One big hurdle for some aspiring founders is their lifestyle—the amount of money required to maintain it is so high that entrepreneurship isn’t a viable option. There’s an argument that every dollar that goes into the founder’s pocket reduces the resources available to scale the company. You often see founders take small salaries with large equity positions in the early years. The thought is that if the business is successful, the equity will be orders of magnitude larger than the forgone salary.

You may not have thought about it this way, but personal burn rate and optionality are correlated (for most people). The higher your personal burn rate, the lower your optionality. A high personal burn rate prevents many people from entertaining opportunities with a big upside but lower initial salary.

Anyone serious about founding a company or joining an early-stage company should keep their personal burn rate as low as possible. This doesn’t mean you shouldn’t enjoy life. Nothing’s wrong with doing one-off things that bring you joy, such as taking a trip. It does mean to be strategic about the recurring monthly payments and other monthly outflows you get accustomed to.

I like to think of a low burn rate not as limiting, but rather as not allowing past decisions to restrict your options. The lower the personal burn, the more interesting opportunities you can consider.

When I was younger, I made a series of decisions rooted in groupthink. Everyone else was doing it—whatever “it” was at the time—so I figured I should too. Some of those decisions proved to be painful. Upon reflection, I realized I was following the crowd instead of thinking for myself.

These days I’m very aware of this. If I find myself thinking about doing what everyone else is doing, I’ll pause and ask myself why I want to do it. If I can’t identify a reason that’s specific to my situation, I go the other way. This is difficult and sometimes isolating, but it’s served me well over the years.

I feel we’re in a period of escalating groupthink in a variety of areas. The people who think for themselves will be uncomfortable in the short to medium term but will ultimately be proven correct.

Today marks the end of my one-hundred-eighth week of working from home (mostly). Here are my takeaways from week one hundred eight:

• Energy – I thought it would take me a bit to get back in the groove after vacation. I surprised myself by jumping back in full throttle with no problems.
• Unplanned interactions – This week ended up being filled with unplanned interactions and connections with people. Although it was unexpected, it ended up being a great thing. Lots of good stuff came from those interactions.  

Week one hundred eight was a high-activity week. I drew a lot of energy from talking with folks. Looking forward to more focus time next week.

I caught up with an early founder yesterday. We met when he was building his first start-up. That company didn’t make it, I learned yesterday. When companies don’t survive, good founders will reflect on the experience and try to learn from it. I asked him what he learned, and he was quick to share this: “Next time, I’ll prioritize go to market too, not just product.” Translation: he focused on building a great product and struggled to get it in the hands of customers.

This founder learned a valuable lesson. Just because you build it, that doesn’t guarantee that customers will come. He didn’t give enough thought to how he would take that product to market.

Kudos to this founder for taking the time to learn from his first experience, even though it didn’t play out as he planned. His self-awareness will serve him well as he dusts himself off and starts building his second start-up. I can’t wait to see his second act.

A founder building a marketplace asked for my thoughts on the risk of people connecting on the marketplace and taking transactions offline. If transactions are done outside the marketplace, his company doesn’t see revenue from the connection it facilitated.

Marketplace founders can’t stop this from happening. There will always be people who’ll do whatever is necessary to avoid paying the marketplace. You can create features and build processes to stop this behavior, but you won’t eliminate it.

The best way to mitigate it is to create so much value for both parties that they don’t want to transact outside the marketplace. And if they do, they risk losing much more than they gain in fee savings. A good example is helping supply-side participants (i.e., merchants) build their entire business around the connections made on your marketplace and making tools available that allow them to scale in ways they otherwise couldn’t.

Conversely, merchants who have thriving businesses and established tools outside the marketplace will explore the marketplace to acquire new customers and aim to take them offline.

Put differently, the best defense is to focus on maximizing value!

I was having a conversation today. It was a normal catch-up conversation. How’s life, what are you working on, etc. Toward the end he asked me, “What are you afraid of?” The question caught me off guard. I hadn’t been asked that before, and I don’t think I answered it very well in the moment.

Reflecting on it a bit today, I now have a clear idea of my answer. It forced me to ask myself some tough questions—and to answer them. I’m glad this person asked me this question. It gets to the core of self-awareness, and I think it’s a great question for founders (everyone, for that matter) to think about periodically.

So, what are you afraid of?

I shared my thoughts on the importance of customer onboarding in previous posts (see here and here). Those posts were inspired by poor experiences related to products I was interested in purchasing. Today I had the opposite experience.

