
Ask HN: Cash-flow muses - bkovitz
 Timothy "Four-Hour Work Week" Ferriss has a concept he calls a "cash-flow muse".  That's a little business that generates some monthly cash without taking up too much of your time.  I think the idea is that with a couple of these running, you're pretty much free to do as you please most of the time.<p>Some desirable attributes of a cash-flow muse:<p>- You own it.<p>- The value proposition is simple enough to explain in one sentence.<p>- High margin: 4x to 50x.<p>- Easy to automate or outsource the selling, record-keeping, and whatever other businessy stuff is needed.<p>- Low capital investment.<p>- Takes no more than about 4 weeks to manufacture the product.<p>Ferriss often casually mentioned that generating this sort of cash flow is easy to do.  It might take a month of real work to set one up, and you'll likely have to market-test a few ideas before you find one that's solid enough to commit to, but once it's up, it should pay your living expenses.<p>That sounds really good--when talked about abstractly.  The main idea is really not that a cash-flow muse can free up your time, it's that cash-flow-muse opportunities are abundant and easy to find.  I myself have little concrete idea of what sort of tiny product you could turn into a tiny business like this, and scarcely any idea how to begin searching for one.<p>My question:  Has anyone actually done one of these?
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idlewords
I run the Bedbug Registry (<http://bedbugregistry.com>), which covers about
half my living expenses. Every six months or so I put in a week's work on it;
otherwise it's just a matter of site babysitting (irate landlords, requests to
rescind a report), which takes no more than an hour a week.

Getting the site to this point took about two years, so I would counsel
patience and perserverance. It also helps to really care about the project,
even if you don't spend much time on it.

And it especially helps when your business partners are relentless insects who
spread very efficiently and feast on the blood of people's sleeping children.

~~~
bkovitz
Wow, thanks: another rich-information, insight-stimulating data point.

I heard an NPR story about bedbugs being on the rise a year or so ago. It
didn't occur to me that bedbugs presented an entrepreneurial opportunity.

~~~
10ren
problem = opportunity

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mishmax
I have one of these businesses. Took me 2 months to build the product (on the
side, after my full-time job). A few more to market and see sales (it takes
time to close sales and generate site traffic). It should generate 10-20k this
year, hopefully more next.

My advice is to focus on a niche market filled with people w/ money, willing
to pay for stuff. And avoid any market/problem that your typical computer geek
would be interested in or aware of (you want to relax on the beach, not code
away 60hrs a week fearing some other startup will catch up and take the market
away).

~~~
fallentimes
Are you worried that because it didn't take long to create (and presumably has
a small barrier to entry), that an influx of competitors will appear?

~~~
patio11
I think people are overly concerned about competitors.

At least two people now have read my blog and set up their own businesses. One
of them practically Xeroxed my business, and his I-can't-believe-its-not-me is
fairly decent. I always joke that since my sales have doubled since then all I
need is to recruit two more people who understand copy/paste and then I can
retire. (The numbers in the joke are way out of date.)

Similarly, I was myself a new upstart competitor to the established market
participants back in 2006, and I haven't killed them, either. (The idea is not
to pick a market with no competitition -- that is a red flag there is no money
to be made. Instead, pick a market where there is an addressable niche for
whom the existing choices are painfully inadequate. Then, sell pain relief.)

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quizbiz
The idea is to set yourself up in a way that allows you to generate passive
income. I like this as in it seems particle and beneficial. I don't think you
can agree with it or disagree with it. It's not morally wrong.

For example, I am not a professional photographer but I have photos on
iStockPhoto and ShutterStock. 33 cents per purchase ads up and I have paid for
a nice amount of gear with the income generated from photo purchases.

In another example, the google ads still point to my account on an old message
board I started. It's 1 check per year at best but it's nice.

If we all put our web designs, a widget of code, anything of that sort for
download for free on a page with ads or for $1 on a purchase paid, you will be
surprised at how it can add up over a long period of time. That's the idea.

I plan to put some of my own webdesigns on an online gallery, people would pay
and get a link to download the .zip. After it's set up, it would be another
source passive income flow.

A bit differently, at one point I experimented with answering questions for
the text messaging service kgb_ whenever I would watch TV. By forcing myself
to do this, I was able to get a nice check at the end of the month. 10 cents
for 2 min of work isn't really worth it though.

Making rules for techniques like these is silly. The idea is to make some
extra spending money however you can... in my opinion.

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patio11
_Has anyone actually done one of these?_

Yep, although I don't think I could comfortably describe it as a fun little
sideline these days.

See <http://www.bingocardcreator.com/stats> and look at the historical sales
data: back in early 2007 when it was selling high three figures a month I
think it would have been a fairly decent example of this.

