Recent waves in online business world

By “recent”, I mean maybe up to the last couple of years or so. Let me start a little earlier than that.

When blogging became hip, there were programs (read: paid products) that teach you how to blog, how to write effectively, how to get your blog to be read.

And on the last note, website traffic became important. So there were programs (read: paid products) that teach you how to get traffic to your website. More importantly, how to get targeted traffic, because casual passers-by were next to useless for business purposes. Just look at all the traffic from Digg and StumbleUpon and Reddit and other social media sites. People come, look at your post, then leaves. That’s pretty much useless.

So creating an email list became imperative. You want to capture people’s email addresses so you can talk to them. If they sign up, then they want to hear from you. This is what Seth Godin would call permission marketing. But beware! There were some WordPress plugins that set annoying pop-ups that has a sign up box for people to put their email addresses. This pop-up happens either on finishing reading a post, or worse, on leaving a page. That would be “annoyance marketing”.

Then came teaching programs (read: pai… ok, you get the idea), that teach you how to teach a topic. The main one is Teaching Sells. The idea is that people will want to pay to learn something useful (and probably turn it into something profitable).

And on that note, videos were becoming popular, what with the increased bandwidth that most people have. And that some people like to see a person talking to them, instead of reading text or hearing audio files. So there was this product called Video Boss (I think). It teaches you (see previous paragraph) how to shoot, edit and upload a video. There were all sorts of information in that product, going so far as the minute details such as making your video visually interesting and lighting setups and so on.

Then there was the app craze, popularised by the iPhone. “Create apps. Become millionaire.” says some paid products (or to that effect anyway). If you’re a developer (which you probably are if you’re reading this blog), then be aware of what you’re creating. Create and sell apps if that’s your thing and that it’s working for you, not because someone says it’s the in thing.

Then there was the Kindle revolution, changing how people read. You can now self-publish on Amazon and push your ebooks out to millions of Kindles in the world. And make a bit of money from every ebook you sell.

The app thing and the Kindle thing have two things in common. They both relieve you of payment processing, and they both let you leverage an existing platform. Apple’s App Store for iPhone/iPad, Windows Store for Windows apps, Google Marketplace for Android devices, BlackBerry App World for Blackberry devices. And Kindle for well, Kindle devices.

Somewhere in those times, there was a need to know how to launch your product. I’m not talking about hype (or just hype anyway). I’m talking how to get sales from your product launch, how to get maximum impact. There’s this product called Product Launch Formula (by Jeff Walker) that teaches you how to do this.

I subscribe to many of these people’s email lists, so I get emails whenever whatever. Some are useful, some are interesting, some I just delete because it’s an obvious sales email (after you receive as many emails of such nature as I do, you can tell from the subject line or within a couple of sentences in).

There’s a point to all this. And I’ll tell you in the next post.

Online business mentorship

In case you missed it, I’m offering to help you with starting your own small online business. You don’t have to pay for it, at least not with money.

Basically, you help me write a few articles, or in whatever form of contribution you can give (I’m flexible). And in return, I help you to get your own online business off the ground. You don’t have to pay me anything, and I don’t give you financial assistance.

And whatever profits your business generates, you get to keep it. All of it. I don’t get a single cent.

In terms of financial reward, that’s a terrible deal for me. Why the hashbrown would I do it? Because I want people to feel more in control of their lives, particularly in these rough economic times. Because I want to create more entrepreneurs and self-starters. A small online business on the side can generate enough cash flow to help with monthly food and/or bills. That’s immensely helpful.

Because my time is limited, I cannot help too many people. So the maximum will be 3. I’ve already had one person interested. If you’re interested in working with me, contact me.

My first product sucked like a black hole

You’d think after 3 years of studying Internet marketing, learning e-commerce stuff such as web hosting, payment gateways, shopping carts, email autoresponders and the like, as well as reading tons of books on business, marketing, leadership, finance, and other entrepreneurial-related topics, that my first commercial online product would have succeeded beyond my wildest dreams.

It sucked. Big time.

