How to Get Good at Making Money(inc.com)
inc.com
How to Get Good at Making Money
http://www.inc.com/magazine/20110301/making-money-small-business-advice-from-jason-fried_Printer_Friendly.html
11 comments
Duplicate:
http://news.ycombinator.com/item?id=2271421
The printer friendly version is actually nicer to read:)
http://news.ycombinator.com/item?id=2271421
The printer friendly version is actually nicer to read:)
I love the idea of buying and reselling the same item to see if you can make money. Very good.
This advice is horribly outdated stuff from the 90's.
With Ebay and Paypal fees eating up at least 10% of your earnings, it is highly unlikely you can just resell iPods or anything else on Ebay and make a profit.
"I love doing this, because there's no real risk involved."
No real risk except losing all the money you've invested and wasting a lot of time making Ebay entries and repeatedly learning how to pack and ship.
With Ebay and Paypal fees eating up at least 10% of your earnings, it is highly unlikely you can just resell iPods or anything else on Ebay and make a profit.
"I love doing this, because there's no real risk involved."
No real risk except losing all the money you've invested and wasting a lot of time making Ebay entries and repeatedly learning how to pack and ship.
This advice is horribly outdated stuff from the 90's.
With Ebay and Paypal fees eating up at least 10% of your earnings, it is highly unlikely you can just resell iPods or anything else on Ebay and make a profit.
You're missing a trick. A couple of years ago, I spent time either buying items on the US eBay and reselling them on the European sites (specifically, items without grey-market issues), or buying items in bulk (e.g. Sim Cards) and selling them individually.
I wasn't earning huge amounts of money, but as per the suggestion, I learned an awful lot about basic sales. It's not like, e.g., Sim cards aren't a competitive market, right? ;-)
You're missing a trick. A couple of years ago, I spent time either buying items on the US eBay and reselling them on the European sites (specifically, items without grey-market issues), or buying items in bulk (e.g. Sim Cards) and selling them individually.
I wasn't earning huge amounts of money, but as per the suggestion, I learned an awful lot about basic sales. It's not like, e.g., Sim cards aren't a competitive market, right? ;-)
So you need to spend hours and lose money on Ebay to learn the concept of bulk discounts? Something that you could do by visiting any supermarket?
The idea is not to make money, well, not in the sense of making earnings from it. You're not meant to take it literally as in 'make money from reselling stuff on ebay'.
Of course you lose in the transaction fees (it also mentions craigslist).
Of course you're not going to make real money doing this.
The point is to sharpen your sales skills and realise that experimentation and refinement is the key to developing a good sales strategy. It goes back to the central theme of the piece, which is to continually drum on things - practising all the time. Of course drumming on the steering wheel isn't applicable to playing in a band, except that it's all mental stimulation and practice of sorts.
Of course you lose in the transaction fees (it also mentions craigslist).
Of course you're not going to make real money doing this.
The point is to sharpen your sales skills and realise that experimentation and refinement is the key to developing a good sales strategy. It goes back to the central theme of the piece, which is to continually drum on things - practising all the time. Of course drumming on the steering wheel isn't applicable to playing in a band, except that it's all mental stimulation and practice of sorts.
The point is to sharpen your sales skills and realise that experimentation and refinement is the key to developing a good sales strategy.
This is like saying the point in picking up trash at the highway will be refining your work ethic. Sure it helps, but you could be doing something more efficient.
Note how he says to find something that is a "commodity". A commodity by definition is a product that fungible, which means for those of you who haven't taken Econ 101, no one cares who they get it from, they only care about how cheap it is. This tells me that Jason Fried doesn't know what he is talking about even though he made everyone's favorite Ruby on Rails company.
This is like saying the point in picking up trash at the highway will be refining your work ethic. Sure it helps, but you could be doing something more efficient.
Note how he says to find something that is a "commodity". A commodity by definition is a product that fungible, which means for those of you who haven't taken Econ 101, no one cares who they get it from, they only care about how cheap it is. This tells me that Jason Fried doesn't know what he is talking about even though he made everyone's favorite Ruby on Rails company.
If you're a lazy person with no work ethic, pickup up trash will improve that. That is inarguable.
