Reflecting on My Failure to Build a Billion-Dollar Company - <AUTHOR> https://medium.com/@shl/reflecting-on-my-failure-to-build-a-billion-dollar-company-b0c31d7db0e7 <comment><USER3> Hey, #1 on Hacker News! I don't think that's happened since...I launched Gumroad back in 2011:

[https://news.ycombinator.com/item?id=2406614](https://news.ycombinator.com/item?id=2406614)

Thanks HN for being a part of my journey!

<comment><USER4> I love your story Sahil, it is so true that people equate 'wealth' with 'success' but that is short sighted. If you step back and look at the big picture, you're on this planet for anywhere from 70 to 100 years, and at the end of that time there are two metrics, the number of people you helped and the amount of wealth you amassed and held on to, which number is a better representative of 'success'?

Working on things you enjoy, making a positive impact on people's lives, and raising a new generation to carry on where you left off, that is success.

Stay focused there and you might accidentally accumulate so much wealth you have to work at putting it to use helping people like Bill does!

<comment><USER5> > at the end of that time there are two metrics, the number of people you > helped and the amount of wealth you amassed and held on to, which number is > a better representative of 'success'?

Let's not forget personal satisfaction. I'm a little leery of putting the entire assessment of my life onto other people (even though if I was going to, I could do a lot worse than number of people helped).

Hopefully helping other people leads to some amount of personal satisfaction for most people, and they'll have a fairly good life and good impact on others by the end. :)

<comment><USER6> Personal satisfaction doesn't matter once you're dead. Those other things do. And your entire assessment of your life at that point _will_ be put onto other people.

With that said, optimizing for after you're dead might be selfish and reasonably desirable, but there's a lot to be said for optimizing for tomorrow instead. Life would be pretty pointless if none of us were supposed to optimize for some enjoyment while we're here.

<comment><USER7> 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.

<comment><USER8> > 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 real impact that doesn't necessarily diminish to zero after we die. The change that occurs then has a small domino effect on any other person or system that it touches. And so on and so forth :)

My life today is deeply affected by the concerted actions of billions of unknown individuals from centuries and millennia past in ways that I can't even begin to fathom. I'm grateful for some of those impacts. For other impacts less so, but I hope to contribute small changes for the benefit those who live in the untold distant future.

<comment><USER7> 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.

<comment><USER9> 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 worked on the Manhattan Project but a history of it that the average person would consume might name 10 key figures.

<comment><USER8> 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.

</comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER10> 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 I raise money?", but there still are plenty of companies and founders who will raise VC, and paying attention to those early warning signs are important if that's the choice you make. It's important to worry about it each month and each week rather than the two months surrounding the raise of your next round.

<comment><USER11> 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 investment.

I wanted to illustrate this because it is necessary to understand why things are the way are. Lifestyle businesses is not viable for VC funding. You add on risk profile (i..e 80% of companies won't even become profitable) you get the only outcome that one or two super-hits needs to occur to cover for rest of the failures. Also remember that even with this strategy most VC funds are not even as profitable as S&P500 index.

<comment><USER12> Yes, but hopefully your average founder will wise up to the following: The chances of _you_ being super successful, happy and content are much higher with a "lifestyle business" than a VC funded one.

Why?

Well, the biggest issue is that VCs can diversify (as you point out, have a lot of bets counting on a few successes), while founders can't.

I think for the vast, vast majority of people, there are greatly diminishing returns after a certain amount of money. That is, if you have a 1/10 chance of having a $10 million payout, vs a 1/1000 chance of a $100 million payout, I think most people would take the former. Put another way, most people are willing to take a good deal of risk for "fuck you" money, but fuck you money for most people is MUCH lower than what VCs expect with a unicorn.

Since VCs _do_ always need to swing for the fences, they invariable will say no to ideas that don't have a huge potential market. My belief is then that there are a number of "mid market" businesses, i.e. ones catering to smaller niches, that have a lot of potential but have lower competition than huge, winner-take-all type businesses.

<comment><USER13> > That is, if you have a 1/10 chance of having a $10 million payout, vs a > 1/1000 chance of a $100 million payout

1/10 chance of $10mil is higher expected value than 1/1000 of $100mil. Of course anybody sane will take the former and not the latter.

I think you'll find the tune different if the latter had been 1/1000 chance of $1 billion.

<comment><USER12> But again my whole point is that expected value is itself a very poor metric to use for this decision, _precisely_ because a founder doesn't get many "swings at bat" like a VC does. Even in the case where the expected value is the same, the fact that the _actual_ value leads to 0 for all but the very, very, very luckiest/skilled means you get St. Petersburg paradox-like results.

</comment></comment></comment></comment></comment><comment><USER14> I'm incredibly grateful for Gumroad - Lambda School (YC S17) wouldn't exist without it.

We threw up a my book on Gumroad because why not/it was easy, and now I believe we're sitting north of $100k in sales. I don't think we would have put it anywhere else - wasn't worth the effort. I often think about how important it is to remove even the slightest amount of friction as a result.

I also find the move from KPCB admirable. They gave up their interest in the company (it was a loss for them anyway) and allowed the company to flourish. Hats off for that.

<comment><USER15> It's interesting how Lambda School was able to capitalize on investors pumping cash into and hyping up Gumroad.

It's a smart move to capture some of that VC money without having to pitch anything to them.

<comment><USER14> Not sure that entirely follows; Gumroad may have existed whether VCs pumped money in or not, but I hear what you're saying.

In a way every time you ride in an Uber or Lyft you're capitalizing on investors pumping cash into companies.

Luckily the winners make enough to pay for all the losses of the losers.

<comment><USER15> I'm starting to think that you can't achieve anything these days unless you're riding some kind of well capitalized trend.

<comment><USER14> Or, alternatively, every trend will be well capitalized

<comment><USER15> 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.

</comment></comment></comment></comment></comment></comment><comment><USER16> _I was basically alone. I didn't have a team, nor an office. And San Francisco was full of startups raising gobs more money, building amazing teams, and shipping great products. Some of my friends became billionaires. Meanwhile, I had to run a "measly" lifestyle business. It wasn't what I wanted to do, but I had to keep the ship from sinking._

There's that term again, "lifestyle business." Uttered like a dirty word, when in fact Sahil has an actual product that many thousands of people use and _pay for_. I'm one of them.

Meanwhile, many startups aren't true businesses – they book no revenue, and they may not even have a sellable product. That's fine, because almost all businesses start with an idea or a dream or a need or pure desperation, and it's up to the founders to make it work. They may even need investment, too – sometimes a lot of it. And that's fine, too.

But when people from the startup world use the term "lifestyle business" to describe real businesses that aren't pure tech, have solo founders, don't take VC money, don't intend to scale to a billion users, or whatever other qualities are not worthy of investor consideration, I find it condescending and misguided. Some startups could actually learn a thing or two from the vendor who sells hot dogs in the park, the person who starts up a specialist marketing agency, the partnership that builds a ceramics factory, or the solo founder running a media distribution and sales platform. They have products or services to sell. They have customers. They book revenue, pay their employees and suppliers, and if they do things right, may even become really successful.

