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.

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Comment Rules: Remember what Fonzie was like? Cool. That’s how we’re gonna be — cool. Critical is fine, but if you’re rude, we’ll delete your stuff. Please do not put your URL in the comment text and please use your PERSONAL name or initials and not your business name, as the latter comes off like spam. Have fun and thanks for adding to the conversation! (Thanks to Brian Oberkirch for the inspiration)

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

  1. I think that both the information and product are great, so, im in Colombia righ now, I’d like to know if is there a way to get the product here? do you know some stores? Thanks!

  2. Any thoughts on what type of critical research you did to start your muse? i have so many different idea but how did you narrow your muse and begin implementation? Any thoughts would be appreciated.

  3. Any thoughts on what type of critical research you did to start your muse? i have so many different idea but how did you narrow your muse and begin implementation? Any thoughts would be appreciated

  4. I just cant get enough of these case studies, they are pure gold for entrepreneurs. Besides containing condensed useful info, they are motivating as hell.

    Tim, I would like to see case studies that include examples like the one you mention in the 4HWW regarding Douglas Price and Prosoundeffects dot com (no spamming).

    I am very interested in that concept because the risk of product development and initial investment approach zero, and the simplicity of the process is much higher when it comes to “downloadable” products, thus eliminating the logistics costs (in both time and complexity, I see complexity as a cost), in conclusion, I would really like to see examples related to “download based muses”, either newly created or leveraged, Doug Price style (his whole process consists of a few clicks) how cool is that?

    I really like reading your stuff, it is right up my alley, intoxicatingly motivating, both in therms of entrepreneuring and hunger for travel..

  5. Hi Tim,

    Love this muse case studies. It makes me green with envy seeing how some startups can take such a short time. besides being a good source of motivation, these “muse” articles are educational too.

  6. Tim, love your blog. Like your book even more. I picked up the 4 hour work week around a year ago. Kind of funny back then for a 15 year old. Anyway, I’ve been running online businesses since I was early 12 and your book has helped me get focused. I just thought I’d leave a comment to say thanks!

  7. These are great Tim, especially for young entrepreneurs like myself. A place where we can learn from others mistakes and learn how they made things happen.really like reading your stuff, it is right up my alley, intoxicatingly motivating, both in therms of entrepreneuring and hunger for travel..

  8. all those stories are great but one critical thing is missing.
    how much are they paying to manufacture or their employees?
    how much asset is required to manufacture in factory for first place?

  9. Thank you for another informative blog. Where else may just I am getting that kind of information written in such an ideal approach? I’ve a venture that I’m simply now running on, and I have been on the look out for such information.

  10. Reading about the success of an idea as simple as a laptop stand is really inspiring. I love these muse examples and the structure that they’ve been published in. They’ve inspired me to create a website where I hope to document many more similar stories. If you liked these I’m sure you’ll get something out of the site so feel free to check it out (by clicking my name to the left).

  11. I’d must check with you here. Which isn’t something I usually do! I enjoy reading a put up that can make folks think. Also, thanks for permitting me to remark!

  12. I have honed in my muse and I am nearing the point where I would like to find a manufacturer. Does anyone know a good site to find manufacturers? Is Alibaba the best place? I would appreciate any advice from someone who has gone through this process.

    Thanks!
    Troy

  13. Hey everyone -

    I’m a huge fan of Tim’s case studies as they are very helpful in helping readers grasp a better idea of the inner workings of a muse business. I’ve already read through these posts + comments a hundred times so I thought it would be a good idea to see if I could gather more case studies on my own. I want to create a free newsletter featuring various muse businesses to be able to help people looking to create a business (like myself) gain skills and insight.

    Here’s a simple landing page I made for anyone who is interested in signing up:
    http://musecasestudies.simplelander.com/

    Lastly, my email is dardster2@gmail.com I would love to hear feedback and thoughts from anyone. Please tell me how this newsletter would help you.

    Best of luck to everybody looking to redesigning their lives!

  14. Hi Tim,
    Thanks for pulling this together. Very inspirational. “Starting with the right complementary partners was key to long-term success!” really resonated with me. It’s so much easier when you have congruent partnerships and it lends itself to success.

    All the best.

  15. It is funny because I did a similar system for an internship, 10 years ago. I was in Highschool. After the internship, I explained my teachers what I had done, but they didn’t understand, and told me that wasn’t usefull…the company didn’t use it either.
    Lesson ? Don’t listen to teachers, see beyond every simple ideas and every task ?

  16. I love reading inspiring stories and some of these truly are. But “revenue” isnt the same as “profit” (at least not in europe i dont know if this is a US EU language barrier), these examples only talk in terms of revenue. You can make millions in revenue and not make any profit.