In 2011 I left my job as the second agent at Pinterest–before I vested any of my stock–to work on what I anticipation would be my life’s work.

Gumroad would become a billion-dollar company, with hundreds of employees. It would IPO, and I would work on it until I died. Commodity like that.

That didn’t happen.

Now, it may look like I am in an enviable position, active a profitable, growing, and low-maintenance software business with barter who adore us. But for years, I advised myself a failure. At my lowest point, I had to lay off 75 percent of my company, including many of my best friends. I had failed.

I no longer feel shame in the path I took to get to where I am today. It took me years to apprehend that I was bearded from the outset. This is that journey, from the beginning.

A weekend activity turned VC-backed startup

The idea behind Gumroad was simple: Creators and others should be able to sell their articles anon to their audiences with quick, simple links. No need for a storefront.

I built Gumroad that weekend, and launched it early Monday morning on Hacker News. The acknowledgment exceeded my grandest aspirations. Over 52,000 people arrested it out on the first day.

Later that year, I left my job as the second agent at Pinterest–before I vested any of my stock–to turn it into what I anticipation would become my life’s work.

Almost immediately, I raised $1.1M from an all-star cast of angel investors and adventure basic firms, including Max Levchin, Chris Sacca, Ron Conway, Naval Ravikant, Collaborative Fund, Accel Partners, and First Round Capital. A few months later, in May 2012, we raised $7M more. Mike Abbott from Kleiner Perkins Caufield & Byers (KPCB), a top-tier VC firm, led the round.

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 account numbers started to climb. And then, at some point, they didn’t.

To keep the artefact alive, I laid off 75 percent of my company–including many of my best friends. It really sucked. But I told myself things would be fine: The artefact would abide to grow and no one far from the aggregation would ever find out.

Then TechCrunch appear Layoffs Hit Gumroad As The E-Commerce Startup Restructures. All of a sudden my abortion was public. I spent the week blank my abutment arrangement and answering our customers’ concerns, many of whom relied on us to power their business and wanted to know if they should look for an addition after account the news; some of our favorite, most acknowledged creators left. (It hurt, but I don’t blame them for trying to abbreviate the risk in their own businesses.)

So what went wrong, and when?

Failing in style

Let’s start with the numbers. This is our monthly candy volume, up until the layoffs:

It doesn’t look too bad, right? It’s going in the right direction: up.

But we were venture-funded, which was like arena a game of double-or-nothing. It’s beatific when things are going your way–and airless when they’re not. And we weren’t acceleration fast enough to raise the $15M Series B (the second major round of funding) we looked for to grow the team.

Every month of less than 20 percent growth should have been a red flag.

For the type of business we were trying to build, every month of less than 20 percent growth should have been a red flag.

But at the time, I thought: “It’s okay.” We had money in the bank, we had product-market fit. We would abide to ship artefact and things would work out. The online architect movement was still nascent; it wasn’t our fault. It always looked like change was right around the corner.

But now, I realize: It doesn’t matter whose “fault” it is, we hit a peak in November 2014 and stalled. A lot of creators absolutely loved us, but there weren’t enough of them who needed our specific artefact offering. Product-market fit is great, but we needed to find a new, larger fit to absolve adopting more money (and then do it again and again, until accretion or IPO).

In January 2015, after our final double-or-nothing hail-mary, when our bank antithesis dipped below 18 months of runway, I told the twenty-person team: the road ahead was going to be a tough one. We didn’t have the numbers to raise a Series B, and we would have to work really hard over the next nine months to get even close to them. To that end, we deprioritized aggregate except appearance that would anon “move the needle.” Many were not core to our business, but we needed to try aggregate we could to get our account candy volume to where it needed to be.

If we succeeded, we would raise money from a top-tier VC again, hire more people, and start the adventure again. If we didn’t, we would have to acutely abbreviate the company.

In those nine months, when the whole team knew that we were angry for our company’s life, not a single person left Gumroad. From “this is gonna be hard,” to “yep, turns out it was,” every single person worked harder than ever.

We launched a “Small Artefact Lab” to teach new creators how to grow and sell. We alien a ton of features, including weekly payouts, payouts to debit cards, payouts to the UK, Australia, and Canada, assorted additions to our email features, artefact recommendations and search, analytics to see how barter are reading/watching/downloading the articles they’ve purchased, and add-to-cart functionality. And that was just from August to November.

Unfortunately, we didn’t hit the numbers we needed.

Slim down or shut down?

Looking back, I’m glad we didn’t hit those numbers. If we angled down, raised more money, and appeared in the account again, there was a very real achievability it would only lead to a more amazing failure.

