Well I’ve completed a full lap around the gamut of emotions in the last 24 hours.
To start, my new VA paid for himself this weekend. During the trial week his mission was simple: free me from having to think about how much money I was making day-to-day. And it worked. Had I known this weekend what I learned today I would have had far less fun. And what good would that worry have done me?

Still, I have to face my profit and loss soberly at least once a week. And today was sobering. Here’s the bad news: I’m spending so much on ads that I’m only barely making a profit, even as sales, on a long timeline, continue to trend upward. The other unfortunate fact is I still have extremely little idea what’s going on behind the scenes.

But I’m happy now, and I don’t want to relive the mood I was in earlier today by reliving the events.

Here’s what’s good: PPC (pay per click, or Internet ads you pay for) Chasing is not the business I want to be in long term, and this week’s sales have hastened that realization. Tweaking and optimizing and re tweaking and re optimizing ads to stay ahead of the cash flow with razor thin margins is no way to do business.

The good news of the week, which ironically heightened my anxiety today, is the mastermind network I joined. Here’s the back story: there’s an entrepreneur I just hired to teach me how to Travel Hack, or use rewards credit cards to get flights at pennies on the dollar. (I mentioned my aspiration to do this in my New Years resolution post.) Since I’m one of the first batch of customers, my package included a Skype chat with the founder. I’d been listening to the guy’s podcast and studying his business model enough to know it was one I wanted to emulate: sell a premium product through the Seth Godin permission marketing model. He earned my trust because another podcaster I trust vouched for him, then I checked out his own podcast for a few months before finally purchasing his product. I digress. Anyway, at the end of the call I asked the dude if I could take one minute of his time to ask him about masterminds.

What are masterminds? Perfect moment to back up.

The internet’s biggest booster of masterminds is probably Pat Flynn. Put simply, masterminds are small groups of entrepreneurs that meet and function something like support groups or AA. Sounding out problems for each other. Offering solutions. Holding each other’s feet to the fire – accountability. Great. Where can I get that?

Turns out that’s more difficult than it looks. After I hit up just everybody I know for mastermind advice – from Pat himself to random strangers at Blue Bottle (who turned out, serendipitously just one year and two months late, to be shoe designers) – I was still at square one. The problem was one familiar to any musician, and mirrors the quote often attributed to the Marx Brothers – “I wouldn’t want to be a part of any club that would have me as a member.” There were places with easy access – like Meetup groups – and no quality control, and places with high performers getting hit up all the time by prospective new members and not interested in them at all.

The solution – to join a paid, by application, service – is one I would have been suspicious of, had not the proprietor of Abroaders, whose product I was buying, been a member himself, and been recommending it heartily. I wrote down the web address on a notepad, and went to the site, prepared to pay a small premium in order to join. (I had earmarked some funds to take Noah Kagan’s course before Noah told me if I already had a startup I shouldn’t spend my money on that!) The price was lower than I expected, so I pulled the trigger. There were two ways this could go – it could be culty and a ripoff, in which case I could cancel and not be out too much, or it could be perfect. In theory, the small admission fee might screen out unserious applicants. Oh yea – you have to apply. That’s actually a brilliant sales tactic I’ve seen used elsewhere – one I’m thinking of using myself.

Anyway, once into this private mastermind network, I started checking out the podcast of the founders, and it was like the scene at the end of Season 2 of Game of Thrones, when John Snow first lays eyes on Mance Rayder’s kingdom “beyond the wall.” When I started this blog, I naively wondered if someone could make Tim Ferriss’ lifestyle design work in real life. I assumed the “muse” case studies on his blog were kind of the apex – a woman who invented beach shoes, a dude who made an oversized yoga mat. There were a few dozen “B to C” folks making a go of it, then there was a gaggle of “gurus” – some like Pat Flynn who mostly gave away teaching for free and made (obscene) money from affiliate marketing and others like Ramit Sethi selling outrageously-priced products purporting to teach buyers how to make money online, leveraging, as his expertise based on which he’d teach you, his experience teaching others to make money online. (Yes, my head is also spinning.) Anyway, the first thing I saw, poking my head into masterminds, was a phalanx of pros, many of them in business for a decade-or-more, for whom entrepreneurship and geo-arbitrage were as natural as breathing.

