In my first year of running CCAW full time, I did an awful job of keeping my personal and business expenses separate. Considering my financial background, one would think I’d have been on top of this from day one. I wasn’t. I did a good job tracking gross profitability. But I used company profits to supplement my personal life. Once I surrounded myself with other entrepreneurs, I learned that was a common bad habit. And I learned how to rectify the situation.

Mingling business and personal expenses is unwise for a variety of reasons. I’ll share a few here:

• Taxes – Filing accurate tax returns is more challenging when expenses incurred by the business may or may not be related to the business. This can come back to haunt a founder, usually at the worst possible time.
• Decision-making – It’s hard to rely on the data to make business decisions when there are non-business-related expenses in the data.
• Bad example – When employees see this type of behavior, it sets a bad example from the top. Employees may think it’s OK and mimic you.
• Mentality – If you begin by using the company as a personal piggy bank, you’ll tend to do so more and more as the piggy bank gets more dimes and quarters in it.
• Tug of war – A growing company may require a reinvestment of profits to fuel further growth. Decision-making can be challenging when the founder has to choose between maintaining the lifestyle to which they’ve become accustomed and growing the company.
• Owner versus employee – Founders often own the company and work in the company. These are two separate things and should be treated as such. Founders should get a wage for the work they do in the business. If the business is profitable and it make sense to take cash out of the company, an annual distribution or dividend can be paid to the owners.

This list isn’t comprehensive; it’s just a few of the reasons you shouldn’t mix business and personal expenses. Going into 2021, founders who are mixing should consider starting the New Year off on the right foot.

Yesterday I shared my thoughts on ways entrepreneurs can derisk without selling their entire company. A friend reached out after reading the post and we had a conversation about private companies as an asset class to invest in. He isn’t involved in tech or start-ups, so I enjoyed hearing his perspective.

My friend views high-growth private companies (i.e., start-ups) as a truly unique asset class. He thinks a start-up is an amazing investment opportunity when it’s generating profits (not breaking even or losing money). The ability to generate more cash than the company needs to maintain a high growth rate is what makes it an attractive investment. He sees a supply-versus-demand imbalance that these companies can benefit from. Historically low interest rates have investors seeking higher returns. More investors are seeking this type of investment opportunity than there are companies that meet these criteria. As valuations for these companies rise, the return on invested capital goes down, but if the company is growing at a high rate and generating surplus cash, the return is probably far better than the return on holding cash in a bank account—a great investment.

My buddy makes some good points. If you can build a profitable company that’s growing quickly, it’s unique and hard to replicate. The higher the growth rate and the higher the profit margin, the more unusual the opportunity. If the entrepreneur can receive meaningful distributions without affecting the growth rate, the entrepreneur can derisk without selling ownership in the company and while the company quickly appreciates in value. That’s an amazing position to be in as an entrepreneur.

I think my friend makes a strong case for why entrepreneurs should maintain ownership of profitable high-growth companies. Having been an entrepreneur and having close friends who are founders, though, I can definitively say that everyone’s situation is different. Every entrepreneur must decide for himself or herself whether that advice works for their circumstances.

A lot of entrepreneurs have a goal of selling their company. It makes sense when you think about it. They often take below-market or no salary for years. During the seven to ten years or so that it takes to scale a company, most of them transition to different life stages (marriage, family, home purchase). These and other factors can put immense pressure on an entrepreneur over a long period of time. The pressure can motivate them to carry on through tough times. It can also be a factor in setting a goal to sell.

When I talk with entrepreneurs, I like to understand the “why” behind their desire to sell in X years. With some digging, I often learn that what they really want is to derisk their financial situation. They decide to sell because it’s the only option they know of to get some liquidity. I define derisking as removing enough financial pressure to be comfortable—not to be in a position where they can do whatever they want without having to work. Maybe their home and their children’s educations are paid for and they have some savings. They’re not flying around in private jets to their multiple homes.

