I’m often asked why I didn’t raise capital from investors at CCAW, instead choosing to bootstrap. I think people expect to hear some strategic thought-out reason. The truth is much simpler. I didn’t know any better. That may sound ridiculous. Let me clarify a bit.

Not raising capital forced me to be capital-efficient, but it also resulted in challenges. Most of them I didn’t recognize until much later. We had customer revenue from day one, so I viewed us as different from companies that burn cash for months while they build a product. Customer cash flows were fine in the beginning, but as I started to think more strategically it wasn’t enough. We had enough money to pay salaries and other operating expenses, but sometimes we didn’t have enough left to invest in strategic projects. And if we did, we didn’t have enough for the entire project.

I found myself in a situation where I couldn’t afford the appropriate resources for the entire time it would take for these projects to pay off. This resulted in a start-and-stop rhythm. We’d start, run out of money, and stop until we got enough in the bank to start again. This extended projects unnecessarily and frustrated the team. Really big projects can require people who work on nothing else. With some of them, it takes a year or two before you see an ROI. That means paying salaries for two years without a contribution to revenue or profitability. We couldn’t afford to carry salaries on the books that long if they didn’t result in revenue. Our large projects were understaffed at times or simply never happened. Strategic projects are what move most companies forward. We never had enough runway to execute properly on our strategic projects. We had too many conflicting draws on our limited capital.

With the benefit of hindsight, I’d do lots of things differently. Mainly, I’d think hard about the resources needed to implement my vision. That would take time, but I’d identify the first major milestones. The milestones would be early indicators of success. For CCAW, that would’ve been early signs of increasing revenue. I’d determine what people and resources were needed and what the time frame was. I’d put all that into a simple budget. That budget, along with my vision, would have been great tools for soliciting investor capital. Had I gotten an investor, it might have given me the breathing room we needed to start working toward my vision. Notice I didn’t say it would’ve been enough capital to make the vision reality—just enough to show others that my team had what it took to make progress. If we were successful, I’m sure additional capital would have been easy to come by.

Hindsight is 20/20, and I wouldn’t change anything about my journey. The situation I’ve described isn’t unique to me. I regularly speak with entrepreneurs in similar situations. They just don’t have enough breathing room to begin executing.

If you’re in that situation, considering identifying short-term milestones that will show you’re headed in the right direction. Couple them with a timeline and budget and you’ll have a powerful tool that will help others understand your vision. Asking for a small amount of capital (just enough to allow you to make some progress) de-risks you as an investment. You will still hear “no” from lots of investors, but you’re more likely to find one willing to give you a shot. There’s a lot to be said for breathing room!

When I started CCAW I was still working full time at EY. I was traveling every week, so I spent my evenings working on CCAW in my hotel room. Once I gained traction, that wasn’t enough. I began handling some things during work hours too. Over time I found myself working two full-time jobs. It pretty much sucked. I definitely wasn’t aiming for that, but that’s where I landed. I never heard any complaints from my superiors at EY, but I’m pretty sure they noticed. It took me longer to complete assignments. I was always taking phone calls. My focus just wasn’t there. I was running on fumes. I eventually went full time at CCAW when I couldn’t take it anymore.  

Over the years, the theme of focus resurfaced in different ways. I learned that focus was important not only for me but also for the entire team. I spent lots of time developing the company vision and identifying the single thing we should all be focused on at any given time to make that vision a reality. When we focused, we were a well-oiled machine that accomplished amazing things. When we weren’t, we weren’t as effective and didn’t achieve our goals.

Why? It’s pretty simple. There are schools of thought that encourage multitasking, but in my opinion people aren’t great at focusing on multiple things at once. It can be done, but the result is less than ideal.

Starting a company is hard. A lot of things outside your control have to go right for you to be successful. Focus is something you can control that increases your chances of being successful!

