The IPO market for technology companies has been slow (see here). I’ve been curious why that’s the case (see here). Klaviyo is a known technology company that IPO’d in September 2023. I came across an interview with the CEO and co-founder, Andrew Bialecki. The interview caught my attention because he discusses initially bootstrapping and growing to over $1 billion in revenue and a market capitalization (i.e., valuation) of over $10 billion as of this writing.

One section of the interview addressed what he thinks the criteria are for technology companies to go public or, said differently, what a company needs to demonstrate to get public market investors to buy its stock and have a successful IPO. Here are the criteria:

• Positive free cash flow – the company needs to generate, not consume, cash.
• Sustainable business – The company provides a product or service that customers will value in future years.
• Durable growth – The company must be growing at a healthy rate. The smaller the revenue base, the higher the growth rate investors want to see. The growth rate must also be durable for the next four or five years.

Growing at a rapid rate that’s durable while not burning money isn’t easy to do. Many technology companies can achieve high growth rates, but they burn a ton of cash to accomplish this.

Bialecki’s perspective on the current IPO market for tech companies is valuable, given he’s one of the few who has successfully completed a technology IPO in the last two or so years.

He shares other great nuggets during the interview. If you want to hear just the section on his thoughts on IPOs, see here, but I found the entire interview worthwhile.

Last week, I shared that I wanted to finish Master of the Game: Steve Ross and the Creation of Time Warner by Connie Bruck and another book. Well, I fell short. I finished reading the Ross biography and started—but didn’t finish—another book.

The goal was aggressive and I wanted to check the box, but I didn’t. No excuses. I just came up short. I put a good effort toward the goal but ran out of time.

This week, I’m going to focus on finishing a single book. Every time I try to do more than that, I regret it.

Current Project: Reading books about entrepreneurs and sharing what I learned from them

Mission: Create a library of wisdom from notable entrepreneurs that current entrepreneurs can leverage to increase their chances of success

Cumulative metrics (since 4/1/24):

• Total books read: 35
• Total book digests created: 14
• Total blog posts published: 210
• Total audio recordings published: 103

This week’s metrics:

• Books read: 1
• Book digests created: 2 (using technology)
• Blog posts published: 7
• Audio recordings published: 0

What I completed this week (link to last week’s commitments):

• Read a biography about Steve Ross, founder of Time Warner and Warner Communications
• Added two books to my “book library” MVP
• Tested prompts, system instructions, and LLMs to improve the quality of responses from the “book library” MVP
• Created two book digests via my “book digest” MVP
• Tested prompts, system instructions, and system settings to improve the quality of AI-generated book digests

What I’ll do next week:

• Read a biography or autobiography
• Read my highlights from David Allen’s Getting Things Done
• Read my highlights from Tiago Forte’s Building a Second Brain
• Read two resources on prompt engineering
• Test different prompting for the “book digest” MVP
• Test adding a book’s contents to the “book library” MVP in different ways to improve response quality
• Identify the path to launching the MVPs publicly so others can test them

Asks:

• None

Week two hundred forty was another week of learning. Looking forward to next week!

Current Project: Reading books about entrepreneurs and sharing what I learned from them

Mission: Create a library of wisdom from notable entrepreneurs that current entrepreneurs can leverage to increase their chances of success

What I struggled with:

• No major struggles this week, just frustration. I couldn’t allocate as much time to this project as I wanted to. I had commitments to other projects that I had to make my priority this week.

What I learned:

• Google’s Gemini large-language models (LLMs) don’t provide in-depth responses when you feed them multiple books via retrieval augmented generation (RAG). When they’re fed a single book, the responses are much better. Feeding too much “raw” information at once is counterproductive.
• I described the problem I’m solving in a way that “feels” more accurate to me and that resonated well with investors when I pitched using it: “Entrepreneurs with photographic memories who read a ton have a superpower. I didn’t win the genetic lottery for photographic memory. I’m trying to solve that problem.” See this post for more details. I wonder how many other entrepreneurs have the same problem and are aware of it?
• My excitement about this project has jumped since my developer friend began helping me. Having someone with contrasting skills to talk with and work through hurdles with has made a noticeable difference.
• I haven’t addressed what to do with the highlights I make in a book. I want to figure out how to feed them into an LLM.
• I need to retain what I’ve highlighted. Maybe create something that helps me review highlights. Or maybe pump my highlights into an app built for that purpose.
• Prompting is a big deal, and I have a lot to learn about creating better prompts.  

