The real cost of taking a company to a $200m+ mark with Dave Hersh

Shamil Malachiyev: Hello everyone, and welcome to this episode of The Founder's Code. Today's guest, Dave Hersh, has built a company from open source roots to a huge hundred-million-dollar-plus IPO. He hit all of the external markers of success, but what happened right after was more profound than any business win. Dave, I want to start right in the middle of it. You once said that real reinvention isn't a pivot — it's more of an ego death. When did that death begin for you?

Dave Hersh: Yeah, you'll find in my commentary that there are a lot of parallels between the company and the individual. I think companies also have a form of death that they need to go through in renewal, and maybe that's a constant cycle. But certainly as leaders — we go into the business world, being founders and creating companies, and ego is not necessarily a bad thing. Ego is how we are shaped by society to believe that we are unique and different. And that's really good. It helps us get out of childhood and become something in the world and create our own mark in a unique way. The problem is it's based on identities and roles that we play, but not necessarily who we are at our core. And those identities, which can help us emerge in the world and become who we are, start to become really heavy baggage over time.

And we don't see it. What once was this outfit that we put on becomes a suit of armor that weighs us down as we go further along. A lot of times, what I found with founders, myself included, is that those identities, those roles, those desires to be loved in a particular way, cause us to make bad decisions. They start to weigh on our ability to be a real steward for our company. And as a result, the likelihood of failure goes up. So I saw firsthand both how much stress founders are under, how miserable they can be in those periods of stress as they're trying to build a company — and I also saw that even if they succeeded, if they were in the 10 percent of startups that were successful, when they were done, they fell into a depression. And the ones that failed also went into a depression. It was this terrible cycle where you're either stressed while you're doing it and depressed if you're not doing it, because there was so much attachment to the company. There was so much of that merged identity. In other words: if the company fails, I fail. My life is meaningless. And that's a really, really heavy weight.

So when I talk about ego death, or forms of it — it's kind of egoic dissolution. Just turning the volume down on those roles that we play. What that does is open us up to be our best leader. It allows us to be a steward for the company rather than identifying with it. And the likelihood of success goes way up, because the likelihood of being in that 10 percent is no longer burdened by decisions that are egoic in nature.

Shamil Malachiyev: And from the book that you shared with me, Transitions — one part of it says that our identity is basically tied to power, through fame. And in order for us to take a new role after the company, after selling the business or after the business fails, we have to drop that power leverage — to be okay with being vulnerable with who we really are. Are people going to like me as just who I am, without attaching the company to it? What do you think?

Dave Hersh: Yeah. And I would say, if they can get to that place while they're still running the company, that's beautiful. Once power is attached as a source of your happiness, that's problematic, as you can well imagine. Anything around power, fame, money — we've known this forever. Aristotle wrote about it. These are false gods. And I think it's okay to play around with them. You get out of college and you're younger and you want to see what it's like to make money, or to try to be famous — sure, play around with it. What you'll find, though, in doing that — the direct experience — is that it doesn't really make you happy. We do know this. And what I'm also saying is that, in the case of entrepreneurship, it dramatically increases the likelihood of failure, because you start making decisions that are meant to find or maintain that power, or make that money. And suddenly your decisions are burdened by that.

And I did that. You talked about my company, Jive. From the outside it was a success: bootstrapped for a long time, raised money from Sequoia, went public on the NASDAQ, a $200 million company, all these things. But the reality was, I was burdened by insecurity and fear, and I made the wrong decisions. I've talked about how it was us and Atlassian in the early days — we were the exact same company, doing the same thing, for a long time. I kind of took a pivot, turned in a different direction that I thought was the right thing to do. It was really somebody else's playbook. It was not my intuition. And that ultimately killed the company. Even though it became a big company, it was the wrong path. And I watched Atlassian continue to do their thing and turn into a $50 billion company. These are the burdens we carry once we are trying to earn our validation as a human through our business: every decision we make is going to be burdened with the weight of that pressure we put on ourselves.

Shamil Malachiyev: Yeah. And right now, having gone through all of that journey, you're much wiser, you have a different perspective. But when you were a child, did anyone play the role model of entrepreneurship for you?

Dave Hersh: My first entrepreneurship endeavor was in seventh grade. I used to buy ninja weapons out of the back of magazines — nunchucks and swords and things like that. Yes, I was basically a young arms dealer. I would sell them to the neighborhood kids at a markup, because I could buy them really cheap — wholesale — and then sell them. So that was my first example. And I did not have an entrepreneurial hero, so much. I just kind of grew up doing it for myself.

And I think it was problematic. I never had a mentor, and as a result I was a rough-hewn piece of wood. It took me a long time to shape myself into something a little more happy and joyful and able to flow through the world. Childhood was — it was great, but it was kind of a blue-collar town that I grew up in, and there weren't a lot of people who focused on entrepreneurship or made money. It was outside the scope of what I knew.

Shamil Malachiyev: Because both of your parents were teachers, am I correct? How did their vision of how they wanted your life to pan out impact your path?

