Solo Founders Should Hang around the Hoop
One of the mistakes I made early was choosing to be a solo founder. Over the last year, I’ve been intentional about sharing with early founders the importance of having a founding team. Some still think the solo route is best, but most tell me they want a co-founder. But finding one is easier said than done—especially for nontechnical founders seeking a technical founder.
Nontechnical founders who want to build a technology company face a dilemma. They can’t build the product. They must find a technical co-founder (or a senior developer they don’t have to manage closely). Otherwise the company never progresses beyond the idea stage. Technical solo founders face a host of other challenges, but they can at least build the product. Putting the product in users’ hands can generate traction —a powerful recruiting tool. It’s easier to recruit a co-founder when you can show that you’ve already acquired customers or users.
So how does a nontechnical founder find a technical co-founder? There’s no silver bullet, but a good start is to hang around the hoop. The hoop is anywhere good technical talent might be found: meetups, conferences, pitch competitions, slack channels . . . you get the idea. Colleges are also great resources. Loitering around a school won’t help, but you can reach out to computer science professors and leaders of student clubs. If you’ve got a good idea, can tell a story, and talk to enough people, the odds are in your favor.
The difficulty of finding a co-founder is a problem I’ve heard about often enough that it warrants deeper thought. I’ll discuss it with others and, I hope, come up with a more comprehensive set of ideas for solving it. If I do, I’ll be sure to share it!
Do Investors Compete?
Today I was asked an interesting question: do I complete against other investors for deals? I decided to share my thoughts (based on limited experience). Some things to consider:
Rounds – Investment rounds frequently aren’t filled by a single investor (for one reason or another). Investors often work together toward a common goal of providing enough capital for the round to be closed.
Expertise – Many investors are great in one sector (e.g., healthcare) and good in lots of others. When an investor comes across a company in an industry they’re not great in, they may seek the perspective of one who knows the sector well.
Awareness – Investors sometimes make each other aware of founders and companies because it’s impossible to know all of them.
Stage – Investors often focus on a specific stage of investment. Outlander Labs is pre-seed, for example. Other stages include idea, seed, and series A, among others. If two investors are focused on the same industry but different stages, they’re probably not competing.
Community – For investors to do well, the overall community needs to do well. Investors know this, so they tend to cooperate rather than compete with each other.
LPs – Venture capital funds usually raise money to invest by obtaining capital commitments from limited partners (LPs). The relationship between LPs and venture funds is important. Great LPs can be helpful to funds. They can be sources of deals and also provide expertise. Sometimes LPs can be invested in multiple funds, which is useful because having LPs in common can be a relational bridge between investors.
In my opinion, the answer to the question, at least from a high level, is “no.” I’m sure there are exceptions on a deal-by-deal basis. I don’t see other investors as competition. I see them as peers working toward a common goal: helping great founders and companies reach their full potential!
Giving Back to College Entrepreneurs
In college, I had a nice side hustle. It was just me, working with a network of installers and vendors to complete customization projects on my friends’ vehicles. I didn’t know it at the time, but I was on to something. The problem I identified for this side hustle was the same problem I would solve with CCAW years later. Hindsight is 20/20, but I wish someone had helped me understand that I’d stumbled on a problem that a big company could be built to solve.
Today I spoke with two bright college students. They’ve launched an early version of an app and are about to start getting feedback from customers. They’re inexperienced and have a long way to go, but I was impressed. They’ve managed to put together a team of twelve people, build a product, and pitch venture capitalists. All while finishing their undergraduate degrees. When I think back to where I was at twenty . . . well, these two founders are light years ahead.
The opportunity wasn’t a good investment fit, but I wanted to help these two grow. Instead of giving them a cold “no thanks,” I (along with my team member) used the second half of the meeting to coach them. I asked them questions that got them thinking about their problem and solution from different perspectives. We discussed alternative ways to achieve their objective. We gave them honest and candid feedback.
When the conversation ended, I was excited. Not about where they are now, but about their future. These two founders have entrepreneurial drive and hustle for sure. They need coaching and mentoring to help them reach their full potential. Hopefully our session today was a step in that direction.
After reflecting on this and my own journey, I’ve decided to find ways to spend time working with entrepreneurial college students. I’m not exactly sure what this will look like, but I know it’s something I want to do, so I’m going to make it happen. I have a new project! I’m excited to give back and help entrepreneurial students head toward success.
