Reflecting on My Failure to Build a Billion-Dollar Company • Hacker News Board

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

#341

Post by netwanderer3 » Fri, Feb 08, 2019, 5:32 AM UTC

Seriously can any company in this world even sustain a 20% monthly growth rate? That seems like an impossible target to achieve and set you up for failure right from the beginning.

I have come across Gumroad a number of times as a customer and unfortunately some of the products sold through there were often either low quality or grossly overpriced. After numerous occasions, eventually any products that use Gumroad would immediately appear as a turn off for me. This was just my personal experience.

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

#342

Post by 18nleung » Fri, Feb 08, 2019, 5:37 AM UTC

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 probably at the tail end of the generation that grew up with Flash games and I have to say Kongregate was great! I loved playing Warlords: Call to Arms. Thanks for your work.

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

#343

Post by jumpingdeeps » Fri, Feb 08, 2019, 5:38 AM UTC

bluquark wrote: post #294

It seems to me the acquihire option was rather summarily dismissed in this post, and I’m not sure why. It would’ve been better for employees and investors, and the customers at worst would’ve gotten a clean, slow wind-down with time to find alternatives. The idea that large companies are horrible places to work and where good products go to die is another stereotype spread by VCs to convince people to go hard into bi…

Agree--definitely a better outcome for all the stakeholders, including Salil (given the opportunity cost of building a lifestyle business). It didn't even have to be an acquihire. He had enough of a product and/or business that a buyer with the right strategic market need for it would have bought the company for more than x per developer.

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

#344

Post by dwaltrip » Fri, Feb 08, 2019, 5:41 AM UTC

robryan wrote: post #318

FiberBundle wrote: post #250

Earlier quoted context omitted.

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 work…

The long-term impact of any human activity is so much more than what is written in a history book somewhere. A history book is an enormously compressed, somewhat distorted depiction of human experience. Only a very small sliver of the actual fiber of human culture, achievement, and experience across time is recorded in this way. Yet all of these things are still happening, and they form the substrate upon which the events that are actually written down can take place.

To use your example of the Manhattan project: only 10 people may be remembered in books, but they certainly would have never completed the project by themselves. The contributions of those other thousands of individuals was vital to the project's success. If they didn't exist, it's not a guarantee that you could have replaced all of them -- the project may have simply failed.

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

#345

Post by sawyerjhood » Fri, Feb 08, 2019, 5:43 AM UTC

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…

Thank you for making Kongregate, it was a huge part of my childhood!

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

#346

Post by bdibs » Fri, Feb 08, 2019, 5:53 AM UTC

netwanderer3 wrote: post #341

Seriously can any company in this world even sustain a 20% monthly growth rate? That seems like an impossible target to achieve and set you up for failure right from the beginning. I have come across Gumroad a number of times as a customer and unfortunately some of the products sold through there were often either low quality or grossly overpriced. After numerous occasions, eventually any products that use Gumroad wo…

Spending $2 to make $1 with VC money is a pretty easy way to boost growth and see numbers like those.

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

#347

Post by pmatos » Fri, Feb 08, 2019, 7:40 AM UTC

dwaltrip wrote: post #207

FiberBundle wrote: post #194

Earlier quoted context omitted.

Intentionally being provocative here, but by that logic, why does your effect on other people matter? You are unlikely to leave a lasting legacy, and the generation you do affect, will die as well.

> 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…

> 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 real impact that doesn't necessarily diminish to zero after we die.

What you do in life, echoes in eternity.

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

#348

Post by apatters » Fri, Feb 08, 2019, 8:09 AM UTC

goatherders wrote: post #340

adwn wrote: post #334

Earlier quoted context omitted.

> People addicted to Startup Porn GREATLY underestimate the value of a business that generates a million dollars a year. Annual sales of $1M does not mean "generating a million dollars a year". In some industries, those $1M in sales might be as low as $30k to $50k in earnings (though it would probably be more for a software company).

Semantics aside, I'll say it again: people addicted to Startup Porn GREATLY underestimate the value of a business that generates a million dollars a year. Even if the earnings are 5% or 3% or even 1% ....getting someone to give you that much money for something you are selling is a lot harder than most people realize. Whether it's a million widgets at one dollar each or one widget at a million dollars, that's a LOT o…

The business world is vast and diverse so generalizations are tricky, but as an example, the combined profit and owner compensation on an owner-operated service business with a $1M annual turnover can be 25-30%. The VC model would put this all back into growth (plus more) and try to go for broke. The mom and pop model might try to live frugally and sock away as much of that annual $250K as possible for 10 hard working years, then sell the business for a modest multiple of revenue. With a relatively low risk business strategy, this puts mom and pop in the top 5% of American households for the duration of running the business and probably higher in retirement. (Yes, software and other giants have eaten a lot of these businesses in the US, but they're still around.)

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

#349

Post by jondubois » Fri, Feb 08, 2019, 8:13 AM UTC

austenallred wrote: post #316

jondubois wrote: post #247

Earlier quoted context omitted.

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

I think that cause and effect reinforce each other but I think that social connections and capital are stronger forces.

Following the money is the most popular overarching trend. I know this because I used to not follow the money at all and it was a big financial mistake for me.

I've worked on many trends that were not well capitalized and not given due attention. Especially in open source; there are so many great solutions which are ignored completely. When there is no money, 99% of people leave; the ones that stay are the smartest, most critical-thinking type of people but they're not the kinds of people who can create hype and drive trends towards newsworthy goals because news only cares about money.

I work in cryptocurrency now (after a decade of free open source work) and I can attest that it's not the same kind of people.

A product without capital almost never gets attention. Capital without a product is what 99% of successful ICOs are. To some extent this is also true for many startups too.

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

#350

Post by brazzy » Fri, Feb 08, 2019, 9:55 AM UTC

sytelus wrote: post #313

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 i…

But when VCs are criticized for obsessing over hyper-growth, we're not really talking about $300K/yr businesses. We're talking about $5M/yr businesses that are forced to try and become $500M/yr businesses or go bust, rather than stabilizing at a lower level.