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Weekly planning and productivity for startup founders

Nothing -- and I mean nothing -- inspires confidence amongst co-founders, employees, users, customers, and investors like planning an ambitious amount of work and then accomplishing that work consistently. So it’s critical that a founder learn the best rhythm for productivity and then accomplish what they said they were going to accomplish.

The rhythm and cadence of a BigCo is pretty well known: annual planning and budgeting, quarterly reporting and OKR setting, monthly updates, weekly sprints, and daily standups. It’s the drumbeat to the corporate world.

Many of the founders we work with come from BigCo-land and are used to this rhythm. But they immediately fall over trying to apply this cadence -- consciously or not -- to their brand-new startup. 

It fails for two main reasons:

1. There’s no urgency in this rhythm. None at all. The feedback loop is up to a year-long, and if there are minor delays throughout the process, it’s no big deal to slightly readjust. This ends up reducing overall productivity and output.

2. The turnaround time is too long. To go a month, quarter, or year without changing priorities reflects a lack of listening at the earliest stage. While I don’t want to argue against focus, there should be continuous, minor adjustments along the way.

What’s a better rhythm for a pre-product-market fit startup?

Startups should operate on a weekly cadence. Every founder should be planning their priorities every single week. Here’s how we do it at Assembler Labs. Over the years we’ve tried lots of systems, but this is, by far, the most flexible, simple to do, and ultimately leads to the highest productivity.

Carve out some time Sunday evening every week to do this. You want to start Monday morning with a bang, not by spending time planning.

Start with a blank slate and plan your goals. 

Figure out what the most pressing things are for your business: do you need to figure out why churn is so high? Build new features to help your “somewhat disappointed users” to become your happiest? Understand what channels will lead to the fastest growth? Find out who the correct buyer is in your sales cycle? Prospect and build your top-of-funnel? 

Choose no more than three high-level goals. This often looks like one goal focused on testing a hypothesis (”important”) and one goal that just has to get done (”urgent”).

Sometimes these goals rarely or never change for the first year or two. If you know your business has a virtuous cycle, you can use all or some of the states of the cycle as your top-level goals every week.

Get the most important tasks in each of those goals

Stack rank the most important tasks in each of these goals. That could be the top 3 features you need to build, or the survey you need to administer, or whatever. Whatever the real action that needs to be done goes into this step.

Get that shit on your calendar immediately

We built Motion to satisfy this exact use case, but you absolutely need to get your tasks on your calendar. If you don’t block off the time on Sunday evening, you’ll never make time for it throughout the week.

Choose ambitious-but-achievable goals

This is a critical step, which is why I break it out even though it’s really part of the scheduling step above. 

When you’re putting the tasks on your calendar, make sure you choose an amount which is ambitious-but-achievable. Here’s how I do that.

Imagine a perfect week. One where you just crush every hour of every day and are incredibly productive. What does it look like? Mark that down as 100%. Every week won’t be like that, but that’s what you’re going to strive for. 

Now, imagine what 90% of the way to perfect would look like. That’s what you’re aiming for every week. It’s ambitious -- after all, it’s almost perfection every single week. But it’s also achievable. You can do it.

So, schedule that amount of work.

Do what you say you’re going to do

That’s it, when it comes to planning. But now comes the absolute most important part: do what you say you’re going to do. 

You just planned a week. It’s Sunday evening, so get a good night’s rest and wake up in the morning ready to attack the whole week. Your job now is to complete everything on your calendar before Sunday rolls back around and you do it all over again.

I said it before and I’ll say it again: nothing inspires confidence amongst co-founders, employees, users, customers, and investors like planning an ambitious amount of work and then accomplishing that work consistently.

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The three things we ask of founders

Last week, a tweet surfaced that struck a nerve: “Becoming successful comes down to one ability above all others in my experience... doing what you say you’re going to do. It’s that simple and that rare.” - James Beshara.

It maps very closely to what we at Assembler Labs ask our founders. We started out by not being very intentional about this -- showing it implicitly through our asks, our conversations, and our feedback. (In fact, I think our first two founders wouldn’t be able to tell you these are what we ask of them, though if you asked if we cared about these things, they’d say yes immediately.)

Going forward, our goal is to be very transparent and intentional with founders about this. These are the three things we find critically important for founders to do, especially in a studio setting, to be successful.

Do what you say you’re going to do

At its core, being a founder is about getting shit done. In fact, it’s about getting more done than anyone thinks possible. Which is why it’s critical that, if you say you’re going to do something, you do it.

This also breeds trust in a studio setting. I promise you we’ll do everything in our power to give a founder the highest likelihood of success, but if we can’t trust that you’ll do what you’re going to say to do, we won’t have a very long or successful relationship.

One note on doing what you say you’re going to do: you can’t sandbag in a startup. In a BigCo, it works to say “I can only get this one project done this quarter,” then meet it, and get high marks on a performance review. But in a startup, you need to get 10 different things done this quarter. So you have to set aggressive goals and hit those goals. 

Developers (especially those from BigCos) do this worse than almost any other function. Because many developers have been trained that writing code is a creative exercise, and as such, it’s done when it’s done. But what they fail to recognize is (a) constraints often breed creativity, so setting an aggressive deadline for yourself is usually a good thing, and (b) speed is a competitive advantage.

