The Conclusion: A 6 Figure Business That Fell Apart When I Was 16
I really have to apologize for leaving you guys hanging on the first part of this story. I was undecided on whether or not to break the article up into 2’s and after some feedback on Twitter I decided to. Below are the middle and the ending. Again, I was undecided on whether or not to break this part up but I left it whole. There are 23 paragraphs, double the original. If you’re not sure what I’m talking about, this is the 2nd part on a story I posted yesterday. You can view the original here. By the way, this is the first time I’ve ever told this full story.
Let me clarify that because the tracking information said the order came on a Thursday I had to take the day off from school. My mum left for work at 6:00am and I’d usually get a lift to and from school with my mate so my sisters didn’t know I was taking the day off. That afternoon, the first home were my sisters. They got in and were confused as to why I had a room full of MP3 players. Being a cool brother (ha!) I gave them both an MP3 player for free. My mum got home at 5:00pm and I was hesitant to tell her I gambled away my savings. I showed her my order and the look on her face was one of shock, excitement and nervousness. I reassured her that I’d be fine and hopefully they’d be packed and posted to customers within a month or two. Turns out my estimations were wrong.
It took me little time to put the first product on eBay. I remember my dinner getting cold that night because I was listing items for sale on eBay. I started off with 1 of each color for sale. There were 6 colors: Pink, Green, Silver, Blue, Black and Orange and all were listed for $49.95. I went to bed that night feeling exactly like my mother’s first reaction: excitement and nervousness. Would I see a sale before the end of the week? Would anyone even buy them from me? I had my doubts.
My alarm went off at 6:00am, though I was already awake. I logged into my eBay account and saw several messages and alerts. Investigating further I noticed that I now only had 1 item for sale – an orange MP3 player. Overnight, in the space of 12 hours I had sold 5 products making me almost $250.00 while I was sleeping. Let me just put this amount into perspective to 16 year old me. I worked 8 hours a day, 5 days a week to make $260.00. Overnight… while I was sleeping… I had almost made this amount. As you can imagine I was ecstatic. Because I got up at 6:00am and my lift to school didn’t arrive until 8:50am I had several hours to do my thing.
It took me a total of 8 days to recoup my original investment. After this I began to get into a routine over the next few weeks. The afternoons would consist of listing new items on eBay, preparing the products to be posted, printing out invoices, managing payments, communicating with customers and walking down to the post office to post several parcels. The post office was around 1km away so I would pride myself on quick postage times. If a customer purchased one of my products and paid for it before 4pm on a business day, I’d post the item the same day. Inevitably, I began to get to know the lady at the post office really well. I remember she gave me access to bulk postage parcels to save me some money one day. If I remember correctly the parcels retailed at around $1.20 each and she sold me 100 for $80.00 – every little bit helped.
I placed my second order on the last day of October. I still had a few products to sell but by the time the 2nd order arrived they should be long gone. By this time I tried to make my setup a bit more professional. I bought a proper printer that could print out invoices and order information extremely fast. I purchased a paper shredder and was using shredded paper as cushioning for the MP3 cases. I had a logo designed through Freelancer.com (formerly GetAFreelancer.com) which you can view here. Off memory the logo only cost me $50.00. I also convinced my mum to co-sign a BlackBerry Bold 9000 for me “for business”. I say “for business” in quotation marks simply because I think I just wanted a cool looking phone which had internet access. The good thing about having a cell phone with an internet connection is that I could receive emails while I was at school or out and about. I remember sitting in class one day after setting up emails on my phone and all mobiles had to be on silent or vibrate. Literally, every 5 minutes I could feel my phone vibrate. The emails were either “Your Item Sold” emails from eBay or “Notification of an Instant Payment” from PayPal.
There wasn’t much time left until school broke up for the Christmas holidays and I certainly needed a break. I knew things were getting a bit chaotic when I was signing documents worth thousands of dollars and authorizing deliveries which meant having crates of electronics being delivered to my tiny house. Not only this, but my recess and lunch breaks at school were basically me sitting in the library processing orders. One of my mother’s jobs was working at the school so she was able to get me administrators access to the schools internet which basically meant eBay & PayPal were unblocked (school internet access being filtered sucked).
