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Guts to start a business

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I explained to a friend why I find it easy to takes risks in life and business.   Here it is:

This reminds me of a story you told me about entrepreneurs being fearless risk takers.  Here’s why I fit the bill.

Growing up in chinatown in a low income family, constantly in debt to friends and landlords, we’ve all learnt to not be afraid of surviving with little or no money (only exiled to Mississauga 4 years ago when my parents couldn’t work in a restaurant anymore, so we needed a place to live).  It’s easy to take risks when your back is against the wall with nothing to lose.  My parents never had the privilege of education because of Japanese occupation, WW2 and the cultural revolution.  My dad especially lost everything during that time.  He tells me stories of pan handling on the streets and being chased away by japanese soldiers.

So as an entrepreneur, I think if there are people like my parents pan handling on the streets in war torn countries, having the guts to start a business in a first world nation is child’s play.  I’ve got nothing to lose and everything to gain, so I might as well take a shot at proving to people with enough hard work and luck, you can actually claw your way out of poverty (after 2 or 3 generations).

Written by John Lai

July 15th, 2010 at 2:12 pm

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Client Levels – How to get high-end clients

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A question that many freelancers asks is, “how do I move away from low budget clients to high end clients?”  This is a difficult question to answer, but it’s generally along the lines of being good at what you do, being a nice person to work with, being patient and marketing yourself well.  The last point, marketing yourself well, can be a difficult thing for programmers to do.  It normally includes targeting the right audience.

The purpose of this post is to introduce the concept of “client levels” which should help freelance programmers target the right audience.  Here we go

I generally assign a “level” to a client to indicate his profitability for my business.   They are:

Level 0 to 10 – These clients are friends or family members who have no appreciation and/or no understanding of what it is you do.  As such, you volunteer your time to help them.   These client projects are good if you need to assemble a portfolio from scratch.

Level 10 to 20 – These clients are friends or small businesses with a small budget who have no appreciation and/or no understanding of what it is you do.  They pay you anywhere between nothing and less than minimum wage for your work. These client projects are good if you need to assemble a portfolio from scratch and if you need a couple of dollars for Tooney Tuesdays at KFC to ward off starvation.

Level 20 to 30 – These clients are small to medium size “established” businesses that do not appreciate the value of your work.  So although they are capable of paying for your work at market value, it is hard to convince them to actually do so because they compare you to high school students or some IT guys in India.  With enough haggling, these client projects can sustain your business.  Hooray!  You have enough money for a Quarter Pounder Meal at McDonalds!

Level 30 to 40 – These clients are small to medium size established businesses that appreciate the value of your work.  They do not hesitate to pay you the market value for your work because they consider you a valuable resource.  They know that they need your help to “take their business to the next level”, but they lack a clear strategy on how to do it and they are mired by disorganization.  These clients are great if, additional to your advertised primary skill sets, you are able to clarify their business strategies and help them execute it.

Level 40 and up – I haven’t gotten these clients yet, so they are all one amorphous blob.  But I presume they all have clear business strategies, great organization, significant cashflows and a history of great execution.

IMPORTANT NOTE: You can expect clients in each level to refer other clients within the same vicinity level.  So for example,  a level 10 client may refer clients between level 5 and level 15.   So if you’re starting with clients at level 0, it may take you 3 years of 24/7 work to obtain level 40 clients.

Written by John Lai

July 15th, 2010 at 4:04 am

Business is not about money

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I’ve been self-employed for a year now.   Last year, I left my 9-5 job with a big company to pursue my own web projects.   Along the way, I learned more about business than any four-year-$40k university program could teach me.   Although I’m still new to business, I’m compelled to share some of my ideas on the subject – ideas that seasoned entrepreneurs may ridicule as naïve.  But hey, here goes…

Business is not about money.  It most definitely is not.

I grew up a Trekkie.  I dreamed of living in a laissez-faire communist society where humanity’s only wish was to better itself through compassion and understanding.  Money was the root of all evil and was abolished in the 21st century shortly after First Contact.  So for much of my life, I resented capitalism.  I wanted to work for free because it would be for the good of man kind.  Naturally, overtime, I realized that my philosophy was naive and misguided because people would always take advantage of free.  I needed a compromise between charity and exploitation, and hence, my new found appreciation for business.  Business, by my definition, is about making people happy without killing myself to do it.