I met with an entrepreneur who’s addressing a unique problem in the automotive space. He’s done lots of customer discovery and is looking to build an early version of his MVP. And he wants to build a marketplace and asked for my insights. We didn’t build a marketplace at CCAW, but we overcame challenges similar to those encountered by marketplaces. After a decade of hitting our heads against a wall, this is what we learned:

• Customer acquisition – Don’t outsource customer acquisition or use third-party software long-term. Third-party platforms (Shopify, Magento, etc.) are cost-effective to begin with, but they will eventually hinder you. These platforms aren’t built with your specific problem in mind. They have to appeal to many, so they must be somewhat generic. This will prevent your solution from being great. It will only be somewhat good. You try to customize the platform to overcome this. The more you spend to customize it, the harder it is to transition away from it. Such platforms will never be as good as building your own technology from scratch. All successful marketplaces (Airbnb, eBay, Etsy) built technology to nail solving the problems they saw.
• Product catalog – This is hard to address, but it’s critical. Don’t underestimate it. Understand the products you’re selling and build technology to manage the catalog properly. Don’t outsource the catalog or use third-party software long-term to manage it. We had about thirty thousand products in our catalog at CCAW. Taking the time to build technology to store that catalog gave us a huge competitive advantage.
• Pricing – This is one of the most important things in marketplaces. The right products with the wrong prices won’t sell. If pricing is calculated (i.e., not provided by the sellers), invest in developing your own technology long-term. (Are you seeing a pattern here?) We built a dynamic pricing engine at CCAW that became part of our secret sauce. It was frustrating and took a year to perfect, but once it was finished it was a thing of beauty and a big competitive advantage.
• Supply – This advice is more specific to the automotive industry, but I’ll share it anyway. You don’t want to go too big or small when you’re finding your first suppliers or sellers. Find companies large enough to have adequate systems and processes in place so they will be reliable and provide data in a consistent automated manner. Medium-sized players usually have these things, plus they’ll value the relationship. Big players typically won’t see the value in working with early companies; it’s more of a nuisance to them. Smaller players will be eager to work with you, but their lack of systems and processes will be an issue. Starting with one or two medium players is usually enough to test. Remember, your goal is to learn what you don’t know. We started out with one supplier at CCAW. Once we finished learning, we courted larger companies that were by that time eager to work with us because we had our act together and they’d heard good things about us.
• Supply side operations – Don’t worry about things like shipping, returns, and customer service at the MVP stage. You can manually handle this stuff with a patchwork of tools like Excel, Gmail, etc. They’re important, but not as important as getting the demand side (customer acquisition) right. First things first. Focus on acquiring customers effectively before you invest in supply side operations. If you can’t get any customers, you won’t need better systems on the supply side.

My biggest learning was the importance of focusing on the demand side when you’re building a marketplace MVP. Yes, you absolutely need supply, but you don’t need to have a world-class supply side operation or a ton of supply sources. Understand the customer’s pain points and address them. Doing so will help you accumulate customers and keep them coming back. If you nail this, you’ll have more customers than you know what to do with and then you can fix everything else!

At CCAW, I was always thinking about making the company better. How can we make our customers’ experience better? How can we make it easier for our vendors to do business with us? How can we use technology to improve internal operations and make life easier for our team members? It was a relentless decade-long quest to be better. It definitely worked. We built an amazing company and some pretty cool technology. Admittedly, I pushed extremely hard (sometimes harder than my team thought I should!). In my mind, there were all these ways we could be better and I wanted to attack them! I wanted us to reach our full potential.

One day I had a conversation with my mom that put things in perspective. She reminded me of where it all started and who helped me. In the early days of CCAW, I stored product at my parents’ house (and other places too). My mom constantly asked me, “When are you going to get all these boxes out of my house? This isn’t a warehouse, Jermaine!” My parents lived in Louisiana and I was in Atlanta (or wherever EY had dispatched me for the week). I used spreadsheets to track the product I was storing and manage customer fulfillment. When we sold product, I would get on the phone and coordinate with my Dad to get it to customers. The stuff was heavy and bulky. He usually made time to ship stuff after working a grueling day in the sun at a refinery. Without his help, there’s no way I would have been able to get CCAW off the ground. I’m super appreciative of that help—and of him for putting up with me.

That conversation with my mom stopped me in my tracks. I realized that instead of focusing all the time on making improvements, I should recognize how far I’d come and how other people helped me get there. At the time of that conversation, we were probably doing around $7 million in annual revenue. We had built a completely automated system that fulfilled hundreds of daily orders from dozens of warehouses nationwide. Yes, there were still warts on the business, but it had come a long way.

From Mom, I learned that things will never be perfect and there will always be things you can improve. It’s important to remember to acknowledge how far you’ve come and the people who helped you get there (thanks Dad!).

How far have you come? Who helped you along the way?

After I published yesterday’s post, I remembered another question from Friday’s Q&A session that stood out to me:

How do you push through when you’re having a bad day?

