Three Examples of Unsuccessful Entrepreneurship
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I have a bit of a gambling nature. This, combined with my inherent laziness, has previously led me down the "easy money" primrose path on many occasions. While some of these certain money-losing ventures (gambling, day-trading net stocks in 2000) were commonplace, the foolish efforts detailed below are particularly embarrassing. I will not count my attempt as a Wall Street summer associate to corner the local Whatchamacallit market, as that was more a test of the concept of demand elasticity (result: very elastic).
Poor Idea #3. Advice from a Naval Officer 1-900 Number
This, thankfully, never got off the ground, therefore it only merits the bottom spot here. The mid-90s were the heyday of the 1-900 number: if all these poor souls were foolish enough to send $2.99/minute to Miss Cleo and other "psychics", what would they pay to speak to a sentient, responsible adult that might be able to offer some actual thoughtful advice? I went as far through the motions as going to AT&T and getting the information on the 1-900 numbers and asking some colleagues if they were in for three hour shifts.
Then somebody pointed out that there are likely liability concerns (if not the obvious moral considerations). Getting sued seemed while at sea would be a tremendous pain, and there was also the danger I'd throw in the towel early and be forced to change it to something more lucrative, like a chat line for furries. This brilliant idea faded fast as i realized i would be gone for half the year and this kind of operation couldn't run itself.
Poor Idea #2. How to Win at Blackjack Pamphlet
I have kept this pretty quiet for over a decade, I'm not sure anyone ever knew about this. First off, there was no pamphlet. I put an advertisement in the National Enquirer offering said pamphlet for $5 to get a sense of the market. It turns out there was an equivalent number of foolish buyers as foolish sellers: one (a disabled kid from Iowa with a ratty $5 bill).
This was stupid on several levels. One, I am without question one of the worst gamblers in the history of the casino industry. I get phone calls from casinos I have NEVER BEEN TO begging me to come play there. I was the one writing the pamphlet?? I did have a sweet Zenith desktop computer from 1990 (running what must have been Wordperfect 1.0 Beta) and I assumed I could just crank out the pamphlet (complete with winning "strategy") if there was a lot of demand. I think I paid about $150 to place the 2 line ad in the "marketplace" section. My overwhelming assumption was that only stupid people read that magazine (full disclosure: it was in my house every week when growing up). I failed to also consider that the people who religiously read that rag are almost always flat broke.
So i ended up with $5, which I sent it back to the poor kid. I should have kept it to teach him a lesson about life; just think how much more it would have cost him had I actually sent him my secret method to convert $500 into -$2500?
Poor Idea #1. Sing & Snore Ernie Speculator
You are probably not destined to be a great entrepreneur if you concoct the same make-a-quick-buck idea as Dwight Schrute. All these great ideas came to me in around 1997; this one thankfully worked it out of my system for good. Tickle Me Elmo was a phenomenon in 1996; people were paying like $1,500 for that fuzzy little guy. Despite not having a high-powered MBA at that time, it was still apparent to me that that was a nice margin on an item that retailed for $28.99. So no problem, right? Just figure out the hot item in 1997 and, boom, 5000% profit.
So Tyco (Tyco Toys, not to be confused with Kozlowski's amalgam of non-complementary businesses) was putting out another talking plush doll featuring the beloved Sesame Steet character Ernie! Of Bert and Ernie fame! That was a complete no-brainer, even for someone like me who was, uh, a little removed from the whole little kid scene. So I went to Toys-R-Us and bought every damn one they had (I think 20-25) about a month before Thanksgiving. First (and importantly), I confirmed their return policy, in case there were any (unlikely) complications. The policy was ironclad - you could return for any reason as long as they were still in the box.
This plan was beyond fullproof. I remember playing golf with a buddy on Black Friday, watching CNN just before we teed off. Sure enough: S&S Ernie was the hit toy sensation of the holiday season, literally flying off the shelves. Fist fights were breaking out in stores and everything. I was so filled with smugness that when I sprayed my tee shot into a house off the first tee, I had little concern for potential broken windows. I was about to have a sweet $20k+ windfall!
My roommate was concerned about people coming to our house to make the pickups. Apparently he had toy dolls confused with the Baltimore narcotics trade; generally people buying Sing & Snore Ernies aren't strapped when they go to complete the transaction. I went to another friend's apartment to check out this new computer auction thingee called "eBay." The market looked surprisingly soft - people listing for only $300-$400 and it didn't look like many were actually selling. Hmmm, since I didn't have this new "internet" technology at home, eBay was out of the question. I would have to go the classified ad route.
By nature, I am not a greedy person. This is evident in the many stock trades where I sell the moment I'm up $3 (after commissions, of course. Losers I will hold until my dying breath). So I decided to price these bad boys to sell: $100. The classified ad cost, I believe, $90. It was early December, time to move some Ernies. And the calls started flooding in. Well, I got one call (might've been the same kid who bought the Blackjack pamphlet). He wondered if the price was negotiable. Heck, no. Time to dig in and hold my ground.
By mid-December I started getting a smidge nervous, as there were more ads for Sing & Snore Ernies than for Automobiles in the Seattle Post-Intelligencer. It never occurred to me that all that initial demand may have been driven purely by greedy, children's-Christmas-wishlist-depriving speculators like myself. Instead, i thought that maybe the market would turn. So I continued to hold my stash of Ernies.
(I used this exact strategy in 2000 with net stocks, sometimes with the added twist of "averaging down." I ended up with a margin call greater than my "equities" (CMGI, ICG, PUMA, etc) were worth. That's always fun - please send us $3,000 to bring your balance up to zero. I probably need to publish an investing pamphlet as well)
I have learned many lessons in life - some academic, some school of hard knocks, some wisdom passed down from the old sages in action movies. But probably the greatest lesson I have learned is this: if you're returning two dozen toys you couldn't sell to Toys-R-Us late on Christmas Eve, then you are an asshole. The absolutely venomous looks of contempt/hatred you will earn from everyone who witnesses the despicable act will have you showering fully clothed in your bathroom like a rape victim on Lifetime.
Thanks a ton, Ernie.