Boring Businesses Have Less Competition

Choosing boring, unflashy sectors lowers competition and increases chances of building a profitable company.

The "Fish Where the Fish Are" Principle for Business Ideas

Charlie Munger's advice to "fish where the fish are" forms the foundation of a strategic approach to finding profitable business opportunities:

• Look for small fishing holes with lots of fish and very little competition rather than crowded markets
• Competition equals lower margins - the more competitors, the lower your prices must be
• Seek industries where few people naturally gravitate toward

Why Boring Businesses Often Outperform Exciting Ones

• Most people chase flashy, exciting business ideas (restaurants, cafes, project management software)
• Boring businesses face dramatically less competition:
  • "Nobody wakes up every morning and says I'd love to start a funeral home or a pest control business"
  • Example: A business making $30M/year helping people fill out government assistance forms
  • "Nobody wakes up and goes I wanna make form filling software but I think they would if they could make $20M a year"

The Deadlift Analogy for First-Time Entrepreneurs

• "You don't wanna walk into the gym on day one and try and deadlift 300 pounds"
• First businesses should be simple with quick feedback loops:
  • Web design agency worked immediately - send invoice, do work, get paid
  • Avoid highly regulated, competitive industries for your first venture
  • Start with "baby weights" and gradually build business muscle

Identifying Profitable Niches Within Your Interests

• Find your passion, then locate the profitable angle within it:
  • Example: "I love movies" → discovered Letterboxd (social network for film reviewers) had a network effect moat
  • Example: Restaurant owner noticed vendors servicing restaurants were "making a killing"
  • Example: Pivoting from managing social media for restaurants ($1000/month) to realtors/wealth managers ($5000/month)

Characteristics of Great Business Models

1. Businesses with moats:

   • Strong brand that gives pricing power (Coca-Cola, Tylenol)
   • Network effects where each new user makes the product more valuable (Letterboxd, social networks)
   • High switching costs (though less consumer-friendly)

2. Businesses that are "hard to mess up":

   • Not dependent on a single person
   • Not "held together with dental floss and duct tape"
   • Can withstand management changes

3. Businesses with unfair advantages:

   • Leverage your unique skills/background (the "Venn diagram" approach)
   • Use existing assets to bootstrap new ventures (advertising new businesses on owned media properties)

Common Business Idea Mistakes

• "The biggest mistakes I've made have been going into business models where other people have repeatedly failed and thinking I can do this better"
• Underestimating the complexity of seemingly simple businesses (restaurants, bars)
• Competing directly with venture-backed companies as a bootstrapped business
• Creating a job rather than a business (failing to scale beyond yourself)