Dave Hersh: Yeah, that's right. You know, they were always really proud of me and didn't really put too much pressure on me to be a particular way. They trusted that I would be on the right path, which is great — a really good situation to be in. And I felt a sense of freedom. I also felt a fierce desire to take care of everybody. That was the thing that was built in me from the ground up: I need to take care of the people in my life. I need to be a sheepdog. I need to save. I need to be a hero. So early on in my life — we talked about the outfits we put on, the roles we take on — for me it was Superman. I needed to be Superman. I needed to be powerful and strong, take care of everybody, make a lot of money, and do that thing. And that was maybe empowering at first, and it certainly got me on a path to where I am now. But at some point that superhero costume became pretty heavy and problematic.

Shamil Malachiyev: Well, you were the oldest son, am I correct?

Dave Hersh: I was the only son. I had a sister who was six years older, and she was an indie rock musician. So while I was playing high school football, she was in Rolling Stone magazine. So that's a little bit of pressure too, to try to make my own way in the world.

Shamil Malachiyev: I get that. Coming from my family — my father was an entrepreneur, and I have three siblings, all younger than me. And I've always had that pressure of having to lead the family: safety, security. That creates a lot of pressure to aim higher, be more ambitious, always try to make more money. Did your parents ever have that kind of influence?

Dave Hersh: No, but I saw the pain of not having money growing up when I did. My parents got divorced when I was pretty young — I was five — and I always felt like I had to protect my mom, be her Superman, take care of her, and then take care of the rest of the family. I took on a burden early on to be an antidote to the other men that were in my mom's arena at the time. And that weighs on you after a while. They weren't directly putting it on me, but I think indirectly I took on that mantle of: I will take care of the family. I'll be the one that saves everybody. And that was the fuel for my fire early on.

Shamil Malachiyev: Did it ever feel like you were missing out on some part of your childhood, when you had to grow up quicker to become the protector, to become more serious about life?

Dave Hersh: Yeah, I'm sure there is some of that. I didn't feel the freedom to experiment with lots of different ways of being. And it was partly that timeframe — the late seventies and then the eighties — and the town I was in was a tough town. I think I was a really creative, smart, quirky kid. Shy. And then my parents got divorced and I immediately went into school, and I got beat up, and I was like, oh my God, I can't be this kid anymore. I can't be the quirky smart kid anymore. I have to do something else. And so it was this will to power: I'm going to be somebody who can survive in this world, and I'm going to be tough and I'm going to be strong. And that became karate, or breakdancing, or lifting weights, and then becoming captain of the football team — all these things that were following traditional male archetypes, because that was the only way I knew to survive, where I wasn't going to get killed and I could be validated.

But I think what it did was put off any experimentation with who I really was. I didn't get a lot of chances to do creative work or play music like my sister did — things that might have been more expansive and maybe felt a little more aligned with who I was. It was kind of like being in prison, where you align with a tough group and just survive. And I'm thankful for it. It certainly made me streetwise, and I have a lot of really wonderful friends from that era. But it was maybe a little more rough of an existence than would have been ideal for who I was as a kid.

Shamil Malachiyev: Did that prepare you, maybe psychologically, to become more prone to persevering when things get tough?

Dave Hersh: Yeah, for sure. For sure. There are positives and negatives, and I think it's all a gift at this point. I get to give back from — what people would call trauma now, whatever happened — these are the gifts that I have to give back. It's all shaped who I am right now. And obviously I'm doing pretty well and I'm happy, so I wouldn't look down at any of it or rewrite the script. But you could certainly play the game of going: well, what would it have been like if I'd had the chance to explore different energies early on, and not be subject to that type of environment?

Shamil Malachiyev: Yeah. Let's talk about your first days leading up to starting Jive. What was the main drive? Were you trying to prove something to someone, or was it curiosity — trying to see what you're capable of?

Dave Hersh: I mean, when we started Jive, it was because my wife at the time was going to grad school on the East Coast. The dot-com collapse had happened. There was no business anywhere. I had gotten into USC for screenwriting at the same time she had gotten into Yale for design. And we had to decide — we'd just gotten married — well, what do I do? So I said, I'll let you go do your program and I'll figure out something else. I followed her to the East Coast, and there was no work to be had. My first day on the East Coast was September 11th. I was supposed to go in and meet the Jive founders that day in New York, and couldn't get in, obviously. So the company was started because there was nothing else really to do for me. I didn't go into it with "I'm going to go be really rich and do something." It was: no, I've got to take care of my family now. I have a wife, I'm responsible, and there are no jobs to be had, because this is now post-9/11 New York, and the ashes are still all there. So that was when the company was really founded. And we had to bootstrap it, because there was no money to be had. It wasn't like I went into it with grand schemes of being really wealthy. It was survival.

Shamil Malachiyev: And how was your relationship with the other founders? I guess what I see is that at the start it's important for the right people to come together to form a team. What was your team like?

Dave Hersh: Yeah, it was great. We all got along really well, and still do to this day. I love them. They're great. They're younger than me, so it actually worked well with them. They were fresh out of college, and I was doing business development work for a dot-com here in San Francisco, where they were interns originally. Then they started working for the company, but they were doing this open source project on the side. And the open source project was way more successful than the dot-com we were all working at. They wanted to turn it into a real company. We were all going to New York, because our wives were going to grad school out there, and I decided to take on turning this open source project into a real company. And it was great. We had a really wonderful ride, especially those early days, before taking venture — building out a really successful, profitable company. It was a great relationship. I love them, still have great conversations with them, and we'll share old pictures with each other periodically over text.

