Small Bets Fundamentals

[0:00:00.04] So hello and welcome back everyone.

[0:00:01.76] Good to see you all here for the final session.

[0:00:04.36] Thank you for making it so far.

[0:00:07.36] So I have I have a few few more ideas to share with you, right.

[0:00:10.76] And as usual, please feel free to jump into conversation, right using the chat questions and so and so forth.

[0:00:17.52] So let's see.

[0:00:18.92] So yesterday we finished that.

[0:00:22.12] We finished when we're looking at marketing, right.

[0:00:25.4] Let's start by looking a bit at a few more ideas related to knowledge acquisition.

[0:00:30.28] We've already talked, we already touched on this a little bit when we talked about what we learned from small wins and failures, like why small wins tend to be better than learning from failures and things like that.

[0:00:43.64] I I, I feel that's a category of knowledge acquisition which is really challenging, especially in the stochastic world, right?

[0:00:50.8] In the stochastic world, there's so much randomness and and other opaque things at play that it's really hard to understand why is something working?

[0:00:59.92] Why is something failing?

[0:01:01.4] Is it all noise or is there some signal?

[0:01:04] Right.

[0:01:04.2] So one of the challenges is probably survivorship bias, and I won't spend a lot of time on this one because I'm sure many of you are already familiar with with survivorship bias.

[0:01:13.68] But I think it's important to note that in the stochastic world it's it's even more problematic because we often see chilli pig stories about about the wins, about the winners light, and the symmetry of all the failed attempts usually gets hidden from us.

[0:01:33.68] And I like to think that when I'm evaluating the probabilities of something working or not, I I.

[0:01:40.16] And it's hard, not not very easy to do that, but it's a good mental exercise to try to understand like what's the denominator, right, of all the of all the successes that I'm seeing.

[0:01:52.4] A good example that I sort of I see often, for example, is wins in the in the creator economy, right.

[0:02:01.36] And this is a good example tweet.

[0:02:03.48] There's a tweet from Sahil Lavinia, the CEO and founder of Gamrode, which gum loads represents a slice of the creator economy.

[0:02:12.28] And there's two interesting pieces of information here.

[0:02:15.44] This is Sahil, you suppose these every, every quarter or so.

[0:02:19.4] I think one of the most recent full year one was this recap of the year 2020.

[0:02:25.56] And in the bottom chart, Sahil is showing us the growth of gum load over time.

[0:02:30.36] Gum load sort of again like a proxy for the creator economy has been growing in the last ten years or so.

[0:02:37.08] Is the total volume basically total of money that was transacted to gum loads?

[0:02:42.72] I saw in 2020 there was almost $150 million like that was that was sold to gum loads.

[0:02:49.48] But that is a there's another interesting piece of information at the top which breaks down the last bar of the bar charts.

[0:02:56.48] Like how was that $150 million distributed amongst all the creators who used gum load in 2020 and the blue to the reality is that that when you look at this like there was about 75,000 people like 75,000 creators in 2020 and more than half barely made anything that made between $1.00 and $100.

[0:03:19.52] There's another big bucket made just between $100 and $1000.

[0:03:24.08] So not a significant amount of income that you have to go to the top 2 tiers.

[0:03:30] I'd like to find income states that would probably represent like a full time income, right.

[0:03:34.88] And when you look at, when you look at the calculation sort of this would be less than .2% I believe like 185 / 75,000, it's a very, very small amount.

[0:03:48.8] So this should always make us make us pause that because it would be fairly naive to believe that these 185 people have cracked the formula right.

[0:04:00.04] I'm sure they they're probably they they might they might have good products like they might have, they might be doing some very good things.

[0:04:08.52] But very likely even the people in the other buckets have put a lot of effort into their products or have have good products, good value like they're doing the right things.

[0:04:17.6] Maybe they're even doing better things than the than the ones at the top, but yet for seemingly random reasons, being at a long place at a long time.

[0:04:26.12] Or maybe the landing page that's in 1008.

[0:04:28.08] Or maybe they they didn't manage to find a sort of the initial catalyst lies to to get them lots of attention.

[0:04:35.64] They're lingering in the bottom tiers.

[0:04:38.92] This actually reminds me, in the first session I mentioned the book Art from Art Devaney that Hollywood economics end.

[0:04:46.76] It's a very fascinating book because it talks about the Hollywood economics in general, where there's lots of this happening as well.

[0:04:52.48] But I remember Ardevina mentioned something that even at the actor level, right, Hollywood celebrities, like Hollywood actors, star celebrities say like Bled Pitt, right?

[0:05:03.76] We tend to look at the successful ones and sometimes try to add to the view, utilize the qualities that make them successful.

[0:05:12.8] You might say Bled Pitt is very good looking, charismatic, very talented, few other things right?

[0:05:19.24] But are there any?

[0:05:20.64] Argues that as Hollywood is littered with people as talented and as good looking and that's kind of charismatic and that's hard working as Brad Pitt right?

[0:05:31.64] But unfortunately they're they're not as successful as he is.

[0:05:36.36] Like they probably have to work a part time job or do other things to to make ends meet the light where they're still sort of taking auditions, hoping to get their big play.

[0:05:46.24] Like, So what made Bled Pitt, the star celebrity that we know of was making millions of dollars, You know, getting paid millions of dollars per movie and everyone wants to see more of him and so on and so forth.

[0:05:57.72] It's usually a very random chance encounter.

[0:05:59.88] This doesn't mean that his skills, talent, hard work ethic, charisma, good lucks don't matter.

[0:06:06.28] They matter a lot.

[0:06:07.88] But there was some other important factor, like hard.

[0:06:10.76] Devaney argues that very often, you know, star celebrities become successful because they were lucky they they auditioned to some random obscure movie.

[0:06:20.36] The term obscure movie happened to become successful people like the movie.

[0:06:24.76] They like the actors and they want to see more of them.

[0:06:27.72] And then it's a snowball effect.

[0:06:29.04] It's the metric principle on steroids, right?

[0:06:32.04] It's basically that keeps reinforcing itself.

[0:06:37.16] It's funny, Jennifer, and it's understanding on on Twitter right now while we're talking about that bit, but another funny coincidence.

[0:06:45] So this is something I think really important to keep in mind, right?

[0:06:47.56] It's like always when we're trying to, when we're when we're seeing people we, you know, me, at least me on my Twitter account, I see many people in the top two tiers here claiming that they founded SAP for success.

[0:07:00.64] It's easy rise to be making $100,000 in dictator economy be making so and so far that we should always be pushing back on.

[0:07:09.4] But what about all the other 99.98% who are probably doing the same thing and yet are still struggling with?

[0:07:18.12] And again, this doesn't mean that we shouldn't be trying to do these things that we should decide with these kinds of expectations that this is hard, it is hard things to do and what do we do here to mitigate.

[0:07:29.8] So as we make small bets, as we try and we'll talk more about this when we talk about selection criteria today that we, we we sort of we will reduce our risk, right.

[0:07:41.68] And we try to choose things that have a fighting chance of of succeeding, but more about that later.

[0:07:46.72] So another interesting concept, right, is what I like to call important but not sufficient and already touched on this with the example of Best Pit.

[0:07:56.76] That's what makes Best Pit successful, right.

[0:08:00.08] That are probably what made him very successful was that Landon chance encounter, right when he auditioned for some obscure movie and he got picked up.

[0:08:08.36] But there were other things like that's very important as we mentioned, like his his talent, his good looks, his cardizema and so on and so forth.

[0:08:17.4] But it's important not to mistake the important for the sufficient, right.

[0:08:20.76] And this is something that we see often when we hear stories from from, from people.

[0:08:26.12] A good example that I went into, let me share again another interesting tweet that I saw.

[0:08:32.16] So here's a good here's an interesting example.

[0:08:34.48] This is a, this is a post from John Olin.

[0:08:36.28] John is the creator of Ghost, a very successful blogging platform which which is quite an inspiring story like started about 10 years ago, bootstrapped light small team.

[0:08:46.28] He took prudent risks and growing very, very, you know very very inspiring on the test spec.

[0:08:53.4] But the the problem is messages like this.

[0:08:57.88] So John here celebrating 200K and MLR for ghost words celebrating you know, very well deserved the one we are tech was showing up every day for seven years even when the graph was flat, right.

[0:09:08.88] It's almost implying that the recipe for success in business is just that you keep persevering.

[0:09:16.12] You keep believing that you keep showing up, you keep working hard, and so and so forth.

[0:09:20.68] And this is a little bit like the, you know, the gold, the treasure hunter, you know, picking one spot and believing that if I keep showing up and I keep digging in this one spot and I keep going down and keep digging hard and keep keep believing is I'm going to find the treasure, destiny will eventually reward me.

[0:09:39.52] And unfortunately, you know that might be true in the predictable world, right?

[0:09:43.16] Again, like in the predictable world, when you're pursuing a very predictable goal, you just get closer every single day.

[0:09:49.52] The harder you work, the closer you get to the growth.

[0:09:52.32] But in this stochastic world, it doesn't happen this way.

[0:09:55.4] Like the the market doesn't guarantee that it's going to the world.

[0:09:59.52] You just because you work hard, just because you're talented, just because you're you're persevering just because you're showing up every single day.

[0:10:05.92] Now, there's many, many people certainly, that showed up every single day for many, many years, But because they were digging in the long spot, they were doing something that the market doesn't want or there's not commercially viable or that it's not commercially viable enough, right?

[0:10:21.28] They ended up going nowhere, right?

[0:10:23.16] And this is a problem, this particular problematic, right?

[0:10:25.64] Because actually persevering blindly is a very easily ruined state.

[0:10:31.36] Like, not to mention that you waste a lot of time potentially, right?

[0:10:34.72] And it's seven years in this case that you might not very get back, but it's also very demoralizing, as we talked about a lot.

[0:10:42.92] Imagine working on seven years on something and then you realize this not not going anywhere.

[0:10:48.24] Wow.

[0:10:48.68] Like, I I don't know if I'll have the willpower like to try something else like.

[0:10:53.6] So it's a very, very interesting course.

[0:10:57] Again, not to pick up on John.

[0:10:58.28] That I think is a very common sort of narrative fallacy, like to try to reflect back on what made me successful and conclude that this was what made him successful.

[0:11:09.4] But I don't think it's really true.

[0:11:10.72] Again, I don't think it's he's necessarily lying, right.

[0:11:13.12] But if we dig it down and by the way, the graph was never totally flat, right?

[0:11:16.96] I mean, my eyes are probably not lying to me.

[0:11:20.68] I'm sure he probably felt that the graph was flat because when you're the owner, right?

[0:11:25.72] And you have like these small periods here maybe three months of maybe even declining revenue or maybe here this it seems like there's there's I don't know quite a long period of time that you as an owner probably would feel that and with the members would be etched in your brain as well.

[0:11:41.84] That was a difficult moment a lot of uncertainty that probably the members those things strongly and he's probably very proud that he managed to recover from those things which is all very well deserved plight.

[0:11:54.64] But I think we, we asked as external people, we shouldn't again like believe that the the, the recipe for succeeding in the stochastic world is is again picking a spot and and persevering blindly.

[0:12:11.04] Antonio is saying it just just shut down something that I did full time for virtually no pay over 7 years.

[0:12:15.88] Yeah, very painful, right?

[0:12:17.4] And now we've all done this mistake, right?

[0:12:19.52] I mean, my first project, userbase.com, which still exists, I spent almost a year to bring it to market.

[0:12:27.2] I spent about over $100,000 of my own savings, you know, hiring people, building it, right?

[0:12:32.6] And unfortunately, it's only making about $10,000 per year, not per month.

[0:12:37.2] So I will probably never recover the amount of time and energy I'm invested.

[0:12:41.88] And that's sort of a very painful lesson.

[0:12:44.2] Incidentally, yesterday I was here, I was listening to I should have listened to the sooner the the podcast interview was between Arvid Khan and and Peter Levels who we've mentioned a few times already and Peter Levis pretty much mentioned in a similar story, right.

[0:12:59.32] His first business was a YouTube analytics software thing and same thing that he spent a couple of years like lots of time, effort, money and eventually didn't make any meaningful income.

[0:13:14.04] So this is a very important thing that again, the mistake here is because when when I mentioned this on Twitter, some of my critics come and say, well, but hard work is important.

[0:13:26.08] You're never going to succeed if you're not talented, if you don't put in the hard work, if, if you don't do the right things.

[0:13:31] And yes, I agree, right.

[0:13:33.4] You know, persevering was important for John, right.

[0:13:35.88] But it's not sufficient.

[0:13:37.2] Working hard is important.

[0:13:39.16] Being having good skills, doing the right things is important, but it's not sufficient.

[0:13:43.68] It's similar to that example we saw in the first session from that best selling author right who who loved the the science fiction book or or climb book, right.

[0:13:54.24] He lingered an obscurity for 13 years.

[0:13:57.64] It must have been a very good book, right?

[0:13:59.44] But nobody read it, nobody cared, nobody saw it.

[0:14:02.64] Until his daughter made that violent TikTok video and suddenly he became a best seller #7 on Amazon, right?

[0:14:09.48] The book must have been good, right?

[0:14:10.96] Because if if his daughter had a bad, so I had the file TikTok video and the book was bad, it would still have not worked.

[0:14:19.84] So the author had to be talented, The author had to put in the work.

[0:14:23.48] The author had to write a good book.

[0:14:25.2] The story had to be good.

[0:14:26.6] All those things were important.

[0:14:28.04] But on the on the they weren't sufficient.

[0:14:30.04] They needed that.

[0:14:31.72] In that case, they needed the file TikTok to to to make the success happen.

[0:14:40.08] So not the important concept, I think, right?

[0:14:42.08] Especially that applies to the stochastic world.

[0:14:44.04] It's what I like to call probabilistic knowledge, right?

[0:14:46.88] Usually when we think of knowledge, we think of concrete knowledge, like the things that we will learn in in in books, right?

[0:14:53.88] Or in school that math is concrete knowledge, you learn 1 + 1 = 2, right?

[0:15:00.08] That's concrete knowledge, right?

[0:15:01.28] It's an undeniable fact when it comes to logic and physics, even even even even learning a programming language.

[0:15:09.28] Like learning how to program a computer.

[0:15:12.04] This concrete knowledge that if you by programming book it tells you like to make the computer do this.

[0:15:18.04] To print hello world on the screen you have to type this command and you have to put in double quotes and you finish and the statement with a; If you don't do those things, those things, the computer won't behave as you want it to be.

[0:15:31.68] That if you buy a a washing machine and it comes with the instruction manual, it tells you if you want to wash your clothes at 40 degrees Celsius, you have to turn the dial this way and press the run button.

[0:15:42.8] That's complete knowledge, right?

[0:15:43.96] If you don't operate the washing machine that way, it's not going to behave the way you want it.

