But by the end of this post I will convince you that it’s actually a terrible idea.

ERGODICITY

First, you have to understand a very important concept: in some systems, what’s best for a group is not necessarily what’s best for the individuals who make up the group. In other words, the total wealth of a group of people could be increasing, while almost everyone making up that group could be seeing their wealth diminish. When this happens, we say we have a non-ergodic system. If the system was ergodic, what’s happening to the collective would also translate to all individuals.

Silicon Valley is a non-ergodic industry (like Hollywood, book publishing, the music industry, and even your country’s economy unless you’re under full-blown communism.) A non-ergodic system is not necessarily bad, but if you’re not cognizant of the system you’re in, you’re going to be played like a fiddle. Those who benefit from the collective will take advantage of you, while you (as the individual) lose out. This is what YC will try to do to you. In fact, this is what YC has to do; otherwise it won’t survive. Let me explain.

LOOKING FOR TREASURE

Imagine you’re told there’s a bunch of hidden treasures within a 100 acre area. What’s the best strategy for finding some of these treasures?

One way is to pick a spot, and dedicate your entire life digging as far down as possible on that one spot. You might reason that the deeper the treasure, the bigger the loot. You don’t want to settle for a measly small treasure box. You want the full chest of diamonds buried near the end of the earth’s crust. This is your shot at glory.

Another way is to use a search method employed by search and rescue teams. You divide the area into small squares, and do a “reasonable search” in each one. You use probabilities and some common sense to help guide you how deep to dig, and then you move to the next square. If you encounter undisturbed compacted dirt, chances are there’s no treasure beneath. If you run into bedrock, it’s almost certain there’s nothing below. So you use that information and move on. Your goal is to search the entire area where there’s probable treasure as quickly as possible. Ideally within your lifetime.

I’m sure you agree with me that the first way is a dumb strategy. Almost every digger employing this strategy will die treasure-less. But actually, it’s only dumb for that individual treasure hunter. For a gold mining company, this is the optimal strategy. The company only needs one miner to hit jackpot, and all the other miners can die penniless. If the cost of sacrificing an individual treasure hunter is low, the most optimal strategy is to get tens of thousands of treasure hunters, allocate hundreds of them per acre, and make them dig all the way down to the earth’s core. The treasure hunting economy would grow much bigger than if all the individual treasure hunters were optimizing for their own self-interest.

So, digging in one spot is a dumb strategy for the economy of the individual, but a very wise strategy for the collective economy of all individuals.

This is what happens in a non-ergodic system. We often hear politicians claim that the GDP is growing, but all the gains are going to the 1%. This is the same thing. The wealth of a country could be growing, but almost all the citizens could be getting poorer. There’s nothing inconsistent with this. The average is simply being dragged up by the freak outliers.

The same thing happens in venture capital. The owners of the portfolio maximize their returns when the system is non-ergodic, because while the individual treasure hunter has one lifetime to strike gold, the VC portfolio has access to thousands of lifetimes: those of all the treasure hunters.

PLANE CRASH

YC will proudly tell you that you are more likely to end up with a billion dollar business if you join them. That may be true. What they’re more reluctant to tell you is that only about 50 companies met that expectation out of the 4,000 or so that went through their program. That’s 1.25%. To be fair, that’s actually quite impressive, but let’s say you have the stamina and willpower to go through YC three times in your lifetime. You’d need approximately 26 lifetimes to hit the jackpot! Aha! See the problem now?

I don’t know about you, but I want to be successful in this lifetime. I can't afford to rely on 26 lifetimes. But maybe you think you’re special. You’re not like those 3,950 dummies who failed. Maybe you are in fact special, but I wouldn’t rely too much on that. Business is much more random than it seems. If business was predictable, YC wouldn't have a measly 1.25% success rate, or thereabouts.

You might think that those who failed might still have gotten something. Maybe. But failure is a very expensive way to learn those things. You don’t need to crash a plane to learn how to fly one. And whatever lessons are learned from going through YC are probably not very useful anyway, but more on that later.

PIVOTS ARE STUPID

One of the bad learnings you get from YC is that there’s a formula for success, and it looks like this: First you do some brainstorming. Then you come up with a good idea that can scale to a billion dollars (otherwise what’s the point of getting out of bed in the morning?) Then you work hard until you find “product-market-fit.” And then if the noises from investors indicate you won’t be getting a next round of funding, you start looking for a “pivot.”

This so-called formula is nonsense. First, good ideas rarely come to us from a brainstorming session. They come from wandering about with an open mind until we stumble on an opportunity worth pursuing. Most of your ideas will be bad ideas, because unfortunately you’re not a genius visionary. So the best way to find good ideas is to have many ideas, try them out, take what works, and throw away the rest. But this is not what YC wants you to do. YC wants you to pick an idea that has market pull (or the potential for it), and to then dig a hole in the same spot until you reach the boiling magma. Because what if you stop digging just before you strike gold? When you’re cheap and expendable, that’s not an optimal strategy for the YC fund. You must go all in. Diversification is for your YC overlords, not for you.

