My Startup has 30 Days to Live

Through a series of unfortunate events, I took a bootstrapped (and profitable) startup onto the VC rocket ship. Now it's crashing into the ground. Hard.

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Behind the scenes:

https://twitter.com/gozmike/status/1378161938165817353?s=21

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Redemption and Resurrection

🚀 

Years ago, one of my investors told me that the life choice I was making when I was setting forth on my startup journey would change me forever. It would make others think I was reckless. It would make me feel dangerous, capable and ready for action.

After writing my last post here, I’ve been in the shadows. From the shadows of the startup ecosystem I built a team, then product, and it grew and grew and grew.

I’m building something I love, with people that I love, for all the right reasons. This time, I’m going to win.

I won’t self-promote here. I just want you all to know that there is indeed life after a startup death. There is redemption. You too will survive and you too will enjoy the ride even more the second time around.

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“It’s not the critic who counts, not the man who points out how the strong man stumbles or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena; whose face is marred by dust and sweat and blood, who strives valiantly, who errs, who comes short again and again, because there is no effort without error and shortcoming; Who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in worthy causes; who at best knows in the end triumph of high achievement and who at the worst, if he fails, at least fails while daring greatly”

Roosevelt

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Epilogue

In two days, I begin anew in a senior management role, though firmly outside the startup ecosystem. I’m thrilled to have a clean slate and happy to be so employable after such a colossal fuck up. Though, the learnings were indeed real and have made me a better man.

The past month has been a torrent of emotions, a series of lows, each lower than the last as I retreated into a shell, neglected my health and came to terms with our only chance at a strategic acquihire ending with a shitty skype chat where we were told we just weren’t good enough to work with the successful valley startup in our space. It was a blow to the work we did over the last two years as well as to those who had invested in us as people, whether financially or emotionally.

We have been threatened with legal action due to our gradual shut down, we had a support organization breach contract and tell us, “just give up, do you really want to fight this”, and have been up close and personal with the true filthy face of the world that on the outside celebrates failure but in reality treats those that are suffering through failure inhumanely, because they can.

It’s over. But you’ll never know. The service continues to run, but communication is slowing down. It’ll continue to slow down gradually, until you get annoyed and lose interest. Churning away to the next big thing to hit tech crunch. Which hopefully, will have a fate better than ours.

I’m not going to reveal my identity, because it does you all a great disservice. Let these words and these memories resonate (or not) not because of who I am but because of who we are. At some point in your life, entrepreneur or not, you will fail and do so spectacularly.

You’re not alone. It’s going to hurt more than anything you’ve ever felt before. It will try to destroy you.

But it won’t.

Thank you, everyone. For your words of support, your introduction, and spirit of perseverance. I am forever grateful that your voices helped me through this awful experience.

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But the hands of one of the gentlemen were laid on K.'s throat, while the other pushed the knife deep into his heart and twisted it there, twice. As his eyesight failed, K. saw the two gentlemen cheek by cheek, close in front of his face, watching the result. "Like a dog!" he said, it was as if the shame of it should outlive him.

Franz Kafka, The Trial

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The Importance of Heart

I've often heard that in our final moments, our life starts to flash before our eyes. I'm still not sure whether this is a fictional construct that has become ubiquitous or some neurological effect. However, I do know that over the last 24 days I feel like I've experienced a lifetime of trials, failures, successes and emotions as I came to terms with the fate of my startup.

I am The Blerch

When I first sought catharsis through this blog I felt completely and utterly alone. I always knew that statistically this outcome was the most likely and the prospect of failing to execute on my vision due to an externality didn't frighten me. What tore me apart that in the middle of the night was the responsibility I felt toward people who had shared in my vision and took part in clarifying it and building it with me.

What would failure mean for them? Would their careers really recover from the sacrifices they made chasing this dream? Would failure of a business sever friendships and relationships the way the reading of a will can tear a family apart?

The Musketeers

Paralyzed by my worries, I had forgotten one important thing about the team I had built. It had heart. 

I was careful not to build a team of mercenaries who toiled for riches or fame. I had passed on hiring great engineers that lacked humility and thought their github profiles made up for it. Instead, I hired nice people who worked ridiculously hard and got things done. And they did, over and over again.

