“Guess who’s back” (cue the beat)
Wow, it’s been a while. I’m back from an extended blogging break for a blog I barely started. I’ll do better, I promise.
I’m a very slow writer… it gets hard to balance with everything I have going on. It takes longer than I thought to put out the type of content I want to write. 2013 should be much different.
I spent a lot of 2012 working on things I didn’t necessarily want to be working on and/or wasn’t a good use of my time, and I need to do a better job of that this year. The blog will benefit from that.
I know there’s interest in “update” type posts. I don’t know if I’ll do monthly updates, but since I know that’s something people are interested in, I’ll try to do regular updates on some of the projects I’m working on that people might find interesting. We’ll start with today’s post.
Blogging:
I started the blog on August 1st, made 3 posts over a 3 week period and haven’t blogged since. Despite that, I was able to gain over 1,700 subscribers.
First post: August 1
Last post: August 21
Month One Traffic
There are a lot of flawed theories out there on the best ways to build a blog. Much like business, many people grind away at it incorrectly. Blogging is constantly viewed as a saturated market. It’s actually one of the LEAST saturated markets out there. I’ll probably write a post about this subject in the near future if people are interested.
Projects
I mentioned one of my objectives this year is to work on things that are the best use of my time. One of the ways I’m clearing off my plate is selling some of my e-commerce stores that aren’t my focus. Our busy season just finished up, so now is a good time to do it. They don’t really take a lot of time to run, but we have a very lean team, so with new projects coming up it makes more sense to focus on as few things as possible. I’d rather have our time going towards our main projects rather than spreading ourselves too thin.
That being said, I’m always on the lookout for good opportunities, and there seemed to be an opportunity for one of the main stores.
There was a product I thought about going to China for in October. I wanted to meet with some manufacturers about making it for us. I decided against it due to time constraints, and the fact that I wasn’t sure I’d stay interested long enough to want to undertake a big project with that particular product.(it wasn’t an easy one to make) After debating with myself, I decided there are way too many opportunities out there to get involved in a project I may not enjoy.
I’m planning on going to China in April or October this year with my friend K (from this post). He’s been doing business out there for years, but this will be his first visit as well. We mainly want to meet people, visit some factories, check out some fairs and get a feel for everything.
Speaking of that…
Have you ever been interested in getting China-like margins on products without traveling to China? It’s actually not all that complicated. We tried it for a product on one of the stores.
All we did was call the brands who currently made the product, and factories that made similar products here in the US. Then we asked if they were open to a whitelabel deal. Many of them were, since it’s not much additional work on their end. All we were asking them to do with whitelabeling, was to take a product they already made and let us rebrand it under our brand.
Many people were willing to do this for us… several at extremely high margins.
For the product we tried it on, we get 29% margins currently. With a handful of calls and emails, the margin quotes we received ranged from 40-50%.
I’m surprised more people don’t look into doing this. If you want higher margins but don’t want to go through China, try this strategy out.
Investments
One thing I looked into a decent amount last year was investing in startups.
I looked at a lot of deals, but ran into the same problem way too often- everyone thinks they’re the next big thing, and want to be valued as such.
Here’s the deal: the valuations are so insane a lot of times that the investing strategy is hoping someone else comes in and pays a higher multiple than you did. In almost all of the calls/meetings I’ve had with people doing angel rounds, I found it amazing that almost no one tried to sell me on the profit they were making/planning on making. There was no talk of ever making money. I came away from most of those calls baffled.
Was I being punk’d?
They were only focused on raising another round of money at a later date, which would be at an even higher valuation. They were selling the idea that this is where I’d make money.
That’s not the type of investing I like to do (although it does work for some people). Even when some of those businesses hit a home run, a lot of the times you as the investor won’t hit one, because you invested at such an absurd multiple.
I’ve looked into a few alternatives to angel deals such as helping fund companies and getting actively involved with their business/marketing (rather than playing startup roulette).
There are a lot of people out there who don’t know how to make money, running a business that isn’t profitable with no clear plan to scale, yet they’re out there trying to raise money.
Some of the companies with baffling valuations actually ended up getting funding.
This made me think I might be playing the wrong game in business.
I’m no expert in the angel space, but just from poking my head around a bit, it makes me think there’s a lot more money available than there are good companies to invest in.
When some people think about starting a business they think about Silicon Valley. They think about raising money, getting meetings with investors, having a board of advisors, getting bought out someday… They forget about all of the important stuff…like…making money.
