Saturday, December 30, 2017
It’s hard to believe, but it’s been more than 10 years since The 4-Hour Workweek was published. And it amazes me that the book is still the most highlighted book across all of Amazon in 2017.
I wanted The 4-Hour Workweek to be a compass for a new and revolutionary world. While many people have misunderstood the title, the book was written as a blueprint for escaping the rat race, living more, working less, and putting yourself in control.
Few things are more enjoyable than reading the case studies I’ve come across over the years.
This guest post, by Elaine Pofeldt, is an adapted (and extended) excerpt from her new book, The Million-Dollar, One-Person Business. Elaine highlights six different people who built a million dollar business after reading The 4-Hour Workweek. Much like 10 years ago, I hope this post inspires more people to make a change for the better and accomplish more than they thought possible.
Enter Elaine
Laszlo Nadler, 36, lives a life many dream of: he is on track to bring in more than $2 million a year in a profitable business that is a one-man show. Nadler runs a five-year-old online store, Tools4Wisdom, from his home in New Jersey. The store sells inspirational weekly and monthly planners. Nadler outsources the printing, so most of his daily work consists of customer service, business development, and marketing. The business leaves plenty of time to get away for vacations with his wife and two young daughters.
When his income from the planners hit six figures a little under two years ago, he quit his job to work on the business full-time. Just four years into running his still-profitable business full-time, he broke $2 million in revenue—and has seen his life transformed.
Nadler is part of an exciting trend: the growth of ultra-lean, one-person businesses that are reaching and exceeding $1 million in revenue. According to recent statistics released by the US Census Bureau, in 2015 there were 35,584 “nonemployer” firms— that is, those that do not employ anyone other than the owners— that brought in $1 million to $2,499,999 in annual revenue. That’s up 5.8% from 2014, 18% from 2013, 21% from 20 12 and 33% from 2011.
While the Census Bureau’s name—nonemployer firms—defines these ultra-lean businesses by what they are not, many entrepreneurs clearly see them for what they are: an engine that offers the potential for high income and a balanced, interesting life—on their own terms. These businesses offer three things that elude most workers today: control over their time, enough money to enjoy it, and the independence to live life as they want.
Many entrepreneurs take one of two paths to economic freedom today: (1) quitting their job and launching a traditional small business, such as a shop or a restaurant, or (2) trying to scale a startup into the next company to go public or get acquired by a big corporation.
But the million-dollar, one-person business entrepreneurs have embraced a new, third path—one in which a single individual or business partners can extend their capabilities to achieve what it would normally take a larger team to do. What they’re pulling off takes effort, but the changing nature of work, the growth of automation, and technological developments that unlock market access are making it easier by the day. “There is a way of thinking that scales beyond them,” says Eric Scott, a partner at SciFi VC, a venture capital firm in San Francisco, founded by Max Levchin, cofounder of PayPal.
What’s driving the growth of the million-dollar, one-person business? One factor is the internet, which has enabled individual entrepreneurs to plunge into a vast global marketplace cheaply and quickly. It has become much easier to quickly set up a business’s legal structure, operations, and distribution, says Scott. Thanks to cloud-based storage, buying expensive servers—once a huge barrier to entry for startups—is no longer mandatory.
The uptick also reflects a shift in attitudes. Rather than adopt Henry Ford–era business models, in which scaling up depends on hiring legions of employees, these entrepreneurs choose to travel light. When they need to expand their individual capabilities, they often deliberately turn to contractors or firms that handle billing and other outsourceable functions—an approach some first considered after being introduced to the idea of outsourcing in The4-Hour Workweek.
The Million-Dollar One-Person Business Revolution
So how do you get from where you currently are in your career to enjoying the freedom million-dollar entrepreneurs have? It starts with forming an idea of the type of business you want to run and the lifestyle you want it to support. While Nadler is passionate about planners, thinking about a daily planner might be a form of slow torture for you.
If what you obsess about is electronic gadgets, stock market investing, Paleo cooking, funky handbags, or collecting ceramic garden gnomes, your million-dollar business idea probably has something to do with that interest.
A good place to start is to ask yourself some key questions:
What are you really passionate about?
Where can you deliver value to people?
