(Special thanks to my agent, Steve Hanselman, and my anonymous sources within the world’s biggest publishing houses)

Print is dead!

This has become a popular headline, and a great way to get quoted, as Nicholas Negroponte has shown. Iconic author Seth Godin, after 12 bestsellers, just announced that he will no longer pursue traditional publishing, and the writing seems to be on the wall: the e-book is the future, plain and simple.

But what are the real concrete numbers? How are established authors actually making money, and what should new authors do? Go straight to e-book?

In this post, I’ll look at real-world numbers to discuss some hard truths of publishing, explain economics and pay-offs, and provide a few suggestions for aspiring authors.

To start, some contrasting numbers…

- The 4-Hour Workweek is one of the top-10 most highlighted Kindle books of all time.

- The 4-Hour Workweek was the #1 business book when Kindle first shipped after November 2007, and is currently around #116 in the Kindle store.

- In my last royalty statement, December 2009, digital book sales (all formats, including Kindle) totaled…. ready?… a mere 1.6% of total units sold.

My own book has been on the bestseller lists for more than three years, and I’ve tracked most multi-month bestsellers for all of those 36+ months using Nielsen Bookscan (among other tools) which covers about 75% of all retail book sales since 2001, including Amazon but excluding discount clubs such as Sam’s Club. Titlez has also been useful for looking at detailed trending on Amazon.

This all gives me a good pool of data, and I feel like I have a good grasp of what authors are selling and… realistically earning directly from books. If you’d like to get a basic idea, just subscribe to Publishers Lunch to see what authors are getting paid as advances. Enjoy.

We’ll come back to the Kindle numbers, but first, here’s a sketch of book economics, incentives and options:

- For a hardcover book, authors typically receive a 10-15% royalty on cover price. This means that for a $20 cover price, the author will receive $2-3. If you have a $50,000 advance, a $20 cover price, and a 10% royalty, you therefore need to sell 25,000 copies (“earn out” the advance) before you receive your first dollar beyond the advance. This is the basic rule, but several quietly aggressive outfits — both Barnes and Noble’s in-house imprint (Sterling, acquired in 2003) and Amazon’s in-house print arms, AmazonEncore and AmazonCrossing — could prove to offer more attractive terms. Then there are the fascinating rogues like Andrew “The Jackal” Wylie.

- For a trade paperback book, authors typically receive around half the royalty of a hard cover. If you are making 15% on your hardcover, you might get 7.5% when it goes to paperback. Guess what? This means you now need to sell twice as many books to break even. I think going to paperback is a bad idea for almost all authors, unless you want to double your work for the same income. Do you really need the people who won’t buy a $20 book hardcover that’s already discounted to $12-14 dollars through Amazon or Barnes and Noble? I don’t think so, yet most authors follow the hardcover-to-paperback progression without question.

- Electronic books, including Kindle, do not count towards the most famous bestseller lists, such as The New York Times bestseller list. I suspect this will change within the next two years, but for now: print is what will make you famous in the mainstream.

- If you choose to self-publish but stick with print format and retail distribution, you might double your royalty earnings. This is based on conversations with friends who own their own boutique publishing houses, all of which have distribution in large chains like Barnes and Noble. It’s fun to imagine that you could print a book with a $20 cover price and pocket $15, but that isn’t how the math works out. Once you factor in retailer discounts and distributor percentages, you might end up netting 30% of cover price vs. 15%, if you’re lucky and have a print run of 20,000+ units (Can you afford the upfront cost, especially if retailers are paying net-30, net-60, or beyond?). Keep in mind you also need to manage things as a publisher, which could make your dollars-per-hour earnings less than with a traditional publisher. There are a few promising companies, like Author Solutions, trying to solve this problem for authors.

- If you choose to go digital only as an e-book, this is where profit rules and amazing numbers can be achieved. How amazing? I know one man who nets between $5,000,000 and $10,000,000 per month with a single e-book and affiliate cross-selling to his customer lists. I’m not kidding. The downside is that you need to be a world-class marketer and understand affiliate and CPA advertising better than anyone else in your niche (since there is little barrier to entry, and therefore plenty of competition). Prepare to be an uber-competent CEO or fail if you choose this option.

The Kindle Phenomenon — How Press Releases Are Misread

Amazon is incredible and I expect nothing but more innovation from them. Putting aside their coming bloodbath with Apple, though…

What of this announcement that Kindle sales have now passed hardcover sales on Amazon? I believe this to be true, but there are a few things I suggest we keep in mind:

1) Kindle books selling well does not mean that print books are selling poorly. In fact, it appears quite the opposite. From the Wall Street Journal coverage of the announcement:

Still, the hardback comparison figure doesn’t necessarily mean the end is near for paper books. Amazon said its hardback book unit sales also continued to increase.

