Incredible Secret Money Machine
kk.org
kk.org
No. Get yourself out of the filter bubble, because it is seriously warping your understanding of the world.
There are still orders of magnitude more "small-time" start-up businesses in the world than "get big fast" start-up businesses. Your town probably has dozens of them: they're restaurants, roofing companies, independent tradesman, etc. Those people are all doing exactly what you're talking about.
The Googles and the Facebooks, the Yammers and the Zappos's are outliers in terms of scale. That's what makes them interesting.
Your question and ef4's comment are caught in an attractor of a different debate.
When you tell people you are doing a start-up it is deeply implied you're doing something with the hopes of hitting it big. Because if it wasn't you would just tell them you "run a roofing company" or are "an electrician" or "sell stationary on the internet"
A start-up, even to non-technicals, connotes an attempt to hit it big.
Getting really big then exiting basically necessitates that you have to be in a mass-market business. But do only mass-market businesses get to call themselves start-ups? Is there no place for start-ups in specialized fields with significant revenue potential but without the kind of universal applicability that makes VC's wet their pants?
I'm currently developing SaaS for a certain service industry in Sweden.
I wouldn't say this is hitting it small, nor is it batting for the major leagues. It's a decent sized chunk of project that will build the skills and capital needed for our next level-up sometime in the future.
Do you really agree that "The concept of entrepreneurism as a small-time life-style has evaporated from the culture"?
http://webcache.googleusercontent.com/search?q=cache:http://...
And the direct link to the "Incredible Secret Money Making Machine" by Don Lancaster:
http://www.tinaja.com/ebooks/ismm.pdf
I'm considering whether this might be a good business read for middle/high schoolers.
What he has to say is not compatible with the current pop culture "startup" hype but it's still valid.
One thing also mentioned is correct: when you're in business, sometimes you get more than you expected, just for showing up. That very rarely happens in a regular "job."
If the product is mostly YOU, you're going to burn out if you refuse to hire anyone to do those repetitive tasks that many, many other people can do for a modest wage.
For example only: you ship something physical, do you really want to spend 1/3 of your day, every day, forever, boxing up product and taking it to the post office?
If you've ever offered phone support, you know what I'm talking about too.
And since there is usually a line of people at the post office near closing time, invariably someone asks what it is that he's shipping (because it's unusual to see someone turning up with a bag of packages like Santa Claus). And he tells them what he does. Strangely, he never has any business cards on him (people always ask). So he asks them to give him their phone number instead. And they do. Now, I'm going froma small sample, but I've seen this repeat itself often enough to think of it as a schtick; at a conservative estimate, every time he drops off his packages, there's a 50% chance that he gets one new customer lead. He sells the bottles for ~$25-50 depending on the size, and marginal costs are pretty low. I'd say he's doing pretty well at his craft business, since he's shipping out a few hundred $ worth of product every time I see him, and more to the point he seems like he's having a really good time.
Obviously this sort of thing doesn't scale well, and imposes a ceiling on the amount one can earn. But as Adam Smith observed, while the division of labor may be highly efficient it's also soul-destroying. Running a one-man show like this is certainly a valid alternative to working in a shop where one is regularly called on for 'crunch time' or 'sprints' or 'hackathons'.
Did you mean the "Strangely" here? What he's doing is, in fact, very clever. A business card is a passive, easy thing that will rarely lead to further action. Asking for the phone number is a much better gauge of how serious the person is.
Over the years, I have seen hundreds of examples of money machine people being severely done in by the patent system. Even murdered by it in several heart-attack-during-litigation cases. And not once did I see anyone approaching the patent system on a small scale basis and profiting from it. Ever. Once again: Unless you are well within a Fortune 500 context, any and all involvement in the patent system in any, shape, or form is absolutely certain to cause you the net loss of time, energy, money, and sanity. Besides ending up a totally useless and utterly unnecessary psychic energy sink.
Maybe the pdf has more information about building machines that either singularly or at least collectively are resilient to patent attacks.
I read that to suggest the "popular mythology" of patents as small inventors making millions from patents as completely wrong. Not sure what to make of the inventor's idea kit sentence.
I don't think we ever sued anyone, but we probably would have had little use for the ability to sue people who arrived at the technology independently. Our worry wasn't about monopolizing the idea, because it wasn't obvious, but protecting ourselves from getting ripped off through copying. We probably wouldn't have published on it then though.
