How I Built an Online Business and Sold It. Part 3 | Ep. 57
Part 2 step by step how I started, built and sold my online business.
Part 3 step by step how I started, built and sold my online business.
This is a section of a book I’m writing with the working title,
“This way. Living, Loving and Finding Your ‘insert your first name here‘ – Ness.
I lay out my journey from start to finish. How I…
- Started with just an idea
- Built the site
- Built an audience
- Marketed the site online and off
- Raised over $2 million
- Build a subscription membership on the site
- Used affiliate programs to make lots of money from the site
- Got content for the site on a regular basis
- Built a huge email list
- Started a podcast to market the site
- Bought it back from the investors
- Ran it as a side hustle that thew off six figures a year, for years
- Sold the site to a large media company
It’s all here. If you follow the steps it can work for you too.
Let me know what you think by dropping me a a line at B @ Brandon C White dot com.
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- How I Build an Online Business of my Dreams
Hello, friends. Welcome to the show. I’m your host, Brandon C White. And today we continue with part three of how I built my online business, which is the working chapter of a book I’m writing called This Way Living Loving and Finding. Insert Your First Name. Yes, let’s not waste a single second. Let’s get to part Three deals happened in unexpected places.
Things seems to be going well. So I asked John if you wanted to go fishing after lunch. You responded. Yes, let’s do it. Followed up the placemat. Put it in this pocket. We paid the bill and headed back to my house to pick up the boat. Then 30 minutes. We were on the water. It was a bit of a run to the fishing grounds, but we managed to have a tight line, a K fish on the line within an hour of being on the water.
Getting outside out of my office and sitting across from one another at lunch was a lot more relaxing. We had a good conversation while fishing for a few hours. Most of the conversation wasn’t even about business, but more about fishing. My background. What motivated me to start the site how I managed to finance and etcetera.
We had a good day catching fish. And while neither of us wanted to leave the fishing spot, it was going to get chilly when the sun went down. So after a few last cast, we headed back to the ramp. While we’re driving back to my house, John looks at me and says, How much money do you want to raise?
Our financial showed that we were gonna need at least a few $100,000 to hire people, etcetera. And I knew we were probably wrong. So I just casually applied while my heart started pounding one million. John didn’t flinch. Yes, how much we had in our bank account today. I explained that we traded stocks with our money, so it fluctuated. But we had somewhere between 7000 and $10,000 in our bank account.
You looked at me funny and asked what I meant by trading stocks with our company money. I explained that we thought it was pretty innovative and it worked so far. We know it was risky, but we need to take some chances. Things got quiet for a few minutes and I kept my on the road While I’m thinking, Well, maybe I shouldn’t have told him about trading our company money. I blew it. Silence breaks, and he says, We can’t build this company with $7000. The unexpected happens. He reaches into his pocket, pulls out a checkbook with no cover, sort of bent and starts writing while I’m driving. He hands me a check and says, Let’s go build this kid. I looked down. It’s a check for $50,000. Sounds like this is right out of the movies, right? I felt like I was in a movie, he said. We’ll work out the details on valuation, etcetera. When we get more investors, let’s agree that will agree to a fair deal. I said Sure as I’m trying to get my head around what is happening, he said. One other thing. No more trading company money. We laughed, and I agreed. After my heart slows down a little, I asked him if he will help with the company and even be on the board of directors. He responded. I’m open to it.
Let’s go raise some more money. We’ll figure it out. Leading creates momentum with your team. He was this day when John left. The first thing I did was getting to my car and drive to Eric’s house with the news. Eric almost couldn’t believe it. He was trying not to be too excited, but I could tell he was pumped from that day forward.
Things changed between Eric and I. Up until this point, we were both working hard and trying to believe we were onto something. Although Eric never really said it out loud, I think he always had the question If I was going to be able to pull something like this off, getting sales helped getting a guy to ready to check and the upcoming trip with the Forbes guy all helped.
But showing him that check for $50,000 changed everything. Truth is, I was a gnaws. He waas Were we in a movie? I believed in myself, but it was pretty scaring going down a path like this that I had never been down. I believed I could do it while at the same time not being sure I could do any of it. Does that make sense? You’re listening and you’re a fellow entrepreneur you know what that means to this day when I’m speaking of conferences doing group or one on one coaching, I tell entrepreneurs you have to believe you could do something that you’re not sure you can Dio.
