I Ranked the Best & WORST Businesses to Start Before 2026 | Andrew Wilkinson - My First Million Recap

Podcast: My First Million

Published: 2025-11-07

Duration: 1 hr 20 min

Guests: Andrew Wilkinson

Summary

Andrew Wilkinson ranks different business models based on scalability, sustainability, and profitability heading into 2026. From agencies to SaaS to restaurants, he reveals the challenges, rewards, and risks of each type, while sharing his own hard-earned lessons from building a $300M portfolio.

What Happened

Andrew Wilkinson starts by evaluating multi-level marketing (MLM) businesses, ranking them as 'F' due to their unsustainable reliance on constantly recruiting new participants rather than selling genuine products or services. He notes the high risk and legal troubles often faced by MLM founders.

Freelancing, which shaped Andrew's early career, earns a 'B' grade. He acknowledges it as a viable way to make a living but notes its limitation: it's an owner-operator model that doesn't scale unless transitioned into an agency, which he ranks lower at 'C' because of its feast-or-famine nature.

Andrew ranks SaaS businesses as a 'B,' emphasizing their high margins and recurring revenue potential. However, he warns of increased competition and margin compression in saturated markets. He highlights Serato, a DJ software company, as an example of a successful niche SaaS business benefiting from hardware integration and a strong moat.

Restaurants are graded 'E,' with Andrew calling them one of the hardest and least lucrative businesses. He cites their low margins and operational complexity, emphasizing that success in the restaurant space is rare and often driven by passion rather than profit.

Andrew ranks marketplaces like Airbnb as 'A' for their scalability and defensibility once established, but he cautions that most marketplaces fail to achieve critical mass, making them difficult to succeed in overall.

Short-term rentals and content creation are both ranked 'D,' with Andrew citing regulatory risks for Airbnb hosts and the lack of scalability for individual creators who rely heavily on their personal brand and constant output.

Investing and fund management stand out as high-tier options, with Andrew ranking investment funds with permanent capital as 'S.' He explains the distinction between traditional hedge funds, which face withdrawal risks, and structures like Berkshire Hathaway or Pershing Square, which enjoy stable capital and consistent fees.

Andrew reflects on his own entrepreneurial journey, from starting a web design agency to building Tiny, a holding company now managing a $300M portfolio. He shares candid insights about past failures, the challenges of public scrutiny, and his philosophy of embracing the courage to be disliked.

Key Insights

• Multi-level marketing (MLM) schemes fail because they depend on endless recruitment rather than real product sales. Andrew Wilkinson ranks them an 'F,' warning that even founders often face lawsuits or financial ruin.
• Investment funds with permanent capital, like Berkshire Hathaway or Pershing Square, are ranked 'S' because they avoid the withdrawal risks that plague traditional hedge funds. Stable capital allows them to focus on long-term growth instead of short-term performance.
• Restaurants are graded 'E' for being one of the least lucrative businesses due to razor-thin margins and operational chaos. Andrew argues success in this industry is more about passion than profit, making it a bad choice unless you love the grind.
• Marketplaces like Airbnb get an 'A' for their scalability and defensibility once they hit critical mass, but most fail to survive early-stage struggles. Andrew warns that unless you solve the chicken-and-egg problem of supply and demand, you're likely doomed.

Key Questions Answered

What does Andrew Wilkinson say about the best businesses to start before 2026 on My First Million?

Andrew ranks SaaS and marketplaces as high-potential models but warns of competition and execution challenges. He advises against low-margin or operationally complex businesses like restaurants and MLMs.

Why does Andrew Wilkinson rank investment funds with permanent capital as 'S-tier' on My First Million?

He highlights that permanent capital structures eliminate withdrawal risks, allowing for stable fees and long-term investments, citing Warren Buffett's Berkshire Hathaway and Bill Ackman's Pershing Square as prime examples.

What are the risks of starting a marketplace business according to Andrew Wilkinson?

While Andrew ranks successful marketplaces like Airbnb as 'A-tier,' he notes that most fail due to challenges in achieving scale and matching supply with demand, making the model inherently risky.