Taking it a step further: the goals need to be based on what is required to win, nothing else. Then you have to do what you say you’re going to do. 

Be coachable

No founder is perfect. In fact, most have many huge flaws. And all make mistakes, frequently. Luckily, we’re in a sick and twisted version of extreme baseball, as Jeff Bezos explains:

“We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments.” - Jeff Bezos

So failure is okay. Mistakes are okay. Because the outcomes can be so big. But founders must still be coachable. Part of the reason why studios work is taking all of the accumulated experience of the studio over many businesses, hundreds or thousands of ideas, and multiple founders and applying that to avoid the same mistakes.

Being coachable is about being able to take critical feedback. We’re not shy about delivering feedback, which means the founder must be not shy about receiving the feedback.

Being coachable isn’t just about us delivering feedback, though. It’s also about the founder acting upon that feedback. Making changes, quickly -- or being upfront and saying they don’t believe that change is for the best and here’s why. But taking the feedback and not doing anything isn’t being coachable and is unacceptable.

A final note on being coachable: the coaching doesn’t just come from us in the studio. It must also come from yourself. If a founder isn’t constantly learning and show passion for the industry and for the process of startups, they’re not fully coachable.

There’s a wealth of information available on startups today. It’s almost insane and unbelievable. We live in amazing times. Founders should find it so easy to read (Twitter, books, articles, etc), listen (podcasts), and watch (YouTube, conferences, movies, tv shows). They just have to do it.

Put in the time and the effort

Which brings us to our last point: you have to put in the time and the effort. There are no shortcuts to building startups. 

There’s a “pure number of hours” aspect to this, which is always hotly-contested. At Assembler Labs, we focus on output first, but we know that output is highly correlated with number of hours on the input. If you don’t believe this, tell us how you plan on making up for it. If the business requires the speed of working 60-80hrs/week regularly, but you’re only willing to put in 40hrs, we want to know how you’re going to get the same output in a shorter time. 

The follow-up question will be “why aren’t you willing to put in more hours?” This question honestly has less to do with the hours themselves, and much more to do with understanding whether or not you’re all-in. Mentally and physically, our entire energy is in our studio and the companies that we spinout. We believe it’s required, and it’s also what we love. We only want to work with people who feel the same.

It’s likely that putting in the time and the effort will mean pushing yourself harder than you’ve ever pushed before, most especially if you come from a BigCo. It will require changes to your life. We expect you to take it upon yourself to make those changes. We’ve seen this mean moving in with roommates, moving out from roommates, going out less (not a problem in COVID times), etc. We don’t want to prescribe your life, of course, that’s on you. But we know it takes serious effort and may mean making changes. If it does, we expect you’ll put the effort in to doing so.

Closing thoughts

These are three really simple things we expect of founders. Just do what you say you’ll do, be coachable, and put in the effort and time. That’s it. 

In practice, though, they are grueling and extremely difficult to navigate and implement. We expect hiccups along the way. We screw these up ourselves regularly, and fight to get them back.

Starting a startup isn’t easy, and we don’t try to make it seem glamorous. We loathe startup theater: the things that look cool (going to endless conferences, tech bro culture, etc) but don’t actually move the needle. I’d rather meet fewer potential founders extremely hungry to succeed than more founders who just think startups are cool. 

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The First Year

I don’t think non-founders will ever truly understand what it takes to get a startup off the ground unless and until they take the plunge themselves. It is, truly, a herculean effort. And it’s why, I believe, hustle culture should not have a bad rap: it’s not for everyone and should never be forced, but for those that want to start something, it is required and should be celebrated.

I’ve been around enough startups at this point to know that, without exception, the first year of a startup is absolutely, mind-boggling brutal. The creativity+grind required to validate an idea, build a product, market, sell, and ultimately even just get your first dollar in revenue is punishing. And typically it happens with almost no money or help.

The lore of startups typically involves passing mentions of the early-days (e.g. Airbnb selling boxes of cereal for the 2008 election) and the strategy and execution required to get to the inflection point that allowed the business to turn a corner. But rarely do we hear about the day-to-day decisions of this early time. The bulk of the story comes after the inflection point has hit and the company is now a rocketship.

I think it’s far more powerful for future founders to hear about that first year, when the company was failing left and right, experimenting, and seeing what works. The how-to, playbook material in this time period is a goldmine, and should be studied much more closely than the scale-up period that comes after.

This is something I’d like to put more time into, and prepare founders with better knowledge of how to get to the inflection point faster.

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On cold emails

I love cold emails. I’ve found that a good cold email converts way better than you typically hear. Sure, use a warm intro whenever possible, but don’t think that it’s required to reach out to someone you don’t know, but want to meet.

In fact, the absolute best in the world rely on cold emails to get what they want. They don’t wait around looking for a way in, they just make it happen. 

To illustrate the point, here are three stories of cold emails. Two of which were cold emails to me and one of which was a cold email from me. All of which garnered response from the recipient. (To be clear, only one ended up with a deal... but the cold email wasn’t the reason the other two ultimately failed... blame me for that...)

