EP 001 | Growth Under Pressure: Why rushing to market almost killed my 4th startup — with Tanner Haas, founder of Freedom Chat

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Show Notes

A product rushed to market. A hack that compromised 30,000 users. And a founder forced to hit pause before it was too late.

In our debut episode, four-time founder Tanner Haas reveals how a string of challenges — from losing money on protein powder sales at 18, to driving Uber to stay afloat, to recovering from a near-fatal beta launch — shaped the disciplined approach that saved his fourth startup, Freedom Chat.

He shares the lessons every founder needs to hear about building a real foundation and making smarter bets with scarce resources.

• ‍Watch on YouTube: https://www.youtube.com/watch?v=NZeCHarS1Qo
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• Listen on Spotify: https://open.spotify.com/episode/76kraSNnY71QeocTSAZz9U?si=rOd4QZkzRuOwYSiVXPC2Nw
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• Listen on Apple Podcasts: https://podcasts.apple.com/us/podcast/why-rushing-to-market-almost-killed-my-4th-startup/id1832545032?i=1000721546022

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🌟 Highlights

• Loses money on every protein powder sale at 18 — and what it taught him about margin
• Keeps startup dreams alive by driving Uber during a brutal pivot
• Recovers from a hack that compromised 30,000 beta users
• Stops chasing growth and invests in product development first
• Stretches cash runway by hiring fractional talent instead of full-time staff

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⏱️ Timestamps / Chapters

00:00 — Intro & setup
01:30 — Discovering privacy concerns and founding Freedom Chat
03:45 — Raising $1.25M pre-seed and product validation
06:20 — First business failure and the Uber pivot
10:15  — Beta launch hack and the dark moment
14:30 — Slowing down and building the right foundation
19:00 — Managing cash burn and knowing every expense
24:20 — Fundraising realities and investor relationships
29:45 — Fractional vs full-time hiring strategies
32:00 — Book recommendations and daily CEO habits
34:00 — CTA & wrap-up

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Transcript

[00:00:00] Tanner Haas: And that beta version was compromised. We didn't implement our end end encryption properly. There was some back doors and just overall the product was hacked.

[00:00:12] Eric Josovitz: Welcome to Growth Under Pressure. I'm Eric Josovitz, founder of AdaptCFO. Here to pull back the curtains on what it takes to scale fast from near crisis moments to epic turnarounds. The leaders of the fastest growing companies in the US unpack the solutions that got them through their toughest moments.

Ready? Let's get started. Tanner, thanks for joining me today. I already know a lot about you and your background. I understand how you've been able to grow under pressure, so let's dive into your story. Sound good? Sounds good. Thanks so much for having me here. Of course, of course. So take us back to day zero.

What problem were you obsessive enough about that it made you start Freedom Chat?

[00:00:59] Tanner Haas: Um, well, you know, we met from a previous company I had, it was called Zika, SEO. It was an online marketing website, creation and design firm. And we had dozens of clients and a few of 'em were in the conservative space. So we managed those websites.

I would look down and I'd see some of these comments, and some of the comments were deeply concerned about the invasion of privacy that's going on. And they'd say, well, government's listening to all of these apps do this. They do this. And I was like, okay, let me actually look into this myself. And when I looked into it, the amount of data that these apps collect.

The amount of unencrypted texts that are sent, each state, uh, the amounts of people's lives, quite honestly, that are ruined because an image or video gets leaked. Um, that was enough of a, a poll where I'm like, okay, let's, let's do something about it. So I talked to five people. I, I called them, I said, I'm thinking of starting this private messaging app that.

Um, we'll be able to prevent screenshots, media from being saved and then encrypted, and we're gonna rely on users memberships rather than exploiting user data. What do you think is, is that a good idea? And those all five were enthusiastically saying yes, and all five actually turned out to be investors.

So right off the bat we were, okay, let's do this.

[00:02:31] Eric Josovitz: Great. That's obviously a pain point for many people. We've been working together for a while now, so I have some insights into, you know, where you started and it's, it's great to see how you've been able to scale and, and push through those challenges. Uh, give us, give our listeners a little bit, uh, team size, user count downloads, active downloads, if you can share and what the current round looks like.

