Engineer Fired For Outsourcing Himself To China

January 17, 2013 3 Comments

The 4-Hour Workweek

The 4-Hour Workweek: Inspiration for an engineer outsourcing himself to China?

If you’ve read the 4-Hour Work Week, you know that one of the key concepts is outsourcing routine or repetitive work to Virtual Assistants. Timothy Ferriss calls it “geoarbitrage”, which is a fancy way of saying that you can benefit from the fact that what costs $60 dollars an hour in the US is $12 elsewhere.

In the book, Tim suggests that geoarbitrage is a great way to build a lifestyle business — one that can eventually free you from your day job.

Well, here’s a brilliant guy who has taken this idea to the next level. His name is Bob (not his real name), but get this: Bob is believed to have outsourced his own full-time job to a Chinese sub-contractor.

With his free time, he surfed the web and took it easy.

According to this article on The Register, Bob caught got because his company noticed that he was regularly logging in from Shenyang, China.

They probably thought, WTF?  (I’m thinking WTF — is this story true!?)

Allegedly, Bob is said to have FedExed his two-factor authentication token to a Chinese programmer, and was paying 1/5 of his 6-figure salary — freeing Bob up to spend the rest of his time taking it easy.

Believe it or not, here’s Bob’s typical schedule:

  • 9:00 AM: Get to work, surf Reddit for a few hours, and watch cat videos
  • 11:30 AM: Eat lunch
  • 1:00 PM: Spend time on eBay
  • 2:00 PM: Do some Facebook updates, visit LinkedIn
  • 4:30 PM: Send an end-of-day update via email to management
  • 5:00 PM: Leave the office

Apparently, this was working out pretty well. Bob’s performance reviews showed him as a top engineer for many quarters.

It gets better.  It turns out that Bob had also taken jobs with other companies, and had outsourced that work as well. Allegedly, he was netting hundreds of thousands of dollars in profit.

Wait, Does This Really Work?

OK, so I’m a nerd, but stay with me for a moment: let’s put aside the legality of what Bob did, and just take a quick look at the business model:

  1. Let’s imagine Bob’s salary is $120,00 p/year, or $57 p/hour. Let’s assume that’s $40 after taxes.
  2. Let’s imagine the Chinese programmer’s hourly rate is $12 p/hour.
  3. This yields a p/hour (after tax) profit of $28 p/hour — a 70% profit margin.
  4. In a year, Bob takes home $83,200, and out of that, pays $24,960 to the Chinese contractor so that he can spend time surfing the internet. He’s left with $58,240 to compensate him for his ingenuity.

And finally: Let’s imagine that Bob somehow figures out how to get hired at one other company (oh wait, Bob did do that) for the same yearly salary of $120,000, and puts the same process in place.

Assuming all other things are equal, he nets $58,240 from this gig as well, bringing his total yearly take-home to $116,480.

I must say I’m dubious of this story, as I cannot substantiate that our friend Bob actually did this.  But what if it’s true?

Question: Legal issues aside, what do you think of Bob’s scheme? Is it stupid — or brilliant? 

Filed under Entrepreneurship, Productivity Tagged with

Case Study: Building a Blog That Generates $500,000 Yearly

January 13, 2013 3 Comments

Have you ever wondered how bloggers generate income?

John Chow, blogger

John Chow: A blogger who generates $500,000 p/year.  Looks like a nice guy.

Previously, we looked at Tim Ferriss and methods he used to build a high traffic blog, and today we’ll examine a blogger named John Chow, who claims to generate on the order of $500,000 per year with his blog.

John has an interesting story: read more about John here, and take a look at his smiling face on the right of this page.

He seems like a regular, down-to-earth guy, who has put in hard work to intelligently build his blogging business.  While some of his stuff seems a little salesy, his methods are worth a look.

At the bottom of this post is a video [56 minutes] where he describes the techniques I’m about to summarize.

Most often, people think that selling advertising on a blog is the only way to make money. John’s model certainly incorporates advertising, but he claims that only 1/3 of his revenue comes from the model where you get paid based on the number of pageviews.

The majority of his revenue comes from what’s called the “back end”: a well-planned system for generating income behind the scenes, even while he sleeps.

Here’s how John does it. Read more of this post

Filed under Entrepreneurship, Sales and Marketing, Strategy Tagged with , , , ,

How to Build a High Traffic Blog Without Going Crazy: Secrets From Tim Ferriss

January 7, 2013 3 Comments

A few years ago at the Inc500 conference, I had an opportunity to meet Tim Ferriss, author of “The 4-Hour Work Week,” “4-Hour Body,” and “4-Hour Chef” (all three are New York Times and WSJ best-sellers). Tim has a great blog at fourhourworkweek.com/blog/, and has built a successful empire around his content.

Around the same time as the Inc500 event, Tim spoke at the WordPress Conference about how to build and optimize a high traffic blog.

Even though it was a few years ago, some of the lessons are still helpful and relevant. Here’s a summary of some of the interesting points:

Read more of this post

Filed under Communication, Sales and Marketing Tagged with , , , ,

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