I’ve run 75+ businesses. Here’s why you’re probably chasing the wrong idea. | Andrew Wilkinson

Starting Your Entrepreneurial Journey

The Importance of a Thoughtful Approach

• Entering entrepreneurship is akin to starting a workout; one should not attempt overly ambitious goals immediately, such as deadlifting 300 pounds on the first day.

• Charlie Munger's quote emphasizes the risks of entering business models where others have failed, highlighting the importance of learning from past mistakes.

The Impact of AI on Business

• Andrew Wilkinson discusses how many knowledge work jobs will undergo significant changes due to AI, raising questions about the future nature of employment.

• Wilkinson's company, Timy, operates like "the Berkshire Hathaway of the Internet," focusing on acquiring and holding profitable businesses for long-term growth.

Generating Startup Ideas

Insights from Andrew Wilkinson

• Andrew has been involved in approximately 75 different projects or businesses, providing him with extensive experience across various business models.

• He advises that successful startup ideas often stem from personal interest rather than trying to cater to what everyone else finds appealing.

Common Pitfalls in Idea Selection

How to Choose the Right Business Idea

The Reality of Starting a Business

• Many aspiring entrepreneurs are drawn to the idea of creating visually appealing businesses, like cafes, but often overlook the operational challenges involved.

• In contrast, less glamorous businesses (e.g., funeral homes or pest control) are rarely considered by new entrepreneurs despite their potential for profitability.

Finding Your Niche

• Charlie Munger's advice emphasizes seeking out less competitive markets: "fish where the fish are." This means finding niches with high demand and low competition.

• Entering saturated markets leads to lower profit margins; thus, identifying unique opportunities is crucial for success in business.

Starting Small

• New entrepreneurs should begin with manageable projects rather than jumping into complex and competitive industries right away. Starting small allows for gradual skill development and confidence building.

• Personal experience highlights that initial successes can foster a positive narrative about one's abilities in business, encouraging further ventures despite setbacks later on.

Avoiding Unpleasant Jobs

• Entrepreneurs must be cautious not to create jobs they dislike; many businesses can become burdensome if not scaled properly. A cafe can easily turn into just a job without growth strategies in place.

• An example illustrates how starting a pressure washing business allowed an entrepreneur to focus on sales rather than manual labor if scaled effectively, emphasizing the importance of delegation and leadership style.

The Importance of Scale

• Achieving scale is essential; it differentiates between having a job versus running a successful business that allows one to focus on preferred tasks instead of mundane operations.

Exploring Business Ideas: Physical vs. Digital

The Nature of Business Ideas

• Discussion on the contrast between physical businesses, like a pressure washing service, and software-oriented ventures. The speaker questions the appeal of real-world businesses in a digital age.

• Emphasis on identifying one's unique advantages when considering business ideas, particularly for those who are digitally inclined.

Personal Strengths and Passion

• The speaker reflects on their strengths in sales and client relations as key to their success in various business endeavors.

• A friend's experience with a restaurant highlights that passion alone may not lead to profitability; instead, opportunities often exist within related services (e.g., cleaning services for restaurants).

Finding Profitable Niches

• The speaker shares their love for movies and how they explored investing in film production but found it largely unprofitable until discovering Letterboxd—a platform combining passion with a viable business model.

• They also mention acquiring Arrowpress coffee maker company as an example of following personal interests while seeking profitable niches.

Unique Advantages in Business Ventures

• Importance of leveraging unique skills or experiences when starting a business. Reference to Brian Armstrong's background as an ideal fit for founding Coinbase due to his rare combination of skills.

Pivoting Towards Profitability

• An anecdote about a marketing student illustrates the potential benefits of pivoting from less lucrative clients (like restaurants) to more profitable ones (like realtors), emphasizing market demand over mere interest.

• The speaker recounts their own journey from local web design projects to higher-paying startup jobs by identifying where the "fish" are—meaning finding markets that are underserved yet have demand.

Understanding Market Needs

• Reflection on Warren Buffett's quote about being both an investor and businessman, suggesting that understanding valuable problems requires experience in solving them.

Understanding Business Models and Market Realities

The Importance of Market Understanding

• The speaker reflects on their initial lack of understanding regarding the realities of business models, particularly how little people are willing to pay for services. They emphasize the value of knowing what customers would realistically pay to solve a problem.

Insights from Real Estate

• Drawing from experience in real estate, the speaker notes that realtors can earn between $20,000 to $50,000 per house sold. This insight leads them to conclude that if they can provide high-quality leads for realtors, those leads could be worth significant money.

