Decide Like an Umpire
I read a quote today about decision-making that I love:
Call it like an umpire: you’re either out or you’re safe.
As a founder, you have to make quick decisions, often using intuition. A quick decision, even if it’s wrong, is better than stopping the game.
I didn’t know that in my early days as a founder. As I gained more experience and confidence, though, the speed of my decision-making improved. As my decision-making sped up, the company’s growth did too. I learned to not worry about being right or wrong. Instead, I made a decision and focused on learning. Right or wrong, there was always something I could learn and apply to make better decisions in the future.
I still try to make decisions quickly and learn from them. Sometimes I’m right and sometimes I’m wrong, but I’m always learning!
Timing Matters a Lot
A founder I know had a great vision for his company. He worked for years to get customers and had success, but not the hockey-stick growth he expected. Then the pandemic hit, and customers flooded in.
I caught up with him and asked him about his journey. His most important observation was this:
I knew I was right. I just didn’t know when I’d be proven right. Giving myself enough runway was the difference maker.
Timing is a huge factor in the entrepreneurial journey. Often, founders can’t control it. When things don’t go according to their planned timeline, they have a choice to make: keep building and wait for the time to be right, move on to something else, or choose some hybrid of the two. There’s no right or wrong answer. Each founder must make the decision that’s right for them and their team.
This founder chose to keep going, and it worked out for him in a big way.
Knowledge Is Like Compound Interest
As an early founder, I had huge knowledge gaps. I didn’t know a lot about start-ups, and that resulted in slow execution and decision-making. Filling those gaps helped accelerate my execution and thus the success of my company.
Since then, I’ve been passionate about continual learning. I’ve developed my own system, but I recently started researching how others approach it. I came across this quote from Warren Buffett:
Read 500 pages every day. That's how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.
This really stuck with me. I agree that knowledge is like compound interest. It builds upon itself. New knowledge isn’t acquired in isolation. It combines with what you’ve already learned to improve your understanding and decision-making. When you look back to a long time ago, you realize that your understanding and decision-making are light years ahead of where you were then because of the compounding effect.
Warren’s 500 pages every day isn’t doable by most people, but frequency is more important than quantity. Reading daily essentially increases the compounding rate of your learning. The more often you add to your knowledge, the better your understanding and decisions become. If you read every day, that’s 365 chances to compound your learning.
The last part of the quote explains what separates the good from great. Most people could take advantage of this life hack—but won’t. So, if you commit to this one habit, you’ll set yourself apart from almost everyone over time.
I don’t think it’s a coincidence that Warren Buffett and other successful people read daily. They recognize it’s something they have total control over that has an outsize impact on their chances of being successful.
Compensate Fairly to Enhance Your Prospects for Success
I love talking to founders about their plan to assemble a team, especially the compensation part. It can be a leading indicator of what’s to come. I regularly speak with early founders who have a big vision for their companies but haven’t thought through team compensation.
Building something great takes a great team. Great team members want to be compensated for the value they bring, and rightfully so. Great people have options—if one company won’t pay them what they’re worth, someone else will. There are two ways to compensate people: cash and equity. If cash is readily available, then paying market salaries will make it possible for a founder to assemble a great team. If cash isn’t abundant, then a combination of cash and equity is typical. It allows the founder to hire more people with limited cash and lets employees have an ownership stake in the company. They get some cash now and benefit from the upside potential of the company if it does well.
If you’re looking to do great things, you need great people. If you don’t compensate people fairly, your chances of attracting a great talent plummet along with your likelihood of achieving your big vision.
Identity vs. Identification
I’ve been thinking about some of the concepts I read about in Atomic Habits. I enjoyed the author’s thoughts on changing your beliefs to change your outcomes. Of central importance is identity. If you don’t believe you’re the sort of person who would take the steps (i.e., form the habits) necessary to get the outcome you want, you’re less likely to do so. I’ve been discussing this with friends. Today, one of them shared a passage from a book he’s reading:
Identity is very deeply who you are—not who someone else thinks you are or wants you to be. Your identity is how you define yourself, while your identification is how others define you. How you identify yourself does not necessarily need to match how other people identify you. While it is true that our families and communities play an important role in shaping how we see ourselves, ultimately, how others attempt to define you is no substitute for how you answer the question “Who am I” for yourself.
This resonated with me. I love how the author describes identity as who you believe you are and makes a distinction between identity and identification. Subtle, but powerful.
As I reflect on my founder friends and myself, I think this is true. We all believed we were entrepreneurs before we started companies—even when others believed we were something else. That strong sense of identity guided us to take the actions that led to starting companies and ultimately to entrepreneurial success.
