Brian Bell (00:00.983) Hey everyone, welcome back to the Ignite Podcast. We are delighted to have Lance Cottrell on the mic. He was a physics grad student in early cyberpunk who wrote the Mix Master Anonymous Remailer that left his PhD program to found Anonymizer, one of the first commercial internet privacy companies. He took it to a successful exit in 2008. And today he is an angel investor, president of the North Bay Angels, just down the road from us, and the host of Feel the Boot, where he coaches early stage founders. Lance, welcome to the show.
Lance Cottrell (00:29.464)Thanks so much. Great to be here.
Brian Bell (00:30.999)Yeah, it's great to catch up. been wanting to do the podcast for a while. I'd love to start with your origin story. What's your background?
Lance Cottrell (00:38.41)So I started off planning to be an academic physicist. My dad was, both my parents were professors, and so I was going down that path in the early nineties, working with the Hubble Space Telescope right after it was launched and the big telescopes in Hawaii. But at this moment, the internet was really arriving, right? The World Wide Web was created, I think, in ninety-one, ninety-two. And being at UCSD in San Diego. I was directly on the internet backbone, right? When I was doing research, I had a Sun workstation directly connected to the supercomputer center. I set up a website on CERN Server 1.0 or something. And so I could see the amount of information that was getting collected. And I knew that, for example, astronomers like to steal each other's targets up on the mountains. They go through the computer. So we were thinking about privacy and cryptography a lot. And then the government came out with this idea that. Privacy was going to be important. Everyone should have encryption. They were going to build a specification for a crypto chip and keep a copy of all the keys. And I thought that was a phenomenally bad idea. So that led me into the whole privacy cryptography space that then led to anonymizer.
Brian Bell (01:50.199)So what is an anonymizer for for folks that don't recall that? I mean it was twenty years ago, so
Lance Cottrell (01:54.37)So yeah, no, it's been a hot minute. Anonymizer, really, we were the world's first internet privacy company. So if you've used Tor or if you've used VPNs for privacy, we were really doing that kind of thing well before that started. So having built the Mixmaster internet's email privacy tool, I realized it wasn't very easy to use. It wasn't gonna achieve mass adoption. And so I started the company to try to build tools that would be user-friendly. And so anonymizer was focused on consumers and originally web-based privacy because the world wide web had really started to arrive at that point.
Brian Bell (02:31.543)So you were on the cyberpunks list back in the early nineties. You consulted on digital cash before, you know, well before blockchain or PayPal or X or whatever, whatever's going on in the late nineties. What what did you guys believe the future would look like back then? I mean, you have this really interesting, you've seen it, right? Like I you know, I'm a little younger than you. I grew up in the eighties. I was born in nineteen eighty. So I was a child when all this stuff was happening, but you were you were an adult. Like what did it feel like as as the internet took off and
Lance Cottrell (02:44.151)Yeah.
Brian Bell (03:01.279)all all these things are starting to be become a possibility.
Lance Cottrell (03:03.968)Yeah, I mean, it was a really interesting time. You could feel the things changing under you. almost not quite as fast as with AI this time, but it was obvious it was going to be a huge thing. It was interesting to see people talking about it as a fad, or it'll just be this little corner of things. But people who were actually on the internet in the early days and saw it coming could could see the degree of sea change that was taking place. In fact, I can remember the moment. I decided to leave my PhD and start the company. I was driving down the freeway and there was a billboard. So literally I saw a sign. And every, every day this billboard would be about the local shopping mall. It would be the Macy's White Sale or whatever. And this one time I drove by and it was just University Town Center, HTP www.utc dot com. And it hit me like a bolt out of the blue because I mean I'd been using the internet and the web for a number of years at this point, but I had never seen a URL in the wild. And seeing it on a billboard just said the tipping point is here. This has gone into mass adoption and the moment to jump is now. And it was you see these all the time. And I for as a founder, it's those things to look for that what tells you that is this has moved from some sort of a niche case to mass adoption.
Brian Bell (04:20.309)Yeah. And it must have been hard to peel yourself away from what was happening in astronomy at the time, right? You mentioned the Hubble telescope. What was that like? Seeing the first images pop off that. I yeah.
Lance Cottrell (04:32.21)I mean, so what was funny with that was this was before they fixed it, right? So this was when the optics had the problems. I was doing spectroscopy. So I was looking at spectra, not images. And interestingly, it was a golden age for that because the images weren't that good because of the problem. But the spectra were fine. It just meant a little less light went into the slit and it took a little longer to get the exposures. But in fact, I was getting a little disillusioned with my thesis because
Brian Bell (04:36.726)Right.
Lance Cottrell (04:58.71)My advisor was a grant writing genius. I had one observation on one quasar that was a hundred hours, continuous exposure. And at the blue end of the spectrum, which is what I cared about, we had a signal to noise of one. And it just wasn't going to be good enough to actually answer the question that I was trying to research. And so I was getting increasingly frustrated with that. And in the meantime, the remailer that I'd written, as part of the cypherpunks was exploding. I was written up in the New York Times and I had You know, hundreds of people running the servers and tens of thousands of users. And that was sort of where my energy was rapidly going.
Brian Bell (05:37.665)So I mean, is there such a thing as internet privacy? Or is it just sort of like a kind of like an arms race between people who wanna be private and people who wanna break your privacy? Like, yeah.