I think you're just trying to be difficult because you've posted that you don't like the author. Fair enough, you don't have to like him or even agree with him. But I think you understand the point by now.
I think you're just trying to be difficult because you've posted that you don't like the author. Fair enough, you don't have to like him or even agree with him. But I think you understand the point by now.
I am not arguing about this because he is Jason Fried. I am arguing about it because this is bad advice.
You haven't made a strong case for why this is bad advice in spite of the overwhelming comments showing why this is good advice.
I suggest rereading the article again. If you still don't understand what the point is, try rereading again.
I suggest rereading the article again. If you still don't understand what the point is, try rereading again.
The arguments here that it is good advice is some mumbo jumbo handwaving that you will learn "something" because it is hard. Guess what else is hard? Trying to sell lemonade for $1000 a cup in the ghetto.
Will you learn "something"? Probably.
Will it be a good use of your time? Probably not.
And for your information, my posts here have plenty of upvotes, so do not take the sheer number of 37 Signal fanboys retorting as a sign of evidence. PS, 31 Pixels? Seriously?
Will you learn "something"? Probably.
Will it be a good use of your time? Probably not.
And for your information, my posts here have plenty of upvotes, so do not take the sheer number of 37 Signal fanboys retorting as a sign of evidence. PS, 31 Pixels? Seriously?
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I disagree. I mean like people have already mentioned, it's all about getting some practice and not really being profitable. You could think of it as the opportunity cost (hopefully I'm using that term right as I'm no Econ guy either). You lose a little money for the opportunity to become really good at making more later (or maybe you'll defy the odds and actually profit). And it doesn't have to be eBay. Any kind of low risk practice really.
I don't really think your comment on picking up trash to improve work ethic really fits. It really doesn't matter how you practice as long as you do it. For those of us already in business we could simply practice this using our own businesses to experiment. We pick a product, service, or just some smaller, lower risk aspect of our business that we feel comfortable playing with and then charge more, less, or change the pricing model altogether. I think his post makes total sense in these terms and I doubt he means we should literally sell iPods. It's just a nice example.
He probably did use commodity wrong (it's debatable, iPods can be a commodity as some would rather get a deal than get a brand new one from the Apple store) but it wasn't a huge error. All in all, it's hard to tell you that you're wrong because you make total sense but at the same time I also think you're reading into this a bit much and maybe taking what he says too literally?
I don't really think your comment on picking up trash to improve work ethic really fits. It really doesn't matter how you practice as long as you do it. For those of us already in business we could simply practice this using our own businesses to experiment. We pick a product, service, or just some smaller, lower risk aspect of our business that we feel comfortable playing with and then charge more, less, or change the pricing model altogether. I think his post makes total sense in these terms and I doubt he means we should literally sell iPods. It's just a nice example.
He probably did use commodity wrong (it's debatable, iPods can be a commodity as some would rather get a deal than get a brand new one from the Apple store) but it wasn't a huge error. All in all, it's hard to tell you that you're wrong because you make total sense but at the same time I also think you're reading into this a bit much and maybe taking what he says too literally?
I think there is a lesson in there somewhere, perhaps you're just missing it. Instead of trying to counter his points, try extracting what you can from it. In the long run this will help you a lot more than just pointing out things you don't like.
I think there is a lesson in there somewhere, perhaps you're just missing it.
Please point out the lesson instead of a bunch of handwaving to save face for Jason Fried.
Please point out the lesson instead of a bunch of handwaving to save face for Jason Fried.
Some lessons you can learn from selling on eBay:
- how to write good, compelling copy. This is one particular skill that is tremendously hard to learn, yet valuable to possess. It includes things like selecting pictures, figuring out what information to include and how to A/B test your ads.
- how to deal with difficult customers.
- how to answer questions when you're dealing with someone who really does not understand. "So, if I get this SIM card I can play the Sims on my phone?"
- how to figure out what goods will sell versus sit in inventory for years.
- how to write good, compelling copy. This is one particular skill that is tremendously hard to learn, yet valuable to possess. It includes things like selecting pictures, figuring out what information to include and how to A/B test your ads.
- how to deal with difficult customers.
- how to answer questions when you're dealing with someone who really does not understand. "So, if I get this SIM card I can play the Sims on my phone?"
