--- status: To Read title: The Minimalist Entrepreneur subtitle: How Great Founders Do More with Less description: "'Pay attention' - Jason Fried, founder and CEO of Basecamp, bestselling author of ReWork A revolutionary roadmap for building startups that go the distance Cracks are forming in the myth of the VC-funded, IPO-driven billion-dollar company. They're unprofitable, unethical and unsustainable - so why bother chasing unicorns? The Minimalist Entrepreneur is the manifesto for a new generation of founders who would rather build great companies than big ones. Packed with hard-won, battle-tested lessons from Lavingia's own journey of building Gumroad, The Minimalist Entrepreneur teaches founders how to start from anywhere to build any kind of software-enabled business. You will learn how to: resist investments that set you up to fail; run a tight ship amid the rise of the gig economy and remote work; develop and release products without failing fast or often; get to profitability and stay there. The Minimalist Entrepreneur offers essential knowledge for every founder aspiring to build a business worth building." categories: - Non-fiction - Entrepreneurship - Business authors: - [[Sahil Lavingia]] published_on: 2021-10-26 publisher: Hachette UK pages: 200 isbn: 349,431,396 cover: http://books.google.com/books/content?id=V0kxEAAAQBAJ&printsec=frontcover&img=1&zoom=1&edge=curl&source=gbs_api local_cover: 50 Resources/51 Attachments/51.03 Public/The Minimalist Entrepreneur (book).jpg link: https://amzn.to/3xqG57l tags: - type/book - books - summaries - creativity - work - content_creation - entrepreneurship - business - solopreneurship - online_business - zone/areas - zone/areas/literature_notes created: 2024-07-05T15:48 updated: 2026-04-01T14:45 public_note: true --- # The Minimalist Entrepreneur (book) - Author(s): [[Sahil Lavingia]] - Link: https://amzn.to/3xqG57l ![[The Minimalist Entrepreneur (book).jpg|200]] # Brief description # Key quotes > ... # Key ideas ... # Reflecting on My Failure to Build a Billion-Dollar Company [https://sahillavingia.com/reflecting](https://sahillavingia.com/reflecting) In 2011, I left my job as the second employee at Pinterest — before I vested any of my stock — to work on what I thought would be my life’s work. > Just had an idea for my first billion-dollar company. Tomorrow, I start building it. > > [April 2, 2011](https://x.com/shl/status/54072049395712000?ref_src=twsrc%5Etfw) I thought Gumroad would become a billion-dollar company, with hundreds of employees. It would IPO, and I would work on it until I died. Something like that. Needless to say, that didn’t happen. Now, it may look like I am in an enviable position, running a profitable, growing, low-maintenance software business serving adoring customers. But for years, I considered myself a failure. At my lowest point, I had to lay off 75 percent of my company, including many of my best friends. I had failed. It took me years to realize I was misguided from the outset. I no longer feel shame in the path I took to get to where I am today — but for a long time, I did. This is my journey, from the beginning. ## A weekend project turned VC-backed startup The idea behind Gumroad was simple: Creators and others should be able to sell their products directly to their audiences with quick, simple links. No need for a storefront. I built Gumroad the weekend I thought up the idea, and launched it early Monday morning on Hacker News. The reaction exceeded my grandest aspirations. Over 52,000 people checked it out on the first day. Later that year, I left my job as the second employee at Pinterest — before I vested any of my stock — to turn Gumroad into what I thought would become my life’s work. Almost immediately, I raised $1.1M from an all-star cast of angel investors and venture capital firms, including Max Levchin, Chris Sacca, Ron Conway, Naval Ravikant, Collaborative Fund, Accel Partners, and First Round Capital. A few months later, in May 2012, we raised $7M more. Mike Abbott from Kleiner Perkins Caufield & Byers (KPCB), a top-tier VC firm, led the round. I was on top of the world. I was just 19, a solo founder, with over $8M in the bank and three employees. The world was starting to take note. We grew the team. We stayed focused on our product. The monthly numbers started to climb. And then, at some point, they didn’t. To keep the product alive, I laid off 75 percent of my company — including many of my best friends. It really sucked. But I told myself things would be fine: The product would continue to grow and no one far from the company would ever find out. Then, TechCrunch got wind of the layoffs and published “Layoffs Hit Gumroad As The E-Commerce Startup Restructures.” All of a sudden, my failure was public. I spent the week ignoring my support network and answering our customers’ concerns, many of whom relied on us to power their businesses. They wanted to know if they should look for alternative products. Some of our favorite, most successful creators left. This hurt, but I don’t blame them for trying to minimize the risk in their own businesses. So what exactly went wrong, and when? ## Failing in style Let’s start with the numbers. This is our monthly processed volume, until the layoffs:  It doesn’t look too bad, right? It’s going in the right direction: up. But we were venture-funded, which was like playing a game of double-or-nothing. It’s euphoric when things are going your way — and suffocating when they’re not. And we weren’t doubling fast enough to raise the $15M+ Series B (the second major round of funding) we were looking for to grow the team. For the type of business we were trying to build, every month of less than 20 percent growth should have been a red flag. But at the time, I thought it was okay. We had money in the bank and product-market fit. We would continue to ship product and things would work out. The online creator movement was still nascent; the slow growth wasn’t our fault. It always looked like change was right around the corner. But now, I realize: It doesn’t matter whose “fault” it is; we hit a peak in November 2014 and stalled. A lot of creators absolutely loved us, but there weren’t enough of them who needed our specific product offering. Product-market fit is great, but we needed to find a new, larger fit to justify raising more money (and then do it again and again, until acquisition or IPO). In January 2015, after our final double-or-nothing hail-mary, our bank balance dipped below 18 months of runway. I told my 20-person team the road ahead would be a tough one. We didn’t have the numbers to raise a Series B, and we