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| Russ compares a startup to a time bomb. If you can't finance the startup period, it blows up. |
The title of his talk was "Defuse the Time Bomb: How to Generate Income from the Blog When Time Is Running Out."
He starts with some images of ticking time bombs and their use in movies to create urgency and excitement.
He relates this to his own situation when he lost his 9-5 job and suddenly was forced to look at his blog as his livelihood, as his daughter was born and he had a family to support.
He compares the wire at the left (the "red" wire) to passive income such as royalties from books or licenses for software. Many founder of startups want to rush into that phase so they can retire quick. The wire at right (the "green" wire) is active income, trading time for money, as in:
- teaching a course,
- training,
- coaching or
- consulting with a client.
Russ's argument is that the best course of action when there is no time to lose is to focus on the "green" wire, the active income. Trading time for money is more reliable, for three reasons:
- While you are developing your ideas, people pay you for your time.
- You get to listen to your clients and improve your ability to address their problems.
- You deepen and broaden your expertise. The best teachers are people who do what they teach.
The key to active income is public speaking because each speech is an opportunity to get business. The rest is a focus on pricing, terms, contracts to gets paid, and business cards to solicit clients.
He gave three books as references for the consulting part of the startup: Fred Miller, The Referral Engine (very practical), No Sweat Public Speaking, and Seth Godin's The Dip - When to Quit.
A blog can help grow up a consulting business because it can mention other people and make them part of your community. It establishes trust and authority. It should also educate prospects so that when a client calls they understand what you do and the terms under which you work.
Once the "green wire" business is under way, it is time to go back to the "red wire" - the passive income. The problem with selling one's time for money is that it is hard to scale up a business that is built on this platform. One can hire staff to make better use of one's time but the principal will be the person the client wants to see. To scale up, one needs passive income from royalties and licensing.
Passive income requires time to build a reputation and a large audience because the revenue tends to be small per item. He uses the example of Katie's Frozen Custard, which had many buyers, but not enough to keep its doors open. "You have to sell a lot of custard to make a living."
SEO Moz started by selling services to Fortune 500 companies. Then it went into the software business to make their system available more widely. A Career Academy became a membership-based community.
The new problem here is how to sell a $30 product via computer. That leads to the need for copywriting skills. Why do people say "yes" to a request via computer? The promotion can be outsourced. The next requirement will be to build a list - attract names to the site, retain them, share them.
For this phase, Russ cited three more books that were useful to him:
Cialfin, The Psychology of Persuasion; Ash, Landing Page Optimization; and Joe Sugarman, Advertising Secrets of the Written Word.
Wrapping up, Russ stressed three points from his remarks:
1. You have to sell a lot of cups of custard to make a living. Selling lots of something inexpensive takes time.
2. Learn how to make money directly with one's skill - then work on getting it in shape to sell online.
3. Start with active income, then use passive income to buy your life back.
As a final recommendation he cited authorityblogger.com and guestblogging.com.
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| That's Russ (L) and CityEconomist Blogger John (R) at BlogWorld 2012, Javits Center, NYC, June 8, 2012 |
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