I was also writing on this blog, biding my time if you will. I couldn’t think of a product I’d be proud to create and sell. I’ve bought some seriously sleazy Internet marketing products, and I don’t want mine to be like that. I know how to set up an online business, at least a simple one. I just needed a product to sell. As a Chinese saying goes (paraphrased from the Three Kingdoms):

10,000 things are ready. Just lack the East Wind.

The background of that saying was that preparations for a fire attack on a flotilla of enemy boats were done. Arrows were dipped in tar (or naptha or whatever fire accelerant used in the old days). The troops were massed. Instructions were passed down. Everything was ready. They just lacked the wind blowing from the east. The good guys were on the east side, so the wind would basically blow any fire towards the enemy side.

Where was I? Yes, my black hole product.

A Dungeons & Dragons character class

So I found some people who played Dungeons & Dragons. The way I play a pencil-and-paper (-ish) fantasy RPG with dice rolling, is to use my imagination. I pictured myself as a fire-wielding wizard, or sword-skilled knight, or raging barbarian.

Alas, I happened upon friends who played Dungeons & Dragons as a game of mathematical and statistical probabilities. You might think that’s funny, considering I’m a mathematician. I read fiction and play RPGs (role-playing games, see?) because they allow me to be someone I normally can’t in real life. They allow me to do stuff that can and usually defy the “real world” rules. Why would I want to reduce that to an analysis of statistical probabilities?

It turns out that a substantial group of players (not just for Dungeons & Dragons) prefer to play it that way. Why do you think there are so many multiplayer online games? Because computers can do statistical probabilities and calculations exceptionally well. They just can’t come up with unique storylines. That comes from humans.

And so, I got this idea, “Maybe I’ll create a character class for Dungeons & Dragons. But I want it to be more dramatic-focused, igniting flights of fantasy, with openings for awesome storytelling. Hey since I’m a mathematician, let’s make it unique by making it maths-based.”

And so I created Math Wizard.

The original idea was Math Sorcerer. The difference is a game mechanic of Dungeons & Dragons. Suffice to say, a wizard requires an implement (such as a magic wand) and can do spell rituals (performing magnificent feats but requiring preparation materials and time). I wanted a sorcerer because that class is more chaotic, as in “unpredictable”. I wanted to introduce chaos theory somehow into the magic spells or powers.

A friend, who’s been playing D&D for years, suggested I use the wizard instead. So I had to make a significant change to how I created the character class. At this point, you’re probably already bored by the gaming references, so I’m going to speed over this part.

Financial fiasco

If you didn’t know, RPG products tend to have amazing artwork. Players are predominantly male, and men are impressed most by visual cues.

So my first mistake was to hire an expensive graphics artist for the cover of my ebook product. That cost me over US$ 1000. I’m not sure if I can divulge the exact fee, so let’s leave it at that. Not only did it cost that much, part of the contract agreement was that I could only use that image for only 3 years. After that, I have to renew the license if I want to continue using the artwork. The artist only granted me World First Rights, meaning I’m the only one with the image in the world for the first 3 years. After that, she’s free to sell the image on her own site.

I read a boatload of information on copyright during that time.

Next, I got myself a new website. To do soft marketing, I decided to go with blogging. The idea was to write about the playing scenarios that I played with my friends. This will help with search engine optimisation (SEO) and promotional efforts and stuff.

I also hired a website/blog designer for US$ 850. You know, to give a suitably fantasy-feel to the blog, and to launch with my product. Oh Ego, thou art strong and irritating…

To help with my research, I also bought lots of game books related to D&D. Companion books to the core rule books, books with lists of weapons and accessories, books of related character classes (so I could model my character powers on them without undue imbalance of game play). I didn’t calculate it exactly, but I believe I bought a total of about US$ 200 worth of books.

The books weren’t just for my research. I bought them because I wanted to be a better gamemaster. Interesting quote from Wikipedia:

It was noted, in 1997, that those who favor their left-brain such as skilled code writers usually do not make it in the ethereal gamemaster world of storytelling and verse.

