FA 002 – Products, Services, and Bits

Summary

In our first installment, we discussed finding your passion to know what niche you should be in. In this second installment, Izzy and I cover what form your passion should take — physical products, services or digital products (we call them bits).

Inside this show, you’ll find pros and cons for each type and which one we prefer (I bet you can guess).

Services

  • You can typically start selling your services faster than trying to create and market a product.
  • Usually low start up costs.
  • Unfortunately, still trading your time for income–the hours for dollars dilemma of employment.
  • And if you take a vacation or get sick, you’re not earning any income.

Physical Products

  • The world still runs on physical products. Clothes, electronics and more make up a gigantic global economy.
  • Problems include manufacturing, warehousing, shipping and inventory management.
  • You can use drop shipping or affiliate programs to earn an income without ever having to ship or store a single product.

Digital Products (Bits)

  • No shipping, inventory, warehousing or manufacturing. Woohoo!
  • Can have huge profit margins, allowing you to earn a good living on smaller number of sales.
  • Digital products can take all sorts of forms such as audio, video, text and software.
  • Pricing can be anywhere from $1 to several thousand dollars.
  • Can be sold while sleeping, sick or on vacation.
  • And much, much more…

Enjoy the show,

t

Listen now!

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Behind-the-Scenes of Our Launch (Video)

We launched Foolish Adventure on Thursday, August 5th, 2010 at 8:06am Pacific Time. I hit “send” in our email software and then pulled out my iPhone to shoot some video. Here’s the result:

A couple things to note:

  • The software we use for real-time stats is Woopra. It’s a fun way to see what’s happening on the website. We’re using the free version of the service. I highly recommend you try it on your website to see what you can learn.
  • I’m hoping that when you see the video, it provides “social proof” that many people are subscribed to the newsletter too, and that you can feel comfortable sharing it. (You’ll likely hear us talk about “social proof” a lot in the future.
  • Big goals are difficult, but sometimes achievable.
  • Launch days are exciting and adrenaline-filled.
  • The best video camera is the one you have with you. I spontaneously shot this (bad looking) video with my iPhone. The quality is lousy, but I’m glad I have it.

Voice Your Questions

We set up a voicemail number to take questions. If you have a question you want us to read and answer on the show, please use this number: +1 (480) 331-4695

You can also ask questions via Twitter. Just use the hashtag #f-a to make it easy for us to find.  Follow us on Twitter: @IzzyVideo and @TimConley.

  • Hoss

    Hey;
    Before you get too far in, can you address the theft issue. For instance, let’s say i buy a subscription to your video series – what’s to stop me from passing my password, etc, around to my friends so they don’t have to pay?

    How about a DVD – let’s say you sell a DVD of your video course; what’s to stop me from ripping it and sending copies to all my friends?

    Maybe there’s nothing you can do, but if there is, shouldn’t we have these strategies in mind as we being to develop the digital products we will try to sell?

    Thanks for your help.

  • Hoss

    Hey;
    Before you get too far in, can you address the theft issue. For instance, let’s say i buy a subscription to your video series – what’s to stop me from passing my password, etc, around to my friends so they don’t have to pay?

    How about a DVD – let’s say you sell a DVD of your video course; what’s to stop me from ripping it and sending copies to all my friends?

    Maybe there’s nothing you can do, but if there is, shouldn’t we have these strategies in mind as we being to develop the digital products we will try to sell?

    Thanks for your help.

  • Chester

    Thank you for the new episode, it was very informative. It makes sense to have an online business based on bits rather than physical products. Unfortunately, my idea for a website is to buy a certain set of collectible children’s toys used locally or on ebay and re-sell them online. I’m hoping there will be an episode in the future that focuses on physical product operations. In the mean time, there is a lot of information I am taking away from your podcasts.

    Thanks Again!