As I started to explore the forums and introduce myself, one thing was clear above all else. This was a Big Pond, and I, the year-in “entrepreneur” selling drum videos and barely eking out a profit, was the Small Fish.

So much the better. With few apparent services to offer the more experienced members (an assumption I don’t accept unchallenged), I would live and die by my social skills. Start conversations. Tell a joke. Be the easy guy to get along with. Be the guy you wouldn’t mind getting stranded in a blizzard in Duluth with. (Poor Duluth, always being the butt of that illustration – wonder if somebody’s leveraged that for the tourism board – “Duluth: the spot it actually doesn’t suck to get stranded as long as it’s in July or August.”) Luckily, a lot of the other members seem to dig helping newbies, and though I wasn’t party to any of the deals I watched cut in the chat rooms (“oh I have a [coding language] guy in the Phillipines. Want to buy a SAAS company?”), people seemed glad to meet me.

Determined to learn from my friends who are social butterflies, I set out to be the most positive, most game guy in the chat room. I messaged anybody with whom I had even the most minor thing in common. In short order I’d hooked up with the New York contingent and been invited to a dinner (that I had to skip).

Then, pay dirt.

A successful entrepreneur from the UK, who was in the “productized music education space” (yes, I had to learn the lingo in a hurry, and yes, I too hate lingo, but it’s useful at times), messaged me back, dug the 8020 Drummer site, and wanted to Skype. Skype meeting set. This was what I wanted. An OG to look at my business, tear me apart, and offer me advice.

Anyway, to return to the story of my chagrin, it was after this Skype meeting with the varsity player was inked that I turned to my sales… Uggh. And the fact that I was now a part of this community made it even worse. I’ll admit the “I’m a fraud” thought crossed my mind before I banished it.

“I am NOT going to practice until I come up with some kind of solution to this,” I told myself. I stayed in the office redoing for the umpteenth time my conversion tunnels – now every ad has its own tunnel, and the main page isn’t connected to anything so I can measure organic traffic, and I put the Facebook conversion code only on the checkout pages, etc – until I had satisfied my need to do Something. Anything.

But in the practice room a really positive thing happened. I remembered Seth Godin’s words from The Dip. Commit to a Market. Be Flexible about your product. With the Friday Skype meeting looming, ideas started to come.

Obviously I don’t have to be locked into this single product, but first and foremost, I need to raise prices. When Chapter Five is released, prices are going up. How will I determine to what figure? Interview my customers. That’s right. I’m going to get on the phone and talk to my customers. Ask them what THEY want.

What’s the biggest Pain Point for drummers, or musicians? Maybe it’s not even drum instruction (though I’ll continue to offer that product because I believe in it). What about a service that hooks musicians up with end-to-end digital portfolios? Sure, I’d have to be careful of what I was promising to avoid the conundrum music schools find themselves in – “selling the dream” – that I want no part of. That would be an appropriate use for an application process, to screen for clients whose abilities would excite potential viewers of their media.

At any rate, I’m excited for what’s going to happen. Just like my approach to the drums, I’m committed to do this for real. As I say in chapter 5 (that I’m currently working on), if there’s a process that’s too messy, inconvenient, or scary for your competition, that’s your in. To reprise a Seneca quote I’ve used in too many places, The Obstacle is The Way.

Will I report earnings accurately, to the best of my ability in this post? Of course. Will I disclose all instances where I need to use “fuzzy math” or can’ t make a true “apples-to-apples” comparison? Of course. Did I delay reporting the earnings until several strategies I had hoped would work started to bear fruit.

Hell yes.

Ok, let’s get to the numbers. We’ll start with the best Apples-to-Apples numbers I can get.

The 80/20 Drummer – Sales from March 15 – April 15 – $621.67

Ad Spending over (roughly) the same period – $471

Here’s where it’s a little fuzzy – I calculated the ad spending form the Facebook invoices, which are billed on fixed dates, so unlike with Gumroad, which allows me to specify an exact period of time, I have to take what they give me. (For some reason Facebook disabled their feature that used to let you track your spending over the last 28 days right on the front page. I think I know the reason…)

To give you an idea of the trend lines, I’d like to zoom out, then zoom in.

Total facebook ad spending, last 6 weeks – $602.59

Total Revenue, last 6 weeks – $782.58

So, last 6 weeks, that’s profit as 23% of total revenue.

