They designed the machine, built it, and flew it. Their model depended not on superior technology, but on the highest number of test runs, creating an optimal learning curve. This revealed flaws to be worked on and gave them a feel for the product that could never be had in the abstract. The emphasis was not on the parts, but on the overall flying experience; not on power, but on control. Since money was a factor, supreme importance was placed on ingenuity in getting the most out of the least. The differences between the two approaches can be seen in the analogies they chose to base their designs on. The abstract thinkers opted for the ship analogy, working on the similarity of navigating an alien medium (water or air), which made them place importance on stability. The Wright brothers chose the bicycle, which emphasized the rider or pilot, the user-friendliness of the machine, and its overall functionality. Focusing on the pilot instead of the medium ended up being the right answer to the puzzle, because it led to the design of something that could be maneuvered. From that starting point, a more complex airplane could be easily evolved.

Mechanical intelligence is not a degraded form of thinking, as compared to abstract reasoning. It is in fact the source of many of our reasoning skills and creative powers. Our brain developed to its present size because of the complex operations of our hands. In working with resistant materials to create tools, our ancestors developed a pattern of thinking that transcends manual labor itself. The principles behind mechanical intelligence can be summarized as follows: whatever you are creating or designing, you must test and use it yourself. Separating out the work will make you lose touch with its functionality. Through intense labor on your part, you gain a feel for what you are creating. In doing this work, you see and feel the flaws in the design. You do not look at the parts separately but at how they interact, experiencing what you produce as a whole. What you are trying to create will not magically take off after a few creative bursts of inspiration, but must be slowly evolved through a step-by-step process as you correct the flaws. In the end, you win through superior craftsmanship, not marketing. This craftsmanship involves creating something with an elegant, simple structure, getting the most out of your materials—a high form of creativity.

Mastery by Robert Greene

We had a working engine of growth. The gross numbers were small because we were selling the product to visionary early customers called early adopters. Before new products can be sold successfully to the mass market, they have to be sold to early adopters. These people are a special breed of customer. They accept—in fact prefer—an 80 percent solution; you don’t need a perfect solution to capture their interest.

Early adopters use their imagination to fill in what a product is missing. They prefer that state of affairs, because what they care about above all is being the first to use or adopt a new product or technology. In consumer products, it’s often the thrill of being the first one on the block to show off a new basketball shoe, music player, or cool phone. In enterprise products, it’s often about gaining a competitive advantage by taking a risk with something new that competitors don’t have yet. Early adopters are suspicious of something that is too polished: if it’s ready for everyone to adopt, how much advantage can one get by being early?

As a result, additional features or polish beyond what early adopters demand is form of wasted resources and time.

This is a hard truth for many entrepreneurs to accept. After all, the vision entrepreneurs keep in their heads is of a high-quality mainstream product that will change the world, not one used by a small niche of people who are willing to give it a shot before it’s ready. That world-changing product is polished, slick, and ready for prime time. It wins awards at trade shows and, most of all, is something you can proudly show Mom and Dad. An early, buggy, incomplete product feels like an unacceptable compromise.

Minimum viable products range in complexity from extremely simple smoke tests (little more than an advertisement) to actual early prototypes complete with problems and missing features. Deciding exactly how complex an MVP needs to be cannot be done formulaically. It requires judgment.

The lesson of the MVP is that any additional work beyond what was required to start learning is waste, no matter how important it might have seemed at the time.

The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries

. . . just as a matter of interest, tell me something: how long do you sleep each night? 

The proverbial eight hours. Ask anyone and they say automatically ‘eight hours’. 

As a matter of fact you sleep about ten and a half hours, like the majority of people. I’ve timed you on a number of occasions. I myself sleep eleven. 

Yet thirty years ago people did indeed sleep eight hours, and a century before that they slept six or seven. In Vasari’s Lives one reads of Michelangelo sleeping for only four or five hours, painting all day at the age of eighty and then working through the night over his anatomy table with a candle strapped to his forehead. Now he’s regarded as a prodigy, but it was unremarkable then. 

How do you think the ancients, from Plato to Shakespeare, Aristotle to Aquinas, were able to cram so much work into their lives? Simply because they had an extra six or seven hours every day. 

The Complete Stories of J. G. Ballard by J. G. Ballard

You can’t make radical changes in the pattern of your life until you begin to see yourself exactly as you are now. 

As soon as you do that, changes will flow naturally. You don’t have to force anything, struggle, or obey rules dictated to you by some authority. It is automatic; you just change. But arriving at that initial insight is quite a task. You have to see who you are and how you are without illusion, judgment, or resistance of any kind. 