Shamil Malachiyev: And how long did it take until you started generating sufficient revenue to cover the main expenses?

Dave Hersh: The reality was we never took a dime of financing in the early days. It was literally all funded from revenue. It was selling a consulting project at first, and the consulting project paid for our low salaries. Then, once we turned the open source project into a paid product, we started getting cash in the door. So it was all paid out of cash flow from the start. And it became a $12 million business over five years. Then we switched gears — that was when we raised money from Sequoia, went to sell to the enterprise, and end-of-lifed that old revenue. Which is the thing — Atlassian kept doing that thing of selling to developers, and we went a different direction. 20/20 hindsight, right? But that's kind of become the work that I do: just saying, look, what I did because of insecurity and fear — I made this switch and it didn't play out. Now I get to give back from those mistakes that I made.

Shamil Malachiyev: What are some of the biggest memories of your time building Jive?

Dave Hersh: There are many, but the best ones are always just the camaraderie — the times I had with the team. My mantra back then was that we were all what I called good-natured ass-kickers. I called them G-NAKs. And I think that was the essence of it, and a lot of me too: I care deeply about human connection, but I also want to create stuff in the world. I want to make sure we are building things that matter. And even though I was still subject to some of those ego tendencies, the core was one of wanting human connection. So my favorite memories are just those little moments in between — laughing at the bar, going around the office, because you were in an office back then. You don't have as much of that anymore: those office moments of supporting people, laughing, meetings, the silliness, the Nerf gun wars, whatever it is. Those are the things that you remember, that stick with you.

Shamil Malachiyev: Were there any make-it-or-break-it moments within the formative years?

Dave Hersh: Yeah, for sure. I think that switch I talked about before — end-of-lifing all the old products and then building out this new product for enterprise customers — was one of those. You had to kill off the old in order to go in an entirely different direction, and you don't know if it's going to work. That's a big switch to make. And having since worked with a lot of stuck startups — my first book was about why startups get stuck and how to turn them around — I see it all the time. Many companies need that near-death experience. You have to get close to the edge, and that forces you to really re-evaluate what matters, who you are as a business, and to find a path where success and happiness can work together and everybody's firing on all cylinders. So we definitely had that at Jive. We had a big shift. Whether it was the right one, you could certainly question, but we had one. And it made us change the shape of what we were doing pretty dramatically.

Shamil Malachiyev: Was there a moment when you realized that you were actually building something that could be huge?

Dave Hersh: I don't know if there was one moment, because it's this series of steps where you just keep seeing yourself as bigger than you are. And as CEO, you have to keep shifting — shape-shifting into: okay, I need to be something else now. I need to change my leadership style for what the business needs at this point in time. So there was not a flip-the-switch moment so much as all these little micro-moments of: oh, we're actually much bigger than I thought. And now I need to change things, and now I need to change things. Those are nice moments, but they're really important, because as a CEO you need to change how you show up. And not every CEO has the ability to do that. A CEO in the early stage, when you're doing customer discovery and founder-led sales and all that kind of stuff, is very different from a CEO of a hundred-person company or a five-hundred-person company, when it becomes much more about facilitating dynamic tension across different departments and executives, setting a big vision, all those things. Not everyone can shape-shift in the right way. But it's fun if you can.

Shamil Malachiyev: Did you ever struggle with imposter syndrome? How did you navigate it?

Dave Hersh: Yeah, for sure. I don't know if I did it well back then. I'm probably better now. I would just bury it back then — I'm just going to do it. I think it was a fake-it-till-you-make-it approach. I did have enough chutzpah to say: I'm just going to do it. I have fear, I worry about this, but I'm going to do it anyway and see what happens. Sometimes it works, sometimes it doesn't. So I'm grateful to have that ability to work through the fear. It's not that I don't have fear — it's that I will still move forward. And that was built into me. That might have been one of those things I took from my town of origin: that ability to just keep going. It doesn't matter if you're scared, just go. Walk into the forest and see what happens. There was a lot of that keep-going, keep-moving-forward approach. Eventually it works.

Shamil Malachiyev: Because a lot of people look at all of these strong founders and think: oh, those are really brave people, they don't fear anything. But in reality, like all humans, they do fear — they act despite the fear, because they understand that to succumb to that fear would be to live a limited life.

Dave Hersh: Exactly. Yeah. My daughter went into surgery today, and she's really afraid of being put under — this deathly fear of being put under. But she also is like: I'll do it. I'll do the breathing exercise, whatever I need to do. I'll find a way to make it work. And she says, even though I'm a scaredy-cat — and I'm like, you're not a scaredy-cat at all. It's the opposite. You're doing this despite the fear. That's the thing. You keep walking forward and facing the fear. And that's the part that's really important. If you don't have any fear, you don't try that hard — or you might be a psychopath. Fear is really important. It helps us stay on our game and make sure we're showing up solidly for the people around us and doing a good job. If I had no fear about doing speaking events or that kind of thing, I just wouldn't try as hard, and I wouldn't produce a great event. So I think fear is really important.

Shamil Malachiyev: Were you scared of the whole IPO journey, whenever it was floating around in conversations?

