Layoffs Hit Gumroad as the E-Commerce Startup Restructures | Hacker News Reader

Layoffs Hit Gumroad as the E-Commerce Startup Restructures

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84 pointsssclafani59 comments

Former Gumroad employee here. Since we didn't write about this, here's a response from the other side-- we weren't blindsided by this. We knew there was a chance we wouldn't get our series B, yet we believed in the product. The numbers looked great (the best they had ever looked). And we wanted to see this work, whether or not it meant being part of it in a few months.

This isn't some photo sharing app; many creators earn their living from Gumroad. When the time came to make a decision whether to be acquired and have the product die, or to downsize and have the product live on, this choice involved a lot more than our 20 person team. It involved the thousands of creators that rely on Gumroad. With or without me, I still believe in Gumroad.

It's refreshing to see employees who are this dedicated to the product. Kudos, Gumroad team.

I've always admired Gumroad for its execution, professionalism, and design chops. Good luck to you all. Other companies will be fortunate to gain the Gumroad team.

    The company had 22 employees as of earlier
    this year, and it has been in the process
    of laying off all but what is expected to
    be around 3 of its staff.

Normally, when I hear the words "layoff" and "restructure", I think 15% of the company, not 'basically everyone.' That's a bummer, and I expect this won't be the last time we hear this story this year.

I hope the frontend engineers making $75,000-$125,000[1] for a shot at one day accumulating up to 1% of Gumroad decide to pursue market wages at the next company they join :-\ The economics of startups rarely offer a worthwhile return to those who choose to play the game. For what it's worth, this is something I've found out the hard way.

[1] https://web.archive.org/web/20130516103241/https://angel.co/...

This never made sense to me. A startup should pay you more because if you are capable, you are giving up a lot.

If you want to be part of something revolutionary as an early employee, I suggest a better plan. Go talk to your employer about starting something small inside the already big and solid company. Negotiate the equity and terms before getting started.

If your company is too big and complex to get this going, then simply cut your hours and work part time on your product with someone else. 1% to 3% is just way too small for someone who is capable.

A gal who loves this game and spends 10 years working at different startups can end up loosing $500k to a couple of millions considering she could get paid very well at big co.

Note: Capable is the keyword here.

>This never made sense to me

There's a lot of naive people that will allow their trust to be exploited if there's a carrot dangled in their face. Now it makes sense.

Most investors will flat refuse to invest in a startup that pays anything more than low-mid-range salaries. Contrary to your theory that the greater risk should be rewarded with a greater tangible wage, I've personally seen investors pass on companies because the founder(s) wanted a 100k salary, even though it represented a 40% haircut in wage for the founder(s).

While the investors don't want you to think it, and do a lot to try to stop it from being thunk, Silicon Valley and tech culture make a lot more sense when you just realize that wealthy, seasoned investors are exploiting naive, just-out-of-college young adults as practically free labor, primarily compensating them in idealism and empty promises instead of dollars.

That's from 2013. No way they were paying sub $100k today.

How about middle of 2014, then? "$95k-$125k"

https://web.archive.org/web/20140707172338/https://angel.co/...

There's a "hiring" post on the front page right now offering sub $100k for front end developers and others. It's in Oakland though.

$75,000 isn't market wages for a developer?

Not in SF, where the median rent is now $4,225/month, or $50,700/year. Realistically, you can't even expect to take home $50,700 on a gross income of $75k.

http://blog.sfgate.com/ontheblock/2015/06/02/san-franciscos-...

I've been thinking about this lately.

Why doesn't Google or Facebook just pack up one day and go to... say, Detroit? Buy a shitload of property there, and tell all their workers that in the course of the next 5 years they want to have presence in two places: this new place in Detroit, and the old place in the Valley. Whoever wants to stay in the valley can stay... and whoever wants to move to Detroit can come move to Detroit. Same pay.

It would win a lot of good will... and it makes sense. The engineers making $150k will actually live what living on $150k is supposed to feel like. It'll jumpstart the hell out of Detroit... etc. etc. Not necessarily Detroit (I just chose to say Detroit because property there is so much down the shit that you can buy a sizable portion of the city for a good few million).

There is a long history of Company Towns in the United States. At their peak in the first half of the 1900's, about 3% of the population lived in one.

At the time, it was seen by the industrialists as a way to raise their workers into the middle class. "Paternalism was considered by many nineteenth-century businessmen as a moral responsibility, or often a religious obligation, which would advance society whilst furthering their own business interests. Accordingly, the company town offered a unique opportunity to achieve such ends."

"Although economically successful, company towns sometimes failed politically due to a lack of elected officials and municipally owned services. Accordingly, workers often had no say in local affairs and therefore, felt dictated. Ultimately, this political climate caused resentment amongst workers and resulted in many residents eventually losing long-term affection for their towns."