So when I called a meeting and gave everyone a long, hard look at our financials. I was the only one with the quiver of sadness in my voice. My team stepped up, re-affirmed their alignment with our shared vision and made a ton of sacrifices to ensure we can continue executing it. 

This passion is what being elite is all about. These are people that can independently step up and save anyone or anything when the outlook looks grim. These people are not employees. They're not co-founders. They're humans. Great humans.

Going Big or Going Home

We didn't go big, and looking back on it all, it was clear to me that we almost always wanted to go home. We just knew that we couldn't really do what we wanted to do alone. Not if we wanted it to really matter.

Of all the meetings I've had this past month, only one man has been able to understand the importance of my vision because he shares it. He's successful, but gets like I do, that it can't be measured in dollars or power. His mission is one my team believes in and I wouldn't have had the chance to connect with him if it wasn't for the intervention of someone I admire. I'm blessed to have been able to find this connection now, before it was too late.

My team now has a chance to live on in some way, the mechanics of which really don't matter to any of us. What does matter is that I know that we are among others whose motivations stem from the same place as our own. This kind of alignment is rare and is the only way that I could be so hopeful that my team will now be able to do the best work it ever has. I don't know what will happen over the next few weeks, but I do know that I'm not scared anymore.

It's gonna be alright.

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Downshifting

The past 2 weeks have been filled with reflection about the fate of my startup and my team. I've opened up the throttle and worked to find a solution. We've trimmed our fat, doubled down on working any source of cash we have while we explore the potential of a much loved pivot. A mental exercise that is closer to masturbation as it keeps my team motivated and forward looking in a situation that is almost certainly doomed. We're frantically trying to shovel ourselves out of this mess while looking toward an oasis that is likely just a mirage.    Lately, as we paddle furiously beneath the surface of our death pool, I keep looking back at all the personal sacrifices I made over the past two years. The sacrifices that most founder make and that nobody really talks about.    Everyone puts in intense work, blood, sweat and tears. Many BRO-EO's talk about how important this is and boast about what they've given up on their path to success (and many more boast about what they've given up without realizing their fate will be the same as mine)    Being Absently There    I can't count how much advice I've gotten on work life balance. You can try time management schemes, forcibly limit your working hours, and even tear yourself away from your mac for time disconnected. The thing is, none of this works for a founder. In my case, it's because of a serious emotional attachment to my work.    I make it a point to tear myself away and play. Whether it be through a really long run, working on my home or interacting with family. I can (usually) put my phone away and go out into the world. The thing is, everything seems colored. Runs that should be meditative and focused on how your body feels as it knocks back mile after mile are instead spent strategizing a biz dev deal. Housework slows do a snail pace as you vacuum the same square foot dozens of times, lost in thought. Family time is the worst. You're present, but not really present. You hear what's spoken, and get really good at following the discussion, smiling when you need to smile. You're not really listening though. You're not really there.    There's nothing as alienating as having a child come to you with excitement in their eyes, sharing a story with you, and realizing after he's done that you don't remember a thing he told you about despite having laughed and expressed wonder about his tale.    Forgetting what "Success" Means    When we started this business and noted our conditions for success, we listed the obvious ones, "Social Change", "An exit that gives us 'Fuck you' money", "Becoming an integral part of the lives of millions"    Give me a fucking break.    These goals are awesome, I still want to live my life in a way that improves society in some way. I want to make my contribution and have it matter. Looking back at that list, I can't believe I ever considered those things to be indicators of success.    Success isn't about fame, wealth or disruption. When I look to the most successful man I have met, he's barely earned a million dollars over the course of his long life. He's always punched a clock of some sort. He lived responsibly and frugally, always saving for a rainy day that never seemed to come.     His secret? He loved. He loved his wife. He loved his parents. He loved his children. His grandchildren. He believed in them when others wouldn't. He loved his kids that went astray. He's my grandfather. Today, everyone he has touched is passing their love on to others in their lives.     That's what success is. Want to really disrupt the world? Do your part to make its inhabitants better people.

