The Success and Failure of Design Inc.
Despite devoted efforts, by a very talented and capable team, we have made the difficult decision to close Design Inc. Because people are and always will be the most important thing to us, we returned all remaining funds to our investors, dissolved the team, reimbursed our designers and closed the platform for good.
/me release heavy, audible and emotional sigh.
The universe teased me a bit today when I came across this quote:
Success is not final; failure is not fatal; it is the courage to continue that counts
— Winston Churchill.
Well Mr. Churchill, I have news for you. Failure hurts like hell.
When a startup fails to blossom into a growing business there is much to learn. Ultimately the outcome of a startup sits squarely on the shoulders of the founder. I never started Design Inc. to have a premature end like Firefly.
Please continue reading to learn a bit about what we learned — Perhaps there are a few nuggets here to help you on your journey.
The Life of Design Inc.
Design Inc. was started to bring great design to the world. Our approach was to create a marketplace to help companies and individuals find and work with great designers. We believe designers are in a unique position to improve how our world works, looks and operates.
By the end, the team had built 4 major versions of Design Inc., each version would have a unique value prop and approach to the market.
Early versions of Design Inc. tried to capture revenue by taking a cut of each transaction. These early versions were excellent at matching companies with designers, but terrible at actually capturing revenue. Our designers resented us taking a cut of their billings and would often transact off platform to avoid our fees.
Finding Market Fit
We tried a bunch of other wonky stuff until we finally landed on a pay-to-propose model we borrowed from Thumbtack. Companies would post their projects to Design Inc. and if a designer was interested in the project, they would pay a small fee (around $5 to $35) to send their proposal to the Company (we capped each project at 5 proposals).
The pay-to-propose model created the ability for both sides to keep some control and autonomy in the transaction. Designers would self-select which companies they wanted to send proposals to and companies had the choice of who they wanted to work with.
I believe autonomy and the power to choose are major keys to happiness. Taking autonomy away from people, especially in the world of software, will always create distrust in your platform and you will lose users.
We knew we were onto something because the positive reviews and feedback came pouring in. Designers were making a great living, companies were able to find designers after months of coming up short and we were finally making revenue. We were very excited, we poured on the gas.
Over the next 7 months we would do everything we could imagine to grow the business, meeting each morning to review what was working and what wasn’t — we iterated on the product daily and added email drip campaigns, newsletters, podcasts, press articles, influencer outreach, blog posts galore, personal networks, social media and our very own YouTube show. Despite all these efforts our revenue numbers only improved slightly.
We were bleeding cash. Looking at our limited runway felt like staring over a cliff without a parachute. We simply didn’t have near enough runway to grind Design Inc. to success. Moreover, if we were able to procure another round of funding, I was not confident on the ultimate size of the market we were working in.
No Mans Land
We were stuck. We had a platform that was making a difference in peoples lives, with a business model that made little money and a limited market to attack.
Logically the decision to close Design Inc. made sense, but emotionally it was extremely difficult. My team would be out of jobs, my investors would not make a return and our community would have a major source of their income go away. I couldn't find another way forward.
With the support of the board and our incredible investors, I made the call to close Design Inc.
In the end I am very proud to say while Design Inc. was in existence we helped over 900 companies complete over $4 Million in design projects and helped employ freelance designers all over the world. For a brief time, we like to think Design Inc. made a positive difference in peoples lives.
I learned I was deficient as a founder in some key areas and only developed these habits late in the life of Design Inc. — I share them now (easy to say, hard to implement) so you can self-reflect and course correct:
- Focus only on what is essential. Nothing else. Only work on the things to move your business forward — many times speaking at a conference or podcast or decorating the office does little to impact your business. At one point our whole team stopped engineering and designing and picked up the phones to generate sales and new business.
- Impatient iteration. Lack of progress is due to a founder not having the mindset of impatiently iterating their ideas. This means everyday asking and executing on what can be done to grow the business. Everyday for months and years a founder must push with impatience.
- Each day, ship experiments. Especially for a SAAS product, there are always improvements to be made from onboarding to CTAs, the funnel can always be better. Establish a culture where teams are encouraged to ship experiments without feeling like they need permission and allow them to fail or succeed without consequence to their career.
- Challenge assumptions frequently. We assumed designers wouldn't pay $10 to get a business lead and this assumption delayed us from finding market fit for many months. We make assumptions from our own biases, and often our own biases don’t encapsulate reality.
Heart Full of Gratitude
Design Inc. was an incredible emotional, mental and physical journey. We were lucky to have a world class team of people pouring their energy into building Design Inc. I would work with any of these folks again in a heartbeat and perhaps, by sharing them with you below you can reach out to them as needed and have the chance to work with them on your journey.