Lance Cottrell (05:48.311)yeah, privacy's become incredibly difficult. It was back then, and it's become much worse. I'll hear people say something like, I want to be private on Facebook. And while those are all English words, the sentence doesn't make any sense, right? Inherently you're being public. For me, you are, if you want to experience the internet and take advantage of it, your information is going to be out there. So it's a matter of curation. What do you care about being private? What details, what information, what activities? And then do the inconvenient things to actually protect those, hide that kind of information, keep that off the internet, run that through VPNs or different different fronts to hide that data. And then just give up on the rest of it. Know that information is going to be out there and make peace with it. Because I think that if you try to protect everything, the reality is you'll end up protecting nothing.
Brian Bell (06:41.729)Hm. And so you go through the exit, it's acquired, you stay on as chief scientist. how long did you stay and kind of what happened next?
Lance Cottrell (06:49.262)So I stayed on way longer than I planned, right? I had this usual two-year handcuffs. I stayed on for 12. But the reason is after 9-11, after the attacks on the World Trade Center, we discovered a new market. And so we'd been doing consumer privacy, which was pretty cool. After 9-11, we discovered a need in the government and took the same core technologies and started building platforms for doing online undercover operations for the intelligence and national security communities. And that's where we found real product market fit and started to build that hockey stick. Plus, you know, you're building things to go up against the Russians and the Chinese and the Iranians. And, you know, it's the North Koreans, right? Very spy versus spy kind of stuff. And that was just too much fun, right? I mean, we're building platforms to route data through multiple jurisdictions, through front companies, you know, moving money surreptitiously so they can't track it back. that was a lot of fun. Plus,
Brian Bell (07:30.711)Koreans. Yeah.
Lance Cottrell (07:48.578)They made it really hard to leave because within a couple of years I went to the CEO and said, I'm gonna move to Wine Country, because I was living in DC at the time because that's where my customers were. and I said, Look, I can quit or I can telecommute. And he was fine with me telecommuting as chief scientist from wine country. And that's that's a hard proposition to resist.
Brian Bell (08:08.245)Sounds sounds awesome. Yeah, I mean you caught the remote work wave well before anybody else.
Lance Cottrell (08:16.694)Yeah, right. 'Cause I moved in twenty twelve, so that was pretty early.
Brian Bell (08:19.659)Yeah. So after the exit, and your you know, how long did you stay on and what kind of pulled you towards advising and investing instead of starting another company?
Lance Cottrell (08:29.176)So one of the first things I did when I moved out here was I joined the North Bay Angels. It was, you know, wanted to get plugged into the entrepreneurial economy, made some investments. and through that, I ended up doing some advising. They invited me to advise some local companies, and I realized both that I had a knack for it, but I really enjoyed it. I loved getting to get an exposure to and visibility of all of these different companies, the technologies they were working on, the ideas, the markets they were exploring. Right. I'm sure you've seen this too. You discover so many things that you'd never even thought about as a kind of business venture. And that was just a blast to me. And so that then kind of rapidly expanded in in terms of what I was doing until now basically that's all I'm doing is working with startups and doing the angel investing and funds.
Brian Bell (09:19.223)Right, right. you describe your approach as the science of startups. What do you mean by that?
Lance Cottrell (09:24.982)Well, I think it really does come out of that scientific background, but I take a very experimental first approach. That is, you know, everything should be tested. A lot of people go with their gut or they have great belief in some outcome or some hypothesis that they've built. And I think it's incredibly important to always be questioning those assumptions and testing them. I remember I had a marketing direction that I thought a hundred percent was gonna work. Like just no question, slam dunk, this was gonna be successful for us. And it Utterly failed. And I've seen that over and over again, where my personal conviction and what actually turns out to be the truth don't bear a lot of resemblance. And so thinking about how do you do quick, dirty experiments, something that'll give you that high-level information. And my advisor talked about this a lot. He said it's very rare that you need three significant figures to see whether or not something's true. You know, either probably it is, and it's obviously is or it isn't. And it's pretty obvious it isn't. And there's fairly few of those kind of right on the knife edge cases. And if it's on the nice ed knife edge, you probably just want to treat it as a no and move on. And that frees you from having to do big elaborate experiments that allows you to do quick and dirty things to just say, hey, is there traction around this? Do people care about this solution? Do they resonate with the messaging that I've got? Do they like the pricing that I'm thinking about?
Brian Bell (10:46.903)What have changed your mind on on ancient investing? you've been doing it for now for, you know, 10, 15 years. You know, how did you as a founder come in and start and how has your kind of maybe your thesis changed changed over the years of how you evaluate what's a good startup or a good founder?
Lance Cottrell (11:03.682)Yeah, I think early on, you know, everything looked good. And I set out a rule for myself actually that I would not make any in angel investments in the first year of being in the North Bay Angels, just so I could try to get some kind of level setting and understand what's the range, what looks good, what doesn't. early on, I think I was very attracted to the slicker pitches, the hotter areas. my thesis has really evolved now. Much more towards off-the-beaten track kind of companies. I want a founder, you know, with a large market, but typically in a less sexy area, something that's not the current hotness in Silicon Valley, a founder who's maybe not located in one of the hotbeds of innovation, but has a really deep insight into their market, a meaningful moat, some understanding of what they're doing, both because I think the valuations tend to be better in that space, but also there's a huge An adverse selection effect, which is up here in the North Bay, I'm not in the middle of Silicon Valley. If some Silicon Valley hot space company is coming to me and they're not coming to me because of something core to my experience, they want to do internet privacy issues or work with the government or astronomy for some reason, I'm I'm not, there's no reason for them to reach out to me, which means the reason they're reaching out is they couldn't get traction with anyone else. And that itself is a bad sign. So I want to find the people that don't have that kind of taint on them and the reason they're coming to me makes sense.
