Tag: how to become a millionaire

/* This was originally a comment made in response to a hacker news thread titled:  Ask HN: How to become a millionaire in 3 years? .  The comment has over 200 upvotes, which means people found it useful. I decided to add more thoughts, refine existing ones, and put it in a permanent place. This is just my own humble advice and I hope it’s useful for entrepreneurs.  */

I move forward the only direction
Cant be scared to fail in Search of perfection

-Jay-Z, On To The Next One

I’m going to go and replace 3 years with a “short time frame”. Some things to focus on:

Market opportunity– Have you every heard of the good, old casino horror stories about a rich man betting his every fortune and lost everything? Well, me neither. A million dollars is not a lot in the grand scheme of things, but it certainly is a lot if the market opportunity is not large enough. Even if you put Bill Gates and Steve Jobs as founders in a new venture with a total market size of 10 million, there is no way they could become too wealthy without completely changing the business (ie- failing).

Inequality of information- Find a place where you know something that many undervalue. Having this inequality of information can give you, your first piece of leverage.

Leverage skills you know- You can go into new fields such as say Finance, but make sure you’re leveraging something you already know such as technology and/or product. Someone wanted to start a documentary with me. I said that would be fun, but it would be my first documentary regardless of what happened. There was a glass ceiling due to that. If I do something leveraging a skill I know, I’m already ahead of the game.

Look in obscure places- We’re often fascinated with the shiny things in the internet industry. Many overlook the obscure and unsexy. Don’t make that mistake. If your goal has primarily monetary motivations, look at the unsexy.  One example would be email newsletters, which I’ve profiled before.

Surround yourself with smart people- Smart people whom are successful usually got there by doing the same and have an innate desire to help those do the same. It’s the ecosystem that’s currently happening with the paypal mafia and can be traced all the way back to fairchild semiconductor.

Charge for something– Building a consumer property dependent upon advertising has easily made many millionaires, but it isn’t the surest path. It takes a lot of time and scale, which due to cashflow issues will require large outside investment probably before you are a millionaire. Build something that you can charge for.  That’s how business has worked for thousands of years prior to the 1990s.  Make something, charge for it, repeat it.  DHH explains this really well at Startup School 08.

Information Products Are Valuable- E-Books, screencasts, And anything that can teach others to be good at something is a very lucrative business.  Look at guys like peepcode… they’re killing it.  There are also things like Parrot Secrets, which make 400k a year.  Bonus points if the information helps a person make money (directly or indirectly) or improves their self image.  Fyi, this doesn’t mean sell snake oil ebooks.  That may get you a somewhere in the 5 figures, but word will spread that your shit smells.

Your primary metric shouldn’t be dollars- If you’re going after a big enough market and charging a reasonable amount, you can hit a million dollars. Focus on growth, customer acquisition costs, lifetime value of the customer, and churn.

Get as many distribution channels as possible- There is some weird sense that if you build something they will just come. That a few “like”+retweet buttons and emails to [email protected] will make your traffic explode + grow consistently. It fucking won’t. Get as many distribution channels as possible. Each one by itself may not be large, but if you have many it starts to add up. It also diversifies your risk. If you’re a 100% SEO play, you’re playing a dangerous dangerous game. You’re fully dependent upon someone else’s rules. If Google bans you, you will be done. You could easily replace the SEO example with: App store, facebook, etc.

Go with your gut and do not care about fameballing- Go with what your gut says, regardless of how it might look to the rest of the world. Too often we (I) get lost in caring about what people think. It usually leads to a wrong decision. Don’t worry about becoming internet famous or appearing on teh maj0r blogz. Fame is fleeting in the traditional sense. Become famous with your customers. They’re the ones that truly matter. What they think matters and they will ultimately put their money where their mouth is.

Be an unrelenting machine– Brick walls are there to show you how bad you want something. Commit to your goals and do not waver from them a one bit regardless of what else is there. I took this approach to losing weight and fitness.  I have not missed a single 5k run in over a year. (Here’s how I lost 50 pounds btw). It did not matter if I had not slept for two days, traveling across the country, or whatever else. If your goal is to become a millionaire, you need to be an unrelenting machine that does not let emotions make you give up / stop. You either get it done with 100% commitment or you don’t. Be a machine.

