A friend in VC sent me a video this morning and suggested I watch it. It’s a Craft Ventures presentation on how founders should operate during a downturn. David Sacks and Jeff Fluhr do a great job of articulating their perspective on what’s happening in the public markets, how it will affect the venture ecosystem, how it compares to previous downturns, and what founders can do about it.

Lots of takeaways from this presentation are helpful to founders, but Jeff’s glass-half-full perspective stood out. Times may get tougher, but great companies are built during downturns (Salesforce, Airbnb, Amazon, etc.). Capital may become harder (not impossible) to come by, but other things become easier: hiring, customer-acquisition costs, the ability to course-correct with less scrutiny, etc.

Jeff ends on this point: “The world will keep spinning.” I totally agree. If you’re an early-stage founder, focus on things you can control (Jeff shares metrics that founders should watch closely), not the macro environment. Even in a downturn, there’s still demand for solutions that solve problems and create value for customers.

Over the past month, I’ve talked to four founders who are looking to hire CEOs to run their companies or who’ve already done it. Two are early-stage; two, later-stage and more mature. This isn’t abnormal. Lots of founders transition away from being the CEO for one reason or another in the company’s life cycle. Some founders even come back and reassume the role.

The early-stage founders’ thoughts around this really struck me. They described hiring a CEO as if they were hiring any other employee. I don’t think they fully understand how hard it is to find the right CEO for an early-stage company and set them up to succeed.

Hiring a CEO for a mature company makes lots of sense. Product–market fit has been achieved. The team is stable. Processes are established. There’s historical data to help inform future decisions. The machine is already built. It may need tuning, but it’s there and working.

Hiring a CEO for an early-stage company is a different story. The pieces to the machine are scattered all over the place, and the new CEO must figure out how to assemble it. It can be done, and it has been done, but it’s harder. Trying to find product–market fit can be challenging if you’re not passionate about the problem or don’t have deep experience in the space. CEOs are the glue holding small companies together, which is hard to do if you didn’t write the blueprint or understand how all the parts work together. There’s usually little historical data, so decision-making can be harder for a non-founder CEO. Most founder CEOs don’t leave in the early innings because everything is going well. Cleaning up someone else’s mistakes is a tight spot to be in.

If you’re an early-stage founder, be mindful of these and other variables if you try to replace yourself.

Someone once asked me what I would change most about my experience in corporate America. I don’t have any regrets, but that question got me thinking. I told them I would be crystal clear about what I wanted to gain from my experience before I started working. I’d then push aggressively (and unapologetically) for opportunities to work on projects or work with people that helped me achieve that goal. Said another way, I’d be clear on what I want beforehand and to be directionally accurate during my time there. I didn’t do that and still got a lot from my experience, but I could have gotten a lot more.

It's hard to do, but if you can be clear on where you’re trying to go (or at least the direction) it has a big impact on your journey. It helps you be able to better evaluate opportunities (does this get me closer or further away from X) and makes it easier for others to help you. The end result is that you’ll likely end up where you want to be in significantly less time.

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One of the exit strategies early-stage founders often have is strategic acquisition. This means the acquiring company will get strategic value from the company it acquires—it’s not just a financial buy. Buying a company and bringing its talent onboard is often quicker than building something from scratch. And in some acquisitions, a larger company quickly grows the smaller company’s sales by using its massive sales force to offer the latter’s product to its existing customer base.

These options sound great, and they are—but there’s something lots of founders don’t consider. Often these deals are structured so the founder will need to stay at the larger company for a few years. The founder usually has what’s called an earnout—they don’t get all their money from the deal when it closes; they must earn it over time. Doesn’t sound like a big deal, but it can be. Especially If your motivation for starting a company was to be your own boss.

If you’re a founder aiming for a strategic acquisition, get a great deal attorney and be ready to hang around for a few years post close!

I connected with someone who’s successful and super busy. During our meeting, I asked a favor. I was thankful that he gave me time on his calendar and had low expectations of his doing me the favor. But I asked anyway because the answer is no 100% of the time you don’t ask. He agreed to do it, but I still figured he wouldn’t.

To my surprise, he did. It took my nudging him a bit, but he came through. We caught up afterward, and I asked him why he took the time to do something for me. I expected some deep reasoning, but it was quite simple. He said most people who ask him for something never follow up. When they don’t, he knows they’re not serious. I took action by nudging him, so he knew I was serious.

My takeaway is that having a bias toward action and following up with people in a thoughtful manner can set you apart. Most people don’t take this extra step to see things through. It’s something simple but powerful that anyone can do.  

