I listened to a successful founder share his story. Part of his journey was a painful realization that he wasn’t the best. He connected with a peer group of type A personalities and quickly realized he wasn’t the most intelligent person in the group. He was smart, but others were smarter. This was tough to swallow because he’d always performed well in school and ranked at the top of his class. In this group of overachievers, he was, as he put it, “average . . . at best.”

As he came to grips with his ranking in this peer group, he noticed something else. Some of the others didn’t give their all because they didn’t have to. Their intelligence allowed them to give less and still get by. They weren’t consistent because they didn’t have to be.

This person went on to found a start-up and later exit it. He’s the only one in his peer group to have done this. When he was asked about his success compared to his peers’, he said something interesting. He wasn’t the brightest person in his group, but he made a point of giving his best effort every day. His work ethic was consistent, and he believes that this (along with luck and other factors) is what allowed him to excel.

His watchword now, when working with others, is “you don’t need to be the best, but I gotta have your best.”

This founder was brutally honest with himself but didn’t let it discourage him. Instead, he found something he could control that would give him an edge. I really like his approach because he focused on playing the hand he was dealt as well as he could—not dwelling on the hand he’d have liked to have had.

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I had a discussion with a buddy about different leadership styles. We talk about a few founder friends and compared their styles. I believe leaders have to figure out what style works best for them. Some people are great motivational speakers. Some are quiet and lead by example. All can be effective.

My buddy expressed a view that I hadn’t thought about: Leading by example is your only option when you have a team of A players because smart people don’t care what you say—they’re watching what you do and will take their cue from that.

I don’t totally agree with my friend. Smart people listen to what leaders say, but they take it a step further. They verify by paying attention to what leaders do. They make sure there’s alignment between a leader’s words and actions. When there’s a disconnect, they take note. Saying something is a lot easier than living it. So, when words and actions don’t align, smart people believe that action represents the truth. If a leader’s actions aren’t what they expect or don’t align with their values, you can expect them to start planning their exit.

If you’re a leader and you want to build an amazing team, remember that A players are listening and watching. Your actions must align with your words. If they don’t, you’ll end up with an average or worse team and average or worse results in your organization.

I watched an interview with Mohnish Pabrai. He’s a successful hedge fund investor and protégé of Berkshire Hathaway leaders Warren Buffet and Charlie Munger. Mohnish shares lots of great nuggets in this interview, but his insight that being ethical is a competitive advantage especially stuck with me. This quote was quite powerful:

What people don’t realize is most things in life function on trust. They don’t function based on contracts. If you become very trustworthy it gives you a massive competitive advantage and leg up in life.

So, what is trust? Trust results from having a sense that the other person is driven by things other than their own gain.

Many believe that you must be hard-nosed, have sharp elbows, or only look out for your own interests to be successful. Monish believes otherwise and views being highly ethical as a competitive advantage because once people feel they can trust you, “the world is at your disposal.” Translation: you attract great people and opportunities to you when you’re not just looking out for yourself. The more high-quality people and opportunities you attract, the more money can be made (or, if that’s not your gauge of success, the more you can achieve whatever you seek).

Building trust isn’t an overnight exercise. It takes a long period of consistently operating ethically to build a reputation for trustworthiness. In today’s world of instant gratification and overnight success, this approach may not resonate with some. People who take this path may not find major success quickly, but they can string together a series of wins that continually compound and lead to a long career and outsize success. Warren Buffett and Charlie Munger are ninety-one and ninety-eight, respectively, and great examples of this.

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I listened to Reid Hoffman and Ben Casnocha’s new podcast. The latest episode was interesting and resonated with me in ways I didn’t expect. They discussed hustling strategies and how people who are great at generating serendipity are curious and love to learn. They may not have an end or destination in mind, but they dive into things because they interest them. Reid dubbed these people “infinite learners” and named a host of wildly successful people who fit this persona.

Reid went on to share his belief that keeping the bar for meetings low enough to allow for serendipity is important. The occasional unproductive meeting is good, he thinks. It means you’re being diverse and risky in deciding whom to meet with, which allows for serendipity. I thought his take on this was fascinating, given how busy he is.

Serendipity is powerful and helped me immensely. Reid’s perspective on being riskier in setting up meetings is something I’ll think about more.  

I’m reading Working Backwards. It was written by two former Amazon executives, who detail why Amazon was able to become one of the most valuable companies in the world. The authors share the principles that guide Amazon, how it practices them, and the backstory on how Amazon arrived at them.

One section about why Amazon prefers small teams stuck with me. Jeff Bezos believes that decisions should be made with 70% of the information you’d like to have. Waiting to amass 90% or more means you’re moving too slow. The key to being successful while making decisions with only 70% of potentially available information is being good at course correcting. If you’re moving fast and catching your mistakes quickly, an incorrect decision is less costly than being too slow is. Amazon believes in small teams because they make it easier to catch mistakes and course correct.

