February 8, 2018

What You Know About Startups Is Wrong: KP Reddy


Today’s episode is with KP Reddy, author of What You Know About Startups Is Wrong. Being an entrepreneur seems like the ultimate American dream, but the startup mythology is filled with urban legends and false expectations that can cause business owners to lose what’s truly important to them.

KP learned this the hard way, through more than 25 years of entrepreneurship experience. He has started, grown and sold multiple successful startups, and he’s even been involved in IPOs and acquisitions.

By the end of this episode, you’ll know the behind the scenes reality of building a business, and you’ll have a better idea of what it really means to be a top entrepreneur.

KP Reddy: The big turning point for me was in 2009 after the economy was tanking. My startup had been technically bankrupt for six months, but I was fortunate to sell just enough to keep the lights on. I had been approached by an investor, acquirer that wanted to buy the company.

My then wife at home wanted to know why I hadn’t gotten a paycheck in five years. I had employees that hadn’t been paid in two months. Investors had caught wind that there was a transaction coming, so they wanted to make sure they were going to have a payday.

And I had an acquirer.

They were probably the most amazing people I’ve ever run in to—just great, genuine people. They really wanted me to come work for them, and buying my startup was a path for them to do so.

We were in final negotiations, and a bunch of things popped up at the end of the deal that were going to kill the deal. The CEO called me and said, “We’re going to take care of you—we will pay off those debts. We want you to have a clean slate so you can be your best for us.”

Of course, it’s not going to help the employees, it’s not going to help the investors, all these other people that I made promises to. I had to start making decisions—is it me versus them? Who is this for?

“I was probably about forty pounds heavier, diabetic, and pumping as much insulin as my body could take just to be healthy.”

I jumped on a plane to go out to San Francisco to close the deal, and I woke up at the bottom of the bathroom.

They were resuscitating me.

Hitting Rock Bottom

KP Reddy: The flight attendant, fortunately, her son was a diabetic, and she was able to get me back in order. She got me some orange juice and got me back in a good spot. When I landed, walking to the office, I thought, this might happen again, who can I call?

I called my lawyer and I basically said, “Hey dude, I think I almost died, I’m not sure. I’m calling you just in case something happens to me, because I kind of feel like if I call anyone else, I’m going to get yelled at.”

If I call my wife, she’s not going to be happy. It will open up all kinds of wounds about all the things that I’ve done wrong in my startup, in my life.

“So I’m literally left calling my attorney in a life and death situation.”

He basically said, “Dude, I’ll stay on the phone with you until you get to your hotel to make sure you’re okay.”

You sit there and you say, “This is where my life has ended up. The only person I can trust is someone that is professionally bound to keep my secrets. I have no one else.”

Charlie Hoehn: What change did that cause in your life?

KP Reddy: I had to wake up the next day and get back to work and get this deal done. I had to be a dad, be a husband, be a CEO, be all the things that are expected of me except actually being me.

There’s this enamoring and this ego associated with being a CEO. Yet, you can’t believe it yourself.

I started my first company when I was 19, and I took them public when I was 27. I had all this success. Clearly, where I was at basically told me that all that success was luck.

“I had nothing to do with it, because God knows if I did, I wouldn’t be failing now.”

You start to set expectations. I mean, it was amazing after that big success. Raising money was easy. People said, “You got what it takes, so I’m going to invest in you,.” They didn’t even need to see a business plan half the time.

It was so rooted and grounded in me and my abilities and being this rock star that you start to believe it.

Can’t Go Back

Charlie Hoehn: If you had to pick the core idea in your book that you wish you could impart to entrepreneurs who are struggling, what would you say that core idea would be?

KP Reddy: Once you become an entrepreneur, there’s no going back. All these short term sprints that you’re pushing yourself to—it’s a long road. It’s your lifestyle.

“It’s not a short term deal—it is a marathon and a journey.”

Putting off all the other things in your life, thinking that you can postpone it for that next big deal. That next big exit, and then I’ll come back and be a dad. And then I’ll take care of myself. That’s just not how it works, because there will be the next thing and the next thing.