Learning from Experience

• The speaker discusses their early entrepreneurial journey filled with misguided ideas and rabbit holes. They highlight the importance of deep understanding before pursuing business ventures and caution against jumping into every new idea without proper research.

Mental Models in Entrepreneurship

• The speaker compares their knowledge accumulation to an AI model trained on various data points about successful and unsuccessful businesses. They stress the importance of having a mental framework or lattice work of experiences to make informed decisions.

Leveraging AI for Business Insights

• Entrepreneurs today have access to tools like AI (e.g., ChatGPT), which can help analyze potential business ideas by breaking down numbers and regulatory challenges. The speaker believes this resource should eliminate excuses for poor planning in starting new ventures.

Embracing Boring Ideas

• A key piece of advice shared is that "boring" business ideas often present better opportunities because fewer entrepreneurs pursue them. This contrasts with flashy ideas that attract more competition but may not be as viable.

Lessons from Failed Ventures

• Reflecting on past failures, the speaker recounts launching a project management tool called Flow without recognizing market saturation. They lost significant funds trying to compete with established players like Asana due to a lack of understanding about industry dynamics.

Identifying Successful Yet Unexciting Businesses

• An example is given about a company making $30 million annually by helping individuals fill out government assistance forms—an unglamorous yet profitable niche that many overlook due to its mundane nature.

Common Pitfalls in Entrepreneurship

• The speaker warns against entering markets where others have failed repeatedly, citing personal experience with attempting to start a bar despite lacking industry knowledge compared to seasoned operators.

Insights on Business Models and Entrepreneurship

The Complexity of Starting a Business

• Starting a business involves numerous logistical challenges, from dough preparation to delivery schedules, highlighting the complexity of operations.

• A strong management team cannot salvage a flawed business model; ultimately, the business model dictates success or failure.

Lessons from Local News and Market Dynamics

• The speaker shares an experience in local news, emphasizing that persistent issues in a market often indicate underlying problems that are not immediately visible.

• Instacart's emergence demonstrates how technological advancements can revive seemingly failed business models, though its long-term viability remains uncertain.

Choosing the Right Business Venture

• Starting an enterprise SaaS company is perceived as easier than launching consumer-focused platforms like Instacart or Amazon due to lower competition.

• Entrepreneurs should be cautious about pursuing ventures that appear easy to start since they may attract many competitors.

Lifestyle vs. Venture Capital Businesses

• There exists a dichotomy between lifestyle businesses (bootstrapped for revenue without external funding) and venture-backed companies; both can achieve significant success.

• Bootstrapping has led to substantial revenue growth for the speaker’s companies, demonstrating that small ideas can scale effectively without heavy investment.

Strategic Decision-Making in Business Growth

• The key difference between bootstrapped businesses and venture capitalists lies in their tolerance for financial risk; successful businesses grow naturally without excessive spending.

• Entrepreneurs must assess their ambitions: high-risk ventures typically require venture capital, while simpler solutions can thrive independently.

Competing Against Venture-Funded Companies

• Competing with well-funded startups is challenging; entrepreneurs should consider alternative strategies if facing such competition.

Case Study: Success of Small Businesses

• "Things," a small software company run by few individuals, exemplifies how focused efforts can lead to sustained success despite not maximizing market share.

Understanding Business Models and Investment Strategies

The Dichotomy of Business Approaches

• The speaker contrasts two types of entrepreneurs: one focused on tangible achievements ("the things guy") and another, Dustin Moskowitz, who operates differently. The implication is that each has a distinct approach to business success.

• There’s speculation about why lifestyle businesses aren't attracting venture capital (VC) interest; the market may be too small for VCs to find them appealing.

Revenue Expectations and VC Interests

• It is estimated that successful lifestyle businesses generate between $5 million and $25 million in revenue, which is often not enough for VCs who seek investments with potential valuations of $300 million or more.

• A metaphor about fishing illustrates the idea that non-venture-backed companies should avoid competing in crowded markets dominated by larger players.

Keys to Successful Business Models

• The speaker reflects on their career journey from starting multiple businesses to focusing on acquiring existing ones, emphasizing the challenges of entrepreneurship.

• They express a preference for buying established businesses rather than starting new ones due to the high failure rates associated with startups.

Learning from Warren Buffett's Approach

• The speaker admires Warren Buffett's calm investment strategy, contrasting it with the hustle culture prevalent among many entrepreneurs today.

• Buffett’s method involves making informed decisions based on thorough research rather than constant activity, leading to a less stressful life despite managing numerous companies.

