318: Louie Bacaj - Betting Small to Win Big

This episode focuses on Louie Bacaj's journey from a venture-backed entrepreneur to a proponent of making small, manageable bets in the entrepreneurial space.

1. Transitioning from high-risk, high-investment ventures to small, manageable bets can lead to sustainable success.
2. Community support plays a critical role in the success of small bets.
3. Practical experience and shared learning are invaluable in navigating the indie software space.
4. Small bets allow for flexibility and experimentation without the pressure of large-scale ventures.
5. The philosophy of small bets can be applied to various aspects of business and personal growth.

1: Introduction

Louie Bacaj shares his background and the shift from venture-backed projects to small bets. "Louie Bacaj: I started placing small bets in various forms like courses and books, which allowed me to transition from eating ramen to enjoying a stable income."

2: The Power of Community

Discussion on how community involvement and support enhance the success of small bets. "Louie Bacaj: Joining a community of like-minded individuals significantly bolstered my entrepreneurial endeavors."

3: Practical Steps to Small Bets

Louie outlines practical steps and examples of small bets he has placed. "Louie Bacaj: Each small bet was a stepping stone that collectively led to financial stability and growth."

4: Philosophical Underpinnings

Exploration of the philosophical approach behind small bets and its impact on business strategy. "Louie Bacaj: Embracing small bets is about managing risk and expecting realistic outcomes."

5: Future Directions

Louie discusses future plans and the ongoing development of the small bets community. "Louie Bacaj: We're continuously evolving the community to better support our philosophy and members' growth."

1. Start small: Focus on projects that can be completed quickly and with minimal resources.
2. Leverage community: Engage with like-minded individuals for support and learning.
3. Diversify efforts: Place multiple small bets to increase chances of success.
4. Emphasize learning: Treat each small bet as a learning opportunity, regardless of its outcome.
5. Prioritize sustainability: Choose projects that can be sustained over the long term without excessive stress.

Louie Bacaj (@LBacaj), once a Walmart engineer, made a bold career shift into the unpredictable world of venture capitalism and entrepreneurship. Now a co-leader of a thriving community for bootstrapped entrepreneurs, Louie reveals how the 'small bets' philosophy guides individuals toward financial freedom and fulfillment. Together with Daniel Vassallo, he has created a unique space that thrives on exclusivity and practicality, challenging the traditional go-big-or-go-home mentality.

Reflecting on our shared transition from engineer to entrepreneur, we explore how small yet strategic side projects, a safety net of real estate investments, and the monetization of expertise can provide a mosaic of possibilities for those on the verge of leaving their day jobs.

Join us as we uncover how integrating AI tools like GPT and Claude Opus helps our community members elevate content creation and make a difference. With inspiration from Sam Walton's step-by-step success, we see how impactful small bets can be. This journey isn't just about building businesses—it's about creating lives that align with our values. Tune in to hear great stories, strategies, and successes!

People

Louie Bacaj, Daniel Masala, Arvid Kahl

Companies

None mentioned explicitly

Books

None mentioned explicitly

Guest Name(s):

Louie Bacaj

Content Warnings:

None

Arvid Kahl
Louis Boccei is an engineer turned entrepreneur. He used to work for Walmart with a large team under him, and then he went the VC route. And now he's co leading a community of bootstrapped entrepreneurs, solopreneurs too. And it's a community that I am in. So today's episode is going to be wild.

It's sponsored by acquire.com. More on that later. Now, here is Louie. I want to start with the small bets community. I had Daniel Vasalouan on this show just a year ago, and he was very proudly doing everything by himself at the time.

And now what was just one has become two. And I have to know what journey led you to become the after the fact co founder kind of situation in what is probably the best and most well organized community in the indie software founder Space. So how did that happen? So, great question. So I'm going to give you a long winded answer here.

Louie Bacaj
My entrepreneurial journey started around 2021. I actually raised some VC dollars, and I was building a SaaS for estate managers that wasn't working out that well, at least for me personally. I was eating ramen, and I stumbled onto this guy, Daniel Masala, who was actually at the time, teaching a course called the portfolio of small bets. And it was the philosophy of everything he'd learned so far. And so this guy basically is brain dumping everything he's learned.

He's teaching us, and he says, look, you know, there's ways to make money online where you don't need to eat ramen, right? Like, you could put a small book out there, you could put a small course out there, you could put a small app out there, you could time box what you would you put into it, and you could have some sort of thesis. Look, you're not going to make millions, but you can make a few dollars. And so I tried it in 22. I basically shifted my mindset.

I said, you know, what do I have to lose? I've got a little bit of Runway. So I placed a ton of small bets in 2022. I was a community member. It wasn't even a community back then.

It was just a discord channel and this course. And so I placed probably ten different small bets in 2022. And I made money. I wasn't eating ramen, I was eating steak. Okay?