And would you actually enjoy turning your idea into a business?
You may find there are some passions you prefer to keep as personal interests instead.
The founders of million-dollar, one-person businesses and partnerships are everyday people who have grown very smart about the time they spend working. Solo businesses and partnerships that hit the million-dollar range typically fall into six categories:
- E-commerce
- Manufacturing
- Informational content creation
- Professional services and creative businesses, such ?as marketing firms, public speaking businesses, and ?consultancies
- Personal services firms, offering expertise, such as fitness ?coaching
- Real estate
In interviewing the entrepreneurs for The Million-Dollar, One-Person Business, I found that no two were alike. But what many have in common is they are using outsourcing, automation, mobile technology or a combination of all three to build, operate and grow their businesses.
Some of these entrepreneurs have made a commitment to remaining solo operations, while others eventually decided to scale the traditional way, by hiring employees. That isn’t what is most important about their stories. The point of the million-dollar, one-person business is that it gives you choices—whether to keep it small while earning a great income or continue growing it. Neither path, you’ll notice, involves the pain of struggling in a marginal freelance business.
Often, these entrepreneurs mentioned to me that The 4-Hour Workweek gave them valuable ideas on how to extend what one person or a team of partners could do before they hired employees. Here are some of their stories, which illustrate how they applied the lessons of The 4-Hour Workweek—and the incredible results they achieved in their lives because of that.
Case Study #1: Split-Testing for Profit
Nadler never planned to be an entrepreneur. He studied business management and technology and then built a career as a project manager for one of the top trading units at a multinational bank. It was a good job that seemed to justify the college tuition his parents had paid and enabled him to support his young family. And yet, as Nadler was talking almost six years ago with his oldest daughter about the importance of doing what you love, his words sounded hollow. He realized he was not following his own advice.
What did excite him—and had led to his career in project management—was improving his own productivity and helping the people around him do the same. Nadler decided it was time to actually follow the advice he had given his daughter and soon started a side business, designing and producing his own planners and selling them online. His goal was to create a side income by creating a truly automated business that would give him the freedom to choose to work—or not—on any given day. An online store, he realized, was the quickest and easiest route to doing that.
“The 4-Hour Workweek got me started,” says Nadler. “Tim created the system to automate his income to make space for the things he loved and travel where he wanted to go. I was inspired to hack the system, to question the status quo and see if I [could] pull it off myself—and behold, it works.”
Unlike most daybooks, Nadler’s planners are not built around making to-do lists. Instead, they focus you on the essential outcomes each week that will move you toward your primary goals. Many people loved his idea and bought the planners.
One thing that helped Nadler was using automated approaches to doing things like conducting A/B testing to determine how consumers were responding to his web pages—a time-saving idea he got excited about after reading The 4-Hour Workweek.
In “A is for Automation,” there is a section looking at software to help readers in internet businesses determine which combination of headlines, texts and images on their home page results in the most sales, instead of trying to test all variables themselves.
Nadler acted on what he had learned by turning to the site Splitly. This saves him hours of manual work. Nadler has found the site’s small team offers smart insights to the questions he is trying to answer. “The size of your company doesn’t matter when you have the right brains,” he notes.
Case study #2: Mastering the Art of Delegation
Ben and Camille Arneberg, a married couple, who live in Austin, Texas, left behind traditional careers—his in the Air Force and hers in corporate social sustainability—to launch their upscale housewares business Willow & Everett in 2015. At the time, they were just 25, and neither had any experience in retail, but they decided they wanted to hit a very concrete goal: $1 million in revenue.
Reading The 4-Hour Workweek helped them find the courage to leave behind traditional careers and build a lifestyle they love. For Camille, reading the Comfort Challenges in Tim Ferriss’s book—where he offers ideas on how to break out of your fear of not conforming to social expectations by doing something weird or ridiculous like publicly relaxing by lying on the sidewalk — helped her question the beliefs that were keeping her tied to corporate life, the first step to leaving it behind. “The 4-Hour Workweek helps you challenge social norms and what people expect of you,” she says.
To make a smooth transition from their traditional careers, the Arnebergs eased into entrepreneurship gradually. Both love living an active lifestyle—Ben was on the Air Force parachute team, while Camille is a certified personal trainer—and they initially tried selling compression sleeves (a running accessory) on the internet on the side.