[00:02:59] Tanner Haas: So Freedom Chat has raised, we raised a $1.25 million pre-seed round that allowed us to get the product to market validated, the proof of concept. We've established some strategic partnerships with some of the most high level influencers and brands in America. Uh, we created a truly private messaging app with the ability to edit unsend, self-destruct messages.

Users can. Uh, also they prevent screenshots for your recording. Each message is end then encrypted and beyond that, we have an encrypted analysis on our website, a white paper. So really the pre-seed was let's get the product to market. Let's validate the proof of concept. And we successfully did that. And now we're raising a $4 million seed round.

We've raised roughly 1 million of that, uh, to date. From our previous beta launch to now, we've had over 25,000 downloads. If you want to count our previous beta, beta launch that's called that, we've had over 50,000 downloads. So it, it, the concept's been validated. We're weeks away from launching our Alpha product and that's really, that encompasses all of the feedback we received the past two years.

Put this on par with what I believe we'll be able to compete with the largest messaging apps in the world. We're as user friendly with more privacy and security focused features, and then a business model that enhances user trust. And we're, we're just getting started on, on the very, what I think is an ambitious mission.

[00:04:36] Eric Josovitz: Awesome. Awesome. Well, that gives us scale. Let's rewind to your first, oh, no moment. Tell me, tell me about the single highest pressure financial moment you've faced so far. What triggered it and how did you dig out? Um, in regard to Freedom Chat, correct? Yeah. Yeah. If you, you know, if you want to, if you want to rewind and go back to it, or nutrition, I, I'd love users to hear about that story.

[00:05:06] Tanner Haas: So I'll, I'll talk on, on that and then I'll get to, to Freedom Chat because I think the two kind of coincide. So my first company, I started my first company when I was 18 years old. I launched that, I moved to Miami to start it. I wanted to put my back against the wall. I was jacked up on motivational books and motivational videos.

I'm gonna do this. Uh, so I moved to Miami. I. Wrote a book to really fund the company. It was called Art of the Goal as a bestseller for one month in the motivational category. I then wrote another book, so that was really the seed money for Fitori Nutrition, and then I realized I did not know what I was doing.

I was 18 years old. I was like this, this doesn't work. And we were selling protein powder. If I had met you, then Eric, you would've really helped save me a lot of time and money because I didn't realize the economics of the business that it, for example, it cost me $25 to make a protein powder shipping was $15, sell it for $39.

I was losing money on each purchase business model. It just didn't work. I did not think it through clearly enough. It's a saturated market, so. Well, what do you, what did I do? I, I'm not gonna give up the, that's not what a real entrepreneur does. It's not who I've been reading about these biographies. They never gave up.

So I got an Uber drive, an Uber job on the side. I drove Uber basically working 12, 18 hour days driving Uber. The rest of the time. I didn't sleep on my bed 'cause I didn't feel like I deserved it. And I honestly, I just ended up pivoting the company. I learned enough about online marketing where I put, I approached an investor in Colorado.

I said, look, I know how to online market. Like I know I've spent so much time, energy, and effort learning Facebook and Instagram ads, Google ads. These products don't work. So I ended up selling all those products, basically 150,000, $200,000 worth of inventory. Sold it for just $10,000. Moved back to Colorado.

Put that $10,000 into a little stress relief supplement, which is cheap to make, cheap to ship, and I can sell it for 40, $45. And that company ended up selling that version of Fitori Nutrition, ended up selling six months later for two and a half million dollars. So it went from Uber and, oh crap, I just lost everything.

I don't know what I'm doing. To persevering a little bit, finding the right investor, selling that company six months later.

[00:07:43] Eric Josovitz: Amazing. Amazing. I want, I want you to tell us about Freedom Chat, but before we go there, do you think that it was integral to sleep outside of your bed and put that pressure on yourself to get to a place where you could turn things around and ultimately sell the business?

