When I was 20 years old, I built a web site that earned over $2500/mo and required about three hours a week of support and maintenance. Damn good money for a kid whose rent was $300/mo. I made two huge mistakes that ended up costing me that creampuff income stream.

I only did what I knew, instead of learning something new

I didn’t even set out to build a business at first. All I did was write a little program to help me get better at poker. A friend of mine suggested that I turn it into a web site for other people to use, so I did. It took about three weeks of programming on my part, and I paid $200 for custom images to use.

At first it was great. I had a bit of a reputation on an internet poker forum, so when I launched the product I quickly received a lot of signups. After a few months, the signups started slowing down. So I did the only thing that I thought would bring in more signups - I lowered the price. All that did was cause most of my existing customers to cancel their plan, and not everyone signed up again at the lower rate.

If I could do it over again, I would have doubled the price for new customers. That way I would make just as much money with half of the signups! More importantly, it would create a sense of urgency for customers. I would have put out an announcement saying that the price would go up in a week, which I suspect would drive some new customers who want to get in at the low rate. And later on, customers would see that the price was increasing over time, so they’d know that they should sign up quick otherwise it might go up again. Lastly, my existing customers would be more likely to stick around, knowing that if they bailed they would never be able to get that low price again.

I sold it

This one’s easy. If you sell a recurring revenue generator for a pile of cash, you end up with a pile of cash and no recurring revenue. I could have bought another revenue generating product, or lived off the cash while I built something else, but instead I bought a fancy car. I was pretty smart for a 20 year-old, but obviously not *that* smart.

Why’d I sell it? Because I wanted a fancy car ;) But mostly because I didn’t know how to build a business, and I didn’t even really want to. I just wanted to code. So instead of learning how to build a business, I sold it off to someone else who would.

It pains me a bit to look back on this and think what it might have become had I stuck with it. But there’s no way to change it now. The good news is, today I’m just as interested in the business side of things as I am the coding, and I learned a lot from that first experience. Now I’ve got the motivation to stick with it and to learn how to grow a business. And next time I won’t be quite so willing to give up something that makes money while I sleep.