Running a Software Business on 5 Hours A Week | Hacker News Reader

Running a Software Business on 5 Hours A Week

kalzumeus.com

359 pointspatio1178 comments

Using Slashdot terminology - Interesting, but not Insightful.

Patrick is trying to derive generic advice by formalizing his personal experiences. While it is useful to know what worked in his case, it is still just one project, an isolated experience.

I've been in a similar situation myself. I have sold a startup that settled me and my family for life, and things unfolded pretty much as I expected them to from the start to the acquisition. But the more I think about the whole experience now the more I am becoming convinced that there was a great deal of chance involved. And over the years I started describing my startup less in terms of how things should be done and more how they worked for me.

In other words, once you are lucky, twice - you are good. Once you are "twice", then it will be Insightful. Until then it's just Interesting. Feel free to disagree ;)

Candidly I think you have mis-assessed.

  o Code is 10% of the business
  o Wall Clock Time vs. Calendar Time
  o Avoid Events, Plan for Processes

all seem broadly applicable and non-obvious

> Code is 10% of the business

Is pretty obvious to anybody that's ever had or worked in a business.

The other two are common sense. But that doesn't mean that it isn't good to re-iterate these things every now and then, but if you fell off your chair because of any of those three sentences then you do not have much - or even any - business experience, and likely are not quite ready to make the jump.

There are some much deeper insights in that piece than those:

- I started this business to make an extra $200 so I could spend it on video games without feeling guilty

That's a really good one, it shows you that no matter what goal you have when you start out your business you are not going to be even near it (in a positive or a negative sense) when you're a couple of years down the line. After all, why didn't he stop when he made his goal? Why all the extra work? Clearly we set our goals, then the goal becomes the new 'base', and we set another goal. If I can make $200, how about $400...

Another gem:

- The 'time as debt' view. That's a very interesting way of looking at time, and I think that if it is an original then that alone is a huge contribution to running a small business. It also says in no uncertain terms that if you want to run a small business, any small business, you should learn how to do some minimal automation.

There is lots of other good stuff in there, but those two stand out for me.

One really good thing too, is that in spite of doing this for years, Patrick never quit his job or skimped on it. He waited until the right moment, probably constrained by the $-in-the-bank as well as the amount of money made on a daily basis by the job vs the project.

We tend to have quite a problem with survivorship bias[1] on HN. We like to look at the cases where things went well and we assume that is because they did something right that the others did not, and since the founder believe this, he will list the things he intentionally did that he thinks helped. In reality, it may have been something he was taking for granted, or it may have been that he happened to miss some common pitfalls. From one data point it is impossible to know if those are the factors that pushed him over the edge or not.

Of course, one data point like this is useful if we look at all the other stories we get here on a daily basis.

[1] http://en.wikipedia.org/wiki/Survivorship_bias

One thing that he did (dunno if he takes it for granted) is get a URL that matches with the top search phrase. If he'd named his company "GridFriend Creator", we'd be reading a VERY different article. Every time anyone links to him, it's like the George Bush "miserable failure" googlebomb [http://en.wikipedia.org/wiki/Google_bomb ]... Except that it's not frowned upon by Google.

I think that is of fairly minor consequence to the overall success of my business. I've been #1 for that phrase for almost four years now -- and as of four years ago, it was worth about 150 visits a month, or substantially less than five sales. "Whee."

It is worth more these days, but that is because people searching for [bingo card creator] are probably looking for Bingo Card Creator (for example, with five seconds of checking into my stats, I can guarantee at least 30% of folks searching for it last week and clicking on my site already have an account with me).

(Have I mentioned that "Google owns navigation on the Internet"?)

Doesn't that help it also rank for "Bingo " and "Bingo Card ", though? I'm very hazy on how Google uses anchor text, but this is how I assumed it works.

On a related note, I'd be very happy to pay you for an SEO consultation.

Hrm-- that's some pretty selective data. I'd be curious to hear you fill in the blanks on this sentence:

"Organic searches with the word 'bingo card' makes up ___ percent of my sales."

As you say, tho-- might be hard to parse out brand searches. But every single one of your holiday-specific landing pages benefits from "bingo card" being in your URL. Isn't long tail SEO a big part of your acquisition?