It will be fun to see more precise Kindle sales when they are shown as a separate line item in Nielsen Bookscan, which should happen in the next year.

2) The top-five Kindle selling authors of all-time, over 500,000 copies each, are all fiction writers (including Stieg Larsson, Stephanie Meyer, and others). In the top-50 Kindle bestsellers right now, I counted just three (3!) non-fiction books. If you’re a non-fiction author, I’d think carefully before jumping the gun to all digital. Remember that comment about print being dead? What if we ask a high-level exec at one of the “Big Six” (explained later) about how print sales are declining?

Hardcover trend is mixed and dependent on hot books. If you are wondering about ebooks, commercial fiction is where you’re seeing the erosion. Paperbacks are ok. Mass markets are taking a hit.

What are “mass market” books? The NY Times describes them thus:

Mass-market books are designed to fit into the racks set near the checkout counter at supermarkets, drugstores, hospital gift shops and airport newsstands. They are priced affordably so they can be bought on impulse. There are other production differences in binding and paper quality (historically, paperbacks were printed on “pulp” and could fit in the consumer’s pocket). The format is often used for genre fiction, science fiction, romance, thrillers and mysteries.

Is it a coincidence that print impulse purchases are also the biggest sellers on Kindle? I don’t think so.

3) I believe (conjecture, yes) that the figure we are missing is Books-Per-Person. If you have a Kindle, as I do, how many books did you buy in the first week or two? How many unread books do you have on your Kindle? Unlike with print books, you don’t have to look at a stack of unread material like undone homework. Ergo, you purchase more digital books than you would ever purchase in print. If Amazon is selling 180 Kindle books for every 100 print books, I wouldn’t be surprised if 10-20 people are responsible for the former, whereas 80-100 people are responsible for the latter. This reflects that Kindle owners are buying more books per capita, not that paper purchasers are buying fewer.

Now, don’t get me wrong. There has to be some cannibalization of sales, and much of print will die eventually, but it will take a long time. Print is far from dead… and far from unprofitable. Despite the industry-encouraged myth that print has no margins, a hardcover book sold for $20, assuming no graphics or color, can often be produced for less than $2 a copy. With the proper economies of scale (unavailable to most individuals), the publishing biz can be quite a little cash cow.

Let’s cover some basics of traditional publishing next.

What “Traditional” Publishing Looks Like

Traditional publishing looks something like the following for non-fiction authors. For fiction authors, you need to write the entire manuscript first. Here are the five steps:

Step 1. Get an agent (best done through a referral from one of their authors).

Step 2. Put together a book proposal, which is like a business plan. It will contain marketing plans, your existing “platform” (who you can sell to or reach without publisher help), an executive summary of the book concept, and 1-3 sample chapters, among other things.

Step 3. Pitch to specific editors at different publishers through the agent and schedule meetings.

Step 4. Sell the book. The editor will probably have signing authority up to a certain advance amount, but higher ups will need to sign off on larger advances. If you don’t have a great platform for selling books without publisher help, don’t expect anything more than $50,000, and that’s being optimistic. The $50,000 will not be paid all at once, but in several installments, something like this: 1/4 upon signing the deal, 1/4 upon publisher acceptance of manuscript, 1/4 upon publication, and 1/4 upon paperback publication (assuming you start with hardcover).

Step 5. Write the book. Keep in mind, you’re not getting paid the advance all upfront, and writing a good book will probably take at least a year if you’re hoping to have good word-of-mouth and some longevity. I’ve been working on my new book for more than three years. I’ve spent this time because I want it to sell like mad for no fewer than five years after publication, preferably more than a decade if I update it on an annual or semi-annual basis.

For more detail and recommended books, which I used as guides, read “How to Sell a Book to the World’s Largest Publisher,” which explains exactly what I did.

Below are the “Big Six” publishers — most of the bestsellers you see come out of one of their divisions (called “imprints”). In no particular order:

Lagardere (owns Hachette)
Harper Collins
Macmillan (owns St. Martin’s)
Penguin Group
Random House (the largest, and where my book lives within the “Crown Publishing” imprint)
Simon and Schuster

All of these publishers have iBook agreements with Apple except for one… Random House. Why? Is Random House just unable to see the obvious future? Nah, I don’t think that’s true. There are plenty of smart people working at Random House, and that includes their legal department.

