We spent a million dollars and all we got was this T-shirt…
A true story of how three mates lost almost a million dollars of their own money in a tech startup, and what they learned along the way…
You know sometimes the secret to making big dollars is not hidden.
As students of entrepreneurship, it’s a rare instance that someone is prepared to share the granular details of a significant failure.
But above all, the lessons learned from real losses can be the most valuable lessons of all.
To that end, here follows the true story of how three mates (me being one of them) parted ways with almost a million dollars of their own money, and were left with not much more than this T-shirt…
Before I dive in here, I want to make a very important point…
This failure happened recently…like a few months ago.
The reason I point this out is because it’s rock solid proof that even relatively accomplished entrepreneurs (who have a million dollars of their own money to lose in the first place), do indeed, fuck up royally
If you’re sitting there thinking that everything’s easier when you start with a bit of cash or that you’re somehow immune to failure once you’ve had a few wins in life, you my friend, are wrong.
No matter what you do in business, there is always risk and your ass is always in the sling.
But here’s something that real entrepreneurs also know…
In the game of financial freedom, if you’re not born into money, the cards are solidly stacked against you right out of the gate.
Here’s the real deal when it comes to becoming properly financially free.
First you must realise and accept something that they don’t teach you at school.
Here it is.
The risk of ending up broke if you DON’T take measured risks is about 100%.
In other words, you’re fucked if you don’t take risks and you’re in with a chance if you do…but it’s still a chance, so take nothing for granted.
Knowing that you are always at risk of missing something critical when you build a new business is what creates the necessary paranoia to reduce your risk of failure overall.
In this case, we weren’t paranoid enough and we burned ourselves.
I’ve seen it time again in teaching Amazon sellers…
People who launch Christmas decorations and didn’t anticipate that sales will drop off between January and October.
A minor oversight (lol).
As stupid as that example sounds, I’ve seen that kind of simple oversight occur over and over again, with new entrepreneurs especially, because they’ve never had a proper ass-whooping in business.
A good and proper belting is (sadly) sometimes a totally necessary experience before one truly develops the level of discipline required to sort good ideas from great ones.
In the story that I’m about to tell you, if we had have paused for even for half a day and done one deep dive into why this idea might not work, and really gotten granular about it, we may have avoided this pain all together.
But we didn’t do that and now we have one very expensive T-Shirt and a ripper of a story to share.
So let’s meet the cast of characters in this tale of ass-fuckery and loss…
That’s me to the left (Adam), my good mate James in the middle and my other good mate Joe, to the far right.
Those smiles were pre-being-fucked.
At this moment in time, we felt certain that we were onto a winner.
The idea was simple…
Everyday, hundreds of thousands of Instagram influencers, YouTubers and Facebook account owners, are using those platforms to publish content that educates, entertains and connects with their audiences.
The problem is, almost none of them are getting paid to do it.
They’re spending hours of their lives every week, working for free, and the big platforms are sitting back getting paid billions in ad-revenue off the back of their work.
To us, that seemed like a massive opportunity.
What if there was an app that allowed influencers to get paid a monthly subscription for producing live video content for to their massive audiences?
So let’s start with this…
Why live video?
At the time that we hatched this idea, live video was by far the most engaging content that influencers could produce and their fans and followers loved it.
Rule #1 in business is give people what they want so that made sense.
What really got us excited was the sheer size of some of these audiences.
It was not uncommon to find a fitness influencer (for example) who had more than 100,000 followers. Heck, finding one with more than 1,000,000 followers just on their Instagram account wasn’t uncommon either.
What if an influencer could get just 1% of their following to pay $15/month for daily coaching and live-workouts delivered live through our video-streaming app?
1% of 100,000 people is 1,000 people.
1,000 people paying $15/month is $15,000/month or $180,000/year and the Influencer could work anywhere and get some serious income from their fan base instantly.
If they had a million followers and the same metrics applied, they could earn $1.8M/year!
How many fitness influencers are there on Instagram?
If 500 of them have 1,000 paying subscribers each, that is 500,000 paying subscribers at $15/month.
That’s $7,500,000/month in recurring revenue just from 500 fitness influencers!
Our minds started to go into overdrive!
Of course, the fitness niche was just one application.
What about awesome chefs teaching cooking?
