My "life lesson" happened when I was about 18. I was running a game server hosting company, everything was organic and I took it from 1 physical 1U server which I owned and co-located to about 10 servers, before I made a catastrophic mistake.
Anyway, I reached a point where my colocation fees were about 1.2k per month, I had been with my supplier from the very beginning, so from 1 server... At the peak I was grossing about 4-5k per month but generally monthly lows were about 2k, and everything had been organic, so I had no debts, and was just pumping everything back into the business. What happened was my provider offered to sell me his business for about 12k. You gotta keep in mind I was 18 at this time.
I took out a loan (my Dad was guarantor) and purchased his business. The aim was to, acquire his contracts for colocation with the datacenter and I was expecting to inherit an operating business which was turning in about 2-3k per month in normal "web hosting" businesses. All the sites were spread across about 30 servers, all of them really really old.
So, things went sour literally from day one. It turns out that he either fudged all of the sites on the billing software or they decided to just exodus on day one of me taking over. I ended up going from having healthy profit each month to operating at a deficit. Long story short it destroyed my business and nearly caused me to lose my degree at Uni from the stress of hacking away trying to save a failing business and continue with my degree.
Anyway, what did I learn?
Due diligence. Don't rush things. Don't trust people. You can really summarise this as a life lesson where I essentially ended up gifting someone 12k for "my patronage". It quickly became apparent I was his only customer and my success kept him just about ticking over, so I ended up "buying myself". I was pretty bitter about it for a long time, but I think I was just angry at myself for being so childishly naive to think someone I trusted wouldn't screw me over cause it suited him.
> So, things went sour literally from day one. It turns out that he either fudged all of the sites on the billing software or they decided to just exodus on day one of me taking over.
I don't really understand the issue. Didn't you buy a bunch of prepaid servers and server administration software for just 12k?
Nah, I already had all of the infrastructure and technology. I can't even remember the software I used for game hosting[1] , but they were the largest paid technology that provided this kind of thing at the time.
I bought him with the intention of moving into "web hosting", since at that time my business was entirely focused ONLY on providing services such as "teamspeak", "battlefield 2" hosting, GMod, Call of Duty etc, I thought I needed to diversify, because when I started "1 slot" was about 1.50-2.00 per user. Then it just started being cut throat and I ended up overselling to keep up with the competition's lower prices.
I ended up inheritting bills I could not pay at the datacenter. Old servers that weren't worth the scrap metal and obviously a loan... I started to struggle to cover the loan and ran into huge/unbearable stress from my mistakes. It was just a series of rushed decisions, head down, plough through a purchase because I thought it would help me grow, when it was the complete opposite.
I can't even remember what the billing software was, but it was something off the shelf... and was for an industry (web hosting) I really didn't know much about. Not that that mattered since I never had to support any of the customers...
Update:
[1]: I researched it for my curiosity.. It was called TCAdmin. Was pretty critical to my early success, without it I wouldn't have had a clue what I was doing.
Now I help run a vacation rental/holiday rental software company -- so instead we help host people. We provide management/distribution for agencies. The original product was to just focus on a web marketing front-end software (so I suppose a little bit of "hosting" through our SaaS product). I started that business a few years after the above story.
Anyway, I reached a point where my colocation fees were about 1.2k per month, I had been with my supplier from the very beginning, so from 1 server... At the peak I was grossing about 4-5k per month but generally monthly lows were about 2k, and everything had been organic, so I had no debts, and was just pumping everything back into the business. What happened was my provider offered to sell me his business for about 12k. You gotta keep in mind I was 18 at this time.
I took out a loan (my Dad was guarantor) and purchased his business. The aim was to, acquire his contracts for colocation with the datacenter and I was expecting to inherit an operating business which was turning in about 2-3k per month in normal "web hosting" businesses. All the sites were spread across about 30 servers, all of them really really old.
So, things went sour literally from day one. It turns out that he either fudged all of the sites on the billing software or they decided to just exodus on day one of me taking over. I ended up going from having healthy profit each month to operating at a deficit. Long story short it destroyed my business and nearly caused me to lose my degree at Uni from the stress of hacking away trying to save a failing business and continue with my degree.
Anyway, what did I learn?
Due diligence. Don't rush things. Don't trust people. You can really summarise this as a life lesson where I essentially ended up gifting someone 12k for "my patronage". It quickly became apparent I was his only customer and my success kept him just about ticking over, so I ended up "buying myself". I was pretty bitter about it for a long time, but I think I was just angry at myself for being so childishly naive to think someone I trusted wouldn't screw me over cause it suited him.