Bill Gurley, Benchmark

In 2013, less than a year after we made our pivot to providing an enterprise SaaS product to app marketers, Bill Gurley reached out... cold. Simple, straightforward, and to the point. 

Why did it work? For two reasons: (a) everyone knows of Benchmark (and Bill); and (b) he offered to sell my product for me. In other words, he had the brand to illicit a response, and provided me value up front. 

Me to Chris DeVore, Founder’s Co-op

Chris has become a mentor to me over the last dozen years, and I often to go him for advice. He wrote the first check into our business in 2009 (not Openomy), and helped guide us at every step. But the relationship started via this cold email. 

I can’t say I’m particularly proud of this email looking back on it, but, hey, it worked to start a relationship. If I were to change it today, I’d make it shorter, less wishy-washy, and talk a bit more about why FC intrigued me.

Marc Andreessen, angel investor

Sadly, I don’t have a copy of this one as it happened on an old email server I no longer have access to. But Marc Andreessen reached out cold about Openomy (the project listed above in the email to Chris) sometime around 2005-2006. He was working on Ning at the time, and seemed as though he was interested in becoming a more active angel investor. A16Z was certainly not a thing yet.

Since I don’t have the exact text, it’s hard for me to say precisely what prompted the response, but I remember it being short and to the point: I’m Marc Andreessen, I like what you’re doing, are you looking for investors?

It’s pretty obvious, again, why that one would work well. After all, he invented the browser.

So, don’t be afraid of cold emails. If you have a great connection, definitely use it. But if you don’t, just work on crafting your cold email skills and take a shot. Especially in venture, the investors who say they don’t invest in deals that come to them via cold email are not the best investors. Just look at Bill Gurley and Marc Andreessen as your examples.

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Why your product backlog is a dumpster fire (or, why completeness and correctness are the antithesis to a good backlog)

I was inspired to write this post by Brian Norgard’s tweet: “Delete your product backlog every six months. If it’s important, it will emerge again. If not, you’ll save your team the mental anguish of rehashing something that will never see the light of day.”

That message rings true because most of the startup product backlogs that I see are dumpster fires. There are three easy fixes for startups to take back control of their backlog and get real shit done to build extraordinary experiences for customers.

Here’s how I usually see it go down: you, a diligent founder, put every single task you need to get done into your product backlog. Your vision depends upon Big Feature X that might take a month to complete, so that goes to your backlog to be prioritized and, ultimately, completed. But you also had that one user point out that one little bug during onboarding that only shows up the first time they use the product and was worked around with just one extra click, so you added Tiny Bug No One Really Sees Y to your backlog, too. After all, the world might end if you forget to record something.

So everything you need to do is in your product backlog. No exceptions. You are a good product founder, who feels proud to have both correctness and completeness in your product backlog.

Every few weeks, you groom your backlog, just like a diligent founder should do. You make sure each task is still relevant, there are no duplicates, and it’s well prioritized. Since you’re a tiny team, you include everyone in this process. It starts out really fun, because you’re laser focused on what matters and there are significant new learnings each time.

But within the span of a few months, this becomes one of the least productive exercises you do. Nothing is gained from it, because very little new things matter. It mostly just services to repeat the big things you know you want to do but don’t have the time for and the little things you know you’ll never get around to doing, either. 

You know you’ve hit this stage when people start dreading the grooming meeting, even if they aren’t telling you. Eyes glaze over. At a certain point, you start saying, “okay, let’s stop there -- we know we’re never getting to anything below this anyway.”

In short, within a span of just a few months as a super diligent product founder, your backlog went from being the place to see your future roadmap -- both complete and correct -- to being a dumpster fire of things that don’t matter that no one wants to look at.

What does a smart product founder like you do, then? Three main things:

First, do what Brian says, and delete your backlog entirely every 6 months. Anything important comes back real quick. Anything that bothers users enough comes back real quick. I promise you will have fewer regrets doing this than you think.

Second, and more importantly in my mind, get it out of your head that your backlog has to be 100% complete and correct. Having everything you need to do or have heard from a user -- regardless of importance and size -- is the fastest way to generate a useless backlog. By default, your backlog does not need to include all the things. Just ensure it includes the things you routinely hear or know you need to do... soon. 

As a rule of thumb, if your backlog is >6mo, it’s probably too long. Remember, at this scale, you’re still searching for product/market fit. What you know to be true today is likely not going to be true in 6mo, so trying to account for anything longer is a waste of time, energy, and team morale.

Lastly, follow the rule that a small task should be completed immediately, not added to a list to be done later. If it’ll take <30min, and you and your engineers know how to do it already, don’t add it to your backlog. Instead, take all the time that you would have spent discussing it during grooming repeatedly for the next three months and just do it now. You’ll thank yourself later, and, surprisingly, your product will feel noticeably better as a result.

If you do those three things and don’t worry about perfection, you’ll go faster, you’ll be happier, you’ll do more important work, and your customers will notice. Don’t let your backlog become a dumpster fire.

