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Three years ago, I sold my startup because I was an idiot
- endlessvoid94 16y agoI posted this on the blog, but it is relevant here also: "As someone who is in a similar position you were, what advice do you have? I have a website that generates a few thousand dollars a month. Like you said, it's enough to live by, but I'm doing everything myself and I'm not sure how to scale. You mentioned being able to see what you were doing wrong...what was that? Do you have any tips?"
- endlessvoid94 16y agofyi here was his response to me: "It's hard to come up with any gems of advice for you specifically because you're in an area I really don't understand - entertainment. Humor, games, and other sorts of light entertainment are obviously a big business (CollegeHumor, Break, Sickipedia, JibJab, Kongregate, et al. show this) but I haven't got a grip on how they work at all. I've kept my focus on software and technical content and I could write quite a bit about that.. that sounds like it should be one of my next blog posts ;-) It's generic, but my best advice to you would be to figure out who is using your site and why, and optimize heavily to that demographic. Once you know who's using your site, you can make them keep coming back by optimizing the experience. Once you keep people coming back (or new people coming in), you can target money making products and services at them. It seems to me that entertainment sites are heavily focused on sponsorships and advertising as their main revenue streams with subscriptions and products coming a way behind. CollegeHumor, for example, are running a Converse sponsorship right now, and they can sell this sort of package because they have a strong grasp on the demographic of people hitting their site. It's like how Rolex and Prada always advertise in the glossy fashion or "wealth" magazines.. they want to stay in the consciousness of a certain demographic. With weed smoking, you might have an uphill struggle with that. Another approach is to find existing successes that relate in any way to your own site and see how they are making money. Even if you can't get any numbers, people's sales channels are usually quite transparent because that's how they get people in to make money. How are other sites related to marijuana making money, if at all?"
- petercooper 16y agoI'm sorry it wasn't a particularly strong one, but I'm very interested in your story and how it pans out. Hopefully you'll blog about it or post here if something significant happens.
- endlessvoid94 16y agoFor sure. I'm new to it and I never expected to make as much as I have. It's been an invaluable experience. I actually did secure some direct advertisers from the UK, the payments should be on their way, and then I'll have some more revenue which is good. Still not as scalable as I'd like, though. I only got $2 CPM from them...
- briandoll 16y agoAs Peter mentioned, with the services available today, many startup ideas are much, much easier to implement. What hasn't changed are the needs of getting users, charging enough, and having the guts to do it in the first place.
- lsc 16y agointeresting... so what are the rules here? I mean, you sold a company, now you are thinking about starting another company that essentially competes with it... is that legally questionable? is it rude? is there usually a time-limited non-compete written into the sale contract? I mean, I've turned down a few offers for my own business in the same price range. If I could turn around and build another, competing business, it would likely make sense for me to sell. but if I have to find some other line of work? well, unlike you, I value the few grand a month I make over the couple hundred grand I'd get from selling it. I really, really like doing this. But if I could sell out, then turn around and start over, competing with the company I sold, keeping my knowledge and experience uh, I probably would.
- rtrunck 16y agoWhile I don't have any real-life experience myself, most deals would include a non-compete agreement for a certain amount of time.
- lsc 16y agohm. and after that would it be considered evil or rude to go out and compete with my old company? (on the other hand, nobody wants my target market; anyone who bought me would jack up my prices, if not directly, then by not continuing to lower prices as hardware becomes cheaper.) How long is standard for a non-compete? I'd expect anyone who bought me would want to hire me for a certain period of time afterwards, if nothing else to integrate my stuff with their stuff, train staff, etc...
- hrabago 16y agoJust think of it as taking "Release early" and "Iterate" to the next level. In this case, your iteration involved executing on an idea, building a business out of it, then selling. You've been there, done that. Now you're equipped with lessons you've learned from your first iteration, and are ready to start your next. And you're not even 30! It's certainly a better problem than, say, wondering if you can actually build something that will allow you to quit your boring day job. Good luck!
- petercooper 16y agoThat's a cool way of looking at it! Thanks! :-)
- kelnos 16y agoPeter, I think it somewhat boils down to your motivation. If you're thinking you want to start a new business similar to the one you sold solely because it can make you more money and "legally, it's ok," then sure, that's probably a bit unethical and rude. But face it: by your own admission, you didn't really know what you were doing the first go around. You think you can do better this time, and, most importantly, build something that can scale better and be very useful to a wider range of people and enterprises. You'd be building on past experience to create something better that adds value to the world and (possibly) wouldn't exist otherwise. Try to look beyond your own particular situation and think, "could the world be better if I started working on this stuff again?" And if you think the answer to that is yes, I feel like you should be able to proceed without any feelings of guilt or rudeness. The fact that you can make some money doing it is certainly motivation (we're human, after all), but it's almost besides the point. You sold your company, and you honored the terms of that sale. If you think you have an opportunity to do something awesome that you'd enjoy and you're passionate about... go for it!
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- jacquesm 16y agoI'm going to take the contrary view here and I'll say that you did fine. Starting a business, operating it for a while and a successful exit are the whole meal, if you had continued to run it you might have crashed it or you might have been in debt now. There is no way to know what would have happened in an alternative universe, and it's a pretty good thing on your resume to say that you ran a startup that made you and your investors money. That puts you in the < 5% bracket of the entrepreneurs. Now you simply need to do that all again, with the lessons learned and your newfound energy, capital and the success story behind you. You'll do very well indeed if you play your cards right. Don't be so hard on yourself, don't compare with the 'could have been' from the perspective of it could have been more, it could have been a whole lot less too!
