The Minimalist Entrepreneur by Sahil Lavingia

Summary

These are some of the key points that I have picked from reading this book. By no means it is an exhaustive list of things that this book has to offer. For more insights check out the highlights section. For even more insights, just buy and read the book, it’s awesome.

• Profitability should be your first concern when creating a business. You might be tempted to give your product/service for free or below the cost at first to attract customers, but if your idea is worth anything, customers will come regardless of the price.
• Do not try to create the next Facebook or Google. Keep your idea simple and start with a minimal amount of features. Your plan and ideas will change a million times as you go along.
• Participating/contributing in communities around you is a great way to find business ideas. By participating and being your true self you will start to see people’s problems, maybe even your own problems. That’s where the best ideas are.
• If you ever feel like you don’t belong or don’t know something, understand that this is normal and everyone feels that from time to time. What you have to do is to learn from mistakes and continue working.
• Launch is only for when you have confirmed that your business idea works and not to test if it works. In other words, you should launch only after you have a considerable amount of customers.
• Don’t dismiss your friends and family, they can be your first customers/supporters.
• In the beginning, the best marketing will take time, not money. Forget about ads, and focus on social outreach (blogging, Twitter, Youtube, etc.)
• Also consider doing a newsletter. Each subscriber is worth a lot more than a follower. Give away some sort of content for free to increase subscribers.
• You don’t have to go the VC route, you can raise from your community directly.

My Thoughts

This is my favorite book on the topic of entrepreneurship. I may be biased as I have been following Sahil for a while now. Even, with that bias, I think anyone who wants to make money with his/her own business should give this book a read.

Sahil takes you on a journey from coming up with an idea all the way to creating a culture you want to work in. He discusses the topics of marketing, profitability, planning, sourcing first customers, and more.

It doesn’t matter what stage you are at, whether just trying to find an idea to work on, or already having a profitable company, you will surely learn something new from Sahil.

Highlights

INTRODUCTION

I had spent a weekend building the prototype of Gumroad, a tool that helped creators sell their products online. No complicated setup. No elaborate storefront. Just a link for customers to pay and you’re in business.

Note: This is Like CDbaby but for everything. Idea is so simple help people make money and the’ll pay you for it.

In San Francisco, being successful means you’ve made a lot of money (which, in San Francisco, is a lot of money). In Utah, it means you’re married and active in the church.

Building a minimalist business does not mean settling for second best. Instead, it’s about creating sustainable companies that have the flexibility to take risks to serve the greater good, all while empowering others to do the same. Being profitable, hopefully from the very beginning, means being able to focus and to stay focused on the reason you started a business in the first place: to help others.

Unfortunately, the word “entrepreneur” has a weird taint to it. I remember going to a “Career Fair” at school and not identifying with the “entrepreneurs” at all. They seemed like businessmen (they were always men), and I didn’t even like business. I liked making things! Eventually I realized that a business is not an end in and of itself. A business is a tool to make or do stuff, a legal structure; that’s it. At first I didn’t need a company, but eventually my creations required a legal structure, a team, and an operation to make the stuff I wanted to make, so I started a business.

You don’t learn, then start. You start, then learn.

1 the minimalist entrepreneur

PUT PROFITABILITY FIRST Minimalist entrepreneurs create businesses that are profitable at all costs.

“product-market fit” (a term coined by venture capitalist Marc Andreessen for being in a good market with a product that can satisfy that market)

Chase Profitability, Not Unicorns

Building a minimalist business is not a get-rich-quick proposition, but it is a get-rich-slowly one if you embrace profitability, not growth, as the key indicator of your company’s success.

Most people don’t start. Most people who start don’t continue. Most people who continue give up. Many winners are just the last ones standing. Don’t give up.

Don’t Call It a Comeback

Where do you start? Take a good hard look at the people, places, and communities you care about. Where are the pain points? What isn’t working, but might with a little elbow grease? These are all opportunities to make things better through minimalist entrepreneurship.

Creator First, Entrepreneur Second

In the end, there isn’t much difference between a business like Gumroad and a creator. It’s just semantics—one or more people using the tool of a business to make something new. Painters need brushes. Writers need pencils. Creators need businesses. It’s key for people to understand that, because it lowers the cognitive barrier to starting a business, and starting is really important. You don’t learn, then start. You start, then learn.

