#34 - Daniel Vassallo, Bad for the economy
[#34] - Taking small bets with Daniel Vassallo
Have you ever heard that to grow your business, you must think big? Well, what if we were to tell you that's not always the case. Joining Conor on today's episode is special guest Daniel Vassallo. Daniel is a master of taking small bets and has a fascinating story to share.
Daniel's professional career was a roaring success as he worked for the globe's largest e-commerce retailer, Amazon. However, despite the promotions, benefits and the attractive six-figure salary, Daniel decided to take the bold plunge from his desirable full-time role into the unknown realm of self-employment on a mission to strike a more sustainable work-life balance.
In this episode, Daniel reveals his small bets portfolio strategy, openly shares his learnings from failure and explores the benefits of aiming for low-hanging fruit. Daniel also unpacks the randomness and unpredictability of business and reminds us how success is never a guarantee. Key points throughout the episode include:
An introduction to Daniel Vassallo.
Developing muscle for uncertainty.
The journey of self-employment and exploring future opportunities.
Daniel's inspiration generator for choosing suitable projects.
The key of knowing what to pursue and what to avoid.
The importance of making small bets and not over investing.
Finding work-life compatibility.
Validating ideas and growing through failures.
The role of randomness and chance in business.
Finding inspiration amongst the wins.
Converting a hobby into a stream of income.
How small wins can make a massive difference.
Why analysing your customers buying patterns is vital.
The steppingstones to success: why visibility and credibility are essential.
Daniel's advice on obtaining your first 10 customers.
Connect with Daniel Vassallo:
https://dvassallo.gumroad.com/
https://twitter.com/dvassallo/
https://www.linkedin.com/in/danielvassallo/
Connect with First 10 Podcast host Conor McCarthy:
https://www.first10podcast.com
https://twitter.com/TheFirst10Pod
https://www.linkedin.com/in/comccart/
Resources:
Book: Hollywood Economics by Arthur De Vany.
https://www.amazon.co.uk/Hollywood-Economics
Check out my podcast partners!
Buzzsprout:
https://www.buzzsprout.com/?referrer_id=1389931
Otter:
https://otter.ai/referrals/ETRNKY16
Calendly:
https://calendly.grsm.io/ilev18qxpn1e
This podcast was produced in partnership with podlad.com
SUMMARY KEYWORDS
people, product, unpredictability, full time employment, lots, wins, build, bets, world, randomness, big, small, vcs, failed, uncertainty, idea, invest, success, business, started
SPEAKERS
Conor McCarthy, Daniel Vassallo
Conor McCarthy 00:03
What's important for us, especially when we're starting out is to find the very, very, very small wins, the low hanging fruit because I think that's, that's the biggest thing. That's what changes everything. Once you do find something small that works, then you can build on top of it. Hello, and welcome to season four of the First 10 podcast. I'm your host Conor McCarthy, and I help people start and grow their businesses. I do that through joint ventures collaborations, coaching and online workshops. In each episode of this podcast, I interview business builders about the early days of starting a business, about how they found their first 10 customers and got off the ground, so that you can learn what works and what doesn't. Please do check out my website Conormccarthy.me for more details. My guest today is Daniel Vassallo. Daniel is a master of making multiple small bets, so much so that he actually quit his job in Amazon to pursue a life building profitable projects to support his lifestyle. In this episode, he shares his top takeaways from his journey, including decision making under uncertainty, the balance between opportunities and unpredictability, using Twitter for idea generation, whether idea validation is useful or not, the value of attention and credibility and a whole lot more. Daniel really does live a lifestyle of his own choosing, and it's great to hear his thought process around launching multiple projects. So please do enjoy this episode with Daniel Vassallo and thanks for listening. First of all, thank you very much for taking the time to be with us here today.
Daniel Vassallo 01:38
Hi, hi, Conor, of course. Thank you for inviting me.
Conor McCarthy 01:42
So do you want to just give us a quick overview about what you're doing right now?