Nobody really wants to be the gamemaster and my friends actually welcomed the fact that I was open to be one for them. It turned out, my friends were divided on my gamemastering techniques. Half of them were happy they got practically unlimited freedom to express their inner character in my make-belief worlds. The other half couldn’t give a shiitake (one of them didn’t even make an effort to participate). Now I have US$ 200 of books I don’t want anymore. That is a lot of business books and fiction books I could’ve bought…

Audience apathy

The real mistake was that I didn’t understand my audience. Frankly speaking, most of those players do not want a story-centric character. Let alone one that has powers based on maths, with possibly complicated game mechanics.

The veteran players might have found my character class insufficiently powerful for them. “Too much fluff.” “Fluff” is the word used for anything story-based or description-based. It even sounds derogatory.

The amateur players might have found my character class too complicated. They can barely wrap their heads around rolling a die, figuring out whether they hit, and how to calculate the damage.

Few people cared that my character class has powers that are awesome when used in the infinite descriptive power of an imaginative mind. If a movie was made around my character class, it would have special effects and situations that made the powers look totally awesome. Have you ever noticed that the bad guys in movies never need to take a ton of hits the moment the hero(es) figure out the bad guys’ weaknesses? That’s because repetitive pummeling is boring. Those bad guys were basically defeated by awesomeness.

But, imaginative storytelling isn’t big with my role-playing gaming audience. They mostly just want to rack up damage. Who cares about hidden levers behind bookcases? Who cares if in the room, there are barrels and baskets, spikes and pikes, chandeliers and champagne glasses? Who cares if you can sling a fireball hanging upside down on a rope ladder? (“Would being upside down disadvantage me?” WHO CARES! IT LOOKS AWESOME!)

Point at enemy. Plan best statistically powerful skill to use. Pummel.

Pricing predicament

I priced the Math Wizard at US$ 7 (now $5 I think. I didn’t care to even check… *sigh*).

Here’s something you should know. Pricing sets expectations. Price is not the only thing a customer considers. And if you’re playing with only price as your competitive advantage, you’re screwed.

The Apple App Store has applications at $0.99. You can’t afford to go there, because you don’t have volume. And if you do have volume, what the hashbrown are you doing pricing so low? Create something worth much more!

The general pricing of RPG products tend to go from US$ 1 to US$ 50 (or even US$ 100), but the typical range is US$ 7 to US$ 20.

This was another mistake. My friends are content to sell products at $1 or $2. They still have day jobs, and they’re taking this as a hobby. I’m running a business. I can’t go that low. Even at $7, I would still need a lot of customers to have enough to eat.

And my target audience just didn’t want to pay my price for what I’m offering. They don’t want my product! This is the most fatal mistake I made.

Quitting and committing

It was around this period of time that I quit my job. Now I have no illusions that this RPG product of mine would rocket me into millionaire status. I quit because I wasn’t happy, I wasn’t growing (professionally, technically, career-ly) and I was eating lunch alone.

But my RPG product was to start off my online business, my foray into Internet marketing and basically where my actions and efforts have a direct impact on my ability to create wealth. So I committed myself to work at this.

So what’s the total damage? My first product cost me over US$ 2000, 2 months in writing the ebook, a few days in reading up copyright laws and regulations, a couple of weeks researching my gaming materials, months maintaining an RPG blog that I no longer have interest in maintaining.

I don’t think I made more than US$ 50 in sales.

And in early 2013, my right to use the beautifully created (and dearly priced) ebook cover image will expire. I don’t intend to renew it.

I learnt a bunch of stuff learning to manage an online business. I just didn’t earn enough to cover costs. Luckily I created another product. Luckily, that one didn’t suck like a black hole.

Anatomy of a sleazy information product

I think I’ve recovered sufficiently from my ordeal, with sufficient time having passed, that I can talk about it to you now. Back in November 2009 (judging from the file timestamps), I bought an information product. Not just any information product. It’s one of those “how to make money online” products.

SSHHHH!! I hear something… that’s the flapping sound of the spambot vultures! Uh, uh… RAINBOWS! CUTE BABIES! UNICORNS!