Once you’re working on other people’s projects, you can’t help but get ideas of your own.

2 start with community

Community First

where we can connect, learn, and have fun. For minimalist entrepreneurs, communities are the starting point of any successful enterprise.

That doesn’t mean you should run out and find a community to join just for the purpose of starting a business. It means that most businesses fail because they aren’t built with a particular group of people in mind. Often, the ones that succeed do so because they’re focused on a community that a founder knows well.

a community isn’t a group of people who all think, act, look, or behave the same. That’s a cult. A community is the opposite. That’s what I discovered when I moved from San Francisco to Provo and got out of the Silicon Valley bubble. For one of the first times in my life, I saw that the best communities are made up of individuals who might be otherwise dissimilar but who have shared interests, values, and abilities. It’s a group of people who would likely never hang out with each other in any other situational context, and it often encompasses virtually every identity, including, yes, politics.

you don’t have to bring your whole self to every community you join, but you do have to bring a slice of yourself. And that part needs to be authentic to its core.

Find Your People

If you’re reading this and wondering which communities you’re already a part of, ask yourself these questions: If I talk, who listens? Where and with whom do I already spend my time, online and offline? In what situations am I most authentically myself? Who do I hang out with, even though I don’t really like them, but it’s worth it since we share something more important in common? Spend an hour, at least.

Being a member of a community is a start, but the real magic happens when you start to contribute.

While it’s better to lurk rather than needlessly comment, it’s even better to add value into the community even if you don’t feel that you’re ready. If you struggle with this, as many do, remind yourself that if you have something to add, it’s selfish to keep it to yourself!

Chances are, if you’ve learned something, there’s probably a good portion of your community that would find value in learning that same thing from you, even if you aren’t the world’s leading authority on the subject.

Overnight Success Is a Myth

In a blog post from 2012, I wrote about trying unsuccessfully to find a way to sell the source code for a Twitter client app I built for the iPhone.

From the outside, it all seems so straightforward, but it took time not only to become part of the community but also to choose the community I wanted to serve and decide on the problem I wanted to solve. There’s really no such thing as overnight success. Most are years in the making, just like my ability to build Gumroad over a weekend was also many years in the works.

Picking the Right Community

You’re probably part of a number of communities, but when it comes to making an impact in a community in a way that leads to a minimalist business, you should focus on a community where you can (and want to): (1) create long-term value; (2) build relationships for decades to come; and (3) carve out a unique, authentic voice for yourself. For the minimalist entrepreneur trying to make an impact, community is a way to stay focused: Instead of changing the world, you can change your community’s world.

There are two more important attributes that will decide which is the ideal community to focus on: how large the community is, and how much money they are willing to spend (said differently: the total addressable market, or TAM). The goal here is not to find the largest community with the most dollars to spend in order to capture 1 percent of it. Instead, you should find something right in the middle. Too small, and you won’t be able to build a sustainable business. Too large, and it will cost too much money to get to sustainability in the first place—and you will attract or create competitors along the way, leading to a race to the bottom in product pricing that you may not survive.

The best way to win is to be the only. And the best way to be the only is to pick a group that is Goldilocks size, has problems they would pay money to solve, and is underserved (likely because it is too small for larger competitors to go after).

First, get involved in those communities wherever they are, offline and online. Then, contribute, teach, and, most important, listen. Finally, use the filters above to make sure you are picking the right community to serve. Then, your problem becomes: Which problem should I pick?

Picking the Right Problem to Solve

If you try to make something for everyone, you will likely end up making something that no one really wants or needs.

Economics 101 may help. There are only four different types of utility: place utility, form utility, time utility, and possession utility. What can you make easier to understand, faster to get, cheaper to buy, or more accessible to others? Place utility: Make something inaccessible accessible Form utility: Make something more valuable by rearranging existing parts Time utility: Make something slow go fast Possession utility: Remove a middleman

Solving Your Own Problem

If you have a problem, other people probably do too.

if you build a product to solve your own problem, you will have at least one user—more than most startups ever get. Plus, you can talk to that user every single second of the day!

Building the Right Solution

Building a business is hard and time-consuming. It will take years. And the more successful it is, the longer you will work on it. So it’s important to find something you want to work on, for people you want to work for.

To build a successful business, you need to build something people love. To stick with it, you need to build something you love working on.

