Today, I had a good chat with a founder friend. He mentioned an idea that I thought about for the rest of the day. Sometimes, early-stage founders struggle to reach their next milestones. They know what they want to do to get there, but they don’t have the necessary skills. Their weaknesses hold them back, and they can’t afford people with high-level expertise. However, they often know tons of other founders—and some are strong where they are weak. And vice versa.

My friend’s observation was that early founders, especially those who are bootstrapping, may be able to complement each other temporarily. For example, Bob struggles with marketing but is strong in engineering. John is a killer marketer, but nontechnical. Instead of complaining to each other about not being able to afford or find high-level talent to get them to the next milestone, maybe the two entrepreneurs should temporarily partner with each other. Bob helps John with his technical problems. John helps Bob market his software. Again, temporarily.

My friend took this even further and suggested that these two founders not accept cash compensation. Instead, they pay each other with a very small amount of equity ownership in their respective companies. This aligns interests, helps both companies be capital efficient, and allows each to get high-level talent it otherwise couldn’t access (or afford). Again temporarily. Of course, vesting and other things would need to be clearly outlined.

My friend’s thesis was that certain high-level expertise can make a big difference in the early days. It can help you reach those critical milestones, but it isn’t a full-time job. It’s more of a gap that needs to be filled until you have sufficient traction and resources to hire someone full-time. Also, discussing strategy with another founder who has expertise in a critical area makes those strategy conversations richer and results in better ideas and solutions. Lastly, no one goes as hard as founders. Having a founder on your side, even part-time, can be a game changer.

Today, I chatted with a friend who’s building a new software company. He shared his milestones with me, and I asked how he came up with them. His answer was simple. There’s a major industry conference in March. He wants to do a big launch at that conference, so that’s the date of his public launch. He needs to test it beforehand, so he’s doing a beta launch in the first week of February to select users. He shipped an early version of the product last week to get something out the door so he can iterate before the beta launch.

His approach makes a lot of sense. Pick an event where you want to make the product available to everyone, and then work backward. Create milestones so you can take advantage of feedback cycles and improve the product.

I like his strategy because choosing a public launch day that’s aligned with an event means the launch date can’t change. There’s no pushing it back. You either hit the date or you miss a big opportunity. This adds urgency, and setting mini milestones a few months ahead creates accountability. You can’t wait until the last minute to prepare for the public launch. It also allows you to get and incorporate feedback from early users and adjust the product before the general public sees it.

Over the past two years, I’ve studied countless investors who’ve had outsize success. One firm I studied was Altos Ventures. It popped up on my radar when I read the S-1 for Roblox and learned the firm had an almost 25% ownership stake when the company IPOed at a $35.5 billion valuation (see my post here). Altos’s stake was worth over $8 billion at IPO, an enormous haul for a single firm. (The Altos ownership stake can be seen on page 172 of the S-1, here. The ownership is under the name of Altos partner Anthony P. Lee, who serves on the Roblox board.)

Today, an interview of Ho Nam, an Altos founding partner, was published. I’ve watched several Ho interviews; this one was deeply personal and highlighted his struggles while building Altos. Ho described how Altos struggled for over fifteen years. The firm raised four funds and hadn’t generated meaningful returns. The partners hadn’t made any money and weren’t seeing eye to eye.

Their struggles led Altos’s three partners to change their strategy. They originally played what Ho calls the VC lotto game. They’d find promising companies early and focus on preparing them to raise the next funding round from a brand-name VC firm at a higher valuation. That strategy imploded when the dot.com bubble burst. The Altos partners realized they were playing a game they weren’t suited to win. They changed their strategy to focus on helping founders build enduring cash flow–positive businesses that didn’t require excessive venture capital funding. They focused on helping the founders create value for customers in a capital-efficient manner, not on hyping them up to later-stage VC firms.

