October 24, 2025 • 29 mins
Check out my newsletter at https://TKOPOD.com and join my new community at https://TKOwners.com
━
Beehiiv is the newsletter platform I’ve used for over a year and a half because their data shows you exactly what’s working. Get 30% off three months at beehiiv.com/chris
━
In this solo episode I’m doing something different and ranking my six biggest business failures from #6 to #1. I walk through No BS Crypto with John McAfee, the painful lessons from running a third-party logistics company that did $400K a month with 90% revenue tied to one toxic client, and the whirlwind of launching Bitcoin mining at the exact wrong time after a bull-run high where we did $10M in 90 days and still lost in the end. I also get honest about a phone repair merger I rushed, and the number one failure that cost me a friendship in my wholesale iPhone parts business. The theme across all of it is control, concentration risk, partnerships, and how survivorship bias hides the real cost of bad decisions. If you want the full backstory on the McAfee chapter, check out Episode 9 where I tell that story in detail.
Enjoy!
---
Watch this on YouTube instead here: tkopod.co/p-yt
Ask me a question on or off the show here: http://tkopod.co/p-ask
Learn more about me: http://tkopod.co/p-cjk
Learn about my company: http://tkopod.co/p-cof
Follow me on Twitter here: http://tkopod.co/p-x
Free weekly business ideas newsletter: http://tkopod.co/p-nl
Share this podcast: http://tkopod.co/p-all
Scrape small business data: http://tkopod.co/p-os
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
All right, you guys hear me talka lot about my wins and making X
amount of dollars and Y amount of days, yadda yadda yadda.
But entrepreneurship is anythingbut rainbows and butterflies.
There's a lot of hard, hard, sucky things that you got to go
through. And so today I want to talk
about some of those things. Six of those things to be exact.
I want to talk about 6 of my biggest failures of all time.
(00:20):
Not 6 of, but my 6 biggest business failures of all time
ranked from #6 to #1 number one being the worst, the biggest.
And I'm measuring these failuresjust by how much they impacted
me. Not by dollar amount necessarily
or time spent on them, just how much emotional or mind space
impact that they had on me. And here's the thing about
(00:42):
social media, it does not rewardpeople talking about their
failures. The algorithms do not like it.
Therefore, the people that are genuinely willing to share about
their failures are disincentivized to do so because
they don't have a positive feedback reward loop after
sharing those failures with somerare exceptions.
There are exceptions, but let's just get into it.
(01:04):
Number six, no BS crypto. So you guys might know the story
back in 2018 when I launched A crypto business with John
McAfee. If you want to hear that whole
story, it is episode 9 way back in March of 2024.
I tell that story in detail. It's one of my best stories.
I love it. It's a great story to tell at
dinner parties. But at the end of the day, that
(01:24):
business failed and it took two years of my life.
Now, I netted out ahead financially speaking, but this
business was a great lesson in not starting businesses where
you have not enough control. Sometimes that control looks
like not enough equity in the business to really have enough
decision making power. Sometimes it looks like you
(01:45):
being in a market that the business is highly dependent
upon, as if you were in the oil business.
It's boom and bust and no matterhow hard you work, you're going
to have a really, really hard time making the business work
during a bus cycle. Well, that's how crypto is.
I've made the same mistake twice.
Crypto peaked on December 17th, 2017.
That's when Bitcoin hit $20,000 and I launched this business a
(02:07):
month later. Now, at the time, it felt like
the perfect time to launch a business because Bitcoin was
just dipping a little bit. It had been 20, now it was 18.
So we're, quote, buying the dip.Little did we know it would end
up at $3000, down 85% at the endof that cycle.
And making a crypto business work in that market is like a
goldfish trying to swim up Niagara Falls.
(02:29):
It's just not going to work. And so, yeah, I totally could
have done things better. I could have been smarter about
it, but I genuinely don't know how I could have made that work.
We spent hundreds if not thousands of hours building out
a community, building software tools, writing an 18 page white
paper, having a free AirDrop, tons of content.
We had a community with 70,000 people in it.
We had people that invested intothis token that we had
(02:51):
airdropped out for free and theylost their money and I lost
money. But I am grateful that I never
held an ICO, an initial coin offering where you basically
sell your token. I never did that.
It was just a free AirDrop. But nevertheless, once it hit
the exchanges, people purchased the token expecting it to go up
in value. And it did sometimes, but most
of the times it didn't and it ended up crashing.
So this is a failure that I regret, but it was a great
(03:13):
learning experience, especially when it comes to getting John
Mcafee's attention, getting in front of him, partnering with
him, and learning that I'm capable of doing cool things
like that. All right.
Biggest failure at #5 this was my business phone restore.
Now, keep in mind, these are failures of mine.
It doesn't necessarily mean thatthe business failed.
You'll see what I mean by the end of each section when I call
(03:33):
it a failure because this business was objectively a
success. I made a lot of money from it,
and I came out on top. But I had three iPhone repair
stores, 1241 in Tuscaloosa, one in Birmingham and two in
Huntsville, AL. I got approached by a competitor
to merge forces. I didn't know the guys.
They were throwing off yellow flags all over the place.
They pressured me to sign a dealbefore the end of the year to
(03:56):
keep taxes cleaner. My lawyer was dragging his feet
on reviewing the contract, and Ijust thought, we'll make it
work. This was before the days of
ChatGPT. We're talking 2011, 2012.
So I couldn't even have ChatGPT review my contract.
And there were some dumb, stupidthings in there that I never
should have agreed to. We signed a contract.
The deal was that I would get a third of the profits in
(04:16):
perpetuity, mailbox money without having to do any of the
work. They, both of them would get 2/3
of the profits collectively. They would invest money into the
business. They would grow the brand.
I got a little bit of cash at closing, nothing crazy.
And everything changed after we signed the deal.
I started another business in the same industry selling iPhone
parts. I didn't have a non compete.
I was fully allowed to do that. I told them about it after I did
(04:38):
it and my business started crushing it and I think they saw
that and they got a little jealous because they wanted to
do the same thing, which I didn't know they wanted to sell
iPhone parts. So unknowingly I created
competitor for them on a productline that they had yet to launch
and I started doing really well and they became a customer of
mine, one of my biggest customers.
But nevertheless this played a role in decisions they made
later down the line. I got that first mailbox money
(05:01):
check the first month and I don't believe I ever got one
again. Maybe there was one more, two
more, but never again. Basically, and Long story short,
they ended up diluting my sharesin half from 33% to 16% without
my consent. They claimed to have my consent,
but they didn't. They were basing it off some
random conversation about an expansion plan, and I learned
(05:21):
about this while I was in China at 2:00 in the morning.
Incredibly depressing. It felt like 2 years of hard
work had gone to waste and they had stole the business out from
under me. That mailbox money I was
promised never came. And to make matters worse, they
still have the company. Massive failure.
I had to retain a lawyer. I had to sue them.
Thankfully, their lawyer was an idiot.
I'm happy to go on record and say that he was a complete
(05:42):
moron. And a lot of the clauses in our
contract did not hold up legally.
It was an unenforceable contractin many ways, not in every way.
And so that really helped our case.
So my lawyer helped me claw backto about 29% equity, so up from
16 to 29%. And then they exited, they sold
the business and I got a check for 275,000, something like that
(06:05):
cash while I was in my 20s. And it was awesome.
And I put it behind me. But that was a great lesson to
not get married to someone you've never met.
