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The Minimalist Entrepreneur (Sahil Lavingia) – Book Summary, Notes & Review

The Minimalist Entrepreneur (Sahil Lavingia)

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⭐ Review

Rating – 7.5/10

Fluff rating – 6/10 (noticeable fluff)

This book is bad for venture capitalists and great for small founders. It teaches you how to build a profitable business step-by-step without venture capital by just being yourself and doing what you love with people you enjoy being with.

✅ What I liked

  • Gives you everything you need to know on how to build a business from step 0 (including finding ideas, selling, building, marketing, growing, hiring etc.)
    • Chapters 3-5 on building, selling and marketing were my favourites
  • Super-relevant in 2021 (i.e. takes advantage of leveraging the Internet, creating digital products, software to scale, using remote work and distributed teams etc.)
  • It’s not just theoretical – everything in the book has been applied to Gumroad (a multi-million dollar company) and heaps of other examples

❌ What I didn’t like

  • If you’re new to business, the explanations and concepts (like funnels, MVPs, profitability vs growth, “testing hypotheses” etc.) may seem a bit much
  • The chapters on finding problems to solve and building an audience went over what to do at a high-level but not really how to do it

🗝️ Key Quotes

  • “Profitability means sustainability. Instead of treading water until a lifeboat comes along to save you—which is how many founders think about raising their next round of VC funding—it means building your own boat.”
  • “We’re moving past an era of gatekeeping, where bosses and universities and venture capitalists decide who gets to try and who doesn’t”
  • “You don’t learn, then start. You start, then learn.”
  • “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”
  • “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”
  • “Building a business is a lesson in fast feedback loops and iteration. Imagine if you were on a boat searching for treasure, but you could only ping your radar once a year. Then once a month. Then every day. The boat is your business, and the treasure is product-market fit. “
  • “[Your business grows by] starting with the people who care about you the most, and “ending” with the people who care about you the least”
  • “People do not go from being strangers to being customers in one step. They go from being strangers to being vaguely aware of your existence to slowly over time becoming fans, and finally to being customers and then repeat customers who help you spread the word. Start with making fans.”
  • “Building a social media presence is a lagging indicator of the success of your company, and it should always be secondary to it”
  • “…it’s a lot more difficult, emotional, and expensive to fix your culture than your code”
  • “Before you invite anyone over, you need to get your house in order. I’ve never seen a house party end cleaner than when it started, and a company is a house party that never ends
  • “…a minimalist entrepreneur without a successful, sustainable business only wants one thing (that!), while one who has achieved it has the world as their oyster”
  • “Your work is necessary. The business you will start is necessary.”

📑 Short Summary – the book in 5 minutes

  • Minimalist entrepreneurs create sustainable businesses that are profitable from the very beginning instead of prioritising “shareholder value” or unsustainable growth
  • Being profitable means you have unlimited runway and can guarantee success
  • But before you become an entrepreneur, become a creator – start creating things, then learn business (as a tool)
  • Steps to becoming a minimalist entrepreneur/building a minimalist business:
    1. Profitability first – create businesses that are profitable from the start
    2. Start with community – learn from markets/communities before building
      1. Pick communities you care about and are large/well-off enough to sustain a living but small enough to deter large competitors
      2. Contribute to the community by creating content, sharing your work, teaching and contributing to conversations by commenting/participating
      3. Find a problem your community wants to solve
      4. Build a solution that is obvious to monetize and fits your likes/skillsets
    3. Build as little as possible – build only what you need to and automate or outsource the rest
      1. Make sure you can test your idea at a small scale with little investment
      2. At first, go manual (i.e. avoid “systems”/”processes”) and do one thing well
      3. Productize your process – after proving your process solves the problem, start automating the essential and turn it into a product that you can sell
      4. Ship early and often – take feedback and iterate frequently
    4. Sell to your first hundred customers – educate instead of convincing people – use selling to learn more about people’s problems
      1. Decide on pricing – don’t give your product away for free (it’s important to know if people want to pay for it/whether it can sustain a living)
      2. Sell to people you know like family & friends
      3. Sell to your community – contact people one-on-one and ask for their honest feedback
      4. Sell to strangers using cold outreach i.e. emails, calls, knocking on doors
      5. Launch to celebrate – only after getting your first 100 customers
    5. Market by being you – people care about other people – share your stories
      1. People go from strangers to customers by first engaging with content -> following you -> researching your offer -> purchasing
      2. Get on social media where your target market “lives” and create content that educates, inspires and entertains
      3. Build an email list so that your customers can hear from you over and over
      4. Spend money last – relying on ads is not as durable as building an audience
    6. Grow yourself and your business mindfully – watch out for these mistakes
      1. Don’t run out of money – always be profitable, stay focused on what your customers want and if needed, raise money from your community
      2. Don’t run out of energy – overcommunicate with your cofounder and avoid thinking you always need to do more, earn more or grow more
    7. Build the house you want to live in – set how, when and where you work based on your values instead of conventional wisdom
      1. Define your values early and often – they codify what you believe and supersede you and allow you to scale
      2. Tell the world who you are and what your values are to attract the right people and repel the wrong ones
      3. **Hiring looks a lot like firing yourself **- look to hire people who are better than you from the beginning
  • The most important thing is to get started – start then learn, don’t learn then start

