My Self-Reflection on Startups, Relationships, and Adversity.
At long last, I’ve finally gotten around to writing my first Medium post. This is a recap on my experiences founding my first companies and going through losing what was probably my most serious relationship ever at the time. Fortunately, nothing as overkill as this piece by James Altucher. But I see some parallels. I write about the adversities I went through co-Founding companies and falling in love whilst bootstrapping new ventures and what this taught me. Kindly bear with the format. There are probably typos as this was hastily written in an airport on 30 minute WiFi.
Søren Kierkegaard said it best: “To venture causes anxiety, but not to venture is to lose one’s self…And to venture in the highest sense is precisely to become conscious of one’s self.”
Startup #1: Enterprise Software Company
I left my first post-graduation job at Oracle for what coulda, woulda, shoulda been the next revolutionary enterprise software solution. If I was still at this job today I would have at least by my approximation a quarter million in net worth right now. Without getting too technical, the idea was to write a sync automation code that is able to pull data from Microsoft SQL to tablets, keeping track of conflicts compiling a sync per user. So it’s not queries on top of a language, each table would have had its own modules. We were optimistic enough to be our own cloud provider using hardware accelerators to enhance the database performance. The main guy behind this was well-credentialed with a decent track record, albeit slightly eccentric. We were working remotely at the time in different parts of California (and Texas at one point), and had met twice prior. The concept came praised by others I showed it to as well. We had people volunteering to be part of a beta launch and become paying customers instantly. Funding looked promising in a near future. Angels were emailing me asking for updates, not vice versa.
Suddenly, my “partner” stops interacting as much and goes MIA. He misses the opportunity to deliver several times on waiting beta customers giving me more and more excuses. Then removes all doubt of being an elevated douchebag in saying “I don’t want to give away MY company, we don’t need funding, we can grow organically” after he missed the deadlines for said beta launch. At this point, I know it’s hopeless. There’s no getting through to this. In the end, he stiffs me for about $300 and we go our separate ways.
Startup #2: Mobile Payments Company
Humbled and perplexed by the experience of Startup #1, I went after the next project with friends I knew and trusted better that I went to school with and were salaried programmers already in Manhattan. I’d think back to a game I played when I was younger called Dreamfall: The Longest Journey. How the convenience of mobile payments was possible anywhere. Our idea was a consumer application on smartphones readily accepted by merchants and manufacturers of vending solutions (think snack machines, self-checkout, or buying an MTA card). The smartphone would interface with proprietary RFID technology we were working on to complete transactions. Instead of digitizing existing credit and debit cards like existing apps such as Apple or Android Pay, we were promoting essentially both a wallet that acted as a debit card, and being in the business of offering lines of credit. We simply figured that these swipe fees had a chance to be disrupted. I leveraged a lot of my connections to gauge interest by NYC merchants alone using it as a pilot city to launch. While Silicon Valley reigns supreme for tech funding, NYC tops them in FinTech.
The interest was strong and we were even eagerly invited by Capital One Labs of all places to pitch. Shortly after, I was intro’d by a mutual friend to meet two middle-aged guys with solid backgrounds. One of them was a dropout Physics PhD from one of the most prestigious schools in Europe with a tidy corporate background. The other, a venture capitalist and entrepreneur with multiple exits from a royal family overseas and personally friends with Ivanka Trump. Their idea? By creating a platform for instant microlending globally by applying portfolio theory to their lending criteria. They insisted that default rates would be only ~5%. We believed them. They were a team of 2, we were a team of 5. Entirely different verticals. But they needed a platform, we needed a value add to encourage mass adoption.
As it turned out, PayPal, Square, and others were keen to continue exploring the mobile payments space. We were not discouraged. What hit us was when Samsung Pay came up with an entirely proprietary solution using MST (Magnetic Secure Transmission) that emits a magnetic signal that would mimic the magnetic strip on a traditional payment card. Meaning they could use this on existing swiping hardware, and it was patented obviously. There would be no rip-and-replace approach our RFID solution required. We were fucked. Around the same time, these two other individuals we’d partnered with called it quits on their idea for reasons that still are not entirely clear. I remember back clearly to where I’d be strolling through Times Square not longer afterward with Samsung Pay advertisement plastered everywhere.
You’re not going to “create the next Facebook” or “the uber of…”. There is far too much vanilla ideation such as this already. You have ideas. I have ideas. One idea I had went onto command millions in funding and is scaling fast: https://entercastle.com/
It does happen.
This is not about glorifying failure. Too many get caught up in embracing this. It’s nothing noble. See this CB Insights article documenting startup post mortems. It breaks people, and not everybody comes out stronger. I just happen to react well by blinking, learning, and moving on. Obviously, there are so many variables you can’t control in this. Among them, when and who you fall in love with and where you are personally in your life to have the timing to fully commit to them.
Focus on one business, two max. All the rest of your ideas you can file down in an encrypted notepad. I get at least 5 ideas a day and practically dream of them. Moonlight whatever you work on holding your job till you make it. Do not leave, especially if you’re with someone you’re serious about. Don’t leave till you’re making at least an MRR of 10x your bills for 3 months straight. Let this be a cautionary tale that idle progress, people, and situations are unpredictable. This is why those that DO constantly try to reinforce to you that it’s not about the idea, it’s execution.
My examples in Startup #2 should surely demonstrate that it doesn’t matter how good Founders are on paper. Look at Y Combinator’s track record. They pick close to as many winners as they do losers but do so carefully vetting their people. Sam Altman has a long way to go to get Y Comb’s portfolio on par with Google’s market capitalization. Never, and I mean never, get into any venture with somebody you don’t know in person for a meaningful length of time. Get every major issue out of the way such as equity, vesting options, LLC/C Corp, outside investors, etc.
Lastly, do not try to put together or allow teams to work remotely, especially Founders in the long-term. I’ve tried it, and it’s not efficient. You might be able to build an MVP and launch. But people that know what they’re doing know that a distributed team without co-location will often result in disaster. If you can’t sacrifice and be where it is that you need to be, how will you lead those that look up to you or earn the respect of the best people to grow your company? It’s so kosher these days to go off to places like Chiang Mai and have “location independence” and everyone works remotely. In practice, I think this works different for people with radical self-discipline on their own projects/ventures, but not teams.
Until next time.