I've been running an Internet marketing firm on 4hrs / week for a year (see: http://maneeshsethi.com/how-to-live-the-digital-nomad-life/) and I'm currently building a marketing plan to sell the software that makes my 4h workweek possible. EPS...it's been done many times before and will be done again.

OPs time as an asset/debt idea is right up with what I believe, since people seem to believe their time is free...I believe it's better off outsourced so I can spend the one resource I'll never get back. Good article.

Wait till you get a kid or two. Then it becomes bloody obvious that your time is your most valuable asset.

Works for me too. I often spend less than 5 hours a week working, and I have a 6 figure income. My web applications compete directly with Google and Microsoft, among others, so the "no competition" argument is out.

I generally buckle down for a few weeks of hard coding (meaning 4 hours a day for 3 or 4 days a week), once or twice a year, and the rest of the year I'm just doing customer service, system administration stuff, and limited marketing. Just maintaining the architecture for the sites is the biggest time sink -- one of the webapps has two different kinds of database servers (MongoDB in the front, MySQL in the back), web servers, worker servers doing incremental processing/rollups... and I keep things PCIDSS compliant which means self-audits, lots of security patching, etc.

Running affiliate programs for my products and encouraging customers to use them to refer others has been extremely important. Affiliates do all the PPC marketing, article marketing, social bookmarking FOR me, with their affiliate links.

Just goes to show there are a hundred ways to run a successful business. The venture backed 60-hour-week startup isn't the only option.

I realize that HN doesn't encourage heavy self-promotion, but what is this business? Where is its website? Your story sounds wildly implausible, though it obviously isn't impossible.

Still, it reminds me of the comments I got on my post about "You’re Not Going to be a Professional Blogger, Regardless of What the Wall Street Journal Tells You:" http://blog.seliger.com/2009/06/17/youre-not-going-to-be-a-p... . People would say things like, "I run a group of online entrepreneurs, and am a member of another, and between the two groups there are well over 200 people, a majority of whom are pulling down 6 to 7 figure incomes based primarily on the advertising on their blogs, not by “selling ancillary services.”" But they wouldn't link to the sites in question! To me, such claims smell bad.

The link in Dan's profile answers your question. Web analytics and other webmaster services.

http://www.awio.com or http://www.dangrossman.info/folio/ if you'd like to take a look.

I'm extremely open about my business. I've thought about writing this type of article to share on HN before, but it always comes across as bragging instead of sharing so I can the idea soon after starting.

This is not an overnight success story. I earned my first paycheck on the internet when I was 15 or so, 10 years ago. I've had a long time to build my skill at development and marketing, try ideas, and build up my user base across the websites.

Some of the sites took a year or two to break even on up front costs and hardware. But since I build services that require almost no ongoing development or support beyond basic "how do I sign up, where do I find feature X" questions, each customer added in the following years is almost pure profit.

Very incremental, steady growth, and sometimes a leveling off. A bigger business wouldn't want a site to level off at a couple thousand a month in revenue, but if it's only supporting and supported by one person, a couple of those and yes, you hit 6 figure annual profit.

I also sell websites from time to time, if they level off and it seems like it'll require more work than I'm willing to put in to reverse that trend. Here's a site I sold on Flippa for $90,000 earlier this month. It generated over $200,000 in sales in the 18 months leading up:

http://flippa.com/auctions/84185/11000month-Revenue-No--1-In...

Oh, wow, you run W3ROI? Please do write about your experiences. I (and many others) can learn a lot from it.

I'm trying to do something similar with http://visualwebsiteoptimizer.com/ - hopefully I will also be able to join the "5-hour workweek" club.

Hey Paras, I'm one of your beta testers. I can assure you that you will go a lot further if you put in a consistent 40 hours a week for the next five years around the core idea of website conversion optimization rather than abandoning the product at some point in the future.

Hi Sunir,

Thanks for replying. Yup, I am committed to the product and thankfully it has been positioned as one of the easiest website optimization products available. What I meant by the comment was that I was quite impressed by W3ROI as a product and thought it was a consistent effort. But when I realized it is a "5 hour" effort, I was really surprised.

