$2M entrepreneur shares 19 hard-won lessons

19 Lessons from Building a $2 Million Online Business as a Solopreneur

Key Concepts: Bootstrapping, VC funding, Solopreneurship, Business Partnerships, Hiring Employees, Legal Considerations, Distribution, Idea Validation, Runway, Bias to Action, Shipping Fast, Customer Understanding, Marketing Gurus, Mentorship, Saying No, Audience Building, Tech Stack Selection, Simplicity, Leveraging External Services.

1. Don't Raise Money

• VC Funding is Not Always Ideal: While VC funding seems like a dream, it can lead to misalignment and pressure to take on excessive risk.
• Investor Experience: The speaker had an investor in their education business (which made $2 million). The investor, who sought out the speaker, persuaded them with the potential for 8-9 figure revenue, creating a feeling of lacking ambition.
• Vision Misalignment: The speaker was content with their existing success, while the investor pushed for more risk, leading to conflict.
• Control and Equity Dilution: Investors often control how the money is spent, forcing investments. Equity is diluted, reducing the entrepreneur's ownership and increasing investor protection.
• Buying Back Freedom: The speaker lost over $100,000 to buy back their investor, regaining focus and control. The token launch plan was related to the investor's influence.
• Bootstrap vs. VC: Bootstrapped businesses have a lower upside (e.g., $1 million/year) but a higher median financial outcome. VC-funded businesses have a low chance of making $100 million+ due to dilution and reliance on acquisitions.
• Decision Point: Choose between a good chance of making a few million in 5-10 years (bootstrapped) or a low chance of making $100 million+ in 5-10 years (VC-funded).

2. Don't Have Business Partners

• Negative Experiences: The speaker had multiple negative experiences with business partners.
• First Business: A partner left with all the tech (an app), leaving the speaker with nothing.
• Second Business (E-commerce): An oral partnership agreement led to the speaker being kicked out after two years of work with no compensation.
• Third Business (Part-Time Project): A project with someone who had a full-time job failed due to lack of commitment and bad incentives.
• Best Case Scenario (Rare): If you want a partner, find someone you know well, both go full-time, and have a signed agreement.
• Recommendation: Solopreneurship is generally less stressful and more profitable.

3. Don't Hire Employees

• Experience with Employees: The speaker's company, Ethels, had up to 10 employees.
• Reasons for Hiring: High revenue ($330,000 in a single month) and investor pressure led to rapid team growth.
• Challenges of Hiring: Difficult, boring, and expensive to hire, train, and manage people.
• Example: Paid $4,000 to someone who did nothing. A community manager quit and insulted the speaker.
• Delegation Strategy: Delegate strategically, but avoid full-time employees.
• Best Option: Delegate to an API: Clear output, known cost.
• Second Best: Buy a Service: E.g., an accountant. They do it better, and you don't have to train them.
• Consultants/Freelancers: More expensive than employees but lower risk. Clear transaction: pay something, get something in output.

4. Ignore All the Legal Stuff at the Beginning

• First Business Mistake: Focusing on legal setup (corporation, bank account) before generating revenue. It cost money and led to nothing.
• Current Business Approach: For the first two years of the current business (making $200,000), operated under the speaker's own name as a freelancer.
• Long-Term Benefits of a Company: Protection from lawsuits, deduction of business expenses, tax efficiency.
• Focus on Revenue: When starting, focus on generating revenue. Create a company once you have enough money to justify the expense.
• Legal Provisions: Profits made before incorporation can often be transferred into the legal entity (check with an accountant).

5. Distribution is Everything

• First Startup Failure: Focused solely on product development for months, resulting in no sales after launch. "Build it and they will come" is a fable.
• Current Business Success: Focused 70% of time on distribution (YouTube channel) from the beginning, resulting in $2 million in revenue.
• Time Allocation: Selling and marketing your product will likely take more time than building it.
• Developer's Dilemma: Developers often dislike marketing but must prioritize it for a successful SaaS.

6. Tips to Pick the Right Idea

• Three Constraints:
  • Excitement: Pick something that excites you.
  • Competence: Pick something you are good at or willing to learn.
  • Demand: Choose something that is in demand.
• Competitors: It's good to have a few competitors, but not too many. No competitors may indicate an untested market.
• Choose Existing Markets: Focus on markets that already exist.

7. Make Sure You Have Enough Runway

• Runway or Income: Don't quit your job with just a few months of savings.
• Steps:
  1. Learn a valuable skill.
  2. Find a high-paid job.
  3. Work on your side project or quit your job after having 1-2 years of savings.
• Expenses: Consider living expenses and SaaS costs (APIs, coding tools, courses, coaching).
• Stress: Lack of money leads to stress and potential failure.

