In the early days of a company, the team is small. One person leaving the company can be a big blow to the team. To an early founder not anticipating the departure, it’s frustrating. Usually, team members opt to leave when things aren’t going well, so the departure combined with challenges in the business can feel like a double whammy and cause founders to question themselves as leaders.

Departures happen at start-ups. The first leaver likely won’t be the last. You want to do all you can to build a great environment and have everyone aligned on the mission, but however hard you try, people will leave. It’s a setback—but also an opportunity to get candid feedback on the business, how leaders are perceived, and the mood of the rest of the team.

I’m a big fan of doing exit interviews when team members choose to depart. Along with thanking them for their service and letting them know they’re always welcome to come back (if they were a good team member), it’s important to ask them for candid feedback. When someone is departing, they’ll usually give more direct feedback because they don’t have anything to lose.

Listening to feedback from someone leaving a hole in your team is hard to do. But it’s super important to look past how you feel about the situation and the extra workload caused by the departure. Listen to understand the why behind the person’s decision to depart, what’s going well, and what can be improved. You may not agree with everything they say, but this opportunity to learn and improve in various areas doesn’t come often. It often leads to valuable golden nuggets.

If you’re an early founder and a team member exits, don’t dwell on the fact that they quit. Instead, focus on what you can learn from the situation to minimize the chances of it happening again and to make your business better.

I spent time talking with a founder friend and with family this weekend about the current labor market for front-line workers. I already knew about businesses having to reduce their hours of operation or capacity due to labor issues. I’ve read about the Great Resignation. But I was still surprised when I listened to firsthand accounts from the customer’s perspective this weekend. It’s anecdotal evidence, but it still got me thinking. I was talking to unrelated parties in different states, yet they were having similar experiences.

I really want to understand this phenomenon better. I’ll be spending some time over the next few weeks learning more from people on the front lines of this issue. My gut tells me that something bigger is happening here that we haven’t fully grasped.  

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I’ve shared my views on the entrepreneurial opportunity to take laggard industries from physical to digital. I’ve been thinking more about what the ideal company will look like in the future in laggard industries and what the result of that will be. A few thoughts:

• Automation - Manual and inefficient processes are common in old-school industries. The result can be inconsistent and slow execution of critical tasks, which leads to a poor customer experience. Automation will be a big part of the ideal company in these industries. Efficiency, timeliness, and visibility of execution will not only improve the customer experience but also reduce costs.
• Centralized data - Manual processes and a lack of systems mean that data is often unavailable to team members and leadership. Decisions are made with subjective or anecdotal evidence. Digitization will allow ideal companies to store data centrally and use it to improve decision-making.

These are just two of many ways digitization can improve laggard (and other) industries. Overall, I believe digitization will allow companies to create more value for customers and reduce costs.

My parents raised me with a certain set of values and morals, which I stuck to. As an early founder, I always assumed others operated similarly. But as my entrepreneurial journey progressed, I learned that wasn’t always the case.

A few of our customers took advantage of us. We sold automotive parts to consumers and had customer-friendly policies around returns and other service situations. They were great for most of our customers, but they also attracted fraudsters. We got hit with a rash of fraudulent transactions in the early days. Caught off guard, we didn’t know what to do to fight them. In the end, they cost us a significant amount of money I didn’t have. We learned we had to be more aware of what was going on with our orders. We implemented systems and processes to identify suspicious orders. I also had our team take an aggressive stance vis-à-vis orders that we deemed fraudulent after they were shipped. Fraudulent transactions dropped sharply, to the point we rarely saw them. Fraudsters knew we’d fight back and weren’t an easy target.

And a supplier walked all over us. This company was orders of magnitude larger than my company and our main supplier at the time. Knowing this, they used their scale to push us around. They’d change our payment terms on the fly, which affected our cash flow. They’d change our pricing on a whim, which made us less competitive and reduced our revenue. They’d limit our ability to sell certain products, too. All these moves were made to optimize the relationship for the supplier at my company’s expense. Once I realized this company was looking out for itself—and only itself—I changed our strategy. I instructed our team to take an aggressive stance with them. We pushed back strongly on one-sided changes and even cut them off as a supplier. That company began to reverse their decisions and operate with more of a partnership mentality. They learned we weren’t a customer they could push around.

From these situations and others, I learned how important it is for a founder to be situationally aware. You can’t count on everyone to be honest and fair all the time. Your business, your people, and your money are on the line. You have to pay attention. You must understand when you’re in a situation where bad actors could prey on you or parties you’re involved with could do harm if given the opportunity. And you have to figure out how to protect yourself.

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I listened to an investor talk about an investment he made in an early-stage company. Smart founder, painful problem, growing market. Even so, the investor is concerned about the investment. The founder wants to grow the business but isn’t growing the team. He’s personally in the middle of everything, so nothing gets completed and growth isn’t what it should be.

