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Engineering a “Muse”: Case Studies of Successful Cash-Flow Businesses

Guest post by: Timothy Ferriss

Article Overview: This post has been in the works for a while. One common challenge for readers of The 4-Hour Workweek is the creation of a “muse”: a low-maintenance business that generates significant income. Such a muse is leveraged to finance your ideal lifestyle, which we calculate precisely based on Target Monthly Income (TMI).

Engineering a “Muse”: Case Studies of Successful Cash-Flow Businesses

This post has been in the works for a while. One common challenge for readers of The 4-Hour Workweek is the creation of a "muse": a low-maintenance business that generates significant income. Such a muse is leveraged to finance your ideal lifestyle, which we calculate precisely based on Target Monthly Income (TMI).

In the last four years, I've received hundreds of successful case studies via e-mail, and more than 1,000 new businesses were created during a recent Shopify competition, but I've presented only a handful of a case studies. Here are a few dozen we've covered:

How to Sell 10,000 iPad Cases at $60 Each (and Other Lessons Learned)

18 Real-World Lifestyle Design Case Studies [VIDEOS]

In this post, I'll showcase four successful muses inspired by The 4-Hour Workweek, including lessons learned, what worked, and what didn't...

In the comments, please let me know: Is this helpful, and would you like more of these posts? What's missing? If you'd like to submit your own muse for being highlighted, please see the end of this post.

All suggestions are welcome, and I hope you enjoy these as much as I did.

"EarPeace" by Jay Clark

Describe your muse in 1-3 sentences.

EarPeace improves any loud live music or nightlife experience. EarPeace is high fidelity hearing protection that turns down the volume without distorting the sound, it's virtually invisible, comfortable, reusable, and comes in fantastic packaging.

What is the website for your muse?

http://www.earpeace.com

How much revenue is your muse currently generating per month (on average)?

$5,000 - $10,000 per month

How did you decide on this muse?

My muse solved my problem. I spent carnival in Port of Spain with my beautiful Trinidadian girlfriend and danced for days in costume next to tractor trailers converted to giant rolling speaker stacks. We recovered in Tobago and the ringing in my ears was louder than the waves. I turned to her and asked if she had ever seen ‘stylish' hearing protection. She hadn't. Right then I found my muse.

After all the research, I was confident I could inexpensively design a better product, deliver superior marketing, and construct an infrastructure that would run itself. EarPeace solved the three major problems that people have with hearing protection - it destroys sound quality, looks stupid, and isn't comfortable. When you use EarPeace, live music is crystal clear (you can even hear your friends), people can't see you wear it (color of your skin and very low profile), and they are very comfortable (and reusable - high value!). I could also wrap it in beautiful packaging and keep a reasonable margin. And, it's small, inexpensive to ship, and easy to maintain inventory. EarPeace has proven itself a winner.

What ideas did you consider but reject, and why?

I was on the verge of opening a yoga studio in Amsterdam. In January 2008, I flew to Amsterdam to do the final walk-throughs, meetings with business attorneys, real estate agents, real estate attorneys, pay roll processors, personnel managers, accountants, special accountants, other people to help me stay in code for the byzantine list of regulations around hiring people and paying them, and the list goes on... TO OPEN A YOGA STUDIO (insert total exasperation). I read half of "The 4-Hour Workweek" on the way out, and the other half on the way home. I knew right then that the yoga studio (especially in Amsterdam) was not the way. I spent the first two weeks of October 2008 in southern China doing factory tours for EarPeace.

What were some of the main tipping points (if any) or "A-ha!" moments? How did they come about?

The main A-ha moment was the realization that I couldn't be tied down to a space. A yoga studio (as much as I love my practice) makes you immobile. I grew up overseas and the wanderlust is still strong. I have to run my business from anywhere. EarPeace allowed me to do that.

The other tipping points were making the right decisions about staying tethered to the corporate mother ship. Overdoing it on vacation and taking as much unpaid leave as possible were critical.