would have to work really hard over the next nine months to get even close. To that end, we deprioritized everything except features that would directly move the needle. Many were not core to our business, but we needed to try everything we could to get our monthly processed volume to where it needed to be. If we succeeded, we would raise money from a top-tier VC again, hire more people, and pick up the journey where we’d left off. If we didn’t, we would have to drastically downsize the company. In those nine months, when the whole team knew we were fighting for our company’s life, not a single person left Gumroad. From “this is gonna be hard,” to “yep, turns out it was,” every single person worked harder than ever. We launched a “Small Product Lab” to teach new creators how to grow and sell. We shipped a ton of features, including weekly payouts, payouts to debit cards, payouts to the U.K., Australia, and Canada, various additions to our email features, product recommendations and search, analytics to see how customers are reading/watching/downloading the products they’ve purchased, and add-to-cart functionality. And that was just between August and November. Unfortunately, we didn’t hit the numbers we needed. ## Slim down or shut down? Looking back, I’m glad we didn’t hit those numbers. If we’d doubled down, raised more money, and appeared in the headlines again, there would have been a very real possibility of even more spectacular failure. With that off the table, our options were: Shut down the business, return the remaining money to investors, and try something new. Continue with a slimmed-down version of the company to aim for sustainability. Position the company for an acquihire. Some of my investors wanted me to shut down the business. They tried to convince me that my time was worth more than trying to keep a small business like Gumroad afloat, and I should try to build another billion-dollar company armed with all of my learnings — and their money. I tended to agree with them, to be honest. But I was accountable to our creators, our employees, and our investors — in that order. We helped thousands of creators get paid, every month. About $2,500,000 was going to go into the pockets of creators — for rent checks and mortgages, for student loans and kids’ college funds. And it was only growing! Could I really just turn that faucet off? If I sold the company, it would be mostly for our stellar team — and I would no longer be able to control the destiny of the product. There were too many acquisition stories of companies promising exciting journeys and amazing synergies to come — and ending with a deprecated product a year later. Selling was certainly tempting. I could say I sold my first company, raise more money, and do this all again with a new idea. But that didn’t sit right with me. We were responsible to our creators first. That’s what I told every new hire and every investor. I didn’t want to become a serial entrepreneur and risk disappointing yet another customer base. We decided to become profitable at any cost. The next year was not fun: I shrunk the company from twenty employees to five. We struggled to find a new tenant for our $25,000/month office. We focused all of our remaining resources on launching a premium service. In June 2015, a few months before our layoffs, our financials looked like this: - Revenue: $89,000 for the month - Gross profit: $17,000 - Operating expenses: $364,000 - **Net profit: -$351,000** A year later, in June 2016, our monthly numbers looked like this: - Revenue: $176,000 for the month - Gross profit: $42,000 - Operating expenses: $32,000 - **Net profit: +$10,000** It hurt, but it meant creators would keep getting paid. It also meant that we were in control of our own destiny. ## From skeleton crew to lifestyle business It got worse from there. Gumroad was no longer the venture-funded, fast-growing startup our investors and employees signed up for. As everyone else found other opportunities, the skeleton crew fizzled from five to one. I was basically alone. I didn’t have a team, nor an office. And San Francisco was full of startups raising gobs of money, building amazing teams, and shipping great products. Some of my friends became billionaires. Meanwhile, I was running a “measly” lifestyle business. It wasn’t what I wanted to do, but I had to keep the ship from sinking. Now, I understand some people would dream to be in that position. But at the time, I just felt trapped. I couldn’t stop, but there was only so much I could do as an army of one. I shut off the rest of the world. I didn’t tell my mom about the layoffs — she had to read the article and tweets herself to find out. My friends were worried, but I assured them I was neither depressed nor suicidal. I left San Francisco for long stretches at a time, thinking that some travel would give me adequate distance. It only made me more lonely. Every day, I woke up and took care of all of Gumroad’s support queries. I tried to fix all of the bugs I could. Often, I had to ask for help from former Gumroad engineers. They were all employed by then, but they always found time to help. Once all things Gumroad were taken care of, I tried to go to the gym, and if I had the willpower, work on a side project (a fantasy novel). Most days, I failed. To me, happiness is about an expectation of positive change. Every year before 2016, there was an improvement in my expectations — in the team, the product, or the company. This was the first time in my life when the present year felt worse than the last. Living in San Francisco was already a struggle. When Trump won the election, I ended up leaving for good. ## New beginnings Then one day, everything changed. Again. I’m wary about sharing this part of the story, because I don’t know if there is anything to learn from it. But it happened, so here it is. On November 27, 2017, I got this email from KPCB, our lead investor: > I am following up our conversation a few months ago. KP would like to sell our ownership back to Gumroad for $1. Can we discuss this week? Mike had left KPCB to start a new company, and KPCB didn’t want the operational headache of appointing a new board member. Plus, it helped their taxes. In one fell swoop, our liquidation preferences (how much we would have to sell for before dollars started going to employees) went from about $16.5M to $2.5M. All of a sudden, there was a light at the end of the tunnel. Small, dim, and far away, but present. There was a path to an independent business, not beholden to the go-big-or-go-home mentality I signed up for when I raised money. One investor joined them. We’ve