The One Thing

A Windup Breakdown

A Question

Weeks after the windup I was on a rooftop in New York City. The event was a founder / investor function hosted by Point Focal’s advisory firm, Sand Hill East. Andy Brown, its founder and CEO, and an early investor, asked from within the mingling,

“What is the one thing you learned from your experience?”

I knew immediately I couldn’t answer properly. It was too early in the stages of founder grief. I hadn’t finished coping with the failure. My reply was lost in the crowd. But I remember thinking the learning was cumulative, so it may have been a few things that led to the one thing.

The Point Focal story, documented here in thirty-two podcasts and 32,000 words, has ended. This, dear reader, is the final edition of Focus Signal. After developing a product, recruiting a team, raising capital, deploying to Fortune 500 institutions, and putting five years of life into bootstrapping a company into existence, when the runway ends, the landing is not smooth. Like Hemingway explains, gradually and then suddenly.

I knew I needed to go to the event, even if I didn’t know why. Sometimes you just go. Since that crepuscular evening I have spent most of my time in some state of reflection considering the question. With enough creative thinking - reading, writing, music production, exercise, and meditation - the answer surfaces.

There were a few things that led to the one thing that matters.

Time

Time is the most precious currency. In lifetimes and businesses, time is the only resource that cannot be replenished. You can raise more capital, you can find more customers, and you can build more products. You cannot create more time.

“Time kills startups. Solving problems creates businesses. Startups are in a race to solve problems before running out of time.”
- Solving an Earnings Challenge, December, 2021

Every decision should consider this dimension of scarcity. The time tradeoff. It is not a simple calculation because there are costs and benefits to speed and costs and benefits to deliberation. Some, not all, decisions are made better slowly. And some, not all, products are made better faster.

Time has a tipping point threshold. When awaiting luggage from baggage claim, as time passes it becomes more likely that our luggage will arrive. Until the point when as time passes it becomes less likely to arrive. In the early minutes, the probability of our luggage arriving is increasing. Later, beyond hours, days, and weeks, the probability is decreasing.

We need to understand the point when time’s impact on outcome inflects - from positive to negative in diminishing return scenarios like luggage arrival, and from negative to positive in situations where new information improves decision-making. Understanding duration, time’s curve, for product capabilities, customer satisfaction, and scale is to hold the fulcrum that solves temporal equations.

When time is the only currency, people are the only store of value. Ergo, with whom you work is more important that on what you work.

Systems determine outcomes by capturing all forms of leverage: technology, capital, and human. Because people create systems there is no substitute for working with great people - internally (teams) and externally (advisors, investors, partners, and customers). Startup currency and store of value, time and people, are related.

The most important function is recruiting people.

Focus

Focus is path optimization, waste allocation, and subtraction.

There are an infinity of paths to failure and one path to success. The likelihood of starting on the success path may be non-zero, but it is close to zero. Survival requires escaping failure paths for those more likely to lead to the success path. All that’s required to traverse the path maze is ruthless discipline, exacting precision, and sacrificial commitment.

Everything that does not lead to revenue is waste. The first catch is you do not know what will lead to revenue and what will not. Some waste is pure resource depletion to be identified and eradicated. And some waste is an optimization cost to be valued and happily paid. Amazon’s Fire phone was waste but so too were the exhaust fumes of its online book store: AWS. Allocate waste with care.

There are many things you can do, fewer things you should do, and fewer things still you must do. We exist in an environment transformed from the law of scarcity to the law of abundance, leaving us with few technological constraints. With sufficient creativity, most things are possible. But possibility is not rationale for execution. Subtract what must be done from what can and should be done.

Product inertia, investor gravity, and customer momentum are startup forces that pull us toward more. Toward yes. Focus is anti-inertia, anti-gravity, and anti-momentum. Toward less and no. Like organisms with survival at stake, what a startup excludes matters more than what it includes.

The second catch is that founders must do many things. Administration, financial management, HR, investor relations, crisis management, operations, and meetings. Painfully unglamorous and necessary functions. Even with singular focus, functions overwhelm. All failure paths have some combination of broad focus and suboptimal functional execution. The success path combines the narrowest viable focus with optimal functional execution.

Omit needless work.

Validation

Before growth, retention, efficiency, and margins there is revenue. Price multiplied by units. Revenue is validation. Everything else is something else.

Raising capital, hiring talent, pitching executives who gush at your product demo, signing beta users, and winning industry awards all fall into the non-validating, something else category. These milestones may be encouraging, useful, they may even be necessary signal. But they are not existentially sufficient. Misclassifying them as validation is perilous.

The third catch is that founders learn to ignore the disconfirmation of “no’s”. No, I won’t invest in you. No, I won’t work for you. No, I won’t try your product. No, I won’t take a demo. No, I cannot meet. No, you cannot have a discount. No, we will not partner with you. No.

Founders must counterintuitively ignore and learn from no’s. The no’s are incessant, so it is easy to to get excited by yes. Accept the difference between everything-yes-masking-as-validation and revenue.

Customers exchanging cash for product is the solitary validity metric.

The One Thing

Startups, like humans, are born alone and die alone. Everything in between that matters is time and people. Life is a gift. And on a different order of magnitude, being in a startup is a gift. The odds of being alive are infinitesimally small. The odds of being alive and being in a startup, through the law of multiplicity, are smaller still.

Life requires immense support. Consider the scope of evolutionary knowledge that have helped produce our living standards and lifespan. Startups require immense support too. Intellectual and emotional knowledge from teammates, advisors, and investors. Goodwill from partners and customers. All forms of courage and solidarity from family and friends. And a wife (or husband) who understands you entirely.

The depth of a failed startup abyss is deep. But it produces the same outcome as every step before failure. A new problem to be solved, albeit of a different kind.

Gratitude lifts you from the abyss. For the gift of having staked a claim on the possibility of creating something from nothing. For the reward of having been joined by believers who supported the possibility. And for the humbling feeling given to you from the ones who joined the journey. Gratitude.

We should all be so lucky to have new problems to solve. Progress of every kind depends on solving problems. As David Deutsch explains in The Beginning of Infinity, with the right knowledge, all problems with solutions not forbidden by the laws of physics can be solved, leaving a solution area under the curve approaching infinity. Happiness comes in knowing problems are inevitable and soluble.

The most common question from the rooftop investors was, “Do you feel relieved?”

Well, yes. Too close to the truth, I wondered about the question’s origin.

It came from their understanding of weight. They had lived through full lifecycles of windups as founders and therefore understood its intensely soul-crushing nature and the aftermath of silent relief.

Also from the evening, “He just wound up his business and he’s still smiling.”

The one thing is optimism.