The paragraph that follows is all hypothetical:

What might happen if the iBooks agreements of the other Big Five all have suspiciously similar terms? If there were a federal investigation, might that lead to charges of collusion among the publishers and have terrible financial consequences for an already fragile industry? It certainly would. By distancing themselves and coming in late to the game, Random House — again, hypothetically — would be playing a very smart hand, indeed.

For those of you who are devoted to your iPads (I do like mine), you can always use the Kindle app to read Random House books on them pretty screens.

So What Should Authors Do?

First off, writing books is a terrible revenue model for authors.

Precious few books sell more than 25,000 copies, so it’s unlikely you’ll make even $75,000 a year from book royalties. In rare cases, you might have a perennial bestseller, but this is less than 1% of all books sold and not a good bet to make.

There are still a few reasons you might consider writing a book and going through traditional channels:

- Speaking: Particularly in the business category, if you target your Fortune 500 audience well enough, you can stair-step your way into $20,000 per 60-minute keynote without needing a miracle. Hundreds, if not thousands, of authors earn this kind of money. The higher echelon can make $80,000 or more per speaking engagement. Needless to say, this adds up fast.

- Reputation and audience: Money is a means to something else. Not unlike wampum, income is traded for either a possession or an experience. If you use your book to build a reputation as a thought leader, and if you can establish a direct line of communication to intelligent readers (through a blog, for instance), it is possible to bypass income and get almost any experience for free or next-to-free. The middleman of currency is removed, and you also have access to things money can’t buy, whether it’s interesting people or unusual resources.

Though I have done high-level speaking and enjoy it with the right audience, I typically do fewer than a dozen engagements a year. I prefer to focus on connecting with my readers and having fun with cashless adventures.

How do you build a base of fans or supporters and build a high-traffic blog? Here are two detailed closely related case studies:

How Does a Bestseller Happen? A Case Study in Hitting #1 on the New York Times
How to Create a Global Phenomenon for Less Than $10,000

So what of self-publishing versus the more traditional route?

Reputation, at least in the mainstream and for the next few years, is difficult to build if you self-publish. In the below five-minute discussion, NY Times bestselling author Ramit Sethi and I discuss the pros and cons of self-publishing vs. getting a “real” publisher:

In Closing

For established and successful authors, like Seth Godin or Jim Collins, self-publishing in print or digital is a supremely viable option. Jim Collins self-published his last print book, How the Mighty Fall, and was featured on the cover of BusinessWeek magazine to help push it up the bestseller ranks. Seth could do the same.

Why is this possible?

Because they have incredible reputations that were built, in part, on top of the traditional publishing machine. The Big Six and their close cousins are in real trouble. Some of them might adapt (which will include massive lay-offs), but most will not. In the next few short years, there will also be many interesting publishing alternatives for aspiring authors.

But, all that said, there is still real value in having the rare stamp of approval that a “traditional” publisher provides. I don’t think this will change much in the next 12 months, perhaps even 24 months.

Now, a handful of first-time, self-published authors hit the New York Times list, that’s an entirely different story…

###

Recommended reading – Below are the three books I’ve suggested to a dozen or so aspiring-author friends. Almost half of them later hit the New York Times bestseller list. Reading these doesn’t guarantee that outcome, of course, but it will help:

The 22 Immutable Laws of Marketing (to help you craft the right message and themes)
Bird by Bird (to help you write the damn thing and not shoot yourself)
Author 101: Bestselling Book Publicity (to help you reach and excite big media)

Afterword: Book Format and Multimedia Books, etc.

In the comments below, I was asked the following question:

“Tim, I have a question… Before I decided to self-publish, I got a couple decent offers from traditional publishers, but they all involved 10+ months of lag time between when everything is ready to actually print and when they would actually print. I’m not nearly patient enough for that much delay. Is the world of “real published authors” really limited to people who are comfortable waiting around a year for their book to manifest?”

My answer addresses a few other common questions I get:

Hi Jeff,

With the big boys, yep. That’s the lag time in production. I actually kind of like it. Allow me to explain:

It forces you to think about your material and attempt to make it perennial. Which advice will be obsolete in 12 months? Delete. Which advice would be obsolete in 24 months? That means it will only be good about 12 months after pub date. Delete.

I find that it helps refine your thinking, just as having the content in a fixed form (print) forces you to consider your writing and editing more seriously than if you could change it willy-nilly like a blog post. There are certainly benefits to the multimedia books on the horizon, but I wouldn’t call them “books”, and I think the bells and whistles of video, hyperlinks, etc. will be used to mask sloppy thinking as often, if not more often, than they will be used to create a more compelling argument or presentation. The wordsmithing and precision of the language will suffer with the crutches of embeddable video, etc. Will they make perfect sense for some books? Absolutely. Will they distract and detract from the flow of the prose, story, or argument in most cases? Absolutely.