- how to figure out what goods will sell versus sit in inventory for years.
The lesson is that you are learning _sales_.
You are learning what does and does not work. When you try that with a real project (ie your business) you will have already learned a lot from repeatedly selling an ipod using different methods on ebay.
You are learning what does and does not work. When you try that with a real project (ie your business) you will have already learned a lot from repeatedly selling an ipod using different methods on ebay.
That assumes that every sale is identical and that the lessons one need learn to make a $150,000.00 sale are identical to those one need learn to sell something for $150.00.
Believe me, there is a lot more overlap in closing a $15.00 and $150,000 sale than most people realise.
The key problem for most people is that they are coming from a base of zero - ie, have never sold anything in their life - is that they can't bring themselves to ask for the sale. A lot of people are uncomfortable with sales transaction beyond those which require you to walk to a register and present goods for purchase. A lot of people have a baked-in attitude that money is evil and trying to make it is a dirty business. All these things have to be overcome to be successful as an entrepreneur.
Practicing selling on ebay requires you to write copy where you ask for the sale. Closing a $150,000 sale requires you to ask for the sale. Both sales require you to communicate with your buyer, to know your subject, to write clearly and to know when you are wasting your time.
Every sale is not identical, even on ebay, because each time a new customer appears with different needs and a different level of understanding.
I once bought a bulk lot of electronic equipment at live auction, then sold all the individual pieces on ebay, making a tidy little profit. This predated my efforts to sell anything online, and I learnt an enormous amount. I learnt that some people will pay silly prices for things, maybe because they need it right now, maybe because they live remotely and can't drive to the shop, maybe because they don't know the value of things.
I learnt how to write copy that got the point across, communicated my trustworthiness as a seller, and yet communicated the important details without reading like a spec sheet.
I even managed to sell a clearly broken LCD as a bet with one of my friends, who bet me I could sell it, and I bet nobody would buy it. Someone paid me $40 for an LCD with a massive crack and bleeding in it. I have no idea why - perhaps they wanted the case or some other part of it.
I lost that bet and learnt a good lesson in the meantime, which is don't presume to know who or what your market is. And that selling, like any other skill, requires repetition, practice and learning to get good at it.
The key problem for most people is that they are coming from a base of zero - ie, have never sold anything in their life - is that they can't bring themselves to ask for the sale. A lot of people are uncomfortable with sales transaction beyond those which require you to walk to a register and present goods for purchase. A lot of people have a baked-in attitude that money is evil and trying to make it is a dirty business. All these things have to be overcome to be successful as an entrepreneur.
Practicing selling on ebay requires you to write copy where you ask for the sale. Closing a $150,000 sale requires you to ask for the sale. Both sales require you to communicate with your buyer, to know your subject, to write clearly and to know when you are wasting your time.
Every sale is not identical, even on ebay, because each time a new customer appears with different needs and a different level of understanding.
I once bought a bulk lot of electronic equipment at live auction, then sold all the individual pieces on ebay, making a tidy little profit. This predated my efforts to sell anything online, and I learnt an enormous amount. I learnt that some people will pay silly prices for things, maybe because they need it right now, maybe because they live remotely and can't drive to the shop, maybe because they don't know the value of things.
I learnt how to write copy that got the point across, communicated my trustworthiness as a seller, and yet communicated the important details without reading like a spec sheet.
I even managed to sell a clearly broken LCD as a bet with one of my friends, who bet me I could sell it, and I bet nobody would buy it. Someone paid me $40 for an LCD with a massive crack and bleeding in it. I have no idea why - perhaps they wanted the case or some other part of it.
I lost that bet and learnt a good lesson in the meantime, which is don't presume to know who or what your market is. And that selling, like any other skill, requires repetition, practice and learning to get good at it.
The basic principles do apply for the most part. I think that's why most people suck at sales. They think that there's some voodoo once you get above $1,000 or $100,000 and learning anything about sales at a level below that just isn't worth it. False.
It's all basically the same ideas just applied differently at varying scales.
It's all basically the same ideas just applied differently at varying scales.
I'm not sure if you even read the article. At the end of almost every point he specifically points out the lesson.
