Wednesday, April 3, 2013

High School Dropout to Millionaire

I have been reading Tycoon Talk for a while, but I forgot there was a success story section. I wrote my success story for 2 other sites and it has been getting a nice response so I decided to share it here. I hope this can be inspirational and helpful.

The Foundation: My first job

When I turned 16, I got a job at a ski shop after school and on weekends. I started out doing a lot of garbage work, but eventually I was allowed to do some sales. I was a shy kid so I had trouble speaking to customers and answering phones. When I was 16, I looked 12, so that did not help. By the end of the first season, I was getting very comfortable with sales and I was producing the most sales for the time I was putting in.

After a couple years, I learned how the business was run and I took a larger role in the shop. Even though I was never put in a management role due to looking very young, I was basically doing everything a manager was doing.

Quitting my first job...

I was getting very frustrated that I was taking on a lot of responsibility, but never given a management role. At the time, I don't think I understood why. I came to the realization that I did not want to be stuck in a job like this anyway. I wanted something bigger. I was always hungry for money and always dreamed of doing some sort of big business that allowed me to be independent. This job would never lead to that.

I am a person who succeeds when put under pressure. Even in school, I waited until the last minute to do my homework or a major project. Now, I stay up late at night to do my work because I race to get work done before I go to bed. I have produced my best work and ideas late at night.

At the time, I knew this is the type of person I was and if I would succeed, it would not be from building a business on the side while I was working at the ski shop. I needed more pressure. The only way to do that is quit.

This simple job at the ski shop gave me the basics of sales and business management at a young age, but it was time to move on.

Dropping Out Of School:

I went from a public school to a private school then back to a public school for high school. The difference between the private school I attended and the public school was huge. I felt no pressure in the public school. I slept through my sophomore and junior year. I never did homework or took a book home. I still managed to pass with B's and C's. It was pathetic. Teachers barely new me, they would give slackers way to get bonus points, there was no trust, etc. The education was a joke. It was like a review of what I already did in the private school. I was never taught how to think for my self or how to figure things out on my own. They only taught trivial things. I was being prepped to be a good little employee and do everything by the book.

Half way through my junior year, I realized this was a waste of time. I wanted to quit and work full time at the ski shop to get more real world experience and see what happens from there. I just knew high school was not helping me grow as a person or intellectually.

I met with the guidance counselor and principal. Neither had any idea who I was. They said, "We don't even know you. You have never been in trouble before. We don't understand why you are dropping out." I just laughed. That was one of the exact reasons I wanted out. I was just another one of the herd. You have to be in trouble or an all-star to be noticed. I was neither because I had no motivation to be an all star and no reason to cause trouble.

I loved the close family atmosphere of a private school. Everyone knows everyone and the teachers are really involved in more than your education. They knew me as a person. I didn't need to be a trouble maker or an all star to be noticed.

Stupid Ideas: My First Try At Business

It is usually not the idea that is stupid, it is the plan. Most people are so blinded by the thought of how much money they can make, they don't think of all of the ways they CAN'T make money with their idea. I found this to be the most important thing when planning a new business.

"Stupid ideas" are needed if you want to succeed at business. Hopefully some of those stupid ideas don't cost you much money. Stupid ideas are a learning experience. You learn what doesn't work.

If you have a successful business that you started on your own, then I am sure you hear people coming to you with ideas all of the time. They are so excited and motivated as they tell you their idea to make millions. Then they ask you, "so what do you think?" It is so hard to tell them all of the things wrong with the idea and ruin their dream, but they are blind to all of those pit falls. They have never tried to build a business to know how many things are wrong with it.

When I start a new business, I spend a ton of time running numbers on different scenarios. The scenarios don't just assume x number of customers spending y. You must be your businesses worst critic and find all of the holes before you fall in them.

My stupid ideas...

After quitting my job at the ski shop, I knew I wanted to work on my own. It was the late 90's the internet was all the hype and everyone was talking about the money to be made there. This was my opportunity to get in the ground floor. My first idea was to see what other successful people were doing. I saw one of the late night infomercials and wanted to give it a try. Yeah, it was him...Don Lapre and his famous"tiny classified ads"! Hey, I was young, hungry and gullible. He had a "new system" that would work online and I thought it was worth a try since I had no idea how to make any money online. Obviously this did not go anywhere.

I jumped from one idea to another. I searched for ways to make money online and that lead me to one Multi-Level Marketing program after another.

It always seemed like the only way to independent wealth was MLM. Every successful person on the TV was saying this. It was all over the internet. It had to be the way. It just made sense. You just build a "downline" who make money for you. It seemed so easy.

I just felt like I had to get in the right MLM program. I taught myself how to build sites and do some basic marketing. I would build sites and try to join marketing networks where i could trade some clicks. I had no money for advertising, so i was trying very pathetic marketing tactics. So many sites offered "the best way to get traffic to your site for free" and I fell for them all.