Brian Bell (12:36.769)Yeah, that's really smart. so founders call you the boot. What is that about?
Lance Cottrell (12:41.012)So that actually came out of some of my early advising. I was advising a couple of people who were mutual friends, and they spontaneously started referring to me as the boot. They'd say, yeah, I'm gonna get the boot from Lance this weekend or on Friday or whatever. And I thought that was hilarious. So when it came time to name my podcast, I just decided to lean into that. It's sort of a, you know, a motivational kick in the ass. Hopefully it's friendly.
Brian Bell (13:07.415)I love that. What have how has advising startups changed over the years? I mean, you've been doing it for a long time. we talked about the evaluation, but like has your advice changed for startups as you've become more tenured as an advisor?
Lance Cottrell (13:24.108)Yeah, I mean, I think it's become a little more nuanced. I definitely am less inclined to sort of talk about running the same playbook. Like I did this playbook, it worked for me, therefore it'll work for you. seeing companies as far more unique in the problems that they run into, the needs they have, depending on where they are, what kind of industry, where their weaknesses may be in terms of the company. You know, maybe they've got a problem with the team, they've got Problem with existing funders. They've got some black spot on the cap table, really diving deeply into that. But the whole ecosystem has changed. I mean, certainly when I was a startup, the whole accelerator world basically didn't exist. There weren't many advisors, and now there are so many advisors, there's so much advice. And now, of course, there's AI advice, which is really interesting. I see a lot of founders leaning into that. It makes them less willing to engage with a lot of advisors. Because they can get the questions answered. But of course, they're getting an awful sort of lowest common denominator rinse and repeat. And it allows them to turn their brains off. Like one of the things that drives me crazy is I'll see in a pitch deck, there'll be let's say the market sizing. And they'll talk about here's our market and here's the numbers. And I'll ask, well, where did that come from? And they said, chat GPT. And that's like an instant no. You have to understand all of these things.
Brian Bell (14:41.879)Mm-hmm.
Lance Cottrell (14:47.666)And and no way am I saying not to use AI. I use it a ton. Everyone should be using it. It's kind of like, exactly, right. And and make sure you understand the information, that it's not something that you're just accepting pasting. you need to be able to handle a drill down, right? You know, if if you're going in and someone starts asking questions about that answer, where did this come from? Why do you believe it? How do you support it? What about this challenge? You need to have it.
Brian Bell (14:51.095)Yeah. Just verify the information. Yeah.
Lance Cottrell (15:14.058)in hand well enough to be able to deal with those questions on the fly. And if you've sort of just believed the answer you got, it's very fragile understanding.
Brian Bell (15:22.805)Yeah. And AI is certainly changing, you know, startups. They can reach meaningful revenue in a handful of weeks or months. How how are you kind of adjusting how you advise and invest in startups? you know, given AI can copy a product over a weekend.
Lance Cottrell (15:37.932)Yeah, it certainly has changed the idea of what a moat is. And even before, people would say, you know, this took us six months to build, therefore we have first mover advantage. and that was never true, right? You could always take a large team of developers and probably reproduce it in a reasonable amount of time. But this idea of software development as a barrier has evaporated completely. And so there needs to be something much more fundamental about. some secret sauce, some trade secret information, some understanding, some customer relationship, some stickiness that allows you to overcome the fact that everyone else can quickly build the same tool, but they can't do some aspect of what you're doing.
Brian Bell (16:27.297)How does AI change privacy?
Lance Cottrell (16:31.168)AI is going to cause a lot of problems. I think mostly almost from a security point of view, but also an analytics point of view. So if you think about phishing attacks, it used to be that everyone got the same Nigerian print scam, but now every single one of those attacks can be custom tailored to you at scale in an affordable way. You don't need to have someone personalizing each one, doing any research. But then also the ability to Ingest mass information and do interesting things with it is completely changing. You can take in enormous amounts of unstructured data and turn it into incredibly detailed insights about individuals and targets. It also allows for identification. So, for example, speaker identification is really interesting. I had an anonymous account back in the 90s that I used on the Cypherpunks mailing list in addition to my real account. And a couple of years ago I was working with someone who wanted to say, Can I build a tool to identify who someone really is? and despite the amount of effort I put into it, they were very quickly able to identify my account and show with very high probability that yeah, that had to have been me. And they were right. Fortunately, I wasn't doing anything inappropriate with it. It was it was a thought experiment, but you know, this is a big issue for our government customers back in the day, but in general, this is enabling kinds of uses of information and kinds of identification that just didn't exist before.
Brian Bell (18:03.605)What's a popular piece of advice that startups often get that you think is wrong?
Lance Cottrell (18:13.806)I think there's way too much focus on getting funding, getting VC money, growing things up. There are some companies for whom it is essential, right? The company will not be able to be successful. It won't be able to grow significantly without taking that VC route, you know, bringing in the pre-seed seed, A, B, C, D, E, F, G rounds, and so forth up the ladder. But in fact, it isn't most companies. And if your company really isn't teed up for that kind of insane hypergrowth and isn't optimized for that, then probably as a founder, your ideal outcome is far better served from either bootstrapping or bringing in only limited amounts of capital. So I raised only two and a half million dollars for anonymizer before we were able to find product market fit and simply never needed money again. When we exited, we had millions of dollars in the bank. And zero debt because we couldn't spend money as fast as we were making it. And that turned into an excellent outcome for me, but would have been an a disaster for a tier one venture capital firm, right? They wouldn't have allowed me to take that exit. So I think it's very important to be conscious of the kind of company you're building. I also see a lot of engineers who want to be CEO of a big company. And I often have to take them aside and say, Do you want to do that thing? Is the thing you want to do for the next 20 years? You know, manage people who manage people who manage people and take meetings and raise money and be in front of the camera and basically never get to do the thing that you love doing that made you start this company is
Brian Bell (19:45.399)Yeah. You're like a politician more than a you know, a doer in in organizations like that. Yeah.