[0:15:49.76] And this is we understand this very well.

[0:15:51.8] But in the stochastic world, as we've seen right we it's very hard to accept the signal from the noise.

[0:15:57.72] There's lots of noise that what made go successful, it's very hard to know like John is telling us it was because he persevered for a long time.

[0:16:07.48] I don't believe that it was the the the the critical thing like there were many many other things the timing in the market like I'm I'm very confident that that ghost if it were to be launched today in 2023 instead of in 2013 it would have faced a very different outcome.

[0:16:25.76] Like the market was probably had the need had the demand for an open source bugging platform that competed with sort of the the the the players of the time right.

[0:16:35.4] And the market is different just like no man never steps in the same level twice because it's not the same level it's not the same man.

[0:16:42] Like it's all there's lots of noise lots of things that we can't really understand.

[0:16:46.84] So what is probabilistic knowledge?

[0:16:48.72] Does this mean that we can't really learn anything when something succeeds or something fails?

[0:16:54.2] And no, we can actually that.

[0:16:56.08] But it's it can never be concrete that we can never really say it worked because of these exact things.

[0:17:04.64] But we can start to, we can start to get patterns, say patterns about something that is more likely to work versus something that is less likely to work.

[0:17:13.84] And the more I think you experimented the stochastic world, the more things you put on the markets, the more things you publish, the more tweets you post like the more the things that you do like the more small bets you place essentially like the better you start to getting at.

[0:17:29.44] Sort of improving your sensitivity relies to the patterns that are more likely to work and the patterns that are least likely to work.

[0:17:36.12] Maybe a good example here, let me share this slide because so last time I showed you one of my small, one of my first small ones which was the the AWS book.

[0:17:46.44] So.

[0:17:47.84] So this is a landing page that for a product that made that sold 7100 copies, right, and made me about $130,000.

[0:17:58.28] So this is a product that that worked for some reason, right?

[0:18:02.88] But why does it work?

[0:18:04.56] It's very hard to tell exactly.

[0:18:06.16] Like again, like if I knew right why it works that I would have made another 100 bucks like this because this was a very, very good return on investment for my time, right?

[0:18:16.2] Like 6 figures about the amount of work.

[0:18:19] Wow, like I mean who doesn't want to make that amount of return?

[0:18:24.56] But there.

[0:18:25.48] So there are many, many different things that we can't really tell.

[0:18:27.72] But what I would recommend to somebody or even to myself like that if I were to do something similar.

[0:18:33.4] If for example one of you decides to want to try to self publish a programming book, I would highly encourage you to try to influence yourself from the landing page that I used or maybe of somebody else I have from a landing page that worked.

[0:18:51.08] Not because this is a guarantee of success by all means, right?

[0:18:54.96] But you will likely improve your lots of success if you reuse something that for some reason seems to work a little bit.

[0:19:02.08] Again, like using a Hollywood example.

[0:19:03.96] This is why Hollywood really loves to do sequels, sequels that for some reason people like the number one.

[0:19:11.4] So they say very likely people will like the number two as well on the number 10 #4.

[0:19:15.96] And they keep doing sequels until they basically until people stop watching the thing.

[0:19:21] That is one way of taming the uncertainty.

[0:19:23.24] You don't need to understand why something works, right?

[0:19:25.96] But, but if you discover something that works, that's compared to doing anything else that you're improving your alternative.

[0:19:33.76] So I mean if we just set the standing page a little bit, right?

[0:19:36.64] I mean, what's in it, right?

[0:19:38.76] Excuse me, there's there's a bit of couple of paragraphs here where I'd try to build some credibility that I'd try to explain why I can speak about this topic.

[0:19:48.8] There's a free book sample right where there's like the first chapter available for free.

[0:19:53.4] There's a table of contents.

[0:19:55.64] There's a few a bit of a fake you at Virginity fund policy where like if you don't like the book, you can get your money back.

[0:20:03.92] There's some social proof, some testimonials, which I'm sure they help.

[0:20:07.84] There's a few more testimonial.

[0:20:09.16] There's a few more social proof over here that which again I'm sure it helps.

[0:20:13.04] The refund policy Again, emphasize the ratings which are decent, the price which is an impulse by the ratings over here, like these are all small things because I I can't really tell you that.

[0:20:23.56] What is more important, what is less important?

[0:20:25.96] But again, if I were to do another product like this, I would very likely follow the same structure.

[0:20:30.6] Not because I know what worked and what didn't, but compared to do something completely novel, this will likely improve my odds of success a little bit.

[0:20:39.72] And in fact, right when I created my Twitter course, that which happened a few months later, if you were to see the the landing page, it's like even though there's a completely different product or a completely different topic, different format and whatever, I pretty much replicated the same style, right?

[0:20:57.44] So again, like, a couple of paragraphs about why I can speak about these things.

[0:21:02] Table of contents, the funds, policy, testimonials, social proof, ratings, impulse by price and so on, so forth, right?

[0:21:11.28] Yeah, Fast and Furious is a perfect example of Hollywood's like to Hollywood discovering something that worked.

[0:21:17.68] Like Like, why did Fast and Furious?

[0:21:20.92] Why was it like, why was it successful?

[0:21:23] Why it's profitable.

[0:21:24.56] We can make educated guesses about why, right?

[0:21:27.48] But we don't.

[0:21:28.6] Hollywood doesn't care about why, right?

[0:21:30.4] They just say, oh, it worked, let's do #2, #3, #4 and let's try to change as little as possible.

[0:21:35.84] Keep the same actors, keep the same plot, keep the same things, right?

[0:21:39.08] I used the example of Top Gun last time, right?

[0:21:41.2] Where the new Top Gun, even though it's like 30 years or so later, they put much capture again, like replicated the same plot.

[0:21:48.92] So to kept even the same actors same story more or less like no guarantee that's going to work but it's for Hollywood doing top Gran 2 that was had high loads of success compared to doing some other than the movie.

[0:22:05.68] Like it makes sense.

[0:22:06.72] Like it's it's one way of using probabilistic knowledge to excuse me to to to your advantage and I think again like this is something I think worth there's worth keeping in mind.

[0:22:20.04] I think I see many people tend to be too novel and too creative with with things, but I desire they follow something that has sort of shown to work with this because of from my own past projects or from somebody else.

[0:22:35.72] And by the way like this landing page where I inspired myself.

[0:22:40.04] Some other people.

[0:22:40.72] I showed you Adam's Whetton's book last time.

[0:22:44.24] There's a bit of inspiration here, even though if you were to look at Adam Whetton's book you probably won't notice significant similarities.

[0:22:51.64] But there were like sections like there was like the some credibility statements, there was like the impulse by price site and there was like the refund policy and things like that that either used myself and I think they helped a little bit.

[0:23:06.88] Then the same the Dean at mind they got undergrad gave a commencement speech saying this is preferred success to something you're really good at and keep doing that looks like it was a completely like look actually I think very likely like the Dean was probably referring to predictable world activities like starting a regular car.

[0:23:24.68] They're starting a full time employment employed and actually in that in those cases this does work right And this is I think This is why we started our sessions by emphasizing the importance of the two different worlds like the predictable world and the stochastic world.

[0:23:40.16] Like things that work in the stochastic in the predictable world end up being counterproductive in the randomness laden world of business and and and things where randomness plays a huge role.

[0:23:52.84] So it's a it's an interesting, it's a very confusing aspect, especially if we've lived in the predictable, predictable world.

[0:24:01.96] We've done things that work and the help does there.

[0:24:05.48] And then we jump into the word of of business, right?

[0:24:09.24] And we almost have to unlearn everything that has worked for us before.

[0:24:14.68] Because I'm please write down the book.

[0:24:16.08] I couldn't make it the book.

[0:24:19.4] Which book and the less happy to write down the book but not sure which one you're referring to.

[0:24:29.32] Do I just mentioned it was Hollywood, Hollywood, astronomics by any chance?

[0:24:33.32] Or something else?

[0:24:34.48] No.

[0:24:36.08] Which one?

[0:24:37.04] Oh, this book, my book.

[0:24:38.36] Eddie Brass.

[0:24:38.8] Good parts of Eddie Brass.

[0:24:43.44] Oh, Adam Wetten's.

[0:24:44.28] Yes.

[0:24:45.08] Adam Wetten.

[0:24:45.84] I think it was called Adam Wetten.

[0:24:50.56] So let's see Adam Wetten PHP book.

[0:24:58.76] I'll look for it.

[0:24:59.28] Yeah, I think it's this one.

[0:25:00.16] Let me see.

[0:25:00.64] I'll post the blog post.

[0:25:02.04] I'm sure there's the, there's the link to the book here.

[0:25:05.4] I think this one, yes, the fact link to collections, yes, that's the one that that probably inspired me most and actually I think inspired me most.

[0:25:14.16] Again, apart from how it was presented, the fact that it was a very simple book, this was just a very short book.

[0:25:20.68] Here's some ugly code.

[0:25:22.16] Here's some, Here's the same code but a bit nicer like it was basically page after page of patterns.

[0:25:29.32] There is a way to do this but ugly.

[0:25:31.24] Here's a way to do it which is a bit more leader, but which was very inspiring to me as well.

[0:25:35.32] Actually, there's not a daunting thing that I can do something similar and it was self published like without having to go to a publisher and so on and so forth.

[0:25:45.96] OK, so to the flame, the Dean's advice can keep saying small bets within your land of expertise.

[0:25:51.64] Yeah to maybe maybe there's two and there's a bit of perseverance.

[0:25:54.4] Actually we'll come to this as well Paul.

[0:25:56.16] It's a very good point.

[0:25:57.68] We're going to to try to use that the flame as a way to apply to the stochastic world.

[0:26:04.08] But more about that in a minute.

[0:26:08] Let's talk about this.

[0:26:08.72] This is a very important concept.

[0:26:10.52] I know it sounds very technical, but I think it's really important to to to understand it.

[0:26:17.28] Ergodicity.

[0:26:18.28] It sounds like an exotic thing.

[0:26:20.16] It is a little bit.

[0:26:21.08] Let me try to explain it with with this simulation right.

[0:26:25.96] So this is let me share this on on the chat for those of you who want to watch the the YouTube after the session.

[0:26:32.04] So this is a this is a coin toss simulation from an economist his his the economist his name is Oli Peters a very fascinating person and you don't have to watch the video that I'm going to explain a little bit what's happening here and what we're looking at.

[0:26:48.16] So Oli Peters does a he created a computer simulation where he simulates a million people flipping a coin.

[0:26:57.44] Right?

[0:26:57.72] A fair coin which has 50% odds of lending either heads or tails.

[0:27:03.12] And in this game, all the participants start with $100 each, right?

[0:27:07.56] And they're going to be flipping the coin.

[0:27:09.36] And if the coin lends heads, they will win 50% of their stake, right?

[0:27:15.28] So if they they they stake $100.

[0:27:18.48] If the coin lends heads, they end up with $150.00, but if it lends tails, they will lose 40%.

[0:27:24] All right, So in that case their $100 would become $60.00.

[0:27:28.16] And every minute they keep going all in with their stake and they keep flipping the coin and they keep repeating the same game, right?

[0:27:36.08] They win 50% if they end up with heads, they lose 40% if they get tails.

[0:27:41.8] And basically the simulation that we're looking here on the on the left hand side is the average wealth of all the participants after they play this game for for a whole hour.

[0:27:51.84] So every minute they all start a million people, they all start with $100, They all have a coin fair coin.

[0:27:58.52] They flip the coin roughly the first minute, roughly half of them end up with $150.00, roughly half of them end up with with $60.00.

[0:28:06.72] And the next minute they do the same thing and they do the same thing and over and over and you know this is, and clearly this is a favourable game that the odds are in your favour because 5050 odds of either heads or tails and one side you lose 40% and one side you lose 50%.

[0:28:23.24] So in theory the more you play it, the more you will gain.

[0:28:26.2] And in fact this is what the left hand side is showing us.

[0:28:29.16] The average wealth of all the participants is growing over time after just 60 minutes.

[0:28:35.44] Like the average wealth right of of of everyone has grown to over $1000 which started from $100.

[0:28:43.32] Makes sense right?

[0:28:44.64] So but here's the mind blowing thing like in the simulation, like if we were to pick one of those million participants right than the participant and we were to plot their wealth over time playing this this game, the almost all the participants playing in this game actually would be losing money like this.

[0:29:05.16] How is it possible like this?

[0:29:06.72] First of all this is a favourable game with favourable loss.

[0:29:09.28] It's not like playing the latter, the casino that way.

[0:29:12.08] You know that the odds are against you.

[0:29:13.4] The more you play, the more you're expected to lose.

[0:29:15.28] This is actually a mathematically favorable game.

[0:29:19.08] And in fact, the average here shows us that the average wealth is increasing.

[0:29:22.64] How come almost everyone is losing money playing this game?

[0:29:26.52] It is very, very confusing.

[0:29:28.56] And in fact, if we look at the histogram of the final outcome, right.

[0:29:34.12] So this is actually.

[0:29:35.32] So this is how much money the individual has had after they placed the game for an entire year.

[0:29:42.24] So all of them started with $100.

[0:29:44.56] They flipped the coin every minute.

[0:29:46.44] After a year, about a third of all the participants ended up with basically $0.00.

[0:29:52.12] Remember playing a game with favourable odds, right?

[0:29:56.84] About a tenth ended up with less than a dollar.

[0:29:59.6] Now it's about another 10th and up with like less than $2.00, About another 10th.

[0:30:04.12] The light out of the million participants ended up with less than $100.

[0:30:06.8] We're sorry, With less than $10 you have to get over here to find people who just broke even playing this game and very few made a profit.

[0:30:15.84] The light?

[0:30:16.12] Very few.

[0:30:17.2] But you know the Green Line is the biggest winner.

[0:30:21.08] I know it's a bit blurry here, but the Green Line is basically showing us the biggest winner in this game.

[0:30:25.48] There's actually a fleek Out Liar.

[0:30:27.08] Even though everyone lost money, almost everyone lost money.

[0:30:30.12] There's some Fleek Out Liar who actually made over $10 million starting from $100 playing the same game that all the other people basically lost almost everything in this game.

[0:30:42.04] It is again, like this is confusing, like how come this is happening and actually like the reason why this is the average is growing up.

[0:30:51.04] It's not because everyone is winning.

[0:30:53.64] Actually, everyone is.

[0:30:55.08] Almost almost everyone is losing.

[0:30:56.68] But there is a freak outlier who is dragging the average up.

[0:31:00.72] There's a little bit like the joke where they say like Bill Gates walks into a ball and suddenly the net worth of everyone in the bar goes to like $10 billion or something like that.

[0:31:12.04] Like the average, the freak outlier is pulling the average up even though everyone is losing in this game.

[0:31:18.84] This explains maybe the inconsistency between these two charts, right?