Daniel Vassallo 01:45
So it's actually a bit of a complicated question. And the complicated answer, I'm doing lots of different things. I have a background in engineering, I used to be a programmer for a long time, I abandoned that car there and big tech about two years ago. And since then, I've been working for myself doing lots of different things, right. So I started software as a service. At first it was my first project. And in hindsight is probably the thing that hasn't succeeded the most yet. Right. And since then, sort of as, as I was dealing with the uncertainty of that project, I started experimenting with lots of various different things, especially with info products, books, courses, and other educational materials. And I found lots of small wins into those things, right. So I've created a small portfolio of a number of different products and projects, from which I've been able to make a living essentially. So I've been, like now, I'm, I'm doing a cohort based course, where I'm meeting with 20 to 35 people at a time. And we're discussing actually, the topics about taking the plunge from full time employment to self employment, dealing with uncertainty, finding opportunities, how to, you know, how to figure out what ideas to pursue, and to avoid, sort of protect the downsides, be productive, and things like that. So I've been running this since November, so about five months or so. And it's been doing great. So like currently sort of been my my main thing. Nevertheless, I think it's important to know that I don't expect this to be the main my main thing for long, you know, it sort of has been my, my situation. This time, last year, I was doing different things. And this time, the year before I was doing different things. So probably this time, maybe later this year, or maybe next year, I might be doing something different. So it's been part of my journey, which initially admitted was uncomfortable. But now actually, I've embraced it, and I'm enjoying it. So I sort of unpredictability, and fending for myself without knowing precisely what it is going to be and I'd so happy to talk more about it.
Conor McCarthy 04:15
Well, look it's fascinating and I want to jump right into the uncertainty piece. Because, yeah, I mean, you live uncertainty and all these projects, but you seem to have made made peace with that. Can you talk a little bit about that? Because I know a lot of first time entrepreneurs especially would feel that a lot. Yeah, it's, I think it's very hard to describe because I think what happens, what I think happens to me was that we tend to go to most of our lives. Living in a very predictable world, starting with early education. You know, you go to school, there's like, first year second grade, you pass two exams, you level up, it's almost like a video game like it's all very predictable, all very transparent. The rules are well defined. then you then you go to full time employment, most of us have gone to regular career, where even there, the amount of fun, unpredictability tends to be very limited, very bounded, you know, to get to a particular job, usually the requirements are well defined, you get 10, then you go up the ladder, and you go through the ranks. Again, there is some basic stability, but it's usually still mostly well defined, well determined, right? And very clear. Once you jump into I think self employment, especially pursuing products, and things like that, I think it's a completely different category of unpredictability. But it's just, you know, the real world doesn't come with the rules of how things work, everything seems seemingly very random, what works and what doesn't work, it's very hard to predict. And I in the beginning, it was extremely uncomfortable, like jumping into the sweat, I think the biggest mistake I did at first was I was operating in this small randomness state of the world. And I was still treating it like the predictable world, where I came from I taught, I'm just going to put lots of hard work lots of time, lots of effort into my project. And sure this must work. Because that's what happens when I was an employee, right. And I set myself a goal, and I worked hard towards it, there might be a few obstacles and hurdles along the way, but you overcome them as you get to your goal. But I think in the product world, in particular, it doesn't work that way. Like it's put all the effort in the world you could put in, you could make all the right things, and yet still fail, or struggle to succeed. Because of the random things I saw outside of your console that is just for business to work, it has to resonate, and to click with humans and humans are unpredictable, what motivates them to take the wallet out of their pocket? It's very hard to to understand this clearly. Right. So long story short, I think even though there's not going to be a very, this probably going to be an abstract answer is that I think, with practice, I've almost exercise this muscle of dealing with this randomness laden world. And I think I've improved my sensitivity to uncertainty. And I did sort of, I'm seeing the good parts and the bad parts of it. That sort of I'm the unpredictability, for example of my income. In the beginning, it used to be uncomfortable, not knowing how much I'm going to be making compared to before where everything was predictable, almost to the last two decimal places, where it's like, now I am treating it as a beneficial assessor. When my income starts to dip, it almost activates something in my brain, I can almost feel it sighs it's, I think it's similar to when creators say, constraints breeds creativity, like just sort of, I get that signal that I need to do something and they start getting ideas about new products, new promotions, new ways of marketing, my existing things. When things are starting to go low, and when things are high, then it's almost an opposite signal of taking it easy, and lighting to momentum. And, you know, it's sort of I'm balancing my life and work that way, by relying on the information from the ups and downs and the different depths. So it's been an interesting journey, very hard to describe. And I think the best probably metaphor that I'd use is that risj taking under uncertainty and making decisions under uncertainty has become like a muscle, that I felt like hats off either way, when I've been for 35 years in a very predictable environment. And as I jumped into the swears, over time, it started to improve just like a muscle that just started to feel something easier to cope with. And over time, it became something that actually I think I'm benefiting from it. It's not just something negative, then trying to avoid but something that I think I almost need now to guide me to how to expend my energy properly, that I so it's, it's interesting, I think I can understand that it might not be easy to there's not might be something easy to resonate with. If you're not in this world. That's when I talk with with people who are doing something like I'm doing this make sense. I but I can understand that. This to me two years ago, which was probably fed, like, you know, I don't know what to what do you mean? Yeah, but that's the best that I can articulate. No, that makes a lot of sense. Thanks for explaining that. Yeah, I think, yeah, it's only something you can experience when you're in it. And, and it's something it's definitely a thing that pushes your comfort zone. You know, which is, which is yes, it's a good thing to kind of experience that and to live in that.