An Expensive Hobby (or How I learned to stop worrying and love indentured servitude)    We worked hard to keep our funding announcement from the press even though it did make the rounds indirectly. Old colleagues and acquaintances who had laughed at my startup dream before had suddenly come out of the woodwork and tried to connect with me.     Venture funding and a C-level title - I must be on my way to buying a boat right? The truth is, from a personal perspective, this startup has caused me to bleed my savings and affect my personal financial goal. There's a quiet pressure from the board to take a microscopic salary. For the most part, I agree with this as it ensures that founders are incentivized to grow the value of the equity they hold while freeing capital to pay key team members.    However, despite the fact that I understand why I'm making a pittance, each day that I spend at this salary is putting me closer to being in debt.    I'm stretching each dollar further than I ever have. I'm worried about actually starting a family of my own since I don't have means to support them comfortably (either financially or emotionally).     I'm a trooper though, because after all, if we get acquired for anything near our seed-round's valuation my mortgage will be paid and I can afford to procreate. It's gonna happen, isn't it?   

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"You see if you don't take money, they can't tell you what to do kid." -Bill Cunningham

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The #Hustle

I wish I could write about how I capitalized on a once-in-a-lifetime moment, using it to find some way to save my team and this company. I wish I could tell you about how I begged and pleaded my way to a soft landing, allowing my team to bring their awesome talent at building and creating to a company that would really be able to make these talents shine.

Instead, I’m writing about the latest in my personal stream of fuck ups. As much as I’ve written about accepting the 30-day prognosis, I really don’t want to. My desire to find a safe landing is offset by the desire to stay true to who I am and what we were out to solve. We made some bad decisions along the way but there is something here, I just wish we had the time to figure out what it would be. I also wish I could tell how much time I’d need, how much it would cost, and how I’d make it work. If I knew, then I’d have a real plan.

How do you fail with dignity when people depend on you?

For the past 2 years, it seems that all i’ve been doing is selling dreams. Sometimes, the hunt felt incredible, other times it left me drained and beaten. Nothing was more thrilling than selling my dream to myself to build up the courage to look my boss in the eye and tell him that I’m leaving (and stare back as he threatened to ensure that I'll never work in the industry again if I needed to), or selling our product to early clients and the press that gave us the liquidity and reputation we needed to get noticed. Every time I heard “No", I tried twice as hard and it usually resulted in a close.

When we raised our seed round, I spent months pitching, pitching and pitching again. We played along through coy games over email and LinkedIn as investors tried to establish negotiating leverage for themselves through their communication patterns. Intros, recon, sizing up and an over abundance of assholes were my day to day. At night, my wife would tell me how this was changing me, we were fighting more then, a lot more. Despite having lived through and participated in M&A and financings before as an employee of a BigCo., I had begun to think that this is how the world really worked. That it was normal to be strung along with smiles and to string others along the same way. These were some of the darkest times for me and the ones that created the greatest rift in my marraige. Thus, when we closed our round I was elated and ready to do what I do best.

Same shit, just more shares on the table

That darkness I felt then is back now as I work towards this acquihire. Once again, we’re being courted by men who use an abundance of designer hair products. Men who’ve seemingly forgotten the struggle and are intent on toying with their prey. Both those that have approached us and those who we’ve approached have acted similarly, circling our bleeding body in the water, perhaps to sadistically toy with us. Though likely, they’re doing what I did when I last was involved in an M&A - waiting until the lights go out before looting.

In the meantime, we are plugging away and keeping the ship afloat. Making ridiculous sacrifices as we try to play a game of chicken with a much larger and apparently much meaner adversary.

So, how do you fail with dignity when you’re responsible for a team of talented, educated, and accomplished builders?

You sell them to whoever is kind enough to be the first who takes your company out back and shoots it.

Dignified, isn’t it?

Yet these days, it’s what I pray for.

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Please note that your bank advises that the debit for your company’s payroll was not funded for due to a shortfall of X159.24 XXX If this was a bank error we will require a letter stating this at the time of resolution. As a result of this transaction, we will be unable to process any further documents or payrolls for this control, or any related controls, until a wire transfer is received to cover this indebtedness. Funds must be wired in the amount of the above payroll to the following within 24 hours and email or fax bank wire confirmation. Please note - wired funds are the only payment accepted.

Peanuts, but sobering when you're trying to keep the ship afloat.

