WE LIVE IN AN AGE…
- of Irrational Exuberance
- of weekly debates about “the bubble”
- of Liquidity Events
- of developers painted as the world’s saviors painted as caged lions
- of celebrating rounds and buyouts instead of celebrating sales and profits
- of tissue-thin “journalistic” integrity (and “tech news” stories which bear an uncanny resemblance to Weekly World News)
- of being told you are too good for a job — so you should build a thing, then hope like hell a big company will buy it from you, only to end up being shackled to a job once more…
Where a round of investment is considered “success.” Where it is considered right and good to take tens of millions of dollars without ever showing a penny of revenue. Where people spend more time on Elevator Pitches and Decks and wooing investors than they do trying to meet customer needs and turning a profit.
Where everyone is trying to Go Big or Go Home.
Where it is considered gauche to simply create a valuable product and charge for it.
We live, in fact, in an age where everybody and his dog is working on a “startup.”
And where everybody believes the money can flow free, forever.
The Goal of Being Rich is to Be Free
What’s the point of money? What’s the point of wanting riches? To do what you want, when you want, how you want. To be able to choose whom to work for, whom to work with, what to work on, how, and when.
But an investment round isn’t a profit, and capital comes with strings.
Any person — or product — which cannot sustain itself on its own terms will live and die at the mercy of the money men.
It’s a simple fact: when you can’t pay for yourself, when you spend more money than you bring in, you’re either going to go bankrupt, or become beholden.
When somebody can decide your fate, decide whether you can continue what you’re doing, decide whether to sell your company or kill it, kick you out or replace you — regardless of results! — when you are strapped by spending that exceeds your income, you are not free.
And I, for one, am tired to fucking hell of watching smart, capable, productive, useful, inspired people create “startups” which fold because nobody would pay, because the investors manhandled the product and screwed things up, because they (joy of joys!) got gobbled up by Google, chewed up & shat out… locked up under vesting rules, and shut down.
There is a better way — one as old as commerce itself.
Ever since the first business was created, to do business has meant to engage in commerce — to exchange goods and services for money.
Suddenly, recently, this has changed.
Suddenly, if you tell people you’re in the business of exchanging goods & services for money, they will dismiss you with, “Oh, a LIFESTYLE BUSINESS.”
(Because living off an investor trust fund, running a “business” without ever turning a dollar of revenue, is not primarily a lifestyle choice?)
But creating value & charging your customers for it directly is the best of all business models. By linking the value created to the income generated, you forge a kind of freedom that answers only to reality, and not to the whims of the money men.
Charging Customers == Freedom
When you create value for your customers, and then charge them, you create a virtuous cycle: Market. Create value. Charge money. Turn a profit. Market. Create value. Charge money. Turn a profit.
When you create value & charge for it, you’re answerable only to your customers. The only thing that matter is: Do they buy? and Will they keep buying? and Am I making enough sales to meet my goals? Pure reality. Nobody can kick you out or shut you down.
As long as you keep making your customers happy, you can stay in business forever.
When a customer buys from you once, you’ve forged a relationship. They’re likely to buy from you again and again. You’ll have their names, know what they like, have their permission to talk to them. And you’ll have learned valuable lessons about what to create, how to sell, how to market, how to run your business.
It doesn’t matter if you achieve hockey stick growth, so long as you’re earning the kind of money you want. And when you are, if you want, you can decide how to grow your business with the cash you have on hand. If you need more cash, you can learn how to make the cash happen — sales, promotions, new products, different types of products.
You can choose to go big, and bankroll your own growth, hire a team, rent an office — and own all of the resulting upside. Or you can stay small, rake in a couple hundred grand a year, work one day a week.
You can choose to invest in more marketing, more products, to reach more customers, and earn more profit. Or you can take the money and invest in spending time on yourself, with your family, traveling, volunteering, or whatever else is important to you.
It’s your choice. Both choices are equally valid, equally right, equally moral. Both are based on the foundation of true wealth — the freedom to do what you want with your one and only life, to do it without being owned by someone or indebted to them.
And both are choices you can make in your business, if you craft it right.
Because “Real Business” is a Pretty Weak Comeback
I’m sick of “lifestyle business.” It’s derogatory, it’s said with a sneer. It implies triviality, without actually being useful as a categorical term. This particular sneer gets applied to any even vaguely tech- or internet-related business which isn’t a venture-backed startup. (A sometimes-blogger with an Adsense account is just as much a “lifestyle business” as a person who sells professional training products to small businesses? Really?)
Because of all of the above, “lifestyle business” is useless — information-free — as well as irritating.
And yet, what can you do when somebody sneers “lifestyle business” at you? Say, “Oh no, honey, I don’t run a lifestyle business, I run a real business”? That’s almost as douchey… and weaksauce at that.
Googling for “real business” doesn’t give you much love, either. Our kind of business is un-Googleable. It’s hard to hold a conversation about it. There’s no shorthand, because “business” and “startup” have been overloaded with totally different meanings than they used to hold.
We need a term we can rally around, which we can use to identify ourselves and each other, to help create, form, and find conversations.
