My First Speed Dates with Founders
Today I had the privilege of participating in a “speed-dating” event pairing founders and investors. I met eight founders one-on-one for 15 minutes each. Their companies ranged from $30,000 to $3 million in annual revenue. Most were seeking investment of up to $10 million.
This was a great event for both founders and investors. Founders were able to connect with a range of investors in a short time and get meaningful feedback. The sessions were short, which forced founders to pitch succinctly. From an investor’s perspective, I loved hearing about new markets and problems I didn’t know existed. I’m now curious about them and looking forward to researching them in my free time.
These founders have a bright future, and I’m excited about tracking their progress going forward.
A Safe Space Helps
I chatted with another investor who’s also a former founder. We shared our founder experiences and how the cities we lived in affected them. In doing so, we discovered another thing we have in common: though our journeys were different, they were both shaped by safe spaces with good people in them.
I was a nontechnical founder building a tech company who didn’t know what an API is. I needed help! And I found it. Through my relationships with technical founders, I began to understand technology and the possibilities it could unlock. Meeting those peers was great, but that alone wasn’t the game changer. Being able to interact with them in a safe environment was the real boon. Everyone could let their guards down because we knew we wouldn’t be judged for not understanding something. A deeper level of knowledge sharing than I’d ever experienced was possible. There were no dumb questions. People just shared all they knew in hopes that it would help someone else be successful.
If you’re a current or aspiring founder, consider looking for a safe space where you can learn from other founders. You’re more likely to succeed if you can learn from others who’ve done something similar!
The High-Growth Lifestyle Company
An early founder who’s thinking about scaling his company asked for my thoughts. As we chatted, I zeroed in on something. What he ultimately wanted and what he planned to do weren’t aligned. I couldn’t tell if he wanted to build a lifestyle business or a high-growth company, so I asked him.
Building a high-growth lifestyle company sounds ideal, but it isn’t likely to happen. The main goal of a lifestyle company is just that—to provide for the lifestyle the owners want to live. Owners take distributions from the company to cover their personal expenses. The goal of a high-growth company, on the other hand, is—wait for it—growth. Growth is expensive. You’re hiring and making investments ahead of anticipated growth. Cash often stays in the company and is funneled toward growing the business.
The founder asked whether building a high-growth lifestyle company is feasible. I told him it’s unlikely. The core challenge is the conflicting constraints on the company’s cash. You can’t take all the money out to fund a cushy lifestyle and fund rapid growth. You have to pick one or the other.
In the end, this founder said he wants to build a high-growth company. I’m excited for him and can’t wait to hear more about his journey to turn this into reality!
Working from Home: ’21 vs. ’20?
Spring is here. More’s going on in Atlanta. As I talk with friends, I’m hearing that most of them are planning to travel before August (if they haven’t already). They’re happy about the weather and plan to be outside as much as possible. Most don’t intend to return to the office until fall (at the earliest).
When the pandemic began last year, many companies moved to remote work. To their surprise, many teams were just as productive working from home as they had been in the office. This high productivity likely gave leaders comfort, and they embraced working from home in some form for the foreseeable future.
I’ve worked from home a few days a week for years, and I love the flexibility it gives me. I am curious about the productivity, though. Last year was unusual. Large parts of the country were limited for months. People couldn’t do much else—maybe that’s why they were so productive?
I’m curious about how work-from-home productivity this spring and summer will compare to the same periods last year. With so many people wanting (understandably) to be out and about, will productivity drop?
Regardless, I think working from home is here to stay, and I’m excited that more people will get to enjoy the flexibility it offers.
The Curious Entrepreneur
In the early days of my company, I had to figure everything out. I was often doing things in areas where I had zero experience. Some tasks were intimidating and complex. Other were simple but time consuming and tedious. All of it had to get done if I wanted my company to be a success, so I dug in. The tasks themselves weren’t always fun, but I enjoyed learning about new things. That’s true to this day.
I spoke with a former founder who’s now in corporate America. When he started his company, he too mastered learning new things. That skill has been invaluable over the years. It helped him take on new challenges in his own company and now in a large organization. Time and time again he’s been successful. When we spoke, he mentioned learning and executing new things as one factor that’s gotten him where he is today.
I believe curiosity is a trait that helps founders succeed. It helps a lot to have a genuine desire to learn about new things and get things done by applying that learning.
If you’re considering entrepreneurship, ask yourself, “Am I naturally curious?” If the answer is yes, it might be a perfect match.