Thank You MD and Our Investment Team
I owe a massive amount of gratitude to our incredible lead investor, board member and friend, Michael Dearing of Harrison Metal — he was always there, anytime I needed to talk or collaborate, he always picked up the phone, no matter what. Michael helped bring out the best in me and our team and I feel a debt to him.
All of our investors believed and supported us every step of the way, each member of our investment group was responsive, kind and dedicated to helping us succeed. We were lucky to work with Bryce Roberts of OATV, Craig Shapiro of Collaborative Fund, David Tisch and Greg Rosen of BoxGroup, Marc Averitt of Okapi Ventures, Dave McClure of 500 Startups, and angel investments from Shiva Rajaraman and Keval Desai.
Thank You Hired Guns
Growth — Brandon Lipman helped us immensely, he’s very meticulous and analytical. (should have hired him a year ago) and super fast on Slack.
Marketing and writing- Amrit Richmond counseled with us early on to talk through brand positioning and voice, some of those conversations really helped focus our strategy.
Press and Social Media — Brenda Vasquez Brenda joined us in 2017 and helped us get various articles in well known publications and helped us through some events.
Thank You Design Inc. Community
The amazing Design Inc. community of designers, photographers, writers, illustrators and creative geniuses — all 2,993 of you are an eclectic group of dreamers, hustlers and entrepreneurs. A million thank you’s for being an active part of our platform always providing your feedback and help. We will keep our Slack community going for a while :)
Thank You Legal & Accounting Team
Thank You Design Inc. Team
Bjoern Zinnsemeister — Bjoern was my co-founder, he is a unicorn engineer great at design, excellent front-end, back-end skills — he can kinda do everything. He was the first person I called when I wanted to start Design Inc. and he said yes immediately. He made a big sacrifice and moved to Orange County. Bjoern has a deep desire to build product and wasted no time and dove straight in and started his own security startup called Templarbit and is currently in YCombinator. He convinced our lead engineer to join him Matthias Kadenbach.
Joel Beukleman — Joel left Google to be our Head of Design. Joel is one of those people who will outwork you with a smile on his face. He is an incredible designer and has massive empathy for everyone he comes in contact with. Joel has gone back to Google and is working as a product designer on the Google Chrome team. I am so grateful to Joel‘s ’wife Erika and his family for lending us Joel for a while, thank you for your grace.
Mikey Wills — One of the best front -end engineers I’ve ever worked with. Mikey also came from a design background and was our first hire at Design Inc. He was working on his own startup at the time we found him with a friend and he dropped what he was working on to join us. Mikey has incredible product instincts and helped shape much of what Design Inc. became. Mikey is now working as a front-end engineer with EaseCentral, a healthcare startup based in San Francisco.
Matthias Kaddenbach — Bjoern called me one day and told me we couldn't build Design Inc. without Matthias. And he was right. Matthias is incredibly creative and effortlessly built out our infrastructure, API and backend — This summer Matthias co-founded Templar bit with Bjoern. They are coding up a storm in Mountain View, CA at YCombinator.
Natacha Cabrera — We stole Natacha from Vans. She was our Community Director at Design Inc. as well as Support, Social and about 10 other jobs. Design Inc. was her first startup and no matter what we threw at her, she figured it out. Natacha is currently developing her own startup focused in the beauty industry.
Thank You Family!
My wife and children have never wavered in their support. They have no idea what I do for work, but have made tremendous sacrifice as I have chased dreams. I hope to return the favor as my children grow and find dreams of their own to chase.
So What’s Next for Me?
I have had the luck and privilege to be a part of many startups and large tech companies over the last 20 years. I left Google in 2014 to pursue startups and co-founded North with Kevin Rose (which merged with and became Hodinkee), dipped my toe in a political startup called Brigade for a hot minute and then dove head first into Design Inc. — 4 years of non-stop startup intensity.
Everything came to a head for me recently as we were closing Design Inc. (btw takes months to close a company). I feel an immense loss with Design Inc. I also feel an equal amount of disconnection from my family. So, we sold our home in California and moved to the North Shore of Oahu, where my wife was born and raised. She has dreamed of moving back for a long time.
I have enjoyed reconnecting with my family and frankly have had to relearn how to do so. Startups crush families and put incredible strain on relationships. I’m not so sure you can pull off a healthy family and a startup at the same time. Moving to Hawaii in many ways is me trying to offset the sacrifice my family has made for me over the years as I have pursued building ideas and companies.
Feel free to reach out if you have something you think we should work on together, my personal email is email@example.com and I’m pretty wide open to new ideas right now. I’m also going to be spending time painting the ocean, developing some other little ideas and biking with my kids to school.
Your designer friend,
P.S. Please remember to drink plenty of water.