Charlie Hoehn: What do you mean by you can’t go back? Can’t go back to what?

KP Reddy: Well, you can, right? Because the biggest thing that entrepreneurship gives you is this freewill. You have to make progress in your company, but you get to pick and choose how you work and what you work on.

Once you get a taste of that, going back to a corporate job where you don’t really achieve anything or you don’t win or lose…You show up, you do your work, you have the vacations, you probably make more money in some cases…

“You might have to go back, but you won’t want to.”

When I am doing my best work, I can’t sleep at night because it’s like Christmas eve to me. Not because I’m stressed—because I can’t wait for the next day to start.

When is everyone else going to wake up so we can get going? This is amazing. We’re crushing it! That excitement. I don’t think you ever get that in a job.

Charlie Hoehn: This podcast not for the corporate desk jockey. It’s for the people who are in startups. They know the genie’s out of the bottle, right? They’re not going back. What do you want them to know?

KP Reddy: That this is the path they’ve chosen, there is no way to go back. Essentially, live your life that way. I also tell people that are in a corporate jobs that are getting enamored, the people who watch way too much Shark Tank or are getting excited about starting a company—when you’re making that leap, everybody is so encouraging, right?

Your significant other, your family, everybody is like, “It will be great” and “You’re so smart” and “You’re the best” and all those things, right? All that support system is there.

“No one really talks about the net impact of being an entrepreneur.”

The biggest lie we tell ourselves is, “Well, if it doesn’t work out, I can always go back to my job.”

That may be the case, right? I mean, if you’re a successful person in your own career, that is absolutely the case. You can go back to your job…and you will be miserable.

Changing through “Pretirement”

Charlie Hoehn: Can you tell me a story that you’re uncomfortable telling because it’s an ugly side of you, of the old you?

KP Reddy: One of my best sales people, always came through, he called me one day and he’s like, “Hey, I’m really sick, I can’t come in the office. I’m just feeling terrible.”

It was the end of the month, and of course there’s all this pressure with investors to hit numbers, and I basically said, “I think you’re confused that I care about you. What I care about is you hitting your numbers.”

“You can take a nap tomorrow after the month is over.”

That was constant.

Charlie Hoehn: When did you turn the tide and start taking care of others?

KP Reddy: After my divorce, I took about a year and a half off. When talk about it in my book, I call it my “pretirement.” I took about a year and a half off and literally was just dad. When I had my kids, I was making them breakfast, making them dinner, taking them to carpool and soccer, and probably the most annoying dad. Always around.

That’s when I just started to have people enter my life where there was never an agenda. I wasn’t looking for a job, I wasn’t looking for a deal.

When the kids were at school, I’d have coffee and tea with people, and we just talked as humans.

A friend of mine had said, “You should take a year off to work on yourself.” I didn’t even know what that meant. I told her, “I don’t know, some kind of yogi or something? I don’t understand this work on myself, what does that mean?”

Then she started talking to me about this thing called self-care.

“I don’t even know what these words are, I have no idea what you’re talking about.”

I started doing a lot of yoga, a lot of breath work, and I was very connected to me living on this planet with no agenda. That’s when it really kind of hit me:

Why can’t I live this way all the time?

Lead By Connecting

Charlie Hoehn: You have a section in the book called Meet Every Person Where They Are, what do you mean by that?

KP Reddy: In the world of business, it’s one big pyramid scheme, right? We call them org charts, but they’re really pyramid schemes.

You know, I’d never liked calling myself a CEO. I always thought it was the weirdest title, because at one point it was a ten person company. But when you’re in these environments, it’s up to you to meet people where they are, not for them to meet you where you are.

“What I like to do is ask people, ‘What do you need from me, and how can I better communicate to you?'”

“How can I better organize? How do you like to work? What is your natural behavior and your natural tendencies that I can adapt myself to?”

Just yesterday I was talking to a friend of mine in LA and she’s like, “You work really well with millennials. It is really impressive for a guy who is turning 47.”