Lance Cottrell (19:49.622)Right, absolutely. And and it's worth thinking about, is that the thing you want to be doing? Will that be satisfying? because if all you want to do is make money, God knows there's easier and much higher probability ways of making money than founding a company.
Brian Bell (20:06.217)And what are those? What are two or three? Maybe maybe some people listening to this podcast right now are going, Maybe I won't start a company. If you were like t in your twenties, like what would you do to make money right now?
Lance Cottrell (20:11.854)Right. I mean, look, yeah, go go into finance. Get get involved in a hedge fund. There's a lot of those businesses that just throw off money. you know, become a become a lawyer in patent law, for example. You know, manage enormous lawsuits for those high profile companies. Those people are incredibly well compensated and it's a reliable business and cash flow, as opposed to it's 10 plus years.
Brian Bell (20:24.279)Mm.
Brian Bell (20:28.935)Mm-hmm.
Lance Cottrell (20:38.798)assuming you w hit it on the first go round, which is unlikely, of incredibly hard work, you know, eating ramen with an 80 to 90% chance of a zero outcome at the end of the day, anyway. I mean, but if you enjoy it, if the journey's worthwhile, if you get pleasure out of it, if you care about the thing you're building, like I was really passionate about privacy and I was passionate about security. once I discovered the space in the government, understood the kinds of life and death issues that they were addressing. I was super excited about that every day. And that's what gets you through the hundred hour work weeks and continuous existential dread and you know, ridiculous requirements that you have as a founder. It can't just be, I want a paycheck.
Brian Bell (21:21.003)Yeah. So you've lived through the internet, mobile, cloud, and now AI. How does AI feel to you on the ground versus the internet felt, you know, twenty five, thirty years ago?
Lance Cottrell (21:36.632)Yeah, it's definitely has the same feel of potential impact, the fact that it's going to change everything. Like in the nineties, I'd see companies saying, Hey, we have a web strategy. And by the time you got to like 98, 99, you look at them like, Of course you do. I assume you're not an idiot. Like now it's do you have a web strat an AI strategy? Well, obviously you should have an AI strategy or you're dead. but the speed of things is so much faster, right? On the internet. Because there was a lot of hardware involved, the ability to take that next order of magnitude speed increase or storage increase or compute increase took years. And so things moved at a much more measured pace. Whereas with the AI explosion, six months ago was unrecognizable. I was talking to some guy about some something I was doing with AI. And he was going, I didn't know you could do that. And I said, Well, you know, he said, I took a class on AI. I said, When did you take it? Like, it's like 10 months ago. I said, yeah, that's all irrelevant now. None of that matters. and that wasn't true in the internet.
Brian Bell (22:40.993)Yeah. Yeah, it certainly it certainly feels like everything's changing. and then you have physical AI is I guess what we're calling it now instead of robotics right behind it. which will change how you know physical things get done as well in a in a dramatic way. yeah, I what is
Lance Cottrell (22:57.112)You're right. And and I'm seeing a lot more of that. And I think that'll that may be more impactful at the end of the day, but probably will be slower just because anytime atoms get involved, it tends to slow things down. You actually have to build things, you need to prototype them, you need to put together, you know, assembly processes and test it and see, make sure it's waterproof and all sorts of those annoying things that you can skip when it's all just an information process.
Brian Bell (23:09.516)Yeah.
Brian Bell (23:22.677)Yeah. It's interesting to try to imagine what the world looks like or the business landscape or the startup landscape when everybody has, you know, dozens, maybe hundreds of agents working for them that are super intelligent and work twenty-four hours a day. and then you have, you know, if everybody has a robot that's, you know, generally capable of doing anything a human can do, it's really hard to imagine what society kind of looks like in in that. I and I guess that's why they call it the singularity, right? It's it's sort of like this. point where things are so advanced so fast that you just can't imagine what comes after. it it certainly like the internet it was like, okay, yeah, well, you know, the internet was like another layer of society. but it feels like AI and robotics are very foundational to how things get done.
Lance Cottrell (24:00.632)Yeah.
Lance Cottrell (24:10.882)Yeah, I think it's going to be more disruptive on the level of like the industrial revolution was in terms of just wholesale displacing large categories of work and large categories of activity. it'll probably require some sort of complete rethinking around of economics in the long term. Now, adoption, even though the technology is moving incredibly fast, I'm suspecting that large scale adoption, there'll be regulation, those things may end up slowing things down. little bit. But in the long run, yeah, I mean, you know, being a weaver and a spinner just stopped existing as a job and it was a job for a fairly large fraction of society back in the day before power looms came along.
Brian Bell (24:51.691)Right. Yeah. And so there'll be new jobs like I don't know, podcasting.
Lance Cottrell (24:55.562)Exactly right. Entertainment, personal services. you know, I suspect that things being bespoke and real and authentic and human-made will just take on exponentially more value over time compared to other things. But even things like what do you own? What do you want to own? you know, people are talking about, well, where are where do I charge my car? And you know, how will that change in the future? Whereas I suspect the idea of my car is just going to evaporate for anyone who other than you know collecting antiques or something for for hobby uses, right? You probably will be illegal. Yeah. Right. It'll be illegal to drive your car.
