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Oct 7, 2018 · 23m · top-founders

1170 Playbook he used for taking 3 companies public f\rom scratch

Will Herman · 13m spoken Nathan Latka · 7m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

Serial entrepreneur and angel investor Will Herman joins Nathan Latka to discuss lessons from his 40-year career, covering early failures, a $500M IPO and buyout, M&A strategies, and foundational principles from his book, The Startup Playbook.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 35.1% of the talking time here. How this is scored →

Nathan as informed peer 4.5 Guest teaching 4.2 Guest disagreement 1.5 Nathan pushing back 1.8
05100:0010:0020:001:05–4:23 · Nathan as informed peer 4/10 Introducing Will Herman and His Startup Beginnings in 1979 Nathan digs into Will's background and biggest losses, asking specific probing questions about accounting fraud at Quintus. Will is cooperative and candidly shares his story.4:24–6:49 · Nathan as informed peer 6/10 Herman's Biggest Win: VueLogic's IPO, Sale, and Management Buyout Nathan probes the mechanics of VueLogic's sale and subsequent management buyout, questioning why they did not carve out assets earlier. Will explains SEC regulations and the logic behind acquiring back non-core revenue streams.6:49–10:38 · Nathan as informed peer 3/10 The Origins and Core Lessons of The Startup Playbook Will explains counter-intuitive startup lessons from his book, particularly why founders should start slow to move fast and disregard the pressure of immediate hyper-growth. Nathan acts primarily as a receptive interviewer facilitating the points.10:41–13:56 · Nathan as informed peer 4/10 Mid-Roll: Nathan Latka at SaaStock Dublin Announcement Following an event promo mid-roll, Nathan introduces his concept of the 'funded company tax' regarding zombie startups. Will agrees and advises addressing misalignment directly with investors.13:56–18:04 · Nathan as informed peer 5/10 Building vs. Buying: Exploring the Value of M&A Nathan and Will contrast buying versus building companies, with Nathan sharing his personal preference for acquisitions. Will breaks down the strategic difference between core tech development and inorganic capability acquisition.18:04–22:38 · Nathan as informed peer 5/10 Evaluating Private Equity Roll-Up Models and Operational Excellence Nathan references private equity roll-up giants like Vista Equity and Constellation, prompting Will to evaluate the operational requirements of roll-ups before breezing through the Famous Five questionnaire.1:05–4:23 · Guest teaching 3/10 Introducing Will Herman and His Startup Beginnings in 1979 Nathan digs into Will's background and biggest losses, asking specific probing questions about accounting fraud at Quintus. Will is cooperative and candidly shares his story.4:24–6:49 · Guest teaching 5/10 Herman's Biggest Win: VueLogic's IPO, Sale, and Management Buyout Nathan probes the mechanics of VueLogic's sale and subsequent management buyout, questioning why they did not carve out assets earlier. Will explains SEC regulations and the logic behind acquiring back non-core revenue streams.6:49–10:38 · Guest teaching 6/10 The Origins and Core Lessons of The Startup Playbook Will explains counter-intuitive startup lessons from his book, particularly why founders should start slow to move fast and disregard the pressure of immediate hyper-growth. Nathan acts primarily as a receptive interviewer facilitating the points.10:41–13:56 · Guest teaching 3/10 Mid-Roll: Nathan Latka at SaaStock Dublin Announcement Following an event promo mid-roll, Nathan introduces his concept of the 'funded company tax' regarding zombie startups. Will agrees and advises addressing misalignment directly with investors.13:56–18:04 · Guest teaching 5/10 Building vs. Buying: Exploring the Value of M&A Nathan and Will contrast buying versus building companies, with Nathan sharing his personal preference for acquisitions. Will breaks down the strategic difference between core tech development and inorganic capability acquisition.18:04–22:38 · Guest teaching 3/10 Evaluating Private Equity Roll-Up Models and Operational Excellence Nathan references private equity roll-up giants like Vista Equity and Constellation, prompting Will to evaluate the operational requirements of roll-ups before breezing