Today I had a conversation with a friend and fellow founder who’s active in the Atlanta start-up community. We shared our views on the macro landscape and what it means for the entrepreneurial community locally and nationally. Here are some of our takeaways:

• Communication – Founders should communicate often with their teams, investors, banks, and partners. If you don’t have all the answers, communicate what you do know. There’s nothing worse than being in the dark, at risk of being blindsided, during a time of crisis.
• Capital – Capital will be less abundant. I assume that banks will honor previously extended credit, but they probably will be reluctant to extend new credit. Venture capitalists are also likely to pull back in the short term until it’s clear how (IPO, M&A, etc.) and at what valuation they can exit their investments and return capital to LPs.
• Delayed closings – Venture capital deal closings could be affected if LPs default on capital calls. If this occurs en masse (which I believe is unlikely), VC deal activity will slow.
• Contingency plan – Start working on a plan and define the thresholds that will trigger it. It’s better to have a plan and not need it than be caught without one.
• Experience – The last economic downturn was more than a decade ago. If you didn’t experience it, seek out entrepreneurs who survived it and learn from them.
• Cash is king – Monitor your balance daily.
• Accounts receivables – Know who owes you, how much they owe, and when their payment is due. Reach out to each customer with a past-due account to gauge their ability to pay.

The business landscape is changing at an unprecedented pace. I encourage entrepreneurs to be proactive. If you’re an entrepreneur who lived through the last downturn and you have bandwidth, I encourage you to reach out to other entrepreneurs. Sharing your experience or just lending a listening ear could change someone’s trajectory.

Today I met with an entrepreneur who’s starting a SaaS company that will automate business processes for small and medium-sized businesses. He’s considering raising venture capital to build the technology, so my experience developing CCAW’s technology without raising capital interested him. Bootstrapping admittedly made it ten times more challenging. Here are some of the things I shared:

• Platform as a service (PaaS) – We couldn’t afford to develop or maintain the infrastructure underlying our applications, so we used a PaaS provider. It worked perfectly. One major downside was not owning 100% of our intellectual property.
• Spaghetti code – A high-profile investor recently told me that most early-stage companies he’s invested in were built on spaghetti code that wasn’t improved until later financing rounds. Duct tape and bubble gum are OK early on, when technical perfection is unreachable.
• Technical wisdom – I’m not technical by training, so bringing in a senior technical person was a game-changer. I could describe how I envisioned our system working and rely on them to make it happen.
• Technology wasn’t our product – Our revenue was generated from sales of physical products. With our technology, we consistently sold ever-larger quantities of them. If our revenue had come from selling technology, we might have chosen a different approach.
• Testing – We tested things manually to gain clarity about what exactly our engineers needed to build. Test before committing tons of engineering resources (if possible).

This approach worked for us and allowed CCAW to scale. Every business must forge its own path but whatever direction is chosen, technology costs have plummeted so much in recent years that more can be done with a fraction of the capital. AWS, Azure, Google Cloud, and Salesforce are just a few of the cost-effective options available. I encourage new entrepreneurs to think creatively about how they build their technology.

As I write this, the coronavirus pandemic is forcing companies to rethink how their employees work. They must embrace the work-from-home option like never before. I managed a mixed team of remote and in-office workers at CCAW, so I thought it might be helpful to share what I learned:

• Right person in the right seat – This is important wherever the seat is located, but it carries extra weight for team members who work from home. Make sure the person you hire is a good fit for the job.
• Experience – Seasoned team members tend to do better in remote roles. They often (but not always) need less hand-holding to work productively.
• Video communication – You can never replace face-to-face conversation, but video tools like Zoom are the next best thing.
• Cadence – Weekly or even daily team stand-ups keep information flowing and help resolve issues quickly.
• One-on-one meetings – Regular meetings with each remote worker are critical. They give the team member a chance to say what they’re thinking (good or bad) and connect personally with their manager. We did our meetings weekly.
• Alignment – Communicating what’s going on with the company is difficult. We published dashboards displaying key performance indicators (KPIs). We then discussed the KPIs during our regular meetings.
• Chat – Tools like Slack that allow you to create rooms or channels are great for communication. People like sending quick messages instead of emails.
• Visibility – Knowing who’s working will help you set expectations for responsiveness by remote team members. Tools like TSheets can help.  