You have to see your place in society and your function as a social being. You have to see your duties and obligations to your fellow human beings, and above all, your responsibility to yourself as an individual living with other individuals. And finally, you have to see all of that clearly as a single unit, an irreducible whole of interrelationship. It sounds complex, but it can occur in a single instant. Mental cultivation through meditation is without rival in helping you achieve this sort of understanding and serene happiness.

“What you are now is the result of what you were. What you will be tomorrow will be the result of what you are now.."

Mindfulness in Plain English: 20th Anniversary Edition by Bhante Gunaratana

WILLPOWER EXPERIMENT:

A FIVE-MINUTE BRAIN-TRAINING

Breath focus is a simple but powerful meditation technique for training your brain and increasing willpower.

Here’s how to get started: 

1. Sit still and stay put . Sit in a chair with your feet flat on the ground, or sit cross-legged on a cushion. Sit up straight and rest your hands in your lap. It’s important not to fidget when you meditate—that’s the physical foundation of self-control. If you notice the instinct to scratch an itch, adjust your arms, or cross and uncross your legs, see if you can feel the urge but not follow it.

2. Turn your attention to the breath. Close your eyes or, if you are worried about falling asleep, focus your gaze at a single spot (like a blank wall, not the Home Shopping Network). Begin to notice your breathing. Silently say in your mind “inhale” as you breathe in and “exhale” as you breathe out. When you notice your mind wandering (and it will), just bring it back to the breath.

3. Notice how it feels to breathe, and notice how the mind wanders. After a few minutes, drop the labels “inhale/exhale.” Try focusing on just the feeling of breathing. You might notice the sensations of the breath flowing in and out of your nose and mouth.

Start with five minutes a day. When this becomes a habit, try ten to fifteen minutes a day. If that starts to feel like a burden, bring it back down to five. A short practice that you do every day is better than a long practice you keep putting off to tomorrow. It may help you to pick a specific time that you will meditate every day, like right before your morning shower. If this is impossible, staying flexible will help you fit it in when you can.

Even when he was focused on his breath, other thoughts sneaked in. He was ready to give up on the practice because he wasn’t getting better at it as quickly as he hoped, and figured he was wasting his time if he wasn’t able to focus perfectly on the breath. Most new meditators make this mistake, but the truth is that being “bad” at meditation is exactly what makes the practice effective.

Science is discovering that self-control is a matter of physiology, not just psychology. It’s a temporary state of both mind and body that gives you the strength and calm to override your impulses.

The Willpower Instinct: How Self-Control Works, Why It Matters, and What You Can Do to Get More of It.

Join our mailing list and we will send you one to two emails a week for 12 weeks teaching you the basic body weight exercises, nutrition guidelines, and mindset tools you need to be Indestructible. 

My job is to know is to know why some process at a customer doesn't work and then find the easiest and most cost effective way to fix it, and each time, my first step is always the same. This tool only costs $.05 in materials, a child could do it and often does, and it solves the process problem almost every time.

Anyone can do it, everyone should do it, but most never do. They should, but usually overlook it as too simple or obvious.

It has worked for me in manufacturing plants, plant and warehouse layout problems, sap integrations, Microsoft AX integrations, paperwork flow, and many other applications. It is pretty much a universal tool. This tool is a Swiss army knife of business problem solving.

What is it?

It is simple. -


Draw your process out. A nice simple rough sketch.

Get a piece of paper and a pencil.

Draw the work flow.

Make sure that you have people with you who are involved in all steps in the process and they are helping you create the sketch. Make sure you get every move, every transaction, every single delay, every person, all the issues.

Your drawing will be messy and that is good, just make sure to draw out the flow of the process you are working on as accurately as possible, no editing until done.

Put it up on the wall.

Does anything in the process get handled twice?

If it does, there is a problem, because nothing should be handled twice.

Is there dead inventory, material stuck at stations? Draw it. Inventory is there to hide a problem, if everything is working, you do not need extra inventory.

Are there feedback loops so that people who aren't of the process know the results of their actions, and see when they are doing well, or not doing well? This important, because people need to know how they are doing, if there is no feedback, they think it doesn't matter.

Put times on your drawing, it will surprise you.

Draw your problem and every time the solution is there as well.

I am a visual learner, and I see structures where others hear words, but it works for every one. Once you see the problem, the answer is obvious, you need to fix a machine, train more, redo the process line, fix process errors that cause quality errors.

It is also makes you truly know your process.

D

Your products are experiments.

If they don't sell, you may stop selling them but those roducts are not failures, they are knowledge earned the hard way.

As you test the waters and try different products, remember that if they don't work, they are not failures, they are experiments on the way to success.

I read a quote once, and I am not sure who wrote it but to paraphrase, if it is not working, it doesn't mean it will end badly, it just means your work isn't finished.

No one, nothing, is ever perfect out of the gate.

Set a goal, set a deadline, and measure your progress.

