An Effective Company Vision
I’ve been discussing the topic of company vision with a few founders. These conversations reinforced to me that some founders aren’t clear on what vision means. They talk about how much revenue they’ll generate in five or ten years, what they plan to build, etc. It’s good to be clear on your aims, but that’s not vision. Those responses are too tactical.
I believe the root of why these founders are missing the mark isn’t a lack of ability or intelligence. It’s simpler than that: it’s a terminology mix-up and maybe not enough practice in thinking non-tactically.
Vision is painting a picture of what you think the world could look like. It’s painting a picture of how you want the world to look. It has nothing to do with your company.
Even when the term is defined, I’ve noticed that it’s hard for some founders to understand vision without an example. This week I spent time searching and found what I think is a good example.
In a talk, Brian Armstrong, CEO and cofounder of Coinbase, detailed not only the company’s thinking behind its vision but also its mission and strategy. Here’s how Brian expressed the company’s vision and mission:
- Vision: Create more economic freedom for every person and business in the world over the next ten years.
- Mission: Create an open financial system for the world.
The vision is big. It will materially change the world if it becomes reality. The mission is what Armstrong’s company plans to do to accomplish its vision. I like how Armstrong explains the logic behind each statement, how they differ, and how they support one another.
At the end of the video, Armstrong ties the vision and mission together: “Our vision is to have a billion people in, say, five to ten years accessing an open financial system, through our products, every day. When we’ve done that, we will have materially changed the economic freedom of the world and we will have bent the shape of that curve.”
In a different video, Armstrong clearly explains his vision of the world: “I imagined a world where anybody with a smartphone could have access to sound money and financial services; where every payment could be as fast, cheap, and global as sending an email.”
Coming up with a vision isn’t easy. It requires zooming out and thinking about the future of the world and what’s possible. Hopefully, the example above is useful and helps founders articulate how the world will be transformed if their company achieves its mission.
What Will Fundraising in 2024 Look Like?
This week I caught up with a founder and chatted about his fundraise. He recently kicked it off (again), and it’s going well this time. A few bank wires have cleared and he has significant interest from various funds for the remainder of the round.
This is starkly different from his efforts to fundraise last fall, so I wondered why he’s having more success this time around. Is something materially different about his company (or pitch)? When I asked, he said the company is still progressing at the same rate as a few months ago. He sees a difference in venture capital investors. More investors are receptive to his pitch, which is essentially the same as a few months ago.
In March, we’ll see start-up fundraising kick into high gear: more pitch competitions, demo days, etc. Lots of founders will “officially” kick off their raise and begin pitching investors. Fundraising wasn’t great last year. How will it go this year? I’m curious about whether this founder’s fundraising experience will be the exception, the norm, or somewhere between the two.
The Mom Test
One of the books I reread periodically and recommend to idea-stage founders is The Mom Test. It’s a short read and can add tremendous value to founders who are thinking about what solution they should build or what problem they want to solve. Every founder I’ve recommended the book to, and who read it, loved it.
The book focuses on a single topic: customer discovery. It outlines a simple, effective methodology for talking with customers. The book details how to ask the right questions (that aren’t leading questions) so conversations yield valuable insights about customer pain and its severity. The book does a good job of laying out an approach that helps founders better understand what (if anything) they should build, which can prevent founders from wasting time, energy, and money. Another reason I like this book for idea-stage founders is that it helps them avoid the common solution-in-search-of-a-problem trap.
If you’re an early-stage founder who hasn’t found product–market fit yet, consider giving the book a read.
Alibaba’s Nontechnical Founder
I’ve been learning about Jack Ma recently. He’s the founder of Alibaba, the China-based e‑commerce behemoth. As of this writing, the company has a market capitalization (i.e., valuation) of roughly $188 billion. Alibaba has a variety of successful business lines, including a marketplace, cloud computing, and financial services.
Jack is an impressive founder, but one fact surprised me. Alibaba is a technology company, but Jack Ma isn’t technical at all. He doesn’t write code and doesn’t have a deep understanding of tech. Yet he was able to found and scale a wildly successful technology company that changed commerce in his country.
If ever a nontechnical founder building a technology company needed inspiration, Jack Ma was the one. For nontechnical founders, his journey is worth studying.
Hustler + Practitioner Experiment
This week an entrepreneur told me about a new business he’s trying. He’d met a gifted creative whose work caught his eye. The creative wants the freedom to create what inspires him and thinks that a business that sells what he makes will give him that freedom. But he hasn’t had much luck getting the business off the ground. The entrepreneur got to know the creative and realized that he’s gifted in his craft, but not in business. He doesn’t understand or know how to apply business concepts.
This entrepreneur and creative have decided to test going into business together. If the test phase works out, they’ll continue. Each is responsible for his strengths: the entrepreneur for administration, marketing, and finances; the creative for creating the pieces and networking with other creatives.
When I heard about these two starting a business together, I was excited. Last month, I shared that I think a practitioner could be a good cofounder when paired with a business-minded hustler. I think a partnership like that could be a great, complementary founding team. The entrepreneurial experiment these two are running is exactly that. If successful, it could turn into something big.
I’m excited to follow the journey of this experiment and hear about what they learn along the way.
Entrepreneurs Win When They Share
Today I got to watch serendipitous interactions between several entrepreneurs who didn’t know each other before today. The inevitable “What are you working on?” question came up in most of these conversations. After sharing, these entrepreneurs were able to add value to what the others were working on in some way.
