I’ve been posting daily for over three years, and I appreciate the craft of writing. I’ve started paying more attention to up-and-coming writers who share their thoughts via newsletters and platforms like Substack and Medium. Some of these writers are entrepreneurs who’ve turned their love of writing into a full-time business. They generate revenue in a variety of ways, including paid user subscriptions, sponsorships, and paid ads.

I chatted recently with one of these writers. He’s built a subscriber base of tens of thousands of people that generates material revenue. And while he loves writing, he does other things besides monetize his writing. His writing helped him build a brand and a following that attracts founders who are building companies in the space he’s writing about. He wants to help these founders, and he does: he invests capital in companies he’s intrigued by, makes connections to people in his subscriber network whom the founders normally couldn’t reach, and highlights start-ups his audience will want to hear about. It’s an interesting entrepreneurial approach anchored by writing.  

Writing is a great way to build a loyal audience. Once you have an audience that trusts you, you can pursue all kinds of entrepreneurial things with their support. I believe we’ll see the emergence of more entrepreneur–writers who use all kinds of interesting business models to turn writing into a viable solopreneur path. I can’t wait to see how this space evolves over the next few years.  

I caught up with a successful late-stage founder. His tech company is doing tens of millions of dollars in annual revenue and growing at a healthy rate, but it’s still unprofitable. Exiting his business has always been this founder’s goal, which he’s transparent about to everyone. During our call, he shared that his exit-value expectation has changed.

He was targeting a unicorn exit, meaning he wanted to sell his company for more than $1 billion. But he said that the late-stage market for tech companies isn’t great, and he’s come to accept the idea of an exit of $100 million or more. He, his investors, and his employees would all realize a material outcome above that number, and an outcome above $1 billion is unlikely.

That’s a big change in what’s acceptable to this founder, but it reflects the current reality. I’m curious to see how the thoughts of founders at all stages about valuations evolve as the rest of this year unfolds.

For early-stage founders, achieving product–market fit is an important hurdle. Iterating on a solution until it creates enough value for customers to be happy to pay for it isn’t easy, but for a successful company, it’s necessary.

In a world where people are more distributed, I’m a big fan of early-stage founders creating communities around the problem they’re solving. Bringing people with similar interests together can create value for all of them.

For the start-up, building a community early is a great way to accelerate reaching product–market fit. Early community members don’t need to be customers or users. They just need to have an interest in the problem being solved. Passionate community members can provide valuable insights on the problem that help founders understand what solution to build. Engaged community members with whom founders build a rapport are more likely to try a new product and provide honest feedback on how to make it better. All of this can help founders develop a superior solution sooner.

For community members, being around others with similar interests makes them feel connected and understood. The community has lots of benefits for members. One is the free flow of information and knowledge, which is valuable because it can lead to outcomes that otherwise wouldn’t happen, such as job opportunities.

Communities are powerful and can be cost-effective. Start-ups should consider whether it makes sense to create or become active in a community for their space.

I spent time with a smart founder this week. He’s started a few businesses that failed, which I knew about. During this conversation, he shared something I wasn’t aware of. He created a social event that he hosted annually for several years. It was focused on getting people from all walks of life to enjoy time together on a lake. What started as a small gathering with a few people turned into an annual event with hundreds of attendees and major sponsors. It was a profitable event the founder organized from thousands of miles away while working a full-time job at one of the largest public tech companies. Some of the learnings from this event led to the tech start-up he’s building now.

Listening to the event’s origin story, I concluded that this founder has a knack for understanding what people want (even if they can’t articulate it) and creating it. He’s a combination of customer focused and action oriented. Much of the event’s success was due to his marketing savvy. He created marketing campaigns that spoke to the customer’s desire. Word spread quickly: the campaigns were highly effective at acquiring event attendees for minimal cost.

This founder is hipster and hustler in one. I’m excited for what he’s building next and can’t wait to see how he uses his hipster–hustler skills to turn this new company into a massive success.

This is my one-hundred-fifty-sixth weekly reflection. Here are my takeaways from this week:

• 1,100+ daily posts – I’ve been posting daily for three years. I never would’ve imagined I’d keep up with this habit for this long, but I’m glad I have. Writing thoughts down is a powerful habit that’s had a big impact on me.
• Messaging – Working on messaging for a project. Messaging isn’t easy, but it’s important: it can have a material impact on perception and comprehension.
• Communities – This week was a reminder of the power of community. Bringing people together who otherwise might never connect is powerful and allows for serendipity.  

Week one hundred fifty-six was an exhausting week. Looking forward to next week!

Early-stage founders have been asking for advice about their fundraising plans lately. Many are planning to raise this year after avoiding a difficult fundraise environment in the second half of last year. Many of these companies don’t have runway past 2023. They’re looking to raise venture capital to extend their runway.

If last year taught us anything, it’s that the availability of venture capital funding isn’t a given; it’s heavily impacted by macro conditions. Venture capitalists themselves were impacted by macro conditions and had a difficult time raising capital from their limited partners in the second half of last year.

