The most successful people, especially founders, are lifelong learners. They have a curiosity and thirst for knowledge that’s on another level. This is well known and something people often talk about. Successful people explore and apply new things.

One trait I’ve noticed that’s closely related is their tendency to adopt new tools and methods. Most of these people are focused on something they care deeply about. In the case of founders, it’s solving a problem. And they’re always trying to find a better way to do what they care about. This often leads to an attitude of open-mindedness about trying new tools and ways of doing things. When they find a promising one, they figure out how it can help them do what they care about more efficiently and incorporate it into what they’re doing.

This doesn’t mean they love trying every latest gadget or guru philosophy; it means they’re not set in their ways when it comes to how they do the thing they care about. They’re married to a destination (what they care about) but willing to explore a more efficient path to get there if one presents itself.

I had a good conversation with a founder friend recently. We discussed people who wait for opportunities to fall in their laps and people who find nonobvious opportunities and a way to be part of them. For a founder of an early-stage start-up, hiring the latter type is usually better.

During our exchange, my friend described the second group as people who show “purposeful progression in life.” I like that because it’s simple. Has someone identified an objective, and are they proactively taking action to move toward it, even if no clear path exists? If yes, they’re not just progressing, they’re progressing purposefully.

Are you progressing, progressing purposefully, regressing, or standing still?

I’ve been helping a founder with a fundraising round. It’s been a few months, and the round was moving toward the finish line. With investors lined up and lawyers finalizing documents, everything looked good for the transaction to close on time. Then one of the investors pulled out unexpectedly, putting the entire transaction in jeopardy. Luckily this founder had never stopped pitching other potential investors and had built a good working relationship with the lead investor. He has a solid list of potential investors to replace the one who dropped out. He was able to have a constructive conversation with the lead investor and agree on a strategy to close the transaction. It took an extra day—not bad given the eleventh-hour dynamics—but the transaction closed and the funds cleared the company bank account.

Fundraising is tough, full of all kinds of twists and turns. A transaction isn’t done until the money’s in the bank. Before then, anything could happen—and something often does happen at the last minute. Don’t get comfortable. Continue working on open items until the transaction is officially closed and the wire clears your bank account. When the wire clears, then you can relax a little and celebrate.

Yesterday I shared my thoughts on Jeff Bezos embracing wandering. In the video I referred to, Bezos talked about something else that I’ve been thinking about: cost reduction.

To Bezos, cost reduction means inventing a better way of doing existing work. When you invest in a better way, you make doing that work less expensive, which makes the world richer. He used the example of the plow. The invention of plowing made farming less expensive and more efficient, which made the world richer (by making food more plentiful and less expensive).

Space flight, Bezos said, is a solved problem, and he’s focused on dramatically reducing its cost.

It’s interesting that Bezos arguably has built a trillion-dollar company (Amazon.com) by focusing on cost reduction and could build another massive company with Blue Origin by turning the same focus onto a different industry.

If you want to check out this section of the interview, look here.

This weekend, I listened to an interview that Jeff Bezos, founder of Amazon.com and Blue Origin, recently gave. I haven’t found many long-form Bezos interviews, so I was interested in hearing what he had to say in this one, which lasted over two hours.

Bezos discussed many topics, but one thing he mentioned multiple times stuck out to me. Bezos is a big fan of wandering.

His thinking is that solving a problem by inventing a new solution means you don’t know where you’re going. New solutions are different than incremental improvement, and there is no linear path to new solutions like there is to incremental improvements. The solution isn’t clear, and you’re working to find it through all sorts of unexpected twists and turns. The process is often seems inefficient, but that’s how new solutions are invented.  

Bezos went on to say that he likes messy meetings accompanied by a crisp document outlining the problem to solve because messy meetings allow for the wandering that results in the invention of new solutions.

Bezos also shared a fun fact: when he wakes up in the morning, he isn’t as productive as people think. He first wanders a bit by drinking coffee, talking with others, reading the news, etc.

The interview with Bezos was interesting, and I had a few great takeaways. If you’d like to watch the full interview, go here. For his thoughts on wandering, go here, here, and here.

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.

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.

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 recently had a conversation with an entrepreneur who’s started several successful businesses in various industries. He was telling me about the latest company he’s working on. It’s a waste management space, and the company will remove trash from residential homes. He doesn’t have experience in this industry, so how did he decide to start this, I wondered. The story was that he heard from a friend about the opportunity to obtain a contract (i.e., recurring revenue), investigated it, and decided it could be profitable. He went to work finding a cofounder and developing a strategy to execute the work.

During our chat, I realized a few things:

• This isn’t a space this founder is passionate about; he just saw an opportunity he couldn’t pass up. 
• He isn’t planning to scale this company. He just wants to have a few reliable customers and build a small, reliable team to execute the work.
• This is a small (and tough) market, so there isn’t an opportunity to create large amounts of value for others and recognize that value through appreciation of the company's value. Rather, it’s an opportunity to create a steady stream of cash flow by providing a service that people don’t want to do, but also don’t highly value.

During my conversation with this entrepreneur, I realized something. Some entrepreneurs are gifted at creating small companies that essentially exist to generate cash flow for the owner. And they do this repeatedly. They’re great at taking a company from zero to one—to getting the machine started—but rarely think about the problem’s market size or how big the company could be. They focus on getting the company to the point where it can distribute a certain amount of cash to them, and when it does, they’re happy. The idea of reinvesting cash into growth opportunities to scale the company doesn’t cross their mind and doesn’t interest them when it’s brought to their attention. 

I think of these gifted people as serial cash-flow entrepreneurs.