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 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.)

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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!

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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.”

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

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

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.