Raising capital isn’t the only way to extend a start-up’s runway. Increasing revenue and reducing expenses are also levers founders can pull to extend runway. Expenses can be cut only so much, but revenue growth is limitless (hypothetically).

In today’s environment, I’m a fan of founders with limited runway taking control of their destiny by trying to get their companies to breakeven. It’s not possible for all founders, but if it is a possibility (even a slim one), it makes sense to work toward it if you have limited runway. It reduces or eliminates cash burn, extending runway. If venture capital is still an objective, it puts the founder in a better position because they don’t “need” the investment to survive. This approach has its downside, too. It could negatively impact growth. That’s not ideal, but a slower growing company is better than a dead company. If a founder achieves breakeven and manages to show growth (even slightly), it’s a good signal to investors and could increase their desire to invest.

If you’re a founder running out of runway, consider the option of moving the company toward breakeven.

Two emerging venture capital fund managers shared their biggest learning during a session I attended today. They said there’s a difference between being a fund manager and being an investor. They spend more time than they anticipated managing their fund versus investing. Managing a fund means doing administrative tasks like working with the fund administrator, doing people related tasks, and managing limited partners. They underestimated the amount of energy and time these tasks require. These tasks also take away from the time they can spend finding great founders to back and supporting the founders they’ve already backed.

Starting your own fund is about more than being an investor. It’s more like being a start-up founder—wearing multiple hats and being spread thin. It’s also a decade-long commitment (assuming your fund is a ten-year fund). For those who haven’t worked at a fund before, it’s even harder as they don’t have a baseline for how a well-run fund operates.

Building a successful fund requires that the founding partners be good fund managers and good investors.

I had the chance to listen to Mike Smith, Cofounder and General Partner at Footwork, share his experience as an startup operator and new venture capital fund manager. Mike was one of the first five hires at Stitch Fix and helped that company scale to over $2 billion in annual revenue and have a successful IPO in 2017, when he was President and COO. He and his partner also raised a $175 million debut venture capital fund. And he was part of the team that helped build out Walmart.com. Mike has a wealth of experience and, obviously, has been part of some successful outcomes.

Mike shared a ton of great insights. One that he emphasized as important to his success was this: He’ll take less talent and more team. Mike believes that large outcomes are the result of a team effort. He wants to work with people who are good team members and willing to work hard, rather than genius individual contributors who create difficult team environments.

I enjoyed hearing Mike talk about his experiences and share this insight. I can’t wait to see what he builds at Footwork.

Today I participated in a mock negotiation session that was designed to mirror a negotiation between venture capital investors and founders. Most participants hadn’t negotiated an investment deal before, so I was curious to hear their takeaways.

One of the founders shared something that stuck with me. Their negotiation started off with aggression from the investors, which set a bad tone. And the investors were aggressive with terms throughout the negotiations. Toward the end, the investors realized they were running out of time to get a deal done and offered a better deal. The founder was so frustrated by the experience that she didn’t even realize they had offered better terms and walked out without a deal. She was stuck on the aggressiveness of the entire process and couldn’t bring herself to do a deal with these investors.

Venture investors and founders, when they come to an agreement, are planning to work together for many years. But at deal term negotiations, they have opposing interests. Today’s session was a reminder that starting off with aggressive negotiating tactics isn’t a way to begin a long-term partnership and can blow up the partnership before it even forms. The best deals are ones that everyone is comfortable with, neither side got everything they wanted, and they’re looking forward to working with each other.  

Earlier this month marked three consecutive years of sharing my thoughts publicly. I started posting on March 9, 2020 (my first post) because of a friend’s challenge. Here are my takeaways from my third year of posting:

• Reflection frequency –The more time between reflection periods, the less likely I am to uncover valuable insights because there’s more information. The more information to consider, the less likely I am to make connections between nonobvious pieces of information. Reflecting daily allows me to think more deeply about a shorter time period (less information) and identify nonobvious insights.
• Second-level thinking – Posting daily has enhanced my second-level thinking.
• Conviction – I have more conviction about my non-consensus views that have resulted from this process.
• Clarity of thought – Writing has helped me think more clearly on important topics. I’ve noticed this, and people close to me have commented on it too.
• Public thinking – Public writing leads to better outcomes than writing privately because it forces more clarity of thought.
• Second nature – The habit of posting daily is second nature to me now, which I enjoy.
• Quality – Every post isn’t going to be Pulitzer piece. That’s OK and normal given the daily frequency of this habit. Life is more eventful sometimes, and my posts reflect that.
• Appetite to learn – My appetite to learn has always been high, but it’s increased. I want to consume more information that I can reflect on and write about.
• Compounding knowledge – Consuming new information daily, reflecting on it daily, and writing about it daily is an effective process for building knowledge in a compounding manner.
• Topics – My writing has shifted from my experience as an e-commerce entrepreneur to my future as an investor entrepreneur.

I’m glad I picked up this habit and have stuck with it. It isn’t always easy, but after three years I can see that the positive far outweighs the negative. I want to keep this habit going and can’t wait to see what year four has in store!