I mean, weeks had elapsed between the first time I had met
these guys and when I first partnered up with him and
basically handed over the keys to my business.
Not basically, that's exactly. I literally handed over the keys
to my business without any visibility into the bank
accounts, into what they were doing and they took advantage of
(06:27):
that. And again, business was
successful. It sold for seven figures.
Those locations, most of them are all still there today, 15
years later. Every time I go back to
Tuscaloosa to an Alabama game with my family, I drive by it.
It's now called You Break I fix or Assurion or something, but
it's in the exact same location right on 15th St. and I just
(06:48):
drive by it with pride and it feels good.
And the other location in Homewood slash Birmingham is
still there. And the one in Huntsville has
since moved, but it's still in Huntsville.
And the one I had in the mall that closed down, that was more
of an experiment. That was our fourth location,
but it was a failure in that I partnered up with guys that I
shouldn't have. And I had I done more due
diligence, I never had partneredup, but also had I done more due
(07:08):
diligence and not partnered up with them, that business may
have just fizzled out. Like they genuinely did a better
job at growing it than I did because they were all in.
They were more invested, whereasI was some what distracted.
So if I could replay that over and over and not partner with
them, I wonder if I would have netted out ahead or behind.
I certainly would have had fewerGray hairs, but I may have had
(07:29):
fewer dollars in the bank account as a result.
So that's number 5 #4 Sandeats. So this also was not a literal
failure in the sense, but it wasa failure in the sense that we
had to let a bunch of employees go and we made some bad
decisions that led to that. This was a third party logistics
business, which meant that e-commerce brands would ship all
of their products to us. We would store them in a
(07:49):
warehouse and then as they got sales through their Shopify
site, we would pick, pack and ship out their orders from our
warehouse. This is a very bad business.
You're competing with Amazon, but you can't compete with
Amazon unless you have billions of dollars, which we didn't.
And so we were making 400, $1000a month in this business, but we
were losing money and 90% of ourrevenue came from one customer.
And what a toxic relationship that was.
(08:12):
They were very, very difficult customer to work with and it was
very straining on my mental health.
And I don't think I've ever saidthat about any other customer or
vendor or business period. Like of all the 7580 businesses
I've ever started, no relationship has ever been that
toxic or that mentally taxing onme and my business partner and
my employees. And I'll never forget I was
sitting in the hospital hospitalin Houston, TX, bedside of my
(08:36):
daughter who was literally in her deathbed at the time.
It didn't become her deathbed, but she it was not looking good.
She needed a lung transplant. And I was at my wit's end.
And this vendor of mine, it's customer who represented 90% of
our revenue and 90% of our employees was just berating me,
just absolutely berating me overe-mail.
(08:58):
I just went nuclear on him aftertalking to my business partner
first, because you have to make this decision like, do we fire
our customer and therefore fire 90% of our employees that
support that customer but stop getting abused by them?
Or do we just grin and bear it for the sake of our employees
even though we're losing money And it just made logical sense
to fire him. And so I just went nuclear.
(09:20):
He had been holding his power asa large customer over me and
wielding that unrighteously, forlack of a better word, thinking
like you could never fire me because he knew how much revenue
he represented in my company. And we called his bluff and we
said no, we will no longer ever ship your orders ever.
And they had thousands of ordersready to ship, thousands of
(09:42):
customers waiting on those orders.
And we said we're done. Come get your crap, pay your
bill. We'll palletize it up.
You can come get all your boxes and your product and we'll ship
it to the next third party logistics company that you
choose. They freaked out.
I mean, they freaked out, but wedidn't budget.
We absolutely did not budget. And they threatened to sue us
and yadda, yadda, yadda. And I said I'll never forget.
All right, I'm going to read this e-mail because this is one
(10:04):
of my prouder moments. October 21st, 2021 at 6:55 PM.
Oh man, this like is triggering to read, but it's also an
amazing feeling to read this first name.
You are volatile, hostile, and unpredictable to work with.
You literally fired us this morning but still want us to
take the risk of scheduling our employees to come in and fulfill
your orders. We are behaving like a company
(10:26):
you just fired and this upsets you, but your words have
consequences. As I read this e-mail, I'm
remembering like he had fired usand basically like expecting us
to say no, no, no, no. And we just said OK, fine, we're
done. I don't remember exactly how it
went down, but yeah, we called his boss basically.
And then he's like, wait, you have to ship our orders.
And we're like, no, you just fired us, bro.
And we're happy to be fired. Anyway, next paragraph, as
(10:49):
previously stated, we are happy to continue working with you if
you are not involved in the communication between us.
So we basically said we'll keep working with your company, but
we can never talk to you again in any form or fashion.
We cannot risk our business on someone making emotional threats
at every turn that have real life consequences on our
business. There is a direct correlation
between the strength of our working relationship with your
(11:10):
company and your involvement there in.
As previously stated, we'd love to continue working with and
fulfilling orders for your company, provided your company
agrees that we are still your fulfillment partner until a
mutually agreed upon date and you are not communicating with
us and you are not communicatingwith us any longer.
Any damage caused by these interactions today will be a
result of your pride and unwillingness to cease or take
(11:32):
ownership of toxic behavior. Your continued involvement in
this working relationship is a greater liability to our
business than the current threats you are making.
And I meant that basically, it'sa greater risk for us to keep
working with someone as psychopathic as you than it is
for us to stop being your vendor.
And after that e-mail, his team stepped in and took over to see
things through, and they ended up going through a couple more
(11:55):
fulfillment partners. That didn't work out either, and
they ended up just fulfilling themselves.
A couple years later, I spoke tohis team who had since moved on
to other positions and they agreed that that was an
absolutely terrible situation. So anyway, that was a failure.
We should have managed that better.
We should have been on top of our numbers so we didn't lose
10s of thousands of dollars every month.
We just weren't on top of our numbers.
(12:15):
We could have prevented that. We should have fired them a lot
sooner because we had 20 something employees that were
reliant on them being our customers that we had to let go
and or reposition within the company.
All right, we are to #3 There's a good chance you've heard this
story before as well, especiallyif you follow me on Twitter.
I had a whole episode dedicated to it last year.
I don't even remember what episode number it was, but Long
(12:36):
story short, I had a business a few years ago with a couple
partners. Actually, I didn't know them at
all when I partnered with them and we built a big business
together. We had a $50 million offer on
the table to invest in our company, which was life changing
money. It was going to help us scale.
It was incredible. And then the two partners went
behind my back and said, Dad, wereally don't need Chris here.
(12:57):
He's kind of redundant. There's not enough room in the
equity stack for all of us plus the investors.
So let's just kick him out and like legally we can't kick him
out, but let's just close this business and start a new one
because the investors like us, they'll start a new business
with us that does basically the same thing and he won't be a
part of it. Well, he'll have 3% ownership
instead of 33% and he'll have tosign and not compete to where he
(13:20):
can't compete against this ever.All right, I want to pause here
just for a. 2nd to tell. You why?
I've used Beehive for two years.And I just actually sent my
100th newsletter edition. I.
Love. Beehive and you see emails
different from other platforms because the social media
platforms own your audience. In fact, YouTube just banned me.
For a week. Because they didn't like one of
(13:41):
my videos even though it was perfectly compliant.
If Instagram changes their algorithm, your reach tanks.
Same with TikTok, Facebook, and anything else you're building on
rented land. But with Beehive, I own my list.