There should be a clear path to charging people money for something of value, in a way that feels obvious. If it makes sense, it’ll make cents.

Squashing Your Doubts

Surround yourself with colleagues and mentors who will not only tell you the truth but will also encourage you when the going gets tough. After all, people need cheerleaders, not just advice.

3 build as little as possible

Every founder, even the most successful ones, knows nothing at the beginning, and learns from there.

Build Last

Remember that you don’t have to know everything about what you’re doing at the beginning (or ever),

If you make a false start, just go back, reset, and begin again. Nothing you’ve done or learned is ever wasted.

Do One Thing Well

Gumroad didn’t have file uploading at the time (you had to specify a destination URL post-purchase, like a YouTube URL), and I didn’t even have automated payouts or fee calculations. That was all manual. The whole app was twenty-seven hundred lines of mostly copy-pasted code in a single Python file, hosted on Google’s cloud.

Over time, we automated absolutely everything, which made all the difference when I needed to run the ship single-handedly. But we didn’t start there! First, I “hired” myself to do it. Then I built a process around it. Then we turned parts of it into a product, now wholly automated.

Constraints Lead to Creativity

I ask myself four questions every time I want to build something new: Can I ship it in a weekend? The first iteration of most solutions can and should be prototyped in two to three days. Is it making my customers lives a little better? Is a customer willing to pay me for it? It’s important for the business to be profitable from day one, so creating something valuable enough for people to pay for is key. Can I get feedback quickly? Make sure that you’re building a product for people who can let you know if you’re doing a good job or not. The faster you get feedback, the faster you’ll build something truly valuable and worth paying for.

if your product is incredibly minimal and useful, and people look past the lack of polish and use it, you will know you are on to something.

Ship Early and Often

You will be wrong a lot; the goal is to get less wrong as quickly as you can.

Create Conditions for Liftoff

This self-doubt never goes away. Even when you conquer community, you’ll still have self-doubt about product. When you build and ship a product, you’ll have self-doubt about sales. When you’ve done everything mentioned in this book, you’ll have self-doubt about whether you’re qualified enough to write it all down. (Hi!)

4 sell to your first hundred customers

Once you have enough repeat customers, you have product-market fit, which is a milestone worth celebrating and a sign you can think about launching. Until then, skip the one-time grand opening, and instead focus on the slow and steady journey of selling to your first hundred customers.

Sales Is Not a Four-Letter Word

“Viral success” is a myth, pure and simple. There is no such thing. It’s just something journalists say about a person, company, product, or service whose seemingly rapid rise is inexplicable from the outside. Most of us—and that includes journalists—only notice new things when they’ve reached escape velocity. We’re often unaware of the previous months or years of hard work and stumbles.

Charge Something, Anything

In the early days, you may be tempted to give your product away for free or to charge less than the value of your time or the raw materials you used. Don’t. In order to stay alive, you need to make money. The only way to do that is not only to charge something, but to charge something that allows you to stay afloat.

Even if you start low and go up over time, it is important to charge something. There is a very large difference between free and one dollar—that’s the zero price effect. As behavioral economist Dan Ariely writes in Predictably Irrational, “people will jump for something free even when it’s something they don’t want.” He uses the example of a long line of college students waiting for free, terribly unhealthy brownies. Asked to pay even just one cent, the line of kids disappears.

Friends and Family First

Yet people believe they can skip their friends and family in favor of launching and going viral. For example, on Kickstarter. But even Kickstarter knows this isn’t the case. “Millions of people visit Kickstarter every week, but support always begins with people you know,” it reads on their website. “Friends, fans, and the communities you’re a part of will likely be some of your earliest supporters, not to mention your biggest resources for spreading the word about your project.”

Community, Community, Community

Over time, this becomes less about you and more about your product. Your friends and family, whom you started with, cared most about you. Your community cares less about you and more about your product.

Cold Emails, Calls, and Messages

until you have a lot of customers or some other force that can supply ongoing momentum, there’s nothing better than knocking on doors.

Katrina Lake, CEO of Stitchfix and one of Forbes’s Richest Self-Made Women in 2020, started out with cold calls and cold messages on LinkedIn to potential investors. “The more shameless you can be, the thicker skin you have, the better,” she says. “People are going to not write back and people are going to say no, but every now and then someone’s gonna be interested and say yes. And you wouldn’t have had that chance if you hadn’t gotten all the no’s first.”

