Photo: Stuck in Customs

Preface by Tim

This post is a follow-up to “How to Create a Million-Dollar Business This Weekend (Examples: AppSumo, Mint, Chihuahuas).”

The purpose of this guest post — written by Noah Kagan — is to show you exactly how a postal worker created a $4,000 per month muse. Included are all the tests, e-mail templates, and details you’d need to replicate his success.

Noah was employee #30 at Facebook, #4 at Mint, had previously worked for Intel (where he frequently took naps under his desk), and had turned down a six-figure offer from Yahoo. Since we first met, Noah’s helped create several multi-million dollar businesses, including AppSumo, loved by entrepreneurs everywhere.

For those interested in mentorship, don’t miss the end of this post.

There’s a time-sensitive chance to visit San Francisco for a week… to be mentored in-person by Noah and yours truly.

Enter Noah

The journey of Daniel Bliss is a telling one.

Our goal was to take his hobby — he was a full-time postal worker — and turn it into a real business making $4,000 a month so he could quit his day job.

We started working a few months before when he won the AppSumo Make a $1,000 a Month Business getaway to Austin to personally work with me for a week.

The preliminary call after Daniel won the getaway went well. Here’s what he told me:

He was solving his own problem. This is an easy way to figure out what business you should start.

Daniel’s a rock-climber and it hurt his neck to look up while he was belaying (standing on the ground helping the climber above him) so he wanted to buy glasses to make his neck hurt less.

Here’s me with a pair of glasses on and Daniel.

 All the glasses on the market were $99, so Daniel figured there had to be a way to make and sell cheaper glasses.

When we talked, he had already found a manufacturer through Alibaba.

Daniel first learned about using Alibaba to find a manufacturer in Tim Ferriss’s book The 4-Hour Workweek (page 175).

He searched suppliers on Alibaba and checked if they were a good fit by testing them on 3 characteristics:

1. How many years (if any) have they been considered a gold supplier?

Gold Supplier is a paid membership on Alibaba.com. All Gold Suppliers in China must pass an onsite check while those from other countries and regions must pass an A&V Check. Basically, this shows that they’re legit.

2. How is their website?

 Poke around to see if anything seems shady. Do they have any negative reviews or positive ones? Search their name/email on Google and see what kind of results you get. This should give you a good feeling if they’re legit or not.

3. Is their “minimum order quantity” reasonable for what I’m trying to do?

You want to keep your costs down and not worry about selling hundreds of items. Daniel originally targeted 50 minimum pieces to validate his business without spending a lot of money.

Once Daniel narrowed down suppliers he ordered a few samples to test in person. He took these to his climbing group. Always look at who you have easy access to when selling your product. A common pitfall is for people to look at everyone outside their network and get rejected.

 By himself, he sold 12 pairs. He sold 2 pairs to a couple he met while climbing and the rest to his climbing group.

So far, so good.

But then Daniel decided to spend valuable time creating a website: http://belayshades.com

How often have you bought a domain, imagining how large your new business is going to be? I KNOW you have. I have many times. You fantasize about how large your business is going to be instead of actually growing it. This is a common thing we help people with in our Make a $1,000 a Month business course.

Daniel’s been working as a postal carrier in Canada for 7 years, so expanding a business was foreign to him.

Daniel had gotten to the point where he was working without a goal so the first question I asked him was:

“To you, how much money is financial freedom?”

Once you know your destination, getting there is MUCH easier.

Tim’s written about figuring out your lifestyle costing, aka “financial freedom,” here: https://www.fourhourworkweek.com/blog/lifestyle-costing/

For Daniel it was $4k / month to be able to travel to Thailand and go climbing as he pleased.

Now it’s key to do the math to see how many pairs of glasses he’ll need to sell to get to that point.

$4,000 / profit a month

The glasses sell for $60 a pair with shipping

40% profit margins on every pair of glasses.

$60 * 40% = $24

$4000 / $24 (profit per sell) = 166 glasses a month.

Basically, 5-6 glasses a day.

That doesn’t sound so bad, right? When you take a goal and break it into daily targets, it makes the goal seem WAY easier and more digestible.

Competitors?

Before Daniel arrived to work with me, he started worrying about competition and patents.

BUT NO COMPETITOR CARES. Ever!

How many burger places are in your town? Cafes? Japanese restaurants?

Exactly, A TON. There’s enough for everyone and — fortunately for you — most people run their businesses like shit.

Worrying about others in the beginning is just a fear of starting.

Daniel’s focus on filing a patent was another aversion to starting.

The next week, he was worried about liability and everything except growing his business.

I’m not saying you should avoid setting up your corporation or take precautionary measures when it’s the right time. The key is to see what’s actually important for the time being and handling it.

Eventually, Daniel arrived in Austin and we had 5 days together to get his business to at least $4,000 in revenue. Here’s what went down:

Day 1 – Foundation

Now that Daniel knew his goal (sell 5-6 glasses a day) we used Quant Based Marketing to calculate how he could try various marketing tactics to grow his business and reach his goal.

Example of Daniel’s Quant based sheet

 See the actual marketing sheet here and feel free to use it for your own business.

What Daniel was previously doing for marketing was paying for Facebook likes and cold calling rock-climbing gyms to gain sales. It was going slowly.

The gyms said they needed time to see if they wanted to buy the glasses. When someone says they need time, it’s because you haven’t sold them properly.

For marketing, the key is to have a “lazy” mindset. With the quant sheet you can estimate the amount of sales you can get from all the different activities and then prioritize based on volume.

It’s critical to find the marketing activities that can scale and be repeated.

Daniel kept doing activities that weren’t producing, like submitting to PR Newswire. It’s not that it can’t work, but we wanted to get results faster.

So I asked Daniel, “If you could only use two of the marketing activities you’ve used before, what would they be?”

          1. Personal network + referrals

          2. Wholesale selling to climbing gyms / online stores

So we had our marketing sheet and planned to do 1-2 activities per day to see what worked best for his business.

Day 2 – Doing more of what works (personal network + wholesales)

Daniel searched Facebook for every single friend who listed climbing in their profiles and added them to a sheet.

Then Daniel individually messaged them. Yes, it’s work. To get The 4-Hour Workweek I’ve found it takes about 6 months of work to finally relax on substantial monthly income. [Note from Tim: This squares with reality; it usually takes 3-4 months to try enough that you can do a proper 80/20 analysis, then two months to design systems to scale what *is* working.]

Here’s the message Daniel used:

Hey <first-name>

Hope you’ve been awesome.

I saw you like climbing. Me, too!

My neck always hurts when I belay, so I created super affordable belay goggles.

Have about 10 available. Are you interested?

Climb on,

Daniel

A few sales came just from messaging his Facebook friends. SCORE.

Then we created a list of every rock climbing store offline and online in Canada.

1. Search google for “rock climbing vancouver” or search “rock climbing” on Yelp

2A. Go to websites listed and get the owner’s name (if possible), email, and phone number. OR

2B. Hire someone on fiverr.com or craigslist to go through every listing and add them on a sheet for you like the one below (if you’re a lazy ass).

Daniel was already calling and emailing but not getting the volume of sales he needed from wholesalers and gyms. I asked to see what he emailed,. He showed me this:

Damn, that is a bad e-mail!

Main things for you and Daniel to learn:

         a) Getting a PDF from a random stranger is never something I want to open.

         b) Make the subject line exciting to read.

         c) Sales emails should ALWAYS be about the other person. Make it valuable for them so they want to reply.

        d) Nobody’s name is Hello. “Hey <first-name>”. Work to find the first name.

Here’s an improved version that we worked on:

Subject: Helping you make an extra $1,000 at your climbing gym

Hey Colleen,

Hope things are amazing with you.

I’ve been working with climbing gyms like yours and wanted to hook up your members with my new belay glasses.

http://belayshades.com (people go nuts over them)

Was thinking, we can email your members with a special discount just for you and we split the profit evenly.

Be a great way for you to make a profit and hook up your members at the same time.

Can you let me know by this Friday if this sounds appealing to you?

Rock on,

Dan Bliss

And here’s the email for online retail stores:

Subject line: Best person to talk with for new climbing gear?

Hey John <store owner>,

Fan of your store and the fact your founder and I both do jewelry making

Noticed you didn’t have any belay glasses, which are becoming super popular with climbers.

Love to see if this makes sense for your store. Other climbing stores are seeing promising results with it.

How’s this Thursday 4pm CST for a quick 7-minute call to see if this makes sense for your store?

Belay on,

Daniel Bliss

http://www.belayshades.com

To actually get a response, I had Daniel use what I call the quad-bomb:

1. Search their name on LinkedIn. Send them a connect request as a friend with a CUSTOM message. “Hey <first-name>, Huge fan of your business and wanted to talk about some cool products for your customers.”

2. Email them.

I wait a day here as to NOT annoy them. If they don’t respond, then proceed to 3 and 4.

3. Facebook message them with: “Hey, just wanted to make sure my message got through”.

4. Tweet them. “Hey @twitter-handle. Love to see if we make some magic together. What’s best email for you?”

Why so many channels?

1. So many people are lazy and don’t put the effort in. You get out what you put in.

2. Sometimes people get busy, so your email may just get buried at the bottom of their inbox.

One of the key things that I drilled into Daniel’s head is to have a follow-up time with ANY person you are trying to work with. I use the line, “I have my calendar open, how’s X time to check in?”

Also I use followup.cc as a great free service to get reminders via email.

Rebuttal / sales sheets

Script out your answers to any possible questions during sales calls. This makes it easy to do your sales. This is also valuable so in the future you can have ANYONE do your sales a la The 4-Hour Workweek.

Here’s a sample of those sheets:

Rebuttals:

You guys are too small for us to work with

I feel we will work well together… we are small and you are big. Since we are small we can keep costs low and pass the savings on to you and your customers. Since you are large and have the reach for distributorship we can do business on a larger scale at smaller margins while still making a profit. Match made in heaven.

What about returns or defects?

We check each product by hand. If there is any problem, we stand 100% behind the product. We have a no-questions return policy for 30 days.

Can you guys do net-90 payment terms?

Yes, we can.

Where have you sold these glasses so far?

We are selling at local gyms and climbing groups all around Vancouver.

Can you give us a discount?

The price is the most affordable on the market. If you wanted to place a larger order, or can offer better payment terms, I’m happy to talk to my team to make it work for you.

Sales Questions to ask whosalers / stores / gyms

1. Something about themselves, a get-to-the-know-them question

2. What are your most popular items for climbers?

3. What are your favorite sites for finding out about new products? If tradeshows, which ones do you guys go to?

4. Do you guys already sell belay glasses?

5. How do you decide which products you want to sell?

6. [POTENTIAL TRANSITION] Well, it sounds like our glasses are right up your alley… (ONLY IF THEY ARE)

7. What’s your preferred amount for a starter order?

8. Is anything holding you back from placing an order of 30 with us today?

9. What are your preferred next steps to get this partnership rolling?

10. How’s x time for a check-in to make sure all is smooth?

Day 3 – Marketplaces + Groups + Advertising

Each day Daniel was in town, he allocated at least 3 hours to try a new method of marketing.

Who knows which will actually work? At the end of the week, we were going to re-evaluate and focus on the most effective ones.

Here are 3 marketing methods we tried out:

Posting on marketplaces

This involves posting your product to sites that already have your customers like eBay, Etsy, Craigslist or Amazon. All totally free, too. Done.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=321233764523

Messaging on Meetup groups

Try messaging meetup groups to do giveaways. No responses? Oh well, move on.

Facebook and Google Advertising

Here’s the exact FB ad we created:

Key things about this ad:

        – Target audience is really small (24,000 people)

        – Your target should be as NICHE as possible. The more unique — or direct the competitor — the better.

         – Newsfeed ads have been performing STUPIDLY well for me, so we chose that route. But what works for me may not work for someone else.

         – Limit yourself to your country and focus on just desktop computers, unless your page is very mobile friendly. Otherwise, you will waste a TON of money.

For Facebook ads, do NOT spend more than $10 a day while you are trying to figure out if you can make more than you spend from this marketing channel. DO NOT buy likes either — they are worthless. You have to rely on Facebook to communicate with your customers vs. having direct access. Get people to buy your product directly or give you an email.

Daniel tried Google Adwords with no success. Luckily, he used a free credit he got from starting a new account. You can get bonus AdWords credit via eBay.

Day 4 – Giveaways / Google / Random ideas

On Day 4, we continued trying new marketing techniques to find which would work:

Giveaways

Daniel reached out to various Facebook pages and bloggers related to climbing. Search Facebook for “rock climbing” or whatever your product is, and you should be able to find a few pages related to your audience.

Here’s what he would message them:

Subject: Free Belay Glasses for you and your <group name>

Hey <club leader>,

You guys look awesome! Glad to see the climbing community growing in <location>.

Wanted to let you know about these cool new belay glasses for rock climbers http://www.belayshades.com

Love to send you a pair to try out. If you like them, I’ll happily give you guys a special price you can share with your members.

Easy enough, right? Just email me by <two days from when email is sent> with an address we can ship to, and we will send a pair out to you.

Belay on!

Daniel

This did not produce any results

A better approach would be to mail out glasses to climbing writers and group owners and focus on building long-term relationships.

Google Top 20

If you were your own customer, what phrase would you search on Google?

For Daniel it was “belay glasses”.

In a non-spammy way, go through the first 2 pages of results on Google and leave a helpful comment or see if you can sponsor or get involved in that page. Way easier than trying to immediately rank for a keyword through SEO.

Daniel found a lot of forums and blog posts so he promoted himself on these pages. By looking at Google Analytics, we saw this drove a decent amount of traffic and sales to his website.

Posting on Reddit

There’s a decent amount of people in the /r/hiking or /r/climbing subreddits so posting a discount or asking for people’s feedback is a good test.

Daniel’s partner posted this thread and was able to sell a few glasses:

This sold 10 pairs, which is awesome for Daniel! But posting on Reddit and hoping to get responses isn’t predictable, and we want predictable.  Can’t run off to Thailand unless you know cash is coming in consistently, right?

Updating his website

His site wasn’t bad, but he had a video that did not explain his product, as well as a random banner slide show that didn’t speak to visitors.

Before:

After:

Day 5 – Bringing it all together

The key takeaway from the whole week: looking at what drove most sales so we can scale it up big time.

So from all the days activities, Day 2 seemed to be the most effective (reaching out to personal network and wholesale retailers).

Our goal for the five days was to grow Daniel’s business. By reaching out to his personal network and wholesale retailers and focusing what had already worked, we managed to make that happen.

Daniel got an email from a large online site named Sierra Trading saying they were interested in the glasses.

HOLY CRAP! He’d been waiting weeks to hear back from small local stores. Now an online provider is finally responding within a day. The store buyer originally responded via a Facebook message.

The order placed was for $4,200!!!!!

WAIT WHUH?!?!?!?!!!!

Lesson of the week: You never know what’s going to work when it comes to marketing. Try new things and then focus on what works until it stops working.

Daniel and the Amigos. Thanks to Anton + Robert for helping with this article.

Big thanks to HomeAway for sponsoring Daniel’s great loft in Austin, Texas.

A Week of Mentorship in San Francisco — An Opportunity

If you want help starting your own business, and if you’re a US resident age 18 or older, Tim and I have a special opportunity for you.

Take the following steps no later than 5pm PST on Wednesday, October 30th, 2013, and you could get an all-expenses-paid trip to San Francisco to work with us on starting your business.

Many surprises await the one lucky winner. Big time. Seriously.

Step 1 – Create a video (2 min or less) on YouTube explaining why you should be chosen. Start the video title with “Tim Mentorship” so we can find it.

Step 2 – Fill out this form. Be sure to include a link to your YouTube video (from Step 1) in the “Tacos or burritos?” answer! This is to ensure you know how to follow directions.

That’s it!

If you’re like Daniel and want the blueprint to start your own business, personal support, and access to a community of 3,000+ entrepreneurs, take a look at “How To Make A $1,000-A-Month Business.”

The post How to Create a $4,000 Per Month Muse in 5 Days (Plus: How to Get Me As Your Mentor) appeared first on The Blog of Author Tim Ferriss.

Now that’s a happy kid. (Photos: Brandon Pearce)

One common challenge for readers of The 4-Hour Workweek is the creation a “muse”: a low-maintenance business that generates significant income. Such a muse is leveraged to finance your ideal lifestyle, which we calculate precisely based on Target Monthly Income (TMI).

Despite the dozens of case studies I’ve put on this blog, and the hundreds elsewhere, one knee-jerk objection always crops up: “That might work for a single 30-something guy, but what about families? I have a mortgage, kids, and…”

The following is a guest post by Brandon Pearce. Brandon has three kids and first appeared on this blog as a muse case study for his business, Music Teacher’s Helper, which generated more than $25,000 a month at the time.

Things are even better now.

He and his family have now been leisurely traveling the world for 1,128 days. They are currently living like royalty and surrounded by palm trees.

This post explains exactly how Brandon spends his time over one week…

Have you implemented The 4-Hour Workweek with your family? If so, please let me know in the comments!

Enter Brandon

Three years ago, I’d already moved abroad with my family, automated my businesses, and was living the 4-Hour Workweek lifestyle. At one point, I decided to track every minute of every day for one week to help me visualize how much time I was spending on what really mattered to me.

Many people seem to think that if you only have to work a few hours per week, you must be spending the rest of your time relaxing in a hammock drinking piña coladas. I mean, what else is there to do? Actually, everything!

As you’ll see, I do spend my fair share of time relaxing, being with family and friends, and even doing “nothing.” But I have plenty else to keep me busy, and I enjoy the freedom to adjust my activities according to my changing interests.

While it takes some effort to track each minute of every day, when I’ve done so, I’ve found it helps me be aware of what I’m doing in the moment, and I feel less pressure while doing tasks I don’t enjoy. I also realize that time will keep moving on, no matter what I do. As long as I’m enjoying life, growing, and helping others where I can, I feel like I’m living my life well.

With that introduction, here is one full week of my life, organized by task.

Disclosure: Even though these tasks are recorded to the minute, they’re not always accurate to the minute. Sometimes I forgot to switch my timer right when I switched tasks, so had to modify it later with a little guess work. Being off by a few minutes for several things has led to being off by a couple hours overall. But it will have to do. For this exercise, I used SlimTimer, a free on-line time tracking tool.

Work Time

I define “work” as activities done specifically to help produce income. This week I “worked” a little more than usual because I was getting some video tutorials written for one product, and launched a special offer with another. I also planned some important new features to work on next. For me, it’s normal for this category to be under 5 hours per week total.

– Business: Music Teacher’s Helper: 5 Hours, 18 minutes. This includes advertising/marketing (1:35), checking programmer’s work (1:30), customer support (0:48), and the rest in business planning, finances, and checking stats.

– Business: Studio Helper: 2 hours, 1 minute. This includes working on video tutorials (1:27), business planning (24 min), and the rest dealing with feature requests and checking stats.

– Other: 33 minutes. This includes times spent researching a new business idea.

Total Work Hours: 7 Hours, 52 Minutes

Update: I’ve since hired more programmers and support staff, a project manager, and a marketing director, so I’m doing different tasks, but still working about the same amount of time each week.

[Note from Tim: Before you literalists scream “But that’s more than four hours per week!” read the book for context. Greatly simplified, the goal is to increase your current per-hour output 10x.]

Family Time

One of the things I like most about my lifestyle is that I have so much time to spend with my family. We’re together pretty much all day, even if we’re not doing the same thing. Meals, driving, and time with others outside the family are under “Personal Time.”

– Playing with kids: 11 hours, 32 minutes. I try to play with my kids a little every day. Much of this is computer or iPad games with one daughter while my wife is doing homeschool with the other one. But it also includes reading to them, playing hide and seek, “restaurant” and other imagination games.