I own my audience. I'm not at the mercy of some
nameless, faceless algorithm. Every time I hit send, they just
get my emails. And Beehive makes this simple.
Growth tools, monetization, and a free website.
(14:03):
And I can't get enough of their analytics and the data I get
from Beehive. This is data that I can actually
use and share with potential sponsors.
It's everything you need in one platform.
The smartest creators out there are the ones that own their own
audience. So go to Beehive.
Dot com slash. Chris to get 30.
Percent off your first three months, that's BE.
EHII v.com slash. Chris and start building
(14:24):
something you actually own so. One of these guys I'd gotten to
know really, really closely overthe year and a half that we had
worked side by side, our families vacation together.
I think of twice, maybe 3 times,our wives were very close.
Our sons shared the same birthday.
They were very close. They live right down the road
from me. They just sat down and said,
hey, you're out dude. I know it sucks.
I know it's wrong, but you're out.
(14:46):
I'm doing this anyway. I know it's wrong.
I'm doing this anyway. And those words are still echo
in my ears. And that was a failure like
that. I had a lot of money.
That was a net failure no matterhow you look at it, on the
monetary side of things, not like the life lessons learned
side of things, but I lost moneyon that.
I lost every bit of equity or potential future value that that
(15:07):
company would ever gain. The reason it was not a failure
was because of basically I took all those learnings from within
that business and helped them catapult my career ever since
then. And I started writing content
about that industry and that occasional tweet or two about
that industry turned into the content I produce today, which
is over 150 million views a month across all platforms
combined. And I don't think I would have
(15:28):
ever even thought about making content had that experience
never happened to me. And I don't know where it'd be
today. I'm sure I'd be doing something
cool and having fun, but I don'tthink I'd be where I am
financially speaking, or in my career.
I think that terrible event likewas a net win for my career,
although a net loss for me on paper.
So kind of the opposite type of failure is my first that I
(15:50):
mentioned a net win on paper, but really just a net loss
experience all around. But I firmly believe that like
any, any, any bad thing in life that happens to us, as long as
we like keep trying, we stay at it and keep trying to be a good
person. Given enough time, that bad
thing will turn into a good thing.
Like I firmly believe that there's only one or two things
(16:10):
in my life that I haven't seen the good of already, one or two
bad things that have happened tome and or my family members, and
I've yet to see the good. But I think that one day in the
future I will. So any failure, right, if we
really want to get ticky tacky about any failure could be a
good thing if given enough time.That was a big failure and it
was dumb of me to partner with acouple guys that I didn't know.
(16:31):
I mean, I just keep making that mistake over and over, but I
like working with people, you know, it's just funner to do it
together. It really is.
And like, despite all the partnership headaches I've had,
I still recommend that people get a business partner do it the
right way. I have a lot of thoughts about
that. That could be a whole other
episode in and of itself. I've written a newsletter about
it, but I think it's taken me a lot of time to realize that I
don't make a super good businesspartner unless I have a very
(16:55):
small slice of the pie and I contribute A disproportionate
amount of value to the business and the partners.
I'm clearly distracted. Like, that's the whole theme of
this, right? 80 businesses in 15 years, I'm
always moving on to the next thing.
I don't regret that. And I think that that has been
one of the major reasons why I've done well is because I've
compounded all my learnings across various industries.
(17:15):
But as a business partner of mine, that could be really
tough. Hey, Chris.
Hey, hello, that shiny object might be cool for you, but I
thought we were doing something together.
That's tough. And I've tried to get a lot
better about that. When people approach me and say,
Chris, let's do XY or Z business.
And I'm oversimplifying this. It's not how these conversations
go. But for the sake of an example,
let's just say, all right, Chris, I want you to put in 10
(17:37):
hours a week and I'll give you 10% of the business.
Nowadays, I'm much more likely to say, how about you only give
Me 2% of the business and you only expect 3 hours a week from
me. I really, really, really try to
under promise and over deliver now.
And I tell, tell people upfront.I don't really need to tell
people upfront because I publisheverything on the Internet.
But Even so, I say clearly I'm doing a lot of things.
I'm very distracted. This isn't going to be my only
(17:59):
thing, FYI. And so I know you want me to
have a bigger role in this. I'd much rather have a smaller
role and an even smaller proportional amount of equity
for the time and effort that you're expecting from me.
And then I try to over deliver. But it's taken me a long time to
learn that, you know, when you have 15 business partnerships
and most of them don't work out,at a certain point, you got to
(18:20):
look at the common denominator and say, you know what, Chris?
Either you really need to take amuch smaller slice of the pie so
your partners have less expectations from you, or you
need to just do things yourself,which I've learned to really
enjoy that. All right, failure #2 of 6 man,
that was the company that my best friend slash partner and I
started four years ago this month, now a Bitcoin mining
(18:41):
company. We launched that at the worst
possible time, but at the time, it felt like the best possible
time. In the summer of 2021, China
banned Bitcoin mining. And so if you don't know about
Bitcoin mining, to explain it very simply, there's a few
variables at play #1 the price of Bitcoin.
All else equal, the higher the price of Bitcoin, the more
profitable Bitcoin mining is. Number 2, the hash rate, which
(19:04):
is basically determined by how many other Bitcoin miners are
trying to mine Bitcoin. The more Bitcoin miners there
are, the more competitive it becomes to mine a Bitcoin or
block of Bitcoin, right? So if the price of Bitcoin is
not going up but the hash rate AKA the competition is going up,
then the profitability of Bitcoin mining goes way down
because the statistical chance of you finding a block goes way
(19:25):
down, right? So the perfect storm happened in
2021 when the biggest Bitcoin mining country in the world,
China, said no more, we don't believe in this, we're out.
It is now illegal. So then all of us enterprising
Americans raise their hands and said all mine Bitcoin.
That sounds awesome. So at the same time, Bitcoin was
in a huge bull run. It was hitting an all time high.
(19:46):
It was insanely high in value. And the hash rate, the
difficulty rate of mining plummeted literally overnight.
Like thousands of miners unplugged, literally unplugged.
And mining became very, very profitable.
Basically you could spend like $500 in electricity to mine a
$5000 Bitcoin. I'm oversimplifying, but it was
like stupid. Mining was insanely profitable.
(20:08):
And so around that time, Nick and I bought a Bitcoin mining
facility for 3/4 of $1,000,000. That way we were able to sell
Bitcoin miners and sell the hosting to go along with it.
Because you can't just plug these things into the wall at
your house. You need three phase power, you
need ventilation, you need soundcontrol, everything.
It's a whole deal. So you can't really sell miners
unless your customers have a place to put them.
(20:29):
And if you have a place to put them, then you might as well
sell miners. So we started doing that and we
made $10 million in our first 90days without any paid ads.
It was just right place, right time, perfect product market
fit, yadda, yadda, yadda. We felt like geniuses, like
we're on the top of the world and we were profitable on that
$10 million, right? And we just thought that we
could do no wrong. But just like the no BS crypto
story, we were fighting an uphill battle because what
(20:52):
happened at the end of 2021, Bitcoin crashed.
It crashed, it started crashing,right?
It's a years and months long process and the difficulty rate
only went up and the price only went down.
And all these miners we sold to people that were fully expecting
them to be very profitable, myself included, were not
profitable. They were at first a little bit
(21:12):
and then less so, and then less and less so, and then they
became unprofitable and we couldnever turn that around.
We can't change the price of Bitcoin.
We can't change the difficulty rate.
