AL #026: The U-shaped entrepreneur

Taking a personal lens on crypto companies.

I'm taking a 3-week break so you’ll see a couple more casual pieces from me. Hopefully you enjoy this one and if not, don't worry – we’ll be back to our regular programming soon.

There are many lenses to think about entrepreneurship.

One can think concretely in terms of problems & products.

One can assess companies as an asset by looking at markets and margins.

And one can look at people.

The people lens is interesting to me because of the well known cliche of it being the great equalizer.

Kim Kardashian noted that “we all have the same 24 hours in a day”.

Jokes aside, there is some truth to this, everyone does invest 24 hours across all their obligations and things they care about (work and non-work included – as I'm recently reminded).

Not everyone has the same 24 hours left net of obligations, of course.

The other reason it’s interesting is that almost everyone that I know feel like they are falling short of their ambitions in terms of allocating that time.

We feel like we don't get enough done in a day, week or month.

On the flip-side, we usually feel pretty satisfied that we are broadly working in the right market, on the right product, for the right company, etc.

So there's some fundamental issue in how we are allocating time and it comes from resolving conflicting priorities.

One heuristic to do this is called the T-shape.

The T-shaped generalist

Conventional wisdom talks about needing to develop a T-shape in terms of expertise.

Have a strong skillset and a good enough understanding of the necessary supporting skills.

Entrepreneurs, however, need to balance existing skills or “edges” with the need to learn something new. Except for isolated cases where companies exist to industrialize existing research, entrepreneurs have to get good at something that nobody else has done before.

So when it comes to personal expertise, the T-shape makes sense.

But when it comes to allocating focus, a U-shape has worked best for me.

Dedicate some energy towards maintaining what is working well.

And some energy towards getting good at one crucial bottleneck.

Some will critique this approach and say that Founders should focus on the things they are good that and Co-Found and/or hire for other skills. This doesn't change the equation.

If the company needs to get better at sales, the Founder either needs to learn it or needs to get better at “recognizing and working with people who are good at sales".

Either way – if there is a problem, there is a usually a new skill to learn.

So what are some counter-intuitive lessons one can draw from the U-shaped approach to managing your personal focus?

Step 1. Generate yield on your core competencies

If the Founder's core skillset is product, it doesn't make sense to use that skillset to just hire another product person and let them run everything.

Instead, think of ways to continuously exercise that skillset to coach/develop/evolve the product development practices in the company.

Think of using product thinking to enhance ways other parts of the company operate.

Consider the Founder’s skillset as a capital asset and aim to generate a continuous yield on it.

Step 2. Have confidence to improve one thing at a time

Many entrepreneurs try to improve 5 areas of their company at once without any timeframe or goal in sight: “we are doing a little more sales, we are starting to looking into search engine optimization and we are just hired a couple of engineers to fix our velocity issues”.

You can improve areas that are working in parallel, but it's dangerous to focus on taking too many areas from “zero to one” in parallel.

I've personally suffered from this problem and have to admit it often comes from a lack of confidence that the improvements will work.

If you assign a low probability to being able to improve something, it’s tempting to build a portfolio of “bets”.

Unfortunately, focusing on too many things is what drives down that probability even further.

Step 3. Find synergies between the edges and bottlenecks

If the entrepreneur is great at business development but need a better product, it's dangerous to drop those activities to focus on the product exclusively.

Instead, business development activities can be steered towards getting customer feedback, in synergy with the product development process.

The best results come when maintenance and improvement are seen as complementary.

Step 4. Don't neglect enterprise value

Eventually start-ups need to grow up and reduce their dependence on Founders to maximize enterprise value.

But, it's okey for Founders to be 100% focused on growing that enterprise value while they are working on the company.

There's a difference between operational dependence and investor value add.