Dave Hersh: I moved out of the CEO role right as we started the IPO process. And that was — it was an unfortunate way it was handled. I was going through a personal crisis at home, and the company was doing exceedingly well, but I was having a hard time, and the board didn't know how to help me. They were kind of clueless about what to do with emotions, as people were — especially people in the VC world. So I had a personal crisis, and I knew that I was losing my family, and I said: I need to step down. I don't think it's right for me to be the public-company CEO. But I was thrashing at the time. So it was handled poorly, but it was ultimately the right thing for me to do. Once I got out of that position of being the CEO, I was just chairman for a while. I was kind of off, and I didn't really care as much about the company. I wasn't in it anymore. So the IPO process was just happening. It wasn't my job anymore.

Shamil Malachiyev: Did you feel like, in order to make the company a success, you had to sacrifice a lot of time, a lot of the relationship with your family — important years of your daughters growing up, or time spent with your wife? Were you really distant at that time, because of all the stress that goes along with a growing company and VC pressure?

Dave Hersh: Yeah, for sure. Before we took on that money — we were a bootstrapped company for five years, so it was a little easier to balance it. But once you took money from Sequoia and you're trying to build a huge team and grow really fast and turn it into a public event, it was a few years of very intense work that did take me away from the family, and it was very hard. Ergo the personal crisis I talked about. Yeah, that was challenging. It would be challenging for anybody. And I see a lot of people in that position now, where they're still in the CEO seat, but now they have little kids and they're trying to do family. It's hard, but it's doable — if you set the right boundaries, and you have coaches and support, and you know how to create a sense of leverage for the company, so it doesn't require as much effort on your part to do all the things.

Shamil Malachiyev: Yeah. How did that IPO change you? Having exited the CEO position, having a lot more money in the bank account, having a bit more time for yourself — how was that life?

Dave Hersh: I think there's a sense of relief, for somebody who grew up without a lot of money, to suddenly have money — there's a little bit of relief. But the peacefulness of having the exit doesn't last very long before you get depressed. I'm now doing talks on this for founders: how to avoid the post-exit depression. Founders really get obsessed with exits and returns and making money, not realizing that on the other side of that is the potential for this postpartum depression, where you fall into a slump because you don't have the sense of purpose anymore. And just trying to do it again doesn't work. It's a really challenging process. So yeah, I guess it changed my life. But I remember right when it went public, it just kind of felt like an emptiness. Because it wasn't really about the money — it never was. It was about purpose and meaning. And now I'm watching my company from the sidelines, being run by people who cared about the money and were slowly running it into the ground. And that was hard.

So I'm not saying money doesn't matter. Sure — if you want to take care of your kids and your family, have some freedom in your life to go do what you want to do, these are all important things. But it only does so much. It doesn't matter as much as entrepreneurs seem to think it does. And I think that's part of the challenge that we all run into.

Shamil Malachiyev: And how long after you'd gained your freedom did you decide: I should join Andreessen Horowitz, I should get involved as a VC? Because I thought at that moment you'd kind of put blame onto the whole VC world for accelerating your life, making work harder, and leading up to the moment where you felt empty.

Dave Hersh: Yeah — and I'm not anti-VC. People do put me in that bucket. I'm not. I'm just anti too-much-VC-too-quickly, and anti VCs who show up poorly and don't support the inner lives of the CEOs they work with — VCs who just care about the return on their investment and don't really know how to work with humans and treat them like humans. That's the problem I have. I think it's a system that's become way too big. When I got out of college, it was $8 billion a year in venture invested. Now it's like 330 billion. There's not that many companies. I also think that AI is going to disrupt it, in such a way that a lot of the companies they used to invest in are going to be subject to being cleaned out by AI — other companies just automating everything they're doing, and cheap infrastructure. So it's going to be hard to find the companies that VCs used to invest in. As an industry, I think it's going to suffer over the next ten years in a pretty dramatic way.

But that aside — I didn't know what to do. I was struggling. I was a post-exit founder that wanted to find something to do, something to keep myself active creatively and find meaning. And I really appreciated the time at Andreessen Horowitz. They were great. They were really smart and very good at what they do, but it just wasn't my happy place. I was not happy there, and it took a long time to find that. I tried private equity. I tried sitting on boards, incubating companies, starting companies. Then I started buying companies that had been chewed up and spit out by the investors, and turning them around. That was how I came to my first book: I now had perspective on why, systemically, only 10 percent of startups are successful — but founders believe they have an 83 percent chance of success — and psychologically, why are startups only successful at 10 percent? What are the traps we get into as founders that propagate that failure rate, and how do we break that? That's really what the first book was about. Systemically, this is why it's messed up. Psychologically, this is why we're messed up and why we create failure. But if you do find yourself stuck, here's what you do — here's how you transform a stuck company into something that matters, that has sustainability and the ability to bring great people on and build something from the ashes of a company that has faced that near-death experience we talked about.

Shamil Malachiyev: And can you tell me about RipFog? You don't talk much about it.