bought back a couple more, since then. I keep the rest of the investors up-to-date with a brief email every few months. The future came into focus: I could grow a small team, slowly buy back our investors, and build Gumroad into a meaningful business focused on our creators. We would never become a billion-dollar company, and that started to feel okay. Certainly, the thousands of creators selling on Gumroad wouldn’t mind. ## Finding new forms of impact The eight years I worked on Gumroad were full of personal ups and downs. There were months where I worked 16 hours a day, but there were also some months where I worked four hours a week. Here’s one way to picture that time:  Can you tell which is which? I can’t. We had a sales team for a few years, then we didn’t. Can you tell when we made the switch? I can’t. It doesn’t matter how amazing your product is, or how fast you ship features. The market you’re in will determine most of your growth. For better or worse, Gumroad grew at roughly the same rate almost every month because that’s how quickly the market determined we would grow. Instead of pretending to be some sort of product visionary, trying to build a billion-dollar company, I’m just focused on making Gumroad better and better for our existing creators. Because they are the ones that have kept us alive. ## Creating and capturing value At a CEO Summit many years ago, my all-time hero, Bill Gates, took the stage. Someone asked him how he dealt with failing to capture so much value. Microsoft was huge, sure, but tiny compared to the total impact it has had on the world and on humanity. Bill’s answer: “Sure, but that’s true with all companies, right? They create some value and succeed in capturing a very small percentage of it.” I am now more focused on creating value than capturing it. I still want to have as large an impact as possible, but I don’t need to create it directly or capture it in the form of revenue and valuation. Take Austen Allred, for example. He’s raised $48M for his startup Lambda School, and he got his start selling a book on Gumroad. > I shifted my focus from selling my book (using Gumroad, the platform he built) to growing a VC-backed company (which he invested in). We still disagree on some things I’m sure, but everyone could learn a lot and quickly by getting out of his or her bubble. > > [February 7, 2018](https://x.com/Austen/status/961268207398010880?ref_src=twsrc%5Etfw) Startups have been founded by former Gumroad employees, and dozens more companies have been massively improved by recruiting our alumni. On top of that, our product ideas, like our credit card form and inline-checkout experience, have proliferated across the web, making it a better place for everyone — including those that have never used Gumroad. While Gumroad, Inc. may be small, our impact is large. There is, of course, the $178,000,000 we have sent to creators. But then there’s the impact of the impact, the opportunities that those creators have taken to create new opportunities for others. ## Opening up about our financials I’ve found other ways to create value, too. After the layoffs, I didn’t talk to anyone about Gumroad. Not even my mom. And after moving away from San Francisco, I felt pretty disconnected from the startup community. As a way to re-engage with the community, I thought about sharing our financials publicly. Founders starting their own companies could learn from our mistakes, utilizing our data to make better decisions. It was scary: What if we don’t grow every month? It could scare off prospective customers. It’s something I would never expect a startup seeking venture capital to do. It makes sense to hold those cards as close to your chest for as long as possible when you must raise money, hire people, and compete for customers with other venture-seeking startups. But, since we were not any of those things anymore, it was easier to share that information. We were profitable, and a no-growth month won’t change that. So in April 2018, I started to release our monthly financials publicly. > Gumroad in April:GMV: $4.2M (down 2%)Revenue: $273K (down 2%)Gross profit: $65K (up 34%)Let me know if you have any questions! > > [May 14, 2018](https://x.com/shl/status/996042451843461120?ref_src=twsrc%5Etfw) Ironically, more investors have reached out (we’re just interested in raising money from our customers for the moment, thanks!), more folks want to contribute to Gumroad, and our shift in focus has brought us closer to our creators. And instead of freaking out about how “small” Gumroad actually is (like I thought they would), our creators have grown more loyal. It feels like we’re all in this together, trying to earn a living doing what we love. Soon, we’re also planning to open-source the whole product, WordPress-style. Anyone will be able to deploy their own version of Gumroad, make the changes they want, and sell the content they want, without us being the middleman. In 2018, we donated over $23,775 (eight percent of our profits) to different causes. We raised money for the hurricane relief efforts in Puerto Rico and the floods in Kerala. We helped fund the Presence-of-Blackness project in speculative fiction, and a Mexicanx publication. ## Seeking the non-binary For years, my only metric of success was building a billion-dollar company. Now, I realize that was a terrible goal. It’s completely arbitrary and doesn’t accurately reflect impact. I’m not making an excuse or pretending that I didn’t fail. I’m not pretending that failure feels good. Everyone knows that the failure rate in startups — especially venture-funded ones — is super high, but it still sucks when you don’t reach your goals. I failed, but I also succeeded at many other things. Gumroad turned $10 million of investor capital into $178 million (and counting) for creators. Without a fundraising goal coming up, we’re simply focused on building the best product we can for our customers. On top of all that, I’m happy creating value beyond our revenue-generating product (like these words you’re reading). > I can't wait until I'm successful so I can write about failure. > > [October 1, 2013](https://x.com/shl/status/384838645829480449?ref_src=twsrc%5Etfw) I consider myself “successful” now. Not exactly in the way I intended, though I think what I’m doing now counts. Where did my singular focus on building a billion-dollar company come from in the first place? I think I inherited it from a society that worships wealth. I don’t think it’s a coincidence that Bill Gates was my all-time hero and the world’s richest person. Ever since I can remember, I’ve equated “success” with net