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

• Determining value – I’ve noticed a trait common to successful entrepreneurs who happen to be investors—I call them “investor entrepreneurs.” They can confidently value what they’re investing in—often in a way that differs from the rest of the market. When buying anything, they make sure to pay significantly less than what they’ve determined it’s worth, regardless of what others are doing and regardless of the asset type (real estate, start-ups, public companies, etc.).
• IPOs – I noticed, this week and last, an uptick in the number of tech-related firms planning to go public. Instacart, Klaviyo, and Arm are a few examples. I’m curious to see how the market receives these companies. I’m also curious to review their IPO filings to find out if they’re generating or burning cash.
• Emulate what you admire – Habitually emulating the positive qualities you admire in others is a life hack that compounds. Everyone can do it, but most people won’t.

Week one hundred seventy-eight was another week of learning. Looking forward to next week!

OnlyFans is a social media company that’s surged in popularity since the pandemic. The company has a less-than-stellar reputation because of the type of content creators post on the site. I’ve never used the site and don’t know a lot about it, but I read an article about the financials that caught my attention.

The parent company, Fenix International Limited, is based in the UK, so its financial statements are public. I looked at its latest financial report covering 2022 and noted the following:

• Creators on the platform grew 47% to 2.16 million
• Fans (i.e., users) on the platform grew 27% to 187.9 million
• $1.09 billion in total annual revenue
• ~67% of annual revenue is generated in the US
• ~48% of revenue is subscription
• ~52% of revenue is transactional (take rates from purchases)
• Net profit (after taxes) of ~37% or $403 million
• Dividend of $338 million paid in 2022
• Dividend of $310 million paid in 2021

Bloomberg says the company is owned by a single individual, to whom all dividends are paid.

Again, I don’t know anything about the platform and haven’t used it, but its financial performance is something to take note of. The revenue, net profit, and dividend figures surprised me.

I’ve been learning about successful entrepreneurs who happen to be investors—I call them “investor entrepreneurs.” I heard about Stanley Druckenmiller and have been learning about his journey as an investor.

Druckenmiller is a hedge fund manager, which I’m less familiar with. I’m still learning about that investing style and about hedge funds, but one thing has stood out to me from learning about Druckenmiller: there are many creative ways to deploy capital and achieve outsize returns. There’s no set path that all investors must follow. Some investors like to invest in what others might consider unorthodox ways, and they can still be successful. 

I’m excited to continue to learn more about Druckenmiller, his approach, and why he was successful. 

I’ve been chatting with several founders who put off raising in 2022 and earlier this year in hopes that fundraising conditions would improve. They’re now at the end of their runway—they must raise new capital. It’s a tough spot to be in, and I suspect it may be more common than not for early-stage founders who raised in 2020 or 2021. 

Summer vacation season is over, and public markets rebounded through July (August has been a down month so far). The optimal window before year end in which these founders can raise capital opens in September and closes around Thanksgiving. This two-and-a-half-month window could be make or break for many early-stage start-ups this year.

I’m curious to see how many early-stage founders begin fundraising in September and how the number of investments completed in this year’s window compares to last year.

I was chatting with a kid interested in entrepreneurship recently. He wants to start some sort of business and asked me where to begin. That’s a broad question, so I shared my story.

When I was a teenager, I was obsessed with fixing up cars and spent tons of time learning about it. What are the best parts? Who makes them? How do you buy them? How are they installed? I was more knowledgeable than most people. My friends ended up paying me to help them fix up their cars. And that morphed into a large business years later.

I ended by advising him to find a problem he’s obsessed with and keep feeding his obsession. Eventually, the obsession will lead to figuring out how to solve the problem. Others will think his obsession is odd at first. But once he masters the problem and solves it, they’ll think he’s a genius. They may even end up being his customers.

I recently watched COIN: A Founder’s Story. It’s a documentary about Coinbase CEO Brian Armstrong and his journey from software developer to CEO of a publicly traded company worth tens of billions of dollars.

Coinbase wasn’t a smooth ride. Its trajectory was far from up and to the right. The journey was full of twists, turns, and obstacles (many of which persist today). The documentary covers all of this. Some of it was new to me: specifically, how Coinbase found product–market fit, the tension between Armstrong and his cofounder Fred Ehrsam, and how Armstrong evolved as a leader as the company grew.

Anyone interested in hearing about the early days of Coinbase and Armstrong’s journey as a founder should check out the documentary here.

