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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

#301

Post by taneq »

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…

This seems to be a HN thing. Most places, a 'startup' is just someone trying to bootstrap a business into profitability so that, well, they have a profitable business. If you end up with a business that pays your wages, you win. If you end up with a business that pays your wages without you having to work full time (or at all) then you really win.

On HN, a "startup" is a moonshot backed by venture capital, and is seen as a failure if it doesn't achieve a massive valuation and take over the world. You read about businesses with "mere" million-dollar-plus revenues being shut down because they're "unsuccessful". It's insane.

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

#302

Post by umeshunni »

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.

And the return on venture capital during those slow periods are also presumably lower (due to recessions etc)

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

#304

Post by umeshunni »

anongraddebt wrote: post #233
ilamont wrote: post #210

Earlier quoted context omitted.

Most businesses should strive to be self-sustaining. And if they make obscene amounts of money, all the power to them. What I dislike is A) the view from startup land that there are only two types of new businesses, "startups" and everything else ("lifestyle") B) and the "everything else" category is somehow inferior or even some sort of hobby or vanity project. Sahil used the term to describe his own company, and at…

I agree about the unjustifiable dichotomy much of the tech scene holds between "startups" and everything else (as you describe it). I think it's funny, though, that non-tech industry leaders critiqued Bezos in the past for running a 'lifestyle business' when in fact Amazon was always a technology company and has become dominant and successful to boot.

Not to mention that Amazon has returned more to investors over the last 10 years than many startups and Unicorns have.

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

#305

Post by gnicholas »

inuhj wrote: post #256
ilamont wrote: post #210

Earlier quoted context omitted.

Most businesses should strive to be self-sustaining. And if they make obscene amounts of money, all the power to them. What I dislike is A) the view from startup land that there are only two types of new businesses, "startups" and everything else ("lifestyle") B) and the "everything else" category is somehow inferior or even some sort of hobby or vanity project. Sahil used the term to describe his own company, and at…

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.

> a company that does 780k/yr (65k/mo12mo)*

$65k is the gross profit, which appears to be before operating expenses are accounted for. He doesn't list the net profit in the tweet (as he does elsewhere in the post). In the other mention, net profit was just under 1/4 of gross profit. So he's probably netting somewhere around $15-25k/mo, depending on how much of his costs are fixed/variable. Still good, but considering how many millions went into the business, not great.

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

#306

Post by fourstar »

jim-greer wrote: post #116

My experience with Kongregate was different, but I did feel some of the same things. We became a vehicle for many indie game creators to make a living, which I'm very proud of. In our case we also had a sale that was very profitable for the founders and early employees, and also profitable for our investors. But the weird thing is that if our VC investors had known at the outset that they would have a 3x return on th…

> I’m an angel now

You actually label yourself that vs. an investor?

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

#307

Post by graeme »

jstandard wrote: post #257
graeme wrote: post #249

Earlier quoted context omitted.

He's talking about switching from vc rocketship to bootstrapped. In that context the pejorative makes sense: he's describing how he felt at the time. Furthes, he ran this "lifestyle" business with outside investors. He's written a nuanced, heartfelt essay, and this comment seems to have missed all of that to nitpick on a word.

Agree the essay was a great read. I didn't see anything to suggest the OP missed that fact so much as had a reaction to a specific part of the essay and wished to discuss it. Being a part of the SV startup ecosystem myself, I also see the term "lifestyle business" used as a soft-perjorative for "not ambitious enough".

That's exactly how OP was using it though, with full awareness. OP's mindset at the time was "I failed: I meant to start a billion dollar business, and I only have a crummy lifestyle business"

They now have come around and appreciate their success. Their use of "lifestyle business" was chosen to convey their own negative attitude at the time.

The comment I replied to totally missed that the author wasn't critcizing their own business! They just felt badly about it a few years ago. See the part of the comment where they praise gumroad.

A more self aware comment would have merely decried the prevailing VC attitude that led the founder to feel bad. Instead the commentor seems to think the founder needs cheering up and convincing.

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

#308

Post by lostctown »

wiwillia wrote: post #281
randall wrote: post #182

Earlier quoted context omitted.

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…

But then how do I sell my mvp startup newsletter to all the people not capable of actually building a quality product? /s

In all seriousness, it is comical how often people apply revisionist explanations for the rise of certain companies. Its simple really. Great product + big market. You must have both, no exceptions.

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

#309

Post by sytelus »

This is very inspiring and kudos to author for being so transparent to share the experiences.

However I really wonder if he actually did any analysis on market sizing and if there is something preventing them to capture the share. I visited Gumroad website, explored it around and even signed up as user and still I have very little clue how exactly does it work. Yes, I can see it "helps" me sell something but I absolutely don't see anything available for purchase. There are no sign of marketplace. So where am I selling? How does the listing look like? What is exactly going on here? If myself as a geek can't figure this out within 30 seconds of landing, there is little hope for non-tech customers.

As an uninformed person in this domain, I think this market is huge. There are dozens of websites like Etsy enabling creators everyday and doing pretty well. However on those websites I know how exactly things works within a minute of encounter. On Gumroad, I can spend same time to encounter those annoying marketing jumbotrones that doesn't go in to any specifics. Being a lifestyle business is great and I love it but sometimes lack of growth is few simple issues like above and one should probably not confuse it with topping out market.

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