Streaks In An Offline Business

I ended up damaging my finger today so typing is bit of a struggle.

I came across this tweet by Moiz Ali, founder of Native. Moiz is known for building a $100M D2C brand that he sold to P&G under 3 years. His company only employed 7 people at the time of acquisition. On his twitter, he likes to give away ideas that he thinks can grow into multi million dollar businesses. Here’s one of his ideas using one of my favorite game-mechanics.

I don’t know much about gym economics, so I don’t know how well this could work. But I do know that gym memberships are sold way beyond the capacity because most members have a poor record of showing up.

If these economics don’t work, I’m sure that a different variant of this same model will definitely work e.g $45/month fee and $1/day waiver so the gym makes $15 even if a member shows up daily. The idea is in the offering and not the pricing.

You’re rewarding your members for showing up daily which encourages them to show up. The statement that you’re making is that your gym really cares about their health as you’re willing to charge less as long the customers are healthier. The attendance rate would still only slightly improve as most members will continue to have attendance rates as before.

In addition, you’re taking 1 year commitment so you’re still likely to make money of your most regular customers.

I think it’s a great idea. What do you guys think?

We Are The Cockroaches

I’ve spent a significant part of my life running content sites that capitalized on catchy (click-bait) titles like the one above so I’ve old habits of using them time and again. The reason, however, why I chose this title for this blog is because there’s a myth that cockroaches can survive the nuclear apocalypse.

After reading about the studies that were conducted, I found out that while cockroaches can’t survive the apocalypse, just as no other biological creature can, they are 10 times more resilient against the radiations in comparison to humans. They also breed fast, so it’s a lot more likely for their generations to live despite the nukes.

I think thats us. The entrepreneurs of Pakistan. Or people of Pakistan in general. Allow me to explain please.

I’ve ranted enough times here on this blog about the lack of basic digital infra access. We don’t have PayPal for collecting small/medium international payments. We don’t have Stripe or other payment gateways, so we can’t collect payments from the credit & debit cards of the customers. We can’t sell on Amazon as a seller either. We’re not eligible for Facebook monetization programs such as Ad-Breaks / In-stream ads etc.

I can’t think of many businesses that can exist without the ability to accept payments. So, in summary, we’re in a pretty fucked up situation.

In comparison, PayPal is available in 200 countries. Stripe is available in 40 countries. Residents from over 100 countries can sell on Amazon US. Facebook monetization tools are available in over 50 countries. All the services described above are available in India & Bangladesh.

Despite that, one of the top ten largest sellers on Amazon US that is doing over $50 million dollars in monthly revenue is a Pakistan-origin company. There are thousands of sellers from Pakistan who sell on Amazon US by setting foreign companies.

The top 5 Facebook ad-breaks / in-stream publishers are Pakistan-origin companies doing millions of dollars in monthly revenue.

Pakistan also has the 4th highest number of freelancers in the world.

These people were banned from participating in this global trade. They were not given an equal playing field. They were born in poverty. There was a systemic racism in place.

While the west focused on “solving problems for others” that could make them billionaires, these people focused on solving their own problems. Problems originating from hunger. Problems originating from lack of education. Problems as basic as access to electricity. Even the middle class & upper middle class struggled with problems as little as the inability to afford air conditioning in scorching heat.

Because they were so tied up with solving problems so basic, I couldn’t and wouldn’t expect them to come up with the Googles and the Amazons of the world. I wouldn’t have even expected them to be top sellers on the marketplaces where they weren’t even welcome. But they are. Because they are resilient. If they have come this far, they will go farther too.

And so, I don’t have any doubts any longer, that Pakistani entrepreneurs will win, whether they get an equal playing field or not.

Last Mover Advantage

The first mover advantage is talked about a lot. The first mover advantage is often quite great but not necessarily game-changer. First mover advantage is both for businesses and early users of the businesses. For example, Amazon has the first mover advantage in the e-commerce space. The early sellers of Amazon also enjoyed first-mover advantage on the platform by monopolizing competitive niches. All early users of social networks that eventually go big have a huge first-mover advantage in influencer marketing.

But the last mover advantage is not frequently talked about. The last mover advantage is that you look at everyone’s mistakes, let them take risks, and you only launch a product after learning at their expense. This isn’t talked about a lot probably because it’s not fancy to talk about it and that not everyone can enjoy the last mover advantage. Often but not always, you need to be at a place of influence to enjoy the last mover advantage.

On Amazon, as a seller, you often prefer going after products that others have tried and tested for months, you learn from their experience by studying the listings, and launch in the end so you have absolutely no risk of dead or wasted inventory etc.

In a similar manner, as a seller, Amazon enjoys the true last mover advantage. After all sellers are done testing, trying, risking, & iterating, Amazon comes right in the end with their own private label product often under the brand name of Amazon Basics. Because they enjoy a position of having everyone’s data, they truly love having the last mover advantage.