[00:08:03] Tanner Haas: I, I take it personal when any one of my businesses is Freedom Chats my fourth one when any of them are not doing well. I take it personal. It's an ex, it's an extension of myself. If they're not doing well, I'm not happy. I don't sleep well. So this was just like, I'm failing in my mind. Why the hell do I deserve a bed?

And that's honestly my thinking. Sounds crazy. Probably is a little bit, but I didn't think I deserved it. And then once the, the company was on sound or footing, especially once I sold the company, I was sleeping a little better. Um. I don't, so it's a

cork, I would say. Yeah. Well I think every entrepreneur that's successful has some level of crazy built in.

Um, but you turn things around. So tell me a little bit about Freedom Chat. You know, what, what is like that integral or, you know, pivotal moment or high pressure financial moment? That you faced and, and how you turned things around. Um, brought Freedom Chat to where it is today.

Freedom Chat is by far the most difficult company I've ever started.

It has the most you have to pay. I mean, every detail matters. And as you know, we launched our beta beta version, um, and this was probably 20 months ago. Took off. 30,000 downloads. 30 days. Holy crap. We're doing it. We're doing it. No we're not. There were some security vulnerabilities. We rushed the product to market and there are levels to an MVP of minimum viable product.

You cannot just rush anything out to market. There are things you need to do, especially when it relates to people's security, safety, anything like that. Um, and that beta version was compromised. We didn't implement our end end encryption properly. There was some back doors. It just overall, the, the product was hacked and that was a very dark moment.

And there was a, a decision to make. You either quit and lie down, say, bore me and, and that's it. Or you say, okay, I'm gonna learn from this. We're gonna challenge this, we're gonna harness this and it's gonna make us better. And I'm a huge fan of Theodore Roosevelt, and that's exactly what he says is, I mean, it's called the Man in the Arena speech.

And we were getting, I mean, so much bad press. Oh, look at this. What is he doing from a nutrition company starting a a messaging app? Or why is he from a marketing company? That's the man in the arena speech. The credit belongs to the person who's getting kicked in the face, who's bloodied, who's dirty, who gets back up time and time again.

It's not the people that point out how the, the strong man falls, but the one that gets up. And so honestly, I, we position the company, we pivoted, changed the name, brought in the correct individual that removed myself from a development role. We've taken our time creating the best, most secure product possible, and that's what this alpha launch is gonna be in roughly a few weeks from now.

And since that dark moment when we were, our cash was dwindling, um, I say dwindling, never again. Was it that at that low level point. Since then, we've raised one and a half, almost $2 million since that point. Um. It's just made us stronger. This is, this is how you create a product. Things are gonna take time.

You can't rush it. Uh, and just be more meticulous. The product matters. You can't claim something if you haven't actually thoroughly vetted the product can do that. And it really did make us stronger. And looking back on that, it's gonna make one hell of a story when we sell this company era, or. The where I want to take it.

We go public that look at that moment, I think there's a 99% of people would've quit after all that bad publicity after that hacked. Although, and, and we just didn't, the team put their head down, we reorganized, made some changes, accepted the blame, and then got better.

[00:12:23] Eric Josovitz: Absolutely. And I completely agree. As you know, we, we had a lot of conversations at that time.

Before we move on, take me back to that dark time that I have a different, I have a thought on how to get out of those tough moments, but I want to, I wanna know what your opinion is. Do you take off a week? Do you take off some time or do you stay in it and work overtime?

[00:12:54] Tanner Haas: I. I don't believe taking off a week is ever gonna solve your problems when you, when the problem needs to be solved by working harder and persisting more.

I, I usually, and I remember this, this was not, I didn't give up my bed, but I went on and I laid on the upstairs floor, didn't have dinner. I just sat there and had all these dark, negative thoughts in my mind. I know I told you about this and we talked. I'm like, I'm just not in a good place. And sometimes you need somebody who has been in that position, another entrepreneur who understands, and I think, you know what?

30 minutes to two hours of grieving of saying poor me is okay. And then you say, all right, back to work. I'm gonna make this happen. We're gonna make this happen. One week of I'm gonna go take a vacation. I'm so stressed. You're stressed because you're. Not working hard enough or you're not doing a good enough job so you don't deserve a vacation.

