#102 – The Day Perrin Lost $120,000

What you will learn

  • The importance of having people you can ask simple questions
  • Focus on what’s important, don’t get sucked down the wormhole
  • What is a PBN
  • Why it’s important to understand risk
  • Why there are no shortcuts to a sustainable business

I don’t care who you are, $120k is a lot of money.

It’s especially a lot of money to lose in one day.

This is what happened to Perrin.

In today’s podcast, I’m joined by Gael and Perrin to tell the tale of how Perrin managed to lose $120k worth of online income in a single day.

Strap in; it’s a bumpy ride.

Getting Started in Site Building

The year is 2008 and America has just been hit by the great recession.

It’s not the best time for anyone to graduate and start looking for a job, but this was the hand Perrin had been dealt. He’d graduated, was in Chicago and had $8k in the bank.

After sending out 700+ resumes, having resorted to knocking on doors searching for a job, and with $35 left in his bank account, Perrin finally managed to land a job.

After six months, he quit that to start freelance writing.

He soon quit that to go to grad school. After graduation, he finally got what most people would consider a ‘good job’ at a consultancy firm.

They had nice offices; people wore suits, he was getting good money. He was living the American dream.

There was only one problem. He hated every minute of it. It was soul destroying.

But what could he do?

He didn’t want to be poor again. He had $100k debt from student loans. All he had was three months of experience and a poetry degree.

He wasn’t exactly beating off the offers with a stick.

The only thing he could do was become an entrepreneur.

Every opportunity he got, he started reading about different business models and how people are making money.

Eventually, he googled ‘make money online’.

While most of the results were sales pages promising the world, he eventually came across some blogs that looked more legit.

Things like Smart Passive Income and Moz Blog.

One such site was Niche Pursuits.

Spencer Haws built a site, documented his processes, linked to the site so that you could look at it and then published his earnings reports.

It was great. Perrin had never seen anything like it before.

So, he bought Spencer’s software, had a couple of email exchanges, and gave this niche site thing a go.

Niche Site Project 2

Soon after this, Spencer was looking to present a second case study. This was called Niche Site Project 2.

This time, he wanted to take someone who had never built a successful site before and taught them how to do it.

He ran a raffle for everyone who had bought his software to narrow the field to 10.

The ten finalists had to write an essay saying why they should get the chance to build a site under Spencer’s tutelage.

Perrin was a finalist, he wrote his essay, and the niche pursuit audience voted for him to be the apprentice.

He launched A Penny Shaved.

A Penny Shaved screenshot

At this point, he started to learn some essential skills, like:

  • Niche research
  • How to write review articles
  • How to get a site up quickly and cheaply

Perrin wrote 15 articles himself and did a bit of ‘link building’.

After three months, he made his first dollar.

After six months, he was earning $600 per month.

At eight months, he was earning $1,300 per month.

It was starting to make significant revenue.

Perrin was delighted it was working. He had a constant revenue stream. But, he just left it at that.

Spencer the suggested that Perrin add some more articles to see if he could rank for more keywords and make more money.

Perrin’s mind was blown. It was genius!!!

So, he did.

He published 40 articles. The revenue grew up to around $4k per month.

Perrin then quit his consultancy job to work full-time with Spencer building other sites, as well as building his own sites.

All was well with the world…

August 24th, 2014

Like every other day, Perrin woke up and checked the affiliate dashboard.

The commissions were zero. Even stranger, the clicks were zero as well.

He wrote it off as a reporting error and checked Google Analytics. There were about seven visits from organic traffic.

It was starting to get a bit freaky, but this could be written off as another error. He’d had problems with GA in the past. He’d probably messed something up again.

It was only when he logged into webmaster tools that s**t really began to hit the fan.

Right there, was a ‘thin content penalty’.

He really started freaking out at this point.

He logged into Skype. It was lit up. All of his friends who build sites in the same way had experienced the exact same thing.

It was devastating. It was like getting dumped and not knowing why. Not only had he lost his own site, but he had lost everything he had been working on in his job.

After the shock had worn off, it was time to start investigating. The one thing every site had in common was that it used PBNs.

It was a massive wake-up call not to use PBNs. It was like Google was sending a message to the community telling us to stamp it out.

Spencer even wrote an article saying he would never use PBNs again.