Tim Ferriss would not be my first suggestion for who to look for for advice on
how to accomplish this. I think he sells "You can avoid doing actual work!!!"
when the real lesson is "You can do actual work _very, very efficiently_ these
days if you're prepared to spend significant amounts of time and mental effort
laying the groundwork for it."

Incidentally, the amount of time you spend on "manufacturing the product" is
rounding error next to the amount of time you will spend on this project. 90%
of the value happens outside your IDE.

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bkovitz
Wow. Thanks for the data point(s)! Your web site cum stats page has got to be
the most useful information I have ever seen or heard of, for the small,
hacker entrepreneur.

Of particular interest to me is that the price for your program is $29.95.
Being a software guy who never buys anything except necessities, books, and
meals out, I have a hard time imagining myself in the place of a buyer. The
reality, of course, is that for some people, $29.95 for the bingo-card creator
is a good deal, and you found them.

~~~
patio11
At the risk of tooting my own horn, you can find my blog linked in my profile.
I think it is probably more useful to you to hear what I've done to get those
stats graphs than to see the graphs themselves, since many of the techniques
will also apply to your business, where the sales numbers will not.

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jlees
I'm glad to read that people have actually set up decent, wholesome businesses
that fulfil the criteria of cash-flow muses. My reaction when reading the book
and even now is just to think 'set up one of those dodgy affiliate sites,
ebook sites or drop shipping resellers', none of these being something I ever
want to do.

The idea of spending a month making something and then the rest of your time
reaping in the profits with low overhead is a great one. Not only does it give
you the freedom to work on a startup (or whatever) without worrying about
rent, but I'd warrant it gives you a fair bit of credibility too - and a
possible exit, even; cf. the recent post about Mingle^2 which took 66.5 hours
to build and which got sold to a competitor.

 _Edit_ Actually, I kind of have a cash-flow muse of my own. I helped build up
a gaming blog to the point where it pays significant money to writers, and am
retained as a columnist there, contributing about 1 hour's worth of work every
Saturday. Without going into _too_ much of the gritty detail, if I doubled
that to 8 hours of work a month, I'd about cover my rent. However, there's a
catch; as my startup's become more exciting, I've had no time to play the game
I blog about, and have stopped writing. I can imagine this working a wee bit
better if I was writing a column a week for TechCrunch or something similarly
in line with the 'day-job', though.

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nico
I don't agree much with the idea, seems like trying to take a shortcut instead
of focusing on real hard work to achieve what you want.

I think that "cash-flow muses" are kind of a myth. If there's something easy
to do, it's probably easy for a lot of people, hence you'll have a lot of
competition, and market price will be low. If you want to differentiate
yourself, then you'll have to put time and work into it, and it'll stop being
a cash-flow muse. Also, if you need many cash-flow muses, each taking up only
a bit of your time, together they'll take up a lot of your time.

Anyway, why do you want to free up your time anyway? If you'd like to focus on
doing what you really want, then you should read this:
<http://www.paulgraham.com/love.html> (a bit long but worth it).

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noodle
i disagree. why are they mutually exclusive?

many times, doing hard work towards what you want to do in life doesn't quite
pay the bills. for him, it was traveling around and doing interesting things.
for you, it might be working on an interesting startup that won't even be
ramen profitable for a while.

~~~
nico
I am not saying they are exclusive, I'm just saying that from my point of
view, cash-flow muses are not worth it.

~~~
zackattack
First, let me say thanks for linking to that essay. Through the essay, though,
pg implies that cash-flow muses could be a path to what you love through the
two-job route.

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matthew-wegner
I created one of these. My company used to actively develop for a particular
market. Today we no longer develop for this market, but it's a big market and
the large players have affiliate programs. We utilize these affiliate programs
--they provide XML feeds and the like, and our site's backend combines them
together and figures out the overlap--to run our own site in the space. The
market players are quite competitive, and feud over exclusive product
distribution, so ironically I think we actually have the largest inventory of
any single non-affiliate site.

It took about two months of my time to do the original website, much of it
spent on SEO optimization and traffic generation strategies. Today we earn
~$8k/month on the site with an upkeep of ~30 minutes/week.

This worked primarily because of deep knowledge of the market (from back when
we were developing this kind of software). I don't think an outsider would
have been able to predict hit products far enough out to lay the proper
groundwork for SEO/etc. When I was actively creating the site site you could
search for "Product X" on launch day and we'd be #1 or #2.

Note: I also launched the site on our company's domain name, taking advantage
of our existing inbound links. SEO from scratch will take a year or more to
really see predictable traffic levels.

So, yeah, it's definitely possible to create a cash flow muse; I think I could
build another one today in around the same amount of time.

It _would_ be hard to do from a totally cold start, though; I'm not sure you
could say "you know what, I'm going to make money by creating a local real
estate website", or whatever random topic, and actually make it happen. But if
you had friends/family in the real estate business, or somehow had accrued
expert knowledge in the area, you'd be off to a strong start. If you're smart
about the area you pursue you should be alright...