I’m friends with an entrepreneur running an automotive service business focused on consumers. He’s been at it several years and is thinking about possibly selling the business one day. He would need to grow revenue and increase margins to make it attractive for acquisition. He has various ideas about how to do this, but his current model creates obstacles:

• Consumers need his service only once every five to ten years, so he must acquire new customers every month.
• Consumers view his service as an expense (i.e., its cost exceeds its perceived value) and negotiate hard, which negatively impacts margins.
• Managing relationships with consumers is a constant pain point for his staff and requires that he run at elevated staff levels, reducing margins.
• Each consumer has a different car, which adds operational complexity to servicing vehicles and reduces throughput.

He recently shared an idea he’s experimenting with. The automotive service he offers is something fleet owners can use too. Instead of continuing to focus on consumers (B2C), he may switch to targeting businesses (B2B). Here’s what he learned from some customer discovery:

• Small fleet owners are growing in his area.
• Each vehicle in a fleet needs to be serviced annually, so he could expect monthly repeat business.
• Down vehicles reduce revenue, so fleet owners view his service as helping them generate revenue (i.e., its perceived value exceeds its cost), which positively impacts margins.
• Working with repeat fleet owners simplifies relationship management, reducing the burden on his team and making it possible to operate with a smaller team, thereby increasing margins.
• Fleet owners buy the same vehicles, which simplifies operations and increases throughput.

Through trial and error, this entrepreneur has learned a valuable lesson: why some businesses are better suited to focusing on other businesses (not consumers) as their core customers.

It’s early, but I suspect this entrepreneur will pivot his business from B2C to B2B and finally reach the scale and profitability that’s eluded him thus far.

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

• Pricing – Determining the pricing model for the first version of your product is hard. I recently spent time with an early-stage founder on this. Pricing should give customers an incentive to use the solution more, not look for an alternative. It should also capture as much of the value you create for customers as possible. Finding the right approach requires balancing these two factors, as well as others, and is easier said than done.
• Better decisions – Making decisions that align with the long-term future you aspire to is difficult for some people. I underestimated just how difficult it is for some people. Suzy Welch’s 10-10-10 method is simple and has resonated with a few people I shared it with.  
• Independence – I’m not a fan of dependence. Needing to be in the driver’s seat of my own life led me to entrepreneurship, and it continues to be important to me. This week reinforced this feeling.  

Week one hundred seventy-seven was another week of learning. Looking forward to next week!

I’ve been learning about successful entrepreneurs who happen to be investors—I call them “investor entrepreneurs.” They invest as their full-time profession, but not by working for someone else. I’ve been reading as much as I can about these people, including biographies about them.

 A biography, of course, is written by someone who spends a lot of time learning about their subject—in this case, an investor entrepreneur. They talk to family members and coworkers. They read files. They interview the investor entrepreneur. All to get a better understanding of the life of the person they’re writing about.

Sometimes the author can’t fit everything they learned in the book, or the investor entrepreneur won’t agree to certain information being published. Sometimes these missing pieces of information can clarify what made the person exceptionally successful.

Biography authors sometimes talk about what didn’t make it to print. Whenever I read a well-researched biography, I search for recordings of interviews and speeches the author gave about the book. This simple hack has led to stories and facts that helped me better understand some of the greatest investor entrepreneurs.

I recently came across the 10-10-10 process of Suzy Welch. It’s a framework to help consistently improve decision-making by identifying regret before a decision is made. It works like this:

• Crystalize the decision you’re making.
• Understand the options available to you.
• Identify the consequences of each option in the immediate future (10 minutes).
• Identify the consequences of each option in the medium future (10 months).
• Identify the consequences of each option in the long-term future (10 years).

Thinking about the consequences forces mental time travel. You’ll understand how “future you” will feel about the consequences of each option you’re considering. If you’re likely to regret a decision (i.e., an outcome doesn’t align with your vision of your future), you can factor that into your decision-making process and pick the decision (and likely outcome) that best aligns with the future you want to create.

An easy example of applying this is working out:

• Decision: Should I work out now?
• Options: Work out or don’t work out.
• 10-minute impact of not working out: relaxed, comfortable, do something enjoyable, etc.
• 10-month impact of not working out: feel bad, look bad, lack self-confidence, etc.
• 10-year impact of not working out: increased risk of long-term health issues, etc.

Using this framework, it makes sense to push through the immediate discomfort and exercise to reduce your risk of health issues in the future and enjoy the other medium- and long-term benefits of working out. I know that’s easier said than done, but you get the idea.

I like Suzy’s approach. It’s a simple tool that most people can use to make consistent, rational decisions.

For more on her 10-10-10 method, watch this video.