In short, people who run small businesses are not hobbyists or dilettantes. They're entrepreneurs doing real business selling something, often with limited capital and without the glamor or hype.

Kudos to Sahil for what he's accomplished. But for the love of Pete, please stop using the term "lifestyle business."

<comment><USER17> "lifestyle business" is really just a small business that works, is self- sustaining, and not overly bloated to attempt to make obscene amounts of $$$.

I feel like this is exactly what most companies should strive for. They'll make better decisions that way.

<comment><USER16> 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 one point felt shame about it, even though he had a _real business with real customers and real revenue_.

That's how twisted the mindset in startup land has become, where real business owners are supposed to feel shame, and "success" is based on as-yet unfulfilled promises and raising a round?

<comment><USER18> 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 growth startups trying to distance themselves from one-man "startups" that could be better categorized as micro-ISVs or side projects.

But there's definitely no shame to running a successful lifestyle business. The 37signals guys have been great at shifting that perspective.

[0] [http://www.paulgraham.com/growth.html](http://www.paulgraham.com/growth.html)

<comment><USER16> _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 businesses (or proto-businesses). I'm just pointing out that they don't have a high-growth profile or potential, the primary dividing line between "startups" and everything else dubbed "lifestyle" in investor circles.

<comment><USER19> 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.

</comment></comment></comment></comment></comment></comment><comment><USER20> > It doesn't matter how amazing your product is, or how fast you ship > features. The market you're in will determine most of your growth. For > better or worse, Gumroad grew at roughly the same rate almost every month > because that's how quickly the market determined we would grow.

This seems like a simplification, and perhaps overly fatalistic. A company's growth rate is a function with many parameters, and at most points, one parameter will be the limiting factor. An amazing product is (usually) a necessary, but not sufficient condition for rapid growth.

It sounds like Gumroad built a product that delighted their users, but there just wasn't a level of market demand to hit the growth numbers that they were hoping for. (Though I consider their end state a big success; being a unicorn isn't the only way to add value to your users' lives.)

In a different market, with enough pent up demand for the product, the story could have gone another way; "We kept on getting new users, but ultimately couldn't keep users because our product wasn't awesome enough."

<comment><USER21> Market determines your growth almost always. I have enough data points now to basically say this with enough certainty. Friendster is the countercase where the technology couldn't scale, and their execution was poor, and they focused on revenue at the expense of growth, but generally like... now-a-days with modern web stack market is basically all that matters.

<comment><USER20> Is your claim "for most companies the quality is already sufficient, and so it's not the limiting factor (even though it would be if the quality was insufficient)"? Or literally "the TAM matters, your app's quality doesn't"?

<comment><USER21> 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.

<comment><USER22> 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.

I think product quality is extremely important in determining success. I think it was less important 10-15 years ago as the web was establishing itself, but today consumers expect a polished, feature-complete experience.

<comment><USER23> 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.

</comment></comment></comment></comment></comment></comment><comment><USER24> I've always liked Gumroad as a product and service but this line kind of bothers me:

> There is, of course, the $178,000,000 we have sent to creators

This money wasn't sent to creators. They sold products worth $178M + Gumroad fees through the service. The creators made the products, marketed the products, acquired the customers, etc. When I use Paypal to sell something they aren't "sending me money".

<comment><USER25> You could say the same thing about Uber, Lyft, Airbnb, Etsy, TaskRabbit, etc..

When you sit down and think about it you start to realize just how "temporary" all these so-called unicorns are, as they are just middleware services with no real differentiating benefits other than size and brand recognition and maybe some vague "guarantee" to the customer. You've got to get big fast, because what you actually do is easily replicated.

<comment><USER26> > no real differentiating benefits other than size and brand recognition and > maybe some vague "guarantee" to the customer.

\- scale

\- brand

\- customer loyalty

that's a lot of differentiation. more then 99% of the businesses in the world and more than even many public companies.

(especially once you add the power gained from aggregating demand and supply which most of these companies have)

<comment><USER25> Most of the businesses in the world make a widget and sell that widget.

</comment></comment></comment></comment><comment> jim-greer 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 their money in three years, they probably wouldn't have made the investment. A 50% annual rate of return is not worth their time. That's not what their LPs are looking for.

The angels made more like 6.5x and put in less time - most of them would take that deal all day long. I'm an angel now, and I definitely would. So perhaps startups that need capital but aren't looking to be billion dollar companies should consider just raising a seed round from angels... The difficulty there is that angels do want an exit, not dividends from a profitable company that stays private forever.

<comment><USER27> > if our VC investors had known at the outset that they would have a 3x return > on their money in three years, they probably wouldn't have made the > investment.

Of course they would have made an investment.

Any guaranteed return above bank interest rate -- is appealing for investors.

Guaranteed return of 50%/year is an amazing investment opportunity.

What you probably meant is that if investors knew that the return cannot be more than 3x, but also has high probability of failure -- then the investors probably would not make the investment.

<comment> jim-greer Look at it this way. A VC fund has a finite number of investments to make. Typically a partner gets to say yes once or twice a year. They usually take a board seat and spend lots of time helping the company.

Knowing that many of those investments will be worthless, they want to maximize the number of shots they get towards a billion dollar company.

If 1/3 of their companies are a 3x return, and the rest become worthless, the fund has failed. They're all aiming for the one company that will deliver the big returns that offset all the failures (and the high fees they charge LPs.)

Seed stage investors are different. YC, for instance, spends much less time with each company, and therefore can take lots of shots.

Growth stage venture is different too. They aim to invest a few years before a company goes public, and are fine with a 3x-5x return. They are taking much less risk.

The VC model also creates a fundamental tension with the founder. Founders get one shot at a time. $50M exits represent life-changing money for them (as long as they didn't raise too much money.) VCs pressure them to take greater risks than are rational for the founder. This is why you want to look for VCs that will truly put the founder first. Or keep control of your board.

Joel Spolsky explained this well 15 years ago, so we knew about it going in and chose a founder-first VC firm.

Here's that post: [https://www.joelonsoftware.com/2003/06/03/fixing-venture- cap...](https://www.joelonsoftware.com/2003/06/03/fixing-venture-capital/)

Thoughtful VCs will do what's right for the founder. It's rational because their reputation matters so much when competing for investments. This has changed for the better since Joel's post.

</comment></comment></comment><comment><USER28> I struggle to see how this story is one of failure. A kid launched a business that is still going 8 years later. He learned that VC funding is a double edged sword and was able to shed some of that burden - buying them out for $1. In the beginning he speaks of building this thing and having it be his lifes work - which it may well be if he keeps going. And yet there was all this talk of being a billion dollar company and an IPO - which is actually as exit strategy. I was floored by the notion that _only_ 20 percent _monthly_ growth was a red flag. 'du fuk you people think you're doing? Launching a rocket? Oh right... SV, VC, etc...

