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

Episode Summary

Executive Summary: The episode centers on a tier-list ranking of business models, with Andrew Wilkinson arguing that median outcomes, scalability, defensibility, and lifestyle determine business quality. He places MLMs and restaurants at the bottom, agencies and real estate in the middle, and SaaS, marketplaces, and permanent-capital investing near the top. The second half addresses criticism of Tiny’s stock performance, with Wilkinson defending the operating business, explaining public-market misperceptions, and making a broader case for being authentic, contrarian, and unboxed.

Main Topics: Ranking business models by quality and difficulty (Priority: 5/5): The hosts evaluate business types by median outcome, scalability, lifestyle, and odds of success rather than outlier wins. Wilkinson repeatedly distinguishes between attractive business models and the small number of operators who succeed exceptionally well. Why MLMs and restaurants are low-quality businesses (Priority: 5/5): MLMs are described as unsustainable and exploitative, while restaurants are framed as labor-intensive, low-margin, and operationally brutal. Both are ranked near the bottom because the median operator struggles. Agencies, freelancing, and local services as middling businesses (Priority: 4/5): Freelancing and agencies can produce good incomes, but they are lumpy and often owner-dependent. Local services like HVAC or pest control are somewhat stronger due to defensibility and technician scarcity, but still difficult for outsiders to run. SaaS and marketplaces as high-potential but context-dependent (Priority: 5/5): Wilkinson ranks SaaS and marketplaces well only when they have defensibility, high switching costs, or ecosystem integration. He argues software is becoming more competitive because AI lowers barriers, but vertical SaaS with hardware or embedded workflows can be excellent. Permanent-capital investing as elite business (Priority: 5/5): Wilkinson argues that Buffett-like structures and certain hedge fund models are exceptional because they generate recurring fees, can scale with minimal staff, and avoid redemption risk when capital is permanent. Tiny, public-market criticism, and the reality of performance (Priority: 5/5): Wilkinson addresses skepticism about Tiny’s stock chart, explaining that public-market timing and stock-price volatility distort perception. He emphasizes revenue, EBITDA, cash ownership, and the breadth of profitable businesses over stock movements. Identity, contrarianism, and the courage to be disliked (Priority: 4/5): The conversation closes on refusing rigid labels and accepting criticism. Wilkinson argues that interesting people and successful operators often defy categories, and that building a fulfilling life requires tolerating some dislike and following genuine interests.

Key Arguments: Median success matters more than exceptional outliers when judging a business model. Lifestyle quality, scalability, and likelihood of success should all factor into ranking a business. MLMs are fundamentally unsustainable because they depend on recruiting new participants rather than creating durable value. Restaurants are hard because they are low-margin, operationally intense, and constrained by physical labor and consistency. Agencies can be profitable, but they are feast-or-famine businesses unless highly specialized or recurring. SaaS is strong when it has switching costs, market dominance, or ecosystem integration; AI may increase competition and compress margins. Marketplaces are powerful at scale, but most fail because matching supply and demand is difficult. Real estate is predictable and can be attractive, but it has ceilings, illiquidity, and often lower innovation potential than operating businesses. Permanent-capital investing is superior to traditional money management because fees and capital are not as easily withdrawn. Tiny’s stock price does not tell the full story; the underlying business generates substantial revenue, EBITDA, and profits across many companies. Being publicly misunderstood is an acceptable cost of operating loudly and authentically. People should optimize for work they can enjoy repeatedly rather than for status or other people’s expectations.

Data Points: ARR: $65 million - Tiny’s recurring revenue cited by Wilkinson EBITDA: Over $40 million - Tiny’s operating earnings Fund size: $200 million - Tiny’s managed fund Total revenue across businesses: Over $300 million - Combined revenue including fund-owned businesses Number of businesses: 30 businesses - Portfolio breadth described by Wilkinson Tiny stock performance context: Public listing began in January 2021 - Wilkinson says the chart starts at a high valuation during the market mania Initial market cap jump: $250 million to $1.2 billion - Value on the day Tiny went public before the broader decline Serato revenue: $45 million - Revenue at the SaaS business Wilkinson discussed Serato EBITDA: $15 million - Profitability of the DJ software business Z1 acquisition price: $300,000 - Tiny’s purchase of the smaller Spanish design agency Z1 profitability: Single-digit millions - Wilkinson’s estimate of cumulative profit from the acquisition Pershing Square staffing: 50 employees - Example used to illustrate permanent-capital investing efficiency Pershing Square AUM: $15 billion - Approximate amount discussed for Bill Ackman’s firm Typical hedge fund fee: 2% of managed assets plus 20% of profits - Standard structure referenced in the investing discussion Ackman example earnings: $2.4 billion profit - COVID-era derivatives bet cited as an illustration of upside Ackman capital stake: About $6 billion - Wilkinson notes Ackman owns a large portion of the capital he manages Tiny ownership: Majority owned by Chris and Andrew - They still control the public company Tiny growth rate: 25% annual earnings growth - Wilkinson’s claim about the past decade IPOs under water: 60% - Wilkinson says many 2023 IPOs trade below issue price One-time capital transfer: $8 million - Moved to his foundation for philanthropy Angel investing exposure: $30 million tied up - Sean’s comment about his own illiquid angel portfolio

Pivotal Quotes: "If that's failing, like sign me up, right?" — Andrew Wilkinson: Response to skepticism about Tiny’s revenue, EBITDA, and fund performance "It's a fundamentally unsustainable business that breaks." — Andrew Wilkinson: His rationale for ranking MLMs as an F-tier business "The courage to be disliked." — Andrew Wilkinson: Core theme from the self-reflection segment on identity and public criticism

Implications: For founders and investors, the episode argues for choosing models with durable economics, not hype, and for accepting public criticism when building unconventional businesses. It also suggests AI, media, and public markets will reward originality, permanence, and honest fit over rigid career labels.