I like to keep my finger on the pulse of new technologies and emerging trends, but it’s easier said than done. One of the ways I do it is by catching up with early-stage founders who are building in that space. The founders in the early days of launching a company are typically as close to ground level as you can get. They’re usually hands on keyboard and in the weeds of everything. Hearing how they’re applying new technologies and what positives and negatives they’ve experienced helps me understand things from a practical perspective. I also try to make sure these conversations are bidirectional by providing feedback on anything that’s on the top of their mind (that I can help with).

I’ve found that this is a great approach to staying abreast of new things and maintaining relationships with and giving back to early founders.

I recently had a conversation with an aspiring entrepreneur. He wanted my thoughts on a company he was considering starting in a space I’m familiar with. During our chat, I learned that he’d been an early employee at a tech start-up and stayed for several years. That company recently sold for a few billion dollars. His equity as one of the first few employees gave him a financial windfall. Because he was on board so early, he worked closely with the CEO for several years, and they still talk regularly. The CEO encouraged him to start a new company and offered to back him once he settles on an idea.

I love to hear stories like this. An early employee is part of a company that turns out to be a massive win. He gets a significant financial reward. Seeing his former CEO’s journey firsthand makes him want to take the same journey. And he already has the backing of his former CEO, who knows his drive and worth ethic.

These are the kind of stories that, when repeated, lead to a city having a thriving start-up ecosystem. We need more stories like this!

Last year I shared a post about Atlanta having the highest inflation rate among U.S. cities in 2021. My post was inspired by a Wall Street Journal (WSJ) article that talked about how Atlanta saw an influx of people during the pandemic, because of the city’s attractiveness, that caused Atlanta to have a higher inflation rate than other cities (mainly driven by above-average increases in housing costs).

I wanted to see where Atlanta stands today, so I did a little digging. The U.S. Bureau Of Labor Statistics (BLS) produces a city-specific Consumer Price Index (CPI) for various metropolitan cities, including Atlanta. The latest report, released this past week on November 14, includes Atlanta’s October CPI.

When the WSJ came out in February 2022, the 12-month Consumer Price Index for All Urban Consumers (CPI-U) for metro Atlanta was 10.6%; it peaked at 11.7% a few months later in August. Since August 2022, the rate has been declining, and it stood at 3.2% as of last month. For context, before the pandemic in December 2019, Atlanta's CPI-U was 3.3%.

I did a quick check against New York and Miami and found that Atlanta ranked below both cities in October. New York’s 12-month CPI-U was 3.5%, and Miami’s was 7.4%.

I’m no CPI expert, but the data appears to be showing that the rate of cost increases in Atlanta is moderating. The BLS’s next metro Atlanta CPI will be released on January 11. I’m curious to see whether this trend continues.

If you’re interested in reading the city-level October 2023 CPIs for Atlanta, Miami, and New York, they’re here, here, and here. 

As I’ve been researching more public-market companies, I’ve noticed that most of the CEOs aren’t the original founders. That makes sense for companies that have been around for many decades. But it’s true even for companies started within the last twenty years.

This got me thinking. It’s difficult to take a company from zero to, say, ten million in annual revenue. Many founders struggle to level up as the company goes through various transitions. Going from zero to hundreds of millions or billions of dollars in annual revenue must be a gargantuan task—one that only the rarest and most talented founders can accomplish.

I’m now wondering, what traits do these founders have in common that help them go from zero to billions? They level themselves up continuously—what’s their secret?

Over the next few months, I’m going to spend time learning about a few founders who are still CEOs of public companies founded in the last twenty years. I’m curious about what I’ll find—and then whether their traits exist in any early-stage founders I encounter.

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

• Brainstorming – This week I spent time brainstorming with a fellow investor. We ended up landing on an interesting idea we’re both excited about digging into more. Neither of us entered the conversation with the idea. This was a reminder of the power of brainstorming with high-caliber people. I need to do it more regularly.  
• Public markets – I’ve been spending more time looking at companies in the public markets. This exercise has me thinking about early-stage investing a bit differently.
• Randomness – The world is full of randomness. Things that have a low probability of happening nevertheless happen sometimes when you least expect them. This week was a reminder of how randomness sometimes produces unexpected surprises or unexpected disappointment (or even pain).
• Fundraising – Next week is Thanksgiving. If founders haven’t received a term sheet by next week, their likelihood of completing a fundraise before year end will have decreased materially.

Week one hundred ninety was another week of learning. Looking forward to next week!