Nothing was really working. I managed to get some sales here and there, but i was not making money. I was getting better at building and marketing sites. Eventually i built up downlines of hundreds of people. Still no money.

I realized that MLM are horrible businesses. Actually they are not real businesses at all. The argument they always made was, "all businesses are multi-level". They would give examples of McDonalds or manufacturing as being multi-level. It is true those businesses, like most, have levels. There is the manufacturer or supplier, usually a distributer and then the end retailer/sales person.

They made it sound like the levels in MLM are just like any business. The reality is the "levels" in MLM are ALL in the bottom level of normal business levels. I was just a salesman like any other salesman except my income is commissioned based. I either made a commission on a product sold or products sold by people in my downline.

The natural problem with MLM is everyone is attracted to it because it is sold as a way to make money while others work for you. Basically, it attracts lazy people. This is why i had hundreds and sometimes thousands in my downlines, but not making money. No one in my downline wanted to work.

Better Idea: Just Basic Business

Instead of looking for the perfect business, I realized I should just be doing something basic. I was learning how to market websites online. I was getting thousands of people to join MLM programs, so I obviously was learning how to get visitors and get them to join a program. I was just marketing the wrong thing. I needed to market normal things so I can get paid a commission right away instead of waiting for someone else to perform.

Affiliate marketing seemed to be the way to make great money online with no expense. I basically needed to build sites and promote some offers and the cash should roll in.

I found several products that were in the "make money" market which was similar to the MLM market. I felt like this was an easy market to capitalize on. I eventually taught myself how to get my sites to rank in the top search engines such as Alta Vista, Lycos and Excite. I built small sites that showed people html tricks, marketing strategies, which affiliate programs were good and how to market them. I received commissions when someone would signup for software that I recommended for marketing online, when someone signed up for an advanced marketing guide, etc.

It was all starting to add up. I also built sites for something called "paid to surf". These were becoming very popular back then and there was some big commissions to be made. I was one of the top ranking sites for many of the keywords back then and generated around $10,000 in profit each month from these programs... that is until they all stopped paying and went bankrupt in the dot com crash.

Ok, it was time to make sure the companies I choose to promote can actually pay me what they say after all of the work I do.

Secrecy: Growing Quietly To Avoid Being Eaten!

Despite taking a hit with the "paid to surf" companies, I was still generating good revenue and I wanted to expand. I knew how to rank at the top of the search engines. (It was easy pickin' back then!) I just needed to scale up. I built many more sites for different products and different niches to get them ranked in the top of the search engines. I was going for a large quantity of small sites to generate more and more revenue.

After a few years, I saw a problem. Affiliate marketing is EXTREMELY competitive and had a very small cost to entry. This means once you start making money and people know it, they copy exactly what you are doing. It is cheap, it is easy, it works and it is a pain in the *** to battle. I went silent for 8 years. Everything I did was a big secret and this was the case with all of the successful affiliate marketers. Even the affiliate marketers who sold "how to make money online" programs kept quiet about their actual money making sites. No one wanted their strategies, site layouts, traffic sources or anything else getting leaked to other affiliate marketers.

One of the important rules was never to talk about your success in affiliate marketing and show one of your sites. Some people did this and I stepped in and took a big share of what they had.

I built hundreds of sites in many different markets. I was sometimes building a site a day. Each site had to sell a product in order for me to make a commission. I needed more than just traffic from search engines, I needed to convert that traffic into a sale. After building hundreds of sites and trying countless strategies, I discovered ways to increase conversions to maximize my revenue from each site.

Some of the sites I built were not small. I put a lot more attention and money into some of them.

Fundamental Problem: I had to get out

By 2006 I had an empire of sites generating over $2 million a year. I felt on top of the world. I was making so much money and could afford anything I wanted, but I felt like I had to make more. I felt something was wrong. Making that kind of money should of made me feel very comfortable. Something was off.

I felt maybe it was not a good thing my business was built off of a ton of small sites. My most successful sites made millions by themselves, but I always felt like they could die at any time.

In 2007 I finally realized why my model was so fragile. Despite expanding, my income did not grow. I did a lot of digging and found the problem.

Like I mentioned before, affiliate marketing is very competitive. Any other marketer could copy what you are doing and hurt revenue. I was always a step ahead of them and very secretive. There was a bigger enemy. The actual companies I was promoting.

In the first 10 years of online affiliate marketing, companies relied on affiliates to drive a massive amount of business. Good online marketers would never work for one company at a regular salary. If you knew how to market anything online, then there was too much money to be made by sending traffic to an affiliate program for a commission. As colleges began to teach basic internet marketing, more and more kids would come out of college eager for a low salary job. Colleges never sell the dream of becoming a millionaire. They pound it in your head to graduate with good grades and start at a low salary in a good company where you can grow.