through the Famous Five questionnaire.1:05–4:23 · Guest disagreement 1/10 Introducing Will Herman and His Startup Beginnings in 1979 Nathan digs into Will's background and biggest losses, asking specific probing questions about accounting fraud at Quintus. Will is cooperative and candidly shares his story.4:24–6:49 · Guest disagreement 2/10 Herman's Biggest Win: VueLogic's IPO, Sale, and Management Buyout Nathan probes the mechanics of VueLogic's sale and subsequent management buyout, questioning why they did not carve out assets earlier. Will explains SEC regulations and the logic behind acquiring back non-core revenue streams.6:49–10:38 · Guest disagreement 2/10 The Origins and Core Lessons of The Startup Playbook Will explains counter-intuitive startup lessons from his book, particularly why founders should start slow to move fast and disregard the pressure of immediate hyper-growth. Nathan acts primarily as a receptive interviewer facilitating the points.10:41–13:56 · Guest disagreement 1/10 Mid-Roll: Nathan Latka at SaaStock Dublin Announcement Following an event promo mid-roll, Nathan introduces his concept of the 'funded company tax' regarding zombie startups. Will agrees and advises addressing misalignment directly with investors.13:56–18:04 · Guest disagreement 2/10 Building vs. Buying: Exploring the Value of M&A Nathan and Will contrast buying versus building companies, with Nathan sharing his personal preference for acquisitions. Will breaks down the strategic difference between core tech development and inorganic capability acquisition.18:04–22:38 · Guest disagreement 1/10 Evaluating Private Equity Roll-Up Models and Operational Excellence Nathan references private equity roll-up giants like Vista Equity and Constellation, prompting Will to evaluate the operational requirements of roll-ups before breezing through the Famous Five questionnaire.1:05–4:23 · Nathan pushing back 2/10 Introducing Will Herman and His Startup Beginnings in 1979 Nathan digs into Will's background and biggest losses, asking specific probing questions about accounting fraud at Quintus. Will is cooperative and candidly shares his story.4:24–6:49 · Nathan pushing back 3/10 Herman's Biggest Win: VueLogic's IPO, Sale, and Management Buyout Nathan probes the mechanics of VueLogic's sale and subsequent management buyout, questioning why they did not carve out assets earlier. Will explains SEC regulations and the logic behind acquiring back non-core revenue streams.6:49–10:38 · Nathan pushing back 1/10 The Origins and Core Lessons of The Startup Playbook Will explains counter-intuitive startup lessons from his book, particularly why founders should start slow to move fast and disregard the pressure of immediate hyper-growth. Nathan acts primarily as a receptive interviewer facilitating the points.10:41–13:56 · Nathan pushing back 2/10 Mid-Roll: Nathan Latka at SaaStock Dublin Announcement Following an event promo mid-roll, Nathan introduces his concept of the 'funded company tax' regarding zombie startups. Will agrees and advises addressing misalignment directly with investors.13:56–18:04 · Nathan pushing back 2/10 Building vs. Buying: Exploring the Value of M&A Nathan and Will contrast buying versus building companies, with Nathan sharing his personal preference for acquisitions. Will breaks down the strategic difference between core tech development and inorganic capability acquisition.18:04–22:38 · Nathan pushing back 1/10 Evaluating Private Equity Roll-Up Models and Operational Excellence Nathan references private equity roll-up giants like Vista Equity and Constellation, prompting Will to evaluate the operational requirements of roll-ups before breezing through the Famous Five questionnaire.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 57.9% · guest 42.1%0:00 · Nathan 57.9% · guest 42.1%3:00 · Nathan 23.1% · guest 76.9%3:00 · Nathan 23.1% · guest 76.9%6:00 · Nathan 17.5% · guest 82.5%6:00 · Nathan 17.5% · guest 82.5%9:00 · Nathan 50% · guest 50%9:00 · Nathan 50% · guest 50%12:00 · Nathan 38.1% · guest 61.9%12:00 · Nathan 38.1% · guest 61.9%15:00 · Nathan 13.4% · guest 86.6%15:00 · Nathan 13.4% · guest 86.6%18:00 · Nathan 34% · guest 66%18:00 · Nathan 34% · guest 66%21:00 · Nathan 52.3% · guest 47.7%21:00 · Nathan 52.3% · guest 47.7%
Sharpest disagreement ▶ 9:10 Rejecting the venture capital hyper-growth consensus