Last 4 weeks, 24% of total revenue.

Last 2 weeks – $322.83 revenue, $232.52 Ad spending, for 27% profit.

Am I splitting hairs a little? Yes.

Let’s also not forget website hosting at $20 per month.

Now let’s talk about why I’m not particularly concerned.

First and foremost, I’m earning profit. So while my brand is gaining thousands of views (and surpassing 1000 facebook likes), I’m still making money. In the last six weeks I’ve done a ton of “scale” experiments – let’s see what happens if I double spending on this ad, and cancel spending on this other ad completely. I got “slick” with it, installing “conversion tracking” from Faceboook on my pricing pages to track which ads were sending the most people to the pricing pages.

It’s a pretty simple application of the Pareto Principle, and one that mirrors the theme of my series – find what’s working and do more. Find what’s not working and do less.

Here’s the problem. “Working”, when you’re dealing with Facebook ads, turns out to be difficult to pin-down.

 

It was the darnedest thing. I would see that one particular ad was “converting” extremely well, so I would triple spending on that ad, and I would see that another was apparently performing “poorly”, so I’d cancel spending on that one. And guess what happened? Sales dried up.

What was going on? To pin that down I had to get away from Facebook’s analytics and use an independent source: Squarespace itself. On Pat Flynn’s advice, I created six parallel conversion ladders. Each of six different ads sent people to its own landing page, each an exact duplicate of the others save the urls. If you landed on page 5 and clicked “learn more” you’d land on More Info 5, and if you clicked “see pricing” you’d land on “pricing 5”, etc. If the ads were converting in the traditional sense, you’d expect to check back in a week and see which pages were getting the most hits. For instance, if “add to cart 5” was making it rain, you’d know ad 5 was converting well, regardless of what Facebook told you.

Are you ahead of me? What do you think I found? Well, here’s a screenshot of the analytics for the last week.

That’s a bit of a lot to digest, so let me break it down-

Home 1 – 45 hits. Checkout 1 (I count this as a “sale” because it means someone has clicked “add to cart”) – 8 hits.

Home 2 – 107 hits. Checkout 2 – 1.

Home 3 – 31 hits. Checkout 3 – 3.

Home 4 – 8 hits. Checkout 4 – 0

Home 5 – 94. Checkout 5 – 1

Home 6 – 19. Checkout 6 – 0.

Now, before we ad in ad data, let’s understand what’s happening. Hardly any checkout page has any hits except for checkout 1. So that means Ad 1 is converting the best, right? Since 8 people of 45 respondents clicked “add to cart”?

Nope.

Here’s why. When somebody lands on one of the home pages, he or she will only reach the checkout page for that conversion ladder if he/she clicks directly through to the checkout page, meaning they’re an instant conversion. And respect to those folks, because that’s no how I buy.

To get a more nuanced picture, consider this number. People who landed on the main homepage – 45 as we said. People who landed on the main “learn more” page? 68. Which means they’re reaching it from other places than the home page. The site has many detours, like “about me”, “browse free videos”, etc., and the button to return to the chapter previews from each redirects to the main chapter previews page.

Ergo, very few people are buying right away. They’re clicking around the site to get the gist, before some of them land on the checkout pages, and others leave the site…for now.

Consider a second data point. No matter what changes I made to my ads, if I cancelled one ad and replaced it with another sales would drop off for about a week. Whatever the reason, that means that people who saw most ads aren’t converting until more than a week later. Think about it – you see a product pitch, you click through to get the gist, but maybe you aren’t ready to buy. A few days later, maybe you’ve seen some videos, and decide the time is right.

The bad news about that is it means it’s almost impossible to get granular about conversion performance. If someone sees an ad, then comes back after 3 weeks to buy, who knows which ad it was. So I have to be modest about my ability to pinpoint exactly which ads are most effective.

There is an outlier, though, if you look again at the numbers. Ad 3 is producing an out-of-proportion number of instant conversions. 31 homepage hits and 3 checkouts. $25.82 total spent in the last week, for a little over $8 per conversion. But remember, that’s only instant conversions. Here’s what the ad looks like –

From a ground-level perspective, what does this mean?

