AS 77: My Investor Copied My Business After Meeting – The Real Hijacker

06 Dec 2016

Dark times guys. The Potential investor I  had talked to back in March ended up copying my business, specifically product that we talked about at a meeting on March 25th. If you go through the amzsecrets blog back in March, you can see specifically when I was meeting with this investor and what happened. This is, unfortunately a true story.

It all started on March 25th. A local investor wanted to acquire my business.

My march 25th post went exactly like this.

We went to a very…very fancy restaurant. Everything was over $25 (for lunch). We were the only ones there. Beautiful restaurant, yet empty lol. “Order anything!” he says. Exactly how you would think these things go down…

So we talk alot about the business. His businesses, mine… etc. He’s a very interesting, very savvy, business guy. Exactly how you’d think he would be like.

Then things get down to business. He’s very interested and sees the potential for expansion.

His request is 66% of the business. 33% for him. 33% for his business partner. And 33% for myself.

In return, I give him a “x” valuation of both perceived combined with actual costs. This “$x” value is not yet finite, and I have not yet thought of number. By paying $x he gets the 66%.

In addition to “$x” he is also guaranteed to fuel the company, providing 2M minimum to fuel growth and accelerate it to brick and motor both in the U.S and overseas.

At which point, he aims to super launch the company to acquisition in 36 months, for an acquisition of 200-300M.

All would be done with teams of lawyers, everything in writing, and paperwork//contracts.

I have yet to determine my valuation of the company, but this is definitely getting interesting. Do I want to sell? No. Would I consider a partner who is extremely savvy in business overseas, well connected with major business players… definitely.

The dinner went well. Then emails preceded. He wanted to essentially steal the business, and bring in new cash. I wanted my multiplier.

Nevertheless, Fast forward 3 weeks ago, 8-9 months after that investor meeting I was browsing Facebook the other day, and I saw picture of a similar product posted by a facebook friend. This girl had liked it, since it was a competing product of mine, I wanted to see what was so likable about that product. I clicked on the photo, nothing big, went to the instragram account of that photo, and I saw a photo of her, one of my other friends, around a table, with the product siting in front of them.

They were having a business meeting about that product. So, this girl, is actually the daughter of the investor, who’s also my friend. I had met the investor through her, we had done previous buisnses together once upon a time. I had built a technology company for him

Two of their products, that was discussed march, was siting on that table in that photo. Their were 4 people photo. I sat down, I looked at it, and I titled it… be better than the competition. It sits on my desktop as an image. I would actually make it my desktop background, but that would probably piss me off too much.

Now, I feel like this is something you only hear in movies. Like Mark Zuckerberg copying Tyler and Cameron Winklevoss on their social network concept except they didn’t have a business launched it was just at idea phase.

When I had met with this investor, I had told him multiple business secrets, products, revenue numbers, inside business secrets that we all have in regards to our own businesses and even inventions I was working on. Theres secrets to selling on Amazon. But theres also business secrets that each one of us have, specific to our business. Some of those were revealed. . I didn’t tell him everything, but I know for fact, it changed the future. He would never have launched that business, and executed on some products that I notice they went into. Speciifcally they launched two products I had mentioned in the meeting. I don’t believe coincidences.

Funny thing is data is all relevant to time. Products that sold well 1 year ago, do not necessarily sell well a year later, and specifically in this case. Markets get saturated, and only the ones on top, with the most solid reviews, last.  Timing has a lot to do with your success. When I launched I was the first to market. No one existed. Today its Definitely saturated. I reaped my investment, and am using the new found capital into  new categories, less saturated areas. And that’s a golden nugget. Copying someone today, doesn’t mean you’ll have the success they have. Especially if your not the 1,2,3,4,5 person to market. You’re the 100th.

So in a sense, that’s karma for them. When I see zero ethics comes in, it’s always nice to see the bad guy lose.

Okay, David, how do you know this company copied for a fact your business. One cool thing about domains, is you can look up when a particular domain was bought. I mentioned at the beginning of this Episode, The meeting took place on March 15th. Their domain was purchased 10 days later according to the WHOIS directory. So from the meeting, and within 10 days, a new company domain was purchased.  CRAZY.

The golden nugget here, is trust. Every business relationship you ever get into requires an iImmense measure of trust. From investors trying to buy your company, or even customers trusting that you’ll deliver when they purchase your product.

Trust is king. Trust creates referrals. Trust allows transactions to happen.

There was a ton I didn’t tell him. But it was enough for him to get started. If I was to do again, I would sign an NDA with him. Well not with him, as his trust is completely blown out of the water. You would never do business with someone if the first thing they said was

“Let me buy your business, or I’m copying you.” Cause that is essentially what happened.

So will that other business be successful? I have no idea. Everyone runs businesses differently, and only kings come up on top. I wouldn’t want to be up against myself.

If you guys have related story like this…like getting screwed by an investor, a business partner running away with your business, someone stealing intellectual property, let me know, I’d love to here it.

It’s just one of more annoying parts of doing business. I try to take as much emotion out of business decisions as it allows me to be more calculated. But man, I had done business with this guy for many years. I trusted him. It wasn’t some random investor.

The real issue is…investors can be extremely dangerous. The come in, they have a lot of money, they can recreate the products that you have and employ others to do what your doing. In my case, this happened. Either sell your business or be copied.

Facebook is doing it to SnapChat. This investor did the same

So what does this all mean David? Launching a new product is insanely hard compared before. It’s not the same. Anyone who tells you so, it not telling the truth. I am currently launching 2 products at the moment, and getting them going is so much harder, even with established email lists, it still takes time to get those good reviews.

I like the challenge, but launching hundreds of products a year is not going to work for those types of sellers. The game has changed. And I’m sure they’re rethinking their strategy.




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