I recently met with an idea-stage entrepreneur. He’s built an MVP of his solution and is thinking about ways to scale the solution. At his early stage, he’s testing and tinkering a surprising amount.

During our conversation, I realized he’s clear on the solution but hasn’t crystallized the problem he’s solving. This means he’s not sure who his customers are, either. His solution addresses a few potential problems, and he’s considering a wide variety of businesses as potential customers. He’s holding his solution tight and the problem it solves loosely.

This is the classic solution-in-search-of-a-problem approach that some idea-stage entrepreneurs unwittingly take. This approach has landed this entrepreneur in a gray area where he’s unsure what steps to take next.

At the idea stage there isn’t much to undo, so there’s a simple remedy for being in a gray area. Simply flip the approach. Let go of the solution and zero in on a specific problem. Said differently, hold a problem tight and be flexible on the solution that solves it.

I suggested that this founder consider pausing work on his solution and doing discovery of potential customer groups about the problems he thinks his solution could solve. I suggested he read The Mom Test and follow the customer discovery methodology outlined in the book to identify the specific problem he wants to solve and develop a deep understanding of it. Hopefully, that will put him in a position to build a great solution that solves a painful problem customers will happily pay for—and keep him out of the gray area he’s in now.

Last year, Money magazine ranked Atlanta as the best place to live in the U.S. in 2022. At the time, I shared my thoughts on Atlanta transitioning to a tier-one major metropolitan city. I believed the ranking showed that word was getting out. I wrote:

I’ve been a believer for many years that Atlanta is where the puck is headed. Most people don’t realize how great the city is. I’ve long believed that when word got out about the city’s greatness, it would go from being a metro city to what I call a tier-one major metro. That transition would put the city in a different stratosphere and able to compete as a destination with other tier-one major metros. I think of tier-one major metros as cities that are known outside the US as the undisputed capitals of their regions. Think New York City for the Northeast, Chicago for the Midwest, Los Angeles for the West. The Southeast has a few great cities, but not an undisputed capital, especially when you ask people outside the country.

Money came out with its “50 Best Places to Live in U.S. for 2023” list, and Atlanta has once again topped the list. My favorite lines from this year’s writeup:

Atlanta is big on culture, in every sense of the word. In years past, it helped catalyze the Civil Rights Movement, and was a nucleus of some of the most popular hip hop, R&B and country music we still listen to today. These days, our No. 1 place to live is nothing short of a cultural behemoth.

Atlanta is a place that people don’t want to just pass through temporarily. They want to plant roots and call it home because it offers the opportunity to pursue professional excellence, an amazing quality of life, and a diverse culture. This rare combination, along with numerous other positives, makes Atlanta unique and desirable. It also helps make a strong case for Atlanta to be the “capital” of the Southeast.

Congrats to the city for topping this list two years in a row. I’m happy others are recognizing what we’ve always known.

For Money’s full list of 2023’s best places to live, see here. For Money’s 2023 writeup on Atlanta, see here.

I recently had the chance to meet Tobi Lütke, CEO and cofounder of Shopify. Shopify’s platform provides technology that allows retailers to easily sell online. Said differently, it makes e-commerce easy. Tobi initially built Shopify to solve a personal pain point but soon realized that other entrepreneurs were experiencing the same problem. In 2004, he embarked on solving the problem for others, and as of the writing of this post, Shopify is a publicly traded company with a market capitalization (i.e., valuation) of just under $100 billion.

Last fiscal year, Shopify recorded $5.6 billion in annual revenue. The Shopify platform processed almost $200 billion in gross merchandise value (GMV); i.e., revenue on behalf of its customers. Tobi has built a company that’s having a large impact on how commerce is done.

Tobi is one of those rare founders with the ability to take a company from idea to billions. I was interested in learning what trait allowed him to achieve such a rare feat. Tobi shared a variety of valuable insights, but what stuck with me most was his conviction about the power of entrepreneurship. Tobi believes entrepreneurship is a powerful force that can change the lives of those who pursue it. He’s expressing that belief through Shopify’s mission of helping people achieve economic independence by making it easier to start, run, and grow a business. And his belief and mission-oriented mindset have likely been a significant driving factor in his ability to continuously level himself up as Shopify has grown from an idea to an international company generating billions of dollars in annual revenue.

I’m glad I had the opportunity to meet Tobi, and I look forward to following his entrepreneurial journey. I can’t wait to see where he takes Shopify next and the impact it has on entrepreneurship.

At a recent event, I met an entrepreneur in the real estate space. I love learning about company origin stories, so I asked for his. He said that after the Global Financial Crisis, his financial services career was uncertain because no Wall Street banks were hiring. In fact, many were firing employees and trying to stay afloat. He used his relationships with his previous banking customers and his curiosity to learn about a real estate problem that others were unaware of. He researched the space for over two years and then launched his company.

I love his story because it demonstrates how focus, creativity, and drive can help entrepreneurs do their best work, even in the worst of circumstances.

You may have heard this proverb:

If you give a man a fish, you feed him for a day. If you teach a man to fish, you feed him for a lifetime.

This makes sense to me. Sometimes people ask for your help with a problem, but they really want you to solve it for them. If you do, you’ve satisfied their immediate need but not set them up for future success. You’ve just taught them to call you whenever they encounter that problem.