Not like the wagyu stuff, but, you know, I was eating good, basically. And it was, you know, a couple of courses, a cohort course, a couple of recorded courses, a book, all these things I did in 2022. I started a newsletter I started a podcast around engineering, career advice, all these different things that I had never thought of that sort of Daniel exposed me to. And so, you know, I became convinced that actually, you can make a pretty good living, and some of these things might become bigger than others. And I think Daniel sort of saw that at some point in 2023, he approached me.

He said, look, you're placing a ton of small bets. You're living this lifestyle, and do you want to help me with the community? Because I feel like there's some things we could do. We could make it better together. And that's how it happened, basically, where I ended up partnering with him in 2011.

Last year. Basically around the middle of last year. Yeah, I was looking for that tweet when it was announced, and I. And I found it just earlier today. It was.

Arvid Kahl
I was quite surprised when it happened, that it happened, because I never thought that then would take it to a bigger kind of, you know, stage, the community. But it needed to happen because the community was just growing and growing and growing. Right. Like, you saw it from the inside. Like, was there kind of an internal process?

Because I'm looking at this as somebody who is interested in building community himself and who knows that a lot of founders in our community, a lot of creators, are quite aware of the power of a kind of an exclusive invite only, or, like, paid community. Right. There's something. Having a strong group of people who really all believe in the same stuff and all want to follow the same dream to reach the same goals. So how was that from the inside?

How did you see this progressing? Was it instigated by. By anybody but Daniel, or did. Was that completely his choice to hire at this point? Yeah, it was.

Louie Bacaj
It was basically completely out of the blue. It's never something I sort of expected in any way. And it's really interesting. Daniel's a very interesting guy. Right.

Like, obviously, I admire the guy. You know, I learned a lot from him. Probably all the money I made in 2022 is because of the stuff he taught me. Like, he taught all of us. Right.

Arvid Kahl
He just. He just taught us what he had learned. And so, obviously, so, needless to say, you know, so if somebody you admire wants to be business partners with you, you're really going to. I mean, you're really going to consider that regardless of what you sort of have going on. But what's interesting about Daniel, I think that I don't see in a lot of people, he's incredibly pragmatic.

Louie Bacaj
Right. And there's this guy, Gerge, that has the pragmatic engineer. It's one of the biggest newsletters out there. I think Daniel embodies that. He is the pragmatic engineer.

And, I mean, he used to be an engineer, so it's very, very interesting, because the way he approached me was like, look, I've got this business. It's making money, but it's slowing down. And I actually think that if I don't do something, it could disappear. And there is a very real chance that you become partners with me in this thing. And we make no money.

This is the way he thinks we're going to try things. Some of them might work, but most people, I don't think, view things that way. I think most people want a pie in the sky. They want to reach the mood. It's a very different kind of mindset.

I was shocked because I see this business. It's working. It's making sales. I'm in love with the community, the people that it's attracting, all of these things. And here's this guy telling me that it could die off, and he says, look, if it dies off, I'm going to be sad about it, right?

But, you know, I'm also not expecting it to become something huge. So do you want to become a part of that and try to do something together? So that was the sort of the seeds for the. For the partnership, you know? And I was shocked that he invited me to become a partner in it.

And. And I think his pragmatism is contagious. Right. And basically, you know, a lot of the things we've done, we've done very thoughtfully, one small thing at a time, just to not basically, you know, overextend ourselves or dream pie in the sky stuff that might not never happen, you know? Yeah, man, it sounds so, so fun to hear you be surprised by a really cool offer, right?

Arvid Kahl
Like this. It's like, hey, would you like to make some money? Like, would you like to work on something you already love? Like, who gets to kind of opportunity? That's so cool.

So cool to hear. No, I mean, it really is, right? Like, it's a working business. He wants you to become 50% partners, is what he told me. And he said, you know, you don't have to pay me anything, you know, like, who lets you into a working makes you 50% partner?

Louie Bacaj
I was shy at first, right? I thought it was too good to be true. I'm like, what is this? My leg. Like, this is ridiculous, right?

Like this. And. And I thought about it, you know, very quickly, and you know, I. And I said, of course I'm going to take it, but it's like, you know, very interesting. Yeah, man, it definitely is a much better deal than anything you can get from a VC.

Arvid Kahl
You were just going to say, right, like that. How does this compare to your prior experience there? Yeah, so, great question. I mean, look, VC, look, we rate. So I started this SaaS with a couple of partners.

Louie Bacaj
My brother was one of the partners. Actually, four of us in that thing. That thing is still going and it's doing well. But when you do a VC, you do a vc backed thing. I mean, you're all in, right?

Like you basically have to. That has to be the thing you do 24/7 right? Otherwise people get upset and all of that. And so you're. They basically, once you take the VC dollars, you have to commit to making that thing huge because you took their money.

And this is the thing that was really nagging at me, right? Like, here I am eating ramen, like, basically making peanuts on, you know, you can't take. You can't take a big salary on VC money. You can't. You usually can't even take a salary, right?

