“Netflix of Restaurants” Side Hustle Earns $50,000/Year

This transcript was generated from the episode audio and may contain minor errors.

[Music]

Hello, hello, what's up, welcome back. This is Chris Guillebeau for Side Hustle School. Every day on the show, I'm telling true stories of people who create side hustles. Side Hustle, as I define it, is an income-generating project that you create without quitting your day job. This is very different from the startup world.

This is very different than driving for Uber or participating in the so-called gig economy. It's not about working harder, it's about working smarter so that you can do more of what's important to you. And today's story is all about algorithms. Now, as I say that, I feel like I have to provide a disclaimer, don't tune out, it's actually a really good story. When I say algorithms, I'm talking about things like the amazon.com recommendation algorithm.

If you've ever checked out purchase something on amazon.com, which, you know, I'd be shocked if you haven't, you're gonna see a bunch of other products after you click that purchase button. It's gonna say, you know, other people who bought this also bought this. Other people who bought X also bought Y. This is a recommendation algorithm, and this is used all across the internet. Amazon pioneered it in lots of ways.

Netflix, we're gonna talk about Netflix today. Netflix has a very powerful recommendation engine as well. The more stuff you watch on Netflix, the more customized, personalized recommendations you get. And this is a pretty significant industry. The technology behind it drives all kinds of purchasing decisions.

Okay, so today's story is about the Netflix of restaurants, a side hustle that allows its creator to earn an extra $50,000 a year. At midpoint, he also experiences a disaster when Google changes the way it displays search results. He goes from doing really well to not doing so great at all. Does he manage to recover and rebuild? Spoiler alert, yes, he does.

But how does he do it? Well, stay tuned. And by the way, speaking of recommendations, I have a book recommendation for you. I'm gonna give that to you at the end of the episode. So don't go anywhere.

Let me say a quick little thank you to today's sponsor. [Music]

Nobody likes going into a restaurant without having at least some idea of what to expect. And being the person that recommended a new restaurant is like playing with fire. It could go really well, or it could also burn you. And that was a risk that Mike Van Headey, a product manager based in Austin, Texas, got tired of taking.

Mike is a self-described nerd at heart who was well-versed in application algorithms. So when Netflix launched a contest that asked people to predict the rating that their 2 1/2 million customers would leave for 100 million movies, Mike was intrigued by the challenge. Netflix offered a prize of $1 million if you could beat their algorithm by at least 10%. Mike didn't know much about building a recommendation system, but he didn't let that deter him. Since Netflix had set up a forum for the competition, Mike found himself doing lots of research into how to begin building this kind of system.

He saw immense benefit in watching people with more experience than him discuss their problems and process. Although Mike didn't win that Netflix challenge, he did come up with a flexible algorithm he could use for other occasions. This gave him his big idea. If people could have restaurants recommended to them in the same way that Netflix recommends movies, then the entire process and deliberation would be simplified. So Mike spent a day building a simple prototype to test how his algorithm responded to the restaurants he already knew he liked and the ones he knew he wanted to go to.

A few tweaks here, a little adjustment there, and, well, there you go, Fudio 54, as he called it, was the life of the party. Fudio's algorithm was complex, but the concept was simple. Users would rate a few restaurants and Fudio would learn about their tastes and suggest places they might like. Every new rating that a user posted would help the system learn more about their preferences. The collaborative filtering also allowed users to refine their future recommendations.

Mike's flourish of genius came when he added a feature that would apply ratings from restaurants to anywhere the user went. So they would be able to find the perfect spot wherever they were. Traffic to the site slowly began to grow through word of mouth and recommendations, but Mike kept it completely non-commercial for the first year. He knew that the easiest way to help Fudio grow was through advertising, but he was initially hesitant to do it. Finally, a year into his Fudio side hustle, he decided that he was ready enough and he turned on Google AdSense, a platform that allows owners to earn money through targeted ads placed on their site.

That turned out to be a good decision because it was almost immediately profitable. A year later, Mike had made $50,000. Over the next two years, he nearly hit $100,000. At one point, the traffic to Fudio was growing so quickly that he considered quitting his day job and making his side hustle his full-time job. But then, disaster struck.

