Engineering a "Muse" – Volume 2: Case Studies of Successful Cash-Flow Businesses

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

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

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

“LapDawg” by Tonny Shin

Describe your muse in 1-3 sentences.
Portable laptop table(s).

What is the website for your muse?
http://lapdawg.com

How much revenue is your muse currently generating per month (on average)?
$10,000 – $25,000 per month

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

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

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

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

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?
The main “A-ha” was realizing that starting with the right complementary partners was key to long-term success!  Fortunately, my job at the time gave me access to talented web designers and programmers. Selling them on the idea, getting the right agreements in place, and then splitting the work involved took time to develop.  But in the end, you have to trust that people will do what they are best at.

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

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

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

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

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

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

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

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

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?
We were mentioned in Kevin Kelly’s newsletter (contacted him).
Placement in “The Shop” in Rolling Stone Magazine for 2 months. (Paid advertisement)
Hands-on reviews from The Gadgeteer, Virtual Hideout, About.com’s Mobile Office, and Digital Trends (all contacted via email).

Where did you register your domain (URL)?
http://moniker.com

Where did you decide to host your domain?
http://softlayer.com

If you used a web designer, where did you find them?
I partnered with one.

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

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

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

“Butterfly Repellent” by Timothy Spencer

Describe your muse in 1-3 sentences.
Natural Defense against social anxiety and stage fright. Safe alternative to beta blockers (when used for stage fright).

What is the website for your muse?
http://butterflyrepellent.com

 

How much revenue is your muse currently generating per month (on average)?
$1,000 – $2,500 per month

To get to this monthly revenue number, how long did it take after the idea struck?
1 year (2 months on market)

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

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

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?
1. I play volleyball for my university and tested the initial batches on my team. Positive feedback from the team was very encouraging.

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

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

What resources or tools did you find most helpful when you were getting started?
The podcast “Automate My Small Business” is GREAT. Youtube tutorials for learning WordPress and Photoshop. ODesk.com for outsourcing and managing VA’s.

What were your biggest mistakes, or biggest wastes of time/money?
Waiting until things were “perfect” before going ahead with them. Market presence was held off for months because we kept fine-tuning the website. I eventually realized that things will never be perfect, and most hang ups are self-imposed.

What have been your key marketing and/or manufacturing lessons learned?
Prompt, positive, and courteous customer service is invaluable. I’ve had great success with providing personalized coupon codes for whoever emails with a question.  For instance, if I receive an email with questions from Amber, I tell her in the response that she can enter the coupon code “amberisawesome” for 10 dollars off. A little more work but well worth it.

If you used a manufacturer, how did you find them? What are your suggestions for first-timers?
I used thomasnet.com to contact dozens of manufacturers around the country. I found one that was local and we were able to meet face-to-face. He loved the business idea and liked me a lot. My starting budget was very small and I was able to talk him into developing and manufacturing the smallest order he had ever done. He was happy to do so, which would have never happened without a face-to-face meeting.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?
I have tried reaching out to local newspapers, attempting to spin an interesting story for them (e.g. “Local student-athlete finds creative way to pay tuition”). No takers yet, but the effort continues.

Where did you register your domain (URL)?
http://godaddy.com

Where did you decide to host your domain?
http://godaddy.com

If you were to do it all over again, what would you do differently?
Move things forward quicker. I think I could be 6 months ahead of where I am now if I had made bolder decisions and taken action instead of waiting for everything to fall into place.

What’s next?!
The next big goal is to try and land product on retail shelves.

The company is very young and I see a bright future. November was the first $1,000+ month and with a continued effort in Adwords and SEO, these numbers will only go up.

“ClockSpot” by Jason Ho

Describe your muse in 1-3 sentences.
Clockspot is a web-based employee time tracking tool, designed for business owners. Employees clock in from any phone or computer. Managers can then check timesheets online instantly.

What is the website for your muse?
http://www.clockspot.com

How much revenue is your muse currently generating per month (on average)?
More than $25,000 per month

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

How did you decide on this muse?
I originally came up with Clockspot because my parents needed a way to track time for different employees at different offices. Being a techie, I insisted that they hold off on buying physical time clocks, and instead wait for me to make them a simple web-based time clock. Within 3 days, I had a rough but usable prototype.