In the end this guy learned a bunch of hard lessons about business, finance, and life. I hope he continues at least until he finds a new adventure, and stops calling it a failure. It may turn out to be exactly what he said he wanted in the beginning: "what I thought would be my life's work."

<comment><USER29> He "failed" to build a billion dollar company.

<comment><USER30> The most interesting thing about the setup premise, is that it should have a "yet" attached to it somewhere.

Unless something terrible has happened in the last few months, their recent November 2018 numbers indicate that at a continued reasonable rate of growth over another decade, they'll have a sizable business and a large number of creators utilizing it (which is one of his goals). It would be worth at least a hundred million dollars. If the growth spikes upward even a bit on average (maybe they garner more interest with scale or the market expands faster), it could get them to between a $500m and $1b valuation a decade out. Modest compounded growth with even a small kicker, from where they're already at, will produce a big outcome over time. So he'd be a sub 40 year old with an extremely valuable company and a lot of people that use what he created (and which I assume he owns a large part of at this juncture).

Given time and their history of slow but steady growth, Gum is more likely than not to produce a homerun. The continued growth over many years is a stellar signal that they're already winning as a business. You can get there slow or fast. The VCs want it fast, Sahil can afford to take his time, he's still quite young and Gum is _his_.

</comment></comment></comment><comment><USER31> I wasn't interested in the emotional story behind this. But I did resonate with 1 line in particular here: "It doesn't matter how amazing your product is, or how fast you ship features. The market you're in will determine most of your growth."

This is so true, in my experience. You hit a roadblock in recurring revenue, not because your product doesn't have enough features, or your team sucks, but simply: your market is smaller than you thought.

<comment><USER32> Scaling to a billion dollar company in that market was certainly attainable. Patreon started two years after Gumroad and now look where they are. Gumroad had a movers first advantage - so I really disagree with the quote. Had they continued to push feature development and tweak PMF they could have been a billion dollar company.

Don't take that as a slight to Gumroad either. Building a profitable business from almost going under and now generating close to $1m in annual profits is an incredible feat. But I do disagree with the point that the market wasn't ready (as clearly demonstrated by the success of others).

<comment><USER33> Patreon and Gumroad were different businesses for most of their histories. Gumroad was always a place to sell stuff and launch subscription services. Patreon is trying to pivot that way now with all their talk of membership businesses, but no one who uses it seems to see it that way.

That's why everyone was up in arms about the fee change in 2017. People tossing $1 here and there to people they liked were the foundation of everything. Membership businesses generally _start_ at $5 a month.

And Patreon isn't going to have much luck with it. There are _so_ many better options if someone just wants to set up a membership business. Memberful, which they bought, wasn't even one of the better options. It doesn't even handle anything other than plans, payments, and integrations with services that do the heavy lifting.

<comment><USER34> Any examples of other business that do what you mention at the end? Just curious what the "better" options are. I like to keep abreast of the underdogs.

<comment><USER33> Gumroad is the only one I've used. Others popped up over the years, but I didn't think to keep notes.

</comment></comment></comment></comment></comment><comment><USER35> Jesus this part sucks:

"In those nine months, when the whole team knew that we were fighting for our company's life, not a single person left Gumroad. From "this is gonna be hard," to "yep, turns out it was," every single person worked harder than ever."

Did everyone one of these people have significant equity in the company?

I'd expect people who love their jobs and who work on something crucial, such as researching new medicines or making more efficient batteries to want and be able to do this. No offense, but if this ultimatum was handed out and I wasn't vested like the top guys I'd bail.

<comment><USER36> If gumroad became a billion dollar company you'd be retiring on that 9 months of work with even a tiny bit of equity. I bet there are plenty of people that bailed out of google, facebook or other similarly positioned startups at that stage and regret it.

<comment><USER37> This is the type of reasoning that startups use to justify making employees work 60+ hour weeks for a tiny amount of equity and below-market pay. Most startups will not become billion dollar companies.

<comment><USER38> You are both right.

</comment></comment></comment></comment><comment><USER39> Sounds like the story of a young person who drank the VC cool-aid. The company should have been bootstrapped from the get-go... $25k/mo office, …doh.

Yep, easy to say as a greybeard and hindsight. But I remember Joel on Software articles on this subject circa 2000, so some information was out there.

Between the lines I feel a lot of self-punishment going on. Well, I'd _love_ to have $10k+ of "failure" coming in every month, with the satisfaction of helping the little guy/gal no less.

Perhaps you'd consider selling to someone who believes in the mission and hates dark patterns? I don't have a lot of capital laying around, but some, and perhaps something else could be arranged?

</comment><comment><USER40> Grateful to read such a personal and detailed post. I had a startup that failed myself, back in the long ago, and in retrospect I'm glad that if failed quickly and cleanly. I admire this alternate path though of working your way to a new equilibrium.

The offer from KPCB to let you off the hook for the venture financing is amazing. Is that a common thing to happen? I get why they just wanted to write it off and be done with it, but it still seems like a generous outcome. An undo button!

</comment><comment><USER41> On the one hand I applaud KPCB for giving up their interest in a founder friendly way, but this also leaves a bad taste in my mouth and seems a bit "Heads I win, Tails you lose" from Sahil's pov. The VC investment let him build a fully fledged product capable of breaking out. But it didn't and he still got to keep the company without much liquidation preference. This is an example of a true VC subsidy.

<comment> super-serial I wonder if an entrepreneur with less connections and not a part of YC would get that $1 buyout deal. I would think the default would be ousting the founder and selling the assets. Then the founder would be left with nothing. They'd have no lifestyle business, even though they could have had one if they never took VC.

<comment><USER42> If he only did a series A, I doubt he gave up enough control to get ousted.

<comment><USER43> _Looking back, I'm glad we didn't hit those numbers. If we doubled down, raised more money, and appeared in the headlines again, there was a very real possibility it would only lead to a more spectacular failure._

Hmmm, reading between the lines, you seem to have a point...

</comment></comment></comment></comment><comment><USER44> Ouch, number 2 employee at Pinterest - a $10 billion company that's about to go public this year.

He probably would have been worth an easy 100-200 million.

<comment><USER3> I prefer not to do the math.

<comment><USER36> It's crazy that you care about the money, being in your mid-20s with a company pulling in 60k USD net/month puts you squarely in the pretty much unlimited money category of the world.

<comment><USER45> "It's crazy that you care about the money..."

Did you read the article?

</comment></comment></comment></comment><comment><USER46> Refreshing. I'd like to see more "anti-survivor" articles so the survivor bias gets toned down.

<comment><USER47> Yep, I was braced for more failed-but-really-succeeded porn.

This is a great read, and clearly from the heart.

<comment><USER48> > was braced for more failed-but-really-succeeded porn.

