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Dalton + MichaelDalton + Michael

How Startup Founders Actually Get Rich (Quick?)

A lot of people think being a startup founder means getting trying to get rich quick, especially in the current AI boom. This is objectively not how it works, but in this episode of Dalton + Michael the two take the time to engage with the idea of how sometimes founders do get rich quickly, and what, if anything, can be learned from those examples. Hint: extraordinary outcomes require extraordinary circumstances. Dalton + Michael is brought to you by @Standard_Cap Dalton Caldwell on X: https://x.com/daltonc Michael Seibel on X: https://x.com/mwseibel

Dalton CaldwellhostMichael Seibelhost
Jun 15, 202611mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 1:19

    Why “get rich quick” is the wrong mental model for startups

    1. DC

      You'll know you're on the right track-

    2. MS

      Yeah

    3. DC

      ... if other people are like, "Wow, this person is doing something really interesting."

    4. MS

      Yes

    5. DC

      And they wanna talk about it. That's a sign you're on the right track. [upbeat music]

    6. MS

      This is Dalton + Michael, and today we're gonna talk about how startup founders get rich quick. And we're gonna try-

    7. DC

      [laughs]

    8. MS

      I was gonna say, we're gonna try to keep a straight face. We're gonna try to keep straight faces. So Dalton, what is the three-part recipe? Please deliver.

    9. DC

      Yeah. I, I think the way I would set this up is there's the wide perception of something, and then there's the reality.

    10. MS

      Yeah.

    11. DC

      And I think a lot of people in the world think of being a startup founder as sort of a get rich quick scheme-

    12. MS

      Yeah

    13. DC

      ... where you kinda show up and you promise some fake stuff and you wave your hands, and then somehow someone gives you a bunch of money. It's, like, really easy. [laughs]

    14. MS

      Yeah.

    15. DC

      And it happens really fast.

    16. MS

      Happens every day.

    17. DC

      And I think the theme of a lot of the videos that we put out over the years is to sort of dispel those myths, or at least be honest about how the sausage is made here.

    18. MS

      Yes.

    19. DC

      And so the point of this video is, let's talk about some case studies of people that did get rich quick and what they did.

    20. MS

      Mm-hmm.

    21. DC

      And see if there's anything actionable in there or not.

    22. MS

      Or if it was all right place, right time. I wouldn't bet my life on it.

    23. DC

      Yeah.

    24. MS

      [laughs]

  2. 1:19 – 3:05

    The real timeline: exits commonly take 8–12 years

    1. MS

      It's funny 'cause I, I think in my career I actually have both examples, and it's really quite funny that it happened that way. So there's Twitch, which took five years for us to even figure out what we needed to do, and then another set of years to actually sell. And there was Socialcam, which the public story is, right, like, we spun out of Justin.tv and sold within six months, right? So, like, boom, boom, boom. For me, I remember a story when I was first starting, when I was 23 years old, and we had, um, our lawyer at Wilson Sonsini, who was 30. And at first I thought, "That's impossibly old. That's-

    2. DC

      [laughs]

    3. MS

      ... you're, you're an ancient person." And the lawyer said very calmly, "Hey, just so you understand, you know, we deal with a lot of startups. We've done kind of a bit of a study, and it turns out it takes about eight to 12 years to exit your company." Something that when we say that to ourselves we're like, "Oh, that lines up." And I remember thinking, "This old 30-year-old has no idea what he's talking about. There's no way this is gonna take eight to 12 years." I've never spent eight to 12 years doing anything. [laughs]

    4. DC

      Well, there, when you're, when you're young-

    5. MS

      College was four years.

    6. DC

      And that's, like, impossibly long. [laughs]

    7. MS

      [laughs] And nobody does the same thing in college for four years.

    8. DC

      No.

    9. MS

      So I just remember thinking, "Old people don't understand." I will tell you, we sold the company eight years later.

    10. DC

      Yeah.

    11. MS

      I was then 30. [laughs] And I was like, "Ah, turns out you were right." And so I think that this idea, um, one, is so verifiably untrue, but two, to be honest, I think it's part of the reason why people get into it.

