Make Money Online With Snowboardjohn

Let me ask you a question:

If the internet is a great place to build a business - why do so many people fail at it?

Surely with enough time, and enough money, anyone should be able to build a converting sales page, and a product that doesn’t get any refunds.

It’s not that hard to do those things - converting sales pages are scientifically test-able, refinable, and ultimately controllable. Products are the same: with testing and work, a product can easily be developed into something that fits well into what the market wants, and raves about.

And there’s no shortage of people out there who would love to own an automated business. And who can (and do) spend thousands of dollars trying to achieve just that.

Yet they fail at an alarming rate.

What is the Reason for Their Failure?

I feel that I have an answer to that question which is logical, prove-able, and definitive.

But before I get to that, let me say that I’m excluding the common reason’s why Newbie Entrepreneurs fail. Stuff like: under capitalized, no self control or discipline, can’t work by themselves, negative thinking, fear of failure, and blah blah blah are well documented, and though true, are not relevant to this discussion.

No, what I’m talking about is something that happens to even highly motivated, seasoned people, ex professionals, ex executives, and so forth who don’t have commitment or skill shortages, but who still can’t make their online business profitable enough to live off.

So tell me Snowboardjohn, What is the Reason for the Constant Failures in Online Business?

I’ll gladly tell you:

It’s due to something I refer to as “Internet Traffic Churn” - and the inability of the “would be entrepreneur’s” business model to absorb it.

To fully explain what “Internet Traffic Churn” is, I need to first explain why having an Internet Business is such an enormous opportunity - because once you understand the context of the opportunity, you will be in a better position to exploit it more fully and with less problems then you otherwise would.

Why the Internet is so Profitable

The internet is ridiculously profitable for two reasons:

The potential cost of leads is so low; and the potential reach is enormous.

People may argue that the cost of fulfilling orders is low as well - which is true - but fulfillment costs don’t have ANYWHERE NEAR the bottom line impact that lead costs have. Lead costs (the amount of money it costs to get a lead for your business) are probably the most expensive part of 99% of businesses functioning on and off the internet.

(When television first came out, the lead generation costs were ridiculously low as well - and many millionaires were created as a result of the cheap cost of leads. As time went on, more companies saw the results of reaching leads through the television medium and started to want some of the action. As time wore on, and the perception of high ROI for television advertising dollars was created, it became less and less profitable to use television to reach a market. Eventually the initial costs for TV ads was so high, only multi million dollar companies could do it, and even they lost (and still lose) money on many of their campaigns.)

Make no mistake about it: Internet Business profit comes from cheap leads and nothing else (significant).

Knowing this, you may ask the question: “so why is the lead cost so low if the potential profits from those leads is so large?”

Which is a good question. And I think there are two main reasons:

Reason 1. The dot com bust at the end of the nineties created a very negative perception of online advertising. A perception of wasting money, and no results. Basically it created a very generalized negative view of online business, due to the over hype that surrounded (and brought down) the first internet business back when things were just starting out. This negative perception is around in the general business population today, and while savvy entrepreneurs see through it, most business people are still misunderstanding the opportunities of the internet, and so are not creating competition and driving up prices as much as they would otherwise.

Reason 2. Emerging “Umbrella” mega businesses have holes which smaller, less profitable (but still very profitable) businesses can exploit. Google is a good example of this. Search Engine spammers take advantage of the fact that Google is chasing the big fish (the big advertising dollars, increasing their stock value, making themselves secure from other rival mega businesses) that they siphon off some of Google’s traffic at little or no cost to themselves. Google will of course devote SOME time and money trying to stop them, but realizes very well that public perception of the search engine is dictated more by PR campaigns then by actual search results. If Time Magazine says that Google is the best, then most people will believe it - not matter how bad the search results - because “if Google is bad, the others must be worse”.

A great example of search engine spam wars which are happening every second of every day can be seen for the search term Buy Viagra. The search results are pure spam, because it is so profitable to spam that particular search phrase.

Understanding Internet Traffic Churn

The moment you fully understand that the internet opportunity is a reach opportunity, you will start to understand the implications of that.

If profit is related to reach, then those who are successful must be reaching a lot of people cheaply - but how?

And there lies the true crux of the internet opportunity - how do you reach a lot of people, for as little money as possible?