It depends on where you are, what stage you're in. And so you're eating ramen and you're working on this thing twenty four seven and you're stressed out. And so that whole experience really, I think, burnt me a little bit. You know, it basically when, when. And people think usually, right, the trade off that they're making on the other side is, look, you could get a really high paying salary in big tech, which is what I had before I did the VC thing.

Or you could do the VC thing, but they don't see this whole other world where you could just put some ideas out there, actually make money with those ideas on day one. Right? They're not, they're never going to be huge ideas, but, but they'll make money. And so, you know, I think. I think, you know, Daniel exposed me to this whole other way of thinking with, with these projects.

And, and, and basically I shed off a lot of that, a lot of that pie in the sky dream that I had acquired while I was under the VC umbrella. And one of the, one of the really nice things is, Daniel, right from the beginning, was like, look, you have your projects. This is one project that we're partners on, okay? And you and I, we're going to work on this thing together. But you have all this other stuff, you know, keep doing that, you know, and I think VC's don't think like that, right?

Like now they own you. Like, you're on this thing and you're going to be on this thing forever or until. Right. Either it sells or it fails. Right.

And it's a very interesting, I think, you know, mindset shift. Yeah. Yeah, for sure. Yeah. It's, it's.

Arvid Kahl
In many ways, I'm still kind of convinced that these models are quite similar. Like you still, you still want to find the one that works, right? Like, even, even with a portfolio of many small bets. And I do the same thing. I have the podcast, the newsletter, my books, and my three SaaS businesses that I run on the side.

Like, all of these are small bets. I see one taking off right now and I'm putting more of my effort in there. I even got some funding for this. Not VC funding, but kinda funding. So this VC model is the same thing.

It's just that the person actually owning or the gains from it. Right. The person actually benefiting from it is never really the founder in the VC setting. Right. In the small bet setting, the owner operator of all these small bets is you, but you, and you get all the benefits that come from it.

But in a VC world, you might be the one of a hundred businesses that work or you're one of the 99 that don't. And nothing comes of that for you. That's the difference that I see. Do you see the same thing? Is that similar for you?

Louie Bacaj
Yeah, I mean, look, a lot of ideas come to mind on this topic, but I fully agree with you basically. And I think there's just a totally different power dynamic. You have something that's working right. You know, there's nothing wrong with, I think the guys at 37 signals who are, you know, an awesome North Star, they make, they make software, they've been doing it for years, they've been bootstrapped. They took, they took funding from Jeff Bezos.

Right. And it's actually, it's very interesting, you know, but it wasn't the VC funding like when Jeff Bezos invested in that thing. It wasn't, it wasn't with the idea that these guys are going to become a billion dollar thing. He just wanted to become a partner with them. He bought a small piece of the thing.

And I think it's just a very different power dynamic when you have a business that's working versus you take money from VC's. When you have just an idea, you've got nothing, and then, you know, you know, the thing might not work. Most of the time it's not going to work. And so now you need funding over and over again. So you're basically trapped in this world until you can make something happen.

I mean, otherwise you might not care about the VC's and you might fail and all of that. But I think that's bad, too, because you took someone's money, you know, you have an obligation to get them a return. And if you go with that mindset, I think, you know, it's just a lot easier when you, when you don't take their money. You can, you can, you can try all kinds of things and then the things that are working, if you, you know, then it's a small bet for you to take the capital because now the thing's already working, you know, so it's a very different sort of power dynamic. That's what I basically, yeah.

Arvid Kahl
Makes perfect sense. And I love the phrase trapped. I think that's, that's the core. Right? Like, you do something you want to do, you have this dream, you have this idea, but you're kind of trapped in, in a cage of somebody else's making around that idea.

Right. The golden cage in many ways, right. The VC money also is a golden cage, just like the golden cage exists in the world of semi high paid engineers. I mean, I saw you tweet about this, too, very recently. I want to get back to your life before this, like your engineering life, because I myself also engineer, became an entrepreneur over time and then became an enjoyer of small bets at some point.

So I guess we've quite a similar journey. What made you stop wanting to be a salaried engineer? Because many people listening to this very likely still have a full time job like most people have. Right. Because that's how the world works.

But have this inclination to want to be an entrepreneur at some point, but they haven't really taken the step just yet. What made you want to take that step? But even raising VC, what made you want to take that step into entrepreneurship back in the day? Yeah. So I think I sort of always dreamed about going into entrepreneurship.

Louie Bacaj
I always had side projects. I would say for many of the engineers that are listening basically place lots of small bets while you have a full time job, there's nothing wrong with you having a side project and some of the things that work out, you know, that's a really good way to off ramp. Right. I probably should have. Should have been more rigorous about that kind of an approach.

I didn't do that. Right. I decided, look, you know, basically I was at Walmart for a couple years I got to Walmart because they acquired this startup I was a part of. I was an early engineer in the startup called Jet. They acquired it for $3.3 billion.

