By Daniel Chiu in Escape Velocity — Sep 12, 2017

Escape Velocity: The Flight Plan

It’s been two weeks since I quit my job to go it alone. I gave myself that time to rest and recover, making today the first day of actual self-employed life. I already know why I need to do what I need to do. Now it’s time to get down and dirty with the how, starting with clearly defining the goal conditions and milestones.

Goal

The primary goal is to reach self-sustained passive income (escape velocity) as quickly as possible. This is important because reaching a self-sustained state defuses the time bomb that’s currently my steadily dwindling war chest.

At an absolute minimum, this will require $2000/mo of average gross income with a very small time input, which I’ll define as one or two days of full-time dedicated work a week. This amount would be enough to keep me going in cheaper places abroad like Marseille, Lisbon, and certain cities in Morocco.

Higher monthly averages will allow me to sustain a more expensive lifestyle (e.g. in a city like Paris, Tokyo, or San Francisco), purchase things that I’d like to have or do (e.g. a really nice road bike, advanced scuba diving training, cooking school at Le Cordon Bleu), or save and invest my money to grow long-term wealth (e.g. IRA, investing in an index that tracks the market and beats inflation, or re-investing money in my own new or existing businesses). The obvious most ideal case is to be able to have all of the above while working less than a single full-time day a week to sustain it. I’m pulling this number out of my butt, but I’d guess that I’d need somewhere between $10000 – $15000/mo in average gross income to make this happen–this would leave me living comfortably, even luxuriously, most places while not having to compromise on funds to pursue personal growth, interests, and hobbies or compromise on long-term savings.

A good middle ground number for the kind of lifestyle I was used to while in Silicon Valley is probably around $5000/mo of average gross income, though this number assumes a minimal amount of long-term saving (maybe a little less than the $5500/year IRA contribution limit), and potentially some clever tax engineering (e.g. spending enough time abroad to qualify for the Foreign Earned Income Exclusion). This same number is likely sufficient for me to live just about anywhere in the world, though not necessarily luxuriously (and in some cases, not totally comfortably, but that’s alright; if comfort were the goal, I might not have quit my job :P).

The secondary goal is to take some risks, experience some failures, and learn a crap ton! This is actually much more important to me than making it out of all of this financially OK, but I figure much of this will come naturally from trying to make ends meet, so I don’t need to put an explicit focus on it.

Strategy

Great, the goal is pretty clear. What are some of the ways I think I can build income quickly? Or, since income is really just a proxy for value, the better question might be: what can I do that’s valuable to other people? Where can I find the intersection of what people need, where my strengths lie, and what I’m passionate about?

Based on my strengths, skills, and passions here are a couple of high-level directions I can already take to start trying to create value:

Monetize my blog.
1. Writing and communication are two things that I excel at. I also enjoy thinking deeply about life and am not afraid to share the details of my own life for the benefit of others, so I believe that I have interesting and valuable things to write about.
2. Time input for a blog is approximately the time it takes to post ~once a week, which isn’t a whole lot. Plus, I rather enjoy the process of writing and sharing :).
Sell software to solve problems I have or am very knowledgeable about.
1. I’m a professional software engineer by training and am well-versed in Silicon Valley methods for effective engineering and product management. I may have quit my job, but I do actually enjoy writing code and solving problems!
2. At a certain point, my software will likely reach a relatively steady and stable state. By its nature, it runs itself without input, but I may occasionally need to do work to fix issues or scale infrastructure.
3. Solving problems that I have myself probably isn’t a winning strategy if I wanted to build the next Facebook, Google, or SnapChat, but it works great if my win condition involves thousands of users rather than millions. This also greatly reduces the product management overhead–I won’t need to agonize about whether or not a product or feature solves a real need; I just ask myself if it effectively solved one of my own needs and market to people who are similar to me (there aren’t millions of such people, but there are certainly thousands).

Fortunately, if I operate along a theme the two methods above have synergistic properties. Even more fortunately, I do have a theme of helping people self-actualize and living with integrity.

Normally, profit for a consumer product boils down to whether or not the user acquisition cost is acceptably below the lifetime value of acquiring that user. The major factors in the equation are how much it costs to show an ad to a single user, what percentage of users actually click on the ad, what percentage of those users actually convert to paying customers, and how much money a typical customer pays over their lifetime use of the product.