Someone who asks this in an open forum is probably seriously struggling with the issue. And there are probably ten more people experiencing something similar but suffering in silence. For this reason, I felt it was an important question to take seriously. I answered it Friday during the session, and I’m addressing it again in this post.

The most important thing for entrepreneurs to understand is that they’re human beings. They’re not superhuman or indestructible. They experience the same emotions as everyone else. And like everyone, they have bad days. It’s OK to have an off day. In fact, it’s normal. When entrepreneurs have an off day, they should be honest with themselves and acknowledge what they’re experiencing. Sounds simple and maybe even stupid, but it’s important. Being honest with yourself is the first step in dealing with a bad day.

Then you can be honest with others. I’ve written about this: support systems are critical to entrepreneurial success and mental wellness. Bad days are one reason that’s true. If there’s someone you trust to act as a sounding board, you can talk with them to work through what happened, and why. Such conversations often help you let go of the troubles of the day and move forward.

Even if you’re having a bad day, stuff still needs to get done. Retail stores don’t close because the staff is having a bad day. You won’t have sympathy for your HR department if your paycheck is late because someone had a bad day. What things do you have to get done, regardless? Create a system under which you’ll be held accountable. There are lots of easy ways to do this. Email updates are a simple approach with numerous benefits. Another effective tool is a daily team huddle or stand-up meeting. Any of these can unlock the power of accountability. I credit accountability for some of my more successful periods. Avoiding it is a huge mistake that many early entrepreneurs make (I know I did).

Everyone has bad days. The key is to recognize one and take steps to turn it around in time to prevent a bad day from turning into a bad couple of days or a bad week.

Yesterday I had the privilege of being on a virtual panel that spoke to about 50 early entrepreneurs. The session was full of entrepreneurs with great ideas. I found it energizing and insightful. At the end there was a Q&A session. We were peppered with tons of great questions, but one stood out to me:

How do I find early customers?

I’m sorry to have to tell people that there’s no secret group that will unlock the door to early customers. Entrepreneurs have to hustle to find them. In my opinion, the right strategy can make it easier (though not easy). I’ve noticed that finding early customers is many times harder when founders do things in the wrong order, which is VERY common. Bob thinks the world needs product X because he experienced a problem or noticed it would be helpful to others. He decides to build it. What has he done? Created a solution without understanding the problem from the perspective of potential customers. He’s done a ton of work based on what he thinks about the problem, which is worthless. Why? Because Bob isn’t the customer. He won’t pay for the solution. Bob may be right—what he built is missing and pretty cool. That doesn’t mean customers will pay for it.

Ideally, entrepreneurs should build rapport with potential customers before the solution is ready. Sounds hard, but it’s not if approached correctly. The key is to do customer discovery before you start building. Find people who are experiencing the problem you see. Ask them about it. Why is it such a problem for them? How are they working around it now? Have they looked for a solution? There’s a great book that explains how to go about doing this.

People love talking about themselves and their problems. By listening to understand (not to inject your opinions), you’ll develop rapport with them. These conversations should help you build a better solution to the problem. When it’s ready, people you’ve nurtured a relationship with will probably be open to trying it. If it solves the problem (it may take time to get there), they’re likely to refer you to people they know who have the same problem.

In other words, making the effort to deeply understand the problem early on will benefit you in two ways: you’ll have a better idea of how to solve it and you’ll have potential customers already waiting for it when it’s ready.  

Entrepreneurs see an opportunity where others see a problem and sometimes stubbornly cling to their vision of the opportunity. There’s nothing wrong with having conviction, but great entrepreneurs take the time to understand the “why” behind the opportunity they see.

Today marked the end of my twenty-seventh week of working from home (mostly). Here are my takeaways from week twenty-seven:

• Strained eyes – I shared my challenges with this issue last week. I received my blue-light glasses and they’ve helped tremendously. Despite having three multi-hour Zoom meetings (one for four hours!), I felt minimal strain on my eyes. This is a major change from last week and I’m thankful. I’ll continue to use the glasses and may order another pair as a spare.
• Writing – Writing quality posts was a struggle. I’m committed to writing every day, so not posting was never an option. I’m going to embrace the changes in my professional life and adapt. I hope that over time I can find the right adjustments to make daily writing fit more easily into my new schedule.
• Founder energy – I had a marathon of meetings with founders this week. The energy and enthusiasm emanating from these founders is encouraging and contagious. I’m hopeful I’ll have the chance to work with some of them as part of an investment portfolio.

