March 2020

This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.

How Long Is Your Runway?

Today I had separate conversations with two friends who are entrepreneurs. The Paycheck Protection Program (PPP) came up both times. The program was just announced, so many things still haven’t been sorted out. We agreed, though, about the importance of understanding your runway so you can plan how to navigate the PPP process and communicate effectively with your team, your bank, and other important stakeholders.

At CCAW, I always knew the length of our runway. This equation gave it to me:

  • net cash / average monthly fixed expenses = runway (in months)

Here are some inputs we can use for an example:

  • cash bank balance: $200,000
  • accounts payable (how much you owe others): $50,000
  • monthly payroll: $50,000
  • monthly rent: $5,000
  • other monthly fixed expenses: $7,000

Here’s the calculation:

  • Net cash: $200,000 (bank balance) – $50,000 (accounts payable) = $150,000
  • Fixed monthly expenses: $50,000 (payroll) + $5,000 (rent) + $7,000 (other fixed expenses) = $62,000
  • Runway: $150,000 (net cash) / $62,000 (fixed monthly expenses) = 2.4

This business has 2.4 months of runway left if things get really bad. Of course, this is a worst-case scenario. It assumes the business won’t collect any cash (accounts receivable aren’t included). And it assumes that fixed expenses won’t be reduced. It isn’t meant to be a perfect calculation. It’s just a snapshot to help inform decision-making.

This calculation was revealing to me, especially during difficult times. Every day, I knew how much time I had to right the ship before drastic measures would be required.

I encourage entrepreneurs to regularly calculate their runway and communicate it to key people, internally and externally. This simple metric is super-powerful. It can rally and focus people rapidly, which is critical during difficult times.


Two . . . or Three . . . or Four Heads Are Better Than One

Today I was reviewing the lifeline that I created for CCAW. Something jumped out at me: how hard the journey was in the beginning. From 2007 to 2013, we grew at a healthy rate (with a few resets along the way) and surpassed $1M in revenue for the first time in 2013. Then beginning in 2014 our growth accelerated dramatically and we recorded eight figures in annual revenue by 2018. Seven years to get to $1M and then more than ten times that number within five years!

There was one major thing that was different about those two time periods: high-level talent. In 2014, we hired a COO and CTO. In 2016, we hired another executive to focus on technology. So, in 2016 there were four high-level thinkers focused on growing the business to our defined goal of eight-figure revenue. We had tons of strategic projects that we were executing on independently and collectively. When there were roadblocks or challenges, we huddled to share ideas. Usually, we broke the huddle with an agreed solution. (Some debates did get contentious, but that’s OK because we got to the right answer.)

Before those three hires, it was just me. I did my best to identify the right solutions. Often that required doing research to fill the gaps in my knowledge. I implemented solutions. I managed all the company’s teams. Twenty-four hours a day just wasn’t enough time for one person to do all of that and do it well. The effort was mentally and physically exhausting. The company’s growth, I now realize, wasn’t what it could have been in those early years.

Hindsight is 20/20 and I wouldn’t change anything. But along the way, I learned—the hard way—the benefits of high-level thinkers being part of an early team. You can exploit your strengths to divide and conquer, hold each other accountable, and bounce ideas off each other at critical moments. These, plus a ton of other reasons, are why VCs are hesitant to invest in solo founders.

If you’re in the early stages of growing your business, consider learning from my experience: involve a cofounder or other high-level thinker as soon as you can.


The Power of a Peer Group

When I began working on CCAW full time, I was doing it out of my apartment (WeWork didn’t exist). It was 2008. Because of the financial crisis, I was trying to stay lean and keep the lights on. After a few years, I started to feel like the only human on a tiny island. My personal network could no longer relate to my professional struggles (my family and friends didn’t have entrepreneurial experience). Conversations increasingly ended with, “Well . . . I hope you figure that out.” It was discouraging. I had gone from interacting daily with peers and higher-ups in corporate America to seldom communicating with anyone professionally (except by email and phone). There was no way for me to talk through my struggle with anyone who understood.

Deciding things needed to change, I sought out entrepreneurial groups. I found Entrepreneurs’ Organization (EO) and was super-excited until I learned that I needed $1M in annual revenue to qualify (I was at about $200k–$300k at this point). I kept pushing forward and discovered that someone I knew was a member of EO’s Atlanta chapter. We discussed my predicament, and he told me that EO had created EO Accelerator for people in my position (less than $1M, but with the potential to reach $1M with some help). I asked for a warm intro to the person running EO Accelerator in Atlanta.

Joining EO Accelerator was a turning point in my entrepreneurial journey. Just like that, I was part of a group of peers—people who had taken action on their entrepreneurial dream (they had customers and revenue), were at about the same place (less than $1M), had similar goals (grow to $1M+), wanted accountability (we met once a month for four hours), and were committed (we had to pay an annual fee).