Identifying Strong Businesses

• When acquiring companies, the focus is on finding those that are resilient and difficult to disrupt. This includes looking for strong management teams already in place.

• A "moat" is defined as a competitive advantage such as brand strength or network effects that protect a business from competitors.

Network Effects and Competitive Advantages

• Examples like Coca-Cola illustrate how strong brands can command pricing power. Network effects create communities where users prefer staying within established platforms (e.g., Letterboxd).

• Elon Musk's acquisition of X serves as an example of network effects at play; despite significant changes post-acquisition, the user base remained intact due to its established community.

Switching Costs as a Business Strategy

• High switching costs can create barriers for customers but may not always be consumer-friendly; Salesforce exemplifies this model where users are reluctant to switch due to extensive training and implementation efforts.

DJing and Business Insights

The Intersection of Passion and Business

• The speaker reflects on the connection between DJing and understanding business, noting that tools like Serato are popular among DJs.

• Emphasizes the importance of having a unique unfair advantage or background when starting or acquiring a company.

People Management Challenges

• Discusses the significance of people in business management, highlighting that all problems ultimately relate to personnel issues.

• Shares a quote from his business partner: "There are no problems. There is only people problems," stressing the need for great team members to navigate challenges effectively.

Hiring Philosophy

• Reflects on past mistakes in hiring based on personal affinity rather than qualifications, comparing it to unrealistic expectations in romantic relationships.

• Introduces a heuristic: if there's ever doubt about keeping an employee, they should be let go immediately; high-performing individuals are irreplaceable.

Hiring for Capability Over Potential

• Advises against hiring solely for potential; instead, focus on candidates who can fulfill current needs without extensive coaching.

• Discusses how this principle applies not just to lower-level employees but also to CEOs, emphasizing alignment with company goals during interviews.

CEO Selection Insights

• Shares an anecdote about hiring a CEO whose vision did not align with the company's needs, illustrating the importance of listening carefully during interviews.

• Notes that successful CEOs will typically pursue their own ideas rather than those imposed by others, suggesting that alignment is crucial for effective leadership.

The Role of AI in Workplaces

AI and Human Collaboration in Product Development

Leveraging AI for Enhanced Productivity

• Miro is at the forefront of integrating AI with human capabilities to accelerate product development, allowing teams to convert unstructured data into structured outputs like diagrams and prototypes quickly.

• The speaker emphasizes the ease of using Miro's canvas as a prompt for collaboration, encouraging users to explore its features at Miro.com.

Personal AI Tools and Workflows

• The primary tool mentioned is lindy.ai, which enables users to create automated workflows that enhance email management and task organization.

• Users can set up agents within lindy.ai to automate tasks such as labeling emails based on content or organizing calendar events related to specific topics, like school activities for children.

Automation in Email Management

• The speaker has implemented multiple agents within their email workflow, including those that filter unnecessary emails and prioritize time-sensitive messages.

• An agent archives non-essential threads automatically, reducing inbox clutter by approximately 20%, while another labels urgent emails for quick access.

Simplifying Communication with AI

• The automation system allows the user to respond to simple inquiries (e.g., lunch invitations) through pre-set options, streamlining communication without manual effort.

• This level of automation has replaced the need for a full-time assistant dedicated solely to managing emails.

Advanced Calendar Management Features

• One innovative feature includes adding emojis to calendar events based on context (e.g., weightlifting), enhancing visual organization.

Tools for Enhanced Productivity

Overview of Useful Tools

• The speaker discusses a reliable employee alternative costing $200 a month, available 24/7, hinting at automation tools.

• Introduction to Replit, a coding platform that can create websites and web apps based on user specifications, showcasing its advanced design capabilities.

• The speaker expresses satisfaction with Replit's functionality compared to other platforms like Lovable and Bold B Zero, noting its comprehensive features.

Innovative Recording Device

• Discussion about Limitless, a recording device that clips onto clothing and captures daily conversations for later reference.

• The speaker shares personal use cases for Limitless in recalling promises made during meetings or resolving disputes by providing factual evidence from recorded conversations.

Relationship Insights through Technology

• Limitless is highlighted as beneficial in relationship contexts; it allows users to analyze arguments and improve communication strategies.

• A user shares how they query the device for advice on improving their parenting skills based on interactions with their child.

AI Tools for Health Management

• The speaker mentions using Claude and ChatGPT alongside Gemini for various tasks; Gemini is particularly useful for managing extensive medical records.

• They describe leveraging AI to receive personalized health advice based on medication history and current health conditions.

