Looking at Imperfect Outcomes Differently
Today I toured a real estate project a buddy just completed. He’s easing his way into entrepreneurship and the industry. This project was the largest (and most complicated) he’s taken on to date. As usual with construction, it didn’t go as planned, but it’s a financial success. Not as much profit as he’d initially hoped, but a success nonetheless. As we chatted, he kept mentioning how he should have spent less but didn’t know any better when decisions were being made. I realized that his perspective was preventing him from realizing how this project was a win in other ways, too.
The project wasn’t easy. The price of lumbar surged in the middle of it. Labor rates increased, while the reliability of crews decreased. These and other factors led to higher costs and a longer timeline. As each obstacle presented itself, my buddy figured out how to overcome it. It was stressful, but he found a way to get it all done. Tough circumstances, I thought, but awesome learning experience.
We talked about his future projects and what he plans to do differently. I pointed out how much he’d learned and how valuable that knowledge will be. Lots of people pay tuition to go to school to learn what he got paid to learn. In the end, he reflected on where he was before and after this project and agreed. It was a huge success and is likely to be the turning point in his real estate career.
Knowledge acquired through experience (yours or others’) can be a big factor in entrepreneurial success. If a situation doesn’t end quite how you’d hoped, reflect on what you’ve learned from it. The knowledge you’ve gained will be invaluable next time and every time—it’s the gift that keeps on giving!
Be Like Water: Go with the Flow
A good friend said something today that stood out to me: “When water wants to flow downstream, you can’t push it uphill. It runs through rocks, concrete, or whatever is in its path and always finds a way. You can slow it down, but you can’t stop it. It’s a heck of a lot easier to go with the flow than against it.” We were discussing innovation and how we used to resist certain technologies we didn’t understand—only to later have to say “Yeah, that makes perfect sense” and feel like we were late to the party.
My friend is spot-on. Sometimes I have to remind myself to pay attention to a trend. It may not make sense to me, but clearly—it being a trend—it’s making sense to others, and I should spend time trying to understand and embrace it. That’s better than fighting it, only to end up having to play catch-up and buy into it later. I now try to be like water and go with the flow.
The world is going to change, with you or without you. Innovation is going to happen, whether we like it or not. It makes a lot of sense, I think, to stop fighting that and make an effort to understand and be part of the trends.
Next time you’re thinking that something that doesn’t make sense, consider asking yourself: am I going against the flow?
Weekly Reflection: Week Eighty-Three
Today marks the end of my eighty-third week of working from home (mostly). Here are my takeaways from week eighty-three:
- Impact – I had a conversation with a founder turned early-stage investor about impact. I’ve been thinking about it for over a year, but this conversation got me thinking about ways to maximize my impact.
- Working on me – I spent time this week working on myself. It was good to take a step back from working on stuff for others. I learned a lot of great things and can’t wait to implement them. I need to get back to doing this regularly.
- One year – Had an enjoyable chat with a good friend this week. We discussed my theses today versus one year ago. He thinks I articulate my thoughts more clearly. I’ve also gotten more comfortable thinking through what the future will look like and why. It was nice to hear his feedback, and it forced me to think about how my thinking has evolved. What a difference a year makes.
Week eighty-three was great. I’ve gained a lot of clarity and learned some interesting new things. I’m reenergized and looking forward to next week.
Change Your Beliefs to Change Your Outcomes
I recently read Atomic Habits at the suggestion of friends. The author has a different perspective on how to reach your desired destination. James Clear provides a framework for using small daily habits and systems, instead of setting goals, to increase the likelihood that you will arrive at your destination.
One thing that jumped out at me was his levels of change: the outcome layer (what you get), process layer (what you do), and identity layer (what you believe). Most people start with the outcome layer by setting a goal. This leads to outcome-based habits. James, however, suggests starting with the identity layer: belief-based habits that focus on the kind of person you want to be. Once you know who you want to be, it’s easier to back into what you need to do (process layer) to get the result you want (outcome layer).
He gives a great example. Two people are offered a cigarette. One says, “No thanks. I’m trying to quit.” The other says, “No thanks. I’m not a smoker.” The first person believes they’re still a smoker trying to be something else. Smoking is something they can still see themselves doing, but they’re trying not to. The second person believes they aren’t a smoker. Smoking was part of their former life but not their current life. These two have similar former lives, but what they believe about themselves is different. The second person doesn’t identify as someone who smokes. Actions are backed by beliefs. If you don’t believe something, you’re less likely to consistently take the actions necessary to support that belief.
I really like James’s approach of starting with the identity layer. It makes total sense to me. I can’t wait to spend some time digging into this and putting it into action.
Evaluation Should Go Both Ways
One of the biggest opportunities I see founders miss is the chance to evaluate the people who are evaluating them—specifically, when an investor asks, “Do you have any questions for me?” the founder saying no or asking superficial ones. It’s a missed opportunity for the founder to gauge whether the investor is a good fit as a partner.
Evaluating a partner starts with knowing what you want. Investors usually have a clear idea of what they’re looking for. Unfortunately, some founders don’t, and they don’t evaluate their partners until after the deal is sealed.
Founders can do a few simple things to increase their chances of being in a good partnership:
- Write down your criteria for a good partner. Putting things down on paper usually leads to more clarity.
- Before meetings, don’t be shy about letting the investor know you want to allocate a certain amount of time for your questions.
- Skip the superficial questions; ask only questions that will help you understand whether the investor satisfies your criteria.
Partnerships are important. Founders should make sure they’re evaluating for fit, not just letting themselves be evaluated.
