Met with a friend today who runs his own company. Seven years ago, he told me he was thinking of making the leap. He’d had a stable job for many years, though, and wasn’t sure how he or his family would weather the ups and downs of entrepreneurship. But he was passionate about the industry. In the end he decided to jump. His wife was supportive (given that certain conditions were met beforehand), and they lived a modest lifestyle. He started the business on nights and weekends. After getting some traction, he went full-time with his wife’s blessing.  

Fast forward to today. He has a booming company that’s growing fast and a big vision. He plans to build a massive company. At the moment, he’s working through how to scale operations while maintaining the quality his customers have come to expect. We talked about how software could be what’s missing. I’m planning to connect him with some software founders who are building products for his industry.

I’m glad my friend bet on himself and that things are working out. I look forward to following his journey and have no doubt that his vision will become his reality!

Today I toured a real estate project a buddy just completed. He’s easing his way into entrepreneurship and the industry. This project was the largest (and most complicated) he’s taken on to date. As usual with construction, it didn’t go as planned, but it’s a financial success. Not as much profit as he’d initially hoped, but a success nonetheless. As we chatted, he kept mentioning how he should have spent less but didn’t know any better when decisions were being made. I realized that his perspective was preventing him from realizing how this project was a win in other ways, too.

The project wasn’t easy. The price of lumbar surged in the middle of it. Labor rates increased, while the reliability of crews decreased. These and other factors led to higher costs and a longer timeline. As each obstacle presented itself, my buddy figured out how to overcome it. It was stressful, but he found a way to get it all done. Tough circumstances, I thought, but awesome learning experience.

We talked about his future projects and what he plans to do differently. I pointed out how much he’d learned and how valuable that knowledge will be. Lots of people pay tuition to go to school to learn what he got paid to learn. In the end, he reflected on where he was before and after this project and agreed. It was a huge success and is likely to be the turning point in his real estate career.

Knowledge acquired through experience (yours or others’) can be a big factor in entrepreneurial success. If a situation doesn’t end quite how you’d hoped, reflect on what you’ve learned from it. The knowledge you’ve gained will be invaluable next time and every time—it’s the gift that keeps on giving!

A good friend said something today that stood out to me: “When water wants to flow downstream, you can’t push it uphill. It runs through rocks, concrete, or whatever is in its path and always finds a way. You can slow it down, but you can’t stop it. It’s a heck of a lot easier to go with the flow than against it.” We were discussing innovation and how we used to resist certain technologies we didn’t understand—only to later have to say “Yeah, that makes perfect sense” and feel like we were late to the party.

My friend is spot-on. Sometimes I have to remind myself to pay attention to a trend. It may not make sense to me, but clearly—it being a trend—it’s making sense to others, and I should spend time trying to understand and embrace it. That’s better than fighting it, only to end up having to play catch-up and buy into it later. I now try to be like water and go with the flow.

The world is going to change, with you or without you. Innovation is going to happen, whether we like it or not. It makes a lot of sense, I think, to stop fighting that and make an effort to understand and be part of the trends.

Next time you’re thinking that something that doesn’t make sense, consider asking yourself: am I going against the flow?

One of the biggest opportunities I see founders miss is the chance to evaluate the people who are evaluating them—specifically, when an investor asks, “Do you have any questions for me?” the founder saying no or asking superficial ones. It’s a missed opportunity for the founder to gauge whether the investor is a good fit as a partner.

Evaluating a partner starts with knowing what you want. Investors usually have a clear idea of what they’re looking for. Unfortunately, some founders don’t, and they don’t evaluate their partners until after the deal is sealed.

Founders can do a few simple things to increase their chances of being in a good partnership:

• Write down your criteria for a good partner. Putting things down on paper usually leads to more clarity.
• Before meetings, don’t be shy about letting the investor know you want to allocate a certain amount of time for your questions.
• Skip the superficial questions; ask only questions that will help you understand whether the investor satisfies your criteria.

Partnerships are important. Founders should make sure they’re evaluating for fit, not just letting themselves be evaluated.

I talked with an early-stage investor today about a recent investment his firm made. He listed lots of great reasons for doing the deal: strong team, great traction, big market, great customer feedback, etc. But one point stood out to me. Competitors—other well-funded large players—have platforms that solve the same problem as this new portfolio company as well as a variety of other problems. They do an okay job of solving most of them. The new portfolio company, on the other hand, solves one problem extremely well. The hyper focus on a single problem helped this investor have conviction for the deal.

I think of this new portfolio company as taking the sniper approach to solving a problem, which its new investor loves. It’s laser focused on a single problem that its leaders have taken the time to understand well. Their solution is designed to eliminate a pain point so customers don’t have to worry about it anymore.

The larger competitors are taking a shotgun approach. They’re aiming in the general vicinity of this problem and many others. They understand the problem from a high level but haven’t gone super deep. Their solution is designed to mitigate the pain of this problem, not erase it.

