How Music Teachers Helper Makes Money
F**king brilliant example of facing a personal problem, coming up with a solution and then selling it to everyone else who suffers from the same annoyance! In the next 30 minutes, list out every single problem you have in your life…this will be your passive income ideas juice!!
Everything from your problem using OmniFocus to eating a healthy breakfast to running stamina to booking your flights to China (yes that was my day haha), should be on the list.
I once sat down with a couple sheets of real paper and a real pen and just scribbled away for 2 hours. Really nit pick. Really get pessimistic as a mofo. You’ll be amazed how many things annoy you if you really try to think about it. When you finish, group them into categories and focus on the things that really drive you up the wall.
Now get positive again. Ideate on how to solve these problems and what products or services could provide the solution. Boom!
Anyway, back to the case study. Brandon was another one of Tim’s early 4 Hour Work Week case studies, and interestingly reappeared on the 4HWW blog not that long ago with a follow up article about how he’s continuing to kill it with MTH whilst raising a family of 3 (I think) and travelling the world non-stop. Hells yeah!
This case study excites me because it’s not your usual blog + info product or ecommerce store. It’s online software – or more correctly Software as a Service (SAAS)…hello monthly repeat earnings! Here’s the basic idea.
Brandon was a music teacher. Couldn’t track which of his students had paid and hadn’t. Decided to make a simple application to track it. This developed into something more sophisticated and soon generated $1000 a month. As of today it is a full suite of offerings, with the billing element having been joined by a lessons management element, as well as a DIY website element. Nice.
And so it shouldn’t surprise you that when he first reported on it to Ferriss back in late 2011 it was (already!) bringing in $25,000 a month…in 90% passive income/revenue. Sorry let me repeat that…dude makes basic program for fellow at-home music teachers. Dude makes $300,000+ a year with probably 70% profit margins (based on Brandon’s disclosure in the comments section of the 4HWW – $10-12k a month to run the business). Loooooove it.
With all that said, let’s get back to the idea that passive income comes from creating an asset either through money or sweat, and to create an asset (the website and software) capable of $300,000+ a year, it took Brandon 5 years! Ie huge upfront investment for long-term passive returns.
Anyways, here’s Brandon’s big takeaways; just put something together at first even if it’s not perfect (Eric Ries Lean Startup style!), create a product focused on a specific target as this makes marketing 10x easier (think music teachers, not martial arts, dance, yoga etc teachers), don’t do everything yourself but watch out for dodgy partners (keep control, just outsource), and KISS – keep it simple stupid.
On the KISS idea, Brandon said a big problem he faced was always adding features to the software as user requests came in. This clouded up the software and made it less usable, and eventually necessitated a big redesign.
I guess, this scream 37 Signals! The guys over at 37 Signals refuse to add features onto their products unless they’re absolutely needed. Their idea: never write down user requests…if they’re important enough they’ll keep cropping up and will stick in your mind.
That should stop overdevelopment. But I guess Brandon’s point brings up another big question; is creating software a truly passive income endeavor? I mean, software by it’s very nature usually requires a ton of support work (even if you do have great documentation, a help desk is normally essential) and users – these days – are always demanding improvements since they are usually paying a monthly fee for use.
Well, I think these problems can be overcome by things like FAQ library, video how-to courses, and of course hiring VAs to answer common questions; whilst the development can be done less often if you do the whole KISS thing.
Something I mentioned in the 43 Best Passive Income Streams & Opportunities article, and I’ll repeat it here; only get into the online software game if you have some tech experience. Otherwise you’ll get taken to the cleaners by a mix of programmers, designers and well, even users who ask for all kinds of crazy things (things you don’t know much about without tech experience yourself).
And you’ll struggle to get out a basic working version for little dollars (Brandon programmed the first offering himself). Alternatively, partner up with a tech savvy fellow entrepreneur, get proof of concept and go for it. I do this with Apps for example. Eeeeeasy.