When the school break finally came along, I was working more hours than ever before. Because I was always busy both before and after school, some of my friends caught wind of what I was doing and wanted in. Looking back now, I had somehow recruited affiliates, but back then they were simply friends helping out. I had designed a flyer template which I gave to each affiliate (I’ll stick with the term affiliate for now) and had them add in their name and contact number at the bottom of the flyer. I raised my prices to $55.00 per item giving each affiliate $15.00 per sale which left me with $40.00 profit. I remember before the Christmas break going to school a few times with a box full of MP3 players and handing out lots of 10 to people who expressed interest in selling. This was probably one of the easiest things I did to make a few thousand dollars – who knew teenagers were good sales people!
With both eBay and my friends bringing me customers I was earning a lot more than I ever expected. While I never hit 5 figures in revenue per day, I was doing it on a weekly basis. What I find incredible now is that I had created this little business with only 1 product. Sounds good now, but it started to make me a little paranoid back then. I wanted to expand my product line. It was only a few days before Christmas so I thought I’d do some research and development the day or two after Christmas thinking that they’d be slow sales days (I was wrong by the way). I didn’t get a chance to work on a new product until mid-January, but that would be too late.
The New Year started out really well. For 2009 I was on track to hit one of my financial goals by the end of the year which was to become a millionaire while I was still a teenager (I still have time left for this by the way & it is still a goal of mine) and this motivated me even more. What was going to get me there quicker was to expand my line. I did research into growing markets and trends. I looked into manufacturing prices and retail prices. If I was to start a new product now, I’d probably follow the same procedure though it would be more efficient now (you know, older and wiser…). The result was an 8GB USB Drive. This is a link to what the finished product would look like. I’ve still got my marketing plan with me which comes with a funny story.
Let me quickly tell you a funny story about my marketing plan. This is for the people who think that working all the time on a business would affect your grades. Same year, 2009 and I was studying Business at school. My business studies teacher gave everyone a task which counted for 50% of our overall mark – a crazy thing to do. The task, ironically, was to create a marketing plan for a new product. Me, just finishing up development of this USB drive simply handed in my real marketing plan. It’s 13 pages long and talks about market demographics, needs, trends, keys to success, product positioning, sales forecasts and the list goes on. I ended up handing it in and turns out I got 20/20. I’ve scanned the front page and you can view it here.
Anyway back to the story. According to my sales forecast, this new product was going to inject a lot more growth into my business. Using forecasts similar to the MP3 Players, I forecast sales of 13,000 units the first year which turned out to be $415,500 in revenue. I was going to use a cost-based pricing method and the total price per unit was going to be $30.00 – a lot cheaper than competitors. Back then, 8GB USB drives were retailing in stores for close to $100.00. I like to think that my product had a direct effect on the market, but that’s just me dreaming. After talking with distributors about in-store placement of my product, I decided that along with the physical 8GB USB drive that the device also comes with 8GB of storage in the cloud – something that could probably work out alright now. Again, this was all a waste of time but I didn’t know it yet. I used my same supplier in Shenzhen, China to manufacture my USB drives. I submitted a small order to test the waters and they arrived just in time for a phone call I received.
I can’t remember the exact date, but it was in February. I was sitting in my elective which was IPT, a class which stood for Information, Processes & Technology. My phone started to ring during the middle of a lecture, something I had gotten used to after publicly putting my phone number on my eBay page (NEVER. AGAIN.) Usually customers don’t leave voicemails but this person did so I decided to check it. It was a reporter from a Rupert Murdoch owned news website called News.com.au – one of, if not the most popular news website in Australia. She left a brief message and then sent an email. I actually have the email printed out so I’ll scan it and you can view it here – I just edited out some information.
The email basically says they want to run a story on “young entrepreneurs” and somehow they got my information (maybe they hacked my email or something? Kidding.) I thought this could be a good opportunity to get some contacts, maybe push my business into stores faster, get the brand out there, I don’t know. That afternoon I realized two things: 1, I’ll be networking with reporters and other “entrepreneurs” and I don’t have business cards and 2, if I want to convert this exposure to money I’m going to need a website. I didn’t think linking to my eBay page would fly. I had my designer put together a business card design which I still have (click here for the design) and had them printed out very quickly. I needed the cards within a few days and it was a bit difficult to get them done that fast – looking back I shouldn’t have tried to act all pro and just go in the way I am. I ordered 1,000 cards and still have about 950 of them to this day. Anyone want some?! For the website design I simply bought a template and integrated it with osCommerce – I honestly didn’t want one or need one so it was just for show really. I don’t have a copy of the design and thewaybackmachine isn’t showing much – sorry!
