I’ve been sharing my views about Apple’s push into financial services since 2021. I believe digital distribution will disrupt banking. I also believe the iPhone has positioned Apple perfectly to benefit from this change and become the financial services partner consumers and small businesses trust. Here are some of the moves I’ve noticed:

• Buy now, pay later in Canada
• Tap to Pay announced
• Apple high-yield savings account
• Pay Later loan product announced

Yesterday it was reported that Apple has expanded testing of its Apple Pay Later service to its employees. This is a big step that shows the company’s getting closer to launching this product widely.

Markets matter a lot. Big outcomes require large markets. Apple is an enormous company worth (i.e., with a market cap of) about $2.4 trillion as of this writing. Any new business that Apple pursues must be—or have the potential to be—a large market. Otherwise, it won’t move the needle for a company as huge as Apple. Consumer and small business financial services is an enormous market, and it’s been primed to be disrupted by changes in how consumers access financial products (digital vs. brick and mortar). This makes it an amazing and high-priority opportunity for Apple.

Don’t be surprised if iBank or Apple Bank dominates consumer and small business financial services within the next five to ten years.

An early-stage founder gave me his pitch recently. He’s just finishing the first version of his product and looking to raise investor capital. One of the things I noticed was that he listed multiple problems he’s trying to solve and multiple types of customers he’s solving problems for (consumers, small businesses, etc.). I wasn’t sure exactly what he’s solving, who he’s solving for, and what exactly his solution does. We talked, and he clarified the main problem, the target customer, and the solution, improving his pitch and my understanding.

Early-stage companies have limited resources. Given this constraint, they can’t be everything to everyone. It’s best to focus, get proficient in your area of focus, and then expand when you have more resources.

Investors, especially early-stage investors, are aware of resource constraints and are less likely to invest in founders who are solving multiple problems for multiple customer types.

For early-stage companies, focus is the name of the game. If you can’t get great at one thing, you likely won’t get great at several things.

Today I heard a story about a start-up that’s down to its last few months of cash, doesn’t have a line of sight to profitability, and is at odds with its investors. I’m not involved and haven’t spoken to the investors or the founders, but I do know the company is in a tough spot. Everyone knows it. Instead of coming together to find a way out, the founders and investors are at odds; they can’t see eye to eye, which is making a bad situation worse.

Every company is bound to hit a bump in the road. Some of the bumps will be painful for everyone involved. Today we’re in an environment where companies are facing the prospect of down rounds, which isn’t ideal for founders or existing investors. Down rounds aren’t the end of the world, though. Meta (formerly known as Facebook) did a down round in 2009. Knowing that hiccups are inevitable, founders should conduct their due diligence to understand how prospective investors have historically handled challenging periods with other portfolio companies. Depending on your circumstance, what you find out may not change who invests in your company, but it can inform how you interact with your investors or the term sheet details (number of board seats, etc.) you agree to.

It’s easy to get along with everyone when money is flowing, but the good times won’t roll forever. It pays to understand how the people you’re considering partnering with handle tough times.

Over the last few weeks, several founders have shared their 2023 plans with me. A few of them intend to fundraise—otherwise, they’ll run out of cash. With those founders, I chatted about cash balance, burn, and runway. And I always asked them what plan B is if the fundraising environment further deteriorates. Most of them have no plan B. Raising is the only option they’re considering, which bothers me.

When I hear a founder say they must raise, it makes me think of this blog post from Bill Gurley. Though it’s a few years old, it’s relevant to today’s environment. Bill was ahead of his time in his thinking. I like how he laid out the following alternatives when founders can’t raise a clean round of financing at a flat or up valuation:

• Dirty term sheets – These are terms sheets that give founders the valuation they want but come with many surprises down the road. Bill does a great job of explaining this and who “shark” investors are.
• A clean round at lower valuation – Valuations don’t only go up. Many high-profile companies raised down rounds and went on to have massive success. A down round is better than a dirty round (i.e., a dirty or structured term sheet).
• Positive cash flow – I focused on this when I bootstrapped my company. The best way to gain leverage and control your destiny is to not need to raise capital from others. Easier said than done for sure, and not an option for all founders, but a good exercise for founders to go through. I personally think we’ll move to a focus on a path to profitability over growth for start-ups because valuations will likely start being pegged to profits rather than revenue.
• Go public (i.e., IPO) – This is more of a longer-term goal. Bill makes the point that founders’ and employees’ common stock is treated as equal to investor stock after an IPO because investor preferred stock converts to common. This eliminates liquidation preferences and other rights that preferred stock has over common stock.

