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.

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.

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.

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!

A close friend in real estate recently shared what he’s seeing: record low home inventory and rapidly increasing prices. Many factors that I won’t get into are contributing to this. He asked me what I’m seeing with early-stage startups. I told him valuations (prices) are increasing, many new companies are being formed, and there’s lots of investment capital. Again, lots of contributing factors.

The pandemic is still causing a great deal of pain. At the same time, multiple asset classes (real estate, stock market, etc.) are experiencing record highs. We had a lengthy discussion and came to a conclusion. We have no idea what direction everything is going in, but we’re probably witnessing a historic time in our economy and the opportunity of a lifetime (for some).

I’m curious to see where things go and will be watching closely. I won’t get the chance to observe historic change every year.

A friend and successful entrepreneur who recently sold his company shared an interesting prediction with me. Purpose is what motivates most people. The events of 2020 helped many people crystallize what matters most and what motivates them. My friend thinks that companies whose only purpose is profit showed their true colors during 2020, and their employees took note. He predicts an exodus of employees from these companies over the next year or so. Companies that have a clear purpose above profits have built significant trust with their employees and communities with their actions. They are likely to see an influx of people wanting to join them.

On various fronts, 2020 was extreme. I’d imagine almost every company was affected to a lesser or greater degree.

I agree with my friend’s observation. More people are professionally motivated by purpose rather than money. I think this was happening before 2020 but that last year accelerated the trend. I’m not sure if this will cause people to leave their jobs in the short term, but I believe it will be a bigger factor in recruiting going forward. More candidates will judge companies by their purpose.

So, what does this mean for early-stage founders? You can’t build a great company by yourself. You need great people to help you get there. If this trend continues, it could be a boost for companies led by missionary founders. Founders driven by success or financial gain may find themselves at a recruiting disadvantage.

An elder once told me that if your plan requires perfection, you’re more likely to fail. I was in high school or early college, so I didn’t grasp the weight of this comment at the time. Over the years, I learned exactly what he meant.

As a founder, I was super bullish and optimistic about many things I was doing. In my mind, if I did X and Y, Z should happen. Eventually, I learned two things. First, I hadn’t fully understood a lot of things about X and Y, so I couldn’t accurately predict how long they would take to execute and what resources were required. Put another way, I didn’t know what I didn’t know and hadn’t factored in that knowledge gap. Second, I realized that this is an imperfect world. Things beyond my control could happen that would dramatically affect my plans. (Think pandemic.)

Over time, I learned to do a few things that were helpful. I sought out people who had done something similar to what I was attempting and asked about their experiences so I could fill my knowledge gap and adjust my plans accordingly. Next, I started adding a buffer to my plans. If I thought something would take three months, I had a plan in case it took four or five. If something was projected to cost $10, I budgeted for $12. It was my way of accounting for the inevitable curveballs the universe would throw at me.

Early-stage founders should remember that nothing in life is perfect. Especially not in startups! The entrepreneurial journey is a long one, and everything won’t go according to plan. Consider incorporating some wiggle room for yourself and your team.

Today marks the end of my fifty-fourth week of working from home (mostly). Here are my takeaways from week fifty-four:

• New ideas – I had some great new ideas this week. I’ve already shared them and gotten some good feedback. Excited to dig into them more over the coming weeks.
• Connections – Made some great connections this week. It’s always nice to chat with smart people who have different perspectives on things.
• Pace – I was more intentional about the pace I worked this week and about managing my calendar. It worked well. I feel like I had a balanced week.

Week fifty-four was pretty normal. No extreme highs or lows. Straight down the middle.

Great companies create value by solving problems. Their customers get sufficient value from their solution to be willing to pay for it. Founders often have a strong conviction about the value of the problem they’re solving because they’ve lived it or researched it extensively. They feel quite sure that customers await them on the other side of a solution. This may be less obvious to others. Often, it’s challenging for early founders to convince investors of it when customers don’t yet exist.

Sometimes early founders feel caught in a chicken-and-egg situation. They can’t build or complete their solution without funding. And they can’t demonstrate that a market exists for it—they think—unless it’s in use by paying customers.

Founders should be aware that there are other ways to prove there’s a market for a solution. At the end of the day, what you’re trying to demonstrate is that people are experiencing a problem that they will pay to solve. You can do a prospective-customer discovery call and include investors. They will hear directly from the (future) customer about the problem and how painful it is for them. Hopefully the customer will say they’re looking for a paid solution or that they’ll pay for your solution when it’s completed. Another possibility is having a potential customer send an email saying the same sorts of things. A simple oral or written communication like this can go a long way toward validating what the founder believes.

If you can’t get customers to validate a need with their wallets, consider trying to get them to do it with their voices (or fingertips).