There are lots of options that allow entrepreneurs to derisk without selling the entire company. Secondary share purchases are one tool. Raising a round of capital through investors buying shares from employees or executives is common. Private equity and venture capitalists do these deals regularly. The founders can maintain a controlling majority ownership and continue to execute on their vision for the company. One founder friend likes this route because it “takes the edge off.” I know another founder who took this route so he could “swing for the fences” without worrying about his family. Because he knew that his family was comfortable, he felt good about growing more aggressively and making some bold bets.

If you’re trying to build a large company, know that there are ways to derisk during the journey that don’t require selling your company. Also, be mindful that most investors understand the desire for some security once enough scale is reached. Most will want to work with someone who’s focused on building something big, not ejecting at the first offer to sell the entire company.

Today marks the end of my fortieth week of working from home (mostly). Here are my takeaways from week forty:

• Countdown – With vaccinations beginning this week, I think there’s a mental shift happening. I had a lot of conversations with people who mentioned counting down. People see the light at the end of the tunnel.
• Reshuffling – I’ve noticed that some days or weeks are heavy with commitments. This week was one of them. It was unintentional. When I noticed it, I made some adjustments to avoid overextending myself. Too often, I’ve pushed through these periods and felt drained when they were over.
• More deals – This week it was announced that CallRail raised another $56 million. Atlanta tech companies are still seeing lots of activity. The holidays are here, but I expect more deals to be announced over the next few weeks.
• Holiday – Christmas is next week, and I’m looking forward to the holiday and the extra downtime.

Week forty was busy, a big push before Christmas. Next week should be much slower—a good time to wrap things up before the end of the year.

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

I’ve noticed a pattern in the lives of people I admire most in life. They tend to be members of great partnerships that contributed to their success. Co-founders . . . business partners . . . spouses. Being part of a team has allowed them to accomplish things they otherwise wouldn’t have. Because their strengths offset their partner’s weaknesses, and vice versa, they form a well-rounded team.

Almost universally, great partnerships go through rough patches. It happened to Bill Gates and Paul Allen. Such a time is a defining moment for the partnership, and how the partners work through it will determine whether their partnership becomes stronger or dies. The partners don’t see eye to eye, but if they make the effort to understand each other and resolve points of conflict in a respectful way, it will demonstrate commitment to the partnership and go a long way toward moving past the period of conflict.

I’m a huge fan of co-founders. I think startups increase their chances of success by having more than one founder. But it’s almost inevitable that the co-founders won’t always get along. If this happens to you, consider taking a step back to think carefully about how you want to resolve the rift. In fact, you might even consider planning for it in advance. Your approach will have a lasting impact on your partnership—not to mention your business and your life.

I recently shared my thoughts on the value that investors offer aside from investing capital and the importance of founders building relationships with investors early. You want those relationships to be healthy, which I believe includes their being bidirectional. I discussed this in more depth with a founder and was asked how someone new to entrepreneurship can add value to a relationship with an experienced investor. It was a great question.

Founders often have deep knowledge in their space. They’re on the front lines, so they can spot trends and challenges before others are aware of them. They may notice that an early company is gaining traction before that becomes apparent to anyone outside the space. While it might not seem like it, all this industry knowledge can be valuable. Sharing it is a great way to add value to your relationships with investors.

Founders are constantly learning. (To build their company, they must.) Investors are too. They’re learning about new problems that they can help great founders solve. Helping investors (or anyone for that matter) learn about your space quickly can be a great way to build a bidirectional relationship.

Over the years, I’ve been humbled. I used to think I was superhuman—capable of doing anything. Now I recognize that I’m not good at everything, nor do I have the experience to navigate certain situations. I’ve learned to ask for help. Learning from the experiences of others has been invaluable in challenging times. If I’d done it more in those early years, it would’ve saved me tons of time and energy. I encourage early founders to learn from my experience.

Learning from others isn’t a one-time thing. It requires investing in and maintaining relationships. I’m a big believer in healthy relationships being bidirectional. As an early startup founder, it doesn’t feel like you have much to offer people who are sharing their wisdom with you. That may be true, but you can do one important that they’ll appreciate: close the loop. When you ask people for help or advice, follow back up with them to let them know the outcome. Good, bad, or ugly. They’ll appreciate the effort.

