Reflecting on My Failure to Build a Billion-Dollar Company

This article is now available directly on my website. I’d prefer you read it there!

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Failing in style

Let’s start with the numbers. This is our monthly processed volume, until the layoffs:

For the type of business we were trying to build, every month of less than 20 percent growth should have been a red flag.

In January 2015, after our final double-or-nothing hail-mary, our bank balance dipped below 18 months of runway. I told my 20-person team the road ahead would be a tough one. We didn’t have the numbers to raise a Series B, and we would have to work really hard over the next nine months to get even close. To that end, we deprioritized everything except features that would directly move the needle. Many were not core to our business, but we needed to try everything we could to get our monthly processed volume to where it needed to be.

Slim down or shut down?

Looking back, I’m glad we didn’t hit those numbers. If we’d doubled down, raised more money, and appeared in the headlines again, there would have been a very real possibility of even more spectacular failure.

  • Continue with a slimmed-down version of the company to aim for sustainability.
  • Position the company for an acquihire.
  • Gross profit: $17,000
  • Operating expenses: $364,000
  • Net profit: -$351,000
  • Gross profit: $42,000
  • Operating expenses: $32,000
  • Net profit: +$10,000

From skeleton crew to lifestyle business

It got worse from there.

For years, my only metric of success was building a billion-dollar company. Now, I realize that was a terrible goal.

I shut off the rest of the world. I didn’t tell my mom about the layoffs — she had to read the article and tweets herself to find out. My friends were worried, but I assured them I was neither depressed nor suicidal. I left San Francisco for long stretches at a time, thinking that some travel would give me adequate distance. It only made me more lonely.

New beginnings

Then one day, everything changed. Again. I’m wary about sharing this part of the story, because I don’t know if there is anything to learn from it. But it happened, so here it is.

Finding new forms of impact

The eight years I worked on Gumroad were full of personal ups and downs. There were months where I worked 16 hours a day, but there were also some months where I worked four hours a week. Here’s one way to picture that time:

Creating and capturing value

At a CEO Summit many years ago, my all-time hero, Bill Gates, took the stage. Someone asked him how he dealt with failing to capture so much value. Microsoft was huge, sure, but tiny compared to the total impact it has had on the world and on humanity.

Opening up about our financials

I’ve found other ways to create value, too. After the layoffs, I didn’t talk to anyone about Gumroad. Not even my mom. And after moving away from San Francisco, I felt pretty disconnected from the startup community.

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.

Founder and CEO, Gumroad