The High School Dropout Who Made $2B & Bought an NBA Team

The High School Dropout Who Made $2B & Bought an NBA Team Speaker 2: This is Ryan Smith, the guy who went from a 1.9 GPA high school dropout to a $2B network. But this isn't your normal dropout story. At some point you have a conversation with yourself like, okay, I got to make this happen. Speaker 1: Yeah, I got to find a gear that I've never used before. Speaker 2: When he dropped out, he had no plan, no money, and nowhere to live. There's a great story about the early days of Qualtrics and Focus. Speaker 1: We were religious about it, and it was actually an incredible forcing function for me. Speaker 2: At some point, you get offered $500 million to sell the company, and you turned it down. Speaker 1: Every other person I would talk to about this offer was like, take it and run. Speaker 2: You're building it from your family's basement all the way to the end zone, basically. Sell for $8 billion. You end up going public. Speaker 1: I didn't do anything else when I was doing Qualtrics. I didn't invest. I didn't sit on boards. Speaker 2: No side hustles? Speaker 1: No side hustles. Nothing. Except for hoops. Speaker 2: What's it like to now own an NBA team? That's insane. Speaker 1: My philosophy was don't bling. Just go. Unknown Speaker: I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days off. On the road, less travel, never looking back. Speaker 2: I want to start with this. You've done what kids like me dream up. It's like, I build a successful company with my family, no less, become the super successful guy, billionaire, NBA team owner. You live this really interesting life. What's cool is that If we rewind the clock, you were a guy who dropped out of high school and had a 1.9 GPA in high school. So going from a 1.9 GPA to like, I don't know, a $2 billion net worth, that's a pretty big jump. We hear these stories where it's like Mark Zuckerberg, Bill Gates, they were at Harvard and then they dropped out with this big grand idea and it came to fruition. That's not your story at all. So let's do the origin. Can you take us back? You know, you're 14, 15, 16, 17 years old. What was going on in your life at that time? Speaker 1: Yeah, I mean, it's no secret. Like my parents split up when I was like 14 and the world was rocked. And, you know, I was, I was very much like, okay, screw everything. No one can tell me what to do. And, you know, I think my parents were trying their hardest to keep us. I mean, we had five kids, they were keeping us all. Kind of afloat and I think to be honest with you, you know I never really developed the skills for for school and And I didn't think I was really good. I knew I was a good athlete I knew I was good at golf and could play poker and like I I knew there was something there But I didn't work hard. I didn't finish anything and it was really hard like this concept of finishing and It just never happened. And so I think the trajectory I was on at 14, 15, 16, 17 was not a very hopeful one. And there was no indication that there was a spark. There was no indication that there was good ideas in there. Speaker 2: Right. So what was your move? So you're not loving school, not doing that well, no spark there. What was the decision to quit, to drop out, to leave? Speaker 1: Yeah, I mean, it was just kind of forced. It was like, hey, school is like, this isn't working out for you. Like, you don't go to class. Speaker 2: It's not us. Speaker 1: It's you. You know, there's probably another path for you. And I had an uncle. Who reached out and said, hey, Ryan, you're 16. We're doing a tech company. It was called iMall. You're not going to just screw off all day. You might as well come work. I'm running a sales team. Come work. And I worked in the mailroom and I worked with three older gentlemen. I mean, one was in his 40s. One was there. And the founder had just gotten back or someone had just gotten back from Seoul, Korea. And I would always say, like, I'm going to go make money one day. I'm going to go work on the fishing boats in Alaska because they're paying $20 an hour. I'm going to go do this. And my parents were like, go do whatever you want. Just graduate high school like we don't care. The bar was really low. And like these guys were like, no, you should go to Korea. And I was like, that sounds good. And my dad was like, if you can pay for it and graduate high school, we'll do it. So I graduated high school. I got a GED when I was 17. I went to like a university and just like cranked it out in like three months through like packets. And like I was with like mothers and like everyone else who would not. And it was like, I was like, OK, I'm going to crank this thing out. And I did it. And there was a little bit of a moment like, whoa, All right, when I kind of set my mind to something, I can do it. And then I went out and that's when I went to Seoul. Speaker 2: And so you go to Seoul, you're what, 17 years old at this time? Do you have a plan? Speaker 1: The plan was I'd communicate. I'd never left Utah. I'd communicate with someone and we were supposed to show up and we had jobs. They had a house for us. They had all these things and we had talked to them. So I remember getting there and we had limited cash, but we were there. We were there to sign a contract and work for a school and move in and we get there and we go right to the hotel and we're waiting and we call where we're supposed to meet up. No answer, no answer, no answer, no answer. Next day, no answer, no answer, no answer. And we're like, what in the world? And then finally someone answers and it's a Korean woman who didn't speak any English. And it was like, okay, well, but this person, like, I thought we were showing up and they were just gonna, I'll be there waiting. Hey, we're so excited to have you. And it was the exact opposite. And like, basically after a week in this hotel, it was like, you have no job. You have no house. You don't have enough money to be staying in this hotel. And so I remember sitting in a coffee shop and you know, we kind of all called our parents