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Entrepreneurs, not investors, kill startups

Every decision that I've made throughout this startup journey has been made with sound mind and a desire to do something that mattered. Some of the decisions, I made without asking for help. Others were made after consulting people who've been in my shoes before. Sometimes, I took a contrarian course. Other times, I followed the herd and kept my head down. 

Venture capital can create one big principal agent problem, and accelerators can just make this worse

There are some mentors that have inspired me throughout my career and have followed me through this startup. They don't have a financial interest but instead treat it as a labor of love. They've helped me add flair to my pitch, understand my cash flow and even think about crossing the chasm.

At the accelerator, I took mentorship from people who had a financial stake in my company and held it in the same esteem as those who really cared about my success on a personal level. These investors saw me as one element to be controlled in a risk management equation, ensuring that the company would embark on a path most likely to lead to a massive return.

In hindsight, the advice wasn't really tailored to my company and our dilemmas, but instead was meant to guide us toward swinging for the fences by hitting a fastball, instead of waiting until the bases were loaded to give it our best shot. It was teaching me to be an opportunist rather than a visionary, since this was the most likely the path to a clean-cut, well understood growth trajectory. After all, this is what successful venture-backed companies do, right?

What bothers me most is that I lost my head, ignored my training and didn't stick to my guns

I had the power to reject these suggestions, at the risk of being labeled as un-coachable, and do as I pleased. Somehow, I thought that I could try to disrupt an industry but couldn't challenge the thinking of these smart men who had taken our startup under their wing. These men never put a gun to my head, never threatened me into making the decisions I did. I just didn't challenge them.

I don't blame my investors for any of this. After all, they're completely incentivized to give the advice they did and push us into maximizing their return through applying the patterns they've seen successful in other verticals. I just didn't act accordingly. My job was to manage market demand, our products and our investors. I definitely fucked up at least 2 of the 3 in some way.

Perhaps most telling is that to this day, some of our investors don't follow our twitter accounts. These are people who have paid cash for shares in our startup, dispense the occasional advice, and can't be bothered to keep up with 140 character updates about our products and what the founders are up to.

If I didn't respect myself as an entrepreneur, why should they give a shit?

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It wasn't the account balance

It wasn't a failed pivot. It wasn't a fight. It wasn't a sudden change in life situation. It wasn't bad advice that was blindly followed. In fact, it's really hard to pin down what it was that made me recognize the prognosis and end the self-delusion.

I knew the moment that I was out of moves

I realized that even if I had a longer runway, and some awesome bridge-loan was on the table, I could not accept it with a clear conscience. I had burnt so much of it already, searching for that repeatable, scalable business model that made so much sense on a lean canvas and in customer interviews but that failed to materialize in any significant way. How could I shuffle around sticky-notes on a whiteboard and unlock the secret to runaway growth?

When you're burning cash, your moves narrow every day you're not actively opening up the playing field

I like to console myself by thinking that if I had just plotted the metrics that really mattered I would have seen this coming. That I focussed on vanity metrics because it brought accolades and funding and didn't see the canary struggling to breathe.

The truth is, I did see the metrics. I reported my concerns to the "board" (whatever this looks like in a seed-stage startup) and to our investors. However, when I look back on these reports, I see that I was so used to crafting a positive, hopeful story that i continued to do so when I really should have been honest with myself. I was always one deal away from hitting the targets I missed last month. Trying so desperately to stay on track that I forgot that the rails were leading me to a cliff.

What now?

The 20 minutes I've spent doing this each day have been the most calming moments I've had in some time, moments where I can detach and write something that isn't tied to a business or content-marketing ploy. This is clarity, or as close to clarity as I've been in recent memory.

We've made some personal sacrifices to get our startup off the ground. Yesterday, we made some even bigger ones to postpone the layoffs for a little longer. Our prognosis doesn't change, but the team stays together just a little longer, hopefully long enough for us to make things right.

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We're killing it, bro

One of the first things you learn as an entrepreneur is that on some level, you're only as good as your pitch. The accelerators reinforce this by teaching you the art of storytelling, a skill that helps an investor sign a term sheet as much as it helps the father of a young child decide to take a pay cut to be part of something that's amazing.

You learn to lie, elaborately.