– Watching Movies: 6 hours, 51 minutes. We watched a few movies with the kids this week, in the evenings, including the 1969 Doctor Dolittle, and Tarzan in Spanish.

– Family Outings: 5 hours, 15 minutes. This includes a little hike up the mountains behind our house, and a trip to the park to ride ponies and bicycles. We also spent time together with our friends, which I’ve included in the Personal: Visiting with Friends section.

– Talking with Wife: 3 hours, 56 minutes. Jen and I enjoy just sitting and talking, as well as reading together.

Total Family Time: 27 hours, 34 minutes

Update: My kids are older now (9 and 7), and we have another baby who is almost two years old. Our two oldest daughters attend a homeschool group most weekdays. And we now enjoy the services of a full-time nanny, housekeeper, driver, and chef. Consequently, my wife and I get more time together, we each get more personal time, and we enjoy different types of activities with our kids.

Personal Time

Even though it looks like I have lots of time left over for myself, I don’t feel like I have much “free time.” I guess that’s because I try to fill my time up with things that I like to do and am passionate about. I still have a full to-do list, and do spend time on things I’d rather not, but I try to work on the most important items first each day. Overall, I’m doing what I love with the majority of my time.

– Sleep: 57 hours, 21 minutes. That’s just over 8 hours per night. This week, we’ve been sleeping in a different room where the sun hits us warmly every morning around 6:30 through the windows. It’s not conducive to sleeping in, but is a very relaxing way to get up.

– Visiting with friends: 11 hours, 22 minutes. We had some friends over for a late lunch one day this week, and we spent an afternoon out with another friend.

– Meals: 11 hours, 2 minutes. We ate out a lot this week (almost every day), and took time to enjoy our food. The meal with our friends is included under “Visiting with friends”.

– Reading: 9 hours, 8 minutes. I have some really interesting books I’m reading right now, although half of this time was spent reading articles and blogs on-line.

– Personal Email: 8 hours, 13 minutes. I had a LOT more time-consuming email than usual this week. I’ve been getting lots of emails from people starting businesses who want advice. I’ve enjoyed being able to help people in this regard. Maybe soon I will have to start charging for consulting and move this into the “Work” category.

– Writing: 4 hours, 31 minutes. This was time I spent working on my new book about how to create an online business. I suppose this could also be considered “Work” since I will eventually sell the book, but that’s not my main purpose in writing it.

– Daily Hygiene: 3 hours, 27 minutes. It’s amazing how much time this takes. But I do love a hot shower.

– Sex: 3 hours, 9 minutes. No, it wasn’t all at once.

– Meditating and spiritual time: 2 hours, 41 minutes. I have a great place to sit for my morning meditation overlooking the hills and the city view. Very relaxing.

– Finances: 2 hours, 3 minutes. This is higher than normal because I’ve been working a lot with my accountant trying to figure out taxes, and have been looking at other investment opportunities.

– Exercise: 1 hour, 47 minutes. This includes my daily stretching and tai chi, and a little weight lifting. This doesn’t include all the hiking and walking we did as a family this week.

– And I spent anywhere from 10 minutes to 1 hour, 30 minutes on each of the following: cleaning and organizing, house maintenance, driving, facebook, games (pool, and angry birds), journal, playing the piano, shopping, time tracking, vacation planning, writing on my blog, and selling stuff on Craigslist.

Total Personal Time: 128 hours, 52 minutes

Update: About a year ago, I started charging $150/hour for consulting and it reduced my email while increasing my income. I’ve also put my book on hold for the time being. And these days, I’d probably count “Finances” as “Work,” since it’s income related. Lately, I’ve been spending more time meditating, reading, and journaling, and am learning more about myself in the process. I’m also taking Qi Gong (Chi Kung) lessons, learning the guitar and ukelele, playing in a small band, studying dreams, and experimenting with connected breathing and emotional awareness techniques to help me be more present to enjoy each moment fully.

How to Improve In the Future

Now that I’ve gone through all the effort of tracking my time for a week, it would be a shame to simply write a blog post about it and not use the data to see where I can improve. In the weeks ahead, I would like to make the following changes:

– More time with my wife, especially reading and talking with her.

– More family time together with the kids at home. We spend a lot of time together outside the home, but when we’re inside, we tend to do our own thing. I also want to take a more active role in homeschool, helping the kids with their blogs, music, as well as math and reading, etc.

– More time working on my book. I’m excited to complete this project and hopefully it will help a lot of people looking to create a business.

– Less time reading online. I want most of my reading time to be focused and intentional, not jumping from item to item.

– Less time on email. I had built up a practice of checking email just twice a day and leaving it alone the rest of the time. But I didn’t follow that so well this week, and found my productivity waver because of it.

Update: I definitely spend more time with my wife now, but probably less with my kids. I’ve stopped working on my book, but have put more time into other interests. My reading is more focused now, and I spend less time on the computer. I still think I have too much email, but most days I can get it all done in one sitting.

Have you ever tracked your time? If you’ve ever charged per hour, chances are you’ve tracked your time working, but have you ever measured what you’re doing with the rest of your time? Yeah, maybe it is a bit fanatical. But I think there is value in it at least every once in a while. If a week seems like too much, even tracking your time for a single day can reveal insights and help you see areas you want to improve.

I’m interested to hear your thoughts below, and what changes you’d like to make in how you spend your time.

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[Note from Tim: An older version of this time table originally appeared on Brandon’s outstanding blog. If you liked The 4-Hour Workweek, you’ll enjoy his personal stories of entrepreneurship, travel, and more.]

The post Case Study: What Does a Real 4-Hour Workweek Look Like…With a Family? appeared first on The Blog of Author Tim Ferriss.

Photo: 401K.

The following article is a guest post by Chris Guillibeau, who’s traveled to 150+ countries and studied more micro-businesses than anyone I know. I hope you love this piece as much as I did. Enjoy!

Enter Chris

Over the past several years, I’ve been on a quest to study micro-businesses—small operations (typically one person) that make $50,000 a year or more (often a lot more). The quest took me all over the world, at first to a large group of 1,500 “unexpected entrepreneurs” who volunteered to share their stories in detail.

I wanted to hear from all kinds of businesses–both offline and online–to decipher what made them so successful. How did they get started? What helped them grow into significant, reliable sources of income? How can you increase odds of success?

After much effort, a small team and I narrowed down the case studies to a subset of 70 that I focused on for final analysis. All 70 people had created freedom for themselves: new income and a completely new way of life. There are formulas.

Here is a highly-condensed list of 17 lessons learned…

The 17 Lessons of $100 Start-ups

Note: Links show the businesses in action.

A gap in the marketplace reveals a business opportunity.

Gary Leff used his Frequent Flyer Miles to travel all over the world in First Class, and his friends kept asking for advice. Almost on a whim, he decided to launch a basic website offering the service of booking travel awards for a fee.

His service is something that people could do on their own for free—but plenty of people don’t know how it works or just don’t want the hassle of dealing with airline call centers. This “side business” now brings in more than $100,000 a year.

Lesson: Provide results (photos, testimonials, details of your own experiences) and offer to do something for people that they don’t know how to do or don’t want to worry about.

Latch on to a popular service, then simplify it for others.

Self-described “professional nerd” Brett Kelly wrote Evernote Essentials, the first English-language manual for the popular Evernote software. Brett was hoping for a $10,000 payday over the course of a few months—enough to pay off some bills. Instead, he received $10,000 in two days… and then the sales kept coming.

Originally conceived as a hobby that Brett worked on during nights and weekends, Evernote Essentials now earns more than $160,000 a year in net income. Here’s what Brett says about the results: “The unreal success of this project has not only freed our family from a decade of debt and financial instability, but has also given us the freedom to pursue the kind of life we want.”

Lesson: Simplify things and cash in. Brett developed a comprehensive resource with lots of screenshots and detailed, highly actionable tips. More than 10,000 customers later, it’s still going strong.

Don’t beg your friends for money!

You probably don’t need any outside investment to begin. The vast majority of respondents in the study started their business for less than $1,000, and nearly half for $100 or less. In Vancouver, Canada, Nicolas Luff started with only $56.33, the cost of a business license. Others started only with a domain name and a free WordPress account.

It wasn’t just online businesses that started on the cheap. Michael Hanna started an unconventional mattress store after being laid off from his job in media sales. A friend of his who owned a furniture store offered him an unwanted truckload of mattresses, figuring that Michael could sell them one at a time on Craigslist. Instead of Craigslist, though, Michael found a car dealership that had recently gone out of business. He was able to rent the space at a huge discount, and he opened his first store while learning on the job.

Even though Michael originally knew nothing about the mattress business, three years later Mattress Lot produces more than $1 million in revenue.

The chart below illustrates the average startup cost from the businesses we examined.

Image Credit: Mike Rohde.

Note: I sometimes hear from people who say that not all businesses can be started on the cheap. This is true. If you want to open a factory, you might need more than $100. If you want to found a VC-backed tech start-up, you might need to woo investors. But the point remains: you can start many different kinds of businesses without going into debt. All things are equal, why not take that route if the costs are low?

Lesson: Whenever possible, start quickly and start cheap. (And most of the time, it is possible.)

If you do need money, you can find a way.

Emma Reynolds had an idea for a consultancy that would work with big companies to improve their staffing and resourcing. She calculated that she would need at least $17,000 to start the new firm. There was just one problem: Emma was 23 and unlikely to get a business loan.

Emma and her business partner Bruce realized that despite this, they could probably get a car loan. Bruce proceeded to do just that, borrowing $17,000 for a car and then investing the funds in the business with Emma instead. They paid back the car loan within ten months, and the bank never found out that there was no actual car. Now the profitable firm employs twenty people and has multiple offices in four countries.

Another example: Shannon Oakey was turned down for a small bank loan despite excellent financials and a strong business plan. Shannon took her business elsewhere: to Kickstarter, where her project was fully funded. Shannon printed out a copy of the final results and mailed it to the loan officer who had rejected her—with a lollipop inside the printout.

Lesson: If you really need a loan, don’t take “no” as the final answer. Consider alternatives. Bootstrap. Hustle. Figure it out. (Note: Borrowing money for a non-existent car is at your own risk!)

Get to the first sale as quickly as possible.

Nick Gatens put up a portfolio site for his photographs and sold a $50 print for the first time. What’s the big deal? When you’ve never sold something before–i.e. never had a stranger comes to your website and hands over their credit card–the first time is flooring. Here’s what Nick said:

“It took me a long time to add the order button on my site. For a while I kept blaming it on technical issues—a WordPress glitch, the need for design improvement, and so on. Finally I realized I was waiting for no good reason. I put the offer out there and made a sale. It felt great!”

Lesson: Does your site have a PayPal button on it? If not, add one today!

A trend or controversial idea can also reveal a business opportunity.

Jason Glaspey was a follower of Paleo, the controversial diet that is both loved and ridiculed. Jason noticed a common problem among fellow devotees: because of the requirement for regular shopping and planning, Paleo was hard to follow on a regular basis.

Jason created Paleo Plan, a membership site that offers shopping lists and ongoing guidance. The goal of Paleo Plan is to keep its customers on track, with detailed shopping lists and ongoing recommendations. The project now brings in more than $5,000 a month.

Lesson: When large groups of people love and hate something, it’s a good sign there’s a business model hiding in plain sight. Get paid by making things easy for the people who love it.

You can be one person… or maybe two.

Nathalie Lussier had lost weight and discovered a new way of life by following a raw foods diet. She then set up a successful business teaching people how they could do the same thing, using webinars, courses, and personal coaching. One of the tipping points came when Nathalie discovered that the initial name she had chosen, Raw Foods Switch, could also be rendered Raw Foods Witch. Nathalie jumped into character, dressing up with a broom and pointed black hat.

Within a year, the business grew to more than $60,000 a year in net income. What’s not to love? Just one thing: Nathalie liked raw foods, but that wasn’t all she liked. She was also a programmer who had set up the entire database and backend operation for Raw Foods Witch. She wanted to put those skills to greater use, and she felt like she could help aspirational entrepreneurs build their business.

Instead of shutting down the raw foods business, however, Nathalie put it on auto-pilot, using auto-responders and repeating webinars to essentially market the business on its own. Then she switched over to a new site, NathalieLussier.com, where she offers specific consulting services based on business-building and technology.

Nathalie now earns a good living from both businesses, with RawFoodsWitch.com essentially running on its own as she focuses her efforts on the new site.

Lesson: Clone yourself for fun and profit. It’s not necessarily about doing more, it’s about being smart.

Notice what frustrates you, then figure out a way to correct it. [TIM: This is my business model for almost everything]

In Portland, Oregon I met Sarah Young, who opened a yarn store at the height of the recession despite no business background. When I asked Sarah, “What made you think you would succeed?” her answer was astute.

“I wasn’t an entrepreneur,” Sarah said, “But I was a shopper. Other yarn stores were cramped and unfriendly. There wasn’t really a space you could go to hang out. I knew I wasn’t the only knitter who felt this way, so I decided to create an alternative.”

Sarah followed up, renting retail space and decorating for the grand opening of Happy Knits, a welcoming space for knitters and their families. The last part was important: most (though not all) knitters are women, so Sarah set up a play area for kids and a WiFi area for non-knitting partners. Customers are welcome to stay as long as they like.

You can see Sarah and hear more about Happy Knits in this video trailer.

[Note: in the trailer, Sarah tells the story of her first $1,000 day. We filmed this a few months ago, and when I recently caught up with her, she told me about the store’s first $10,000 day. Business is great and Happy Knits now has six employees.]

Lesson: See something missing? Maybe you’re not the only one. Pay attention to inefficiencies, which may be opportunities to provide something better.

To make an extra $35,000 a year, be open to change.

One of the most insightful stories came from a source who preferred to be anonymous, a gent who tweaked a single variable in his sales page. Everything else was constant:

On one sales page I had $49, and on another $89. Nothing was different at all—same copywriting, same order process, same fulfillment. To be honest, I thought that $49 was a better price, but I had set that price somewhat arbitrarily. Guess what? Conversion went down [for $89]… slightly. But overall income actually increased! …

I then decided to test it at $99. Why not, right? But from $89 to $99 I saw a bit more of a drop-off, and I got worried. I’m now back at $89, and even with the lower conversion factored in, I worked out that I’ve given myself a $24 raise on every product that sells.

These days we are selling at least four copies a day. If everything else remains consistent, I’ll make $35,040 more this year . . . all from one test.

This single, unexpected tweak resulted in more than $35,000 a year in net income. His last words to me were: “I’ve decided to try some more tests.”

Lesson: Test everything. If you’re not good at testing, however, at least test pricing. [TIM: Here’s one helpful tool you might get obsessed with: Unbounce.com]

Give them an offer they can’t refuse.

What separates a decent offer from a compelling offer that you simply must purchase? I learned this lesson in Anchorage, Alaska, when I talked with Scott McMurren, co-founder of Alaska TourSaver, the leading coupon guide for visitors coming to Alaska.

Scott explained how it worked. Every year, more than a million visitors head to the frontier state, and many of them travel independently. Alaska is a beautiful place, but it’s also expensive. To keep costs down, Scott worked with hotels, restaurants, and tour providers all across the state. He put pressure on them to provide real savings instead of the usual minor discounts that other coupons offered. (In the TourSaver guide, most deals are Buy-1-Get-1-Free or 50% off.)

Then Scott make an important decision: instead of pricing his coupon book for twenty bucks or so, like some competitors did, Alaska TourSaver would sell on an annual basis for just under $100. Because the deals are so valuable, it’s a no-brainer for most travelers to pick up the package. Scott’s pitch is: “Get this coupon book, use it once, and it will pay for itself. Then you’ll have hundreds of additional coupons to use as well.”

Lesson: Make your offer so compelling that buyers have no reason to say no. Give them an offer they can’t refuse. (Bonus tip: every compelling offer includes an element of urgency, the reason why buyers should take action right now. “Supplies are limited! Don’t wait!”)

Give people what they want (not just what they say they want).

Kyle Hepp is a wedding photographer who travels the world from her home base in Santiago, Chile. Kyle’s clients tend to be young and hip, and they’re drawn to her work because it is non-traditional. Sometimes they even say they don’t want any traditional wedding shots. “We’re not into old-school,” was how one couple put it.

Kyle agrees with them and spends her time at the wedding getting fun, candid shots that she knows the couple will like. But that’s not all. Having done this for a while, Kyle knows that what her clients want and what they say they want may be different—and she also knows that the families of the bride and groom may have preferences of their own. Here’s how she handles these competing desires:

On the day of the wedding, I’ll grab them and say, “Let’s get your family and just do a couple of traditional shots.” I’ll make it quick and painless. I make sure everyone is laughing and having a good time and it’s not those awful, everybody-stare-at-the-camera-and-look-miserable kinds of shots. And then after the wedding, when I deliver those photos, either the bride and groom’s parents will be thrilled to have those pictures (which in turn makes the couple happy), or the bride and groom themselves will end up saying they’re so happy that we did those shots.

Kyle goes above and beyond by giving her photography clients what they really want… even if they hadn’t realized it themselves.

Lesson: Dig deeper to uncover real needs. Give people what they really want.

Put happiness in a box and sell it.

What do people really, really want? They want something positive added to their lives or something negative removed. The best microbusinesses do this in different ways—making it easier to travel the world, for example, or making customers feel special. But when you talk with business owners, many focus on the descriptions of their business instead of how their product or service will actually help people.

Consider these different approaches in explaining the mission of the V6 Ranch, an unconventional vacation destination in Parkfield, California:

Descriptive (Boring): Our business enables visitors to ride horses and sit around the campfire.

Benefits (Inspirational): Our business helps visitors be someone else for a day. The message we try to send is “Come stay with us and be a cowboy.”

Isn’t the second option so much better? Sell happiness (benefit) instead of merely describing your business (features).

Lesson: As much as possible, focus your business messaging on adding something positive or removing something negative from customers’ daily routines.

Forget traditional demographics. Focus on psychographics instead.

In Arcata, California, Charlie Jordan and Mark Ritz teamed up to start the Kinetic Koffee Kompany. They had great coffee, but that wasn’t enough—these days, there are plenty of small businesses making great coffee.

What set the Kinetic Koffee Kompany apart was their target market: they focused specifically on the outdoors community, pitching bike shops and “gear retailers” on carrying their stock. They showed up at races and made a name for themselves among groups interested in active hobbies. Instead of competing with Starbucks, Charlie and Mark made their own market.

Lesson: Figure out who “your people” are and serve them. Don’t group them according to traditional demographics unless you have a good reason to.

Offer a “no pain, all gain” refund option to build confidence.

Nev Lapwood was a snowboarding instructor who created a set of instructional DVDs that sold around the world. Nev had a good business model almost from the beginning, but he decided to kick it up a notch, offering to refund his customers 110% of their purchase price if they didn’t like the product. Sales increased, and Nev applied the same approach with foreign translations of his DVDs.

I asked Nev if this had become a problem with people requesting habitual refunds. His response: nope, not at all. The business now produces more than $240,000 a year in net income.

Lesson: Build trust by making it easy to trust you. Offer a strong guarantee, and don’t make people jump through hoops to get a refund.

[TIM: 110% sound familiar? Check out the below. Congrats again, Nev!]

“Marketing is like sex (only losers pay for it).”

This quote, originally from a 2010 Fast Company article, aptly describes how the roles of marketing and paid advertising have changed. The vast majority of business owners I surveyed had built their customer base without any paid advertising at all. Instead, they did so largely through word of mouth.

I tested this hypothesis through my [Chris] own $10,000, Ten-Hour “Marketing and Sex” experiment—placing a series of paid ads for a travel service I operate and comparing them to the efforts of “hustling,” or connecting with friends and readers in a free, organic manner. The results were clear: I made far more money through the hustling efforts than through the paid advertising methods.

Lesson: If paid advertising proves to work for your business, by all means, don’t quit. But before you go down that road, consider “hustling” instead—the gentle art of self-promotion, and making something interesting that others will be eager to share for free.