Both strategies have pros and cons, and large companies can be built using either. My personality leaned toward the sniper approach when I was a founder, but I’ve shotgunned too. From my experience, the decision of which to embrace depends mainly on what customers want. Who are you targeting and what do they want? A one-stop shop that does a decent job at solving many problems but doesn’t shoot for perfection? Or an expert that’s trying to eliminate a problem altogether?

Listen to what your customers want to give you a clear idea of what you need to build.

I spoke with a founder who shared some of his plans with me. He hesitated to reveal one detail, but I encouraged him to keep chatting. He planned to sell merchandise to customers in addition to his core technology product. I asked him why he wanted to do that and why he hadn’t wanted to tell me. He was worried, he said, that I’d think the merchandise was a distraction from the company’s core product and that he was scattered and unfocused. He sees the merchandise as important to building a brand and community.

Founders who are talking about their initiatives and ideas often get excited. They dive straight into the details of what they want to do. It’s very common; I used to do it myself. But the person listening usually doesn’t have the same context. They haven’t been thinking about this problem day and night. They don’t understand the customers and the market. Since they don’t understand the bigger picture, they’re left to wonder. Why are you doing this? The missing why prevents them from wrapping their minds around the details the founder is sharing.

Before founders explain what they want to do, they should tell their audience why they want to do it. Start with the high level and then get into the details. It’s a flow that’s much easier for a non-founder to digest because it provides context.

This founder has a great merchandise plan, and it makes sense. I think he should let other people know about it. When he does, he should begin with his big why: to create a moat with loyal customers by building a brand and community. With that high-level context, the merchandise plan doesn’t sound like a distraction. It sounds like a shrewd strategy.

When I decided to leave corporate America, some friends and family didn’t understand. I’d worked hard during college to position myself for a job with a reputable organization. I was walking away from that stability to pursue a risky start-up idea, which sounded crazy to them. It just wasn’t something people in my circle did. I was one of only a few with the tolerance for high risk needed to pursue this path.

As I look around today, I see a different landscape. Many people want to pursue entrepreneurship. It’s a beautiful thing, and I love it. But that doesn’t change the fact that being an entrepreneur is risky. It appears that more people have a higher risk tolerance and are moving forward as founders.

I’m now wondering if this higher risk tolerance is specific to entrepreneurship or more general. If the latter, what impact (good or bad) could this have on society over the next decade or so? I don’t have an answer to this yet, but I’ll be thinking more about it and getting the perspective of others.

One of the things founders hear often is “What is your big vision for this company?” Lots of early founders will respond with how much revenue they hope to reach or how many customers they plan to have. Those answers miss the point of the question.

Your vision transcends money and sales. It’s about impact. If you build a flourishing company, what impact will you, and it, have? Put another way, what does the world look like if you and your team are successful?

If you’re building a company or thinking of building one, consider taking time to think about the impact you can have . . . and the impact you want to have.

I caught up with a founder working on an early version of his product. It doesn’t currently exist in the market. And he’s not sure that the pain point is big enough to justify the product. He’s been focused on getting it in the hands of users and converting them to paying customers. But today he shared a new approach with me. He now realizes that feedback is more valuable than revenue at this point. Feedback will help him understand whether he’s going in the right direction and help him fine-tune the product. He’s decided to give the product away for free (for now) in hopes of acquiring more users so he can get more feedback.

I like this founder’s approach of prioritizing feedback over revenue. For his situation, it makes sense. I suspect the feedback he receives will lead to valuable insights.

Customer feedback is important. It helps you understand what your customers want, which is key to the success of any company. If you never listen to your customers, you’ll never be in tune with them.

If you’re building a company or thinking of doing so, consider incorporating customer feedback into your decision-making early. If you do, customers are likely to thank you with dollars!

I chatted with a founder today about my experience bootstrapping my company. We discussed the pros and cons of various ways of capitalizing a company and factors to consider. Here are the main takeaways:

• Talent – If you’re going after a big opportunity, you can’t do it by yourself. You need a team. You want to find the best and brightest people you can. These A players usually want to be compensated for their talents. They may accept equity and cash compensation, so you may be able to go a little lower on salary. But you don’t want them looking over their shoulder for the next opportunity. You need ample capital to pay people what they’re worth.
• Runway – When you’re executing a plan, it takes time to see a return on your efforts. You want to give yourself enough breathing room for your hard work to start paying off.
• Strategic thinking – When founders aren’t focused on day-to-day survival, it’s possible for them to think strategically about the business. And founders should be thinking long term about the business—which they can do only if they’re not trying to figure out how to pay this week’s payroll.

There isn’t a right or wrong way to capitalize and grow a company, but these are important considerations for founders. Bootstrapping and raising investor capital are common approaches, but there are others. Pick the one that’s right for you and that sets you up for success.