A couple of years ago I spent $1.3 million on a new business, and lost it all. Let me tell you my $1.3 million lesson.

Don’t spend $1.3 million on an Internet business.

There. You’ve learned it! Seriously, though, there’s a bit more to that very expensive lesson, one that cost me my life’s savings and very nearly my marriage.  The complete lesson is a syllogism: a chain of statements connected by logic. Here it is in full.

1. People spend lots of money for all kinds of things on the Internet. And by a lot, I mean hundreds of billions of dollars every year.
2. You can spend a lot of money trying to market something people aren’t sure they need, but you aren’t guaranteed success.
3. People buy when you sell something they’re desperate for.
4. You don’t need to do much marketing when people are desperate for something.
5. Therefore… sell what people are already desperate for.

I lost my shirt selling something people weren’t desperate for. It was a classified site that was superior to Craigslist in every way. Guess what. People aren’t desperate for an improved Craigslist. Sure, if you ask, they say they’d like one. But they aren’t desperate.

How do you find out what people are desperate for in the eBay world? One way is to learn what searches are most common. Another way is to see what sellers are most successful. You can find both at eBay Pulse.

Here’s a bonus lesson many of you will ignore. It is so frustratingly, maddeningly simple that it makes Yoda sound like Shakespeare. The lesson is this: Sell what other people are successful selling. Here, let me repeat it. I think maybe you got distracted for a second.

Sell what other people are successful selling.

Ignore this lesson at your peril. I bet you think the trick is to sell a brand new product into a brand new market that you have created. Sure! This definitely works! Like maybe once in every 30 billion tries, or for pharmaceutical companies who can spend $1 billion developing a new drug and another $200 million marketing it. Inventing a new product or market won’t work for you. It is the path to heartbreak.

I have been a careful watcher of Microsoft for a quarter century, and Microsoft is one of the most successful companies ever. One of the criticisms leveled most frequently at them is that they only steal ideas from other companies, that they don’t invent their own products. Now, this is demonstrably untrue. I can name half a dozen innovations that came out of Microsoft. However, it is true that all their most successful products were indeed improvements on existing ideas. Bill Gates is way smarter than you, and here’s something he knew in his early 20s: let someone else do market research. He knew the pioneers are the ones with arrows in their backs.

Don’t invent a new market, at least not to begin with. Understand what’s selling well, and start there.

See? I just saved you $1.3 million.