They acquired us for the tech and for some of those things. Jet is where I got a lot of my engineering experience, a lot of my engineering management experience. And then at Walmart, they put me in charge of all the modern tech for pharmacy. It was really exciting for a little bit because COVID was happening. We were running these big teams.

We were pushing features to apps that impact 100 million customers across the US. It felt really impactful. But then around 2021, the bureaucracy kicked in. All these things right now, they're not legal and compliance, and all these people are asking questions like, why did you this this way? Well, because, you know, we had elderly people and they needed pills, you know, and so we just said, screw it, you know, and we got it to them.

But it's a very, they stepped in, and then it was just meetings about meetings and about. And so I said, look, when am I going to take a shot at entrepreneurship, if not now? And so in 2021, I decided, you know, screw it, I'm going to quit. And I quit that job. And I went and, you know, for most people that quit, I think the thing that they think of is, you know, I'm going to go raise some money, right?

I've got an idea. I'm going to go raise some money and we're going to do it that way. And that's what I did. And I think that's basically a huge mistake because now you're trapped. Now that thing might not work out, and you're beholden to these people.

I mean, you know, if you have morals and ethics and all this stuff, you're beholden to these people because you took the money. Right. So it's a very interesting thing, I think. Yeah. Did you have any, like, personal savings back in those days?

Arvid Kahl
Like I did. So the one smart thing that I really did that I highly recommend, and any good, you know, for people listening is I invested a little bit, you know, because I was getting paid really well, obviously. I was a senior director of Walmart, you know, 50 plus engineers, probably teams all over the world. I was making good money, you know, at least for like, two years after the acquisition, I was making really good money. And I took that money, I invested it basically in real estate, and I created some rental income, not, not a lot, but it was enough that I basically had at least the roof over my head is paid off.

Louie Bacaj
So when I quit, even though I'm not going to be making probably nothing, I have some money coming in, and my family won't start because I have kids. I have a wife. So I highly recommend for engineers listening to this to consider that, to consider something they wouldn't normally consider some boring type of business, a laundromat, whatever. Just get some cash flow, something that's reliable, steady, and if you can't get the side projects to work out, at least take your money and make it produce some money, because then at least you have something coming in, you know? And so that's basically the thing that gave me the confidence to say, you know what?

I can just, I'm gonna quit. You know. But I wasn't making a lot. I mean, just basically getting by in the beginning was all I had with the real estate. Well, that's all you need, right?

Arvid Kahl
At that point, that's kind of the baseline. I know that you wrote a book about this, and I know that you gave a lot of talks inside the community, I think even before you work, like, for the small bets community, right? Was that right? Like, you already were teaching some of these kind of real estate for developers things. So Daniel's very interesting, right?

Louie Bacaj
Like, he let. He allows people in the community to teach guest classes as something that he tried as sort of a small bet. I'm going to pay people $1,000 for an hour and a half to come and teach us something that they've done themselves. And this is very interesting. And he said to me, louie, I've seen some of your tweets about real estate.

You're a big, you know, would you like to teach a class? I never thought about teaching a class on real estate. Come on, man. Like, I thought it was like a funny ask. Like, I didn't even think it was in the realm of possibility.

And he said, look, you know, you're a beginner, and this is important because most of the people that are in the community are beginners. Like, it's better to learn from you than from some guy that owns 500 properties now. They forgot how to even get started. So very, it was a very interesting thing. And then after I did the classes, I thought, wait, maybe I could, like, take the transcript from these classes, put it into a book, and make a few dollars outside the community.

And that was. I love this. I love this so much. This is such a smart way of taking your knowledge, like, from one medium into the other. First you had it completely internal because you thought it was only for you.

Arvid Kahl
Then somebody kind of pulled at it and said, hey, actually other people can benefit from it too. Then you taught it and then you kind of productize that into a book. That is genius. Just want to mention that this is something that so few people do, even though most people could. I'm getting excited just hearing about this journey because I would love to see people take their little niche, weird, unexpected expertise, and first teach it to see how it resonates with people and then kind of manifest it into something they can sell while they sleep.

Like, how could you not want this? Well, Arvind, you mentioned this, but I had mentioned earlier that I've read your books, and I think you give this advice in some of those books, embed yourself into these communities. This is how stuff gets pulled out of you because there are things that, you know that you don't even realize that maybe other people want it or they're willing to pay you money for it because it's just something that, you know, you did a while back and whatever, right? Like, you undervalue things. Most people do that.

Louie Bacaj
And so embed yourself in these communities and things get sort of get pulled out of you. It's a very interesting thing. I think you see opportunities all over the place, basically, where they didn't exist before. Yeah, definitely. And I think that the small bets community, this is not sponsored by small bets, even though it should be.

Arvid Kahl
But, you know, I myself been part of this podcast. I'm part of the community, right? I'm in there and I occasionally teach in there as well, building a media business, which is literally what we're doing right now, right. Podcasts and that kind of stuff. So I've seen it from the inside, I've seen it from the outside.

