How I Built A $5,000 Per Month Side Project


Passive income. The 4 hour work week. The dream. As a millennial there are few things that rank as desirable as finding a recurring source of income that doesn’t take much work (or a boss). In April of 2015 I decided to seek that out and build a side project that could pay my bills while I read books and traveled the world. Within a few months I achieved my dream and booked $5,000 in monthly recurring revenue (MRR).

It’s been almost 3 years since I started SimpleData, my passive income muse. I grew the business to $30,000 per month in revenue within six months, automated and delegated just about everything, and for all of 2016 I worked an average of 5-10 hours per week. My new freedom enabled me to spend five months living in Argentina and then Europe. It afforded me the time to study things like history, political science, and other liberal arts that I felt I missed after dropping out of college. This muse changed my life.

In January 2017—18 months after starting the business—I sold SimpleData. It’s hard to imagine what my life would look like today if I didn’t sit down at my computer one night back in 2015 and come up a plan to quit my job, make passive income and travel the world. This simple act put me on the path to financial independence and wealth. It gave me the time and money to volunteer and give back, which opened my mind to a set of questions I never thought to ask previously—about my responsibility to help people less fortunate than me, about the work that makes me happy, and what to do when those two things are in conflict. This path also led to depression, social isolation, and the hardest time of my life, which previously I’ve been hesitant to share. (Is there anything worse than a rich guy complaining about his life?)

In this 3 part series I’ll break down how I built and sold my business, including how I came up with the idea, found my first customers, scaled operations, and found potential acquirers. I’ll also share some of the more personal things that I learned along the way and how I learned to calm some of the demons in my head.

#1 — Monetize your brain

The thesis of the project was simple: take what was in my head and monetize it. In other words, build a business that leverages all of the skills that I had learned over the first three years of my career in entrepreneurship, marketing and sales.

When I started SkyRocket — my last (failed) startup — I solved someone else’s problem which meant the time-to-market was significantly longer and the investment had to be much larger. I had to stay up late in the night reading industry journals just to be on the same playing field as my competition. In my second go-around I didn’t want to do that.

With that in mind I decided to solve a problem in the sales development space. At Highfive I made a name for myself as a “saleshacker” by applying some basic web scraping and front end development to my job. I had carved out a niche by applying what I knew about technology to sales. This was my unique skill, and I wanted to monetize it.

#2 — Find the pain

Finding a skill that I could use as leverage pointed me in the right direction, but in order to actually make money I knew I’d need more clarity. I needed the specifics of what problem I would solve, who I’d solve it for and how it would make money. And all of that could be found if I were able to answer a simple question: what do people in sales development need, and is there any pain in the current process of achieving that?

As I thought about problems to solve I remembered a story one of Highfive’s account executives told me. She was $5,000 short of quota (her quarterly revenue goal) and the only way to hit it was to email and call as many people as she possibly could to see if they needed video conferencing. In order to get that list of people she stayed up until 1am and built a prospect list (a spreadsheet of people to reach out to). 1am is painful. 1am is opportunity for improvement.

When I took over the Sales Development effort at Highfive the first thing I did was hire a team in the Philipinnes to ensure I never had to stay up until 1am building lists — or build any lists for that matter. I made a couple videos with instructions, bought some tools and found a virtual assistant on oDesk named Jonathan. For most sales development reps building lists can take two hours out of their day. I had eliminated it entirely.

When I put two and two together I realized that sales development outsourcing was an idea worth pursuing. If I could prevent salespeople from having an end of quarter frenzy like my co-worker, I could probably make a buck.

#3 — Competition isn’t always a bad thing

In March of 2015 I decided that I would build a sales outsourcing side project. The goal would be to provide a turn-key service for sales teams to request leads. But there was a problem with the idea: the market was highly competitive. Whenever I told people about what I was building they replied, “Oh something like [competitor].” Most people I spoke with told me I shouldn’t build the business for this reason. That’s when I learned play #3.

Most people in the tech industry are brainwashed by Silicon Valley group think. These people believe that every business must have a billion dollar opportunity. This isn’t true, especially for side projects. In fact, when pursuing the passive income dream competition is your friend. Let me explain.

Competitive markets are by their very nature mature markets. And the more mature a market, the less time and money a business has to spend educating that market on the problem. Think about real examples. Coca-cola isn’t spending money on ads telling you why you should drink soda. They spend money telling you why Coke is better than Pepsi. Soylent — the future of food startup — on the other hand must spend money educating people on why they should drink their food. In order to succeed, Soylent will have to spend tens of millions of dollars and years in the market.

Creating a new soda to compete with Coke would take less time and money than creating a new food and beverage category entirely (like Soylent). Coke has spent billions educating people on why they should drink soda. And you could educate people on why they need to drink your soda. You could pick a small niche that Coca-Cola executives see as a rounding error ($1-10 million) Granted, the long term opportunity may be smaller. That’s besides the point. The passive income dream isn’t about making billions, it’s about making thousands per month and doing it quick.

So is it better to create a “future of food” side project or a soda side project? I put my money on the mature, yet competitive market.

#4 — Find a position in the market

By April I decided that competition wasn’t going to stop me from starting a sales outsourcing startup. But in the back of my head I heard the voice of one of my mentors — Highfive’s VP of Product Marketing. I recalled a lesson he gave me during a 1:1 at Backyard Coffee in Redwood City.

When you hear Volvo what comes to mind? Scandanavians, but more importantly you probably think “Safe car.” How about Honda? Odds are “Reliable car” came to mind. This is the basic idea of positioning. What comes to mind when people hear {company name}?

The concept of positioning is incredibly important when starting a business because it determines who will buy your product. A product with no positioning that sells to “everyone” is likely to sell to no one. That’s because people need to identify with your product and brand in order to buy.

To put this in context I’ll give an example of positioning in my life. I no longer buy Abercrombie and Fitch because they position themselves as the high end clothing brand for middle schoolers. I do buy from Urban Outfitters though because as Highfive’s VP of Sales liked to say, I’m a wannabe “urban hipster.”

Previously I thought positioning was just another business school buzzword. But it’s important. At it’s core, positioning means “Pick a niche to get rich.” Isn’t the entire point of a side project to get rich?

In order to find a unique position in the market you must look at the competitive landscape. When I looked at the lead generation space I realized that companies fell into three categories:

Platforms: Data.com, Hoovers and DiscoverOrg are all examples of companies that charge annually for a set amount of lead exports from their platform. These databases are sold to thousands of companies which means everyone is emailing the same person. This results in worse response rates for their customer. And the average cost is about $30,000 per year (billed upfront). Ouch. Bad data for a high price.

Service-as-a-service: LeadGenius is an example of a company that charges annually for a team that prospects for you. Great concept, but there business model is built to work for them, not the customer. The cost is about $24,000 upfront ($2,000 per month billed annually). Not so great for a startup on a tight budget with changing business needs.

Freelancers: oDesk and Elance are examples of platforms where you can hire your own virtual assistant team to prospect. Customers have to train their team and the billing is variable so your cost per lead ranges from $.50 to $5. Cheap entry point, but time intensive and unpredictable.

I knew that there was an opportunity to create a turn-key service with a pricing model that customers could love. And thus, the first pay-as-you-go lead generation service was born.