That sounds a little odd, but you have to have that mindset as an entrepreneur. The Florida trip. A few days later, I got on a plane and head to Florida. Meet Henry. I got off the plane, got a rental car, follow the directions to his place. The directions takes me to a dead end. Where there is a large gate with a guardhouse. I pull up and say, Hi, I’m Brandon on. I’m here to see Henry. He checks the list in two big gates open. I parked the car and head into the lobby.
It’s a huge high rise and really fancy inside. Arriving at the lobby desk, I said, Hi, I’m Brandon. I’m here to see Henry. The guy responds. What’s your name again? As he’s flipping through some papers, my heart starts to race a little. Did the guy change his mind? Was this a joke? Did I blow our money on this travel? That was all made up. The guy looks back up. Oh, Brandon. Yes? Henry is expecting you. Let me kill you into the elevator. He swipes a card, presses the number, and I’m on my way. The top floor.
I don’t remember the four number, but it was the top floor of the penthouse. As elevator starts going up, I’m thinking to myself, Holy cow. I have no business meeting this guy. I’m not a business pro. A guy who lives in a place like this is going to expect a lot more than we have. You know that feeling of reality setting in when you get to actually do something and it becomes more real than you ever had imagined. The elevator door opens basically right into his house.
Henry standing there in shorts and a casual shirt. It looks exactly like he did in the picture in Forbes magazine. He smiles and welcomes me in all the cow. This place is unions. I walk and and see the entire length of the places glass overlooking the ocean. We sat down, talked for a few hours. Yes, all sorts of questions ranging from why I was doing the business to where we wanted to take it if we had investors interested toe how we spend money if we got it.
We had dinner that night talking more about the business, which eventually changed to talking about fishing. As we’re walking out of the restaurant, he says you have a term sheet with other investors that you can share the details with me. I had no idea what a term she was, much less what terms would be in it. I responded. Now I don’t have any of those yet. We need to get one together.
I have some people introduce you to help with everything and given the terms airfare on. I can talk with your other interested investors. You can count on me for $100,000. $100,000. Are you kidding me? This is a lot of money. Get back to the hotel room, called my girlfriend and tell her we just got $100,000 commitment. She’s a little in shock, but calmly responds. E guess the business plan book was a good idea. Yeah, email. Eric, let him know we have another investor. I email John and tell him and ask for some help. with a term sheet. It responds that when I get back, take me down to a law firm that will help and specializes in startups.
They’ll take care of everything I keep raising money. My grandfather knew what we were up Thio and was keeping an eye on our progress when I explained to him some of the momentum we had. He said he had someone that he wanted us to meet and was going to set up a meeting. Turns out my grandfather’s best friend, my godfather, had a partner, and his son was in Tech in an early guy at America Online.
He had just left to be CEO of an Internet company and had just raised $15 million. The meeting was set. It was winner on the East Coast, and a snowstorm was in the forecast for the same day of our meeting, anxiously watching the weather as the meeting date gets closer. Sure, enough, day of the meeting snowstorm hits on. I get a call. Brandon, I’m going into the office today, but I understand if you can’t make it. There was no way I was going to miss this meeting. I responded. I might be a little late, but I’ll be there. Don’t worry.
All my meetings were canceled. You’re the only one. I drove 70 miles in a strong East Coast snowstorm, but I made it. I’m glad I made the effort. The extra effort allowed for, um, or relaxed meeting. The one hour turned into two, two and 23 three and four because he had the time. I gave him the full download of our plan. He got what we were doing. Liked it. It was up on the whiteboard drawing as I talked. Long story short, I left that meeting with a commitment for another $100,000 and an introduction to a friend of his in the media business.
That guy turned out to be another investor mentor and really was a bigwig in the media business. That’s a story for another time. A million dollars? Yes, $1 million. There’s several other good stories about how we met investors there, Justus, Good as the ones I’ve told so far. And if we ever meet, I’m happy to share them over a beer really was like being in a movie, a dream to take away from the whole experience is that we went from having one single investor and not even knowing how to raise money. Toe having a group of investors in our Siri’s. A round of funding.
We had people putting in anywhere from 25 to $250,000 investors. No other investors. Investors trust one another. So when you get recommended, you gain credibility by that simple recommendation. The process takes on a life of its own investors. Also no lawyers, accountants, PR farms, consultants and other resource is that they can introduce you to to help grow the business. We were very lucky to have the group investors who not only put money in but mentored us along the way.
No, the fundraising process wasn’t all rosy. I mean, it sounds like there was not any hiccups. That’s not true. I don’t want you to walk away from reading this or listening to this and thinking it was all smooth sailing. We had a few investors say No, not right now. I learned all sorts of hard fundraising lessons in this experience, such as just because investors says they’re committed doesn’t mean the deal is done. An investor is committed when the final deal. Documents were signed and the wire with all the money, It’s your bank account.