Ok, I think I fooled those search engines… for now…

Pitchathon seminars

Where were we? Yes, the uh, information product. I was studying how to uh, let’s use “create online business”. So I got to know this one fellow when I attended a 4-day seminar on Internet businesses. There was another 2-day seminar before that, so it’s 6-days back-to-back. The seminars were like pitchathon fests, where the speakers presented for about an hour, and then at the end, gave a sales pitch. Tens of thousands of dollars changed hands (or at least bank accounts) that day.

I’m not so befuddled by greed and desperation that I fell into their sales funnel, but I can understand the power those speakers held over a willing audience. … Actually, I bought over $400 (Singapore dollars) worth of several CDs, which didn’t turn out to be video presentations but audio ones. “I can’t see that board you mentioned because it’s an audio track!” *sigh* I also got suckered…

Anyway, back to that fellow. I came home and researched on him. And I found he offered a USD 27 dollar product to uh, create an income online. I thought about it hard, calmed myself, and decided to get it. I won’t name the guy nor the product. But a little birdie might just tell you that the product name consisted of the words “autopilot” and “profits”. Just saying.

AAHHHH flapping! Uh, UNICORNS! EXPECTO PATRONUM! *whew*

But I had rules. I would learn what his sales page looked like (so I knew why people bought, and how I wouldn’t get suckered by other such products). I would learn what his sales funnel looked like, because the only way you could learn what that was, was by actually buying a product (so you could go through the entire funnel). I would learn what product he created, and how he created it and so on.

Just so you know, if you see the current date on the page or a count-down timer to when the discount will disappear, the product is highly likely to be sleazy. It’s done with JavaScript, and its purpose is to keep the page looking current so people feel it’s “up to date” and lowers their guard. The count-down timer is to urge people to make a decision fast. “It will be gone by tomorrow!” Humans don’t usually make good decisions on the spot. Come a week later, and you might see that count-down timer still there.

I had a job back then, and so I thought $27 was a cheap enough lesson, even though in my heart, I knew it was a sleazy (enough) information product. Why did I still buy from him then? Because he was a top affiliate marketer (or at least recognised by the other people as so), so he must have done something to get there. I wanted to learn what (morally and ethical) bits of knowledge there was, and how to avoid the sleazy sides of the, uh, let’s call it “industry”.

Sales funnel and affiliate marketing

So some quick definitions. A sales funnel basically comprise of leads/prospects getting to know you, then moving on to a low-priced product, then moving ever deeper into higher-priced products of yours. The conventional definition is strangers getting to know you, then you market to them, building a relationship, and so on until they decide to buy from you, where the funnel closes.

Well, in online marketing, that’s too slow. Their sales funnel encompasses a larger view, that of loyal customers buying (hopefully) higher value (and higher-priced) products and services from you. This is itself, not sleazy. I just want you to know what a sales funnel mean.

As for an affiliate marketer, basically it means someone who sells affiliate products. What kind of affiliate products? You know those Amazon links, where if you click on them and eventually buy that product from Amazon, Amazon will pay the person who provided that link a commission? That’s affiliate marketing. Basically you’re paid a commission for selling other people’s products.

What? You didn’t know that Amazon links are like that? Man do you have a lot to learn… Do you know Google earns money primarily from advertising? “I didn’t know that!” You, my friend, really have a lot to learn…

Amazon’s commission rates are paltry. You think “up to 15%” is a lot? The common commission rate in online marketing circles is by default 50%, sometimes going even to 80% or even 100%. How would anyone earn anything if they give out 100% commission? They have an excellent backend process. They get armies of affiliates (because it’s 100% commission!) and they sell higher-priced items to the customers they eventually get. If you’re interested, you can contact me or leave a comment so I know there’s interest in letting the (tech?) community know more about this particular aspect of the (online) business world.

