The Drop — Issue 3: You're renting your customers.

We are making progress on the architecture of our nationwide compliance layer, and I’m getting starting to get really frustrated with out much bad advice, or no advice, is out there for operators who want to start a business out of their residence.

I’ve used Zenbusiness for each of my companies, as its an easy way to incorporate. They just released a AI feature chat feature that is supposed to advise business owners on compliance measures they need to take. The guidance that it provides is identical to what you would get from prompting in Claude, ChatGPT, Gemini, etc.

This is the exact, lazy, approach that we felt the market was going to take to try and address this friction point for entrepreneurs. It’s not good enough.

No guidance on what local governing bodies across the municipal, township, or county layer you need to reach out to, based on your address. No insight into your HOA authority, if applicable. No guidance on shipping product across your state line. What if you are renting? Can you still start a business?

Homeownership peaked in 2020, and the number of renters is increasing. For every two homeowners in the US, there is one renter. That’s about 34% of the US population. Can those people still start local businesses?

The answer is, yes. But, there are a few hoop you need to jump through.

More on a few of these scenarios next week!

I was listening to Seth Godin on The Diary of a CEO this week, and he said something I haven't been able to stop thinking about.

Seth Godin laid out two paths for someone who wants to make a living driving. You can hand your freedom to Uber and let the app find your passengers, and operate by their rules. Or you can recognize that there are maybe 75 people in your corner of town who need reliable, safe rides and would be glad to know their driver by name, and that with the right cards in the right hands, and real clarity about who you're for and who you're not, fifteen regulars isn't a fantasy. He was careful to add that this isn't about beating Uber. Uber will be Uber. It's about which of the two tomorrows is actually yours.

"...getting to 15 regular customers is not out of reach." — Seth Godin

This can be done. It can be done slowly, deliberately, with intention, and balance, over time.

Think about the first road, because it's the one almost everyone takes. You download the app, pass the background check, and within a week strangers are getting in your car. You don’t need to introduce yourself to anyone. You never explain what you do or ask a single person for their business. The work simply arrives.

Road one is easier. Road two is better, more profitable, and each customer builds a valuable asset (your company), and deeper relationships.

Road one gives you volume without identity. You are interchangeable by design, that's the entire point of the system. Any driver, any rider, any ride. If you stopped tomorrow, no rider would notice. Nobody would come looking for you, because nobody knows you.

Road two gives you identity without volume. Fewer rides. More ownership.

Identity and ownership compounds. Volume doesn't.

Fifteen people who trust you will refer you to their neighbors. They'll text you for a 5 a.m. airport run because they don't want to gamble on a stranger. They'll pay for reliability instead of hunting for the lowest bid. Fifteen becomes thirty, and so on.

Two thousand anonymous rides gets you nothing you can carry with you. You end where you started, except older.

The most important part is easy to miss: who you don't do it for.

That's the hard sentence. Saying it out loud costs you something. But specific is what makes you memorable, and memorable is what makes you referable.

"I drive people places" is a shrug.

"I do early-morning airport runs for folks in South Tampa who need to be there on time, and I don't do bar pickups after 11" - that's a person. That's someone you'd hand a friend's number to.

Trying to be for everyone is how you end up being for no one in particular. Which is exactly where the app puts you anyway. At least on road two, you chose it.

Fifteen regulars. Two round trips a week. Thirty dollars a trip.

That's about $900 a week, and none of it gets a percentage skimmed off the top before it reaches you.

I'm not calling that a projection, it's math on a napkin, and your numbers will be your own. But it reframes what "small" means. Fifteen customers isn't a lesser version of a real business. For a lot of home-based operators, fifteen customers is the business.

Back to the thing Godin was careful about, because I want to be careful about it too.

If you choose to drive for Uber, Uber's rules come with it, that's the deal, and no amount of mindset fixes it. Some constraints are real. Some things genuinely cannot be solved by one person deciding to try harder, and pretending otherwise is its own kind of cruelty.

So this isn't a story about platforms being villains. They solved a real problem, and for plenty of people they're a useful on-ramp, sometimes the only one available right now.

But convenience has a price, and the price is that you're renting your customers. You never own the relationship. You can't take it with you. And the terms can change on a Tuesday without asking you.

If you are still with me, here is the takeaway that you can apply to your baking business.

Don’t rent your customers. Dial in your ICP (Ideal Customer Profile).

Try to stay away from retail/third party relationships, if you can. You will have much higher margins, which is the number one metric you should care about, and you will form much deeper customer relationships that you can carry with you and monetize in other ways. Stay the course and grow slowly over time the right way.

Farmers markets are great to find new customers, but you need to bring them into your ecosystem that you own in perpetuity. If you stopped attending that farmers market, or they stopped offering the market, or cancelled; How would that impact your business?

Always, always, always get your customers data and keep it in a place that you will always own. Sometimes, thats a simple export of contact information. Other times, software companies make it pretty painful to get that data out of the platform, but it is worth the effort.

If you don’t own the relationship, your customers data, and can’t talk to your customers outside of a tool, then your business is at risk.

Don’t rent your customers.

NearbuyOS exists for the person choosing road two, where the customer relationship is yours, the compliance is handled, and the money stays closer to home than the nearest server farm.

Not because it's easy. Because it's yours.

I spent a lot of time debating between a “contractor” model and an “ownership” model, where operators are forced to start their own company.

This is the exact reason why I chose the latter.

Write the sentence.

Not a business plan. Not a logo. One sentence: who you do it for, and who you don't do it for.

For bakers, this could be simply:

I bake staple sourdough goods that families need every week. If your looking for quick tasty sweets, there are probably other bakers for you.

Say it out loud to three people who live within a mile of you. Watch their face when you get specific. That reaction is your first real market research, and it costs nothing.

Yes, you might turn away someone who wants a cookie or two. But, you’ll attract your ICP, which is worth a lot more in the long run.

And here’s the thing… you can bake cookies every once in a while, and people will still buy them!

Then tell me what you came up with. I read every reply.