Rest assured the product isn't going anywhere. I have built a team (not a single man effort anymore) and is a serious startup now. What I said was a bit like hyperbole, sorry if it came across as I am abandoning the product :)

Don't worry so much about bragging. If you're interested in sharing your experience, then it will show from your writing style.

Personally, I'm always interested in such stories about running businesses on the side or full time. Businesses, mind you, not startups aiming to sell in a year. Those are very different in terms of decisions taken and work style and such.

Plus, if you've got it, flaunt it.

Thanks for posting that—incidentally, something like awio sounds pretty useful, so you might see someone with my last name in the demo pool in the near future.

A marvelous post about Patrick's start of his "wee business" and how he got there on the time left over from his salaryman day job with a three-hour train commute to boot. Whether this overall will work for any of the rest of us, given what seems like incredible focus Patrick seems to have, is unknown.

And this is not "work four hours per week to gain huge success in life". Like everything else he writes, this is backed by expedience, external constraints, and data-backed experience.

Patrick's business is what I call the Chicago School of Startups. (I might have just made that up.) (And at the risk of tweaking Joel, as Fog Creek Software seems to be following the Chicago model.) This is, like 37Signals, a self-funded operation, and eventually self-sustaining. The SV School, or more precisely, the YC school, emphasizes the path of seeking venture capital, and has the side benefit of a seriously enviable network of other founders and former founders.

What has been most interesting is the data-driven nature of his decisions. Many longwinded discussions on HN have focused on the importance of design,. Patrick, among others, points to A/B tests (not to mention highly successful sites like Craig's List) indicating that such design obsession might be misplaced. Minor heresy: while Mac developers are very graphically intensive people who will buy software just to lick it if the UI is good enough, many Mac users are just regular people. My Mac version has a conversion rate fully twice that of the Window version, and it is not noticeably pretty.

Perhaps there is a little leeway to tease Patrick--it does not seem that this five hours per week is sustainable. It is successful enough that he is quitting his day job, and I bet he now can't help but spend more than five hours per week on it. Congratulations.

I bet he now can't help but spend more than five hours per week on it

It is a very open question how much I'm going to be working after I go "full time", but I've rarely seen myself do great things after ~20 and that would leave me with plenty of time to catch up on living, so I think I might try that on for size. But hey, if I decide to do more or less in any given week, there won't be anybody to tell me not to.

Start another project.

If you can do this one on average at 5 hours per week, theoretically after the initial burst you could sustain 8 such jobs in parallel.

(Aside: I know many Americans consider the last option shockingly irresponsible. My ability to prevail over my employer — a major multinational — in a lawsuit is effectively nil. A contract is just a formalization of a promise. In Japan, the ongoing relationship with my bosses is the part of the agreement that provides security, not the piece of paper.)

This is one of the more important bits of advice I've seen Patrick give, and I think it applies to those of us full-timing with our companies even more. Your lawyers are going to tell you that contracts matter a whole lot, too. And just like Patrick with the company in Nagoya, your ability to prevail in a dispute, contract or not, is usually going to be nil.

This is something I think a lot of us learn the first time they get into a dispute (for instance, when we are first aggrieved by a giant business partner who breaches our carefully-considered contracts.)

This is a large part of why I advocate waiting to incorporate until you can do it right. The instacorp LLC won't really protect you when you need it most.

I think that's pretty misleading. What protects you when you've incorporated is that your contracts are between your company and your customers, vendors, or partners. It's not the nature of the contracts themselves. Consolidated Gypsum can put your company out of business by dragging you through a lawsuit until you BK. It can't take your house.

The reason contracts don't protect businesses is that they cost too much to enforce. When you're not in the same league as your adversary, they will simply outlast you. The same dynamics do not apply to an attempt by Consolidated Gypsum to make themselves whole on a debt by trying to take your house.

Incorporate early. There's no good reason not to.

Good advice. Also, in most states setting up an LLC is cheap and easy. Here in Colorado, it's only $50 and a fairly thin form that only ask for the obvious stuff like; what's the company name, what's your name(s), etc.

As someone who struggles to come up with 'lifestyle business' ideas, his advice on just talking to people was like a punch in the gut. So obvious it hurts, yet I ignore it and spend time 'thinking.'