Dave Hersh: Well, I mentioned that I did try to found a company. Yeah, that was in my struggles. I was like, well, what do I do? I'm depressed at home. I've got to do something. I literally gave myself a timer. I said: I'm going to start something in three months. I'm going to start something new, and that's it. Which is insane, but I was just so miserable, I knew I needed to get out of the house and do something. So RipFog was a science experiment that I did with some of my old Jive colleagues, to build out a product for a new category. But we were really just ahead of the game, and we just couldn't figure it out. We took seed capital, we tried to make it work, we pivoted a little bit, but within a year I was like: it's just not working, and I don't want to raise more money on top of something that we haven't validated. So we did sell the business, and actually made a return on it ultimately, from the company that we sold it to. It was probably the equivalent of a T-bill in terms of the interest rate we got on it — we didn't make money on that startup. But we had fun.

And I think, for me, that was thrashing around trying to find meaning again, and trying to do it using old techniques. You talked about that book, Transitions, by William Bridges. The classic mistake we make is: we have an old self that needs to die a ritualistic death, and we need to grieve it, and then we need to go through this liminal place in between, and then, after a while, a new self can be reborn. The problem is people get into that forest of limbo, in between old self and new self, and it's really scary — and they go back to the old identity.

Shamil Malachiyev: You call it — reversive regression? Or regressive reversion, that's the one.

Dave Hersh: Regressive reversion, yeah. That's a Jungian term. Good call. Which is: I'm going to go back to my old self, because that's what I know. That's an identity problem. People know me as a CEO and they respect me, and I'm validated in that world, so I'm going to go do that again — even though that's not what your soul wants. That's not what your subconscious is telling you you need to do as you age and grow. But we get so scared without that identity. That period where you're like, well, if I'm not that person, then who am I? — that's a scary place to be. And what happens is people go back to old identities. Spiritually, psychologically, they're no longer in that place, but they're trying to make it work. It's like getting plastic surgery to try to look 27 forever, or men getting sports cars in their midlife. All these things are grasping for an old identity that used to serve us well, when some part of us knows it's no longer serving us. But it's too scary to confront the emotions that are important to confront to get to a place where a new self can emerge.

Shamil Malachiyev: I myself have struggled with the same thing, and the biggest hardship for me is that I feel bad about letting my old version die. Because in order to be reborn into somebody I want to be — with maybe less resistance towards actions I deem to be productive and good for me — I need to say goodbye to the old me. And that feels like a betrayal of sorts, because I still feel tied and obliged to the old part of me for getting me here safely. How did you navigate that question in your mind?

Dave Hersh: Poorly at first, clearly, because I tried to do it again and repeat something. In a way, I think I knew what I was doing was not right, and I was trying to do it differently, but I was still propagating an old identity as the means to make myself happy — and it couldn't anymore. And so that's when I knew I had to go through this liminal place, to really become a ghost and to grieve the old self. I think that's really important. Again, it's an emotional thing. One of the things I learned during this whole process is that real change is not intellectual. It's not me saying: okay, I'm done with that old self, now I'm going to go through a liminal place, and then I'll be a new self. It's crying your eyes out, and screaming and yelling. It's anger and fear, and all of these things are inside that. And if you don't face those directly — walking through the dark forest is walking into the emotions, no longer suppressing them, but feeling them and moving them through.

Part of that is to grieve the old self. To say: thank you for getting me here. I don't need you anymore, but I love you. And I'm going to go into the forest now. You can cry and do whatever you need to do to grieve that old self. And then you need to embrace: I don't know — I'm nothing right now. I am a ghost. I'm just me, drifting in between these worlds. And what happens is that when you are that ghost, you are subject to all these frequencies and energies and people and rooms and meetings and ideas that you wouldn't normally have access to. Instead of having the blinders on — I'm a founder and I'm doing this thing — they're gone. You rip the blinders off. Now you have the antennae up, and the antennae can hear all these frequencies and start doing all these really interesting things, and pull you in directions you never thought possible.

But you don't get to that point unless you really let go of the old self — unless you really grieve it and become okay with not having an identity. And the business world is terrible at this, because we're expected to go to parties and be asked: what do you do? And you have to put yourself in a box in order to be validated. I am this person, I'm CEO of this, and I did these things. Those parties are awful. Don't go to those. Be done with those parties. Go to different parties, where people can just see you as a person and listen, and you feel connected. Or go to meditation retreats — whatever it is that makes you feel like you can be grounded again. Because you have to have that grounded sense in order to start feeling the pull of the universe.

It sounds really groovy, but it's the same as a startup, actually. In a startup, if you try to say "this is our product" and you just push it on the world — push, push, push — you're not going to get very far. What you have to do is say: I like these ideas. And then listen to what a customer is telling you. Eventually, if you have your antennae out, you can start to feel the pull of the market and what they really want, as opposed to selling, selling, selling. I think the same is true for us as people. We have to get away from putting ourselves in boxes, saying this is who we are — and then rip that all apart, grieve it. And in that open period, where it's just antennae, you can start to hear what the world really wants from you and what you are uniquely suited to do.

And then, if you listen to it and you start running experiments, in the same way you would with a startup, it's amazing. And you get to do that. You get to talk to people — like you, doing this thing. This wouldn't happen otherwise. I do these all the time. I get to meet with people and talk to CEOs about the relationship with their father and what that really means. I get to write books about how humanity is going to be the next phase of capitalism. I get to do all these great things that would not have happened if I was stuck in those old identities, because I just wouldn't have had the time and space to do it.