  • Chester

    Thank you for the new episode, it was very informative. It makes sense to have an online business based on bits rather than physical products. Unfortunately, my idea for a website is to buy a certain set of collectible children’s toys used locally or on ebay and re-sell them online. I’m hoping there will be an episode in the future that focuses on physical product operations. In the mean time, there is a lot of information I am taking away from your podcasts.

    Thanks Again!

  • paul

    Iphone 3 or 4?
    as u can see from your video iphone 3 fixes on a focus point and you cant change it once you have hit record, ridiculous!

    Iphone 4 is much better u can tap the screen to refocus as you are shooting and it can get it to a semi macro mode which is better than a lot of pocket cams!

  • paul

    Iphone 3 or 4?
    as u can see from your video iphone 3 fixes on a focus point and you cant change it once you have hit record, ridiculous!

    Iphone 4 is much better u can tap the screen to refocus as you are shooting and it can get it to a semi macro mode which is better than a lot of pocket cams!

  • tim

    Hoss,

    My advice: don’t worry about it.
    1. Most people are generally honest–at least the ones who will be your loyal customers.
    2. Even big corporations can’t keep people from stealing their movies, software, etc for very long before someone figures out how to hack it. Yet, companies like Microsoft still make billions.
    3. I don’t know any top notch information marketers who try to protect their materials from theft. Except if someone copies them and tries to resell them.

    There isn’t anything you can effectively do to stop a dishonest person from stealing your stuff and putting it out there on the Interwebs. For me, things I can’t control don’t get much, if any, of my time.

    t

  • tim

    Hoss,

    My advice: don’t worry about it.
    1. Most people are generally honest–at least the ones who will be your loyal customers.
    2. Even big corporations can’t keep people from stealing their movies, software, etc for very long before someone figures out how to hack it. Yet, companies like Microsoft still make billions.
    3. I don’t know any top notch information marketers who try to protect their materials from theft. Except if someone copies them and tries to resell them.

    There isn’t anything you can effectively do to stop a dishonest person from stealing your stuff and putting it out there on the Interwebs. For me, things I can’t control don’t get much, if any, of my time.

    t

  • Tom

    Loving this podcast. You’re making a hell of a lot of sense to me. But my light bulb has not flicked on to an idea…..YET! Keep it up!

  • Tom

    Loving this podcast. You’re making a hell of a lot of sense to me. But my light bulb has not flicked on to an idea…..YET! Keep it up!

  • tim

    Chester,

    We’ll try to cover physical products more in the future, but we don’t have much experience in the operational side of physical products. I’ve done marketing for companies that shipped goods and can give you some general knowledge.

    If you have specific questions, call our new Google Voice number (I’m going to call it the IZ Phone, maybe the Fool Fone) at +1 (480) 331-4695 and leave a message with your questions.

  • tim

    Chester,

    We’ll try to cover physical products more in the future, but we don’t have much experience in the operational side of physical products. I’ve done marketing for companies that shipped goods and can give you some general knowledge.

    If you have specific questions, call our new Google Voice number (I’m going to call it the IZ Phone, maybe the Fool Fone) at +1 (480) 331-4695 and leave a message with your questions.

  • Nancy

    Hoss – As small business people, the digital scrapbook designers have always faced this piracy problem. All have copyright info included in their file downloads as well as piracy warnings and terms of use. It’s a never ending battle. If you know about torrents (where people have uploaded all sorts of digital files for people to download free), you know that even the big companies have their media ripped off. It’s a never ending risk when selling anything digital – or that can be converted to digital. One easy strategy is to enlist your customers in reporting violators. Here’s a web site designed for just this topic: http://jenjen.typepad.com/stoppiracy/

  • Nancy

    Hoss – As small business people, the digital scrapbook designers have always faced this piracy problem. All have copyright info included in their file downloads as well as piracy warnings and terms of use. It’s a never ending battle. If you know about torrents (where people have uploaded all sorts of digital files for people to download free), you know that even the big companies have their media ripped off. It’s a never ending risk when selling anything digital – or that can be converted to digital. One easy strategy is to enlist your customers in reporting violators. Here’s a web site designed for just this topic: http://jenjen.typepad.com/stoppiracy/

  • Would you please address using PayPal to collect payment for on-line product or services or bits? Thanks much.

