The Automated Startup: What Can Be Automated?
Hello Reader,
To figure out how to automate we should start with… “What can be automated?”
And to do this it’s good to consider what is more ideal to be automated and what is not.
A laundromat is a great business to automate.
A writing services company is less so.
The way I’m going to break these down is to distinguish a few different types of business.
A service business is a business that is requiring of human’s to operate it.
A product business is a business that has a machine or non-human object doing the work.
And to slice through a couple of hecklers out there who read my last post, what about the SaaS, Kyle? Software as a SERVICE?
As I take a breath and smile, software is something that runs separate of a human. It takes coders to build and fix bugs, but it’s like a car. The car does all of this stuff when you give it action orders as opposed to a Flinstone car that requires you to be the motor. When a car breaks down you have to fix parts and change some things, but more often than not it should be working, unless you have a Jeep or something.
Anything in tech is an effort to automate what use to be manual. A Software as a Service could be anything from payroll to advertising. Tech is about productizing what use to be entirely on the backs of humans mentally (software) or physically (hardware).
Each day tech is pushing closer to making manual things automatic from agriculture all the way to restaurants.
The main goal when starting a business is to think about the upside. To be a person who chops wood and delivers it is a very manual intensive process. Anything that does anything is prone to wear and tear. And the big wood manufactures have machines doing the manual intensive stuff, like in this video here —
This machine can cut and strip two trees a minute - how long would it take a human? I guarantee it’d take a human at least a hundred times that. Machines can do more manual things than us and they don’t have to rest and are easier to replace and fix.
But Kyle!
Yes.
Someone has to operate that tree-cutting machine!
For now.
But the thought exercise for the best type of business in this day and age is to find businesses that run in your sleep, not only when you’re clocked in.
Passive Income: money earned separate of time.
Active Income: money made by selling time.
Selling time is the most costly business you’ll ever run. It is the most finite resource you’ll ever know. Money is the psychological tool institutions have deployed to get people to sell their time. Business owners need to buy time because they have work that needs to be done and they don’t have the time to do it all. They wish they could buy their time back, but they can’t. They can only figure out ways to get you to sell yours. So the best they can do is outsource as much as possible to save the last bits of life they have left while keeping the bottom line good.
Passive income is intricately tied to product businesses. The laundromat in some ways feels like the first near automated business model this world saw. People use to wash everything by hand. A lot of places still do, but the second the washing machine came out — everything changed. You can put a quarter into a slot and the machine would run, saving hours of manual labor. As a business owner you could have a dozen washing machines and just make sure the vending machine gets restocked when it’s low, empty the coin slots (or just install a card reader), call a repair man when a machine breaks, pay the bills and taxes and that’s it. You could have a 24 hour laundromat and people could be using these things as long as they want while you sleep soundly.
With the advent of the internet it took a bunch of human processes like data management and streamlined it. The internet creates at its best entire replacements for mental heavy tasks humans had to do and at its worst creates tools to help.
There are hardware businesses and software businesses. Hardware is a physical machine or product made, while software is a product that exists solely on the internet.
Accountants use to have to manually balance the books for a business, now they have software like Quickbooks that is just linked to the businesses bank account and it tracks every transaction. This is a software business.
So the first thing to ask is -
How Do I Find a Business Idea to Automate?
What is something that can be better?
If you’re having a hard time with this, just be more aware when you go through your day and anytime you encounter something frustrating in the world — this is your chance!
You went to a local salad shop and they are taking forever! Examine these jobs and ask yourself how could I automate this?
Or could a machine make my salad?
Check out Spyce —
Though this still has humans operating some parts of this system - it is progress towards taking what was once a very high touch business and has made it more systematized. This salad machine is a hardware business.
What is high touch?
High touch is a thing to constantly keep in mind, if it requires a lot of maintenance on your end. Then this series will be vital to try and get some systems to help with that, but if it’s still high touch after that. You have to ask if it’s something you want to be doing ?
You Found a Pain-point in the Market. Now What?
What is the process of making this solution and can I scale it?
Making a salad is a little different than writing copy for a website. Anything that requires a ton of unique brain power is a business that will be harder to automate.
There are ai tools that are coming out that can generate rough drafts of text, but it needs at this moment a human to refine it. You’ve had to prove you’re a human thousands of times on the internet asking what the letters are in a box or select what is a train. These are all the things that only humans can analyze: the difference been a train and a bus. This is where machines fall short, but it won’t be forever. Each day it gets closer.
So you’ve done the exercise of examining the world through your day and you realize that your favorite boba shop has a few basic steps to make a Jasmine Green Milk Tea. It’s brewing the right kind of tea and mixing it with the specific type of milk that. That’s it! This is ripe for hardware to automate.
A thing that is ripe to automate is something that has clear instructions and ideally a finite of combinations. Whether is is a “hand” crafted boba vending machine or accounting software.
The number one must do thing when you think of a business idea. The number one rule. No matter how much it feels unlikely that anyone else has thought of it.
Google your product idea.
“Boba Making Vending Machine”
*ENTER*
And guess what?
When Someone’s Already Done Your Idea
Hey, hey, hey. What’s wrong? You’re sad someone’s already come up with it? No. No. No. You should rejoice. The great thing about this discovery is that the hardware machine/tool you want already exists. You don’t have to develop it. You can most likely buy or lease it and set it up in the location you think will drive the most traffic. Then all you have to do is make sure it has the ingredients it needs to meet demand.
If it is software that’s been developed then maybe you can find application in a business you want to do or you live to find problems another day. It’s a part of the fun.
A List Of Passive Income Businesses
Content creation (like courses, e-books, podcasts, designs etc.)
Monetize your content through branding and ads (blogs, YouTube, etc.)
Renting (this could be commercial or home properties or assets like a car that people will pay you for to use for a certain period of time)
Affiliate marketing (links on your blog that cut you a check every time people use)
Flip retail products (dropshipping with Amazon and Shopify is the name of the game in this gigantic category)
Peer-to-peer lending (create a loan company or bank)
Create software (you get it)
Final Thoughts
There are so many ways to get started to figure out how you will uniquely solve the problem you’re trying to solve in your world. Whatever you pick it will have its own journey specific to its category, but the best thing to do is get started.
So, we have an idea.
Now, let’s get started building the automated framework.