If you reach the magma layer and you still have nothing, then you’d be encouraged to pivot. But that’s not how you find business opportunities in the real world. You can’t just say I’m going to pivot, and suddenly a good opportunity lands on your lap from heaven. You get good ideas by embracing randomness for a long time, until something looks like it has a fighting chance of paying off. The pivot idea you were forced to come up with is extremely unlikely to be one. Your imagination is overrated. The YC execs didn’t imagine Stripe or Dropbox or AirBnb. Random things come to them during demo days. The YC folks are smart because they know their imagination is limited. And so should you. You can’t just pivot a business idea. And if you’re going to cherry pick some pivot that worked out of the thousands attempted, you should stop reading now. Just go join YC.

The second bad lesson from YC is the focus on the upside. But if there’s any formula for success in business, it’s to focus relentlessly on staying in the game rather than on hitting it big. Focus on the downside, and let the upside take care of itself. To thrive, you must first survive. To win the race, you must finish the race. And so on. But this is in tension with what YC wants you to do. They want you to dig deep to the middle of the earth, and if you don’t come back alive, tough luck. You were a brave soldier, but now it’s time for them to focus on the other 999 soldiers. YC is still alive, but you’re not.

Don’t be a dummy. Don’t be a bet in somebody else’s portfolio.

BUT YOU JUST WANT TO SELL YOUR COURSE!!!

Ahahaha, you caught me! It’s true. I do have something to sell you. I run a community for small-time entrepreneurs who are satisfied with reliably attainable mediocre success. The YC folks feel sorry for our joy with mediocrity while they’re out there changing the world. And we reciprocate the emotion.

So yes, I am promoting something that goes against everything YC stands for. But if you think YC is not also selling you something, I have a bridge to sell you. But maybe I’m being a bit too harsh. Because what is it that YC is selling you exactly?

Me, I charge you a one-time payment of $245, and you get access to my community, which includes live workshops, recorded classes, a group chat, and a few other things. It’s very clear what I’m doing. I ask for some money in exchange for access, and those who give me the money get access. Even my 6 year old kid understands it.

But YC is not asking you for money. They actually give you money! It looks like you’re the one selling to them. You’re technically selling them a piece of your business, no?

No, no, no, hold on. The easiest way to see what YC is selling is to look at military recruitment. The military sells the narrative that serving your country is a noble endeavor. You’ll get a shot at glory, and at the very least you gain some important life skills. You’ll also get paid enough to feed yourself and cover your basic needs, but barely. The military wants to recruit expendable soldiers who will go out to the battlefield risking their lives and limb for the collective, while the generals with all the medals sit in an air conditioned room giving orders.

YC is no different. It wants to recruit wide-eyed young founders to pick a spot on the treasure map and dig all the way down through the earth’s crust. Most of them will spend years or decades digging, and all they end up with it is a ramen lifestyle. Usually bunched up with 4 roommates in a damp San Francisco basement living on take-out ramen noodles every single day. But hey, they’re young. They’ll have time to do adult things later, like starting family or making decent money. And at the very least, they’ll gain some important life lessons and make some good connections.

Think about this for a second: The most successful business owners are typically in their 40s and 50s. Why is YC full of 22 year olds? Why aren’t the 40 year old entrepreneurs taking up this incredible deal that YC is offering? YC will tell you it’s because only the 22 year old kids can be true visionaries. BULL. SHIT. You’re not a visionary. All those 4,000 kids who went into YC also thought they were visionaries, and where are they now? They’re all in the startup cemetery, except for a dozen or so who despite the low odds managed to flip 10 heads in a row. The biggest indicator YC is a bad deal is that only people who are easily duped take up these deals.

UNLEARNING IS HARD

The best thing I learned about business is to avoid trying to predict what will work and what won’t. YC knows this. That's why they only make small bets in thousands of businesses. But YC will try to teach you the exact opposite.

Business is a lot more random than it seems. You can’t treat it like a predictable project. You need to treat it like a financial investment. Instead of investing your money, you’re investing your time and energy, which is as scarce and as precious as money (if not more). Tell me, how do you invest your money? Do you pick one amazing stock and put all your life savings on it? Of course not. You understand that finance is uncertain. What’s good today might not be good tomorrow. There are hidden risks everywhere. And even if your stock pick doesn’t go bust, the biggest gains are likely to happen elsewhere and you won’t benefit from them if you’re only exposed to one piece of equity.

YC teaches you to try to be a visionary. When you fail… Oopsie! Tough luck. The fund benefits from the non-ergodic nature of the system, but you’re out years of your time. But that’s not even the worst of it. You would have been taught things that not only won’t work in the real world of business, but are counterproductive. You will have to unlearn almost everything.

If you want to succeed in the real world (and within this lifetime), you need to try many small things, experiment, tinker, and build a portfolio of multiple income streams. You need to treat your time the same way you treat your brokerage account. You basically need to become a VC, but for your own ideas. To make the system ergodic, you must un-leverage yourself from going all in on one thing, and get access to many diverse income streams. The same way it’s wise to invest in a broad ETF, you should be doing the same things with your projects. YC will teach you to do the opposite, but you’ll have to unlearn all of it. And unfortunately unlearning is much harder than learning.

Yelling and screaming at me in the kitchen, he smashed all the dishes in his hand onto the floor. The salad guy, and the dishwasher, their mouths were gaping. The chef had to stop cooking and turn around to see what the hell was going on.

The waiter grabbed me by my shirt. He pushed me up against the wall, and I pushed back in what almost turned into a scene from A Bronx Tale.

It was my first few weeks on my first job; I was 14 and needed that job.