Working from Home: Week Twenty-Eight
Friday marked the end of my twenty-eighth week of working from home (mostly). Here are my takeaways from week twenty-eight:
- Groove – This week, I felt like I was in a good rhythm and beginning to hit my groove. Looking back at my calendar, the week was busy with lots of meetings, but it felt less hectic. I’m starting to get used to this new pace and seeing early signs of balance.
- Giving back – I write daily, mainly in an effort to help others. This week I had conversations with five unrelated people who mentioned that my writings are helpful. This felt great! It was encouraging. I’m happy that others find value in my thoughts and experiences.
- Education – I participated in some meetings that educated me on topics I want to master. They reminded me how important it is for me to be intentional and seek out ways to continue to better myself and work toward goals I’ve set for myself.
Week twenty-eight was a busy week, but it didn’t feel as busy as it was. I’m looking forward to settling further into my new groove this coming week.
I’ll continue to learn from this unique situation, adjust as necessary, and share my experience.
Teaching by Asking Questions
I had a good conversation with a friend today. We both advise early entrepreneurs. Today we talked about things we’ve learned and best practices. Since we’re doing the same thing in different ways, we can help each other by talking through our experiences and sharing our perspectives.
One thing I’ve learned that I told my friend about has to do with asking versus telling. When you’re experienced, you can see things that novices can’t. When someone’s in a difficult situation that you’ve been in, the natural inclination is to help them avoid the pain that awaits by telling them what they should do or shouldn’t do. This can be helpful, but it’s not the best approach. You’ve set them up for future pain. Yes, you’ve helped them avoid pain today, but you’ve scotched their opportunity to learn. The next time they have to deal with something similar and you’re not around, they won’t know what to do.
When I work with entrepreneurs, I ask questions. My hope is that by thinking through the answer, they’ll connect the dots and learn something that will help them avoid pain both now and later. If I’ve had a relevant experience, I share it with them, of course. But my questions have been more helpful. I’ve noticed that entrepreneurs who’ve answered them feel like they’ve figured out what to do themselves, through learning, which is powerful.
If you want to help people, don’t spoon-feed them information—encourage them to reason . . . analyze . . . think. You’ll be fortifying them against future tribulations.
Rookie Mistakes 101: Not Admitting That You Don’t Know
Early in my founder journey, I had an overwhelming feeling that I had to have all the answers. I felt like it was expected of me. Whenever the team asked a question, especially about direction, I thought I should know the answer. I worried that they would lose confidence in me if I didn’t. As I worked with suppliers, it was the same. I felt like I had to have an answer or they would look at CCAW differently. Even when speaking with entrepreneurial peers, I felt the same self-imposed pressure. It was ludicrous.
As I settled into running a company and leading a team, I became more self-aware (partly through reflection on failures and partly from people pointing out my shortcomings). I realized there were things I was really good at and felt confident answering questions about. Other things I was inexperienced in or just plain bad at, and I wasn’t well equipped to answer questions about them. As I matured, I stopped trying to come up with a good-sounding answer that would let me squirm out of the corner I was in when the true answer was “I don’t know.”
Those three words are simple, powerful, and scary all at the same time. They’re scary because you’re admitting you have a knowledge gap. This can feel uncomfortable (it was for me), but it helps to think of saying them as acknowledging that you’re human. They’re powerful because they signal self-awareness, confidence, and honesty, and they give you the opportunity to learn something. And they’re simple because . . . well . . . they’re only three words.
Nowadays, when I’m asked about something outside my wheelhouse, I usually admit my ignorance (I still slip up, though). I try to turn it into an opportunity to learn. Usually I say something like, “Honestly, I’m not sure, but I’m actively seeking different perspectives on this. I’d love to hear yours.” People will tell me what they think, which adds to my fund of knowledge. Or they’ll admit they don’t know either, which reassures me that I’m not the only one.
When I speak with entrepreneurs now, I try to tell them what I wish someone had told me early on. It’s OK to not know. In fact, it’s normal. You’re human and no one expects you to have all the answers!
Sometimes You Just Need Breathing Room
I’m often asked why I didn’t raise capital from investors at CCAW, instead choosing to bootstrap. I think people expect to hear some strategic thought-out reason. The truth is much simpler. I didn’t know any better. That may sound ridiculous. Let me clarify a bit.
