Ramit Sethi is probably the most successful financial blogger of all time. He has more than a million views a month and his company makes easily $5 million a week. I must admit that I simply could not stomach his material because too much emphasis was made on bargaining.
However, any write-up on how he succeeded would be something that should be worth reading.
a) How tactics become commoditised
If you understand the timeless principles, you would always be able to come up with refreshing tactics. However, relying on a tactic may make you some money on the short term, but these tactics eventually get commoditised.
This is easily illustrated in investing.
Dividends investing is clearly a tactic. Finding a stock with a high dividend yield and sustainable cash flows is a useful tactic to make above average gains. This can be proven by backtests on Bloomberg.
The principle of backtesting, noting down returns and the standard deviation is a broader strategy than dividends investing which some of us like to do. The Financial Analysts Journal this month has a great article on how to refine a dividends investing strategy and reports a higher Sharpe ratio when an investment portfolio is targetted at mid-cap value stocks. I will be testing this out in SMU"s Bloomberg terminals this week to confirm whether it works in local markets.
My practice of reading investing white papers, networking with investment bloggers, backtesting and then building the portfolio gives me the ability to have a formless approach towards building portfolios based on timeless principles instead of tactics.
Even my friends who were drunk on Technical Analysis 10 years ago are talking about dividends these days.
b) Products should adopt the barbell strategy.
Ramit does not not call it a barbell strategy when it comes to product creation and launch. I thought Nicholas Taleb's idea of the barbell would be helpful in consideration product creation.
Close to 99% of the stuff produced by Ramit is given away for free, but when he has to charge for a physical appearance or a premium product, he goes for the jugular and charges fans $7.5k per seat.
This dualistic strategy works because the free aspect of the strategy gets you the eye-balls but the paid strategy maximises the revenue for the least amount of effort because the profit margin is so high.
I highly doubt that this strategy is realistic for folks who are not Ramit Sethi. Us bloggers are planning our next event and we can't charge such a high premium yet. We're better off keeping our costs reasonable and ensuring that we can sell every ticket we have.
c) 1,000 true fans
Many readers may have heard of the 1,000 True Fans doctrine by Kevin Kelly. Get 1,000 true fans who would buy anything from you and attend all of your talks and everything else is just about churning out products which maintain your popularity. Everything else is ensuring that you cut away enough middlemen to extract profits from product sales. If you create a $100 product a year and you have 1,000 true fans, you will have income of $100,000 a year.
It is almost the same as Dividend's investing ! I've always been harping about getting $300,000 invested at 8% a year for a reasonable income at around $2,000 a month.
But it's probably easier to earn money from a regular job to get $300,000 than to even get 10 true fans.
( I have great readers who interact with me on this blog, but I highly doubt that I even have 10 true fans here right now. That would take a longer time. )
But let's not think in terms of absolutes. 10 true fans who pay $100 is $1,000 extra income a year. Not to mention the 50 plus or so casual fans who will probably buy a book for $30 and netting you another $1,500.
1,000 true fans is a great goal. Question has always been what system you need to adopt to get true fans.
Gurus tend to be silent when confronted with this.