Well, most ads are succeeding in generating interest, which gets people to the site, then the videos and the sales pages make their pitch, and they either buy later or don’t. But the “smart people” ad is different. Somehow, it’s creating a synergy between expectations and delivery – selecting for the exact people who will eventually buy, and giving them just the right expectations so that they know what they’re getting into. It’s a pretty flattering picture, actually, that people see an ad that says drum lessons for smart people, then, after visiting the site, decide, “yea, that’s about right.”

It looks like the trend line on conversions for this ad have gone down. Still, It’s probably worth my while to up the spending on this one to $6 daily.

Ultimately, the reason I’m not sweating the ads so much these days, beyond the fact that I’m making money from them, is twofold. First, the current incarnation of the product is only the first. I’m releasing the final chapter soon, and I may commit to a $10 price increase, which I think will more accurately reflect the value of the product. I’ll probably lose a few buyers for whom price alone is the major qualifier, but I’ve been looking at my data, and very few of my buyers are that. Higher price is not in-and-of-itself a guarantee of higher margins, but it’s a step in the right direction. Mandarin-language versions of the series, and higher production-value/updated versions are both on the horizon.

The second reason I’m “at ease” about things is that I’m playing the “long game”, inspired by Seth Godin’s wisdom in Permission Marketing and The Dip. Eventually I want ad spending to be only a small portion of my traffic, as most people find me through YouTube. I’m also pitching the mailing list almost more than I’m worrying about short-term sales, because I know “1000 true fans” whose lives my free content has enriched will both be a valuable resource in deciding what new products to launch, and also willing to buy those new products.

And if you’re an 80/20 Drummer customer, or prospective customer (or even prospective employee) reading this because you googled me, welcome. I was inspired by Pat Flynn’s example to make a lot of this stuff transparent. I’m also continuing to conduct an experiment in entrepreneurship to see how viable Tim Ferriss’ ideas are for “regular folks”.

I have a lot of thoughts about the direction I want my life to take, and some outsourcing anecdotes to share, but I think 1320 words is plenty for one post, so I’ll leave it there and be back soon with another.

Peace,

Nate

Planning to get at you (the collective “you”) in a couple of days with the earnings report, but wanted to share a little of what’s been “up”.

Beginning with this. Which made my week.

Thanks Will. Haven’t checked out Will’s videos yet but if he’s anything like most of the other folks who have written and commented, he’s probably a great player, which I find humbling and motivating.

Which brings up a point. I’m keenly aware that this blog is the third or fourth result in Google for “8020 Drummer”, which means anyone looking for more info on my product will probably see my blog on its creation, from which they’ll be able to peruse sales figures, strategies, etc. Everyone, including competition. Which makes this @#$% “real”. I’ve wagered that in the new abundance economy, “zero sum” competition is irrelevant, and businesses like mine can only benefit from transparency: Make only moves I’d be comfortable with the whole world reading about, and…be comfortable about the whole world reading about it. Sure, if I were patenting drugs or aircraft parts I’d have “trade secrets”, but music is so individual – nay, this whole yourself as brand economy that Mike Johnston, JP Bouvet, Gary Vaynerchuk, all the makeup bloggers my wife follows – is so individual, that “idea theft” is beside the point. Even if I wanted to steal someone else’s ideas I’d never do them as well as I could do my own, and vice versa.

All of which means, if you’re a fellow drummer, and 80/20 Drummer customer, welcome, and please enjoy reading about the business side if you’re interested. 80/20 Drummer is my Tim-Ferriss-inspired “muse” – the raison d’etere of this blog – and the test case that if I can become good at drums and profitable in business, truly anyone can.

That wasn’t the point of this post, but it’s an important adjunct. The point is, I’m trying to find a place where I’m giving myself the best chance of financial success without fixating on it. My focus has to be solving problems and helping people, both because that’s far more rewarding than judging myself solely by sales figures and because it ironically gives me the greatest chance of success. If I can say anything about my products, it’s that while some of them are for sale, none was produced for the money. They all have my heart, soul, and passion for discovery, even if they’re imperfect video specimens (my video editing and equipment is gradually getting better, as is my playing).

Which brings me to the Outsource portion. I finally conquered my fear of hiring help, and though I’m starting small, I’m already seeing results. I found a great VA, with enough expertise to coach me through some of the learning curve of supervising her. In the last week, I’ve outsourced a number of things – some of which immediately saved me time, others of which are investments in future time savings (training her to do things that will save me time in the future, etc) – the most important of which is worry, about the day-to-day of my sales.