When that business did not take off, they began researching other products they could sell on the giant trade marketplace Alibaba.com and decided to build a store around their passion for home entertaining. They invested about $5,000 in inventory obtained through a sourcing agent in China they found through a freelance marketplace, raising some of the cash from friends and family, looking at it as just as much of an investment in their own education as a college course would be. Even if it all went down the tube, they reasoned, the experience would be valuable.
The couple opted to launch their site on a giant ecommerce marketplace, reckoning that this would give them the exposure they needed quickly. The site grew quickly, thanks to the couple’s eye for selecting stylish but affordable products, like decorative shot glasses.
To stay focused on the high-level decisions that grow their revenue, the Arnebergs don’t try to do everything themselves and, taking a cue from what they learned in The 4-Hour Workweek, outsource tasks like customer service and photography for the site. They also outsource order fulfillment, relying on their retail platform to handle this. Another example of how they outsource is by relying on a private label manufacture overseas, who customizes their products for them, instead of trying to become manufacturers themselves.
To avoid getting involved in distracting minutia, they actively empower their contractors to make judgement calls, such as issuing a refund, that will cost the company $50 or less—a general concept they learned in The 4-Hour Workweek. (Ferriss empowered his own assistants to resolve such problems if they would cost him $100 or less). “It’s about being smart and strategic and trusting others to make decisions,” says Ben.
By eliminating unimportant tasks, the Arnebergs are able to follow entrepreneur and venture capitalist Paul Graham’s manager’s vs maker’s schedule, an idea Ferriss also practices. Ben and Camille break up their day into the “manager’s” part, focused on strategy and business growth, and the more task-focused “maker” part, where they tackle high-impact tasks best done by them in uninterrupted blocks of time.
During the “manager” part, they focus on coming up with new ideas for growing Willow & Everett, as well as new business opportunities to pursue.
The results of those sessions have been powerful. Last year, they launched a second business on the crowdfunding site Kickstarter. It sells the CubeFit Terra Mat, an ergonomic mat for people who use standup desks. The couple raised more than $108,000 to bring the project to fruition in a campaign that started in December 2016 and have since grown it to more than $1 million in revenue. More recently, they ran a successful Kickstarter funding campaign for a new product Cold Brew on Tap this past fall, raising more than $56,000 and shipping the product to backers in December 2017.
None of this would have happened if they had not made an active commitment to outsourcing and staying focused on what really matters. “It’s important to protect that space,” says Ben.
Case study #3: Fewer Distractions = More Growth
Dan Faggella, twenty-nine, is a black belt in Brazilian Jiu-Jitsu. Faggella earned enough money to support himself in graduate school by running a small martial arts gym he owned in his early twenties but had sold it by age 25, with the goal of creating a scalable, location-independent internet business.
In 2012, he launched Science of Skill, a subscription-based ecommerce site that initially sold online courses in martial arts. As a fighter, Faggella, who has a slight build, had achieved some renown among martial artists for a fight in which he beat a much larger competitor. Many people found his matches instructive. Online videos of his competitions – and, eventually, those of other instructors – drew visitors to Science of Skill’s site.
Reading the book Scaling Up by Verne Harnish and listening to The 4-Hour Workweek audiobook during a seven-hour drive from Rhode Island to Philadelphia proved to be pivotal experiences that helped Faggella grow his business to the next level, the entrepreneur recalls.
The 4-Hour Workweek opened Faggella’s mind to two key ideas that helped him grow his revenue far beyond the average “nonemployer” business: Growing a business without hiring traditional employees and finding the right communication rhythms with his team.
One idea that really resonated with Faggella, after running a traditional brick-and-mortar business, was Ferriss’s idea of working with a remote team of contractors. He found it freeing to realize that he didn’t necessarily need a physical space where his team at Science of Skill would work together under one roof.
“That’s an idea that jumped out at me,” he says. “The ease with which that can be done became evident. I knew that was going to be the way to fuel the big game.”
To find remote contractors for tasks such as copywriting and web support, Faggella turned to the freelance platform oDesk, now part of Upwork. He built a team of four reliable contractors to handle tasks such as copywriting and web support.