Manual “sales” will be 99 percent of your growth in the early days, and word of mouth will be 99 percent of your growth in the latter days.

Launch to Celebrate

Once you’re running a growing, profitable business with a hundred customers who love you and whom you care about, you can celebrate them—by launching. Throw a party. Invite all of your customers and thank them for their ongoing support. Do that, and you’ll have customers lining up at your door.

Your customers may be even better salespeople than you are.

5 market by being you

Marketing is really just about sharing your passion. —MICHAEL HYATT

Sales got you to one hundred customers. Marketing will get you to thousands.

It’s much better to start by spending time instead of money. Blog posts are free. Twitter, Instagram, YouTube, and Clubhouse are free too. Instead of spending money, let’s start there, by building an audience.

Make Fans, Not Headlines

Unfortunately, most founders are not comfortable putting themselves at the center of their company’s story. But you need to. People don’t care about companies, they care about other people.

How to Get Started on Social Media

Too many people think their business account is enough. No, it’s not. People don’t care about your business and its success, they care about you and your struggles.

Don’t share what you ate for lunch. Status updates about your life and your business are fine, but they won’t grow your audience. The days of discussing meals on social media are over, even on your personal account. Your goal now is to expand your reach and to provide the most value to strangers who find you on the internet.

Be authentic. Social media is about ideas, not people. Be yourself, but focus on acting out a set of core values. What did you learn? What conversation did you have? Your job here is to give, not ask. Remember: This is not about selling.

Your business account should be similar to your personal one, because they’re both you, and both should be about ideas so that you’re constantly giving value out for free. It may feel weird that you’re not talking about a new customer case study or a new feature you’ve launched. You can do that too, occasionally. But the truth is, your audience doesn’t care. They want to lose weight, laugh, be entertained, get smarter, spend time with loved ones, go home on time, sleep adequately, eat good food, be happy. Help them do that.

Educate, Inspire, and Entertain

Few make the transition from being themselves to being teachers, but those who do build audiences quickly, because people spend much of their time on social media in search of a better way to live, learn, and make money. This is how you start growing your audience beyond the people who already know you. You do it by providing value for free, asking for nothing in return, repeatedly.

LEVEL TWO: INSPIRE

How can you motivate and inspire? You can apply your learnings from painting, writing, designing, software engineering, or physics to life and share them with a wider audience. You can document your projects and your progress: where you started and where you are today. If you’re in the supplements business, for example, a weight loss journey will gain far more traction than an information video.

Did the founders set out to inspire? Not necessarily. But by sharing their struggles and their successes, they showed others what was possible and made fans, not just customers. You can do the same. Don’t just teach. Speak from experience, tell the truth, and the inspiration will happen.

Middle of the Funnel: Emails and Communities

To sweeten the deal, give them something in exchange for their email, like a mini ebook, a short PDF guide, a video, a series of emails that help them solve a problem, or a checklist to complete.

While you probably won’t have millions of email subscribers, each subscriber is worth far more than a follower.

The way we’re marketing lets you build an audience of people who are hearing from you over and over again, before and after they’ve bought your product. To get good at this, and for it to be most effective, you need to reach out to the people on your list frequently. Create a schedule, whether it’s every Monday morning or every Saturday night or even just once a month.

Eventually, your business will start to grow organically. You will no longer have to push that boulder up a hill. Social media algorithms will start to boost your content to new followers as you find your own success, your readers will share your blog posts with their friends, and your customers will start to tell others. How can you help them do so? By creating more content they want to share—that will help them educate, motivate, and entertain their own audiences.

Spend Money Last

Your product is not for everyone, so you shouldn’t try to reach everyone. That’s way too expensive.

Take Advantage of Lookalike Audiences

From the outset, I’ve said that minimalist entrepreneurs should be selling to their users, not selling their users.

Instead of spending money, spend your time. Build relationships, have passionate customers who spread the word, and then think about spending a little bit of your profits to slightly expand your horizon. If you can do that, you will stay lean and grow at a comfortable rate that never overextends your business.

