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Building Ocho: Welcome To The How They Grow Show

Episode #1 | A conversation with Ocho founder and CEO, Ankur Nagpal

👋 Welcome to the pilot edition of The How They Grow Show: a series of conversations with founders of promising new startups — bringing you insights into early-stage markets as well as tactical advice on building, launching, and growing your product.

Hi, friends 👋

You weren’t expecting me in your inbox today, were you?

That’s because this is a fresh off-the-press, pilot series I’m testing out. Today, I excitedly bring you the first edition of The How They Grow Show.

Simply, this is a series of conversations with founders of promising new startups — bringing you insights into early-stage markets as well as tactical advice on building, launching, and growing your product.

These posts/episodes will be available in video, audio, and written formats:

  • You can watch (or listen to) the full conversation [links coming up below]

  • And/or you can read the snackable highlights

Right now as a How They Grow reader, you get deeply researched analyses into the tactics and strategies behind the growth of world-class companies. This is my main cheese, and my goal here is to bring you the most comprehensive and useful coverage of these companies on the Internet. As you know, you get these deep dives every other Wednesday. Then, you also get my weekly roundup, 5-Bit Fridays, and the occasional Why They Died.

Assuming this new series goes well (AKA you enjoy the content and find me bearable to watch/listen to), I intend to post one of these conversations bi-weekly on Wednesdays, meaning you’ll always be getting two posts a week. You’ll still be getting the same amount of everything else, this is just an addition.

On that note, feel free to reach out to me and let me know what you think. You can reply to this email, or shoot me a note directly:

Alrighty, let’s get to this thing.

For our first conversation, I reached out to my friend Ankur Nagpal.

I met Ankur back in 2019 on the subway in New York. We ended up hitting it off while the L train was delayed, got off at the next stop, and ended up getting drunk at a nearby bar.

What a meet-cute.

At the time, Ankur was still working on his first startup, Teachable. He ended up selling it for $250M a few months later. And after traveling the world for a while and taking some well-deserved rest after 7 years of building Teachable, he got the itch to come back.

After having spent a lot of money hiring lawyers and consultants to help him structure his money, estate, and taxes, he saw (1) how complicated the tax code was, and (2) how many loopholes there were for creators and business owners.

He began Tweeting about his learnings, and it resonated with a lot of entrepreneurs who were hungry for this information but also found it difficult to access. Fun fact, 34% of entrepreneurs have zero retirement saving plans for themselves. So, he founded Ocho, a platform that makes personal and business finance strategies attainable and accessible for everyone. Ankur and his team are opening up the black box of the US tax code, and bringing folks the strategies of the rich and famous.

To help business owners build wealth. Ocho is made up of two products.

  1. Smart financial products that make it easy to build wealth on autopilot — like the solo 401k account.

  2. Knowledge and training on how money, personal finance, and the tax system work in America.

Ankur was gracious enough to be a guinea pig for this new series. So, if you’re self-employed and you don’t feel like you’re maximizing your business as a tax-saving vehicle, be sure to go check out Ocho. It could save, and earn, you hundreds of thousands of dollars in the long run, if not more.

Cool, let’s get to our conversation.

Ankur and I talk about:

  • Selling his first startup, Teachable, and what founders should think about early on to set themselves up for an exit event

  • Why finding product-market fit is all about taking more shots on goal

  • After 2 years of traveling the world, why he came back

    for a second startup

  • The Solo 401k: the #1 investment vehicle for anyone self-employed

  • Building an early-stage product when sales are impacted by seasonality

  • Early product development and prioritization in the early days with a small team

  • The value of working fully in person as an early-stage startup team

  • Things Ankur knew he’d do differently with his second startup

  • Validating the idea for Ocho through a single social post

  • Building in public, what it is, and why it helps with customer acquisition fundraising, and hiring

  • Advice on raising money as a first-time founder, and figuring out a startup valuation

  • Customer acquisition in the early days, and why it’s all about trial-and-error and figuring out what makes the product take first

  • Wealth-building and tax-saving tips

Watch it [Recommended] 📺

Listen to it 🎧


Or, read the snackable highlights from our chat 🧠🔍

The below excerpts from our conversation have been lightly edited for readability.

What was the process like of selling Teachable [for $250M], and when you started it, were you thinking about an acquisition exit at all?

At no point were we actually looking to sell the company. When Hotmart, the company that ended up buying us, ended up reaching out indirectly through a private equity company, it wasn’t even a thing we were thinking about. But the way it was pitched by this company was like, “Hey, why don't you meet Hotmart, this massive company in Brazil? Their numbers are X, Y, and Z.” And I'm like, “Holy shit, these numbers are really good. Let me actually have a conversation with them and see how it goes.”