Why You Should Start A Business In Recession

One of the advices that seems to come from everywhere with regards to recession is to lower your customer acquisition cost because the lifetime value of the customer is going to be lower than before. Of course this makes sense. There will be behavioral changes in the purchasing patterns as well as cut in spending. This will make your customers less valuable for you than before.

However, when the customers are spending less, and the businesses are paying less to acquire them, it makes customer acquisition cheaper for all businesses. Sure, they are cheaper to acquire because they are less valuable, but you are being given a one off opportunity when it’s over-all cheaper to start your business.

The cost to start a new business is significantly lower during a recession.

If you’re not VC funded but bootstrapped like me, this means a great deal. We’re already planning some e-commerce stores and hoping to schedule the launch right when the markets are in deep turmoil.

The Stupid Simple Scaling Strategy For Your Business

What can you 10x? What can you not? Always ask this question whenever you’re trying to do a ton of different things in your business, which by the way you should all the time.

For Facebook ads strategy, my phase 1 is always trying 10 different ad-sets targeting different interests each with multiple ads inside each ad-set.

The phase 2 is simply finding what you can 10x and what you can’t. You trim the fat, you drop the ones that didn’t work, and double-down on the ones that did. The same dead simple concept should be used in all businesses.

I spoke to a friend who helps businesses initiate email marketing automation, improve delivery rates, create email sequences that work and more. Over the years he grew his customer base to over 1000 businesses but still struggled with making the profit the way he intended. Until he asked himself the 10x question.

He simply looked into his customer-base and identified that bloggers aren’t working at all for him. They simply are churn and burn for his business. All the customer acquisition till date for acquiring bloggers has been a waste of time and money. He also looked into his highest ROI generating subscribers which turned out to be Shopify stores. He cut his spending by 100% on blogger acquisition and doubled down on Shopify stores. A few months later, he found himself making the profit the way he intended.

While it sure is dead simple and almost stupid to highlight the obvious rule, many people actually struggle with identifying the parts that can be 10x’d. It gets easier to spot those when you ask the 10x question more often. In my friends case, he had to manually dig deep into his customer-base to get the information on what type of customers worked for him and what didn’t. He did that because he asked himself that question. He also realized that he should be collecting this information about his customers as part of the on-boarding process so he can fingerprint his customers better.

As a general rule always try a ton of different things in your business, trim the fat, and double down on the rest.

Getting A World Class MBA For Free

I neither have the time nor the money to go through a traditional MBA. Instead, I’ve been doing this new kind of MBA for the past many weeks that I’ve found quite interesting & informative.

I’ve no way to gauge the actual value in comparison to the traditional MBA but since my teacher (Fred Wilson) is a venture capitalist for more than 3 decades, holds a world-class traditional MBA himself from UPenn, and is an early stage investor in many world-class companies including Twitter, I’m more than happy to learn whatever I can at my own schedule and without incurring any cost.

Most entrepreneurs and company founders are never going to need an MBA, but they are going to need to know bare bones of whatever is taught in an MBA.

This is great for that.

Breakthroughs Can Break You

Semmelweis made a breakthrough in early 1800s. He came up with what is known as the hand-washing technique today. Because of his discovery, the mortality rate in women giving birth went down from 18% to 0. Despite that, his discovery never was acknowledged. Instead he died in a mental asylum when he was 47 only.

Garry Tan did a vlog on how breakthroughs can break you and what you can do to avoid that from happening. I’ll leave you to it.

How Digital Nomads & Remote Workers Pay $0 In Taxes, Legally

The tax law for majority of the world citizens is defined by the physical presence. If you spend more than 180 days in any country regardless of what citizenship you posses, you’re liable to pay taxes in that country.

However, if you don’t spend more than 180 days in any country in any given year, your legal tax liability is almost always going to be $0. So if you’re spending 4 months in Pakistan, 4 in Thailand and 4 in Turkey, you owe no income taxes to any of these countries.

If you work as a freelancer, in a tech company, in an e-commerce business or anything that can be done remotely, you can travel the world and legally owe $0 in taxes. If you’re feeling a little adventurous you could spend your potential tax liability on your travels, at no added cost really.

This applies to citizens of most countries in the world with a few exceptions such as citizens of US who are liable to pay taxes in US regardless of their residence.

Even the workers in US can take advantage of state taxes by moving to sunny states with 0% taxes. As Twitter, Shopify have already announced going fully remote, and Facebook planning to do so smoothly over the next 5 years, I see a lot of people taking advantage of this. The biggest loser, of course, would be California.

What Happens When You Leave Your Job or Business Abruptly

I started working in my early teens. I didn’t make any significant money for doing so but it’s been a while. I received my first pay-check in 2004. I am 30 years old now and I can say I’ve worked for more years than I have not.

Despite being in a career for this long, I have never had a day job. Not even for 1 day. So I don’t know how that works. To top this off, my own company is also a distributed one with a headcount of less than 5 and a couple of freelancers. So I’ve never seen the other side of the picture clearly. May be there’s something I’m missing out in a day job, I absolutely don’t know about that.

