Jonathan Maxim

The Future of Investing - Automated Businesses

In this article I’m going to discuss the future of investing and entrepreneurship. The entire calculus of the investment game is changing at a very rapid pace (Now that people are starting businesses without even lifting a finger or doing any of the work).  Many are reaping the benefits.

Let me stop you before you leave this tab, like I usually do when I see a promise like that. “Don’t do any of the work, but get all the benefits”? Sounds too good to be true.  So, typically, I would say run the other way when you see these kinds of promises online.  Most of them are ruthless and unscrupulous.  At best, these types will give you a headache and waste your time.   At worst, you could be their next sucker. I promise though, this opportunity is different and I can prove it to you.

This isn’t about letting someone else do your thinking for you. There is something that will be required of you.  I suppose you can think of it as work because it does require some time and a little bit of effort on your part.  Once you’ve set this up, many people are truly raking in solid cash income without having to sweat it.

I'm going to unpack it all below.

A New Market That Wasn’t Possible, Until The Internet Reached Its Current Level of Elaboration & Scale

The bottom line is this is a booming new market right now, for everyday-retail or amateur investors alike.

People are comparing it to investing in real estate, the stock market, exchange traded funds (ETFs), and cryptocurrency.  This may be an asset class unto itself.

This is a microcosm of the world of Mergers and Acquisitions (M&A).  Peek inside this world of buying businesses with me for a moment.  What I’m really describing is a world of micro-transactions that power micro-acquisitions of automated companies that I’m describing.

The “micro” aspect of this is extremely powerful because that’s where you can get in at almost any amount, to start playing in this arena for upward income mobility.

What matters here isn’t the amount being spent. What matters is the economic usefulness and business intelligibility of your micro-business.  Once these elements are sorted out with a decent input of your time and money at this micro-level, then it can be scaled and become huge.

I’m discussing nearly-fully automated businesses. They start out as baby residual income machines, but with the correct business plan, that takes into account scale and the virtue of online opportunities, it’s a brand new world to explore in business.

Automated Business: A New Trend of AI and Decentralized Staff Managing Your Business

So what are automated businesses?

Automated businesses are a new trend where teams, powered by a lot of software and a lot of decentralized staff, oversee a business and work together to scale it (With just a little oversight and input from you/the business owner).

Each integral part of the business takes its portion of the profit and whatever is left is yours to keep, spend, or save at will. The way it works is all performance based compensation, for bite-sized, effective actions required to maintain and grow the business.

Rather than a salary, each piece gets their performance-based compensation, and what has made this so possible for a massive number of new entrants into this business model…Is the rise of big data and metrics.  This has enabled the possibility that each successful task is tracked and completed on-time.

The better any part of the business does, the better the entire business does. The better the entire business does, the better every part of the business will be able to do. It’s a positive feedback loop in action.

This is a super interesting category and it’s blowing up very quickly.  Right now you could say it’s in its very nascent stages, still new and going through the rapid growth part of the S-curve for market adoption— meaning it still holds enormous potential.

In fact, it’s almost all upside out here at the moment.

With any new industry, just like crypto, when you’re in the early stages there are hiccups and turbulence along the way.  After all, entrepreneurs beginning to wield these new instruments form a volatility of sorts across new platforms with new data structures.

That might sound like too much but it’s all new in terms of opportunity.  This is due to the network effects of a maturing Internet. So if you're looking for the next wave to catch, or if you're worried that you missed the last wave, this might be the time to lean in and read on.

In another article, I’m going to tell you about my experience running my first automated business; a simple Amazon store that made $45,000 in its second month running.

In this article however, I want to give you an overview of what these automated types of businesses are, how they work, the risk, and how much money you can make with these systems up and working for you.

Questions Everyone Should Be Asking Before Investing In Or Starting An Automated Business

To start off: What businesses are automatable?

You may think of automation as software. Generally these businesses are very software powered. They are mostly on tech platforms. But there’s also a ton of human power that people are leveraging over these platforms, going back to “The World Is Flat” concept from the New York Times’ Thomas Friedman, right?

So getting freelancers here or overseas for five bucks an hour or ten bucks an hour (or twenty-five bucks and hour, or $100 bucks an hour, etc) — To perform specific tasks the business needs done that are measurable, trackable, and can be compensated on a performance basis easily by metric.

I think it was Mark Zuckerberg, maybe it was him or some other tech CEO who was on Joe Rogan’s program some time back and said that essentially any corporation or business today is a cybernetic organism, an organization of software applications and people doing work.

These businesses have a gigantic suite of ready-made software out there, tools, and platforms that can be snapped together to plug and play.  All it needs to run is the marginal cost per unit produced and sold, and minimal upfront fixed costs to get started and running.

These are beautifully ideal businesses for making profit from basically no money to start off and scaling as far as the eye can see, deeper into their entire addressable market in a short amount of time.

So many entrepreneurs are finding their wheels in what feels like overnight success by building automated businesses this way, and that can absolutely catch fire and launch.

If Drop Shipping Was Ever Dead, Automated Business Tools Have Breathed New Life Into Them...

It's like a blueprint that you can reuse for each business. So the different types of automated businesses that are getting popular today are first, Amazon and Walmart, right?

Amazon is the biggest retail ecommerce provider there is, and Walmart has grown online sales massively to stay in stride with its Silicon Valley twin.

They all get the lion’s share of all the online business, right?

Every brand typically has an Amazon store to complement their brick and mortar operation or their Shopify store, wherever else they’re bringing their goods to market.

Think about Amazon: I don't know about you, but I place sometimes one, two orders a day now. At this point, I order everything from there. And because there's so many people doing what I'm doing, there is a metric cluster-you-know-what tonne of unmet demand on that website.