And so every single year in business, our sales dropped and
dropped and dropped, profitability dropped and
dropped and dropped, Customer sentiment dropped, stresses went
up, the losses piled up. I put in hundreds of thousands
(21:33):
of dollars. I partners put in even more
hundreds of thousands of dollars.
The investors put in hundreds ofthousands of dollars and net of
net on the whole, looking back, that whole experiment lost
money, lost money for me, our partner, my investors, the
customers, Bitcoin miner investors, everyone.
Really the only people that won were the hosting facilities that
(21:53):
we partnered with that marked upthe rates they won and the
companies in China that sold theminers they won and it sucked.
It sucked because I sold some ofthese miners to friends and
family, and I'm always very, very careful about that, very
wary about that, overly so. Like any investment, Bitcoin is
the most attractive when it's the most expensive.
And then as soon as it gets cheap, no one wants to buy it.
(22:13):
That's how any type of investingworks, period.
End of story. Real estate crash, stock market
crash. Soon as it's cheap, everyone's
afraid. Soon as it's way too expensive,
everyone's greedy and hungry. And so I was getting calls and
texts every single week from friends and family, Hey, don't
you sell miners? Hey, isn't mining profitable?
And I was buying miners myself. I was eating my own dog food.
(22:33):
I had my own miners in my own warehouse because I'm like, heck
yeah, this is illegal money, literally a legal money printing
machine. And so most of our customers
lost money and me and my partners and everyone.
So massive failure. No matter how you look at it
financially, emotionally, it's just a failure.
I don't know what I would have done.
The whole business was built on the thesis that retail mining
(22:54):
needs to happen. I was very, still am very
passionate about that, that mining should not be in the
hands of these mega corps, thesemulti billion dollar
corporations, that mining shouldbe distributed, that people
should have a miner in their garage, that they should have
one hosted at a data center fullof other retail miners.
And if you look at the hash ratetoday, it is outrageously high.
(23:16):
Mining is still not great despite the fact that Bitcoin is
112,000 because the difficulty rate has grown much faster than
the price of Bitcoin. And so even though bitcoins near
an all time high, Bitcoin miningfor retail investors is still
dead. And I'm honestly pretty
pessimistic that retail mining will ever be alive again just
due to the nature of what miningis.
(23:38):
You have to have cheap energy, and the only way to have cheap
energy is to be a scale, or to be in some random third world
country, or to be flare gas mining in the middle of West TX
where everything breaks down because of all the dust and
heat. You just need scale to have
cheap energy. And even when you have cheap
energy, you're exposed to all these price fluctuations.
And when do you sell? Do I hold the Bitcoin after I
mine it? And do I sell it immediately?
(23:58):
You kind of have to become a trader in a sense.
It's just an impossibly hard business and one that I had not
nearly enough control over. But that's not my biggest
failure. Almost lost a friendship over it
but did not happen to say that we are still doing great but we
went through some rocky points. But my number one biggest
failure is my biggest failure because of the friendship that I
(24:19):
lost over it. I had a company for 7-8 years
that sold wholesale iPhone parts.
This is the company after my iPhone repair company and I
launched it by myself. But I soon brought my best
friend on a few months after founding.
Gave him 1/4 of the business andhe moved his family to Texas and
he had big hopes and aspirations, as did I, for what
(24:42):
that equity would turn into. And it was a ton of fun to work
side by side with each other, grow this business.
We grew up really fast. It was really profitable for a
long time. But I was just a stupid leader.
Like I was just young. I was in my mid to late 20s.
I was all over the place. I was unorganized.
I had 25 employees across four different states, four different
(25:03):
warehouses. I wasn't keeping track of
anything closely. I was, you know, testing other
business ideas. I was not being a good steward
of this business, of this revenue, of this equity and the
tide turned. The barriers to entry in this
business were very, very low. Basically, if you had a free
Alibaba account, you could import iPhone screens for 15
bucks and sell them for 28 bucks.
(25:24):
That's while we were doing that's it.
If you can learn how to, you know, import stuff through FedEx
and DHL three day air, you couldbe in business.
If you could scrape iPhone repair stores and cold call them
cold e-mail, you could be in business.
If you you could build a Shopifystore, you could be in business.
And so over the years, we saw more and more competition.
And some of them took this business very, very seriously.
(25:44):
They raised money, they were sophisticated, they had good
leadership. They had their own warehouse,
they fulfilled their own stuff. And they just outsmarted us.
And we did some really cool things in that industry.
We pioneered the lifetime returnpolicy.
We were the first to start it. And then everyone copied us.
We did 10s of millions of dollars of revenue.
But there was this weird dynamicbetween me and my best friend.
He was like the CEO. I was just kind of the owner,
(26:06):
but like he was kind of the CEO and name only and I wasn't
really treating him as such. And there were a lot of
ambiguities between him and the other employees.
And, you know, as the owner of the business, it was my
responsibility to to clear that up and to set the record
straight. And then one day in 2017, I had
this call with my accountant andhe said, hey, bro, you've lost
money this year. You're losing money every month.
(26:27):
And that floored me. I didn't know I've been losing
money for I don't know how long.And I had no idea.
I'll never forget that phone call.
And we had to make like immediate changes to the
business. We had to let people go.
We had to close warehouses and Ihad to cut back.
I had to eliminate profit distributions for all the
shareholders, including my best friend, and I didn't show much
grace or leniency in doing that.I made too big of cuts, too
(26:49):
quick to people that I loved, and I could have done it better.
I could have rolled it out slower.
I could have given them more breathing room or runway.
I'm trying to tell both sides ofthe story here because there's
always two sides of every story,so I'm trying to tell both sides
at the same time. Obviously I'm biased, but given
the benefit of time, I have beenable to see more the error of my
ways and it took me years and years to to see that.
(27:12):
I think the first several years,both me and him were pretty
bitter about it. And that's a hard place to be
where both people well, where neither person thinks they did
anything wrong, or at least eachperson thinks the other person
did more of what was wrong. But given enough time, I think
I've come around and I'm more onthe other side of the table than
my own side of the table at thispoint and thought, man, I really
(27:33):
could have managed that better from day one.
So I have a lot of regrets aboutthat business.
I think people say that they live with no regrets.
They aren't introspective enough.
I think it's good to have regrets because regrets drive us
to be better and we truly don't have regrets.
Then what are we really improving towards?
So that is my #1 failure. Even though I netted out ahead
on the balance sheet, right? I lost a great friendship over
(27:54):
it and it ease me up inside eventhough it's been like 8 years
now. And that's a lot more valuable
than money or equity. So when it comes to
partnerships, I can honestly saythat a business partnership is
more difficult than a marriage. It's more critical even, not
more important, right? Of course, marriage is the most
important relationship in your life, but like, I think it's a
lot harder to make a business partnership work than a
(28:15):
marriage. Frankly.
I think that there's no stigma attached to partnering with
someone too quickly, whether whereas there is a stigma
attached to marrying someone tooquickly and for good reason.
That could be a mistake, right? You got to get to know the
person. But in business, it's like, Oh
yeah, these guys met in their dorm room and they built the
business Yeti. And we hear all these success
stories, but it's all survivorship bias.
We hear about the ones that work, but the ones that don't
(28:36):
work, you know, no one's really talking about them on podcasts,
even this podcast, except for, you know, 1 episode out of every
230 or so. But in my opinion, the eighty
20th business partnerships are 5050 rarely works unless both
partners are in person together.Not remote in person, side by
side, all in both feet first, not working another job, not as
(28:59):
a side hustle, but literally in the same room building the one
thing together all day every day. 5050 can be great there.