And then we saw that we were looking at the world the same way and soon realized that fundamentally we had the same beliefs. And at that point, I decided it may make sense to actually work together and join paths. But, since we weren't looking to sell the company, it wasn't like I ran a process where I found the highest bidder. It was more that I met this company and agreed with their worldview.

It was a difficult decision at first to figure out if I was ready to sell or not because you’ve spent all your time building this thing. But, eventually, after some consideration, I figured the time is right. I had been building Teachable for almost seven years and I felt emotionally ready.

[After 2 months from the first meeting] we basically were good to go. We had terms agreed on, and the term sheet was signed. I thought we were two months away from a deal, but little did I realize how annoying the legal process is, because it took us almost six months to then actually close the deal in terms of all the diligence and legal stuff. There were three different types of diligence we had to do. And then just negotiating the contract was super painful from the perspective of negotiating a three or 400-page merger agreement.

Ankur’s first startup, Teachable

Having gone through that process first-hand, is there anything you’re doing differently with Ocho from an earlier stage to (1) set yourselves up for an acquisition better, and (2) make for a smoother process down the line?

I mean, probably not at this stage because we're too early, but I do think there are a lot of things we'll do sooner than before. For instance, as soon as we prove our product-market fit, I'll probably push for audited financials as early as next year. That way, we’ll have a track record of that sort of built-in from the beginning. Also, I think not skimping on legal counsel early, and just being very intentional about how we structure the business upfront so that if we get to that point, things will be a lot quicker.

I always say you can do all these things correctly, but if at the end of the day not find product-market fit — you're going to end up not mattering at all.

On that note, how are you thinking about product-market fits with Ocho? Any sort of system for measuring it?

I don't think there's anything unique about how to measure it. I think the product market fit surveys are still as good. Realistically, the game early on is how can you set yourself up in a way that you maximize the probability of hitting product-market fit. So for us, that means moving really, really fast, trying lots of things and just increasing our shots on goal. So, as I tell our company all the time, the only competitive advantage we have today is our speed. So, how can we take as many bets as fast as possible and then keep measuring and then figure out what to double down on?

It's honestly just chaos, throwing spaghetti against the wall and seeing what sticks.

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Can you tell folks about the solo 401k, which as you say, is the best tax/retirement vehicle for anyone self-employed?

We found the solo 401k to be one of our first wedge products, which is a retirement account for anyone self-employed. Technically, the way retirement works in America is your employer contributes to it.

But, for anyone self-employed, it so happens this one-person retirement account is the best and most powerful retirement account out there, so we were like, “Okay let's launch the best version of that and then go from there.”

And the contribution limits are crazy. You have $66,000/year, which is really high. Unless you're over the age of 50, then it's over $70,000. And you can make all of it in after-tax contributions so you don't pay any tax in the future. You can invest in any asset class that compounds tax-free. Think of it as this supercharged investment account. Very powerful.

Ocho’s Solo 401k product, priced at $299 a year.

Since this was your wedge product, what was the process of setting up a solo 401K before Ocho?

It's very janky. You have to either go to a traditional brokerage like Fidelity or Vanguard and mail them physical forms and send them physical checks in the mail. And even then you can’t do raw contributions and a lot of other stuff. Or, you could hire a legal team to do it for you where you're paying thousands of dollars.

With Ocho, we've made it all very simple, with an easy SaaS product that has investing built in and is just dead simple for anyone to use. But, there's no reason people can't be fancy and choose to invest in real estate, startups, or anything else.

If you’re employed as a normal W-2 employee like most people, are you at all able to capitalize on this powerful solo 401k account in conjunction with a traditional 401k?

Absolutely. A lot of our people, for instance, have their W-2 income, but they set up a solo 401k on their side business. The only thing to think about is you can only contribute money you earn in your side business to this account. So you can't, for instance, contribute dollars you make in your full-time job.

But, I do think ultimately that owning a small business it's the biggest tax hack you have in this country, to the degree that I tell people, “If you have a hobby that you spend a lot of money on, maybe it's golf or it's boats, cars, or whatever — if you can find a way of creating a small business from it, it's going to help your life so much because you can now deduct a lot of your expenses with your otherwise expensive hobby in your small business, and now you're making money from that”.

That’s definitely something we’ve been working with a lot of people on. For instance, I have a friend who's a travel blogger, loves to travel, and makes money from it. Now, all his trips are paid for, which is amazing, right? And it can be around whatever your interests are. If you're a fashion blogger, you can have outfits paid for. There's a lot of stuff you can do.

How are you thinking about feature prioritization and deciding what to build at this early stage?