I went into the interview and had an alright time. Spending a whole day outside of school and work was a bit challenging – I didn’t want to fall behind on either so I was a bit reluctant to go, plus I had no way of getting there. My dad ended up taking me. He’s a shift worker so he worked from 11:00pm till 7:00am and then drove 90 minutes to the interview. He was so tired that he ended up sleeping in the car for the 4-6 hours I was in doing the interview. This was the first time I was interviewed so I was a bit nervous having a camera shoved in my face and told to talk. They wanted us to talk about the Global Financial Crisis, which to be honest I didn’t want to talk about. To me this was a simple plug-the-shit-out-of-my-business-as-much-as-possible event.
The day ended with a request for me and two other of the “young entrepreneurs” to go on Sky Business and talk about the GFC in more detail on live TV. FUCK THAT. I said no and went on my way. Just to note that I’ve done live TV interviews since then – not too scary, but I was still shitting bricks. I was told that the article would go live soon and I’d be contacted when it does. I was excited to see what this could do for my business.
The article went live on February 18th. As you can imagine things were taken out of context and the topic shifted dramatically. You can see the article here. They’ve removed all but 1 of the comments. When the article was live it amassed hundreds of comments and brought out the haters and trolls. I remember printing out the article and having 1 page of content and tens of pages of comments ripping the shit out of us – mainly myself. Some were sort of right saying “2 products isn’t a business” but that’s an argument for another post.
The article didn’t get me down. I continued selling on eBay; the MP3 Players were still selling like hot cakes, even after Christmas which was a good thing. Week after week I was seeing increases in revenue. By this time I’ve made several big orders with my supplier and had built up a good relationship with the representative I was dealing with – I still talk to her today. Shout out to Ferry! I had plans on making huge orders which took up a lot of time so promoting the new USB drive and trying to organize distribution was put on hold. I was close to ordering a shipping container of USB drives. Close…
March was almost upon me. March 1st is my birthday and I was turning 17. I wanted to go on a holiday and take my family with me. Money wasn’t really a factor to me then as I had been making enough to support myself if need be. Then came the phone call. I was sitting in the computer room at school at lunch time doing what I usually do, processing orders, chatting with my supplier and my phone starts ringing with an unusual number on the caller ID. It was a man who claimed to be from a law firm representing a major business in the MP3 industry. The similarity between my MP3 Player and this company’s product was too close. I had to cease operations immediately or be sued. I couldn’t take another order, I couldn’t accept any more payments, and I couldn’t even trade under the same name. I still remember the voice saying “Client is not happy.” – replace the world client with the company’s name.
Wow. Can you imagine how I felt when I got off the phone? My stomach dropped, I started to sweat and I was utterly… confused. On the computer screen were orders and legally, I couldn’t touch them from now on. The past 7 months of my life gone. I remember coming home, walking into my room and just laying down and staring at the roof for hours, just thinking about what I was to do. I was a 16 year old in too deep.
I came to the conclusion that I wasn’t going to give up that easy and I went to see a lawyer. I figured I had enough money to present a decent battle – how wrong I was. I told the lawyer my story and what the situation was and the consensus was not good. Give up. I was told I could not win. Regardless of if I had a case or not, fighting a company this size was not worth it. Nowadays I can agree with what the guy was saying but being told to give up hit me hard.
For the rest of the year I was pretty quiet in the business world. I focused majority of my time at school though I did have a few ventures that I ran with (out of the retail sector) that did okay which (if there’s any interest) I can make a post about later. To this very day I still have MP3 players lying around and shitloads of USB drives that I never got the chance to sell and are pretty redundant right now.
If given the opportunity would I of done things differently now knowing what I know? Yep. Did I learn a lot from this experience? Yep. Did I make a lot of money and then lose a lot of money? Yep. Would I have gotten my ass handed to me on a gold platter if I went to court against the company? Hell yes. Do I regret doing any of it? Nope.
← My Early Business Life: A 6 Figure Business That Fell Apart When I Was 16 The Importance of Networking – My Experience with Power Users →