My friend wanted to meet at a particular coffee shop he’d heard about. I meet people at coffee shops regularly but never buy coffee or tea. They just haven’t been my thing, but I’m happy to support the business by grabbing a juice. I had no plans to do anything different today. Little did I know that was about to change.

As soon as we walked into this shop, we were greeted and given an impressive education on their products and the history of the company. They highlighted how they were different from competitors, gave us personalized recommendations, and allowed us to smell samples. I was impressed and intrigued. I’d never had an experience like that at a coffee shop and decided to try one of the recommended teas. My expectations were still low.

My buddy and I both were blown away when we got our drinks. He’s an entrepreneur too, so we immediately nerded out on breaking down why we thought this coffee shop would do exceptionally well. We concluded that in addition to having high-quality products, they’d done a phenomenal job of onboarding people who are new to coffee or tea. They made it easy to try something you otherwise wouldn’t through education, personalized recommendations, and sampling. All within the first minute or so of walking through the door.

This shop did an amazing job and gained two new customers in the process. I have zero desire to try tea anywhere else, but I’m looking forward to my next cup at this shop! My experience today demonstrates the power of onboarding for a business different from tech—a brick-and-mortar retail store with a physical product. Make it easy for your customers to try a great product and you’ll win!

As most people understand,  building a great company is hard. It requires years of focus and dedication. You often hear founders, even after their companies have scaled, acknowledge that they’re constantly thinking about work when they’re away from work. They can’t help themselves. They’re giving it their all at the office and putting in more mental reps outside it. I was guilty of this when I was building my company. I’d find myself constantly thinking about the business and jotting down ideas—often at the most inopportune times (dinner, for instance).

As I’ve reflected and studied other accomplished people who aren’t founders, I’ve seen a pattern. In any industry or profession, the people who want to be the best have a similar dedication. They eat, sleep, and breathe what they do. It’s often a big factor in their eventual success.

That level of commitment has other ramifications. It means they often forgo other things in life (for better or worse). It affects their lives—and possibly the lives of others around them—in important ways. It’s hard to be 100% dedicated to your goal and have enough left to give to others too. Not impossible, but definitely hard.

People don’t stumble into significance. They dedicate themselves to what they’re doing and sacrifice to achieve it.

I recently became a customer of an interesting business. It seemed amazing, and I wanted to learn more. The product is great. I was surprised it hasn’t seen explosive growth. I decided to dig deeper and spent time observing and talking to the team. The owners are absent most of the time and live somewhere else. Once they got the business open, they began to focus on other projects, relying on general managers to run this business. Two general managers share the load, each running the business for approximately six months at a time. I spoke with one of the managers and asked about this arrangement. She said she has other projects outside this job that take priority and this role was never intended to be a full-time or long-term commitment. I spent time with the junior team members as well. They all live close to the business, and this is their full-time and only job.

I realized what’s missing. The owners and managers of the business aren’t fully committed. Leadership all have other things they’re working on that are more important to them than this business. The rest of the team sees the lack of commitment and has adjusted accordingly. None of them spoke of this as a place they see themselves long-term. They view it as a job and are passing through until their next opportunity.

There’s no one on the team fully committed to seeing this business reach its full potential, so it hasn’t. It’s just chugging along as a mediocre business. I suspect another entrepreneur will come along and see its potential. They’ll buy it and commit to taking it to the next level.

I’ve used the same home cleaning service for over a decade. They’ve been reliable, and their quality’s been consistent. I’ve been a happy customer. A few months back, the owner told me that the team servicing my home would be transitioning out of the company. They decided to go back to school and become software engineers. I was excited for them and wished them well. The company assigned another team to my home and things went on as normal.

This week, the owner of the company reached out to let me know that he’s been dealing with a worsening labor shortage. It’s gotten to a point where he won’t be able to keep my upcoming cleaning date. He’s hoping to add more team members and be able to service my home in a few weeks, but he has concerns, given the labor market. He’s historically paid his team the highest rates in the industry and has increased their pay recently, but even that isn’t enough to retain people in this market.

I’ve been trying to learn about the problem from the perspectives of various people on the front lines over the last few months (see here and here). Now I’ll have my own firsthand experience as a customer.

From everything I’ve seen and learned so far, I think this problem will get a lot worse. What matters to people has changed drastically. Pay is important, but it’s not the main motivator for a lot of people. Until employers understand what matters to people and incorporate it into hiring and retaining people, they’ll have labor struggles.

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