worth. If I heard someone say “that person’s really successful,” I didn’t assume they were improving the well-being of those around them, but that they’d found a way to make a ton of cash. Wealth can be a measure of being able to improve the well-being of those around you, as seems to be the case for someone like Bill Gates, who has invested heavily in philanthropy. But it’s not the only way to measure success, nor is it the best one. There’s nothing wrong with trying to build the next Microsoft. I personally don’t think billionaires are evil. And there’s a part of me that wishes I was still on that path. But for better or worse, I’m on this one now. _Gumroad is a product of many people’s hard work, including our alumni: Leigh McCulloch, Sidharth Shanker, Anish Bhayani, Kathleen Warner, Heather Whiles, Benjamin Nguyen, Steve Kaye, Tuhin Srivastava, Avinash Ananth, Joel Packer, Katsuya Noguchi, Matan-Paul Shetrit, Amir Haghighat, Ian Atha, Emmiliese von Clemm, Kate Yu, Sri Raghavan, Ryan Delk, Al Hertz, Travis Nichols, Maxwell Elliott, Phil Howes, Ben Reynolds, Michael Klocker, Bryan English, Laura Biester, Jake Heimark, Aaron Relph, Ben Walsh, Greg Terrono, Donald Huang, Paul McKellar, Francisco Gutierrez, Kyle Doherty, and Jessica Jalsevac. Thank you._ _While this essay is about what not to do, I'm writing my first book on the subject of what to do. It comes out October 21, 2021 and you can [learn more and pre-order it here](https://minimalistentrepreneur.com/book)._ Join 20,000 people receiving updates on the Gumroad journey: ## Chapter 1: Profitability [https://www.minimalistentrepreneur.com/chapter/profitability](https://www.minimalistentrepreneur.com/chapter/profitability) ### Profitability means sustainability. Instead of treading water until a lifeboat comes along to save you, build your own boat. ![[The Minimalist Entrepreneur (book) - profitability.png]] 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. On paper, it seems simple enough: 1. Narrow down who your ideal customer is. Narrow until you can narrow no more. 2. Define exactly what pain point you are solving for them, and how much they will pay you to solve it. 3. Set a hard deadline and focus fully on building a solution, then charge for it. 4. Repeat the process until you’ve found a product that works, then scale a business around it. In practice, it’s not so simple. There are many complications that pop up, and most people don’t even know where to start. A “business” of any kind is too scary, too amorphous, or too unattainable. Luckily, there’s another way to get started today. Before you become an entrepreneur, become a creator. 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. But 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. It’s ironic how often people go around hoping to find a startup idea while simultaneously complaining about all the everyday stuff around them that doesn’t work properly. “Sure, I could solve that for people with a little effort, but the potential market just isn’t big enough to really scale.” That’s the kind of thinking _The Minimalist Entrepreneur_ seeks to address. While I do think the minimalist entrepreneur mindset leads to a near-100-percent success rate, I’m willing to concede that it may only happen over the course of many experiments. That’s why profitability matters. If you’re profitable, you can take _unlimited_ shots on goal, virtually guaranteeing your success as long as you keep learning from your customers. I really do believe that starting a business should be an option for everyone no matter your background. But most people don’t start. Most people who start don’t continue. Most people who continue give up when things get hard. Many winners are just the last ones standing. Don’t give up. The world desperately needs the solutions that only entrepreneurs can provide. Everyday problems are all around us, but they are often hidden from the view of the Silicon Valley software engineers and Ivy League overachievers who have been anointed as our entrepreneurial class. We need the help of entrepreneurs from every part of the planet and every stratum of society. It’s down to individual creators and entrepreneurs to set better goals for ourselves and our businesses. After all, problems don’t solve themselves. **People do.** ## Chapter 2: Community [https://www.minimalistentrepreneur.com/chapter/community](https://www.minimalistentrepreneur.com/chapter/community) 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. You probably have something you enjoy, something that on its face has nothing to do with your “real” job. Whatever it is, building a minimalist business around the people you love to spend time with and the ways you love to spend your time depends on being part of a community. You may already be thinking about how to solve the problems of a current community you participate in, or you may simply be planning to join a community based on something you love. 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. The real magic starts to happen when you contribute to your communities. Authors and bloggers Ben McConnell and Jackie Huba call this the “1% Rule”: On the internet, they say, 1 percent create, 9 percent contribute, and 90 percent consume. Contributing means commenting, editing, and generally being part of the broader conversation. What’s more, if you go further and create by showing what you’re working on, teaching what you’re learning, and bringing new material to your community, that influence will grow ninetyfold. 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! ![[The Minimalist Entrepreneur (book) - community parts.png]] 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. And if you’re learning every day, which you probably are, you’ll have something to share every day. Meanwhile, you’ll build your skills and experience, learn to speak the language, and grow your community, all essential ingredients when you eventually have a product you are ready to sell. Then, when you are proficient enough to monetize what you know, now or in the future, if you’ve put in the time, you will be part of a sizable community that will eventually be your first group of prospective customers (more on that in chapters 4 and 5). This is an important factor in keeping you honest about the quality of work you are able to produce. Your community should serve as proof that you’re improving, producing, and helping others; these people could spend their attention on a gazillion things, and they’ve chosen you. 