The problem for Perrin was he didn’t feel like he understood the risk at that time. He didn’t really understand this way of link building was against Google’s terms of service.

It was so devastating that Perrin realized he never wanted it to happen again. He decided to go straight.

He started seeking out people who were going about things in a white hat way.

Becoming Friends With Gael

This is where he started to connect with Gael.

He’d been on the Niche Pursuits podcast, and they’d stayed in touch.

They developed a friendship, Gael suggested he start a site in the dog niche, and that’s how HerePup.com was born.

This was eventually sold for around $250,000 by doing things the white hat way.

What do you say to people that say you just didn’t do PBNs properly?

There are three types of people who use PBNs. In Perrin’s mind, there is only a point in talking to one of those groups.

There are:

  • Boom and Bust – People who know the risks. They know they’re going to get penalized eventually, build multiple sites and work being penalized into their business models.
  • Zealots – They’ve decided PBNs are what they’re doing, they’re fine, and the want listen to any debate otherwise. These are the ones that will be sending us death threats after this episode is released.
  • Newbies – These are the people worth talking to. They want a long-term, sustainable business (usually). They’re invested financially, emotionally, and, often, in terms of lifestyle in the success of their site. They usually don’t understand the risks. It’s worth working to explain things to them properly so they at least know the score and can make an informed decision.

What Did Perrin Learn From The Collapse of A Penny Shaved?

It sucked so bad, but he’s now happy it happened (kind of).

If it didn’t happen then, it would’ve eventually. He would’ve been making more money, and it would’ve been an even bigger blow.

The real reason Perrin is happy is that it allowed him to become a real marketer than a niche site builder.

He’s learned how to build a brand, promote things, do it properly, and build a long-term, sustainable site.

He’s gained confidence, ‘testicular fortitude’ and knows how to build the kind of online business he wants to create.

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14 Comments

  1. Well, I love niche websites and one advice I may like to add – do not think when you buy websites and that is it money will come! Even if you buy from the best niche website builders, you have to promote your site and you need to feed it with articles all the time. once a week is good-but do it consistently in addition to placing comments, placing ads, SEO to get traffic. Then one day yeah it will make money on its own.

  2. Nice post, lads!
    So, the morale of the story is never give up (and never use PBNs :D).

    I am sure you came across Tim’s (Ahrefs) recent post (was it last week or so) on how it’s inevitable to use PBNs (and buy links) in some niches.
    What’s your take on that?

    Cheers!

    Artem the LinksHero

  3. I love the blog post writing style,kept me hooked and the podcast.

    Do Check the content box of What is a PBN…no 2 reads write and article, guess it should be write an article.

  4. Yeah, there was a lot of it about, back in those days! I started so-called “sniper sites” back in 2009 – just small 5-10 post websites, each targetting a single major keyword. And backlinking was generally whatever I could get my hands on: link exchanges, directories, etc.

    Although I never got around to developing my own fleet of PBNs, I did use a system where tons of us linked sites into a single guest posting system, writing 500-word posts for backlinks. Not sure that’s exactly the same as a PBN, as all the sites were owned by different people, and (theoretically – I did, personally) all submissions were exposed to editorial control by site owners and could be rejected.

    Anyway, it seems these were regarded as PBNs or at least “manipulation” by Big G! I had the same kind of thing as Perrin, but on a smaller scale. I was making about $1000 per month over 12 websites. Lost 95% of traffic (and earnings) over the course of a weekend. And that was that.

    So I know EXACTLY the feeling of walking around in a daze, Perrin. For me, it was probably back in 2011-12 (Panda 4.2 or one of the Penguins). Ended up on welfare and having to move house – I’d ploughed most of a redundancy payout/savings into those 12 sites after losing a 20 year career in 2008. Ack! Still makes me shudder.

    1. There are definitely people making PBNs work. Much of the debate revolves around the risk in using them.

      Proponents of PBNs argue that the inherent way they are set up means that they are undetectable. This represents an ideal scenario where the build and management is done properly. This isn’t an area I have a ton of experience with, so I can’t really advise on how that is supposed to be done these days. It’s worth noting that even the most die-hard proponents of PBNs will admit that there are some other people who are running PBNs in a more sloppy manner and there is a greater risk of these being detected and penalized. The degree of risk differential is debatable.

