Part I
Part II
Part III
Part IV
Part V
This is a story from an anonymous answerer on reddit.com.
Looking back, those were pretty dark times. I was completely alone with no one to talk to. Since I alienated everyone around me for a long time, it was now up to me to pick up the pieces. I still remember quickly packing up our belongings from my “mansion” to move into one of our much smaller rental properties one night so the neighbors couldn’t see me leaving. I felt so ashamed and desperate. The mansion had a mortgage, I let it slide into foreclosure, and for the next several years I had to learn how to dodge calls from debt collectors.
Eventually I came to the conclusion that hiding, feeling sorry for myself wasn’t going to solve my problems, I had to get up and look for something constructive to work on. By now we had to depend on my wife’s income to support us. Gone are the days of $1M plus a year income, say hello to $70,000. Also gone are all the fancy cars, unnecessary spending and vacations. My mental attitude started to get hardened again. It was time for me to get out of the house and work. I joined a tech startup in 2004 as head of sales, after all, I could still sell.
The startup had no real funding, it was started with less than $50,000 seed by the founders. When I joined, there were all of only two founders left. It had no real customers since it had no revenue. We worked out of a warehouse in Southcenter, an industry area south of Seattle. It was actually worse than a garage, the constant noise of trucks coming and going made it difficult to even conduct phone calls. Whenever a customer or a prospect asked about the noise, I would jokingly tell them our business was booming since they can obviously hear all the commotion from the loading. I devised a plan to generate revenue anyway we could. I went around the country on sales calls, traveled to China almost monthly dealing with vendors and partners. Since there was only three of us, I did sales, business development, accounting, finance and marketing. In our first year we had revenue of $500,000, the next year we got to $2M. It was during this time I took over as the CEO since I came up with the plan and direction, generated all the sales. The business grew to $3M by 2007 and we thought we should be able to raise venture capital. Unfortunately no one in Seattle bought our story. All three of us are older when compared to the twenty something startup guys. None of us had a computer science background, as a CEO, I was the least presentable. A college dropout without any experience in the tech space. Despite the revenue, we were unfundable. The VCs in Seattle are about as WASP as they come, but they did point out flaws in our business. One of questions the VCs asked over and over again at the time was: what unfair competitive advantage did we possess. I could never give them a straight answer because we didn’t have any differentiating IP, but even if we did, it wouldn’t have mattered. In was only in hindsight now that the real answer was that we had heart.
It was during this fund raising process I really felt insulted. We would present to “Angel” investors, which often times made of people who got lucky to be some of the earlier employees of successful companies such as Microsoft and Google, or they retired as wealthy corporate executives, doctors and so on. Most never ever ran a business in their lives, most carried this entitled arrogance. One of the investment groups is ZINO Society, we presented while they were wining and dining away as a social club, I really felt like cheap entertainment on the stage. I vowed that if I ever make it big, I will do everything I can to change how startup guys are treated, we are not in medieval society with overlords anymore!
We were raising funds to find a way out of old business model, which is to develop technology to sell to OEMs (basically companies with their own brands and products). Our customer would package our technology and sell it as if it is their own. We discovered over time that we were getting $50-60 per license for our product, when it is all said and done, the end customer actually pays anywhere from $1,000-10,000. Sensing the old business model was running into a dead end, we felt we needed a change. Despite not being able to raise VC funding, we decided to pivot by 2008. This meant building out the rest of the product features and market it directly to the end customers. In business jargons, we want to climb the value chain. What it also means is that we are no longer competing against companies doing $50-100M sales, but billion dollar companies instead. This would require us building a comprehensive suite of products, integrate it with enterprise grade hardware, be responsible to deploy, service and support the product. It is utter insanity if I tried to convince investors that a dinky little company with no prior experience, no direct relationships with large accounts dare to pull it off.
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Tags: dealing with failures, how to be rich