Today I listened to a founder describe his first start-up failure. His key takeaway: what matters most is what customers think, not what he thinks. He had a hypothesis, and he built a product around it without much input from customers. When the product launched, customers wouldn’t pay for it. He shuttered the company.

The founder started another company. He’s staying close to the customer this time—focusing, laser-like, on building what they want. Feedback from early customers uncovered key insights he didn’t anticipate. They led to changes that accelerated the company’s early traction and have become a core part of its strategy.

Companies exist to solve problems for their customers. The only way to know if you’re doing that is to talk to customers. They may not always tell you want you want to hear, but if you listen hard enough, they’ll tell you what they want you to build.

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Today a founder shared with me his vision for helping people communicate more effectively. He’s starting out by building software that helps people understand how effective—or ineffective—their pitch is in communicating their message. He has studied effective communication and has experience working in the space, and he believes he can improve outcomes by helping people communicate more effectively.

I think he’s on to something. Listening to him today reminded me of a meeting I had. I was sharing an idea with a group of founder friends. When I finished talking, I asked them to tell me what they’d heard and what I’d left out that they wanted to hear. Their answers were eye-opening. Everyone heard something slightly different! I walked away realizing that I needed to improve how I communicated the idea and fine-tune it with my audience in mind.

Effective communication is important. Many people could use help improving their skills in this area (myself included). If you’re an early-stage founder trying to communicate an idea, take time to consider how you’re doing it and who your audience is.

An entrepreneurial friend told me about some early challenges at his company. The team wasn’t being efficient or consistent about completing work. This created at least two problems. First, the longer it took to complete the work, the less satisfied the customers were (and the less likely they were to refer other people to the company). Second, the longer each job took, the more it cost because employees were paid by the hour. After months of talking to his team, he found the solution.

He changed the compensation structure. He began compensating his team for completed jobs. The fewer jobs they completed, the less money they made. The more jobs they completed, the more they made. My friend noticed an immediate impact. His team’s productivity went through the roof. Over time, his team made more money and his business saw increased revenue and profit. Customer satisfaction increased too.

Keeping a team aligned is difficult. Everyone moving in different directions or moving at different speeds is stressful for the founders and could even sink the business. If everyone is moving in sync and in the same direction, the employees can have more autonomy and the business can reach new heights.

An entrepreneur buddy recently was a guest on a podcast, and he shared the recording with me. He told the host about his journey and his learnings to date as an entrepreneur. One of the things he mentioned was that he’d had tunnel vision early on, which was a mistake. He kept his head down and executed as best he could. He didn’t grow up in an entrepreneurial family and didn’t know many entrepreneurs. He used his street smarts and hustle to figure it out . . . the hard way.

Looking back, he now realizes that his journey was more difficult than it needed to be because people who came before him did the exact same thing: built their businesses, heads down. They weren’t sharing what they were learning as they went along. My friend wants to change this approach, which perpetuates a cycle of people making the same mistakes and learning the hard way.

His journey as an entrepreneur is far from over, but he now makes a point of publicly sharing it and what he’s learned. He doesn’t have it all figured out, and he says so. But his hope is that someone listening will avoid some pitfalls and execute faster than he was able to. Or someone on the fence about entrepreneurship will be motivated to give it a try.

Kudos to him for being intentional about sharing his learnings in real time. All too often, successful founders wait until the end of their career to share their knowledge. It’s great that they do that, of course, but I think that doing it along the way gives the people who hear them information that’s more current and therefore more relevant—so it’s more helpful.

I hope more founders start sharing what they learn as they go!

I spoke with a buddy today who asked me for my thoughts on raising capital for his business versus bootstrapping. I shared the lessons I learned from bootstrapping my own start-up and from investing as a venture capitalist:

• Market size – It’s important to understand the size of the market you’re going after. If it’s a small market, raising capital is less likely to make sense. If it’s a large one, then raising capital can make sense, depending on other factors.
• Destination – Once you understand how big the market is, you can determine how much of it you want to capture. CCAW’s market was $40 billion. I figured we could realistically capture 1% of it and build a $400 million company. Sadly, I didn’t think about this early enough in my entrepreneurial journey.
• Speed of execution – Once you know how big a company you want to build, you can think about the time frame for achieving your goal. The faster you want to execute, the more resources you’ll need. If you believe you’re facing a closing window of opportunity, you may want to execute as fast possible.
• Team – Given the speed with which you want to execute, who do you need on your team? Unsurprisingly, the faster you want to execute, the more people you’ll need.
• Runway – Consistent execution is important. You’ll want to make sure you have enough financial runway (i.e., cash) to consistently execute on your plan at the speed you envision. If you’re executing at a slow to moderate pace, bootstrapping may suffice. It’s more challenging (though not impossible) to provide ample runway for rapid execution if you’re bootstrapping.
• Accountability – The bootstrapping approach usually means the founder isn’t accountable to anyone. If you raise capital from others, it comes with an enhanced level of accountability. In my experience, most people need accountability—but no one wants it.