Outside of that, if you remote, one of them works, the other one
doesn't. One of them put in money, the
other one didn't. One put in more than the other.
It's not going to work, sorry. It's just not going to work.
I think it usually needs to be someone in the driver's seat.
60408020 equity split, an investor and an operator that
(29:23):
can work. That's more likely to work,
going to business with your friend.
A lot of fun. It really is a lot of fun.
But man, watch out, be careful, know what you're getting
yourself into. High risk, high reward.
Hope you enjoy this episode. I might regret publishing this
one day, but what's done is done.
Thanks for hanging out on the Kerner Office.
All right, you guys hear me talka lot about my wins and making X
amount of dollars and Y amount of days, yadda yadda yadda.
But entrepreneurship is anythingbut rainbows and butterflies.
There's a lot of hard, hard, sucky things that you got to go
through. And so today I want to talk
about some of those things. Six of those things to be exact.
I want to talk about 6 of my biggest failures of all time.
(00:20):
Not 6 of, but my 6 biggest business failures of all time
ranked from #6 to #1 number one being the worst, the biggest.
And I'm measuring these failuresjust by how much they impacted
me. Not by dollar amount necessarily
or time spent on them, just how much emotional or mind space
impact that they had on me. And here's the thing about
(00:42):
social media, it does not rewardpeople talking about their
failures. The algorithms do not like it.
Therefore, the people that are genuinely willing to share about
their failures are disincentivized to do so because
they don't have a positive feedback reward loop after
sharing those failures with somerare exceptions.
There are exceptions, but let's just get into it.
(01:04):
Number six, no BS crypto. So you guys might know the story
back in 2018 when I launched A crypto business with John
McAfee. If you want to hear that whole
story, it is episode 9 way back in March of 2024.
I tell that story in detail. It's one of my best stories.
I love it. It's a great story to tell at
dinner parties. But at the end of the day, that
(01:24):
business failed and it took two years of my life.
Now, I netted out ahead financially speaking, but this
business was a great lesson in not starting businesses where
you have not enough control. Sometimes that control looks
like not enough equity in the business to really have enough
decision making power. Sometimes it looks like you
(01:45):
being in a market that the business is highly dependent
upon, as if you were in the oil business.
It's boom and bust and no matterhow hard you work, you're going
to have a really, really hard time making the business work
during a bus cycle. Well, that's how crypto is.
I've made the same mistake twice.
Crypto peaked on December 17th, 2017.
That's when Bitcoin hit $20,000 and I launched this business a
(02:07):
month later. Now, at the time, it felt like
the perfect time to launch a business because Bitcoin was
just dipping a little bit. It had been 20, now it was 18.
So we're, quote, buying the dip.Little did we know it would end
up at $3000, down 85% at the endof that cycle.
And making a crypto business work in that market is like a
goldfish trying to swim up Niagara Falls.
(02:29):
It's just not going to work. And so, yeah, I totally could
have done things better. I could have been smarter about
it, but I genuinely don't know how I could have made that work.
We spent hundreds if not thousands of hours building out
a community, building software tools, writing an 18 page white
paper, having a free AirDrop, tons of content.
We had a community with 70,000 people in it.
We had people that invested intothis token that we had
(02:51):
airdropped out for free and theylost their money and I lost
money. But I am grateful that I never
held an ICO, an initial coin offering where you basically
sell your token. I never did that.
It was just a free AirDrop. But nevertheless, once it hit
the exchanges, people purchased the token expecting it to go up
in value. And it did sometimes, but most
of the times it didn't and it ended up crashing.
So this is a failure that I regret, but it was a great
(03:13):
learning experience, especially when it comes to getting John
Mcafee's attention, getting in front of him, partnering with
him, and learning that I'm capable of doing cool things
like that. All right.
Biggest failure at #5 this was my business phone restore.
Now, keep in mind, these are failures of mine.
It doesn't necessarily mean thatthe business failed.
You'll see what I mean by the end of each section when I call
(03:33):
it a failure because this business was objectively a
success. I made a lot of money from it,
and I came out on top. But I had three iPhone repair
stores, 1241 in Tuscaloosa, one in Birmingham and two in
Huntsville, AL. I got approached by a competitor
to merge forces. I didn't know the guys.
They were throwing off yellow flags all over the place.
They pressured me to sign a dealbefore the end of the year to
(03:56):
keep taxes cleaner. My lawyer was dragging his feet
on reviewing the contract, and Ijust thought, we'll make it
work. This was before the days of
ChatGPT. We're talking 2011, 2012.
So I couldn't even have ChatGPT review my contract.
And there were some dumb, stupidthings in there that I never
should have agreed to. We signed a contract.
The deal was that I would get a third of the profits in
(04:16):
perpetuity, mailbox money without having to do any of the
work. They, both of them would get 2/3
of the profits collectively. They would invest money into the
business. They would grow the brand.
I got a little bit of cash at closing, nothing crazy.
And everything changed after we signed the deal.
I started another business in the same industry selling iPhone
parts. I didn't have a non compete.
I was fully allowed to do that. I told them about it after I did
(04:38):
it and my business started crushing it and I think they saw
that and they got a little jealous because they wanted to
do the same thing, which I didn't know they wanted to sell
iPhone parts. So unknowingly I created
competitor for them on a productline that they had yet to launch
and I started doing really well and they became a customer of
mine, one of my biggest customers.
But nevertheless this played a role in decisions they made
later down the line. I got that first mailbox money
(05:01):
check the first month and I don't believe I ever got one
again. Maybe there was one more, two
more, but never again. Basically, and Long story short,
they ended up diluting my sharesin half from 33% to 16% without
my consent. They claimed to have my consent,
but they didn't. They were basing it off some
random conversation about an expansion plan, and I learned
(05:21):
about this while I was in China at 2:00 in the morning.
Incredibly depressing. It felt like 2 years of hard
work had gone to waste and they had stole the business out from
under me. That mailbox money I was
promised never came. And to make matters worse, they
still have the company. Massive failure.
I had to retain a lawyer. I had to sue them.
Thankfully, their lawyer was an idiot.
I'm happy to go on record and say that he was a complete
(05:42):
moron. And a lot of the clauses in our
contract did not hold up legally.
It was an unenforceable contractin many ways, not in every way.
And so that really helped our case.
So my lawyer helped me claw backto about 29% equity, so up from
16 to 29%. And then they exited, they sold
the business and I got a check for 275,000, something like that
(06:05):
cash while I was in my 20s. And it was awesome.
And I put it behind me. But that was a great lesson to
not get married to someone you've never met.
I mean, weeks had elapsed between the first time I had met
these guys and when I first partnered up with him and
basically handed over the keys to my business.
Not basically, that's exactly. I literally handed over the keys
to my business without any visibility into the bank
accounts, into what they were doing and they took advantage of
(06:27):
that. And again, business was
successful. It sold for seven figures.
Those locations, most of them are all still there today, 15
years later. Every time I go back to
Tuscaloosa to an Alabama game with my family, I drive by it.
It's now called You Break I fix or Assurion or something, but
it's in the exact same location right on 15th St. and I just
(06:48):
drive by it with pride and it feels good.
And the other location in Homewood slash Birmingham is
still there. And the one in Huntsville has
since moved, but it's still in Huntsville.