Those are my struggles and learnings from the week!

I was chatting this week with an entrepreneur who’s trying to figure out how to solve a problem outside his expertise. This founder is facing the starting-from-scratch dilemma. He’s trying to solve a problem and figure out what his next action should be, but it’s so far outside his domain he doesn’t even know where to start.

Experience gives you the best shot at resolving a problem or determining your next action. You can acquire experience by doing things yourself (and often failing) or by learning from what other people learned by doing things. When I’m starting from scratch, I like the second option.

I crystallize the problem I want to solve and write it down. Then I find material from people who’ve solved the problem and had outsize success. Books are my preference because they’re long form and more thought out. But if I’m trying to do something tactical or something that requires recent experience, I listen to podcasts where the person explains what they did (not someone else giving their opinion or interpretation). I want the wisdom straight from the horse’s mouth. If possible, I try to learn from the experiences of several people.

This usually solves the starting-from-scratch issue. It doesn’t magically give me a solution to my problem or tell me what action to take, but it often gets me 70% to 75% there.

I then try to figure out how to apply what I learned from others to my situation. Copying exactly what they did usually doesn’t work because their situation was different from mine. Once I figure this out, I’m close to 100%. I know where to start, and I have a good idea of how I want to solve the problem and what the next action to take is.

I still fail and learn more along the way, but the entire process is much faster because I’m not learning foundational lessons from the ground up. Instead, I’m taking what works and building on it.

The next time you need to solve a problem or figure out what action to take but don’t know where to start, consider getting clear on the problem you’re trying to solve (write it down) and finding books or other content from people who’ve solved that exact problem. Learn from their experiences and try to figure out how you can apply what they learned to your situation. It isn’t perfect, but it’s a lot quicker than the alternative.

Current Project: Reading books about entrepreneurs and sharing what I learned from them

Mission: Create a library of wisdom from notable entrepreneurs that current entrepreneurs can leverage to increase their chances of success

With the help of a developer friend, I’ve created an MVP—two, really—for my current project. I’m starting by trying to solve two personal pain points:

• Create a digest, for each book I read, that I can review and use as a reference. This was taking me 10 to 15 hours manually. The output was valuable, but the manual process wasn’t sustainable.
• Create a library of all the books I’ve read. I want to be able to query all these books to help me solve problems or figure out the next action to take. Entrepreneurs with photographic memories who read a lot have a superpower. Their minds query everything they’ve read when they’re solving problems and make connections that uncover new insights. Those new insights help them develop unique solutions to problems or identify the unconventional next action to take given their goals. This is a huge advantage for these entrepreneurs. I don’t have a photographic memory, but I’m an avid reader. I want to use AI to help me remember and make connections between everything I’ve read. In other words, I want AI to help me develop this superpower.

I’m using an AI setup to create a digest of each book, and I’m impressed with the results. The quality isn’t as good as what I can manually create, but I see a path to getting it there. It’ll take work, but I think it can be done. One cool thing the AI has been good at is adding the frameworks an entrepreneur used to achieve success to the end of each digest. I didn’t include this in the digests I created manually, but having them in one place is helpful.

I’m using a separate AI setup to get answers to questions based on the contents of multiple books I provide. I’ve found a way to do this using retrieval augmented generation (RAG), which I’m happy about because I’m not technical. RAG allows you to provide a knowledge base to AI to complement its large-language model (LLM). In theory, this should result in more accurate and detailed responses. I’m finding that the answers are accurate, but they’re too high level to add value. They’re not detailed enough. When I ask AI to provide more in-depth responses, it doesn’t meet my expectations. I’m not sure if it’s the setup I’m using, my prompting, my system instructions, or something else. I’m using the same LLMs for both setups. I’m hoping the problem is with the instructions I’m providing, not the setup. But I’ll keep testing to see.

One of the things that prevented my company from reaching nine figures in revenue was our marketing. We didn’t have a marketing strategy, and execution wasn’t great either. We still managed to reach over $10 million in revenue—but despite our efforts, not because of them.