I mentioned this in another thread, but I'll reference it here. So you know about the Ansari X Prize. The company who won it was Scaled Composites, headed by Burt Rutan. The actual work was the result of investment by Paul Allen. The Spaceship One was patented, and the IP is held by a holding company that embodies Allen's investment. Allen didn't invest in the research for the piddling $10 million prize. He didn't do it so he could get into the spaceship manufacturing business. He did it so he could sell the IP to someone who wanted to handle the actual building and flying part of the equation. Burt Rutan is objectively a genius, and has invested 30 years in Scaled Composites. What is the end result of those 30 years of research by top-notch PhD's? The company doesn't have huge factories, a stockpile of cash, etc. The value of the business is a pile of IP.
I don't think the law has to protect every business model, but I do think it's a little weird that you can employ a team of construction workers for a year to build a house and have some hard assets to show for it, but people argue that you shouldn't have anything to show for employing a team of PhD's for a year. There has to be some mechanism for transacting in the results of research. Maybe that mechanism needs to look different than the existing patent mechanism, but I think it needs to exist. I think there is value in a company full of PhD's that's not intrinsically bogged down with the need to manufacture end-user products.
There are lots of non-F500 companies that make their revenues developing and consulting on non-patented technology, so it doesn't necessarily follow that their revenues were solely due to patents.
I think the biggest message of this book is how to bootstrap yourself in making money doing something you love to do. This book is important because it shows how Lancaster (and many people who have read this book) went from a "you can't get there from here" position to doing what they love. You don't have to be a hippy or limit yourself to a lifestyle business to make use of the knowledge in this book.
I dunno... I guess it depends on what filter bubble you live in and what echo chamber you participate in, and any number of other factors, but my feeling has been that, yes, "startup" - as opposed to "small busines" - does mean a business that's intended to grow very big (not necessarily fast though) and is more in the mold of your typical Silicon Valley "startup". OTOH, I've always perceived that people use the term "entrepreneur" to refer to anyone from a one man plumbing company, to a startup that's aiming to be the next Facebook. "Entrepreneur" to me includes mom and pop restaurants, tradesmen of various kinds, small consulting companies, whatever.
But, in either case, regardless of how the terminology has been changed over time, the idea of "entrepreneurship as a small-time life-style" clearly still exists. Maybe now people use the term "lifestyle business" but who really cares about the label?
I fall on the growth side right now. My lifestyle suffers greatly because I'm working so much. Hopefully that will change one day when I make my riches (LOL). But one day I will "retire" into a lifestyle business of some sort. I was thinking renting jet skis at the beach would be cool.
[1] http://www.amazon.com/Growing-Business-Paul-Hawken/dp/067167...
Of course, if you choose to incorporate your own LLC (or C-corp or S-corp or whatever) there's always risk in that vs. hiring a professional to do it for you. I'm not really suggesting one approach or the other, but FWIW, I chose to incorporate our NC LLC myself by using one of those books and the stuff from the appropriate NC gov website.
But, also FWIW, if/when the day comes that we start trying to raise outside money or doing any complicated deals involving ownership/equity, we'll reincorporate as a Delaware C-corp, and I expect to hire a seasoned lawyer who specializes in that kind of thing, to take care of that.
I mean I don't try to do my own dentistry. And like others on HN I make fun of people who think they can program after doing a mail merge.
So why would I try to do my own legal and accounting stuff? Given the potential downsides, that's just crazy.
The chances are that once I knew more about it, I'd think it's crazy too, especially for the general case. I'm curious whether it is possible to reduce the difficulty of operating as a single person limited liability company to the same level of difficulty as operating as a sole-trader.
The limit of my complexity is occasionally emailing my accountant to ask whether to book things against me or the company.
The people I work for require me to be incorporated, so that pretty much settles that.
As for curiousity: again, I just ask the professionals. They are likely to give me a correct answer.
I do sometimes look things up myself, but there's always the nagging doubt that I've mistaken a technical term for its common meaning, or that I lack some key conceptual framework or whathaveyou.
I always get the feeling that lots of startup entrepreneurs get the impression that just setting up a corporation through an online provider is the end of the process, in reality it's just the beginning. If you don't follow through you might as well save your money and just operate as a sole proprietorship.
There may be some value of running as an LLC or corporation rather than as a partnership as this protects you personally from the stupidity of your partner. Perhaps, I am over-cautious, however, as I would never even consider going into business with someone where I thought there was any chance of him screwing me over intentionally or by accident.
Finally, if you start having employees, incorporating might be worthwhile to protect you from the stupid actions of your employees.