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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

#311

Post by cecilpl2 »

eanzenberg wrote: post #293
nostrademons wrote: post #290

Earlier quoted context omitted.

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.

That's timing though, historically I believe s&p yields 7% per year on average.

Assuming reinvested dividends, the S&P has returned 7% real, or 10% nominal over its lifetime.

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

#312

Post by robryan »

ilamont wrote: post #269
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. Are they, though? I have looked at the incoming classes of various startup accelerators over the years and see lots of niche-focused products and services that can never grow to anything more than a niche-focused product or service as described in their pitch decks. I'm not putting down those types of busi…

As far as YC goes, it seems that they are investing in companies they think might be able to dominate a niche in the hope that a few of them use that as a springboard to a much larger market.

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

#313

Post by sytelus »

holman wrote: post #11

Really love this post. My favorite line is: > Every month of less than 20% growth should have been a red flag. I think that's pretty insightful. 20% growth is great for a normal business, of course; for a VC-backed startup it can show some warning signs about future hard decisions you might have to face. I think there's certainly lots of discussion that has been had — and should be had — about "should I or shouldn't…

Let's run some numbers. Say you are VC putting in $1M in 100 companies. To your great luck all companies become self-sustaining lifestyle business. By definition, lifestyle business is making just enough for comfortable lifestyle of founder, so may be $300K/yr pre-tax. Let's say founder decides to give back 10% of $300K as return on investment. At that rate, it would take 33 years for VC to just recoup his original investment.

I wanted to illustrate this because it is necessary to understand why things are the way are. Lifestyle businesses is not viable for VC funding. You add on risk profile (i..e 80% of companies won't even become profitable) you get the only outcome that one or two super-hits needs to occur to cover for rest of the failures. Also remember that even with this strategy most VC funds are not even as profitable as S&P500 index.

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

#314

Post by austincheney »

ilamont wrote: post #196

I was basically alone. I didn’t have a team, nor an office. And San Francisco was full of startups raising gobs more money, building amazing teams, and shipping great products. Some of my friends became billionaires. Meanwhile, I had to run a “measly” lifestyle business. It wasn’t what I wanted to do, but I had to keep the ship from sinking. There's that term again, "lifestyle business." Uttered like a dirty word, wh…

Worse than the use of the term lifestyle business is his definition of success. Success is his placement relative to other people who become billionaires. He describes this several times. That is vanity rather than any sort of imperative or objective goal describing a business position.

To me vanity is a major red flag. That sort of self serving quality needs to describe the founder as somebody willing to ask for cash and drive necessary growth, but must not be a goal driving the business. The difference is that the qualities (appearance) of vanity are attainable early.

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

#315

Post by austenallred »

wolco wrote: post #275
austenallred wrote: post #211

Earlier quoted context omitted.

Both employees and founders vest. Founders own more of the company than employees, of course. The good news is anyone can start a company!

Agreed but if you choose to be an employee opt for higher salary over vested future value for better game theory results.

Unless the company is successful, in which case you should do the opposite

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

#316

Post by austenallred »

jondubois wrote: post #247
austenallred wrote: post #176

Earlier quoted context omitted.

Not sure that entirely follows; Gumroad may have existed whether VCs pumped money in or not, but I hear what you're saying. In a way every time you ride in an Uber or Lyft you're capitalizing on investors pumping cash into companies. Luckily the winners make enough to pay for all the losses of the losers.

I'm starting to think that you can't achieve anything these days unless you're riding some kind of well capitalized trend.

Or, alternatively, every trend will be well capitalized

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

#317

Post by ncmncm »

It was an interesting read until his admiration for Bill Gates soured it.

Besides milking the world of untold billions in unearned profits by illegally enforcing a monopoly on OSes, Gates personally held back progress in development of computer software by easily fifteen years. (Youngsters who never suffered Windows 9x might not know that Microsoft singlehandedly changed the meaning of "crashed" from "I need to restart my program" to "I need to re-install my OS".) It was only the explosion of smart phones that knocked his jackboot off the world's throat. Now he is putting drips and drabs into philanthropy to try to salvage his reputation.

Inspired by Bill Gates? No thanks.

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

#318

Post by robryan »

FiberBundle wrote: post #250
dwaltrip wrote: post #207

Earlier quoted context omitted.

> You are unlikely to leave a lasting legacy, and the generation you do affect, will die as well. By this logic, culture and society would die every generation, and have to be rebuilt from scratch each time. We all leave behind a "small" but far-reaching legacy that ripples out from our short lifetime. Each of the thousands of interactions we have with with other people and our general environment have a tiny but rea…

I completely agree that wanting to make a positive impact on the world is important, although, and I don't want to sound too nihilistic here, the actual magnitude of that will probably be small for most people, therefore I think that personal satisfaction in life should be important and isn't meaningless, which was what OP claimed and the reason why I asked that question.

Yeah small and quickly diminishing over time, outside of very close friends and direct descendants. For example how many fought in WW2? How many were in high level roles and instrumental to the conflict? How many would be thinking they were making a lasting impact on the world? And of those what small portion have pretty much a permanent place in the history books?

Even to pick a small part of it, 130,000 people worked on the Manhattan Project but a history of it that the average person would consume might name 10 key figures.

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

#320

Post by chillwaves »

Retra wrote: post #223
pathseeker wrote: post #213

Earlier quoted context omitted.

>Personal satisfaction doesn't matter once you're dead. Nothing matters to you once your dead. Other peoples' assessment of your life is irrelevant to you. I would rather live my life happy with my decisions (part of which is helping people because of my own morals) rather than helping a bunch of people in ways that make me miserable.

One wonders why you have those morals if they mean so little to you. And if you don't need to justify your behaviors to others, why are you trying to justify them to me?

It's called having a discussion. You felt like participating, why isn't the person you are replying to given the same courtesy?
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