Fish Where Fish Are, Not Where Fishermen Compete

Fish where the fish are, but avoid the crowded spots where everyone is competing with sophisticated tools. This principle from Charlie Munger guides entrepreneurs toward profitable niches with less competition.

Finding the Right Business Opportunity

• Look for markets where there's demand but not excessive competition

  • "Fish where the fish are" - find ponds with lots of fish and very little competition
  • Competition equals lower margins - the more competitors, the lower your prices must be
  • Avoid industries where others have repeatedly failed thinking you can do better

• Start with something manageable that gives you quick positive feedback

  • "You don't wanna walk into the gym on day one and try and deadlift 300 pounds"
  • First-time entrepreneurs should avoid highly regulated, competitive industries
  • Begin with something simple that provides immediate validation (like Andrew's web design agency)

• Identify your unfair advantage and leverage it

  • Look for the intersection of your skills, interests, and market opportunity
  • Pivot slightly within your skillset to find the most profitable application
  • Example: Instead of managing social media for restaurants, target realtors who have larger budgets

• Boring businesses often have less competition and better margins

  • Most people chase flashy opportunities (restaurants, cafes, project management software)
  • Look for businesses nobody dreams of starting (form-filling software, funeral homes, pest control)
  • "Nobody wakes up and goes 'I wanna make form filling software' but I think they would if they could make $20,000,000 a year"

Building a Sustainable Business Model

• Focus on businesses with natural moats

  • Brand power (like Coca-Cola or Tylenol) that gives pricing power
  • Network effects (social networks where users don't want to leave)
  • High switching costs (though Andrew notes this is less consumer-friendly)

• Consider scale potential to avoid creating just a job

  • A business that can't scale beyond you doing all the work is just a job
  • "There's a big difference between a business and a job"
  • Practice "lazy leadership" - focus on getting away from tasks you hate as quickly as possible

• Choose businesses that are hard to mess up

  • Many businesses are "held together with dental floss and duct tape"
  • Look for businesses with staying power that can withstand management changes
  • Businesses with loyal customers and consistent demand are more resilient

• Recognize that venture funding isn't necessary for significant success

  • Bootstrap businesses can reach hundreds of millions in revenue
  • The key difference is "the level of tolerance of burning money on fire"
  • Venture funding makes sense only for capital-intensive businesses requiring significant upfront investment