How My Startup Dropped From $100K to $0 Overnight
It was a sunny Good Friday on 18 April 2014. I woke up later than usual and flicked through emails on my phone. All good. Five new sales totalling $400 had come in overnight.
Then I looked at Twitter and saw this:
Oh shit. My site has been penalised by Google.
A frantic Google search revealed that my site PostJoint.com was nowhere to be found.
Within hours the story was blowing up all over Twitter and it didn’t take long for the rounds to start on tech and search engine media.
I had already scaled back my client services business and had a lot of financial commitments to deal with.
What the f**k will I do now?
PostJoint started out with good intentions as a blogger outreach platform. I came up with the idea in 2012 as a result of client campaigns that I was working on at the time.
The process of sending emails and searching for suitable sites on behalf of my clients was tiresome. There was one other established player in the field at the time. It had a thriving community but lacked in other areas.
I had spotted a huge opportunity
My plan was to streamline everything from matchmaking, initiating contact to publishing and messaging — and packaging this into a beautifully designed platform where marketers and publishers could get things done super fast.
I put together a small, talented team of freelancers, wrote out a product roadmap and designed a bunch of wireframes. We kept adding feature on top of feature, and consequently delaying launch.
By Dec 2012 we were finally ready.
We started in beta mode and invited bloggers, agencies and marketers to try the system out for free. We advertised on Google. We did mail shots. And we took out display ads.
I couldn’t help ploughing more and more cash into the venture. I was determined to build the ‘perfect’ SaaS product.
Everyone wanted links.
As we grew we stopped manually moderating every single user and interaction. More and more users started to use the platform for backlinks and SEO. More and more funds were being exchanged between users.
The quality of some content and publishers became questionable. We knew that paid links were against Google’s policy unless disclosed and no-followed, but our users didn’t seem too worried, so we went with the flow.
We exited our free beta in Dec 2013. Since we already had thousands of active users, over our first few days of trading we made a whopping $20K (excluding user to user payments).
This is more exciting than client services.
By March 2014 we were close to hitting $100k revenue with a margin of 20% to 25% (the rest was mostly user to user payments). Not bad for a month.
At this rate, we were on track to hit $250k to $300k / month by year end.
Waking up to dozens of new sale notifications everyday was a massive buzz.
I was dreaming about a big exit. About sitting on a tropical beach with my laptop and using a satellite connection to get online in the absence of wifi.
Within 24 hours, sales virtually dropped to zero.
The new sale emails stopped. All of the cash and time my team and I had invested went down the drain. I was gutted. Good had quickly turned into a Bad Friday.
I didn’t sleep very well that night. My other half told me to focus on the positive —the fact that I had created a successful platform and could apply the learnings to the next venture.
I’ll tell you a secret. It was only a matter of time before Google came after us and I knew it all along.
But I ignored it. I’m not sure why. Maybe I liked the new sale notifications too much. There were no goods to ship or phone calls to answer. It was my first scalable SaaS venture and it was happening now.
- I shouldn’t have allowed the platform to be overtaken by SEOs
- I should have invested more into quality control
- I shouldn’t have written stupid things like “no footprints” on the website
- I should have pivoted to a slightly different direction early on
- I shouldn’t have spent two years on development before charging for the service
Don’t screw up like I did with your startup. Here are my 10 key takeaways.
1) Pivot before its too late
Letting our users violate Google’s policies on our platform was a terrible recipe for long term success. I should have seen the writing on the wall and pivoted the system into something else.
Twitter started off as a podcast network called Odeo. The founders anticipated the rise of iTunes and quickly pivoted into a micro blogging platform. Not that PostJoint was ever going to reach anywhere near the scale of Twitter. It was my stepping stone.
2) Don’t build crappy links to push your rankings up
Google is designed to give value to its users. If you give value to your readers, you will naturally gain traffic and rankings over time. Produce great content that helps people out. Inform, inspire and entertain.
Talk in the same language your prospective readers use. You will then place your keywords naturally and build trust that Google is designed to spot.
Sidenote: Even if you don’t build links, you’re not immune to penalisation so you still need to continually monitor your backlink profile.
3) Create new connections daily
Creating amazing content is useless if nobody knows about it. And this is where the magic begins.
- Befriend influential people in your sector
- Help others out by sharing your knowledge and expertise
- Email contacts and ask them to share your latest feature
- Build your social following and share widely
- Engage with your customers on a human level
4) Don’t poke fun at Google’s rep’s (yes we actually did that)
Trying to be smart with a witty post that was certain to be noticed by Matt Cutts and the webspam team backfired right into our face. I guess we deserve it!
5) Done is better than perfect
Its better to release something quickly and improve it incrementally, rather than sit on it while you strive for perfection and build feature after feature.
Focus on your unique benefits and check out what Eric Ries has to say about building a ‘Minimal Viable Product’. The basic idea is to invest less, gather feedback and iterate rapidly.
6) Embrace failure. Other good things will follow.
You’ve heard it before but I’ll say it again. It doesn’t matter whether you fail or succeed. The point is to do something. Anything. Just f***ing do it. Nuff said.
I have not failed. I’ve just found 10,000 ways that won’t work.
Aside from learning a huge amount and commencing work on a new and improved platform (yes, it has nothing to do with SEO this time), several other cool things have happened since.
It turned out that one of our users was from a fast growing Silicon Valley startup operating in a similar field. Out of the blue I received a phone call from the CEO. “We love your system and were interested in buying it.”
They had just received a new round of funding and they didn’t care about the penalty, it was the product experience and technology they liked.
After several rounds of negotiation I sold the website to them for a decent sum and walked away cash positive.
7) Theres no such thing as bad publicity
As a result of the acquisition and the publicity, I’ve made new connections with some amazing people. Some of these relationships have led to new business opportunities that I’m very excited about.
8) Well actually there is..
.. And its called RipoffReport. Apparently, 80% to 90% of the reports are fake. The site has no moderation and anyone can post anything.
I suspect someone that we kicked out from the network for being a jerk left a nonsensical report about PostJoint and dropped my full name and phone number into it for good measure. It now ranks on the first page of Google for my name which sucks. The very title of the site makes me cringe.
Dealing directly with the site is futile — they have a blanket non removal policy. Or something called a ‘corporate advocacy program’ which costs tens of thousands.
9) Beware of trolls
Of course there is nothing wrong with customers leaving genuine reviews and businesses making mistakes.
Just be careful with individuals that you have to kick out from your community for causing trouble, especially if that decision might affect their income.
Setup clear cut policies from day one, keep referring to them and give your users several friendly warnings before taking action.
10) Bootstrapping? Share equity with key people
It took around two years from initial concept to generating revenue. I ran out of money to pay my developers about half way through. Like most projects, it always costs more than you think it will.
Fortunately, we already had some traction and my lead developer was sold on the vision. I gave him equity in the business and he happily carried on with development. I could not have done it without him.
It wasn’t such a ‘Bad Friday’ after all.
If you enjoyed this piece, hit the green ‘recommend’ button below to share it with your friends. Thanks :)