Bill’s post is thoughtful and contains a lot more great material relevant to the current environment. It’s worth a read for founders and anyone else in, or considering entering, the start-up world.

I had the chance this week to catch up with a founder who hasn’t gotten the traction he’d like in his fundraise. He has a solution that’s working. It’s generating revenue and has a small, but loyal, customer base. But the long-term viability of the solution doesn’t resonate well with all investors. They wonder if it can be scaled.

I know a little about his industry. I keep up with thought leaders and have formed my own views on the direction of the industry. I shared my vision for where the industry is going. As we chatted, I realized that his pitch is missing a vision for the future. The current solution is likely a stepping stone to something bigger, but his pitch doesn’t communicate that because he doesn’t say what his vision is for the industry. Nor how his solution helps turn his vision into reality. Therefore, investors fixate on the scalability of the current solution instead of thinking about how it can evolve to create value in the world of the future.

Having strong opinions about what the world will look like in the future and how your solution fits into that future world is important for a founder. And not just for pitching investors, but also for recruiting team members and landing business partners.

Creating a vision for the future isn’t easy. It requires understanding a problem so deeply that you can predict how the world will evolve because of the problem. Founders should have conviction regarding their vision but also understand that it might not be 100% accurate—and that’s OK. The important thing is to have a vision you can support with an understanding of the problem that others don’t have along with conviction that makes others want to be part of the mission to turn your vision into reality.

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

• Ideas aren’t original – Ideas aren’t usually new. Others have had your idea before, and someone may even have tried to execute on it. It’s always worth finding out whether that’s happened and, if so, what caused them to succeed or fail.
• Team – When you’re trying to do something difficult, you often can’t do it by yourself. You need others, but finding people who are the right fit isn’t easy. This week was a reminder of that.    

Week one hundred forty-nine was a good week. Looking forward to next week!

I’m a fan of continual improvement, and I’m always looking for techniques to make it happen. I enjoy reading about ways for individuals and teams (e.g., a company) to optimize performance. Lately, I’ve been reading about individual optimization—sleep, diet, exercise, and cognitive performance. I made some notes:

• Things that move the needle the most on personal optimization aren’t the most appealing options (sometimes you dread them). And doing them can be an unpleasant experience. But when you finish and are on the other side of your decision, you feel great and happy you did whatever it was. Examples include big things like a grueling physical workout. But they also include little things like cutting a TV show short to go to bed early.
• The things that slow or even prevent personal optimization are often attractive options that feel great in the moment. But you don’t feel great, or you have regret, when you’re on the other side of the decision. I’m thinking of things like excessive alcohol consumption (i.e., a hangover), an unhealthy meal, or even staying up late to watch a movie. All of them feel good in the moment, but later that day or the next day when they negatively affect your performance—not so much.

Sometimes I focus on the desirability of an activity—how I’ll feel as I do it. If I dread it, think it will be unpleasant, or just don’t want to do it, sometimes I opt out. That’s the wrong approach. Given my desire to optimize my performance, I want to change the criteria I use to make these decisions. I want to focus on how the activity will make me feel afterward. Said differently, I’ll ask myself “Will this make me feel better or improve me?” If the answer is yes, I should do it. If the answer is no, I should say no (though there will always be exceptions).

Asking myself this question is a simple mental hack to make better decisions that optimize my performance.

The market is a big factor in a start-up’s success. I was telling a founder that I was able to scale my start-up to over $10 million in annual revenue because of the market. Without a big and growing market, it wouldn’t have happened. Sure, I did some things right (and a lot wrong), but the market was key.

My company sold automotive products online. Most customers were individuals and small businesses. The parts we sold had historically been hard to locate and difficult to transport due to their large size. We built technology to aggregate inventory in a single place and optimize fulfillment and transportation.

That’s all fine, but the thing that allowed us to scale was the market. It was big and growing quickly. Consumers were rapidly adopting online shopping. Online shopping as a percentage of overall spend was increasing rapidly. People started with smaller items to get comfortable shopping online and eventually embraced the idea of buying large, bulky things like mattresses, couches, and auto parts online too. As the online market for bulky items expanded, we benefited tremendously. If consumers had never gotten into shopping for bulky items online, we never would’ve been able to scale the company to the level we reached.

It’s important to understand the market for the problem you’re solving. You can be a rockstar founder with a rockstar team and an amazing solution and still not scale your company quickly—because of the market.