Thanks for continuing the journey with me. If you are here, you have probably read the first part, How to Retire at 40 and the mistakes I made. If not, you should probably read that.
So, we were talking about Financial Independence. A state of affairs when you do not need to worry or even think about money anymore. The money comes in on a regular basis – monthly or quarterly – and pays off your expenses for the lifestyle that you desire. You have a confidence that your assets and investments will continue to grow and pay for your expenses. This is the state where you don’t need to worry about money any more. This is Financial Independence. Now, if you can do this at an earlier age, you can retire early and stop working for money. Then you can work on whatever you love – for yourself, not for the money! Combining this too, is what we call FIRE – Financial Independence and Retire Early movement!
One of the most important thing as I mentioned earlier, is to take action. In the previous article, I laid out a simple plan if you are starting at 25. In this article, I am going to take it a step further and share how I build a business from $0 and grew it to 20X $$ product.
If you are like me, you probably have a passion for doing something for people. It may be helping people with something, solving problems, teaching them etc.
I liked solving customer problems too. As I worked with several customers, I realized there is a huge potential to solve a unique problem. As it’s a technology product, I’ll not go into too many details of the tech but to keep things simple, there was a unique group of customers who were struggling with a particular tech in the Oracle Cloud applications space. My friend came up with an idea to solve this problem. I liked the Idea and we invested $0 to start building this product. I say $0 because we were doing this in our off-time and didn’t have to invest any money upfront. Once we created the paper prototype of the Idea, we started engaging other people in the Idea. The next step was to hire a developer to build the product. This was $15 per hour. We estimated it will cost us $3000 to build the initial version that can be used by the customer. Also known as MVP – Minimum Viable Product. In parallel, we started working with a few customers who were vocal about this problem and would be willing to pay for it. We gathered their initial inputs and added those features to the product. At the end of the 4-5 months period, we had our MVP ready. We met the customer and their team, demonstrated the product, and grabbed our first order!
Over the course of next one year, we signed up 100 + users to use the product. Some of them were “elite” and paid full price for the product. Some were trial users. Some were “lite” users and paid only for some features. Overall, we made $20,000 from the sale of this product in 1st year. From a $0 investment to $3000 development cost, not including the time we spent on it, we made a $17,000 profit before taxes. Over the course of 2nd year, we added another 200+ users and had a total revenue of $45,000. Not bad for a product so niche. We continued to add features, spending money on development and adding customer feedback into the product.
Everything was going great when we hit a snag. As this product was build to work with Oracle Cloud, we had a huge dependency on Oracle to continue to provide us the technology (APIs) that we needed it to work. Oracle released a new set of rules, which will make it difficult for our product to work in the current state. We had to revisit our design, and change the way the product worked. Luckily, we had customers who supported us in this journey and worked with us while we made changes to the product.
Exit strategy: With any business or product, it is important to have a strategy. A marketing strategy, product roadmap etc. But most important is an exit strategy. We had an Exit strategy and that was to make the product so successful that either Oracle or one of the other leading Oracle service providers would buy the product from us. Well, everything was going well and we were on right track for that when we hit another snag.
Due to a personal problem that was facing one of our partners, we had to sell out earlier than expected. A product that we took from $0 to $50,000 in 1.5 years, and was on track to earn $100,000 in the third year – had to be sold for 1/10th of what we could’ve made with it in a few years. Unfortunately, the situation that we were in didn’t allow us to wait any longer and we decided to sell the product and call it a day.
In the end, we did get 20X return on our original investment of $3000 to build the product. And with the option we have with the purchaser of the product we continue to reap the rewards of our hard work for next few years.
The lessons from this story that I’d like you to take away are these:
- You can build a product (an Asset) from nothing – if you are willing to look at problems around you and find a solution.
- You need to put your sweat and blood to continue to grow your company/product until it becomes an asset on auto pilot.
- Sometimes you may have to make hard decisions – but if your priorities are clear, you won’t regret it.
- Hardwork always pays off!
I’ll continue to share my lessons of good and bad experiences with life and business through this channel and I hope you’ll provide your feedback so I can share more and benefit you in some way, shape or form.