12:14 PM

Solo Entrepreneurs: Big Bucks From Tiny Computing Startups

One-person companies are earning upward of $1 million in revenue annually. How do they do it? With high-speed Internet connectivity, mobile apps, automation, and a little help from their customers.

With A Little Help From Our Friends

Dave Lu had his "aha" moment for creating Fanpop from a Web site he built in his spare time just after graduating from business school. The site focused exclusively on Canon digital cameras, and provided a forum for users to come together and learn how to use the devices effectively, and share their experiences with each other. Through affiliate marketing programs and Google AdSense, he found himself pulling in more than $1,000 a month from the site without doing much of anything. "It turned out to be a great source of passive income," Lu said.

Dave Lu, Cliff Szu, Michael Chu, and David Papandrew of Fanpop

At the same time, as a big fan of the television show The Office, Lu was constantly surfing fan forums, taking polls, and keeping on top of the show. Putting it all together, he came up with the idea for a network of social portals where "communities of interest" could access, contribute, and share content on topics dear to their hearts. "I realized that we'd never gotten past the first generation of fan sites," he said. "Really, they had pretty much stayed at the level of Yahoo Groups."

Excited by the possibilities, he got together three of his friends and proposed a social networking platform that would facilitate the creation of fan sites that could be designed and run by their members. "By giving the fan communities themselves the tools they needed to build their sites, we don't have to keep up with the trends -- our users do that for us," said Lu. Today, Fanpop is a conglomeration of social networks, polls, image galleries, news, and -- of course -- user forums. "Because the community owns the site, there is no hierarchy for managing it," said Lu. Fanpop itself generates its revenue through affiliate marketing and display advertising."

The four partners made a conscious decision not to go to venture capitalists for money. Instead, they raised $100,000 from family and friends in January 2006, "and we haven't taken any money since then," Lu said. "We never wanted to lose control of the vision."

Early on, Lu bumped into the term "lifestyle entrepreneur" and found it derogatory. "I don't see how our company is different from those that ended up getting a lot of funding," he said. "When I hear that term, I know we're being written off."

Yet, Lu argued, "we're building a business as much as anyone else. Just because we're four guys, just because we didn't take VC money, doesn't mean we're not thinking big."

The partners have also, for now, opted not to hire additional employees, but to share the work amongst themselves. This was a very personal decision," Lu admitted. "Once you start growing, politics starts infiltrating the organization. Cliques form. That was what we couldn't stand about large companies. We love being able to sit in one room and call out to each other when we have an idea or need help."

Each of the four partners has taken significant risks to do what they are doing. "If we were just into cushy lifestyles, we would have all taken six-figure salary, and a safe corporate environment," he said. "But it's very rewarding. We're in charge of our own destiny."

For Lu, the most rewarding part has been doing the things he wasn't trained to do. After working at Yahoo and eBay as a product manager, he got his MBA at Stanford before founding Fanpop. Yet he finds himself doing everything from graphic design to HTML coding to business development, accounting, and finance. "Because we all chip in for anything that needs to be done, we're 150% to 200% more productive than large companies."

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