Helmsley Media

When I did a search for “lifestyle business” I found some interesting posts discussing the term. It seems that this is something of a swear word thrown at businesses that aren’t considered “real businesses”. They describe the connotations surrounding the term as indicating that these are not real businesses, especially in the venture capital community. An “equity business” is viewed as something that is worth of investing in because the long term growth prospects are considerable, even if short term profit is extremely unlikely.

The way I see lifestyle business is as a means to create leverage for oneself. Looking at someone like Timothy Ferriss from the Four Hour Work Week for example, you see that building a lifestyle business is a great way to create a cash cow that can fund either your grander business aspirations, or it can fund your lifestyle.

The main thing I see separating a lifestyle business from an equity business is that a lifestyle business needs to be profitable very early on. If we don’t have a plan to profit from our very first customers/visitors, then it’s not worthwhile trying. In an equity business we’re more interested in growth of our customer base, in establishing critical mass and market share, then we go looking for a way to tweak things in order to reach profitability. The equity business tactics are certainly much higher risk, but also higher rewards.

I think the term “lifestyle business” is inaccurate. Of course we can provide ourselves with a comfortable lifestyle from this type of business, but I believe a better term would be cash cow. This term also provides something of a shift in our mindset when we look at it this way. Lifestyle business has connotations of sitting back and relaxing, whereas cash cow reminds us that the business is used to fund other activities within our larger operations. For example, we could look at PlentyOfFish.com and say that it is a lifestyle business, but I’m willing to bet that the owner/operator Markus Frind would look at things differently. Sure he can run his site in minutes per day (allegedly), but if you’re generating in excess of $10 million in revenue annually from such a minimal amount of work, you have a lot of options. These numbers are of course unrealistic for most of these types of businesses, but it shows the upside potential.

By applying this type of mentality to the online media business, my plan is to develop a small number of so called lifestyle businesses online. Then I will use the proceeds from these to build something focused more on equity, on building a large user base in spite of no plans for short term profitability. Sure you could do up your business plan, create a few prototypes and go the venture capital route, but then you hand over all control and a huge piece of the pie. Perhaps this is why the VCs look on these “lifestyle businesses” with such disdain, because it shows that they aren’t needed. I’m not saying that VCs are a bad thing, just that they aren’t the only choice if you want to build something big in online media.

I came across this video on JohnChow.com recently (I have embedded the video below), and thought that I would write a post about the business model surrounding the This Week In Tech podcast, but then I looked a little further into the video hosting platform that the video uses, and I got really excited. As I dug deeper into Livestream and the service that they are providing, I saw a future for online media that I really, really like.

While not necessary for all video online, there is a definite lacking of good live video content. For things like sports, or live events, having streaming video is important to a lot of viewers who won’t really care to watch after they know the outcome of the event. Livestream is an excellent service for hosting, and for mixing live video. Imagine being able to run your own cable tv channel without spending a quarter of a billion dollars! Your video can be made available on their website, or you can make it privately available only on your website where you could hide it behind a pay wall if you decided to do so. This means niche markets that were previously unservable do to their small size, can now be served profitably.

Within the video Leo Laporte talks about his experience in the traditional broadcast media world, working as a tv host for a number of different canceled shows, and channels. The point he makes that is the most important for all of this is the ability to target your audience so precisely with the tools available to us now. Previously you were paying $50CPM when only a small majority of that audience was who you really wanted to target, but now he charges a $70CPM and provides his advertisers with an absolutely laser targeted audience. Just imagine the number of different niche markets this could be applied to. I will admit that yes, creating a show that caters to tech enthusiasts is going to do very well online, but this could be repeated for several under served markets, just don’t expect to get $70CPM!

Twit.tv however does not use Livestream’s service, they use something called BitGravity, which from the looks of it provides a similar service, but does not give as much information on their website regarding how they work exactly. Livestream seems like it is geared towards a broader market with their free service, whereas BitGravity from what I can make of it, seems geared towards the higher end producers.