Assigned term sheet is not a closed deal until the money wire hits your bank account. You have a potential investor. I had an investor negotiating with us, literally up until 10 minutes before we signed the final deal documents. This will wreck havoc on the deal, not to mention on your nerves. Then there’s this whole thing called due diligence, the process that comes after assigned term sheet process that has a million moving parts and could be really intense. Then there’s this whole situation of negotiating with your partners about roles. Who gets what? How the equity will be determined. This wasn’t something super hard for Eric and me. We had worked out a lot of these things before. We even embarked on it. But there were some tense moments.
Money changes, things. Money changes the game and the clock starts ticking for you to make investors a return on the investment. That’s not a bad thing, necessarily. All I’m saying is, things change. Oh, yeah, And this one little thing called life in the middle of raising money. My grandfather got shingles. You know anything about shingles and older people? They could be very dangerous and cause depression, which can lead to, ah, whole downturn of mental health on the way out the door to meet an investor.
One day I get a call from my Anna learning me that my grandfather had just killed my grandmother and killed himself. No need to rewind. You heard that, right? Crazy, huh? Talk about pivotal moments in life called Eric and said he had to cover for us having a partner. You can count on his prices when building any business.
Life doesn’t stop because you’re working on your business. Life just keeps happening. You have to find the strength to roll with the punches. It’s not always easy, but it is worth it. Driving over the Bay Bridge the day of the deal closing, I drove over the Bay Bridge that crosses the Chesapeake Bay, joining the Eastern Shore to the Western Shore that leads to Washington, D. C. And as I crossed the bridge, we had about $55,000 in the bank. I drove back west that afternoon after closing with over $1 million in our bank account, a number that wasn’t even in our conversations a year ago. It felt like that was impossible. It was an accomplishment, and we celebrated that evening. Guess what happens the next day after you close around the funding, the real work begins. The work of building your team scaling your operations is an importantly, increasing your sales in the shape of a hockey stick.
As I had pitched an angel investor who ultimately did not invest but explained to me his philosophy with any of his investments. He said, Brandon, the only reason I’m an investor is for our ally. That’s your job running any business. If you have investors, you’re always looking for a return on your investment. Once you have investors, it’s not just your own return. It’s about making them or return as well. And in early stage investing, they’re not looking for a two X or three X. They’re looking for a 10 or even 100 X return, and we thought raising money was hard.
A whole new set of challenges emerged. We had a recruiting hire. People figure out employee benefits get in office, which involved negotiating the least figure out insurance set up I t infrastructure and the list goes on on and on. Oh yeah, And then how are we going to grow the site? And most importantly, revenue? We were lucky enough to have been mentored and build a great board of directors and advisers. We had that help, and I got my own independent personal mentor, which I highly recommend for all entrepreneurs. It costs me money, but it was worth every penny. Have someone I could email or call when I had a question. The R O I on That was exponential. We rebuild the site. The Internet was just starting to take shape, and more flexible platforms and programming languages were emerging. Running a site off a database was becoming something that was reasonably possible from a management and cost perspective. We were lucky. Tohave hired some really talented people.
They were innovative and creative and took the initiative to make it happen. In a few months time, we were able to transform the site from flat file HTML to a database driven site. From our early interactions with our customers, we knew they wanted local information. We build a custom experience for him. In fact, this is going to sound a little crazy, but we were one of the first commercial sites to customize a user’s experience around their ZIP code. We landed the mentioned in PC magazine because of that accomplishment. And here’s the thing that press actually helped us recruit and attract mawr talent and even crazier, we went out and built one of the first weather sites at the time, the U. S government released flat file updates from all the weather stations they had around the country. Four times a day.
We stood up a server in our office, wrote code and build a zip code based weather app. Go figure crazy to think how far the Internet has come since those days. Right Fishing tackle shop database that I built from the sales calls became a resource with library to show local shops. With the reports, fishermen were able to get a fully customized site. We combined media with e commerce. Our traffic was growing by the week and by this time we had an email this with tens of thousands of people, allowing us to continually drive traffic back to the site. We came up with the idea to expand our e commerce site that Onley currently had T shirts and hats, and we built a full online tackle store.
When we ran the numbers, it was clear that we didn’t have enough money to buy inventory and opened that type of tackle store that we had envisioned. But was there another way? I thought so. Why not approach the traditional tackle shop distributors and have them drop ship? Our orders drop. Shipping is a normal thing on the Internet today, but back then it was almost unheard of. I called up several tackle distributors and pitch them The idea. Some outright dismissed me. They said.