So, how would you describe your experience with part-time development ? I'm wondering if working 20+ hours a week on top of a regular 9-5 is enough.

I agree. See relevant blog entry - http://blog.gridspy.co.nz/2010/02/part-time-entrepreneur.htm...

I acknowledge the fact that a product is more likely to be successful if it is made simpler. And I face the difficulty of trying to create a complex product every day. Hence his advice:

"Are you considering starting up a business because you wish to work on wonderfully interesting technical problems all of the time? Stop now — Google is hiring, go get a job with them. 90% of the results of your business, and somewhere around 90% of the effort, are caused by non-coding activities"

But... then who is eligible to build a complex product? Like writing a database from scratch, or some other complex piece of work. I think a startup should also be able to do it somehow.

What's your point? He's not saying every company should work this way. He's saying "this is a way to do it that works when you have other time constraints".

In Patrick's case, doing it this way got him from full-time job to full-time startup entrepreneur without taking a dime of money from anybody but his customers. We'll see what he comes up with after a few years of doing it full time.

Finally, writing a database from scratch? Crappy business to get in to even if you're full time!

I thought that was the best line in the piece, because it's so true. Probably 90% of the engineers at Google are there because they want to work on wonderfully interesting technical problems all the time, and don't want to deal with all the other bullshit that comes from running a company. And I suspect that a major part of the reason my startup failed was because I wanted to work on wonderfully interesting technical problems yet also wanted to get rich. There're a limited number of problems that people will pay you to solve, and most of them are boring.

As for who is eligible to build a complex product? Nobody. If you set out to build a complex system from the start, it invariably won't work at the end. Remember Gall's Law:

http://en.wikipedia.org/wiki/Galls_law

Before you cite counterexamples like Linux or Google, it's worth considering what they looked like when they started. Linux started as a terminal emulator that would spit back "ababa" when you turned on the computer. Google's early webserver was a dozen or so source files that looked vaguely like Tornado, except that instead of having all those webframeworkey goodness like regexp-based dispatch rules and templates, it would just issue "prints" on the file descriptor for the user's connection.

If you want to write a database from scratch, you should start with some sort of basic persistent key/value store. Then give your values a column-like substructure. Then figure out how to index it. Then figure out how to index it based on multiple columns. Then figure out how to handle joins and sorts. Then slap an SQL parser on top of it, and you'll have something similar to MySQL c. late 1990s. Then endure all the laughs as people say you're not a "real" database, and put in 10 years of incremental improvements while you add transactions, and better SQL compliance, and query optimizers, and wire protocols, and replication, and clustering, and all that stuff.

Congratulations on making the move to full-time!

At the beginning of last year I made a similar move from being a Japanese salaryman to my own business. I was writing code in a notebook on my 1.5 hour train commute and on my lunch break and then typing it up on weekends. After I went full-time on my own business I found that the scope of what I wanted to do expanded and my productivity dropped. Also, the time-management skills that worked well on a part-time basis didn't work as well when I went full-time. I also found that it was easy to get sidetracked by side-projects and that personal life (time with friends, holidays) became a larger part of my life. I also found that a lot of things that I wasn't so great at (web design, graphics) etc. took up a large amount of my time.

So I would be interested to hear your thoughts on time-management, prioritization and working from home once you go full-time if you decide to do this as a series.

In our periodic bouts of crunch time, such as the last three months, I end up sleeping at a hotel next to the office (about 25 times this calendar year).

Oh man. Maybe it's just me being an ignorant American, but doing that for anything but a company you founded is just crazy. I can't believe that's the norm in Japan.

It Japan, as far as I know, it's not "periodic bouts of crunch time" that brings salarymen to small hotels instead of home, but "nightly bouts of alcohol".

I do not drink. Most of the engineers in my company go straight home to their wives and children when they leave the office. (Our salesmen appear to have the more traditional salaryman attitude.)

patio11: I certainly wasn't implying you drink. (A few downvotes to my post tell me that people thought I was attacking you)

I appreciate the point that running a software business is only 10% development and 90% business. "If you want to spend your time writing code, go work for Google."