    12. DC

      Yeah.

    13. MS

      Right? Like, let's unpack that. Like, how many people right now are in year one of their startup and they're like, "If I really knew this was eight years, I'd quit today." [laughs]

  3. 3:05 – 3:32

    Startups feel easy—until you’re committed

    1. DC

      Have you ever heard that old engineering saying, "We do this not because it's easy, but because we thought it would be."

    2. MS

      [laughs] Yeah.

    3. DC

      And I think, I think that's startups. I think if I had to summarize-

    4. MS

      That's truly the whole thing. [laughs]

    5. DC

      If I had to summarize everything about, about technology-

    6. MS

      Yes

    7. DC

      ... the, the whole industry-

    8. MS

      Yes. That's it

    9. DC

      ... is people thinking something will be easy, and then they get in and they, and they keep going for some reason. [laughs]

  4. 3:32 – 4:16

    The dangerous shortcut mindset: hacks, flips, and misaligned incentives

    1. MS

      Well, 'cause once you're in... Well, and, and like, I don't wanna belittle this. Like, I don't think, like, I want people to do startups, right? So I'm not trying to convince everyone that startups are so hard they're not worth doing. But on the flip side, once you're doing a startup, I don't want you to lie to yourself.

    2. DC

      Yeah.

    3. MS

      I think that's the big challenge, is, like, when you lie to yourself, you then look for shortcuts, you look for hacks. You look for ways that, like, you can get value and your customer doesn't. Because you're like, you would know logically that if this was a long-term plan it wouldn't work, but when you lie to yourself and like, "Oh, well, I could do this for a couple years, and then we'll sell. If we make $10 million we can sell really easily."

    4. DC

      Yeah.

    5. MS

      You could tell yourself this kinda fake story. So how do you, how do you live with that duality?

  5. 4:16 – 4:57

    The “dark secret” founders think investors don’t know

    1. DC

      I think a lot of founders have this hidden, secret thought that they wanna hide from everyone.

    2. MS

      Uh-oh.

    3. DC

      Especially investors.

    4. MS

      Especially invest- the parents in the room.

    5. DC

      Um, which is they really just wanna get rich quick and sell their company fast and cash out.

    6. MS

      Yep.

    7. DC

      And they don't actually wanna be, uh, in it for the long haul. And-

    8. MS

      The idea of IPO-ing a company-

    9. DC

      Yeah

    10. MS

      ... is the last thing on their mind.

    11. DC

      And so they're like, "Man, I know I'm not supposed to admit this."

    12. MS

      Yeah, otherwise people wouldn't give me millions of dollars. [laughs]

    13. DC

      "Otherwise I wouldn't be able to raise money," you know?

    14. MS

      Yeah. [laughs]

    15. DC

      And so this is my, like... I'll, you know, maybe give me some drinks and I'll tell my friends.

    16. MS

      It's my dark secret. [laughs]

  6. 4:57 – 6:14

    The contrarian path to getting rich faster: build real value that stands out

    1. DC

      Yeah. And I think the perhaps surprising thing, I would say, is, oh, we know. And so here's the point, is it's actually extremely midwit to think that this is a secret-

    2. MS

      Yes

    3. DC

      ... and that your job is to pretend that you wanna build a big company and, and like, you'll fool everyone and somehow it will work out.

    4. MS

      Midwit's the exact right term, because you're better off being dumb and just assuming building a big company's easy.

    5. DC

      [laughs]

    6. MS

      Like, like, you're actually better off than being like, "No, I found the hack." Like-

    7. DC

      Yeah, if you're like, "Oh, I got into YC and I told them I was gonna build a big company, but I'm not."

    8. MS

      Yeah, yeah. [laughs]

    9. DC

      Like, if you think that that's some, like, cutting edge strategy that-

    10. MS

      Yes

    11. DC

      ... like, you invented-

    12. MS

      No

    13. DC

      ... I've got news for you.

    14. MS

      Sorry.

    15. DC

      We know.

    16. MS

      Yeah.