To me, “timely” books are a bad bet for writers. If the content delivers value based on timing near recent events, other media have it beat. I think long-form books should have a longer shelf life, and therefore require harder thinking throughout the process to ensure the content has value 1 year, 5 years, even 10 years down the line.

Hope that helps!

Tim

Not long ago, I received the following comment — edited for length — from Ryan N.:

I hate you Tim. I had a secure future ahead of me, and I left my job, my reasonably well paying professional career all because of your book. Best thing I’ve ever done!!

I was wondering if you might be able to put up a blog post where people could post their ideas or muses as case studies. I’m sure there are a lot of people like me who would like to share their stories and listen to others living the 4HWW.

Here’s to 2010 being the year everything changes.

Indeed. Here’s to 2010 being the year everything changes.

I decided to take Ryan’s advice. Below is a post of just a few select video case studies. This is also where you can win a round-trip ticket anywhere in the world.

That would be a nice way to start 2010 with a bang, right?…

I’m sure you’ve dreamed of taking that big trip, but it’s been put off due to the million things that interrupt and overload all of our lives. The fact is this: there is never a convenient time to do the most impactful things, whether having a baby, quitting your job, or taking a dream trip overseas. It’s something you pull the trigger for despite imperfect circumstances, not because of perfect circumstances.

Let’s end the wait.

Here’s how it works – simplicity itself:

1) Upload a video to YouTube of 5 minutes or less where you describe how you’ve most successfully applied techniques or tools from The 4-Hour Workweek to your life or business. Be sure to tag your video with “4hww success” in quotation marks. Click here to see what it should look like when you are uploading your video.

2) Leave a comment on this post with a link to your video and a brief description of what worked for you (no need for more than 1-2 short paragraphs). Do all of this no later than 5pm PT this Saturday, December 26th. Early responses get bonus points.

3) I and a few secret judges will select our top favorites, and then you all will vote for the winner.

4) I will then provide a roundtrip ticket anywhere in the world that the 25+ airlines in the Star Alliance fly.

In the meantime, find below some fun examples to get your juices flowing. Included are:

- Electra, a mother who uses batching to run her business while making time for the kids
- Michael, a father of two who’s lived in Argentina and explored both international and home schooling while earning full-time income.
- Harris, a father who can take his kids to the zoo on a Wednesday or take the entire family to Barcelona for a month.
- Jed and Chelsea, who quit their previous jobs, moved to another city, and are reinventing themselves one step at a time.

Last but not least, we have Aaron Carotta, who was diagnosed with cancer but still achieved the four-hour workweek in 60 days and documented it all on video. Here is the cliff notes version, in his words:

-Diagnosed with cancer
-Lost wages
-Accumulated medical bills
-Received the book as a gift
-Documented his interpretation of the book
-Achieved goals to free up his lifestyle
-Successfully opened and sold a business in another country
-Generated automated money
-Now successfully runs a company that allows his to travel for a living, The Seven Wonders Tour [with sponsors, Vibrams!].
-Continues to live healthy, travel the world, and be happy

I’ve included a 3-part video diary compilation of Aaron’s experience at the end of this post after the other case studies. Total viewing time is just around 20 minutes.

Enjoy these wonderful examples and don’t forget — your own video submission and comment on this post must be up no later than 5pm PT this Saturday!

Question of the day: where would you travel if you had a free round-trip anywhere in the world?

###

Get the brand-new Expanded and Updated 4-Hour Workweek, published 12/15, which includes more than 50 new case studies (including families) of luxury lifestyle design, muse creation, and world travel. Make 2010 the year when you make the leap.

Recommended and Related:
Tim Ferriss on Twitter – what adventures and mischief am I up to this instant?
Tim Ferriss on Huffington Post – marketing case studies, travel how-to, and more

“Cevallos told Zobrist [Tampa Bay Rays MVP] he could turn him into a power hitter…The results have been remarkable.”
- ESPN The Magazine

This article will tell the inspiring story of Jaime Cevallos, who went from $7 an hour to coaching MVPs in Major League Baseball, automating his income in the process.

Jaime is now — in many respects — set. But how did he do it?