It’s simple. I need to check my business email practically every day, so I can respond to customers and community members in case somebody needs help. But I can’t not see my sales when I do that. They haven’t been bad – I’m not complaining at this point – but I dislike the day-to-day focus on “how much did I sell?”. Now that I have people working for me, they can respond to most of the day-to-day stuff (for instance copying and pasting the “thankyou” letter I wrote personally into an email to everyone who buys my videos), while I focus on making videos, getting better as a drummer, and helping people. If someone has a direct question or comment, they can forward it to me.

I’ll discuss things like advertising and sales strategies at greater length later this week when I publish the monthly sales figures, but now I can truly “set and forget” all of my split-testing conversion experiments.

Finally, as the weather improves, I feel pangs of regret at not being out walking the dogs, reading a book in Prospect Park (oops I geo-identified myself;), and generally living in the present, and that focus is, I think, a positive one. It’s with the really important things in mind that I want to structure my life. Get to an income figure beyond which money is no longer a worry. Become fluent at Mandarin. Learn (and write about – stay tuned) travel hacking, using credit card rewards to travel the world and build amazing credit at the same time. Start a drumming community in Taiwan that I can retreat to every year to get paid to travel to the homeland of my in-laws. Make gonzo videos of myself auditioning for Juilliard and the Monk Institute even though I have no intention of attending either. Run experiments in low-cost musical self-promotion via the internet. Read more good books. Start the blog Stuff Post Modern First Worlders LIke to lampoon myself and my ilk.

Back midweek with the earnings report.

Peace,

Nate

Advice is a funny thing. In real time it’s hard to know on which wrong side of history you’re going to be, in hindsight, come Monday morning.80/20 Drummer will go down either as the success I’m glad I believed enough in to carry it across the finish line or the modest failure from which I was smart to move on. But in the present moment it’s impossible to tell which.

[Context for new readers – I’m about a year into my experiment with Tim Ferriss’ “muse” businesses from Four Hour Work Week.]

About half the business “gurus” you listen to will spout some anecdote or other about giving up too early. “You have to be patient,” says Garry Vaynerchuk (I’m paraphrasing). “Don’t even worry about money for the first two years.”

So the greatest sin is giving up too early, right? How many businesses that could have been great were hobbled in the early stages because their founders didn’t believe in them enough?

Then there’s the other side. “Marketing is going to be difficult if nobody wants your product,” says Noah Kagan, who routinely, in seminars, will tell attendees, “yea you should probably abandon that” after listening to them describe their businesses for a few minutes.

“You have to be high on the totem pole,” says Noah. “If people don’t wake up in the morning thinking about you, there’s probably a better line of business to be in.”

Along the same lines, Mr. Ferriss, after whom this blog is titled, preaches “invest or divest.”

“Cut losses with losers [businesses that performed poorly during validation] and manufacture winners.” Four Hour Work Week suggests testing several things in parallel, and being ruthless about paring down and divesting the ideas that don’t work. The very essence of Pareto’s 80/20 principle for which my drum videos are named.

Finally, there are a lot of scattered examples of entrepreneurs preaching unsentimental abandonment of weak-performing biz ideas as examples of inoculating oneself against failure. I don’t know to whom to attribute this, but “your first [insert number] businesses are going to fail” is also pretty common parlance.

But here’s my issue.

Either 80/20 Drummer needs time and more effort to realize my sales goals or it’s a moderately profitable stepping stone and I should see it as that and abandon it to make (at best) $60-a-week in perpetuity while I consider lower-hanging fruit.

Just for fun, I decided to role-play what a guru on either side might say. Let’s just say I’m relating my story to Gary Vaynerchuk, author of 3 NYT bestsellers on entrepreneurship. Garry built his empire the patient way. Putting up a youtube channel and waiting for it to grow. With a seeming sixth sense about the viability of his idea he invested time and money in building his brand for a decade before he ever saw any great returns. In the end, he’d built the most valuable asset you can build: an engaged community – one that waited ravenously for each new blog post or youtube video. One what was practically begging him to sell them something. Here’s what Garry would probably say to me:

How many years have you been working on 80/20 Drummer? Oh – five months? And you’re whining about low sales? How many free youtube videos have you made? Six? How many facebook followers do you have? Only three hundred? And you’re whining about low sales? Did you think this was going to be easy? Let me ask you something – do you watch TV every night before going to bed? Why? Why aren’t you using that time to bootstrap your business? Why aren’t you on social media every day, building your brand, etc.