My takeaway from today was that entrepreneurs have more to gain than lose from sharing their ideas and what they’re working on. The more you share, the more opportunities you provide for others to help you and the more feedback (positive and negative) you get. Both will improve your idea or project.
Knowledge Isn’t Wisdom
As an early-stage founder, I was part of an entrepreneurial group that taught new founders about key business functions. Each quarter we went deep into a specific business function: marketing, finances, HR, marketing, etc. At the end of each of those sessions, I better understood functions that didn’t come naturally to me (e.g., marketing). I felt educated. But I still had a problem: What do I do with this new knowledge? How do I use it in my business? I’d learned what I needed to do, but I still had no idea how to do it.
This experience highlighted the difference between knowledge and wisdom.
Knowledge is acquired by learning new information or being made aware of something. Learning about marketing is an example of acquiring knowledge. Knowledge acquisition doesn’t always equate to adding value. There’s another step.
Wisdom is the ability to apply knowledge in a manner that aligns with the outcome you desire. Wisdom means changed behavior and improved decision-making—knowing what to do and when to do it. Wisdom is acquired from experience (yours or someone else’s). Growing your company through marketing execution is the result of wisdom.
Through trial and error and talking with other successful entrepreneurs (who shared their experiences), I learned how to apply the concepts I learned in those sessions to grow my business. My problem was solved.
This experience showed me that knowledge is important. You can’t apply something if you aren’t aware of it, which is why continuous learning is so important. But wisdom is what I value most because applying knowledge well is how I achieve the outcomes I desire.
Think of Hiring as a Three-Month Investment
This week I chatted with a founder who wants to hire for a key role but feels he can’t afford to do so. The business is bootstrapped and hasn’t received any external growth capital. I faced the same situation when I bootstrapped my company. I was drowning and needed someone who could think strategically and execute. I wanted to hire someone in a leadership role, but the business wasn’t generating enough cash to support an additional leadership-level salary.
I ultimately realized that I would be adding this person to help grow the business, not stagnate it. If the business grew, then the incremental cash generated by the business could cover the additional salary expense.
I couldn’t afford to pay someone for a year if they didn’t help move the business forward. I also couldn’t expect them to move mountains on their first day. There would be an evaluation and ramp-up period, and at the end of it, I should know if their contributions could help grow the business and if they were a good culture fit. Because I was hiring a leader, I estimated that within three months I should know. After reframing it like this, I realized that I didn’t need to think in terms of the business’s current state absorbing this leader’s entire annual salary. It just needed to be able to absorb three months’ worth or so. Said differently, I needed to be able to invest just one-fourth of their annual salary. Since this amount was much lower, thinking of it this way made the decision seem less risky.
I ended up hiring someone, and it worked out perfectly. Within a few months, he had learned the specifics of the business and our industry and was contributing in a meaningful way. The business began generating more cash around the third month, and within twelve months the growth more than covered his salary.
My big takeaway is to not think in terms of annual salary when resources are limited at an early-stage company. Instead, think of hiring as making a three-month (or so) investment in someone to accelerate business growth (and cash generation). By the end of three months, you can usually tell if you’ve made the right decision. This isn’t a hard-and-fast rule and doesn’t work for all roles or at all companies, but it’s an alternative way to think about hiring when things are tight.
Founders/CEOs Who Go from Idea to Billions All Have One Trait
A few months ago, I started thinking about what traits founders/CEOs who take a company from idea to public-market company worth billions possess. It’s a small group of people, as the number of companies that reach hundreds of millions or billions in annual revenue is small relative to the total number of companies founded.
After spending time learning about people who’ve accomplished this, I see one clear trait. These people were obsessive about a single problem. They weren’t entrepreneurs who wanted to build a company but weren’t sure what problem they wanted to solve. Rather, they’d been thinking about a problem intensely and decided they wanted to solve it.
It's hard to scale a company to billions and take it public. Along the way, founders will usually get an offer to sell if the company is doing well. To reject the offer and the financial windfall associated with it and take a company public is a hard decision. To continue as a public-company CEO and endure all the scrutiny from public-market investors isn’t for the faint of heart, either. This requires a vision and level of commitment that founders aren’t likely to have if they weren’t obsessive about the problem they’re solving.
I’ll keep looking as I study more founders/CEOs of public companies, but I’ve yet to find a founder of a public company who was a founder in search of problem before starting their company.
The Sprinter Work Style
During a meeting with an entrepreneur, the topic of unique work styles came up. He has a long track record of success, so I was interested in hearing about his approach. He almost burned out early in his entrepreneurial journey and realized that he’s a sprinter, not an endurance entrepreneur.
He learned that he isn’t wired to run hard 24/7/365. Instead, he’s more effective when he goes all out for a while and then recovers before repeating the cycle. He’ll work intensely for a few months and then take two or three weeks off to rest and recover. Recharging and recovering are key to how he operates best. He comes back refreshed, energized, and full of new ideas.
He went on to share that the key to this working style is his productivity when he’s in work mode. He works intensely—so much so that he’s able to get more work done during his sprint than most people would accomplish during his sprint and recovery period. He essentially gets the same or slightly more work done in a year, even with his breaks, than people who don’t take these kinds of breaks do.
He isn’t the first person to share this type of work style with me. I know a successful angel investor who focused intensely on investing for three or four months and then took a month or two off to recover and travel. He could do this because he was investing his own capital, so he could deploy it at a pace that suited him. He too works intensely when he’s in work mode but needs time off to recover.
Sprinting as a way of working isn’t available to everyone, but for those who are intense but not wired for endurance, it’s a work style to consider.