absolutely. In fact, we tell the team, if you want to come by, and we had a bar at the office, so if you want to come by and hang out at the office on the weekend and bring your friends, we’d love you to. It’s here. It’s a shame the space isn’t used after hours. People working there a lot, but yeah, use the space as your space, right? Bring your friends. Don’t be an idiot, but bring your friends.

And this idea of these are spaces that feel like places to build community was just very unique. And we did a bunch of stuff to keep unique. We had a house, one house had alcohol, one house had super high-end coffee. We had different flavors of sparkling waters in each house, different snacks in each house. Some houses were all teams. Some were all conference rooms. We had this kind of concept of movement through the houses to make sure that somebody couldn’t get siloed. And that came from an early story that actually is what got us the Fortune Magazine, about having tribes form. And we just had two houses and how we spent a lot of time and energy to overcome that. But we became very good at it. It was fun, and people were proud of it.

Brad Weimert: Moving from that era to Red Fridge Society today, where you’re deliberately working on creating culture environment for a group, what translated? What did you keep when you had this set of bungalows to deliberately create culture for your team? Moving out of that era, what did you learn and what did you keep when you said, hey, I want to design a culture moving forward for entrepreneurs?

Chris Taylor: Yeah, I mean, it was pretty wholesale. I mean, basically, so I owned one of them and rent it. Over the years, we’d run like eight different ones, but at 1.6 in a row at our kind of peak that we had at once. But I only owned one of them. I rented the rest of them. So, when I sold in ‘21, my acquirer on one of the office spaces in ‘22, I basically got the one I own back, and whole ‘nother conversation about should have bought them all, of course, in downtown Austin real estate, but oops.

Brad Weimert: Well, that is a conversation.

Chris Taylor: Yeah, exactly. Yeah, exactly. It would’ve been worth almost as much as my company had. I just bought the stupid houses. So, I basically had my award-winning call. And as part of them breaking all the leases, I was like, oh, yeah, let me– they didn’t want any of the furniture or anything. So, I get to keep all the furniture and all the houses I went through and poached my favorite pieces of furniture from all six houses, brought them back to the main house. and then that house was always the cultural heartbeat of Square Root.

And people are sensitive to energy types up, that whatever that has happened in that house before and I’ve actually met some people who used to live there and know a little bit of the story, it’s got a wonderful energy. It feels like intimate. It breeds connection. When you walk in there, you just have these wonderful conversations. Everybody’s relaxing at ease. And I really like the house.

And so, I was still doing my earnout when I got the house back. And so, I actually leased it for a couple years contractually to a startup and like, oh, you can come by whenever you want. We’d love to have you here. And this was ‘22. So, yeah, they didn’t raise round and they asked if they could break the lease. And in those six months that they were in the house, I really missed it. And it didn’t really feel like mine anymore. I felt like I was intruding if I was going to go down there, so I didn’t.

And I just really loved that space and the energy I used to get out of that space. So, when they wanted out the lease, I’m like, absolutely, I want to use it myself, but I want to sit here by myself. And I sure as hell don’t want to start another company right now for a whole set of reasons. Yeah, and what do I love doing? I love advising and hanging out with mentoring and learning from entrepreneurs. So, I’ll basically turn this and just like a little coworking place, I got 20 entrepreneurs to pay me a little bit. I’ll curate all the food and drinks and everything. Let’s create a space where we can all use, where we can all hang out and help each other through the journey. That was the original vision.

And I hit 30 members and they were like two people there on a daily basis because I was targeting these more accomplished founders and they were busy and they didn’t really use the space very much. So, then that vision changed to, we have this wonderful culture, this kind of ethos like EO and YPO of how do we help each choose through the journey around this kind of really unique space that kind of builds all this momentum and energy. That’s now the value. So, I basically created a community that has coworking benefits and social benefits and event benefits and all these things, but it’s a community around a space.

And so, our main value is manifest serendipity. You, the culture, I curate the people, so they’re fantastic people, founders, and no assholes. The ethos is it’s rude not to say hello, rude not to introduce yourself. The whole point is to help each other through the journey, whereas if you walked in the house and just started talking to everybody and, like, it would be weird, right? Whereas here, like literally, if you walk in right now and there’s somebody that’s not clearly on headphones in one of the main areas, they’re going to stop, stand up, say hello, introduce themselves. And so, that culture can really breed super interesting, very valuable network that’s been super fun.