Isn't that what this is though? Sure he failed to build a billion dollar business, but his business is still way more successful than most. Lots of people would certainly kill to attain this level of failure.

I certainly recognise failure is a very personal thing, but from the outside looking in this looks like a success overall, even though I'm sure it was completely gut wrenching along the way.

<comment><USER49> Kind of. Usually these trope-filled stories make a mountain out of some small setback, but this story genuinely feels like the company had some major setbacks.

</comment></comment></comment></comment><comment><USER11> 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.

<comment><USER50> I was thinking the same thing. I really enjoyed reading a candid perspective of the process, but think there's more that can be done.

You almost need a second page 'GumroadTunes' where I can browse all the products. I strongly suspect there is a lot I'd be interested in, but it isn't in one place. The website justifiably focusses on the product for creators, but since there are a lot of thinm, it also feels like you could be driving more traffic/sales to them, and by extension yourself.

Again though, thanks for the interesting read (and the comments too - <USER2> interesting to read).

</comment></comment><comment><USER51> Not that you asked, but as a word of advice from a random person on the internet: if you do go the open-source it like Wordpress route, it would be good if you made an easy path back in to your product. Some people who start off self-hosting WP, Prestashop, or whatever, then decide after a few years they would rather have somebody else do it. Oddly, it is often not a marketing focus for the company that makes the software. If I had a self-hosted, open- source Gumroad setup, and a couple years later wanted to pay someone else to host/manage it, I would want a clear and easy article on your website about how I could turn it over to you and pay you to do that.

<comment><USER52> I'm curious: why open source at all in this particular business model at this particular stage?

</comment></comment><comment><USER53> Nice story, but:

> It doesn't matter how amazing your product is, or how fast you ship > features. The market you're in will determine most of your growth.

This is just a cop-out. The market will _limit_ , not determine, your growth. It's up to you to hit that maximum, and use marketing/sales to extend that maximum. That is called creating a market. And overall it's called execution.

OTOH, Sahil isn't wrong. Some markets are either not that ripe (timing is important), don't have enough support, are too niche, and a thousand other factors. But as a generalization, "Product doesn't matter" is just wrong.

<comment><USER54> This story seemed inside-out to me. With the "you just have to find the right pre-existing market" logic, as well as the (much more significant to me) "but we were venture-funded, which was like playing a game of double-or-nothing," buried as an aside.

I think these are the real stories in this story: basically stable and relevant, coupled with irrational growth pressure. I get it, though: the personal journey through the wilds of Sand Hill Road, doing battle with market forces with an army of unknown strength, and so I would have liked to see some spotlight on _the mistake of taking VC._

In this way, we also see this conclusion about halfway through the essay, "[s]o instead of pretending to be some sort of product visionary, trying to build a billion-dollar company, I'm just focused on making Gumroad better and better for our existing creators. Because they are the ones that have kept us alive."

I remember hearing a lot about Gumroad! People in the UK(? Aus?) used it a lot! In that way, this incredible journey appears as another log on the fire when it could have been part of a nice house. Or something like that. Everything about this story signals a decent business that was killed by VC.

</comment></comment><comment><USER55> This bit is interesting...

"I am following up our conversation a few months ago. KP would like to sell our ownership back to Gumroad for $1. Can we discuss this week?"

...do founders discuss a Plan-B exit strategy/costs with the VCs ? Do VCs (or their lawyers) give this option or offer to discuss.

For Gumroad, it sounds as if this was a lottery or a happy coincidence. But I am interested in finding out if VCs actually only are interested in outright discussion of the up side (similarly for the founders... but that's kind of apparent from observation, and ... well also reading your article :-) )

</comment><comment><USER56> > The next year was not fun: I shrunk the company from twenty employees to > five. We struggled to find a new tenant for our $25,000/month office and > focused all of our remaining resources on launching a premium service.

Ouch. Even at 20 employees, $25k a month is insane when you have no profit. I'm sure it was a pretty office, the kind that attracts good developers in a competitive market.

<comment><USER57> I thought the same thing. There are tons of people all over the world, or even spread out in America, that want to work on an interesting idea with interesting people. The office really does not matter.

It feels like so much of the VC funding goes to creating buzz and cool-factor (cool office, free lunch, potential lucrative exit), which can obviously be great marketing, but it really limits your runway and obviously the control you have over your idea.

Still insane to me that more companies do not embrace remote work.

<comment><USER58> Ehh. It doesn't matter up until the point it does. I quit my last job partly because we moved from a nice area in a dumpy building to an awful space (no natural light) for ~10 months. My health suffered, I felt depleted, and the entire team was on edge. How easy to commute to ($$) and how nice it is are definitely things I consider. Free food gets an outsized return too, if we're talking >100k salaries--I'd bet $4000 in free food gets more goodwill than a 5% pay bump.

Agree that remote should be more widely used, especially in software.

</comment></comment></comment><comment><USER59> Reading about a 19 year old kid, grinding through that incredible ordeal is just awe inspiring. I think his constant re-focusing on creating value for creators and employees first has been his guardrail against total failure in toughest of times - I'm glad to see he powered through.

</comment><comment><USER60> I'm really surprised that Gumroad has such low gross margins. For April 2018 $65k gp on $273k revenue is 24% gm. It looks better in December $135k gp on $341k revenue is 40%, but still lower that what I would have thought. Is it credit card processing fees? Server costs? What am I missing?

</comment><comment><USER61> I'm pretty sure this is the best post I've ever read on Hacker News, because of its potential positive impact on others. It's one thing to give advice, it's another to back it up with detailed life experience. The lessons shared here are invaluable ones, and if writing this story helps others learn them without having to go through as many trials to get there, you have done a great service. Bravo.

</comment><comment><USER62> I remember when Gumroad first launched. I was 24 at that time and just couldn't believe that a kid that young could be so good at making such polished products.

To that end, I considered Sahil - and people like him - to be my model of success: being able to bring your vision to life.

</comment><comment><USER63> "Man reflects on horror of being millionaire instead of billionaire."

Should we start a Gofundme for him? What an unimaginable fate to befall someone.

<comment><USER64> While slaving away his employees who most likely don't share in his millions now.

</comment></comment><comment><USER65> 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 billion-dollar companies.

<comment><USER66> 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.

</comment></comment><comment><USER67> You think you failed because you got to quit your comfortable job with high- valued stock options to chase your dream and turn it into a profitable business? To me that sounds like someone who is in it for possibly the wrong reasons.

</comment><comment><USER68> This brings me back to a few lessons I've learned from other friends:

+One of the CEOs main roles is to raise money

+Rich or King? Know which one you wanna be.

+How much is your friendship _really_ worth? Think carefully about this before you get in business with them.

</comment><comment><USER69> Honestly doesn't seem like he failed at all. Sounded like just bad times for the business. I mean 2 years of difficulty seems like a minor thing in the grand scheme of the business lifetime. Not only that, the business literally keeps growing if the graphs are to be believed.

