Day 650 - The $500K question - https://golifelog.com/posts/the-dollar500k-question-1665529523396
Chanced on a good question from [@SimonHoiberg](https://twitter.com/SimonHoiberg/status/1578386243381071878) from the Twitterverse:
"If someone gave you $500K to quit your job and build a SaaS Product... What would you build?"
Most people will say "I'll use it to build X, my dream product." Basically, they'll choose to ***spend*** it. Looking at success rates of startups, 90% will end up draining the $500K pot dry from trying and failing.
I have a better answer.
I'll ***invest*** it. All of it. And use the returns on investment to fund my runway to experiment and build a portfolio of bets, including SaaS products.
Say I invest it in S&P500. Historically over decades, the returns are at least (conservatively) 10%.
10% of $500,000 = $50,000
That's $50K a year. While not necessarily enough to feed me and my fam, it can already cover a major part of it. I can top up the rest with gigs. I can imagine $50K to be more than enough for an indie solopreneur who's single, living as a digital nomad in Bali for example.
And living off that, you'll have almost infinite runway to keep trying, even if you fail.
Spending it on a ***single*** (SaaS) bet is actually a worse-off decision. Because you don't know if that's the one bet that will work. You might need many more tries on the slot machine called the market. But you went all in on that one bet with a 90% probability of failure.
Better to use it to fund all your future bets, and you stay in the game.
Only when you survive do you have a chance at thriving.
Entrepreneurs should be as good investors as they are at business, don't you think?
"If someone gave you $500K to quit your job and build a SaaS Product... What would you build?"
Most people will say "I'll use it to build X, my dream product." Basically, they'll choose to ***spend*** it. Looking at success rates of startups, 90% will end up draining the $500K pot dry from trying and failing.
I have a better answer.
I'll ***invest*** it. All of it. And use the returns on investment to fund my runway to experiment and build a portfolio of bets, including SaaS products.
Say I invest it in S&P500. Historically over decades, the returns are at least (conservatively) 10%.
10% of $500,000 = $50,000
That's $50K a year. While not necessarily enough to feed me and my fam, it can already cover a major part of it. I can top up the rest with gigs. I can imagine $50K to be more than enough for an indie solopreneur who's single, living as a digital nomad in Bali for example.
And living off that, you'll have almost infinite runway to keep trying, even if you fail.
Spending it on a ***single*** (SaaS) bet is actually a worse-off decision. Because you don't know if that's the one bet that will work. You might need many more tries on the slot machine called the market. But you went all in on that one bet with a 90% probability of failure.
Better to use it to fund all your future bets, and you stay in the game.
Only when you survive do you have a chance at thriving.
Entrepreneurs should be as good investors as they are at business, don't you think?