So the key play to make here is looking for a niche where you can list a product that's got a lot of demand and very little competition. And you could be selling 100 units a day very quickly.

That's how people scale these stores so quickly.

So Amazon and Walmart together is one category where automated businesses are in the middle of a Cambrian explosion of growth. Ecommerce gurus who say the advertising is too expensive on Facebook now per unit profit, or that the competition has saturated automated drop-shipping businesses are plain wrong. The automated business segment is flourishing.

That would be like saying at the beginning of the 1970s that Rock’n’Roll music is saturated and there won’t be any great rock bands or new rock music anymore.

People were actually worried about that back then. They felt like Rock music had its time in the 1950’s and ‘60s and that Disco and Pop music would be all we had left after the Beatles.

The ironic thing is that’s exactly what producers said about the Beatles when they were getting close to their big break, working out their music and live performance in Liverpool, UK. They said, “Guitar music is on its way out.”

Boy were they wrong about that! Then after the Beatles, the ones who didn’t listen to the naysayers became the Eagles, The Stones, and all these other rock groups that all at the same time seemed as singularly important as the Beatles were in the ‘60s.

It’s the same thing happening all over again with automated e-commerce stores.

There are, at this very moment, going to be Def Leppards, and Twisted Sisters, and Princes, and Billy Idols, and Quiet Riots, and Van Halens of e-commerce rocking this new situation with online marketing—

Automated Businesses Built on Amazon, Shopify, Facebook Shops, Etsy, YouTube (Any of them with ads)

Both Amazon, Facebook Shops, and Shopify are all similar in the sense that you can be a merchant and sell on them. You can sell branded products or wholesale products.

Drop-shippers, of course will retail wholesale products, and bargain shoppers that turnover inventory on sale to online shoppers will gravitate to branded products as well as whatever they can find in a profitable niche from wholesale outlets to market online this way.

YouTube Channel Automation Using Performance Paid Freelancers

So, those ones are pretty similar. Next, there's YouTube automation. YouTube automation is the process of starting a channel around a certain niche. A team does all the research and figures out what niche and what content is needed.  You just produce enough content until you get to 1,000 subscribers.  You either produce the content yourself, or you can automate that process to be offloaded to freelancers that have a demonstrable track record of building channels.

If you compensate the freelancer per subscriber added over a certain period of time, then the compensation model is proof & the control to keep you from spending unnecessary money. Then, you don’t even need the team to do the research. It’s just however many freelancers you bring on to get the job done on a performance-compensated metric.

Your channel is monetizable after you reach 1,000 subscribers and 4,000 watched hours of content from your channel.  That’s when you can start getting paid for how many views you get, as well as clicks of the ads YouTube serves when someone watches your channel.  This way of building an automated business using a YouTube channel to build an audience and then advertise to them is lower risk because of the controlled way of paying for results only.

I like that model a lot because of the lower risk and because it is fully compliant with YouTube creators. As a result, YouTube channel building is beginning to become very popular. Next, we have Shopify automation. Automating Shopify is when an outsourced company of freelancers, or a group that specializes in that, either builds or buys you a branded store.

They'll make you a Shopify store with a certain set of products. It's similar to what you would do on Amazon. But you use ads to power it. A lot of people still make a lot of money using Shopify automation. I think this is the first e-commerce automation space that I saw.

Shopify automation works well. It can make a lot of money, but the issue is, you have to pay for advertising to keep sweeping new prospects into your funnel.  This is opposed to Amazon, where you have to pay for advertising as well, but the margins are different.

So, your margins are typically going to be better with Amazon if you get the right balance of fulfillment cost and advertising cost to purchase price - for a niche that strikes a market of buyers, from seeing the ad to making a purchase.

Trucking Automation Businesses

Trucking automation is super interesting, into the supply chain type of business, because who thinks of automating the most human possible business out there, right? People driving trucks?

Well, first, there are going to be self-driving trucks, and there are electric trucks. So a lot of people are automating through those mechanisms. But the general business model is that you use a blueprint, like starting a franchise, instead it is a digital franchise of a trucking company.  All you have to do is find a driver and a truck.  Somebody else will handle the dispatch and getting orders and all that.  You basically just make profits as the investor.

I haven't personally run a trucking automation company yet, so I can't provide personal experience on that. But I do know some people that are and it's definitely growing in popularity.

Next we have Airbnb automation. This is where you do arbitrage. You get a bunch of rentals and you turn them into Airbnbs. There is also Turo automation, where you get a fleet of cars and you do the same thing, using an arbitrage markup model to resell those cars as rentals on Turo.

Automated Stock Investment Business

You could automate a stock investment business that sells any number of investing products from investment knowledge and education, investment plans, investment portfolio planning, managed funds, hedge funds, derivative investments, leveraged trades, (etc.).

That would involve, like finding the right niche to sell on Amazon and Shopify stores with ad networks directing viewers to your product offer, getting the balance right of ad costs and product fulfillment cost to your retail price with delivery. It’s fairly simple.

And the way they automate that is through bots, they have trading bots that trade the market based on historical algorithms and can predict the incomes and outcomes of certain trades.

This type of automated business is super interesting to me as well, I'm in the process of starting one right now. Because the AI and the technology trading the bots has gotten so advanced, at this point, it’s generally better than a human investor.

Therefore, as long as your batting average is above 51%, meaning you win 51% of your trades, you're going to be profitable. That model is quite easy to run, as you can imagine. And then there's a whole world of other passive digital assets that do not have a tech platform that are growing in the number of potentially high profit digital capitalism opportunities.

I urge you to explore these new automated business spaces and if you have any I haven’t covered, reach out to me and I would love to cover them in a future article.