  • Sherry

    How do I go back to past sessions that I’ve missed?

    • Izzy

      Sherry — if you click on “Our Newsletter” at the top of the page, you’ll see all the past installments (which are currently only #1 and #2).

  • Sherry

    How do I go back to past sessions that I’ve missed?

    • Izzy

      Sherry — if you click on “Our Newsletter” at the top of the page, you’ll see all the past installments (which are currently only #1 and #2).

  • Hoss,

    Programs like aMember will lock out a user if there are too many different IP addresses being used.

    So if someone passes around their login after say three logins from a different IP address they will be locked out and the admin will have to reset them before they can log back in.

  • Hoss,

    Programs like aMember will lock out a user if there are too many different IP addresses being used.

    So if someone passes around their login after say three logins from a different IP address they will be locked out and the admin will have to reset them before they can log back in.

  • Enjoyed it well enough. This episode didn’t grab me like the first, but I’m definitely looking forward to the third installment!

  • Enjoyed it well enough. This episode didn’t grab me like the first, but I’m definitely looking forward to the third installment!

  • tim

    Carol,

    We will definitely be covering how to get paid! It’s not a business if you’re not making money.

    In a future episode, we’ll discuss Paypal (I use it for my consulting clients & Izzy uses it for his businesses) and other forms of accepting payment.

    t

  • tim

    Carol,

    We will definitely be covering how to get paid! It’s not a business if you’re not making money.

    In a future episode, we’ll discuss Paypal (I use it for my consulting clients & Izzy uses it for his businesses) and other forms of accepting payment.

    t

  • Was the launch also helped by an email list ? cause its pretty amazing.

  • Was the launch also helped by an email list ? cause its pretty amazing.

  • tim

    Malone,

    Short answer, yes. But I would never stop there when I can say it the long way.

    Izzy and I did a “soft” launch. We sent out an email to his in-house email lists and also contact friends of ours to do some tweeting and posting on facebook.

    We had considered putting in more effort to promote FA before launching, but it would have taken longer and we probably wouldn’t have been able to launch till the end of the month.

    Pulling the trigger and taking action was more important to us than trying to make the launch even bigger.

    But yes it was pretty amazing. Izzy said we would hit 1000 subscribers in 24 hours. I was more hesitant since we were only sending 1 email to his lists. I figured we would have a couple of episodes released before hitting that number.

    t

  • tim

    Malone,

    Short answer, yes. But I would never stop there when I can say it the long way.

    Izzy and I did a “soft” launch. We sent out an email to his in-house email lists and also contact friends of ours to do some tweeting and posting on facebook.

    We had considered putting in more effort to promote FA before launching, but it would have taken longer and we probably wouldn’t have been able to launch till the end of the month.

    Pulling the trigger and taking action was more important to us than trying to make the launch even bigger.

    But yes it was pretty amazing. Izzy said we would hit 1000 subscribers in 24 hours. I was more hesitant since we were only sending 1 email to his lists. I figured we would have a couple of episodes released before hitting that number.

    t

  • Michael

    Can you discuss the strategy of when to ask for money? For example, would you provide a podcast free for the first ten episodes to gain a following and then close it off and start charging? Or would you start charging from the start? And then even if you close it off, do you still leave the free stuff free? Or do you charge for stuff that used to be free?

    I know Izzy mixes free episodes with paid stuff. I’m just not sure if he did that from the beginning or started off with just free stuff. Basically need to know if I should build a fan base first. Plus I don’t want to piss people off who have gotten used to the free stuff, to the point where they won’t want to start paying.

  • Michael

    Can you discuss the strategy of when to ask for money? For example, would you provide a podcast free for the first ten episodes to gain a following and then close it off and start charging? Or would you start charging from the start? And then even if you close it off, do you still leave the free stuff free? Or do you charge for stuff that used to be free?