How to capitalize a new or existing business is situational. This is one of many decisions a founder has to make. There’s no right or wrong answer in the abstract—only the right answer for your situation.

I met with a technical founder who spent seven years at a big tech company that’s a household name. I was surprised to learn that he spent a lot of his time rebuilding decade-old systems. The company worked on those systems only when it had to. On the outside, this company is cutting-edge, but internally, not so much . . . but the public would never know. The founder said the company didn’t grow to be worth hundreds of billions of dollars by fixing things that worked perfectly fine.

This reminded me of my time in corporate America. I learned then that some of the most well-known organizations have antiquated systems or processes. Not pretty, but things still worked, and that’s what mattered most. If it wasn’t broken, they weren’t in a rush to replace it.

Early founders should remember that good enough is all you need in the early days. Get something working and pushed out. You needn’t worry about using the latest and greatest technology or building something perfect, because those aren’t always the best use of resources. In many cases, done is better than perfect.

Today I listened to a founder pitch a solution to help small retailers sell more products to consumers. It facilitates taking an in-person interaction with a consumer online. The need for such a solution preexisted the pandemic, but the pandemic intensified it.

This pitch reminded me of the early days of my company. I bootstrapped it, so resources were limited. Because I couldn’t afford to hire a big team, I handled almost every aspect of the business. I was stretched thin. Whenever I found reasonably priced software that saved me time or money or enabled me to do something that I couldn’t do manually, I happily signed up. I recognized and was happy to pay for the value the software created for me and my business.

Change is flying at us. We’re facing more change in the next decade than we’ve ever seen. Small and medium-sized businesses (SMBs) won’t be able to keep pace on their own. They’ll need software to keep their businesses relevant as the world changes. I see a big opportunity to help SMBs of all kinds navigate the winds of rapid change.

During the Thanksgiving holiday, I caught up with friends who work in various industries and asked how 2021 has been for them. Their responses were consistent: it’s been busy for all of them. The companies they work for (or own) are growing, and some are having a hard time keeping up with all the growth.

Today I looked at the calendar and thought about the rest of the year. We have about three-and-a-half workweeks until Christmas. Once Christmas hits, it’s pencils down, as the year is essentially over for many (not all) industries.

I think December 2021 is going to be the last leg of a spectacular year. We’re not going to see a holiday-season slowdown: the next three-and-a-half weeks will be a mad dash for many people who want to close out the year strong. And I’m one of them—looking forward to it!

I read a quote today about decision-making that I love:

Call it like an umpire: you’re either out or you’re safe.

As a founder, you have to make quick decisions, often using intuition. A quick decision, even if it’s wrong, is better than stopping the game.

I didn’t know that in my early days as a founder. As I gained more experience and confidence, though, the speed of my decision-making improved. As my decision-making sped up, the company’s growth did too. I learned to not worry about being right or wrong. Instead, I made a decision and focused on learning. Right or wrong, there was always something I could learn and apply to make better decisions in the future.

I still try to make decisions quickly and learn from them. Sometimes I’m right and sometimes I’m wrong, but I’m always learning!

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A founder I know had a great vision for his company. He worked for years to get customers and had success, but not the hockey-stick growth he expected. Then the pandemic hit, and customers flooded in.

I caught up with him and asked him about his journey. His most important observation was this:

I knew I was right. I just didn’t know when I’d be proven right. Giving myself enough runway was the difference maker.

Timing is a huge factor in the entrepreneurial journey. Often, founders can’t control it. When things don’t go according to their planned timeline, they have a choice to make: keep building and wait for the time to be right, move on to something else, or choose some hybrid of the two. There’s no right or wrong answer. Each founder must make the decision that’s right for them and their team.

This founder chose to keep going, and it worked out for him in a big way.

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