to come home. These guys, all the parents went to the airport, bought them a ticket and they all jumped on the plane. But like I sat there, my dad's like, you're not coming home. And I was like, what in the world? He's like, I know what you're going to do here. Like, you got a chance to go do something. And I look back as a parent now and I was like, what in the world? Like, I would never leave my kid over there. But he was like, the upside is like, way better. Speaker 2: So what was your dad? Was that tough love? Or was he just sort of like, look, you just need to look at it this way. Hang in there. Like, what was he? What was going through the mind, you think? Speaker 1: I have no idea. I like honestly I've thought about it so much it's like and that's just my dad like he he's like fine with his kids failing. Speaker 2: Did you feel like rock bottom at that point? Speaker 1: Oh my word. So homesick, in a country, no Americans, no English, no money. And you just kind of had to go figure it out. Speaker 2: All right, so you meet this guy, crash on his couch. At some point, you have a conversation with yourself like, okay, I got to make this happen. Speaker 1: Yeah, I got to find a gear that I've never used before. Speaker 2: And so what'd you do? Speaker 1: Ended up running into someone who needed an English teacher. The school was a ways away. I didn't have a place to stay. So he said he'd pay me $10 an hour, which isn't a lot there. So I teach the kids from, you know, three hours a day in the mornings. And I had found out about a place where Koreans go to study called the Goshiwon, which is like that locker room we just looked at. It's about that big, but a little bigger. No one ever sleeps there. And I'd convinced the guy that if I could teach him English one hour a day, he'd let me sleep there because they had a shower. I found a little stove. I would cook ramen noodles on it because that's all I could afford. Speaker 2: Obviously, it's tough. Obviously, you're sort of it's like character building moment because you're on your own for such an extended period of time. But was there like a part of you that was in sort of enjoying MacGyvering it a little bit? Speaker 1: Not at all. This was not. Speaker 2: No momentum. Speaker 1: No, like at the time, there was no like, there was no of like myself now looking back going, okay, I'm gonna get crafty. This is an experience. I'm backpacking through Europe. Speaker 2: Didn't have that attitude then. Speaker 1: This was not that. I mean, this was like, I gotta get home. Speaker 2: Right. And so you, you're teaching one guy. Did you eventually get more students and how'd you do that? Speaker 1: In Korea, there was, you know, 20 big 15 to 20 story high rises where everyone lived. And I was like, okay, I'm teaching English. I've got 12 hours in the day. Rather than teaching a school, it's way better to do these private lessons. And if I could get into one of the high rises and get like starting at four o'clock in the afternoon, teach every 55 minutes, like it's going to be great. Well, how do you do that? And I got someone to write, I had a pager at the time, I got someone to write a message in Korean and I made like 5,000 flyers. And I would go in and they'd have these huge mailbox rows, but there was a security guard there. So I would go in and talk to the security guard and I was like, hey man, like. Speaker 2: In English or broken Korean? Unknown Speaker: Whatever it took. Speaker 1: I would just try to be their friend. Speaker 2: Okay. Speaker 1: And I was like, let me put these, here this is, let me put these in all of these. And they're like, well, and I was like, come on. And I would normally be pretty successful at it. And then my beeper just started hammering and blowing up. And I was like, whoa, this was the first time in my life I was like, actually, there's something in there. You have a good idea and you can execute on it. And then I started getting a schedule. And literally a month later, I was making $8,000 a month as a 17-year-old teaching English. And I was like, how in the world did I go from there to here? Speaker 2: That's amazing. Let's talk about the start of Qualtrics. So you build this company, you build it with Stuart, you build it with your brother, with your dad, and you're building it from Your family's basement all the way to the end zone, basically. Sell for $8 billion. You end up going public. You have a pretty crazy story over like a 20-something year period. What's the origin? What was the idea? And what were the early days like? Speaker 1: Yeah, so I think the origin, and if you talk to all of us, it's a little different. So it was really my dad and I who started. I was doing an internship at Hewlett-Packard in LA. And I get a call that my father had cancer and it was terminal or pretty close. I mean, it was like three years to live max and probably a couple months. And he ended up going through and recovering and is alive today, which is an amazing story. But I kind of had a moment where I just left California. I was working in L.A. and came back. Deferred school and said, I'm spending this whole semester with my dad. My dad was always working on technology. He had come up with this idea of like collecting research online and it seems normal now, but at the time it wasn't trusted. Speaker 2: What were companies doing before Qualtrics? Speaker 1: Yeah, they were either doing customer satisfaction, paper, pencil. We're not doing it at all. Like the thought of asking your employees feedback or your customer feedback, that seems normal now. Speaker 2: They wouldn't do it. Speaker 1: And so they'd have blind spots everywhere. And he would get paid a lot of money to go in there and help companies do this. And it was like a novel thing. We were going to go put the customer at the table. We were going to have them part of the decision making process. And this is what we were going to come up with. He had this idea, but he was always messing around and he never really went commercial with anything. Well, I was in Hewlett Packard and I had gotten pretty, I learned