📕 Chapter Summary – the book in 30 minutes

Introduction

  • Minimalist entrepreneurs create sustainable businesses that are profitable from the beginning and have the flexibility to take risks to serve the greater good
  • Instead of prioritising “shareholder value”, minimalist businesses are focused on solving meaningful problems in their own way while making a profit
  • This book is a manual to help design, build and successfully grow your own minimalist business

1 – The Minimalist Entrepreneur

  • Venture capital businesses embrace growth (above all other metrics like profitability)
    • The VC model needs a few huge wins (5%) to pay for all their losers (95%)
  • Minimalist businesses embrace profitability, not growth, as the key indicator of success
    • Being profitable means you have unlimited runway and can guarantee success
  • Steps to becoming a minimalist entrepreneur/building a minimalist business:
    1. Profitability first – create businesses that are profitable at all costs
    2. Start with community – learn from markets/communities before building
    3. Build as little as possible – build only what you need to and automate or outsource the rest
    4. Sell to your first hundred customers – educate instead of convincing people – use selling to learn more about people’s problems
    5. Market by being you – people care about other people – share your stories
    6. Grow yourself and your business mindfully – own your business instead of letting it own you – don’t sacrifice profitability for scale
    7. Build the house you want to live in – set how, when and where you work based on your values instead of conventional wisdom
  • Before you become an entrepreneur, become a creator
    • Start creating things, then learn business (as a tool) – instead of starting a “business” and then creating later
  • To start as a minimalist entrepreneur, look at the communities you care about and how you can make them better/problems you can solve

2 – Start with Community

  • Successful minimalist businesses start with communities they love to spend time with/on things they love to doyou can’t just be in it for the money
  1. Pick the right community – focus on communities you care about for the long-term and are large/well-off enough to sustain a living but small enough to deter large competitors
    • These will usually be where you spend most of your time (online and offline) and where you feel most like yourself
  2. Learn more and contribute to communities – join where the community meets (online and offline) and add value by creating content, showing your work, teaching and contributing to conversations by commenting/participating
    • Eventually, people will start recognizing you and you’ll build relationships organically
  3. Add value through teaching – share your work in public, teach everything you know and learn new things and create content regularly for the community
    • Eventually, you’ll be skilled enough to monetize what you know and have the community/relationships to serve as your first customers
  4. Pick the right problem to solve – don’t invent problems – find a problem that your community actually wants to solve before starting a business
    • People value four things:
      • Place utility – make something inaccessible accessible
      • Form utility – make something more valuable by rearranging existing parts
      • Time utility – make something slow go fast
      • Posession utility – remove a middleman
    • Alternatively – solve your own problems (chances are the community might share them)
  5. Build the right solution – ensure your solution is something you’ll love, is obvious/easy to monetize, has an organic growth mechanism and fits your natural skillsets
    • Your business will fail if you don’t build it in the right way with a minimalist mindset

3 – Build as Little as Possible

  • After finding a problem worth solving for people worth solving it for, you need to figure out what is essential to build now and what can wait until you’re in business
  1. Start by testing your hypothesis – every minimalist business starts by testing their product/solution with real customers at a small scale
    • Note – hypotheses’ must be testable and falsifiable (able to be proved wrong)
    • When validating a hypothesis, don’t ask leading questions
      • “Would you pay for my product?”
      • “Why haven’t you been able to fix this already?”
    • Leave businesses that need lots of investment/can’t be tested to VCs
  2. Get started by going manual and doing one thing well
    • You don’t need to know everything in the beginning – learn what you need to know, leverage what you already know and delegate the rest – just get started
    • Bias towards doing things manually before creating systems and processes
      • Use your time and expertise instead of software – document your minimum viable process so you can figure out what works/doesn’t
    • Do one thing well (solve a real pain instead of creating a nice-to-have)
  3. Productize your processafter proving your minimum viable process sells/solves customers’ problems, turn it into a product that you can sell
    • This is where you can automate each individual task so that people can do your process without you being involved (e.g. sign up, use, pay for it etc.)
    • Add constraints so you don’t try to do everything perfectly at once – in the early stages, create something good enough and deliver value quickly to customers
    • Every time you want to build something new, ask yourself:
      • Can you ship it in a weekend?
      • Is it making your customers lives a little better?
      • Is a customer willing to pay for it?
      • Can I get feedback quickly?
    • Alternatively – you can also freelance if you’re not sure what product to build
  4. Ship early and often – take feedback and iterate frequently so you can learn from your mistakes quickly and correct your course until you’re on the right track
    • Each time you ship, some customer goes from “I may want this later” to “I need this now”