Faggella also learned another key lesson from The 4-Hour Workweek: the right cadence of communication with his team. Faggella found it helpful to learn that Ferriss only checked his email twice a day and made conscious decisions about when he would communicate with his team and how often.
“It wasn’t an unbroken, consistent stream of messages back and forth but was an organized way of communicating that kept things moving and functioning,” notes Faggella. “You could kind of bucket when you actually handle your digital communication and talk to these folks who are thousands of miles away. It became self-evident to me that those things were manageable.”
By establishing similar communication rhythms to communicate with team members in other time zones, such as his developer and designer in India, Faggella protected the time he needed to focus on big-picture strategizing that helped him grow Science of Skill. The direct result was that he gradually expanded his offerings beyond the martial arts world to offer products related to self-protection and self-reliance. An ongoing curriculum for self-defense and martial arts techniques became one of his biggest products.
That expansion helped him make the leap from six-figure to seven-figure revenue prior to hiring employees. “The tools and concepts in The 4-Hour Workweek were critical for Science of Skill,” he says.
In 2017, Faggella sold Science of Skill for more than $1 million to a group of software entrepreneurs from Ohio. As he got ready to sell, Faggella hired one-full time and one-part time employee to run it. He understood that he needed to demonstrate to potential owners that someone else could run the business successfully without his involvement.
The month before Faggella sold Science of Skill, it was bringing in $210,000 a month in revenue. That sale helped him fund his current startup, Tech Emergence, a media and market research firm in San Francisco that is focused on artificial intelligence, a subject that fascinates him. “That’s the stuff I’m super-duper passionate about,” he says.
Case study #4: Success Through Liberation
Sol Orwell, thirty-two, who lives in downtown Toronto, has grown his business, Examine.com, to seven-figure revenue while traveling the world. Creating a business that allows him to live the way he wanted didn’t happen overnight. For years, Orwell experimented with a variety of businesses—online gaming, domain names, local search and daily deals—until he found the ideal approach to make it happen.
One thing that finally freed Orwell to achieve his goal was reading The 4-Hour Workweek. The “L is for Liberation” section really resonated with him. It showed him how to cut the leash to traditional office work and create the freedom to travel. Orwell was intrigued by the idea of a mini-retirement—where, instead of waiting until you’re done working to travel, you redistribute it throughout life. “That switch in mindset has begotten me so many positive consequences I cannot even begin to count them,” he says.
Looking for a way to achieve his own liberation, Orwell realized he need to put systems in place to free him from daily responsibilities that might otherwise prevent him from traveling. Thanks to income from his various ventures, being able to pay for travel was not an issue for him.
Although Orwell was experienced in delegating work to contractors from his previous ventures, reading The 4-Hour Workweek helped him realize he needed to step out of the day-to-day completely at Examine.com.
“After having spent years building up my business, instead of attempting to just continue growing it, I put my #2 in charge (I trusted him and killed my own job), and then I gallivanted around the globe,” he says. Mobile access to the internet was so extensive by that point, he says, that “everywhere I went I could work… if I wanted to.”
The key to pulling this off was working with the right contractor. Orwell, who had initially gotten interested in nutrition while losing weight, had gotten to be friendly with a fellow contributor to the fitness community on Reddit and was impressed by the way in which his buddy shared his expertise with others on the site.
“The most important part was how patient he was,” Orwell says. “He would write these long answers.” Orwell was equally impressed by the way his friend handled challenging feedback—without getting angry. “Reddit is not the friendliest place,” says Orwell. “He took it very evenly.” These were qualities that would serve him well in an internet business like Orwell’s, where customers often reached out with their own questions about nutrition.
Orwell had soon enlisted his friend, as a contractor, to run Examine.com day to day, offering a small amount of equity to ensure his buddy was invested in its success. Orwell found the arrangement worked beautifully when it came to indulging his love of travel. “Giving him the authority to do whatever he needed to do implicitly brought initiative,” Orwell says.
To make sure the site had credibility, Orwell also hired a group of expert contractors, such as Ph.Ds, to evaluate the research on various nutritional supplements and write reports on them. “Using contractors was not only about simplifying our lives and processes but making sure we have the best knowledge or information on that specific topic,” he says.