Of course, it's only lying if you don't believe it's true right? We set the stage for greatness and then scurry away to make it happen so that the moment someone looks under the hood, they see the gears of technology spinning away and not the emptiness of yet another slide deck. This is what dreaming is all about, and it's one way to push ourselves to be better than we thought we can actually be.

I'm still dreaming.

I never dreamt of riches and fame when I made the decision to start this business. I dreamt of building something that would shake things up and improve the web. Yesterday was the day, I finally stopped believing I could do this within the confines of my startup and accepted my 30-day prognosis.

As I look out at the sunrise this morning, my dreams of building something that mattered have been replaced by a dream of doing right towards those who have trusted me through this journey and walked the road with me. A road I couldn't have walked alone. 

I'm going to save my team.

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In 30 days, my startup will be be dead

Almost 2 years ago today, I quit my day job and started building something. After months of customer development, discussions with my wife about my plans, savings and sleepless nights, I finally decided to take the plunge.

I'm glad I did

That day I quit my job marked the beginning of an epic roller coaster ride. One that saw me hit the top of TechCrunch, hire employees and become a rising star in the technology world. Glowing in our newfound success and ramen-riches, we got an offer that seemed to be the key to making it huge. We were offered a spot in a very well known accelerator.

They say accelerators speed up success and failure, in our case, all it sped up was our ability to play the startup game

The day we set foot into the doors of the accelerator, we had a business that DHH would be proud of. Bootstrapped, lean and already providing (in a small way at least) for the needs of my family and that of my co-founder. Over the next 3 months, our initial desire to not raise a seed round was dismissed and we were thoroughly convinced that we had to continue on the VC rocket-ship in order to matter to anyone. My reluctance to do this was met by scoffs and dismissals from many others in the accelerator cohort (most of which have since gone on to fail hard) as well as by the mentors and investors who had offered their time, network and resources to help us succeed. This is where we made the first in a series of many mistakes

We listened to our investors

They were proven entrepreneurs that had made millions (sometimes nefariously...) and they believed in us. If only we would:

"Make feature X free"

"Stop focussing on revenue, someone else will pay the bills"

"Grow $VANITY_METRIC so you can show a hockey stick at demo day and look good"

"Cut out that pesky client that generates 80% of your revenue, they're a distraction on the road to executing $OUR_BIG_VISION"

We drank the Kool-Aid and went all-in. By the time demo day came around, we had cheques being written and were all over the press. Still, I had this nagging feeling eating away at me. That nagging feeling was disbelief.

I didn't believe the shit I was selling investors. This was not the company I put my life on the line to build.

We raised our round, closing up early so we can get back to work and stop fucking around on endless pitches and breakfast run-arounds. Product after product hit the market and found traction, but not the million-user strong kind of traction that would make us matter. My team was still motivated though, firing on all cylinders building these apps that they loved. Despite this, I found myself sitting at my desk, afraid, alone and overwhelmed. 

I built a team that I love. I didn't build a team that can lead.

I really love my co-founder. It's an enduring bromance that will last a lifetime. He's a talented executor, supportive listener and I trust him entirely. However, he left me alone in the cold. He didn't mean to do this, he didn't even realize he did. I became the guy who would "do-it-all". Biz Dev, check. Product Management, check. Support, check. Accounting, check. PR, check. Ad Copy, check. Development Lead, check. While he took complete ownership over design (and really excelling at it). 

I'm overwhelmed, stretched so thin and unable to do a really good job at any of my duties. I don't sleep nearly enough and honestly think the only thing that keeps my health and my marriage intact is my running. 

When I built this team, I didn't build it with generalists and with people who could jump into any area of the business and get shit done. Instead, I built it with quality-minded perfectionists who build beautiful things. These people have their place, but not as early founders unless they can hustle. 

Thus, in many ways, when my startup fails, I can clearly say that I failed since behind the scenes I'm responsible for much of what the world sees and how the gears of this (albeit tiny) organization turn. 

I don't know what happens next

I made the decision to start this blog in the middle of the night last night while lying in bed next to my sleeping wife. Just one of the many people I will have disappointed due to this failure. (However, undoubtedly one of the few that will still love and support me afterward). This week, I need to speak to the other founder and fire our first employee before he leaves on a planned vacation. He's a good developer, but I won't fucking make payroll next week if I don't clear him and his severance out of the company.

I'm scared.