
Incredible Secret Money Machine - andrewl
http://kk.org/cooltools/archives/9659
======
ef4
> The concept of entrepreneurism as a small-time life-style has evaporated
> from the culture, and now entrepreneur and start-up means “get big fast.”

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.

~~~
hemancuso
Those are called small businesses.

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.

~~~
rayiner
I've worked for two tech companies doing fairly cutting-edge R&D that were
definitely "start-ups" in every sense of the word, called themselves such, but
were never developed with the intention of getting a bunch of VC money then
making a big exit. These are much more common than you probably realize, even
within the tech sector.

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?

~~~
hemancuso
Isn't cutting edge research a very pure version of trying to hit it big? Sure,
there might be no VC involved. But what does that matter?

------
pardner
I spent the better part of high school with a copy of Lancaster's TTL Cookbook
in hand (still have my dog-eared copy). Then as an undergrad in 78 I re-read
this primer for success. While I was more inclined towards the 'enterprise'
track, this book nonetheless helped shape my attitude about money, time, and
purpose. I can't recall another book that combined (good) advice regarding
cashflow, always giving customers something extra, working with your body's
natural cycles of energy, retirement funding, and "modifying a television set
for a better money machine" (by cutting the cord and throwing it away). Still
a worthwhile read, IMO.

~~~
waterlesscloud
Oh! The book is by Don Lancaster! I missed that. His electronics books were a
key part of my self-education in the early 80s, as I'm sure they were for a
lot of computery types my age. Guy is a hacker in the most hackerist sense
possible.

<http://en.wikipedia.org/wiki/Don_Lancaster>

------
kjhughes
Site seems to be down or overloaded. Here's the Google cache copy:

[http://webcache.googleusercontent.com/search?q=cache:http://...](http://webcache.googleusercontent.com/search?q=cache:http://kk.org/cooltools/archives/9659)

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.

~~~
bkeating
Made a few adjustments. Hows it loading for you now?

~~~
HeyLaughingBoy
Are you by any chance the famous "Bee?"

~~~
bkeating
Probably not!

------
OldSchool
Wow, now that's an old book by a real guy who could breadboard TTL chips into
the equivalent of a graphics card at that time. Sort of another Wozniak,
though that kind of bare metal knowledge was expected of all EE's.

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."

~~~
CamperBob2
Lancaster's TV Typewriter project was actually an influence on Woz, IIRC.

------
metaperl
"""Employees are a hassle, a waste of time and ploney and a psychic energy
sink. You should avoid them at all costs. Your incredible secret money machine
should have 0.834 employees-that is 83.4 percent of you, nothing more,no less.
The remaining 16.6 percent of you should go for fun and rewind time"""

~~~
OldSchool
For most businesses, this idea is a little too hippy/artisan from my
experience.

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.

~~~
anigbrowl
There's a guy who lives in my neighborhood that blows glass; his specialty is
blowing Klein bottles (<http://en.wikipedia.org/wiki/Klein_bottles>). I know
about him because2 or 3 days a week he shows up at my local post office right
before it shuts, with a net bag that has 5-10 boxes in which he is shipping
out to customers. He knows everyone at the post office by name and always
gives them a big hello; he has printed and affixed the postage at his
home/workshop, but brings them to the post office so he can see the tracking
numbers get scanned. As there is no paperwork to fill out, and they know him,
he gets handled almost immediately - typically someone will come out to scan
the packages when they hear him arrive.

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'.

~~~
flyinRyan
>Strangely, he never has any business cards on him (people always ask). So he
asks them to give him their phone number instead.

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.

~~~
anigbrowl
Well yes, that's the point.

------
noonespecial
He had a lot of prescient advice about patents, way before they became the
giant sucking nuisance that they are today.

<http://www.tinaja.com/pasamp1.shtml>

~~~
adolph
Here's what KK quoted:

 _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.

~~~
rayiner
I've worked for two non-F500 (think 10-25 engineers) companies that made their
revenues developing, consulting on, and licensing, their patented technology.

~~~
wmf
Would they have made as much money if they didn't patent their technology?

~~~
rayiner
We sold technology, not end user products, because we weren't in the business
of who could find the cheapest Chinese manufacturer. If we didn't have
patents, we'd have to replicate a fragile version of them contractually.
Patents gave us a ready made legal instrument we could transact with. I think
that's their real value to industry.

