I get a lot of questions about this blog, but by far, one of the most interesting questions I consistently receive is from those who have read my Goals page. One of the goals is stated in a straightforward manner: “Have at least $1 million/year in passive income by the time I am 30.” The question I get is “How do you plan to do that?”
This is something I haven’t clearly addressed on this blog, because although I knew what I wanted to do with my life, I was not sure how I wanted to do it. I knew that I wanted to set up two content websites, HardworkingMillionaire.com and InspiringInnovators.com. I also want to write a book and do public speaking. But what I was missing, until this week, was the link between “Step 1: Set up a bunch of websites” and “Step 2,346: Profit!”
There are basically two ways to make money with content websites:
- Provide content for free and charge advertisers to advertise, based on your audience size.
- Charge a subscription fee for content.
The advertising method is obviously more popular, but it’s also more difficult to track. It’s easy to set goals like “I want 1,000 subscribers to my blog,” but what does “1000 subscribers” really mean when it comes to income? I didn’t find an easy answer to that question by studying other successful bloggers.
I will be the first to admit: I need to have a goal that involves money. This is key to the way I think about things. For me, setting a goal of subscribers and traffic is all well and good, but if I can’t translate that into money, it’s meaningless to me. I knew I had a predicament on my hands, so I started looking at alternative ways to make money.
Here is what I decided:
Inspiring Innovators will be completely advertising-driven. There are two ways I plan to make money with the site:
- Set up a store where I sell the products of the people I interview for the site, and also allow other small businesses to add their products to the store.
- Sell advertising on the site.
Since I can’t easily measure how much revenue I will make with the site, I made the decision to go forward with Inspiring Innovators, even if that revenue is basically $0. I will have no revenue goals for the site, although I fully expect it to bring in a nice income. Why? Because interviewing people who inspire us all and getting those folks’ messages out there is an important thing for me to do, no matter how much income it generates.
That’s the conclusion I drew: Even if the site doesn’t make a dime, I still want to do the site. There are other goals associated with the site — the biggest one being once it starts, I will be posting an interview every week for the next two years (over 100 interviews in all with some really interesting people.) The content will be available for free to anyone who visits the site. I will sign advertisers. But I won’t add a revenue goal to the site. It will be a labor of love first.
But what about the $1 million per year?
Where does that leave me, then, with my $1 million per year goal? That’s where Hardworking Millionaire comes in. I had several tough decisions to make. Should I make it a blog? An online book? A series of online books?
Finally, what I sketched out for the “bones” of the site was:
- A series of ebooks (these would probably be considered chapters if this were a “real” book, but it’s not), released every month, that explains how to get from “I have an idea!” to “I turned my idea into a million dollars!”
- Setting up a community of people who were passionate and committed to turning their businesses into million-dollar moneymakers, and weeding out those who distracted the serious folks.
- A springboard for developing my own seminars, published books, and spoken content.
- Tie-ins with Inspiring Innovators — guest ebooks or posts of extremely high-quality from those who have run successful businesses.
- Distilling the lessons of the Inspiring Innovators into actionable items for members of the Hardworking Millionaire community.
After some serious thought and research, I decided that Hardworking Millionaire should be a subscription community. The problem I have with most online communities is that most posts are of questionable value. Finding the “good stuff” is hard. It’s buried in there, somewhere, among the “How do I use Dreamweaver?” and “How do I set up WordPress?” posts that seem to consistently take up a lot of bandwidth.
By making the community a subscription, I can address the easy concerns with a FAQ or links to other sites, and get to the real “meat” of the matter. I’m not naive enough to suppose that all questions will be of high value, but the goal is to open the community only to people who are serious about taking their business to the next level.
I want the subscription to be affordable enough so that you don’t feel you need to take out a second mortgage to get business advice, but I don’t want to undersell it so much that you don’t feel it has value.
I based my subscription price on my previous business — web hosting. When I ran a shared hosting company, I found that the best customers were in the $35-$50/month range. The $10/month customers often did not take their sites seriously and would cancel with no warning. The larger customers moved on to dedicated hosting or colocation. My $38-50/month shared hosting customers were consistently among my quietest in terms of support and many of them stayed several years with us, because they had sites that required serious uptime but didn’t need a dedicated server.
I liken this to the world of business seminars — a $10 ebook (cheap shared hosting) is perceived to be of lower value than a $4000 4-day workshop (a cluster of dedicated servers), but there is not a lot in the middle of that.
I first asked myself, “What could I charge $48/month for?” I quickly realized that this was the wrong question. The correct question was, “What would entrepreneurs pay $48/month for?” Better yet, “What would I have paid $48/month for when I was first starting out?” I came up with a list.
Here, in a nutshell, is the business model of Hardworking Millionaire:
- Provide a step-by-step program that all Hardworking Millionaires can implement to start a business based on their idea, TODAY. It will be interactive and feature question and answer sessions, “homework” assignments, and some motivational/mental work.
- Sift through online forums and blogs to find links to help folks get started turning their idea into a business. Separate the content from the crap and publish the good stuff on a regular basis (I am thinking weekly.)
- Build a community that can ask questions and receive answers online, in real time, and encourage everyone to participate and give support to those getting started.
- Offer meetups and/or seminars on a regular basis where people can come and meet me in person, meet others form the community in person, and network with other businesses. I will likely open these up to the public for typical seminar fees and offer significant discounts for members to drive membership.
- Offer a free, no-strings-attached, no-credit-card-required 30-day membership so people can test-drive the site and see if it really works for them.
Here’s the scoop: If I can sign up 2,000 members at $48/month, the site will gross $1,152,000 a year. After paying at least one employee to do things like resolve membership difficulties, paying for hosting, and paying merchant account fees, I will still gross over a million dollars a year. I may not make $1 million after affiliate commissions, but by that point, enough people will be joining the site that it won’t be a problem.
The key here is to provide value. If there is no value in the site, or the site is static, people won’t continue paying the fee. That means this isn’t completely passive income — truly passive income would mean I don’t have to do any work. It does mean, however, that after putting in crazy hours for a year or so, I can maintain the site with 10-20 hours of work a month and a few employees. Unlike the web hosting industry, it doesn’t require 24×7 support. And unlike expensive seminars or cheap e-books, the onus is on me to deliver the goods, month after month.
I turn 27 in July. That means I have a little over three years to pull this off. I’m fairly confident I can sign 2000 people by the time I turn 29 in July, 2010. If you think I can’t… well, you didn’t watch me grow a web hosting company from absolutely nothing to 600+ customers at its high point, 170 of whom paid over $100/month each by the time I sold it in September 2007.
This is like web hosting, only more interesting to me, and hopefully of even more value to my customers. It’s what will get me to my goal of $1,000,000 a year in passive income by the time I turn 30, but more importantly, it will help thousands of people turn an idea into a business. That’s what I am most looking forward to!