Plan your product launch long in advance, and make people line up to purchase.

Like a Hollywood movie, you want to build anticipation before launching anything. Use the “dark and stormy night” approach to tell stories and lead people into a great experience—not just a sale.

Adam Baker and Karol Gajda’s Only72.com project illustrates this concept well. Twice a year, they line up affiliates and partners to push through a megasale of discounted online products… for only 72 hours. Each sale produces a six-figure payday for Adam, Karol, and the affiliates—because they’ve learned to build anticipation.

Free bonus: wondering how to launch your first product? Here’s a 37-Step Product Launch checklist. Pay it forward by making a great product or service and launching well.

Lesson: Get people excited! Then give them what they want.

Turn disaster into recovery—then sell recovery.

Ridlon “Sharkman” Kiphard was on an island in Fiji, operating his first big tour for Live Adventurously, an alternative tour operator for those who like to play hard. The first half of the trip had been great, but then the call came: the chief of the neighboring island, which they were scheduled to visit the next day, had died. His death called for a mandatory 100 days (!) of mourning. Suddenly, Sharkman had nine high-paying guests… and nowhere to go.

In Sharkman’s words, here’s how the story unfolded:

“This was when doing our research earlier, and really knowing the area, paid off. We managed to extend our stay where we were by one night and spent the time feverishly cobbling together plans. We chartered an aircraft; contacted numerous hotels, resorts, and dive operators; got recommendations; did some more research; and booked the group into a newly opened property on a remote island. The transition went smoothly, the entire rest of the trip came off without a hitch, and it was as if it had been planned that way the entire time.”

Over and over, I heard stories like these—of how an impending disaster turned into a moment of strength. In Sharkman’s case, his guests were highly impressed with how the team managed the problem. Some of them offered to pay extra to cover the additional costs incurred with the change, and all went on to provide strong referrals for Live Adventurously.

Lesson: Stick it out! (Bonus: The value of failure is overrated. Everyone always wants to know about failure because of some convoluted theory that you must fail more often than you succeed. “You learn more from your mistakes…” etc. Why not succeed from the beginning? Some people do. [TIM: In other words, learn from other people’s mistakes instead, when possible.)

***

Wrap-up: Your Turn

The constant themes in our study were freedom and value: freedom is what we all want, and value is the way to achieve it. Over and over, I found business owners who had created their own freedom (and a great income) by making something useful and desirable for their customers.

It’s easy to think that these are isolated examples, or that you can’t achieve the same results, but the micro-business phenomenon is happening all over the world in different ways.

Follow the path of these stories and make actionable plans. Pick one thing, get it on the calendar, and do it in the next week. Just do something.

Lesson: Don’t kill the dream! Live the dream!

###

Odds and Ends:

– If you have enjoyed the muse example series in the past, you will love Chris’ new book, The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future.

– If you’re interested in product launches, check out this oddly named (cough, cough, scratch head, scratch head) piece in Forbes: The Tim Ferriss Effect.

– Are you a writer, or an aspiring writer? Read this: “How I Went From Writing 2,000 Words a Day to 10,000 Words a Day.”

The post Six-Figure Businesses Built for Less Than $100: 17 Lessons Learned appeared first on The Blog of Author Tim Ferriss.

Tobi Lutke, CEO of Shopify. How did they turn a $100,000 prize into $12,000,000 in transactions?

In the world of magazine articles, one of my all-time favorite headlines is “Anything You Can Do, I Can Do Meta” from the MIT Technology Review, a feature about billionaire programmer, Charles Simonyi. Charles designed Microsoft Office and is outstanding at looking at programming as different layers of abstraction.

How can we raise our perspective from 5,000 feet to 30,000 feet to learn a few things? This post will do that with competitions.

Today, Shopify, a start-up I have advised since 2009, announced the winners of their Build-a-Business Competition, featuring a grand prize of $100,000 cash. Winners were determined by combining their two highest-revenue months in an 8-month competition window.

I want this post to show two things, and the second is where meta comes in:

1) How the competition winners won and key lessons learned in taking their products from ideas to profitability. This includes manufacturing, marketing, PR, and just about everything in between. I’ve looked at these types of lessons before.

2) How Shopify has used these competitions to build their own business several-fold and cross the chasm from early-adopter to mainstream. This is something I’ve never written about…

To avoid any linguistic nitpicking, I’m using the definition of “meta-” from Wikipedia:

Meta- (from Greek: ???? = “after”, “beyond”, “adjacent”, “self”), is a prefix used in English (and other Greek-owing languages) to indicate a concept which is an abstraction from another concept, used to complete or add to the latter.

Let’s address creating competitions first and winning them second.

This post might have a few typos in it, as I’m at the hospital with family. If you like, please point them out in the comments and I’ll do my best to fix them.

Creating a Competition Yourself

Let’s look at the stats first, and then lessons learned.

THE FIRST COMPETITION

Tobi, Shopify’s CEO, and I hatched plans for the first Build-a-Business competition over the phone in 2009. It was announced in December 2009 on my blog, and–as you can see from the afterword and scrambling in the initial post, which I suggest you read–it wasn’t perfect.

The imperfection didn’t matter, as nothing is perfect the first time, especially if you’re ambitious. The protocol is: ready, fire, aim. But when the competition wrapped up, despite the bumps, Shopify had made leaps across the board:

– From a revenue standpoint (for Shopify), they’d killed it, right alongside their competitors. Here are some stats:

Revenue PER HOUR for the duration of the contest (180 days): $696.38

Total number of people competing: 1,819

Total number of orders placed: 66,503

– From a media standpoint, they’d jumped from niche to mainstream, including The New York Times.

– Larger, more recognizable brands, like GE and Angry Birds, suddenly chose Shopify as their e-commerce platform, even though these companies could afford custom solutions.

– Shortly after the competition closed, Shopify was able to secure $22 million in Series A and B funding from world-class firms like Bessemer Venture Partners, FirstMark Capital, Felicis Ventures (Hi, Aydin!), and Georgian Partners. These funds were then used to accelerate expansion, as Shopify was already profitable. Funding isn’t just for floating the boat, keep in mind; it can be used to add rocket fuel to a successful launch.

– This leads us to 2012. In February, Shopify was named one of Fast Company Magazine’s top 10 most innovative retail companies in the world.

THE SECOND COMPETITION AND LESSONS LEARNED

Flash forward to the new competition, which was made international (3 of the 8 winners were Australian), and you can see both huge growth and a fascinating trend:

– 3,060 competitors (versus 1,819 in 2010)

– More than $12,000,000 worth of products sold (almost 4x the $3,543,191 in 2010)

– Closely related to the preceding point: Average sales per store were up 56% compared to 2010. Why? Shopify dramatically improved their educational and support efforts this time around.

The trend? Three of the winners–Coffee Joulies, Neu Year, and Opena Case–used Kickstarter to raised funds for manufacturing, and all of them exceeded their fundraising goals, some by miles. Joulies, for instance, aimed for $9,500 and raised more than $300,000! Kickstarter and similar tools were the focus of my recent post, “Beyond X PRIZE: The 10 Best Crowdsourcing Tools and Technologies.” It’s fun to see these services and technologies converging to create companies.

More on that later, but let’s look at some of what Shopify learned through this all. For instance: what type of lawyers do you need, if any? What are the pitfalls? I asked them to find out.

– What were your primary lessons learned in the first competition?

“We learned in the first contest that just announcing a contest and giving out prizes wasn’t good enough. This year, we used social media to help promote our new shops and to bring truly educational content to them. It paid dividends. Mentorship was a major focus of this contest (Tim Ferriss, Seth Godin, and Gary Vaynerchuk).”

– What type of lawyers or other help did you need, and how did you find them?

“The laws concerning contests are different in every country, even in different states. Contest rules are a legal contract between the contest sponsor and anyone who enters the contest, so they should be taken seriously. The potential downsides of mistakes include lawsuits and more.

We found our first lawyer by looking for thought leaders. We read articles written on contest law and contacted the authors who were lawyers. Since were on a budget, we looked for sole practitioners instead of big firms.

For a simple contest, you can go through a ‘Contest Fulfillment company’ that can use their lawyers to draft the rules, oversee the process, and “audit” everything to ensure the winners are not committing fraud or breaking the rules. If you’re sending materials to contestants (e.g. we sent books to everyone), such a company will also do the mailing, etc.”

– Above the prize amounts, what costs should start-ups expect to incur? What unexpected expenses did you guys experience?

“Legal expenses, especially when doing multiple countries, adds up really quickly. If you have all your details figured out before going to your lawyer to draft the rules, you save a lot of time, which equals money. Even a minor change costs a lot when it’s done by a $500/hour lawyer.

We offered a lot of travel prizes during this contest, so you have to estimate those costs carefully. This isn’t easy because you don’t know where your winners will be from and how much hotels and flights will cost. We also gave away thousands of books to people who entered the contest.

It turned out that these were much more expensive to ship than we had originally thought, especially to Australia. Next time, we would probably focus more on e-books and digital goods.”

[Notes from Tim: This is why specifying if you’ll accept contestants from outside of your own country is critical. Constantly ask yourself: “What could go wrong here? If I wanted to game this, how would I?” and run through a hypothetical sign-up in your mind. Where will users be confused, or ask “Now what?” For example, if you have a submission deadline, have you listed the time zone? What do you do if someone has a tech problem (server issue, WordPress issue, whatever) with submission outside of their control? Try and cover as many of the what-ifs as possible in your rules so people don’t get upset.]

“When it comes to prizes, money isn’t always the biggest motivator. Anyone can write a check. Look for prizes where perceived value is greater than actual cost. In our contest, we are gave away a dinner with Tim Ferriss, lunch with Seth Godin and a meeting with Gary Vaynerchuk. These are literally priceless things that people can’t get on their own.”

– Any other tips for people wanting to hold their own competitions? Warnings or otherwise?

“Know what your objective is. For us, it wasn’t primarily about getting media attention, for instance. That was a fantastic side-effect, for sure, but our main goal was to attract customers who wouldn’t have come to us otherwise.

Consistent support and info sharing is also critical. Just bribing people to do big things often isn’t enough. Building a community where people could share best practices is what made 2011 so much bigger than 2010.

If you’re offering a large prize, definitely consult a lawyer specializing in that area, and most big firms will have a few.”

Winning Competitions

Let’s look at this year’s winners, what they did right, and what they did wrong.

Grand Prize Winner: Coffee Joulies

Who are you and what is your Shopify store?

Dave Petrillo and Dave Jackson, owners of joulies.com

How did you decide on your product? What ideas did you consider but

reject, and why?

Coffee Joulies was just one of an unending stream of ideas we would

toss back and forth over gchat while avoiding doing actual work at our

jobs. What was different this time is that we put our foot down and

said enough was enough. A Joulie is made of two parts: the shell and

the filling. It was the simplest idea we had ever come up with. We

decided it was time to step up and actually make this idea a reality.

There was no way we were going to create an entire business without

figuring out whether people would want the product first. We focused

on rapid prototyping for proof of concept and then manufacturing

alpha-stage Joulies ourselves to see if people would actually buy

them. The goal was to get Joulies into the hands of customers as fast

as possible and let them tell us whether or not they liked the

product, ignoring all the other flapping heads who love to shoot down

ideas to make themselves feel better.

We put up a website and offered Joulies for presale, and pretty much

nothing happened. How do you attract customers to buy a product that

has never existed before? We needed a way to tell the world about our

idea. Kickstarter was our soapbox. We launched Coffee Joulies on

Kickstarter during April of 2011 and ended up getting funded 3,230

percent over our goal from 4,818 backers in 57 countries. It was clear

that we had a hit product on our hands. After fulfilling our

Kickstarter orders we turned to Shopify to build Coffee Joulies into a

business.

What were some of the main tipping points (if any) or a-ha moments?

How did the tipping points happen?

The first tipping point for Coffee Joulies occurred on day two of our

Kickstarter campaign. We had emailed Uncrate, Gizmag, and Gizmodo with

a press release and high resolution images hoping one would pick up

our story. All three posted about us. Next on our list was TechCrunch,

but before we could email them we found out they’d already picked up

our story. We were viral.

The second tipping point came after Dave and I read “The Lean Startup”

by Eric Ries. We were on the verge of jumping into a number of large

batch processes, like an expensive website deployment and a $60,000

progressive die purchase. In the context of “minimum viable product”

(MVP) it became painfully obvious that these big, enticing projects

were not the way to go. Ever since then our focus has been on reducing

cycle time and closing the feedback loop. It has fundamentally changed

how we do business.

The third tipping point came as we wrapped up Kickstarter fulfillment

in November. With MVP on our minds we used a bone version of the

simplest Shopify template that was available to create our website. We

learned a lot as we released the Gift Pack at $100 and then the Set of

5 at $50, and we had it timed so well that we sold out of everything

at 9am on the last day that orders could be placed and still be

delivered in time for the holidays. What more could we want?

What were your biggest mistakes, or biggest wastes of time/money?

We underestimated the amount of time it would take to fulfill our

Kickstarter orders by about a factor of five. We spent a huge amount

of time in central New York solving manufacturing problems at the

factory. During that time we definitely could have spent more time

honing our marketing message and performing A/B testing while the only

thing we were selling was an opt-in to our email list.

We were extremely careful with our money from Kickstarter because we

knew it had to last until all of the orders were fulfilled. That said,

we were tempted on a number of occasions by big-ticket items like

expensive manufacturing equipment, apartments in San Francisco, and

marketing firms. Looking back now we dodged quite a few bullets. The

money we made selling on Shopify came in so fast that we really didn’t have time to blow it. The majority was reinvested to build up

inventory once we learned we had won the Build-a-Business competition.

Key manufacturing and marketing lessons learned?

Key manufacturing lessons: The simplest idea you have will still be

extremely difficult to manufacture, test, and deliver to the customer

in a timely manner. It will also cost more than you think.

Key marketing lesson: At some point the free PR will dry up. Then what?

If you were to do it all over again, what would you do differently?

It’s hard to imagine doing this any differently than we did. We

approached all of our hurdles as learning opportunities and took them

one step at a time so we could find the easiest/fastest way to succeed

and then move on. The only big decision that could have really

changed things is if we had taken on an investor towards the end of

our Kickstarter campaign. There were plenty of times when we wished we

had extra capital, experience and manpower, but who knows where we

would be now if we had, for better or worse. The grass is always

greener.

What’s next?

Moving beyond the internet. Coffee Joulies look great online, but

really are amazing when you hold them in your hand. Also, plenty of

other drinks could use temperature stabilization…

Home Category Winner: Neu Year

Who are you and what is your Shopify store?

Jesse Phillips, designer and owner of neuyear.net

How did you decide on your product? What ideas did you consider but

reject, and why?

I’m a web designer, caught-up in the web-startup gold-rush. So, naturally, I have several web startup ideas. But, since this is my first startup attempt, I wanted to try something easy – something easy to make, inexpensive to test and simple for customers to accept or reject. So I went with the calendar: very easy and cheap to make prototypes, test them, easy to execute, setup Shopify, etc.

Also, with the recent buzz around productivity and productivity products, I thought a new productivity product would have a better shot. And seeing the success of Moleskine and Behance (essentially cooler tools for productivity) – I thought a cooler calendar would have some legs. Finally, since there’s not much competition in the calendar market, and I wanted one myself, I saw an opportunity in the market, and took it.

I have 49 other ideas that I rejected for my first venture because, although they are more sexy and potentially have broader appeal, they would require a lot of effort and cash to startup, and they are in crowded markets. The calendar seemed like the easiest, most simple opportunity for me grasp.

What were some of the main tipping points (if any) or a-ha moments?

How did the tipping points happen?

Since I have no money and I was wasn’t sure if this would work, I decided to do a test (like you suggested) on Kickstarter. We created a campaign to raise $5,000 – just enough to do our first print-run of 1,000 calendars and ship 200 of them to our backers. We were so excited and thought we had the perfect price point to raise at least $10,000. We BARELY made our goal of $5K. This was super discouraging. My mom gave a HUGE donation early on, without which we would not have made it, and that would have been it.

Fortunately, we made it. That was a small tipping point. The big tipping point was when we got on Fab.com. Before Fab, we had been selling for about a month online. In that time we had only sold about 100. It was slow.

When I sent a calendar to Fab it took them a little while to get back to me, but they liked it and wanted to do a run. I had no idea what to expect. I thought – “Ok, maybe we’ll sell 100, or 200 at the MOST.” 3 hours after we started the sale, we had nearly sold-out 400 calendars! They called me excited and asked for 400 more! This was one of the best feelings of my life – this established company was excited about the performance of my product on their network! Wow. It was then that I realized our product was viable (niche, yes, but viable).

Let me also say that it seems impossible that the calendar has sold as well as it has (not that it’s been overly amazing). I honestly believe that Jesus, who is in charge everything, has allowed it to work-out, and I’m thankful for that!

What were your biggest mistakes, or biggest wastes of time/money?

We are new to this, so we made several mistakes:

1. I just entered into an agreement with Groupon. The margins are very tight. From the way we were talking I was virtually promised to sell 10,000. I got caught up in the frenzy of it and made a deal with little to no margin on 5,000 and slightly better on 10,000. I’m looking at our sale right now and we’ve sold 1,700 Looks like we’re going to lose money, potentially thousands of dollars, if we don’t sell a lot in the next 24 hours.

2. We didn’t test our product with consumers enough, or at all. If we had, we would have learned what we learned shortly after launching: people want more than 1 box for the weekend. See, our calendar was aimed at businesses (I guess?) that would focus on the work week, so we put Saturday and Sunday in one box. I thought we were so innovative. Well, I’ve gotten over 100 emails of people wanting the weekend to be split out. And they want dry erase. We didn’t think of either of those. And we’ve probably lost at least 500 sales because of it. We should have really tested this with consumers before hand.

3. Didn’t research how to get into retail outlets. I’m only now learning how that is done and it seems we’re too late to get into retail outlets for 2013 (not 100% on this, but it seems like it).

4. Didn’t do enough research on printers, shipping, etc. We could be getting better pricing on stuff, I’m only now finding this out.

5. Didn’t market the product well – don’t really know how to do that. Paid for too much advertising that never turned-in to sales. And didn’t beat the pavement enough to get free PR on blogs.

Key manufacturing and marketing lessons learned?

Study the crap out of your manufacturing process, so you can find the cheapest way to do it and make sure the quality is good. Get samples. Understand what you’re doing. Plan better, so you can make good estimates and make more at one time. Do one run of 3,000 instead of 3 runs of 1,000 (duh!).

Marketing is tough! Be careful how you spend money. The best marketing is free word of mouth, and for us, relevant blogs. Like Gary Vaynerchuck has said, you have to crush it, find EVERY relevant blog, comment on it, read the posts, find the players on Facebook, email them, go, go, go, email, email, email, comment, comment, comment. Make friends. This is tough work. But it pays off big.

Turns out, one of our best sources of click throughs to our site has been Pinterest.com. Use google analytics, analyze that junk, figure-out where sales are coming from, who your target market is, and reach those folks. This is hard to do, and I suck at it, but our sales have been better when we do this.

Do a contest. One our most successful campaigns was a contest where you were entered to win a $20 amazon gift card, if you tweeted about the contest. We saw a large jump in sales around this time. It helped a tiny, nobody company like us get the jump in exposure we needed.

If you were to do it all over again, what would you do differently?

I would do more research on our product – making sure we had tested all the features with real people (the problem with this is we had lots of skeptics early on, so you can’t always listen to your critics – it’s a balance I guess). I would pound the pavement a lot harder before the Kickstarter campaign to try and drum-up support ahead of time – asking people to blog at specific times during our campaign.

I would have (and I should be) continually contacting influencers (bloggers, tweeters, media outlets) and sharing our product with them – to try and gain free “word of mouth” advertising – which seems to be our most cost effective mode of advertising (but I’m no expert).