Brian Bell (25:28.375)Yeah, it'd be like saying my horse, right? It's like, wow, you have a horse, that's interesting. Tell tell me more about your horse.
Lance Cottrell (25:34.808)That's right. Yeah. It is it is a bougie hobby to have a horse rather than something that is meaningfully impacting your day to day life in a productive way.
Brian Bell (25:43.585)I think the hardest trend I've been thinking about this a lot. I think the hardest transition for people will be going from, you know, I work to live. from that to I you know, I'm living to work, which means that like, you know, people go do their nine to five jobs so they can pay their bills and do their other things. But I think when when you live in a super abundant society of AI and robotics, I think the biggest challenge will will be for people to know thyself and kind of know what they're actually interested in and what they actually want to kind of create. it's almost like free time at school, right? All right, you get a free hour to yourself, you know, you got your, you work done, your teacher's like, go do whatever you want. And, you know, so like I don't know, you go color and read a book and stuff like that. But at some point you're you want to create something. And I think that's gonna be the hardest transition for people because a lot of people are just consumers and workers.
Lance Cottrell (26:23.63)Mm.
Brian Bell (26:42.059)They work and they consume. They work and they consume. Yeah, they have relationships and hobbies and stuff like that. But and I think in a in a post scarcity, almost post capitalist AI robotic society, I think the biggest challenge is gonna be like, what do I really like to do?
Lance Cottrell (26:56.814)Right. It's a very Star Trek kind of world. But yeah, if you don't have that motivation out of your core, that desire to bring something into existence, to make something happen, to create some kind of experience or or interaction, it's it's probably going to be problematic, right? Psychologically for a lot of people. How do you define your worth? How do you define your sense of purpose? And purpose is critical. You know, I think there's a lot of data showing that.
Brian Bell (26:58.806)Yeah.
Lance Cottrell (27:25.686)When people don't have a sense of purpose, it's very harmful to them and generally society as well. And of course, the question will be: how does society manage this? We may be in a potentially post-need situation, right? A maximum abundance. But the question is, does that in fact get spread out, or just do you have small pockets of hyperabundance and everyone else is still sort of in this kind of terrible situation? despite the fact that there's this plentitude out there, which, you know, will lead to lots of social conflict and issues. So it'll be interesting to see how this plays out. It's not gonna be an easy story.
Brian Bell (28:07.137)Yeah. And I think a really good or interesting lens to think about is like people being retired. Right. you know, most people if they're healthy and they're retired and, you know, their financial and health needs are kind of taken care of, they're the happiest they've ever been in their lives. Right. They're, you know, going out, doing things, traveling, you know, they're, you know, playing pickleball, whatever. And they're the happiest that they've ever been. So I think I feel like that's sort of the vision I have is like people are kind of doing these hobby jobs. Like you're just kind of creating stuff for fun. and like all the material needs. It's it's almost like you know, imagine like we all have robots. I could just like loan you my robot and your rope that robot could go like paint your house and fix your deck and plant a garden and build you a pool. And like you just have to pay for like the materials. and it's it's a whole different world.
Lance Cottrell (28:39.448)Yeah.
Lance Cottrell (29:01.122)Yeah. Yeah. And and I sort of relate to this because I reject the term retired. you know, I feel like I'm way too young to be retired, but I certainly don't have to work anymore. You know, post exit, I'm in a situation very much like that where what I do is entirely by choice. Advising startups is because I want to advise startups. you know, I make wine for fun because I want to make wine. right, these are all optional choices because I'm still passionate and involved. And the idea of just, you know, checking out and playing golf or something is is incredibly boring to me. But, you know, I have a low threshold for boredom. I want to be involved in doing interesting things.
Brian Bell (29:44.055)Right. Yeah. And I think that's gonna be the hardest transition for people, when they aren't told what to do. Right. But they'll have AI to kind of guide them through stuff too, right? You know, what color is your parachute was the book I read in my twenties to try to figure out what career I would do in my life. And, you know, I think we'll have a you know, the AI will be able to guide you through that.
Lance Cottrell (29:54.894)Well,
Lance Cottrell (30:04.246)It it'll certainly be a good a good sounding board, I guess.
Brian Bell (30:06.913)Yeah. So what what would you like to see founders build in the next few years? What do what's very fundable for you?
Lance Cottrell (30:13.654)You it really is finding those interesting niches that I'm not aware of. I'm not a big fan of the hundredth company going into the same area. So if I could give you a template off the top of my head, it almost by definition is something that's got far, far too many people in it. So I'm much more interested in someone who often is sort of mid-career. They've been out there, they've experienced things, and they have understood a need for something and why it hasn't been filled yet. Right? Why is this gap persisting over time? And has an idea of how to come in and fill that? Those are the things that are interesting to me. Although there is one caveat to that, where I see a lot of people come in and they'll say, This is a green field, this is a new idea, no one's thought of this. And I'll look at the problem and say, but this is sort of obvious. So if there are no other competitors in the space, and often they're right, they've done a Google, there's no other companies doing it. The question then is. Where are all the bodies by the side of the road of the companies that have failed at this in the past? Because the reason they aren't there now isn't that no one else has thought of it. It's that they're all dead. And now the business question in your pitch deck that you have to answer really is, what is it that you understand and are doing differently that will allow you to survive when all of these other companies ended up, you know, dying for some reason?
Brian Bell (31:36.235)Yeah, it's kinda like the timing question, right? Is it the right idea at the right time with the right team? but I think I I like that framing, which is, you know, sometimes it's an obvious idea that should exist with a ton of traction and no dead bodies. That's a very fundable startup, right? Yeah.
