“When you make something, you make something else. Find it, package it, and sell it. There’s money to be made everywhere.”
-Jason Fried, in Sell Your By-Products
I’ve found this to be one of the most profound changes in my thinking since I started experimenting in entrepreneurship. I remember listening to Rework (an incredible book) and upon hearing this advice articulated, I had to turn off the audiobook and just think for a while. It’s a really obvious insight in retrospect, but not terribly clear if you’re not attuned to it.
Jason Fried and his Rework co-author David Heinemeier Hansson are co-founders of Basecamp, a software company out of Chicago. They built their company in a very transparent way and champion several principles that I find really appealing:
- Don’t raise money if you can help it
- Bigger != better. There are huge advantages to staying small
- Many of the convention “rules” of business are just traditions that you don’t need to follow; and in fact you may be better off not following them
- Perfection is the enemy of progress; get the big things right and then worry about the details later
In this article, though, I’d like to focus on selling your byproducts, because I think it can help a lot of people who are looking to start something of their own.
I’m going to show my interpretation of this idea with a few examples.
Example 1: E-Commerce and Fire Starters
A few months ago, I started an e-commerce company called Whittle Away (you may already know from this article, and because I shamelessly advertise it at the end of my posts). The idea behind the company is simple: I sell kits with everything you need to get started woodcarving. I took up whittling as a hobby, and as becomes obvious very quickly, wood shavings are a byproduct of whittling.
At first, I would whittle for a while, and then sweep the wood shavings up and throw them in the trash.
Then, on a recommendation from a friend, I started using the wood shavings as packaging in my kits (as a substitute for packing peanuts). I liked the aesthetic this lent to the kits and thought it was good for my brand.
But I still had shavings left over, and I didn’t know what to do with them. I asked a couple of fellow whittlers I had met through Instagram what they did with theirs, and one of them told me he burns his.🤔🤔🤔🤔
I googled a bit, and discovered that you can make firestarters by mixing candlewax with wood shavings or sawdust (I also produce a lot of sawdust cutting the wood I put in my kits). Hey, people would buy firestarters, wouldn’t they? Especially if they knew they were made from scraps of hand-carved wood. So I made a few batches (I make them in egg cartons, so a batch is 12 firestarters) and showed them to a couple family friends over thanksgiving. They seemed happy to pay for them, so I offered to sell them for $8 apiece. I walked away $24 richer and with a smug sense of accomplishment on account of my ingenuity.
Now, I figure I’ll make a few batches of firestarters whenever my wood shavings pile up, and I’ll sell them when I rent booths at craft fairs or farmers markets. I’m not going to make a lot of money from them, but if I sell 6 of them at a craft fair, that $48 will cover most of the cost of a booth. More importantly, it’ll give me new customers to have a dialogue with, and give me a chance to turn those customers into advocates.
This kind of thinking can be extremely powerful, and is brought about by having constraints (if I had raised $100k to start this company, I’m sure I wouldn’t worry about throwing away my woodshavings). It can lead to huge value, as we’ll see was the case with Basecamp and Rework.
Example 2: Basecamp and Rework
Jason Fried and DHH built Basecamp, a software company. The product of their company was a suite of project management tools. The byproduct of their company was what they learned while building it and the philosophies they developed in the process.
They packaged this byproduct into an extremely popular blog and several best-selling books. According to Fried, Rework earned Basecamp over a million dollars outright and likely much more indirectly as a marketing tool.
Mind you, every single company has this same byproduct.
It’s impossible not to learn something while starting a company. Even if you start an awful company and it fails spectacularly and you have to stop going to coffee shops and wine bars for fear of running into your angel investors, you learned something and have a byproduct that you could share and sell. Hell, I’d love to read a book about building an awful software startup, it could be really insightful as well as funny.
The key is in recognizing these byproducts and then packaging them in a way that is either helpful or entertaining to people.
This third example is a hypothetical one, but I think it’s an important example because it’s so accessible to so many people.
Example 3: The Bored Office Worker
Know someone who’s a consultant or an investment banker and wants to do something more entrepreneurial? Or someone who’s in IT and has a ton of free time at work when there are no fires to put out? Regardless of the specifics, this holds true for any job in any industry:
- There are people outside of the industry who would like to start working in the industry
- The people within the industry have information that could help people break into the industry
A very simple set of truths, but it represents a clear business opportunity for anyone who has a job to sell the byproduct of their career and job search. Package your expertise about breaking into your industry and sell it to people who want to get into your industry.
The method of doing this will vary. For example, in highly competitive industries such as investment banking and consulting, there is actually a market for independent consultants who help with résumés, interview skills etc. The founders of Management Consulted and Wall Street Oasis have built what I imagine are quite profitable businesses doing this.
Of course, if you give people valuable content and build a following, you can serve as an affiliate or ad publisher and make money that way. My buddy in law school reads Above the Law religiously, and a quick glance at their website shows that they’re monetizing through affiliate links and sponsored job postings, among other ways.
This applies to educational programs, too: Poets and Quants is a blog about Business School that makes money; if you spent a lot of time studying to get into school, you can package that expertise and sell it.
I think this is a great thing to recognize because it is the perfect starter project for someone interested in entrepreneurship, because it compliments whatever it is you’re doing.
If you’re an aerospace engineer, and you write a blog outlining the most important things to know for aerospace engineering interviews, you can start to monetize it; and you will also enhance your own abilities as an aerospace engineer.
Following this formula, you can keep your day job and even grow your reputation in it, up until your side project spins off enough cash for you to take the leap and go for it full time.
Would love to hear about other examples of selling your byproducts!
P.S. You can (and should) listen to Rework on Audible. Not only is it an awesome book, the narrator has a very pleasing voice. If you haven’t used Audible before, it’s free! (As you might guess, this is a way I monetize my habit of listening to books a lot– SO META!)