What’s next?

We will be making a school year version soon. And we’re making a larger version for teams. Perhaps even making specific versions for Moms, Teachers, Churches, etc. I’ve got tons of other ideas (my enemy, I know). I’m inspired by Studio Neat’s products, and I have an idea for a simple tech accessory that everyone will want next year.

Other Category Winner: Opena

Who are you and what is your Shopify store?

Chris Peters and Rob Ward of openacase.com

How did you decide on your product? What ideas did you consider but

reject, and why?

Because of our backgrounds in design and tool making we knew we had the skills to design a product but we didn’t have the capital so we turned to crowd funding to help raise the funds need to produce it. Many late nights trawling successful kickstarter projects led us to the following:

– Impulsive price point of around $50, people have less objections to buying products around this price point, but it also meant that our particular product could be manufactured to a very high quality due to the low manufacturing costs.

– Had to be a suitable size for postage – after all we were going to be shipping these things world wide so we don’t want something the size and weight of a house brick!

– Wanted to piggyback off the back of another popular trend/product.

– Needed to fill a niche that had little competition.

– Had to have a unique feature that would make our product stand out from the crowd.

– Have a decent margin to allow for marketing, advertising, affiliates, wholesale, and promotion etc.

We rejected a few other ideas mainly because they were too complex, too expensive to manufacture and did not have the broad appeal of the Opena Case.

What were some of the main tipping points (if any) or a-ha moments?

How did the tipping points happen?

There we’re quite a few but three in particular stand out. The first was when we showed the final prototypes to people for feedback. When we asked for them to hand it back they asked if we wanted to sell the prototypes. When we explained that we couldn’t sell the prototypes they became very disappointed and were reluctant to hand them back, so right then we knew we had a product people wanted. The second was when we put the idea on Kickstarter and realized that lots of people loved the idea and we’re willing to put money towards it to make it happen. Nothing better than having your idea validated by people voting with their wallets. The third was when Ashton Kutcher tweeted about it to his 7 million followers!

What were your biggest mistakes, or biggest wastes of time/money?

Our biggest mistake was not having enough faith in our ideas from the beginning. We should have launched our own product years before we actually did it, although it would have been much harder without awesome businesses like Shopify and Kickstarter!!

Key manufacturing and marketing lessons learned?

Get your product right before you ship! Our original design has some flaws that we overlooked during prototyping. This costs us time and money as we had to modify the production tooling and change the design before we could start mass production and fulfilling orders.

Things always take longer than you have been quoted…always!!

Don’t underestimate the importance of packaging! Our original packaging was designed to keep shipping costs low, however, retails stores thought it looked cheap. This effected the initial uptake into retail stores but once we updated the packaging to suit the retail environment the stores and distributors started placing orders.

If you were to do it all over again, what would you do differently?

Jump in earlier, the only thing from stopping you from doing it is YOU. Get feedback from as many people as possible and let them figure out what you have overlooked. Don’t be afraid to take pre-orders but make sure you have your product ready to ship when the Ashton Kutcher starts tweeting about it!

What’s next?

We’ve formed a company (annexproducts.com) to allow us to continue to produce awesome innovative products. We’ve signed up a global distribution partner and we’re just about to hit the go button on production of our second product the Quad Lock Mounting System which is a revolutionary case based mounting system designed for the iPhone 4/4S. Once again we validated the idea on Kickstarter and using social media and we’re now taking pre-orders at www.quadlockcase.com which will be shipping in March.

Apparel Category Winner: FlockStocks

Who are you and what is your Shopify store?

Sophie Kovic, huge Tim Ferriss fan and owner of flockstocks.com

How did you decide on your product? What ideas did you consider but reject, and why?

I read the 4-Hour Workweek and carefully followed the steps. In the book it mentions using the Adwords Keywords Tool to find opportunities in your area of knowledge. I already had some understanding in the beauty section and so whilst searching in that general area I uncovered the rising trend of Feather Hair Extensions. The competition on that keyword was low and the global monthly searches were pretty high. I decided to test the idea. I set up a testing website using Weebly and made 11 “sales” in four hours! It proved it was a winner before I had invested any money, which was essential to me as I only had about $3,000 in my account at the time.

Some other ideas I looked into were pancake pans, bongs and tobacco pipes, nylon stockings and generators. I rejected each one after Adwords testing with test websites. None of them sold the way I’d liked and none of them were really areas I knew anything about. Although I still think the generators have potential I don’t like the idea of posting and storing heavy, bulky items.

What were some of the main tipping points (if any) or a-ha moments?

How did the tipping points happen?

My business was successful very quickly. It was due to the fact that I had no competitors on Adwords and as a result I got a big chunk of the marketshare just by being there and in stock. Competitors were finding it hard to find supply and all I had to do was be visible and I made sales. So the tipping point would only be marked at the point I came into supply and posted my Adwords ad.

What were your biggest mistakes, or biggest wastes of time/money?

The mistakes I have made I am still making! I try to employ the 80/20 principle but have been slow to apply it to my customer base. I have managed to secure some good distributors now but regret I didn’t start sooner. I’ve probably wasted a lot of money on using Adwords incorrectly too. But I’ve kept it pretty lean in most aspects, especially in terms of time. We spent 3 of the past 9 months in business on a mini retirement in Thailand. The book really taught me to trust people to do their jobs correctly. It was a great freedom. I probably could have stayed home to run the business and make it bigger and better over that period, but I was after the freedom at the time as we’d had a difficult couple of years.

Key manufacturing and marketing lessons learned?

Good blogging drove me lots of traffic for free. Certain celebrities were wearing feathers in their hair, so I blogged about them and it drove traffic to my site for months. Celebrity endorsements for products like mine are an amazing way to create interest. Somehow I got on a mailing list for a PR company that organizes celebrity events and it really opened my eyes to how it works and how little it can cost. I nearly put my feathers in the gift bags at the Golden Globes this year.

In regards to manufacturing, we didn’t really have much to do, more like plucking and packaging. This was about finding people I trusted and creating clear objectives, roles and standards. I found someone I trusted who understood what I wanted, then delegated, so all I did was the orders and the ordering.

If you were to do it all over again, what would you do differently?

I would secure distributors earlier on.

What’s next?

We are working to launch our new range of human hair extensions. We have created a grading system that makes it easy for the consumer to identify what standard of hair they are buying. The brand is called Lockstocks and will specialize in selling high quality human hair extensions to salons.

We also have a passion project in the pipeline, where we hope to help people recover from depression without medication. It is based on my partner Tim Butterfield’s research. We have written an eBook and are currently learning how to promote it.

Art Category Winner: Tattly

Who are you and what is your Shopify store?

Tina Roth Eisenberg, aka Swiss Miss, owner of tattly.com

How did you decide on your product? What ideas did you consider but

reject, and why?

I had the idea for Tattly one day in June of 2011 when I applied yet another hideous, badly designed, cheap temporary tattoo on my daughters arm. I simply told myself: “I can continue complaining about this or I can do something about it!” And I did. I took matters in my own hands, reached out to some of my wonderful designer friends to see if they’d be interested in designing tattoos. I had no idea but I opened floodgates. They all said yes and within hours I had first mockups in my inbox. I designed the site, built it and we launched mid July. The internets went crazy and on the second day we even got a call from a very prestigious store in London that asked us for a Wholesale catalog. Little did they know we *just* launched our site. It’s been quite a ride ever since.

What were some of the main tipping points (if any) or a-ha moments?

How did the tipping points happen?

Interestingly enough the tipping point was right during the first few days. It was obvious right off the bat, that the world was, in some sense, waiting for designy temporary tattoos. The excitement for Tattly seems unstoppable.

What were your biggest mistakes, or biggest wastes of time/money?

We haven’t had time to experiment much up until now, so no big mistakes come to mind. I am sure we will have plenty ahead of us as we grow the business. I feel like the hardest part is right ahead of us. We are only 7 months old and we now have to really figure out how to scale.

Key manufacturing and marketing lessons learned?

Find a manufacturer you love and that is pleasant to work with.

Make sure you have enough resources to offer immediate and personable customer support.

People *love* receiving packages that have a personal touch. We put real (and cool) stamps on our mailings and people go nuts over it, which often ends up in a tweet of the stamps.

Put some love into the design of the invoice, these things don’t go unnoticed.

Be prepared to be ripped off; protect your intellectual property from the start.

It’s never too late to reinvent an existing product.

If you were to do it all over again, what would you do differently?

I would (mentally) prepare myself for success. I started this project more or less as a joke with a side project mentality. While there is nothing wrong with that, I wish I would have built the website so it would scale better so I didn’t have to completely redesign and rebuild the site from the ground up 4 months later. Lesson learned.

What’s next?

Growing Tattly and getting it into lots of designy stores, all around the globe.

Food and Drink Category Winner: Simply Hops

Who are you and what is your Shopify store?

Eleanor Downes of simplyhops.co.uk

How did you decide on your product? What ideas did you consider but

reject, and why?

Simply Hops parent company has been supplying major brewers in the UK with Hops for many years. We were aware of the growing supply of craft beers. That is beers brewed on a small scale, generally by small organisations. We analysed the market data available from the Society of Independent Brewers (UK). From this we made estimates of the likely demand for Hops. It was apparent that each customer (potentially over 800 in the UK alone) would take relatively small volumes of hops, and we judged that these would not be as price sensitive as major brewers. We investigated the offer from our competition, and although many customers seemed satisfied, they were looking for alternatives. Our competitors were attempting to service the market in the conventional way, i.e. sales people, phones and bespoke arrangements for delivery. We reasoned that a properly run e-business, could offer improved service (next day delivery) and significantly lower transaction costs. There is keen interest in exotic hop varieties which impart unique flavours to beer. We judged that our links through parent companies and associates would give us a competitive edge in sourcing these varieties. We considered entering this market in a conventional way, but rejected it in view of high costs and lack of novelty compared to the competition.

What were some of the main tipping points (if any) or a-ha moments?

How did the tipping points happen?

We launched the company with a conventional marketing event and advertising and started to get some initial orders. As part of this process we spent time with potential customers and it soon became apparent that most are avid networkers and users of Facebook and Twitter. We decided to explore the use of these media but to respect their social status and avoid a “hard sell”. We just advise of significant events. A definite a-ha moment was seeing how quickly our customers responded and how quickly our number of followers grew. In one case, we announced on Twitter that a particular American variety of hop was now available. Within 2 minutes, we had our first order! The other key learning point was to understand how our customers plan. Sometimes the brewery owner is also the accountant, and head brewer and sales person. They are just busy. If they decide that next week they would like to brew a particular recipe and they can then go online and order what they need then convenience is a big benefit for them. We had judged that having more specialised varieties would be attractive to our customers. We were able to introduce these fully in January 2012 and this led directly to more than doubling our monthly turnover.

Following our launch event, we reviewed how we should get more information to our customers. We concluded that meeting with brewers during normal working hours would not work. Who would brew the beer if the head brewer was in a meeting! So instead we organised an evening session with light refreshments. We are also seeing the benefits of an e-model. Some of our customers make good use of the fact that they can order time of day.

We also learned that providing an efficient phone service was really important. It’s surprising just how many people say that they can collect the goods to avoid carriage charges when they are located hundreds of miles away. A pro-active call from our customer sales manager has led to some very positive feedback. Also in the event of a glitch (usually with the freight side) we are usually able to fix problems very quickly.

Through Shopify, we were also able to see where are main referrals were coming from. We learned that inserting a click through banner on a home brewing forum really accelerated the process.

What were your biggest mistakes, or biggest wastes of time/money?

Early on in the life of the business we received enquiries from customers who did not feel that they should pay by credit card. We accommodated this initially, but this led to some complications with stock management and has now been discontinued.

Key manufacturing and marketing lessons learned?

It has taken us some iterations to get our pricing policy sorted. The initial set-up part of the configuration would have resulted in Simply Hops running a manufacturing operation. We quickly realised that this made the model overly complicated and stuck to our original intent to trade finished packed goods only.

If you were to do it all over again, what would you do differently?

We would spend more time up front defining our sales order/fulfillment process and clearly articulating who is responsible for what. This would save a lot of wasted effort and confusion. We would also think more deeply about building our social media presence, and presence in industry forums and relevant areas.

What’s next?

A few ideas that we want to keep from the competition! We have been successful in sourcing a number of really interesting new and old varieties of Hops. Some will be known to some brewers and some are completely new and “straight out of the breeding programmes”. We plan to introduce improved packaging to make using our hops much easier and improve availability in smaller pack sizes.

Canadian Winner: Clearpath Robotics

Who are you and what is your Shopify store?

Matt Rendall of clearpathrobotics.com

How did you decide on your product? What ideas did you consider but

reject, and why?

Clearpath Robotics started in a university robotics lab. Having experienced huge frustrations ourselves, we knew that researchers and students needed a better way to learn and build robots… So we spun out a company and we set out to solve this problem. There were a few other ideas on the table, but research and education seemed like the perfect starting point for us – it just fit.

We knew that our market needed a powerful low-cost robot. Our first attempts resulted in a great robots that customers loved, but at $5000, they were too expensive for most schools. We refined our designs and got our price down to $3500. Better, but not still not good enough and it was really hard for us to get the price down further.

To keep our costs low, we experimented heavily with open source. In 2010, we began working closely with a really innovative open source robotics company in Menlo Park, Willow Garage. It was started in 2006 by Scott Hassan one of Google’s first engineers. They have developed the world’s best operating system for robots and it is open source (Think of it as the Linux of the robotics world). We partnered with them to launch Turtlebot in the summer of 2011. The Turtlebot is the world’s most affordable professional robotics development tool.

What were some of the main tipping points (if any) or a-ha moments?

How did the tipping points happen?

The biggest tipping point for Turtlebot was making the decision to sell it online. This allowed us to really cut down our customer acquisition cost and we pass these savings on directly to our customers.

What were your biggest mistakes, or biggest wastes of time/money?

We make lots of mistakes. It is very important to us that we make mistakes. It keeps us innovative, it keeps us competitive. One of our most important mantras is “Fail Fast, Fail Cheap, Fail Often”. One of our investors taught us this early on and we live by it. The single biggest “lesson learned” so far is the importance of “slow to hire, quick to fire”.

Key manufacturing and marketing lessons learned?

Instead of spending a ton on traditional marketing, we invest those dollars into proactive customer service and back into development of rock-solid products. It’s all about turning customers into evangelists by delivering a remarkable customer experience. Tons of companies have figured this model out (i.e. Zappos), but it’s pretty rare in our industry. It’s working – our best marketing by far is word-of-mouth.

Manufacturing is so important for us. We spend a lot of time iterating our designs and working with our suppliers to optimize manufacturing process, product reliability and inventory management. I think it is important to have as small a list of trusted and proven suppliers as possible. The bigger the list becomes the more potential sources of error.

If you were to do it all over again, what would you do differently?

I don’t think we’ve done anything regrettable. Sure, we’ve made mistakes – everyone does. We learn from them and become better because of them. Our business is stronger today because of them. It all goes back to our “Fail Fast, Fail Cheap, Fail Often” mantra.

What’s next?

We see the Turtlebot as the very first “personal computers” of the robotics industry. The Turtlebot is the Apple II of the personal robotics industry. We want to make Turtlebot accessible and attractive to a much larger audience. Much like the first PCs, the Turtlebot is only really usable by programmers, hackers and the tech-savvy hobbyist communities. The next big thing for Turtlebot is figure out how to make it easier to use for non-programmers and also to make it even more affordable. Another big tipping point will be the creation of a “killer app” – an application to make Turtlebot highly valuable to the masses. In the mid-1980s, Lotus 123 was the “killer app” that contributed significantly to the success of the PC in the business world. Turtlebot needs its Lotus 123 equivalent. The open source community is working on ths as we speak and we’re working on a few “killer apps” of our own. We’re laying the foundation. Now it’s only a matter of time until something big happens.

For more info about the contest and winners, visit the Shopify Blog

The post "The Start-up's Secret Weapon: Contests" or "How to Turn $100K into $12,000,000" appeared first on The Blog of Author Tim Ferriss.

Six-pack abs sell. (Photo: San Diego Shooter)

Once or twice in the past, I have referred to “someone” who has earned $5,000,000-$10,000,000 per year with e-books and cross promotion.

For that, I should apologize, as it’s not accurate: his numbers are now closer to $1,000,000 per month, and “e-book” doesn’t begin to explain what he does. That someone is named Mike Geary. He prefers to keep a low profile, skiing powder and refining his “muse,” or automated business, to a precise science. From strategic customer service in Germany, to testing for trending, it’s all piece of a well-planned puzzle and well-oiled machine.

For the first time, this post will explain how he built his business, some of the key lessons learned, and common mistakes with digital products.

As you read, keep in mind two things:

– He is, without a doubt, considered one of the smartest online marketers and traffic buyers (a key differentiator) in the world.

– He started off knowing nothing and got there through intelligent testing.

As Thomas J. Watson, founder of IBM, is famous for saying: “Nothing happens until someone sells something.” Planning is valuable, but–long-term–it’s your ability to improvise and adjust that makes the difference.

Enjoy…

Enter Mike Geary

Can you describe your muse?

My “muse” (i.e. business) is composed of three main components:

1. I sell a fitness information product called “The Truth about Six-Pack Abs,” which has sold more than 500,000 copies since 2005.
2. I publish a fitness and health newsletter to about 680,000 subscribers (with subscribers in almost every country), and have built a large content based website that goes along with this fitness newsletter.
3. I act as a media buyer, purchasing large amounts of traffic (mostly in the fitness/nutrition niche) that I funnel to a few select partners. This allows me to become integrated into several other large fitness and nutrition businesses (they promote my product extensively on their backend) since I act as a very large source of their overall traffic.

What is the website for your muse?

My main website, which has the sales process for my “Truth About Six Pack Abs” product, is: www.TruthAboutAbs.com

[Click here to see an affiliate landing page, click here to see the standard non-affiliate/PPC landing page]

How much revenue is your muse currently generating per month (on average)?

The business as a whole (all three components listed above) generates just shy of $1 million in revenue per month. Total revenue for last year was approximately $11 million.

While the financial freedom that this business has created has been amazing, it’s also been very rewarding to receive thousands of emails in our support center from customers who have literally changed their lives with the help of my fitness advice. I still get chills when I read a glowing email from a customer that has lost 100 lbs with my program, totally changed their confidence and energy, and just overall changed their life! So cool.

To get to this monthly revenue number, how long did it take after the idea struck?

To be honest, I was a little slow in learning marketing and building the business, so it took me about five years to get to those numbers. About two years into this venture, I was finally making about $50,000 per year with the online business. As I explained above, growth exploded once I quit my corporate job, and my earnings increased about 10x the following year. Growth in following years went to $3.6 million, then $6 million, and finally $11 million in annual revenue.

How did you decide on “Truth About Abs”?

It was simple really… A mentor told me to follow what I’m most passionate about, and that passion was fitness and nutrition. I can talk all day long about fitness and nutrition, so why not do what I love?

I initially bought an information product that was about $300 (a big investment for me at the time) from a marketer named Ryan Lee. The product was all about teaching fitness professionals how to build a more successful business, particularly online. To this day, I still give Ryan credit for being the guy that got me into this career and changed my life. Thanks, Ryan! [Ed: The product Mike is referring to is no longer available. For those interested, this course covers similar content.]

As I studied Ryan’s course, I thought about my ideas for a potential information product. Working as a personal trainer, I knew that about 90% of the questions I got from clients were always about “six pack abs” or getting a flatter stomach. I also knew that there was a load of crap out there on the internet and on TV infomercials for all sorts of garbage like ab machines, belts, and worthless pills. Finally, I’d seen a ton of bad exercise advice floating around online. That was where my initial idea for “The Truth about Six-Pack Abs” came from. Little did I know that the idea would eventually become such a phenomenal success!

