How to Turn a Hobby into a Multi-Million Dollar Business: A Chat with Jim Wang
I got the opportunity to sit down with my friend and fellow classmate Jim Wang, who was able to turn his personal finance blog, which initially started as a hobby, into a multi-million dollar payout. We talked about his beginnings, how he slowly turned his hobby into a business, and ultimately going through the sale.
What made you start a personal finance blog in the first place?
I always had an interest in personal finance and how it all worked, so I started the blog to help me understand it. I just got my first “real” job after school and it was a challenge understanding all of these decisions. It was about the time that WordPress and blogging were becoming popular so I thought that made for a good way to keep a journal. I never thought it’d become something that other people would want to read.
In those early days, how did you get readers (friends, family, or strangers)?
It was a mixture of telling my friends and family plus interacting with other bloggers. Back then, there were only about 10 other personal finance bloggers and so building friendships was much easier simply because there were so few bloggers.
How long were you writing before you started trying to monetize the site? What was the driving force behind this? Did you always think in the back of your mind that this could become a full-time job for you?
I think it took me about a month before I even realized I could. In the beginning, I did what all bloggers do, I stuck a few Google Adsense blocks onto my site. After that, I started seeing affiliate links, which back then were the Commission Junction gibberish URLs, and investigated what they were. I eventually discovered affiliate marketing and that opened up a whole new world for me. I never considered that Bargaineering would ever become a full-time job for me.
At this point, how much time were you spending on the blog per day or per week?
I was probably spending around 15-20 hours a week. I’d spend a solid 2-3 hours after work and then I’d devote a few more hours on the weekend to the site.
Turning a Hobby into a Business
Obviously, you still had a day job when you started blogging. After you first put ads on your site, how long did you continue blogging on the site before you seriously considered blogging as a full-time job?
It wasn’t until mid-way through the second year that I thought it could be a full time thing. The first year, it made a few thousand dollars. That’s a nice sum for a fun side project, but it would have to be much bigger before I could consider making it a full-time job. I think the second year, it made around $30,000, which isn’t enough in the Washington DC/Baltimore area. But, that growth (and the nature of that growth) showed me a way forward. I could see how this could become a full-time job and started thinking about that more seriously near the end of the second year.
As you ramped up your hobby, did you find yourself spending an increased amount of time on the blog?
Yes, I started doing more competitive research and studying other sites and blogs to see if there were things I could implement to increase growth.
It’s always difficult to think about how to most effectively allocate your free time. As you were spending more and more time blogging, what suffered as a result (if anything)? Did you sacrifice working out consistently, hanging out with friends, getting a promotion at work, or spending time with family?
Something always gets sacrificed because we all get the same 24 hours in a day, but nothing stuck out as especially significant. I was spending downtime on it – a few hours after dinner and a few hours early in the weekend days. These weren’t “prime” times to do something else.
Even before you started making enough money from your blog to consider quitting your day job, you must have come to a crossroads much earlier than that where you had to decide whether to commit much more of your free time to ramp up your blog or continue it as just a hobby. What was your decision-making here?
I was enjoying the blog so I didn’t think of it as sacrificing my free time to “work.” I enjoyed building up a resource, making money off that resource, and thinking of ways to make it even more valuable and lucrative. It was a game to me and one that I was doing relatively well in, so I kept pushing for more. There were setbacks, but overall it was a fun experiment and I was amazed I could make a penny off of it, let alone actual dollars.
For you, what was the difference between blogging as a hobby vs. really trying to put this on the path of your day job? That is, what additional activities did you find yourself doing trying to get this business started?
Competitive research is the main difference, studying other blogs and sites, because you don’t do that when you treat something as a hobby. You do it when you treat it like a business and how you might overcome your competitors. One of the great things about the internet is that a lot of these competitors weren’t my competition. For personal finance information, people are seeking multiple sources of information. They don’t read one site and then stop. So while I could study my competition, there was never a sense I was “taking” from them. We were merely sharing from the same large pie. This was important because many of these bloggers are my friends.
The Business of Bargineering
How exactly did the transition work from hobby to business? What are all the things you had to think about or do? Did you establish an LLC, hire people, etc.? How did you know what to do or did you have good mentors helping to steer you?
The steps to starting a business are straightforward. In the beginning, it was a sole proprietorship and I recognized income and expenses on a Schedule C. You don’t need to file anything for that. Eventually, I filed Articles of Incorporation to form a limited liability company, got an EIN, and opened up a bank account strictly for the business. Eventually, income grew to a size that I needed to request S Corporation tax treatment for the LLC and would pay myself a W-2 salary and dividends via a K-1. That’s a lot of letters and acronyms and it’s all very dry and boring, so I apologize for that, but it pays to have a good understanding of how it all works and a competent accountant to execute it. No mentors, just the internet.
How did your friends and family react when you told them you were a full-time blogger?
My parents weren’t skeptical, but they were a little wary. Friends were happy and congratulatory, not much was made of it really.
What was your biggest fear or concern in terms of deciding to blog full-time? Was it forgoing health care, not having a 401k match, paying double social security payments as an employer vs. an employee, or something else? Did you do a cost-benefit analysis?
The revenue the site was generating made all those points moot. My concern was how long the blogging as a business trend could last, but I felt that I had to devote all my energy towards it regardless. If it disappeared tomorrow and I was working a full-time job, I would regret not pursuing it more wholeheartedly. If it didn’t and I was working a full-time job, I’d regret not potentially growing it even more. Either way, working another job didn’t make sense any more.
How long after you started doing blogging full-time did you begin getting offers to sell? How did you go about evaluating these offers and what made you decide to ultimately sell the business?
I actually never got any offers to sell until I started talking to an investment bank. They handled the sale of a couple other personal finance blogs and around that time, I felt like I needed to divest myself. I had built up a business that was worth something, I’d like to see what I could get for it. I felt like if I received two bids, I’d be able to determine the value of the business and would most likely sell it. It’s hard to evaluate offers outside of going with your gut. In my case, one offer was clearly better so I didn’t truly need a rubric to decide.
Beyond the (unexpected) financial benefits of blogging, what do you think was most valuable about your Bargaineering experience? Did you meet great friends, get opportunities to do consulting, etc.?
I understand the business of financial services a lot better now. I understand how businesses acquire customers online, the methodology they use and the math behind it. I’ve also made some great friends I certainly otherwise would not have made and it’s given me the ability to do all of this on my own terms (and time).
What’s next for you? Will you continue blogging, go back to Corporate America, or something else?
The next project is Microblogger, where I teach folks how to create a blog that will generate a lifetime of income. It’s not going to promise them a million dollar blog or even a hundred thousand dollar blog, but I think it’s reasonable to build one that makes a little bit of money each year to help offset some expenses or pay for hobbies.
What interests you beyond personal finance and blogging and will your experience building Bargaineering help you pursue these interests? Does your Bargaineering experience give you credibility beyond the personal finance and blogging circles?
I’m not sure which of those interests are worth pursuing, but I think the fact that I’ve built and exited a seven figure business gives me a little bit of credibility somewhere.
Any words of wisdom for all those up and coming bloggers out there, especially personal finance bloggers? How do you think things would have turned out differently if you had started Bargaineering today instead of nearly 10 years ago?
It’s a different environment these days. There are far more bloggers and Google’s algorithm is becoming less favorable to small independent publishers. I think that if you want to stand out today, you really need to inject your personality into your blog. The days of a blog without personality, or an “angle,” are limited.