Not raising capital forced me to be capital-efficient, but it also resulted in challenges. Most of them I didn’t recognize until much later. We had customer revenue from day one, so I viewed us as different from companies that burn cash for months while they build a product. Customer cash flows were fine in the beginning, but as I started to think more strategically it wasn’t enough. We had enough money to pay salaries and other operating expenses, but sometimes we didn’t have enough left to invest in strategic projects. And if we did, we didn’t have enough for the entire project.
I found myself in a situation where I couldn’t afford the appropriate resources for the entire time it would take for these projects to pay off. This resulted in a start-and-stop rhythm. We’d start, run out of money, and stop until we got enough in the bank to start again. This extended projects unnecessarily and frustrated the team. Really big projects can require people who work on nothing else. With some of them, it takes a year or two before you see an ROI. That means paying salaries for two years without a contribution to revenue or profitability. We couldn’t afford to carry salaries on the books that long if they didn’t result in revenue. Our large projects were understaffed at times or simply never happened. Strategic projects are what move most companies forward. We never had enough runway to execute properly on our strategic projects. We had too many conflicting draws on our limited capital.
With the benefit of hindsight, I’d do lots of things differently. Mainly, I’d think hard about the resources needed to implement my vision. That would take time, but I’d identify the first major milestones. The milestones would be early indicators of success. For CCAW, that would’ve been early signs of increasing revenue. I’d determine what people and resources were needed and what the time frame was. I’d put all that into a simple budget. That budget, along with my vision, would have been great tools for soliciting investor capital. Had I gotten an investor, it might have given me the breathing room we needed to start working toward my vision. Notice I didn’t say it would’ve been enough capital to make the vision reality—just enough to show others that my team had what it took to make progress. If we were successful, I’m sure additional capital would have been easy to come by.
Hindsight is 20/20, and I wouldn’t change anything about my journey. The situation I’ve described isn’t unique to me. I regularly speak with entrepreneurs in similar situations. They just don’t have enough breathing room to begin executing.
If you’re in that situation, considering identifying short-term milestones that will show you’re headed in the right direction. Couple them with a timeline and budget and you’ll have a powerful tool that will help others understand your vision. Asking for a small amount of capital (just enough to allow you to make some progress) de-risks you as an investment. You will still hear “no” from lots of investors, but you’re more likely to find one willing to give you a shot. There’s a lot to be said for breathing room!
Rookie Mistakes 101: Too Many Priorities
When I started CCAW I was still working full time at EY. I was traveling every week, so I spent my evenings working on CCAW in my hotel room. Once I gained traction, that wasn’t enough. I began handling some things during work hours too. Over time I found myself working two full-time jobs. It pretty much sucked. I definitely wasn’t aiming for that, but that’s where I landed. I never heard any complaints from my superiors at EY, but I’m pretty sure they noticed. It took me longer to complete assignments. I was always taking phone calls. My focus just wasn’t there. I was running on fumes. I eventually went full time at CCAW when I couldn’t take it anymore.
Over the years, the theme of focus resurfaced in different ways. I learned that focus was important not only for me but also for the entire team. I spent lots of time developing the company vision and identifying the single thing we should all be focused on at any given time to make that vision a reality. When we focused, we were a well-oiled machine that accomplished amazing things. When we weren’t, we weren’t as effective and didn’t achieve our goals.
Why? It’s pretty simple. There are schools of thought that encourage multitasking, but in my opinion people aren’t great at focusing on multiple things at once. It can be done, but the result is less than ideal.
Starting a company is hard. A lot of things outside your control have to go right for you to be successful. Focus is something you can control that increases your chances of being successful!
So You Wanna Build a Marketplace
I met with an entrepreneur who’s addressing a unique problem in the automotive space. He’s done lots of customer discovery and is looking to build an early version of his MVP. And he wants to build a marketplace and asked for my insights. We didn’t build a marketplace at CCAW, but we overcame challenges similar to those encountered by marketplaces. After a decade of hitting our heads against a wall, this is what we learned:
- Customer acquisition – Don’t outsource customer acquisition or use third-party software long-term. Third-party platforms (Shopify, Magento, etc.) are cost-effective to begin with, but they will eventually hinder you. These platforms aren’t built with your specific problem in mind. They have to appeal to many, so they must be somewhat generic. This will prevent your solution from being great. It will only be somewhat good. You try to customize the platform to overcome this. The more you spend to customize it, the harder it is to transition away from it. Such platforms will never be as good as building your own technology from scratch. All successful marketplaces (Airbnb, eBay, Etsy) built technology to nail solving the problems they saw.