What ideas did you consider but reject, and why?

As crazy as it sounds, “The Truth about Six Pack Abs” was my very first idea, and it’s been the product I’ve continued to focus on throughout the years. I haven’t strayed into other businesses or distracted myself from the product that I knew would be a best-seller. I wanted to keep my focus on one main product. With that said, I do have a couple other products that sell okay, such as my skiing fitness product (AvalancheSkiTraining.com), which I produced solely because it was a labor of love. But to this day, the “Truth about Abs” product remains my bread and butter.

How did you get started? What ultimately lead you to your current lifestyle?

I started my internet business in 2004 because I had become fed up with the time and freedom constraints that came with my old 9-5 corporate lifestyle. My main goals in designing my “new life” were:

1. To build more time freedom into my life. I desperately wanted to design my new life with much more free time to enjoy my hobbies, friends, and family. This “time freedom” was actually a higher priority for me than the financial rewards of starting a web-based business. And this may sound funny, but I also had a goal to eventually NEVER have to wake up to an alarm again (aside from traveling). I despise waking up to an alarm!
2. The ability to travel as much as I wanted, to anywhere in the world, with no financial or time constraints.
3. More financial security for myself and my family.

When I set these goals back in 2004, I was basically working three jobs. I worked an engineering consulting job from 9-5 at an office. I also worked 15-20 extra hours per week as a personal trainer at a local gym, and I was attempting to build my online fitness business.

From 2004 to 2006, I made consistent but SLOW progress on my internet business. By the end of 2006, the internet business was making just as much money as my corporate job. I quit my corporate job in January 2007, and never looked back. Quitting my job at that critical point in time was the best decision I could have made as that freed up the time I needed to dedicate solely to my internet business, which started to boom in the months that followed.

Within another year, my internet business grew into a 7-figure annual business and, eventually, an 8-figure annual business in revenue.

It may have taken a few years to achieve, but I eventually successfully reached all three of those goals… time freedom, ability to travel anywhere/anytime, and financial freedom. Oh, and — except for when making flights — I haven’t had to wake up to an alarm clock in over four years now!

What does your daily/weekly routine look like? Where do you live and what does your lifestyle look like?

It has really been a dream come true. After I quit my corporate job in 2007, I moved to the mountains of Colorado and skied almost every day that next winter. I don’t ski every day anymore in the winter (I’m more picky about the ski conditions now), but I never ever miss a powder day. For those who aren’t hard core skiers: a powder day is like the holy grail of skiing. If you love skiing, you never want to miss a powder day!

In the summer, I do a lot of hiking, mountain biking, and other outdoor fun. And because of my time freedom, friends and family can come out to visit me anytime in Colorado, so I love to host friends and act as a tour guide.

As for traveling, my girlfriend and I now travel at least 10-15 days every month. We’ve traveled to dozens of countries and done all sorts of fun stuff, like heli-skiing in Chile, ATVing and ziplining in Costa Rica, dry suit scuba diving in the Silfra Ravine in Iceland, and tropical scuba diving throughout the Carribean. We’ve also traveled extensively throughout Mexico, Central America, South America, and lots of islands! We plan to do more traveling through Europe and Asia soon.

When I travel, I still work on my business about 1-2 hours per day. That’s what I’ve decided personally is a good schedule to allow me to enjoy traveling and still keep up with my business. When I’m not traveling, I basically allow myself complete freedom of schedule. Some days I’ll feel like I’m “in the zone” and just work all day long, maybe 10-12 hours or more. Other days, I might only work two hours and enjoy the rest of the time doing fun outdoorsy stuff, going to a nice dinner, or golfing with friends.

What were some of the main tipping points or”A-ha!” moments? How did they come about?

In the very beginning, I had this foolish idea in my head that this flood of people would automatically rush to my website, buy my product, and I’d be a millionaire within months. Reality struck when I had a whopping 5 visitors to my site in the first month. At the time, I didn’t understand that you actually have to DRIVE traffic to your site, as people won’t just magically find you.

After about six weeks of having my site “live” and still having yet to make a single sale, I started to get discouraged and thought that this whole internet marketing thing just didn’t work. Then I had a tipping point: I got my first sale! But when I looked at the details of the sale, I noticed that the buyer was one of my mom’s good friends. I had to laugh, but at the same time, it gave me the motivation to push forward, as I saw that the website could make sales if I just produced traffic.

The next tipping point came about 18 months later when I started playing with Google Adwords, and learning how to purposely drive traffic instead of just hoping people would find the site. I’m very technically minded, and Adwords is a numbers game, so that fascinated me. Within a couple months, I started learning how to split test ads, find what converted best for my site, and get massive amounts of traffic for reasonable prices (at least reasonable enough to break even, or make a small profit on the front end). Running a massive amount of traffic on Adwords and doing lots of testing taught me how to buy traffic in other places too, beyond Google’s network.

Another big tipping point came in early 2007, when I finally put my product on the affiliate network, Clickbank. The biggest thing that I did was set my affiliate program apart from the crowd. Here’s how…

At the time, I noticed that most vendors on the Clickbank marketplace were only paying affiliates 35-50% commissions. Even the highest paying vendors were paying 55% to 60% commissions max. To some, that might seem very generous. But at the same time, we’re selling digital products, so we don’t have as many overhead costs as with a physical product and can be more generous.

I decided to be OVERLY generous with affiliates and truly set myself apart from the crowd. Instead of the normal 35-60% commissions, I set my commissions at 75% (which is the maximum percentage you can pay to affiliates in Clickbank). Immediately, this made my product more lucrative for most affiliates than other products that were paying lower commissions. I had hundreds of affiliates shift their traffic to my site instead of some of my competitors. Within a couple months, I jumped up to one of the best selling products on the entire Clickbank marketplace, out of more than 10,000 products.

[Tim postscript: As Mike mentions in the comments, this means:

“For a clarification on revenue, the way that Clickbank works is to take the processing fee and the affiliate fee out before the revenue ever flows into my account, so that $11MM ‘per year’ actually did not include gross sales numbers. With gross sales, it would be more around $20MM-$25MM per year, I’m guessing.”]

Within 6-12 months, most other top selling Clickbank vendors followed suit and switched to 75% payouts. Currently, as a vendor (product creator), if you pay affiliates any less than 75% (as that’s now the standard), it’s very hard to be competitive, because most affiliates will only promote products that pay 75% commissions.

Some vendors still have the wrong mindset and can’t stand the idea of the affiliate making more per sale than they make as the creator of their own product. That’s foolish, however, because the math is simple: would you rather get 10 sales and make $30 per sale ($300), or get 1,000 sales at $10 per sale ($10,000)? Better yet, how about 500,000 sales at only $2 per sale in profit ($1,000,000)? The answer should be obvious. The more generous you can be with affiliates and other business partners, the more sales VOLUME they can send you, especially if they’re buying traffic and incurring that cost. Plus, there’s more backend revenue potential with a higher volume of customers.

The above was a huge takeaway for me, and it led to the development of two priorities that are still at the heart of my business today:

1. Treat my customers like gold. Without happy customers, any business will eventually die. I wanted people to get RESULTS! I don’t just want to sell them some fad or gimmick that doesn’t work.
2. Treat my affiliates (and other business partners) like gold. Going above and beyond while being overly generous with business partners and affiliates effectively jumpstarted my business success. In fact, in additon to being one of the first vendors to pay affiliates 75% commissions, I was also one of the first vendors on the Clickbank marketplace that started to reward affiliates that sent over a certain number of sales each month with bonuses up to 85% or even 90% commissions. The additional percentage points had to be paid manually at the end of the month as a bonus.

What resources or tools did you find most helpful when you were getting started?

I remember buying lots of low priced marketing e-books about search engine optimization (SEO) and pay-per-click (PPC marketing). Those e-books that I bought 5-6 years ago are mostly outdated now, given the techniques change so rapidly. Regardless, the benefit was that I learned how to use both SEO and PPC and stumbled onto new discoveries as I worked with both.

What were your biggest mistakes, or biggest wastes of time/money?

A couple that I can think of right off the top of my head…

I got approached once to buy an “email drop” in a list that supposedly had 5 million names. The list was apparently built through credit card surveys or something like that. I think it only cost $600 to run an ad to this list, so I thought it HAD to be a winner, and I tested it. I ended up getting 1 sale ($40) from that $600 test. Even with a list of 5 million names, that list was basically worthless since there was no relationship, and it had been built solely from credit card surveys. Compare that to a JV (joint venture) partner who has a great relationship with their list. We’ve had some affiliates get hundreds of sales from relatively small lists of maybe 10,000 emails.

I know that buying “email drops” can sometimes work (and I’ve made other successful ad buys in newsletters), but you have to know exactly how the list was built, if it’s maintained regularly, and if it has a loyal following. Otherwise, it could be a garbage list.

Another failed test was a direct mail postcard we tested. The whole campaign cost me about $30,000 to implement (postage costs, postcard creation costs, copywriting, list rental, etc). It seemed like a viable test as I had friends that had moderate success with direct mail pieces before. The postcard tried to get the user to go to a website from the postcard and purchase our fitness product. It backfired big time, as we only made back about $3,000 out of the $30,000 investment in the test. A 90% loss to the tune of $27k… No fun.

Now, I’m not saying that a postcard-to-website sales process can’t work. However, in our example, we obviously had a big missing link to the puzzle and it just didn’t produce sales. I think it’s a trickier process than someone who’s  coming to your site after clicking on a PPC ad or banner ad.

What have been your key marketing and/or manufacturing lessons learned?

I haven’t manufactured any products, so I can’t comment on that. As for marketing, my biggest lessons (as mentioned above) were being overly generous with affiliates and paying them every possible penny that I could. This is the only way to be competitive with affiliates: to be the business with the biggest payout to them. Even if you have to pay affiliates 100% of your front end revenue, at least you know that you obtained those customers without incurring a loss (which doesn’t happen with every type of advertising), and now you have the opportunity to build a long term relationship with those customers and sell them your other products in the future.

Another key marketing lesson I learned is that when buying traffic, be prepared to not make any profit on the front end. Sometimes, in order to compete with other advertisers, you need to be willing to take a small loss on your advertising spend in order to bring in lots of customers. You just need to be careful to know your backend numbers (average future revenue amount per customer) well enough to ensure that your front-end losses aren’t so steep that you can’t make back the advertising loss after a certain period of time.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

I’ve had various radio interviews, and had content picked up by popular websites, blogs, etc. However, some of my best relationships have been companies that I’ve partnered with on media buying (think AOL, MSN, etc.) Spending a boatload of money with certain big companies, and building a long term relationship with them by advertising for years has resulted in special deals for cheaper traffic. If you think about it from the publisher’s perspective, it helps to save them administrative costs by dealing with fewer advertisers, so sometimes I’ve been able to get better deals by agreeing to large contracts upfront. Another advertiser might only buy 1-2 ads, instead of the 50 ad placements that I would buy.

Where did you register your domain (URL)?

GoDaddy.com

Where did you decide to host your domain?

I host with a company called Rackco. It was just a referral from a friend at the time, but I’ve stuck with them for years.

If you used a web designer, where did you find them?

The only thing I had “designed” was my cartoon based header graphics. Again, this was simply a referral from a friend, and the guy I used was a talented cartoon designer named Vince Palko. I’ve also heard that 99designs is a great place to get designs.

Do you have any employees?

I have customer service representatives in a few different countries and major markets. Specifically, I have one person in France, one Swiss for German translation help, an English-language affiliate support rep in Trinidad (he also handles Spanish translation), and one German-based woman who handles German affiliates. Finally, I have a webmaster who helps with site maintenance.

If you were to do it all over again, what would you do differently?

Nothing. I’ve learned so much, even from my mistakes, and everything has happened for a reason.

What are some common mistakes when buying media/traffic?

The most common mistake is not letting enough traffic flow to see true trends. Some people shut down their campaigns after only a couple hundred clicks thinking that it won’t be profitable, but they haven’t let it run long enough to see for sure. For example, a newbie might shut down their campaign after only 500 clicks and 1 sale. But what if they would have made 3 sales in the next 500 clicks, for a total of 4 sales in 1,000 clicks? Data can be pretty variable when you’re still under 1,000 clicks. I generally test an ad for at least a couple thousand clicks. However, keep in mind that I deal mostly with the fitness and nutrition niches and they require high volumes of clicks to see true data.

Another big mistake is not split testing enough variations of ads. Many advertisers give up on losing campaigns after testing only a couple ad creatives. However, I’ve found that simple modifications — such as a one word variation in a headline or a slightly different image or background color — can be the difference between a losing campaign and a profitable campaign. In some instances, I’ve used the exact same ad text combined with slightly different pictures and seen DOUBLE the click-through rate (CTR).

The last mistake is also very common: most advertisers aren’t willing to lose money to find what works. I EXPECT to lose money the first time I test a campaign. Then I tweak the ad copy, offer, etc. based on our testing results, and we see if we can restart the campaign a second time and make it profitable based on what we learned [i.e. what lost the least money, etc.] For example, if I do a $10,000 traffic buy test on a new website that we haven’t worked with before, we’ll usually only make back maybe $6,000 to $7,000 for a net loss of about $3,000. But we also usually learn that one of our ad variations performed MUCH better than the others, and we can work with that specific ad from that point forward and possibly negotiate lower rates. Sometimes we find that the numbers are too far off to work in the future, so we just decide to cut all ties with that particular website and not buy traffic from them again if they can’t offer lower rates.

Any tips for Facebook media buying? Common wastes of money or newbie screwups?

The three mistakes that I listed in the previous question apply to buying Facebook traffic, as well. I’ve found that the most important aspect of Facebook ads is the image, so it’s necessary to test at least 6-10 variations of images for each ad. The image attracts the eyeballs first, then your headline needs to finish the job and get the person to click your ad. One thing I’ve found is that images that have done well for ads on other sites may not always be effective on Facebook. Each site is unique with its style, colors, and layout, and I’ve been surprised by some images that work well on Facebook and others that don’t.

One common mistake I’ve seen with people buying ads on Facebook is paying WAY too much per click. In my experience, you almost NEVER need to pay the recommended bid amount that Facebook displays when you set up your ad. For example, I’ve set up ads where the recommended bid amount was $1.12 per click. I’d bid $0.30 cents instead, and would still be able to get large amounts of traffic (assuming that I was able to get a high enough click through rate on the ad). In order to pay a lot less than the recommended bid price per click, you need to get an above average click through rate, so it takes good ad copy, good images, and the right targeting.

If you had $5K to start media buying, what would you do right now, assuming all sites/platforms (e.g. AdWords) were available to you?

The best quality and cheapest traffic is available on Google’s content network. That’s easier said than done, as Google is currently very picky about what offers they will allow to run. In certain industries, it’s not even worth trying anymore, because Google won’t allow some types of websites to advertise at all. But if you are advertising in an industry that Google still accepts, the content network is wide open, and it’s the cheapest source of quality traffic available in most cases. It’s also one of the highest volume traffic sources available (along with Facebook), but in some industries, the Google content network can be easier to advertise profitably compared to Facebook.

Sometimes you’ll hear marketing “gurus” say that the search network is better quality traffic than the content network. This is false, as it’s industry specific. In my case, I spent over $5 million advertising on Google over the years with fitness and nutrition products, and I can say without a doubt that content network traffic is MUCH cheaper than search traffic, and converts even higher than search traffic in many cases.

What would you do if you had $20K to start media buying?

At this spend level, you can do test campaigns on nearly any major website, as most major sites require test campaigns of around $5k to $10k minimum to get started. We’re talking about big news websites, politics sites, weather sites, and major sites like Yahoo, MSN, and AOL. From my experience with media buying, testing is all that matters as it’s hard to compare CPM rates from one site to another, since placement locations, sizes, etc. are all different. For instance, I’ve had CPM campaigns that were profitable on some sites at super high rates of $6.00 CPM or more, and on other sites, a price as low as $0.50 CPM resulted in a loss. You never know how an individual site will perform until you test.

The usual steps for a media buy on a large site are:

1. Run $5-10k test campaign (most times, initial test loses money). Smaller sites accept much lower test amounts.
2. Optimize the ads that performed best and delete the ads that performed worst.
3. Negotiate a lower CPM rate if the publisher can go any lower (sometimes they can, and sometimes they can’t go lower — depends what other advertisers are paying on average and how much inventory they have available).
4. Re-launch campaign when you’re confident that you will be able to profit.

What are your recommendations for developing information products?

Sell the customers what they want, but give them what they NEED. In my market, what people want are six-pack abs exercises. But that’s not what I give them, because that’s not what they need. They need the right nutrition, the right full body training program, and the right mindset to be dedicated to their goal. Basically, I sell six pack abs, but I teach them how to live healthier and adopt a fitness lifestyle in order to lower their body fat for life.

What have you learned about price points?

It’s been really interesting to see some of the testing for pricing. We’ve tested price points for various fitness info products at $29.95, $39.95, $47.00, $67.00, $77.00, $79.00, and $97.00. I’ve found a sweet spot in the $47.00 price point for most online fitness info products that seems to maximize front end revenue and the total number of customers. Lower price points can sometimes bring in more customers on the front end, but the backend marketing plan needs to be solid in order to make up for the lower price (especially if you’re buying traffic and need that front-end revenue to come close to break even on your ad buys).

How have you tried to minimize requests for refunds?

Truthfully, I’ve just focused on producing a great quality product, which goes a long way to reduce refunds. I know that some people are dishonest and will request refunds even though they liked the product. But I feel that, overall, most people are honest and won’t take advantage of someone on purpose.

A surprisingly common scenario for requesting a refund is when people don’t understand that the program is downloadable, even though it’s spelled out on the site. They think they’re getting something in the mail, then request a refund when they don’t. It’s best to be as clear as possible to make sure people understand that this is a downloadable program. This can prevent loads of customer service requests from confused customers. Of course, if you sell a physical product, this isn’t a problem, though shipping and delivery time may be more of an issue.

How do you test for your content pages?

At this point, it’s fairly easy to test the interest in content pages. I simply come up with an idea, prepare the article, and send it to my email list of about 680,000 readers. The open rates of the email give a good representation of how interesting that topic (email subject line) was to most people.

Also, on each content page, I have the social media sharing buttons (Facebook, Twitter, and Stumbleupon). I can guage how much people like a particular topic based on how much social media sharing occurs. I have some pages with over 40,000 Facebook likes and others with only a couple dozen likes.

Best and worst performers? Most unexpected winners or losers?

My best content pages are typically topics that surprise or shock people in some way, or clear up a confusing topic. Take note of the amount of Facebook likes, tweets, etc. on some of these pages below:

Successful example #1: “Are Whole Eggs or Egg Whites Better for You?”

In this article, I surprise people with my arguments as to why egg yolks are actually the healthiest part of the egg, and anybody eating only egg whites is making a foolish decision. This is a great example of the type of information that goes against the grain and shows how people have been misinformed by the media.

Successful example #2: “The Salad Dressing You Should NEVER Eat.”

This is another good example of a content page that shocks people. Before reading this article, a lot of people had no idea that most salad dressings at the grocery store are a health disaster, full of additives like corn syrup, unhealthy soybean and canola oils, etc. People want to share articles like this.

Successful example #3: “Does Canned Food and Bottled Water Increase Your Abdominal Fat Through Hidden Chemicals?”

This is another article that shocks most people, as it teaches them about a rather unknown chemical that they might be exposed to in canned foods and plastics. These types of surprising articles help people to want to share the article with their friends to help protect their health.

And now for an example of a content page that didn’t seem to work that well:

“The Nutrition Benefits of Kale.”

You can see this page got less than 100 Facebook likes, compared to the examples above that have thousands, or even tens of thousands of “likes.” What’s the difference? Well, I think the main difference is that kale is just not a “sexy” topic. People already know that kale is good for you, so there’s nothing shocking in this article. Compare that to the egg yolks article, where most people think egg yolks are horrible for you, and I give an argument to show why that’s wrong. It’s more shocking and therefore something people want to share with friends.