However, thinking on those lines something popped up in my head and I thought to lay it out here.

When you leave your job abruptly, what happens? If after 7 years of working, you have decided to leave your job today, you may be given some bonuses I suppose for staying around long enough. I don’t know what that number would be but I suppose it won’t be a lot or that it would depend a lot on case to case basis.

When you’re asked to leave your job unwillingly, severance may be offered? How much does that sum into? Internet suggests 2-4 weeks per year that you’ve worked. Let’s average that out to 3 weeks. Since you’ve worked for 7 years, this could be mean you’re getting 5 months of salary without working. That’s not too bad.

What happens though when you leave your business abruptly? If it’s a very very small internet business doing anything between $10K-$100K per year. You will easily flip it for 30x monthly multiple. If it’s slightly bigger than that, but still a small business doing $100k-$1MM per year, I suppose you’ll get over 40X monthly multiple. If your business is larger, solid, more consistent and has been around for 7 years, you can hope to get paid even more than that. If it’s an offline business, I suppose you will get paid a lot more than what you get paid for internet businesses today.

Assuming you have a steady job giving you 6 figures per year i-e $100,000 USD, for having a business of the same size you’re looking at an extra $300,000+ for abruptly leaving it. I don’t think any bonus or severance pays that much. Educate me if my understanding is incorrect.

As humans, we’re so focused on the short term, living in today and thinking everything in the terms of daily and monthly gains, that we forget about the value that is created outside of today. The value that is created outside of today can often be much larger than today. A reminder of that is necessary and I make every effort to constantly remind myself.

Thanks for reading.

Do We Choose Grey Hat, Or The Grey Hat Chooses Us

I met this guy in 2009. That’s 11 years ago. He always wore a hat. He loves them.

He taught me how the systems are gamed. I loved it. We were on the Digg’s front-page everyday. We worked for the top guys. I will probably not name them today. May be they don’t want to acknowledge they gamed the system too.

The system was nothing but a recommendation engine. One of the first I had seen. When Twitter and Facebook ranked posts chronologically, Kevin Rose had the recommendation engine figured out. We just knew how to make the best use of it. Reverse engineering it, I would say.

One of our clients in the sports niche got acquired for $150 million dollars. Almost all of our clients are a multi million dollar properties today.

We even made some of our own tiny sites that we drove from Digg.

Over time, struggling between gaming the system for growth, solving an actual problem or doing both at a time, 2020 came.

Today, I’m wondering, how do you build a global business from Pakistan that could one day grow large enough?

How do you hire white people or black people or asian people or anyone to cast them in your ads? Can you? Are there any in this country? If yes, are they actors? They probably aren’t and you probably can’t.

You could outsource though. For tens of thousands of dollars perhaps? Or millions of Pakistani Rupees that you can most likely save in 5 years working in a day job.

If you’re bootstrapped, which you most likely will be because there aren’t any VCs here, what would you do? Would you get that ad made? Or would you pick a hundred ads from the internet, break them apart, and stitch them enough times that they qualify for “fair use” and become DMCA-free. This would probably cost you $50.

Forget about the ads. Not all businesses advertise and advertising could be just one of the many things about building a business. You will most likely require certain kind of digital infrastructure for sure. PayPal? Ability to accept cards i-e payment gateways? But there are none that support this region. What do you do?

You could fly to US or another supported region, setup a company, and use that to setup the rest of the digital infrastructure. But most likely you’ll never get a visa and you probably also can’t afford this travel easily. If you think I’m exaggerating, I know at least 5 tech entrepreneurs from Pakistan who have built multi million dollar businesses but were declined US visit visa.

May be you could fly to one of 31 visa free countries? But they are just as good as your own country as far as the digital infrastructure and access to business tools is concerned.

You could reach out to friends or relatives in US and form a company in partnership with them. You could use that company to setup PayPal, payment gateway and other business tools that you need to begin your business.

But there’s more. You will most likely be banned at some point once you access these business tools physically from within Pakistan.

What do you do then? You could rent a server physically in US. Remote Desktop Protocol. You could access that server remotely and run your business on that. Sounds sketchy, doesn’t it?

But you could get banned for that too. Because it’s not that big of a deal for these multi billion and trillion dollar companies to understand the difference between a data-center’s IP and that of a home in US.

So may be you could buy a Raspberry Pi that you could physically place in someone’s house in US. I’m confident none of my friends or relatives would agree to this. It would seem strange to them that why would someone want to do it? They would think that there could be something malicious going on that could land them in trouble.

You could also buy a laptop and physically place that in their houses and run your businesses with remote access. I know my cousins aren’t going to like that idea. May be yours do.

By the time you would come this far, you would have exhausted 83% of your energies in setting up the the foundation to start your business.

Thousands of entrepreneurs from Pakistan actually have to go through all of this (and more) to actually start their businesses. May be you see a scammer, but I see a victim that turned around his fate and became a hero.

So what happened there? Did we choose that grey hat, or did that grey hat choose us?