4 – Sell to Your First Hundred Customers

  • Once you have your MVP, you need to sell to your first hundred customers
  • The sales process is about discovery – you want to learn about what people want, why don’t they want your product, what’s working, what’s not and how to fix it
  1. Decide on pricing – pricing decisions are subject to iteration – just start the discovery process, don’t worry about getting to the perfect result right away
    • You’re able to charge in two ways:
      • Cost-based – adding margin to how much it costs to provide something
      • Value-based – charging for the value you deliver (e.g. Netflix multiscreen features)
    • The goal – charge people for tiered levels of service (like economy, business and first class) – this happens when your offering has an established value/brand
    • Note – in the early days, don’t give your product away for free – you need to find out if it’s valuable enough for people to pay for it + for your business to survive
  2. Sell to people you know – you have little credentials when starting out so sell to friends and family and get them to fund, try, refer or help you with your product
    • This is how your business grows – it starts with the people who care about you most and ends with people who care about you least (and more your product)
  3. Sell to your community – if you can turn friends and family to customers, move on to your community (by contacting micro-influencers and building relationships)
    • Contact everyone who has written/shared anything about a similar business and ask for their honest feedback (and show your appreciation for their time)
    • Note – The key to doing business for a long time is to build relationships – never oversell, be honest, open, kind, share your failures and educate instead of selling
  4. Cold outreach – manually sell to strangers by sending emails, making calls and knocking on doors
    • Manual sales will be 99% of your growth in the early days and word-of-mouth will be 99% of your growth in the later days
      • Only once you’re profitable and getting referrals should you think of other forms of marketing (like SEO, ads etc.)
    • As you manually sell, you’ll learn more about your customers which allows you to tune your product to better solve your customer’s problems
  5. Launch to celebrate your first 100 customers – not to get your first customers

5 – Market by Being You

  • Once you have repeat customers to sustain your business without ongoing sales efforts (product-market fit), you can focus on scaling with marketing
  • Marketing is sales at scale – while sales is outbound and one-by-one, marketing is inbound and about attracting 100s of potential customers at a time (harder)
  • The best way to start marketing is by spending your time (not money) building a following (audience) online and offline
    • People don’t care about companies – they care about other people
  • People don’t go from being strangers to customers in one step – they go from strangers -> being vaguely aware of your existence -> fans -> customers -> repeat customers through The Minimalist Marketing Funnel:
    1. Engage – people encounter your product (e.g. in their Instagram feed, forum post etc.) and most likely forget about it or “like” it
    2. Follow – eventually, they’ll get interested (not in your product), but in what you/your business has to say and they’ll “follow” you/check out your website
    3. Research and Consider – if they’re a fit, they’ll consider your product and evaluate its functionality, pricing etc.
    4. Purchase – if they like your product enough, they’ll eventually buy
  • Top of the Funnel – Social Media and SEO
    • Get started on social media by trying platforms (e.g. Twitter, Instagram, YouTube etc.) where your audience “lives” online and that most suits your personality
    • Be authentic online and create content with this framework:
      1. Educate – provide value for free – build in public and share what you’ve learned
      2. Inspire – share your struggles, successes and show people what’s possible
      3. Entertain – just have more fun while educating and inspiring people – crack jokes, make people laugh
    • Trust the feedback loop – as you keep sharing, you’ll collect more data on what works and what doesn’t
  • Middle of the Funnel – Emails and Communities
    • Building an email list gives you a direct line to your customers that’s not controlled by private companies, algorithms or advertising
    • Do the same with emails as any other content – educate -> inspire -> entertain
    • By collecting emails, the sale isn’t the end of the transaction between you and the customer – they become part of your audience and hear from you again and again
  • Bottom of the Funnel – Sales – now the customers buy (simple)
  • Further notes
    • Spend money last – wait as long as you can before spending money on marketing – relying on paid advertising is not durable and you learn less
    • Pay your users to help you growe.g. offer discounts for leaving reviews or sharing your product on social media