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.

------
andrewl
The PDF is free. Kevin Kelly wrote "If I had to sum up this book in my own
words it would be: If you are willing to build your business on expertise, you
can make a living instead of making a fortune--and occasionally the fortune
comes anyway."

------
tudorw
This is a great read, it talks to me, I've run my computer business like this
and it's certainly worked as well as some friends who have taken great jobs,
and had them taken. At least my way I create my own failures, there is
something satisfying in that even if it does not always result in a lavish
lifestyle.

------
dwc
I've read the book (and TTL Cookbook, of course) and met Don Lancaster a
couple of times at social gatherings.

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.

------
juan_juarez
Reading through the intro, he managed to get some things right and some things
horribly wrong. Predictions from 1992 of technologies that would fail : solid
state cooling, QWERTY alternatives, touch screens, NeXT computers, UNIX,
TrueType, DVI video & Teletext.

------
mindcrime
_The concept of entrepreneurism as a small-time life-style has evaporated from
the culture, and now entrepreneur and start-up means “get big fast.”_

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?

------
ianstallings
Every entrepreneur needs to make a decision before setting out - what is your
goal? Is it to get rich or is it a better lifestyle through a job you love to
do every day? Sometimes, rarely, these two meet. But there is a big difference
between a lifestyle business and a growth business. Paul Hawken wrote a book
about this particular subject and focused on the the lifestyle business - ones
that grow slowly and are more about the lifestyle of the owner than reaping
massive profits. These tend to be smaller businesses with one1

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.

~~~
retroafroman
_Growing a Business_ [1] is the book you're talking about it. I picked it up
on a whim from a book sale a couple years ago and it was an interesting read.
Like this one, some things are fairly outdated (talks a fair bit about catalog
sales), but overall pretty sound advice for building a sustainable business.

[1] [http://www.amazon.com/Growing-Business-Paul-
Hawken/dp/067167...](http://www.amazon.com/Growing-Business-Paul-
Hawken/dp/0671671642)

------
RobGR
I have read the book (paper copy) and recommend it. It is a relatively quick
read, you can knock it out over three cups of coffee at a coffee shop on a
Saturday afternoon or on a medium length plane flight, and I think most people
would benefit from it and feel inspired.

------
United857
Great read but needs a better title; it sounds like the subject line of spam.

~~~
bradshaw1965
Wasn't a whole lot of spam in 1978 when first published.

~~~
n3rdy
That DEC-20 offer was hot though.

------
znmeb
Yes, I read Lancaster's book back when it was published. It's crushingly out
of date in today's world, however. No sane person in 2013 will subject
him/herself and family to the risks of operating _any_ business as a sole
proprietorship or even a partnership. Get a freaking lawyer and accountant and
buy business insurance. Do it right or don't do it!

~~~
polymatter
can you expand on why sole proprietorship or partnership is not "right"? IRS
requirements?

~~~
retroafroman
An LLC is a very lightweight, easy to establish corporate vehicle that
provides personal protection for the business owner. When running a sole
proprietorship, if your business gets sued, they sue you for your personal
money. If your LLC gets sued, it's much, much harder for them to go after your
personal property. Today's society is too litigation happy to risk personal
homes and wealth with a simple sole proprietorship/partnership. An LLC or C or
S-corp is easy and fairly cheap to establish compared with how much it's
possible to lose.

~~~
femto
Is there a book out there that describes how to run a limited liability
company in various jurisdictions, effectively "open sourcing" the company
process for small players? Even better if it's coupled with code that guides
you though the process.

~~~
jacques_chester
Lawyers and accountants just aren't that expensive. Really. For the common
case ("I just want to set up a company") you could be in and out in an hour
and face only a moderate premium over the underlying fees.

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_.

~~~
femto
Why? Curiosity.

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.

~~~
jacques_chester
I'm Australian, I own a Pty Ltd.

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.

------
smoyer
I loved reading Don Lancaster's articles in Radio Electronics when I was
Junior and Senior High School (yes ... I'm that old).

------
cerebrum
The author of the book: <https://en.wikipedia.org/wiki/Don_Lancaster>

------
waivej
Neck tingles... I gotta say that rarely does a post hit at the right time so
well. Thank you.