The experience turbocharged my growth. I was now learning from the successes and failures of others, which saved me a lot of time. I was exposed to entrepreneurs in other industries and was able to apply best practices from those industries to my space (this is how I was introduced to tech). I presented my ideas and got unbiased feedback from peers. Within a few years, CCAW’s revenue exceeded $1M and I had a great professional network and a great set of friends. Joining EO Accelerator was pivotal and I’m thankful that EO created the program.

Whatever you’re trying to do, don’t go it alone if you don’t have to. There’s a lot to be gained from working with and learning from other people in similar situations.


Working from Home: Week Two

Today marked the end of my second week of working exclusively from home. Here are my takeaways from week 2:

  • Physical activity – I embraced running outside during week 1, but it’s been raining too much to do it consistently this week. I adjusted by incorporating bodyweight exercises into my routine. I even began a daily challenge (with friends, for accountability): 200 push-ups and 200 sit-ups. Fitbod is a cool app with algorithmic daily workout suggestions customized for you and your situation. Happily, it works when you want to lose body fat and you’re stuck at home with no equipment.
  • Time – My days began to creep a little. I found myself working at 8 p.m. one day. Going forward, I intend to stick closely to defined working hours.
  • Social interaction – I attended a Zoom video happy hour, which was a lot of fun. And I’ve been using Zoom videos often to catch up with people. It helps to see someone’s face during a conversation.
  • Meals – I’m cooking more (after calling Mom for her favorite recipes). Researching and discussing recipes (“What are you cooking?” is a great conversation starter these days) highlighted some of the unhealthy things in those tasty restaurant meals I’m accustomed to. I really miss not doing lunches with people, but I’m replacing them with—you guessed it—Zoom video calls.
  • Relationships – This has been a great time to reach out with and catch up with people. More folks answer or return calls quickly.
  • Goals – Having this much downtime may never happen again in my life. I want to make the most of it. This week, I’m going to consider what I want to accomplish during this lull.
  • Reflection – I’m a thinker by nature, and now I have more time to think deeply about things, which I’m enjoying.

This second week of working from home wasn’t ideal, but it wasn’t bad, either. I’ll continue to reflect on my goals and look for creative ways to interact socially. I plan to learn from this unique situation, adjust as necessary, and share my experience.


Startups Don’t Have to Start from Scratch

I’ve been using Zoom video calls to conduct meetings for the last few weeks. Zoom is a perfect example of a startup (well . . . it used to be) that improved on an existing product rather than creating something new. Zoom’s founder worked for Webex, and he realized its product was becoming obsolete in the age of cloud computing. And Webex’s acquisition by Cisco, a large enterprise company, slowed Webex’s evolution.

The founder saw an opportunity. Wouldn’t video conferencing be better if it was designed to work on cloud computing infrastructure? He built a beta product, raised some capital, and the rest is history. Today, Zoom is publicly traded and has a market cap (i.e., worth) of more than $42 billion. Its product is popular with customers even though it has lots of competitors and it wasn’t the first video conferencing product. (Side note: Zoom currently has an enterprise value of forty-five times 2020 projected revenue. For most publicly traded SaaS companies, this number is in the vicinity of ten.)

Many entrepreneurs feel they should create something transformative that no one else has thought of. But building a better mousetrap can be just as rewarding. (I’m not saying it’s easy—the product usually needs to be ten times better than existing products to scale quickly.) Zoom is a great example. Its founder combined his deep knowledge of video conferencing (his “unfair advantage”) with new technology (cloud computing) to create a much-improved video conferencing experience that customers love.

I like this path because everyone isn’t an idea person or futurist. Most professionals, though, have years of experience in some corner of the world of work and can easily tell you what people don’t like about it and how it could be improved. A great startup idea could spring from that specialized knowledge.


Accept What You Can’t Change . . . Change What You Can

Today I had a conversation with a close friend who is an entrepreneur. His business has multiple locations that provide services to children. We discussed the pandemic and how it’s affecting him (local stay-at-home orders forced him to close). He’s concerned, of course, about the well-being of his fifty employees and of his customers.

The biggest thing bothering him is the uncertainty. He doesn’t know how long he will have to be closed, which makes planning difficult. And he doesn’t know what to tell his team. He’s also not sure whose directives to follow. The city’s? The county’s? The state’s? The federal government’s? I sympathized with him and we decided to brainstorm about ideas to help him through this.

During our conversation, he settled on a strategy. He’s going to make contingency plans for closure lasting one, two, three, four, five, and six months—different plans for each scenario. And he’s going to communicate this approach to his team members, vendors, and customers. Proactively managing the situation is important to him.

I’ve never run a business like his, so I’m not familiar with its nuances. But the merits of his overall approach are obvious, and I give him a lot of credit for coming up with it. He isn’t worrying about things he can’t control. He’s accepting uncertainty, planning as best he can on the basis of the information at hand, and communicating his plans. They won’t be perfect, and things will likely change, but I’m confident that his employees, customers, and vendors will appreciate not being kept in the dark.


