This article was originally published onMediumbySahil Lavingia, the Founder and CEO ofGumroad.
Just had an idea for my first billion-dollar company.
Tomorrow, I start building it.
It would IPO, and I would work on it until I died.
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But for years, I considered myself a failure.
I no longer feel shame in the path I took to get to where I am today.
It took me years to realize that I was misguided from the outset.
This is that journey, from the beginning.
No need for a storefront.
I built Gumroad that weekend, and launched it early Monday morningon Hacker News.
The reaction exceeded my grandest aspirations.
Over 52,000 people checked it out on the first day.
A few months later, in May 2012, weraised $7M more.
I was on top of the world.
I was just 19, a solo founder, with over $8M in the bank and three employees.
And the world was starting to take note.
We grew the team.
We stayed focused on our product.
The monthly numbers started to climb.
And then, at some point, they didnt.
To keep the product alive, I laid off 75 percent of my companyincluding many of my best friends.
Then TechCrunch publishedLayoffs Hit Gumroad As The E-Commerce Startup Restructures.
All of a sudden my failure was public.
So what went wrong, and when?
Failing in style
Lets start with the numbers.
This is ourmonthly processed volume, up until the layoffs:
It doesnt look too bad, right?
Its going in the right direction: up.
But we were venture-funded, which was like playing a game of double-or-nothing.
Its euphoric when things are going your wayand suffocating when theyre not.
Every month of less than 20 percent growth should have been a red flag.
But at the time, I thought: Its okay.
We had money in the bank, we had product-market fit.
We would continue to ship product and things would work out.
The online creator movement was still nascent; it wasnt our fault.
It always looked like change was right around the corner.
To that end, we deprioritized everything except features that would directly move the needle.
If we didnt, we would have to drastically downsize the company.
We launched a Small Product Lab to teach new creators how to grow and sell.
And that was just from August to November.
Unfortunately, we didnt hit the numbers we needed.
Slim down or shut down?
Looking back, Im glad we didnt hit those numbers.
I tended to agree with them, to be honest.
But I was accountable to our creators, our employees, and our investorsin that order.
We helped thousands of creators get paid, every month.
And it was only growing!
Could I really just turn that faucet off?
It was certainly tempting.
But that didnt sit right with me.
We were responsible to our creators first.
Thats what I told every new hire and every investor.
I didnt want to become a serial entrepreneur, and risk disappointinganothercustomer base.
We decided to become profitable at any cost.
The next year was not fun: I shrunk the company from twenty employees to five.
Skeleton crew to lifestyle business
It got worse from there.
Gumroad was no longer the venture-funded, fast-growing startup our investors and employees signed up for.
As everyone else found other opportunities, the skeleton crew fizzled from five to one.
I was basically alone.
I didnt have a team, nor an office.
Some of my friends became billionaires.
Meanwhile, I had to run a measly lifestyle business.
It wasnt what I wanted to do, but I had to keep the ship from sinking.
Now, I understand some people would dream to be in that position.
But at the time, I just felt trapped.
I couldnt stop, but there was only so much I could do as an army of one.
I shut off the rest of the world.
I didnt tell my mom about the layoffsshe had to read the article and tweets herself to find out.
My friends were worried, but I assured them I was neither depressed nor suicidal.
It only made me more lonely.
Every day, I woke up and took care of all of Gumroads support queries.
I tried to fix all of the bugs I could.
Often, I had to ask for help from former Gumroad engineers.
They were all employed now, but they always found time to help.
Most days, I failed.
To me, happiness is so much about an expectation of positive change.
New beginnings
Then one day, everything changed.
But it happened, so here it is.
KP would like to sell our ownership back to Gumroad for $1.
Can we discuss this week?
Plus, it helped their taxes.
All of a sudden, there was a light at the end of the tunnel.
Small, dim, and far away, but present.
One investor joined them.
Weve bought back a couple more, since then.
I keep the rest of the investors up-to-date with a brief email every few months.
We would never become a billion-dollar company, and that started to feel okay.
Certainly, the thousands of creators selling on Gumroad wouldnt mind.
There were months where I worked 16 hours a day.
But there were also some months where I worked four hours a week.
Heresone way to picturethat time:
Can you tell which is which?
We had a sales team for a few years, then we didnt.
Can you tell when we made the switch?
It doesnt matter how amazing your product is, or how fast you ship features.
The market youre in will determine most of your growth.
Because they are the ones that have kept us alive.
Someone asked him how he dealt with failing to capture so much value?
Bills answer: sure, but thats true with all companies, right?
They create some value and succeed in capturing a very small percentage of it.
Similarly, I am now more focused on creating value than capturing it.
While Gumroad, Inc may be small, our impact is large.
There is, of course, the $178,000,000 we have sent to creators.
Opening up
Ive found other ways to create value, too.
After the layoffs, I didnt talk to anyone about Gumroad.
Not even my mom.
And after moving away from San Francisco, I felt pretty disconnected from the startup community.
So, as a way to re-engage with the community, I thought about sharing our financials publicly.
Founders starting their own companies could learn from our mistakes, utilizing our data to make better decisions.
It was scary: What if we dont grow every month?
It could scare off prospective customers.
Its something I would never expect a startup seeking venture capital to do.
But, since we were not any of those things anymore, it was easier to share that information.
We were profitable, and a no-growth month wont change that.
So in April 2018, I started to release our monthly financials publicly.
It feels like were all in this together, trying to do earn a living doing what we love.
Soon, we will also open-source the whole product, WordPress-style.
In 2018 we donated over $23,775 (8 percent of our profits) to different causes.
We raised money for the hurricane relief efforts in Puerto Rico and the floods in Kerala.
We helped fund thePresence-of-Blackness project in speculative fiction, and aMexicanx publication.
Seeking the non-binary
For years, my only metric of success was building a billion dollar company.
Now, I realize that was a terrible goal.
Its completely arbitrary, and doesnt accurately reflect impact.
Im not making an excuse or pretending that I didnt fail.
Im not pretending that it feels good.
I failed, but I also succeeded at many other things.
We turned $10 million of investor capital into $178 million and counting for creators.
I cant wait until Im successful so I can write about failure.
Sahil Lavingia (@shl)October 1, 2013
I consider myself successful now.
Not exactly in the way I intended, though I think it counts.
Where did my binary focus on building a billion-dollar company come from in the first place?
I think I inherited it from a society that worships wealth.
I dont think its a coincidence that Bill Gates was my all-time heroandwas also the worlds richest person.
Since I can remember, I equated successful solely with net worth.
But its not the only way to measure success, nor is it the best one.
Theres nothing wrong with trying to build the next Microsoft.
I personally dont think billionaires are evil.
And theres a part of me that wishes I was still on that path.
But for better or worse, Im on this one now.
This has been my path tonotbuilding a billion-dollar company.
There are many like it, but this one is mine.
Im happy to help, or at least to listen.
