Daniel Vassallo's Small Bets: How to Build a Portfolio of Profitable Products

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Daniel Vassallo's Small Bets: How to Build a Portfolio of Profitable Products

Daniel Vassallo is a software engineer from Malta who spent 8 years at Amazon Web Services before quitting in 2019 to work for himself. He now runs the Small Bets community with over 5,000 members and has become one of the most recognized voices in the indie hacker space for his portfolio approach to entrepreneurship.

Daniel Vassallo left a $500,000/year job at Amazon to bet on himself. Within 3 years, he generated over $1 million in revenue from digital products. In 2025, he sold his Small Bets community to Gumroad for $3.6 million.

His strategy wasn’t genius execution or venture capital. It was launching 70+ small experiments and letting randomness work in his favor.

This guide covers the philosophy, tactics, and how to apply portfolio thinking to AI-powered products.

What is Small Bets?

Small Bets is a business strategy built on portfolio thinking instead of single big bets. See Small Bets for a detailed breakdown of this philosophy.

Core principles:

Why it works:

You cannot predict winners upfront. Rapid experimentation with affordable failures is the only way forward.

Vassallo’s results:

The Five Core Principles

1. Embrace Randomness

Actions:

Vassallo’s quote:

“Business success is mostly a discovery problem, not execution. You cannot know in advance which idea will work.”

2. Portfolio Over Single Bets

Approach:

Example portfolio:

ProductRevenueStatus
The Good Parts of AWS$100K+Winner
Everyone Can Build a Twitter Audience$100K+Winner
Small Bets Community$400K+/yearWinner
66 other projects$0-5KLearning experiments

3. Optimize for Self-Employment

Eliminate:

Vassallo’s definition of growth:

“My idea of growth is doing fewer things I’d rather not be doing.”

4. You Are the Product

Why it matters:

Vassallo’s approach:

5. Survivorship Bias Awareness

Most success advice comes from survivors who mistake luck for skill. Randomness plays a larger role than tactics.

Example traps:

Reality check:

Study the entire population (winners + losers). Portfolio math accounts for randomness; individual tactics don’t.

Vassallo’s Proven Tactics

Twitter Growth Strategy

System (150 → 24K in 9 months):

  1. Share first-hand experience
  2. Post practical tips, not theory
  3. Document learning publicly
  4. Engage with replies

Content types:

Product Development Process

Launch cycle:

  1. Identify skill/knowledge you have
  2. Package into digital product (course, ebook, community)
  3. Pre-sell before building (validate demand)
  4. Build minimum viable version
  5. Launch to Twitter audience
  6. Learn from sales/feedback
  7. Iterate or move to next bet

Timeline per product:

If product fails: Move on. The 5% winners fund everything else.

Revenue Model

Platform stack:

Pricing strategy:

Revenue breakdown (estimated):

How to Apply Small Bets to AI Products

AI lowers experimentation costs. Launch more bets faster.

Portfolio Ideas for AI Products

Content products:

Software products:

Community products:

Quick Launch Template

Week 1: List 20 product ideas, pick one requiring <20 hours.

Week 2-3: Build minimum viable version, no perfectionism.

Week 4: Launch on Twitter. Share story. Track sales for 30 days.

Week 5: Profitable = iterate. Unprofitable = archive. Repeat.

AI Automation Advantage

Use AI to launch bets faster:

Content creation:

Product development:

Customer support:

Common Mistakes to Avoid

Mistake 1: Treating Ideas Like Pets

Do: Launch in 2-4 weeks. Kill unprofitable products immediately.

Don’t: Spend 6 months perfecting. Refuse to pivot.

Mistake 2: Seeking Certainty

Do: Launch to learn. Let market decide winners.

Don’t: Wait for perfect idea. Over-research competition.

Mistake 3: Following Survivorship Advice

Do: Study entire populations. Focus on portfolio math.

Don’t: Copy famous entrepreneurs’ tactics. Ignore luck/timing.

Mistake 4: Optimizing for Revenue

Do: Define anti-goals first. Optimize for self-employment. Stay small.

Don’t: Maximize revenue. Hire teams. Raise funding.

Real Examples of Small Bets Winners

Example 1: The Good Parts of AWS

7 years at Amazon → ebook + video course (4 hours) pre-sold to Twitter audience → $100K+ in 3 weeks.

Example 2: Small Bets Community

Portfolio approach shared publicly → Discord community ($199/year, $999 lifetime) → $400K+/year → Sold to Gumroad for $3.6M.

Example 3: Everyone Can Build a Twitter Audience

150 → 24K followers → course ($149) → $100K+ in 2 weeks.

Tools for Small Bets Portfolio

Product Platforms

Gumroad:

Alternatives:

Community Platforms

Discord:

Alternatives:

Audience Building

Twitter/X:

Alternatives:

AI Tools for Faster Launches

Content:

Development:

Design:

Key Takeaways

  1. Launch 20-50 experiments, expect 5-10% success rate
  2. Treat ideas like cattle (disposable), not pets
  3. Optimize for self-employment, not revenue maximization
  4. Build audience first, products second
  5. Accept randomness, increase surface area

Vassallo’s results: 70+ projects, 4 winners (~5% hit rate), $1M+ revenue, $3.6M acquisition.

Next Steps

Day 1: List 10 product ideas from your first-hand experience.

Day 2-14: Build minimum viable version.

Day 15: Launch publicly.

Day 16-30: Learn from market response.

Repeat 20 times. Portfolio math handles the rest.

External resources:

Topics: workflow ai-coding automation open-source