The waiter went off on me because I had messed up. 

I was a snail at busing and cleaning the tables. I made terrible cappuccinos. The way I decorated the dessert plates looked shittier than when those artists smash paint onto a canvas and call it modern art. How did I mess up that day? I was a kid; it could've been any of those things that night.

But still, there is no excuse for a grown-ass man, my waiter partner was in his late 30s, to go off on a 14-year-old kid. 

It was an absolute shock for me to witness an adult that was a total stranger go off like that in what was a pretty fancy restaurant. Brunelli's (now closed) was on 78th Street in Manhattan, NY.

I remember going to the bathroom after the incident, my face red, ready to explode. I was embarrassed badly for a split second, and I thought about doing something crazy.

But I thought about it some more as I washed my face. It didn't make sense to go off. I had a family that loved me and that I loved. I was there to help bring in some extra money, not to bring more trouble. As fresh-off-the-boat immigrants, we had enough trouble.

The best thing to do was quit.

It was a busy Saturday night at the restaurant, the worst time to quit. But I walked back in, approached the owner, apologized, and said I quit. 

But my uncle, a waiter there too, had just picked up on what transpired. My uncle got me that job. He had asked the owner for a favor to let me work there on weekends because I needed the money. It was probably against some law for a 14-year-old kid to be busing tables. So they'd taken some risk to help me.

My uncle was an immigrant, too; he had gotten to the U.S. a few years earlier and was a little more accustomed. And that night, my uncle gave me one of the best pieces of advice I ever got in my life. Something I rely on to this day.

As I left the place, my uncle caught me outside. 

He said, "You're going to let that guy make you quit? You go back in there, and you make him fucking quit."

He added, "Don't ever let anybody make you quit something you want or need."

I went back into the restaurant and kept working. 

I didn't need to do much to make my waiter "friend" quit. I just showed up every weekend, and time did its thing. Any adult that goes off on a 14-year-old kid has his demons he's dealing with. And sure enough, my waiter "friend" was showing up late, arguing with other people who worked there. He was doing things in the back that he shouldn't have done. And he got fired.

I never forgot that lesson. And it serves me to this day as I try to build an audience and build on the internet.

Today, there are a lot of people who will criticize you. 

Some will try to get you to quit without ever showing their faces. They'll do it from anonymous accounts. 

Only losers attack people from anonymous accounts.

And some messed up people will say nasty things to you and want everyone to see it, like my waiter “friend.”

But you just remember the lesson my uncle taught me. 

You keep doing what you need to do. And you make these people quit.

Thanks to Chris Wong and Daniel Vassallo for helping edit this piece.

Small Bets in the Wild:

🔸 Gary Vee has a conversation with Hasan Minhaj about how the goal needs to be the process. All the external factors, they’re out of your control. You can only focus on what you can do.

Highlights from the Small Bets Community:

🔸 Starting next week, & will be teaching a 3-week live course on how to start and succeed with newsletters.

Chris and Louie have taught the Newsletter Launchpad multiple times, but this is the first time they are hosting the entire thing live for the Small Bets community.

All Small Bets members get access to this live course (and the recordings) at no extra cost. It will run from May 29, 2023, to June 15, 2023, and registration is open. Join us if you’d like some help starting your own newsletter.

The Small Bets Community can be your support network. Join an active community of 2,852 members where we discuss ideas, get feedback, share wins, learn together, and help each other. No recurring fees. Pay once, and you'll get lifetime access to everything.

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In the first months of 2021, memestocks went mainstream. Some of my friends were all in - they were buying GameStop, AMC, Bed Bath & Beyond. They bought options and bragged about how much money they were making. A couple of years later, I haven’t heard them mention any of those words in months. There’s a not-so-thin-line separating skilled traders and degenerate gamblers - and my friends were clearly on the wrong side. I heard about their wins but never about their losses.

When my friends played at the Wall Street Bets casino, they didn’t know anything about options. They didn’t know the value of the underlying companies, they were buying out of FOMO. They didn’t care about the price they paid and they disregarded that options expire eventually.

In finance, a stock option gives you the right, but not the obligation, to buy or sell a stock.

In life, money gives you optionality. You have the ability, but not the requirement, to take action.

Our default mindset is to accumulate optionality instead of figuring out what we actually want to do. I had a high-paying finance job for eighteen years. I could do anything (not everything!) I wanted. But I never did anything. Sure, I had jet lag inducing beach trips, got the requisite IG-worthy photos next to lions, and had Michelin-star dinners. But, in the end, it was more for the ‘gram than for me.

My degen friends had no idea how the business operations of GameStop, AMC and Bed, Bath, and Beyond worked, they just followed the herd. And in my life, I did the same. If my friends wanted to go clubbing on a Saturday, I subjected myself to ear-splitting music when I would rather just chill out. The only part I enjoyed was hitting up K-town for some late-night mandoo soondobu afterward.

Just like my degenerate friends, my life choices were driven by FOMO.

I didn’t realize the cost of building optionality was my time and before I knew it, I was thirty. Another blink of an eye and I was forty, and I still didn’t know what I enjoyed.

Focusing on collecting optionality blinded me to other opportunities. Just like a hoarder, I ignored the outside world, hemmed in by the piles of optionality I amassed.

It was easy to sit back, letting the winds blow me. Only to have years pass and realize I hadn’t accomplished anything and was bored out of my mind. My options were expiring, just like my friends’ GameStop options.