Lance Cottrell (31:42.102)Mm.
Lance Cottrell (31:55.284)Exactly. Right. You know, it's it's either no dead bodies, which would be in some ways surprising, or it's dead bodies that you can do forensics on. Like I've gone in and dissected the dead bodies, and they all have this common mistake. And so therefore, they didn't have this technology, or they tried to sell it this way. They went after this market, they they structured the deals in this kind of way. And in some way, you need to have a really good answer to I'm doing it this differently, and that'll allow me to win.
Brian Bell (32:00.46)Yeah.
Brian Bell (32:09.079)They didn't have this technology, yeah. They didn't have AI in this way or whatever it is. Yeah. Yeah.
Lance Cottrell (32:24.19)And ideally, you've done some experiments to show that you're right. You know, navel gazing is is is not that productive.
Brian Bell (32:31.671)Well let's wrap up with some rapid fire questions. what's something you believed with total conviction, you know, five or ten years ago that you've changed your mind on?
Lance Cottrell (32:42.506)I really think it was that funding thing. I really believed that for startups, raising capital was the key to success. And increasingly, yeah, I'm I'm a firm believer that the vast majority of startups that I talk to, that's just not the right answer for them.
Brian Bell (32:58.933)And I think that's definitely the case in angel groups that I've been in. I've been in a couple myself when I was starting to get into this 10 years ago and versus the kind of venture backable things, right? Like you go to, you know, like your YC demo day, speedrun, whatever, you see some very VC venture scalable things. And I think angel groups do see a lot of kind of like, you know, they'll see some venture scalable things, but you'll also see a lot of lifestyle things where, you know, like this isn't very venture scalable. This is like a small business kind of loan thing.
Lance Cottrell (33:14.99)Mm-hmm.
Lance Cottrell (33:29.422)That's right. Yeah, they they want you to invest on an equity basis, but there's no way they're ever gonna be taking over the universe.
Brian Bell (33:35.191)Yeah, it's not gonna go a hundred X, right? It's like great, I'm getting it at a five cap or a ten cap, but I don't think this gets to like a billion dollars, right?
Lance Cottrell (33:42.7)Yeah, exactly. And with a similar failure rate to the big guys. So the math doesn't work.
Brian Bell (33:47.177)Right. The math doesn't math on that, right? Yeah. When you have a you know eighty percent or seventy percent failure rate and it's not venture scalable, oof, that's that's a tough place to be. what's a belief you hold now that most smart people you respect disagree with?
Lance Cottrell (33:50.679)Yeah.
Lance Cottrell (34:13.868)There seems to be a big move right now to the was it nine nine six kind of work schedule? And you know, people saying, with AI, you know, you're gonna crank all the time. And I just absolutely don't believe that's the right way to go. That in my experience, really high quality thinking, high quality, intense cerebral activity caps out at about four hours a day. And after that, I think you're spinning your wheels. And almost all of this is performative. So I really when I was doing my start.
Brian Bell (34:46.869)really no reason to work eight hours a day. I mean, like if you like you like back in the industrial revolution before kind of the labor movement, I think in the eighteen eighties and the triangle fire and all those things, you know, people were working like ten, twelve hour days, six days a week. You know, they were working a nine nine six back then.
Lance Cottrell (35:07.128)Right. Well, and if it's just physical labor or if you're just cranking widgets, you're putting license plates on a machine or something, yeah, you can do that all day long. But your ability to really be at peak thinking. And the more AI comes out, you know, the more we have these tools, that is your job, is to be being really sharp, thinking really hard, really deeply. And the more fatigued you get, the lazier your thinking gets. the fall off, in my opinion, is very, very sharp.
Brian Bell (35:28.556)Yeah.
Lance Cottrell (35:35.862)And I believe strongly that, you know, when you hit that barrier, go do something else. Read a book. Do something that recharges you, that you know, brings something else to your life. Like I when I was running my startup, I did not miss my kung fu classes because Choi Lee Foot.
Brian Bell (35:49.465)what kind of kung fu? Joili foot. Okay, which i what animal style is that?
Lance Cottrell (35:55.302)it's neither it's it's a combination of southern and northern. So the the founder studied both south and northern styles. and then also we did a lot of Tai Chi as martial as as martial art, but troleafoots a hard style. but it was the
Brian Bell (36:02.028)Wow.
Brian Bell (36:08.139)Yeah. I I always knew we're nerds of a feather, but I didn't know why. But like that is like one of the nerdiest things you said. I did Wing Chun twenty years ago out of college. I always wanted to learn k kung fu and had a really good time, did it for a few years. Yeah.
Lance Cottrell (36:12.739)Ha ha.
Lance Cottrell (36:17.815)yeah.
Lance Cottrell (36:24.438)Yeah, I know. I love I love the discipline of it, the focus, totally unlike the other stuff I was doing. jumping around, yelling, hitting things is very cathartic. you're definitely not thinking about your business when someone's foot is coming towards your head. You know, it's it is a is a meditative in an interesting sort of way.
Brian Bell (36:27.445)Yeah.
Brian Bell (36:33.665)Yeah.
Brian Bell (36:37.974)Yeah.
Brian Bell (36:41.781)You gotta have that physical hobby, I think. A lot of people don't have that physical hobby. And you gotta have something where you use your body. It could be yoga. I play basketball, do yoga and work out at you know, weight train and stuff. I don't do martial arts anymore. I kind of wish I did. I think I think it's a really healthy practice to get into. You get really connected to your body, you know.