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. ![[The Minimalist Entrepreneur (book) - community vs business.png]] Takeaways: 1. It’s the community that leads you to the problem, which leads you to the product, which leads you to your business. 2. Once you’ve found community-you fit, start contributing with the intention of becoming a pillar in that community. 3. Pick the right problem (it’s probably one you have), and confirm that others have it. Then confirm you have business-you fit too. 4. When in doubt, always go back to the community. They will help you keep going and ultimately succeed. ## Chapter 3: Process [https://www.minimalistentrepreneur.com/chapter/process](https://www.minimalistentrepreneur.com/chapter/process) ### Constraints lead to creativity. Stick to what is truly essential on the way to building a solution for your first customer. ![[The Minimalist Entrepreneur (book) - process.png]] ## Key Takeaways 1. You don’t learn, then start. You start, then learn. 2. Minimalist entrepreneurs focus on getting “profitable at all costs” instead of growing at all costs. 3. A business is a way to solve problems for people you care about—and get paid for it. 4. Become a creator first, an entrepreneur second. Every big idea was small first. If you don’t start small, if you can’t help people one by one, you will struggle to build a business around your idea. Leave your ego at the door, set aside your concerns about funding and software, and focus on your first customers, using your time and your expertise to solve real problems for real people. Now that people know you, trust you, and perhaps even turn to you for expertise, it is time to start helping them in a systematic, repeatable way that allows for continuous improvement and iteration. 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. Methodically creating this manual valuable process and recording the steps you take to complete it will help you figure out what’s working and what isn’t. It will also help you discover if you’re making something that people actually need or will buy. Unfortunately, the English language does not have a word for this activity, so I made one up: > verb > > _After they tested it on their friends, they processized their recommendation system._ It really should be a word in the dictionary, because it is so important on the path to building a business the right way. Unfortunately many people miss this step, falter, and ultimately fail because they go straight from problem to product before learning exactly what and how to build. But processizing is a cheap, quick discovery process that is essential. “Creating a product is a process of discovery, not mere implementation. Technology is applied science,” Naval Ravikant says. Without processization, you may think you know what the customer actually wants, maybe even because the customer has told you what they want, and maybe even what they would pay for. But 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. You need to solve one customer’s problem reasonably well, if imperfectly, before you can scale. If it works, great. If it doesn’t, you may realize _you_ want to scale up, but your customers couldn’t care less. If that’s the case, you may want to consider a different idea. ![[The Minimalist Entrepreneur (book) - process - development.png]] To this day, processizing is a concept we employ over and over again at Gumroad. Everything I do is listed on a piece of paper that everyone in the company can access. When I go on vacation, someone else can take over my job. And if I get hit by a bus, the company doesn’t go under. Once you have this magic piece of paper, you can turn your process into a product. We don’t have to make up a new word for this, because it already exists: “productizing.” 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. Now that you’re productizing, focus on your product doing just one thing (at first) and control the temptation to try to do everything at once . . . or to try to do it perfectly. ### I ask myself four questions every time I want to build something new: 1. _Can I ship it in a weekend?_ The first iteration of most solutions can and should be prototyped in two to three days. 2. _Is it making my customers lives a little better?_ 3. _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. 4. _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. Note that there are no constraints around how pretty the product is or how well written the code is. That’s another reason to do as little as you possibly can: to be honest with yourself about how useful your product actually is. 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. Takeaways: 1. Refine a manual valuable process before building a minimum viable product. 2. The faster the feedback loop you have with your customers, the faster you’ll get to a solution they will pay for. The fastest feedback loop will be one you have with yourself. 3. Before you build anything at all, see how little you can get away with charging for. Even later, build only the things you need to build. Outsource the rest. 4. I define “product-market fit” as having repeat customers who sign up and use your product on their own so that you can start to focus on outbound sales. ## Chapter 4: First 100 customers [https://www.minimalistentrepreneur.com/chapter/the-first-100-customers](https://www.minimalistentrepreneur.com/chapter/the-first-100-customers) Now that you have your MVP, it’s time to turn your attention to your first customers. If you wait too long, if you endlessly iterate without showing your work to the world, you may feel productive even though you are slowly (or quickly) running out of runway. That’s why it’s so important to start. Once you have enough repeat customers, you have product-market fit, which is a milestone worth celebrating. Until then, focus on the slow and steady journey of selling to your first hundred customers. Remember, you already have a relationship with the community, and you’re selling a product that adds value to the life of a customer who is happy to pay for it. Eventually you will be profitable, you will have customers paying for your product, and they will be telling other customers about it. Then you can launch—or rather, you can celebrate by saying thank you to the community and the customers who have helped you build from nothing to something. Until then, treat the sales process as an opportunity for discovery. You think your product is market-ready. It’s probably not. You think you’ve figured out the correct pricing tiers. You probably haven’t. Turn every failed conversion into an insight. Either you’re talking to the wrong person and you need to shift your focus, or they’re the right person but your product still has work to do to solve their problem. Both are good learnings, learnings you want to have before you start marketing to a broader audience. For now, sales is an education process. Your customers will get to know you, and you’ll get to know what’s working, what’s not, and how to fix it. Selling might not always go smoothly at the beginning, but I guarantee waiting won’t make it any easier. Once you’ve figured out how to get started, the next challenge is pricing. 