Failing Fast & Hard
Anything worth investing into is usually worth taking big risks with, especially if you are beyond self sustaining from other revenue streams and investing in a project is taking time away from your other business ventures. So a friend and I were working on a project that started off slow. He was a bit of a mule off the start, but now he is doing great. Since I was funding it, off the start he was worried about spending too much, because he worried that it would take longer to break even and that earnings would have to climb much higher to break even.
After losing about $20,000 so far this year, last month was the first month the site more than broke even, but rather than allowing it to keep moving slowly toward profitability I decided to dump about another $20,000 into it so that the site would either sink or swim quickly. As more and more people invest into slowly growing their business market saturation will make it harder and harder to be profitable going slow and steady. But when you take big risks you are remarkable and have the potential to see big returns.
Slow and steady growth is nice, but if you are investing you can't be risk adverse. The site I just invested into recently doubled it's daily income, and I have to think that all of the latent effects of marketing still have not yet kicked in. If you are sitting on shaky ground it is ok to hide what you are doing or invest slowly, but if you believe in what you are doing, it is worth more than twice as much to fail or succeed quickly. If you are quick even if you fail at least you saved time in the process. If you succeed you should have more to reinvest sooner.
For the first year or two of owning a site you should be able to double its income every 3 months until you reach market saturation as long as you are an aggressive marketer and the category is in good health (and of course there is little to no reason to invest lots of effort into a dying category).
Comments
Agree completely. I once invested what was to me at the time a pretty insane amount of money. The result? That project's now by far the most successful site (in terms of traffic and revenue) that I own.
Besides, most decent marketers have money to spare, but not a whole lot of time. Generally, the more money you invest the less time you need to invest... The logical conclusion is to invest more money so you so achieve more.
I'm not sure I'd advise this approach to anyone new, though. Although it's old and cliche, you really shouldn't be risking any money you can't afford to lose.
agree too, the beginning of project, maybe one or two years, the website earns nothing, and the co-founders have to invest again and again. Also that's a big risk, but i think you could get more happy at least, and anohter way to solve the problem of money is that getting the capital ventures. althought everyone knows it, but it's very difficult for co-founders
I agree with you. However, I think time is the more valuable than money. It is because time = timing which means that perioud of time that you put in, you might miss so other greater opportunities.
"Think big or go home."
I believe society trains people to be risk averse. Look at real estate; it makes more millionaires than any other form of investing. Yet you hear about bad deals all the time.
At least on the web we have enough tools to paint a complete picture of a situation. Most people quit before they've learned from their failures. The really successful people fail, learn, retry, and win - online and off.
I just started a second blog, and right now, for me, given my financial situations, a "big" investment was the domain name. I kept going through the game of "I'll get the domain when I have money to spare".
The risk-taker in me decided to go ahead with it, mostly due to a story I remember reading once. It was in a book (forget which one), about success and entrepreneurship.
Basically, the story was a short parable about a man who was looking into an empty wood stove, and yelling at it, "I'll put some wood in once you start putting out some heat."
My friend told me once, "The only place where success comes before work is in the dictionary"
So, here I am
Bill
Rich people play to win,
the average plays not to loose.
just my 2 cents
Frank
Hi Aaron,
I hope that it doesn't sound rude, however there is nothing substantial in this statement.
How can you define "anything worth investing"? If you come to the conclusion that something is worth investing you already decided that you are about to accept a certain amount of risk.
At a particular point you might come to the persuasion that is even worth taking a higher level of risk. However, if you are riding a dead horse, climb down from it. You won't reanimate with money. The difference between professionals and amateurs (like me) is that pros know when to quit.
So the big question is how to decide if a project is worth investing in. Everything else is just outcome of the answer to this question.
Aaron,
Yes, if it's worth doing, it's worth risking something, but calculating the risk is still so very important. Sometimes you can be passionate about something, but that usually means you can be blinded or can rationalize the risk beyond what it truly is. If something is important to you, you need to realize what your intent for the project is.
Just like SEO, what's your purpose? Higher organic rankings because you pushed for them, or higher organic results because you deserve it!
Would you share with us your project?
Thanks,
pittfall
Hi Pittfall
I can't share that project other than vaguely talking about it.
Hi Marc
I don't think the decision is just black and white invest or not. I also think you have to look at how many levels you are investing into a project and if you are fully committed to its success. If you passionately believe in something and are emotionally invested into it then it is going to do much better than if you are just throwing capital at it.
Investment is such an under-rated concept online - there seems to be a generally mindset that investment comes from either just building a website, or simply paying for traffic - ie, to generate returns in the short-term. IMO there isn't enough focus on investing in projects now without even looking for returns in the long-term. 2c.
"For the first year or two of owning a site you should be able to double its income every 3 months"
That's a decent guideline. Is there any real "exit strategy" if these income projections aren't maintained?
Thanks
Matthias
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