A Terrible, Horrible, No Good, Very Bad Hardbound Update
medium.com
medium.com
I don't mean to be harsh, it sounds like you gave it a shot and it went pretty right. But you got caught up in the unicorn-chaser Silicon Valley mindset:
1) Do something that only works if you're huge
2) Raise lots of capital based on the idea that you will one day be huge
3) Use that capital to become huge enough that your thing actually works
In short - go with "disrupting" world-changing ideas to the VCs. If your idea is good, but not great, you're better off finding money on your own and growing it organically.
If you're a seed stage VC you're where a larger fund has allocated a portion of its capital to play insanely high risk/high reward investments.
It's just a long, slow grind. It requires direct communication with your audience. You have to listen to what they want and meet their needs.
Consider this: you might not already know everything there is to know about my business by skimming one blog post!
You're coming across as pretty defensive, which is understandable, but probably not helpful. People here can see this from a perspective that you can't, and if you're defensive, you're missing out on learning something.
Otherwise, why are you bothering to interact here?
Also, I totally get that it seems like a total waste of time to engage with the comments here. A lot of people have told me the same thing on Twitter. But the thing is: I think it's really special that someone on the other side of a computer screen read this thing I wrote and is thinking about what they would do in my shoes. Even if they express it in a way that's kind of rude or condescending, it means something to me!
I'm sorry if it seems like I'm being defensive. When I think of what the word "defensive" represents, I think of someone who is totally unwilling to consider other points of view and is trying to shut out the world. I don't think that's what I'm doing. Nothing is more important to me than learning from what happened and growing into a better, smarter person. I totally appreciate the fact that I am just too close to the thing to really understand what happened. I need help from objective third parties to learn the most from this.
That's actually why I'm replying to the comments. There's the naive DHH-cheerleading reply to anyone who is "yet another dumb unicorn chaser". But I want to go one or two levels deeper than that. I don't think those replies are particularly helpful, but I think the people that write them totally could be helpful. They just need to actually have a desire to understand in more detail what my business is/was doing. I accept that most people here will never care enough to really dig in. But I think the probability is high that some people here actually might really care. So I'm engaging here while it's on the front page of Hacker News, because I won't get another opportunity like that for a long time.
Thanks for giving me the opportunity to think that through more. I hope it answers your question.
I've been part of a failed business that's left my father with a mountain of debt in his late middle age. I am in the process of retooling my life to go back to school and earn a degree. I recognize what it's like to face a crossroads in your life. It's not something that can be casually dismissed.
We're all human and doing the best we can.
- mechanic is scalable with more resources. Throw in more computers, programs and get more output immediately with a much higher rate compare to human
- organic is good but it take time. If you need quality work of human, it doesn't scale easily. It's possible to grow slowly with low cost.
You're absolutely right that we weren't profitable at our current scale, and that our goal was to raise funding from VCs, and since we couldn't do it we had to make really tough changes. But this was a risk that we all accepted! Would I do it exactly the same way again next time? No, of course not. I learned a lot from this experience. But do I regret going for something big that I believe in, even if it wasn't a plan that was easily bootstrapped? Absolutely not.
You are smart, and you make a lot of good points. I could learn a lot from your way of thinking! But--you're also being a bit of a condescending know-it-all. This is a perfect example of why everybody makes fun of Hacker News comments.
You can see that, right?
It's nice that you chased your dreams. The problem is, this is how almost all startups end up, with the last guy wondering what to do next. If you get struck by lightning, you get acquired. If you get struck twice, you get VC money.
That you "accepted" the risk just means you took a very bad bet. If you learned from that, great. No shame in that. But it's not something people are going to be impressed by, especially this late in the game.
1) I have never had more job offers in my life than the past 24 hours. Like, really good jobs. Obviously that wasn't the goal, but it's not like I'm out on the street or really in any way worse off than I was before.
2) I learned more in the past two years than I have any other time in my working life. So again, I'm not in that bad of a spot. It wasn't a waste of time at all.
3) Even though there are very few massive hit VC successes, they do happen dozens of times a year. Just because something is low-probability doesn't make it stupid. Do you think people are dumb who write novels? Or become actors? Or open food trucks? Nobody should try anything that probably won't work?
That's a really sad life outlook.
If your goal was to get some job offers, great. I got the impression that wasn't your goal, though. That you're fine, personally...well, I assumed that, given you bothered to blog about it. But yes, that's good. I hope that's true of everyone else involved.
But to answer your last question...it's the wrong question. The real question is whether it's smart to pin all your hopes on a really unlikely way to succeed when other approaches exist. Most people who write novels, become actors, etc. don't quit their day jobs until they actually start to make it. Food trucks that don't turn a profit don't tend to get investors to save them. Most new businesses aren't wannabe unicorns.
