Sep 15 2008

It’s Easier Becoming an Infopreneur

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Entrepreneurs thrive during periods of rapid change, and we are living in such a time right now. The good news is that the more rapid the change, the greater the opportunities available to entrepreneurs.

The explosion of new technologies make this an unprecedented period in economic history for entrepreneurial opportunities: cheap computers, new software applications and digital networks – namely the Internet – are powerful tools available to everyone who wants to create financial independence and improve his or her lifestyle.

The Money Game

I’ve been a student of business since I began my career as a venture capitalist on Wall Street. Over the years I raised millions of dollars to finance numerous entrepreneurs and start-up companies until I decided to become an entrepreneur myself and financed my own companies in broadcasting, alternative energy, software, and telecommunications. I was the CEO of the company that built the first digital network in Moscow, in 1990, and started one of the first B2B Internet service providers.

It’s from this perspective that I see fantastic new entrepreneurial opportunities unfolding. And nowhere is this more apparent than in the world of communications and information.

Because information and communication are fundamental components of every human interaction and business transaction, each new communication medium – the telegraph, telephone, radio and television — has had a successively greater impact on the world, and created great fortunes for those who rode each wave of change. The Internet will be the most significant wave of all.

The Internet

The Internet now makes it possible to reach almost any person, anywhere in the world, in only a few seconds and for only a few pennies. But what makes it even more significant is that computers can convert all the traditional analog forms of information (sound and voice, printed words, pictures and data) into a common digital medium for transmission over the Internet. This capability is radically changing existing businesses and creating vast new entrepreneurial opportunities.

While the Internet is affecting every business in every industry, its greatest impact will be on the information industries’ products and services. Think of some of the biggest businesses in the world. Think entertainment (music and movies), think broadcasting (news, information and entertainment), think publishing (books and magazines), and biggest of all, think training and education (books, courses and continuing education).

To see the Internet’s potential impact, let’s look at one small, well-established medium: the book.

Analog Economics

A physical book requires harvesting trees to make paper, onto which a story or information is transferred via a printing press. Then many hands and lots of energy are required to move the book from manufacturing plant to retail store and, finally, to the consumer. This process is resource, labor and capital intensive.

To see how this works in financial terms, let’s consider the author of our book.

In the analog world she writes her book and receives 10 percent of every sale, or $2.50 on each $25 book sale. The publisher retains the remaining $22.50 for manufacturing, distribution and selling expenses. Let’s further assume that her publisher pushes hard and sells 25,000 copies in one year, a decent number in the offline publishing world. Our author would then earn $62,500 ($2.50 x 25,000 copies) for her creative efforts.

Digital Economics

The same book can be produced and packaged in a digital form known as an ‘eBook’, and delivered anywhere in the world in seconds, at 1/100th the cost and with almost no environmental impact.

So let’s assume our author writes that same book, but decides to become an entrepreneur in the digital world by setting up a small Web business and selling her eBook online, over the Internet, to a worldwide market. And for the sake of this example, let’s assume she sells the same number of books at the same price.

Looking at the costs of doing this, over the year she’ll spend about $2,500 to build the Website, $4,000 a month for a half-time Webmaster, $150 per month to host the Website (that sells and collects money 24 hours a day, seven days a week), and an additional $10,000 per month to buy pay-per-click ads on Google to get traffic to her site.

At the end of one year her expenses ($2,500 for construction, $48,000 for the Webmaster, $1,800 for hosting and $120,000 for advertising) would total about $172,300. On the income side, her revenues ($25 per copy x 25,000 copies) would total $625,000. When we subtract her expenses from her revenues, she’s left with $452,700. Cheap digital tools and the Internet’s reach provide her with the leverage to do a little more work…but make a lot more money. She could never enjoy this sort of success in the offline world.

This simple example shows the amazing leverage of becoming an entrepreneur and selling information products in the new digital world. Whereas in the physical world our author earned 10 percent of the revenues ($62,500), in the digital world she earns more like 70 percent ($452,700), or seven times more income.

The New Capital

This new digital world shifts the advantage from those with, or having access to, financial capital, to those with intellectual capital. And that’s exciting.

In the analog world of physical publishing, setting up the systems to manufacture, store, ship, distribute and retail books requires lots of financial capital. Plants and offices have to be built to hold the equipment, people and inventory. Trucks have to be purchased to transport the books to the stores that have to be opened to sell them. As a result, entrepreneurs have had to start almost any venture by first raising a lot of financial capital, commonly known as venture capital.

Again, the Internet changes all this.

In the digital world, the business infrastructure is embedded inside computers and networks, and increasingly intelligent software replaces most of the manual and clerical functions critical to any business. Setting up a digital business requires intellectual capital but relatively little financial capital. Thus the power shifts from the people with the money to the people with the ideas and intellectual horsepower to recognize, harness, and leverage the new information technologies.