Decide on a number, could be sales dollars, and then set a date, say 60 days, and then measure your daily progress. What gets measured gets done, and turns this from wishful thinking to an actual plan.

Measure your progress.

See what worked, see what didn't, redo, improve,and do it again.

D

Business Experiment No. 1

Learning means nothing with out action, so here is the first goal for you; 

Make $1.00 by selling something to someone else. 

Take action.

It could be anything, and it needs to be to anyone you don't currently know, but you need but make a deal. Sounds easy, but can you really do it, make that first dollar? That $1.00 can be the start of a business that can change your life. Do you have what it takes?

Stop everything, stop reading this, and go do it. 

This will prove an important point to you, and it is what I think is the most important point that you can learn about business:

That you can make money and you can do it now. No one else has do to it for you, you can make your future. 

The first dollar is the hardest, but once you get it, you understand that it can be done, that you don't have to work for someone if you don't want to, that businesses are created by people just like you. You make that dollar, you sell something, you have your first email for your customer list, your mailing list, and you meet someone new, which means you have widened your network.

See on eBay, sell on flippa.com, sell at a garage sale, sell on the street, online, make a cold call, it doesn't matter. 

Sell.

For me it was ebay, I started selling used books and some jewelry, and I quickly learned that I coiuld sell, and it started me learning all I can.

Let me know how you do. I would like to know.

Any questions let me know.

D

Here are 6 Reasons Why You Should Raise Your Prices Immediately;

1. You are long overdue.

When was the last time you raised your prices?

It probably has been a long time since you have raised prices, and everywhere you go you are now paying more for gas, groceries, everything. What was the price per gallon for gas the last time you raised prices? Have you kept pace?

2. Raising Prices increases your confidence.

People always undervalue themselves and then by extension their products or services. Raising prices and seeing what the market values you at and not what you value you at really increases your confidence as an entrepreneur.

Don’t be a bottom feeder.

Best customer surveys say;

That the customer thinks that you have great quality, great customer service, great technology, but high price, and that is a great survey response. The customer is telling you why he buys from you and why they know your higher price is worth it.

3. Raising Prices gives your product added value.

Do I want to learn marketing from a person charging me for a $9.99 eBook and I try and figure it all out, or would I prefer someone charging me $2,000 to get me all set. Price sets expectation.

4. Raising prices allows you to get more profit.

That is why you are in business, right?

Seriously, this why you are here, right, this is why you sell.

Enough said.

5. If you raise Prices you make more margin, which is more money.

With more money, you can work less and still make the same amount of money.  Maybe money isn’t the end all be all, but having time is crucial. It is how you build, reinvest, grow, and live.

I can get more product, ideas, make more money, hire more people, but time is finite. You cannot get more.

Use it.

6. The final reason to Raise Prices:

Raising prices is scary and very hard work, but the fact that raising prices is scary is the very reason why you should raise your price;

How will you know what your business can do or what will work if you don’t try. So try.  If it doesn’t work, just go back.

Growing a business is all about experimenting.

Go experiment.

D

PS: 

 If you have decided to raise your prices, I will soon show you how. There is an art. 

D

The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich (Expanded and Updated)  

by Timothy Ferriss 

Notes Part 1

This has to be the most requested book here on the site, but it is also one of those books that I think are misunderstood. Where many of the fans of the book picked up on creating a business on a laptop, and working "four hour" weeks, if you read the book closely you see the normal job deconstructed, and a defense of your time. 

He states at one point, the book is not for people who want to run businesses, it is for those that want to own them. It is for people who want to control their own time.

The book is almost a stereotype, but is definitely worth reading. It is one of those books that today it is hard to understand how different it was when it came out, because the book helped make what is the new entrepreneur today.

People don’t want to be millionaires—they want to experience what they believe only millions can buy. (Time and experience are the only things that matter.)

..... this book is not about finding your “dream job.” I will take as a given that, for most people, somewhere between six and seven billion of them, the perfect job is the one that takes the least time. The vast majority of people will never find a job that can be an unending source of fulfillment, so that is not the goal here; to free time and automate income is.

Reality is negotiable. Outside of science and law, all rules can be bent or broken, and it doesn’t require being unethical.

Focus on being productive instead of busy.

Conditions are never perfect. If it’s important to you and you want to do it “eventually,” just do it and correct course along the way. If it isn’t going to devastate those around you, try it and then justify it.(Simply said Do. Test. Correct. Do Again.)

It is far more lucrative and fun to leverage your strengths instead of attempting to fix all the chinks in your armor. The choice is between multiplication of results using strengths or incremental improvement fixing weaknesses that will, at best, become mediocre. Focus on better use of your best weapons instead of constant repair.

People who avoid all criticism fail.