What were your biggest mistakes, or biggest wastes of time/money?

Over-ordering inventory. This was the biggest mistake. As soon as you get your first run of product, you are already tweaking it and making it better. Bargain and promise the moon on future sales, and keep the inventory low. On the second order (blister packed EarPeace for venues), I over did it. Thank BUDDHA the initial run of boxed EarPeace for internet sales are still almost perfect.

What have been your key marketing and/or manufacturing lessons learned?

Ask as many smart people for their opinion as you can. The forest quickly gets lost for the trees when you are in the thick of operational, distribution, creative, and financial decision-making. Give 5% of the company to a couple of clutch advisers that will give you 1-2 hours per week to review strategy, make introductions, and help drive sales. You CAN NOT do it all by yourself. There are so many marketing communications decisions that make it impossible to do everything alone. And, as quickly as possible, hire someone part-time to do continuous PR.

How did you find your advisers, and what would be your advice to first-timers?

I was lucky enough to have a robust network of professionals and friends that I could turn to for quick advice during ramp up and launch. My Thunderbird MBA network is INVALUABLE. However, if people don't have those sorts of people on speed dial, it's then a matter of networking. The American Marketing Association is cheap to join and has several meetings a month where you can meet smart people who are interested in helping budding entrepreneurs. The SBA has formal adviser programs. Kauffman Foundation will help connect people. There are lots of resources, but you need to get out and have lots of coffees, dinners, and beers until you find someone who you trust, who demonstrates the types of core competencies you need, and is willing to be involved / mentor you through the mountain that is starting a business.

How did you find your manufacturer, and what would be your advice to first-timers?

I found my manufacturer through Alibaba.com and GlobalSources.com. I contacted all of them through my business email, because using a Gmail account will not get you serious feedback. I started off with a list of 20+ potential suppliers and sent them all emails. Based on how quickly they responded, the quality of their English, and their willingness to answer my questions, I narrowed that list to about ten. I sent those ten an NDA and narrowed it further when there was no response or issues with confidentiality.

Then I asked them to demonstrate that they could create what I wanted through mock ups, and further narrowed the list to about five. After that, I used my MBA network to help find an interpreter that could help me with the factory visits and negotiations. This was critical - you don't know what you don't know, and there is a lot you don't know about doing business in China. Having someone who speaks the language and can drive the negotiations is worth the money. After I found my interpreter, I got on a plane and went to Hong Kong.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

- "A Ringing Endorsement for Earplugs" on Mashable

- Patrick Dierson on the Jay-Z tour

- The Bowery Presents venues in NYC carry EarPeace

- Thievery Corporation has custom EarPeace

- I am making custom EarPeace for SXSW

These all happened through adviser introductions, lots of blind phone calls, and PR. And, being out there. EarPeace had a presence at every major music festival in the late summer. That is a phenomenal work lifestyle.

If you were to do it all over again, what would you do differently?

I would have brought on advisers sooner, ordered less inventory to enable faster product innovation, and spent more money on PR.

What's next?!

EarPeace is a great product. I am very proud of it. It really works and it's designed uniquely enough that competing ‘high-fidelity' products just can't touch it for normal lifespan. We're going to transition EarPeace into a consumer, mass-market product. Right now it's still relatively niche, but EVERYONE needs this. Foam earplugs are great for sleeping, for instance, but you need hearing protection when you are out and about all the time. Whether it's the movies, the basketball stadium, a loud bar, a restaurant, or the subway. We still need to hear, we just need to turn down the volume. EarPeace does that, discretely, and in a high value way. I want EarPeace at CVS, Walgreens, and Wal-Mart by the end of next year.

Then, I'm taking a break. I'm going back to my favorite Vipassana retreat in Thailand. When I come out after 10 days of no speaking, 10 hours of meditation and 2 hours of yoga per day, and fabulous vegetarian food... the next muse will have manifested itself.

"Summer Jasmines" by Alissa Kraisosky

Describe your muse in 1-3 sentences.