Some of the questions I asked Jaime include:

1) What is your muse [automated business]?
2) How did you contact the initial MLB players, and what exact wording did you use?
3) What things were much easier than expected, and which things were much harder?
4) To those people who haven’t yet tried to create a muse, what 3-5 pieces of advice would you give them?
5) What mistakes did you make, and what did you learn from them?…

The Beginning: An E-mail

Our interaction started with an e-mail to one of my assistants in August, 2008:

Amy:

I just thought I would let you guys know that three years ago, I was making $7 an hour. I read 4 hour work week and now I am one of the most sought after swing coaches in Major League Baseball.

If you google my name, you will see the headway that I have made. I really have to say that I owe a lot of my success to FHWW.

After reading the book. I began approaching MLB players and offering them my assistance. I always knew I was an expert on the baseball swing but didn’t know how I would penetrate the MLB ranks. FHWW just showed how to do it.

I gave my company the name “the swing mechanic” and the rest is history.

Thanks again, Tim.

Jaime Cevallos
The Swing Mechanic
www.theswingmechanic.com

Then an update and elaboration:

Subject: update – The Swing Mechanic

Dear Tim and Amy:

Although I’m feeling like I should reread The Four Hour Workweek lately
(because I am quite busy and I know I need a refresher), I look back and
have to say that I’m still employing the principles quite well.

1. I was invited to speak at the American Baseball Coaches Convention, the largest baseball coaches convention in the world, on January 10th. It’s amazing what you get when you ask. I just found out who the guy in charge of speakers was and sent an email along with my accomplishments and followed up twice with phone calls. (4HWW chapters/principles – Becoming An Expert, Eustress Is Good).

2. My book, Positional Hitting, is being self published after the person that I hired to edit and format the text and design the cover (on Elance, LOVE ELANCE) is finished. Should be out February, 2010. (4HWW chapters/principles – Becoming an Expert, Outsourcing Life)

3. My second and third training aids are currently being designed. For one of my inventions, I had blueprints and prototypes made in China (on Elance) for $150 and then found a local manufacturer on Thomasnet.com to iron out the details and do the mass production. (4HWW principles – License A Product/Create A Product)

Doing quite a bit as you can see. But, as I said, it’s still time for a refresher :-)

I hope all is going well for you both. Keep in touch and let me know how everything is going.

Jaime

How have Jaime’s results in the majors turned out? Judge them for yourself. Here are just two examples:

In 303 plate appearances before working with Cevallos, Zobrist had 3 home runs and a .259 slugging percentage. In the 309 plate appearances after, Zobrist hit 17 home runs with a .520 slugging percentage. “The numbers before I worked with Jaime compared to after speak for themselves,” said Zobrist. In 2009, Zobrist won the team MVP award for the Rays, finishing the season with a .297 batting average and 27 home runs.

Before working with Cevallos in 2007, Drew Sutton, playing professional baseball for the Corpus Christi Hooks, had 9 home runs and a .267 batting average. After working with Cevallos in 2008, Sutton improved his numbers to 20 home runs and a .317 batting average, earning team MVP honors. “(Cevallos) has made a huge difference,” said Sutton after the season.

Tips from a Pro

“Ted Williams once famously remarked, ‘Hitting a baseball is the hardest thing to do in sports’…Jaime Cevallos has made it his life’s mission to conquer the unconquerable.”
– Fort Worth Star Telegram

1) What is your muse [automated business]? Coaching is, of course, usually tethered to one location.

My muse is the MP30 baseball training bat. Having a muse allows me to “be in more places at one time.” I can be giving a lesson in Dallas while a player is receiving his MP30 training bat from UPS in New York. It’s a great feeling to know that thousands of hitters around the country are improving because of a training bat that I designed. Now my training bat is in the dugouts of six Major League teams and I get orders every week from hitting coaches of university and professional baseball teams, which is a great compliment. I can’t be everywhere to give instruction, but my bat serves as an instructional device that is almost as good as me being there.

2) How did you contact the initial MLB players, and what exact wording did you use?

After reading 4HWW, I understood that if I was really going to pursue my goal of being the best swing instructor, there would be many moments of discomfort and even embarrassment along the way. After I accepted that, I was left with nothing but excitement. I just started walking into hitting facilities around my home and introducing myself to the management. One day, I walked into Showtime Sports Academy in Franklin TN, and the manager, Tony Naile, must have seen the determination in my eyes when I told him that I was going to change baseball with my hitting methods. He said, “Come back here. I have someone I want you to meet.” He took me to the back of the facility where Ben Zobrist and Nevin Ashley, both MLB players in the Tampa Bay Rays organization, were taking batting practice in one of the cages. When they were done, I introduced myself to them and said, “I have a unique method of analyzing and training baseball swings that I’d like to share with you guys. Would you be willing to let me film your swings so I could offer my analysis?” They looked at each other and looked back at me and said, “Sure. Why not.” The rest is baseball history.

