Staying small in a portfolio of small bets

I’d been a big fan of @dvassallo’s portfolio of small bets idea for a while. The concept goes like this:

• Instead of a singular focus, going big and all in on one product, you have a portfolio of small bets. The likelihood of something working is higher if you place more bets. The small in “small bets” ensure you don’t overstretch yourself. This is akin to investment portfolio, where you lower your risk by diversifying your investments between low- and high-risk financial products. Likewise for making indie products.
• It fits those who like variety, have diverse interests and not ‘stuck’ in a niche they dug themselves into by going all in.

I thought I understood his small bets to be a temporary thing, where you try a bunch of things, see what sticks, find a big winner, then you focus and drop the rest, like how folks do do the 12 startups in 12 months challenge do.

Today he shared something which broke that (mis)perception. It’s not about finding the big winner:

• Bet on things that don’t require a significant investment
• Not about payoff maximization but odds maximization
• Something low expectation but reasonable chance of materializing
• Small bets is likely to give small wins too (subject to what small means to you)
• Keeping things small can be the long term approach (instead of just doing it on the way to finding a big winner), because what’s enjoyable at small scale doesn’t always stay that way when it scales.
• Big winner might not remain a winner, so can be high risk too if it fails later
• You can narrow the things you try if there’s too many small bets
• Remember: the ultimate goal is to enable a lifestyle you envision.

I love how this portfolio of small bets approach is turning out to inform how I can manage my own portfolio of products.

Turns out, maybe I don’t need to find that one big winner. That’s a relief. Maybe I can build a small income from each and they can all add up to a living wage. I also enjoy playing with these different products. I’m a curious generalist by nature. It’s fun, it’s refreshing, and I can engage my monkey mind when I get bored on doing one. Staying small means my relationship with my customer can be more engaged, intimate and friendly.

Most important point is about how scale changes things. If having a big winner means I got to hire a team, do too much support, handle difficult customers, start managing more than making, and have it start eating into the ultimate goal of an ideal lifestyle, then perhaps I don’t really want a big winner? (Of course, “big” or “small” is subjective)

So have many small bets. Stay small and many. Win big at lifestyle.