Week twenty-seven was a busy week but a great one. I’m relieved that I was able to reduce my eyestrain. I’ve been very worried about it.

I’ll continue to learn from this unique situation, adjust as necessary, and share my experience.

When I worked at EY, I had a great group of friends. Over time, I found that my circle consisted mainly of people at public accounting or similar firms. When I talked about entrepreneurial ideas, the response was often a blank stare. Most people in my network viewed life through the same lens. There wasn’t much diversity in thinking or interests.

When I started CCAW I didn’t know many entrepreneurs in Atlanta and struggled to gain traction. Eventually, though, I connected with some amazing founders. These people had different backgrounds and were solving all sorts of interesting problems. They were knowledgeable about finance, technology, the arts, advertising . . . To this day I’m amazed at how diverse this group was.

As I look back, I see that the diversity of my network played a huge role in my growth. These people introduced me to things I didn’t know existed. For instance, in 2009, I had no idea what a software developer did. Exposure to that knowledge led to CCAW building technology that would help power its growth.

When I’ve needed help in an area in which I’m not strong, my network has been a valuable resource. I once renovated a property and was terrified the project would go awry. Someone I knew helped me by giving me information that was critical and led to the project being successful.

Having a diverse network has also helped in recruiting. When I needed a great creative, artists I knew introduced me to credible candidates.

The diversity of my network has helped shape me. It’s broadened my perspective, made me more empathetic, and given me confidence to do things outside my areas of expertise.

If you’re building a company, doing something else great, or simply want to continually grow, seek friends and acquaintances who are different from each other—and different from you. The exposure could change your life!

I used to enjoy reading box office rankings every week. Movies were ranked by total gross sales that were reported by theatres nationwide to a central organization, which published the data. It was my way of staying in tune with popular culture. It also helped me understand just how massive the movie business is. Yes, I know this is super nerdy, but hey, it worked for me. I haven’t followed these in a few years and hadn’t thought much about why until yesterday.

A sharp founder connected the dots for me. Box office sales are no longer an accurate reflection of consumer movie-viewing habits. This has been the case for the last few years, and the pandemic accelerated this trend and at the same time completely halted the collection of this data. Content creation has historically been dominated by large studios, with movies being distributed through theatres. Box office receipts helped creators understand how their content performed with audiences and estimate its future value. Equally high-quality content is now distributed (and sometimes created) by platforms like Netflix, Hulu, and Amazon Prime Video. As I understand it, these platforms don’t share their viewership data. So how do creators know how their content is performing on a platform or across multiple platforms? They don’t. Without viewership data, it’s difficult for creators to understand the value of their content. This is a big problem that creators are trying to solve. There are companies actively working on it, but I don’t believe anyone has solved it in a way that all stakeholders will readily adopt.

Distribution varies by industry, but at a high level it’s how a product or service reaches customers. Distribution methods have been evolving over the last decade, with the pace of change constantly accelerating. Especially now, with COVID-19 looming over everything. After entrepreneurs achieve product–market fit (i.e., customers readily pay for their solution), they should be thinking about how their product or service will reach their customers.

Early in my journey building CCAW, I was fortunate to have the opportunity to develop relationships with a handful of amazing technical founders in Atlanta. Over the years, some of them went on to create businesses valued at tens and even hundreds of millions of dollars. I was sometimes privy to the behind-the-scenes story. I heard the thought processes that led to some incredible accomplishments. I knew about early traction and success before they were made public. I saw firsthand how successful technology companies were built—Atlanta-style, at least. I was super excited for these founders. To this day, I still root for them.

As a nontechnical founder listening to these stories, I was motivated to keep pushing. I had a vision and I was trying to turn it into a reality. Often my efforts failed. Naturally, it was frustrating. I wanted to reach the level of success my peers were experiencing.

I shouldn’t have been frustrated. I was trying to build a company that relied on technology. Except . . . I wasn’t technical. Where technological knowledge resided in the brains of those other founders, I had a massive gap. No wonder some of my ideas didn’t work out. I learned from each failure, though, and my decision making improved. It took time, but I eventually made a good decision that led to success. Looking back, I see that my situation was different from my peers’, so it makes sense that my journey was different too.

You can’t do things the way other people do. People have divergent backgrounds, educations, work experiences, resources, and personal circumstances. If you want to build a company or accomplish anything else big, comparing yourself to others is futile. Work hard. Educate yourself. Learn (from others, and on your own). Try, and try again. Whatever time it takes, it takes. Find your own way to success.