Failing is when you can't come back and you close the business.

<comment><USER70> I think that's the point the author is making. The benchmarks for "success" are different if you're in the SV VC-funded startup world. What may be a sustainable 10-person staff e-commerce business would be seen as a failure in some circles because it didn't grow fast enough to IPO, which is all VCs care about.

</comment></comment><comment><USER71> "Every month of less than 20% growth should have been a red flag." It's concerning that this is the state of affairs for expected business growth

<comment><USER72> Venture capital is broken. Plenty of other good businesses to create out there that don't have to do 20% month over month.

</comment></comment><comment><USER73> This is totally awesome, @sahillavingia. For a young guy, you have learned some incredible lessons about business in a VERY short time. You are positioned well to build that billion dollar venture that you originally dreamed of. It might not be called Gumroad, but who cares?

"It doesn't matter how amazing your product is, or how fast you ship features. The market you're in will determine most of your growth."

This is so utterly, absolutely, painfully true. We hear stories of hypergrowth as if you can just choose that path and it magically happens. Reality is: most companies never get to hypergrowth. Your only real option is to pick a large potential market with a reasonable hypothesis for getting there. And then see what happens.

</comment><comment><USER74> After having founded a non-VC backed company (browserless.io), my anecdotal experience is that most potential creators out there need more encouragement to stand out on their own two feet. The maker market has huge potential, but there are so many barriers to entry that it does stifle growth.

It takes almost a perfect storm of potential, communication, determination and timing to birth a successful company/product. I think it's just what our "startup" environment tends to favor, and how the ecosystem just works, for better or worse. If we had more companies like Gumroad, Atlas, and IndieHackers I think that there'd be a proliferation of growth in the creator space. Even just getting decent health insurance as a single-person LLC/company is a frightening thing, and that's just _one_ obstacle!

I also think that, once more and more folks awake to the idea that you don't need VC funding to get something off the ground (and that it's really an achilles heel in many regards), that more products will start getting out there. It's also a conflict of interest many times: they want a return on their capital, whereas you want that _and_ to make something of value. Sure, VC is necessary in many regards, but it also isn't in a lot of cases.

I'm really happy that Gumroad stuck it out and is fighting for creators. Just the notion of them _not_ closing for financial reasons is comforting to me. Means that they cared that much about their users and the bigger picture, rather than just money.

</comment><comment><USER75> 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.

<comment><USER76> Spending $2 to make $1 with VC money is a pretty easy way to boost growth and see numbers like those.

</comment></comment><comment><USER77> I have to say, this was a very pleasant read. I expected it to be a thinly vield ad for some new business, but it was actually very insightful.

Seems to me like the author's failure taught them a valuable lesson about what they actually valued vs. what they thought they valued.

I would like to see more tech companies like Gumroad; that is companies whose focus is not on IPO and quick aquisition, but instead, on the quality of their product/service and the prosperity of the customers/users.

</comment><comment><USER78> Thanks for sharing your story. There are many valuable lessons there and I certainly wish you all the best.

I am familiar with Gumroad as someone who has used it to buy things. From what I recall, the UX was smooth but left me wondering about the ease of cancellations / ways to handle refunds. I recall not feeling like the product lacked something critical - perhaps it was Paypal integration, but I don't remember. Something about it didn't sit right with me as a customer.

From a UX perspective, I feel that some of the commenters here are onto something. The website does not make it clear what the product does. Looking a bit into it, it feels like there are two products in one - payments and audience building - something that I would expect to be separate. It's like the product is trying to do 2 things well instead of 1 thing really well. Of course, this is my personal opinion which could be harsh and unfair seeing how I am not really qualified to give advice. In all, you know your customers and their needs best and it's great to hear you havent given up on gumroad. I hope things go your way and you accomplish everything you set out to do.

</comment><comment><USER79> This was a really insightful read, so first of all thank you to Sahil for writing and sharing this.

I think this is a perfect read for anyone contemplating on starting their own business as this clearly illustrates that not every startup is destined to become a unicorn and/or should be _heavily_ backed by VCs. Moreover, if that is the only reason why you are pursuing your venture, then you will most likely experience heavy turbulence, possibly face the brink of total failure, and possibly just have to accept failure.

All that being said, I really enjoyed the end of the post, where he was explaining his change in outlook and open-sourcing the service. This could lead to wider adoption and potentially open new sources of revenue, similar to Discourse and how they can create and manage your forum for a fee even though the product itself is open-sourced. The reality is, sometimes people need the middle-man and it is nice to have the option available if you are in that situation.

Thanks again for sharing your experiences. I wish Sahil and the Gumroad team all the best :)

</comment><comment><USER80> I use gumroad and like it.

This reminds me of the Patreon founder claiming a few days ago that he didn't have a sustainable business. Did Patreon or Gumroad need $10 million of VC money? Do they need to be located in the bay area? These seem like sustainable businesses that shoot themselves in the foot with unnecessarily high operating expenses and unreasonable expectations from VCs.

</comment><comment><USER81> The lesson.

Don't take VC money before you've built something (anything) and tested it out. You don't want to give away equity to invent your product.

I am aware it was way harder to build something in the payment space back then but still.

Great story and while I definitely am happy Gumroad is doing well it's also great to know that good things can end well with a fizzle rather than a big bang.

</comment><comment><USER82> Thank you for writing that up. Is there a healthier, less painful path you've identified for a company such as Gumroad to come into existence and get to the point it's at today?

Perhaps a traditional business loan from a bank and a smaller team from the start? Would it be possible to aquire new users at a similar rate without the VC headlines?

</comment><comment><USER83> He links another post he made a year ago about moving from SF to one of the most conservative/religious cities in America[0]. Both were great reads.

[0] [https://medium.com/@shl/from-bubble-to- bubble-21d86195e178](https://medium.com/@shl/from-bubble-to- bubble-21d86195e178)

</comment><comment><USER84> Why would KPCB sell back their stake for $1? Why not just hang on to the stock just in case it turned around? The explanation that they didn't want the overhead of appointing a board member sounds strange. If you don't like the company, send a junior person who can learn board membering in an unimportant firm.

<comment><USER85> Sounds like they wanted the tax benefit of marking a loss on the investment.

</comment></comment><comment><USER86> Reminds me a lot of Bandcamp, which serves a similar market and has a similar and very refreshing ethos: in it for the long haul, dedicated to serve their audience because (likely) nobody else will, because there's not and never will be VC-sized 100x upside.

</comment><comment><USER87> If you're given $8M, how hard are you really struggling? I think many people here on HN believe they could build a tremendously successful company with $8M.

It's frustrating that I cannot get money for my ideas, which I believe are more impactful.

</comment><comment><USER72> Off topic, but Sahil, love your drawings and paintings on your IG.

I've thought about the idea of moving to a place like Provo from NYC, but I work in cybersecurity, and I don't think there's a client base anywhere but DC, NYC or maybe SF.

