Today, I chatted with an entrepreneur who owns a retail company about what can be done to grow sales. One of the projects mentioned was improving the functionality of its website. The entrepreneur views money spent that way as a cost and wants to spend as little as possible. This perspective got me thinking.

Entrepreneurs should keep a close eye on costs. The old saying, “If you watch the pennies, the dollars will take care of themselves,” is true. The best entrepreneurs keep costs under control.

However, expenses and investments are different. An expense is a cost to operate a business that generally covers only a year. Think insurance, taxes, rent, salary, etc. An investment creates an asset that produces revenue (and hopefully profits) for years. An investment should generate a return.

The entrepreneur I was talking with today was thinking of money spent on an ecommerce website as an expense, but I think it’s an investment. A website is an asset that, if properly built, can drive revenue and create a return on the money invested for years.

Entrepreneurs have a dual role. They should manage the costs of the company to ensure short-term profitability. But they’re also capital allocators who must invest profits in ways that will help the company grow long term. Treating investments as expenses will improve short-term profitability at the expense of long-term viability.

I’ve been learning more about marketing recently. Last week I finished reading the second book about David Ogilvy. He was a famous advertising entrepreneur who founded the agency Ogilvy & Mather. One of the points stressed in both books is how important a headline is.

Most people will read an ad’s headline, and then some percentage will read the rest if the headline catches their attention. David focused on the headlines because he understood that people will never read the body of an amazing ad if the headline isn’t effective. Great ad content alone doesn’t sell products—there must be a great headline too. Most people focus on the former, but the latter is equally, if not more, important.

I want to improve at thinking about and writing the equivalent of headlines. I’m going to practice with titles for my blog posts. I write these daily, so it’s a good way to get reps of something that David said matters more than people realize. If I get good at this skill, I’m sure it’ll pay off in ways I can’t imagine.

A friend of mine, Markell, is an engineer and investor who’s been following my book project journey. Today, he shared an example of a different way to communicate a book’s concepts: a mind map. I like mind maps. They effectively communicate concepts quickly. And creating one is a great exercise in thinking through an idea and all the supporting parts.

My mission with my book project is to create a library of wisdom from notable entrepreneurs that current entrepreneurs can leverage to increase their chances of success.

I’d never considered using a visual like a mind map to communicate entrepreneurial wisdom or an entrepreneur’s journey. But when I looked at what Markell sent me, it clicked. A mind map is a great way to quickly give someone a 50,000-foot view of something. They can then zoom into whatever areas they want to know more about. It’s also a great way to show how actions and ideas build upon each other, how multiple people leverage the ideas, etc. Said differently, it’s an effective communication tool that shows how things are connected.

I’m not sure how to create a mind map of an entrepreneur’s journey or wisdom (or multiple entrepreneurs’ journeys or wisdom), but I’m excited to try to figure it out. It could add a lot of value to my book project.

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: 37
• Total book digests created: 15
• Total blog posts published: 224
• Total audio recordings published: 103

This week’s metrics:

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

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

• Read a second book on David Ogilvy—a collection of memos, letters, speeches, and interviews
• Created a book digest for David Allen’s Getting Things Done using the “book digest” MVP
• Tested prompts to improve the quality of digests created using the “book digest” MVP
• Tested different parsing methods as alternatives to retrieval augmented generation (RAG) for my “book library” MVP
• Tested prompts to improve the quality of responses from the “book library” MVP

What I’ll do next week:

• Read a biography or autobiography
• Test alternative setups for the “book library” MVP

Asks:

• None

Week two hundred forty-two 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 material struggles this week.  

What I learned:

• Retrieval augmented generation (RAG) comes in various flavors (see here), and all of them have shortcomings. The main hurdle is that information indexing can’t be adjusted. It’s a bit of a black box. RAG might not be viable for the “book library” MVP.
• I thought Google Cloud Platform (GCP) was throttling my account last week, impacting the depth of query results from the Gemini LLM. The issue may have been that GCP’s RAG tools could not index a large data set like a book, which led to shallow responses.
• A database can structure and store information, which helps make the data more useful. A database needs a schema. A database might be a necessity for this project.
• The prepackaged solutions meant to save time are good for generic use cases. This project is individualized and may require more solutions to be built from scratch.

Those are my struggles and learnings from the week!

I’ve been learning more about retrieval augmented generation (RAG) and how it can enhance AI responses and help AI-oriented businesses. Here are a few thoughts based on my understanding today:

• The better the data, the better the responses from AI. Data can be a moat that will keep competitors away. Data aggregated in a single source will be valuable because it will enhance the output from AI. Assuming that AI will aggregate disparate data, organize it, and provide a quality response isn’t a winning strategy as of today.
• Data structure matters for large data sets. AI struggles to make sense of large data sets. The data needs to be structured so AI can easily understand connections within it. And when I say data, I’m including text.
• AI will make it easy to build solutions. I see new niche AI apps launching daily. Competition is ramping up. To succeed long-term, entrepreneurs building AI solutions will need a proprietary data set or a unique way to distribute their solution to customers (e.g., brand credibility or a creative way to acquire customers)—ideally both. Absent these two things, having a sustainable edge over competitors will be difficult.