~~~
mlapeter
Funny you mention local real estate websites, that's actually been something
I've been thinking of. I'm a real estate broker learning to program, and my
"muse" hopeful is <http://mysinglepropertywebsites.com/>, which is targeted
towards real estate agents. Average age of agents is 54, and they have a lot
of pain points. I'm still pretty weak on programming but deep on real estate
industry knowledge, if you (or anyone else) is actually interested in that
area email me: mlapeter at gmail.

~~~
Shooter
I'm also a real estate broker. And a programmer. And a few other things ;-)

We looked at this exact market a bit. In the course of doing our research, we
found a company with a similar (but better...or at least more functional)
offering than the one you cite. And all of the sites are completely FREE for
real estate agents. It's difficult to compete with a company that has a nice,
easy-to-use system that is FREE. And they're just starting to market
nationally. We eventually just started using them instead of developing our
own...and we're a company with 50+ full-time developers on staff. I'd
genuinely be interested in your ideas if you have a way to compete with
free...

~~~
superchink
Are you talking about Postlets? I'm actually just getting involved in a
property (leasing) related business and it's going to be a great stopgap for
us while I build the real site

~~~
Shooter
Not Postlets. The site I'm talking about used to charge $10 per listing
directly to agents, but they now have a bulk listing package which is
completely underwritten for active real estate agents by third parties,
including lenders. It complies with all RESPA rules. I bought one of the bulk
listing packages to offer to agents. (I also own a mortgage bank and a few
brokerage offices.) Where are you located?

~~~
superchink
We're in Los Angeles. Getting started by filling vacancies in a few key
markets in the general LA area. Website is still under development; I still
have a day-job, So we're using Postlets right now.

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ja27
I have a small one that looks like it'll bring in about enough to buy a new
laptop this year. It's taking maybe 60 hours so the rate sucks but those are
mostly otherwise wasted hours where I'm already watching TV or other crap.

This is a direct result of doing Ed Dale's 30 Day Challenge last year. That's
a free online course on internet marketing, especially on market testing, that
often gets confused with a "make money fast" scheme. I went into it last year
with what I thought was a decent product but soon realized that the online
market (search hits) for it is tiny. Almost a year later and I still only get
20 hits a week on that one.

In the last week of the challenge I stumbled upon a market niche that works
and now generates up to a thousand hits for me a week. It's not a market
looking to spend money so my conversion rate has sucked, but I'm slowly
finding what sells to them.

If I hadn't done this testing, I would have wasted some money and a lot of
time trying to get the first idea off the ground. If you've got a product or
service (or even just an idea for one), I'd recommend the 30 Day Challenge as
a free/cheap way to get rolling.

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jsterce
I fell into one of these with one of my hobbies--nature photography.

A couple of years ago I setup JS Nature Photos (<http://photos.jstechs.com>)
basically how it is now as a branch of another site at the time. Soon traffic
to JS Nature Photos dwarfed traffic to the main site. The other site was
fizzling anyway. Practically all of the revenue from JS Nature Photos is from
ads (people don't buy photos online). It brought in some pretty good money
through the first half of 2008, till the economy tanked.

I don't have time to do much with it with school, etc., posting a photo every
week or two if I'm lucky, but it still pays the rent each month.

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igrekel
Unrelated to the question, I apologize but am I the only one who is annoyed by
the usage of the word "muse" in this context?

For me a muse has such a noble connotation about deep tought, meaning and
inspiration that I feel it is cheapened by being associated with selling pills
online and other near-scams. Not to say that a small, low maintenance business
can't have value to the world.

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wlievens
I'm somewhat facing the same dilemma. I will be having a good amount of free
time in a couple of months' time (4 weeks, at least, possibly more), so I
really want to do one of these, even if it only ends up providing me with a
couple hundred euro per month.

I have one micro-b2b idea, but I'm not really convinced of its value. How do
you generate more ideas of the sort? The impending time pressure isn't helping
me either :-)

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zackattack
I hesitate to dive into a startup for a number of reasons, one of which is
that I have little knowledge of the markets. Where do people have problems?
What are they?

A more difficult question: What non-obvious "problems" become manifest once a
solution is evident? (Perhaps, A key to victory in this consumer culture).

Anyway, more directly on topic, here's a cash-flow muse I came up with
recently: make a pasta-chute that lets you put in the pasta without burning
yourself in the boiling water. Let me know if you wanna collaborate with me.

