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My Early Business Life: A 6 Figure Business That Fell Apart When I Was 16 | Sofa Moolah | An Online Entrepreneurship Journey
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My Early Business Life: A 6 Figure Business That Fell Apart When I Was 16

I originally planned on making this topic into an eBook and have it released alongside “How I Launched, Marketed and Promoted A High-Traffic Blog in Under 15 Days” but I’ve decided against it. I wrote this (very personal) article to document the rapid rise and ultimate collapse of my very first business which I launched in 2008 at age 16 and to tell you what I learnt from this experience. I’ve tried to be as transparent as possible with regards to financial information and other experiences along the way.

The business was called ZOR Technology. In this early recount of my business life I go into detail of how I created an online business that was importing crates of consumer electronics from China, had revenues of high 4 figures per month, made me a power seller on eBay, generated national media attention and put me in one of those ridiculous “top 10 young entrepreneurs in Australia” list. I also talk about the fall of ZOR which involved the intention to sue from one of the biggest companies in the world (read the first ever post on Sofa Moolah for more information about this) and a lifelong suspension from eBay.

This story actually starts off with my first and last “real job”. I was employed for the very first time when I was 15 years old at a printing company called iMAAGE. The pay was minimum wage, around $6.50 an hour if I remember correctly and involved simple, mundane tasks like packing and making boxes, helping around the office and if I was lucky, using Photoshop to crop client’s images for print. The motivation to work there was pretty simple: I wanted to gain experience in the work force and I wanted to help my family out with financial stress. I was living with my mother and my two sisters at the time and felt the need to do something when my mum had taken it upon herself to work 4 jobs to support us through school. After the initial interview, I was immediately offered the job and started the next day.

I was still at school when I joined the iMAAGE team so the amount of work I could do was limited, however I was still picking up around $100.00 a week doing a few shifts after school. This turned out to be a good boost in cash flow, but after a while I came to realize that I could be doing more and ultimately earning more with my time. What I learnt from this job was crucial to what happened next in my life. I learnt about how they imported their products, their different kind of sales channels, information about their website and also ecommerce in general. From simply asking questions and doing research I was able to grasp the basic concept of importing and selling products for a profit.

In August 2008 I decided that I would save up enough money to start my own business – a decision I kept to myself. My plans were hastened as the school break was upon me which meant I was able to work 8 hours a day, 5 days a week. My bank account read $1040.00 after the first month – the most it had ever held. (I’m sure there’s something here about not succumbing to temptations, ability to differentiate needs and wants – perhaps I’ll address that in a different post). I knew I had to spend my savings wisely; figure out what the best return-on-investment would be.

It was now September 2008 and it was coming up towards one of the busiest shopping periods of the year, Christmas – I decided that this would be when I launch. I now needed a product. I had been using eBay before so I was familiar with the website so I decided to use a thing called eBay Pulse. Basically eBay Pulse show’s what the most sought after products are on the website. I remember seeing things like the Nintendo Wii which had yet to be released as well as the Xbox 360 and other expensive products. I simply could not afford to purchase these items in bulk so I kept searching. Further down the list were MP3 players – a more realistic product that I could purchase in bulk. I studied a few auctions for MP3 players with all of them receiving a large number of bids and was also sold for a reasonable price. This is what I wanted to get into.

Several problems arose as I now needed to find a reliable supplier who was cheap, but also provided quality products. A few Google searches failed until I found a site called Alibaba. Alibaba is “the world’s largest online business-to-business trading platform for small businesses” – a fancy way of saying a large directory of offshore suppliers. Spending several days on the website I finally found a decent MP3 player with a company who seemed legit. The product was an unbranded 2GB MP3 Player which came in multiple colors. I’ve linked to a picture of what the MP3 Player looked like here.

This specific supplier I found had a minimum order quantity (MOQ) which was an issue for me as I had a very limited budget. A few hours of haggling and I was able to bring the MOQ down from 500 units to 200 by calling this a “sample order”. A few other problems came up that I won’t go into too much detail, but they included the supplier not accepting my preferred method of payment which was PayPal, they only took Western Union. They also wouldn’t deal with anyone under the age of 18, so I had to lie about my age.

So after negotiating with my supplier and signing a few documents, I placed my order. The order was for 200, 2GB MP3 players in mixed colors. The cost per unit was $4.20 including shipping and handling which brought the cost up to $840.00. After paying Western Union fees and changing currency to USD from AUD, I sent the money off and was pretty much broke – this needed to pay off. I was told that my order would be manufactured within the next week and will be shipped out afterwards. It was near the end of September now and I had to be prepared for when the order arrived.

I decided to create eBay templates for the products in order to list them quickly and efficiently. I created a few different templates to do some A/B testing in order to improve conversion rates. The exciting part was deciding on a selling price. Comparing prices on eBay, majority of the MP3 Players were selling for around $60.00$70.00. I was purchasing these products for $4.20 each so I could afford to undercut the competitors by a significant margin. A buy it now (BIN) price was put as $49.95 – this would give me a $45.75 profit, minus the eBay fees which brought the profit down to around $40.75. I only needed to sell 23 of these MP3 Players to break even.

