In yesterday’s newsletter, I wrote about how I like the productized service business model of Scribe, the book writing and marketing company. A productized service is basically a limited scope of services offered for a fixed price. This is in contrast to doing custom services in a typical service business where you have to quote and sell each project. The TropicalMBA has a more nuanced discussion with Maryl Johnston, founder of the online bookkeeping firm Bean Ninjas, around that business model. They are some drawbacks, such as the long time until profitability compared to just consulting. Also, a general productized service business can be a race to the bottom as new competitors enter and lower prices.
Dan and Ian of the TropicalMBA have some interesting discussions on their latest podcast. They talk about the SaaS products they are adding to their Dynamite Jobs board because of all the competition in that space. The best discussion is about getting through the grind of building a new company. They coined the 1000 Day Principle that says it takes about 3 years to recreate your professional salary from an asset you own. The hardest part is the second year when you are putting all your time and money back into the business but not really getting anywhere. They call that the grind, or what Seth Godin calls The Dip. This is where many entrepreneurs give up. “It’s a special brand of pain and suffering because, look, three years is a long time to be broke.”