- Rod 16y ago"Starting a business, operating it for a while and a successful exit are the whole meal." Are you serious? You mean that in general, or in this particular case? Frankly, I am shocked by your assertion. Quoting Andy Grove: "Intel never had an exit strategy. These days, people cobble something together. No capital. No technology. They measure eyeballs and sell advertising. Then they get rid of it. You can't build an empire out of this kind of concoction. You don't even try." My thoughts exactly, only expressed more eloquently. What do you want? Make a couple of million and spend the next 30 years bored by the pool drinking cocktails? Or do you want to build an empire? Sure, building an empire is hard work, but at the time of my death, I want to know I chose the path of adventure, not the easy way out. I am by no means advocating taking enormous risks and chasing quasi-impossible dreams. But if one's startup is taking off, why not stick around and try to scale it up? Building a company of a few 100s of people from scratch sure must be a whole lot of fun. You are creating employment, you are creating wealth. If you sell your business as soon as it starts working, then you do the hard work, and someone else gets all the credit and the fun.
- jacquesm 16y agoIt all depends on your initial goals. If your goal is to create a company that is going to be around in its original form and that will 'change the world' then by all means, stick around. But if you create 'web-apps' for an emerging field where you'll be faced with 10's if not 100's of competitors a successful acquisition is not bad at all. In such markets shake-outs are the norm, and that period is marked by acquisitions and obituaries. Most successful start-ups find that at some point in time they're going to be acquired. Your comment reminds me of the criticism levelled at mint.com when they 'sold out', as though what they achieved and did was all negated by selling to their 800# gorilla competitor. Personally I think they - and Peter Cooper, albeit at a lesser scale - did great. Whether you should stick around or not depends on a lot of factors, your ambition, your ability to manage a larger company (and your desire to do so), your risk profile and so on. No one size fits all, there is room enough for all strategies and tactics, what works for you may not work for everyone. Peter managed to do what very few people here will ever manage to do, in spite of all the potential, he did it under his own power, recouped his investors money and paid them a premium, had a pretty much text-book acquisition for a company this size. Nothing to complain about. Could you do better ? Maybe. But you could also do a lot worse. The joke goes that no deal is ever right, if you manage to sell you should have waited, if you crash you've waited too long. So a certain feeling of 'I could have done better' post sale is pretty much the norm, and maybe you really could have done (a lot) better, but for all the same money you'd have crashed horribly or you could have found yourself the proud owner of a stagnant business in a field with lots of better funded and better executing competitors. There might be a way to turn that around but it's not a given.
- lionhearted 16y ago> In 2006 I got an e-mail from Michael Arrington who wanted to write about Feed Digest for TechCrunch (yes, one of the biggest and most influential tech blogs in the world). Being a closet perfectionist, I asked if I could hold until the magical version 2 was released. Man, I hate perfectionism. I've done a similarly stupid thing or two. This is something worth striving against.
- all 16y ago'it would be an understatement to say I was naïve about the concerns of "running a business."' He missed the forest for the trees in terms of his industry. As he says at the end of the article, it is only now - 3 years later - that he has enough perspective to see some of what he did wrong. His story reminds me a lot of Gerber's master technician who is good at his craft but not the business thereof. Fortunately for him, that industry is still quite small but has massive potential, and he could jump in again (assuming the terms of sale allow it).
- fmora 16y agoHonestly, calling yourself an idiot is a huge turnoff. You automatically make me want to not cheer you on. It makes me feel like you deserve to fail. Bill gates, Steve Jobs, Paul Grahams and many other famous people have had failures before becoming successful but you have never heard them call themselves idiots (as far as I'm aware). If nothing else they would call those failures "early attempts at success". And the worst thing is that what you did cannot really be called a failure so what is wrong with you? Even if you think that you are no longer an idiot the title and article gives waves of no confidence. My advise, please never call yourself an idiot; your subconscious will start to believe you're an idiot and so will other people. Is difficult to describe but just remembering your article I feel repulsion. I wonder whether other people feel like this. Anybody else or do I just have issues?
- edanm 16y agoCan't speak for anyone else, but I disagree. Title notwithstanding, the article is a nice piece of self-reflection. The author clearly looked at his semi-successful past, and managed to see both what he did right, and what he did wrong. Not many people are as able (or willing) to dig deep like that, much less share those thoughts with others. I'm happy he did so so that I have a chance to learn, and I also think it takes great confidence to admit what you did wrong.
- fmora 16y agoNothing wrong with learning from your failures. I do it all the time. I Think back about the times that I screw up and that if I'd had more experience things would have turned different. But hindsight is 20-20 so calling yourself an idiot just because you had no experience and were learning is unfair to yourself. What is the necessity of calling himself an idiot and then trying to convince us that he is an idiot. It smells a lot like low confidence and I'm not sure I want to be around him if he feels that way. The paper could have been written as lessons learned from his first startup. The way he portrays himself is just completely wrong. I noticed he has other articles and I just cannot force myself to read them. He did to good a job in his article convincing me that he was an idiot. How do I know he still is not one. He probably is not because of what he did (he made a good amount of money) but emotionally I still feel like he is an idiot. Weird huh?
- Corrado 16y agoNot to put to fine a point on it, but does anyone use feed readers anymore? Hell, does anyone read feeds at all anymore? I'm the geek in my circle and no one I know relies on feeds. I've tried to 'get it' about why they are good and have given them a try, but I end up back at HN or Reddit for my updates. Am I missing something that everyone else knows about? Is my time being wasted checking web pages instead of checking feeds?
- petercooper 16y agoI can't answer your overarching question, but the majority of Feed Digest's users were merely processing snd republishing feeds to HTML includes for their sites rather than actually subscribing to or using the RSS output features. Think RSS-to-HTML (or JavaScript.)