8. Be Biased to Action

• Action vs. Thinking: Action is more important than overthinking.
• Overthinking Example: Spending months or years deciding which idea to pick.
• Learning: Doing the wrong thing is better than doing nothing. Reality is the best teacher.
• Decision-Making Tip: Don't aim for the best decision, just a good enough decision.

9. Ship Fast is Overrated

• Levels Hyo's Approach: Building 12 startups in 12 months.
• Business is Not a Lottery: Winning in business is not like a slot machine.
• Execution Matters: Most of the value comes from execution, which takes time.
• Lack of Focus: Switching to the next idea prevents proper execution and problem-solving.
• Commitment: Winning in business involves solving problems and persisting.
• Ethels Story: The speaker almost quit Ethels when it was making only $1,000/month but persisted and eventually made $2 million.
• Sweet Spot: Ship quickly, but persist for a few months before moving on to the next idea.

10. Know Your Customer Like Your Life Depends On It

• Focus on One Audience: Vertical (industry-specific) is better than horizontal (broad application).
• Example: Teachers or developers (vertical) vs. email marketing tool (horizontal).
• Marketing Advantage: Easier to target specific pain points in a vertical market.
• Customer Research: Find out where your target audience hangs out online (Reddit, Twitter, YouTube).
• Understand Pain Points: Study their struggles before designing your product.
• Avoid Building Without Understanding: Building a solution without understanding the pain point is a guaranteed loss.

11. Most Marketing Gurus Suck

• Coaching Experience: The speaker spent $20,000 on coaching and had two horror stories.
• First Coach: A great talker but not a doer, providing only psychological support.
• Second Consultant: Poor copywriting skills due to non-native English and inability to adapt to the speaker's voice.
• Marketing Guru's Skill: Selling their service, not necessarily helping you.
• Recommendation: Learn marketing yourself first, then hire a marketing guru who understands your industry (e.g., SaaS).
• Better to Learn With: It's better to hire someone to do something with you, so you keep learning.

12. Listen to Mentors Who Are at the Next Step

• Avoid Billionaire Advice: Advice from billionaires may not be relevant to your current situation.
• Next-Step Mentors: Seek advice from someone who is one step ahead of you.
• Example: If you're a software developer wanting to quit your job, find someone who has done that successfully.
• Resonance: Pick a guru that resonates with you and shares similar values.

13. Learn How to Say No

• Lost Focus: The speaker lost focus in their education business due to investor influence, business guru advice, and trying to serve too many audience subgroups.
• Symptom: Releasing more and more products, leading to confusion for the speaker and customers.
• Time Allocation: Saying yes to something means saying no to something else.
• Recommendation: Listen to many ideas but say no to almost everything.
• Say No to Yourself: Resist the urge to chase the latest trends.

14. Having an Audience is a Giant Cheat Code

• Audience Benefit: The speaker benefited from their YouTube audience for both their course and SaaS businesses.
• Easy Product Launch: Email list allows for easy product launches, feedback, and sales.
• B2C/Prosumer: An audience is helpful for B2C or prosumer (professional user) SaaS.
• B2B: Less need for an audience in B2B SaaS, but it still adds credibility.
• Audience Size: The audience doesn't need to be huge; a newsletter or small community can suffice.
• Downsides:
  • Time: Building an audience takes time (months or years).
  • Bad Signals: The audience may provide biased feedback.
  • Negative Impact: Building in public can help competitors if you're not selling to that audience.

15. Pick a Tech Stack That You Already Know

• New Tech Stack Trap: Trying a new tech stack for a startup project often leads to delays or failure.
• Difficulty: Learning the tech stack adds to the difficulty of building the app.
• Recommendation: Use a tech stack that you already know for production projects.
• Learning New Tech: Do a quick side project to learn a new tech stack.

16. Keep It Simple

• Avoid Big Tech Complexity: Don't listen to big tech startups for technical choices.
• Big Tech Problems: Big tech companies have complex problems (scaling, uptime, data privacy) that you don't have.
• Senior Dev Bias: Senior developers may overcomplicate things due to their experience in big tech.
• Service Selection: Choose high-level, simple services (e.g., Vercel) over low-level services (e.g., AWS).

17. Don't Build Everything Yourself for Your SaaS

• Developer Temptation: Developers may be tempted to build everything themselves to save money and because they enjoy it.
• Use External Services: Use external services and APIs as building blocks.
• Time Savings: Saves time, allowing you to focus on core features and marketing.
• Examples: Superbase for hosted database, Auth0 for authentication, Rapid API for data.
• API Marketplaces: Use API marketplaces to find existing APIs.

Conclusion

The speaker's 19 lessons emphasize the importance of bootstrapping, focusing on distribution and customer understanding, avoiding unnecessary complexity, and prioritizing action over perfection. By leveraging existing tools and services, solopreneurs can maximize their efficiency and increase their chances of building a successful online business.