My Digital Product Made $500K. These 5 Lessons Learned Are Worth Far More.

Lots of people try to build digital products because they have low startup costs, they are very scalable, and you can build them on your own schedule. I built one. It made me over half a million bucks in profit—but these 5 lessons learned are worth far more.

(1) The Difference Between Scalable Income and Simple, Scalable Income.

The allure of a digital product is scalability. You build something once (like a course, an app, or a tool) and then it can serve multiple customers (i.e. more revenue) without requiring additional work (i.e. no additional time).

However, not all scalable products are created equally. My digital product was an investment research subscription (based on my background, yours will be based on your background). My product was very scalable because additional customers did not require additional work. It was also scalable because, as a subscription, recuring revenues compounded over time (a good thing!).

However, my product was not simple. Specifically, it required me to constantly create more research reports to keep customers happy. I had some success with outsourcing and data-driven report creation, but it still required meaningful time from me every week.

This lack of simplicity put me at a huge disadvantage versus purely one-and-done digital products whereby they build it once—and thereby freed up time so they could market the heck out of it on social media (whereas I was bogged down constantly creating more good content that would only be seen by existing customers).

The takeaway: To create operating leverage for your digital product, build something scalable—but also keep it simple!

(2) Build at The Intersection of Passion, Skill, and Market Demand.

The strongest digital product opportunities sit at the intersection of three factors: what you care about (your passion), what you can deliver well (your skillset), and what customers are willing to pay for (market demand).

This is because passion helps you sustain your efforts, skill helps you execute consistently, and market demand determines if your efforts will become a business or just an expensive hobby!

For my digital product, I have the passion (I like investments) and the skillset (I have a lot of experience), but it took me a long time to correctly calibrate to market demand (more on this in the next section).

The takeaway: The stars align when you build your digital product at the intersection of your passion, your skillset and market demand! 

(3) Niche Down Hard—and Do It Right!

The Internet is a big place. So if you are going to build a digital product—it’s far better to narrow down enough to excite a specific niche audience than to try to be everything to everyone.

In my case, investments, I wrote a lot about income investing and growth investing because there is a lot of demand from both groups.

However, it took me a long time to calibrate my messaging (and pricing) for these two very different groups.

Both audiences value investment research, but their priorities and investment philosophies are very different. And even though my content quality was highly regarded, I didn’t do a good enough job separating my messaging for each group specifically.

The takeaway: If you are good at multiple things—it’s still really important to focus on a specific niche—and make sure your messaging is on point!

(4) Own Your Distribution—Because Social Platforms Change

Marketing strategies that once worked great can become less effective over time. For example competition increases, algorithms change, and platforms introduce new walled garden restrictions. Even Google’s once-coveted first page keyword searches are now being disrupted by AI.

Personally, I built over 20,000 online followers on one platform, only to have that platform tighten its rules so draconianly over time it became largely useless.

As arcane as it may sound, building an email list from day one can make it much harder for big tech to disrupt your distribution. Specifically, if your content is trusted, people are still willing to share their email address.

The takeaway: Building an email list from day one can help protect you from the constant dynamics of big tech rule changes, algorithms and walled gardens.

(5) Build a Brand, Not Just a Product

When you build a digital product you are building a brand (some people even smartly build the brand before the product) and that brand has legs beyond simply your product.

For example, my digital product resonated well enough with some people that it opened the door to hundreds of thousands of dollars in consulting—and the launch of my own independent niche investment management firm—both of which relied heavily on my existing research.

The takeaway: Think of your digital product as not only a simple, scalable income stream, but also as a brand and a flywheel that can open doors and leverage your work well beyond your immediate expectations.