A friend called me today to say he’d been offered a complimentary, all-access pass to this weekend’s Formula 1 race in Las Vegas. He was on the fence at first but decided to accept the offer because it’s a once-in-a-lifetime opportunity. He pulled the trigger and made travel arrangements.

Once-in-a-lifetime opportunities don’t come my way often (of course), but when one does, I try to quantify the magnitude of the opportunity and then act quickly to capitalize on it if it’s truly great and rare. I’ve found that truly rare opportunities don’t last long. If you don’t take advantage of one, someone else will—with lightning speed.

A few months back, I purchased a book that was recommended by several investors who’ve had outsize success over a long period of time. I typically buy a book only if credible people recommend it and the Amazon reviews are 4.5 stars are higher. This book fit both criteria, so I quickly ordered it.

When I received the book, I realized two things. It’s 800 pages long, and it was first published almost a century ago. Both facts made me cringe. I generally read books of 300 pages or less. In my experience, the longer the book, the more fluff it contains. I enjoy books that get their points across succinctly. With verbose books, my attention wanders. I also personally don’t enjoy books written long ago because the writing style is so different. It can be a struggle for me to grasp the authors’ points because I’m not used to that way of writing. I put the book on the shelf to read later. That was months ago, and I haven’t touched it.

This book is so well regarded that I don’t want to keep putting it off or, worse, never read it. Today I set a goal: read this book by the end of the Thanksgiving weekend. That means I need to read all 800 pages by November 26. Setting this challenge for myself reenergized me in relation to this book. I can’t wait to hit this goal and learn the insights in it.

I’m a believer in non-consensus investing—that is, taking advantage of investment opportunities that don’t fit into the conventional framework used by other investors. A leap of faith is sometimes necessary. I like these investments because they require independent thinking and going against the grain, two things I embrace. To get to conviction on these opportunities, I usually do a deep dive into them, so I understand them well.

After I’ve made one of these investments, I sometimes share my thinking with other investors who are using more conventional frameworks. Recently, an investor agreed with my analysis but still didn’t think my investment was a good one because this kind of investment hasn’t historically produced significant returns.

I respect his opinion—after all, I asked for it—but I disagree. Someone must be the first to do something. The person who makes a non-consensus investment first or early is usually going to reap an outsize return, assuming it works out. When other investors follow, their returns are likely to revert to the mean because of the increase in capital chasing the opportunity. I’d rather be in the former group. I like investing in things others might not. It’s more mentally stimulating, has more upside potential, and is a better fit with my personality and wiring.

Today it was reported that Google has a revenue-sharing agreement with Apple that pays the iPhone maker a staggering 36% of the revenue that Google earns from search ads on Apple’s Safari browser. The two companies have had a partnership since 2002 that makes Google search the default search engine on Safari. These details were revealed in testimony in an antitrust lawsuit.

I don’t know how much revenue Apple receives under this agreement, but I’d imagine it’s in the billion if not tens of billions of dollars annually, given the global popularity of iPhone and other Apple devices.

Apple’s successful hardware business has another benefit for Apple. These devices are highly effective modes for distributing software and other digital tools, and companies wanting to distribute digital offerings to consumers will pay Apple to do it for them. Apple’s App Store and the revenue-sharing agreement with Google demonstrate that Apple is aware of its distribution power and plans to continue to monetize these capabilities.

I had a conversation this past week with an entrepreneur who’s run a successful business for several years. During our conversation, I realized he didn’t know the cash flow of his business—or what that means. After more chatting, I realized that he didn’t understand his balance sheet either. He didn’t know how much he owed others or how much he’s owed. He mainly bases his decisions on his bank account balance and profit and loss statement. This approach to decision-making has hindered the business’s growth over the years.

In college, I was forced to take accounting classes as part of my finance curriculum. I’m not much of a rule follower and hated memorizing countless accounting rules. Many years later, I can’t remember any of those rules to save my life. But the concepts stuck with me. How to read core financial statements and how the statements work together to show you a complete picture of the business are the biggest takeaways from those courses. When I was an entrepreneur, those foundational concepts improved my decision-making. Now that I’m an investor, they’ve helped me spot opportunities and problems early that others have missed. I hated my accounting courses and don’t remember most of what they covered, but they taught me how to understand accounting. 

Accounting is often called the language of business. To thrive in business, entrepreneurs need to speak the language—or at least understand the foundational concepts underpinning accounting. If you’re an entrepreneur or aspiring to be one, consider taking time to learn basic accounting concepts. It may be difficult, but it will likely pay off in the long run.