some tricks around how to like go to market over the phone with technology. And so I saw what he was working on and I was like, actually, I had just been doing that with like some software and support stuff. What if We apply to here. And so he would come home from his like radiation and chemo and you're just kind of sitting there and I'd be like, let's do a business. Let's let me take this to the world. He's like, well, I don't have any money. I can't pay you. I said, well, let's just let's just go 50 50. And. You know, by the time he recovered, he couldn't speak, we had 10 customers and. We kept finding people that would believe in what we were doing. It was a little Jerry Maguire moment where I had to find one person who was like, then take it to the world. That's how the business started in the basement. Speaker 2: He couldn't talk at the time. He's writing on a board. You're the guy on the phone. Speaker 1: I'm on the phone. These people are asking about deep statistical stuff. I don't know. I'm going back and forth. You know, it was a pretty gnarly time. I wish I had more pictures in that moment, but no one thought it was going to be anything. Speaker 2: Right. Speaker 1: And everyone's like, oh, you started with your with your dad. And there was this great like no one like my roommates didn't think it would be something like I didn't even think it was good. He didn't think it was going to be something. Speaker 2: Hey, let's take a quick break for a message from our sponsor, Hubspot, who's making this episode possible. Listen, if you're trying to build something big, and I'm talking about $100 million or a billion-dollar company, one of the most important things is to focus on the market. Where is the opportunity? You are like a surfer on a surfboard, and you're trying to find the biggest, best wave possible for you to go on. Well, Hubspot has put together a cheat sheet that is studying and sort of reverse engineering what's working today. So they're looking at the top performing industries that you could be looking at, the funding routes that work the best and the growth strategies that the fastest growing companies are using. So if you want a one pager, that is a cheat sheet on the big company playbook. You can get it right now. Just either scan this QR code that you see on the screen or click the link in the description below. All right, back to the show. There's a great story about the early days of Qualtrics and Focus, and I love this when I was researching it. I guess it was you and your brother who were talking about like, well, we have this market, we can sell to these people, these people, and you guys at some point decided, no, no, no, we want to narrow down, sell only the universities. And the part I love, because focus is a word anybody can throw around, right? But like, if you take focus as an action word, what does it mean? It means saying no to a bunch of otherwise believable ideas. And the thing I read in the research was, your brother was basically like, you know, if you're talking to him about some other type of customer, He's hanging up the phone. He's like, unless you're talking about these 250 universities, I don't want to hear it. So can you tell me about how that went down and what that was like? Speaker 1: Yeah, so this is probably 2006, 2007, and we had found some traction in universities. We'd found people like my dad. My first customer was Angela Lee at the Kellogg Business School. She made all of her students use Qualtrics. It just kind of went from there and I can go through every professor and kind of how the whole thing worked. But my brother at the time was a Google. He was an early Googler. And at this time, I didn't have very many people to call. I didn't know how good he was, but I knew he was like running a big piece of the internet. And Google was kind of having a moment. And he had been assigned to go run China for Google. So he was living in Beijing. He was working with Kai-Fu Lee and like running Google China. So for me, I think when I would call him and ask for advice and we started developing this dialogue, he was four years older than me. So we were close, but not that close. I think for him, it was like, dude, you're all over the place. I don't have time for this. If you're gonna call me, stay on script, stay focused, and actually finish something. And it was a little bit more like, get out of here. But he was religious about it. And it was actually an incredible forcing function for me and the team to be like, okay, We're going to go get the top 100 universities and nothing else matters. Speaker 2: Right. These forcing functions are so powerful. Yeah. You know, it's like if we play basketball, like if there's a shot blocker, it's like you can't bring that weak stuff in here. You can't show up on the call and be scatterbrained because you know how the other person is going to respond. Speaker 1: I know what he's coming at me with. Speaker 2: Even when they're not in the room, you start editing. Speaker 1: Oh, yeah. What am I going to tell him? What's the story on our next call that we have? What progress am I going to show him? Speaker 2: Right. Speaker 1: Am I actually telling him the same story I told him last week? So what did we actually get done this week? I've got to actually come up with a new story. And ultimately I was able to recruit him out of Google to move back to Utah. And that happened in 2009. So we were seven years in and then when we got together, magic started happening. Speaker 2: Why is that? What changed? Just because he's that good or what do you mean? Speaker 1: Yeah, I mean, I knew he was good. I didn't know he was a top Five or six, whatever at the time, product person in the world. And there was a dynamic between us. And I'll just be super honest. We were brothers. We had to love each other. And we were just able to push on each other harder than any executive or person I've ever met. With executives, I could probably go, or teams, I could probably go three or four rounds on something really hard before someone said, uncle. With my brother, I could go 15 