Noah Kagan is the guy I’m picturing arguing the other side in this fantasy courtroom scene. Noah is the (much more self aware) Sherlock of entrepreneurship, and is prone to decimating people with a single (well-intentioned) remark. A series of moderate successes abandoned due to lack-of-interest characterizes Noah’s career. He’s like the Jerry Seinfeld of entrepreneurship. (And also the Sherlock. Still the Sherlock.) He’s also one of the two gurus who responds consistently to my emails. To date, he’s hooked me up with two third-party websites for sales and escrow. Here’s what I imagine Noah saying:

Ok what does your business do? What problem are you trying to solve? Drums? Ok never mind. Anyway, how did you validate this? With a landing page? Did you get on the phone and actually ask ten people in real time to buy this from you? Ok, that notwithstanding, what’s your current conversion rate? [Percentage of people who see an ad who end up buying.] Yea dude hate to say it but this has all the hallmarks of “people aren’t desperate for this product”. But let’s see if we can find something they really do want. We’ve got two hundred people in the [imagined] room right now. Show of hands – how many of you are desperate to get better at the drums? [zero] Okay that’s a data point. Let’s ask people – what do you dread most in your day? Your commute? That’s one. Negotiating with your power company? That’s another. Recruiting new agents at your company? Ok see what’s happened? We just got [insert number] of REAL responses about what people are ACTUALLY concerned about. So let me ask – if Nate offered you a product to [xyz], how many of you would pay ten dollars for it? Nate, get up here and sell it to them. etc.

So you see the issue. The chasm between the two sides of the argument is actually emblematic of two pretty different approaches to entrepreneurship. The “build it, believe in it, and they will come” model, and the “see what people want, then sell it to them” approach. If you can’t differentiate which school a guru is from his or her advice lacks valuable context.

Here’s my suspicion about the “build it, believe in it, and they will [hopefully] come” crowd. This would be viewed as blasphemous in many a positive-imagery-centered seminar room, but I think a lot of them got lucky. It’s called sampling bias, and it basically means that if you’re in a position to write a book about your success, you’ve already won, by definition, and hence we often only hear from those for whom a method or approach has succeded, even if it’s failed for many others. Yes, treatises on success from successful people are so ubiquitous that we often miss the obvious analogy – what if double-blind placebo tests of new drugs only published the positive results. (Actually, they often do. But I mean, what if it was accepted scientific practice.) If making the sign of the cross before entering the gym worked to improve physique at exactly the same rate as random chance, you’d still assume there was something to it if everyone who achieved a Mr. Universe physique, and coincidentally also crossed him or herself, wrote a book about it, and none of the “crossers” who failed did. Point being, if 10,000 people put up blogs and pour their heart and soul into their personal brands and it pays off for five of them, and those five are the only ones to write books about their success, it’s going to skew public perception about the viability of said business model.

And of course, this is a version of what’s happened. With many shades of grey. (I tend to believe that those who succeed are also keenly adaptive and combine a sense of what’s working and not working with that unflinching belief in themselves they so love to tout.) I do believe Gary would have succeeded in whatever endeavor he set out on, but more because of his ability to ferret out the monetizable facet of a business than simply because of sheer dogmatic sticktoitiveness. (Oh that’s not a real word? C’mon!)

Noah Kagan’s approach is more strictly evidence-based. Don’t leave it to chance. Don’t believe this or that philosophy. Test what works. Here’s the problem with testing – you have to agree on a definition of “works”. In the case of the 80/20 Drummer, it’s selling modestly, and profitably. It’s not converting as well as my tests indicated it would, and that, of course, means my test wasn’t terribly accurate. That definition problem dogs me in the current stage as well. “What does success look like?”

So I really ought to be asking two questions.

1. What type of sales were xyz successful brands who use a similar model to mine doing when they were at my stage of development?
2. What are the differences between my product and theirs that might cause mine to be less successful with the same effort? What are the failures, who started where I am, implemented the same strategies as my successful peers, and still failed.

Both of these questions receive some treatment in the excellent new book Decisive, which aims to codify best-practices in decision making across a range of disciplines. Another two tips that probably apply to my situation?