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Business strategies hidden in plain sight: Speed as a defensible strategy

Sometimes, there are defensible business strategies hidden in plain sight and rarely spoken about. They often come up as important or interesting tactics within a business, but never as defensible strategies. My partner Patrick wrote about how design is a strategic power, citing Clearbit’s use of simple, effective, concise design in all aspects of their business. It was a compelling argument of a business strategy hidden in plain sight. 

I think speed is another defensible business strategy hidden in plain sight.

I’ve written multiple times on how I believe speed is a competitive differentiator for startups. But lately I’ve been thinking it goes a step further: the companies that figure out how to build speed as a core process are able to use it as a defensible strategy.

Using 7 Powers lingo, speed is a Process Power. The company that deeply ingrains speed into its culture is able to reliably deliver a superior product. That means shipping more value to customers, responding to user requests more quickly, and finding out what people want before anyone else.

What makes speed so interesting as a defensible business strategy is its compounding effect. The organization that builds and maintains speed as a process will, over time, increase its lead exponentially as it grows. 

We see this at companies that have figured out how to apply speed at scale. Facebook is the most obvious example: the short time it takes for them to go a different direction or add a product means they extend their lead more and more over time and fend off disruptors. This has happened with mobile, stories, video, etc. 

When in doubt, go faster. But when possible, find ways to make speed a cultural value that can scale with your startup.

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Separation Week and the Formula for Success

I like to think of the week between Christmas and New Year’s as a free week. Most people are out of the office, whether on vacation or just enjoying time off at home.

Which means that most of your competition is sitting still. It’s essentially a rare week where you can get ahead simply by working. A week where you can separate from competitors. A Separation Week.

Which brings me back to the one topic about which I’d write, if I were to ever write a book. My Formula for Success (which I first put down in writing in 2017).

It’ll never get old to debate whether you have to work long hours at the expense of other aspects of your life in order to be successful, but it’s popping up again this week in Startup Twitter. 

That debate continues to miss the point for me (though I firmly believe the answer is yes, you do have to work long hours). It misses the point because what matters is what makes you successful, which I believe is a simple formula:

(Work Output) * (Strategy) * (Luck) = Success

You can work 40 hours/week if you have a strategy that is orders of magnitude better than your competitors or if you’re extremely lucky. You can work 40 hours/week if you have the same strategy and similar amount of luck, but are able to complete 10x the amount in 40 hrs/week as your competitors complete in 100 hrs/week.

But, the fact is, you have to produce something. You must produce quality work output. In the real world, it’s rare that your strategy is so much better than your competitors that you can afford to slack in your work output. You aren’t so much luckier either. 

So, all things being equal, yes, working more will lead to better outcomes. It is what it is. Suck it up. Startups are hard. Harder than you can ever imagine, actually. If you want to make change in the world and/or run a successful startup, expect to work long hours. If you aren’t willing to do that, get a “normal” job -- it’s not a bad thing to do.

And, so, in this separation week, and heading into 2020, I wish you all the success in the world.

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Capital efficiency

Most people know I’m a huge proponent of venture capital to help companies scale. I have no religious objection to raising venture and think, by and large, it’s a huge net positive to have more capital in the startup ecosystem. Don’t take this post as some sort of condemnation of venture. It’s not.

At the same time, I’m becoming increasingly enamored with the next generation of companies being built with extreme capital efficiency.

~11 years ago, when we started our first company, the tailwind behind startups was this: as technology prices are falling and cloud infrastructure is growing, founders no longer need millions of dollars to get off the ground. Instead, they can launch a company, validate the idea, and build a product with almost no money.

What wasn’t figured out yet, though, was how to scale efficiently, without massive capital influxes. So, the last generation of startups got off the ground cheaply, but then proceeded to raise hundreds of millions of dollars across multiple rounds regularly on their way to scale.

A decade on, however, and it seems as though founders are beginning to figure out how to scale efficiently, too. 

The first major example I remember is Atlassian: from nothing to $300m+ in revenue and an IPO with zero venture dollars going to the balance sheet. Today Atlassian is worth ~$30b and the two founders continue to own almost 30% of the company... each.

In the last few years, though, the number of companies scaling with minimal capital is growing substantially. And this is against the backdrop of no new distribution channel at scale (more on that in another post at some point).

Here are just a few examples:

Notion: raised a small round early-on, became profitable, and raised just $10m on an $800m valuation.

Webflow: raised a solid Seed, became profitable, and waited 5 years before raising >$70m.

Calendly: reportedly raised just $350k before becoming profitable. Today, Calendly is extraordinarily profitable on $30m+ in revenue.

1Password: Bootstrapped with a focus on profitability from day 1, they raised $200m 14 years after founding (with a majority of this going to the founders, not the balance sheet).

GitHub: Also bootstrapped, they raised no money until a $100m round at a $750m valuation. They then raised another $250m at a $2b valuation before selling to Microsoft for $7.5b.

From an outsider’s perspective, there are a few megatrends that these companies took advantage of:

SaaS for SMB taking off. 10 years ago, the market for SaaS was beginning to explode. But mostly that was happening in the enterprise sector. In the last few years, the market for Saas in SMBs has caught up. 

