Ask HN: Cash-flow muses
Some desirable attributes of a cash-flow muse:
- You own it.
- The value proposition is simple enough to explain in one sentence.
- High margin: 4x to 50x.
- Easy to automate or outsource the selling, record-keeping, and whatever other businessy stuff is needed.
- Low capital investment.
- Takes no more than about 4 weeks to manufacture the product.
Ferriss often casually mentioned that generating this sort of cash flow is easy to do. It might take a month of real work to set one up, and you'll likely have to market-test a few ideas before you find one that's solid enough to commit to, but once it's up, it should pay your living expenses.
That sounds really good--when talked about abstractly. The main idea is really not that a cash-flow muse can free up your time, it's that cash-flow-muse opportunities are abundant and easy to find. I myself have little concrete idea of what sort of tiny product you could turn into a tiny business like this, and scarcely any idea how to begin searching for one.
My question: Has anyone actually done one of these?
37 comments
[ 5.8 ms ] story [ 89.3 ms ] threadI think that "cash-flow muses" are kind of a myth. If there's something easy to do, it's probably easy for a lot of people, hence you'll have a lot of competition, and market price will be low. If you want to differentiate yourself, then you'll have to put time and work into it, and it'll stop being a cash-flow muse. Also, if you need many cash-flow muses, each taking up only a bit of your time, together they'll take up a lot of your time.
Anyway, why do you want to free up your time anyway? If you'd like to focus on doing what you really want, then you should read this: http://www.paulgraham.com/love.html (a bit long but worth it).
many times, doing hard work towards what you want to do in life doesn't quite pay the bills. for him, it was traveling around and doing interesting things. for you, it might be working on an interesting startup that won't even be ramen profitable for a while.
Here's a couple of other thoughts:
1. Hackers often dramatically under-estimate the knowledge that they have...something that's easy for most of us is probably near impossible for 99.9% of the population, or at least they think it is.
2. For me, I don't view this as something that I'll dedicate any more time or energy to than is necessary to free my time. The whole point of a muse is passive income to allow you to pursue whatever you're really passionate about.
For example, I am not a professional photographer but I have photos on iStockPhoto and ShutterStock. 33 cents per purchase ads up and I have paid for a nice amount of gear with the income generated from photo purchases.
In another example, the google ads still point to my account on an old message board I started. It's 1 check per year at best but it's nice.
If we all put our web designs, a widget of code, anything of that sort for download for free on a page with ads or for $1 on a purchase paid, you will be surprised at how it can add up over a long period of time. That's the idea.
I plan to put some of my own webdesigns on an online gallery, people would pay and get a link to download the .zip. After it's set up, it would be another source passive income flow.
A bit differently, at one point I experimented with answering questions for the text messaging service kgb_ whenever I would watch TV. By forcing myself to do this, I was able to get a nice check at the end of the month. 10 cents for 2 min of work isn't really worth it though.
Making rules for techniques like these is silly. The idea is to make some extra spending money however you can... in my opinion.
My advice is to focus on a niche market filled with people w/ money, willing to pay for stuff. And avoid any market/problem that your typical computer geek would be interested in or aware of (you want to relax on the beach, not code away 60hrs a week fearing some other startup will catch up and take the market away).
May I ask, broadly what kind of product and what kind of market?
At least two people now have read my blog and set up their own businesses. One of them practically Xeroxed my business, and his I-can't-believe-its-not-me is fairly decent. I always joke that since my sales have doubled since then all I need is to recruit two more people who understand copy/paste and then I can retire. (The numbers in the joke are way out of date.)
Similarly, I was myself a new upstart competitor to the established market participants back in 2006, and I haven't killed them, either. (The idea is not to pick a market with no competitition -- that is a red flag there is no money to be made. Instead, pick a market where there is an addressable niche for whom the existing choices are painfully inadequate. Then, sell pain relief.)
Cf. Tom Lehrer's line about the doctor who specialized in "diseases of the rich".
Yep, although I don't think I could comfortably describe it as a fun little sideline these days.
See http://www.bingocardcreator.com/stats and look at the historical sales data: back in early 2007 when it was selling high three figures a month I think it would have been a fairly decent example of this.
Tim Ferriss would not be my first suggestion for who to look for for advice on how to accomplish this. I think he sells "You can avoid doing actual work!!!" when the real lesson is "You can do actual work very, very efficiently these days if you're prepared to spend significant amounts of time and mental effort laying the groundwork for it."
Incidentally, the amount of time you spend on "manufacturing the product" is rounding error next to the amount of time you will spend on this project. 90% of the value happens outside your IDE.
Of particular interest to me is that the price for your program is $29.95. Being a software guy who never buys anything except necessities, books, and meals out, I have a hard time imagining myself in the place of a buyer. The reality, of course, is that for some people, $29.95 for the bingo-card creator is a good deal, and you found them.
Getting the site to this point took about two years, so I would counsel patience and perserverance. It also helps to really care about the project, even if you don't spend much time on it.
And it especially helps when your business partners are relentless insects who spread very efficiently and feast on the blood of people's sleeping children.