As a kid, I had lots of dreams and ideas. Regardless of how bad or outlandish the idea, my mom always listened and encouraged me. She let me know I could do or be whatever I wanted if I set my mind to it and worked hard. Her encouragement during my formative years gave me a solid foundation and the confidence to pursue entrepreneurship (and all my other ideas, good and bad) over the years.

Happy Mother’s Day, Mom! I appreciate your love and support!

The last two years have been interesting ones for companies. Founders who were well positioned for the revenue redistribution did extremely well. Revenue skyrocketed for some of these businesses as customers sought solutions to new challenges. I’ve been chatting with some of these founders. Some of them are starting to see early signs of their customers’ habits changing again. The customers they acquired in the last few years are beginning to redistribute their revenue again.

This poses an interesting problem. These founders scaled up their companies around this new customer segment, which became a large percentage of their overall revenue. Sales, marketing, etc. are all optimized for this segment. They thought their ideal customer profile was made up of these customers because so many of them willingly and rapidly paid for their solutions. Now, they’re starting to see these customers churn as life trends toward historical norms.

These founders have a dilemma. It’s beginning to look like the house they thought they were building on a concrete foundation was built on slow-moving sand. They have significant expenses for the scaled-up organization. Do they redirect their teams to go after a different customer profile? What does the ideal customer profile now look like? How long will it take to redirect the team? These and many other questions will need to be answered by many founders in the next year to eighteen months. I’m curious to see how founders handle this dilemma—I suspect that many will shrink their teams to reduce burn until they have more clarity on these questions.

I noticed a problem some time ago and decided to dive into it to understand it better. I emailed a bunch of people and asked others to introduce me to people who’d lived the problem. So far, a high percentage of these people have agreed to chat. The calls have all started off the same, followed a consistent path, and ended well.

People are a bit suspicious when they first hop on the call. I introduce myself and share some info on my background. I then share the problem (I frame it in a way that’s unique to my background) that I’m trying to learn more about from people who’ve lived it. That’s when the conversation changes. They warm up and start telling me all about their experience with the problem. They love talking about how the problem affected them. By the time the call ends, we’ve built the beginnings of a relationship and I’ve learned a ton. If it’s gone really well, they’ve agreed to intro me to someone else.

The most important thing I’ve learned from these conversations is that people love talking about their problems and feeling heard. If you’re a founder, take the time to talk to people—and, especially, to listen to them—to understand the problem you’re solving. The time and energy you put into this will pay you back many times over.

I had a chat with an investor today. Not only is he a successful venture capitalist, he’s personally invested in forty other emerging venture capital funds. I was amazed when I heard that number. Inspired by such a large number of data points, I asked him a question: What have you learned from these investments that surprised you? I didn’t know what his answer would be, but I was sure it’d be insightful.

He said there’s a high correlation between success and emerging fund managers who are disciplined about communicating with their LPs (people who invested in their fund). The fund managers who communicate best also run funds that have the highest returns (in his personal portfolio). It’s a small sample set but still a powerful insight.  

I’m a fan of founders keeping people in the loop via regular update emails. The upside to writing them far outweighs the downside. Based on today’s conversation, this appears to be a universal rule that applies not just to founders but to anyone trying to achieve outsize success.

In 2013 or so, I met with a founder who blogged. I enjoyed his posts and wanted to learn more. The idea of blogging interested me, but there were two hurdles I wasn’t sure how to overcome. I was an early founder trying to get my company off the ground and didn’t think I would have the time. More importantly, I’m a naturally private person. I’ve been this way as long as I can remember. I was uncomfortable with the idea of sharing my thoughts openly.

I asked that founder how he handled privacy in his blogging. He told me he was very specific about what he shared. Nothing about his personal life. Only posts about things related to business. More importantly, he understood that he had significantly more to gain from sharing publicly than he had to lose. That last part really stuck with me—that he was playing the probabilities. The upside was significantly larger than the downside. I had focused on the downside and never considered the potential unintended benefits.

Fast forward to 2020, and I finally began blogging myself. I’ve been sharing my thoughts daily for over two years. It started it as a 60-day challenge to share what I’d learned, but I’ve gotten more than I ever would’ve thought from the experience. The founder was right. I haven’t lost anything (that I know of) from blogging, but I’ve gained a tremendous amount and hopefully helped others. The upside has far outweighed the downside. Sharing publicly has been a good bet, and I plan to keep doing it.