1. “Ooching”, or trying out a solution minutely, with little opportunity cost (wasted time or money that could have been better spent on something else). An example the authors give is quitting college to be a chef. Is it possible to work one night-a-week in a kitchen to see if you like the job while you continue to attend college? With respect to 80/20 Drummer, is it possible to try Garry Vaynerchuk’s persistence strategy while leaving enough time to pursue possibly-more-lucrative businesses?
2. Midstream abort points and predetermined metrics. “If we’re not doing xyz sales by xyz date we abandon ship.” It seems common sense, but basically means a decision isn’t the endpoint, but a midpoint. We continue to monitor things to see if they’re evolving the way we predicted, and give ourselves predetermined abort points and criteria to avoid “mission creep”, the process of moving the goal lines midgame.

So that’s what I’m going to try to do with 80/20 Drummer. I’ll publish another earnings report at the end of the week, and profits are up this month from last. But I’m disappointed with sales at this point, especially relative to testing, which indicated I should have about five sales-per-week.

One final note in this soon-to-be-2000-word uberpost. I have an inkling that in the niche I’ve chosen, people convert slowly. It’s anecdotal, with a study sample-size of just one (myself). When I click on an ad and go to a sales page, I’m often just checking out the pitch for future reference. To put in my mental roladex. I may return and purchase later. Indeed, there are two products I plan to purchase and deduct as business expenses when I get a better picture of my finances. Both of them courses.

Second, when people are parting with money for an educational product, whether that’s Noah’s $333 Make Your First Dollar course, or a $200-some TOEFL prep course, needing the product is only one link in the chain. They have to trust you. They have to believe you can deliver. There are so many people offering free drum advice – how do I know I need to spend money for this. For people in the education material/courses niche, web presence and podcasts do seem to help. Let people get to know you, week-after-week. Let them observe you using your strategies effectively – the way Greg O’Gallagher of the Road To Ripped podcast does by 6-repping 275 on the incline bench. Could I use my own strategies to hack a real-life audition? Or maybe I only need to post videos of me deconstructing seemingly impossible things, for instance this.

But I will use the “ooching” from the Decisive book. I’ll streamline the free-video-making process to the point where I can do it one day-a-week, leaving myself time to pursue other ideas.

Thanks for sticking with me through this 1940-word post. See you soon.

Update – Pat Flynn actually responded to my email asking for advice, and since I don’t want to bug him for his permission to reprint what he wrote, I’m going to paraphrase. Pat basically said most people abandon things too soon. Yes, there’s a point beyond which you should cut your losses, but most people’s radar is calibrated to the “give up too soon” side. If something’s working for you, he said, do more of that. Decide which parts are working, and scale them. An obvious takeaway is determining my exact conversion rate and profit-per-advertising dollar, and seeing if it stays the same if I double my ad budget. Anyway, I’ll be back to post more soon.

So first off, I’ve decided to follow the lead of the bloggers I respect, and be completely transparent about my earnings from passive income.

Trouble is, it’s easier said-than-done.

A lot of my “expenses” were for experiments in business, and many don’t itemize super clearly – for instance advertising charges that may have been for 80/20 Drummer, private drum lessons, and Shoe Gogo (my as-yet back-burnered import idea), and as such are difficult to represent purely as expenses related to 80/20 Drummer. In the end I decided to put myself in the shoes of a reader deciding what the cost-of-entry is, and represent things as intellectually honestly as possible.

First, the good news:

Earnings – 80/20 Drummer – $277.92 so far

I’m happy to report that 80/20 Drummer has earned me a total of $277.92 since its partial launch in December. That’s $105.99 in December, $171.93 in January. That’s modest, but considering that I launched with half-a-product in December, and now have 3/5 of a product that I’m still discounting, I expect earnings to pick up in future months.

Now, the mixed news:

Total Advertising Costs for everything – $595.56

Here are the caveats – this includes advertising for other things besides the 80/20 Drummer, and it includes advertising for the “test” phase of launch, which can be shortened significantly. (Ads began running in late September, but the product didn’t launch until December.) Below, I’ll detail how much you would probably need to spend to follow in my footsteps, learning from my mistakes.

Total Website Hosting Costs – $40

That’s four months of Squarespace at $10-a-month.