I did not deserve a vacation, but 30 minutes to put things into perspective to realize, yeah, I screwed up. We screwed up and we're gonna make it right. I think that's okay.

[00:14:02] Eric Josovitz: Yeah, that's valid. That's valid. So talking a little bit more about cybersecurity, you're in privacy, cybersecurity messaging app space where compliance mistakes can be expensive really fast.

So, looking back, which one decision had the biggest impact on cash flow or margins or, or any other metric like runway that you wanna speak on?

[00:14:29] Tanner Haas: Um, I'm thinking I'm not ignoring you. Yeah, no, it's okay. Honestly. Do things right from the beginning. We will have, we've saved a lot of cash. If you try to rush things, then, okay, instead of three months, we're gonna get out in two months.

But then that two months turns out that you actually have to go back and fix things. Now that has an additional two months, as opposed to this is how long it's gonna take. If it takes longer, it takes longer. We're gonna get it right. That's the approach we've taken since that event. It's honestly, it's, yeah, we'll spend some cash, but it's gonna conserve us cash in the long run because you wanna set a firm foundation.

That's the same thing I did with my nutrition company, is I dove into it head first. Didn't think to consult people and know more than me have been in the space before. And honestly, if you're a go-getter, if you're an entrepreneur that I wanna start this, and the next day you're starting it, sometimes the best thing to do is actually slow down a little bit, think you through, consult with people that.

Have a different perspective, have been there, have a different area of expertise. So the best thing that we've done for Freedom Chat is slow down, set the foundation, right? Spend less on marketing, more on the product. And then once the product really takes off and explodes, like I know it will, now let's plow some into marketing.

But only once you actually have a product that is worth. Paid marketing essentially.

[00:16:01] Eric Josovitz: Yeah. And I see that all the time where marketing spend is multiple times more than, than product and r and d and then they have to, you know, deal with the churn. People don't like the actual product. So it obviously makes sense to perfect it first.

And you know, it's a balance, you know, working with so many different CFOs. I see. Some are like, just throw the money, just throw it into the fire. And then, you know, working with you, you're like, look, man, every dollar counts, we're gonna, we're gonna be like, you're gonna be looking at the, at the bank account and making sure, um, it's controlled and, and things aren't outta control.

[00:16:43] Tanner Haas: That's the other thing is the CCEO, and this sounds embarrassing that I, I've ever done this, but like my nutrition company. And then I had an online autism test. Sometimes when the business is going very, very poorly, you wanna stick your head in the sand, meaning you don't wanna look at the bank account, you don't want to.

That's where you need to look in at it closer. You need to be acutely aware of every single expense. And I know I brought this up to you. There's a $39 charge that I don't like. We're stopping that charge. I know every single dollar that is in and out of the company, and that's how the CEO EO should be.

You can't offset it completely to A CFO, the CEO themselves. Any entrepreneur, you need to know every dollar that goes in and out of the company. And obviously there's levels of, you're a billion dollar company, you can't know the smaller, I mean, what comes in and out, but you really need. To have a 360 degree view of the company's financial performance, just ev you need to know like the back of your hand.

[00:17:46] Eric Josovitz: Yeah, that's, uh, that's definitely true. And sometimes I think you can be a little bit more meticulous than even I could be. Which, which is crazy. Um, if, you know, you know, in my experience in, in, you know, finance and accounting, um. But yeah, it's, it's absolutely true. So at what point did you realize that spreadsheets weren't enough?

And what finance or operation controls did you put in place?

[00:18:14] Tanner Haas: Uh, I, I mean, having, you and your team has been instrumental, but it's the same thing with the business. Like things look pretty on paper. You can have the, a beautiful business plan, but it's the execution that matters. We can have the numbers. Finagle the financials to look any way we want. Uh, and I think that's what I wanted to do early on is, oh, we can do this, this, this.

But things rarely go according to plan. They take longer than you think. They're gonna be more difficult than you think. So it's, yeah, make a plan. Stick to the plan. I think expenses are much more predictable than income, but you also just need to be very flexible that okay, we spent a little more, 'cause that took longer.