My muse is a foldable, compactable evening and pedicure sandal. It is patent pending, is launched in the US and currently launching in Japan.

What is the website for your muse?

http://www.summerjasmines.com

How much revenue is your muse currently generating per month (on average)?

$1,000 - $2,500 per month

How did you decide on this muse?

I had read Tim's book on a flight back from a Paris vacation in 2007. I was stuck in a job that was getting more toxic, and Tim's book got me excited again - kind of like when I was in college and felt like anything was possible. About a year later, necessity became the mother of invention. My feet were hurting walking back to my hotel at a Las Vegas convention center. I wished there was a stylish shoe I could just pull out of an evening bag and wear for comfort. I also wanted something that would easily separate the toes during a pedicure. I pulled out Tim's book and re-read the chapters on starting a muse, and voilà!

I also used PRLeads and HARO to gain exposure for the product (as mentioned in the book). The idea was put into motion, and Summer Jasmines has since appeared in the Style Network website, attracted the attention of celebrity stylists, and is in the hands of Paris Hilton.

What ideas did you consider but reject, and why?

I thought about doing something in the medical field (my day job is as a physician-psychiatrist) but read Tim's experiences with BrainQuicken and decided against it. I didn't want to do something that was too similar to my day job.

What were some of the main tipping points (if any) or "A-ha!" moments? How did they come about?

I was walking back to my hotel from a convention in Las Vegas and my feet were killing me - that was my "A-ha!" moment. I did not want to walk back barefoot, so I limped back to the hotel with my uncomfortable shoes on. I did some searching online and found nothing similar to what I developed. I wanted a shoe that could be worn in emergencies, but also daily or to pedicures.

What were your biggest mistakes, or biggest wastes of time/money?

I hired a PR agency, but found they needed micromanaging and it was not helpful at all. I did much better with Tim's recommendations in the book, such as HARO and PRLeads.

What have been your key marketing and/or manufacturing lessons learned?

My product needs to really be demonstrated or else it just seems like another shoe that's joining the masses.

How did you find your manufacturer, and what would be your advice to first-timers?

Finding a manufacturer was tough, as I wanted to make sure they made the product exactly as I designed it. I searched in the United States with no success, and it took me three months, multiple Internet searches, and a flurry of follow up e-mails before I found a reliable manufacturer. This manufacturer was willing to prototype my designs, with minimal cost initially (around US $300) per style. When I saw that the sandals were generating a good market response, I was able to order in bulk.

My advice to first-timers would be to start with Alibaba.com. It's fairly easy to find a contact who speaks English (in my case) and I was also able to find some pretty big name established manufacturers (for example, those who work with Disney and L'Oreal). Be sure to ask them if they do private label manufacturing (the acronym ODM-original design manufacturer-is what you're looking for.) Ask them to ship a few sample items to you (or prototypes) to avoid a huge inventory of something you don't want. Some other acronyms to learn are: FOB (freight on board or free on board) and ISF (Importer Security Filing) so there are no nasty shipping/customs cost surprises later!

Any key PR wins? Media, well-known users, or company partnerships, etc.?

Joe Robinson at "Entrepreneur" magazine recently interviewed me on surviving multitasking and setting boundaries. Again, it happened via PRLeads, recommended by Tim.

If you were to do it all over again, what would you do differently?

I would have not hired the PR firm.

What's next?!

I want to keep designing more shoes, and figuring out how to integrate this into medicine to increase wellness. I know it will happen somehow!

"Hewley L-Carnitine Shampoo" by Daniel Bradley

Describe your muse in 1-3 sentences.

Hewley products (L-Carnitine Shampoo and Saw Palmetto Conditioner) help men and women combat thin, lifeless and limp hair with a daily 2-step regimen for thicker, healthier hair, as well as new hair growth.

What is the website for your muse?

http://www.hewley.com

How much revenue is your muse currently generating per month (on average)?

$2,500 - $5,000 per month

How did you decide on this muse?