Perhaps it is time for a new company town concept being pushed by one of the big tech firms. Apple, Microsoft, Facebook, or Google might be able to pull it off. It could also be a test bed for their new technologies.

[*] Quoted paragraphs lifted from https://en.wikipedia.org/wiki/Company_town

1) Facebook or Google already have offices in Seattle, Los Angeles, Austin and other lower-priced locales.

2) The moving scenario works great for single people with no attachments, less so for married people with non-Facebook and non-Google spouses, even less so for such married people living in a school district they like.

3) Even with a single non-attached engineer, how many are company men dreaming about retiring from the same company they work for nowadays? How many are just using Facebook/Google as springboard for their "next step", be it a switch to another large company, fast-growing startup or doing your own startup?

4) If you're not independently wealthy, you want to hedge your bets. Being let go of an engineering job in the Valley is probably less onerous than being laid off from software engineering field in Detroit, as far as job searches, networking, and sacrifices one has to make.

Because money alone isn't enough; you need good schools, roads, and other public services.

Which follow when you send in the money. Not because throwing more cash at something is a magic fix, but because people that are capable of earning more money won't accept less.

Yes, but for the typical sort of talent that Apple, Google, Facebook, etc. want to hire, you need those things first.

Also, while those companies could start a long-term investment in an area, it's not something that could be done in a year or two, and ultimately they could only influence the process.

You need relatively successful leadership in that community to start to ensure those things happen -- the money alone isn't enough.

Do you mean Portland? It's a short flight from SF, in the same timezone, and has a huge software culture.

But even Portlanders are now complaining about the tech industry taking over and driving up rent.

Because the Bay Area has a lot more attractions than tech jobs.

One reason is because Detroit has 24x7 winter -- in the Bay Area it's a 4 hour drive to winter so you only experience it when (and if) you want to.

Well, Google and Facebook are both extremely profitable, so the wages they are paying their employees aren't hurting them at all.

Is it actually that bad? SF rents are certainly not low, but if you check Craigslist/PadMapper, it would seem difficult to pay $4k, let alone that being the median.

That number is for all apartments (http://blog.sfgate.com/ontheblock/2015/06/02/san-franciscos-...). So this lumps in studios, 1 BRs, 2BRs etc. When you consider that it is (slightly) less crazy. However the median rent for a 1BR is still $3,530 (http://sf.curbed.com/archives/2015/09/03/san_franciscos_medi...).

More anecdotally it is basically impossible to get a studio for less than $2k or a 1BR for less than $2.5k-$3k. I pay ~$1700 but have 1 bedroom in a 4BR apartment. If you are willing to live with roommates rent can start to become "reasonable" (assuming a $100k+ salary), but you're kind of screwed in SF proper if you want to be on your own and pay less than $2k.

That's ridiculous. You're talking about the kind of money I paid in mortgage repayments for a 2 bedroom house 12km outside of Canberra, Australia.

But comparing Canberra to SF isn't fair. Compare it to Sydney. It's $2k here easily a month for a 2 bed place to rent, depending on the suburb.

I pay about USD$2,400 a month for a 650 square foot 1 bedroom in downtown'ish Seattle. I envy your AUS$2,000 2 bedroom :)

The prices go down 12km outside of SF too. (Not to that level, but still)

Your post suggests you must be single, probably living either with your parents or with roommates. Perhaps 75k works if you are in the above two situations, but not otherwise. Consider that 75k, after taxes will be 50k. Assume you are saving zero for IRA/401k, you still have other costs -- healthcare premiums, car/bus/train fees, etc. Oh, and food. Doctor co-pays, dental co-pays.

Now if you are married with kids: 1. Hospital co-pays, premiums, co-insurance, $45 drug co-pays, everything comes to about $5k/yr if you are just moderately sick. 2. You cant live with roommates, you actually need your own home. Can you imagine raising a family with roommates? 3. You def need a car, possibly two.

Forget about saving up for a house, most will be $1m+

Some people will say -- "oh, you are married, now you have two incomes" -- sure, until you have kids. Then most of your second income goes to child-care, and in the early years, you will pay MORE for childcare than you earn!

Yikes! I thought NYC was bad.

...and yeah, I was thinking more in terms of national averages, not specific metropolitan areas.

Yeah, but divide that rent rate by 8 roommates ...

I run a company called SendOwl, which is probably the biggest competitor to Gumroad, and I must admit I'm sad to see this. We've been watching them over the years and have been impressed with some of the work they've delivered. I've also met a few of their employees and have liked their thinking around selling digital goods and where it's going. You could see they wanted to make a success of the company.

