

Making a million bucks/year in revenue - paraschopra
http://discuss.joelonsoftware.com/default.asp?biz.5.818857.14

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clemesha
In his third response (when he gives "a few ideas") "speedy" basically
describes Dropbox:

    
    
      Don't you wish you never had to worry about your  
      computer crashing or hard disk dying?  
      An idiot proof backup, and one where I don't have 
      to set _anything_ would be nice.
    

I bet Dropbox is making a million bucks.

~~~
VladimirGolovin
Dropbox is not a backup.

Backblaze is.

~~~
mhansen
Can you elaborate? I use dropbox as a quick and instant document backup. It
works great.

~~~
derefr
The important bit is "one where I don't have to set _anything_"—you _do_ have
to put the files you want synchronized _into_ your Dropbox folder. (This is
the part I've found hard to explain to people that just save things to
wherever the Save dialog opens.)

This could actually be worked around; once Dropbox enables per-folder sync,
they could also provide a daemon (as an option) that automatically finds and
sets up sync for any folder you seem to be making personal use of. Kind of
like how Picasa works with pictures, but with everything on your computer
that's yours.

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DenisM
A little nugget of wisdom:

 _What if you made an app that could take database connection specs, and an
Amazon S3 account and then automatically backs up the database for you (wish I
had this app).[...] What if you didn't even ask the user if the database was
MySQL or MS SQL or Oracle in the connect settings? The app could quickly spin
through all possibilities and figure it out for the user. Make the app (and
programmer) do the heavy lifting, and let the user (thousands of different
users) benefit. That's the secret. My app does lots of brute force
searches/checks to relieve the user of having to do that. The competition
doesn't._

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_delirium
It's an interesting thought experiment. An interesting variant, though, might
be to divide all his numbers by 10: what can you do to make $100k/year? Now
that's not "rich" kind of money, but it is "making a good living
independently" kind of money. And the numbers actually don't look daunting at
all: bill at $52/hour, make 8 to 9 sales per month of something at $1000/pop,
or make 111 sales per month of something at $75/pop.

~~~
jjs
_bill at $52/hour_

If you have year-round, full-time contract work with no downtime due to
acquiring new clients or negotiating new jobs with existing ones, then you
probably don't have enough clients to be truly independent.

~~~
_delirium
Well, yes, but you can change the numbers to account for that. Say, bill at
$100/hr? Or take the route of selling software. My main point was that the bar
is much lower than the targets he gives, if your goal is "make a good living"
rather than "become rich".

~~~
jjs
I like your general point.

I'm sure there are unforeseen expenses in all of those scenarios that would
require some padding to insure against, but the contracting scenario is the
one I'm most experienced with, and the assumptions behind your numbers have
bitten me in the past.

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zenocon
I know this has been covered here before, but here's a real-world example of
succeeding at this: <http://www.balsamiq.com/blog/2010/01/03/a-look-back-
at-2009/>

This guy is my hero.

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olliesaunders
Just make something people want or, better still, make something you want. Is
there much advantage starting out defining how rich you want to be? Just keep
going for a few years and then, if you're lucky, you can look back and go "Oh,
I've got enough now, I think".

~~~
jjs
_Is there much advantage starting out defining how rich you want to be?_

Yes.

Quantifying your goal helps you answer questions like "How can I get there
from here?", "How long will it take?", "Will I ever make it there at my
current trajectory?", and "Do I still need to work anymore?"

And it will also tell you, "How much do I have to charge, and to how many
customers?", which will help you avoid low-margin, hard-sale markets, and get
you thinking about recurring revenue.

~~~
mburney
Does how much you charge really depend on how much you want to make?

~~~
Timothee
It does in helping you realizing if the market you're targeting is big enough
to achieve your goal.

If your goal is to make a million dollars a year with a certain product or
service, the number of units of that service or product that you can provide
(e.g. you have time to take on only so many projects a year, you're hand-
building furniture and can make so many a week, etc.) or the expected number
of sales you can make tells you how much you would need to charge to reach
your goal. price = $1,000,000/# units

But it really depends on what end of the stick you're looking at. The OP's
objective is to reach a certain revenue. You can look from the other side and
say "I'll be selling my product at that price, which means I'll make
price*units per year."

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mahmud
Better yet, what can you sell for $5 to 200k people? Aim low, aim wide, and
hunt with a gatling.

~~~
dkasper
Not necessarily better yet. In fact you've completely missed the point. Recall
the post about the company making $1000 per day on their iPhone app. They sell
it for $25 and have staked out a niche. Meanwhile hundreds of other apps try
to aim low and wide and for the most part make nothing because they charge too
little and can't make up for it in volume. The point of the post is it's
easier to sell something to 1000 people than 200,000.

~~~
scottchin
Do you happen to remember the name of this app? Thanks.

~~~
hboon
<http://iteleportmobile.com> and <http://news.ycombinator.com/item?id=1365776>

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dedward
Why worry about a million a year in revenue (or did we mean profit here) -
what you really want is probably the lifestyle you think you will get when
that happens.... perceptually, what's the difference between a million a year
and 10 million a year in revenue? What really matters is what you, as the
owner, take home, and the life you live while doing so....

~~~
kristofferR
Great point. A lot of people spend all their time trying to earn more money,
but they don't remember that money is worthless if you don't have the time or
the need to use it. Time is the most valuable currency we have in our lives,
it's the only currency we can't earn more of. We can only choose to spend it
better.

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carson
90-95% profit margin isn't exactly realistic. Not that people and some
companies don't hit that mark but it is rare. A much more realistic range is
probably 30-35% if you are in the tech world and much lower if you are in the
world of physical products.

~~~
DilipJ
Yeah I agree. If the margins are that high, then you'll have a ton of
competitors come in, which will end up lowering it in the end. It may be
possible in the beginning, before the competition forms.

~~~
nitrogen
Pro audio equipment has pretty high margins. The barrier to entry is fairly
high (lots of R&D involved), so there aren't a ton of compmetitors, and the
competitors like making good margins so the prices never get too low
(improving technology and cheaper materials also helps with that). If a
competitor tried to own the market by selling equipment at consumer margins,
they'd probably starve on the low volume they'd get.

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modoc
I've taken the approach of selling a service for $250,000/year to a small
number of people. The sales cycles are longer, but the customers are very
loyal if you provide good service, and it's much easier to support 5-10
clients than 200k clients.

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inscitekjeff
When starting a business, if the idea is even reasonably good in a decent
sized market and you stick to it, getting to $1M per year in revenue is not
the hard part. In fact, after two companies of my own, it was almost too easy
to get that far in each one. The hard part is making a decent amount of money
at that revenue level because realistically you are going to have at least a
few employees in the company to get there. ie: $1M isn't what it used to be.

In my experience, getting to $10M dollars should be the real goal and that
proves to be quite a bit more challenging because this takes some real scale
and the skills from 0 to $1M are quite a bit different that say the skills
from $5M to $10M range....the job of CEO is completely different between the
two and most people don't prove to be good at both types of the "jobs".....so
the company hits a ceiling and never quite gets there.

~~~
paraschopra
Interesting. Can you elaborate how exactly job changes from 0 to $1 M as
compared to $5 M or $10 M range?

~~~
ojbyrne
I would guess that the job changes from managing people to managing managers.

~~~
inscitekjeff
Yes, that is definitely part of it.

