Of course, "no silver bullet", especially to make big money, but I'm curious, from the perspective of someone who'd place around 1.3 on the spectrum you described.
To clarify, I put “fuck you money” at about $10m-$20m. This amount enables a relatively comfortable life in perpetuity without touching the principal.
The ways are all commonly known, but they aren’t commonly followed.
tl;dr — it’s boring.
As a tech person:
1. Learn sales.
2. Learn business operations.
3. Solve business problems, possibly using tech.
A great way to scale into this is starting an agency. The agency can do programming, web development, ad tech… anything that direction.
It’s cash as you go, you get to learn while getting paid, you get a front row seat to business problems, and you can make useful contacts.
Once you have enough cash / cash flow, you can buy or joint venture with companies that have good product-market fit but weak operations, and you provide the part that they are weak at.
These businesses are everywhere at price points in the $10k to ~$500m range (at around $500m, the big boys start getting interested).
Many of the operational failures are in sales/marketing (all aspects thereof like pricing, channels, etc.), organization structure (too many bodies), misaligned incentives, etc.
Some of the easiest changes I’ve personally made is pricing changes. Specifically, changing a large irregular one-off payment to a much lower recurring payment (one that is preferred by the customers), and adding three-tier pricing with appropriate value add at each level. Imho, these decisions were not made by the original owners because either they were afraid of change or they didn’t talk to and listen to their customers (or both).
This lets you develop a cash cow.
Hold your cash cow.
Rinse.
Repeat.
Boring, right?
If you work at a very high paying job in finance or at a place like Google or FB, I might agree with this. Some people in those groups make a lot and spend a lot (sometimes more than they make).
For people with more modest salaries, I think that this is tragically wrong for fuck you money, but probably right for relatively modest “nest egg” money.
There is a limit to how much a person can gain by cutting, but that same person is essentially uncapped in earning potential.
The easiest way to get fuck you money is to start a business that solves business problems. Knowing sales, business operations, and tech is a relatively easy way to access this market. Not easy overall, but relatively easy compared to other options that lead to fuck you money.
I'm technically a type 3, but an idiot one that wasted a lot of time chasing sexy ideas with no connection real-world problems. Trying to get better now.
Yes.
I’m basically like Andrew Wilkinson and Tiny Corp, but not as far along the curve as he is (tiny is valued at ~$500m+ USD currently).
I have some cash cows. I buy tech businesses and streamline the business side.
> but an idiot one that wasted a lot of time chasing sexy ideas with no connection real-world problems
I hope you aren’t beating yourself up for this — that’s the kool-aid that is being served, and your path is very common.
The cool thing is that you probably developed some useful knowledge and skills along the way.
For full disclosure, I “wasted” a lot of time in my former career as a research professor. I’m glad I did it. It helped me grow as a person. It gave me opportunities to learn important things that I did not know. It was where I needed to be for that part of my life.
That said, although it’s time I won’t get back, I’m very happy about the path I’m on, and I’m not sure a younger me could have navigated this path as successfully.
Cool hearing about your story! How did you get the initial capital to buy businesses, just from your savings as a research professor?
Much like Andrew Wilkinson, I started an agency. Agencies are great cash cows.
In retrospect, I could have just started with savings (I had enough). It probably would have added stress I wasn’t looking for.
That said, the agency was and is still great cash flow. It’s also a useful business space for learning how to build a business that (mostly) runs itself.
Successful tech agencies that have been started by people I know:
- programming
- digital marketing
- social media
- web development
- SEO
- data science
- AI (this is emerging)
The agency is a business that goes to other businesses and offers to solve one or more of their business problems for a fee. Sometimes these fees are one-time payments, sometimes they are recurring, sometimes both. I recommend having recurring payments being baked into your agency model.
It’s a relatively easy way to get “ramen profitable” (or more!) along with some money to invest.
would you consider a small saas product in this realm? that is, is there a clear distinction for what could be considered an agency vs a saas product? or is the line blurred in some contexts?
Cash cows don’t have to be agencies, but agencies are easier to spin up than a SaaS.
In terms of nomenclature in general, productized consulting is a thing. Whether you can spin a healthy amount of recurring revenue from it depends on the SaaS product.
First, these nice little boxes I made are somewhat arbitrary and imperfect. That said, they have a use.
Sam is currently a 3 imho, but he has enough tech chops to be able to work with 2s effectively. I think any sufficiently large tech company, especially if the tech is complex and/or consumer-oriented, needs at least one 2 and one 3. OAI is a great example of this.
I’m pretty sure Sam can’t do any of the AI work on his own, but he knows enough (or learned enough) to be able to empathize with the AI leads, clear roadblocks for them, and otherwise support their work in an effective manner.
I’m kind of biased. I think b2b sales experience selling anything is a great way to learn core business skills — things like finding the true business problem (it’s rarely what your customers say), navigating the gatekeepers and decision makers, negotiations, etc.
As I have said elsewhere, starting a small agency is a good way to start. If you know some 1s, figure out ways to do sales and business operations for them. Many 1s are terrible at sales and hate the scut work of business operations. Just make sure to charge enough so that you can pay them well and pay yourself enough to be worth your time. The key is learning how to add value above and beyond supplying access tech talent.
Note that this is not easy. There is a lot of suck in sales (and agency management), and there is a reasons sales people make a lot of money. But if you can’t do this, you probably shouldn’t start your own business. Running a business is a lot of dealing with day-to-day suck and embracing it.