The opposite of optionality is action. And action is how you find out what you like to do. Small bets let you conserve your optionality by taking prudent risks. Trying out your creativity gives insights into what you actually enjoy. In the last two years, I’ve experimented with writing, editing, and building courses. I’ve learned that I like connecting dots and clarifying ideas. So far my small bets have taught me things, now I need to make some more small bets to utilize the strengths I’ve found.

You could say that I can only do this because I built up the optionality over eighteen years, but I see my former coworkers still chained to their desks until late at night. How much more optionality do you think they need?

Optionality is not just making more options for yourself but also freeing yourself from what you don’t want to do. Take advantage of the optionality you have. A life building optionality without using it is just like the option-buying degens chasing FOMO. The worst use of optionality is not taking action.

In fact, everything meaningful in life comes from exercising optionality. Settling down, starting a family, creating memories with family and friends, adding beauty to your surroundings, etc... all reduce future optionality but add meaning to our lives.

Use optionality, don’t hoard it.

Thanks to Louie Bacaj and Daniel Vassallo for helping edit this piece.

Small Bets in the Wild:

🔸

https://twitter.com/dvassallo/status/1611121456674398208

🔸 Mark Manson talks about the different types of people who are into self-improvement. “Coach People” get addicted to the process of self-improvement and lose connection to why they are actually doing it.

But what the Coach People don’t get is that the whole point is to eventually stop. It’s to leave. Because unlike chess or basketball, there’s no world championship for anger management. Nobody is going to give you a trophy for mindfulness. No one gives a shit if you got control of your anxiety yesterday or not.

Just like Coach People, modern workers lose perspective and start chasing prizes that they may not actually care about.

🔗: The Point Is to Stop

🔸 Harvard Professor Mihir Desai writes about how the career goal of many of his students is to maximize optionality.

🔗 The Trouble with Optionality

🔸 “Why do you stay in prison when the door is so wide open? Move outside the tangle of fear-thinking. The entrance door to the sanctuary is inside you.” ― Rumi

Highlights from the Small Bets Community:

🔸 We have an exciting lineup of live classes coming up, including a brand-new one tomorrow by Sahil Laviginia, founder of Gumroad.

All of these are all 100% free for all members of the Small Bets community:

• May 9 - Sahil Lavingia - State of the Creator Economy

• May 16 - Michael Sklar - Minimum Viable Marketing

• May 22 - Chris Wong & Louie Bacaj - Getting Started and Succeeding with Newsletters

• May 29 - Chris Wong & Louie Bacaj - Cohort 1: The Newsletter Launchpad Cohort Course

🔸 Later this month, Louie Bacaj & Chris Wong will be teaching a 3-week live course on how to start and succeed with newsletters.

Chris and Louie have taught the Newsletter Launchpad multiple times, but this is the first time they are teaching the entire thing live for the Small Bets community.

Anyone with a membership to Small Bets gets access to this live course (and the recordings) at no extra cost. It will run from May 29, 2023, to June 15, 2023, and registration is open.

The Small Bets Community can be your support network. Join an active community of 2,793 members where we discuss ideas, get feedback, share wins, learn together, and help each other. No recurring fees. Pay once, and you'll get lifetime access to everything. You can join today at half price if you use the button below:

Join the Small Bets Community

Benjamin Franklin was the original American "PDF Hustler."

Of course, they didn't have PDFs back in Franklin's time, but they did have Almanacs. The first Almanac in North America was published in 1639. And Almanacs are a sort of compilation book published annually with a calendar and all sorts of wisdom. Almanacs were common when Franklin published "Poor Richard's Almanac" on December 19, 1732. Even Franklin's brother, James Franklin, had published an Almanac.

But Benjamin Franklin's Almanac was a smashing commercial success in the American Colonies.

10,000 copies of Franklin's Almanac were printed each year. The book had editions published for 25 years. The book was advice from Franklin, who wrote it initially under the pseudonym of Richard Saunders. It had jokes, hoaxes, and what we would call today Memes. It had poems, proverbs, and aphorisms. The book included industry and lifestyle advice, among many other things.

This book was so successful that Napoleon even ordered it translated into Italian and French.

According to the Library of Congress, Benjamin Franklin would go on to be known for many things: "a printer, writer, scientist, inventor, statesman, civic leader, and diplomat." He charted and named the gulf stream current; as a scientist, he was among the first to dabble in electricity. His achievements were known far and wide.

But what is not widely known is that his PDF or Newsletter Hustle financed all of that, err, I mean his almanac.

Poor Richards Almanack was Franklin's biggest commercial success. It made him wealthy. And it allowed him to dabble in all sorts of other things he is known for today, including becoming the first Postmaster General.

“Wealth is not his that has it, but his that enjoys it.”

― Benjamin Franklin, Poor Richard's Almanack

Today, they call people like Franklin a Polymath.

I struggle to describe what I am doing these days, but I am making money. I run courses and have written a book. I also build a lot of software. And I am part of this Small Bets community. I invest and manage some real estate. I write a newsletter and tweet. 

It's honestly hard to tell you exactly what I do.

Some people prefer to call me by the derogatory term "PDF Hustler." Now I can handle it.

But some people fear this term so much they don’t even try. They don't even try to create things that could add value to other people and the world.

