One big hurdle for some aspiring founders is their lifestyle—the amount of money required to maintain it is so high that entrepreneurship isn’t a viable option. There’s an argument that every dollar that goes into the founder’s pocket reduces the resources available to scale the company. You often see founders take small salaries with large equity positions in the early years. The thought is that if the business is successful, the equity will be orders of magnitude larger than the forgone salary.

You may not have thought about it this way, but personal burn rate and optionality are correlated (for most people). The higher your personal burn rate, the lower your optionality. A high personal burn rate prevents many people from entertaining opportunities with a big upside but lower initial salary.

Anyone serious about founding a company or joining an early-stage company should keep their personal burn rate as low as possible. This doesn’t mean you shouldn’t enjoy life. Nothing’s wrong with doing one-off things that bring you joy, such as taking a trip. It does mean to be strategic about the recurring monthly payments and other monthly outflows you get accustomed to.

I like to think of a low burn rate not as limiting, but rather as not allowing past decisions to restrict your options. The lower the personal burn, the more interesting opportunities you can consider.

Today I chatted with an early founder. His business creates video content for automotive enthusiasts. He’s been at it for a few years and has built an audience of over 2 million followers on a single social media platform. With this following, he’s been able to develop several revenue streams. He’s a solopreneur who’s looking to expand his business and team.

We discussed his business high-level. He faces two challenges. The first is seasonality. His revenue streams are good but variable based on the time of year. The second is bandwidth. He has ideas that will provide more consistent cash flow, but he doesn’t always have the time to execute consistently on them. He works on them during slow periods, which prolongs getting those initiatives off the ground.

I get it. It’s the all-too-familiar story of the bootstrapping entrepreneur. I’d imagine he isn’t the only small creator experiencing these challenges—but he’s different because he’s proven he knows how to build a large audience and create content they enjoy. He just needs capital (and mentoring) to scale his business and make it a big one. I’m not familiar with the content-creation world, but I imagine that providing growth capital to proven early founders with aspirations of creating large content businesses is a good opportunity.

A founder shared his fund-raising journey with me today. In the last two weeks, he’s gone from zero traction to conversations with multiple firms and a likely path to getting his round closed. Anything could happen between now and funds being wired, but I was curious about what changed in the last two weeks, so I asked. The founder said he’s been more intentional about expanding his network. He volunteered to speak at NOEW because he knew lots of investors would attend. He met with folks leading up to the event and during it. As his network expanded, the possible paths to getting his round done proliferated.

Networks and relationships can have a big impact on the trajectory of a company (not just on fund-raising). Knowing the right person, or the right person knowing that you exist, can lead to doors being opened that were previously closed and to amazing opportunities. Building external relationships isn’t the focus of a CEO, but it’s something they should be mindful of and intentional about. Especially if they’re fund-raising.

If you’re a founder looking to build something great, try to build a network before you need it—or build strong bonds with a few key people who have large networks. As your network expands, your company’s possible paths to success will multiply.

I’ve shared my views on the digitization of distribution and its impact on banking. Today I read about Apple’s new service that will allow small businesses to accept payments on their iPhones. No hardware (i.e., payment terminal) will be required. Consumers will be able to tap a credit card or another iPhone against the business’s iPhone to send payment. The service hasn’t been launched as of today, but it’s coming, and it shows how Apple is inching closer to being a bank.

Helping consumers and small businesses with financial services is an enormous market—one of the few that could move the needle for a company the size of Apple. Banking is about to go through rapid change. Don’t be surprised if Apple ends up being the go-to bank for consumers and small businesses.

Founders looking for capital will likely talk to a lot of investors and hear no repeatedly before they hear yes. It’s a frustrating process. Today I was talking with a founder friend about finding the right investor. We discussed the importance of fit.

Founders have an objective they’re trying to achieve. They need capital, start-up knowledge, and relationships to execute and turn their vision into reality. The investors that can help them achieve this objective are the best fit. Founders are (or should be) evaluating investors for fit, but what they often don’t realize is that this is happening on the other side of the table too.

Investors, like founders, have objectives. They’re looking for opportunities that are the best fit with their objectives. Investors’ objectives vary. They probably include potential financial return, but they may also include other variables. For instance, an investor may want to fund a start-up with a specific approach to solving a problem. Or invest in certain types of solutions (e.g., software) and not others. Or give back to the community as well as make money (do good while doing well). Whatever their objectives are will play into their decision-making process. This means you could be a great founder with a great idea, but the opportunity might not be a fit with a given investor’s objectives.

Good relationships are mutually beneficial. Founders should be mindful of this when evaluating investors (or any partner for that matter). Clearly articulate what your objectives are—but understand the objectives of the other party too. The goal is to find fit: alignment of the objectives of both parties, even if they differ. When there’s a fit, the relationship will be mutually beneficial.