    I know Izzy mixes free episodes with paid stuff. I’m just not sure if he did that from the beginning or started off with just free stuff. Basically need to know if I should build a fan base first. Plus I don’t want to piss people off who have gotten used to the free stuff, to the point where they won’t want to start paying.

  • tim

    Michael,

    This is a huge topic and there isn’t one right answer. It really just depends on your overall goes and strategy.

    Izzy and I will definitely cover this topic in a show and probably in several shows since it is a big and important topic that encompasses traffic generation, product development and profitability.

    But to give you something right now, I think a business should get to selling something as soon as possible. I’ve been known to start businesses by making a sale first and then figuring out the business stuff.

    Giving something away for free just to give it away isn’t smart. There must be a strategic purpose for it IF you are running a business. You can give stuff away all day long if it’s just a hobby. No strategic value necessary.

    Foolish Adventure (keeping our actions transparent) is going to be a business, which means we will be generating revenue at some point. We are giving the newsletter away for free permanently for 2 strategic reasons–1. to build an engaged audience and 2. to change the world.

    Stick with us and we’ll answer you with more depth in upcoming shows.

    t

  • tim

    Michael,

    This is a huge topic and there isn’t one right answer. It really just depends on your overall goes and strategy.

    Izzy and I will definitely cover this topic in a show and probably in several shows since it is a big and important topic that encompasses traffic generation, product development and profitability.

    But to give you something right now, I think a business should get to selling something as soon as possible. I’ve been known to start businesses by making a sale first and then figuring out the business stuff.

    Giving something away for free just to give it away isn’t smart. There must be a strategic purpose for it IF you are running a business. You can give stuff away all day long if it’s just a hobby. No strategic value necessary.

    Foolish Adventure (keeping our actions transparent) is going to be a business, which means we will be generating revenue at some point. We are giving the newsletter away for free permanently for 2 strategic reasons–1. to build an engaged audience and 2. to change the world.

    Stick with us and we’ll answer you with more depth in upcoming shows.

    t

  • Hello Hoss,

    I agree with what Tim said, but if we can do a little more to prevent our digital (or not ) products to get pirated better… just making it more difficult I think would be nice.

    The one solution that might help on achieving this is Multimedia Protector.
    (http://www.multimedia-protector.com/)

    But I haven’t tried it to the fullest…if anyone has, please share.

    Cheers.

  • Hello Hoss,

    I agree with what Tim said, but if we can do a little more to prevent our digital (or not ) products to get pirated better… just making it more difficult I think would be nice.

    The one solution that might help on achieving this is Multimedia Protector.
    (http://www.multimedia-protector.com/)

    But I haven’t tried it to the fullest…if anyone has, please share.

    Cheers.

  • “from getting pirated” is what I meant. 🙂

  • “from getting pirated” is what I meant. 🙂

  • Hoss

    Thank you all for your advice on trying to slow down the theft problem. Some great ideas there. I know as of this date, it’s still an uphill battle, but anything one can do to at least put up some sort of fight seems worth it.

    And Tim and Izzy, i know you feel it is a losing battle, but it would still be helpful if you could outline possible strategies in one of your podcasts.

    I have a hunch that a lot of people, who start online businesses, have a limited amount of material/knowledge to sell on a topic. So once we’ve made the 10 videos on the “proper stuffing of one’s cat” say, that’s the end of our video product line.

    And if that gets stolen, plastered on the web, linked to from all the forums on Cat Stuffing, the only real option we have is to make another 10 videos of the same info, but perhaps dressed as a clown to make it seem different.

    So, you see, even though we know the thieves can still win, we at least want to try to slow the dumb ones down… just a little.

    Hoss

  • Hoss

    Thank you all for your advice on trying to slow down the theft problem. Some great ideas there. I know as of this date, it’s still an uphill battle, but anything one can do to at least put up some sort of fight seems worth it.