Daniel Vassallo 09:55
Yeah, I think what what I feel like I've achieved right now is sort of, I feel like I've achieved have the ability to fend for myself almost whatever happens, I can almost find something like to make ends meet. And again, it's very hard to describe, it's just, it's just I think I've improved this muscle so much that I can see abundant opportunities in front of me lights that I feel reasonably comfortable, they're going to be there somewhat. And I can choose to take any one of those if I want to, and I can be more selective nowadays like to choose things that are more compatible with my preferred lifestyle, for example, like and that I enjoy doing and things like that. But it's, it's, it's an interesting journey. And I encourage people to, you know, to, as much as possible, try to jump into this unpredictable world if they can afford to live in. So to find maybe take a gap year from full time employment and treat it as you know, taking a loan from your future retirement plan. Like I think there's something Tim Ferriss this blog talk a long time ago in one of his books, I think it's an interesting idea. And so to make it work, right, and I don't think you'd be taking consequential risk, you can often always go back to where you came from, if not at this same exact job somewhere similar, that so it's not like you're taking something hugely consequential in terms of risk. But I think it's, it's important to have a taste of this world and to start to exercise this decision making under uncertainty I call it so it is like you have to make decisions where the path you're taking, you have no idea whether the path is going to lead to anything, which I think is very different from almost everything that we tend to do in our traditional life. Almost every path that we take, starting from school from early, very early age, we tend to take paths that we believe almost certainly are going to lead to something that we want, right, whether career direction, or whether specializations or promotions or any other things, right. Whereas when you venture into the product business, for example, you might pick something and you still have no idea whether this is the right direction at all, whether there's something at the end of it. So it's I think it's you start to have to take a more experimental approach more tinkering more trial and error, because you're exploring more than exploiting that you're, you're not optimizing, you're just figuring out where there are some small wins, that you can pick, and then you can build upon that.
Conor McCarthy 12:45
it's interesting yeah, because you is, you know, you said a minute ago, you have so many, you see more options, you see more opportunity. Do you have a really rough rule of thumb for sorting the things you might want to do from the definite no?
Daniel Vassallo 12:59
Yes, absolutely. I think probably is one of the most important things at one point, I think. What has helped me is, first of all, you know, I have a system mostly through social media, to be honest eyes, which gives me lots of inspiration. I follow a lot of interesting people who show me lots of different things that I could potentially be doing. It's become what I call my inspiration generator. I don't think social media has to be this the day inspiration data for everyone. But for me, it has become so right. Then the problem is that, okay, there's all these ideas, all these things that I find interesting, and potentially I could do. But then how do I filter that as the next step? How do I choose what to pursue and what to avoid? And I think too, after many mistakes that I've done, over the last three or so years, sort of I've been very, I've become even more ruthless and vigorous with the selection criteria. And I think it boils down to, I try to do things that I can do that I can bring to markets, all by myself, like it has sort of has become something almost a rule of thumb, that defines something very simple, like a sort of fight of my inputs, minimization, if I start thinking, I need help, I need a partner, I need employees I need, it's an indicator, this is going to be something complex, something that is going to probably require me to invest more than my risk appetite and more than is prudent, right? And this is a mistake that I did with user base, for example, I've invested too much. And I started getting help and getting somebody to help me part time and partnering with freelancers and so on and so forth. And I fooled myself into believing there's more potential than there was. So that's one one thing. Another thing is I try to also select things that I can bring to market very, very quickly. Ideally, in under a month right. And, you know, the problem, the problem with this is that we, you know, we're investing time, most of the time, unless you're, you're extremely wealthy and you can scale capital, most of us, we get 24 hours a day. Of course, there's life, sleep, and other things are probably just a few hours a day that we can invest, you know, and when you think about it per month it's a big chunk, because we don't have infinite number of months to spend. And not only, I think it's important to not over invest, for financial reasons, because you want to take multiple, you want to place multiple bets, you want to have multiple shots, but also psychologically, like, I don't know about you, and definitely one but for me, if I were to invest three months, six months into something, and it fails, and then maybe do another thing, spend six months and this fails, really likely, I'm going to be discouraged, demoralized, and I might go seek shelter into the predictable world of full time employment back. And so sort of almost as, as a precaution to avoid that happening, it's why I'm sort of becoming very ruthless. I'm calling it's, I came up with this term, like making small bets, right, and the small