It takes a team to build a big company. As a founder, it’s hard to let go. There’s always the feeling that no one can do it as well as you. I experienced this, as did several of my founder friends. In the end, we all had the same experience. When we found the right people and empowered them (i.e., got out of their way!), they did a better job than we could have ever done. We wish we had done it much earlier in our journey.

If you’re a founder aiming to build something big, remember: teamwork is dream work.

Finding a co-founder can be a challenge. Especially for non-technical founders. I was chatting with one today who asked about my early founder experience evaluating people who might become cofounders or high-level team members.

There are lots of examples of teams with high-caliber individuals who can’t make it work as a team. For this reason and others, I opted to evaluate two potential leaders by working with them before extending full-time offers.

There was no shortage of problems that needed to be solved, so I created two projects of short duration—a few weeks to a month—and assigned each of them to a project, paying them as a consultant to solve it. I was able to gauge their working styles, and they were able to gauge mine. The projects were a success, and I knew I could work with each of them individually.

The next thing I needed to figure out was if we could all work together as a team. I created another short-term project for the three of us to collaborate on. I tried to make sure each person contributed strategically and tactically to the project. It turned out that we worked well together, and I was ready to add them to the team full-time.

With this approach, I was able to evaluate these two people individually and then as part of a team with me. It gave me confidence not only in their individual abilities but also in our chemistry. In the end, this team helped scale the company to eight-figure revenue.

This approach won’t work for all founders, but it worked for me.

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I’ve been following public and private companies that benefited tremendously from COVID-19. Some saw more growth in a few quarters than they would have seen in five years without the pandemic. Last week I shared my view that these companies will shift from reactive to proactive in 2022.

These companies will focus on driving growth instead of managing it. Doing so with a larger revenue base and fewer macro tailwinds is more challenging. Expectations for many are high, which can mean patience is low. Results of evaluations of whether to build something or buy have likely shifted.

I foresee acquisitions playing a role in the 2022 strategy of companies that benefited from COVID and are flush with cash. The size of the acquisitions will vary. Some will be acqui-hires to get people in the company who can turbocharge initiatives with their expertise, while others will be traditional acquisitions of proven solutions with paying customers. Regardless of size, the reason for acquisitions will likely be to help achieve growth goals.

I’m curious about how this will play out and will be watching it closely.

I had a great conversation with another investor today. One of the things he shared was his view on how important perspective is in many areas of life, especially investing. He’s a fan of focusing on the upside potential of an investment. He does his due diligence and is aware of the downside, but he doesn’t focus on it or optimize his deals for it.

Investors are partners. When founders take investments, they’re usually agreeing to partner with this person or group for many years. There will be ups and downs. Understanding the perspective of your partners is important because it will help you understand how they’ll respond and support you when things aren’t going so well.

If you’re a founder considering accepting investment, take the time to understand what everyone is focused on—the downside or the upside. Hopefully, it’s the latter.

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Over the last two years, remote work has exploded. Absent the need to be in the office, many people have incorporated exploring new places into their work routine. I talk to founders regularly. During first calls, I’ve started asking where they’re calling from. Paris, one founder responded this week.

How we work won’t go back to pre-2020 norms anytime soon, if ever. This got me thinking about the intersection of vacation and work. Historically, people have scheduled vacation time to spend time away from their office and home city. During quarantine, many people camped out and worked remotely in new locations outside their home cities. From anecdotal evidence, it appears this trend is continuing.

How people work has changed for sure. But I think where people work will also change. I foresee some people early in their career (or without attachments) adopting more of a nomadic lifestyle. The line between work and vacation will start to blur a bit. They’ll spend a few weeks or months working remotely from a location that interests them or where they have community. When they want a change of scene, they’ll go to another location for a similar amount of time. They’ll have the opportunity to learn about new cultures or places, build or strengthen relationships, etc.

I think the people doing this now are hacking it together on their own. Going forward, I see an opportunity for employers to gain a recruiting advantage by supporting and even encouraging this work-from-wherever approach. I also see lots of entrepreneurial opportunities to help the nomads make the best of their experience.

I’ll be paying close attention to this trend this year to see how it unfolds.

I had a great conversation today with a founder who brought something to my attention. He said that in certain industries, a significant amount of information, communication, etc. still moves between people in the physical world. He gave me examples of many government offices and other entities still relying heavily on the postal system to communicate with their customers and constituents. I’m a digital-first person, so I hadn’t thought much about this.

Lots of things shifted from physical first to digital first in people’s personal lives in the last 24 months. People ordered pretty much everything online and even learned to accept virtual meetings. But there are still industries that haven’t made this change. Physical interaction or physically exchanging information, or both, are core to their operations. These laggard industries are likely at a point now where they realize they too must make this change (or adopt a hybrid approach). Many would never have considered this before because they simply didn’t have to. Their customers and counterparts didn’t expect it. That’s changed now.

Laggard industries aren’t sexy, but they’re a great opportunity. Entrepreneurs who understand the nuances of these industries and can build digital or hybrid solutions can create massive value for these customers and build large businesses doing so.