I don’t care how old I am, how much experience I have, whatever. I do that with everybody. It’s just natural.

It just works with the younger generation because I am not asking them to live within my construct. I am asking them what their construct is so I can live within it.

Charlie Hoehn: What is the key to working with millennials?

KP Reddy: I think back to the relationship. It’s having conversations about what they want to do with their life not in their job. I view it as my responsibility. When I had millennials work for me, it’s been they’re like my kid brothers and sisters.

“If the best thing for them is to work at a different company, I will help them get there.”

If their passion is to get back to grad school and get a master’s degree, I’m going to help them do that.

Is that part of my job? No. Is that good for my investors or my personal balance sheet? Probably not, because your best talent tends to be very ambitious.

Helping them be ambitious isn’t necessary great for your business, but that’s what I do.

Go With What Works

Charlie Hoehn: So let’s talk about business practices that bring sanity. How do you prioritize now to keep you sane?

KP Reddy: This is going to sound horrible, but I do what feels best in that moment.

It sounds privileged right? Because it takes time to get there. A lot of people say, “Well KP, of course you get to do that. I am not at your spot.”

But I do believe that nobody likes doing the same repetitive thing over and over again. I think there is a flow that we start to figure out about ourselves. What do we like to work on?

“This is the good news-bad news of being an entrepreneur. There’s always something to do, and sometimes there are things you have to do right now.”

But I found that if I just do the things that I want to do at that moment and I do them, it all tends to work out.

Charlie Hoehn: Tell me an example of that?

KP Reddy: Sometimes I like to write, sometimes I like to do my blogs, and sometimes I like working on financial models. I can spend an hour or two in Excel, and sometimes I want to work on PowerPoint.

Sometimes it’s networking. I love showing up to networking groups that have nothing to do with my industry, just so I could meet new people.

Of course, every once in a while, I had a board meeting this morning and I was behind on some board reports. I didn’t really want to put them off all day, but around 9:00 I was like, “You know what? The kids are getting ready to go to bed. I think I’ll crank on this for a second.” And it was fine.

I think the biggest thing is we’re so quick to beat ourselves up over everything. “Oh, I have to get this done.”

My first book was a textbook, and being a good engineer, I had a spreadsheet.

“If I spend this many hours, I can crank out this many pages.” I had it all mapped out, and my publisher would have a draft in six months.

“Eighteen months later, I was dodging my publisher.”

Some of this stuff is very fluid. We demand things of ourselves that are irrational and aren’t in our natural flow. And then we judge ourselves and beat ourselves up over not having done it, which is almost a bigger problem than not doing it in the first place.

You’re Always Happy

Charlie Hoehn: In your book, you described choosing your personal life over business as a courageous act. Why is it courageous?

KP Reddy: We all have mortgages and car payments, and we build these systems that don’t allow us to just have a personal life. To be connected with people and take the time to look someone in the eye.

Taking that moment to look at a loved one for more than a second and a peck on the cheek and out the door. To actually look at them in the eye and say, “Hey we got it pretty good, don’t we?”

We live in super interesting times, right? I mean, our productivity is through the roof. We’re working more. If you go search #startuplife on Instagram and scroll through the pictures that you see, it’s scary. You know, someone having five empty cans of Red Bull: “Startup life, haven’t slept in three days.”

I post sometimes. “Dude, get some sleep. Get your 10. You need to get your 10.”

And people can be like, “Ten? Aren’t you luxurious if you have 10 hours of sleep.” I was like, “If you have issues with 10, maybe get eight.”

I have a friend of mine who is such a dear friend an older gentleman, and he’s like, “I don’t know how you do it. You just float around like a butterfly and make money. I don’t know how you do it.”

“You’re always happy.”

I just don’t really focus on it, and I try to do the things I want to do.

“I find myself going back to my book when I feel like I am off course, to remind myself.”

We live those ideas every day. You have to remember where you came from.

I started writing this book a while back, but we are seeing the fruits of our labor with all of the different allegations that keep coming out. Whether it is entertainment or the Silicon Valley, just be a good person and treat people well.