This was a huge step for me. I could have easily said to myself: “These guys have coaches. They aren’t looking for me.” At the time, it was unheard of for MLB players to receive instruction from a guy who never played in the Majors himself. I changed that. Without those real gutsy moves, especially in the beginning, I find that usually nothing great ever happens. One of the biggest things that helped me to just get out there in the beginning was really understanding the principle in 4HWW that “doing the unrealistic is easier than doing the realistic.”

3) What things were much easier than expected, and which things were much harder?

The technical things were much easier than I expected. For example, when designing my company logo, I was a little apprehensive about posting a project online (Elance.com), so I called a local provider to do the design. Despite her being thirty minutes late to our first meeting, I told her what I wanted, gave her a downpayment of $250, and she said she would have something for me within a week. Five weeks later she had a design that looked like it had been made by a first grader. I expressed my disappointment to her and never paid the second half. So I was only out $250.

I immediately posted the project on Elance, using the first designers logo as a rough sketch of what I wanted. The next morning I had six bids on the project. I immediately chose a designer and less than four hours later, the provider had a sample for me that was absolutely perfect. It’s still the logo that I use today. In one day and for $90 I had a perfect logo that a local provider couldn’t even do in 5 weeks for $500! I still use Elance today. In fact, most of the work in my book, Positional Hitting, coming out in February, was done on Elance.

As for the something that was much harder than expected, I must confess, I drove to a Starbucks 40 minutes from my house and sat there for an hour trying to muster the courage to lay down in public [Tim: this is an exercise in discomfort from 4HWW]. All the caffeine I could handle wouldn’t get me on that floor. I just couldn’t do it. I’ll do it one day. I don’t know what country I’ll be in, but I’ll do it.

4) To those people who haven’t yet tried to create a muse [automated business], what 3-5 pieces of advice would you give them?

a. Choose something within a subject with which you have some level of familiarity. You wouldn’t want to become a real estate agent if you never before had an interest in homes or interior design. The same is true of your muse. You should have a considerable amount of knowledge about the niche market that you are targeting.

b. Take your time in choosing your muse if it doesn’t hit you right away. If you just choose anything so you can get started, you may not have the full commitment necessary to stay the course. Make sure you believe in it enough that you can say, “There’s no doubt that I can do it, it’s just a matter of time.”

c. Keep an open mind. The market is always changing, which means new demands for brand new products and services. I invented a product. That obviously means that nobody else in the world had tried selling the product before me. If you choose this route, it will be a tougher road because you don’t have others to model, but the upside can be much better too.

5) What mistakes did you make, and what did you learn from them?

For me, when I start to make bad decisions, it’s usually because I’m afraid of making bad decisions.

For example, when sales started picking up for the training bat, I suddenly assumed I needed a partner. I desparately searched for someone who would take over some of the control of the business. It was a disaster. He would call me to tell me what I needed to be doing to run my company. The root of the problem was that I assumed that there was a “right way” to do things and I needed to do it that way.

There isn’t a “right way.” When it’s your company, there’s one way: your way. The lessons you learn along the way are yours alone and they are your most precious assets.

###

Get the brand-new Expanded and Updated 4-Hour Workweek, published 12/15, which includes more than 50 new case studies (including families) of luxury lifestyle design, muse creation, and world travel.

Odds and Ends Elsewhere:
How to Tim Ferriss Your Love Life
Tim Ferriss – angel investments and start-ups

“So, do you have any ideas?”

“Well, if we’re going to do something, it should be big. It should make people sit up and say OMFG. Make people actually do something,” I responded.

The conversation continued in front of the Thai restaurant, me pacing on my cell phone in San Francisco — foregoing food in excitement — and Tobi in his offices in Ottawa, Canada.

We decided in the subsequent 10 minutes to offer $100,000 cash as a bribe to you all. The overview?

* $100,000 for the grand winner
* $120,000 total in prizes
* 6 months starting January 1 but you can (and should) get started now
* Even if you don’t win the prizes, you should end up with a viable business at the end of 6 months

The details make it even better…

Background

Randy and Nicola Wilburn in the above photo, featured in BusinessWeek’s “Mom-and-Pop Multinationals“, are just two of the thousands of people in 35 countries who have used the steps in The 4-Hour Workweek as a basis to create near- or fully-automated businesses. The principles of automation have been equally applied within both Fortune and Inc. 500 companies.

The problem?