I've seen how the community, outside of the community reacts to the community and vice versa. What I would like to know, as somebody who is both part of the community and operating it, you probably see a lot of weird small bets, like people trying to build all kinds of things. And I'm always interested in the stuff you didn't expect. So is there anything, any particular kind of example of small bets in the small bets community right now or in the past that you never thought it would actually be something that could work, but they did work? Well, I think there's, we're almost starting to categorize them now where we're thinking about them in like for example, like there's a whole class of info product type small bets that I think can get to money very, very quickly in comparison to let's say an app, right?

Louie Bacaj
An app usually much longer ramp up. People need to know about it. There's so many more things. And most engineering types would rather just write code, and they would, you know, not talk to anybody and just do the code. But there's just something really interesting about first sort of writing a book or recording a small course, putting it on a place where there are people already there and searching.

So udemy, for example, we've got a lot of people that are putting courses on Udemy, and people are searching for those things every day. Sometimes their employer pays for the course, so they're getting it basically for free. But it's part of this contract that they have with Udemy. And this is very interesting because now that suddenly gives you access to people. You just taught them something that you already knew, whether it's about real estate, whether it's about software engineering, whether it's about some tech that, you know, something quick, a brain dump, something that you knew.

And then, and then now you have access to human beings. Now they're going to reach out to you. Now you're going to have a call with them. Now you're going to hear their other problems. And now maybe you could put an app out there.

Maybe you could do something else. So we see a whole lot of this, basically a chain thing where, and small bets itself is exactly this. I mean, if you think about it, right, it started as a course, then you'll decided, you know what? Like, we got to try. You know, people love the discord.

People love the community aspect. Let's open it up. Let's let people teach other than me in this. Let's. Let's do more.

Let's. And so one thing sort of leads to the other once you sort of have access to people. And I think there's a very interesting thing. But to go back to sort of your original question, I've seen all kinds of small bets now that I didn't think. We've got this guy, Greg in the community who recently put out an app that asks you questions via voice.

And so it just sends you a link, and it's almost like a podcast that you kind of do asynchronously, but it's really great if you have a newsletter or something like that. The person answers the questions, it then transcribes them, allows you to edit it. It uses the fancy AI tech that's out there now, and it's really cool. And I think there's some really interesting use cases for this. Like even forget about podcasts or, like, writing a newsletter.

But even if you want to write a book, like, just ask the questions, have this thing, you know, ping you, and then, and then you answer the question, and then suddenly you've got, you know, paragraphs and paragraphs of your book structured into this thing. So I think there's some really, there's some interesting stuff. I mean, that's just one example. But there's so many, so many different things people are building. It's just most of them are small.

You know, I think. I think this is, this is the main thing is just try to time box it. If you're spending six months a year. I don't tend to like those small bets, even though, you know, people call them small bets. Yeah, it's not that small, right?

No, I mean, I was at risk right now. You know, what if it fails? Right? Yeah. Yeah.

There's cost attached. That's also a thing, right? Like cost of living. You got to pay for your mortgage or whatever, or you still have to eat. And it's not all ramen, right?

Arvid Kahl
It shouldn't always just be ramen. I don't think that's a healthy way. I'm glad you're still with us because, like, just eating, like, the cheapest of food is never really good, particularly in a stressful environment. But, you know, they made that a. They made that.

Louie Bacaj
You know, it's funny to call that out, but the VC world has made that, like, their, their mantra, you know, like, ramen profitable, which is good, you know, but. But it's just men. You don't need to live that way. You know, like, there are ways to make money right now on the Internet, more ways than ever, and one individual could do more than ever by themselves. And if you just, you know, expand your horizons out of the being tied to one idea, there's so many things that pop up that you didn't even think you would do before, you know?

Arvid Kahl
Do people also look outside of the realm of kind of software specific businesses? Because I know that we all kind of come from an engineering background. We all know how to code. We know how to throw up a website or whatever. But do you all also see, like, real estate being an example of.

There's something that is completely outside of the digital domain as well? Yeah, we've got some people that are doing short term rentals. We've got one guy, I think, out in Portugal, six guy, Sal I talk to sometimes. He's got short term rentals via Airbnb out in Portugal on the beach. It's very interesting.

Louie Bacaj
I mean, people buy different things, right? And they just. It's a, it's a cash flowing business, man. And I think it makes money. It's sustainable, you know, and you see a whole lot of that.

You also see people going to Micro acquire and they basically, they struggle with the marketing aspect. So they think, maybe I'll buy something that already makes money and I'll add the additional things to it. I think that's a decent path to, but a little bit more risky because now you're putting money up and these other things. But so there's all kinds of stuff people are doing real estate for sure. I mean, it's one of those things.

But people do newsletters, you know, they do. They try for a few months with a paid newsletter, see if it works out. They try, you know, all kinds of different things that are not just software, but there is a lot of software. It attracts a lot of tech people. And so, and I think the main thing that Daniel has done is, like, sort of get the tech people to think outside of just software, you know?