When Mike looked at his stats one day, he thought the site had gone down. He had been driving back to Austin from a trip to Ohio and pulled the car over to double-check his web browser. It turned out that Google had updated their guidelines overnight and launched an important update, which changed how they showed websites and their rankings. Traffic had declined by 75% in one day and Fudio was squashed like an overripe avocado. Mike realized he'd made a critical mistake.

He had focused on a recommendation algorithm that depended on ratings, making reviews and other content secondary. Most of his restaurant listing pages only consisted of a name, address, phone number, and rating. In other words, he had published a lot of pages, but there wasn't a lot of value on all those pages. This was a big learning opportunity for Mike and his side hustle adventure, and he took it as a sign to switch his focus from SEO optimization towards creating a better user experience. He realized that if he optimized his site just for the search engines, then he would always be chasing Google and always running the risk of being crushed by unforeseen updates.

But if he switched his focus toward his users, however, then maybe Google would chase him. His web traffic might be down, but Fudio 54 was not out. Google's new update helped him shift that focus toward additional content in the form of hundreds of thousands of menus, over 10 million images, five million reviews, and lots of other data in the form of restaurant business hours, menu price points, and the addition of social media profiles. In short, he paid much more attention to content that would be helpful and interesting to visitors. This road to recovery took months, but he slowly and steadily built back Fudio 54's prominence.

He hasn't recovered to that point of earning almost $100,000 in a single year, but he's still hovering comfortably at around $50,000 a year. The project remains a side hustle. Mike believes that the skills he's gained could have only come by doing something on his own, not through his regular job. He still hopes to one day be self-employed, and one of his next steps is to grow the Fudio 54 site into a standalone phone application. You could say he's planning to brunch out.

Awesome, so speaking of recommendations, I said I got a book recommendation for you. I recently read a book, and I provided a blurb for it, an endorsement. Then the finished version came in the mail, and I started reading it again, because I liked it so much. I actually went and also bought the audiobook version, because I don't ever recommend a book that I don't purchase myself. Like even if I get it free, I like to go and support the author.

So without further ado, this book is "Never Lose a Customer Again" by Joey Coleman. And the subtitle is "Turn Any Sale Into Lifelong Loyalty in 100 Days." I went to write an Amazon review in addition to my blurb, and I said something like, this is the book that I needed to read myself, basically, because I am good at starting things. I'm not so good always at maintaining things. And as you might guess from the title and subtitle, it's all about customer retention. It's all about doing a great job for your customers so that they will continue to be your customers for a long time.

And Joey is the master at this. He has actually been speaking on this topic for, I don't know, at least 10 years, if not longer. So I just throw that out to you, to anybody out there who has a customer-centric business. If you want your business to grow and be more successful so that you're not always hustling for new customers, you're not dependent on something like a Google update that's gonna take away 75% of your business. You might wanna check out this book.

Again, it's by Joey Coleman, "Never Lose a Customer Again." And as to this story, well, first of all, congrats to Mike. I mean, fantastic. I love how he not only built this project, he also rebuilt it when that disaster struck. That kind of proves that he wasn't just lucky. Like he may have been a little bit lucky in the beginning, but then he also kind of took a step back and re-evaluated and said, okay, what's next?

How are we gonna improve after Google comes and takes away our business? Always a good thing to be self-reliant. Of course, that is a major value of Side Hustle School. And I also think about this project in particular, it's kind of a good Cytosil for someone who's really interested in data. Because for everything I just mentioned about customers, with this kind of project, you never actually have to talk to anyone.

You have no clients, you don't even need to interact with most of the people who come to the website. The way that you can do a better job with your project is to improve the data and to figure out, okay, collectively, what do these people want? These people that are coming to the website. So it's not so much about any one customer or client, it's about making the service better for a lot of people. Always good to think about your skills and your personality when you're trying to decide what kind of Cytosil to start.

That's it for me today. Remember, inspiration is good, but inspiration with action is so much better. Today's show notes include links to Mike's site, will include a link to that book recommendation, anything else I talked about, just go to sidehustleschool.com/472. That is for episode 472. I hope you'll join me again tomorrow.

It's an honor to make this show for you and much more is on the way. My name is Chris Guillebeau for Side Hustle School.