Action may not always bring happiness, but there is no happiness without action. —BENJAMIN DISRAELI, former British Prime Minister

I realized that on a scale of 1–10, 1 being nothing and 10 being permanently life-changing, my so-called worst-case scenario might have a temporary impact of 3 or 4. I believe this is true of most people and most would-be “holy sh*t, my life is over” disasters. Keep in mind that this is the one-in-a-million disaster nightmare....best-case scenario, or even a probable-case scenario, it would easily have a permanent 9 or 10 positive life-changing effect. In other words, I was risking an unlikely and temporary 3 or 4 for a probable and permanent 9 or 10, and I could easily recover my baseline workaholic prison with a bit of extra work if I wanted to. This all equated to a significant realization: There was practically no risk, only huge life-changing upside potential, and I could resume my previous course without any more effort than I was already putting forth.

You have comfort. You don’t have luxury. And don’t tell me that money plays a part. The luxury I advocate has nothing to do with money. It cannot be bought. It is the reward of those who have no fear of discomfort. —JEAN COCTEAU

Usually, what we most fear doing is what we most need to do. - (By far my favorite phrase from the book, and one that pops in my head many times a day.)

The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich (Expanded and Updated) 

What are you waiting for? If you cannot answer this without resorting to the previously rejected concept of good timing, the answer is simple: You’re afraid, just like the rest of the world. Measure the cost of inaction, realize the unlikelihood and re-pairability of most missteps, and develop the most important habit of those who excel and enjoy

Unreasonable and unrealistic goals are easier to achieve for yet another reason.

....fishing is best where the fewest go, and the collective insecurity of the world makes it easy for people to hit home runs while everyone else is aiming for base hits. There is just less competition for bigger goals.

Excitement is the more practical synonym for happiness, and it is precisely what you should strive to chase. It is the cure-all. When people suggest you follow your “passion” or your “bliss,” I propose that they are, in fact, referring to the same singular concept: excitement. This brings us full circle. The question you should be asking isn’t, “What do I want?” or “What are my goals?” but “What would excite me?”

When I started BrainQUICKEN LLC in 2001, it was with a clear goal in mind: Make $1,000 per day whether I was banging my head on a laptop or cutting my toenails on the beach. It was to be an automated source of cash flow. (Definite specific goals matter)

Dreamlining is so named because it applies timelines to what most would consider dreams. It is much like goal-setting but differs in several fundamental respects: The goals shift from ambiguous wants to defined steps. 

The goals have to be unrealistic to be effective. It focuses on activities that will fill the vacuum created when work is removed. 

Living like a millionaire requires doing interesting things and not just owning enviable things. Now it’s your turn to think big.

...... The goal is to start a dialogue so they take the time to answer future e-mails—not to ask for help. That can only come after at least three or four genuine e-mail exchanges.” (to meet new people, to get advice)

Life is too short to be small. —BENJAMIN DISRAELI

Dreamlining (Setting Goals)

Create two timelines—6 months and 12 months—and list up to five things you dream of having (including, but not limited to, material wants: house, car, clothing, etc.), being (be a great cook, be fluent in Chinese, etc.), and doing (visiting Thailand, tracing your roots overseas, racing ostriches, etc.) in that order.

Do not limit yourself, and do not concern yourself with how these things will be accomplished. For now, it’s unimportant. This is an exercise in reversing repression.

If still blocked, fill in the five “doing” spots with the following: one place to visit one thing to do before you die (a memory of a lifetime) one thing to do daily one thing to do weekly one thing you’ve always wanted to learn

Convert each “being” into a “doing” to make it actionable. Identify an action that would characterize this state of being or a task that would mean you had achieved it. People find it easier to brainstorm “being” first, but this column is just a temporary holding spot for “doing” actions.

Using the 6-month timeline, star or otherwise highlight the four most exciting and/or important dreams from all columns. Repeat the process with the 12-month timeline if desired.

Determine the cost of these dreams and calculate your Target Monthly Income (TMI) for both timelines

Last, calculate your Target Monthly Income (TMI) for realizing these dreamlines. This is how to do it: First, total each of the columns A, B, and C, counting only the four selected dreams. Some of these column totals could be zero, which is fine. Next, add your total monthly expenses x 1.3 (the 1.3 represents your expenses


plus a 30% buffer for safety or savings). This grand total is your TMI and the target to keep in mind for the rest of the book. I like to further divide this TMI by 30 to get my TDI—Target Daily Income. I find it easier to work with a daily goal. Online calculators on our companion site do all the work for you and make this step a cinch.


The objective of this exercise isn’t, therefore, to outline every step from start to finish, but to define the end goal, the required vehicle to achieve them (TMI, TDI), and build momentum with critical first steps. From that point, it’s a matter of freeing time and generating the TMI, which the following chapters cover.

