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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

#321

Post by apatters »

sahillavingia wrote: post #13

Hey, #1 on Hacker News! I don't think that's happened since...I launched Gumroad back in 2011: https://news.ycombinator.com/item?id=2406614 Thanks HN for being a part of my journey!

I was reading an article recently about managing small business growth. Not tech or startup related, just a good old fashioned blog post from an accountant who said hey you've started a business and it's growing, here are some things to consider. (I've lost the link unfortunately.)

One point this guy made was that a lot of businesses develop additional overheads and need a lot of cash to grow after they reach around $1M in annual sales. Going from $1M->$10M is a big step which is hard to self-fund, there is some risk involved, and the owner's mindset needs to change.

I couldn't help but think, hey a consistent annual $1M in sales is quite an achievement by itself. If you own most or all of the equity in that company, financially you're doing far better than most people (OK, maybe less true if you run in certain Bay Area circles). This is a perspective you won't hear from VCs, but if you hit that milestone, who says you have to go higher?

Maybe it's OK for a founder to just stop at some point, especially if they don't enjoy what they're doing or they've been under-investing in other areas of their life.

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

#322

Post by Terretta »

rossdavidh wrote: post #107

Not that you asked, but as a word of advice from a random person on the internet: if you do go the open-source it like Wordpress route, it would be good if you made an easy path back in to your product. Some people who start off self-hosting WP, Prestashop, or whatever, then decide after a few years they would rather have somebody else do it. Oddly, it is often not a marketing focus for the company that makes the sof…

I’m curious: why open source at all in this particular business model at this particular stage?

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

#323

Post by ulfw »

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…

20% growth per month in itself has such a non-meaning. It really depends on where you are coming from.

If you start with 10 users in month 1 all you need is 90 users in month 12 to have 20% MoM growth. Well, that's doable.

If you start with a million though you need to have 9 million by the end of said year. Tougher to find 8 MM new users than 80, don't you think?

If you're someone like Facebook with a billion users, good luck finding 9 Billion after 12 months of growth ;)

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

#324

Post by johnvanatta »

eeeeeeeeeeeee wrote: post #255
bdcravens wrote: post #37

> The next year was not fun: I shrunk the company from twenty employees to five. We struggled to find a new tenant for our $25,000/month office and focused all of our remaining resources on launching a premium service. Ouch. Even at 20 employees, $25k a month is insane when you have no profit. I'm sure it was a pretty office, the kind that attracts good developers in a competitive market.

I thought the same thing. There are tons of people all over the world, or even spread out in America, that want to work on an interesting idea with interesting people. The office really does not matter. It feels like so much of the VC funding goes to creating buzz and cool-factor (cool office, free lunch, potential lucrative exit), which can obviously be great marketing, but it really limits your runway and obviously…

Ehh. It doesn't matter up until the point it does. I quit my last job partly because we moved from a nice area in a dumpy building to an awful space (no natural light) for ~10 months. My health suffered, I felt depleted, and the entire team was on edge. How easy to commute to ($$) and how nice it is are definitely things I consider. Free food gets an outsized return too, if we're talking >100k salaries--I'd bet $4000 in free food gets more goodwill than a 5% pay bump.

Agree that remote should be more widely used, especially in software.

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

#325

Post by giis »

sahillavingia wrote: post #13

Hey, #1 on Hacker News! I don't think that's happened since...I launched Gumroad back in 2011: https://news.ycombinator.com/item?id=2406614 Thanks HN for being a part of my journey!

I had terrible experience with Gumroad (more info: https://news.ycombinator.com/item?id=13139000) and even pinged you on quora: https://qr.ae/TUrSmp No response what so ever. I still believe Gumroad provides one of arrogant customer support I ever received.

If you have 'startup' with so many unhappy customer - its expected to fail. https://gumroad.pissedconsumer.com/review.html Focus more on being open, transparent and being kind. Good luck!

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

#327

Post by sytelus »

sahillavingia wrote: post #13

Hey, #1 on Hacker News! I don't think that's happened since...I launched Gumroad back in 2011: https://news.ycombinator.com/item?id=2406614 Thanks HN for being a part of my journey!

Just wondering how much of your decision for not starting new venture could be because of burn out. You can always hire your one person replacement to do customer service, fix occasional bugs etc so you move on. Especially if you hunt for good freelancer offshore/remote, you probably can do it with more devs and cheaply. This I wouldn’t recommend for spinning new products but for maintaining existing mature enough products it works out fairly well and lifestyle-level revenue is good enough to do this. Shouldn’t this allow you to move on to new ventures?

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

#329

Post by goatherders »

apatters wrote: post #321
sahillavingia wrote: post #13

Hey, #1 on Hacker News! I don't think that's happened since...I launched Gumroad back in 2011: https://news.ycombinator.com/item?id=2406614 Thanks HN for being a part of my journey!

I was reading an article recently about managing small business growth. Not tech or startup related, just a good old fashioned blog post from an accountant who said hey you've started a business and it's growing, here are some things to consider. (I've lost the link unfortunately.) One point this guy made was that a lot of businesses develop additional overheads and need a lot of cash to grow after they reach around…

People addicted to Startup Porn GREATLY underestimate the value of a business that generates a million dollars a year.

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

#330

Post by treis »

ryanSrich wrote: post #122
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…

>. Patreon started two years after Gumroad and now look where they are.

Two years away from buying back shares for $1 from their VCs?

There's this whole swath of the internet that can support thousands of small businesses that's being slashed and burned by VCs in search of a unicorn. Gumroad and Patreon are both perfect examples. They are both good ideas that are well executed. They are not, however, companies that can extract tens of millions to hundreds of millions in profit a year. They really should be 20-30 employee type companies making a steady couple of million in profit.

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