I shared this poll with my Twitter audience recently:
Interesting question, isn’t it?
Personally, I chose 5 apps option!
I prefer to diversify by running five apps with a lower monthly recurring revenue than having only one with a considerably higher MRR.
While “diversification” is the short answer to the poll, I would love to use this article to expand my vision of entrepreneurship.
This breakdown may be interesting to some people and explain why I do things the way I do them.
So, here I go - five reasons why diversification is the best way to approach entrepreneurship.
Minimize Platform Risk
In one way or another, most products in our industry depend on other products or service providers to function.
Of course, the more self-reliant you are, the better.
However, I don’t view reliance on other products as something intrinsically wrong when you are an online entrepreneur because, most of the time, this is not something you can choose.
Since those circumstances are real, platform risk can be a significant threat if you rely on a third-parties to operate your product.
Take, for example, what happened when Twitter shut down free access to their API.
The “fall” of products that relied on that access was massive.
Platform risk is a reality for most digital entrepreneurs.
Social media is not the only example.
Some products are entirely built on top of other products or (some features of those products), making them dependent on the main product (and their leaders).
That was the case with Checkout X.
It was a Shopify app that offered one-page checkout with post-purchase upsells.
Its founder Ruslan Leteyski grew it to 600k MRR during five years just to be killed by Shopify when they decided to fix their checkout issues.
recently got viral on Hacker News.
The truth is that he’s not alone.
In some cases, moving to another service if your provider shuts down its business or changes its terms is an option. In many others, it’s not.
Even if you have the option to transition, sometimes the downtime or adaptation time can be fatal to a business life.
Diversifying gives me the option to stop worrying about platform risk.
Less Opportunity Cost
Focusing on one business only means you must turn down every other opportunity that knocks on your door.
You may think doubling your efforts on your current business is the best if the project shows some growth.
The truth is that you will never know if it’s the best or not.
In my experience, the market changes so fast in our industry that most of the time, focusing is not the safest practice.
I prefer to bootstrap businesses that are easier to run, so I am free and available to pursue new opportunities as they come to my head or cross my way.
There are many technologies and models that I have never explored. I will try new things if I want to.
There is also a lot of money in the trends. I can jump into something trendy and
always enjoy the gold rush
That is what I am doing with
Diversification Is More Fun
Doing things because they are attractive or more interesting to you than others is a great way to run your business portfolio.
Entrepreneurship is hard work. Why would you want to turn your dream into a prison by marrying one business only?
What if you get tired? What if your interests change?
Online builders can make their work fulfilling and fun by working on different ideas depending on their current bandwidth, interests, and motivation.
Also, if you are in this for the long haul, there may be no better option. You need to be motivated and excited, or you will eventually quit.
That is what led Josh Pigford to sell Baremetrics.
You can read the full story
. However, Josh’s words summarize it very well:
“I just wasn’t enjoying myself anymore.”
Being an online entrepreneur is part of my life now, and I want to guarantee that I stay around for many more years by only doing exciting work.
Diversification allows me to solve new and different problems as I see fit.
The More You Ship, the More You Will Win
I learned this from Pieter Levels.
Speed is very important when it comes to launching new products.
Not only because of the competition but because you invest time and money in a product that won’t be validated until it hits the market.
Some of your ideas won’t succeed.
Some of your ideas won’t be your most successful ones.
The more you can ship and validate, the higher your success rate will be.
Financially, This Is a Healthier Approach
I wanted to leave the most obvious (and maybe boring?) item at the end.
At the same time is probably the most important one:
You should never put all of your eggs in one basket.
My businesses are my family’s support.
My number one responsibility is protecting my family’s present and future.
I can only make my best effort by having as many assets (businesses) as possible for me and my team to handle, running simultaneously, and generating income.
If one of these businesses fails, I would have many others in my portfolio to keep going without worrying about financial stability.
That’s building a true moat. Diversification is the only way you can protect yourself in this fierce economy.
Let other VC-backed startups go ALL IN. I just choose to go wide because I don’t work for VC.
I’m a father and a husband who works for his family.
In the meantime, this is all about my family and me. I am not hustling to build the next unicorn or to “change the world” while mine falls apart.
I don’t want to be the next Mark Zuckerberg. I don’t need that much money (or problems).
The best option is a model that brings “enough” money, keeps me motivated, and brings balance and sustainability to my healthy, family-first lifestyle.
That’s why I got started in the first place. My first responsibility is with my wife and kids.
I will keep protecting my interests in the way that makes the most sense to me, and for now, that is diversification.