We're still figuring that out, which is why right now velocity is super important. So we have, for instance, four engineers, which is pretty high for a company of nine people. But I think it's because we're just taking many bets at the same time. We're still at this very special place where we can talk about a feature on a Monday and sometimes have a launch on Friday, which is really great. Because at Teachable, by the end, we would talk about a feature and then we’d have four different meetings and then we squeeze it into like our Q3 roadmap.

It would take almost 12 months from first talking about it to seeing it live. So shortening that out to a week feels like magic.

Ankur Nagpal, second from bottom right, with his team at Ocho Wealth.
Ankur (orange sweatshirt), with his team at Ocho Wealth

And more specifically, what does that process look like with a small team of 9?

It's super ad hoc. We're in the office every day, and we have no scheduled meetings. As a result, we're literally like, “Hey, you got a second?”. We all sit around each other, so it makes it super easy and I really enjoy working in person again.

For me, starting another company and working in person was not negotiable. If the -only option was working remotely, I wouldn't start a company to sit on Zoom all day. That does not add value to my life.

And with the remote or in-person debate, I think it has a lot to do with the stage of the company. At Teachable, we were never going to get people back to the office because it's too big a company, and candidly no one cares enough. But I think it's very different when you're a seven, or eight-person team and everyone actually likes each other. And it's a very special stage of the company. When we're 200 people, it's not going to be the same.

As soon as people try to negotiate how many days they have to come into the office, like, you've already kind of lost the battle.

Were there any standout lessons you wanted to take into your second startup after 7 years working on Teachable?

I mean, to be quite honest, right after selling Teachable I said I was never going to do another startup again. So I kind of lied about that.

But, I think the big lessons are from things I wanted to avoid from what we did at Teachable. For instance, I think we got to a point of overselling the product before the product was quite ready, and with Ocho, we're deliberately taking our time. Even if it means growing slower for a while.

Ultimately, I think we'll avoid the same mistakes we made at Teachable, but make different ones.

One of the things that have been refreshing this time around, is that the first time I always had this sense of inadequacy, of like, “I've never done this before, so I should listen to what all these other experienced people tell me to”. Now I'm like, “No one fucking knows anything. My stupid ideas are as good as anyone else's. I don't need to do this thing because this quote-unquote senior person said we should.”

A lot of the imposter syndrome is gone. I'm just more comfortable doing the things that authentically feel right versus saying, like, “Hey, this big company executive said we must do bi-weekly one-on-ones”.

How would you translate that advice for first-time founders?

Do not be intimidated by thinking that all these other experienced people know so much more than you. A lot of times, yes, they have more experience, but it doesn't necessarily mean they're better at it. They've just sort of seen it more. And very often, if anything, they have a tendency to do things the way they've seen it done, not because it's necessarily the best possible way.

Another learning has been that historically, I really indexed on people who came from all the brand name companies. I was like, “Oh, the company they come from is so impressive, they'll know how to build it.” But very often those people went to a company that was already working, so they never actually had to go figure it out. And very often it shows people who are just good at picking companies, they're not necessarily building the machine that makes the company work.

Someone who comes from, say, running marketing at Facebook. And it's like, how much marketing does Facebook need, right? Take a company like Google, I think there are a lot of people that didn't really learn anything there because Google had such phenomenal product-market fit already. Very often, working at a company that's truly amazing can disguise that these people don't know what they're doing. They're just a machine that's kind of always worked.

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How did you validate the idea for Ocho? What steps did you take?

We wanted to see if there was a demand for a solo 401k platform specifically. And I was like, “What’s the quickest way of testing this?”

So I posted literally one tweet thread, where I pitched the problem and solution, and I said, “Hey, by the way, I know this company that can set this all up for you, DM me if you want an introduction.” I got over 30 DMs from very qualified people.

By the way, I think almost half of them ended up becoming paying customers six months later. But to me, it was a very quick way of figuring out if there was a business here or not. And yeah, Twitter is very, very useful for that and still continues to be for these kinds of rapid things.

You’ve been very public about sharing updates on a monthly, and very consistently. What was the thinking behind adopting this build-in-public approach?

So I think I started sharing updates more towards the end of building Teachable, not at the beginning. It just felt like something that resonated with my personality because I'm a pretty open person and I started to feel like there's a lot less downside than people tend to think there is. So I started to share a lot more about Teachable, but as I was doing that, I started to get more pushback, pushback from our team members, pushback from other people at the organization, and from people running our finances.

And it was late enough in the company's journey that it was probably too drastic a step at the time. But now that I had a brand new start and I could set the culture from day one, it just felt authentic to who I am and my personality — so I decided to do this upfront.

Sure, there are times when it will be tricky. Like you have a slow month and you kind of don’t want to have to be public about it. But I firmly believe what you gain from it is far more than what you give up. And so it works very well for us. But at the same time, I wouldn't necessarily say everyone should do this. For some people, it fits with their personality, and for some, it doesn't.