We sell tackled a physical tackle stores, not on the Internet. We don’t see that happening. After visiting about seven distributors to had agreed to do it. One slight problem. We were excited, but there was a slight issue. No e commerce software existed. We had to build it from scratch, and that’s what we did. And we took the customization approach. We theorized that because we knew the regions that visitors were fishing, we could categorize, tackle and create a customized shopping experience. It was a ton of work to build, but it worked and we were getting orders. It looked pretty on the front end, but it was ugly on the back end. We receive orders online and then literally fax. Yes, fax them to distributors.
They would pack and ship and then fax us back confirmation. Then we would get that confirmation and send a note back to the customers via email returns were even Messier pretty labor intensive, huh? And then had a crazy idea to create the world’s authority database of tackle boats, motors and engines so people could compare products, took the idea from a site at the time called My Simon, which gave customers the ability to compare electron ICS. And then they applied the affiliate model and linked to the products where they earned a portion of the revenue.
How did we build this database? You might ask. We hand jammed it all of us. At the time, there were probably 12 of us hand jam data into Excel sheets for what felt like three years, but really was about six weeks straight. We all worked on populating it every day for a few hours. It was painful to create, but it turned out to be an Evergreen resource that attracted tons of visitors over the years.
Also, it was something that was really hard to create, and it built a moat around our business as competitors considered doing similar things. It gave us an added revenue stream and insight into what anglers would buy. It also gave us an invaluable lesson and understand product margins. Fishing reels margins were tight, but lures were high. We made sure toe always recommend lures to go along with the fishing reel thio, even out the margins. Things were rolling along our lesson in running promotions online.
I’m not sure who had the idea, but one of us had the idea to run a free giveaway of coups, ease the drink wraps that keep beer cold and use that to help us drive traffic. Driving traffic at this point was our highest priority. The promotion gave a free Cuzzi to anyone that would recommend five of their friends by inviting them via email. We had a form online visit, had to be registered on our site and then would give five friends emails who would then receive a personalized message from them.
Through our system. It worked almost too well we had thousands of people sign up and sharing. At first. That sounds like great news, but it meant snail mailing out chooses to all these people. Yeah, really painful process. Luckily, we had a summer intern. His job for a few weeks was sending out Uzis. It was insane. It cost us some money, but from a customer acquisition cost standpoint, it was pretty low. At least that’s what we thought at first as we studied the data, what we realized was that giving something away for free on the Internet can create a mass movement that can attract tons of visitors and traffic free causes a frenzy.
Think of what happens at an event when they throw out T shirts. People go crazy even when they don’t wear T shirts. It’s almost an automatic human reaction. But here’s the challenge. Visitors that come might not be the audience you’re looking for. In our case, people were coming for the Free Cuzzi, but not all of them were anglers, and not all of them returned to the site. They just wanted that free Cuzzi. At the end of the day, we wanted repeat visitors to the site, people who liked what we had and could drive revenue for us.
Luckily, we figured this out before it got completely out of control, and we put some parameters around it and ultimately changed the promotion to a giveaway where a set amount of people would be chosen at random. Good example, honor people chosen at a random ex date who would then receive Goose’s. What type of fish are you? A better promotion? What the lessons learned from the free giveaway. We applied them to a questionnaire to determine what type of fish people were.
The type of questionnaire you see go around Facebook every now and again these days or similar to the what type of Star Wars character are you, or what type of dog are you people registered to take the questionnaire, which went through just a few questions. We built some logic around and out came the type of fish a person waas. This proved to be very successful as well, and we picked a group of people at random for a monthly prize. People thought it was cool, and they shared it with their friends via email and created a word of mouth movement. We believe that email was our strongest connection with our visitors, and whenever possible, we were connecting with him on that channel. Hiring lessons.
I had some experience hiring people from when I worked on the tree nursery after college, but never hired the whole team like we had faced hiring at worldwide angler lessons, I learned along the way of growing a team of 15 in a few months time. Irene consumes a ton of your time.
You have to find people review resumes, coordinate calls, do in person meetings, check their references and have other people from your team interview them, get feedback from the team interviews, sometimes talk with family members and ultimately, higher the person. Don’t sit people in a room and interview them across the table. Go for a walk with him. Ah, hike something outside an informal setting. That’s when you really get to know someone. Call all the references and ask for at least 33 is enough that you can get some good, honest feedback. Hire the most talented people you can afford, even if you have to stretch to afford him.