Arvid Kahl
Yeah, I've noticed that in my own approach as well. Like, ever since I understood that Daniel's approach and also, like, Rob Walling's stair stepping approach, I think they're very similar. Like the idea of, like, building small things and just building a foundation of income through, like, I don't know, shopify plugins or WordPress plugins, apps like little tiny things on somebody else's App Store and then slowly creating your path to whatever comes next. Right. Might be a personal brand, might be a SaaS business, might be some ecommerce, whatever it is, but you kind of slowly aggregate stability into your life, and then from one that works, you just go further.

I think there's a lot of compatibility between these two, and it's really nice to. It's nice to hear that there's a strong diversity of these businesses and there's still alignment because they're all built similarly small bets. Look at what works and then act on that. One thing you just mentioned was AI in these things. And I have two questions, really.

How much AI do you use inside the community to actually orchestrate the community events? Or I think you have this very snappy chatbot inside the community as well. That's one use of it. Then also, do you see a shift, maybe without how much do you see a shift in what businesses incorporate AI as and with, in the businesses that are run by people inside the community? Well, I mean, I think these tools you know, AI in general has just made it so much easier for individuals.

Louie Bacaj
So just thinking about, about them as tools that you can use to build things, I mean, I use it to help me with coding, right? I could write code, right? I've been writing code for 15 years. Well, let's say ten years, because five years I was maybe in management, but I was still writing some code even when I was a director. So I've been writing code for a long time and I still use this stuff.

Why do I use this stuff? Because, man, I don't want to write all this HTML and all this boring tailwind. I just tell GPT or now Claude Opus just produced a page for me and it's just, it's so good, it's so fast. So just as a set of tools, it's really powerful. Or even just.

I have a transcript that I spoke out that has errors. I give it to GPT and I say, clean this up for me. Don't add extra words, just clean it up. Just make it make sense. And it's good at that kind of stuff.

Like stuff that would take editing, that would take you days now could happen very, very, you know, would take you hours, maybe not days could happen very, very quickly in seconds. And so this is the kind of stuff that I think speeds up people's time to get a product out, right? So you could place more small bets, but then you could also embed this stuff into your tooling, into the, into the things that you're building. And you mentioned the smallbot, which is our witty, I won't say who it's got, you know, who it copies in terms of personality, but somebody on Twitter that curses a lot, and he's very, very smart. You know, we admire this guy like crazy.

And, you know, the personality is loosely based off of. Based off of that, I'll just give a hint, antifragile.

So it curses like crazy, but it gives really good advice. And it took some really fine tuning on the prompt to get it to curse and to get it to behave the way. So that's sort of the magic sauce behind it, is that, and it's glued into our discord so people could chat with it on there. But we've recently started moving over to campfire, and we're going to make campfire more of. More of a thing.

Discord has some issues. I mean, it's got great APIs, it's decent for running a community, but. But there's a lot of problems with discord as well. I mean, you don't know who you're talking to. For one.

You have somebody with a nickname. They have no, and so you have no idea. Right. But, but we've got people's profiles in the directory. We've got all kinds of tools and small bets that are very helpful that, you know, when you're speaking to somebody, you sort of want to know what projects they have.

You want to know what they're into so you can have a better conversation. And discord doesn't allow for any of that. And so we want to do all of that in campfire. And basically this bot, the way it's integrated into campfire now, it automatically creates threads in campfire and it's going to do more and more. It'll register you for events if you want.

It'll, it'll, you know, it's, and so, you know, we're going to, and you know, we're using AI in a lot of interesting ways. I mean, we basically get transcripts out of the recordings. We have, you know, lots of insights about that. We're actually not necessarily, we do all of that right now, but we're not actually surfacing it too much. But very, very soon, hopefully, we'll let you chat with the bot and it'll tell you what happened in that event and, and whether it's worth you checking out.

And so we're going to do all that. I mean, I think it's, it's, it's easy enough now that two guys can do it. You know, this is, this is the thing that I really want to call out is that most of the people watching this, they could probably do it, they could use these tools. And it just makes, it's pretty amazing time, I think. Yeah, that is to me, the result of Claude or chat, GPT or whatever, even the local llms, like llama three.

Arvid Kahl
I'm working a lot with that because I don't want to give my data to anybody on a platform, so I run it on my own servers. But any of these are already crazy good at doing certain things, not all things, but if you tell them the right things and prompt engineering, I guess, is what you need to understand and learn to get them to do these things for you. But once they do it, that's spectacular. But what it facilitates, like what it enables you to do is just run things that would have required 20 people working full time. And now you get to do it like all by yourself or with one or two people.

That's the crazy part of AI for me. Not just what the technology does, but how much it impacts our workflow and how it restructures work as a concept. Right. Yeah, it's a lot of. It's a lot of fun to see you build these things.

