This week I listened to the founding team of an early-stage startup describe their current traction. They’ve built a software product and have thousands of (nonpaying) users. To determine what features their customers would pay for, they sent them a survey. Twenty-five percent of the people who responded said they’d pay for a particular feature. So, the company built that feature and launched it recently. The results weren’t good. Only three (yes, three) customers bought it.

So, what went wrong?

The team surveyed customers; they didn’t talk to customers. Talking to customers involves picking up the phone or meeting a customer in person (one customer at a time is ideal). A conversation, if you aren’t leading them, will allow you to dive deeper into the customer’s thought process and experience. It’s iterative. You hear something you weren’t expecting (or didn’t know) and ask questions about it. That leads to something else you didn’t expect, and you ask more questions. The result of that loop is new insights about the customer’s problem. Do that with multiple customers, and you start to see a pattern. You now have a better understanding of the problem and how to solve it for the customer.  

What I described can’t be done with surveys. Surveys may have biased questions that don’t help you understand your customers. And they foreclose iterative interaction with your customers. Sure, they’re efficient and allow you to get a lot of feedback quickly, but the quality is often low, and it can lead you down the wrong path.

The lesson this early-stage team learned was to stop doing surveys of their users and start getting them on the phone. Conversations lead to insights. You can’t have a conversation in a survey.

Earlier this month, I shared that my weekend-only project to update my library won’t be completed until November at my current pace. I could either make peace with that or ramp up my pace to add more than two books per weekend.

Pondering the situation, I decided to finish the project well before the holiday season kicks off. I’m afraid that if I finish in November, I’d be more likely—with all the holiday distractions—to not begin another weekend project. I want to have established the habit and momentum of a new project before the holidays.

I’m going to add more books to the library every weekend. Four, or maybe even five. I’ll test it this weekend and settle on a number. My goal now: complete this project by mid-to-late October.

Wish me luck!

Weekly Update: Week Two Hundred Eighty-Five

Current Project: Reading books about entrepreneurs and sharing what I learned from them

Mission: Create a library of wisdom from notable entrepreneurs that current entrepreneurs can leverage to increase their chances of success

Cumulative metrics (since 4/1/24):

• Total books read: 80
• Total blog posts published: 525

This week’s metrics:

• Books read: 1
• Blog posts published: 7

What I completed this week (link to last week’s commitments):

• Read Invested, Charles Schwab’s autobiography detailing his founding of Charles Schwab Corporation and how he built it from a pioneering discount brokerage into a financial services company catering to individual investors
• Added two more books that I read in 2018 to the library on this site—see more here; they were about the $5 billion Malaysian 1MDB scandal and the high-stakes underground poker world

What I’ll do next week:

• Read a biography, autobiography, or framework book
• Add two more books that I read before 2024 to the library on this site—see more here

Asks:

• No ask this week.

Week two hundred eighty-five was another week of learning. Looking forward to next week!

Current Project: Reading books about entrepreneurs and sharing what I learned from them

Mission: Create a library of wisdom from notable entrepreneurs that current entrepreneurs can leverage to increase their chances of success

What I struggled with:

·      No material struggles last week

What I learned:

• The lawsuit by a group of authors against Anthropic, parent company to Claude AI, resulted in a $1.5 billion settlement last week. I’m still learning about this and similar cases brought against firms like Anthropic. From what I can tell, using books to train the Anthropic models isn’t what got Anthropic in trouble. The lawsuit was for copyright infringement and Anthropic not compensating the creators of the copyrighted books. Anthropic used pirated books to train its models, which means authors weren’t paid for the use of their books in model training, a key issue that appears to have led to the settlement. I get the impression that if Anthropic had purchased the books, it could have used them freely to train the models because the authors would have been compensated for the use of their copyrighted work.

That’s what I learned and struggled with last week.

In 2024, I challenged myself to accelerate my learning by reading a book (usually a biography) a week. To date, I’ve done it for 79 consecutive weeks. I wanted to share what I was reading and also keep track for myself, which was difficult (see here), so I created a Library section on this site. I added to it all the books I’ve read since my book-a-week habit began in March 2024, and I’ve committed to adding my latest read to the Library every Sunday (see the latest here).

That left the books I’d read before 2024 unshared and untracked. I set a goal to add my old reading to the Library over time. It began with a Memorial Day Challenge to add five books (see here) and continued with my challenging myself to add two books every weekend until my backlog is gone. This past weekend was my fifteenth weekend, and I added two more books:

• Billion Dollar Whale by Bradley Hope and Tom Wright
• Molly’s Game by Molly Bloom

That’s the latest update on my weekend goal. I hope that sharing these books will be of value.

Last week, I read about John Bogle’s journey to build Vanguard into an index-investing powerhouse (see here). That biography mentioned discount brokerages having been launched in the 1970s. Ameritrade was one of them, and I wanted to learn more about it, so I read the memoir of Joe Ricketts, founder of Ameritrade.