because we had to wake up and there was no drama. There was no nothing like we spoke each other's language, but we were so different. You know, he was full engineer. I was full like business and we met on the product side and we almost had to grow together. To like almost like a relationship like where like my weaknesses, he had to go fill in those gaps, my blind spot and me too. Speaker 2: Yeah, I've read something where you were saying that, you know, he came to you at some point and he's like, hey, here's my weaknesses. What are yours? And you're like, yeah, I had never really thought about it that level of detail. I'm great, right? Speaker 1: No, he's like, hey, I suck at these five things. What do you suck at? I was like, I don't suck at anything, bro. And he was like, oh boy. And I've heard him say this, like, My job is to develop my younger brother. Who does that? Speaker 2: Yeah, that's great. Speaker 1: And when we took money in 2011, Sequoia, I remember, was like, we're only doing this if there's a CEO. Which one of you is the CEO? Speaker 2: So it wasn't really even stated. Speaker 1: He said clearly, we are co-founders. I'm not working for my little brother. Speaker 2: Right. Speaker 1: I remember sitting in the room, I'm looking across from Mike Moritz who gave Steve Jobs his first dollar and backed Larry and Sergey and they're like, we need a CEO or we're not investing. Speaker 2: You guys kicking each other under the table? Speaker 1: Literally, it was just crickets because I knew where this conversation was going. I still remember the silence because we're all just looking at each other and finally he just stands up and slaps the table and is like, it's him. And he points at me and he goes, I won't do media. And then sat down. If you find a Jared interview, it's rare. If you find a Jared Smith interview, it is super rare. And that was a moment where I was like, all right, we'll still operate two in a box, we'll divide the world, but it's a cool moment. Then it was like your first time CEO, they're giving you, we're now in the big leagues, like we've taken this money from Excel. This is the largest series A raised in 2012 since 2008 in all of tech. It's outside of the Bay Area, which I mean, Sequoia at the time wasn't even investing there. So we came out of nowhere. The Forbes article was like the biggest company no one's ever heard of. You know, you look at that prior time, but now the pressure was on us. Speaker 2: Today's episode is brought to you by HubSpot because using only 20% of your business data is like dating somebody who only texts you in emojis. First of all, that's annoying. And second, you're missing a lot of the context. But that's how most businesses are operating today. They're only using 20% of their data unless you use HubSpot. That's when all your emails, your call logs, your chat messages, they turn into insights to help you grow your business because all that data makes all the difference. Learn more at HubSpot.com. So wait, what year did you start the company? 2002. 2002. Now we're talking about 2012. 10 years. Speaker 1: 10 years. Speaker 2: You have a sign out there in your office that we walked by. It says, tune out the noise, play the long game. And there's a picture of a guy just sitting there with his ears plugged. And I've had a lot of people on this podcast. I remember when we had Jimmy, Mr. Beast. He's now the biggest YouTuber in the world. But back then, And I played him a clip of him like 10 years prior. And he just said, matter of fact, that he goes, I started this when I was 12 years old. When I was 12, nobody watched. 13, nobody watched. 14 years old, nobody watched. 15, nobody watched. 16, is anybody ever going to watch? 17, nobody watched. He's like, finally, when I was 19, some people started to watch. And even then, it was nothing, just relative to how it grew. And so he was talking about there's this cliche around this 10-year overnight success. But it's real different when you hear somebody just year after year of just obscurity. What was that like for you that period? Speaker 1: But you against the world and You know, I'll never forget once in, I think it was like 2004, we were in our basement and my father was operating, he was in one room on his computer like deep into like stat stuff. And I was out there and I was having these issues with our website. I was like super frustrated because our competition had just raised a bunch of money. The product was cheaper than ours. They raised $40 million and their product was better than ours. Speaker 2: Better, cheaper, more resources, more funding. Speaker 1: And I'm like, that's hard. So I was frustrated. I was like pissed. And I was like, are we going to do this? What's going on? And I was almost like argumentative with my father. My father's just sitting there. And finally, it's the only time I ever saw him get mad. And he slams the table, turns around, and he's like, who's stopping you? Who's stopping you from going to do everything you want to go do? And in that moment, it was like a ton of bricks. If we're going to go do this, you're going to have to do it. There's only two of you. You're actually going to have to go do it. There's not going to be a shortcut. There's not going to be an easy button. You're going to have to go. From that moment on, I stopped asking him. That was that moment, don't ask for permission. Speaker 2: I have this photo here. Describe the scene. Speaker 1: So this is me and Stuart. Everything in this photo is bought at a salvage sale from campus. So like the printers were $5. On the board, I'm making a list of customers. And like setting goals like the 25K club. Speaker 2: Yeah. Speaker 1: And seeing how many we can put. Speaker 2: How many sales calls do you think you did those first couple of years? Speaker 1: I was just dialing. Speaker 2: All day? Speaker 1: All day. Like emailing, dialing, going. Speaker 2: You still remember your script? Speaker 1: Ring, ring. Speaker 2: What happens? Speaker 1: Oh, yeah. I mean, I would ask people what they're using. Have they ever heard of us or have they ever