I sometimes fall short, but I do my best to close the loop. I appreciate and respect other people’s time, and I make sure to thank them when I close the loop. Simple to say, simple to do—but powerful. It will strengthen your relationships.

I few months ago I rejoined Discord. (I tested the platform years ago, but it didn’t resonate with me then.) Discord allows users with different interests to create communities on the platform. It offers a variety of features and ways for users to interact, but I mainly use the chatting. I was looking to get better at one of my hobbies by connecting with people I could learn from. I read about a private Discord server (i.e., community) and decided to check it out.

I got invited to the server and found what I was looking for and more. I was a novice among experts in this community. I was surprised by the amount of knowledge and information that was flowing freely. People were transparent and highly engaged in the conversations. Some even collaborated and pooled resources to solve really big problems, sharing their findings with the community. I now check it every day.

My experience got me wondering how many others were finding community through Discord. I dug a little and learned that Discord raised $100 million this summer at a $3.5 billion valuation. At the time, it was said to have 100 million active users (monthly, I’m assuming). The company was recently rumored to have 120 million monthly active users and to be finalizing another round of funding at a $7 billion valuation. I think it’s safe to assume that people are finding community there and investors are taking notice.

I shared my musings on rethinking and creating community the other day. I believe community is a big opportunity for 2021. Discord’s traction demonstrates that people are looking for community. The growth of this sector may change, but I think people will continue to seek new solutions to this problem.

Amazon announced an initiative to offer free cloud computing training. Its goal is to help 29 million people globally grow their skills in cloud computing by 2025. I got really excited when I read about this. Cloud computing is exploding. I believe it will continue growing for the foreseeable future. Amazon will provide knowledge and training (free of charge) and help many people excel in this emerging industry rather than watch it from the sidelines.

I recently talked with a close friend about declining industries and their impact on my hometown and similar communities. When a dominant industry declines, its workers often have trouble finding employment because many players in that space are downsized at the same time. They may not have the necessary skills for roles in other industries with comparable pay. They end up taking jobs that pay less, which has a ripple effect on the local community. Over time, this has a negative impact on all aspects of the community and is hard to reverse. Communities once dominated by the steel industry but now struggling are an example.

Our economy is changing faster than ever. We’ve seen revenue redistribution and other factors accelerate growth in some sectors and bring others to their knees. The pace of change highlights the need to help our workforce adapt. That’s why I got excited when I read about Amazon’s initiative. I like its approach and hope that others replicate it. It will help many people if more growing industries have the foresight to invest in skills training early. I also hope that we provide more support and resources to aspiring entrepreneurs to accelerate new business creation. These two things will provide the foundation local communities need to continue thriving and adapting to our changing economy.

Today marks the end of my thirty-ninth week of working from home (mostly). Here are my takeaways from week thirty-nine:

• Community – I miss seeing people in the Atlanta tech community. I’m looking forward to the day when we can interact in person safely. Community will be top of mind for me and many others in 2021. If working from home and other habits become the norm, people will be seeking community more than ever. I view 2021 as a time that offers a unique opportunity to create and rethink community across in many sectors, not just tech.
• Working smarter – I spent time this week thinking about what I want to improve. I thought about what was and wasn’t working but realized I do better when I begin by defining the end goal. After I did that, it was easier to see what activities were misaligned and start figuring out what changes to make. I’ll keep doing more of this over the next few weeks.  
• More deals – Last week Microsoft announced the acquisition of Slack. This week was busy for IPOs. Doordash debuted Wednesday and Airbnb debuted Thursday. Investors are bullish on tech companies and are paying high premiums for high growth. I expect this trend to continue with more large deals announced before year’s end and maybe into Q1 too.
• Weather – Last week I shared how the cold weather negatively affected me. It warmed up this week and we had more sunshine. My productivity and mood were noticeably better. I know there’s lots written on this, but I’m still amazed to observe it in myself.
• Chapter 2021 – 2020 will end in two-and-a-half weeks. It’s been a wild year, and I’m looking forward to turning the page.

Week thirty-nine was a reflective week. Next week is the last full workweek before Christmas. I’m looking forward to it being both productive and reflective.

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