The Harder You Work, the Luckier You Get is a candid recount of Ricketts’s life in his own words. It details how he went from college dropout to struggling stockbroker with a growing family to founding his own discount brokerage firm in Omaha. Ricketts’s story was interesting because he didn’t found his firm (which ended up being a technology firm) near the financial capital, Wall Street, or the tech capital, San Francisco. He founded and scaled his firm in Omaha, Nebraska. Another thing that stood out to me was how regulation played a huge role in his success. In 1975, the government eliminated fixed commissions on stock trades, which opened the door to negotiated commissions and a new business model that Wall Street had never seen (and wasn’t ready for): discount brokerage. Ricketts and three partners launched First Omaha Securities, the predecessor to Ameritrade, that same year.

Ricketts’s early years were also interesting to me because they align with my interest in understanding the 1968–1982 era. Ricketts provides lots of perspective on this era and on how his firm navigated raging inflation and a bear stock market. A point Ricketts emphasized, and that I’ve read elsewhere, is that between 1968 and 1982, the Dow Jones Industrial Average lost 75% of its value, adjusted for inflation (inflation peaked around 12%).

Anyone interested in learning more about Ricketts, Ameritrade, the stock brokerage business, or how a nontechnical founder built a tech company should consider reading The Harder You Work, the Luckier You Get.

This week, I listened to an entrepreneur who’s building a software platform that helps online clothing sellers manage businesses that sell mostly through social media platforms, such as Instagram. The thing that caught my attention was that the company is focused on micro SMB sellers, who make up the majority of this fast-growing market. The company is performing well and has generated over $1 million in revenue.

I’ve shared my thoughts on the micro SMB market before (see here). I think it’s a great market that’s overlooked because people don’t know how to find and convert super-small business owners into customers. There’s no proven playbook. My interaction this week with this entrepreneur further increased my bullishness about this market.

Companies are being built right now to serve this market, and they’ll be massive companies in the next five years. By the time people realize the market opportunity, these companies will be so far ahead and so critical to how the micro SMBs operate that it will be extremely difficult to compete with them.

This week, I met with someone who recently finished their MBA and is trying to decide what city to move to. Their job has given them the flexibility to choose to live in any of several major cities. This person is in their early 30s and looking for not just professional but also personal success. They want to live in a city that will help them in both areas. Succeeding professionally but not having a social life or finding a life partner wouldn’t cut it.

The more I’ve learned from my own mistakes and from reading biographies, the more clear it’s become that your personal network heavily influences the opportunities you’re presented with and your probabilities of succeeding (whatever that means to you). This is true of your personal life, too—the people you socialize with have a big influence on its direction.

I suggested that they go through all the personal and professional relationships they’ve built over the last several years, identify the important ones, and plot the cities those people live in. Then they can count the number of strong personal and professional relationships in each city they’re considering moving to.

My advice was to strongly consider the city that scores highest in strong relationships in both spheres. It’s impossible to predict what any city has in store for you, but living and working where you have the most high-quality personal and professional relationships drastically increases the chances of your finding success in both arenas.

Yesterday, I shared why I love what Andrew Carnegie said about why you should put all your eggs in one basket, which is counter to how most people think. It’s simple, but it’s far from easy to execute. And even if you execute it well, success isn’t guaranteed.

Picking the right basket to put all your eggs in is the hardest part of execution. Whether you’re founding a start-up or making a concentrated investment, this choice is critical. And you must have conviction in your decision so you can weather the inevitable ups and downs. Therefore, you can’t haphazardly pick something based on a whim. You must do the work to deeply understand each of your options. Doing the work often leads to what others might consider an obsession, but it’s what uncovers the insight that others miss—the insight that reduces your risk, tilts the probabilities in your favor, and helps you build the conviction needed to go all in.

Andrew Carnegie’s method isn’t something that everyone is suited for. Making that kind of decision and sticking with it to the end requires mental grit and toughness. But for people with the right mind-set, when it’s done well, it can lead to outsize results.

A friend reminded me of some wisdom attributed to Andrew Carnegie that I’ve always loved because it’s counter to what most people believe leads to outsize success or investing returns:

The way to become rich is to put all your eggs in one basket and then watch that basket.

Mark Twain famously said something in the same vein after hearing about Carnegie's remark (source).

This quote resonates with me because it’s what every wealthy person I know personally did. In either company building or investing, concentration (i.e., extreme focus) on one thing is what led to outsize success. If you focus on one thing, you’re more likely to know everything about it and be able to assess it better than others. You’re likely to spot what others have missed, which reduces risk and tilts the probabilities of success in your favor. When everyone else thinks the chance of success is 10%, you realize it’s 60%.

What I’ve also seen is that after someone has achieved outsize success, they embrace diversification as a means of preservation and reducing downside risk.

Said differently, concentration is for building outsize wealth (or a business), and diversification is for preserving that wealth (or that business).