I’ve moved a lot of my posts over to my new company’s site, at hirefraction.com/blog – and I’ve also started a new series there which I think bears summarizing here, called Profit 101. In it I distill the lessons I’ve learned building startups going all the way back to 1999. I’ve had some successes and some failures, but luckily more of the former than the latter! Through four major attempts (and a few minor ones), a couple of consistent themes have emerged: 1) I’m a bootstrapper by personality (I’ve never raised a dime), and 2) this causes me to have a relentless focus on profitability.

The Profit 101 series distills my experience running HiddenLevers, which I built over a decade prior to selling to Orion in 2021. I was proud that the startup produced enough cash flow to be immediately accretive to Orion’s profitability – that’s a rare thing to say about a high growth tech startup! Here’s a summary of the series so far, which I’ll update as I continue to add posts. I focus on starting up, with one eye on revenue and profitability at all times:

Profit 101 #1: Intro
Startup founders, and tech founders in particular, hear a constant drumbeat that they must follow the Silicon Valley VC playbook when starting a company. But while that approach has created many great companies, it’s not true for many companies, including one everyone has heard of: Microsoft! Microsoft was cash flow positive in every year of its existence. In Profit 101 #1, I kick off with a high level map of how to start similarly.

Profit 101 #2: How to Start
I think most founders should start fractionally, and I’ve done the same with all of my startups. With traction, there will come a decision point on when to go all in – but you’ve got to get there first.

Profit 101 #3: Year 1
Walking through the first year running my last startup, HiddenLevers, reminded me of just how much effort we put into the #1 goal in that first year – finding customers!

Profit 101 #4: Minimum Viable Revenue
Every undertaking requires goals – and a great foundational goal for a startup is to achieve Minimum Viable Revenue. Once you get there, you really have options.

Profit 101 #5: Fail Fast
Venture Capitalists are the target of much ridicule in the founder community. But there’s one VC innovation for which they deserve a lot of credit: the concept of failing fast.

Profit 101 #6: Let’s Talk About TAM
Is your target market big enough to support a scalable business? Is it so big that you’ll find it impossible to get any traction with customers? Sizing up TAM (Total Addressable Market) wasn’t just a box-checking exercise at HiddenLevers – it actually drove our decision making. I have some thoughts on how to use TAM effectively.

Profit 101 #7: Pricing and Unit Economics
Interacting with startups over the past year, I’ve been amazed at the wide range in how founders price their product – everything from free to wildly overpriced. But how do you set prices for a new product?