This weekend, I chatted with two founders who’ve each built a multibillion-dollar company. Both companies are still growing, and both founders want to take their companies “all the way”: they’re planning on IPOs followed by public trading on the stock market. These founders realized that to achieve that goal, they, and their supporting casts, need to level up. They’re both preparing to become public company CEOs, which means they need to learn new skills and improve existing ones. They’ve started hiring company leaders with public company experience and building relationships with public company CEOs from whom they can learn. If all goes well, they should be ready to take their companies public in the next few years.

By any standard, these founders are successful. They’ve built amazing companies from zero to hundreds of millions of dollars in annual revenue, creating wealth for themselves, their team members, and their investors. But even with all this success, neither has ever taken their foot off the gas or become complacent. They continue to level up so they can tackle their next challenge head-on.

Most founders—these two included—have no idea what they’re doing when they start out. A key difference between those who achieve greatness and everyone else is the former group’s desire to continuously level up. They’re OK about not knowing some things, but they put in the work to learn and fill those gaps as quickly as possible . . . over and over again.

My chat with these founders was a reminder that greatness arises not from complacency but from continuously leveling up.

One thing that’s more common than most people realize is early-stage founders not having the data they need to understand how their business is performing. For example, I talked with a real estate founder with multiple properties. I asked how he knows how each property is performing. He doesn’t, he said. He does back-of-the-napkin math on rent and expenses. I’ve talked with other early-stage software founders who don’t have a great handle on their customer conversion rate, customer acquisition cost, or, sometimes, how much runway they have left.

Early-stage founders have limited resources, so it’s not realistic to expect them to precisely measure and understand every data point in the business. But it does make sense to pick two or three that really matter. The highest-priority one should be financial. Businesses fail because they run out of cash. You always want to understand your cash position and its trajectory. For nonprofitable or pre-revenue businesses, understanding your revenue is critical. Knowing how many months you can plan before the bank balance hits zero is key. For profitable businesses, review your profit and loss statement and balance sheet monthly to understand what’s contributing to (or detracting from) your profitability and how much net cash you have on hand. If you’re not a numbers person, there are plenty of firms who can help pull these numbers together and explain them to you.

As we head into 2023, early-stage founders should be mindful of what numbers tell them about how their business is performing. Hint, hint . . . every founder should keep their finger on the pulse of their cash.

With the new year approaching, many people are thinking about what they want to accomplish. A friend told me his weight loss goal for 2023 and asked for feedback. I think he was hoping I’d share my experiences with food or exercises. Instead, I had one piece of advice: start simple by weighing yourself daily. It takes five seconds and doesn’t require changing your life as you’ve known it.

Losing weight is hard for many people—especially when they make abrupt changes. Starting with a feedback loop, instead of big changes, can be a great first step. By measuring something every day that you want to improve, you’re more likely to change your behavior. And if you change your daily behavior, you’re more likely to form habits that contribute to achieving a goal. For example, if you weigh yourself every day, you’re more likely to rethink eating a piece of cake after dinner if you don’t like what you saw on the scale that morning. If you establish a habit of not eating desserts, that reduces your calorie count, which can get you closer to your weight loss goal. Of course, you need to do other things, including upping your physical activity—but you get the idea.

Feedback loops can be a simple but powerful way of taking the first step toward forming powerful habits that align with a goal. Next time you think about something you want to accomplish, ask yourself what feedback loop will send you down the right path.

I listened to someone explain poll-based decision-making. When faced with a difficult decision, you reach out to people in your network and ask which choice they think is correct. Then you do whatever the majority “vote” for. For example, you ask one hundred people if it’s a good idea to put all your money into a single stock someone told you about. If ninety-nine people say yes and one person named Warren Buffett says no, this person would make the investment.