With that off the table, our options were:

  • Shut down the business, return the actual money to investors, and try commodity new.
  • Continue with a slimmed-down adaptation of the aggregation to aim for sustainability.
  • Position the aggregation for an acquihire.

Some of my investors wanted me to shut down the business. They tried to argue me that my time was worth more than trying to keep a small business like Gumroad afloat, and I should try to build addition billion-dollar aggregation armed with all of my learnings–and their money.

I tended to agree with them, to be honest. But I was answerable to our creators, our employees, and our investors–in that order. We helped bags of creators get paid, every month. About $2,500,000 was going to go into the pockets of creators?—?for rent checks and mortgages, for apprentice loans and kids’ academy funds. And it was only growing! Could I really just turn that faucet off?

And if I sold the company, it would be mostly for our arch team, which means I would no longer be able to ascendancy the afterlife of the product. There were too many accretion belief that promised agitative journeys and amazing synergies to come–and ended with a deprecated product a year later.

It was absolutely tempting. I could say I sold my first company, raise more money, and do this all again with a new idea. But that didn’t sit right with me. We were amenable to our creators first. That’s what I told every new hire and every investor. I didn’t want to become a serial entrepreneur, and risk black another customer base.

We absitively to become assisting at any cost. The next year was not fun: I shrunk the aggregation from twenty advisers to five. We struggled to find a new tenant for our $25,000/month office and focused all of our actual assets on ablution a exceptional service.

In June 2015, a few months before our layoffs, our financials looked like this:

  • Revenue: $89,000 for the month
  • Gross profit: $17,000
  • Operating expenses: $364,000
  • Net profit: -$351,000

A year later, in June 2016, our account numbers looked like this:

  • Revenue: $176,000 for the month
  • Gross profit: $42,000
  • Operating expenses: $32,000
  • Net profit: $10,000

It hurt, but it meant creators would keep accepting paid, and that we were in ascendancy of our own destiny.

Skeleton crew to affairs business

It got worse from there.

Gumroad was no longer the venture-funded, fast-growing startup our investors and advisers signed up for. As anybody else found other opportunities, the skeleton crew fizzled from five to one.

I was basically alone. I didn’t have a team, nor an office. And San Francisco was full of startups adopting gobs more money, architecture amazing teams, and aircraft great products. Some of my accompany became billionaires. Meanwhile, I had to run a “measly” affairs business. It wasn’t what I wanted to do, but I had to keep the ship from sinking.

Now, I accept some people would dream to be in that position. But at the time, I just felt trapped. I couldn’t stop, but there was only so much I could do as an army of one.

I shut off the rest of the world. I didn’t tell my mom about the layoffs–she had to read the commodity and tweets herself to find out. My accompany were worried, but I assured them I was neither depressed nor suicidal. I left San Francisco for long stretches at a time, cerebration that some travel would give me able distance. It only made me more lonely.

Every day, I woke up and took care of all of Gumroad’s abutment 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 active now, but they always found time to help. Once all things Gumroad were taken care of, I tried to go to the gym, and if I had the willpower, work on a side activity (a fantasy novel). Most days, I failed.

To me, beatitude is so much about an apprehension of absolute change. Every year before 2016, there was an advance in my expectations–in the team, the product, or the company–and this was the first time in my life when the present year felt worse than the last.

Living in San Francisco was already a struggle, and when Trump won the election, I ended up abrogation for good.

New beginnings

Then one day, aggregate changed. Again. I’m wary about administration this part of the story, because I don’t know if there is annihilation to learn from it. But it happened, so here it is.

On November 27, 2017 I got this email from KPCB, our lead investor:

I am afterward up our chat a few months ago. KP would like to sell our buying back to Gumroad for $1. Can we altercate this week?

Mike had left KPCB to start a new company, and KPCB didn’t want the operational cephalalgia of appointing a new board member. Plus, it helped their taxes. In one fell swoop, our defalcation preferences (how much we would have to sell for before dollars started going to employees) went from about $16.5M to $2.5M. All of a sudden, there was a light at the end of the tunnel. Small, dim, and far away, but present. There was a path to an absolute business, not bound to the go-big-or-go-home mentality I signed up for when I raised money.

One broker joined them. We’ve bought back a couple more, since then. I keep the rest of the investors abreast with a brief email every few months.

The future came into focus: I could grow a small team, slowly buy back our investors, and build Gumroad into a allusive business focused on our creators. We would never become a billion-dollar company, and that started to feel okay. Certainly, the bags of creators affairs on Gumroad wouldn’t mind.