Their problems, in my opinion, have come from being VC backed. VCs ultimately want thier money back and with this comes massive, often unrealistic growth expectations. I've had a lot of offers of VC money for SendOwl over the years but I've never once considered taking it. I've bootstrapped SendOwl because I wanted complete control of the company, to direct where I thought it should go, to create the company where I wanted to work at (we work a sensible 9-5, I spend lunchtimes hitting the gym...), but most importantly to serve our customers and build something for the long term. This last part is something I've always seen as uncompatabile with the VC model.

The VC model is alluring though - VC money makes growing quickly easier, it makes getting PR easier and it makes bringing in lots of staff early on an easy decision. I'm not saying it's right or wrong per say, it's just not the path I wanted to go down. Bootstrapping isn't as sexy as VC money, but as long as we're growing, getting great customer feedback, and innovating with new features I know we're on the right path. Focus on those three things with Boostrapping and it's hard to go far wrong to be honest.

Interestingly we're getting more and more people asking about us as a company and whether we'll be around long term, so maybe the tide is starting to turn. Anyway I wish everyone leaving Gumroad all the best for the future. And any sellers out there who are interested in alternatives please check us out at: https://www.sendowl.com Happy to also answers questions in the thread below!

I just read your blog post on the topic. We need more voices like yours.

Thanks so much - we're going to be talking about this much more in the future

Interesting. I've been a customer of theirs for ~2 years. It's been really great until a couple months ago. Then something seemed to change. Rather than just being a great payment provider, they seemed to change direction in order to become a "platform".

In emailing with Sahil about my concerns about Gumroad's new direction, he said "We want Gumroad to be the core channel for everything. We started with sales, and are moving into audience/list management."

He made it clear that they want me to import my audience lists to Gumroad and that they don't plan to support future integrations with CampaignMonitor, Mailchimp, etc. That makes sense, since those email platforms are now the competition I guess. It's bad news for me though - if I wanted to stay with Gumroad, I'd now have a project on my hands to move everything over to a (currently) much less powerful email platform.

I imagine this will work for many of their customers, but there are customers like myself that don't want to be pushed in this direction. I prefer to keep my audience management separate from my payment provider. I don't want my payment provider deciding that my customers are now their customers that they can now spam and upsell them in order to grow their platform. I'm not saying that that is Gumroad's plan - but I'm increasingly worried that it might be. Particularly if they get in a "desperate for growth" situation like this article hints at.

Again, they've been great for years and I really appreciate that. The new direction just seems too risky and not a good fit for folks like me who don't want their payment provider as the middle-man for communicating with their audience.

I guess there's an argument that they're not a payment provider, but a "sales platform" or something.

Currently I'm looking for a replacement payment provider (or whatever they should be called) to use. SendOwl looks promising. If you've used them, or have another provider you'd recommend, please let me know!

I've been using SendOwl for a few years now to sell music education eBooks and albums directly through my website.

I can't recommend it highly enough.

Here are a few things I like:

- It works 100% reliably, has never let me down

- The checkout process is easy and neat from the customer's perspective

- Supports PayPal and Stripe which is the ideal imho

- Integrates with all popular email providers so you can do product-specific followup sequences with bonus gifts, etc. after purchase

- Provides simple support for running an affiliate program

- Support it absolutely superb: personal, swift and effective

- They handled the EU VAT mess better than anyone else I saw

- Monthly fees are very reasonable, I think I pay just $20-30/month

- It's easy to issue refunds and/or re-issue download link emails if you need to, so customer support can be handled quickly for those things

- You can create product bundles to support multiple products or discounted versions of products. After trying e-junkie and Clickbank before SendOwl, I can't tell you how much easier this feature alone made my life!

- You can do upsells/cross-sells during (or after) checkout

- They've been continually improving and extending the features offered in substantial ways - but without making a total mess of things.

- The reporting/analytics is simple but effective.

- In integrates effortlessly with e-commerce in Google Analytics so your sales (including dollar amounts) just show up in GA automatically.

Okay, that turned out to be more than a few things. I love SendOwl.

So you... work for them?

I was part of GumRoad's recent 10-day challenge called Small Product Lab. I had this feeling that they were getting very good at their business. I'm about to finish up work on my ebook. I was to go with GumRoad. As per my research, they were THE best in terms of design, seller pricing and payment experience for end-users.

The next best would be PulleyApp.com by BigCartel. Costs $6/month. Nowhere near Gumroad's percent-per-sale pricing. But BigCartel.com has been around for a long time (I remember they focussed on helping people sell tshirts online). PulleyApp is just their digital variant.

The main downside of most GumRoad-alternatives is that if the product's sales go down or just die out. Unless seller has made huge amounts of profits (say $10k), then paying $6/month to keep it alive for previous customers might slowly leak out profits previously made.

If anyone is to buy Gumroad, it should be Twitter (or Facebook?). They have the buy button and GumRoad would be a nice fit for small sellers.