Net Profit to-date – 357.64 in-the-hole

If 80/20 Drummer earns that amount, it will have paid for the entire experiment, including advertising testing other ideas that didn’t pan out.

You may be wondering – what about commissions from the sales-hosting site, Gumroad? Gumroad takes a small percentage, but that’s already deducted from the “earnings.”

Here’s the more important part – even if 80/20 Drummer earned only a modest $170-a-month, the apparatus is cash-flow-positive, and by a big margin. Advertising costs are about $52-a-month, and hosting is $10, so that’s $108 – or 63% of earnings –  profit. Obviously, I intend for it to earn far more than that, but it’s a useful illustration, because I could go on a polar expedition tomorrow, and 80/20 Drummer, unless demand dropped off sharply, would continue to profit-in-perpetuity.

Here’s what’s hamstrung my earnings so far.

Far and away the biggest albatross on the enterprise is the partiality. As soon as I put a contact form on the site and asked customers for feedback, the fact that they couldn’t get the entire series in a single swoop was the biggest complaint. As soon as I uploaded the third chapter of five, orders picked up. Actually, if orders continue at the rate they’ve come in since the third chapter went up, February’s earnings should be a lot better than January’s. But the other factor is once all five chapters are up, the price resets to full price from the “pre order” price, which should increase earnings still more even if the fact that people can finally download all five chapters as an “impulse buy” doesn’t increase the number of orders.

Even so, if I’m completely honest, I’ll admit I’m not 100% sure of the testing process. True, I validated a product then built it and now it’s selling, but it’s a bit of a “black box” to me. How do I know, for instance, that I didn’t just get lucky, and that orders won’t simply dry up forever? (Does that have something to do with sample size and statistical significance?) Or that the entire market for The 80/20 Drummer isn’t finite, and once I reach all the people who need a copy that orders won’t dry up? Or that demand isn’t cyclical – waxing in the months before college auditions, for instance, before waning in other months. I have no idea about that, and it truly won’t be until I’ve been in business for a year and seen earnings climb to a satisfactory level then either level off or average out without nosediving that I’ll be able to say with confidence that 80/20 Drummer was a “success” and not just a “fluke”.

How To Learn From Me

But here’s what I can already tell you, if, say, you were making an instructional video series about something you were good at. (Pottery, for instance, or test-prep.)

1) If you can test something and get it to-market in 3 months, you can probably do it for around $180 investment – $50-a-month on Facebook ads (knowing what I know now I wouldn’t have wasted any time on Adwords and I wouldn’t have spent more than $2-a-day on ads until I had the best ad in place and the product launched) and $10-a-month on Squarespace.

2) Test the same product you’re going to launch – the minimum viable product. Meaning, work out how much product you need to build in the testing phase, rather than deciding arbitrarily how much, then struggling to “catch up”. The reason? You manage your customers’ expectations. Say you’re making an instructional video for pottery, just as a hypothetical. I would test short, medium, and long incarnations at various price points (for instance $59.99 for two 15-minute chapters, then $49.99 for two, then $49.99 for three – changing only one variable at-a-time), and as soon as you’ve located the minimum viable product, launch. You can add bells and whistles in beta, then charge a premium for them. If this sounds unscrupulous, just remember: your customers are telling you what they want. In this type of marketplace, the minimum viable product is by definition the incarnation people want the most. (And, for those of us who enjoy the process, and want to give people more than they paid for, there’s no reason we can’t be already selling product while we add in the labor-of-love stuff.)

3) Test ads and conversion strategies diligently and continuously during and after your prelaunch process. That means start with a Facebook ad. Leave if for a week. Try a different ad with only one variable changed. Etc. The same goes for landing pages. (Here’s my latest landing page.) Once you’ve found an optimal price and minimum viable product, change the copy one element-at-a-time. (This, by the way, is where Squarespace earns its $10/month. You can change page designs as easily as if you’re playing with post-its on a bulletin board, with no knowledge of code. No, I don’t have an affiliate relationship with Squarespace, but, Squarespace? Call me.)

Had I followed the above strategy instead of making the mistakes I made, I would be $97.92 in the black, to say nothing of what the minimum viable product and shorter launch timeline would have saved. But live-and-learn.

So there it is. Putting it on the line for my peeps. I’ll be posting plenty between now-and-then, but I’ll be back March 1 with another earnings report.

Peace,

Nate