The Psychology Behind Successful Exits with Dave Hersh

When Dave Hersh made the decision to raise venture capital from a big-name investor and pivot Jive toward the enterprise market, he thought he was following the playbook. Facebook had just entered the scene in 2006, and the opportunity to become "the Facebook for the enterprise" seemed irresistible. The company went from zero to $60 million in three years under this new direction, eventually going public on NASDAQ. By most measures, it was a success.

But here's what Dave knows now that he didn't know then. Fear and insecurity drove that decision. The need to prove his worth, to validate himself through external achievement, led him away from a trajectory that could have made Jive a $15 to $20 billion company. He knows this because he watched Atlassian, a comparison company that started at the same time doing the same thing, stick to their original path and achieve exactly that outcome.

I invited Dave on the podcast not just because of his impressive background as founding CEO of Jive and board partner investor at Andreessen Horowitz, but because of his willingness to share the hard truths about entrepreneurship that most people don't talk about. Through his book Reignition: A Playbook for Helping Startups Get Unstuck and Find Their Breakthrough and his executive coaching practice, Dave has become a voice for the psychological underbelly of startup success. Whether you're thinking about raising capital, navigating a stuck company, or preparing for what comes after an exit, this conversation offers insights that could change how you approach your next big decision.

THE EARLY ARMS DEALER

Dave's first entrepreneurial experience reveals something important about innate business instincts. As a kid growing up in Newport, Rhode Island, he would buy ninja weapons from the back of Black Belt Magazine and Karate Magazine and sell them to neighborhood kids at a markup. There was no entrepreneurial modeling in his family. His father was a philosophy professor, his mother was a teacher, his stepdad was a plumber. He was literally on an island, in a blue-collar town that served as a playground for wealthy summer visitors.

This pattern of operating without a roadmap would define much of his later journey. Dave didn't pick up his first Inc. Magazine until college, and that's when the pieces clicked. The entrepreneurial drive had always been there. It just needed validation from the outside world to make sense.

BUILDING IN THE ASHES

Dave's path to founding Jive started in the worst possible circumstances. He arrived in New York City on September 10th, 2001, having driven across country from San Francisco because his wife was starting grad school. The next day was supposed to be his first meeting with the co-founders he'd met at a previous dot-com venture called For Charity. Instead, everything collapsed.

But that crisis created an unexpected opportunity. With the dot-com collapse already devastating the market and 9/11 adding to the economic paralysis, there was nothing else to do but start selling software. The company was created out of necessity. There was no capital available, so profitability was the only option from day one. Dave and his co-founders took an open-source application that had built an audience, rewrote it as commercial code, and started selling it inexpensively.

The result was five years of profitable bootstrapping, growing to a $12 million company without taking a dime of outside funding. "When everybody is zigging and you can zag, it's a pretty powerful time," Dave told me. The times that are hardest economically have been where he's created the most economic value.

THE 10% REALITY

When Dave finally decided to raise venture capital in 2006, he learned something that shapes his coaching work today. "A lot of founders believe they have an 83% chance of success, but the reality in venture capital is that it's 10%." That's how VCs make their money. Ten percent of their portfolio pays all of their returns.

The problem is that founders equate raising money with success. They want desperately to go raise money because that signals validation. But to get that money, they tell a story that doesn't match where the organization really is. They describe a faster growth trajectory than reality, then spend years trying to live up to promises made under the pressure of fundraising.

The best companies, Dave explained, are the ones that can stay in learning mode for longer. If you can go leaner longer, be in the science mode, work from curiosity and wait for the pull of the market, then you get that hockey stick effect. But entrepreneurs want to skip the flat part of the hockey stick and jump straight to the steep climb. That rarely works.

THE MENTAL HEALTH COST

The statistics Dave shared at the EO Deal Exchange conference stopped me in my tracks. Somewhere between 80 to 95% of founders suffer some mental health issue while running their companies. And even if you're lucky enough to be in that successful 10% and have a life-changing exit, you have an 85% chance of suffering for up to 10 years after the exit.

This isn't something people talk about openly. The entire system programs founders to believe that success and money will solve everything. But Dave's experience tells a different story. The work you do for yourself to show up as a great leader is the same work that optimizes your chance of building a successful company, having a successful exit, and having a successful life post-exit. They're all intertwined.

I've talked about this postexit depression phenomenon on the podcast before, including in my conversation with Jodi Hume about founder exits. Dave's experience adds another dimension to that conversation. When I asked him about the hardest part of getting entrepreneurs to do the inner work, his answer was revealing. For men, it's often getting their ego out of the way. For women, it's often fully owning their value. Both barriers lead to the same outcome. Founders make decisions from fear, scarcity, or a need for external validation rather than genuine strategic clarity.

THE INNER BOARD MEETING

One of the most powerful concepts Dave brought to the EO Deal Exchange was the inner board meeting. The premise is simple but profound. Just like in an actual board meeting, there are always parts in conflict with each other. A salesperson needs features to close deals. Engineering needs time to rebuild the product. Finance says there's no budget. These tensions are normal in any organization.

What Dave realized is that the same dynamic plays out inside every founder. There might be a child part that wants safety. A hero part that wants to save the whole family. A warrior that wants to go bigger. A teenager that wants to travel the world. An insecure part that wants the NASDAQ IPO. If you don't recognize these parts and let them drive your decision-making without awareness, they'll take you in the wrong direction.