I would encourage you to look around before deciding on Pulley. While I haven't used them in a while, when I did I was really blown away by how little support, features, and service they provided. It felt very half-assed and very slow to grow. I emailed them once about something and they seemed annoyed that I'd have a feature request. I left immediately after that, and that's when I went to Gumroad. Been happy there since. However, should I launch something new, I'll definitely look at SendOwl

Thanks for tipping me off about PulleyApp ~! Didn't know that they were that bad at support :(

I did checkout SendOwl after reading posts on this thread. They look like the best alternative if switching was required. Their video show a very slick & kickass experience for buyers (I tried the demo too).

B/w it looks like Gumroad is sticking around. Going by Sahil's tweets. They do understand very well that a lot of people love Gumroad a LOT and depend on it.

Oof. I sell through Gumroad as well, and now I'm a lot more worried :-/

I had been using hand-rolled Stripe integration. They're not bad, but I really like the invoicing in Gumroad, and that they accept PayPal.

They've been great while I've used them, though.

Use Selz. Do everything Gumroad does/did but also plugs in stuff like Mailchimp, Aweber, Campain Monitor etc etc. Don't know anything about SendOul.

> has been in the process of laying off most of its staff in an effort to run more efficiently

Is that meant to sound quite as much of a death knell as it does to me? I hope not.

I've made a few comics purchases through Gumroad (Skin Horse, Narbonic, and Inhuman Relations, amongst others), and found the process quite delightfully straightforward. I do hope this isn't their end - they deserve better.

Huh? I thought Gumroad was one of the better services out there for selling stuff. Too bad "hypergrowth" mania devalues companies like Gumroad because they look like a pretty awesome and sustainable business.

I remember when Gumroad was announced on Hacker News 4-5 years ago as a little weekend project.

"Over this past weekend I had the idea to build a sort of link shortener but with a payment system built-in... I think it has some potential. What do you guys think?"

https://news.ycombinator.com/item?id=2406614

It was April 4th 2011. There's an entertaining sub-thread about Bitcoin in that discussion https://news.ycombinator.com/item?id=2407053

At the current ~$0.70 / bitcoin...

I can't imagine bitcoins in their current implementation gaining traction as a form of payment with 'regular folks'...

And four years later at $400/bitcoin, that's still true.

Yep. One of the main allures of credit card processing is that it's instantaneous. Bitcoin's confirmation system is a non-starter as a competitor against credit cards unless you have special circumstances that make it the only practical option (can't trust customers to refrain from filing chargebacks and/or conventional financial institutions won't have anything to do with your business). Ultimately, while Bitcoin may maintain some value, it's not very convenient as an everyday payment instrument (just like gold, actually).

at this time I would still say thats an accurate statement.

I've wondered why a company like this needs to be present in the bay area paying bay area salaries and bay area office space prices.

For anybody doing the VC thing, they need to be able to plausibly promise their VCs to grow really, really fast.

That means hiring a lot of engineers, designers, etc., really fast.

That's much harder outside the Bay Area, and especially outside really expensive areas generally -- Seattle isn't that much cheaper than the Bay Area, for instance.

That's pretty surprising...

You would think with 15K creators and their traffic they would be able to monetize better... having to cut down to only three employees suggests they aren't making much revenue at all...

That's the unicorn way. Tech companies are encouraged, practically forced, to overspend in an attempt to show "hockey stick growth". This strategy has two positive properties for the investor: it ensures that the entrepreneur will be back before the VC to grovel for more cash in the next 24-36 months, and it gives the VC a way to kill investments he doesn't believe in anymore, despite what is a conventionally respectable and sustainable growth rate, by refusing to provide that infusion. Since most founders are naive 20-somethings, this trick works.

or three employees were bringing in all the money, and the others were overhead.

The real question is, why did they have 22 employees? I think this would have been an incredibly profitable one-man business (think TinyURL) but it tried to be something that was very hard for it to be.

This is what VC investment does to a company. The investors make you go for hockey stick growth, which means instead of just having a good service for selling content (that makes the owner a very handsome income), you need to take on the likes of Facebook and Pinterest. DHH's article from yesterday is right on:

> Part of the problem seems to be that nobody these days is content to merely put their dent in the universe. No, they have to fucking own the universe. It’s not enough to be in the market, they have to dominate it.

https://signalvnoise.com/posts/3972-reconsider

Restructuring down to only 3 people? I think this will make the company way more attractive for an acquisition.

Intermediaries get disintermediated. Braintree is a tad bit closer to the iron and maybe (if PoW conundrum finally overcome and after debt is introduced) crypto will do it again.

SHL learns a ton from this, gets experience most executives don't have. Optimistic in his future either way.

To the GR team, your work is not marginalized by this speed bump. GR is really good and something people love.

I hope other people recognize that and snap up everyone into good places.

You've gotta find some semblance of product/market fit or traction before staffing up to 22 people.

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