After reading countless biographical books about business leaders and industry titans, I’ve come to realize that failures and fuck ups are a normality in business. It's not a matter of if but when you’ll get it wrong. The best you can hope for is to learn from your mistakes and try not to repeat them. Every mistake offers insight into how to fine tune and improve your approach to business.
Listed below are a few examples of my business failures along with an explanation of what went wrong and why they failed. All important lessons that I’ve learned from and applied to future investments in order to avoid the same mistakes.
LoudLaunch
LoudLaunch was a link-building platform that owned/operated thousands of informational websites. Customers would pay LoudLaunch to post links on it’s network back to their own sites in order to increase their domain authority and search engine rankings.
The main reason it failed was because Google caught onto this trick and made an algorithm update to its search engine which effectively obliterated the value of LoudLaunch’s entire network of websites. Being heavily reliant on one source of traffic is risky.
Also the person running LoudLaunch, whom I invested alongside, really didn't know anything about the space. She was a therapist by trade and bought LoudLaunch from the original owner through a business broker. I was introduced to her via a mutual friend since I had successfully invested in another link building platform and was bullish on the space. Big mistake on my part. Towards the end, the owner stripped the business of all remaining cash and disappeared. I ended up losing my entire $100k investment.
Wicker.com
I purchased this domain for nearly $250k and hired staff to build the business from the ground up including sourcing manufacturers/inventory and overseeing the e-commerce website development. The business never made any money and I ended up selling it a few years later to a competitor for a substantial loss.
Wicker failed for a number of reasons. The inventory was drop shipped and most pieces were oversized and needed to ship freight. This translated to increased shipping costs (lowered margins), increase in transport related damage, long lead times, and an increase in customer dissatisfaction. Inventory was made to order and stock was inconsistent, resulting in many orders being delayed or cancelled all together. Finally, we didnt carry our own branded inventory (where we control the brand and margins can be higher). We were drop shipping inventory that was readily available on competing websites at lower prices and we really had no competitive edge.
HardDrives.com
I bought the domain for $305k with the intention of flipping it for profit. Big mistake. I ended up trading the domain for equity in a domain registrar startup. I have yet to see a dollar back from that investment. Lessons learned: dont invest in domain names, dont get into dying niches, dont invest in startups.
Barber Poles Direct / Pedal Car Co / World Globes Direct
I built and launched all three sites around the same time. Each website eked out a small profit but all three ultimately failed for similar reasons. I was relying on a single manufacturing source to drop ship inventory and had no competitive edge. All three were in niche spaces, which I loved, but I came to realize that getting into too small a niche is no good. If the space and prospective buyer pool is tiny, your success will be limited. While they were all profitable, none were worth the time and resources to manage so I shut them down.