Summary: Entrepreneurs often struggle between overthinking their ideas or rushing to launch without thought. A better approach is to carefully select projects and then pursue them with full intensity, similar to the “tight aggressive” style in poker. By analyzing the odds and potential value of each idea, founders can make smarter decisions and maximize their chances of success.
In poker, most world class players play a style known as “tight aggressive”.
They are tight about entering pots, but play aggressive when they do.
That’s exactly what you should do as an entrepreneur.
Carefully choose what you work on, but once you do, pursure the project with intensity. (View Highlight)
You also don’t pursure your bets with intensity if you’re betting on everything all the time.
But there is a risk once you start weighing your bets instead of just focus on shipping.
You might get stuck in analysis paralysis.
It’s a fine line to walk.
But similar to poker, you can at least always do some quick napkin math to see if a bet is worth taking.
Write down the odds of success, the potential payoff, the costs.
Then calculate the expected value.
Looking at the expected value decide if this is a bet worth taking. (View Highlight)
Founders in “just ship it mode” are afraid that even the tiniest bit of analysis might paralyze them.
Founders in “analysis paralysis mode” are afraid that always might be a better opportunity around the corner.
The catch is of course that all estimates are of course purely based on gut feeling. This is what makes entrepreneurship so much harder than poker. But that’s also why the potential payoffs are so much higher.
Some quick napkin math always helps. To generate 1kinprofitIneedtosell13unitsofa100 product, assuming ~75% profit margin. That seems doable but doing it consistently month after month is a challenge. Moreover, who knows if I will get ads to work at a level where I can acquire customers for less than $100 and make a profit at all. 10% odds of success seems reasonable. (View Highlight)
A good rough estimate for big wins in business 2-5%. So if you’re unsure, just use something in that range.
Factors that signficantly shif the odds are if you can sell a product to an existint audience you have direct access to or to people in your immediate network. If you’re purely reliant on converting cold traffic the odds are much lower. (View Highlight)
For the potential upside, you can look at revenue numbers of comparable projects. Revenue numbers are often not public but you can get an estimate (depending on industry) by multiplying headcount by X.Forexample,forSaaScompanies,youcanuse200k/employee. For agencies, you can use $150k/employee.
The total value of a project in any scenario is the money you could sell it for. For SaaS companies, the multiple is often 5-10x revenue. For agencies, it’s often 1-2x revenue.
This is not an exact science but gives you directionally correct numbers fast. (View Highlight)
Now the second key to playing tight aggressive is to pursue your bets with intensity once you’ve made one.
No half-assing. No hedging. No second guessing.
Once you’ve decided that a project is worth doing, you relentlessy pursue it.
You don’t build a shitty MVP, put out a tweet to announce it and call it a day.
Instead, you put in the hours to build the best product you can, you pay what’s necessary to get the word out, you hustle to get the first customers.
You don’t stop until it’s obvious you’ve either lost or won.
Yes, losing is always a possibility. It’s always a game of probabilities. You can fold as more information becomes available.
But until then, you play to win.
Now there is of course no right or wrong way of pursuing entrepreneurship. (View Highlight)