This strategy change worked in a major way for Ho and Altos. The firm has since had several early-stage companies that each has gone on to be worth over $1 billion; a few, over $10 billion. The firm still owns a stake in Roblox, although it’s been distributing shares to LPs since the IPO, likely for liquidity reasons. As of this writing, Roblox has a market cap (valuation) of almost $42 billion. Coupang is another company Altos invested in early, and that company is publicly traded with a market cap of over $40 billion as of this writing.

Here are a few of my takeaways from Ho’s interview:

• Everyone can’t play every game. Figure out what game you can play and win. Play that game, even if it’s not popular at the time. Winning fixes everything, and you’ll look like a genius in the end.
• Struggle is often a prerequisite to outsize success. The painful times force you to evaluate why things aren’t working, hopefully leading to changed behavior. The wisdom gained during struggle leads to better decision-making, which is required for outsize success.
• Companies exist to add value to customers. You add value to customers by solving their problems. Focus on solving the customer’s problem and capital to grow your company is less likely to be an issue.
• The best founders are capital efficient. Constraints force creativity, which leads to better solutions for customers. Raising too much money leads to loose spending, which leads to founders focusing on raising capital from investors, not solving their customers’ problems.
• Control matters a lot for founders. If you’re constantly raising rounds of capital, you're losing control, and your board could fire you.

I enjoyed this interview, which contains nuggets of wisdom for founders and investors to learn from. If you want to watch this section of the interview, you can find it here. You can watch the entire interview here.

Note: Roblox is probably one of Altos’s most capital-efficient portfolio companies. Ho shared on X (formerly Twitter) that Roblox raised only roughly $10 million in funding to get to cash flow positive. All other capital raised was for secondaries (to buy shares from other investors) or to put on the company’s balance sheet.

The book The Money Masters: Nine Great Investors: Their Winning Strategies and How You Can Apply Them by John Train introduced me to Thomas Rowe Price Jr. (aka T. Rowe Price). I’m familiar with the investment firm bearing his name but not the man himself. I wanted to learn more, so I’m reading T. Rowe Price: The Man, the Company, and the Investment Philosophy by Cornelius Bond.

The book says that Price was one of the first investors to recognize the value of growth investing and adopt it as a strategy. After the Depression began, many people focused on preserving capital, so bonds were popular. In 1934, he recognized that the largest fortunes in the country had been created by owning growing businesses. He developed an investment strategy based on this insight and pitched the investment firm he was working for to test the approach.

With the country still feeling the Great Depression, the firm turned him down. Frustrated and having conviction about his approach, Price quit in 1937 to launch his investment firm, which would become T. Rowe Price Group.

After reading several biographies about famous investors, I’ve noticed that they all came to similar realizations about their investment approaches: investing in growing businesses is the key to outsize returns (Price’s biography details why this works so well). However, how these investors executed their strategies and built their firms varies drastically. Price built a firm that made decisions by committee and was paid by fees from customer accounts. Buffett created a decentralized conglomerate (after he shuttered his investment partnership) and increased his wealth through equity ownership in the conglomerate.

There’s more than one way to capitalize on an insight, as the stories of these investors prove. The most important thing is doing so in a way that aligns with the beliefs of the founder of the investment firm (or the investor, if they’re independent).

I’ve been struggling to articulate the problem I’m solving with my “book library” project. It’s critical to clearly state the problem in such a way that people will understand why it’s worth solving. When you can do that, people are more engaged and want to hear about your solution. But I wasn’t doing it, so I had to fight to keep people’s attention. And this was when I was talking to friends, not strangers, and I wasn’t asking them to use or pay for the solution.

I decided to use the holiday to review all my notes and start crystallizing the problem in a clear sentence. Creating a problem statement is something that sounds simple, but it’s been hard for me in the past. Getting to a concise statement is usually a process of refinement and wordsmithing. In the past, I’ve done it alone (with no success) or with a group of entrepreneurs as part of a retreat.

I didn’t want to do it alone and had no planned retreats, so I decided to use Google Gemini and ChatGPT as thinking tools. Both offer mobile apps that allow you to speak your thoughts instead of typing them. For this kind of ideation exercise, I wanted to capture my thoughts as they were flowing, so speaking was key.