Will forcefully pushes back against the standard venture capital ethos of moving fast from day one, arguing that premature acceleration wastes massive amounts of capital.

 Hardest push from Nathan ▶ 6:09 Questioning why VueLogic wasn't carved out initially

Nathan challenges Will on deal structure, asking why they didn't carve out the unwanted division at the point of sale rather than waiting a year to buy it back.

 Biggest teaching moment ▶ 6:12 Educating on public market carve-outs and SEC rules

Will explains regulatory and operational realities to Nathan, clarifying that public companies cannot easily spin off major revenue assets beforehand and SEC rules require a one-year waiting period for MBOs.

 Nathan holds their own ▶ 13:12 Formulating the funded company tax thesis

Nathan synthesizes the structural misalignments between VC funds and founders into a distinct conceptual framework explaining why zombie startups linger unnecessarily.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Introducing Will Herman and His Startup Beginnings in 1979 4312 Nathan digs into Will's background and biggest losses, asking specific probing questions about accounting fraud at Quintus. Will is cooperative and candidly shares his story.
Herman's Biggest Win: VueLogic's IPO, Sale, and Management Buyout 6523 Nathan probes the mechanics of VueLogic's sale and subsequent management buyout, questioning why they did not carve out assets earlier. Will explains SEC regulations and the logic behind acquiring back non-core revenue streams.
The Origins and Core Lessons of The Startup Playbook 3621 Will explains counter-intuitive startup lessons from his book, particularly why founders should start slow to move fast and disregard the pressure of immediate hyper-growth. Nathan acts primarily as a receptive interviewer facilitating the points.
Mid-Roll: Nathan Latka at SaaStock Dublin Announcement 4312 Following an event promo mid-roll, Nathan introduces his concept of the 'funded company tax' regarding zombie startups. Will agrees and advises addressing misalignment directly with investors.
Building vs. Buying: Exploring the Value of M&A 5522 Nathan and Will contrast buying versus building companies, with Nathan sharing his personal preference for acquisitions. Will breaks down the strategic difference between core tech development and inorganic capability acquisition.
Evaluating Private Equity Roll-Up Models and Operational Excellence 5311 Nathan references private equity roll-up giants like Vista Equity and Constellation, prompting Will to evaluate the operational requirements of roll-ups before breezing through the Famous Five questionnaire.

Statements from this episode (10)

Assertion Partly supported
Herman: Quintus grew to $60M revenue and IPO'd before collapsing
“That was an actually an investment, not one that I was active in, although I did help the VCs spin it out of a of another company. Company was called Quintus. High flyer went from nothing to sixty million in revenue, went public.”
Will Herman Oct 7, 2018 ▶ 2:43
Disclosure
Herman lost nearly $500,000 in his Quintus investment
“I had I had pretty close to half a million dollars.”
Will Herman Oct 7, 2018 ▶ 4:01
Assertion Supported
Herman: Viewlogic IPO'd in 1991 and Sold for ~$500M in 1996-1997
“We started that in 1984, took it public in 91 sold it in 9006 or 97. About a half, it was about a half billion dollar deal.”
Will Herman Oct 7, 2018 ▶ 4:35
Assertion Supported
Herman raised $60M venture funding to buy back $120M of Viewlogic revenue
“A year after we sold it, we bought back about 75% of the revenue, 80% of the revenue of the company in an MBO and then ran that company. Oh, it's a management buyout. We actually got venture funding about 50 or sixty million dollars and bought the bought about…”
Will Herman Oct 7, 2018 ▶ 4:57
Assertion Partly supported
Herman: Viewlogic Had $160M-$175M TTM Revenue at Acquisition
“Trailing 12 was probably 175,000,160 million.”
Will Herman Oct 7, 2018 ▶ 6:37
Insight
Herman: Raising venture capital locks founders into pursuing an exit
“Most people don't realize that once you take venture capital, you are stuck. You're going for an exit, and that's what everybody wants.”
Will Herman Oct 7, 2018 ▶ 12:16
Insight
Herman: Unmotivated founders should directly ask investors to wind down
“Speaking as an angel investor, no investor wants to be involved in a company that the founders don't want to be involved in. So, you know, it's just going to take a long time to die, and it's going to be a long, painful death. So, so the best way, as hard as i…”
Will Herman Oct 7, 2018 ▶ 12:30
Insight
Herman: Build In-House When Strategy Is Core; Acquisitions Fail To Integrate
“When what you're working on is sort of core to your long-term strategy I feel like there's no, no better value of developing that in-house, of creating that yourselves, because you can't get your hands around the technology, or the customers, or the employees,…”
Will Herman Oct 7, 2018 ▶ 14:51
Disclosure
Viewlogic burned up to $30M building CAD tech before abandoning it
“Over time, we probably put, you know, 20 or thirty million dollars into building the product. Eh, maybe that's a little high, but not, that's the order of magnitude. It's pretty close.”
Will Herman Oct 7, 2018 ▶ 16:09
Disclosure
Viewlogic eventually acquired a CAD tech competitor for $60M in stock
“Stock deal. It was probably, probably worth 50, 50 or sixty million at the time.”
Will Herman Oct 7, 2018 ▶ 17:32
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