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As you may already know, if you follow the articles in this series, I built, managed and eventually sold a network of websites in the 2000s. I started it in 1999 and sold it in 2008. During this time, I tried no less than 21 different ideas, each one with its own budget, resources and human power. Out of 21 tries, 2 proved to be winners on their niche: a culinary recipe portal and a car portal.

The Context

Around 2003-2004 it was increasingly obvious that our car portal (called "masini.ro", which is literally the translation of the common word "cars") was doing pretty well. We didn't rely too much on advertising. Instead, we had a package of 17 services that we were selling, from dealership listings to monthly traffic reports.

As we realized our position as a market leader was secured, we started to look for ideas on how to scale. After a few months of talks, something really interesting emerged. Or so we thought.

The Business

At that time, in 2003-2004, print was still going strong. Car magazines were dominating the market and we, despite the fact that we were the number one car website, we were perceived as an underdog. When we were trying to negotiate partnerships with major car magazines, we were always on a week position: "I know, you may have some users, but we have all the money. All advertisers are working with us, not with you, because they know us for years." Hard to beat that.

So one day we decided to make a print sibling to our website. The idea was to have a free, pocket size magazine, distributed in gas stations, with second hand car ads (we had plenty of those) and other content. The costs of print were extremely high. I remember that a 50 pages pocket size magazine, full color, was around 3500 USD for 20000 copies. But we knew there were a lot of money in the advertising industry and we just had to reach one or two big clients to support the costs. One cover of the magazine could have been easily sold for $1000 and we had 4 of those (including the inside). So just by selling the covers we could cover the costs. The rest should have been profit. Add to the mix the leverage we could get with the site and we were pretty sure we had a killer product.

Six editions later and $20.000 spent, we realized we didn't.

The Outcome

After 3 months we had to stop production, accept the loss and move forward. We couldn't sell a single cover and all we had were just some free promotions given to some clients under the promise they will give us some money, if we could manage to stay on the market for a few more months. We lost each and every dollar we put in. Although we were still making some money with the website, the hit was still strong, losing $20.000 in just 3 months was a serious problem.

So, what went wrong?

First of all, we should have had our magazine registered with the print advertising association. No major client would spend money without knowing that we were part of that association. What that organization did was to measure and validate the circulation of the printed magazine. Lying about your traffic was common those days. You would print 2,000 copies but lie at the advertiser that you had 20,000 copies on the market. So that association was born to validate the numbers. It used an accepted methodology but the membership was very expensive. Just being there, though, kinda guaranteed that big players will spend money with us. Because we weren't there, no major client gave us money.

Second, we didn't plan for long enough. We should have been on the market for at least 6 months until we could sign year long contracts. We stretched the hell out of our pockets and yet, we could only cover 6 editions and 3 months (it was bi-montly apparition).

And third - which kinda sums them all - we simply "thought" it will work out. We simply took a much bigger risk than we could afford.

A very useful, yet incredibly expensive, lesson.

image source - Pixabay

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This post is part of an experiment I run on Steemit.

Each of the posts related to the entrepreneurial mistakes will be set up as "Decline Payout". But if you like the post, you may contribute directly, by sending me whatever amount of SBD or Steem you consider appropriate. I will keep 20% of the proceedings and the rest will be redistributed equally among all the contributors.

I will publish the reports in the following day, in a separate post, which will NOT be setup as "Decline Payout". The proceedings from that post will be redistributed equally to all the contributors as well (minus what I get as Steem Power, that I will keep).

You can read more details about the methodology and metrics of the experiment here.

Previous posts in the experiment:

• The Fuckup Files Experiment - Report Number One
• The Fuckup Files Series - Episode One: "I Thought I Was Really Good"
• The Fuckup Files Experiment - Report Number 2
• The Fuckup Files Series - Episode Two: "I Thought I Got This Covered"
• The Fuckup Files Experiment - Report Number 3

So, if you like the experiment, if you think it will bring value, you can start participating in it right now, by sending me Steem or SBD using the following memo: "fuckup files episode three".

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I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.

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