Some things just aren’t as simple in execution as they appear on paper. If there is one place where readers fail or give up, it is on such automated “muses”, as such automated businesses are called in book to abbreviate.

It’s most often due to lack of technical skills, lack of testing abilities, or — much more often — simple intimidation and failure to attempt it at all. The truth: it’s easier to continue in the predictable and comfortable mediocrity of the 9-to-5 than to start a business. It seems too big and there is little perceived incentive to change.

Let’s change that.

Tobi Lutke is the CEO of Shopify. Several months ago, I polled more than 50,000 Twitter users about e-commerce platforms, and the near-unanimous response was that Shopify offered the easiest-to-use full-service platform in existence. I’d never heard of them.

It seems I was late to the party.

From Pixar to Tesla, Pamela Anderson to Amnesty International, I saw slick design after slick design, all of which could be set up in minutes. Even Google Website Optimizer is built-in for testing. I was so surprised and impressed that I became an advisor upon meeting Tobi at RailsConf.

I want to give you a reason to finally take the jump with full confidence. Here’s what we’re doing:

The Competition – More Than One Winner

Shopify and I are running a 6-month “Build Your Business” competition. The store with the most revenue for two consecutive months (we’ll use your best two) wins $100,000.

There are other runner-up prizes, and there will be worthwhile surprises. To support you with the tools and skills you need, there will be expert tutorials on critical subjects (like Google Adwords testing, design, etc.) on a monthly basis at minimum, posts on this blog with real-life examples, and more.

The bullets:

* $100,000 for the grand winner
* $120,000 total in prizes
* 6 months starting January 1 but you can (and should) get started now. Even two weeks of practice will give you a massive advantage. I strongly suggest playing with it now.
* The best two consecutive months of sales count
* Even if you don’t win the prizes, you should end up with a viable business at the end of 6 months
* The steps and details in the new, expanded 4-Hour Workweek will be used as ground-zero for instructions
* Contest open — unfortunately — to US residents only. Please see “Afterword” below for why you should do it regardless. The tools and guidance will be available to all entrants.

Outside the US? Perhaps you should just incorporate a US company online? But – I’m no lawyer. Speak with a professional first and read the fine print. Be sure to read the FAQ, which opens up even more opportunities.

[Update: there is a new forum on Shopify for questions and feedback about the contest]

Tens of thousands of online stores have been created with Shopify: everything from Nerdbots to CrossFit.

Will you be next? I know a Fortune 500 company employee who’s quitting in 2010 because his Shopify store makes more than $1,000,000 per year. Not bad for a side gig!

If you’ve thought of starting a muse but have put it off or given up, here are two reasons to make 2010 the year that changes everything:

$100,000 and know-how guidance from experts. Though I’m an advisor, I receive no commission or payment whatsoever for this competition. It’s to get more people to pull the trigger.

If you decide not to pull the trigger, ask yourself “why not?” If not now, then when?

This competition is intended as a benevolent and encouraging kick in the ass. This stuff isn’t rocket science, but it does require stepping outside your comfort zone for a bit to realize: this isn’t that hard. It’s just unfamiliar. If you do it now, a lot of people will be in the same boat and you’ll take the trip together.

No more excuses. Click here to learn how simple it can be.

[Update: there is a new forum on Shopify for questions and feedback about the contest]

###

Frequently Asked Questions with Tobi

[The most up-to-date FAQ is on the contest page here]

> Rachel: Can you sell a combination of affiliate products and your own products through shopify?

Yes absolutely. In fact we highly encourage our customers to source extra products that round off the product offering. A lot of our customers started by selling just a single product and later on started cross selling related products between their stores for additional sales.

> BrianReid: Can we use a drop shipper like Doba for products?

Yes, Shopify even integrates directly with drop shippers and consignment warehouses such as Shipwire, Webgistix and Amazon fulfillment. These services are really the key to fully automate your online store because manual shipping is labor intensive. At Shopify we have something called the App Store (http://apps.shopify.com) which allows you to add extensions to your store (think a mix of wordpress plugins and facebook apps). I know there are a few developers currently working on Doba integration.

> Erica: I’m using 1ShoppingCart right now. Can I just move stuff over to Shopify and qualify, or does it have to be a new business?

The point of this competition is to encourage people to create new businesses. If you could simply move a million or multi million dollar business over to Shopify and take the pot then the entire thing would be fairly uninteresting. So in other words, moving an existing business over: no go. Creating a new, related business that you organically grow from the start without simply redirecting your old store: OK.

That being said, we would love to get your existing business on Shopify. If you want to talk more in depth about this, contact me at tobi[at]shopify.com.

