In the first article of this series, “Freedom through Apps: The Road through Independence,” we started to look at the idea of gaining freedom from the daily grind through creating applications. We more specifically covered the idea of carving out time. In this article, we focus more deeply on how you can leverage your independence to create an app—and a company that will be your ticket to retiring rich. What does it take to set yourself up as a developer who can retire rich?
Our first view of the developer who has become independently wealthy and has retired is the lone wolf. The idea of the lone wolf is enticing because it means we don’t need anyone else to “make it big.” However, there don’t seem to be many successful lone wolves. Those who try to make it on their own often end up burned out and frustrated. One success story from many years ago is Phil Katz, who wrote an enhancement to the ZIP archive format—PKZip. The program was a success and a company formed around it and his software. However, PKZip is the exception not the rule.
To Know about Knowing
Most developers are hard wired for learning. Whether it’s a new language, tool, or environment, learning is a core part of what it means to be a developer. Most developers will initially resist a language or environment as a passing fad, but eventually dive in and learn the latest and greatest once they’re sure it’s going to stick around. We’ve all learned something that turned out to not be useful any longer. (I happen to know a great deal about sales and use tax because I needed to for a project once.)
However, when considering the lone wolf, not everything is rosy. Some of the skills that are required need a different way of viewing the word. Often, the required perspective is so foreign that it’s difficult to see how to get there from where you are. The skills I’m talking about aren’t the skills of a new language or environment; the skills I’m talking about are business, sales, and marketing.
It takes some level of skill to run a business. Although ultimately it’s all about profit and loss—making more than you’re spending—there’s unfortunately more to it than that. There’s cash flow—making sure you have the money available when you need it. In solving cash flow issues, there’s the skill of negotiating with the bank on a line of credit—or planning cash reserves to support cash flow issues.
Cash flow is one of the most challenging aspects of business because it hurts you whether you’re doing poorly—struggling to keep afloat—and when you’re doing well and you’re looking to expand. Having to pay for work before your customers pay you can quickly exhaust your cash reserves.
Consider for a moment you decide that you need to subcontract to some other people to help on a project instead of hiring people and making your company larger. You’re making good margin but you have to pay the staffing company every two weeks—and you don’t get paid by the customer until 60 days after you invoice them. If you invoice every month, you’re going to have to have 76 days of cash to support the supplemental staff. (30 days to invoice + 60 days for payment terms—the 14 days you get to pay the staffing company.) If you’re paying $50/hr and you have just one supplemental person, you’re talking about $12,000 of cash you have to have before you start making money. Even if you’re making 50% margin (which is quite a bit), you’ve got a lot of cash outlay before the profit starts to catch up.
Banks can help with cash flow issues or, more frequently, you’ll borrow from yourself or not take a paycheck. However, it is issues like these that make independent business folks lose their hair. Things are going great; you’re “making” good money, but you don’t see it because you don’t have any cash.
Cash flow may be the problem when you’ve got too much sales and you need to expand, but what about getting enough business in the first place? That takes sales and marketing, and marketing is first up. Marketing a business isn’t as simple as most developers would like to believe. It’s not like you can simply set up your Web site and suddenly people will find you. There are billions of dollars spent annually on search engine advertising and on search engine optimization. Even though some of that is certainly wasted, not all of it is.
Despite previous reports, the world won’t beat a path to your door if you design a better mouse trap. You’re going to have to pull them in and, for most folks, that means going to local business networking events and telling hundreds of people what you do and why you’re special. You’ll have to refine your “elevator pitch” to the point where it feels natural.
With over 10 years of being in business, I can tell you that marketing remains the most elusive skill for me despite the massive amounts of energy spent on it. I’m still studying psychology and sociology in an attempt to better understand what works in marketing. Most marketing professionals have a worse guess than you do about what will work for your market.
At some point, someone has to agree to write a check for the work you do. At some point, someone has to agree to pay and that requires sales. It requires that you’re able and willing to “close the deal.” That’s a skill that most developers have never had to deal with. If you’re selling an app, the sale may be transactional and you may be able to get a “buy.” However, even in somewhat transactional situations, there are times when it’s necessary to sell.
Economies of Scale
Margaret Mead said “Never underestimate the power of a small group of committed citizens to change the world. Indeed, it is the only thing that ever has.” We sometimes romanticize the idea that one man or woman can change the world. However, if you look carefully at those stories, you’ll find that there are often many unsung heroes whose names never made it to be put in lights. Consider Thomas Edison, who had a team of scientists that worked with him. Gutenberg had a financer to help him with his printing press.
In the end, although the lone wolf idea of development is a good one in practice it isn’t as frequent as we dream it to be. So, if you want to be successful, you’ll want to partner up with someone else—or a group of people—to share the work, share the risk, and ultimately share the reward.
Becoming the Lone Wolf
If you’ve decided that you’re committed to the lone wolf path, you need a map. Here are some principles that will help you:
- Work on the business, not in the business: Marketing, Sales, Accounting, and so forth, are all about working on improving the business. Doing your “day job” of technology is working in the business. The more you work “on” the business and not in it, the more successful you’ll be.
- Love the miscellaneous: The natural tendency is to work on our strengths—development; however, the lone wolf needs to know how to be good at all of the functions of a business. Learn to love the learning of the non-development things so that you will keep working on them.
- Howl at the moon: Occasionally, every lone wolf needs to find some others to share the situation. So, go find a place that you can go howl at the moon from time to time. That is, find others who are doing what you’re doing whom you can compare notes with.
You may not be the best lone wolf who ever walked the planet, but you can be a good one.
In the next article in this series, we’ll tackle the question of what you should do if you don’t believe the lone wolf approach is right for you and whether you should become a Sexy Startup.
About the Author
Robert Bogue is a thought leader and an engaging presenter who speaks at events around the world. Rob has been awarded the Microsoft MVP designation a dozen times. He is also the author of over 25 books, including The SharePoint Shepherd’s Guide for End Users: 2013. Rob is a developer, an IT Pro, Architect, organizational change agent, pilot, comedian, and friend. Follow Rob’s blog at http://www.ThorProjects.com/blog/. You also can email Rob at [email protected].