Brutally humbling lessons from Good Money

As an entrepreneur and investor, mistakes and failures in the high-risk land of startups are a critical part of the journey. I have backed over 100+ companies and only a few break out into scale. That said, in my adventures as an entrepreneur, I feel it’s valuable to share some of the things I have learned in my failures (aka learning opportunities).

In this case, I’m speaking about the failure of my startup Good Money which was one of the most painful, high-profile, and difficult startups of my career. I raised money from many friends and friends-of-friends, and it’s never easy to lose money of those who believed in you.

I started Good Money coming off of the success of Thrive Market. Our powerhouse team had scaled to our once tiny ecomm store to millions of users and hundreds of millions in revenue.

I now had a desire to create a scalable platform to help people redefine and empower their relationship with money — a conscious banking app that made its customers owners.

Good Money started as a crypto project in early 2018. As regulatory uncertainty began looming over the crypto space, we pivoted into a conscious banking solution with a unique way of distributing ownership to its customers. Below is a list of some of the key mistakes and learnings I made along the way. I share this in the vulnerable spirit of hoping others will learn from my lessons as well.

Underestimating the challenges of banking regulatory and technology

The first beta of Good Money we launched using a 3rd party banking middleware service provider that was funded by famous Tier 1 investors that had other fintech unicorns on the platform. When we were finally launching, their top customers were abandoning their platform and we quickly saw why.

While we were seeing historically low $1.50-$3 costs to acquire customers across media channels. We quickly realized we didn’t have adequate control of the customer using 3rd party tech, and if we started to accelerate we were going to be losing 1m+ a month quickly in customer fraud losses alone. We took it on the head and made the difficult decision to let go of 70% of the company back to core engineering so we could go do the hard work of being direct Program Managers as a fintech player.

The engineering team did an amazing job building the project from scratch and I went and negotiated a 100m incentive deal with Visa, but that didn’t matter because, by the time we were ready to launch 1 year later, fintech valuations had fallen 90%+. The leadership team of Good Money didn’t see a path forward and thus decided to return the approx 13m of cash to investors. The note-holders got all this money and many of my friends who invested (including me) lost all their capital. One of the greatest risks non-technical cofounders have is the technology development and the choice to use this 3rd party tool was no exception that caused existential harm. I could have made all the other mistakes, and if I had got this decision right to build it all in-house (or pick a better partner), we likely would have flourished.

The pros and perils of cofounders

Coming off founding and scaling Thrive Market I had extremely successful cofounder partners relationships. As a consequence, I came into Good Money being too loose with cofounder titles, and in less than a year there were 6 of us cofounders. At Thrive Market my cofounder and President had access to the bank accounts without me needing to sign because I was on the road nonstop bringing in partners and influencers into the company. Similarly, I had one of my cofounders who was a California Bar seemingly high-powered tech lawyer who also served as our General Counsel have signing access to the bank accounts. And while I would get reports on the monthly burn rate I didn’t see she was stealing funds in the flawed strategy of focusing most of my time raising money to “go big or go home” approach of scaling Good Money.

When this came to light I felt so betrayed as this person stayed in my home off and on for 2 years when she would travel to Los Angeles and I helped her child get jobs at other companies. Once it was clear what was happening, we immediately brought in 3rd party forensics for all historic financial records and we brought in the FBI so she could be served justice.

It took 18+ months, but a large portion of the funds she stole were returned, she lost her ability to practice law and she now sits in prison. I had personally invested 1m into Good Money, four years of my life and vouched for my team to friends who invested. To have someone deceive me so thoroughly was deeply painful. Since then there are much tighter controls that are put in to protect funds and more rigorous processes for screening the people I work with.

Personal reflections

When I don’t sleep consistently I become an asshole pretty quickly. In the mad dash of trying to lift Good Money, I started to lose sleep quality which greatly affected the clarity of my thinking and leadership. The lack of clear thinking and strategy created downstream negative effects that the organization had to spend time trying to fix later on. There is a huge difference in the power of good strategic thinking that is 70% baked and 90% baked in terms of outcomes.

In the early days of Good Money when I made the biggest mistakes, I didn’t slow down to get it’s strategy laser-focused. This was ultimately the single biggest factor that crushed the org and its noble mission. Refining and honing the strategy affects every decision from sequencing, team selection, product development, etc.

When you have built a career defying people and society who told you no or that’s impossible, you start to believe your own kool-aid. This started to change for me in the process of the following 2+ years of healing from my near-death mountain bike accident.

I still believe it’s critically important that we challenge the status quo but I seek to do it from a place of more self-awareness, less certainty, and hyperbole. After my accident, I took a long hard look at how unconsciously convinced I was of how right I was, and how wrong others were. Hopefully, as we get older, help friends/family die, succeed, and fail, we come to realize the world is not so black and white.

As a side note, I feel like one of the most critical things for humanity is to learn how to hold competing and complicated ideas closely without having to make enemies of each other. The polarization of society into left/right, conservative/liberal ideologies is making it near-impossible to face the critical challenges we face of the national debt, endless war, destruction of ecosystems, an epidemic of systemic health crisis (cancer, diabetes, etc) and the capture of American democracy by large corrupt corporations.

It appears that powerful corporations and politicians want us to be divided because when we are, they win. It’s that simple.

The Aftermath and what’s next…

It took almost a year to properly close Good Money down with an ABC Trustee. I still sometimes have hard and honest conversations with past backers about Good Money because it’s important to me to keep learning from the feedback. It was heartening in the midst of such challenges to see how many kept cheering us along the way in our regular investor updates.

In the aftermath of all that I spent more than a year soul-searching and not starting anything new. How could I have made these mistakes? And what was at the core of why I tried to launch Good Money in the first place?

From being deeply influenced growing up with the children of the Patagonia founders to starting Thrive Market onwards, I have been guided by a deep desire to help galvanize the collective power of humanity doing better together by voting with their money, their attention, and their values. In the dark night of the soul after Good Money, what emerged was a continued fierce belief in the human spirit to collaborate in making things better, and a desire to be part of that. This led me to my newest project UNFK.com, as a path of galvanizing tens of millions of humans to celebrate our power together as we pressure corrupt corporations to shift their practices, using pranks and comedy.

I’m committed to not repeating the same mistakes I made at Good Money. This led us to incubate many ideas slowly for UNFK at lower burn till we got aligned on our current strategy of launching our crypto game and web app.

It’s been with great humility and honor that many Good Money investors and teammates have joined to work with me and to back UNFK. That said, we have kept this org much leaner this time and I have been careful not to overstate the odds of success. What we are trying to build is objectively fucking hard. Yet for me and the UNFK team, the risk is worth taking because when our hearts and minds are aligned, humanity is unstoppable and why not do it with a big dose of humor.

We stand on the shoulders of giants and often successes we celebrate come from a long line of failures and compost. I want to thank everyone who has joined me in the past holding the vision of a healthy future for humanity and all of those that courageously contribute to making it a reality. One of my longtime meditation teachers, Adyashanti, says that “courage is not the absence of fear, but willingness to persist in its presence.”

I hope you can learn from some of my mistakes and we continue to advance the success of the human experiment together…