Finding new forms of impact

The eight years I worked on Gumroad were full of claimed ups and downs. There were months where I worked 16 hours a day. But there were also some months where I worked four hours a week. Here’s one way to picture that time:

Can you tell which is which? I can’t. We had a sales team for a few years, then we didn’t. Can you tell when we made the switch? I can’t.

It doesn’t matter how amazing your artefact is, or how fast you ship features. The market you’re in will actuate most of your growth. For better or worse, Gumroad grew at almost the same rate almost every month because that’s how bound the market bent we would grow.

So instead of assuming to be some sort of artefact visionary, trying to build a billion-dollar company, I’m just focused on making Gumroad better and better for our absolute creators. Because they are the ones that have kept us alive.

Creating and capturing value

At a CEO Summit many years ago, my best hero, Bill Gates, was on stage. Addition asked him how he dealt with declining to abduction so much value? Microsoft was huge, sure, but tiny compared to the total impact it has had on the world and on humanity.

Bill’s answer: sure, but that’s true with all companies, right? They create some value and accomplish in capturing a very small allotment of it.

Similarly, I am now more focused on creating value than capturing it. I still want to have as large an impact as possible, but I don’t need to create it directly, or abduction it in the form of our acquirement or our valuation.

For example, Austen Allred, who’s raised $48M for his startup Lambda School, got his start affairs a book on Gumroad.

Startups have been founded by former Gumroad employees, and dozens more companies have been massively bigger by recruiting our alumni.

On top of that, our artefact ideas, like our credit card form and inline-checkout experience, have proliferated the web, making it a better place for everyone–including those that have never used Gumroad.

While Gumroad, Inc may be small, our impact is large. There is, of course, the $178,000,000 we have sent to creators. But then there’s the impact of the impact, the opportunities that those creators have taken to create new opportunities for others.

Opening up

I’ve found other ways to create value, too. After the layoffs, I didn’t talk to anyone about Gumroad. Not even my mom. And after moving away from San Francisco, I felt pretty broken from the startup community.

So, as a way to re-engage with the community, I anticipation about administration 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 don’t grow every month? It could scare off -to-be customers. It’s commodity I would never expect a startup gluttonous adventure basic to do. It makes sense to hold those cards as close to your chest for as long as accessible when you must raise money, hire people, and attempt for barter with other venture-seeking startups.

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 won’t change that. So in April 2018, I started to absolution our account financials publicly.

Ironically, more investors have accomplished out (we’re just absorbed in adopting money from our barter for the moment, thanks!), more folks want to accord to Gumroad, and our shift in focus has brought us closer to our creators.

Instead of freaking out about how ‘small’ Gumroad absolutely is (like I anticipation they would), our creators have grown more loyal. It feels like we’re 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. Anyone will be able to deploy their own adaptation of Gumroad, make the changes they want, and sell the agreeable they want, after us being the middle-man.

In 2018 we donated over $23,775 (8 percent of our profits) to altered causes. We raised money for the blow relief efforts in Puerto Rico and the floods in Kerala. We helped fund the Presence-of-Blackness activity in abstract fiction, and a Mexicanx publication.

Seeking the non-binary

For years, my only metric of success was architecture a billion dollar company. Now, I apprehend that was a abhorrent goal. It’s absolutely arbitrary, and doesn’t accurately reflect impact.

I’m not making an excuse or assuming that I didn’t fail. I’m not assuming that it feels good. Even though anybody knows that the abortion rate in startups, abnormally venture-funded ones, is super high, it still sucks when you do.

I failed, but I also succeeded at many other things. We turned $10 actor of broker basic into $178 actor and counting for creators. And after a fundraising goal coming up, we are just focused on architecture the best artefact we can for them. On top of all that, I’m happy creating value beyond our revenue-generating product, like these words you’re reading!

I accede myself “successful” now. Not absolutely in the way I intended, though I think it counts. Where did my binary focus on architecture a billion-dollar aggregation come from in the first place?

I think I affiliated it from a association that worships wealth. I don’t think it’s a accompaniment that Bill Gates was my best hero and was also the world’s richest person.

Since I can remember, I equated “successful” solely with net worth. If I heard addition say “that person’s really successful,” I didn’t assume they were convalescent the abundance of the people around them, but that they had found a way to make a lot of money.

Wealth can be a admeasurement of success, as seems to be in the case of addition like Bill Gates, who has invested heavily in philanthropy. But it’s not the only way to admeasurement success, nor is it the best one.

There’s annihilation wrong with trying to build the next Microsoft. I alone don’t think billionaires are evil. And there’s a part of me that wishes I was still on that path.

But for better or worse, I’m on this one now. This has been my path to notbuilding a billion-dollar company. There are many like it, but this one is mine.


Let me know if you have any questions. I’m happy to help, or at least to listen.