It’s hard to replace the in-office experience, but there are things you can do to make everyone feel welcome and be productive. When done well, remote work raises team morale in a big way.

I wrote a post about why I wasn’t scared to leave corporate America. In that post, I committed to providing a detailed list of all the factors that allowed me to transition without fear. Here’s the list:

• What could go right – I focused on this, not what could go wrong.
• Superman syndrome – I hadn’t yet experienced any serious professional failures and basically thought I was invincible (typical early 20’s mentality). Note: I experienced many failures and was humbled many times over while building CCAW.
• Experience – This would be my second “official” company. My prior startup experience, my education, and my corporate experience made me “feel” much more prepared this time around.
• No career path – There was a clear path to being an EY partner in 15-20 years. The downside is that it is (or was back then) an up or out career path. You progress, yearly, towards partner, or you’re out. I didn’t want to be a partner, so I knew my days were numbered.
• Can’t hit what you can’t see - Working in a large company and with other large publicly traded clients gave me a clear idea of what well-run companies looked like. I knew what I was aiming for and felt confident I could replicate it. Side note: They look like well-oiled machines from the outside, but they’re not. There’s always a fire drill, crisis or some critical system failure when you peek behind the curtains.  
• Financially de-risked – I was traveling a ton, so a large percentage of my expenses were paid by EY. I also had two roommates. This allowed me to save a sizeable cushion. Feedback from others heavily influenced how I came up with this plan.
• Business de-risked – I actually started working on CCAW while still employed and using EY resources (which was probably against company policy). I was able to build relationships with suppliers and gain traction with customers before quitting.
• Reputation – I made sure I did a stellar job on all projects and got along with all team members. I never wanted to burn bridges or have a bad reputation. I wanted to leave on great terms.

Looking at this list now, it gives the impression that I was this well-thought-out young person. I wish that was true. In reality, I wasn’t. I was actually stretched super thin and all over the place (literally, too, since I was traveling every single week). What I was actually doing was staying true to my passions (entrepreneurship and personal finance), staying true to the values instilled in me by my family (do your best, treat people well and never burn bridges) and throwing stuff at the wall to see what stuck. Mix in a little luck and good timing and I found myself in a position to take a leap of faith.

Takeaways:

• Venture capitalists like betting on people with entrepreneurial experience. I now understand why. If you have an idea, give it a shot (even if you keep your job). You never know what could happen. Worst-case, you’ll learn a lot that can be applied to the next idea.
• My approach was the product of my young age and lack of responsibilities. However, I do think some (maybe not all) of the things I did might be applicable to others at different life stages thinking about entrepreneurship.
• Making the people who cared about me proud by taking a corporate job was nice, but my heart wasn’t in it. I’m an entrepreneur at heart. I like building things or helping people who are building things.
• Stay true to your passions and values. You never know where they’ll take you.

I previously wrote about my transition to corporate America, which people never actually ask me about. Most people are more interested in my transition to entrepreneurship, which I’ll detail in a future post. When I tell my story, people always ask me if I was scared. I always politely say no and continue telling the story. In my mind, I’m baffled and wonder, “Why would they ask if I was scared?” It never made sense to me. Recently, I reflected more on this and asked myself “Jemaine, why weren’t you scared?” For me, personally, the “why” is more valuable than the “what.” If I can understand why a decision was made or an action was taken, regardless of the outcome, I learn a lot more. Unfortunately, I hadn’t taken the time to understand “why” I, in fact, wasn’t scared to leave corporate America.

After unpacking this a bit, I realized there were a variety of reasons why I wasn’t scared. I had technically been an entrepreneur before. I knew I didn’t want to be an EY partner (great job, just not for me). I had started to de-risk my situation and my business idea, etc. I’ll provide a comprehensive list of all the reasons in a future post. My aha moment, though, was realizing the main reason I wasn’t scared was super simple: I was focused on what could go RIGHT.