I chose to use two models because no model is perfect. They all have strengths and weaknesses. But I’ve found that feeding my thoughts to both, reviewing their outputs, incorporating the outputs into my thinking, feeding my updated thoughts to both, and repeating that loop has worked well. I also ask each model to rate and give feedback on the output from the competing model. Together, this created a rapid iteration cycle, something I can’t normally do alone.

After many cycles, I’ve finally landed on two versions of what I think is a clear problem statement. I feel pretty good about both, but I’ll get feedback before I make final decisions.

Clearly articulating the problem sounds like an obvious thing that all entrepreneurs do, but many don’t have clear problem statements, which causes lots of issues down the road.

A few days ago, I shared that a founder friend suggested that I start my book library project with the end in mind—that is, with the desired output. The idea was that since I’m building a solution to a problem I’m experiencing, I’m in a position to produce hypothetical examples of the kind of output this solution could create that would solve the problem.

I've created three hypothetical outputs over the last few days. I wasn’t sure how to approach this at first, but I decided to base it on my journey with this project so it’s somewhat grounded in reality. I started with problems I’ve solved for myself during this journey or am actively trying to solve. For two examples, using problems I solved the old-fashioned way with the help of my notes and highlights from various biographies, I figured out the ideal outputs that would have gotten me to the same results more efficiently.

This was a fun exercise. Having already solved the problems, figuring out how this solution could have helped me get there more efficiently was interesting. What kind of information should it have provided to me? What kind of questions should it have asked me to get me thinking? What stories needed to be shared for suggestions to resonate with me?

I shared these outputs with my developer friend today. Having them to work backward from led to a productive discussion. We narrowed our focus to what must be built to make those outputs a reality. We realized that a structured approach to solving certain problems is required for consistent results. This reinforced the importance of data structure.

This exercise has been helpful and something I want to do going forward when I’m trying to build a solution to my own problem. I’ve got three example outputs that are complete now, and I’ve got another two or three that I want to document before the end of the year.

This past weekend, my developer friend and I chatted with a founder friend about the book library project. This founder has a unique perspective because he’s a self-taught developer, a trained designer, and a self-taught user experience (UX) person. He can take a product from idea to launch by himself—and has done so successfully by scaling and selling a software company—so he has credibility.

I wasn’t sure how the user experience should flow, so I wanted his input. The conversation was helpful, and he made a key suggestion: since the solution is being built to solve a problem that I’m experiencing firsthand, I could start with the output I’d be happy to see as a user instead of starting with the user experience. That is, I could create hypothetical examples of what kind of output I’d want this solution to create that would be tremendously valuable to me.

His point was that we could work backward to determine what the UX would need to create the output. But also, looking at this way would inform what would technically need to be built to create that output. My developer friend and I agreed that’d be a great exercise, so I’ve been working on it.

Doing this analysis has been a great exercise. It’s forced me to think about how the tool will improve my current workflow and, hopefully, that of other users. With so much information in so many books, whittling it down to the key pieces of valuable information in response to a specific question was thought-provoking. Thinking about how information and the connections between it (ideas, people, books, etc.) should be presented and how to do this without drowning myself in information was eye-opening.

I’ve completed one of these, and I’ll do a few more. A big takeaway is that the connections between information in various books make the library unique and valuable. Connections can uncover new insights. New insights help entrepreneurs develop unique solutions to problems or identify the unconventional next action to take given their goals. Today, the people who are able to take advantage of this process are mainly those gifted with a photographic memory, which isn’t me (more thoughts on that here). Showing these connections can’t be done using only text. A visual component allowing people to easily see the connections from a high level and decide where to double-click is necessary.

I’m a big proponent of starting with the end in mind and working backward, but I didn’t do a great job of doing that with this project. My friend pointed out that since I’m experiencing the problem myself, I’m too close—it’s hard to see past the details and stay focused on the big picture. He’s right. His suggested exercise is forcing me to articulate what will add value and how it looks. This will help my developer friend and me reprioritize the features and also highlight shortcomings in what we’ve already built and plan to build.