We did research on scientific journals and studies with respect to stimulating blood flow to the scalp. We discovered some exciting results and found that there was a viable niche, and that the pricing of the products allowed for necessary margins.

What ideas did you consider but reject, and why?

Our first muse concept was fish oil. We found a great Icelandic company that has a terrific product that they would sell to us in bulk. We tested the concept using 4HWW tools, but found there was too much competition and not enough differentiation.

What were some of the main tipping points (if any) or "A-ha!" moments? How did they come about?

The main tipping point was finding that we could ‘name' our product with an exciting and key ingredient and also own the domain (e.g., L-Carnitine Shampoo - the domain lcarnintineshampoo.com was available). Tying together the domain and the product name seemed like a great way to ‘own' a niche. We then realized that having a ‘brand" (in our case Hewley) would add the flexibility of playing around with our products and product line.

What were your biggest mistakes, or biggest wastes of time/money?

The biggest trouble has been trying to outsource website design work. We outsourced our product label design to a great firm, and are super excited about the results. But in the web design world, we've not had the best luck. We've tried a few firms on eLance and a couple of Shopify designers, but we struggled with finding a designer who knew how to ‘design' for maximum conversion. This has been our biggest waste of time and money.

[Note from Tim: This is where advisors can be very helpful. First, have an advising conversion expert help you put together "wireframes" or sketches of pages that should convert (using pen and paper, or something like Balsamiq). Then have a designer implement and add aesthetic flavor, after which you have a developer chop it up and create the functioning site.]

We are still struggling with the concept of a brand. We probably would have stuck to ‘L-Carnitine Shampoo' instead of ‘Hewley.' Getting people to understand what Hewley is will ultimately be a positive for us, but right now it's just a hurdle to get over.

What have been your key marketing and/or manufacturing lessons learned?

Twitter! There are firms out there that will manage your Twitter account for $1500+ per month (yikes!). We found SocialOomph and a couple other firms that troll for followers for about $50/month. In one month, they helped us build our Twitter following from 10 to 1,400 followers, and it is now a major source of traffic to our website.

We also used a marketer on eLance to develop a brochure for us. That saved us a lot of time, and the marketer knew how to use clear, concise, and powerful language. The brochure came out great!

How did you find your manufacturer, and what would be your advice to first-timers?

Once we proved the concept and decided it was time to outsource production, we started playing detective. In addition to Google searches, we took each shampoo product that we studied during our product development and looked for clues as to where it was manufactured (whether it was made in-house or outsourced). We also asked each potential vendor to name a couple companies that they thought were competitors. With this multi-pronged approach, we found many more manufacturers that were initially accessible on the web through simple Google searches.

My advice for first-timers: Start today. Commit yourself to your muse by putting the idea out there as fast as possible. We know a lot of folks who have read the 4HWW and love to discuss it and their ideas, but time moves on and nothing happens. Call a potential business partner and share the tasks; tell all your friends that you are launching a product on X date; build your test site and get it out there. My partner and I have learned that the fastest way to get something done is to commit to it. You always have time to perfect the product later.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

We are going to be featured in an upcoming issue of a magazine with 100,000 readers. It came about by reaching out to a rep from the magazine and showing her the brochure. We have also been approached by other sites looking to add our product, but are cautious to protect our margins (4HWW).

If you were to do it all over again, what would you do differently?

We would have had our product manufactured faster. We spent too much time in "test mode" by mixing and fulfilling orders on our own. Once this was automated, it was a huge weight off our backs. We could focus on selling and marketing instead of fulfilling.

What's next?!

We have learned so much since we started. We've been working with a chemist on a much-improved product that includes a concentrated serum, and it's backed up by some pretty impressive results. We will be rolling this out early next year, and couldn't be more excited!

"Shred Soles" by Nate Musson

Describe your muse in 1-3 sentences.

Comfortable, canted, performance, snowboard boot insoles.

What is the website for your muse?

http://www.shredsoles.com

How much revenue is your muse currently generating per month (on average)?

