MegaMaker - Same effort, but better results

Howdy!

Back in 2001, Bob and Jane each picked a stock and invested $1,000.

Bob picked IBM. Jane picked Apple.

Bob's $1,000 investment turned into $2,643

📊 IBM investment over time

Jane's $1,000 investment turned into $903,471

📈 Apple investment

This same "effort/reward effect" is present when entrepreneurs start businesses: two founders can apply the same effort, but one can get wildly better results

To me, this is fascinating: two people can invest the same amount of time, money, and resources, but one person can get a 10x, 100x, or 1000x better outcome.

Some of this can be explained by "luck," but this multiplication effect can also be achieved by making better bets.

Warren Buffett's investment strategy relied on making better bets. As Bill Gates explained in HBR:

"Warren says that in your lifetime you should swing at only a couple dozen pitches, and he advises doing careful homework so that the few swings you do take are hits."

How does this apply to indie entrepreneurs?

We have to get better at making bets. We can't, as Buffett says, "swing at every pitch."

To make better bets, we really need to do our research (this could include doing smaller experiments). But we're looking for evidence that the market it "pulling" for a particular product or solution.

It also means we have to be patient: founders shouldn't go after every opportunity (we shouldn't swing at every pitch that comes our way).

Too often we equate "more effort = more success." But in business, it's market demand that multiplies our efforts. You'll put $100 worth of effort in, and get $1,000 out.

This doesn't mean we'll hit every pitch that comes our way, but if you're selective, you'll know when you've hit a home run.

(If you liked this post, please share it on Twitter)

Cheers,
Justin Jackson
@mijustin

PS – one way business isn't like baseball: you don't need to stay committed to a "swing" you've already taken. Part of making better bets is being able to move on from a bad bet.

This newsletter is brought to you by ⚡ MegaMaker
(a private Slack for bootstrappers)

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