People often focus on all the things that can go wrong (I’m guilty of it on a daily basis). It’s natural and part of how people assess things, but it can also be the death kiss to promising ideas if left unchecked. I was thorough in my assessment and aware of all the things that could go wrong, but I didn’t focus or dwell on them. For whatever reason, when it came to this particular decision, all I focused on was what could go right and where that could put me.

Next time you feel strongly or passionately about something, consider thinking about all the things that could go right and where you could end up as a result. You never know, the upside may outweigh the downside.

Today I had the opportunity to meet with an up-and-coming Atlanta entrepreneur, “Stephanie,” who has a growing company that she’s bootstrapped for the last three years. She recently participated in an Atlanta start-up competition and did well. Because of that exposure, local venture capitalists have shown interest in her company. Stephanie is currently evaluating if venture capital is the right path for her. It took many years, but I eventually bootstrapped CCAW to eight-figure revenues. Because of my experience, a mutual acquaintance asked me to chat with Stephanie.

I always like to start these conversations by learning about the entrepreneur’s background, business model, technology, and vision for the company. Here are some things I learned about Stephanie’s situation:‍

• ‍Solo founder – There is no cofounder or team member at her level intellectually.‍
• Scalable – Her business model is scalable—others in the market have proved it.‍
• Unique advantage – Stephanie has lived and breathed two unrelated industries for years. She’s uniquely positioned to see how linking the two can create value for customers. Others don’t realize this yet.‍
• Competition – Her business model isn’t new, but her implementation of it is unique. Highlighting this difference is critical to achieving healthy margins.

Stephanie has clarity about the destination she’s aiming for because the competition required her to pitch her destination to others. Now she has to figure out how to reach the destination quickly. She has ambitious goals, which will require a sharp team and a variety of resources. These things don’t come cheap.

In the correct situation, venture capital can help accelerate growth. Investors will also provide experience gained from prior portfolio companies, access to relationships, and accountability via a board of directors. Unfortunately, venture capitalists typically invest only when companies have the potential for outsized returns.

Everyone has to figure out what path is right for them, so my goal wasn’t to tell Stephanie what to do. Instead, I shared my bootstrapping experience—the good, the bad, and the ugly. I described the lessons I learned and the things I would do differently if I had it to do over (hindsight is 20/20).

Takeaways:

• ‍Capital source – Venture capital isn’t for everyone, nor is bootstrapping. Consider the pros and cons of all funding sources and pick the one that’s best (none will be perfect) for your company and your situation.‍
• Partnership – To build something great (a company or anything else), it’s VERY difficult to do it by yourself. Be open to partnership (cofounder, investors, etc..). Some of a lot is better than all of nothing.‍
• Timing – You can be too early, too late, or there at just the right time. Consider timing when making decisions about your capital sources or anything else.‍
• Consistent execution – When you’re executing on a growth plan, starting and stopping on the basis of cash flow—bootstrapping—makes everything exponentially more difficult.

In a previous post, I revealed that I started my first company in high school at the urging of a family friend. Today I’ll share what I learned from what became a seven-year experience.

I essentially developed and executed plans to customize customers' vehicles (think Pimp My Ride). I sourced and sold the required parts to my customers and then partnered with local shops to install them. I was pretty busy, so this was a part-time business. (After high school, I became a full-time college student and worked two jobs, one on campus and the other at a lobbying organization as an intern.)

I was a traveling salesman. I met customers in parking lots and other random places. I then brokered deals around town to get the installation work done. Looking back, this was pretty dangerous, considering that most customers paid in cash. It was also crude and unsophisticated—but it provided funds that made high school and college a little easier and it was an eye-opening, transformative learning experience.

Here are my takeaways from that first business:‍

• ‍Sales Process - I talked with a lot of people, but only a small percentage forked over money. In hindsight, I see that I was learning about the sales funnel, sales cycle, and close rates.‍
• Reputation - People did business with me because they knew I wouldn’t run off with their money. It takes years to build a good reputation: protect it.‍
• Relationships - I developed strong relationships with customers, vendors, and installers. When someone needed a favor, I obliged. Healthy relationships are bilateral.‍
• Scalability - Driving around meeting customers and installers took tons of time and wouldn’t scale.‍
• Customer Acquisition - I leveraged relationships with friends and paid commissions to people who brought me paying customers. How you acquire customers can make or break your company. Think hard about it.‍
• Information - The lack of information available to consumers was the main driver of high retail margins.
  

