Founder Fridays No. 176
Stop to Go Faster -- Labor Becomes Programmable -- Growth Costs Money Now
Happy Friday.
Here’s my January playlist featuring Gracie Abrams, The Lone Bellow, Olivia Dean, Jon Bellion, Bruce Springsteen and others.
The first story this week is a briefing on the history of Rolex as told on the Acquired podcast. It’s not a story about jewelry. It’s a story about branding, survival, and the brilliance of Hans Wilsdorf.
As you may know, I have another newsletter called Acquired Briefing, where I take in-depth notes on Acquired episodes. Over the next month or so, I’m covering some of their most popular episodes, and some of my favorites. Rolex was this week; the surprisingly fascinating story of IKEA is next. I think you’ll really dig it, so sign up to get those briefings directly.
The History of Rolex
Rolex is a series of paradoxes. They sell obsolete and objectively inferior mechanical devices for 10-1000x the price of their superior digital successors… and demand is stronger than ever in history! Their products are comparable to a Hermès Birkin bag in price, luxury status and waitlist times… yet they produce over 1m units / year (roughly 10x annual Birkin production). They make the most universally recognized and desired Swiss watches… yet their founder wasn’t Swiss and didn’t start the company in Switzerland! If Rolex were publicly traded, they’d almost certainly be among the top 50 market cap companies in the world… yet they’re 100% owned by a charitable foundation in Geneva that (among other things) literally just gives away money to local people in the city. This is one of the most fascinating and admirable companies Ben and David have ever covered on Acquired and one of my favorites. Check out my briefing on Rolex including some iconic Rolex print ads. Acquired Briefing (18 minutes)
Stop to Go Faster
The CEO advice to “focus” fails because it doesn’t explain the mechanism: stopping most things doesn’t just reduce distraction—it literally creates the time and energy to execute the few things that separate thriving companies from dead ones, the way ending toxic customer relationships frees you to turn satisfied customers into fanatics who drive word-of-mouth growth and never churn. The principle underneath: you have fixed time and energy, so every mediocre activity you protect is space stolen from transformative work—chasing every ill-fitting prospect means 1/3 the pitches to good-fit customers at 1/3 the close rate. This week, list everything your team did last month and mark what would happen if you stopped the bottom 70%—not delegated, not optimized, actually stopped—then calculate how much time that frees for your top three priorities. The realistic outcome: you’ll either kill the draining customers, generic marketing copy, and metric-chasing that consumes 60% of your week while delivering 5% of results, or you’ll keep starving in Sylvia Plath’s fig tree, watching opportunities rot while you’re too busy with everything to be great at anything. A Smart Bear (4 minutes)
Growth Costs Money Now
AI companies that celebrate user growth are often celebrating their own bankruptcy—Replit’s gross margins collapsed from 36% to -14% as usage increased, the exact opposite of traditional SaaS economics where more users meant more profit on the same infrastructure. The underlying shift: every time your customer uses your product, you’re paying OpenAI or Anthropic, turning the beautiful fixed-cost model of software into something that looks more like a retail business. This week, calculate your fully-loaded cost per active user (including all LLM calls, not just your average) and compare it to what you’re charging—if your power users cost more than they pay, you’re MoviePass ($9.95/month subscription, $10/ticket cost to theaters). The outcome: you’ll either implement usage-based pricing, subscription overages, or rate limits before your best customers bankrupt you, or you’ll learn this lesson when your gross margins turn negative and investors start asking why growth is destroying unit economics instead of improving them. Every (6 minutes)
Founder FAQ: Why Data Breaching Is Harmful For Startups?
Investors now view data breaches as disqualifying risk signals, not just operational hiccups—a startup that can’t protect customer data gets marked as unable to execute on basic business fundamentals, which tanks your ability to raise the next round even if your product metrics look strong. The underlying issue: breaches trigger cascading damage (GDPR fines reaching millions, customer exodus, reputation collapse that spreads instantly) that investors know will consume management bandwidth and cash for quarters, making you radioactive during diligence. This week, audit your third-party vendors who touch customer data and implement the minimum viable security stack: encryption at rest and in transit, two-factor authentication, regular security audits, and an incident response plan your team has actually practiced—not a 47-page document nobody’s read. The outcome: you’ll either close the obvious security gaps before they become fundraising killers (because one breach announcement between your seed and Series A will cost you 6-12 months and multiple term sheets), or you’ll learn this lesson when a breach forces you to disclose during diligence and watch investors ghost you regardless of your growth rate. Westaway (5 minutes)
Startup Funding Guides
I’ve put together a series of guides to equip founders to excel at fundraising. These guides break down the deal term-by-term and give you negotiation tips so that you can speak to investors with confidence.
Convertible Note: Guide / Video
Is the Billable Hour Right for Startups?
Most law firms bill startups by the hour because that’s the status quo. But while it may work for big companies, the billable hour is likely the wrong model for startups. Why?
It incentivizes inefficiency. Firms are motivated to pad hours rather than work efficiently. This adds unnecessary costs.
It rewards busywork over results. Startups care about outcomes, not hours logged.
Costs are unpredictable. With fluctuating monthly hours, legal spend is hard to budget.
It stifles innovation. Hourly billing gives no incentive to find better solutions. Startups need forward-thinking counsel focused on results. That’s why we’ve ditched the billable hour for transparent flat fees.
If you’re ready to explore a law firm with a better billing model, let’s talk.