Now let's re pivot. And so, really. Spreadsheets have a place in it, but you need to roll up your sleeves literally and figuratively, and, uh, just get into the nitty gritty, understand what money comes in, what money goes out, and adapt accordingly. I think a lot of CEOs are so flexible, are not flexible enough in the sense that no part budget fits our budgets.

This, our budgets this. Well, if the product needs more dollars and it's gonna save you time and money in the long run, then you need to shift and allocate more money towards that. Just bite it, that it's gonna take a little longer, put more money there, but don't spend money on stupid stuff. That's, that's just ridiculous.

[00:19:38] Eric Josovitz: Yeah. Yeah. That's a great point. And you felt you needed to lean on a finance expert or a team that could drive that value or answer those decisions for you quickly?

[00:19:50] Tanner Haas: Yeah. And provide a different perspective. It's different when you're the CEO, especially an optimist at most. If entrepreneurs are, you think this is gonna happen because I'm gonna, will it to happen?

Well, yeah, maybe in the long run, but initially not gonna work like that. So you need somebody to actually go through the numbers, be a little more pragmatic than you would be, and then lean on their experience and expertise and craft a plan, help you execute the plan, hold you accountable to the plan. So yeah, I definitely can't do it alone.

[00:20:25] Eric Josovitz: Perfect. Now, freedom Chat raised outside capital early. Knowing what you know now, what would you change about your first funding round?

[00:20:38] Tanner Haas: Put more into the product, less than marketing. I mean, we totally validated the proof of concept. Um, very early on there was no need to put more money into marketing because it things take time to build, test the concept with as little dollars as you possibly can. And then finish building the product.

And then once you have some organic growth, that means your users have said, yeah, this is a real product. Now you can put more money into marketing. So honestly, with our raise, I mean, it, it, it's gone well. It's taken, it's taken longer, especially in the space we're in, but put more into product. And honestly, you can get by with less than you think.

If you do it right from the beginning, set the firm foundation. Don't try to rush it because you wanna, oh, we're gonna grow this, this, this. Like, just take care of one thing at a time, slow it down a little bit, get it right.

[00:21:31] Eric Josovitz: Yeah. I feel a lot of times CEOs will try to appease the investors or go to market really fast and use the money, um, you know, put it to use right away when mm-hmm.

Sometimes the ideas. Go back to the drawing board. Like really just hire, hire really slow, make like just, you know, vet those people. I'm sure looking back now, there would be some people that you would, you would just dive a little deeper into background in their, in their history. Um, I,

[00:22:08] Tanner Haas: what you said though is perfect because like you raised $1 million.

You don't need to spend it all. Like if you come, if you just can't find like Warren Buffet, he's sitting on $350 billion right now. If you can't find somewhere to properly allocate the money, don't allocate the money. Like if you're okay, this approach isn't working to product development, then conserve the cash, go back to the drawing board.

Don't just try to spend it all because we raised this, we have to spend it. That is the wrong approach. That's something that I did on my, with Vitori Nutrition. That's something I feel like I did early on with. Freedom Chat. We rush the product to market. Oh, we have this money, we have to spend it because we have to show something.

No, we have cash sitting on the sideline. We're getting it right. When we feel we can properly allocate it, which is going to either increase our user base, improve our product, add financial returns, then we will put that money to work.

[00:23:05] Eric Josovitz: Yeah, absolutely. And, and with the fundraising rounds, obviously. You know, raising this current $4 million.

Can you speak on when it's the right time to raise? Do you feel this last round may be late, maybe too early? Mm-hmm. How would you do things differently if you could, or, or what takeaways do you have from, from this last round that we just started?

[00:23:32] Tanner Haas: Um, I think everybody has this idea. That they're gonna raise money, they're gonna raise 5 million, 10 million.

A hundred million is gonna be an overnight thing. It's gonna be one month, two months. That is so rare. Usually it's a drawn out process. Your job as a entrepreneur is to bring that into a reasonable timeframe. I think there's a time and place in your rating strategy, like for example, when you're going after individuals, I think you can establish a connection.