I don’t believe in leaving people hanging when they ask for your help. Instead, I believe in supporting them. I won’t solve the problem for them, but I’ll be there to help them think and navigate through the problem. I make it a point to not lead; instead, to follow their direction. I try to support, nudge, and encourage along the way. When the problem is solved, they’ve solved it—I haven’t. The process of figuring out the solution sticks with them, and they can comfortably solve problems like it in the future on their own. And you’ve helped them become more confident. When someone succeeds in doing something they thought was impossible, they become surer of themselves and their abilities. They start to look at other problems not as insurmountable but as puzzles they can solve if they focus and put forth the effort.

I’m not sure who wrote this proverb, but it’s spot on. I prefer to teach someone how to fish.

Today I read an article about the dispute between Warren Buffett and the Haslam family over Berkshire Hathaway’s purchase of the Haslam family’s prize asset, Pilot Travel Centers. The dispute has led to a lawsuit. Pilot is a truck stop operator with over 860 locations operating under the Pilot Flying J and One9 Dealer brands.

Since 2017, Berkshire has gradually purchased 80% of Pilot for $11 billion. During an annual 60-day window, the Haslam family can opt to sell their 20% remaining stake to Berkshire. The contractually agreed-upon price would be 10 times the prior year’s earnings before interest and taxes (EBIT). Note that EBIT differs from EBITDA. EBITDA is earnings before interest, taxes, depreciation, and amortization.

The lawsuit centers on what financial reporting method should be used to calculate EBIT and thus determine the purchase price should the Haslams elect to sell the remaining 20%. The issue is pushdown accounting, a method that has an impact on the value of assets a company owns, which impacts the depreciation and amortization expenses, which impacts reported profitability (in this case, EBIT). The Wall Street Journal reported that the decision to use pushdown accounting can have as much as a $1.2 billion impact on the price Berkshire would pay for the remaining 20% of Pilot. I assume the Haslams want to use the method that determines a higher EBIT and Berkshire and Buffett want to use the method that determines a lower EBIT.

There’s more to this case that I won’t get into, but I find it interesting that this dispute isn’t about the company's operations. It’s about how the results of its operations are recorded in financial statements and how the method used could have a $1 billion-plus impact.

Accounting isn’t fun, but it’s the language of business. This case reinforces my thoughts about it being important for entrepreneurs to learn basic accounting concepts.

This is my one-hundred-ninety-third weekly reflection. Here are my takeaways from this week:

• Fundraising – I chatted this week with two founders who are finalizing fundraising rounds. They’re wrapping up diligence and have target close dates in the next week or so. I suspect most investors and lawyers are aiming to get most deals done by December 15.
• Serendipity – I ran into someone I haven’t talked to in years. We caught up, and I learned that he has expertise that will be helpful with something I’m actively working on. He even offered to help. I’ve benefited from serendipity many times, but I’m still surprised by its power.

Week one hundred ninety-three was another week of learning. Looking forward to next week!

I want to improve how efficiently I learn—specifically, how efficiently I read. To answer the question of how I can improve my ability to learn through reading, I sought out a few books and experts on the topic. From these sources, I’ve learned a few ways to read faster with better comprehension. One suggestion that I heard consistently was simple but effective: underline the words you’re reading with something (e.g., your finger or a pen).

A few observations on why this technique works:

• Speed – The pointer acts as a visual pacer: your eyes will move as fast as it does. If you want to increase your reading speed, you can move the pointer faster. This is a good way to practice improving your reading speed.  
• Comprehension – Your eyes focus on what you’re pointing to. You’re less likely to daydream or be distracted by things happening around you. With the power of focus, your understanding of what you’re reading improves.

I’ve tried this hack, and I must admit, it works when it’s applied consistently. If you want to improve your reading speed and comprehension, consider following your finger.

I caught up with an entrepreneur friend considering his next thing. He sold his first company and wants to buy a company he can optimize for cash flow. The dilemma he’s working through now is what size company to buy.

If he buys a company that’s over $1 million in annual EBITDA, the multiple paid on EBITDA will be higher. Translation: it will be a much more expensive purchase price, and the yield on the investment likely will be lower than he would like. On the other hand, the company will likely have more people with institutional knowledge of how the business operates. That will minimize the chances of the business rapidly declining if the CEO transitions out. The purchase price will be higher and the yield could be lower, but the business is more likely to run on its own without much intervention from my friend. He could be a passive owner.

If he buys a company with less than $1 million in annual EBITDA, it’s the opposite. The multiple will be lower and the potential yield higher. But there’s key-man risk. The CEO is likely the glue holding it all together. My friend will likely have to become CEO or work closely with the CEO so he can learn the business and minimize the chances of a rapid decline if a CEO transition happens. The purchase price is lower and the yield may be higher, but my friend will likely need to be a very active owner.

Both approaches have pros and cons. I’m curious to see which path my friend chooses.

I’ve been watching Apple’s push into financial services over the last few years. Financial services for consumers and small businesses is a large enough market to move the needle for a company of Apple’s size. Consumers shifting from in-person to digital banking and the slow pace of innovation by banks make it ripe for disruption. 

Apple partnered with Goldman Sachs to offer credit card and high-yield savings account products. But it’s been reported that Goldman Sachs has been trying to get out of the credit card business, and Apple offered the bank a way out of their credit card arrangement. The article doesn’t include specific details about why the bank wants out.

I’m a fan of Apple’s push into financial services. I’m curious about why this partnership isn’t working, how this change will affect Apple Card customers, and what impact it will have on other financial products Apple offers. I hope we’re looking at a bump in the road and not a major setback for the tech giant.