The next step necessary for online media is to start providing more high quality content. Of course silly YouTube videos are fun, and they get a lot of views, they don’t have the same power over users like high quality content about stuff their interested in does. If you are a badminton fan, like I am, you know that there is very little available for us. No cable channel, limited broadcast coverage (none if you live in the Americas), and not much online either. If someone were to produce half decent quality video content online for badminton fans, they would dominate the market. They would be able to aggregate all of the world’s badminton fans to their website, and not the people who just kinda like it, but the hardcore fans who will buy the stuff you try to sell them. Tools like Livestream has provided will make this so much easier for us content producers to start providing higher quality live and on-demand video.

There are of course some issues I’ve seen with Livestream. The most obvious is the quality of some of the streams. I was excited to see a tennis channel, but was immediately disappointed by both the streaming quality, and the production quality. These are issues that will be sorted out over time as bandwidth improves and as the producers learn how to create better quality productions, however something that really concerns me is the idea of relying so heavily in a start up company. If a company like Amazon, or Akamai was running this service, I wouldn’t be quite as hesitant to sign on, but with a new company like this the concern is that they won’t be around as long as you are, and then what are you going to do when you have built a business that relies on this service.

In spite of the aforementioned concerns, I would bet money on this service, and I probably will. The possibilities that are being presented to us with new services like this are very exciting. The clutter of new media is starting to take us in a direction that seems to be making some sense, and should make traditional media companies more and more nervous. Check out the video below, Leo Laporte is definitely something of a trailblazer in this new media world.

As I have studied email newsletter marketing further, and have learned about the concept of taking your time to develop a relationship with your readers, I have also begun to better understand the business models of several new media companies. Yesterday on the Facebook blog, Mark Zuckerberg announced that they have surpassed the 300 million user mark, and that they are now cash flow positive. In this story from Yahoo News, this cash flow positive metric does not include any cash from private investments, which means they are now proving their viability as a business model. For a long time there were criticisms that their business model would never reach this point, and that eventually it would all come crashing down around them. So what is their business model exactly? Are people really buying this many “gifts” for their friends?

A Look At The Facebook Layout

Taking a look at the Facebook home screen (I’ve removed personal information pertaining to my friends) you’ll notice that they actually do nothing that immediately makes them any money here. No advertisements whatsoever. Everything on this page is about making your connections within the site deeper. They want your online social life as it were, to be dominated by your Facebook interactions. The whole page is designed to get you clicking on links pertaining to your friends’ activities, the pictures and videos they post, and their status updates.

Advertising Placements

Further into the site we start seeing ads on the right hand side of the content. The same ad placement applies across most of the site, whether it is on profile pages, or photos/videos that you or your friends have posted on the site. You’ll notice in the image below that some of the ads are not in English, this is because I am currently in Denmark, and as a result I am being targeted as though I were living in Denmark.

Advertising Targeting

Advertising in a newspaper, or on a billboard we can get broad exposure, which is great for branding purposes (I suppose), but it’s not very effective at driving sales immediately. With Facebook and other social networking sites we have the ability to do some very specific targeting that traditional forms of media cannot. Let’s say for example that we ran an ecommerce store selling camping equipment and we wanted to drive more sales to our website. Using Facebook we can target people based on their geographic location, age, gender, and many more characteristics. In the picture below we have made a sample advertisement targeting people living in the United States, over the age of 21, who have listed “camping” as one of their interests. The result of this targeting is a pool of 1,725,280 Facebook users for us to target.

Advertising Pricing

After targeting our prospective customers, and receiving numbers as to how many there are on the network, we can get some approximate price quotes from Facebook. This is automated, and only an approximate. You will never pay more than your max bid, or max daily budget, but if people are clicking on your add more often then your per click cost will go down. You can also target based on number of exposures which is apparently a great way to keep your costs down if you know how to get your click thru rates up.

