Startups are a sequence of nested bets. Like poker, you’ve got a limited bankroll and imperfect information.

The Market Bet

Your foundational bet isn’t just picking a market, it’s betting that you understand how that market will evolve. This bet shapes everything downstream:

• Is the market large enough?
• Is the timing right for your solution?
• Do you have unique insights about where this market is heading?

If this foundational bet is wrong, you face an existential choice: pivot to test a new market hypothesis or run out of resources. There’s no point perfecting execution if you’re building for the wrong market.

Opportunity Bets

Once you’ve placed your market bet, you make increasingly specific bets about where to find leverage:

• Which customer segments are most underserved?
• What specific problems are worth solving?
• How will you create unique value?
• What distribution channels will work?

These bets are more open to experimentation than your market bet. You can test them faster and adjust based on feedback. Each successful bet increases confidence in your higher-level bets while opening up new possibilities to explore.

Solution Bets

Solution bets range from major strategic choices (“build vs. partner”) to tactical decisions (“which features first?”). Key aspects:

• Some solutions are “all in” with no easy way to pivot (one-way door)
• Solution bets can be nested inside each other to reduce risk, too (e.g. quick demand test via fake door followed by implementation bet by prototyping)
• Some bets are tiny and easy to optimize (where should we put this button?)
• Solution bets should trace back to higher-level opportunity bets
• Failed solution bets can still validate or invalidate your bigger assumptions

Implementing a Betting Philosophy

1. Make bet sizing explicit. Some bets are existential, others are easily reversible. Match your investment and validation approach accordingly.
2. Look for leading indicators. Find ways to validate higher-level bets through smaller, faster experiments.
3. Track your bet portfolio over time. Is each bet (regardless of outcome) compounding your internal knowledge?

The power of the betting framework isn’t just in making individual decisions, it’s in seeing how each bet connects and how we start to compound insights.