Many small bets, or one big bet?

Let’s settle the debate:

Many small bets, or one big bet?

What are the factors and context that helped you decide which to choose?

I tweeted that question out and was blown away by the nuances in the replies. Here’s me trying to do justice to them all and summarizing it:

It’s not binary, it’s a spectrum

Many small bets versus one big bet is a false dichotomy. In between there’s many shades of grey. It can look like this:

• Many many small bets (5 or more?)
• Many small bets, with 1 more in focus (like 80:20)
• Many small bets, but work on them one at a time serially
• 2-3 small distinct bets, in different markets
• 1 big bet with 2-3 spinoff related small bets in same market amplifying each other
• All-in on 1 big bet

For different stages of the journey

• Small bets for learning (when uncertain about market or problem space), place big bet when more certain after learning
• Small bets as a means to get to a big bet - this is a common approach. Try many bets, see what sticks and go all in on one
• Small bets as a safe-fail if big bet fails - as Plan B of the prior point. Do small bets to learn how it’s done, go big on the one with most potential, but if it fails, go back to small bets
• Small bets for fun in itself - this is for makers who might not be after monetization.

Other factors to consider

It’s about discerning probability of success, which we’re notoriously bad at estimating but do so anyway:

• Growth stage (pre-revenue, pre-PMF vs post-PMF) - makes more sense to adopt more bets at early stage.
• Market demand, competition - if there’s established demand, presence of other competitors, less need to make small bets to test and learn
• Personality - I get bored if I just do one project for years. I enjoy variety and it suits me. Others prefer a focused, craftsman path on just 1 thing.
• Product type, niche - some products simply need more time/depth to build, or need more support/maintenance, hence need more focus (i.e. 1 big bet). More technical SaaS with machine learning could be an example. Ebook, digital downloads are on the other end, and a small bets approach are more likely to succeed.
• Cash runway - this determines the approach. Basically, the longer your runway, the longer you can focus on 1 big bet without payoffs.
• Family situation - if you got many mouths to feed, less chance you can have a long enough runway to focus on 1 big bet for a long time. Sprinkling it with freelance work while working on products is a common path here.
• How fast you can ship - if you can ship fast, there’s less opportunity cost to make many bets
• How enjoyable - similar point to personality. Do you enjoy making many bets or just one? Besides cash, attention and motivation are scarce resources for a solo indie hacker.
• End goal (unicorn vs lifestyle biz) - if your aspiration is to build a typical VC-funded unicorn startup and have a grand exit, then 1 big bet is the obvious way. For lifestyle-business solopreneurs, you have a choice of both.
• Risk appetite/assessment - one big bet means big win or big disaster. So lower risk appetite means you could go for many bets. Higher risk appetite more likely to go for 1 big bet.
• Full-time vs part-time - if you have a full-time job, going all in means taking a leap of faith and quitting. But holding a full-time job and doing side hustles part-time is like having a few bets going on.
• Scarcity mindset - going for many bets might mean a scarcity mindset. A desperate grab at whatever the comes. Good to reflect if that’s the case.
• Shiny object syndrome - does going for a portfolio of small bets a good business strategy for you, or are you just using it as a front for a deeper, shiny object syndrome?
• Distraction - more bets can mean more distraction, stress and time/energy suck. Depends on ability to manage and context switch.

It’s too confusing. Give me a silver bullet.

Sorry no silver bullets. Whatever advice you follow, understand that that advice represents only 0.00000000001% of reality, yet it’ll be expressed as if it represents 99.9999999999% of reality, as absolute truths. Classic survivorship bias here. So, a possible, less sexy way through this jungle that I imperfectly practice is:

• Ask about their context, back story.
• Discern if your situation is similar to others based on the non-exhaustive considerations listed.
• Cherry pick and intuit the best ones that suit your context.
• Experiment, collect data, analyse and reflect, iterate or pivot. Make decisions based on reality not ideals, predictions or advice.
• Whatever the bet size, it should be pulling you forward. Overall trajectory should be upwards. Indicators/metrics may differ.
• Don’t be dogmatic on any one approach. Strong opinions, loosely held. Always be open to even challenge yourself.
• Act accordingly.