Now lets be serious, when he set up the site he was working a job and building the site at night a few hours at a time. So there was more work at the start. But now he literally works very few hours. Sometimes 10-15 minutes a day to make sure nothing serious is going wrong. Peak work is 20 hours a week. So you must be thinking he has a ton of employees. Nope. Just three. And they pretty much just make sure there’s no spam or nude photo’s.

All of this comes down to business model design. He didn’t focus on high powered high feature sites that charge fees. In fact he did the exact opposite. Took a service that usually charged a fee, the dating website, and created an easy site for free. Then he put on adsense (google advertising – available to anyone) and bang he’s making money.

There’s very few sites that make it this big, but I have to say the business model is very appealing. Start a simple site while working, earn ad revenue instantly and see if it grows to the point where you can work on it full time. Or in Markus’ case, a few minutes a day.

So take a book from Markus Frind’s library and build a rock solid business model. More time and hard work doesn’t always mean the best payoff.

-Craig Sharkton

So I check out their website and see if you can buy one of these stores. And no. They don’t like to franchise. What does this mean. They make so much money on their own they can expand all by themselves. Who else was like this? Starbucks. So next time you’re in London take a gander at one. And copy their business model where you are. Or at least invest in them when they go public. Because once they do, they’re going to explode.

Have a good one,

-Craig Sharkton

Over 26 million people visit Craigslist every month and this translates into an estimated $81 million in sales for 2008. Not bad for a small company that’s still private (although eBay now owns 25%). So how does Craigslist do this? I believe a large part is trust. Of course their site is easy to use, free for most postings and quick because of the lack of images. But it’s also trustworthy. Craigslist is the anti-corporation, they are out there to provide a service, not make the most they can off of you and people love that.

So next time you’re thinking of what you can charge your customers, think instead of what you can provide them with. The resulting changes may just create the buzz and goodwill that your company needs to jump sales year after year like Craigslist.

-Craig Sharkton

She markets it at $50 and it’s now carried by 46 worldwide distributors. Last year she sold around 826,000, which would be over $20 million in sales at the wholesale price. So Metrokane built a product into $20 million in sales in seven years off of a “stolen” idea. Just fabulous.

Another genius idea Kane employs is branding similar products at different price levels. The Houdini is a Rabbit knock off that retails for a cheaper price, but it was created by the same company. They knew someone would create a cheaper similar product (like they originally did to the Screwpull) so they acted first, cannibalized a bit of their sales, but gained overall. Genius.

So next time you think you need a great idea try looking through patents that are about to expire and see if you can find some buried gold. You can start by checking out the US Patent and Trademark Office.

-Craig Sharkton

I have to say it’s interesting to hear someone worth half a billion saying that he’s rarely happy except when he’s writing poetry. I mean we all start small businesses to get out of working for the man and in the hopes of striking it big. But to hear someone who made it say that it’s a waste of time and would gladly give it all up to shave a couple decades off his age is quiet eye opening. I mean wouldn’t most people trade five years for several million dollars?

There are tips though on how to succeed in business throughout the book. Like how ownership is the most important factor, never give up a percentage of your business that you don’t have to. Split up the annual profits to create incentive, but if anyone wants a slice of ownership you have to turn them down. Most of the other tips are common stuff: hire people smarter than you, work hard, look for opportunities where the money is, etc.

However, the most interesting part about the book is the constant undertone that getting rich is not really worth while. So maybe next time you get up at 5am to start working take a minute to think… If half a billion doesn’t make you happy, what will.

-Craig Sharkton

He started the business by taking 200 samples of an Argentinian shoe back with him to the US and started going door to door. He made it in a few botique shops in LA, but the real break came when he made the weekend edition of the LA Times. By the end of the weekend he had $88,000 in orders.

From there the company has exploded. It’s such a good story that it’s been covered by Time, Elle, Vogue and even Oprah. This has led them to sell over 60,000 shoes since May 2006 and they’re looking at selling 200,000 shoes this year. At about $48/shoe that’s $9.6 million in revenue in their second full year of business. Great growth and it’s all based on a model that will give back to the world indefinitely.

They’re now selling t-shirts and even a tote bag that if you buy will support a child to go to school and eat for a year. And they’re making money doing this. And having a great time. So this all brings up the question can you build a profitable business while helping the world. Absolutely. I’ve been trying to think of ways you could mimic this model, but it’s difficult.

Originally, I thought you could replicate it by selling LED lights. They’re low powered and last for years so they are being used in location rife with poverty so people can study at night. However, they are expensive and you can’t differentiate them enough. That’s the key I’m sure to this model. You need a product that you can differentiate. Toms Shoes are similar to a lot of shoes made out there, but they’re branded and come in different styles so people will spend a lot more to buy them.

If you have any ideas on products that could support this model leave an idea, or let us know what your experiences have been with social entrepreneurs. I can’t think of a better mark to leave on the world than an organization that supports itself and helps the world.

-Craig Sharkton

In fact Steve Jobs, the founder of Apple, wakes up every morning since he was 17, looks into the mirror and asks himself “If today were the last day of my life, would I want to do what I am about to do today?” If he says no too many days in a row he knows he needs to change something (link to full speech at bottom of post).