And the one I had in the mall that closed down, that was more
of an experiment. That was our fourth location,
but it was a failure in that I partnered up with guys that I
shouldn't have. And I had I done more due
diligence, I never had partneredup, but also had I done more due
(07:08):
diligence and not partnered up with them, that business may
have just fizzled out. Like they genuinely did a better
job at growing it than I did because they were all in.
They were more invested, whereasI was some what distracted.
So if I could replay that over and over and not partner with
them, I wonder if I would have netted out ahead or behind.
I certainly would have had fewerGray hairs, but I may have had
(07:29):
fewer dollars in the bank account as a result.
So that's number 5 #4 Sandeats. So this also was not a literal
failure in the sense, but it wasa failure in the sense that we
had to let a bunch of employees go and we made some bad
decisions that led to that. This was a third party logistics
business, which meant that e-commerce brands would ship all
of their products to us. We would store them in a
(07:49):
warehouse and then as they got sales through their Shopify
site, we would pick, pack and ship out their orders from our
warehouse. This is a very bad business.
You're competing with Amazon, but you can't compete with
Amazon unless you have billions of dollars, which we didn't.
And so we were making 400, $1000a month in this business, but we
were losing money and 90% of ourrevenue came from one customer.
And what a toxic relationship that was.
(08:12):
They were very, very difficult customer to work with and it was
very straining on my mental health.
And I don't think I've ever saidthat about any other customer or
vendor or business period. Like of all the 7580 businesses
I've ever started, no relationship has ever been that
toxic or that mentally taxing onme and my business partner and
my employees. And I'll never forget I was
sitting in the hospital hospitalin Houston, TX, bedside of my
(08:36):
daughter who was literally in her deathbed at the time.
It didn't become her deathbed, but she it was not looking good.
She needed a lung transplant. And I was at my wit's end.
And this vendor of mine, it's customer who represented 90% of
our revenue and 90% of our employees was just berating me,
just absolutely berating me overe-mail.
(08:58):
I just went nuclear on him aftertalking to my business partner
first, because you have to make this decision like, do we fire
our customer and therefore fire 90% of our employees that
support that customer but stop getting abused by them?
Or do we just grin and bear it for the sake of our employees
even though we're losing money And it just made logical sense
to fire him. And so I just went nuclear.
(09:20):
He had been holding his power asa large customer over me and
wielding that unrighteously, forlack of a better word, thinking
like you could never fire me because he knew how much revenue
he represented in my company. And we called his bluff and we
said no, we will no longer ever ship your orders ever.
And they had thousands of ordersready to ship, thousands of
(09:42):
customers waiting on those orders.
And we said we're done. Come get your crap, pay your
bill. We'll palletize it up.
You can come get all your boxes and your product and we'll ship
it to the next third party logistics company that you
choose. They freaked out.
I mean, they freaked out, but wedidn't budget.
We absolutely did not budget. And they threatened to sue us
and yadda, yadda, yadda. And I said I'll never forget.
All right, I'm going to read this e-mail because this is one
(10:04):
of my prouder moments. October 21st, 2021 at 6:55 PM.
Oh man, this like is triggering to read, but it's also an
amazing feeling to read this first name.
You are volatile, hostile, and unpredictable to work with.
You literally fired us this morning but still want us to
take the risk of scheduling our employees to come in and fulfill
your orders. We are behaving like a company
(10:26):
you just fired and this upsets you, but your words have
consequences. As I read this e-mail, I'm
remembering like he had fired usand basically like expecting us
to say no, no, no, no. And we just said OK, fine, we're
done. I don't remember exactly how it
went down, but yeah, we called his boss basically.
And then he's like, wait, you have to ship our orders.
And we're like, no, you just fired us, bro.
And we're happy to be fired. Anyway, next paragraph, as
(10:49):
previously stated, we are happy to continue working with you if
you are not involved in the communication between us.
So we basically said we'll keep working with your company, but
we can never talk to you again in any form or fashion.
We cannot risk our business on someone making emotional threats
at every turn that have real life consequences on our
business. There is a direct correlation
between the strength of our working relationship with your
(11:10):
company and your involvement there in.
As previously stated, we'd love to continue working with and
fulfilling orders for your company, provided your company
agrees that we are still your fulfillment partner until a
mutually agreed upon date and you are not communicating with
us and you are not communicatingwith us any longer.
Any damage caused by these interactions today will be a
result of your pride and unwillingness to cease or take
(11:32):
ownership of toxic behavior. Your continued involvement in
this working relationship is a greater liability to our
business than the current threats you are making.
And I meant that basically, it'sa greater risk for us to keep
working with someone as psychopathic as you than it is
for us to stop being your vendor.
And after that e-mail, his team stepped in and took over to see
things through, and they ended up going through a couple more
(11:55):
fulfillment partners. That didn't work out either, and
they ended up just fulfilling themselves.
A couple years later, I spoke tohis team who had since moved on
to other positions and they agreed that that was an
absolutely terrible situation. So anyway, that was a failure.
We should have managed that better.
We should have been on top of our numbers so we didn't lose
10s of thousands of dollars every month.
We just weren't on top of our numbers.
(12:15):
We could have prevented that. We should have fired them a lot
sooner because we had 20 something employees that were
reliant on them being our customers that we had to let go
and or reposition within the company.
All right, we are to #3 There's a good chance you've heard this
story before as well, especiallyif you follow me on Twitter.
I had a whole episode dedicated to it last year.
I don't even remember what episode number it was, but Long
(12:36):
story short, I had a business a few years ago with a couple
partners. Actually, I didn't know them at
all when I partnered with them and we built a big business
together. We had a $50 million offer on
the table to invest in our company, which was life changing
money. It was going to help us scale.
It was incredible. And then the two partners went
behind my back and said, Dad, wereally don't need Chris here.
(12:57):
He's kind of redundant. There's not enough room in the
equity stack for all of us plus the investors.
So let's just kick him out and like legally we can't kick him
out, but let's just close this business and start a new one
because the investors like us, they'll start a new business
with us that does basically the same thing and he won't be a
part of it. Well, he'll have 3% ownership
instead of 33% and he'll have tosign and not compete to where he
(13:20):
can't compete against this ever.All right, I want to pause here
just for a. 2nd to tell. You why?
I've used Beehive for two years.And I just actually sent my
100th newsletter edition. I.
Love. Beehive and you see emails
different from other platforms because the social media
platforms own your audience. In fact, YouTube just banned me.
For a week. Because they didn't like one of
(13:41):
my videos even though it was perfectly compliant.
If Instagram changes their algorithm, your reach tanks.
Same with TikTok, Facebook, and anything else you're building on
rented land. But with Beehive, I own my list.
I own my audience. I'm not at the mercy of some
nameless, faceless algorithm. Every time I hit send, they just
get my emails. And Beehive makes this simple.
Growth tools, monetization, and a free website.
(14:03):
And I can't get enough of their analytics and the data I get
from Beehive. This is data that I can actually
use and share with potential sponsors.
It's everything you need in one platform.
The smartest creators out there are the ones that own their own
audience. So go to Beehive.
Dot com slash. Chris to get 30.
Percent off your first three months, that's BE.
EHII v.com slash. Chris and start building
(14:24):
something you actually own so. One of these guys I'd gotten to
know really, really closely overthe year and a half that we had
worked side by side, our families vacation together.
I think of twice, maybe 3 times,our wives were very close.
Our sons shared the same birthday.