I heard an NPR story about bedbugs being on the rise a year or so ago. It didn't occur to me that bedbugs presented an entrepreneurial opportunity.
Which VC firm are you referring to?
Can you give any more details? Exactly (or approximately) how many dollars is half your living expenses? How did you start the project and keep it going? What marketing tools do you use? How much time + money have you put into the project?
Sorry if I'm prying, but I am genuinely interested in people that taken a simple idea and built something strong and profitable out of it.
It took about two months of my time to do the original website, much of it spent on SEO optimization and traffic generation strategies. Today we earn ~$8k/month on the site with an upkeep of ~30 minutes/week.
This worked primarily because of deep knowledge of the market (from back when we were developing this kind of software). I don't think an outsider would have been able to predict hit products far enough out to lay the proper groundwork for SEO/etc. When I was actively creating the site site you could search for "Product X" on launch day and we'd be #1 or #2.
Note: I also launched the site on our company's domain name, taking advantage of our existing inbound links. SEO from scratch will take a year or more to really see predictable traffic levels.
So, yeah, it's definitely possible to create a cash flow muse; I think I could build another one today in around the same amount of time.
It would be hard to do from a totally cold start, though; I'm not sure you could say "you know what, I'm going to make money by creating a local real estate website", or whatever random topic, and actually make it happen. But if you had friends/family in the real estate business, or somehow had accrued expert knowledge in the area, you'd be off to a strong start. If you're smart about the area you pursue you should be alright...
We looked at this exact market a bit. In the course of doing our research, we found a company with a similar (but better...or at least more functional) offering than the one you cite. And all of the sites are completely FREE for real estate agents. It's difficult to compete with a company that has a nice, easy-to-use system that is FREE. And they're just starting to market nationally. We eventually just started using them instead of developing our own...and we're a company with 50+ full-time developers on staff. I'd genuinely be interested in your ideas if you have a way to compete with free...
I once talked with a woman in a Palo Alto coffeehouse who was running her one-person business right there (she was there just about every day). She sold a tiny program she had written that did something involving physical chemistry. I think she only had one or two customers that she licensed it to, but that was all she needed.
Affiliate marketing in general is probably a good approach if you have deep knowledge of some area and an idea of how to generate traffic. SEO can be quite difficult, but if you know enough about your topic--let's say you're a multi-day hiker and you're running a blog with product reviews--you should be able to generate enough actual, usable content to get some revenue flowing.
A more difficult question: What non-obvious "problems" become manifest once a solution is evident? (Perhaps, A key to victory in this consumer culture).
Anyway, more directly on topic, here's a cash-flow muse I came up with recently: make a pasta-chute that lets you put in the pasta without burning yourself in the boiling water. Let me know if you wanna collaborate with me.
This is a direct result of doing Ed Dale's 30 Day Challenge last year. That's a free online course on internet marketing, especially on market testing, that often gets confused with a "make money fast" scheme. I went into it last year with what I thought was a decent product but soon realized that the online market (search hits) for it is tiny. Almost a year later and I still only get 20 hits a week on that one.
In the last week of the challenge I stumbled upon a market niche that works and now generates up to a thousand hits for me a week. It's not a market looking to spend money so my conversion rate has sucked, but I'm slowly finding what sells to them.
If I hadn't done this testing, I would have wasted some money and a lot of time trying to get the first idea off the ground. If you've got a product or service (or even just an idea for one), I'd recommend the 30 Day Challenge as a free/cheap way to get rolling.
The idea of spending a month making something and then the rest of your time reaping in the profits with low overhead is a great one. Not only does it give you the freedom to work on a startup (or whatever) without worrying about rent, but I'd warrant it gives you a fair bit of credibility too - and a possible exit, even; cf. the recent post about Mingle^2 which took 66.5 hours to build and which got sold to a competitor.
Edit Actually, I kind of have a cash-flow muse of my own. I helped build up a gaming blog to the point where it pays significant money to writers, and am retained as a columnist there, contributing about 1 hour's worth of work every Saturday. Without going into too much of the gritty detail, if I doubled that to 8 hours of work a month, I'd about cover my rent. However, there's a catch; as my startup's become more exciting, I've had no time to play the game I blog about, and have stopped writing. I can imagine this working a wee bit better if I was writing a column a week for TechCrunch or something similarly in line with the 'day-job', though.
A couple of years ago I setup JS Nature Photos (http://photos.jstechs.com) basically how it is now as a branch of another site at the time. Soon traffic to JS Nature Photos dwarfed traffic to the main site. The other site was fizzling anyway. Practically all of the revenue from JS Nature Photos is from ads (people don't buy photos online). It brought in some pretty good money through the first half of 2008, till the economy tanked.
I don't have time to do much with it with school, etc., posting a photo every week or two if I'm lucky, but it still pays the rent each month.
For me a muse has such a noble connotation about deep tought, meaning and inspiration that I feel it is cheapened by being associated with selling pills online and other near-scams. Not to say that a small, low maintenance business can't have value to the world.
I have one micro-b2b idea, but I'm not really convinced of its value. How do you generate more ideas of the sort? The impending time pressure isn't helping me either :-)