</comment><comment><USER88> For the employees of a VC backed company, the liquidation preference of its investors is cage - a cage that you can't break out of unless you become a billion dollar business.

This is a wonderful story and I have such enormous respect for Sahil for sticking it out. I wonder if the story would be different if the investors didn't give up the keys to cage.

Here's a challenge to VCs: do you really want to strangle us if we turn out not to be the billion dollar business you hoped for? And if you don't want to strangle us, put your money where your mouth is and do away with the preference. Better still, buy common stock :)

</comment><comment><USER89> I'm sure it's been a very tough experience and the author learned a lot during the time. But I would expect that if you fail to build a billion dollar company you end up at least with a $100 million company...

<comment><USER90> Unfortunately failing to build a billion dollar company often means ending up with a $0 company. Like the OP said, VC too often comes with the pressure to either succeed in a big way or pack everything up and go home. And when your liquidation preferences are greater than the current value of your company, as a founder it's not very compelling to keep moving forward.

</comment></comment><comment><USER91> Cool story! Makes me think I should write my own up someday.

However, one thing I find odd. The story talks about the creators and how important they are. But when I go to gumroad.com looking to see all these creators, I see how to sign up as a creator, but don't actually find the pages of other creators. Where are they all? After reading the article, I don't get how the business works, I guess. The article led me to believe it was similar to Etsy where creators sell their wares. Is that not the case here?

</comment><comment><USER92> It's sad building a sustainable "lifestyle" business isn't good enough in go go go Silicon alley culture. At the end of the day, our communities do not need dozens of Amazons who grow too big to actually participate in a meaningful way in the local community and motivated by stock price and not impact.

The country would work a lot better if everyone who wanted to could build a lifestyle business. And sustain themselves, their families and maybe a couple of employees.

</comment><comment><USER93> I started using Gumroad to sell zines that teach you how to program by creating generative art ([https://gumroad.com/l/splashofcode](https://gumroad.com/l/splashofcode)). I love their product and I enjoyed reading this post about their journey. I'm also excited that they plan to open source the product, providing a perfect alternative if they were ever to be sold or shut down.

</comment><comment><USER94> "In 2011 I left my job as the second employee at Pinterest"

Does this shitty website have a business model besides spamming google picture search? Sorry for the rant.

</comment><comment><USER95> David Heinemeier Hansson gave this speech at one of the early YC startup schools and he's still right about everything. This feels like such an impossible relic now that YC is firmly part of the grow-like-cancer VC universe. How things change.

[https://www.youtube.com/watch?v=0CDXJ6bMkMY](https://www.youtube.com/watch?v=0CDXJ6bMkMY)

</comment><comment><USER96> > On top of that, our product ideas, like our credit card form and inline- > checkout experience, have proliferated the web, ...

I've used Gumroad several years ago (as a customer), and the simplicity of the transaction and this interface was something refreshing.

You also say that you'd make Gumroad open source soon. May we know what the tech stack behind it is?

<comment><USER97> From their calls for part-time/contract devs, I think it's largely a Rails stack.

</comment></comment><comment><USER98> poor guy, only making millions since 19. let me get my violin out.

</comment><comment><USER99> Incredible article. Thank you for taking the time to share and educate the world (and me) about your experience as a startup founder. I'm so happy and proud of you to hear that you've found your way as an entrepreneur, who you are in life and what you want to do with it. Good job!

</comment><comment><USER100> The bigger, separate issue, is that billion dollar companies fit a certain mold, not one you should ever strive for to be honest. Just do a quick manual analysis of the top companies of the world and you will pick up patterns in them that Gumroad would never have had.

</comment><comment><USER101> I had not known about gumroad and took a look. Would you ever introduce more of a product browsing store front experience?

I see all these great categories in the search drop-down, but no way to just take a peak into what was available.

Great read and glad you are enjoying your journey.

</comment><comment><USER102> I think its hilarious that so many of the comments are calculating how much money he can make from Gumroad when the ENTIRE point of the piece is that " _hey_ there is plenty of success to be found in non monetary ways."

</comment><comment><USER71> "Every month of less than 20% growth should have been a red flag"

It's mildly concerning that this is expected business growth. Endstate is what's happening now- how to get the public IPO to value my $1bil co at $1bil

</comment><comment><USER103> Amazing and poignant story; thank you for sharing.

I do wonder if there was a path for Gumroad to become a Shopify killer, instead of focusing on sellers too small and unsophisticated for Shopify, which limited the addressable market.

<comment><USER104> They're not really congruent products… if anything Gumroad is more similar to Stripe. But to take your question seriously, I'd far rather hack together a shopping site and use Gumroad for payments than grapple with Shopify again, they give me a migraine.

Gumroad is also going to have some new opportunities if Patreon continues to struggle with their similar deal-with-the-devil.

+1 Gumroad, glad to see it's found a way to thrive.

<comment><USER105> Yes I'm confused why Gumroad didn't become more like stripe or patreon. That would've been a natural development. It must be execution problems.

</comment></comment></comment><comment><USER106> More relevant than the cliché striptease of a failure, specially when told by a youngster, is this tidbit hidden in the article:

 _To me, happiness is so much about an expectation of positive change._

</comment><comment><USER107> Biggest lesson I learned from my failure to build even a million-dollar company was the same... You can't engineer your way out of a marketing problem.

</comment><comment><USER108> This is quite the inspirational read believe it or not. It is really good to hear about success that is actually a matter of redefining perspective.

</comment><comment><USER109> This is one of the best examples I've seen on "fighting for the users", the rule that every developer should follow.

</comment><comment><USER110> Stupid question, but what does gross profit mean here? How can the costs be so high to provide one more gumroad installation?

</comment><comment><USER111> I wonder if this issue they had is why they went from charging 5% per sale to a monthly flat fee instead.

</comment><comment><USER112> Great story. At the end of the day, we all need to be building something we can be satisfied with.

</comment><comment><USER113> Suggested title change: "Reflecting on My Failure to Win the Lottery"

</comment><comment><USER114> To some money is a tool. To others it's a high score.

</comment><comment><USER115> I'm pretty sure I saw that graph of the CEO not working much correlating with low growth like a year ago

</comment><comment><USER116> Businesses have a right size, and growth for growth's sake is cancer. Venture capital fuels the cancer.

</comment><comment><USER117> this was a nice and soothing read...

</comment><comment><USER118> Thank you :)

</comment><comment><USER119> humble brag

</comment><comment><USER120> Wants a login.

</comment><comment><USER121> Amazing post.

</comment><comment><USER122> I am not sure whether he's really serious or this is a long false modesty article about himself

<comment><USER56> I've had some interactions with @shl on Twitter where he seemed a bit full of himself (a few years ago - I didn't realize he was so young, so that probably had a lot to do with it). However, he could, and most would, have cut and run and found the next opportunity. Not doing so probably cost him millions of dollars; that's pretty authentic in my book.