My company’s marketing efforts were a reflection of me, the founder. I suck at marketing. I don’t understand it, and I didn’t try to hire to fill my gap. Even today, I haven’t tried to understand marketing. Of course, I could—many people deeply understand marketing and have shared their wisdom in books and other content. I just haven’t put the energy into trying to learn it.

I doubt I’ll ever be a great marketer, but I think there is value in learning some of the timeless concepts and frameworks of marketing. This week I’ve decided that I’m going to try to learn them. I’m not exactly sure how it will happen. I imagine it will be a mix of reading and talking to marketing-minded entrepreneurs, but we’ll see.

Marketing has been my Achilles’ heel as an entrepreneur, but I’m excited to put effort into understanding it better. I think it will be fun.

I have a goal to read a biography or autobiography every week. I set the goal in April and have been pretty good about it, especially the last two months. But this past week, I didn’t finish the biography I was reading, Master of the Game: Steve Ross and the Creation of Time Warner by Connie Bruck.

I got annoyed with myself when I realized I wasn’t going to finish in time. Looking back, I probably could have if I’d been more strategic with my time earlier in the week. To compensate, I spent extra time reading this past weekend and accepted the failure. It is what it is—but I definitely don’t want this to become my norm. I enjoy reading and have benefited tremendously from this habit since I set my goal in April.

This week is pretty busy, but I want to finish the book I’m reading plus a new one. It’s aggressive, but I think it can be done.

Wish me luck!

A few weeks back, I visited a friend who’s a founder. Their business moved to a new location, and they asked me to check out the new space. I’ve known the founder for years and know what products the business offers, but I didn’t really understand how it offers them. So I decided to use my visit to learn “how the sausage is made.”

I toured the space and observed how the operation runs. It’s a well-oiled machine, but one thing caught my attention: one process seemed high priority but inefficient compared to everything else they did. I made inquiries and learned that the process is critical to generating revenue, which makes it a high priority, and it has to be done multiple times a week. This critical, inefficient process is the founder’s biggest annoyance and time suck.

After I left, I started making mental notes about new technologies I learn about that might automate parts of this process. I read about one promising new technology and shared it with the founder this weekend.

Two big takeaways from this experience:

• In Sam Zell’s autobiography, he said that visiting people in their environment is a great way to learn about them. Zell was right. Going to visit people and watching them do their normal work is the best way to understand their workflows and problems. It’s also the best way to deeply understand their pain points. Visiting this entrepreneur’s office helped me understand the severity of their pain. Video meetings and phone calls are good, but in-person visits are best.
• This founder has a never-ending to-do list. After I shared the new technology with them, they were excited about reducing the time and cost associated with this process. However, they’re not looking forward to learning how to use a new technology. In fact, they don’t really care about the technology or how it works. They want a solution to the problem. They want a service that takes care of everything from start to finish. The end result, including its quality, are all that matters.

There’s an opportunity to provide services that solve painful problems in specific small business niches. If new technologies such as AI are used to do most of the work, the services potentially can be high margin and scale nicely to seven or even eight figures in revenue with a small team. To understand what problems niche small businesses need solutions to, visit their operations. Look for points of frustration and inefficiencies that impact revenue generation. Then find technologies that solve the problem. Create a service offering that handles solving the problem from A to Z. Seems like a decent playbook for building a scalable services business in a niche.

Current Project: Reading books about entrepreneurs and sharing what I learned from them

Mission: Create a library of wisdom from notable entrepreneurs that current entrepreneurs can leverage to increase their chances of success

Cumulative metrics (since 4/1/24):

• Total books read: 34
• Total book digests created: 12
• Total blog posts published: 203
• Total audio recordings published: 103

This week’s metrics:

• Books read: 0
• Book digests created: 0
• Blog posts published: 7
• Audio recordings published: 0

What I completed this week (link to last week’s commitments):

• Created two book digests using Google AI Studio
• Tested using Google Vertex AI Studio
• Tested ways to improve the quality of book digests AI-generated using Google AI Studio
• Created an MVP that runs locally using Visual Studio Code (a developer friend was a huge help with this)

What I’ll do next week:

• Finish reading the biography about Steve Ross, founder of Time Warner and Warner Communications
• Start reading a biography or autobiography
• Test adding more books to the MVP
• Fine-tune the MVP
• Identify the path to launching MVP publicly so others can test it

Asks:

• None

Week two hundred thirty-nine was another week of learning. Looking forward to next week!