About four years ago I read "The 4-Hour Work-Week" by Tim Ferriss, and was enthralled. The book promises to show you how to obtain financial freedom, visit exotic places, and have loads of fun while doing it... sort of like channeling your inner Richard Branson.
Sign me up!
A friend of mine who recommended the book said "I don't recommend doing everything he says, but some of it is really good." I soon learned that this was sage advice.
Join the New Rich?
For those unfamiliar, the tagline of the book is "escape the 9-5, live anywhere, and join the new rich." In other words, the book promises the ultimate in autonomy. No more daily grind, do whatever you want, and so on.
Like most people, my question was mainly about how the money would work. The main idea he proposes is to obtain products and services from developing countries, and selling them to more wealthy parts of the world. The idea is essentially to act as a middle-man and live like a king off the proceeds.
Ferriss' Model is Fraught with Ethical Dilemmas and his Business Model has Flaws
I reflected on this as a way of life and decided it was a terrible idea for two reasons... firstly, it hurt my conscience, secondly, it's very difficult to pull off this type of business.
Ethical Problems: It's very difficult to ethically source products and labor overseas, particularly when you're a sole proprietor and have limited ability to check things out for yourself. How are the working conditions? Are the companies you're dealing with paying workers a living wage?
Even if working conditions are great, how good are you supposed to feel about living a life of luxury while other people work their tails off to support your life?
Business Model Problems: The business model Ferriss proposes has holes large enough to drive a Mack Truck through. One specific business plan he puts forth is to launch an e-commerce store, buy AdWords to drive traffic to the store, and sell drop-shipped products. Anyone in the e-commerce world knows this is insane for three reasons:
- Hosted e-commerce sites cost about $80 a month, and $1,000 to $30,000 to pay someone to professionally deploy them (even someone from overseas).
- Drop-shipped products are notorious for having razor thin margins
- AdWords can also cost a bundle, and take a lot of work to manage.
Instead of Basking on the Beach, You'd be Fretting about Cashflow
To pull off the business model Ferriss suggests, you'd have to be insanely talented. If you have the skillset to deploy an e-commerce site, drive cost effective AdWords and source profitable drop-shipped products, you can get a job ANYWHERE. If you can do the above, you can more than likely work from a beach, come to work in sandals, or do whatever else you want.
How to E-Commerce Really Works
The only people I know who have successful e-commerce businesses either produce their own product or service, or source a product and extensively mange the inventory and supply chain.
Whether it's t-shirts or construction equipment, their days are spent managing inventory turns, logistics, customer service and brand management... none of it involves watching money roll in while they lounge on a hammock sipping Mai Tai's.
These people have incredible rewarding, highly autonomous, interesting lives and contribute a great deal to the economy and to the lives of those around them. However, I don't know a single successful person who's been able to spend their days doing whatever they want.
For that reason...Fear. The. Hammock.