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. If you’ve productized, then you’ve already figured out an initial pricing structure for your first customers, and pricing, just like every other part of a business, is subject to iteration. Pricing decisions are not permanent. 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 end result right away. Once you’ve picked a price, you need to shop your offering around. I recommend starting with those closest to you: your friends and family. Eventually, when you’re ready, you’ll expand your sales conversations to the wider community. You’re going to be sending a lot of emails, you’re going to be making a lot of calls, and you’re going to be knocking on a lot of doors. It’s your job to reach out to friends, family, and members of your community whom you may not have seen for a while. Your calls are a chance to tell them what you’re up to and ask them if they’re interested in becoming customers. Some will say yes, but many will say no. Once you’re okay with the nos, you’re ready to sell to strangers. In the early days (read: years) of Gumroad, we scoured the web for people who could benefit from a product like Gumroad and then told them about it. Literally thousands of times. That’s the only way, really, when no one cares or knows who you are, to get folks to use your product. I get it. It’s awkward and uncomfortable to reach out to people you don’t necessarily know personally, many of whom will ignore or reject you. My sense is that people who wish to reach customers some other way, like search engine optimization (SEO) or content marketing, are looking for an out. If that’s you: Stop! It doesn’t exist! Just hunker down and dedicate some time to finding people, reaching out to them personally via email, phone, whatever, and being okay with it sucking for a while. But you may find that talking about your process and your product and the path you’ve taken to get there is far less difficult than you think. After all, this is your work, and if you’re bringing it out to the world, you should be excited and proud, so don’t skip this chance at discovery. 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. It’s not a glamorous answer, but it’s true. Things like paid marketing, SEO, and content marketing can come later, once you have a hundred customers, once you’re profitable, and once your customers are referring more customers to you. Only then! The best news of all is that once you have a hundred customers, you can use the same playbook to get to a thousand. Once you have a thousand, you can use a similar playbook to get to ten thousand. Takeaways: 1. Launches are alluring, but they are one-off events I wouldn’t bet your business on. Instead, wait until you have a product with repeat, paying customers. Then launch by thanking them! 2. Selling your product (or process) directly to customers may seem slow, but it is worthwhile. It will lead to a much better product, as you treat the sales process as less about convincing and more about discovery. 3. Start by selling to your family and friends before moving on to your communities and, finally, if at all, to total strangers. (The farther away from you, the harder they will be to convince.) ## Chapter 5: Being You [https://www.minimalistentrepreneur.com/chapter/marketing-by-being-you](https://www.minimalistentrepreneur.com/chapter/marketing-by-being-you) Congratulations! You have community, a product, and a hundred customers. That means you’ve arrived at product-market fit, which I define more specifically for minimalist businesses this way: repeat customers. Repeat customers mean that your business is able to persist without ongoing sales efforts, so you can start to focus on scaling. First comes scaling your customer acquisition and sales strategy, then your company, then your ambition. So where does _marketing_ fit in? Marketing is sales at scale. Remember that before we built a minimum viable product, we had a manual valuable process. And before you can have marketing, you need to sell to your first hundred customers; that’s because sales is the process upon which you build marketing. While sales is outbound and one-by-one, marketing is inbound and about attracting hundreds of potential customers at a time. Sales got you to one hundred customers. Marketing will get you thousands. But do not confuse marketing with advertising. Ads cost money, and minimalist entrepreneurs only spend money when we absolutely have to. We do cover ads later in this chapter, because they are a part of marketing, but in true minimalist fashion, we’ll start with the free stuff. Because it’s only once you’ve learned enough from sales—like you did with the manual process for your product—that you’re ready to spend money on marketing. 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. What’s the difference between community and audience? While your community is a part of your audience, your audience is not a part of your community. Instead, an audience is a network of everyone you can reach when you have something to say. That may include your followers on each social media platform, your business’s followers, your email newsletter subscribers, the people who walk by your retail store window every day, and more. If you needed to tell as many people as possible that the world was ending in an hour, how many people would you be able to tell? That’s your audience. Selling allows you to test the waters with these new people because it forces you to leave your bubble and convince them one by one, improving your product along the way. Marketing is harder, because instead of going to your customers, you have to make them leave _their_ bubbles and come to you. People have lives and things to do, and using your product today is unlikely to make an appearance on their priority lists. But if you can figure out how to bring customers to you, you’ll have a much easier time scaling your business on all fronts. Hiring becomes easier, sales becomes easier, growth becomes easier. Everything about building a business becomes easier when you have a group of people rooting for your success that grows larger by the day. ![[The Minimalist