Film makers teaching film?
DJs teaching how they cut tracks and releasing exclusive content to their subscribers on our app?
What about motivational gurus like Grant Cardone, Robert Kiyosaki and Tony Robbins who make a living making motivational (mostly video) content?
Some of these guys have *millions* of followers across their various social accounts and they can sell!Surely they would all jump at the chance to monetise their social followings?
What got us even more excited was the fact that none of these people needed to spend a cent on advertising to build this income stream for themselves.
They already had the audience!
All they had to do was reach out to their followers and promote their new “channel” on our app and they were off to the races.
Our phone call to them would simply be….
“Hey! So you’ve got all these followers on social media that are paying you nothing. What if we could show you how to instantly make a decent amount of money from them for doing something that you’re already doing for free?”
Our questions (internally) quickly became around what the split would be between us and the influencer and how much it would cost to build it properly.
We decided on an 80/20 split in favour of the influencer and then we got to work on pricing up the build.
While all of this was going on, a (then) small startup called “OnlyFans” was starting to making headlines.
The premise of their business model was identical to ours.
Like us, they set out to make it easy for people with large social followings to monetise their audience through publishing premium or exclusive content on their platform.
Their early numbers were astonishing, which only made us more confident that we were onto something.
Some influencers were making hundreds of thousands of dollars a month posting photos and videos that they weren’t making available on their free channels.
OnlyFans was mostly nudity and varying degrees of porn.
For the first time, (mostly) men who had been following that hot girl that they loved on Instagram for years, could now pay to see what previously was only in their mind…and the girls cashed in big time.
Check this out…
Corinna is not an exception.
Loads of girls are making big money and today, OnlyFans is valued at more than $1B.
Meanwhile, back at home-base where we were building our app and we had plans to be “the non-porn version of OnlyFans”.
So there we were.
Three ambitious entrepreneurs, getting super-excited about cashing in on this idea, but we weren’t thinking clearly enough, deeply enough, or objectively enough, about the finer nuances of our particular idea.
We were focused on what could be rather than what we were actually doing and what the real stumbling blocks might be to our particular offering.
So let’s dive into those…
Firstly, unlike OnlyFans, we weren’t selling sex.
People who pay our users would be paying for high quality, LIVE video-based content and not just filtered photos or videos that required nothing more than showing your body parts and acting sexy.
That’s a whole different ball game and that is the ball game that we didn’t think through as you’ll soon learn.
What we quickly discovered when reaching out to real influencers about our idea is that many of these people were terrified or completely incapable of just “going live” on video.
They had built massive followings based on photos.
Taking a photo is totally different.
First, you can take 100 photos and choose the best one.
Zero pressure and unlimited fuck-ups is fine.
A flashing red light, a silent room and your phone saying “You’re Live” – freaked the hell out of most influencers.
Put simply, most people are not on-demand video performers.
Secondly, many influencers were just flat out lazy.
I kid you not… these are real discussions we had with people…
“So I get that I can make $50,000 a month but do I have to go live for 10- minutes EVERY day? That seems like a big commitment.”
It drove us insane!
The third major challenge is that almost everyone that we successfully got onto the platform had major issues selling themselves by way of video.
I was the first user of our app and I managed to get over 1,500 paying subscribers from only 24,00 followers.
That was 6% conversion.
But I was not your normal influencer.
I have made a career out of selling myself straight down the barrel of a video camera, or live on stage in front of hundreds or thousands of people at a time.
It never occurred to me that this would be a major issue for 99% of the population.
Remember what I said about selling Christmas decorations and being surprised when sales dropped off in January?
Most normal people freeze when it comes to selling anything, much less selling themselves!
Most people become the worst, most nervous, salespeople in the world and this showed in their sales every time.
It wasn’t uncommon that we’d get an influencer with 100,000 followers on Instagram only getting 10 people to pay $15/month for their premium content on our app.
It wasn’t 1% conversion.
In fact, it was often 1/100th of 1%!
It was crazy and it meant that our modelling was out by a factor 100X.
Cue the tightening sphincter..
The combination of these things made the business non-viable.
We were in trouble and we were fast approaching having spent all of the million dollars that we’d invested to get this thing going.
So what do you do when it starts dawning on you that you may be, totally, and utterly, fucked.