Lance Cottrell (36:58.38)I yeah, no, I dropped out as well. yeah, I I dropped out when I moved from San Diego where I started to DC for the customers, and it's an obscure form of Kung Fu. There were no other schools with the same style. And I thought about at that moment starting from scratch again and
Brian Bell (37:16.311)Yeah, like I'd hate to go back to Wing Chun at this point. I'd I just feel like, man, to be new again at it, like, yeah, that would that would not be great.
Lance Cottrell (37:24.376)I mean I should be embracing beginner mind, but not so much. Exactly. But you know, and then before that, I guess I'm attracted to one single single person sports. Before that I was a fencer, so
Brian Bell (37:27.157)Yeah, Zen Mind beginner mine, right?
Brian Bell (37:37.449)wow. That's awesome. That's that's really unique. Really yeah, I hear I hear it's really easy to get a fencing scholarship at college. Like if you're a fencer,
Lance Cottrell (37:44.876)I believe it. Yeah, because it's it's sort of it's obscure and it's a it's a it's a niche sport. Yeah, I went to UC Santa Cruz and despite the fact that they have almost no you know strong sports programs, their fencing program is excellent. I was never competitive in it, but they had a former Olympic coach and it was it was yeah, a really amazing, you know, one kind of corner of competitive athletics in that generally hippie school.
Brian Bell (38:00.022) Wow.
Brian Bell (38:13.109)All right, you gotta give a give us the tour of your your background. You got some books and figurines. I think that's Darth Vader. tell us a yeah, tell us a
Lance Cottrell (38:19.298)That is. That's that's a that's actually assigned to Darth Vader. So signed by the guy in the suit. a lot of this comes from San Diego Comic Con from when I was down there and I've I've been for years the the dragon over there with the that's made out of like both both creatures are made out of like found materials. So the dragon's spine is like a motorcycle drive chain, and the polar, you know, the pauldrons on that guy over there are spoons that have been welded on and spattered with.
Brian Bell (38:42.449)wow.
Brian Bell (38:48.331) wow.
Lance Cottrell (38:48.942)we've got what is it? Sort of a Art Nouveau kind of Darth Vader ship over there. and the books are actually my wife's books. So my wife writes horror novels, and this is her series of love crafty and modern day miskotonic sort of dark academia.
Brian Bell (39:07.583)Wow. Very cool. And is that a Viking boat as well?
Lance Cottrell (39:11.884)That is, that is. So I've got a lot of Viking heritage. And my it's actually a needle point that my grandfather made many, many, many years ago that I ended up inheriting. And I've got some more Viking ships in a fjord that I picked up when I was in Bergen, along with a sword and a crossbow.
Brian Bell (39:22.805)Yeah. Yeah, we did we did the the whole Norway, Sweden trip, Finland. never been to Scan Scandinavia, so we finally went a few years ago. It's just beautiful, amazing country. And you and you make wine. What are you growing your own grapes? Are you buying the grapes?
Lance Cottrell (39:38.626)Yeah.
Lance Cottrell (39:42.348)Yeah, no, I've got a couple acres of pinot noir up here. So we w largely we're we're grape growers, so we sell to local wineries. and then I take maybe most years I take about five hundred pounds, make a dozen cases of pinot noir, press off a little rose as well, and they're great, you know, to share with friends.
Brian Bell (39:45.749)Wow.
Brian Bell (39:58.593)And the Pinot Noir is it's ready faster, right? It only needs a you know, eighteen to twenty four months in the bottle, right, before it's
Lance Cottrell (40:04.344)Yeah, you can drink it usually pretty young, although most commercial wine is designed to be consumed basically on release. right. Ninety percent of wine is consumed within twenty-four hours of purchase, something like that. but I personally love Pinot Noir probably between five and seven years after its vintage date. That to me is the sweet spot. It's kind of mellowed and smoothed and evened out, whereas, you know, cabs maybe give it a couple more years. But you know, it's all about your palate. I
Brian Bell (40:06.453)Yeah.
Brian Bell (40:11.585)Right.
Brian Bell (40:21.751)Mm.
Lance Cottrell (40:32.728)Biased towards younger wines. I like the fruit, whereas other people love those secondary flavors that come out with older wine. and so I think with with a lot of life, it's really a matter of having confidence in your own taste and your own opinions rather than looking for that guidance, following the score, being beholden to someone else when it's not actually your truth.
Brian Bell (40:54.401)So what's your what's your privacy stack look like as somebody who's been thinking about this for decades? Like like what's like if I if I peered into your application stack or your privacy stack at your house or your computer, like what kind of apps and technologies are you using?
Lance Cottrell (41:10.2)So I don't use a lot of technologies, right? I've got a VPN for those times when I need to do that. my general approach is to try to keep the things I want to keep offline, offline. So, you know, things like I care about physical access. so hold your property through you know, a trust of some sort and get your mail, you know, your mailing address should not be your house. It should be a P.O. box of some sort. So all the packages and everything else goes there. I'm very careful about what kind of photos of my my family, my house, my location end up online because I know those things are very, very trackable and identifiable. So deciding what are your priorities. And for me, it's physical safety. I've had stalkers come after me, people who got paranoid about some of the stuff that I did with the government and assumed that I was personally like there was this one guy actually accosted his mailman who resembled me and posted it to the internet.
Brian Bell (41:57.151)wow.
Lance Cottrell (42:10.294)Like got in this guy's face and yelled at him because he thought that I was wearing a mailman costume and trying to spy on him. and you know, so I ended up doing a lot of research. So, who is this guy? Does he have a gun? Well, what do I need to worry about in this kind of scenario? but I've always sort of been aware of that kind of threat, particularly with some of the stuff that I've done. so that's the piece of it that I care about. And then in general.