Shamil Malachiyev: I think the whole current structure of VC startups — the whole of capitalism — is a perfect escapism. You never have to question the meaning of life. You just have money. That's the goal. That's the IPO, the dream goal, which sometimes takes 20, 30, 40 years to achieve. And you suffer through because you want to prove something to your parents, because they loved you only when you came with accomplishments, or to society — that you're worth something. And you just keep at it, until at some point you're like: wait a minute, I'm playing someone else's game. Why am I even doing this?

Dave Hersh: Yeah. Are you taking the red pill or the blue pill? You can admit that you're in the Matrix at some point, and really get out and see life for what it is and live something beautiful and joyful — or you can distract yourself till you die. And that's kind of it. We have tools now that'll keep you distracted. You could do heroin, or you could just do your mobile device. You could just do Wordle. It doesn't matter — these are distraction devices. They're meant to say: you know what, capitalism is really screwed up, and it's creating a lot of really screwed up, anxious, unhappy people. It works at scale, at some level. But man, does it create a lot of anxiety. Does it not allow for genuine joy. And there are no rituals to support the collective flourishing of us as humans anymore.

So what I'm trying to do is reimagine businesses as these systems of human flourishing. Think about it: as AI takes over the means of production — as AI starts doing all these jobs — what are humans doing? They have to do what humans do well. They have to be the ones forming connections, and empathy, and active listening, and humor, and love — all these things that only humans can do. So we have this window of opportunity. If we don't have to do Dilbert-level jobs, where we're sending spreadsheets around and typing up emails anymore, let's do the things that humans do well. Let's reimagine these businesses as something that allows for the collective flourishing of the people inside them. And I think those are the ones that are going to be wildly successful. I think human-led moats are going to be the way of the future. That's what I'm writing about: businesses that really embrace human connection, creativity, and desire are the ones that are going to create systems people really want to be a part of. They want to feel alive. Everybody wants to. And capitalism has not allowed that yet. I think that's about to change.

Shamil Malachiyev: And how does that tie to — once I heard a VC say: the more traumatized I see the founder, the more he's trying to prove to everyone that he's worth something, the more likely I am to make money off him. And at the same time, there's another quote I've heard: the more we heal, the less ambitious we become in terms of capitalistic success. How do you think that ties to the future of building a new wave of successful companies, where people are more healthy but, in those terms, less ambitious?

Dave Hersh: I hear this all the time. And I think that level of ambition could work in this last phase of capitalism. I don't think it works as well in the next phase, because people are going to have infinite choice and decide where they go. You can't hide behind being an asshole anymore. In the past you could, because what happened was: yes, they had fuel. They wanted to create something, and in that zero-to-one path they'd create a lot of momentum, and they built these companies. And they could raise a lot of money and build buffers around the asshole to make it work for people — even though it was not a great system, and people didn't like their jobs, but they made money and could grow their careers. I don't think you can hide behind that anymore. What's happening is that all of that is being exposed.

So the fuel for breakout companies of the future is not going to be that egoic fuel of "I'm trying to earn the love of my parents, and screw everybody else, and I'm going to create a dog-eat-dog culture." People can go anywhere. Customers can go anywhere. The differentiation people like that would build was technical in nature: they'd build better products, and they'd have the network effects. They would do all the kind of classic last-phase-of-capitalism competitive advantage moats. That doesn't exist anymore — not the same way.

Shamil Malachiyev: Everyone's smart now.

Dave Hersh: Right. If the system itself is really just the connections of humans — that's what's holding it together. It's not held together by ones and zeros. AI can do all that, and everybody has access to AI. So if you've leveled the playing field from a technical standpoint, what's left? Human connection. And are you going to gravitate to the companies that are run by assholes in that world? Why would you? There's no difference. You don't have what Elon had built, and Bezos, and all that. You couldn't do that in this next — ten years from now, it's going to be really hard to do. Certainly for some deep tech — obviously, if you're building rockets and things like that, those are companies that are going to have a moat out of the gate, and they're going to raise a lot of money to do that. But for the majority of companies that have been differentiated based on ones and zeros, all that goes away.

Shamil Malachiyev: In your life, I know that you went through a phase with the group called the Art of Accomplishment, and you went through the Hoffman Process. What role did that play in helping you unlock your other mental states?

Dave Hersh: Yeah, I did a lot of inner work. Hoffman was maybe the starting point. It was the first time I realized that emotions are what get in the way of real change — meaning, a resistance to emotion. Meeting those emotions, letting them flow through: that's how change happens. It's like the source code. If you want to really do change, you have to do it at the somatic and emotional level. It's not up here — it's the brain that creates a lot of the suffering. So that started the process, and then I took on all manner of therapeutic modalities: anything from primal scream to somatic work to sweat lodges, meditation retreats, Internal Family Systems. There was everything. I kind of just swam in it. And my thought was: I'll go do it all, and then I'll come back and package it up for leaders, to say — here are the things I think are going to have the biggest bang for the buck. Here's what's going to make a big difference in your ability to lead and build great companies that matter.