Example - "There's another lesson in here: Charging for something makes you want to make it better. I've found this to be really important. It's a great lesson if you want to learn how to make money."
Do you just not like this guy or something? There is no hand waving going on. Just trying to learn something from a successful businessman who's willing to share his experiences.
Example - "There's another lesson in here: Charging for something makes you want to make it better. I've found this to be really important. It's a great lesson if you want to learn how to make money."
Do you just not like this guy or something? There is no hand waving going on. Just trying to learn something from a successful businessman who's willing to share his experiences.
That lesson doesn't apply to reselling commodities on Ebay. That is the entire point of my comment.
The only rebuttal here is from someone who was using bulk discount arbitrage to make a profit. This is not a very good lesson to learn for the amount of time and effort you put into it, especially when you aren't even making the product "better".
And of course I don't like this guy. He sells himself as a business guru like those get rich quick guys, and he is famously arrogant for criticizing the value of other companies like Facebook.
The only rebuttal here is from someone who was using bulk discount arbitrage to make a profit. This is not a very good lesson to learn for the amount of time and effort you put into it, especially when you aren't even making the product "better".
And of course I don't like this guy. He sells himself as a business guru like those get rich quick guys, and he is famously arrogant for criticizing the value of other companies like Facebook.
His eBay comment was about getting good at the skill of selling things and making money. He does not advocate this as a business but rather a way to practice. It is not risky at all. He tells you to buy 1 iPod and sell it. When you sell it buy another and repeat the process until you feel like you improved your messaging, sales pitch, pictures, etc. Worst case scenario you get stuck with 1 iPod. How is that risky? Did you think he was advocating this as a business? He's not, just practice.
Also, if you don't like him that's fine but why not still try to learn something? The reality is in life they are going to be plenty of people you don't like, plenty. If you can't learn from others because of your own personal bias you're going to hold yourself back big time.
Also, if you don't like him that's fine but why not still try to learn something? The reality is in life they are going to be plenty of people you don't like, plenty. If you can't learn from others because of your own personal bias you're going to hold yourself back big time.
He tells you to buy 1 iPod and sell it. When you sell it buy another and repeat the process until you feel like you improved your messaging, sales pitch, pictures, etc. Worst case scenario you get stuck with 1 iPod. How is that risky?
Why do I have to keep repeating myself? No one gave an example of how you can feasibly mark up a commodity like an iPod to get anywhere above the 10% Paypal and Ebay fee except when you buy in bulk. And when you buy in bulk you risk a lot more than 1 iPod.
And I am not arguing about this because he is Jason Fried. I am arguing about it because this is bad advice.
Why do I have to keep repeating myself? No one gave an example of how you can feasibly mark up a commodity like an iPod to get anywhere above the 10% Paypal and Ebay fee except when you buy in bulk. And when you buy in bulk you risk a lot more than 1 iPod.
And I am not arguing about this because he is Jason Fried. I am arguing about it because this is bad advice.
The whole point is trying to figure out that part for yourself. If someone told you exactly how to do it then you wouldn't learn much would you? You need to try it with 1 ipod not bulk and see if you can make a profit. It is difficult, it is challenging, that is the point. How do you think you get good at something by taking the easy way?
The point is to try and figure out how to make a profit on your own. Its not to ask someone else how they did it and just copy it. If you copy someone elses homework it does not make you any smarter, you gotta do the homework yourself.
Don't be so afraid to fail. If you try it and your not very good, its ok! Just try again and again, you'll improve. But looking for someone to give you the answer for this is not a recipe for success, its cheating yourself out of an opportunity to learn something new.
The point is to try and figure out how to make a profit on your own. Its not to ask someone else how they did it and just copy it. If you copy someone elses homework it does not make you any smarter, you gotta do the homework yourself.
Don't be so afraid to fail. If you try it and your not very good, its ok! Just try again and again, you'll improve. But looking for someone to give you the answer for this is not a recipe for success, its cheating yourself out of an opportunity to learn something new.
Whether you like him or not, he runs a successful, profitable business--which is proof he has some idea what he is talking about.
I agree. Ebay, Amazon, and Paypal eat up every penny of profit that you would make as a reseller.
