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My First Million

I Ranked the Best & WORST Businesses to Start Before 2026 | Andrew Wilkinson

80 min episode · 2 min read
·
Andrew Wilkinson

Episode

80 min

Read time

2 min

Topics

Career Growth, Investing, Startups

AI-Generated Summary

Key Takeaways

  • Agency Economics: MetaLab generated hundreds of millions in profit but ranks only C-tier due to feast-or-famine client cycles. Winning a $10 million Walmart contract means hiring 30 people, then facing layoffs when budgets shift unexpectedly under new project managers.
  • SaaS with Hardware Moats: Serato DJ software generates $45 million revenue and $15 million EBITDA by deeply integrating with Pioneer hardware. DJs invest $5,000 in equipment and won't switch easily, while manufacturers resist integrating with new competitors, creating defensible competitive advantages.
  • Permanent Capital Advantage: Bill Ackman's Pershing Square with 50 employees manages $15-20 billion, earning 1.5% fees ($200+ million annually) plus 20% performance carry. Permanent capital structure prevents investor withdrawals during downturns, unlike traditional hedge funds forced to sell positions.
  • Real Estate Ceiling Problem: Real estate investing ranks C-tier because rent has natural ceilings based on market rates. Unlike digital businesses where profits can fuel exponential growth through innovation, real estate requires massive capital expenditures to scale, creating illiquidity despite impressive paper valuations.
  • Courage to Be Disliked: Seeking universal approval traps entrepreneurs in narrow boxes. Jesse Itzler successfully reinvented himself from rapper to jingle writer to private jet company founder to coconut water investor, demonstrating that unlabelable careers attract more interesting opportunities than rigid specialization.

What It Covers

Andrew Wilkinson ranks business models from MLMs to investment funds, sharing insights from building MetaLab to hundreds of millions in profit and managing Tiny's portfolio of 30 companies generating over $300 million revenue.

Key Questions Answered

  • Agency Economics: MetaLab generated hundreds of millions in profit but ranks only C-tier due to feast-or-famine client cycles. Winning a $10 million Walmart contract means hiring 30 people, then facing layoffs when budgets shift unexpectedly under new project managers.
  • SaaS with Hardware Moats: Serato DJ software generates $45 million revenue and $15 million EBITDA by deeply integrating with Pioneer hardware. DJs invest $5,000 in equipment and won't switch easily, while manufacturers resist integrating with new competitors, creating defensible competitive advantages.
  • Permanent Capital Advantage: Bill Ackman's Pershing Square with 50 employees manages $15-20 billion, earning 1.5% fees ($200+ million annually) plus 20% performance carry. Permanent capital structure prevents investor withdrawals during downturns, unlike traditional hedge funds forced to sell positions.
  • Real Estate Ceiling Problem: Real estate investing ranks C-tier because rent has natural ceilings based on market rates. Unlike digital businesses where profits can fuel exponential growth through innovation, real estate requires massive capital expenditures to scale, creating illiquidity despite impressive paper valuations.
  • Courage to Be Disliked: Seeking universal approval traps entrepreneurs in narrow boxes. Jesse Itzler successfully reinvented himself from rapper to jingle writer to private jet company founder to coconut water investor, demonstrating that unlabelable careers attract more interesting opportunities than rigid specialization.

Notable Moment

Wilkinson reveals he has $30 million tied up in illiquid angel investments he cannot access and would rather own stocks or real estate instead, ranking angel investing E-tier and comparing it to playing roulette versus the poker-like odds of buying established businesses.

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Episode Transcript

We have 65,000,000 of ARR. We do over $40,000,000 of EBITDA. We also manage a $200,000,000 fund. So we're over 300,000,000 in revenue across 30 businesses, and all the businesses in the fund are profitable I don't know. I'm kinda like, if that's failing, like, sign me up. Right? You've owned a number of agencies. How much revenue lifetime has MetaLab generated for you? The hundreds of millions of dollars of profits, not revenue. I don't know that I would still rank it very highly though. SaaS. Where are you putting SaaS? I would say it's a What do you think about marketplaces? Well, I would say it comes down to scale. A good marketplace like Airbnb, I'd say in a, I'd rank marketplaces in general as. That's the one I would disagree with you with. I feel like I gotta ask you this because I think you get a lot of shit nowadays. I think a lot of people go look at the tiny stock and then they click click max. And basically, you see just a downward trend. A lot of people I see on Twitter want to kinda look at that and say, oh, this guy calls himself the Warren Buffett of the Internet and he says he buys these great businesses, but what's going on? What's up? Andrew is here. Andrew is, one of the most visited guests on the pod. Always good to have you, man. I wanted to play a game with you. You've done many types of businesses. You've done agencies and and, you know, private equity, and you've started, you know, e commerce companies. You've done a huge number of companies in the last twenty years. So I wanna do a game where we rank the different types of businesses that you could start. And we could work out this criteria together, but I I think the idea should be we're not looking at the outlier scenarios. So in every industry, right, the world's best plumber makes a fantastic living. That may not mean that plumbing is the best trade to go into. No offense to the plumbers out there listening, but we're not looking at just the extreme outlier. So I think that here's my criteria for a great business, Andrew. It's gonna be the median successful outcome. Okay? So like the sort of like normal case, if you can make it work. That's the first that's the first criteria. The second thing is we're thinking we're taking into account both the lifestyle as well as the, the result, the upside. So, you know, if one thing is just makes you miserable, or overworks you like crazy, then that would be obviously worse than a business that that lets you have a great flexible schedule and flexible location, for example. So lifestyle matters, upside matters, and we're looking for kind of the median success case. But but, you know, in some of these, it's gonna be like, dude, it's median success. …

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Books, tools, and gear mentioned in this episode

SignalCast may earn commission on purchases via these links. As an Amazon Associate, SignalCast earns from qualifying purchases.

Books

  • Courage to Be Disliked: Seeking universal approval traps entrepreneurs in narrow boxes. Jesse Itzler successfully reinvented himself from rapper to jingle writer to private jet company founder to coconut water investor, demonstrating that unlabelable careers attract more interesting opportunities than rigid specialization.

Tools

  • by Serato

    Serato DJ software generates $45 million revenue and $15 million EBITDA by deeply integrating with Pioneer hardware.

company

  • TinyBy guest
    sharing insights from building MetaLab to hundreds of millions in profit and managing Tiny's portfolio of 30 companies generating over $300 million revenue.
  • MetaLabBy guest
    Andrew Wilkinson ranks business models from MLMs to investment funds, sharing insights from building MetaLab to hundreds of millions in profit and managing Tiny's portfolio of 30 companies generating over $300 million revenue.
  • Bill Ackman's Pershing Square with 50 employees manages $15-20 billion, earning 1.5% fees ($200+ million annually) plus 20% performance carry.

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