1. Close your business while it’s working
I opened my first business right out of high school. I had a few thousand dollars saved up and I wanted to start a business. I found a tiny office space on a busy road and shook hands with the landlord. My Dad helped me make a sign using a piece of wood and a vinyl sticker. I purchased two computer systems and set them up on folding tables. I purchased a desk and a chair and put those in the back of my space, like a small used car salesman. Suddenly, I was selling custom built computer systems using off the shelf parts.
A few months later I got a call from my high school. I told the caller what I was up to and he informed me that the school would receive a small grant because I was working in the industry I had aspired to less than a year after graduation.
Then, I fell in love. No, that’s not right, I was in love before I had even started this. But, the conversation had turned to marriage and children. The business was working okay, but I didn’t think I was doing well enough to support a family. I needed a real job making real money. After working in the store for just nine months, I applied at a local tech company and walked away from my little business.
Three months later I would hire an accountant to do my taxes. I handed him a shoe box full of receipts and invoices and let him figure it out. When he handed me my first Schedule C I nearly hit the floor. I was showing a business loss that was more money than I had ever imagined. He explained that I would be able to write this loss off, in parts, over the next seven years.
But, remember, I had come into this business with only a few thousand dollars. If I had lost that kind of money, I had also made that money to lose. If I were paying attention, I think the business would have been profitable. But, I wasn’t paying attention, and the business had closed months ago.
2. Get a cease and desist from your own employer
Remember that Tech job I landed to make real money? Turns out, that was a good move. The company I joined was Iomega and they were roaring. They had recently released the Zip drive and had gone from 100k in annual revenue to a two billion dollar company. With that kind of growth, money and promotions were all around me. I loved the job and the people I was working with. I was climbing the corporate ladder and loving it.
Iomega also made the higher end Jaz drive, and all of us had one (or two) on our desks. Some of my co-workers were complaining about a problem though. The Jaz drive would spin-down, after two minutes or so, to conserve energy. The next time you accessed the drive, it took 20 or 30 seconds for it to spin up.
I had access to an internal engineering manual for the drive, so I dived in. I concluded that the drives were designed to spin down mostly to save energy. Based on the numbers I had, I figured they would last more than 10 years, even if they were running 24/7. But, there was no way to configure them to stay spinning. The sleep was built into the firmware of the drive itself.
That’s when I got the idea for my first Shareware program. It was a simple Windows utility that I called JazAwake. It would write a tiny file to the Jaz drive every 60 seconds and then delete it. The file was just big enough that it would flush it to disk. Because the drive was being written too every minute or so, it would no longer spin down.
The program was popular both inside the company and out. All of my co-workers were using it and people were starting to pay to register it.
Then I got a letter from one of the lawyers at Iomega. It was addressed to my software company. It was a cease and desist asking me to stop using the Jaz trademark and remove JazAwake from the Internet. At first, I laughed. How can you remove a piece of software from the Internet? That’s impossible. But, nothing short of that would stop them from suing me.
Luckily, they didn’t realize I also worked there, or I imagine I would have lost my job too.
I went to work creating my own cease and desist letter explaining what I had done and started mailing them to every organization that had written about or linked to my software. I had to send these letters to over a hundred different companies. I went back and forth with the lawyers at Iomega for about 6 months and when they could no longer find the software online, they were satisfied.
I stayed at Iomega for a couple more years and I created another popular Shareware program called ButtonWiz. When Iomega started to lose steam, I left for a smaller company.
3. Close your side business and focus on the promise of becoming CEO
I got a job at a small technology company that served only about 100 customers. But, the owner had created something useful and he was making enough money to pay for himself and another employee. He didn’t want to make too much profit, because that meant paying more taxes and quarterly tax paperwork. He would watch the books so that his profit was less than $4k per year. If we had made too much money for the year, by October or November, he would spend some of it on new things we needed for the office or employee bonuses. It worked out really well.