As the company grew and expanded into new products, such as its Research Digest, a newsletter aimed at professionals, Orwell brought in another equity partner. Though his #2 eventually moved on to other pursuits, the company continues to thrive and grow. With Examine.com generating millions of page views a month, Orwell now wants to scale up in a more traditional way and this year began the transition to adding traditional employees.
Given that he has structured the company in a way that he does not have to micromanage everyone, Orwell still has the freedom to travel and give back to charity as much as he wants. Recently, his Chocolate Chip Cookie Off NYC X benefit, held at The Strand bookstore in New York City, raised more than $30,000 for the nonprofit She’s the First, which supports girls in low-income countries who will be the first in their families to graduate from high school.
Orwell’s next goal: Figuring out how to raise $50,000 per event—to multiply the impact even more. That’s something he probably wouldn’t have had the time or mental space to tackle if he hadn’t decided to embrace his own liberation.
Case study #5: Rethinking Scale (and Profit)
Jayson Gaignard, founded and runs MasterMindTalks, a Toronto-based firm that brings together a carefully selected group of entrepreneurs in a by-application-only annual event.
The company, which Gaignard runs with some help from his wife, an assistant who is a contractor, and, very recently a content and community manager, could easily expand. About four thousand to five thousand people apply annually to participate in the event for 150 entrepreneurs.
Gaignard has made a conscious decision to keep the business to the size it is as a direct result of reading The 4-Hour Workweek.
He read the book in 2008, when he had been an entrepreneur for about three years, and recalls vividly how life-changing the story of the Fables of Fortune Hunters story was for him at the time. “I have very few moments like that,” he says.
The tale is about an American businessman with a Harvard MBA who takes a vacation to a small coastal Mexican village on doctor’s orders. At the pier, he meets a Mexican fisherman with a small boat who leads a bucolic life with plenty of time to spend with his family and friends in the small community. The businessman encourages the fisherman to scale up his operations by buying more boats and fishing more, so he can eventually expand his operation into the U.S., do an IPO, and cash out a rich man.
When the fisherman asks, “Then what?” the businessman says, “Then you would retire and move to a small coastal fishing village, where you would sleep late, fish a little, play with your kids…”
Reading the story, says Gaignard, “made me realize I was on a hamster wheel running a business I hated. It fundamentally shifted my view on scale. I had a desire to build a big business at that time but never questioned it.”
At the time Gaignard was running a business called TicketsCanada, a tickets retailer in Toronto. Gaignard assumed that when he hit $1.5 million in revenue that he would double his $350,000 in profits if he could hit $3 million. However, he didn’t anticipate that higher overhead would prevent the expected growth in profits. In fact, when he grew to $3 million, his profits only hit $400,000—and he had to bring almost 20 people on staff to get there. He ended up in a tough financial position where he was considering bankruptcy.
Reading The 4-Hour Workweek made him start questioning the conventional wisdom on scaling a business. “I had a desire to build a big business at the time, but I never questioned it,” Gaignard says. “It made me realize I was on a hamster wheel, running a business I hated.” He eventually decided to close TicketsCanada. “It was the biggest shift I’ve ever made in business,” recalls Gaignard.
In 2011, a friend invited Gaignard to see a talk by marketing guru Seth Godin in New York City. Godin’s theme of networking with like-minded individuals resonated with Gaignard. Gaignard started holding dinners where he would invite eight interesting people, embracing the idea of developing his network.
Gaignard was new to events, but, now that he was committed to building a new way of living for himself, decided he would figure things out as he went along. He was delighted when the event proved to be very successful. That event morphed into his current business, MasterMindTalks, the following year.
Despite constant encouragement to grow his business, Gaignard has decided to keep it small, paying himself $250,000 a year. “How much more money do I need?” he says.
Keeping the business small allows him plenty of time to spend with his wife and their young daughter—and he has no intention of letting go of the perspective he gained from The 4-Hour Workweek. “I became conscious of designing my lifestyle and designing my business to fit that lifestyle,” he says.