Perfect Timing

I believe strongly in the impact of timing. When I incorporated CCAW, it was spring 2007 and the economy was going strong. I figured this trend would continue, so a few months later I made a leap of faith and quit my job. And you know what happened next. In 2008 the country was in financial crisis. Things looked bleak. No one was buying my products and my last employer was laying people off (no way would it rehire me). For the next two years or so, I was in survival mode.

For CCAW’s business model to work as I envisioned, I had to pitch a new way of doing business to automotive vendors. In 2007, most of them weren’t receptive. But in 2009, they were open to almost anything. I seized the opportunity and never looked back. We took that new way of doing business, added some technology, and over the next decade built a company with eight-figure revenue.

Looking back, I can see what happened. I finally got the timing right. In 2007, I was too early. My vendors were doing well financially, so they had no incentive to try new things. A year or two later, they were desperate for new ideas—with revenues down 30%–40% they were looking for ways to grow again.  

I believe you can be too early, too late, or right on time. Sometimes this means you have a good idea but your timing is off. Recognize when you’re too late or too early and adjust accordingly.


Hang On, and Learn from Tough Times

Tomorrow, I’m speaking with a group of rising entrepreneurs about my experience founding CCAW. They’re all very early-stage, don’t have established customer bases, and may not have a product–market fit yet. I’ve been pondering what will be most helpful considering the allotted time (it’s hard to condense more than ten years of insights into twenty minutes) and the reality of the pandemic. I decided to prepare by mapping my CCAW journey in a lifeline (a diagram of the major highs and lows of something, such as a life or a career).

Doing this exercise recalled to my mind lots of great (and not so great) times. I decided to focus on sharing the lows of my journey. My goal isn’t to be negative or pessimistic—quite the opposite. I’m assuming things have gotten very difficult, very fast for this group. By sharing my low points, I hope to communicate these points:

  • Take advantage – Negative experiences mark us the most, and they shape entrepreneurs. Appreciate this time as a learning opportunity.
  • Change – People are forced to embrace change when times are tough. Make wise changes.
  • Cycles – They’re inevitable. Those who survive downturns ride the wave up and do well. Focus on keeping your business alive.
  • You’re not alone – Every entrepreneur (and every business, for that matter) is dealing with the same pandemic. Find a peer group. Their experiences—if you pay attention to them and apply them—will help you navigate this difficult time.
  • No comfort zone – When you’re uncomfortable, you’re usually growing. Get comfortable being uncomfortable.

Finding the Silver Lining in the Coronavirus Cloud

More and more state governors are issuing stay-at-home orders to protect people from exposure to the coronavirus. Consequently, many of us are spending more time inside than we usually do. I assume that some view this positively and others negatively. Either way, the orders are a short-term fact of life that we have to deal with.

Though far from ideal, this is a rare opportunity for some people (including me). Today I thought about what I can work on that will have long-term importance to me and that requires some concentrated time.

Here are some of my ideas:

  • Research things of interest – I’ve been interested in trading stock options for years. Now I have time to read about it.
  • Care – Call a wiser family member (Mom, Dad, Grandma, Grandpa). Considering the effect this virus is having on wiser (read: older) people, I’m sure that most of them are anxious (even if they’re not saying so). Calling to check-in will make them feel cared about.
  • Work on a project – Now is a great time to work on anything you’ve been putting off around the house. I’m unpacking a ton of boxes.
  • Check on friends – I have great relationships with a decent number of people that I don’t talk with more than once or twice a year. I’m reaching out to see how they’re doing.

If you’re already staying home, what are you doing? If you’re not, your time may be coming—consider making plans.


Gratitude . . . Even Now

Today I read the weekend paper (yep, I still read a physical paper), and it was pretty scary. The pandemic has everyone worried, and rightly so. We haven’t experienced anything of this magnitude in our lifetimes. Most of the constant updates are not positive. As I digested all of this, I thought about something else—gratitude.

Things are never perfect. I don’t have X, Y didn’t go as planned, Z was unfair, and so on. In the current environment, the list is longer than ever and that’s totally understandable. But there’s always something to be thankful for as well. I’ve been stuck in my house . . . not so great. I have a home to be stuck in . . . many people aren’t so fortunate.

Today I made a list of three things I’m grateful for (actually, I do this every day). The simple act of thinking about this and writing the list is powerful. It forces me to think about all the wonderful people and things in my life. Some days, I list things that are deep and weighty. Other times, it’s three of life’s little joys. Regardless, I take the time to notice and appreciate the good things in my life.

What are you grateful for?


Subscribe to receive new posts via email.

Submitted successfully!
Oops! Something went wrong while submitting the form. Try again?