Brian Bell (42:11.84)Wow.
Brian Bell (42:24.491)Yeah.
Lance Cottrell (42:37.142)I live in a pretty open way. I like I do podcasts. I I talk very freely about my my background, my history, the struggles that I've had. and that's not something I care to hide because I don't need to. I'm not worried about trying to look good for my next job.
Brian Bell (42:40.427)Right.
Brian Bell (42:51.733)Right. Yeah, that is is certainly freeing. you can say and do things a little bit more freely when you're not under the thumb of the corporate machine. Right.
Lance Cottrell (43:02.958)That's right. Yeah. You don't need to scrub your entire social media to make sure you didn't say something that would politically offend your next potential employer in in whatever direction. Whereas now I'm like, yeah, whatever. I believe what I believe.
Brian Bell (43:16.897)So what's a question you wish people asked you but never do, or rarely do?
Lance Cottrell (43:37.656)People make a lot of assumptions, I think, about the path that you take. And they want to talk about the success and the way the business went. And I'd really love to spend more time talking about some of the struggles. I think we learn more from failure than from success. And so we tend not to start with those kinds of stories. People are often uncomfortable telling them. But You know, we went through a lot of hardship in the company. And I think it's really interesting to explore those and to understand that both from a business, you know, logistics perspective, but also just from an emotional perspective, it's really informed me. You know, I've earned all the gray hair that I have up here.
Brian Bell (44:16.321)Yeah, I call that the positive tip of the iceberg. Right. Like there's like this five or ten percent that you see of people, you know, on their on the podcast, you know, on their social media, on their website, like their blog posts, their Instagram or Facebook, and you're like, wow, their lives are amazing. But you don't see the the other ninety percent of of the struggle, right?
Lance Cottrell (44:38.274)Yeah, I did a an episode of Feel the Boot called My Worst Day as a Founder. And it's about one weekend. in 2000 during the dot com collapse, when a million dollar angel investor pulled out, a $10 million acquisition fell through, and my father-in-law passed away. And, you know, all in the same weekend. And that was, you know, a low point. But it's the kind of thing that happens in a startup that.
Brian Bell (44:55.484)All all all in the same like few days.
Lance Cottrell (45:04.981)You know, you think things are on fire. You think you know, we're like, well, look, things are bad, but we've got two different ways that we're kind of in a great position and are gonna pull through when both of those got rug pulled at the same time, and my headspace got totally disrupted by the family. and you've still gotta to try to survive. You know, we must have dodged death at anonymizer by a hair's breadth more times than I can count. We spent 18 months with less than 30 days working capital in the bank.
Brian Bell (45:33.502)wow.
Lance Cottrell (45:33.826)during that era, you know, and
Brian Bell (45:36.033)constant thread of like, are we gonna be build make payroll? Are we gonna build make payroll? I'm watching my my wife go through this right now. she's a an AI startup founder and she's like, I don't think we're gonna take payroll this month. You know, it's like, you know.
Lance Cottrell (45:38.55)E every time.
Lance Cottrell (45:47.616)Right. I mean, I never I never missed payroll for anyone but me. And yeah, the founders missed payroll, but no one else had to. but yeah, you know, it it it was rough. You know, we had a situation where we owed our colo provider a quarter million dollars and ended up
Brian Bell (45:52.245)Yeah, the founders. Yeah, the founders aren't gonna take payroll. Yeah. Yeah, yeah.
Brian Bell (46:00.385)Yeah.
Lance Cottrell (46:07.852)Convincing them that in fact there had been a check that had cleared long enough for them to unlock the cage and allow us to take all of our gear out of there over 24 hours without taking the site down so we could move somewhere else. And then then they went bankrupt and we settled f with them for 10 cents on the dollar by reaching out to the the liquidation firm. You know.
Brian Bell (46:19.329)Jeez.
Brian Bell (46:26.112)Wow.
Lance Cottrell (46:28.994)The the kind of extreme business practices that you have to get involved with as a startup just to survive and survival becomes the only criteria that matters because if you're not alive, you're not around to succeed later.
Brian Bell (46:41.429)Yeah. What is a colo for people listening that don't even know what that is?
Lance Cottrell (46:44.122)Old school. So this was you know, one of these data centers, but you'd actually have your own gear in it. So they'd sell you a cabinet with a data connection and power and you'd load it with your own equipment into the into the rack, your own servers. Yeah.
Brian Bell (46:51.499)Yeah.
Brian Bell (46:57.003)Your own server. Yeah. Yeah. That's amazing. Can you imagine? you know, like how yeah, back in the day you'd have to physically go set up your startup. You know, now you can just sit there on a laptop and Bali or anywhere, you know, and just do it.
Lance Cottrell (47:03.01)Back in the day.
Lance Cottrell (47:11.722)Exactly. Right. And it's it's it's managed perfectly. It's always up. It's redundant. It's backed up. Like all those things that we had to deal with.
Brian Bell (47:16.597)Yeah. That's amazing. Well, I really enjoyed the conversation. Where can folks find you online?
Lance Cottrell (47:23.428)I'm always at LinkedIn, so Lance Cotrel at LinkedIn. Also you can get all of my startup advice. The blog is at feel the boot dot com and the videos are at feel the boot on YouTube.
Brian Bell (47:36.215)Great. So I'll say thank you so much, Lance. Yeah.
Lance Cottrell (47:38.68)Thanks much. Great talking to you.