part of it is the input. So I just take the the investment that I'm doing both financial, but most of the time in terms of energy and, and time investment. So usually, when I bump into these inspirations, I will ask myself, is this something that I can bring to market all by myself? Is this something that I can bring to market next month, like by the end of this month, or sometimes even even sooner. Sometimes I start changing the scope of the idea, okay, maybe this is too big, but maybe I cut it down, maybe I can do something simpler, like something smaller. Also, I try to ask myself, What are the odds of something like the succeeding, I try to avoid speculative bets? Now there's, there's the, you know, people who describe who were talking in terms of expected value and other sort of probabilistic terminology, like to say, deflates asymmetric bets, which is an interesting concept, where you're, you're placing a bet, essentially, you're you're trying something speculative, where the stake is limited and small. And the upside is huge, and unbounded. That's an interesting idea. But I think it's still not enough that because I think if you're doing asymmetric bets, but the odds of that thing materializing are too small, the payoff is still likely going to never materialize. I mean, if you're doing something with one in 1000 odds of success, but you can only try five times before you're out of time, out of money out of patience, out of motivation, or whatever, almost certainly, you're never going to see that pay off, right. So I say to be careful, too. If this seems too speculative, too new, too novel, too, too, too, too, you know, too crazy, that for something to work, I try to avoid that I just seems even if I can do it quickly, even if I can do it with a short amount of time, because it's probably just going to be a distraction, like, so I've been trying to choose tanks that does feel it seems like having a reasonably good chance of working usually, I'd be trading the upside. So this is the big trade off here is that the things that I choose to do usually are not very scalable, they're unlikely to make me millions of dollars. So I like to become something big are something that I can sell, or something that I can automate and turn into passive income. That is the trade of the time making. But what I'm trading off for is, in my opinion, higher odds of finding some small wins, and continue to improve my reputation continue to build, build small wins, slides that I can make this lifestyle more sustainable, which has become my goal, essentially, I just sort of people sometimes ask me, like, what's your goal? What do you want to achieve and we talk with, with founders and other bootstrappers and they talk about you know, I want to exit I want to sell the build this thing and sell or I want to make $50,000 in passive income or whatever. I think my goal is purely to make this lifestyle that I'm living sustainable, and to increase the odds that this remains sustainable. I just don't want to go back to full time employment. I've written off that chapter out of my life, not because it was extreme hardship, like I like I will be exaggerating, but I think it's just very incompatible with my preferred lifestyle that my was my preferences. I really enjoy doing things when I like to do them, how I like to do them, working on my own terms from what I want from when I want. I want to be able to take time off without asking anyone's permission, and all these kinds of things that matter a lot to me. So I've been trying to do things that allow me to make this reality as sustainable as possible. Again, tradiing off the upsides and the, you know, if I wanted to maximize income, expected value, lifetime income potential, or whatever they call, it probably would have stayed an employee, right, I was on that track, I was already highly paid. I was on a track where things were looking even more promising. And I'm not yet making as much as I was doing. When I was an employee, I'm completely fine with it. And it's, it's, it's hard for some people, right, because, and it was hard as well, for me in the beginning to get used to that idea. But I think it's a, it's an interesting way to, to improve your life, by leaving some money on the table, I hope you're enjoying this episode, and that there's some actionable and insightful advice that you can take out to your business, helping you identify and create those first 10 customers is what I do. So if you like what you hear on this podcast and want more information, including a bunch of free resources on how to find your first 10 customers and grow your business, check out first10podcast.com, that's 10 One, zero, or find me on Twitter @thefirst10pod. Now, you probably hear what I'm about to say on every podcast you listen to. And it makes a really big difference to the show. If you find this podcast in any way useful or enjoyable, I'd be so grateful if you left me a review on iTunes, it really does make a big difference in terms of other people discovering the podcast. Also, if you leave a review, you will get to see your name and the review in lights. What I'll do is I'll design your words and post them online, tagging you and your project along with it. I know it's a pretty sweet deal. Okay, let's get on with the show. It takes a certain amount of courage maybe to do that. Because I think you're right, the asymmetry thing does apply. If you want to call it the glass ceiling of employment, you know, your income will always be limited to what that kind of market rate is whereas the path you're taking, if it was an income thing, it's it's limitless, depending on what you choose to do in future. But I like this idea of small, you're making small bets, and it's things you're super interested in and things you can do fast. Do you have a way to kind of validate these ideas that you come up with or that you see?
