From a book called Little Bets by Peter Sims, referring to successful innovators and entrepreneurs like Steve Jobs, Chris Rock and Frank Gehry:
Rather than believing they have to start with a big idea or plan out a whole project in advance, they make a methodical series of little bets about what might be a good direction, learning critical information from lots of little failures and from small but significant wins… [This] allows them to find unexpected avenues and arrive at extraordinary outcomes.
In recent months I’ve been trying to make lots of little bets, developing the habit of implementing lots of business ideas and seeing what sticks. I haven’t found anything real sticky just yet, but I’m pretty confident that this practice will serve me well in the long run.
One such idea I acted on was from Karol Gajda:
Next time you’re looking for an apartment get a 2 bedroom instead of a 1 bedroom, or a 3 bedroom instead of a 2… be sure you’re renting in a desirable area of town… Next step is simple: Rent out your extra bedroom on AirBNB. Price your room for just under the going rate (if average is $100 make yours $90) so it gets rented quickly and often. I would even start by renting it for half the going rate at first to build up reviews, which are important to get future rentals.
After reading this I quickly went and viewed a nice, fully-furnished three-bedroom apartment at a prime location in Bangkok. I worked out that I’d need to fill each of the two spare rooms at least fifteen days per month to cover the rent payment and make a little profit. If I got to that point, it would be pretty easy to rent out another apartment in the same building and sublet all three rooms there to really make some money.
I could have gone ahead and dropped a big deposit and rent payment on that first apartment, but that would have been a big bet. I had no idea if I’d actually be able to fill the spare rooms via Airbnb. And if I couldn’t, I’d be left paying for a huge apartment all by myself.
So I made a little bet instead.
I took pictures while touring the apartment, then used those pics to set up a listing on Airbnb as if I already lived there. I told myself that I’d need to get at least four sublet inquiries within a week to justify going ahead.
As it turned out, I got zero inquiries. But no big deal. I’d minimized the risk by testing the idea before investing serious time and money. Having lost that little bet, I deleted the listing and moved on to another idea (although I might return to this one another time in a different city).
SEO Writing and $50 Blogs
Earlier this year I launched an SEO writing business, providing writing services for Internet marketing companies. I spent 3-4 hours registering a domain name, setting up a portfolio website, and collecting contacts to pitch by email. Then I hired an assistant on commission and let her manage most of the pitching, writing and editing. Again, a pretty small bet, nothing much to lose if it didn’t work.
The business is now a few months old and it has yet to take off like I hoped it would. And here’s where I want to emphasize the importance of knowing when to quit. I’ve set a goal for the business this month to generate at least $1,500 in revenue (about $500 in profit). If we don’t reach that, I’ll shut the business down and move on to something else.
In hindsight, I should have set similar goals with my $50 Blogs service. I started that about two years ago and it never really took off. I kept it alive with the justification that it would do really well once I invested more time and effort in marketing, but after about a year of telling myself that, I had to admit that I was never going to make such an investment. I’d simply lost interest.
Upon accepting this several months ago, I took on a partner in the business and am in the process of handing full control over to him. He’ll likely make a much better go of it than I did and I expect he’ll succeed.
The point I want to emphasize here is that I wasted a year trying to keep the $50 Blogs business afloat. My ego didn’t want to admit failure and walk away, so I kept it ticking over and told myself that someday I’d turn it around. I’m looking to avoid that same mistake in the SEO Writing business by setting concrete profit/revenue goals. If I fail to reach those, it’s a clear indication that I should quit and go try something else.
To summarize, here are two key takeaways:
- Make lots of little bets, testing your ideas in such a way that you keep your investment low. Ask yourself: How can I test this idea fast and cheap? If an idea shows promise when you test it, then go ahead and invest some significant time and money to see if you can really make it soar.
- Set measurable goals for your business ideas so you know when to walk away. For the Airbnb idea I specified four inquiries within a week, or bust. For the SEO writing business I need to see $500 profit in July or I shut it down. Ask yourself: How will I know when it’s time to quit?
I’ll leave you with a non-business application of the concept of little bets:
I see lots of guys waiting for that one perfect woman to come along and then hoping they’ll magically be able to impress her. That’s a big bet. I’ve found it much more effective to practice approaching and flirting with lots of women, making lots of little bets.
I’ve been dating a legend of a lady for the past three months here in Bangkok, and there’s no way I would have had a chance with her if not for all the the experience I’d built up interacting with lots of women the previous two years.
What little bets are you making? Let me know via the comments.