You can explain the vision more clearly to 'em. It's less of the numbers, it's more of this is our team, this is where we're going, and that's how we primarily raised our $1 million. And then once we launch our Alpha product in a few weeks and we gain some significant traction, other firms, investors can go use the app.

That's when I think we'll have our most leverage, and then we will attack the raise hard. So it's the same thing with if you have $1 million and you don't need to spend it all right away. Same thing with raising. If you have all these connections. Don't utilize them all the way or immediately because then you could just, you could, I mean, basically just throw away connection because you were so rushed to raise money.

Even though that, hey, if we waited two months when our product was better, our team was better, we had more traction, we have a much greater probability of closing them.

[00:24:56] Eric Josovitz: Yeah, it definitely could soil the, the relationship. Um, timing is everything. Of course there's no perfect out of the box solution. That's just not mm-hmm.

It doesn't work like that. There's no guy that says you need to raise exactly six months and two days after your last round. But it's really a feel, it's forecasting it. Right. It's making sure that you're planning it and, and nothing ever goes as planned in the startup world. Let's just be real. No, you can, I

[00:25:27] Tanner Haas: think you can plan your expenses reasonably well.

Um. But be flexible, be willing to, okay, we're going to, we need to just eat this cost. It's gonna be a higher month, or we need to allocate it somewhere else. Income even raising, because you're dealing with, I mean, from an investor standpoint or from a entrepreneurial standpoint, you're dealing with individual.

Somebody could say they're, they're putting in 1 million, they're finicky, I mean. It's emotional. Sometimes it takes six weeks to get a check after somebody says they're in. Sometimes it takes six hours. I've had both. I've had some that said they're in, they sign their docs and then they, they pull out. And as you just have to be ready for everything until you have the money in the bank.

And then actually, I honestly think until two weeks after you actually have the money, because we raised, we've gotten a check from somebody and then it bounces. I'm like, oh, until you have the money, you don't have the money. Literally and figuratively.

[00:26:26] Eric Josovitz: Yeah. Not a lot of people have, uh, issues with the bank either, but we, we have some stories on that as well.

We'll save that for another day. But next episode, Eric, episode 100. Episode 100. I love the, I love the, we'll put money in once the, uh, majority of the round is raised, it's mm-hmm. It's like a, an elephant in the room that founders don't always talk about. But I feel that every single entrepreneur that's raising in the startup world goes through that, that comment.

Mm-hmm.

[00:27:00] Tanner Haas: And I mean, that's like, if you're, like, you're in the dating scene and you try to find a, a girlfriend and I'm, I have a wife, and, but it's like, oh, I'll be interested in you once you're rich and successful. It's like, whoa. You would do them like, I need you now and in the startup world, like we're raising, no, I need you now.

No, we'll come back to you when you've had the majority of your round raised. Or you like, okay, but that's, that's the way it is. And then you go to people that are willing to take more of a bet now, uh, and maybe those people lose their position because you don't need them. And sometimes that happens, but you just have to keep plugging away and just 'cause somebody says no or says not at this time.

Honestly, no. Never truly means no in the funding space. I have followed up with people a year after, months after, and sometimes they come around and say, you know what? Fine, so you'll stop bugging me.

[00:27:56] Eric Josovitz: Yeah, it's really the chicken and the egg situation. You know, fa fast forward when you're, you know, multiple billion dollar valuation, you look back and you're like, I remember I had that conversation with that person that didn't want to get into the industry or wasn't sure about.

Uh, the company, if it, if it had the ability to scale, and then it's like, oh, that was a no brainer. Why? Like, why didn't I invest? But easier said than done. Right.

[00:28:23] Tanner Haas: Hindsight's always 2020 or really like, I mean, everybody has perfect vision looking backwards.

[00:28:32] Eric Josovitz: Yeah. Yeah. So you're still sub 100 employees. Have you leaned on fractional specialists, CFO, HR, legal Development or gone straight to full-time hires?

Why? Tell me a little bit about that.