done anything like this? Telling them the top researchers in the world were using it. If I was calling into Dallas, I would say I was part of the Dallas American Marketing Association. And we went to the conference. I would say, hey, can I just walk you through a demo? And at the time, there was no Zoom. So I would actually get on the phone, send them a link, and then they would follow along with me. And I could do the demo. This is where I've always told our reps, Like, do you know your product? I could do the demo on the phone in a car with a link, walking them through without me looking at the screen. And explain to them every single thing that's going on. Speaker 2: What does it take to be great at sales? You were great at sales. Speaker 1: I mean, so I think sales gets a really bad name because people like use it as, okay, the salesperson we don't want to deal with. I remember a moment, a lot of authors would use our software to write books. And I remember once Daniel Pink called me. He said, I'm writing a book and I want your help. I said, great. And he's like, what's the title of the book? And he said, To Sell is Human. And basically, it's a great book about how every single person is a salesperson. They're actually trying to get a group of people to go in one direction or another at some point in the day. And I think that when it comes to software, the first of all is you've got to believe in it. You've got to actually believe that your product has value and the person on the other end's life's going to be better if they use it. And so in our case, We wanted them to run their businesses from the outside in instead of from the inside out. We believe that their employees were their biggest assets and getting a pulse on them more than once a year was probably a good idea when we said, hey, actually, if your business operated with a cadence of this data, you're going to win more. And so part of it was educating these people that there was a new way. And by the way, it was cheaper, faster and better. And if you as a user would embrace this, your personal career inside your organization would skyrocket. Speaker 2: Right. Speaker 1: Because everyone else is guessing. And you'll have this massive propensity of being correct all the time. Speaker 2: Wouldn't it be great to know? Speaker 1: Wouldn't it be great to know? You don't have to guess. And so that was the thought and I was like, oh my word, like how do we get this to everyone? Speaker 2: Somebody had a great reframe. They were like, sales is the generous act of letting the right person know that you might have a solution to their problem. If you think about it that way, like it's an act of service and you can approach it maybe differently. It does start to work and you get it to work. You eventually hit a point where you do something pretty crazy. You start this business in your basement and you're dialing for dollars. And at some point you get offered $500 million to sell the company. An absurd amount of money that sets up you, your team, everybody for life, and you turned it down. What was that like? Speaker 1: It was hard because no one had ever offered to buy our company. It's always a reality check where it's like, okay, it's kind of a recommitting point. The gentleman who was doing it ran a company, I'll just be honest, it was called Survey Monkey at the time. He was married to Sheryl Sandberg and she was running Facebook. They were the power couple. Loved Dave. Dave was awesome. And I was like, whoa, do we want to go? My brother had known him because he worked for Sheryl at Google. There was just this synergy coming together. And he's like, I'll take the business. Let's go. We can partner. You can leave and be done. It was like the cleanest moment of all time. And I remember sitting around just next door from here. And one of our mentors, Duff Thompson's office, and this is someone who, as you talk about mentors, who had been there at WordPerfect. And every other person I would talk to about this offer was like, take it and run, right? And Duff's like, we sold WordPerfect too early. We had the market, Microsoft was coming, we sold too early. And he was the only person that said, don't take the money. He said, in my mind, you guys are cashflow positive, you're cranking, you're growing at 100%. If you and Jared can get along and do this, it should be interesting. And Jared kind of turned to me and my dad turned to me and said, well, what do you want to do? And I just said, I'll come back to you. And I literally, I remember getting in the car with my wife and I was like, hey, we got to leave. Like, we just got to drive south. And we get in the car, we're like 40 minutes into a three and a half hour drive. She was from Vegas. So we were going down there. And she's like, like if it's going good, just keep it rolling. I was like, you don't worry about like passing that up. She's like, no, like what are you going to do at home? Like, I don't need you around the house. And like, this is the time, like if we're going to go for it, this is the time. And it was like, it was just one of those moments where We knew we were going to go for it. Speaker 2: Had you pulled out a lot of cash already, secondary? Were you basically already stable and made? Speaker 1: We were profitable, so we were paying ourselves. And that was a unique thing, profitability and tech as a young company. So we would distribute the money. But this was a whole new world. And so we came back and I remember sitting down, you know, it was funny, Dave, you know, rest in peace. Like he, he, he was an amazing human. And he's like, I just want to do what's best for you. But I remember he flew into town and I was like, I knew that I think I was going to tell him that we were going to turn it down. And I knew how crazy that was. But I also needed to hear him out a little. So we met at the office and I wanted to walk him through our culture and our company because I wanted him to see. Maybe things change. Maybe he comes back for more. I don't know. So I was like, all right, we can't be recognized. I was like, put on that