Well, that didn't work
Now, I understand some people would dream to be in that position. But at the time, I just felt trapped. I couldn’t stop, but there was only so much I could do as an army of one.
Capital Thinking • Issue #266 • View online
In 2011 I left my job as the second employee at Pinterest–before I vested any of my stock–to work on what I thought would be my life’s work.
Gumroad would become a billion-dollar company, with hundreds of employees. It would IPO, and I would work on it until I died. Something like that.
Needless to say, that didn’t happen.
Reflecting on My Failure to Build a Billion-Dollar Company
From Medium-Startups, by Sahil Lavingia:
Now, it may look like I am in an enviable position, running a profitable, growing, and low-maintenance software business with customers who adore us. But for years, I considered myself a failure.
At my lowest point, I had to lay off 75% of my company, including many of my best friends. I had failed.
I no longer feel shame in the path I took to get to where I am today. It took me years to realize that I was misguided from the outset. This is that journey, from the beginning.
A weekend project turned VC-backed startup
The idea behind Gumroad was simple: Creators and others should be able to sell their products directly to their audiences with quick, simple links. No need for a storefront.
I built Gumroad that weekend, and launched it early Monday morning on Hacker News. The reaction exceeded my grandest aspirations. Over 52,000 people checked it out on the first day.
Later that year, I left my job as the second employee at Pinterest–before I vested any of my stock–to turn it into what I thought would become my life’s work.
Almost immediately, I raised $1.1M from an all-star cast of angel investors and venture capital firms, including Max Levchin, Chris Sacca, Ron Conway, Naval Ravikant, Collaborative Fund, Accel Partners, and First Round Capital.
A few months later, in May 2012, we raised $7M more. Mike Abbott from Kleiner Perkins Caufield & Byers (KPCB), a top-tier VC firm, led the round.
I was on top of the world. I was just 19, a solo founder, with over $8M in the bank and three employees. And the world was starting to take note.
We grew the team. We stayed focused on our product. The monthly numbers started to climb. And then, at some point, they didn’t.
To keep the product alive, I laid off 75% of my company–including many of my best friends. It really sucked. But I told myself things would be fine: The product would continue to grow and no one far from the company would ever find out.
Then TechCrunch published Layoffs Hit Gumroad As The E-Commerce Startup Restructures. All of a sudden my failure was public.
I spent the week ignoring my support network and answering our customers’ concerns, many of whom relied on us to power their business and wanted to know if they should look for an alternative after reading the news; some of our favorite, most successful creators left. (It hurt, but I don’t blame them for trying to minimize the risk in their own businesses.)
So what went wrong, and when?
Every month of less than 20% growth should have been a red flag. Seeking the non-binary
For years, my only metric of success was building a billion dollar company. Now, I realize that was a terrible goal. It’s completely arbitrary, and doesn’t accurately reflect impact.
I’m not making an excuse or pretending that I didn’t fail. I’m not pretending that it feels good. Even though everyone knows that the failure rate in startups, especially venture-funded ones, is super high, it still sucks when you do.
I failed, but I also succeeded at many other things. We turned $10 million of investor capital into $178 million and counting for creators. And without a fundraising goal coming up, we are just focused on building the best product we can for them.
I consider myself “successful” now. Not exactly in the way I intended, though I think it counts. Where did my binary focus on building a billion-dollar company come from in the first place?
There’s nothing wrong with trying to build the next Microsoft.
I personally don’t think billionaires are evil. And there’s a part of me that wishes I was still on that path.
But for better or worse, I’m on this one now. This has been my path to not building a billion-dollar company. There are many like it, but this one is mine.
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