This thought process has several flaws. I’ll discuss two:

• Credibility – It’s good to ask for others’ perspectives. But it’s important to ask credible people, meaning people who have experience or a track record of success in the area. People who have no experience or success in the area aren’t credible, and their perspectives should be discounted or, in extreme cases, ignored.
• Independent thinking – It’s important to take the time to figure things out yourself and reach your own decisions. Letting other people do the thinking for you—following the crowd—can be dangerous. You can factor in the perspectives of others to make sure you’re not missing something, but you don’t know how they made their decisions. If you rely on them, you could be exposed to serious errors. Frauds like Ponzi schemes grow because new investors take comfort from and rely on the fact that other people decided to invest. People who evaluate opportunities independently are more likely to see things that are too good to be true for what they are.

I’m all for getting perspectives from others before making decisions, but I’m not a fan of poll decision-making.

I had a chat with my family over the holiday about truthful feedback. I asked them to share with me any observations they have about me (positive, negative, or neutral). I let them know I wanted the truth and wanted to understand different perspectives to improve my decision-making. I value the feedback of those who’ve known me longest. I may not agree with it, but I still want to hear it. Ideally, I want to hear their raw thoughts, not a watered-down version that I have to interpret later.

The request was embraced, and I got some valuable info. One family member thanked me for giving them permission to provide feedback. They said they’ve had feedback for me in the past but didn’t feel it was their place to share without my asking for it. I always assumed those close to me know how I value candid feedback. I also assumed that knowing this meant they would readily share any feedback. Today that assumption was proven wrong.

As I’ve matured, I’ve become more intentional about seeking out people who will readily share candid feedback. What I missed is that people in my circle might have something to tell me but not be comfortable doing so absent an explicit request.

In 2023, I want to have the truthful-feedback conversation with more credible people in my circle. I suspect this will be a positive exercise that takes some relationships to the next level in the long term and unlocks some valuable observations in the short term and long term.

I recently listened to a presentation Bill Gurley gave at his alma mater a few years ago. It was a great presentation from a highly successful investor. He shared his ideas about how some of the most successful people have thought about and executed their journeys. Here are a few takeaways:

• Passion – Pick something you’re passionate about. Your passion will push you further than others. That extra effort can be the difference.
• Preparation – There’s no shortcut to outsize success. It takes hard work and preparation. Those who achieve it prepare in a way that others may not understand and can view as borderline obsessive. Bill named a few wildly successful people we all know (Bob Dylan, Bob Knight) and gave examples of the intense preparation they all put in.  
• Mentors – Find people who’ve had success in your field and ask them as many questions as possible. Take notes on what you hear; they’ll be invaluable later. Have mentors throughout your journey, and be sure to update them as you go along (good or bad).
• Peers – Find people doing something similar, not necessarily in the same field. Try to learn from them and help them learn from you. Cheer them on by celebrating their accomplishments.
• Humility – Give most of the credit for your success to everyone who helped you along the way. Pay it forward by helping others who come along behind you.

Bill shared a lot of other insights that I haven’t mentioned, too. Overall, this was a great presentation for anyone trying to understand what it takes to accomplish something great or trying to think about their career. If you’re interested, you can watch the presentation here and see the presentation slides here.

An aspiring founder has been looking for the right problem to solve. He heard about a problem and found a company experiencing it. He talked to the company leaders to understand the problem from their perspective. They validated the problem, but the aspiring founder wasn’t sure how painful it was. He decided to send them a proposal before he started building the solution. It recapped his takeaways from their discovery conversation and outlined key functionality that needed to be built. More importantly, it also included potential pricing options for the solution.

The company leaders’ response was telling. They didn’t want to pay anything close to the pricing the aspiring founder had proposed. Hearing this, the founder paused building this solution.

This founder quickly learned valuable information: this problem isn’t painful enough for this company to pay for a solution. This founder likely saved weeks or months of time. Now he can focus on finding a problem that needs a painkiller instead of one that’s merely inconvenient.