hat. Let's go in. And so we did this whole tour. We come back. We go to a different office. We sit down. And I was like, I just, I think we're going to go for it. And he's like, huh? What makes you think you can do it? And like, I didn't know what to say. And I was like, well, I just got you to put on a Qualtrics hat and walk through our building. I didn't know what else to say. And it was like, we're just going to do it. And he really respected that. And we'd have lunch every week. I was out there. And like, you know, we ultimately ended up talking about joining forces later on, actually the week before he passed away. And then that was kind of it. It was cool. Like, things happen for a reason. And, you know, we went for it. And then we decided, like, if we're going to turn that down, That means we got to get serious. We can't be running this thing on our own personal credit cards and in the credit union bank and all this stuff. We've got to actually We put all the money back into the business. And then we decided to go raise money from Sequoia and Accel. And at the time, it was like taking money from the Red Sox and the Yankees. Accel had just done Facebook. Obviously, Sequoia had done Google and Apple. And they were the forefront of everything. And the goal was, hey, you guys watch our back in the tech industry. We're going to sit in Utah and we're going to make money and put our heads down and go. And we got the world covered. That's what we need you for. It was a pretty cool partnership. Speaker 2: I want to learn from you more on the business side, how you think, how you operate. One of the things I liked is you talked about like working backwards. This is one way just to work forward. I don't know. We'll just figure it out as we go. Of course, there's that. But a very useful exercise is to like, you know, start with the end in mind and then just reverse engineer. Well, if that's true, then what needs to be true underneath that? And you sort of go back. Can you explain maybe How you do that are an example. Speaker 1: Yeah, I mean, I think it's different from where we are today to where we were then, but I learned something by accident once. You know, when we did announce the fundraising, I remember getting on the phone with a journalist from Business Insider, Julie Bort. And I'll never forget this. I'd never really done an interview. I'd done one interview with Forbes. And she comes up. I mean, we're 10 years in and no one even knows who we are. And she goes, I heard you just turned down $500 million. I was just flustered. So she writes this headline, the kid who turned down $500 million with my picture is excited about it. And I'm like, oh my gosh, because it looked like I went to the media and slammed the story back into Dave's face. And I was so embarrassed. But I knew at that moment that Dave wasn't coming back. It was a burn the boat moment. She burned the boat for us on a possible acquisition. The first one in 10 years. And I was so mad. I never forgot about that. And so we operated for two more years, and we went to raise money. And everyone's like, well, when are you going to raise money again? Because kind of when you start, you're on that path, right? And what's the dollar amount and everything? And, you know, my entire thing was Well, we're going to raise it a billion dollars because that'll show that we've doubled. That's a new mark. We're giving away stock to employees. That's where it's going to be at. So when we got down to it, Excel and Sequoia and we brought Insight in, they agreed to that. And they said, all right, we're gonna, how do you want to announce this? I was like, there's only one person I want to talk to. So I called Julie Bort and I was like, hey, you might not remember me, but you wrote that article that said, I turned down $500 million. I was happy about it and raised $70 million, dah, dah, dah. And just so you know, like, we're raising a billion. Do you want this story? And she's like, yes. And so she, Basically took the exact same article, the exact same picture, and put the folks that turned down $500 million just raised it a billion. Speaker 2: New headline. Speaker 1: New headline. They look the exact same. Speaker 2: You have both of those framed in the office. Speaker 1: I have both of those framed. And then I remember sitting there one day after we had done that, and there was a lot of our employees that were like, okay, wow, we made it, we're here. And I was like, no, no, no, no, what's her next article? Speaker 2: Work backwards. Speaker 1: What's her next article? Like, what is she putting up next? And two years later, it's like the group that turned down $500 million just raised it $2.5 billion. And, you know, we knew that that wasn't the goal. We knew we had our own mission and the Qualtrics story and everything, but it was very clear from a directional standpoint. We raised it $2.5. What's the next article? A year later, it says the group, you know, or two years later, it says the group that raised $2.5 or turned down $500 just sold for, and she literally put Four of those together with the same headline, the same page. So I'm grateful for it because it fired us up to go and say, well, that next one isn't interesting. We actually need to go bigger. We need to push harder. We need to go more global. Every decision came to, okay, what's the story we're going to be able to tell when we're done with all this? It's kind of a weird thing because at the end, if you meet sports stars, At the end of the world, like where they're done playing, you know what they do? They sit around and tell stories. They tell stories about what the world was like. And you get them together and all they do is just sit and tell stories. And you hear Bird tell stories, you hear Ainge tell stories, you hear Dwayne Wade tell stories, like it's awesome. And it's kind of like all we have are going to be these stories that we're going to be able to tell. And when Qualtrics sold, it was probably one of the most underwhelming days of my life. Speaker 2: So when the money hits the bank. Speaker 1: Yeah. We were at a