Actually, I think the question should be “how do you reach as many people as you can, with as much STABILITY as possible?”. Because profitability is synonymous with INSTABILITY. What works with an enormous ROI today, may not work at all tomorrow. What works with minimal ROI today, may work forever. And vice versa.

The problem though, is not that traffic models are unstable (though they are), the problem is that most internet entrepreneurs FAIL TO ABSORB AND ACCOUNT FOR TRAFFIC INSTABILITY IN THEIR BUSINESS MODEL.

I call the rate at which traffic (the visitors that are the basis of a lead generation strategy) fails, the Traffic Churn Rate.

And in my experience, Traffic Churn Rates are the highest where the percepted expectation of return is the highest.

You can build a great sales page, and a killer product - but that doesn’t mean shit if no visitors ever see it. And because Traffic sources are organically changing all the time - it is not possible to test and quantify it very well - after all, incoming traffic is related to the market place perceptions of larger websites then your own, who send traffic to your website(s). These larger sites get traffic from other sites as well - whose quality, and content, and visitor demographic are unstable. All you can do is adjust your sails, and try to catch as much wind as possible.

And there lies the MOST PROFITABLE AND LEAST RECOGNIZED SKILL:

Creating Business Systems that Absorb and Adjust to the rate Incoming Traffic Fails

A great friend of mine recounted to me recently that he was sitting down with a 21 year old friend of his in late 2001.

The friend of his was receiving $100,000 checks every other week from his affiliate marketing business.

Needless to say, that kid is retired now at the age of 26, a multi millionaire.

How did he do it? Simple, he bought Google Adwords ads, and ran them straight through his affiliate links - didn’t even own a website. Back then, you could tip as many keywords as you wanted into one adgroup and pay 5 cents a click for as many clicks as you could get.

No editorial reviews. No quality score. No real competition.

No need for business systems.

I have another friend who currently makes about $1,000 USD per day profit from adwords advertising. He has special software which manages his bid prices in real time, along with which keywords are converting, and the placement of the ads, and so on. All developed in house, and being refined all the time. He has a team of software designers who make this program work, and keep it working, and improving.

Because these days, that is the way the system is working.

Eventually the Umbrella Mega Businesses start to squeeze more and more profit - they go after the billions, then the millions, then the hundreds of thousands, and so on down until they have maximized their profitability to the nth degree. And then they start at the top again.

The flux that the mega businesses create is what your business model needs to absorb.

The Two Things Your Business Model Must Have To Absorb “Mega Business Flux”

It’s simple:

1. A front end product.

2. As many affiliates as possible.

Why do you need these two things?

Basically it’s because the front end product is a list builder - it’s your main source of leads. After people buy the front end you get them to “opt in” to a list to receive the product. As long as that list keeps growing, your business will continue to grow.

Sure you COULD try and promote the front end yourself - and many people do - however in my experience it is FAR MORE PROFITABLE to give away most of the front end revenue to affiliates, and sell a backend product or coaching program which you take 100% commission on.

By spreading your risk over a large amount of traffic generation strategies (because your affiliates will generate traffic in varied and unique ways) you make it likely that however the mega businesses shift traffic flow, your business will always catch a reasonable amount of it.

As long as your incoming traffic to the front end product is stable - then you have something to work with, to make more money.

If you are in a CONSTANT BATTLE to get traffic, then you will never have enough “breathing room” to sit back and really maximize the profit of your market(s).

Make sense?

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This is a short post about something I was discussing today.

(I have a proper post coming up in the next few days which will kick some serious ass).

Anyway I was talking to a business associate about how much I hate the whole “set a high level financial goal to motivate you and set you to figuring out how to obtain it”.

IMO this type of thing is Business Guru Bullshit that’s designed to get people hyped up about the amount of money they’re supposedly going to be making so that they’ll buy “Guru Products” that will help them get to that goal *cough* *cough*

Let me tell you about myself, and see if you can relate to my current beliefs about this topic.

I’m a type A personality. I’m already trying to be better then the best. Not for money, but just because I WANT to be the best. I want to be known and recognized as being the best. And I don’t just want people to think and say that about me, I actually, INTERNALLY, want to KNOW that I’m the best. Like 15000% KNOW there’s NO ONE better then me at whatever I’m doing.