My belief is that consistently being candid in your communication will lead to so much trust and respect that when things turn around, it'll be worth so much more. As an investor, I get so many investor updates that I have no idea how the company is doing because they're always saying it's fantastic. Their numbers could be shit and they're like, yeah, it was a great month. And I'm like, what's going on?

Let's say they have a bad month, suddenly they’re now reporting year-over-year numbers. There are a lot of these little subtle tricks that people use to disguise [what’s going on] because they don't want to send an email saying it was a bad month. And I think even though it's tough, it gets you credibility.

Want an example of Ankur’s BIP updates? 👇

Get Ankur's monthly update

What benefits have you seen from sending out these monthly reports?

It's been a benefit in terms of fundraising, customer acquisition, and in terms of hiring. It's just been great for getting the word out there for pretty much anything external you need.

I think hiring is such a big one. When we want to hire for a role, we send out an email. We now have tons of good candidates and almost all have been sourced through this channel.

And I can already tell you this. Say we raise money three years from now, I bet the person we raised money from was on the update I sent today. That's how these things tend to work, right? Very often the people who invest in you will be someone who's been following you for a while. So I think when it's time to raise money, I have this pool of ~3,000 people who get our update now. My guess is our investors are already in that group.

You just build this body of work where people are following your narrative or journey for a while so they already feel like they know you more than if you're starting a relationship from scratch.

As an early-stage, pre-product-market fit startup, how are you thinking about customer acquisition at the moment?

We're still experimenting. We're playing a lot with creators and other people with audiences, but fundamentally, I still think we're really in the state of getting the product to work at a point where I feel really good about our product-market fit.

We're still at a point now where from an acquisition perspective, I think our biggest sources are our own channels, social media, and so forth, and then from creators in the space.

And we're good with just focusing on these channels for now until we can build a product that people truly love, and then it's easier to add gas on that. And that's a change from Teachable, when we were just trying to sell sell sell. [With Ocho] we're just trying to market it to everyone and figure out what it is that makes the product take.

Having raised money with two startups and being an investor yourself, what would your advice be to founders around fundraising?

I think fundraising as a second-time founder versus a first-time is so different. The second time everyone is dying, begging even, to give you money. The first time, no one wants to give you anything. So I think it's very, very different.

For a founder raising money for the first time, I think you need to build proof of work.

Again, public investor updates are a great way to do that. Basically, you build this reputation as a person that does what they say they're going to do, because that's still very rare, and then use that to build momentum and compound from there.

So, instead of going out and targeting everyone, target a small list of people, tell them what you're going to do, and then consistently do it. That's how you raise money.

How do you think about landing on a startup valuation in the early days?

It's all arbitrary. I remember raising money with Teachable and someone asked what the price was. I said, “Eight million”. He said it felt like a six million-dollar valuation. And I'm like, “Dude, your number is arbitrary. My number is arbitrary. We're both pulling fucking random numbers. So you can use mine if you want to. We already had other people come in [on the round] with it. But like, you're right, I can't defend why we're worth this amount.” So I think it's just a mutual leap of faith of two people coming to a number.

I wouldn't stress it too much. I think early on you want to find the right partner. Once the company is kind of successful, I think that's when stressing your valuation matters a lot because at that point you already know it's going to be worth something.

From series B onwards is when I think you get very dilution sensitive. At the seed and Seris A stage, you just need to maximize your chance of success. At that point, the default outcome for your company is zero dollars, right? So all you're trying to do is make sure it's worth more than $0.

Across your years of entrepreneurship, any unconventional advice you’ve found to be true, or final words of wisdom to leave us with?

Yeah, a few different things.

One, the longer I've done this, the more I’ve realized no one really knows anything. Everyone is winging it. So, being comfortable in your own ability to wing it I think is very important.

Two, on that note, I've always tended to feel like the world is a pretty forgiving place in general. I know the cliched quote is “Ask for forgiveness, not permission”, but as a founder, you're fundamentally trying to do something that's very hard. You're trying to create something where nothing exists. So, don't make your life any harder than it needs to be. It's inherently already the most unnatural thing in the world. So, if there are places where you can ask for forgiveness rather than permission, go for it because what you're trying to do is a very, very difficult thing.

Finally, here are a few of my favorite Ankur tweets on wealth/tax/savings 🧠

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If you enjoyed this interview…

Where to find Ocho:

Where to find Ankur Nagpal:

• Twitter (link)

• LinkedIn (link)

Referenced in our chat:

  • I Will Teach You To Be Rich, Ramit Sethi (link)

  • Losing My Virginity, Richard Brandson (link)

How They Grow
How They Grow
Jaryd Hermann