Brad Weimert: So, it sounds like a ton of this stuff translated from the Square Root days into Red Fridge in terms of what the cultural elements are. From a physical perspective, when you’re designing a space to create the culture versus the stuff that you write on the wall, that you try to make the culture, what are the non-negotiable things? What do you think about doing in a space to make sure that it helps curate that culture?

Chris Taylor: The space itself I’ve been dialing in. I actually don’t think as much about space. Again, the space is cool. People want to be there, great, awesome. Wonderful bars. Nonalcoholic and alcoholic wine storage, like all kinds of great stuff, right? But kind of like any company culture, you go back to ping pong tables and pool tables that companies are going to do, that isn’t culture, right? The space isn’t culture. It is the either agreed upon, written down, or implied rules around the space that is the culture, right? So, you already pointed to the main one, right? I drill it into people. It’s rude not to say hello here. It’s rude not to introduce yourself. It’s either a member or a guest of a member that’s here and their people you should know.

And just that one thing sets the tone and drives it. So, I think it’s just all those little things about the space. We always like to say it’s the most exclusive, least pretentious, kind of organization in town. It’s small space. I can only have so many members. We’re almost a capacity now, but it’s lightly staffed. You put your dishes in the dishwasher. You let yourself in. Nobody’s checking you in. You got to check your guests in. It’s helped yourself to everything highly curated, but if you’re a super high maintenance, this is not the place for you, right? And so, we end up with this like very exclusive because it’s a small set of people, but all super down to earth, wanting to help each other through the journey, which is great.

Brad Weimert: Well, you mentioned that you wish you bought the houses. And then we’ve talked about shiny objects a couple times. I’m huge on owning the real estate that I’m in. I mean, I think I’m as much a real estate person as I am a software person or a sales salesperson. Somebody told me many, many years ago that the best decision they made was owning the real estate that they ran their office out of, because when everything was said and done, it was like this forced retirement account. What caused you to buy the one house and not buy the other five?

Chris Taylor: Yeah. So, originally, I was looking for a space like this, right, and had the opportunity to buy it. There’s a slight longer story. It’s not worth going into there. So, bought the one house and yeah, this was in ’09, that’s when I bought, started my company in ’06, bought the first house in ’09. And again, basically, it’s between Fifth and Sixth Street in downtown Austin. It was $250 a square foot, $225 actually, then I had to put another $25 because it had the original foundation, which were cedar trunks with bark on them of all different sizes on top of the ground holding up the house, right? So, I’d like new foundation to…

Brad Weimert: For frame of reference here, like that right now, so you bought it at $200, $225 a square foot, it’s probably a thousand bucks a square foot.

Chris Taylor: It is a thousand bucks square foot now. So, two years later, I had an opportunity to buy another one, literally, like within two houses of our house, but it was $500 a square foot and it seemed ridiculous because it was two years later, right? And then I had an opportunity at $645 to buy another one. It always seemed like it was just ridiculous at the time because I was set point at what I paid for mine back in the day and just to do, but again, and also at that point, I was investing. Everything back in the growing the company to sort of pull money out to do that would’ve been tricky, but yes, am I kicking myself now? Of course, I am, yeah.

Brad Weimert: Well, I mean, debatably, a good idea and I think that the traditional wisdom points you in the direction of don’t distract yourself or allocate funds in different places and keep your head in the game. There’s no question at all that my real estate investment activity is distracting to other things in my life. And so, if you’re constantly assessing other opportunities necessarily of less bandwidth for the core opportunity, also worth noting, real estate very, very, very often seems like it’s too expensive in the moment. Yes, and one of the beautiful things about real estate is that it trends upward over time.

And sometimes, you have to weather a storm as I am right now with quite a few things. And that’s the nature of real estate. But I love that you still have the Red Fridge. We started with this in the beginning and it’s sort of an age-old debate or something that I hear come up quite often, which is, would you rather have 1% of $100 million company or 100% of a $10 million company?

Chris Taylor: Yeah. And clear for me is the 100% route just because, again, I’m 52. I’m pretty set in my ways at this point, as most of us are. I learned from being acquired and being executive of a public company for a while, I’m not a great employee. So, that ability to have control on a playground where it can be a true value. I used to talk about the culture of Square Root, and now, it’s true of Red Fridge Society as well, is get to know me because this is a reflection of me and my values and what I think is cool or fun or enjoyable or joyous. So, I’m pretty comfortable with that control thing right now, sadly, but…

Brad Weimert: I totally understand, yeah, for sure. It’s definitely been my path.