$1,000 - $2,500 per month

How did you decide on this muse?

I had the idea for this product in the back of my mind since winter of 2005. After reading 4HWW in 2007, I started to hand-make and test different degrees of canted insoles in my snowboarding boots. I know it sounds cliché, but the idea was kind of like an itch that wouldn't go away - I just had to keep taking steps towards it, and 4HWW gave me the "road map" along the way! I also felt that this product could fit the 4HWW muse criteria, so I went with it.

What ideas did you consider but reject, and why?

I'd considered making a more versatile, non-canted, non-snowboarding specific insole with cool art printed on it. It would have been way easier to make, but I just didn't feel that it was niche enough. I really wanted to have something that was snowboarding-specific.

What were some of the main tipping points (if any) or "A-ha!" moments? How did they come about?

First, my own personal testing. I personally made and tried out hundreds of different insoles with different degrees of canting. Second, the affirmation that I was on to something by a professional boot fitter whose classes I'd attended. I kind of had to dance around the topic since I didn't have a patent at the time. Third, customer feedback! The very first online sale happened before I even had inventory or marketed the site (the site wasn't even done!). I had to send the customer my last sample in my size. A couple months later, he emailed me with this unsolicited feedback: "After 2 foot surgeries, I didn't think my feet would be able to handle snowboarding, but thanks to the Shred Soles, I'm carving up the mountain. Thanks again."

What were your biggest mistakes, or biggest wastes of time/money?

$600 phone call to a trademark attorney just to have him tell me that "I'll never be able to trademark Shred Soles." He was wrong. I just kept pursuing it with the USPTO and it worked out. Paying for services that I didn't need yet (or ever), like shopping carts, 1-800#, and a podcasting account. Buying business cards too early, and now the info on them is outdated. Getting stuck on patents and trademarks and not moving forward with the rest of the business because I was concerned that they wouldn't work out.

What have been your key marketing and/or manufacturing lessons learned?

Manufacturing- Keep making calls/emails until you find the right fit. I made 30 or more manufacturing contacts until I found the right one! I had guys tell me that what I was trying to do was stupid, impossible, and that it's just not the way things are done!

Marketing- Facebook ads and fan page, Twitter, Email list, submitting to product reviews, posting in snowboarding forums, and a little SEO!

How did you find your manufacturer, and what would be your advice to first-timers?

I found my manufacturer through Google, emailing the few that looked decent, then exchanging more emails and phone calls with them if they responded. I decided that most of them were not a "good fit" for what I was trying to make. Finally, I came across a manufacturer that was receptive to my idea! They always responded promptly, while many of the other manufacturers I'd contacted had been very slow to respond.

My advice for the first-timers seeking a manufacturer would be to send lots of emails, make lots of phone calls, and be persistent! Find one that's "into" what you're trying to do and really understands the scope of your project.

Any key PR wins? Media, well-known users, or company partnerships, etc.? How did they happen?

I've got some big coverage lined up with the #1 snowboarding magazine through a lucky industry connection. Shred Soles has also been covered by the #1 and #2 independent snowboarding bloggers.

If you were to do it all over again, what would you do differently?

I'd get set up with a mastermind group from the start! That alone would have made the biggest overall impact in every area of the business, IMO!

What's next?!

The new site just went up, and it has a much cleaner look! I'm going to add some new items into the mix (socks, for instance), as well as a new secret product! I'd love to do some kind of information product in the future, and have a couple of ideas on the back burner.

###

IMPORTANT AFTERWORD:

Do you have a successful muse that's generating more than $1,000 per month?

Please tell me about it! If it stands out (meaning you give specific details of lessons learned and what's worked vs. what didn't), I'm happy to promote you and help further increase your revenue. If you qualify and this sounds like fun, please fill out this form here.

Both physical and digital goods are welcome, as are services, as long as they're low-maintenance, income-generating "muses" as described in The 4-Hour Workweek.

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Article Tags: case studies, lifestyle, muse, target, workweek



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