[0:31:23.04] But how come again, like, we still don't understand how come people are losing in this favorable game?

[0:31:29.16] It seems at face value that this is a game that we should all be jumping into and participate.

[0:31:34.48] Participating in that is a favorable game.

[0:31:36.96] Like what is truly happening here?

[0:31:39.52] And the the, the, the, the problem with this game, the the the, the the reason why this game actually isn't as favorable as it seems is that it's actually very easy to become bankrupt in this game.

[0:31:53.92] Like, it's actually much more brutal than it seems.

[0:31:56.88] Consider that all you need is a few tails in a row.

[0:32:01.44] Like no matter how lucky you've been until that point, once you get a few tails in a row, if you manage, if you happen to get like 5 tails in a row, you're basically going to get very close to 0 very quickly because your your play money will get a loaded very, very quickly.

[0:32:16.52] Like you lose 40%, you lose another 40%, use another 40%, and suddenly once you're close to zero, once you only have like 1 or $2.00, even if you have a lucky streak, you almost never go to the cover.

[0:32:29.04] Technically they call this the absorbing barrier, the point of no deterrent.

[0:32:32.8] Like the game over a state that once you once you become bankrupt, once your play money gets close to 0, like you're done.

[0:32:41.56] Like it's over.

[0:32:42.6] Like you're you're you're you're dead in this game.

[0:32:45.72] You know, in theory, in this game you never get to 0, right?

[0:32:48.28] But you get very close to it, but it's basically essentially the same thing.

[0:32:51.92] So because think about it like you start with $100, you get tails, now you're 40, you get tails again, no, that's, I don't know, 25 or something.

[0:33:00.88] You get tails again, you're at 13.

[0:33:02.48] You get tails again and you're, I don't know, seven or eight or something like that right now it's become, it became incredibly, incredibly hard.

[0:33:11.48] That's from that points to the cover, even back to the $100, let alone make a profit.

[0:33:16.16] Right.

[0:33:16.88] And this is the problem.

[0:33:18.56] This is the fatal flow with this game.

[0:33:20.2] Like in this game, like basically to make, to make money, you have to be a freak outlier that you avoid the absorbing failure.

[0:33:27.6] You avoid those 546 tails and hello.

[0:33:30.24] And that's why it's very there.

[0:33:31.68] That's why only one person out of 1,000,000 managed to make a killing out of this game and very few people managed to eke out a tiny profit.

[0:33:40.6] It's because to survive here you're basically, it's like you're playing Russian Zoulette, right?

[0:33:46.16] With with with a big battle, right.

[0:33:48.72] You just need to make sure like you just need to be lucky enough to avoid the the the the bullet basically.

[0:33:55.36] It's really not a good game, right?

[0:33:57.28] But there's something interesting here right?

[0:34:00.48] And in fact Olipeters continues in his talk to simulate the example like can we do something that was, it's a pity right?

[0:34:07.8] Where we we, we encounter A favorable game, something where the odds are supposedly in our favour but we can't actually benefit from it.

[0:34:16.64] And here's a distinct twist like that.

[0:34:18.44] We can change here to make suddenly the game from unfavorable to favour.

[0:34:23.16] You remember that in this first simulation, everyone was going all in.

[0:34:27.96] They start with $100, they stake the entire $100 right?

[0:34:32.4] If in the next turn, with whatever they have the meaning, they go all in and they keep going all in, and so on and so forth.

[0:34:39.88] But what if, what if the participants made essentially smaller bets?

[0:34:45.32] What if instead of going on, then they went they stayed only 50% of their plane money in every turn, or 30% or 20% and kept some money on the side as a buffer?

[0:34:57.4] What would happen in that in that case?

[0:34:59.96] And let me let me show you this.

[0:35:01.52] So leverage 100% means going on then Liegeville 50% means staking half the plane money.

[0:35:10.04] Take a look at what I'm going to play a little bit here with tweaking the leverage, what changes it makes to the charts.

[0:35:19.4] So let's see 90%, Eighty percent, 706050403020, let's pause it here at 20, so with 20% leverage, right.

[0:35:31.24] So which means basically that people start with $100, they take $20, they leave the 80% safe and they stake the $20.

[0:35:40.72] They flip the coin.

[0:35:42.68] They either win 50% of $20 or lose 40% of $20.

[0:35:47.68] And they end up with some money and with whatever they have they made.

[0:35:50.24] Again, they only stake 20%.

[0:35:51.88] They never exceeded that buffer.

[0:35:54.36] Suddenly this game became ergodic.

[0:35:56.8] The, the, the, the, the technical term is ergodic is when you can infer life from the collective perspective.

[0:36:05.6] That's what is happening to the individual.

[0:36:07.64] Like in the previous over here, we could infer like the collective was seeing a very different like the group, the portfolio like the entire thing was seeing a very different perspective than what the individual was seeing.

[0:36:21.56] But just by I lost the, I lost the, let's see 30 anyway.

[0:36:30.84] But just by changing the leverage to to 20%, suddenly the game became ergodic.

[0:36:39.72] So why did it happen?

[0:36:41.48] Like, let's reflect a little bit on this.

[0:36:43.24] How come suddenly what this means basically now is that everyone is succeeding in this, in this game, right?

[0:36:50.96] By keeping a little bit of money on the side now it became a no blainer to participate in this game.

[0:36:56.52] You're all you're going to to be to be winning.

[0:37:00.16] It's very, very unlikely that you're going to be losing money suddenly, right?

[0:37:04.12] And we're looking at the average wealth of the individuals maps very clearly the the the what the individuals participating in the game are saying what is happening basically by making smaller bets, by keeping some money on the side as a deserve, it became almost impossible to hit the absorbing barrier like previously.

[0:37:25.84] All you needed were 546 tails and LO to basically become bankrupt.

[0:37:30.52] Like to get close to 0.

[0:37:33.12] Just by staking only 20% you end up needing.

[0:37:36.64] I don't know the exact number, but you end up needing like 100 tails and a low like something incredibly, incredibly unlikely to happen, like to actually get you close to the absorbing value, gets you close to 0 basically right?

[0:37:50.24] By staking a much smaller amount that you avoid the game, overstate that you go avoid bankruptcy, that you avoid zooming and going out of business, right.

[0:38:01.96] And then you keep playing and I think keep exposing yourself to the benefits of this game, actually having having good faith with odds, right?

[0:38:12.48] But there's another thing that's happened.

[0:38:13.84] You might have noticed that at the collective level, the ID graph diminished as well, right?

[0:38:18.6] So previously this was was a much steeper chart, right?

[0:38:22.76] So the trade off here is by is that by the individuals thinking more for themselves, right?

[0:38:29.4] And playing a game that is more favourable for themselves as as individuals has actually harmed the collective that has actually harmed the average world of the game.

[0:38:41.36] And this is actually something very interesting, right?

[0:38:43.36] Because we often hear for example in politics and politics, and this is actually why this discussion about economics we often hear for example, politicians say, yes, the GDP of the country is growing but all the wealth is going to the 1%.

[0:38:59.48] And this is actually not an inconsistent thing, that it is very possible that the wealth of a country or a region is growing, but 99.9% of the citizens are seeing their wealth diminish for exactly the same reason.

[0:39:12.68] That is because because the 1% could be dragging the average up, the the total wealth of the country might be growing, but 99% or 99.9% of all the citizens are seeing their world diminish.

[0:39:27.16] And you know, with economics and politics, there's all sorts of concerns about equality and so on and so forth, which is is out of topic for us.

[0:39:35.56] But for us, as you know, aspiring business owners, what we care about here is this.

[0:39:42.24] We do not really care what the industry is doing, right?

[0:39:44.68] And actually, we already saw a good example of this chart, lights versus left versus light.

[0:39:52.24] It was here Sahil here was showing us the creator economy, glowing light making tons of money.

[0:39:59.64] But this was what the individuals were seeing from their own perspective, that if the creator economy was perfectly ergodic, like $150 million here would have been divided roughly equally between the 75,000 creators making trying to make an earnings here.

[0:40:16.84] And certain as clearly not not what happened.

[0:40:19.36] And maybe that's not even what we want to happen right.

[0:40:21.48] I mean there's all sorts of problems with with if that was the if that was the the system.

[0:40:29.84] But this is important because for us what we really care about is is this but we hear we always we often hear again from the media from the news Silicon Valley is flourishing.

[0:40:40.28] There's lots of money being made like the the the Hollywood is flourishing the character economy is going and so on and so forth.

[0:40:46.8] But we need to be careful that what we're doing right is something that is going to make our line go over time.

[0:40:57.12] That's not make the economy better, right?

[0:41:00.2] Or make the industry better or may declare to economy better like it's not our job to worry about the economy.

[0:41:06.36] Yes, I really love that Maius The the the one that's Maius posted about from Taleb.

[0:41:14] The paper about understanding is a poor complexity.

[0:41:17.32] Sorry understanding is a poor substitute for complexity.

[0:41:20.36] Great paper is very easy to read the first couple of pages and he he mentions I think basically some of the ideas with his we we talk about here like the I think the small bets he calls it the one on end strategy like very similar I think very very good paper and also avoiding the absorbing barrier basically that's something that Talab talks about very, very often uses Helipot as an example.

[0:41:46.8] Yes, I think that's true.

[0:41:50.8] So what does this mean to us, right.

[0:41:55.76] Basically, in my opinion, like this almost proves that we need to take a small bets approach when we're dealing with the stochastic world that when it's very important for us to almost at all costs, like avoid the absorbing barrier that we always need to.

[0:42:09.84] When we're facing uncertainty, like we're doing things under the uncertainty, we honestly keep a buffer.

[0:42:15.16] And this buffer, again, it's not just financial buffer, not just keeping money on this side, but even psychological energy buffer like.

[0:42:22.04] Again, I emphasize this because I think for most of us we're probably never going to be this king.

[0:42:26.64] I mean, unless we're really foolish with our finances, it's not like we're this king becoming technically bankrupt or end up homeless on the streets.

[0:42:33.64] Hopefully that's not the case.

[0:42:35.8] What's more likely for us to happen is we become mentally bankrupt.

[0:42:38.48] Like we just lose all the energy.

[0:42:40.32] Like we just give up.

[0:42:41.92] We we we we lose the willpower to try more right?

[0:42:46.32] And or or with a lot of time we only have one lifetime again like as we started this the sessions we said we're investing our time.

[0:42:52.88] We don't have infinite time.

[0:42:54.48] Like we will spend years.

[0:42:56.48] Imagine the example again like you spent years building something, it fails.

[0:43:00.64] You spend years building something it fails.

[0:43:02.36] Spend years building something, it fails.

[0:43:03.72] You're basically navigating this line of failure, right?

[0:43:06.8] And really eventually that you're going to end up to a situation where you're not going, not going to try again, either because you're out of patience and motivation or you're basically out of time, polite.

[0:43:16.6] Your lifetime is over.

[0:43:20.76] What changes like this work out when things, what change is likely to work when things are not working out.

[0:43:27.12] Manish.

[0:43:27.44] I think we'll get to this in a couple of slides.

[0:43:29.64] If not, we'll discuss this later in the Q&A at the end.

[0:43:35.76] So hopefully this makes a bit more sense.

[0:43:38.32] Again happy to discuss more but this is I know it's a bit of an advanced ticket concept later on but maybe you know this will explain it better is I really believe that is that we need to build what I like to call a bias for Survivor which is almost the opposite of what start-ups in Silicon Valley do that Silicon Valley start-ups.

[0:43:59.12] When you see how people who applied to Y Combinator think they just think about the upside.

[0:44:04.96] Are you building a billion that are you building a business that has the potential to become a $1 billion company.

[0:44:11.28] Are you building something that can scale that can be venture backed the all the all the only thing they think about is the upside.

[0:44:18.68] I really believe we should completely invert the the attitude and just think about the primarily focus on our downside, like what will happen, what will happen if what we're doing fails?

[0:44:30.8] Will it put me closer to my absorbing barrier that is going to win me financially or waste a lot of time that I will never get back and I won't be able to use for other things.

[0:44:43.68] That is, I am going to end up becoming depleased and give up on things.

[0:44:48.6] I'd like to focus on the downside and let the upside take care of itself.

[0:44:52.44] And basically once you take care of the downside, right, and you're focused on paying the bills, staying in the game, avoiding the absorbing barrier that you start, I mean things become immediately much more, much more clearer and easier in some way, right?

[0:45:07.24] Because now you have something, right, something that you can very easily visualize your burn rate.

[0:45:12.08] So that's just to keep paying rent or your mortgage and your essential utilities.

[0:45:16.84] You keep saying things and eventually like very likely something will pay off a bit better than you were expecting and that you make the the the, you know you make your profits that way.

[0:45:27.56] But if you're not focused on the downside, sooner or later that your destiny is going to catch up to you.

[0:45:32.6] Right.

[0:45:32.88] Eventually, right.

[0:45:34] You're going to end up like the person flipping the coin.

[0:45:38.08] Eventually you're going to get your five tails and hello and then you're over, right?

[0:45:42.48] Then you're you're you're that statistic, right?

[0:45:45.6] That's taking the the, the average down and it's a very, very unfortunate thing.

[0:45:50.24] This is, I think this is an interesting thing that because again like we're really there to hear about this attitude.

[0:45:55.84] I was recently, I recently stumbled into this interview on In the hackers with the creator of Convertkit posted here as well.

[0:46:03.88] Essentially a great interview, but I really enjoyed reading it.

[0:46:07.16] Convert it again like ghosts at a very successful bootstrapped business.

[0:46:11.6] Started about 10 years ago making millions of dollars and revenue and profits.

[0:46:16.76] Nathan barely started it, so it's been learning it very well.

[0:46:21.4] Great interview overall, but there was a passage that caught my attention.

[0:46:27] Nathan.

[0:46:28] So the interviewer asked Nathan, if you were to start over, what would you do differently?

[0:46:32.08] And Nathan said I would focus on one thing sooner.

[0:46:35.12] I can't turn multiple business at the same time.

[0:46:37.16] I don't think many people can.

[0:46:38.76] Now I laugh when somebody brags about learning for businesses.

[0:46:42.76] Just focus on one right.

[0:46:45.6] And this is particularly ironic coming from Nathan, right?

[0:46:49.04] Again, I'm not saying that he is necessarily.

[0:46:50.88] Again, it's a negative fallacy.

[0:46:52.12] I think it's very easy to think that.

[0:46:54.4] You know, Nathan did many, many things before he eventually stumbled on something that made hundreds of millions of dollars.

[0:47:02.28] It's very easy to think if I wear his shoes that I should have just focused on converted.

[0:47:07.24] Why play around with all those small things?

[0:47:10.24] But this is, I think, a very naive conclusion, right?

[0:47:14.16] Of this story from Nathan Berry.