Everybody Isn’t Billion or Bust
Not every founder wants to build a billion-dollar business. Truth be told, most businesses don’t have the potential to reach that size anyway. The vast majority of businesses (think more than 90%) never even make it to $1 million in annual revenue. If a founder has a goal that’s less than a billion, it’s still hard as hell and many people will never do it.
Building a company with seven (or eight) figures in revenue is no small task. The journey will be years long and full of learnings. If the company is successful, it can help to financially derisk founders too. Building and capitalizing this type of company probably won’t include venture capital and may not get your name in the headlines, but it’s still a great path to pursue. The key is knowing what you’re aiming for and why it’s the right goal for you.
If you’re considering being a founder but don’t want to build a billion-dollar company, go for it. The experience could be life changing and you’ll be in good company—plenty of other amazing founders have trod a similar path before you.
Weekly Reflection: Week Fifty-Five
Today marks the end of my fifty-fifth week of working from home (mostly). Here are my takeaways from week fifty-five:
- Transferable skills – A friend asked me to help with something. I initially said I didn’t have the experience to do it (which was true). He pointed out that I have skills that are transferable and that qualify me to help him. I don’t often think in terms of transferable skills, but my friend was right, and I was able to add a lot of value to his project.
- Good enough – This week was a reminder that sometimes things just need to be good enough to check the box. Done is better than perfect. I have to continually remind myself of that.
- Journeys – Everyone has a story. It’s so interesting to learn about someone else’s. This week I was totally surprised by the journeys that some have taken.
Week fifty-five was a rewarding one. I was able to move the needle on things that matter to me and help others too. The week was a win–win.
Some Founders Build to Belong
Why founders start businesses always intrigues me. I’ve paid attention to this question over the years so I have insight into what motivates people, and I can tell you that sometimes it’s not for the reasons you would think.
I’ve connected with two founders with amazing success stories who’ve sold their companies. They don’t know each other, but they were motivated to create by the same thing. They knew problems existed that they wanted to solve. They felt like they didn’t fit in at traditional organizations because they didn’t go to Ivy League schools or have unique relationships. They felt strongly about solving these problems in environments that welcomed them. Such places didn’t exist, so they set out to create them.
Fast forward to now. One founder’s venture capital firm manages over $500 million on behalf of its investors. The other founder’s company has hundreds of employees and annual revenue approaching $100 million. Both were built from scratch.
I love both of these stories. These founders were motivated to solve problems they were passionate about and to do it in places that were more open and accepting of them and others like them. You could call that a win–win.
Founders Can Pattern Match Too
As a founder, I noticed that our strongest team members shared certain characteristics. From that point on, I looked for those traits when hiring. I was hoping to find more rock stars. Many investors do something similar. Their successful investments may have things in common; if so they look for those traits—which could predict success—in future investments.
Early-stage founders should look for patterns too—especially when they get feedback from professional pattern matchers. Feedback from investors is super useful to a founder, even when it doesn’t result in an investment. You’re likely to hear way more noes than yesses if you’re fundraising, and the noes are a great opportunity to pattern match. After all, investors see tons of companies and have a good sense of what it takes to succeed. Founders should ask for the why behind every no. Individually, it may seem like an investor doesn’t “get it,” but collectively founders may see a pattern emerge and learn that the opposite is true: they themselves are the ones who don’t get it, have a serious blind spot, or have a gap in an area critical to the business.
No, pattern matching isn’t perfect; everyone can be wrong. However, it can be a great way to understand what risks outsiders see in the business. At a minimum, founders can address these risks in future conversations with investors, which will demonstrate that they’re self-aware and have their finger on the pulse of the business.
I learned about warehouse management when I ran my company. We never operated a warehouse, but all our partners did. Working with them helped me learn how they approached warehouse management and how critical it was to their operations. My big takeaway was that the systems run by a lot of companies in the aftermarket automotive parts industry to manage this critical part of their business were extremely outdated. It’s a wide open opportunity for a technology company.
Today I spoke with a founder who, after a decade in warehouse operations and warehouse management systems, understands the space. He’s created a SaaS solution to solve pain points for companies running large warehouses. His product is easier to implement than existing systems and requires less upfront investment because it’s SaaS. Of course, SaaS isn’t new. Delivering software over the internet has been around for well over a decade (if not two). But it’s relatively new for this space. Most traditional systems run on-site and impose implementation costs.
I like this founder’s approach, and I think it’s one others can follow. Some cutting-edge businesses rapidly adopt technology, but others can’t or just don’t. Laggard industries are great opportunities for entrepreneurs, who can watch a new business model be validated in other industries first. A new approach can create massive value for customers even if it isn’t cutting-edge in other industries.
I’m excited for this founder and can’t wait to see how his approach revolutionizes the space!