What ideas did you consider but reject, and why?
Out of college, I started a social Question & Answer website called Qaboom.com (pronounced “Kaboom!”). It didn’t work out for a number of reasons: partner conflicts, difficulties gaining traction, a failed partnership, etc. I learned a whole lot, but had to cut my losses and move on.

I dabbled in a couple of startup projects/ideas after that, then eventually came up with Clockspot.  I’ve been running it ever since.

What were some of the main tipping points (if any) or “A-ha!” moments? How did they come about?
The 4-Hour Workweek” really struck a chord with me because my company was growing quickly, and there was this forever-growing list of things that needed to get done. I was working 80+ hour weeks, at the expense of everything else around me: my relationships, my social life, my body… Being a perfectionist, I was very reluctant to delegate tasks to anyone but myself.

After reading the book, particularly the lesson about “The Art of Letting Bad Things Happen,” I decided to outsource support. The obvious benefit was that I no longer had to answer emails and phone calls myself. The most surprising benefit, however, was that it actually increased my focus and productivity by an order of magnitude, which was so much more valuable than the actual hours outsourcing saved me (~20-30 hours/week).

Because I didn’t have to directly deal with customers, I could actually think clearer and make better decisions about the overall direction of the product. Anyone who’s had a startup can probably relate to this: it’s really hard to say “no” to a customer when you don’t have that many of them. Because I wanted to please every customer and acquire every prospect that came in, I had this never-ending list of features to implement. I ended up scrapping this enormous list, and decided to only concentrate on the top 5 items.

Outsourcing support was the stimulus to my four hour work week. I delegated all tasks that weren’t core to my business, moved to Taiwan, then spent the next two years traveling Asia and South America, working only 4 hours/month while my company continued to grow. “A-ha!” is an understatement!

What resources or tools did you find most helpful when you were getting started?
I read a lot of books. About one every two weeks. I had no business experience or real mentors, so I had a lot to learn a lot on my own.

The most influential books I read were:
1) The 4-Hour Workweek (Tim Ferriss)
2) Crossing the Chasm (Geoffrey A. Moore)
3) The World is Flat (Thomas Friedman)

I have since moved to Silicon Valley, so my best resources now are other talented entrepreneurs.

What were your biggest mistakes, or biggest wastes of time/money?
I experimented with many different types of advertising: newspaper, magazine, buying leads, and even hiring a company to cold call. They were all a huge waste of money, but I wouldn’t consider any of them to be mistakes… unless I did them all over again!

My biggest mistake was trying to save money on hosting. When I first started, I went with a budget host, and never bothered to switch until my server crashed one day. After being on hold for hours with the hosting company and being transferred a thousand times, they finally fixed the issue 8 hours later. I lost 15% of my customer base that week.

Clockspot is now hosted on Rackspace, which we pay an arm and a leg for, but now our service is 100% solid. High-end servers, hardware redundancy, load balancing, dedicated firewall, daily security scans, etc. We’ve never had a downtime ever since switching to Rackspace.

What have been your key marketing and/or manufacturing lessons learned?
Track everything. A/B test everything. I am consistently surprised at how wrong my assumptions are.

A good example is to always track the performance of your keywords from start to finish. I used to pay for the keyword “time clock” because it brought a lot of traffic, and a decent amount of sign ups. However, it wasn’t until I started tracking actual account activations (when a sign up becomes a paying customer) that I realized “time clock” wasn’t converting at all, compared to the lower traffic key phrase “online time clock,” which was converting many times more than “time clock”.

If you track enough data, you’ll eventually be able to quantify each action a visitor takes into a dollar amount. For example, I know customers that searched “online time clock” and signed up for our newsletter will have a X% chance of signing up, which converts Y% of the time, which translates to $Z/month in earnings.

Now if Clockspot’s monthly growth ever fluctuates, I know exactly which levers caused it.

Where did you register your domain (URL)?
http://www.godaddy.com

Where did you decide to host your domain?
http://www.rackspace.com

If you used a web designer, where did you find them?
I am both the designer and developer.

If you were to do it all over again, what would you do differently?
Drop out of college to start Clockspot sooner! Just kidding, if mom and dad are reading…

Honestly nothing. I have a tendency to not listen to good advice, which causes me to try and fail, then start preaching that same advice. But as a result, I never really regret anything that I do.