I agree. Ebay, Amazon, and Paypal eat up every penny of profit that you would make as a reseller
So all those resellers on eBay are losing money? And distributors lose all of theirs to credit card fees as well?
So all those resellers on eBay are losing money? And distributors lose all of theirs to credit card fees as well?
The point isn't earning money, but learning to sell, just at the cost of fees. And where does the risk of "losing all the money you've invested" come from? If they bring the fees to 100%?
Take it from someone who has bought and sold on Ebay recently.
The point is that you won't even be selling at the cost of the fees. Needing to make at least 10% profit due to Paypal and Ebay fees is a huge obstacle unless you are buying in bulk. In this case you are assuming a huge amount of risk for a 5-10% discount because you are probably buying 100s at a time.
The point is that you won't even be selling at the cost of the fees. Needing to make at least 10% profit due to Paypal and Ebay fees is a huge obstacle unless you are buying in bulk. In this case you are assuming a huge amount of risk for a 5-10% discount because you are probably buying 100s at a time.
> And where does the risk of "losing all the money you've invested" come from?
There's usually a window between shipping the item and receiving payment. Also, there's the risk the client will file a claim against you and get PayPal to side with him.
There's usually a window between shipping the item and receiving payment. Also, there's the risk the client will file a claim against you and get PayPal to side with him.
Well, if your local Craigslist is operating with a decent volume, you can use that. :)
there is currency and sales tax arbitrage opportunities
The value of deliberate practice applies everywhere. I wouldn't want to do this particular exercise because I did a little bit of this in 2005, and the shipping part of it was kind of tiresome and exhausting, but you can do the same thing with World of Warcraft -- practice the key skill of buying low and selling high over and over again.
I actually did that with WoW, but I skipped the whole buy low/sell high thing after discovering a cunning hack which made me ridiculously wealthy until I got to around level 50 and had to start buying low and selling high like everybody else. The big lesson I got from that: finding a smarter profit-making system than average will give you wildly above-average earnings. I suppose the little lesson is that hacks are context-sensitive.
Anyway, the point is not which WoW method makes the most gold, or whether eBay profit margins do or do not offer opportunities, the point is to use deliberate practice to sharpen your money-making skills the same way you would use it to learn scales on an instrument. I did this in 2010, with a goal to launch a new mini-business every month. Didn't hit the goal, but learned a lot, and some of the little businesses I did launch worked out quite well.
I definitely recommend following this advice. Making money is a skill like any other. There's substantial research on how to attain high levels of skill. Leverage that research to develop the skills you want. Could not be more sensible.
I actually did that with WoW, but I skipped the whole buy low/sell high thing after discovering a cunning hack which made me ridiculously wealthy until I got to around level 50 and had to start buying low and selling high like everybody else. The big lesson I got from that: finding a smarter profit-making system than average will give you wildly above-average earnings. I suppose the little lesson is that hacks are context-sensitive.
Anyway, the point is not which WoW method makes the most gold, or whether eBay profit margins do or do not offer opportunities, the point is to use deliberate practice to sharpen your money-making skills the same way you would use it to learn scales on an instrument. I did this in 2010, with a goal to launch a new mini-business every month. Didn't hit the goal, but learned a lot, and some of the little businesses I did launch worked out quite well.
I definitely recommend following this advice. Making money is a skill like any other. There's substantial research on how to attain high levels of skill. Leverage that research to develop the skills you want. Could not be more sensible.
So many gems in this article, like this:
" Whether you're playing drums or building a business, you're going to be pretty bad at something the first time you try it. The second time isn't much better. Over time, and after a lot of practice, you begin to get there."
" Whether you're playing drums or building a business, you're going to be pretty bad at something the first time you try it. The second time isn't much better. Over time, and after a lot of practice, you begin to get there."
Small point that puzzled me: He said he got a reseller's license to buy stuff for himself from distributors, and he mentioned he bought "a" radar gun. I thought distributors only sold in bulk and the discount only came out because of the bulk part.
Of course, that's "mostly" true. But he was a sixteen year old with a reseller's licence. Most people love to help a kid out. So I'm pretty sure that's what happened, he talked to them and the rules were bent.
That's an even more important lesson that should be spelled out: rules are for shy people who are afraid to ask.