      Opponents of PBNs argue that even a small inherent risk to too big of a risk to take. Because it’s impossible to quantify how much risk can be mitigated with proper building/management, it still leaves you with a risk. Perhaps the chance of the risk occurring is low, but the impact would likely be high.

      There are a number of factors which influence the position people take. The structure of your business can play a large part in determining this. For example, if you run 100 sites making $10,000 per year each, then you may assess the risk differently to someone running 1 site earning $1million per year.

      Humans also have prehistoric association mechanisms in their brains. If you see your buddy mauled by a sabre-tooth tiger, you are going to assume that sabre-tooth tigers are bad. This evolutionary biological trait still influences modern humans, myself included.

      For example, I got a bunch of sites penalized many years ago for using grey hat tactics. Does this label impact the way I view current grey hat tactics (PBNs). Almost certainly.

      Accounting for that bias, as objectively as I can reasonably be expected to, I still take the position that I wouldn’t recommend PBNs are a core marketing strategy for most people. This is especially true for a) beginners – who are more likely to do something wrong and b) people with large sites – where the impact of a penalty is very significant.

      There is no right answer to this because there are too many unknowns both now and in the future. Therefore you get two groups of people who are debating from rational perspectives but with differing subjective views on risk.

  5. Excellent podcast and post. I agree that PBNS are risky business. With that siad though I think when used correctly (especially with white hat) they can be quite powerful. When I just started out I was confused about them. It wasn’t until I really dove in to how to use them effectively and safely did I see the true potential.

    These days I am doing a mix of pbns, guest posts, forum posts etc. Diversity I think is key when using them. I track which ones I use very carefully too. So basically in my point of view I’d say it’s ok to use them as long as you’re safe and as long as you switch it up ^_^.

  6. Awesome episode Perrin, Gael and Mark. I really enjoyed it.

    Fellow Budapest resident here and I have actually with spoken to you before Mark and Gael. I contacted you sometime back and got your help with information about setting up my tax situation in Hungary.

    As an SEO and Internet marketing veteran, I have been through it all including the catastrophic loss of everything I had made online. I lost a site that used to rank on the 1st page for “affiliate marketing” with a couple hundred review pages for ClickBank products generating $100-$400 per day. The site was lost due to aggressive link building/anchor text with PBN companies like authority link network/linkVana.

    I am one of those people that refined their PBN strategy and found out ways to make them even more private. I have sites (personal and client) that are currently powered by a few PBN websites of mine. The rank tracking of the keywords for these sites go back to 2014 and I have never had any penalty to any of the sites since then. I have a theory that still stands true today, as long as the number of links going to a specific page are under a certain threshold, Google considers those pages/sites mom-and-pop businesses in the penalty filter skips over them. So what I did was to build the list amount of links needed with the exact anchor text I wanted to rank for using the most powerful available PBN domains available to me. This way I got the benefit of exact match link with very powerful link juice. The usual quality over quantity.

    But using PBN successfully comes with having the right experience and knowledge on how to go about this. Stuff like hosting sites on different IP/hosting companies, using fake name generator to create personas for whois ecc.

    I still have active domains my PBN network, but these days, even I have found myself going more towards natural website creation/content with minimal link building. I have moved more towards using internal links within the site and this is really helping. My moto now is “Wikipedia the s***” out of all my pages (link internally from all posts to as many other posts I can link to).

    Also, it looks like Google is seriously favouring quantity of content on site. My long-form content quickly outranks what is available out there beating even more established domain names in most cases.

    I create the content updating it constantly to increase the word count and then simply wait. I have noticed that the positions I needed links to acquire before are slowly coming even without links as long as the content is useful and well optimised. The other benefit of this is the longtail keyword traffic which surpasses the traffic of single targeted keywords.

    Obviously, there are some things we will never be able to rank for without adequate backlinks so correct and safe link building skill is always needed.

    Anyway, it’s nice to see you guys active again on the podcast and am happy Perrin bounced back from his loss. I’d like to keep in touch with you guys as fellow marketers, after all, this is one of the loneliest carriers out there :)

    Take care and keep it up.

    Roberto

    PS: dictating this with a speech recognition software so apologies for any mistakes.

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