<comment><USER3> I'm sorry you had those interactions with me in the past!

I think I've grown since, but it still sucks to hear that about past-me.

<comment><USER56> No worries at all. Keep building good products and you as a person (too many double down on their character flaws).

</comment></comment></comment></comment><comment><USER123> What a nice mirror. Narcissus would be enthralled.

</comment><comment><USER124> It was an interesting read until his admiration for Bill Gates soured it.

Besides milking the world of untold billions in unearned profits by illegally enforcing a monopoly on OSes, Gates personally held back progress in development of computer software by easily fifteen years. (Youngsters who never suffered Windows 9x might not know that Microsoft singlehandedly changed the meaning of "crashed" from "I need to restart my program" to "I need to re- install my OS".) It was only the explosion of smart phones that knocked his jackboot off the world's throat. Now he is putting drips and drabs into philanthropy to try to salvage his reputation.

Inspired by Bill Gates? No thanks.</comment>


What's Really Going on With Color: A Small Apple Talent Acquisition - <AUTHOR> http://allthingsd.com/20121018/whats-really-going-on-with-color-a-small-apple-talent-acquisition/ <comment><USER2> How do you "acqui-hire" a bunch of people from a company without buying the company itself? Isn't that just, you know, _hiring?_

<comment><USER3> Well, they're essentially buying the employees from the company, which is different than normal hiring.

<comment><USER2> But why would you want/need to do that? I'm not an expert on labor law, but AFAIK the company doesn't have any legal ownership claim to the employees or their services; employment in the US is at-will (<http://en.wikipedia.org/wiki/At-will_employment>), so if Apple and a Color employee come to an agreement that the Color employee will go to Apple, Color doesn't have much say in the matter. There's no Reserve Clause (<http://en.wikipedia.org/wiki/Reserve_clause>) in tech.

Maybe the employees signed a non-compete agreement, and what Apple is buying from Color is a waiver on those agreements? Non-competes don't have a great record of standing up in court, but OTOH $2 million split 20 ways isn't that much money per person either; might be considered cheaper than the risk of a legal challenge. I dunno.

The reporting on this story could definitely do with some additional detail, but given how rapidly the story's been changing we may just have to wait an hour or two for that detail to be uncovered :D

<comment><USER4> The acquihire is traditionally done by converting unvested options from one company to the next, quite often with a 15-20% retention bonus for employees that stick around for 12 months.

The employees, of course, are free to walk away from those unvested options and retention bonus, should they chose to do so.

</comment></comment></comment></comment><comment><USER5> It's possible that both this report and the "double digit millions" report are true. $2M divided among 20 engineers isn't enough to convince each engineer to stick around at Apple for a few years vs. look for another job immediately. Usually in this case, there are separate retention bonuses for each employee that the acquiring company wants to ensure they keep. Sometimes these retention bonuses are included in the reported price of an acquisition to make everyone feel better, but the investors don't see any of that. So it's possible that from the investors' perspectives, it's a trivial $2M deal, but from Apple and the acquired employees' perspective, it's significantly bigger.

I have no information about Color so I'm not saying that necessarily happened, just that it's a way of reconciling all the conflicting stories. The submitted story on its own doesn't quite add up either ($2M for 20 employees is too low).

<comment><USER6> Well, considering Color's history, the promise of a steady paycheck for a few years might be enough for that team right now. And the $2 million could be signing bonuses for the engineers, which would be a decent chunk of one-time money.

</comment></comment><comment><USER7> They're paying millions to hire some people, but aren't getting any of the IP? Isn't that unusual?

Maybe I just don't understand how these things work.

<comment><USER8> In this kind of deal, the reality is that Apple are getting some seriously valuable IP.

They're hiring a team of software engineers who have been working together for a while in an area which is clearly of interest to Apple (I'm betting they're going to be working on Facetime).

They've been working with live video extensively. They know the lay of the land. It's very valuable.

And if you want to acquire this many engineers from a company simultaneously you're probably fighting against a huge amount of non-competes, so approaching the company and negotiating directly for the hires is the best way to avoid getting slapped with a lawsuit.

<comment><USER9> To paraphrase, they are getting the intellectual/s without the property.[1] =D

__________

[1] What is interesting, though, is that they may have legal reasons for this. Any extant creditors, for example. We may see a second stage disposition of the IP. Transfer of people for $$ != transfer of legal-owned Gaap assets, when it comes to _fraudulent transfer_. Relevant > <http://en.wikipedia.org/wiki/Fraudulent_conveyance>

</comment></comment></comment><comment><USER10> The real talent would have left long ago.

<comment><USER11> Having been involved in an informal[1] acquihire a long time ago, I both agree and disagree with this.

Engineering talent isn't always correlated with great organizational awareness, so while some of the better people will have moved on by the time it gets to this stage, there will still be strong engineers left.

That being said by this stage it is unlikely to be a team on top of its game, and if the stories about an increasingly poisonous work environment are to be believed, Apple is going to have to do a winnowing process, and keeping the "team" together may well be counter productive.

[1] Informal acquihire in the sense that our CEO got wind of a company closing down its remote sub (remote to them, local to us) and made a blanket offer to the team

</comment></comment><comment><USER12> It's reassuring to hear that what has often been cited as a case-study in over-ambitious fundraising and over-enthusiastic investment did, in fact, turn out to be a sobering lesson for entrepreneurs.

The tales of double-digit million dollar exit were frankly baffling and would have painted a very different picture of the current acquisition market.</comment>


Mac OS X Mountain Lion ready for download - <AUTHOR> http://itunes.apple.com/us/app/os-x-mountain-lion/id537386512

<comment><USER2> Oh people. Just because it's up on the Apple Site doesn't make it available.

"There was an error in the App Store. Please try again later. (100)"</comment>


Show HN: WISP – a simple SaaS service to create mobile employee handbooks - <AUTHOR> http://www.wispapp.com/launch

<comment><USER2> For policies, it would be good to have a method to make sure that all employees acknowledge they have read the policy and then have some reporting for management. When the policy is changed they have to re-acknowledge.

Another useful thing would be to connect it to google apps so I don't have to manually create all employees but it would work more or less without intervention.

<comment><AUTHOR> Thank you for your feedback, we plan to implement these features in the next versions.

<comment><USER2> you can reach out to me at email@example.com, will be happy to provide feedback if we adopt it.

</comment></comment></comment><comment><USER3> Sorry, off topic, but aww, I was hoping for some new public exposure for wisp, the Javascript Lisp: [https://github.com/Gozala/wisp](https://github.com/Gozala/wisp)

Such a cute language but I still have not used in anything other than some toy projects :(

––

Anyway, is WISP an acronym in this case?

<comment><AUTHOR> :) No, this is just a short name that is easy to remember.

</comment></comment><comment><USER4> Sounds like a nice idea, but without being able to see much of the app I wouldn't even try it. Even in the video on your site there is nothing to see.

