I am a huge fan of great, simple ideas. When I first heard of the TropicalMBA, I thought it was a brilliant concept with lots of potential. Just the name alone, conveys all the information you need to know. What better way to learn about business, then interning with a successful entrepreneur in an exotic country? In this interview, Dan Andrew talks about how he started the TropicalMBA, how he makes money and gives advice for aspiring entrepreneurs.
Please tell us about yourself
After studying philosophy in college, I sort of blindly jumped in to business because I assumed that business guys had a lot of freedom in terms of how they spent their time and where they can be located. I didn’t really have a plan, but in retrospect I think I was right about the business thing. Being an entrepreneur allows me a great deal of freedom in how I spend my time and I also get to be creative, which is really important to me.
It took me a little while to figure out how to get the kind of freedom I was looking for. I started my business in 2007, basically the day after I read the Four Hour Work Week. At the time I was working as the Vice President of Operations for a small manufacturing firm, and even though I was making good money, I wasn’t able to afford the kinds of adventure and freedom I wanted in my life.
At that job, I started hiring web developers and experimenting with outsourcing to improve our marketing. As I learned about things like SEO and web development it dawned on me that by becoming an expert in that stuff I could make a living from anywhere. After the business made its first few sales I quit my job and took off to travel.
I don’t want to portray it like one day I was just free and galavanting around the world. Although I can work from anywhere and do a lot of cool stuff, I still have tons of responsibilities (like payroll!) and its not all fun and games. For me, building a lifestyle business is a ton of work and freedom increases gradually and by degrees, it doesn’t just arrive overnight.
Where do you spend most of your time?
I’d describe my lifestyle as semi-nomadic. I travel a lot and generally spend about 3 months in a location. Since I quit my job in San Diego I’ve pretty much been drifting from condo to condo. I’ve spent time and done my work from San Diego, Pennsylvania, New York, Montreal, Saigon, Hanoi, Bangkok, Manila, Dumaguete, Puerto Galera, Phnom Penh, and Bali. I’ve set up offices and hired employees in Vietnam and the Philippines, and checked on our suppliers in China. This year I’ll be renting a space in Bali to meet and hang out with my TMBA interns.
Please introduce your main sites, Tropical MBA, OutsourcetothePhilippines and the LifestyleBusinessPodcast.
The TropicalMBA is basically my personal blog where I occasionally offer paid internships for aspiring digital nomads. I started the Lifestyle Business Podcast because I’m a radio nerd and wanted to have my own show, and OutsourcetothePhilippines.com started as a place where I could share my experiences setting up a business in that country.
You wrote that you had sales of more than $800,000 last year, exactly how do you earn an income?
We aren’t known for giving satisfying answers to this question. If my product were an information product I’d be showing everybody everything, but with hard goods its a zero sum market. There can be a downside to revealing how I make my money. For example: one of the products I sell is a particular kind of safe. If I start publishing on the web how much money I’m making there, and show the key terms, it really has the potential to damage my business.
In general, we basically do niche marketing but with manufactured products. My business partner @AnythingIan is a product designer. We got started in business by designing and manufacturing products for niches that we felt were under-served. We develop industrial products for hotels, restaurants, and we also have a line of consumer cat furniture.
We got two new interesting sources of revenue in 2011:
1) Contracting. We’ve started to do environmental design and contracting within the parking industry, which is really exciting because the deals can be quite large. We are currently working on securing new contracts and
2) Information products. This year I’ll be launching a private membership site for entrepreneurs, a guide to setting up a business in the Philippines, an expat living guide to Bali, and a product that helps people make money by flipping used cars.
I love the idea of the TropicalMBA, can you please tell us about that?
Starting the TropicalMBA really changed my life. Exploring the world while I work is really a dream come true for me and I’m so happy to get to help others make the same transition. I came up with the idea when I was in the Philippines looking to hire a PHP developer. I had a budget which was pretty decent. It occurred to me that when I was in a job hoping for things to change, I would have jumped at the chance to have that salary I had budgeted for a Filipino employee, provided I could earn it from anywhere and have a good learning experience out of it. So I bought the domain and put the offer up there. You can still see the first post on the site now.
The response was pretty overwhelming– I got some incredible applications for both semesters and ended up hiring two incredible guys who are now great friends of mine and still working for my business.
I’m really in love with the idea of the program, and if our business continues to do well I hope to provide many more internships in 2011.
Why did you go the podcasting route for the Lifestyle Business Podcast?
The podcast has been up until this point a 100% passion project. I’m a total radio and podcast nerd. I used to skip high school to listen to the Howard Stern show, and I still listen to tons of podcasts.
Podcasting is a lot of effort, but for me its so much fun. I feel I am learning to communicate better. I think the people who listen to our show have a more intimate and trusting relationship with us than if we were writing.
