3 Lessons From My Failed Business With a Guy I Met on Craigslist
I’ll be the first to admit that sometimes common sense is not so common. Let me give you a quick background to this story so I don’t lose all credibility.
First off, as you may have read in a couple of my other articles (see How My Life As An Entrepreneur Shaped My Time In Prison), I was sent to prison for two years for an incident that happened 10 years ago. Once out, I had to rebuild my life from scratch.
I had been building startups before prison, and have been doing digital marketing for some time, so I started a digital marketing company. Immediately, I hit Craigslist seeking people in need of digital marketing, and quickly secured a couple clients. Shortly after, I created an IFTTT trigger that alerted me anytime someone posted a new ad to Craigslist with digital marketing keywords.
One day I received an alert from someone who claimed that their website was front page listed on more than 150 local listings for keywords specifically related to digital marketing. My opportunistic predator senses were tingling, but I was skeptical. I contacted the guy, and decided to have him swing by my office to further examine his claims.
We met, and I could tell he was down on his luck. To my astonishment, the site was in fact front page for all of the places he claimed, but he was asking for more than I was willing to part with because he was in a position of need. So, like any other logical startup entrepreneur I told him we should go into business together.
I was focused on web and app development and design, and felt like he brought an important component to the mix. It seemed like a great complement. We would be 50-50 and build a digital marketing company together, while we both focused on each of our respective strengths. I ended up handling operations and design and development, while he focused on sales and search engine optimization.
If you’ve ever jumped into a relationship way too quickly, and let things get serious way too fast, you'll have a small glimpse of what happened next. To say we failed in epic fashion would be an understatement (I'll spare the details for now), but life, and startups, go on.
Here are three important lessons I learned from the experience that I hope will help you in your future endeavors:
1. Figure out how to protect yourself
One of the biggest problems with my experience was that I was way too exposed. This company had been my primary source of income, so even though I had some other small side projects going (all pre-revenue), this is where my main income was derived from. Further, taking an operational role had left me out of the sales process.
Getting new clients for any service-based business takes work, and is a full-time job unto itself, so when our company imploded I was left without any new client opportunities. This early on, without the revenue being generated from new business, I was in a very bad position.
This was one of my biggest takeaways: The foresight to better protect myself if things did in fact go sideways as they did. It was a valuable lesson to learn, and an experience I’m grateful that happened now rather than later.
2. Continue to take chances
Even though I felt burned, and was disappointed with how things turned out (there’s more to the story, but I’m going to remain courteous and professional), I didn’t want to allow the experience to scar me from future opportunities. I realized that this was one isolated event, and that not everyone will turn out like it did, nor will every opportunity end this way.
This took a conscious effort of reminding myself of these facts. Of course, it made me more cautious, but cautious is OK. The big lesson here is that some opportunities work out, and some don’t. Some people work out, some don’t. Whatever the case, do not let one bad experience hinder you from taking chances on other opportunities.
3. Mitigate risk
Having a healthy appetite for risk, as an entrepreneur, is what sets us apart from the pack. However, I’ve learned that mitigating risk is what sets an experienced entrepreneur from a rookie. I should have better mitigated my risk.
For example, even though I was focused on operations, I should have done some sales and worked on having warm leads in the pipeline. I could have had a side source of income, or even a part-time job just in case something went wrong.
There were probably a million things I could’ve done to mitigate risk. I didn’t do them, but I’ve learned my lesson, and will be wiser when faced with future opportunities.
Like a phoenix rising from the ashes, my new company was born, and I would never be where I am today if I didn’t have that experience. Today, my company boasts of clients such as the California Department of Education, a prominent household media company and the 2014 Crossfit woman games winner, to name a few.
I’m grateful for all of my experiences as an entrepreneur, especially the ones that don’t go as expected. Some people call these failures. I call them unintended consequences. Whatever you call them, make sure you learn from them and they’ll be the greatest experiences of your startup careers.