What’s next?!
During my two years of travel, my main accomplishments were:
1) Climbing Mount Everest to Basecamp (where the oxygen is 50% that of sea level).
2) Biked the circumference of Taiwan (~1000 km).
3) Volunteered in the relief effort for Haiti.

I ended up moving to Silicon Valley and plan to start other businesses, as well as get involved in more humanitarian work.

Life plan = loop { create_value(); have_fun(); }

###

Need help with developing or perfecting your “muse”?

This following offer is only available for the next 12 hours.

Click here to learn how you can get a complete site review from me and one of the best site testers in the world… or a one-hour phone call with me. I advise companies like StumbleUpon, Evernote, Posterous, and TaskRabbit, and the least I’ve improved conversions is 21%. The most is over 100%. Ridiculous as it might seem (it is ridiculous), I get at least $50,000 per 60-minute speaking engagement, so this is something I never do.

Want to also get your X-mas shopping done in one shot?

Click here to learn how… and also get a 1-hour group conference call with me.

Posted on: December 11, 2010.

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218 comments on “Engineering a "Muse" – Volume 2: Case Studies of Successful Cash-Flow Businesses

  1. Hey Tim,

    Great to see this article! I have been struggling with muse ideas and was happy to see your offer with Ramits course included as a bonus for buying the Four Hour Body.

    This promotion is really an education, best of luck on the bestseller list!

    P.S I will let you know how the muses turn out or dont

    Like

  2. Very inspiring stories. I’m not yet at the level of these guys, but it is great to read about their past experiences and take away little nuggets to help out my own journey. Thanks for sharing!

    Like

  3. The link to “Click here to learn how you can get a complete site review from me and one of the best site testers in the world… or a one-hour phone call with me…” is redirecting back to your site. Broken? Kindly advise as to how we can know more.

    Like

  4. Great to see some more examples of successful muses.
    The 4HWW inspired me to live everything behind and spend the last 8 months in Asia which resulted in the time of my life.
    I’m mostly working on building affiliate websites which are pretty set and forget once they rank for your target keywords as my muse.

    Like

  5. Wow – what great ideas! It just goes to show you, there is always room for another idea and innovation. Thanks for the nuts and bolts. I am reading your book again(I also ordered 4hrbody) send some good shakas my way!

    Like

  6. This post is exactly what I needed. Right on time! Thanks TIm! I just bought your 4 hour work week expanded version as well. I look forward to diving into it. Good luck with your new book.

    Like

  7. Excellent idea in asking the question about which books have helped influence!

    Tim, I was wondering if you have any type of a “curriculum” of books or sites that you would send young entrepreneurs to (high school or even college age)? I have a good amount of teenagers within my sphere of influence and want to introduce them to entrepreneurship while still fighting the “support the rat race” mentality that so many American public schools proclaim.

    These are great questions for the case studies. Thanks again!

    – Josh

    Like

  8. Hey Tim,

    Great post as usual. I love these series on “Muse” engineering, as this is something that has been a sticking point for me. I’m caught up on how you get from idea to manufacturer without knowing exactly how to build your product, and without having to spend 1000’s of dollars on e-lance hiring an engineer.

    I’m also concerned with much of the research I have done on suppliers in China (ie not being the original manufacturer, stealing your ideas, crafty accounting, etc.) I have faith that their are legitimate sources in China, however finding them seems to be a daunting task, let alone knowing the right questions to ask them without getting scammed.

    anyways.. looking forward to the next post in this series, and my new book in the mail..

    cheers,

    Victor

    Like

  9. Tim, I’m lovin’ these case studies. One extra question to ask if you do more of these could be “How much initial capital did you require prior to reaching your break even point?” While the number will surely vary depending on the product, I think it’ll help folks recognize that some of these adventures most certainly require an investment of money in addition to time, and it might provide planning perspective as well.

    P.S. I’d love to attend the party in NYC, but think I might not be able to make it in time from Jersey! How many do you anticipate will go?

    Like

  10. @Josh

    For your teenager friends, I might encourage them to check out Global Entrepreneurship Week and the Ewing Kauffman Foundation in general. Lots of great stuff coming out of those camps for budding entrepreneurs!

    Cheers,
    Doc

    Like