Summaries Starting a Business Top and Bottom Businesses to Launch with Billionaire Investor Andrew Wilkinson (#386)

This is a summary of a YouTube video "Ranking The Best And Worst Businesses To Start w/ Billionaire Investor Andrew Wilkinson (#386)" by My First Million!

4.7 (72 votes)

The video discusses the challenges and opportunities of starting a business, the importance of learning from mistakes, the key factors for successful investing and business allocation, and the risks and rewards of investing in startups.

• 💼
  00:00

  Starting a business like Milk Road is easier than brick and mortar businesses with physical goods and many employees, and agencies rank as medium difficulty.
• 💡
  00:38

  Starting businesses can be painful, but it's important to learn from mistakes and not compare oneself to successful individuals.
• 📈
  09:49

  With focus and reading, one can become a top percentile industry expert, while operational lens and attention to detail are key to successful investing and business allocation.
• 💼
  16:36

  Being a full-time entrepreneur can be boring, but investing in Aeropress and starting an online store for cat furniture taught valuable lessons about the industry.
• 💼
  26:28

  Agencies require constant balancing of supply and demand, while American companies face pressure to achieve the same results for less money.
• 💰
  37:18

  Tenzing is a modern investment bank that helps bootstrap founders access capital and navigate options for their businesses in a fee-free manner.
• 🚨
  50:40

  FTX may be a fraud, Canadian stock market is full of fraud, eglx is overvalued, Luminosity lost money, and Bird is not a good investment according to a short seller.
• 💰
  1:00:55

  Investing in startups is risky, but it's important to think for oneself and not rely on big names as signals for investment decisions.

Key insights

Business Success and Profitability

• 💰 Tiny Capital's portfolio of internet companies collectively generates hundreds of millions of dollars in revenue, showcasing the profitability and success of their investments.
• 💡 Wilkinson's experience highlights the importance of understanding how to value a business and the potential consequences of not doing so.
• 📚 Despite his image as a "geezer," Warren Buffett's letter showcases his intelligence, storytelling ability, and deep involvement in the operational aspects of businesses.
• 🤔 Warren Buffett questions the significance of geographical uniqueness in products, implying that marketing and storytelling may play a larger role in consumer perception than the actual quality of the product itself.
• 💼 Warren Buffett's ability to influence and grow businesses sets him apart from investors who simply shuffle paper on Wall Street.
• 🤔 Wilkinson advises tech entrepreneurs to focus on buying great businesses rather than speculating on cryptocurrencies like Bitcoin, emphasizing the importance of patience in finding investment opportunities.

Innovative Business Ideas and Concepts

• 💰 Andrew Wilkinson believes that the Aeropress, a unique way of making coffee, has the potential to be a lasting business with decades of impact.
• 🌟 Owning a business like Aeropress, which has a passionate and excited customer base, is rare and can be incredibly rewarding.
• 🌐 The new CEO of Aeropress, who previously grew SodaStream's business to $200 million in the United States, brings valuable experience and potential for further growth to the company.
• 💡 Andrew Wilkinson suggests the idea of a service that allows you to get on one person's radar, targeting them with hyper-targeted advertising everywhere they go on the internet, which he believes is worth a lot of money.
• 🤔 The idea of creating a database to analyze someone's information diet and tailor marketing strategies accordingly is an intriguing concept that could potentially revolutionize the way businesses approach advertising.
• 💡 The idea of starting a modern Investment Bank for bootstrap founders, called Tenzing, aims to provide guidance on accessing capital, credit, debt, M&A, and business sales in a way that is aligned, long-term focused, and not fee-driven.

Ethical and Fair Investment Practices

• 🤝 The concept of a non-binary term sheet, where the valuation of a business is structured to allow investors to get their money back if certain benchmarks are not met, can create fairer and more balanced agreements between founders and investors.
• 💰 Investing in fraudulent or self-dealing businesses is fundamentally different and more concerning than investing in businesses that simply didn't work out as expected.
• 💡 "You can't Outsource your conviction like you can outsource a lot of things."

