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How to really make money online...

MJ DeMarco

I followed the science; all I found was money.
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I pulled this from the other thread because I thought it warranted it's own thread.

Awesome video on how to really make money online. He does an excellent job of getting down to the nuts of bolts, misconceptions, and that you don't need to be the next Facebook to make millions.

David Heinemeier Hansson at Startup School 08 | Omnisio
 
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biophase

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He hits on some great points! The video almost felt like it was made for me!

Some important points:

Work fewer hours per day, but very efficient hours
Niche service business
After launch, it's never going to be less work
At the high end you need to be there when your customer calls 24/7, at the lower end it's not "as" important.
Mom & Pop store isn't bad
Target businesses not consumer
Target the Fortune 5,000,000
No need to dominate market
No VC needed, run at your own pace
 

TC2

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He hits on some great points! The video almost felt like it was made for me!

Some important points:

Work fewer hours per day, but very efficient hours
Niche service business
After launch, it's never going to be less work
At the high end you need to be there when your customer calls 24/7, at the lower end it's not "as" important.
Mom & Pop store isn't bad
Target businesses not consumer
Target the Fortune 5,000,000
No need to dominate market
No VC needed, run at your own pace

You make better notes than I do.

I felt the same way too. I am on the right track.

One other notes. Many companies start seeing the result after one year or even longer. So don't give up too early.
 
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MJ DeMarco

I followed the science; all I found was money.
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The video almost felt like it was made for me!

That's kinda how I felt; the other video (By Graham) was more respective to hitting the home run on a massive scale while this guy, was about hitting a home run in your own way and in a niche.
 

Salinger

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Thanks MJ! His advice was very helpful to clarify my thinking and better narrow down the business model for the website business I'm developing.

I have been wrestling with the amount of free content vs. subscription content. I want to strike the right balance. At the moment I think it makes sense to build the business so that the bulk of the income is subscriptions and the advertising revenue is just gravy. Like he said, it doesn't take a lot of customers, as a percentage of the target market, to make a substantial income.

A friend of mine believes that the subscription business model is dead since so much content is available for free now. I tend to disagree. If you are offering something of value, people will pay for it.
 
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MJ DeMarco

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A friend of mine believes that the subscription business model is dead since so much content is available for free now

Yikes, I'll be sure to tell my friend with the $1.5 Million Veyron next time I see him that his revenue model is F*CKED.:smug2: :smxB:
 

I85

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what's the rationale for targeting businesses not consumers?
Because they take emotion out of the equation. For the most part, they do not care what you are charging them or what you are making...as long as they are making a nice return on their time and/or money. Many less headaches too, businesses go off numbers, not emotions.
On the other hand, many businesses would probably have no problem moving to your competitor if they can get the same product or service at a better price. Many "consumers" may decide to stay with you because they feel comfortable dealing you or just plain like you and your company. Emotion>logic

A friend of mine believes that the subscription business model is dead since so much content is available for free now. I tend to disagree. If you are offering something of value, people will pay for it.
I agree with you and MJ.
What if the info was organized and all in 1 place. Meaning you spend much less time searching for that info. Doesn't that time savings have a value to you? I'm sure it would.

I guess another reason why B2B is often times the way to go. Logic>emotion
 
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Salinger

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Yikes, I'll be sure to tell my friend with the $1.5 Million Veyron next time I see him that his revenue model is F*CKED.:smug2: :smxB:

I guess that's why my friend is working in the slowlane.;)

I had (50% of) a subscription-based business 10 years ago. It was a great business. We were successful, but never took it to the level it might have been. I couldn't imagine why that concept wouldn't still work, but that was his position.
 

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Yikes, I'll be sure to tell my friend with the $1.5 Million Veyron next time I see him that his revenue model is F*CKED.:smug2: :smxB:


Depending on the way you look at it, or really who you are will determine whether you deem his content "premium" or not haha.
 

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Great video! Thanks!

Curious as to what kind of conference/convention this is with the 'F' bombs he is dropping. Also, 500 customers x $40/mth is $20,000/mth.....where did $125K come from???
 
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neverfastenough

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Great video! Thanks!

Curious as to what kind of conference/convention this is with the 'F' bombs he is dropping. Also, 500 customers x $40/mth is $20,000/mth.....where did $125K come from???

Startup School is put on for free by Y Combinator, Paul Graham's seed-stage fund.

The rest of the talks are here: Startup School 08 | Omnisio

And for those interested in angel investing, they held Angelconf. Videos are here: http://www.justin.tv/angelconf
 

biophase

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Great video! Thanks!

Curious as to what kind of conference/convention this is with the 'F' bombs he is dropping. Also, 500 customers x $40/mth is $20,000/mth.....where did $125K come from???

His slide was 400 X $40/mo = $200,000 yr
 

Redshft

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His slide was 400 X $40/mo = $200,000 yr

He had a slide where he was talking about server costs, towards the end after talking about Zappos and scaling problems. He said if you have 500 customers on one server paying $40/mth you're making $125K/mth.

"Do you care what that server cost? You can have the most expensive server in the world and it wouldn't matter."

I'm just pointing it out, no big deal, not trying to argue anything. I just find it interesting whoever put the slides together didn't catch that.
 