I’d say if I could do only one project for the next 5 years, it would be the podcast.
You wrote that you have more than 80 domains, can you give some advice on choosing profitable niches?
I think one thing about niche selection that isn’t talked about much is expertise, this is especially true in conversations surrounding affiliate marketing. The more you know about a niche the more likely you are going to be successful in it.
I’d also suggest that you chose niches that you love. Any way you slice it, being successful takes tons of work, so it sucks to slave away at niches you don’t care about and it’s difficult to keep up the energy for it. I’ve been successful in a few niches I don’t care about (safes?!) and I’ve handled it by hiring myself out of that role.
What country do you pay your taxes in?
We have a California S-Corp and we’ll be finalizing a corporation in the Philippines this year. We have an accounting firm, an office and warehouse in California, and we offer health insurance to our employees.
Have you had to set up a business or get any special visas or licenses to work in other countries?
Oh my! I could go on for days… Right now we’ve got people on the payroll in Vietnam, China, the Philippines, and the USA. Currently, all but our US employees are technically independent contractors. I’ve gone through all kinds of visa stuff to operate overseas, but in general, you can operate on tourist visas as long as your primary corporation is in the US and you aren’t making money in the country you are in.
Can you give some advice about outsourcing?
My favorite outsourcing site at this time is Odesk.com. My best advice about finding employees overseas is that you should treat them just like you would any other employee. I think a lot of internet marketers and online business people underestimate the time and commitment it takes to have an employee on board.
If you were new and starting today, what would you do differently?
I would find one small creative project that I could pour all of my energy in to. I have a zillion things going on right now, which is cool, but sometimes I’d like to have a little more focus. I also would not do hard goods again. It’s too tough to make a buck. I’d focus on information products and software. If I had to start form scratch, I’d just wake up every morning and do the Lifestyle Business Podcast.
Lifestyle Business Podcast
Outsource to the Philippines
Follow The TropicalMBA on Twitter
Follow The Lifestyle Business Podcast on Twitter
Dan, your Tropical MBA plan is awesome! I know you’ve only done it a few times, but do you have any statistics to share about how it worked out for the individuals that joined you (increase in revenue, number of ideas implemented, etc). There are a number of projects I hope to work on during my around the world trip and it would be incredible to meet up with other aspiring entreprenuers to share accommodation/internet/feedback. John, as usual, thank you for introducing these amazing people to your readers.
Rockin’ Jannell, thanks for the kind words. We’ll be spending a good portion of the year in Bali so def. look us up if you swing by. In terms of the success of the gents involved, I’d say better than expected… they both got full time gigs with my company but I expect that they’ll move on eventually because their personal businesses are doing so well. I look forward to working with them as partners at that time 😀 I’ll be running more internships this year.
Andrew @ DUBturbo
It seems like going the physical product route is much more time consuming, expensive and risky. I would be worried that a product I spent time and money on would not sell. Although, I suppose if you are creating superior products in an under served niche that there would be demand.
Do you think in the future you will stop designing and manufacturing products, and go more towards informational products?
I think everyone wants to create information products because of the lower cost and lower risk. However, I think that needs to be weighed against the competition. How many make money online ebooks does the world need?
Selling information products is only going to get more competitive with further price competition. The very fact that physical products are more expensive and risky can make them a better opportunity because it will keep competitors away. Anyone can set up a blog and sell an ebook, not everyone is going to source and distribute physical products.
I also think physical products are an easier sell. People understand exactly what they are buying. With information products, it is more important to play on emotional triggers and human gullibility. “If you don’t buy this now you are going to lose out.”
Hey Andrew– we are doing more info products in the future… they have their own set of challenges… like figuring out when you are done with one, or when you have failed, or ensuring you have enough credibility in a market– and perhaps most importantly, sustainability. A lot of info guys are in “perpetual launch” mode which is something we very much want to avoid. We’ve found with our hard goods products that we’ve got a little more consistency year to year and we can count on the income more.
In general it’s tougher to get started, and like John said it means you are competing against less people. You also need less “attention” to make a sale, which can be a good and a bad thing.
One way we make physical products less risky is do market testing with ‘dummy’ websites the same way an information marketer would. For example– set up an adwords campaign and see if people click on the “buy now” button. If our conversion rates look right we’ll plunk down the cash on a production run.
We talk a lot about this stuff on our podcast if you are interested (lifestyle business podcast) and feel free to ask further questions, we are looking to help others build businesses. Thanks for reading !
hm, what’s that in Dan’s hand and how come it’s not a coconut?! 🙂
Tropical MBA, Startups for the rest of us and Empire flippers are three of my favorite podcasts. keep it up guys!
Thanks for visiting Peter.