This hits close to home as I am gradually learning that I provide far more value to the world by using my knowledge to have others do technical implementation than if I were doing it myself. For someone who loves code, it's a painful transition. But I think you can learn to love business just as you learned to love code.

That's a complicated statement. The depth of your own technical knowledge sets a ceiling on the depth of the people willing to do technical implementation for you. After all, most people are unwilling to do grunt work for people dumber than themselves. The main thing your workers get out of it is a learning experience and the chance to be mentored by others more experienced than themselves, so if you're not more experienced, why should they work for you?

So yeah, you get more leverage by using your knowledge to mentor others to do the development for you. But you could end up getting stuck as CEO of a startup that's in a backwater corner of the industry, rather than as a developer in a company that's doing interesting world-changing stuff that you can then leverage when you start your company later.

Well, I can measure the value I'm creating (at least in the short term) relatively objectively by seeing how much money I make. And I make more money (and just generally get a lot more projects done) by managing other programmers.

Regarding 'backwater corners' - isn't this article about how to provide value in the backwater corners of the software industry? Printing and generating bingo cards is about as backwater as you can get, but I see nothing wrong with that. I'm also in the food industry and I understand that you don't grow up to be McDonald's (a restaurant which has - from my perspective - provided incredible value all over the world) overnight. Ray Kroc grew McDonald's by serving what was then an expensive burger to a niche clientele. Then he expanded from there. I don't see why a similar strategy isn't sane in the software industry.

It's a simple statement. You confuse naïveté with stupidity. If there is a "ceiling" as you describe, then Sergei and Larry must have godlike intelligence to have 20,000 engineers working for them.

The point is not "I'm not capable of coding this, I must hire someone smarter", it's "I'll manage someone to do the coding I don't have time for, and they can observe my attempts to run the rest of the business (or whatever)."

"...However, you’ll quickly find that there is literally a world of people out there who are willing to work for $1.50 an hour and would be terrifically overpaid at that price..."

That's the number one reason why some clients of mine comeback to me saying their last developer didn't quite accomplish what they wanted. And the reason why sometimes I have to struggle to fix bugs and identification (yes, many low-cost devs don't have a tab key) on other peoples code.

You normally get what you paid for, but I hope it worked nice for you.

identification/Identation

That's one of those little things that really annoy me- not because they are important, but because it's so easy to get right!

Hell, most IDEs would indent your code correctly for you, I'd have to actually work to override eclipse's auto-indentation!

I always enjoy incorrect corrections.

I find it incredible that he's a Japanese Salaryman having recently read another such peron's Q&A on reddit: http://www.reddit.com/r/IAmA/comments/bewof/iama_salaryman_僕...

Seems like once you've finished working 10 hours every day for your lifetime employer, there's not much to do than the obligatory heavy drinking!

See also patio11's own IAMA Salaryman: http://www.reddit.com/r/IAmA/comments/9g79p/i_am_a_japanese_...

Have you thought about writing an ebook like Getting Real?

I would buy this.

I would buy it as well, especially if you include your experiences with A/B testing

Great idea!

http://news.ycombinator.com/item?id=1186157

Yes, but he's already written large parts of the book on his blog. He could outsource an editor or even ghost/cowriter to assemble it. Could be a possible project for after he quits the day job, but there are probably others that would pay better.

This advice is written from the perspective that writing is 100% of the project. Writing is 10% of the project. Writing a salesletter, a marketing site, linkbaits, and obsessive promotion is the other 90% of the project. That is time debt that I take on as soon as I sit down and say "OK, I'm going be become an author."

The upside to it is miniscule: I know I can sell thousands of copies of software for $30, because I've done it, and am reasonably certain that I could sell accounts at a new SAAS for $100 / month, given time to work on it. I am not sanguine about my ability to sell thousands of copies of a book/ebook -- my most loyal blog readers number in the hundreds, if that. I'd also expect massive pushback on the prices that I think make sense -- for examples, take a look at every launch of a non-software info product on HN. (I think I'd be particularly at risk for that because a non-trivial portion of my audience likes the fact that I started a business for $60 -- and when you have $60 in your budget, $X00 on a book is right out.)

There are also psychic costs to me. I kind of value my participation at HN and the Business of Software, for example. It is my sanity-preserving lifeline. I'd really hate to have every post carry the implicit disclaimer "Warning! He is trying to sell you something."