Detailed summary

• 💼
  00:00

  Starting a business like Milk Road is easier than brick and mortar businesses with physical goods and many employees, and agencies rank as medium difficulty.
• 💡
  00:38

  Starting businesses can be painful, but it's important to learn from mistakes and not compare oneself to successful individuals.

  • Sahil Bloom was a surprisingly popular guest on the podcast and was praised for his honesty and openness despite his desire to maintain a positive public image.
  • The speaker talks about their experience of starting multiple businesses and the pain and lessons learned from them.
  • Andrew Wilkinson owns Tiny Capital, which buys and holds internet companies collectively doing hundreds of millions of dollars in revenue.
  • People should be cautious about being compared to successful individuals like Warren Buffett or Steve Jobs, as it can lead to negative consequences and expectations.
  • The speaker created a premium marketplace for Tumblr themes called Pixel Union, which generated automatic revenue and led to a partnership with Shopify.
  • The speaker incubated a business, sold it for $7 million without realizing its true value, regretted it, bought it back for $26 million, made acquisitions, and took it public at a $260 million valuation.
• 📈
  09:49

  With focus and reading, one can become a top percentile industry expert, while operational lens and attention to detail are key to successful investing and business allocation.

  • In less than a decade, with intense focus and reading, one can go from knowing nothing to being in the top percentile of their industry, as exemplified by the speaker's success in value investing.
  • Being a businessman and investor helped the speaker and his partner to allocate capital within their own business and become better investors by looking at a business through an operational lens rather than just a spreadsheet.
  • Warren Buffett's 1972 letter to the CEO of C's candy showcases his business savvy and attention to detail.
  • The store environment and merchandising can affect how customers perceive the quality of candy, similar to how the editorial environment of a publication affects the perception of ads.
  • The speaker discusses the comparative disadvantage of their product against Stovers due to poor store design and suggests creating descriptive material and catchphrases for marketing.
  • Warren Buffett not only owned businesses but also influenced them massively, built value, and made acquisitions, but it's hard to change CEOs' minds and he starts businesses because he gets bored being just an investor.
• 💼
  16:36

  Being a full-time entrepreneur can be boring, but investing in Aeropress and starting an online store for cat furniture taught valuable lessons about the industry.

  • Being a full-time entrepreneur may sound like a luxury, but in practice, it can be boring and require finding new things to fill your time with.
  • The purchase of Aeropress was a unique and valuable investment with potential lasting impact in the coffee industry.
  • Aeropress is a great business with a refillable component that could become a de facto winner in its category, even though the speaker doesn't drink coffee.
  • Aeropress, a company known for its retail presence, lacked online sales focus until a new CEO with experience from Sodastream was hired.
  • Sodastream was acquired by Pepsi for 3 billion in 2018, but there should be more competition from D2C brands in the market.
  • Starting an online store for cat furniture taught the speaker a valuable lesson about the difficulty of e-commerce and the challenges of businesses that involve physical goods and employees.
• 💼
  26:28

  Agencies require constant balancing of supply and demand, while American companies face pressure to achieve the same results for less money.

  • Agencies are scalable and asset light, but require constant balancing of supply and demand, and owners must be prepared for feast or famine and ready to make radical changes at any time.
  • Softness in the market is causing a slowdown in American companies buying services, with pressure to achieve the same results for less money, and uncertainty in the market making it difficult to predict future trends.
  • Starting a restaurant business was a wrong decision for the speaker, but it taught him valuable lessons on how to run a successful business.
  • The speaker has an idea for a service that allows individuals to get on a specific person's radar by hyper-targeted advertising.
  • Jack Smith sold his company Vungle for $800 million after using LinkedIn to target the founder of AngelPad and get into the incubator, leading to a viral article and changes in LinkedIn's advertising policies.
  • Targeting someone everywhere they go can have negative consequences, such as buying a billboard by their house.
• 💰
  37:18

  Tenzing is a modern investment bank that helps bootstrap founders access capital and navigate options for their businesses in a fee-free manner.