If it’s a mass market “trend” that’s all over the news, it’s too late- This means the barriers to entry are usually too high at this point to have the greatest possible chance of success. Sure you could still make a lot of money in something like the app store or the facebook platform, but the chances are significantly less than they were in the summer of 08 or spring of 2007. You can always revisit past trends though.  Peter Cooper and I clarified some of the semantics about what is a trend over here.

If you do focus on a dollar amount, focus on the first $10,000- This usually means you’ve found some repeatable process / minimal traction. ie- if you’re selling a $100 product, you’ve already encountered 100 people who have paid you. From here you can scale up. It’s also a lot easier to take in when you’re looking at numbers. Making 1 million seems hard, but making $10,000 doesn’t seem so hard, right?

Be a master of information– Many think it might be wasteful that I spent so much time on newsyc or read so many tech information sites. It’s not, it’s what gives me an edge. I feel engulfed.

Get out and be social- Even if you’re an introvert, being around people will give you energy. I’m at my worst when I’m isolated from people and at my best when I’ve at least spent some time with close friends (usually who I don’t know from business.)

Make waves, don’t ride them– There was a famous talk Jawed Karim gave from youtube. He described the factors that made youtube take off in terms of secondary/enabling technologies. I think they included (1- broadband in the home 2- emergence of flash, so no codecs required 3- proliferation of digital cameras 4- cheap hosting 5- one click upload 6- ability to share embed). Find those small pieces and put them together to make the wave. That’s what youtube did imho. The other guys really just rode the wave they created (which is okay).

Say no way more than you say yes- I bet almost every web entrepreneur has encountered this: You demo your product / explain what you’re doing and someone suggests that you do “X feature/idea”. X is a really good idea and maybe even fits in with what you’re doing, but it would take you SO FAR off the path you’re on. If you implemented X it would take a ton of time and morph what you’re doing. It’s also really really hard to say no when it comes from someone well respected like a VC or famous entrepreneur. I mean how the fuck could they be wrong? Hell, they might even write me a check if I do what they say!!!!! Don’t fall for that trap. Instead write the feedback down somewhere as one single data point to consider amongst others. If that same piece of feedback keeps coming up AND it fits within the guidelines of your vision, then you should consider it more seriously. Weight suggestions from paying customers a bit more, since their vote is weighted by dollars.

Be so good they can’t ignore you- I first heard this quote from Marc Andreessen, but he stole it from Steve Martin. Just be so good with what you do that you can’t be ignored. You can surely get away with a boring product with no soul, but being so good you can’t ignore is much more powerful.

Always keep your door/inbox open- You never know who is going to walk through your door + contact you. Serendipity is a beautiful thing. At one point Bill Gates was just a random college kid calling an Albuquerque computer company.

Give yourself every opportunity you can- I use this as a reason why starting a company in silicon valley when it comes to tech is a good idea. You can succeed anywhere in the world, but you certainly have a better chance in the valley. You should give yourself every opportunity possible, especially as an entrepreneur where every advantage counts.

Give yourself credit– This is the thing I do the least of and I’m trying to work on it. What may seem simple+not that revolutionary to anyone ahead of the curve can usually be pure wizardry to the general public, whom is often your customer. Give yourself more credit.

Look for the accessory ecosystem– iPod/iPhone/iPad case manufacturers are making a fortune. Armormount is also making a killing by making flat panel wall mounts. Woothemes makes millions of dollars a year (and growing) selling WordPress themes. There are tons of other areas here, but these are the ones that come to mind first. If there’s a huge new product/shift, there’s usually money to be made in the accessory ecosystem.

Stick with it- Don’t give up too fast. Being broke and not making any money sucks + can often make you think nothing will ever work. Don’t quit when you’re down. If this was easy then everyone would be a millionaire and being a millionaire wouldn’t be anything special. Certainly learn from your mistakes + pivot, but don’t quit just because it didn’t work right away.

Make the illiquid, liquid- I realized this after talking to a friend who helps trade illiquid real estate securities. A bank may have hundreds of millions of assets, but they’re actually worth substantially less if they cannot be moved. If you can help people make something that is illiquid, liquid they will pay you a great deal of money. Giving you a 20-30% cut is worth it, when the opposite is making no money at all.