I’m still learning, but those are my thoughts right now.

I did a lot of reading this weekend for my “book library” MVP. I dug deep into retrieval augmented generation (RAG) and learned some helpful things:

• There are different variations of RAG: GraphRAG, StructRAG, LightRAG, etc. New versions have been introduced every few months this year. Which is the right one depends on your use case.
• Normal RAG isn’t great for a large data set like a book. It struggles to make connections when presented with a lot of data.  
• RAG’s results are better when you feed it relationships in a data set via a schema. GraphRAG, StructRAG, and LightRAG try to make up for this by using a knowledge graph to index the information better, which leads to understanding the data better and providing better results.

I’m realizing that how the information gets indexed in large data sets is critical, especially if I want to query across lots of dense data sets like books. Thinking about why entrepreneurs with photographic memories have an edge, I decided that their minds have done a superior job of indexing everything they’ve consumed and making nonobvious connections across the data. Those connections lead to unique insights that lead to creative solutions to problems or actions to get closer to their goal.

This weekend highlighted that I need to focus on and understand how information gets indexed as I evaluate RAG and other alternatives.

Today I read an article about a hack that helps you learn better. It suggests writing a one-page summary after you’ve read ten pages of a book because this increases your retention by 50%. The idea is that to learn, you must stretch yourself. You’re forced to do that if you have to process and organize what you consumed and then express your understanding in writing.

A few months back, I was writing a series of five or so blog posts for every biography or autobiography I read. I created a digest of each book and then shared the important parts via the blog series. Then, I began using the blog series to create a podcast series.

I was doing multiple levels of distillation, which helped me uncover insights from each book and retain more about each founder’s journey that I’d read about. Doing all of this weekly wasn’t sustainable, and I want to find a more sustainable process for doing the same thing. That’s why I’ve created an MVP to help me create book digests.

I’m a fan of writing. It’s a powerful practice that helps me organize my thoughts. When I write about what I’ve read, it feels like a superpower. I identify core concepts and insights I wouldn’t have found by reading passively, I retain them, and I can share them with others.

Writing about what you’ve read is something everyone can do, but most won’t. It’s more work, but I think the reward is worth the effort.

Last week I talked to an entrepreneur who’s shuttering his start-up after several years. The company is at breakeven, but it’s not growing. He shared with me what he’d learned from his journey.

The market is the main thing he wishes he’d paid attention to in the beginning. The market he entered looked good at first glance because it’s large. However, it’s slowly shrinking, and shrinking market forces have made it difficult for him to acquire customers because he has to steal market share from other companies. He now recognizes the huge role the market played in his company’s trajectory, but he didn’t understand it until he was in deep. If he knew then what he knows now, he wouldn’t have started a company in that market.

Markets matter a lot for entrepreneurs, especially if they aim for outsize success. Growing markets are good, and new, rapidly growing markets are the best. This founder is talented, but that wasn’t enough to overcome a shrinking market. He recognizes this now and says his next company must be in a growing market.

Shuttering a company isn’t ideal, but it happens often in entrepreneurship. This founder gained valuable wisdom from his first company. I’m excited to see what the next leg of his journey looks like.

This week, I committed to reading my highlights from David Allen’s Getting Things Done and Tiago Forte’s Building a Second Brain. It’s been a few months since I read them. Today, I read highlights from Getting Things Done. A few thoughts:

• This is a framework book (mostly). It teaches you a method you can use when executing your work to get more done with less stress.
• In school and at my first job, I was never taught how to work; I was just expected to get a lot of work done. Looking back, I was pretty inefficient, and I wish I’d known about this framework. I suspect most people are never taught how to work efficiently. They work hard but might not be efficient or strategic in their efforts.
• Context switching is a challenge for many. Often, the ramp-up period when starting a new task is a pain point. Some of this book’s methods can resolve this.
• Teaching this framework to employees at smaller companies could increase the velocity (which matters more than speed) of the company’s execution.
• A lot of entrepreneurs approach managing execution as a top-down activity. Some end up micromanaging because of this approach. This framework is more bottom-up—it empowers the employee and removes the need to micromanage.
• I like the idea of equipping employees with training on this framework, combined with a strong vision/mission and a goal-setting framework (such as OKRs or EOS), to create a company with high execution velocity.

I’m looking forward to fine-tuning how I execute the ideas in these books.