They were very close. They live right down the road
from me. They just sat down and said,
hey, you're out dude. I know it sucks.
I know it's wrong, but you're out.
(14:46):
I'm doing this anyway. I know it's wrong.
I'm doing this anyway. And those words are still echo
in my ears. And that was a failure like
that. I had a lot of money.
That was a net failure no matterhow you look at it, on the
monetary side of things, not like the life lessons learned
side of things, but I lost moneyon that.
I lost every bit of equity or potential future value that that
(15:07):
company would ever gain. The reason it was not a failure
was because of basically I took all those learnings from within
that business and helped them catapult my career ever since
then. And I started writing content
about that industry and that occasional tweet or two about
that industry turned into the content I produce today, which
is over 150 million views a month across all platforms
combined. And I don't think I would have
(15:28):
ever even thought about making content had that experience
never happened to me. And I don't know where it'd be
today. I'm sure I'd be doing something
cool and having fun, but I don'tthink I'd be where I am
financially speaking, or in my career.
I think that terrible event likewas a net win for my career,
although a net loss for me on paper.
So kind of the opposite type of failure is my first that I
(15:50):
mentioned a net win on paper, but really just a net loss
experience all around. But I firmly believe that like
any, any, any bad thing in life that happens to us, as long as
we like keep trying, we stay at it and keep trying to be a good
person. Given enough time, that bad
thing will turn into a good thing.
Like I firmly believe that there's only one or two things
(16:10):
in my life that I haven't seen the good of already, one or two
bad things that have happened tome and or my family members, and
I've yet to see the good. But I think that one day in the
future I will. So any failure, right, if we
really want to get ticky tacky about any failure could be a
good thing if given enough time.That was a big failure and it
was dumb of me to partner with acouple guys that I didn't know.
(16:31):
I mean, I just keep making that mistake over and over, but I
like working with people, you know, it's just funner to do it
together. It really is.
And like, despite all the partnership headaches I've had,
I still recommend that people get a business partner do it the
right way. I have a lot of thoughts about
that. That could be a whole other
episode in and of itself. I've written a newsletter about
it, but I think it's taken me a lot of time to realize that I
don't make a super good businesspartner unless I have a very
(16:55):
small slice of the pie and I contribute A disproportionate
amount of value to the business and the partners.
I'm clearly distracted. Like, that's the whole theme of
this, right? 80 businesses in 15 years, I'm
always moving on to the next thing.
I don't regret that. And I think that that has been
one of the major reasons why I've done well is because I've
compounded all my learnings across various industries.
(17:15):
But as a business partner of mine, that could be really
tough. Hey, Chris.
Hey, hello, that shiny object might be cool for you, but I
thought we were doing something together.
That's tough. And I've tried to get a lot
better about that. When people approach me and say,
Chris, let's do XY or Z business.
And I'm oversimplifying this. It's not how these conversations
go. But for the sake of an example,
let's just say, all right, Chris, I want you to put in 10
(17:37):
hours a week and I'll give you 10% of the business.
Nowadays, I'm much more likely to say, how about you only give
Me 2% of the business and you only expect 3 hours a week from
me. I really, really, really try to
under promise and over deliver now.
And I tell, tell people upfront.I don't really need to tell
people upfront because I publisheverything on the Internet.
But Even so, I say clearly I'm doing a lot of things.
I'm very distracted. This isn't going to be my only
(17:59):
thing, FYI. And so I know you want me to
have a bigger role in this. I'd much rather have a smaller
role and an even smaller proportional amount of equity
for the time and effort that you're expecting from me.
And then I try to over deliver. But it's taken me a long time to
learn that, you know, when you have 15 business partnerships
and most of them don't work out,at a certain point, you got to
(18:20):
look at the common denominator and say, you know what, Chris?
Either you really need to take amuch smaller slice of the pie so
your partners have less expectations from you, or you
need to just do things yourself,which I've learned to really
enjoy that. All right, failure #2 of 6 man,
that was the company that my best friend slash partner and I
started four years ago this month, now a Bitcoin mining
(18:41):
company. We launched that at the worst
possible time, but at the time, it felt like the best possible
time. In the summer of 2021, China
banned Bitcoin mining. And so if you don't know about
Bitcoin mining, to explain it very simply, there's a few
variables at play #1 the price of Bitcoin.
All else equal, the higher the price of Bitcoin, the more
profitable Bitcoin mining is. Number 2, the hash rate, which
(19:04):
is basically determined by how many other Bitcoin miners are
trying to mine Bitcoin. The more Bitcoin miners there
are, the more competitive it becomes to mine a Bitcoin or
block of Bitcoin, right? So if the price of Bitcoin is
not going up but the hash rate AKA the competition is going up,
then the profitability of Bitcoin mining goes way down
because the statistical chance of you finding a block goes way
(19:25):
down, right? So the perfect storm happened in
2021 when the biggest Bitcoin mining country in the world,
China, said no more, we don't believe in this, we're out.
It is now illegal. So then all of us enterprising
Americans raise their hands and said all mine Bitcoin.
That sounds awesome. So at the same time, Bitcoin was
in a huge bull run. It was hitting an all time high.
(19:46):
It was insanely high in value. And the hash rate, the
difficulty rate of mining plummeted literally overnight.
Like thousands of miners unplugged, literally unplugged.
And mining became very, very profitable.
Basically you could spend like $500 in electricity to mine a
$5000 Bitcoin. I'm oversimplifying, but it was
like stupid. Mining was insanely profitable.
(20:08):
And so around that time, Nick and I bought a Bitcoin mining
facility for 3/4 of $1,000,000. That way we were able to sell
Bitcoin miners and sell the hosting to go along with it.
Because you can't just plug these things into the wall at
your house. You need three phase power, you
need ventilation, you need soundcontrol, everything.
It's a whole deal. So you can't really sell miners
unless your customers have a place to put them.
(20:29):
And if you have a place to put them, then you might as well
sell miners. So we started doing that and we
made $10 million in our first 90days without any paid ads.
It was just right place, right time, perfect product market
fit, yadda, yadda, yadda. We felt like geniuses, like
we're on the top of the world and we were profitable on that
$10 million, right? And we just thought that we
could do no wrong. But just like the no BS crypto
story, we were fighting an uphill battle because what
(20:52):
happened at the end of 2021, Bitcoin crashed.
It crashed, it started crashing,right?
It's a years and months long process and the difficulty rate
only went up and the price only went down.
And all these miners we sold to people that were fully expecting
them to be very profitable, myself included, were not
profitable. They were at first a little bit
(21:12):
and then less so, and then less and less so, and then they
became unprofitable and we couldnever turn that around.
We can't change the price of Bitcoin.
We can't change the difficulty rate.
And so every single year in business, our sales dropped and
dropped and dropped, profitability dropped and
dropped and dropped, Customer sentiment dropped, stresses went
up, the losses piled up. I put in hundreds of thousands
(21:33):
of dollars. I partners put in even more
hundreds of thousands of dollars.
The investors put in hundreds ofthousands of dollars and net of
net on the whole, looking back, that whole experiment lost
money, lost money for me, our partner, my investors, the
customers, Bitcoin miner investors, everyone.
Really the only people that won were the hosting facilities that
(21:53):
we partnered with that marked upthe rates they won and the
companies in China that sold theminers they won and it sucked.
It sucked because I sold some ofthese miners to friends and
family, and I'm always very, very careful about that, very
wary about that, overly so. Like any investment, Bitcoin is
the most attractive when it's the most expensive.