[00:28:47] Tanner Haas: Uh, we have definitely leaned on fractional and I think that's the way to go. As a startup, you can get a lot more bank for your buck than you think. Don't eventually go to. Don't right off the bat, don't go to full-time employees because you can have sums, but there's gonna be a lot of times where if you try to hire like a full-time CFO or a full-time CMO or that they'll be twiddling their thumb and you're still paying them a salary.

So when you leverage fractional, like A CFO, AdaptCFO would make them take care of your accounting and your financial. They're there when you need them. They're make sure everything gets done, but you're paying for results. You're not paying for their time. And there's two different things you, you wanna pay for experience and skills.

You don't want to pay for somebody's time. So as a start, I think it's important to have a few employees that this is what they, this is their whole life. And then you need to leverage fractional because you can often get more talented individuals and leverage. Not just one individual, but their whole organization, which really reaps dividends immediately and in the future.

[00:29:59] Eric Josovitz: Yeah, and I think historically that option wasn't available. You would have a startup with a bunch of generalists that wore multiple hats, and nowadays you can hire fractional or you know, part-time resources, uh, in a firm or you know, someone like AdaptCFO of course. Uh, I won't drink my own juice right now, but, um, I definitely, I'm definitely a big fan of it.

And, and yeah, you, you don't pay for PTO or benefits or, you know, time where someone goes and takes a walk or, um, you know, is on YouTube, um, you know, scouring that data in it.

[00:30:40] Tanner Haas: Yeah. You pay for results and only results, and that's important. As a startup, every dollar matters. So 100% agree. I'm a fan of that something I didn't utilize in my previous three companies, and I definitely could have lean on people that have more expertise than you.

That's you have to hire people that are better than you. But hire doesn't mean full-time hire. It means you can also leverage fractional work as well.

[00:31:10] Eric Josovitz: So right now, freedom chat if I'm correct, has more fractional specialists than full-time employees, right?

[00:31:19] Tanner Haas: Yeah. And I think that actually works better that way because again, you're paying for results.

You don't will take care of your health insurance, you get paid time off. No you, you come work, you do your job and we will keep using you in, it's a cash based system. Sometimes they take equity. But it's, you don't need to pay taxes, you don't need to pay for all these extra benefits. You pay for the work that gets done.

[00:31:47] Eric Josovitz: Yeah. I think we, I think we pay up to 30% additional on top of salary in hourly costs. So it, it definitely, you know, there's a time and a, and a need for both. Mm-hmm. Um, so. I see, I see both working out. But, um, tell me real quick what looming risk keeps you budgeting extra buffer right now? Market compliance tech, obviously with the tariffs that, you know, Trump's implementing all the economic government changes.

Mm-hmm. Uh, the market for cybersecurity messaging app, you know what, what keeps you up at night?

[00:32:34] Tanner Haas: Um, the product, I mean, you get the, getting the product right takes time. And I always think conserved more caps than you think you'll need, because eventually then you'll need more caps than you thought you need it.

Um. So, I mean, you know, I'm pretty frugal in the sense like, don't spend on stupid stuff. Yeah. There's time to be aggressive, but you also need to think of the alternative that, yeah, we could do this, this, and this. We get this many users that we raise this amount. Yeah, but you also have to consider the alternate reality, as I call it, that you could do this, you got a bunch of users, spend all that money, but no additional funds come in and now what are you doing?

So you have to sort of balance both of the what I want to happen versus the what the worst case is versus, okay, what's actually a realistic possibility. And then assign a number percentage to that. Don't just go out spending again, just 'cause you have it. Like sometimes black swan events do happen. These tariffs that, I mean, they don't impact us, but if they impact an investor and now they're conserving gaps, now they're not dispensing it as freely or as willingly as they would before individual investors, their stock portfolio is down.

Okay? They're not gonna invest is, I mean, there's always, that's just, you never know what could happen as a startup, and your main job is to make sure there's caps in the bank to keep operating and just stay alive another day.

[00:34:15] Eric Josovitz: And it could be a VC fund that has companies go outta business and, you know, they just change the way they're doing things and they're not investing, they're holding cash.

