Note: This isn’t about “passive income”, but rather “income that comes after you do a bunch of work and create lots of well-thought-out processes up front”. There is a big difference.
I love to create beautiful, useful things. My creations help people, so I want to sell them. This makes me a business, which invites a slew of non-creative activities into my daily routine. And business activities can be quite tedious.
While I could release everything for free to avoid the headaches of business, the lack of self-generating finances would eventually impact the viability of my projects. I also don’t believe in running away from something if it gets hard. There’s usually another path with its own unique tradeoffs.
I wanted to make money from my projects without being overwhelmed by the business side of the equation. The goal was to remove myself from the day-to-day operations of the business as much as possible: my business should continue serving customers, making money, and marketing itself when I was asleep. I didn’t want to deal with networking, and I wanted to limit customer support as much as possible so I could use my spare time to continue building projects.
Most productized, digital businesses can automate themselves with technology. In my journey so far (which is nowhere near complete), here are a few of the things I’ve learned:
1. Onboard users like Shigeru Miyamoto.
When Shigeru Miyamoto designed the first Super Mario Bros. he needed to appeal to a generation completely unfamiliar with gaming. Thus, World 1-1 was born.
Miyamoto wouldn’t be there to hold people’s hands through playing the game, so he made sure that the level subliminally instructed the player on what they needed to do next. He accomplished this without any blocks of text or game manuals:
That video should be required material for anyone involved with automation or UX. It’s one of the most important parts of this whole post. Understanding it will at least triple your onboarding ability.
Some companies provide tutorials to users the first time they use the product. Others ask the user to schedule training sessions or watch videos (try to avoid doing this). My favorite onboarding sequences are stripped-bare products that serve a single function and use visual hierarchy to guide users through the process of using their service. If possible, make your product explain itself through use.
2. Well-designed products decrease customer support.
Excessive customer support will consume your personal time, making it hard for you to continue automating and scaling. Design your products to be self-explanatory and easily accessible.
Look at how large companies work: you’ve never talked to someone from Facebook, Netflix, Amazon, Google, or the App Store in order to use their services. But they’re still getting paid.
A random person from the other side of the planet should be able to buy, install, and use your product (in its entirety) without saying a single word to you.1
Make sure that:
- your product is ultra-simple to use
- you have an FAQ somewhere near your website’s Contact link
- over time, you add users’ most common questions to the FAQ
3. Be a service snob.
Most entrepreneurs add to overcome problems: they buy a new system, they add new features to their products, they create new internal processes. Few realize that you can also simplify.
Several years ago, I created a set of tutorials for using a particular WordPress theme. They were popular in a very niche market, and I had an opportunity to partner with a popular distributor that required me to accept PayPal. The problem was, I had built my platform and automations around another payment solution called Gumroad.
When I researched PayPal, I heard horror stories of frozen accounts, bad customer service, and clunky interfaces. My friends, who worked with PayPal in their own jobs, experienced the same thing. So I took a step back and looked at the basics:
- I wanted to provide a great product.
- I wanted to help people.
- I wanted to create additional income.
- I didn’t want it to consume my life.
My systems with Gumroad were good enough that they could withstand a huge influx of customers without faltering, so I figured there would be plenty of opportunities to build more revenue in the future that didn’t require me to open up a new can of worms. This kept my focus on providing a great product instead of maximizing revenue. So I left the PayPal deal on the table and told the distributor, “no thanks”.
This leads directly into number four:
4. Don’t use horrendous software.
Many companies tend to use bastardized enterprise software that’s more like a ball-and-chain than a pair of wings.
If your software requires training, find new software.
In an age of beautifully designed, simple apps with wonderful UX, you’ll be shooting your productivity and morale in the foot if you need to learn how to use a bloated, cumbersome tool to manage your business.
Well-designed software enables you to stay more organized, take better care of customers, be more productive, and have higher morale. Take Slack, for example:
Most enterprise software looks like a cheap 70’s prom suit — muted blues and greys everywhere. […] We gave Slack the color scheme of a video game, not an enterprise collaboration product.
[…] In Slack, every piece of copy is seen as an opportunity to be playful. Where a competitor might just have a loading spinner, Slack has funny quotes like, “Need to whip up a dessert in a hurry? Dump a bag of oreos on the floor and eat the oreos off the floor like an animal.” A strange little injection of fun into an otherwise boring day. Slack acts like your wise-cracking robot sidekick, instead of the boring enterprise chat tool it would otherwise be.
[…] Like a well-built home, great software focuses on giving its users hundreds of small, satisfying interactions. A great transition in a mobile app gives us the same feeling we get from using a well-made door handle on a solid oak door — you may not be able to put your finger on it, but man, does the house ever feel well built. Slack is really fun to use. It feels like a well-built house.
5. Be a business contrarian.
This isn’t a normal way to run a business, so don’t treat it like a normal business. If your automation is so well done that your team only needs to work a few hours per day, let them go home at lunch2. Likewise, if your team doesn’t use the office for anything but computer work, let everyone work from home3.
Allow yourself to go against the generalized advice of the business world. Technology has changed everything (from cold-calling to networking) and many people haven’t realized this yet. Allowing yourself to reason instead of blindly accepting advice can make life drastically better. Focus on the first principles of your situation and trust your intuition.
This post was inspired by my own projects, as well as an anonymous answer on Quora:
My partner and I have been working in a SaaS company we started 4 years ago (around 30 employees and lots of automation). We are Silicon Valley contrarians. Our company is still private (we didn’t take investors’ money) and was profitable since the third month after inception. We are millionaires.