Bottoms up sales. Likewise, when selling to these SMBs, you can’t use the same playbook that the last generation used. As far as I know, every one of the examples I listed above have adopted a bottoms up sales strategy, where land-and-expand is driven by getting a small number of individuals at a company using your software and then getting those individuals sharing with their team and company.

Inbound marketing. With small ACVs and a bottoms up approach, these companies can’t afford to hire large sales teams. And consumers don’t want to be sold to anymore. So these teams focus on organic marketing.

Product experience. Consumers care more deeply today about the overall experience of products than ever before. These companies have all built fantastic products that are simple to use and delightful. None are just functional. They all bring about a “wow” reaction.

I believe we’re in the beginning innings of each of these megatrends, and there are far more companies to be built using this playbook.

I’d love to learn more about each of these businesses and the nuts-and-bolts of what allowed them to scale so efficiently. If you have any good resources or contacts, please send them my way.

I’m excited to dig in further to these companies, which I think will stand up as the model for company building. Not only will they change the game for founders, but they’ll change the game for venture as well -- round sizes, ownership stakes, terms, will all change as a result of this capital efficiency.

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On my carbon emissions

I tweeted a few things last weekend about my greenhouse gas emissions and carbon offsets. It seemed at least a few people enjoyed it, so I figured I’d repost much of it as a blog post, with a couple additional thoughts.

Recently I became interested in my personal greenhouse gas emissions and ways to reduce it or offset it. I learned a few things that surprised me in the process.

I started at the highest-level (the world) and worked my way down to my own emissions, to get a sense of how everything fits together.

To start, is the US responsible for most greenhouse gases in the world?

How does the US compare? Is China really as terrible as we say they are?

Well, yes, China is pretty bad. The worst even. China is responsible for over a quarter of all emissions in the world. But the US is horrible, too. We're number 2 and responsible for about 15% of all emissions.

As my friend Kevin Nakao pointed out, China has a population of almost 1.4b people, while the US has under 350m. On a per capita basis, then, the US looks pretty horrible.

What drives emissions within the US?

If you listen to some politicians, we need to stop eating meat immediately because of the impact on the climate. Is that true or false?

Well, actually, transportation is the driver of greenhouse gas emissions in the US. 

Inside transportation, is that our mega-trucking industry, or your everyday car commuting to work?

Okay, so the biggest driver of emissions within Transportation is your personal car.

Everybody buy a Tesla...?

If my personal car is the biggest driver of emissions, should I immediately go buy a Tesla? 

Well, not really. For a few reasons: (a) they’re very expensive relative to the cost of carbon offsetting; (b) depending on location, the grid may still be very dirty; and (c) if you can afford a Tesla, I bet your emissions aren’t being driven by your car.

Teslas are expensive

We all know that, though, right? But how about this: I drive a 2010 Ford Fusion, purchased a little bit after starting my first company. It gets decent gas mileage (30+ MPG on the highway) and I drive somewhere around 10,000 miles/year. 

I looked it up, and that equates to about 7,500 lbs of CO2 emissions. To offset it, that’d cost less than $50/yr. By comparison, it’d cost me roughly $3,000/yr in incremental costs for a Model 3.

In other words, for the same price as a Model 3, I could offset the carbon from roughly 60 cars.

Michigan’s grid

And, depending on where you live, the grid may not be producing electricity cleanly anyway. In Michigan, by default (see more on this below) DTE is roughly 20% renewable sources, a majority on coal, and a goal for 100% carbon neutral by 2050. 

But, if I lived in Washington, it’d be primarily hydroelectric and clean.

It’s not your car

This is a gamble, but I bet the majority of people who could afford a Tesla also travel a decent amount via airplanes. While aircraft only represent 9% of Transportation emissions, if you are among the smaller percentage of people who travel regularly, they are likely a huge percentage of your carbon emissions. 

At my peak, I was flying just around 100,000 miles/year. On average I’m probably closer to 50,000 miles/year. In a normal year with 50,000 miles, I’d rack up around 60,000 lbs of CO2 emissions. That’s 8x my car. Which makes flying my biggest transportation driver of emissions.

All these things combine to show that just buying a Tesla really isn’t going to make much of an impact for me and is going to be way less cost-effective than other means.

Why is this so hard?

None of this is earth shattering. Anyone could research it. But it wasn’t easy or obvious. It took me a bit to wrap my head around it. 

My biggest takeaway is that if I want to manage my greenhouse gas emissions, I have to do it in a very personalized way. There is no one-size-fits-all in this world. Everyone’s energy usage is different in many ways and requires a different, personalized solution.

I’m honestly pretty shocked there isn’t anyone out there making this easy to understand. And easy to offset, month after month. There are some cool companies trying, but none are easy enough. 

To give some perspective on just how crazy this can be, after posting my tweets, someone responded with Clean Choice Energy, a company that allows me to choose a renewable supplier from my electricity company. I didn’t understand that at first, but it’s pretty cool. It then led me down the path of seeing what DTE offers. Which is when we found MIGreenPower, a program from DTE where you can choose to pay some more money for (up to) 100% renewable energy. So, in Michigan, you can get renewable energy, after all. It looks like it’d add about $5-10/mo for an average-sized 2-bedroom apartment.