Conor McCarthy 22:38
I really dislike, I think the term validation sort of doesn't make sense in our world of uncertainty, I think it causes more harm than benefit. By validation metrics, my most validated products, or bets that I've done was user base. And this was my biggest failure. And probably I think my biggest failure because I've relied so much on these signals that I fooled myself into that there's more potential, like user base as a software as a service business. For those who are in tech, it's an API services allows front end developers to build stateful web applications without having to deal with servers and databases. It was an interesting idea related to the specialization that I have specialized in over the last decade almost. But long story short, I started this I was talking about it building it in public, and it gets gathered a ton of interest in the beginning as I was building it. I was endorsed by the CEOs of highly influential companies of Netlify and vericel. publicly on Twitter multiple times, they've mentioned me and endorsed me, they've invited me we talked with them multiple times. And I had a mailing list of over 4000 people before I launched. When I launched I was funded on hedge funds page on Hacker News number one on Product Hunt, made $15,000 and sales in just the first few hours, my tweet when I was announced got liked by Paul Graham of Y Combinator from lots of signals. Yeah, everything and everything like indicating that this was a big thing. And yet and and because of that I've invested I've invested I've spent over $100,000 of my own savings into this project. I had to pay a lot, I hired at one point, like four part time people helping me build it. I spent lots of money as well on trademarks and security, where pretty much your expenditure, right? But sort of this sickness led me to the mistake that there's big potential here and therefore we're invested. And the problem was that over time, it turns out to be much harder to grow this I mean this is still doing just $5000 - $6,000 in annual revenue. All of that energy didn't translate for random reasons. Maybe I did some mistakes. Maybe the market changed maybe the product wasn't as good as people hoped, it's hard to pinpoint exactly. What's fascinating, as well is that a couple of years later, a competitor came on the market, superbase, which completely seems to have succeeded in this space. They took a different approach. They were venture backed by Y Combinator, and they raised like $30 million dollars, they were a bigger team, and the product in the beginning was very similar, I probably could argue it was even a failure in terms of features. But again, it just shows the amount of chance and randomness in business success, like it's very likely that the potential was there. But for reasons, maybe timing, maybe my positioning, maybe my pricing may be the fact that I didn't have backing of investors or other things. Who knows. Do the other words doesn't come with a post mortem that tells you exactly why something failed. You can make educated guesses, or guesses to try to figure out what might have caused the troubles. But I think it's, it's it's hard. So long story short, to get back to your question. Nowadays, I've tried to avoid even thinking in terms of validation, like the term that was validation as people sees, it's almost like a binary state. I've done something and now I've flipped this property from invalidated to validated just because I have five pre-orders or just because I have 100 people on my mailing list or just because I've done this, which I think treating it as validated, leads you to taking imprudent risks very often. Nowadays, I think again, it's like when you're when you're dealing with uncertainties like validating a poker hand. You it doesn't make sense. Like, I mean, with a poker hand, you can assess that you might have a strong poker hands but you can never say this is validated. Maybe, I don't know exactly those rules of poker, maybe there's some hands, that you will always win if you have it. That may be not a perfect analogy, but in business, surely that isn't. So no matter how everything is looking great, there's lots of hidden risk and hidden stuff. There's a very interesting body of work on this topic by economist, his name is Arthur De Vany. He wrote a book called Hollywood Economics, where he started the Hollywood industry over the last 100 years or so trying to identify signals that could have predicted the profitability of movies. And he pretty much came to the conclusion that almost nothing can predict what is going to make a movie successful in terms of profitability or not, not the marketing budget, or the production budgets, not the list of directors of the screen, not the star actors. There's just so much randomness with regards to how people would perceive something. The problem is that again, like in the movie industry, sometimes there's like over investment, just because there's a list of star actors, and people assume there's going to be successful, they over invest, and then it flops. So there's lots of these different dynamics, which I think it's very interesting, when I've been sort of going through this journey myself, but noticing my own experiences, as well as noticing others. In hindsight, it's easy to fool ourselves when if you see a success story, and then we say, Oh, yes, it's that, that that It's easy to say that that could have been successful. But that's only easy in hindsight, when you're trying to see yourself beforehand. Lots of people fly and do all the right things. This is his argument actually, that most of the movies that failed, did exactly the same things as the ones that succeeded and yet still failed, right? So same thing in business, I think many people did exactly the same things. As others that succeeded, put in all the hard work, had competitive pricing, had good marketing, good products, good distribution, good validation