Research Efficiency with AI

AI's Impact on Job Displacement and Future Work

AI Research Tools and Meeting Preparation

• The speaker discusses using tools like Perplexity to gather context before meetings, including background information about the person they are meeting with.

• They express a desire for AI agents that can automate research, highlighting the limitations of current tools like ChatGPT in this area compared to Perplexity.

Job Displacement Concerns

• The conversation shifts to job displacement due to AI advancements, mentioning a researcher whose contract is no longer needed because of these technologies.

• A quote is referenced: "The future is already here. It's just not evenly distributed," indicating the uneven impact of technology on different sectors.

Historical Context and Technological Evolution

• The speaker compares current AI developments to the Palm Trio device from 2007, which provided early mobile email access but had usability issues.

• They anticipate an "iPhone moment" for AI within five years, where accessible digital assistants could revolutionize business operations.

Predictions About Knowledge Work Jobs

• There are concerns about significant job displacement across various roles due to advancements in AI capabilities.

• Reference is made to Dario Amodei's prediction that by 2027, AI models may surpass human PhDs in knowledge across subjects.

Skills for Future Workforce Adaptation

• A two-part question arises regarding advice for new graduates and current workers on skills that will remain relevant amidst technological changes.

Future of Work and Skills in an Automated World

Navigating the Impending Changes

• The speaker discusses the potential future where automation and AI significantly impact job markets, suggesting that while this change isn't imminent, it's essential to prepare for it.

• For those with resources, investing in companies that leverage compute power or energy is a viable strategy; however, the focus shifts to younger individuals who need to adapt their skills.

Building Wealth Through Skill Development

• The speaker emphasizes that young people should become proficient with emerging tools to create wealth, which can then be invested in sectors like compute and energy.

• There’s a belief that while many fear job loss due to robotics, there will be ample opportunities for new business ventures as technology evolves.

Emerging Job Opportunities

• Unique skill sets may emerge in a world of abundance; for instance, roles centered around humor or companionship could gain traction as people seek connection.

• The speaker speculates on future societal structures where status might derive from niche skills or experiences rather than traditional metrics.

Parenting and Future Skills

• A discussion arises about parenting strategies focused on socialization and basic manners for children aged five and eight, emphasizing emotional intelligence over specific technical skills at this stage.

• As children grow older, the importance of encouraging them to pursue their passions becomes paramount despite uncertainties about future job markets.

Embracing Technology as a Tool

• A key takeaway is the necessity of becoming adept with AI tools; the quote "AI won't replace you. It'll be somebody very good using AI" highlights this point.

• The speaker shares personal anecdotes about utilizing AI (like ChatGPT) for problem-solving tasks efficiently, showcasing how technology can enhance productivity.

Overcoming Challenges with Technology

• The conversation touches on ADHD challenges faced by individuals when dealing with complex tasks; AI tools help maintain focus and streamline processes.

What Does It Take to Be Happy?

The Misconception of Happiness and Wealth

• Many people believe that achieving financial goals or acquiring wealth will lead to happiness, yet this often proves untrue.

• Reflecting on personal experiences in their early 20s, the speaker recalls feeling anxious and seeking fulfillment through travel, only to find that anxiety persisted regardless of location.

• The speaker emphasizes that internal issues like anxiety do not disappear with external changes such as increased wealth or status; they are rooted in one's mental state and past experiences.

The Cycle of Anxiety Despite Success

• Despite reaching significant financial milestones—from earning $60K to over a billion dollars—the speaker continues to experience anxiety about various aspects of life.

• A moment of realization occurs when reflecting on past stressors; despite substantial growth in revenue, the same worries persist, highlighting a cycle of comparison among wealthy individuals.

• An encounter with a multi-billionaire reveals how even those at the top still compare themselves to others, indicating that wealth does not equate to contentment.

Recognizing Privilege and Its Challenges

• The speaker acknowledges their fortunate upbringing but also recognizes feelings of inadequacy due to comparisons with peers who had more material possessions.

• This sense of being "hard done by" is exacerbated by societal pressures and expectations regarding wealth and success.

Strategies for Finding Happiness

• To combat these feelings, the speaker discusses reframing money's purpose from personal gain to philanthropy, which provides a sense of fulfillment beyond mere accumulation.

• Reducing spending and ownership has led to greater happiness; less material burden allows for more freedom and less stress associated with managing possessions.

Mental Health and Medication: A Personal Journey

The Impact of Anxiety on Daily Life

• The speaker reflects on a moment in 2020 when anxiety distracted him from enjoying a movie with his ex-wife, highlighting the pervasive nature of anxiety in daily activities.