Patrick and I would love to start a company in the energy space. We’d love to help people easily navigate this world and make better choices to help the environment. The pieces seem there, but putting them together is not simple at all. 

If you have any ideas or want to work with us on this, give me a shout.

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Detroit startups and the role of nonprofits vs private cos

Recently, we were having a conversation with an awesome new individual from the Detroit startup ecosystem about ways to support the ecosystem further. While the conversation wasn’t about the private sector vs public vs nonprofit per se, it got me thinking about the roles of each.

It’s obvious to me there’s a role for each sector in the startup ecosystem, but it isn’t obvious what the right roles are for each. My guess is that the default should always be the private sector, not the public/nonprofit sectors. In Detroit it often feels like the opposite is true, with nonprofits and public sectors sucking up a majority of resources and dollars.

Detroit (and Michigan as a whole) is hungry for more startups and a bigger startup ecosystem. They create jobs and diversify our economy. Plus, corporations in the area are hungry for more talent -- especially technical talent -- and view startups as a way to bring that talent to the area. And Detroit is full of foundations supporting the ecosystem. 

As a result, it’s normal to see corporations fund a nonprofit to help startups. It’s clearly normal to see foundations do the same. The city and state economic development corps fund plenty of nonprofit initiatives as well. It seems far fewer of these fund the local private sector, though.

Ultimately that puts an imbalance, in my opinion, on the ecosystem away from the private sector and toward the nonprofit sector. And, as a result, incentives are misaligned early and often. These misaligned incentives appear to help the ecosystem, but can often be detrimental to the long-term success of building large, fast-growing businesses.

As an example, a nonprofit might have the mandate to help foster and teach entrepreneurship in the city. Maybe they’d create programs for potential founders to come in and learn how to write a business plan. Or maybe they’d host events for founders to meet each other. They’d generate press and publicity about the startup ecosystem.

Those are all good things in a vacuum. 

But the incentives of a nonprofit here would be to continue to drive attendees to their programs and events. This “proves” their worth to the foundations or corporations they are funded by (and how they will continue to be funded).

As an example of how this could devolve, they then might start running events that hold no value to fast-growing, soon-to-be-large companies, but do hold value to people trying to open small businesses. Small businesses are worthy, for sure, and should be supported, but they’re decidedly not startups. There’s more small businesses than startups, though, so the nonprofit would view this as a success. As a result, this nonprofit soon begins to focus on small businesses almost exclusively. Startups are subsequently starved of the resources.

Even nonprofits that remain focused on fast-growing startups are subject to this misalignment in incentives. They still have to show broad impact to their donors to keep their funding alive, but they don’t have to create winners (i.e. big businesses) in order to do so. 

So, there’s a role for nonprofits in startup ecosystems like Detroit. We should support these nonprofits. But, at the same time, there are private companies whose incentives are far more closely aligned with the missions of startups and growing big businesses. 

In Detroit, it feels like the pendulum has swung too far towards nonprofits and/or public sector help for the startup ecosystem. Great nonprofits are doing great work and should be celebrated (and this post should certainly not be interpreted as picking on any nonprofit). But there are not enough for-profit organizations with aligned incentives for startups. We (Assembler Labs) like to think we’re one. There are a couple others (investors, for-profit accelerators), but there aren’t enough. 

Corporations hungry for talent and innovation should fund more for-profit organizations. Foundations should be willing to see their efforts go to for-profit options. Economic development corps should find ways to enable for-profit companies to succeed further. Hard, but doable. 

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The Rabbi Test

At Assembler Labs we believe that many things can be taught, but some things can’t. One of the things that can’t be taught is drive. And we believe drive is a critical and necessary attribute for a startup founder.

So when we’re thinking about working with a founder, we evaluate their drive. As we’ve been doing this more and more over the past year, we’ve stumbled our way into something I like to call “The Rabbi Test.”

Judaism, as compared with many other religions, does not proselytize. And, more than that, if one tries to convert, they’ll be turned away. Typically multiple times. One must show their dedication to conversion before a Rabbi will proceed with the conversion process. The Rabbi is searching for drive to become Jewish.

For us at Assembler Labs, we hear many interesting pitches from great potential founders. We give our honest feedback and try to give a productive first step: “if we were in your shoes, the first thing we’d do is talk to 50 potential customers and learn about whether X or Y is more important.” 

Our goal is twofold: (1) give valuable feedback and advice to help their business move forward; and (2) test their drive on their own.

Around 80% of founders never come back after this first step. That’s okay. It’s super helpful for us, hopefully likewise for them, and maybe they’ll come back in the future. 

The 20% of founders that do come back almost invariably come back with progress and an indication of drive. We chat through the progress and try to be helpful again, giving them another piece of advice on how we’d move forward and send them on their way.

Again, around 80% of the founders don’t come back after the second meeting, leaving just 4% of the original founders coming back. At this point, we’ve seen their drive, we’ve seen their work progress, and we’ve shown them how we think about problems. 

In this way, it’s like a Rabbi turning away potential converts to Judaism. Like many things in Judaism, the traditions hold a valuable lesson for life. The Rabbi Test is a great way for us to evaluate drive and provide value at the same time. 