[0:47:15.56] In fact, if we read the interview you'll you'll see him mention this.

[0:47:20.08] But there was actually a decent tweets that's from him, which illustrates my point even better.

[0:47:25.64] Like he's saying confronting this past $100 million in lifetime sales.

[0:47:28.56] Again, wow, it's very celebrating.

[0:47:31.32] Easy to share the wins, but building in public means sharing the full journey.

[0:47:34.6] Basically he's going to share with us his failures.

[0:47:38.04] The right.

[0:47:38.32] I think that's what he's implying.

[0:47:40.24] And this is another tweet, Said another.

[0:47:42.04] An entire tweet said telling us all the things hit slide.

[0:47:44.76] That didn't work out.

[0:47:46.52] I did choose Sling, a web hosting company using WordPress.

[0:47:50.88] Whatever made $0.00 OK didn't work out.

[0:47:54.36] Shop to await a local social network for the Boise area $0.00.

[0:47:59.32] OK, Didn't work out.

[0:48:00.64] One Motion.

[0:48:01.48] A web app for sign language agencies $300.00 a month actually, you know, not that bad, right?

[0:48:07.44] It's a small win in my book.

[0:48:09.16] Of course you can't live of it, but it teaches you something, right?

[0:48:13.28] You got some customers, you know.

[0:48:15.96] I wouldn't do it off completely.

[0:48:17.76] Teams, you know.

[0:48:19.36] Presumably with some time He was, by the way, Nathan.

[0:48:22.08] He's a designer by background.

[0:48:23.32] He was also doing freelancing designing work as well, which he doesn't mention in this thread.

[0:48:27.44] But he was also doing consulting for Lancing and so on so forth $70 nothing.

[0:48:34.24] Oh this is interesting.

[0:48:35.36] An iOS app, one voice was built for kids with no verbal autism.

[0:48:40.04] Started as a hackaton based, presumably a weekend project or something very quick.

[0:48:44] Made $50,000.

[0:48:45.16] Well, just pays the bills.

[0:48:47.6] Just pays your own mortgage for a couple of years at least.

[0:48:50.88] Like this.

[0:48:51.2] Keeps you alive, Keeps you away from the absorbing barrier.

[0:48:54.24] Like this is not bad.

[0:48:57.32] Lowent, another iOS app, only made $75.

[0:49:00.24] Commit a habit checking app that made $20,000 again?

[0:49:04.76] Well, this pays the bills for a year for is the mortgage at least for a year, even if you're living in a nice house, right?

[0:49:11.12] Keeps you alive, keeps you living, keeps you going.

[0:49:14.92] Not bad.

[0:49:16.6] And a newsletter got him 1000 subscribers, which is of some value in itself.

[0:49:21.52] Didn't make any money, but it's another small win.

[0:49:24.04] You know, 1000 subscribers is a nice thing to have, but here's another thing.

[0:49:28.08] He created the App Design Handbook.

[0:49:30.64] You know, I bought this one.

[0:49:31.92] In fact, it doesn't seem like it took him a long time to build $90,000.

[0:49:37.16] Wow, is this a failure?

[0:49:39.24] I don't think so.

[0:49:40.48] This, again, like this, pays the mortgage for many years now.

[0:49:44.4] It keeps you alive, pays the bills.

[0:49:45.88] You can live off this product probably for a year or so.

[0:49:50.2] There's another one.

[0:49:51] You create another course 200, two, $100,000.

[0:49:54.28] What?

[0:49:54.76] Is this a failure?

[0:49:55.92] I don't think so.

[0:49:57.72] And then we convert kit, which yes, $100 million.

[0:50:00.84] It makes everything look like a drop in the bucket compared to everything.

[0:50:04.44] Yes, it looks like a rounding gather, but my take away from Leyton Barry Story isn't that he should have big cherry picked convert kit and just ignored everything else and focused on it.

[0:50:14.12] That's just too naive.

[0:50:15.6] There's it's very hard to predict that convert it would have succeeded in fact later he explains convert.

[0:50:22.56] It took like 2 years, barely breaking even until it actually took steam right and started actually making an actual profit, even convert.

[0:50:31.68] It didn't look like it wasn't necessarily going to work out or not.

[0:50:35.32] My take away from Dayton Bay's story is that the order here matters, the fact that he was doing these small projects and again, something is not mentioned.

[0:50:42.52] Instead, he was also consulting and felancing the fact that he was play focusing on surviving.

[0:50:49] Like metapholically speaking, focusing on paying the bills, small projects, short feedback loop, small bets.

[0:50:56.32] Essentially all of these were small bets.

[0:50:58.84] These things were keeping it in my life.

[0:51:00.44] Even if Nathan Bradley didn't stumble and convert kit or something like convert it, I'm super super confident that who would have continued to repeat these things like some of those some of the things again would would have done nothing some would have done 200K or so and who very likely would still be living a very nice lifestyles you know paying the bills and so on and so forth.

[0:51:21.92] This isn't the take away.

[0:51:24.6] This is surviving is the take away.

[0:51:27.28] I didn't allowed him to eventually stumble on stumble on things that had some outsized turns.

[0:51:35.36] Krishna Singh.

[0:51:36.12] I'm quite amazed that there are people who want to pay for these small absolutely built.

[0:51:39.28] I think you need to get over my head.

[0:51:40.76] No, absolutely.

[0:51:41.96] It's it's, you know, it's and again, like you don't need a lot of customers like to make $200,000 or $90,000 or things like that.

[0:51:52.72] Especially when you go after these apps and things like that, you never really know, right?

[0:51:57.56] I mean, if you're buying a habit sucking gap, do you even care that it's made by a single person or it's just something I just paid for something silly recently, like like an iPhone app that just counts.

[0:52:09.52] There's a button and every time I press it, it just counts a number and I use it for my workouts just to count apps or things like that.

[0:52:15.68] It's incredibly silly.

[0:52:17.28] They paid, I don't know, like $2.00 like or something like that.

[0:52:21.16] Very likely done by a single person.

[0:52:23.44] Sure.

[0:52:23.64] It's the stochastic world, by the way.

[0:52:25.16] It's not just not easy, still like to make money there, don't get me along.

[0:52:29.84] But the the mitigation here is that they're small projects.

[0:52:33.84] So I think that you can do very quickly.

[0:52:37.08] And by the way, notice that he did things aligned with his asset stack.

[0:52:40.68] He's a programmer and a designer, right?

[0:52:43.4] And he did things, especially the things that succeeded the app design handbook, the design course, the the sort of the iOS apps and whatever, right things that that align with his skills.

[0:52:55.52] He didn't just close random things at the wall, right, and hope something worked.

[0:53:01.48] Yeah, paying for convenience and things like that.

[0:53:03.84] Absolutely.

[0:53:04.44] Absolutely.

[0:53:07.68] Two years is a long time to stick with the small.

[0:53:09.08] But yeah too.

[0:53:10.16] I I, you know I think I don't even know the story exactly here.

[0:53:14.08] I think sort of it was barely breaking even.

[0:53:20.68] I I I suspect he had a gut feel like that there was some potential and and convert it and I think it was a good thing to again to stick to to keep it to keep it around and actually we'll talk more about this attitude that of doing things where time is your friend.

[0:53:33.96] I like to call it that where the future can only benefit you, it can't really harm you.

[0:53:39.96] But I don't know what was it happening over here whether he actually shut down everything else during these two years or he was still.

[0:53:47.48] I mean, I imagine he was still paying the bills to some other means because if he was self-employed, if converted wasn't making any money on those two years at least from either from freelancing or from other projects who was still paying, paying the bills.

[0:54:03.6] So I didn't like this.

[0:54:04.48] Like, I think there's something, something really discussed like focus on your downside, let the upside take care of itself.

[0:54:11.68] Build it by a for a survival.

[0:54:13.68] I chose like a survivalist sort of person.

[0:54:17.6] Here's the image.

[0:54:18.4] Because I think, you know, survivalists and Peppers like, are very inspiring in this aspect.

[0:54:24.08] Like, we might think of them, especially the Peppers.

[0:54:26.88] Like, who's always worried about some natural catastrophe, building their bunkers and so on and so forth.

[0:54:31.72] They seem like almost paranoid, but, and I used to think so, but actually I start to see them differently, right?

[0:54:37.48] I start to see those people as they recognize the downside, the thing that makes them worried, makes them lose sleep at night.

[0:54:42.68] Instead of just going to worry about it or ignoring it.

[0:54:45.88] They do something about it.

[0:54:47.08] They prep for it.

[0:54:48.28] You know, the preppers might stock their bunker with food and and medicine and water and supplies and whatever, just in case, you know, the zombie apocalypse comes up Like that at least needs to be prepared.

[0:55:00.48] And this is how I like to approach my business as well, that I focus on the downside, which the downside for me is I want to maintain myself, employment, lifestyle.

[0:55:08.32] I really enjoy it.

[0:55:10.04] I don't want to go back to a full time job, right?

[0:55:12.36] And I focus on, you know, the things that are going to keep keep me to keep this lifestyle and not having it taken away from me.

[0:55:22.88] And the upside almost doesn't really matter, right?

[0:55:25.04] Sometimes I get lucky.

[0:55:26.16] I stumble on things that pay off much more than I was expecting, but my eyes are on paying the bills, saving enough money for retirement, paying for my kids stuff.

[0:55:37.44] The essential things was that saying me and my fiance bought an illustration of a dog on camera for a wedding poster cost $1.00.

[0:55:43.8] There was no other illustration that looked like our dog.

[0:55:46.4] Very interesting.

[0:55:47.08] Yeah, absolutely, absolutely.

[0:55:48.92] You know, sometimes it's just very, very small things.

[0:55:54.72] That's that's that surprised you for the outcomes.

[0:56:01.6] OK.

[0:56:02.04] So let's talk about selection criteria.

[0:56:04.72] All right.

[0:56:05.96] So we talked about how it's important to have an inspiration generator like how it's important to find things that almost a continuous basis, give us a stream of opportunities, give a stream of ideas like things that we can that we can consider doing.

[0:56:22.08] But then the challenge is how do we decide what things to pursue and what things to avoid, right.

[0:56:27.56] And I think it's very hard to come up with the selection criteria that applies to everyone because we all have different, we all have different circumstances, we all have different, we all slightly different.

[0:56:40.04] But in general, I think maybe the objective point that probably I should apply to almost all of us is that our selection criteria should always be when we're choosing to pursue something, we should always ask ourselves, can we do this as a small bet?

[0:56:53.92] Like basically, can this be a small safe to fail experiment?

[0:56:57.2] That if it were to fail it wouldn't harm us significantly, right?

[0:57:03.88] Like there's again, either psychologically or financially or reputationally right or everything that we can imagine potentially causing us harm.

[0:57:13.28] It's it's it's weird that when I'd say something new, usually the very first thing I think about is like, what would happen if this was to completely fail and sometimes completely fair.

[0:57:22.84] This isn't just necessarily, again, like not making any sales, there's I think worse things that can happen.

[0:57:30] Like what if actually people buy it and they hate it and they leave beds of fuse?

[0:57:34.76] That's probably even worse than than making no sales.

[0:57:39.16] So I like to make sure that I can mitigate those things.

[0:57:43.4] For example, I showed you earlier, my 100% refund policy comes out a little bit on my own to be honest.

[0:57:50.8] Almost a little bit of insecurity, right?

[0:57:52.8] I mean, what if people hate it?

[0:57:54.32] The fact that I have 100% refund policy makes me much more confident in putting something on the market because OK, you hated it.

[0:58:01.28] OK, I'm sorry I wasted your time and I took your money for a little bit.

[0:58:05.56] But you know, just hate 100% refund, no questions asked.

[0:58:09.12] I don't even ask people give me feedback or whatever and that's one way for me to mitigate the worst case scenario right and and with impostor symptom and things like that sometimes you can find techniques like these that can just help you eliminate whatever concerns you you you might have.

[0:58:30.04] But again more importantly probably most important one is time right?

[0:58:33.84] Investing overtime and energy.

[0:58:35.56] That if we're investing a lot of time, if the if the idea that we're considering pursuing requires a lot of time and time is limited.

[0:58:43.68] Time is cars or even money, right?

[0:58:46.64] Chance to size probably not worth pursuing.

[0:58:48.52] Leave it for someone else for whom it's a small bet.

[0:58:51.48] Remember small bets are relative right for for somebody working as an individual right with limited resources something taking six months to build is probably, you know a too big of a bet.

[0:59:03.44] But for a for a medium sized company, say with 100 employees who is making $10 million in revenue, maybe doing a project that takes six months to to to to build, maybe not a big, not a big bet.

[0:59:15.48] That's for Elon Musk, who's worth $200 billion.

[0:59:19.16] You know, starting Starlink is probably a small bet in his portfolio, right?

[0:59:23.92] So if we get inspired, like to do something ambitious but we can't find a way to scope it down to something small, it's perfectly fine to leave it on the table.

[0:59:34] Like there's no obligation to take everything that we that we that we encounter.

[0:59:41.4] So this number one, right, can I make it a small bet #2, which I already hinted about, is like, if this thing fails, what would the outcome be that I think that's very, very important.

[0:59:52] That will get me close to my absorbing barrier.

[0:59:53.88] Anything that is just too risky, it is going to put me at risk or my lifestyle at risk or my family at risk.

[1:00:01] I stay away from it.

[1:00:02] So I don't want any of those things.

[1:00:03.44] This is why I really dislike the highly ambitious start.

[1:00:07.44] Silicon Valley style startup project is because you're literally putting yourself at risk in very insidious ways that you have to sacrifice a lot of your life or very small odds, odds of success.

[1:00:19.92] That is very incompatible with with with this philosophy.

[1:00:24.56] And there's another, I think then there's another, there's a few more maybe subjective aspects like, again, like you want to choose things that are related to your asset stacks, that if you're going to do something that is completely related to the things you've experienced, right?

[1:00:42.16] Sometimes you might get inspired by doing some to do something that might seem like there's a good opportunity that might solve a little problem, and this may be a commercially viable opportunity.

[1:00:51.24] But if we're completely ignorant of the domain of the industry, like, our lots of success are probably going to be very low, which gets me to another point on this election karate.

[1:01:01.28] Yeah.

[1:01:01.4] Does this opportunity have a fighting chance of paying off?

[1:01:05.12] Remember last session where we talked like everything is marketing?

[1:01:08.48] It's really important to have a hypothesis.

[1:01:12.04] How can I make this expectation happen?

[1:01:14.92] It's not about putting something out there and hoping that eventually people will find it and the expectation is going to materialize.

[1:01:24.32] You need to have a hypothesis that you need to have to to have to have a basic understanding.

[1:01:29.88] Oh, OK.

[1:01:30.84] If I I have an audience of 1000 followers.

