When I was a kid, my elders would say, “Show me your friends and I’ll show you your future.” They were trying to tell me that the circles I ran in would have an outsize influence on me. That saying made sense to me even as a kid, and now that I’ve experienced more life, I realize how spot-on it is.

Today I was reminded of it when I shared my founder journey with another founder I was meeting for the first time. He asked how I scaled my company as a solo, nontechnical founder who wasn’t raising capital. The answer is that I’d found a good circle to run with. I stumbled into a group of founders who were building software and other innovative solutions. I was able to apply what I learned from their experiences to my company. It was like having the cheat codes to entrepreneurship. Without these friends, my company probably wouldn’t have reached eight figures in revenue.

If you want to accomplish something great, consider surrounding yourself with others trying to do something similar. Your circle can be the difference between great and so-so—or even success and failure.

Happy Labor Day!

I hope everyone had a safe and healthy holiday!

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I read the reflections of a successful investor recently. Most of his insights had to do with why he and his team had been successful. One factor is that they focused on a sector that was target rich—meaning the incumbents were highly profitable in comparison with other companies globally. These incumbents weren’t keeping up with changing consumer behavior, though, so the sector was in need of modernization.

This was an interesting insight. Large, highly profitable companies were solving problems, creating value for customers. But their solutions weren’t keeping up with the pace of change, so they were outdated. This created an opening for a new solution.

This investor identified companies that were solving well-known problems. There was no need to wonder if the problem was painful enough for customers to pay for a solution; that had already been validated. The market size had also been validated by the incumbents’ large and profitable businesses.

This investor believes that investing in a target-rich sector significantly increased his chances of success. He thinks an average investor in a target-rich sector can win out over a great investor in a sector full of great competitors.

I like this reflection, and I think it’s a strategy some founders can leverage too. Focusing on a sector or problem that’s proven and ripe for disruption will likely increase your chances of success (assuming you have founder/market fit).

A close friend shared this with me. It’s a well-written Harvard Business Review article that explores the relationship between financial gains and control of a company. The article basically says that when founders maintain control of their company, the company is less likely to reach its full financial potential. When founders cede control to board members, key employees, etc., the company is more likely to do so.

This is an interesting article. When I was a founder, I fell into the camp that doesn’t want to cede control early on. But when I did empower other leaders, my company flourished.

This article makes salient points. The relationship between a company reaching its full potential (financial or otherwise) and founder control is very real. It’s something early founders should be aware of. If founders want to build a large company, they’ll probably have to get comfortable with relinquishing control. It’s not possible to control every part of a sprawling organization without stunting its growth.

Today marks the end of my seventy-fifth week of working from home (mostly). Here are my takeaways from week seventy-five:

• Patience – Some situations take time to line up the way I want before I can execute or move forward. Patience is needed. Over the years, I’ve learned to not jump the gun. This week was a reminder of that.
• Holiday – I didn’t realize Labor Day was next week until Wednesday. That was a nice midweek boost. I love three-day weekends and holidays, and I’m looking forward to enjoying this holiday.
• August – The month went by quickly. We’re now in the last month of the third quarter. I spent time thinking about what I want to get done this quarter, and I need to push pretty hard this month to hit my goals.  

Week seventy-five was great. I’m looking forward to recharging over the holiday so I can finish out the third quarter strong.  

Acquiring paying customers is a challenge for most companies and especially for early-stage companies. The brand isn’t well known, and resources don’t allow them do marketing the way they want. Customers that early companies do acquire are precious.

A few weeks ago, I chatted with two smart founders who have an interesting software product. Their platform helps consumers resolve a particular issue efficiently. The issue is something most people will experience only once in their lifetime, if ever. The downside to not resolving the issue is high, so the software creates value for consumers. Once the issue is resolved for a customer, though, they become an ex-customer and no longer contribute to revenue. This creates a challenge: the founders must constantly attract new customers. Their high marketing spend reflects this. This company will likely be successful, but it will be harder to scale than, say, a company that attracts and retains customers who pay monthly for many years.