Sometimes, bringing in a fresh pair of eyes to look at things from 50,000 feet can be helpful. I’m glad my friend made the time to chat and share his candid feedback.

Today, I caught up with a founder friend who sold his software company for a few hundred million dollars. As entrepreneurs do, we started talking shop about business ideas and what each of us is working on. I pitched the idea of the “book library.”

I’ve talked to him about this project as it’s evolved throughout the year, and he’s been skeptical each time—rightfully so, because I wasn’t clear on many things. Today was different. He listened as I described the MVP I was building. He immediately got it. He had some great questions and great feedback.

One big point he brought up was that though entrepreneurs often have hair-on-fire problems and want ideas about how to solve them, there’s also a desire for ideas about the tactics of executing solutions. He gave an example: needing to reduce burn. The solution could be to significantly reduce the workforce (which he’s done). Most entrepreneurs don’t do that often, so they’d want to understand the nuances of executing the reduction in a way that treats employees as well as possible. To fill this tactical knowledge gap, most entrepreneurs learn from others who’ve recently made a reduction or botch it and learn from their own mistakes.

His points were valid and got me thinking. There’s a difference between tactical learning and strategic learning. Tactical learning involves learning what’s working in the current environment. And tactics are constantly evolving. Strategic learning is about learning the concepts and frameworks that solve problems that all entrepreneurs encounter. Strategies do evolve, but they tend to be more timeless. The bid ideas around marketing haven’t changed in decades, but how those strategies are executed continuously evolves. Marketers advertised heavily in newspapers forty years ago, but today it’s Google and Facebook.

I wasn’t aiming to provide entrepreneurs with a library of tactical wisdom. I feel like many resources, such as YouTube, make tactical learning accessible. But my friend got me thinking. The application of wisdom is a big thing entrepreneurs struggle with. Am I overlooking an opportunity to bring massive value to entrepreneurs by not including tactical wisdom? I’m not sure now, but I want to think about this more, with an open mind, during the holidays.

Last week, I shared that I want to learn more about psychology to improve my decision-making and because it seems like a fun topic. Charlie Munger famously studied the failures of others to understand thinking errors. That approach resonates with me, and I decided it’s best to start by regularly analyzing my own failures. I wasn’t sure how, though, so I started looking for ways others have done this.

I started rereading The Warren Buffett Way by Robert Hagstrom and found a great idea. Hagstrom says that Buffett included in his Berkshire Hathaway annual shareholder letter a section called Mistake Du Jour. In it, he “confessed not only mistakes made but opportunities lost because he failed to act appropriately.” He was transparent about his mistakes and shared them broadly.

I’m a huge fan of update emails (see here, here, and here). But I can’t recall ever seeing an update email with a section dedicated to the founder's mistakes. The more I thought about it, the more I thought it’s brilliant. It’s a great way to make a habit of analyzing your own mistakes—and also to build trust with others and maybe even get unexpected advice based on how other people navigated similar mistakes.

My weekly update blog posts are inspired by update emails. Including a mistake du jour–type section in them would be cool. It would check the box regarding forming a habit to analyze my mistakes and force me to crystallize and communicate them concisely. If I also force myself to include the lesson learned, this could be even better. I’m not sure about some things and need to think about them (e.g., will I have enough to do this weekly, or should I do it monthly?). But I like this idea and want to add my mistakes to my 2025 weekly updates.

One thing that resonated with me in Warren Buffett: Inside the Ultimate Money Mind was the idea of studying failure. The book mentions that Charlie Munger studied failure to improve his decision-making. Munger studied the failures of others as a way of understanding thinking errors, which is studying psychology.

This got me thinking. I want to be more intentional about studying failure. I get excited about hearing what worked from entrepreneurs, but I need to be equally (or more) excited to learn about their failures and the why behind them. I’m really curious about psychology and want to keep improving my own decision-making, so this approach is appealing.

I think the first step is to regularly analyze my own failures and mistakes. I’m going to put some thought into ways I can make this a habit and see if I can adopt strategies others have used successfully.