I talk regularly with people who struggle to put a product out of fear that they'll be judged harshly. In fact, a few months ago, I had several phone calls with my friend Dagobert Renouf before he finally launched his smashingly successful Twitter course. He was going through the same doubts I had months before; what would people think if I put out a course?

But Dago had a unique approach to doing Twitter; he was replying to over 100 people a day. And he was posting a regular tweet and a meme every day. And it was working; he grew from a few thousand followers when I met him to nearly 50,000 in a few months. So I encouraged him to share that hard-earned knowledge. Heck, I wanted to learn from him myself. 

To convince him, I told him the same thing I realized.

If I stand by what I've written, recorded, invested in, or built, then there is nothing wrong with it.

“Nothing was useful which was not honest.” – Benjamin Franklin

And if what you are doing is moral, ethical, and legal, and you stand by it, then there is nothing wrong with you trying. 

You might never try if you listen to the haters and the people that sling this word around. And a lot of times, the haters are projecting their own fears and insecurities onto you. 

What if that silly course or PDF that you sell, with your hard-earned knowledge in it, becomes a stepping stone and enables you to do other things? It did for Franklin, Dagobert, myself, and many others.

“There’s many witty men whose brains can’t fill their bellies.”

― Benjamin Franklin, Poor Richard's Almanack

And if the term they use for people like you and me is "PDF Hustler," then at least we are in good company with people like Benjamin Franklin paving the way for us.

“Keep Conscience clear, then never fear.”
― Benjamin Franklin, Poor Richard's Almanack

Thanks to Chris Wong and Daniel Vassallo for helping edit this piece.

Small Bets in the Wild:

🔸 Imposter syndrome causes us to fear sharing our knowledge. We fear that experts will call us out. But “expertise is great, but it has a bad side effect. It tends to create an inability to accept new ideas.” - Dean Williams

🔗: Trying Too Hard

🔸 Nick Maggiulli writes how pushing past the cringe lets you avoid “letting others shape your life instead of building your own.” But the crucial point is that you still need to focus on quality.

What’s their secret? They focus relentlessly on the quality of their writing and ideas. Because quality never goes out of style. And when you focus on quality, you don’t have to play by the rules of the algorithm at all. You can reject the algorithm altogether and create success in your own way.

🔗: Reject the Algorithm

🔸 MrBeast is one of the most popular YouTubers in the world, but he didn’t start off that way. He improved his craft for years, constantly testing his assumptions. He actually deleted his first video because his classmates made fun of him. Now each of his videos has millions of views.

🔗: MrBeast on My First Million

Highlights from the Small Bets Community:

🔸 The Small Bets community makes $440K/yr in revenue, and growing. If you want to get a glimpse at what happens behind the curtain, you can watch a recording of this webinar we hosted last week:

🔸 We have an exciting lineup of live classes coming up, including some brand new ones. These are all 100% free for all members of the Small Bets community:

• Apr 20 - Louie Bacaj & Sairam Sundaresan - Enough GPT to be Dangerous

• Apr 25 - Justin Welsh - Understanding LinkedIn

• May 1 - Aprilynne Alter - Getting Started on YouTube

• May 3 - Greg Lim - KDP Crash Course

• May 9 - Sahil Lavingia - State of the Creator Economy

The Small Bets Community can be your support network. Join an active community of 2,570 members where we discuss ideas, get feedback, share wins, learn together, and help each other. No recurring fees. Pay once, and you'll get lifetime access to everything. You can join today at half price if you use the button below:

Join the Small Bets Community

22 years ago, a close friend called me to ask if I wanted to go to a local trade show with him. I didn’t have anything better to do, so I went.

I came home from the trade show with a 12 foot boat. I was 18, and I had almost no money, but I could pay for the boat in installments. The boat didn’t come with a motor or any accessories, but I figured I’d find a way to afford them.

However, when I did the math, I didn’t like the numbers. It would have taken me months to save for a motor, and I wanted to use my boat that summer. So I decided to find a part-time job.

This was Malta in 2001, in an economy that was just starting to develop out of third-world status. Despite knowing quite a bit of programming, there were no fancy internship opportunities at tech companies. The only viable part-time work for me was working at a restaurant. So I took a job at one for a whopping $3.40/hr including tips.

2 years later, I was still working at the same restaurant. And that’s where I met my wife.

Today, after 20 years together, we are settled in the Pacific Northwest of the United States. We have 3 kiddos, two boys and one girl. A lot has happened since that phone call from my friend, but if that random call didn’t happen, nothing in my life would have been the same. I wouldn’t have met my wife, I wouldn’t be in the US, my 3 kids wouldn’t exist, and certainly, I wouldn’t be writing this post today.

I’m sure you also have some story like this yourself. This is not uncommon. Most of us can recall some random chance encounter that completely changed the trajectory of our life. In fact, almost everything consequential in our lives happens this way: from being born, to meeting our friends, to finding a spouse, to settling in a place, to stumbling on a career, and so on. Randomness drives these things. We might start with a direction, but more often than not, we end up with something that would have been completely impossible to imagine beforehand.

Take being born. Who gets to pick where they are born or to whom they are born? Arguably the most consequential event in our lives is a totally random one. Warren Buffet refers to this as the “Ovarian Lottery.” He says he was incredibly lucky to be born in the United States, a country that rewards buying businesses and allocating capital. If he had been born in Bangladesh or in Afghanistan, his skill of allocating capital would have been almost useless.