I did end up making one large investment, but it wasn’t any sort of angel deal (I’ll probably discuss this in a future post). If you’re trying to get a great return on your money, chances are that standard angel deals will not get you there (overvalued ones definitely won’t). You either need to get in a position where you get non-standard deals, or create a new situation that adds value to both sides of the deal.
Miscellaneous
One thing I almost did since my last post, was buy $84,000 worth of books from Tim Ferriss.
“WTF!?”
Let me explain.
Tim Ferriss recently released a new book called The 4-Hour Chef. He ran a promotion to help make book sales, and one of the offers was as follows:
- 4,000 books of The 4-Hour Chef
- Two 60-minute keynote speeches
- All expense trip anywhere in the world, with 5 other people who sign up.
Most people would instantly look at this and say, “too expensive”.
That’s a silly response.
This was clearly a +EV opportunity, it’s just that most people don’t think that way about things. If someone described it as “too expensive”, it’s probably because they didn’t run the math. They were reacting emotionally to the $84,000 as seeming like a lot of money, rather than logically about the EV on the deal being extremely positive.
Remember what we talked about in this post: https://foreverjobless.com/how-to-buy-a-ferrari-for-20k/
In the long term, everything works itself out if you are putting the work in and consistently making +EV decisions.
Don’t let emotion get in the way of making money. Some simple math will tell you everything you need to know, and it’s often going to lead you in a different direction than your initial emotional response would have.
You will have much better end results once you start making decisions logically instead of emotionally.
Let’s break the deal down:
You get 4,000 books of The 4-Hour Chef. As you can see, the book is selling for $20.99. The cheapest new book is selling for $17.49 + shipping.
Maybe you offload the books and get $60k back.
Then, you get an all expense trip with top entrepreneurs/investors.
“But wait, it didn’t say top entrepreneurs/investors were going!”
Well, you can figure that out pretty easily by realizing the other 5 people on the trip have at least $21k to throw around (price of that package), so they probably do pretty well. The trip alone would probably be worth $5-$10k, and doesn’t factor in that you will establish close relationships with a handful of successful people.
Then the main value – you get 2 keynotes from Tim. I’ve heard he charges ~$100k for a keynote speech, so just right there you’re getting around $200k in value.
Since you’ve already paid yourself back most of the money from book sales, you’re basically getting Tim to speak almost FREE for you… TWICE.
It’s pretty easy to fill a room for Tim Ferriss. So on top of the close relationships with Tim and other top entrepreneurs, it wouldn’t be unreasonable to make a sizable amount of money.
A friend here in Austin had a project I thought would be a perfect fit for this, so I let him know about it. He looked into it and had a phone chat with Tim, but decided against it last minute.
Another friend of mine named Jayson was actually the one who ended up purchasing it. I met Jayson at a small event Tim had last year. I won’t say what he’s doing with it since I’m not sure if he wants it public yet or not, but he had some pretty cool ideas around how to leverage the deal. (If he’s cool with it, I’ll post an update on this in the future)
You might be thinking, “Ya, but I don’t have $84k…”
So what? Partner. Find someone who does have the money. Then put a plan together to run the deal for them and split the proceeds. There’s plenty of people out there who have the money, but their time is limited (like mine was in this case).
“Ya, but why would Tim even do this, what’s the catch?”
Selling an extra 4,000 books helps Tim make the bestseller list. He’s willing to give extra value to the buyer because of this goal. It creates a win-win.
Train yourself to see these opportunities. They are EVERYWHERE.
Often the money as an entrepreneur is made by seeing opportunities other people can’t. This is a practicable skill set, it’s just not practiced by many.
Closing Thought
One thing I want to touch on before I end this post is to recommend setting goals for this year (if you haven’t already).
I experienced some huge life changes due to goals I set last year. Here are some quick tips on how to do this the best way possible:
Set specific goals, and have specific plans for how you’ll accomplish these goals, and even specific benchmarks to track progress through the year on them.
The way most people set goals don’t allow them much chance of success.
“Get in better shape” is not a goal.
Getting to x% body fat by going to the gym x times/week doing a specific workout program while maintaining a specific diet is a specific goal, that will get you specific results.
Keep this in mind when setting your goals for the year. It’s not too late to fix them.
By the end of the year you should try to accomplish AT LEAST 1 thing that will change your life.
Don’t fall into the trap of setting low goals so you can hit them. Then you’re just going to be “successful” at hitting goals, but unsuccessful at life.
It’s very hard to fail completely, if you aim high enough. – Larry Page
Set your goals high, set a specific plan to achieve them, and have at least one life changing accomplishment this year.
Finding success is apparently a huge secret – here’s the real secret:
It’s not as hard as you might think.