signals, good endorsements, and yet still failed to meet the expectations that they had set. So in light of all this, I think my best approach is the small bets portfolio strategy it's like so many different things. We already we already assumed this to be a good strategy for investments in the stock market and other places. We think it's foolish to put all your life savings into Apple stock. Why? Because we understand that there's lots of unpredictability, that suddenly some law might come in and could hurt Apple Sales and suddenly their stock value drops by 50% or market conditions China, put some tariff and suddenly, you know, there says that we understand that there's lots of unpredictability. So what do we do we diversify as we build a portfolio, mix of stocks and bonds and different industries and maybe defense markets. So I think it's important for people that are taking the plunge into this unpredictable world to do something similar with their own ideas. Of course, you know, we can't start 1000 businesses. So that's where the, the probabilities come in play, we might try five different things. But they have to be five different things that have a good fighting chance of succeeding No, not five speculative things. Like I like I'd like to use the phrase, you almost have to be like a venture capitalist for your own ideas, that again, because the venture capitalists does the same thing. VCs understand that all of randomness, imagine. There's no situation where I could go to a venture capitalist and pitch them my idea. And they become so impressed with the idea that they say, I'm going to liquidate all my investments, and put everything into you. Never going to happen. Why? Because VCs understand the role of chance and randomness into success. They might be more bullish on one thing or another. They're humans, they have biases, and they like this or another. But they're still mostly they're disciplined. And they understand that sometimes the biggest successes come from the things that they're least expecting. And the things that they're most bullish on usually are many times end up flopping for the random reasons or random like reasons. And so I think for us to be disciplined investors of our energy and our time, we almost have to take the same attitude, the same attitude as a VC as a book publisher, as a movie studio, like these are all players in this very random lane in the world, that I think, we can learn a lot from from what they do. There are some differences, of course, because these companies again, like they said, scale their capital, instead of their time. And when when you scale capital, it's easy. A VC can invest in 1000 businesses, because if they have $10 million to invest, they write $100,000 cheques each and they have you know that they have access to the success of 10,000 businesses, we as individuals, public can't start 1000 businesses, right. So we have to be, I think the solution to that is that we have to be even more vigorous and ruthless with our input minimization and with our selection criteria, to not choose to speculative things, we're not trying to choose something that will have a billion dollar exit, or even a million dollar exit. But I think what's important for us, especially when we're starting out is to find the very, very, very small wins the low hanging fruit, because I think that's, that's the biggest thing. That's what changes everything. Once you do find something small that works, then you can build on top of it.I think your odds of con have more success increase exponentially. Once you have something tiny, it might seem negligible, it might be something that's used to making you $200 a month, you're not going to be able to live off it, you're not going to make any material difference to your life. But now suddenly, you might have a few random strangers paying you. Now you can understand that you have something that's working. Some random people are lending to a landing page and some percentage are converting and buying. Now you can start thinking, can I optimize this landing page? Can I find 10 times more at the top of the funnel? Maybe can I do another product like this, maybe something similar, maybe have something else working? You know, I know you're building more reputation, you're having more, you having more customer emails of people who are buying things from you, or maybe you can sell them something else. You know, once you have small wins, success brings with it more success. Like this is a phenomenon that happens again, it is something that Arthur De Vany highlighted in his book, Hollywood economics when he studied, for example, what makes an actor like Brad Pitt become a celebrity. Like there's this huge disparity in Hollywood, like there's actors who are making $10 million per movie. And then the vast majority are struggling to make ends meet that are mostly usually having to work another job to supplement that income. When you look at their talents and their skills and capabilities and their efforts. Usually they're almost indistinguishable, right? There's probably many people who have the same talent and skills and putting the same efforts as Brad Pitt in Hollywood, but unfortunately, they're making almost nothing from the acting industry. And what's the difference? And I think Arthur De Vany pointed out that the stars celebrities, they the ones that we know of? What happened most of them had a very small win early in their career, they got chosen by a random audition that happened to become a successful movie, people saw them, they liked them, and they wanted more of them. And then everything snowballed from that. Right? So there's almost always this small one factor. And I think we can also and this if you look at it, this almost looks unfair, like, it's almost like it's like, can feel like, depressing, because, okay, it's all luck then. But I think we can use that to our advantage. Because once you start chasing