So what does this have to do with business? Well, for one, we should embrace and use the random gifts life throws at us rather than trying to brute force our way onto ideas.

For some reason, we like to think that our ideas come to us in the shower. Or on a long walk in the countryside. Or during a brainstorming session. We tend to think we can use our imagination to find good opportunities, just by thinking hard and by avoiding distractions.

But let me tell you this: it rarely happens that way. Our imagination is good at optimizing ideas and extrapolating them. But it rarely leads to new ideas. If I had tried to imagine my life 22 years ago, all the consequential details would have been unimaginable. And the same thing applies to business.

A very common theme I hear among friends who work for themselves is that the things that are making them the most money are things they would have never imagined to be doing just a few years ago. They might have started with a direction, but some random chance encounter led them to try something that a minute before that encounter wasn’t even on their radar.

Sounds familiar?

This is not just an amusing theme. If you want to succeed in business, it’s important to embrace randomness. It might sound counterintuitive, but your goals and dreams can be your biggest obstacle in finding commercially viable opportunities. If you convince yourself that you should stick with your imagined goals, any random opportunity that comes your way that is not conducive to that goal, will feel like a distraction. But almost all good opportunities lie in that randomness.

Business is more random than it seems. It’s very hard to predict (or imagine) what will work and what won’t. It’s not even easy to imagine what we’ll like doing or dislike. We just have to try many things. Many small, safe-to-fail experiments. We learn by trial and error; not only what works as a business, but also what business works for our preferred lifestyle.

But how are we going to try many things? It’s already hard to find one good idea; let alone many. Ah, that’s because you’re trying to use your imagination to find ideas. But as I already convinced you (hopefully), our imagination is limited. It often needs a catalyst. 

If we want to have an endless stream of ideas, we need to find an inspiration generator. Something that lets us see random things on a daily basis. Things that without this generator, they would have almost certainly never occurred to us on our own.

Think about how book publishers work. The executives at the company that published Harry Potter didn’t come up with the story themselves. They didn’t sit in a brainstorming session and ended up with a proposal to write a story about a young wizard at a school of wizardry. No, it would have never occurred to them. What book publishers do instead is they open up their inbox, and let random authors come to them with book ideas. Every morning the publisher goes through this stream of book ideas, and then decides which ones to pursue and which ones to ignore.

Or consider venture capitalists in Silicon Valley. Y Combinator would have never been able to imagine AirBnb, Stripe, Reddit, Instacart, Zapier, and Dropbox on their own. Yet, they made billions of dollars from these ideas. Ideas that came from randomness, when some random founder showed up at a random demo day, with a random idea, and YC chose to invest a small amount of money in them.

If you want to work for yourself, my best recommendation for you is to find your own inspiration generator. Something that on a daily basis exposes you to random things that you would have never thought of on your own. Over time, you will improve your selection criteria, and get better at choosing what things are worth trying. But the very first thing to do is to find your inspiration generator.

My own inspiration generator is Twitter. Not me tweeting, or building an audience, but just consuming my Twitter feed. Part of my morning routine is to walk my kids to school, come back home, make a cup of coffee, and spend 30 to 45 minutes scrolling through my Twitter feed. On Twitter I see other people doing things. Sometimes unconventional things. I skim through 99 out of 100 tweets, but there’s usually something I pause on. Something that makes me see an opportunity I had never seen before. I would almost feel the neurons in my brain rearranging themselves. This is called inspiration, and my Twitter feed is its generator.

Every project that I tried (successful or not) in the last few years came from my inspiration generator. The things I’m doing now are things I would have never imagined to be doing just a year or two ago. The things that paid off the most are the things I had the lowest hopes for, and vice versa. I would have found much less success if I didn’t embrace randomness. My imagination is just not enough.

What do you think can be your inspiration generator? Let me know in the comments.

Thanks to Louie Bacaj and Chris Wong for helping edit this piece.

Small Bets in the Wild:

🔸 Tony Dinh identified a problem, figured out a solution, and discovered how many other people had the same problem. Good thing he scratched that itch!

🔸 "The mistake we often make is in building a choice set (which we mistakenly call a ‘portfolio’) by trying again and again for one guaranteed ideal choice. That’s not a portfolio. Instead, we should focus on going to the edges, not trying to group everything at some imaginary ‘center’." — Seth Godin

🔗: Portfolio thinking

🔸 Have you ever wondered how the publisher, Random House, got its name?

🔗: A Trial Put Publishing’s Inner Workings on Display. What Did We Learn?

Highlights from the Small Bets Community:

🔸 I run a private Discord community that makes $440K/yr in revenue, and growing. On Apr 13, I'm hosting a FREE webinar on everything that happens behind the curtain. How it started, what tools I use, how I'm growing it, the costs involved, etc. We’ll have Q&A and I promise to get to all questions. If this interests you, register here for free: https://lu.ma/9e8wy4x2.

🔸 We also have an exciting lineup of live guest classes coming up. These are all 100% free for all members of the Small Bets Community:

• Apr 3 - Espree Devora - The Art of Podcasting

• Apr 5 - Sean O'Dowd - Make $500 on Upwork by Monday

• Apr 11 - Peter Askew - Domain First Development

• Apr 25 - Justin Welsh - Understanding LinkedIn

• May 1 - Aprilynne Alter - Getting Started on YouTube

• May 3 - Greg Lim - Amazon KDP Crash Course

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Chinese immigrants called America 金山, the “Golden Mountain”. The nickname started during the 1849 Gold Rush, but it lasted because it was thought that opportunity in America flowed like the gold in Alaskan rivers.

