This is part 1 of the Benny Luo story featured in the September 2014 issue of Amped Asia magazine.
As a college student Benny Luo and his business partners made 6-figures a MONTH on the Internet.
A few months later, he was about to declare for bankruptcy.
The early days of his entrepreneurial life make for an interesting story — one where Luo realized how the Internet can make you an overnight success, but can also make you a failure almost just as fast.
“I was involved in ‘Blackhat’ (means unethical, potentially illegal) marketing tactics. I did things on PPC networks that are now banned and not allowed. I tried other unethical but technically legal ways to drive traffic to my site. It was affiliate marketing, but we were generating tons of traffic through Blackhat methods.”
“It was a gold rush at the time because not that many people had caught on to the tactics. I got on at the tail end of it so I wasn’t able to earn as much as I could have. But people eventually caught on to what we were doing and it stopped being profitable.”
Here’s an example of something ‘Blackhat’ you could do today (it’s not exactly what Luo did, but Luo employed similar tactics at the time).
If you go on Craigslist there’s a bunch of ads for girls and personals. You pretend you’re a hot girl looking for a date tonight, and then a guy emails you asking for your contact information. You tell the guy to sign up for a “dating” website so she can talk to him through that website. The guy signs up and you earn a commission for his signup. Then you obviously go MIA. Benny and his partners had a script that would automate all of it so they didn’t have to do any of the work and they would get all the money.
For Benny Luo, it was easy EASY money. In fact he’s still amazed at how easy it was. But it wasn’t fulfilling at all.
“I didn’t feel good doing it, but being a kid and wanting to have money justified my poor decisions at the time.”
It worked amazingly, for a while, but then things took a turn for the worse.
“One partner was only 16. He was the mastermind behind all of this. It was nuts because he was so young and already lived in the same place as some famous rappers in Los Angeles. When we first started that kid said he made something like $45,000 per day doing Blackhat marketing. The first time I met him he was wearing a robe like Hugh Hefner.
I was naive at the time. I was only 20 or 21. I trusted this kid, but I should have known better. He was spending money frivolously and eventually lost almost all his money, especially when the gold rush ended. Then he started scamming people to earn more money, and I was one of the people he scammed. I should have realized a guy that has done all the unethical things he’s done would eventually turn on me. He asked me to co-sign an apartment he wanted to rent for $5,000 a month. I did it because he promised me we would make tons of money and he would share even more secrets. We also did a business deal together and got an investor to pay us money. Then the kid stole all the money and ran. Then he abandoned the apartment and trashed it also. The damages for the apartment were $7,000 alone, and then I also had to pay off the rest of the apartment. I was in severe debt and extremely depressed. I was close to declaring for bankruptcy. I contacted a bankruptcy lawyer and he told me that I should try and make payments on all the debt I owed instead of declaring for bankruptcy so that’s what I did. Luckily I never had to go bankrupt.”
But all of that gave Luo a new perspective. He realized that there was money to be made on the web, now he just had to earn it without potentially going to jail. Furthermore he learned a lesson about karma and how being unethical is not a long-term way to do business.
He discovered a new passion, blogging, one that would lead to his first company acquisition and another taste of big money.
Part 2 coming soon.
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