You develop some combination of muscle memory and scar tissue over time that makes it easier and easier, but it’s really a lifestyle choice. I think it took me at least five years to take a frequent, holistic view of “how things are going” that wasn’t subject to the recency bias of the good thing that happened yesterday or the bad thing that happened five minutes ago.
I have been in and out of therapy at various points in the journey. I have had amazing co-founders that I deeply trusted and could confide in. I also try to prioritize hobbies – especially ones I’m bad at (so I feel like I’m always learning and growing) and that I can do anywhere (so that no matter what city I’m in I can find a way to experience them). Good examples are like running and improv comedy.
I don’t have some magic formula, and I certainly still have bad days. But learning to zoom out is definitely the most important piece.
Thanks for the question and for the RJMetrics nostalgia!
I think your question is actually offering a false choice. There are many dimensions on which a company might be considered a good idea or a bad one, but I don’t think entering into a market with existing players – even a lot of them – should be a wholesale disqualifier. Nor should category creation be viewed as a golden ticket or something to avoid.
When deciding which business to pursue next (in this most recent wave when I chose Crossbeam), my framework was more about:
Founder-market fit: Am I uniquely suited to creating success in this business and laying out a vision that will be differentiated and succeed?
Total upside potential: is the TAM large? what are the break points (“kinks in the growth line” that you can foresee) and are they addressable or preventable?
Is there a good answer to the “why now?” question?
The fun factor: Am I fascinated enough by the problem set to fully live in it for years to come? Can I trigger that passion in other people when I talk with them about the idea?
The fact that Crossbeam was a category-creation play and RJMetrics was a crowded market play were not in the top 5 inputs.
It’s certainly possible (and admirable when it happens), but there are many products out there – especially ones where you are selling into large enterprises or experience long sales cycles – where it’s impractical or can be debilitating to your ability to grow at the highest possible clip.
Imagine a company where your CAC ratio is 1 (that means you make back your “costs to acquire a customer” once you have collected one year’s worth of revenue from them). Now imagine in this same world that you are growing at 100% per year.
In this world, at any given time, 1/2 of your customers have been acquired less than one year ago. That means you are always “in the red” for half of your customers, “in the black” for the other half. So, assuming they all pay the same average monthly rate, you are perfectly breakeven.
Now imagine you want to increase that growth rate to 150%. That makes your business better and more valuable, right? Heck, if you can do that and not increase your CAC ratio, you are a stuperstar! But now the percentage of customers in the red is over 50%. You are, by definition, now burning cash. This is why VC becomes more and more important as growth becomes more and more realizable. It costs short-term cash to build long term equity value, and that’s just the way the cookie crumbles for the vast majority of companies in this space.
I think the most important way to enter a new market is founder-led sales. It isn’t a volume play, but it’s the ultimate “do things that don’t scale” technique. It also ensures you aren’t putting the cart before the horse when it comes to validating that your new market is one you’re ready for (and that’s ready for you).
The nice thing about SaaS is that a relatively small sample size is usually extremely effective way to validate your market and start getting some growth engines going. I am always partial to networking my way into warm intros in the form of “product feedback” sessions (ask for advice, not money). The feedback is legitimately the important part, but if you are onto something a decent number of those will turn into customer conversations too.
One of the most important skills is the ability to listen. Good listening allows you to delegate better, trust team members more, build more empathy, and just generally avoid becoming the stereotype arrogant CEO who is short-term effective but often grows toxic and ineffective over time.
That works its way into my decision-making frameworks in a few ways:
I trust my team. I spend huge amounts of energy on recruiting and hiring excellent people who bring experience that I can trust and I feel will be additive to my skills and the strengths of the team. Then, when they’re here, they are empowered to make an impact in the areas where their superpowers are at work and give them the support system (including myself) on everything else.
I trust myself. This is the mild dose of “reality distortion field” that ends up being helpful in moments of doubt or despair. Major decisions come from a place of vision, which often requires a level of trust – validated by good listening and good data – that we are on a bigger, better journey.
Thank you so much for taking the time out to answer all the questions!
There is a ton of super tactical advice, actionable frameworks, and brilliant analogies in there — that I’m sure would be very useful for everyone.
I especially loved the water-hose example and how you phrased this: “You develop some combination of muscle memory and scar tissue over time that makes it easier and easier, but it’s really a lifestyle choice.”
Thank you, again, for sharing your hard-won lessons and insights. Hope to have you join us for another session very soon!
Thanks so much for your wonderful answers. I like your idea of “our company”. It makes total sense and you want to see the company grow and prosper, with or without you. It’s very nice to hear that RJ Metrics is an integral part of Adobe Digital Experience Cloud. I also like what you said about being risk seeking. It matches my current mental state and took a while to get there Now to balance it all and make more right moves than wrong!
Thanks again for your generous sharing. I appreciate it very much.