- Product catalog – This is hard to address, but it’s critical. Don’t underestimate it. Understand the products you’re selling and build technology to manage the catalog properly. Don’t outsource the catalog or use third-party software long-term to manage it. We had about thirty thousand products in our catalog at CCAW. Taking the time to build technology to store that catalog gave us a huge competitive advantage.
- Pricing – This is one of the most important things in marketplaces. The right products with the wrong prices won’t sell. If pricing is calculated (i.e., not provided by the sellers), invest in developing your own technology long-term. (Are you seeing a pattern here?) We built a dynamic pricing engine at CCAW that became part of our secret sauce. It was frustrating and took a year to perfect, but once it was finished it was a thing of beauty and a big competitive advantage.
- Supply – This advice is more specific to the automotive industry, but I’ll share it anyway. You don’t want to go too big or small when you’re finding your first suppliers or sellers. Find companies large enough to have adequate systems and processes in place so they will be reliable and provide data in a consistent automated manner. Medium-sized players usually have these things, plus they’ll value the relationship. Big players typically won’t see the value in working with early companies; it’s more of a nuisance to them. Smaller players will be eager to work with you, but their lack of systems and processes will be an issue. Starting with one or two medium players is usually enough to test. Remember, your goal is to learn what you don’t know. We started out with one supplier at CCAW. Once we finished learning, we courted larger companies that were by that time eager to work with us because we had our act together and they’d heard good things about us.
- Supply side operations – Don’t worry about things like shipping, returns, and customer service at the MVP stage. You can manually handle this stuff with a patchwork of tools like Excel, Gmail, etc. They’re important, but not as important as getting the demand side (customer acquisition) right. First things first. Focus on acquiring customers effectively before you invest in supply side operations. If you can’t get any customers, you won’t need better systems on the supply side.
My biggest learning was the importance of focusing on the demand side when you’re building a marketplace MVP. Yes, you absolutely need supply, but you don’t need to have a world-class supply side operation or a ton of supply sources. Understand the customer’s pain points and address them. Doing so will help you accumulate customers and keep them coming back. If you nail this, you’ll have more customers than you know what to do with and then you can fix everything else!
How Far Have You Come?
At CCAW, I was always thinking about making the company better. How can we make our customers’ experience better? How can we make it easier for our vendors to do business with us? How can we use technology to improve internal operations and make life easier for our team members? It was a relentless decade-long quest to be better. It definitely worked. We built an amazing company and some pretty cool technology. Admittedly, I pushed extremely hard (sometimes harder than my team thought I should!). In my mind, there were all these ways we could be better and I wanted to attack them! I wanted us to reach our full potential.
One day I had a conversation with my mom that put things in perspective. She reminded me of where it all started and who helped me. In the early days of CCAW, I stored product at my parents’ house (and other places too). My mom constantly asked me, “When are you going to get all these boxes out of my house? This isn’t a warehouse, Jermaine!” My parents lived in Louisiana and I was in Atlanta (or wherever EY had dispatched me for the week). I used spreadsheets to track the product I was storing and manage customer fulfillment. When we sold product, I would get on the phone and coordinate with my Dad to get it to customers. The stuff was heavy and bulky. He usually made time to ship stuff after working a grueling day in the sun at a refinery. Without his help, there’s no way I would have been able to get CCAW off the ground. I’m super appreciative of that help—and of him for putting up with me.
That conversation with my mom stopped me in my tracks. I realized that instead of focusing all the time on making improvements, I should recognize how far I’d come and how other people helped me get there. At the time of that conversation, we were probably doing around $7 million in annual revenue. We had built a completely automated system that fulfilled hundreds of daily orders from dozens of warehouses nationwide. Yes, there were still warts on the business, but it had come a long way.
From Mom, I learned that things will never be perfect and there will always be things you can improve. It’s important to remember to acknowledge how far you’ve come and the people who helped you get there (thanks Dad!).
How far have you come? Who helped you along the way?