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My $0->$100M->$0 in 5 years story

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Re: My $0->$100M->$0 in 5 years story

#11

Post by raincom »

Lessons learned from that post:

(1) "I was told to hire a lot of people. Put fuel on the fire they said. Bring industry experts who can move the needle. All this BS you hear all day. All failed. I hired VPs and bloated my payroll. Ultimately I ended up with a bunch of highly paid employees who don’t know how to do anything but to “build and lead amazing teams.” Imagine you hire someone to scale an area and their solution is to divide that area into 5 sub areas and hire someone for each of them to figure it out, etc. that’s their solution."

(2) "I ended up focusing my efforts on hiring and ramping up those VPs and dealing with their dumb ideas instead of focusing on my 3 core tenants: build, sell, and deliver."

Re: My $0->$100M->$0 in 5 years story

#12

Post by benjaminwootton »

monero-xmr wrote: post #5

There’s a lot of information missing. All of his problems were caused by VC? Why did he raise VC if he had 7 figure revenue? 5 years explained in 6 paragraphs. I agree that hiring bigco people for a startup is a mistake, but otherwise you can’t learn anything here.

It’s a very common mistake in funded startups.

You think you need to bring the tenured exec in with all of the industry contacts, but they are often a terrible cultural fit or experienced in the last iteration of your industry. They also want to hire under them rather than work the tools themselves and do this bait and switch after you’ve hired them.

You are then stuck with high salaries for ineffective people or an expensive and disruptive exit.

VCs also seem to push these people onto you as they think that is what constitutes a real company and/or they want a nice gig for their friends.

Re: My $0->$100M->$0 in 5 years story

#13

Post by mdorazio »

1) How can you be in an "executive job at a FAANG" and not know this is how the VC model works?

2) > I hope this part is clear because it’s the crux of the misalignment between founders and VCs.

This is the crux of the misalignment between small business owners and VCs. The large majority of the startup founders I've met all have dreams of building a rocket ship, not of building a happy small business. If you're in the latter camp, as I have been several times, you usually know better than to take VC money.

Re: My $0->$100M->$0 in 5 years story

#15

Post by benjaminwootton »

djoldman wrote: post #8

Honest question: if you sell 50%, then why do what the VCs tell you to do? Beyond gaining some sort of reputation for not doing what your investors want, is there anything else?

It’s not worth taking VC if you aren’t going to put it to work.

And if you put it to work to any degree, you start growing and accruing costs.

You are then in a race against time for the next raise and you are off to the races.

Re: My $0->$100M->$0 in 5 years story

#16

Post by Waterluvian »

mdorazio wrote: post #13

1) How can you be in an "executive job at a FAANG" and not know this is how the VC model works? 2) > I hope this part is clear because it’s the crux of the misalignment between founders and VCs. This is the crux of the misalignment between small business owners and VCs. The large majority of the startup founders I've met all have dreams of building a rocket ship, not of building a happy small business. If you're in t…

Why would someone doing executive work at a massive and well-established corporation be expected to know how VC works?

Re: My $0->$100M->$0 in 5 years story

#17

Post by version_five »

I would have preferred to see this written as a blog post, there's nothing that requires anonymity imo if presented the right way, and it would make it more credible. As is it's believable and certainly reinforces stereotypes I have but it's not super helpful, as in it's just an outline of stuff people already think.

Re: My $0->$100M->$0 in 5 years story

#19

Post by game_the0ry »

raincom wrote: post #11

Lessons learned from that post: (1) "I was told to hire a lot of people. Put fuel on the fire they said. Bring industry experts who can move the needle. All this BS you hear all day. All failed. I hired VPs and bloated my payroll. Ultimately I ended up with a bunch of highly paid employees who don’t know how to do anything but to “build and lead amazing teams.” Imagine you hire someone to scale an area and their solu…

This is too real in big corp as well as the VC funded start up world.

A bunch of bourgeoisie over-educated idiots, usually with MBAs, who don't know how to do anything except take credit for work that other people do.

Re: My $0->$100M->$0 in 5 years story

#20

Post by renewiltord »

apodolny wrote: post #3

A little frustrated by the ambiguity of the $100M in the post. Is that capital raised, ARR, GMV? Makes a big difference in terms of understanding what kind of business they built.

I'd guess it's valuation. He raised once at $1M (F&F probably). Then raised. Then some time post-raise low 7-figs in revenue => $3-4M, and $10M in the bank. Raised $20M at $100M perhaps? Seems reasonable, 25x-30x revenue.

It makes sense. If he got there quick, his product was working, and it had a chance at gold. Ultimately, lots of ways for startup to fail and failing-to-scale is one of them.

Well, he knows there's PMF at a small market now. He can try again without the large raise if he wants to run a lifestyle business.

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