So I've been doing that — looking at this intersection of conscious work and results, so I can help business leaders confront the things that are getting in the way of joy and success, because the two really go hand in hand. And you talked before about that ego fuel — what do you do if you don't have it, if you're not traumatized? What happens if you don't have that fuel? What I found is that there is a deeper, more inexhaustible fuel source underneath it. Ego fuel burns bright and it burns quick. It may work in that zero-to-one stage to get a company off the ground, but I often get brought in when the company starts to scale and it's still being run by a jerk — or somebody who's showing up as a jerk. They're never a jerk at the core. They're really lovely people who have these wounds that are causing them to act like a jerk. And that's when I get brought in, once the company starts to grow, because it'll fall apart otherwise — and they can go through the transformation process. If they do, they show up with a much deeper, more inexhaustible fuel source. And that's soul. That's their essence — whatever you want to call it. It's their purpose, their meaning: I'm here for a reason. That's why I do what I do. If you can tap into that, you can go the distance. And as I mentioned before, companies in this era are going to be defined by people who can do that, because you can't just disguise it by building tech around you anymore.

Shamil Malachiyev: I think that is a very tough task. Following from my journey — I remember my earlier days, when I was twenty-something, starting my first companies. I was trying to prove to my father that I could do it. He was an entrepreneur as well, and very controlling. I thought: I can do it too, I'm a man. And I was trying to out-compete him. But then after a certain point I realized that was the wrong way of approaching things. I stopped putting him on a pedestal, started seeing him as a human being, and stopped competing with him. And what I found is that my relationship with my father became better — but my inner motivation dropped drastically. I wasn't trying to become stronger, better, do another Ironman, start another company, show that I'm growing. It was a long period of: I kind of wanted the result, but I didn't have another mode of motivation to fuel my passion and drive me through. What would you say would be a shortcut, if there is one, to navigating that journey to finding that inner fuel? Because from what I know, it's incredibly hard to find, and the process can take years.

Dave Hersh: Yeah. So — when I got out of college, I was frustrated with my college experience, and my dad was a college professor. I worked with him on designing a curriculum for his university, and it was about the design of a good life. What does a good life mean, throughout history — from Aristotle, Thomas Jefferson, anybody? What is a good life, and how do we look at it as a whole and design around it? And one of the things we would do is ask the students: if your life were a movie, what would it be about? So that you stop thinking "here's me as an 18-year-old, and all I care about is this 18-year-old," and you think about all of it — you at five years old, you on the deathbed, you later in life. Why are we watching this movie? Why do we care? It was a shortcut to ground people into whole-life thinking, and a chance to contemplate and feel that thing that truly moves us. The thing that is the reason we're on this planet. Why do we care about this character? What are the hurdles they have to get over? What does a beautiful life for them look like? If they confront those demons, those challenges they have inside — and we all have them — what's the redemption for that character? And what's the tragedy if they don't?

That, to me, was a shortcut to get a glimpse of what's really inside — what we care most deeply about. And to get out of the matrix requires that thinking: I am not my patterns. I am not these modules that were programmed early on. I am not this person trying to earn love in the world by whatever means necessary. There's something much deeper in there. And if I can touch that source in some way, then I can start shaping my life around doing and being what I'm meant to do on this planet, and why I'm here.

And I think there are also shortcuts with psychedelics — I've done a lot of that work too. It's a chance to take the elevator up and see the whole way. But it doesn't replace therapy. It doesn't replace the work you have to do. I was describing it like a hundred-acre plot of land, and you're going to build a house, and a fire pit, and tiny houses along it — you're going to build out this land, and you still have to build it all with your bare hands. Psychedelics are like taking a helicopter up and looking at it from above and going: oh, the house needs to go over there, and that's where the little tiny houses should go, and we should build a trail over here. It's that. It doesn't replace anything, but it gives you that perspective. Whatever it takes for people to just touch essence — to really touch their character, their source, their soul, whatever you want to call it: who's looking out from behind the eyes. That consciousness is really powerful, and it helps.

Shamil Malachiyev: And that I hear about a lot. I've recently been hearing about analytical idealism as a way of understanding the world, and they talk a lot about using psychedelics to allow us to get a sense of more than just the visual, the touch, the tactile. Do you question yourself on the more religious kinds of questions — what's the meaning of life, what is our purpose, and how can we define that?

Dave Hersh: I think it's just part of the human condition. People use different words for it, but we are all in quest of that essence. Religion is one way people talk about it, but so is psychology. It's all there — just different language. Scientists may use different language for it than people who are religious, or people in the world of clinical psychology. But we all have it. It's built into our programming as humans. We want to feel alive while we're here. And capitalism doesn't help us feel alive a lot of the time. So we have to really work hard to do that inner work, to face emotions, to go through that forest, to emerge on the other side and have a felt sense of why we're really here and what we're doing.

And I think once you're there, motivation doesn't go away. It just changes to something much more beautiful, something much more about: oh, we're all part of the same system. That's the feeling you get when you get to the other side — it's all love. To some person, that's going to sound like: you hippie, you're crazy, what are you talking about? I'm trying to build a startup. But it's a felt sense that, when you get to the other side, that startup suddenly becomes a vessel for connecting with people and uplifting humanity. And man, does that feel good. And you don't have what we talked about at the beginning — you're not stressed while you're doing it and depressed when you're not. You're just here, doing what you're meant to do. What's wrong with that? That's what we all seek. And I think we have this window of opportunity right now, with AI taking over the jobs that kept us in cubicles and shallow thinking, to rise above that and be very human again — and enjoy the ride.

Shamil Malachiyev: And as I know — are you writing another book at the moment?