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TC2

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I guess someone took that 75K for commission. :)

I am interested in knowing what exactly the profit is after all the expenses. I would imagine a huge cost on the marketing, customer services, new development and human resources etc.
 

biophase

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He had a slide where he was talking about server costs, towards the end after talking about Zappos and scaling problems. He said if you have 500 customers on one server paying $40/mth you're making $125K/mth.

"Do you care what that server cost? You can have the most expensive server in the world and it wouldn't matter."

I'm just pointing it out, no big deal, not trying to argue anything. I just find it interesting whoever put the slides together didn't catch that.

LOL, you're right. If you watch it with comments turned on you'll see a bunch pop up on that slide.
 

Redshft

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I was wondering what that tag was all about saying "put comments here". It's pretty hilarious to watch with the anonymous comments on actually and read them, there are some pretty random ones LOL.
 
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Love it. I think he has a great point that your new business does not have to be revolutionary. It does not have to be scalable to make a bn $ from the very beginning. Focus on providing value and solutions instead.

It was pretty interesting to see that a product may work with businesses but not with consumers. I guess you have to simply test some things and see what sticks.
 

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This is the best video I've seen in a while.

I did not know the guy was that young (or at least seems really young).

Very interesting points he made.

Yeah, he also reminded me of the comments Kenric made during last B&P.
 

TOLDUSO

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Yikes, I'll be sure to tell my friend with the $1.5 Million Veyron next time I see him that his revenue model is F*CKED.:smug2: :smxB:

If you're talking about Rob, then you have to remember that he markets a subscription based on an industry that will always be in demand. His revenue model is virtually failsafe, yet finding an equal example for most people is pretty difficult considering most won't give in and go that route for obvious reasons. :smug2:
 
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buckmajor

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Unbelievable!! This is one of the best threads I've come across so far. That video brought so much clarity, and now knows where I should be focusing on.

I guess my question is:
1. What would be beneficial? Building your business on the side and working on it for 3-5 hrs max per day to get a lot more productive out of it or working on it full time(8-10hrs) e.g. like the i.t developer at the end of the video for 14hrs, even though it wasn't recommended by David Heinemeier? Let's say 5hrs, then what would you do for the rest of the day (Work for someone's business) to support yourself for the mean time or bumming around and hope for the niche business to grow?
2. If this was done in our own pace, then what is wrong with doing it 8-14hrs a day? Or is there a limit for the human mind to intake/exercise and make it productive enough per day?

I am a Freelance Web designer and I don't want to be freelancing for the rest of my life and surely don't mind transferring all my energy working and committing to build this niche business (when it comes me lol). You can agree or not but this makes a lot of sense to me about how some of the entrepreneurs are successful e.g. RK (Robert Kiyosaki), weren't looking for work (not working for other businesses). I guess what I'm saying is, there is always a price to pay and isn't this all part of the sacrifice you have to make by putting in the hard yards first or is 3-5hrs a day is a smarter way of building your niche business?

What do you think?

I am very excited about this and can not wait for my own niche business to take off. I am 30yrs old and have come to the point in my life where, I have no desire to go out or hang out with my friends like the old days. I have sacrificed a lot of my social time, by learning to up skill my website design so much in these short amount time and building websites thinking that advertising was the way to go(but realize, that it is only the gravy lol) but hey if works to pay the bills then why not :).

I read MJ's article or testimony on how he became an entrepreneur, very inspiring.
I would really appreciate your help or anyone else, if you can answer the above questions.

Many thanks in advance
CHEERS :)
 

TaxGuy

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If you're talking about Rob, then you have to remember that he markets a subscription based on an industry that will always be in demand. His revenue model is virtually failsafe, yet finding an equal example for most people is pretty difficult considering most won't give in and go that route for obvious reasons. :smug2:

I imagine it's the same "subscription based industry" as the son of my old business associate(well the franchisor I worked for as an E then with as an S) does- in fact last time I talked to him over a year ago he got done building a $4m house in Boca and got himself an R8 to go with his stable of Benz's and Bimmers.

Great business model, but definitely not for everyone...

I'm sure there's a few dating and roommate finder sites out there though, that'll argue you can have a successful subscription model without having to be "risque" :smxB:
 

Adde

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I love this guy! He truly has some really good points and he is inspirational as well. Thank you!
 
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neverfastenough

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what's the rationale for targeting businesses not consumers?

There's been a recent change in the way people in the tech startup community look at business models. The old belief was that you can support a business based solely on ad revenues. It's not easy to make money that way (especially in the beginning.) The advantage of targeting businesses is that businesses are more receptive to the idea of SaaS (Software as a service). Can you think of many websites that you, as a consumer, would be willing to pay anywhere from $280+ to $1800 a year as a recurring fee? 3 of the 4 products his company develops charge that amount.

This reminds me of a question that was posed at a tech conference I attended in May. The question was: Would you be willing to spend $1 / month to use Facebook? The overwhelming answer was: NO! Now Facebook certainly provides more than $12/ year of value to me, but at the end of the day, it is easily replaceable ( and will be replaced eventually).
 

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I want to bump this thread. It's one of the main reasons why my new projects and business models took a hard left turn from "how can I get 1 billion users to my site?" to "how can I earn a million dollars as easily, effectively (and LOGICALLY) as possible?"

Highly recommend this video.
 
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MJ DeMarco

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