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Written by John Lai

October 18th, 2009 at 12:16 pm

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How to Grow a Web Business

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I’m sure every developer who’s ever wanted to start a business had trouble coming up with that one really awesome idea to make him millions. Personally, I feel that approach is too overrated. Here are two other approaches to consider:

Approach 1: Build for Niche Market

David from 37signals explains this one:

Watch live video from HackerTV on Justin.tv

Basically, don’t obsess over coming up with that one big application to change the world.  You have a better chance at winning the lottery. Instead, take an already existing idea and just make it [slightly] better. Then rely on marketing power to take it the rest of the way. Have several of these apps, and you will do quite well.

Approach 2: Focus on Creating Assets

Instead of focusing on which business idea has the most potential for profit, I focus on which business idea allows me to build multi-purpose/re-useable technology. The advantage here is that regardless of whether the immediate business succeeds or fails, I will have created an asset of value that I can re-sale or re-use in the future. There will always be at least one other person who will find my technology useful, and will pay me to use it. This is what I call the “no-loss” scenario.

Written by John Lai

March 7th, 2009 at 12:40 pm

Engineer or Entrepreneur?

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I recently sent an email to Matt Heaton, CEO of Bluehost and Hostmonster. Here’s the email and his response (thanks Matt!):

Hi Matt, I stumbled on your blog while shopping around for web hosting. I want to ask you a question related to career development

“Do you feel that by focusing on business, your technical skills deteriorate (or vice versa)?”

I ask because I graduated from engineering school 5 years ago (I’m 27 now), and I have been working as a programmer since. A few months ago, I quit my full time programming job to focus on my freelance projects and a couple of web start ups. I have never done business before, and if you asked me 5 years ago when I was still a student, starting a business would have been the most far-fetched idea ever. I would have been content working as a “programming guru”.

However, here I am today, having fun working on the projects “I want to work on” and developing my own software which I’m proud of. But the thing that irritates me is that I find it hard to become both an “expert” programmer and an “expert” business man because each discipline is so indepth…there just isn’t enough time to learn everything. I can be a “good” programmer and a “good” business man, which isn’t nearly as “godly”. I want to be able to do everything!

When I’m reading your blog, you seem to be an expert in business and an expert in hardware+OS architecture. It may seem this way to me because you’re much more experienced. But modesty aside, do you really believe you’re an expert in both arenas? What kind of sacrifices did you have to make to achieve this kind of expertise?

Thanks

John Lai

Hi John,

Sorry, I took a while to reply. I intended to do it the first day and then never got to it – I apologize. As for the following question…

“Do you feel that by focusing on business, your technical skills deteriorate (or vice versa)?”

In the beginning for various businesses that I started the technical aspect was always the reason behind starting the business, but with less employees the business side took most of my time. I always make sure to spend at least 50% of my time on technical aspects to “keep current” and learn new things.

At Bluehost and Hostmonster I spend about 70% of my time working on technical issues including Linux I/O bottlenecks in the kernel and userspace apps. I also custom design our network and hardware systems. Initially I did all the development work for all our web apps but can’t find the time for coding anymore. Only so many hours in a day! I can do this only because we have a very competent general manager that handles many of the day-to-day details that I don’t want to deal with anymore.

I am a bit of an enigma compared with most developers or IT people. I LOVE the technical side of things but frankly Im better at the business part of it than I am the technical aspects. The business side is very natural for me and seems to take far less effort on my part.

In answer to your question about being the best in both disciplines I completely agree. You don’t have to be mediocre in both business and tech, but if you split your time you will never be the developer you could be spending all your time coding – But thats ok to me. You ask if Im an expert in both areas and the answer is no. There are areas of business I’m very strong in and areas where Im weak (projections and accounting practices!!!). Technically I am very strong in I/O bottlenecks, kernel tuning, hardware, etc but have had to let go of my software development. I used to code all day long. Recently I wasn’t happy with the way a specific monitoring tool was working and it was the weekend so I decided to code it myself. It took about 10 hours to write. 5 years ago I could have written it in 2 hours. Those are the breaks, but I did it because the other things I chose to spend my time on made me happier.

The real question you need to ask yourself is if you will be HAPPY. What makes you happy? 100% coding? 80% coding/20% business? 50/50? If you LOVE it then you will do well. If you do something for strictly financial reasons then after a short period of time you usually start falling behind and a poor job is what follows.

I wish you good luck with whatever you choose to do and hope it makes you happy!

Thanks,

Matt Heaton

Written by John Lai

January 14th, 2009 at 2:31 pm