Sadly, both of my grandfathers discovered that the reality didn’t match the myth.

My grandfather, my father’s father, left China when he was thirteen, by himself. The last dynasty had recently fallen and the country was tumultuous. Times were tough and he jumped at the chance to go to the Land of Opportunity. 

My grandfather landed in California but jobs were scarce for a thirteen-year-old boy. The only prospect was a salmon canning factory - in Alaska. Coming from a subtropical climate, Alaska was definitely not on his bucket list (it wasn’t even a state back then!) yet it became his home for a few years. My grandfather continued to take any jobs that were available until he managed to return to the mainland US.  

He eventually found restaurant jobs and learned how to cook, eventually opening his own restaurant. The restaurant was ostensibly a Chinese restaurant but he cooked whatever a customer wanted. Better to make up a dish than to turn a customer away. All to support his family back in China and eventually bring them to the US.

My other grandfather, my mother’s father, came to America in his twenties. Landing in Oakland, he and his seven siblings chased opportunities across the country. When one brother found an opening, he brought the others. They hop-scotched across the country from the west coast to Virginia. 

Among other things, this grandfather became a mechanic, a bartender, a cleaner. He wasn’t the best at any, but he learned enough to pay the bills. He finally settled in New York City and opened a laundromat.

My grandfathers accomplished everything they set out to do when they left China.  They not only supported and helped their relatives in China to emigrate, but they had thriving families of their own. They accomplished their goals, but I doubt they knew the winding journey it would take. 

I wonder if they believed the stories and expected the ground to be covered in gold when they first stepped on American soil. I know that I would not be here today if they didn’t eventually face reality — if they focused on looking for gold rather than survival.

Today, most of us won't have to face the hardships our ancestors faced. But we can use their lessons to build a better lifestyle for ourselves. To confront the uncertainty of leaving our jobs and creating our own income, think about the idea of the Golden Mountain.  You can take a narrow, treacherous path to the peak, or you can be happy that you’re on the mountain.

We all want to reach the peak, but we often don’t consider the fraught path. You may think of a brilliant business idea, you can form a company, and maybe you even find investors and hire a few people to help you. You’re a "founder and CEO", and every day you work hard to make that idea a reality. But every day, life throws obstacles at you; random things that seem to conspire to put you off course. And chances are that sooner or later, you will tumble off the mountain and your dream will crumble. It may sound harsh, but reality doesn't care. Destiny is not guaranteed to reward your hard work.

Most people never consider that just being on the mountain can be enough. The pinnacle doesn't matter. If it happens, it happens, but it shouldn’t even be on your radar. Your only goal is to survive the mountain; to avoid having your new lifestyle taken away from you. This may sound mediocre and uninspiring, but in reality, it's extremely liberating. Once you start to think of yourself as a cockroach — just trying to survive — you free yourself from the constraints of walking that precarious path to the top of the mountain. The random things that life throws at you won't always harm you. Sometimes the obstacles can actually help you. Sometimes they show you an opportunity that until a minute before you didn't even know existed.  And you can seize that opening because you’re not fixated on a remote summit.

Do you want your future to be fragile or robust? Forget your mimetic goals and start living the life you want to be living. Then make sure nobody takes that away from you. 

Thanks to Louie Bacaj and Daniel Vassallo for helping edit this piece.

Small bets in the wild:

🔸 “Nobody ever thinks Go Big or Go Home will actually end in go home… but most of the time it does.” Tyler Tringas

🔗: Debt Free

🔸 "In order to succeed, you must first survive." — Warren Buffett

🔸 The mathematical concept behind Think Like a Cockroach is “ergodicity.” Leon Lin walks through an example of a game with a positive expected value — yet 94% of participants can be expected to lose money. Ergodicity is also the backbone behind Nassim Taleb’s book “Skin in the Game.”

🔗: Ergodicity, what's it mean
🔗: The Logic of Risk Taking

🔸 Lengthen your Runway

Highlights from the Small Bets Community:

🔸 The Small Bets Community has a new digital home. If you’re a member, you can get access to all the events, recordings, deals, and freebies from home.smallbets.co.

🔸 Next week we start the 23rd cohort of the Small Bets course. This will be a presentation of a few important ideas that will help you become self-employed, but most importantly stay self-employed. You will learn how to tame uncertainty, filter signal from noise, take prudent risks, build a safety net for yourself and your family, find ideas and opportunities, persuade customers to give you their money, and last but not least, design a lifestyle based on your true preferences. We will meet 3 times a week for 2 weeks over Zoom. If you’re not a member yet, you’re still in time to join us.

🔸 We also have an exciting lineup of live guest classes coming up in the coming weeks. These are all 100% free for all members of the community:

• Mar 17 - Benjamin Carlson - How to Get The Attention of Highly Influential People

• Mar 23 - Daniel Vassallo - Gumroad Crash Course

• Mar 28 - Catherine Cusick - What to expect when you go self-employed

• Apr 3 - Espree Devora - The Art of Podcasting

• Apr 5 - Sean O'Dowd - Make $500 on Upwork by Monday

• Apr 11 - Peter Askew - Domain First Development

• Apr 25 - Justin Welsh - Understanding LinkedIn

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It was a sad day when my grandfather decided it was time to cull my favorite sheep.