A $27 business lesson

So, about that $27 information product. Sales page was riddled with big, bold, or highlighted text (sometimes all 3). The headings were meant to lead the reader to excitement and eventually buying the product. The conventional wisdom then was to add so many bonuses that, and I quote, “It would be stupid not to buy” (the quote’s not from this guy by the way). I won’t go into that here because frankly I can’t remember it all, and also because any online marketer doing that now will probably have a hard time (peers and the desensitisation of the audience). Why would anyone still put up with ugly pages and sleazy products? Well, there’s the Nigerian scam. There will always be ignorant people out there.

The product consisted of a PDF file, 8 videos, and a bonus PDF (teaching you about Google AdWords). The videos were Flash videos (.swf), with an HTML file embedding them. They were created with Camtasia, a screen capture software. They were also not created by that online marketer. How do I know? Because the person speaking in those videos was a Caucasian male. That online marketer was a Singaporean Chinese. So don’t give me that calamari about how Americans have shady Internet marketers. Singapore has her fair share too.

Anyway, based on that, I believe he didn’t even create the PDF nor even the whole product. He probably dictated the content, and outsourced that content to be converted into a PDF transcript. He also got the videos outsourced. I’ve heard him speak before, and he’s not fluent in speaking English. Getting a Caucasian to voice the videos solved his speaking problem, and also that a Caucasian voice might make customers feel at ease (I believe many of the customers were American, or at least Caucasian).

During that seminar I attended, he invited his wife on stage. One of the memorable things I heard her say was “I everyday walk here walk there”. In broken Singlish, it means that she doesn’t have anything pressing to do, because her husband is raking in money. The audience, comprising mainly of Singaporeans, took to that with gusto. It was probably why that guy was voted the best speaker, even though I felt there were other speakers who did better.

So how did he rake in money based on just a $27 product? Well, it’s safe to assume that’s not his only product, and his other products might be priced higher. But still, you can make quite a sum from just a $27 product. Remember, he’s an affiliate marketer. “But isn’t this his own product?” Yes, it is. He sold other people’s products within his own product.

I want you to absorb that last sentence for a while.

How an affiliate product works

Let me give you a gist of what that product was about. To be fair, it did contain useful information, to me at that point in time at least. So what it will teach you was to find a profitable niche, satisfy that niche with your product, how to market your product, and how to automate it. And the product did all that. Peppered within the PDF file, were affiliate links to other products. The assumption is that, since the reader has bought this product, the reader “trusts” the information within, and is more likely to trust the information that those links lead to.

If those links lead to $47 dollar products, or $99 per month subscription sites, that’s not really a problem, right? Imagine say 50% commission on all these affiliate links…

Well, the product taught you how to find profitable niches, create products, market your products and product automation. But how do you go about creating that product of yours? Ah, here’s where I felt really disgusted. The author had hinted within the PDF product that he would show you a profitable niche with a hungry audience and how to easily satisfy that niche.

Near the end of the PDF, he said one of the hungriest audience is the “make money online” crowd. AAAHHHH wings flapping! CUDDLY KITTENS! FAIRY LIGHTS! PETRIFICUS TOTALUS!

*whew* And where do you get your product? Right here! This product you’re holding is the product. He even gave you instructions on how to set up your account on ClickBank (a digital product marketplace) so you can start selling right now! And you get a 75% commission out of every sale you make!

Did you see that? I’ll give you a moment to see if you realised it.

Stumped? He just recruited you to be his affiliate. Know that even though he only gets 25% out of your every sale, he still gets 50% (or whatever commission rate he got) out of every sale in the affiliate links inside the product that you are helping him sell.

This is multi-level marketing in the swiftest execution form I know. The only barrier is that ClickBank only allows up to a 2nd level tier commission scheme. This’ll take forever to explain if I also explain the tier system, so I’ll just stop here. But a cursory search online should provide you with answers.

I actually signed up with ClickBank, just to see what it’s all about. And his product was already flooded within ClickBank. The early affiliates had already gotten sales, and the (ClickBank) market was saturated with the product. So I wasn’t going to get any sales.

But it was still an enlightening process. I’m sure the guy is a nice person. I just don’t approve of some of his tactics.

WOX or online business guide?

