Author: johnhooley

Around The Mountain

What would you do if you couldn’t grow the number of customers your business serves?

For many businesses, new customer growth is how the business grows. Demand determines the size of the business and its concurrent impact.

However, a reality that every business faces is that demand is limited. Even Amazon, a corporate leviathan that sells everything to everyone, has a limited number of customers that they can acquire.

Yesterday, I did market estimates for a new enterprise that I’m partnering on. My partner had thrown out some pricing numbers for a service we’re developing and I wanted to identify what the impact would be for different price points.

The formula looks like:

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Adding things is tough.

If you look at your business, adding customers, employees, products, marketing, and systems all require a significant series of investments. And once you’ve added the thing, the return is inconsistent. Even if you’re scrupulous in your execution, you rarely get home-runs. Mostly, you get a mixture of base-hits and strikeouts. It often takes months and years to see your new addition bear fruit.

Subtracting things, on the other hand, is much easier. It’s typically quick, simple, and has an immediate and positive effects. You cut a bad-fit employee and profit jumps up,  you fire a bad-fit customer and life gets easier, you kill an unproductive service and suddenly the business is more valuable.

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What if your criteria for what objectives you would take on was that they were easy?

In the book Scaling Up, author Verne Harnish, uses a graphic to challenge the traditional mentality of entrepreneurship. He replaces the model of summiting a mountain with a river that flows downhill. His point is that nature chooses the easiest route and businesses should too.

Easy is an interesting criteria to play with because so many things in business are hard.

One of the consequences of using easy as a filter is that it curtails over-investment. If something doesn’t easily work, then it’s abandoned. More initiatives die because they ask too much, but the ones that remain are profitable.

Additionally, easy as a criteria engenders thinking because thinking is easier than doing. Thinking is often helpful in business because it anticipates problems and identifies opportunities. Both of which are missed when you’re heavily involved in doing.

Whether easy as a decision filter is right for you, it’s important to understand that we all have internal priorities that shape our decisions. Yet, we tend to be unaware of them.

Consciously choosing how you’ll make decisions, even for just a season, can help expose your inherent priorities and their impact on you and your business.

Stepping Into The Casino

One of the inherent challenges of entrepreneurship is that some initiatives you launch will require time to have an effect.

For example, I spoke with an agency owner last year who was developing leads through LinkedIn. He said that he posted for almost a year before he started to see any business from that channel.

What makes time a challenge is that often the initiative you launch leads to a dead end. There are many marketing channels that the agency owner I talked to could have invested in that would not have had any impact after a year.

And it’s even trickier to navigate because it’s easy to slip into sunk cost fallacy where you assess whether to keep investing in an initiative based upon how much you’ve already put into it.

It’s a gamble. Knowing it’s a gamble is helpful, because gamblers have rules to manage risk. They decide in advance when it’s time to get up from the table and cash in their chips.

For anything significant you’re starting, it’s helpful to set some boundaries. Answer questions like:

  • How much will you invest and for how long?
  • What signs do you need to see to merit further investment?
  • When will you move on? 

Just understanding that you’re stepping into the casino will help you to better navigate the data you collect as your investment resolves.



Paper Chains

Many years ago, when I was freelance developer, I became interested in building a product. As I investigated what that would take, I discovered that the success of the product would hinge on my ability to market it. I was a great developer, but I had no marketing experience.

I emailed in this question to, “Startups For the Rest of Us”:

Do I have to learn marketing? Or can I just find an excellent marketer and partner with them to launch a product?

My rationale was that it’s more impactful to be a specialist than to try and master another field. Rob Walling and Mike Taber, both experienced software entrepreneurs, responded that I needed to learn marketing.

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Bumps in the Road

I’m finally settled into our house in Baja. It took five days of driving all told. It wasn’t a hard drive, but five days on the road is a long time and I have a reinvigorated respect for truckers.

While I was on the road, and when it wasn’t my turn to drive, I re-read Profit First. It’s one of my favorite books on small business operations. And a section of the book made me think of a trucker I recently met.

In December, I was on a flight home from Sacramento and I happened to sit next to a chatty Kathy who revealed that he was a truck driver. He told me that he delivered semi-trucks and would fly around the country, pick up a set of trucks, and deliver them somewhere else. You’ve probably seen a semi-truck towing two other trucks stacked on their hitches- that’s what he did.

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Changing the Scenery

Tomorrow, I hop in my car with my wife, my mother-in-law, and two dogs and start a four-day drive down to the tip of Baja, Mexico. Once there, we’ll spend February in a house overlooking the Sea of Cortez.

It will be my second month long working retreat down in Baja. The first trip was in 2022 and one of the activities that emerged from that retreat was this blog.

On that trip, I spent days staring out at the Pacific Ocean and pondering my strengths and how to develop them. I realized that writing develops my thinking and some of my best insights come from exploring ideas with the blinking cursor of a word processor. But to hone that strength, I had to have some sort of vehicle that would prompt me to write and so I began a daily writing practice that continues to this morning. Had I not taken the trip and changed my environment, I wouldn’t have started this blog.

We inhabit what seems like two worlds. Our internal and external experience. But they’re actually connected. Your internal world changes your external world. And your external world changes your internal world.

Changing the scenery is a useful way to turn over the soil in your internal world. To invigorate it with sunshine and air and plant the kernel of the next version of you.

When to Chase Shiny Objects

“I started a side business,” a friend told me over a glass of wine a few weeks ago. “And it’s sort of crazy: this thing is taking off like a rocket.”

I’ve talked with and been in entrepreneur communities long enough that I’ve seen lots of similar trajectories. Most new businesses fail and of the ones that survive, the majority have a long trajectory to thriving. But a few just burst out of the gate with the entrepreneur holding the reins as best they can.

When you don’t understand why some businesses are break out successes, you ascribe it to luck. But really it’s market demand coupled with a few good decisions (which can be luck or skill or both).

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The Investor’s Glasses

I sat with an entrepreneur friend on a bluff overlooking the Pacific ocean in San Diego a couple of years ago. I was making the multi-day drive back to Portland from Baja and had stopped in to visit him. I asked him an old question that he had answered before:

“Would you rather be an investor or an entrepreneur?”

“Investor,” he answered. It was the same answer he had given me previously.

It surprised me again because he’s someone who’s passionate about business. So I dug deeper, “You’d rather focus on stocks and property rather than developing a business?”

“No,” he said, “I mean that it’s more useful to look at business as investing. If you were putting money into someone else’s business, what would the decision look like? How would you manage the risk? What would you expect back?”

An investor’s viewpoint is from a higher, more objective perspective. It highlights the trade-offs and risks in your decisions and emphasizes the need to generate a return.

The next time you make a significant choice, try putting on an investor’s glasses. How does the choice look then?

Investing In Your Business With a Barbell

How do you invest in the growth of new business and new opportunities?

One approach to this challenge is with an antifragile perspective. Nassim Taleb pioneered the idea of “things that gain from disorder” in his eponymous book. To apply his philosophy on antifragile things, he proposed an investment strategy that he named a “Barbell Strategy.”

To apply a barbell strategy, you invest mostly in low risk investments, around 90%, and for the other 10% you invest in high risk, high upside options.

For your business, that might mean 90% of your attention, energy, and cash is on optimizing what is already proven within the business. Often, most of the “low hanging fruit” is inside your company.

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