There is no replacement for the very best talent. In fact, hire him when, even when you can’t afford them, because the mist ake you will pay for. Once you get above three people, the dynamics of your company team starts to change. Get above 10 and it changes. Even Mawr get above 15, and it happens again. At our peak we had 21 people and it really changed all the dynamics. What I mean by changes that you need to have. Mawr and Mawr processes policies and procedures in place in order to be able to manage the team, their benefits and for the team members to know how to do their job on all. We got really lucky with the people we hired.
They were talented, passionate and worked relentlessly lessons from expanding too fast. At this point, we had hired about 15 people are in expanding as fast as we could, opening other regions using the blueprint we had built from the Chesapeake region. Each region we opened, we look for a regional editor to be the anchor. They were responsible for up keeping the regional content, building the community around the regional site, leveraging the forums and getting other locals to get together in person because we were moving so fast we would explain what we wanted them to do, give them the technology to do it.
And some support from our headquarters. While the regional editors knew how to write fishing articles and create Resource is they did not know how to create a community, were built out the brand following. It really was not their fault. These skills are not inherently something that someone is born with. When we realized things were not working as planned, we figured out we needed to come up with a formal training program.
Without that process in training, scaling fast was going to be a failing effort. We build a training program, but it put a tremendous strain on our content division. It was hard for the team to keep up with relationships that needed touching on a regular basis and basically just fixing things with duct tape while building out a training program.
Building out systems is not something that happens overnight, and when we did get the training system finally built, then we had to actually do the training. It was chaotic and we lost some regional editors along the way because they got frustrated on that set us back. We managed to survive in the end, thanks to the hard work of everyone lessons we learned from this experience, one truly own your target market.
Before expanding, we thought we had a good grip. But the truth is, we had plenty of room to grow in the mid Atlantic Chesapeake Bay region where we were. If you want to expand, make sure you build a system to do it before you do it. What we had was an outline of things that a region had toe have local fishing reports, local articles, etcetera. What we did not have was a system to train someone how to actually build out the region and then build a community around the brand. In other words, we had the what, but we didn’t have the how n r 00 m.
The most important thing. When growing a company fast, we raised our first million in funding. John introduced us to a lawyer and energetic funny partner named Harry from G T Law we first met. You asked me if this was my first start up on my replied. Yes, he said, Here’s the most important advice. I’m going to give you along this ride, never run out of money. We were just starting out, and I said to myself, Of course, that seems obvious.
It was only a year or so later that that advice really hit me. Well, we had revenue. We were investing ahead of our revenue to keep the growth trajectory high. As growth increases, So did our burn rate. The second round of funding. As the burn rate was increasing, it was clear that we were going to need another round of funding. I hit the fundraising trail again. I could easily write another 5000 words on fundraising experiences.
This time around. I’ll leave that for another chapter, raised another million dollars and hit the floor running. Keep our revenue and user grows high or momentum continues. I had just parked my car and was walking into the hair Cuttery to get a haircut. When my phone rings, I answered. The guy on the other line says, Is this Brandon at Worldwide Angler? Yes, it is.
How can I help you? I replied. I’m thinking this is one of our customers who just wants to talk. I always made myself available because I realized that standing in touch with our customer firsthand was how we got to where we were with the business, and I never wanted to lose that connection. The guy says, Hi, this is David from Lycos. We’d like you to talk with you about providing all the content on our search engine for fishing. Is that something you’d be interested in discussing at the time, Like Coast was one of the top three search engines on the Internet.
Besides Yahoo and Excite, I was a little shocked, grateful, but shocked at this valuable opportunity and replied calmly as I’m jumping up and down with my hands above my head. You know that feeling? Yes, we’d love to talk about the opportunity and work together. Within three weeks, we had a deal signed, sealed and delivered. We would syndicate are content and provide some original content for Lycos.
Think of this in today’s modern age of the Internet as guest blogged, posting on a really big site and then we would share in the advertising revenue. The revenue split was a big deal because of the amount of traffic that, like has received and how much they were driving to their sports section where our content was located. What was also great about the deal is that we were allowed to put a byline at the end of every single article. In that byline, we would always include a link back the worldwide angler. This gave us traffic and, as importantly, S e o juice. Because all the search engines were taking site, linking into account heavily with their algorithms. It worked out to be a great partnership.
We buy a company, we’ll pick up here in part or and thank you, friends for tuning into the show. If you enjoyed this episode, please rate review. We want to hear from you and subscribe. So you don’t miss any of our weekly episodes until the next time. Remember, you are just one business plan away. I’m rooting for your success. We’ll see you soon.