And then as soon as it gets cheap, no one wants to buy it.
(22:13):
That's how any type of investingworks, period.
End of story. Real estate crash, stock market
crash. Soon as it's cheap, everyone's
afraid. Soon as it's way too expensive,
everyone's greedy and hungry. And so I was getting calls and
texts every single week from friends and family, Hey, don't
you sell miners? Hey, isn't mining profitable?
And I was buying miners myself. I was eating my own dog food.
(22:33):
I had my own miners in my own warehouse because I'm like, heck
yeah, this is illegal money, literally a legal money printing
machine. And so most of our customers
lost money and me and my partners and everyone.
So massive failure. No matter how you look at it
financially, emotionally, it's just a failure.
I don't know what I would have done.
The whole business was built on the thesis that retail mining
(22:54):
needs to happen. I was very, still am very
passionate about that, that mining should not be in the
hands of these mega corps, thesemulti billion dollar
corporations, that mining shouldbe distributed, that people
should have a miner in their garage, that they should have
one hosted at a data center fullof other retail miners.
And if you look at the hash ratetoday, it is outrageously high.
(23:16):
Mining is still not great despite the fact that Bitcoin is
112,000 because the difficulty rate has grown much faster than
the price of Bitcoin. And so even though bitcoins near
an all time high, Bitcoin miningfor retail investors is still
dead. And I'm honestly pretty
pessimistic that retail mining will ever be alive again just
due to the nature of what miningis.
(23:38):
You have to have cheap energy, and the only way to have cheap
energy is to be a scale, or to be in some random third world
country, or to be flare gas mining in the middle of West TX
where everything breaks down because of all the dust and
heat. You just need scale to have
cheap energy. And even when you have cheap
energy, you're exposed to all these price fluctuations.
And when do you sell? Do I hold the Bitcoin after I
mine it? And do I sell it immediately?
(23:58):
You kind of have to become a trader in a sense.
It's just an impossibly hard business and one that I had not
nearly enough control over. But that's not my biggest
failure. Almost lost a friendship over it
but did not happen to say that we are still doing great but we
went through some rocky points. But my number one biggest
failure is my biggest failure because of the friendship that I
(24:19):
lost over it. I had a company for 7-8 years
that sold wholesale iPhone parts.
This is the company after my iPhone repair company and I
launched it by myself. But I soon brought my best
friend on a few months after founding.
Gave him 1/4 of the business andhe moved his family to Texas and
he had big hopes and aspirations, as did I, for what
(24:42):
that equity would turn into. And it was a ton of fun to work
side by side with each other, grow this business.
We grew up really fast. It was really profitable for a
long time. But I was just a stupid leader.
Like I was just young. I was in my mid to late 20s.
I was all over the place. I was unorganized.
I had 25 employees across four different states, four different
(25:03):
warehouses. I wasn't keeping track of
anything closely. I was, you know, testing other
business ideas. I was not being a good steward
of this business, of this revenue, of this equity and the
tide turned. The barriers to entry in this
business were very, very low. Basically, if you had a free
Alibaba account, you could import iPhone screens for 15
bucks and sell them for 28 bucks.
(25:24):
That's while we were doing that's it.
If you can learn how to, you know, import stuff through FedEx
and DHL three day air, you couldbe in business.
If you could scrape iPhone repair stores and cold call them
cold e-mail, you could be in business.
If you you could build a Shopifystore, you could be in business.
And so over the years, we saw more and more competition.
And some of them took this business very, very seriously.
(25:44):
They raised money, they were sophisticated, they had good
leadership. They had their own warehouse,
they fulfilled their own stuff. And they just outsmarted us.
And we did some really cool things in that industry.
We pioneered the lifetime returnpolicy.
We were the first to start it. And then everyone copied us.
We did 10s of millions of dollars of revenue.
But there was this weird dynamicbetween me and my best friend.
He was like the CEO. I was just kind of the owner,
(26:06):
but like he was kind of the CEO and name only and I wasn't
really treating him as such. And there were a lot of
ambiguities between him and the other employees.
And, you know, as the owner of the business, it was my
responsibility to to clear that up and to set the record
straight. And then one day in 2017, I had
this call with my accountant andhe said, hey, bro, you've lost
money this year. You're losing money every month.
(26:27):
And that floored me. I didn't know I've been losing
money for I don't know how long.And I had no idea.
I'll never forget that phone call.
And we had to make like immediate changes to the
business. We had to let people go.
We had to close warehouses and Ihad to cut back.
I had to eliminate profit distributions for all the
shareholders, including my best friend, and I didn't show much
grace or leniency in doing that.I made too big of cuts, too
(26:49):
quick to people that I loved, and I could have done it better.
I could have rolled it out slower.
I could have given them more breathing room or runway.
I'm trying to tell both sides ofthe story here because there's
always two sides of every story,so I'm trying to tell both sides
at the same time. Obviously I'm biased, but given
the benefit of time, I have beenable to see more the error of my
ways and it took me years and years to to see that.
(27:12):
I think the first several years,both me and him were pretty
bitter about it. And that's a hard place to be
where both people well, where neither person thinks they did
anything wrong, or at least eachperson thinks the other person
did more of what was wrong. But given enough time, I think
I've come around and I'm more onthe other side of the table than
my own side of the table at thispoint and thought, man, I really
(27:33):
could have managed that better from day one.
So I have a lot of regrets aboutthat business.
I think people say that they live with no regrets.
They aren't introspective enough.
I think it's good to have regrets because regrets drive us
to be better and we truly don't have regrets.
Then what are we really improving towards?
So that is my #1 failure. Even though I netted out ahead
on the balance sheet, right? I lost a great friendship over
(27:54):
it and it ease me up inside eventhough it's been like 8 years
now. And that's a lot more valuable
than money or equity. So when it comes to
partnerships, I can honestly saythat a business partnership is
more difficult than a marriage. It's more critical even, not
more important, right? Of course, marriage is the most
important relationship in your life, but like, I think it's a
lot harder to make a business partnership work than a
(28:15):
marriage. Frankly.
I think that there's no stigma attached to partnering with
someone too quickly, whether whereas there is a stigma
attached to marrying someone tooquickly and for good reason.
That could be a mistake, right? You got to get to know the
person. But in business, it's like, Oh
yeah, these guys met in their dorm room and they built the
business Yeti. And we hear all these success
stories, but it's all survivorship bias.
We hear about the ones that work, but the ones that don't
(28:36):
work, you know, no one's really talking about them on podcasts,
even this podcast, except for, you know, 1 episode out of every
230 or so. But in my opinion, the eighty
20th business partnerships are 5050 rarely works unless both
partners are in person together.Not remote in person, side by
side, all in both feet first, not working another job, not as
(28:59):
a side hustle, but literally in the same room building the one
thing together all day every day. 5050 can be great there.
Outside of that, if you remote, one of them works, the other one
doesn't. One of them put in money, the
other one didn't. One put in more than the other.
It's not going to work, sorry. It's just not going to work.
I think it usually needs to be someone in the driver's seat.
60408020 equity split, an investor and an operator that
(29:23):
can work. That's more likely to work,
going to business with your friend.
A lot of fun. It really is a lot of fun.
But man, watch out, be careful, know what you're getting
yourself into. High risk, high reward.
Hope you enjoy this episode. I might regret publishing this
one day, but what's done is done.
Thanks for hanging out on the Kerner Office.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!