I’ve told you all before, and Alice has too, that I’m constantly full of new ideas. I file most of these ideas away for a rainy day and occasionally I’ll decide to take an idea further than the “back of a napkin” conceptual stage. It’s now been 6 or 7 months since my last idea took flight and I think it’s only fair to tell you how it’s been going (SPOILER ALERT: not well).
There’s really no easy, buttered up way of saying it so here it is – I’ve killed off Camphaus. Although the underlying idea was good in theory, there were a myriad of reasons why it didn’t work in practice and although the idea may not have succeeded, I don’t count it as a failure. That might sound bizarre but let’s have a look at the whole picture.
What went wrong?
Well, a few things. Firstly, I’d underestimated how easy it’d be to get a merchant account with a credit-card processor. About 5 – 6 years ago it was shitloads easier but now, not so much. This lead me to use Paypal to process credit cards and in turn led to my profit taking a massive hit (in order to not break contract with suppliers) per transaction. 3.4% + 20p to be exact. That’s slightly higher than 30p/ transaction for merchant services.
Secondly, people don’t care about deals websites – they’ll still shop around. What I was finding was that customers tended to be browsing specific products and phoning competitors to my suppliers citing their “price match” service. If you’re not familiar with price match t’s and c’s it basically means that if you can find the product anywhere else online for cheaper, they’ll match the price. Using our discounted rate, customers would phone up competitors and force them to match it. Meaning my site was used as a glorified price check and they could still keep a relationship with their retailer.
Thirdly, all of my retail connections are in the same industry. That’s not terribly bad for some ideas but, for Camphaus, it was near suicide. If you remember, the idea was to only pick the best retailers to work with – when all your contacts are in office furniture, this means that you can only call 1 contact and get their products. Not only have you potentially pissed of 99% of your contacts that didn’t get the gig, you’re also stuck for who to phone next. What started out with good intentions grew menacingly into cold calls and pleading to get them on board – that’s not good.
What did it cost?
Other than time, £1000. 75% of that was spent on marketing and the rest on general running costs. I’d say that’s not bad, I know people that spend that easily in half the time on nights out. Mind you, that alcohol & pizza/kebab is looking pretty good right now.
At the end of the day it boils down to one simple fact- Would you rather spend £1000 on beer, kebabs, and hangovers or on an idea that might just be able to pay the bills. I’d choose the latter every-god-damned-time.
What did I learn?
Loads of shit. But more importantly, I found loads of ways not to do shit. Like Edison (prick), I think that’s way more important. Here’s some of the things I learned in an easy to digest list form:
1. Don’t get involved in industries you know nothing about.
Unless you don’t mind losing some money figuring out what it’s all about. Kinda like being the new kid at school and trying to figure out who’s who. When you eventually do, you’re still stuck with your head down a toilet.
2. Do all the banking stuff early as possible.
This buggered my first month. I powered into developing the system assuming that bank accounts would be really easy to set up. They were easy, just 30 days instead of a week. So the system was fully functional, it just couldn’t process credit cards. And on that note…
3. Don’t depend on one key condition for you to make money.
In order to attract sellers, I had to have a low commission rate. This wasn’t a bad idea until merchant services decided to pull an Edison and say “no” at the last kick. This meant my processing fees went from a flat 30p per transaction to 3.4% + 20p per transaction, killing my commission. Therefore it required a lot of sales to be making me a fair amount of money.
4. Know when to quit.
I’m not embarrassed about it not working out, I learned a lot of stuff in the process and had fun making the system. The one key thing I think I’ve learned is knowing when to call it a day. I’ve decided to pull the plug before it starts costing money, hold my hands up and apply the knowledge to my next project.
So what happens next?
My IT solutions company (Onnya IT, incase you’re keeping tabs ;)) is still running away successfully and I’ve pulled another idea out of the old folder to look into. This one is in an industry I know masses about and, this time, I’m not going it alone. Everyone I’ve spoken to so far has loved the idea and I’m using all the knowledge of Camphaus’ failings to help further it. More on that later but I’ll leave you with this final thought: recently someone asked me if this meant I was giving up and getting a “real” job.
Absolutely not, I’ll never give up. I’m going to make it, it just might take a few attempts.