Entrepreneur (book) - engagement funnel.png]] 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. The journey of each customer will be different, but it always starts with someone having no idea who you are or what you’re selling. Eventually, they will encounter your product somewhere in their Instagram feed or in a forum post or in a tweet a friend shares. They will almost definitely forget about it. One day, even though they’ll forget who posted it, they may “like” it. They may engage a few times. Eventually, they will get interested—not in your product, but in what you or your business has to say. They’ll hit that big “follow” button. Maybe they’ll click through to your website and check it out. If they like what you think, what you say, and how you say it, they may like what you’ve built too. Most people will not be a fit for your business. That’s okay. Your audience will grow much larger than your customer base—but your customer base is a subset, likely the most passionate, of your audience. If they are a fit, they’ll start to consider your product. Then signal their intent by signing up for an account, let’s say, and then evaluating your functionality, pricing, and more. One day they’ll purchase. While you may be tempted to cut as many steps out of this funnel as possible, you may also want to add steps to it, like a free trial. But you can’t shorten this process, no matter how much you’d like to. Every customer will engage, follow, research, consider, and finally buy (and hopefully buy again!). ‍Takeaways 1. Marketing is not about making headlines, but making fans. 2. Start by educating, then inspiring, then entertaining. Each of these three levels of content is more far-reaching than the last. 3. Paid advertising can work, but it has its cons. If you do decide to spend money, wait as long as you can—you’ll know much more about who you’re trying to reach that way. ## Chapter 6: Growth [https://www.minimalistentrepreneur.com/chapter/growth](https://www.minimalistentrepreneur.com/chapter/growth) So what comes after you’re profitable and have an organically growing customer base? For some of you, figuring out the answer to this question will be relevant right now, but even if you’re not there yet, don’t skip over this part. It will save you a lot of heartbreak if you can start thinking now about how to grow sustainably while avoiding some of the most common mistakes founders make. ![[The Minimalist Entrepreneur (book) - profit vs revenue and costs.png]] You may be earning a nice living for yourself and your family, and in theory, your journey and the journey of your company could be coming to a close. But for many, including me, the point was not to create a lifestyle business, retire on a beach somewhere, and be done with it. The reasons to grow are different for every founder. Even though I got comfortable with the non-unicorn outcome for Gumroad in 2019, I’ve continued to invest in its growth. For one, it’s fun and satisfying to work on a continuously improving project. Two, it feels good to find new ways to create value for our creators. And frankly, 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. I’ve seen this play out at many companies. They solve the problem, get complacent, and over the years their customers churn and the people they hire are no longer fired up. But 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. At this stage, the real question is: How can I grow with intent, without jeopardizing the impact I make for my customers or damaging the life I’ve built? On the surface, it might seem straightforward to stay the course when you start to see results, but slow, sustained growth is its own kind of challenge that requires deliberate, conscious decision making. When businesses fail, it’s unlikely that a tornado of unforeseeable misfortunes is the cause. Instead, it’s usually one or more of the same handful of mistakes: overspending on inventory and office space, hiring too quickly, cofounder infighting. I’ll talk about how to avoid those mistakes, but also about how to deal with them, because it’s likely that some of them will happen to you, even if you try to avoid them. ### There are two categories of self-inflicted mistakes, or “unforced errors,” to watch out for. The first set relates to running out of money, and the second set to running out of energy. These are the rules that I follow: - Don’t spend money you don’t have - Stay focused on what your customers want - Raise money from your community (if you need to raise money at all) - Build profitable confidence - Maintain your energy and sanity To be clear, this isn’t about scaling back your ambitions in order to make your business work. It’s about aligning the ambitions you have for yourself and your company with the ambitions your customers have for themselves. Because I’m not trying to build a billion-dollar business at all costs, my focus now is on creating more creators and business owners. And frankly, you often can’t grow faster if you try. I’ve worked sixty hours a week for years on end, and I’ve worked four hours a week. For better or worse, Gumroad grew at its own pace, and the number of hours I worked didn’t seem to have much of a correlation. I think you’ll find the same is true for you: Your company will grow as quickly as your customers determine it will grow. For us, that was 15 percent in 2017, 25 percent in 2018, 40 percent in 2019, and 87 percent year-over-year in 2020. It taught me to be wary of thinking I always needed to do more, earn more, or grow more than I needed to. Once I came to terms with the reality that I couldn’t control everything, it got a lot easier to move forward. Instead of pretending to be a product visionary and trying to build a billion-dollar company, as if it were within my control, I could focus on making Gumroad better for our existing creators. Takeaways 1. Seek “profitable confidence”: Infinite runway will maximize your creativity, clarity, and control. This is simple (spend less than you make), but not easy. 2. How to spend less: Do less. Don’t move too fast, don’t move to Silicon Valley, don’t get an office, don’t get too big. Grow as fast as your customers want you to—and are paying you to. 3. If you raise money, think about raising it from your community and turning your customers into owners. 4. Ultimately most founders run out of energy before they run out of money. Maintain your energy and sanity, and that of your cofounders and coworkers by realigning early and often on what really matters. ## Chapter 7: People and Culture [https://www.minimalistentrepreneur.com/chapter/people-and-culture](https://www.minimalistentrepreneur.com/chapter/people-and-culture) Build the house you want to live in. Before you’re ready to hire anyone, you first need to make a company people want to work for. 