I recently bought and participated in Daniel Vassallo's Gumroad class - "A Portfolio of Small Bets". Overall, I found the class extremely valuable with lots of additional content I continue watching.
In terms of some big takeaways, Daniel has some very unorthodox advice:
- Don't focus on one project - This is pretty controversial to many. VC-oriented incubators like YCombinator strongly emphasize the importance of focus. Most bootstrapper advice will similarly emphasize focus.
- Don't validate - Likewise, this is controversial. Advice around bootstrapping / self-funding particularly emphasizes the importance of validation. Some, like Microconf founder Rob Walling, suggest extensive validation before you write a single line of code.
- Spend a lot of time scrolling places like Twitter (or another "idea generator") -And again, this is controversial advice. Most entrepreneurial advice emphasizes ruthlessly avoiding distraction, of which any sort of social media would be a prime example.
Most people who've spent a lot of time consuming entrepreneurship content from YCombinator, Microconf, VCs like a16z, and even Indie Hackers will negatively react to the above three points.
Daniel manages to make solid arguments for all three points, based on his hard-won experience surviving in the self-employed world after leaving Amazon. In this post, I want to cover some big takeaways from the class.
First Takeaway: Different Things Can Work
Having consumed content from entrepreneurs like Daniel and the others I mentioned (YCombinator, Microconf), one of my takeaways is that "different things can work."
Daniel said several times, "there's no formula for success, only known formulas for failure."
A classic example of a "failure formula" is a developer who holes himself up in a room for a year, drops a product link at the end of the year, and expects instant success. Of course, pretty much everyone agrees that's a terrible idea - here's a talk by the Tailwind CSS creator saying the same thing. Even the creator of the hit indie game Stardew Valley, who holed himself up for four years, started a web forum to share screenshots about his game before release.
Still, many entrepreneurs would be highly critical of Daniel's "don't focus/don't validate" strategy, yet Daniel has made it work.
Strategies like "validate a B2B problem, make a minimal MVP, focus hard on it and iterate based on customer feedback" is probably popular because it's the closest thing to a repeatable formula there is. So to the extent that entrepreneurship content creators want to provide a formula, it's no surprise they pick that.
But even that formula isn't as formulaic as it sounds - even figuring out how to generate ideas to validate requires a lot of creativity. For example, Jason Cohen argues to validate paying customers before starting development in his video From Burnout to $100M in ARR. But the idea he generated (a scalable WordPress hosting service) was only discovered because he was blogging and making friends with lots of bloggers.
The fact that Jason Cohen was blogging rather than hyper-focused on finding B2B problems is how he found a B2B problem to solve.
Daniel also provides examples of other bootstrappers who "focused" on a successful product that worked and say that they wish they hadn't spend time on ten failures before. In contrast, those entrepreneurs don't see their willingness to try ten products led to the final success.
It is worth noting that Daniel accepts the idea that focus and avoiding social media might make sense in limited contexts, such as a "sprint" to ship a given project. He just thinks it's important to have some source of new ideas besides showers and long walks. Most ideas come from interacting with other humans. Twitter is one way to do that , but there's many others.
Finally, I've found at least one other entrepreneur who's advice is very similar to Daniel's - Jason Kester of Expat Software. He communicates ideas such as - "90% of businesses fail - so you better start 10 businesses!"
Second Takeaway: Embrace and prepare for randomness
The class's price tag of $375 made me hesitant to buy. However, the attached community of bootstrappers in Discord helped, as did Daniel having a similar background to mine, with us both having been FAANG SWEs and we're both fathers.
Another thing that stood out to me, though, was how similar so many concepts he discussed - risk management, accepting randomness in outcomes, and mental preparation sounded very similar to playing professional poker. At points in my life, I've played semi-professionally, and it's always been something I'm good at. While many think that "reading people's souls" is the key to poker skills, skills like bankroll management are far more critical. Most professional poker players recommend never risking more than 1% of your entire bankroll on a single buyin to a cash game or tournament (the exact recommendations can vary depending on some variables, of course).
Likewise, the thesis of Daniel's class is that going "all-in" and focusing on one business idea is extremely risky. The majority of businesses fail. Venture capitalists encourage it because they have a portfolio of businesses, but founders don't. Daniel's central concept is that you don't need to go into venture capital to diversify - you can instead just work on lots of small things and have a portfolio of bets instead of being a venture capitalist's one bet. This ties into Daniel's argument for not validating.
He's not against making sure you research a problem before spending a lot of time on the solution. He's against spending a lot of time on any solution at all. Instead, filter all your ideas to ones you can finish fast - so fast you don't even need to validate them.
If you have minimal income and you're trying to stay self-employed without freelancing too much, your time is your biggest asset and one of the biggest things to risk.
Daniel advocates for working on tiny projects projects so small that you validate them by finishing them and shipping them. Since they're small, you can have a bunch of them, diversifying your risk.
By working on tiny projects, you also avoid overcommitting. If you're not overcommitted, that leaves more free time open to find new opportunties, ones that might be a lot more promising than whatever you had chosen to focus on. Daniel stresses that having some free time and slack in your commitments is a key aspect of being a succesful implementor of the smallbets strategy.
While places like Twitter can be addictive and distracting, they can also be a huge source of new opportunities and new ideas. That's why Daniel advocates for leaving some slack in the system to "waste" time on social media.
When opportunity knocks, you need to be ready to open it, which you won't be able to do if you're hyperfocused on a project that you fully committed to.
Third Takeaway: Work with what you got, not with what you wish you had
One strategic heuristic to generate ideas is to combine "asset stacks", for example, your skills, your literal assets like money, things you have credibility or a good reputation for, etc.
For example, one of my friends can't code, and can't design, but always ideates silly consumer social media apps that would take millions to build and would probably fail. Meanwhile, he's in great shape and has a super fine-tuned fitness and nutrition program people always ask him about. I imagine how much more entrepreneurial success he would have if he had built a business around fitness instead.
This gave me the idea for a startup idea generator - work on whatever people ask you for advice about.
I'm a bad artist. I'm a bad visual designer. I'm a terrible singer.. I'm not bad at socializing, but I am bad at needing to be the charismatic guy who carries the room with his energy. I'm good at programming. I'm an above-average writer and above-average data analyst. And I'm ok with risk and taking some Ls on the road to some Ws. That third skill will be a key one if I'm to have any hope of succeeding at self-employment. And the rest of the skills should be key criteria I use when deciding which projects to pick. With that said, our asset stack isn't written in stone either - I do plan to spend some time improving at web design since it's such a key skill in so many projects.
How my path has changed
So what's next for me? I recently announced that I wanted to spend a lot of time in the coming months working on Navigoals. The truth is, I love my goal tracker. I use it all day, every day. It helps motivate me to code and write when I see my grey boxes turn green and avoid my grey boxes turning red. But I also realize going "all-in" on a B2C app is simply too risky for my goals. The product space also requires too much emphasis on visual design to appeal to consumers, which is not my strength. So while I can write about mental health and productivity to accomplish some growth, I doubt it will take the project far enough to generate significant income.
Part of the appeal of self-employment to me is that I'm bursting with ideas. Tying myself to one project sounded boring anyway and counter-productive to my goals. So, being told to do multiple projects is a relief.
So I'll definitely be planning to mix in a few additional projects in the next few months, and I'll try to filter them to be extremely small and shipped very fast. I'd love to commit to some ambitious goal like "8 SaaS apps in 8 weeks", but ironically that type of commitment wouldn't leave me very open to new opportunities. One of the major points of the class was to avoid hard commitments, especially long term ones, and be available to any new serenedipitous chances that may arise.