I like Jeff’s thoughts. They reinforce that many decisions can be undone, so it’s better to move fast and undo them if you’re wrong than to wait to identify the perfect decision.

I listened to Sequoia partner Jess Lee share her thoughts (beginning at 12:20 in the recording) on how community can play an important role in entrepreneurial success. She defines community as customers who love the solution so much that they’re willing to talk to peers about it. She views community as the ultimate growth engine for the following reasons:

• $0 customer acquisition cost – When you build a place for people to share their thoughts about something they’re passionate about, they generate word-of-mouth advertising that costs you nothing.
• Feedback – These people are fiercely loyal and will give you candid feedback on what they like and don’t like about your solution. Their feedback is your ear to the ground, helping you find and retain product–market fit.
• Connections – People build relationships within these communities. Among members there’s loyalty and a sense of belonging.
• Underserved users – Even in large organizations, there are often groups of people whose pains aren’t understood and haven’t been solved. Connecting with these underserved users so they don’t feel alone can create loyalty. Solving their pain points further reinforces their loyalty.
• Key elements – The four important elements of a successful community are government, economy, religion (shared ethos), and media.
• Community needs first – The best communities are oriented to the needs of the community, not the needs of the business. Making connections and adding value for users helps build strong communities. The best community builders are customer (user) obsessed.

Jess does a great job of sharing her thoughts on community. I agree with them, and I believe the most successful companies will have a community at the core of their success.

I recently heard someone refer to the start-up world as a young man’s (or woman’s) game. When I dug deeper, he shared that he believes you have to pursue this path young (in your twenties) if you want to be successful.

I don’t agree, for a few reasons. Anyone can be successful as a founder, regardless of age, if they’re willing to put in the work. How you achieve success will likely change with your age and maturity. For example, when you’re younger you can put working hard above most anything else. All-nighters, weekends—they’re doable. You can be selfish with your time. As you mature and have other priorities, you begin to work smart while working hard. The work ethic is still there, but how you deploy it is likely more strategic and incorporates other priorities.

History is full of examples of people having entrepreneurial success in their forties, fifties, and even sixties. Ray Kroc (McDonald’s in his fifties) and Harland Sanders (KFC in his sixties) are two great ones.

If you can solve a problem in a way that creates value, you can be an entrepreneur—no matter how old you are.

A friend asked for my thoughts on accessibility of information, knowledge gaps, etc. Early in my journey, I didn’t know what I didn’t know, so I focused on acquiring knowledge about areas where I wanted to be successful (e.g., start-ups). That was helpful, but I realized it wasn’t enough. I had to take it a step further. I needed to figure out how to apply that knowledge. How do I apply it to my situation? How do I use it to achieve my goals? How do I execute given this new information?

Knowing what to do was helpful, but figuring out how to do it was a game changer because execution is what really matters. Knowledge is without a doubt valuable, but applying it is how you progress toward goals. I wasn’t always sure how to execute based on the knowledge I gathered, but I was determined to figure it out.

I ended up settling on two approaches. The first was to talk to experienced people who’d done what I was trying to do and ask how they did it. Dive into the specifics with them and get a better understanding of what worked, what didn’t work, and why. The second was to test. Come up with a few small things that have a reasonable chance of working and try them. Test them until I hit on the one(s) that work. Double down on what worked and kill the rest.

I still seek to learn and fill my knowledge gaps, but I also think about how to apply my knowledge and move the needle forward

I caught up with a founder recently and we talked about his frustrations. He shared that he’s been having a hard time the last few months. A laundry list of things aren’t going his way—from product, to customers, to managing his team. Some are the result of subpar decisions on his part. So many things aren’t going as he anticipated that it’s starting to wear on him mentally.

He asked my thoughts on his situation, and I shared my founder experience with him. On my journey, there was a pattern: when lots of things weren’t going right and my frustration level was peaking, I was usually on the cusp of a big breakthrough or material change in the business.

For example, we cut off one of our main suppliers because we weren’t aligned culturally. This caused us to start burning cash at a rapid rate. Tensions were high. We had some runway because of cash reserves, and I still believed in what we were trying to accomplish and in our team. Just when we were approaching max pain from cash burn, we identified a new supplier more advanced than our previous one. That situation set us up to go on a growth tear, and we scaled to eight figures in revenue.

When nothing is going right, be mindful that you’re likely on the cusp of a breakthrough if you push through!

I recently met with folks running an emerging fund who shared some interesting insights about their fundraise strategy. Their existing portfolio is performing well, and they’re out raising a new fund. They targeted $50 million, but because of recent market conditions they think they’ll land at $25 million. They’re adjusting the portfolio construction. They plan to do fewer investments and are raising the bar on what it takes for them to make an investment.

I wasn’t surprised to hear that funds are reducing the amount of capital they’re raising, given the macro environment, but the higher bar for investment was surprising given the success of their investments.

Risk aversion has ballooned, and founders should be aware of this and plan accordingly. We’ll eventually move back to embracing more risk, but I believe that will be a gradual process.