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Podcast notes: Capitalisn’t - Are Stock Buybacks Evil?

I had a conversation with a friend recently who made the argument that corporate tax rates should actually be reduced to 0% (effectively making all corporations pass-through), but that dividend tax rates should be significantly increased, and that stock buybacks are just a dividend to investors and should be taxed accordingly.

It was the first time I had ever heard the argument to tax buybacks, but it makes a ton of sense.

A couple days later, Capitalisn’t, a podcast from my alma mater, University of Chicago, focused on the issue of stock buybacks. Capitalisn’t is a fun look at what’s going right and wrong with capitalism today (and, potentially, how to fix it).

This episode is about whether stock buybacks are evil, which is a narrative pushed by some elected officials.

Some notes: 

A buyback is just a dividend. Duh.

Loopholes allow investors to not pay taxes on buybacks, for now or ever (think: death).

Buybacks came to the forefront thanks To Richard Nixon in the 1970s, by imposing wage control and dividend control.

$1.2T of cash was returned to investors of the S&P500 in 2018, about 2/3 of which was from buybacks.

Politicians like Bernie Sanders and Elizabeth Warren blame stock buybacks for lack of wage growth. Generally speaking, they want this money to go to further investment into the company rather than back to the shareholders.

[My note: This makes no sense to me as the way to solve our wage issues, which the hosts also discuss.]

If anyone has any good resources to learn more about the impact of buybacks, I'd love to read them. Send them my way!

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On high standards

We have high standards for the startups we work on at Assembler Labs. We believe we must have high standards because our mission in the world is to bring to life the best new companies in Detroit and Michigan. Great companies can only be built with excruciatingly great execution.

Our standards have only grown with time, too. In part because we’ve leveled-up our game, and in part because others have leveled-up their game, too. Table stakes for great startups have risen. Ten years ago, an MVP could look like trash and be barely functional. Today, design must be great, UX must be stellar, engineering must scale, and, most importantly, your hiring and your strategy has to be dead-on. These are required if you want to win.

We see lots of people coming (or trying to come) out of BigCos and move to startups. Impressing upon them our level of standards is one of our most important jobs early on.

In a BigCo, standards don’t mean anything. There’s virtually no incentive to have high standards at a BigCo. At a BigCo, your moat (real or perceived) is already built and the pressure is off (correctly or not). Your personal goals aren’t to build the best business, your goals are for the most personal gain. And it’s easier to win through politics, processes, or just plain laziness. If you can play politics better, you don’t need high standards. Heck, you don’t need any standards if you can play politics really well. Or, if you can fall back on pre-defined processes, you just follow those steps and use them as an excuse for why your standards are low. Or, you just do nothing and coast along, assuming no one will ever find out (they probably won’t).

But in a startup, standards are all you have. There’s no one there to push you except yourself and your co-founders. If you don’t have impossibly high standards and don’t push yourself and your team further you’ll die before you ever lived.

Patrick and I push each other every day. Patrick pushes me to care more about design and UX. Design and UX are hard for me. I don’t like to have high standards there, because it’s hard for me to live up to those high standards. Patrick doesn’t let me off the hook. Everything we do looks, feels, and works better than the previous thing we did. Likewise, I like to think I push Patrick to go even faster than we already do. I believe speed is a competitive differentiator in startups, so we always want to go faster, do more, and push the businesses forward. If we can be faster today than yesterday, we’ll be even closer to winning.

We push the same high-standards on the entrepreneurs that we work with. We try to do it lovingly. Hopefully they appreciate this about us. It’s something we believe deeply.

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Podcast notes: a16z - Entrepreneurs, Then and Now

It’s pretty great to be able to hear regularly from Ben Horowitz and Marc Andreessen of a16z. It’s really great when Slack CEO Stewart Butterfield subs in to interview them.

In this episode, we hear about what what Ben and Marc were thinking about ten years ago when they started their firm, and compare/contrast that with what they see today.

There’s lots of good insights in this episode, but one thing really struck me. I’ll focus on that in these notes. Go listen to the episode if you want more gems.

They quote Jeff Bezos as saying:

“We rate people on the inputs, not the outputs.”

Specifically, they discuss what Annie Duke calls “resulting.” I haven’t read Annie’s book, Thinking in Bets, yet, though it’s on my Book Queue. But, briefly, resulting is when you come to the wrong conclusion for a probabilistic bet that didn’t work. According to Annie, you need to separate process and outcome.

I absolutely love the way that's phrased, "rate people on the inputs, not the outputs."

In our work at Assembler Labs, we see many first-time founders and many founders who have failed as well. We haven’t been thinking about it in terms of "rating people on the inputs, not the outputs," but that's intuitively what we've been trying to do.

We dig into how they think through problems. We try to understand how hard they’re going to work on problems. We try to figure out whether or not they're going to win in the absence of previous experience showing us that they have. But we don't necessarily care whether or not they were successful at solving those problems.

Add another to a long list of pithy and insightful quotes from Bezos.