  • Tenzing is a modern investment bank for bootstrap founders that helps them access capital and navigate options for their businesses in a long-term, aligned, and fee-free manner.
  • Tenzing is a financial translation service that connects bootstrap businesses with investors and helps them get the most out of what they have.
  • The speaker prefers to hold onto businesses rather than sell them, as it is difficult to predict their future success and selling a dying business may not yield much profit.
  • The FTX Saga is bad for crypto and has a lasting negative effect on trust, but the price of Bitcoin hasn't reacted as expected, and while there are fascinating arguments for it, the speaker has steered clear of cryptocurrency for now.
  • There's always a second chance on the train, even when prices are down, but people are hesitant to act on it, and there were no red flags or fraud issues with FTX that the speaker was aware of.
  • The speaker discusses a businessman known for risk management who has been involved in sketchy loans between related party businesses, and questions whether he is a bad actor or just someone who got in over his head, while waiting for Michael Lewis' upcoming book on the topic.
• 🚨
  50:40

  FTX may be a fraud, Canadian stock market is full of fraud, eglx is overvalued, Luminosity lost money, and Bird is not a good investment according to a short seller.

  • FTX is likely to fail and become a big fraud scandal, with evidence presented in a Twitter thread by Jason Choi.
  • The speaker discusses encountering fraud in his professional life, including small-time fraudsters and a larger-scale case involving bribery and corruption in Indonesia.
  • Fraud is prevalent in the Canadian stock market, where investment bankers dress up small businesses to match trends and dump them to retail investors, making a killing while the stock eventually drops to zero.
  • Esports investment company eglx is overvalued and has lost 90% of its value since being called out on Twitter.
  • Luminosity, a Canadian ad agency and owner of niche websites, bought several agencies for cash and stock, traded on the TSX, and made 30 million in revenue with 50 million in expenses, resulting in a loss of 20 million and a need for more funding.
  • Well-researched and enjoyable short seller shares insights on the San Francisco scooter company Bird.
• 💰
  1:00:55

  Investing in startups is risky, but it's important to think for oneself and not rely on big names as signals for investment decisions.

  • The speaker discusses a non-binary term sheet structure for venture funding that allows for fair valuations and potential return of investment if certain benchmarks are not met, but the other person in the conversation expresses skepticism about its practicality and potential negative incentives.
  • Alternative funding options for technology businesses, such as non-VC options, can provide a better outcome for founders who may feel pressured to continue down the VC path even when it's not feasible, but caution should be taken to avoid opportunistic fundraising.
  • Even the smartest investors make terrible financial decisions in the rigged game of venture capital, and it's important to think for oneself and not rely on big names as signals for investment decisions.
  • Investing in business is a hard game and even the smartest people make dumb decisions, so it's important not to take their backing or involvement in a project as a signal of success.
  • Investing in startups is a risky business, but it's different when investing in fraudulent or self-dealing businesses, and while there will always be some losses, it's important for firms to deliver value to their investors in the long run.
  • Don't outsource your conviction to big names and be aware that even smart people can make mistakes.

Q&A

• Is starting a business like Milk Road easier than traditional brick and mortar businesses?

  Yes, starting a business like Milk Road is easier than brick and mortar businesses with physical goods and many employees.

• Who is Sahil Bloom and what was his impact on the podcast?

  Sahil Bloom was a popular guest on the podcast known for his honesty and openness, despite his desire to maintain a positive public image.

• What is the speaker's experience with starting multiple businesses?

  The speaker has started multiple businesses and shares the pain and lessons learned from those experiences.

• Who is Andrew Wilkinson and what does he own?

  Andrew Wilkinson owns Tiny Capital, which buys and holds internet companies collectively doing hundreds of millions of dollars in revenue.

• Should people be cautious about comparing themselves to successful individuals like Warren Buffett or Steve Jobs?

  Yes, people should be cautious about comparing themselves to successful individuals like Warren Buffett or Steve Jobs, as it can lead to negative consequences and expectations.