Are we browsing hidden tailwinds?

I used to work for LivingDirect, an internet retailer. I started with the business in 2001, when I was an undergraduate in college. Tech companies were falling like flies. The dot-com bust was real.

But LivingDirect survived. It is because we worked like a real company. We offered compact appliances, and we followed closely old-school company rules: Purchase a product for a particular amount, sell it for more, and keep your expenses .

Times were lean in 2001. With so many businesses failing, many people believed ecommerce was just a fad. We knew it was here to stay, however.

And from 2001 until 2008, times were good. I presumed we were smarter than everybody. Many so-called pundits believed the bust proved that dot-com businesses were bad. We knew better, or we thought we knew better.

But 2008 rolled around, and we understood that times could get tough for us too.

What happened?

We were surfing three significant tailwinds and had a substantial business advantage that we took for granted.

Internet adoption

The first tailwind was U.S. internet adoption. In 2000, 52 percent of U.S. adults used the internet. In 2008, that number reached 74 percent. Thus the amount of customers that we could sell to through the internet increased by thousands of people in only a couple years. This made it much easier to sell more goods — every year millions of people became possible clients.

After 2008, the amount of adults in the U.S. who used the net continued to climb. However, it wasn’t the rapid growth of the late 1990s and the early 2000s.

Broadband

The next tailwind was closely linked to the first: broadband adoption. It was crucial to the success of ecommerce. Imagine waiting minutes for one image to download. It’s difficult to sell a product if a client can’t see it.

In the early 2000s, sales on the weekend were reduced. The reason was simple: Many people didn’t have broadband in their property. They had to wait for Monday to get products online using their company’s broadband connection!

From 2000 to 2008, home broadband went from 1 percent of U.S. adults to 57 percent. Earnings at LivingDirect benefited. After 2008, weekends generated actual earnings.

Housing boom

The last tailwind for LivingDirect was industry specific. We sold mostly appliances. There was a housing boom from 2000 to 2008, fueled by easy lending practices. This was great for a business selling appliances. New houses, condos, and apartments needed refrigerators.

But then the bubble burst. And the simple growth dried up. Fewer houses were constructed, and the adoption of net in general and broadband especially grew more slowly.

We lived, and, after a recalibration, even thrived. But that simple growth had passed.

Moreover, since the real estate expansion was supported by poor lending practices, credit became much tougher. This hurt ustoo. We’d funded our growth with an ever-expanding credit line.

Need more money? Call the bank, and our line was extended. It worked every time. Until 2008.

In 2008, the lender called us. It reduced our credit line. That was tough. Butagain, we recalibrated and lived. A number of our opponents did not.

We didn’t recognize all those 3 tailwinds at the moment. We thought we were smarter than everybody else. But when the tailwinds slowed, we endured. We had to work harder for our expansion.

Hidden tailwinds

The lesson I took from this was that tailwinds are amazing! I search for them whenever I could. But I try to see them for what they are: temporary boosts.

By way of instance, once I began FringeSport, the CrossFit movement was in full swing. Times were good. If we offered a good barbell and rubber weight plates, then customers would beat a path to our door.

But beginning in 2013, the movement started to plateau. This made a shake-up from the competitive landscape. Some of our competitors went out of business.

The survivors — like us — were hardened by the shift.

I knew the change was coming. I just didn’t know when. When the CrossFit tailwind died down, we pivoted our business model.

Probably we are all surfing some tailwinds. We simply don’t know what they are and if they will go away.

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