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Reflecting on My Failure to Build a Billion-Dollar Company

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

#281

Post by wiwillia »

randall wrote: post #182
theptip wrote: post #163

Earlier quoted context omitted.

Is your claim "for most companies the quality is already sufficient, and so it's not the limiting factor (even though it would be if the quality was insufficient)"? Or literally "the TAM matters, your app's quality doesn't"?

The prior. Now-a-days, the majority of developers can build a quality app since infrastructure and tooling (heroku etc) are widely available, that you can paper over most completely horrible / unacceptable experiences by limiting features early on. If you pick a huge market and have simply 1-2 compelling features, you can go from nothing to something within 90 days typically, and then use that to become unstoppable.

I'm not sure I agree that quality isn't a major driver of success.

Two counterpoints: - Shopify came in and dominated Magento and others via a much better quality product (later they built network effects with app store, but originally it was just an easier platform) - Slack came into a workplace communication space where there were (arguably) free alternatives in IRC and others and won with a better, simpler product.

I think product quality is extremely important in determining success. I think it was less important 10-15 years ago as the web was establishing itself, but today consumers expect a polished, feature-complete experience.

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

#282

Post by notatoad »

enraged_camel wrote: post #277
inuhj wrote: post #256

Earlier quoted context omitted.

Gumroad took 10.35MM in investment to build a company that does 780k/yr (65k/mo*12mo) in profit. The numbers don't work out to call that a success. If he bootstrapped and reached 780k/mo after 8 years of work that would be a successful lifestyle business and he should be absolutely proud. I'm absolutely not trying to be judgmental as I've succeeded and failed at businesses myself.

>>If he bootstrapped and reached 780k/mo after 8 years of work that would be a successful lifestyle business I find it difficult to call $10M/year a “lifestyle business.” To me, lifestyle business means a business that can support the owner in their lifestyle. So unless the owner spends millions of dollars every year...

I think the parent mistyped and meant $780k per year, not month. $780k/mo is an entirely different beast, and would be a success regardless of whether it were bootstrapped or had taken $10mm in capital.

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

#283

Post by marcus_holmes »

mindcrime wrote: post #267
Zanni wrote: post #254

Earlier quoted context omitted.

There's a legit distinction, though, between startups and other businesses - startups are designed to grow fast. [0] That doesn't mean they're better, but you have to know the difference or you're going to get yourself in trouble. Is a quarter-horse better than a camel? Yes, if you're trying to win a quarter-mile race; not so much if you're trying to survive in the desert. I think some of the disdain comes from legit…

There's a legit distinction, though, between startups and other businesses - startups are designed to grow fast. [0] I respect and admire pg as much as probably anybody on this board, but I still reject the idea that he has any particular standing to declare his subjective definition of "startup" to be "the" definition by fiat. I would argue that "startup" actually refers to "businesses that are designed to grow big"…

the definition I've used for years is "a startup is a business creating a new business model or service over the internet". Because there were so many people around me who were/are part of the startup scene, building businesses that were/are definitely "startups" and yet not focused exclusively on growth.

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

#284

Post by csa »

markdown wrote: post #265
Zanni wrote: post #254

Earlier quoted context omitted.

There's a legit distinction, though, between startups and other businesses - startups are designed to grow fast. [0] That doesn't mean they're better, but you have to know the difference or you're going to get yourself in trouble. Is a quarter-horse better than a camel? Yes, if you're trying to win a quarter-mile race; not so much if you're trying to survive in the desert. I think some of the disdain comes from legit…

> There's a legit distinction, though, between startups and other businesses - startups are designed to grow fast. Perhaps in the US, and probably in just a small part of the US. Everywhere else, a startup is just a new business.

So I think the point that many folks would make is that maybe we should call a new business a “new business” or a “small business” rather than a “startup”.

While I realize people don’t always like to use constraining labels, limiting the word “startup” to businesses that are aggressively seeking a rocket-ship trajectory actually strikes me as a useful convention.

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

#285

Post by aeriklawson »

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.

But would you trade the amount of time spent at Pinterest before IPO with the experience you gained at Gumroad? Tough call, given the professional and personal growth you gained from it.

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

#286

Post by galfarragem »

the_cat_kittles wrote: post #259
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.

who gives a fuck. i wish people would say this more, especially on this site. stop worshiping money. why am i saying this here, on what is a 50% get rich quick scheme site? i dont know... i somehow enjoy the downvotes. if you offered me 200 million to throw away a couple years of my life at pintrest, the thrill of saying "no" would far outweigh the benefit of being a sellout. only do stuff that is cool on its merits…

Paraphrasing (probably Nietzsche):

"There are only 3 kinds of people: the poor that wants to be rich, the rich that wants to continue being rich and the idealist, that using his ideals wants to be rich."

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

#287

Post by Aeolun »

eanzenberg wrote: post #276
inuhj wrote: post #256

Earlier quoted context omitted.

Gumroad took 10.35MM in investment to build a company that does 780k/yr (65k/mo*12mo) in profit. The numbers don't work out to call that a success. If he bootstrapped and reached 780k/mo after 8 years of work that would be a successful lifestyle business and he should be absolutely proud. I'm absolutely not trying to be judgmental as I've succeeded and failed at businesses myself.

That's actually not a bad return on investment (7.5% yearly)

And it doesn’t stop there. The money certainly isn’t vaporized as with a failed business.

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

#288

Post by inuhj »

eanzenberg wrote: post #276
inuhj wrote: post #256

Earlier quoted context omitted.

Gumroad took 10.35MM in investment to build a company that does 780k/yr (65k/mo*12mo) in profit. The numbers don't work out to call that a success. If he bootstrapped and reached 780k/mo after 8 years of work that would be a successful lifestyle business and he should be absolutely proud. I'm absolutely not trying to be judgmental as I've succeeded and failed at businesses myself.

That's actually not a bad return on investment (7.5% yearly)

It's not a good return on investment because the underlying asset hasn't appreciated 7.5%/yr some 8 years later. I am not a valuation expert but as a small business I'd estimate a 3x EBITDA placing the valuation at 2.34MM. The investors presumably owned a fraction of that.

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

#289

Post by jeremyjh »

eanzenberg wrote: post #276
inuhj wrote: post #256

Earlier quoted context omitted.

Gumroad took 10.35MM in investment to build a company that does 780k/yr (65k/mo*12mo) in profit. The numbers don't work out to call that a success. If he bootstrapped and reached 780k/mo after 8 years of work that would be a successful lifestyle business and he should be absolutely proud. I'm absolutely not trying to be judgmental as I've succeeded and failed at businesses myself.

That's actually not a bad return on investment (7.5% yearly)

Risk adjusted its a pretty poor return. Also you are completely ignoring the time value of money.

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

#290

Post by nostrademons »

eanzenberg wrote: post #276
inuhj wrote: post #256

Earlier quoted context omitted.

Gumroad took 10.35MM in investment to build a company that does 780k/yr (65k/mo*12mo) in profit. The numbers don't work out to call that a success. If he bootstrapped and reached 780k/mo after 8 years of work that would be a successful lifestyle business and he should be absolutely proud. I'm absolutely not trying to be judgmental as I've succeeded and failed at businesses myself.

That's actually not a bad return on investment (7.5% yearly)

There's a time value on that money. If you'd put $10M into an S&P 500 index fund in 2011, it'd be worth about $22M now, which first of all is a fair bit more than 7.5% and secondly is the denominator you're looking for to figure out percentage returns on capital now. The company wasn't making $780K/year in profit in 2011, it took 7 years to get there.
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