This model is quite similar to Google’s Adwords advertising service, but instead of targeting based on people’s search terms, you are targeting based on very specific demographics (including interests). In fact if you read up on Google’s development and their history it is strikingly similar to Facebook’s. They took quite some time to build up their Adwords service, and to get to the point where they are now. They are making money through long tail economics. Because it is so simple for them to make money on the narrowest of niche’s at essentially no extra cost, they can become a viable advertising tool for almost any business regardless of scale. What makes Google and Facebook so valuable is that they make other businesses lots of money, even though they don’t directly charge 99.99% of people who use their website and services. Give your users increasingly more reasons to stay on your site, and interact with the different elements within it, and you increase the lifetime value of each visitor/user/customer.

Of the many reasons that compel me to be an entrepreneur, flexibility/freedom ranks high on the list. I’m probably preaching to the choir here, but being able to live/work wherever I please, and to not be a slave to the clock, are very appealing to me. Before I wanted to be an entrepreneur because I wanted to be exceedingly rich, but after reading The 4-Hour Workweek I realized that most of us think this way because we believe this to be the only way to live the lifestyle we want. The all too common mistake that most of us make is to build a business that imprisons us, instead of letting us free. The focus now is to build a business around the things I love to do, and a business that requires a minimal amount of ongoing maintenance from me.

Over the years there have been a number of different business gurus/mentors that have influenced my views on how best to conduct business. It started with Robert Kiyosaki’s Rich Dad, Poor Dad and the lessons on what it is to buy and build assets, instead of liabilities. Next was Michael Gerber’s E-Myth
and the idea of a business as a system with 3 main people involved; technicians, managers, and leaders. Finally there was Timothy Ferriss’ Four Hour Work Week (which I mentioned above) and the idea of lifestyle design, or building a business as a means to finance your dreams and provide you the time to live them out.

This has been a long process for me, and I’m not all the way there yet, but as you start moving forward you can start to see the pieces of the puzzle much more clearly. It is difficult to read these books and get a sense on how you can achieve what they have when you’re at square one and they are already so successful, it can be much more helpful to learn from somebody who is somewhere in between. Over the last couple of years I have been watching the progress of a lifestyle entrepreneur with great interest, his name is Yaro Starak. Yaro has been running his blog Entrepreneurs-Journey for a while now, but it’s only been in the last couple of years that things have really picked up for him, which is reassuring to see how the progression can be quite rapid after a few things are in place.

A recent post on Yaro’s blog talks about what his life is like now on a daily basis. He wrote the same post 4 years ago, and now he is comparing the differences and showing you how things have improved for him.

A Day In The Life Of An Internet Entrepreneur 2009 Edition

It’s a little ridiculous me to say that I’m more ambitious than Yaro seeing as he has achieved a great deal more than I have at this point, but I guess it’s just that my interests are a little different. I want to be involved in Hollywood filmmaking, and you can’t really do that on a small scale. If you’re producing Hollywood films it’s a huge undertaking. My point is that a lot of lifestyle entrepreneurs are interested in freeing themselves to be able to focus on the things that interest them most. Yaro seems interested in a relaxing lifestyle, I want to free myself to engage in a very expensive passion. A great post that outlines the different types of lifestyle entrepreneurs is on Anywired.com that talks about 3 different types of lifestyle entrepreneurs.

Become a Lifestyle Entrepreneur: Complete Guide and 40+ Resources

Yaro seems to fall into the first category, the time minimalist, while I seem to fall more into the third type who does it for the love by focusing on topics of passion. I guess I could also be classified as the second type, the nomadic entrepreneur, seeing as I’m currently traveling to do my work in Denmark (although as I write this I’m in Portugal). I wrote a guest post on Yaro’s blog recently talking about how blogging isn’t just about making money, and how it’s a great way to chase dreams as well, so I suppose that sounds a lot like the entrepreneur doing it for the love of it, doesn’t it?

I have been studying online marketing for a few years now, but recently I’ve become aware of marketers like Jeff Walker, Frank Kern, Eban Pegan and others that seem to be championing direct response marketing online. Direct response marketing has been around for a long time, but since the internet has gained in popularity, and we have an ever increasing number of ways to communicate with social media, direct response marketing can be cheaper to execute than ever before.