the small wins, intentionally, you make your life easier. You ignore all the all the ambitions, all the big things, all the highly speculative, glamorous things, and you go for something that can make you $200 a month, you know, that can make you $1,000, one time, not even caring, less, what can I sell to do this month, that's my might, that might make me $1,000, it's not going to change my life. But if I do manage to make $1,000, I might stumble into something that works to some pattern, the work is still going to be very hard to predict how humans behave. But if I put something out there, and maybe 50, random strangers, take their wallet out of their pockets, and choose to buy, I think that shows me something that for some reason, this thing worked. And, you know, I've used this formula for my product. So I did sort of when I had my very first small win was a short, technical ebook, it was called the good parts of AWS. I've worked at AWS at Amazon for 10 years. I had lots of knowledge about the topic in my head. And, again, I saw some other developers citing self published books like this. And they inspired me and I thought, what if I give this a shot right, and I did, it was a short book, 70 pages or so brain dump, nothing super polished, I just just opened word, did a brain dump, spent a couple of weeks editing and polishing, boxed it and then released it. And this, you know, made six figures made over $125,000, which was impressive. Over the course of two years, but in even in the beginning, because it made I think it's close $50,000, just in the first five or six weeks, it was eye opening to me, I said, Wow, this is interesting. For some reason, this landing page works. So for some reason, people felt $25 for this kind of product worked. They were leaving five star reviews, so they were satisfied. It opened my eyes. It wasn't the $50,000 that changed my life. It was the realization that I could do more like this. Yeah, right. And I don't think I need it. I actually, I think I opened my eyes differently first day when I just made $3,000, I didn't need $50,000, this was a bonus that I'm happy with. But just when I saw this working, just a very small scale, you know, when I saw Oh, there's there were like 100 people who bought this that are strangers and that they're not my friends, people who had no reason to buy and yet the bought which I figured. And that's what I did. I did I did a few other different products on different topics, almost following the same formula, some worked better than others, that was still unpredictable. But it's it's been very inspiring, because I sort of to take this very experimental approach. And you know, my partner's taking me to do various different things like my most extreme thing that I did last year, well that I'm still doing was selling handmade, wooden cutting boards. So it's just something that completely I would like I hadn't even picked up a sawthis time last year, I started woodworking as a hobby in March of 2021. Yeah, that just to show and again, like purely as a hobby. I wasn't doing it with any aspirations of a business. But then as I was doing it, I was enjoying it. I was thinking, could I try to sell something, mostly to get some experience with E commerce. I didn't have any experience with physical products yet. And by the way, this hasn't full disclosure, I just hasn't been extremely successful yet. I've only made about $6,000 In the last four months or so since I started, but it was still again a small win. Today like now what's changed? I think what's what what I gained from this is that I did gain quite a big amount of ecommerce experience. Now I think if I bump into another ecommerce opportunity, it's going to feel much less daunting because I had to ship these cutting boards to all over the world to deal with customs and packaging and postage and all these things that I had no clue how to deal with them. And now I sort of got into a system, I can reason about the cost of shipping and the risks of customs and, and costs and whatever. Yeah, if I run into another ecommerce opportunity, I'd be more inclined to jump on it.
Daniel Vassallo 39:54
The small wins bringing more success, it's just, this is what I encourage people to pursue. Ignore all the all the big stuff, all the scalable, all the things that the VCs like to encourage you to pursue. Like, there's like last last week there was this tweet by the CEO of Y Combinator. Are you like their selection criteria now apparently is like, what makes you believe that your business is going to be $100 billion business? You know, that's I think it's, it's the, it's the opposite to encourage like, what, what can you do this month that can make you $1,000? Think about that, think about it like that. And I think that suddenly, you're going to start to see opportunities that you are completely blind to, because most of us don't think about these low hanging fruit. Because they are, they are not scalable most of the time is to, like most of the time, you can make $1,000, but you might not make $1,000 a month, or you can scale them to about $10,000. It is true, I'll accept that. But I think there's more value than that $1,000, it's not the $1,000 that you're going to be gaining. But it's in the pattern and recognition skills, of actually getting $1,000, which is hard and predictable. And once you do make, once you do start making money on the internet site or money in general, convincing other people to give you their hard earned money, which is the hardest thing, you start to learn, you start to improve this muscle that we've described before that sort of this pattern recognition muscle that I admit two years ago, for me, it was completely underdeveloped. Like now I still want to remain humble because I again, I appreciate that I am operating in extreme uncertainty which is still very hard to predict, but I feel I got a bit better at it, like over time from these very small wins. Right?