Alright, in my quest to feed myself, I have a few product ideas down the pipeline. Now that version 2 of my spreadsheet Open XML guide is out (privately and affectionately referred to as SOX because the full acronym SOXFS is pronounced “socks fuzz” and doesn’t sound sexy), I am going to create something else.

Here’s where you can influence what I’m going to create. I’m going to ask you what would be useful to you, and I’ll go create that. More details in the following paragraphs.

Naturally, the next logical products should be Open XML guides for Microsoft Word and PowerPoint, named (for consistency) Wordprocessing Open XML From Scratch and Presentation Open XML From Scratch. Or referred to internally as WOX and POX. *grin* That’s 2 product ideas.

I’m also thinking of writing a guide for setting up a small online business, specifically for technically proficient people. You know those online business guides out there? They range from “how to make money online” to “how to make money online in niches”, from setting up small to big online businesses, from setting up businesses in the boardgames niche to the herbal niche to dating niche to the blogging niche.

You know what’s common in all of them? The authors all assume that you’re technically inept, that you don’t know anything about (or fearful of) HTML, CSS, WordPress, PayPal (payment integration), buying and setting up domains, setting up email lists, designing logos or ebook covers or website/blog layouts. The authors will give you step-by-step instructions to whatever they’re teaching and showing you, which is crucial to getting the “common” people (I mean no disrespect with that term. Would you feel better if I called them the “masses”?). They will tell you to get a technical person to help you with your technical problems. Get it outsourced, get a friend to help, but just don’t do it yourself because it wastes time.

Well, technically proficient people face different problems. Specifically, pride and fear of letting go. Our technical proficiency can be a bane at times.

“WordPress runs on PHP? I don’t know PHP, but I’m good at programming. How hard can PHP be?”

Why WordPress? What about Django or .NET Framework or whatever-new-fangled-thing-out-there? Because you’re running a business, and not indulging in your pet peeves. See the problem of pride I mentioned above. Hey, I’m a .NET programmer and the LAMP stack is extremely great at business setup ease. I don’t even deal with the LAMP stack. I let the web host deal with it. Remember, you’re running a business.

That said, any time those authors say it’s a technical thing, you can probably solve it quickly. Maybe in a few minutes. Maybe it takes a couple of hours. So depending on your technical proficiency, you can save a bunch of money from not outsourcing. But there’s the price of your time…

Anyway, that online business guide I might be writing will have everything I know about product creation, how to get product ideas, marketing, sales page writing, setting up the whole sales funnel, why you need an email list (think of it as your CRM). I will teach you the littlest number of activities you need to do to get something up and running.

Let me tell you, there are a lot of these “how to make money online” kind of guides and products out there. I’ve read and gone through many of the free offerings, whether they be blogs or PDF reports (one of the “tricks” used to get people to sign up). The current most-used method is to have a free video giving you valuable information, but you have to sign up to a mailing list. Your email address is the price to watch that video. Why do they want your email address? Because they’re building their CRM.

I’ve even bought a few of these products. There’s a traffic generation product, to generate website or blog traffic because apparently your product/service will fail without millions of views. I’ve been in 2 membership sites, teaching about how to use a blog as a means to creating cashflow and how a membership site is the greatest thing an online business owner can have. Membership sites are great because of the recurring income (see website hosting or Basecamp from 37signals or anything with a subscription model). I’ve bought sleazy products before, and I’ve bought ethical and useful products too.

There will be no startup stories, although I worked in a startup before. So maybe I can tell you about my experience. I can tell you it’s nothing like those stories in Silicon Valley… I suggest you think about a problem people are having and you solve that problem. A startup may be the solution, but you don’t need a development team, venture capitalists, and massive numbers of users. My blog doesn’t have thousands or hundreds of thousands of readers, yet I still manage to sell copies of my guide. Solve a problem people are facing.

So let me know if you’re more interested in another Open XML guide (for Word or PowerPoint) or this online business guide. Write in the comments or you can contact me privately if you want. If I don’t get any particular preferences from you, I’ll just go with whatever I can produce in the shortest amount of time and effort. Like I said, I need to eat…