kind of a president's club type deal with about 100 of our people and the deal had closed but hadn't funded. And I remember sitting there by the pool with like our whole company who had leadership who had like made president's club. I could tell when the money I knew when the money was going to hit and it like lands and then just hits to everybody. And I. I could see over the next two hours like this reaction. And I remember turning to my wife, like handing my phone and she's like sitting there reading a book. And, you know, there's a lot more zeros there. And she's like, oh, scary. And I was like, okay, we've been grinding for 20 years and your response is scary, scary. And then I started watching our people. It's like we just paid off our home. We just did that. And then there was a little bit more joy, but it became clear to me that it is about the journey. Because even after all that, it wasn't a eureka moment. And so knowing that I'm going to work till I'm 80, I'm never going to stop working. I already know that about myself. And every young person should ask themselves that question right now. I don't know that anyone knows exactly what they're going to do. No one has figured it out. Like, I still don't know what I want to be when I grow up. Right. But what I do know is I'm going to work till I'm 80. Cuz I'm not gonna check out if I was gonna do that. Speaker 2: I would have done it already All right, let's take a quick break cuz I gotta tell you a story Let me tell you at the first time I tried to run payroll for my team I was using a traditional bank and you know the type it's got a janky interface It's built like a 2002 tax form and it was open only during business hours and I hit send and it froze They flagged the transaction. They locked my account. They put me on hold for 45 minutes and then they told me I got to visit my local branch and And that was the day I started looking for a new banking solution. After asking a few founders what they were using, I found out about Mercury. And so now my payroll is two clicks. I can wire money, I can pay invoices, I can reimburse the team, all from one clean dashboard. That's why I use it for all of my companies. And so do 200,000 other startup founders. And so if you're looking to level up your banking, head to mercury.com and apply in minutes. Mercury is a financial technology company, not a bank. Banking services are provided through Choice Financial Group, Column NA, and Evolve Bank and Trust members FDIC. So we play basketball this morning, and it's clear you've been playing basketball since you were a kid. And so what's it like to now own an NBA team? That's insane. Speaker 1: So it's weird. When we're on the roadshow to go public, like you normally go like one day in San Francisco, two days in New York, one day in Boston, one day in Maryland, then back to New York. And I had organized our roadshow to go three days in New York, one and then to Boston. And no one had really done that the way they were doing it. And they're like, why are you doing that? I was like, because I'm going to the Celtics game. I'm going to go sit with Ainge. And I'll never forget sitting in the locker room with Ainge. It's the only thing outside of Qualtrics. I didn't do anything else when I was doing Qualtrics. I didn't invest. I didn't sit on boards. I didn't buy real estate. I was literally Qualtrics for 20 years, heads down. When we say intense focus, It was like everything else was- No side hustles. No side hustles. Speaker 2: No angel investing. Speaker 1: No. Speaker 2: Yeah, nothing. Speaker 1: 22 years. Yeah, it was like nothing except for hoops. I would go down to Summer League and sit there with Ainge and he was cool enough to let me, I mean, he's running the Celtics and it was like, I could see how- And you were applauding, you were thinking, like, I wanted to get into this? No, it just happened. I was like, I am so intrigued by this. I love the NBA. I love hoops. I love the business side of it. When we did sell, my brother was like, what are you going to do? I was like, I'm going to go be part of the NBA. With SAP, I'd gotten to know Adam. I was working on a tech council for the NBA. Through SAP and Bill McDermott had connected us. You know, he was like, hey, and I let him know. I was like, I'm going to be part of this one way or another. Like, and he was like, oh, we'd love it. Like, too bad Utah's not for sale. And, you know, he called me and was like, hey, you know. And someone else, I hear Minnesota's for sale, and so I went down that entire road, and that story's pretty famous, where Ash was like, we're jazz fans. Do we have to give up our season tickets at the jazz? I was like, yeah, that's probably part of it. It was like, no, we grew up jazz fans, and I was like, oh yeah. Speaker 2: And you just thought the jazz would not come up for sale. They weren't. The Miller family was like. Speaker 1: Yeah, they weren't. Did you try? Yeah, I had approached Gail Miller, who Larry and Gail had purchased it for years, and they owned it for 30, 35 years. It was in a legacy trust for the family that could never be sold. Speaker 2: Oh, like it literally could never be sold. Speaker 1: Yeah, it was a pretty locked door. At least that's what we thought, right? Speaker 2: And you have a jazz hat on. So something changed. What happened? Speaker 1: Yeah, I think I think, you know, I'd approach her and the answer was no. And then so you got a call back. Yeah. After the first about six months later saying, hey, after we turned down Minnesota saying, are you still interested? I was like, are you serious? Yes, we're in. Speaker 2: How'd you negotiate the value or how'd you figure it out? Speaker 1: It was literally a meeting where it was like, well, are you serious? Make us an offer. We pulled up the Forbes valuation on the phone and I said, well, how's this? Speaker 2: Because I didn't know this was before. Speaker 1: This was like a year before all this madness. And I was like, does that work? She's like, it seems fair. And like to her credit, like. Speaker 2: And it wasn't a big auction or anything in