I pulled this from the wikipedia page for “direct response marketing”

Direct-response advertising is characterized by four primary elements:
* An offer
* Sufficient information for the consumer to make a decision whether to act
* An explicit “call to action”
* Means of response (typically multiple options such as a toll free number, web page, and email.)

So I’ll do my best here to break down this process for you.

First of all we need to somehow direct people towards the website where we are making our offer. This could be done through various different means, whether it is our email newsletter readers, traffic from pay per click advertising, or even a flyer we have mailed out, but let’s pretend it is PPC for our example here. So we run an ad on Facebook, targeting people who are interested in web design, because we’re selling a course on how to make money as a freelance web designer or something like that. The ad copy (text) and image should be designed to lure in the people who we want to try sell to.

When we bring them to the website, we generally want them to arrive on either a sales page, or a sign up page where we can have them sign up for our email newsletter so that we can take our time to establish a relationship with them. Refer to my article on relationship marketing to see how this works. For this example we’ll pretend that we’re sending them to a sales page where we are trying to sell our course. This is where the offer part comes into play.

The best resource I have ever come across providing examples of different kinds of offers was Copyblogger’s 58 of the World’s Greatest Offers. Different offers have different objectives, I won’t go into great depth about the different types, look at the Copyblogger article for that, but to summarize we’re basically playing on all sorts of common human emotional triggers. These triggers are more or less universal, and while we won’t succeed in selling everyone as a result of a well crafted offer, it certainly can raise our success rates.

For our example let’s pretend that we have decided to use the “Enrollment Period” offer from Copyblogger’s list of examples (it’s an offer that increases urgency in our prospects). On our sales page we explain to our prospects that we will be opening up our doors to new customers for a limited period of time, or for a limited number of spots. If our prospects do not sign up within a week our doors will be close and they will have missed their chance. This increases scarcity, which raises the perceived value of our course, pressures our prospects to act more quickly because their is a time limit. If there was no time limit on this offer, and people could sign up at anytime, there would be less pressure to act on the offer.

At this point our offer is clear to the customer, but perhaps they still have some reservations about it, now it’s time to give them sufficient information to make a decision. Price is the most obvious of these reservations, but this can be addressed a few different ways. In our sales copy you can compare our price to something that would be of comparable value, but more expensive in price. An example could be saying how our course is only $500, but provides the educational value of a year long course at a school that charges $15,000. Suddenly our prospect is thinking you’re a bargain. Perhaps their concerned that our course won’t be right for them, but perhaps a 30 day money back guarantee will eliminate their worries (this is another offer actually, so we’re stacking offers). Finally, we could provide a brief video tour of the course, or a detailed description of what they are getting. Either way, you are providing them with enough information to make their decision.

The next step is making an explicit call to action to our prospects. I’m sure you’ve heard many sayings like “You never know what you can get until you ask”, or “You miss 100% of the shots you don’t take”, and the sentiment is always the same, you have to try in order to succeed. This is a common mistake made by inexperienced business people, neglecting to flat out ask for the sale. Either they’re nervous, they forget, or they don’t want to seem too pushy, but regardless the reason, it’s a mistake not to do it. We can do it without being pushy, in fact there probably isn’t any such thing as pushy if our offer, and information we have provided to our prospect has properly prepared them to buy. In many cases they will be aggressively seeking out how they can buy from us, and in an online situation all we need to do is the make it really obvious to them how they buy from us, and remind them of the terms of our offer. Remind them of the scarcity, and the value, and how they are going to be missing out. We’re not pushing them, we’re guiding them to the obvious conclusion.

Finally, the last step of the process is to provide them means to respond to your offer. In our case it’s most likely that we will have a buy now or subscribe now button of some sort, so that they can immediately purchase our course. Another option which will oftentimes increase response rates significantly is offering a phone number that they can use to make their purchase or make further inquiries. More tech savvy people who have been making purchases online for a longer period of time are more comfortable with online purchases, but people with less experience with e-commerce purchases will prefer, or even sometimes need to speak with a real person before making the purchase.

In a nutshell, this is direct response marketing, the future of my company, and maybe the future of yours.