Today, I want to spend a couple minutes talking about a blogger named Darren Rowse, a man whose skill in building a blogging empire I respect immensely. He’s a guy who runs a collection of highly successful blogs, one of which is called problogger.net. If you visit the website worthofweb.com/calculator and punch in “problogger.net” into the site estimator, you will see that Darren’s website makes an estimated $26,000 per day, which is translated into $791,000 per month, which gives him a pre-tax income of almost $10,000,000 per year from this website alone (and keep in mind this is just one website that Darren owns).
Most likely, the readers of this site wouldn’t mind reaching a point in life where they make $18 every minute that they stay alive (and it’s really fun when you go to sleep for 8 hours and realize you just made over $8,600. Seriously, every time he sleeps, this website makes him 25% of the average American household’s annual income).
The question worth breaking down into discrete elements is this: How on earth do you reach a point where you can make $26,000 per day—or hell, per month? Here’s my guess at how Darren made it happen:
It all starts with perseverance. He started out writing in the early 2000s. With very few exceptions, it is going to take at least 500+ articles of over 1,000+ words to make it as an online blogger, from an influence and income perspective. During my first week of starting this site, I think I made $0.22. And I think spent more than 22 hours getting this sucker started, so I can honestly say I worked for under a penny per hour at one point. Some of you follow my writings on Seeking Alpha. If you view most authors on that site, you will see under 30 articles in total written. That’s because coming up with content is hard, and most articles are the result of a two-hour process: an hour of reading, and an hour of writing. Darren has been writing every day for ten years, but the initial hump is the hardest.
Eventually, though, once you get a couple hundred articles under your belt, things start to change. A following of regular readers (who like your personality or the information that you give them) starts to build up. You have a couple hundred different places to show up in a Google search engine. And then you reach the tipping point where you can outsource content creation: people become willing to write guest posts for your site in the hopes of bringing some traffic to theirs, and this lets you off the hook as the website owner since you keep the people coming without having to do the work of producing the content.
Think about: about 400 or so posts show up on his site per year. And do that for ten years, and there’s at least 4,000 ways that someone can stumble upon your website. That number is huge. And in Darren’s case, it’s much higher since you contributed significantly more than one article per day to his website in the early years. It wouldn’t surprise me if he had more than 10,000 pages worth of content on his problogger.net.
And lastly, he has chosen a topic that has stimulated a lot of interest: running a successful blog. If he had chosen to write a blog dedicated to the most effective grass seeds for lawn maintenance, he would not have a blog bringing in $10,000,000 per year. There are countless things you can say about building blog traffic and running an effective website, but there better not be 10,000 ways to talk about grass seed selection. Secondly, advertisers aren’t going to be willing to pay the big bucks to place ads on a website about grass seed—the money just isn’t there. And last, and most importantly, the grass seed market is not that big. Darren’s website brings in 1.7 people per day across the world. Yes, that’s 0.005% of the population of the United States each day reading his blog. If he wrote about grass seeds, you’d be lucky to get 5,000 readers per day as a final endgame.
All of these factors have implications for those of you who want to be successful investors. For instance, the early days of dividend investing are quite similar to the early days when Darren was working madly on his blog before the cash register started ringing. A $1,000 investment in Coca-Cola will only get you $27 or $28 right off the bat. That, in and of itself, may not be terrible exciting. What is exciting though is that you are entitled to every dollar of dividend income that those 25 shares generate between now and entirety. You are the owner. As the profits grow, the dividend will grow, and those 25 shares will pay out more. If you choose to reinvest, your dividend reinvestment will purchase new shares, and you begin the expansive process of creating friends that generate profit on your behalf.
And just like Darren has a collection of tens of thousands of posts throughout the internet that can show up in a search engine at any given point in time, bringing visitors to his site and generating revenue, you too can simulate that experience with a diversified portfolio. You can have $500 checks from BP over here, $400 dividend checks from Exxon over there, $220 checks from Colgate-Palmolive showing up in that account for you, $780 in Philip Morris International income coming in, and so on. As you collect assets throughout your life, you are like a baseball General Manager that is putting together the best farm team that will help his team win the World Series. And the World Series for us is a thing called financial independence—the ability to reject work as a necessary condition of survival and only engage in projects that bring us happiness or develop a character trait that we seek to possess.
And lastly, Darren chose the topic of blogging which is something a whole lot of people contemplate at some point in their lives. It makes sense—sharing your opinion and having the feeling of holding a microphone out to the world is fun, and you don’t have to show up anywhere at 8 AM or engage in BS office politics. Because of this heavy interest in the field, Darren writes on a topic that has essentially unlimited demand.
Likewise, when you construct a portfolio, you should look to acquire assets that have avenues for growth. Colgate-Palmolive sells toothpate among hundreds of other things. They will be selling more toothpaste five years from now, because brushing your teeth is a pretty widely accepted thing to do in most cultures. The growth potential is there, so you make an investment in that kind of market. Contrast that with investing in a print bookstore company—the best case scenario there is that you maintain the status quo. The economic forces are destroying demand for print resources, so why invest in a field that will deteriorate over time? Don’t be the grass-seed blog guy type of investor.
Of course, there is more to it than just that. Darren possesses skills that many other bloggers do not possess—he can title posts well to bring in traffic, he knows how to play the backlink game to move up in the hierarchy of internet credibility, and so on. Investing is the same way—it takes a while to realize that McDonalds owning the real estate at 19% of its stores obscures some of the numbers on its balance sheet. It takes a while to realize why Johnson & Johnson’s current profits are understated. There is a deep art to all of this, and I don’t mean to understate that component. Instead, I want to point out that you can get a lot of mileage out of practicing perseverance, outsourcing your life so that you have ways to generate money beyond your own labor, and it can’t hurt to focus on areas that are naturally growing. If you do those three things, you will guy a long way towards becoming an intelligent, wealthy long-term investor.
Originally posted 2013-11-19 08:21:10.