Once you have three steps for each of the four goals, complete the three actions in the “now” column. Do it now. Each should be simple enough to do in five minutes or less. If not, rachet it down. If it’s the middle of the night and you can’t call someone, do something else now, such as send an e-mail, and set the call for first thing tomorrow.

The best first step, the one I recommend, is finding someone who’s done it and ask for advice on how to do the same. It’s not hard.

One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity. (Bruce Lee Quote)

Effectiveness is doing the things that get you closer to your goals. Efficiency is performing a given task (whether important or not) in the most economical manner possible.

I would consider the best door-to-door salesperson efficient—that is, refined and excellent at selling door-to-door without wasting time—but utterly ineffective. He or she would sell more using a better vehicle such as e-mail or direct mail.

Here are two truisms to keep in mind: Doing something unimportant well does not make it important. Requiring a lot of time does not make a task important.

What you do is infinitely more important than how you do it. Efficiency is still important, but it is useless unless applied to the right things.

Pareto’s Law can be summarized as follows: 80% of the outputs result from 20% of the inputs.

80% of the consequences flow from 20% of the causes. 80% of the results come from 20% of the effort and time. 80% of company profits come from 20% of the products and customers. 80% of all stock market gains are realized by 20% of the investors and 20% of an individual portfolio

The next morning, I began a dissection of my business and personal life through the lenses of two questions: Which 20% of sources are causing 80% of my problems and unhappiness? Which 20% of sources are resulting in 80% of my desired outcomes and happiness?

Make no mistake, maximum income from minimal necessary effort (including minimum number of customers) is the primary goal. I duplicated my strengths, in this case my top producers, and focused on increasing the size and frequency of their orders.

Slow down and remember this: Most things make no difference. Being busy is a form of laziness—lazy thinking and indiscriminate action

Being overwhelmed is often as unproductive as doing nothing, and is far more unpleasant. Being selective—doing less—is the path of the productive. Focus on the important few and ignore the rest.

.....the key to not feeling rushed is remembering that lack of time is actually lack of priorities

You don’t need 8 hours per day to become a legitimate millionaire—let alone have the means to live like one.

Parkinson’s Law dictates that a task will swell in (perceived) importance and complexity in relation to the time allotted for its completion. It is the magic of the imminent deadline.

There are two synergistic approaches for increasing productivity that are inversions of each other: Limit tasks to the important to shorten work time (80/20). Shorten work time to limit tasks to the important (Parkinson’s Law).

The best solution is to use both together: Identify the few critical tasks that contribute most to income and schedule them with very short and clear deadlines.

If you haven’t identified the mission-critical tasks and set aggressive start and end times for their completion, the unimportant becomes the important. Even if you know what’s critical, without deadlines that create focus, the minor tasks forced upon you (or invented, in the case of the entrepreneur) will swell to consume time until another bit of minutiae jumps in to replace it, leaving you at the end of the day with nothing accomplished.

I just asked him to do one simple thing consistently without fail. At least three times per day at scheduled times, he had to ask himself the following question: Am I being productive or just active? Charney captured the essence of this with less-abstract wording: Am I inventing things to do to avoid the important?

6. Learn to ask, “If this is the only thing I accomplish today, will I be satisfied with my day?”

Compile your to-do list for tomorrow no later than this evening. I don’t recommend using Outlook or computerized to-do lists, because it is possible to add an infinite number of items. I use a standard piece of paper folded in half three times, which fits perfectly in the pocket and limits you to noting only a few items. There should never be more than two mission-critical items to complete each day. Never. It just isn’t necessary if they’re actually high-impact. If you are stuck trying to decide between multiple items that all seem crucial, as happens to all of us, look at each in turn and ask yourself, If this is the only thing I accomplish today, will I be satisfied with my day?

Reading, after a certain age, diverts the mind too much from its creative pursuits. Any man who reads too much and uses his own brain too little falls into lazy habits of thinking. —ALBERT EINSTEIN

From an actionable information standpoint, I consume a maximum of one-third of one industry magazine (Response magazine) and one business magazine (Inc.) per month, for a grand total of approximately four hours. That’s it for results-oriented reading. I read an hour of fiction prior to bed for relaxation. (I truly believe he reads much more than this.)

1. I picked one book out of dozens based on reader reviews and the fact that the authors had actually done what I wanted to do. If the task is how-to in nature, I only read accounts that are “how I did it” and autobiographical. No speculators or wannabes are worth the time. 2. Using the book to generate intelligent and specific questions, I contacted 10 of the top authors and agents in the world via e-mail and phone, with a response rate of 80%.