Who do you believe you are?
Early Founders Should Make Time to Get Out of the Weeds
Today I had the opportunity to participate in an event whose purpose was to give early founders candid feedback on their businesses. The founders got real-time as well as written feedback and rankings in core areas, such as vision, execution, and storytelling.
These founders have small teams, so they’re still involved in the day-to-day combat of building a company. But they spent most of today away from operations to focus on their businesses at a high level. We went over everything from go-to-market strategy to vision to hiring plans.
It was great helping these founder consider things from this perspective, and I think it was much needed by some of them. Today was a reminder of how important it is to get out of the weeds of running the business. Early founders can find themselves on a hamster wheel if they work in the business too much. They must be intentional about making time to regularly work on the business from a high level. I know this because I learned it the hard way when I was a founder.
I’m excited for these founders and can’t wait to see what the future holds for them!
Paying a Premium for Greatness
I’ve been chatting with a founder friend about a deal he’s considering doing. The seller doesn’t have any other suitors, probably because they’re asking for above-market pricing. My friend knows this and has been trying to get them to a price more aligned with the current market. All the numbers support my friend’s argument.
Today we spoke again, and he told me he’s going to try to meet them in the middle. He’ll likely end up paying more than the deal is currently worth. Not expecting this, I questioned his logic. His explanation: he’s focused on future, not current, value. He has a vision for creating more value using the asset. If he executes on it, the difference between what the deal is worth now and what he paid will be negligible. He sees a great opportunity to create a large amount of value and wants to capitalize on it quickly before someone else sees it.
Recognizing greatness is important to any founder’s success. I didn’t do it early in my journey, and it hurt me. When this founder began focusing on how great this opportunity is, it changed his thought processes, actions, and sense of urgency. I’m looking forward to seeing him create something profitable and great out of this opportunity!
Peer Groups Aren’t for Competing
I credit the help of peers with being one of the biggest factors in my success as a founder. I’m grateful I was able to connect with other founders grappling with similar issues. We shared our experiences with each other, which helped us avoid pitfalls and go further faster.
Recently, I connected with a smart founder who could benefit from hearing other founders’ experiences. As I’ve gotten to know him, I’ve learned that it’s difficult for him to watch other people win if he isn’t winning. This mindset is one of things keeping him from stepping up from being a good founder to being a great one.
I’m a huge fan of founders helping one another via peer groups. When you participate in a peer group, it’s important to be mindful that the goal isn’t to be the “best” founder in the group, it’s to be a contributing member of the group. That means learning from and supporting one another. Learning, that is, from the experiences of smart people and applying that knowledge to your own situation. And supporting each other through the highs and lows of the entrepreneurial journey.
Peer groups are amazing, and I recommend them to anyone who can tamp down their competitiveness enough to be a supportive contributing member.
Founders, Your People Are Vital to Business Success
I’ve connected with numerous founders who have a big vision but don’t value how vital other people are to its success. They understand they’ll need help, but how they see other people is always telling. They may view others as necessary to execute specific tasks but replaceable. They treat them as an expense line item, with the compensation, equity, and responsibility they offer reflecting that mindset.
The classic example I see is a nontechnical founder building a software company. He wants to use offshore development or hire a junior developer whom he’ll manage. He thinks he needs someone to just build a product and tries to get it done as cheaply as possible. What this founder doesn’t grasp is that the software is the company. The software is a living thing that will evolve and become more complex over time. The people building it are not just an expense. They’re critical to building and maintaining a product customers will pay to use, and they should be treated as such. And there needs to be someone at the leadership level—other than the nontechnical founder—who’s responsible for this critical part of the business and incentivized by cash and equity.
When I was a founder, I learned (the hard way) that you can go further, faster with a solid team that shares in the upside.
If you’re trying to do something great, think about how you can get the best people possible around the table to help you, not how you can spend the least amount possible. That shift in mindset could be the difference maker.
Looking for Common Threads
I had a meeting with another investor recently. His journey to investor wasn’t easy. I love hearing stories like this. They show you how people are wired and who they really are. I wanted to hear his story so I could understand him better and see if I could be of assistance.
The call began normally and was cordial, but he wasn’t opening up. Then he mentioned a small detail that made me realize we might have experienced something similar earlier in life. So, I shared my experience. Sure enough, he said he’d had a similar one. From that point on, the conversation changed. We were able to relate and get to know one another via a common thread.
I appreciate this reminder that finding ways to relate to people is important. Doing so can completely change a conversation (or start it off on the right foot). More importantly, it can be a powerful tool in helping you build relationships and understand who people really are (as opposed to how they want to be perceived).