How Steven Guo knows a business idea is worth pursuing

Steven Guo launched his first business when he was 12 — “basically by accident,” he says.

That summer, he developed a Minecraft server and sold in-game perks to players. He ended up making $10,000 within a few months.

While he admits he “blew basically all of my money” trying to start a game development company right after, the early lesson kickstarted Guo’s passion for entrepreneurship.

In 2022, Guo sold one of his first businesses, a jewelry brand that brought in over $2 million in revenue within a year. The 24-year-old now owns and runs several e-commerce ventures set to bring in a combined $1.7 million this year.

Guo has experienced plenty of failures along with his successes over the last 12 years. Here are the biggest lessons he’s learned.

Guo says the most successful brands he’s started live at the intersection of two passionate audiences. You have to offer a product or service that solves a key problem for both audiences.

For example, one of his businesses sells premium car covers with to people with luxury cars.

“We are serving the audience that loves to protect their car and also the audience who wants to show off their car at the same time,” Guo says. “By combining these two interests and making a really unique car cover, we can appeal to a much more passionate audience.”

Another one of his businesses sells K-pop inspired merch to fans who enjoy fashion.

“I’m always looking for unique insights into different passionate audiences to see if I can come up with a solution to solve their problems,” Guo says.

It’s a crucial combination to stand out in e-commerce, he adds: “Online business is definitely competitive, but if you’re able to find a unique angle or some sort of way to stand out from the crowd, that’s how you can really win big.”

Guo says blowing his money on his failed game development company early on taught him a valuable lesson: “Marketing is extremely important for any business,” he says.

“One thing that I wish I knew earlier about running a business is that the product isn’t necessarily everything,” he says. “You have to figure out how you’re going to go to market and how you’re going to get your product out to your customers, because without that, you don’t really have a business.”

Moving on from his early mistakes, Guo became obsessed with learning about marketing through high school and went on to study business economics in college at University of California, Irvine.

Guo doesn’t shy away from making mistakes in business: “I really think failure is part of the process to success,” he says. “I’ve launched countless e-commerce brands that have failed. I don’t even remember how many have failed.”

The important thing, he says, is that you learn from previous failures and apply those lessons to your next idea. When he launched a business selling fidget spinners in high school, he went all in, “ordering inventory to my house, spamming subreddits and sending products to YouTubers for unboxing,” Guo says. “This hustle gave me traction and sales, but it wasn’t sustainable.”

When he started another business selling toys during college, he knew he needed a scalable approach. Guo partnered with a third-party logistics company in China to handle shipping and focused his attention on the advertising side of things using Facebooks ads. “This time, I was able to take the business much further,” he says.

It’s also a good idea to build the prospect of failure into your business, and even your personal finances. “I know that business isn’t stable,” Guo says. “Because of that, I developed a much more frugal mentality when it comes to saving money, because there’s always ups and downs in business, and I want to make sure I have enough cash to weather the storm.”

Guo’s earnings have fluctuated over the years, but he’s now on track to pay himself $254,000 this year. He keeps about $15,000 in his bank accounts and regularly contributes to his brokerage accounts (mostly invested in index funds) and maxes out his Roth IRA. Earlier in 2024, he moved to Bali from Southern California and enjoys a nice lifestyle at “a fraction of the cost.”

Ultimately, he says, “all you need is one business to work, and that can change your entire life.”

Want to earn more money at work? Take CNBC’s new online course How to Negotiate a Higher Salary. Expert instructors will teach you the skills you need to get a bigger paycheck, including how to prepare and build your confidence, what to do and say, and how to craft a counteroffer. Register now and use coupon code EARLYBIRD for an introductory discount of 50% off through Nov. 26, 2024.