How to Read 200% Faster in 10 Minutes
1. Two Minutes: Use a pen or finger to trace under each line as you read as fast as possible. Reading is a series of jumping snapshots (called saccades), and using a visual guide prevents regression. 
2. Three Minutes: Begin each line focusing on the third word in from the first word, and end each line focusing on the third word in from the last word. This makes use of peripheral vision that is otherwise wasted on margins. For example, even when the highlighted words in the next line are your beginning and ending focal points, the entire sentence is “read,” just with less eye movement:
3. Two Minutes: Once comfortable indenting three or four words from both sides, attempt to take only two snapshots—also known as fixations—per line on the first and last indented words. 4. Three Minutes: Practice reading too fast for comprehension but with good technique (the above three techniques) for five pages prior to reading at a comfortable speed. This will heighten perception and reset your speed limit, much like how 50 mph normally feels fast but seems like slow motion if you drop down from 70 mph on the freeway.

Develop the habit of asking yourself, “Will I definitely use this information for something immediate and important?”

.....complete your most important task before 11:00 A.M. to avoid using lunch or reading e-mail as a postponement excuse

Create systems to limit your availability via e-mail and phone and deflect inappropriate contact.

Batch activities to limit setup cost and provide more time for dreamline milestones.

Set or request autonomous rules and guidelines with occasional review of results.

Here is a sneak preview of full automation. I woke up this morning, and given that it’s Monday, I checked my e-mail for one hour after an exquisite Buenos Aires breakfast. Sowmya from India had found a long-lost high school classmate of mine, and Anakool from YMII had put together Excel research reports for retiree happiness and the average annual hours worked in different fields. Interviews for this week had been set by a third Indian virtual assistant, who had also found contact information for the best Kendo schools in Japan and the top salsa teachers in Cuba. In the next e-mail folder, I was pleased to see that my fulfillment account manager in Tennessee, Beth, had resolved nearly two dozen problems in the last week—keeping our largest clients in China and South Africa smiling—and had also coordinated California sales tax filing with my accountants in Michigan. The taxes had been paid via my credit card on file, and a quick glance at my bank accounts confirmed that Shane and the rest of the team at my credit card processor were depositing more cash than last month. All was right in the world of automation. It was a beautiful sunny day, and I closed my laptop with a smile. For an all-you-can-eat buffet breakfast with coffee and orange juice, I paid $4 U.S. The Indian outsourcers cost between $4–10 U.S. per hour. My domestic outsourcers are paid on performance or when product ships. This creates a curious business phenomenon: Negative cash flow is impossible. Fun things happen when you earn dollars, live on pesos, and compensate in rupees, but that’s just the beginning. (I love this story. It is here just because I love it.)

Eliminate before you delegate. Never automate something that can be eliminated, and never delegate something that can be automated or streamlined. 

It is tempting to immediately point the finger at someone else and huff and puff, but most beginner bosses repeat the same mistakes I made. 
1. I accepted the first person the firm provided and made no special requests at the outset.
2. I gave imprecise directions.
3. I gave him a license to waste time.
4. I set the deadline a week in advance.
5. I gave him too many tasks and didn’t set an order of importance. 

As to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble. —RALPH WALDO EMERSON

His business model is more elegant than that. Here is just one revenue stream: 
1. A prospective customer sees his Pay-Per-Click (PPC) advertising on Google or other search engines and clicks through to his site, www.prosoundeffects.com. 
2. The prospect orders a product for $325 (the average purchase price, though prices range from $29–7,500) on a Yahoo shopping cart, and a PDF with all their billing and shipping information is automatically e-mailed to Doug. 
3. Three times a week, Doug presses a single button in the Yahoo management page to charge all his customers’ credit cards and put cash in his bank account. Then he saves the PDFs as Excel purchase orders and e-mails the purchase orders to the manufacturers of the CD libraries. Those companies mail the products to Doug’s customers—this is called drop-shipping—and Doug pays the manufacturers as little as 45% of the retail price of the products up to 90 days later (net-90 terms).

This chapter is not for people who want to run businesses but for those who want to own businesses and spend no time on them.

People can’t believe that most of the ultrasuccessful companies in the world do not manufacture their own products, answer their own phones, ship their own products, or service their own customers. There are hundreds of companies that exist to pretend to work for someone else and handle these functions, providing rentable infrastructure to anyone who knows where to find them.

Before we create this virtual architecture, however, we need a product to sell. If you own a service business, this section will help you convert expertise into a downloadable or shippable good to escape the limits of a per-hour-based model. If starting from scratch, ignore service businesses for now, as constant customer contact makes absence difficult.

To narrow the field further, our target product can’t take more than $500 to test, it has to lend itself to automation within four weeks, and—when up and running—it can’t require more than one day per week of management.

Our goal is simple: to create an automated vehicle for generating cash without consuming time. That’s it.22 I will call this vehicle a “muse” whenever possible to separate it from the ambiguous term “business,” which can refer to a lemonade stand or a Fortune 10 oil conglomerate—our objective is more limited and thus requires a more precise label.