The order arrived on the 9th of October. I inspected the products after being told they could possibly be low quality but they worked and had zero faults. I needed some good product shots so I lined them out on the floor and took some photos. The setup was extremely dodgy and I should have got professional product shots but I was cheap. I used a lamp for lighting, A4 paper for the white backdrop and a cheap digital camera. The finished product wasn’t terrible, but they certainly weren’t the best.

This post is getting extremely long so I’m going to break it up into a series type article. In the next part I’ll talk about the joy of making tens of thousands of dollars in the lead up to Christmas, the daunting phone call I received while at school that would eventually lead to the collapse of ZOR and the realization that I could be in very serious trouble. Stay tuned.

YOU CAN READ THE 2ND HALF OF THIS STORY BY CLICKING HERE.

Mat

Mat co-runs this site. You can find him on Twitter, Facebook or LinkedIn .

21 Comments

James

about 6 years ago

Very interested in reading the rest, please post asap...

Reply

Mat

about 6 years ago

Will do, thanks for reading!

Reply

Tommi Carleman

about 6 years ago

Oh damn, I was just getting excited to read more, and then you decided to be evil and cut it >:(

Reply

Mat

about 6 years ago

Haha, sorry about that! I'll post the rest soon.

Reply

Tapha Ngum

about 6 years ago

Duuude, you CAN'T end it there! lol. Great read. Looking forward to part 2. Subbed.

Reply

Mat

about 6 years ago

Thanks for subscribing! I was tossing up whether or not to keep it going but the length was getting out of control and I didn't want people to look at the length and then leave.

Reply

William

about 6 years ago

Whattt.... you had such a grabbing intro and title and you leave a huge cliff hanger like that!? lol When's the next part coming?

Reply

Mat

about 6 years ago

Haha, sorry! I'll post the next part in the coming days. The ending will probably be a bit longer than this post. Hope that's fine.

Reply

Anonymous

about 6 years ago

A little over 10 paragraphs is extremely long? Is this what twitter has done to us?

Reply

Mat

about 6 years ago

I guess it's a bit slack but hopefully you stick around for the ending.

Reply

Design 311

about 6 years ago

Damn! It sucked when I reached the end of the post and didn't get to read everything, but I understand the post was getting a bit lengthy, long posts might scare people after all. It is INCREDIBLE how you only had to sell 23 products out of 200 to reach break even. I've heard some pretty bad things about alibaba.com though, scams and such. I must have it confused with something else.

Reply

Mat

about 6 years ago

I've also heard my fair share of horror stories about Alibaba but fortunately I've never had a bad experience. I guess with any community that is very popular their would be a few that want to ruin it through scams and whatnot.

Reply

SBD101

about 6 years ago

Hi Mat great post first time I've actually commented on anyone's post- i mean ever haha hope to hear the ending soon. I'm going through my second start-up now and a young entrepreneur myself , what a roller coaster it can be! Excited to read the final part of your story!

Reply

Mat

about 6 years ago

Hi! Thanks for reading and commenting! It's a privilege to have your first ever comment on an article I wrote. Send me through a tweet or email if you want to have a chat about your start up, maybe we can bounce ideas or something. I'll post the final part very soon.

Reply

Ryan

about 6 years ago

I'm surprised that you got sued for selling those players as they're still on sale at some pretty big retailers here in Netherlands. Worthless crap, mind.

Reply

Mat

about 6 years ago

Hi Ryan, I didn't get sued, I was close but it never got that far. :)

Reply

Andrew

about 6 years ago

Hey Mat, I read this a few days ago while I was at work, but didn't have the time to comment. I wanted to leave a comment though, because of how similar our experiences were. It's funny - I went through (almost) exactly the same thing at around the same time frame. 3 years ago, I took about $1,500 saved from a job (I was 18 at the time), bought in bulk from alibaba/dealextreme, and hit 6 figure (total) revenue in about 8 months. Instead of a fruit, I was stopped by a company that recently released a 3D handheld gaming device... Anyways, I just wanted to drop a line for someone who's story sounds a lot like mine! Best of luck with your future endeavors :) Cheers, Andrew

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Mat

about 6 years ago

Hi Andrew, cheers for the comment. Wow, our stories do sound similar. You should write out your story for us to read - I'm sure a lot of people would be interested.

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ibcontact

about 6 years ago

Interesting, thanks for sharing your story.

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Mat

about 6 years ago

No worries, cheers for reading!

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seo

about 5 years ago

Its like you read my mind! You seem to know a lot about this, like you wrote the book in it or something. I think that you can do with some pics to drive the message home a bit, but other than that, this is excellent blog. An excellent read. I'll definitely be back.

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