Productize a service- If you can make what might normally be considered a service into a scaleable, repeatable, and efficient process that makes it seem like a product you can make a good amount of money. In some ways, I feel this is what Michael Dell did with DELL in the early days. Putting together a computer is essentially a service, but he put together a streamlined method of doing things that it really turned it into a product. On a much smaller scale, PSD2XHTML services did this. It’s a service, but the end result + what you pay for really feels like a product.

Look For Something That Is Required Or Subsidized By Law–  Motorists are required to have insurance, public companies have to go through sarbox laws, doctors get tens of thousands of dollars for EHR systems, etc.  Look for something that is required by law and capitalize on that.  Usually things that are required and/or subsidized by law are mind numbing with complexities.  Find a way to simplify that process.

Make Sure You’re Robbing A Bank- When Willie Sutton was asked why he robbed banks, he said because that’s where the money is (Thanks to edw519 for this phrase).  Make sure whatever you’re going after is where the money actually is ie- a customer that will pay you.  Consumer markets are tough, especially with web based products.  People expect everything to be free.  Businesses are usually your best bet.

Don’t Be Emotional- Emotions can let you make stupid decisions.  It can make you not walk away because you’re attached to something.  Most importantly it will lead to indecision and a loss of confidence.  Put your emotions into your product or save them for your lover, family, friends,etc.

Don’t Leave Things Up to Chance- People feel that things will just work out due to carpe diem.  They usually don’t  People can be unreliable, deals can fall through, and shit will always happen.  Prepare for multiple scenarios and contingencies.  You can mitigate this by working with smart AND reliable people.

Raise Revenue, Not Funding- Everyone is always so damn fixated on getting funded because it’s the cool thing to do.  Focus on getting people to pay you at first and then scale things outwards with funding IF and WHEN you need it.  If your goal is to make a million dollars in three years, funding probably isn’t the way to go.  VCs won’t let you take a salary of ~300k per year.  Selling a company in < 3 years is a crapshoot.  The lifespan of an investment is usually about 7 years from what I’ve read.

Don’t Get Comfortable- You will probably get comfortable somewhere around 200k, maybe less or more, but it will certainly be before 1 million dollars.  If you get comfortable you start getting off balance and having the hunger to move forward.  Reward yourself a little bit, but live as frugally as possible.  I have friends who have made some okay money, but blow it all away on stupid shit because they got comfortable.

Look For Those Who Are Comfortable–  Who is comfortable in a certain industry?  Go in and knock them off their hammock so they spill their mojitos on themselves.  This can also be considered stagnation.  Industries often mature and people get comfortable keeping the status quo.  Stagnation is the mid-life crisis for a former trend. This is usually a good point to come in with something.

Don’t Skimp on the Important Things- When it comes to things that need to be reliable such as infrastructure, delivery, or even your own personal tech equipment – don’t skimp out.  These are the tools that ensure reliability and your product being delivered.  You can skimp on the office space, the desks, coach airfare, budget motel in mountain view,etc.

Companies Spend Just as Much or More On Services as they do On Software–  Paying for the ERP, CRM, or custom built system is just the first step.  There’s the maintenance, training, and service contracts.

Keep The Momentum Going–  I’ve had projects where things were moving a million miles an hour, then BOOM, they just lost a lot of momentum.  That is the worst possible thing you can have happen.  Keep moving the ball everyday.

Listen (or read the transcriptions of) to Every Mixergy Interview You Can- Most of my audience will probably know about Mixergy, but I can’t let a single reader leave without making sure they know it exists.  It is by far the most practical resource on the Internet if your goal is to do well.  Andrew has interviewed entrepreneurs from all walks of life with varying levels of success.  Most of them had real business models and bootstrapped.  Most importantly, he finds out what specifically led to their success. Link to Mixergy.

Last, but not least:  Learn How To Filter- I just wrote upwards of 2,200 words.  Some of the points are even contradictitory.  Start adding in other sources of information and you will feel like you’re being pulled in a five million directions.  You then become indecisive.  Take in information and then filter the good bits while synthesizing them to be a part of your overall plan.  What works for person A doesn’t always work for person B. You can find out more about deed lenders here and learn how to be profitable.