Most common mistakes and/or easy fixes for content pages?

Assuming the content is interesting and well-written, one mistake I see is that people don’t always make it easy for people to share things on their website. For example, they might just have a Facebook like button at the top of the page, but not the bottom. I like to have sharing buttons at the top and the bottom so that people see the buttons right as they finish the article. I think it’s important to have the social media buttons at the top of the page too so that people see that the page has social proof and is popular right at the beginning.

I also think some site owners can use too many sharing buttons, even more than a dozen total. I like to use the “Big 3” (Facebook, Twitter, and Stumbleupon) to keep things uncluttered.

What’s next for you?

Honestly, I just want to continue simplifying my business more and more as time goes on.

I have plans for a couple new small projects, one of which is an upcoming healthy fat-burning recipe book that I’m working on with a co-author. Other than that, one of my main goals is to maintain my current lifestyle without getting bogged down by too many business projects. I want to continue pumping out great fitness and nutrition content that helps my readers live healthier lives.

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Related and Suggested Posts:

Engineering the “Muse”: Case Studies, Volume 1

Engineering the “Muse”: Case Studies, Volume 2

Engineering the “Muse”: Case Studies, Volume 3

Engineering the “Muse”: Case Studies, Volume 4

Odds and Ends: Noah Kagan competition results

Thank you so much to everyone who participated in Noah Kagan’s contest! For those who haven’t read his post, Noah made a simple offer: The reader who generated the most profit in two weeks with their new business or product would win $1,000 of AppSumo credit and RT airfare for a romantic candlelit taco dinner in Austin, Texas.

We had some truly amazing entries, and ended up having to split the prizes. Here were the results:

WINNER: Tom from RaceCrowds.com, who made $600 profit in 4 days. Tom ran a sale on his site over the weekend, using many of the tips Noah suggested in the post:

“I basically did a Motorsports version of AppSumo. I did a 50/50 split with my promotional partner and Chompon takes 10%.

Stats from Chompon.com

Total Views: 981

Total Shares: 23

Total Purchases: 6

Total Revenue: $1,350.00”

Runner-ups: Adam Nolan and Russell Ruffino from ultimatesalesfunnel.net. These two made $17,867.64 in profit… “WTF?!” Yes, they did. However, according to the rules in the post, each competing business/product had to be brand new. Their product, while new, was created four days before the contest was announced. Either way: BIG congrats, guys!

All entrants: For everyone who made an attempt at starting up their million dollar business: Be sure to check your inbox for complimentary credit to AppSumo

The post The Truth About Abs: How To Make $1,000,000 Per Month with Digital Products (Plus: Noah Kagan results) appeared first on The Blog of Author Tim Ferriss.

The Square36 yoga mat earns $10,000-$25,000 per month for Bob Maydonik.

One common challenge for readers of The 4-Hour Workweek is the creation of a “muse”: a low-maintenance business that generates significant income. Such a muse is leveraged to finance your ideal lifestyle, which we calculate precisely based on Target Monthly Income (TMI).

I’ve received hundreds of successful case studies via e-mail, and more than 1,000 new businesses were created during last year’s Shopify competition (If you haven’t already, sign up for this year’s contest here), but I’ve presented only a handful of them.

In this installment, I’ll showcase three diverse muses, including lessons learned, what worked, and what didn’t. Income ranges from $1,000 – $25,000 per month…

“Square 36” by Bob Maydonik

Describe your muse in 1-3 sentences.

Oversize yoga mat.

What is the website for your muse?

http://www.square36.com

How much revenue is your muse currently generating per month (on average)?

$10,000 – $25,000 per month

To get to this monthly revenue number, how long did it take after the idea struck?

1.5 years

How did you decide on this muse?

I was doing P90X and was annoyed by how inadequate my typical yoga mat was. My good friend, who is also an entrepreneur, convinced me that we should give Tim’s formula a try. So we plugged our big yoga mat concept into the 4HWW business model, and that’s how everything got started.

What ideas did you consider but reject, and why?

We thought about doing a free-standing pull-up bar (and we’re actually still considering this). We also considered rings that could be attached in a door way frame for doing pull-ups, like gymnastic rings for home-based workouts. We rejected the rings for a few reasons: (1) RingTraining.com was already doing it, and (2) we were going to have to deal with a few different manufacturers to have one product made. It was too complicated and wasn’t worth the hassle. More importantly, the market for ring trainers is much smaller than the market for yoga mats.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

Sorry, no major tipping point moments for us. We’re both entrepreneurs and were already part of the New Rich!

What resources or tools did you find most helpful when you were getting started?

Alibaba.com to source our manufacturer. We also really lucked out with Google Adwords. Google built our Adwords campaign for us, then they gave us seed money credit to launch it… all for free.

What were your biggest mistakes, or biggest wastes of time/money?

Our biggest mistake occurred when we ordered our first 20 prototypes. We bought a large roll of PVC mat and asked the yoga supply wholesaler who we bought it from to cut them into 6′ x 6′ mats. If you look on this yoga wholesaler’s website now, you’ll see they totally ripped off our idea (they took a picture of our mat) and took credit for it. We dealt with this by changing the color of our mat to black, amping up the density and thickness, then de-bossing it with our logo. Luckily, the wholesaler has done a crappy job marketing his product. I don’t think he’s affected our sales too much, but it’s still a piss-off.

What have been your key marketing and/or manufacturing lessons learned?

Key manufacturing lesson: Guangxhi (Mandarin for ‘connection’). This is how the Chinese do business. When you meet, you talk about your family for two hours, then discuss pricing/terms for the last 10 minutes. If you go out for beers with the factory manager, you will get way better pricing/terms.

Marketing lesson: it matters what time of day your ads appear. Most people aren’t shopping online during their workday. Ads that appear on weekday nights are best.

Also, incorporating the cost of shipping into our price and advertising “FREE SHIPPING” has been pretty effective for our Google Adwords campaign.

If you used a manufacturer, how did you find them? What are your suggestions for first-timers?

We found our manufacturer using Alibaba. My suggestion is to find a minimum of three manufacturers who can make what you want. If you’re dealing in China, there’s a good chance all of your manufacturers will be in the same town (different towns seem to specialize in manufacturing one type of product). Go and visit with them all personally. Chinese manufacturers will almost always tell you that they can do what you want, but when you actually meet with them in-person and show them what you want, 2/3 of them will not be capable of producing your product. We visited five factories for our mat, all of which assured us through e-mail that they could produce our product. Only one of the five factories actually could.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

“The New Rules of Marketing and PR” by David Meerman Scott is a killer book on PR/media. However, we haven’t really done a lot of PR/media stuff for Square36. We focused a lot of energy on retail after reading “This Business has Legs” about the ThighMaster. We will be testing in 10 Costco stores across Canada, and are also in negotiations with another large Canadian retailer.

Where did you register your domain (URL)?

http://netfirms.com

Where did you decide to host your domain?

http://bluehost.com

If you used a web designer, where did you find them?

I was lucky: my web designer was my former next-door neighbor.

If you were to do it all over again, what would you do differently?

I’d probably pick a product that’s easier to ship. A 6′ x 6′ yoga mat that weighs ten pounds is not as easy to ship as a pair of shoes or a DVD. Plus, you can fit a much smaller product in a Sea-Can, which would be a nice savings.

What’s next?!

Counting dollars and sending Tim a mat Thanks for the inspiration.

[NOTE: Readers of this blog get a discount on Bob’s yoga mats with the coupon code ‘tferriss’]

“iFlip Wallet” by Vincent Ko

Describe your muse in 1-3 sentences.

The iFlip is a niche product that combines the style of a leather iPhone case with the functionality of a flip wallet. Our product is for minimalist iPhone owners who are looking to carry everything in one package.

What is the website for your muse?

http://iFlipWallet.com

How much revenue is your muse currently generating per month (on average)?

$1,000 – $2,500 per month

To get to this monthly revenue number, how long did it take after the idea struck?

3 months

How did you decide on this muse?

Right before returning for my senior year of college, I received an iPhone as a birthday present. Form-fitting jeans were the style around campus and having pockets bulging with an iPhone and thick wallet looked pretty stupid. I evaluated whether I needed all the items in my wallet, and came to the realization that the only things I really needed to carry around on a daily basis were my ID, credit card, a $20 bill, and my iPhone. That’s when I envisioned an iPhone case that also acted as a wallet. When I went online and couldn’t find that type of product, I decided to create it myself.

What ideas did you consider but reject, and why?

Prior to reading the 4HWW, I was actually selling fold-up beer pong tables online. It was a fun product to sell as a college student. However, beer pong tables are huge and heavy. Logistics and shipping from a rented out warehouse soon became too much of a hassle. Along with growing competitors, import tariffs, and shrinking margins, I knew I had to call it quits on a profitable business. The time spent was not equal to the financial output. I traded-in 30 pound beer pong tables for 3 oz. iPhone wallets.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

My A-ha moment was the first time I went online searching for an iPhone wallet. When I found the only product out there was an iPhone case that looked like a mini-purse, a light bulb went off: create an iPhone wallet case that guys would want to buy.

What resources or tools did you find most helpful when you were getting started?

The best resource was learning directly from other muse owners and entrepreneurs. For instance, Mixergy.com does a great job of putting out interviews with entrepreneurs who have been successful. Taking those nuggets of wisdom and implementing them into my business has been extremely helpful. This includes everything from tactics for increasing conversion, tracking statistics, sales language, and more.

What were your biggest mistakes, or biggest wastes of time/money?

The biggest marketing lesson I learned was: you have to get your product in front of people searching for it. Initially, I was advertising on iPhone-related sites. It was only after I invested money into getting my site in front of people specifically searching for “iPhone Wallet” was I successful. This naturally led to me working on SEO for particular keywords.

If you used a manufacturer, how did you find them? What are your suggestions for first-timers?

I found my manufacturer on Alibaba. My suggestion for first-timers is to find the supplier that currently manufactures a product as close to the product you are envisioning, then tweak that product to fit your specifications. I found that creating a custom product from scratch was not only hard to communicate but very expensive. The iFlip was actually a modification of an iPhone case that my manufacturer was already producing.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

I was able to get my product featured on some iPhone accessory blogs by creating a template e-mail and sending out custom messages to sites I thought would be interested. I told all of them that I was a college student who had created a unique product that solved a simple problem.

Where did you register your domain (URL)?

http://www.netfirms.com

Where did you decide to host your domain?

http://www.netfirms.com

If you used a web designer, where did you find them?

I actually designed the site myself. I took a template I purchased at ThemeForest.net for $15 and tweaked the text and images in Dreamweaver. However, I did hire help for SEO. I found two people on oDesk to create backlinks and submit the site to directories.

If you were to do it all over again, what would you do differently?

I have a short video that demonstrates my product. After putting it on my site, sales increased by 25%. I believe that potential customers who see your product in-action not only understand it better but are also more inclined to purchase. If I were to do it again, I would have implemented the video sooner.

What’s next?!

Creating more muses! The iFlip was developed by creating a product I wanted for myself but currently was not on the market. I have teamed up with a college buddy to create several new muses. The key is that we only create products we would use, then we strategically think about the best way to market the product to ourselves. It is a fun process

“Keynotopia” by Amir Khella

Describe your muse in 1-3 sentences.

User interface libraries for turning Apple Keynote and Microsoft Powerpoint into interactive prototyping tools.

What is the website for your muse?

http://www.keynotopia.com

How much revenue is your muse currently generating per month (on average)?

$5,000 – $10,000 per month

To get to this monthly revenue number, how long did it take after the idea struck?

3 hours

How did you decide on this muse?

I’d been creating and using these libraries for awhile in my consulting gigs, but wasn’t sure they would be useful to anyone else. One day, I was playing around with my iPad and challenged myself to prototype something in 30 minutes. I did, and it worked on the iPad almost flawlessly.

I wanted to do a quick test to see if this would be useful to anyone else, so I wrote a step-by-step blog post and created a video showing the end result. I also included a downloadable zip file containing the iPad interface library with the blog post. Three weeks later, I had over 10,000 views on the post and over 500 downloads of the archive file. One evening, I thought about prototyping a quick website to see if anyone would buy the libraries if I charged for them. Three hours later, I had a premium WordPress theme linked with an e-junkie shopping cart and I posted a link at the bottom of the original blog post.

The website made its first sale after roughly 10 minutes of being online (The original version of the site looked too ugly – at least for me, as a designer – that I thought about pulling it down, but that first sale told me otherwise).

The full story behind this experiment can be found here.

What ideas did you consider but reject, and why?

Developing plug-ins for Keynote and Powerpoint. I wanted a product with a very low barrier-to-entry so I could quickly test it, and these templates were the fastest. Now I can confidently develop these plug-ins, knowing that I already have hundreds of paying customers who can use them.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

The biggest tipping point was waking up one day to find more money in my bank account. That was a paradigm shift, as my income was no longer coupled with my time. Instead of consulting/freelancing (trading time for money), I had invested some upfront time to create a system that worked hard for me.

Here are a few other “A-ha!” moments:

– Realizing the first prototype doesn’t need to look pretty, it just needs to work. Instead of spending days (potentially weeks) reinventing the wheel and creating my own e-commerce site, I just bought something that was good enough and tried it out. Total cost: $47.50 ($5 hosting, $7.50 domain, and $35 WordPress theme).

– People buy benefits: if it weren’t for the original blog post, I doubt that I’d have 1/100 of the sales I have now. The blog post continues to be the highest traffic generator for the site, because it shows people what they get out of the product (not just how they can use it).

– Aggressive testing: For Keynotopia’s landing page, I tested over 29 iterations for the copy and layout, reducing the bounce rate from 59% to 12% in less than 30 days.

– Byproducts can be profitable: The UI libraries had been sitting on my hard drive for months before I’d decided to share them. I didn’t consciously sit down to create a business by making the libraries and selling them; they came as a byproduct of working with clients, and all I needed to do was to create a system that delivered them.

What resources or tools did you find most helpful when you were getting started?

– WordPress + Premium themes

– Google website optimizer

– e-Junkie

– TextMate (Mac)

What were your biggest mistakes, or biggest wastes of time/money?

Banner ads. They don’t generate much traffic (compared with AdWords) because they are placed in websites/blogs where people are already distracted by other information, and may not be actively looking for a solution.

What have been your key marketing and/or manufacturing lessons learned?

Great free content (blog posts + videos) converts better than $1000’s in advertising.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

The libraries have been mentioned by some of the top UI designers (including a blog mention from Adaptive Path). I basically reached out to bloggers who had written similar content, left them thoughtful comments, and sometimes shared a free copy of the libraries with them. In the beginning, almost nothing happened, but then the mentions started to snowball.

Giving away a freebie on a well-known blog has helped tremendously with building a strong rank on Google. I gave away a simplified version of the libraries on SmashingMagazine (one of the top design blogs in the world), they wrote a post about it, and it literally brought down the server.

Finally, sharing the story behind the product helps too. I wrote a blog post on how I prototyped the product and it was on the homepage of Hacker News for more than 24 hours. Again, lots of traffic and good back-links.

Where did you register your domain (URL)?

http://godaddy.com

Where did you decide to host your domain?

http://1and1.com

If you used a web designer, where did you find them?

Nope. Just a premium WordPress template.

If you were to do it all over again, what would you do differently?

Do it much earlier. I waited too long to build up enough confidence and discover that what I had built was useful enough to sell.

What’s next?!

Having paying customers is great because they send all kinds of questions and requests. I have great customer service (I personally reply to all emails and tweets), and I have a long wish-list of what they’d like me to build next!

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Do you have a successful muse that’s generating more than $1,000 per month?

Please tell me about it! If it stands out (meaning you give specific details of lessons learned and what’s worked vs. what didn’t), I’m happy to promote you and help further increase your revenue. If you qualify and this sounds like fun, please fill out this form.

Both physical and digital goods are welcome, as are services, as long as they’re low-maintenance, income-generating “muses” as described in The 4-Hour Workweek.

Parts 1, 2, and 3 of this series can be found here.

The post Engineering a “Muse” – Volume 4: Case Studies of Successful Cash-Flow Businesses appeared first on The Blog of Author Tim Ferriss.

One common challenge for readers of The 4-Hour Workweek is the creation of a “muse”: a low-maintenance business that generates significant income. Such a muse is leveraged to finance your ideal lifestyle, which we calculate precisely based on Target Monthly Income (TMI).

I’ve received hundreds of successful case studies via e-mail, and more than 1,000 new businesses were created during a recent Shopify competition, but I’ve presented only a handful of them.

In this installment, I’ll showcase three diverse muses, including lessons learned, what worked, and what didn’t. Income ranges from $2,500 – $25,000 per month…

”Datsusara MMA” by Christopher Odell

Describe your muse in 1-3 sentences

Datsusara MMA makes hemp bags and apparel for martial artists.

What is the website for your muse?

https://www.dsgear.com/

How much revenue is your muse currently generating per month (on average)?

$5,000 – $10,000 per month

To get to this monthly revenue number, how long did it take after the idea struck?

Three years.

How did you decide on this muse?

I was at a crisis point in my life when I realized I needed to do something I truly loved instead of what I was merely skilled at doing.

I thought deeply on things that I loved. One was Mixed Martial Arts, and another was hemp products. That’s when it clicked. I realized that making a high quality hemp bag for MMA enthusiasts would fill a gap in the market.

What ideas did you consider but reject, and why?

I thought of starting a small MMA fight promotion but decided it would be more trouble than I wanted to deal with.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

It all started to sink in when we got our first prototype. Being able to see and touch the actual product really changes everything. It helped me realize that you truly could make your dreams appear by simply shifting your time and energy into the right places.

What resources or tools did you find most helpful when you were getting started?

A message board called Sherdog.net was our biggest source of early sales. This was due to a few gear review postings by our first customers (friends at my gym).

Having a decent looking website with good product descriptions and photos was critical, as well.

What were your biggest mistakes, or biggest wastes of time/money?

Sending out free gear bags to pro fighters cost us thousands in revenue and was a huge waste, except for the one and only response we got. That one response was from Eddie Bravo, who is well known in the MMA scene and gave us our first pro endorsement. We should have targeted more carefully, because we knew that Eddie loved hemp products and MMA already.

What have been your key marketing and/or manufacturing lessons learned?

In manufacturing, we learned to never rush a product out when you think you are “close enough,” assuming the odds and ends will be taken care of on the final product run. Since we were not 100% specific on what we wanted, our manufacturer cut some corners and cost us quite a bit of money in product exchanges.

But we did learn that if you treat your customers with care, they will stick with you and sometimes become even more loyal despite your mistakes.

If you used a manufacturer, how did you find them? What are your suggestions for first-timers?

I used Alibaba.com to find manufacturers. It was fairly easy but also a bit terrifying since you don’t always know who or what you are really dealing with.

We looked for manufacturers that had experience with hemp and military gear (we wanted these bags to be very strong). We reached out to several companies, judged them by how good their responses were, then chose a few to make our first prototype. After that, we made our final decision based on quality of the prototype and ease of obtaining it.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

Our Facebook fan page probably generates more interest then any other source at this point and it’s growing fast. We also love that it’s free

The endorsement from the sample we sent to Eddie Bravo was very useful, as was the mention by Tim Ferriss on Twitter about the sample we sent him.

We were also approached by many distributors that had simply heard of our gear and wanted to get on board. We picked one from each country that would have an exclusive for our gear. We chose the companies that had a good reputation and the best exposure. This has helped us generate over 60% of our sales, but it does impact our revenue negatively since they purchase at a wholesale price.

Where did you register your domain (URL)?

http://www.poehosting.com

Where did you decide to host your domain?

http://mediatemple.net

If you used a web designer, where did you find them?

I had a friend design the site (paid gig).

If you were to do it all over again, what would you do differently?