Chris Taylor: Which goes out the door with the VCs, right? As soon as you raise money, even if you have the CEO title, even if it’s minority, there’s incredible pressure that that money comes with, right, and the board and all those things. And the control implicitly goes out the window, if not explicitly, if it’s a control deal.

Brad Weimert: So, to that, you had an earnout. So, you had some portion of your exit where you then had an expectation to work for somebody. Most people don’t think about exits until the moment. What sort of exit math or exit lessons do you have for founders that haven’t yet hit that point? What should they be thinking about now and what is the reality?

Chris Taylor: Yeah, I mean, you hear some great stories and some horror stories, probably more horror stories and great stories to tell you the truth. So, I think first and foremost, and this is the–again, this is not novel advice, but make sure you are comfortable with what you got in the first bite, right? You have to almost assume that the earnout is going to go to zero, right? And so, if you’re not comfortable with that first part, because there’s all kinds of things that the acquirer can do to make sure you never do that. It could be strategy change. It may not be malicious, right? It’s just, I was a 60-person Fortune Magazine’s second best place worked in the US, got bought by a 4,000 person, 8 billion market cap public company, right? It’s just different, right?

There were two big reasons they bought us. One of them still is true to this day. The other one, they changed strategies on three months later, right, which was like this OEM strategy. In our relationships, the OEMs were really important until it wasn’t because they decided to go a different way and which kind of sidelined me and the earnout and all those type of things as it went through.

So, the first thing is make sure you’re comfortable. Don’t rely on the earnout. The earnout is usually a way to bridge valuation gaps is a way to think about it. Like, I think I’m worth 50 and you think I’m worth 30. Well, great, I think we’re going to do all these wonderful things for you and you don’t believe it, so I’ll stake the other 20 on that, right? That’s a probably healthier way. Otherwise, the deal’s just not going to get done, right? That’s probably a healthy lens to think from it.

The second thing is if you do have an earnout, it needs to be really explicit. I mean, it’s just, you cannot, simple, it needs to be– actually, it’s not explicit. It needs to be simple, right? Best one is time-based, right? Hang out for a year and make 5 million bucks, right? Hang up for two years, make 10, whatever it is. That’s the simplest. And actually, that was what my team had, because I wanted to make sure retention bonuses and we took a big chunk of the value of the company actually, and put it in the retention bonuses for the team. And all they had to do was stay, right, because they were excellent. The acquirer wanted them all and that was great.

Mine was tied to this incredibly complex set of revenue and deliverables and all these things that were just gameable by either party, frankly, more from them because they control the purse strings. So, simple time base is the simplest equity in the current company that’s on the same terms as your acquirers next best, right? If the company does well, we all do well. I can’t control the other 90%, but at least, we’re all aligned, right, on what it is, but as simple metrics as possible, because everything else, even if it’s like revenue of my little world, I’m like, okay, good. But oh, can you do this thing for us for the old world? We don’t know because I don’t get paid on that. I get paid on this. Well, come on, be a team player. And so, I got stuck up in a lot of those type of things, right, where it’s like, we’re paying you to do this, but we’re asking you to do that, which get rational from their point of view except that that’s not what my contract says. So, make sure you’re aligned.

Brad Weimert: Yeah. I think aligned incentives in general are a very difficult thing to figure out in a lot of situations. And I think pointing to simplicity in the earnout, hopefully, solve some of that for some people. Love it. Chris Taylor, where do you want to point people? Where can people find out more about you or the Red Fridge Society?

Chris Taylor: FridgeATX is the best place to find me. I am the Red Fridge Society, so any email that goes through there or any application forms or anything go to me. You can find me on LinkedIn. Look up Red Fridge Society or Chris Taylor on LinkedIn. It’s probably the best way to– that’s the only social media I’m on, actually, so.

Brad Weimert: That sounds like a delightful reprieve from a lot of my life.

Chris Taylor: Yes. One of the many reasons I’m not starting what I’ll call a real company.

Brad Weimert: Awesome. Always good to see you, man.

Chris Taylor: Yeah, as well. Thank you for having me.