• He expresses fear about disappointing others due to his inability to focus, leading him to consider medication as a solution for his mental health struggles.

Discovering SSRIs

• After starting an SSRI (Selective Serotonin Reuptake Inhibitor), he experienced significant relief from the negative internal dialogue that had plagued him for years.

• The speaker compares the effect of medication on his mind to transitioning from the chaos of Times Square to the tranquility of a quiet library, emphasizing the calming impact it had on his thoughts.

Addressing Stigma Around Medication

• He discusses societal stigma against taking medications like SSRIs, contrasting this with common acceptance of pain relievers like Tylenol for physical ailments.

• The speaker argues that just as people take medication for headaches or allergies, they should not fear using SSRIs or similar treatments for mental health issues.

Understanding Side Effects and Metabolism

• He shares insights about concerns regarding side effects from SSRIs and suggests that individual metabolism plays a crucial role in how one responds to these medications.

• By utilizing genetic testing (like 23andMe), individuals can identify which SSRIs they may metabolize well, potentially avoiding adverse side effects.

Cognitive Testing and ADHD Awareness

• The speaker recounts being advised by his doctor to undergo cognitive testing as a baseline measure for future neurological health assessments.

Understanding ADHD and Its Impact on Entrepreneurs

The Connection Between ADHD and Entrepreneurship

• Approximately 30% of entrepreneurs have ADHD, compared to only 5% in the general population. This suggests a significant correlation between entrepreneurial traits and ADHD.

• Many entrepreneurs describe themselves as "unemployable" due to their tendency to jump between various topics, reflecting a common trait among those with ADHD.

• ADHD is recognized as a legitimate brain disorder that affects executive function, leading to challenges in organization and task completion.

Personal Experiences with ADHD

• The speaker shares personal anecdotes about forgetting tasks at home, which can lead to misunderstandings in relationships. This highlights the real-life implications of living with ADHD.

• Understanding his condition has fostered empathy for himself, alleviating feelings of being "broken" or inadequate compared to others.

The Importance of Diagnosis

• The speaker encourages entrepreneurs to consider getting tested for ADHD, suggesting that awareness can lead to better management strategies.

• Knowing one's diagnosis can empower individuals by providing options for lifestyle changes or interventions that improve daily functioning.

Lifestyle Interventions and Support

• Even without medication, there are numerous lifestyle adjustments that can help manage symptoms of ADHD effectively.

• Communicating needs clearly with partners or colleagues is essential for fostering understanding and support in relationships.

Recommended Books and Insights

Key Book Recommendations

• "The Laws of Human Nature" by Robert Greene is recommended for its exploration of personality disorders through engaging storytelling.

• "How to Get Rich" by Felix Dennis offers an honest perspective on wealth creation while expressing regret over material success.

Favorite Media Consumption

• The movie "Challengers" is highlighted as a recent favorite due to its exceptional acting and cinematography within a romantic sports narrative.

Favorite Products and Life Philosophy

Innovative Product Discoveries

• A highly praised robot vacuum called Matic is noted for its advanced features like machine vision, making it effective at cleaning without tangling.

Life Motto Reflection

Interview with Andrew: Insights and Experiences

The Decision to Let Go

• Andrew discusses the importance of making tough decisions, such as firing someone or abandoning a project, emphasizing that these choices often simplify his life.

Meeting Steve Jobs

• As a teenager, Andrew reached out to Apple PR for an interview with Steve Jobs, initially met with skepticism but ultimately invited to an Apple store tour.

• During the tour at Macworld in 2003, he was first in line when Steve Jobs arrived. He describes his excitement and nervousness meeting his hero.

• Andrew recalls asking Jobs various questions about technology rather than personal insights, highlighting the thrill of engaging with someone he admired deeply.

Lessons Learned from the Experience

• The experience taught Andrew the value of asking big questions; he believes that aiming high can lead to unexpected opportunities.

• He references the "door-in-the-face" technique, suggesting that bold requests can yield positive outcomes.

Business Ventures and Philosophy

• Andrew introduces his business, Tiny (tiny.com), which focuses on buying companies. He shares how their negative experiences selling led them to create a buyer's platform they wished existed.

• They seek businesses that are high quality, positively impact the world, have satisfied customers and employees, and possess competitive advantages.

Community Engagement

• Listeners interested in connecting with him are encouraged to reach out if they visit Victoria, Canada. He enjoys meeting interesting people through podcasts and casual encounters.

Closing Remarks