[1:01:34] If 1% buy this thing, I will make so much and that's a good enough expectation for the effort I'm putting in.

[1:01:41.76] And you might conclude this is a good thing to pursue.

[1:01:45.24] This is the reasoning.

[1:01:46.24] Like when I considered I think the ABS book for example, my first thought that I I I felt that at least at the time I forgot lots of it right now.

[1:01:55.64] But at the time, I felt I could have written the ultimate reference guide for AWS.

[1:02:00.88] I pretty much had used all the adwest services.

[1:02:03.2] I worked at AWSI saw many services being built that I used it even before I joined Amazon, right?

[1:02:09.68] So I I remember it was as it was in the beginning.

[1:02:13.6] I felt I had it in me to write like the ultimate, you know, volume Encyclopedia of AWS.

[1:02:20.08] But I realized very quickly that would have taken me a very, very long time, like months if not years, to do it all, like to do the entire exhaustive thing and my very first instinctive.

[1:02:30.2] And I wasn't willing to do that.

[1:02:31.68] I was already in the mode of I want to do something quick that is going to pay the bills rather than just do it for its own sake.

[1:02:40.08] So my first reaction was how can I scope that idea down to something smaller?

[1:02:44.64] And so basically that exercise leads to OK, forget doing the entire encyclopedia, the exhaustive reference guide, let's just do the good parts of AWS.

[1:02:54.96] Let's just pick the 546 important things.

[1:02:58.96] That's my share, my perspective and my opinion and how those things should be used and just intentionally ignore everything else.

[1:03:08.28] And in addition that me choosing it to light it with a cohort, I was also another risk mitigator, right?

[1:03:16.28] I felt like if I do it with somebody else, I'm going to spend half the time building it, right?

[1:03:21.64] And that helped me as well that to to invest even less time in this uncertain venture.

[1:03:30.12] But also like that was part of the risk mitigation, the downside mitigation.

[1:03:34.6] But also I had a hypothesis that of how I could made.

[1:03:38.08] I remember thinking if these things makes $5000 it would have been worth it, like $5000 each.

[1:03:44.04] Maybe it was.

[1:03:44.8] I don't remember exactly the expectation, I said and back then I had like 4005 thousand followers on Twitter that I had this audience.

[1:03:52] I did a bit of Matt 1% coming from or whatever that some some final dynamics.

[1:03:59.8] I knew roughly that how many impressions I was getting on the tweets that I was posting.

[1:04:04.76] I thought if only 1% were to click on the announcement tweet and I post about it 10 times, there is a plausible chance this will chance that this will make will make us $5000 each.

[1:04:15.96] And I thought, yes, for this amount of effort, making $5000 would be satisfactorily right.

[1:04:22.44] It was an important part.

[1:04:23.56] If I couldn't, if I couldn't have that hypothesis, very likely I would have done it.

[1:04:29.12] I would have spent my time on something else.

[1:04:33.28] So those are probably the most important things that I think.

[1:04:36.72] Then, especially once you start having a portfolio of things that is working, you might start incorporating things related to your preferred lifestyle right in your selection criteria, things that you something that you dislike doing.

[1:04:49.48] Maybe we want to avoid it.

[1:04:51.32] So I think in the beginning, right sort of you know you you can't be too picky that you may want to start to get your four small wins as quickly as possible to let your to let the metro principles start to help you as much as as as it can.

[1:05:07.72] But as you start building that you're small wins that you can start avoiding things just because you don't want to do them right.

[1:05:16.04] We'll we'll talk more about this in the last session.

[1:05:18.56] Right.

[1:05:18.68] Because what's the point of working right and and placing small bets usually because you're trying to improve your life right.

[1:05:25.48] If you're doing things that are actually harming your lifestyle should at least make you pause and consider then it's saying not to mention that fewer people who probably want to lead encyclopedia and that's a very good point as well that sometimes again especially with information products sometimes less is more.

[1:05:43.16] My friend hasn't.

[1:05:44.32] My friend Hassan Osman who mentioned a few times likes to say, and I really believe it, that people pay with their time sometimes more than they pay with their wallet.

[1:05:54.32] Like, especially when they're consuming information, they're actually paying by leading your thing for like an hour or two hours or three hours.

[1:06:03.2] Like other than just the $25 that they spent and being concise and having high information density is actually a very valuable thing with with information and educational products.

[1:06:17.28] So section 30, again like just to recap, I think it's very important, even more important for us as individuals.

[1:06:23.4] Like remember when in the very first session we talked about how VCs work and Hollywood studios and book publishers, they have their own inspiration generator that which is their stream of pitches coming to them and then they apply the own selection criteria.

[1:06:38.48] Like the VC might have their own selection criteria based on whatever they decide.

[1:06:43.28] It's important like this fees might say we only invest in B2B businesses or we only invest in businesses that have the out the potential to become $10 billion companies or whatever.

[1:06:54.04] Or based on the founders.

[1:06:55.76] We only invest in founders who like Y Combinator used to have a section criteria that you had to be you had to have a Co founder.

[1:07:03.12] I don't know if they still apply it right or maybe they lex it a little bit but they can come up with whatever selection criteria they think is more conducive like to to to the outcomes that they're that they're after.

[1:07:14.12] Book publishers, same things might they might say we only publish books on this genre right or or written by authors who have credentials and the fields that they're writing about or whatever they want.

[1:07:28.52] But book publishers and VCs have the luxury of scaling their capital.

[1:07:33] They can be a bit more liberal with the selection criteria because they can afford to.

[1:07:39.72] Book publishers can afford to publish 1000 books.

[1:07:42.84] VCs can afford to invest a small amount in 1000 companies.

[1:07:46.64] We as individuals, we can't really afford to have a stake in 1000 businesses or like 1000 books.

[1:07:53.16] That I mean we're we're limited by our time but we can maybe have a portfolio of five projects, a handful of projects something like that and even that is probably at at the limit.

[1:08:03.28] So I think we need to be even more rigorous and more ruthless with our selection criteria.

[1:08:08.24] We need to have a higher odds of success compared to DVCSDVCS might afford to have a 1% or even less like pay off ratios.

[1:08:18.68] We can't afford 1%.

[1:08:20.52] We can't afford to do hunt these projects that we we need to have something that that is is more more more vigorous.

[1:08:28.64] And I think the way to do it again is like to choose things, to choose small things.

[1:08:33.08] Curb the downside, sorry, curb the upside, focus on the downside.

[1:08:36.96] Forget the the the dreams of of hitting it big.

[1:08:42.24] But what can you do that can make you $100 by the end of the month?

[1:08:47.52] What can you do that can make you $1000 by at the end of the month and work backwards from that a little bit, right?

[1:08:53.72] And you get yours for a small win.

[1:08:55.84] And then again like everything becomes easier in the next month and the following month.

[1:09:03.48] So I want to touch on this a little bit.

[1:09:04.96] So it's with speculative bets and again it's a bit of overlap with what we just talked about.

[1:09:08.92] We will very likely get tempted to try ambitious projects because it will it it's they sometimes feel like they're perfectly compatible with our asset stacks, like we might see an opportunity.

[1:09:23.88] I'd say, for example, I'm a programmer and I really hate using Gmail for my e-mail client, and I see people complaining about Gmail.

[1:09:33.48] And maybe you've worked with e-mail systems in the past, like your combination of asset stacks seem to align perfectly with solving the Gmail problem and you decide, oh, maybe creating a competitor to Gmail seems like a very good idea.

[1:09:48.4] And and unfortunately that I think this is, this is a very hard thing to break out of that because you start to feel like you have the opportunity that you have the the the the right skills to go after this thing.

[1:10:03.24] But we need to often recognize like what are the odds like that I'm going to convince people like to trust their e-mail services with me, an individual for example.

[1:10:16.28] I don't know that but it seems like a very very very low a low low probability and this is all very in fact you know my favorite e-mail client is hey not e-mail service I use actually I I don't use Gmail anymore.

[1:10:31] Like hey built by the Seven Signals as medium sized company very likely that considers the competing with Gmail as a small bet in there context.

[1:10:43.12] They've invested presumably a lot of money in absolute terms but in their sort of in their circumstances probably it was a smaller smaller bet.

[1:10:54.04] So there are ways to do it, but for us as individuals that we need to be very, very careful not to fall into the of going after these very big ambitious things like that might just be very tempted.

[1:11:07.08] We need to be disciplined investors that with our with our with our time and the disciplined investor.

[1:11:13.24] Even though you might get that little bit of excitement about something, you need to think about what I did towards this.

[1:11:21] This reminds me a little bit about, I don't know how how many of you have watched the Shark Tank or the Jegons Den in other parts of the world.

[1:11:29.24] And I always noticed how how conservative, at least I watched most of the US version.

[1:11:36.84] Like, I don't know if it's different in the other parts of the world.

[1:11:39.24] But the investors on the Shark Tank, by the way, for those of you who don't know what I'm talking about is, is that the LDCTV show where there's a panel of investors and there's like business owners who try to grow in front of these investors to try to get an investment into their business, right.

[1:11:54.72] And it's all done on TV.

[1:11:56.32] That's what you hear actually the investors articulating their selection criteria, which was I think one of the most fascinating parts of the of the show.

[1:12:05.12] The investors don't just say, no, I don't, I'm out.

[1:12:08.08] But usually they say I'm out because this, this and this and I realized that you could see it sometimes that they're that these investors are very wealthy like the the the the founders come to them with with with offers that are only asking usually a relatively small amount of money compared to the investors wealth.

[1:12:31.72] And sometimes the investors are very tempted to invest.

[1:12:34.44] They like the product.

[1:12:35.48] They didn't like the founder.

[1:12:36.8] They didn't like the opportunity.

[1:12:38.72] But then they realize that the odds of this business making it and having making it an eternal investment is is very low.

[1:12:46.64] Right and very often right.

[1:12:49] That's how they explain themselves, right.

[1:12:50.44] I'm out because they say I can't see myself making my money back.

[1:12:55.04] Right.

[1:12:55.32] And this is something very important to us as well to be realized that this like we're we're as it is something that investors me to have a belief that the time we're investing is going to make the deterrence that that we're hoping for.

[1:13:12.36] OK.

[1:13:12.84] So another interesting concept we've already touched on this before which I I think is I really, really like this one.

[1:13:19.08] There are certain opportunities I believe where time can act as our friends and there are actually other opportunities where it's pretty much the opposite where time we're.

[1:13:29.12] We're always fighting with time that we start-ups tend to use the term runaway.

[1:13:34.12] For example.

[1:13:34.84] Runaway is literally the opposite of this.

[1:13:37.28] Runaway is a metaphor for it's a race against time and that you you're you're you're you're a plane cruising and about to take off from the runaway and you need to make sure you take off just before the runway ends.

[1:13:51.04] That it's a very fragile, to use Nassim Talab's term situation, that if you don't manage to become profitable or get whatever you want you seem to get by the time you're at the end of the runway, that's it absorbing barrier, you're done.

[1:14:06.88] You're failed right?

[1:14:09.2] And this is a very, very difficult position to put yourself in.

[1:14:12.04] I believe that I think the ideal world is is 1 where there is no runway.

[1:14:17.6] That basically every single day can only blink you good stuff.

[1:14:21.92] There's good opportunities rather than you're always moving closer to the edge of the Cliff, right?

[1:14:27.04] And if you don't manage to make something succeed, it fails.

[1:14:31.32] And when we come to select, select when you come, when it comes to applying our selection criteria, this is probably another thing that I decided to consider is this opportunity, an opportunity where time will be my friend.

[1:14:43.28] This is an opportunity where I have to be chasing.

[1:14:46.2] I have to be on a long way like and have something make something work before I learned out of some resource.

[1:14:53.6] And ideally, for example, one of the reasons why I gravitated towards information products, education products and things like that.

[1:15:00.76] Because it's almost an inherent property in those kinds of things.

[1:15:04.68] Like, for example, with the Edwards book, again, like I launched it and I released it in in 2019, right, almost in a close to like over over four years ago.

[1:15:19.72] There's nothing that I'm I'm I'm not, I'm not racing against any deadline.

[1:15:24] I mean, maybe there is an end, Like for example, if the content in my book becomes so outdated that eventually I might have to pull it out of the market.

[1:15:33.48] But every single day that I wake up, I check my phone notifications and maybe I get a new sale or two that maybe I get none.

[1:15:43.04] But I can never get like a negative sale light or something that can hire me.

[1:15:47.36] The the future can only bring me good stuff, can only bring me new sales.

[1:15:50.96] It can never bring me bad, bad, bad, bad outcomes.

[1:15:55.16] And this I think a very, very interesting property of certain opportunities.

[1:16:01.08] And this gets to the question of it's often and I think that we had something in the chat as well like how do you decide when to shut down a project, when to turn it off, when you, when you, when you, when you quit and so on and so forth.

[1:16:14.24] And I think ideally we wouldn't even need to ask this question that there are certain projects where you just, you can just leave them on the market, they're not costing you anything.

[1:16:24.92] Worst case scenario you get a new sale or maybe maybe something changes.

[1:16:30.68] We talked, it's interesting, we talked about Peter Levels a lot.

[1:16:34.8] So I mean, Peter Levels had his first success with no Med list and then soon after he created the Moto K, which was this very simple job listing site for the most for companies who had the most work opportunities and candidates who were seeing the most work.

[1:16:51.52] And for a long time, if I remember correctly, the most work, the most OK was his sort of small, much smaller project compared to Norm.

[1:17:00.72] At least Norm is this was getting featured in the New York Times and the media picking up, making lots of money.

[1:17:06.16] The Moto K was sickling along on its own, like getting very little attention from Peter and so and so forth.

[1:17:14.84] I think it's made like this for several years, but because time was his friend, because it was costing him almost nothing to keep this thing running, even though it was a small, almost rounding compared to him, he was making some moment list.

[1:17:29.68] I mean there was no guarantee, but as eventually time actually brought himself very good luck.

[1:17:35.72] The pandemic happens and as we mentioned last time it's changed the most work from being this flinged novelty that a few weird companies did to something that pretty much every company in the world suddenly was doing.

[1:17:49.48] And all of a sudden like the the most OK became his biggest business the next seeded no mid list that was at one point making $100,000 a month or something crazy like that just because there was a huge influx and this was like fire for six years after he launched the thing right.

[1:18:06.76] So if no if the Moto K was operationally burdensome for Peter to than it was receiving lots of customer support or it was very expensive to than lots of server costs or whatever.

[1:18:19.04] Very likely who would who would have shut it down at some point Because why bother with this thing that's annoying you making you very little money and and while you have this other thing that's working out but because he managed to automate all the all the annoying things eliminate the things that that were problematic.

[1:18:38.6] Be very lean not spent no you know make it it's done very very efficiently.

[1:18:44.04] Time suddenly was his friend right.