that case. Speaker 1: No, there was no one else. I think she had sat across the court from Ashley and I. She knew what we were about. She cared about it being in Utah and that was important. They had had 35 years. I think they bought it for $22 million. Would you buy it for 1.6? Yeah, 1.6. And it was like, okay, I've got to, this looks like about as clean as it could get. I mean, it's not all gold when you're running an auction. Speaker 2: So how does it work? You're not buying the whole thing. So that's the franchise value. You're buying like a majority stake. You just gotta send a wire one day? How does this actually go down? Speaker 1: Yeah, pretty much. Yeah, that's pretty much how it works. Speaker 2: Let's double check the numbers. Speaker 1: It's like a car. You gotta go figure it out because you can't put a lot of debt on these. My philosophy was don't blink. There's 30 of these things in the world. Just go. Ash and I had a lot of conversation about why. Life's pretty good at this point. Why are we literally going, hey, we're on this 20-year journey of sacrifice and travel and all of this and literally grinding at a level that most people could never comprehend? You interview founders all the time. When we're all in, it's like a different level. And then going and signing up for a level where there's a lot of pressure, there's a lot of responsibility, everything's public. And you're taking the hopes and dreams of a whole nation here and putting them on your shoulders to go do something. And you're also impacting the children. Our kids like Equaltrics was a relatively normal life, even though it was worth, on paper, a lot more than an NBA team. The NBA team is very different. Speaker 2: You didn't take it lightly. Speaker 1: No. There was a lot of personal discussions about what's this for? Is this for ego? Is this for us? Is this for helping Utah? It really came down to Utah. Speaker 2: I want to finish with a couple of rapid-fire, almost like life-isms. This idea of the nine most important minutes of the day. What are the nine most important minutes of the day? Speaker 1: When your kids wake up, when they get home from school, and when they go to bed. Speaker 2: 3-3-3. And you show up for those. Speaker 1: Or you just try to hit one. Right? I mean, a lot of times like you're planning a trip, you're doing this and like you have an option to like be at one of those. Speaker 2: Right. Speaker 1: And so I think that as you schedule, as you plan, as you optimize, those are important moments, not all three maybe, but like if I can schedule a call, I'm not doing it in one of those moments. Speaker 2: Right. If you don't know what to do, if you don't know what you want to do, go figure out what you don't want to do. Use the inversion, use the contrast. What's that? Unpack that a little bit. Speaker 1: We teach a class at BYU. We teach a business school class and it's every fall and it's around leadership and decision making and watching all these kids, it's like, this is what I want to go do. I didn't know what I wanted to do. And I think that's why Qualtrics worked. Because if I had a picture in my head of what it's supposed to look like, I don't think I would have done Qualtrics. I would have been so focused on that, the opportunity or Zuckerberg could have been sitting next to you starting a business and you're like, you didn't even see it. And you're like kicking yourself, right? But what I did know is there was some attributes that I believed in. I knew I wanted to be able to have a job where the sky was the limit. My age wasn't going to limit me to what my potential could be. I didn't want to be like, well, when you're 22, you can make up to $80,000 a year and you're 24, you get to 120. I didn't want to be capped. I want to be like, if I work harder than everyone else, I'm more creative, my ideas hit, like they can go somewhere, right? I knew I wanted to be like in leadership and I could lead, right? I knew I wanted to see a lot of businesses very quickly, a lot of industries. I wanted to know the world and know every industry. I wanted something that was kind of not old school. And so when I started looking at opportunities, I never thought enterprise software, but I was like, okay, I look at it and I kind of put the opportunity right here and I'm like, wait, sky's the limit. I can be a founder. I can create. I'm not really capped. It's a new school. It's a new part of technology. It can go for a long time. I'm not going to get the legs pulled out from under me if I start doing well. I think those attributes is where I would advise kids and younger people or entrepreneurs to say, okay, don't be so caught up on what this looks like. See if it fits and you'll be blown away that it's like, oh, the auto industry actually works really well for me. Never would have thought about that. And that's all that really matters. And so I think that's kind of how we look, you know, and now I've got a lot more roles and things that I care about, but it has to fit into that. You ask like, what do we do? Does it fit? And, you know, you kind of go through that rubric. Speaker 2: That's great. Well, listen, man, thank you for doing this. I appreciate it. Speaker 1: Thanks for coming out to Utah. Speaker 2: I mean, it's great out here. I love it. Speaker 1: Let's go. Speaker 2: All right, man. Thank you so much. Hey, let's take a quick break. I want to tell you about a podcast that you could check out. It is called The Science of Scaling by Mark Roberge. He was the founding CRO of Hubspot, and he's a guest lecturer at Harvard Business School, the guy's smart. And he sits down every week with different sales leaders from cool companies like Klaviyo and Vanta and OpenAI, and he's asking about their strategies, their tactics, and how they're growing their companies as, you know, head of sales or chief revenue officer. If you're looking to scale a company up, if you're a CRO or a head of sales that's looking to level up in your career, I think a podcast like this could be great for you. Listen to The Science of Scaling wherever you get your podcasts.