Conor McCarthy 39:55
Yeah you build those skills and you almost get rid of the fear. It's good, good. It's, it's an amazing story. So there's, there's one question that I always ask at the end of these interviews, and it's basically for the so many people listening to this podcast, who are starting out to get their first customers, and you've done this multiple times, and had all kinds of successes and ups and downs. What would you say to someone who's just about to go and find their first 10 customers? So I think this seems almost something obvious. But sort of, I think lots of people miss it sort of, it's important that you have a strategy on how to get attention and credibility to yourself or to your products, it's, you could have the best product, the best pricing, the best advertising, and yet, if you can't get attention, and some credibility, some amount of trust, nobody's going to find you. And without credibility, even if they find you, they're not going to choose you like so when when I started, like I left my job without any concrete plan. And I remember sitting here at the same desk, thinking, Okay, I'm going to build some products, spend a few months and then release it to the world. And immediately I had a small crisis of anxiety, like I started imagining, working for a long time on something, releasing it, and then nobody sees it. And I could imagine myself becoming very, very discouraged. So I think that that that stressor helped me into the realizing that I needed to find some way to start getting some some some reputation, and some skills to get some attention, which I had none before. You know, I was a developer, I never thought about marketing or social media or getting attention or branding, or whatever. There's many different ways to get attention, like search engine optimization or on other platforms, being active on communities, building a following many, many different ways. The same with building credibility, like testimonials, having funding, it's something that can help, having good customers showing successful stories of people who used your products and whatever. But it's important to have something that because I think without those things, you're just, it's like multiplying by zero, that whatever you try, is almost certainly going to fail. And I see many people get discouraged when they spend a lot of time and energy, because I think you know, you're not guaranteed success, even if you do have a good strategy for how to get attention and visibility, but at least you can see it as like a scientific experiment. You say, Okay, I have an audience of 10,000 people. I'm going to try this thing. I'm going to announce it to my audience. Maybe it's still failed, but I at least can start reasoning about something. Okay, I announce it to my audience, maybe 5000 saw it, 2000 clicked, 1000 signed up for the trial, but only 20 paid and you can say okay, there's something belong there like I expected the numbers to be better. At least now you, you have something to think about. Whereas if you start with no strategy, no plan, I'm just going to build something and hope that people will come and see it and trust me. And then when you fail, you just have no information. But this, this almost this, like infatuation and tack that failure. We learn a lot from failure. And I like to challenge that to ensure we, we tend to learn some things from failure sometimes. But I think we usually don't learn as much as we think we're learning because sometimes we fail. And unfortunately, again, as I mentioned before, the world doesn't tell us why we failed. It doesn't tell us, Oh, you failed, because you didn't have enough credibility, and people just didn't trust you. Right? We might start to speculate a bit. But it's worse than just guessing. Whereas I think we learned a lot more from a small win. That's why going back to what I was saying before, once you do have a small win, it might not be life changing the payoff of that win it self but you learn so much, oh, this is something that worked, I might be able to replicate it with something similar, or keep optimizing it or, or improving it or whatever, and built on top of it. The wins are so so full of information. Absolutely, absolutely. So back to the question, like, why I chose to start building an audience. Back then I wasn't thinking about it that way. I thought, what can I, what can I do that might be interesting to others, right. And I started going in various different places, all the forums, that it's Hacker News, and the Hacker School, LinkedIn Stack Overflow, on GitHub, with open source, trying to help as much people as I could, trying to build my own reputation in the beginning that many of these attempts failed, like, or I try them for seven months, and I didn't see any results. Some of the some of these worked better than others. Long story short, in my case, I started on Twitter, mostly it was the place where I felt I was getting the most return on investment there was enjoying the most. And over time, I've you know, when I launched my first product, I had not huge, you know, 4000 - 5000 followers, people who are following me because they I was sharing how I was thinking about the things that I was doing nothing special, I was just documenting what I was doing, I wasn't like writing long form essays, or whatever I was doing sometimes explaining mundane things, like setting up a business bank account and getting insurance and coming up with a name for my product, or, you know, getting a trademark, you know, basic stuff like this, and people are following along. And then when I had something to announce, there were people there who were listening, that and then they helped spread the word, and you know, give feedback, and and so on and so forth. Again, I had no idea that there was going to be enough or there was going to dissolve into something that was commercially viable back then, it was still very experimental. But at least as I said before, it was it was useful to at least have something that I could reason about that if the things that I tried failed, at least I could say, Okay, I still got it in front of 10,000 people, 5000 people, and yet they still didn't convert. So maybe that's what I need to improve. That's a great, yeah,, I love that. That is, that's a that's a great answer. It's very, that that idea of attention plus credibility, I think is really important. You're very, I just realized you're very, very kind with your time. You've got so many good stories, because you've done so much and your your latest course of portfolio of small bets. I think that probably speaks to everything you've been talking about plus more. It's all your personal experience of how to do this. So I do encourage people to go check that out. I'll include a link in the show notes. Thank you so much for your time. You're very kind to share everything today. Of course. Thank you. Thank you Conor. This was fun actually, I enjoy talking about this topic. Cool. Thanks a million