    17. DC

      And so you should just accept that, and then flip this around and be that actually, if you really, genuinely, like, if you could read my mind-

    18. MS

      Mm-hmm

    19. DC

      ... and you're like, "Dalton, how would I get rich quick with a startup?" It's to do the opposite of what everyone else is doing.

    20. MS

      Yeah.

    21. DC

      And if everyone else is trying to, like, fake their way through things and not build real value or- Be in it for the long haul. If you build real value, you stand out from the crowd. And counterintuitively, those are the people who make a lot of money really fast.

    22. MS

      Yes.

    23. DC

      Do you get what I'm saying? Like, go ahead, man.

  7. 6:14 – 7:17

    AI accelerates both the good and the bad—only one attracts buyers

    1. MS

      Well, I think what's so funny is that, like, AI helps and hurts. I think that, like, if you're actually trying to create real value, AI, like, makes it so you could do it faster, and that's really exciting. If you're not trying to create real value, AI makes it so you could do it really f- much faster. [laughs]

    2. DC

      Yeah.

    3. MS

      Um, and so I think that I have certainly seen conversations where companies would want to acquire a founder in the first year-

    4. DC

      Yes

    5. MS

      ... because that founder did something extremely interesting. And I promise you that those conversations are rarely about companies that went from zero to 100 million ARR in three weeks.

    6. DC

      Yeah. It-

    7. MS

      Like, that's not the-

    8. DC

      It's like-

    9. MS

      ... profile

    10. DC

      ... if you're just building cookie cutter slop-

    11. MS

      Yeah

    12. DC

      ... B2B agent stuff, and your plan is to, like, get rich quick, I'm just saying there is no market for that startup.

    13. MS

      No.

    14. DC

      But if you do something truly weird or different-

    15. MS

      Yes

    16. DC

      ... that requires you putting yourself out there and really trying-

    17. MS

      Yes

    18. DC

      ... y- it's actually possible for you to get rich quick.

  8. 7:17 – 7:29

    Acqui-hires and realistic “rich quick” outcomes (don’t over-raise)

    1. MS

      And with the proviso that you're not raising tons of money and burning tons of money, 'cause these are not... These deals we're talking about are not billion-dollar deals.

    2. DC

      Yeah.

    3. MS

      These are, you know, acqu-hire pluses.

  9. 7:29 – 8:43

    Case study: Bun—earned attention by shipping a respected developer tool

    1. DC

      Yeah, I mean, to give you a couple of examples, there was a company that I was in the interview. We accepted it to YC in, like, 2020.

    2. MS

      Yeah.

    3. DC

      And the founder was building, like, a niche social network, you know, that didn't go anywhere, and he pivoted to this thing called Bun-

    4. MS

      Oh, yeah

    5. DC

      ... which was a JavaScript runtime compiler thing.

    6. MS

      Mm-hmm.

    7. DC

      And he would post about it constantly, and it was, like, really interesting.

    8. MS

      Yeah.

    9. DC

      Like, he was an interesting guy doing interesting things.

    10. MS

      Yeah.

    11. DC

      And then Anthropic bought Bun for, you know, a decent amount of money.

    12. MS

      Yeah.

    13. DC

      And so he just... I don't know if that was quick, like four years, but basically I think he got extremely rich.

    14. MS

      Yes.

    15. DC

      And he did the dream that I think a lot of founders secretly want, which is to get Anthropic to buy their company for 40 million or whatever in-

    16. MS

      Shares

    17. DC

      ... Anthropic shares.

    18. MS

      Mm-hmm.

    19. DC

      How did he do it? It wasn't by, like, brainstorming on how to fool people. [laughs]

    20. MS

      No. Spamming infinite people with email.

    21. DC

      Or, like, networking.

    22. MS

      Yeah, no.

    23. DC

      It's that he built a really kickass JavaScript tool that earned the respect of other builders.

    24. MS

      Yeah.

    25. DC

      Right?

    26. MS

      Yeah, yeah.

    27. DC

      [laughs] And so he did it, guys.

    28. MS

      Yes.

