My Review of Daniel Vassallo’s Class "A Portfolio of Small Bets"
And why you shouldn't go all-in on a startup
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I used to think entrepreneurship meant building rocketship startups like the next Google or Facebook. Anything less wasn’t worth aiming for.
So when I quit my job, I tried copying these tech giants by building my own billion dollar startup, only to fail miserably.
I first tried to build a marketplace for renting out driveways for parking spots. Then COVID hit and shut that business down for good.
Then I tried to sell an API as a business. It was called “scheduler API”, and it was an API to delay other API’s. It failed when I got stuck dealing with too many engineering issues and never launched the service.
My best attempt was building a SaaS startup called RecordJoy, a screen-recording website similar to Loom. I managed to grow it and sell it on Microacquire for a profit. But overall it was a modest affair. I made around $15k in profit, which I had to split with a partner and use to cover costs.
Having wasted years of my life trying to recreate these huge SaaS businesses, I had a suspicion that my approach to entrepreneurship was flawed. But I didn’t know what I was doing wrong.
How I Heard About “Small Bets”
Through Twitter, I heard about entrepreneur Daniel Vassallo and found his story extremely relatable. He was an ex-Amazon engineer like me. And after quitting his job in 2019 to work for himself, he tried to build his own startup.
Except six months in, he realized it wasn’t going anywhere and that he had to change his approach to self-employment if he wanted to avoid going back to corporate.
That’s when he started aiming for much smaller, attainable goals as opposed to venture-scale startups. He placed “small bets” on various projects, starting off with a book on how to use Amazon Web Services.
Then he launched a template for tracking his profits and losses every month, and finally he launched a Twitter Course called “Everyone Can Build a Twitter Audience.” This course exploded, and he has over 13k course sales to date.
The kicker? He made almost $300k from the course after only 3 days of work.
Now he teaches an online cohort-based class called “A Portfolio of Small Bets”. As the title suggests, he advocates a “portfolio approach” to entrepreneurship. Instead of going all-in on a startup, he suggested that entrepreneurs should try many different things, not committing to any unless there is a signal that it’s worth doubling down on.
His explanation was a refreshing change from the go-big-or-go-home mentality that pervades Silicon Valley. Intrigued, I signed up.
How the Class was Structured
The course consists of six Zoom sessions at 10am PST on Mondays, Wednesdays, and Fridays for two weeks. When I took it, each class had about 30 people in it, and was structured as a 1-hour lecture with 30 minutes of Q&A at the end.
The main portion of “A Portfolio of Small Bets” focused on Vassallo’s idea of taking a portfolio approach to entrepreneurship. But he also covered a number of other topics including:
Lifestyle design to make sure we don’t overwork ourselves
The importance of prioritizing survival over home run outcomes
How to price digital products
Along with the class, students get the slide deck and life-time access to his community of people who’ve taken the class in a Discord channel. There’s no homework and all the classes are recorded, so if you can’t make it you can always watch it later.
How a Portfolio Approach Limits Downside for Entrepreneurs
Vassallo’s “portfolio approach” to entrepreneurship was an important lesson I needed to hear.
Business success is unpredictable because there are too many variables out of our control. Since we can’t control how well our products do, we should focus on the only variable we can control: our time input. By timeboxing ourselves to small <1 month bets for every project we take on, we limit our potential downside if it fails.
Focusing on small bets also lets us take a higher volume of bets on various projects. Like a baseball player taking swings at bat, our first swing might not connect. But given 100 swings, surely one would connect for a homerun.
Entrepreneurship is a Video Game with Levels
His “small bets” approach also aligns with my discovery that entrepreneurship is like a video game with levels.
In a video game, you can’t go straight from level 1 to fighting the main boss. You have to complete side-quests, collect items, and level up before you can win the game.
Entrepreneurship is similar in that there are levels to this game as well. You can’t go from a W-2 job straight to building a SaaS business because SaaS products are the equivalent to fighting the final boss of a video game. You’ve got to beat the mini-bosses before you can beat the main bosses of the game.
So the small bets approach ensures that you level up properly by collecting the right assets to prepare yourself for more ambitious goals.
For example, writing a book might be intimidating because the publishing process is long and you have to write so many words. But instead of tackling a “big bet” like writing a book, you can start with a “medium” bet like writing a few articles instead.
Or instead of taking a “medium” bet like writing articles, you can start off with a “small bet” by writing a few Tweet threads instead.
And even those Tweet threads can be broken down into smaller, single tweets.
For example, Dickie Bush, founder of a writing program called Ship30for30 starts off with just a few single Tweets. When he sees the single Tweets do well, he then expands them into longer Tweet threads.
Similarly, note how Andrew Chen, a VC at a16z, didn’t write his book “Cold Start Problem” from scratch. It started off with a series of popular articles on his blog, which he then collected and organized into a book.
Both Andrew and Dickie started off with smaller bets, and only when those bets took off did they invest more time expanding it into a larger bet. This is an approach I recommend for you as well.
So as an exercise, think of a project that you want to take on and ask yourself:
Is there a smaller version of that project that you can launch in under 1 month that has standalone value?
Can you take this further and imagine how you could launch an even more barebones version in under a week?
You can see a sample progression of “small bets” that entrepreneurs should take here:
For Writers: Tweet → Thread → Article → Blog → Newsletter → Books
For Consultants: Freelancing → Agency → Consultancy → SaaS
For Course Creators: Creating Content → Audience Building → Video Courses → Cohort-Based Classes → Building Communities
The Best Benefit - The Community
Although I already finished the class, I continue to get value from the course through Vassallo’s Discord community. It’s grown to over ~2,000 members, all of them entrepreneurs and creators like myself who have taken the class. And they’re some of the friendliest people I have met.
Recently I had a question about how I had trouble closing any Upwork engagements after submitting over 20 proposals. Someone responded and graciously reviewed my profile. They even sent me their proposals and profile for me to model after!
Furthermore, Vassallo runs guest classes where he pays $1k to community members to speak on various entrepreneurship topics. Some example classes he held recently include:
A class on self-publishing books on Amazon by Greg Lim
A workshop on making money through real-estate by Louie Bacaj
A class on what to expect when going self-employed by Catherine Cusick
Each of these classes alone is worth the cost of the course, and yet he continues to add more of these over time, free for members.
And unlike many other communities that are subscription based or end after the class is over, you get life-time access to this community.
So even if you already buy into this portfolio approach, the course could be worth it for the community alone. Entrepreneurship can be a lonely endeavor. Having other similarly-minded people to bounce ideas off and gather feedback will help you find inspiration for your ideas.
I spent $375 for this course, and even after paying full price, I feel I’ve gotten my money’s worth from this class multiple times over. He even offers a 50% discount on the course now, making the price $185. At that price, taking this course is a no-brainer.
It’s low commitment, there’s no homework, and the lessons he teaches will save you months of frustration on your entrepreneurship journey.
It has probably been one of the best course purchases I’ve ever made. I highly recommend the course.
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Going from a side project to a startup, however, means going from building something that interests you to building something people want & the world has seen some awesome startups that started just as a project! Big believer in this thesis