There’s a ton of ways you can reduce your work load, but I thought I’d list three that successful entrepreneurs used.

1. Leave the employees in charge: Paul Orfalea, the founder of Kinko’s, was expanding his company and kept getting calls about every little decision. Finally, he realized he’d never be able to grow the company if he had to do everything so he left. He jumped in his car and went on a vacation. The first week he said people just said “he’ll come back,” week two was “Oh my, he’s gone.” Then in week three something magical happened. The employee’s handled everything. It took Paul a bit of time when he came back to get over the fact that his employee’s didn’t need him. But he was able to take longer vacations and his employees were empowered, a clear win for everyone.
2. Fire a customer: Tim Ferris ran a nutritional supplement website and was working himself insane. One of the tactics he used to go from working 14 hour days to 4 hours each week was to evaluate his customers. He profiled the most profitable ones, then searched for more of those. He also evaluated his most stressful customers who wasted his time and either stopped calling them or simply fired them. He’d tell them that if they weren’t going to follow his process or respect him to go somewhere else. A bit gutsy, but it worked for him. He’s got a great book out, check it out if you have time – The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich.
   
3. Design a better business model: John Chow is another interesting entrepreneur. He started a tech related blog and quickly realized people were interested in how to make money with blogs. A few years later and presto he writes a couple posts a day for his site johnchow.com and last month brought in over $40,000 in ad revenue. With almost no costs, he’s living the life. He’s totally mobile and although he doesn’t state how much he’s working… I can almost guarantee it’s less than you.

So look in the mirror tomorrow and pretend it’s your last day here. Are you looking forward to the day? If not perhaps it’s time to see if you can reduce the hours you spend working. Start looking for little ways to leverage the internet, your employees or your assets. Hire an outsourcing company. Leave a promising employee in charge for a couple weeks. Redesign your business model.

If you have any tips of your own please leave them as a comment. I’m sure the other business owners are interested to see how you’re getting home early or taking that vacation to Europe.

-Craig Sharkton

Related articles – Steve Jobs Commencement address

Fred Franzia is another entrepreneur who always related business to war. He’s the man who’s turned Bronco Wine into the fourth largest wine company over the last 30 years. He hates his competitors and takes pleasure in underselling them and then buying their bankrupt businesses. Okay, I don’t think everyone should act the way he does, but he’s very good at what he does.

Bronco specializes in making good wine very cheap. His leading brand Charles Shaw goes for $2 a bottle and has been nicknamed “Two Buck Chuck” by his customers. He thinks people are crazy to pay more than $10 for a bottle and even has a $6 cabernet made from the same grapes as competitors $75 bottles.

He keeps his costs low by watching every dollar. When the guy who rents the portable potties for the field workers raised his prices, Fred fought back. He bought his own. In his words “To you, that’s a sh*tter, to me it’s a profit center. It’s a sh*tter war. You got to have war at all times.”

So even though I wouldn’t want to work the 100 hours a week that Fred does, or have an entire industry enraged at me because of my attitude towards them, but I have to respect a man as tenacious as him. He’s a shrewd businessman and patient, as he says “Success is easy if you think of it like rust; It’s inevitable if you keep at it.”

-Craig Sharkton

I think that’s so important, I’ll repeat it. He invested in other companies. So often entrepreneurs keep putting money back into their businesses because that’s where they think they can get the best return. But if you’re in an unattractive industry it may be better to put the funds into a different venture or investment.

For people looking at starting a small business this should be one of the areas you investigate in depth. For every dollar you put into your business what can you expect to take out? After all, your goal I assume is to take money out of the business, not endlessly toss money into it.

So what type of business did Buffett buy with the cash flow from the textile plant? Well, the perfect example would be See’s Candy. See’s makes boxed chocolates, an industry with a 2% growth rate, but does not require large investments and therefore has been extremely profitable. See’s has grown from $30 million in sales ($5 million in profits) to $383 million in sales ($82 million in profits) from 1972-2007, which is quite extraordinary. But then look at the cash taken out of the company. Buffett has taken $1.35 billion in cash out of See’s over the 35 years.

And to relate this to the entrepreneurs out there, imagine buying a business for $250,000, have profits grow from $50,000 to $800,000 over the 35 years and still managing to take $13.5 million out of the business over your lifetime. That’s the same economics as See’s Candy on a smaller scale. Simply amazing.

See’s performance is due to the fact that it required $8 million in capital in 1972 and only $40 million today. Everything else has been put into the bank (well actually other investments). So when you evaluate businesses look at what you can take out of the business, not just what it takes in.

For access to one of the greatest business minds of our generation check out Warren Buffett’s letters to the shareholders.

-Craig Sharkton

Since consumers are voting on the t-shirts, you know which ones will be popular, ensuring everything sells out. The designers get a modest $2,500 if their shirt is chosen and they even get people to send in pictures of themselves so they don’t need to hire models (they’ll give you a $1.50 credit on your next purchase per picture). They don’t spend any money on external advertising, since the designers word of mouth brings in people much more effectively.

This all leads to a growing business that made a profit of $6 million on $18 million in sales. Margins that would make most companies the envy of their competitors. If you can create a company that has its consumers: create, advertise and sell your wares, you’ll be in the money before you know it.

-Craig Sharkton