    29. DC

      Like, if you wanted, if you wanted to replicate getting acquired by Anthropic in three or four years-

    30. MS

      Yeah

  10. 8:43 – 9:26

    A practical research tactic: study what acquirers actually buy

    1. MS

      I mean, I keep on bringing this point up in every video. You can actually just look at every public Anthropic acquisition and ask yourself the question, what did they do?

    2. DC

      Yes.

    3. MS

      [laughs]

    4. DC

      And, and was it a lot of networking?

    5. MS

      Yeah, yeah. Does it align-

    6. DC

      And was it-

    7. MS

      ... with what you're doing? [laughs]

    8. DC

      [laughs] Like, what's, what is your secret strategy to get acquired? Does that look like the stuff that Anthropic's been acquiring?

    9. MS

      Like, what's so funny is we're basically saying there's alpha in just looking at the facts, because so many people are deluded. [laughs]

    10. DC

      Yes.

    11. MS

      And, and that delusional story is so attractive, they don't wanna look at the facts. They don't wanna learn the truth. And so you can stick out even more. It's a weird thing that you can stick out even more just creating value right now.

  11. 9:26 – 9:46

    Another example: long “overnight successes” from sustained interesting work

    1. DC

      Yeah, and, like, think about, like, OpenClaw. It's, like, some guy in Europe-

    2. MS

      Yeah

    3. DC

      ... who was, like, an indie hacker for 10 years, and he just built this cool open source company, and then, you know, it got bought for a ton of money. I guess he got, he got rich quick.

    4. MS

      After 10 years. [laughs]

    5. DC

      But, like-

    6. MS

      Yeah, yeah. Yeah

    7. DC

      ... you know, he was not trying to get acquired. He was just building really interesting stuff, and it happened really fast.

  12. 9:46 – 11:03

    Best antidote: build what you like, for people you like (and pivot toward it)

    1. MS

      I'll end on this. One of the ways you can avoid this trap is to actually build something you like, build something you wanna use, or build for people and customers that you like. It's so easy to get into the, "I wanna try to figure out how to pick an idea that VCs will fund even though I hate it, but that's okay because I'll do this fast flip thing that doesn't ever happen." And you're just kinda like, you're tricking yourself here.

    2. DC

      Yeah.

    3. MS

      It's, like, it's way easier to enjoy the thing you're doing.

    4. DC

      And the investors know. Again, this is our point, is you're not fooling anyone. You're actually just fooling yourself-

    5. MS

      Yeah

    6. DC

      ... if that's your secret plan. Like, who are you fooling?

    7. MS

      We have, we have factored that in. And, and oftentimes what's fun, and I'll bring it back to Twitch, Twitch pivoted into the thing that Emmett actually liked. Like, even if you're running your company now, you can just pivot into the thing that you enjoy doing, and counterintuitively, you might have massively increased your chances of getting rich. [laughs]

    8. DC

      [laughs]

    9. MS

      It's just like, it's sitting right there. [laughs] Like-

    10. DC

      Yep.

    11. MS

      And, and how many jobs are like that? How many jobs are just like, "You know, if I came into work and just did what I wanted to do, I might win." [laughs]

    12. DC

      Yeah. What if I ignored all authority figures-

    13. MS

      Yes

    14. DC

      ... and I just built something awesome-

    15. MS

      Yes

    16. DC

      ... with no other plan that's actually good?

    17. MS

      That actually worked. [laughs]

    18. DC

      [laughs]

  13. 11:03 – 11:44

    Closing signal: you’re winning when builders find it genuinely interesting

    1. MS

      Like, that works. So with that being said, um, getting rich quick happens. Don't expect it. It's not frequent. Lot of luck involved. But damn, it's so much easier when you're doing something that you like and that actually is good.

    2. DC

      And that earns the respect of other builders. Like, basically-

    3. MS

      Yeah

    4. DC

      ... you'll know you're on the right track-

    5. MS

      Yeah

    6. DC

      ... if other people are like, "Wow, this person is doing something really interesting-

    7. MS

      Yes

    8. DC

      ... and they wanna talk about it." That's a sign you're on the right track.

    9. MS

      Excellent. All right. Great chat.

    10. DC

      All right. Thanks, Michael. [upbeat music]

Episode duration: 11:44

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