[1:18:46.52] In fact Peter levels recently he's he did shut shut down something that wasn't working out for him.

[1:18:52.76] He was building this paid community very decently like using his Twitter subscription features.

[1:18:58] EDMD me recently actually about about it right And he just told everyone look I'm I'm going to stop charging your kisses card because it's not a working God.

[1:19:07.08] It's not making enough money for him basically he realized that this thing is just not time is not his friend here, right.

[1:19:14.28] This thing is is too burdensome to learn this modulation.

[1:19:17.2] It's not making enough money.

[1:19:20.04] That's it, right.

[1:19:20.8] It's, it's gone and sometimes you have to do that.

[1:19:23.44] But I didn't really enjoy that.

[1:19:25.92] I didn't enjoy selecting opportunities where I can make this happen for me and that's where I can let put things on the market.

[1:19:33.72] You know, I have some expectation if that expectation doesn't happen immediately, no big deal.

[1:19:38.48] I don't have to make hard decisions about shutting things down or or or or or or things like that.

[1:19:46.24] Selling my startup, Yes.

[1:19:49.12] Thanks to Dennis.

[1:19:52.08] OK, a couple of quick slides and these are, I'm shifting gears a little bit that is it is going to sound like almost like a random thing to mention, but I I want to mention it because it's I think it's important and an undelated thing.

[1:20:05.56] There's a concept of medicine called the dose response relationship and we're all somewhat familiar with this that we when when we take, when we prescribed a drug to treat some problem, the doctor doesn't just tell us, you know, go take aspirin.

[1:20:20.28] Take as much as you want, right.

[1:20:21.76] We actually, the prescription has two components usually like the dose that we should be taking it and the frequency like with the doctor might tell us take 20 milligrams of aspirin twice a day like 6 hours apart or something like that.

[1:20:35.76] It's a very, very important thing because as we know, right in fact is a, it's it's a, it's a it's a concept like there's a Wikipedia page about it.

[1:20:46.04] So I just like these curves and medicine like that.

[1:20:50.16] If the dose and the frequency of a particular drug is too low, like it won't even exceed the necessary threshold for the body to absorb it and for the for the helpful effects to start to start working.

[1:21:04.48] And as we all know, right, if the dose and frequency are too high, not only this medicine won't help us really start harming because it could actually cause much more harm than the problem we're trying to treat, right?

[1:21:15.88] Of course, drug overdoses and so on and so forth being an extreme example, but not even just at that case.

[1:21:24.72] So with medicine, right, we discovered that there's an optimal curve.

[1:21:29] It can't, the dose can't be too low.

[1:21:31.12] It needs to be optimal that for it to start working.

[1:21:33.68] And if you start tweaking those optimal that you're starting going to either lose the efficiency or it's actually starts harming you more than it starts to help you.

[1:21:43.68] And this is an interesting property because it actually applies to many, many different things.

[1:21:48.36] So it doesn't just apply to medicine.

[1:21:50.52] But when you think about it, almost everything has this effect.

[1:21:53.8] And by the way, this is not just diminishing the terms, like diminishing the terms, which is a concept we're more familiar with, is a charge that eventually plateau.

[1:22:00.48] So the more you do it, eventually the benefit starts to diminish until it's flat lines at the top.

[1:22:07.56] But the dose response relationship goes beyond plateauing.

[1:22:10.48] It actually turns negative.

[1:22:12.2] The chart looks like even though this doesn't show it like this, that this chart looks like eventually it starts to become an end curve, that it starts helping you, then it plateaus and then it's actually starts harming you.

[1:22:25.28] And if you keep doing over exaggerating, it starts harming you more than you started with.

[1:22:32] Why does this matter?

[1:22:33.04] Like I think this matters because like we easily fall into the trap of thinking more is better.

[1:22:39.88] Like we've we we're doing something, it's working for us, we're getting satisfaction out of it and we think the more we do of it, the more it's going to help help us so that the more it's going to to to improve our lives, improve our business and so on and so forth.

[1:22:54.08] But I think it's very important to keep this in mind.

[1:22:57.32] There's almost always a dose response relationship threshold in everything, in everything that we're doing that scale changes things.

[1:23:04.2] This is a very important concept and in complexity science, like it's something that Talib talks about actually in that paper as well that was shared on the chat.

[1:23:13.6] Scale changes things like a small project that is isn't just a bigger version.

[1:23:21.92] So a big project isn't just a bigger version of a small project, it's a completely different thing.

[1:23:26.84] That's something that's working at a small scale, doesn't necessarily mean it's going to work at a larger scale, something that's profitable at a small scale doesn't necessarily mean it's going to remain profitable at a larger scale and so on and so forth.

[1:23:39.56] This, I think that applies also to our own preferences, which is a bit on a tangent maybe with things regarding to business.

[1:23:47.16] But even when we come to do things, when we start on trying to understand ourselves, what are the things we truly like and dislike?

[1:23:56] We might know for example, that is a good example.

[1:23:58.44] I think that makes what makes sense with what we're talking about.

[1:24:01.8] Say I like programming like I always loved to program since I was 10 years old.

[1:24:06.36] I was thinking starting to create my own games and whatever I aspired to, you know, to work with computers when I grew up and that's what I did.

[1:24:16.04] But something interesting started to happen.

[1:24:17.68] Right when I was working as a full time job that as programming as a full time job, 40 hour weeks.

[1:24:25.44] The dozen frequency was 8 hour days, 40 hour weeks.

[1:24:28.84] The frequency was this impetitive Monday to Friday, 9:00 to 5:00, one after the other.

[1:24:33.64] My relationship with programming was very different than the one when I was doing programming on my own.

[1:24:40.16] Like when I was maybe going after burst of high intensity when I was inspired to do something taking some time off, like doing it whenever I felt like doing it.

[1:24:50.28] That was a different feeling.

[1:24:52.12] But when I went could become became the the the dose response became very legit, dictated by my employer and by the norms of full time employment.

[1:25:01.56] It was a very, very different feeling.

[1:25:03.44] Now this is something I didn't notice even with my hobbies that a few years ago I picked up woodworking.

[1:25:09.12] It's a hobby, I didn't enjoying it, but almost subconsciously I started experimenting with different doors and frequencies how I apply woodworking and actually it's very different those and frequency for woodworking compared to programming.

[1:25:22.92] For me, with programming I can do an all nighter, go high intensity mode, spend like 12 hours time to finish something and it just works for me.

[1:25:31.96] With woodworking is very different.

[1:25:33.36] I can't spend more than probably 4 hours in the workshop.

[1:25:37.16] Maybe it's because it's more physical, loud noises, blight lights, you know, staying on your own feet.

[1:25:43.04] It wears me out much faster right?

[1:25:45.2] I have to take breaks, but also I can't take too long of breaks.

[1:25:48.28] Like I did the opposite mistake of stretching a project too long and then I start forgetting where I left off.

[1:25:55.96] At one point I had the designing table that I was making that and I was trying to do it like with one hour chunks and eventually I never even finished it because I sort of started to loosen to this and lose motivation to continue to do it.

[1:26:09.28] So discovering the optimal dose response that when we're applying our energy is very, very critical in my opinion.

[1:26:17.52] I didn't how we get the best out of the energy that we're that we're investing in.

[1:26:21.28] This is very, very subjective almost unlike everything we've discussed up to this point.

[1:26:27.56] So that is the, the dose response for me is going to be very different for all of you here and I don't really have any clicks on how to discover it beyond just trying different doses and frequencies.

[1:26:39.8] And this is probably my biggest issue with full time work employment is that they don't really allow you.

[1:26:45.16] Like if you discover that the 40 hour work week Monday to Friday 9 to 5 is not the ideal dose and frequency for you, what can you do?

[1:26:53.52] You can't really do anything.

[1:26:54.52] Maybe you take a couple of days off, but you're back to the same arrangement.

[1:26:58.04] If you get promoted, you're still in the same arrangement.

[1:27:00.48] If you change companies the same, it's usually still the same arrangement, right?

[1:27:04.84] And I know the only way to bake out of it is to maybe transition to freelancing where you take a lot of more control into how you work, light or full self-employment or something like that, right?

[1:27:17.36] And and that's how you start experimenting, which is a hard thing to do.

[1:27:22.08] I'll admit with hobbies it's easier and that's sort of what I did is what would work.

[1:27:26.44] And almost subconsciously I was saying different with those responses, but because nobody was bossing me around about how much I should be working on these projects.

[1:27:36.12] So I stumbled almost by experimentation.

[1:27:39.44] I don't know that I did those and frequency that works well for me when it comes to those kinds of projects.

[1:27:45.68] Yes, Tim Feddis, absolutely.

[1:27:47.52] And the very interesting you're going to mention Tim Fed is my very last slide, right.

[1:27:51.28] And that I wanted to end up with, which I think it almost steps up, right, everything we talked about up to this point.

[1:27:59.44] So I mean, what what's the point of doing everything we discussed like dealing with the stochastic worlds, embracing randomness, like finding opportunities, creating our assets, tax, serve ergodicity, survivorship bias, all the concepts we're talked about.

[1:28:16.32] Usually we're trying to do these things because we're trying to improve our lives.

[1:28:19.8] Like, what was the point of starting a business, right?

[1:28:23.92] Usually we want starting a business because we want to make our lives better, our lives, lives of our family at whatever, right?

[1:28:31.16] And this is, I think, a problem that we have in modern and the modern world is that we we ascribe like we have a very loose definition for work.

[1:28:40.44] Like, if I were to ask people, what does work mean to you?

[1:28:43.04] Probably I get a very, very different range of answers.

[1:28:46.28] Some people say I work because I want to find meaning.

[1:28:49.4] I work because I want to improve the world.

[1:28:51.28] I want to because I work because I want to bring this project to reality.

[1:28:55] I think that's it's it's too problematic when we have such a loose definition of work, because when do you stop?

[1:29:00.44] Like if you work, if you think you're working because you want to change the world.

[1:29:04.56] The world will never need, will never stop needing change.

[1:29:07.76] Where do you draw the line, what's the good work life balance.

[1:29:10.56] How do you how do you you know live a multi dimensional life.

[1:29:15.36] Like where work is only one dimension and I think the problem is better way.

[1:29:19.4] The best way to think about this and this is totally from Tim Ferris that really inspired me how to think about this way and I'm sure to many people they've heard about this it's like to answer their lifestyle first work like the only purpose for work is to improve your lifestyle.

[1:29:33.92] Like the only reason you're doing all these things that is to make your lifestyle better.

[1:29:38.4] And I want to finish this like with with this, with this story actually from from Tim Fellis.

[1:29:46.88] Like you might have heard it.

[1:29:48.12] Like I share it on Twitter every every few months, the fable of the Mexican fisherman and the and the American banker.

[1:29:57.12] And I really like this story.

[1:29:58.44] I know it's a pity story.

[1:29:59.6] It's imperfect site and there's many many things you can criticize about it.

[1:30:04.92] The story goes that there was American banker that was in vacation in Mexico and he saw this fisherman who was coming back from the fishing slip and the the American said like, oh, what did you get?

[1:30:16.64] What did you catch?

[1:30:17.44] And the Mexican showed the fish.

[1:30:18.52] MO, I caught these fish and how long did you?

[1:30:23.68] The American said.

[1:30:24.36] How long did you spend fishing?

[1:30:25.88] Oh, only a little while.

[1:30:27.84] And he asked, like, why don't you stay out longer and catch more fish?

[1:30:31.08] And the fisherman said, oh, I have enough to support my family, gives to a few friends, so whatever.

[1:30:35.6] But then what do you do with the rest of your time?

[1:30:37.96] Asked the banker.

[1:30:39.44] Oh, he said, Oh, I see plates, I fish a little, play with my kids, take siesta with my wife, stall the village, sip wine, play big guitar.

[1:30:47.96] I have a both full and busy life.

[1:30:50.4] So the American stood tall and said, wait, look, I'm a Harvard MB AI can help you.

[1:30:55.4] You should spend more time fishing with the proceeds, buy a bigger boat and now time you have multiple boats with increased hull.

[1:31:01.36] You have an entire fleet of boats and then you sort of selling to the middleman, you can send that to the consumers, you can open your own Canary.

[1:31:08.72] You cancel the product service distribution.

[1:31:11.04] Then you can move from the small village move to Mexico City eventually to Los Angeles, New York where you can run your expanding empire.

[1:31:19.68] And the visually must said, surprise.

[1:31:21.36] But how long will this take?

[1:31:23.08] Oh, he said like, oh, 1520 years, 25 tops.

[1:31:27.2] And then what?

[1:31:27.96] Asked the fisherman.

[1:31:29.36] This is the best part.

[1:31:30.84] When it's time right you can you can announce your IPO, sell your company, and you will become rich.

[1:31:36.68] You will make millions.

[1:31:38.28] And this is the punchline of this toy, right?

[1:31:40.44] And and the fisherman must then what?

[1:31:42.52] And the banker said, oh, that's a nice thing.

[1:31:44.68] Then you can move to a small coastal village where you can sleep late.

[1:31:47.8] Fisheries will play with your kids, take sister with your wife, slip wine like it's of course here.

[1:31:54.4] The the take away of the story is that at least my take away is that in many cases many opportunities we have shortcuts right to to there are two ways like to live this lifestyle.

[1:32:07.92] One is the American banker's way by doing all these complicated things taking 20 years, right Risking a lot lots of stress.

[1:32:17.76] And there was the the shortcut way right in doing a little enough like to cover your downside, right and to live the life that you want to be living.

[1:32:27.76] You know.

[1:32:28.6] And I know it is this and this applies to selection criterias as well that I thought.

[1:32:32.8] I think I mentioned in the in the previous session that where after I I, I lost the eight best book.

[1:32:39.64] I got quite a few interesting opportunities about teaching, sort of flying to different companies with each other, employees about aid W topics and things like that.

[1:32:49.4] Which tempted me for a little bit.

[1:32:50.84] But I really quickly realized this actually would allow my lifestyle.

[1:32:54.84] I had two small kids at home.

[1:32:56.32] I would have to be flying all over the country spending time away from my family.

[1:33:00.04] I don't enjoy business level at all.

[1:33:03.28] I don't particularly enjoy dealing with big companies in general, right.

[1:33:08.04] So lots of things that are very, very like, if I was desperate, I would take it right?

[1:33:14] Don't get me wrong, right?

[1:33:15.08] Or if I didn't need the money or I needed to make ends meet.

[1:33:18.6] But I quickly realized that yes, the money would have been good, but what's the point, right?

[1:33:24.36] My point right now is that I'm working for myself because I'm able to spend more time with my kids right when I don't have to ask anyone's permission to take time off.

[1:33:34.96] And there is all these small advantages like that are really helpful for me.

[1:33:39.36] It's like the the the fisherman's example from here, like why take this complicated zoo to make more money, such that eventually like more money than I need, such that eventually I can spend more time with my kids, maybe when they're 18 years old instead of right now, Right.

