The Minimalist Entrepreneur: How Great Founders Do More with Less

by Sahil Lavingia

Gumroad may have been a crappy investment for a few venture capitalists, but it was still a great company for its customers.

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.

he was laid off from eTour, a websurfing guide he helped build and grow,

being a minimalist entrepreneur is all about: making a difference while making a living.

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

There’s nothing inherently wrong with raising money, and not all unicorns are evil.

According to Matt Murphy, managing director and partner of Menlo Ventures, approximately 70 percent of startups fail, which can mean anything from full liquidation to becoming cash flow positive, which, despite being good for the company, is still bad for the VC. Of the 30 percent still standing, he says, some return three to five times the initial investment, which constitutes only modest success in this setting. The whole system is riding on at least 5 percent of VC-backed companies delivering tenfold to one hundredfold returns to balance out losses and make it all worth it. Without them, the VC model simply doesn’t work.

Narrow down who your ideal customer is. Narrow until you can narrow no more. Define exactly what pain point you are solving for them, and how much they will pay you to solve it. Set a hard deadline and focus fully on building a solution, then charge for it. Repeat the process until you’ve found a product that works, then scale a business around it.

That could mean being an artist, but it doesn’t have to. Creators make things, charge their audiences for those things, and then use that money to make more things. They use the first dollars they earn as tools to fuel their own creative drive, not the other way around. With time and experience, creators show others how to turn their own creativity into businesses, and the cycle continues. 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.

free course on iOS development from Stanford through iTunes University, called CS193P (I still recommend it!).

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.

Either way, finding your people is really important at the beginning. Not just for the sake of your business but also for the sake of your own well-being.

Once you’re regularly cultivating relationships by contributing to the conversation, the time will come when you’re ready to go further and educate others.

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.

Patrick McKenzie, a writer, entrepreneur, and software business expert who is best known for a 2012 post on salary negotiation that has since become a cult classic

As you think about what you’re creating now and how that might lead to a business in the future, look to the communities you’re already a part of.

Once you are part of a community, you can start to make a list of difficulties its members face, and you can think about how you could build a product or service to solve one or more of them.

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).

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?

The important thing is the thought process you bring to figuring things out for yourself. You need the right mindset and to know what questions to ask yourself. It begins and ends by thinking of your business as a tool to solve a customer’s problem. Not as a lottery ticket.

what truly makes great founders and great businesses in the long term is a great deal of persistence.

This is about interests, not skills. Instead of focusing on the things you do not know, focus on the things you do.

If your passion to solve a problem is genuine, you can overcome obstacles on your path one at a time. If you’re on a mission to serve customers, you can learn what you need to know and delegate the rest. Just figure out where your skills, knowledge, and background intersect with the business you have in mind and leverage these strengths to the hilt.

It’s just that you don’t have to jump straight into coding or programming to create the processes that will power your minimalist business.

The world will tell you to go big or go home, but I say go small at the beginning. And the smallest you could possibly start is to build nothing at all. Instead of skipping straight to software, stick with pen and paper.

As you fulfill the first customer cycle, document each part of the process so that with every consecutive customer you have a playbook. This document will be the true MVP of your business. I’m not talking about the minimum viable product that we’re all trying to build and to launch. I’m talking about the manual valuable process that precedes it and will be the foundation for the business you’re trying to build.

“Creating a product is a process of discovery, not mere implementation. Technology is applied science,” Naval Ravikant says.

talk is cheap. Until you get through the entire process of solving the customer’s problem and (ultimately) receiving payment, you won’t know what the customer wants and is willing to pay for.

one of the easiest ways to get started and to experiment is to freelance. Selling your time does not scale nearly as well as other types of businesses but can generate positive cash flow much sooner, giving you the breathing room to think about what comes next.

It takes time to test and honest reflection to recognize when you are wrong. But it is better to be wrong now, when the stakes are low, than to be wrong after you have spent five years and some of your own personal capital trying to build your idea into a business that was never meant to exist.

it may be useful to know that most apps on the internet consist of two things: forms and lists. Twitter, for example, has a form you use to tweet (with a single input) and a list of tweets you see from people you follow.

Productizing simply means developing a process into something you can sell. In the processizing stage, you created a manual valuable process for yourself and built a system for working efficiently and effectively as you helped each individual customer. Now you are ready to productize, which means that you automate each individual task so that people can sign up, use, and pay for your product without you being involved.

If processizing is how you scale a manual process, then productizing is how you go fully automatic.

A product that is beautiful or has great marketing behind it may feel more useful than it actually is. But 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.

But businesses are not something you engage with once, talk to your friends about, and then forget as you move on to the next thing. Your business should have customers for life, not just for a Friday night.

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.

Eventually strangers will buy your product, but mostly because your customers are spreading the gospel of your business and product, not because they saw an ad. But it will take time to get there.

Once you’ve figured out how to get started, the next challenge is pricing.

A price is just a part of a product, like everything else, and it can and will change over time. Similar to product development, your goal is to start the discovery process, not get to the perfect result right away.

Humans, like objects, have inertia. Everyone is on a path, and it usually takes a bump to knock them in a different direction, even if it is a better one in the form of the solution you’re offering with your business.

Don’t sell them on your product, educate them on your journey and learnings.

Once you’re okay with the nos, you’re ready to sell to strangers.

Consistent growth comes after a long period of time, mostly driven, especially at the beginning, by a hardworking sales team—starting with you.

Each email will refine your ability to write better emails. Done right, you’re not only educating customers, but educating yourself about what you can do better. It’s a learn-learn situation.

Big network-focused tech companies boast dazzling metrics, but their actual profits (when they have profits, anyway) come from a very tiny portion of their total audience.

Whether you’re just starting or you’ve been in business for years, your most important clients are your community.

Across the spectrum of minimalist entrepreneurs, I see a common pattern: manual sales, finding your community, talking about your journey, highlighting your customers, and getting authentic coverage.

Growth-at-all-costs is all about selling to strangers so that you can scale, but profitability-at-all-costs means you don’t need to depend on strangers to keep your business afloat. Instead, you can rely on your existing customers from your communities and eventually from your audience. They’ll spread the word as they feel comfortable doing so, and that’s how you’ll grow. The math looks different for everybody, but the goal is the same: financial independence. When I did it for myself, I needed about $2,000 a month to maintain my lifestyle.