The exercise involves picking a particular topic, perhaps around an exit or a major strategic decision. Then you identify which internal parts are most active around that issue. What do they value? What's their emotional state? What action do they want you to take? From there, you can see where conflicts arise and start brainstorming compromises that can break through the stalemate.

Dave has developed a deck of cards for this exercise with archetypes ranging from the procrastinator to the collaborator, the creator to the rebel. When founders let each part have a voice and then work toward compromises, major breakthroughs happen. "I could have been a $20 billion company," Dave told me. "Instead, it kind of died on the public markets. It's real money. These are real situations."

THE LIFESTYLE BUSINESS REFRAME

This episode reinforced a message I've been on a mission to spread. The term "lifestyle business" in the traditional entrepreneurial world is often treated as a diss. If you're not shooting for the rocket ship unicorn funded company, you're somehow settling.

My perspective is exactly the opposite. If you're starting a company and it's not creating the life you want, what are you doing it for? Every company should be a lifestyle company, meaning it should create the lifestyle that entrepreneur truly wants. For some people, that lifestyle means pursuing a unicorn outcome and understanding everything that entails. For others, it might mean building something sustainable at a smaller scale. Both are valid choices.

Dave's story validates this perspective. His original company was profitable and growing organically. The decision to raise capital and chase a larger vision wasn't driven by genuine strategic necessity. It was driven by what he thought he was "supposed" to do. The system told him this was the path, and he followed it despite his intuition suggesting otherwise.

THE DEATH AND REBIRTH OF IDENTITY

After exiting Jive, Dave went through what he describes as the dark forest between identities. According to Anastasia Corva of the Exit Paradox podcast, 70% of exited founders are retired but unfulfilled. Another 15% actively struggle with addiction, depression, and anxiety. Only 15% are what she calls unicorns, founders who are truly thriving after their exit.

The problem, Dave explained, is that founders get stuck trying to revert to their old identity rather than going through the necessary transition. They might become angel investors, thinking that keeps them partially in the game. But they haven't done the work of genuinely letting go and allowing a new identity to emerge.

Dave's own transition took years. He tried all the expected paths for a successful founder. CEO of another company. Board seats. Investments. Golf. All of it left him miserable. It wasn't until he fully let go that the rebirth could happen. "That death allowed me to start doing this work," he said. The calling started to find him once he stopped clinging to who he thought he needed to be.

He recommended a book called Transitions by William Bridges as a resource for founders navigating this territory. Understanding how to grieve the old self and remain open during the in-between period is crucial for emerging into whatever comes next.

HUMAN FIRST MOATS IN THE AI ERA

Dave is currently working on a new book about enlightened leadership in the era of AI. The premise is that as technology becomes commoditized and democratized, traditional competitive advantages like IP and network effects are eroding. Systems are handling the block and tackle work that used to require human execution.

So what holds businesses together in the long run? Dave believes the answer lies in what humans are genuinely good at. Vulnerability. Curiosity. Creativity. Imagination. Humor. Love. Connection. The future belongs to companies that can create cultures so compelling that nobody wants to leave, form emotional and empathetic bonds with customers, and become anthropologists who go deep into the hearts and minds of the people they serve.

He calls these "human first moats," and he's collecting case studies and frameworks for how to build them. Given his father's background as a philosophy professor and his romantic partner's work as a clinical psychologist, Dave is bringing an interdisciplinary lens to a question that will define business success in the coming decades.

SHOWING UP DIFFERENTLY

What makes Dave different from many business speakers is his complete vulnerability. He joked that there's no kimono left to open. He shows up naked in terms of sharing his failures, his struggles, and the decisions he'd make differently. But it's not just vulnerability for its own sake. Every story connects back to practical implications for the founders and executives he serves.

The entrepreneurs who work with Dave want to go deep into their inner work and emerge as the best leaders they can be. These are people who recognize that business success and personal fulfillment aren't separate tracks. They're the same journey approached from different angles.

He still acquires companies occasionally and is in the process of acquiring one now. But the way he approaches these deals has fundamentally changed. It's not about proving anything or clinging to an identity. It's about creating value in a way that aligns with who he genuinely is.

FREEDOM FROM IDENTITY

When I asked Dave my signature question about freedom, he took a moment to sit with it. His answer cut to the heart of everything we'd discussed. "Freedom for me is not having that connection to identity or ego, but being the most me I can possibly be as much of the time. Just being in the moment and being fully me for all my warts and everything else and just loving it."

That's freedom. Being happy with who you are, the real you, not the provisional identity that's trying to prove something or earn love through achievement.

For founders navigating capital raising decisions, stuck companies, or the complex terrain after an exit, this conversation offers a different lens. The external challenges are real. But the internal patterns driving those challenges might be even more determinative of outcomes.

Tune in to this episode to hear Dave Hersh share his journey from founding CEO to executive coach and the psychological patterns that determine whether companies thrive or get stuck.

FOR MORE ON THIS EPISODE: https://podcasts.apple.com/us/podcast/dealquest-podcast-with-corey-kupfer/id1451959848

FOR MORE ON DAVE HERSH:
https://www.linkedin.com/in/davehersh/
https://one-in-ten-thousand.beehiiv.com/ 

FOR MORE ON COREY KUPFER
https://www.linkedin.com/in/coreykupfer/
https://www.coreykupfer.com/

Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

Get deal-ready with the DealQuest Podcast with Corey Kupfer, where like-minded entrepreneurs and business leaders converge, share insights and challenges, and success stories. Equip yourself with the tools, resources, and support necessary to navigate the complex yet rewarding world of dealmaking. Dive into the world of deal-driven growth today!