[1:33:55.88] So I didn't like the story right because again like it's it's it's a good whenever we take new opportunities, I think it's good to pause and deflect.

[1:34:06.68] What is this going to do to my lifestyle?

[1:34:08.44] Sometimes we have to sacrifice some short term lifestyle, incur some short term lifestyle, pain life to to gain some benefits in the future.

[1:34:18.6] But you know, the fair always defer link seems like also a very naive problem.

[1:34:24.08] Again, this is a a problem with the dose response, right?

[1:34:28.4] Not, not, sort of.

[1:34:29.8] Not thinking about the future is bad, just only thinking about the future is equally problematic, right?

[1:34:36] So this is all I had everyone.

[1:34:39.56] I'm almost tight on time, so thank you everyone for staying around.

[1:34:44.24] Happy to take questions.

[1:34:45.24] Let me see.

[1:34:46.16] As usual, if I missed anything in the chat, let me stop sharing so that we can't see each other.

[1:34:53.32] OK, so let's see where I left off because I think there were some things in the chat that I haven't.

[1:35:00.88] After yesterday's call, I looked into my notes and found these simple ideas to write books on and SAS programming also a great idea to add simple videos explaining things.

[1:35:09.24] Wonderful.

[1:35:09.96] Good to hear, Good to hear the the minimal dose effect.

[1:35:16.64] Yeah, yeah, so.

[1:35:17.56] So actually that was referring to the four hour body book instead of the four hour workweek.

[1:35:22.4] I I didn't notice that.

[1:35:23.4] But yes, I think even the four hour workweek, I think Tim Feddis calls at the minimum the minimum effective dose, right.

[1:35:30.64] If I remember correctly he calls it which is actually a very, very similar idea to the small bets approach that the minimum effective dose right is the the the scoping things down to something.

[1:35:42.36] And you know in startup language minimum viable product is also a very similar thing like the the lean concepts.

[1:35:49.64] Again, these are not necessarily novel ideas, right?

[1:35:52.68] But because of all the all the conflict of interests from VCs and other things that that are more interested in in you know, in the ergodicity chart that we saw, they're more interested in the left hand side because they console the portfolio that we get pushed into into taking extreme bets instead of thinking for ourselves.

[1:36:16.32] That's something maybe let me bring back the something I want to touch on very, very quickly before we pop.

[1:36:24.8] So one second, where did my zoom go?

[1:36:27.16] Zoom share screen, Safari that I like to, I like to pick on VCs a little bit because it's important to recognize that venture capitalists have a conflict of interest here.

[1:36:40.72] VCs remember when we looked at this chart at this slide that VCs care about this chart, this, this one, this is their portfolio.

[1:36:50] The more the individuals sacrifice themselves for the good of the collective, the steeper the chart will look like.

[1:36:57.56] Remember when all the Peters started tweaking the the leverage right and decided to benefit the individuals more This this line here diminished significantly that when you're the portfolio owner that when you care about the collective that you will want your individual bats to be speculative right.

[1:37:23.72] I mean the the the, the, the VC is like the coal mining company that was sending all these coal dig or gold diggers, the gold mining companies and gold these gold diggers to pick a spot and dig all the way down to the bottom of the earth.

[1:37:42.32] The company doesn't care whether the individuals each individual was like or what they care about is at least a few will do that's all.

[1:37:51.16] Again, like in the narratives that we hear around, especially from VCs, like all the all the stuff that pulled the ham rights, all the wonderful essays, right.

[1:38:01.52] Most of them are from this perspective like it's what's good for the technology, what's good for the economy, what's what's good for society, what's improving the world.

[1:38:13.56] But if you are thinking about yourselves, right there's a big conflict between those two.

[1:38:19.08] If you want to succeed, right, you should think about your own journey.

[1:38:23.08] That's what's good for the economy.

[1:38:25.12] And this is again like what's good this might take, that's what's good for the economy.

[1:38:28.4] It's not necessarily good for the individuals in the economy.

[1:38:30.84] This is what the politicians always say.

[1:38:33.24] And I think again like this the this because the economy is not ergodic and it's something that I think it's important for us to recognize.

[1:38:41.2] So above about enough meal, anything about that, let's see just going back in the chat again just to see if I missed anything, let's see go back down, just finished the MVP for a small bet including payment.

[1:39:01.64] We do recommend buying the domain before I launch or trying to make my first sale.

[1:39:04.92] It depends I think.

[1:39:09.6] Look, a domain, usually, unless you're spending a lot of money on the domain, the domain is really a small investment that if it's if it's a regular available domain for $10, why not, right?

[1:39:19.6] I mean, I imagine $10 is not a significant amount of money for you.

[1:39:23.28] By all means.

[1:39:25.04] If it's something different, then it's a different thing.

[1:39:29.24] Look, I wish I showed you the example of Peter SQ, right, who in my opinion is an excellent implementer of the small bets philosophy, everything we discussed in these decisions.

[1:39:39.76] Peter Askew implements by the book.

[1:39:42.6] But he does buy expensive domain names.

[1:39:44.4] In fact, he doesn't even decide businesses without a good domain name.

[1:39:47.8] It's his thing.

[1:39:49.16] It's his thing to earn some credibility.

[1:39:51.68] His logic, which I think makes sense, is that these domains maintain most of their value like they give him a big advantage.

[1:40:01.64] Right.

[1:40:01.96] And it makes economic sense.

[1:40:04.04] Like even for the projects that failed for him, he managed to either sell the business with the domain and he recouped sometimes either more than he paid for the domain or at least that close to break even or or or he just saw the domain on its own, like without the business with it and as well you recover, you recover part of it.

[1:40:23.84] So it's it's an interesting perspective again where you might, it might look like you're investing a lot, but it's a tangible asset after that.

[1:40:37.32] But again, but of course, like for small domains, absolutely similar loss takes most of the time.

[1:40:45.76] And this is the placement 2%.

[1:40:47.52] OK, so I just call in the chat.

[1:40:54.32] It feels like books are probably the easiest place to start.

[1:40:56.88] I didn't believe so right.

[1:40:57.88] I think it's the educational space is highly highly underrated.

[1:41:01.96] Like almost.

[1:41:03.96] I I I'm willing to bet like I'm almost guarantee that everyone in this room here has something in their head.

[1:41:12.2] Some knowledge, some experience, something that they know that you know that other people would be willing to pay $25 just to get a blame, dump some of your head or not.

[1:41:22.12] No, it's not enough, right?

[1:41:23.72] I mean again, like you need to have a hypothesis of how do you find these people that will pay the $25 to get your brain dump download, right?

[1:41:33.8] So you need to think about that as well.

[1:41:36.44] Everything is marketing once again, such as building a product, but the information products are great because again, like you can do it on your own nowadays, you can self publish.

[1:41:46.52] You're not relying on any gatekeepers.

[1:41:49.56] You, your customers become your customers like.

[1:41:52.4] You start building relationships.

[1:41:53.64] You Start learning how to sell what designates with people.

[1:41:57.96] You start building like your probabilistic knowledge sensitivity right to get better at selling, motivating people to get the credit cards out of their pocket and giving you some of their hard earned money.

[1:42:09.28] These are all very transferable skills and knowledge like to other projects that you end up doing.

[1:42:16.2] Absolutely.

[1:42:16.56] And again, like I think Adam Whetton was probably my biggest inspiration with this, seeing him do that.

[1:42:22.08] I don't know if you I think he mentions that he was inspired by someone else because again, it goes to show how much inspiration generators matter.

[1:42:30.04] I don't remember who Adam Whetton got inspired by, but it's a whole chain.

[1:42:34.64] I'm sure at the beginning there was some, some, some person who just liked something without any inspiration, but it's oftentimes there's a whole chain of exploration happening there.

[1:42:48.36] But I completely agree.

[1:42:49.64] And again, I think one of the better ways of of making educational products, info products even more to tame even more the uncertainty is not to do it like I did that I self published on Gum Road and I decided to sell things myself that I had to find my own customers.

[1:43:08.28] You can probably start by using one of these popular platforms Amazon KDP for books.

[1:43:15.04] You're almost guaranteed to sell something right Not not maybe not exactly 2 but there's so many people searching for stuff and in fact there's let me show you this show you this like there's we had that recorded class from so small bets recordings.

[1:43:32.76] So you should all, you should all have access to this.

[1:43:34.96] And so Greg as we have this recording Amazon KDB clash course that you can all watch and Greg is again like an interesting person who has dozens of small programming books on KDP, he's making nice, nice I think 5 figure income or at least high four figures I think from his portfolio of small books.

[1:43:55.64] But what Greg showed us here in in this class that you can all watch is that there are some interesting ways to analyse what people on Amazon are searching for, right.

[1:44:05.36] And you can also work backwards from there.

[1:44:07.16] There's like you can say for example in programming Greg will look for people searching for you know nowadays for example which ChatGPT or how to use the open AIAPIS and things like that.

[1:44:19.32] And he starts to gauge how much interest there are and he satisfies a need that he grows himself and starts studying.

[1:44:27.92] So different technologies like and he like shows books to satisfy what people are already searching for.

[1:44:34.28] This is probably a very, very reliable strategy that to start monetizing some of your skills and knowledge, right, by creating information, education of products because you can assess the demand.

[1:44:45.04] There's like a score every Amazon product has like a ranking which can sort of hold.

[1:44:51.04] You can almost reverse engineer what that means in terms of the number of sales and number of searches, sort of.

[1:44:56.8] I don't remember the exact details but Greg out explains it very, very well in his in his class here and another one by Hassan Osman about Udemy, right.

[1:45:09.08] Udemy is the same thing, a platform that is used a lot in with in enterprises like lots of companies buy Udemy licenses for their employees and basically these employees are basically not paying anything out of their pockets like but if they if if your content is especially geared towards professionals like tech or management or things like that, Udemy is an excellent platform, right.

[1:45:34.44] So they have some complex calculation about how you you get paid based on the number of minutes watched and things like that.

[1:45:40.92] But Udemy is great for videos basically which is Hassan is really good at as well.

[1:45:46.96] And I've seen Hassan done these things that and almost out of everything he puts out there, he makes maybe a couple of $100 a month that of course he got better at it over time, right.

[1:45:58.36] But, and this might not sound like a lot, but a couple of $100 a month, so that if you end up building a portfolio of a dozen different things over time, eventually we'll end up with the, with the outcomes that Hassan is seeing that, which is a little bit impressive, like he's doing I think $14,000 a month or so from Udemy last time he shared the numbers with us and another 4000 or so from Amazon.

[1:46:21.12] It's almost a full time income.

[1:46:22.2] Yeah, it took him 10 years.

[1:46:23.2] Like again, like this is not not something like that.

[1:46:26.24] It took him a long time, but little by little he he he glued this thing.

[1:46:32.88] And I think these platforms give you a much more predictable part and then you can evolve to selling things yourself in sense, in fact, something Hassan, I think just a couple of days ago on Twitter he shared.

[1:46:45.6] Twitter author, author on the side.

[1:46:49.48] Let me see if I can find it in a little time.

[1:46:51.36] He just launched a small book that he made about $1000 from on Gamble.

[1:46:57.16] Maybe I'm not going to find it somewhere there, somewhere decent.

[1:47:02.4] So he's now he's trying to do his own.

[1:47:05.52] Oh, there it is.

[1:47:06.04] Right.

[1:47:06.24] So I think he had a more recent tweet about this.

[1:47:10.76] Actually this one.

[1:47:16.48] Well, it's the same one, but I think his Ave.

[1:47:18.4] was a bit higher now.

[1:47:19.56] I forgot where his where I saw his screenshot.

[1:47:22.8] So he's now trying as well going out of these platforms.

[1:47:26] Now he's built more reputation, has built of an audience now that he's trying to sell directly, not give up like 70% of the revenue to the platforms, right.

[1:47:35.84] But it's something that he's glowing into rather than jumping immediately into the more difficult approach.

[1:47:44.8] So yeah, again, highly, highly encouraged.

[1:47:49.68] Education for products just finished MPVP.

[1:47:54.36] Yes, yes, that is saying OK.

[1:47:58.8] Last night I read some Indian hacker posts saying it's super important to find a hungry cloud before even bothering with an MVP and observe customers in the wild 1st and interview and interview them too.

[1:48:10.92] I feel like this kind of activity should probably be my investing small bet.

[1:48:15.28] Do you come and say recordings pages?

[1:48:17.48] Small bets are worse than about this.

[1:48:22.84] Nothing comes to mind.

[1:48:23.96] I I, you know I I agree right.

[1:48:25.96] I sort of I think it's important.

[1:48:27.52] So like to notice again like in the example that I showed you from Greg Lynn using something to me I generalize this idea of forming A hypothesis like you need to have a hypothesis of how you're going to have your expectation materialize.

[1:48:40.32] I I'm not as strict as some people like to say that you need to have you to start charging money before you even have the product or things like that.

[1:48:48.24] I don't believe that's necessary actually to be honest with you.

[1:48:51.76] I think sometimes it's it's a lot harder like it's very hard to make people buy something that doesn't exist yet.

[1:49:00.08] So I think if you if you're so radical with validation, you might end up missing out on opportunities just because it's a little hard.

[1:49:08.4] But even pre-orders are hard.

[1:49:09.84] So I'd rather put a small product on the market so I can charge for it rather than like put a promise to a product.

[1:49:17.92] So there's some new ones.

[1:49:18.84] I'm not against necessarily orders, but sometimes it's it's I think it's too extreme.

[1:49:26.92] I can't think of anything line.

[1:49:28.2] If I think of something I'll share with you.

[1:49:30.48] But I think overall I think if you if you just just in our community in our Discord this pattern that you're going to be seeing many people discuss and and and talk about it's going to consider a platform.

[1:49:47.52] No.

[1:49:48.24] Like I don't think so they want to be one right.

[1:49:51.68] But I think gum load you better off thinking of it as just a payment processor.

[1:49:56.68] But it's a payment processor with some nice features that I use a lot.

[1:50:01.12] Like there's an e-mail mailing list feature, which is the handy.

[1:50:04.72] There's some analytics, there's an affiliate feature where I'm sorry, where gum load allows you to create affiliates for your products and attend this, all the paying affiliates out and so on and so forth.

[1:50:17.28] There's a coupon discounts feature, but it's basically at up along Skype and PayPal with some features attached.

[1:50:24.08] You have to find your customers.

[1:50:25.92] If you put a product on gum load and you don't tell anyone about them, nobody's going to buy your product.

[1:50:31.6] They want to change this.

[1:50:33.16] They're creating the discover platform.

[1:50:34.8] If you've got to discover that, sorry, discover.gumload.com, They have a bit of a marketplace, but the way you start ranking up in that marketplace, it's based on how many sales you're making, right?