I don’t need the pressure of “making $2 Million in 2 years” to make me want to train, study, implement, fail, question, get coached, ask questions, improve, and so on to be the best I can be.

In fact, having that tangible financial pressure has made me feel downright miserable at times in the past. Oh look, it’s one year later and I don’t have my first million, why am I so unlucky? Or AM I unlucky? Maybe I’m just really bad at this…

Truth be told I look back at a lot of my huge financial goals and my skill level at the time and I think “Man, I was really good for how long I had been picking up that skill - I really should have been high 5′ing myself for being as good as I was at that time.”

Instead I was questioning myself and feeling really shitty.

As a somewhat seasoned entrepreneurial vet at this point I don’t even care about financial goals any more.

Because wanting to have $1 Million, $100,000, $10,000, or $10 Million doesn’t INCREASE your ability to ACQUIRE that money AT ALL! If you’re a new entrepreneur, let me tell you, you don’t even have enough information to CONCEIVABLY UNDERSTAND how a $10 Million business functions. Wanting to have that much income won’t increase your brains ability to figure out how to get it - because your brain doesn’t even have enough pieces of the jigsaw required to put the picture together - never lone IMPLEMENT that picture!

In fact it only increases the likelyhood that you will SPEND some of your money (like consumers do) on GETTING more money! Which is totally crazy!

MYTH: You have to spend money to make money.

TRUTH: You have to RISK money for the POSSIBILITY of making more money.

REALITY: Unless you know the market, the media channels to reach the market, the expected ROI on an advertising spend, your lead gen conversion rates and so on - you’re acting like a consumer when you spend money trying to make more of it. You’re not risking money for the possibility of a higher return - how could you be? - you don’t even know what the numbers are! That’s not a risk! That’s financial suicide! And you’re a sucker the punters are hoping to make a profit on.

Sorry!

So the next time you hear someone telling you to write down the amount of income you want to receive and then tell you that you need to formulate a plan for getting that money - you RUN - because you understand that wanting the reward for a skill you don’t have, doesn’t increase your ability to get that skill.

And in fact it is quite possible you will become disillusioned in your efforts to acquire that skill if you’re doing it for the skills payoff - instead of for the sheer enjoyment of knowing you have the skill.

Okay?

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In his bestselling book “The Theory Of Poker”, David Sklansky states that the Fundamental theorem of Poker is:

“Every time you play a hand differently from the way you would have played it if you could see all your opponents’ cards, they gain; and every time you play your hand the same way you would have played it if you could see all their cards, they lose. Conversely, every time opponents play their hands differently from the way they would have if they could see all your cards, you gain; and every time they play their hands the same way they would have played if they could see all your cards, you lose.”

This simple fundamental statement about knowing what your target is thinking can be applied to business strategy any way you can think of.

From negotiating the sale of a business, to negotiating the salary of an employee, to establishing a product price point.

This is because the theory points out that if you know what the other persons “has” (his motivations, and desires) you will be able to play against him correctly (extract the most value from him.)

But is it really that simple?

If you know what the highest price point someone is prepared to pay, should you just charge them that?

Actually, I don’t believe that you should. And this is because businesses operate in complicated environments - needing a lot more consideration than the thought process which would go with extracting value from ONE person.

What is the position in the market you want to occupy? Do you need testimonials? Are you marketing to the top end of the market and filtering down? If so, can you get more value from selling cheaper, but getting something else more valuable than highest purchase price from the early adopters? Etc. Etc.

If business were static, and you were selling in a vacuum: sure, go for the highest price point. But in the dynamic fluid nature of the modern day market place, I argue that you need to use your knowledge of market desire more intelligently than just extracting highest dollar from the market.

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… How much do you spend on something that’s actually important? Like Business consulting? Marketing consulting? Accountancy?

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1. Google is possibly buying Godaddy - that sucks BIG TIME. Has anyone noticed how quickly you lose traffic if you put Google analytics on your website - imagine what’s going to happen if Google can measure your traffic through Domain requests. F&*k.
2. Gaming Wikipedia for link love… using… images. Anything that games wikipedia for some value gets the thumbs up from me.
3. Unlocking the iPhone has never been easier, this Gizmodo video shows you how.
4. Google is getting sued for misleading advertising. As critical as I am of Google, I think that this lawsuit is BS and hopefully gets thrown out.