> LLCs
This is a one-day or less research project.
> accounting
Word of mouth in your area. Possibly online if you’re in the US. Also possible in a day (or maybe 8 hours across a few days).
> finding lawyers
Same as accountants. The good ones will jump out at you by the way their clients talk about them with effusive praise and specific examples.
> figuring out how to hire marketing people
Ahh… now this is a tough one.
The short answer is that you have to be the 3 in marketing — that is, you need to know enough to hire and work with specialists who aren’t willing or able to do the business or tech work on their own, and you need to know enough not to be bamboozled by the charlatans (and there are a lot of charlatans in marketing/sales).
At early stages of a business, you should probably do it yourself, and you have to be good enough to do that. A 70% effort is usually enough to get a solid business revamp off the ground. This is all learnable.
Once you hit growth and revenue, you can hire an agency. The best agencies will not try to milk you, since they have enough business. Pro tip — don’t be an agency’s smallest client.
If you are savvy, you will ask around for folks who have had good marketing people, and you will get to know these folks. Tap them and/or their network when you need people.
A lot could be written about this, but I will just say that learning marketing has a huge roi, and having access to a good network of marketers also has a huge roi. Communities like the Dynamite Circle or Hampton are low key ways to help develop these networks.
This is nicely worded, but I would like to expand on it. This is coming from someone who is a businessperson who programs — I’ve been programming since I was 10, but I’ve never had the job of a programmer.
tl;dr - I think that both programmers and business people can be delusional about their value add, but folks who can do both are easier to work with, and folks who can do both have more opportunities than just hyper-growth startups.
In generalities, there are four groups of folks on the tech-business continuum.
1. Pure tech folks with little or no business acumen. Some of these folks think “sales” or “marketing” are fighting words. I find many of these folks very difficult to do business with. To be charitable to the “Ivy League” folks you refer to, they have probably met enough of these pure tech folks (some of whom are actually idiot savants) such that they erroneously over-generalize to think that all tech folks are like these pure tech folks.
2. Tech folks with business acumen. The business side usually comes from experience. I think pg advocates for tech folks who do start ups to develop into this. Overall much easier to do business with, but sometimes they make product-oriented decisions that miss the forest for the trees. The best tech businesses come from this group, but they get outclassed on the business side unless they embrace the business side aggressively (Zuck and Gates being prime examples). I think the “Ivy League” folks lose a lot of business due to lack of respect for this group.
3. Business folks with tech acumen (this is me). Great at taking over tech business that are poorly run and optimizing them either as a c-suite executive or as a buyer (this is what I do). While I don’t refer to programmers as “coders”, and I don’t treat programmers as idiot-savants, I know how to find and pay programmers to solve my business problems. Interestingly, I run into some programmers who are doing commodity work who want a percentage of the business. My offer is always the same — zero. I’m not building a startup or complex software. Their skills are largely fungible to me, since most of the value is in finding the solution rather than the nuts and bolts of development. The exception is for folks in group 2 who want to move to group 3, but at that point they become a businessperson rather than a programmer.
4. Business folks with no tech acumen. These are the “Ivy League” folks (and a lot of VCs, tbh). These are the “idea people”, the people who are clueless about tech and tech development, often the people who are also bad at business, but they happen to have access to money and/or critical buyers. Fwiw, many of these folks treat other business people even worse than programmers — they just treat most people like idiots, sans the savant. I sometimes have a hard time doing business with these folks, because they frequently don’t know the value (or lack thereof) of their business, and/or they are only looking for suckers to do business with. Many/most of these folks are all style and no substance. If they had some substance, they would be in group 3 (or try to be).
Obviously these are people on a continuum that are separated into somewhat arbitrary groups. That said, these archetypes exist.
How do these archetypes matter for tech businesses?
If you’re in group 1, you’re at the mercy of whatever business person you can work with. You hope that you end up more like Woz than most of the pure tech folks who get restructured out as the business grows. I strongly recommend that the pure tech folks focus on getting paid primarily in cash rather than equity, since any non-benevolent business person will structure out the tech person’s equity as soon as possible.
If you are in group 2, you are in a strong position to develop a successful startup or successful tech business. Just realize that you are a cog in the VC machine, and they only value you for your potential to hit home runs. You can make more reliable money (think 8 or 9 figures) in a “lifestyle business”, but it is not likely you will become a billionaire… unless you shift to group 3.
If you are in group 3, you need to realize that most of your value will be by doing very boring shit. Billionaire status is possible, but it will be a boring trip, and you are not likely to appear in any sexy tech write ups unless you engage in aggressive self-promotion in these areas (some should, most probably shouldn’t). The biggest mistake I see group 3 folks make is to think that they are in group 2, especially if/when they try to develop a consumer-oriented product without getting a group 2 cofounder.
Group 4… well, group 4 is what they are. There is some jiujitsu by which their egos and ignorance can be used for greater good. If you engage with these folks, I would only do so with that type of interaction in mind. If you engage with them on their terms, you will almost certainly lose.
Why did I write all of this? To clarify options for various level of tech people.
The HN/Ycombinator narrative to push for technical co-founders is very valid for start ups (the pg kind that are built to grow fast), but there many other ways to make money as a tech person or a tech-oriented business person than start ups (especially now in the 20s compared to the 90s or 00s), and some/many of these are more reliable ways to get to a “fuck you money” level. I don’t think a lot of highly skilled tech folks realize this.