Shotgun versus Sniper Solutions
I talked with an early-stage investor today about a recent investment his firm made. He listed lots of great reasons for doing the deal: strong team, great traction, big market, great customer feedback, etc. But one point stood out to me. Competitors—other well-funded large players—have platforms that solve the same problem as this new portfolio company as well as a variety of other problems. They do an okay job of solving most of them. The new portfolio company, on the other hand, solves one problem extremely well. The hyper focus on a single problem helped this investor have conviction for the deal.
I think of this new portfolio company as taking the sniper approach to solving a problem, which its new investor loves. It’s laser focused on a single problem that its leaders have taken the time to understand well. Their solution is designed to eliminate a pain point so customers don’t have to worry about it anymore.
The larger competitors are taking a shotgun approach. They’re aiming in the general vicinity of this problem and many others. They understand the problem from a high level but haven’t gone super deep. Their solution is designed to mitigate the pain of this problem, not erase it.
Both strategies have pros and cons, and large companies can be built using either. My personality leaned toward the sniper approach when I was a founder, but I’ve shotgunned too. From my experience, the decision of which to embrace depends mainly on what customers want. Who are you targeting and what do they want? A one-stop shop that does a decent job at solving many problems but doesn’t shoot for perfection? Or an expert that’s trying to eliminate a problem altogether?
Listen to what your customers want to give you a clear idea of what you need to build.
How Future Generations Learn Will Be Radically Different
I listened to a friend’s seven-year-old share his views on a prominent technology company and its founder. I was shocked by how much he knew. I asked his father if he had discussed this company or the founder with his son. No, he said, and he wondered where he’d learned about them. Our assumption is, the internet. We think he heard about the company, liked it, and did some research to learn more.
The internet didn’t exist when I was his age, but I vividly remember finally getting online access at my parents’ home. I spent hours digging into subjects I was interested in and reading everything about them I could find. It was a game changer. Forums and chat rooms exposed me to new things—to a world I didn’t know existed. I ended up using some of this knowledge to start a company in high school. I’d say the internet was a big reason I became an entrepreneur.
Today I still spend lots of time online learning about things that interest me. I try to find a credible person (on Twitter, Medium, or Substack) and read about what they know or think about a topic or watch YouTube videos of them sharing their thoughts. I’ve gained a lot of extremely valuable knowledge this way.
Information is power. I love how the internet has made information more available to the masses. It’s empowered people to share their expertise and given others a way to consume it. With decentralization and other trends gaining momentum, I suspect my friend’s son and his generation will experience a completely new way of learning. They will be more knowledgeable than previous generations, and how they learn will likely be radically different.
Don’t Forget the Context
I spoke with a founder who shared some of his plans with me. He hesitated to reveal one detail, but I encouraged him to keep chatting. He planned to sell merchandise to customers in addition to his core technology product. I asked him why he wanted to do that and why he hadn’t wanted to tell me. He was worried, he said, that I’d think the merchandise was a distraction from the company’s core product and that he was scattered and unfocused. He sees the merchandise as important to building a brand and community.
Founders who are talking about their initiatives and ideas often get excited. They dive straight into the details of what they want to do. It’s very common; I used to do it myself. But the person listening usually doesn’t have the same context. They haven’t been thinking about this problem day and night. They don’t understand the customers and the market. Since they don’t understand the bigger picture, they’re left to wonder. Why are you doing this? The missing why prevents them from wrapping their minds around the details the founder is sharing.
Before founders explain what they want to do, they should tell their audience why they want to do it. Start with the high level and then get into the details. It’s a flow that’s much easier for a non-founder to digest because it provides context.
This founder has a great merchandise plan, and it makes sense. I think he should let other people know about it. When he does, he should begin with his big why: to create a moat with loyal customers by building a brand and community. With that high-level context, the merchandise plan doesn’t sound like a distraction. It sounds like a shrewd strategy.
Higher Risk Tolerance, Entrepreneurship, and Society
When I decided to leave corporate America, some friends and family didn’t understand. I’d worked hard during college to position myself for a job with a reputable organization. I was walking away from that stability to pursue a risky start-up idea, which sounded crazy to them. It just wasn’t something people in my circle did. I was one of only a few with the tolerance for high risk needed to pursue this path.
As I look around today, I see a different landscape. Many people want to pursue entrepreneurship. It’s a beautiful thing, and I love it. But that doesn’t change the fact that being an entrepreneur is risky. It appears that more people have a higher risk tolerance and are moving forward as founders.
I’m now wondering if this higher risk tolerance is specific to entrepreneurship or more general. If the latter, what impact (good or bad) could this have on society over the next decade or so? I don’t have an answer to this yet, but I’ll be thinking more about it and getting the perspective of others.
Weekly Reflection: Week Eighty-Two
Today marks the end of my eighty-second week of working from home (mostly). Here are my takeaways from week eighty-two:
- Schedule – I’ve been doing a better job of managing my schedule a few weeks out. It’s more of a mix, now, of time open to others and protected time. This week and last, that helped me be more efficient and get things done.
- Future thinking – I shared my thoughts on future thinking in a post this week. It’s especially important when you’re looking at a window of opportunity that’s about to close. I’ve been reflecting on this more. The people I’ve seen build amazing companies and have outsize successes (personally and professionally) are future thinkers. They see the world through a lens of what’s possible, not what is.
- Pace – Just like last week, this week was busy. Next week will be too. Lots to do before the holidays.
Week eighty-two was another busy week. More of the same is coming for the rest of this month.