So first things first: cash flow and time. With these two currencies, all other things are possible. Without them, nothing is possible. (I think there is a third one, your network)

Here’s how you do it in the fewest number of steps. Step One: Pick an Affordably Reachable Niche Market
The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich (Expanded and Updated) 

Creating demand is hard. Filling demand is much easier. Don’t create a product, then seek someone to sell it to. Find a market—define your customers—then find or develop a product for them.

Ask yourself the following questions to find profitable niches. 

1. Which social, industry, and professional groups do you belong to, have you belonged to, or do you understand,

Which of the groups you identified have their own magazines?

Step Two: Brainstorm (Do Not Invest In) Products

Pick the two markets that you are most familiar with that have their own magazines with full-page advertising that costs less than $5,000. There should be no fewer than 15,000 readers. This is the fun part. Now we get to brainstorm or find products with these two markets in mind. The goal is come up with well-formed product ideas and spend nothing;

The Main Benefit Should Be Encapsulated in One Sentence. People can dislike you—and you often sell more by offending some—but they should never misunderstand you. The main benefit of your product should be explainable in one sentence or phrase.

It Should Cost the Customer $50–200. The bulk of companies set prices in the midrange, and that is where the most competition is. Pricing low is shortsighted, because someone else is always willing to sacrifice more profit margin and drive you both bankrupt. Besides perceived value, there are three main benefits to creating a premium, high-end image and charging more than the competition. Higher pricing means that we can sell fewer units—and thus manage fewer customers—and fulfill our dreamlines. It’s faster. Higher pricing attracts lower-maintenance customers (better credit, fewer complaints/questions, fewer returns, etc.). It’s less headache. This is HUGE. Higher pricing also creates higher profit margins. It’s safer.

I personally aim for an 8–10x markup, which means a $100 product can’t cost me more than $10–12.50.27

I have found that a price range of $50–200 per sale provides the most profit for the least customer service hassle. Price high and then justify.

It Should Take No More Than 3 to 4 Weeks to Manufacture. This is critically important for keeping costs low and adapting to sales demand without stockpiling product in advance.

It Should Be Fully Explainable in a Good Online FAQ.

Understanding these criteria, a question remains: “How does one obtain a good muse product that satisfies them?” There are three options we’ll cover in ascending order of recommendation.

Option One: Resell a Product Purchasing an existing product at wholesale and reselling it is the easiest route but also the least profitable. It is the fastest to set up but the fastest to die off due to price competition with other resellers. The profitable life span of each product is short unless an exclusivity agreement prevents others from selling it. Reselling is, however, an excellent option for secondary back-end28 products that can be sold to existing customers or cross-sold29 to new customers online or on the phone.
Option Two: License a Product
Option Three: Create a Product

Creating a product is not complicated. “Create” sounds more involved than it actually is. If the idea is a hard product—an invention—it is possible to hire mechanical engineers or industrial designers on www.elance.com to develop a prototype based on your description of its function and appearance, which is then taken to a contract manufacturer. If you find a generic or stock product made by a contract manufacturer that can be re-purposed or positioned for a special market, it’s even easier: Have them manufacture it, stick a custom label on it for you, and presto—new product. This latter example is often referred to as “private labeling.”

Information products are low-cost, fast to manufacture, and time-consuming for competitors to duplicate. Consider that the top-selling non-information infomercial products—whether exercise equipment or supplements—have a useful life span of two to four months before imitators flood the market.

Information, on the other hand, is too time-consuming for most knockoff artists to bother with when there are easier products to replicate. It’s easier to circumvent a patent than to paraphrase an entire course to avoid copyright infringement. Three of the most successful television products of all time—all of which have spent more than 300 weeks on the infomercial top-10 bestseller lists—reflect the competitive and profit margin advantage of information products. No Down Payment (Carlton Sheets) Attacking Anxiety and Depression (Lucinda Bassett) Personal Power (Tony Robbins

If you aren’t an expert, don’t sweat it. First, “expert” in the context of selling product means that you know more about the topic than the purchaser. No more. It is not necessary to be the best—just better than a small target number of your prospective customers.

Second, expert status can be created in less than four weeks if you understand basic credibility indicators.

1. How can you tailor a general skill for your market—what I call “niching down”—or add to what is being sold successfully in your target magazines? Think narrow and deep rather than broad.

2. What skills are you interested in that you—and others in your markets—would pay to learn? Become an expert in this skill for yourself and then create a product to teach the same. If you need help or want to speed up the process, consider the next question.

3. What experts could you interview and record to create a sellable audio CD? These people do not need to be the best, but just better than most. Offer them a digital master copy of the interview to do with or sell as they like (this is often enough) and/or offer them a small up-front or ongoing royalty payment. Use Skype.com with HotRecorder (more on these and related tools in Tools and Tricks) to record these conversations directly to your PC and send the mp3 file to an online transcription service.