Part of the reason it was my favorite is that it was a slightly different color than the rest; it stood out.

He told me we would have some good meat for a while, a luxury for us back then. Since it was my favorite sheep, I wanted to say goodbye; I was sad but understood this was how life worked for us. As a seven-year-old watching, I'll never forget how my grandfather held that sheep that day; it was a clean slice on the neck. 

Then later, my favorite old sheep was hanging upside down as he carefully cut its leather skin off not to damage it. Sheep produce more than milk; they make about 10 pounds of wool per year that we use to make sweaters. 

But their leather skin, after it's cured and dried properly, makes for some wonderful warm rugs. We had several of them around the house; we lived primitive, and we didn't have fancy heating sources, so these rugs kept our feet warm in the winter next to the fireplace.

And my favorite sheep was part of a flock of about 20 that we kept. 

That sheep was very useful to my family for a decade. Each sheep can produce about 2 liters of milk per day for about 160 days out of the year. It was a small but important part of our sustenance over those years. It produced milk, tasty feta cheese, yogurt, sweaters, and other things. 

But once sheep get up to around ten years old, they stop breeding, and once they stop breeding, they stop making milk and start to wither. My favorite sheep was up there in age. 

Then when my favorite sheep stopped making milk, we couldn't afford to keep it around just for me to play with it. And it had more to give us on those last days. Mainly, that roasted lamb was scrumptious.

We survived on our animals - the flock of sheep, along with the cows, pigs, and chickens we had.

How we lived when I was a kid is how humans lived and sustained themselves for millennia. Each animal had multiple uses for us, we kept a few pets, but even the pets we kept were useful and pulled their weight. Our dog used to help me when I took the sheep out to graze. Our cat used to eat the mice out of the grainary and in the barn.

These sources combine and create a reliable antifragile lifestyle. 

Yet today, the vast majority of humanity has one source of sustenance: their job.

For a long time, I was one of those people. But over the last few years, I have diversified out. I have created about four types of income so far. One is from real-estate long-term rental properties. Another is from consulting, where I trade my time for money. The third and fourth I have created entirely in the last two years. One is from software I have built and continue to build as a service. And the fourth is from digital products: two courses, and one book.

My two newest sources of "sustenance" created about $100k in income from internet money for me in 2022. Specifically, one software engineering course generated about $50k on its own.

That engineering course is my new favorite digital sheep. It is at prime milking age and continues to provide. And that course has also produced other opportunities for me, lots of digital lambs. 

But that engineering course is part of a flock of other projects. And some things didn't turn out to be huge hits, namely some of my software. So I scrapped some, the scraps were useful too, much like the rug from my favorite old sheep is useful. The scraps went into other projects.

I will confess that I do have some pet projects; projects that I could have outsourced or bought but I have an emotional attachment to. I enjoyed creating them.  My personal website is one, but even those pet projects have multiple uses. For example, my website maintains my articles, serves as a hub for my digital life, and all of my followers are stored safely on a blogging platform I hand-coded and fully own. And its code has proven and will continue to prove useful and reusable for future projects.

When Daniel Vassallo says “treat your projects like cattle, not pets,” he is saying to take the emotion out of all this. With certain things we should act as if they'll last forever: family, relationships, house, hobbies, etc. With other things, we should act as if they're very temporary: jobs, businesses, startups, etc. Don’t get attached to your business projects. Keep as few pets as possible. You need to eat. And most of all, don’t rely on one thing for sustenance. That way, you can kill off things for scraps and not feel bad when they are no longer useful. 

Thanks to Chris Wong and Daniel Vassallo for helping edit this piece.

Small bets in the wild:

🔸 Annie Duke talks about the power of quitting. From her poker career, she learned when to hold’em and when to fold’em. When to cull and when to care.

🔗 Annie Duke on the Power of Quitting

🔸 Colleen Robb asks, “Why would we spend hours of energy and resources on building something your customer doesn’t need?” You would only spend hours of energy and resources on something your customer doesn’t need if the project is a pet.

🔗 Addiction to Ideas: How to Break the Cycle

🔸 Pieter Levels - “Ship More”

Highlights from the Small Bets Community:

🔸 We will be hosting a free public webinar on March 7th. It will be all about how to start and succeed with your own newsletter.

🔸 We also have a new digital home. A brand new portal hand-coded with love. If you’re a member, you can get access to all the events, recordings, deals, and freebies from home.smallbets.co

🔸 We have an exciting lineup of live guest classes coming up next month. These are all 100% free for all members of the community:

• Mar 10 - Nick Wignall - Making Money on Medium

• Mar 17 - Benjamin Carlson - How to Get The Attention of Highly Influential People

• Mar 21 - Justin Welsh - Understanding LinkedIn

• Mar 23 - Daniel Vassallo - Gumroad Crash Course

• Mar 28 - Catherine Cusick - What to expect when you go self-employed

The Small Bets Community can be your support network. Join an active community of 2,188 members where we discuss ideas, get feedback, share wins, learn together, and help each other. No recurring fees. Pay once, and you'll get lifetime access to everything. You can join today at half price if you use the button below:

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