Today, I met with “Sam,” an up-and-coming entrepreneur who’s been working for a few years to grow his bootstrapped start-up. He’s smart, scrappy, and an overall good person. Unfortunately, he hasn’t yet gained the traction he envisioned. I was asked to chat with him by someone who cares deeply about his success.

I started by learning more about the business model, his vision for the company, how his technology works, and how the business is doing. I was able to identify these concerns:‍

• Solo Founder - There is no cofounder or team member at his level intellectually
• Multiple Hats - He’s the GM, senior developer, HR lead, customer service lead, etc.
• Alignment - He spends most of his time executing and managing operations.
• Deadlines - He has no timeline in place.

Sam is caught on the entrepreneur’s hamster wheel. A lack of capital prevents him from hiring the talent or acquiring the resources he needs to execute on his vision. He’s down in the weeds and every day looks the same. I can see this because I bootstrapped CCAW and I was on that hamster wheel too before I turned the corner with the help of others.

I was very open and honest with Sam. I was respectful of what he’d built, but I didn’t sugarcoat the situation. Things must change or his vision will never become reality. I shared my perspective based on my own experiences and encouraged him to seek the perspective of other entrepreneurs as well. I have no doubt that Sam will go on to do great things and I’m excited about what the future has in store for him.

Takeaways:

• ‍Destination. Take the time to define, in writing, where you want your company to go (revenue, number of customers, etc.). This can be simple, high-level, and change over time, but the exercise is priceless.‍
• Timelines - Set target dates for your destination and associated intermediate goals. These dates may change, but that’s OK.‍
• Accountability - Share your destination and timeline with people you respect so they can support you by holding you accountable.‍
• Alignment - Every day, ask yourself, “Does this activity move me closer to my destination?” If the answer is no, think twice about what you’re doing.‍
• Wisdom - Novice entrepreneurs (regardless of age) have a wisdom gap. Fill your gap by seeking out credible entrepreneurs with the experience you lack. If you’re an entrepreneur with wisdom (successful or not), consider giving back. It could change the trajectory of someone’s life!

Have you been on a hamster wheel (entrepreneurial or not)? How did you manage to get off?

After building a company for over a decade, I’ve recently become more intentional about mentoring new entrepreneurs (I’ll explain this decision in another post). They often want to know the story of how I started CCAW Automotive Group. Like most people, they usually don’t realize that CCAW was my second “official” company (the fourth or fifth if you count all my childhood hustles). I’ve never shared this before, but here’s the story of how I started my first company.

In high school, my dad’s close friend (I’ll call him Joe) was visiting for Thanksgiving. He saw me heads down, intensely researching, and asked what I was up to. Joe was an entrepreneur. He was super-curious about new things, and it showed. He always engaged with me differently than other adults. At the time, I was into cars and had been trying to figure out how aftermarket auto shops source their products. I figured I could cut out the middleman and get better deals for my friends and me. Keep in mind that this was 1998—information wasn’t as readily available as it is today. I learned about retail and wholesale relationships but hit a wall when wholesalers asked for my business license.

Armed with my research, I proudly told Joe, “When I become an adult, I want to start my own company selling auto accessories.”

He interrupted me. “Why wait until you’re an adult?”

The question caught me off guard. I was speechless. I assumed there was some age barrier to overcome, but I’d never taken steps to find out if that was true. Joe encouraged me to apply for a business license and see what happened. I took his advice, and two weeks later my first company was registered with the Louisiana Department of Revenue. I officially had a business (well . . . kind of).

My takeaways:‍

• ‍Take action. Take the first step. Confirm your assumptions.‍
• Stay curious. Never stop learning.‍
• Give back. Take the time to talk with anyone interested in entrepreneurship. Encourage them. You could change someone’s life!

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