Building a portfolio of Small Bets

Once there was a karate master, who trained for years, knew all the moves, and was highly respected in his Dojo, but never opened his own gym.

He never considered himself to be a teacher.

Until one day, a younger student at the Dojo asked him for advice on a complicated manoeuvre. He quickly showed the youngster the trick and went back to his training.

That evening he lay awake thinking… “What looked complicated to the student was basic for me. Maybe I can share my knowledge with the other students, maybe I should consider teaching…”

We are all this karate master in some sense. We are all experts in one or more multiple topics.

Whether that’s knowing how to play underwater hockey, or how to sharpen your lawnmower blade, or how to price an insurance product (yikes!). We can all teach other people from our unique skillset.

A few weeks ago I did just this. I released my second digital product – a video course teaching people how to create illustrations called Procreate for Writers.

The best part is this wasn't too much of a lift. I created the entire product in one day. It’s what you can call a “Small Bet”.

What is a Small Bet?

A Small Bet is a product or tool you can create based on your existing experience and skills. It can be built in a relatively short timeframe with little upfront investment and it can generate revenue in future without much further work or attention.

This a concept coined by Daniel Vassallo, an ex-AWS employee who walked away from a $500k salary to become an entrepreneur.

Why walk away from such a cushy, high-paying job? Daniel explains that he was uninspired by his job and frustrated by the bureaucracy. All the managers and senior execs above him looked miserable and he didn’t admire their lifestyles. He didn’t want that for himself and his young family.

This is something I resonate with deeply. A similar lack of inspiration and upward movement in my corporate job led me to quit last year and pursue self-employment. I wanted to be free to follow my interests, express my creativity and build things, instead of being a small cog in a big machine.

After quitting AWS, Daniel built a startup (called Userbase), and invested a lot of time and money in it, only to see it stagnate and not live up to its initial hype.

This was disappointing to him (as it would be for anyone), but this failure led to an important breakthrough.

By becoming an entrepreneur, he realized he had moved into a stochastic (unpredictable) world, which is different to the largely deterministic (predictable) world he was used to in corporate America.

In corporate you get a stable salary and you know what to expect from your job every day. Working hard will get you promoted within a certain (often predictable) timeframe, but your upwards movement is largely limited by corporate policies and salary caps. This maps very well to my own experience.

As an entrepreneur, you remove the limits on the upside, but you also move to a more risky environment. Hard work will only get you so far. There is a large amount of luck involved in your success.

This discovery is what led Daniel to his main thesis — there is a lot of randomness in the world and to benefit from this (to make luck your friend) you need to take multiple independent bets (build multiple products) instead of putting all your eggs in one basket (building a single product/startup).

What does a Small Bet look like?

This is how Daniel defines it:

Here are the three things it comes down to for me, using my Procreate course as an example.

1/ Small investment

A Small Bet has limited downside.

It requires a relatively low investment of time and money, with a high likelihood of upside.

You commit to a project (say an e-book or a video course) for a couple of days (maybe weeks) without lingering on a heavy long-term project.

Once the bet is done, you can start building the next one. The product is out there. It can generate income for you in future without needing active management.

The Small Bets mantra echoes Jack Butcher’s “Build once, sell twice” philosophy.

The input costs for my video course were zero. Just my time and experience.

It took only 8 hours end-to-end (one work day) to create.

That includes:

1. making slides on Pitch (a free online slideshow editor),
2. recording myself on Zoom (the video calling app we all know),
3. uploading the video to Loom (a video editing & recording platform),
4. splitting the video into 2 parts (for the intro & buy-up versions of my product),
5. creating a swipe file in Notion (giving my clients some example illustrations to inspire their own sketches),
6. moving everything to Gumroad (an online marketplace that handles payments and email communication), and
7. writing some copy (telling people what they can expect when buying my product)

Again, this shouldn’t take too long. It's not about a meticulous, 'perfect' product, but a small guide that you already have in you.

Since I’ve presented this topic multiple times before I could record myself all in one go without retakes. I admit, I fluffed my lines here and there, but the instructions were still clear and it gave a “live” feeling to the recording, similar to being in a workshop.

2/ Building from experience

A Small Bet can be built from your existing experience. It shouldn’t require much extra training or learning. Don't go start up some new, exciting research for this thing. Build from what you know.

As I wrote about in Add Visuals to Your Writing — when I started writing online, I was fascinated by some of my writing peers who were creating digital art. I was impressed by how easily they could convey their message.

I knew I wanted in. I also wanted to capture my readers’ attention and make them smile.

So I decided to teach myself how to draw.

My illustration course is the accumulation of 6 months of teaching myself and others how to draw. Something I wanted to do anyway. I could just repackage it, instead of reinventing the wheel.

3/ Building in public

A Small Bet is public-facing.

Instead of building something in stealth mode (which has its advantages if you are in a competitive environment), you can share your process and your work with your followers.

By building in public, you generate trust. By taking people on your journey, you get real-time feedback from potential customers.

I’ve been posting my drawings in this newsletter, on Twitter and on online communities for the last year. I also hosted workshops for over 100 students and sent out surveys to figure out what people want.

This helped me find my initial customers and it helped me generate moderate success without pushing the product very hard.

So far I’ve generated almost $400 in sales from my two Small Bets (my illustration course and my Notion content management system).

The extra money is great, but the best part is I’ve learned a lot, had fun building something and I’ve overcome limiting beliefs around marketing & selling my services.

The good news is you can do this too.

You can also create a 60-minute “how to” guide. All you need is an idea and a few hours to record yourself teaching.

Ask yourself:

• When talking to friends and colleagues, which topics get you fired up?
• Which problems have you overcome that other people can learn from?
• Which topics have you presented multiple times before?
• What have you spent 1,000 hours plus doing?
• Which topics can you create a quick how-to guide for?

Like the karate master, there’s a teacher in all of us.

PS: If you're interested in adding visuals to your writing (or just want to draw for fun), check out Procreate for Writers for yourself. I’ve added a 50% discount code for subscribers, which expires on 30 June 2023. If you want this deal, simply add “CREATORSCORNER” at checkout before clicking “I want this”.

PPS: If you’d like to join the Small Bets community, you can sign up here (no affiliate). This includes Daniel Vassallo’s 6-part course on creating digital products, access to a community of entrepreneurs and entry to free workshops hosted by other Small Betters like Louie Bacaj(engineering advice and property tips), Janis Ozolins (explain your ideas visually) and Justin Welsh (how to use LinkedIn effectively).

Thanks to Rik van den Berge for reading drafts of this essay.

Originally published at https://johnnic.substack.com/p/building-a-portfolio-of-small-bets on June 21, 2023.