It's a lot of fun to see people generally use them in their workflow. I was talking to Tyler Tringas of the company fund, who recently invested into Potskin, my business. So there's a whole thing going on, but he's using it internally, too, for the fund, in the fund operating the community of the fund, where the mentors speak with the people that are funded, and all of that is just facilitated by AI. And he gives these tools into the companies that the fund puts money into as well. So now you get kind of an operating system that is built for you, but nobody has to be paid to run it.

That is just spectacular. Building a business has never been as easy, and doing work that you don't really know how to do has never been as easy and cheap as it is today. Yeah, I wouldn't say it's necessarily work that you don't know how to do. It's just work that you don't necessarily want to do. Yeah.

Like, right. You know, it's like. Yeah, you'd rather not do. You'd rather not do some of that administrative or whatever it is. Right.

Louie Bacaj
And by the way, you know, one of the things you have to be careful with, especially with the community, is because you could automate like crazy right now. You know, I think we're trying to be careful with that because we do. You know, there's something really nice about this human connection, right. Like, this is. And a lot of people are lonely today.

I don't think AI. I don't know, maybe. Maybe AI fixes it, but I don't think it fixes it. I think people need human connection, and so some things you almost don't want to automate, but the boring stuff. Definitely.

Right. Like, I think it makes a lot. Of sense, and that's what I hear you say. Like, you say, use it as a tool. Like, don't use it to replace people, but use it to replace an hour of work and condense it into 20 seconds.

Arvid Kahl
Right. That's what it is. It's a. It's a better tool. It's a power tool, quite literally, because it's, you know, quite power intense, I guess, all the computation and stuff.

But it's just a tool. It's not a replacement for a person. 100%. I agree with that. Yeah.

Wow, man, I'm excited to see what the future holds for small bets. And you already kind of hinted at a couple of things that are going to happen. What do you want this community to look like over the next couple of years? Do you have a vision for this, or do you just take it as it goes? This is an interesting thing.

Louie Bacaj
I think Daniel's pragmatism has started to seep into me, and so now I'm, you know, I like to think of things one step at a time, one small bed at a time. Anything we try is basically now ends up being once more, you know, I want to, not to go off on a tangent. I want to tell an interesting story. So, so when I, when I joined Walmart, when, after they acquired us, you know, I was now in charge of this pharmacy thing. I had to go to Bentonville, Arkansas.

That's their headquarters. Everyone has to touch base with the mothership after the acquiring. And I was shocked when I got there because Bentonville, Arkansas, is in the middle of nowhere, and it's a beautiful town. It's, you know, it's got, it's got this, this wonderful museum there. The Crystal Bridges, the original painting of George Washington that's in the dollar bill.

Is there all these things in the middle of nowhere? How did that happen? This guy, Sam Walton, started a company called Walmart, you know, 40, 50 years ago, and he changed his entire town. I mean, they got, you know, the largest museum of american art in the country in that town. But not, not just that.

I mean, there's so many things there, and it's just an unbelievable thing. But think about how did that happen, right? It's not like Sam Walton. You know, this guy comes from poverty. You know, he was, he was a farmer.

You know, he was still driving his truck with his dogs in the back. And so how did this guy do all of that? He started the company of 45. And so you think about all that. Did you think he sat down and said, I got this master plan.

I'm going to change my, I'm going to start this retail thing. I'm going to change my town. I'm going to change my country. I'm going to do. He didn't do any of that, right?

And so I think a lot of the best sustainable things happen just one step at a time. The guy literally opened a five and dime, which is like a penny store. That was his first store, and he literally sold whatever he could. And then the next small bet was he put an ice cream thing in front of it and see if that sells and that sold. He was selling women's undergarment.

Whatever sells, he would bring it in and try to sell it, and next thing you know, he opens up a huge retail store. Then the second one, then the third, then he's taking over the country. But it all happened. It wasn't some grand scheme or master plan. He first, you know, found a small bet that works, then found another one, then kept layering on and it just became this huge thing that is now very robust.

I would say even in the age of Amazon, they haven't died off. You know, the pharmacy business alone that I was a part of is a $35 billion business. You know, it's huge, right? And so it's just, it's just an unbelievable thing that the guy built, but he didn't set out to do that. And so I tell the story because I want to be like that guy.

Like, I don't want to be like these pie in the sky guys that want to change that get sold a dream and get, want to change the world. You know, I just want to build the next thing and the next thing right now. You know, I think we just added free meth. Like, I don't want to call a free trial, but people could watch up to three recordings. It's something that people have been asking for to see, you know, what kind of classes we have and all of that.

So we just added that. That was a nice little neat feature and it's working really well, by the way. Conversion rate, we were getting a ton of traffic to the site and it wasn't, it wasn't, we weren't capturing any of those emails. Now it's 4% conversion. We're getting 4% of the traffic's emails.

And now we have those emails. We can reach out to them potentially. We could try to sell them the bigger thing later if they want it. But, you know, these are little things. Like, we do things like this.