4. Do you have a failure-to-success story that could be turned into a how-to product for others? Consider problems you’ve overcome in the past, both professional and personal.

The Expert Builder: How to Become a Top Expert in 4 Weeks

How, then, do we go about acquiring credibility indicators in the least time possible?

1. Join two or three related trade organizations with official-sounding names.

2. Read the three top-selling books on your topic (search historical New York Times bestseller lists online) and summarize each on one page.

3. Give one free one-to-three-hour seminar at the closest well-known university, using posters to advertise.

4. Optional: Offer to write one or two articles for trade magazines related to your topics, citing what you have accomplished in steps 1 and 3 for credibility.

5. Join ProfNet, which is a service that journalists use to find experts to quote for articles

Income Autopilot II

The moral is that intuition and experience are poor predictors of which products and businesses will be profitable.

To get an accurate indicator of commercial viability, don’t ask people if they would buy—ask them to buy.

Step Three: Micro-Test Your Products Micro-testing involves using inexpensive advertisements to test consumer response to a product prior to manufacturing.

The basic test process consists of three parts, each of which is covered in this chapter. Best: Look at the competition and create a more-compelling offer on a basic one-to-three-page website (one to three hours). Test: Test the offer using short Google Adwords advertising campaigns (three hours to set up and five days of passive observation). Divest or Invest: Cut losses with losers and manufacture the winner(s) for sales rollout.

Sherwood first tests his concept with a 72-hour eBay auction that includes his advertising text. He sets the “reserve” (the lowest price he’ll accept) for one shirt at $50 and cancels the auction last minute to avoid legal issues since he doesn’t have product to ship. He has received bids up to $75 and decides to move to the next phase of testing. Johanna doesn’t feel comfortable with the apparent deception and skips this preliminary testing. Sherwood’s cost: <$5. Both register domain names for their soon-to-be one-page sites using the cheap domain registrar www.domainsinseconds.com. Sherwood chooses www.shirtsfromfrance.com and Johanna chooses www.yogaclimber.com. For additional domain names, Johanna uses www.domainsinseconds.com. Cost to both: <$20.

Sherwood uses www.weebly.com to create his one-page site advertisement and then creates two additional pages using the form builder www.wufoo.com. If someone clicks on the “purchase” button at the bottom of the first page, it takes them to a second page with pricing, shipping and handling,43 and basic contact fields to fill out (including e-mail and phone). If the visitor presses “continue with order,” it takes them to a page that states, “Unfortunately, we are currently on back order but will contact you as soon as we have product in stock. Thank you for your patience.” This structure allows him to test the first-page ad and his pricing separately. If someone gets to the last page, it is considered an order.

Johanna is not comfortable with “dry testing,” as Sherwood’s approach is known, even though it is legal if the billing data isn’t captured. She instead uses the same two services to create a single webpage with the content of her one-page ad and an e-mail sign-up for a free “top 10 tips” list for using yoga for rock climbing. She will consider 60% of the sign-ups as hypothetical orders. Cost to both: <$0.

Both set up simple Google Adwords campaigns with 50–100 search terms to simultaneously test headlines while driving traffic to their pages. Their daily budget limits are set at $50 per day

Sherwood will use Google’s free analytical tools to track “orders” and page abandonment rates—what percentage of visitors leave the site from which pages. Johanna will use www.wufoo.com to track e-mail sign-ups on this small testing scale.

Johanna has done well. The traffic wasn’t enough to make the test stand up to statistical scrutiny, but she spent about $200 on PPC and got 14 sign-ups for a free 10-tip report. If she assumes 60% would purchase, that means 8.4 people x $75 profit per DVD = $630 in hypothetical total profit. This is also not taking into account the potential lifetime value of each customer. The results of her small test are no guarantee of future success, but the indications are positive enough that she decides to set up a Yahoo Store for $99 per month and a small per-transaction fee. Her credit isn’t excellent, so she will opt to use www.paypal.com to accept credit cards online instead of approaching her bank for a merchant account.46 She e-mails the 10-tip report to those who signed up and asks for their feedback and recommendations for content on the DVD. Ten days later, she has a first attempt at the DVD ready to ship and her store is online. Her sales to the original sign-ups cover costs of production and she is soon selling a respectable 10 DVDs per week ($750 profit) via Google Adwords. She plans to test advertising in niche magazines and blogs and now needs to create an automation architecture to remove herself from the equation.

1. Market Selection
2. Product Brainstorm
3. Micro-Testing
4. Rollout and Automation

Income Autopilot III MBA—MANAGEMENT BY ABSENCE

Once you have a product that sells, it’s time to design a self-correcting business architecture that runs.....


The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich (Expanded and Updated)