Picks and Shovels for Creators

I enjoy spending free time learning about new things online. When I find something I want to learn more about, I seek out credible people who’ve created useful content on the topic. I’ve been amazed by some of the videos I’ve found since the pandemic began. The content and production quality are impressive. The creators take what they’re doing seriously, which has resulted in large, faithful audiences. A few have been producing videos for less than a year, but you’d never know that from the quality and frequency of their content.

The trend of individuals monetizing content is likely to continue for the foreseeable future. More subject matter experts will monetize their knowledge and create followings. This got me thinking about picks-and-shovels opportunities. Much of this content is created by a single person or very small team. I suspect many are limited in their abilities and would welcome opportunities to do more with less or the same thing in less time. And I suspect the market for tools to support these creators is small but growing quickly.

I believe an opportunity exists for entrepreneurs to build a big business helping creators via software. These creators are small businesses or sole proprietorships, so there’s an opportunity to build a large and sticky customer base. They probably aren’t using any software now, so they don’t expect a perfect product. The market is small, so I doubt it’s on the radar screen of large software companies because it won’t move the needle on their sales now.

As I continue learning online, I’ll be paying close attention to what tools these creators adopt. I think that someone who deeply understands their pain points will strike entrepreneurial gold by solving their problems.

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Thankful to Have Thanksgiving Again

I enjoy the Thanksgiving holiday. It’s a nice time when most people are focused on family, friends, and fellowship. The past eighteen months have been unprecedented in several ways. One example of that, on a personal level, is that last year was the first time I didn’t celebrate Thanksgiving as I always had. That had a big impact on me—it was a stark reminder of how fortunate I’d been in all the years before.

Yesterday felt like a normal Thanksgiving, and I really enjoyed it. After the day was over, I reflected on how fortunate I am and all the things I’m thankful for. Everything isn’t exactly how I want it, but life is good and I’m appreciative of that.

What are you thankful for?

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Happy Thanksgiving!

Happy Thanksgiving!

I hope everyone had a safe and healthy holiday!

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Thoughts about Identifying as an Investor

I’ve been thinking about identity and habits lately. I’ve come at identity from two angles: Who do I want to be? Who am I? To answer the latter, I looked at the habits I’ve had for a long time. I suspected that I believe some things about myself that I haven’t consciously acknowledged. It’s been an interesting process that’s made me more self-aware. And it’s shed light on a few things, including my investing habits.

I’ve been into finance and investing since high school. I didn’t come from a wealthy family and didn’t have money to invest, but I sought out books and online resources to learn. In college, finance was the only major I seriously considered even though I didn’t know anyone who worked in the field. As an adult, I spent free time (founding a company didn’t leave much of it) keeping up with public market investing. Now I spend my days investing in early-stage private companies at Outlander VC and still do personal investing in my free time.

Next, I asked myself why: Why have I established these habits? What is it about investing?

I took it a level deeper and reflected on what I’ve enjoyed about investing all these years to answer these questions:

  • Not the smartest person in the room – Investing attracts some of the smartest people. I love learning from bright people and having a constant feeling of not being the smartest person in the room.
  • Perpetual change – Investing is always changing. I’ve never reached a state of comfort and likely never will. This is exciting. It keeps me on my toes.
  • Complexity – Investing has a lot of moving parts. I enjoy trying to parse the complexity so I can achieve a desired outcome.
  • New problems – I love learning about problems and how companies are creating value by solving them.
  • Endless – No matter how much time I spend learning about investing, I only scratch the surface. It’s a vast industry with an endless learning curve.
  • Intellectually challenging – For the all the reasons listed above and many more, I find investing a stimulating challenge.

I’ve had an investing habit for many years. With that kind of consistency, I guess I have a core belief that I’m an investor (I don’t claim to be a good one). It feels very weird to say this publicly, and I’m not comfortable with it, but it’s hard to argue with my habits over the years, and I can’t deny that I enjoy it.

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Decide Like an Umpire

I read a quote today about decision-making that I love:

Call it like an umpire: you’re either out or you’re safe.

As a founder, you have to make quick decisions, often using intuition. A quick decision, even if it’s wrong, is better than stopping the game.

I didn’t know that in my early days as a founder. As I gained more experience and confidence, though, the speed of my decision-making improved. As my decision-making sped up, the company’s growth did too. I learned to not worry about being right or wrong. Instead, I made a decision and focused on learning. Right or wrong, there was always something I could learn and apply to make better decisions in the future.

I still try to make decisions quickly and learn from them. Sometimes I’m right and sometimes I’m wrong, but I’m always learning!

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Timing Matters a Lot

A founder I know had a great vision for his company. He worked for years to get customers and had success, but not the hockey-stick growth he expected. Then the pandemic hit, and customers flooded in.