    And Tim and Izzy, i know you feel it is a losing battle, but it would still be helpful if you could outline possible strategies in one of your podcasts.

    I have a hunch that a lot of people, who start online businesses, have a limited amount of material/knowledge to sell on a topic. So once we’ve made the 10 videos on the “proper stuffing of one’s cat” say, that’s the end of our video product line.

    And if that gets stolen, plastered on the web, linked to from all the forums on Cat Stuffing, the only real option we have is to make another 10 videos of the same info, but perhaps dressed as a clown to make it seem different.

    So, you see, even though we know the thieves can still win, we at least want to try to slow the dumb ones down… just a little.

    Hoss

  • Holy pot of coffee! As an avid Woopra, Aweber, Product launch formula fan that’s quite a conversion rate especially from a default wordpress theme page with little design. If you guys would have put together a better landing page, I bet you could have hit 2000 in the first 9 hours.

    Congrats on your launch, very inspiring.

  • Holy pot of coffee! As an avid Woopra, Aweber, Product launch formula fan that’s quite a conversion rate especially from a default wordpress theme page with little design. If you guys would have put together a better landing page, I bet you could have hit 2000 in the first 9 hours.

    Congrats on your launch, very inspiring.

  • tim

    Hoss,

    Theft is a big concern with new information marketers, but it should be one of the least. You call it an “uphill battle,” but it is an un-winnable battle. My advice is not to fight that battle at all.

    Business is hard enough when dealing with things you can control so why make it harder by working on things you can’t control? That’s my philosophy.

    There are things you can do to slow the casual thief, but nothing you can do about someone who is determined to steal it.

    I have a friend who makes several million dollars a year, yet his information products can be found on bit torrent. There was a recent product launch from a famous marketer. He had previously released his course and in this launch rereleased it. Stolen copies were available online. He still made about $2 million from that relaunch.

    Your stolen products can be a great form of marketing. Sounds counter-intuitive, but it’s true. The honest people out there who get a copy of your stolen materials, who like it, will find you and buy other things from you.

    As for having limited knowledge and only being able to create one single product, I say keep learning so that your knowledge and experience continues to grow. Then you’ll have no end to the products you can develop.

    You said, “we know the thieves can still win.” I’m saying that the thieves only win if the thought of them prevents you from taking action.

    Izzy and I will probably touch on this topic (I’ll let Izzy speak for himself), but my advice in a podcast will be what I wrote in these comments.

    I’m not belittling your concern. I find this an important issue hence spending quite a bit of my time responding to it. I hope this helps you and others reading this to take action on your dreams.

    t

  • tim

    Hoss,

    Theft is a big concern with new information marketers, but it should be one of the least. You call it an “uphill battle,” but it is an un-winnable battle. My advice is not to fight that battle at all.

    Business is hard enough when dealing with things you can control so why make it harder by working on things you can’t control? That’s my philosophy.

    There are things you can do to slow the casual thief, but nothing you can do about someone who is determined to steal it.

    I have a friend who makes several million dollars a year, yet his information products can be found on bit torrent. There was a recent product launch from a famous marketer. He had previously released his course and in this launch rereleased it. Stolen copies were available online. He still made about $2 million from that relaunch.

    Your stolen products can be a great form of marketing. Sounds counter-intuitive, but it’s true. The honest people out there who get a copy of your stolen materials, who like it, will find you and buy other things from you.

    As for having limited knowledge and only being able to create one single product, I say keep learning so that your knowledge and experience continues to grow. Then you’ll have no end to the products you can develop.

    You said, “we know the thieves can still win.” I’m saying that the thieves only win if the thought of them prevents you from taking action.

    Izzy and I will probably touch on this topic (I’ll let Izzy speak for himself), but my advice in a podcast will be what I wrote in these comments.

    I’m not belittling your concern. I find this an important issue hence spending quite a bit of my time responding to it. I hope this helps you and others reading this to take action on your dreams.

    t

  • tim

    Jason,

    Thanks for the kudos. We even mentioned in our first episode how we were taking action even before we had all the pieces in place. Kind of a Ready, Fire, Aim approach.