Well, as luck would have it, because I’ve failed so many time in business, I actually have a model for it that helps me know when it’s time to quit.
As the great Kenny Logins says…
“You’ve got to know when hold ‘em. Know when to fold ‘em. Know when to walk away. Know when to run!”So let’s talk quitting for a moment…
People know me today because of my success in selling products on Amazon as well as my success with teaching others to sell on Amazon as well (at time of writing, our students have now done over $1.3B in sales there).
I’ve written a best-selling book.
I’ve shared the stage with Tony Robbins, Gary V, Grant Cardone, Robert Kiyosaki and I even produced a documentary on the late Larry King.
But that success is on the back of many failures.
My path to success has not been a straight line at all.
So let’s talk about my model for failure.
Basically this model is what I do when things aren’t working out as planned.
In my view, there is not nearly enough help around this subject and most people stay in shitty situations for far too long because they simply don’t know what to do when things are going poorly.
If you’re a student of success, you may be one of the majority who buys into the famous Winston Churchill quote,
“Never give in! Never, never, never, never.” Hmmmm – or not!
The appended quote above is the stuff of self-help wet dreams, but taken at face value and without the full quote, it can seriously fuck up your life!
Here is the full quote…
“Never give in–never, never, never, never, in nothing great or small, large or petty, never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy.”
You see that part I underlined?
That bit is extremely important!
If good sense arrives and you ignore it, then you are fucking idiot.
With that in mind, here’s my model for knowing when to quit.
This diagram is pretty self explanatory.
The only thing I want to comment on is the part about seeking counsel.
That means, “Ask people who have really done this before and who have results you admire.”
Don’t ask your loser Uncle Bob who is as broke as a joke about what you should do with your fledgling business and dream.
Ask a successful business person and tell them to be straight with you!
If you don’t have any successful entrepreneurs in your life, hire a few by the minute on www.clarity.fm
Obviously you have a blind spot like I did, otherwise your thing would be flying right?!
Maybe you started selling fire proof matches or waterproof tea bags?
But make it your business to find out what you are doing wrong and if after implementing everything that you and the smart people in your life can think of to make it work, it still isn’t working, get out of there like it’s a burning house.
Life is too short and opportunity cost is a real thing!
Why your “world changing idea” is statistically a dumpster fire but you just don’t know it yet…
I could write an entire book on what we learned from this failed tech startup, but I hope you’ve learned a lot by reading just what I’ve shared here.
As it stands today, we have lost about a million dollars on this project, not counting about 18 months of our lives.
That is a very important sentence to absorb because the truth is, this is where most start-up entrepreneurs end up.
The success stories you see online and read about in magazines are the exception, by a long, long way.
In fact, in the venture capital world (where most of the startup funding comes from) they expect that 90% of their investments will go to zero.
9% will break even or make a small profit.
1% will make enough money to pay for all their losses and make them rich.
To put that in perspective, just to get venture capital in first place, you have to be among the elite.
If you launched (not thought of) two elite business ideas every year for 50 years, with venture capital funding and mentorship to get you going, you might hit one that makes you rich.
In short, your chances of success through a unique business idea which you start from scratch are virtually zero.
It’s just too fucking hard for most mere mortals.
So why is it that selling on Amazon became a home run for me and also loads of our students around the world?
Using a proprietary piece of software that we developed and is connected to our student’s actual Amazon seller accounts, we know that this random group of mums and dads and ordinary people our students) have now generated more than $1.3 Billion in sales on Amazon within the first 5 years of us teaching them.
Split between every student that’s bought our online course, and not excluding those who never even launched a product, it’s an average of almost $200,000 per student.
That’s actually extraordinary.
Yes – we are awesome teachers 🙂
There’s no way that we’re that good!
Underlying all this has to be a business model that gives the everyday person a far better than average chance of success than most other business concepts.
So rather than bang on here about Amazon, if you’d like to see how I started my Amazon journey, a see the actual product that I started selling when I first got going, please visit this page.
I reveal the actual product, the numbers and why I chose it. I also reveal my second product which got me raided by the FBI. It’s a true story!
I also show you what’s changed on Amazon and where the opportunities are today. It’s free and I think yo’ll enjoy it!
Good luck out there and well done on getting through this story!
Here’s to your success.
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