These kids out of college now had enough basic knowledge needed to copy what I was doing and dumb enough to do it at a low salary. The companies I promoted hired them and told them to copy what their top affiliates were doing. I was usually one of them.

The companies I promoted had all of the data from my sites. They tracked how I sent them traffic. They simply had their new employees make sites like mine (which converted traffic like crazy) and then they would market their sites like I marketed mine. I worked so hard keeping everything I do secret so other affiliates could not see everything I do, but I could not prevent the companies I promoted from seeing everything.

The entire affiliate industry was falling apart. Now, it is just a small fraction of what it was.

Selling: I finally get out

In 2008 I started shopping my business to all of my competitors who I knew were larger than I was. The only offers I would get is 1 or 2 months of revenue. I kept working on one potential buyer. He said "no" to me a dozen times. I would keep pressing to show him how he could profit from the buy. The recession hit and it was a hard sell, but I managed to get him to see the upside. I managed to unload everything for a pathetic price of $700,000.

I was certain I wanted to sell despite getting what I could make in 6 months. First, I did not feel comfortable in the ability to make long term money with the business and I wanted to be able to focus 100% on something else. Second, I was bored of what I was doing. Finally, the biggest thing that pushed me was the recession. When the market collapsed, I knew it was a huge opportunity to make a massive ROI in stocks.

I felt releived when it was sold and excited to get all my cash into the stock market.

If I had to do it all over again, I would have focused on a few sites and made them huge.

Doubling Down: Making money from a stock market collapse

I could have sold my business 8 months earlier if I really wanted to and I would have received twice the money. If I did, I would have surely invested everything in the stock market. Investing in the middle of 2008 would have surely bankrupted me.

Selling my business in November 2008 for a pathetic amount of $700,000 and getting the cash when the S&P was around 700 points turned out to be perfect. I was actually lucky to sell it for a fraction of what it was worth when I did.

I have always had a fascination with investing and read dozens of books on the subject. I was heavily researching stocks for several month in anticipation of selling my business. I wanted to invest in companies that were very solid and had the cash or assets to handle the credit lockup. I wanted very strong fundamentials. Companies that increased their revenue, profits and market cap ever year for 5 to 10 years, not just a few years. Any company can ride a hot market or a bubble. I wanted companies that could grow in a recession.

I read annual reports on many companies and dug for any information I could find. I settled on around 10 stocks and began investing. By the end of 2008 I doubled my net worth.

The first 3 months of 2009, stocks had one of the biggest declines ever. I managed to ride out the storm. By the end of the year I still made 6 figures from the investments despite ignoring the market for most of the year. I could have taken advantages of the wild swings, but it was too stressful. One day everyone was saying we would all be broke as the market would go down a couple percent. The next day, all of the same people would scream about all of the money that can be made in this market. I did not want to hear that stuff and took the rest of the year off.

Current Day: Leveraging what I know and swallowing my pride.

My entrepreneurial itch was really getting to me. I love investing, but I wanted to start another company. For years I always had the idea of becoming a consultant, but I had such a bad view of them. I thought if they could really do what they say, they would do it instead of talk about it and experiment with the budget of clients. The fact is, most consultants are idiots who really don't know what they are doing and just talk a good game. That does not take away from the other fact that there is HUGE money in consulting and those who really know what they are doing can make big money. I swallowed my pride and decided to become a consultant.

I started a firm, Prodigal Solutions, that focuses on SEO and Conversion Optimization. These were the 2 areas I had a ton of experience and I knew I could leverage this experience to build a new company for myself and help other companies expand. Despite my experience, I found that it is a hard sell. Major companies want to see case studies and testimonials. How do I get these without clients? I had to start with many smaller companies to build up some case studies. Although, larger companies want to see case studies from larger companies. Getting this firm up to the size I want is taking much longer than I thought. SEO is not something that happens overnight. It takes time to build up solid case studies for that.

Conversion rate optimization is where the real money is for companies. Optimizing a site to convert as many visitors into customers creates huge return and makes everything much more profitable. It just opens up so many doors when a company has great conversions. This is how my business was so successful. My sites converted visitors at amazing rates and that allowed me to spend more money per site for marketing.

The unfortunate thing is many companies feel that their current website designers or developers can do some basic work to increase conversions. Every SEO, design, and consulting company is offering conversion optimization now which is kind of funny. Oh well, more business for me down the line when those companies fail to help their clients and those clients realize how important conversions are. I will be there to help them.

So, there have been challenges in my new business that took time to overcome. After the first year, Prodigal Solutions has hit 6 figures in revenue. Definitely not the income I had before, but it should be profiting in the 7 figures within 2 years.

I love business and I love helping other companies work on their overall business plans, optimize their site and help with marketing. I am doing what I love again.



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