That reminds me of a passage from Jobs' biography. When they started prototyping the Apple I, Woz needed memory chips. But those were expensive and available only in quantity, so they would be hard to get for a prototype. Jobs just called and got the manufacturer to send some samples. That blew Woz' mind.
That's an even more important lesson that should be spelled out: rules are for shy people who are afraid to ask.
That reminds me of a passage from Jobs' biography. When they started prototyping the Apple I, Woz needed memory chips. But those were expensive and available only in quantity, so they would be hard to get for a prototype. Jobs just called and got the manufacturer to send some samples. That blew Woz' mind.
I've done that trick with chips a few times. Manufacturers want to sell you huge bulk supplies and their costs are so low for things like simple logic or ADC chips that they'll send you a single tube of them just for asking.
You could buy one item at a time from the Ingram Micro D catalog. I believe bulk prices were even cheaper, but you could still buy items individually below retail prices.
"I realized that when customers shop for shoes, they do three things. They consider the look and style. They try them on to see if they're comfortable. And they consider the price. Endorsements by famous athletes help a lot, too. But the technology, the features, the special-testing labs—I can't remember a single customer who cared."
Does this apply to software or online services? What do those customers really care about?
Does this apply to software or online services? What do those customers really care about?
You know when you hit the Readability bookmarklet and say "god this is just beautiful", this is one of those situations.
I couldn't agree more on points 5 and 6.
I absolutely love the guys at 37signala. In particular, their writing style. I recently bought Rework and it was an incredibly easy to finish book, fairly short, but at the same time packed full of more information than books I've read that were twice as long on the subject.
I like the ideas put forth here. Sometimes we forget about these basic concepts like the fact that we deserve to be paid fairly for our work. How simple is that?! I know I lose sight of it all the time. I've been in business for a year (2 weeks is when my 1 year anniversary is) and I now charge ten times as much as I did the first month I started and I still have to raises prices a lot more. This isn't a good thing. It's bad because I obviously undersold myself because I lost sight of the fact that I'm giving something valuable to someone and I should be well paid for it. Instead I felt guilty for charging when I was enjoying my work.
Most of their writings on business is so simple but profound (to me at least). From what I've read, it all boils down to making sure you're being paid for your work, always see if there's a better way to do things, and your business should grow into itself instead of fitting into someone else's mold (e.g. Following business advice that doesn't apply to what you're trying to achieve just because everyone else is doing it and that's what you "should do". ).
I also love the fact that they're Chicago boys. I always root for the home team, haha. I have a friend who knows Jason Fried and I really hope I get an introduction one day.
I like the ideas put forth here. Sometimes we forget about these basic concepts like the fact that we deserve to be paid fairly for our work. How simple is that?! I know I lose sight of it all the time. I've been in business for a year (2 weeks is when my 1 year anniversary is) and I now charge ten times as much as I did the first month I started and I still have to raises prices a lot more. This isn't a good thing. It's bad because I obviously undersold myself because I lost sight of the fact that I'm giving something valuable to someone and I should be well paid for it. Instead I felt guilty for charging when I was enjoying my work.
Most of their writings on business is so simple but profound (to me at least). From what I've read, it all boils down to making sure you're being paid for your work, always see if there's a better way to do things, and your business should grow into itself instead of fitting into someone else's mold (e.g. Following business advice that doesn't apply to what you're trying to achieve just because everyone else is doing it and that's what you "should do". ).
I also love the fact that they're Chicago boys. I always root for the home team, haha. I have a friend who knows Jason Fried and I really hope I get an introduction one day.
s/money/wealth/g
"Making money is not the same as starting a business" -
A lot of the conversation, content, advice, etc today seems about the "art of the start" which is about fundraising, customer development, etc. Those may be necessary but definitely are not sufficient to having a business.
"...from Day One, a funded business is all about spending money...Anyone can spend money. Making it is the hard part"
Gary Vaynerchuk had a similar comment about us celebrating the fundraise. Again, fundraising is a worthwhile and perhaps useful milestone, but it's a means to an end which should ultimately be building a real sustainable business.
These points are what you'd expect from Jason Fried, but it was refreshing to see nonetheless.