So a year or so ago, I decided to undertake a crazy project: rebranding “lifestyle business.”
A name that encapsulating creating value and charging for it. You know, real business.
That said down with monetization… up with money!
That means self-sufficiency, creating a business that can last, and solid foundations, and doing what it takes. A name that has room for different kinds of businesses and people; a name that doesn’t refer to a specific process, a specific type of product, or a single specific viewpoint, but rather a framework of doing business.
Something catchy. And, if possible, something fun.
And so, after months of angsting, procrastinating, writing, designing, throwing out what I wrote & designed, & doing it all over again, I am so pleased to show you what I’ve been working on:
Bacon Biz: Makin’ Bacon and Bringin’ It Home
Here’s my humble proposal:
- when talking about a product-based biz
- either software (downloadable or subscription)
- or digital goods (white papers, reports, screencasts, videos, ebooks, etc.)
- which creates solid value and charges for it
- and sells a product directly to a customer — the obvious, direct customer, not advertisers
- regardless of the income level or income goal
… call it Bacon Biz (or, for the more formal among you, Bacon Business).
Don’t worry, it sounds weird at first to everyone. But it grows on you, I promise. Here’s my reasoning:
Money. “Bacon” is something we English speakers have used for ages to refer positively to money and money-earning. The phrase “bringing home the bacon” is defined as “To earn money, especially money for one’s family; to be successful, especially financially successful.”
Sustenance. Among the salted & cured meats, bacon is the king. It’s the stuff you’d put away which would sustain your family through the winter. Bacon will keep your ass alive.
(Saving) Your Ass. Ever heard the phrase “saved my bacon”? Yes. Bacon comes up again, in a very positive way.
Meaty Goodness You Can Count On. You know where you stand with bacon. Heck, you know where you stand with a pig. It used to be that every family who could, would own a pig or two. Those pigs would be the foundation of food independence. Bacon is solid — it’s not airy-fairy in the least. It’s meat. And in addition to protein, meat means “the essence of something.” The important part.
So much of “startup media” or “tech media” is airy-fairy handwaving, focusing on investment rounds instead of profits, and the crazy, freakish success stories — meatlessness incarnate — instead of how to make it happen, reliably, predictably, every day.
Bacon is everything that the startup media is not.
Bonus: the Opposite of Spam. Bacn, anyone?
For the vegetarians. The name “bacon biz” isn’t about the love of the pork product (the bacon worship that’s recently become sooo popular). It’s about the associations above.
What Matters in a Bacon Biz
A Bacon Biz dispenses with all the unnecessary trappings of “startup success” — the very trappings that people say make you a more attractive acquisition target, but by no means make an acquisition guaranteed or even likely. (Yup, you heard it here first — startup acquisitions? Totally non-deterministic. You can do everything right and get absolutely nowhere, and make no single dollar. Just making “a great product” or having “lots of activations” is not enough, and never has been.)
A Bacon Biz deals in pure reality. The only things that matter in a Bacon Biz are:
- did I create value?
- did I communicate that value?
- did I make the sale?
- did I leave the customer happy?
- did I create a path for future purchases, for the happy customer to buy more, & to refer more future customers?
- am I doing enough of all of the above (and in the right blend) to get where I want in life?
Pure reality: Did I create something people want to buy? Did I sell it right? Do they buy it? Not head count, not eyeballs, not the voodoo metrics of tasty acquisition targets, not “blending” your apps so that the ads will look more click-worthy than the actual app functionality.
These questions get at the heart of creating a sustainable, profitable business of any size.
Bacon Biz Creates Freedom
Freedom to live the kind of life you want — whether that’s as the head of a fast-growing biz with a team and an office an a payroll, or a chill, laid back biz which gives you ample free time to do what you want.
Freedom to choose how long to keep at it — with making customers happy your only true constraint. When you bankroll your own growth, you are the absolute owner. Nobody can kick you out. Nobody can force you to sell. Nobody can force your decisions.
The ultimate freedom that comes from having true wealth — true wealth being the freedoms above, plus the knowledge and skills required to create new money, or a new business, when you want it and need it. Of knowing you can rely on yourself, that you know how to make things happen.
That’s why I’m a tireless proponent for product biz. And that’s why I knew it was so important for us to have a word, a name we can use, to call what we do — so we can have a foundation to build a discussion, so we can reach out to people who may not know this kind of biz is even an option, and so we can find each other.
This idea is my baby, I’ve been circling it for years — since even before I designed, and we built and shipped our first web app, Freckle. (Which turned 3 years old — 3 years of being live, shipped, 3 years of billing — just a couple weeks ago.) Ever since I laid out my master plan.
So I’ve written about it, talked about it, bitched about it, and I’ve got a lot of material for you to explore & enjoy.
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Stacking the Bricks.
http://unicornfree.com/2011/drawing-back-the-curtain/ http://unicornfree.com/2011/7-hardass-rules-for-business-and-life/ http://unicornfree.com/2010/make-an-infoproduct/ http://unicornfree.com/2010/running-the-numbers-your-first-infoproduct/