Swimming Naked When The Tide Goes Out

You must do all the work yourself before you can make a profit. That’s a lie. The opposite is true. Get someone else to do the work. Take profits. The internet makes it easier than ever before. Physical, brick-and-mortar businesses require upfront capital to start. A service business, like power-washing or landscaping doesn’t demand much upfront capital. There’s a big downside to those kinds of service businesses. That is, it’s next to impossible to stand out from your competition. But if the year is 2006, and your service is web design, you have a huge advantage. It was a high demand, low supply service he could hire someone else to fulfill. It cost next to nothing to start, and provided double the margins.

All Andrew had to do was go out and find his ideal clients. He stopped relying on job boards and started networking, flying to conventions. He went to every convention center in Silicon Valley, handing out business cards. Then he had a better idea. It turns out that guessing the email address of a CEO is not hard. Every time a startup announced a big VC raise via TechCrunch, Andrew sent the CEO a one line, cold email. “Hey, big fan of your business. Would love to work together.” This outbound marketing funnel proved to be effective. But it was missing something.

Methods of Prosperity newsletter is intended to share ideas and build relationships. To become a billionaire, one must first be conditioned to think like a billionaire. To that agenda, this newsletter studies remarkable people in history who demonstrated what to do (and what not to do). Let me know how I can help you out. For more information about the author, please visit seanallenfenn.com/faq.

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In human evolution, a novel change is evident. A person realizes their lifestyle differs from their parents’. This rapid, exponential progress contrasts with the gradual improvements of the past. Today, technology and information are easily accessible. This allows for self-directed learning, as seen in Andrew’s journey. Two successful web designers were his regular customers at the coffee shop. They shared their knowledge and inspired him. He taught himself web design. Determined, he landed his first web design project. Which gave him confidence to pursue web design full-time. Adopting a “fake it until you make it” strategy, he created MetaLab. He built it on perceived expertise and strategic delegation to freelancers. It gave him early success and significant income. Until financial mismanagement and lack of oversight threatened MetaLab’s stability.

Do you know about my livestream podcast? It’s called Hidden Secrets Revealed Live (HSRL), and I record it live on 𝕏 every Wednesday. 

Part 90. Andrew Wilkinson (continued).

You can find this week’s TL;DR here.

Key Lessons:

• Prestigious clients are overrated.

• Reprogram the simulation.

• Maintain cash reserves.

• Design is dispensable.

• Align incentives.

Now there’s a collectible version of this newsletter! Methods of Prosperity newsletter number 53 is available to collect as of February 28, 2025. If you’re so inclined you can permanently own it!

What are you passionate about? Music? Fashion? Art? Dance? Guess what all of those things have in common. Someone else is passionate about them too. If your friends are musicians, you’re going to want to go on tour with them and get a record deal, too. If your friends are into fashion, you’re going to think it’s a good idea to go to school to become a fashion designer, too. If you go to art school, you will definitely end up with your art chosen for The Whitney Biennial, won’t you? If you’re a dancer, you better be the best dancer the world has ever seen. Now, what if you could keep the passionate thing, but without that pesky competition? The solution is simple. Market yourself as one-of-a-kind, in a class all your own.

That’s when Andrew became the founder of the world’s first interface design firm. “We’re the top interface design firm in North America”. This ability to think outside-the-box gave him a Kobayashi Maru advantage. If you’re not a StarTrek nerd, like me, you might not know what that is. It’s a training exercise in the Star Trek universe designed by Starfleet Academy. It’s a deliberate no-win scenario. Captain Kirk is the only cadet in Starfleet history to beat the test. How? By reprogramming the simulation.

For the first time in his life, Andrew was making enough money on his own terms. He wasn’t rich, but he wasn’t struggling anymore. MetaLab was gaining bigger and bigger clients, charging by the hour on a project by project basis. Until one day that changed. His biggest client decided to switch from a per project basis to a monthly retainer. They would pay $20,000 per month. Which was great for his business, right?

Sure, the money was awesome, but at what cost to his employees? They’d be doing more work while Andrew would be making more money. Notice his mistake. Andrew made $10,000 per month in profit and paid the rest to his developer and several freelancers to split. It wasn’t fair to them. Instead of aligning incentives, he gave his employee who complained a small raise. Then Andrew went on a shopping spree.

It was 2008. Everyone around him acted like nothing was wrong, but there was a financial crisis. It wasn’t long before Andrew’s business felt the turmoil. Design is dispensable. At least one major client demanded a refund. Which put significant financial strain on MetaLab. All at once, MetaLab had cash flow problems. MetaLab went to zero. Andrew was broke. He found himself late at night wandering the florescent isles of the supermarket. Counting potatoes, he estimated how many it was possible to live on and for how long.

The impact was severe enough that it almost led to bankruptcy for MetaLab. The only thing that saved him was a gift of Apple stock from his uncle. It was the worst time to sell. All the prestigious clients faded away. Gone were the days of picking and choosing which brands to do design work for. A small hair removal clinic reached out. They needed someone to edit photos of hair follicles and they paid their bills on time. MetaLab survived. Many of MetaLab’s competitors didn’t. From that point on, Andrew paid more attention to his balance sheet.

As the dust settled in 2009, business began to pick up again. Over the following years, MetaLab added YouTube, Walmart, Apple and Slack as clients. The former had a big exit which put MetaLab on the map by association. It cemented their reputation as a top tier design firm. Salesforce acquired Slack in December 2020 for $27.7 billion. MetaLab was not involved in the acquisition itself. Andrew missed out on the opportunity of several millions of dollars in stock options. Stewart Butterfield is the co-founder and former CEO of Slack. He offered to pay MetaLab in stock options. Andrew declined, triggered by the recency bias of suffering through insufficient cash reserves.

What if he decided to accept payment in stock options? What if he could have avoided the need to panic sell his Apple shares? He would be so much richer. Isn’t that the goal? Now life was becoming a blur of conference calls and emails. Either that or working all night on design projects. That’s when he wasn’t out all night getting drunk with potential clients. He was restless and anxious. After losing it all during the financial crisis, his consuming goal was to fill his bank account. Andrew wasn’t going to lose it all again. That’s why he needed to diversify.

To be continued…

I like you,

– Sean Allen Fenn