In the mid-90’s, I started a business called Trumpetfish Productions. This business was all about helping scuba divers “capture the majesty of the sea.” I wasn’t the subject matter expert…I was the producer and the marketer. I needed to attract the photo and video expertise I lacked. I had success doing this.
The business failed. I attracted and lost OPM (other people’s money) as well as my own. The entire investment was lost. What went wrong?
- The retail price of special interest (or “how to”) videos dropped from $45-60 to $20 in about one year. No experts that I worked with saw this coming. This was a game-changer. There wasn’t enough margin to have a viable business or to fund the development and sale of new products and services to grow the business.
- A 3-video underwater photography series that I licensed had very limited distribution potential as the original producer had angered dive stores that carried the product by (a) not promoting it as he had promised, and, (b) placing an advertisement in the middle of each video informing the viewers where to purchase the other videos in the series–directly from him. Not good. He was competing with his dealers.
- I tried to pivot to a different business model. I explored creating a subscription newsletter. I met with 2 of the world’s top underwater photography and videography experts in L.A. about this idea. They were excited. When I did my market research, I discovered that more than 50% of subscribers would not renew as they believed (as was the norm for “how-to” newsletters) they had maxed out on the value they received in the first year. I could have tried to convince myself that my experience would be different but that would have been my ego talking. The lifetime value of a subscriber was low when I factored in the cost of acquiring the subscriber.
What to do? I was playing in a charity golf tournament at Los Alto Hill Country Club. I was on the back nine surrounded by absolutely glorious homes when the answer hit me. I asked myself, “What would any of these homeowners do if they faced my situation?” My conclusion: “They would shut Trumpetfish Productions down immediately and not give it second thought.”
I let my investors know of my decision. One asked me if additional funding would change my decision–he wanted to give me more money as he shared my passion for the idea. I told that it would not and why. He agreed.
I went into this business with my eyes wide-open. I certainly focused on the upside but was aware of some downside potential. I never believed I would lose other people’s money but I did. The downside was painful.
Whenever I see a “Going Out of Business” sign, I think of the pain the owners and employees are going through. A dream has come to an end.
Photo Credit: Paul Asman and Jill Lenoble on Flickr
Thought for the week:
“Customer: A person who purchases a commodity or service. Client: A person who is under the protection of another.”
― Jay Abraham, Getting Everything You Can Out of All You’ve Got: 21 Ways You Can Out-Think, Out-Perform, and Out-Earn the Competition
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