The Economic Tsunami

Already we’ve seen 30-year-olds start with little or nothing on the Internet and become multimillionaires (even some billionaires) while large companies run to the courts in an effort to hold back the economic tsunami brought on by these new technologies and quick-witted entrepreneurs.

We first saw the digital world impact the music industry; now it’s affecting Hollywood’s monopoly on film and video distribution, and soon we’ll see it affecting the publishing and education fields. Much faster, lower cost digital systems are replacing traditional, slow physical manufacturing and distribution systems.

As the older physical systems crumble under the economics of the new technologies, countless jobs and careers are being lost in the process. We see long-term employment disappearing; pensions are on the way out; salaries are not what they used to be. And this comes at a time when the cost of living continues to rise. As a result, we all need to begin thinking more about becoming entrepreneurs – to understand and take advantage of these new digital technologies by creating new information products and services that will leverage our skills and expertise.

Traditionally, entrepreneurs have not only had to have the ability to envision something new, they had to raise the capital and build complex organizations to supply their new product or service, and then they required the skills to lead, coordinate and manage them.

Infopreneurs

What makes the Internet and information publishing businesses so exciting is that they don’t require the traditional skills of money raising, organizational development and management to launch and build. This opens the new financial doors to a much larger group of potential entrepreneurs.

Entrepreneurs capitalizing on the new areas of digital information publishing are becoming known as infopreneurs. They think and work differently.

Infopreneurs are the new entrepreneurs who envision ways to apply new information technologies and systems to satisfy market needs and wants. They can see and create new economic models. They don’t need to raise capital; they create it instead. They don’t manage large organizations; they guide small teams. They don’t work in corporate office complexes, but in bedrooms across America. They don’t have onsite employees, they have contractors spread around cyberspace. And they make a lot of money. This is the new breed.

The businesses they build are also different.

Virtual Businesses

Infopreneurs are creating a whole new category of opportunity known as virtual businesses. Virtual businesses exist almost entirely inside computers and networks. Most of the business functions that are handled by teams of people in the offline world are now embedded in software applications. Virtual businesses are automated collections of hardware and software connected to their customers via digital networks. They operate 24/7, selling and delivering information products to worldwide markets, with minimum human intervention.

Virtual businesses receive their customers over the Internet and respond with automated product presentations and virtual salespeople. Automated eCommerce engines process transactions, and products are shipped and delivered electronically. Software systems provide supervision, control and management.

Virtual businesses exist today that were started on shoestrings. Yet they serve the same number of customers and produce the same level of profits as venture-backed companies launched with millions of dollars and significant investments in plants and equipment. There are virtual businesses run from bedrooms that make more than companies with hundreds of employees. This is truly an entrepreneurial heyday.

Benefits of Becoming an Infopreneur

If you’ve often thought about becoming an entrepreneur, or you’ve looking at your existing economic world quaking and shaking, if you no longer see a bright future in a big organization, if you’re worried about your financial outlook, if you long for something different or more lucrative, consider becoming an infopreneur.

Becoming an infopreneur offers many significant benefits.

· You get to be your own boss. Working for yourself brings the freedom to work on what you want, when you want.

· You can work anywhere. Since all your activities take place via the Net, you can be anywhere in the world…on the beach in Hawaii, in a mountain cabin in the Alps, or at a Starbucks in Manhattan.

· You don’t need much capital. Info businesses can be launched on a shoestring and throw off capital instead of consuming it. The only significant capital you’ll need is the intellectual capital you create by learning how to exploit these new technologies.

· You can start in your spare time and at your own pace. You can start slowly and maintain your nine-to-five gig while you learn the ropes and develop the confidence and income to make the big leap to independence.

· You don’t need employees. All the specialized talent, skills, and help you’ll require can be hired over the Net, on a contract basis. There’s no overhead or burn rate to keep you up at night. You don’t even need any real management skills.

· You can make a lot of money. I personally know infopreneurs that make millions each year and employ only a few outside contractors. One is making over $8 million, after expenses, with just nine employees. That’s the leverage of virtual companies.

Internet information publishing is the most accessible entrepreneurial opportunity you will see in your lifetime. It’s the easiest, fastest and least risky way to create financial independence, or build a fortune. Best of all, you can do it on your terms, with no venture capitalists or shareholders telling you what to do.

Maybe you should consider becoming an infopreneur.


Wayne Van Dyck is the founder and principal of Six Degrees Media in Sausalito, CA. He is also the creator and developer of Smart Money Websites, the first complete, Internet Business-In-A-Box. If you would like a free copy of Wayne’s e-book, “How to Make Your First $50,000 Online” please CLICK HERE

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