The owner was getting up there in age and he figured he would like to retire in another 10 years or so. None of his family was interested in the business he had built and he had no real plan to exit. So, he had the idea that he would hand the business to me at some point and I would continue to pay him well into retirement. He purchased a life insurance policy and set me as the beneficiary. If he died before he was able to retire, I could pay his family and continue to run the business.
ButtonWiz continued to get more and more popular and was now bringing in a few hundred dollars a month. One day the boss suggested that I stop working on my side projects and double-down at the office. So, I shelved work on ButtonWiz and let it wither away over the next few years while I focused on the company I worked for.
Now eight years into my Career here, the company had grown from the two of us to around ten employees. Among those employees a few family members had been introduced, but I was still employee number two. Then the boss dropped a bomb that didn’t completely surprise me. There were people in the family showing interest now and he had decided to keep the business in the family. I can’t blame him. One of the reasons I’ve always wanted to build a business is to support my family and, if it’s really successful, more of those around me. But, suddenly, my career felt like another job, so I started to look elsewhere.
4. Break Googles TOS and accidentally commit click fraud while your at it
Growing more and more frustrated with the stress of my job, I started to run. I would run at a park by my office every day on my lunch break. I also started watching my weight and I started writing software again.
I had tried a bunch of calorie trackers but logging all the specific foods I ate was too much for me. I decided to create a calorie tracker that was fast. I would just enter the number of calories I ate and the web app would timestamp them. No more looking up foods.
At the top of the app I created a search box and I pointed that to a webview that opened to Google. I modified the search a little by adding the word “calories” to the end of it. That way, I could search for something like “pizza” and it would return a set of results for “pizza calories”, often with the actual number of calories right there at the top. I also signed up for Google advertising and embedded a mobile ad unit on the page. I released it for the iPhone and published it free on the web app directory on Apple.com (the App Store didn’t exist yet).
The money started rolling in. Lots of users were downloading the app and using it and the ad revenue was crazy high. It made a ton of money for a couple weeks and then I started looking at my ad click rates. They were astronomical. In fact, my click through rate was so high, it had to be an error. I started digging in.
What I found is that the search box and the ad unit were in close proximity to each other and users were accidentally clicking on the ad when they were trying to enter calorie counts. Oops.
I adjusted the placement of the two UI elements to be far apart. While I was doing that, I found a piece of information in Google’s Terms of Service that said you weren’t allowed to alter the search term a user entered. I was relying on Google for all my income here, so I also updated my search box so that it didn’t add the word “calories”, even though it made the search results significantly less relevant. Hopefully users would learn to do that themselves.
When I released the new version, as you might expect, the ad revenue tanked. Nearly all of the advertising clicks were users clicking by mistake.
5. Write a book about a platform that changes a lot
Since I was writing software again, I decided to give Facebook Apps a try. The app setup process was complex and confusing so I started to take detailed notes. After creating a “Hello World” app, I followed my instructions again and repeated the process for something more interesting. I refined my notes as I went, creating several test apps along the way. When I got done, I realized I had enough information to teach other developers how to do this. At the time, the Facebook documentation was sparse and hard to find. I had learned most of it by trial and error. I was also interested in trying self publishing. So, I decided I would spend the next weekend formatting this into a small book and self-publishing it on Amazon.
The book was selling a few copies a week and was getting great reviews.
About three months later, the book suddenly started to get bad reviews. I opened the book and followed it myself. Facebook had updated the process and things were different now. I made new notes and figured out the new process and updated the book, but the damage was done. The book was performing poorly and didn’t have very good reviews anymore.
Three months later the process changed again. Then again. Then again. I decided it was no longer worth keeping up and I removed the book from Amazon.
Those aren’t all of my business failures but they’re some of my most notable ones. And, if you couldn’t tell from 25 years of trying, I’m not ready to stop just yet. You know how I started my family early? Next year I’ll be 45 and an empty nester. There’s no doubt I’ll be building another business soon.
Published by Joel Dare on February 3rd, 2021.