Unfortunately, but predictably, there’s a humongous drop-off at every step: good ads lose about 95-97% of potential customers before they even click on the ad, and then from there every page a user has to go through to decide whether or not to purchase the product deters a similarly large number of people. All told, it wouldn’t be ridiculous if less than 1% of 1% of users exposed to my product actually purchased the product. The deficiency here is that a potential customer has no relationship with the product creator until the ad makes the first impression, and they’re making a purchase decision based on how much they trust you in the 30 seconds it took for them to click on your ad, read about your product, and check out your offering. Talk about judging a book by its cover, eh?

With a well-oiled blog, however, I can build a consistent audience of people who have already self-selected themselves as similar enough to me to find my content interesting. The more focused the theme and content of my blog, the more focused this self-selection will be. Now if I create a product that solves a need related to the theme of the blog, not only have I identified a bunch of people who are similar enough to me to likely be interested, but I’ve also had the opportunity to build a real relationship with them. I don’t have an exact number, but I think it’s safe to bet that conversion through this channel is likely to be much higher than 1% of 1%. Even better, if done right, marketing through this channel costs nothing and doesn’t feel intrusive the way traditional marketing does. There are tons of clever cheap and free ways to build readership on a blog, not the least of which is simply writing compelling content that resonates with people so that they share it with others.

Milestones

Cool, the goal makes sense and I have a few workable ideas for how to get there. The next question is how do I break the goal down so that it’s more manageable?

Here are some milestones I’d like to hit organized by method:

Monetize my blog.
1. My blog is the first thing that comes in Google when someone searches my name.
  1. This will prove that I’ve established my online presence and that search engines are properly indexing my content. Right now I show up on the second page. Time to blow all those other Daniel Chius out of the water!!
2. First subscribed user that I can’t claim to know personally (and doesn’t look like a bot).
  1. This will prove that something I’m doing is starting to work and that the content on my blog is actually compelling enough for people outside of my immediate social network to read on a regular basis.
3. First income, however small, from a monetization tactic on my blog.
  1. This will prove that the monetization channels I’ve chosen can actually work, which means that income from my blog should begin to scale linearly with the number of regular readers on my blog.
  2. This will also prove that I can make money from my blog without “selling out.” I don’t really intend to fill the space on my blog with cost per click advertising. Instead, I’m hoping to use affiliate programs to make it easier for readers of my blog to buy products that I actually really believe in and have mentioned here.
4. Generate enough Amazon affiliate purchases that Amazon decides to approve my affiliate application.
  1. I’m pretty sure Amazon affiliate purchases are going to be my main monetization channel, and I don’t think I get paid out until they actually approve the application, sooooo… this would be a big deal haha.
5. Reach a point where I’m posting to my blog once a week or more and getting relatively consistent readership numbers without losing people.
  1. This will prove that I can consistently produce content that’s worth reading.
6. Reach 100 subscribed users.
7. Reach 1000 subscribed users.
8. Reach 5000 subscribed users.
Sell software to solve problems I have or am very knowledgeable about.
1. First re-used piece of code between two projects.
  1. There are going to be some commonalities between many of the products I try to create (e.g. social login and payment integration), and I’m hoping to make my software modular so that each time I build a product I can reuse large chunks of it to make it quicker to build the next one.
2. First successful test marketing page.
  1. I’ll be test marketing my ideas by creating offerings for products that don’t exist yet, then measuring how well they do when I funnel real ad traffic to them. In my mind, successful means that a) users actually took an action indicating that they would purchase based on the information they’ve seen and b) user acquisition cost falls below a reasonable pricing for the offering.
3. First product launch.
4. First paying customer.
  1. This is a big one. The biggest fear of every entrepreneur is that they’ll create something and nobody will care. This proves that I’ve created something that has some value for someone. Scaling that value from one user to n users is much easier than going from zero to one.
5. First recurring paying customer.
  1. This proves that the product is compelling and sticky enough to generate recurring revenue (likely on a subscription basis).
6. 100 recurring paying customers.
7. 1000 recurring paying customers.
  1. Depending on pricing, this could be sufficient to push me over $5000/mo if each user pays $5/mo.

