The Last Paycheck

Your good-news behavior is performance. Your bad-news behavior is the test.

Last week, Jared Tiefenthaler flipped the script on me. Jared’s the CEO of Signed Up Sports — one of our Wildfire Labs founders — and he took over the interview chair on the podcast. Put me on the other side of the mic for the first time. Somewhere between middle school floppy disks and the Concur years, he asked me about my first startup failing. I started talking and a memory surfaced that I haven’t thought about in a long time.

Mid-nineties. Rapid City, South Dakota. I’m twenty-something, sleeping on a couch in my own office, showering at the YMCA before my team arrives. I stopped paying myself two months ago. The apartment is gone. When I still couldn’t make payroll, I sold my car and started biking to work.

We had built something real. An edutainment product for kids learning earth science — good curriculum, backed by National Science Foundation content, a solid team of eight people. Some full-time, some students pulling shifts between classes. We raised a little money. We had a product in a box with a CD-ROM in it.

What we didn’t have was distribution.

I was cold-calling Walmart. Calling Software Etc. We did a small deal with Gateway. Got the state of South Dakota to buy a couple of copies. But I had gone from big plans about where we were going to grow this thing to staring at a bank account with nothing in it.

Then came the conversation I’d been dreading. I went to every person on that team — five or six full-time, the rest part-time students — and told them the truth. This is the last paycheck. I can’t do it anymore.

Some of them had been pulling oars with me. They believed in the product. They believed in me. And I had to look them in the eye knowing I’d taken investors’ money and come up empty.

The investors handled it with grace. They knew the risk. But I didn’t feel grace. I felt like I’d let every single person down.

What Happened Next

Here’s the part that still surprises me, thirty years later.

Most of those people followed me.

Not immediately. Not in some dramatic “we’re all in this together” moment. But over the next few years, the majority of those eight people either joined one of my next startups or followed me out to Seattle. The students who were pulling part-time shifts? Some of them ended up at Concur with me.

I didn’t understand it at the time. Now I think I do.

The Authenticity Test

Every founder talks about authenticity. On podcasts, in pitch decks, on LinkedIn. But authenticity isn’t a value you declare. It’s a behavior that only shows up under pressure.

When things are going well, everybody looks authentic. The founder who buys pizza on launch night, who gives shout-outs in the all-hands, who talks about culture at conferences — none of that is hard. It’s free. Good-news behavior is performance. Anyone can be generous, transparent, and real when the numbers are up and the team is winning.

The authenticity test is what happens when the numbers aren’t up. The last paycheck conversation. The call to investors where you say the words out loud. The morning after, when you still show up even though there’s no reason to. That’s when you find out if the authenticity was real or if it was just a luxury you could afford when things were easy.

I didn’t know I was taking the test while I was sleeping on that couch. I thought I was just surviving. But every person on that team was watching. Were the last paychecks on time? Did I lie about the runway? Did I blame the market, the investors, the product? Or did I stand there and own it?

They watched. And then they decided I was worth following again.

The Guy Who Runs Through Walls

A couple years later, I’m interviewing at a small company in Bellevue, Washington called Concur. Maybe forty, fifty employees. They’re selling travel and expense software — a world I know nothing about. I’d been at Microsoft for nine months, miserable, a small cog in a sixty-thousand-person machine getting my knuckles rapped every time I drifted outside my job description.

Concur was different. Small. Messy. Losing thirty-seven million dollars on seven million in revenue. The kind of place where, if I’d known how to read a balance sheet, I probably would have walked away.

One of the guys who interviewed me said something I’ve never forgotten: “It seems like Todd can run through walls. If we can show him where the windows and the doors are, this will work out pretty good.”

That’s not a comment about my resume. It’s not about technical skills or a Stanford pedigree — I didn’t have either. It’s about something that showed up in a conversation. An energy. A willingness to go headfirst into problems.

Where do you think that energy came from?

It came from a couch in Rapid City. From biking to an office with no money in the bank. From telling sixteen people the truth when the truth was the last thing I wanted to say.

Nineteen Years of Compounding

I stayed at Concur for nineteen years. Went from managing two people to running global products — eighty-five percent of the company’s revenue, deployed in a hundred and ten countries. Along the way I did engineering, general management, product strategy, acquisitions, hosting operations, consulting, and sales. Not because I was qualified for any of it. Because I told them early that I wanted to diversify my skills, that this was a step toward going back to startups someday, and to their credit they kept moving me into roles I probably wasn’t ready for.

Every time I landed in a new one, I used the same playbook. Shrink the initiative list from seven to three. Fix the process problems that were making people’s lives harder. Learn the domain while you’re delivering short-term value. By the time ninety days passed, I’d earned enough credibility to start making strategic decisions.

It worked because the foundation was already there. The ability to walk into a room where you don’t belong and earn trust anyway — that didn’t come from Concur. That came from failing in front of eight people and having them decide you were still worth betting on.

The Pattern I See Now

I’ve been coaching founders for over 10 years. I’ve watched dozens of startups up close. And the authenticity test shows up everywhere.

The founders who build lasting companies aren’t the ones who never fail. They’re the ones whose bad-news behavior matches their good-news behavior. The investor who gets a straight answer instead of a spin job. The employee who gets told the truth with enough time to make a plan. The co-founder who sees accountability instead of blame. Same person on the worst day as the best day. That’s what passing the test looks like.

I’ve watched people fail it, too. Not in dramatic ways — in quiet ones. A company I advised had someone who wasn’t performing. Everyone knew it. Instead of having the conversation — here’s where you’re falling short, here’s what needs to change — they eliminated the position. Told the person it was a restructuring. Moved resources around. The person left thinking it was bad luck, not bad performance. They never got the feedback that might have actually helped them.

The leadership team told themselves they were being kind. They weren’t. They were being comfortable. The hard conversation was the kind thing. Telling someone the truth about their performance — with enough specificity that they can do something about it — that’s the authenticity test. Disguising a performance problem as a reorg is the opposite. It protects the person delivering the news, not the person receiving it.

Your reputation as a founder isn’t built in the pitch meetings or the product launches or the press coverage. It’s built in the conversations you’d rather not have. The last paycheck. The missed quarter. The pivot that means admitting the first idea was wrong.

Those moments are the authenticity test. And the results compound in ways you can’t see until years later.

The Question

Every founder I work with will face a version of the last paycheck conversation. Maybe not literally — maybe it’s a layoff, a pivot, a failed product launch, a co-founder breakup. The specifics change. The test doesn’t.

Here’s what I’d ask you: Is your bad-news behavior the same as your good-news behavior? When everything is falling apart and nobody would blame you for cutting corners, do you stand there and own it the same way you’d own a win?

Because the people around you are watching. And what they see in that moment will determine whether they follow you next.

This article came from the conversation Jared and I had on this week’s episode of Startup Stories from the Treehouse. Give it a listen — he asked better questions than I usually do.