[1:50:47.28] So it's a bit of a chicken and egg problem.

[1:50:49.52] You only get attention there if you're already selling a lot on your own, but otherwise you're just going to linger in obscurity.

[1:50:56.12] You might be lucky and somebody searches for your exact same thing and you shop in the search results, but I think it's very, very hard.

[1:51:03.08] Gamelo lemons, squeezy teachable podia.

[1:51:06.6] All of these in my opinion are just payment processors a lot with some features attached to them.

[1:51:13.88] Gum Load versus them is squeezy.

[1:51:16.36] I never use them in squeezy so I don't think they have have an opinion.

[1:51:20.4] I know them in squeezy fees are slightly lower than Gum loads, so that's one advantage.

[1:51:26.56] I think Gum load has some features that lemon Squeezy doesn't have.

[1:51:31.16] Personally, I didn't like Gum Load just because I'm familiar with it.

[1:51:33.92] I think it's super, super simple.

[1:51:35.88] And by the way, I think next month I have a gum load clash course thing that I I will go in.

[1:51:41.84] Is it next month or maybe in January?

[1:51:44] Is there somewhere on our small best calendar where I will do a deep dive into every feature of gum load?

[1:51:50.72] I talk more about the pros and cons, things to use, things to avoid, all the bells and whistles and so on.

[1:51:59.68] And there's recordings as well, because I've done it in the past.

[1:52:02.12] For those of you who can't wait to be done, yes, I agree.

[1:52:08.12] Lean start-ups.

[1:52:11.52] There's an information product idea that I think a small bet for me of a niche technology.

[1:52:15.68] I am interested in creating this product enough that I don't care about validating it enough.

[1:52:20.12] If there is validation.

[1:52:21.88] I know at least one random stranger on the Internet person that wants to buy it.

[1:52:25.32] Yeah, no, I put some on YouTube.

[1:52:27.4] But actually it seems that people didn't search for the topic on YouTube.

[1:52:30.08] But after I put some YouTube, people start searching for it.

[1:52:32.76] Look, yeah, look, I think if the project is small enough, again, you almost don't need any, any hypothesis or whatever.

[1:52:40.92] That is just you can just do it.

[1:52:43.76] And yeah, I like, I like even just knowing that there's at least one person who will buy it.

[1:52:49.72] It's sometimes enough to to to to frame your expectation.

[1:52:55.08] Probably you're not going to spend six months.

[1:52:57.08] We're going something knowing that, you know, you're only looking at maybe a few single handed things, you know, a few handful of people going to buy this thing.

[1:53:06.84] And I think again like keeping the expectation in mind is help helpful to to let you scope the project and take prudent risks about validation, right.

[1:53:23.4] I think it's personally I don't even like the term validation because validation is a is a semantically, it's almost incompatible with the stochastic world activity.

[1:53:33.76] You can't really validate something.

[1:53:35.24] You know we talked about Nassim Taleb, it's actually one of his books he talks about this Karl Popper philosophy.

[1:53:42.04] You can't in in in randomness laid in the world.

[1:53:44.16] You can't validate anything things things you can at most invalidate things.

[1:53:51.04] And even there there's some some ambiguity on whether you can even validate ideas.

[1:53:57.48] And you know because what does it even mean, right.

[1:54:00.2] I mean it's like saying to validate a poker hand.

[1:54:03.28] Like to imagine you're playing poker, you have a hand of good cards, doesn't mean you've validated your card.

[1:54:09.04] It doesn't make sense because you don't even know what the other people have what's on the table, right.

[1:54:14.28] It's it's all land in a slate and so you can the the alternative I think to to validation is probabilistic knowledge that is just learning over time what is more likely to work and what is less likely to work.

[1:54:26.36] It's the same thing that poker players, skilled poker players become good at is they recognize the strength of their hands and they place their bets accordingly.

[1:54:36.2] It's something that you learn with practice right?

[1:54:38.32] And I think the same thing with business validation.

[1:54:40.92] I dislike it because people use it as if it's a binary condition.

[1:54:45.6] You do something and now you have your labyr stamp of validated.

[1:54:48.84] This thing is validated.

[1:54:50.12] I see people asking people saying did you validate your idea as if there's a check box.

[1:54:55.36] Oh yes, it's validated.

[1:54:57.08] I will never do something before I validate it as if the thing goes from invalidated to validated just by doing something it doesn't make sense because there's so many, many things at play.

[1:55:07.88] All you can do again, I think is just having some reasonable hypothesis that this thing is going to work.

[1:55:13.92] Whether that means because maybe you have a waiting list of 1000 people who already told you they want to buy your thing, you know that means something like it's no guarantee.

[1:55:22.68] Whether you whether you put out a landing page and collected some pre-orders, you know that's some strong signal that people are interested.

[1:55:30.56] If people are willing to give you money before they even have the project, that's some sort of signal.

[1:55:33.72] It's still not a guarantee that even more people are going to come, right Eventually Market changes.

[1:55:40.36] If you manage to reach 1000 people, there's no guarantee they're going to reach another thousand or another 10,000 or whatever.

[1:55:46.24] The right customer acquisition costs are real, right?

[1:55:49.4] So there's so many flaws with the concept of validation that I'd try to not use it myself.

[1:55:55.12] I'd try to eliminate it from my vocabulary because I think it's misleading that it's really easy to fall into the trap of thinking I've validated this.

[1:56:02.28] Because what happens when people think they've validated something?

[1:56:05.64] They lose all discipline with their risk taking.

[1:56:08.72] Like they think, oh, I validated it, I'm going to go all in.

[1:56:11.04] I'm going to invest a lot in it.

[1:56:12.44] I'm going to spend six months because I found my validated idea.

[1:56:15.88] And then they get sucked in too, you know, into the tap, which by the way, I've done this mistake myself.

[1:56:23.36] Like, that's why.

[1:56:25.32] That's why.

[1:56:26.36] That's why it stings.

[1:56:28.4] I have a 5K e-mail list.

[1:56:29.68] I have some cost to start.

[1:56:30.84] What do you think?

[1:56:31.32] Should I charge at the beginning lifetime fee or one time year fee instead of monthly charge with type and so I go to a small bet if I get for example 500 payments for a year.

[1:56:41.12] Look, I don't see it's really hard to give advice on this because I would honestly.

[1:56:44.92] I think my best heuristic for charging and spacing models is I'd try to put myself in the shoes of my customers or my potential customers.

[1:56:54.4] What would I do?

[1:56:56.08] How would I feel if I was being offers this type of product site and I look, it's a heuristic.

[1:57:02.24] It's imperfect because not everyone is like me or will behave like me.

[1:57:06.68] But I think this heuristic has served me well in in, you know, if if I think it's going to be hard for me to sign up to some of the caring payment, chances are other people are going to feel the same thing.

[1:57:20.6] This doesn't mean that it's a bad business model.

[1:57:22.56] And when I think once you have something that's working, you can AB test different prices and so on and so forth.

[1:57:27.96] But I think in the very beginning, I would rather err on leaving some money on the table under charge, choose the pricing model that's going to convert more sales faster, which sometimes, for example lifetime fees might be better because it's easier to sell a lifetime fee than as a carrying fee is significantly.

[1:57:45.76] I mean almost always because because again of the metrical principle, I'd rather have a few, I'd rather have 100 customers that may be I under charged rather than sign to optimize my pricing.

[1:58:00.12] And then nobody signs up or very few sign up and then I have nothing, I have no customers, again for the metrical principal reasons that because having 100 customers is valuable, those 100 customers will leave your reviews, will leave your testimonials, they'll give you their e-mail address, right.

[1:58:15.72] It's an asset that if you decide to optimize too early you might end up with nothing and now we have nothing right.

[1:58:21.84] So I think I again like my maybe my, my answer is Ellen under charging.

[1:58:28.76] A lot of you think the fertilize and this I think controversial right maybe lots of people on Twitter say charge more you should always charge more blah blah blah.

[1:58:37.92] I believe and it's I've I've executed this myself.

[1:58:41.76] If I think maybe I can get away with $40, I say let's let's the price at $28.00 like something like that so I can see how it goes.

[1:58:51.64] You can always increase charge prices later, optimize later, but I'd rather get that sort of small win that other than jeopardize that.

[1:59:06.92] Let's see slide zones economically many VC start-ups validate but never get profitable.

[1:59:12.72] Yeah, this is the thing that I mean VCs are always talking about product market fit.

[1:59:17.24] They only invest in you if you show up product market fit.

[1:59:20.64] Yet if you look at the statistics, even the most successful VCs like Y Combinator like 98% fold or get acquired which is a graceful way of failing, right.

[1:59:36] If product market fit was real, right.

[1:59:38.96] I mean if it was something that was really indicative of success, they wouldn't have these extremely, extremely high failure rates, right.

[1:59:46.64] So I mean I'm not saying that product might fit has some has some value right.

[1:59:52.16] I mean it shows that your people are signing up for your thing your your product is not a complete, you know, it's not completely useless.

[2:00:00.32] If some people are actually taking the wallet out of their pocket and paying for it and they're they're happy with it, it it means something.

[2:00:06.76] But it doesn't necessarily mean that even more people are going to come or it's going to be as easy to find the next 100 customers as if it was the 1st 100 customers or any of the other things that people try to extrapolate from their very early wins.

[2:00:23.52] But yeah, very good point, right?

[2:00:27.64] Usually PMF is in the VC selection criteria, but we should ask ourselves how come you know 99 out of the 100 things you've invested in that health PMF ended up failing?

[2:00:39.96] What does PMF actually mean if if it has such a high failure late, which I think again like this, the solution is to think about it probabilistically.

[2:00:49.52] It's a good sign that people are using the product, but it shouldn't be just extrapolated indefinitely.

[2:00:56.76] One of my small bets and subscription service that helps subscribers find clarity by asking a question daily.

[2:01:01.36] It's been growing slowly, almost exclusively toward of mode so has recommended it recommended me.

[2:01:06.68] We expand using ads on X and LinkedIn but I fear it may be similar to shouting into the void.

[2:01:12.52] Look, I think ads can be very nice small bets because I was pleasantly surprised a couple of times with ads.

[2:01:18] I remember with my Edwards book, actually I managed to have some success with ads in probably the least likely place on that place which is notoriously hostile for ads.

[2:01:30.68] But it was the pandemic.

[2:01:33.04] And AD prices were clashing down because of of all the uncertainty And and I heard somebody say that prices on that are really cheap and they decided what if I advertise in the AWS subleddit my Edwards book and believe it or not I managed to get you know a banner there and the Edwards subleddit for only $0.10 per click.

[2:01:56.6] And it was working right.

[2:01:58.4] And for about six months I made a nice profit of about, you know, I was making basically making half my two.

[2:02:07.36] I don't remember what terms they used, but for every dollar I was spending the net I was making $2.00 in revenue.

[2:02:12.44] That was relieving me with with with a nice profit.

[2:02:16.36] Eventually like the ad prices kept up right and I stopped making a profit and I paused the campaign.

[2:02:22.88] So it wasn't very long lived, but it was a very interesting experiment.

[2:02:26.24] I made about $18,000 in profit just from saying that.

[2:02:29.44] Small experiment, My experiment.

[2:02:31.92] My first campaign was I dedicated like $200.00 right to run a small date campaign for one or two days.

[2:02:39.16] I made a few sales and said OK, maybe I should try it again for another few days and they kept working and I had some mediocre success.

[2:02:47] Even with Twitter ads again, I never really managed to continue to replicate it, that maybe they were one of things, but ads can be small bets because you define how much you're going to spend.

[2:02:59.04] Is $100 a significant amount of money for you?

[2:03:02.76] If not, give it a go that you learn something.

[2:03:05.72] That and I've learned a bit about ads as well, just by placing little small bets here and there.

[2:03:11.32] And I know people like who have stumbled into, you know, a very nice campaign structure on Facebook ads and things like that.

[2:03:21.44] I have never, I haven't been lucky yet.

[2:03:24.6] I'd like to stumble on something that I can't just keep putting money into it and it keeps generating me sales.

[2:03:30.12] They were all very transient.

[2:03:31.96] But even with it, even with just these transient things, it worked out for me.

[2:03:36.76] So no, absolutely I I recommend ads like give it a shot.

[2:03:40.96] I never had said LinkedIn XI saw it a few times.

[2:03:43.68] I think X is changing so much that, you know, whatever I learned six months ago, I think it doesn't make any more sense.

[2:03:49.96] So I think it's worth just like periodically, right?

[2:03:54.04] Again, I'll locate a couple of $100, give it a shot.

[2:03:57.32] I wouldn't sleep on.

[2:03:58.08] Let it again.

[2:03:58.84] Like believe it or not, it can work.

[2:04:02.08] And I think the fact that not a lot of people advertise the places are competitive and of course Google I think it's it's it's interesting you know Amazon as well for information products both Greg and Hassan use.

[2:04:16.56] Basically Amazon has a self-serve not self-service pretty much turnkey ad solution, a little ticket box and they will run ads for you to promote the books that you already have on Amazon and they make sure that you remain profitable and so on and so forth.

[2:04:30.4] It's almost like a no planer to to use.

[2:04:36.88] So operating fit is not binary sliding scale.

[2:04:41.04] So the LST message you can have early PMMF which is used demonstrated by paying users and then you can have different scale.

[2:04:46.88] Oh yeah, totally right.

[2:04:48.04] And again like it's it's a, it's a, it's a sliding scale on a, on a, on a, on a ruler with no marks.

[2:04:55.4] And this is the problem, right.

[2:04:57.2] This is why we can't really use it as a very objective formula.

[2:05:02.52] It's a signal, right?

[2:05:04.08] And I think signals are make sense when we think in terms of probabilistic knowledge.

[2:05:08.36] Yes, it's good.

[2:05:09.08] It's like the poker player who has a strong hand, it's a signal and they you play your bets accordingly, right.

[2:05:18.8] But using it as using it as a as a binary thing is a very very very problematic thing.

[2:05:31.52] OK, I think I caught up with this chat.

[2:05:33.16] Let me see if I missed anything.

[2:05:34.6] Anything I missed, feel free to copy and paste.

[2:05:36.56] Again, apologies if I if I skipped it or any other questions from anyone.

[2:05:46.6] Thanks so much.

[2:05:49] Anything else before we let up?

[2:05:53.96] OK, maybe not.

[2:05:55.24] Well, thank you everyone for keeping me company and sticking up to the end.

[2:06:00] I hope we all get to keep in touch that on Discord, on Twitter and other places.

[2:06:05.48] Feel free to share your projects on our Discover channel.

[2:06:08.2] Happy to give feedback, support you if I can, any questions, of course you know where to find me.

[2:06:15.24] So cheers everyone.

[2:06:17.32] Have a good day.

[2:06:17.84] Bye, bye.