You do still have the option of keeping your "vision" afloat and your business going (also, please, call it a business, not a 'startup'). Get a job, use the $2500/mo to keep producing content with the resources you can afford and work at 4xing that $2500/mo that you're currently making. You'll eventually be back in business, if you are flexible with how you think about this.
$1B or nothing is fool's errand.
"Now, everyone has moved on but me, and I’m trying to figure out how to move forward. For the time being, we’re not going to be able to release any new stories (it sucks, I know), but the app and website will stay up. I am not ready to quit just yet. There probably will be some big changes, but I am not finished."
Also:
"The second option [continuing with our same model & creating all the content myself] is tempting, because I have no significant new data that changes my mind about Hardbound’s potential. Investors are wrong all the time. But if I just jumped into that, I would need to spend all my time working on new stories and I wouldn’t have very much time to learn from what just happened. So I have reservations about immediately jumping into this route."
When I reference "failure" in the post, I am referring to my failure to keep our bank account full.
1. Yes, if you can take some time.
2. Do some crying. You probably feel depressed, burnt out, stressed out. Crying is a great release.
3. You don't need to do anything right now it's ok not to do anything right now.
4. If you're under personal financial stress try and resolve that. Perhaps move somewhere cheaper.
5. You probably don't need to think too much about what went wrong right now, maybe take some time first?
Realize that there will be a time when the stresses of this business will be long behind you, and you won't feel it with the same intensity anymore. Maybe read some good books, it can really help you feel alive again.
All this is very biased. It's based on how I would be feeling, if I'd gone through the same process as you.
Good luck!
>There’s an image in my head that helps me make sense of this:
><image>
>I’m driving towards the horizon in the desert.
Wait a minute, a man can dream, but the image in your mind is driving in a Ferrari towards the horizon in the desert.
And right after:
>Instead, the car ran out of gas, and it’s just me now.
Maybe if you had an ordinary pickup with a couple jerry cans in the back you would have gone further?
https://www.youtube.com/watch?v=5C6GZQ7UNaU
and I visualized that (or any of the movies where the car is a battered old car, possibly an old jeep or a pickup) before noticing the Ferrari logo.
Maybe this one would do (not a photo, but a painting) to better explain what I visualized:
https://www.flickr.com/photos/alberto_ollo/5229651715/sizes/...
I tell him I'm impressed with his success and he kinda downplays it. I've worked plenty of places that failed after four or five years. If you can keep the wheels on that long you must be doing an abnormal number of things right, and you should be objectively proud of that.
...unless they used it to bump up burn rate to the point where another round or layoffs were inevitable, because profitability before out of runway was never feasible. That's what it looks like, but hard to tell from outside.
> 1. Try to get acqui-hired and pretend I didn’t fail to fundraise, as is the tradition in our industry (“our incredible journey!”, etc). Hint: I’m not going to do this.
In the words of Oliver Cromwell: 'put your trust in God; but mind to keep your powder dry'.
At the end of the day, investors weren't convinced, so you certainly have a point! There may have been something seriously wrong with the plan. But I challenge your assertion that we'd need "big growth just to survive". Yeah we'd need pretty good growth, for sure. But not "unrealistic, crazy unlikely" growth.
And on the upside, once we got there, all growth would be pretty much pure margins after that! We don't think we'd need to dramatically increase our investment in content.
Basically, it might not be as dumb as it seems.
1. Are those numbers inclusive of Apple taking a 30% cut?
2. You have a $15k per month content budget, but what about other overhead? Does the 15k subscriber number for profitability cover that too?
3. How is churn?
4. What's your CAC and LTV?
Most importantly: you talked to dozens of investors, some of them probably smart and experienced. Why did they say they didn't think it would work?
They might be wrong, obviously, but I'd be curious to hear their main objections.
What they want of for you to reach a high valuation which allows them to get a +10x return on their investment. What they want is for you to need more money from them in order to survive, so if they believe in the play they can increase their stake.
At some point they want liquidity. But that doesn't have much to do with your profitability.
Honestly, you probably know better than me. But this has been my limited experience.
You say this while literally telling me that your big hope was to get a pile of money so that you could "bend" your growth curve towards reaching bare profitability after about another year. When would a realistic assessment of your actual growth curve say you'd reach that point? Was there enough customer base that you could actually reach to get to that point, much less beyond?
I won't call your plans "dumb", but the whole startup approach is one that almost always fails, even compared to starting other businesses. It's really hard to call it "smart".
I feel like your marketing plan relied on too many perfect things to happen. You should also consider that the more you exploit a specific marketing channel, the less it tends to work. I think it's a tough sell to convince investors to put money into something that will only get you to your targets if your conversion and share rates improve.
Maybe focusing on opening the doors for content creators is what they need to create _enough_ stories for user demand