I would have shopped around more for a better importer, as our current importer charges half what we paid the first and does twice the work.

I also would have started the Facebook fan page right away.

What’s next?!

We may be expanding soon to other markets outside of MMA if we get some solid financial backing.

We hope to make hemp bags and apparel for all lifestyles while maintaining our quality of goods and customer service.

”Ready Set Go Kits” by Amy Sandoz

Describe your muse in 1-3 sentences

I help schools and families prepare for emergencies by offering ready-made emergency kits and free disaster planning information.

What is the website for your muse?

http://www.readysetgokits.com

How much revenue is your muse currently generating per month (on average)?

$2,500 – $5,000 per month

To get to this monthly revenue number, how long did it take after the idea struck?

One year.

How did you decide on this muse?

A friend and I were reading The 4-Hour Workweek at the same time and decided to just go for it. We sat down and listed out all the activities we had ever been involved in throughout our lives, then listed out the products that people in those same activities needed. The next steps were picking the five products that were most interesting to us, researching their markets, and seeing whether there was a drop-shipper available. I’m a long-time volunteer at American Red Cross and knew that people had trouble building an emergency kit. When I found an emergency kit manufacturer, I knew I had found my muse.

What ideas did you consider but reject, and why?

Selling salsa dance shoes and apparel was rejected because of a lack of dropshipper in the U.S., and bobbleheads were similarly rejected because of no desire to try to find a manufacturer overseas.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

My first big sale to a school district – they found me online and I thought “Wow, I actually own a business now!” It really reinforced the online model for me.

What resources or tools did you find most helpful when you were getting started?

I found the “SEO for Dummies” book super helpful, as well as the technical support staff at CoreCommerce.com (my hosted shopping cart software). It was also easy to get overwhelmed, so all action items were broken down into very small pieces, e.g. “Research names for business” or “Research hosted shopping carts.”

What were your biggest mistakes, or biggest wastes of time/money?

I’ve spent a lot of money on seminars and books promising to get me more sales or to the top of Google search for my keywords… and I’d like to get that money back. Most of that stuff was useless.

I also spent a lot of time trying to do things myself. I’m happy with the knowledge I’ve gained, but I think I would have started making money sooner if I had outsourced more things.

What have been your key marketing and/or manufacturing lessons learned?

You think you know who your target market is, but you really have no idea until you have paying customers. When I started the business, I was convinced that my target market was moms in the 35-55 range. I’m finding now that it’s really more of a 50/50 split between men and women.

If you used a manufacturer, how did you find them? What are your suggestions for first-timers?

I found my manufacturer through an online search and submitted an application to become a reseller. I ordered products from them to see what kind of packaging they came in, how long they took to arrive, and to determine the quality of the kits.

My suggestion for first-timers would be to go out and tour the operation (if you live nearby) and get to know the owner. That way if you have any trouble later, you’ll know where to turn.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

I applied for the Project Rev small business contest through Deluxe Corporation and won! They have been really helpful in getting press coverage and exposure for my business. I also hired a public relations freelancer and we set up a yearly schedule for pitches. I’m happy to report that she has already helped me land four feature print articles and an invitation to appear on a local TV station.

Where did you register your domain (URL)?

http://www.godaddy.com

Where did you decide to host your domain?

http://www.corecommerce.com

If you were to do it all over again, what would you do differently?

I would have found a reputable SEO person and hired them early on. That would have saved a lot of time and confusion.

What’s next?!

I’ve just launched a complementary site (www.ReadySetGoKitsDisasterPlan.com) that allows families to download free disaster planning templates that they can fill out and then tuck into their emergency kit. I’m also experimenting with creating videos about disaster preparedness to help raise awareness.

”Music Teachers Helper” by Brandon Pearce

Describe your muse in 1-3 sentences

Online software to help private music teachers manage the business side of their teaching studios.

What is the website for your muse?

http://www.musicteachershelper.com

How much revenue is your muse currently generating per month (on average)?

More than $25,000 per month

To get to this monthly revenue number, how long did it take after the idea struck?

Five years.

How did you decide on this muse?

I used to teach private piano lessons, and got frustrated having to keep track of how much they owed me. I wrote a simple program to track it, put it online so students could check the amount themselves and pay, and it just took off from there.

It started small, making just $1,000 or so per month after the first couple years, but it continues to grow to this day.

What ideas did you consider but reject, and why?

I thought about making a program to help private teachers of all types (ie. dance, yoga, and karate instructors, etc). I rejected it because I thought it was too broad to make one program that will fit all of these types. However, I did eventually create something for larger studios with multiple teachers (www.studiohelper.com) that serves a broader audience, and it’s also doing well. But it’s more difficult to market to such a broad audience.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

When my father-in-law lost his high-position job because of downsizing, I realized that there is no such thing as job security when you work for someone else. I became determined to find a way to have money come to me, no matter how much I work or where I live.

What resources or tools did you find most helpful when you were getting started?

When I started, I was doing everything myself – the programming, the design, the marketing, etc. And I knew basically nothing about starting a business. The Internet was helpful for research, but after I read 4HWW, I became a lot more productive. I started outsourcing things, built up enough courage to quit my job, and the business really took off. These days, I’m working about five hours per week, living in Costa Rica (for now), and thoroughly enjoying my life! (Thanks Tim!!!)

What were your biggest mistakes, or biggest wastes of time/money?

My biggest mistakes, financially and emotionally, were when I partnered with individuals and companies who ended up being more of a drain than a help. They were expensive to remove, as well. But those experiences helped me learn to value my time and product, and to be more cautious about who I do business with.

What have been your key marketing and/or manufacturing lessons learned?

With a complex web application, you can’t write it once and be done; you need to continue making enhancements and listen to user feedback in order to have a successful product.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

No, it’s been a steady, slow-growing process, all self-funded and mostly self-promoted.

Where did you register your domain (URL)?

http://www.godaddy.com

Where did you decide to host your domain?

http://www.liquidweb.com

If you used a web designer, where did you find them?

oDesk.com (Although initially, I designed it myself).

If you were to do it all over again, what would you do differently?

I would have kept the product simpler, and been more picky about what features to include, rather than adding nearly every feature the customer wanted (necessitating a huge redesign later).

What’s next?!

In this business, I’ll be focusing more on marketing and really getting the word out, and pushing our affiliate program more. I’m not sure if I will start another business soon, but I’m starting to look into real estate, just to diversify my income a little.

I’m also working on a book about what I’ve learned in the process of creating this online business, in the hopes that it will help others who want to do something similar. I plan to spend more time writing music in the months and years ahead, continue to travel, and enjoy my life doing whatever I can to make the world a better place.

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Parts one and two of this series — another six success stories — can be found here.

Do you have a successful muse that’s generating more than $1,000 per month?

Please tell me about it! If it stands out (meaning you give specific details of lessons learned and what’s worked vs. what didn’t), I’m happy to promote you and help further increase your revenue. If you qualify and this sounds like fun, please fill out this form.

Both physical and digital goods are welcome, as are services, as long as they’re low-maintenance, income-generating “muses” as described in The 4-Hour Workweek.

The post Engineering a “Muse” – Volume 3: Case Studies of Successful Cash-Flow Businesses appeared first on The Blog of Author Tim Ferriss.

The “LapDawg” earns $10,000-$25,000 per month for Tonny Shin.

In the last four years, I’ve received hundreds of successful case studies via e-mail, and more than 1,000 new businesses were created during a recent Shopify competition, but I’ve presented only a handful of a case studies.

In this post, I’ll showcase three successful muses inspired by The 4-Hour Workweek, including lessons learned, what worked, and what didn’t. Income ranges from $1,500 – $25,000 per month…

“LapDawg” by Tonny Shin

Describe your muse in 1-3 sentences.

Portable laptop table(s).

What is the website for your muse?

http://lapdawg.com

How much revenue is your muse currently generating per month (on average)?

$10,000 – $25,000 per month

To get to this monthly revenue number, how long did it take after the idea struck?

6 months.

How did you decide on this muse?

I got injured one day, severely twisting my ankle while playing tennis. The doctor said to stay in bed with minimal movement. Well, there is not much to do in bed lying around all day, and I needed my laptop. But it was super uncomfortable to use! Your groin area heats up a lot when it’s on your lap, which is no good for a male.  I tried propping it up on a pillow but the laptop would overheat.  I also got sore in a hurry when I was on my stomach.  I needed something to hold my laptop that was portable, ergonomically comfortable, and easy to adjust to any position I wanted.

What ideas did you consider but reject, and why?

Starting an internet marketing and consulting business. There were just too many negatives. It turned out to be: (1) Un-scalable, since there is only one of me; (2) Time-consuming, not only in the technical/maintenance side, but also educating the client; (3) Cost heavy. You need to find good web designers and skilled programmers, and pay them a good hourly rate; (4) Research heavy. You need to keep up with this stuff all the time; (5) On call. You have to be around if you want to bring in sales and keep your clients happy, no matter what situation comes up.

My most important goal for me planning my own business was all about “ROE,” or Return On Effort, and NOT just “ROI.”  The ROE for consulting would have been way too low, while LapDawg happens to be very high!

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

The main “A-ha” was realizing that starting with the right complementary partners was key to long-term success!  Fortunately, my job at the time gave me access to talented web designers and programmers. Selling them on the idea, getting the right agreements in place, and then splitting the work involved took time to develop.  But in the end, you have to trust that people will do what they are best at.

To this degree, it substantially cut our initial costs as I partnered up with a web designer, and business analyst/programmer who, by profession, allowed maximum efficiency in getting things done right!

What resources or tools did you find most helpful when you were getting started?

Since my partners lived far away from each other in our city, it was hard to get together face-to-face on a regular basis. We decided that a private online collaboration tool would help us communicate better getting the project up and running.  So we signed up for Central Desktop.  At the time, they allowed one project to be free. Anymore and you had to pay. We definitely maxed out that one free project!

We had good private discussions and everything was documented. It turned out to be valuable in that I can now look back and see what I did wrong or right.

What were your biggest mistakes, or biggest wastes of time/money?

Getting the pricing of our product right. Our initial price included shipping. It turned out that, due to the dramatic variations in shipping costs, we were not making any money and actually lost some in our first month.

Raising the price, splitting shipping separately, and changing the value proposition on our website helped significantly.

What have been your key marketing and/or manufacturing lessons learned?

Very important: For Chinese manufacturers, make sure they are the original manufacturer. A lot of Chinese companies will claim they are manufacturers but are in fact middlemen. They will take your requests and modifications, then outsource them to the lowest priced manufacturer who may not produce the best quality, but will give them the best deal. They will go to great lengths to produce authentic proof that they are the original manufacturer, and you have no way of knowing unless you physically visit them.

Hire a consultant who will check them out in person and report their findings back to you.

If you used a manufacturer, how did you find them? What are your suggestions for first-timers?

Make travel plans to visit Canton Fair. Not only is it one of the largest in the world, it’s also a real eye-opener on what brand names companies use to produce their stuff. Each booth will have brochures and catalogs on what they manufacturer, which are free to pick up in exchange for your business card. Make sure to bring LOTS of business cards!

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

We were mentioned in Kevin Kelly’s newsletter (contacted him).

Placement in “The Shop” in Rolling Stone Magazine for 2 months. (Paid advertisement)

Hands-on reviews from The Gadgeteer, Virtual Hideout, About.com’s Mobile Office, and Digital Trends (all contacted via email).

Where did you register your domain (URL)?

http://moniker.com

Where did you decide to host your domain?

http://softlayer.com

If you used a web designer, where did you find them?

I partnered with one.

If you were to do it all over again, what would you do differently?

Make sure that you have your business basics down first. Proper business bank account(s), incorporate earlier, record expenses properly, keep receipts, and get your accounting straight. It’s very hard to switch things over later, so invest some time at the outset and get it right.

Although obvious in practice, it’s hard to do as it is detail-oriented work and requires patience. It takes away from the “real” work that needs to be done but come tax time, you will absolutely regret that you did not do this from the start. It becomes much more error prone and harder to do everything at the end of the corporate year.

What’s next?!

Develop more products, improve our current products, create more product videos, try affiliate marketing, and experiment more with social media.  There is a whole world of exposure methods online.  You have to dig in and try them all!

“Butterfly Repellent” by Timothy Spencer

Describe your muse in 1-3 sentences.

Natural Defense against social anxiety and stage fright. Safe alternative to beta blockers (when used for stage fright).

What is the website for your muse?

http://butterflyrepellent.com

How much revenue is your muse currently generating per month (on average)?

$1,000 – $2,500 per month

To get to this monthly revenue number, how long did it take after the idea struck?

1 year (2 months on market)

How did you decide on this muse?

After watching the documentary “Bigger, Stronger, Faster,” I learned about a growing problem of musicians and actors abusing prescription beta blockers to mediate the effects of stage fright. I looked to see if there was a natural alternative on the market, and there wasn’t.

What ideas did you consider but reject, and why?

I was originally working on a relaxation drink (think anti-Red Bull). I had contacted manufacturers and was just about to order product when I learned about the growing problem of beta-blocker abuse. I saw a niche and my business made a major pivot.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

1. I play volleyball for my university and tested the initial batches on my team. Positive feedback from the team was very encouraging.

2. I was so excited after having my first logo designed (outsourced on eLance). I made the logo my wallpaper on my computer and iPhone, and showed it to everyone. I don’t actually use it anymore, but it gave real life to the product and motivated me to keep pushing forward.

3. Getting my first few sales online was easily one of the most motivating experiences I’ve had.

What resources or tools did you find most helpful when you were getting started?

The podcast “Automate My Small Business” is GREAT. Youtube tutorials for learning WordPress and Photoshop. ODesk.com for outsourcing and managing VA’s.

What were your biggest mistakes, or biggest wastes of time/money?

Waiting until things were “perfect” before going ahead with them. Market presence was held off for months because we kept fine-tuning the website. I eventually realized that things will never be perfect, and most hang ups are self-imposed.

What have been your key marketing and/or manufacturing lessons learned?

Prompt, positive, and courteous customer service is invaluable. I’ve had great success with providing personalized coupon codes for whoever emails with a question.  For instance, if I receive an email with questions from Amber, I tell her in the response that she can enter the coupon code “amberisawesome” for 10 dollars off. A little more work but well worth it.

If you used a manufacturer, how did you find them? What are your suggestions for first-timers?

I used thomasnet.com to contact dozens of manufacturers around the country. I found one that was local and we were able to meet face-to-face. He loved the business idea and liked me a lot. My starting budget was very small and I was able to talk him into developing and manufacturing the smallest order he had ever done. He was happy to do so, which would have never happened without a face-to-face meeting.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

I have tried reaching out to local newspapers, attempting to spin an interesting story for them (e.g. “Local student-athlete finds creative way to pay tuition”). No takers yet, but the effort continues.

Where did you register your domain (URL)?

http://godaddy.com

Where did you decide to host your domain?

http://godaddy.com

If you were to do it all over again, what would you do differently?

Move things forward quicker. I think I could be 6 months ahead of where I am now if I had made bolder decisions and taken action instead of waiting for everything to fall into place.

What’s next?!

The next big goal is to try and land product on retail shelves.

The company is very young and I see a bright future. November was the first $1,000+ month and with a continued effort in Adwords and SEO, these numbers will only go up.

“ClockSpot” by Jason Ho

Describe your muse in 1-3 sentences.

Clockspot is a web-based employee time tracking tool, designed for business owners. Employees clock in from any phone or computer. Managers can then check timesheets online instantly.

What is the website for your muse?

http://www.clockspot.com

How much revenue is your muse currently generating per month (on average)?

More than $25,000 per month

To get to this monthly revenue number, how long did it take after the idea struck?

12 months.

How did you decide on this muse?

I originally came up with Clockspot because my parents needed a way to track time for different employees at different offices. Being a techie, I insisted that they hold off on buying physical time clocks, and instead wait for me to make them a simple web-based time clock. Within 3 days, I had a rough but usable prototype.

What ideas did you consider but reject, and why?

Out of college, I started a social Question & Answer website called Qaboom.com (pronounced “Kaboom!”). It didn’t work out for a number of reasons: partner conflicts, difficulties gaining traction, a failed partnership, etc. I learned a whole lot, but had to cut my losses and move on.

I dabbled in a couple of startup projects/ideas after that, then eventually came up with Clockspot.  I’ve been running it ever since.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

“The 4-Hour Workweek” really struck a chord with me because my company was growing quickly, and there was this forever-growing list of things that needed to get done. I was working 80+ hour weeks, at the expense of everything else around me: my relationships, my social life, my body… Being a perfectionist, I was very reluctant to delegate tasks to anyone but myself.

After reading the book, particularly the lesson about “The Art of Letting Bad Things Happen,” I decided to outsource support. The obvious benefit was that I no longer had to answer emails and phone calls myself. The most surprising benefit, however, was that it actually increased my focus and productivity by an order of magnitude, which was so much more valuable than the actual hours outsourcing saved me (~20-30 hours/week).

Because I didn’t have to directly deal with customers, I could actually think clearer and make better decisions about the overall direction of the product. Anyone who’s had a startup can probably relate to this: it’s really hard to say “no” to a customer when you don’t have that many of them. Because I wanted to please every customer and acquire every prospect that came in, I had this never-ending list of features to implement. I ended up scrapping this enormous list, and decided to only concentrate on the top 5 items.

Outsourcing support was the stimulus to my four hour work week. I delegated all tasks that weren’t core to my business, moved to Taiwan, then spent the next two years traveling Asia and South America, working only 4 hours/month while my company continued to grow. “A-ha!” is an understatement!

What resources or tools did you find most helpful when you were getting started?

I read a lot of books. About one every two weeks. I had no business experience or real mentors, so I had a lot to learn a lot on my own.

The most influential books I read were:

1) The 4-Hour Workweek (Tim Ferriss)

2) Crossing the Chasm (Geoffrey A. Moore)

3) The World is Flat (Thomas Friedman)

I have since moved to Silicon Valley, so my best resources now are other talented entrepreneurs.

What were your biggest mistakes, or biggest wastes of time/money?

I experimented with many different types of advertising: newspaper, magazine, buying leads, and even hiring a company to cold call. They were all a huge waste of money, but I wouldn’t consider any of them to be mistakes… unless I did them all over again!

My biggest mistake was trying to save money on hosting. When I first started, I went with a budget host, and never bothered to switch until my server crashed one day. After being on hold for hours with the hosting company and being transferred a thousand times, they finally fixed the issue 8 hours later. I lost 15% of my customer base that week.

Clockspot is now hosted on Rackspace, which we pay an arm and a leg for, but now our service is 100% solid. High-end servers, hardware redundancy, load balancing, dedicated firewall, daily security scans, etc. We’ve never had a downtime ever since switching to Rackspace.

What have been your key marketing and/or manufacturing lessons learned?

Track everything. A/B test everything. I am consistently surprised at how wrong my assumptions are.

A good example is to always track the performance of your keywords from start to finish. I used to pay for the keyword “time clock” because it brought a lot of traffic, and a decent amount of sign ups. However, it wasn’t until I started tracking actual account activations (when a sign up becomes a paying customer) that I realized “time clock” wasn’t converting at all, compared to the lower traffic key phrase “online time clock,” which was converting many times more than “time clock”.

If you track enough data, you’ll eventually be able to quantify each action a visitor takes into a dollar amount. For example, I know customers that searched “online time clock” and signed up for our newsletter will have a X% chance of signing up, which converts Y% of the time, which translates to $Z/month in earnings.

Now if Clockspot’s monthly growth ever fluctuates, I know exactly which levers caused it.

Where did you register your domain (URL)?

http://www.godaddy.com

Where did you decide to host your domain?

http://www.rackspace.com

If you used a web designer, where did you find them?

I am both the designer and developer.

If you were to do it all over again, what would you do differently?