Great companies are built around solutions that create value by solving painful problems. If the value created is sufficient, customers readily pay for the solution. Finding a burning problem that is or will be painful to a large group of people is the key. If you build a business around an inconvenience, the chances of your solution turning into a large company are significantly reduced.

I’ve been helping a founder think through office options. His company is experiencing unexpected growth, and he’s bringing more people on board. He’s been remote since 2020 and wants to get a space for his expanded team to work in. We discussed coworking spaces, and I also shared the experience of my first office.

In the early days of my start-up, I needed something simple. Two desks and reliable internet. When I talked with seasoned founders, one of them suggested that I sublease from a larger company. He connected me with a founder who had excess office space, and we struck a deal. My new landlord had been an entrepreneur for many years and had built a company doing millions in annual revenue and operating in two states.

Over the course of a few years, my company grew from a few hundred thousand dollars in revenue to over a million. That sublease played an unexpectedly large role. First, I was able to observe the inner workings of my landlord’s company, which I learned a lot from. It was like being a fly on the wall watching a larger company manage growth. Instead of hearing about his management style, I saw it firsthand. Instead of asking him to describe qualities that make a top performer, I learned about them every day as I got to know his top performer. Second, my landlord became a mentor and advisor. He observed my journey and hurdles in real time. On many occasions, he pulled me aside to share how he’d handled a situation I was struggling with. And I’d often walk over to ask if he had fifteen minutes to chat. Those information sessions were valuable.

The knowledge I gained from my sublease was worth many times more than the rent I paid. I’m thankful for that experience.

With companies reducing staff and embracing working from home, I suspect there’s more underutilized office space than we’ve seen in a long time. Translation: lots of opportunity for small start-ups to sublease space from more mature companies. If you’re a founder looking for space and coworking spaces aren’t ideal, consider a sublease. You could end up getting much more than just office space out of the experience.

I listened today to a founder explain his approach to building his second company. His first company failed because he couldn’t get any paying customers. His big takeaway was that what he built wasn’t what customers wanted. He had a hypothesis and built a solution based on it, not realizing that his hypothesis was just that, a hypothesis that needed to be proven correct or incorrect. He was trying to sell his solution, not find out whether his hypothesis was correct. After reflecting on his journey, he realized that the company failed because he wasn’t listening to what customers were telling him, which was that his hypothesis was incorrect.

This time he’s taking a different approach. He has a hypothesis, but he has recognized from day one that it may be wrong. Right or wrong, he’s focused on learning the why behind what people say. He built an MVP based on his hypothesis and has been getting feedback from customers. The feedback told him he was wrong in his initial thinking and helped him understand his customers’ pain better. He built the second version of his solution, which is resonating with customers because it solves a real pain point.

It took this founder a few years and a failed start-up to learn a valuable lesson. In the early days, focus on proving your hypothesis right or wrong. Have mental flexibility so you can see things from the customer’s perspective and be ready to go where customer feedback takes you. He learned this lesson the hard way but is now succeeding in his second act.

I love hearing company origin stories. It’s always interesting to hear what led someone to start a company. I’ve started asking for the origin stories of younger VC funds too. Emerging managers are founders too, and going from zero to one with a fund can be difficult. I love hearing why they made the leap. I recently heard a VC fund origin story that was different than any I’d heard before.

Venture capital and its outsize financial rewards have been known in areas like San Francisco for decades. A founder from another country was able to take his start-up public and reap a massive windfall for himself and his investors. This hometown story caught the attention of founders and investors in his native country, who wanted to know how they could support the next local founder who’d have breakout success.

A multifamily office in that country was repeatedly getting asked by the families it managed wealth for if it could find some early-stage investment opportunities. Its leaders realized there was no venture capital in the country and decided to start the first venture fund there. They settled on a hybrid strategy of investing in other venture capital funds and making direct investments in start-ups.

Fast forward a few years, and they’ve raised a few funds and had one of their seed-stage start-up investments go public. The fund managers are happy, as are the founders they backed and the limited partners who invested in their fund.

What an interesting origin story.