Case study #6: How to Overcome Your Doubts and Grow
Allen Walton, 29, runs Spy Guy, an online store in the Dallas area that broke $1 million in revenue its first year. Walton learned the business from the ground up in an early job as a retail clerk at store where he sold security cameras and other gadgets to consumers who came to a store where he worked and later at an online store he ran for another entrepreneur.
Working in those jobs, Walton essentially earned a master’s degree in picking the right inventory. Although he eventually got frustrated with the world of traditional jobs and a paycheck that didn’t reflect the work he put in, it took him a while to build the confidence to start his own store.
Walton says the fear-setting exercise in The 4-Hour Workweek helped him overcome his own doubts, and, armed with $1,000 he’d saved, go into business himself three years ago.
In the fear-setting exercise Ferriss created to break free of workaholism that was keeping him from traveling, he decided to spell out exactly what nightmare that living his dream would cause—the worst-case scenario that would result.
Walton still has his notes from that exercise in a legal pad. In his own version of the “define your nightmare” exercise, Walton envisioned his business failing and being forced to work for $10 an hour in In-N-Out Burger. To his surprise, he says, “I found a little bit of comfort in it,” says Walton. Not only would he be able to live on the food he was serving at the burger joint, he concluded, but, he says, “I could get a stable income—something a lot of entrepreneurs miss.”
Fortunately, it never came to that, thanks, in part, to a lesson he took from The 4-Hour Workweek and Ferriss’s podcast on how to optimize your situation. Following Ferriss’s example, he made a list of everything that needed to be done to launch the business, so he could compartmentalize it.
“You make what would seem to be a complex, insurmountable task—starting a business—a lot more digestible,” he says. “All of a sudden you are going through the checklist—and a year later the business has launched.”
Walton’s business took off quickly, thanks to his knowledge of the business. He knew what inventory would sell and avoided inferior products that would require a lot of time spent on returns and customer service.
Not long after the one-year mark, the company was growing so fast that Walton hired an employee to handle customer service, then hired two more. He brought in $1.9 million in annual revenue last year.
That might seem to be a good position to be in, but as Spy Guy continued to grow, Walton was surprised to find himself struggling with depression and struggling to stay interested in the business.
Growing the business past the point it had reached was going to be significantly harder than getting there, he realized, and he wondered if he had the motivation to get it there. He had thrived during the struggle of the early days, and now that the business was established, lost some of his motivation.
“I’d wake up at noon and look at sales for the day and say ‘Oh, we have enough sales today. I literally just made $1,000 in profit for myself after taxes and can afford not to do anything today,” Walton recalls. “I’d browse the internet, play a video game, eat dinner at a nice restaurant and go to sleep at 2 am.”
Thinking back to The 4-Hour Workweek, Walton recalled that Ferriss discussed this very problem in the section on “Filling the Void.”
As Ferriss puts it, “Once you’re making enough money to live the way you want, “There will come a time…be it three weeks or three years later—when you won’t be able to drink another piña colada or photograph another damn red-assed baboon,” Ferriss wrote. “Self-criticism and existential panic attacks start around this time.” Ferriss recommends strategies such as committing to continual learning and service revisiting and resetting “dreamlines” set earlier to define and fulfill what you really want out of life.
To get out of his funk, Walton looked for mentorship from other successful entrepreneurs, which he found at a high-end business retreat called two12 (Tim has been a mentor twice at the event). At two12, he spoke with Noah Kagan, founder of Sumo and an early Facebook employee, who helped him reset his own dreams. “He convinced me to double down on my business when everyone else was telling me to sell,” says Walton. “I felt like I’d really regret it if I didn’t give it my all.”
For the past few months, Walton has done just that. He invested in rebranding the company as Spy Guy, instead of SpyGuy Security, a relaunch of his website and hiring a professional video studio to replace the DIY videos he was relying on. These days, he wakes up every morning, works the entire day full of energy and, at the end, asks himself, “Where has the day gone?”
“I have this really interesting niche,” says Walton. “I still think there’s tremendous opportunity to grow.”
Now that he’s committed to doubling down on his business, Walton stays pumped by watching video interviews with Tim Ferriss and listening to his podcast interviews.
“I don’t know where I’d be without Tim Ferriss,” says Walton. “The way I think about things and operate has been tremendously influenced by what he has written about.”
Posted on: December 30, 2017.
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