Recurring Revenue vs. Disability Insurance

You may not know this, but a few weeks ago, I had my left leg amputated below the knee. About six months before that I sold Sifter. The two events are somewhat related, but they didn’t have to be. Financially, things were great because recurring revenue beats the pants off of disability insurance. Regardless of how many hours you put in, recurring revenue still just shows up.

Let’s rewind a few years…

In July of 2013, I had been working on Sifter for a little over five years, and it had been paying me a comfortable full-time salary for the last two of those years. (It was below market rate, but it was close enough.) Around that time, I went in for a minor surgery on my ankle. Surgery went fine, but during recovery, the polar ice machine gave me frostbite on my foot. Three years later, I’d choose to amputate, but what happened with Sifter during those three years is where it gets interesting.

During the first four months after that original surgery, I averaged a surgery every two weeks. That’s a lot of downtime. The surgeries take enough time between the actual surgery and recovery, but that’s not what really kills productivity. The checkups and followups. The second, third, and fourth opinion appointments. The driving. The lab work. The pain. It all turns your days to swiss cheese, and it’s almost impossible to find uninterrupted blocks of time to get in the zone and do important work. But, you know what? Sifter kept on trucking. Growing even.

Two of those surgeries led to a three-week stay in the hospital where I couldn’t get anything done. Even my first couple of weeks back at home were a struggle. My body was beat up, weak, and drowsy from pain killers. Just answering support emails was a struggle. The good news? Sifter never skipped a bit, and my paychecks kept coming. Things improved over the next year, but my ankle never recovered. I began talking to doctors about amputation. Most advised a different, but still significant, surgery. More appointments and opinions. More downtime. More physical therapy. Yet Sifter kept on trucking. About two years of averaging part-time work, and Sifter’s growth finally slowed to crawl.

But here’s the thing…

Those years never put a financial strain on our family. Regardless of hours worked, my salary stayed the same. Actually, a year into it, Sifter had more cash, and I got a raise. Let’s let that sink in. I was working less and making more. Even at the best full-time job with the best disability insurance, that would have never happened. And if it did, it certainly wouldn’t have lasted three years.

So what’s my point?

No source of income beats creating something that makes money while you’re asleep. Or sick. Or in the hospital. Or busy caring for a loved one. If you’re consulting or freelancing, your income is tied directly to your hours worked. At some point, though, there’s a ceiling. More importantly, if something happens where you can’t put in the hours, your income will drop.

If you only get one thing from this, let it be this next paragraph…

Once you have a profitable SaaS application with recurring revenue, you have a built-in disability insurance policy. It’s actually better than that because even if a loved one gets sick, you still get paid if you take time off to help them. If the downtime lasts for years, then it’s likely that at some point, the business will suffer, but it will keep going. And you’ll keep getting paid. Even if your application never supports you full-time, it will still make money and help provide financial support.

Recurring revenue digital products are one of the best bets you can make. Whether it’s writing a book, selling some sort of digital goods, or launching a SaaS application, it will help. At this point, you might be wondering, “But Garrett, if it’s so great, why did you sell Sifter?” And I’d tell you that’s a great question.

The reason is multi-faceted, but I assure you that it had nothing to do with money. Sifter’s growth had slowed, but it was very comfortable financially. After almost three years of juggling it all, the process had taken its toll. I was just tired. I also had different priorities. I wanted spend more time with my wife and two young daughters without being haunted by the amount of catchup I felt I had to do. Everyone’s situation will be different, but even if you never want your side project to be your full-time gig, the sooner you create something that automatically makes money regardless of hours worked, the better off you’ll be.