Uh, and, and you see this a lot on the downturns where companies go out of business when, when something happens to the market or the economy, you know? And they're like, there's not really, there's, you know, no one's gonna give me additional money. Yeah. I can't get debt, I can't get equity. Nowhere else. They

[00:34:43] Tanner Haas: spend too much.

That's, yeah. But there's also companies that use that and that's the time they grow because they were a little more conservative when everybody else was guns a blazing. Um, and so I think there's opportunity, but you just need to be prepared in the startup world that anything can happen. Your job is to conserve cash and yeah, you can grow and you can be really focused on growth, but you don't want the train to stop.

And you're, you're not prepared.

[00:35:13] Eric Josovitz: Yeah. Alright. I want to get into my favorite part of this. We're gonna do a rapid fire, three questions. The first one is gonna be awesome for you because you read a lot of books. You're an author, you've written multiple books, and I love hearing your, uh, you know, your favorites.

Favorite leadership or finance book you gift most? I'm not gonna limit you to one because you've got a ton in your back pocket.

[00:35:46] Tanner Haas: Um, my first and foremost recommendations for people would be just honestly biographies of people you like and admire. Thedo Roosevelt, Elon Musk, Steve Jobs. Because when you read them, you also realize that they're an individual just like myself.

They didn't have it figured out at the time. They struggled. This is what they did, this is how they treated people. This was their work ethic. Um, but two books that I think are incredibly interesting and apply to today, one is called The Power and the Money. It's the epic clashes between commanders and chief and Titans of industries.

And that basically is the history of the US from every business Titan. So Rockefeller. Carnegie and how they dealt with an adminis like the President of the United States. And it applies from, I mean, Henry Ford, it just very interesting applies to today. So that's the power in the money. The epic clash between commander and chiefs in the titans of industry.

And the other one is money and it's a, uh, by David McWilliams. And it's actually like a story of humanity, how money came into existence. What is money? He has a super interesting take on the crypto space. A lot of people call it cryptocurrency, but is it a currency? 'cause in order to be a currency, it has to be freely tradable.

It is freely tradable, but it can't be as volatile as it is. Um, is it a crypto asset? Well, it's backed by nothing. So that's a very, very interesting book. That's Money Story of Humanity by David McWilliams. So biography, those, those two books. Honestly, just keep, keep learning. Everything can be learned through reading.

Yes, you need to actually implement it. But I mean, the people that run the world are the smartest. That's how it is. Or, or they work the hardest.

[00:37:35] Eric Josovitz: Awesome, awesome one KPI. You check every day or week before coffee.

[00:37:41] Tanner Haas: Um, I always make it a habit to check the bank account first thing in the morning. Um, always checking that.

Then honestly just, it wouldn't really be a key performance indicator, but making sure I check in with our developers very early in the morning, make sure everybody's on schedule. How are things going? Any feedback questions? Um, look at the cash, look at the products, the on top of people. And yeah, it's true that great people don't need to be managed, but as the CEO, you're supposed to set the strategic budget.

So you can save a lot of time if you just make sure this is what I see, what do you see? And now let's come and build that. Rather than just, hey, do this, give them no guidance, and then you give 'em feedback at the the end of it when you could have been with them through it.

[00:38:34] Eric Josovitz: Great. Alright. Complete this sentence.

A founder under pressure should always

[00:38:42] Tanner Haas: persist and work harder.

[00:38:45] Eric Josovitz: Awesome. Awesome. Tanner always a pleasure speaking with you. I can't wait till episode 100. We do this again. We're obviously gonna be talking between then. But thanks for coming on.

[00:39:00] Tanner Haas: Uh, always a pleasure. Thank you so much for having me here.

[00:39:04] Eric Josovitz: Alright, till next time. That's it for today's episode of Growth Under Pressure. I'm Eric Josovitz from AdaptCFO, and I hope these insights help you tackle your biggest scaling challenges. If you want to help other founders find the show, give us a quick follow or a share. Thanks for listening, and I hope to catch you next time.