6 grow yourself and your business mindfully

In this chapter, we’re going to talk about what comes after you’re profitable and have an organically growing customer base. For some of you, this will be relevant right this second, but even if you’re not there yet, don’t skip over this part.

staying put doesn’t work. The world is constantly changing, and we and our businesses have to change with it. Staying put is a great way to start going backwards. You don’t need to grow like crazy, but you also don’t want to grow stagnant.

being a minimalist entrepreneur isn’t just about owning a business that doesn’t own you; it’s also about owning a business that you want to work on, even if you don’t have to work on it anymore.

Don’t Spend Money You Don’t Have

Don’t get swept up in what a “successful” business is supposed to look like. Keep doing what’s working, stop or improve the processes that aren’t, and always, always, always keep an eye on the numbers and your ears on your customers.

Raise Money from Your Community

control of their companies. If you do choose to go the venture capital route (Hit me up! shl.vc), profitability will give you leverage in those negotiations.

there are also new ways to raise money, ones that preserve your ownership and empower your customers. I don’t just mean new venture capital funds such as Calm Company Fund (disclosure: I am an investor), and Tinyseed Fund, which are looking to invest in more sustainable, perhaps minimalist, businesses. These firms are building a portfolio with a higher hit rate, allowing them not to overoptimize for finding the single company that returns their whole fund.

In 2012, President Obama signed the JOBS Act into law. This bill, among many other things, included the ability for private companies like Gumroad to sell shares to the general public, making it possible for almost anyone to invest in the business. On March 15, 2021, the legal limit for regulation crowdfunding went from $1.07 million to $5 million. These new rules also allow for “testing the waters,” allowing companies like Gumroad to see how much demand there is to invest in the company before committing to a crowdfunding campaign.

I can speak from experience: On March 15, 2021, I used Regulation Crowdfunding to allow some of Gumroad’s creators to become part-owners. In 12 hours, we raised $5 million from more than 7,000 individual investors. Now we have thousands of our creators as our investors too, keeping our interests more cleanly aligned.

Overcommunicate with Your Cofounder

Drs. John and Julie Gottman, well-known couples therapists, say they can predict the end of relationships using “The Four Horsemen of the Apocalypse,” their name for four types of communication styles that start to appear in a relationship: (1) criticism, (2) contempt, (3) defensiveness, and (4) stonewalling.

Maintain Your Energy and Sanity

Some say that you need to grow like crazy, because “if you don’t get big, someone else will eat you.” As if companies were fish. This is wrong. The vast majority of small businesses are never eaten. Big fish want to eat other big fish. In fact, the longest-lived businesses in the world are also some of the smallest.

7 build the house you want to live in

I used to think that communicating company values was kind of dumb, to be honest. Be nice, work hard, show up on time—isn’t it obvious? Then I started Gumroad and realized that if you don’t constantly remind everyone—including yourself—what you do, how you do it, and why you do it that way, you will veer off course. And then you’ll have to make corrections, usually at the most inopportune time.

8 where do we go from here?

Søren Kierkegaard wrote in 1844 that anxiety is the “dizziness of freedom.” It’s what happens when you stare at the infinity of your own choices.

I believe our goal should be to bring together our passions, our missions, our professions, and our vocations. This is the Japanese concept of ikigai, which aligns what you love, with what the world needs, with what you can be paid for, and with what you are good at: When you are in ikigai, you feel at peace, and you can work to improve the world at the same time. You can live in the present while working toward a better future.

But where specifically do you go from here? The answer is that I don’t know. This question never goes away, and there will never be one right answer for every founder. This is why you should always try to build the right business for yourself selfishly while at the same time also serving a community of others selflessly. And you should prioritize your happiness while you do it!

one more thing

Let’s start at the beginning. What’s the plan? You have a business idea, hopefully. And because you picked the right community to serve, and became a pillar within it, you have a good plan of attack to get started on building your MVP (manual valuable process first, then a minimum viable product). You’re going to get to a hundred customers, and only then worry about launching!

In this book, we’ve mostly spoken about successful businesses. But every successful entrepreneur has many failed attempts. In the years before Gumroad’s creation, I built and launched several dozen things. Almost all of them failed. Gumroad worked, though. And you only need to be right once.

If you’re struggling to even come up with a problem to solve, be patient. Look around and pay attention. Humanity is just getting started, and it’s unlikely that anything we do today will resemble how we do it in the future. One day, your life and work will align. You’ll have a purpose that unifies everything you do. You’ll get paid to do what you love. Your business will grow as long as you keep being you.