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. Values are not generic two-word commandments that companies use to state the obvious. Quite the opposite: They’re for stating the non-obvious, in non-obvious ways. They codify what you believe, putting it in a place where everyone can see—and everyone can suggest changes. Values are oral tradition. They tell employees a story of how to behave in both everyday _and_ extreme situations. And they’re more efficient mediums of information than manuals and handbooks. That’s because good values stick in the brain; they’re efficient and memorable. Values aren’t just for the people within the company. They tell your customers and the people who may consider working for you that you exist, and that they might be a great fit. More importantly, they tell everyone else that your company isn’t right for them, saving you, and them, precious time. A lot of founders think they can wait to write down their values, that they’ll appear to them just in time and that culture will develop naturally. That’s true, but be forewarned that it may not be a culture you want for you, your team, or your customers. You can start small and grow from there. But it is important to start having conversations about values—even if it’s just with yourself. You can communicate your values through pithy statements, or you can draw them out into long stories, but you should start. It will end up being more work to build your company culture than your product, but it will also be more valuable. And the reward will be a company that fulfills your goals and the goals of many others as well. Once you have cultural values that work for you, start to communicate them publicly. Many people fear that communicating these values will alienate people from looking further into their company. This is exactly correct. Cultural values allow most folks to say, “This isn’t for me,” and a select few to say, “THIS IS EXACTLY THE JOB FOR ME!” Your job listings should be a filter, not a magnet. You only want to interview the candidates who think they’re a really good fit for you, not people who are just looking for their next job or a pay raise. Most people won’t enjoy working at your company, and being open and honest about your values will save everyone time and energy. If you do this well, hiring becomes much easier and faster. And because of your minimalist approach to building your business, you already have communities, customers, and a marketing muscle with which to best engage them. Ultimately, a company scales successfully because employees are empowered to help customers without your intervention. Whether you have three employees or three hundred, your job, and the job of any management team you build, is to give them the resources to succeed, and, when necessary, the thirty-thousand-foot view, so they can clearly see where their work fits into the big picture and how best to accomplish it independently. ![[The Minimalist Entrepreneur (book) - culture.png]] The Peter Principle, coined by educator Laurence J. Peter, states that “the tendency in most organization hierarchies, such as that of a corporation, is for every employee to rise in the hierarchy through promotion until they reach a level of respective incompetence.” Though it was originally meant as satire, we've all seen that within a strict hierarchy, people can get stuck with jobs they're not good at. At Gumroad, I’ve tried to turn the Peter Principle on its head. Employees work for customers. I work for my employees. The best people continue to do the jobs they’re best at as they get promoted—they just get paid more to do it. Revisit your values regularly, and make sure they are embedded in your job posts just like everything else that you write and do. For Gumroad that means making it clear how much we pay, what we expect of our people, and what we don’t offer. But your values will be different from ours, and so your job posts (and your company) will be, too. Takeaways 1. You’ve already built one product for customers, now you’re building another: The product is your company, and your customers are your employees. 2. Building a company full of humans is more rewarding than building software, but it is also much harder. 3. Articulate your values early and often, because you will need them to avoid veering off course as you grow. (It’ll happen anyway.) 4. Fit is two-way: If it’s not working out for you, it’s probably not working out for them. Have the hard conversations early, as they’ll only get harder the longer you wait. ## Chapter 8: Purpose [https://www.minimalistentrepreneur.com/chapter/purpose](https://www.minimalistentrepreneur.com/chapter/purpose) ### As long as you’re making the world better in an honest way by selling a product worth paying for to a community that wants it, starting a company is worth it. You may be asking yourself if now is the best time to start a company. There is a lot broken with the world, and the future is uncertain. If you think starting a business looks risky, you’re right: It is and always will be. But I believe it’s one of the best ways to make change. I don’t think healing the world only happens if we are able to make “a dent in the universe,” as Steve Jobs is famously misquoted; it also comes about by repeatedly making small choices that compound and that improve our communities. You can’t change everything, but you can and should change a few things, to start. The reward, once you’re profitable and growing sustainably because your customers are spreading the word, is that you get to decide what your company’s next positive impact will be. I know that once Gumroad got to that point, it was easier for me to focus on a more meaningful life. But it still wasn’t easy. I had to wrestle with a new definition of success, one that would be defined by a greater sense of purpose and mission. “A healthy man wants a thousand things, a sick man only wants one,” Confucius is purported to have said, and 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. This is all part of what you get—for taking the risk, doing the hard work, and putting in the time to start and to scale your business—whether you like it or not. Now that you’ve arrived at your initial destination, _where do you go next?_ 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 also serving a community of others _selflessly_, all at the same time. And you should prioritize your happiness while you do it! ## References -