    Too many people wait to make things perfect or for the perfect moment and those never happen.

    We like to take action and correct along the way.

    t

  • tim

    Jason,

    Thanks for the kudos. We even mentioned in our first episode how we were taking action even before we had all the pieces in place. Kind of a Ready, Fire, Aim approach.

    Too many people wait to make things perfect or for the perfect moment and those never happen.

    We like to take action and correct along the way.

    t

  • Love the show and the info- thanks! What do you do when you have several ideas you feel like sharing with the world. I’m having trouble honing my niche. I am graphic designer who loves digital scrapbooking, kids crafts, and DIY home decorating projects. Just wondering what your thoughts are on creating a site to share all of the above???

    Keep up the great work! Thanks again!

  • Love the show and the info- thanks! What do you do when you have several ideas you feel like sharing with the world. I’m having trouble honing my niche. I am graphic designer who loves digital scrapbooking, kids crafts, and DIY home decorating projects. Just wondering what your thoughts are on creating a site to share all of the above???

    Keep up the great work! Thanks again!

  • Interesting that now we are in the midst of a move to an electronic age – versus an industrial age. That means things like intellectual property will become more and more valuable as time goes on. These are things like trademarks, patents, copyrights, and trade practices. We are just now scratching the surface of how to properly capitalize on this new world. In an industrial age, your tools were used to make physical products (protected by patents, often, but not always) which were then sold. In an electronic age, your tools are used to create virtual products – digital pictures, books, designs, music, software, videos, web pages, and other intellectual property. When companies like Apple and Amazon are making a fortune from “bits,” they are selling digitally managed intellectual property (actually, they’re re-licensing it with a licensing agreement between artist and licensor). Stock photo, audio, and video agencies are doing the same: licensing digitally managed intellectual property. Amazon, Apple, and stock places are merely gateways to the properties. There are really only 2 models in effect: offer your properties to individuals on a one-on-one basis (self-distribution) OR on a mass basis (licensing) to anyone willing to pay. Both models work, but they’re a holdover from prior models used for years before the internet. Whoever can come up with a new, more profitable, more approachable model for both property creators and whatever licensor is dealing them will make a fortune.

  • Interesting that now we are in the midst of a move to an electronic age – versus an industrial age. That means things like intellectual property will become more and more valuable as time goes on. These are things like trademarks, patents, copyrights, and trade practices. We are just now scratching the surface of how to properly capitalize on this new world. In an industrial age, your tools were used to make physical products (protected by patents, often, but not always) which were then sold. In an electronic age, your tools are used to create virtual products – digital pictures, books, designs, music, software, videos, web pages, and other intellectual property. When companies like Apple and Amazon are making a fortune from “bits,” they are selling digitally managed intellectual property (actually, they’re re-licensing it with a licensing agreement between artist and licensor). Stock photo, audio, and video agencies are doing the same: licensing digitally managed intellectual property. Amazon, Apple, and stock places are merely gateways to the properties. There are really only 2 models in effect: offer your properties to individuals on a one-on-one basis (self-distribution) OR on a mass basis (licensing) to anyone willing to pay. Both models work, but they’re a holdover from prior models used for years before the internet. Whoever can come up with a new, more profitable, more approachable model for both property creators and whatever licensor is dealing them will make a fortune.

  • Stefani

    Hey, I’ve listened to the first two epidodes, and I love the idea of selling or even giving away “how to” videos related to the business. I know how to shoot a traditional video, but what about a video of something you do on the computer? I’m thinking about digital designing, using software, etc.–the types of things that (I think) would be best to actually show on someone’s screen, like a recorded webcast. What’s the best way to do this?

  • On a PC, you can use Camtasia to record your screen. You can narrate as you do things on your screen or you can narrate later. On a Mac, you can use Screenflow to do the same thing.