I don't get the "There is no need to create an entreprise app store" either. I don't think your product solves that problem at all.

<comment><AUTHOR> Thank you for your feedback, we will try to improve the message at our site. BTW all beta users are guaranteed to always use WISP for free.

</comment></comment><comment><USER5> So it's a software-as-a-service service? ;)

<comment><AUTHOR> SaaS solution :)

</comment></comment><comment><USER6> > Invite you employees

*your</comment>


Zuckerberg orders Facebook executives to giveup iPhone and use Android - <AUTHOR> http://thetechim.com/mark-zuckerberg-reportedly-ordered-all-facebook-executives-to-give-up-iphone-and-use-android/ <comment><USER2> Original source [https://www.indiatoday.in/technology/news/story/mark- zuckerb...](https://www.indiatoday.in/technology/news/story/mark-zuckerberg- orders-facebook-employees-to-give-up-iphone-and-use-android-reason-will- surprise-you-1389031-2018-11-15)</comment>


Postmates earned 400% more on a delivery than the delivery guy - <AUTHOR>

I used Postmates to buy and deliver a $199 Chromebook for me from Best Buy. The delivery fee was $5, 80% of which went to the delivery guy. Postmates added a 10% "purchase fee" which they do NOT split with the delivery guy. So they made $21 while the guy who actually did the work made $4 (not counting the tip I gave him).
I realize that developing the app that facilitated this transaction is work but for the purposes of a single transaction is it truly 400% as much work?
Does anyone else have a problem with this?
Receipt image: http://goo.gl/z4HBdv <comment><USER3> "Meet the new boss - same as the old boss"

These CRUD-on-a-service companies (Postmates, Uber, etc) aren't "disruption" but just an investment land rush to be the new rent-extracting middlemen. Let's just hope they're easily dislodged when an actual p2p economy finally develops.

</comment><comment><USER4> "Does anyone else have a problem with this?"

I imagine the delivery guy does.

It's a free market though, so if that $21 turns out to be far more than is necessary for making the SAAS site, then a competitor will see it as an opportunity and undercut them eventually. Shouldn't take long if the business model is viable.

<comment><AUTHOR> ive sinced learned that ebay now would have brought me my chromebook for no additional fee. wun wun also apparently caps the transaction fee at $2.

</comment></comment><comment><USER5> Typical mistake. Service price is never based on the costs of development but on a value it creates. You might have extremely expensive IT solution that creates no value to anybody and is worth $0. You might have email-based manually operated business that provides service worth thousands USD.

Postmates creates value both for you and the delivery guy. After all - <USER2> used their service for some reason and paid for it right? You get the quality service, delivery guy gets the demand for his services.

Alternatively the delivery guy could develop an app for himself only, put it on the appstore and wait for you to download it. But he would never earn anything this way.

</comment><comment><USER6> No why would anyone have a problem with it? If you want to charge less or pay the delivery guy more you have the opportunity to start your own competitor. No one is forcing the delivery guy to work there either, if he is qualified for a better paying job he can find other work.

<comment><AUTHOR> because a startup has structured its business model to keep the vast majority of the profit it extracts from a virtual work force of independently contracted peons

</comment></comment><comment><USER7> There are bigger problems in the world. As long as engineers at Postmates are compensated properly, I am OK.

<comment><USER8> Can you explain this? Why would you be okay with the delivery guy underpaid, but not the engineers? Doesn't make sense, unless I am missing something.

</comment></comment><comment><USER9> People tip delivery guys? Aside from food deliveries I've never heard of that before.

</comment><comment> Alex-Galapagos how do you know that he only got $5?Maybe part of $19 goes to him as well

<comment><AUTHOR> i called and asked. they keep 100% of the purchase fee.

</comment></comment><comment><USER10> Anything is worth what they can convince people to pay for it.

See: the diamond industry.

<comment><AUTHOR> actually they don't disclose this fee when you arrange for the original transaction. They list everything as "TBD"</comment></comment>


Edward Luttwak: The Machiavelli of Maryland - <AUTHOR> http://www.theguardian.com/world/2015/dec/09/edward-luttwak-machiavelli-of-maryland <comment><USER2> A good read. Having never heard of the man he seems like an extraordinarily successful variant of the self-aggrandising "arm-chair general" found in pubs throughout the world. Right down to the highly questionable claims to have seen military action. This and other of the claims could certainly have been fact checked here. It comes across as though the journalist didn't want to offend him by showing up the obvious lies.

</comment><comment><USER3> Luttwak is a welcome guest of italian TV talk shows because: (a) he speaks Italian and (b) he has a usually different, and often interesting, point of view. Even if one does not like its macho-neocon slant, he is a rather smart guy.

<comment><USER4> c) he was considered the unofficial speaker for NATO in Italy in the '70s and '80s, saying the outrageous things others couldn't say and making local "Atlanticist" politicians look moderate in comparison.

</comment></comment><comment><USER5> He evidently wants to present himself as The Most Interesting Man In The World.

<comment><USER6> I suppose there must be some people who still find Obama-is-a-Muslim rabid warmongering neocons interesting [http://www.nytimes.com/2008/05/12/opinion/12luttwak.html](http://www.nytimes.com/2008/05/12/opinion/12luttwak.html)

<comment><USER7> How does this article support the"Obama is a Muslim" trope? His point is that some of the Muslim world might view Obama as an apostate because of his parentage, over which he had no control, and his renunciation of Islam and conversion to Christianity, which he did.

"But of all the well-meaning desires projected on Senator Obama, the hope that he would decisively improve relations with the world's Muslims is the least realistic."

He certainly had that right.

<comment><USER6> At best, he is trying to have it both ways: Saying it outright and then raising the tone a few octaves into dog-whistle range.

</comment></comment></comment></comment><comment><USER8> Interesting read -- i had no idea about his youth in sicily. Now I know what made him so "popular" in Italy.</comment>


Apple's iPad Air website consumes Quarter Gig of memory - <AUTHOR> http://movingfulcrum.tumblr.com/post/64871334174/memory-hogging-websites-apples-ipad-webpage

<comment><USER2> Seems like a Chrome memory issue (which are becoming more and more prevalent). Firefox is fine: [http://idzr.org/p00g](http://idzr.org/p00g)

In fact, it would appear your site uses more memory: [http://idzr.org/4rpp](http://idzr.org/4rpp)</comment>


ShowHN: MultiPLX, RSS Reader Reimagined - <AUTHOR> http://multiplx.com

<comment><AUTHOR> Got this posted for a friend. Here is what he has to say:

""" I am excited to announce the launch of my startup, Multiplx.com which is a RSS Reader Reimagined for all users. It's a RSS reader, news aggregator and content discovery application, one in all.

Multiplx.com is still in alpha stage and we are committed to bring all the features that Google Reader provides, and much more. You may use the following PROMO code to gain instant access to MultiPLX.com: HACKERNEWS.

I would love to hear from you! """</comment>