The Hybrid Creator Flywheel
Fund the business with services, then add zero-marginal-cost products that feed each other
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 4
- Confidence
- 85%
Cole's biggest agency mistake was scaling services forever. Services grow only by landing more clients, which forces more hires, and people are step-costs that erode margin. The sweet spot arrives when the service runs with an hour or two of owner time a day; at that point, instead of scaling services, you use the reclaimed time to build digital products, which have no marginal cost and are pure profit. This creates a flywheel: some product buyers do it themselves, but a good share get educated, realize it's harder than expected, and hire your service. Product sales are profitable and generate service leads, which fund more product creation. A firm doing $60K in services plus $40K in products is far more profitable than one doing $100K in services. Cole predicts hybrid creators and hybrid agencies are the coming intersection few are executing yet.
Origin
Cole grew a ghostwriting agency from zero to ~$180K/month and, looking back, wishes he'd added digital products at the sweet spot instead of scaling headcount. Extracted from Deep Dive with Ali Abdaal.
Core principles
- 01Scaling a pure service business means hiring, and people are step-cost liabilities
- 02Digital products have no marginal cost, so they are pure profit
- 03The sweet spot is when services run on autopilot and free your time
- 04Products and services educate and convert into each other
How to run it
- 1
Build the service to autopilot
Grow the service business until it runs profitably with only an hour or two of your time per day.
Pro tip This is the sweet spot; profitability and health peak before endless scaling.
Watch out Don't assume you should just grow services forever; headcount erodes margin.
- 2
Reinvest reclaimed time into products
Use the freed-up time to build digital products that carry no marginal cost.
Pro tip Every product sale thereafter is essentially pure profit.
- 3
Let products feed services
Products educate customers; a share realize the work is hard and hire your service instead.
Pro tip You monetize the sale either way, which spins the flywheel.
- 4
Blend and watch the tipping point
Aim for a revenue mix weighted toward high-margin products, and watch for the size where more staff kills profit and fun.
Pro tip A $60K services + $40K products mix beats $100K of pure services.
Watch out Growing too fast can make the business less profitable and less enjoyable.
In the wild
At $60-80K/month with five staff and ~15 clients, Cole and his co-founder each made $20K/month working an hour or two a day. Not knowing how good they had it, they kept scaling services. In hindsight, that was the moment to start building digital products, whose pure-profit margin and flywheel effect would have made the business far more profitable than continued service growth.
→ Recognizing the sweet spot would have added high-margin product revenue instead of costly headcount.
Common mistakes
Scaling services forever
Treating more clients and more hires as the only growth path caps margin and adds management burden.
Missing the sweet spot
Not noticing when the service runs on autopilot means never freeing time to build products.
Is it for you?
Best for
Agency and service founders who have hit a stable revenue plateau and want higher-margin growth.
Not ideal for
Beginners who haven't yet built a working service or accumulated teachable expertise.
From the transcript
“every digital product thereafter has no marginal cost so it's it's pure profit”
“your digital products are profitable which educates customers to become service clients”
“that was The Sweet Spot”
From the episode
How to Make $10k/Month as a Writer - Nicolas Cole
Nicolas Cole