Don't Eat Your Seed

NOTE: I originally wrote this article in 2005 for my Joe Indie blog, so it focuses on indie game development. Much of what it says, though, can be easily applied to writing and indie publishing.


The Millionaire Next Door provides a simple, almost 100% guaranteed way for any American to become a millionaire within their lifetime:
 
1. Spend less than you make.
 
2. Invest the difference.
 
3. Re-invest all earnings.
 
Those who have a bigger income that they can spend less than have an edge, but it's an egalitarian plan that will work for pretty much anyone with an income.
 
This is only a slight modification of the advice you get from a lot of financial advisors:
 
1. Invest $25/$50/$100/whatever (it goes up as you get older) per month, every month.
 
2. Leave it alone until you retire, letting all earnings remain in the kitty.
 
With this plan, any 25 year old can become, if not a millionaire, at least comfortably set, even at historically conservative interest rates. That's the magic of compound interest.
 
Both plans involve the same principles:
 

Self-imposed scarcity (AKA, "self-discipline")
Time
Re-investing the earnings

 
I take the same approach to indie game development (and indie software development, or "micro ISV's", and indie publishing). You take a portion of your available resources (time and money) and invest them in a game (or product or book) of your own creation, and let the result(s) increase over time, assisted by re-investment of your early earnings.
 
No one serious about building a "nest egg" for their retirement expects it to replace their regular income stream in less than 5 years (unless they are over 60 when they start and/or are hopelessly optimistic). Yet how many indies expect exactly that from their efforts?
 
Quite a few, in my experience. They're Big Plan is to "burn the ships", focus their efforts, and release their game/product/book. Then it's all "Sit back and relax and spend the profits."
 
How many actually achieve that? Not so many.
 
Depressed yet?
 
I'm one of those evangelists who try to win converts by pointing out how much hard work is involved rather than focusing on the Potential Riches That Could Be Yours. You get fewer converts, but maybe they stick around longer.
 
So what am I suggesting? In the words of the farmer, "Don't eat your seed."
 
The only way investing and compound interest work for anybody is by taking the early proceeds and re-investing them. Apply this to your indie projects. Don't try to live off the proceeds of your efforts, not at first. Take what you make from your initial game and use it to improve the game (adding more value for your existing players and new players) or make a better Next Game. Don't eat your seed by spending it all on a new Blu-Ray/DVD player. Or rent.
 
Treat your indie efforts as an investment, with an eye to the long term, instead of as a slot machine where you insert the proper coin and pull the lever. Accept that it may take more than a few months–or even a few years–for you to be a full time indie, earning enough to live off of.
 
Though obviously not a Get Rich Quick recipe, this is an approach with some advantages. Here are a few:


The freedom to take creative risks. You're not investing anything you can't afford to lose, so you're free to try anything.



The freedom to be wrong. Time is on your side. You don't have to get it right the first time.



The freedom to change your mind. Life is change. No one remains the same forever. Sometimes we have things we want to try. So try them. Maybe you'll move on, maybe you'll stay. You never know until you try.


Or look at it from the reverse angle. If your indie efforts MUST support you, then you will find that you've lost all of those advantages. You no longer have creative freedom. Instead, you have to do something that generates $X. You must be able to extract your investment, starting immediately. Which means you can no longer afford to be wrong. Welcome to the world of endless clones and sequels. And changing your mind could prove disastrous, since you have nothing else to fall back on. What you started out doing because you wanted to, is now something you have to do, nose to the grindstone day after day, or you starve.

Be content to build with what you have, not gamble on what might happen. Take the long view, invest–and re-invest–in yourself. Don't eat your seed.

-David
 
Related Posts:
The Indie Alternative Part 2The Day Job Strikes Back!The Indie Alternative Part 1