> Erica: For the Shopify folks: Do you offer a 1-click post-sale upsell feature like Upsell Express from 1SC?

I’m not familiar with the 1-click post-sale product but marketing to prior clients is a big part of Shopify. We have great integration with Sendloop, Vertical Response, Campaign Monitor and all such services. Through the App Store that I mentioned earlier there are also some really exciting new apps being developed that help people find related products that go well with their current cart content. Shopify is a very flexible platform.

Afterword

Gross revenue and US residents only? A case study in technology and real-life lawyering…

First and foremost, the best prize we can offer is this: your own near-automated, cash-flow positive business at the end of six months. The $100,000 is just a catalyst, a push. The former is, as the proverb goes, teaching you to fish, whereas the latter is handing over a single fish.

No contest is perfect. Shopify can’t verify net profit (without private investigators proving margins), so revenue is used as the measuring stick, which is trackable. Does this handicap you if you sell comic books instead of race cars? Not necessarily. It just means you’ll need to sell more units. Important: the most any single transaction can be applied the contest is $5,000.

Life is a competition. The rules were the best we could put together without making it impossibly complicated.

But, what’s up with the “limited to US residents” and all that?

From a post on Etsy about their own contest challenges (the whole post is worth a read):

Etsy is an international site. We have buyers and sellers from all around the globe. And we love our community. To solely enable U.S. residents to participate in an aspect of our site did not sit well with me or with Etsy. So I called an attorney who specializes in contest law to find an alternative. Unfortunately, his response supported my disappointing findings. He explained that in order to hold an international contest, Etsy would need to consult a licensed attorney who specializes in contest law for each and every country eligible for the contest. And, in fact, for many countries a translator would have to draft the rules. “How much would this cost and how much time would it take?” I innocently asked the contest law attorney. His two-word answer was most discouraging: “a lot.”

Here is Tobi’s version, especially frustrating, considering that Shopify is based in Canada!

“When putting together the contest we really wanted to make it a contest for anyone, anywhere in the world. Throughout the planning I spent more hours on the phone with lawyers than I’d care to admit to anyone. Unfortunately, as time when on, it became clear that it would be impossible to hold the contest anywhere outside the US without fundamentally altering the original concept.

Without going into too much detail, the crux of the matter is the classification of the contest as a game of chance versus a game of skill. Apparently, being good at selling stuff online is considered chance by many agencies and therefore would be governed by Lottery laws, as silly as this sounds.

That being said, you can still participate in this contest wherever you are. The prize money is significant, but don’t forget the spirit of the contest: to give a kick in the pants to all those people who have wanted to start businesses but haven’t. The real prize is having a business of your own at the end of the six months. You’ll still have all the same resources and guides as everyone else: support from the Shopify team, help and guidance from Tim and other experts, and more control over your financial independence.”

###

Elsewhere on the web:

Get the brand-new Expanded and Updated 4-Hour Workweek, published 12/15, which includes more than 50 new case studies (including families) of luxury lifestyle design, muse creation, and world travel.

The 4-Hour Workweek was first published April 27th, 2007.

I did my best to cover all of the bases when it debuted, but there were gaps. Though I included cases studies of families using lifestyle design, for example, it was hard to find more than a few the first time around.

Not anymore. Things have changed. There are more than 30,000 comments on this blog, hundreds of people have shared their successes and failures via detailed e-mail, and both case studies and experiments continue to flow in from around the world.

This doesn’t mean that the current edition doesn’t do the job — it does — but more than 40 printings and 35 languages later, a new and expanded edition has finally been completed…

This new version includes all of the updates and additions that I’ve wanted to make for the last 2.5 years, including more than 50 case studies from readers, as well as 100+ pages of new content. Many of the “tools and tricks” resources have been completely revised to reflect testing with newer and better technologies.

The book publishes December 15th but is available for preorder here at a 30% discount. Why not get some X-mas shopping done early? :)

The graphics in this post are the new cover and jacket, which you voted on here. Thank you all so much for the wonderful input and conversation, both online and in real-life.

I learn more from you than I could ever hope to teach.

I hope you love this new edition as much as I do (larger font in second graphic):

Pre-order it here for 30% off the cover price, making it less than $15.

If you’re in media and would like to discuss exclusive interviews, stories, or segments, please email amy-at-fourhourworkweek-dot-com with “4HWW Media” in the subject line.

Have a beautiful weekend!

###

Odds and ends elsewhere on the web:
Tim Ferriss on TED – Smash Fear, Learn Anything
How to Tim Ferriss Your Love Life (from WordCamp 2009)