What You Do Isn’t Who You Are

Charlie Hoehn: And do you mind me asking, was that the big lesson learned through your divorce, or did you learn that through stuff related to your company?

KP Reddy: You know I think both. I think going through a divorce, especially for me being of Indian heritage, it’s not something we do. It’s not acceptable.

We had a lot of conversations.

I tell people it was probably the least dramatic divorce. There is not a lot of dirt there.

But the biggest thing was having two young boys. I am framing the life that they probably would want to live. “I want to be like dad.”

What does a healthy relationship look like? I’m the case study for them. I am the benchmark for what healthy and normal looks like. That was the biggest driver for my divorce. I’m going to be what they look up to, and this isn’t working and my life isn’t working.

“I don’t want them to be all of these things, so I’ve got to be better than that.”

They’re 17 and 15 now, and there are days they don’t get me. There are days that I will ask some things like, “Hey you’re pushing yourself really hard with your homework, why don’t you take a break?”

And they’re like, “I think you’re the only parent that tells us that.”

Charlie Hoehn: What do you hope your sons will model after you and what do you hope they avoid?

KP Reddy: If you ask my kids what your dad does for a living, the first thing they’ll do is chuckle, because they don’t know what to say. I think living a life where you’re not highly defined by what you do is the biggest lesson. I hope they pick that up.

“Unfortunately, we put children on a track that requires them to, as adults, unlearn a lot of things that we teach them.”

That having the best grades means everything, being popular is everything, conforming to whatever is everything. It’s just that being liked aspect. There is so much internal trauma that’s just created by that.

My girlfriend taught me, “Never use the word should. You should expunge it from your vocabulary.” And what do we do to our kids? You should get better grades. And then we wonder when they’re in their 20s and in therapy.

Get Your Ten Hours

Charlie Hoehn: Could you give our listeners a challenge? Maybe something an entrepreneur could do this week, from your book, that can improve their life in some way?

KP Reddy: I’d love to give people a challenge to get 10 hours of sleep for seven days in a row. Just for seven days. You can get back to your hustle on the eighth day.

Charlie: What’s going to happen when they get 70 hours of sleep in seven days?

KP: They will make better decisions, they will be much more focused on approach and importance. I think you just prioritize better.

Charlie: Let’s say they’re hopped up on stimulants and they’re in constant hustle and grind mode, how do they make that shift to 10 hours?

KP: Lots of hydration. Drink lots of water, and sunshine doesn’t hurt anything. And just setting some boundaries.

I don’t want people to think I am just kind of chilled out. I get 400 emails a day, so I am busy. But I definitely don’t guilt myself into, “Sorry, I have to work on this email.”

I work on my emails when I need to, and then I put my phone away and I go do the next thing. I think you can try it.

Right now, actually, I am not living my best life. I am not getting my 10 hours because I have been traveling a lot for the book and some other stuff. But I know I need to. Like, “Oh man I feel like I need to cut out early tonight and get to bed early.” Just trying to make it a priority.

The negative side of these challenges is that people feel really bad when they don’t get there. But set yourself up for success.

If you Google sleep hygiene, you get all kinds of stuff. I am a firm believer that your body tells you everything you need to know if you’re just willing to listen. You don’t need an app for that.

“You can literally just take a break, take a breath, and track what is working for you.”

I talk about it in the book too, the whole CrossFit mentality that’s entered our work life—it is just not a good look. Nobody needs to be lifting things that heavy and hurting themselves.

Yoga and gentle walks. That’s a good move.

Connect with KP

Charlie Hoehn: So where can listeners connect with you and follow you? I know you were featured in NBC. When is that airing?

KP Reddy: That has actually already aired on NBC affiliate and will be on my website, which is I do a pretty good job of keeping things up to date, and I am pretty active on social media. So I try to communicate.

I try not to be a stream of consciousness for people. I try to think through what I’m going to put out there before I put it out there. That’s pretty much where you can find me.