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Podcast notes: Acquired LP - Building tech and product for marketplaces (with Rover cofounder Phil Kimmey)

Acquired is one of the best podcasts in startup-land. Profiling a different exit (M&A or IPO) each episode, the hosts (Ben Gilbert of PSL and David Rosenthal of Wave Capital) do an amazing job of going back in time to describe the full lifecycle of the company in question, from inception (or, in some cases, far before inception) to exit. Give it a listen, if you don’t already. Acquired also has a premium, subscription based, podcast, Acquired LP.

In this episode of Acquired LP, the first six months of Rover, the Airbnb for dogs, are discussed with co-founder Phil Kimmey.

Those paying attention may know that Rover helped spawn Pioneer Square Labs, a startup studio in Seattle, similar to what we’re building here in Detroit with Assembler Labs.

Notes from the episode (most of below are quotes or paraphrasing from the podcast):

In the earliest stages, buy when you can. Developer services are cheap and frequently priced by usage, so why build when it’s so cheap early on? Focus on speed. [My note: Speed is a competitive differentiator, so I agree, if you can spend small amounts of money to increase velocity, do it. That said, I’m super cheap and really focus on what speed I’m getting.]

Going down the microservices path early is almost always a mistake in the early days. It slows things down, especially with bringing on new developers and getting development environments spun up quickly. It’s only now, with ~200 people in Engineering, where modularity and services are becoming necessary. [My note: Agree. Again, speed is a competitive differentiator. I love Phil’s focus on speed over all else here. It’s not sexy in the developer community to say you’re building a monolithic web app instead of 100 microservices, but it works.]

Airbnb Plus has been a major contributor to Airbnb’s revenue, by providing even more beautiful and sophisticated listing pages. Ultimately, features like these can increase take rate (or take) signficantly for marketplaces.

Most marketplace businesses go out with too much product. Start with less than you’d expect. Narrow your focus, there are only a few features that matter to marketplaces. The #1 mistake marketplaces make is overbuilding their products, and some of the best marketplaces are focused on removing features that are not used frequently than adding more features. You’re better off spending time on the features 80% of users use.

My takeaway from this episode is that Rover dialed in, from day one, the importance of speed in a marketplace business. Virtually everything they discussed was a way to ensure that they had the most impact on their business as quickly as possible.

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Podcast notes: Numbers Geek - America's middle class

[Note: I listen to many podcasts now, mainly on my solo, gas guzzling commute from the suburbs to Detroit every day. I've noticed the amount I recommend podcasts and discuss them has increased drastically, too. For a while I've wanted to write quick notes on episodes that stick out to me, so here I go.]

Numbers Geek is a podcast by the folks at Geekwire and USAFacts (Steve Ballmer's initiative to bring transparency to our government). It's always fun and insightful, and a great data driven way to look at what is happening in our world, without all the biases and political or media circuses.

This episode went deep into the shrinking middle class. The news talks about the middle class daily, and politicians talk about a shrinking middle class. But what does it really mean?

According to Ballmer and Numbers Geek:

Since 2000, the income for the middle class has declined.

We are making up for this decline in income by providing government subsidies. Which, by definition, creates a deficit.

A shocking 43% of middle class households in America are single people without children. And the average age of that group isn't young -- it's 40. That group, along with seniors over 65, are the fastest growing middle class groups in the country.

The average person has absolutely no idea what constitutes middle class in this country. We talk about it all the time, but have little idea of what we are debating.

The hollowing of the middle class has been even worse for blacks and other minorities as it has been for whites.

If you're interested in the economy at a macro level in this country, listen to this episode. I promise you'll learn something interesting.

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Sugar

I’m not a crazed health-fiend. I try to live a healthy life with exercise and a moderate diet. 

But the one thing I’ve always been horrible with is sugar. If it has sugar in it, I love it. I’d bet, up until recently, I consumed 40g+/day of added sugars (and, mind you, I don’t drink pop/sugary-drinks). Far from ideal.

Then I went to the cardiologist. Heart disease runs in the family. Men in my family often thought they wouldn’t live past 50. I have the C;G allele in the rs1333049 gene, associated with a 1.5x increase in heart disease. And I have the worst of the worst in terms of cholesterol. 

The cardiologist told me, “your heart looks great, I’ll keep you alive until you’re 90 if you can find a doctor who will guarantee the same with cancer and if you stay off the road when other drivers are texting. But, if you don’t get your bloodwork in check in the next 6mo, I will.”

So off I went on cleaning up my diet and adding more exercise. On went the Apple Watch for more tracking and data. 

Most importantly from a diet perspective for me: out the window went sugar. Sugar is also known to have correlation with heart disease. I’m probably averaging around 5g/day of added sugars now. It’s not easy. Leave a plate of cookies in front of me for the day and I can feel my willpower drop throughout the day. (Side note: It’s given me a whole new perspective on addiction and recovery. You people are amazing.)

That’s why I find it really cool that research is suggesting we can re-train our brain on these things. Research at Drexel University is showing that games can actually re-wire us to not consume as much sugar. I suspect we’re just at the leading edge of this. 

Over the last ten years we learned how to use gamification and psychology to drive user behavior for the bad. I hope over the next ten years we use what we learned for good. Here’s one example.