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I spoke with a founder who’s smart, and the solution he’s looking to build could bring real value to customers. He wants to raise capital but isn’t familiar with the venture capital process and doesn’t know anyone who’s been through it. Recognizing his knowledge gap, he wanted some pointers.

This founder’s approach is a good one. Try to fill your gaps and build a network of people who are knowledgeable about raising venture capital before you begin trying to do it. I suggest getting as many perspectives as possible. Socialize your idea with investors and ask for feedback. During those chats, you can ask them how their firms’ investment processes work and what they’re seeing in the market. Founders are a great source of knowledge too. They can give you their takes on current market dynamics and valuable insights gleaned from their experiences.

Maybe you don’t have physical proximity to any of these people, but you always have digital proximity. Blog posts, Twitter threads, YouTube videos—investors and founders have put out a lot of content about fundraising.

In the end, you want to avoid being in a situation where you’re at a disadvantage with respect to information or knowledge about the process and current market when you start raising. Not knowing can have a big impact on the outcome of your fundraising.

I spoke with a buddy today who asked me for my thoughts on raising capital for his business versus bootstrapping. I shared the lessons I learned from bootstrapping my own start-up and from investing as a venture capitalist:

• Market size – It’s important to understand the size of the market you’re going after. If it’s a small market, raising capital is less likely to make sense. If it’s a large one, then raising capital can make sense, depending on other factors.
• Destination – Once you understand how big the market is, you can determine how much of it you want to capture. CCAW’s market was $40 billion. I figured we could realistically capture 1% of it and build a $400 million company. Sadly, I didn’t think about this early enough in my entrepreneurial journey.
• Speed of execution – Once you know how big a company you want to build, you can think about the time frame for achieving your goal. The faster you want to execute, the more resources you’ll need. If you believe you’re facing a closing window of opportunity, you may want to execute as fast possible.
• Team – Given the speed with which you want to execute, who do you need on your team? Unsurprisingly, the faster you want to execute, the more people you’ll need.
• Runway – Consistent execution is important. You’ll want to make sure you have enough financial runway (i.e., cash) to consistently execute on your plan at the speed you envision. If you’re executing at a slow to moderate pace, bootstrapping may suffice. It’s more challenging (though not impossible) to provide ample runway for rapid execution if you’re bootstrapping.
• Accountability – The bootstrapping approach usually means the founder isn’t accountable to anyone. If you raise capital from others, it comes with an enhanced level of accountability. In my experience, most people need accountability—but no one wants it.

How to capitalize a new or existing business is situational. This is one of many decisions a founder has to make. There’s no right or wrong answer in the abstract—only the right answer for your situation.

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.

Today Intuit confirmed that it’s acquiring Mailchimp for $12 billion. Mailchimp started by building software for other clients. Then it built a product to simplify marketing via email, pivoting the entire company around offering it to small and midsize businesses. Since then, the product has expanded into other areas, but it’s still focused on empowering SMBs.

Congrats to the Mailchimp team for a huge win. Atlanta has known this company is something special for a long time. Today, that was demonstrated to the world in a big way!

I’ve shared a few of my views on Apple’s potential to be a consumer bank and how consumer lending is heating up. Yesterday I had the opportunity to chat with someone who’s worked at one of the largest US banks for over twenty years. Our conversation was social, but I couldn’t resist sharing my views and getting his take on where banking is headed. Our chat was enlightening. I learned a great deal about the inner workings of the bank, how the largest banks view Atlanta as a strategic city and are expanding rapidly, and how this has led to a hyper competitive Atlanta market for bankers, with salaries rapidly increasing.

One of the biggest takeaways was that what matters to consumers in a banking relationship is changing fast. Historically, large banks won because of their branch networks. The more branches, the better. Consumers knew that wherever they were, they could find a branch and get whatever help they needed. The branches were banking’s version of distribution. The branches were a core part of how the products and services the bank offered reached their customers. Establishing a network of brick-and-mortar branches was costly and time consuming, so the largest players had moats giving them defensible competitive advantages.

Now, consumers are rapidly shifting from in-person banking interactions to digital banking interactions. You don’t need to go to the bank to deposit a check or get a loan. You can do many tasks electronically via a mobile app or website. Because of this shift, consumers evaluate banks differently. Consumers care less about a network of branches because they don’t need to visit branches. They care more about digital tools. They want the best and easiest-to-use technology.

This banker was telling me that digital distribution is changing the banking world. The large banks that previously had the best distribution because of their branches are seeing their moats erode quickly. The companies that offer the best digital experiences are winning.

How companies get their solutions in customers’ hands matters a lot. Said another way, distribution matters a lot. The digitization of distribution will drastically change banking. Apple, Square, and other companies will compete for banking relationships like never before.