Now, there's absolutely no money in it, but getting published dead-tree can give you a lot of credibility and publicity, and it's not as hard as it once was (see the bit about 'there is no money in it')

As far as I can tell, writing a dead tree is /easier/ than writing a ebook, and distribution is easier, etc... you keep less of the money, but more of the credibility.

I think a large part of it is competition...you don't really have any so you can work as much or as little as you want.

If you have competition like in 99% of the niches...you'll be working a lot more than that

Nonsense. First, I'm sure that Patrick does have competition in his niche (a simple Google for "bingo card software" reveals a litany of options). Second, having no competition is a big warning sign that perhaps that niche isn't a great one to go into. Third, you would be well-advised to avoid niches that are highly over-competitive. Finally, most businesses are pretty terrible, and not all that hard to run circles around, especially if you follow some of Patrick's advice here (I'm thinking particularly of the stuff regarding time debt and building repeatable processes).

The central theme in Patrick's post was not "how much to work", but "how to work effectively".

His points are especially relevant to people working with lots of competition.

I disagree. The big parts of it seem to be 1) Talking (as in person-to-person) to customers and potential customers 2) Focus 3) Determination.

Patrick has been writing about his competition for awhile. He has not cornered the market on bingo cards.

There are three companies listed on the American stock exchanges with over 1,000 employees who sell products which directly compete with me. (They are, of course, much less important to those companies than they are to me.) Software-wise, there were ~15 shareware products and ~7 web applications last time I checked a few years ago. At least three of them actually know what they're doing (and one of those was launched by a participant from another forum I'm on who, ahem, paid me the sincerest form of flattery).

In a broader sense of the word "competition", my program is a proper subset of Microsoft Excel, I compete with the world's savviest Internet publishers (like Demand Media) for large portions of the queries of interest to me, and a portion of my queries are dual-use for a multi-billion a year industry. (Teachers are not the only folks interested in the top ten for [bingo cards].)

I mean, its not like I went and made a URL shortener or zip file extractor, but I also didn't go make something so staggeringly unique the world had not heard of it before or since.

Just out of curiosity, have you ever thought about adapting your bingo card creator to make cards for plain old bingo. You know, with the numbers and not words?

An additional interesting number is the number of hours that freelancers have worked on this project, if that wouldn't be telling too many secrets.

Yikes, no clue. That would be upwards of 10 freelancers and $6,000 worth of projects.

(I have always paid by task, not by hour -- as you might have noticed I tend to center on small, well-defined projects with easily verified deliverables. I cultivate trust with my freelancers such that they know I'm not going to screw them on a neverending scope-creep deathmarch for the $400 project. Thus, I've really got no clue whether they're taking their sweet time doing projects or figuring out ludicrously efficient ways to do them and earning more per hour than I do -- and if they have done that, bully for them.)

Hey patrick/patio11, there are quite a few things I disagree with you about, but I love that you're a genuine guy. I wish you all the success and happiness in the world now that you're following your dreams full time. I'm very glad you're a hacker; the decisions you make and the thought you put into them always inspire me.

Peace.

Wow, this was amazing, and better than almost all of the other time management posts out there.

Patrick, what is the best way to contact you a la PM for startup advice?

Write an e-mail, you can find the address on his blog.

Alternatively, if he isn't able to do the contact, I would highly recommend reading all of his comments http://news.ycombinator.com/threads?id=patio11 and all of his blog http://www.kalzumeus.com/

Email. My address is trivially discoverable.

Before even reading it, I just wanted to say thank you for finally writing up your experience.

How large is his business now with 5 hours a week?

Well documented-- but enough to quit his day job and growing every month.

Please refer to this post for his 2009 sales stats:

http://www.kalzumeus.com/2009/12/18/bingo-card-creator-year-...

http://www.bingocardcreator.com/stats/sales-by-month

We look forward to the next part in the series!

How many articles can you write on Bingo cards?

All the power to him however.

This article is not about bingo cards, it is about the 0 to 55 Mph stretch that you face when you're starting a 'side' job, and achieving the point where you can quit your day job.

Reply on news.ycombinator.com