Reflecting on My Failure to Build a Billion-Dollar Company • Hacker News Board

Re: Reflecting on My Failure to Build a Billion-Dollar Company

#121

Post by wheredTheyGo » Thu, Feb 07, 2019, 6:23 PM UTC

Cool story! Makes me think I should write my own up someday.

However, one thing I find odd. The story talks about the creators and how important they are. But when I go to gumroad.com looking to see all these creators, I see how to sign up as a creator, but don't actually find the pages of other creators. Where are they all? After reading the article, I don't get how the business works, I guess. The article led me to believe it was similar to Etsy where creators sell their wares. Is that not the case here?

Re: Reflecting on My Failure to Build a Billion-Dollar Company

#122

Post by ryanSrich » Thu, Feb 07, 2019, 6:23 PM UTC

AznHisoka wrote: post #4

I wasn't interested in the emotional story behind this. But I did resonate with 1 line in particular here: "It doesn’t matter how amazing your product is, or how fast you ship features. The market you’re in will determine most of your growth." This is so true, in my experience. You hit a roadblock in recurring revenue, not because your product doesn't have enough features, or your team sucks, but simply: your market…

Scaling to a billion dollar company in that market was certainly attainable. Patreon started two years after Gumroad and now look where they are. Gumroad had a movers first advantage - so I really disagree with the quote. Had they continued to push feature development and tweak PMF they could have been a billion dollar company.

Don't take that as a slight to Gumroad either. Building a profitable business from almost going under and now generating close to $1m in annual profits is an incredible feat. But I do disagree with the point that the market wasn't ready (as clearly demonstrated by the success of others).

Re: Reflecting on My Failure to Build a Billion-Dollar Company

#123

Post by dawhizkid » Thu, Feb 07, 2019, 6:23 PM UTC

chosenbreed37 wrote: post #38

dawhizkid wrote: post #28

Earlier quoted context omitted.

You are vastly overestimating what even an early employee (esp a jr one) gets at a unicorn. Not that it wouldn't be substantial today, but nothing close to 1-2% of the entire value of the company.

> You are vastly overestimating what even an early employee (esp a jr one) gets at a unicorn. Not that it wouldn't be substantial today, but nothing close to 1-2% of the entire value of the company. Mmm...based on the valuation even 0.1% would equate to $10 million...not bad ;-)

you'd probably get around .1% as an early jr person. assuming a 4 year vest period, that .1% will have been diluted to maybe .05%, so assuming a $10b valuation it comes out to $5m. Still not bad, but a far cry from $200m.

Re: Reflecting on My Failure to Build a Billion-Dollar Company

#124

Post by crispyporkbites » Thu, Feb 07, 2019, 6:24 PM UTC

sahillavingia wrote: post #3

sixQuarks wrote: post #2

Ouch, number 2 employee at Pinterest - a $10 billion company that’s about to go public this year. He probably would have been worth an easy 100-200 million.

I prefer not to do the math.

It's crazy that you care about the money, being in your mid-20s with a company pulling in 60k USD net/month puts you squarely in the pretty much unlimited money category of the world.

Re: Reflecting on My Failure to Build a Billion-Dollar Company

#125

Post by WilliamEdward » Thu, Feb 07, 2019, 6:24 PM UTC

The bigger, separate issue, is that billion dollar companies fit a certain mold, not one you should ever strive for to be honest. Just do a quick manual analysis of the top companies of the world and you will pick up patterns in them that Gumroad would never have had.

Re: Reflecting on My Failure to Build a Billion-Dollar Company

#126

Post by lbj » Thu, Feb 07, 2019, 6:28 PM UTC

Reading about a 19 year old kid, grinding through that incredible ordeal is just awe inspiring. I think his constant re-focusing on creating value for creators and employees first has been his guardrail against total failure in toughest of times - I'm glad to see he powered through.

Re: Reflecting on My Failure to Build a Billion-Dollar Company

#127

Post by benatkin » Thu, Feb 07, 2019, 6:28 PM UTC

themagician wrote: post #77

lancesells wrote: post #69

I've always liked Gumroad as a product and service but this line kind of bothers me: > There is, of course, the $178,000,000 we have sent to creators This money wasn't sent to creators. They sold products worth $178M + Gumroad fees through the service. The creators made the products, marketed the products, acquired the customers, etc. When I use Paypal to sell something they aren't "sending me money".

You could say the same thing about Uber, Lyft, Airbnb, Etsy, TaskRabbit, etc.. When you sit down and think about it you start to realize just how “temporary” all these so-called unicorns are, as they are just middleware services with no real differentiating benefits other than size and brand recognition and maybe some vague “guarantee” to the customer. You’ve got to get big fast, because what you actually do is easil…

Uber and Lyft are middlemen, but because they interface directly with the consumer, they also create demand. I deleted my apps when I realized that I was spending a hundred bucks a month compared with twenty bucks a month if I had used cabs, and getting little real benefit out of it. It just feels so convenient, but the fares add up quickly. I bet if they sent weekly or monthly summaries people would use them less.

Re: Reflecting on My Failure to Build a Billion-Dollar Company

#128

Post by lquist » Thu, Feb 07, 2019, 6:28 PM UTC

On the one hand I applaud KPCB for giving up their interest in a founder friendly way, but this also leaves a bad taste in my mouth and seems a bit “Heads I win, Tails you lose” from Sahil’s pov. The VC investment let him build a fully fledged product capable of breaking out. But it didn’t and he still got to keep the company without much liquidation preference. This is an example of a true VC subsidy.

Re: Reflecting on My Failure to Build a Billion-Dollar Company

#129

Post by [deleted] » Thu, Feb 07, 2019, 6:33 PM UTC

eanzenberg wrote: post #86

austenallred wrote: post #76

Earlier quoted context omitted.

Based on the revenue and growth rates of Gumroad my guess is Sahil will make more money from it than he would have at Pinterest. It will take longer but it will be on his terms.

How is that even remotely possible, unless he got no equity in pinterest? They are ~10b IPO'ing this year. Even 1 basis point of pinterest is worth more than what Gumroad brought in.

[deleted]

Re: Reflecting on My Failure to Build a Billion-Dollar Company

#130

Post by mrskitch » Thu, Feb 07, 2019, 6:34 PM UTC

After having founded a non-VC backed company (browserless.io), my anecdotal experience is that most potential creators out there need more encouragement to stand out on their own two feet. The maker market has huge potential, but there are so many barriers to entry that it does stifle growth.

It takes almost a perfect storm of potential, communication, determination and timing to birth a successful company/product. I think it's just what our "startup" environment tends to favor, and how the ecosystem just works, for better or worse. If we had more companies like Gumroad, Atlas, and IndieHackers I think that there'd be a proliferation of growth in the creator space. Even just getting decent health insurance as a single-person LLC/company is a frightening thing, and that's just _one_ obstacle!

I also think that, once more and more folks awake to the idea that you don't need VC funding to get something off the ground (and that it's really an achilles heel in many regards), that more products will start getting out there. It's also a conflict of interest many times: they want a return on their capital, whereas you want that _and_ to make something of value. Sure, VC is necessary in many regards, but it also isn't in a lot of cases.

I'm really happy that Gumroad stuck it out and is fighting for creators. Just the notion of them _not_ closing for financial reasons is comforting to me. Means that they cared that much about their users and the bigger picture, rather than just money.