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 this week

What I learned:

• Understanding what has happened helps us understand what’s happening now and what might happen in the future. However, it’s not always easy to get context on historical events or periods. Reading multiple books to piece together history is often necessary. Giving people historical context from multiple books in a way they can access quickly is tremendously valuable to them.

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

This week I heard multiple people compare the current AI revolution to the period when the internet was introduced in the ’90s. One was an accomplished entrepreneur I had a conversation with. Another, a seasoned VC investor who founded his firm in 1994 and has ridden the wave since, was on a podcast.

One of my takeaways from both conversations was that the internet introduced a new technology paradigm that reshaped society and led to a financial gold rush that lasted decades.

All of this got me thinking. I’m curious about how the cycles around new technologies work and how to identify what stage of a technology cycle you’re in. I have a rough idea, but not as detailed an understanding as I’d like. I’m going to look for some historical books on this topic to help fill my gaps.

Following up on yesterday’s post (see here) about the back office and recordkeeping. Another huge benefit of having good records is that it means your financial reports are accurate. If your financial reports are accurate, you make better decisions because you understand the current state of your business. Which means you can plan better for the future.

Surprisingly, many entrepreneurs don’t know the true financial health of their business. They don’t have good financial reports, or they don’t know how to read them. They make decisions based on bank balances (see here), but bank balances don’t account for unpaid liabilities.

Having accurate financial reports that provide a full picture of the business’s health is critical for entrepreneurs. And financial reports are only as good as the data and the processes that create that data. Recordkeeping and the back office are boring and seem like a cost center. But it all starts there. If you make them a priority, the trickle-down effect is a clear picture of the business’s health through accurate financials, which empowers you to understand the current state of your business and make better decisions about the future.

Recently, I had a conversation with an entrepreneur whose business is going through an audit by a government agency. He mentioned that a few years ago, he decided to pay a premium to upgrade his back office administration. That decision seemed expensive at the time, and he was reluctant to do it because of the added expense. But looking back, it’s clear that it saved him a tremendous amount of time and money in this audit, and he now realizes it was money well spent. His clean documentation has been a lifesaver in helping him smoothly navigate the audit. Because he has clean files and documents, he’s been able to quickly answer the auditors’ questions and provide supporting documentation.

To entrepreneurs who’ve found product–market fit and are growing their company, a solid back office to keep paperwork organized and create clean accounting records is important, but its value isn’t understood. As a business scales, an entrepreneur can’t be involved in everything. They transition to running the business using data and numbers generated by the business. If the numbers and data they’re fed aren’t quality, their decisions won’t be quality and the business will suffer.

In the case of this entrepreneur, having clean records is helping him run his business more efficiently with a close eye on profitability and navigate what could otherwise be a painful and costly audit.

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 75 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 eleventh weekend, and I added two more books:

• The Mastermind by Evan Ratliff
• Secrets of Sand Hill Road by Scott Kupor

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

I’m continuing to lean into my curiosity about the late 1960s through roughly 1982. This was a period of social and economic change. Interest rates were near 20%, and inflation was double digit.

Last week, I shared a biography I read about how Thomas Rowe Price Jr, founder of T. Rowe Price Group, navigated that period. This week, I dug into how Warren Buffett handled it by reading Warren Buffett’s Ground Rules. It was pre-Berkshire Hathaway, so Buffett was managing an investment partnership, Buffett Partnership Ltd. (BPL), and investing other people’s money (his LPs’).

This book isn’t specifically about the period in question. It’s more of a framework that details the principles that governed Buffett’s investments and how he applied them during the years he was actively investing via BPL, 1956 to 1969. The book is unique in that each chapter focuses on a Buffett principle, which is explained and then supported with excerpts from various BPL letters Buffett wrote. It does a great job of explaining his thinking and some of the investments BPL made. It devotes a section to the structure of BPL. It describes the three investing strategies Buffett used at BPL to generate outsize returns: generals (buying generally underpriced securities), workouts (profiting from merger arbitrage), and controls (taking majority ownership to influence a company’s direction).

This book also explains Buffett’s thinking regarding how to navigate the period I’m interested in. I learned that Buffett opted to sit on the sidelines and not invest. In May 1969, he announced that he was closing BPL and would return investors’ money. He went on to send a 17-page letter to his investors in early 1970 about the mechanics of tax-free municipal bonds, which he suggested they invest in. After BPL closed, the stock market experienced a very volatile period with significant declines in several years.

It was great to learn about the early Buffett days, his strategies, and why they worked. It was also eye-opening to see how he sidestepped the period I’m curious about. Anyone interested in BPL or Buffett’s early days should consider reading this book.

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: 75
• Total blog posts published: 490

This week’s metrics:

• Books read: 1
• Blog posts published: 7

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

• Read Warren Buffett’s Ground Rules, a framework for how Warren Buffett ran his pre–Berkshire Hathaway partnership, Buffett Partnership Ltd., from 1956 to 1969
• Added two more books that I read in 2020 and 2023, these about venture capital deal structures and financial crises, to the library on this site—see more here

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:

• Seeking technical lead or cofounder – I’m looking for a senior full-stack developer skilled in AI retrieval. If you know one who’d have an interest in working on the software project related to books, please introduce us!

Week two hundred eighty 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 this week

What I learned:

• Books often link to concepts in other books, but those connections aren’t visible. You have to read a book to uncover them. This week, with the help of a friend, I added to the library the ability to see the number of each book’s connected books. This simple quantification of the number of connections added a lot of value for me—and I read the books! I suspect it will add tremendous value to others. If this can be done on a larger scale, not just the books I’ve read, I think this could create.

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

This week I had a conversation with an early-stage founder who’s building software for micro SMBs. After being at it for several years, he’s finally hit product–market fit. He’s doing over $1m in annual recurring revenue, is cash-flow break even, and wants to raise from VC firms to accelerate growth.

As we chatted, he told me that he’s made it to several final meetings with VC firms where he presents to the entire partnership. They love the product, but they don’t understand how the go-to-market will work for micro SMBs or how big the market opportunity is. So, they pass.

This conversation reminded me of a post I wrote a few months ago (see here). There’s no tried-and-true playbook for selling to micro SMBs like there is for enterprise SaaS, so lots of people avoid it. They don’t understand how big the market is or how to find potential customers.

To me, it’s an obvious white space that people—even some VC firms—are overlooking. And to this founder, the opportunity is crystal clear. He’s dumbfounded that forward-thinking investors don’t get it.

Micro SMBs is an overlooked and great market to go after. The entrepreneurs who get it now will end up building massive businesses with diversified and loyal customer bases. By the time others realize how big this opportunity is, these early entrepreneurs will have a first-mover advantage that will be hard to compete with.

I’m rooting for this founder. He finally found one firm whose people get it. They’ve agreed to be the lead and write a large check in his fundraising round. He’s on his way!

A friend read my post yesterday about adding all the books I read years ago to the Library section of this site. Their question was, “How do you know which books you read, and when, from so many years ago?”

Great question. The simple answer is that I remember most books I’ve read but I don’t remember exactly when I read them if it was before mid-2023. The detailed answer is that I buy all my books (mainly used) on Amazon.com, so my purchase history is there, going back over 10 years. I went through that history and noted all the books I’ve bought and the date of purchase. Some of them are still in the to-be-read pile. I’m adding those that I’ve read to the Library and using the Amazon purchase date as the month and year I read them. It’s not precise, but it’s roughly accurate, which is good enough for me. Done is better than perfect.