Drop out of college to start Clockspot sooner! Just kidding, if mom and dad are reading…

Honestly nothing. I have a tendency to not listen to good advice, which causes me to try and fail, then start preaching that same advice. But as a result, I never really regret anything that I do.

What’s next?!

During my two years of travel, my main accomplishments were:

1) Climbing Mount Everest to Basecamp (where the oxygen is 50% that of sea level).

2) Biked the circumference of Taiwan (~1000 km).

3) Volunteered in the relief effort for Haiti.

I ended up moving to Silicon Valley and plan to start other businesses, as well as get involved in more humanitarian work.

Life plan = loop { create_value(); have_fun(); }

###

Need help with developing or perfecting your “muse”?

This following offer is only available for the next 12 hours.

Click here to learn how you can get a complete site review from me and one of the best site testers in the world… or a one-hour phone call with me. I advise companies like StumbleUpon, Evernote, Posterous, and TaskRabbit, and the least I’ve improved conversions is 21%. The most is over 100%. Ridiculous as it might seem (it is ridiculous), I get at least $50,000 per 60-minute speaking engagement, so this is something I never do.

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The post Engineering a "Muse" – Volume 2: Case Studies of Successful Cash-Flow Businesses appeared first on The Blog of Author Tim Ferriss.

This post has been in the works for a while.

One common challenge for readers of The 4-Hour Workweek is the creation of a “muse”: a low-maintenance business that generates significant income. Such a muse is leveraged to finance your ideal lifestyle, which we calculate precisely based on Target Monthly Income (TMI).

In the last four years, I’ve received hundreds of successful case studies via e-mail, and more than 1,000 new businesses were created during a recent Shopify competition, but I’ve presented only a handful of a case studies. Here are a few dozen we’ve covered:

How to Sell 10,000 iPad Cases at $60 Each (and Other Lessons Learned)

18 Real-World Lifestyle Design Case Studies [VIDEOS]

In this post, I’ll showcase four successful muses inspired by The 4-Hour Workweek, including lessons learned, what worked, and what didn’t…

In the comments, please let me know: Is this helpful, and would you like more of these posts? What’s missing? If you’d like to submit your own muse for being highlighted, please see the end of this post.

All suggestions are welcome, and I hope you enjoy these as much as I did.

“EarPeace” by Jay Clark

Describe your muse in 1-3 sentences.

EarPeace improves any loud live music or nightlife experience. EarPeace is high fidelity hearing protection that turns down the volume without distorting the sound, it’s virtually invisible, comfortable, reusable, and comes in fantastic packaging.

What is the website for your muse?

http://www.earpeace.com

How much revenue is your muse currently generating per month (on average)?

$5,000 – $10,000 per month

How did you decide on this muse?

My muse solved my problem. I spent carnival in Port of Spain with my beautiful Trinidadian girlfriend and danced for days in costume next to tractor trailers converted to giant rolling speaker stacks. We recovered in Tobago and the ringing in my ears was louder than the waves. I turned to her and asked if she had ever seen ‘stylish’ hearing protection. She hadn’t. Right then I found my muse.

After all the research, I was confident I could inexpensively design a better product, deliver superior marketing, and construct an infrastructure that would run itself. EarPeace solved the three major problems that people have with hearing protection – it destroys sound quality, looks stupid, and isn’t comfortable. When you use EarPeace, live music is crystal clear (you can even hear your friends), people can’t see you wear it (color of your skin and very low profile), and they are very comfortable (and reusable – high value!). I could also wrap it in beautiful packaging and keep a reasonable margin. And, it’s small, inexpensive to ship, and easy to maintain inventory. EarPeace has proven itself a winner.

What ideas did you consider but reject, and why?

I was on the verge of opening a yoga studio in Amsterdam. In January 2008, I flew to Amsterdam to do the final walk-throughs, meetings with business attorneys, real estate agents, real estate attorneys, pay roll processors, personnel managers, accountants, special accountants, other people to help me stay in code for the byzantine list of regulations around hiring people and paying them, and the list goes on… TO OPEN A YOGA STUDIO (insert total exasperation). I read half of “The 4-Hour Workweek” on the way out, and the other half on the way home. I knew right then that the yoga studio (especially in Amsterdam) was not the way. I spent the first two weeks of October 2008 in southern China doing factory tours for EarPeace.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

The main A-ha moment was the realization that I couldn’t be tied down to a space. A yoga studio (as much as I love my practice) makes you immobile. I grew up overseas and the wanderlust is still strong. I have to run my business from anywhere. EarPeace allowed me to do that.

The other tipping points were making the right decisions about staying tethered to the corporate mother ship. Overdoing it on vacation and taking as much unpaid leave as possible were critical.

What were your biggest mistakes, or biggest wastes of time/money?

Over-ordering inventory. This was the biggest mistake. As soon as you get your first run of product, you are already tweaking it and making it better. Bargain and promise the moon on future sales, and keep the inventory low. On the second order (blister packed EarPeace for venues), I over did it. Thank BUDDHA the initial run of boxed EarPeace for internet sales are still almost perfect.

What have been your key marketing and/or manufacturing lessons learned?

Ask as many smart people for their opinion as you can. The forest quickly gets lost for the trees when you are in the thick of operational, distribution, creative, and financial decision-making. Give 5% of the company to a couple of clutch advisers that will give you 1-2 hours per week to review strategy, make introductions, and help drive sales. You CAN NOT do it all by yourself. There are so many marketing communications decisions that make it impossible to do everything alone. And, as quickly as possible, hire someone part-time to do continuous PR.

How did you find your advisers, and what would be your advice to first-timers?

I was lucky enough to have a robust network of professionals and friends that I could turn to for quick advice during ramp up and launch.  My Thunderbird MBA network is INVALUABLE.  However, if people don’t have those sorts of people on speed dial, it’s then a matter of networking.  The American Marketing Association is cheap to join and has several meetings a month where you can meet smart people who are interested in helping budding entrepreneurs.  The SBA has formal adviser programs.  Kauffman Foundation will help connect people.  There are lots of resources, but you need to get out and have lots of coffees, dinners, and beers until you find someone who you trust, who demonstrates the types of core competencies you need, and is willing to be involved / mentor you through the mountain that is starting a business.

How did you find your manufacturer, and what would be your advice to first-timers?

I found my manufacturer through Alibaba.com and GlobalSources.com.  I contacted all of them through my business email, because using a Gmail account will not get you serious feedback.  I started off with a list of 20+ potential suppliers and sent them all emails.  Based on how quickly they responded, the quality of their English, and their willingness to answer my questions, I narrowed that list to about ten.  I sent those ten an NDA and narrowed it further when there was no response or issues with confidentiality.

Then I asked them to demonstrate that they could create what I wanted through mock ups, and further narrowed the list to about five.  After that, I used my MBA network to help find an interpreter that could help me with the factory visits and negotiations.  This was critical – you don’t know what you don’t know, and there is a lot you don’t know about doing business in China.  Having someone who speaks the language and can drive the negotiations is worth the money.  After I found my interpreter, I got on a plane and went to Hong Kong.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

– “A Ringing Endorsement for Earplugs” on Mashable

– Patrick Dierson on the Jay-Z tour

– The Bowery Presents venues in NYC carry EarPeace

– Thievery Corporation has custom EarPeace

– I am making custom EarPeace for SXSW

These all happened through adviser introductions, lots of blind phone calls, and PR. And, being out there. EarPeace had a presence at every major music festival in the late summer. That is a phenomenal work lifestyle.

If you were to do it all over again, what would you do differently?

I would have brought on advisers sooner, ordered less inventory to enable faster product innovation, and spent more money on PR.

What’s next?!

EarPeace is a great product. I am very proud of it. It really works and it’s designed uniquely enough that competing ‘high-fidelity’ products just can’t touch it for normal lifespan. We’re going to transition EarPeace into a consumer, mass-market product. Right now it’s still relatively niche, but EVERYONE needs this. Foam earplugs are great for sleeping, for instance, but you need hearing protection when you are out and about all the time. Whether it’s the movies, the basketball stadium, a loud bar, a restaurant, or the subway. We still need to hear, we just need to turn down the volume. EarPeace does that, discretely, and in a high value way. I want EarPeace at CVS, Walgreens, and Wal-Mart by the end of next year.

Then, I’m taking a break. I’m going back to my favorite Vipassana retreat in Thailand. When I come out after 10 days of no speaking, 10 hours of meditation and 2 hours of yoga per day, and fabulous vegetarian food… the next muse will have manifested itself.

“Summer Jasmines” by Alissa Kraisosky

Describe your muse in 1-3 sentences.

My muse is a foldable, compactable evening and pedicure sandal. It is patent pending, is launched in the US and currently launching in Japan.

What is the website for your muse?

http://www.summerjasmines.com

How much revenue is your muse currently generating per month (on average)?

$1,000 – $2,500 per month

How did you decide on this muse?

I had read Tim’s book on a flight back from a Paris vacation in 2007. I was stuck in a job that was getting more toxic, and Tim’s book got me excited again – kind of like when I was in college and felt like anything was possible. About a year later, necessity became the mother of invention. My feet were hurting walking back to my hotel at a Las Vegas convention center. I wished there was a stylish shoe I could just pull out of an evening bag and wear for comfort. I also wanted something that would easily separate the toes during a pedicure. I pulled out Tim’s book and re-read the chapters on starting a muse, and voilà!

I also used PRLeads and HARO to gain exposure for the product (as mentioned in the book). The idea was put into motion, and Summer Jasmines has since appeared in the Style Network website, attracted the attention of celebrity stylists, and is in the hands of Paris Hilton.

What ideas did you consider but reject, and why?

I thought about doing something in the medical field (my day job is as a physician-psychiatrist) but read Tim’s experiences with BrainQuicken and decided against it. I didn’t want to do something that was too similar to my day job.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

I was walking back to my hotel from a convention in Las Vegas and my feet were killing me – that was my “A-ha!” moment. I did not want to walk back barefoot, so I limped back to the hotel with my uncomfortable shoes on. I did some searching online and found nothing similar to what I developed. I wanted a shoe that could be worn in emergencies, but also daily or to pedicures.

What were your biggest mistakes, or biggest wastes of time/money?

I hired a PR agency, but found they needed micromanaging and it was not helpful at all. I did much better with Tim’s recommendations in the book, such as HARO and PRLeads.

What have been your key marketing and/or manufacturing lessons learned?

My product needs to really be demonstrated or else it just seems like another shoe that’s joining the masses.

How did you find your manufacturer, and what would be your advice to first-timers?

Finding a manufacturer was tough, as I wanted to make sure they made the product exactly as I designed it. I searched in the United States with no success, and it took me three months, multiple Internet searches, and a flurry of follow up e-mails before I found a reliable manufacturer. This manufacturer was willing to prototype my designs, with minimal cost initially (around US $300) per style. When I saw that the sandals were generating a good market response, I was able to order in bulk.

My advice to first-timers would be to start with Alibaba.com. It’s fairly easy to find a contact who speaks English (in my case) and I was also able to find some pretty big name established manufacturers (for example, those who work with Disney and L’Oreal). Be sure to ask them if they do private label manufacturing (the acronym ODM–original design manufacturer–is what you’re looking for.) Ask them to ship a few sample items to you (or prototypes) to avoid a huge inventory of something you don’t want.  Some other acronyms to learn are: FOB (freight on board or free on board) and ISF (Importer Security Filing) so there are no nasty shipping/customs cost surprises later!

Any key PR wins? Media, well-known users, or company partnerships, etc.?

Joe Robinson at “Entrepreneur” magazine recently interviewed me on surviving multitasking and setting boundaries. Again, it happened via PRLeads, recommended by Tim.

If you were to do it all over again, what would you do differently?

I would have not hired the PR firm.

What’s next?!

I want to keep designing more shoes, and figuring out how to integrate this into medicine to increase wellness. I know it will happen somehow!

“Hewley L-Carnitine Shampoo” by Daniel Bradley

Describe your muse in 1-3 sentences.

Hewley products (L-Carnitine Shampoo and Saw Palmetto Conditioner) help men and women combat thin, lifeless and limp hair with a daily 2-step regimen for thicker, healthier hair, as well as new hair growth.

What is the website for your muse?

http://www.hewley.com

How much revenue is your muse currently generating per month (on average)?

$2,500 – $5,000 per month

How did you decide on this muse?

We did research on scientific journals and studies with respect to stimulating blood flow to the scalp. We discovered some exciting results and found that there was a viable niche, and that the pricing of the products allowed for necessary margins.

What ideas did you consider but reject, and why?

Our first muse concept was fish oil. We found a great Icelandic company that has a terrific product that they would sell to us in bulk. We tested the concept using 4HWW tools, but found there was too much competition and not enough differentiation.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

The main tipping point was finding that we could ‘name’ our product with an exciting and key ingredient and also own the domain (e.g., L-Carnitine Shampoo – the domain lcarnintineshampoo.com was available). Tying together the domain and the product name seemed like a great way to ‘own’ a niche. We then realized that having a ‘brand” (in our case Hewley) would add the flexibility of playing around with our products and product line.

What were your biggest mistakes, or biggest wastes of time/money?

The biggest trouble has been trying to outsource website design work. We outsourced our product label design to a great firm, and are super excited about the results. But in the web design world, we’ve not had the best luck. We’ve tried a few firms on eLance and a couple of Shopify designers, but we struggled with finding a designer who knew how to ‘design’ for maximum conversion. This has been our biggest waste of time and money.

[Note from Tim: This is where advisors can be very helpful. First, have an advising conversion expert help you put together “wireframes” or sketches of pages that should convert (using pen and paper, or something like Balsamiq). Then have a designer implement and add aesthetic flavor, after which you have a developer chop it up and create the functioning site.]

We are still struggling with the concept of a brand.  We probably would have stuck to ‘L-Carnitine Shampoo’ instead of ‘Hewley.’  Getting people to understand what Hewley is will ultimately be a positive for us, but right now it’s just a hurdle to get over.

What have been your key marketing and/or manufacturing lessons learned?

Twitter! There are firms out there that will manage your Twitter account for $1500+ per month (yikes!). We found SocialOomph and a couple other firms that troll for followers for about $50/month.  In one month, they helped us build our Twitter following from 10 to 1,400 followers, and it is now a major source of traffic to our website.

We also used a marketer on eLance to develop a brochure for us. That saved us a lot of time, and the marketer knew how to use clear, concise, and powerful language.  The brochure came out great!

How did you find your manufacturer, and what would be your advice to first-timers?

Once we proved the concept and decided it was time to outsource production, we started playing detective.  In addition to Google searches, we took each shampoo product that we studied during our product development and looked for clues as to where it was manufactured (whether it was made in-house or outsourced).  We also asked each potential vendor to name a couple companies that they thought were competitors. With this multi-pronged approach, we found many more manufacturers that were initially accessible on the web through simple Google searches.

My advice for first-timers: Start today.  Commit yourself to your muse by putting the idea out there as fast as possible.  We know a lot of folks who have read the 4HWW and love to discuss it and their ideas, but time moves on and nothing happens.  Call a potential business partner and share the tasks; tell all your friends that you are launching a product on X date; build your test site and get it out there.  My partner and I have learned that the fastest way to get something done is to commit to it. You always have time to perfect the product later.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

We are going to be featured in an upcoming issue of a magazine with 100,000 readers. It came about by reaching out to a rep from the magazine and showing her the brochure. We have also been approached by other sites looking to add our product, but are cautious to protect our margins (4HWW).

If you were to do it all over again, what would you do differently?

We would have had our product manufactured faster.  We spent too much time in “test mode” by mixing and fulfilling orders on our own. Once this was automated, it was a huge weight off our backs. We could focus on selling and marketing instead of fulfilling.

What’s next?!

We have learned so much since we started.  We’ve been working with a chemist on a much-improved product that includes a concentrated serum, and it’s backed up by some pretty impressive results. We will be rolling this out early next year, and couldn’t be more excited!

“Shred Soles” by Nate Musson

Describe your muse in 1-3 sentences.

Comfortable, canted, performance, snowboard boot insoles.

What is the website for your muse?

http://www.shredsoles.com

How much revenue is your muse currently generating per month (on average)?

$1,000 – $2,500 per month

How did you decide on this muse?

I had the idea for this product in the back of my mind since winter of 2005. After reading 4HWW in 2007, I started to hand-make and test different degrees of canted insoles in my snowboarding boots. I know it sounds cliché, but the idea was kind of like an itch that wouldn’t go away – I just had to keep taking steps towards it, and 4HWW gave me the “road map” along the way! I also felt that this product could fit the 4HWW muse criteria, so I went with it.

What ideas did you consider but reject, and why?

I’d considered making a more versatile, non-canted, non-snowboarding specific insole with cool art printed on it. It would have been way easier to make, but I just didn’t feel that it was niche enough. I really wanted to have something that was snowboarding-specific.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?

First, my own personal testing. I personally made and tried out hundreds of different insoles with different degrees of canting. Second, the affirmation that I was on to something by a professional boot fitter whose classes I’d attended. I kind of had to dance around the topic since I didn’t have a patent at the time. Third, customer feedback! The very first online sale happened before I even had inventory or marketed the site (the site wasn’t even done!).  I had to send the customer my last sample in my size. A couple months later, he emailed me with this unsolicited feedback: “After 2 foot surgeries, I didn’t think my feet would be able to handle snowboarding, but thanks to the Shred Soles, I’m carving up the mountain. Thanks again.”

What were your biggest mistakes, or biggest wastes of time/money?

$600 phone call to a trademark attorney just to have him tell me that “I’ll never be able to trademark Shred Soles.” He was wrong. I just kept pursuing it with the USPTO and it worked out. Paying for services that I didn’t need yet (or ever), like shopping carts, 1-800#, and a podcasting account. Buying business cards too early, and now the info on them is outdated. Getting stuck on patents and trademarks and not moving forward with the rest of the business because I was concerned that they wouldn’t work out.

What have been your key marketing and/or manufacturing lessons learned?

Manufacturing- Keep making calls/emails until you find the right fit. I made 30 or more manufacturing contacts until I found the right one! I had guys tell me that what I was trying to do was stupid, impossible, and that it’s just not the way things are done!

Marketing- Facebook ads and fan page, Twitter, Email list, submitting to product reviews, posting in snowboarding forums, and a little SEO!

How did you find your manufacturer, and what would be your advice to first-timers?

I found my manufacturer through Google, emailing the few that looked decent, then exchanging more emails and phone calls with them if they responded. I decided that most of them were not a “good fit” for what I was trying to make. Finally, I came across a manufacturer that was receptive to my idea! They always responded promptly, while many of the other manufacturers I’d contacted had been very slow to respond.

My advice for the first-timers seeking a manufacturer would be to send lots of emails, make lots of phone calls, and be persistent! Find one that’s “into” what you’re trying to do and really understands the scope of your project.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

I’ve got some big coverage lined up with the #1 snowboarding magazine through a lucky industry connection. Shred Soles has also been covered by the #1 and #2 independent snowboarding bloggers.

If you were to do it all over again, what would you do differently?

I’d get set up with a mastermind group from the start! That alone would have made the biggest overall impact in every area of the business, IMO!

What’s next?!

The new site just went up, and it has a much cleaner look! I’m going to add some new items into the mix (socks, for instance), as well as a new secret product!  I’d love to do some kind of information product in the future, and have a couple of ideas on the back burner.

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IMPORTANT AFTERWORD:

Do you have a successful muse that’s generating more than $1,000 per month?

Please tell me about it! If it stands out (meaning you give specific details of lessons learned and what’s worked vs. what didn’t), I’m happy to promote you and help further increase your revenue. If you qualify and this sounds like fun, please fill out this form here.

Both physical and digital goods are welcome, as are services, as long as they’re low-maintenance, income-generating “muses” as described in The 4-Hour Workweek.

The post Engineering a "Muse": Case Studies of Successful Cash-Flow Businesses appeared first on The Blog of Author Tim Ferriss.