Like, we're going to try this thing, see if it works. If it doesn't work, great, we'll throw it out. We only spent two weeks on that thing. And so, and so this is my mindset now. You know, I hinted at those things with the bot, but, you know, every one of those things, if I can't layer it into a small bet where I could do it in a week or two, then I'm not going to do it.

You know, it's not for me, it's for somebody else to build something big like that. That's cool. I love that you apply, like you walk the walk, right? You apply the principle of small bets to how the community works. You teach it to the people in the community.

Arvid Kahl
They get their bets going, and the whole thing itself is a bet in your life and Daniel's life. I love this. This is just authentic, like using your own knowledge and implementing it in a way that shows just, yeah, it's trustworthy. That's what I love about this community. There's no fakeness.

It's just, you walk the walk. And I really appreciate that. And I think you've made a man. You made a super interesting case for it, too, with the Sam Walton story. If you do something that has never been done before, how can you plan for it?

How could you potentially or possibly plan for something that just isn't even. It has never been codified into a structure or anything like that? It makes a lot of sense to just take it one step at a time, conscious step at a time, measured step at a time, but still just a step at a time. And I really like it. I'm here for it.

And if the dear listeners of this wonderful show are here for this while, where would they go to find out more about you and about the community and about all the wonderful things that you've shared here so far. Sure. So we got small earlier this year. We actually bought the.com. It's a very interesting story.

Louie Bacaj
It's told inside the community somewhere. You can find that thread. But we bought the.com for a lot of money, so we have smallbits.com and they could go there. And I think the link to my Twitter and Daniel's Twitter is right on the landing page of small bets as well. So I won't spend too much time on that.

But there is. We're going to. We're going to. After this show comes out, we're going to put a promo with your name, Arvid, on it. The code will be Arvid.

You'll have to plug it in, find out, and, you know, get a huge discount to this, to the small bets membership. So we'll. I'll set that up right after this call. I appreciate it.com is where they can find me and find everything about the community. That's awesome.

Arvid Kahl
Well, I wish I would have been. I wish the discount would have been around when I started joining the community, but I guess, you know, I paid 375. Me, too. You know, I told Daniel I think it was too cheap, you know? Yeah.

Don't tell that to the guys on hacker News, though. I think that's going to start quite the conversation, man. Louis, thank you so much for being on the show. This was a really nice insight into your story, into the small bad story, and kind of the synthesis of it all. I really, really appreciate this, like, how you kind of pulled it all together.

That was quite enjoyable. And I just see so many similarities in, like, where we come from and how we approach entrepreneurship. It's really nice to talk to a like minded guy. Really appreciate it. Thank you.

Louie Bacaj
Thank you very much for having me, Arvid. And, you know, it's awesome to talk to someone I've admired for a long time. Thank you. Right back at you. Thanks so much.

And that's it for today. I will now briefly thank my sponsor, acquire.com dot. Imagine this. You're a founder who's built a really solid SaaS product. You acquired all those customers and everything is generating really consistent monthly recurring revenue.

That's the dream of every SaaS founder. Right? Problem is, you're not growing for whatever reason. Maybe it's lack of skill or lack of focus or apply in lack of interest. You don't know.

You just feel stuck in your business, with your business. What should you do? Well, the story that I would like to hear is that you buckled down, you reignited the fire, and you started working on the business, not just in the business. And all those things you did, like audience building and marketing and sales and outreach, they really helped you to go down this road. Six months down the road, making all that money, you tripled your revenue, and you have this hyper successful business.

That is the dream. The reality, unfortunately, is not as simple as this. And the situation that you might find yourself in is looking different for every single founder who is facing this crossroads. This problem is common, but it looks different every time. But what doesn't look different every time is the story that here just ends up being one of inaction and stagnation because the business becomes less and less valuable over time and then eventually completely worthless if you don't do anything.

So if you find yourself here already at this point, or you think your story is likely headed down a similar road, I would consider a third option. And that is selling a business on acquire.com. Because you capitalizing on the value of. Your time today is a pretty smart move. It's certainly better than not doing anything.

And acquire.com is free to list. They've helped hundreds of founders already. Just go check it out at try dot acquire.com arvid, and see for yourself if this is the right option for you. Your business at this time you might just want to wait a bit and see if it works out half a year from now or a year from now. Just check it out.

It's always good to be in the know thank you for listening to the Bootstrap founder today. I really appreciate that you can find me on Twitter at avedkar a r v Eddie Kahl. You'll find my books and my Twitter course tattoo. If you want to support me and this show, please subscribe to my YouTube channel. Get the podcast in your podcast player.

Arvid Kahl
Of choice, whatever that might be. Do let me know. It would be interesting to see and leave a rating and a review by going to ratethispodcast.com founder. It really makes a big difference if you show up there because then this podcast shows up in other people's feeds and that's, I think, where we all. Would like it to be.

Just helping other people learn and see and understand new things. Any of this will help the show. I really appreciate it. Thank you so much for listening. Have a wonderful day and bye.