6 – Grow Yourself and Your Business Mindfully

  • After you’re profitable and have an organically growing customer base, don’t get complacent – the world is constantly changing and you have to adapt
    • If you don’t, your customers will churn and your employees will leave
  • Two categories of self-inflicted mistakes to watch out for:
    • Running out of money
      • Don’t spend money you don’t have – always be profitable and make more than you spend so your company can keep going forever
        • Only pay yourself as profits allow
        • Outsource everything using software -> freelancers -> full-time employees (in that order)
        • Don’t get an office or move to Silicon Valley – it’s cheaper and less competitive to work remotely & build your company in a smaller city
        • Be incredibly disciplined with your expenses
      • Stay focused on what your customers want – everything your business develops/creates should be scrutinized in the eyes of your customer
        • Why does this matter for the customer? What value does it bring?
      • Raise money from your community – using regulation crowdfunding (if legal in your country) instead of raising from VCs or calm funds
    • Running out of energy
      • Overcommunicate with your cofounder – approach your cofounder relationship like a marriage (because it’ll drain you otherwise):
        • Don’t start a relationship unless you really, really trust them
        • Introduce vesting so that each of you earns your stock over several years
        • Make sure you’re aligned on your values, what/how you want to build
        • Plan for the possibility that one of you may leave
        • Have the hard conversations as early as you possibly can
      • Maintain your energy and sanity – avoid thinking you always need to do more, earn more or grow more
        • Your company grows as quickly as your customers determine it will grow – the number of hours you work often is not correlated with business growth

7 – Build the House You Want to Live In

  • Before you hire anyone, you first need to make a company people want to work for – build the house you want to live in
  • Define your values early and often – start small and grow from there
    • Values codify what you believe, tell everyone how to behave in any situation and put it in a place where everyone can see (and suggest changes)
      • Values supersede you, and allow you to scale
    • Note – cultures can develop naturally without needing to write down your values, but it might not be a culture you want for you, your team or your customers
  • Beware of the Peter Principle – in every hierarchy (company), every employee gets promoted until they get stuck with the job they’re not good at (lol)
    • At Gumroad, this principle is turned on its head – the best people continue to do the jobs they’re best at as they get promoted (they just get paid more to do it)
  • Focus on delivering the best product for your customers – this way, a system that works will develop organically instead of artificially imposed
  • Tell the world who you are
    • Hiring well is about telling potential candidates that you exist, and why you exist over and over again (similar to selling/marketing well)
    • Communicate your values publicly – it will be polarizing but this allows you to attract the right people for the job and repel the incompatible ones
  • Hiring looks a lot like firing yourself – look to hire people who are better than you from the beginning
    • Figure out the job you’re hiring for so you can figure out who may be a fit
    • Ask yourself what you most enjoy doing, what you’d like to pass on to someone else, what you’re good/not good at and whether you’re using your time wisely?
  • Fit is two-way – if someone isn’t working out for you, you’re not working out for them
    • When in doubt, reflect on whether the person fits your values and is a valuable addition to your company (or whether your values need work)
    • Firing people is an essential skill to build the house you want to live in

8 – Where Do We Go from Here?

  • Now that you’ve arrived at your destination (of having a successful, sustainable business), where do you go next?
  • You’ve made money, now make time – reclaim obligation-free time and make your life about things other than work
    • The goal is to make the business require as little of you as you wish it to, so that you can engage with the world in the way you think best
      • Outsource, automate or ignore anything that you don’t enjoy doing
  • Pursue ikigai – align what you love with what the world needs with what you can be paid for and with what you’re good at
    • This way, you’ll feel at peace in the present while improving the future
  • Serve others – now that you’ve “made it”, help others “make it” too
  • Save the planet – commit to carbon neutrality, sustainable operations, keep your mission aligned with sustainable values (among other things)
    • Note – you don’t have to “change the world” with your minimalist business – any small change that benefits anyone is worthwhile
  • Let go – you may leave your minimalist business (either by choice or force)
    • Afterwards, your options are limitless and there’s no right answer:
      • You can retire on a beach and feel like your work is done
      • You can double down, raise money and take a big swing with your next company
      • You can find a new CEO but stay involved in running the company
    • Question and reflect on your decisions – ask yourself “why” for everything to figure out who you are and what you really want
      • Then you can figure out HOW to get what you want

One More Thing

  • Every successful entrepreneur has many failed attempts but you only need to be right once to have a successful business
  • The most important thing is to get started