Dave Hersh: Yeah. Basically, it's about how the businesses of the future are going to be differentiated based on human means. As all of the traditional moats as we've known them go away, to me the last frontier of competitive advantage is human in nature. So it's about channeling human connection, creativity, and desire through our companies as the basis to build companies that matter in this next era.

Shamil Malachiyev: And why does this motivate you? Why is it important to you?

Dave Hersh: It's just part of my source code. I love, love, love thinking about and feeling human connection and psychology and philosophy and what it means to be human. And I was forged as an entrepreneur — it's the world that I know. So I bring those two things together. I understand entrepreneurship really deeply, and I still work in businesses. It's not like I've gone off into the ether or the ivory tower. No — I work on annual operating plans and budgets and marketing content, and I work with CEOs. I still have my hands in the pot. I know what it's like to be in the throes of being a founder and working in capitalism. But I also get to bring this other element to the work that I do. And I think it's the confluence of those two things that really is meaningful to me. It's always been there, since the beginning. I always just loved philosophy. I loved big ideas, and I loved being able to see the human side — what's going on under the surface of these things we're doing all day. Can I use that to help people build better companies, to be more successful along traditional means, but also to be happier individuals who are supporting the collective flourishing of the planet?

Shamil Malachiyev: And what is your view on Stoicism?

Dave Hersh: Stoicism? Yeah, I'm a big fan of Stoicism. My dad was a philosophy professor, but I didn't grow up just with Stoicism. I look at a lot of different areas, and I think there are a lot of really powerful practices and ideas in it. I never go all-in on just one, but I'm sure there will be elements of Stoicism built into my book, just because it's a good one to pull from. It's well considered.

Shamil Malachiyev: What would you say to anyone who's running a startup, trying to prove something to the world — who doesn't feel that happy inside, feels stressed a lot, but is sensing that there is another way to do these things, without the suffering, with maybe more connection to their inner self?

Dave Hersh: I would listen, first and foremost. It's hard for me to just say something — a lot of times, when I help founders, I take them through a cognitive behavioral therapy-style approach, where we look at the automatic negative thoughts. We look at where they're getting stuck, where they're feeling stuck, and we look at what the voice in the head is saying. Usually it takes a while to distill it down to the essence of it, but for a lot of founders that voice, oftentimes, is: if the company fails, I'm a failure, and my life is over. There's some form of that sentiment. So I would work with them to listen, and try to get to whatever their version of it is, and what the associated emotions are with that negative thought, and what actions they're taking that are subconsciously being burdened by it — so they can see how this is happening. And then what we try to do is rewire it. That's CBT, which is a pretty good thing for founders. A lot of times it's very easy to work with, and it's intellectual. But it's a starting point to say: you can see what's happening. These are the negative thoughts in your head. And if you can work with those and come up with alternative beliefs — alternative voices that are much more reasonable and balanced and kinder — it starts to open things up a little bit.

So that's one of the things I like to do: I try to shine a light. I take therapeutic approaches, and in a 30-minute workshop I can shine a light on where the work needs to be done. I saw Raiders of the Lost Ark — probably my childhood movie — where he goes into that room and puts the staff in, and when the sun hits the right point, it points to where the Ark is. That's kind of what I do. I point to where the work is, and shine a light on: this is the stuff you need to work on. There's nothing I could tell them. But if I can help them help themselves, usually you get to the right subject matter, and at least get them to a place where there's a little more lightness, and they can see: yeah, there's work to be done, and that work will help me be more joyful and create more successful companies.

Shamil Malachiyev: And if you could have five minutes with your younger self — with little Dave, who has to play the role of protector, who's not sure how life's going to unroll — what would you say to yourself?

Dave Hersh: Yeah — I'd probably listen. But for the kid, the five-year-old kid: I think he just needs to feel loved and seen. He's great. You don't need to prove anything to anybody. You don't need to save anybody. I think that's the essence of it. And it's hard to tell people that in a way that takes root. But if they feel seen and valued — the more of a presence you can be in people's lives where you can just make them feel that way, seen, and ask them questions that get the answers through them — I think that's a nice role to be able to play for folks. So I think it would be that: just play catch with him, and let him know that he's loved for who he is, not for what he does.

Shamil Malachiyev: I've really enjoyed this conversation, because I think it relates to pretty much everyone. I really think it touches the journey that every single founder is going through, knowingly or unknowingly, at different stages and different times. And stories like yours help shine light onto this journey — that it doesn't have to be made out of suffering, chasing results just to try to make more money short term. It can be something more of a spiritual journey: discovering yourself, discovering love and the life around you, through creating value and building companies with people you like. And I'm really excited to see more of the next steps of your journey, becoming a therapeutic coach to a lot of the founders who will try to find that transition into the AI era. I think that's going to help a lot of people live a healthier, happier life.

Dave Hersh: Yeah — and, ironically, more successful. Along traditional means.

Shamil Malachiyev: Ironically, more successful. Thank you so much for your time today. I really hope we can have another podcast a few months down the line. I'm trying to uncover more of the psychological side of things, and it would probably be interesting to dive into more psychological topics.

Dave Hersh: Great, excellent. Well, I really enjoyed today. Thanks so much for having me on.

Shamil Malachiyev: Thanks, Dave.