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I’m currently finishing up a website that took one month build.

Now, it’s a pretty slick website, with some cool flash graphics, normal graphics work, and other site navigation functions.

And before I awarded the project, I shopped around a number of web development design firms - in Australia and the United States.

The quote price range was between $3,500 - $7,000 USD.

I brought the project in for… wait for it…

$460 USD

And no, I didn’t use an Indian child labor web design firm.

In fact, my designer is American born and bred - he’s very talented, takes direction well, and even includes many of his own concepts.

How did I achieve this?

I attribute it to something I call “Pipes’n'Fields” Theory.

The basics of which is thus:

In life, everyone is born into an enormous field. And in this field is where 99% of people will stay for the rest of their lives.

They are comfortable there; all their friends are there, and besides, they have no knowledge that anything could exist beyond this field. Most want to stay dead in the center of it, and they can often be heard talking negatively about any person who is curious about things beyond the field.

But there’s something those people don’t realize. Something that can never be taught to them, or explained to them. And that is, way out on the edges of the field are pipes. Small pipes. So small in fact that they blend into the horizon, and make it look as though nothing is there.

There are no markers on the front of the pipes though. There are no maps. The pipes lead away from the field, to who knows where.

Many who have found the pipes, and climbed into a few of them expected them to lead to a bigger, better field. Others who found the pipes decided to try and sell fake maps of the pipes, and promised the would-be pipe venturers a safe journey to the fields they had been dreaming about for years.

The truth is though, no one has ever really documented the pipes. They are too vast, too complex, and seem to change shape and destination depending on who is climbing through them.

Some lead to great fields, filled with lush green grass and sunflowers, populated by only a few other people. Many seem to lead to dank underground sewers, whose slippery slopes do not lend themselves to climbing back out easily.

But wherever they go, only those who know they exist, and have traversed through them, understand that a person in the main field can only ever be as smart as that field lets them be. They may be unequaled geniuses of the main field, and know its physics, geography, climate, and everything else - and yet - cannot make the same plays, and calculations, as the less intelligent pipe traveler.

Wherever you are right now, whatever your background: whether you’ve been labeled smart or stupid for your whole life, remember: you’re only as smart as your knowledge of the pipes, and the fields (or sewers) they lead to.

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I wrote up a 3 page PDF on something no one really wants to acknowledge or talk about.

Get it here:

How To Manage Your Online Biz Capital Risk

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Wow, how do you like the headline of this post? Cool huh?

I like it anyway.

Anyway, onward to the point of this post:

One of the things that really made a big difference to my abilities as an entrepreneur is when I stopped thinking like a consumer. I stopped thinking about material things I could obtain with money. I stopped reading books about luxury houses. I stopped reading magazines with $180,000 watches in them. I stopped fantasizing about what it would be like to rent a $400,000/week super yacht in the Mediterranean.

I realized that a lot of the self help, goal setting, business success books are just PLUMB WRONG.

Heck, I had lists of lists of everything I would buy when I finally make my $100 million. And one day, I just threw them out. Adios! I don’t want to think about that anymore.

I mean, many people who teach motivation and success encourage you to think about what it will be like “once you’ve made it” right? It’s all about pain/pleasure, and the payoff for going through the hard yards.

But you know what?

If you’re in it for the money, you’ll never be any good. You’ve got to be in it because you love THE GAME.

While you’re obsessing about the Ferrari you’ll drive once you force yourself to read those books on marketing funnels, or effective outsourcing => I’m obsessing about those books subject matter, simply because I like learning and implementing business strategy so much.

And guess what? I’m not alone. The guys I’ve been meeting and hanging out with lately are the same as me, perhaps even more so.

I once cared about the Ferrari, and marble basin, and the heated floors. Now all I care about is THE GAME. The game of business, of acquiring skills, of achieving things for the sheer enjoyment of it.

Not because I want to be a bigger consumer.

Consumers are my target. The more consumers who consume through my business system: the more choices I get to make over the direction of my life. But ultimately, consumers have almost no choices.

And because I realize that I don’t think like a consumer any more; I realize that always focusing on becoming a bigger one would NEVER have lead me to where I am now.

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