Acquisition and retention of customers are important issues for founders to think about. Not all business models support ongoing customer payments for years, and that’s okay. Whatever business model a founder chooses, though, they should have a strategy to acquire customers in a cost-effective way and, if possible with that model, retain them.

I’ve been interested in residential real estate for years. I love researching different markets and following trends. Like everyone else, I’ve watched as housing prices have risen rapidly over the last few years. First-time home buyers in major metro areas are finding the supply of starter homes extremely tight, which is making affordability a challenge (there are other factors too). A few weeks ago, I read this article explaining that the problem’s not just in major metros.

Supply and affordability of starter homes are big problems waiting to be solved. I’m not sure what the right solutions are. Once they’re figured out, demand for them will be huge. Solving these problems won’t be easy, but it’s a massive entrepreneurial opportunity.

I suspect we’ll see more innovation as the problem becomes more painful. I’m looking forward to following the space and the innovative solutions founders create.

Today I spent time learning about a company. Generally, public perception of it is slightly negative. I’ve followed the company for some time, and after my research today I arrived at a different conclusion. I’m bullish on the company. I think it has a good future. I shared this opinion with a few friends, who all pointed to public sentiment. They suggested the crowd is likely right and it’s not a wise investment.

Today reminded me of my early days as a founder: I see something others don’t. When I explain what I see, others dismiss it or disagree. After I start my company and we have meaningful traction, others begin to believe what I’d always believed—that my startup could be something big.

The fact that others don’t see the potential in this company signals to me that it could be an opportunity for an outsize return. These types of opportunities don’t come along often. I’ll continue to research and will likely go with my (educated) instincts and pull the trigger on this investment.

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I was getting an investor’s perspective, and he said something that resonated with me. He’s a big fan of taking risks and trying things. Planting seeds, he calls it. He never knows whether the seeds he plants will germinate or, if they do, what they’ll become. One may grow into something massive. He’s lived this way, and it’s worked out well.

I agree, to a point. It’s important to try new things. If you don’t, the chances of having an outsize outcome are minimal. As Wayne Gretzky said, “You miss 100% of the shots you don't take.” On the other hand, I think trying to do many things at once isn’t ideal for most of us. You can spread yourself so thin that the thing that could be a winner doesn’t work because it isn’t getting enough attention.

My approach? Try new things in hopes that one will grow to be something big—and give each one the sun, soil, and space it needs to germinate and thrive.

I’ve shared a few of my views on Apple’s potential to be a consumer bank and how consumer lending is heating up. Yesterday I had the opportunity to chat with someone who’s worked at one of the largest US banks for over twenty years. Our conversation was social, but I couldn’t resist sharing my views and getting his take on where banking is headed. Our chat was enlightening. I learned a great deal about the inner workings of the bank, how the largest banks view Atlanta as a strategic city and are expanding rapidly, and how this has led to a hyper competitive Atlanta market for bankers, with salaries rapidly increasing.

One of the biggest takeaways was that what matters to consumers in a banking relationship is changing fast. Historically, large banks won because of their branch networks. The more branches, the better. Consumers knew that wherever they were, they could find a branch and get whatever help they needed. The branches were banking’s version of distribution. The branches were a core part of how the products and services the bank offered reached their customers. Establishing a network of brick-and-mortar branches was costly and time consuming, so the largest players had moats giving them defensible competitive advantages.

Now, consumers are rapidly shifting from in-person banking interactions to digital banking interactions. You don’t need to go to the bank to deposit a check or get a loan. You can do many tasks electronically via a mobile app or website. Because of this shift, consumers evaluate banks differently. Consumers care less about a network of branches because they don’t need to visit branches. They care more about digital tools. They want the best and easiest-to-use technology.

This banker was telling me that digital distribution is changing the banking world. The large banks that previously had the best distribution because of their branches are seeing their moats erode quickly. The companies that offer the best digital experiences are winning.

How companies get their solutions in customers’ hands matters a lot. Said another way, distribution matters a lot. The digitization of distribution will drastically change banking. Apple, Square, and other companies will compete for banking relationships like never before.