Actions and Timelines

This Week

Monetize my blog.
- Create/update blog content.
  - ~~Write this week’s post for my blog. (This is it!)~~
  - Write next week’s post for my blog.
  - Update the about page on my blog to clarify what this blog is about.
- Affiliate marketing.
  - Learn more about affiliate marketing in general.
  - Go through and add Amazon affiliate links where books or products are mentioned in old posts.
  - See if affiliate programs exist for other products I love to use and use regularly to help me accomplish my goals.
- Optimize blog for monetization and audience building.
  - Increase resolution on metrics I’m gathering for my blog.
    - Find a way to measure how far down the page readers scroll so I can decide whether or not my typical post length is too long (it probably is).
    - Re-work the home page so it isn’t possible for a reader to read the entirety of more than one post without me being able to track which posts they read.
  - Search engine optimization (SEO).
    - Learn more about SEO in general.
    - Figure out what I need to install/configure to optimize my WordPress blog for search engines.
  - Find a system for allowing readers to subscribe to my blog by email that I actually like using and don’t think is too intrusive.
    - Ideally, allows people to subscribe/unsubscribe by post category.
  - Outreach.
    - Do some research on best channels for increasing blog traffic.
    - Make sure I tackle all low-hanging fruit for putting my blog out there (e.g. make sure it’s indexed on popular blog boards, etc.)
    - Set up Google Alerts so I know if I or my blog are mentioned somewhere on the web.
  - Look into re-branding my blog.
    - Chiubaka.com, while fun and pithy, may not be the best brand for the theme I’ve chosen to blog about.
Sell software to solve problems I have or am very knowledgeable about.
- Ideating and planning.
  - Brainstorm new product ideas.
- Strive, the platform for setting and achieving goals.
  - Write-up a pitch, value proposition, and detailed execution plan document for Strive, a platform for setting and achieving goals.
  - Experiment with visioning exercises.
  - Do some additional research about the science behind effectively setting and achieving goals, as well as forming good habits.
- Development.
  - Get my development environment setup on my home desktop computer.
Open a merchant bank account.

This Month

Monetize my blog.
- Write a new blog post each week.
Sell software to solve problems I have or am very knowledgeable about.
- Strive, the platform for setting and achieving goals.
  - Go through 2 iterations of a test marketing site for Strive, collecting data on performance by launching real ads.
  - Scope out work and effort for building an integrated social login backend for Django.
    - There’s an existing solution, but I’m not quite sure it does what I want it to do. I’d like to make it really easy for my products to allow a user to connect their Google and Facebook accounts and, if desired, authorize access to data integrations that may provide additional value.
  - Build login and basic execution functionality.
- Development.
  - Migrate away from SquareSpace for test marketing websites and consolidate my own tooling/documentation for quickly creating these.
    - At $28/mo SquareSpace is a bit pricey for the purposes of test marketing, and as an experienced Web Developer I don’t think I get that much more out of their what you see is what you get interface for site building.
Reflect, re-evaluate, and re-strategize at the end of this month in order to plan appropriately for October. (You can expect this to be blogged as a progress update!)
- Loosely speaking, I already know that I’m aiming to have a working and marketable MVP for my first product by the end of October, but will take new information into account when planning for this at the end of the month.

Travel?!

Since I mentioned living abroad in my last post, some people have been wondering when I’m actually leaving and where I’m going. Both are TBD at the moment.

I’m currently living in San Diego with my parents (I know, not sexy at all), and am planning to stay here until after my first product launch or, more ideally, after I acquire my first recurring paying customer. If I’m really lucky, I’ll leave the country shortly after Thanksgiving. More realistically, though, I’ll probably move abroad at the beginning of 2018 and stay abroad for the vast majority of the year.

Destination-wise, I’m still deciding, but am pretty certain my first destination will be Marseille in France, likely followed by Taghazout in Morocco, and maybe another stretch in Marseille (or elsewhere in France). I’m primarily prioritizing French-speaking countries so that I can finish learning French, since that was one of my goals this year. There are however, some other great options in Portugal, Eastern Europe, and South East Asia that are very affordable. I’ve found that Nomad List is a great resource for identifying candidate cities.

Stay Tuned!

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