I caught up with him and asked him about his journey. His most important observation was this:

I knew I was right. I just didn’t know when I’d be proven right. Giving myself enough runway was the difference maker.

Timing is a huge factor in the entrepreneurial journey. Often, founders can’t control it. When things don’t go according to their planned timeline, they have a choice to make: keep building and wait for the time to be right, move on to something else, or choose some hybrid of the two. There’s no right or wrong answer. Each founder must make the decision that’s right for them and their team.

This founder chose to keep going, and it worked out for him in a big way.

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Knowledge Is Like Compound Interest

As an early founder, I had huge knowledge gaps. I didn’t know a lot about start-ups, and that resulted in slow execution and decision-making. Filling those gaps helped accelerate my execution and thus the success of my company.

Since then, I’ve been passionate about continual learning. I’ve developed my own system, but I recently started researching how others approach it. I came across this quote from Warren Buffett:

Read 500 pages every day. That's how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.

This really stuck with me. I agree that knowledge is like compound interest. It builds upon itself. New knowledge isn’t acquired in isolation. It combines with what you’ve already learned to improve your understanding and decision-making. When you look back to a long time ago, you realize that your understanding and decision-making are light years ahead of where you were then because of the compounding effect.

Warren’s 500 pages every day isn’t doable by most people, but frequency is more important than quantity. Reading daily essentially increases the compounding rate of your learning. The more often you add to your knowledge, the better your understanding and decisions become. If you read every day, that’s 365 chances to compound your learning.

The last part of the quote explains what separates the good from great. Most people could take advantage of this life hack—but won’t. So, if you commit to this one habit, you’ll set yourself apart from almost everyone over time.

I don’t think it’s a coincidence that Warren Buffett and other successful people read daily. They recognize it’s something they have total control over that has an outsize impact on their chances of being successful.

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Compensate Fairly to Enhance Your Prospects for Success

I love talking to founders about their plan to assemble a team, especially the compensation part. It can be a leading indicator of what’s to come. I regularly speak with early founders who have a big vision for their companies but haven’t thought through team compensation.

Building something great takes a great team. Great team members want to be compensated for the value they bring, and rightfully so. Great people have options—if one company won’t pay them what they’re worth, someone else will. There are two ways to compensate people: cash and equity. If cash is readily available, then paying market salaries will make it possible for a founder to assemble a great team. If cash isn’t abundant, then a combination of cash and equity is typical. It allows the founder to hire more people with limited cash and lets employees have an ownership stake in the company. They get some cash now and benefit from the upside potential of the company if it does well.

If you’re looking to do great things, you need great people. If you don’t compensate people fairly, your chances of attracting a great talent plummet along with your likelihood of achieving your big vision.

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Weekly Reflection: Week Eighty-Six

Today marks the end of my eighty-sixth week of working from home (mostly). Here are my takeaways from week eighty-six:

  • Holiday push – The week before a major holiday is always busy for me. Everyone is trying to push things over the finish line before the holiday. This week was no exception. I tried to plan my schedule accordingly, but I could have done some things better. I’ll manage my calendar better the week before Christmas.    
  • His way – I met with an investor this week who’s a hustler and has done things his way. He refuses to bend on his beliefs. It’s paying off for him; he’s proving everyone else wrong. Talking to him reinforced to me that there’s something to be said for standing by your beliefs, even when others question them.
  • Opportunity – I’ve been thinking about how others gave me opportunities in college and early in my career that changed my trajectory. I’m thinking about how lucky I’ve been and how to provide opportunity to others.

Week eighty-six was hectic. I’m tired and glad it’s over. Looking forward to the holiday next week and some time with friends and family.

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Identity vs. Identification

I’ve been thinking about some of the concepts I read about in Atomic Habits. I enjoyed the author’s thoughts on changing your beliefs to change your outcomes. Of central importance is identity. If you don’t believe you’re the sort of person who would take the steps (i.e., form the habits) necessary to get the outcome you want, you’re less likely to do so. I’ve been discussing this with friends. Today, one of them shared a passage from a book he’s reading:

Identity is very deeply who you are—not who someone else thinks you are or wants you to be. Your identity is how you define yourself, while your identification is how others define you. How you identify yourself does not necessarily need to match how other people identify you. While it is true that our families and communities play an important role in shaping how we see ourselves, ultimately, how others attempt to define you is no substitute for how you answer the question “Who am I” for yourself.

This resonated with me. I love how the author describes identity as who you believe you are and makes a distinction between identity and identification. Subtle, but powerful.

As I reflect on my founder friends and myself, I think this is true. We all believed we were entrepreneurs before we started companies—even when others believed we were something else. That strong sense of identity guided us to take the actions that led to starting companies and ultimately to entrepreneurial success.

Who do you believe you are?

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